If you had $300,000 to invest in the NOVA real estate market... (Dale City: renters, HOA)

[oneasterisk]

If it were me and I had 300k burning a hole in my pocket, I wouldn't pay cash for 1 property. I'd put 20-25% down on two properties and borrow the rest. The idea is to use other people's money to increase your own. You could buy two 300k properties and put down 150k. The rest you could use as rehab costs as necessary. Leverage is your friend if used wisely.

Also the goal is to cash flow the properties monthly. If you have positive cash flow every month then you're not relying on appreciation to make money. You make money whether the housing market is up or down so long as it's rented. Now if the house does appreciate in value, I'd consider that a bonus but your primary concern is to make money on a monthly basis. Otherwise, you're just speculating that your new purchase will increase in value. I read somewhere that you should be able to rent out a place for 1% of the purchase price. If you can't, then it's not a good candidate for rental. So if you can't rent your 300k home for 3k a month, then I'd look elsewhere.

I'm an amature property investor so take what I say with a grain of salt. In 2009 at age 29, I bought a 70's split level in foreclosure. So with the down payment, closing costs and repairs I spent 50k. I've been getting about a 8-12% annual return after expenses on my 50k so far. Way better than what I can get if I kept my money in the bank. I paid 158k, but I've been renting it for $1700 a month. I pay a property management company to manage it, and they take an 8% cut. After paying my PITI and PM, I'm still clearing almost $600 a month.

Similar homes in that neighborhood have been selling for 225k so I could easily sell and make a profit after realtor fees/closing costs etc. This is a long term investment vehicle for me though so I'm content in keeping it, making the 8-12% a year and utilizing the tax deductions to increase my take.

As far as where you should buy, I've read that you should stick to the area you know. So when it came for me to buy, I bought a place that's about 15 minutes from where I am. I know the area so I can judge what the rental rate should be, if the neighborhood is attractive etc. While it's not near metro, it is close to a VRE station, close to highways, NVCC and almost in between of Quantico and Ft. Belvoir.

Sorry for the lengthy post, but hopefully it offers something of value.

[Mr Beco]

Personally, the better investment is in DC. Areas such as U Street and NE.

[FCNova]

I wouldn't invest in real estate either. I don't think the return is that great, when you factor in all the maintenance costs, and the time involved(unless you pay a mgmt company, but then you have more expenses eating up your ROI).

For some people who bought into great situations years ago it may make sense, but I think if you're sitting on 300k now there are better ways to go.

[snuffy1968]

Pay off my house

[NOVA998]

What is the 22204 area like these days, especially around Columbia Pike? Any projected developments?

[NC211]

I haven't read all of these posts, so I might be repeating something here or missing the point.

The question depends on your expectation of your internal rate of return. Are you looking for immediate cash flow? Or are you able to acquire and carry for a few years? If you can carry it, then I'd personally look towards land in Loudoun, specifically around areas that you think will go commercial in the next decade. I hear developers are practically tripping over themselves out here around Brambleton to find opportunities. I think anywhere from Belmont Ridge road to Leesburg south of the toll road is a safe bet for a 10 year hold period. I say commercial, because once an annual revenue stream can be attached to dirt, its value potential changes from a market price per historic sales, to an income stream potential for the buyer. Especially if you target an area that you think could go towards a neighborhood retail center such as a grocery anchor, or the like.

If you're looking for immediate return activity. Then I think anything rentable around Reston is a safe bet too, especially if its affordable in nature to the tenant. I've done probably close to $1.7b in CRE investments in the DC MSA over the past 8 years for my employers, some with loan terms of 20 years, some with terms as short as 3 years for construction only, many highly visible and well known to the real estate realm. Class A office and apartments, to a couple of true "trophy quality" properties down near the Capitol. Loans that range in size from $2m to upwards of $400m. Out of all of these, the one asset class that I see that shows the most stability and least amount of on-going capital expenditures to maintain competitive edge for the top market rents..... Is the nice Class B apartment unit. If you can make $2.00/sf rents work in a submarket that is clearly showing a $3.00+/sf trend, you'll have a revenue stream for the foreseeable future. Factor in a 4% management fee on your rent, and you're hands are clean from the daily management and upkeep requirements. Best deal, in terms of IRR to the owners, that I have ever done in my entire career was exactly this product type, in the Merrifield submarket. I can think of at least 3 others in the region of similar potential for a $300,000 investment. Silver Spring, Reston, NoMa. Of those three, I think SS is your safest, followed by Reston and cautiously optimistic about NoMa, although NoMa has such a sharp contrast between acceptable and just dumpy that if I went there, I'd have to do it with the understanding that I'd probably have to invest in renovations. Just follow the metro stops, put a 1/2 mile circle around it, and start your search. The newer the construction activity, the more attractive the affordable product becomes to tenants. You know, there's nothing wrong with Formica countertops in a granite crazed comp set....

Or, if you wanted to avoid CRE in general - I am absolutely convinced that if you rolled out a flippin' hotdog cart and slapped a Mickey Mouse doll on front of it out here in Brambeton, you'd be rich within 6 months! This place is absolutely missing the kid-friendly market entirely. I only know of one place that seems to cater to the kids, a frozen yogurt shop in Brambleton Town Center, called Sweet Frogs. Why do I know about it? Because every kid in our neighborhood wants to go there and they've got my own kids nagging me now too! I think a cool restaurant that played off of the fact that we have some of the coolest airplanes flying above from Dulles, would be a grand slam!

[mdcrim]

NC211- I agree there isn't enough catering to kids in Loudoun. Especially the tweens. May have to ponder that a bit...

[marie5v]

Originally Posted by mdcrim

... What would you do with it and why? This has come up in conversation recently so I thought I'd throw it out there for discussion.

Totally hypothetical question. Where would you spend your $300k? Ashburn townhouse? McLean condo? Old Reston town home? Others?

For me, Haymarket, walking distance to town. Probably a townhouse, because I think that's the only thing in that price range, but I'm not sure. I don't think you can get a Reston or Mclean home for that price. We have a condo in Reston and the price has jumped way up, presumably due to the coming metro. But Haymarket is so cute and quaint and uncrowded. If it doesn't get completely destroyed by poor planning and the expansion of the Gainesville strip malls, it will be one of those rare, walkable and charming places that everyone wants to live in. The commute in on 66 is not great during rush hour, but depending on hours and destinations, it can be pretty manageable and wouldn't be a deal breaker for me. I see a lot of people heading that way these days and would love to own something there in anticipation of the value going way up over the next ten years. I figure if I'd live there so would other people. I would prefer to invest in a place that I would actually live in.

[PhenomenalAJ]

I'd hire a forgery artist to convince the person who gave me the money I bought a house in Fredericksburg but would really buy a house in old town Anacostia.

[metclubin]

I would at least put $10k-20k in Apple (AAPL) stock. It is way too oversold at this time.