What areas in VA are on the up and up?

Question

With the Amazon HQ2 move to Crystal City projected for 2023, what housing markets appear to be heating up in VA? I feel like now is a good time to look for a single family buy and hold or duplex/triplex before Amazon rolls in and creates a surplus of jobs in the area. Thoughts?

Joe Facenda · Answer

@Gregory Cudzilo  I am a Realtor in Northern Virginia.  I am not licensed in DC or MD so can't speak to the their markets.  It would be virtually impossible to find a cash flowing investment inside or close to the beltway in this market.  (I am assuming 20%/25% down and a traditional 30 year mortgage at investor rates.)

We are at such a low point in inventory that anything - turn key or run down - that is priced anywhere close to value frequently gets bid up above value.

Could you find an off market deal where a seller is desperate to sell?  Perhaps but on the MLS you will not find anything that cash flows.

But say you do find something that cash flows, I can almost guarantee that if you spent that same money in another market your cash flow would be substantially more even after factoring in property management.

Now, our market has historically been one of the best appreciating markets in the country.  And even in 2008, Alexandria and Arlington held up much better than other parts of the region. Of course, no way to anticipate the future.

So, whether to hold the condo depends upon your goals.

1st question - does it cash flow from day one?  If it does not, sell it. In my opinion, it is silly gamble on appreciation when you you could be making hundreds of dollars a month in another market.

2nd question - Is you investing goal maximizing cash flow or long term gains?  If cash flow, again, sell it, and reinvest in another market.  If appreciation and it currently cash flows, perhaps it is worth waiting things out.

ONE CAUTION AND DEADLINE - Your girlfriend is moving out this year. Remember that capital gains comes into play when you can no longer say you lived in the home 2 of the last 5 years.  So, if you want to test renting and see what Amazon impact is over the next few years, that is fine but you need to really think things through about 2 1/2 years from now.  If you don't want to pay capital gains on the sale, you need to settle by the 3 year mark.

LAST - Want a less expensive way to the play the Amazon game?  The lower level Amazon employees, support staff and those working service businesses in the area will not be able to live in Arlington or Alexandria.  Where will they go?  One possibility could be the outlying stops on the VRE line (not metro - that is too close).  Perhaps Dumfries to Fredericksburg? There you can cash flow with minimum down payments.

Hope that helps.

Cameron Peters · Answer

@Gregory Cudzilo I’m going to include Hampton Roads in this thread. Of course we have a strong military and industrial economy, but also Amazon just bought a large parcel in Suffolk.

Adrienne Green · Answer

Russell's right on: Virginia within an hour of DC has been a strong market for quite a while, and Amazon's HQ2 announcement at the end of 2018 just turned the heat up even higher.

There are buy and hold opportunities for sure, not limited to SFH at all. Townhouses and condos can be moneymakers.

there are not many duplex/triplex options in NOVA, FYI. Most house hacking like people do with MFH in other regions is done in this area by buying a SFH and renting out a basement or extra rooms.

Mary K. · Answer

@Gregory Cudzilo There are a lot of debbie downers out there. I think they just like to hear themselves blab instead of stating that they don't know the answer to your question.

Really I think it's all about strategy and finding a system that works for you. You should go to as many meet ups as you can. Reach out to BP members too and ask them what they are investing in now.

Mary K. · Answer

@Gregory Cudzilo Condos in NoVa are great and have the possibility of cash flowing well day 1. People who say otherwise don't know the area. It takes some hunting to find a good property.Side note, I actually have never seen a house or townhouse cash flow in NoVa day 1 (unless it was a house-hack). People pay the premium for personal space inside the beltway.

Joaquin Camarasa · Answer

Hi!

I think you should hold on to the property in Alexandria, as long as you are not cashflowing negative too much, because you are building equity and you can get the tax benefits of rental income as long as you don't make more thatn 150K a year.

I agree the market is heat up more and more. There are several trendy areas that are surging quite rapidly in price. The probable extension of the orange line towards Centreville is making that area quite attractive (still cheap in comparison to Vienna or Alexandria)

Andres Piedra · Answer

My first investment in this area was a condominium, and it worked out well. I bought it prior to truly understanding my strategy, but that's how we learn, right?! My condo cash-flowed, yet the condo fees here are significant, so you need to evaluate each deal for what it is individually. I use a pro forma spreadsheet to evaluate my options, with a slew of inputs, to help me figure out if a potential investment makes sense from day one, and how it likely will look 10 or 20 years down the road as well. You should do this with your condo as well.

I've had a slew of clients "tell" me that Crystal City is an incredible investment due to Amazon's upcoming move. We actually had a client ratify a contract the VERY day Amazon made the announcement. He purchased a condo I advised him to avoid, as he wanted a cash flow investment after he was to move out of it 3 years later. He over paid to beat out multiple other offers too. The problem is, I don't view buying something with the hope of a value increase down the road as an "investment." To me, it is speculation or gambling. I want/NEED my investments to cash flow the moment I put a tenant inside. Any increase in value is that incredible cherry on top I love to see, but it's not paramount.

Just food for thought!

Gregory Cudzilo · Answer

@Joe Facenda Thank you for the help/information!

Joe Facenda · Answer

@Gregory Cudzilo  Refinancing and selling later is simply a math problem.  The costs of the refinance can be rolled into the loan so there is no cash needed.  And the refinance will reduce your payment by $x per month.

Closing costs/monthly savings = payback period.  Going to hold longer than that payback period?  It may be worth it.  Going to sell within a year? Never worth it.

Gregory Cudzilo · Answer

@Joe Facenda Using my little investment knowledge and math skills, I roughly checked the numbers based on what 1,000sqft 2 bed/2baths rent for in that area currently. It would likely negative cash flow by $200-300 a month, UNLESS we could get $2,100 a month, which is unikely given the average in that area currently is about 1,700-1,800 ish. Is there a downside to refinancing then deciding to sell anyway?

What areas in VA are on the up and up?

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