Good Deal or Not? Rowhouse with Tenants – Investor Edition


This home is located at 1674 Irving Street, NW.

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The flier says:

“This property is in good condition and has great Tenants. Walking distance to the Metro at 14th and Irving St and all the new shops there. Two of the Tenants are on month to month leases the other 4 are in various stages of a year lease. The expenses don’t include management in that a Purchaser may want to do self management. (current owner lives in NYC). All units recently upgraded.”

More info but sadly no photos can be found here.

I’m curious if there are folks out there who would consider an investment property like this? What if you wanted to live in the home itself, how are the tenant laws in DC? What would it take for this to be a good investment? Cause the price ain’t cheap – $1,125,000.

15 Comment

  • Vonstallin

    This is something I’ve been looking into for a while, but The price don’t allow for any error at all.

    I’m sure the rent just covers the mortgage with little to no profite margin. Repairs and other items will come out of your pocket. This would only be good for the long term after the note is paid for 15-30 years?

    id rather find a fixer upper so I can save on the upgrades and at least make enuff profit to be able to put back into the place in repairs and normal wear n tear.

  • No way would the rent cover the mortgage at $1,125,000. With 6 tenants they’d have to all be paying over $1,000, which is crazy for a large group house like that. Bad deal.

  • the listing says there are 4 1 units paying 1,380 each including utilities. Which seems high for the area and the fact there are no pictures of the inside means i cant make a great judgment.

  • that should say 4 1 bedroom units

  • cbw33, I didn’t see that about the 4 units. Those rents actually seem about right to me, but they’re nowhere near enough to make this a good investment at $1 mil. The price has to come down to $800-825k to make sense.

  • Vonstallin

    $5,520 a month…SheeeeeeeeeeeeiiiiiiiiiiiiDDD
    How much is a 30 year mortgage on $1,125,000 averaging for today???
    This deal seems like you would be taking it up the a$$.

    Do Not Want…..

  • Regarding tenant laws, D.C. has some of the most pro-tenant laws of any city in the country. It’s very difficult to evict deadbeat tenants.

    Also, in order to obtain a COO for a basement apartment, the apartment must have a separate front AND rear entrance, and a minimum ceiling height. I don’t recall what the minimum height is, but needless to say that nearly all original rowhouse basements have ceilings too low to qualify for a COO. So, most basement landlords are probably leasing illegally. QUite fitting for D.C., really.

  • 1BR units at $1,380 each — how is that high for the area? I’d say for a new lease in Mt Pleasant or Adams Morgan for a non-basement 1BR, you’d be super lucky to find something for less than $1500. I’m sure there are people who’ve been renting a while who pay less, but this would be a great price for a new rental. I suspect that these 1BRs, if in good condition, could be rented for $1500-1600 each pretty easily.

  • Yes, DC is probably the worst in terms of tenant laws (from a landlord’s perspective) and this property would be a huge headache. Lots of tenants, no profit margin for vacancy or repairs, not to mention that this is going to be difficult to purchase because the tenants have TOPA rights.

    That being said, its still a good deal because of the price (if you have deep pockets) Most of the real estate in the city is to expensive to make money off of cash flow. However, this is probably a situation where you buy and hold for 5 years, lose $20-$30K in cash flow but then see $200K in appreciation as the market turns around.

    Unfortunately this is the result of lots of government interference in the housing market over many years from many sources. The fed lowering interest rates, Fannie & Freddie enabling low cost loans, tax codes that promote home ownership all push up the cost of real estate. Rent control policies and income inequality keep rents down. Who is caught in the middle? Joe the wanna-be-real-estate-mogul

  • The reason people make investments in multi-families is so you can live in one unit for at least the last 2 years and then sell it without paying capital gains on the first $250 K. This is true of your primary residence or any multi-family residence you may live in (up to 4 units, I believe).

  • The price only makes sense if there’s a 25-30% cushion to cover repairs. Otherwise, you’ll be going into your own pocket for 5-10 years years.
    And, unless I’m mistaken, the IRS will only allow you to exempt (as primary residence) only the gain realized by the portion of the property you live in. To shelter the rest, you’ll be wanting to look at a 1031 exchange, or something similar.

  • A friend of mine moved to this area a year ago and couldn’t find a one-bedroom for less than $2,000 a month.

    I can’t imagine rents have gone down since then. Mine reliably goes up every year — but if it keeps my landlord out of the market, I am happy.

  • Vonstallin

    I had no Idea rent was that high in DC.
    How much would a 3 BR 2.5 bathroom with screen deck, w/d and 3 car off street parking 90 second walk to metro in CH/PW house rent for?

  • I think the realtor or whoever filled out the listing did it wrong — it says there are 6 units (and mentions six tenants), so I’m guessing it’s 4 1BRs at $1380 each plus 2 studios at $1082.50 each. So that’s $7685 in rental income per month, which is $600-$700 more per month than what I estimate my landlords are making off of my (similar) building (a few blocks away from this one, they bought it in late 2006 for $1.1 million). I don’t know how much a mortgage for $1,125,000 is per month? Might be fairly priced (given my highly unscientific comparison) — even though the market in general is depressed, I think the location will keep its value steady/going up.

  • A decent rule of thumb for a mortgage loan issued to a buyer with good credit is $500/month for every $100,000 of value; 1.1million = 5500/month. This doesn’t include any transfer costs, or homeowner’s insurance.

    The property doesn’t seem like a bad deal, but neither much of a steal; really, we have no idea whether this past bubble’s pop will change the real estate dynamic in the future fundamentally or not. We’ve had real estate bubbles form and collapse throughout our history (and the history of any reasonably developed country). On the other hand, that sort of aggregate home price comparison ignores the risk that any given house, in any given neighbourhood, might not appreciate for 7-8 years at a time.

    Moreover, the average increase in real estate in the US over the last 50 years, in real terms (net of inflation), is 0.5%. Now, the P/E for that house isn’t 1.1m/66,000, but rather downpayment (potentially as little as 55,000)/(rent-mortgage).

    I’m just saying, this is more complicated than it appears, and less obviously good or bad. Any upswing could make this a dramatically better investment, prolonged malaise might make the market a better option. You’re unlikely to lose your shirt here, assuming the home inspector doesn’t find plutonium between the walls or somesuch.


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