Returned Letter With Message From The Owner

Twenty Eighth Week – Old Lead Put Under Contract

Danny Johnson / 39 comments

Here is what happened during the Twenty Eighth week of documenting our flipping houses adventures. 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:

Put Another House Under Contract

Got a call from a guy that has a house he’s been trying to sell since March. I had actually looked at it back in March and made an offer. He just recently decided to list it with a Realtor and has only received one showing. He is moving out of the country and just wants to have it gone.

He called to tell me that he was willing to take my offer, if it still stood. I could not remember the house, even after looking at the pictures that I had taken. So, I went back to see it and decided that it was still a deal. The comps had to be checked again because it had been so long and a lot can change quickly in this market.

The seller wanted to have it closed within 3 days and we didn’t sign the contract until almost 5:00 that afternoon. I had to scramble. As soon as I left his house, I was making calls to get everything lined up. So far, we are still set to close tomorrow.

This one will be called the ‘Flatulent House’. I hesitate to name it that, but it is all that comes to mind. πŸ™‚ The seller had a problem with passing gas as we talked at the house. I’m sure it was uncontrollable for him and I had a very, very hard time not changing facial expressions while talking to him as it happened. Whew.

Details and pictures soon.

Busy With The Move

Boxes everywhere and still a ton of stuff to box up. I was just thinking how funny it is that we pay big money for houses and then do our best to get boxes for free. Just can’t see paying money for new boxes. We hit the jackpot yesterday by chance.

As we were driving behind our favorite grocery store (to get to another store without dodging pedestrians in the front), we saw a cart full of boxes that had already been broken down. There were two young employees messing around with something else and we asked if they minded if we took them. You could tell one of them was thinking of the ramifications and just ended up saying “go ahead and steal them”. Not really a permit to load up the boxes, but it was enough for us.

I really only bring all of this up because we are in the middle of it all and I just don’t have as much time available to put as much attention into this post as I usually do.

More New Contractor Dramatics

The journey even still continues in my attempts to find another good contractor for the rehabs on the houses we are flipping. With the move coming up, I did slack off a little in my search so it’s not like it has been a 24/7 attempt to find one.

Here is the post I wrote concerning the process: Finding and Interviewing Contractors for Your Flip Houses

Had another contractor that I was willing to work with and had agreed on a price. He was happy to be getting the work.

After telling him that we would have to meet first thing in the morning on Monday, he just acknowledged but then continued talking. Do not cut them off when they start rambling. Just be quiet and listen. He started mentioning some things that concerned me. Mainly, that he had just finished a big job for a church and he was waiting for payment and therefore could not buy any materials and needed money up front.

This could be a valid problem but I believe it is probably a normal situation for contractors that have been out of work for a little while. They are behind on their bills. This is understandable and I can’t fault them for that. The problem is when they receive some money for materials up front (as I do not buy materials – all bids are for labor and materials) and it either goes to finish a job they haven’t finished yet or to pay their bills. They begin with you upside down and it is never pleasant.

I’m not saying this is always the case, but I’d err on the side of caution.

I was still going to meet with him and go over the contract. The draw schedule was set up so that there was less chance of his becoming upside down on the job. The payments would be smaller and based on work already done.

My schedule was busy and I had to get up early to be able to meet with him. He wasn’t there on time and then called 10 minutes late to tell me that his alarm did not go off. Already with the excuses and we had not even started. This was a deal killer for me. Too soon to have issues and it usually is a sign of how things will always be with him.

So now I am back to square one. Not a big deal. I feel relieved that I avoided a dud.

Closed on the ‘Perp House’

Closed on the house that I mentioned getting under contract two weeks ago. This house was not where my wife found someone inside the house that had broken in, but is in the same neighborhood as where that happened. So, I am going to call it the perp house. This one will most likely be fixed and sold with owner financing. I will post the numbers and pictures within the coming week or two.

Closed on the ‘Audi House’

Closed this morning on the first house that I mentioned getting under contract two weeks ago. The seller had a nice Audi and honestly, that what the first thing that came to mind when trying to come up with a name for it.

The house needs a lot of repairs and I will most likely wholesale it. Numbers and pictures will be posted as soon as it is wholesaled. Got several people that might be interested that I need to have see it. Hopefully it will go quickly and profitably.

Marketing

Total Motivated Seller Leads This Week: 13

Lead SourceLeads This WeekNotes
Bandit Signs2Wow. Some are still up?
Yellow Pages2For 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 Dollars0Have not done this in a while.
Wholesale Deals0Made Offer
Absentee Owner Mailing1Have not mailed in a while.
Probate0Have not mailed for several weeks.
Craigslist0Just a basic ad saying we buy houses.

Total Leads To Date [419]
This is the total number of leads for each source since I started posting about the leads (late March 2011).

Lead SourceTotal Leads To Date
Buying Website:218
Bandit Signs:64
Yellow Pages Ad:47
Absentee Owners:29
Driving For Dollars:17
Probate Letters:11
Wholesalers:11
REO Realtors:7
Referrals:7
Realtors:3
Craigslist:2
MLS Search:2
For Sale By Owner:1

Leads Analyzed

  1. Moving To Take Care of Mother

    [Source: Yellow Pages]

    Homeowner wants to sell a 3 bedroom, 1.5 bath, 1100 sf house in a so-so neighborhood.

    Here are the numbers:

    Asking Price:$35,000
    Amount Owed:$23,000
    Repairs:$15,000
    After Repaired Value:$70,000
    Max Offer:$30,000 ($45,000-$15,000)

    Seller is moving in with his mom so that he can take care of her. He mentioned that the house was already being made ready for sale but did not finish. He made it sound like it was nice and just needed minor touch ups.

    I went out to see it and was surprised by the stink. I’m sorry but the house really reeked of dog. There were giant rat holes chewed through the wall and a ceiling in a bedroom. Everything needed to be redone. I think the only thing that looked fine was the roof and water heater.

    He was not interested in my offer of $25,000. I really did not want to go above that. The room was there for another investor so I birddogged it to see if he could make it work.

  2. Wants To See What I’d Pay

    [Source: Absentee Owner Postcard]

    Homeowner wants to sell a 3 bedroom, 2 bath, 1600 sf house in a good neighborhood.

    Here are the numbers:

    Asking Price:Make An Offer
    Amount Owed:$50,000
    Repairs:cosmetic (unconfirmed)
    After Repaired Value:$120,000
    Max Offer:$78,000 – repairs

    Seller wants to see what I would pay for the house. He’s had a tenant in it for the last 4 years and was acting like it would be difficult to show the house. I’m really not sure why so many landlords are afraid to show rental houses with tenants. Maybe they have a fear of their tenants worrying and moving out on them.

    He just wanted me to make a ballpark figure and then we would go from there. I did a little research and found out that he is behind on the property taxes. So, it sounded like a tire-kicker at first, but there is probably some motivation there.

    I told him I would probably be in the 70’s.

    He was not interested but I will follow up with him.

  3. Relocating

    [Source: Website]

    Homeowner wants to sell a 2 bedroom, 1 bath, 700 sf house in a not-so-good neighborhood.

    Here are the numbers:

    Asking Price:Make An Offer
    Amount Owed:$0
    Repairs:several things (unconfirmed)
    After Repaired Value:$45,000
    Max Offer:$20,000 – repairs

    Seller is relocating and wants to sell fast. The house is tiny and not in an area I focus on. This one got passed on to another investor as nothing is owed and there is some motivation.

  4. Trying To Sell For Over 18 Months

    [Source: Website]

    Homeowner wants to sell a 3 bedroom, 1 bath, 1000 sf house outside of town. I did not even analyze this one as I do not buy that far out of town. This house is in an area that my father buys in. So, I sent the lead to him.

  5. Having Trouble Making Payments

    [Source: Website]

    Homeowner wants to sell a 2 bedroom, 1 bath, 750 sf house in a not-so-good neighborhood.

    Here are the numbers:

    Asking Price:Make An Offer
    Amount Owed:$37,000
    Repairs:cosmetic (unconfirmed)
    After Repaired Value:$60,000
    Max Offer:$35,000 – repairs

    Very similar to a lead a couple positions up from this one. The difference is that this ones owes money on the property and it makes it that much easier to birddog it, which is what I did. Next.

  6. Does Not Have The Time Or The Patience

    [Source: Website]

    Homeowner wants to sell a 3 bedroom, 1 bath, 900 sf house in a not-so-good neighborhood.

    Here are the numbers:

    Asking Price:Make An Offer
    Amount Owed:$53,000
    Repairs:house gutted (unconfirmed)
    After Repaired Value:$55,000
    Max Offer:$30,000 – repairs

    Seller was rehabbing a house of theirs and have it in the gutted stage. They do not have the time or patience to mess with it. Sadly, I do not either as I would have to pay too much for it because too much is owed. Next.

  7. Inherited and Lives Out Of Town

    [Source: Website]

    Homeowner wants to sell a 3 bedroom, 2 bath, 1300 sf house in a not-so-good neighborhood.

    Here are the numbers:

    Asking Price:$42,000
    Amount Owed:$0
    Repairs:mostly cosmetic (unconfirmed)
    After Repaired Value:$60,000
    Max Offer:$35,000 – repairs

    Homeowner inherited house from her parents and lives out of town. She does not want to mess with the house and is willing to sell at a discount. The area is not one that I prefer so I will probably send another investor to look at it when the seller comes to town next week or go myself and try to contract for wholesale. Depends on my schedule and with the move, I’m sure it will be birddog time.

  8. Has Other Houses And Cannot Afford

    [Source: Yellow Pages]

    Homeowner wants to sell a 3 bedroom, 3 bath, 2200 sf house in a not-so-good neighborhood.

    Here are the numbers:

    Asking Price:$135,000
    Amount Owed:$87,000
    Repairs:cosmetics (unconfirmed)
    After Repaired Value:$85,000
    Max Offer:$55,000 – repairs

    Seller cannot afford all of his houses and wants to get rid of this two story one because they are having trouble going up and down the stairs. The house is in a rough area and he has a way over inflated idea of its value. No deal here or with any of his other houses. Next.

  9. Lost Job – Facing Foreclosure

    [Source: Bandit Signs]

    Homeowner wants to sell a 4 bedroom, 2.5 bath, 2400 sf house in a not-so-good neighborhood.

    Here are the numbers:

    Asking Price:$185,000
    Amount Owed:$185,000
    Repairs:cosmetics (unconfirmed)
    After Repaired Value:$129,000
    Max Offer:$84,000 – repairs

    This is one of those areas that was hit really hard when the housing market tanked. Values keep dropping because of foreclosures in the area. He owes way more than the house would ever sell for. Can’t do it.

  10. Separating Couple

    [Source: Bandit Signs]

    Homeowner wants to sell a 4 bedroom, 2.5 bath, 2100 sf house in a decent neighborhood.

    Here are the numbers:

    Asking Price:$120,000
    Amount Owed:$117,000
    Repairs:cosmetics (unconfirmed)
    After Repaired Value:$120,000
    Max Offer:$78,000 – repairs

    Couple is separating and want to sell the house. Too much is owed and they are not behind on the payments. Can’t do it. Short and sweet.

  11. Willing To Come To The Table With Money

    [Source: Website]

    Homeowner wants to sell a 3 bedroom, 2 bath, 1000 sf house in a bad neighborhood.

    Here are the numbers:

    Asking Price:$20,000
    Amount Owed:$24,000
    Repairs:a lot (unconfirmed)
    After Repaired Value:$35,000
    Max Offer:$10,000 – repairs

    The area this house is in is very bad. You can tell just by the fact that she immediately mentioned being willing to come to the table with 4k+ to help sell the house (because she owes 24k). I don’t want it and sent out to several investors and nobody wants to touch it. This is the type of property you need to buy in the low teens.

  12. Short Sale

    [Source: Website]

    Homeowner wants to sell a 3 bedroom, 1 bath, 1400 sf house in a good neighborhood.

    Here are the numbers:

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

    Seller is facing foreclosure and the lender is willing to look at offers for a short sale. Going to look at this one today.

  13. Moving To Arizona

    [Source: Website]

    Homeowner wants to sell a 3 bedroom, 2 bath, 1600 sf house in a good neighborhood.

    Here are the numbers:

    Asking Price:$132,000
    Amount Owed:$131,000
    Repairs:none (unconfirmed)
    After Repaired Value:$130,000
    Max Offer:$84,000 – repairs

    Seller is moving out of state and needs to sell their house first. The problem of course is that too much is owed.

Summary

Busy week with trying to find a good contractor and boxing up stuff for our move. Still spending a lot of my day at the new house making sure the work is progressing and that it is done to a standard that we want. Nothing worse that having work done on your house and having to see the imperfections every day.

Plans For Next Week

  • Find and Hire a Contractor
  • Move. That’s It.

Please ReTweet and Like this post because it’s the nice thing to do and I truly appreciate it.

-Danny

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.

“Formal education will make you a living; self-education will make you a fortune.” – Jim Rohn

Thank you for following along with us on our adventures in flipping houses. We hope you are enjoying it and that it is helping you to learn how to flip houses or improve your house flipping business, whatever the case may be.

Leave a Reply

Your email address will not be published. Required fields are marked *

39 awesome responses to “Twenty Eighth Week – Old Lead Put Under Contract”

  1. Pat Chadwell on

    Great information Danny. Thanks so much for sharing. You give such details. Awesome!

  2. James on

    Keep up the good work. I like this alot. seeing what others are doing.

  3. Pete on

    this isn’t one of those “scratch and sniff” blogs is it?? πŸ™‚

  4. John on

    Good stuff Danny. Really enjoy your posts.
    How are you funding your deals?

  5. Pete on

    u ever put wholesale deals on the mls?? we got one now we are thinking of closing on ourself then putting it on mls. I think that’s where a majority of cash buyers are looking….just so much exposure that way.

  6. steve on

    Really enjoy the info you share. I am a long time realtor that would love to flip 1 or 2 a year to make some extra $. Unfortunately the market I am in (northeast suburban atlanta) is full of leads like #9.

  7. jeff on

    Thanks again Danny,
    Seems all I can do for you is retweet the articles and Like it.I also want to thankyou for the great updates on your business.It helps me out alot,to see how an advanced investor handles deals coming in his way,analyzing them,putting in offers or not and the options you have.Having a large Network around you is so very important I have learned,and its also backed up by you,how you show when a particular deal doesnt fit your criteria,it doesnt mean its a dead deal.Extract at least a Bird Dog fee if possible,then move on.Heck,a Bird Dog fee of a $1000.00 if you can get it,is the amount I used to gross in a week of working full time and being on call.I wasnt happy about getting layed off a couple years ago,but I think it was the best thing that ever happened to me with the situation I was facing.These articles and updates you have are a great way for myself and others to learn the business.Again,Thanks so much.

    Jeff

  8. Jeff on

    I’m always blown away by some of the numbers in your posts. To think you can buy a house for the price of a decent used car is fascinating to me. Keep up the good work.

    Jeff

  9. Brian on

    Have any of the deals you’ve bird dogged made any money for you?

  10. Fran on

    I’m so glad to see the summary of your analysis and to appreciate the range of “realities” that are out there. We’re almost finished rehabbing our first rehab house – whew! Our agent put the “For Sale” sign in the yard 2 days ago and will list the house on MLS sometime next week. He told us if we sell it before he lists it, he’ll represent us without charge. πŸ™‚

  11. Mike W. on

    A different mind set. Enuff said!!

    Danny, I foresee your birddogging skills progressing in the right direction. I don’t think you’ll miss out on any more good (great) deals. I see that you have a different mind set.

    Mike,
    Liked and Tweeted

  12. Donovan on

    What’s the numbers since you started, Rehabs and houses sold?

  13. Don on

    I just found your blog this week and I have been reading all the past weeks. I currently do rentals and I am about to close on the next house. You have motivated me to try flipping it.

    I have a safety net: I was already buying and renovating with the intent to rent. Worse case, I will just have some carry cost and will be back to a rental.

    I don’t have MLS access, but I have the appraisal that my bank required. It shows 4 good comps with 125 DOM being the greatest (one is 35). If the appraisal is good, I will be at about 69% of appraisal after all the work. That’s a little higher than you, but the contract was signed and it meets my rental criteria.

    Do you wait until everything is complete before putting the house on the market?

    How do you go about finding a good agent for selling a house?

    I have an agent I work with for offers, but he is leaving the business. Plus, making offers is very different from getting a house sold.

  14. Mike G on

    Congrats on getting another house under contract. And it seems like you made a wise decision passing on the contractor. If the guy can’t get up early, that’s a really bad sign.

  15. FRED on

    Hi Denny,

    How do you pay you contractor? 100% after whole project is done or in increments as rehab progresses?

    Thanks.

    1. Mike G on

      Not sure how Danny pays, but we usually pay a small amount upfront (less than 10%), then pay incrementally as certain things are completed, with a final chunk at the end once everything is completed to our satisfaction and the contractors have signed a release waiver.

  16. Sharon Hiebing on

    I’ve been reading all of your 34-week series, and one thing that keeps puzzling me is who the heck does your wholesaler(s) sell these houses to in the not so good or bad neighborhoods? And what do the end-buyers do with them? It seems nothing is selling in these areas, so who would a wholesaler sell them to? I can’t imagine anyone would really want to be a landlord there (I suppose some would, but not me lol!).

    Anyway, when you have time, would love to know what type of strategy investors are using in those areas that allow you to birddog there all the time. Thanks!

    Sharon