Good Deal or Not? “Views of US Capitol and Washington Monument” edition

This home is located at 26 P St, NE:

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The flier says:

“Great Building. Well Located. Spacious 4 Unit bldg Sold as is. No appliances, no HVAC nor water heaters. Units r in very good condition. 3 two BR units w/ similar floorplan. 4th unit is a 3 BR loft with unfinished deck. Hardwood floors in three units. tile baths. Views of US Capitol and Washington Monument. Purchaser live in 3br loft unit & rent rest. 3blks metro. MUST SEE!! well worth a look-see”

You can find more info here and photos here.

Well, this is arguable one of the most insane pop ups in the city. And it can be yours for $699,000. The area is actually up and coming but what do you think this pop up can/will actually go for? And what’s the best case scenario here – someone purchases the building and removes the pop up? Is that even possible or in any way likely? It’s interesting to note that the photos give no indication of the giant pop up…

33 Comment

  • without even seeing the “tour” I would say NO!!! I would be ashamed to say “I live here” it is FUGLY and there is just no other way of saying it.

  • one more: if they take the pop-up maybe but not with that appendage!!! no way!

  • I would just think about what you can get in this city for 700K and then look at this place and then ask yourself why you would even consider it.

  • I’m glad to see that it is a foreclosure – everyone involved in creating this travesty deserves to have lost their shirt.

    • It guessing the siding contractor made out alright for himself.

      • Seconded, I’ve been praying that whoever is responsible for this mess would pay dearly.

        Of course in reality, it’s a bank that will be absorbing it, but hopefully the investor/builder/whoever will get bad credit as a result.

  • Someone had big dreams for a 4-condo building and ran out of money in the middle of it. Let the foreclosure go through, make an offer to the bank, call it a day. I would not pay 700k for this.

  • LOL. That’s all.

  • From the photos, it’s clear that the remodeling is done using very cheap materials. no way at that price.

  • Why stop at the Capitol? This thing probably has views of Shenandoah and maybe the ocean.

  • I just threw up a little in my mouth…

  • I’m going to pretend that is just a badly photoshopped picture.

  • 700K for 4 apartments. That’s 175K per apartment. With standard 1% formula, they would have to rent for 1,750/month each. I doubt it. The price is obviously high.

    Let’s work backwards.

    If each place can rent for $1250, that’s 5K/month total, or 500K valuation.

    • Bear

      Out of curiosity, where does the 1% rule come from? I’m considering renting out my unit (recently purchased, but I might have to leave DC temporarily for work), and would like to charge about enough to cover my mortgage–which is several hundred dollars less than 1% of the sales price.

      I’m really just asking out of curiosity–never heard of that rule before. Not trying to be snarky.

      • It is a generic rule of thumb for RE investors. Depending on how far off from 1% you are, it is usually increasing good or bad deal depending on direction. You can Google ‘1% rent investment’ or similar terms for more details and limitations.

    • Care to take a look at the actual numbers, and not some armchair-investor rule of thumb?

      Anyone who buys this is going to have to put 25% or so down, so the PITI is going to be around $3000/month at today’s rates (based on a $525,000 mortgage).

      A decent 2 bedroom basement apartment in Eckington should rent for above $1500, but let’s just say $1500 to apply conservative numbers. Let’s say the second 2 bedroom also rents for $1500. We can rent one of the 3 bedroom units at $2000.

      $1500 + $1500 + $2000 = $5000. So in this situation, the owner/investor is clearing $2000/month above their mortgage and living for free in a 3 bedroom condo.

      It’ll cost about $250,000 cash to get into this place and make it renter ready. It earns a profit of at least $24,000/year not including deductions, depreciation, contribution to principle, any increase in value over time, or the fact that you’re living FOR FREE. That’s a 10% return in cash per year. I’m not going to flesh out the rest of the numbers, but I’d guess the total return over time will amount to above 20%/year. Fugly but sweet.

      • Whoops, misread the post — thought there were two 3 bedrooms. Still, it should gross around $4500/month, and $18,000/year in net cash profit. A fair deal for someone who wants to hasten their retirement and live in Eckington as a landlord.

        • as long as we’re looking at actual numbers, here are some things that might have been left out of this calculation:

          (1) Maintenance. I’m going to estimate it at 1%/year of the sales price. Could be more or less… it should be lower because it’s a row house and much of the work is new, higher because it is still an old house and somehow I’m guessing some of the improvements aren’t high quality. That’s $700/month and will probably end up tax-deductible.

          (2) Real Estate Taxes. 0.88% of assessed value minus approximately half of the homeowner’s deduction since you’re renting about half. Not sure the assessment but will assume ~600k, feel free to look it up for the real numbers. That’s another $5,000/year, and again it’s deductible.

          (3) Opportunity Cost. If you’re putting 175k down and spending 250k to fix it up, that’s 425k that you’re not investing elsewhere. If you had earned 5% on it, that would be $21250 in income. Of course, the house may also go up in value… or down, just like other investments.

          (4) Closing costs. Expect to pay ~18k here not toward equity but just for the privilege of getting the loan and for having DC record the deed transfer, etc etc.

          (5) Don’t forget real estate agent costs on the other end, if you ever want to get out of the deal. ~5% of the new value.

          (6) Since you are benefitting from depreciation for tax purposes, know that if the nominal value of the house increases when you sell, you’ll owe capital gains taxes on the portion that you were renting out — even if the price only rose in keeping with inflation.

          (7) If you are indeed clearing a profit on the rental income, after maintenance and depreciation and associated costs, then you need to pay federal and state income taxes on that money (not payroll though). Your bracket will vary, but the combined burden could be around 33% on a *portion* of the rental income — the profit. Note that if you are allocating part of your mortgage payment as a business expense, you can’t also deduct that interest off your personal taxes, so you will pay some of this one way or the other.

          Which is all by way of saying, I don’t think this is quite the excellent deal you are describing.

  • I wonder if this was properly permitted. If so, something needs a desparate fix at DCRA.

  • Holy eyesore! I don’t care what you can see from that thing – you wouldn’t see me in it!

    • It’s not as much as an eyesore as the burned out shell infested with troublemakers that used to be there.

      I’m not a fan either, but unfortunately I’m not rich. I can’t afford to have a pretty house with yard in Gtown. Beggars can’t be choosers. It’s people like you who regulate and zone DC real estate to death so that affordable housing can not be built because it doesn’t look pretty to you. You stop ugly projects that give affordable housing and then you come back to whine about lack of affordable housing.

  • “As is” probably means it was built without permits and is structurally unsound. That thing just can’t be safe.

  • So a buyer not only would have to shell out the $700K, but maybe a few more thousand dollars to fix whatever “as is” problems there are from such a badly conceived project. I’m going to guess there isn’t a C of O for this thing for it to be legally rented.
    For the renters out there, who of you would want to stay in this place and for how much?

  • Great Building. MUST See! HAHAHAHAHAHAHA

    Anyone who buys that deserves all of the problems they are going to have with what I assume was crappy construction.

    I can see why there are selling the whole place as an investment property because no owner is going to buy this and live in it. Considering what the grifters – sorry flippers – did to this it is only good for cheap rental.

    Did anyone else notice that the pictures on the listing try and not capture that horrendous 2 story wart. And do my eyes deceive me, but it looks like other units have to enter though the rear? And the view of the Capitol. Good one because they didn’t mention the view of the huge parking lot.

  • Buy now, or be priced out forever!

  • Who says affordable housing has to be an eye sore… I am not rich either (its just my name) however if this is an example of what affordable housing looks like no thanks. There are ways to create affordable housing with out bad design. After all you I would hope you’d want your affordable house to increase in value with time and for the neighborhood to age well. Alley houses are a perfect example of beautiful affordable houses. Unless your like me transitioning careers. Heck if 700k is affordable to you than I am really in trouble with the fugly houses.

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