From the Forum – Agent Recommendations – Multi-Unit Properties

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Agent Recommendations – Multi-Unit Properties:

“I’m looking to buy my first place and wanted to see if anyone had good recommendations for agents. Specifically, I’m looking for an agent that knows DC very well – especially the neighborhoods of Shaw, Truxton Circle, and H St/Trindad – as I’m looking primarily in zip codes 20001 and 20002.

I’m targeting multi-unit properties (anywhere from 2-4 units) and am looking for a value buy. I’d like to purchase something that is in livable shape, but it does not need to be pretty or anywhere near turnkey condition. The plan would be to live in one of the units and rent out the others to reduce mortgage costs and expenses, and perform much of the maintenance and upgrading of the units myself.

Anyone have recommendations on agents that have experience with those types of properties? Or have general advice on this approach? If anyone reading has done a similar process on their own, I’d be very interested in connecting to hear more about your experience.”

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41 Comment

  • You can’t rent out merely “livable” space to tenants. You’d need to make repairs before they moved in.

  • The only “value buy” of the places you mentioned is in Trinidad. There are several multi-unit properties on the north end of Trinidad (also interspersed throughout the rest of the hood), but some of those are on rather sketchy blocks.
    Your best bet for finding a multi-unit property in Shaw/Truxton is buying a large townhouse and converting it into several units. You can easily convert into 2, but trying to do more will likely require a zoning variance.

  • I’m not sure of what your financial situation is, but since you mention that you will take out a mortgage on the property, a residential lender will most likely require that you are financially able to swing the entire mortgage payment without any renters, even if it’s your plan to rent it out most of the property. Sometimes there are exceptions where you can use expected future rental income to qualify for the mortgage if you have previously been a landlord for 2 or more years. But be aware that you might not be able to use expected future rental income of the property to qualify for the mortgage to make the purchase.

    • Ditto. When we were looking last year for a rental property, we were looking at mostly single family homes to rent out, never dreaming that we could land a duplex. We stumbled onto a duplex in Truxton Circle (2BR/1BA), but had to qualify for the entire mortgage w/o the rental income (even though the rental income nearly covers PITI). It was overpriced and therefore sat for a while, so we were able to significantly negotiate down. Similarly, we were looking for something livable but not updated so that we could do the upgrades over time. Now we’re able to live in one unit and rent out the other unit to cover our living expenses and allow us to save up for our next place.

      What’s your price range? Trinidad, Brookland, and potentially Truxton Circle are your best bets. Good luck!

      • I think you hit a good point here with “something livable but not updated”… When we bought our (single family) house last year, I feel like we stumbled upon something that nobody else was interested in. It was “too nice” for a developer (not worth the added mark up because it had 15 year old HVAC and kitchen upgrades) but not nearly nice enough for people looking for a “renovated” house (even though it was advertised as one, it definitely couldn’t compete with true renovations).
        It’s a narrow band in the middle there, between gut jobs that developers will pay cash for, and renovated places that buyers will go into a bidding war over. But if you can find places, I think it’s where the best deals can be found.

    • And you’ll still be required to put down at least 20% (probably more on something that I expect would require a jumbo loan). Which could be like $200k for an apartment building in Shaw.

    • This is not true, as my experience was easier. I bought a three-unit rowhouse and they counted expected rental income for me even though the building was a vacant foreclosure and had no leases. Because there were no existing leases their rent estimates were way too low but that helped with the mortgage anyway. And this was a HUD loan (very strict) back in 2010 (when mortgage lending rules were even stricter than they are today). However, the building already had three existing units so doing a conversion would likely be harder.

  • So basically you are looking for a “diamond in the rough”, basically a golden goose type situation. Good luck!

  • I forgot about this picture. Thanks :^)

  • Your first place and you’re looking at multi-family units? That’s quite a plunge. If, by chance, you decide to go with a less established neighborhood, I do have a friend who specializes in east of the river and other emerging neighborhoods. He owns a duplex himself– the mortgage is something like $1400 a month, and each unit rents for $1100, so he could live in one and effectively only be paying $300 a month in housing expenses.

    • Does your friend have a website or is there anyway i could get in contact with him? I am not in the market for a place just yet but i plan on searching East of the river (probably around early 2015).

    • I bought a double shotgun (in N.O.) as my first house. Unless you have a large family I think it’s just about the smartest thing you can do. Typically one to two people don’t need all that space.

      Of course if you really want a regular house you can just rent out the other bedrooms. It’s nice to have separate units, though.

    • Yes, please… info! Looking for 2015 for my husband and my first place, and trying to do some legwork now.

  • …You and every other Joe Schmo trying to quickly make a buck. Good luck.

  • Oh, ok. So you, a first time buyer who needs a mortgage are looking for that “one ” place that the hundreds of developers in DC who look full time and pay in 100% cash haven’t found yet.

    Ok then, good luck

    • PG County might be a good place to look– lots of deals to be had there, less competition from developers, and the rental market is strong because it’s so close and convenient to DC.

      • The advice from folks that this guy needs to remember that he’ll need a big down payments and proof that he can swing the whole mortgage without rent is spot on. When we bought our DC row house a couple few years ago the lender initially demanded 25 percent down because the house has a separate English basement apartment — they wanted to categorize it as multi-family.

    • You could just buy a single family with an “in law suite” like the rest of the city 😛

      • You could do that and then make it legal if it is possible. Still going to cost more then regular cause everyone knows what people do with “in-law suites”

        • I’ve heard that in Cap Hill having a rental basement adds about 100k to the price, which is well worth it since that will pay for itself in 5-8 years.

  • justinbc

    I bought a 4 unit property in 20002 this year. Our agent was Annette Wagner of Centurion Properties and I highly recommend her.

  • I love that not one person actually tried to answer this guy’s question. But everyone had plenty of advice to give.

    • Wrong. The guy asked more than one question, and one of his questions was “Or have general advice on this approach?” I did have general advice, which is that you don’t buy fixer-up rental property and do the fixing after tenants move in — you have to do the fixing first.

      Specific answer to specific question.

      • I thought it was pretty clear that the OP was looking for a place that was livable but “did not need to be pretty.” Meaning not that the ceiling is falling in and the plumbing is bad, but that it might have old cabinets, vinyl floor & laminate countertops etc.

        That said – it is indeed a rare and difficult find.

    • And you’re here to help I take it?

    • justinbc

      Actually I answered it quite specifically.

      • Yeah, when I saw this question I thought, “Wait a sec, isn’t Justin a landlord of a multi-unit property?”

    • Even though I don’t know an agent that deal with those neighborhoods, I don’t think my advice was out of line.

  • 20001 is NOT GONNA HAPPEN unless you are a millionaire… there’s nothing close in shaw/downtown/logan in the multi-unit category that would be on the market for less than $1M, and probably a lot more

    • This is true for most of the ‘hoods you mentioned. You might want to expand your search a bit. Kingman Park, Michigan Park, and Edgewood are all places that I would consider.

  • I recommend reaching out to Amy Levin tel:240-497-1733. She’s been the buyer agent for many multi-unit deals. Please tell her that her colleague Leslie recommended her. Good luck.

  • Be sure to find a realtor who understands the C of O and business license process. I don’t have one to recommend because our realtor didn’t know much about it. If we hadn’t researched it ourselves, we wouldn’t have figured out that the copy of C of O we received was worthless because it was too old and that one of the units needed substantial renovation to meet current housing code regulations. (We still bought the house but only after negotiating the price down to accommodate some renovation costs, since the place had been marketed as having a legal basement rental unit).

  • I think your best bet is to buy a house and rent out the spare rooms. Finding and financing a multi-family property that is reasonably priced in those neighborhoods would be very hard. Converting a house to a multi-family would be expensive- if you have the $, great. Talk to some banks first and see what you can qualify for and what types of loans are available. Don’t underestimate your construction costs, even if you are planning on self performing some of the work.

    And yes, definitely look across the river.

  • There is also an FHA program – if still in effect – that allows for a ridiculously low downpayment if you will live in one of the units, up to 4 units. Some hoops to jump through like ensuring the prospective rent of all 4 units could cover the mortgage if you lost all income. It is more the exception that everything lines up right for the program, but it does work sometime and is worth looking into. Ask your agent about it.

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