Washington DC Client Success Story- Thanks BiggerPockets

[Cassidy Burns]

Hi BP,

I wanted to share a success story between myself and another BiggerPockets member @JosephDunphy.  

Joe is an active military vet that has really taken advantage of the BRRR method as he is moved every 6 months - 1 year. Joe reached out to me via BiggerPockets saying he was interested in doing the same in DC. Buying a distressed property, rehabbing, living in it as his primary while he lives in the area and then turning it into a long term rental.

We just closed yesterday and here are the #'s

-Purchase Price: $530,000

-Initial Appraisal: $545,000 ($15,000 of initial equity)

-Down Payment: 5% ($26,500) (All closing costs payed for by seller)

-I connected him with my go to interior cosmetic contractor in the area and we have a bid of $50,000 to do updates to bring up to comp values and finish out the basement which we will be doing AirBnB in.  

-Current Mortgage: $3,400/month

-AirBnB Potential: $2,500/month

-Long Term Rental Potential: $1,700/month

-Joe and girlfriend will be living in the upper level 3 bed/ 1.5 Bath unit for $1,700/month (they were currently paying $2,400/month in Alexandria.

-Once they move out they will be able to rent that upper level out for a minimum of $3,000/month.

-Total Monthly Income: $4,700/month

-PITI: $3,400/month Expediting paying off the hard money loan of $50,000 they got for construction ($400/month interest only) but will be using other cash flowing properties to get this paid off within 8 months.

-Appraised value after renovation: $675,000-$725,000.  Still have to see what finish level they choose to do.  

So to sum it up:

-$75,000-$125,000 forced equity

-$1,300/monthly cash flow (this isn't factoring CapEX, expenses, etc.

That is how you take advantage of a higher priced Washington DC market! 

[Cassidy Burns]

Hey @Jason Piccolo, yes definitely, but that is why we evaluated it as a long term rental first.  As an AirBnB it will collect $2,200-$2,500/month for the lower level (they will utilize this until the law is passed) and then we know it will rent for $1,700/month on a long term lease.  So they will still be living for $1,700/month and then will cash flow once they move out.  AirBnB is just an added bonus until it's not.