Real Estate Friendly Agents in Washington DC

11 Replies

Hi Guys,

I've been searching for the ideal property to invest in that makes ultimate sense for my bottom line for what seems like a while after moving to DC a little under a year ago and putting an offer on a propertin in Baltimore (fell through due to foundation and electrical issues)...My strategy is buy and hold and looking to invest in multi families in Washington DC with the idea of househacking (living in one unit renting out the rest). I would not be opposed to an FHA loan as i realize this might be the only option of affording this crazy market (my budget all in is 25k). Any pointers or agents that can guide me to options that might be viable? Thanks in advance!

Well as you might be aware, multifamilies are incredibly rare in the DC area.  in 2017 218 in total sold, and so far this year about 170 of them. So this is one of the most competitive parts of an already competitive market. So be well aware of that going in. 

With a budget of $25k, with closing costs, you are limited to the low $400ks on price point.  That is going to likely put you EOTR (East of the River).

The other thing to keep in mind is that FHA has strict condition requirements, and many of these properties are not going to meet FHA condition guidelines.

Also be aware that you will be at a competitive disadvantage because you are using FHA financing, on an asset that a lot of cash buyers are looking to buy, and then cut up into separate condos.

As a first step, Id suggest using a strong lender, and going through preunderwriting so you can get an actual loan commitment as opposed to a generic preapproval, to help boost your position. @Upen Patel is a lender in the area that has one of these programs.

Also to be aware of, 3-4 unit properties in the area typically will not meet the FHA self sufficiency test, so you may be limited to 2 unit properties.

@Russell Brazil Thank you so much for your QUICK response and ..this is i'm seeing but figured I would give DC a chance again...being that the surrounding areas (VA/Maryland) are just not meeting the 1% rule in terms of investing .. many of them strictly single family housing which is another...what are your thoughts on buying a condo given the news about Amazon?

@Charlene Isoh The rent/price ratio is indicative of the underlying risk of the asset/and or market.  DC is one of the lowest risk markets in the country, so our ratio in the higher demand areas is going to be well below 1%. Baltimore for instance is a much higher risk market, and thus will have much higher ratios in the 2, 3 or even 4% range.

I wouldnt let the impact of Amazon affect my thinking. Im a buyer of DC real estate regardless of Amazon. Amazon is just one small data point that points to why this is already a great market to buy in. Growing market, growing incomes, growing population, high income earners.

Buying here regardless is typically going to yield good results. You just have to have realistic expectations for the market, such as being prepared for how competitive multifamily is.

Originally posted by @Charlene Isoh :

@Russell Brazil Thank you so much for your QUICK response and ..this is i'm seeing but figured I would give DC a chance again...being that the surrounding areas (VA/Maryland) are just not meeting the 1% rule in terms of investing .. many of them strictly single family housing which is another...what are your thoughts on buying a condo given the news about Amazon?

Are you going through a realtor who is getting the leads from the MLS? If so I doubt you will ever hit that rule.

Originally posted by @Charlene Isoh :

@Mark Cruse @Russell Brazil do you think buying a condo and renting it out in DC could potentially be a smart option?

Best,

Char

 I own 3 condos now, Ive owned 2 other ones in the past. I like condos.  They just take a little bit more due diligence. You have to dig into the financials of the association a little, and understand what you are looking at.  Most people who dont know what they are looking at always think what they are seeing is scary.  DC has some associations that are great, but it also has some that are poor.  

Condos also as an asset class are more volatile than other asset classes.  In the beginning phases of sellers markets they can take off red hot before other assets. Conversely they can soften easier with changes to the market.  Condos in DC proper have softened in the last few months with rising rates, making it a better time to buy a condo now, than say a year ago.  Most of the condos Ive been getting under contract in the last few months have had a lot less competition than the preceding year.

@Russell Brazil Thanks for the mention.

@Charlene Isoh Adding to what Russell mentioned about FHA. For a 3-4 unit properties, FHA requires it to meet a self-sufficiency test. Given the higher prices in Metro DC and the recent rise in rates, it is very difficult to find a property that will pass that FHA test. Russell is a very knowledgeable realtor and investor himself. I would highly recommend you work with him, as he is great at finding those rough diamonds.

Originally posted by @Ike Okonkwo :

@Russell Brazil I have also become very interested in househacking in DC. What would you recommend the best strategy/approach be? Is it even worthwhile in DC?

 Buy a place that is big enough to have roommates.

@Russell Brazil

I see you mentioned that you own 3 condos. Specifically, what exactly should we be looking for when looking at the financials of the association? I have been reluctant to buy condos because of the associated HOA monthly payments that could cost more than $250+ monthly, which can eat up the net profit and hurt the bottom line. I'm hoping you can chime in and maybe that will change my perception of owning condos. :)

Happy New Year!

@Arthur C. I prefer condos from 1978 to newer. They need a descent anount of cash reserves. The amount needs to make sense for the size of the building and the age. One of mine is new construction, so obviously that doesnt have large reserves yet. I dont like seeing constant special assessments. Can they happen, sure, but I dont want to see them on an ongoing basis. Condo needs to be in good condition. Deferred maintenance on the building is a red flag. Generally fha/va approved. Low investor ratio. Owners up to date on condo fees. No lawsuits, or just 1 lawsuit against association. Ive owned a nonwarrantable condo in the past, and the financials on that were a mess....but the price point was cheap enough that it didnt matter