Washington DC 2023 Real Estate Market

Title: Washington D.C. Real Estate Market Report 2023: Trends, Opportunities, and Challenges

Introduction

Washington D.C. real estate market in 2023. As a dynamic and diverse city with a rich historical background, Washington D.C. has always been a hotbed for real estate activity. In this report, we will delve into the current state of the market, exploring the latest trends, identifying potential opportunities, and addressing the challenges that buyers, sellers, and investors may face in this bustling metropolis.

1. The Current State of the Market

In 2023, the Washington D.C. real estate market remains strong, characterized by steady growth and increasing demand. The city's thriving economy and attractive employment opportunities have continued to attract a diverse group of homebuyers and investors, contributing to the ongoing rise in property values.

The residential sector has seen a surge in demand, particularly in suburban neighborhoods surrounding the city center. Young professionals and families seeking a blend of urban amenities and a more relaxed lifestyle are fueling this trend. At the same time, the commercial real estate market is experiencing a revival, with new businesses and startups taking advantage of the favorable economic climate.

2. Trends Shaping the Market

2.1. Affordability Concerns:

With the rise in demand, affordability has become a pressing issue for many prospective homebuyers. The influx of well-paid professionals has driven up housing prices in some areas, making it challenging for middle-income earners to enter the market. As a result, there is a growing interest in affordable housing initiatives and cooperative housing arrangements.

2.2. Sustainability and Green Living:

Sustainability is no longer a buzzword; it has become a significant consideration for both developers and homebuyers. Properties that incorporate eco-friendly features such as energy-efficient appliances, solar panels, and sustainable building materials are gaining popularity and commanding premium prices.

2.3. Tech-Enabled Living:

The city's tech-savvy population has driven demand for smart homes and technology-integrated living spaces. Homebuyers are looking for properties equipped with home automation systems, high-speed internet connectivity, and smart security features.

2.4. Co-living and Shared Spaces:

As housing costs rise, co-living arrangements and shared spaces are becoming more prevalent. Young professionals and students are opting for co-living spaces that offer a balance between affordability, social interaction, and convenience.

3. Opportunities for Buyers and Investors

3.1. Emerging Neighborhoods:

While some well-established neighborhoods remain desirable, emerging areas are offering excellent investment opportunities. Neighborhoods that were previously overlooked are now undergoing revitalization, presenting potential for long-term appreciation.

3.2. Short-term Rentals:

The city's popularity as a tourist destination makes short-term rentals an attractive investment option. With the rise of platforms like Airbnb, investors can capitalize on the steady stream of visitors looking for unique accommodations.

3.3. Commercial Real Estate:

Washington D.C. boasts a robust commercial real estate market. As businesses continue to expand and new enterprises take root, commercial properties offer promising returns on investment.

4. Challenges to Consider

4.1. Limited Inventory:

The supply of available housing has not kept pace with demand, leading to a shortage of inventory. This situation can result in bidding wars and inflated prices, making it difficult for buyers to find suitable properties.

4.2. Regulatory Environment:

Navigating the complex regulations and zoning restrictions in Washington D.C. can be challenging for developers and investors. Staying informed and working with experienced professionals is crucial to success in this market.

4.3. Interest Rate Volatility:

Fluctuations in interest rates can impact both buyers and sellers. Buyers should be prepared for potential rate increases, while sellers may need to adjust pricing strategies accordingly.

Conclusion

The Washington D.C. real estate market in 2023 continues to present a wealth of opportunities for buyers, sellers, and investors. While affordability and limited inventory remain concerns, the city's dynamic economy and strong demand offer promising prospects for those willing to navigate the market intelligently. As the city evolves, embracing sustainable and tech-driven living, it is sure to remain a top destination for real estate enthusiasts in the years to come. Whether you're looking for your dream home or aiming to expand your investment portfolio, Washington D.C. stands ready to welcome you into its vibrant real estate landscape.

The winter worries 2019

The winter worries!!

My company BCL Properties LLC continues to build a steady increase of leasing and management clients in and around Georgetown, DC. I wanted to write a small blog today on the winter worries that face property owners and some brief solutions they can use to help alleviate their anxiety.

One of the consistent challenges we continue to face is working with new property owners in the winter time. The leasing business in Washington, DC is a very seasonal business. Most businesses, schools, Embassy’s transfers are usually done in the spring or summer months with some roll over in the fall. People are generally happier when the weather is nicer and willing to spend a day or two viewing property.

Usually owners prior to contacting me have a rental amount in mind. That’s typically made up from the owner calculating their mortgage, condo fees (if applicable), management fees if they want that service and or future possible repairs which is usually around 10% of the yearly income.

Owners typically want to break even or make a small profit. I am then presented with a number that sometimes is just too high. My job is not to offend the owner as I want to sign them as a client, but rather educate to give a realistic view of what they can achieve. I try to use systematic and research driven data to provide information on pricing.

Owners may scour the internet and use various real estate websites to produce “their” number. The numbers that those real estate websites produce can be based on moving averages over months or even past years. A number of the larger scale websites are based typically more for sales than rentals. Their developers usually care more about sales data then rental data.

 What those websites fail to do is show on a consistent basis the accepted price and when that happened. A lot of websites do send an email to ask you to provide that information but by then the owners are just happy to have a tenant or just don’t want to place that data online. Some owners do provide those numbers which is where the software companies get the rented amounts from. It is just a very inconsistent system that can cause owners to be misinformed.  

As agents are required to enter data in to the MRIS system we can show the price amount obtained, days on market, and specifics about the building or neighborhood. We can view additional information that can give us specifics about pricing. We can even contact other listing agents around our listing to see how their traffic has been.  One of the even bigger factors an agent can provide is experience. As I have been doing this for 14 years and have rented probably over 1000 properties I typically have a ball park number of what the property can rent for without much research.

 Price ceilings are important to keep in mind. In other words no matter how nice the property was renovated someone is only going to pay so much for a 1 bedroom or 2 bedroom and so on. That’s another blog entirely.

With Amazon coming to the DC area it should help rental pricing over time increase. We are not there yet!  (Blog to come on this)

Below are just a few ideas/tips that I use when marketing property in the winter time. The biggest takeaway is just to be patient. The winter comes and goes and with some marketing tricks I use the property will typically rent come early spring.

My comments below are based on my experience and not concrete data. Take it with a grain of salt. It’s not set in stone but will give property owners some tips when renting in the winter months.

1.  A property owner should have a reserve of at least 4 months of carrying money. Remember at least one of those months will go towards commission when rented by an agent. A few additional months in case the property does not rent right away.

2.  Always have 2 months of reserve even after rented in case of a large repair.

3.  The “lets try your price”. I will agree to this within reason for 15-20 days. If we do get it than great. If not we have to start considering a price reduction to stay aggressive in the winter. I will talk about vacant property status in another blog post and the negative effects of that.

4.  Remember that come November your faced with the start of the holiday season. From Thanksgiving, Christmas, New Years and any additional holiday one may celebrate. Most people are focused on the holidays that rather than moving.

5.   February / March the winter months hit stronger. Unless someone is being transferred into the area the cold weather, snow, and dreary days don’t bring out tenants looking around to move. Not many want to walk around in the cold looking at rental properties.

6.  Be patient… Your agent does not make money unless they rent the property. So trust me they are working to produce a tenant.

7.  When spring hits people tend to start walking around so if you can place signs outside of the property that is still one of the best marketing techniques out there. **One benefit is that if you can start a lease in the spring the tenants will typically move out in the spring/summer positioning yourself in the better time of year for future marketing.

For additional information feel free to contact me directly at Barry@bclmgt.com

www.bclmgt.com

Design You DC Rental Property in 2018

 

IT’S TIME TO UPDATE!!

Time to set up for the spring market! Just in the past few weeks I have taken on many small construction projects as part of my services to upgrade and update properties for the rental market. January through March is a great time to get your property in the best possible shape for the rental season to come.

Some new color schemes for 2018:

Walls:

The days of off white are behind us. Depth and warmth create an atmosphere that gives tenants a sense of a home like feeling. The shades of gray I use are still neutral enough for tenants to decorate with their own style. We complete the walls with white baseboards / trim.

Kitchens:

For counter tops I am always comfortable with granite as it holds up well. However with some additional financial reach from an owner I would bump that up to quartz. The kitchen is and probably will always be the main area of a property. So don’t slack here! You need that wow factor. Stainless packages now range in pricing so it’s not just for the elite.  No need in a standard rental for subzero fridges and wolf ranges. Just make sure it is a solid product that looks good. Look for upcoming sales on holidays to take advantage of pricing.

Flooring:

I am really trying to stay away from laminates. To me they don’t hold up well and with seasonal change in DC no matter how well they are placed they always seem to buckle or bump up in areas (floating floors).  *DC inspectors are citing these issues and making owners rip out floors for re-inspection. They also don’t feel like wood. If the budget is not allowing real hardwood then a thicker engineered wood works well to be glued or nailed down. Some properties you have no choice but to float the wood floor. I believe over time causes issues especially when placed over concrete.  Even with a protective barrier the concrete gets cold and or heats up depending on season and can affect the wood. Yes I know you are supposed to leave a gap for expansion but even with the gap I have still seen laminates start to push up. Laminate and water don’t mix well. So that constant cleaning with a mop, or those wet boots from outside effect the laminate floor over time. Areas by the sink in the kitchen get the worst of it.

A great alternative is Porcelain. Porcelain flooring lasts for a long time and can withstand large weights (even cars). With new colors/styles that allow the tile to look like wood it is a strong alternative that can last longer than wood with no need to re finish.  Be on the lookout for some great deals on porcelain wood like flooring typically on sale at lumber liquidators.

Install will set you back a bit more than wood, however you only do it once if done correctly. No need for refinishing or sanding ever.

Baths:

There are so many styles and options here. For your average rental my advice would be to paint in a light but warm shade. Heavy dark reds, or greens make the bath feel dated. Light grays or deep whites work well. Some accent tile around the vanity helps lift the modern feel. New vanities that have a modern look are great.  Frameless showers are great however I have had issues with some that leak. Be careful who installs them for you. Make sure to have a specialist install the doors. Home depot has many of them to choose from. Replace that old showerhead with something new and large.

Simple : Clean : Functional

Part of my business has evolved into the re-design of property for both sales and rentals. Taking older properties that need work and creating that balance between budget, ROI on rent/sale, and design to bring the property up to 2018 standards.

One of the larger problems with condos/homes built in the 80’s and 90’s in DC is that they cant hold weight to properties that are just being built presently. They don’t look the same and many features of the property are older. The days of just throwing some paint up after a tenancy are over. With the new millennial generation coming forth and generations behind them the modern look is what is needed to keep up to new construction. Remember this is your investment property. Just like a car that needs to be detailed your invest property needs to be detailed to the point where it shows better than the competition. Many owners wonder why they are not getting the same price points as 2-3 years ago and many of those reasons come down to the way the condo looks.

For more information please contact:
Barry Lieberman

www.bclmgt.com

barry@bclmgt.com

The Millenial Investor

As the millennial trend continues to take over the real estate market what questions should a future millennial investor be asking to their agent? What is their expectation of creating wealth in real estate? What are the differences between the age 50+investor and the millennial investor?

In the age of YOUTUBE where some stars have been born and money can be made I believe that a true investor needs to actually be involved in a real estate transaction to learn first hand of how investors make money.  Youtube and other social media channels can show positive results but those may not be typical.

So who is this millennial investor? From what I am seeing in the market it is typically someone in their late 20’s to mid to late 30’s looking to take either some savings they have accrued over the past few years, or a trust fund that has been allocated to them.

Two trains of though when I speak with investors. The age 50+ investor looks for a percentage gain over time typically. Creating almost a retirement package. The millennial wants the flip. Fast in and out. Neither one are really wrong, but the outcomes of those transactions are dependent on variables in your marketplace. Not every marketplace in the US is in the correct trend to flip property.

With good intentions I believe the younger generation of investors are in the right direction. However my feeling is that they may lack the knowledge of what becoming a landlord or investor actually entails.  As my property management company is based in Washington, DC there are a number of strict rules and regulations regarding landlords and what they can or can’t do.  The “quick” flip can be potentially slowed or even stopped by DC’s TOPA laws. I am happy to go over any information on the laws in Washington, DC.Barry@bclmgt.com

Some new agents in the business hear the word investor and $$$$ light up in their eyes. However if an inexperienced agent has never worked with an investment client a transaction can hold some major challenges. Example of that is working through a 1031 exchange or serving tenants rights to an entire building, and or even finding the right property for the investor.

I have put together a brief punch list a new investor can go to an agent with. Here are some questions to ask your agent to get a feel of their experience and knowledge of the market place.

One thing you might want to consider when purchasing a property is whether you are better off working with a commercial agent or residential agent. Both hold different types of knowledge in their own marketplace.

Here are some example questions to ask your agent?

1.     What is the average CAP ratio of a multifamily building in your current city.

a.     In fact ask the agent if they even know what a CAP ratio is?

2.     What is the typical (average) rental income on various units?

a.     Ex. What does a 1 bedroom rent for?

b.     Ex. What does a 2 bedroom rent for?

c.      Ex. What does a studio rent for?

3.     All markets carry highs and lows for various size properties in terms of lease rates. You want to be sure your investment can at least cover operating costs.

4.     What are the property taxes on the building or property?

5.     Is the property currently being managed professionally?

6.     What is the eviction rate in the building? If any?

7.     You should ask for the last 2 years Revenue & Expense statements for the property. Typically investment sales contracts come with a study period. Make sure you use that period to know what your about to purchase.

8.     What is the typical vacancy time of property in the area. Meaning how long would a unit sit on the market empty once a tenant moves out.

9.     Who is paying the utilities? (Landlord or tenant)

10. In your city does the tenant pay the commission or landlord when leasing out vacant property?

11.  Does the building or property currently have its C of O or Business License.  When has the city inspected the property last?

These are just some of a long list of questions people can ask when thinking about investing in real estate.

Millennial Investors are here to stay. Working with them can have its challenges, but due to so many advances in technology it can eliminate a lot of excess time and energy when working with younger clients. So there are many positives in regards to getting deals done much quicker than 20 years ago.

For more information on Washington, DC investment properties, or our management services please contact us at

BCL Properties LLC

Info@bclmgt.com

Presidential Election & How it will effect Washington DC's Rental Business

This fall I am finding landlords perplexed with their financial situation. Owners don’t really know what to do with their property? Do they sell or continue renting. As everyone’s financial situation is different I still encourage owners to be positive and that DC is a great “bubble” for real estate. We seem to rise above other cities in the nation especially in pricing. This is probably due to the fact that DC is a very transient city. Most leases average 14-16 months with very little worry about finding a new tenant.  There is always a demand for property but the supply levels vary per season. This summer I found myself working with a number of New York City tenants moving to DC. After working with them they do feel there is more value in Washington, DC in terms of square footage, but pricing not all that different if your coming from a trendy New York City neighborhood.

The fall rental market is typically the last push of the year for landlords to secure a tenant for the winter. It is typically made up of properties that have yet to sell during the spring and summer market. History tells me that a property owner is now frustrated either at their current agent, past agent, or just the fact the property is still sitting on the market for sale. Owners may have been reaching for a price that for now is unattainable. They discover a new idea to “get through” the winter. Renting. This is a great entry point for my services to guide your property through the steps of renting in DC.

With election being weeks away some owners I have spoken with are holding off to see who wins this battle for the White House. Personally I don’t believe it will make a huge difference in the short term for rentals, but we will see. The rental market has slowed from the summer months as it usually does. The weather plays the biggest role in the next weeks to come. If the weather stays mild the market will extend into the beginning of December. If DC gets hit early with cold temps and snow there is definitely a retraction of tenants looking to move. Typically most tenants are settled now and hibernating for the winter. My experience is that customers tend to be transferred early fall for their jobs and become new clients, and or tenants during the fall season.

Plan of Action: Most clients I speak with now are working with me to set themselves up for the early spring market. We are going over TOPA strategies as some have tenants in the property along with renovations for the property to increase rental income. Placing your best foot forward in the spring will allow the property to be seen first, and create a better rental price. Yes it’s not even the end of fall 2016 and I am already setting up clients for the spring of 2017.  Part of my business is the lead time to get set up for marketing. Strategy and moving through a process creates successful returns on investment.

BCL Properties LLC looks forward to a successful winter for all landlords in Washington, DC and as always if your looking for a change in management, or new to rentals in DC we are always happy to help.

The Georgetown Spring Market 2017

What is Georgetown, DC offering this spring in terms of the 2017 rental market?

As the weather in Georgetown begins to clear up, and the warm temperatures approach the spring market for rentals and sales will come forth. With many property owners now calling to start the process of renting their property I am going through step by step the with them the potential pricing, rennovations, and what to do in order to get the best lease rates possible. 

Georetown faces some challenges as they are filled with older row homes that can need a good amount of work for DC to approve their business license. What some call "old world charm" DC calls violations. Some of these items include railings on all stair wells, overflow tanks on water heaters, flip locks on gates leading to a patio in the back. Although DC has a list of basic requirements remember that these are housing enforcement specialists. Each specialist tends to have their own specialty that they look for. 

As for marketing it is best to have your property always in the best showing condition as possible. I always stress to owners to make sure their property has a "home model" like feel to it. No clutter is very important. Prospective tenants should be able to go from room to room very easily. Our standard protocol of painting, fixing up as needed, appliances working, and full cleaning are always recommended.

Georgetown offers a wide variety of pricing. A small interior row home can start around $3000 a month. As you get into the mid size row homes that number will move quickly into the $4000 range. End units, and row homes with parking will sit nicely in the $5000+ market. Those typically have large outdoor space, covered parking, and 3-4 bedrooms. 

A question I get asked by owners in Georgetown is regarding students. Georgeotown University is located inside of the city/town of Georgetown so students often start their search for the summer in January. To date I have about 15 calls/emails already for housing for the summer months leading into September 2017. So what can an owner do about students. Technically not a whole lot. If a student can provide source of income meaning through a trust fund, a legal guardian, friend, or bank account there is no reason to deny them. Although they may not produce a credit score due to lack of credit that can not be used to deny a student or anyone else. So how does one handle students in property management?

With my online systems parents are able to pay directly online so there is no issue with payments. Years ago we would have to collect checks from each student which was a nightmare. Our software allows each parent to have their own access and make their contribution monthly. So financailly things are easier. Addendums to the lease are very helpful as well. I have addendums for everything from parties, drinking, and some others that owners have had me draft over the years. Fortunately Georgetown University has ties to landlords making the school involved in student behaivor. Any reports from property management, and or the police are also sent to the school. Overall there have been very few times that I personally had major issues with students.

In an upcoming blog I will talk about some points that tenants should ask their landlord or property manager prior to signing a lease. DC has very specific rules and laws regarding tenancy. It is always best that a tenant understand what they are prior to moving in.

For more information please contact at info@bclmgt.com

New Agents Entering The Real Estate Business

Are new agents really prepared for this business after they pass their exam? Are they informed about how much time and money is vested into the business just in your first year? Do brokerage firms really spend the time training and giving hands on experience in that first year?

Is this business too easy to get into? Should there be more training or requirements for agents to enter? Over the past year I have seen an influx of new agents coming into the business. Heck in the last week I had two different agents showing two different properties that did not notify me there was an issue. One left the lockbox wide open because they could not figure out how to close it. The other thought they locked the front door but did not and the door was wide open when I got there. I can’t imagine a seasoned agent doing such things.

In my opinion this business is way too easy to enter. Taking a 60 credit hour class and followed by a short test should only be the minimum requirements. So how do we as agents and brokerage owners change this? Is there another way that agents can get trained and succeed? I don’t have the ultimate answer, but maybe someone reading this has some further insight.

In no way do I feel they don’t deserve to be agents, or have the opportunity to be successful in this business. However coming into the business with really no knowledge or experience and trying to create an income from nothing is extremely hard. It can take a long time to get your first client and that’s from an agent working extremely hard to get there.

The most successful people I have seen in the business have worked for someone for years prior to going out on their own. To me this is the best training. It is what I did as well. Attending seminars, and watching videos are fine. Listening to speakers and motivating you is also ok. However real world experience is the best way to understand the day-to-day operations of running your own real estate business.

In the past I have heard this line over and over again from both new agents and what I call seasoned agent jumpers.  This is the biggest line of them all in real estate. Ready for it…..

“This company is not doing anything for me. The broker only focuses on the agents who make money, and nobody is doing anything to help me.” Another firm promised to give me tons of leads the second I get there.

Both the agent jumper and the newby have the same line. I bet you can think of at least 1 or 2 agents that you know who have jumped from one firm to another and heck even back to the original firm. Nobody did anything for them!

Well I would tell that person you are probably not in the right business and to move on to something else. But they don’t. They become that 1 percent who sits in the meetings and complains.  I heard an agent state one time at a meeting that in a room of 50 realtors it only takes 1 negative person to make the entire room negative. I can definitely see that in some cases. Why? I think because it is easier to pick at a problem rather than solve it. Its easy to complain the company is not doing anything for you when your not making money. It is human nature to point blame at someone or something else when personally not succeeding. Everyone does it at one point in there life. It is those who can admit the problem, evaluate the issue, and form a plan to meet their goals and ultimately succeed.

Don’t overanalyze things either. I have experienced this before. No broker should have to sit with anyone for hours formulating some mega plan on how to succeed in this business. This is a business of trial by fire. You need to try numerous approaches with marketing before one works for you. Not everyone can cold call. Not everyone wants to send postcards. Do what works for you which takes time to find.

So what does make a successful agent? Well for starters not complaining. Its all about the can do attitude in this business. That’s typically an entrepreneur’s attitude. No task too big basically.

When I started my company I did not know if I was going to expand out to bringing on agents. However I do feel there are benefits to this. My plan is to take on 5 agents in 2017. That’s all just 5. My goal is to work with them on strategies, online marketing, and give them higher commission structures to help maintain their advertising budget. Placing a percentage back into marketing from every deal they do. Almost forcing a building process. I built my business in one year from the ground up and it over tripled in size in one year. Yes I had 11 years in the business, but that is different than building a new brand and company from scratch.

So I want to share with these agents is how I did it. I am not asking for anything other than hard working agents who want to produce. No desk fees, no transaction fees, no franchise fees. My believe is that if I can help create the success the agent will want to stay and continue to grow.  I mean really how is an agent supposed to pay fees to a brokerage company on a monthly basis when they are brand new or not making money. I would never sign up for that as an agent. I don’t care how great a pitch it is.

If you do read this post and you are interested in having a quick chat with me feel free to reach out via email. If not that fine as well. Whether you are licensed in DC, MD, or  northern VA. I am happy to speak with you.

Looking forward to working with many of you out in the marketplace this coming spring.

Airbnb Bill Proposed By DC Council

Washington DC can be one of the most challenging places for a property owner to become a landlord. 

New innovations that have come forth from the Internet are challenging those laws set forth by DC Housing. Landlords in DC are required to file for business licenses, maintain records if under rent control, have properties inspected, follow TOPA laws if they sell, and are subject to hefty fines if a tenant calls upon a DC tenant representative ( which is free for tenants ) if found in violation of something in the property that has not been attended to in a timely manner. Example would be a HVAC system not working and the landlord refusing to fix or replace. 

As Airbnb started making footsteps into DC not too long ago various issues have come forth.  Landlords and even tenants jumped on this opportunity to fill vacancies at premium profits for short-term periods of time. 

However there is a fine line in DC with landlord tenant law, and DC regulations onto what is considered a tenant, and what is considered a paying guest. There are rules regarding squatters rights, adverse possession, the exchange of money from "tenant" to landlord, and selling rights that tenants obtain during the process of sale.

Right now Airbnb and DC are trying to come up with a solution to minimize the landlord being able to take advantage of their hotel like system. From what I understand there have been landlords in DC that have multi- family buildings of 15-40 units that are border lining on running their building like a hotel. Using airbnb as its main source of guest traffic. Because they are not signing leases and just coming and going DC is concerned about the abuse of this process in the long run. It basically goes against everything DC landlord tenant law stands for. Landlords without a hotel licenses and or zoned as a hotel should not be able to rent out individual units on a ongoing basis for short term periods of time without a lease. 

The argument comes into play, as there are some management companies that specialize in short term corporate rentals. However those candidates are screened, have leases that are signed off, and are given the landlord tenant guidelines pamphlets when moving in. They have an understanding and expectations of the law from the start.

The bill that is being proposed is consisting of fines ranging from $1000-$7000 depending on how many times the landlord is not being compliant. Hotel owners in DC are also concerned as hotel bookings are down due to many using the airbnb platform. 

There are many challenges in a jurisdiction that is so heavily driven on landlord tenant rights. 

I have personally been asked by tenants to rent out space as a sublet by finding people on airbnb. The quick answer in my company is no. Until some actual rules, and laws are established in DC those that want to sublet must go through the approval process with our company. 

Airbnb is leaving a lot of openings for their customers to gain tenant rights in the District right now. 

For example. Lets say a tenanted property that has a group of 4 working professional’s needs to fill a room for the next month. During that month period the owner decides that he wants to sell the property un-expectantly. The tenants are on a month-to-month lease and the owner is going to follow TOPA laws with their agent.

However the owner of the property did not know that the tenants were secretly renting out a room in the property and profiting from it. With this scenario there are now two problems. The first being the tenants are in violation of the lease by profiting from renting out space in the owners property. Secondly depending on how long that new person has been living there they may have acquired some tenant rights. Length of stay and possible exchange of money can start that process of gaining tenants rights in DC.

Does the landlord now have to serve TOPA rights to the airbnb client? That’s the confusion at this point. Even if they did not serve that person rights under TOPA laws the actual tenants are allowed to sell their rights to a third party for as low as a penny if they want. So lets say 1 tenant out of the 4 sold their rights to the airbnb customer. Now you have 3 other tenants and one airbnb customer all with tenant rights for the sale of the property. As you can see this now creates a long and drawn out legal process for the landlord that can become very costly.

As there is no instant eviction in DC the tenants must stop profiting from the client of airbnb with a 30-day notice to cure or quite from an attorney. However that does not mean that person must move out. If that client was savvy enough and now has gained rights by the purchase of TOPA you now have a non paying new tenant with rights that can hold up a sale for up to 180 days if they wanted. 

Do I think airbnb is a good idea on paper? Yes as was Uber, and other .com ventures, however both take away from professionals like taxi drivers, and landlords that must spend thousands on licensing to be sought as legal under their state guidelines. So in states and jurisdictions where landlord tenants rights are prevalent I think there should be something that Airbnb should come up with along side  DC Housing to create a fair system. Right now Airbnb is not showing signs of doing that. 

For all questions please feel free to email at barry@bclmgt.com

www.bclmgt.com

Rennovating A Rental Property

Often I go into rental properties with new clients and we have to do some work to prep the property for the market. As most owners dont want to spend a ton of money for a rental there are some tips and tricks I learned over the years. One of the most important things you can do for your property is make sure you have a fresh coat of paint. Painting is one of those items that can become personal due to room colors, furniture and so forth. The best thing that an owner can do is paint their property a neutral shade.  Here are some color paletts from Benjamin Moore that I like. Years ago it was all about the off white shades. Now I am seeing more and more tones of gray coming into play. They work nicely with most furniture and dont leave such a sterile feeling in the rooms. 

Accent walls are usually a question or concern. An example of an acccent wall is having 3 out of the 4 walls in a room a nuetral color and the 4th wall bright red for example to go with the furniture. I often get asked what should we do? My answer is typically leave it for the time being as long as furniture is being left in that room for marketing. If the property is going to be left vacant I would highly consider re painting that wall to match the rest. Consistency is the name of the game in rentals. The less questions the tenant prospect askes the better when it comes to "what is the owner going to do about that".

Flooring is always an interesting conversation. Owners ask do I install new carpet, or wood floors? First if you have carpet already and it looks in good shape I would have it professionally cleaned and leave it. For most condo buildings I feel that it reduces noise for neighbors. Wood aesthetically looks better but can be pricey to remove the carpet, level the floors, and place new wood floors. Although this investment can last a bit longer than carpet. It can make a room feel larger at times, and cleaner as well.  If your planning to go with wood floors there are now many options one can choose from. A true hard wood is very expensive. I wiould stick with the engineered wood or a laminate for rentals. Both work just fine and they look just as good. Every year those products continue to look and even feel better. A lot of laminates now even have etching in them to give that weathered look. Some of my favorites are bamboo strand. This is one of the toughest surface engineered woods around. This wood comes in a variety of shades and can be installed as a floating floor or nailed down. 

Bathroom upgrades are a must these days. That 1940's green tub that sits in these old world homes needs to go. I know some people are historic and like old world charm but its just not my taste. Modern clean lines are what the younger generations are going for. This is a great example of a bath that is not overly done but on the inexpensive side. Home depot is one of my favorite stores and you can make your property look great for not a lot of money. Even less if your willing to do some of the labor yourself. 

Kitchens are typically the main focus area in a single family home, or condo. In a rental property there are ways around making a kitchen look good on the cheap. The best way is to use laminate countertops instead of real and costly marble or granite. They wear pretty well and you wont have to worry about a piece of marble cracking. Another way to tone up the kitchen is by using tile backsplashes. Using an accent color or even a neutral color is a great way to make your kitchen look that much better. Re paint or stain your exisiting cabinets. You can even re face them if needed. 

With rental properties the name of the game is typically look like you have more for less. The less questions that are asked by a prospective tenant will increase the chance of them saying yes. You want to avoid tenants asking for items to be done prior to move in. This creates an opening for negotiation on rent. Place your best foot forward and price correctly.

Happy Renting

www.bclmgt.com

Contact us today for your leasing & property management needs.

What Qualifies Property Owners For Rent Control? What Are The Exemptions?

Who is under rent control?

LLC's - Yes
Inc.- Yes
Trusts - Yes
Corporation -Yes

Sole Proprietor - Not under rent control. natural person who owns no more than four rental units, provided the rental units are registered as exempt.

If you are under rent control you need to make sure your filing the proper forms with DC and your tenants.

Is there a difference in increasing rent with a current tenantrather than when a unit is vacant and being marketed? Absolutely and by how much?

Contact us today to find out more about our services and the latest in DC rental control laws. 

Single Family Investment vs Condo vs Multfamily Investment in Washington DC

BCL Properties has a variety of properties in our portfolio. They range from single family, condos, and multifamly. As the owner of the company I often get asked what is a better investment. A condo, single family home, or multifamily. An answer to this question varies for many reasons. Affordability typically being the dominant reason. There are benefits to all three. 

In condominiums you can face several obsticles. Lately in Washington, DC move in fees have become a way for buildings to make extra money. Especially if the building is geared toward investors. With increasing move in fees you can get hesitation from tenants to move in. I have seen move in fees upwards of $1000.00 in some buildings. I would say on average move in fees range from $200-$400. Some buildings even have an additional move out fee. Yikes! The problem is if the tenant likes the unit they often dont want to pay the move in fees. So many of my owners pay it for them. On a positive twist this technique is a great marketing tool as an incentive for tenants to view your unit. Some buildings limit the amount of rental owners as well. Buildings can have percentage stops that only allow up to a certain amount of rentals in the building. So that is something your agent should make a client aware of prior to purchase. Another issue condos face are assessments. You typically know months in advance that one is coming, but that takes away from your bottom line of profit. Dont forget the ongoing monthly condo or HOA fees that tend to rise over time. 

There are however advantages of condos. The first being they are typically more secure to an extent then a single family home. Generally the buildings have electronic access FOBs, desk reception, and so forth. Generally you can rent a condo in DC pretty quickly. Less than 45 days on the market if priced correctly. Condos if well taken care of usually have less repairs over the tenancy then single family homes.  For example in a one bedroom condo besides an appliance breaking, or HVAC system not working, alot of the structural items can often be the responsibility of the building owner. Leaks comiing from other units into your unit is usually the biggest problem I see. Typically the owner who caused the leak has to pay for the repair. 

Single family homes have their own set of positives and negatives. Time of year plays a bigger role on renting single family around Washington, DC.  Tenants wanting a 2-4 bedroom property may have kids and will want to move once school is out. So there is a limited time for agents and owners to get their property on the market. Usually spring and summer. By the fall most familes are settled for the year. Areas around Universities can attrack student homes. Those homes can have significant wear and tear over a tenancy.

I have found that single family homes over the long run can generate larger increases in rent over time. I think the reason I have seen this is because a number of single family homes around the DC area often comprise of multiple tenants.  Homes are generally larger in size giving the owner a reason to charge more, and or the home is in a desirable school district or development. Single family homes can take more wear and tear. Tenants have more responsibility like a true home owner does. Ex. gutter cleaning, grass mowing, shoveling snow etc... Although with long term leases I have seen some amazing rental properties transform into beautiful homes for tenants. Tenants tend to think of a house more as their home so they want to take care of it. Most single family homes rent out longer than a year. Some tenants I have had have been in their property for over 10 years. So I find for more stable long term leasing single family is a better option. Most condo leases in DC range about 16 months on average.

My favorite out of them all is multifamily. I believe that a good multifamily building ranging from 5-25 units can generate a great positive income for a long time. Even when one unit is vacant the other units are still generating income. So there is not a total feeling of loss of income. Generally repairs range in line with condos. Rents can be set around the same price points as condos as well. Having your 5 to 10 units all in one location is a huge benefit both for obtaining new tenants. People have most likely seen the building or may have friends that want to live there once another unit opens up. The transitions of vacant to rented in my opinion are easier. As for re sale purposes mutlifamily buidlings are typically well sort after by investors.

For any additional questions, or comments feel free to reach out to us.

BCL Properties a full service management and brokerage company. For more information please visit our website at www.bclmgt.com

or call 202-255-0045 

Winter Update 2017

So far the winter is holding up better than expected. With an increase in showings around downtown the rental market remains fairly stable. Prices right now are still in winter mode. Meaning an owner should expect at least 1-2 price reductions during the marketing process if pricing started high. Property owners need to be aggressive during this process unlike spring and summer months. The demand is always less as leases tend to come up for renewal around May. 

This winter I am finding an increase in owners wanting to do furnished rentals. This maybe due to last minute assignements overseas or wanting to leave DC quickly. As I currently have 2 lisitngs that are furnished most prospective tennats still prefer unfurnished. The furnished market is a niche market and short term housing companies do well flipping properties every few weeks. Owners have attachments to their furniture as they should. But just because they like it does not mean the tenants will. 

My suggestion to property owners weighing on the decision of placing their unit on for rent is to take some time and stage the property so it looks the best it can. First online impressions can make the difference between obtaining a lead or not. 

Some quick tips for making the property shine are:

- If vacant and the property has not been painted in some time a fresh coat of paint goes a long way. There are a ton of painters looking for work so pricing should be farily competative. 

-No clutter on countertops. Clean minimized counters are best.

- Professional cleaning is the most important. The property should not only look clean but also smell clean. No mold or mildew in the showers, or bathrooms. Carpets should be shampooed. Wood floors buffed. 

- HVAC filters should be changed out prior to a new tenant coming in. I have found that if the owners provide some filters to the tenant they are more likely to change them.

-Make sure your DC business licese is up to date. 

-When taking pictures use wide angles. Dont take a picture of the corner of a bedroom. Broad wide shots work best. 

In the Washington DC area winter generally hits hardest in February and March. So the next two months will be a test of just how strong rentals will be during the winter months. 

Property owners that I speak with are already prepping for spring. We are getting the properties rennovated, and ready to be the first out of the gate on the market. 

Seasonal Change Brings Stress to Vacant Property Owners.

For those landlords having to rent their property between November and January should understand that there are challenges that come with this time of year.

Ex. Rentals do better when people are out walking around. Especially in areas like Georgetown.  So weather is a huge factor.

Ex. Demand now is less as most tenants are settled through the New Year.

As per previous blog posts DC is a very seasonal rental market. I can almost tell to the day when the market shifts from very aggressive to moderately busy and then to slow. Sometimes landlords can’t control when their rental comes up for vacancy due to the month -to -month laws for tenants. So I must work with what is given.

So what are some things you can do to help with re marketing in the fall/winter months?

What are the benefits of taking that lower price even though it’s not exactly what you as the landlord want?

Landlords I find like anything else in the world become accustomed to a particular amount of money each month. But like life everything can and does change. The rental market although fairly strong in DC can shift up or down at times. That comes mostly when the seasons change. As a property manager one of the most challenging things I face when talking to landlords is price points. In the summer it’s usually a very pleasant conversation. In the fall and winter it can be a struggle.  Landlords always have a price in mind. So I ask?

What number are you looking to get on the rental? The question places the owner in the driver seat. This lets me get an idea of how realistic their number is or if they are “dreaming”.  Getting $3000 a month for a studio is just not going to happen. Typically most owners are fairly realistic and within the price points.

One issue I do contend with is unhappy owners. This is simple because for the entire summer their property did not sell. Now they are faced with a mortgage payment with no way to offset it. Their voices are frazzled typically and want their place rented tomorrow.  I do my best to  coast them through this new process for those who never experience being a landlord in DC. Then they typically get more upset. J But that’s what my company is here for. Let us do our job so you don’t have to worry about it. Laws, regulations, TOPA, tenants rights, and more.

So lets go back to some quick tips that will help your rental get moving in the marketplace.

1.    A good rental agent will continue to check the MLS and additional websites to see what the competition is. Every few days I continue to check the market to see what is rented, has an application in or still active.  This gives me the most knowledge of the current market when I speak to a client. Knowledge is power when listing property.

2.    When speaking with a new client in the fall or winter I warn them upfront that the price point they desire maybe a stretch during this time of year. I set a time line of reductions over the course of the listing. That way they know on “this date” we go from this price to that price. Then another 20 days we reduce again and so on. Typically 1 price reduction does the trick. Its upfront and no feeling of surprise for the owner.

3.    The unit itself has to and must show in “model” form. I have found that trying to rent a unit with a tenant living there can have its challenges. If the tenant has not taken care of the unit and is messy it will make the rental process difficult.

4.    PAINTING: PAINTING : PAINTING. A fresh coat of paint goes a long way. Now for larger homes that becomes expensive. So try to enhance the best rooms possible. Kitchen, entryway, and living areas.

5.    Incentive marketing. I have found this works wonders when competing with a listing similar to mine. Incentives can include rent reduction, move in fees paid by owner, last months rent free, a paid for professional cleaning during the tenancy. Something that makes the listing pop out.

6.    Appliances must be cleaned out and spotless. (Tenant’s use this to cook food). You can’t have grease stains all over the oven and moldy food in the fridge.

7.    A full property cleaning prior to marketing always helps. Carpets shampooed and wood floors shined up.

Owners should anticipate spending money to get the property back to marketable condition.

Taking that lower price! Ouch!

Well its not so bad. The property needs to be kept up especially in the winter. Having a tenant in the property and using the water, bathroom, and so on helps keep the property keep going. Too many landlords want to wait for their “price” but end up with frozen pipes and a large bill when the pipes burst. There goes your extra profit! I have seen it time and time again.

The idea behind the rental game is to look at the property as in investment. With each turnover taking a price percentage increase if possible. Keeping the property is great shape will reduce the major overhauls down the road. Don’t skimp out on the little stuff. Tenants notice when a landlord keeps the property up to date and clean.

My advise for the winter is to start marketing as soon as you can. I try to be aggressive with advertising. Create a buzz about the property with social media. Sharing the listing with agents that work with renters.

To find out more just visit my website at www.bclmgt.com

Happy Renting!

DC (TOPA)- LOOPHOLE FOR TENANTS? ARE TENANTS MAKING MONEY FROM THE SALES PROCESS?

October 28, 2016

(TOPA) short for Tenants Opportunity to Purchase Act has always been an exhausting and drawn out process for landlords. Any landlord that has been through this process or considering selling with a tenant in their property is not in for a quick sale. With these rights tenants gain the first right of refusal to purchase the property along with the ability to sell their rights for as little as a penny to a third party. 

Working in property management I have found TOPA once understood to be a formality that I run into a lot due to my business of property management. In a nut- shell it’s basically a time line for tenants to act on the opportunity to purchase. For specific questions feel free to contact me at barry@bclmgt.com. Building owners do have a bit more complex set up for TOPA as they have to initiate the paperwork to every tenant in the building followed by a different set of timelines and rules.

As TOPA laws continue to affect the ability to go to settlement an agent must understand the proper procedure of filling out the paperwork as well as how the forms are delivered.  Tenants can actually make this process long and strung out if they want to. Tenants have the ability to hold up the sale up as much as 180 days if all their rights are used. As stated above they can also sell their rights.

However more and more tenants are finding this loophole as the title of this blog states. That is CASH FOR KEYS. Over 11 years of managing property and brokerage I heard of some owners trying this, but I never really thought it was kosher. Well I learned something new. After speaking with a DC representative in the office that represents/advocates for landlords (202-442-4407) I was actually taken back that it is ok. I specifically asked if it is legal and the representative said yes.  As I researched this a bit more I was finding articles, and forums online that tenants were making a good amount of money on this. Not shocked there. 

I pose the following questions to DC Housing?

1.     Should there be a max amount that is regulated by DC that a tenant can ask for?

2.     Is this giving tenants too much power and leverage on a property they don’t even own?

The process is as follows.

A tenant is still issued TOPA rights as normal. However during the TOPA process the owner can offer tenants a cash buyout to sell their rights back to the owner in turn for a set move out date and return of keys. The TOPA rights then become null and void. I asked if there is a ceiling on the amount of money the tenants can ask for and I got a simple “nope” from the representative. As long as both parties agree to the amount it is considered a deal.

Remember landlords that if you have roommates or a group house each tenant must be issued TOPA rights. So if there is more than one tenant in a property the cash offer must be issued to each individual. Not a group deal. Once the tenants agree with the landlord on a price the tenants must issue a brief statement in writing to the landlord indicating they agreed to cash for keys and are selling their rights back to the owner for the agreed amount. This voids out TOPA and creates a firm move out date.

Can a tenant make some extra money on the deal? Absolutely! For a landlord to consider a buy out he or she would have to weigh the cost of the buyout vs. selling with a tenant in the property. If the owner knows that renovations need to be done, staging placed, and knows the chances of a sale increase dramatically when vacant then yes it could very well be worth buying out a tenant.

My advise to any landlord is to make sure you have an experienced agent/broker representing you when tenants are still living in your property. Most major settlement companies in DC are asking to see the TOPA forms to be able to settle the sale of a property. I have heard horror stories of clients being at the settlement table when the attorney would not close the deal because TOPA was not issued. You can only imagine how the buyer and seller reacted to that. Remember DC does have a 30 day notice to move out. TOPA does not guarantee that the tenant has to be out at time of settlement. TOPA is purely for the tenants right to purchase. Not a notice to vacate.

So how do you get the tenant out of the property?

I plan on going into more depth on how to sell effectively with a tenant in a property and going over the actual forms one by one in a later blog post.

Going over TOPA FORMS A,B,C.

For any questions please feel free to contact me directly Barry@bclmgt.com or by phone at 202-255-0045.

Visit us online at www.bclmgt.com