Ready to Start Investing in DC

[Jose Vazquez]

Hi everyone!

I've been perusing the BP site and listening to tons of podcasts for a few months now and it's finally time to get going. I live with my wife and six-year-old son in Washington, DC. I'm a systems engineer and commute at least 45 minutes to/from work every day. I have absolutely no passion for the job and am ready for a new chapter. We're currently renting and are looking to finally purchase our first property here. My goal (for starters) is to generate at least $5k/month of passive income so I can eventually quit my job and invest more/spend more time with the family.

I'm intrigued by house hacking and it seems like the most logical place to start, but here are a few challenges we're facing right off the bat. My son is going to a great school and he loves it. We want to keep him in that school, so our search is restricted to the school's zone, which is very expensive. We plan on using the VA home loan, but given that multi-family homes here are easily over $1M, we would need to take out a loan for the amount the VA loan won't cover, and we don't have enough to cover the down payment/closing costs.

The opportunities in the area for flipping are very slim. We had one opportunity and put in an offer, but were outbid by someone who was willing to pay $100k over the list price and all in cash. 

So we're leaning towards just buying a small condo to start out. Our mortgage payment would be much lower than our current rent, so we can save for down payment/closing costs on the next one. This is the much slower route though.

So, I guess my first question would be...how do people who live in affluent areas with little to no money for down payment/closing get started investing? Should we pursue partnerships?

Looking forward to meeting people and reading your input.

Jose

[David Fernandez]

@Jose Vazquez, I leave in the DC area as well, but we invest in Baltimore. If your goals are investing in an appreciating market, Baltimore may not be the best one. But if you are looking for cash flow, take a look at it. 

Baltimore is driving distance from DC and you can find cheaper properties that cash flow. Do not look only at the purchase price though, you really need to spend some time understanding the market there and driving around to see where do you feel comfortable investing.  Attend meet ups and REIAs to network with local investors, they’ll give you their thoughts about where to (and where not to) invest and what types of properties. 

Definitively real estate is not a quick rich scheme, but you can speed it up by investing in an area that requires you to save $10-$20k for a down payment vs. another area where you need $100k. 

Good luck!