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Today’s Sign the Apocalypse is Near – $1,000,000 Edition

by Prince Of Petworth — February 21, 2017 at 1:15 pm 32 Comments

say what

Thanks to a reader for sending this listing for 754 Lamont St, NW : “Great development potential in Columbia Heights.” The 3 bed/1 bath is going for $1,000,000. Remarkably it apparently sold for $500,000 in April 2016. Not much more to say except if you need me I’ll be in the bunker…

  • Anon

    Eh, this isn’t really anything new. Folks have been purposefully listing decrepit properties at absurd rates to avoid having to pay the vacant/blighted tax while the neighborhood improves.

    • JS

      Yes. This place comes on and off the market every few months in what is clearly a tax-avoidance scheme.

    • PetworthGuy

      Owner is Benoit Haber (754 Lamont street partners LLC) – CEO of Evolution Investment Group. Per their website, they manage and own similar rowhouses that have been converted into rentals. Agreed that it is most likely an attempt to avoid additional taxes

  • James W.

    Yep, this is a shameful tax dodge. District exempts from property tax any blighted/vacant homes that are marketed for sale. Owner is dodging taxes without any good faith intent to sell. DC needs to close this loophole.

    • anon29

      The person that owns this lives in an apartment on 14th street. The listing agent is offering a 1% commission to the buyer’s agent (norm is 2.5-3%). This is such a scam on DC taxes.

    • jonah

      There is a fix. CM Silverman wrote up some legislation last year (Vacant Property Enforcement Amendment Act of 2016) that was passed which if I am reading it correctly only allows a one year exemption for permits or fake sales attempt. I believe it also puts the burden on the property owner to show someone is living in the property and it isn’t vacant. There was a standard waiting period time for Congressional review but it should be law now or very soon. Here is the LIMS link http://lims.dccouncil.us/Legislation/B21-0598

      • James W.

        Interesting – thanks for posting. Makes me wonder why this POS exemption was ever put in place. In fact, it makes sense to do the exact opposite (ie tax vacant land and housing) to discourage speculation and encourage rehabilitation.

  • Speaking of blighted properties, I’m looking into tax sales for vacant properties behind on their real estate taxes. Any suggestions where somebody not versed can begin to research and understand the process?

    • crazyivan

      Yes. Don’t do it. It is a minefield of disaster for the individual investor, and at best you’ll get 18% interest on the money you plunk down to pay off the tax debt, but that comes with the risk of not knowing when you’ll get paid that interest. Once you pay off the tax debt, that is only the beginning of a very lengthy (think 2-3 years) process to your getting ownership. A lot of people mistakenly believe that the “winner” of the tax sale takes ownership of the property, but the truth is that it only entitles you foreclose on the property. And DC will allow the delinquent owner to pay the debt all the way up until the last second of the foreclosure process.

      That said, each year DCRA offers tax sale information sessions a couple weeks prior to the tax sale. It’s an interesting crowd, usually either first-timers who want to learn about the process, but also retirees with a little extra cash who treat the tax sale like a bingo game, and who might get that 18% interest.

      But the people who win the tax sales are usually institutional investors; and they’re not at the information sessions.

      My opinion is that it’s not a good way to purchase a property because your money will be locked away until the the delinquent owner pays the debt + penalties, or until the foreclosure case is resolved.

      • I’m not interested in purchasing properties, but rather understanding how the process works because, like you indicated, it seems like an inefficient and bureaucratic process that is difficult for even the most trained and knowledgeable.

        • anon

          Take a look at the Washington Post series on tax lien sales from September of 2013.

    • There are a hundred pros already “versed” in the process assembled like vultures for any hint of a tax sale. Basically, you don’t stand a chance.

      • James W.

        The tax sales are largely a waste of time for developers/flippers. More valuable properties can pretty easily be re-financed to pay any tax liabilities. After all, would you forfeit a property worth half a mil at fair market value if you’re short $10K on the taxes? The overwhelming majority of tax sale properties lie east of the Anacostia, where you can still buy a home for $80,000. The sad fact is that these owners don’t have property that’s easily refinanced and face the very real prospect of losing their homes over a few thousand dollars.

  • John

    Someone should schedule a tour just to see how the agent would handle it.

    • wdc

      Or just ask Ms Leslie White what’s in it for her. Isn’t there any downside to real estate agents putting their names on these phony listings?

      • JS

        White isn’t the listing agent; that’d be a “Frederick Hubig” of “Capitol Asset, LLC.”

        • wdc

          Ah, right. She’s the one with a picture on the listing, but I guess she’s hoping to represent a buyer…
          Ok, so what interest does Frederick Hubig have in this? Shouldn’t stupid listings be bad for an agent’s reputation?

          • JS

            I don’t know – I did a bit of googling and saw some testimonials from which it seems like the firm has handled estate sales in the past. Maybe this is the realtors’ version of a lotto ticket? Getting a chunk of that listing fee for zero work is enticing.

    • I Dont Get It

      Yeah, take a tour and take lots of pictures!

  • KY Ave

    At the bottom of the Redfin page, it says it was listed on April 12, 2016 for $1m and sold on April 28, 2016 for $500k. At the top it says it’s been on Redfin for 316 days. So it looks as though something is wrong on Redfin?

    • Anon

      It was actually sold on April 8, 2016 for $500,000 per the actual deed. However, it was not recorded until April 28th with the Recorder of Deeds, and thus Redfin pulled the recorded date rather than the sale date. So the LLC bought it, listed it for a 100% markup four days later (maybe on the off chance someone else wanted to develop), and then went with developing it themselves. Looks like they got a demo permit, then had a stop work order for a few months in late 2016, and then the newer permit for a third story and two condos.

      If they kept the same general building footprint, there’s ~700 square feet per level so at four levels that is 2,800 square feet – two 1,400 square foot condos. The lot size is also very large (2,375 sqft) so it could be possible that they’re also extending the footprint of the building, leading to larger units. I’m no zoning/permit expert so I’m not sure if that’s possible or would be reflected in the permits, but I’d be curious as to what they did. Anyone live nearby that can see if they’ve extended past the original footprint? While $1m is a little high, its a lot less about what structure is on the land currently than what the land can accommodate in terms of build-able square footage and units.

  • anon

    The house was bought by a developer last spring and is being flipped. The listing at the ridiculous price is clearly meant to avoid the higher tax rates for vacant properties. The property was reported vacant in August and again this month, but the owners are given something like a year’s reprieve from paying vacant property tax rates if the house is listed on MLS by a realtor.

    • jonah

      If they get a construction permit they also avoid the vacant tax rate. They got one on 2/8/2017 to add a third floor and convert it into two condos. That should be enough to cover them during construction. It is possible they want out and are putting it up for sale knowing another developer can flip two units, or even a third if they get a special exception, for well over $1M total.

      • Interesting. Where did you find the construction permit information?

        • jonah

          Google DCRA PIVS. You can look up any property by address. On the left is navigation for restrictions and holds, permits issued, etc.

        • anon

          DCRA has an online permit tracking system. Just enter the address and you can see the history, including the stop work order issued for doing work beyond the scope of their initial demolition permit. Looks like that has now been lifted and the permit issued.

          • Great information, thanks all

      • GBinCH

        This is silly though. At $1m to buy the land, construction costs, closing and carrying costs, there’s no way a developer could make money on this building. If they really wanted out, they’d sell at or around the price they purchased for last year.

        • anon

          I don’t think they want out. They have been working for months to get their permits approved (as the online permit tracking history reflects), and they have resumed work on the place since the permit was issued. I’m betting the flipped condos go on the market this summer.

  • apocalypse thwarted thankfully…

    As far as the project-

    My client, the developer, just got construction approved a few weeks ago (Jonah- very good work on that:-) and should begin work soon on what is to be a nice 2 condo project from what was an extremely dangerous property…we are relisting once we are finished with construction.

    If anyone has any specific questions about what it took to acquire (this was a very complex transaction), and/or any other questions or suggestions, please don’t hesitate to contact me. DC is a rapidly changing amazing place and, even as a local, I am constantly surprised by the breadth of the changes. And while we did receive quite insanely high offers, the developer decided it made more sense to keep this and develop rather than sell…

    Fritz Lorenz Hubig
    LuxuryDC, LLC. Real Estate | Principal Broker
    (202) 907-3733 mobile
    [email protected]
    http://www.DistrictReal.com

  • aPhamDC

    This use to be a crack house. The guy who used to own it passed away and I believe his son took over the house. A bunch of drug users were in and out of that place.

    • The lovely elderly lady owner rented rooms after husband died (I heard it was sometime in the late 90s), until she became too frail to keep the show going on. What happened was that she unfortunately let her niece stay there, who was a serious addict, who let in her boyfriend, (conveniently , a dealer), and the word got out fast. It took her mom’s court-chosen attorney, the police department, numerous non-profit legal companies including AARP Legal Counseling for the Elderly to finally get some clarity after two years of focused action. Some of the squatters grew up in the house next door but vacated when Bank of America foreclosed on the home- there are multiple side stories, all involving addiction. While the Seller lived a frugal lifestyle, eating beans out of a can, she signed a reverse mortgage that eroded hundreds of thousands. But that’s another topic for another day. There were good intentions on behalf of the owner to let a troubled family member stay with them…

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