These are the results of the eigth week of opening up of 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:
Prepared List of Addresses For Drive For Dollars Mailing
Our next batch of drive for dollars handwritten letters is ready to be written, folded, stuffed and stamped. 50 Addresses.
Sent Probate Letters
Sent out 18 probate letters and got 16 more probate leads.
Dealt With A Cold All Week
My family has been dealing with a cold all week. Not fun. I stop for nothing though. This is not a pity party. 🙂
Had Bandit Signs Put Out
Only got 25 up and code compliance decided to finally call and set me straight. I will wait a couple of weeks and put out some more… in a different area.
Got Another Angry Call
Got another angry call. This guy was so angry he called several times and paged me. I called back to get an earful for a couple of minutes. It was from a probate letter and I completely understand where he was coming from. Doesn’t justify it, but I understand it. You have to be ready for these types of calls when you mail to probate. They are guaranteed.
Marketing
Total Leads This Week: 23 🙂
Leads Analyzed
Homeowner wants to sell a 3 bedroom, 2.5 bath, 2300 sf house.
Here are the numbers:
| Asking Price: | $175,000 |
| Amount Owed: | $164,000 Darn it. |
| Repairs: | $Not much – cosmetic (unconfirmed) |
| After Repaired Value: | $190,000 |
| Max Offer: | $130,000 minus repairs |
Seller wants to sell because she is separating from her husband. Sounds like a pretty permanent separation. Too much is owed. Next.
Homeowner wants to sell a 2 bedroom, 2 bath condo.
Here are the numbers:
| Asking Price: | $72,000 |
| Amount Owed: | $58,000 |
| Repairs: | $cosmetic (uncomfirmed) |
| After Repaired Value: | $65,000 |
| Max Offer: | $40,000 minus repairs |
Seller is graduating from college and moving to Kansas City. He’s already talked to a Realtor and was wanting to see about selling quickly. This sort of situation rarely results in a deal. There’s also the matter of him owing too much. Can’t do it.
Homeowner wants to sell a 2 bedroom, 1 bath, 600 sf house.
Here are the numbers:
| Asking Price: | $35,000 |
| Amount Owed: | $0 |
| Repairs: | $cosmetic (uncomfirmed) |
| After Repaired Value: | $50,000 |
| Max Offer: | $25,000 minus repairs |
Seller is having a baby and needs a bigger house. They have received an offer from another investor for $30k but want $35k. I wouldn’t want it for more than about $20k. Pass. Tiny houses are hard to sell and this one is in a neighborhood with very, very long days on market. This property would be good to sell with owner financing, but I would still need to get for around $20k.
Homeowner wants to sell a 3 bedroom, 1.5 bath in a neighborhood one of the stories from the ‘7 Crazy Real Estate Investing Stories’ Ebook takes place in.
Here are the numbers:
| Asking Price: | $What’s Owed Plus Something |
| Amount Owed: | $47,000 |
| Repairs: | $cosmetic (uncomfirmed) |
| After Repaired Value: | $70,000 |
| Max Offer: | $45,000 minus repairs |
Seller is behind on payments and will be facing foreclosure. The date has not been set yet, so there is plenty of time. I told the seller I would need to be below what they owe and before I could mention ‘short sale’, she came in with ‘It’s OK. I know the house was valued at $90k. So forget it.’ and hung up. Next.
Homeowner wants to sell a 3 bedroom, 2 bath, 2000sf, 1998 house in a good neighborhood.
Here are the numbers:
| Asking Price: | $140,000 |
| Amount Owed: | $0 |
| Repairs: | $cosmetic (uncomfirmed) |
| After Repaired Value: | $159,000 |
| Max Offer: | $103,000 minus repairs |
Seller bought the house cash several years ago from her parents who were losing it. She now has health problems and the house needs repairs. She wants to see how much she can get for it ‘As-Is’. They were not interested in my offer of $85,000. I am following up with this one though.
Homeowner wants to sell a 3 bedroom, 2 bath, house in a bad neighborhood.
Here are the numbers:
| Asking Price: | $35,000 |
| Amount Owed: | $0 |
| Repairs: | $sewer line collapsed |
| After Repaired Value: | $50,000 |
| Max Offer: | $10,000 minus repairs |
Seller has moved from the house and there are family problems so they want to sell it. They’ve already had investors offering 30k and a wholesaler put it under contract for $33k and backed out after 2 weeks. I am not even going to really analyze this one. It is going to another wholesaler to see if he has buyers in the area.
Homeowner wants to sell a 3 bedroom, 2.5 bath, 2000sf house in a new neighborhood.
Here are the numbers:
| Asking Price: | $150,000 |
| Amount Owed: | $140,000 |
| Repairs: | $very minor |
| After Repaired Value: | $145,000 |
| Max Offer: | $94,000 minus repairs |
Seller in the military and relocating. He owes too much though.
Homeowner wants to sell a 3 bedroom, 2.5 bath, house in a good neighborhood.
Here are the numbers:
| Asking Price: | $118,000 |
| Amount Owed: | $75,000 |
| Repairs: | $cosmetic |
| After Repaired Value: | $115,000 |
| Max Offer: | $75,000 minus repairs |
Seller has had this house listed for about a year. It has price-changed repeatedly and so I discounted the ARV a little because, based on the pictures, there does not seem to be anything wrong with it. Just priced too high.
Homeowner wants to sell a 3 bedroom, 2 bath, converted garage house in a bad neighborhood.
Here are the numbers:
| Asking Price: | $43,000 |
| Amount Owed: | $42,000 |
| Repairs: | $foundation,roof, etc. |
| After Repaired Value: | $60k |
| Max Offer: | $nothing |
This neighborhood has very few solds in the MLS. Mostly rentals in this area. The house needs too much work and with what is owed, is just not doable. Next.
Homeowner wants to sell a 3 bedroom, 2 bath, rental house in a good neighborhood.
Here are the numbers:
| Asking Price: | $130,000 |
| Amount Owed: | $116,000 |
| Repairs: | $cosmetic (unconfirmed) |
| After Repaired Value: | $125,000 |
| Max Offer: | $81,000 minus repairs |
Divorce situation and this is the last thing they own together. Too much is owed however. Next.
Homeowner wants to sell a 3 bedroom, 2 bath, 1900sf house in a good neighborhood.
Here are the numbers:
| Asking Price: | $135,000 |
| Amount Owed: | $100,000 |
| Repairs: | $Unknown (says none) |
| After Repaired Value: | $130,000 |
| Max Offer: | $84,000 minus repairs |
This seller is buying a new home. This usually is not reason enought to be motivated to sell at a steep discount, but sometimes can become a reason to. I’m not really interested though as too much is owed.
Homeowner wants to sell a 2 bedroom, 1 bath, 700sf house in a bad neighborhood.
Here are the numbers:
| Asking Price: | $13,000 |
| Amount Owed: | $0 |
| Repairs: | $Unknown – A Lot |
| After Repaired Value: | $Only Rental Or Owner Finance |
| Max Offer: | $None |
The sellers says the house has been vacant for a long time and has been ‘stripped’. At least they are asking a realistic price, though I am sure it will need to be had for under 10k. This one is being bird dogged.
Homeowner wants to sell a 2 bedroom, 1 bath, 1000sf, built in 1930 house in a decent neighborhood.
Here are the numbers:
| Asking Price: | $Make An Offer (1st sign not motivated) |
| Amount Owed: | $0 |
| Repairs: | $Unknown (these are old houses – there will be repairs needed) |
| After Repaired Value: | $55,000 |
| Max Offer: | $30,000 minus repairs |
The seller actually saved a postcard I had mailed to them over a year ago. They said they had others so there will be competition. This neighborhood does have buyers that can qualify for new loans but they are very few and hard to come by. This house would make a good owner financed property. Told them I would probably need to buy in the 20’s to see if they were motivated at all. They said they would call me back. I will follow up.
Homeowner wants to sell a 3 bedroom, 2 bath house for full market value, cash, as-is, close quickly. It’s a dream come true. Come on…
Homeowner wants to sell a small house just outside of San Antonio. Well it’s about 45 minutes to an hour away. Too far for me and the market stinks out there. He doesn’t owe anything though and seems somewhat motivated so I am passing this one on as a birddog.
Homeowner wants to sell a 4 bedroom, 2 bath, 2700sf, built in 1939 house in a historic neighborhood.
Here are the numbers:
| Asking Price: | $Make An Offer |
| Amount Owed: | $0 |
| Repairs: | $60,000 roughly |
| After Repaired Value: | $250,000 |
| Max Offer: | $100,000 |
The house is vacant and is already being worked on. The kitchen still needs complete updating, the wiring needs complete updating, the pool needs complete updating. With these houses the repairs can double very quickly, so if I get this house, it will be wholesaled because it’s just easier. I am going to offer around $90,000 and see what happens.
Homeowner wants to sell a 3 bedroom, 1 bath, 933sf, built in 1936 house with garage apt.
Here are the numbers:
| Asking Price: | $Make An Offer |
| Amount Owed: | $0 |
| Repairs: | $unkown |
| After Repaired Value: | $70,000 |
| Max Offer: | $40,000 minus repairs |
Seller’s son is moving out of the house. There is a garage apartment (tiny) with a family of 5 living there for 350/mo all utilities paid because no separate meters. The house needs work. I’ve schedule to see the house Saturday morning. This business doesn’t stop at 5 on weekdays. In fact, I took a call for a lead at 10:00 last night. Saturday was the earliest she could show it. She seemed to be somewhat motivated, so I am going to go and see if the house has any potential.
Bank-owned 3 bedroom, 2.5 bath, 2200sf, built in 1998 house in an area I don’t care much for.
Here are the numbers:
| Asking Price: | $80,000 |
| Amount Owed: | $0 |
| Repairs: | $5,000 (paint and carpet) |
| After Repaired Value: | $115,000 |
| Max Offer: | $70,000 |
I don’t care much for this area because there are a lot of newer house foreclosures affecting the resale values of the houses. It is sometimes hard to compete with bank owned properties that are priced great for homeowners that need very little. I offered $67,000, but this is a new listing and chances are pretty slim. I still made the offer anyway. We’ll see.
Homeowner wants to sell a 3 bedroom, 2 bath, 1500sf, house in a decent neighborhood.
Here are the numbers:
| Asking Price: | $99,000 |
| Amount Owed: | $95,000 |
| Repairs: | $Cosmetic |
| After Repaired Value: | $100,000 |
| Max Offer: | $65,000 minus repairs |
Divorce situations can be pretty motivating, but there is no equity.
Homeowner wants to sell a 3 bedroom, 2 bath, 1300sf, built in 1915 house in a historic neighborhood.
Here are the numbers:
| Asking Price: | $70,000 |
| Amount Owed: | $0 |
| Repairs: | $cosmetic (unconfirmed) |
| After Repaired Value: | $85,000 |
| Max Offer: | $55,000 minus repairs |
Seller lives out of town and needs the money so they are selling this house. I put in a call to schedule a way for me to see the house and awaiting their call.
Homeowner wants to sell a 1 bedroom, 1 bath, 1000sf, house ON AN AIRPORT.
Here are the numbers:
| Asking Price: | $79,000 |
| Amount Owed: | $0 |
| Repairs: | $None |
| After Repaired Value: | $??? |
| Max Offer: | $??? |
I’m excited and confused about this one. I would love to own a house on an acre in a flying community where you can taxi out to the runway. The problem is there are no comparables and the house does not have a hangar. What I’ll have to do is calculate what I would need to buy this for to make it cashflow as a rental. That way I can make money on it until I decide what I want to do with it. The seller did mention that everybody wants to rent it, but he doesn’t want to be a landlord. Man, wasn’t I just talking about not getting emotional about a deal? That is why I am putting the analysis of this one off until tomorrow.
Homeowner wants to sell a 4 bedroom, 1.5 bath, 1200sf, house near a community college.
Here are the numbers:
| Asking Price: | $52,000 ($43,000 when least would take was asked) |
| Amount Owed: | $29,000 |
| Repairs: | $Unknown |
| After Repaired Value: | $75,000 |
| Max Offer: | $45,000 |
This seller called late last night. Of course, I picked up the phone. She seems pretty motivated. Appointment is set for tomorrow morning.
Homeowner wants to sell a 4 bedroom, 3 bath, 1500sf (not sure how that is possible), house in a good owner financing neighborhood.
Here are the numbers:
| Asking Price: | $60,000 |
| Amount Owed: | $0 |
| Repairs: | $Unknown |
| After Repaired Value: | $69,000 |
| Max Offer: | $39,000 minus repairs |
This is an inherited house owned by someone that lives out of town. The house is currently rented for 500/mo. Same tenant for 10 years. This is a very old house and I’m sure it needs repairs. Trying to set up an appointment to see it.
Summary
I’m almost certain one of these leads will become a deal. That’s all I have to say about that.
[fj_optin type=”random”]
Plans For Next Week
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Comments (25)
Good stuff. I’m amazed at how well your website has done. It will be interesting to see if you repeat that next week. Thanks for the continued updating. It helps us newer folks at direct marketing prepare for what to expect on calls.
Jason
Great, great posts. It’s fun to read the nitty gritty process of wading through prospects. Keep it up! 😀
thats a good amount of leads you’ve gotten this week from your website man! with as many leads you are getting you’re bound to get a deal from one if not a few of these,as for your probate leads are u buying them from a list provider or courthouse?also how often do you follow up with these as well
Stephen,
The probate leads I am getting directly from the courthouse. I will try to mail to these leads every three to four weeks and see how it goes.
Hey Danny – I am a wholesaler from Louisville, Ky. I do a lot of direct mail – mostly proates and absentee owners. That is my main source of leads. As for the phone book ad, it has never paid for it’s self. I do some driving for dollars, but not like I should.
I was wondering, how large of a geographic area do you farm and do you drive every week?
Sharon,
Thanks for sharing your marketing info.
My ‘farm area’ encompasses most of the north side of San Antonio (about 20-25% of the city). It is a really big area and I just pick different pockets of it to drive through.
If your you Kansas City Condo seller needs someone in KC to help them find their next place, let me kno0w 🙂
This was a big one! How long did it take for you to put this post together?
-Mat
Mat,
This post probably consumed about 4 to 5 hours for me this week. Some of the time is actually spent on the analysis as I enter them into the blog post as I analyze them.
ok, wordpress newb question, I can’t figure out where to upload my avatar pic for my posts…. help anyone?
Mat,
Don’t worry. I didn’t know about this either until my wife showed me a couple of weeks ago.
Go to http://www.gravatar.com and you can upload your picture and associate it with an email address. When you post with your email address the picture will automatically be pulled from your gravatar.
I love it man! I only got 5 leads this week (obviously not the pace that I need) so you’re a push to me to ramp up the marketing!
I did write down 8 ”vacants” while out and about today (and it felt great!)
In the past I’ve done the tedious task of trying to track down the owner and call them directly! I’ve done zero deals in this manner, although I’ve probably only gotten 3-5 correct people on the phone.
I think I’m just going to opt to send all of these addresses letters — is that your attack?
I’ve definitely got investor friends that have gotten some killer deals by ‘driving for dollars’!
Brooks,
I send letters to all the owners of vacants I find. In addition, I try to call the ones that have obviously been vacant and neglected for a long time.
Good post, and a lot of leads. I’m curious about something that’s a little off topic: how big is your farm area? San Antonio is a huge city and I assume you’re not putting bandit signs in every neighborhood. Even though your website and yellow pages ad serve the broader San Antonio market, how large of an area do your bandit signs and drive for dollars cover?
Is choosing a city with 50,000 people too small an area to market to? Would I not receive that many leads?
Thanks.
Mat,
I don’t think 50,000 is too small. You can more easily dominate the whole area. Should be less competition than a big city.
Oops. I opened this page yesterday, so I didn’t see your response until I posted. I skipped over Sharon’s question, too.
First of all, Awesome blog! I’m no real estate expert (yet) but I am able to spot an excellent communicator and educator. Thanks for all of the info.
My question is: Do you see any inherent problem in using your purchase strategy not only to flip but also to pick up some rentals along the way? Seems like a good way to purchase a property regardless of what you plan to do with it.
Thanks!
Dave,
Thanks. Yes, I feel that if you buy at 65% or less of market value (minus repairs of course), you should be able to cash flow the property or sell as-is or rehab and still make a profit. The only problems that I can immediately think of is if your numbers are off. You should be confident in your repair and after repaired values. When you look at comps you need to make sure that the properties are similar and, if you intend to rehab and sell, make sure that the comps were bought with new loans and not with owner financing. Debt service needs to be taken into consideration as well. If you have to pay 8 points and 18% interest and you hold the property over a year, it might not turn out so hot.
You mentioned that the code enforcer gave you a call on your bandit signs. Have you ever had any nasty fines from them. I’m guessing not, since you said you’ll put more out in a week or two. I live in Orlando and have noticed a significant difference in bandit signs around the city after they made a big push aginst them in the past year or so, but I never heard the real downsides from anybody.
Josh,
I’ve never been fined, but I know when to hold off on putting them out. The city seems to have big pushes in taking down signs and then get a little relaxed and it happens in cycles constantly. I’ve heard of one guy locally that was taken to court and fined, but I think he was putting out 200-300 signs at a time :). Use caution. People do get fined. Some people mention putting them out on Friday night and then picking them up Sunday night to avoid the hours the code compliance officers are working.
This blog gives a great perspective of the daily workings of real estate investing! Keep up the good work. One question though: Why aren’t you doing some subject to deals. It seems like you are passing on some great equity and longterm gains by not takingover payments for some of these people. Perhaps you are in a position to do some cherrypicking, which is great! Best of luck!
Thanks, Jason.
I don’t do subject to deals unless there is a lot of equity. Usually, it works out to where it is not a big difference for me to warrant doing that versus getting a private money loan and paying it off for the seller. I know some people will buy sub2 with little equity and sell on lease option, but I think this is too risky. I don’t want a house unless I am getting a lot of equity, so that no matter what happens, I can sell the house for more than I bought it for.
There are situations that I just plain forget about offering up different options and this one may allow me to buy something where we are just a few thousand apart on price.
Thanks for the question and reminding me to consider this more often.
Danny,
Thanks for your insightful posts and responses to reader’s comments. You’re helping us all become better investors.
I’m curious how your process changed from when you were really starting out to your recent “start”. How did you estimate your purchase price (did you have to get contractor estimates for all leads or were you still able to weed out the bad ones?)? It seems like your able to roughly estimate costs just by talking to sellers now. Also, how did you identify your target market – what preliminary research did you do and what research do you do to keep up to date with economic & governmental developments?
Thanks.
Justin
Justin,
Thanks for the compliments.
I think the process has just changed the most between the two starts with respect to consistency. When we were starting out, I would do a lot of marketing, get calls and get a couple deals. Then I would just focus on rehabbing those deals and selling them before doing much more marketing. The deals were not very steady at first. It did not matter so much then as we were both still working full-time jobs.
Weeding out bad leads is usually done from their level of motivation and level of equity. The amount of repairs matters only if those things are where they need to be. In the beginning, I had a contractor give estimates on the first couple and then I was just really conservative with my repair estimates. If I was really unsure about the cost for repairs, I would put a contingency in the contract that stated that the agreement was subject to further inspection of the property and I would then have a contractor or an experienced investor (this is usually easier and better) see the property before continuing with it.
I hear about people doing research on economic and governmental developments, but I have no interest in that. There are direct indicators of an area being good for what you want to do. Mainly, where are other investors wholesaling and rehabbing? After calling several investors and asking where they want houses, you will soon find out that most of them want to buy in the same areas. We buy houses so far below market value that those economic indicators really don’t matter much to us. If you were buying with the intent of gaining by appreciation, then it would be another story, but I would never advise doing that anyway.
You make your money when you buy.
Danny,
Quick question! When you send out the letters, do you look up each one on the appraisal district website and look to see if the homeowner listed has a different address, or do you just send it to the address of the home you want to buy and hope it reaches the owner and that they dont have renters living in there? I think it is obvious that you might get more feedback and leads if you look up the address of the homeowner (incase its a landlord), but this would be extremely time consuming because of the different websites you need to lookup to find that information. I’ve been trying to send ten letters a day for the past week or so, but havent gotten any leads yet (Patience young padawan, I know),
Nate,
Yes, it’s best to look up each owner address. If the house is vacant and there is no forwarding address, your letter will just be returned. I always send them to whatever address is on the appraisal district website, even if it is the same as the property you are targeting.
It’s just a numbers game. Keep going. Don’t forget to send follow up letters after several weeks to the ones you already mailed to.