Add An Addition or Buy An Additional Property

5 Replies

Hello all. I’m a newbie. I posted this is another forum so not sure if duplicates are allowed. I didn’t get any responses so I thought I would post again  

I have a small rowhome in an up and coming area in DC. I bought the property six years ago for 240k and put in 100k. Homes like mine are now going for a little over $500k. This was my home for some years, but I started renting it out last year when I moved away for family reasons. They are building a new town center at the corner of my block (literally) with over 1300 new apartment units, 250k sq ft of office, and retail space. The project has already started and all phases should be done in 3-4 years. I’m thinking of moving back in 2-3 years and have been contemplating adding an addition up and out before renovation prices get crazy in the area but still want to keep the income.

The house has 3 bedrooms and 2 full baths and rents for $2200. Because of its location, I cannot have two proper units, but can have a main unit and an ADU or rent as one house (although I'm hoping the new development will bring a change to my zoning code) The basement has 8ft ceilings and is completely finished but I'm thinking of digging down behind the rear wall to add a full bedroom and reconfiguring the floor plan to accommodate another room, kitchen, and door to walkout (2 bed/1bath unit). At the same time I also want to add a bump out to the 1st and second floor as well as add a third story addition. This would mean the house would have about 7 bedrooms and 5 1/2 baths. Based on my research, a modest budget for the project will be about $350k, so I'm wondering if it's worth it to do all of that or just find another property. Your advice is truly appreciated!

Gia

Before you put any money in the house I would investigate the zoning.  Just because they are putting an apartment complex down the block does not mean our zoning will change.

If you are going to move back in, then consider the lost rent in your calculation for the cost of the renovations you want. 

Are you planning on keeping this house and looking for another building, after you do your research see what numbers work best.

Check zoning future first before anything. This could be your answer with out getting to involved. 

What is your plan with the house at this time? Change to a MFR or house hack or keep for your own living? Would you be able to live in the house while all the Reno is being done? If it is a rental, are your rents going to add enough return to account for the large investment?

It might be worth looking into other homes near by that you could purchase and pour some of that renovation money into to. It could net you the same or better monthly returns and save you a lot of time and headache from doing the addition. 

Could you possibly do a smaller ADU and still purchase another home? Live in one of the locations and have two doors to rent out?


Good luck in your choices. Sounds fun either way you go. 

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Thanks for the response!

I don’t have any info yet on a potential status change, but right now I can only rent an ADU if I am a primary occupant. Of course, I could also rent out the entire home at any time. 

I wouldn’t need to live on site for the renovations as I can stay with family. From what I’m seeing in the market, a 2 bedroom goes for about $1800, so I still think it’s a decent offset, but renting the upper 5 bedroom could yield closer to $3000 if not more. The only concern with that is I wanted to have some higher end finishes in the upper level (mainly appliances and glass enclosures on stairs) that would be subject to a higher degree of wear and tear with a tenant. 

So far, all the fixer uppers in the area are running about $350k as is. It’s a really tight market here. 

Im really doing some soul searching about moving back and I’m hoping I’ll sort it out by the beginning of the year. 


Originally posted by @Marco Martinetti :

Check zoning future first before anything. This could be your answer with out getting to involved. 

What is your plan with the house at this time? Change to a MFR or house hack or keep for your own living? Would you be able to live in the house while all the Reno is being done? If it is a rental, are your rents going to add enough return to account for the large investment?

It might be worth looking into other homes near by that you could purchase and pour some of that renovation money into to. It could net you the same or better monthly returns and save you a lot of time and headache from doing the addition. 

Could you possibly do a smaller ADU and still purchase another home? Live in one of the locations and have two doors to rent out?


Good luck in your choices. Sounds fun either way you go. 

Thanks for the feedback!

I really am trying to figure out the right move. So far I have no info on the zoning changes, but currently can’t rent an ADU if I am not occupying part of the property. 

There are no other properties in the area that I’d be able to get for a cheaper price than the $350k, and that’s still a fixer upper. 

Originally posted by @Andrea Lane :

Gia

Before you put any money in the house I would investigate the zoning.  Just because they are putting an apartment complex down the block does not mean our zoning will change.

If you are going to move back in, then consider the lost rent in your calculation for the cost of the renovations you want. 

Are you planning on keeping this house and looking for another building, after you do your research see what numbers work best.

@Gia S. it sounds like you have some tough decisions ahead of you. There is a lot to account for in that big remodel. Make sure to vet  your contractor really well. Also in my experiences with remodels/additions, they always take longer and cost more than expected. There are always so many unknowns hidden behind walls. However they are exciting to do and the finished product is always worth it.