Invest in Real Estate
Real estate is a foundational pillar of the United States economy. Property sales and value have a tremendous impact on both related and unrelated markets. Trends in real estate, however, should be followed on a local basis - as some areas may flourish while others experience slow growth during a particular time.
On average, properties in the DC, Maryland and Virginia area appreciate in value 6.5% per year. Following this formula, a property in a stable and healthy market is expected to nearly double in value after fifteen years. Due to the area being the seat of the American government; the proximity to several military bases; and a constant movement of individuals to and from the area for employment, the average price of a home in the DC Metropolitan area has remained fairly stable through the years (as seen in the graph below).
There are myriad investment strategies available; the key is determining those most suitable for your investment needs. The following are examples of strategies our Team has successfully employed when working with our investor clients that may be a good fit for your goals.
Properties in need of renovation are purchased at a percentage of their after-repair- value (ARV). They are then renovated and returned to the market for sale to an end buyer. These projects generally last 6-8 months from the time of purchase to the final resale (including time for renovation work). Below is an example using a renovation our team helped acquire and resale in Alexandria, Virginia.
Purchased for $380,000 in this condition:
Sold for $575,000 in this condition:
Buy and Hold/Lease
Properties are purchased with the intent to hold them for appreciation while generating passive income through leasing. This is an actual listing we sold to an investor for $80,000 that will rent for approximately $1,500 per month. With this type of deal, the investor could buy with all cash and get a greater return monthly than he would from depositing the cash into a savings or investment account with a bank. The investor could also get a loan and have the rent cover the mortgage with the overage becoming passive income. Because the average annual appreciation rate for property in the area is about 6.5%, the investor could sell the unit for greater than he paid for it in the next few years.
Similar to Buy and Hold/Leasing strategies, multifamily provides an opportunity to own several leased units within one building. These include duplexes, triplexes, 4-units and apartments. The property to the right is a 4- unit building in Washington, D.C. that contains two one-bedroom units and two two-bedroom units. Total rent collected is approximately $4,325 per month.