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.

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