• image

Top 3 Reasons for Buying an Investment Property in DC

 

We’ve all heard the mantra that smart investing means putting your eggs in many baskets. For some people, that simply means creating an investment portfolio that includes different sectors. But savvy savers understand that one of the best long-term investments is real estate, especially in the District. Here are the top three reasons for buying a rental property in DC.

 

#1: Rates are low

Interest rates are at record lows for the purchase of a primary residence, and only slightly higher for investment properties loans (rates fluctuated between 3.75 and 4.0% in February 2015). These are conventional loans that typically require a down payment of 15-20% of the sales price, so you’ll need cash as well as a decent credit score.

 

When determining how much you can afford, keep in mind that the rent generated by the property will be included as potential income. “Generally, we allow a 75% contribution of future rental income, as determined by the lower of an existing lease or the rent as determined by an appraiser,” says Hillary Legrain of First Savings Mortgage.

 

This leads us to reason #2 to buy an investment property in DC.

 

#2: DC’s rental market is strong

Data shows that there is a steady flow of young adults moving to the District in search of good jobs. According to a recent report by RealtyTrac, the percentage of Millennials – defined as people born between 1977 and 1992 – increased by 50% in DC since 2007. Despite evidence that it makes better financial sense to buy versus rent, this demographic is more likely to rent, creating a reliable pool of potential tenants.

 

The average rent on a two-bedroom home in the District is about $2,800, which means that many landlords enjoy passive income on their investments. Even those who only break even on their rental properties (i.e., the rent is equal to the mortgage) are building equity, which can quickly translate to significant wealth in emerging neighborhoods.

 

#3: Home values continue to rise

Homes in many of DC’s neighborhoods have seen steady gains in the past few years, and in some areas those gains are significant. For example, the median sales price for a home in the zip code of 20002, which includes NE Capitol Hill, H Street, Trinidad, NoMa and Eckington, increased by 22.4% from January 2014 to January 2015. Some of these areas actually saw an increase of closer to 30% in that time period, with the strongest gains in the most northeastern areas of the zone.

 

What does this mean for potential buyers? Whether you’re buying an investment property or a primary residence, the DC housing market is a solid bet for your hard-earned funds.

 

Want to learn more? Contact me today!

 

Colleen Cancio

202.460.0828

 

  • image
  • image
  • image
  • image

 Colleen Cancio, GREEN

Colleen@WhereDoYouDwell.com


(202) 460-0828

 

Dwell Residential Brokerage DC 

Green Designation Realtor Capitol Area

 

 

Colleen's Email List