Is this a good time to buy an investment condo in Reston, VA: will hold on to it for 10 years?

Asked by Joan, 20191 Sat Nov 24, 2007

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Jill S. Maye…, , Reston, VA
Tue Jan 12, 2010
Joan: There are many things to consider when buying an investment property; rental income expectation, Condo Fees, vacant carrying costs, initial non conforming lending down payment. You also need to take into consideration, the ongoing development in the area you are considering buying an investment property. Reston has many benefits to investment, such as our upcoming Metro Line with anticipated completion in 2015 and it being the second largest business center outside DC. I both work and live in Reston, and have a great handle on some ideal locations and properties. Let me know if I can help.

1 vote
Mike Rosen, Agent, Ashburn, VA
Sat Jan 5, 2008
Overall this is a great time to be looking for investment properties. It's true that there may be some continued softening of prices here in 2008, but with a 10 year time horizon you should see a healthy overall appreciation based on historical performance.

There are a few factors that go into evaluating a good investment:
- cash flow
- price appreciation
- tax benefits

In the Northern Virginia area properties that have a break even cash flow have been hard to find due to high housing prices. With the recent mortgage problems and foreclosures however there is more and more activity from buy-and-hold investors in this region. As prices come down, one can find properties where the cash flow numbers work on a month to month basis - especially if you're open to buying below market with bank owned, short sales, etc.

As for appreciation, Northern Virginia and Reston in particular has been and will continue to be strong because of the proximity to DC and access to jobs in the Dulles Corridor. The Dulles Metrorail expansion will also be a major appreciation benefit to long term investors.

Of course, the tax benefits will vary depending on the individuals situation (tax bracket, employment status, 1031 exchanges, etc.). Typically, the government tends to give a lot of tax advantages to those investing in real estate as compared to other investment vehicles such as stocks.

If your price range allowed it, I would recommend that you look at townhouses as well as condos. There are some townhouses in the Reston/Herndon area that are below 200k and the cash flow numbers look good given the strong rental market. Buying a townhouse as opposed to a condo may also insulate you from some of the price volatility that tends to come with the condo market (a factor once you're looking to sell).

Hope this helps.
1 vote
Don Tepper, Agent, Burke, VA
Thu Nov 29, 2007
No. Not unless you can buy it for at least 30% under current market prices today. Why? The lower-priced condos, such as in Shadowood, have tanked. Three bedroom units that had sold for as much as $300,000 are now on the market for $175,000-$180,000. The two bedroom units that had sold for as much as $275,000...listed around the same price, but few are selling. That's due to a number of factors--lots of foreclosures in the lower-priced condos (due to investors who bought at the peak, expecting prices to go higher, and new owners with poor option ARMS), high cost of commuting to any place except Reston or maybe Dulles, and much better deals closer in.

The higher priced condos in Reston generally have high condo fees, and--it could be argued--were pretty expensive to begin with.

Your problem also would be cash flow. The Shadowood units are getting to the point where they almost cash flow--buy one for $150,000 and rent it out for $1,100. But watch out for negative cash flow, especially on a long-term hold.

If you really anticipate holding it for 10 years, can bear to watch prices decline another 10%-30%, then you'll probably come out OK. Real estate, of course, is cyclical, and prices will rebound somewhat...probably in a couple of years. But I think there are far, far better places to buy in Northern Virginia. And I'd suggest a single family home or at least a townhouse.
1 vote
Yvonne Jansen, Agent, Ashburn, VA
Thu Apr 14, 2011
Hi Joan,

Not only is it a good time but the rental market is strong especially in Reston. There isn't enough inventory for qualified renters. Renters really don't care for apartments they are willing to pay more for some type of a yard and square footage like a townhome or prefer a condo over a an apartment.

If you need expert guidence please contact me as I would be happy to assist you in your investment purchase and locate a
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0 votes
Mitra Saify, Agent, Reston, VA
Wed Dec 29, 2010
Yes, it's a very good time. I see condos selling higher than previous 2 years with multiple bids. I wouldn't wait too long to take advantage of this market.
0 votes
The CAZA Gro…, Agent, Reston, VA
Sun Sep 19, 2010
Hi Joan,

I've purchased 11 properties in the last two years in the Reston Area. I think it's a great time to purchase real estate BUT you need to know your numbers. A great book for you to read is the Millionaire Real Estate Investor. I also run a Reston based investment group that can help you get a lot of answers. Follow the link below....membership is FREE.

Rob Chevez
0 votes
Barbara Cogh…, Agent, Reston, VA
Wed Sep 1, 2010
I think so, if you buy along the proposed metro, the value should go up once the line is operational. Look at the Vienna station effect on properties in Oakton and Vienna.
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Monika Kumar, Agent, Reston, VA
Sun Dec 16, 2007
I think the property prices will still fall more next year. Fannie Mae and Forbes predict price declines by nearly 5-10% next year. The condos still are expensive (partly because of higher condo fees, generally in excess of $300, which is at 6% is about 50K of mortgage), and the townhouses are going very very cheap. There are even some two level bank owned ramblers below $300K, which is good buy.
So, in essence, waiting till next year mid or even late might get you better bargains.

Monika Kumar
The RealtyGeeks Team-we care
0 votes
Jesse, , 20190
Wed Dec 12, 2007
If you are looking at a 10 year horizon positive or at the very least break-even cash flow is a must for an investment. I would focus on Chestnut Grove, because it is very close to the proposed metro and is relatively cheap.
Historically condos have been more likely to decline, so a townhouse or SFH may have a lower downside, although the higher purchase price makes it harder to make the numbers work on a monthly basis.
0 votes
James Downing, Agent, Dunedin, FL
Sat Nov 24, 2007
I would say Yes. While a decision to buy depends on many factors; most importantly the buyers needs - interest rates are still low. While the Winter months typically sees a decrease in the number of properties for sale - those sellers who MUST sell - tend to lower their prices in the winter.
Holding a condo for 10 years (one would hope) that the Metro extention should be well on its way to completion; thus adding to the resale value.
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Danilo Bogda…, Agent, Reston, VA
Sat Nov 24, 2007
I would wait until this spring or summer when foreclosure and REO properties have increased some more and banks have gotten beat up even more. You will be able to get even better deals on foreclosures and REOs than currently. Then scoop one up, put some work into it and rent it out.

Also, by the spring/summer, the rental market should be better for you as a landlord (aka market rental rates will have gone up). Currently, market rental rates are really low which is great for renters, but not for landlords/investors. That will start changing soon though.

But that's just my humble opinion and I don't have a crystal ball.
0 votes
Jeff Royce, Agent, Fairfax, VA
Sat Nov 24, 2007
Yes. Prices are low right now, but the main driver of price growth--jobs is still going strong. As Northern Virginia continues to attract jobs, many will be in the "Dulles Corridor" from McLean to Reston. Commercial buildings are going up quickly in Reston. The people that fill those offices will need a place to live.
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Tony Arko, Agent, Reston, VA
Sat Nov 24, 2007
Actually, the next 12 months will be a great time to buy an investment condo because of the increase in people unable to get financing due to the tightening in the last 4 months. This has caused a number of properties to be sold at 4 year lows. Rental rates have not started to go up as of yet but we anticipate them moving up next year. It might be hard to get to a positive cash flow situation the first year or two but after that you should be able to breakeven. The value of the properties will not fall much lower than they are now because we are seeing more investors making offers on properties. That is usually the first sign of a bottom in the market.
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