These are the results of the Twenty First 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:
Frustration House Rehab Progressing
The Frustration House, is nearing completion. We have the tile going in right now. Once that is done, the carpet guy will go in with new carpet. All we have to do then is have it cleaned and staged. We will be moving staging items from one of the other houses that is closing soon.
The yard at that house looks pretty rough (mainly the back yard). The previous owner had dogs that tore it up and is now mostly dirt. This severe drought we are having down here doesn’t help. Starting to wonder if it is going to be another dustbowl situation. With the drought, there is no way I am going have sod put down. It would never make it. We have watering restrictions and I don’t feel like going over there everyday or paying someone to go over there. We will offer a credit for the new buyer to do as they wish.
Expensive House Rehab Progressing
The rehab on the Expensive House is still under way. All of the wallpaper has been removed, textured and painted. While looking over the job, we decided to replace all of the brass fixtures (cabinet knobs and pulls – over 125 of them!!, light fixtures, toilet paper holders and towel racks, faucets). We are replacing all of this brass-y-ness with brushed nickel fixtures. Should go a long way to update the place. Materials alone for this were over $2,000, but I wholeheartedly feel it was worth it.
There was sort of a fiasco regarding the stuff left behind by the previous owner. I had told the contractor to not remove anything from the house until we had a chance to look at it. Don’t guess he bargained for the Realtor to visit the house with us (she had already been there when the previous owner vacated the house and knew what was left behind). There were several things missing. Of course, the whole time he was trying to say that the items were there somewhere, though they were not found while we were there. Magically, they appeared the next day. Nothing major, just some stuff we were going to use for staging and a whole bunch of games that we wanted to donate to go to a church that needs them.
Even though it was obvious what had happened, I felt it was best to let him know that I knew but without actually coming out and saying it. If he had to defend himself a whole lot, they would have never magically reappeared as he would have lost a lot of face. Oh, the contractor balancing act. 🙂
New Post on Building Your House Flipping Team Posted
Posted on the people on our team that help us with our business. A good team is vital to your success. Read The House Flipping Dream Team Post Here
Numbers for the Hidden Iron House Now Posted
I’ve finally posted the numbers for the Hidden Iron House Flip. Check it out to see what we estimated we would spend and what we actually spent. Oh and don’t forget to see what we made on the flip, not that that is important ;).
Followed Up On Older Leads
Got a hold of about 7 people yesterday that I had talked to before. Nothing great but you never know. By keeping in touch with them, when they are finally ready they will think of me.
Ordered More Bandit Signs
Ordered 200 more bandit signs. Will slowly put them out. An investor friend just told me how he got fined for 11 signs ($150/each). I’m sure he can negotiate the fee. I asked if they had warned him first and he said, “not this time”. So, be careful. People do get fined.
Worked On New Idea For This Site
Last week I talked about a new idea for this site. Well, I didn’t actually get around to working on that idea but did work on another. I will get the other idea out soon though. So there is still more to look forward to.
The thing that I did work on was the Flipping Junkie Facebook fan page. The blog is great for talking about everything we are doing but is sort of difficult to have discussions. I get a lot of questions emailed to me and it doesn’t benefit everyone because only I can see those.
The fan page is a great place for other investors to be able to answer and ask questions as well. I know there are a lot of very experienced investors following along on this blog and I hope they can join us in the discussion on the fan page.
Take a moment to click on the graphic below and check out the page. Let’s get the discussions going so that we can all help each other.
Marketing
Total Motivated Seller Leads This Week: 12
| Lead Source | Leads This Week | Notes |
|---|---|---|
| Bandit Signs | 0 | Been a month since any were put out. |
| Yellow Pages | 2 | For a picture of my ad, visit the ‘The First Week’ post. |
| Buying Website | 5 | For a link to my site, visit the ‘The First Week’ post. |
| Drive For Dollars | 0 | Been a month since letters were mailed. |
| MLS | 0 | Did not look at any listed properties this week. |
| Wholesale Deals | 3 | Not really worth mentioning. (not included in count) |
| Referral | 1 | I love referrals. |
| Probates | 3 | Mailed about 2 weeks ago. |
| REO Realtor | 1 | Not good lead. |
And A New Feature – Total Leads To Date [291]
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: | 154 |
| Bandit Signs: | 51 |
| Yellow Pages Ad: | 35 |
| Driving For Dollars: | 16 |
| REO Realtors: | 7 |
| Probate Letters: | 6 |
| Referrals: | 6 |
| Absentee Owners: | 5 |
| Wholesalers: | 5 |
| Realtors: | 3 |
| MLS Search: | 2 |
| For Sale By Owner: | 1 |
Leads Analyzed
Homeowner wants to sell a 3 bedroom, 2 bath, 2000 sf house in a good neighborhood.
Here are the numbers:
| Asking Price: | $235,000 |
| Amount Owed: | $0 |
| Repairs: | $none (unconfirmed) |
| After Repaired Value: | $235,000 |
| Max Offer: | $153,000 – repairs |
Seller inherited the house and wants to sell. They’ve already fixed the place up and have it listed with a hot shot agent (ok, so I added the “hot shot” part for effect). There is just one catch, they want full price. No thanks.
Homeowner wants to sell a 2 bedroom, 2 bath, 1100 sf house in a so-so neighborhood.
Here are the numbers:
| Asking Price: | Make Offer |
| Amount Owed: | Would Not Tell (Said Not Much) |
| Repairs: | $quite a bit (unconfirmed) |
| After Repaired Value: | $70,000 |
| Max Offer: | $45,000 – repairs |
Seller inherited the house. She wouldn’t give out how much was owed and seemed like she really wanted it to be sold easy, but did not want to do it easily. That probably doesn’t make much sense. Let me try again. She wants to negotiate and play ball, but at the same time, she wants to be rid of the house quickly.
She wanted to know how much I would offer. I am not interested in a house in this area so I just made a ballpark offer in the $30’s to feel out whether she is motivated or not. If she is, I will pass the lead on to another investor for a fee. Update: she was not interested. Maybe she will be in a couple weeks. I will follow up.
Homeowner wants to sell a 4 bedroom, 2.5 bath, 3600 sf house in a great neighborhood.
Here are the numbers:
| Asking Price: | $350,000 |
| Amount Owed: | 0 |
| Repairs: | $foundation and roof leak (unconfirmed) |
| After Repaired Value: | $400,000 |
| Max Offer: | $260,000 – repairs |
Seller wants to downsize so that he can travel and enjoy his retirement. This house is right down the street from the expensive house that we are currently working on. He did not seem at all motivated, but the more I talked to him the more I felt that maybe he was. He had mentioned selling his last house through a Realtor and was not happy that he ended up with just a little more than “those we buy ugly houses people” offered. Of course, he had to wait months and deal with all of the hassles of selling the conventional way which is why he wasn’t very happy about it.
He just wanted a ballpark to begin with so I gave him one in the under $250k range, depending upon the repairs of course. He said he would think about it and I will definitely be following up.
Homeowner wants to sell a 3 bedroom, 2.5 bath, 1000 sf house in a good neighborhood.
Here are the numbers:
| Asking Price: | $100,000 |
| Amount Owed: | $55,000 |
| Repairs: | $good amount (unconfirmed) |
| After Repaired Value: | $150,000 |
| Max Offer: | $97,000 – repairs |
Seller needs to sell because her husband is ill and they cannot maintain the house. This one is located about 45 minutes from where I live. Going to try to go and see this one soon.
Homeowner wants to sell a 4 bedroom, 2 bath, 1500 sf house in a decent neighborhood.
Here are the numbers:
| Asking Price: | $70,000 |
| Amount Owed: | $68,000 |
| Repairs: | $cosmetic+ (unconfirmed) |
| After Repaired Value: | $110,000 |
| Max Offer: | $71,500 – repairs |
Seller is taking care of his elderly mother and does not need this house. He just wants to get out from underneath it. This one is close as my max offer is going to be right at what he owes. I’m going to go and see it.
Update: Went and saw this house. There was about 10-12k in repairs needed which makes this a no-go for me. I passed the lead on to another investor.
Update: Investor lost out on the deal because he was not able to visit the house the same day I told him about it. You’ve got to be fast. You cannot steal in slow motion.
Homeowner wants to sell a 3 bedroom, 2 bath, 1100 sf house in a decent neighborhood.
Here are the numbers:
| Asking Price: | $80,000 |
| Amount Owed: | 0 |
| Repairs: | $10,000 |
| After Repaired Value: | $90,000 |
| Max Offer: | $58,000 – $10,000 = $48,000 |
Seller inherited this house. There are several heirs and one is living in the house. Before we talked much, I made sure that all were on board with selling it. I don’t know how many times I’ve had people negotiate with me and get down to getting the deal done, only to find out one of them didn’t want to sell at all.
She said all were interested in selling so I have analyzed the deal. I will need to get this one quite a big below their asking price. The house wasn’t that bad. Mostly cosmetic and new AC is needed. I offered $43k and they said they were going to talk it over with the other people involved.
Homeowner wants to sell a 4 bedroom, 2.5 bath, 2900 sf house in a good neighborhood.
Here are the numbers:
| Asking Price: | $205,000 |
| Amount Owed: | $150,000 |
| Repairs: | none (unconfirmed) |
| After Repaired Value: | $160,000 |
| Max Offer: | $104,000 – repairs |
Seller lives in New York and I guess has no idea what houses are selling for down here. She wants $205k when the market value is at $160k. I went ahead and told her that I would need to get it at $100k. She sounded like she was gasping for air…. I don’t think I will be buying that house.
Homeowner wants to sell a 4 bedroom, 3 bath, 2600 sf house outside of town.
Here are the numbers:
| Asking Price: | $190,000 |
| Amount Owed: | $140,000 |
| Repairs: | $cosmetic (unconfirmed) |
| After Repaired Value: | $150,000 |
| Max Offer: | $97,000 – repairs |
Seller says this is a big house that they built. That always scares me. Said that the county would only show a small orginal house that was one bedroom. Also not good. No building permits? I think I’ll pass.
Homeowner wants to sell a 4 bedroom, 3.5 bath, 3000 sf house in a good neighborhood.
Here are the numbers:
| Asking Price: | $210,000 |
| Amount Owed: | $204,000 |
| Repairs: | none (unconfirmed) |
| After Repaired Value: | $210,000 |
| Max Offer: | $137,000 – repairs |
They want to sell the house to buy a house with acreage. Too much is owed for me to be interested. Next.
Homeowner wants to sell a 5 bedroom, 3 bath, 2600 sf house in a good neighborhood.
Here are the numbers:
| Asking Price: | Make An Offer |
| Amount Owed: | $0 |
| Repairs: | $43,000 |
| After Repaired Value: | $135,000 (maybe $140k) |
| Max Offer: | $88,000 – $43,000 = $45,000 |
Parents are moving out of this house and moving in with the caller. The house needs everything according the seller.
Ok. Went and saw it. This was a real hoarder house. Stuff stacked everywhere. The best part was a sign on one of the bedroom doors that stated not to open it because there was a raccoon in the room. I asked the guy showing me the house if there really was a raccoon trapped in there at one time. He said, “Yes. It fell out of the ceiling over here in the living room and ran upstairs into that room.” He then pointed at a hole in the ceiling in the living room.
The plan was for them to have three investors look at the house and make offers. This happens a lot and I don’t like it because then everyone is playing the game of trying to find out what the other investors offered. I mentioned this problem to him so that he could feel that we were on the same team. He then said that everyone just needed to give their highest and best and that there would be no second offers. This is why I offered my max offer.
When you know there will be other investors making offers, it can be tempting to wait until all of them have made offers and try to get that out of the seller so that you can get the deal by offering just a little more. Don’t do this. Sometimes the seller will see this as being sneaky. A lot of the time, they will not wait for all offers and will accept one on the spot. Make your offer and just work hard at building good rapport. That is most important.
Homeowner wants to sell a 4 bedroom, 1 bath, 1500 sf house in a not so good neighborhood.
Here are the numbers:
| Asking Price: | $49k – Make An Offer |
| Amount Owed: | $0 |
| Repairs: | mostly cosmetic (unconfirmed) |
| After Repaired Value: | $65,000 |
| Max Offer: | $35,000 – repairs |
REO Realtor called with this non-bank-owned property they have listed. Said the sellers were motivated and needed an offer. I am not at all interested in this area and told them that my offer would probably be $15k-$20k to feel out their motivation. They said they would never go for that. I then sent the lead on to another investor that buys in the area to see if he could make a higher offer.
We were told about a house that is about to go on sale by our attorney’s office. The house is selling for close to market value and is not a deal. Next.
Summary
This week took a little effort to get back into taking action after our vacation. I find myself slacking a little with the marketing and need to pick that back up. Maybe I should find a way to have that delegated a little better. I’m excited about the facebook fan page for dicussions. It will be nice to have more participation to see what you are all interested in finding out and to find out what you are all doing. Make sure to visit: the flipping houses discussion fan page.
Plans For Next Week
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Follow along with me on my journey though this flipping houses blog.
Next: Follow Along As I Open Up My House Flipping Business
Comments (19)
lmao loveee the racoon story Danny.
And Danny you are such a tease with the new idea for the site….geez way to wake us wait longer 🙂
Sorry, Carey. No I am afraid that a lot of people are going to be disappointed because nothing can live up to the hype. 🙂 Sorry to keep you waiting. It’s nothing revolutionary. See, I’ve got to tone it down now.
Brass is sss00000000 1990 — Good Move!
Darn, and we just starting installing all the brass stuff we took from that house into our own house. We have been watching a lot of Beverly Hills 90210 lately. Just kidding.
Hey Danny,
Have you heard of anyone getting fined for bandit signs that were put up Friday night and taken down Sunday night?
I’m over here in San Diego and have no doubt that I would be fined if I had them up during the weekdays.
Chris,
No, I have not. That seems to work because the code compliance officers aren’t working on the weekend. I just couldn’t image going out and having them all picked up every weekend.
Danny,
Hello and thank you for this amazing blog. It’s a great resource for information (and entertainment!) I’ve been reading it over the past few days when i get the time and I’m finally caught up to present. Seriously, great job.
I’m a member of Sean Terry’s coaching program and I posted a link to your blog in our private forums. One piece of advice Sean gives is “Never believe the bogey”. He says that if a seller tell you they already have a better offer, it’s time to switch to “Fear of Loss” mode and say something like “That’s great, you should definitely take it, but when they can’t perform and don’t close give me a call. However you should know that I only have the funds to buy 1 or maybe 2 properties right now and I’ll be going on a few appointments after this”
You’re an inspiration to all the newbies (like myself) out there and I wish you the best of luck.
Thanks again!
Thanks, Dave.
Great advice there. I don’t ever offer over my maximum allowable offer and walk away when I need to. It can be very difficult at times, but walk you must.
Dave,
Your statement above about what to do when there is competition would be a great reply to one of the discussions on the fan page, please visit it and enter it there so that we can help others that are reading there. You will find it here: http://www.facebook.com/flippingjunkie
Thanks.
Danny and Melissa,
First of all, you’ve both done an amazing job building and updating your website. I heard of your website on a forum a few hours ago, and just read through every post you two have made up to this date. My eyes are killing me. It has to be one of the most useful and valuable websites that I have ever come across on any subject. Thank you and kudos to both of you!
You said that if you find a deal, you will be able to find the money. Do you suggest finding a deal, and then worry about funding it? How did you find funding for your deals when you first began rehabbing?
When you mail a list (probate, preforeclosure, vacant, etc.), do you send a follow-up mail piece to everyone that didn’t respond to your previous mailings? Everyone including the sellers that said no?
I spent 9 months marketing in 2009 and began marketing again last week, but I’ve yet to buy a house. 90% of the leads that I get here in California look like this: Asking Price $250,000; Amount Owed $230,000; Repairs: $none; ARV: $150,000. Are you just not posting leads like this or is there that big of a difference between the Texas and California markets?
Sorry for the long post, and I can’t thank you enough for your efforts. Can’t wait to read your next post!
Wade. Thank you very, very much for your awesome compliments! It’s great to know that this site is so appreciated. Thank you.
Yes. If you find a true deal, you should have no trouble finding the money. In the beginning, it might be a little more difficult to find someone willing to lend on the deal for you to rehab. It’s not impossible, but might be difficult without a track record. Hard money lenders would be the best bet as they are lending more based on the deal than anything else. If none of that works, you could try and wholesale the deal and make a quick several thousand dollars. A lot of investors start by wholesaling. There is a lot less risk.
When we first began we had a mentor/partner that we split everything 50/50. He put up all of the money (no risk for us) and we found the deals, negotiated the deals, signed up the deals, found contractors, handled the rehab, sold the house. This might seem like a lot, but half of a good rehab profit is definitely a lot more than all of nothing. We did this for several years and got a lot of experience. Then we started working with private lenders. I have a very detailed post of how we did this coming up for next week. I think you’ll like it.
We do send follow up pieces on all mailings (when I am not too busy to remember). I am working on delegating the mailings to someone right now. I do not send them to people that called and said they are not interested in selling.
Wow. No, I am posting all of my leads (except for some of the wholesales that are not worth mentioning because they are not deals). All I can say is to keep at it. I know there are a lot of investors constantly buying deals in California and everywhere. You saw how long it took for me to find a deal that I liked through the posts. Give it some time and have faith. DO NOT GIVE UP!
Something that has constantly helped us through tough times is this: The Secret (Extended Edition) DVD. I highly, highly recommend this dvd. It will change your life.
Thanks again for visiting the site and hope to hear of your progress.
Great info and thank you for your reply. I can’t wait for the post on your mentor and private lending experience. Yes, The Secret is great. I might have to watch it again to get some more inspiration. I did order the Negotiating book last night because that you recommend. Hopefully that’s just as great. Thank you again!
No problem. You will not be disappointed with that negotiating book. We both love it.
Danny,
How are you locating comps and determining ARV on your deals? Couldn’t remember if you or your wife are an agent.
Also, when looking at comps do you look for properties that have been rehabbed?
Pete,
I use the MLS for comps. Neither of us are agents.
When looking at comps, I do not look for rehabbed properties. I look at the pictures and determine the condition and only really knock value off if the house looks completely outdated or needs a lot of work. It works out so that our fixed up houses are priced the same as the ones that are in good shape but not rehabbed and ours will typically sell faster.
Danny, I certainly get the value of having a great RE agent on your team…but doesn’t your agent find it difficult running comps for you for all of your leads? or are you guesstimating on some of these leads based on past experience?
Gail,
Our agent focuses on selling the houses.
I don’t think she would be working for us for very long if she had to run comps on all of these leads. 🙂 The job of determining value is always up to me. I run my own comps using the MLS.
oh…ok…so you have your license? I’m not an agent. don’t want to be really…need to get decent comps though!
thx for the info…love your blog! It inspires.
Thanks, Gail.
I’m not an agent and don’t want to be either. Build some good relationships. I know that is not the answer most people want to hear, but it is the only one that I can give. Everything takes work and effort.