REGIONAL SPOTLIGHT
WASHINGTON D.C.
Capitol Hill is the largest historic residential neighborhood in Washington, D.C. These residences are highly coveted and may only be renovated within the bounds of historic preservation guidelines.
emy with partner Brad Quintana and active on both the rehabbing and lending sides of D.C. real estate, noted properties in extremely attractive areas of the city, such as the areas where politicians live within the city proper, often never even go on market. “It’s really interesting to watch over time,” he said. “Politicians tend to sell their homes to other politicians.” McCall added, “Of course, probably the majority of people who work in D.C. live outside of D.C. as commuters.” McCall considers properties 45 minutes away from the met- ro area to be particularly attractive but emphasized investors should do their own investigation into traffic patterns rather than relying on distance to determine which properties are, in fact, 45 minutes away. “Traffic can be really bad up there, so you have to do your research,” he said. In markets like D.C. and its surround- ing areas, it can be hard for real estate investors to find properties that work for their investment strategies, especially if they prefer to fix-and-flip and need to buy at a discount in a market full of retail buyers also willing to pay cash and close quickly. “You make your money when you buy in real estate investing,” observed ATTOM Data Solutions vice FINDING AND DOING DEALS IN D.C.
president Daren Blomquist. “Sure, selling high is good, but if you cannot buy at a deep enough discount, you will have a hard time making a profit.” “A lot of people are overpaying for properties right now in our area,” ob- served Vaughan. “They have a different frame of reference because they have access to private capital or cash on hand and are competing with each other and retail buyers. For investors, if the market slows, those buyers are going to get hurt.” To lessen the competition, Vaughan’s company focuses on older properties and properties he describes as “rehabs that would scare most people.” “We buy properties that need founda- tion repairs, that are heavily fire-dam- aged, anything that looks really, really serious,” he explained. “If nine out of 10 investors back away, that is the property we buy at a great price, add value, and make great returns.” In the D.C. area, “older” properties tend to be between 40 and 60 years old. However, Vaughan noted, “In Baltimore and D.C. proper, it is very common to rehab houses that were built in the 20’s or 30’s. Row houses in these markets are definitely some of the oldest inventory in the country, and you have to remember that with older housing inventory, your renovation costs go up because you have to replace, update, and upgrade not just the floor plan, lighting, and other amenities, but
also add bathrooms, make sure electrical and plumbing are up to code, and maybe finish the basement.” Chandler added that finding deals in the D.C. metro area using “tradition- al” venues, such as the multiple listing service (MLS), is nearly impossible in his experience. “Competition is so tough, deals can no longer be found on the MLS,” he said. Instead, investors are using direct marketing to reach owners who may be willing to sell at a discount. Some, like Chandler, market on radio, television, and online to reach their target market. “We also mail thousands of post- cards a month,” he said. McCall, on the other hand, focuses on physically reach- ing sellers as soon as possible once they may be inclined to sell. To that end, he sends his teams straight to the courthouse record rooms to create lists, on-site, of owners who are in probate or experienc- ing other real estate-related distress. “A lot of people don’t want to be hands-on with lead generation, and if you want to buy a list of leads for a mar- ket like D.C., that’s fine,” he explained. “However, in a tough market like D.C., if you reach those leads before anyone else, you will have an advantage.” •
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Carole VanSickle Ellis is the editor of Think Realty Magazine. She can be reached at cellis@thinkrealty.com.
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