All Forum Posts by: Leo Watts

@Antonio Barnes

Oak cliff is the move. There are a lot of small multi family deals but most are off market. Need to get to know the area and the guys doing deals around there.

@Kyle Spears

@Cassidy Burns can give you a good run down on some condo rental numbers. You should at least follow him on insta and see his break downs.

It really depends on the type of returns you're looking for, but my feeling is a lot of what's driving the market is low inventory, low interest rates, and fear of missing out. I personally think we will see some weakening in the condo market to come mainly because there's been some lowering rents, increased vacancies, and a no eviction order, which is hard to quantify what's going to happen when that is lifted. When you slap a $400+ HOA on a single family condo it's hard to get a nice profit, unless you're doing an appreciation play. If you have a multiple bedrooms, then the house hacking angle as referenced above opens up more options.

@Russell Brazil

Anecdotally I’m seeing many apartments offering 1 to 2 months free rent, in established and desirable buildings, plus waiving in move in fees.

I found this article in The Washingtonian about DC rental price drops from last month.

“New data confirms what common sense probably already led you to suspect: Fewer people want to live in buildings with hundreds of other units—and which charge premiums for shared amenities like pools and gyms—during a public health crisis. Delta Associates, an authority on the local commercial real estate market, released the findings in its 2020 second quarter report, concluding: “The pandemic has impacted all major apartment market metrics.”

In short, all those glassy, luxury buildings that have risen around the city in recent years have become emptier and less expensive since Covid-19 hit. “Severe job loss coupled with the closure of multifamily buildings to the public resulted in a significant slowdown in leasing activity,” according to the report. “Tours of multifamily buildings went virtual, but this was not enough to sustain a more normal level of leasing activity.”

Within the District, rents in high-end buildings are down 3.5 percent compared to last year, in large part because those apartments are having to offer discounts to attract residents. Average rent for a luxury DC apartment is currently $2,561 a month, compared to $2,649 last June.

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Prices have been particularly affected around NoMa and H Street, where buildings are offering an average 6.3 percent discount off full-price rent, and around Capitol Riverfront and the Southwest Waterfront, where they’re knocking off 5.7 percent.

Vacancies in those neighborhoods are also the highest. NoMa and H Street apartments are experiencing an 8.2 percent vacancy rate, while developments in Navy Yard and Southwest are seeing 7.7 percent vacancy. The vacancy rates in those areas were less than 5 percent at the same time last year. District-wide, the average vacancy rate in luxury apartments is currently 6.8 percent, compared to 4.1 percent last year.”

@Brendan G.

Nice job!

@Kyle Spears

Investment property is a broad term.

I live in Cleveland Park and work for a home builder in McLean. Both are primo areas in the region.

Cleveland Park you’re probably hard pressed to buy a condo that will have positive cash flow as you stated. If it’s just for a primary residence that’s another story. I’ve heard some talk of a softening condo market (which is clearly playing out in lowered rents) in DC due to probably 50k (my random estimate) of students and international workers who haven’t returned due to Covid19.

I work with acquiring off market properties in McLean, and what you see are sellers who’ve seen the tear down value of their homes go from 800 to 900 to 1 million to 1.1 to 1.2 million in the last 8 or 9 years. That 1.2 million dollar house only rents for $3500, but they’re expecting it to be worth 1.3 in a year or two.

There’s a lot of appreciation plays going on in more exclusive parts of the dmv along with downright parking of money. Had a big investor tell my recently they just want to buy some single family homes in North Arlington just because they don’t believe in the stock market and need some cash flow even if not huge.

@Russell Brazil

That’s an interesting stat about income vs housing prices. I think DC does seem reasonable compared to NYC or California, but not to many other markets. We’ve seen a big drop in rental prices but no subsequent drop in housing values.

Investment Info:

Single-family residence commercial investment investment.

Purchase price: $50,000
Cash invested: $300,000
Sale price: $550,000

Built two single family homes.

What made you interested in investing in this type of deal?

I already owned the lots

How did you find this deal and how did you negotiate it?

Tax sale acquisition

How did you finance this deal?

Commercial construction financing

How did you add value to the deal?

Partnered with fellow builder

Update: property appraised as  single family!

hi all,

Quick question.

I have a home under contract. It’s four beds with a semi converted basement (it has a sad looking kitchen). The city zoning has the home listed as single family, but the previous owner added in a second meter for the basement it looks like.

It would be advantageous for me to have it appraised and classified as single family since it will me a lower down payment, but the lender has indicated he thinks the appraiser will say it’s multi since the basement has a kitchen.

I’m unfamiliar with the specifics on this situation. Anyone have any insight?

That's interesting @Russell Brazil! Can I ask what the pricing is based off? Bedrooms? Neighborhood comps? Cap rates? Thanks in advance.