Brian McHone, author. Investments - I write about the real estate market in Blacksburg and Montgomery County. I intend to give the reader some insight into the investment world and offer resources to help.
Most people enjoy talking about real estate; whether they own any or not, it always brings about debate, education, inclusion, and in some cases starry eyes. Why? Because everyone old enough to rent or buy a home plays a vital part in the real estate market.
Let me explain what I mean: If you rent a home, you affect the way investors look at potential rental properties as you continue to bolster their wealth by creating a positive return on their investment. If you own a home, regardless of the size, and are thinking of upsizing or downsizing, your decision effects supply/demand which in turns weighs heavily on how values are determined. If you own a home and never plan to sell, your rigidity plays a crucial role in the supply/demand chain. If you want to leverage your assets to buy rental properties, you can easily see how you play a large part in market conditions. What will you pay for the investment creating a comparable sale? What return will you expect? How much rent will you charge for the unit?
Almost everyone will find themselves inside one or more of these scenarios. That’s why having discussions about real estate around the dinner table, office break room, or reading about the endless possibilities of growing your wealth through investments, elicit such an emotional response. It’s a significant endeavor to buy into the market, or not! No matter how you lean, the decision bears considerable weight.
However you slice it, and wherever you land, the topic is exciting for most. I’m an advocate for buying real estate, not only buying a home to occupy but buying as much of it as you can. Wealth building is essential for everyone, regardless of your age. It will directly impact how you live and how you retire. There's always a degree of angst when you stroke a check for the down payment of an investment property, but I’ve never regretted the decision to do so.
Every market is a bit different. The real estate market is HIGHLY localized. I cannot express with enough emphasis how vital this immutable truth is. Every town, city, county, region, state, is different and for different reasons. The real estate market is, and will forever be, tethered directly to the ability of the people who live in a given area, to generate income. That can look as different as the people who occupy the space but make no mistake, a “good” real estate market will sit directly in the epicenter of a town, region, or county where jobs are plentiful, and the residents do and will continue to generate a paycheck. The further you get from this reality the more volatility the market will produce.
Let’s take Blacksburg as an example. After all, I live, work, and invest here so I feel I can speak with some experiential knowledge about the local market.
Blacksburg is a thriving little town bustling with entrepreneurs, and academia for in the heart of Blacksburg VA lies the “Virginia Polytechnical Institute and State University.” Also known as Virginia Tech or even shorter, VT.
VT has been cited as one of the top six technical schools in the country and offers a plethora of engineering degrees, both under and postgraduate studies. It provides a robust veterinary program with a teaching hospital, a nationally known medical school churning out DO’s at VCOM, an agriculture program that is celebrated and much more. The school has numerous sports programs which offer world-class facilities and coaching. These programs provide endless opportunities for student-athletes to go to the next level if they possess the ability and desire to do so.
Attached to campus is the Virginia Tech Corporate Research Center. This vast land mass is brimming with startup companies as well as companies who are mature and growing like wildfire. 1901 Group located in the CRC is a trusted provider of IT services for the public and private sector. They just announced in the last quarter of 2018 that they plan to hire over 500 new employees in the next year and a half. That’s a big deal, and that’s just one employer in the area.
Here's my point, Blacksburg is growing. VT is growing, companies already here want to enlarge, and other companies look at the area and recognize that we churn out valuable employees every semester. The environment is rife with opportunity, and that’s where people want to be. The community is diverse, professional, and very welcoming to outsiders. It’s like they “get it.” What is it they get? They get the fact that diversity is the breeding grounds for creativity, growth (both personal and professional), introspection, self-reflection, and human harmony. Existing inside this fair little hamlet are people from every corner of the globe, and you know what’s special? They do it effortlessly and with great pride in who they are and the different experiences they bring that make Blacksburg great. They acknowledge that our differences are to be celebrated and that no one is better than his or her neighbor. If you are alive, you are intrinsically valuable. No one stands above another. We are all just people who were designed to love and have the desire to be loved and valued.
This diversity is a vital part of any community, and it’s rich here in Blacksburg. Having said all of that, the conclusion to the matter is that the real estate market here is stellar. Let’s consider some of the metrics.
- The median home sale price has grown over 14% in the past 24 months.
- Inventory is down
- Days on the market are down
- Listing volume is down
- Months supply is down
- Sales prices are up
- The average price per square foot is up
- Percentage of list price/sales price is up, and the number of people who are moving to the area is more significant than those who are leaving.
What does all of this mean? It means that if you are considering Montgomery County as a place to “buy in” to the real estate market, then you’re making a wise decision. Not based on feeling but based on fact. I just laid out a list of compelling reasons why investing here would be a good idea.
What do I buy? How much can I afford? What are the current interest rate trends? How do I time the market? What's the rate of return on single-family homes versus student rentals? What are the carry costs of owning rental properties? Do banks look at a condo differently than a townhome?
These are a few questions that you SHOULD have, and I can answer them for you. Not only can I answer them but I love to watch my client’s eyes widen as they learn about real estate on a different level.
When it comes to determining ROI (return on investment), I have provided a simple calculator to help guide you. This calculator is just going to factor cash on cash return and will not include appreciation as it relates to the real property or rental rates. It will not factor in principle pay down or mortgage interest deductions if you cross the standard deduction threshold.
It will, however, give you an idea of what return you can expect and arm you with enough information to decide whether to leave your money in a volatile stock market or pull some out and invest in something more stable yielding better returns.
If after reading this you have questions, please call me. I love what I do, and I’d like to add you to my pipeline of clients I’ve helped achieve their real estate goals.
Thanks for stopping by!