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The Cribline House Pick of the Week – November 27, 2011 | Real Estate

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The Cribline House Pick of the Week – November 27, 2011
Real Estate
The Cribline House Pick of the Week – November 27, 2011


Holiday Greetings Cribline Readers:

This week, we have one pick, it’s a property with 2 condos in LeDroit park that The Cribline featured back inAugust

The price has been reduced considerably, and per square foot, these 2000 plus 3 bedroom beauties are some of the lowest prices we’ve seen in town (about $259/square foot). And, wait until you read the about how this prices out in the To The Point Analysis below, you’ll see what we mean.

We are talking about 40 Adams Street, NW. http://www.redfin.com/DC/Washington/40-Adams-St-NW-20001/home/10049824

Listed by DC Living Real Estaste:

Unit 1 is $519,000
and Unit 2 is $549,000

The Cribline believes that these units could be purchased together and one rented out at a profit (more about in the analysis below)

Located on one of LeDroit Park’s best blocks, these stunning 2,000 plus-sq-ft, 2-level condos come with open floor plans, huge designer kitchens with Bosch appliances, AND 3 master suites, and a bonus den with all of the style and finishes many urban professionals covet.

There are also hardwood floors throughout, decks on every level, recessed lighting throughout, the bedrooms are large, and there is parking.

LeDroit Park is a neighborhood in northwest Washington, D.C. located southeast of Howard University. Its borders include W Street to the north, Rhode Island Avenue and Florida Avenue to the south, Second Street NW to the east, and Georgia Avenue to the west. It is a Gateway of sorts to every quadrant of the city and particularly convenient to downtown and to many of the other great neighborhoods, shopping, restaurants etc…
More background on the neighborhood:

LeDroit Park was one of the first suburbs of Washington. Many of the area’s Victorian mansions, houses and rowhouses were developed and marketed as a “romantic” neighborhood with narrow tree-lined streets that bore the same names as the trees that shaded them. Originally the neighborhood did not follow the scheme for street names used in the rest of Washington DC. Extensive focus was placed on the landscaping of this neighborhood, as developers spent a large sum of money to plant flower beds and trees to attract high profile professionals from the city.  The zip code for the neighborhood is 20001.

To the Point Analysis:

With 20 percent down of around $100,000 (for each unit), the gross mortgage for unit one would be around $2,500, and unit 2 would be about $2,400 (at today’s interest rates of around 4 percent). That includes the estimated principle, interest payment, taxes, and insurance. After the tax deductions, The Cribline estimates the net payment to be around $1,800 and $1,700 per month respectively.

There are 2 bedroom condos in the neighborhood going for around the $400′s, and we think this is quite a deal.

In the earlier analysis, we also explored buying both properties so the owner would possess the entire building.

Check out this analysis:

Both units together are about $1,070,000. With 20 percent down of about $200,000 (a lot of money, but work with us here), the loan amount is about $870,000. At 4 percent for a 30 year fixed rate (estimate based on last week’s rates, and the rates have improved since August), that’s a mortgage payment of less than $5,000 a month for both units (principle, interest, taxes, and insurance).

For this top of the line home, The Cribline estimates a rent of at least $3,000 a month, more than half of the total mortgage for one of the units. After the tax deductions, the other unit, according to our estimates, would be reduced to a net of about $1,400/month ( less than half the rented unit).

The benefit of owning both, is that the appreciation of both using a historic 5 to 6 percent rate of return over the long run is about $60,000 to $72,000 a year (estimated). The owner, living in one of the units would only pay less than $18,000 a year out of pocket, and would score a profit of about $36,000 a year (equivalent to a modest salary for some).

We recognize that there could will also be maintenance costs over time, but we believe with such a low monthly out of pocket expense that these could be easily managed.

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