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D.C. Short-term Rentals Are Worth a Serious Look -- 7 Reasons Why

Wondering if Washington, D.C. short-term rentals are a great investment?

Two years after Covid-19 broke out, the nation’s capital is back in business. Capacity restrictions have been lifted in stores, restaurants, museums, and other attractions.

And compared to other cities across the States, D.C.’s response to the pandemic has been one of the most robust. While its local economy may take a while to completely get back on its feet, there are plenty of good reasons why it’s a great city for investing in short-term rentals.

Why Invest in Washington, DC Short-term Rentals?

1. Financial indicators are positive.

Much of the city’s economic recovery is attributed to the presence and stability of federal government jobs. Federal employment accounts for a third of salaries in the district, along with the countless allied roles: lawyers, political interest groups, consultants, and contractors.

In 2019, Business Insider ranked D.C. 7th among US big cities with the most booming economies. The average weekly wage that year was $1,540, the third-highest among the 30 biggest metropolitan areas in the country. The per capita GDP of $74,198 was the fourth highest.

Last year, the city’s GDP shot up to $208,284 and became the country’s largest output. The average weekly wage of $1,669 became the highest.

But another important sector that kept the district afloat was private business. Even though hundreds of enterprises were being wiped out by the pandemic, many new businesses were also being formed.

The Washinton metropolitan area — collectively and colloquially called “DMV” for D.C., Maryland, and Virginia — is home to big private-sector employers like Capital One Financial, Freddie Mac, Lockheed Martin, Deloitte, and Booz Allen Hamilton.

The strong, diversified economy made DMV rank the 14th most competitive financial center in the world by the Global Financial Centres Index.

Federal labor, along with professional, business service, technology, hospitality, and tourism is what the region has thrived on for decades. And while the last two industries were badly hit by Covid-19, they’re seen to bounce back in the months and years ahead.

2. Property values are rising.

Washington, D.C. is regarded as a “consistent safe haven market” in the real estate industry. It’s been known to thrive during downturns and been tagged “recession-proof”. True enough, the district has retained its place at the forefront of the national apartment market throughout the pandemic.

Last year, buyer demand was very strong and days on market were at all-time lows — as low as 7 days.

In October, the median price for a single-family home crossed the $1million mark for the first time in history at $1.1 million. That’s a 24.2% increase from the previous year.

Bloomberg reported a housing boom as D.C. neighborhoods see home prices rising by an average of 13% this year.

And new developments will surely affect the market. The sprawling new estates of Amazon HQ2 and Virginia Tech’s Innovation Campus are located in the National Landing neighborhood. Together, these promise to bankroll at least 50,000 jobs and create a demand for 15,000 residential units over the next several years.

Meanwhile, the Wharf at the Navy Yard is on Phase 2 of development, with 255 apartments being readied.

3. Rental vacancies are down.

At the end of 2020, the rental vacancy rate in the district was at 5.9%, down by .4% on a year-over-year basis. That figure is well below the national average of 6.5% according to Mashvisor, a real estate financial and investing advice company.

4. Inventory is good.

Multifamily investment properties, comprising over 62% of real estate options in the area, are particularly popular in the rental market. The DMV has always been a favorite among multifamily capital, especially pension funds, life insurance companies, family offices, and other institutional investors.

New investors needn’t worry, though. Mashvisor says the city’s inventory matches the national average.

In addition, the number of multifamily housing permits that have been issued far exceeded the projections. That means many more housing units are currently being constructed.

Townhouses and condos are also in the mix. New listings of attached townhouses rose by almost 30% in October 2020 compared to the previous year, which is a 10-year high. Across the region, new listings of condos rose by 49.2% year-over-year.

5. The workforce is competitive.

D.C. is the 20th most populous city in the US, with a population of 705,000. The greater DMV is the sixth-largest metropolis with an estimated 6.32 million residents last 2020. If neighboring Baltimore is counted, the population swells to over 9.8 million.

The well-compensated white-collar workforce was already growing before the pandemic. It earned DC the World’s Most Competitive City title on the Global Talent Competitiveness Index.

The Adecco Group, a talent solutions and advisory company that gave the title, cited the following characteristics that gave D.C. the competitive edge:

a steady economy;
dynamic population;
outstanding infrastructure and connectivity;
highly-skilled workforce; and
world-class education.

The district was the only American city that made it to the top 5 of the list. It’s joined by European cities Copenhagen, Oslo, Vienna, and Zurich.

And a vast number of D.C.’s residents — about 61% — dwells in rental properties. Most of them are high-quality renters who can well afford to pay.

In 2019, the median rent for a single-family home was pegged at $2,220. And because of the strength of the labor market, the metro area had the second-highest median household income in the nation at over $92,200. The Loudoun neighborhood, in particular, posted the highest median household income at $129,588.

6. DC is an all-time favorite destination.

Not only did D.C. rank the 4th best city for young professionals to live in America in 2021, but it also topped Conde Nast Traveler’s Gold List for that year.

The online magazine’s editors cited the city’s stunning monuments and museums, historic architecture, expansive parks and gardens, and scintillating bars, restos, and entertainment as timeless and unmatched tourist attractions.

The district also made it to #5 of Buzzfeed’s list of places to travel after the pandemic.

Before the pandemic, domestic travelers comprised 93% — or a whopping 23.8 million — of D.C.s total visitors. That’s up 4% from 2018. And a vast majority of them, around 63%, came for leisure. Not business.

While the numbers dipped to half that amount after Covid-19, visitor arrivals for 2021 have quickly picked up to around 18million. The baseline forecast for 2022 is a conservative 20 million, and the upside forecast is a more liberal 22 million.

7. When it comes down to “Hotel vs. Airbnb”, furnished short-term rentals DC still have an edge.

While Washington, D.C. short-term regulations may be a bit prohibitive, many visitors still opt to book fully-furnished vacation rentals over hotels. These are families, groups of friends, and a host of non-business travelers who otherwise couldn’t visit if they stayed at hotels. Especially if they came at a time when there’s a lot of conferences happening and business travelers are in town.

A mid-scale hotel room in the city center costs anywhere from $220 to $250 per night. By comparison, that price can already fetch a fully equipped 4-bedroom townhouse in the outskirts of the metro. Or, for just $120, you could get a modern Airbnb basement suite near Capitol Hill.

Let’s face it. Short-term rentals provide amenities that hotels can’t: a well-stocked kitchen, washer and dryers, wider living spaces, and free parking. We know that Covid-19 changed the face of tourism, with so many tourists now traveling by car.

Conclusion

The nation’s capital is every bit as viable as other eminent, top-tier cities in the U.S. for short-term rental investing.

The DMV population is a unique ecosystem of diverse renters, with a constant influx of government workers, lobbyists, service providers, and tourists needing furnished short-term rentals in DC.

Downtown areas near transportation arteries and hospitals will always be preferred. But suburban properties away from the city center will be more affordable — both for renters and investors alike.

If you’re ready to invest in D.C., we can help. Cohostit provides complete short-term property management services from marketing to cleaner scheduling to issue resolutions. We’ll take the headaches and sweat out of short-term renting so you can work less and earn more.

We’ll help you with the ins and outs of property management. Not just in DC, but also in some of the hottest real estate markets in the United States like Tampa, FL and Phoenix, AZ.

Click here to book a call and see if you qualify.