When he went looking for a way to free himself from cubicle-hell, David Ounanian settled on the BRRRR method: buy a house, rehab it, rent it out, then refinance it and repeat it all over again. With each house estimated to cash flow at $200-300, David knew he just needed a small portfolio to replace his W-2 job.
But of course, this is the Deals Gone Bad series, and you know that simply picking a strategy and finding a house is going to be the easiest part of the deal. After months and months of analysis paralysis, David’s wife insisted he pull the trigger, so he bought a $45,000 house in a Class C neighborhood. The wholesaler he purchased the house from told him it would take $20,000 to make the house liveable, so David gave himself a conservative budget of $25,000 to get the job done.
How much would you estimate for foundation damage? Or new clay sewer pipes? Or repairing a chimney? Or pouring a new driveway to comply with a brand-new city ordinance? As the costs began to mount up, David thought he was going to lose absolutely everything on this house.
David shares how a mentor or an investor-friendly agent would’ve helped him see the big costs of the property, and how he prevents getting sucker-punched by a laundry list of repairs. For my listeners, he’s provided his Excel spreadsheet for estimating the true costs of repairs so that you will never be surprised when repair projects start to eat away at your profit.
Watch and Learn:
Listen and learn:
- How a simple $150 plumbing inspection could have prevented some very expensive sewer repairs.
- Talking to fellow local investors can help you see common problems in certain areas or types of homes.
- The careful and methodical approach David takes now to prevent a repeat of his first BRRRR deal.
Mentioned in this episode:
- Bigger Pockets
- Agent David O on Instagram
- Agent David O on Facebook
What are you thinking?
First off, we really love feedback, so please click here to give us a quick review in iTunes! Got any thoughts on this episode? We’d love to hear ’em too. Talk to us in the comments below.
Enjoy this podcast? Share the love!