All Forum Posts by: Andrea Delgado

Thanks everyone. I have considered the taxes which are taxed at a short gain, ordinary income tax rate. I thought i was over thinking this but I'm glad I posted it because it just re-assured me of all those items listed on the comments.  

The plan  on the loan was to loan the money in exchange for collateral such as the title. 

At this moment, i have chosen to pass on this given that he is not wanting to come down on his price of the upper unit that I think would benefit trading the property.  I will probably end up waiting 2 years to avoid taxes and getting enough experience to do the 3 condo conversion.

@Eric Teran I'm 100% sure we can build 3 on the property we bought. We invested on the property for that reason when we bought it. We are on the Trinidad neighborhood. 

Thanks again everyone. I really appreciated your input and helped with making my decision more clearly. 

Andrea. 

Hi Folks, we are new to the investing world and have just been offered a trade on our house that we just bought about 4 months ago in the Northeast quadrant of Washington, DC. This deal was brought to us by our agent/investor. This is our first big deal so maybe I'm analyzing this too much, there are a lot of parts of this deal, I keep going back and forth and can't seem to confidently analyze this deal, so I have decided to ask the BP family forum and get some advice.

Details:

We bought our house for 615K and would be selling it for 816K to a developer who would do a 3 condo conversion (In DC, a larger plot of land allows for a 3 unit, instead of a 2-unit, which our property has). Our property is approx 2500 sq. feet plus an unfinished basement on a 3,356 sq foot lot. At the end of the sale taking into account closing costs, agent fee, and a permit credit. We would end up making around 110K.

In return for this sale of our house, the developer is about to finish a two condo conversion in the same NE area (with high end finishes). We would be trading/buying one of the 2 units, the two-story first level/basement unit plus parking spot (about 1600 square feet) for 750K or market value. This is a two bedroom/plus den 2.5 bath condo, with gourmet kitchen and open floor plan living space.

In addition to this "trade", there is a "sub-deal" in which the developer would also help us flip a condo at cost (approx. 40k profit from this flip) and we would then lend some money, interest-free back to the developer to help with the renovation of one of his next projects.

My hesitations are:

We really want to trade for the upper unit because it has better views of the city and bedrooms are slightly more spacious. It seems like the upper unit at market value could be up to 825K. (It seems like 825K may be too high).

I "feel" I am not getting a good deal because I see the potential of our house, but I understand i don't have the skill set to convert it into a 3 condo conversion.

My pros:

We make a great return on our house purchase within four months.

We get "free" GC reno for a flip of another property we have.

We get a "high-end" condo, but our intent is to build our portfolio, so we never previously considered buying a property at market value.

What would your advice be on this investment?

@Marian Huish. Thanks for letting me know about the airbnb new regulation that they are trying to pass. I just read it and if I keep as my main residence by renting a room or by renting an English basement there is no effect on renting through airbnb if I live there 365 days out of the year. 

Thanks everyone for the advise. Much appreciated ! 

@Shadonna N. Thanks for the answer. The besament is about 6 ft unfinish basement. It only serves for storing items. I might go the airbnb route for a room in the upstairs. I'm hesitant to convert the condos myself given i don't have enough experience. 

@Ray Johnson I'm starting to see some slow down as well or properties that were listed too high are getting their prices dropped. I think i'm probably low on my estimate like you are saying. 

I might try the airbnb as Shadonna suggested to see how that goes and to re-think about my plan. 

Russel from what i saw and from what our realtor (he is an investor as well) said is that the 500-550K are for the row houses that can only be converted to two condo's due to the limited square footage. This property can be converted into a three condo conversation. I'm also not referring to sell it now for 900K but in two years time. 

What is your opinion on the basement apartment. Do you think holding the property a better option ? 

Hi - 

I'm a newbie trying to make the right plan on my recent purchase. First off, let me introduce myself by saying that my partner and I bought our first rental four years ago in Alexandria, VA. I already had a house so we live in the woodbridge, va house for a number of years. We had been looking another property to buy an we didn't really have a plan in mind at first but once we started looking in DC, we can across this property in NE DC in the Trinidad neighborhood that we closed about two weeks ago. The plan is to move to this property as it will be our primary home and rent the Woodbridge house.

My question is regarding the plans on the DC house. The DC house is very livable but it has never been renovated. We bought the property for 600K. I had two options in mind. 

Option 1: To Hold 

Convert the basement to a basement apartment and rent it out and we would still live in the house. Converting the basement to a basement apartment (2bed,2 bath) my estimate is of 100K. It needs underpinning + everything else to convert it. Is my estimate too low? 

If it really costs 100K then I could rent the basement for $1800 and I would recoup the money in about 4.6 years. 

With this option, we hold the property and renovate the upstairs slowly and live there. The neighborhood is up and coming and trending to go up and years. 

Option 2: To Sell 

The property has enough land to pull permits to be converted into a 3 condo conversation. The house beside us is almost done with the construction of their 3 condo conversation. 

The option here is to pull the permits and underpin, so about 95K (50K for permits + 45 for underpinning) and sell the house to an investor with experience in year 2. We would make 87K if we sell it in two years. This number is taking into account that we would sell the property for 900K in year 2. 

What are your thoughts on this?