Washington DC Deal Review

[Adam Paikin]

Hi Everyone,

I'm a new member to BP and have been trying to soak up as much knowledge as possible. From everything I've listened to and read it sounds like house hacking is a great way to get started investing in real estate. I am currently renting and looking for my first deal.

There is a multi-family on the market for 875k that is a 2 BR unit upstairs with a 1BR unit in the basement. Based on comps the basement should rent for 2,200/month. 

If we use an FHA loan and put down about 65k, we should be able to get our payments under 5k/month for both units after MIP and PITI. When we move out of the upstairs, we should be able to rent that unit for 3,200+ depending on how long we stay for.

The area this property is in is already well establish and probably not likely to appreciate much greater than 3.5% yearly.

There are very few multi-family homes in this market for under 1M as a reference point. I'm looking for advice and guidance as to whether making an offer here makes sense.

Thank you all in advance,

Adam

[Russell Brazil]

Originally posted by @Adam Paikin:

Hi Russell,

Thanks for the reply. The limit on a 2 unit is actually 814,500. I found the info here: https://entp.hud.gov/idapp/html/hicost1.cfm

 That's if it actually qualifies as a multifamily. Properties with english basements in DC, which by your description is what it sounds like, are zoned for single family. If it is zoned single, then it will need to be financed as a single. Zoned multi then it can be financed as a multi.  99 times out of 100 we are removing the stove from the basement unit so that it will qualify for so for family financing because the zoning doesn't permit multifamily financing. 

Check the tax records to find out the zoning on the property.