Investor with CASH in VA, MD, DC area, Thoughts on PG county

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Investor with CASH in VA, MD, DC area, Thoughts on PG county

Jami Carnagey
Fort Washington, MD · Member since 2013 · 3 posts · 0 votes

Hi guys and gals, 

My wife and I have accumulated ~$160K over the last two years. All liquid but half ($80K) is in Stocks and ETF's right now so not crazy about pulling it out with the market down so much. We are looking to real estate to increase our overall returns and add to our portfolio. I have rooted around on this site quite a bit and rolled around with the real estate thing for a while but I realize what I need is actual experience. 

My initial thoughts are that I am open to rehabbing properties and rentals. I live in Fort Washington MD, and have been looking at my local area for potential. New $2B casino going in right now, National Harbor is 2 miles away. And there is talk of adding a Tech corridor a couple miles away. The area is older(70's era), depressed, and has lots of foreclosures still. Home prices under $300K abound but most are poorly maintained. Super close to DC and Alexandria VA. Where I live has potential I think but I am not committed to one area although my money will go further here vs DC or VA.

Anyone working in PG county or Fort Washington MD more specifically? Any thoughts on the area? I am very wary of it since most houses are so poorly maintained, lots of delinquencies and horrible schools.  But a 2 miles south, house prices go up and houses are much nicer, especially along the river ($500K -1.2M).

Brief Bio: My wife and I are college educated and working full time in Professional careers. I am an economist and data analyst, she is a CFO for a government contractor. I also have a small welding and machine shop (building custom metal furniture for kurtzandatkins.com). I also did most of the work on the foreclosure we bought 6 years ago. We have 4 kids and are looking for a way to get out of the rat race, run our own business and home school our kids.

 Thanks for any advice.

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Russell BrazilBusiness Member
Moderator
Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
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Welcome to BP @Jami Carnagey.  Ft Washington is actually not too bad for flipping.  You can get an ok price spread between rehabbed and non rehabbed homes. However I think if you look over closer to Hyattsville, Mt Ranier...over that way you will see a better spread that where you are. DC will have much higher spreads, but the price points I think would be a bit too high for a first time investor. PG County has some descent buy and hold opportunities as well.

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  • Sam Lin
    Real Estate Agent · Gaithersburg, MD · Member since 2016 · 99 posts · 32 votes
    10y

    @Jami Carnagey Welcome to BP! PG county properties have been a hot commodity for some time, and there are still deals to be had. One investor I've worked with had a recent example in PG county: purchased at $110k, renovated for $30k and sold it at $215k in less than a week. Your asset amount seems to be in line with the distressed properties. Are you looking to do renovations yourself or contract out? It's a good idea to have a good renovation estimate when you look at properties.

    I also wouldn't dismiss other counties nearby like Ann Arundel or even Baltimore. I'm on the fence about whether the casino will add much value to the surrounding communities, but National Harbor isn't going anywhere.

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    10y

    Welcome to BP @Jami Carnagey.  Ft Washington is actually not too bad for flipping.  You can get an ok price spread between rehabbed and non rehabbed homes. However I think if you look over closer to Hyattsville, Mt Ranier...over that way you will see a better spread that where you are. DC will have much higher spreads, but the price points I think would be a bit too high for a first time investor. PG County has some descent buy and hold opportunities as well.

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  • Jami Carnagey
    OP
    Fort Washington, MD · Member since 2013 · 3 posts · 0 votes
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    Thanks for the replies! @Sam LinI agree with you on the Casino moving in. Typically research done on casinos are places like Reno, Las Vegas, or Atlantic City, ENTIRE Cities, all with high crime rates.  I honestly wonder if a standalone like the MGM has the same effect though. No one has effectively researched that yet.

    Yes I will need  a contractor to do the rehab work (If I go the fix/flip route). 

    I'm really probably more interested in the buy/hold route since flipping really seems to involve a  lot of work to make sure construction happens on time and budget. (No I don't have a contractor already) Time is what I do not have, I work full time, have 4 kids and a side business. I suspect house flips may be beyond what I can realistically do in 24 hours, nevermind the learning curve. I would like some thoughts on that.

    I have owned a rental property before so I do at least have an idea of that. Does anyone rent out houses around Fort Washington? What are the class of renters here. Sorry it is just weird to me, folks with our income typically spend  $600K + on a house and we live in a foreclosure that cost $180K, so I have a warped sense of what people spend on houses. I simply cannot imagine spending 2500/mo on a house I don't own, but houses in my area seem to go for about $2k + per month ( according to Trulia and Zillow). I guess My question is whether it would be wise to buy a $350-400K house in a really nice area with newer homes and rent that out. Could I get quality people to rent something like that. I mean we are talking a pretty sizeable monthly rent check Probably $3k +

    Or would it be better to take my money across the River to Alexandria?There is very little I could afford right around Alexandria though, Maybe one of those tiny little 800Sq ft houses near Belle Haven for 600K...Lol

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  • Russell BrazilBusiness Member
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    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
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    @Jami Carnagey Part of deciding where to buy will have to do a bit with your criteria. Do you want buy for appreciation, or for cash flow.  If you are looking more at cash flow, then you might want to consider areas more like Laurel MD, Frederick MD.  If you are buying more for appreciation...then you may need to decide on a price point, and how much cash flow over the mortgage payment you want to be.  You can get something with pretty descent appreciation chances in the $400k price range in Rockville, Silver Spring, Fairfax.  You can probably do something in the $250k price range near Hyattsivelle, Mt Ranier.  However once you start pushing past $450, $500k plus...then you are going to have a hard time breaking even on a monthly basis. While price levels of properties can keep extending upwards depending on the locations..the rent increase in those higher priced properties will not keep pace proportionally with the rise in the property value.  So take a $390k house in Rockville. That might rent for $2300 or 0.6% of the value of the property. But if you go into a rowhouse in Petworth at the $800k price point, it probably rents for $3500 or 0.4% of the value of the property. So the higher in price the property, the harder it is for the rent to increase at the same proportion. On my cash flow type properties I try to hit 1%....but even on my properties I own for appreciation, 0.6% still gives me a nice amount over the mortgage payment to be safe.  Once you get to 0.5% or less, its going to be hard to cover your monthly expenses.

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  • Tia Willis
    Real Estate Agent · Capitol Heights, MD · Member since 2016 · 8 posts · 3 votes
    10y

    @Jami Carnageyas others have stated the Fort Washington area, Clinton, Upper Marlboro and such are great areas to invest into. The prices are low due to distressed property care but the neighborhoods value is pretty good. I specialize in Prince George's County; I reside in Capitol Heights and have family in Fort Washington. In the coming months the prices will move slightly due to the National Harbor project. Charles County is a great place to look for properties as well. 

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  • Sam Sharata
    Real Estate Agent · Annandale, VA · Member since 2015 · 30 posts · 15 votes
    10y
    Welcome to BP Jami. If you're time constrained and concerned about your budget and return on investment (who isn't?), then you might want to consider partnering with an experienced investor. You increase your purchasing power, the learning opportunity is priceless, and you also share the workload and risks. Trying to buy and hold in DC or VA is a losing proposition, particularly with a price point at or below $160K. Whether you choose a partner or not, you will have to make time to research your market (i.e., stalk properties), work with a realtor (or be your own), and formulate a strategy for buying your investment. Take the time to review the FREE real estate course being offered by our friends at BP (it's under Education link. I recently discovered it myself and I've learned a thing or two (kudos to Brandon for the awesome class). Very best of luck with your investing pursuits.
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  • Sam Lin
    Real Estate Agent · Gaithersburg, MD · Member since 2016 · 99 posts · 32 votes
    10y

    @Jami Carnagey Research seems to indicate a negative impact for the communities when a casino move in. That was the case when I was in St. Louis and Lumiere Place moved in. However I do think nice areas with rentals will benefit from it - new casino employees with extra cash may settle in Alexandria, both for the commute and the community.

    As for buy/hold route vs flip, like others have said, it depends on your strategy. There is another option that hasn't been mentioned: buy a house with a large walk-out basement and bedroom, and rent downstairs. That'll give you a little relief for your mortgage payment and perhaps allow you to dabble in other buy/hold or flip. For flipping, there's a lot of work before the construction starts. And during construction, you should also check in on the progress - you'd be amazed on how some contractors take 2 hour long lunch breaks and take their time on your renovation.  It's not impossible since one investor I worked with would check in on the property during her lunch break at her full time job.

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  • Jami Carnagey
    OP
    Fort Washington, MD · Member since 2013 · 3 posts · 0 votes
    10y

    @Sam Lin

    Yes the points about the casino are exactly my thinking, and even a standalone seems to have negative consequences, never experienced it firsthand though. I figured the only areas to benefit in the real estate arena would be the Harbor or Alexandria. The Casino will hire locally for low and mid level employees but absolutely must import the talent at the high levels. Those folks absolutely will not accept PG county anything. Alexandria seems to be the best choice for school options and lifestyles and proximity. And that is exactly why I have been looking at Alexandria too. Alex is probably too high for us to get into though. We have great credit (800+) but everything about Alex is super expensive including property taxes.

    Primary strategy is wealth generation. In any form. We have some money but don't like the idea of it sitting in the bank losing value to inflation and only earning $84 per year. Our initial thoughts are cash flow. We don't need it so we were thinking of buying one or 2 properties with large down payments and cycling the extra back into the principle. We also have extra money leftover from paychecks and bonuses so we could pay off 2 $250K properties in a couple years, or maybe 3.

    @Sam Sharata

    The other option is rehabbing. I have no experience here so I would prefer to partner with someone if I were to go that route. But since I am new I am prohibited by the BP TOS from asking for partners or such :). I did hear there is a meetup in Reston that just happened. Might have to check that out next month...

    It just seems there is a lot of moving pieces to a rehab and with that many moving parts there is a lot of error that can happen. I don't know if it just me, but the properties I have seen in PG county are so poorly maintained that they require very extensive rehab costs. Thanks for mentioning the Education link, I had forgotten that. 

    @Russell BrazilThank you. Intuitively that seemed correct on the house price vs rent you could get out of it. Thanks for clarifying. I will take a look at the areas you mentioned.

    Our original plan was to do the crowdfunding thing (Fundrise and POL were the two I wanted to work with and opened the accounts) for a few years to build up a bigger pot. But fortunately for us there is only one state that completely prohibits cowdfunding real estate and it is MD. We are so lucky they have our best interests in mind. :/ The only option there is to incorporate in another state and run the investments through the Corp. 

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  • LIpeng Wu
    Real Estate Investor · Rockville, MD · Member since 2015 · 24 posts · 2 votes
    10y
    Originally posted by @Russell Brazil:

    @Jami Carnagey Part of deciding where to buy will have to do a bit with your criteria. Do you want buy for appreciation, or for cash flow.  If you are looking more at cash flow, then you might want to consider areas more like Laurel MD, Frederick MD.  .

     So much information, and a wonderful talk. Thank you very much. 

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  • Jason Chan
    Washington DC · Member since 2018 · 15 posts · 3 votes
    7y

    bump. any updates on opinions on fort washington?

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