Deal snapshot
| Location | Columbia Heights, Washington, DC |
| Property type | 20010 rowhouse (legal two-unit — upper + main, no basement conversion) |
| Loan type | Hard money bridge → DC DSCR hold |
| Loan amount | $503,250 bridge (85% LTC) |
| Close time | 10 business days |
Investor challenge
A repeat DC sponsor targeted a 14th Street corridor rowhouse — legal upper + main configuration (no basement conversion), one unit vacant, dated systems. Banks wanted seasoning on purchase price before lending against renovated value. Compared to Kenyon Street basement legalization plays (heavier scope on the Columbia Heights hard money page), this file prioritized faster stabilization over maximum unit count.
Jaken Finance Group’s solution
85% LTC at 10.75% IO with 12-month term and milestone draws aligned to panel upgrade, kitchen/bath completions, and two-unit CO. TOPA did not apply — both sides vacant at closing. 2%+ recordation tax modeled in carry before term sheet.
Outcome
Stabilized gross rent: $3,900/mo ($2,250 upper + $1,650 main)
Appraised value at refi: $685,000
DSCR refi: 74% LTV → $506,900 @ 8.50% — recovering acquisition equity and ~$48,000 of rehab capital
DC hub: investment property financing Washington DC · DSCR Washington DC
Acquisition
Purchase: $498,000 · Day 10 close
Hard money: 85% LTC · 10.75% IO · 12-month term
Rehab scope
| Item | Cost |
|---|---|
| Upper + main kitchen/bath gut | $42,000 |
| Electrical panel + HVAC service | $24,000 |
| Hardwood refinish + paint | $14,000 |
| DOB violation cure (minor) | $11,500 |
Total rehab: $91,500 · All-in: $589,500
Hold exit (executed)
- Gross rent: $3,900/mo
- Appraisal: $685,000
- DSCR refi: 74% LTV → $506,900 @ 8.50%
- DSCR ratio: ~1.13 at RLTO-modeled opex
Why upper/main beat basement legalization here
Basement conversion adds $72K–$95K and 4–6 months — right for Petworth thesis, wrong when 14th Street upper/main comps already support ratio at $589.5K all-in. Takeaway: match Columbia Heights scope to legal configuration at acquisition, not every rowhouse needs an English basement.
14th Street vs Kenyon — why this file was faster
The sponsor passed on a Kenyon Street row with illegal basement at $565K — modeled $175K legalization scope and 8-month DOB path on the Columbia Heights hard money page. The 14th Street upper/main file traded $67K higher acquisition for $83.5K lower rehab and 4 fewer months to stabilization:
| File | Acquisition | Rehab | Months to refi | Gross at refi |
|---|---|---|---|---|
| Kenyon basement play | $565,000 | $175,000 | ~14 | $4,600/mo |
| 14th St upper/main (this deal) | $498,000 | $91,500 | ~9 | $3,900/mo |
Permanent-debt exit was the goal — time to ratio beat maximum unit count.
Project timeline
| Milestone | Week |
|---|---|
| Hard money close | Week 1 |
| Panel + rough electrical sign-off | Week 4 |
| Upper + main kitchens complete | Week 12 |
| Two-unit CO issued | Week 22 |
| Both units leased | Week 24 |
| DSCR refi closed | Week 28 |
Draw releases tracked DOB rough and final — no cosmetic draws without inspection photos.
Recordation and refi friction
DC recordation on acquisition added ~$11,000 to carry. Cash-out refi at 74% LTV triggered second recordation ~$5,600 — modeled in hold pro forma before LOI. Sponsors who underwrite flip ARV only miss ~$16K–$18K combined friction on $685K assets.
What would have killed this file
- Basement conversion scope added mid-project — would have blown 12-month hard money term
- 1007 using Petworth basement rents on upper/main configuration
- Occupied upper at closing — TOPA would have added 60–90 days before full rent roll counted
Operator lessons
Comp discipline: Appraisal pulled three renovated two-unit rows on 14th Street between Irving and Monroe — not DC metro DSCR Capitol Hill premiums or Park View basement comps. Lease file: Both units on 12-month terms matching 1007 — no month-to-month at refi. Entity: LLC vesting completed before appraisal order — DC refi files delay when vesting docs arrive late.
Insurance bind: Landlord policy quoted $2,400/yr higher than sponsor pro forma on 1900s row — underwriter accepted bound quote; budget +15% on vintage DC stock at LOI.
Permanent debt vs sale after rehab
Modeled $725K flip on $589.5K all-in netted ~$18K after 2%+ recordation, commission, and 9-month carry — sponsor chose $506.9K refi to retain $3,900/mo gross and extract ~$48K rehab equity. DC row sponsors often undervalue hold when flip ARV looks attractive on paper but recordation twice erodes net. Hard money term was 12 months with one 60-day extension unused — scope matched legal configuration at acquisition. Both units on 12-month leases at refi — no month-to-month that would trigger RLTO renewal risk in year two of hold. DOB violation cure ($11,500 line) closed before kitchen rough — sequencing compliance before finish is standard on 20010 acquisition files.
Columbia Heights Two-Unit DC Case Study — Hard Money to DSCR: replay checklist
Case studies illustrate one closed file — not a guarantee of future terms. Before you mirror the structure:
| Step | Action |
|---|---|
| Comps | Three solds within 0.5 mi on matching bed/bath and product type |
| Carry | Model 8.99%–13.5% IO bridge and 5.75%–10.5% DSCR exit with investor tax and insurance |
| Entity | LLC vesting, operating agreement, and EIN aligned before appraisal |
| Exit | Written takeout path — DSCR refi, sale, or wholesale — before increasing rehab scope |
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Related
- Hard money loans Columbia Heights
- Petworth DC case study — basement legalization contrast
- DC BRRRR strategy
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