All Forum Posts by: Andrew Spell

it’s hard to find a good property manager. DIY owners often post on the bulletin boards in their buildings. You could post there so they see it when they go to post. It’s free and you can target buildings with higher investor ratios in the areas you want, etc. You can contact building managers and ask to advertise in their newsletters. Go to meetups and cultivate agent referrals. Just some thoughts

From Arlington County website: 

Accessory dwellings are smaller, independent second dwellings on a single-family lot. They have their own living, bathroom, and kitchen space. Homeowners often build accessory dwellings to house a relative, age in place, or to bring in additional income by renting the space. In Arlington, accessory dwellings can take multiple forms: they can be located within or attached to the main dwelling, like a basement apartment or an addition, or they can be within a new or existing accessory building. More info: https://housing.arlingtonva.us...

DC is encouraging ADUs as 1 step to help meet housing needs. UPO put out a great manual on creating an ADU for homeowners: https://www.upo.org/wp-content...

If considering DC, there is also good info in this BP thread: https://www.biggerpockets.com/...

@Anthony Fanucci If you are not familiar, ADU = accessory dwelling unit. That seems to be what you're describing w the emphasis on privacy. ADUs often have the separation you're describing.

Most homes in the areas you listed will have shared kitchens, shared laundry, etc. It's not uncommon to rent out basements, etc. Some basements have full baths. You can add a fridge, microwave, etc. You can check craigslist to see what those go for in areas of interest. Egress is a big factor. There should be 2 ways out for the resident(s). That often means a door or accessible window (not a high basement window or a full size in a window well) plus the stairs/door to the main home. You could add a door if needed and install a sensor to notify you when it's opened. You can't lock it if that's 1 of the 2 escape routes in case of fire.

There are several online background check providers for landlords. Cost is usually around $30 per check. Virginia has a sex offender registry searchable by name: https://sex-offender.vsp.virgi...  

@William Segal Have you made any decisions?

@Lexie De Stefano nailed it for Arlington. People have made extra bedrooms in at least 5 buildings < .25 miles of Rosslyn metro. These are just homes I've come across w/o asking around. The biggest rent drivers are proximity to metro, washer/dryer in home, and parking. Not sure you can write off your condo fees for your personal residence - sounds like you will be living there. 

It's hard to judge rents by the past year. Expect them to rebound when schools start up in person again. 

In my experience, roommates that don't know each other are a mix. In some homes roommates gravitate to their bedrooms. In others, some/all hang out in the shared space. Sometimes there is one 'squatter' who spreads out in the shared space w TV on, etc. I know of one where an enclosed balcony has become the shared space. There is even a portable AC unit out there. Some guidelines / house rules might help make it livable for all.

@Andrew L. Lots of good info in these posts. A couple finer points. 

401(k) Loan - If you borrow from an employer based 401(k) and leave the job, you may need to pay it all back at the time of separation. If it's individual 401(k), that is not a concern. Suspect yours is employer based, meaning it's offered through your employer. These often involve employer matching contributions. There may be info on this on the same website you would use to initiate the loan. Or you can call the company that manages your plan.

Interactive Brokers - As @Account Closed noted, you could consider transferring from ETrade/TD Ameritrade to IBKR, which has great margin loan rates. Believe IBKR will lend up to 50% of your balance using the other 50% as collateral. But if your borrow the full 50% and the stocks lose value, IBKR will sell some of your stocks to prevent further loss of collateral. You can reduce this risk by borrowing less than 50%. If you were to borrow 25%, your portfolio could lose more than 1/2 its value w/o triggering a sell off.   

Borrowing for a down payment - As others noted, lenders generally don't like the idea of using a loan for the down payment. You could sell off the minimum amount to get the down payment you need. As i write this I'm wondering if a lender would let you cover the minimum down payment with cash - that is 3% for an FHA loan - and then add to the down payment with a loan to get out of the MIP range. Feels doubtful but the answer is no until you ask. Recommend laying out your full plan to the lender/broker to minimize the chance of any surprises.

First time buyer support - You mentioned Arlington. If you'd consider DC, you may qualify for a mortgage credit certificate. It's for 1st time buyers w up to 140k income for homes up to 565k w mtgs up to 548k - as of today. Not sure what fees are involved. An MCC offers up to 20% federal tax credit (not deduction, credit) on mortgage interest. You would need to use a participating lender - w FHA or conventional loan - to qualify. See the DCFHA page for more info and link to participating lenders - there are several: https://dchfa.org/homeownershi...  

Finally, at these historically low mortgage rates, you may want to consider a lower down payment. You could consider buying a rental property when you're ready. You posted on BP so someone had to say this. 

@Matthew McMenamin Any update on what your friend is up to?

@Aubrey P. You can also get a rowhouse in NW that fits a group house of 4. If vacant in the future, you can upgrade, sell and 1031 again, maybe into 2 properties. You could also get 1 to 3 studios, depending on how much of the 650 will be reinvested and how much debt you want to take on. Tiber Island is a co-op in SW w studios ~ 200 depending on condition, placement, etc. Looked at it years ago and it seemed landlord friendly. It's walking distance to the Wharf and Nationals Park. Co-op financing often requires a big down pmt and higher rates so the prices stay down. Believe the fee includes most utilities so you can write off some tenant utilities. Harbour Square and River Park are in the same area. Don't know much about them.  Please keep us posted.

@Joseph Kelly 

1. Yes. I scan CraigsList, Zillow, etc. to ID areas w higher/lower rents and figure out why. When you see enough data, trends appear. Winchester CraigsList has 17 listings in Martinsburg, 150+ in Winchester, 2 in Front Royal - maybe there's an opportunity. This report on Va rural housing trends is a good read: http://www.housingvirginia.org... Saw somewhere that 70+% of rural homes are owner occupied and rentals are in short supply. That was nationwide so  Shenandoah may be different. There seems to be a need for senior friendly housing everywhere.

2. No. Understand where you are. I did first couple rehabs w a friend on a shoestring budget. The 1st didn't need much. 2nd involved gutting a tiny kitchen. Found pros by asking around, talking to those found by word of mouth, and going w best fit. If you're looking and get to talk to neighbors, they sometimes have great info. Some like to see their street improved and will tell who they've seen doing work around. Some tell about the property you're considering. I have heard it's hard to find people in some areas. Not so much in the Valley but I hear that about Hagerstown and Frederick area (MD town, not VA county). On the flip side, I hear people in the lower Valley - Harrisonburg, Staunton, Roanoke - have a great work ethic. So it might be good to check w other investors in the area to see what they say.

@Joseph Kelly Zillow has 3 duplexes in Front Royal, no 3 or 4-plexes. With 11k and FHA loan at 3% down, you could buy a duplex in 70k range, leaving some for closing. Saw a duplex in Martinsburg for 60k in need of total rehab. Google has lots of job listings in Martinsburg. One IT company alone has 20+ openings listed there. You asked about things to think about. In no particular order:

• - PITI: What is your monthly carrying cost?
• - Can you carry the mortgage w vacancy/vacancies and cover a repair bill at the same time?
• - Do you have a reserve for repairs/replacement? Home inspection & home warranty can help lower reserve requirement
• - Utilities: will you cover and include in rent or are they tenant responsibility? A big factor is whether they are split (3 bills for 3 homes) or common (1 bill for all homes)
  
• - Security deposit: one month rent is common, due at lease signing
• - Is there a way to add value to some/both/all homes - add washer/dryer, dishwasher - to boost rent potential?
• - What are rent drivers in your area? In Arlington, the biggies are proximity to a metro station, parking, washer/dryer in home vs in building, and central A/C vs window units. A river view boosts rents too
• - Is there enough parking for everyone? What if there are 2 cars per home?
• - Is there any need for furnished homes for short-term rentals, AirBnB or longer.
• - Is there a need for semi-furnished homes? In Winchester, for example, SU students might pay more for a place w the main furniture pieces in place but bring their own linens, etc.

Hope there's something helpful here.

@Loid Danga Yes, that's what it means. If you spend time on the zoning map, in the descriptions, and looking at what you can do w listings, it all starts to make sense. DCRA will provide you a free consult to let you know what is allowed on a specific property when you are doing your research.

There are 2 ways I know to rent space in the home you live in, 1) roommates (boarders) and 2) ADU. Boarding is easier. This is when leases do not restrict access to a specific part of the home. Don't believe you even need a BBL (basic business license) when you live in the home.

Building on the excellent info from @Eric Teran, an ADU (Accessory Dwelling Unit, not Affordable DU) is more work. Once you build it out in an R zone, you register w Tax & Revenue, apply for single family BBL online, and register w DHCD. Leases limit access to the ADU so tenants don't get access to the main home. If the ADU is within the main home, no COO is required. If it's a separate structure, a COO is required. If in an RA or RF zone, COO is always required.

If you don't have an ADU and rent the whole home out w/o living in it, you need the registrations above including a COO (cert of occupancy).

If you have 2 homes on the same lot and rent both out w/o living there, you need the registrations above expect the BBL is a 2 family BBL and you need 2 COOs, one for each dwelling. @Jeremy D. I think this is what you have in mind. 

If there are 3 or more homes and you rent them all out, that is an apartment building.

The permit/registration requirements for landlords are summarized at https://dcra.dc.gov/page/renta... 

The COO process includes notifications from DCRA to neighbors, who have a chance to object - like when you add on a deck, as well as property inspection(s).

The city is encouraging ADUs to increase housing supply. UPO put out the ADU Homeowner's Manual w info on planning, getting free DCRA consultations, licenses, COOs, what inspectors look for, costs, sample ADU lease, etc. My favorite part is about creating an ADU out of a shipping container. But that brings up a whole other topic about lot coverage - for another thread. Link: https://www.upo.org/wp-content...

@Jeremy D. Yes, this is an ADU. In our case, the owner must live in one or the other - or rent out the whole home to 1 tenant. So I see this ADU as an income property, in-law suite, etc. In some areas the owner can rent out both homes - just depends on the zoning. Sometimes the zoning changes in the middle of a row so the neighbor you share a wall with has different zoning than you. The DC website has a ton of info. Sometimes I find something good on the site and then have a hard time finding it again so it might help to bookmark useful pages. Here's the page on ADUs: https://handbook.dcoz.dc.gov/u...