These are the results of the Nineteenth week of opening up my house flipping 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 page: See How We Are Flipping Houses.
These are the things I did this week:
Sold Hidden Iron House
We closed on the Hidden Iron House this week. I will be working on the final post for the house flip and will be posting that hopefully next week. It will have a break down of the true numbers for the deal. The deal worked out pretty good and we made a really nice profit, especially considering how little work was involved.
Def Leppard House Staged and On The Market
The Def Leppard flip house has been rehabbed, cleaned and staged, and on the market. We are currently negotiating an offer but are dealing again with the 90 day FHA flip rule. The buyer really wants to move in before the end of the summer, so we are checking to see if they would be ok with leasing the house for a month and then closing after the 90 days is up. View the after pictures with staging here.
Frustration House Rehab Started
We have started the rehab on the Frustration house. The seller happened to be at the house the morning I met my contractor there. He continued to cement the name we came up with for the house by walking around following us while we were going over the scope of work. Every room we went into he would give his input on what he thought we should do. My contractor was getting confused as I was telling him what I wanted done and this guy was mentioning other contradictory things. He then went on to talk about how he should have waited to make the commitment to sell and how he knew we would make a fortune on the house. I’d heard enough of this and asked him if he had everything he was going to take from the house and opened the front door for him.
The next day, my contractor started work there. He called me in the morning and told me someone had gone in and removed the light bulbs out of the bathrooms and the red toilet seat. Strange. It must have been the seller. Good old frustration house (not like we were going to keep the toilet seat anyway…it was red for heaven’s sake).
View the before pictures, scope of work and details for the frustration house here.
Expensive House Rehab Scope of Work Determined
The sellers from the expensive house are vacating the house today. I had already met with my contractor at the house to go over a scope of work so that he could start the day after they move out. The holding costs on this house are something we need to be careful about. Got to move this one as soon as possible.
Got Approval For Red Door
Got approval from the HOA for our red door at the Def Leppard house. Great.
Left For Vacation
Went to Oshkosh for AirVenture! This place is awesome. I have missed some leads this week due to wanting to completely relax and not be a slave to my phone. I may be slow to respond to comments.
Marketing
Total Motivated Seller Leads This Week: 7 🙁
| Lead Source | Leads This Week | Notes |
|---|---|---|
| Bandit Signs | 0 | 40 bandit signs put out two weekends ago. |
| Yellow Pages | 2 | For a picture of my ad, visit the ‘The First Week’ post. |
| Buying Website | 4 | For a link to my site, visit the ‘The First Week’ post. |
| Drive For Dollars | 0 | Mailed about 50 out two weeks ago. |
| MLS | 0 | Did not look at any listed properties this week. |
| Wholesale Deals | 0 | Nothing – Come On Wholesalers, where are you? |
| Referral | 0 | I love referrals. |
| Probates | 1 | 75 more mailed out. |
And A New Feature – Total Leads To Date [266]
This is the total number of leads for each source since I started posting about the leads (late March 2011).
| Lead Source | Total Leads To Date |
|---|---|
| Buying Website: | 138 |
| Bandit Signs: | 50 |
| Yellow Pages Ad: | 33 |
| Driving For Dollars: | 16 |
| REO Realtors: | 6 |
| Absentee Owners: | 5 |
| Referrals: | 5 |
| Wholesalers: | 4 |
| Realtors: | 3 |
| MLS Search: | 2 |
| Probate Letters: | 3 |
| For Sale By Owner: | 1 |
Leads Analyzed
Homeowner wants to sell a 2 bedroom, 1 bath, 1000 sf house in a decent neighborhood.
Here are the numbers:
| Asking Price: | $75,000 (was asking 84,000 at first) |
| Amount Owed: | $0 |
| Repairs: | $unknown (unconfirmed) |
| After Repaired Value: | $65,000 |
| Max Offer: | $40,000 – repairs |
This seller inherited the house and wants to make some money. Too much, in my opinion. I said I would need to buy in the 30’s depending on the amount of repairs and am waiting for a response.
Homeowner wants to sell a 3 bedroom, 2 bath, 1700 sf house in a decent neighborhood.
Here are the numbers:
| Asking Price: | $65,000 |
| Amount Owed: | $57,000 |
| Repairs: | $A lot (unconfirmed) |
| After Repaired Value: | $95,000 |
| Max Offer: | $61,000 – repairs |
Seller needs to sell this house. They mentioned that it had foundation problems, broken windows, broken AC, etc. They owe too much and the days on market are high. I am passing on this one. Will check with a buyer to see if he is interested anyway. Update: foundation is sloping 8 inches from back to front. It’s solid, just sloping. They are starting to ask a ridiculous amount even with this problem. Will be following up.
Homeowner wants to sell a 3 bedroom, 2 bath, 1100 sf house in a decent neighborhood.
Here are the numbers:
| Asking Price: | $60,000 |
| Amount Owed: | $45,000 |
| Repairs: | $cosmetic (unconfirmed) |
| After Repaired Value: | $75,000 |
| Max Offer: | $48,000 – repairs |
Kids have moved out and the house is too big (not sure how a 1100 square foot house is too big, but oh well, maybe there is more to the story.) They said it could use some painting. Not really interested in the area, so I birddogged it.
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 (was asking $175k) |
| Amount Owed: | $0 |
| Repairs: | none (unconfirmed) |
| After Repaired Value: | $185,000 |
| Max Offer: | $120,000 – repairs |
Seller moved out of town and wants to sell his old house. Wants to go back to school and needs $25k for that. He was just curious to see what we would offer. I told him probably in the 120’s and he was interested in the least. He said absolute minimum would be $150k. Some people might be interested in this if the seller offered owner financing, but again, he needs at least 25k down and I just don’t like the spread. Too thin. I will follow up.
Homeowner wants to sell a 3 bedroom, 1 bath, 800 sf house in a so-so neighborhood.
Here are the numbers:
| Asking Price: | $50,000 |
| Amount Owed: | $0 |
| Repairs: | cosmetic (unconfirmed) |
| After Repaired Value: | $70,000 |
| Max Offer: | $45,000 – repairs |
Seller inherited the house when her mother passed last year. She was going to sell it then, but ended up with throat cancer. Now that she has recovered from treatment she is ready to sell the house. There is a deal here, but I am not really interested in the house. Mainly because I will be leaving for vacation soon and trying to get things squared away and don’t have time to see and contract this one. I know people interested in this area and probably would have tried to contract and wholesale the house had I not been in a hurry. I birddogged it instead.
Homeowner wants to sell a house but would not give me any information about it. How does this ever make sense to anybody?!? I guess there is a very real possibility that I may go over there and lift the house up and steal it… just hook some chains up to it and drag it down the street. Maybe bring a heavy duty helicopter. Maybe some magical, vanishing pixie dust sprinkled here and there. Maybe entice the house to follow me while I play my mythical unicorn flute…
I have her number and will call again after a couple weeks. So ridiculous.
Homeowner wants to sell a 4 bedroom, 2.5 bath, 2500 sf house in a good neighborhood.
Here are the numbers:
| Asking Price: | $100,000 |
| Amount Owed: | $88,000 |
| Repairs: | cosmetic (unconfirmed) |
| After Repaired Value: | $125,000 |
| Max Offer: | $81,000 – repairs |
Seller’s husband passed away and she needs to sell. There is some equity here, but just not enough for me. I passed the lead on to another investor that can probably make it work.
Summary
This week was mostly about relaxing so I birddogged most of the leads. Next week should see some more as I get into some of the ones that I missed, if they are still available.
Plans For Next Week
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Comments (20)
Have you heard of an issue when leasing a house to a person that’s going FHA? I think we have this on a house we currently own, but the lender is beating around the bush about it – it creates an identity of interest (possibly the correct jargon?) and FHA will require a certain amount of time to pass (6 months I think) before you’re allowed to sell them the house.
Enjoy your vacation.
PS – Houses always come to the call of the magical flute…
Brooks,
Lol. Those houses sure do love that flute. I’ve got it an a safe deposit box. 🙂
I have not heard about any problems with giving a buyer a temporary lease and then selling to them after a month or two. I’ll update this if something does arise, but I don’t think there will be a problem.
I gotta say I am impressed with your website leads. That’s one of the cheaper forms of advertising you have. The more important question is where are your sales coming from? Have a good vacation.
Jason,
Thanks. It’s been a lot of work to get the website to where it is. Definitely is cheaper per lead than most of the other marketing methods.
We list our houses with a Realtor. She does a little social media marketing, but other than that, we’re not doing anything special. The big thing is that my wife and our Realtor always respond to every inquiry and do it quickly.
Guess, I misstated. Which lead generation method gives you the greatest number of deals? ie: If probate has only 5 leads, but 3 deals it would still be worth it.
Jason
I second Jason’s comment. It would be cool to see how many leads in each category turned into deals for you.
Great site, and thanks for keeping it up!
Mike,
I will consider adding that to the weekly analysis so that it is easily kept track of.
Jason,
Bandit signs and website for sure. It’s still too early to tell how the probate letters are performing.
Thanks Danny. More curious than anything, but could be very helpful down the road.
Not sure if it was you or someone else that said “a seller must be pretty desperate if they are contacting a number on a little yellow sign in order to sell a house.”
Jason
No problem.
I think that is true most of the time and I also feel it has something to do with reaching them at the right time. Where they might not of known about the possibility of selling as-is for cash and happened to see the sign. They then realize that it is what they need.
Danny,
Great blog lots of info. As Bilgefisher stated your website really brings in the leads! In week 1 you posted you use google ad words and pay per click. Is there anything else you have done to get the website leads rolling in? I’ve had a site for about a month, with not much action. Thanks
Clement
Great question, Clement.
This is all I am doing. There is some marketing (right now just the yellow pages) that has my web address. The bulk of leads though come from organic search and pay-per-click. It will take a while for google to start to pay much attention to your site. You need to do search engine optimization for keywords that homesellers would search for and then be patient. This is the hardest part, but it takes time.
Danny,
I know this has been talked about a lot but would like to ask one more question about your website optimization. Have you used any SEO companies to generate more traffic for your site? Meaning those companies that create the so called landing pages that all the traffic is initially directed to and that has links to your own website. Or have you just bought ads from Adwords directly and tried to do it all by yourself for your organic site?
Thank you.
All the best,
EJ
EJ,
No, I have never used any SEO companies to generate traffic. You have to be careful with using those because some may do things that the search engines don’t like and can actually hurt your rankings.
I just make sure that my site is relevant to what people are searching for when wanting to sell a house and pay for adwords ads to get more traffic. Most people make this more difficult than it really is. The most important thing is to realize that it does take time. If you want quick results, I recommend other marketing (bandit signs) while you are building up your site and climbing the rankings.
“Got approval from the HOA for our red door at the Def Leppard house. Great. ”
Hilarious!
Those guys! They keep sending letters as soon as they spot a blade of grass growing over 5 inches tall.
Has your wife ever considered getting a sales/broker license?
Do you use a pool of hard money lenders or the same one for each deal?
Thanks for the blog – it is awesome !
Ferny,
She thought about it in the beginning but then decided against it because we felt it wasn’t necessary.
We use a handful of private lenders. I will be posting a very in-depth post about how we found and built relationships with them this coming week.
Thanks for the compliments.
Danny – can you give some insight to someone (me) who is new at estimating repair costs? Is there a website I can use for general estimates? Should I start developing relationships w contractors and bring one when I see a house?
I assume you make your offers based on your knowledge and experience of knowing rehab costs, then you bring your contractor in to the fold once you have the house either under contract or after you own it. Thanks!
Nick,
The best way to start is have a contractor go with you to look at a couple houses and then sit and really discuss what it should cost to do the common things. Things like: replace the flooring, paint inside and out, replace the light fixtures, replace or paint the cabinets and put on new hardware, replace countertops or have refinished, do sheetrock repairs, replace interior and exterior doors, replace trim, replace the roof, replace HVAC, replace the water heater, replace the windows, replace a tub and install and new tub surround, fiberglass or tile, tile floors, carpet floors, etc. Make a list of these things and ask how much each should cost based on square footage or average sized item. Just for a rough idea. You will never estimate repairs to a very accurate number. Be conservative and add a fudge factor of at least 10%.
You could also start by reading a book on inspecting houses (there is one on the house flipping resources page) to get a general idea of what to look at (though I do NOT recommend actually checking all things an inspector would check – this would be a huge waste of time as you are not likely to be buying all houses you are going to look at – usually only a small percentage). Just be really conservative at first.
Hope this helps.