Updated
Scenario assumptions
| Location | Anacostia, Washington, DC (Ward 8) |
|---|---|
| Property type | Illustrative renovated Anacostia rowhouse (3-bed upper unit + 1-bed legal basement unit) |
| Loan type | Modeled DSCR purchase loan, 30-year fixed |
| Loan amount | $371,250 modeled (75% LTV) |
| Close time | 21 business days modeled |
What this Anacostia scenario tests
This is an illustrative financing scenario, not a completed Jaken Finance Group loan. The price, rents, rate, and taxes below are assumptions. They show how a buy-and-hold rental in Anacostia should be underwritten with a DSCR loan.
Anacostia sits east of the Anacostia River in Ward 8. It has some of the lowest rowhouse prices in the District, a Green Line Metro station, and the planned 11th Street Bridge Park nearby. Investors are drawn to the price point. The risk is buying a property that qualifies for a loan but does not produce cash after real operating costs.
The modeled investor buys a rowhouse that has already been renovated. It has a three-bed upper unit and a legal one-bed basement unit. There is no rehab and no bridge loan. The investor uses a DSCR loan, which qualifies on the property’s rent rather than the buyer’s personal income.
For current DSCR program details, see DSCR loans in Washington, DC and the Anacostia DSCR page. If you are buying a property that still needs work, start with hard money loans in Anacostia.
Property and rent assumptions
| Item | Assumed figure |
|---|---|
| Purchase price | $495,000 |
| Upper unit rent (3 bed, 2 bath) | $2,400 |
| Basement unit rent (1 bed, 1 bath) | $1,550 |
| Total monthly rent | $3,950 |
| Annual property tax | $4,207.50 |
| Annual landlord insurance | $2,100 |
DC taxes Class 1 residential property at $0.85 per $100 of assessed value. A rental does not receive the homestead deduction, so the model applies that rate to the full $495,000. Compared with Cook County, the tax bill is small relative to rent. That is a major reason DC rowhouse coverage looks stronger than similar-priced Chicago rentals.
Loan terms
| Loan term | Modeled input |
|---|---|
| Loan amount | $371,250 (75% LTV) |
| Interest rate | 7.25% fixed |
| Amortization | 30 years |
| Origination | 1 point ($3,712.50) |
| Prepayment | Three-year step-down (assumed) |
The 7.25% rate sits inside Jaken Finance Group’s published DSCR range of 5.75%–10.5%. Credit, leverage, and property type determine a real quote. Jaken Finance Group’s DSCR purchase program goes up to 85% LTV in select markets for qualified borrowers. This model stays at 75% for the reasons explained below.
Monthly payment and coverage
| Payment line | Monthly amount |
|---|---|
| Principal and interest | $2,532.59 |
| Property tax | $350.63 |
| Insurance | $175 |
| Total PITIA | $3,058.22 |
PITIA means principal, interest, taxes, insurance, and association dues. Divide $3,950 of rent by $3,058.22 and the DSCR is about 1.29. Most DSCR programs look for 1.0 or higher, so this file has a comfortable cushion.
Cash needed at closing
| Closing item | Modeled amount |
|---|---|
| Down payment (25%) | $123,750 |
| DC deed recordation tax, buyer side (1.45%) | $7,177.50 |
| Origination point | $3,712.50 |
| Title, appraisal, and legal | $4,800 |
| Cash to close | $139,440 |
| Recommended reserves (six months of PITIA) | ~$18,350 |
DC charges a 1.45% recordation tax and a 1.45% transfer tax on residential sales of $400,000 or more. Buyers customarily pay recordation and sellers pay transfer, though contracts can shift that split. Model it before you write the offer.
Deal timeline
| Week | Milestone |
|---|---|
| 1 | Offer accepted; certificate of occupancy for two units verified |
| 2 | Loan application; leases and rent history requested from seller |
| 3 | Appraisal with rent schedule ordered |
| 4 | Title search; rental license and basement permits confirmed |
| 5 | Appraisal back; insurance bound; entity documents reviewed |
| 6 | Loan closes in 21 business days (modeled) |
| 7–8 | Tenants notified of new owner; property manager onboarded |
Why 75% LTV beat 80%
Coverage tells you whether a lender will approve the loan. It does not tell you whether the building will pay for itself. The investor compared two leverage levels after setting aside realistic operating costs.
| Line | 80% LTV | 75% LTV (chosen) |
|---|---|---|
| Loan amount | $396,000 | $371,250 |
| Monthly PITIA | $3,227.06 | $3,058.22 |
| Lender DSCR | 1.22 | 1.29 |
| Rent after 5% vacancy, 7% maintenance, 8% management | $3,160 | $3,160 |
| Monthly cash flow (managed) | −$67.06 | +$101.78 |
| Monthly cash flow (self-managed) | +$248.94 | +$417.78 |
| Cash to close | ~$114,940 | ~$139,440 |
At 80%, the investor saves about $24,500 at closing. But a professionally managed building would run slightly negative. At 75%, the property stays positive even with a manager. The investor plans to use a manager, so 75% was the safer choice.
Year-one return picture
Modeled year-one cash flow at 75% with management is about $1,221. That is under 1% on $139,440 invested. Principal paydown adds roughly $3,600 in the first year. Self-managing lifts annual cash flow to about $5,013.
Put plainly, this is a steady but modest hold. The return depends on long-term appreciation east of the river and on keeping both units leased. Investors who need strong monthly cash flow should compare it with rent-ready properties elsewhere in the District or outside it.
DC rules that affect this hold
- Two-unit status. Confirm the certificate of occupancy covers two units. An unpermitted basement unit can be excluded from the appraiser’s rent schedule, which would drop coverage to about 0.78.
- Rental license. DC requires a Basic Business License for rental housing. Budget time for it before the first lease.
- Rent stabilization. DC’s rent stabilization law has a small-landlord exemption for some owners. How you hold title, personally or through an LLC, can affect whether it applies. Confirm with DC counsel before closing.
- TOPA. The Tenant Opportunity to Purchase Act gives tenants rights when a rental property is sold. Buying occupied units adds notice periods. This model assumes both units are vacant or the seller has completed the process.
What could break this scenario
- Basement unit loses legal status. Coverage drops sharply, as shown above.
- Insurance renewal jumps. A 30% increase adds about $53 a month.
- Longer vacancy. One unit empty for three months costs $4,650 to $7,200 in lost rent.
- Assessment increase. A $50,000 higher assessment adds about $35 a month.
How the appraiser would pick comps east of the river
A two-unit rowhouse is usually appraised on a small residential income report, such as Fannie Mae Form 1025. That report gives two answers: a sales value and a market rent for each unit. Both matter here.
Strong sales comps for this model share three traits:
- Same side of the river. Renovated sales in Anacostia, Fairlawn, and nearby Ward 8 and Ward 7 blocks. A Capitol Hill sale a mile away is a different market, even if the house looks similar.
- Same unit count. A single-family sale ignores the basement income. A two-unit sale with a legal lower unit captures it.
- Recent and renovated. Sales from the last six months with similar finishes, parking, and yard size.
Rent comps follow the same logic. The appraiser should compare the basement unit to other legal one-bed basement units nearby, not to one-bed apartments in a new building. A signed lease at $1,550 is the best support you can hand over.
What a low appraisal would do
On a purchase, DSCR lenders size the loan on the lower of the price and the appraised value. A low appraisal does not change the contract price. It changes how much cash you bring.
| Appraised value | 75% loan | Extra cash to keep the $495,000 price | DSCR |
|---|---|---|---|
| $495,000 | $371,250 | $0 | 1.29 |
| $480,000 | $360,000 | $11,250 | 1.32 |
| $465,000 | $348,750 | $22,500 | 1.36 |
Coverage actually improves, because the loan shrinks. The real risk is cash. The investor kept an extra $22,500 available until the report came back. A low value is also a reason to reopen price talks with the seller.
Rate and rent stress test
A fixed-rate loan protects you after closing. It does not protect you if rates rise before you lock. The investor tested a rate 1% higher and rents 10% lower, both at 75% LTV.
| Scenario | Monthly PITIA | DSCR | Managed cash flow | Self-managed cash flow |
|---|---|---|---|---|
| Base: 7.25%, $3,950 rent | $3,058.22 | 1.29 | +$101.78 | +$417.78 |
| Rate 8.25% | $3,314.71 | 1.19 | −$154.71 | +$161.29 |
| Rent $3,555 (−10%) | $3,058.22 | 1.16 | −$214.22 | +$70.18 |
| Both | $3,314.71 | 1.07 | −$470.71 | −$186.31 |
The loan still qualifies in every row. The monthly result does not hold up. With a manager, any single shock turns the building negative. That is why the investor locked the rate as soon as the appraisal was ordered and priced both units to lease within 30 days.
What the investor would change next time
- Ask for the permit history with the offer. The final inspection and certificate of occupancy for the basement should arrive before the appraisal fee is paid.
- Negotiate a seller credit toward reserves. A small credit is easier to win than a price cut when the house is already renovated.
- Lease the basement first. A signed lease supports both the rent schedule and the appraiser’s value.
Before you copy this structure
Test at least two leverage levels on a cash flow basis, not only coverage. Verify the certificate of occupancy before you pay for an appraisal. Keep six months of payments in reserve for a two-unit rowhouse.
Compare flip and hold paths in our Capitol Hill vs Anacostia article. For a rehab-first approach, see the Petworth DC case study and the DC BRRRR strategy guide. Run your own numbers in the DSCR calculator.
Ready to test a real property? Submit your scenario or call (833) 264-7776.
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