Anonymous wrote:

Anonymous wrote:My husband and I have a rowhouse in Shaw we bought in 2011 for around 600k. Houses on our block are now selling for 900k. We have one toddler now and the house is great, but if we add to our family in a few years, we will likely need to move somewhere larger. We've got about 125k saved now for our next down payment and are saving a little more than 3k/month to that fund. We could increase the monthly savings if we needed to, so we could probably manage a down payment on a new house without the proceeds from the row house.

Would you hang on to the row house as an investment? Husband thinks we can manage it ourselves, but we are two busy working professionals and will possibly have two kids at the time, so I want to hire a property manager. It is three bedrooms with parking, I am guessing we could get around 4k in rent, mortgage is $2186. What would you do?

I'd look really hard at vulnerability to flooding.

I'd find one of those Google flood maps and show what happens to the house if a storm pushes the sea level up 12 feet, and look at what happened to the neighborhood in the worst recorded floods.

If there could ever be any flooding issues, I think you should consider selling, no matter what other analyses show.

Even if you still want to invest in residential real estate, try to trade this property for a property far from where you'll own your primary residence, to reduce the odds a bad storm will take out both houses at the same time.

I'd also look at how this might affect college aid. I have the impression that real estate assets make calculating financial aid harder than owning financial assets does.

Anonymous wrote:My husband and I have a rowhouse in Shaw we bought in 2011 for around 600k. Houses on our block are now selling for 900k. We have one toddler now and the house is great, but if we add to our family in a few years, we will likely need to move somewhere larger. We've got about 125k saved now for our next down payment and are saving a little more than 3k/month to that fund. We could increase the monthly savings if we needed to, so we could probably manage a down payment on a new house without the proceeds from the row house.

Would you hang on to the row house as an investment? Husband thinks we can manage it ourselves, but we are two busy working professionals and will possibly have two kids at the time, so I want to hire a property manager. It is three bedrooms with parking, I am guessing we could get around 4k in rent, mortgage is $2186. What would you do?

Anonymous wrote:I agree with the previous poster. Also, folks who say that being a landlord in DC is fine until it isnt are just plain paranoid and risk-averse. I’ve been a landlord in this town for 10 years and have had less than zero problems. Again, you should get a property manager though.

Anonymous wrote:

Anonymous wrote:OP, I think you’re jumping the gun on leaving. You have a HOUSE. Unless it’s 600 sq ft, you can easily have two kids thru elementary there. We live in a 2 br apt with two kids and we’ll stay there until the youngest is about 6/7. I’d keep your sweet lifestyle, build more equity, and most importantly, cash in on super convenient and free, good early education for your kids. Really. You don’t need much and neither do your kids.

This. We have three kids in a three-bedroom, 1400 sq foot apartment in a not-great school zone. We have more than enough space because we're careful about what stuff we keep. You have *at least* until your oldest is 5 (not sure what your schools are like - we don't live in DC). Stay and save save save.

Anonymous wrote:OP, I think you’re jumping the gun on leaving. You have a HOUSE. Unless it’s 600 sq ft, you can easily have two kids thru elementary there. We live in a 2 br apt with two kids and we’ll stay there until the youngest is about 6/7. I’d keep your sweet lifestyle, build more equity, and most importantly, cash in on super convenient and free, good early education for your kids. Really. You don’t need much and neither do your kids.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Throwing this out there. If you are currently in a rowhouse in Shaw you're probably looking to stay pretty close in. Your new house will be at least 1M - so you're looking at a bare minimum 200K down payment - that's another almost 3 years of saving before you are ready to move given your current rate of saving. As someone else noted, you'll need to qualify for debt/income ratio and your current mortgage will be considered a debt (at least at first) which will be problematic for getting a mortgage unless your income is extremely high.

Not to mention that you'll have to be a landlord in DC. It's fine until it isn't and all you need is one bad tenant to end up with a ton of legal fees and an enormous hassle. I'd take the equity and buy your dream home and never look back. Not everything in life is about maximizing every single asset.

This.

Isn’t everything fine, until it isn’t:

Marriage
Your health
Your body as it ages

That’s not a reason.

Anonymous wrote:

Anonymous wrote:Throwing this out there. If you are currently in a rowhouse in Shaw you're probably looking to stay pretty close in. Your new house will be at least 1M - so you're looking at a bare minimum 200K down payment - that's another almost 3 years of saving before you are ready to move given your current rate of saving. As someone else noted, you'll need to qualify for debt/income ratio and your current mortgage will be considered a debt (at least at first) which will be problematic for getting a mortgage unless your income is extremely high.

Not to mention that you'll have to be a landlord in DC. It's fine until it isn't and all you need is one bad tenant to end up with a ton of legal fees and an enormous hassle. I'd take the equity and buy your dream home and never look back. Not everything in life is about maximizing every single asset.

This.

Anonymous wrote:Throwing this out there. If you are currently in a rowhouse in Shaw you're probably looking to stay pretty close in. Your new house will be at least 1M - so you're looking at a bare minimum 200K down payment - that's another almost 3 years of saving before you are ready to move given your current rate of saving. As someone else noted, you'll need to qualify for debt/income ratio and your current mortgage will be considered a debt (at least at first) which will be problematic for getting a mortgage unless your income is extremely high.

Not to mention that you'll have to be a landlord in DC. It's fine until it isn't and all you need is one bad tenant to end up with a ton of legal fees and an enormous hassle. I'd take the equity and buy your dream home and never look back. Not everything in life is about maximizing every single asset.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I’d keep it but not use the management company. They take a huge amount of the profit and some charge you for things like finding a handyman- which means profit you thought you have, You don’t. They list on Craig’s list just like you would.

Disagree with this. I rented a unit of mine without a mgt company and regret it. First off, there’s a lot of work involved. I think going through a mgt company means you get more normal tenants. Tenants seem less likely to try and mess with someone with the backing of a company. It shouldn’t work that way, but it does. You’d be surprised how challenging having a rental can be.

We have many rentals: an office building, a townhouse, a condo and 3 homes. What was the work involved that you had to do?

- list on Craig’s list
- show the unit (scheduled to happen with many people coming the same time and day)
- run credit check of applicant (get application online, credit check is paid for by them)
- get lease (online)
- let utility co know you have a tenant if necessary
- open bank account/create llc thru scc
-get security deposit
- change locks
- give key to tenant, walk thru (walk they list from online), get first month’s rent, sign lease, give garage door opener
- if tenant calls with problem: Plummer, electrical, etc - join nextdoor and get recommendation. Tell tenant who worker is and have them schedule it themselves. Tell tenant to pay, send a bill copy to you and deduct it from rent OR have worker call you to pay by credit card

This is pretty much it. Have money available for repairs.

The list you wrote is actually a lot of work. It involves numerous phone calls that can be a problem if you don’t have a flexible job. If you’re mananging your own property you need to be able to head over to the rental at any moment. Even just changing the locks requires you to get the new key from the locksmith and then deliver it to the renter. If you live or work in another part of town it can mean you need to take a few hours off of work.

However, the work isn’t what made me regret not using a property manager. I had a tenant who stopped paying rent and I had to evict. Just dealing with me made it extremely easy for the tenant to give me the run around. Dishonest tenants know that as an individual you have very little power to do anything. A management company is experienced in this, knows what they can and can’t do, and has a lawyer on retainer. The tenant know this.

My using a property manager is fine with you don’t have any problems. If it’s a strong rental market, you don’t require many repairs, and you have a solid tenant then you may be fine. But when you’re not it’s a huge headache.

Also keep in mind that credit reporting is lagging. Someone can be evicted on Friday, try and rent from you on a Monday and you wouldn’t be able to know they had any sort of problem with their previous landlord.