Submarket Investing in Washington DC

[Matt Smith]

All, 

I am a new investor in the Washington, DC market. As many of you know, residential supply of single family housing is extremely limited in the metro area, and pricing makes it difficult to underwrite positive cash-flowing properties in many submarkets of the District, such as Adams Morgan, U Street, Shaw, Logan, etc. Does anyone have experience investing inside the Beltway, where properties may not be immediately metro accessible but still possess strong fundamentals for renting based on their close proximity to DC? Properties in areas like Silver Spring, PG County, etc. are significantly cheaper and have consequently drawn my eye as a better foundation for a diversified investment strategy. But, I simply don't know the market well enough for non-metro accessible single family homes as a rental asset--both in terms of strength of the market, tenant creditworthiness, etc. Any recommendations where to find this information? Thanks!!

[Russell Brazil]

@Matt Smith PG county will allow you to hit the 1% rule on some single families....and push the 2% rule on some of the condos and townhouses in some of the not so nicer areas.  That will be the same as parts of SE DC on the east/south side of the river.

PG county though is very tenant friendly.  So I would be very careful with your tenant screening process. Check the Maryland court records in addition to your regular screening process as a minimum.  There re some nicer parts of PG county that I would consider investing in...parts of Bowie, Hyattsville, Greenbelt, College Park.  At the moment though all of my investing is down outside the beltway as it is just easier to get positive cash flow a few more minutes outside DC.