New Investor Looking to House Hack near Washington D.C.!

[Alex Petsopoulos]

Hey BiggerPockets! I am a senior graduating from Virginia Tech in May and getting married in November :)  For the last six months, I've analyzed a real estate deal every day, listened to over 100 BP podcasts, read The House Hacking Strategy, and I'm currently reading Long-Distance Real Estate Investing.

My fiance and I are hoping to set up our first house hack sometime before we get married, and are looking in this purple area!

Where would you all recommend investing? I have been looking at single-family homes in the Fort Washington area, and the numbers seem to work out alright there. Does anyone have experience in this area? Does anyone know what room rentals are worth in Fort Washington? 

My fiance and I care less about how the numbers work while we're living in the property and care more about how the numbers will work after we move out in one year. The plan is to move once a year for five years, turning each former house hack into a rental property when we leave. We have nearly no home repair/renovation experience, but we've put a bunch of tools on our wedding registry and we love to learn! Really looking forward to meeting some fellow DMV investors and connecting with other BP members! :)

[Russell Brazil]

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Quote from @Alex Petsopoulos:

Quote from @Russell Brazil:

Quote from @Alex Petsopoulos:

Quote from @Russell Brazil:

Quote from @Alex Petsopoulos:

Hey BiggerPockets! I am a senior graduating from Virginia Tech in May and getting married in November :)  For the last six months, I've analyzed a real estate deal every day, listened to over 100 BP podcasts, read The House Hacking Strategy, and I'm currently reading Long-Distance Real Estate Investing.

My fiance and I are hoping to set up our first house hack sometime before we get married, and are looking in this purple area!

Where would you all recommend investing? I have been looking at single-family homes in the Fort Washington area, and the numbers seem to work out alright there. Does anyone have experience in this area? Does anyone know what room rentals are worth in Fort Washington? 

My fiance and I care less about how the numbers work while we're living in the property and care more about how the numbers will work after we move out in one year. The plan is to move once a year for five years, turning each former house hack into a rental property when we leave. We have nearly no home repair/renovation experience, but we've put a bunch of tools on our wedding registry and we love to learn! Really looking forward to meeting some fellow DMV investors and connecting with other BP members! :)

This really depends on your price point. More moderate prices SFH in Ft Washington or rowhouse/multi in Deanwood. More expensive price point Capitol Hill multifamily. SFH in Alexandria.

Hey @Russel Brazil, thanks for the reply! We're definitely thinking about starting at a lower price point for our first property and then maybe moving into the higher price but higher rent areas for our second. Is this a good strategy? Downpayment shouldn't be an issue, we're both engineers and should be earning a good wage. If we've got the funds, does it make sense to buy a more expensive property? We originally thought about Alexandria, but I just couldn't find a way in my analysis to make the numbers work there.

 We are in a rising interest rate environment.  So Im trying to lock in as much low interest debt as I can.  The era of sub 4% rates has come to an end, and I think we will never see it again in our lifetimes. 

I know, it kills me that I won't be graduated and start my higher-earning job until this summer!! I'll probably have missed the low-interest rate train by just a few months. I remember in your BP podcast episode you were talking about investing in areas with high rent growth to make the numbers work in our expensive market. If you were going to house hack anywhere in the map I posted, with the hopes of cash flowing after you move out of the property, where would you do it? 

 Shaw, Columbia Heights, Noma, Kingman Park, Capitol Hill. Im actually planning on purchasing a multifamily in that stretch of the city this year.

Oh okay, so you would definitely go into DC proper then. I originally considered purchasing multifamily there, but everything seems to be in the millions of dollars. Are you buying a rowhome and then turning it into a multi? With a quick check on Zillow, it doesn't look like there's anything in Capitol Hill or NOMA that would even remotely cashflow. My fiance and I should have a combined income of around $150k, how expensive would you go if you were in the same position? I really appreciate your time and advice :)

 All properties (with paying tenants) cashflow. I'll say it again....all properties cash flow.

Now when you say they dont cash flow....it is probably not the property you are talking about that isnt cash flowing, but rather the debt service that is causing the issue.  If you are too highly leveraged, then your debt service may create a negative cash flow, but it is vitally important to understand that the issue isnt with the property, it is with the individual person taking on a highly leveraged position.

There are ways to improve the amount of rent a property can yield in certain circumstances as well.  There are 4 major ways to look at how much a unit can rent for in the DC area, all with widely drastic rent amounts.

1) Market Rate Rent

2) Section 8 Rent

3) Rent By the Room

4) Corporate Rental.

Each will yield a different rental amount, and will have pluses and minuses based on the specific location.

Just as an example, in Kingman Park on a rowhouse, you might get $4,000 a month in a Market Rate Rental, but $5,757 on a section 8 rental on the same house. So in that neighborhood, Id be doing Section 8 for instance.