These are the results of the Twentieth 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:
Went To AirVenture in Oshkosh and Visited Chicago
My wife and I took the kids up to the greatest airshow on earth up in Oshkosh, Wisconsin. Absolutely spectacular. You can probably guess who wanted to go there for vacation…. my wife. Just kidding :). Though she was interested and wanted to go. We were hoping for a break from the south Texas heat, but it was hot up there as well.
We also went to Chicago and stayed downtown for 3 nights. My wife and I love Chicago. It was the first time for the kids to be there and they enjoyed it also. We did the bus tour and boat tour, Shedd Aquarium, Navy Pier, Sears Tower and lots of walkin’.
Due to wanting to not have many interruptions during our vacation, I missed a lot of calls. I tried to let as many people know as I could that I would call them when I got back. If they were in more of a hurry, I passed the lead on to an investor in San Antonio to look into. This week probably is short of at least 5-10 leads where people did not leave messages or call me back. This is exactly why it is so important to pick up the phone when someone calls you. You just never know if it is the one call you’ve been waiting for.
The time with my family uninterrupted was well worth it and I would handle things the same way next time. But, when I am not on vacation, you better believe that I am answering the phone whenever I have the chance.
I want to thank our awesome Realtor for helping us with the rehabs and other goings on while we were gone. The importance of a good team cannot be stressed enough.
Got A Citation For Watering the Grass At One Of Our Properties
If you didn’t know, we are in somewhat of a drought in Texas (had to go to Wisconsin and Chicago to see rain again) and we have some strict restrictions against watering lawns and other uses of water. The sprinkler system at one of the properties we have has been going off at an unapproved time. Just have to go and change the timer to be between 3-8 AM on Thursday. It was set to go off really early before dawn so I am assuming someone must have reported it. Oh well. We are closing on that house soon. Hopefully the grass doesn’t die before that.
Frustration House Rehab Progressing
While gone we had our contractor working on the Frustration House. I initially did not include doing anything with the kitchen and bathroom floors. They were sheet vinyl and in good shape. After the house was finished, our Realtor mentioned how cheap the floors looked. We are going to go ahead and put in ceramic tile in all wet areas (kitchen, bathrooms, laundry and entry).
Hidden Iron House Now Officially Sold
We’ve finally closed on the Hidden Iron House Flip. Unfortunately, I have not had time yet to work up the final numbers for the deal, but promise to have that for next week.
Came Up With A Great Idea For This Site
During the last week, I came up with a great idea for this site that I should be unveiling within the next two weeks. This is just a teaser. I think it will be a great addition to what I have here and follows along with the same spirit of sharing what we are doing in our house flipping business. Keep your eyes peeled. 🙂
Marketing
Total Motivated Seller Leads This Week: 13
| Lead Source | Leads This Week | Notes |
|---|---|---|
| Bandit Signs | 1 | 40 bandit signs put out three weekends ago. |
| Yellow Pages | 0 | For a picture of my ad, visit the ‘The First Week’ post. |
| Buying Website | 11 | For a link to my site, visit the ‘The First Week’ post. |
| Drive For Dollars | 0 | Mailed about 50 out three weeks ago. |
| MLS | 0 | Did not look at any listed properties this week. |
| Wholesale Deals | 1 | Just one – Come On Wholesalers, where are you? |
| Referral | 0 | I love referrals. |
| Probates | 0 | None mailed out this last week. |
And A New Feature – Total Leads To Date [279]
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: | 149 |
| Bandit Signs: | 51 |
| Yellow Pages Ad: | 33 |
| Driving For Dollars: | 16 |
| REO Realtors: | 6 |
| Absentee Owners: | 5 |
| Referrals: | 5 |
| Wholesalers: | 5 |
| Realtors: | 3 |
| MLS Search: | 2 |
| Probate Letters: | 3 |
| For Sale By Owner: | 1 |
Leads Analyzed
Homeowner wants to sell a 4 bedroom, 2 bath, 2100 sf house in a good neighborhood.
Here are the numbers:
| Asking Price: | Make An Offer |
| Amount Owed: | $100,000 |
| Repairs: | $minor (unconfirmed) |
| After Repaired Value: | $130,000 |
| Max Offer: | $85,000 – repairs |
Seller divorced and wife was living in the house but abandoned it and now he needs to sell. The days on market in this neighborhood are high and too much is owed for me. This might work as a short sale or sub2 for someone.
Homeowner wants to sell a 4 bedroom, 2 bath, 1500 sf house in a so-so neighborhood.
Here are the numbers:
| Asking Price: | $72,000 (after talking, really $36,000) |
| Amount Owed: | $0 |
| Repairs: | $quite a bit (unconfirmed) |
| After Repaired Value: | $80,000 |
| Max Offer: | $52,000 – repairs |
Seller inherited the house. There are 3 heirs and they each want to net $12,000. So closing costs would have to be figured in as well. There is most likely a deal here, but I really don’t like the area (days on market very high and more renters than owners) and would rather bird dog it. So I did.
Homeowner wants to sell a 4 bedroom, 2.5 bath, 3300 sf house in a good neighborhood.
Here are the numbers:
| Asking Price: | $175,000 |
| Amount Owed: | ??? |
| Repairs: | $cosmetic (unconfirmed) |
| After Repaired Value: | $185,000 |
| Max Offer: | $120,000 – repairs |
Waiting for seller to call back.
Homeowner wants to sell a 2 bedroom, 1 bath, 900 sf house in a bad neighborhood.
Here are the numbers:
| Asking Price: | $ |
| Amount Owed: | $ |
| Repairs: | $ (unconfirmed) |
| After Repaired Value: | $30,000 |
| Max Offer: | $FREE |
Waiting for seller to call back.
Homeowner wants to sell a 5 bedroom, 3 bath, 3300 sf house in a good neighborhood.
Here are the numbers:
| Asking Price: | $270,000 |
| Amount Owed: | $225,000 |
| Repairs: | $cosmetic (unconfirmed) |
| After Repaired Value: | $300,000?? |
| Max Offer: | $195,000 – repairs |
Seller’s wife filed for divorce and he wants out of the house. This house is in a town outside of San Antonio and my dad buys there. I told him about it and he said he had already spoken to the seller (just didn’t want to pay my referral fee – just kidding). He said it wasn’t a deal and that that price range had really been hit hard in that area over the last several years. So, no go. Next.
Homeowner wants to sell a 3 bedroom, 2 bath, 2100 sf house in a good neighborhood.
Here are the numbers:
| Asking Price: | $187,000 |
| Amount Owed: | $90,000 |
| Repairs: | $cosmetic (unconfirmed) |
| After Repaired Value: | $200,000 |
| Max Offer: | $130,000 – repairs |
The house is in a town about 30 miles north and there are several investors interested in the area. The seller did seem terribly motivated and so I passed this one on to one of them to work on.
Homeowner wants to sell a 2 bedroom, 1 bath, 1000 sf house in a so-so neighborhood.
Here are the numbers:
| Asking Price: | $58,000 |
| Amount Owed: | $38,000 |
| Repairs: | $cosmetic (unconfirmed) |
| After Repaired Value: | $60,000 |
| Max Offer: | $35,000 – repairs |
Family has grown too big for the house and need to sell. They owe just a little too much for me and I’m sure the repairs are going to be more than what they are telling me. I called to feel them out for the lowest they would even consider and they said 54k. No sense in wasting my time or any other investors’ time on this one. Next.
Homeowner wants to sell a 3 bedroom, 2.5 bath, 2658 sf house in a good neighborhood.
Here are the numbers:
| Asking Price: | $150,000 |
| Amount Owed: | $150,000 |
| Repairs: | $cosmetic (unconfirmed) |
| After Repaired Value: | $150,000 |
| Max Offer: | $98,000 – repairs |
Want to sell because they cannot afford the house. I cannot either at the price they need to get. Next.
Homeowner wants to sell a 4 bedroom, 4 bath, 6666 sf house in a great neighborhood.
Here are the numbers:
| Asking Price: | $380,000 |
| Amount Owed: | wholesale |
| Repairs: | $updated and likely well work (unconfirmed) |
| After Repaired Value: | $500,000 |
| Max Offer: | $325,000 – repairs |
Wholesaler called with this lead. Listed foreclosure that I had looked at back in 2007 when the owners still owned the house. This house is just plain UGLY. The style is not appealing and the landscaping is nonexistent. It would take a lot of work to make this house sell for the ARV they are telling me ($700k+). The more realistic ARV is closer to $500k and I still think it would sit on the market a while. I think I had offered $300k back in 07 before the market decided to go south. If I was going to buy a house that cost that much, it would have to be a no-brainer. Have to pass.
Homeowner wants to sell a 3 bedroom, 2.5 bath, 1698 sf house in a good neighborhood.
Here are the numbers:
| Asking Price: | $139,000 |
| Amount Owed: | $0 |
| Repairs: | $none (unconfirmed) |
| After Repaired Value: | $140,000 |
| Max Offer: | $91,000 – repairs |
Tire kicker just seeing what I would offer. He is firm on his price and so am I. Next.
Homeowner wants to sell a 3 bedroom, 2 bath, 1100 sf house in a decent neighborhood.
Here are the numbers:
| Asking Price: | $70,000 |
| Amount Owed: | $55,000 |
| Repairs: | $cosmetic (unconfirmed) |
| After Repaired Value: | $80,000 |
| Max Offer: | $52,000 – repairs |
The seller repeated over and over about all of the things they had done to the house. They did the work themselves which scares me most of the time. They are very firm on their asking price and so this is a no go.
Homeowner wants to sell a 4 bedroom, 3.5 bath, 4200 sf house in a great neighborhood.
Here are the numbers:
| Asking Price: | $410,000 |
| Amount Owed: | $397,000 |
| Repairs: | $none (unconfirmed) |
| After Repaired Value: | $415,000 |
| Max Offer: | $270,000 – repairs |
Seller needs to sell this georgeous house. Beautiful. Too much is owed unfortunately. Next.
Homeowner wants to sell a 3 bedroom, 2.5 bath, 2700 sf house in a good neighborhood.
Here are the numbers:
| Asking Price: | $165,000 |
| Amount Owed: | $0 |
| Repairs: | $cosmetic (unconfirmed) |
| After Repaired Value: | $180,000 |
| Max Offer: | $117,000 – repairs |
Husband is being transferred and they are checking to see what an investor would pay and then are going to consult with a Realtor. I didn’t spend much time on this because I wasn’t very confident in getting it. I made ballpark offer of around $120,000 and let them know that I would need to verify repairs needed. I’m not going to hold my breath. Next.
Summary
Missed some leads over the last couple weeks, but am back at work and ready to really get after it. There are still some leads that I am waiting to hear back from the sellers. Many have probably already contracted their house, but there might be some that have not and they might be just a little more motivated. Stay positive my friends.
Plans For Next Week
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 posted. Besides, don’t you want to read about the crazy adventures you can experience house flipping? Flipping houses is the best business to be in, bar none.
Follow along with me on my journey though this flipping houses blog.
Next: Follow Along As I Open Up My House Flipping Business
Comments (18)
Danny,
Glad to hear vacation went well. Some folks do not realize how extremely important r&r is to your business. A good book recommendation on the subject of working more efficiently (including r&r) is “The way were working isn’t working”. by Tony Schwartz.
Your very right on picking up the phone. I can’t tell you how many leads I have lost because I can’t answer the phone at work.
Btw, looks like your website is still doing fantastic.
Jason
Jason,
Thanks. I’ll have to check out that book… Just added it to my cart on Amazon. Just need one more book to make it to the $25 free shipping mark.
I had the same problem at my job. It was for a defense contractor and could not have cell phones on at work. I feel your pain. Don’t know how many times I had to go to the stair well to talk to sellers on the phone.
Hi Dan..
Enjoy your site. How do you purchase the houses on your own without a realtor? Are you licensed? I tried looking for a post that described this but couldn’t find it. If you already explained this I apologize.
-thanks, Anthony
Anthony,
Glad you enjoy the site. You do not have to work with a Realtor or be a Realtor to buy or sell houses. I buy directly from homeowners and sell through a Realtor, though we used to and could still sell ourselves if we want to.
We have a purchase agreement (contract) signed with the sellers of a house and take that contract to the title company that we use. They check for clear title, provide title insurance and prepare the paperwork for transfer of ownership. When all is ready the deal is closed at the title company with both buyer (us) and seller signing the closing docs. Sellers get their check and we get the keys.
I’m not exactly sure what all you want to know. This is a simplified explanation as there could be a lot more variables, like if you were getting a loan, etc. Let me know if more explanation is needed.
Grade A stuff. I’m unquetsinolaby in your debt.
Thanks, Kiona.
We are planning on a honeymoon in October and while I was trying to leave the laptops, it is looking like we’re going to be negotiating a very complicated shortsale and possibly managing a couple rehabs at that time. I would love to be free on the beach, but the idea of coming home to more money than we left with for taking a couple calls, seems to be more relaxing being in charge of our business while we’re away rather than worrying the entire time if everything will have crashed by the time we get back! Ha!
Justin,
I can appreciate your position. It’s not that we just ignored everything. We did negotiate repairs on a house after the inspection and handled some calls. Before we left, we tried to figure out everything up front to be prepared and to delegate responsibilities to people on our team to handle for us. They were given instructions and if things didn’t fit into what we had planned, they were to contact us to find out what to do. In order to do this you really have to trust your team. Every now and again you really need to be able to just have everything off, at least we do.
Have fun on your honeymoon and try to have as many things as you can stand taken care of before you leave.
Where are you going?
Hi Danny,
I’ve been enjoying your flipping ventures; really good stuff, Thank You. don’t stop.
I have a question . What contract do you use? Do you use a realtor’s contract to write offers, or do you have your own? If you use a realtor’s, how do you get them to give them to you? If you use your own, would you be willing to share it? I am having difficulty writing offers; would you point me in the right direction?
Thanks, Henry
Henry,
Thanks for the compliments.
I use the standard Texas Real Estate Commission contract. It’s available online in pdf format. Hopefully you can find your state’s online. Maybe try to search for [Your State] Real Estate Contract.
The offers I make to homeowners (not listed properties) are usually just verbal. Once we agree on a price, I write up the agreement on the TREC contract.
For listed properties, you would have your agent draw up the contract or have the listing agent draw up the offer if you are not using an agent. Sometimes the listing agent will be busy and direct you to a buyer’s agent in their office if you do not have one.
If this does not clarify things, please let me know what you plan on doing and I will try to help.
Danny,
I really like how you break down all of your leads. It’s really great to see and hear about where all of your leads are coming from.
Quite interesting to see all of the details of said deals too (we investors love to see all the numbers don’t we? lol)
And being uninterrupted on vacation with the family is priceless and is worth a lot of missed calls. I’m glad you had a great vacation.
Can’t wait to see what you have up your sleeve for the site.
Carey,
Glad you are enjoying how I present the work that we do in this business. Sometimes I wonder if people feel it is too repetitive with the analysis of the leads, but then I get great comments like this that really tell me that people do enjoy it. Thank you.
I too love to see the numbers!
Yeah, it felt good to finally take a break from thinking about the business and the website etc while on vacation. When I am not on vacation, I am thinking about this stuff 24/7 (drives my family a little crazy :)).
I can’t wait to show what it is. Just trying to figure out how I want to present it. I think it will help us to do things better and when I say ‘us’, I mean everyone following along on this blog.
Danny,
I love your posts. Would you feel comfortable making a comment on how you raise private money to buy houses? Or are you using hard money?
Thanks,
Jeff
Jeff,
You’re in luck. I am currently working on a detailed post on how we found and use private lenders. Should have it ready within a couple weeks.
Hi Danny,
Just to let you know your the man! I love this site. So much priceless info it is just awesome! I myself just closed on my first property that I flipped under 3 months with 30% net profit. It was awesome.
My question to you is, how is your tax strategy setup? I know the rate is about 35% on short term capital gains plus self employment tax which is at 15%. That is just insane. Do you have any suggestions on how to structure my business so I don’t pay so much taxes? What do you do?
Thanks for your help
Ed
Ed,
Thanks. Good job on the 30% net profit.
Disclaimer: I am not giving financial or tax planning advice and recommend seeking that from a professional.
Ah, the tax strategy. You know I can’t give a quick course on that. The number one thing is to have a CPA that knows real estate.
The way we try to minimize our tax beatings is by keeping ‘net’ profit to a minimum (as much as possible) and by using a C Corp. We flip houses in a C Corporation and get taxed at 15% if our net profit is less than $50k for the year. Goes to about 30% if over $50k. This is net profit. We try to balance this by buying properties to sell on owner financing or rent to help offset our profit (this is actually our ‘retirement plan’ of which I am planning on doing a massive post about). Better to invest it than to give it away to the tax man. Of course there are also a lot of operating expenses that are paid as well.
There is also the franchise tax that is 1% of gross income (sales less cost of goods). They recently changed this in 2010 to only be charged if your gross income is less than a million dollars. This is much better than the rates you mentioned.
Hi Danny,
I enjoy reading your posts! It’s interesting how you analyze leads, give us stuff to read to help us understand RE in a simple, yet fun kind of way, and sharing a little bit about your family too. Keep doing what you are doing, because I like what I’m learning! Can’t wait to hear about your detailed post for private lenders!!!
Thank you. I’m glad you are enjoying the blog.