Investment Info:

Single-family residence buy & hold investment in Washington.

Purchase price: $885,000
Cash invested: $44,250

Newly purchased single family in Columbia Heights

What made you interested in investing in this type of deal?

Potential to convert into multiple (2 or 3) units

How did you find this deal and how did you negotiate it?

Redfin (I'm a noob)

How did you finance this deal?

Credit Union

How did you add value to the deal?

Looking for options

Condo conversion may be possible depending on zoning, but DC no longer allows conversion to legal multifamily.

Do you know if I could still do conversion in Arlington? I'm planning to buy there. Thanks!

@Maurice Matthews what zone is your property located? That will tell you what you can do by right. Anything more and you will have to apply for a special exception or variance with the BZA (board of zoning appeals).

@Anne Barkow what area in arlington? There are many by laws and zoning rules that are in Arlington.

I'm looking at the Colombia Heights/Westmont Area. I'm looking to buy in the next 6 months, but I've noticed that DC doesn't have many duplexes, so I hoped to split something. Maybe even do AirBnB but that isn't my first choice.

Originally posted by @Anne Barkow :

I'm looking at the Colombia Heights/Westmont Area. I'm looking to buy in the next 6 months, but I've noticed that DC doesn't have many duplexes, so I hoped to split something. Maybe even do AirBnB but that isn't my first choice.

 You can not split it into a multi, but you may be able to add an accessory dwelling unit.  DC limits the amount of days per year you fan do short term rentals.

My property is zoned as RF-1. Understand there are limitations around short term rentals (Airbnb) which wasn't my goal. I was looking to get the "cellar" done as a separate rental unit, then maybe later sell it to fund rehab of the first and second levels, perhaps even adding a third. That would result in the following:

Unit #1 - Cellar, Unit #2 - 1st level, Unit #3 - 2nd and 3rd levels

Does this sound feasible? It appear to be the exact same setup as the house next door (1524 Ogden St NW). I can see where they've sold 2 of the units on Redfin.

Thank you for the information. I will start looking at that as an option. 

@Maurice Matthews I would consult with a zoning attorney but to my knowledge, properties zoned RF-1 are allowable for 2 dwelling units as long as the lot and building sqft are a certain size and don't use more than 60% of the lot space. 

It can get costly but definitely worth it to have the guidance of a zoning attorney when going for a condo conversion.

Originally posted by @Russell Brazil :

Condo conversion may be possible depending on zoning, but DC no longer allows conversion to legal multifamily.

Could you just own all three condo's though and rent them out?

Originally posted by @Jack Seiden :

Originally posted by @Russell Brazil:

Condo conversion may be possible depending on zoning, but DC no longer allows conversion to legal multifamily.

Could you just own all three condo's though and rent them out?

 

 You could do that....however with 1 owner controlling the whole project they would be non-warrantable condos. So they would need to be owned in cash, and their values would drop from expected value due to that.

Originally posted by @Russell Brazil :

Originally posted by @Jack Seiden:

Originally posted by @Russell Brazil:

Condo conversion may be possible depending on zoning, but DC no longer allows conversion to legal multifamily.

Could you just own all three condo's though and rent them out? 

 You could do that....however with 1 owner controlling the whole project they would be non-warrantable condos. So they would need to be owned in cash, and their values would drop from expected value due to that.

This is all great info. Admittedly I didn't know anything about condo conversions, but after reading your responses I looked into some details re: non-warrantable condos. Doesn't sound like the juice would be worth the squeeze for me, so looks likely a basement rehab only then renting the two units separately is the best route. Timing of course depends on the cost of the project as I'd like to avoid tying up too much money where I could be using it to purchase a new property. Opportunity cost...

Originally posted by @Maurice Matthews :

Originally posted by @Russell Brazil:

Originally posted by @Jack Seiden:

Originally posted by @Russell Brazil:

Condo conversion may be possible depending on zoning, but DC no longer allows conversion to legal multifamily.

Could you just own all three condo's though and rent them out? 

 You could do that....however with 1 owner controlling the whole project they would be non-warrantable condos. So they would need to be owned in cash, and their values would drop from expected value due to that.

This is all great info. Admittedly I didn't know anything about condo conversions, but after reading your responses I looked into some details re: non-warrantable condos. Doesn't sound like the juice would be worth the squeeze for me, so looks likely a basement rehab only then renting the two units separately is the best route. Timing of course depends on the cost of the project as I'd like to avoid tying up too much money where I could be using it to purchase a new property. Opportunity cost...

 

 Well, just keep in mind you cant rent 2 units separately legally. Accesory dwelling units are only available to owner occupants, and you cant do a legal multifamily conversion any more. 

@Maurice Matthews @Russell Brazil

an RF-1 zone does not allow ADU. ADU are only allowed in R zones. You will have to separate the basement as it's own unit. I've seen my clients charged between $125k to $175k to do this. It depends on what you have to do.

Here is a brief list of what a new unit needs: fire sprinklers, own heating/cooling, own electric meter/panel, own water heater, entry access, fire proofing between units in the ceiling and/or walls, sound proofing (50 STC min.) bedroom egress, daylight, no interior access to the upper unit, 7’ ceiling heights, and a few other items. These are all required.

Other items that you may need that will significantly drive up cost is if the existing size of the water meter and lateral lines has to be enlarge, the existing footing/foundation, lead removal for homes built before 1978, and other items.

Also, RF-1 zone by right only allow 2 units. This changed in 2015. If you want 3 units you have to go through the BZA. If the neighbor has 3 that may help. Especially if they were permitted after 2015. Your ANC support is also good to have.

One more thing, if you want to add a third story do it now while you are doing the basement or at least have an engineer determine if the existing foundation is adequate to support an additional floor. The third floor will have to conform to the 60% lot occupancy rule. 62% is allowed if a letter is obtained from the head zoning administrator. Anything between 62% to 70% requires a special exception from the BZA. If you are in a historic district there are also requirements for the third floor visibility from public space such as a street or alley.

Lots of information but all doable. Good luck.

Originally posted by @Eric Teran :

@Maurice Matthews @Russell Brazil

an RF-1 zone does not allow ADU. ADU are only allowed in R zones. You will have to separate the basement as it's own unit. I've seen my clients charged between $125k to $175k to do this. It depends on what you have to do.

Here is a brief list of what a new unit needs: fire sprinklers, own heating/cooling, own electric meter/panel, own water heater, entry access, fire proofing between units in the ceiling and/or walls, sound proofing (50 STC min.) bedroom egress, daylight, no interior access to the upper unit, 7’ ceiling heights, and a few other items. These are all required.

Other items that you may need that will significantly drive up cost is if the existing size of the water meter and lateral lines has to be enlarge, the existing footing/foundation, lead removal for homes built before 1978, and other items.

Also, RF-1 zone by right only allow 2 units. This changed in 2015. If you want 3 units you have to go through the BZA. If the neighbor has 3 that may help. Especially if they were permitted after 2015. Your ANC support is also good to have.

One more thing, if you want to add a third story do it now while you are doing the basement or at least have an engineer determine if the existing foundation is adequate to support an additional floor. The third floor will have to conform to the 60% lot occupancy rule. 62% is allowed if a letter is obtained from the head zoning administrator. Anything between 62% to 70% requires a special exception from the BZA. If you are in a historic district there are also requirements for the third floor visibility from public space such as a street or alley.

Lots of information but all doable. Good luck.

Excellent info Eric. I really appreciate it. I'm evaluating my options to see if the money is best spent on a project such as this or just renting as-is and moving on to the next property.