MTRs in NoVa - What's working? Where to look?

Question

Hello All,

My name is Aaron Dixon and I've been investing in real estate for about a year now with a LTR in Tampa, FL. Since purchasing that property I've dug into hours upon hours of podcasts and books from BiggerPockets and have grown very fond of the MTR strategy. (I'm currently reading the 30 Day Stay).

From my understanding, based on the data found on Furnished Finders, there's a large need for more MTRs within NoVa. While I'd love to own something in my hometowns of Fairfax or Arlington I've yet to find a property on the MLS that comes close to providing positive cash flow. That said, I've begun leaning into looking off-market and exploring creative financing.

It'd be much appreciated to get some insight from any current MTR operators (and investors in general) on what they've found successful and where they believe there may be opportunities for investment.

Thanks!

Russell Brazil · Answer

You can do short term rentals in the city of Alexandria. Outside that, as youve alluded to, it would need to be a midterm/long term rental.

Ive found most demand for mid term rentals are within close proximity to the State Department and the Pentagon.

And yes in regards to cash flow, under current market conditions you will need to put 47.5% down as a down payment to break even against debt service. So more investors are getting creative.  Rent by the room is a more popular strategy than mid term rentals in DC.

Lexie De Stefano · Answer

On a micro level, I have had a decent amount of success with MTR's with my househack. I have a 2 bed/2bath in-law suite in Arlington, and I rent by the room on a midterm basis in the main house where I live. I get the most bites from transitioning pre- or post-PCS government personnel, interns, travel nurses with contracts at VHC (Arlington) or Medstar Washington Hospital Center in DC, or local people going through divorces that temporarily need somewhere to stay while they iron out life plans.

My observations over the past year: I have more single people or married couples looking for a 1 bedroom separate unit than folks looking for a 2 bedroom, and that really surprised me. Fewer folks seem to want my in-law suite as a 2 bed unit, and I've only had single people that rent the whole thing instead of couples or friends traveling together. I also get a lot more interest in rooms that have a private bathroom than when I offer the same room as a shared bathroom (and it's decorated very tastefully). Most of my folks contact me via Furnished Finder or huge variety of local facebook housing groups.

You'll want to keep in mind that parking restrictions can be tough here, in addition to the maximum amount of non-related people in a particular home. Virginia only allows 4, and I think Maryland 5, then DC 6 respectively...but I could have the last 2 accidentally swapped. Take a look at Furnished Finder and you'll be able to see the local demand...I've found it's pretty good, particularly when metro accessible. Best of luck!

Sara Frank · Answer

Need to put down almost 50% to break even on debt service for long term rent, so it would be slightly less for MTR but then you incur the setup and management costs. There really are very few places in DMV that MTR doesnt work due to heavy gov't presence. PG county might be a good option for you as prices are still softer compared to NOVA, MoCo and DC.

Jack Seiden · Answer

The D.C. area is so transient really anywhere should work, the military also pays an insane per diem on mtr, I had a friend who was on assignment and rented a 2bd condo in navy yard for like $7500 a month (I was paying $2700 for a long term for context) they also unrelatedly gave him like a $100 food budget or something per day, this dude ate at every michelin star restaurant in the city lol. The one thing i'd caution about mtr is while i think its much more stable than str there is risk that a similar dynamic to str in the long term (more supply and more regulations) so make sure its a property you'd want to own as a ltr if need be. I should also add you might want to consider pg, Howard or as county around the bases, much cheaper entry point, have a friend who’s has alot of success around there.

Russell Brazil · Answer

Its typically state department employees coming back to town after an assignment, before they get redeployed to their next country.  Then near the pentagon is military PCSing to the area looking for short term housing while they shop for permanent housing.

You just need to get plugged into those communities to find out who is moving here looking for temporary housing.

Lexie De Stefano · Answer

47.5 percent! Wow! That's a crazy and intimidating statistic :(

Chris Seveney · Answer

@Aaron Dixon

My wife has worked for World bank and IMF so for them anything in Arlington next to metro also is high demand as they have lots of people from different offices coming in for month(s) at a time as well

Aaron Dixon · Answer

Thanks for the feedback @Russell Brazil. Would it be safe to assume the tenets in these locations are federal employees? If so, do those tenets tend to come in from Furnished Finder and the like, or are leads generated elsewhere?

The cost of entry is troublesome as I've never attempted to pull together funding from any private or HML. I'll admit it's a bit nerve-racking and unsure where it would make sense outside of finding a property in need of some value add and refinancing to repay the lender.

MTRs in NoVa - What's working? Where to look?

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