The Southwest Waterfront neighborhood of Washington, DC continues to attract investors and renters alike. With its waterfront views, luxury developments, and proximity to The Wharf, it’s one of DC’s most dynamic rental markets. But if you’re an investor, you may be asking the big question:
Should you buy an existing rental property or build a new one?
As housing competition intensifies across the country – with DC home prices up 5.1% year-over-year in 2025 (Redfin Market Data) – some investors are turning to new construction to meet the growing demand for high-quality rentals. Both strategies can be profitable, but the right choice depends on your financial goals, risk tolerance, and the local market.
Here’s what every investor should consider before deciding whether to buy or build a rental home in Southwest Waterfront.
1. Compare the Total Cost
While the idea of building a new home may sound more expensive, that’s not always the case. Construction costs can vary dramatically depending on the lot, materials, and labor.
In 2025, the average cost to build a home in DC is between $220 and $350 per square foot, while the median home price in Southwest Waterfront exceeds $700,000. If you already own land or have access to a reliable builder, new construction could make financial sense – especially for long-term investors.
On the other hand, buying an existing home offers a faster route to rental income. You’ll spend less time on permitting and construction, but you may need to budget for renovations, system upgrades, and code compliance before renting it out.
Tip: Always factor in closing costs, property taxes, and maintenance reserves when comparing your total investment.
2. Evaluate Local Market Demand
Rental demand in the Southwest Waterfront area remains exceptionally strong, driven by the neighborhood’s proximity to employment hubs, entertainment venues, and waterfront attractions. According to Zillow’s 2025 Rental Report, average monthly rent for a one-bedroom in Southwest Waterfront now exceeds $2,800, up 3.9% from 2024.
However, competition is steep – not just among tenants but among property owners. Luxury apartments and new mixed-use developments have raised tenant expectations for modern features, which makes new construction properties with energy-efficient systems and smart home technology particularly attractive.
Still, existing homes in established neighborhoods nearby may offer more stable occupancy rates at slightly lower acquisition costs.
3. Account for Maintenance and Renovation Costs
One major advantage of new construction is lower maintenance. Newly built homes typically require minimal repairs in the first few years and often include energy-efficient HVAC systems, modern wiring, and smart thermostats that reduce long-term operating costs.
In contrast, older homes might need upgrades to plumbing, roofing, insulation, or electrical systems before they’re move-in ready. These improvements can cost anywhere from $20,000 to $80,000, depending on the age and condition of the property.
However, older homes often sit in mature neighborhoods with established tenant demand and proven appreciation rates – factors that can offset renovation expenses over time.
4. Consider Long-Term Appreciation
Real estate appreciation is one of the strongest wealth-building tools for investors. Historically, existing properties in Washington, DC have appreciated at an average rate of 3.8% annually (CoreLogic Housing Report, 2025).
For new construction, appreciation potential can vary more widely. While newer developments may offer faster value growth if the area expands, it can take years for market comparables to stabilize. Investors who build should plan to hold for the long term to realize full appreciation potential.
In contrast, buying an existing home in a desirable neighborhood like Southwest Waterfront or The Wharf gives you immediate access to established comps, rental histories, and neighborhood data – making it easier to forecast returns.
5. The Right Decision Depends on Strategy
Ultimately, whether to build or buy a rental home depends on your long-term goals.
- If you value speed to market and proven returns, buying an existing home may be the better choice.
- If you prefer customization, energy efficiency, and brand-new amenities, building can be a great way to stand out in the competitive DC rental landscape.
Either way, expert guidance is key. Understanding zoning regulations, construction permits, rental demand, and ROI projections can make or break your investment.
Partner with the Experts in Southwest Waterfront Property Management
At Real Property Management DC Metro, we help investors across Southwest Waterfront, Navy Yard, Capitol Hill, and throughout Washington, DC make confident, profitable decisions.
Whether you’re building your first rental home or expanding your portfolio, our team provides:
- Accurate rental market analysis to project returns.
- Full-service property management including marketing, leasing, and maintenance.
- Compliance expertise to navigate DC’s housing laws and rental regulations.
- Tenant placement and retention strategies that maximize occupancy and long-term value.
Don’t leave your investment up to chance – partner with DC’s trusted property management professionals.
Call Real Property Management DC Metro today at 202-269-0303 or contact us online to schedule a consultation and discover how we can help you build, buy, and grow your rental portfolio in 2025.