Investing in Congress Heights DC for Owner Occupied MULTIFAMILY?

Question

Hi Bigger Pockets Community,

I hope everyone is well. I have a quick question for my DC investors/realtors/lenders:

I'm interested in multifamilies in Congress Heights and I think I've found a winner number-wise. Only issue is determining if it's a worthy investment as an Owner Occupant considering the current dynamics of the area.

What do you guys generally think about the area as an owner-occupant in a 4 unit multi? Would you go for it?

Would love to hear any thoughts.

Thanks!

Aaron Smith · Answer

@Russell Brazil

So, did they actually get the exemption and the tenants fought back against the exemption, or did DC not grant the exemption?

If the latter, I wonder what the other considerations are for DC.

I  inherited tenants for my property. DC approved a rent control exemption that I applied for. I sent the tenants the rent control exemption permit # when they asked about it, and they then accepted it and signed vacancy agreements.

Aaron Smith · Answer

However, for extra incentive, I did offer cash for keys in exchange for them signing the vacancy agreements on top of the rent control exemption.

Russell Brazil · Answer

Keep in mind that if the current tenants are rent controlled, they are grandfathered in even if you are exempt. So the unit will be rent controlled til they move out.

Jon Sheffield · Answer

Hey nick, just wondering if you purchased the property in congress heights? If so where at, I currently own a building on parkland place se. As mentioned earlier they are currently redevloping St. Elizabeths campus and there's a lot of development in between Anacostia and Congress Heights. With that being said the area still has a ways to go, but it has changed a lot. As for owner occupied financially makes great sense, but mentally depending how much you can take is a different scenario. If you haven't purchased and are still thinking about purchasing I say drive over there park your vehicle and walk from congress heights metro station to Anacostia metro station after 10 am. This will give you the vibe of the area, the later you go  the more you will see. This is a great area with great opprotunities just know it will take a couple of years before you get to a H st type vibe. Good luck on your search

Aaron Smith · Answer

@Russell Brazil, Do you have any experience in using the "Landlord seeks to substantially rehabilitate rental unit" reason? Have you seen DC or tenants get stubborn with that?

I didn’t use this one because I was told DC may not allow a condo conversion if they believe the tenants were treated unfairly/poorly.

Russell Brazil · Answer

They were all eligible for the exemption.  DC simply does what it wants, whether it's housing, auto ticketing, etc.

Aaron Smith · Answer

Maybe they were ineligible for the rent control exemption. The requirements to gain a rent control exemption are owning less than 5 units and have to own in your own name (not an LLC).

Russell Brazil · Answer

My reading of the law does not allow for grandfathering....however i know 3 separate multifamily owners who purchased with rent controlled tenants in place who have been unable to get the rent control removed from those tenants. It's not a process I've needed to navigate myself however.

Aaron Smith · Answer

There are a bunch of ways to evict tenants in DC, this is from DC guide to eviction:

The landlord may evict a tenant for only one of ten specific statutory reasons:

• Nonpayment of rent;
• Violation of an obligation of tenancy, of which the tenant failed to correct after notice;
• Tenant performed an illegal act within the rental unit;
• Landlord seeks in good faith to occupy the rental unit for personal use and occupancy;
• Landlord sells rental unit to a party who seeks in good faith to occupy the rental unit for personal use and occupancy;
• Landlord seeks to renovate rental unit in a manner in which tenant cannot safely occupy;
• Landlord seeks to demolish rental unit;
• Landlord seeks to substantially rehabilitate rental unit;
• Landlord seeks to discontinue rental unit for housing and occupancy; or
• Landlord seeks to convert rental unit to a condominium or cooperative after securing governmental approval.

@Russell Brazil Are you sure about being grandfathered in? Can you point to a law in particular that states that?

Kiyon Harley · Answer

Hi Nick, I have invested in and flipped in Congress Heights with great success. Considering the plans for MLK Ave., the metro, and the Saint Elizabeth's I think it's a great area to find some hidden gems. I've worked in the area for a little over 5 years and it is certainly evolving. There is obviously still room for improvement, but sometimes such areas are great to operate in and allow you to get in before the prices get high (e.g. Petworth or Columbia Heights). PM me if you have further questions.

Investing in Congress Heights DC for Owner Occupied MULTIFAMILY?

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