First Flip in St. Louis – Looking for Advice & Local Connections
Member since 2018 · 12 posts · 7 votes
First Flip in St. Louis – Looking for Advice & Local Connections
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Ashish AcharyaBusiness Member
CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votesCongrats on completing your first BRRRR and preparing for your first flip. Since the long-term plan is to use the flip profits to acquire more rentals, one thing I would establish before closing is a clear separation between the flipping activity and the buy-and-hold portfolio.
A property purchased primarily to renovate and resell can be treated as business inventory rather than an investment property, which means the profit may be taxed as ordinary business income. Simply reinvesting those proceeds into a rental does not automatically defer the tax, and properties held primarily for resale generally do not qualify for a 1031 exchange.
That said, cost segregation on the rental side of your portfolio can actually work in your favor here. If you're materially participating or otherwise able to use those losses actively, accelerated depreciation from a cost seg study on your BRRRR or other rentals can help offset the ordinary income coming from the flip, so the two activities being taxed differently isn't purely a downside, it can be a planning opportunity if it's coordinated correctly.
Track the purchase, rehab, financing, carrying, and selling costs separately for every property from day one. It is also worth estimating the expected annual profit before deciding whether a separate LLC or an S corporation election makes sense. With one or two flips per year, the right structure should be based on the actual numbers, ownership, and risk rather than forming an entity simply because you are starting to flip.
Happy to connect!
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5 Replies
- 1moVijay FriedmanBusiness MemberMiami, FL · Member since 2026 · 766 posts · 122 votes
Quote from @Igor Bakovic:
I'm looking to do my first flip in the St. Louis area. We currently own several long-term rental properties, and our primary goal is to continue growing our buy-and-hold portfolio. We completed our first BRRRR project a few months ago and are currently working on our second.
I’d love to connect with investors who have experience flipping houses in the St. Louis area and would be willing to share their insights, lessons learned, and any guidance for someone preparing to take on their first flip.
Our plan is to complete one or two flips each year and reinvest the profits into acquiring additional long-term rental properties. I’d appreciate any advice or connections from those who have experience in the local market.
Thanks,
Igor
@Igor Bakovic
Igor, it sounds like you've built a solid foundation with your rentals and BRRRR projects. Since you're moving into flipping, I'd spend time building relationships with reliable local contractors, agents, and lenders before taking on the first project. Having the right team in place usually makes the biggest difference, especially when you're planning to do multiple deals over time. Best of luck in St. Louis! - Flipper/Rehabber · Tacoma, WA · Member since 2026 · 10 posts · 2 votes1mo
Congrats on the move — I flip in Tacoma, WA, and came at it from a similar direction. The biggest adjustment isn't the rehab, it's the math: BRRRR forgives buying mistakes in a way flipping doesn't. If a BRRRR appraisal comes in low, you leave some cash in the deal and the rent pays you back over the years. A flip has one exit and a countdown attached — every month past plan is interest, taxes, insurance, and utilities coming straight off the profit line, and there's no "hold and wait" button once you've renovated to resale spec.
Three filters I now run on every candidate, all born from one house that almost got me:
1. Square footage from the county assessor, never the MLS. A Tacoma listing said 3,367 sqft at a $404k ask. Assessor records: 2,483 finished plus an 884 sqft unfinished basement — the listing had rolled the basement into living area. Every $/sqft comp was garbage until I caught that.
2. Three prices before negotiating, not one opinion of value: break-even, and the price that clears my minimum acceptable profit. That house penciled to a $366k break-even against the $404k ask. If the seller can't get near your profit number, it's not a deal that got away — it's a retail listing.
3. A nine-cell stress grid: ARV plus or minus $25k against three rehab budgets. Eight of nine cells on that house lost money; the ninth made $3,600 for five months of work. When most of the grid is red, the price is the problem, not the house.
One thing worth pricing out before your first offer: rental-grade vs resale-grade finishes. Coming from buy-and-hold it's easy to budget the rehab at rental spec, and retail buyers won't pay for the result. What gap are you seeing between those two budget levels in St. Louis?
- 1moAshish AcharyaBusiness MemberCPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
Congrats on completing your first BRRRR and preparing for your first flip. Since the long-term plan is to use the flip profits to acquire more rentals, one thing I would establish before closing is a clear separation between the flipping activity and the buy-and-hold portfolio.
A property purchased primarily to renovate and resell can be treated as business inventory rather than an investment property, which means the profit may be taxed as ordinary business income. Simply reinvesting those proceeds into a rental does not automatically defer the tax, and properties held primarily for resale generally do not qualify for a 1031 exchange.
That said, cost segregation on the rental side of your portfolio can actually work in your favor here. If you're materially participating or otherwise able to use those losses actively, accelerated depreciation from a cost seg study on your BRRRR or other rentals can help offset the ordinary income coming from the flip, so the two activities being taxed differently isn't purely a downside, it can be a planning opportunity if it's coordinated correctly.
Track the purchase, rehab, financing, carrying, and selling costs separately for every property from day one. It is also worth estimating the expected annual profit before deciding whether a separate LLC or an S corporation election makes sense. With one or two flips per year, the right structure should be based on the actual numbers, ownership, and risk rather than forming an entity simply because you are starting to flip.
Happy to connect!
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I’d go ahead and start planning for your buy and holds as well so you have a more concrete game plan.
I’m assuming you’ll be doing the long term rentals in the same area, but again, just an assumption. Have you figured out things like property management? Contractors, what agent you’re going to use, and any lenders? If not I’d start there. Happy to share referrals if you need any. - 3wNicholas FloydBusiness MemberNY · Member since 2026 · 167 posts · 58 votes
Hey Igor, congrads on your success, I would love to connect with you as well, I'm a business funding consultant and I like to have flippers within my network because we usually end up adding much value to each other
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