buy rental property in reston/herndon? (real estate, rentals, condos)

[explosion99]

A bit further west is also fine too...I just want to know if it will be worth it to buy a condo and rent it out in that area

[Flamingo13]

Do you have experience as a rental agent/homeowner that rents?

[explosion99]

Originally Posted by Flamingo13

Do you have experience as a rental agent/homeowner that rents?

no...I recently graduated college and want to buy some real estate while interest rates are still low. I'll have enough money to make a down payment. I'm just wondering what the market is like in that area.

[mdcrim]

If you buy real estate for investment, you always want to make sure your rental income will more than cover your expenses. Yes, Reston and Herndon are very good rental markets but they are also very expensive. And add in condo fees (if you can find a condo unit that will allow rentals- many have restrictions on the percentage of condos that can be rented out). Wow- lots of money out, not so much in. You need a big, fat down payment in these areas to break even. Those areas will most likely appreciate but you will also most likely be out of pocket every month covering the difference between your rental income and expenses.

[airjay75]

On the expense note, also keep in mind that there can be so many unexpected costs associated with owning and maintaining real estate. If anything breaks, it will be your job to fix it, and, as a landlord, you will have a legal obligation to do so. For someone living in their own home, they can always say, well, the dishwasher broke, but I can't afford to replace it for a couple of months, so it's hand washing the dishes for now. If it breaks in your rental property, you'll have to get it fixed asap unless you write into the lease that if it breaks, they are out of luck - good luck finding a decent tenant who will agree to those terms.

In my personal opinion, real estate as an investment rarely outpaces the rate of inflation once you have taken into account all of the expenses associated with owning real estate. Plus, most investment advisers will tell you that diversification is key to maintaining long-term return. If you subscribe to that theory, putting a large portion of your investments in a single piece of real estate is very risky, just as putting all of your money in a single stock is very risky.

One last thought - have you spoken with any lenders? They are pretty strict these days with people who want mortgages for properties in which they aren't planning on living. You are probably going to have to have an income where the combination of the mortgage on your rental property and the rent/mortgage where you live yourself does not exceed a certain percentage of your gross monthly income - even if you have that type of income, it might still be difficult if you have not had that kind of income for any length of time.

[austindoxie1972]

I second the comments of others, but will add a few thoughts. I'm an accidental landlord, with a house in San Antonio. It stays rented and I make a little money off of it. I keep it because I'll probably end up in that area when I retire. Being able to weather the odd (and often hefty) expense is one issue to consider. However, you have to be able to go without a paying tenant at least one month a year. Many of my tenants stay two years, but when they do not renew their lease, I have two mortgages the month they move out (while I'm showing the property to potential tenants).

Another piece of advice: Never purchase a property you wouldn't want to live in. You just may end up there one day! Also, if you don't want to live there, why would anyone else? There are some sketchy areas in Reston and Herndon. Some I would not want to live in, but they are fairly reasonable and I know people who own rental property in those developments.

[FCNova]

I would hold off. Rates have risen dramatically in the past month, so it's not like you're getting record low 3.5 anymore. Plus housing prices are really high now due to the low interest rates and low inventory. You may be buying at the peak. I don't foresee a crash or anything but I think prices could soften with rising rates and eventually rising inventory.

I really don't think real estate is that great of an investment. Like others said there are lots of costs associated with maintaining a home. If you have a place you want to hold on to and rent because you may live there again, or maybe it's a vacation home you use a good amount, or there is some other reason compelling you then it could make sense. But if you're looking at it solely as an investment vehicle I think you could get a better return elsewhere. Especially when you factor in the cost of your time associated with being a landlord. Just my opinion though

[sarahstark]

As long as you can wait and are not flipping it for quite some time, I think it's a good move.