What was supposed to be a simple flip, turned into a race against time. LOL.
For those of you who don’t know about the movie from 1977, “Smokey and The Bandit”, you really don’t know what you’ve missed. Burt Reynolds, look for the guy with the cool, giant mustache on IMDB, is dared to pick up a truck load of beer and return it to the people that dared him. It seemed simple enough and he accepted…only to end up running into trouble and having quite the adventure.
First, a little insight into what my story involves. This took place within my first year of flipping houses, so it was many years ago so I’ll do my best to remember all of the exact details.
My adventure didn’t involve a truckload of beer (though I could have used one after it was all over), but did involve a bandit and a dare (sort of). A bandit sign that is. If you don’t know what a bandit sign is, I have a picture of one of my bandit signs posted on a telephone pole here.
These signs are an awesome way to generate leads from motivated sellers quickly and very inexpensively. It’s important to place them where they will be seen by a lot of people and in areas you want to buy houses.
The bandit sign involved in this adventure was place with a wire stake in the grass along a highway exit ramp (I had actually ‘planted’ 3 or 4 signs about 30 or so yards apart along the exit ramp – it’s just that ‘Smokey and The Bandit Signs‘ didn’t sound as good to me). The exit was for a major road into an area I was targeting. If you exited the highway and turned right on this road, you entered an area that is full of bread and butter houses that can be bought cheap and sold easily.
The problem was that if you turned left, you would enter one of the worst parts of town – pretty much a war zone. Not sure if that had even occurred to me at the time I put the signs out. Probably not being that I actually put the signs out myself back then and I would only do it on Sunday mornings before 6:00 am.
Just thinking about having to have done that makes me feel tired. (though it was usually well worth it :))
Ok, so maybe a ‘dare’ is a bit of a stretch. But, the more I think about it, it really was a dare to do the deal as I was relatively new to flipping houses.
The call came in at 2:00 (believe it or not, I do remember the time details) the same afternoon that I put out the signs. The seller had a house he had inherited and needed to sell.
Can’t remember the exact details as to why he ‘had’ to sell it. I think it was a rental he had inherited and he was done with dealing with tenants. This happens a lot with unintentional landlords.
The problem was that the house was on the left side of the highway, the bad one. Darn.
That took some wind out of my sails.
After some conversational probing, it turns out he was willing to sell for something like $10,500. That put a little wind back in the old sail. 🙂
Even in a war zone, I felt like I could do something with the property if it wasn’t completely dilapidated. So, I schedule to meet with him within a couple hours.
Note: When someone is asking a crazy low price, you’d better try to meet them as soon as possible to see if you can do the deal and sign it up quickly. They usually aren’t go to wait long to have their problem taken care of. In the beginning, it’s tempting to stop and just wet yourself, but this isn’t the time to do it. (should I delete that? nah)
Here’s where I went to pick up the ‘load’. It was surely a load of something. 🙂
I arrived at the house about 2 hours before dark. The sun was getting low and was starting to descent below the government housing complex that was only separated by one house from the one I was to look at. There were people walking around, seemingly aimlessly, everywhere. Cars were probably turning corners, losing hubcaps. Seems like something that would happen on a regular basis around there.
For some reason, I received a lot of glares…
The yard, or mud pit really as it had rained the night before, was devoid of vegetation but did have a parts from a piano strewn about. Of course, those parts were the heaviest parts. Have you ever tried to pick up a piano? The majority of the weight is the metal part inside holding the wires (sorry, don’t know the technical terms).
The house wasn’t too much better than the yard. It needed paint for sure, but was generally in decent condition. There wasn’t much rotted wood on the outside.
The inside was is rough shape. The floors were buckling because of the leaking roof. The paint on the walls was peeling and some of the sheetrock crumbling due to the moisture inside. The kitchen and bath needed to be gutted. The house was a small 2 bedroom.
I think I figured a landlord could rehab the place for 10-15k.
As for the rent, honestly I was just pulling a number out of thin air. I figured it could rent for at least $500/month, being a single family home with a decent-sized yard.
There wasn’t much for me to figure out as I felt that I could probably wholesale it quickly if I got it at his asking price. I wanted to see how low I get it though.
Negotiations seemed to last for about an hour as we stood around the front yard as it was getting dark, people still wondering around everywhere down the street. I was glad the seller was there with me as he was a very large man that seemed to command respect from the neighbors.
After some back and forth, we agreed on a purchase price of $8,500.
I was now under the gun. I didn’t want to end up buying this place and didn’t want to have to back out of a deal. Action had to be taken immediately to find a buyer.
My memory is not real clear on how I marketed the property, but I’m sure it involved putting some signs out around the area asking something like $15,000 for a 2 bed / 1 bath fixer. Cash Only! I probably didn’t put the address because I didn’t want to seller to know and I was wanting to build my list of cash buyers.
Other things probably included calling other investors that advertised in the paper and people from my very small existing buyers list.
Several people were interested in the house before they saw it. This is normal.
I was able to put a lockbox on the house and allowed people to just go by and take a look without me having to go out there to meet them. Several people had told me the door was just left wide open so I decided to stop allowing them to go by without me.
I was getting nervous though. No one wanted this thing or would even make an offer.
Near the closing date I got a call one evening from a landlord named Mr. Smith. That’s what he was called. He wanted to see it right then, but I wasn’t about to go over there after dark. I told him I would meet him in the morning.
We had to meet right after day break as I still worked a full-time job across town from the house. As we entered the house, we noticed a bed made from a sleeping bag and newspapers. There were plenty of beer cans strewn about. He must have exited out the back when he heard us out front.
Immediately, I was thinking, “GREAT! The guy I need to buy it is now seeing that there is a squatter. Crap.”
He didn’t seem to mind though and continued to walk the house.
We negotiated a little and agreed on something like $12,500 and he could close in time. I was thrilled.
He did end up closing it and we received a check for about $4,000. Not bad.
Melissa and I bought our first flat panel tv with that money as a reward. It was awesome ordering that tv and thinking that the filthy house in the war zone allowed us to get it. What an awesome trade.
This adventure was all courtesy of that one bandit sign (not sure which of the three or four he took the number from). It’s incredible to know that you can put signs out in the morning, get a call early in the afternoon, see and contract the house that evening. The only thing that would have been better was if we could have sold it and closed that very night.
Maybe that will happen someday. 🙂
If you enjoyed this article, a click of the ‘like’ button is always appreciated!
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I thouroughly enjoyed your blog post. What a great story about how taking action can turn into a flat panel t.v. : )
On a serious note, I’ve put out signs and the same day received phone calls. I haven’t wholesaled a deal yet using this method, I typically try to cherry pick them off the MLS. I do believe that using bandit signs to find motivated sellers does work though, because I’ve received calls, gone on appointments, made offers, the numbers just haven’t worked for both parties yet. Thanks for the inspiring and motivating post.
What do you do when the seller is Unwilling to let you place a lockbox on the property? What if they say, “well, if you need to bring contractors and partners by, then I’ll meet you out at the house to let you in”???
Thanks, James. Glad you got a kick out of it. I never know how people will respond to my ‘stories’. 🙂
When a seller is unwilling to let you place a lockbox on the property you can do two things:
1) Try harder to convince them. This can be done by calling to schedule with them and letting them know that you and your contractor can only make it by in the morning or some odd hour. Ask if they could just leave the key hidden somewhere.
2) If that doesn’t work, you will just have to work with them. Have interested parties go by and look in the windows (I’m assuming the house is vacant – and, of course you should always get as many pictures as possible to show potential buyers) and call you if they are very interested and ready to buy. Then you schedule with the seller to show it. Just let your buyer know they are just there to look at what repairs it needs (they are acting as the contractor).
As usual, great story — and as you said, all from a $2.00 bandit sign! Nice!! Questions for you if you don’t mind. Having just read through all 34 weeks of results from last year, as well as having read all of your blog posts, including this one, I just have a couple of questions concerning your approaches to finding wholesale deals:
1. I have noticed that you do not seem to direct market to foreclosure properties (those folks having just received their notice of election and demand). No question that bandit signs, your website and your YP ads are indirectly marketing to this crowd but I was just wondering if you have ever tried to direct mail to these types of motivated sellers?
2. Concerning your Yellow Page advertising, may I ask how much this costs you each month? Looks like it produces lots of leads for you, so I am considering this for my area as well. Just wondering whether it makes sense to do just online, or online + the book, or ??
3. Concerning your DannyBuysHouses.com website (great site BTW: concise, to the point, yet friendly, etc), most recently, looks like you have scored preferential positioning in the ads on top of the google page results (using search words “we buy houses San Antonio) where the paid ads are. Sorry, I have yet to advertise on Google, using Ad Words, or otherwise, but wondering if this is the result of winning the bid on certain adwords, or is this a separate paid ad?
4. As a PART B to question 3 above, on same search mentioned, you are the first posting just below the Paid Ad area at the top. So, same question, was this the result of Ad Words, or some really intelligent SEO work by yourself or someone you have hired?
As always, thanks much for the background and info. I sincerely appreciate your willingness to share info about what works and what doesn’t. Thus far, I have not found another active RE investor, who “opens the book” the way that you do.
Kind regards, Bryan Scott. Denver Metro Area.
Hey Bryan. Thanks.
I hope you broke up reading all of that over several days or weeks! 🙂
To answer your questions:
1) No, I do not mail to pre-foreclosures. Too much competition. The only way I would spend time with pre-foreclosures is door-knocking, which I don’t like to do.
2) It’s about $700/mo. You have to negotiate. I had 2 different ads for that price. This was only for the print ads. They screwed up my online stuff when they did some online stuff for me. Big mistake. Information was incorrect and missing. In my opinion though, phone books are becoming a thing off the past. I’m not advertising there anymore.
3) Position is just determined by bid. Guess my bid at that particular time was the highest for the keywords used. It usually isn’t. I think I hover around 2 and 3 mostly.
4) The position in organic is purely from SEO and has nothing to do with the adwords.
Thanks for visiting the site and the great questions.
I was very happy with the information in this posting. I am very new to this field and havnt dont any deals yet. Ive been mostly studying how to position myself to make me first move. I dont really know what to do first to get the ball rolling, but have alot of confidence in myself as ive worked for the financial industry for 6 yrs recently and know the terminology. Danny ive just signed up for your lead sheet manager and i love that widget but id like to know whats the best way to get started and if you’d help me thru my first deal and help me to step out of my comfort zone and make the first move as i am timid and unsure of what to do with all this knowledge ive been studying for the past month. I just can’t seem to put forth any effort to start this because of fear.
ps i saw ur name is danny as well so it makes it alot easier to talk to someone with the same name.
Have you seen this post: How to start a house flipping business step by step?
Starting with birddogging and wholesaling is what I recommend. That post details that.
My advice is to always get educated and then start taking baby steps. Try to put out some marketing and get your phone ringing. Start talking to people that want to sell their house. You will make mistakes, but that is how you learn and learn the fastest. You can then move on from there.
I’ll be offering up something that will help even more coming up in the next month or so….be on the lookout for that! You’ll want to be sure to subscribe to the newsletter (top of the main page).
Another great article Danny. I now look forward to your emails as I know I will always get a grin or goosebumps from inspiration ; >
In this article I especially like how you described your mental/emotional state while the deal was progressing. Your manner of writing brings the reader “right there” with you. I sighed a breath of relief when the deal was done.
That’s good writing.
Thanks. It’s always great to hear that the story is being told well. Sometimes I’m not sure if it comes across the right way. Glad to hear that it does.