Buying a rental property in moco

[Anonymous]

Don't forget about the 10% it costs to buy and sell real estate.

[Anonymous]

Anonymous wrote:OP research the rental vacancy rate in the area that you are considering.

Very good suggestion, thanks!

[Anonymous]

We just had to have the AC drain unclogged. We can't prove it, but it's probably because the renters never replace the air filter even though we provide them for free. Keep that kind of thing in mind when drawing up your expected budget.

[Anonymous]

Anonymous wrote:We just had to have the AC drain unclogged. We can't prove it, but it's probably because the renters never replace the air filter even though we provide them for free. Keep that kind of thing in mind when drawing up your expected budget.

And in a condo, a flood caused by your tenants can mean not only replacing your flooring, but a neighboring unit’s. That can blow your profit for the year.

[Anonymous]

I would just point out that I think in general "it's cash flow positive" seems like a very poor rationale to justify the illiquidity, concentration, and headache of being a small time landlord.

You know what's also cash flow positive, the REIT index and publicly traded corporate America.

It's true that direct real estate allows one to get more leverage than other forms of investing, but I think you need much lower valuations in and higher yields to justify the effort.

If you want to own well located apartment buildings just buy EQR or something. If you want to bet on the DMV, buy JBGS. or just buy the whole damn real estate market.

Show me your expected unlevered and levered return and how much better that is than the passive alternatives and how much extra money you're going to make for your effort.

[Anonymous]

Condos are a good way to go, mine are in good neighborhoods for under 200k. They are smaller 2bd 2ba units with fees under 300 a month and with the 25% down as required on an investment property I cash flow 2-300 a month per unit. Look near metros or commuter routes in good school clusters. Tenant selection will make or break your business, and this is very much a business. Good tenants wont hassle you, will pay on time and will take care of your property. Establish a criteria for tenant selection and stick to it, keep your standards high and you will get good tenants. Keep rents reasonable and dont raise them if you have good tenants. My tenants are paying down my mortgages and the positive cash flow is set aside for any potential repairs. Great way to leverage your money and cheaper condos are easy to accumulate over time, with your cash flow snowballing over time with rent increases. As you build equity and are ready for something else, you a 1031 exchange to ladder up into higher value property and keep growing your wealth.

[Anonymous]

Anonymous wrote:Think about the kind of person who is going to live in a cheap rental. Is that the type of tenant you want?

I'm a landlord of a "cheap rental" for over 10 years now. My tenants have been:

- A young 20-something couple, just out of school and moving in together for the first time
- A single 40-something RN
- A young-ish immigrant family from Central Asia, learning English and working (he in construction, she as an office assistant and nanny)

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Then go for it. My own caution is that when you rent a condo you have to deal with many more property owners than a SFH. My stepson and three roommates are renting a DC condo this summer. All four young men are law students clerking or interning at great firms. The condo owners claims she gets 4-5 complaints about them every week. She acknowledges that the complaints are almost always BS, but she has to follow up on each one or the condo board will come after her.

Hmm. That's strange that is happening to your stepson (although law students love to get trashed) but it's a good point.

The complaints are things like:
—held the elevator for someone locking their unit door
—held the elevator to load groceries from their Costco run
—took bicycles or garbage in the regular elevator rather than the service elevator
—talking on cellphone in lobby
—eating in lobby or elevator
—too many deliveries

None of these things are against the condo rules or their lease

General nuisance and quality of life issues. Noisy renters overcrowded into
Condo

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Then go for it. My own caution is that when you rent a condo you have to deal with many more property owners than a SFH. My stepson and three roommates are renting a DC condo this summer. All four young men are law students clerking or interning at great firms. The condo owners claims she gets 4-5 complaints about them every week. She acknowledges that the complaints are almost always BS, but she has to follow up on each one or the condo board will come after her.

Hmm. That's strange that is happening to your stepson (although law students love to get trashed) but it's a good point.

The complaints are things like:
—held the elevator for someone locking their unit door
—held the elevator to load groceries from their Costco run
—took bicycles or garbage in the regular elevator rather than the service elevator
—talking on cellphone in lobby
—eating in lobby or elevator
—too many deliveries

None of these things are against the condo rules or their lease

General nuisance and quality of life issues. Noisy renters overcrowded into
Condo

Only 4 people in a 2br condo is overcrowded?
Only the cell phone was a noise complaint.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP research the rental vacancy rate in the area that you are considering.

Very good suggestion, thanks!

And look at Zillow to see what similar properties are renting for.

[Anonymous]

Anonymous wrote:Condos are a good way to go, mine are in good neighborhoods for under 200k. They are smaller 2bd 2ba units with fees under 300 a month and with the 25% down as required on an investment property I cash flow 2-300 a month per unit. Look near metros or commuter routes in good school clusters. Tenant selection will make or break your business, and this is very much a business. Good tenants wont hassle you, will pay on time and will take care of your property. Establish a criteria for tenant selection and stick to it, keep your standards high and you will get good tenants. Keep rents reasonable and dont raise them if you have good tenants. My tenants are paying down my mortgages and the positive cash flow is set aside for any potential repairs. Great way to leverage your money and cheaper condos are easy to accumulate over time, with your cash flow snowballing over time with rent increases. As you build equity and are ready for something else, you a 1031 exchange to ladder up into higher value property and keep growing your wealth.

Ooh I want to pick your brain. Where did you find a condo with fees that low? The ones I am seeing are at least 600. How much did you pay for the unit and how much are you renting it for? Even with a high HOA I am finding the condos would be cash flow positive. And what kind of higher value properties would you ladder up to?

[Anonymous]

I have mine in the suburbs, mostly in Germantown and Gaithersburg. In Gaithersburg there are buildings in the Quince Orchard HS cluster close to Rio/Downtown Crown where you can purchase a 2bd 1ba or a 2bd 2ba for just under 200k, condo fees will be between 3-340 a month. With 25% down (required for an investment property) you can cash flow 200 to 225 a month.

These units are easy to rent because they are very close to 370 and a straight shot to metro, as well as near Downtown Crown and Rio, you can get 15-1525 a month in rent. My tenants are mostly young couples. The only issue is that these areas are heavily targeted by investors you have to move very quickly and even then you may lose out to an investor paying all cash.

In Germantown, look near the lake on Wisteria/Waring Station there are a few complexes there which have fees less then 300 a month and rents will be near 1450-1500 a month. These condos will be around 180-200k. Same issue here, they get picked up by investors very quickly.

With a 1031, im looking at selling condos I purchased in 2014-2015 and move into smaller single family homes in Rockville near Rockville and Twinbrook metro. These will typically be just under 500k and rent for upto 3k a month. I would also consider condos in NW DC near metro or on the Blue line to take advantage of the Amazon commuters without having to pay the insanity of Arlington prices.

[Anonymous]

Anonymous wrote:I have mine in the suburbs, mostly in Germantown and Gaithersburg. In Gaithersburg there are buildings in the Quince Orchard HS cluster close to Rio/Downtown Crown where you can purchase a 2bd 1ba or a 2bd 2ba for just under 200k, condo fees will be between 3-340 a month. With 25% down (required for an investment property) you can cash flow 200 to 225 a month.

These units are easy to rent because they are very close to 370 and a straight shot to metro, as well as near Downtown Crown and Rio, you can get 15-1525 a month in rent. My tenants are mostly young couples. The only issue is that these areas are heavily targeted by investors you have to move very quickly and even then you may lose out to an investor paying all cash.

In Germantown, look near the lake on Wisteria/Waring Station there are a few complexes there which have fees less then 300 a month and rents will be near 1450-1500 a month. These condos will be around 180-200k. Same issue here, they get picked up by investors very quickly.

With a 1031, im looking at selling condos I purchased in 2014-2015 and move into smaller single family homes in Rockville near Rockville and Twinbrook metro. These will typically be just under 500k and rent for upto 3k a month. I would also consider condos in NW DC near metro or on the Blue line to take advantage of the Amazon commuters without having to pay the insanity of Arlington prices.

Ugh, Germantown is so far from me (I live in PG). I was looking closer in at Bethesda but the HOA fees are pretty outrageous.