Basement Recreation Room Conversion & Open Main Floor Layout Fix & Flip

The Investor Scenario & Opportunity

An active real estate investor identified an off-market single-family rowhouse in the Hamilton neighborhood of Northeast Baltimore. Positioned near Harford Road and Hamilton Avenue, the location provides convenient transit routes into Downtown Baltimore and Towson, creating steady demand from first-time buyers and young families.

The acquisition was driven by a Chapter 7 bankruptcy court liquidation mandate. The court-appointed trustee required an immediate cash transaction to distribute proceeds to creditors before a court reporting deadline. The investor negotiated an as-is purchase price of $85,000. Fully renovated rowhouses on surrounding blocks featuring finished lower-level living spaces and modern kitchens were selling consistently around $185,000.

The Strategy & Capital Requirement

The primary challenge centered on settlement speed combined with liquid capital preservation across active projects. The bankruptcy trustee established a strict six business day settlement window, with non-performance resulting in the property being handed to an institutional liquidating broker.

At the same time, the investor had capital committed to an active single-family renovation in nearby Lauraville. To maintain adequate liquidity for trade contractor payroll and material deposits on that active site, the borrower required a direct loan facility covering 90% of the purchase price and 100% of the construction draw budget.

The Henry Solution (Loan Mechanics & Underwriting)

Hard Money Henry underwrote the transaction based on direct real estate equity and local sub-market sales comparables. Our internal underwriting team evaluated recent Hamilton rowhouse sales within 24 hours, completely eliminating third-party appraisal delays.

We issued a firm commitment letter and structured a $114,500 total loan facility, financing 90% of the purchase price ($76,500) and 100% of the construction scope ($38,000). Construction capital was held in escrow and released across three structured draw inspections as work was completed. The transaction funded and closed in five business days.

The Financial Win & Outcome

The developer executed a 60-day targeted renovation program. The primary value-add strategy focused on converting an unfinished basement into a functional lower-level recreation room and opening the main-floor layout. The investor allocated $16,000 of the $38,000 budget to install subgrade waterproofing, frame drywall, lay durable flooring, and build a finished recreation room with an added half bathroom. Another $12,000 was dedicated to opening main-floor walls and installing new kitchen cabinetry with quartz countertops.

The remaining $10,000 funded an electrical service update, refinished original hardwood flooring, modern bathroom fixtures, and fresh interior paint. Adding finished lower-level square footage created a strong selling feature, leading to a full-price purchase contract within six days of listing.

• Purchase Price: $85,000
• Rehab Budget: $38,000 (Basement recreation room buildout, main-floor wall opening, kitchen refresh)
• Financing & Holding Costs: $7,500
• Selling Costs (6%): $11,100
• Total Cost Basis & Expenses: $141,600
• Final Sale Price: $185,000
• Net Profit: $43,400

Key Takeaways for Local Investors

• Basement conversions expand marketability. Finishing lower levels and adding half bathrooms significantly increases usable living space and boosts resale pricing in urban rowhouse markets.
• Bankruptcy mandates require guaranteed funding speed. Partnering with a direct balance-sheet lender who guarantees settlement in five business days allows investors to win clean court-ordered liquidations.
• 100% construction debt maintains working capital. Structuring loans to fund complete renovation draws keeps investor cash flow liquid across concurrent development projects.

Planning a single-family fix and flip or rowhouse renovation in Baltimore or Maryland? Submit your property address at hardmoneyhenry.com/apply for a 24-hour commitment letter.