Thinking about buying an investment property? We don’t blame you. That purchase alone can be a great way to generate income and build wealth over time, a coveted combination. So — why doesn’t everyone do it? The truth is, most don’t know where to start. Luckily, we’re here to help. Keep reading for everything you should know about buying an investment property in Washington, DC.

To Clarify: When we use the phrase “investment property,” we’re referring exclusively to a property that you plan to buy and rent out for the purpose of generating income. If you’re thinking about fixing and flipping a house, that’s another topic entirely. Now that we’ve cleared that up, let’s get started.

Decide Whether It’s the Right Move

Buying an investment property isn’t right for everyone, and it isn’t the only way to invest in real estate, either. So, before you start looking for your first investment property, take a step back and decide if it’s the right way for you to get into the exciting world of real estate investing.

Here are a few things to consider along the way:

• Time commitment: Even if you decide to hire a property manager, owning investment properties can be undeniably time-consuming.
• Liquidity: Investment properties aren’t a liquid investment. If you want to receive fair market value for your rental properties, they can easily take months to sell.
• Capital requirement: Unlike some other forms of real estate investment, you’ll need a significant amount of money to buy an investment property. In most cases, you’ll need a minimum of 20% down, closing costs, and several months’ worth of reserves in the bank — to name just a few.
• Unpredictability: Although rental properties can yield substantial income, it can come at a cost. For starters: properties become vacant from time to time, and things break that you’ll need to replace.

Know Your Neighborhoods

They say in real estate, it’s all about the location. But when it comes to investment properties, the importance of location is only magnified, especially in DC, where each neighborhood has a distinctive character. The bottom line? Some neighborhoods are simply in greater demand than others, and the neighborhood you choose will impact who is likely to rent your property. For example, the neighborhoods with the best schools are attractive to renters who have families, just as the neighborhoods with the liveliest nightlife will hold allure for young professionals.

➤ Click here to access our extensive library of DC neighborhood guides!

Pick Your Price

So — what qualifies as a competitive yet acceptable price for your next investment? Simply put, it’s one that allows you to reach your investment goals. That’s why it’s crucial to do your research beforehand, so you can strike the right balance between price point and expenses that will yield the desired ROI. For reference, many real estate investors seek to get a rate of return between 5 and 10 percent.

Factor in Access

In DC, renters need to get around, with many of those renters opting for a car-free lifestyle. That means they’ll need easy access to Metrorail, the city’s subway system.

Other DC renters, on the other hand, prefer driving. While properties with driveways or garages are ideal, such properties have limited availability in DC. A property that doesn’t have off-street parking and is not located near a Metrorail station should at the very least be: Located where on-street parking is usually available OR on a block where residents can obtain city-issued residential parking permits.

Check the AC

Even for the staunchest summer-supporter, the heat and humidity DC summers usher in can be tough to bear, making AC an absolute must. Despite that fact, some of the city’s older houses still lack central air conditioning…but the harsh reality is that window units are simply not an attractive substitute for today’s renter.

➤ Check out some the newest and hottest developments in DC right here:

• Our Featured Developments
• Your Guide to DC’s Hottest Developments
• Your Brookland New Developments Round Up
• New Developments in DC: Southwest Waterfront Edition

Take Stock of the Property’s Condition

What qualifies as the right property condition depends greatly on your experience level as an investor and your repair budget. New investors, for instance, may want to avoid homes in need of major repairs, such as foundation issues, a compromised roof, or outdated wiring. Inexperienced investors may also want to prioritize move-in ready homes or those that need only minor repairs, like replacing a tile floor, fixing faucet leaks, or repainting the interior.

The bottom line? The DC real estate market is one of the hottest in the country, with many renters eager to make their next move. What does that mean for you? Investing in the right property at the right time can yield optimal returns. Get in touch today or check out our featured listings to start your search for the perfect property to add to your portfolio today!