A couple weeks ago, UrbanTurf featured a dilapidated home in Anacostia that was purchased for $54,000 a couple years ago and transformed with sweat and grit and about $100,000 towards renovations. Many commenters chimed in to compliment the property, some hoping to follow the same path.
Last summer, we reported that the average sale price was creeping up in the neighborhood east of the river as investors bought up shells, renovated them, and put them on the market for two or three times the purchase price. UrbanTurf decided to investigate to see if deals like that were still available.
It appears those hoping to turn a threefold profit on an investment property in Anacostia may have missed their opportunity.
“The days of buying a fixer-upper property in Anacostia for under $100,000 are gone,” Darrin Davis, the owner of Anacostia River Realty, told UrbanTurf.
While fixer-uppers are still available, the sale prices have risen as multiple investors now compete for neighborhood properties. Davis mentioned a property, which needs to be completely gutted and rebuilt on the inside, that is listed for $165,000. The sale of rehabbed homes tends to be in the mid $200s to $300s. Anacostia’s market of investors-seeking-shells is still more competitive than its market of owners-seeking-rehabbed properties, creating a slim profit margin.
Instead of selling right away, said Davis, he sees investors holding on to their properties and renting them out, with the hopes of selling them in a few years when property values rise further.
Last year, Irene Dubrovina bought two Anacostia rowhouses for $75,000 apiece, and sold them for almost three times the purchase price. Now, she concurred, deals are much hard to find. Dubrovina recently made an offer on a vacant lot in Anacostia for 15 percent above the list price, and was outbid.
“The market is strong, but I do think that it is getting saturated with investors,” Dubrovina told UrbanTurf. “A lot of investors are now buying with an expectation that the market is going to continue to go up at a fairly fast pace, and I don’t think that this is a prudent strategy — we’ve been here before.”
Having moved on from Anacostia, Dubrovina has started working on three projects in nearby neighborhoods like Hillcrest and Fort Dupont Park. Davis is encouraging his clients to consider doing the same.
“I am now urging investors to venture outside of Anacostia and into neighborhoods like Congress Heights, Randle Heights and areas like Deanwood and Marshall Heights,” said Davis.
- The Pursuit: Investing in Anacostia
- A $50,000 Anacostia Rowhouse, Transformed
- Swarming Investors Push Home Prices Up in Anacostia
- Sheridan Station Forges New Market in Anacostia
This article originally published at http://dc.urbanturf.com/articles/blog/profit_margins_shrink_for_anacostia_investors_as_prices_rise/6803
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