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The Second Week

Home » Blog » 34 Weeks Flipping Houses » The Second Week

These are the results of my second 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.

Here is the First Week, if you missed it. It has some explanations of some of the marketing.

These are the things I did this week:


Total Leads This Week: 14

  1. Bandit Signs I did not put up anymore bandit signs this week. These leads were from the ones that are still up from last week (gotta love it when they stay up longer than a week :)).
  2. Yellow Pages For a picture of my ad, visit the ‘The First Week’ post.
  3. Buying Website You can view my website here:
  4. Realtors I have built relationships over the years with Realtors that will notify me when a deal comes a long that they think I would be interested in.
  5. $20 Marketing Cards These are cards you leave all over the place and they have your marketing message on them. The ones I use look like folded twenty dollar bills. If that doesn’t catch someone’s eye, I don’t know what will. You can have lots of fun with these. Here’s what mine looks like:
    Marketing Cards For Flipping Houses
    I got these from You should seriously consider getting these!
  6. Drive For Dollars My wife and I went driving for dollars this week. We really enjoy doing this together. It’s relaxing. We collected addresses for 75 houses that appeared to be vacant. This took a total of about 3.5 hours spread over two days. That’s about 21 addresses an hour.I’ve put together a primer on driving for dollars that contains lessons learned from years of doing this. Kind of a ‘best practices’ article. You can view the primer here: Driving For Dollars.

Leads Analyzed

  1. 4-Plex[Source: Website]Tired landlord wants to get rid of 4-plex with all 1/1 units. 2 are rented $375/mo (tenants in for 1 year and 4 years). One unit being filled next week for $325 and one vacant. All separate utilities, so tenants are responsible for their own utilities. All units are less than 500 sf and the structure was built in 1920. The seller wants $59,000.

    As I’ve stated before, I do not want this type of rental at this point. I feel that money can be made on this one (monthly rent is far greater than 1% of the purchase price – simple rule of thumb to be used to figure out whether you should even mess with the lead) for the landlord that is willing to make the repairs and deal with the tenants. Therefore, this one was sent to my ‘go to’ guy (wholesaler/landlord).

    Note:If you do not have someone to send these types of deals to yet and feel like money can be made, you should consider just getting an option contract on them. This gives you an option to buy at an agreed to price, but also allows the seller to continue to sell it himself (most aren’t trying that hard to sell it). Just make sure that whoever you tell about the deal doesn’t try to go around you and deal directly with the seller (hint: don’t give out the sellers’ contact info.) This should really be a whole other post. Hopefully soon.

  2. House in Decent Neighborhood[Source: Bandit Signs]This one was a 3 bedroom, 2 bath, 1200sf house that was built in 1984. Here are the numbers:
    Asking Price: $60,000
    Amount Owed: $46,000
    Repairs: $Unknown
    After Repaired Value: $75,000
    Max Offer: $48,750 (65% of After Repaired Value) minus Repairs

    With this one, based on what she told me about the condition of the house, I would need to get it for no more than about $40,000. They owe more than that and are not behind on payments (I don’t try short sales anyway as they are just too much work, unless there is huge potential for profit). This is the type of deal that some people are tempted to try and make work because if you just bend your criteria a little, you can squeeze enough profit out to make it a “deal”. DON’T DO IT. Move on to the next one.

  3. House In Neighborhood Next To The Last One[Source: Website]This one was also a 3 bedroom, 2 bath, 1300sf house that was built in 1984. Here are the numbers:
    Asking Price: $85,000
    Amount Owed: $45,000
    Repairs: $10,000 (estimated from listing pictures)
    After Repaired Value: $90,000
    Max Offer: $48,500 ($58,500 (65% of ARV) – $10,000)

    This one was listed on the MLS. I was able to see pictures and make a rough estimate of the repair costs. The seller is out of state which gave me reason to see if he would consider such a low offer. He wasn’t interested and I thought he was starting to go into the “you’re trying to steal the house speech”, but he didn’t. Turned out to be a nice guy but was not willing to go below $75k. I will follow up to see what he does.

  4. Owl House[Source: Bandit Signs]This one was also a 3 bedroom, 2 bath, 1338sf house that was built in 1978. Here are the numbers:
    Asking Price: $99,000
    Amount Owed: $75,000
    Repairs: $Unknown
    After Repaired Value: $100,000
    Max Offer: $Who cares

    This one is a definite no go. Divorce situation and they refinanced two years ago. They flat out owe too much. Next.

  5. House Backs Up To Busy Road[Source: REO]The listing agent called me on this 4 bedroom, 1 bath, converted garage, 1200 sf house. Here are the numbers:
    Asking Price: $56,000
    Amount Owed: $0
    Repairs: $14,000
    After Repaired Value: $90,000
    Max Offer: $40,000 (60% ARV minus $14k for repairs)

    Here’s a quick breakdown of the repairs:

    Paint Inside/Outside: $2,400 ($1/sqft inside and outside)
    Siding: $500
    Windows (glass only): $200 (~$35/window)
    Cabinets/Countertops: $1,800 (small kitchen, get prices at Home Depot)
    Flooring: $2,000 (~$1.50/sf cheap, but nice carpet, ceramic tile)
    Bath: $1,000 (new tile tub surround, new vanity and toilet)
    Sheetrock Repairs: $500 (lots of patches)
    Landscaping: $500 (tree trimming, red mulch and lawn care)
    AC: $2,000 (just in case – looks old and no power to run it)
    Doors: $700 (front door, back door and several interior doors)
    Lights: $500 (again, check Home Depot prices for builder specials)
    Trash Removal: $500
    Miscellaneous: $1,400 (about 10% added to total)
    Total: $14,000

    Coming up with these repairs estimates to show you was sort of difficult because I subscribe to Ron Legrand’s method of determining
    repair estimates
    . With this, I can walk in and out of a house with an estimate in 10 minutes. Some people call it crazy, but I know it works. Basically, you will never get the estimate exactly right. No matter how detailed you get, you will never be exactly right with the actual costs. Go in and determine whether the job will cost $5k (kinda hard these days), $10k, $15k, $20k, etc. Some will seem like $7k and you will just round up to $10k.

    This is usually hard for new investors to do. To help get an idea, the best way is to take an experienced investor with you. If you don’t know any that would, take a contractor. Just be careful to not over do it. You are not going to live in the house. Be mindful of the price range of the house as well. Don’t go putting granite in a house that will retail for $60,000 (or $125,000 for that matter). Spend lots of time at Home Depot or Lowe’s, getting an idea of what materials cost.

    You will make mistakes, but don’t worry so much. You should be buying the house cheap enough that you should never have to worry about burning up all of your profits. You shouldn’t lose money, just make less than you figured.

    Speaking of mistakes, I remember one argument I had with a contractor when I first started. I actually argued with him over the cost of quarter-round trim. He was trying to tell me they were $60 (I don’t remember the exact numbers) and I told him that I just saw them at Home Depot for 75 cents for 8′ or 10′ lengths and that did not add up to $60. We argued for about 5 minutes and I got my way. Well….I was walking through Home Depot a couple days later and had to take a look. I was shocked to find out that I was looking at the cost per foot! An apology was made immediately. How embarrassing.

    The problem with this house is that it backs up to a busy road (reason for the 60% used for max offer calculation – and the house was just hideous). This really does affect resale value and needs to be taken into account when figuring out values. Another thing to watch out for is junkie neighbors. This really affects how quickly a house will sell. I don’t know how many times I’ve ignored this and my wife has chewed me out upon arriving to see this “great deal” for the first time.

  6. Value Is In The Lot[Source: Bandit Signs]This one was a 3 bedroom, 1 bath, 600sf house that probably needs to be torn down. Here are the numbers:
    Asking Price: $15,000
    Amount Owed: $0
    Repairs: $Unknown
    After Repaired Value: $55,000 owner financed or lease option
    Max Offer: $For me, $1,000

    This one is a great contender for an owner finance property. Buy the house, fix it and sell it on owner financing or lease option. I did not analyze further because I am not interested in such a small house in a bad area. Passed it on to another investor.

  7. Pre-Foreclosure[Source: Website]This one was a 3 bedroom, 2.5 bath, 2000sf house that is facing foreclosure. House is only 6 years old. Here are the numbers:
    Asking Price: $115,000
    Amount Owed: $115,000
    Repairs: $Few Cosmetic
    After Repaired Value: $120,000
    Max Offer: $78,000 minus repairs

    I took this call while helping my brother move. Always take your calls. Don’t be like your competition. Actually pick up your phone when people call you. You will stand out.

    This is not a deal for me because of what is owed and the fact that the house does not really need repairs. If you are a short sale investor that wants these leads, please contact me. I’ve done some, but really would rather not spend much time on them (Do you see a trend here? No, not laziness.).

  8. Too Many Houses For Sale[Source: Website]This one was a 3 bedroom, 1 bath, 1120sf house that was inherited.
    Here are the numbers:

    Asking Price: $75,000
    Amount Owed: $0
    Repairs: $Unknown
    After Repaired Value: $65,000
    Max Offer: $40,000 minus repairs

    This house is in an area that I don’t really care for and there are A LOT of houses for sale right now in the near vicinity (about 1/2 mile radius). I passed this one on.

  9. Out of Town Owner[Source: Website]This one was a 3 bedroom, 1 bath, 1100sf house in a neighborhood close to downtown. Here are the numbers:
    Asking Price: $40,000
    Amount Owed: $0
    Repairs: $Unknown
    After Repaired Value: $65,000 (without central air) $75,000 (with central air)
    Max Offer: $48,000 (65% of $75k) minus repairs

    I received this one on my website and the phone number was missing one number. I have sent a couple emails and am waiting for a response.

  10. Too Far Out Of Town[Source: Bandit Signs]This one was a 3 bedroom, 1.5 bath, 1300sf historic house about an hour from where I live.
    Here are the numbers:

    Asking Price: $80,000
    Amount Owed: $65,000/td>
    Repairs: $Unknown
    After Repaired Value: $110,000
    Max Offer: $71,000 (65% ARV minus repairs)

    I cannot see making this one work for me. There is a tenant living in the house and it is just so darn far. I’ve talked to plenty of investors that deal with out of town properties and it seems like they are constantly spending half a day checking on 1 house. Not good. I passed it on to a wholesaler.

    A good point to make with this one is to ask what is the least they are willing to take. They were asking $105,000 and when I asked what their rock bottom price was, they told me about $80,000. That’s a big price drop with one simple question. Use it.

  11. Area I’ve Agreed To Stay Away From[Source: Yellow Pages]This one was a 3 bedroom, 1 bath, 1200sf house that was inherited.
    Here are the numbers:

    Asking Price: $Told To Make An Offer (I hate this)
    Amount Owed: $0
    Repairs: $Unknown
    After Repaired Value: $50,000
    Max Offer: $See comments below

    This house is in an area that I agreed at the request of my wife to never buy in again. This was immediately passed on.

  12. Mobile Near Lake[Source: Website]This one was a 3 bedroom, 2 bath, manufactured home north of town.
    Here are the numbers:

    Asking Price: $120,000
    Amount Owed: $63,000
    Repairs: $Unknown
    After Repaired Value: $80,000
    Max Offer: $Not worth calculating

    Even if I bought for what they owe, I would not be able to make this deal work. I’m not really a mobile guy either.

  13. Rough Neighborhood[Source: Website]This one was a 3 bedroom, 2 bath, 1600 sf home in a war zone.
    Here are the numbers:

    Asking Price: $45,000
    Amount Owed: $0
    Repairs: $Unknown
    After Repaired Value: $x amount of crack
    Max Offer: $Not worth calculating

    I might be interested in this one if I was a junkie in the true sense of the word. Seriously, this is a really rough neighborhood and there are investors that will buy here. I am sending this one to them.

  14. Another War Zone[Source: Yellow Pages]This one was a 3 bedroom, 1 bath, small house in a different but similar war zone.
    Here are the numbers:

    Asking Price: $45,000
    Amount Owed: $0?
    Repairs: $Unknown
    After Repaired Value: $?
    Max Offer: $Not worth calculating

    See explanation for lead above.


There were quite a few leads this week. Nothing really great, but that just means I am getting closer to the good ones. 🙂

I was not able to get the list of Absentee Owners this week because we switched title companies recently and I had login information from the old title company. I am getting in contact with someone at the new title company to get this set up. This will be explained next week.

[fj_optin type=”random”]
Plans For Next Week

  • Get List of Absentee Owners.
  • Put Out More Bandit Signs
  • Send Letters to Drive For Dollars Properties
  • Call REO Realtors.

I am going to take half of this week off to go camping. This is a lot to do, in a half week, but I am going to have other people do some of the tasks for me.

Please do not hesitate to leave feedback on the format I am using for these posts. (I may not be able to respond to the comments as fast this week due to my camping trip.) I am trying to figure out what works best.

If you have not subscribed, please do so on the right side of this page. This way you will be notified when my new posts are put up.

Stay tuned.


Comments (31)

  • Brian Jones

    I really enjoy reading your post Danny. It gets me excited about building my business and it gives me hope.
    Have fun on your camping trip, I’m jealous!

  • Litia

    Thank you for all the information Danny.
    I am not technology savvy, do you recommend how I can go about to create my homes buying website?
    Again, thank you.

    • Danny Johnson

      This is tough one for me to answer because I build my own. There are templates available (free and paid-around $40-$60) that you can customize. Google search ‘css website templates’ – the css ones are usually better looking and built better.

      You could also check out There you can have programmers bid on your job. You can probably have a basic one set up for under $100.

      There are some real estate investor websites you can buy. Just do a google search for real estate investor website.

      Hope this helps.

  • Joyce

    Re making a website:
    Hi Litia,
    I have been using

    I think it is a great (and fun) way to ‘design’ a nice website and it is FREE.
    When you have a domain name ( is inexpensive), you can ‘point’ it (it will tell you how) to

    Good luck!

  • Christian

    another great post….

  • Mathew

    For the leads from your website, how are people attracted to your website? Do they come from your other marketing methods?

    Although we see some of your negotiation techniques with certain deals, I’d be interested in hearing (reading) a full-on negotiation between and a seller that incorporates many of those techniques along with your analysis. A hypothetical deal would even be good.

    Thank you, and I hope you had a good time camping.

    • Danny Johnson


      Web leads come from organic search, pay per click advertising, website address on my marketing pieces and other websites.

      I will probably do a negotiation article in the near future. I want it to be pretty in depth.


  • william (Bill ) Hall

    Asking Price: $120,000
    Amount Owed: $63,000
    Repairs: $Unknown
    After Repaired Value: $80,000
    Max Offer: $Not worth calculating

    In the above, How do you know the ARV when the repairs are unknown?

    Thank you,

    • Danny Johnson


      ARV is the After Repaired Value so it is the same regardless of repairs because it is the resale price assuming the house is already fixed up.

  • william (Bill ) Hall

    What is a good budget for a decent amount of google hits?

    • Danny Johnson


      That varies based on where you are location wise (competition) and how many people are searching locally for home buyers.

  • william (Bill ) Hall

    Thank you –
    I have a 3 year old REO house with a LP of $249,000. My realtor told me that the bank is motivated to sell, so I offered $100,000 and I am willing to go to MAO. If the bank accepts my offer, then I will pull the comps and check for repairs… Should be minimal – What else should I do?
    Remember, I am very new to this business. I hope my questions are not too elementary.


    • Danny Johnson


      Any question is never too elementary. This goes along with yet another one of my fortunes from a recent fortune cookie (you probably think I’ve got a tub of them on my desk :)) It says, “One way to learn more is not to hide your ignorance.” People that focus on the ignorance part are thinking about the wrong thing. Being open and willing to learn is the right thing to consider and that is what you are doing.

      First, you should at least have an idea of what the house should sell for once fixed up before making an offer. In this case, hopefully they are priced below the actual After Repaired Value (ARV) so that you will be fine if they accept the $100k. You really need to have your Realtor give you comps so that you can determine ARV yourself and have them give you their opinion of it.

      Being that the house is only 3 years old, it should not require that much, but don’t ever assume that to be the case with your offer. If you have not seen the place, you need to assume everything needs replacing, because it could. The best thing to do is see the house and be really conservative in your repair estimates. If you have no clue how to estimate repairs, take a contractor (your going to need one anyway if you end up rehabbing). They should give you a free estimate and just tell them you might not be able to buy the house but when you do, if all works out, you will have a lot of work for them in the future. Include 10% extra to the repair estimate for any surprises.

      Take the ARV multiply that by 65% or (70% at the most) and subtract the repair estimate to get your MAO (maximum allowable offer). Offer below MAO and be prepared for negotiating (have room to come up, but don’t ever exceed MAO, no matter how tempting). This should all be figured out before you make your offer. This way, when you make your offer and they accept, you already know you have a good deal. There are people that go around shooting really, really low ball offers in attempts to find the motivation of sellers of listed properties (mostly banks), but you will quickly burn out your Realtor and some of the REO agents will not take you seriously for too long. There’s a balance and this is best done after doing several deals, where you have a better idea of what works and what is a waste of time.

  • Bryce

    Mobile Near Lake

    This one was a 3 bedroom, 2 bath, manufactured home north of town.
    Here are the numbers:
    Asking Price: $120,000
    Amount Owed: $63,000
    Repairs: $Unknown
    After Repaired Value: $80,000
    Max Offer: $Not worth calculating

    Even if I bought for what they owe, I would not be able to make this deal work. I’m not really a mobile guy either.

    Can you elaborate on this? Does the 65% standard not apply to mobile homes? Thanks

    • Danny Johnson


      It just depends on the market. After Repaired Value is always going to be After Repaired Value. You make it as conservative as you want and then take 65% of that. Here I set it at $80,000 because that is what comps were showing and I was being conservative. If you take 65% of that you get $52k. They owe $63k so there is no way I could make it work.

  • Mark


    When you find these deals that are no interest to you, do you negotiate a price before sending it off to another buyer or do you let the buyer deal with the negotiating? Also do you get the referral fee written down before disclosing the sellers info? Thanks.

    Great info by the way

    • Danny Johnson

      I do not negotiate with the sellers before I send the leads. The other investor does their own negotiating. I usually specify the amount I want for the lead along with the contact information for investors that I know and have worked with before. With the birddogging, that is all I am really sending to, investors I know and trust.

      If you are looking to do the same but do not have any relationships with other investors, you can find the ones that are hustlers (guys that will call the sellers right away and schedule an appointment to see the house. You DO NOT want to send leads to investors that say they will call you when they get around to it or don’t pick up their phone every time you call. The good deals are gone fast.) and let them know up front what you want to get for the leads (paid only if they close the deal of course). Let them know that you are not just sending them every lead you get, rather just the ones that are potential deals. You won’t be wasting their time and you don’t want them wasting yours.

  • Mark

    Thanks for your quick response. I am really learning a lot just reading through your blogs. Great info.

    So I guess the best way to learn is to just jump in a get my feet wet. I do not know any buyers yet but I think I will work on trying to find a deal first then look for a potential buyer through advertising (bandit signs, ect.) until I can establish connections. I plan on attending some REI club meetings, but there not for a couple weeks. Any other advice on how to find buyers would be great. I have had an interest in doing this since I was a kid and I figured what better time to try. Thanks for your knowledge and quick response.

    • Danny Johnson

      No problem, Mark.

      You can always do both at the same time: find buyers and find deals. Keep a spreadsheet of investors that you find and what their criteria is (how many houses they are looking to do, what price ranges, areas, how they pay, what kind of rehabs they are looking for, whether they rent them out or flip or wholesale) and, just as important, how you felt about them.

      Some people advise putting an ad in the paper or cragistlist mentioning that you have a deal to get investors contacting you. You simply mention that the deal is no longer available but get their information for any future deals. You could do that if you feel comfortable with it or just call other investors from their marketing (bandit signs, phone book, newspaper ads, websites). Try to find out who has been buying properties with cash lately (ask a Realtor to pull up recent sold fixers that were bought with cash).

  • Sarah

    1. When you buy a house how do you get the cash to pay the buyer right away? Do you have investers lined up with cash? How do you have $50k in cash to give to buyers in a 3 days or a week…

    2. Also if you are buying from the bank and you want to just fix and flip… do you rent them out first on a monthly basis until it is fix so you can have someone paying the rent while you want?

    i am in los angeles and it is hard to get houses for 50k… i dont have 200k to give to these people or 20% down.. any ideas how i can do it with 0% down … your bandit sign strategies.. (i have money to fix up properties.. but i dont have 20% down to buy the house..) what is the best thing to do.. what exactly would you do if you were starting out in los angeles where houses are 200k+

    • Danny Johnson

      Great questions, Sarah.

      1. We use private lenders for funding most of our deals. Read About How To Find And Approach Private Money Lenders Here

      2. We never rent the house while we are rehabbing them. We just work hard to get the rehab done quickly so that we can put the house on the market. Most of our rehabs are only taking from 2 to 4 weeks anyway as we are focusing on the ones that don’t need a complete gut job.

      3. I would try to find private lenders to fund the deals (you will need to find awesome deals that no one could pass up) and also try to find sellers that would be willing to owner finance the house or sell subject to the existing mortgage (where you get the house deeded to you through a normal closing but their loan stays in their name and you become responsible to pay the payments).

  • Pamela

    Hi Danny I know its been a while since this post but I have a big question about the Sub2 instead of money down that you discussed with sarah. I’m very eager to get moving while i’m laid off and I really like the sub 2 idea. However, what if the bank finds out and calls the mortgage due? It seems to be happening a lot right now or i’m talking to the wrong people. Do you just deed the property back to the original owner or try a bank negotiation? Obviously if I don’t have money down I won’t be able to pay off the mortgage. Seems like it might p*** off the seller even if you state it in the contract. Sounds like a suit. Illinois RE law scares me anyway.

    • Danny Johnson

      I really don’t recommend sub2 for new people in this business for that very reason. You are responsible for the seller’s credit and if you can’t cover payments (if and when you need to make them), it will cause some serious problems.

      You mentioned in the other comment your interest in wholesaling. I’d stick with that for now. (I’m going to be doing something soon that will really, really help you learn wholesaling from start to finish)

  • Mike

    Hi Danny – I’ve been reading your powerful blog. This is excellent, straightforward information. By the way, you should start holding seminars if you haven’t already and depending upon the responses that you get. TV and radio advertising can be pricey if you branch out.

    1.) Anyway, what role does your wife play in all this? I’m married too. She’s an outgoing person and I wonder how you two work as business partners in the real world; duties, etc.?

    2.) For house #5 you have all the repair estimates laid out, but what do you pay a crew to perform those repairs; a percentage of something, by milestones at a price depending upon the milestone?

    Thanks for the great info,


    • Danny Johnson

      Hey Mike.

      Melissa, my wife, helps with design of the rehabs, staging and selling the houses. She also handles the books. She pretty much does everything. I just pretend to flip houses. 🙂 She’s awesome.

      Those numbers are for labor AND material. You have to find the contractors willing to give the good prices in exchange for consistent work.

  • ida

    Mr. Danny,

    wow, this is really interesting to me. My sister and I are looking to start A flipping houses adventure. I am a real estate agent, but fairly new to the market. My question is…. with private lenders or hard money what is it that they look for in order to qualify for this loan? and do they give a certain amount of time to repay this loan or how does that work?

    • Danny Johnson

      Hello, Ida.

      Great questions. You can find some clarification in this post:

      Regarding what they look for to qualify the loan, it really depends on the lender. Some private lenders only care about the numbers for the deal, others want to see your credit. For a flip, typical loan terms are 9-12 months. They will usually allow an extension (which usually costs another point [1% of the loan amount]). Of course, everything is negotiable. I feel that lenders actually like to see borrowers negotiate because it shows that they are not desperate for the money.

  • wayne

    on these older homes is there any problem getting insurance.

    • Danny Johnson

      No, no problem getting insurance. You will want to get a builder’s risk policy that covers vacant houses.

  • Kim

    Love the content, reasoning and strategies in these weekly posts. I’ve received similar calls where we try to figure out a way to make deal work, so it’s a great reminder to quickly review to see whether it’s a deal or not…and move on quickly!

    Could you tell us how you explain to the seller that you’re not comfortable buying in that area? Thanks

    • Danny Johnson

      Hello Kim.

      When you are reviewing whether or not a deal is possible, be sure to not base that decision on what they are asking for the house. Base that decision solely on whether a deal is possible (aka what they owe is low enough that there is equity).

      When I’m not comfortable buying in a certain area, I tell them I do not buy in that area because it doesn’t fit my investment model. I do tell them that I know other investors that do and then refer the lead to the other investor (birddogging). If the other investor buys the houses, they send me a referral fee.

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