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Old 04-13-2012, 05:14 PM
 
49 posts, read 90,079 times
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Huntington Gateway (heard some good comments about this)

Midtown Alexandria

Courts at Huntington Station



and does anyone have an opinion on which might be the best?
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Old 04-13-2012, 07:07 PM
 
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Huntington Gateway is the most upscale of the high-rise apartments immediately surrounding it (e.g. Riverside, Cityside.) It's the oldest of the three that you're considering.

Midtown Alexandria is a ~ 5 year-old condo building. it doesn't surprise me that a fair number of rentals are available.

I don't know much about Courts at Huntington Station. I believe it's newer than than Midtown.

Basically, all three properties are going after the same upscale clientele. It may come down to how much you value newer vs. older, location and other specific, unique features each complex may have.
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Old 04-13-2012, 07:15 PM
 
49 posts, read 90,079 times
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Quote:
Originally Posted by Tone509 View Post

Midtown Alexandria is a ~ 5 year-old condo building. it doesn't surprise me that a fair number of rentals are available.
just out of curiosity, what do you mean by that statement?
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Old 04-14-2012, 10:36 AM
 
Location: Tysons Corner
2,772 posts, read 3,651,669 times
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I'll take a stab at what he might have meant. Sometimes nicer condos, after a few years have a tendency of becoming rentals because the owners saw them mostly as investment properties to start with. It depends on the price range really. If a condo cost 500k and isn't particularly next to metro, it likely is an actual residence (and probably spacious enough for a long term owner).

I usually use the metric 1/100 for the typical remaining mortgage (80% of assessed) for when renting is inevitable in a building. So if the market would bear 1/100 of 80% of the mortgage then its a good unit to rent.

So a 350k 2br, the mortgage would be around 280k assuming 20% paid down. Therefore if rental rates in the area would support about 2800 then you can anticipate a lot of those units are going to start becoming rentals.

If it was 300k, 2br, and the mortgage is about 240k. If the rental rates in the area were only 1800 then the numbers don't align with a building turning into rentals. Some of them might start renting out, but the costs don't even out.

The reason is because beyond just the mortgage theres around 200-300 dollars worth of cost per month that can be anticipated for maintenance/depreciation/upkeep. Theres about 300-400 dollars in taxes likely on a place like this. Theres anywhere between 100 and 400 dollars in condo fees. So you are talking about $1000 in monthly costs beyond mortgage that the landlord has to be able to recoup so back to the second example, only being able to rent out the unit for 1800, you are making only 800 against the mortgage. For 240k mortgage you are looking at about 1200 in the pure mortgage. AKA if you are an investor, this is not a great investment.

For the 280k mortgage, you are looking at about 1450 in the pure mortgage, but are renting for about 2800, so you are making about $350 over cost, or about a 25% over the capital investment.

Now in both cases you are having equity built in the property, but in the long run if you are trying to be a serious landlord, you need to be recouping more than just the cost to eventually own the property. So anywhere between this 1/90 and 1/110 number is what I've seen is the breaking line between a building staying as primary residences and a building becoming an investment property for land lords.
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Old 04-14-2012, 02:45 PM
 
Location: The Port City is rising.
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as it happens I took a walk around there today. I went into Huntington Courts - its quite nice, the newer phase I think is maybe a year old and still has some units that haven't been lived in, it seems to have a bunch of the au currant amenities, and the metro stop is practically right at the door. Oh, and though a midrise, not a hirise, it has elevators, which is handy for moving in and bringing groceries home. The area is "interesting" but I intend to discuss that in another thread.
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Old 04-14-2012, 03:12 PM
 
49 posts, read 90,079 times
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Quote:
Originally Posted by brooklynborndad View Post
as it happens I took a walk around there today. I went into Huntington Courts - its quite nice, the newer phase I think is maybe a year old and still has some units that haven't been lived in, it seems to have a bunch of the au currant amenities, and the metro stop is practically right at the door. Oh, and though a midrise, not a hirise, it has elevators, which is handy for moving in and bringing groceries home. The area is "interesting" but I intend to discuss that in another thread.
interesting as in.....ghetto-tastic?
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Old 04-14-2012, 04:12 PM
 
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What tysonsengineer said.
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Old 04-16-2012, 08:28 AM
 
1,784 posts, read 2,990,389 times
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Quote:
Originally Posted by tysonsengineer View Post
I'll take a stab at what he might have meant. Sometimes nicer condos, after a few years have a tendency of becoming rentals because the owners saw them mostly as investment properties to start with. It depends on the price range really. If a condo cost 500k and isn't particularly next to metro, it likely is an actual residence (and probably spacious enough for a long term owner).

I usually use the metric 1/100 for the typical remaining mortgage (80% of assessed) for when renting is inevitable in a building. So if the market would bear 1/100 of 80% of the mortgage then its a good unit to rent.

So a 350k 2br, the mortgage would be around 280k assuming 20% paid down. Therefore if rental rates in the area would support about 2800 then you can anticipate a lot of those units are going to start becoming rentals.

If it was 300k, 2br, and the mortgage is about 240k. If the rental rates in the area were only 1800 then the numbers don't align with a building turning into rentals. Some of them might start renting out, but the costs don't even out.

The reason is because beyond just the mortgage theres around 200-300 dollars worth of cost per month that can be anticipated for maintenance/depreciation/upkeep. Theres about 300-400 dollars in taxes likely on a place like this. Theres anywhere between 100 and 400 dollars in condo fees. So you are talking about $1000 in monthly costs beyond mortgage that the landlord has to be able to recoup so back to the second example, only being able to rent out the unit for 1800, you are making only 800 against the mortgage. For 240k mortgage you are looking at about 1200 in the pure mortgage. AKA if you are an investor, this is not a great investment.

For the 280k mortgage, you are looking at about 1450 in the pure mortgage, but are renting for about 2800, so you are making about $350 over cost, or about a 25% over the capital investment.

Now in both cases you are having equity built in the property, but in the long run if you are trying to be a serious landlord, you need to be recouping more than just the cost to eventually own the property. So anywhere between this 1/90 and 1/110 number is what I've seen is the breaking line between a building staying as primary residences and a building becoming an investment property for land lords.
So I think I follow for condos. Using an example calculation with 5% interest rate on 300K (240K loan) condo:

P+I: 1288 (319 / 970 split at the 2-year mark)
Taxes: 300 (1.12 rate)
Condo Fees: 400
Insurance: 75
Maintenance / Depreciation: 300

Monthly Rental Income: 2400 (240K * 1/100)
Total Expenses: 2363
Gross Profit (cash): 37
Tax Liability@ 2400/mo rental: [2400 - 300 - 400 - 75 - 300 - 970]*.25 = 89
Net Profit (cash): -52

So you're actually losing $50/mo a month from a cash-flow perspective (based on a lot of estimates), but then are building over 300 a month in equity. So I could see how 1/110 is the lower end for people willing to take a cash hit and still slowly build a profit after equity.

Now obviously that's for condos. I don't want to dig through the math right now, but I imagine that fraction is even smaller when a $400 condo fee is replaced by a $75 HOA fee.

Last edited by snowdenscold; 04-16-2012 at 08:57 AM..
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