Use DD-WRT to Join two wireless networks using a wireless link in Repeater mode

So me and my neighbour wanted to share a network, we both have existing separate wireless networks with multiple devices configured to use our networks. The most straightforward way to do that is to run a cable between our apartments (drill a couple of walls, get a long cable and run it from his router to mine, configure my router to work as an access point only with DHCP disabled) but because we were too lazy to do that, we decided to do this wirelessly.

I did some research, and I stumbled upon DD-WRT. DD-WRT is an open source linux based firmware for wireless routers. Although it is an open source project, it became so popular and so powerful that router companies like Buffalo manufactured and shipped routers that runs DD-WRT out of the box.

DD-WRT has plenty of features that I wanted to use, like having OpenVPN server and client, advanced DDNS capabilities, static NAT, and advanced repeater capabilities which exactly what I need.

Here is what I needed to do:

Pick a router that can run DD-WRT: I ended up picking LinSys E1200v2 http://amzn.com/B00AAU54TW. The router is cheap (20$), fully supports DD-WRT, and it has a nice wireless range. Edit: I take the "Fully supports DD-WRT" part back, it does support it fully on paper, but DD-WRT builds vary, some builds are stable enough to run everything perfectly, and some other builds will make your wireless network like a bird in a storm! For me build 25974 worked perfectly. 

Install DD-WRT on the router: I followed the instructions in the official DD-WRT wiki and install the same initial build, and it worked like a charm http://www.dd-wrt.com/wiki/index.php/Linksys_E1200v2. After I was done with the instructions I flashed this bigger more stable build 
ftp://ftp.dd-wrt.com/betas/2015/01-20-2015-r25974/broadcom_K26/dd-wrt.v24-25974_NEWD-2_K2.6_big-nv64k.bin. 
Important: when flashing dd-wrt builds, DO NOT SELECT TO RESET SETTINGS WHILE FLASHING. THIS WILL STOP THE ETHERNET PORTS FROM RUNNING. 

Configure the router: This is the fun part, DD-WRT has two different repeater modes: 

• Repeater bridged mode: repeats a wireless signal of a primary router while bridging the two networks together. This mode must disable DHCP on the secondary router and use DHCP only on the primary router. Basically making the two networks a single network with a Wifi signal booster installed on the network. In this mode devices on the primary network and devices on the secondary network can access each other directly. 
• Repeater mode: repeats a wireless signal of a primary router while keeping DHCP on the secondary router working and assigning IPs to its devices. In this mode the secondary router acts as a node in the primary router's network and uses NAT to bridge devices connected to it. In this mode devices on the secondary network can access devices on the primary networks directly, while devices on the primary network can only access devices on the secondary networks using port forwarding, and this is OK in my case so I picked this mode. 

Edit: Unfortunately after using DD-WRT for about 2 months. I have encountered instability issues, the router would unexpectedly disconnect all wireless clients and hang. I had to restart it to be able to connect again, this happend like twice daily. I ended up switching to Shibby Tomato, and it has been solid for almost a week now. I will write a follow up blog on Tomato.