Washington DC condo

28 Replies

I'm thinking of buying a very inexpensive condo in Washington DC in September or October.  I'm not opposed to getting a very small house, but I don't think my budget will allow for even a small house in the DC area in need of serious repair.

I've been to DC a few times in the past, just to visit and on business trips, and this seems like a good fit for me.  Though this will be a long distance buy, I'll visit any unit before I buy it, so it won't be a blind buy.

Now, my question.  Because of my budget, I'm fairly certain I'll be sticking to SouthEast DC.  A couple of friends have mentioned crossing the border into Maryland or Virginia, but I really want the address to be a real DC zip code.  If at all possible, I'm limiting my search to DC proper.

Back to the question.  Where would be some good neighborhoods and buildings to begin my search?  I'll probably head to DC in mid-to-late August, and again in September, for the sole purpose of scouting locations.  Each trip will probably be just an overnighter, so I won't have a lot of time to waste.

I want something very close to the Metro.  The closer the better.  Anything more than 1/2 mile better be extremely special or extremely inexpensive.  I'm not opposed to something being in "the hood" but I'd rather avoid any real threat of daily mugging -- I don't mind neighborhood flavor from strange characters.   I'd prefer a 2BR, but I realize I'll probably end up with a 1BR. I don't mind if the interior needs work -- in fact, I'd probably prefer it.  My plumber in NC is from DC and I'd rather have him do some of the work and find/manage other workers than trust (and pay extra for) any recent "rehab".  However, I'd like the exterior of the building to be in at least decent condition.

Lastly, I'd like the immediate neighborhood to be at least mildly walkable, with at least one store, one restaurant (fast food or otherwise), and whatever nearby.  In a perfect scenario, the condo would be in a dense neighborhood.

Okay, DCers, let me hear it!

What is your budget - inexpensive and in an area you describe really doesn't exist in DC. Also is this a buy and hold or fix and flip ? If it's a buy and hold make sure to read up on DC tenant laws as they are some of the most tenant friendly laws in the country

I agree with what Chris said.  What is your budget? that would help to offer suggestions.  Don't leave out SW DC.

@Chris Seveney , it's a buy and hold.  My immediate plans are not to rent it but to hold it as a sort of family pied-à-terre.  Initially, for at least the first year, it would be a place for my immediate family, extended family, and a couple of close friends to use to visit DC -- and eventually as a long-term investment.  After a year or two, I'd make it a rental.  I haven't extensively read the DC laws, but I know it's a tenant friendly city.  I'm not too concerned with that.  Know the rules, follow the rules.  I can do that.

@Sonya Stovall , I'm definitely not leaving out any parts of DC.  As long as it's in DC itself, I'm game.  My price range is under $100K.  The further under, the better.  I'm not looking for Dupont Circle neighborhoods.  LOL.  And I'm not afraid to be in a low-income area.  In fact, I'm looking for that.

below $100k in DC isnt going to buy much. I think Anacostia is your best bet.

The area you probably want is around U Street. There are plenty of restaurants and activity, without the great threat of mugging (not saying it won't happen). DC is quite a special place in that one street could cost as much as 1.5million for a condo and the next street is full of muggers, crime ridden and the like (with therefore homes offered at a much less price). I would suggest working with an agent in the area to give you some ideas of what you will find, and then travel to view a predetermined amount of properties together with that agent (somewhere between three and four, so you see enough and can get a feel for the different areas in DC). After one effective visit, you should be able to hone in on the area that you want to invest in and determine the best price range for that area.

To evaluate the area effectively, I would visit such in the evening. My husband and I always do a ride by before we live in any area to see what it's really like. It's also important to ask questions, DC is heavily reliant on its metro system, so you may want to inquire if you can hear the train from the unit you intend to purchase. Happy investing! I hope this helps!

Stephanie

Yes that is tight, research Deadwood (NE),  or Anacostia and see if that is the neighborhood vibe you are seeking. You can go to Urban Turf and they have great information on DC neighborhoods.

Originally posted by @Joseph Barbaretta :

below $100k in DC isnt going to buy much. I think Anacostia is your best bet.

 Anacostia works.  That's the sort of area I had in mind for this, and a friend who is a former DC resident also suggested looking there.  I guess I better keep it on the table.

Thanks Joseph.

@Stephanie Dobbs , I like the tip about visiting the area at night.  That is most definitely in the plans.  When my wife and I were looking for a primary residence nine years ago, I'd visit the houses on the short list at various times of the day and sit on the front porch to absorb the vibe of each locale.  I do that with my rental properties too.  So, I'll definitely be doing it with this DC property.

Thanks for the U St tip.  I'll start looking around there now.

@Sonya Stovall is right, don't forget SW DC, it is a jewel.

If you are thinking SE DC are you thinking west or east of the river? The other thing, if you are thinking of being a buy and hold person, DC is very tenant friendly and has hurt even people renting out the basement apt below their primary residence. So do not skimp on screening tenants.

Regarding getting mugged, that happens in trendy neighborhoods like H Street, Columbia Heights and Logan Circle. Be aware of your surroundings, and walk like you know where you're going.

Originally posted by @Sonya Stovall :

Yes that is tight, research Deadwood (NE),  or Anacostia and see if that is the neighborhood vibe you are seeking. You can go to Urban Turf and they have great information on DC neighborhoods.

 LOL, yeah I have a tight budget for this.  Since it won't be generating any income for a year or two, I don't want to spend too much on this.  Maybe for my second DC area investment, but not this time.

 I'll add Deadwood to my list, too.

And thanks also for the tip about Urban Turf.  I'll be on it very soon!

-Randy

Deanwood, not Deadwood. It's also a metro stop.

Thanks Marie, yes it is Deanwood, I didn't notice the auto correction. LOL

Originally posted by @M Marie M. :

@Sonya Stovall is right, don't forget SW DC, it is a jewel.

If you are thinking SE DC are you thinking west or east of the river? The other thing, if you are thinking of being a buy and hold person, DC is very tenant friendly and has hurt even people renting out the basement apt below their primary residence. So do not skimp on screening tenants.

Regarding getting mugged, that happens in trendy neighborhoods like H Street, Columbia Heights and Logan Circle. Be aware of your surroundings, and walk like you know where you're going.

 I would prefer west of the river, but I think east is more realistic for my budget.  I'd buy on either side.

I wasn't too serious about the mugging comment.  Any urban area is going to have some risk of mugging.  But thanks for the tips.

I agree that screening and being willing to miss a month's rent to get the right tenant are very important in a tenant-friendly city like DC.  North Carolina is a landlord friendly state, so I'll have to reprogram myself slightly, but that doesn't concern me much.  As they say, this isn't my first rodeo. ;-)

DeaNwood, not DeaDwood.  Got it.  lol.  I really liked that show.  Not sure I'd want to live there, though.  Then again, they way the town expanded, it turned out to be a great investment for those that invested early.

Just read an article that explained the TOPA law in DC.  Whoa, that's an unusual law.  Not a deterrent for me in this case, but it does make me eager to read up on any other unusual DC landlord/tenant laws.

Anacostia is probably one of the very few neighborhoods you will find anything in DC in the sub 100k range. I don't think it's the safest in the world. Getting mugged? Very high possibility. 

Randy....part of the factor too here beyond cost is how you will be paying for the unit...whether it is cash or conventional mortgage. You can find sub $100k units in parts of NE and SE DC...but it may not be possible to finance them. Ive run into this issue with clients as some of these HOA's are in such disarray that you need to do an all cash purchase to close on the property.

Originally posted by @Russell Brazil :

Randy....part of the factor too here beyond cost is how you will be paying for the unit...whether it is cash or conventional mortgage. You can find sub $100k units in parts of NE and SE DC...but it may not be possible to finance them. Ive run into this issue with clients as some of these HOA's are in such disarray that you need to do an all cash purchase to close on the property.

 Hi Russell,  thanks for the reply.

This will be a cash deal on the purchase end.  In fact, part of my strategy is I'll probably put up substantial earnest money and offer a quick close to get an even lower price.  I know what I want, I'm not afraid of the areas, and I know what I'm getting into with the neighborhoods, so there won't be any surprises there.  In fact, I think I'll be pleasantly surprised by where I end up purchasing.

Yet, I'm curious as to why it wouldn't be possible to finance these units.  I understand that many banks don't want to finance under or around $50K.  And I know some banks don't want to loan if a property requires substantial rehab before being livable.   Are you noticing problems with loans for other reasons in these neighborhoods?  Like I said, it won't affect me this time out, but now I'm curious.

Thanks

So off the bat if the investor ratio is too high, or too many units HOA fees are delinquent, then FHA financing is gone right off the bat.

But even further, some of these buildings have HOA/Condo associations that have been dissolved or are nonoperating. So when this is the case even a conventional loan may be off the table then. I know this is the case with several buildings near the Deanwood Station, Benning Road and Congress Heights metro stations.

So what I would suggest is when you are narrowing down properties, long before you ever see them have either you or your agent contact the listing agent to see if it is the unit is eligible to be financed.  Even if you are paying cash, buying into a condo project in such disarray can have huge risks.  What if the condo building owes property taxes in addition to the units, and the city imposes a special tax assesment suddenly to recoup the taxes?

Another thing I did see happen once too is one building that was near the Benning Road metro station....there was no active condo association. So the exterior of the building was not kept up....the city deemed it a blighted property which raises the tax assesment from $0.85 per $100 of value to $5 or $10 per $100 depending on which category of blighted property it fell into.  

@Russell Brazil , thanks for the info.  Those three neighborhoods are areas where my preliminary search has taken me.  I'll definitely ask my future agent those questions and have him/her check into it.

But now you've got my investor brain ticking. I might want to get into a smaller version (6-10 units) one of those HOA-distressed buildings and see if I might be able to take over the whole building in a year or two, buying two or three units a year, then turn it around after I had control. I'm getting behind the DC market and the more I look into it, the more I think I might want to get into it in a big (for me) way.

But that's just dreaming for now.  For now, I just need to get this first unit nailed down.  September can't get her soon enough.  :-)

You're going to have a very hard time finding what you describe in SE DC. Frankly, with your budget, you aren't going to find it in MD and VA close to DC. Look at crime maps closely and ask whether you'd feel safe in the areas where you might find properties at that price point. Being vigilant is always important, but having ended up on that side of the river by mistake once and ended up caught in the middle of a drive-by shooting, it is not an area that I would put my family in. Search for grocery stores. SE east of the river is largely a food desert. I'm not sure the areas in your budget are going to come close to meeting your desires. I don't mean to be a downer, but I want to give you a realistic picture of what those areas are like. Also, some have mentioned SW. SW used to be great value. Today, it is harder than ever to find values. Some areas in SW are up 30% year-over-year. New condo buildings have penthouses starting at $3m. DC is a very expensive market. Best of luck!

@Stephen Chittenden , thanks for the advice.

Ultimately, different people have different thresholds for what is too sketchy an area and what is somewhat acceptable.  I respect your opinion.

This morning, I spoke to my plumber who was working on a house for me in NC, but who is from DC and visits there over a dozen times a year.  From his point of view, he said there are no "really bad" areas of DC any more.  In his words, "not like it was ten years ago or so."

I don't say this to dispute what you (and others) have said.  I'm just saying that it's all in the eye of the beholder.  I love hearing people give different opinions of the same neighborhood, because in the end I end up getting a more complete picture of the situation.  

Thanks!

Originally posted by @Shawn Dandridge :

Anacostia is probably one of the very few neighborhoods you will find anything in DC in the sub 100k range. I don't think it's the safest in the world. Getting mugged? Very high possibility. 

 Thanks for the advice, Shawn.  Sorry I missed it earlier.

If I could afford more for this purchase, I'd love to go to Dupont Circle, or Georgetown, or other tonier areas.  Unfortunately, the reality is, those areas are out of my price range.  So, I'm okay with heading to Anacostia and the surrounding neighborhoods.

And thanks for your service!  One of my good friends is ex-Army, now privately employed in the Middle East after tours in Iraq and Afghanistan.  I'm finally going to see him again later this month when he returns for our long-time fantasy football draft.  I have seen him in over eight years.  In fact, I don't think he's seen my two youngest children.  Anyway, once again, THANKS!

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