All Forum Posts by: Johnathan Le

@Johnathan Le if you are going to occupy this property as your primary home I would encourage you to examine it from that stance first.  Meaning, does it provide me a good commute time?  Is it safe for me and my family?  Are the school zones ok?  Do I like the neighborhood?  Am I comfortable with the payment while I live here?  And I'm sure there's TONS of other personal reasons to choose a home than even those that I mentioned.  The reason I'm saying it like this is that when I purchase my own primary home I have a lower down payment...which helps me "afford" a home easier.  But since I'm borrowing 95% of the property value (or more) my mortgage payment will ALWAYS be higher than that of an investment property.  Most of the time we are using 20% or 25% down for an investment property. Since I borrow less...my mortgage payment is lower.  My primary home I borrow more...so my mortgage payment is higher - always.  You will always struggle to "cashflow" with primary homes because of this.  But if that primary home provides me OTHER benefits (like those "personal reasons to buy a home" that I referenced above) then ok, now it's worth it because of X reason.  And AFTER I use that property to fulfill those "personal needs to buy a home" then I will move out and use it for a rental.  You can certainly rotate it every year if you want to...but you will never cashflow in that scenario - even if rates decrease.  You will still have an equity play in the property.  And there are certainly tax benefits to living in the property for 2 years...and then renting for 2 years...and then selling.  So, perfectly sound strategies out there that justify doing this.  But the expectation should be that you won't cash flow.

I hope all of that makes sense. 

Oh, I also wrote a post on this the topic of "cash flow" (but more of investment properties) that you can read HERE if you would like.  Thanks!

I could be wrong, but by Northern VA, I assume you mean the DC area?

If so, I'm not surprised. Real estate in DC is sometimes just as competitive as New York or Chicago. Due to the government presence, your investment is incredibly secure compared to other cities and as a result, cap rates and cash flow will be lower. 

My advice would be to pursue a rent by the room model. Maybe something like FurnishedFinders. That's the "only" option, really, in these super competitive markets. It's what we do here in Atlanta too. After you've owned it for a few years, maybe paid down the mortgage, maybe rates come down... then you can refi and maybe make it work as an LTR.

Furthermore, your price point may be too high. I know it's a competitive market, but with the numbers you gave I calculate a purchase price of around $550k for a 1 bedroom? I have no idea what a typical 1 bedroom sells for in that area, but $550k for a 1 bed won't work as an investment anywhere outside of Manhattan