Are you thinking about buying an investment property at the Gates of Mclean, but you're not sure if it's actually going to be a good rental? In this video and post, I'm going to be going over all the numbers that you need to know to see if buying a 1-bedroom condo at the Gates at Mclean is going to be the right choice for you.
Gathering the Right Information
So I actually just pulled up everything that has sold since 2019 in our MLS system. I pulled up both sold and rental properties at the same time so I can see what the rents look like compared to the sold properties. There have been about eight properties that had been rented out at the Gates of Mclean this year. So it definitely seems like a strong rental community. The rents are ranging between $1450-1600/mo. So I'm going to use $1,600/mo as the basis for this calculation.
I'm also going to be looking at are the closed sales and what's actually been selling there. I'm only looking at the closed sales (not active or under contract). For this calculation I'm going to assume that our 1 bedroom condo costs $300,000. I'm also going to assume the condo fee is $351/mo and the property taxes as $2968 per year.
The Rental Analysis
I put together a spreadsheet to do the rental analysis, assuming someone is going to get an investment loan with 25% down. So with the purchase price of let's say about $300,000, a 25% down, you're looking at a down payment of $75,000. Let's say your rent is $1600/mo, which is what we pulled from the MLS. What we just saw, and I'm also putting in our taxes and the condo fee. And then obviously you're going to have to get homeowner's insurance, which I estimated at about $500 per year.
So basically over a year you're going to be paying about $13,000 in principle and interest on your loan, your that results in a net annual income of $1,700 a year. And so your cash on cash return is only 2.27%, but your monthly cashflow is $142 a month. So actually this isn't too bad if you're putting 25% down, you're getting a monthly cash flow of $142 a month.
Now, you can always play around with these numbers. Let's say if you only had 20% to put down, which is usually the minimum for an investment property, you're only going to be making $66 a month. On the reverse side, if you put more down your, obviously your cash flow is going to be much bigger.
Is This a Good Investment?
Determining whether this is a good investment is going to be different for everyone. If your money is sitting in a saving account making next to nothing, then yes, this could be a good investment since you will definitely be making a better return than the savings account. On the other hand, if you have your money in the stock market that is making a better return, it may not make as much sense.
One thing we didn't take into account here is the appreciation. While appreciation is never guaranteed, Tysons is definitely being developed more, making it very likely the property will appreciate. This appreciation could have a huge payoff when you decide to sell.