Good Deal or Not? “2 separated bi-level units” edition

This home is located at 1338 Irving St, NW:

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The flier says:

“Rare and highly desired multi-unit building. PERFECT for the investor or an owner occupant to subsidize the mortgage with top dollar rental units! This home has 2 separated bi-level units, offering 2 bedroom, 2 den, 2 bath living in each apartment. There are 2 parking spaces in the back, along with a huge backyard and 2 small decks. Must see!”

You can find more info here and photos here.

$799,000 sound right?

26 Comment

  • Hug Backyard? WTF?

  • sounds wayyyyy too good to be true.

    • Agreed. I’m wondering what the catch is… or if the real estate agent deliberately priced it low with the idea of starting a bidding war.

      • It can be tough finding buyers for these properties. We looked at a similar one on Capitol Hill that was priced at $700k and it sat on the market forever.

    • Because it’s a multi unit building, there are different rules for qualifying for a loan. And the monthly interest rate is usually higher than if buying a condo/single family home.

      • Bingo. The upside is that the rental income goes into the equation when figuring out loans. This is a great deal – not cheap, not a steal, but an overall solid price.

      • There is an FHA program by which you can buy a multi-unit building with 5% down if a) it is 4 or less units, b) you intend to live in one of the units, and c) the appraisal of rent generated by the units would cover the mortgage. the program allows for mortgages even as high as close to $1.4M. can be tricky to get all the numbers, etc. to line up, but when it does it is a good opportunity and such deals do happen.

        • Note: even if you will live in one unit, the appraisal will look at market rates for the rents for all units, including the one that you inhabit; if adding up the cash flow will cover the mortgage, it should be signed off on.

  • This was just on Urban Turf as their good deal or something. So I’m guessing it’s a good deal?

  • Do you really think each unit would bring in $3000/month as the ad claims?

    If you put down 20% you’d be paying about $4000/month on mortage, taxes, and insurance.

    • I think $3000 is much closer to the truth than the $2300 number Urban Turf coughs up. I think $2900 would rent it in days.

      Seems like an okay deal for an investor, but a great deal for live-in owner. The PITI at 100% financing is around $5500, so this house is profitable even before you put any money down. A live in owner effectively gets a 2 bedroom plus den for a monthly note of $2500, which works out to about an equivalent mortgage of $400k — an excellent deal for CH this close to metro. Of course, once you factor in a down payment of 20%, the note drops to about $1000/month. All you have to do is be front the cash, qualify for a $600k note, and be willing to become a landlord. Tall order, but good for someone with the wherewithal.

    • Yes – it would.

  • I went to the open house on Sunday – (since I live nearby)
    Both units are good-sized, in good condition and pretty well arranged – with decent closets and lots of space. The bedrooms are a bit small, but the common spaces very spacious.

    I can easily see each apt. renting for $3000 – and that feeling like a decent deal for 2 roommates, and a great deal for a couple. (especially one that likes to entertain)

    Finishes are cheap – vinyl floors and carpet, laminate counters, plastic doors etc. but clean and not horribly offensive. (same developer did my place and I’ve lived with it just fine) 2 parking spaces a big plus.

    If I had 800k lying around I’d definitely buy, anticipating an annual return of 50-60k.

  • I live across the street, in a similar 2-story unit (mine’s bigger, with nicer finishes, has no yard, but a 3rd floor deck, and one parking spot). I didn’t make the open house, but I do know that it backs up onto public housing, which might scare some people off. I think you could easily get $2800-$3000 a month for it. If my place was in shape to sell right now, I’s seriously consider flippign my place, moving into the upper unit, and renting the lower. With a 20% down payment, and a 5-year ARM at 3% from Wells Fargo, it’s cost me about $400 per month.

  • Wouldn’t it depend on which unit is the rental and which the owner lives in? It’s hard to tell but I think it might be unit# 1 = basement & 1st floor, unit 2 = floors 2&3. (if you look at the pics there are a couple of BRs on the basement level).

    I’m thinking the top unit could go for $3000 but lower level would be more like $2300.

    • A landlord would think, “The bottom unit for $3000, and the top unit for $3500.”

      $2300 would rent the bottom unit within a couple hours — Urban Turf appears to be looking at single level units. FWIW, the Allegro is renting luxury single level 2 bedrooms for $2975. If you really need to bump up the rent on the bottom unit, you offer it with parking inclusively at or above $3000.

  • Seems like a great deal.

    Also I’ve bought an (owner-occupied) duplex before and it was no different than buying any other home. Now if it is as an investment that’s different (higher interest rates etc) but that’s same for a SFH purchased as an investment.

  • Love this block. Looks like a great deal.

  • A two-unit property that’s completely separately metered like this (as opposed to an english basement type setup) requires at least 25% down right now, regardless of whether it’s an owner occupant or investor. We’re talking about around $200,000 cash to close on this deal. Sure, there are plenty of people in DC with that kind of cash, but it does eliminate a ton of potential buyers. It’s not like anyone with a 3.5% FHA down payment can pick this one up. That’s probably why the price is fairly low — the deep-pocketed investors get all the deals!

    • Even if it’s not a two-unit property, something in this price range would require 20% down these days. We recently bought a house for $775k and they were pushing us put down 25%.

  • Investment rates are not that much different from regular ones. Our latest house was 4.75% no points (in Oct 2010).

    But you do need at least 20% and perfect credit….

    • Yeah, we were able to get a 5.5% ARM but had to put down 20%. We had perfect credit history but we were first-time homebuyers so the lenders didn’t have much to go on.

  • I used to live here, until the landlady kicked us out and decided to sell. She broke my heart.

  • sounds like she broke the law too… you might want to speak with the tenant advocate office

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