Flipping Houses On The Twenty Sixth Week

Twenty Sixth Week – 2 More Deals Signed Up

Danny Johnson / 32 comments

These are the results of the Twenty Sixth 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.

These are the things I did this week:

Spent Time Trying To Find A New Contractor

Finding a good contractor can be very, very frustrating and very, very time consuming. Once you find a good one though, your life can become a lot easier. Be sure to invest the time up front looking for a good contractor. I am using the term invest, because you really are trying to spend time now so that less of your time is consumed and wasted in the future.

We have been having some issues with our current contractor that we have been using for at least 3 or 4 years now. It’s been nice being able to call him to send him to do quick jobs on houses and get the bill later because I know that he will not submit ridiculous bills. We’ve gotten into a rythem with the rehabs because he knows that I will not accept high bids and we don’t waste each other’s time.

The issue relates to workmanship and a financial matter that I will not discuss. With regards to the workmanship, too many small things have been popping up that were done out of pure laziness and I wonder if some mistakes were made ‘on purpose’.

I really should have spent the time months ago looking for a new contractor, but I know how hard it can be to find a good one and I have been just taking the easy way out and avoiding it. Just call up ole trusty. I’d rather spend my time working on other things. It’s now come to the point where I need to go ahead and invest the time in finding someone new.

All week, I’ve been making calls to other investors and talking to several contractors. The ones that I felt best about met me at the ‘honk your horn’ house yesterday to talk and go over the scope of work. I am still awaiting their bids and have an idea of who I hope gets the right numbers.

While going through this I thought it would be helpful to provide a post about the process. So I did (staying up a little late to do it):

Finding and Interviewing Contractors for Your Flip Houses

Closed on the ‘Honk Your Horn’ House

Finally closed the ‘honk your horn house’. Here are the before rehab pictures.

Got Two More Under Contract

The first one was one that I mentioned having a verbal acceptance of my offer on last week. The seller inherited the house and lives in Austin. He knew the house needed quite a bit of work and did not want to mess with it. They quickly accepted my offer and I met with him to sign it up on Monday morning. I think we talked more about cars than we did about the house.

This one should be a great flip. I will post pictures and the numbers as soon as we close. I must admit that I am tempted to wholesale this one, as it does require quite a bit of rehab.

The second one I put under contract this morning. It will be a wholesale because my wife does not like the area. We had one for sale there a couple of years ago and it turned into a nightmare property. Took about a year to sell, got vandalized, had an incident with kids breaking in and sleeping there.

My wife and our make ready crew (husband and wife team) were meeting there to clean it again as it had been on the market for a while. My wife went in and a teenager was inside the house. She asked him what he was doing there and he paused and then mentioned that he was interested in the house and was looking at it. He then mentioned that he was going to leave and, being as tough as she is, she told him that he was not going to (we had already had damage done by someone putting out cigarette butts in the new carpet). She was going to call the police.

The perp was not going to stick around for that, so he decided to try to run out the front door. The problem was that my wife was standing between him and the door AND she was holding our new born baby in her car seat. He actually shoved her aside and took off running down the street.

My wife called me told me what had just happened and I immediately pulled a u-turn and headed straight over there. Pissed.

God bless the cleaning crew. The husband, even being over 50 years old (I know that’s not much, but the kid was in his teens!), took off after him. My wife said it was actually sort of comical as the kid had saggy drawers and they kept falling down and he was struggling to keep them on. This allowed the cleaner giving chase to keep up with him a little, even as he was having to pause for breath every so many yards.

The kid made it through a drainage ditch that ran between two houses and outside the neighborhood to some neighboring apartments.
Here is the craziest part. The cleaner did not see where the kid had gone but assumed he must have ran into the apartment upstairs where a bunch of crazy looking teenages were hanging outside. He immediately went up the stair and just entered the apartment. Found the kid and dragged him out. Awesome.

The police quickly arrived and took the kid into custody. My wife was really shaken up by the incident and I was extremely pissed. The police took it very seriously because they considered assault of a child because my wife was holding our baby.

So please be careful going into vacant houses, even ones you own.

Got sort of sidetracked there. 🙂

So that is why we are not going to buy the house with any intention of selling on a new loan. I will do my best to make a good profit by wholesaling it. If by chance I do not get a decent offer, I will sell the house with owner financing.

Pictures and numbers will be provided once we close and have it wholesaled.

Work Still Progressing On Our House

Got all the old tile out (almost 10,000 pounds worth!). Have the master bath plumbing rough-in done, electrical rough-in done (I think there are 6 switches for the master bath), sheetrock hung and being taped, floated and textured. The fireplace will be tiled soon and the master bath will soon get new tile.

Probate Info Gathering Has Ceased

I told you last week that I do not have anyone gathering these leads for me right now. I did contact the probate office and ask if there was a way to get the information online and it was as it was when I last checked, no. Not yet.

Mailed Postcards

Mailed 480 5×7 postcards out to absentee owners using click2mail.com.

Posted Ad On Craigslist

Posted an ad on craigslist.org. I have not done this in a really long time (maybe I have but just don’t remember). Figured it wouldn’t hurt to try it again as it only takes a couple of minutes. Got one call from it this week. I’ll have to try to keep posting ads.

Named The House I Got Under Contract Last Week

The one I mentioned putting under contract last week will hence forth be known as the ‘Front Yard Stink House’. This is because I took my wife over to see it yesterday and she was standing about 15 ft away in the middle of the front yard while I went in to make sure nobody was in the house. Even from that far away she could smell the house.

After clearing the house, I signaled for her to come inside and she refused. The smell was just too much! 🙂 It’s from the stuff in the sink. Should probably have someone do something about that before we close. Good stuff.

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: 20

Lead SourceLeads This WeekNotes
Bandit Signs050 went out three weekends ago.
Yellow Pages5For a picture of my ad, visit the ‘The First Week’ post.
Buying Website12For 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 Mailing0Have not mailed in a while.
Probate1Not a good response rate so far.
Craigslist1Just a basic ad saying we buy houses.

Total Leads To Date [390]
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:199
Bandit Signs:61
Yellow Pages Ad:45
Absentee Owners:28
Driving For Dollars:17
REO Realtors:7
Probate Letters:10
Referrals:6
Wholesalers:10
Realtors:3
MLS Search:2
For Sale By Owner:1
Craigslist:1

Leads Analyzed

  1. Fathers House – Son Lives Out Of Town

    [Source: Website]

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

    Here are the numbers:

    Asking Price:Make An Offer
    Amount Owed:Nothing
    Repairs:$10,000 (updating mainly)
    After Repaired Value:$100,000
    Max Offer:$55,000 ($65,000 – $10,000)

    Son drove into town from out of state to help father sell his house so that he could go and live with him. The house needs updating but is in good shape. The problem with this one is that it backs up to a large apartment complex that is right up against the property line. Some big, fast-growing bushes should do the trick. I was conservative with the ARV because of this.

    I’ve made an offer and they are considering it. I will follow up soon.

  2. Needs Money To Build New House

    [Source: Website]

    Homeowner wants to sell a 3 bedroom, 3.5 bath, 2600 sf house in a good neighborhood.

    Here are the numbers:

    Asking Price:$204,000
    Amount Owed:Nothing
    Repairs:Unknown (unconfirmed)
    After Repaired Value:$230,000
    Max Offer:$150,000 – repairs

    Seller inherited the house a couple of months ago and wants to sell it so that they can build a house. The house is listed with a Realtor and has been on the market for a couple months already. I guess they didn’t waste any time with getting it on the market. I was able to see pictures of the house and all of the details.

    This one is a tough one because the house is completely outdated and not many houses have been sold in the neighborhood recently. One that has sold is also outdated-looking, but sold for a high price (mainly because it was owned by a renowned local architect). This house is out-dated too. Maybe I should title the house as [Insert Some Renowned Architect Name] Land Trust and try to sell it as-is that way. 🙂

    Not too sure, but I know either way I would need to buy it cheap. I called and mentioned that I would need to buy for closer to $100k.

    Update: No go at this time.

  3. Listed Wholesale

    [Source: Wholesale]

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

    Here are the numbers:

    Asking Price:$30,000
    Amount Owed:?
    Repairs:a lot (unconfirmed)
    After Repaired Value:$50,000 (owner-financed)
    Max Offer:$25,000 – repairs

    Wholesaler called with this house that he has under contract. The neighborhood is not good and will most likely require selling with owner-financing or to a landlord. Either way, I would need to buy it very cheap. Next.

  4. Aunt Passed Away

    [Source: Website]

    Homeowner wants to sell a 3 bedroom, 1 bath, 1100 sf house in a so-so neighborhood.

    Here are the numbers:

    Asking Price:Make An Offer
    Amount Owed:Nothing
    Repairs:$8,000
    After Repaired Value:$60,000
    Max Offer:$35,000 – repairs

    Seller inherited this house from her aunt who recently passed away. The house is a newer house in an older neighborhood. This one would make a good rental or owner-financed house.

    My ARV was for retail sale and that would take a while, with the high days on market in the area. If I sold it with owner financing I could sell for much more. The house didn’t need much beyond some leveling so I offered $30,000. They did not like that offer, but I will follow up.

  5. Moved To Different School District

    [Source: Website]

    Homeowner wants to sell a 4 bedroom, 2 bath, 1900 sf house in a good neighborhood.

    Here are the numbers:

    Asking Price:$190,000
    Amount Owed:$150,000
    Repairs:Flooring and Cosmetics (unconfirmed)
    After Repaired Value:$215,000
    Max Offer:$140,000 – repairs

    Seller moved to another area to change school districts. The school district the house is in isn’t bad so I guess it was for other reasons. Just a little too much is owed and the seller is asking too much for me to be interested.

    I told him I would be below what he owes but know another investor that would probably get somewhere just above what is owed but he was firm on his asking price. This is when I ask them again what the lowest is that they would be willing to accept. He mentioned $180k and I don’t know anyone that could make it work for that much. He just does not sound motivated enough right now.

  6. Need To Downsize

    [Source: Website]

    Homeowner wants to sell a 4 bedroom, 2.5 bath, 2700 sf house in a good neighborhood.

    Here are the numbers:

    Asking Price:$169,000
    Amount Owed:$167,000
    Repairs:cosmetics (unconfirmed)
    After Repaired Value:$175,000
    Max Offer:$114,000 – repairs

    Seller needs to downsize and wants to sell the house because it is getting too expensive. Too much is owed.

  7. Helping Sister Sell Her House

    [Source: Website]

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

    Here are the numbers:

    Asking Price:$80,000
    Amount Owed:$0
    Repairs:cosmetics (unconfirmed)
    After Repaired Value:$80,000
    Max Offer:$50,000 – repairs

    Seller’s sister called to see if I would make an offer on the house. They were asking for full market value and did not seem to need to sell right away so I made a ballpark offer around the max offer amount and said it just depends on the repairs. This way, if the seller is negotiable enough to sell around where I would need to be, I will go and see it and try to work a deal.

    This sort of situation may not have motivated sellers right away, but they may eventually become motivated enough. So, if they don’t want to be negotiable enough right now, that doesn’t mean they won’t be in a couple of months. I will follow up. That is exactly what the motivated seller lead manager is for.

  8. Selling Dad’s House

    [Source: Website]

    Homeowner wants to sell a 2 bedroom, 1 bath, 1200 sf house in a bad neighborhood.

    Here are the numbers:

    Asking Price:$30,000
    Amount Owed:$13,000
    Repairs:a lot (unconfirmed)
    After Repaired Value:$50,000
    Max Offer:$25,000 – repairs

    Dad is moving in with his son and needs to sell his house. It is in a rough area and the house needs a lot of repairs. I birddogged this one to another investor that buys in the area.

  9. Selling Inherited House

    [Source: Probate (sincere letter)]

    Homeowner wants to sell a 2 bedroom, 1 bath, 900 sf house in a not-so-good neighborhood.

    Here are the numbers:

    Asking Price:Make An Offer
    Amount Owed:$0
    Repairs:a lot (unconfirmed)
    After Repaired Value:$50,000
    Max Offer:$25,000 – repairs

    Got a letter from me and wants to see about getting an offer before he puts it on the market. Tire kicker. I’m not really interested in the area, so I told another investor so that he could make an offer. Next.

  10. Moving To Get Out Of The Neighborhood

    [Source: Yellow Pages]

    Homeowner wants to sell a 2 bedroom, 1 bath, 700 sf house with apartment in back in a very nice neighborhood.

    Here are the numbers:

    Asking Price:Make An Offer
    Amount Owed:$6,000
    Repairs:a lot (unconfirmed)
    After Repaired Value:$50,000
    Max Offer:$25,000 – repairs

    Did you notice that I put ‘very nice’ neighborhood? Just checking to see if you are paying attention. Not a good area and they want to ‘escape’ it. The owner inherited the house years ago and has been living there. I’m not interested in the area and passed it to another investor. This one should pay out.

  11. Selling Because He Has A Couple Houses

    [Source: Craigslist]

    Homeowner wants to sell a 4 bedroom, 4 bath, 3000 sf house in a good neighborhood.

    Here are the numbers:

    Asking Price:$250,000
    Amount Owed:$250,000
    Repairs:none (unconfirmed)
    After Repaired Value:$250,000
    Max Offer:$175,000 – repairs

    Says he is selling because he has a couple of houses. He would not elaborate. He owes what it is worth and I just can’t do anything with that. Next.

  12. Prefers Apartment Living

    [Source: Website]

    Homeowner wants to sell a 4 bedroom, 2 bath, 1600 sf house in a so-so neighborhood.

    Here are the numbers:

    Asking Price:$65,000
    Amount Owed:$0
    Repairs:updating and cosmetics (unconfirmed)
    After Repaired Value:$80,000
    Max Offer:$52,000 – repairs

    Inherited the house but does not like house living. She prefers apartment living and wants to sell this house. Seemed like a motivating enough reason for me to go and see it. Made my offer and will be following up.

  13. Tiny, Tiny House

    [Source: Website]

    Homeowner wants to sell a 1 bedroom, 1 bath, 400 sf house in a so-so neighborhood.

    Here are the numbers:

    Asking Price:Make An Offer
    Amount Owed:$0
    Repairs:a lot (unconfirmed)
    After Repaired Value:$35,000
    Max Offer:$???

    Seller has a tiny 400 square foot house that he wants to sell that he inherited. The house has been vacant for over 10 years. Honestly, I don’t want that small of a house. He lives next door also which could be a problem. Decided to just birddog this one.

  14. Seller Wants To Downsize

    [Source: Website]

    Homeowner wants to sell a 3 bedroom, 2.5 bath, 2800 sf house in a good neighborhood.

    Here are the numbers:

    Asking Price:$115,000
    Amount Owed:$56,000
    Repairs:nothing (unconfirmed)
    After Repaired Value:$135,000
    Max Offer:$88,000 – repairs

    Seller just wants to downsize. She had the house listed for about 3 months at a super high price and then dropped it dramatically down to $145k for a couple weeks before cancelling the listing. I asked her how many showings and offers she’d had and she said only 2 showings and no offers. Just with that you can figure that the ARV is going to be at or below the $145k. After looking at comps, I feel the $135k is much more likely. Of the ones that sold, days on market were pretty high.

    With the dramatic price decrease and then now asking $115k, I felt that she must have some motivation. So, I scheduled to see the house. Going to see it Saturday.

  15. Moved Out Of State

    [Source: Yellow Pages]

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

    Here are the numbers:

    Asking Price:$90,000
    Amount Owed:$70,000
    Repairs:cosmetic (unconfirmed)
    After Repaired Value:$105,000
    Max Offer:$70,000 – repairs

    Seller moved out of state and needs to sell this house. Unfortunately, I cannot pay what he is wanting and needed to inform him that I could only pay what he owes, if that.

    He was not interested. Next.

  16. Bad Tenants Moved Out

    [Source: Website]

    Homeowner wants to sell a 3 bedroom, 1.5 bath, 1200 sf house in a decent neighborhood.

    Here are the numbers:

    Asking Price:$63,000
    Amount Owed:$58,000
    Repairs:$12,000
    After Repaired Value:$85,000
    Max Offer:$43,000 ($55,000 – $12,000)

    Seller has his nephew living there after some tenants moved out. His nephew says that he is paying the mortgage but the uncle (owner) says they are behind on the payments. The only thing that could make this work is a short sale.

    He says he is just going to try and sell it as-is instead and will consider the short sale later.

  17. Beat Cancer But Cannot Find A Job

    [Source: Yellow Pages]

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

    Here are the numbers:

    Asking Price:$105,000
    Amount Owed:$98,000
    Repairs:cosmetic (unconfirmed)
    After Repaired Value:$109,000
    Max Offer:$70,000 – repairs

    Seller was diagnosed with cancer a few years ago. He was recently told that there were no more signs of it. I was glad to hear that. The problem is that he cannot find a job, even an entry level job. This is making it so that he cannot afford his house any longer.

    This is truly a situation where I wish I could just pay his house off and help him out. But I can’t. I bring this up because you will face a lot of situations like this when flipping houses and you will be mighty tempted to help, especially when the numbers are closer to what your max offer is. There will be times where you will be 10k or 5k or even 3k off and you will be very, very tempted to fudge the numbers a little to make it work. Please avoid it. You will be glad you did.

    Do not make other peoples’ problems your problem (this is especially true with contractors).

    It may sound harsh, but it is a rule that I firmly believe will keep you out of a lot of trouble.

  18. Two Manufactured Homes Out of Town

    [Source: Yellow Pages]

    Homeowner wants to sell 2 manufactured homes that are out of town.

    Here are the numbers:

    Asking Price:$50,000
    Amount Owed:$0
    Repairs:a lot (unconfirmed)
    After Repaired Value:$?
    Max Offer:$?

    Seller just wants to move and has two older manufactured homes that are pretty far out of town. I’m just not interested.

  19. Wants To Buy Van For Disabled Mom

    [Source: Yellow Pages]

    Homeowner wants to sell a 4 bedroom, 2 bath, 1500 sf house in a not-so-good neighborhood.

    Here are the numbers:

    Asking Price:$45,000
    Amount Owed:$40,000
    Repairs:cosmetic (unconfirmed)
    After Repaired Value:$55,000
    Max Offer:$30,000 – repairs

    Seller wants to sell her house so that she can buy her disabled mom a wheelchair accessible van and rent an apartment for her. Another situation where I would love to be able to help them, but I simply cannot.

  20. Did Not Realize Tenants Would Be Such A Hassle

    [Source: Website]

    Homeowner wants to sell a 2 bedroom, 1 bath, 1000 sf house in a not-so-good neighborhood.

    Here are the numbers:

    Asking Price:$60,000
    Amount Owed:$0
    Repairs:cosmetic (unconfirmed)
    After Repaired Value:$50,000
    Max Offer:$25,000 – repairs

    Seller just evicted some bad tenants. She is not at all interested in trying to rent the house out again. Surprisingly, she says the house does not need much in the way of repairs. Not sure how true that could be.

    I told them I would need to be in the 20’s. She was not interested at all.

Summary

Mondays are usually my most hectic day. I think a lot of people look for people to call about selling their house on the weekend, but wait to call until Monday. I got 13 or more leads this week JUST ON MONDAY! My head was spinning by the end of the day. Things are really rolling now and we are going to get pretty busy, especially with the move coming up.

Plans For Next Week

  • Close on the ‘Front Yard Stink’ house and post details.
  • Send out some more postcards.
  • Get new house closer to move in.

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.

“Make each day your masterpiece.” – John Wooden

Thank you for following along with me on my journey though this house flipping blog. Flipping houses can be very entertaining. Don’t you think?

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32 awesome responses to “Twenty Sixth Week – 2 More Deals Signed Up”

  1. Benjie on

    Danny I just wanted to take the time to thank you. You have inspired me to get off my procrastinating @** and start my business. I am currently an IT professional and commute 4 hours a day so needless to say I will only be able to see houses on the weekends. My questions are did you find that having your day job make you lose more houses in the beginning? Or did you have problems with scheduling viewings during the weekend? Or did your wife help you more with viewing the homes in the beginning (I ask this one because I am single)?

  2. Brooks on

    I’m glad your child was safe and yay for courageous 50 year olds who are willing to chase a kid (even if he has to stare at the kids behind while doing so).

  3. Brooks on

    Glad your wife was safe too but she sounds like she can hold her own!

  4. Lucky on

    Good to hear your wife and child are OK. Good thing it was just some kid and not a real bad guy. Not sure if I would have chased him or not, depends on how mad I really was (you know how emotions can really roll sometimes). Truly enjoy the blog, keep it coming. Even though there are many involved in this business and I am a member of some reia’s I never really know what others are confronting. I guess we all hit the same problems.

  5. Pete on

    Danny,
    Is it fair to say, your direct mailing efforts need work? You basically just mail once and do no follow up?
    Any particular reason you don’t concentrate more on direct mail?

  6. Pete on

    So when you go to the “expensive house”, do you ever think what if? You probably would’ve had it sold by now and cash in your pocket…..to put towards hiring people for your direct mail campaigns!! 🙂

  7. Donovan on

    I can’t believe you don’t use an answering service. It’s nice to build rapport from the first call, but 13 calls in a day? I would go nuts! I love my answering service. If they have any equity and I’m interested in the house I’ll usually just spend extra time on the phone going over all the details again.

    I’m surprised people that many people still use the phone book, I might have to consider this. Do you ever run ads in the Paper? Did you re-mail to the same absentee list you used previously?

  8. Robin G. Grimes on

    Hi Danny, Great site, I look forward to your updates each week. You’ve mentioned that you sometimes sell a house with owner financing. Also that you use investors to finance your buys. So how to you handle the investor loan when you owner finance to an end buyer? Surely you don’t carry the 10% investor loan for 1-3 yrs.

  9. Donovan on

    TX must be a non-judicial foreclosure state?

  10. Demian on

    Danny, thanks for what you’re doing here. I appreciate your blog. Great stuff! A few months ago I decided to “go for it”. And after finding your blog a few weeks ago, it has spurred me on even more.
    I just put my first two signs up on Friday. My 11-year old son helped me and he loved it! I got my first call today and although it sounds like a tire kicker I’m gonna go check it out just for the experience.

  11. Lucky on

    Got a question for you. I have been following you for some time and notice your web site brings in the overall majority of the leads. I am going to put one up but do not know how to do it myself or really have the time to do it. Who did you use as to get yours up, running and if front of your audience. Any tips would be helpful.

    Lucky

  12. Dave Tower on

    Hey Danny,

    Great stuff as always! I had been away for a couple weeks trying to deal with personal life, but it’s back to business. My girlfriend and I visited our company’s Westlake site and we loved it. I think we’ll be Texans before long! I’m still trying to decide whether I’m renting my house in RI or selling it, but it looks like renting may be the only viable option. Heading back to TX for 9 days 10/15….should be fun.

    Keep up the great work….I’ll definitely keep reading.

    thanks