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The Twelfth Week – This Is Why You Don’t Give Up

Danny Johnson / 19 comments

These are the results of the Twelfth week of opening up 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:

Got Another One Under Contract!
The marketing is starting to bring steady deals now. New leads are coming in and I am still following up on old leads. This was one I had made an offer on a couple of weeks ago. Honestly, I didn’t think she would change her mind but she did. She was originally asking $150k. She does not owe anything except some property taxes. I originally was pretty conservative with the $160k ARV. This house would have sold for $180k two years ago. It still might get $170k and I will try to get that at first. I had offered $95k and she was not all happy with it. Several days later I called and asked if she had thought about it. She asked if I could pay $120k and I told her the most I could do would be $100k. Several days later she called and mentioned that another investor had offered her $105k and wanted to know if I could do $110k. I knew I couldn’t but scheduled with her to take my wife by to see it.

The reason I didn’t just tell her that $100k was the most I could do over the phone was because it would have been too easy for her to just say no and call the other investor back. I wanted more time in the deal and to discuss it face to face.


My wife and I went back over to the house and my wife got the tour. We sat and talked a little while and then told her that I just could not pay more than $100k. She asked if I could do the $105k the other investor had offered and I quickly told her that I just couldn’t. At $100k I knew I could close it and she could consider it a done deal. She thought about it and asked if could close within a week. It turns out that she would have the help of a friend to move the next weekend only and she needed money to move as well. I told her we could close before that weekend and allow her to stay in the house 5 days after closing if we withheld $5,000 at closing until she vacated ($100/day penalty for every day over – this is very important). She accepted our offer. She then told us that she went with us because she trusted us and liked us. I always like to hear that because it makes all the difference in the world. This proves that you can pay less than another investor and still get the deal.

The repairs should not exceed $6,500 for some paint and carpet and small cosmetic repairs. With the repairs I am just over my Maximum Allowable Offer of $97.5k, but remember I was really conservative with the resell value and the house will be on the market within a week. I will post pictures and rehab details once we close and the seller has vacated the house.

This deal came from Bandit Signs.

Closing On Historic House Still Held Up
We are still awaiting Chase to send a release of lien on the property. The seller has informed me that he sent everything they asked for and we are just waiting for them.

Putting Final Touches on the Free Lead Manager Web Application
I’ve been fixing a couple things and adding a couple more features. Just a handful of things to do and it will be released. I think you will like it. 🙂

Prepared Letters For Mailing
Another batch of drive for dollars prospects has come due for more letters. I printed out a batch of letters and signed each one. Already had this new batch put into envelopes and hand addressed. These will be mailed out on Monday (want to minimize calls this weekend as I need a little break).

New Article Posted on the Bigger Pockets Blog
My article entitled ‘5 Things You Should Know Before Talking To Sellers’ was posted on Bigger Pockets, you can read it >> HERE << (it will open in another window).

Marketing

Total Leads This Week: 12

  1. Bandit Signs – 1 – 50 were put out early last week.
  2. Yellow Pages – 1 – For a picture of my ad, visit the ‘The First Week’ post.
  3. Buying Website – 7 – For a link to my site, visit the ‘The First Week’ post.
  4. Drive For Dollars – 3 – Mailed out at the beginning of the week.
  5. MLS – 0 – Did not look at any listed properties this week.
  6. Wholesale Deals – 0 – No wholesales sent to me this week.
  7. Referral – 0 – The seller for the house I put under contract said she told a friend about me and I should be hearing from them soon.
  8. Probates – 0 – Still looking for someone to gather these for me.

Leads Analyzed

  1. Vacant For A Year

    [Source: Bandit Signs]

    Homeowner wants to sell a 3 bedroom, 1 bath, 800 sf house in a bad neighborhood.

    Here are the numbers:

    Asking Price:$45,000
    Amount Owed:$0
    Repairs:$Everything (unconfirmed)
    After Repaired Value:$50,000
    Max Offer:$Not For Me

    Seller just wants to unload this house in a bad neighborhood because they don’t need it. It’s been vacant over a year and needs a lot of work. It is in a historic district, but this one really has gained any traction and with the economy in the dumps, I just don’t see being able to sell this house easily. I passed it on to another investor.

  2. House In Laredo, TX

    [Source: Website]

    Homeowner wants to sell a 7 bedroom, 4 bath, 3500 sf house in Laredo and willing to take $80k. I do not buy in Laredo. If you do, please contact me and I will pass on the seller’s contact info.

  3. Lost Jobs Years Ago

    [Source: Website]

    Homeowner wants to sell a 2 bedroom, 1 bath, 800 sf house in a neighborhood outside of town.

    Here are the numbers:

    Asking Price:$67,000
    Amount Owed:$59,000
    Repairs:$Garage doors, cosmetic work (unconfirmed)
    After Repaired Value:$75,000
    Max Offer:$48,000 – Repairs

    Homeowners lost their jobs several years ago and have been living off retirement money they took out. They are now just about out of that and need to sell. The probably is that they simply owe too much. I cannot buy this. A short sale might be possible but would be too much work for a 2 bedroom that is a good distance from where I live and would sit on the market for a while. Next.

  4. Wants to Move Out Of Town

    [Source: Website]

    Homeowner wants to sell a 3 bedroom, 2 bath, 1500 sf house in a neighborhood outside of town.

    Here are the numbers:

    Asking Price:$55,000
    Amount Owed:$46,000
    Repairs:$Garage doors, Kitchen cabs (unconfirmed)
    After Repaired Value:$70,000
    Max Offer:$45,000 – Repairs

    Homeowner just doesn’t want to do repairs on the house because they want to move to New Braunfels. Too much is owed and the area really is not one I am interested in. Next.

  5. Inherited and Needs Work

    [Source: Yellow Pages]

    Homeowner wants to sell a 4 bedroom, 2 bath, 2000 sf house in a good older neighborhood.

    Here are the numbers:

    Asking Price:$100,000
    Amount Owed:$0
    Repairs:$A LOT – Repairs Not Calculated Yet
    After Repaired Value:$Depends on Rehab 160k-225k
    Max Offer:(range of $104k-135k) – repairs

    Homeowner inherited the house and has no need for it. It needs a lot of repairs due to deferred maintenance and does not want to deal with the hassle. I was unsure of her motivation because she seemed concerned about how we operate.

    These types of sellers need a little extra explaining and talking to so that they are more comfortable with you. If you have subscribed and received the 7 Crazy Real Estate Investing Stories Ebook, you will recall the guy that thought we set up the attorney’s office just for appearance to get him to sign over his house (we had to meet there to sign the contract as I wanted to lend more legitemacy to the whole thing). You know, like in a movie where the guy goes back the next day and it is just a vacant warehouse.

    Asking price was reasonable though and so I went to see it this morning. I think the ARV would probably tend to be on the upper end of that scale because the house has a lot of character, but it also needs A LOT of work! I need to figure out a repair estimate for this one and an offer price as I would prefer to wholesale it. So many calls this morning that I have not had a chance to.

    See Picture Here(will open in another window)

  6. Listed For Year and a Half

    [Source: Website]

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

    Here are the numbers:

    Asking Price:$165,000
    Amount Owed:$150,000
    Repairs:$Nothing (unconfirmed)
    After Repaired Value:$165,000
    Max Offer:$107,000 – Repairs

    House has been listed forever and it’s because it is priced too high. They have no room to lower it. This conversation lasted all of 2 minutes. Next.

  7. Fixed Up To Sell

    [Source: Drive For Dollars Letter]

    Homeowner wants to sell a 3 bedroom, 2 bath, 900 sf house in a decent neighborhood.

    Here are the numbers:

    Asking Price:$75,000
    Amount Owed:$50,000
    Repairs:$None (unconfirmed)
    After Repaired Value:$75,000
    Max Offer:$45,000

    He fixed the house with the intention to sell (sounds familiar). I’m not sure what it is with investors, but a lot of times they want to hide the fact that they are investors. I know when selling a house retail, people tend to be less apprehensive if they think they are buying from a homeowner that lived there. Possibly because of the flipping houses shows, people think that we all ‘slap lipstick on pigs’. This conversation didn’t last long. We were wasting each other’s time. Next.

  8. Separated 3.5 Years Ago

    [Source: Drive For Dollars Letter]

    Homeowner wants to sell a 3 bedroom, 2.5 bath, 1500 sf house in a good neighborhood.

    Here are the numbers:

    Asking Price:$113,000
    Amount Owed:$113,000
    Repairs:$bathrooms, siding & cosmetic (unconfirmed)
    After Repaired Value:$120,000
    Max Offer:$78,000 – Repairs

    Homeowner separated from her husband 3 years ago and has been treading water. She simply can’t afford the house anymore and her ex-hubby had taken out a home equity loan right before he split. Too much is owed. This could possibly work as a short sale for someone. I’m not interested in spending the time on it, but if you are, contact me.

  9. On the Market One Whole Year

    [Source: Website]

    Homeowner wants to sell a 4 bedroom, 2.5 bath, 1700 sf house in a good neighborhood.

    Here are the numbers:

    Asking Price:$140,000
    Amount Owed:$136,000
    Repairs:$None (unconfirmed)
    After Repaired Value:$140,000
    Max Offer:$91,000 – Repairs

    Too much owed. Next.

  10. Tiny Gutted House

    [Source: Website]

    Homeowner wants to sell a 2 bedroom, 1 bath, 600 sf house in a not so good neighborhood.

    Here are the numbers:

    Asking Price:$Make Offer
    Amount Owed:$0
    Repairs:$Everything (unconfirmed)
    After Repaired Value:$?
    Max Offer:$?

    They inherited the house and were in the process of gutting and repairing it to move into. They quickly realized how much work was involved and decided to sell. I told them that, based on what they were telling me about the house, the offer would be around 10k. They didn’t get mad, so I told them another investor would call them shortly and passed on the lead to investor that buys in the area. If he does something with it, I’ll get paid a referral fee of course.

  11. Does Not Want To Rent

    [Source: Website]

    Homeowner wants to sell a 4 bedroom, 2.5 bath, 3100 sf house in a good neighborhood.

    Here are the numbers:

    Asking Price:$Make Offer
    Amount Owed:$135,000
    Repairs:$Cosmetic (unconfirmed)
    After Repaired Value:$195,000
    Max Offer:$126,000 – Repairs

    Seller moved out of town and rented the house. Tenants trashed it. He moved back and into the house and has been fixing it up again, lost his job and has opportunities out of town. He does not want to rent again for obvious reasons. This one just owes a little too much. The ARV is conservative because there are a lot of foreclosure to compete with in that area. Probably will pass on this one, but will give it a little more thought. Maybe something creative can be worked out.

  12. Major Surgery for Husband and Wife

    [Source: Drive For Dollars Letter]

    Homeowner wants to sell a 3 bedroom, 2 bath, 1300 sf house in a decent neighborhood.

    Here are the numbers:

    Asking Price:$Make Offer
    Amount Owed:$28,000
    Repairs:$Cosmetic (unconfirmed)
    After Repaired Value:$90,000
    Max Offer:$58,000 – Repairs

    House was inherited and they are living there. They both have had surgery recently and cannot keep up with the house maintenance and cleaning. This one seemed really embarrased about the state of the house and was hesitant to even schedule an appointment. Still ended up saying she wouldn’t know until Sunday which day next week she could show it. I told her that I understand how hard it is to keep up with maintenance on a house even without medical problems. I am only interested in the ‘potential’ the house has and don’t care what shape it is currently in. She seemed more relaxed immediately. We’ll see what happens.

Summary

Fewer leads this week. Actually only got about 6 before this morning. This morning, before noon (that is morning isn’t it), I got 6 of the leads. Now have 3 under contract awaiting closing so I will be able to get more into the rehabbing and selling side of things. I am still sending out letters and will attempt to drive for dollars again soon. Another priority is to find someone to go to the courthouse for me to research probates.

Plans For Next Week

  • Look For Probate Gatherer or Do It Myself
  • Follow Ups
  • Work Some More on the Lead Manager Application
  • Find time to sign up for Accurint again and find owners of the worst Drive For Dollars properties.
  • Close on the property we got under contract this week. (lender is in place, insurance is in place, title commitment already in. Set to go.)
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.

An investment in knowledge pays the best interest. – Benjamin Franklin

Amen.

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Photo: Dana Lookadoo

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19 awesome responses to “The Twelfth Week – This Is Why You Don’t Give Up”

  1. John on

    The wholesalers in San Antonio must suck……..or you just haven’t hooked up with a good one yet?
    Thru 12 weeks and no deals bought from wholesalers.
    Just saying, it could be another source for deals. I think I’m gonna explore expanding our business to San Antonio. I’ll find you good deals!!

    John

  2. Ryan O. on

    Danny,

    It seems as though many of your leads are coming from your website. Just curious if you think that many folks are getting your name from other sources and then go to check you out on your website? When you are asking how they heard about you do you try to pursue this if they simply say your website? In other words are they just searching for S. A. house buyers, are they obtaining it from your yellow page ad and then going to website or are they receiving your other marketing first and then going to website?

    It is not a big deal but I am trying to put together my marketing plan and wanted your thoughts on the website leads.

    Also, thanks for your website! Just received the email about the 5 things you should know before talking with sellers…excellent content that relates your actual experience and how others can use the info. to help them in their house buying.

    Have a great weekend.

  3. John A. Johnson on

    3 under contract in 12 weeks is impressive to me. noted that your lenders, closing agents etc are all in place.
    Will you focus any of your blog on the financing side of your business?
    (that’s the piece that challenges me the most).
    John

  4. Bilgefisher on

    Danny,

    I know your not interested in lease option, but would it be something you could pass on? For instance lead #11. If the house is livable a lease option tenant may want to take on the repairs for a reduced sales price. Just a thought. Glad to see things picking up.

    Jason

  5. John on

    Can you give us any details yet about that house you are trying to wholesale??

    John

  6. John on

    Also……have you ever tried getting your cities list of code violation properties and mailing them? I’d imagine in San Antoinio, being the 6th or 7th largest city, would have a pretty big list. My city had 159 properties……

    John

  7. John on

    So it’s tough to get the list? I actually got mine from a newspaper reporter who did a story on some of the crappy houses in a certain neighborhood. He got the list from the city and I asked him to email a copy……..he did!
    How can they refuse to give the list out? Ask them if they’ve ever heard of The Freedom of Information Act. Yeah, I would take one of the inspectors out for lunch and see where that goes. If the list is hard to get, that means nobody is mailing it!

    John

  8. Brooks on

    That’s interesting about not being able to get the info – we have a publication called “The Mobile Record” – it’s a paper publication put out weekly by a group of little old ladies (at least that’s the picture I have in my mind) that has every public record regarding properties that week (sales, deeds recorded, loans, violations, etc.) – but if you asked people in Mobile, AL if they had heard of this most would say No. So maybe there is an underground paper like this in your market?

  9. Jean Norton on

    I have a couple of questions: what lead source came from each deal you got under contract?

    What is your internet marketing budge for advertising?

    Thanks – And keep those stories coming!

    Jean Norton

  10. Fred on

    Danny,

    When to talk to the seller first time do you tell them that you can pay X amount(ARVx65%-repair)and if they accepted it than you go and see the property to see how much repair would cost?Or you go see the property,evaluate repair cost and than start negotiating?

  11. Fred on

    Thanks,Danny.