This week’s Q&A column is sponsored and written by Kim Peele and Hope Peele of The Peele Group and McEnearney Associates Realtors®, the leading real estate firm in Alexandria. To learn more about this article and relevant Alexandria market news, contact The Peele Group at 703-244-5852 or email [email protected]. You may also submit your questions to McEnearney Associates via email for response in future columns.
Question: Is this a good time to buy an investment property?
Answer: Happy 2021! We are all hopeful that it will be a very different year than 2020 and that the pandemic will be coming to a close. We are looking toward the future, and for many people interested in growing wealth that could mean buying a new home or investment property.
We have witnessed an extremely strong market for single family homes and townhomes in the D.C. metro area. Condos, on the other hand, have not sold quite as well this past year. While condos further out from D.C. are doing better, we currently have an excess of condos on the market closer in — probably due to people wanting more space. This translates into good news for investors.
For those who are looking for smart investments, owning a condo in the D.C. metro area is a dream investment, and this is the time to do it! David Howell, Chief Information Officer of McEnearney Associates, reports that while contract activity for condos is up in the entire D.C. metro area compared to this time last year, condo inventory in Alexandria is up 433% and condo inventory in Arlington is up 500%. Yes, those numbers are correct! There are a lot of condos on the market right now. We fully expect the condo market to come back strong at the end of this year; however, at the moment, this is a huge opportunity for cash buyers to take advantage of immediate rental income and long-term appreciation.
We have worked with many investor clients recently, and here is a recent example of how you can put your money to work for you: Buy a condo with cash for $175,000. The likely rent would be $1,550, less a condo fee of $421 a month, and 7% ($108.50) to a property manager. A property manager will manage your condo for you, reduce headaches and simplify your investment. This translates into an income of about $1,020 per month. Where else can you get that kind of return on your investment?
Another strategy that some investors are using is to buy a home outside of the metro area and rent it out with companies like Airbnb or VRBO for short-term periods. Some HOA and condo associations have rules against these types of rentals, but that is mostly closer to D.C. It is, of course, important to completely understand regulations before you make your decision to purchase. However, those who are willing and able to put in the effort have seen some amazing payoffs. Mountain and lake areas within 100 miles of D.C, are rising in popularity, and there are many great investment opportunities.
And for those still renting, this is the year to buy! Interest rates are still fantastic and down payments are much lower than most buyers realize. According to the 2021 Housing Forecast with Realtor.com, interest rates will remain low throughout the year but will rise toward the end of 2021. Why not put that rent money to work for you?
Buying real estate is an important part of building wealth. Whether it’s your first home or a long-term investment, real estate can be one of your most important purchases. For information on buying or selling investment properties or your own home and for making informed decisions, call The Peele Group today!
We will be hosting a Virtual Buyer Happy Hour on February 2, 2021. We will be joined by a lender and a home inspector and will answer all of your questions on the home-buying process. For an invitation, please send an email to [email protected].
For a professional, confidential evaluation of your home, please call or text us at 703-244-5852. We have a Dream Team of experts — contractors, staging advisors, photographers and more — to help make the right preparations, minimize stress and maximize profits!
Kim Peele is a licensed real estate agent with McEnearney Associates, Inc., lives in Old Town and works in Virginia, D.C. and Maryland. She and her daughter Hope Peele are The Peele Group. Kim is a second-generation Realtor and fourth-generation Washingtonian and is dedicated to helping owners through the challenges of selling their home.
If you would like a question answered in our weekly column or to set up an appointment with one of our Associates, please email: [email protected] or call 703-549-9292.
McEnearney Associates Realtors®, 109 S. Pitt Street, Alexandria, VA 22314. www.McEnearney.com Equal Housing Opportunity. #WeAreAlexandria