Thank you for joining us. Another episode this week of Market Hunter Thursday with Herve.
So, excited. Today, we're going ahead and taking our show to Washington, DC, kind of
my old stomping grounds. DC population just over 700,000, median income 86,000. I'll give
you a little fun fact of DC. DC ranks in top three in the country of cities that have gone
through gentrification. So the city looks absolutely nothing like what it used to look
like when I went to school back then. It has completely changed over. And part of that
is that median income being $86,000. It used to be probably less than half of that many
years ago. You have median rent of $1,500. Median home value just over 600,000.
One of the reasons why it's gone through so much gentrification, a lot of employers, big
time Fortune 500 employers have moved to DC over the past several years. Obviously, you
have Fannie Mae down there. You got Lockheed Martin, Marriott Corporation, Capital One
is right outside of DC. And on top of that, you have obviously Amazon putting their second
headquarters right in Crystal City, Virginia, which is right across the bridge from DC.
We're going to go ahead and get started. Ms. Stephanie Assi from Washington, DC. Stephanie,
thanks so much for being with us here today.
Thank you so much. This is amazing. I really love what you do.
Stephanie has another business called Oui Clean DMV. Stephanie opened up her own commercial
cleaning company not too long ago. What is it about Washington, DC that attracts you
to investing in DC especially with all the changes that has taken place there over the
past couple of years?
The main factor for DC and surrounding areas is mostly the strength of the job market.
Pretty much being strong just like the companies you've listed in your introduction. First
of all, there's the government presence, which is a huge [inaudible 00:02:04] of employment,
job stability. A lot of families are moving into the DC area. I got working for the federal
government. We have quite a good tech presence too, especially in Northern Virginia just
like you're listed Amazon is coming here. We have pretty good Google presence too. A
lot of government technology companies, Booz Allen Hamilton, Lockheed, you have [Northrop
Grumman 00:02:32]. So all these companies are bringing a lot of jobs, and that's attracting
families, that's attracting workers. And as a result, the housing market is also growing
and expanding to DC surrounding areas. So I strongly believe that's a market that would
never "die" because of just all the aspects that I've listed.
You also have a major airport. We have three airports in the DC area, so travel is really
easy. So being coming into DC and going out. So those are things that I personally take
into consideration when I'm looking at a market. I want to see how accessible it is, how the
employment, the job market is, and the potential for growth. Buildings, houses are being built
consistently. Companies are building headquarters. So it's like forever changing market that
you definitely want to get your feet on the ground and put your piece of the pie.
So with that as the backdrop, right? What have you seen that has worked successfully
for not only yourself but other real estate investors in DC to kind of satisfy that demand
and that appetite for folks looking for a place to live? What strategies have you been
pursuing in the area?
So a lot of the successful investors that I have interacted with, a lot of close friends,
the major, I would say, successes in DC are around flips. So a lot of people are buying
distressed properties, renovating them, putting a lot of upgrades, and then getting them on
the market. Because buyers, especially DC buyers, families they are looking for homes
that are move-in ready with all the bells and whistles. They want their countertops
there. So having that as a plus, on the seller's standpoint is a huge benefit. So a lot of
investors in DC, in surrounding areas, Maryland, even all the way to Baltimore, they're buying
distressed properties, fixing them, and then selling them at a premium. That's been, I
would say, where most of the success is. Now, on the rental side, which is mostly what I
go for, is by either turnkey or buying a property that, I wouldn't say is distressed but just
needs a little work. Just a little more work, and then getting some tenants in their long-term
tenants.
Now, the thing with DC is properties will not cashflow, rental properties will not cashflow
right away just because we are in a high cost of living area. However, every year your property
is going up in value, so that's one great benefit with being in a dense and I would
say very appreciating market like DC. Even though you don't get your extra 300, 400 a
month cashflow every month, but you do get the appreciation. You do get your house going
up in value because people are moving in all the time, jobs are being created all the time,
so properties do see a lot of appreciation. Between cashflow and appreciation, I'm kind
of stuck in the middle, but I like the fact that I can rely on my home going up in value.
I can rely on that. And just adding those little, I call bells and whistles, also helped
too. Just having some crown molding, just little things that will help also put your
property up there in terms of competing with other homes.
Do you have a better opportunity maybe for cashflow if you're renting something that
you own more at the high-end of the market, maybe call it like a class A building versus
a class B or class C building where rents are not as high?
Now, it also depend on the type of property. So condos and I would say single families
townhomes, even in the class B, class C, you will rarely see cashflow. Those are priced
usually in the upper three to 500s for condos, upper 700s to 800 for townhomes. So there's
no way you're renting that full 5,000 a month. There's the potential to increase rent every
year is there. So eventually, you will catch up to where you actually cashflow positive.
However, with multi-families, so duplexes, triplexes, quadplexes, that's where you're
going to see a lot of cashflow.
Okay.
If you have all these units and price at the right level, you can cashflow from day one.
But when you go Upper Marlboro, so outside of DC, you're getting really close now to
cash flowing because the house prices especially for town homes, you can easily rent a townhouse
for 3000. So imagine you'd have bought a distressed for, let's say 200, 250k, put a little bit
of work. Now, it's worth 350, and you're renting for 3000. Now, you're really in a good shape
when in terms of cash flow. Taxes are a little lower. Your operating expenses are lower just
because you're a little farther out. But then, it comes with a little distance.
A lot of folks may or may not know, DC is split up in quadrants folks. We got Northwest,
we got Northeast, we got Southwest, and we got Southeast, right? And then we've got the
Beltway, right?
Yeah.
South side, Virginia. North side, Maryland. So if folks are working in DC, going to school
in DC, but maybe it's still too expensive to move in DC. From a real estate investor
perspective, which quadrant would you look to get started with your real estate investment
strategy, whether it's flips and/or some small multi-families, those duplex and triplexes?
I'm not sure if you're familiar with the Anacostia, Navy Yard [crosstalk 00:08:57]-
Yes.
That scenario that has seen a lot of growth.
Yes.
It's a lot of growth. I've been telling people coming in, you guys don't underestimate Southeast.
And it's also my favorite part of DC, just like the landscape overall. And you have Maryland
right a few minutes away. And because of the gentrification that has happened throughout
DC over the past few years, a lot of families are being kind of pushed towards those areas.
So there's been a lot of developments. Shopping centers, stores opening, things happening,
especially in Anacostia, Capitol Heights, those areas. And prices are very attractive.
Yes.
Very attractive right now around there for condos and townhomes or row homes, depending
on how you call them. So, I encourage people to start looking there. Northwest, it's kind
of up in the million.
It's gone.
Yeah, it's gone.
The trains has left the station in Northwest.
You can still find some gems in Northeast. It's still very well located and Metro-accessible.
You can still get anywhere. But if you're really looking for those hidden gems, good
price, good sense of community, I would say definitely Southeast. Now, there are some
parts of Southeast. You just have to do your research. It goes by street, every street
is different. So you can't really look at it as a whole, just pick some areas, go down
there. DC is not a place where you want to buy remotely. You have to be on the ground.
You have to see for yourself because every street is different. And then, when we're
looking at outside of DC a little bit, if we want to talk about Virginia, Arlington
reminds me of Northwest. Arlington is pretty gone too.
It's gone, yes.
Alexandria, however, has some very nice properties. Some areas of Alexandria or actually right
off of the George Washington Parkway, beautiful views. And you can still have pretty affordable
condos in Alexandria. And then coming into Fairfax County, you get your single families
because there's more space. Single family homes. And actually, as you go farther out,
I don't know if you've heard of Gainesville-
Yes.
Or you've heard of Loudon County, yeah. So those homes, very nice, lots of space, priced
right. For bigger families that are looking for space and also don't want to compromise
on proximity to the city, I would say Fairfax County, definitely. Not to go too far. Now
in terms of Maryland, I love Largo, Upper Marlboro, those parts of PG County that are
still pretty close to DC, about 15 to 20 minutes drive to DC. So, you're not far from the city.
Laurel is beautiful, very affordable too, very big homes around there. And it's also
not far from Baltimore. So you get the Baltimore, Maryland, Marina experience, and then you're
still close enough to DC to experience everything that comes with that. I used to really be
a big fan of Montgomery County. Rockville, Bethesda, Silver Spring, super close to DC.
But now, it's getting very pricey.
Very expensive over there.
Yeah.
Very expensive.
Very [crosstalk 00:12:31] for investors, especially we're talking first time investors. So you
really want to go to to Laurel College Park.
Yes.
Those are good areas that are still affordable and still close enough to DC when it comes
to commute. And Metro-accessible too, that's important. And then, [crosstalk 00:12:53]-
Metro is important in DC.
Yeah.
Not a lot of parking. When you find a parking, it's expensive. They going to ticket the heck
out of you over there [crosstalk 00:13:02].
Yes. Oh, yeah.
You better either buy a damn good pair of shoes and sneakers, you [inaudible 00:13:07]
not dare go on Metro system. But it's not [crosstalk 00:13:09] going to takes you everywhere.
But you better live near at Metro.
Right.
And once you are to Metro, the higher the value of that particular property that's near
to Metro. No doubt about it. That is top three, top four, in a lot of people's list when they're
out there going house hunting, apartment shopping in DC. So going back to Southeast, you think
that Southeast is a value play and not a value trap?
I think it's a value play.
Okay.
Now, it's going to take-
It's going to take some time.
It's going to take a little time.
You've been waiting.
Yeah. But it's [crosstalk 00:13:48] there. It is getting there. They're doing a lot of
work. The city has been doing a lot of work.
Yeah. I tip my hat to the mayor.
Yeah.
She's been doing a lot of work, yes.
I know a lot of people might be giving the side-eye. But, well-
Side-eye is not a bad investment. You got to go side-eye before you go straight-eye.
You know what I'm saying?
Yeah. So if you want to be amongst the first that have spotted the gem, now is the time
to kind of start doing the research and start getting out there. And some of them are really
nice. And like I said, a lot of people are moving away from DC into Oxon Hill, other
parts of Maryland.
Yes.
So within the next two years, Southeast is going to be in a pretty good shape. Let me
put it in that way.
It's the last quadrant left that hasn't gone through the development such as Northeast,
Northwest, and Southwest, right? Right now, you're three out of four on quadrants that
have gone through extraordinary development. They are the quadrants you're talking about
when you're discussing gentrification that has taken place to DC. Southeast isn't there
yet, but it is slowly catching up.
As investors, we have to be able to spot opportunity from afar.
That's right.
That's where we set ourselves apart from the bunch.
Right.
So, I always keep my eyes out for opportunities. And as risky as they come, sometimes [crosstalk
00:15:29]-
As risky as they come, right? Folks, DC, it is a hot market. There's no doubt about it.
It's an outstanding place to live, and outstanding place to work, outstanding schools. But from
real estate perspective, there are some real great opportunities, but you have to like
Stephanie recommends, feet on the ground. If it's not going to be your feet, let it
be your partner's feet, someone else's feet. And if you're looking for those cashflow opportunities,
Southeast DC is your place to be. Be patient, right? The development is coming, the companies
are coming, but you've got to be patient. If you don't want to be that patient, then
yeah, you can look in some of the other quadrants, but you're going to have to pay up. You're
going to have to pay it up. Because again, a lot of those trains, as Stephanie says,
it's kind of left the station. To me, there's no city better in this country than DC during
the summertime.
I agree.
It's unbelievable, man. You got-
And, the cherry blossoms just started.
Cherry blossoms, the Smithsonian free museums is outstanding. So put together a sample itinerary
for us, if I'm going to come down to DC to hang out. Restaurants, clubs, nightlife, if
I've got a weekend in DC, what do you recommend some places that we go?
Okay. In terms of monuments and museum, I would recommend you spend a day. So you dedicate
a day, make sure you see the Air and Space Museum.
One of my favorite.
And the beauty of that is that they're all free.
Yes, absolutely.
They're all free. They're all pretty accessible within each other. So you will dedicate a
day. You call it a cultural day. You do all the museums. You'll do the Lincoln Memorial.
I love the Lincoln Memorial. Go to the fish market, get you some crab legs. So, definitely
do the Wharf. It's beautiful. And now, they have added a lot more shops coming from the
fish market down a little bit. And there's this huge tower, it's like a restaurant/lounge
right at the top of the building, right on the Wharf. It's gorgeous at night. Oh, to
Georgetown. You want to go to Sequoia for brunch on Sunday.
The Sequoia is still there?
It's still there.
Wow. Thanks so much for being us with today. We learned so much. I'm excited. I've got
some stuff in DC that's been doing extraordinarily well. So I back up Stephanie a 100% on her
comments in regards to neighborhoods, real estate strategies, and so on and so forth.
Folks, tons of opportunities. Thanks so much for being with us today. I wish you guys very
safe, healthy, profitable week. Until next week. We'll see you again.