Are you thinking of building wealth by purchasing a rental property? It can be an excellent idea, but one that’s not without challenges. Broker Kenneth Rose of Rose Realty, who grew up in Potomac and has worked in real estate here for more than 30 years, shared some insights with us on investing and the market.
“Currently there are very few properties on the market [in Potomac], and I think that it's going to take a while for that to change,” Rose says. “And I think it's also supporting the fact that Potomac is a very valuable place and people do not easily part with the property they own…I think Potomac real estate over time becomes more valuable and I do not see anything changing.”
At the time of this interview, Rose says there were only five available houses in Potomac under $1 million. What makes it such a desirable place to live? “Location is always the number one consideration. You can drive to D.C. without the highway. You can drive to Tysons Corner within 30 minutes, even with heavy traffic,” he says. “You've got national parks, an abundance of county, and regional parks for children. And of course the highly ranked public schools and top-notch private schools.”
When he finds a home on the market for $500,000 to $700,000, which does happen in Potomac, Rose says that’s “a very attractive investment.” But having an experienced realtor is key to identifying the best investment, and walking through pros and cons.
Potential buyers must consider any added costs, both financially and otherwise — time is money, and a rental property may take up more time than you’d anticipated. “Lower maintenance is the key to an investment property,” Rose says. You “should buy something that requires less upkeep, and therefore will have less maintenance over the long period of time and less required by the tenant, therefore making it more attractive. When it comes to rental properties, I lean towards lower-maintenance properties like townhomes or single-family homes with small yards.”
Due to factors like the great schools and hurdles like high interest rates, many Potomac tenants end up renting for five to 10 years. With these long-term rentals, Rose says, “Even with interest rates above 5%, a 20% down payment puts you well within reach of the tenant being able to carry your costs… so it's about being selective with the right tenants and then sitting back and enjoying the ride.”
Rising home prices are something Potomac residents with kids would be wise to think about. Rose says buying an investment property, renting it out until the kids are grown, and then passing the home to their children after much of it has been paid off can potentially protect kids from skyrocketing prices, and keep them from fighting over the one house left behind.
“For people who have been fortunate enough to have one home and maybe it's close to being paid off or it is paid off, how nice of a thing it could be to purchase that second or third home…to ensure that your children always have a place to go.”
Contact Kenneth Rose 301-983-3500; ken@rosehomeservices.com; rosehomeservices.com.
"Potomac is a very valuable place and...Location is always the number one consideration."
