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
- 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 :)).
- Yellow Pages – For a picture of my ad, visit the ‘The First Week’ post.
- Buying Website – You can view my website here: http://www.DannyBuysHouses.com.
- 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.
- $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:
I got these from DollarCardMarketing.com. (aff link) You should seriously consider getting these!
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.).
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
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.