GDoN “on most sought-after renovated 5th floor” edition

This unit is located at 1301 Delaware Avenue, Southwest. The listing says:

“Showstopper in Sizzling SW! Great 1 bed/1bath in coveted River Park on most sought-after renovated 5th floor. Large LR with dining area leads to charming screened-in porch. Big bedroom with great closet space. Updated kitchen/ bath. 24/7 desk, pool, gym, bike room. Onsite parking avail. Unbeatable SW waterfront location – blocks to the Wharf, METRO, Safeway, Nats Park and much more! OH 9/27, 1-4.”

You can see more photos here.

This 1 bed/1 bath is going for $189,900 ($611 monthly fee.)

36 Comment

  • The metal work on the porch would drive me crazy

  • How do co ops work and why are they always so under market value? Are they income restricted? Can you not sell it for more than you paid, etc? Seems odd that this unit has a tax assessment of $500k, but is selling for under 200.

    • HaileUnlikely

      They are fundamentally different than condos. A coop is technically not property. What you buy is a share in a corporation, kind of like buying a share of Apple or General Electric or Berkshire Hathaway, except that this share comes with a special kind of lease that entitles you to live somewhere specific. Again, you do not own property here. And you don’t pay property taxes, the corporation does. And if the corporation defaults on its taxes, or if the corporation still has a mortgage for the property and the corporation defaults on its mortgage, the corporation can lose the property and all shareholders lose their right to live in “their” unit. This does not happen often, but it is technically possible – my point here is not to scare people away from coops, but just to illustrate the fundamental difference in what it is that you are buying.

      • Great info- thanks! So the corporation dictates the price of the “share” in the property going forward? So when you go to sell your “share” you can’t name a price?

        • there are limited-equity coops that restrict how much you can sell for, but River Park isn’t like that. You can sell for whatever the market will bear. Given that you get your property taxes and utilities included in the fee here, I say good deal. The major downsides are that I don’t think this building allows pets (could be an upside for some!) and there might be restrictions on whether you can rent your unit out. There are fewer banks that will do a co-op loan so you can’t do as much comparison shopping for the best mortgage rate. And, like a condo, the fees could go up.

          • This place is cat-friendly. Not sure about dogs. I’ve been to this particular unit and it’s pretty cool. I’m not into big buildings, but it’s a great deal for people who are looking for this type of living situation and amenities.

        • HaileUnlikely

          No, you can price as you wish, but the nature of it being a coop (not real property) affects the price, as do specifics pertaining to the particular coop (e.g., whether the corporation has a mortgage on the building, called an “underlying mortgage,” or whether that’s paid off; restrictions on rentals; that sort of stuff). Also, condos are not generally regarded as comps for coops – this will affect appraisal, which will affect how much a buyer can qualify for. Also, a lot of lenders do not offer mortgages on coops – you are much more restricted in where you get your financing with a coop. For buyers, sellers, lenders, and all parties involved, the market for coops is just plain different.

        • In addition to the considerations outlined above, the coop board typically has to approve any sale. So getting approved for a loan and having your offer accepted is not the end of the buying process. The buyer fills out an application packet, which contains a lot of the same kinds of financial information provided to banks for financing along with personal and professional references, and meets with the board for an interview. It’s only after the Board approves the sale that the sale will go through.
          The buyer can also review the coop’s financial documents prior to the purchase.

          • HaileUnlikely

            Yes, the buyer can review the coops financials prior to purchase, and darn well better do so. I dodged a bullet a few years ago, withdrawing an offer during the review period, when I observed that the coop (in NW, not here) was drawing down its reserves monthly to cover operating expenses, had not contributed a penny to its reserves in years, and was going to have to raise fees and/or levy an assessment to cover a large looming maintenance expense soon. (They have not done this yet, they have actually lowered fees, probably have used up their reserve by now, and are visibly neglecting needed maintenance – again I’m talking about a different coop, not this one)

          • Thanks again for all the info- very helpful. My brother is getting married in a couple months and it seems like this would be a great place for him (esp since he lives in Reston atm). Thanks again!

      • They are stock corporations–they generally have done well except for those that began with weak leadership, mostly those done as affordable housing conversions in the 80s. A building like this will have little risk. Like condos most of the day to day operation is delegated to a management company. there usually are more restrictions on renting, in part because of the tax status of the corporation (it’s a non-profit) and because the FHA mortgage rules are sometimes a little stricter than for condos and FHA likes to see that there aren’t a lot of renters.

        You deduct your share of the property taxes from your income tax, like a condo. The mortgage process is essentially the same as for a condo–there are fewer lenders that do them and the interest rate will be a little higher, but the actual purchase price will be lower than a comparable condo.

        People tend to be more involved in the building governance in a coop, which is a plus or minus depending on the owners, but on balance relying on a small group to run a building with little turnover is not a good idea. Stuff that makes sense, like having adequate reserves and a fairly recent reserve study you can review are important, just like a condo.

      • While this is all technically correct, from the owner perspective it really is not fundamentally all that different from living in a condo. I used to own a co-op in Adams Morgan. Yes, there is board approval for purchases – but it’s not like NYC where there are stringent interviews, vetting, etc. You still get to deduct your mortgage interest and your property taxes (the portion of your co-op fee that goes to them). The number of banks that finance them is fewer – but you still have several options, and rates are the same (or at worst, within a quarter point) of what best/typical market rates are. I thiink they offer an awsome opportunity for 20-somethings to buy their first place and boostrap their way up – it worked for me! EJF, who manages a few in the city, has a good document explaining the fundamentals here:

    • HaileUnlikely

      Also, the $493,000 is not the assessed value, that is the actual tax. Not on the unit, though, but on the entire property. The assessed value of the entire property is $68 Million; $493,000 is the amount of the property tax for a property assessed at $68M.

    • That is likely the yearly tax assessed against the entire coop. DC real estate postings never get this right. Even this blog doesn’t bother to notify people that the monthly fee includes taxes.

      • HaileUnlikely

        It’s not that they “never get this right,” it’s that they’re relying on you knowing something that in reality is not common knowledge: coop fees always include taxes (if you want to think of it that way). An “owner” of an individual unit in a coop does not actually (legally) own property and thus is not charged property taxes, period. The cooperative as a whole owns all of the property, is charged property taxes, expects each shareholder (the “owners” of the individual units) to chip in and help the cooperative pay its tax bill, and decides for itself how much each shareholder should chip in. This does not vary from one coop to another – the individual shareholders are never personally taxed directly by the city for property taxes. The city neither knows nor cares how much one unit vs. another within the coop should be taxed, that detail is entirely up to the cooperative to deal with as they wish. In the eyes of the city, the cooperative is a single property owned by a corporation and thus they tax the corporation for the whole property.

  • This building always seems to be priced incredibly low, but I’m not sure why.

    • Because it’s a co-op — co-op prices tend to be lower than for similarly sized/appointed condos, and the monthly fees tend to be higher (because they include property taxes).

      • Coop fees are usually the “condo fee” plus taxes. Also, many condos finance capital expenditures through an underlying mortgage which also is part of the fee. Coops with extremely high fees tyically have a large underlying mortgage and are doing significant improvements. The underlying mortgage should be tied to a reserve study. The positives about the underlying mortgages are: you deduct the interest you pay on it as a shareholder and the principal will drop over time, along with your payments.

        This building has had exceptionally high fees in the past because they needed to catchup on capital projects.

        • Thanks! I understand how coops work, and the difference between coops and condos, but I didn’t understand why this building specifically is always so low even compared with fellow coops in the same area. Now I do, good to know,

    • Anonomnom

      Aside from the co-op vs condo difference (see above) this building has extremely high fees. Since you are paying those every month, its almost the same as paying more in mortgage so to make them desirable the sales price needs to be lower to compensate.

      • I Dont Get It

        It would be interesting to know what is included in the monthly fee? I’m assuming taxes are included but are utilities included?

        • I live in this building. The fees looks scary initially. But it includes property taxes (don’t worry, you can still deduct those from your taxes), all utilities including basic cable, 24 hour maintenance (when my heater broke in the middle of the night they fixed it in less than an hour), an outdoor pool, large gym, gated parking, storage unit in the basement, woodshop, art studio, music room (yup), 24 hour front desk and security, children’s play area.

          • If this is true, its a deal.

          • Are there any other units for sale in this building – particularly a 2 or 3 bedroom unit?

          • I don’t think there are any 3-bedrooms in that complex (except for the townhomes). Some people might buy two and put them together but it would be up to the board if that’s allowed.

            There are 2brs, but I don’t see any on the market right now. Here’s one that sold last month:

            They are not very big units, parking costs extra, and they don’t have in-unit washer-dryers. But in exchange they are fairly affordable–that 2br, if you had a 20% down payment, would probably be about $2000 a month including mortgage, fees (which include taxes and utilities), and insurance. Cheaper than renting in the neighborhood, and with tax deductions for mortgage interest and property taxes.

        • Just studios – 2 bedrooms unless someone bought two and knocked the wall down. Both 1301 Delaware Ave and 1311 Delaware Ave, SW are part of this River Park Development. Also includes the barrel roof townhouses next door

    • Coops are often demand 20% down minimum. Which keeps a lot of people out of the market and drives down the price. Also, they often don’t allow investors to buy and rent. Good if you want to have a stable cohesive owner occupied community, bad if you have boomtownitis and expect to make money off of your home.

      • the coop doesn’t demand this, but the lender might. FHA wanted 20% for a period in the mid ’00s and lenders followed suit, but this is not a hard and fast rule.

    • It’s in a not so nice part of SW. Basically surrounded by projects. The lobby of the building is nice, but the hallways remind me of Alice in Wonderland in that they get narrower as you move away from the elevator.

    • It was built with a middle-income market in mind, unlike the luxury market across the street. Since the comps are within the building, the price differential between the buildings persists to this day.

  • I think the main reason this may be “discounted” is because it’s in SW. Coops in NW are not appreciably cheaper than condos in NW.

    • well, NW is a big place. It’s true that SW is cheaper than, say, Tenleytown, but probably more per square foot than Brightwood or Takoma. SW is a nice place to live. Lots of metro and highway access, close to the Mall and the water and the baseball stadium. Schools are not as good as they are in west-of-the-park NW, but that probably doesn’t matter to someone buying a 1 bedroom.

      • Condo coop or whatever, a high fee usually depresses the purchase price. A lot of the coops in NW are “Best Address” buildings an the prices are less than they would be if the buildings were condos.

  • The building was commissioned by The Reynolds Aluminum Foundation in the early 60s to showcase the “versatility of aluminum” and was designed by the renowned mid-century modern architect Charles M. Goodman. Luckily, the lattice work does not impact the view from the inside.

    Co-ops aren’t for everybody, but can be a great way to own a place vs. rent, especially in SW — at least for now. With everything except cable and phone included in the fee — including property taxes — it’s a good value for this crazy market.

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