Good Deal or Not? “Move into one unit and rent out the others” edition

1815 16th Street Northwest

This house is located at 1815 16th Street, Northwest:

popville_real_estate

The listing says:

“Grand Victorian with 3 2-bedroom rental units with high end kitchens and bathrooms, virtually never vacant. Leases on month-to-month basis. Move into one unit and rent out the others to pay your mortgage!”

You can see a virtual tour here.

This 5 bed/4.5 bath is going for $1,599,000.

27 Comment

  • Am I missing something? Why is this so cheap?

  • I’m missing the part where there are three 2-bedroom units. Are there just not photos of the other two units on the virtual tour?

  • Wow! That price seems crazy low for this. I’m in!

  • I wish I had the money because that’s a steal. It must be in need of major repairs or something to be so cheap, but I’d still take it. Wow.

    • It looks like it was last updated about 20 years ago. My guess is that the guts of the building are fine, but the cosmetic stuff will probably need replacement in the next 5-10 years. Most of the fixtures are budget. Also, my guess is that the current tenants have been there a while and might have low rents (compared to the current asking price for 2BR rents). In the current market, a 2BR in this location should go for around $2800-3000.
      .
      I personally don’t believe that this is an insanely cheap deal. Lots of the original details were probably stripped out. To convert this back into a “luxurious” single family home would probably take another $500K+.
      .
      VERDICT: Decent deal. But not spectacular.

  • Not sure…how can it be a 5-bedroom with 3 two-bedroom units?

    It doesn’t seem like a great deal, but it’s certainly one way to move to a fancy area and have the mortgage defrayed. There are a lot of hassles and higher mortgage rates of owning a multi-unit. If you can swing a 20% down payment ($320k!), the mortgage payments will be about $8500/month. I don’t know how much you can rent 2BR/1BAs for there…let’s say $2500 and $3000 a month. That still leaves a $3000 payment plus taxes and insurance on the whole big building, and you can’t assume 100% occupancy all the time.

    • I’m fairly sure a two-bedroom would rent for more than $2500-$3000 in that area. Of course, we don’t really know the condition of the units since there don’t seem to be pictures of anything but the main house.

    • In this location you pretty much can assume 100% occupancy all the time. I was going to say that the “virtually never vacant” in the description is the first time I’ve ever seen a realtor understate something.

    • I am not certain where you are getting $8500. I would say you are closer to $7500, including taxes and insurance.

      If these are nice (put $20-30K into each) then these rent for $2800-$3000, easily.

      • I did 5% as the interest rate with 20% down, realizing that’s high, but multifamily rates are often higher. Also, this might be above the conforming loan limit depending on how big the downpayment is–20% is probably optimistic. Many lenders are looking for 25% or more down.

        • Meh, they run an extra 1/8, not THAT much more. For a jumbo multi-family, I think your assumption of a 25% downpayment is likely.

  • why is this so cheap?

  • Speaking of cheap, I did a walk of shame out of this building one morning many years ago.

  • It’s going to take a real unique buyer to want that. The place you live in yOurself isn’t that nice or big. You get a decent amount of rent to offset the mortgage, but if won’t fully cover it (plus $300K+ down). Most buyers with that kind of money won’t touch this situation. Looks like you’re getting three 1,000sqft apts. $3,000 each is a fair rental estimate. Too much hassle for most.

    • Who says you have to live in one though? I think it would be a good starter for someone who wants to graduate from renting a single home to an apartment building.

      • You don’t have to live in one. But if you are buying it as a pure investment you don’t pay $500 per sqft. Investors are smart enough to get a good deal and make money quicker. This house is priced for an owner to live in. FMV for a live in property and FMV for pure investment are two different things.

  • My wife lived there for 5 years ending in 2011. She rented the lower apt for $2500. It was a 2BD, 2BA unit, with one bedroom and bath on the 2nd level from the bottom. The lower 2BD unit was the previous owners residence (the one selling it now lives in the top two of the five levels) and was nicely appointed. (Granite, stainless appliances, gas range, wood floors, tiled bathrooms, updated fixtures and recessed lighting with dimmers.) Cannot beat the location! The lower 2BD unit is the full 1st floor and the street side of the 2nd. The next unit is the back side of the 2nd and the full 3rd. The upper unit is the 4th and 5th levels.

    • Ah ok, that clears things up. They really need to update the virtual tour to include that because they are only showing two levels plus the roof deck. If all the units are updated, I’d say this is a good deal.

  • Someone clearly thought it was a good deal. Went into contract on December 31st according to Redfin!

  • lenders will not give you a mortgage big enough to buy a house like this based on the ‘potential’ of renting out the parts you aren’t planning to use. that’s simply not how it works. maybe it’s a good investment and you can reduce your monthly expenses, but you will never ever ever be able to buy this house unless the bank giving you the mortgage determines that you can afford the entire mortgage payment even when nothing is rented.

    • That seems reasonable on the bank’s part (rents dipped pretty badly during the Crisis). Thanks for clearing it up.

    • I’m by no means an expert, but lenders were willing to assume income from a basement rental when I was looking. I believed they assumed 50% occupancy for a potential unit. Not sure why this would be different.

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