Is DC-metro a good area for Buy-And-Hold strategy?

[Weis Sherdel]

Hello BP community - I am a complete newbie and trying to embark on my first project. The education I have gained so far is pointing me to the direction of Buy-And-Hold strategy, but I have heard that DC area is not very good for this strategy as most, if not all, of the rental income goes to mortgage payment.  Contrast this to the 2% rule (which says that your rental income should be 2% of your home purchase price) or the 50% rule (which says that after dedicating half of your rental income to non-mortgage expenses and then paying your mortgage, you should be left with $100-$200 positive cash flow).  

For those investors living in DC (VA/MD/DC), would you agree that our area is not great for rental strategies as prices are so high? If so, how do you determine what geographical areas in the country to invest?

[Payam Dastmalchi]

My first question would be to define "DC area". 

I own a couple of rental properties in Northern VA (Herndon). Both properties are cash positive but I got lucky with them and would probably argue that Northern VA is not generally a good area for buy and hold. You will make some money but not much.

On the other hand, Washington DC itself is completely a different story and probably one of the hottest buy & hold markets in the country because of all the government workers and several universities in the area. I know several investors that are making $1500-2000 monthly profits on their properties. It is all about location and numbers. The going rate in NE, DC is anywhere between $1000-$1200 per room so you just need to look hard and have the assets to put down a decent down payment for the numbers to work. 

I am not familiar with Baltimore/MD so I don't have any suggestions there.