My First Big Rehab $100k+ in St. Louis MO

[David Ounanian]

Investment Info:

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

Purchase price: $202,000
Cash invested: $130,000
Sale price: $385,000

This was my first big rehab project. Before this, the largest renovation I had done was around $30k. So it was a big jump to be getting into a gut rehab that was going to cost well over $100k. This was a 3/2 ranch home in the Brentwood/Richmond Heights area of St. Louis. House was built in the 1960's and was a single owner with everything inside and out being original.

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

I was interested in this type of deal as a fix and flip to generate income to invest in more rental properties. I didn't have any rehab projects going on at the time when I found this deal. My initial analysis only had me making a $30k profit margin which really isn't all that exciting. But making some money is better than making no money!

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

I found this deal through a real estate agent. This was an off market "coming soon" listing that only I knew about. The agent gave me a chance to buy it AS IS for $210k and I negotiated the price down to $202k.

How did you finance this deal?

I used Midwest BankCentre (PM me if you want my contact there). They were great! They financed 80% of the purchase price and 100% of the renovation costs.

How did you add value to the deal?

We completed gutted the house and replaced virtually everything except for the hardwood floors we were able to refinish those. One of the hidden value adds I found was a 200sqft sunroom that sat between the house and the garage. We enclosed the area and added exterior doors to it so we could increase the listed square footage of the home. This was key because the home sat at 1836sqft and after doing this it pushed it above 2000sqft!

What was the outcome?

The outcome was much better than I even expected! We listed it for $365k and had a dozen offers. We ended up selling it for $20k over asking price ALL CASH and AS IS!

Lessons learned? Challenges?

One of the challenges that came up was that the contractors thought the vermiculite insulation material was asbestos. We thought there would be major costs ($10-15k) with having this material removed properly. But I paid $125 to have an asbestos testing company come out and test it and it came back negative! This was great news and the lesson learned was to always have the material tested before taking drastic measures to remove it.

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

Our lender at Midwest BankCentre was amazing as well as our stager at Stage Right St. Louis.