The Fourth Week

Danny Johnson / 35 comments

These are the results of the fourth week of opening up of my 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 Post.

Didn’t get to fly to Carsbad Caverns because of 35+ mph surface winds that do not bode well for small airplanes. I wasn’t really phased though as I also got the best news this week. I am going to be a dad again! My wife and I have 4 beautiful girls (2 are twins) and now we are expecting another (maybe a boy… not that I wouldn’t be happy with another a girl :)).

Note: I am only going to be showing
repair estimates
for houses I bought as I cannot go into enough detail for the ones that I am making offers on. It would just be too time consuming to explain that the kitchen repair estimate only includes repair two drawers, installing a new dishwasher, replacing the backsplash, providing a roll of paper towels, etc. for every property I analyze. If you are learning how to flip houses, it will be more easily understood this way.

These are the things I did this week:

Had lunch with one of the top REO agents in San Antonio on Tuesday. We had a great time and got to hear some good stories. In the near future we are going to have an interview with her about how to contact and deal with REO agents. This will be a great way for people to see their point of view (the most important). A lot of courses tell people to just call them up and tell them you pay cash and they will send you all kinds of deals and it just does not work that way. This interview will be sent to all subscribers when done. So, you might want to subscribe. 🙂

Got a list of 487 address for absentee owners. I got an account set up through the title company we use for REISource.com. The title company had already worked out pricing for accounts through them. I called to see if anyone could get an account and they said you could. You just need to call sales and talk with an account manager to set up pricing. The title company we used to use went through propertyinfo.com which is another list provider company. PropertyInfo was free if I remember correctly, but REISource seems to allow for more targeting with loan amounts.

To narrow down the list, I chose to owner receive absentee owners, with 3 bedroom or more single family homes and 30% equity or more with property value below $150,000. This criteria narrowed it down from 33,000 properties to 487.

This list is highly targeted. When you target your list like this you should be confident in spending more money sending repeat mailings (which is where you will get the most calls – repeat mail!).

Marketing

Total Leads This Week: 9

  1. Bandit Signs – 40 signs were put out last week (none this week).
  2. Yellow Pages – For a picture of my ad, visit the ‘The First Week’ post.
  3. Buying Website – You can view my website here: http://www.DannyBuysHouses.com.
  4. Drive For Dollars – Sent the 75 letters out to the owners of the vacant houses 2 days ago. No calls yet.

Leads Analyzed

  1. Investor Selling As-Is

    [Source: Bandit Signs] 

    Investor wants to get rid of a 3 bedroom, 2 bath house that he has partially rehabbed.

    Here are the numbers:

    Asking Price:$57,000
    Amount Owed:$0
    Repairs:$Complete Rehab – Probably about 20k.
    After Repaired Value:$80,000
    Max Offer:$48,000- Repairs

     
    Investor trying to find the greater fool. There is no way I would buy this house any where near his asking price, even if it didn’t need as much repairs as I am guessing.

  2. House Bought Few Years Ago

    [Source: Yellow Pages] 

    Family wants to sell a house they bought a few year ago with very little put down. They just don’t have any equity. I could not help them.

  3. Great Wholesale

    [Source: Bandit Signs] 

    Homeowner selling a 2 bedroom, 1 bath, 1200sf house, built 1950.

    Here are the numbers:

    Asking Price:$12,000 – Gotta love reasonable asking prices 🙂
    Amount Owed:$0 (some back taxes)
    Repairs:$Unknown
    After Repaired Value:$45,000
    Max Offer:$20,000 – Repairs

     

    This is an inherited house that needs repairs. The neighborhood is a rough one but I’m sure I could wholesale it.

  4. Bad Neighborhood – House Looks Decent on Google

    [Source: Website] 

    This house is a 3 bedroom, 2 bath, 1400sf house that was built in 1956.

    Here are the numbers:

    Asking Price:$20,000
    Amount Owed:$0
    Repairs:$?
    After Repaired Value:$50,000
    Max Offer:$Not For Me To Figure Out

     

    Another inherited house. This one is in a neighborhood that I do not buy in. The seller is asking a reasonable price and this one is going to my go to guy. He can probably work it and give me something for my referral.

  5. Tiny House – Bad Neighborhood

    [Source: Bandit Signs] 

    This house is a 2 bedroom, 1 bath, 624sf house that was built in 1925.

    Here are the numbers:

    Asking Price:$20,000
    Amount Owed:$0
    Repairs:$?
    After Repaired Value:$40,000
    Max Offer:$Not For Me To Figure Out

     

    This one is also in a neighborhood that I do not buy in. I am birddogging this one also.

  6. Duplex – Bad Neighborhood

    [Source: Website] 

    This house is a duplex with both 3 bedroom, 1 bath, units. Total 1772sf and was built in 1938.

    Here are the numbers:

    Asking Price:$30,000
    Amount Owed:$They are not sure – inherited
    Repairs:$?
    After Repaired Value:$Landlord Determines
    Max Offer:$Not For Me To Figure Out

     

    Repeat. Nothing new. I am birddogging this one also.

  7. Decent Area – Owe Little Too Much

    [Source: Website] 

    This house is a 3 bedroom, 2 bath, 1300sf house that was built in 1985.

    Here are the numbers:

    Asking Price:$75,000
    Amount Owed:$75,000
    Repairs:$? (probably 5-10k)
    After Repaired Value:$105,000
    Max Offer:$68,000 (65% ARV) – repairs

     

    I would have gone and seen this one if he had owed a little less. It’s tempting to try to work the numbers to make it work, but you just can’t. This lead is going to another investor to see if he can make it work.

  8. A PO Box

    [Source: Website] 

    This house is a PO Box.

    It’s the first time this has happened. Someone actually put their mailing address for the property address. I have sent an email and awaiting information on the property they want to sell. [update – not a deal, the po box needed too much work (lots of dents) – but seriously, it was not a deal.]

  9. Wanting to Move Overseas

    [Source: Yellow Pages] 

    This house is a 3 bedroom, 2 bath, 1200sf house that was built in 1951.

    Here are the numbers:

    Asking Price:$75,000
    Amount Owed:$0
    Repairs:$? (said minor repairs)
    After Repaired Value:$90,000
    Max Offer:$58,000 (65% ARV) – repairs

     

    I made a ballpark of about $50,000 on this one because they did not seem at all motivated. They will call me if they decide that number is reasonable for them. A note to follow up with them is already in my planner.

Summary

I have been birddogging a lot out the last few weeks. So far 3 are under contract and I will get paid finder’s fees for each when they close. One of them is supposed to pay a $5k finders fee (that’s what I requested).


Plans For Next Week

  • Send Postcard to List of Absentee Owners.
  • Put out more bandit signs
  • Call more REO Realtors.
  • Provide a Getting Started Post – My recommendations for what to do to get started.
  • Closing on the house I put under contract a couple of weeks ago.

If you have not subscribed, please do so on the right side of this page. This way you will be notified when my new posts are posted. Besides, don’t you want to read about the crazy adventures you can experience as a house flipper? Flipping houses is the best business to be in, bar none.

Follow along and learn how to flip houses.

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35 awesome responses to “The Fourth Week”

  1. Mat on

    Thanks for keeping us in the loop! Enjoying every “episode”. Looking forward to next week.

    -Mat

  2. Shanti on

    Congratulations on the baby news! I’m really enjoying your blog.

  3. Litia on

    Thank you very much for your post full of good information. I am learning a lot from your posts.
    Is it possible that you share with me the wordings you use for the yellow page.
    Again thank you Danny.

  4. Mike on

    Danny,

    How are you determining the ARV? Is it just from years of doing this? I was talking to an appraiser today and they mentioned that they did different types of appraisals and one of them was to provide an investor with and ARV figure.

    Will be heading to the local home improvement store this weekend to take note of the cost of materials. Hope this helps come up with some sort of figure on repairs.

    Mike

  5. stephen j. moore on

    danny u mentioned a 5k finders fee whats the average of your wholesale fees u making per deal

  6. Tara on

    Danny,
    So you are not licensed? Did a realtor give you access to the MLS? Good point about non-disclosure states!

    Tara

  7. Tara on

    So how did the lunch go with the REO agent? If she does the most volume in town you should have deals coming at you left and right correct?
    Also, what do you think that agent saw from you that she didn’t/won’t see from others?

  8. Tara on

    Danny,
    The other thing I was gonna ask is how are you and your wife paying for marketing, living expenses, etc etc? Do you have rentals that cashflow?
    Hope that isn’t too personal a question……
    Also, that list of absentee owners seems low. I would think in a city that size the list of landlords with equity would be larger?

    Tara

  9. Tamara Pickens on

    I need to sign up, because i am definitely looking forward to that REO agent interview.

    I do have a question, it seems dumb tho but i’ll ask it….how are you determining how bad a neighborhood is? Is it just a common known thing, number of rented vs. owned properties, crime reports?

  10. John on

    Danny,
    How important is follow up in regards to marketing and sellers? For instance how often do you mail a particular list? Do you follow up with all sellers you’ve made an offer to?
    Thanks

    John

  11. Matt K on

    Danny,

    Your website brings in a good flow of leads. Do you use Google Adwords or is it all from organic search traffic??

    Congrats on the new addition to your family.

  12. Mike on

    Question on the absentee owners list. Did you first set up an account with REIsource.com and then ask your title company if they could pull information from them for you. Or did you have to find a title company that would do this and set up an account with them. Just want to make sure I am understanding what you wrote.

    I will be getting that set up soon. Thanks

  13. Lin Arington on

    Danny,

    First, thanks for all the great info. It has really helped me a lot. I’m interested in making offers on REO properties so I have a couple of questions…

    1) Do banks accept “soft”(computer generated from the company website) prequalification letters from hard money lenders and transactional funding companies?

    2) since I need to buy at under 70% – repairs – finders fee to wholesale properties, should I wait for a property to be on the market a while before I make my offer or is it normal for banks to accept theses offers as soon as they are listed?

    It has been my limited experience that banks will first only accept retail offers. I want to save myself time and keep the broker happy too.

  14. Mathew on

    How much can one expect to pay for about 500 absentee owner leads?

    I’ve yet to read something as thorough and informative as your blog. I hope it continues for a long time.

  15. Bailey on

    Danny,

    Do you seriously mean yellow legal/letter paper from the walmart??! Holy cow.

    Thanks in advance.

    Bailey

  16. Bailey on

    Another HOLY COW @ the lead list investment. I was about to plunk down almost $400! Thanks

  17. Bailey on

    Danny, yes, I’ll still get a list. I was just stunned by the price difference.

  18. Nancy on

    Danny, your blog rules! Found it from reading the forums at REIClub.com. Thanks for sharing your experiences!

  19. Louis on

    Danny,

    When you turn over your leads for a birddog fee. Dont you put it under contfact first? The reason I ask this is because of the slim shady’s out there tha2 would put a deal together and not tell you. Thanks