Flipping in Ivy City Washington, DC

8 Replies

Has anyone tried to flip in Ivy City in DC? Trying to get a feel for what the appetite is for homes there. I live in NoMa in DC, and I love the "bones" of the neighborhood, but trying to gauge timing for any sort of investment there. Also, perhaps a more general question, but what are some good metrics people have used when analyzing a new neighborhood/market to invest in? Thanks!

I've never done a flip in Ivy City, but the metrics for analyzing a good deal are universal in my mind. What's the ARV for a property there? I've never looked at Ivy City sales, but your challenge may be finding enough recent sales to determine what the typical ARV is in the neighborhood. If you can buy a property cheaply enough to make money on a flip based on the ARV, then it's worth pursuing.

@Robert Williams ,

Any suggestions on how to find a good real estate agent in a new area? From all my reading on BP, it's clear that I need to begin establishing relationships with all kinds of people - agents, lenders, GC's, accountants, property managers, etc., but not sure what the best place to start is. I went to the last DC meet-up, but it seemed like most of the attenders were investing outside of DC, so I'm not sure what they best way to establish relationships with people that have intimate knowledge of NE DC.

Regarding metrics, are there not other metrics other than ARV that you look for? I'm thinking of things like days on market, average monthly mortgage v. rental, $ of proposed development, crime, schools, etc. Where I am in NoMa, home values are rising rapidly, and Trinidad is turning, so it seems like Ivy City is a logical next step, but not sure if there will be some reason that this neighborhood is slower to appreciate/ be attractive to millenials than others. I'm wondering if there are good ways to use the available data and crunch numbers to see if there are some quick stats that would show a good place to invest. For example, what is the 5 year moving average of sale price, or % increase on sales per year, or trends on the days on market margin. Seems like you could put together a set of metrics that you could use to give you the trajectory of a neighborhood and from that anticipate correctly what the "tipping point" for investment would be.

Currently my strategy is to put in the work to find distressed homes in healthy neighborhoods that are a potential for value add, but I'd also like to look for things in up-and-coming neighborhoods.

I was thinking about this for flipping because I don't want to get stuck holding a property that won't move, so I understand that many of these things might be better for a buy or hold strategy.

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Hey Bobby,

I think all of the metrics you mentioned are useful, especially if you're contemplating a buy and hold strategy. If I'm looking strictly at a flip investment in a neighborhood, I typically go back and check the sales records for the past six months. If you go back any further, you're looking at potentially out-of-date data. If it's a neighborhood with a ton of sales, then I'll shorten how far back I'm looking.

The most important metrics I look for are 1) what's the typical sales price of as-is properties, 2) what's the typical sales price of renovated properties, and 3) how long did it take to sell the renovated properties (days on market), and 4) did the seller end up having to drop their price or offer buyer incentives to get to closing.

If all these factors are conducive to making a decent profit on a flip (a net of at least $50,000 is what I look for after all realtor fees, closing costs, carrying costs, and renovation expenses are paid off) within a reasonable period of time (I look to be in and out of a project within 3-6 months) then the numbers work for me.

A quick search of Ivy City sales turns up only 2 sales during the last 12 months. One was a rundown rowhouse that sold for $135,000 and the other was a renovated rowhouse that sold for $475,000. Now those are great numbers, but there's not enough inventory turnover to make me feel comfortable about working there.

I've never looked at Ivy City, but it is the next logical step after Trinidad geographically. What I don't like about it is that it feels physically isolated (being tucked in between Mount Olivet Road and New York Avenue) and has less access to public transportation (no metro or trolley). Trinidad has the cachet of being close to the dynamic H Street corridor. Ivy City does not.

Personally, I'm focusing more on areas across the Anacostia that are close to metro, especially around the Deanwood and Minnesota Avenue metro stops.

If you're looking for a good real estate agent, just message me and I'll put you in touch with a good one. I'd also be happy to share my list of responsive lenders and to give you my property manager's info.

-Rob

I agree with Rob that Ivy City is currently physically isolated. Plus, it has a huge nightclub there, and the neighborhood isn't currently inviting. But I think you are right that it will change, and change in a big way. I hear they are putting a bike trail that would connect it to the Florida Market and the NoMa Metro. Also, Douglas Development is redoing the Hecht Warehouse, that will be a huge retail center, including an organic grocery store. Ivy City has great access out of town to Baltimore, Philly, NYC, etc. so I think there is some upside there.

Rob,

Thanks for the quick reply. I know we've both replied to other posts about the desirability of homes close to transit. I totally agree with that, and I have my own apprehensions about the isolation of the neighborhood. What's interesting about Ivy City is that the residents there don't seemed motivated to petition the District for better forms of access to public transportation. From reading some news about civic action in the neighborhood, residents are more focused on fostering better amenities for the existing community, rec centers, etc. But I do know that Douglas is moving forward with the conversion of the Hecht Warehouse into 330 new units, a project I'm working on pricing right now. I'm very curious to see how this will change the neighborhood, and if they are pushing for new connections to make their development attractive.

And with the population pressures of incredible growth, it seems that any near in neighborhood is bound to transform, the only question is when. Trinidad, which is close to H St, but not really conveniently close, and not really within walking distance of any metro, is changing fast. And the housing stock in IC is charming. There's a community feel that I love. Ivy City seems to have a unique culture, and was not the hotbed for foreclosures that Trinidad was that attracted all the investment. (Sorry I'm probably just rambling at this point...). Perhaps I should just trust my gut that this is not the right time to buy there, but I just know that with how DC is changing, it will be a terrible place today, and a great place tomorrow, and then POOF!, its too late. Shaw, Bloomingdale, Eckington, H St, Trinidad...Ivy City? Also, wouldn't it be nice if they could add a metro between NoMa and RI Ave? The rails are there, just need to run a spur line over there. But like all those investments, its a chicken or the egg problem. If you build it, they will come! If they come, we will build it (H St Streetcar)!

Anyway, the four metrics you gave are a great baseline. Thanks for sharing. I'll be sure to use these when looking at properties. And kudos for looking in Deanwood and Minnesota Ave. I just finished a 70 unit building at 48th and Nannie Helen, and worked with Scottie from Blue Skye who is developing the new project at Minn Ave Metro. I also love the feel of that are around the metro, and am beginning to look over there myself.

Maybe this is the wrong mentality, but I've only been looking at investing for about 2 months, and I still feel I need to develop my own business plan before beginning to make connections. I'd like to be ready to hit the ground running, clearly communicate what I'm looking for and what my goals are, quickly identify good deals and be ready to move on them, and have an intimate knowledge of the areas I want to invest, etc. If and when I get to that point, I'd really appreciate any connections you could provide.

@David Rivera ,

Don't act like you don't go to LOVE on a Saturday night! We'll organize a BP field trip soon. I've been curious about that place for a while with it's bright sign along NY Ave. But yes, I agree it might not be the highest and best use for the space in the near future. But NoMa has developed around Ibiza on 1st St, and now a few years later the friction of the growth is straining their "jet-setting vibe."