Reply to WWYD: keep DC rowhouse in Shaw as investment?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]I would just because the cash flow is so positive on it to start.  I know people who've kept their first house in DC to rent when the rent was just barely covering the mortgage at the beginning, and they look like geniuses 5 years down the line.

You can always sell it later if you find it's too big a hassle.[/quote]

But what if the value drops and you lose 100k in equity?  It’s possible.  [/quote]

This isn't some 4 BR, 2.5 BA on an exurban cul-de-sac.  It may not increase as much in value, but it's unlikely to decrease, and it's still generating great rental returns.  [/quote]

It can still drop.  [/quote]

Thorough analysis there.  Yes, it's possible.  But there is literally no investment that is guaranteed to not drop.  Keeping it in cash will even effectively drop because of inflation.  But rental that is cash positive in a close-in neighborhood that has rapigly gentrified is a pretty good bet.

Also, think of it this way - for every $4000 rental payment, OP gets $2000 in cash, and $1000 is used to pay her mortgage.  Thus, even if the property value drops $100,000, which is unlikely, she's protected because someone else is paying to increase her equity.

They probably have about $400,000 in equity now, if they sell.  But say they keep it and rent it for $4000 - $2000 pays the mortgage ($1000 principal and $1000 interest), $1000 for expenses, and $1000 profit.  That's effectively $2000/month (money paid to principal and profit).  Even if it drops in value $100,000 in 5 years (and that's very unlikely), they're ahead of the game by $20,000.[/quote]

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