Crazy House With Christmas Decorations - Good House Flip

Twenty Fifth Week – Christmas? Another Deal Under Contract

Danny Johnson / 20 comments

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

Is it Christmas already? I guess it is 365 days a year at the house in the picture. Crazy. You will stumble upon a lot of crazy theme houses as you cover most of your area. There is one in town that has about 5,000 birdhouses. The yard is completely covered!

These are the things I did this week:

Took A Break From The Bandits

Was going to put out more bandits, but there has been too much anti-bandit sign activity lately. Have to lay low for another couple of weeks. Our relationship with the person that puts them out is also a little strained at the moment (don’t ever, EVER sell a house with owner financing to someone you know, even a contractor).

Closing On ‘Honk Your Horn’ House Tomorrow

We were supposed to close on the Honk Your Horn house today but ran into a problem. It was a pretty big problem actually. I had made my offer in an amount that should have allowed the seller to not have to come to the table with any money at the closing. Unfortunately, the amount of taxes owed was quite a bit higher than we had anticipated.

The title company has to withold a certain amount for property taxes because the seller had a homestead exemption on it for the last five years and he was not living there. They have to withold the money to pay the difference and this put us over by quite a bit (several thousand dollars).

I talked it over with the seller and was attempting to see if he would be able to come to the closing with the difference. He was getting anxious and told me he would call me back. When he did, it was not what I wanted to hear. The talk was now starting in the direction of him backing out.

Back to negotiating. Can you pay half? No. What are you going to do? Keep making payments on it. How much are your payments? $800. Ok. How about you pay $800 and I will pick up the rest? (Did I just say that? Darn it.) Actually it was the only thing I could do to salvage the deal without having to pay the full amount. We should be alright.

I will have pictures and the numbers for you this coming week.

Got Another One Under Contract

Yes! Got another one. This one was from a couple of weeks ago. The seller was having difficulty getting the tenant out of the house. I was finally able to see it the other day. The place was trashed but very fixable. It smelled really, really bad, but I’m sure that was just the week old food sitting out on the counter and sitting in the nasty water that was in the sink. 🙂

The tenant actually showed up at the house while we were there. He did not look either of us in the face and I can understand why. I stayed out front with the seller to keep him company while the tenant was getting some of his stuff. The seller asked him when he would have all of his stuff out and tenant mumbled something about 5 days.

I immediately thought that they had always been way too lenient with this guy. His ‘stuff’ should have already been out on the curb by this point. I don’t mean to sound harsh, but this guy has been taking advantage of the seller for who knows how long, he’s trashed the house and was being somewhat disrespectful.

The seller told me to call his wife with whatever offer I would come up with. I worked up the numbers while sitting in my car in front of the house and then called the wife after running a couple more errands. I’d offered 20k and she quickly told me that her husband would never go for anything that low. She then asked if there was room for negotiating and I told her that the offer was so low that I did not build any room in for negotiating (which was actually the case). She told me she would talk it over with him and let me know.

They called me back that same evening and told me that if they netted $20k they would be willing accept the offer. I wanted to make sure that they knew the prorated taxes would still be coming out of the proceeds and they told me that they wanted to net $20k. I told them I would have to give that some thought (the taxes would be about $1,400) and call them in the morning.

The next morning, I got busy with a bunch of little things and was just about to call them, when they called me. They wanted to get this thing overwith and told me they were willing to net $19,000. Sure. I was willing to do that.

We met at a restaurant and got the contract together. This one should close within a couple of weeks.

I’m debating on whether to try and wholesale this house or fix it up and sell it with owner financing. I will post pictures and the numbers for the deal after we close.

Work Still Progressing On Our House

Have you ever seen about 2300 square feet plus of tile being removed?

another house flip rehab


Frustration House On The Market

The Frustration House is finally on the market. Here are the after rehab pictures.

Probate Info Gathering Has Ceased

The guy I had pulling probate leads for me called and informed me that he would no longer be able to. Crud. This is not good. Guess I will have to look for someone else. Anybody out there live in San Antonio that wants to gather these for me?

Flipping Houses Discussion Facebook Page

Have you ‘liked’ the Flipping Houses Discussion Facebook page yet? What are you waiting for?

flipping houses discussion facebook fan page

Marketing

Total Motivated Seller Leads This Week: 19

Lead SourceLeads This WeekNotes
Bandit Signs150 went out two weekends ago.
Yellow Pages0For a picture of my ad, visit the ‘The First Week’ post.
Buying Website11For a link to my site, visit the ‘The First Week’ post.
Drive For Dollars0Have not done this in a while.
Wholesale Deals1Made Offer
Absentee Owner Mailing5From almost 1000 postcards couple weeks ago.
Probate1Not a good response rate so far.

Total Leads To Date [370]
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:187
Bandit Signs:61
Yellow Pages Ad:40
Absentee Owners:28
Driving For Dollars:17
REO Realtors:7
Probate Letters:9
Referrals:6
Wholesalers:9
Realtors:3
MLS Search:2
For Sale By Owner:1

Leads Analyzed

  1. Tired Landlord

    [Source: Absentee Owner Postcard]

    Homeowner wants to sell a 4 bedroom, 2.5 bath, 2500 sf house in a good neighborhood.

    Here are the numbers:

    Asking Price:$160,000
    Amount Owed:$140,000
    Repairs:cosmetic (unconfirmed)
    After Repaired Value:$160,000
    Max Offer:$105,000 – repairs

    Landlord is tired of dealing with the house and lives in California. The trouble is that too much is owed. Next.

  2. Another Tired Landlord

    [Source: Absentee Owner Postcard]

    Homeowner wants to sell a 3 bedroom, 2 bath, 1700 sf house in a good neighborhood.

    Here are the numbers:

    Asking Price:$120,000
    Amount Owed:$100,000
    Repairs:cosmetic (unconfirmed)
    After Repaired Value:$115,000
    Max Offer:$75,000 – repairs

    Landlord wants to sell and owes back taxes. Again, too much is owed…

  3. My Nemesis, The Tire Kicker

    [Source: Absentee Owner Postcard]

    Homeowner wants to sell a 3 bedroom, 1.5 bath, 800 sf house in a not-so-good neighborhood.

    Here are the numbers:

    Asking Price:Make An Offer
    Amount Owed:$22,000
    Repairs:cosmetic (unconfirmed)
    After Repaired Value:$50,000
    Max Offer:$25,000 – repairs

    Wants to see what he can get for this house. Told him low $20’s and he wasn’t interested.

  4. Again With The Tire Kicking

    [Source: Absentee Owner Postcard]

    Homeowner wants to sell a 5 bedroom, 2.5 bath, 2300 sf house in a good neighborhood.

    Here are the numbers:

    Asking Price:Make An Offer
    Amount Owed:$?
    Repairs:cosmetic (unconfirmed)
    After Repaired Value:$145,000
    Max Offer:$95,000 – repairs

    Wants to see what I would be willing to give for it. He was very hesitant to give me any information and kept telling me to drive by the house first and then we could talk. I politely told him that I was not interested in wasting my time. Next.

  5. Servicing Company Wanting Offers

    [Source: Website]

    They want an offer for a 3 bedroom, 2 bath, 1400 sf house in a so-so neighborhood.

    Here are the numbers:

    Asking Price:Make An Offer
    Amount Owed:$?
    Repairs:cosmetic (unconfirmed)
    After Repaired Value:$85,000
    Max Offer:$55,000 – repairs

    Servicing company is getting people out of the house and want to get an offer for it.

    Just made a ballpark offer because I knew they would give me a chance to see it before commiting. If not, I could always put a contingency in the contract. They are supposed to get back with me.

  6. Estate Sale

    [Source: Website]

    Estate wants to sell a 4 bedroom, 2.5 bath, 2200 sf house in a good neighborhood.

    Here are the numbers:

    Asking Price:Make An Offer
    Amount Owed:Nothing
    Repairs:$28,000 foundation, drywall, cosmetic
    After Repaired Value:$150,000
    Max Offer:$69,000 ($97,000 – $28,000)

    Estate wants to get an offer for this property. The house was in a nice pocket of the neighborhood. It needs updating throughout and foundation work. This would be a good buy. I offered $65k and the seller didn’t seem shocked and said he would talk it over with the family. We continued to talk about some things and I was trying to treat the conversation as though we had already made an agreement. Hopefully this one works out.

    Update: Have a verbal acceptance on this one and should have something in writing soon.

  7. Separated From Husband

    [Source: Website]

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

    Here are the numbers:

    Asking Price:$85,000
    Amount Owed:$54,000
    Repairs:cosmetic (unconfirmed)
    After Repaired Value:$50,000
    Max Offer:$25,000 – repairs

    This is a rough neighborhood and I had already vowed to not buy any houses there. This couldn’t be a deal anyway. Even if we short-saled it, it would be difficult to sell, even to another investor. Next, please.

  8. Inherited Half

    [Source: Website]

    Homeowner wants to sell a 2 bedroom, 1 bath, 800 sf house in a not-so-good neighborhood.

    Here are the numbers:

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

    Inherited half of the property. Other half ownership says to sell. There is a tenant paying $350/mo and is on month-to-month. Not my cup of tea. Might be difficult to get this many people (several on both sides getting a piece of the pie) to make this an easy thing. Birddogged for maximum effectiveness.

  9. Does Not Want To Be A Landlord

    [Source: Website]

    Homeowner wants to sell a 3 bedroom, 2 bath, 1000 sf house in a not-so-good neighborhood.

    Here are the numbers:

    Asking Price:Make An Offer
    Amount Owed:$5,000 taxes
    Repairs:drywall, cosmetic (unconfirmed)
    After Repaired Value:$60,000
    Max Offer:$35,000 – repairs

    I considered trying to contract this one myself and just wholesaling, but laziness got the better of me. Tried to feel him out on the price and realized that I would not be able to get him below $30,000. I would need to get this one in the 20’s at least to be able to wholesale it. Birddogged it instead.

  10. Very Tired Landlord Wholesaler

    [Source: Wholesale]

    Homeowner wants to sell a 2 bedroom, 1 bath, 800 sf house in a not-so-good neighborhood.

    Here are the numbers:

    Asking Price:$40,000
    Amount Owed:$35,000
    Repairs:leveling, sheetrock, wiring, plumbing, roof (everything)
    After Repaired Value:$60,000
    Max Offer:$35,000 – repairs

    This is a wholesaler that I have known for a while. He has this rental and just wants to get rid of it. I’ve had and still have houses like this and know exactly how he feels. He just is not able to sell it for what I would need to get it for (which would be $20k or less).

    Also, the tenant was home drinking lots of beer before just after noon. Not sure that he does much other than that based on the state of the house, even though he knew I was coming to see it (of course a lot of tenants will do things to keep landlords from selling because they don’t want to be thrown out).

  11. Wants To Reduce Debt For More Borrowing

    [Source: Absentee Owner Postcard]

    Homeowner wants to sell a 2 bedroom, 1 bath, 800 sf house in a really bad neighborhood.

    Here are the numbers:

    Asking Price:Make Offer
    Amount Owed:$18,500
    Repairs:a lot (unconfirmed)
    After Repaired Value:$35,000
    Max Offer:$10,000 – repairs

    This one is in an area that I will not even consider touching. Birddogged it. Next.

  12. Too Far From Work

    [Source: Website]

    Homeowner wants to sell a 4 bedroom, 3 bath, 2100 sf house in a good neighborhood.

    Here are the numbers:

    Asking Price:Make Offer
    Amount Owed:$0
    Repairs:none (unconfirmed)
    After Repaired Value:$150,000
    Max Offer:$98,000 – repairs

    Seller just bought the house a little over a year ago. The information was submitted from the website and I’ve called and left a message to talk to him about it. Doesn’t seem like a situation where he will be willing to come down to what I would need to buy it for, but we’ll see. You never know.

    Update: He was not willing and it turns out that $108k+ is owed. I will check with some other investors to see if anyone is interested.

  13. Behind On Payments

    [Source: Bandit Signs]

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

    Here are the numbers:

    Asking Price:Make Offer
    Amount Owed:$25,000
    Repairs:cosmetic (unconfirmed)
    After Repaired Value:$50,000
    Max Offer:$25,000 – repairs

    I do not buy in this area and feel the price is too close to be able to wholesale. Passed lead on to another investor instead.

  14. Father’s House

    [Source: Probate (sincere Letter)]

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

    Here are the numbers:

    Asking Price:$55,000
    Amount Owed:$0
    Repairs:cosmetic and bathroom repairs (unconfirmed)
    After Repaired Value:$50,000
    Max Offer:$25,000 – repairs

    Seller inherited his father’s house and wants to sell because he doesn’t want to be a landlord and could use the money to finish up the repairs on his own house. He is asking a high price but I will have to tell him that I will need to buy below $30k and see where he is at. I have to wait until tonight to call him because that is the only time he can answer the phone. We’ll see.

    Side note: Seems like the Sincere letter is pulling better. I don’t think there have even been any calls from the non-specific letter.

  15. Info Masked Because of Line of Work

    [Source: Website]

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

    Here are the numbers:

    Asking Price:Make Offer
    Amount Owed:??
    Repairs:unknown (unconfirmed)
    After Repaired Value:$130,000
    Max Offer:$85,000 – repairs

    Seller has only made contact through email and is not sure whether they want to sell. I had to double check the address because I could not find anything online regarding the house. The seller said that it is hidden because of their line of work. Interesting. I did not pry. They wanted a ballpark so I made a ballpark and am still waiting to hear back from them.

  16. Needs To Move Out Of State

    [Source: Website]

    Homeowner wants to sell a 3 bedroom, 2 bath, 1200 sf house in a decent neighborhood.

    Here are the numbers:

    Asking Price:$75,000
    Amount Owed:$40,000
    Repairs:cosmetics (unconfirmed)
    After Repaired Value:$80,000
    Max Offer:$50,000 – repairs

    Due to needing to be pretty close to what they owe and that they were asking quite a bit, I decided to make a quick ballpark estimate in the $40’s before I went out to look at it. They are not in any hurry to sell and I will follow up.

  17. Could Not Make Contact

    [Source: Website]

    Could not make contact with this seller. Information was submitted on the website but I could never get them to return my calls.

  18. Could Not Make Contact Part Deux

    [Source: Website]

    This seller called me while I was at Lowe’s and I could not take down their information. Tried to call several times since and have been unable to get a hold of them. Always have paper and pen on you.

  19. Could Not Make Contact Part Tres

    [Source: Website]

    I’ve never had this many people contact me that I could not contact again. Was starting to wonder if another investor was sending fake deals to keep me busy so that I could not work on the good ones. Nice try, but that will not work! Just kidding. I’m sure that could not be the case. My competition likes me. 😉

Summary

Still have quite a bit of leads coming in. I actually hesitated to send out more postcards this week so that I could catch up a little and knew I would be spending time dealing with getting our next house ready for move-in.

Plans For Next Week

  • Close on the ‘Honk Your Horn’ house and post details.
  • Send out some more postcards.
  • Attempt To Focus On Business While Having Work Done On New House

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.

“I do not believe a man can ever leave his business. He ought to think of it by day and dream of it by night.” – Henry Ford

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20 awesome responses to “Twenty Fifth Week – Christmas? Another Deal Under Contract”

  1. Bryce on

    What criteria do you use to decide whether to birddog or wholesale? From what I gather, location is very important. If you do not invest in an area, you would birddog. Also if the area is a rental neighborhood, birddogging makes more sense (the margins wouldn’t be there to flip/wholesale). Anything else?

    How many of the leads you pass on result in you getting a commission?

    When you pass a lead on, is it just via a simple phone call or email? Do you write up an agreement saying that you will receive your commission contingent on the other person closing the deal and have both parties sign? Sorry if these are stupid questions. I have no real world experience. Really enjoying your blog though. Keep it up please!

  2. Sharon Vornholt on

    Danny –

    Our probates are published in the newspaper monthly. They are actually online (and also free) in other big cities. Have you checked with your local probate court to see if you can get them one of these two ways?

  3. Sharon Vornholt on

    One more thing Danny, what comment system do you use? I like it.

  4. Matt K on

    Damn… that’s a lot of tile!!

    What are you going to replace it with? Tile, Hardwood, Carpet??

  5. Donovan on

    With Your SEO campaign are you able to outrank the national sites on more generic searches like we buy houses or sell my house fast? I’m at the top when you do a specific search, i.e. “Sell my house fast in Columbia SC”. However, I’m no where to be found on a generic search like We Buy Houses.
    Curious and eager for that SEO course!

  6. Daniel on

    On your probate leads, are you mailing directly to the executor of the estate or to the estates attorney? Thanks……

  7. jeff on

    Great Site Danny,
    I love the info and experience and the sharing of info.I really liked the examples of your offers on leads that you get in.I am still stuggling with rehab costs,so I have lots of work there.If I cant get closer on my rehab costs,I think I will be putting myself out of range for having offers accepted.Thanks for all your hard work.
    Jeff

  8. Jeremy on

    Danny,

    Great Blog! I look forward catching up on past posts and all new updates with my morning cup of coffee.

    This may be a better question for your wife, but I’ll post it here.

    Do you all use Quickbooks, Quicken, or another accounting software?

    Thanks

  9. Nicholas on

    Danny, how does your contract and contracting process differ between wholesaling and your purchases to flip?

  10. Nicholas on

    Thank you for the reply.