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Best Places to Invest in Real Estate in Washington DC

Saad Dar

Writer and Editor at Baselane 6 April 2022 5 Min Read
Best Places to Invest in Real Estate in Washington DC

An investment property not only provides you with a reliable way to generate a supplemental monthly income, but it’s also a great way to invest money. If you’re looking to invest in real estate property, the hot market that is Washington D.C. is an almost sure-fire way to generate some extra cash. And, if you’re a newer investor or even a seasoned landlord looking to expand your portfolio, our Ultimate Guide to Real Estate Investing can help you make your next big move.

Investing in Washington D.C. does come with a larger than average price tag. In January of this year, the median sale price of a home was around $639.3K. On average, homes went for $40K over asking. While this may seem high, as of last year, the demand for rental properties in the city has increased, and the average rent for a home was around $1,600-$2,400 a month.

In 2020, the rental vacancy rate in Washington DC was approximately 8.2%. In the fourth quarter of 2021, the United States had a national rental vacancy rate of 5.6%, a downward trend from the start of the year. With businesses returning to in-person work in 2022, one can anticipate that the demand for rental housing in the D.C. area will increase.

In January of 2022, Washington D.C. saw employment increase by 1000 new jobs or 0.1%. This job growth will undoubtedly only increase as the need for service, and in-office work grows. As job growth continues, you can expect to see rental demand grow.

When looking for investment property for sale in Washington DC, here are five hot areas you might want to consider. And, if nothing in this list is right for you, check out our article on the 10 Best States for Real Estate Investment to find out what other options are out there.

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1. Adams Morgan

  • Median listed home price: $454.2K
  • Median Price per square foot: $632
  • Rental Vacancy rate: 7.4%
  • Schools in the area: 9 public schools rated good and higher.
  • Median Rental Income: $2,641/month for a 1 bedroom
  • Household Median Income: ​​$109,923 /year

Given its cultural diversity, it’s no wonder that Adams Morgan continues to be one of the most popular areas in Washington DC.

Boasting a vibrant nightlife and an abundance of hip restaurants and cafés, there’s never a shortage of things to do. Adams Morgan has the perfect mix of old and new and is a hot spot among younger generations. You’ll find something here for everyone, from its 19th-century row houses to its pedestrian and bicycle-friendly streets.

The DC Arts Center offers culture lovers the perfect spot to view works by up-and-coming artists, and at the Adams Morgan Day festival in September, you’ll discover all the hidden gems of the neighborhood. You’ll always find an energetic and exciting way to spend your free time in Adams Morgan.

Adams Morgan is a great area to look at purchasing an investment property, with the median listed home price falling below the district average and the vibrant area remaining popular among residents and tourists.

2. Dupont Circle

  • Median listed home price: $469.9K
  • Median Price per square foot: $673
  • Rental Vacancy rate: 16.2%
  • Schools in the area: 7 public schools rated good and higher.
  • Median Rental Income: $2574/month for a one-bedroom
  • Household Median Income: ​​$103,347 /year

A popular neighborhood with young professionals, Dupont Circle offers easy access to the Red Line, numerous restaurants, museums, and boutiques, and is home to the historic Embassy Row.

The year-round Dupont Circle farmers’ market is a great way to spend a Sunday, and for added culture, you can take advantage of the neighborhood’s First Friday Dupont event.

With such a lively and vibrant cultural scene, it’s no wonder that the area is popular among both locals and visitors. This can be a drawback for renters, as it can lead to crowded streets and hard-to-find parking, but the fact that it offers so much also makes it a highly desirable area for renters.

While the cost for a home may be more expensive per square foot than the district average of $549, this iconic neighborhood continues to prove itself a hot spot among renters.

3. Foggy Bottom

  • Median listed home price: $425K
  • Median Price per square foot: $547
  • Rental Vacancy rate: 18.7%
  • Schools in the area: 4 public schools rated good and higher.
  • Median Rental Income: $2169/month for a one-bedroom
  • Household Median Income: ​​$68,038 /year

Named after the eerie fog that often blankets the area, Foggy Bottom is a hugely popular neighborhood due to its mix of culture and history.

Home to both the Kennedy Center and the State Department and featuring Rock Creek Park – a 2100 acre green space, Foggy Bottom is an ideal neighborhood if you’re looking for a perfect mix of history, culture, and outdoor space.

Adding to the neighborhood’s draw, Foggy Bottom is the location of the IMF and World Bank headquarters – as well as the notorious Watergate building. It boasts a low crime rate, a hot restaurant and bar scene, and features buildings that date back to the late 19th century.

Being the home of the urban campus of George Washington University, the demographic of Foggy Bottom is younger than some other areas, which is either an attraction or a deterrent for potential renters.

Foggy Bottom’s price per square foot is below the district’s average, so if you’re looking for value for your investment dollar, this could be the neighborhood for you.

4. Navy Yard

  • Median listed home price: $744.9K
  • Median Price per square foot: $698
  • Rental Vacancy rate: 8.9%
  • Schools in the area: 6 public schools rated good and higher.
  • Median Rental Income: $2420/month for a one-bedroom
  • Household Median Income: ​​$134,438 /year

As the name suggests, Navy Yard is the former shipyard for the U.S. Navy. Overlooking the Anacostia River, the area still serves as the ceremonial and administrative center for the Navy but now offers a great mix of commercial and residential areas.

Home of Washington’s Major League Baseball team, the Nationals, Navy Yard continues developing its infrastructure with projects like the Frederick Douglass Memorial Bridge. As these projects continue, the area’s appeal will only increase.

With proximity to downtown and conveniently located near Capitol Hill, it’s no wonder that the neighborhood is one of the hottest in D.C. While there are tons to love about the area, it is also one of the more expensive parts of the district to buy or rent a home.

Despite the median cost of a home being more than the average for the district, the area’s growing popularity almost ensures you’ll have no problem renting out your property.

5. Columbia Heights

  • Median listed home price: $664.5K
  • Median Price per square foot: $601
  • Rental Vacancy rate: 10.1%
  • Schools in the area: 25 public schools rated good and higher
  • Median Rental Income: $1856/month for a one-bedroom
  • Household Median Income: ​​$101,804 /year

With a diverse, vibrant community, Columbia Heights is a popular community for international professionals, artists, and those looking for a multicultural environment.

Home of the Mexican Cultural Institute and the European-style Meridian Hill Park, the neighborhood is inviting to both families and young professionals. With grand, architecturally striking buildings housing embassies and international organizations and more modest dwellings, Columbia Heights offers an inviting atmosphere to everyone.

The neighborhood is a great area to walk around and take advantage of the many restaurants and sites. Columbia Heights is notoriously hilly, though, so you might want to use the Metro Yellow or Green Line to access it. Or, if you are looking for a bit of a challenge, you can grab a bike at one of the Capital Bikeshare stations and spend a day traveling around.

While homes in Columbia Heights listed above the district’s average price of $599K, the sale price was less. The median sale price for a house in Columbia Heights is $600K, while the district’s average is $639.3K.

While you might not make as much money on rent compared to the district average, the fact that you’ll pay less for a home up-front creates a greater opportunity for long-term profit.

FAQs
Is Washington DC a nice place to live?

Washington DC offers all the benefits of living in a large urban center but also provides access to great outdoor spaces and year-round cultural activities. In Washington, more than just the nation’s capital, you’ll discover superb restaurants, artistic events, and unique neighborhoods, each with its own vibe.

Is there a large rental market in Washington DC?

Washington DC has continually been a hot rental market. With both government offices and world headquarters of major organizations, not to mention many international businesses, there are always people looking to rent. With businesses now returning to in-person work, the demand for rental properties is soaring in D.C. The rental market is filling up with gen-Zers looking for places to live.

How do house prices in Washington compare to other areas in the U.S.?

In 2020, D.C. had the second-highest median value of homes. For $626,911, you could get a 3-bedroom, 1-bathroom, or 2-bedroom, 2-bath home. While the pandemic saw a decrease in demand for homes in the D.C. area, the rental market has started to surge once more. While houses may cost more, property taxes and utilities, generally cost less.

Saad Dar

Writer and Editor at Baselane

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