Investment property - best location?

[Anonymous]

Anonymous wrote:Condo in newer building along the Orange Line in Arlington.

Note that condo fees are higher but you can deduct some of the maintenance costs from your Fed tax as well as depreciating the condo.

HOA fees are lower because you are responsible for exterior elements such as roofs.

For $600K you can get an okay 2 BR 2 Bath that will rent quickly for $2,500.

I'm with the OP on this. I don't get why you people are enamored with condos as rental units given the HOA fees. Never mind that you can deduct the HOA fee, any fee reduces your profit and cash flow. HOA fees do not apply to SFH (most of the time and when they do, it's usually fairly nominal for access to a community pool, etc). So unless a condo commands more in rent than a SFH to offset the HOA fee, I don't see why a potential investor would lean towards a condo vs a SFH. I'm strictly speaking from a monetary standpoint because I fully recognize that from a maintenance and repair perspective, a SFH may have more issues that a landlord has to deal with compared to a condo.

[Anonymous]

Realtor here. I own only investment condos. I have seen what tenants do to single family homes and how much it costs to bring them back into shape each time a tenant leaves. Tenants can do less damage to a condo and the condo fees cover many maintenance costs that you would have to pay in a single family home or a townhouse with a lower HOA fee.'

[Anonymous]

Anonymous wrote:Condo in newer building along the Orange Line in Arlington.

Note that condo fees are higher but you can deduct some of the maintenance costs from your Fed tax as well as depreciating the condo.

HOA fees are lower because you are responsible for exterior elements such as roofs.

For $600K you can get an okay 2 BR 2 Bath that will rent quickly for $2,500.

The mortgage on $600K loan is going to be around $3k/month or more. Plus condo fees.

[Anonymous]

Anonymous wrote:Realtor here. I own only investment condos. I have seen what tenants do to single family homes and how much it costs to bring them back into shape each time a tenant leaves. Tenants can do less damage to a condo and the condo fees cover many maintenance costs that you would have to pay in a single family home or a townhouse with a lower HOA fee.'

The problem with condos is that they compete with the apartments in buildings continually being built all over the area. And each new building brings new amenities -- amenities that your condo building may not have.

SFHs and THs don't have anything like this to compete with so they will always be in demand.

With all of the new apartment buildings coming online and are in the pipeline, I think we are very close to oversaturation.

If you have a SFH in a close-in suburb renting for $2500 on up, you're not renting to the class of tenants who are going to mess your property up.

[Anonymous]

Anonymous wrote:

If you have a SFH in a close-in suburb renting for $2500 on up, you're not renting to the class of tenants who are going to mess your property up.

Landlord here with SFH in Bethesda renting for above $2500. About to evict tenant for non-paymetn of rent. Paperwork submitted to judge and should have the approval in 1-2 weeks.

[Anonymous]

Anonymous wrote:Realtor here. I own only investment condos. I have seen what tenants do to single family homes and how much it costs to bring them back into shape each time a tenant leaves. Tenants can do less damage to a condo and the condo fees cover many maintenance costs that you would have to pay in a single family home or a townhouse with a lower HOA fee.'

Defensive play. Makes sense. But what are these "maintenance costs" that you are referring to thar are covered by the HOA fees?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Condo in newer building along the Orange Line in Arlington.

Note that condo fees are higher but you can deduct some of the maintenance costs from your Fed tax as well as depreciating the condo.

HOA fees are lower because you are responsible for exterior elements such as roofs.

For $600K you can get an okay 2 BR 2 Bath that will rent quickly for $2,500.

The mortgage on $600K loan is going to be around $3k/month or more. Plus condo fees.

OP from earlier in the thread:
"OP here. I should have clarified that I am going to get a mortgage and put $200k down so I figure I should be able to afford a property of around $600k."

[Anonymous]

Anonymous wrote:

Anonymous wrote:Realtor here. I own only investment condos. I have seen what tenants do to single family homes and how much it costs to bring them back into shape each time a tenant leaves. Tenants can do less damage to a condo and the condo fees cover many maintenance costs that you would have to pay in a single family home or a townhouse with a lower HOA fee.'

Defensive play. Makes sense. But what are these "maintenance costs" that you are referring to thar are covered by the HOA fees?

Not the PP but I have a rental condo. Here are the maintenance costs that are covered in condo fee: all exterior stuff, chimney cleaning in each unit, condensate line cleaning 2x/year in each unit, various plumbing issues (since it may be a multi-unit issue).

I have a SFH rental and a condo rental. Condo maintenance is much less.

[Anonymous]

I think it would be hard to buy a $600,000 house and then rent it out for $3000 per month to cover costs. Seems easier to buy a $200,000 property and rent it out for over $1000.

[Anonymous]

Another agent perspective here. I live in DC and own several rentals, one condo, two townhouses. First things first:

1) Do buy somewhere close to where you live if you are going to manage it, especially if it's a house. Way harder to go see what the issues are if you have a regular job and need to act fast (which you should when there are issues).

2) Buy where you think you will see the most appreciation, not necessarily the 'nicest' neighborhood. A huge reason for owning real estate is the appreciation in value, not just the income stream.

3) Condos are way easier than houses to manage, even small townhouses. Yes, you have a condo fee, but the DO pay for something. The fees are deductible against your rental income. With a house, you have to save for bigger repairs (roof, pointing brick, etc.). With a condo you don't. It will all eventually catch up with you. The trick with condos these days is to find a building with no rental restrictions. You don't want to be left holding an asset you can do nothing with. If there are any murmurs at all about putting restrictions on, run. And this can change with every change of board members - what they push for. It's always a risk. On the other hand, there is no yard, exterior maintenance, roof issues etc. And tenants rarely take care of things like yards, even when it's in the lease. Determine which you will do better with.

4) Look for areas that will be easy to rent. Near a university? Great! Military bases too could be good, but you're also guaranteed turnover. You might have less problems with that set though.

5) DC does have strong tenant laws. MD too. VA is pretty pro-landlord. I have found that as long as I do a good job checking my people, there aren't issues, but you have to do this up front and not just say, "hey, he seems like a great guy with a good job, great!". CHECK THEM. I think people who know you're going to do this who are sketchy dont' really bother to apply.

6) I would not necessarily buy in an area where there's lots of competition coming onto the market

7) Might seem counter-intuitive, but don't buy new build or flip properties. Likely too many problems with them your tenant will have to deal with. At least be careful here - if it's a reputable builder, maybe.

8) I know you're not there yet, but meeting with an agent who has experience with rentals and investors will be your biggest help. Bigger than this board. Easier to talk about specifics of your situation and what makes sense for you and direct you the right way.

[Anonymous]

20:53 here - I realize how pro-condo I sounded. Because I have the money to pay for bigger ticket items myself if I have to, I don't worry about the houses as much, so in the long view, I actually prefer them. I don't worry about the houses as an investment the way I might about the condo. But the condo is just way easier to manage. If you're new to this, it may be where you want to start. Maybe.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Condo in newer building along the Orange Line in Arlington.

Note that condo fees are higher but you can deduct some of the maintenance costs from your Fed tax as well as depreciating the condo.

HOA fees are lower because you are responsible for exterior elements such as roofs.

For $600K you can get an okay 2 BR 2 Bath that will rent quickly for $2,500.

The mortgage on $600K loan is going to be around $3k/month or more. Plus condo fees.

OP from earlier in the thread:
"OP here. I should have clarified that I am going to get a mortgage and put $200k down so I figure I should be able to afford a property of around $600k."

Ha!

Missed that

[Anonymous]

Anonymous wrote:Another agent perspective here. I live in DC and own several rentals, one condo, two townhouses. First things first:

1) Do buy somewhere close to where you live if you are going to manage it, especially if it's a house. Way harder to go see what the issues are if you have a regular job and need to act fast (which you should when there are issues).

2) Buy where you think you will see the most appreciation, not necessarily the 'nicest' neighborhood. A huge reason for owning real estate is the appreciation in value, not just the income stream.

3) Condos are way easier than houses to manage, even small townhouses. Yes, you have a condo fee, but the DO pay for something. The fees are deductible against your rental income. With a house, you have to save for bigger repairs (roof, pointing brick, etc.). With a condo you don't. It will all eventually catch up with you. The trick with condos these days is to find a building with no rental restrictions. You don't want to be left holding an asset you can do nothing with. If there are any murmurs at all about putting restrictions on, run. And this can change with every change of board members - what they push for. It's always a risk. On the other hand, there is no yard, exterior maintenance, roof issues etc. And tenants rarely take care of things like yards, even when it's in the lease. Determine which you will do better with.

4) Look for areas that will be easy to rent. Near a university? Great! Military bases too could be good, but you're also guaranteed turnover. You might have less problems with that set though.

5) DC does have strong tenant laws. MD too. VA is pretty pro-landlord. I have found that as long as I do a good job checking my people, there aren't issues, but you have to do this up front and not just say, "hey, he seems like a great guy with a good job, great!". CHECK THEM. I think people who know you're going to do this who are sketchy dont' really bother to apply.

6) I would not necessarily buy in an area where there's lots of competition coming onto the market

7) Might seem counter-intuitive, but don't buy new build or flip properties. Likely too many problems with them your tenant will have to deal with. At least be careful here - if it's a reputable builder, maybe.

8) I know you're not there yet, but meeting with an agent who has experience with rentals and investors will be your biggest help. Bigger than this board. Easier to talk about specifics of your situation and what makes sense for you and direct you the right way.

OP here. Catching up on the thread and appreciate your guidance and counsel. What neighborhoods did you choose for your 3 investment properties?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Another agent perspective here. I live in DC and own several rentals, one condo, two townhouses. First things first:

1) Do buy somewhere close to where you live if you are going to manage it, especially if it's a house. Way harder to go see what the issues are if you have a regular job and need to act fast (which you should when there are issues).

2) Buy where you think you will see the most appreciation, not necessarily the 'nicest' neighborhood. A huge reason for owning real estate is the appreciation in value, not just the income stream.

3) Condos are way easier than houses to manage, even small townhouses. Yes, you have a condo fee, but the DO pay for something. The fees are deductible against your rental income. With a house, you have to save for bigger repairs (roof, pointing brick, etc.). With a condo you don't. It will all eventually catch up with you. The trick with condos these days is to find a building with no rental restrictions. You don't want to be left holding an asset you can do nothing with. If there are any murmurs at all about putting restrictions on, run. And this can change with every change of board members - what they push for. It's always a risk. On the other hand, there is no yard, exterior maintenance, roof issues etc. And tenants rarely take care of things like yards, even when it's in the lease. Determine which you will do better with.

4) Look for areas that will be easy to rent. Near a university? Great! Military bases too could be good, but you're also guaranteed turnover. You might have less problems with that set though.

5) DC does have strong tenant laws. MD too. VA is pretty pro-landlord. I have found that as long as I do a good job checking my people, there aren't issues, but you have to do this up front and not just say, "hey, he seems like a great guy with a good job, great!". CHECK THEM. I think people who know you're going to do this who are sketchy dont' really bother to apply.

6) I would not necessarily buy in an area where there's lots of competition coming onto the market

7) Might seem counter-intuitive, but don't buy new build or flip properties. Likely too many problems with them your tenant will have to deal with. At least be careful here - if it's a reputable builder, maybe.

8) I know you're not there yet, but meeting with an agent who has experience with rentals and investors will be your biggest help. Bigger than this board. Easier to talk about specifics of your situation and what makes sense for you and direct you the right way.

OP here. Catching up on the thread and appreciate your guidance and counsel. What neighborhoods did you choose for your 3 investment properties?

Not PP, but a low-cost (under 250k real estate "investor" bought a row house in Columbia Heights in 2002, a rowhouse in Petworh in 2003, a gigantic rowhouse in Bloomingdale in 2004, a bottom of market home in Brookland in early 2009, a rowhouse in eckington in 2010, and now I'm looking at multi-units in metro-accessible Ward 8 and 7 after wishing I had bought those in all these locations previously. My properties, after paying mortgage, generate about 8k in income a month now, before taxes.

I'd also echo previous commenters on diversifying income. Be a partner in a restaurant or a jiffy lube? Buy frack-able land in PA or timberlands in Georgia?

We are working now to diversify outside of traditional real estate to build long tern wealth and equity.

[Anonymous]

Condo near metro in northern virginia. Trust me, a condo is far better as a rental than a townhouse or single family house. There is so much less maintenance and potential liability with renting a condo, plus the building will handle most maintenance issues so you don't have to deal with them. Good luck!