These are the results of the Twenty Fifth week of opening up my house flipping business for you guys to see how my wife and I are building our flipping business back up. If you missed the first post explaining what I am doing, please visit this page: See How We Are Flipping Houses.
Is it Christmas already? I guess it is 365 days a year at the house in the picture. Crazy. You will stumble upon a lot of crazy theme houses as you cover most of your area. There is one in town that has about 5,000 birdhouses. The yard is completely covered!
These are the things I did this week:
Took A Break From The Bandits
Was going to put out more bandits, but there has been too much anti-bandit sign activity lately. Have to lay low for another couple of weeks. Our relationship with the person that puts them out is also a little strained at the moment (don’t ever, EVER sell a house with owner financing to someone you know, even a contractor).
Closing On ‘Honk Your Horn’ House Tomorrow
We were supposed to close on the Honk Your Horn house today but ran into a problem. It was a pretty big problem actually. I had made my offer in an amount that should have allowed the seller to not have to come to the table with any money at the closing. Unfortunately, the amount of taxes owed was quite a bit higher than we had anticipated.
The title company has to withold a certain amount for property taxes because the seller had a homestead exemption on it for the last five years and he was not living there. They have to withold the money to pay the difference and this put us over by quite a bit (several thousand dollars).
I talked it over with the seller and was attempting to see if he would be able to come to the closing with the difference. He was getting anxious and told me he would call me back. When he did, it was not what I wanted to hear. The talk was now starting in the direction of him backing out.
Back to negotiating. Can you pay half? No. What are you going to do? Keep making payments on it. How much are your payments? $800. Ok. How about you pay $800 and I will pick up the rest? (Did I just say that? Darn it.) Actually it was the only thing I could do to salvage the deal without having to pay the full amount. We should be alright.
I will have pictures and the numbers for you this coming week.
Got Another One Under Contract
Yes! Got another one. This one was from a couple of weeks ago. The seller was having difficulty getting the tenant out of the house. I was finally able to see it the other day. The place was trashed but very fixable. It smelled really, really bad, but I’m sure that was just the week old food sitting out on the counter and sitting in the nasty water that was in the sink. 🙂
The tenant actually showed up at the house while we were there. He did not look either of us in the face and I can understand why. I stayed out front with the seller to keep him company while the tenant was getting some of his stuff. The seller asked him when he would have all of his stuff out and tenant mumbled something about 5 days.
I immediately thought that they had always been way too lenient with this guy. His ‘stuff’ should have already been out on the curb by this point. I don’t mean to sound harsh, but this guy has been taking advantage of the seller for who knows how long, he’s trashed the house and was being somewhat disrespectful.
The seller told me to call his wife with whatever offer I would come up with. I worked up the numbers while sitting in my car in front of the house and then called the wife after running a couple more errands. I’d offered 20k and she quickly told me that her husband would never go for anything that low. She then asked if there was room for negotiating and I told her that the offer was so low that I did not build any room in for negotiating (which was actually the case). She told me she would talk it over with him and let me know.
They called me back that same evening and told me that if they netted $20k they would be willing accept the offer. I wanted to make sure that they knew the prorated taxes would still be coming out of the proceeds and they told me that they wanted to net $20k. I told them I would have to give that some thought (the taxes would be about $1,400) and call them in the morning.
The next morning, I got busy with a bunch of little things and was just about to call them, when they called me. They wanted to get this thing overwith and told me they were willing to net $19,000. Sure. I was willing to do that.
We met at a restaurant and got the contract together. This one should close within a couple of weeks.
I’m debating on whether to try and wholesale this house or fix it up and sell it with owner financing. I will post pictures and the numbers for the deal after we close.
Work Still Progressing On Our House
Have you ever seen about 2300 square feet plus of tile being removed?
Frustration House On The Market
The Frustration House is finally on the market. Here are the after rehab pictures.
Probate Info Gathering Has Ceased
The guy I had pulling probate leads for me called and informed me that he would no longer be able to. Crud. This is not good. Guess I will have to look for someone else. Anybody out there live in San Antonio that wants to gather these for me?
Flipping Houses Discussion Facebook Page
Have you ‘liked’ the Flipping Houses Discussion Facebook page yet? What are you waiting for?
Marketing
Total Motivated Seller Leads This Week: 19
| Lead Source | Leads This Week | Notes |
|---|---|---|
| Bandit Signs | 1 | 50 went out two 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 | Have not done this in a while. |
| Wholesale Deals | 1 | Made Offer |
| Absentee Owner Mailing | 5 | From almost 1000 postcards couple weeks ago. |
| Probate | 1 | Not a good response rate so far. |
Total Leads To Date [370]
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: | 187 |
| Bandit Signs: | 61 |
| Yellow Pages Ad: | 40 |
| Absentee Owners: | 28 |
| Driving For Dollars: | 17 |
| REO Realtors: | 7 |
| Probate Letters: | 9 |
| Referrals: | 6 |
| Wholesalers: | 9 |
| Realtors: | 3 |
| MLS Search: | 2 |
| For Sale By Owner: | 1 |
Leads Analyzed
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 |
| Amount Owed: | $140,000 |
| Repairs: | cosmetic (unconfirmed) |
| After Repaired Value: | $160,000 |
| Max Offer: | $105,000 – repairs |
Landlord is tired of dealing with the house and lives in California. The trouble is that too much is owed. Next.
Homeowner wants to sell a 3 bedroom, 2 bath, 1700 sf house in a good neighborhood.
Here are the numbers:
| Asking Price: | $120,000 |
| Amount Owed: | $100,000 |
| Repairs: | cosmetic (unconfirmed) |
| After Repaired Value: | $115,000 |
| Max Offer: | $75,000 – repairs |
Landlord wants to sell and owes back taxes. Again, too much is owed…
Homeowner wants to sell a 3 bedroom, 1.5 bath, 800 sf house in a not-so-good neighborhood.
Here are the numbers:
| Asking Price: | Make An Offer |
| Amount Owed: | $22,000 |
| Repairs: | cosmetic (unconfirmed) |
| After Repaired Value: | $50,000 |
| Max Offer: | $25,000 – repairs |
Wants to see what he can get for this house. Told him low $20’s and he wasn’t interested.
Homeowner wants to sell a 5 bedroom, 2.5 bath, 2300 sf house in a good neighborhood.
Here are the numbers:
| Asking Price: | Make An Offer |
| Amount Owed: | $? |
| Repairs: | cosmetic (unconfirmed) |
| After Repaired Value: | $145,000 |
| Max Offer: | $95,000 – repairs |
Wants to see what I would be willing to give for it. He was very hesitant to give me any information and kept telling me to drive by the house first and then we could talk. I politely told him that I was not interested in wasting my time. Next.
They want an offer for a 3 bedroom, 2 bath, 1400 sf house in a so-so neighborhood.
Here are the numbers:
| Asking Price: | Make An Offer |
| Amount Owed: | $? |
| Repairs: | cosmetic (unconfirmed) |
| After Repaired Value: | $85,000 |
| Max Offer: | $55,000 – repairs |
Servicing company is getting people out of the house and want to get an offer for it.
Just made a ballpark offer because I knew they would give me a chance to see it before commiting. If not, I could always put a contingency in the contract. They are supposed to get back with me.
Estate wants to sell a 4 bedroom, 2.5 bath, 2200 sf house in a good neighborhood.
Here are the numbers:
| Asking Price: | Make An Offer |
| Amount Owed: | Nothing |
| Repairs: | $28,000 foundation, drywall, cosmetic |
| After Repaired Value: | $150,000 |
| Max Offer: | $69,000 ($97,000 – $28,000) |
Estate wants to get an offer for this property. The house was in a nice pocket of the neighborhood. It needs updating throughout and foundation work. This would be a good buy. I offered $65k and the seller didn’t seem shocked and said he would talk it over with the family. We continued to talk about some things and I was trying to treat the conversation as though we had already made an agreement. Hopefully this one works out.
Update: Have a verbal acceptance on this one and should have something in writing soon.
Homeowner wants to sell a 3 bedroom, 2 bath, 1500 sf house in a bad neighborhood.
Here are the numbers:
| Asking Price: | $85,000 |
| Amount Owed: | $54,000 |
| Repairs: | cosmetic (unconfirmed) |
| After Repaired Value: | $50,000 |
| Max Offer: | $25,000 – repairs |
This is a rough neighborhood and I had already vowed to not buy any houses there. This couldn’t be a deal anyway. Even if we short-saled it, it would be difficult to sell, even to another investor. Next, please.
Homeowner wants to sell a 2 bedroom, 1 bath, 800 sf house in a not-so-good neighborhood.
Here are the numbers:
| Asking Price: | Make An Offer |
| Amount Owed: | Nothing |
| Repairs: | a lot (unconfirmed) |
| After Repaired Value: | $50,000 |
| Max Offer: | $25,000 – repairs |
Inherited half of the property. Other half ownership says to sell. There is a tenant paying $350/mo and is on month-to-month. Not my cup of tea. Might be difficult to get this many people (several on both sides getting a piece of the pie) to make this an easy thing. Birddogged for maximum effectiveness.
Homeowner wants to sell a 3 bedroom, 2 bath, 1000 sf house in a not-so-good neighborhood.
Here are the numbers:
| Asking Price: | Make An Offer |
| Amount Owed: | $5,000 taxes |
| Repairs: | drywall, cosmetic (unconfirmed) |
| After Repaired Value: | $60,000 |
| Max Offer: | $35,000 – repairs |
I considered trying to contract this one myself and just wholesaling, but laziness got the better of me. Tried to feel him out on the price and realized that I would not be able to get him below $30,000. I would need to get this one in the 20’s at least to be able to wholesale it. Birddogged it instead.
Homeowner wants to sell a 2 bedroom, 1 bath, 800 sf house in a not-so-good neighborhood.
Here are the numbers:
| Asking Price: | $40,000 |
| Amount Owed: | $35,000 |
| Repairs: | leveling, sheetrock, wiring, plumbing, roof (everything) |
| After Repaired Value: | $60,000 |
| Max Offer: | $35,000 – repairs |
This is a wholesaler that I have known for a while. He has this rental and just wants to get rid of it. I’ve had and still have houses like this and know exactly how he feels. He just is not able to sell it for what I would need to get it for (which would be $20k or less).
Also, the tenant was home drinking lots of beer before just after noon. Not sure that he does much other than that based on the state of the house, even though he knew I was coming to see it (of course a lot of tenants will do things to keep landlords from selling because they don’t want to be thrown out).
Homeowner wants to sell a 2 bedroom, 1 bath, 800 sf house in a really bad neighborhood.
Here are the numbers:
| Asking Price: | Make Offer |
| Amount Owed: | $18,500 |
| Repairs: | a lot (unconfirmed) |
| After Repaired Value: | $35,000 |
| Max Offer: | $10,000 – repairs |
This one is in an area that I will not even consider touching. Birddogged it. Next.
Homeowner wants to sell a 4 bedroom, 3 bath, 2100 sf house in a good neighborhood.
Here are the numbers:
| Asking Price: | Make Offer |
| Amount Owed: | $0 |
| Repairs: | none (unconfirmed) |
| After Repaired Value: | $150,000 |
| Max Offer: | $98,000 – repairs |
Seller just bought the house a little over a year ago. The information was submitted from the website and I’ve called and left a message to talk to him about it. Doesn’t seem like a situation where he will be willing to come down to what I would need to buy it for, but we’ll see. You never know.
Update: He was not willing and it turns out that $108k+ is owed. I will check with some other investors to see if anyone is interested.
Homeowner wants to sell a 3 bedroom, 2 bath, 1000 sf house in a bad neighborhood.
Here are the numbers:
| Asking Price: | Make Offer |
| Amount Owed: | $25,000 |
| Repairs: | cosmetic (unconfirmed) |
| After Repaired Value: | $50,000 |
| Max Offer: | $25,000 – repairs |
I do not buy in this area and feel the price is too close to be able to wholesale. Passed lead on to another investor instead.
Homeowner wants to sell a 2 bedroom, 1 bath, 800 sf house in a decent neighborhood.
Here are the numbers:
| Asking Price: | $55,000 |
| Amount Owed: | $0 |
| Repairs: | cosmetic and bathroom repairs (unconfirmed) |
| After Repaired Value: | $50,000 |
| Max Offer: | $25,000 – repairs |
Seller inherited his father’s house and wants to sell because he doesn’t want to be a landlord and could use the money to finish up the repairs on his own house. He is asking a high price but I will have to tell him that I will need to buy below $30k and see where he is at. I have to wait until tonight to call him because that is the only time he can answer the phone. We’ll see.
Side note: Seems like the Sincere letter is pulling better. I don’t think there have even been any calls from the non-specific letter.
Homeowner wants to sell a 3 bedroom, 2 bath, 1300 sf house in a good neighborhood.
Here are the numbers:
| Asking Price: | Make Offer |
| Amount Owed: | ?? |
| Repairs: | unknown (unconfirmed) |
| After Repaired Value: | $130,000 |
| Max Offer: | $85,000 – repairs |
Seller has only made contact through email and is not sure whether they want to sell. I had to double check the address because I could not find anything online regarding the house. The seller said that it is hidden because of their line of work. Interesting. I did not pry. They wanted a ballpark so I made a ballpark and am still waiting to hear back from them.
Homeowner wants to sell a 3 bedroom, 2 bath, 1200 sf house in a decent neighborhood.
Here are the numbers:
| Asking Price: | $75,000 |
| Amount Owed: | $40,000 |
| Repairs: | cosmetics (unconfirmed) |
| After Repaired Value: | $80,000 |
| Max Offer: | $50,000 – repairs |
Due to needing to be pretty close to what they owe and that they were asking quite a bit, I decided to make a quick ballpark estimate in the $40’s before I went out to look at it. They are not in any hurry to sell and I will follow up.
Could not make contact with this seller. Information was submitted on the website but I could never get them to return my calls.
This seller called me while I was at Lowe’s and I could not take down their information. Tried to call several times since and have been unable to get a hold of them. Always have paper and pen on you.
I’ve never had this many people contact me that I could not contact again. Was starting to wonder if another investor was sending fake deals to keep me busy so that I could not work on the good ones. Nice try, but that will not work! Just kidding. I’m sure that could not be the case. My competition likes me. 😉
Summary
Still have quite a bit of leads coming in. I actually hesitated to send out more postcards this week so that I could catch up a little and knew I would be spending time dealing with getting our next house ready for move-in.
Plans For Next Week
Please ReTweet and Like this post because it’s the nice thing to do and I truly appreciate it.
-Danny
Follow along with me on my journey though this house flipping blog.
Next: Follow Along As I Open Up My House Flipping Business
Comments (20)
What criteria do you use to decide whether to birddog or wholesale? From what I gather, location is very important. If you do not invest in an area, you would birddog. Also if the area is a rental neighborhood, birddogging makes more sense (the margins wouldn’t be there to flip/wholesale). Anything else?
How many of the leads you pass on result in you getting a commission?
When you pass a lead on, is it just via a simple phone call or email? Do you write up an agreement saying that you will receive your commission contingent on the other person closing the deal and have both parties sign? Sorry if these are stupid questions. I have no real world experience. Really enjoying your blog though. Keep it up please!
Bryce,
Great question and it really is subjective. Rental neighborhoods can be great to wholesale if you have landlord buyers that are looking for those types of houses. Wholesaling can generate larger returns but will require you going and contracting the deals. Honestly, I get a little lazy and birddog some that would make decent wholesales. I’ve actually been working on trying to start wholesaling more. I say working on it, because I need to work on getting out there and making the offers. Running around town all day takes a lot of time.
Really, if you could have several buyers in mind for a lead, you should try to wholesale it. If it is in an area you just don’t want to go and/or you think the deal is marginal, birddog it. You could birddog some leads in the beginning to find out what the buyers really want and then start wholesaling them.
I don’t have an exact figure as far as percentages for getting paid on the birddog stuff, but I’d guess it is about 10-20% or so. Really not bad for some phone calls.
There are no stupid questions. I’m glad you are asking these questions because it helps to fill in the gaps for a lot of people. I have personally met with the investors I birddog to and have known some for years, so I don’t require anything but their word. I usually email them the leads with the contact information so they can contact them directly. Include what you are charging for the lead in the email so that there is an immediate understanding of what you expect. I don’t get paid unless they close.
If you don’t know the investor very well, make sure they understand how much you want for each lead. When I pass on a lead that I feel has great potential, I don’t hesitate to ask for more (even as high as 5k). It doesn’t mean I’ll get it, but I sure wouldn’t have if I didn’t ask for it.
With the first ones, you should keep notes and follow up with the sellers to see if they contracted and closed or not. Don’t just take their word for it if you don’t know the investor well.
Danny –
Our probates are published in the newspaper monthly. They are actually online (and also free) in other big cities. Have you checked with your local probate court to see if you can get them one of these two ways?
Hey, Sharon!
I have yet to find mine online. Maybe I should look again. This is something I keep hearing but have never found for this area. Thanks for mentioning it.
One more thing Danny, what comment system do you use? I like it.
I just use the standard word press comments and also the ‘Subscribe to Comments’ plugin.
Damn… that’s a lot of tile!!
What are you going to replace it with? Tile, Hardwood, Carpet??
Yeah. That’s why we didn’t change it during the first rehab. But after thinking about it, I knew right now would be the best time to remove it.
We are going back with wood floors for most of it and carpet for the back hallway and two bedrooms.
With Your SEO campaign are you able to outrank the national sites on more generic searches like we buy houses or sell my house fast? I’m at the top when you do a specific search, i.e. “Sell my house fast in Columbia SC”. However, I’m no where to be found on a generic search like We Buy Houses.
Curious and eager for that SEO course!
Donovan,
Yes. But, keep in mind that Google includes where the person is searching from as a part of the relevance ranking for the search results. So if they search from San Antonio for just ‘we buy houses’, I am showing up at the top.
Still brainstorming ideas and working towards it. Can’t wait to get it out there.
Guess I just need to keep working at it. Thanks
On your probate leads, are you mailing directly to the executor of the estate or to the estates attorney? Thanks……
I am mailing directly to the executor of the estate. I’ve been keeping track of most of the attorneys and have considered mailing separate letters to them in the future. Just something that informs them that I buy houses and can help estates that need to sell real property.
Great Site Danny,
I love the info and experience and the sharing of info.I really liked the examples of your offers on leads that you get in.I am still stuggling with rehab costs,so I have lots of work there.If I cant get closer on my rehab costs,I think I will be putting myself out of range for having offers accepted.Thanks for all your hard work.
Jeff
Thanks, Jeff.
Determining rehab costs is probably was of the most difficult aspects in the beginning. The bigger issue could be not getting offers accepted and figure you are offering too low. This can lead to not being conservative on the repair costs and paying more than you should. Be careful that you do not fall into that trap.
Danny,
Great Blog! I look forward catching up on past posts and all new updates with my morning cup of coffee.
This may be a better question for your wife, but I’ll post it here.
Do you all use Quickbooks, Quicken, or another accounting software?
Thanks
Glad you like it.
She uses Quickbooks. I don’t use it because I would just mess it all up. 🙂
Danny, how does your contract and contracting process differ between wholesaling and your purchases to flip?
They don’t.
I use the same contract whether I am purchasing to flip or wholesale.
Thank you for the reply.