Deal snapshot
| Location | Petworth, Washington, DC |
| Property type | 1922 Petworth rowhome (two-unit after CO) |
| Loan type | Hard money bridge → DC DSCR hold |
| Loan amount | $550,000 bridge (88% LTC) |
| Close time | 11 business days |
Investor challenge
12-day estate timeline on a Petworth rowhome with unpermitted English basement, open DOB violations, and TOPA exposure. Conventional lenders would not fund until compliance cure — sponsor needed 88% LTC bridge with draws tied to DOB sign-offs, not cosmetic photos alone.
Jaken’s solution
88% LTC at 11.25% IO with 14-month term and milestone draws aligned to TOPA clearance, basement CO path, and Historic Preservation facade approval. Compliance spend (~$48,500) was modeled before cosmetic ARV.
Outcome
Flip at $925K ARV would have netted ~$9K after carry — sponsor executed Plan B: legal two-unit at $4,800/mo gross, DSCR refi at 68% LTV for long-term hold with RLTO-modeled expenses.
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Acquisition
Purchase: $625,000 · Day 11 close
Hard money: 88% LTC · 11.25% IO · 14-month term
Compliance spend
| Item | Cost |
|---|---|
| TOPA counsel | $4,500 |
| DOB violations | $18,200 |
| Basement CO path | $22,000 |
| HP facade consultant | $3,800 |
Hold exit (executed)
- Gross rent: $4,800/mo (legal two-unit)
- Appraisal: $895,000
- DSCR refi: 68% LTV → $608,600 @ 8.45%
Why Plan B (hold) beat the flip in DC
This deal is a lesson in regulatory carry. A Petworth rowhome with an unpermitted English basement, open DOB violations, and TOPA exposure can’t be flipped on a cosmetic timeline — the value is locked behind compliance. The bridge was built for that reality: an unusually long 14-month term with draws tied to DOB sign-offs, the basement CO path, and Historic Preservation facade approval, not just before/after photos. Without that calendar, the ~$48,500 compliance spend would have forced a distressed sale.
When the work was done, the exit math chose itself. A flip at $925K ARV netted only ~$9K after carry and DC’s heavy transaction friction. The legal two-unit configuration rented at $4,800/mo, which supported a DSCR refi at a conservative 68% LTV — converting a marginal flip into a long-term hold with equity and cash flow, expenses modeled to RLTO.
Takeaway for DC investors: price TOPA, DOB, and HP into carry before you offer, and keep the hold exit live — in high-friction markets the rental often beats the resale.
Related
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