Rentals in Hampton Roads VA: Is competition good or bad?

Question

First off - I'm total noob so trying to learn a lot.

I'm looking to buy a condo or townhouse which I plan on keeping long term as a rental property.

From looking at Zillow I noticed that there are some large-ish neighborhoods where there are few to no properties for rent, and others where there are several properties for rent in a condensed area.

All things being equal, is it better to avoid areas where there's a high concentration of rental properties?

Ayana Miller · Answer

Welcome @Eric Schuster

My answer to your question about avoiding areas where there's a high concentration of rental properties is: It depends.

There are a lot of factors that can impact how many rentals are available at any given time and it can be hard (for me, at least) to know what "a lot of rentals" is without looking at trends (time series) over time.

I would argue that it in Newport News, in particular, areas where there are places for rent is a good indication of where investor activity is taking place.

Trends such a military spending/deployments, time of year (school  months versus summer months), and commercial activity (Tech Center/Whole Foods) all seem to impact the rental market in Newport News to a considerable amount.

Denbigh tends to have a considerable amount of condos and town homes for rent, but as @Edward Barnes mentioned, the HOA fees can eat into cash flow when you run the numbers. So it's important to run the numbers.

However, the Denbigh area also is very attractive to military service people because of its proximity to bases. So, yes, vacancies may be higher (due to military movements), but if the prices are right, then it can be a good strategy. I know of a few investors who do buy and holds primarily in Denbigh with condos as their primary strategy with great success.

A buy and hold strategy in Hilton would be excellent if you can find a duplex (or any multi-family), but they are difficult to come by. The challenge with Hilton (and many desirable areas of Newport News), is that the price of homes is such that anyone who would pay rent that would cover the cost of a town home (as a buy and hold investment strategy) in Hilton would also be very likely to want to own and can likely do so. In other words, very few things are for rent in Hilton because most of the properties are SFH and are owner-occupied.

Interested in other thoughts too! I grew up in Newport News, but I'm always curious about other's perspective.

Happy investing!

Eric Schuster · Answer

Thanks! I'm literally just starting to get into this. I own my own business but want to get into real estate a little bit. Looking at the Hilton area to see if I can get a decent property to rent there.