Owning property is associated with a sense of wealth and security. For this reason, many people want to have full ownership of a house. In fact, as of 2019, 64.9% of American families had a home under their names. And in recent times, the home-buying market continues to witness a rising trend. Therefore, it may be a wise move for you to invest in the real estate market and expect to grow a vast sum of money. (1)
Washington, DC, Real Estate Market
While these figures continue to rise across the country, a study by Bright MLS shows that the median sales prices for homes in Washington, DC, are dropping over the months. In August of this year, the market indicated a 2.4% drop from July, with the median sales price at USD$536,800. (2)
Therefore, if you’re in the real estate market of Washington, DC, you’d want to put up solid strategies to ensure you achieve maximum benefit from your ventures. This article discusses four such methods.
1. Fix and Flip
One lucrative way to make money in real estate is to buy an undervalued house, renovate, and sell it promptly. In other words, fix and flip it. To do this, identify a residence with high-value potential. Do a tour around the house to find the features that need fixing and establish a way to restore their quality so they’ll give maximum profit when you sell the house.
Funding Your Project
Fixing and flipping a property can be expensive, whether you’re doing the repair yourself or contracting a repair crew, especially if you factor in the cost of materials. This is more so in cities like Washington, DC, whose costs of living have surpassed the national median. According to a study, you need about USD$86,420 to comfortably live in the nation’s capital. So the question of how to finance your project arises. (3)
On this account, you may get a short-term loan from a Washington DC-based hard money lender. The beauty of borrowing from money lenders is that very little documentation is required, unlike in bank financing. Additionally, even with low credit scores, you can still qualify for a loan. Also, with their short loan closing times, you’ll quickly get your loan and set about your project.
After the renovation, you can put your refurbished house on the market. When setting the sales price, ensure the figure allows for a profit—after regaining the money you used to purchase the house and paying back your hard money loan.
2. Invest in Multifamily Rentals
Putting your money into rental complexes is a lucrative real estate investment strategy as you get a guarantee of cash flow at the end of every month from the tenants’ rent. Additionally, due to this financial security, you can easily secure a loan to finance your project.
However, before investing in multifamily assets, consider the following factors about the property:
- Total number of units
- Potential income
After investing in an apartment complex, ensure to conduct routine maintenance to keep it in a good state that’ll yield more profits with time.
3. Consider Vacation Rentals
Vacation rentals include home-sharing services like bed and breakfast (BnB) establishments. You may consider renting out a room in your house on a short-term basis to tourists for some income. You could do this by putting up your offer on a home-sharing platform, where potential tenants can spot it. This may be a good idea, especially if you live around Pennsylvania avenue or another top tourist destination.
People prefer staying in BnBs rather than hotels as this gives them the feeling of home away from home. This has, in turn, led to the rise in popularity of the BnB market in the past years. In fact, a recent study indicates that the number of BnB tenants increased by 5%, with room prices rising from USD$103 to USD$121 within four years. (4)
Washington, DC, laws allow you to rent out an attic, basement, or bedroom as long as you live in the house at the time of renting. Other rules apply, including ensuring all necessary repairs are done to keep it in good condition. (5)
4. Buy and Hold
Buying and holding property is a common way of earning real estate income. You have several options to implement this method, including the following:
- Buy a single home and rent it out.
- Buy a multifamily home and live in one of its units while renting the others.
- Buy and rent all the units in a multifamily establishment.
You may apply for hard money loans to fund your purchase. Once you have possession, you may either manage the property yourself or hire a management company. However, it’s more economical to be in charge of single homes yourself. You can then use the rent to pay your mortgage and cover your other personal expenses.
If you’re thinking of profitable real estate strategies in Washington, DC, you need to establish a reliable source of funding for your projects first. And one way to get guaranteed financing is from hard money lenders. With this money, you can proceed to fix and flip property, invest in multifamily rentals, rent out your home as a BnB, or buy and hold property. Ultimately, these strategies will lead you to make money in this productive property industry.
- “4 Key Factors That Drive The Real Estate Market”, Source: https://www.investopedia.com/articles/mortages-real-estate/11/factors-affecting-real-estate-market.asp
- “Report: D.C.-area housing market may be slowing”, Source: https://www.washingtonpost.com/business/2021/09/14/report-dc-area-housing-market-may-be-slowing/
- “Top 10 Most Expensive Cities in the U.S.”, Source: https://www.investopedia.com/articles/personal-finance/080916/top-10-most-expensive-cities-us.asp
- “How To Start A Bed And Breakfast”, Source: https://www.entrepreneur.com/article/83704
- “Airbnb And Other Homesharing Services Are Now Legal In D.C.”, Source: https://www.npr.org/local/305/2019/10/28/774133451/airbnb-and-other-homesharing-services-are-now-legal-in-d-c#:~:text=More%20Podcasts%20%26%20Shows-,Airbnb%20And%20Other%20Homesharing%20Services%20Are%20Now%20Legal%20In%20D.C.,also%20resides%20on%20the%20property.