How to Buy, Renovate, Rent, and Occupy a Home in Under Six Months

• October 7th 2011

by Sarah Godfrey

After living in a Mount Pleasant group house for about a year, economist Adrian Dungan decided that, if done right, he could own and live in a home and also rent it out.

Before this scenario could become a reality for Dungan, he needed to actually own a home. So, late last year he and his girlfriend, Nicole Aga, began looking for a place.

They had a few basic requirements:

• The property needed to be east of 13th Street NW (Aga is a French teacher and commutes to a school in Maryland each day);
• It needed to have off-street parking;
• It needed a basement apartment that the couple could live in, since they planned on renting the main part of the home.

Last November, they came across 1012 Park Road NW (map), a five-bedroom, 3.5-bathroom row house that had two out of the three above requirements covered. However, Dungan was a little hesitant as the home wasn’t in the best shape, and the basement was unfinished, which meant that a lower-level unit would need to be built from scratch.

Nevertheless, he and Aga closed on the house on January 20, 2011 for $585,000. A long-term housesitting gig had allowed Dungan and Aga to sock away cash. Coupled with an FHA loan and low interest rates, the couple was able to get a lot of house for their money. “We bit off as much as we could chew with the investment,” Dungan says.

The first mortgage payment was due a little over a month after the couple closed, so their primary focus was getting the upper levels in better condition, so that they could rent them out and avoid carrying the entire mortgage.

Armed with online home improvement research and a ton of Home Depot supplies, Dungan spent the last part of January and all of February furiously working on the house. The to-do list was pretty long. Dungan had to, among other things, fix roof leaks, caulk walls and window seams, repair bits of the hardwood floor, the ornamental fireplaces and mantles, replace outlets and light switches, and then make everything pretty by patching, painting, adding trim, hanging mirrors, and installing storage shelving.

“Those six weeks were pretty hectic,” he says. “I’d work at my office from 7:30 to 5:30, get home around 6, 6:30, and then work on the house until 1:30, 2:30 a.m. Every day I’d go to work and say to myself, ‘OK just make it through lunch and you can go home sick and get some rest.’ But, I’d make it through lunch and it wouldn’t be that bad, and somehow I made it through, day after day.”

The work was not only exhausting but, at times, creepy.

“I’d work until super late, and then spend the night,” he says. “Being in a big empty row house by yourself can be a little scary. With every noise, [you’re wondering] if someone just walked in.”

After the upstairs was ready to be rented out, Dungan turned his attention to the basement. Although readying the upper levels for tenants was no easy task, it was nothing compared to the process of turning an unfinished basement into a livable apartment.

With the help of a family friend — who offered more knowledge than actual hands-on labor — and a single contractor, Dungan got to work again. He basically built a one bedroom apartment from nothing: Putting up drywall to make rooms, evening out the floor and tilling it, installing and framing doors, and putting in a brand new kitchen. The only break Dungan got was from the pre-existing plumbing, which made building a full bathroom easier. However, even some of the things done strictly to improve the aesthetics of the basement ended up being complicated and time consuming.

For example, Dungan applied a stripping solution to remove paint from the bricks, scraped at it with a metal brush “for hours,” repeated that process, and then sanded and regrouted the bricks. He says the small patch of brick behind his living room sofa took “12 to 16 hours,” to strip and beautify.

“I am personally in touch with every single brick,” Dungan says, laughing. “I have a relationship with each one.”

Dungan worked alongside the contractor, which meant he learned a lot and saved money. However, the contractor was a little ambitious when it came to what could be accomplished.

“I’d ask him if we could do certain things, and he’d just say, ‘Anything is possible!’” Dungan says. “And then, when we started doing it, and ran into problems, it became clear that everything was not possible.” During the stripping of the brick, for instance, the acid solution wasn’t diluted properly, which oxidized some of the exposed fixtures and anything else metal in the apartment, including part of a new stainless steel fridge.

The couple spent approximately $35,195 fixing up the place; of that, $12,525 was labor and the remaining $22,670 was for materials and other associated costs, such as renting a truck to haul stuff to the dump. Still, the final costs were in line with what the couple anticipated, and they were able to move into the basement — with its new kitchen, Spanish tile floors, and refinished exposed brick — in June.

While all the backbreaking physical work was going on, Dungan was also conducting a tenant search. He knew his friend Coleman Hall was a lock for one of the bedrooms, but he needed four more people. In a scenario that could only be described as kismet, he ended up snagging the remaining tenants as a package deal when four of his friends, who were living together in a group house, were told they had to move because the owner was planning to sell.

After offering them some perks (including furniture and lease flexibility), and ensuring that the landlord/tenant relationship wouldn’t ruin their friendships, the foursome decided to move in.

Despite the long hours and hard work, Dungan, with tons of support from his family, friends, and, of course, Aga, had achieved what he set out to do. In under six months, he had purchased a home, fixed it up, turned the basement into an apartment, rented the upper levels, and moved in. He wouldn’t disclose his monthly mortgage payment or the rent that he is charging, but confirmed that he was “cash-flow positive” or in other words the rent being charged was covering the mortgage.

Jumping into the project would’ve been a huge leap for anyone, but it was especially a big deal for Dungan, who planned on doing the vast majority of the repair and renovation work himself, even though he had no formal experience.

“Obsession drove me through this,” he says. “Along the way people were watching with wary eyes, but it worked out well in the end.” In addition to the hard work, Dungan knows that a number of things aligned perfectly in order for the couple to pull the project off without any major setbacks.

So, would they do it again? Possibly. Dungan is now interested in finding a foreclosure to renovate.

Note: UrbanTurf’s CMS is a little bit on the fritz (for some reason it has us on a Europe time zone), which may explain why the time stamps for articles and comments are so off.

This article originally published at https://dc.urbanturf.com/articles/blog/how_to_buy_renovate_rent_and_occupy_a_home_in_under_six_months/4243.