Washington’s rowhouses are the heart of its renovation market. Most were built between the 1880s and the 1940s, and many still have their original layouts, wiring and plumbing. A full renovation, often with a finished basement, can add a great deal of value. The financing has to cover the purchase, the whole renovation, and a timeline that includes DC permits and, in many neighborhoods, historic review.
How the loan is sized
A fix and flip loan combines a share of the purchase price with the renovation budget, and the total is capped at a share of the after-repair value (ARV).
| Purchase price | $520,000 |
| Rehab budget | $160,000 |
| After-repair value | $930,000 |
| 90% of purchase | $468,000 |
| 100% of rehab | $160,000 |
| Loan | $628,000 |
| 75% of ARV ceiling | $697,500 |
| Cash to close, before costs | $52,000 |
The rehab money is not paid at closing. It is held back and released in draws as each stage of work is inspected and completed, so you or your contractor need enough cash to start each stage.
Costs that are specific to DC
- Recordation tax when you buy. DC’s recordation tax is 1.1% of the price under $400,000 and 1.45% at $400,000 or more, and buyers customarily pay it.
- Transfer tax when you sell. The transfer tax uses the same rates, and sellers customarily pay it. On a flip you pay both, at different ends of the deal.
- The vacant property tax. A property unoccupied for 90 days or more must be registered with the Department of Buildings and can be taxed at $5.00 per $100 instead of $0.85. A property under construction with permits issued in the last 12 months can qualify for an exemption, but you have to apply.
Permits and historic review
Structural, electrical, plumbing and mechanical work needs a Department of Buildings permit, and larger jobs go through plan review. Much of central DC lies in historic districts, including Capitol Hill, Georgetown, Shaw, Logan Circle, Mount Pleasant and LeDroit Park, where exterior changes also need historic preservation review.
- Ask your architect or contractor for a realistic permit estimate before you make an offer.
- Choose a loan term that covers the permit wait and the construction. Our flip loans run 6 to 24 months.
- Carry the monthly interest for the whole period in your numbers.
What old rowhouses hide
- Rear walls and party walls. Bowing rear brick walls, failing mortar and shared walls with neighbors are common, and repairs can need structural engineering.
- Lead paint. Nearly every rowhouse predates 1978. Plan for lead-safe work practices and testing.
- Old wiring and plumbing. Knob-and-tube wiring, undersized electrical service and galvanized or cast-iron pipes are frequent replacements.
- Basements. Finishing or underpinning a basement adds space and value, but water management and ceiling height drive the cost.
The exit
Most flips end in a sale to an owner-occupant, so your after-repair value should come from recent sales of renovated rowhouses nearby. If the market slows, a DSCR rental loan can replace the flip loan and turn the house into a long-term rental, with a cash-out refinance at up to 80% loan-to-value.
Common questions
With a 720+ credit score, roughly 10% of the purchase price plus closing costs, DC’s recordation tax and reserves to carry the loan, since we can finance up to 90% of the purchase and 100% of the rehab within 75% of the after-repair value.
No. First-time investors can qualify. Investors with 5 or more flips in the past 2 years can close without an inspection or appraisal.
No. You can pay the loan off the day you sell.
See full terms on the fix and flip loans page, or get pre-qualified.