As part of our broader strategy of buying homes in cities experiencing a housing shortage, we’ve acquired a three-bedroom, one-bathroom, 1,760 square foot home in the Brookland neighborhood of Washington, DC for approximately $529,000. This is our third acquisition to date in Brookland, joining two other homes we bought in March.
Business plan
The home has great potential, but is in need of major work to make it competitive. We anticipate spending about $225,000 to perform a full renovation before putting it on the market. Together with the initial acquisition costs, this brings our total commitment to about $754,000. Based on comparable homes in the area, we believe we will be able to sell the renovated home for at least $840,000, a gross profit of about $86,000.
Why we invested
- Fast-growing neighborhood: Over the five-year period ending March 2018, the Zillow home value index in the 20018 ZIP code has increased from $311,000 to $535,000, a trend that we believe will continue as prospective homebuyers are priced out of more established areas.
- Strong, stable local economy: With over 30% of residents employed by the government, the DC market is uniquely insulated from national economic downturns. In addition to federal workers who generally earn comfortable middle-class salaries, there are thousands of highly-paid private sector employees such as consultants, lobbyists, and lawyers. For more information, please see our DC market analysis.
