How to compare properties when inventory is low.

[Jessica Long]

Hello everyone! I'm Jessica and I'm new to Bigger Pockets and investing. 

My husband and I have begun the process of learning how to choose an investment property and are currently analyzing a property. We have an opportunity to buy a home off-market in the Prince George's County MD area. It meets many of the typical criteria (good school district, close to good job market industries, in good condition, and we are getting a very good deal on it-buying from family). 

Our challenge is that 

A. We have very few properties locally to compare it with since inventory is so low right now and 

B. We don't know how it will fare long-term since prices are inflated right now--ie. does it have longevity as a rental property down the road. I have no idea if we could continue to rent for the high amount that we could now, later. (I have run some market research at the numbers that make sense for the property to provide cash flow and have gotten many responses from potential tenants)

I have contacted some property managers to gain more insight in our market but was wondering about tips on how to further analyze this property. What else should we try before buying?

Thanks so much for any insight you can give us!

[Leo Watts]

@Jessica Long

So rental rates are fairly stable over time in the face of the 2008 recession. Covid hit rental properties nationally pretty hard, but well positioned properties and savvy landlords overall have done fine. If you have a nice property and are a good landlord you’ve mostly done fine (myself included) during Covid.

Take a look at this data. It’s analyzing median rental rates over time in PG county. You will notice that the median rental has stayed fairly steady over the last 15 years with incremental appreciation of rent and only a small drop due to the 08 recession. Vacancy rates did jump from 6 - 10 % but then dropped back down to 6% a year.

https://www.deptofnumbers.com/rent/maryland/prince-george's-county/

I think PG is probably one of the better places for a rental property near DC, depending on many factors. If your numbers work now, analyzed conservatively, I wouldn’t worry about a huge sudden lack of demand for a rental. Covid was probably the biggest disrupter of all time, and that hit mainly studios and one bedrooms and individual rooms for rent, less homes for families.