If you are an investor looking to purchase Northern Virginia real estate, the timing and benefits of purchasing a single-family home as a rental couldn’t be better than in this current market. Single-family homes used for rental property have particular advantages over other types of investments.
An investor can borrow 75-80% at fixed interest rates on appreciating real estate with definite tax advantages and more control than other investment options. The financing alone is attractive compared to some investments that require 50% cash and have floating rates.
The prices of homes for sale in Northern Virginia on average have adjusted 20-30%, which is less than the national average, due to our stronger real estate market. Mortgage rates are incredibly low and rents have risen in the past two years due to more demand and shorter supply. These indicators point to a strong and sustained rental market.
Consider you bought a $250,000 home with a 20% downpayment invested, which is $50,000, that would rent for $1,700 per month, or $20,400 per year. Even allowing for property taxes, insurance and maintenance, it is still reasonable to expect $9,000 net gain ($5000 in positive cash flow and $4000 in loan payoff). . You’d have an 18% return on investment without considering tax savings or future appreciation. Compare this return to an alternative investment of 5-year CDs paying less than 1.5%, or 10-year Treasury yields at 1.65%.
Many investors enjoy having more control over their single-family real estate investments, and consider it an great alternative to the volatility and risk of the stock market. Please contact me if you’d like to know more about available opportunities.
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