Good Deal or Not? “AS Is, Rehab” edition

This home is located at 1483 Newton St, NW:

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The flier says:

“Vacant. AS Is, Rehab. Bring your investors. 3bed up with one bath. Main level entrance hall, to livingroom, dinning room and kitchen. Small room in front could be office or study. all hardwood floors throught. Small fenced in back yard. Front and back entrance to basement with half bath unfinished. Unfinished basement waiting for a nice English Basement potential. Between16 & 14th st, near Columbia metro.”

You can find more info here and photos here.

I’ve had some requests to show some fixer uppers and when I saw this one I thought it was perfect. What do you think of the potential? How much will it cost to fix up? Does $375,000 sound reasonable given the work that is needed?

34 Comment

  • Could that basement really be converted into a rental unit? The ceiling looks really low.

    • Speed costs money, how fast do you want to go?

      Yep, doing a proper(legal) basement apartment would require excavation & underpinning before even starting the re-model.

      $200k for a garden variety re-hab (maybe more depending on just how bad the porch and bay window are), add $150k for a basement apartment. Add a couple of permitting & construction delays, and it would be pretty easy to get into trouble on this one if you’re starting at $375k…

  • I’ve been looking at rehab units for a while now — this seems quite over-priced, even if there are no major structural or plumbing problems. Floors look pretty good, but that’s about it.

  • I notice it doesn’t have parking/alley access which is a major downside to me. But this property is certainly ripe for a condo conversion and my guess is that’s what will end up happening given it’s prime location near the metro and 16th st bus lines. Eitherway I would rather buy this than a 550k post-flip in petworth. But to each their own.

  • With a $200K infusion of renovations, this would be a sweet place that would instantly be worth $100k – $200k more than what you invested.

    • I’m not sure. Maybe after it has a proper basement apartment. It looks like it’ll need to be dug out, which’ll add another $30,000 – $40,000. It’s basically a gut rehab. I would personally be afraid to offer on this at this price.

    • This place is in rough shape — everything needs to be re-done. Problems look structural, not just cosmetic. I’d bet it’s AT LEAST 200k to reno this, likely much more if you’re also digging out the basement for a rental. I’d offer low and see what happens: 300-325k. At that level, it comes close.

  • The address in this post is wrong — it’s actually 1482 Newton Street — but I’m glad to see this is up for sale, too. The property at 1483 Newton Street, discussed as a Horse’s Ass Award entry a couple weeks ago, has been deemed blighted since that post. It could be a double-shot for us on Newton Street if both properties get rehabbed and put back to good use.

  • Can’t really comment since I have sworn off fixer-uppers forever. Mmmm, the taste of lead paint…Pretty sweet location though. Lack of parking puts it on the no-effing-way list for a single family unit, in that neighborhood.

  • Assessed at $444K. Buy at $375 leaves less than $75 for rehab. That house doesn’t need $75 of work to make it move-in ready. Any rehab to basement should be calculated separately and in-line with projected cash flow on basement. It’s in the ballpark until a hands-on inspection shows otherwise.

    • See my post. The neighbors house sold for $500k last year. That’s an extra $25k and I agree with you 100%.

  • Everyone’s just guessing. The house next door sold for $500k in ’09 with the same basic layout. So your renovation budget is $100k if you want to make 5% profit on the house for your time and effort.

    The floors and the windows look like they’re in decent shape. The walls could be repainted and the back yard needs to be landscaped. The front porch doesn’t look like it’s falling down, although it could use a paint job. The bathroom(s) needs to be redone and maybe you yank the radiators and put in central air/heat. ~$50-60k is my guess. No idea about the electrical, the roof and plumbing though. Plenty of room financially so far.

    The basement ceiling looks to be within a few inches of 7′ given the size of the entryway door. If you cut out the old cast iron boiler pipes, you might only have to dig down 2-3 inches. You might be able to break up the old poured concrete and relay it without doing an extensive excavation. If you try to put in a full basement kitchen and bathroom, I think you blow the budget. I don’t know what you can expect in rent from a dark garden level apartment in this neighborhood.

    If you are young and ambitious, I think you could make a nice home for yourself. Turning the basement into a rental seems to be a stretch unless you have some money to burn, but there’s no reason you have to do that.

    If you don’t like living in construction, you have to pay $500k.

    • I can’t find the house next door in sales data. I’m looking at this place under contract on Monroe that’s in better shape, but similar:

      $450k. Has central A/C and parking. The parking adds a lot of value, of course. Might have updated electrical.

      I’d bet $1000 the Newton place needs all new electrical.

      I think whoever buys this is going to do much more than a basic reno — this is going to attract more people who want this to appraise post reno between $600 – $700K. New kitchen, new layout, add bathrooms, etc. If we increase our outlay, risk exposure and our margin doesn’t grow, then that 5% shrinks to something more paltry.

      • I’m confused by the logic of your last paragraph. Yes, if you overbuild a house and you can’t sell it for that much, you lose money. That’s why professionals don’t overbuild for a given neighborhood. It’s the reason why you don’t get hand inlaid wood floors in middle class neighborhoods.

        You can’t “make it appraise” for $700k unless you have a buyer willing to pay that price to live there.
        As far as I can tell on Zillow, no one’s willing to pay $700k for a 3bedroom on that street. So unless that street is super secretly ready to pop, no one’s budgeting for a $700k selling price.

        However, you could put $75-100k into that home and reasonably expect to sell it for $450-500. That’s what makes it a reasonable asking price. If you thought it could sell for $700k, then it would be way under priced.

        It’s a pretty timeless rule in real estate that people don’t pay extra for plumbing/electrical upgrades. As long as everything works, no one pays a premium for new plumbing and wiring. They pay a premium for stupid things like expensive bathroom sinks, beige walls and sometimes kitchen cabinets.

        Also, the difference between $450k and $500k is 10%. It may seem like a lot of money, but it’s within the mud of someone’s ability to accurately guesstimate.

        • Turn this into a 4 bedroom, and that gets you well above $600K. Basement rental or rec room with wet bar and full bath. I’m making the point a likely buyer of this place is going to build this to fit in with the metaphorical Joneses close by, those with new flips.

          It doesn’t matter if buyers don’t pay extra for new electrical — you simply can’t flip a place and leave 15 amp circuits and a 60 or 100 amp service. Deal breaker for non-Amish types. A buyer who would discover this during inspection.

          ‘Sides, I would be less concerned about whether I could make this work at $375K, and more concerned about if I could buy it at $325K. The sellers should be paying me to flip this house to myself — more than 5%. While that’s an OK return for money sitting in a brokerage account, it’s not enough for the stress and effort I’d have to put into this. If you take that 5% and convert it into a salary for hours worked, it’s not much bang for the buck. I’d be more interested in 20% or higher.

          • Putting aside the accuracy of any assumptions about this particular place, this is an excellent point: no one does this for a 5% return. It’s 15-20+% that justifies all the trouble and risk you take on. If there’s a professional or serial flipper out there who works on a 5% margin, I’d be interested in some explanation of how that works out.

  • If you could live it in while you renovate — after getting rid of the awful paint job and refinishing the floors, you could probably make yourself a nice single family home. But, that only works if the place is sound.

    It will cost you $100K+ and all your weekends from now on. But, that would still be a good deal for a nice single family at that location.

    But, I’d be very cautious about the soundness of this structure. It looks like they started working on the basement and then stopped.

  • this is way over priced and typical of the area. Elderly grandma dies and the kids/grand kids are trying to sell the house. Figure the previous owner lived there for 20 years, maybe more. in a 100 year old house there is a lot that goes wrong and I’m willing to be the cosmetic is a predictor of the structural state of the house. I bet anything that is not brick, probably needs to be torn out, that includes the roof. I’m thinking 180k is about right for this place.

  • i just love what they have done with the half-bath!

  • Almost a year ago I paid $295k for a comparably-sized fixer-upper near 1st and P Streets NW, with a yard that could be used for off-street parking. It seems the place I bought was in better shape than this property, having been renovated (albeit with horrible style) about 30 years ago with a central HVAC system, new electrical system and new windows. My place still needs a ton of work . . . but it’s not as rough as this place. At the end of the day, it’s tough to tell whether this place is a reasonable deal without an inspection by a professional.

  • unless there are major structural problems, I think that this is an amazing deal. comparable properties in mint condition are going for near 700K.

  • A bit overpriced, but not bad. I don’t see it as a gut job, just the usual systems and paint and roof, and it’s cheaper to buy and fix than to rent a 1BR in NOMA, apparently.

    Bigger question: Why does google show the Powhatan Museum on Monroe Street?

  • If anyone buys this will you give me the peacocks? Please?

  • The easiest way to find out if it is really a deal is to see how long it has been on the market. It it’s on the market for more than a week, it is not a deal. I’ve been shopping around for a place to renovate, and everything that is a good deal is snapped up within days of being listed on MLS and with multiple offers. There’s your quick and dirty answer.

    People underestimate how much work and time is really needed to make this place into a ‘similar’ place that costs 700K. Most of those 700k places are complete reconstruction AND bump out expansion.

    Slapping on some lipstick on a pig isn’t going to fool anyone. You can’t just slap on new drywall on top of 100 year wiring and plumbing and think no one will notice.

    With this place in particular, I would be concerned about parking, the possibly ghetto housing next door, and the unappealing war zone view in the front that doesn’t look like it will change anytime soon.

    Also, I have yet to see a property that looks better than the pictures. Almost always, the pictures looks far, far, better than reality even though you are looking at the same thing.

    • None of the $700k houses are on THIS street either.

    • I agree . . . I found my great deal only after searching obsessively for three months and making several unsuccessful offers on places. I got the place I now own by making an offer on it less than 24 hours after it was listed. And I also agree about the amount of work that’s required. A flipper might have slapped a new coat of paint on my place, along with some stainless steel appliances and granite counters and put it back on the market . . . but the place needs a lot more than that to truly be a quality home. Even though my place was borderline live-able when I bought it, to make it nice is requiring a gut job. I love it, but I’m looking at years of work.

  • I’d have to say you need to get that place for 300k or less to put in a good renovation for an honest sales price. I love the arm chair “flippers” that fail to take into account transfer taxes and real estate fees, staging fees etc. A cheap arse flipper slapping up paint and going very cheap and hiding problems could probably make it work at that price, but you will have a very unhappy buyer 12 months after their purchase.

  • I’d love to get a fixer-upper. I’m rent-free, so I wouldn’t need to move into the house right away, plus my dad’s a general contractor and is willing to help with whatever work needs to be done. Nevertheless, the fixer-uppers in DC simply aren’t worth it. The lots are worth so much that in most neighborhoods you’re paying at least $300k even if it’s just a shell. Unless you have something specific in mind, it doesn’t make sense to buy a $550k house that needs $150k of work when you can get an otherwise equivalent and freshly rennovated one for $700k.

  • Dooon’t dooo it….

  • i think is a nice house with a lot of potential and quite frankly not very overpriced. If i was still on the market for a rehab (which i bought last year) i would definitely put an offer for this house at $360. My current house was in worse conditions that this one seems to be but after 2 years of renovations it is *almost* perfect

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