Maryland - A Tough State to Invest? Need Help/Input

[Henry L.]

Hi Everyone,

I feel "stuck" in my current real estate adventure, and I could really use some advice to pinpoint me in the right direction.

 I had purchased a ~$450K townhome, 3bedroom, 3 bathrooms, and put 10% down. We thought this would our home to live in for a long time, and we want to make sure it's a decent/comfortable one. The other two rooms are rented out for 850 and 800 each.

Right now the plan is to house hack for a few years and take the whole house back for ourselves once we have kids. The goal is to save up as much as I can and buy investment properties as fast as I can. I have 23K sitting in cash and after mortgage and personal expense, I anticipate to save ~2.5K/month (~30K/YR). My GF has ~30K sitting in cash. 

Sorry about the long post, but I wanted to show you where I'm coming from before I post the questions.

1. what would you do next in my current situation? Wait a year? or purchase with my GF?
2. As you can see my 10% down could barely cover my mortgage. How hard do you think it is to find cash flow positive properties in DC Metro? using the 3% down method? I barely see anything in the area covered by the 1% rule, let alone 2%
3. Since my commute to work is pretty far, I listen to Biggerpockets podcast in the morning. I noticed that most of the guys that are successful typically live in less expensive areas. This enables them to buy cheaper properties, larger quantities, take more risk, etc. However, for DC Metro, this would be tough to replicate and each risk has more weight/consequences
4. You can still leverage other investment strategies here like BRRRR, but I am sure it's not as effective as doing in other states. I almost feel like most people in the metro area tend to focus on buy and hold for cash flow. What is your strategy?
5. I know condos are not desirable due to HOA fees, but what about townhomes? I noticed that townhomes in the metro area tend to be higher quality than SFH with low HOA fees. The downfall is that I typically see townhomes experience little to no appreciation. What your thought on investing in a townhome in the area vs SFH or condos?

Sorry about the long post. I had so many questions that I wanted to ask and did not want to create multiple threads. I hope that by answering these questions, it would help others as well. 

Thanks, Everyone.

[Russell Brazil]

Real estate is a slow burn.  You dont nessecarily have that immediate satisfaction like you do when your stock portfolio goes up 20% in one year.

But look at the great situation you are in now.  You and your GF are each essentially paying $400-$500 a month each to rent, while roommates pay for the majority of your housing.

Also while in the wealthier parts of the DC area cash flow isnt initially great, you will have much higher rent growth than in the areas that have stronger cash flow to begin with.  One of my rentals in Rockville I started off with $1900 a month rent in 2010, and in 2018 Im getting $2750.  Rent isnt going up $100 a year in Baltimore. Combine that with the value of your asset going up each year, and that is how you really build a strong balance sheet.

There are lower risk areas though that also afford better cash flow.  Cheaper condos with reasonable fees in Germantown and Frederick will offer 15-20% cash on cash returns. The trade off is these do not nessecarily have strong asset price growth or rent growth.  Its a trade off, like everything in real estate.