Third-Story Pop-Top Extension & Detached Carriage House Conversion Fix & Flip

The Investor Scenario & Opportunity

An experienced luxury residential developer secured an off-market contract for a three-story historic brick townhouse in the Dupont Circle neighborhood of Washington, DC. Located near Connecticut Avenue and Dupont Circle Park, the location represents one of the most resilient real estate markets in the District, supported by high-income professionals, diplomats, and executive buyers.

The transaction originated from a strict 1031 exchange replacement deadline. An out-of-state investment group required an immediate, non-contingent direct sale to complete a tax-deferred exchange within federal regulatory timelines. The developer negotiated an as-is purchase price of $1,000,000. Fully renovated historic townhouses in Dupont Circle featuring structural pop-top extensions and detached carriage house spaces were commanding resale prices near $2,100,000.

The Strategy & Capital Requirement

The core requirement was execution speed combined with balance sheet liquidity management. The seller established a strict seven business day settlement window to satisfy 1031 exchange statutory deadlines, with any financing delay causing contract cancellation.

At the same time, the developer was actively managing a luxury multi-unit project in Georgetown. Tying up liquid reserves in this acquisition would have constrained cash reserves required for trade deposits and material orders on the active site. The sponsor required a direct capital partner capable of closing in five business days while funding 90% of the purchase price and 100% of the heavy renovation scope.

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 team completed an in-house evaluation of recent Dupont Circle historic sales within 24 hours, waiving traditional third-party appraisal requirements.

We issued a firm commitment letter and structured a $1,350,000 total loan facility. This financed 90% of the purchase price ($900,000) and 100% of the construction budget ($450,000). Construction funds were escrowed and released across five milestone draw inspections as structural phases were completed. The loan funded and closed in five business days.

The Financial Win & Outcome

The developer executed a four-month heavy renovation program. The primary value-add strategy focused on constructing a third-story pop-top structural extension and converting a detached rear brick carriage house. The investor allocated $180,000 of the $450,000 budget to install structural steel framing and build a fourth-level primary penthouse suite with a private terrace. Another $120,000 was dedicated to fully renovating the detached carriage house into a conditioned home office and studio space.

The remaining $150,000 funded a gourmet chef kitchen, custom marble bathrooms, complete HVAC replacement, and historical facade masonry restoration. Adding vertical living space and a functional carriage house generated competing offers above list price within four days of listing.

• Purchase Price: $1,000,000
• Rehab Budget: $450,000 (Third-story pop-top extension, carriage house conversion, full interior renovation)
• Financing & Holding Costs: $80,000
• Selling Costs (6%): $126,000
• Total Cost Basis & Expenses: $1,656,000
• Final Sale Price: $2,100,000
• Net Profit: $444,000

Key Takeaways for Local Investors

• Pop-top extensions maximize high-value urban density. Adding vertical square footage and rooftop terraces in historic sub-markets unlocks premium resale valuations.
• 1031 exchange transactions demand guaranteed speed. Partnering with a direct lender who guarantees closing in five business days allows investors to win high-end off-market properties under tight statutory deadlines.
• 100% construction debt protects corporate liquidity. Structuring financing to cover total renovation draws maintains working capital reserves across concurrent luxury developments.

Planning a luxury townhouse fix and flip or pop-top expansion in Washington, DC? Submit your property address at hardmoneyhenry.com/apply for a 24-hour commitment letter.