Basement Suite Buildout & Open-Concept Layout Fix & Flip

The Investor Scenario & Opportunity

An active urban developer contracted an off-market two-story brick rowhouse in the Deanwood neighborhood of Northeast Washington, DC. Situated near Kenilworth Avenue and the Deanwood Metro station, Deanwood provides direct transit connectivity into Downtown Washington, DC and Capitol Hill, driving consistent demand from government personnel, healthcare workers, and young professionals.

The acquisition stemmed from a complex pre-foreclosure tax lien workout. The property owner accumulated multiple years of delinquent municipal property taxes and tax certificates, triggering a court tax sale notice. To prevent losing all equity at auction, the seller agreed to an off-market cash sale price of $300,000 in as-is condition. Fully renovated rowhouses on surrounding streets featuring finished basement suites and open main floor plans were selling consistently near $640,000.

The Strategy & Capital Requirement

The primary challenge was settlement speed combined with cash flow management across concurrent active job sites. The tax sale enforcement timeline required a strict six business day closing window to satisfy municipal liens and clear title before public auction.

In addition, the investor had capital committed across an active rowhouse renovation project in nearby Petworth. To maintain adequate liquidity for trade contractor payroll and material deposits on that active job site, the borrower required a direct loan facility that financed 90% of the purchase price and 100% of the construction scope.

The Henry Solution (Loan Mechanics & Underwriting)

Hard Money Henry underwrote the transaction using direct real estate equity and local sub-market sales comparables. Our internal underwriting team evaluated recent Northeast DC rowhouse sales within 24 hours, bypassing institutional appraisal delays.

We issued a firm commitment letter and structured a $414,700 total loan facility, financing 90% of the purchase price ($270,000) and 100% of the construction scope ($144,700). Construction capital was held in escrow and disbursed across four structured draw disbursements as work milestones were inspected and verified. The transaction funded and closed in five business days.

The Financial Win & Outcome

The developer completed an 80-day comprehensive renovation program. The primary value-add strategy focused on converting an unfinished lower level into an independent basement suite and opening the main-floor layout. The investor allocated $62,000 of the $144,700 budget to install interior subgrade waterproofing, dig out lower-level headroom, frame drywall, and build a basement suite complete with a rear egress door, wet bar, and full bathroom. Another $45,000 was dedicated to removing main-floor partition walls and installing structural support beams to create an open living and dining area.

The remaining $37,700 funded a luxury kitchen overhaul with quartz countertops, custom upper-level bathrooms, refinished hardwood flooring, new HVAC systems, and fresh interior paint. Delivering additional lower-level living space generated immediate buyer competition, resulting in a full-price purchase contract within five days of market release.

• Purchase Price: $300,000
• Rehab Budget: $144,700 (Basement suite buildout, subgrade waterproofing, structural wall removal, luxury finishes)
• Financing & Holding Costs: $25,000
• Selling Costs (6%): $38,400
• Total Cost Basis & Expenses: $508,100
• Final Sale Price: $640,000
• Net Profit: $131,900

Key Takeaways for Local Investors

• Basement conversions yield significant equity gains. Lower-level suite conversions add high-value square footage and flexible living arrangements that attract high-end urban buyers.
• Tax lien workouts demand guaranteed closing speed. Partnering with a direct balance-sheet lender who guarantees settlement in five business days allows developers to cure delinquent tax judgments before public foreclosure auctions.
• 100% construction debt maintains portfolio liquidity. Structuring loan packages to cover total renovation draws preserves investor capital for concurrent active developments.

Planning a single-family fix and flip or rowhouse renovation in Washington, DC or the surrounding metro area? Submit your property address at hardmoneyhenry.com/apply for a 24-hour commitment letter.