These are the results of the Twenty Fourth 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:
Bandit Signs Grabbed Attention
I had 50 bandit signs put out last weekend and they certainly grabbed some attention. Just from the wrong audience (though I did get some calls for houses). Code compliance called me twice on Saturday. Saturday? I thought they didn’t work weekends. Guess times are changing. There were doubts about whether it really was someone that worked for the city, but my doubts went away after they gave me their office number. Plus it just seemed very unlikely that it was another investor just trying to minimize competition.
Going to lay low for a little while as my friend also got 3 calls on the same day.
The Well Has Run Dry
It was pretty funny actually. This is regarding the possible oil producing property from last week that I had put under contract.
My brother-in-law and I had gone out to see the property (put it under contract before actually seeing it – with an escape clause of course :)). We found the overgrown lot with lots of trees and heavy, thick brush. I questioned how oil trucks would have gotten to the back of the property, where the oil well was supposed to be, as late as 1999. The brush was just too thick and the trees looked to be older than that.
A call was immediately put in to the seller and she informed me that the trucks would access the holding tank from the back of the property from the road that ran behind it. Wasn’t sure we’d be able to pinpoint which part along the road would be the back of the property so we decided to try to walk to the back. We had made it past a couple acres by following the game trails but it was really slow going.
A funny side note: When she told me to be careful because of the javelinas (pronounced have-a-leen-ahs), I thought she had said halloweenists. What?!!?? I was immediately thinking that there was some wierd satan-worshiping cult out there…. 🙂 After asking her to clarify, I understood what she was talking about.
It was tough getting back there so we decided to try to use the GPS to figure out where the back of the property was from the back road. We went around to where a road ran behind the property and spotted a large tank and decided that it must be it. The tank had not been used in a long time. We jumped the gate and walk around the property looking for where the well would have been and for any markings on the tank to determine it’s ID so that I could look up how much oil the well had been producing before it was closed.
We walked all over the back of the property and wondered why there were a lot of recent beer cans and a volleyball net hung between two trees out in the middle of nowhere. I called the seller and asked about a second tank we spotted and the pump jack that was still there. She paused for a minute and then said that they were a part of the property also. Weird. Why would she not have told me about that to begin with? I become even more suspicious.
At this point, we figured we had enough info and were headed home. I quickly pulled up the satellite image for the property on Google maps to see where we had been walking. WE WERE ON SOMEONE ELSE’s PROPERTY!!
The front part was correct, but when we went to the back section, it was not the same property. There was no road going behind that property. She must have been talking about the side road that required you to go through yet another person’s property to get to the back.
At this point, I needed to get a hold of the survey that she supposedly had to get this all straightened out. My wife and I met her at her office and looked it over. IT SHOWED NOTHING OF A WELL ANYWHERE! And, she had decided to all of a sudden “throw in” an adjacent 5 acres. Weird. She was pointing to lat and long coordinates and suggesting that they were the numbers for the oil well. ??? It gets even better…
THEN, she says that she was going over the contract and wanted to make sure that the $30k she owed would NOT be taken out of the proceeds from the sale. OF COURSE THEY WERE. I HAD CLEARLY INFORMED HER OF THAT SEVERAL TIMES. She told me that she needed to buy a new car and it would cost her a “cool forty”. Who says that unless they were prepared to say it? Too funny.
I quickly nipped that in the bud and told her that I would not do it. She then suggested splitting the $30k. No. At that point, I could see that this was a dead deal and we were wasting our time by bothering any more with it. I told her we were done.
Sadly, there won’t be a large white Cadillac converatible in my near future.
Second Rehab At Expensive House Getting Expensive
We’ve decided to make a lot more changes on the expensive house now that we’ve decided to move in. A word of advice here: when you start rehabbing your own house, be prepared to have it completely consume you and your time. I’m exhausted.
Frustration House Staged
The Frustration House has been staged and cleaned. Haven’t had a chance to upload the pictures yet, but will have those up within a couple days.
Mediation Time?
Not sure what is even happening with this right now. Maybe I should find out… It’s a good thing you guys are keeping me accountable.
Flipping Houses Discussion Facebook Page
Have you ‘liked’ the Flipping Houses Discussion Facebook page yet?
Marketing
Total Motivated Seller Leads This Week: 25 Two Weeks In A Row! 🙂
| Lead Source | Leads This Week | Notes |
|---|---|---|
| Bandit Signs | 4 | 50 went out last weekend. |
| Yellow Pages | 2 | For a picture of my ad, visit the ‘The First Week’ post. |
| Buying Website | 9 | For a link to my site, visit the ‘The First Week’ post. |
| Drive For Dollars | 0 | About 100 went out to existing list couple weeks ago. |
| Wholesale Deals | 1 | Made Offer |
| Absentee Owner Mailing | 7 | From almost 1000 postcards couple weeks ago. |
| Probate | 2 | Not a good response rate so far. |
And A New Feature – Total Leads To Date [351]
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: | 176 |
| Bandit Signs: | 60 |
| Yellow Pages Ad: | 40 |
| Absentee Owners: | 23 |
| Driving For Dollars: | 17 |
| REO Realtors: | 7 |
| Probate Letters: | 8 |
| Referrals: | 6 |
| Wholesalers: | 8 |
| Realtors: | 3 |
| MLS Search: | 2 |
| For Sale By Owner: | 1 |
Leads Analyzed
Homeowner wants to sell a 2 bedroom, 1 bath, 800 sf house in a so-so neighborhood.
Here are the numbers:
| Asking Price: | $50,000 |
| Amount Owed: | $40,000 |
| Repairs: | cosmetic (unconfirmed) |
| After Repaired Value: | $50,000 |
| Max Offer: | $25,000 – repairs |
Landlord is tired of the hassles involved with having a rental property. The problem is that she owes what it is worth. Have to pass.
Homeowner wants to sell a 3 bedroom, 2 bath, 1100 sf house in a decent neighborhood.
Here are the numbers:
| Asking Price: | $60,000 |
| Amount Owed: | $37,000 |
| Repairs: | cosmetic (unconfirmed) |
| After Repaired Value: | $75,000 |
| Max Offer: | $45,000 – repairs |
Landlord wants to see how much he can get for his rental property. Based on fixing up and reselling, I told him I would need to buy it for about $40-45k depending on repairs. At this price I could probably find a landlord that would want it. The tenants are paying $850/mo. If you would want something like this for near the seller’s asking price, please contact me: danny at flipping junkie . com.
Homeowner wants to sell a 4 bedroom, 2 bath, 2200 sf house in a good neighborhood.
Here are the numbers:
| Asking Price: | $83,000 |
| Amount Owed: | $96,000 |
| Repairs: | cosmetic (unconfirmed) |
| After Repaired Value: | $130,000 |
| Max Offer: | $85,000 – repairs |
A wholesaler actually called with this one. I think he said that he saw a bandit sign so I am going to credit the bandits for this lead.
Couple is divorcing and facing foreclosure. They need to sell but owe too much for me.
I passed this lead on to another investor to see if he could make it work. Might have to do a short sale to work this one.
Homeowner wants to sell a 2 bedroom, 1 bath, 800 sf house in a so-so neighborhood.
Here are the numbers:
| Asking Price: | Make An Offer |
| Amount Owed: | $50,000 |
| Repairs: | cosmetic (unconfirmed) |
| After Repaired Value: | $50,000 |
| Max Offer: | $25,000 – repairs |
Another landlord that just wants to see what I would give him. I made a ballpark and he quickly realized that I wasn’t going to make him happy. Next.
Homeowner wants to sell a 2 bedroom, 1 bath, 800 sf house in a bad neighborhood.
Here are the numbers:
| Asking Price: | $36,000 |
| Amount Owed: | $6,000 |
| Repairs: | a lot (unconfirmed) |
| After Repaired Value: | $45,000 |
| Max Offer: | $20,000 – repairs |
Caller’s Dad’s house and it needs a lot of work. The dad moved out about a month ago and just wants to sell. This is in a bad part of town, so I birddogged it as it has potentional for a landlord.
Homeowner wants to sell an owner financed note with 0% interest. So very enticing. 🙂 Seriously though, he wants $50k for a note with a balance of $60k and $400/mo payments. Not good. Next.
Homeowner wants to sell a 2 bedroom, 1 bath, 700 sf house in a so-so neighborhood.
Here are the numbers:
| Asking Price: | Make An Offer |
| Amount Owed: | $4,000 |
| Repairs: | cosmetic plus (unconfirmed) |
| After Repaired Value: | $50,000 |
| Max Offer: | $25,000 – repairs |
His father passed away and the house has been sitting vacant. He is ready to sell but is just 1 of several heirs. I will attempt to make an offer and see where they are at.
Didn’t work out so I birddogged this lead.
Homeowner wants to sell a 2 bedroom, 1 bath, 1100 sf house in a bad neighborhood.
Here are the numbers:
| Asking Price: | Make An Offer |
| Amount Owed: | $5,000+ (back taxes) |
| Repairs: | a lot (unconfirmed) |
| After Repaired Value: | $50,000 |
| Max Offer: | $25,000 – repairs |
Dad died and the caller’s brother lives in the house. The house is nothing but a hassle for his mom and I guess the brother is worthless and doesn’t ever lift a finger to help. The caller is the good brother. He is away in the Military and trying to take care of this long distance.
Made offer and following up. Will wholesale if I get it.
Homeowner wants to sell a 2 bedroom, 1 bath, 900 sf house in a not-so-good neighborhood.
Here are the numbers:
| Asking Price: | Make An Offer |
| Amount Owed: | $18,000 |
| Repairs: | leveling and cosmetics (unconfirmed) |
| After Repaired Value: | $50,000 |
| Max Offer: | $25,000 – repairs |
All these houses seem the same lately. 2 bedrooms, 1 bath with ARV’s about $50k though I think it would be very difficult to sell these to homeowners. These are rentals through and through. Passed as a birddog. Next.
Homeowner wants to sell a 3 bedroom, 2.5 bath, 2800 sf house in a good neighborhood.
Here are the numbers:
| Asking Price: | $150,000 |
| Amount Owed: | $147,000 |
| Repairs: | cosmetic (unconfirmed) |
| After Repaired Value: | $150,000 |
| Max Offer: | $97,000 – repairs |
Transferring. Already have another house lined up to buy. Regrettably, too much is owed on this one. Next.
Executor wants to sell a 3 bedroom, 1 bath, 800 sf house in a bad neighborhood.
Here are the numbers:
| Asking Price: | Make An Offer |
| Amount Owed: | $0 |
| Repairs: | a lot (unconfirmed) |
| After Repaired Value: | $40,000 |
| Max Offer: | $15,000 – repairs |
Executor of an estate called to sell a house. He lives out of town and his sister was going to be in town for today only. I had to act quick. Bad neighborhood, not for me. I called a wholesaler friend that buys in the area and he was there within minutes.
Homeowner wants to sell a 3 bedroom, 2.5 bath, 1700 sf house in a good neighborhood.
Here are the numbers:
| Asking Price: | Make An Offer |
| Amount Owed: | $83,000 |
| Repairs: | none (unconfirmed) |
| After Repaired Value: | $115,000 |
| Max Offer: | $75,000 – repairs |
They are buying another house and cannot afford both. People that are doing this usually are really motivated. The caller was no exception.
Unfortunately, they just owe too much for me to be interested. I birdogged this one to see if someone is willing to buy being that there supposedly aren’t any repairs required. Thin deal, but someone might be interested. Next.
Homeowner wants to sell a 3 bedroom, 2 bath, 800 sf? house in a bad neighborhood.
Here are the numbers:
| Asking Price: | $65,000 |
| Amount Owed: | $52,000 |
| Repairs: | cosmetic (unconfirmed) |
| After Repaired Value: | $50,000 |
| Max Offer: | $25,000 – repairs |
Too much is owed on this rental in a bad neighborhood. Spent more time typing this up than actually analyzing this non-deal. Next.
Homeowner wants to sell a 3 bedroom, 1 bath, 1100 sf house in a bad neighborhood.
Here are the numbers:
| Asking Price: | $5,000 |
| Amount Owed: | $5,000 |
| Repairs: | Everything (unconfirmed) |
| After Repaired Value: | $50,000 |
| Max Offer: | $25,000 – repairs |
Mom can’t afford to pay the property taxes and the house has been gutted and boarded up. Definitely a reasonable asking price. This is a rough neighborhood that another investor wouldn’t mind. Birddogging this one all the way.
Homeowner wants to sell a 3 bedroom, 2.5 bath, 1400 sf house in a decent neighborhood.
Here are the numbers:
| Asking Price: | $50,000 |
| Amount Owed: | $16,000 |
| Repairs: | $18,000 leveling,kitchen,baths,electrical,plumbing |
| After Repaired Value: | $90,000 |
| Max Offer: | $40,000 ($58,000 – $18,000) |
House needs repairs that they do not want to do themselves. They’d rather sell the house and be done with it.
Their balance is low enough to where a deal is possible, so I went to see the house and make an offer.
House looks good on the outside but bad on the inside. This thing is going every which way and needs to be leveled. The house next door is a rental and has a lot of trash in the yard.
I ended up offer $38,000 because they said they have another investor coming by next week. Why would it take the other investor a week to see the house? Maybe is trying to line up his showing after all of the others and then will try to offer just a little more. I warned the seller that this may be the case. Not sure if that ever helps. Your ideas?
Homeowner wants to sell a 3 bedroom, 1 bath, 1100 sf house in a so-so neighborhood.
Here are the numbers:
| Asking Price: | $30,000 |
| Amount Owed: | $0 |
| Repairs: | $15,000 (unconfirmed) |
| After Repaired Value: | $60,000 |
| Max Offer: | $20,000 ($35,000 – $15,000) |
Wholesale deal. Even though it was far lower than asking, I still made the offer of $20k. Had not seen it yet, but if and when he counters, I will.
Homeowner wants to sell a 4 bedroom, 2.5 bath, 2200 sf house in a good neighborhood.
Here are the numbers:
| Asking Price: | $95,000 |
| Amount Owed: | $90,000 |
| Repairs: | cosmetic (unconfirmed) |
| After Repaired Value: | $130,000 |
| Max Offer: | $85,000 – repairs |
Divorce situation with the usual result of one person keeping the house and not being able to afford with their single income. There is just a little too much owed for me but am confident another investor will be interested. Birddogged it. Next.
Homeowner wants to sell a 3 bedroom, 2 bath, 1100 sf house in a so-so neighborhood.
Here are the numbers:
| Asking Price: | Make An Offer |
| Amount Owed: | $0 |
| Repairs: | a lot (unconfirmed) |
| After Repaired Value: | $70,000 |
| Max Offer: | $45,000 – repairs |
Inherited house. 3 heirs and they live out of state. There is someone living in the house who is related somehow. I was surprised when they told me they found me from the yellow pages. They had someone locally look in the book and call them with my number. You would thinking hopping on Google would be easier. This just goes to show you that people still use that big yellow book. She also mentioned me having to call long distance to them in another state. I haven’t even heard that phrase used in years. We truly take our cell phones for granted. 🙂
I don’t really like the area so I birddogged it to another investor. Easy money.
Homeowner wants to sell a 1 bedroom, 1 bath, 400 sf garage or something in a not-so-good neighborhood.
Here are the numbers:
| Asking Price: | Make Offer |
| Amount Owed: | $0 |
| Repairs: | lots (unconfirmed) |
| After Repaired Value: | $??? |
| Max Offer: | $??? |
Seller called and informed me that she received my letter regarding any property the estate may have and want to sell. She asked if I knew which property it was and I informed her that I had no clue but would be interested in it no matter where it was or what it was. The reponse was that the house was not really a house but just a run down garage or shed or something.
I’m not really interested but attempted to birddog it to someone else that might be. I’m sure they can get it cheap.
Homeowner wants to sell a 4 bedroom, 2.5 bath, 2200 sf garage in a good neighborhood.
Here are the numbers:
| Asking Price: | Make Offer |
| Amount Owed: | $130,000 |
| Repairs: | none (unconfirmed) |
| After Repaired Value: | $140,000 |
| Max Offer: | $91,000 – repairs |
Seller has a Realtor going over to sign listing agreement tomorrow. They wanted to see what we would offer. This is one of those cases where the seller is praying and hoping that I will offer them some great price for their house. Probably thinking it is too good to be true, but let’s cross our fingers. Quickly worked up a ball park figure and informed them to go ahead with the listing because I can’t touch it.
Next.
Homeowner wants to sell a 4 bedroom, 2 bath, 1700 sf house in a good neighborhood.
Here are the numbers:
| Asking Price: | Make Offer |
| Amount Owed: | $120,000 |
| Repairs: | cosmetic (unconfirmed) |
| After Repaired Value: | $135,000 |
| Max Offer: | $88,000 – repairs |
Seller called while we were taking one of our daughters to dance class. I had the call on bluetooth so that I could talk and drive (also everyone in the car could hear the conversation). She mentioned receiving a letter from me about buying any property an estate might need to sell. She quickly and angrily asked how I got her address and deceased husband’s name. My hand went for the disconnect button and hovered there as I waited for the explosion of anger and cursing.
Thank God, it never came. It was really a sad situation and you could tell that she was trying to sell the house and deal the loss and having a hard time. To me, these calls are harder to receive than the super angry “kick your @$$” calls (one of which I did get yesterday. according to the caller I am “worse than an ambulance chaser”. gotta love probates).
Another investor had offered her in the 70’s and she informed me of how much she owed. There is just nothing I could in this situation. I’d love to help, but it just doesn’t make financial sense. At least she has enough equity to sell it through a Realtor possibly.
Homeowner wants to sell a 3 bedroom, 1 bath, 700 sf house in a not-so-good neighborhood.
Here are the numbers:
| Asking Price: | Make Offer |
| Amount Owed: | $50,000 |
| Repairs: | cosmetic (unconfirmed) |
| After Repaired Value: | $50,000 |
| Max Offer: | $25,000 – repairs |
Seller was very interested that I was buying houses in the area and decided to try to unload a bad one. Owe what it is worth. No thanks. Next.
Homeowner wants to sell a 6 bedroom, 2 bath, 1700 sf house in a good neighborhood.
Here are the numbers:
| Asking Price: | $145,000 |
| Amount Owed: | $115,000 |
| Repairs: | cosmetic and new roof (unconfirmed) |
| After Repaired Value: | $140,000 |
| Max Offer: | $91,000 – repairs |
Seller has recently become disabled and needs to sell his house. Just can’t make the numbers work. Next.
Homeowner wants to sell a 3 bedroom, 1 bath, 1400 sf house in a so-so neighborhood.
Here are the numbers:
| Asking Price: | $60,000 |
| Amount Owed: | $36,000 |
| Repairs: | cosmetic, updating and pool (unconfirmed) |
| After Repaired Value: | $80,000 |
| Max Offer: | $52,000 – repairs |
Seller is moving to Dallas and needs to sell this house. It has an inground pool and that is the first thing I asked about. Pools can be a pain in the rear end, especially if the house is sitting vacant and you are trying to sell it. The pool has some problems (cracks). This area is not one I am interested in and the pool sealed the deal to just birddog this one.
Homeowner wants to sell a 3 bedroom, 2 bath, 1300 sf house in a decent neighborhood.
Here are the numbers:
| Asking Price: | $90,000 |
| Amount Owed: | $90,000 |
| Repairs: | cosmetic and new roof (unconfirmed) |
| After Repaired Value: | $105,000 |
| Max Offer: | $68,000 – repairs |
Seller is getting behind on his payments. The fees accrued for missed payments and not paying insurance, taxes, etc. have made it to where he owes more than the original principal balance of the loan. Can’t buy this one.
Summary
Tons of leads again this week! I’m beginning to wonder if just mailing postcards is the way to go. The letters just aren’t pulling very well. Got a lot more calls from the postcards. They are cheap and easier to get mailed out. Will give this more consideration.
I also wanted to bring something to your attention. A lot of people assume that house flippers mostly buy from people facing foreclosure. After reading this blog, it should be apparent that this is not the case at all. The reason I bring it up is because your marketing should be focused on who would need what you are offering. There are a lot of different reasons why people want to get rid of houses fast and this blog shows you who they typically are. Focus on that and you should be well ahead of your competition. 🙂
Plans For Next Week
Please ReTweet and Like this post because it’s a 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 (42)
Great update, thanks for the ongoing motivation for people that have less going on. Do you ever consider taking properties on Sub2 when the amount owed is close to your max offer? Let me know if you decide to make that SEO book or course. I think your lead updates shows exactly how important capturing those nearly free website leads are. Thanks.
Thanks, Donovan.
I do consider taking them subject 2 but most sellers have a hard time with that, especially when I am offering as low as I am for the houses. It is a good thing to offer when giving the seller several options. You can offer to pay a little more if you buy sub2 the existing mortgage or pay cash but pay less.
I’m already planning out the SEO thing. 🙂
This is the most remarkable site I have ever seen. There should be more people like you that shares what I think is information about flipping that is actually useful to everyone. I’m late getting in the game, [I’m 75] but I love trying to flip houses. I started out doing this to try and pay for my wifes cancer bills. but now I will keep doing it because I really enjoy it…thanks to you giving out all this great information.
Bill
Thanks, Bill!
Glad to hear that you have found some success and are continuing with it. I was in the opposite situation where I was starting sort of young (looked even younger) and worried that people would not take me seriously. As long as I acted with confidence, it was never an issue. Though I did have a couple of instances where the seller actually asked if my dad was the one that actually bought the houses. 🙂
I’m currently getting the highest response rate on probates and bandit signs right now, but I don’t advertise online or in the Yellow Pages yet. I can design a website, but haven’t even begun to learn SEO. Looks like I should start marketing online!
You mentioned that you’re thinking about sticking to postcards over letters. How are the response rates on both? Do you have those numbers? Do you use a live stamp on the postcard as well?
It seems that I am getting a slightly better response rate on the post cards but the list I am sending to makes the biggest difference. I’ve sent out hundreds of letters to people that are behind on property taxes with very little response. It could be my letter, but I think the bigger issue is that most of the recipients actually live in the house I am trying to buy. They will ride the storm for a while before deciding to sell and/or call me.
I’ve used live stamps before and it did not seem to make much of a difference. Not enough to warrant the extra work involved in printing the postcards and sticking the stamps on. I’ve fallen in love with click2mail all over again. So easy.
What is the number of houses that you have been able to buy since you started this blog? If this is private information, then please excuse the question. I am new and just trying to see when I might be able to make a living with RE.
Thank you for this blog, it is… by far my best source of information. I have spent thousands with other people before I found this site. THANK YOU!!
Bill
After closing the “honk your horn house” this next week, it will have been 6 since starting blogging about it. I’ve actually found myself birddogging a lot and don’t have a tally on that. I can’t believe that I didn’t birddog more in the past. The issue was that I didn’t really try to connect with other investors and just focused on leads that I was interested in.
Shortly after starting to blog about what we were doing, we found out that we were going to have another baby. To be honest, with him (it’s going to be our first boy) coming I’ve become a lot more interested in not getting overly busy. Trying to find the right balance between easy with less profit (birddogging) and more money with a lot more hassles (rehabbing). Maybe I should focus more on wholesaling and making middle profits.
There are a lot of ways that others could probably have turned more of the leads that I have received over the last several months into profitable deals. It really just boils down to what everyone wants with regards to their lifestyle and what type of investments they prefer.
I’m glad that this has helped so many people to realize the work involved and most importantly that it really is just a numbers game.
Are 30 houses per year still your goal for this year or with the baby coming, do you think it may be next year before you get on tract to the 30 houses?
Of the 6 houses you have bought, how many have sold, and are you keeping up W your mimimum 25k profit?
How many hour are you working – weekly?
THANK YOU! And have a great Labor Day weekend:-)
BILL
Actually, I have given this a lot of thought lately. With the work being done on the new house and the baby on the way, I don’t think that I am going to shoot for a certain number. It really has become more of how I want my life to be and don’t want to feel like I have to hit some magic number. If I do that may great, if we don’t get back to that level but my life is easier and I can spend more time with my wife, kids and flying, that would be even better.
We are being a lot more picky about the houses we are buying and trying to keep things at a manageable level (want lighter rehabs in better parts of town). The number is not as important to me as the return on my time investment is. That is what I guess I have come to really focus on. Not to mention this blog has really helped me to look over each day and plan ahead a little. Maybe prioritize better. But, it is a lot of work also.
Of the six so far, two have sold and closed. We still had some properties from before I started blogging about our business and those have required attention that I have not included for the most part in the blog. All but one of those has closed (the mediation thing). A lot of the birddogging has paid off as well. I’ve been toying with the idea of wholesaling more but must admit that I’ve grown pretty lazy with not wanting to go and look at a lot of properties. I’m probably working about 40 hours a week, but this blog is probably close to 10 hours of that.
Thank you and I hope you have a great Labor Day as well.
Danny,
Gotta love those stories. I had to look up javelinas though. Guess they are known to be deadly in packs. Crazy.
Having just finished a 75K house rehab on my own house, I feel your pain. (painting till 3am in order for the flooring guy to start at 7am). The strongest recommendation I can give you is to finish as much as you can right now. Living in a construction zone tends to weigh on the nerves a bit after awhile. Good luck, it will be a great home for your family.
Jason
Jason,
We know all too well how miserable it is to live in a construction zone. Our last house (the historic one) took us about 3 years to complete (even though we were not having work done on it constantly). That is exactly why I just decided to get rid of most of the tile now. There is probably over 3000sf of tile in that house and I don’t really care for it. I could not imagine trying to do that while living there (impossible really).
We always also talk about how we have waiting to do things in the past until we were ready to sell. What stinks about that is that you don’t get to really enjoy it. You live with what you don’t 100% like and then change right before you move out.
Love this! I just wish more investors would put up a web showing the
work and what was done. Keep up the good work! Keep this coming…
Thanks, James.
Danny,
Another great post. I really look forward to reading this every week.
Can you explain the difference between your “bird-dog” and “wholesale” deals? What fee do you charge for bird-dogging and what percentage or fee to you shoot for in wholesaling?
I’m a high school teacher and real estate broker out in California and am working on getting into the investment field. You’d laugh at good deals out here in the $300K range.
Thanks,
Jeff
Jeff,
That’s a completely different market. I’m sure my equations would have to be adjusted there.
My birddog deals are where I get a lead and just pass it on to another investor who puts the deal together and pays me a fee. I typically get $2,000. Not all of the time, but that is what I ask for most of the time. This is possible when they know that you are a great source of deals and that you could just as easily go and contract it yourself and charge more by assigning the contract them (which is wholesaling).
With wholesaling, I want to make at least $5k but usually shoot for $10k or more.
Danny,
I really like the postcards too.
My direct mail consists of postcards with a few yellow letters sprinkled in. I haven’t done “normal” letters in a long time.
The postcards are just so much easier to deal with. Plus, you don’t have to try to get them to open them to see your message. If I could just figure out how to mail bandit signs as postcards…
Hey Danny, if you were to switch your business up to more wholesaling which I doubt cause your pretty good @ what you do now, would you adjust your marketing any to go after different leads? If so, what type of leads would you prefer?
I would just be sure to market to the areas where the majority of my strongest buyers are looking for houses. This is the best way to wholesale. Figure out who the best buyers are that can pay cash and are looking for a lot of houses and find them what they are looking for.
How do you find them? Would you mind listing a few ways that would be helpful to a new RE investor?
How do I find what?
Sorry, where do you find wholesalers if you are just starting out in RE?
A great free way would to be to put ads on craigslist.org mentioning that you have a ‘fixer upper house for sale’ or something like that. Just tell them that you are marketing and looking for buyers to buy the deals you come across. You can throw ‘Cash Only’ to try find some of the more serious players. If you are looking for serious buyers, you could also have a Realtor pull up recently sold investment properties (REO’s, houses needing lots of repairs, etc) that were bought cash.
After being in the business for a little while, it becomes more obvious who the real active house movers are.
You mentioned a 90 day FHA rule about flips. Are you required to hold a property for 90 days? I’m not familiar with this rule.
Fran,
The 90 day FHA rule pertains to selling a house within 90 days of purchase to an end buyer that will be using an FHA loan.
People are all over the board about this rule. This is because of all of the different interpretations of the rule and the recent waiver. The different interpretations are also coming from the lenders and investors that decide on how they want things handled.
To sum up the basics of what will usually be encountered, this is what I discovered after talking it over with several knowledgeable Realtors and mortgage brokers:
You can sell within 90 days of purchase IF there is not more than a 20% difference between your resale price and your purchase price (including repair costs, closing costs, but not likely your holding costs (grey area)). You will have to show receipts and might need other proof of your improvements (pictures, scopes of work, etc).
If the difference is greater than 20%, you will have to wait until after 90 days. If you find a FHA buyer before the 90 days you can work around it by going ahead and signing the contract with a closing date after the 90 days is up and having the contract redrawn and signed after the 90 days is up and then close. Before 180 days, you will likely have to have two appraisals (you must pay for the second appraisal), but will not have to show receipts and justify the increase in sales price.
Hope this helps.
Dan,
First and foremost I have to say Thank you for keeping this blog going. We appreciate all your hard work. I really look forward to reading your blogs each and every week. I ran across your blog @ BiggPock…com and couldn’t stop reading it. I’ve been reading your blogs for weeks and wonder how you manage.
My family and I have been living in San Antonio for almost 2 years now and I was wondering if you knew any Realtors who wouldn’t mind working with a new investor. I am basically trying to find the best areas in San Antonio to start my investment career (which I know you already have the answer to this question). I am building a cash buyers list for the purpose of wholesaling and/or birddogging properties.
I live on the Northeast side of town (Live Oak/Universal City). If you ever have any properties on this side of town to check out, I would be happy to take pictures for you. I can’t say I would love to evaluate them because I am not sure what you would be looking for (I would have to use your house inspection check list).
Thanks a Million.
Thanks, Mike.
Glad to see another San Antonio investor here. As far as good areas to start in, it really depends on what you plan on doing. If you are wholesaling, which is what is sounds like, that depends on where the most serious buyers are buying. If you are just going to stick to a certain area to start with, try to choose one close to where you live.
Sorry, I don’t really have any contacts for Realtors to contact. It can be hard to find a good one and it took us a while. If you are going to be marketing directly to homeowners, the Realtor is not that important. If you want to find one to help you find listed deals, you should be able to just contact several Realtor offices and just ask if they have an agent that works with other investors. Find several and see who you “click” with most and just work at building the relationship and teach them exactly what you are looking for.
Thanks Danny,
I appreciate you taking the time to answer my post. I am going to focus my marketing efforts toward homeowners (absentee owners) and incorporate the driving for dollars method.
Thanks again and keep it coming!!
Thanks, Mike.
Let us know how it goes.
Been following you for a while and love all of the information. Just curious about your website. Do you do any marketing? What attracts people to your site?
Again thanks for the information.
Vince,
The website is on my yellow pages ad and postcards. The bulk of the traffic though is from Google. My site is number one for my area for several search terms for when people want to sell their house fast. It took a while to get the site to the top and a lot of people have been asking how I get so many leads from the website. I am working on something right now that I will release within a matter of months that shows how I did it (it won’t be available for anyone in San Antonio though ;)).
Looking forward to seeing how you drive keyword focused traffic to your website.
Danny:
When you purchase with intent to wholesale do you have an ‘escape clause’ in the contract in case you can’t find a buyer? Wondering how you protect yourself if this situation ever arises.
Thx,
Blake
Yes, I usually do. The wording is usually something like “This agreement is subject to further inspection of the property.” Plain and simple.
Holy bird dog batman!
Excellent post as usual. Regarding the ‘leads to date’ analysis, it would be interesting if you had additional columns for 1) total marketing material sent out (for letters, bandit signs, and other quantifiable categories), 2) deals closed, 3) deals bird dogged, 4) deals wholesaled, and 3) total profit. Maybe you could spot some interesting trends.
lol.
Good ideas. Considering adding it (lot going on right now with the move to our new house, so it is hard to focus on too much at the moment).
lol.
Great ideas. I will certainly consider adding them as time allows. We are in the middle of moving over the next week or so and things are pretty hectic.
Best of luck with the move.
Thanks.
I enjoy this blog so much that I have stopped watching tv to read this blog! Danny-can you show a sample of the postcard that you use for absentee mailings?
Thanks!
Nicholas,
That’s great. Too many people spend far too much time in front of the tv. What a waste.
Postcard: http://flippingjunkie.com/postcard.html