Buying in DC/NoVA area with intent to move in 1-2 years? Crazy?

Question

Hi all,

I live in the DC/NoVA area and have been here a long time, but am considering moving to the west coast at some time in the next 2 years.  (I've said this for years though, so no idea if I'll been decisive enough to make it happen).

Why am I considering buying anyway?

1. I'm really, really tired of renting

2. Speculation on Amazon HQ2 coming here.  While this is speculation, vegas odds seem quite good, and even if they don't come this area has been quite stable.

On my budget, I most likely could afford at most something like a 2 bedroom condo.   The plan would be to buy and hold, and if I move rent it out while I am away using a property management company.  While living in it I would rent out to 1 person to help pay the mortgage.

I know I have to run my own numbers, but I'm assuming that at best I'd be close to breakeven when accounting for mortgage + HOA fees ($400-$600 is common) + taxes vs. rental income.

Does it even make sense to aim for break-even for investments?

I'm new to RE and devouring material here, but wanted to get a placeholder discussion in here to mostly discuss if this makes sense at all.

Bill B. · Answer

Cool, I did not know that. They constantly change in Las Vegas and Minnesota. And by constantly change I mean constantly from allowing to not allowing. NEVER from not allowing to allowing.

Russell Brazil · Answer

Rules changes on rentals in condos in this area are essentially non existant. They have either always allowed rentals or never allowed them.

Bill B. · Answer

Not being able to buy where you are going hurts my option 2.

Option 1 gets hurt because you selling costs will probably eat up any gains possible in 2 years so you won’t have the option of selling or access to the cash you invested. Once you’ve decided that you’re ok with long distance landlording there are just a lot of options that might work out better than an expensive east coast condo. (You might be able to buy a 4plex in some markets for less than that condo?)

What’s your plan if a year or two from now, before you move out the condo association says no more rentals? They MIGHT grandfather in existing rentals but you’d be living there not renting at the time. Now you have a place you have to sell to move. If prices are down or interest rates are up, or both, or there’s a condo assessment you might not be able to move.

It just sounds like you’re sinking money in to a deal to limit your future options.

Ps. Take everything you read on the internet, even from me, with 2 grains of salt. It’s your life. Better you screw it up than some guy you don’t know.

Mike Andrews · Answer

I don't disagree that it will be challenging, but could you help point out any of the non-obvious challenges I'd have to deal with?  (I assume requiring property management and finding new tenants, dealing with multi-state taxes, etc)

Also, the new location would be SF, not vegas, so buying in the new location isn't even an option.

Russell Brazil · Answer

You are much more likely to increase your balance sheet over time having bought in a high demand market like DC than in a secondary market.  Also with a little patience, with the huge rent growth that DC has, you will in time cash flow more in DC...it just takes patience. I have several properties that cash flow at $1,000 a month with the rent growth here that were barely break even a decade ago. I also own a couple of places in secondary markets where my rents have stagnated for a decade.

Bill B. · Answer

The odds of you buying, moving in 2 years and keeping that property as a rental successfully is higher than 0%, but not significantly. A SLIGHTLY, better plan would be to buy the vegas place today as a rental with the idea of moving in to it within a couple years if you’re above 65% chance you’ll move.

Neither of these 2 options excite me, but I’m trying to work within the options you gave me.