Successful BRRRR Single Family in St. Louis Rents $1400/mo

[David Ounanian]

Investment Info:

Single-family residence buy & hold investment in Florissant.

Purchase price: $69,000
Cash invested: $30,000

This is a single family home in St. Louis (Florissant area) that is 4 bedrooms 2.5 bathrooms and 1800sqft. This was my second successful BRRRR deal and it consistently cash flows over $300/mo after all expenses.

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

I was interested in this type of deal because of the potential for adding value and building up equity from a renovation.

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

I found this deal through another real estate agent. The owners were contemplating listing it but didn't want to go through the hassle of cleaning it out or making any repairs to the house. So I made a cash offer (read not contingent on financing) and beat out another investor to win the deal.

How did you finance this deal?

Although my offer was not contingent on financing (cash offer to the seller), I used a local commercial bank to finance this deal. They lended 80% of the purchase price, 100% of the rehab costs and did a cashout refinance at 70% of the new appraised value 4 months later. To come up with the 20% down initially I used a HELOC. I effectively used no cash out of my own pocket to do this deal.

How did you add value to the deal?

I added value to the deal by doing a mostly cosmetic renovation. New flooring throughout, new bathrooms, new kitchen, new paint, minor landscaping, fixed some minor plumbing and electrical issues.

What was the outcome?

The outcome was awesome! After renovating the appraisal came back at $150,000, which means I had close to $50k in equity in the property. I decided to refinance at 70% LTV and hold on to this property as a rental. My mortgage payment is $700/mo and I have a section 8 tenant paying $1400/mo in rent.

Lessons learned? Challenges?

A big lesson I learned on this one was to take care of your referral partners. The agent that gave me this lead assumed that I would rehab it and list it with her (as I had done previously with a fix and flip). Unfortunately when I decided to hold onto it as a rental it didn't occur to me that she wouldn't be compensated at all. I didn't get any more leads from this agent for almost 2 years. I have since made amends and promised to take care of her on all future deals.

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

My lender at Midwest BankCentre was fantastic and really easy to work with.