Newbie in Washington DC

[Joshua Smith]

Hi guys - I have a big goal: To purchase and renovate a four unit property in the Trinidad or Kingman Park neighborhoods of DC with a FHA 203K loan, rent out three units for a year while I live in one, and then convert to condos and sell or refinance to move on to the next project.

All signs are there that these neighborhoods are only going up; and the inventory is in poor shape, ready to be renovated. Deals can be found in spite of the aggressive pricing.

I've been talking with as many investors, property managers and agents in DC. I've also been going door to door and talking with as many neighbors as I can in these neighborhoods to learn about them and to identify any off market properties. So far I have a few great leads. 

Any way I look at the numbers, converting to condos makes a ton of sense. At this point I'm looking for anyone just to talk to more about this goal, to give me some pointers, just to strategize. Anyway - that's my goal and I'm sticking to it! 

[Russell Brazil]

@Joshua Smith It is a fantastic idea.....however do not get very attached to the idea. You should try.....but getting an offer accepted in those neighborhoods with a 203k loan is going to be very challenging.  You are going to be competing against very strong all cash no contingency offers that can close in 10-21 days. (203k takes about 60 days and has required inspections). There are things you can do to make your offer more competitive....but even in those circumstances, many times the all cash offer wins.  You will absolutely need to use an escalation clause....and you will likely need to escalate a dollar amount of next best offer with a number pretty high that you might not feel comfortable with.  Jut this week I had one client bid $10k over the 2nd best and they still didnt get it.  So conceivably in some of these situations, you might need to bid $15k, $20k over 2nd best (if 2nd best is all cash no contingencies) to lock up the property. Anyways discuss with your agent what is realistic in the market place.