The opportunities will still be there.
Also, as an investment, it's still very tough to purchase and achieve positive or even neutral cash flow (i.e., your mortgage + condo fees + taxes exceed rental income). So, in a negative cash-flow situation, you are counting solely on future appreciation. You have to buy really low, invest money in every month, and then plan to sell in the future and get a return from your total investment. Right now this traditional investment model is still very risky. If you plan to live in this unit initially, then the numbers can be more favorable.
If you want to investigate this further, then find an agent that *really* knows Bethesda condo market to identify the best opportunities (I do some business in the area, but I'm definitely not a Bethesda condo expert). You will make or break your investment return on the purchase. Get it wrong, and you'll pay later.
Good luck -- you are a brave guy!
Do you own any other investment properties? My understanding is that new Fannie Mae/Freddie Mac guidelines prevent an investor from holding more than 4 investor loans simulataneously. You will also likely pay a premium on your mortgage rate if you put less than 25% down.
So I think it is a great time to buy in the Bethesda area if you are paying cash or are able to put forth a sizable down payment. Cash investors are getting a far better return on rental income than money markets and CDs. And even those who put a lot down are often cash flow positive and are potentially able to do better than parking the funds in the bank.
Bethesda is great, but I think you will get a bigger bang for your buck if you head just a little south to Chevy Chase. There is a smaller number of rentals, which creates more demand, and the units are larger relative to Bethesda. Take a look at the Friendship Heights neighborhood. There are several buildings that have been very good to investors over the years.
Unless you are planning to retire one day to this investment condo, I'd spend towards the lower end of your range and purchase a one bedroom or even a large studio. There is the most rental demand for one bedrooms and smaller. Your costs go up with larger units, but the increased rent usually does not make up for the increased costs. Not to mention, if there is any down time between rentals, your carrying costs are much more on the larger units. This is not to say that you couldn't do well on a 2 bedroom investment. I just think your cash flow will be better on the one bedrooms.
I started out in real estate as an investor. In fact, I accumulated about a dozen condos in the Bethesda/Chevy Chase area. My best returns were on one bedrooms and large studios. In Friendship Heights and even some buildings in Bethesda, you could purchase a unit like this for under $300K. 2 bedrooms are going to run you in the upper $300s to mid $400s.
The Willoughby has provided great returns for investors over the years
4515 Willard Ave/5500 Friendship Blvd in the 20815 zip code
I'd also look at The Elizabeth at 4601 North Park Ave and across the street is 4620 North Park. The Riviera on East West Hwy in Bethesda is also an option.
Look at buildings walking distance to the metro. Rents are higher and the property will rent faster.
If you have further questions, feel free to contact me.
Long & Foster
Ours is a 3-bedroom, 2 1/2-bath close to NIH, multiple bus lines, and the beltway. Kind of unusual to find a 3-BR in this price range (we are asking $389,900) so we figure even in a slow market we will get interest. If you're still looking and interested, you could contact our agent (Steve Withrow @ Long & Foster, firstname.lastname@example.org). The website won't be up until Tuesday, Jan. 6.
Make sure you have your financing in order before you look to purchase investment property.
Most banks want at least 20% down, some require even more. They are looking for reserves of 6 months or more or other investment properties as collateral.
Let me know if you need the names of some excellent lenders in the Bethesda area.
I would love more information on your condo. I have several buyers in the area that are looking for a condo in downtown Bethesda.
Can you give me more information? How much are you asking? Number of Bedrooms, Baths, name of the building, floor location, etc
thank you so much
I just completed a study on 3 apartment buildings in Bethesda for another investor looking in your price range. You definitely want to target properties close to metro, shopping and so on, and that allow rentals.
Whether your investment will provide some minimum monthly positive cashflow or just be a headache until you sell it depends on many factors including how large a down payment you have. Right now most lenders are going to want 20% or more for an investment property. The larger your down payment, the lower your monthly cash outlay on mortgage payments will be, and so you might be able to get a small monthly return. But also, you don't mention whether you will self-manage and rent it on your own. If you have a professional do it, there are fees involved (first months' rent upon signing of lease and 6-10% per month of the rent as a management fee). Make sure you decide on this before going forward.
Let me know if you'd like to receive a copy of the study I did on the 3 Bethesda area condos, by emailing me at email@example.com or calling 301-575-4915.