Anyone bought a multifamily property in Washington DC area?

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Anyone bought a multifamily property in Washington DC area?

Pavel Jiltsov
Member since 2018 · 9 posts · 3 votes

Hi all, I am new to investing and looking for get started with a duplex or a fourplex. Anyone has experience with one of those in D.C. area? 

thank you

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Jen Olson
Washington, DC · Member since 2017 · 5 posts · 3 votes
7y

I just bought my first property in NE DC,  which happens to be a duplex, in January and I put $30K down for closing costs/downpayment. If I can do it, you can do it!  :)  I purchased close to Gallaudet university. 

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  • Shadonna N.
    Developer · . · Member since 2014 · 520 posts · 162 votes
    7y

    DC has great appreciation.  Way to go @Marian Huish!

    0Reply
  • Pavel Jiltsov
    OP
    Member since 2018 · 9 posts · 3 votes
    7y

    hi Marian. Thank you for the offer but I was thinking of buying this fall. Just doing research now. Also I only have about 30k saved up. So I was thinking maybe outside DC will be best. Any advice on where I should look? 

    0Reply
  • Matthew Paul
    Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes
    7y

    Baltimore city would be a place to look

    0Reply
  • Pavel Jiltsov
    OP
    Member since 2018 · 9 posts · 3 votes
    7y

    Hi Matthew. Why do you say that ? Any area in particular that cought your eye ? 

    0Reply
  • Yannik Cudjoe-Virgil
    Rental Property Investor · Baltimore, MD · Member since 2016 · 253 posts · 178 votes
    7y

    @Pavel Jiltsov If you are looking to buy in DC then you have to be ready to pay to play. There is alot of investment going on in DC and cap rates for multifamily are compressed. Anything on the market is tight. Hope this helps

    1Reply
  • Pavel Jiltsov
    OP
    Member since 2018 · 9 posts · 3 votes
    7y

    Hi yannik, thanks for the advice. I was thinking more of a DC area. I understand that I don't have enough cash to get something in NW DC. I was thinking  Say within 50 mile radius of DC. Baltimore sounds interesting but I live in Alexandria and rarely get to see Baltimore. I would love to hear a suggestion about  a particular area of BBaltimor. Any advice 

    ona particular area  to look at in the DC area ?

    1Reply
  • Erik K.
    Realtor · McLean, VA · Member since 2009 · 184 posts · 80 votes
    7y

    DC is on fire right now.  I put one of my properties on the market and had multiple offers within days.  The best value for your money would be in Prince George's County, Maryland.  Baltimore is a good market if you really know the area but the drive up there is a pain.

    1Reply
  • Pavel Jiltsov
    OP
    Member since 2018 · 9 posts · 3 votes
    7y

    Hi Erik, thanks for the advice. I was looking at PG county too. I bought a place near southern metro last summer. What we're you thinking ? You hear of any new developments happening in PG? Also, are you a flipper or a landlord ?

    0Reply
  • Cassidy BurnsBusiness Member
    Investor · Alexandria, VA · Member since 2016 · 859 posts · 460 votes
    7y

    Hi Pavel,

    Great choice!  Washington DC market is strong, location is critical!

    [email protected]540-960-1507
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  • Ned CareyPro Member
    Moderator
    Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
    7y

    @Pavel Jiltsov the DC market simply does not have many small muti-family properties.  They few that show up for sale are priced quite high. 

    Why do you want multi family? IF you want to live in one unit and the rest of the building is an investment then that is normally a great strategy (house hacking). You get the advantage of homeowner financing for your first investment. However this advantage is already priced into the market. 

    If you just want multi family because you have heard multi family is a better investment, Think again. Right now multi family is in very high demand and therefore returns are lower. A SFH may be a better investment in today's market. In Baltimore I think clearly SFHs are a better choice. Perhaps someone like @Russell Brazil can comment about the greater DC area.

    1Reply
  • Pavel Jiltsov
    OP
    Member since 2018 · 9 posts · 3 votes
    7y

    Hi Ned, that's great insight. I have noticed that there are not alot of multifamily properties in the DC area. You are correct, I was thinking about living in the portion of the property and renting the rest. I was thinking about buying a single home and breaking it up in to two or three separate dwellings. Have you had any experience with that ? 

    Thanks again for responding 

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y
    Originally posted by @Ned Carey:

    @Pavel Jiltsov the DC market simply does not have many small muti-family properties.  They few that show up for sale are priced quite high. 

    Why do you want multi family? IF you want to live in one unit and the rest of the building is an investment then that is normally a great strategy (house hacking). You get the advantage of homeowner financing for your first investment. However this advantage is already priced into the market. 

    If you just want multi family because you have heard multi family is a better investment, Think again. Right now multi family is in very high demand and therefore returns are lower. A SFH may be a better investment in today's market. In Baltimore I think clearly SFHs are a better choice. Perhaps someone like @Russell Brazil can comment about the greater DC area.

     Thanks for the tag Ned.

    Pavel, the DC metro area is perhaps the metro area with the smallest number of 2-4 unit multifamilies in the entire country.  We have somewhere around 100,000 home sales per year in the metro area....and only about 200 per year are multis.  The number of them is actually shrinking as they get carved up into condos.  Zoning in pretty much each local jurisdiction does not allow new ones to be built or converted, and has simply grandfathered the few existing ones into legality.

    Can you buy one? Absolutely.  But it is perhaps the most competitive niche of one of the already most competitive markets in the country. So just be aware of that.  You will largely be competing with all cash no contingency offers, high down payment offers.  Realistically, you arnt getting a home inspection on a multi except in the rarest of circumstances.

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  • Pavel Jiltsov
    OP
    Member since 2018 · 9 posts · 3 votes
    7y

    Hello Russel. Thank you for a dose of reality :). I was slowly coming to the same realization. 

    So if I were to buy a single family and add a kitchen, a bathroom and a separate entrance. Would that work? Or are you saying to zoning will not allow that ? 

    Thanks in advance for your advice 

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y
    Originally posted by @Pavel Jiltsov:

    Hello Russel. Thank you for a dose of reality :). I was slowly coming to the same realization. 

    So if I were to buy a single family and add a kitchen, a bathroom and a separate entrance. Would that work? Or are you saying to zoning will not allow that ? 

    Thanks in advance for your advice 

     It depends on the jurisdiction.  Each has different regulations on it. PG County does not allow that. DC and Montgomery County do under very specific circumstances.  Ive been meaning to do a blog post on that, or throw the info on my website, but I havnt had time to get to doing it.

    In DC the regulations are basically the basement unit needs a seperate electric meter, 7 foot ceiling height on 70% of the basement, an egress window, and front and rear doors, only available to owner occupants. 

    Montgomery County requires driveway for both units, properties older than 10 years old, 7 foot ceilings, a door on the side or rear of the house not on the front, an egress window, there is a sq footage limit (1200 I think?) and it needs to be less than 50% of the total sq footage of the house, and it has to be 500 feet away from another property with such a unit, only available to owner occupants. We are currently lobbying the Montgomery County council to try to ease these restrictions even further. (Im on my trade associations public policy committee, and this is an issue we have a big voice in)

    Also, Im just quoting these regs quick and off the top of my head, dont take them as the exact or only regs concerning this.

    In Montgomery County...it is hard to find a property that has the driveway space to make them legal. In DC its typically ceiling height and the front access that are issues.  In DC they certainly exist, I sell a lot like these, they are just as in high demand as true multifamilies.

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  • Pavel Jiltsov
    OP
    Member since 2018 · 9 posts · 3 votes
    7y

    Fantastic info. I see I have some research to do.

    0Reply
  • Christopher Hauser
    Investor · arlington, VA · Member since 2016 · 49 posts · 10 votes
    7y

    I haven't been able to find any MFH either.  One realtor in Northern Virginia finally told me,

    "Sugar, if any MFH come up for sale and have positive cash flow, we (realtors/brokers) will buy it before YOU ever hear of it".

    I'm thinking of SFH in Florida.

    chris

    1Reply
  • Jen Olson
    Washington, DC · Member since 2017 · 5 posts · 3 votes
    7y

    I just bought my first property in NE DC,  which happens to be a duplex, in January and I put $30K down for closing costs/downpayment. If I can do it, you can do it!  :)  I purchased close to Gallaudet university. 

    3Reply
  • Account Closed
    Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes
    7y

     Arlington County should soon allow accessory cottage type building to be built in the backyard ..  not that that will be the multifamily you were looking for  .. but it’s something 

    0Reply
  • Sean Rooney
    Real Estate Investor · leesburg, VA · Member since 2014 · 5 posts · 1 vote
    7y

    @Jen Olson. Congratulations. If you don't mind me asking, how much rent revenue are you getting fore each side? I'm asking as I am looking for duplex's/quads and MF in VA and DC.

    0Reply
  • Jen Olson
    Washington, DC · Member since 2017 · 5 posts · 3 votes
    7y

    Great question, I am still in the process of renovating the entire duplex. A neighbor who has the same size duplex gets about $1800/month for one unit and does STR in the extra bedroom in her unit and is able to cover her mortgage completely. I am going to start with STR for about a year and see how it goes and then reevaluate at the one year mark.

    0Reply
  • Brandt Tingen
    Rental Property Investor · Washington, DC · Member since 2014 · 94 posts · 12 votes
    7y

    @Pavel Jiltsov I rarely look on BP for anything anymore because of the quality of information, a lot of armchair quarterbacks who aren't actually in the arena operating (don't actually own/operate said asset type in said jurisdiction that they comment on) - and the same talking heads are (IMO) wracking up comments for business development reasons. The notion that there aren't many multifamily properties in DC is ridiculous. I pulled the list from the tax records the other day and there are approx. 18,000 2-4BR properties in DC. Anyone, and I mean anyone, who looks hard enough long enough will find a good deal on a 2-4 unit in DC, they aren't hen's teeth. Also the notion that you need a bunch of money to get involved is also ridiculous. DC offers down payment assistance to those buying 2-4 unit properties, you can negotiate the closing costs, seller financing and creative financing happens regularly. I have first hand experience with a buyer who walked from the table with 80% of their EMD check back, and no additional closing costs, on a 2-4 unit. If you don't have the cash, the renovations can be financed. If you find a good deal experienced operators will partner with you. Small multifamily is much more like commercial than it is residential, commercial banks will make loans on them for this reason. BP IME is not a great resource for legitimate information from commercial operators - for that, just look in the tax records and cold call the owners of the type of property that you want to buy and ask them questions, tell them you're just getting started - 2 out of 3 will be happy to talk to you and lend you a hand. The wealth building upside and cash flow on these properties can be very substantial, keep grinding until you find a deal, and don't engage with trolls / naysayers, they'll just sap your energy.   

    1Reply
  • Brandt Tingen
    Rental Property Investor · Washington, DC · Member since 2014 · 94 posts · 12 votes
    7y

    @Pavel Jiltsov One thing to add.  Despite all the advantages I listed above, there are definite cons and pitfalls that await the inexperienced in this asset class.  There is a lot of red tape and bureaucracy involved in setting up and operating.  A huge risk that I see buyers & sellers in this space make is working with the uninitiated.  I often see the properties under-priced by residential realtors by as much as 25% when they are sold (yes you read that right).  I also see and hear those same "professionals" massively under-quote repair costs, forget to mention important due diligence items that if not checked can be a nightmare for the new buyer/operator, and make ridiculous claims that fly in the face of building codes/basic supply and demand factors/actual operating experience, and the like.  Again, you'll find a property, but make sure you are networking with actual owner operators in this asset class across different neighborhoods to learn the due diligence steps and pros/cons of operating different unit mixes in different areas, and to learn other lessons "from the trenches".  

    1Reply
  • Pavel Jiltsov
    OP
    Member since 2018 · 9 posts · 3 votes
    7y

    Thank you for the positive words. I am slowly doing the leg work. I was a bit surprised to hear that there were not any multifamily properties in the DC area. I guess there is nothing better than doing your own research. 

    Next stop is the bank to see what I can qualify for. again thanks for all the advise 

    0Reply
  • Brandt Tingen
    Rental Property Investor · Washington, DC · Member since 2014 · 94 posts · 12 votes
    7y

    @Pavel Jiltsov Got it. Be careful there too. IME residential lenders (I'm assuming you're going FHA) in this asset class mostly "hack" at it, very few are actually highly experienced with small multifamily, so if they're saying it can't be done, in a lot of cases that translates to "I can't (or don't know how) to do it". Keep pushing.

    0Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    7y

    The DC tax database has 12,854 2-4 unit properties listed that I can find, and 306,970 housing units. That puts them at 4.1% if all housing units.  Even if it were as high as the 18,000 stated, thats 5.8%.  In the entire metro area roughly 0.7% of housing units are 2-4 units. Most of the 2-4 unit properties that exist in the area exist in DC proper, so those percentages plumit even more against the metro areas 2,354,827 housing units that exist.  These are tiny numbers compared to other metro areas.  What are they in Boston, 20, 25% of houses maybe? Not sure why youd want to throw shade at me...did I win a listing over you or something? Disagee with me all you want, many of my closest friends do (some of which are the other talking heads you also refer to on here) just do so cordially.  The sandbox is big enough for everyone to play in. And while I dont own multi in DC, (I own in Boston where they are easier to come by) I do sell a descent amount of them.  Usually right around 6 per year I sell, and usually I have to go off market to get the deals done because of their rarity.  (Or find ones misclassified as they often are by agents who list them in the single unit section of the mls). But hey, good luck in your endeavors. And if you ever have off market multis for sale, I typically have buyers lined up for them.

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