My First Deal in St. Louis Missouri

[David Ounanian]

Investment Info:

Single-family residence fix & flip investment in St. Louis.

This was an absolute nightmare! After listening to hundreds of bigger pockets podcasts and researching enough about real estate investing to be dangerous I finally pulled the trigger and purchased my first investment deal.

What made you interested in investing in this type of deal?

I was originally interested in using the BRRRR method so that I could scale and build passive cash flow to build long term wealth. But on this deal the rehab costs went way way over budget and I had to resort to trying to sell the property in order to cut my losses.

How did you find this deal and how did you negotiate it?

I found this deal on craigslist. It was listed by a wholesaler. I later found out after I closed that it had been wholesaled to the wholesaler so my margins were already thin to being with. I negotiated a purchase price of $45,000. ARV of the property was $96,000 which is what I sold it for 6 months later.

How did you finance this deal?

I used my own personal cash savings which later turned out to be a horrible idea. Because so many things went wrong with this property I was down to my last few dollars before this deal finally sold. Had one more thing went wrong I would've had no way to pay for it and it was incredibly stressful. For my future deals I always use OPM (Other People's Money)! This allows me to have my personal cash savings as an emergency fund incase something happens and I need it.

How did you add value to the deal?

This property needed a complete rehab. It was a 50 year old home that had mostly original construction inside and out. The plan was to update it, rent it out, refinance it and repeat the process (the BRRRR method). The wholesaler told me the estimated rehab costs were $20,000. To be safe I estimated about $25,000. The problem was that the actual costs to fix up the property ended up being around $50,000.

What was the outcome?

The outcome was not what I had expected. I had to change exit strategies to cut my losses and sell. When I purchased the property it was vacant and the utilities were off. I had my home inspector inspect the property but with the power, water and gas shut off there wasn't too much he would've been able to uncover. This I didn't realize until it was too late. Every problem you can think of came up in this house from foundation problems to electrical and plumbing it all had to go.

Lessons learned? Challenges?

Looking back on my first deal I got a PhD in real estate investing. I lost around $5000. Which at the time felt absolutely terrible, I remember the day I found out about the foundation problems I literally wept at the property thinking I was a total failure. But now the money lost seems like a bargain for the education gained. Since this deal I was able to push forward to acquire over a dozen BRRRR rental properties enabling me to escaping my corporate job.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

The biggest mistake I made on this deal was not getting any help. I thought I could do everything myself. That's why I became focused as a real estate agent to help others succeed. I created My Agent Investor to give people access to investor friendly agents that can help them avoid all of the mistakes that I made on my first deal. We have a team of agents that can help you with everything from figuring out cash flow on rentals, estimating repairs, to negotiating great on or off market deals.

[Kevin Hunter]

@David Ounanian, congrats on your first flip.  Although it didnt go as you thought it would, it still sounds like a successful education and opportunity.  Thanks also for being so honest.  A lot of people on here would not talk about losing money or the things that went wrong so kudos to you!!

Good luck on your next deal....

[Rumi Velazquez]

@David Ounanian. Thanks for sharing! It’s inspiring to read that you were able to push through and use the learnings to become successful. I also purchased my first duplex in St. Louis earlier this year and had lots of good learnings. I hear it’s hard to come by good contractors. Wishing you much success!

[Alex Olson]

Originally posted by @David Ounanian:

Investment Info:

Single-family residence fix & flip investment in St. Louis.

This was an absolute nightmare! After listening to hundreds of bigger pockets podcasts and researching enough about real estate investing to be dangerous I finally pulled the trigger and purchased my first investment deal.

What made you interested in investing in this type of deal?

I was originally interested in using the BRRRR method so that I could scale and build passive cash flow to build long term wealth. But on this deal the rehab costs went way way over budget and I had to resort to trying to sell the property in order to cut my losses.

How did you find this deal and how did you negotiate it?

I found this deal on craigslist. It was listed by a wholesaler. I later found out after I closed that it had been wholesaled to the wholesaler so my margins were already thin to being with. I negotiated a purchase price of $45,000. ARV of the property was $96,000 which is what I sold it for 6 months later.

How did you finance this deal?

I used my own personal cash savings which later turned out to be a horrible idea. Because so many things went wrong with this property I was down to my last few dollars before this deal finally sold. Had one more thing went wrong I would've had no way to pay for it and it was incredibly stressful. For my future deals I always use OPM (Other People's Money)! This allows me to have my personal cash savings as an emergency fund incase something happens and I need it.

How did you add value to the deal?

This property needed a complete rehab. It was a 50 year old home that had mostly original construction inside and out. The plan was to update it, rent it out, refinance it and repeat the process (the BRRRR method). The wholesaler told me the estimated rehab costs were $20,000. To be safe I estimated about $25,000. The problem was that the actual costs to fix up the property ended up being around $50,000.

What was the outcome?

The outcome was not what I had expected. I had to change exit strategies to cut my losses and sell. When I purchased the property it was vacant and the utilities were off. I had my home inspector inspect the property but with the power, water and gas shut off there wasn't too much he would've been able to uncover. This I didn't realize until it was too late. Every problem you can think of came up in this house from foundation problems to electrical and plumbing it all had to go.

Lessons learned? Challenges?

Looking back on my first deal I got a PhD in real estate investing. I lost around $5000. Which at the time felt absolutely terrible, I remember the day I found out about the foundation problems I literally wept at the property thinking I was a total failure. But now the money lost seems like a bargain for the education gained. Since this deal I was able to push forward to acquire over a dozen BRRRR rental properties enabling me to escaping my corporate job.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

The biggest mistake I made on this deal was not getting any help. I thought I could do everything myself. That's why I became focused as a real estate agent to help others succeed. I created My Agent Investor to give people access to investor friendly agents that can help them avoid all of the mistakes that I made on my first deal. We have a team of agents that can help you with everything from figuring out cash flow on rentals, estimating repairs, to negotiating great on or off market deals.

 Congratulations David. Great work. What is your next project going to be?

[Laretta Young]

Thanks for sharing your experience @David Ounanian. That's awesome you are using your experience to help others learn along the way. I am a first time investor and have interest in SFR in the STL area. I'm still at the beginning stages, now currently reading "Long-Distance Real Estate Investing".

[David Ounanian]

Originally posted by @Kevin Hunter:

@David Ounanian, congrats on your first flip.  Although it didnt go as you thought it would, it still sounds like a successful education and opportunity.  Thanks also for being so honest.  A lot of people on here would not talk about losing money or the things that went wrong so kudos to you!!

Good luck on your next deal....

Thanks Kevin!  Yes it was really embarrassing to lose money because before this I was telling all of my friends and family about my great plan to start investing in real estate.

[David Ounanian]

Originally posted by @Rumi Velazquez:

@David Ounanian. Thanks for sharing! It’s inspiring to read that you were able to push through and use the learnings to become successful. I also purchased my first duplex in St. Louis earlier this year and had lots of good learnings. I hear it’s hard to come by good contractors. Wishing you much success!

 Congratulations Rumi on your first duplex purchase!  Yes good contractors were a challenge for me too.  Just like anything else it seemed to be a numbers game though.  I would call 12 contractors to find 1 good one.

[David Ounanian]

Originally posted by @Alex Olson:

Originally posted by @David Ounanian:

Investment Info:

Single-family residence fix & flip investment in St. Louis.

This was an absolute nightmare! After listening to hundreds of bigger pockets podcasts and researching enough about real estate investing to be dangerous I finally pulled the trigger and purchased my first investment deal.

What made you interested in investing in this type of deal?

I was originally interested in using the BRRRR method so that I could scale and build passive cash flow to build long term wealth. But on this deal the rehab costs went way way over budget and I had to resort to trying to sell the property in order to cut my losses.

How did you find this deal and how did you negotiate it?

I found this deal on craigslist. It was listed by a wholesaler. I later found out after I closed that it had been wholesaled to the wholesaler so my margins were already thin to being with. I negotiated a purchase price of $45,000. ARV of the property was $96,000 which is what I sold it for 6 months later.

How did you finance this deal?

I used my own personal cash savings which later turned out to be a horrible idea. Because so many things went wrong with this property I was down to my last few dollars before this deal finally sold. Had one more thing went wrong I would've had no way to pay for it and it was incredibly stressful. For my future deals I always use OPM (Other People's Money)! This allows me to have my personal cash savings as an emergency fund incase something happens and I need it.

How did you add value to the deal?

This property needed a complete rehab. It was a 50 year old home that had mostly original construction inside and out. The plan was to update it, rent it out, refinance it and repeat the process (the BRRRR method). The wholesaler told me the estimated rehab costs were $20,000. To be safe I estimated about $25,000. The problem was that the actual costs to fix up the property ended up being around $50,000.

What was the outcome?

The outcome was not what I had expected. I had to change exit strategies to cut my losses and sell. When I purchased the property it was vacant and the utilities were off. I had my home inspector inspect the property but with the power, water and gas shut off there wasn't too much he would've been able to uncover. This I didn't realize until it was too late. Every problem you can think of came up in this house from foundation problems to electrical and plumbing it all had to go.

Lessons learned? Challenges?

Looking back on my first deal I got a PhD in real estate investing. I lost around $5000. Which at the time felt absolutely terrible, I remember the day I found out about the foundation problems I literally wept at the property thinking I was a total failure. But now the money lost seems like a bargain for the education gained. Since this deal I was able to push forward to acquire over a dozen BRRRR rental properties enabling me to escaping my corporate job.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

The biggest mistake I made on this deal was not getting any help. I thought I could do everything myself. That's why I became focused as a real estate agent to help others succeed. I created My Agent Investor to give people access to investor friendly agents that can help them avoid all of the mistakes that I made on my first deal. We have a team of agents that can help you with everything from figuring out cash flow on rentals, estimating repairs, to negotiating great on or off market deals.

 Congratulations David. Great work. What is your next project going to be?

Thanks Alex! Right now working on a flip and a couple more BRRRR rental properties

[David Ounanian]

Originally posted by @Laretta Young:

Thanks for sharing your experience @David Ounanian. That's awesome you are using your experience to help others learn along the way. I am a first time investor and have interest in SFR in the STL area. I'm still at the beginning stages, now currently reading "Long-Distance Real Estate Investing".

 Thanks Laretta and congratulations on your first investment!  I learned from the experience of so many others on BP and now trying to share what I can now too!  Great book you are reading Laretta - if you need help with building out your team let me know.

[Ali Hussein]

Thank you for posting this.

most people dont share their stories when losing money , thank you i have learned that i should ask for help from professional real estate people.

Thank You!! 

[Naomasa Hase]

@David Ounanian Thank you for sharing your story!

[Jeffry Faulkner]

@David Ounanian Thank you for sharing! I think it’s cool you’re using your experience to learn from for the future and also using it to teach the future. I, too, am looking forward to my first investment right in St. Louis. Getting all the necessary tools before I make that first leap!

[Kamil Pieniadz]

@David Ounanian hey I’m looking to invest in St. Louis. Curious about what neighborhood you did this deal in and how was your experience with the contractors you used?

[Kevin Hunter]

@David Ounanian, what price do you put on that learning, the education??? rhetorical of course, but certainly less than a 200K MBA.....

[David Ounanian]

Originally posted by @Ali Hussein:

Thank you for posting this.

most people dont share their stories when losing money , thank you i have learned that i should ask for help from professional real estate people.

Thank You!! 

Thanks Ali!  Yes get help from professionals but more importantly get help from someone you trust!

[David Ounanian]

Originally posted by @Naomasa Hase:

@David Ounanian Thank you for sharing your story!

Thanks for the feedback Naomasa!

[David Ounanian]

Originally posted by @Jeffry Faulkner:

@David Ounanian Thank you for sharing! I think it’s cool you’re using your experience to learn from for the future and also using it to teach the future. I, too, am looking forward to my first investment right in St. Louis. Getting all the necessary tools before I make that first leap!

 Thanks Jeffry!  Yes experience is a great teacher!

[David Ounanian]

Originally posted by @Kamil Pieniadz:

@David Ounanian hey I’m looking to invest in St. Louis. Curious about what neighborhood you did this deal in and how was your experience with the contractors you used?

 Hi Kamil, this deal was in St. Ann.  To find my first contractor it was also a challenge.  I called 12 of them on this house.  6 met with me for bids but only 3 got back to me afterwards.  So it was a numbers game to find a contractor that worked out.

[David Ounanian]

Originally posted by @Kevin Hunter:

@David Ounanian, what price do you put on that learning, the education??? rhetorical of course, but certainly less than a 200K MBA.....

 Hi Kevin great question!  I have an MBA and what I learned on my first deal was certainly worth more!  Experience is a great teacher.

[Kamil Pieniadz]

@David Ounanian thanks for getting back to me. I’ve been looking at some small duplexes near St. Ann that seem interesting. I like the area overall for investing because it’s hard to find buildings that are less than 100 years old in St. Louis and that area is relatively newer

[David Ounanian]

Originally posted by @Kamil Pieniadz:

@David Ounanian thanks for getting back to me. I’ve been looking at some small duplexes near St. Ann that seem interesting. I like the area overall for investing because it’s hard to find buildings that are less than 100 years old in St. Louis and that area is relatively newer

Yes I've put some offers on duplexes in St. Ann and looking to purchase there if an opportunity arises to BRRRR.