Finished Basement Guest Suite & Subgrade Waterproofing Fix & Flip

The Investor Scenario & Opportunity

An active real estate investor sourced an off-market two-story brick rowhouse in the Belair-Edison neighborhood of East Baltimore. Located near Erdman Avenue and Belair Road, the property occupied a stable residential sub-market that appeals to first-time homebuyers and commuters accessing Interstate 895 and Downtown Baltimore.

The seller was an absentee landlord liquidating non-performing rental inventory featuring severe deferred maintenance, outdated plumbing, and an unfinished, damp lower level. The investor negotiated an off-market purchase price of $101,000 on the condition of an immediate cash settlement without repairs or inspection contingencies. Fully renovated rowhouses on surrounding streets featuring finished basement living space were selling consistently around $215,000.

The Strategy & Capital Requirement

The core requirement was rapid execution combined with liquidity management across concurrent job sites. The seller established a strict seven business day closing deadline to liquidate the asset before municipal property tax interest accrued.

At the same time, the borrower had capital committed to an active renovation site in nearby Bayview. To preserve sufficient liquid reserves for subcontractor payroll and material orders on that active site, the investor required a direct loan facility that funded 90% of the purchase price and 100% of the construction draw budget.

The Henry Solution (Loan Mechanics & Underwriting)

Hard Money Henry underwrote the loan based on direct real estate equity and local sub-market sales comparables. Our internal underwriting team evaluated recent Belair-Edison rowhouse sales within 24 hours, completely waiving third-party appraisal requirements.

We issued a firm commitment letter and structured a $133,900 total loan facility, financing 90% of the purchase price ($90,900) and 100% of the construction budget ($43,000). Construction funds were held in escrow and disbursed across three structured draw inspections as work was completed. The transaction funded and closed in five business days.

The Financial Win & Outcome

The developer completed a 60-day targeted renovation program. The primary value-add strategy focused on transforming an unfinished lower level into a fully waterproofed basement guest suite. The investor allocated $18,000 of the $43,000 budget to install an interior French drain system, a dual sump pump, moisture barriers, drywall framing, and a half bathroom.

The remaining $25,000 funded an updated kitchen with shaker cabinetry and quartz countertops, refinished flooring, an electrical service panel upgrade, and fresh interior paint. Converting the basement into dry, usable square footage eliminated buyer hesitation, generating multiple offers within eight days of listing.

• Purchase Price: $101,000
• Rehab Budget: $43,000 (Basement guest suite, subgrade waterproofing, cosmetic updates)
• Financing & Holding Costs: $8,500
• Selling Costs (6%): $12,900
• Total Cost Basis & Expenses: $165,400
• Final Sale Price: $215,000
• Net Profit: $49,600

Key Takeaways for Local Investors

• Waterproofed basement conversions add high usable value. Installing perimeter drainage systems and finishing lower levels creates functional living area that drives buyer interest in historic rowhouse markets.
• Tired landlord sales require fast settlement. Partnering with a direct balance-sheet lender who guarantees closing in five business days enables investors to secure deep off-market discounts on neglected inventory.
• 100% construction debt maintains working capital. Structuring loans to fund total renovation draws keeps investor cash flow available for concurrent active developments.

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.