As most of the posts have pointed out, the physical real estate investment is no longer attractive due to prices being so high now. If you want exposure out of stocks and into real estate, consider investing in passive real estate crowd sourcing investment vehicles like Fundrise. You can get good return without the headaches of dealing with tenant/property/taxes. Fundrise also allows you to invest all over the county rather than the overpriced areas like DC.

Instead of NOVA, look for a college town that is not overbuild like Blacksburg. Still pretty good demand and a TH of $260-280K could easily rent for $2200-2400.

Rental yield is pretty poor in NOVA but appreciation might be much better.

Rental property is a good investment for people above a certain income because of the tax advantages which should not be under-estimated.

Thank you all for sharing your opinions! I really appreciate it!

We can pay cash to purchase investment property. However, many people said that we should leverage the money. Both my husband and I have stable incomes. It is not a problem for us to get mortgage loans. With the same amount of cash as downpays, we can purchase more properties. That’s why we are thinking about using leverage. I appreciate the insight of investing the money into mutual funds. It is all about diversity of the investment.

As a mortgage broker, I have seen quite a few people with 120+K annual income own 6+ rentals. Many rentals have mortgages, yet still generate positive cash flow. Hence, they can continuously use their W2 income to qualify for a new mortgage loan. With the appreciation of investment property value, they built up a substantial amount of equity over years. Of course, the bottom line is to have positive cash flow? (Some even said that, initial negative cash flow is also doable, thinking about the paid off principle and the property value appreciation)

The reason our realtor recommended rental properties in VA is that VA is more landlord friendly. I know many friends have rentals in MD. Realtor told me that in MD and DC, it is super hard to evict the renters and one might end up selling the property real cheap. Is that bad?

Please share your experience of where is a good place to get an investment property? Or it is simply a bad time to buy for now? Thanks!

Anonymous wrote:you'll make better money in stock market vs rental market. also less headache

Agree. Only wants who make money are pros who pay cash. I went to foreclosure auction a few times and folks with cash picked up dirt cheap small condos, coops and bungalows in second tier areas paid cash, did cheap Handiman fixes and rented out did fine.

But buying a property at full market price with a mortgage at all time peak prices with rents falling. AKA 2020 is dumb.

you'll make better money in stock market vs rental market. also less headache

Anonymous wrote:

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?

$2,250 a month so I get $27,000 a year rent - $9,000 covers HOA, taxes and insurance. That is consider good. But even then stocks are better unless you also get home appreciation.

Anonymous wrote:

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.

Thanks for pointing out! You are right. I miscalculate the property tax and insurance. For 2.875% 30yrs fixed, $300k loan with $400K property value, the PITIA is about $1800/month. For $2000 rent, I fear it will not bring positive cash flow, thinking about the maintenance and vacancy.

Anonymous wrote:How do you get such low rates for rental property?

I am a mortgage broker. We have lenders offer $2.875% 30yrs fixed for $300K 75%LTV investment purchase. That's why I know for sure we can get $2.875%.