Determining Feasibility of House Hacking in DC

8 Replies

Hi all!

So, my wife and I are dual military. We currently have a primary residence in Washington State, but are moving to DC. We're looking at the options of either STR/Vacation rental, or sell it and reinvest an estimated $250k into a multi-family. It seems like to get a good tri/quadplex in the area is taking around 1.5M, of which we'd only get 679k with 0% down on the VA loan, so with the BAH for that area we could definitely afford the payments, but I don't know how hard it is to get a jumbo loan that big (both credit scores over 800). I'm sure there are a lot of pertinent details in here, but we're just getting started and could really use some help. Anyone experienced with this have any thoughts? What is the train wreck that we're missing?

@Aaron Zike I am house hacking in DC right now. I bought a duplex for 620k in the trinidad area, or "H" street corridor. Is it doable, yes. Do you have to be patient and start early, yes! Also, you will need a "boots on ground" realtor. I bought this duplex sight unseen, other than my realtor. 

Also, expect to pay the VA funding fee which if you max out the loan, it will come out to be around 16k-23k. I was all in for a 640k loan for 16k total on my zero down option.

Let me know if you have any other questions.

Thank you,


@Johnny Quilenderino ,

That is super encouraging! I completely agree with a BOG realtor. I was just in a conversation with my wife while you were writing this actually. We have about 4 months available to research, far enough out you think?

Also, what's your other place renting for? How does your cash flow and cash on cash return look if you don't mind my asking?

Duplex cash flow is negative because I am living in it. 2000 a month I get from the upper tenant. Once I move out, 4000 a month from the building. PITI is 3500, so only 500 a month starting at the end of this year. I expect them to stay at or about the same. This was a "I am not going to pay someone's mortgage" buy, and can I get something in a trendy area of DC.

Four months is far enough out. Contact the people that I sent on the PM so you can get the paperwork started. VA loans do take a bit sometimes if you have a complicated financial status, the reference I gave you will help!



My initial plan was to traditionally house hack in DC. I did not have enough cash on hand to handle anything that wasn't close to turn key, and cash flow on anything in my price range (800k or less for a multiunit) was awful. I did find a nearly turn-key quad with tenants in Carver-Langston, near the Trinidad/H St area @Johnny Quilenderino mentioned that would have cash-flowed decently. Made an offer that was accepted, but DC has a law - Tenant Opportunity to Purchase Act (TOPA) - that was not fully followed by the listing agent. One of the tenants in place exercised a right of first refusal on my accepted offer and proceeded to utilize the maximum legally allowed timeline to purchase (~7 months in this case). All the while, I was searching for other options while holding out hope that the tenant's attempt to purchase would fall through. No such luck on either front.

Fast forward a couple months, and decided to try a different strategy. Partnered with a buddy who I knew was moving to the area (drilling reservist coming here for law school on GI Bill) and our goal was to find a multi-unit house hack either taking a unit each or being roommates in a decent unit. While this arrangement opened up the price range, the competition increased tremendously with us often going up against deep-pocketed investors or folks making all-cash/non-contingent offers. At one point we made an offer on a legal 3-unit in Adams-Morgan, listed at ~1.1 mil, with an escalation clause to 1.4 million and no contingencies except VA financing. Still lost to a lower cash offer. Good thing though as we did get under contract on a good option (large rowhouse with extra rooms to rent out, questionably legal basement apartment), but the lenders I had been working with were mistaken in how a two-veteran VA loan works (can't simply add entitlements together) and had to pull out as the required out of pocket doubled from the original estimate.

Ultimately, we got a nice ~800k three-bedroom condo in Columbia Heights as roommates, renting out the third bedroom. It's certainly not the most profitable purchase from a cash-flow perspective, but overall I've been happy with the arrangement. I don't know that I would recommend it, especially not having sold yet (though appreciation appears very healthy) and a PCS coming soon, but share just to indicate how tough the market here can be. Jumbo VA is not too challenging to get here if income supports it (downpayment of 25% of the difference between purchase price and entitlement) with rates not too much higher if at all than staying in zero down range, problem is sellers are often reluctant to entertain VA loan financed offers. Overall, be prepared for hefty escalation clauses, consider forgoing using a VA loan to initially purchase (i.e. buy conventional and then refinance into VA), waiving or reducing inspection contingencies, and all other measures necessary to get to closing in such a competitive market.

I will say pricing wise, 6% cap rate is "standard" making cashflow almost zero or negative if you're putting minimum down on a VA loan. This is compounded by some difficulties specific to DC, notably the aforementioned TOPA procedures, as well as many rowhouses with potentially rentable but not legal basements. One note if you are buying here, might consider the possibility of maintaining Washington state residency for yourself while having your spouse become a DC resident allowing one of your incomes to remain tax-free, and potentially be able to legally claim homestead exemptions on both properties at once. Probably doesn't work for a married couple purchasing, but obviously saves a lot if such an arrangement is legal.

Happy to chat more, as I've spent *a lot* of time pursuing house hacking options in the area.

@John Fabros ,

Great points. We’d be looking at 2 rooms minimum for us, better at 3. I figure it’ll be a hard find with the cash-in-hand folk as you say. Not sure about the residency piece. I suppose I should find a real estate attorney for that. 

DC offers a few options. There are a few multis. Also rowhouses with english basements, then in Montgomery County MD you can rent out your basement if it meets guidelines.

The real key is having realistic expectations, and being aggressive with yoir offers.

Good to see another fellow active duty investor on the boards! As has already been mentioned the areas entitlements for VA are quite high and the 25% downpayment requirement of anything over that means you can really go as high as your DTI will probably let you comfortably go. You have a very good shot to secure a multi or home with a basement unit with the downpayment your are talking about. The debt to income has to support the payment and the offer has to be right to overcome to sellers fear of a VA loan which are usually unfounded.

The real questions come into what type of place you want to live in. Do you have family that will also be there? Wife or kids walking around or playing around at night? That turns this from a business mathemical deal into a business/lifestyle combo deal. The past two active duty deals I have done this month have both bought something completely different than how they started but still something that made sense investment wise.

@Aaron Zike ...there are plenty of 3-4 units in the DC area. The numbers start improving when you get into a 4 unit. Many buyers in DC are using FHA loans with only 3.5% down up to $1.2 Mil for a 4 unit. This is a great option in DC as there are many residential multis being sold. The main issue, as others have mentioned, is TOPA. However, even though some will have horror stories, typically TOPA will not be a major issue. The main concern with TOPA is delivery and tracking receipt...sometimes when the title insurance is underwriting the file, they will hold up settlement and require additional paperwork and possibly redelivering TOPA notices. In an extreme case, tenants will push back and attempt to extort a payout from the seller.

I would think that your best option would be to find a 4 unit in good condition and try and use a VA loan and work closing costs into the acquisition. Theoretically, you could buy a property with zero $ out of your pocket.

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