Except next door.
In July, the Arlington resident put some of that spare cash toward the purchase of a $490,000 townhouse across from his own. Now, he hopes to rent out the home and watch its value appreciate as the years pass.
With mortgage rates at their lowest level of the year and home affordability at a 40-year high, the idea of investing in real estate is appealing to a growing number of people. Investors have purchased about 20 percent of the existing homes sold this year, up from 17 percent last year and the highest level since 2008, according to the National Association of Realtors. While many are probably seasoned investors chasing after cheap foreclosures, some are people like Cummins who are dabbling in real estate because they think it makes good financial sense.
Chris Cormack, a Keller Williams real estate agent in Ashburn, said many of her clients have recently expressed interest in buying for investment purposes. “We’re seeing regular people, customers, saying, ‘I want to buy a townhouse,’ ” Cormack said. “And they’re not professional companies. They’re not looking to own 10. They just want one.”
Cummins certainly doesn’t consider himself a professional investor. He describes himself as a small-business owner who figured he had a good shot at finding reliable tenants and collecting a decent return on rental income. “The idea is to rent the thing out, take care of our tenants and they take care of us,” he said.
A recent survey by Fannie Mae suggests that Cummins is not alone. The poll found that Americans expect home rental prices to rise 3.9 percent on average over the next year, the highest level since the company started tracking the monthly data in June 2010. This phenomenon is already playing out in the Washington region. The latest inflation-adjusted census figures show that area rents soared to the highest level measured in at least 20 years, with rental prices surging 22 percent in 2009 from a decade earlier. The rates jumped in part because 10,000 single-family houses that were occupied by their owners two years ago are now rental properties; those houses tend to be larger and have higher rents than apartments.
Later in life, Cummins may consider selling the townhouse (hopefully at a huge profit) and using the cash to invest in more properties or to help pay for his three kids’ college tuition. If the kids, now in middle school and high school, choose to go to college locally, maybe he can rent the townhouse to them.
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