New Buyer Looking for Agent Reccomendation
Washington, DC · Member since 2017 · 2 posts · 2 votes
New Buyer Looking for Agent Reccomendation
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Contractor · USA · Member since 2016 · 23 posts · 25 votes
9yl agree with Russel 100%
Especial with regards to Takoma park and the rent control. I rent single family homes by room in addition to flipping houses. Renting by room can make the same or more than multi fam properties and in this area, it's much easier to do so. Just watch for the specific counties policies in Airb renting versus regular/long term renting and be sure you get your rental license/certificate. With single family homes some neighborhoods have retired bored people who like to harass and complain about rooming houses in their neighborhood.
As long as you're following the law and have your paperwork people can say what they want but you still be just fine and make lots of money. Screen your tenant well. I pay my current and past tenants a referral bonus and it helps me get great tenants and reduce the costs associated with finding great tenants on my own.
Good luck!
11 Replies
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes9y
Thats not typically an area that you will find a lot of rentals. Unless you are looking at a larger than normal down payment, it is going to be hard to be cash flow positive. But if you are looking at a larger than normal down payment or an all cash transaction, it is an area that you will be able to easily fill with quality tenants and have an asset that is likely to increase in value over time.
District Invest Group546 Reviews - Washington, DC · Member since 2017 · 2 posts · 2 votes9y
Hi Russell,
It seems as though there is a fairly large market for rentals given that there are almost 1,000 Georgetown students who live off campus during their Senior year. Are you saying that there is just not a lot of houses on the market or that to buy one and turn it into a rental is difficult?
If it is the later than how are all of these homeowners making a profit on their renting to students/why would they rent out in the first place?
Thank you so much for helping me to understand this!
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes9y
Originally posted by @Zachary Harrison:
Hi Russell,
It seems as though there is a fairly large market for rentals given that there are almost 1,000 Georgetown students who live off campus during their Senior year. Are you saying that there is just not a lot of houses on the market or that to buy one and turn it into a rental is difficult?
If it is the later than how are all of these homeowners making a profit on their renting to students/why would they rent out in the first place?
Thank you so much for helping me to understand this!
They are not leveraged at 4 to 1, or 3 to 1 on a current sales price. They purchased at considerably lower prices in the past.
District Invest Group546 Reviews - Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes9y
I had a few minutes to check the market in Georgetown. So let's just for the sake of simplicity look at the cheapest 3 bedroom on the house there. $1.35 million. With 25% down you are looking at a monthly payment of $6100 a month. I'd put the rent on the property probably between $5,000 and $6500 a month. Let's say $2,000 each bedroom for an even $6,000. So you are cash flow negative even before factoring in any expenses.
I'd be looking further east in the city for a rental.
District Invest Group546 Reviews - Real Estate Investor · Arlington, VA · Member since 2016 · 3 posts · 1 vote9y
Russel,
If you don't mind jumping back to the original title of the thread - for a first time investor looking in the DMV area who is looking to househack a multi-family unit where would you recommend looking? I hear NOVA is a little crazy but would NE/SE DC or Silver Spring / PG County be an ideal location?
Ideally I am looking for a project property to get a 203K FHA loan on in an up and coming area.
Thanks in advance!
- Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes9y
Originally posted by @Harry Holroyd:
Russel,
If you don't mind jumping back to the original title of the thread - for a first time investor looking in the DMV area who is looking to househack a multi-family unit where would you recommend looking? I hear NOVA is a little crazy but would NE/SE DC or Silver Spring / PG County be an ideal location?
Ideally I am looking for a project property to get a 203K FHA loan on in an up and coming area.
Thanks in advance!
Multifamily 2 to 4 units only exist in the tiniest numbers throughout the region. This is a hard thing for people from outside the area to wrap their minds around. I think in Nova something like 2 of them sold in the last 3 years.
The places where they do exist are in the DC neighborhoods of Trinidad, Brentwood, Hill East, Carver Langston, Anacostia.
You can also find some row houses with basement apartments in additionally Petworth, Brightwood, Shaw, North Cleveland Park.
Frederick md has a few, Baltimore has a few. Takoma Park has them but the rent control there will kill you.
Keep in mind that even in the places I mentioned they only exist in extremely small numbers.
District Invest Group546 Reviews - Real Estate Investor · Arlington, VA · Member since 2016 · 3 posts · 1 vote9y
Russel thanks so much for the insight. It seems for a new buy and hold investor looking to jump into the game with one's first purchase that single family homes are the asset class to target. I'll start to focus my search in the areas you recommend!
- Contractor · USA · Member since 2016 · 23 posts · 25 votes9y
l agree with Russel 100%
Especial with regards to Takoma park and the rent control. I rent single family homes by room in addition to flipping houses. Renting by room can make the same or more than multi fam properties and in this area, it's much easier to do so. Just watch for the specific counties policies in Airb renting versus regular/long term renting and be sure you get your rental license/certificate. With single family homes some neighborhoods have retired bored people who like to harass and complain about rooming houses in their neighborhood.
As long as you're following the law and have your paperwork people can say what they want but you still be just fine and make lots of money. Screen your tenant well. I pay my current and past tenants a referral bonus and it helps me get great tenants and reduce the costs associated with finding great tenants on my own.
Good luck!
- Real Estate Investor · Arlington, VA · Member since 2016 · 3 posts · 1 vote9y
Ebony,
Thanks for the insight! I had not thought that renting room by room would be a feasible long term strategy given most peoples aversion to sharing common areas - but in an area devoid of multi's it would make logical sense. I assume you are filling single family homes in this manner? Do you find it is hard to get people to sign up for long term renting/leases in this setup? Or do you utilize short term solutions such as Air BnB?
Tenant referral bonus is a very clever way to get around what I am sure is constant turnover - saves the headache!
Appreciate the advice!
- Contractor · USA · Member since 2016 · 23 posts · 25 votes9y
Harry,
Most people have more of an adversion or fear of not gettting along with their house mates and not having "clean" common areas. Not wanting to "share common areas" is often cited as an excuse but not usually the actual true reason.
When renting by room, having long term leases is actually harmful and not your goal. Based on your question I get the sense you're implying that long term leases are preferable. That maybe the case with renting by the whole house, but absolutely not when you're renting by room (which is a very common mistake by newbies who rent by room).
Since I said all that, I'll explain a bit. When you rent by room; tenants ability to get along well/live well with heir housemates matters. As I said above it's one of a house-sharers worst fears. When you offer 12 month or less leases you can get rid of people who don't fit well or who cause "trouble" more readily. This is important because one bad egg can scare the rest of your good tenants who live in the house away and reduce your ability to get referrals. Start with 3-6 month leases with a month to month afterwards.
Don't do more than 12 months when renting by room. Only sign for 12 after they've been there for 6 months already and you have a sense for how well they get along with others.
Make sure your tenants know and feel comfortable that they can text or call you with any questions or concerns. I've created that type of comfort with my tenants and if I have someone who's disruptive or an issue, I will hear about it from all or most of them. You want this. Better to know and do something about it than be ignorant and wonder why you can't keep your tenants. Proper screening will almost always help you avoid a bad egg in the first place but bad eggs do occasionally slip through.
My target audience appreciates flexible leases. Those who ask for 12 or more months educate them and sell them on how a shorter term lease works in their benefit. Again, they can stay for years on a month to month. Having everyone on a month to month or less than 6 month lease helps keep everyone respectful of each other because they know if they're not I have the power to cut them off when the time comes. If they want to stay, they have to behave and get along with the others. People always want to stay in my rooms; I have a waiting list. Having a rooming house where everyone is respectful and the place is remodeled, affordable, and clean is priceless.
As per your question about AirB: I strategically have half my rooms AirB and the other half non Airb. This is important. You always want to be able to have a flat month instead of a negative month. My non AirB folks pay a little less per month but give my property stability financially and socially. AirB guests pay more and when certain parts of the year come up - for example the month of December... AirB dries up fast as people stop traveling as much and go home for the holidays. I was rebooked and full the next month though. Because I diversified my rooming house, I will always have super profitable months or an occasional flat month where I can pay my expenses and not lose money.
Plus, having half the house non AirB helps create consistency in the house with the houses "culture" and norms so when my more transient AirB guests come into the fold they are socialized quickly and welcomed.
There's always the consistent folks to show the new guests "the ropes" or whatever of how the house "runs" (i.e how trash and recycles are handled, mail, how to work the Roku, how they interact with each other and use common areas etc)
Yes, the tenant referral bonus is one of my secrets to filling my rooms. Don't mistake though, it's only half about the money.
I'll explain: When you tell your tenants that you want referrals from them, it's a people issue. You're saying without saying it that you like them, trust them and want more people like them. This makes them feel good and wanted. They will like the idea of getting to possibly choose a house mate or help a friend they know rent a room with a landlord that's "good". If you're not a "good" landlord no amount of money you offer them will get them to refer others to you. That said - by giving them money for a good referral you're showing your appreciation in a way that matters to them.
Talk to your tenants and learn from them other ways that would make them feel appreciated. For some, it's not all about the money (but for my demographic it mostly is.)
Here's an example - One of my long term tenant appreciates being able to pay his rent sporadically throughout the month in 3 chunks for example. His previous landlord would have never let that slide. For me, I'm fine with giving him this flexibility. This is how I show my appreciation to him. If I have a new AirB guest arriving, this tenant will open the door for him, show him their room, give them a hour tour and take them under his wing - so I don't have to go the the house to let them in and explain everything myself. I can stay home and be with my family instead. This tenant who I'm flexible with will take care of small issues when I'm not around and help keep everything all-good, for example. He's the first to tell me if I have a bad egg in my nest. He takes out the trash for the whole house and gives my AirB guests tips on how to get around the city.
I've experimented with different ways to offer a referral bonus and if you're interested you should too. Always experiment and see what works best for the demographic you serve. What works best for me and my audience is $500. $200 if they stay for at least 90 days and another $300 after 6 months. The bonus is enough to get your tenants always looking out for more potential tenants to send your way. It's also less than a months rent for me so I'm happy to pay my tenant the referral bonus so I don't lose a whole month or few of rent looking myself or waiting.
My wait list is a combination of being a "good " landlord is (which I could go into more detail about what that means in a future post), advertising directly to my target market, and referrals from tenants or others who know what I do. Don't rely on just one stream to get your tenants (like only post of Craigslist or only AirB for example). Multiple steams including simply being a "good" landlord will always be working for you all at the same time in your favor. This makes landlording-life and tenant screaning easier.
Remember, SFH room renting is different from other type of renting if you really want to be successful at it. Treating it the same way will be to your financial and emotional detriment. However the basic fundamentals of being a "good" landlord is what crosses over and is important no matter if you are room renting, multi-fam or commercial landlording.
Good luck Harry!
- Real Estate Agent · Alexandria, VA · Member since 2014 · 184 posts · 78 votes9y
Hey Harry,
It is possible to buy multifamily in DC. In order to see the deals, you have to be connected, because most of the inventory sells off market between commercial agents and brokers. Many commercial agents will sell both sides of the transaction in house, so unless you have a connection to that agent, you won't see the deal. Sometimes the best way to buy Multifamily is to get in touch with owners and offer a fully vetted off market offer. Takes some work and its hard to get the right data without CoStar (commercial MLS).
If you are interested in chatting, PM me.
Good luck,
Dan
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