Good Deal or Not? “Unbelievable opportunity to purchase a wonderful, sunny one- bedroom apartment in the great 14th & U Street corridor” edition

1440 W Street Northwest

This unit is located at 1440 W Street, Northwest. The Listing says:

“Unbelievable opportunity to purchase a wonderful, sunny one- bedroom apartment in the great 14th & U Street corridor, near Metro! Approximately 650 square feet. Coop fee includes taxes, insurance, maintenance, management fees, utilities (except electric), underlying mortgage and more. YOU PAY ONLY $42,000 TO PURCHASE. INCOME RESTRICTIONS APPLY – $47,950/one person. Sorry no investors allowed.”

You can see more photos here.

This 1 bed/1 bath is going for $42,000 ($1,076 monthly fee.)

27 Comment

  • I currently pay $700/month with a few roommates and out of curiosity how does this possibly make sense w/ a $1,000+ monthly fee.

    • Theoretically you would pay cash for the apartment. Therefore all you would pay monthly is the fee, electricity, and cable/internet. So around $1200 a month. Fantastic deal for a one-bedroom in this location.

    • Also, a big chunk of that fee is probably for an underlying mortgage for the entire building (which I believe was bought under TOPA). So theoretically , that portion of the fee will eventually go away. It’s worth asking about for anyone who is seriously interested in the property.

      • I am a CMC resident. Yes, most of the carrying charges go to service the acquisition and construction loans, plus property tax. You get to write off a good chunk of those charges, though not all, if you itemize your taxes, which improves the affordability further.

  • I don’t get it. Someone explain to this idiot (me) how this works.

  • Maybe I just don’t get co-ops, but how does one making less than $47,950 per year save enough money to afford the $42,000 required for purchase. (I’m just ballparking that someone making that cannot afford much loan on top of the monthly fee, which I realize might be wrong.)

  • not everyone wants to live with roommates. Your total payment would be under $1300 a month even with a low down payment, and that’s way cheaper than most 600sf 1-bedrooms in the neighborhood.

    With that said, you probably don’t recapture much if any of the equity in the place when you sell. There are probably restrictions on who you can sell to, and possibly on what happens if your income goes up.

    So I would think of it as a good alternative to a long-term lease, but not as a wealth-builder like other types of homeownership.

    • 1300 a month making less than 50K is not easy. You’re probably bringing home about 2500 a month after taxes. Then add utilities, food, transportation, loans, credit cards etc. you’re basically broke, like you have been the whole time you weren’t able to save any extra money for your down payment that led you to not purchase this apt. in the first place.

      • Nope. Most of your taxes come back at that wage.

        • Hmm, my take home was $2600 a month when my salary was $50K. If you throw in the taxes returned to me after filing my return, maybe $2800 MAX per month. My rent that year was also $1250/month and while I wasn’t feeling poor, I also had no savings.

      • I’ve done it, but yeah it’s not fun.

  • Right now I make $16 an hour 35 hours a week, and have for some time (and it has sucked A LOT), but I recently interviewed with, and am very confident that I will be offered a position at a job where I will make just over 50k before taxes. So let’s say I buy this place TODAY (all obviously theoretical, I have no interest in owning right now) and my income is somewhere around 30k. In a month if I get that job, what would happen? Does the co-op track your income somehow to make sure you’re under the required level? Or does it only apply to what you make when you buy?

    But anyway, despite the low price I don’t really think this is a great deal. Like anonymous @ 1:53 said, making under 47k, you’d pay 1200-1300 a month and I know I could not afford that with what I make. I guess it might be good for someone in the 35k-45k range though?

    • binpetworth

      The income obligation is only a requirement at the time of purchase. If you get a job making more afterward, that’s no problem. (And anyway, how would the co-op board know your income after purchase unless you told them?)

    • Future income doesn’t matter. Once you buy it you are free to get a better job.

  • I suspect that a lot of potential buyers for this type of place would have Mom and Dad providing the down payment (or even the entire purchase price), like referenced in the NY Times article posted above. Does anyone know if the source of the down payment is considered in determining whether a buyer fits into income restrictions?

    • In the NYT article, it didn’t sound like it.

    • It is a coop. So the board can reject you without ever giving a reason (protected under the business judgment rule). Maybe this coop would like a good bootstrap story, but if they are financially conservative they might prefer an all cash offer. Also, if the board members ever want to sell-they will be inclined to approve the highest offer rather than wait for a nice story.

  • well, to be fair. The NY times article largely referred to people who inherited Mom and Dads money. If you come from a modest background, where the word inheritance is a joke, then these options are a little more far fetched.
    Consider the 25 year old who truly put themselves through college, earning 40-50k – living in DC.

  • The big question is whether that $1,076 a month is for a coop loan that will eventually be paid off and go away. If that payment shrinks by a couple hundred or more then this would probably end up being a really *ridiculously great* deal. I think these units have covenants that restrict your ability to gain much equity, but as far as getting a way-below-market-price in U Street I don’t think you can beat this.

  • What happens if you start earning above the income restriction at some point?

    • Once you qualify at the front end of the process, you never need to requalify. So if you start earning more, it doesn’t matter.

  • What does Tax: $29,409 mean? Does that mean that in addition to the $42,000 purchase price, you would be paying almost $30,000 in taxes?

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