GDoN? “Potential to be a grand home” edition

1125 7th Street Northeast

This house is located at 1125 7th Street, Northeast. The listing says:

“3BR/1.5ba, Federal Porchfront, Large Garage, Needs Work, Could Qualify for Residential Loan easily, but needs a lot of work. Potential to be a grand home, but sold strictly “As Is”, only. No exceptions. EZ to see.”

You can see more photos here.

This 3 bed/1.5 bath is going for $500,000.

23 Comment

  • justinbc

    Can you bring the maps back to the GDoN OPs? Or is that lagging too many people?

    • +1 Even if it’s a map that doesn’t link directly to google maps (in case that’s slowing down page loading) it would be helpful.

  • This is what an opportunity looks like…

  • Not a good deal

  • A flipper’s dream – someone will pay cash for this quickly.

  • Deal. Even of you put in 150k of reno you’re still 100k under market value. 3 blocks behind new whole foods. Close to metro.

  • There is not doubt that this needs updating but I would love to see this bought and fixed by owner/occupant and not a developer. There are some easy things – and some not so easy things – that if someone could beat the developer to it could be a good project for someone to earn some equity. Saying that I am sure a developer will get to it do a few things to it and spend about $50,000 and jack the price up to $800,000 and put it on the market.

  • 1137, just a few houses away, went for $775K this summer. Assuming the bones & roof are stable, $500 K strikes me as fair.

    What interests me the most is why this owner chose to sell on the market & pay a commission, as opposed to just taking cash from a flipper.

    • I wouldn’t be opposed to a Flipper Tax. Many jurisdictions have them.
      Keep the equity in DC, instead of going to wealthy VA and MD ‘burbs where all these guys live.

      • Accountering

        We DO have a pretty healthy flipper tax. It costs 1.1% to buy a house, and 1.1% to sell (unless the house is over 400K (this is) and the resulting house they sell is over 400K (it will be.) then the cost is 1.45%. So for a house you buy for 500k, and then sell 2 condos for $400k each, you are paying a total of $18,850 in transfer taxes. Probably not as punitive as you are (i’m guessing) hoping for, but that is quite a bit in taxes.
        The other side of the argument is that they are taking a house that would have 1-2 income earning tax paying citizens, and creating 2 or more units of 1-2 income earning tax paying citizens, so I don’t see a legitimate reason on the cities part to punish that. As it stands, the city has earned a ton from transfer taxes as a result of the flipping going on all around town, as well as a ton of new tax paying residents.

        • That’s not a flip tax, but a transaction tax. Which most jurisdictions have.
          A flip tax is usually much higher and takes into consideration the amount of time between purchase and resale. I’d have no issue with a 10% flip tax if someone bought and sold within 24 months at a certain % increase between buying price and selling price. That would ensure that no resident homeowner got hit with the tax.
          Like I said, keep that money in DC. There’s a giant sucking sound as all this bank financed equity ends up outside the District. Sure, we get higher tax receipts but even people who were considered upper-middle class a decade ago (e.g., two working lawyers or two GS-15s) are now spending upwards of 40-50% of take home income on housing in a quasi-safe neighborhood for a small family. It’s not sustainable.

          • Accountering

            Where is the interest in a punitive flip tax? Flips take undesirable properties, and make them available to people who are willing to pay fair market price for them.
            The bit about the two GS-15s paying 40% of take-home is ridiculous. Two GS-15s are making $250,000 pre-tax. Assuming 40% tax rate (too high) their take home is $150,000/yearly. An 800,000 house with 20% down is going to cost ~$3800/month. That is 30.4%. To be conservative, they say don’t spend more than 35% of your pretax income on housing, and our hypothetical couple is only spending 18.2%. There are issues with housing costs in DC, but the two GS-15s are not the issue.

          • “Flips take undesirable properties, and make them available to people who are willing to pay fair market price for them..”
            That’s not necessarily the way it works. Flippers tend to like properties in need of renovation, since they can pay less for them, but sometimes they purchase properties that are already livable. I’ve heard of flippers paying above market price (and in cash) to get a hold of a desirable property, which I suppose is fine for the sellers but not so great for non-flipper buyers who can’t compete with all-cash offers.

  • That’s a bingo!

  • I live across the street from this. I believe it needs a bit more work than the pics show, but I’ve never been inside. However, the price seems about right based on what others in the surrounding blocks have been going for. There is a borderline tear-down around the corner that, while slightly larger, just went for $550K in 1 day on the market to a developer who has completed gutted it and is going to convert it to two units. It appears the only way developers seem to make those work anymore is to convert them to two units.

    To ET’s point, I feel like there are fewer and fewer places that are owner/occupant purchased and fixed up. I think the prices have just gotten too high. That’s what we did 9 years ago, and I know there’s no way I could even touch a house like this now, and then still afford to renovate it.

    • “It appears the only way developers seem to make those work anymore is to convert them to two units.” That might be true some of the time, but I feel like we’re seeing a lot of flippers who could have flipped a single-family home and still made a profit who are instead opting for MORE profit by splitting SFHs up into condos.

      • Accountering

        Can’t really blame them though – when given the option of “profit”, and “more profit”, wouldn’t you too pick “more profit?” 🙂
        Interesting that there is certainly a line where it makes more sense for SFH (Brightwood etc) and where it makes sense to condo-ize (U St etc) Would be interesting to see how that line moves as housing prices have moved up etc.

      • “I feel like we’re seeing a lot of flippers who could have flipped a single-family home and still made a profit who are instead opting for MORE profit by splitting SFHs up into condos.”

        Agreed 100%. The house behind me sold 2 years ago for $329K. It was was gutted, popped up, dug down, blown back, everything you can imagine, and turned into two units that will likely go for a minimum of $700K and $800K each. Lot of work, but still a pretty sweet profit margin. The developer has taken 2+ years to do this and is still just now putting up drywall, but he could have had it flipped and done in 3 months and sold it as a single family for $800K.

    • I agree on the price thing but it is a bit of a vicious circle that feeds on itself. Flippers are able to snatch up those properties that are habitable (though in need up updating) from the grasp of those willing to buy a fixer-upper because they have all cash. This is one reason (among many) that the price of real has risen so fast in DC.

      I bought my house at the end of 1999 and it was one that was OK to live in but definitely need a lot of TLC. Today that house would have been purchased by a flipper, fixed, and sold for $200,000 more than it sold for. And I would have never even seen the inside of it much less been able to buy it. If the owner occupant was willing to buy and slowly fix it up all that equity improvement would have been much slower and that would have not impacted prices in the area as much .

      Of course many don’t want to live in a fixer-upper and want it all done before they move in, which means they are going to have to pay for it and pay more for it.

  • Impossible to tell if this is a good deal without pictures of the kitchen.

  • I’ve never seen a house with no kitchen in DC before.

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