The Seventh Week – 21 Leads

Danny Johnson / 37 comments

These are the results of the seventh 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.

These are the things I did this week:

Interview With A Top REO Agent Posted
Posted Interview With A Top REO Agent

Hidden Iron House Completed and on the Market
Posted Hidden Iron House

My Wife Posted Her First Article
Posted Does your bookkeeping consist of a box of receipts?

Be Careful With REI Source
I noticed a lot of the absentee owner property addresses were missing the first digit. Not sure why and need to find out how many were like that. If you get data from them, check to make sure the address are correct.

Sent Postcards
Sent out 80 postcards to the owners of the properties that we find driving for dollars several weeks ago. This will be the second contact we’ve made with these prospects.

Got Some Probate Leads
Finally made it downtown to the county courthouse to go through probate records. I look for probate files where the deceased had real property. If property was owned, I get the executor (or executrix in the case of a female) of the estate’s name and address so that I can send them a letter.

Decided Against the Deal From Last Week
I backed out of the one where the attorney was RE-negotiating terms. If they call me back and agree to my offer, I will accept, but I will not accept their new terms. They said they have two other people interested, but I have to stick to my guns and not cross the maximum offer line that I calculated for myself. Sometimes this is very hard to do, but do it we must.

Marketing

Total Leads This Week: 21 🙂

  1. Bandit Signs – 10 – No more were put out this week, but we sure got a lot of calls from the ones that are still up.
  2. Yellow Pages – 2 – For a picture of my ad, visit the ‘The First Week’ post.
  3. Buying Website – 2 – For a link to my site, visit the ‘The First Week’ post.
  4. Drive For Dollars – 0 – Just sent out postcards yesterday. The new list of 40 we gathered last week have not had letters sent to them yet. I want to get some more first.
  5. REO – 2 – Both duds, but just made offers anyway.
  6. MLS – 1 – I found one that I could see why viewing another property.
  7. Realtor – 1 – Realtor told us about another house owned by an investor that was for sell cheap (investor’s private residence and man was it a mess).
  8. Wholesale Deals – 0 – None worth analyzing.
  9. Absentee Owner Mailing – 3 – All leads from absentee owner postcard mailing stunk. I’m starting to remember why I haven’t done these in a long time…

Leads Analyzed

  1. Want to Move to Another School District

    [Source: Bandit Signs] 

    Homeowner wants to sell a 3 bedroom, 2.5 bath, 2500 house.

    Here are the numbers:

    Asking Price:$130,000
    Amount Owed:$122,000 Darn it.
    Repairs:$Not much – cosmetic (unconfirmed)
    After Repaired Value:$140,000
    Max Offer:$91,000 minus repairs

     
    Seller wants to sell to move to another school district. They need to by August. They are not that motivated and it doesn’t matter because they just owe to much for me to be able to buy this house.

  2. One Bath House in Decent Area

    [Source: Bandit Signs] 

    Homeowner wants to sell a 3 bedroom, 1 bath, 1000sf house.

    Here are the numbers:

    Asking Price:$65,000
    Amount Owed:$40,000
    Repairs:$cosmetic/minor plumbing (uncomfirmed)
    After Repaired Value:$79,000
    Max Offer:$51,000 minus repairs

     
    Days on market in this neighborhood seem pretty good. 30-90 days which is good nowadays. This one only has 1 bath so I had to be conservative on the ARV. She did not seem motivated so I just gave her a ballpark figure of about $45,000. She said immediately that this would not work and the absolute minimum she would take would be above $60k. So, no go.

  3. Townhome in Good Area

    [Source: Absentee Owner Poscard] 

    Homeowner wants to sell a 1 bedroom, 1.5 bath, 1000sf condo.

    Here are the numbers:

    Asking Price:$95,000
    Amount Owed:$50,000
    Repairs:$cosmetic-flooring (uncomfirmed)
    After Repaired Value:$70,000
    Max Offer:$45,000 minus repairs

     
    The caller has a rental property that she got a postcard from me about. Her brother wants to sell his condo (townhome) so he can move closer to his sister. Too much owed and the condo market is not very active. Days on market are pretty high and I could not find a one bedroom comp sold over the last year.

  4. Turd That Could Be Great in Good Area

    [Source: Realtor] 

    Homeowner wants to sell a 4 bedroom, 2.5 bath, 2000sf house.

    Here are the numbers:

    Asking Price:$120,000
    Amount Owed:$?
    Repairs:$55,000 Everything
    After Repaired Value:$195,000
    Max Offer:$71,000

     
    A Realtor called me about this house. It needs foundation work, flat roof repair, AC work, redo kitchen and baths, new flooring, etc.etc. I need to get this one cheap. I ended up offering $60,000 on this one because of the amount of work involved. It turned out that this one was owned by an investor. This is his personal residence. For obvious reasons, I will not be posting the pictures of the house.

    My wife and I had looked at the house two houses down from this one several months ago. When I got back home, I sent the seller of that house an email asking if they ever sold it. It appeared to still be vacant. I’ll let you know if something comes of that.

  5. Want to Buy A Bigger House

    [Source: Absentee Owner Postcard] 

    Homeowner wants to sell a 3 bedroom, 2 bath, rental house.

    Here are the numbers:

    Asking Price:$make offer
    Amount Owed:$unsure but only 4 years left, so not much.
    Repairs:$unknown
    After Repaired Value:$120,000
    Max Offer:$78,000 minus repairs

     
    Seller got a postcard from us about his rental property. He is considering selling it and his primary residence to buy a bigger primary residence. The rental has had the same tenant for 10 years and pays $895/mo. This is not the time of situation that makes someone motivated to sell at the price I would need to buy at. Now if he finds his dream home and has to sell this house quickly in order to get it, he might be a little more motivated. I will stay in touch. Just to let him know, I did mention the figure would be around 80k minus repair costs.

  6. Tiny El Dumpo Shotgun House

    [Source: Bandit Signs] 

    This is what you would call a shotgun house. It’s tiny and in a bad area. Passed on to landlord to see if he wanted it. I don’t.

  7. Another Tire Kicker?

    [Source: Bandit Signs] 

    Homeowner wants to sell a 3 bedroom, 1 bath, vacant house.

    Here are the numbers:

    Asking Price:$make offer
    Amount Owed:nothing
    Repairs:$unknown (cosmetic – unconfirmed)
    After Repaired Value:$85,000
    Max Offer:$55,000 minus repairs

     
    Seller has a house that was a rental and is vacant. It needs cosmetic work and he wants to see if he can sell it As-Is. Gave him a ballpark and he wasn’t havin’ it…

  8. Realtor Owned Fixer

    [Source: Bandit Signs] 

    Realtor/Owner wants to sell a 3 bedroom, 1.5 bath, vacant house that needs quite a bit of work.

    Here are the numbers:

    Asking Price:$55,000
    Amount Owed:?
    Repairs:$20,000+
    After Repaired Value:$80,000
    Max Offer:$48,000 – $20,000 = $28,000

     
    This is a case where a Realtor came across a good deal and snatched it up in hopes to sell it for profit. It needs quite a bit of work and it’s hard to get a good idea for the ARV on this house because the neighborhood has ‘pockets’ (differing areas street by street). Comps showed a little higher but the square-footage this house had was mostly in garage conversion and very poorly done back porch enclosure. Be very careful with additions to houses. If they were done bad and not up to code you should deduct from the after repaired value rather than increase it for the extra square-footage.

    Pictures Here

  9. Buying Another House and Need To Sell The Old One

    [Source: Website] 

    Homeowner wants to sell a 4 bedroom, 2 bath, house with a converted garage (I hate converted garages).

    Here are the numbers:

    Asking Price:$87,700
    Amount Owed:89,000
    Repairs:$unknown (cosmetic – unconfirmed)
    After Repaired Value:$85,000
    Max Offer:$55,000 minus repairs

     
    Seller is buying another house and needs to sell this one quick. They simply owe too much. He mentioned their Realtor was talking about a short sale. I asked if they were behind on payments and he said no. The conditions just aren’t there for this one. Next.

  10. My Realtor Stinks

    [Source: Yellow Pages] 

    Homeowner wants to sell a 3 bedroom, 2 bath, house in a neighborhood I’ve bought a lot of houses in.

    Here are the numbers:

    Asking Price:$95,700
    Amount Owed:22,000
    Repairs:$unknown (cosmetic – unconfirmed)
    After Repaired Value:$105,000
    Max Offer:$68,000 minus repairs

     
    Seller inherited the house. He is living in it and was complaining about how his Realtor was not doing anything. “No showings, no nothin'” Then I find out why. He seems to have a seriously warped opinion of what the house is worth. His idea is that it is worth at least 50% more than it really is. I told him a I usually buy in the neighborhood for in the 40’s and 50’s and he did not seem too keen on it. Actually, not at all.

  11. Art Studio in Back

    [Source: Bandit Signs] 

    Homeowner wants to sell a 2 bedroom, 1 bath, house in a neighborhood I’ve bought a lot of houses in (same as last lead).

    Here are the numbers:

    Asking Price:$Make Offer
    Amount Owed:$55,000
    Repairs:$Says None
    After Repaired Value:$79,000
    Max Offer:$50,000 – Repairs

     
    Seller wants to sell the house to buy another house. Not usually a motivating situation enough to sell at the prices I need to buy at. They owe too much to make it work and so I had to pass.

  12. This house has everything.

    [Source: Bandit Signs] 

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

    Here are the numbers:

    Asking Price:$120,000
    Amount Owed:$100,000
    Repairs:$Unknown
    After Repaired Value:$120,000
    Max Offer:$78,000 – Repairs

     
    Seller inherited a house. Her nephew lives there right now. This seller went on and on about every little detail. Usually this is a bad sign that the seller is absolutely, not motivated. Too much is owed anyway. Next.

  13. House in Area I’m Not Interested In

    [Source: Bandit Signs] 

    Homeowner wants to sell a 4 bedroom, 2 bath, house in a bad neighborhood.

    Here are the numbers:

    Asking Price:$62,000
    Amount Owed:$0
    Repairs:$Unknown
    After Repaired Value:$62,000
    Max Offer:$37,000 – Repairs

     
    Seller wants to sell house because he just doesn’t want it anymore. I’m not interested in it due to its location, but may work for someone else. Therefore, I am passing this one to see if I can get a birddog fee.

  14. Want What It’s Worth

    [Source: Absentee Owner Postcard] 

    Homeowner wants to sell a 3 bedroom, 2 bath, with converted garage house in a good neighborhood.

    Here are the numbers:

    Asking Price:$85,000
    Amount Owed:$60,000
    Repairs:$Unknown
    After Repaired Value:$85,000
    Max Offer:$55,000 – Repairs

     
    Seller was interested to see how much I would pay for the house. They have long time tenants and no real desire to sell. Next.

  15. That’s My Bottom Line

    [Source: Bandit Signs] 

    Homeowner wants to sell a 4 bedroom, 2.5 bath, 2000 sf house.

    Here are the numbers:

    Asking Price:$130,000
    Amount Owed:$Wouldn’t Say
    Repairs:$Says None
    After Repaired Value:$135,000
    Max Offer:$87,000 minus repairs

     
    I wonder if this guy is motivated….Just kidding. He is far from it. He wouldn’t tell me how much he owes and says that $130,000 is his bottom line. I still called with a ballpark. He wasn’t happy with it. Next.

  16. I’m Sick of Taking Care of the House

    [Source: Yellow Pages] 

    Homeowner wants to sell a 3 bedroom, 1 bath, 800 sf house in a not so good area.

    Here are the numbers:

    Asking Price:$Make Offer
    Amount Owed:$Nothing
    Repairs:$Foundation Repair and other (uncomfirmed)
    After Repaired Value:$55,000
    Max Offer:$30,000 minus repairs

     
    Son is tired of taking care of his mother’s house. She is the owner and is still alive. He is trying to get an idea on price, but I am going to pass this on in hopes of getting a birddog fee because I don’t like the area. One’s like this I am tempted to try and buy to wholesale, but I make a decent amount when birddogging and for a lot less work. Plus some of the people I pass on to are able to make lemonade out of lemons.

  17. My Ex Offered Me X Amount

    [Source: Bandit Signs] 

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

    Here are the numbers:

    Asking Price:$90,000
    Amount Owed:$65,000
    Repairs:$Says A Lot
    After Repaired Value:$95,000
    Max Offer:$61,000 minus repairs

     
    I like this neighborhood because I sold a house very fast here last year. It’s too bad the owner owes too much and is stuck on her outrageous price. The house needs a lot of work (according to her) and she owes 65k and says her ex husband offered 20k over that. So she wants 5k more than that and there is no way I will ever be able to do that. Next. (I wish I could say ‘More of the Same’ here instead of ‘Next’).

  18. Good REO

    [Source: REO] 

    Bank-Owned 4 bedroom, 2 bath, 1600 sf house.

    Here are the numbers:

    Asking Price:$85,000
    Amount Owed:$REO
    Repairs:$21,000
    After Repaired Value:$110,000
    Max Offer:$50,000 (65% ARV – Repairs)

     
    This one has been on the market for over 2 months and is ready for a price change. I’m offering $45,000 (don’t be afraid of the low ball). Hopefully the low offer will hit them at the right time. I think this house has a lot of potential.

  19. Listed Fixer

    [Source: MLS] 

    Vacant 4 bedroom, 2 bath, 1100 sf house, built in the 70’s.

    Here are the numbers:

    Asking Price:$60,000
    Amount Owed:$REO
    Repairs:$20,000
    After Repaired Value:$85,000
    Max Offer:$31,000 (60% ARV – repairs)

     
    This house is a true piece of junk and the neighbors are a little junky (reason for the 60% ARV instead of 65%). The house has settling issues (most in San Antonio do) and the owner looks to have just quickly patched and painted over the cracks. Another low ball. I always try to make an offer on every house I look at, even if I don’t want it. If I don’t want it, I just offer lower in order to be able wholesale it. If you spend time looking at a house, you should make an offer, even if it ridiculous. Don’t let your time go to waste. You never know what somebody will accept.

  20. Another REO

    [Source: REO] 

    Bank-owned 3 bedroom, 1.5 bath, 1400 sf house, built in the 80’s.

    Here are the numbers:

    Asking Price:$70,000
    Amount Owed:$REO
    Repairs:$20,000
    After Repaired Value:$105,000
    Max Offer:$43,000 (60% ARV – repairs)

     
    This house had a horrible layout. Most houses in the area are 2 full baths as well. This one gets into the same thing as the last one, where I really don’t want it, but will make an offer anyway. It’s been on the market a while (if it was a new listing, I would not waste the Realtor’s time).

  21. Hour Away – Falling Down House

    [Source: Website] 

    Homeowner wants to sell a vacant, falling down 3 bedroom, 1 bath house on almost 5 acres. He owes taxes and about to lose the house. He says a tree fell on the house and has pretty much destroyed it. I need to make time to go and see this one. It’s pretty far and from the satellite images, the neighbors look like junkyards.

Summary

What do I have to do to put another one under contract? I know the next one will be under contract soon. Lots of leads. The absentee owner leads really stunk. Know I remember why I haven’t sent them in a long time. I’d like to get input from other people that mail to absentee owners to see if the response rate increases with subsequent mailings.

Plans For Next Week

  • Get another one under contract. 🙂
  • Call more REO Realtors.
  • Check on rehabs.
  • Get more probate leads from the courthouse and send letters.
  • Have more bandit signs put out.
  • If time: drive for dollars again.


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37 awesome responses to “The Seventh Week – 21 Leads”

  1. John on

    Danny,
    As far as absentee mailings, I like to have a large list and do multiple mailings to them throughout the year.
    I think you need to ramp up your bandit signs. Keep putting out 50-100 per week. A guy by the name of Jon Kubas started the whole “we buy houses” signs and he put out 150 per week like clockwork. He told me it was his only form of marketing!
    I just put out 20 last week and had about 30 calls.
    Just some suggestions you might want to think about.

    John

  2. Mat on

    My Bandit signs get about a 20% return rate. I usually put out 20-25 at a time and get 5-7 calls off of those.

    My last yellow letter campaign was about a .5% (176 mailings, 1 call) call back rate, but that one caller was a qualified lead! so at least a 100% conversion.

    Sorry about this week’s results, but like you said, just closer to the good ones. NEXT!

    Keep em coming!

  3. John on

    Danny,
    I live in Iowa…..we always get a ton of calls off bandit signs. Nobody puts them out, we are the only ones doing it.
    We put them mostly on city intersections at red lights and stop signs.
    One thing we are looking into is contacting store owners/gas stations that have good locations and ask them if we can put a sign out front. We would pay them a small monthly fee or part of the deals we get. Got this idea from a guy in PA….he has like 5 different locations.
    Like Ron Legrand says, “Some Will Some Won’t…go milk another cow!”

    John

  4. GeorgiaNT on

    Danny,

    First I would like to thank you for how much time your putting into this Blog! I’ve been dabbling ( meaning I haven’t made any money … YET ) in RE for about 5 years and I realize the info that your are freely posting here is priceless. Just the fact that your willing to share in detail your marketing strategies, cost analysis, and daily progress makes you a rare breed of investor.

    Seriously, as I’m sure you know, there are guys that would charge 10K just to be available to answer the same questions that you answer in your comments! I’m glad I stumbled onto this blog and again thanks for your generosity!

    GeorgiaNT

  5. Tamara Pickens on

    Nice posting. I am about to start an absentee mailing as well, so maybe we can compare results.

  6. Russ on

    Hey Danny,

    I’m new to your blog. Appreciate you are going into details.

    In my early days I didn’t know that I will have to analyze/see many houses before I buy one. Somehow gurus always left that part out or I missed it. It takes a person with determination to make it thru 1st year.

    Thanks for sharing. Nice post. I’ll certainly be back to check out more!

    Russ

  7. Chris on

    Danny,

    On no.8 “Realtor Owned Fixer” you estimate repairs at $20k, but I don’t see it. By looking at the pictures the materials alone would likely be $20k, if not more. The house is in rough shape.. no central HVAC unit, new gutters, lots of sheetrock, new kitchen, and an updated bath, a few windows, etc.

    Can you explain how you came-up with $20k in repairs?

  8. Bilgefisher on

    Danny,

    you mentioned not liking absentee owner letters. (that’s my main form of direct marketing at the moment). Is it just poor leads or lack thereof?

    Very curious on the marginal deals as well. For a house in good condition, why not sub2, wrap or lease option?

    BTW, I gotta say, your posts each week have been very motivational for me. I appreciate that.

    Jason

  9. Bilgefisher on

    Thanks Danny. I was curious about those since I have heard of a few folks do a lease option on sub2 with marginal equity. They require a down payment and sell the house above market. I believe Nick Johnson has done this.
    Ex: House worth 200,000. Owner sells at 190k. You lease option for 210k with 10k down payment to folks that may not qualify on a traditional mortgage. (Ive never done it, just trying to learn pros and cons from various sources).

    I haven’t gotten any calls yet on absentee owners. Still to fresh to say. 100 letters went out last Monday, 165 went out today. No calls yet.

    I had about 10% response rate on probate. Stopped doing those. I just couldn’t stomach a crying wife who thinks I make bin laden look like a saint. Plus probate leads are very expensive here in CO. It costs $5 per record to pull a probate file in every county.

    Jason

  10. John on

    Danny,
    That was a great interview with the REO agent…thanks for making that happen! However, if she is one of the largest reo agents in town seems she should have a handful of deals for you….at the minimum.
    You ever buy HUD houses??

    John

  11. Douglas on

    Great stuff here Danny! I saw your “comfort zone” article on Bigger Pockets and followed your link. Wow, a guy breaking down his real business model for the whole world to see and not charging a subscription or coaching fee?!? You are sending out some good Karma brother and it shall return good things to you.

    I will be following your entries to see how things go with these leads. My wife and I are small time investors in Utah and California. We like the bigger deals with 100k or more spreads. We only do a couple rehabs a year but it works…most of the time. I am looking to bump to the next level but have to get out of my comfort zone. Yikes!

    Keep up the good work!!!

  12. Bailey on

    Eight weeks out of ten. I’m almost caught up in the reading. I’m putting up my seller’s website, but I can’t take my eyes off the blog. lol

    B

  13. EJ on

    Hi Danny,
    First of all, would like to thank you for a great blog. Tons of detailed information. Best real estate blog out there…

    My question:
    You briefly covered garage conversions and poorly done additions in your post. What’s your approach to un-permitted additions? Do you get permits for them retroactively when you complete your rehab or what’s your approach?

    thank you,
    EJ

  14. Nick on

    Danny – absolutely love your blog!

    When you do mailings to drive for dollars, do your repeat mailings have different verbiage or formats (ex: first is yellow letter, second is post card, etc)? Or do you just keep sending the same mailpiece? What is the frequency of mailings to a particular list (weekly, monthly)?

    Thanks so much! As a relative newbie, your blog motivates me to keep at it!

  15. Adam on

    Recent full blog reader, first time comments:
    I hit the King County (Seattle, WA) Court Clerk today to review Probate files. The process there is to search one bank of terminals (old style tab fields) by NAME to find case numbers, then on the other side of the room enter case numbers at PC intranet terminals to view the individual case files.
    Of the 5 cases I had time for it appeared as though the most useful of the up to 15 documents was the Will itself. No other documents seemed to indicate the existence of any Real Property. The Wills listed Executor, which is useful, but all 5 just generally referred to all possessions and personal and real property being left in the decedents’ desired proportions.
    Surely every court is different but in your experience, did I miss something obvious that would indicate real estate?
    If I am simply in for a long day at the courthouse? What parameters do you recommend identifying before mailing to Executors? Any executor, whether spouse or child, the more heirs the better after checking Recorder records for property owned? Ideal age range for cases in weeks or months?
    Again, the only search fields are case # and Last Name. Do you have a list of typical mainframe wildcards or other old school suggestions? I hope to search for more than Smith, Jones, and Johnson… I’ll try consecutive case numbers at the second bank of viewing terminals next time.
    Thanks for all the great information and insight into your business!

  16. Armando on

    I believe I read that when you calculate the amount you would like to offer, you say that you want to make at least 20k. I also, see that you pass on a lot of places that may get you less than number. However is there a problem with taking on some of those places and only get 10-15k out of them. I feel that making money is making money, and would rather get 10k out of 20 projects, than 25k out of 5. Or do you see the lesser profit a waste of your energy and resources?

  17. Howie S on

    On #20 you mentioned “This house had a horrible layout. Most houses in the area are 2 full baths as well. This one gets into the same thing as the last one, where I really don’t want it, but will make an offer anyway. It’s been on the market a while (if it was a new listing, I would not waste the Realtor’s time).”

    Why are you more likely to throw an offer if its been on the market for awhile? Because no one has been able to capture it thus far?

  18. Kenny on

    Hey Danny,

    Your website has been a God send. Thank you for all of the information and for being an open book.

    My question: I know you use a 65% model when making offers. Is this because you are using hard money? I understand that you like to give yourself room for trouble but I guess I’d like to know if you would maybe extend that to 70-80% if you were not using hard money (Maybe getting money at under 5% or straight cash).

    (ps I’ve been trying to sign up for your mailing list and can’t seem to get a confirmation email, also I’m in SA and would love to be a part of your wholesale list if you are interested in more investors)