Heavy Mechanical Overhaul & Roof Replacement - Fix & Flip

The Investor Scenario & Opportunity

A local real estate investor won an off-market single-family rowhouse at a municipal tax foreclosure auction in the Strawberry Mansion neighborhood of North Philadelphia. Located just blocks from Fairmount Park and 33rd Street, the area has experienced steady investment activity driven by buyers seeking affordable single-family homes near green spaces and downtown transit options.

Winning the auction enabled the investor to secure the property for $110,000. However, the municipal auction guidelines mandated full settlement within seven business days. The investor had two other rehab projects active in West Philadelphia and prioritized preserving cash liquidity while securing the auction acquisition.

The Strategy & Capital Requirement

The core requirement was rapid execution coupled with capital preservation. Missing the seven-day funding deadline would result in forfeiting the auction deposit and losing rights to the property.

In addition, the investor needed a financing structure that covered 100% of the renovation budget. This approach ensured that personal working capital remained available to fund payroll, permits, and material expenses across the investor's concurrent active job sites.

The Henry Solution (Loan Mechanics & Underwriting)

Hard Money Henry underwrote the loan using direct asset equity and local sub-market comparables. Our underwriting team completed an in-house desktop evaluation of recent Strawberry Mansion sales within 24 hours, bypassing the delays of third-party appraisals.

We issued a firm commitment letter and structured a $139,640 total loan facility. This covered 90% of the purchase price ($99,000) and 100% of the renovation scope ($40,640). 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, meeting the strict municipal auction settlement deadline.

The Financial Win & Outcome

The investor completed a 60-day targeted rehab. Rather than pursuing high-end cosmetic alterations, the value-add strategy focused heavily on mechanical systems and core structural integrity. The investor allocated $22,000 of the $40,640 budget toward stripping out old knob-and-tube wiring, installing a modern electrical service panel, replacing deteriorated plumbing stacks, installing a new high-efficiency heat pump system, and laying down a full rubber membrane roof.

The remaining funds covered fresh drywall, paint, and durable laminate flooring. Restoring the home's essential utility infrastructure eliminated buyer red flags, enabling a fast sale to a first-time homebuyer.

• Purchase Price: $110,000
• Rehab Budget: $40,640 (Heavy mechanical systems and roof replacement)
• Financing & Holding Costs: $8,800
• Selling Costs (6%): $13,500
• Total Cost Basis & Expenses: $172,940
• Final Sale Price: $225,000
• Net Profit: $52,060

Key Takeaways for Local Investors

• Auction acquisitions require rapid closing capability. Securing municipal auction wins requires working with direct lenders who can guarantee funding in under seven business days.
• Core mechanical overhauls drive buyer confidence. Investing in new electrical, plumbing, HVAC, and roofing systems removes major inspection hurdles and speeds up retail closing times.
• Escrow funding protects operational cash flow. Financing 100% of construction costs allows active investors to maintain liquid reserves across multiple simultaneous projects.

Need fast capital for an auction purchase or fix and flip in Philadelphia? Submit your property address at hardmoneyhenry.com/apply for a 24-hour commitment letter.