Anonymous
Post 12/02/2020 07:59     Subject: $400K investment property with $2K monthly rent - worth to buy? How about the 1% Rule?
Anonymous wrote:I’m in Mclean. TH selling for 700-900k renting for 3000-4000/month have been snatched away by investors. I guess people just need somewhere to park cash for some safe return. None of them are near the 1% rule at all.

We're eyeing this situation for ourselves, but we're not overly enthusiastic. But the answer is for some diversity in our portfolio which has been all stocks, mutual funds and bonds. We have the cash and reserves plenty but it's still a hard sell in our minds.
Anonymous
Post 12/02/2020 07:47     Subject: $400K investment property with $2K monthly rent - worth to buy? How about the 1% Rule?
*700-900k. Sorry
Anonymous
Post 12/02/2020 07:47     Subject: $400K investment property with $2K monthly rent - worth to buy? How about the 1% Rule?
I’m in Mclean. TH selling for 700-700k renting for 3000-4000/month have been snatched away by investors. I guess people just need somewhere to park cash for some safe return. None of them are near the 1% rule at all.
Anonymous
Post 12/02/2020 01:32     Subject: $400K investment property with $2K monthly rent - worth to buy? How about the 1% Rule?
bethesdawings wrote:We are thinking about buying our first investment property. Please advise if we should follow the 1% rent rule (rent/purchase-price)?

Our realtor sent us a couple rental properties (townhouse) in Alexandria VA. The sale prices are all around $400K with monthly rental income $2100-$2000. These properties were sold at about $330k in 2018. The price has been increased by $60K-$70k within 2 years. I research the nearby area in VA. Looks like the rent/value ratio are all less than 1%. For example, in Fall Church, Arlington & Alexandria, a rental property worths $600K is rented for about $3000/month; $400K property is rent for about $2000+.

I simply couldn't find any investment property that can get 1% rent. Are people making money on renting out these $400K~$600k properties? Will the $400K townhouse (HOA $100/month) bring in positive cash flow? We are thinking about getting a mortgage of $300K (2.875% 30 years). The PITI will be around $1400/month.

Thanks!


That mortgage payment with insurance and taxes sounds very low for a $300K loan. We had a lower interest rate and ours was still about $2K. It doesn't make a lot of sense when you look at cash down, mortgage payment, insurance, taxes and maintenance plus HOA.
Anonymous
Post 12/02/2020 00:22     Subject: $400K investment property with $2K monthly rent - worth to buy? How about the 1% Rule?
Anonymous wrote:My condo I paid 290k cash in 2013 and rent it for $2,250. I have no property manager but on board so know what goes on.

My common charges are $350 and taxes are $300. So I clear $1,600 a month well maybe $1,550 if you add on insurance

I have a few investors in building but all bought cash when units were between 230k and $300k. Once units broke 300k only primary owners bought in building. I get notice when folks take a mortgage as I am treasurer and no investor took a loan.

10x rent roll used to be a winner. I over paid as I paid 290k when 270k was the winner. My building is at 13x rent roll now and we have no investors. They bailed around 23x rent roll


Why would you pay all cash for a single unit instead of leveraging your money? Tying up the full 290k for only $1550/month kind of sucks.
Anonymous
Post 12/01/2020 23:48     Subject: Re:$400K investment property with $2K monthly rent - worth to buy? How about the 1% Rule?
The bottom line is that it is tough to generate any positive cash flow on rentals in Northern Virginia. If you are buying another house in the area because you want to upgrade, then renting out your old house can make sense if you are handy. I would probably just dump the extra money into a REIT that is in a Roth, and maybe the rest in a US Total Market mutual fund. Also, be wary about the numbers that people are putting out there, as none of the numbers so far are realistic.
Anonymous
Post 12/01/2020 23:00     Subject: Re:$400K investment property with $2K monthly rent - worth to buy? How about the 1% Rule?
Have a hard time believing you'll do better investing that $100k+ in a rental townhouse than VTSAX when you consider maintenance, vacancies, management, etc.
Anonymous
Post 12/01/2020 22:51     Subject: $400K investment property with $2K monthly rent - worth to buy? How about the 1% Rule?
bethesdawings wrote:We are thinking about buying our first investment property. Please advise if we should follow the 1% rent rule (rent/purchase-price)?

Our realtor sent us a couple rental properties (townhouse) in Alexandria VA. The sale prices are all around $400K with monthly rental income $2100-$2000. These properties were sold at about $330k in 2018. The price has been increased by $60K-$70k within 2 years. I research the nearby area in VA. Looks like the rent/value ratio are all less than 1%. For example, in Fall Church, Arlington & Alexandria, a rental property worths $600K is rented for about $3000/month; $400K property is rent for about $2000+.

I simply couldn't find any investment property that can get 1% rent. Are people making money on renting out these $400K~$600k properties? Will the $400K townhouse (HOA $100/month) bring in positive cash flow? We are thinking about getting a mortgage of $300K (2.875% 30 years). The PITI will be around $1400/month.

Thanks!


You can get well over 1%... in downtown Baltimore. Not sure if you are interested in that.
Anonymous
Post 12/01/2020 22:48     Subject: $400K investment property with $2K monthly rent - worth to buy? How about the 1% Rule?
Anonymous wrote:My condo I paid 290k cash in 2013 and rent it for $2,250. I have no property manager but on board so know what goes on.

My common charges are $350 and taxes are $300. So I clear $1,600 a month well maybe $1,550 if you add on insurance

I have a few investors in building but all bought cash when units were between 230k and $300k. Once units broke 300k only primary owners bought in building. I get notice when folks take a mortgage as I am treasurer and no investor took a loan.

10x rent roll used to be a winner. I over paid as I paid 290k when 270k was the winner. My building is at 13x rent roll now and we have no investors. They bailed around 23x rent roll


Are you actively trying to be impossible to understand ? Or am I super ignorant? What is rent roll?
Anonymous
Post 12/01/2020 22:37     Subject: $400K investment property with $2K monthly rent - worth to buy? How about the 1% Rule?
My condo I paid 290k cash in 2013 and rent it for $2,250. I have no property manager but on board so know what goes on.

My common charges are $350 and taxes are $300. So I clear $1,600 a month well maybe $1,550 if you add on insurance

I have a few investors in building but all bought cash when units were between 230k and $300k. Once units broke 300k only primary owners bought in building. I get notice when folks take a mortgage as I am treasurer and no investor took a loan.

10x rent roll used to be a winner. I over paid as I paid 290k when 270k was the winner. My building is at 13x rent roll now and we have no investors. They bailed around 23x rent roll
Anonymous
Post 12/01/2020 20:18     Subject: $400K investment property with $2K monthly rent - worth to buy? How about the 1% Rule?
I’m strongly opposed to residential rental property, so take my input with a grain of salt. Property management is a ton of work if you do it yourself, expensive if you outsource it and with a $700 a month gap between rental and mortgage, you don’t have a lot of wiggle room. What if it’s empty for a couple of months? What if your dishwasher breaks? It just seems like you’re doing a lot of work for very little return, and I don’t think you’re going to see exponential growth in value on a $400,000 townhouse. Maybe will it be worth a ton more in 20 years, but so would money that you put in a mutual fund and it would be so much less effort.

I say this as someone who had managed both commercial and residential rentals in the past.
Anonymous
Post 12/01/2020 20:11     Subject: $400K investment property with $2K monthly rent - worth to buy? How about the 1% Rule?
Investing in real estate is for people who have cash to invest -- not for regular people to get overly leveraged!
Anonymous
Post 12/01/2020 19:57     Subject: $400K investment property with $2K monthly rent - worth to buy? How about the 1% Rule?
You will also need a larger downpayment in addition to higher rates which will both affect cash flow. We bought two SFHs in the mid-$300Ks in 2016 and 2017, rates are 4 and 4.5 so monthly is $1700 and $1800. We get $2350 and $2325 for them now.
Anonymous
Post 12/01/2020 19:05     Subject: $400K investment property with $2K monthly rent - worth to buy? How about the 1% Rule?
How do you get such low rates for rental property?
bethesdawings
Post 12/01/2020 19:01     Subject: $400K investment property with $2K monthly rent - worth to buy? How about the 1% Rule?
We are thinking about buying our first investment property. Please advise if we should follow the 1% rent rule (rent/purchase-price)?

Our realtor sent us a couple rental properties (townhouse) in Alexandria VA. The sale prices are all around $400K with monthly rental income $2100-$2000. These properties were sold at about $330k in 2018. The price has been increased by $60K-$70k within 2 years. I research the nearby area in VA. Looks like the rent/value ratio are all less than 1%. For example, in Fall Church, Arlington & Alexandria, a rental property worths $600K is rented for about $3000/month; $400K property is rent for about $2000+.

I simply couldn't find any investment property that can get 1% rent. Are people making money on renting out these $400K~$600k properties? Will the $400K townhouse (HOA $100/month) bring in positive cash flow? We are thinking about getting a mortgage of $300K (2.875% 30 years). The PITI will be around $1400/month.

Thanks!