What Parts of DC Area Aren't Tapped out for Newbie Flippers?

16 Replies

Hi, BP Members.

Long time lurker, first time poster here.  My brother and I want to team up to flip houses, and we have about 85K in cash to leverage to get started.  We thought we'd start in the DC area because that's where I live. Alternatively, we could do Houston, because that's where he lives.

At any rate, I met with a real estate agent today is was very discouraging about flipping prospects because buying distressed/undervalued properties in the DC area is so competitive that it's usually hard to turn a profit unless you're a realtor or a general contractor (thereby cutting one of your major costs). I have good contacts that could do some things at a discount and sell me materials at wholesale prices. But ultimately, I'm wondering if there are any areas in the Washington/Arlington/Alexandria areas where one can still find properties that can sell at a profit after rehab. If not, is the BRRR still an option?

Any tips or advice would be appreciated.

Thanks all.

Plenty of neighborhoods in DC....but you will likely need more capital. Petworth for instance you can buy for $450-500k, $125k on rehab and sales prices from $700-$875k depending on location in neighborhood and finishes.

Originally posted by @Russell Brazil :

Plenty of neighborhoods in DC....but you will likely need more capital. Petworth for instance you can buy for $450-500k, $125k on rehab and sales prices from $700-$875k depending on location in neighborhood and finishes.

Thanks for the reply.  Assuming we can find a lender who is willing to finance 80% of the purchase price and construction costs, that would put our total budget at about 425K.   Do you think there is enough of a difference in distressed properties/retail sale price to make other places like Trinidad/Brookland/Eckington or even Annacostia profitable at that budget point?

Thank you again for your expertise and advice.

Originally posted by @Chase C. :
Originally posted by @Russell Brazil:

Plenty of neighborhoods in DC....but you will likely need more capital. Petworth for instance you can buy for $450-500k, $125k on rehab and sales prices from $700-$875k depending on location in neighborhood and finishes.

Thanks for the reply.  Assuming we can find a lender who is willing to finance 80% of the purchase price and construction costs, that would put our total budget at about 425K.   Do you think there is enough of a difference in distressed properties/retail sale price to make other places like Trinidad/Brookland/Eckington or even Annacostia profitable at that budget point?

Thank you again for your expertise and advice.

 Maybe Anacostia but Im not sure of the math there. Holding costs will be much more over there as the propeties will take longer to sell. None of the other neighborhoods you mentioned could you be all in at $425k. 

DC I very expensive and over saturated with investors and wouldn't be the best area to be a newbie. It's very competitive and hard to make the numbers work unless you have great wholesalers or off market deals. Not saying it's impossible but DC would be one of the harder markets to dip your toe in for the first go round.

There is plenty of opportunities in the Fairfax County section of Alexandria at your price point. You need to do two things:

1) Have your financing lined up ahead of time and make sure you are making a "all cash" offer with no contingencies

2) you will need to find something that is off market. Anything a Realtor finds you on the MLS either won't be around long enough for you to jump on and/or will sell well above what you should be paying.

Originally posted by @Doug W. :

There is plenty of opportunities in the Fairfax County section of Alexandria at your price point. You need to do two things:

1) Have your financing lined up ahead of time and make sure you are making a "all cash" offer with no contingencies

2) you will need to find something that is off market. Anything a Realtor finds you on the MLS either won't be around long enough for you to jump on and/or will sell well above what you should be paying.

Doug--

Thank you very much.  Really appreciate the insight.

Hey Chase,

You can also look for opportunities in PG county( Riverdale, Hyattsville, Suitland, Capital Heights, Oxon Hill, Temple Hills, Ft.Washington, and District Heights). The MLS is dead in my opinion. Lately I’ve been submitting reasonable offers just for people to bid 10k-20k over list price and I’m like how will you make a profit paying that much. Have your financing lined up and look for off market deals. Driving for dollars and direct mail is what I’m focusing on. You have to do what the majority won’t do. It’s easy to click a button and over pay for a property. Buts it’s not easy to stay consistent and persistent with direct mail. It’s not easy to play the numbers game driving for dollars , writing down addresses, tracking down owners and following up if they say no initially. A lot of people don’t want to leave there house to find a deal. You can’t do what the majority is doing.

As for DC there are still opportunities to make money in deanwood, Marshall heights, and Congress heights where you can potentially purchase between 150k-200k and resale 310k and up. It will be competitive on the MLS though. My buddy got lucky with a short sale recently. He purchased for 183k, put 63k into it and resold for 330k in Marshall Heights DC. I’m not a realtor yet but I’m in the process. It’s beneficial being a realtor in my opinion.

Originally posted by @Account Closed :

Hey Chase,

You can also look for opportunities in PG county( Riverdale, Hyattsville, Suitland, Capital Heights, Oxon Hill, Temple Hills, Ft.Washington, and District Heights). The MLS is dead in my opinion. Lately I've been submitting reasonable offers just for people to bid 10k-20k over list price and I'm like how will you make a profit paying that much. Have your financing lined up and look for off market deals. Driving for dollars and direct mail is what I'm focusing on. You have to do what the majority won't do. It's easy to click a button and over pay for a property. Buts it's not easy to stay consistent and persistent with direct mail. It's not easy to play the numbers game driving for dollars , writing down addresses, tracking down owners and following up if they say no initially. A lot of people don't want to leave there house to find a deal. You can't do what the majority is doing.

Phillip,

Thanks for the reply and your perspective.  I'm happy to put in the work to find deals.  Can I reach out to you sometime to get your ideas and specifics for your approach to direct mail and driving for dollars?  I'm in the very beginning stages where advice and networking is extremely valuable to me.

Best,


Chase

Send me a message with your contact info. Let’s connect. Make sure you add a profile picture on here. It increases your credibility. 

Originally posted by @Chase C. :
Originally posted by @Phillip Amaechi:

Hey Chase,

You can also look for opportunities in PG county( Riverdale, Hyattsville, Suitland, Capital Heights, Oxon Hill, Temple Hills, Ft.Washington, and District Heights). The MLS is dead in my opinion. Lately I've been submitting reasonable offers just for people to bid 10k-20k over list price and I'm like how will you make a profit paying that much. Have your financing lined up and look for off market deals. Driving for dollars and direct mail is what I'm focusing on. You have to do what the majority won't do. It's easy to click a button and over pay for a property. Buts it's not easy to stay consistent and persistent with direct mail. It's not easy to play the numbers game driving for dollars , writing down addresses, tracking down owners and following up if they say no initially. A lot of people don't want to leave there house to find a deal. You can't do what the majority is doing.

Phillip,

Thanks for the reply and your perspective.  I'm happy to put in the work to find deals.  Can I reach out to you sometime to get your ideas and specifics for your approach to direct mail and driving for dollars?  I'm in the very beginning stages where advice and networking is extremely valuable to me.

Best,


Chase

@Chase C. Consider doing a mail campaign to find off-market leads as @Doug W. is suggesting.  A good target in a tight market is Seniors with 15+ year ownership and low Financial Stability Scores (FSS). 

These folks are likely ready to downsize or transition to assistance. Very often they have deferred maintenance and not done much updating. Combine this with the fact that their homes have appreciated since they purchased 15-20 or more years ago, and you will likely have room for a lower offer.

In DC, Arlington and Alexandria, there are 1,453 senior homeowners, 15+ years, home value up to $400,000, single family homes with Low FSS. If you add in Fairfax and Montgomery counties, the number available goes up to about 3,500.

A lot of good commentary here. Based on the loan submissions we receive, it seems a lot of investors are turning their attention to other areas (such as PG County, other parts of VA, and Baltimore). Agree with contributor above that off market is the way to go if you can create a viable (and consistent) marketing channel. Also, networking with quality wholesalers and investor-friendly realtors can help. In real estate (as is generally the case in most fields), relationships matter.

Hello everyone.  This is my first post and was very intrigued with this conversation.  I wanted to ask everyone what their thoughts were on this question now that Amazon has announced their move here. It seems like inventory and the overall market has changed so much in the past 6-10 months. Any advice for a newbie investor in the area now?  Are the areas still the same?  Thanks in advance