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From One Investor to Another
I love rental properties. I have owned 2 investment properties so far, both in Northern VA.
1 of those I later moved into, which you can read about here. One day it will become an investment again.
I can tell you that by the time you read this I will be on my way to buying more.
I do not have any money in the stock market, I am an “all-in” kind of a guy. And I am committed to real estate investing.
I will be a real estate investor for life, and I want to help you find your next investment property.
So if you are looking for advice homes for sale now, you can find those here. If you want to know more about investing, read on.
Potential Investment Properties For Sale In Northern VA
Use the list below to see rental properties that are currently for sale in the Northern VA region.
Every area is also covered with some information about owning a property there and property types.
- Investment Properties in Sterling, VA
- Investment Properties in Fairfax, VA
- Investment Properties in Arlington, VA
- Investment Properties in Vienna, VA
- Investment Properties in Falls Church, VA
- Investment Properties in Reston, VA
- Investment Properties in McLean, VA
- Investment Properties in Annandale, VA
- Investment Properties in Ashburn, VA
- Investment Properties in Burke, VA
- Investment Properties in Springfield, VA
- Investment Properties in Manassas, VA
- Rental Properties in Alexandria, VA
- Rental Properties in Oakton, VA
Northern Virginia is a prime location to buy and hold rental properties. Washington DC is a short distance away.
There is a large amount of both government jobs and government contractors who live in Virginia and work in DC.
In the last few decades, Northern VA has also become a technology hub. There are many startups in the area as well as established companies.
In 2019, Amazon made Arlington VA its sole east coast headquarters.
Northern VA is also very transient. There is a constant flow of population in and out.
This makes the rental market strong as well as the housing market as a whole.
During times of economic expansion, the properties appreciate strongly.
Many towns in Northern VA also have a history of weathering recessions better than other parts of the country.
Overall, Northern VA is a solid area to start a real estate investment portfolio.
Know Your Stats to Compare Properties
Whether you do a whole bunch of einstein like calculations, or just some quick and simple ones, you need a way to mathematically judge your rental properties.
This will allow to compare a group of them and see which ones offer the best value.
A Simple Calculation
A “Cap Rate” is often used for commercial properties. But it can be a simple and fast way to see a return on a residential property as well.
Cap Rate= Net operating income / Value of Asset
Net operating income is calculated by finding the total rent revenue for the year, minus the expenses for the year. Note: principal and interest of loan payments are not included in expenses.
Let’s say you are looking at townhomes in Herndon.
You find a property that has a tenant in place renting for $2,500/month. That gives you $30,000 for the year. You calculate your yearly expenses to be $9,500.
You can buy this property for $350,000.
(30,000 – 9,500) / 350,000 = .058
Cap Rate of this particular property is 5.8
Once you start to run this equation on multiple properties, it will help you see standouts in the area you are looking.
It also helps you to see which areas have the best rental rates compared to the price of buying the property.
Another, quicker equation is used by Jason Hartman, a national investor.
He looks for properties where the monthly rent equals to 1% of the sales price, single family detached with low or no HOA fees.
Keep in mind, that would be a unicorn property in Northern VA and in most areas extremely rare.
The first two properties I bought were .5% and .8% by this calculation. Both needed work, the second needed a lot of work.
And I considered those very solid purchases.
A lot of factors go into choosing an investment property, but knowing how its potential financial performance is important.
For many investors, they are looking for one thing from a property’s performance: positive cash flow immediately upon finding a tenant.
If your property has monthly rental income that exceeds its monthly expenses, congrats…you are cash flow positive.
Let’s say you buy a rental property that rents for $3,500 a month. Your mortgage payment, interest, taxes, community fees, vacancy and maintenance comes to $3,375.
Your investment has a positive cash flow of $125 per month.
This may sound low, but that number could also increase as rent prices increase and a fixed rate mortgage payment stays the same.
There are many investors that want a good property in an area that is convenient for them and to see that it will make them money every month.
Estimating Vacancy and Maintenance
Vacancy and maintenance costs are important to calculate as you look at investment properties.
These are going to be estimates. But if the property you are buying has a rental history you could ask the seller.
I assume that my investments will be vacant 3 weeks out of the year, or about 6% of the time.
So if my monthly rent will be $2,500, that is $150 per month in vacancy.
Sometimes, you will beat that number if you get a multi year lease or turn it over after tenants very quickly.
Maintenance can be tough to estimate.
If you need a new HVAC unit, and the next month the roof leaks and needs replacing, you will have very high maintenance costs in that year.
But those items tend to last many years, so after that your maintenance costs could remain low for some time.
There is a rule called the “1% rule” that many rental property owners have accepted as the gold standard.
In estimating your maintenance costs, take 1% of the property value, and use that as yearly costs.
So if your townhome is worth $500,000, then your maintenance costs for the year would be $5,000. Monthly, about $417.
Due Diligence on Your Property
Blanket rules can be useful to analyze properties quickly. However, I always break down a full estimate of a property I am interested in.
Each property is different, in different starting condition, different association fees, rents quickly or slowly, etc.
A full analysis of performance is recommended once you find a property you think you may want to make an investment.
Benefits of Owning Investment Properties
Why invest in real estate? You may think it is a good idea but are not sure why. Here are some of the benefits of becoming a landlord.
Cash is king. I think of rental income as any other income, but with a really good return on the hours I put in.
Managing a property takes a lot less time than going to work for 40 hours a week.
Over a long period of time with multiple properties you can create wealth for yourself and loved ones.
This is my favorite aspect of owning properties. This applies if you have a mortgage on the property.
When you own a piece of real estate, every month that you make a payment towards the mortgage you are paying off a portion of the principle.
For a rental property, the tenants will be covering your payment to the mortgage. You will get a rent check, and that check should cover your mortgage payment (hopefully).
The monthly equity you build will also increase over time as your early mortgage payments go more towards interest (they are “front-loaded” with interest)
This is a large part of what makes long term real estate investing investing a great strategy.
Any market goes up and goes down.
But over a long enough period of time real estate has a track record of appreciating.
From 2010-2019, the Fairfax County median sales price went up 31.5%.
Appreciation is a nice side bonus for long term investment properties in Northern VA. With the major benefit being rental income.
I keep close track of all my rental expenses and leave it up to my accountant to figure out the best way to write offs.
And since I am not a CPA and the tax code changes, I will not get into the depths of these benefits.
The IRS themselves have an article on deductions.
A good accountant is almost certainly a better source in your favor.
Types of Homes: Which is Best For Investment Properties?
What type of property should you buy? Each type of home has its advantages and drawbacks.
These three types dominate the Northern VA residential real estate market. There are a couple of other types that are rare.
If you run into something that you are unfamiliar with, let me know I will give you a rundown.
Appreciation stats I compiled using Arlington County, Fairfax County, Loudon County, Falls Church City, Prince William County, Manassas City, Alexandria City and Fairfax City.
This gives a pretty wide area that I would say encompasses Northern VA.
Those figures come from Bright MLS. Average increase is over 2010-2020.
|Average Yearly Home Value Increase||4.34%|
|Price to Purchase Property||Medium|
|Average Days to Rent||30|
My first rental property was a townhome. I think they make great investments.
For starters they appreciate very well. The best of the three types of properties in many areas.
They also have a good amount of space. They are attractive to potential renters because often they have a basement, a small yard and more space than a condo.
|Average Yearly Home Value Increase||3.26%|
|Price to Purchase Property||Low|
|Average Days to Rent||32|
The biggest advantage of a condo is lower maintenance costs. In many communities however, this is offset by the higher monthly fees.
But having less repairs to arrange will save you time. Condos are very popular as rental units because they are also easy to find a tenant for. They resemble an apartment.
There are some communities where the fees are very high for one reason or another. Make sure to be aware and include these numbers in your research.
Certain condo buildings have rental restrictions written into their bylaws. Make sure to check on this before you write your offer.
If that info is not available before the offer, study the condo docs quickly and thoroughly to make sure there are no restrictions once under contract.
Detached Single Family Homes
|Average Yearly Home Value Increase||4.29%|
|Price to Purchase Property||Medium/High|
|Monthly Fees||Very Low/None|
|Average Days to Rent||35|
The single family home can also make a good investment.
They have the highest maintenance cost, as you are also maintaining a yard. But many areas of Northern VA the single family home is the most sought after.
Northern VA has several single family home communities that are prime for investment properties.
Keep in mind the cost to purchase vs. the rental income. Larger, more expensive homes tend to have lower rental performance.
Specific Areas for Investment Properties
Below are properties for sale in each area of Northern VA. If you want to find properties in more towns not listed, use my home search tool.
For each area I include how long houses are on the market before they get a lease. This does not include vacancy time while you make any repairs between tenants.
Investment Properties For Sale
These properties are currently on the market. Browse through and you can see which ones would be the best investment for your situation.
Investment Properties in Sterling, VA
Sterling rental properties have become very popular.
The silver line metro brought in new possibilities for commuters and more companies are locating their offices closeby.
Sterling has a lot of smaller townhomes and condos that make great rentals. The single family homes also have potential.
|Sterling Rental Analysis||Stats (2019/2020)|
|Average Days to Rent||24|
|Median Rent Price||$2350|
Investment Properties in Fairfax, VA
Fairfax includes both Fairfax City and a small portion in the larger Fairfax County.
The area has a good balance of townhomes and single family homes. There are not as many condos, but there are a few buildings.
Most of the condos are in the Fair Lakes area.
George Mason University attracts students to the area who are looking to rent. Properties walkable to Mason are especially attractive.
|Fairfax Rental Analysis||Stats (2019/2020)|
|Average Days to Rent||32|
|Median Rent Price||$2,600|
Investment Properties in Arlington, VA
Arlington is full of rental potential. It is easily accessible to DC, and has a ton of condos for sale that can be quickly rented.
Arlington also has a fair amount of older single family homes that have potential to be added to your portfolio.
The price tag is relatively high in Arlington. So run the numbers carefully.
However many investors have made a good living being landlords in the area because of good appreciation and rising rents.
|Arlington Rental Analysis||Stats (2019/2020)|
|Average Days to Rent||27|
|Median Rent Price||$2,800|
Investment Properties in Vienna, VA
Vienna has a couple of distinct areas. Off of park street is the town of Vienna, where there are lots of large single family luxury homes, and some older small homes.
Closer to Tysons, Vienna has some condo complexes that make great rentals.
Unless it is your chosen niche and you have experience, I stay away from luxury homes as rentals.
You may be able to find an older home with some good income potential, but more and more they are disappearing to build larger homes.
Vienna has a number of townhome communities as well.
|Vienna Rental Analysis||Stats (2019/2020)|
|Average Days to Rent||30|
|Median Rent Price||$3,000|
Investment Properties in Falls Church, VA
Falls Church is another Northern VA town with 2 jurisdictions. The City of Falls Church is relatively expensive, with lots of new construction homes being built.
There are only a couple of condo complexes and townhome communities in the City of Falls Church.
Falls Church on the Fairfax County side has a number of townhomes, older homes and condos that could be a match.
|Falls Church Rental Analysis||Stats (2019/2020)|
|Average Days To Rent||37|
|Median Rent Price||$2,825|
Investment Properties in Reston, VA
The investment prospects in Reston are plentiful.
First of all, Reston has great quality of life for tenants. It has lots of activities, green space and amenities that make it sought after.
Secondly, there has been a boom in jobs in the area as technology companies have moved into Northern VA.
And finally, there are a ton of townhomes and condos. Many are older and the price tag relative to buying closer in to DC has historically shown value.
And two metro stops definitely help.
|Reston Rental Analysis||Stats (2019/2020)|
|Average Days to Rent||21|
|Median Rent Price||$2,400|