We financed both the bridge and the DSCR refi on this DC townhouse BRRRR. Start-to-refi was 11 months. Here is every number from purchase through long-term refi, with full honesty about what went right and what did not.
The Property
Townhouse in Petworth, 3 stories, 1,580 sqft, 4 bed / 2 bath. Purchased from a tired landlord who was done with management. Needed full renovation — dated kitchen, single bath that needed expansion to master en-suite, old systems throughout.
The Plan
- Purchase: $385,000
- Rehab: $85,000 budget
- ARV estimate: $565,000
- Projected rent: $3,500/month
- Exit: DSCR cash-out refi, pull out all rehab capital, hold long-term
The Bridge Loan
| Loan Term | Amount |
|---|---|
| Purchase price | $385,000 |
| Purchase loan (85% LTC) | $327,250 |
| Rehab holdback | $85,000 (in draws) |
| Total loan | $412,250 |
| Rate | 9.75% IO |
| Term | 18 months |
| Origination points | 2.0 |
| Cash to close | $75,500 |
The Rehab (Months 1–6)
Budget: $85,000. Actual: $94,200 ($9,200 over, covered by contingency). Major items:
- New electrical panel + rewiring major circuits: $11,500
- New HVAC (replaced failing dual-zone): $9,200
- Kitchen (cabinets, quartz, appliances, tile): $17,800
- Bath expansion + new bath: $15,200
- Flooring throughout (LVP down, carpet up): $8,900
- Paint, drywall, trim: $12,400
- Plumbing (including a surprise cast-iron stack): $11,600
- Roof patch + gutters: $3,800
- Misc/punch: $3,800
Lease-Up (Months 7–8)
Listed at $3,650/month. Leased at $3,525 after two weeks of showings. Tenant signed a 14-month lease. Two months of vacancy during lease-up cost $0 income, carried $2,850/month bridge loan interest.
The DSCR Refi (Month 11)
Appraisal came in at $572,000 — slightly above the $565K ARV estimate.
| Refi Term | Amount |
|---|---|
| Appraised value | $572,000 |
| New loan (75% LTV cash-out) | $429,000 |
| Rate (7.5% 30-yr fixed) | 7.50% |
| Monthly P&I | $3,000 |
| DSCR @ $3,525 rent | 1.17 |
DSCR came in tight at 1.17 (target was 1.25). We adjusted to a 70% LTV loan to hit 1.25 DSCR:
- New loan: $400,400
- Monthly P&I: $2,800
- DSCR: 1.25
- Cash out after paying off bridge + closing: $8,800
Full Deal Accounting
| Item | Amount |
|---|---|
| Initial cash invested | $75,500 |
| Rehab overage (out of pocket) | $9,200 |
| Bridge interest + points (11 mo) | $47,100 |
| Holding (taxes, insurance, util) | $9,800 |
| Refi closing costs | $11,200 |
| Rent collected (4 months) | $14,100 |
| Cash from refi | $8,800 |
| Net cash invested after refi | $129,900 |
Ongoing Cash Flow
- Rent: $3,525
- P&I: $2,800
- Taxes, insurance, reserves: $700
- Net monthly: $25
Cash flow is thin. That is DC. But the equity play is real: $172K of equity at 70% LTV in a gentrifying neighborhood, with a tenant paying down the principal and likely 3–5% annual rent growth.
What Went Right
- Appraisal hit at projected ARV
- Kitchen and bath work photographed beautifully for listing
- Got through rehab in 6 months vs. 7-month projection
What Went Wrong
- Cast-iron plumbing stack was an expensive surprise
- DSCR came in tight, forcing lower LTV than planned
- Lease-up took 2 weeks longer than expected
Lessons
Project DSCR at 1.25 minimum when underwriting a BRRRR — not the 1.0 or 1.1 minimum. If you underwrite to the tight edge, a soft appraisal or slightly lower rent can force a smaller refi and more cash left in the deal.
DC BRRRRs are equity plays, not cash flow plays. If you are picking a market for day-one cash flow, DC is not it. If you are picking a market for 10-year appreciation in a supply-constrained city, it is one of the best in the country.
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