BP Podcast 356 - Section 8, Joe Asamoah, questions about rehab

General Landlording & Rental Properties
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BP Podcast 356 - Section 8, Joe Asamoah, questions about rehab

Patrick H.
Clifton Park, NY · Member since 2016 · 9 posts · 0 votes

I recently listened to BP podcast 356 with Joe Asamoah who does high end Section 8 rentals in Washington DC. One of his strategies is to buy a 3 bedroom house with a basement and finish the basement making it into a 5 bedroom house. Does anyone else use a similar strategy?  He mentioned getting $5,400+ for his rentals which is way above the DC FMRs. How is he able to do that?

I made an offer on a 6/2 two-family (each 3/1) that has an unfinished attic with at least 7-8 foot ceiling. Both units total 2,100 sq ft and the attic is another 900-1,000 sq ft. The property already needs extensive renovation so would it be worthwhile to finish the attic by adding 2 more bedrooms and a bathroom (making one unit 5/2), assuming the cost wasn't too high? In this area, 3 bedroom FMR is about $1,390 and 5 bedroom is almost $1,750.

I am looking to BRRRR this.

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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
6y

Im in the DC market and friends with @Joseph Asamoah.  Ive also added bedrooms to houses.  Finding a location in the basement that makes sense for a bedroom, with proper ceiling height, and has the ability to add an egress window.

Joe gets above market rate rents in certain neighborhoods through section 8. DC has several neighborhoods that the section 8 rents are well above market rate rent. Takoma and Kingman Park being 2 of them.  Thats not universal though throughout the city. Some neighborhoods the section 8 rents match market rate, and some trail market rate.

Another way to get above market rate rents is to do a rent by the room strategy. We just filmed a video yesterday for BP actually where @Ron Gallagher uses that strategy here in DC.

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y

    Im in the DC market and friends with @Joseph Asamoah.  Ive also added bedrooms to houses.  Finding a location in the basement that makes sense for a bedroom, with proper ceiling height, and has the ability to add an egress window.

    Joe gets above market rate rents in certain neighborhoods through section 8. DC has several neighborhoods that the section 8 rents are well above market rate rent. Takoma and Kingman Park being 2 of them.  Thats not universal though throughout the city. Some neighborhoods the section 8 rents match market rate, and some trail market rate.

    Another way to get above market rate rents is to do a rent by the room strategy. We just filmed a video yesterday for BP actually where @Ron Gallagher uses that strategy here in DC.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group545 Reviews
    WebsiteView Page
    3Reply
  • Patrick H.
    OP
    Clifton Park, NY · Member since 2016 · 9 posts · 0 votes
    6y

    Thanks for your input, @Russell Brazil.  I'm not at all familiar with DC, so what makes the areas you mentioned with above market rents different than other areas?

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y
    Originally posted by @Patrick H.:

    Thanks for your input, @Russell Brazil.  I'm not at all familiar with DC, so what makes the areas you mentioned with above market rents different than other areas?

     Theres nothing inherently different about those areas. The housing department sets the section 8 rents in every neighborhood in the city, and for whatever reason the rent in say Kingman Park on a 5 BR is $5500 versus $4000 or so as market rate.  Theres other neighborhoods where that is inverted.

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  • Mark Cruse
    Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
    6y

    @Russell Brazil you see no difference in the neighborhoods at all? 

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y
    Originally posted by @Mark Cruse:

    @Russell Brazil you see no difference in the neighborhoods at all? 

     Is crossing Benning Rd from Carver/Langston to Kingman Park worth an extra $1500 a month in rent, or crossing Georgia Ave from Petworth to 16th St heights, worth the same rent bump, or Crossing from into Takoma fromt Brightwood or Riggs park worth nearly $2k in additional rent? Market rents actually higher in Petworth than it is in 16th St Heights.

    You have any thoughts on the rent in the tier 1 section 8 neighborhoods?

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  • Mark Cruse
    Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes
    6y

    @Russell Brazil I don't see much in those areas you described and clearly don't know what they base significant differences on but in general, all over the city the areas are astronomically different. I don't know who pays what but there is clearly a difference in Takoma and Petworth. I know Deanwood and Anacostia are still developing but there could be a 100k difference in sale price on those two. I know a Brrrrr that Joe did over on one side of Benning is very different than Riggs Park. Maybe you are talking about places and jurisdictions right next to one another. 

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    6y
    Originally posted by @Mark Cruse:

    @Russell Brazil I don't see much in those areas you described and clearly don't know what they base significant differences on but in general, all over the city the areas are astronomically different. I don't know who pays what but there is clearly a difference in Takoma and Petworth. I know Deanwood and Anacostia are still developing but there could be a 100k difference in sale price on those two. I know a Brrrrr that Joe did over on one side of Benning is very different than Riggs Park. Maybe you are talking about places and jurisdictions right next to one another. 

     Yeah, Im just saying rental prices for section 8 in some of these neighborhoods explode dramatically from one neighborhood to the next.   Im sure DCHA has some sort of logic as to why they pay so much more than market in Takoma, but I dont know why. 

    [email protected]301-893-4635Podcast Guest on Show #192
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  • Patrick H.
    OP
    Clifton Park, NY · Member since 2016 · 9 posts · 0 votes
    6y

    Back to the question I would like some help with...I made an offer on a 6/2 two-family (each 3/1) that has an unfinished attic with at least 7-8 foot ceiling. Both units total 2,100 sq ft and the attic is another 900-1,000 sq ft. The property already needs extensive renovation so would it be worthwhile to finish the attic by adding 2 more bedrooms and a bathroom (making one unit 5/2), assuming the cost wasn't too high? In this area, 3 bedroom FMR is about $1,390, 4 bedroom is $1,515, and 5 bedroom is almost $1,750.

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