Wholesale House Fee Paid Fifty Thousand

The Eighteenth Week – The $50,000 Wholesale Deal

Danny Johnson / 34 comments

These are the results of the Eighteenth week of opening up my house flipping business for you guys to see how my wife and I are building back up to 30 deals a year. If you missed the first post explaining what I am doing, please visit this page: See How We Are Flipping Houses.

These are the things I did this week:

Def Leppard House Staged and On The Market

The Def Leppard flip house has been rehabbed, cleaned and staged and is on the market. We did not have enough time to put together the ‘after’ page for this week, but we should have it ready for next week’s post.

I want to thank my wife and our Realtor for doing another outstanding job on staging the house.

More Probate Letters Mailed

Mailed out about 75 Probate letters yesterday and have not received any calls yet. Too early to really tell but I might need to split test my letters and try to find a better performing one.

Still Working Hidden Iron Closing

Not much to say about this. We have things ironed out (pun intended) and are just waiting to close.

Frustration House Closed Yesterday

Closed on the frustration house yesterday. I will have before pictures and scope of work details up during this week. We met with our contractor there this morning and are awaiting his bid. Should be a quick rehab and we should be able to have it on the market within 2 weeks.

Expensive House Tenants Moving Out

We closed on the expensive house a couple of weeks ago and gave the sellers a temporary lease so that they could move out by the end of the month. To get a head start on the rehab, we met our contractor there today to get the scope of work figured out. I will post pictures and details on this one after they move out.

Resources Page For The Blog Is Now Posted

A resources page has been added. It currently just has some of our favorite business and house flipping related books, but we will be adding other resources as time permits. The link is on the top left of the page.

TShirts Now Available

Yes, you read that correctly. My wife and I came up an idea to do some tshirts for real estate investors and house flippers. We were just sort of playing around with the idea over dinner and thought of some funny ones. We knew about Cafe Press and decided to try it out. So check out the shirts and let the world know that you love ugly houses.
Shouldn’t having fun be one of your priorities?

Best For Last – Closed On The Historic House Wholesale

Finally, bought and sold the Historic House. I’ve decided to not share the details. Just kidding! Check them out here (Trust me, you will want to see this!): Historic House Wholesale Details

Marketing

Total Motivated Seller Leads This Week: 16 🙂

Lead SourceLeads This WeekNotes
Bandit Signs540 bandit signs put out last weekend.
Yellow Pages1For a picture of my ad, visit the ‘The First Week’ post.
Buying Website8For a link to my site, visit the ‘The First Week’ post.
Drive For Dollars0Mailed about 50 out last week.
MLS0Did not look at any listed properties this week.
Wholesale Deals0Nothing – Come On Wholesalers, where are you?
Referral2I love referrals.
Probates075 more mailed out.

Total Leads To Date [259]
This is the total number of leads for each source since I started posting about the leads.

Lead SourceTotal Leads To Date
Buying Website:134
Bandit Signs:50
Yellow Pages Ad:31
Driving For Dollars:16
REO Realtors:6
Absentee Owners:5
Referrals:5
Wholesalers:4
Realtors:3
MLS Search:2
Probate Letters:2
For Sale By Owner:1

Leads Analyzed

  1. Strange Seller

    [Source: Website]

    Homeowner wants to sell a 3 bedroom, 2 bath, 2000 sf house in a good neighborhood.

    Here are the numbers:

    Asking Price:$Make Offer
    Amount Owed:$63,000
    Repairs:$unknown (unconfirmed)
    After Repaired Value:$105,000
    Max Offer:$68,000 – repairs

    The seller submitted the form on my website. I tried to call her to ask some more questions and gauge her motivation. She sounded strange and asked if I could call back at noon. She never did pick up the phone again and I’ve tried several times. Will keep trying.

    Got back in touch and found out that they want to move back to Vegas. I mentioned that I would need to buy around what she owed and she seemed to be taken aback. The problem is the competition with foreclosures in the area, which has brought the value down. She was under the impression that Texas was doing really well real estate wise and I had to inform her that we are doing well “compared” to other markets. She wants close to market so I will have to pass.

  2. Financial Problems and Tenants That Are His Friends

    [Source: Website]

    Homeowner wants to sell a 3 bedroom, 1.5 bath, 1000 sf house in a so-so neighborhood.

    Here are the numbers:

    Asking Price:$32,000
    Amount Owed:$20,000
    Repairs:$unknown (unconfirmed)
    After Repaired Value:$60,000
    Max Offer:$35,000 – repairs

    Seller is behind on payments on his own house (out of town) and his rental house that is in San Antonio. He has tenants in it that are supposed to be out by the end of the month. He is hesitant to send anyone in to see the house as the tenants were his “friends” and they were wanting to eventually buy the house (even though they’ve always been late with their rent. Go figure. Why is it not good to have your friends as tenants? Hmmm.) He is two months behind on his payments. He mentioned that he has contacted several people and will schedule with them to show it after the tenants are out.

    I’m not interested in this house but passed it on to someone that I informed of the situation. My investor should be able to work with the seller to contract this house before the tenants are out and avoid the competition that is likely to be waiting until the tenants are out because the seller absolutely refuses to show it while they are there. I suggested to contract the house if he is confident and put a clause in it that makes the agreement subject to inspection of the house.

  3. Outside of Town and Functionally Obsolete, Maybe

    [Source: Website]

    Homeowner wants to sell a 5 bedroom, 1 bath, 1200 sf house 30 minutes outside of town.

    Here are the numbers:

    Asking Price:$Make An Offer
    Amount Owed:Nothing
    Repairs:$probably a lot (unconfirmed)
    After Repaired Value:$50,000
    Max Offer:$25,000 – repairs

    Seller wants to sell his house in a small town outside of San Antonio. I don’t buy houses outside of town unless they are super steals because the time wasted traveling to them costs far too much in missed opportunities. The seller wanted to know how much I would pay and I just threw out a ballpark of about 20k and he seemed interested. So, I passed this one on to a wholesaler that expressed interest.

    I mentioned that the house may be functionally obsolete due to the fact that it has 5 bedrooms and only 1 bathroom. Not really a big deal for a rental.

  4. Texas City – Remarried

    [Source: Website]

    Homeowner wants to sell a 4 bedroom, 2.5 bath, 1900 sf house near the Gulf Coast.

    Here are the numbers:

    Asking Price:$105,000
    Amount Owed:$97,000
    Repairs:$minor (unconfirmed)
    After Repaired Value:$???
    Max Offer:$???

    “Investors? Maybe you!” See if anyone knows what that is from.

    House is in Texas City, which is close to Galveston. If you invest in this area, please contact me if you are interested. I do not buy that far out of town.

  5. All Dolled Up With Nowhere To Go

    [Source: Bandit Signs]

    Homeowner wants to sell a 4 bedroom, 1 bath, 900 sf house is a so-so neighborhood.

    Here are the numbers:

    Asking Price:$69,000 and Listed
    Amount Owed:$5,000
    Repairs:$none (unconfirmed)
    After Repaired Value:$60,000
    Max Offer:$35,000 minus any repairs

    Seller has this vacant house listed with a Realtor. Based on the pictures, it is clean and freshly painted. Doesn’t look like it needs much. He seemed like a tire-kicker but I made him a ball park offer anyway in the low 30’s. He was not at all interested. Next.

  6. Snooty Seller

    [Source: Bandit Signs]

    Homeowner wants to sell a 3 bedroom, 2.5 bath, 2500 sf house is a good neighborhood.

    Here are the numbers:

    Asking Price:$300,000
    Amount Owed:$200,000
    Repairs:$none (unconfirmed)
    After Repaired Value:$300,000
    Max Offer:$210,000 minus any repairs

    Seller is moving out of state and wants to sell. She seemed really snooty on the phone and difficult to deal with. One of those people that acts like they are above selling to a real estate investor (even though they are calling you to sell). She was adament about not selling below $300k, which is what it is worth. Next.

  7. Cannot Afford Any Longer

    [Source: Yellow Pages]

    Homeowner wants to sell a 3 bedroom, 2 bath, 1500 sf house is a good neighborhood.

    Here are the numbers:

    Asking Price:$80,000
    Amount Owed:$80,000
    Repairs:$AC and Cosmetic (unconfirmed)
    After Repaired Value:$109,000
    Max Offer:$70,000 minus any repairs

    Seller cannot afford the house anymore but is not behind on payments. Need to see if willing to consider sub2. I checked and she will not consider sub2. They are not behind and so a short sale would not be very likely. This one has some equity and I will try to birddog and see if someone will buy with a more narrow profit margin.

  8. Moving To Another Country

    [Source: Bandit Signs]

    Homeowner wants to sell a 3 bedroom, 2 bath, 1600 sf house is a decent neighborhood.

    Here are the numbers:

    Asking Price:$105,000
    Amount Owed:$65,000
    Repairs:cosmetics (unconfirmed)
    After Repaired Value:$89,000
    Max Offer:$58,000 minus repairs

    Seller is moving out of the country and wants to sell the house quickly. The garage is converted and I’m sure it will affect the resale value on this house. Because the garage was converted to a den, I determined the ARV with a 1200 square footage. We’ve found that this will give you a more accurate estimate than including the square footage of the enclosed garage. There is too much owed, but this could be a sub2 for someone. Called him back and he is not interested in anything below market value. Not motivated at all. Next.

  9. Nasty Divorce

    [Source: Website]

    Homeowner wants to sell a 3 bedroom, 2 bath, 1300 sf house is a good neighborhood.

    Here are the numbers:

    Asking Price:$65,000
    Amount Owed:$45,000
    Repairs:cosmetic (unconfirmed)
    After Repaired Value:$95,000
    Max Offer:$62,000 minus repairs

    Seller got divorced and needs to sell this house. They are also behind on payments. Sort of a perfect storm.

  10. Super Tiny House

    [Source: Referral]

    Homeowner wants to sell a 1 bedroom, 1 bath, 400 sf house is a not-so-good neighborhood.

    Here are the numbers:

    Asking Price:$21,000
    Amount Owed:$0
    Repairs:cosmetic (unconfirmed)
    After Repaired Value:$30,000
    Max Offer:$Not For Me

    Husband had a stroke and can no longer work. They need to sell this house that they have a relative living in so that they can make ends meet. A 400sf house is not something I’m interested in, so I birddogged this one. When asked what repairs it needed, she told me “just where the dog chewed on the porch board.”

  11. Vacant Rental Number One

    [Source: Bandit Signs]

    Homeowner wants to sell a 3 bedroom, 2 bath, 1500 sf house is a decent neighborhood.

    Here are the numbers:

    Asking Price:$75,000
    Amount Owed:$50,000
    Repairs:cosmetic (unconfirmed)
    After Repaired Value:$85,000
    Max Offer:$55,000 minus repairs

    The seller had two houses as rentals and no longer wants to be a landlord. Both houses are vacant. This is the first one she told me about. I had just looked at a house down the street from this one a couple weeks ago. The area is really “hit or miss”, meaning that there are decent pockets and real dumps.

  12. Vacant Rental Number Two

    [Source: Bandit Signs]

    Homeowner wants to sell a 3 bedroom, 2 bath, 1400 sf house is a decent neighborhood.

    Here are the numbers:

    Asking Price:$79,000
    Amount Owed:$60,000
    Repairs:cosmetic (unconfirmed)
    After Repaired Value:$100,000
    Max Offer:$65,000 minus repairs

    This is the second vacant rental from the same seller. Once again, this one is would need to be bought for about what is owed depending on the actual repairs.

  13. Bought Another House

    [Source: Website]

    Homeowner wants to sell a 3 bedroom, 2 bath, 1100 sf house is a decent neighborhood.

    Here are the numbers:

    Asking Price:$55,000
    Amount Owed:$0
    Repairs:$10,000
    After Repaired Value:$90,000
    Max Offer:$48,500

    Seller bought another house and is moving out of this one. They said it needs quite a bit of repairs, but were asking a reasonable price. I went to check it out.

    The house was in decent shape just needed bathroom updates, flooring, paint, new water heater, drywall repair, new light fixtures and some other small things. I ended up offering $45,000 on the spot. The seller’s ex-husband, which was who met me there, said that that would not work. They wanted to walk away with $55,000. I told him the most I could do would be $47,000. He said he would talk it over with the ex-wife and let me know. I need to stick to my figure because the days on market in this neighborhood are high and this house is a little smaller than most.

  14. Other Investor Was An @$$&%*#

    [Source: Website]

    Homeowner wants to sell a 4 bedroom, 2 bath, 1500 sf house is a decent neighborhood.

    Here are the numbers:

    Asking Price:$80,000
    Amount Owed:$80,000
    Repairs:quite a few (unconfirmed)
    After Repaired Value:$100,000
    Max Offer:$65,000 minus repairs

    Seller recently married and wants to sell this house fast and to avoid any hassles with the house sitting on the market for months and having to do repairs. He had called another investor before me and he said the guy was extremely rude and really just an @ss. Competition is really not as bad as most of us believe it to be.

    After some research, I determined that I would not be able to buy the house because too much is owed. Next.

  15. Rental With No Time Or Desire To Repair

    [Source: Referral]

    Homeowner wants to sell a 3 bedroom, 1 bath, 1400 sf house is a decent neighborhood.

    Here are the numbers:

    Asking Price:$47,000
    Amount Owed:$60,000
    Repairs:$20,000
    After Repaired Value:$90,000
    Max Offer:$38,500

    Seller bought this rental last year and has been slowly fixing it up. He had not been there in a while and lost interest. The house has become a drain on him and he just wants to get rid of it. So much so, that he is willing to come to the table with money to get the deal done (being that he owes more than he is asking for it). This is still not enough and so I am passing this on to another investor that has more buyers.

  16. My Tires Have Been Kicked

    [Source: Website]

    Homeowner wants to sell a 4 bedroom, 2.5 bath, 3000 sf house is a good neighborhood.

    Here are the numbers:

    Asking Price:$200,000
    Amount Owed:$145,000
    Repairs:$cosmetic (unconfirmed)
    After Repaired Value:$210,000
    Max Offer:$136,500

    Seller wants to downsize and wants pretty much full market value. No thanks. There does not seem to be any motivation either, was just curious. That’s understandable. Next.

    Hilarious update: Seller called me back this evening when I was taking our twins to dance class. I had her on blue tooth to my car and she was very hard to understand. She has an accent which is mostly why it was difficult to make out what she was saying. She went on and on, the kids were looking at me funny trying to understand themselves, and when I finally got a chance to say something, all I could say was, “could you please repeat that. I did not understand one word you just said.”

    She repeated everything more slowly and clearly. Basically, after our conversation, she got on Zillow and looked up her house value. She was shocked. Zillow showed $140k. She mentioned that a Realtor had just told her to list it for $230k only 30 days ago. She wanted to know what had happened to her neighborhood for the values to drop that dramatically in that short period of time.

    Now an unscrupulous investor would have taken this opportunity to really work a seller. Not cool. I informed her that Texas is a non-disclosure state. Which means that sales of homes are not made public. Zillow can only guess at values based on loan amounts and whatever other random silliness they incorporate. I am really surprised that Zillow does not put huge disclaimers on their site for people accessing it from non-disclosure states.

    She was relieved to hear about this. It felt good that she had called to ask me about this versus the Realtor she had talked to. Guess who built better rapport. Still no deal, but got a good story out of it. 🙂

Summary

Leads picked up again this week. Was dealing with a cold all weekend (thank God, for Zicam). The cold kept me from flying twice this week, so I was a little irritable. Lots of stuff happened this week with a closing and getting ready for a vacation soon (AirVenture and Chicago). I’ve slowed down a little on marketing and will pick that back up again soon after vacation (don’t want to get a ton of calls that I might miss). Of course, some of the time was doing fun stuff like coming up with the shirts and choosing which books to recommend.

Plans For Next Week

  • Have work started on Frustration House.
  • Push Def Leppard House For Sale
  • After Pictures With Stage For the Def Leppard House
  • Before Pictures And Scope Of Work For The Frustration House
  • Before Pictures And Scope Of Work For The Expensive House
  • Other Top Secret Stuff (Just Kidding, I share everything.)
Bonus: Click Here to Download My Top 5 Motivated Seller Marketing Methods Guide pdf that will show you, in awesome detail how to use 5 different marketing methods to generate great leads consistently.

“Men of action are favored by the Goddess of Good Luck.” -George Clason -The Richest Man in Babylon

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34 awesome responses to “The Eighteenth Week – The $50,000 Wholesale Deal”

  1. Lupe on

    Of Course! Another great Update!!
    Congrads on your closing!

    Danny..
    I have a question…Very important question for me.
    How are you funding your deals?
    Ok….I have another…
    I have none, zeepo, nada experience on having a website. What would you recomend? How can I start having people opt in and stuff like that? How can I get educated on this subject or are there already made websites I can use?

    Danny thanks again for being my mentor…yes you are my mentor!

  2. Brooks on

    Danny, Thanks for the post!
    I’ve got a probate campaign going as well. Instead of sending a ”condolence” letter, I’m just sending a professional ”we buy houses” letter on company letter head.
    My theory is that they can put 2and2 together and call if needed, and possibly less angry callers (maybe not though ha)

  3. Mikey on

    I love snooty sellers… they say stuff like “I don’t have to sell, you know.” Then why the heck did they call???

  4. Lupe on

    Thanks for the quick response…

    It would be a website for buying houses…and you have inspired me to start blogging soo it would be both.

    Lupe M.

  5. Brooks on

    Will definitely keep tabs on my statistics on the general letter to probate leads and will let you know how I go!

  6. Bilgefisher on

    Danny,

    Congrats on the process. That tree didn’t just bear fruit on its own. Its great to see the many many small steps you must take to see those good deals.

    You have got to be getting busier and busier by now, what do you outsource?

    Jason

  7. Carey_PA on

    Danny,
    Gotta tell you that this is my first time to your blog and I absolutely love it! I’m so glad that you stopped by my blog.

    Otherwise, it may have taken me a lot longer to see your blog. You’re doing an amazing job with your blog and from what it seems apparently with your real estate too.

    I love all of the details you provide with your deals right down to your marketing. Great work! I’m going to explore your site some more now.

  8. Bill Kirkpatrick on

    Another great post Danny! Congrats on the ‘Historic’ Flip, too! That is just awesome!

    Sometimes I wonder how you have enough time in the day to do all of these things week after week. Just running your business and posting your stats on this blog each week would take long enough, but you go and add something all the time! You have your investing stories, the Toolbar, the Lead Generator, and now T-shirts!! What next?!? Are you going to give us flying lessons, too???

    Keep up the great work!

  9. Shae Bynes on

    Fantastic post, Danny! Congrats on the closing too….I can’t wait for your video on my blog. All of my subscribers should be checking out your blog over here for some great detailed tips and a huge dose of motivation to keep hustling. 🙂 I must say that I’ve only twice seen a wholesale deal (that wasn’t a short sale) net that kind of profit, so way to go!

  10. william Hall on

    Danny,

    If I buy I house at a deep discount and turn around and sell it for a 40% profit to someone that needs an FHA or VA loan. Do I have to wait 90 days before I can sell the house? I have been told that if I am making more than 20%, then I must wait 90 days before I can sell. I can’s seem to get a straight answer, not even from a loan agent.

    Buy the way, this blog is awesome.

    Bill

  11. KAY L on

    Hi Danny
    Great job on the Blog its really helping me get my business started the right way
    I’m interested in the Texas City deal because I’m investing in the Houston and surrounding areas.

  12. KAY L on

    Danny
    I would really appreciate the info!

  13. Holly2463 on

    Thank you for sharing this site. I really appreciate it. And i’m glad to hear it. Good job. Keep up the good work.

  14. Justin on

    Hey Danny – trying to get up to date with your posts. For your max offer that has “$ less repairs” – what is your methodology for figuring this out? Do you use a min profit $ amount or % of the sale price. Also, I’m assuming your factoring buying, holding, & selling costs in this? If so, how many months do you factor in? Thanks

  15. Justin on

    Thanks Danny. I think that’s a great point that you account for the additional time on market. I don’t think many people do that and the holding costs end up eating into their profit or worse – create a loss.

  16. Shane in Weatherford on

    Regarding your 65% ARV – repairs, I’m quite impressed at how well it works for you, with holding costs and your “minimum” profit and all that worked in. It seems too simple to be true, compred to what almost every other flipping Blogger I see is doing, using more precise figures instead of the old % ARV. For purposes of building my business plan/private lending packet, would you recommend this approach? Or the more precise calculations to determine value of a deal? Or maybe instances of both?

    Great blog and thanks for all the time taken. As a father of 3 with a JOB and a wife I. School and working part time…and I understand how few hours there are in each day for anything other than work and family. Thanks for including your family in your work…and thanks again for taking time for us.

  17. Shane in Weatherford on

    Wife IN school. Can’t edit posts from my phone.

  18. Sharon Hiebing on

    Danny, the most interesting takeaway I got from this post was the fact that your probate letters have had the second lowest response rate from all your marketing efforts, but you got a huge payday from one of them! Just proves why it’s so important for any business to have many spokes in their marketing wheel.

    Question: So the Texas non-disclosure issue.Does this mean all of these comp sites, like Redfin, Trulia, etc., are just guessing on solds? And when you get 17 or 21 leads in a week, does your realtor really pull all those ARV’s for you? Thanks!

    Sharon