300k SHF in Gainesville, FL or 400k SFH in Fredericksburg, VA?

Question

Hi everyone! I am a newbie to real estate investment. I hope that I can learn more from your all help in this forum.

To get $2,500 rental per month, I can see a $300k SFH in Gainesville, FL and a $400k SFH in Woodbridge, VA. Which one I should choose to buy. These 2 houses have same rental, same expenses.

I am looking forward to receiving your analyzing and advice. Thank you all so much.

Jennifer Turner · Answer

As an active investor in Gainesville, I'd be glad to buy something in Virginia, or any other area, assuming the taxes and insurance costs are less there than the astromical amounts we pay here. Last I heard, Alachua, County has the highest property tax rates in the state of FL--maybe 2nd after Miami/Dade? And the city of Gainesville just tripled the mileage rate in 2023, so it's getting worse. Despite appreciation and annual rent increases, I'm actually cash-flowing less each year it seems.

Also, I used to think the same things as JD Martin above, but both Gainesville and Ocala have blown up, and there are so many more employers besides the university, bringing in many white collar jobs here. I frequently meet people from NY, CA, NV, Miami, and Orlando moving here not solely for jobs, but purely for the quality of life and outdoor lifestyle here. There will also always be a large population of Hari Krishna up in the City of Alachua, and that seems to draw many retirees and younger professionals of that faith to relocate here each year.

Winston Covington · Answer

Good morning Thu. Let’s begin with the basic considerations.,,

1. Location…which property is in the better area ? Stronger and more diverse economy, job and population growth, home affordability, better rated schools, lowest crime and 5 year growth plan ?

2. What are your long term investment goals ?  Positive cash flow, appreciation or a combination of the two ?

3. How do these properties compare financially with the true cost of ownership ?  Make sure to compare your true principal, interest, property tax and insurance payments. * Note * The cost of a good landlord Insurance policy had had steep increases lately.4. What is the condition of the property  ? Have you had inspections covering everything from the roof to the foundation And everything in between ? What are your Cap X expenses ?5. Have you interviewed local property managers to see what a fair rental amount should be ?  Have you found a good  property manager in the area that you’re comfortable with ?

I’m sure that other Investors with BP can add a lot more to this list but it will give you a good start.

Good luck.

Ika Sargeant · Answer

@Jennifer Turner is spot on because for those who think FL is a great, the costs are rising rapidly. Insurance for one has almost doubled. Taxes and HOA fees are coming up too. But for those who love VA, they have not seen the tax bill, and repair costs. A little problem with a property will leave you easily with a hefty bill and eat away at your returns. Surely VA will likely give you a higher appreciation over time. Go back to what your goal is with your this investment and see if the math works. Perhaps the best advice might be from someone who suggested pick the house that will be close to you so if anything you can self manage and learn. But I will also add if I had this 300K or 400K, I would go with VA because of location. In a downturn, you will likely to rebound faster than Gainesville(But keep in mind I have no in depth market of Gainesville- there could be a large company coming there and that would change everything)

JD Martin · Answer

With no other information to go from here, I'd go VA all day. You virtually cannot lose in the DC Metro area, your housing insurance is going to 1/3 or less what it will cost in FL, and there's probably a lot more appreciation upside in DC area than Gainesville, which only has UofF and nothing else - have you ever been to Gainesville? It's in the middle of freaking nowhere. I drive through it several times a year on my way to my STR in central Florida. Take away the university and it reverts to cow pastures in a year.

Chetan Malik · Answer

Woodbridge, VA all day.

Thu Minh Dam · Answer

Thank you Brandon. Your advice is very useful to me 😊

Thu Minh Dam · Answer

Thank you so much for your detailed information and helpful advice 😊

Brandon Wagner · Answer

My vote would be to pick a market you are closer to if the numbers look the same.

Also don't forget to factor in management.  Managing or at least being able to drive to the property yourself will save you at least 8% a year, probably closer to 10-12%.  You will also learn a lot quicker than if you outsource everything.

Ultimately if you can get a primary residence and rent out the rooms that is by far the best way to get started.  Better interest rates, lower downpayments, and more awareness of what is going on in your property for your first investment.

300k SHF in Gainesville, FL or 400k SFH in Fredericksburg, VA?

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