Detached Accessory Dwelling Unit (ADU) Construction & Main-Floor Structural Opening Fix & Flip

The Investor Scenario & Opportunity

An experienced luxury home renovator contracted a single-family split-level property on an expansive lot in Rockville, Maryland. Situated in Montgomery County near Rockville Town Square and the Rockville Metro station, the location provides prime suburban access to major employer corridors along Interstate 270 and Downtown Washington, DC.

The acquisition was sourced through a corporate fund disposition. A regional housing fund decided to liquidate its non-core single-family holdings across suburban Maryland to reallocate capital into commercial multi-family assets. The corporate seller mandated a non-contingent cash settlement within six business days to meet end-of-quarter fund closing targets. The investor negotiated an off-market purchase price of $750,000 in as-is condition. Fully renovated luxury suburban residences in surrounding Rockville neighborhoods featuring separate guest accommodations or detached accessory dwelling units were commanding valuations near $1,550,000.

The Strategy & Capital Requirement

The primary challenge was rapid capital deployment combined with liquidity preservation across active job sites. The corporate disposition contract carried a strict six business day settlement window, with non-performance resulting in contract cancellation and liquidated damages.

At the same time, the investor had substantial capital committed across two active luxury renovation projects in Bethesda and Potomac. To preserve necessary liquid cash reserves for trade contractor payroll and long-lead material deposits on those active job sites, the borrower required a direct lending partner capable of funding 90% of the purchase price and 100% of the construction draw budget.

The Henry Solution (Loan Mechanics & Underwriting)

Hard Money Henry underwrote the loan using direct real estate equity and local sub-market sales comparables. Our internal underwriting team evaluated recent high-end Rockville single-family sales within 24 hours, completely waiving traditional third-party appraisal requirements.

We issued a firm commitment letter and structured a $1,003,550 total loan facility, financing 90% of the purchase price ($675,000) and 100% of the construction scope ($328,550). Construction funds were held in escrow and released across four structured draw inspections as work milestones were verified. The transaction funded and closed in five business days.

The Financial Win & Outcome

The developer completed a 120-day comprehensive renovation program. The core value-add strategy focused on constructing a new detached Accessory Dwelling Unit (ADU) above a detached garage and reconfiguring the main house floor plan. The investor allocated $160,000 of the $328,550 budget to build a fully permitted 600-square-foot detached ADU equipped with a kitchen, full bath, and private entrance. Another $85,000 was dedicated to removing load-bearing interior walls and installing structural steel beams in the main residence to create an open-concept living area.

The remaining $83,550 funded a luxury kitchen upgrade with waterfall quartz counters, custom bathrooms, new HVAC units, architectural roofing, and professionally landscaped grounds. Delivering a dual-living setup attracted multi-generational home buyers, resulting in a full-price purchase contract within nine days of listing.

• Purchase Price: $750,000
• Rehab Budget: $328,550 (Detached ADU construction, structural steel wall opening, full interior modernization)
• Financing & Holding Costs: $65,000
• Selling Costs (6%): $93,000
• Total Cost Basis & Expenses: $1,236,550
• Final Sale Price: $1,550,000
• Net Profit: $313,450

Key Takeaways for Local Investors

• Detached ADUs unlock significant equity. Adding compliant detached guest suites or accessory dwelling units maximizes lot utility and attracts premium multi-generational buyers in Montgomery County.
• Corporate fund liquidations require guaranteed closing speed. Partnering with a direct balance-sheet lender who guarantees settlement in five business days allows investors to capture discounted institutional dispositions.
• 100% construction debt maintains corporate liquidity. Structuring loans to cover total renovation draws keeps working capital available for concurrent luxury developments.

Planning a single-family fix and flip or ADU construction project in Rockville or Montgomery County? Submit your property address at hardmoneyhenry.com/apply for a 24-hour commitment letter.