RSS FeedReal Estate Corner: Ready To Rent That PQ Condo?
MVTResident is a realtor in the Capitol Hill office of Long & Foster who lives in the Mount Vernon Triangle and is experienced with transacting downtown DC real estate.
Many condo owners struggle with whether to rent or sell their unit when it is time to leave the area or simply move to a larger or different type of place. For many owners who bought in the 2005 to 2007 time period, the condo has simply not appreciated enough to merit selling. When pricing a condo for rent, I’ve always advised my clients that allowing pets can increase the monthly rent around $50 to $100 per month and parking can be worth $100 to $150 more in monthly rent than a comparable condo without a spot. But does the data support that?
Looking only at the 2012 multiple listing service data, Penn Quarter one-bedrooms have been renting at an average of $2396 per month with an average of 46 days on the market. Two bedroom units rented this year for an average of $3234 per month with an average of 45 days on the market and studios rented for an average of $1725 per month with the shortest number of average days on the market – only 24.
A little under half of those units allowed pets but the average price for those condos jumped up to an average of $2456 per month for a one-bedroom unit. The two-bedroom units rented for close to the same amount with or without a pet as did the studios.
The bottom line? Renting your condo can be a terrific strategy for holding onto your asset—your home—while waiting on the market to catch up to your investment, or waiting for a better price altogether. The flexibility to allow pets can not only increase your income but also, from what I’ve observed, shorten the time on the market. Pet owners tend to be stable tenants due to the difficulty in finding housing that accepts Fido. Finally, a parking space can also an yield a return long past your time as a resident, and well into your time as landlord.
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Comments
“terrific strategy for holding onto your asset—your home”…not the right way to think about it. If you’re renting it out, it’s an investment, not a home. So you are correct that it is an asset, but it is not that tax-favored, socially-favored thing known as a “home”–it is just another investment. Hate to point this out, but the alternative way of thinking is not good for the economy.
Totally agree with Anonymous @12:05 am. This is the wrong kind of thinking about homes and investments.
@Anonymous 12:05 – homes that are rented out do receive socially favored tax treatment – depreciation. you can depreciate the real estate as a fixed/capital asset much like a company depreciates a piece of equipment used to manufacture a product. even though the depreciation gets added to the home’s basis when you sell, that can be a very sweet deduction off your income taxes and a boost to annual cash flow. this is in addition to the rent collected to pay off the note. whether you generate a return on invested capital is a function of how much equity has been injected into the asset.
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I waited more or less 2 years to buy a 2BR unit with patio at Clara Barton/Lafayette, but they are almost all rented out, and none of the actual owners would consider a sale. So I gave up and bought a similar (but more economical) place in Mt. Vernon Square.