$14,456.38 to be exact.
That was the net amount to us. Not bad for about 3 hours worth of work.
I’m going to be sharing the details of this recent wholesale deal as well as what we’ve been up to lately. It’s strange to think that I haven’t shared much in the way of what we’ve been doing. Especially after sharing everything we did for 34 weeks in our house flipping business a while back.
Time certainly flies much faster when you are busy. And busy doesn’t even begin to describe my last year. It was more of a flash.
The joy of fatherhood was given to me again last December. Weston is now a year old and I couldn’t be happier. He is 100% boy (our first and only boy). Which is a good thing considering we have 4 girls! He is a climber and wants to scale anything he can get his hands on. Guess he likes to get altitude like his dad. 🙂
If we can run this business with everything we have going on, you can too.
In addition to family, we’ve been wrapping up 4 simultaneous rehabs and have 4 more awaiting rehab. (It’s a good thing I decided to add that up because it reminded me of a house that I’ve been forgetting. Oops! Yes, that happens.) Some were recently vacated rental houses (which is why I forgot it).
The last house we finished rehabbing is being sold after only a couple days on market and multiple offers. That’s how the one before it went as well. I hope that is a long term trend.
Leads have been pretty steady. Just today I think I had 8 leads. Probably people waiting until after the holidays to take care of their house problems. I hope that trend continues as well. 🙂
We are continuing to buy houses to rehab and wholesale. Birddogging has also been a good source of quick $1,000 here, $2,000 there checks. I’d like to do more wholesaling this year as it is less time consuming.
I’ve also been working on something that I’ll let you know about pretty soon. It’s something that will help a lot of people finally get off the starting line and really take off in this business. My subscribers will be the first (and will probably be the only ones) to find out about it when it’s ready. You probably should subscribe to this blog if you haven’t already. You can at the top of the main page, or on the top right side of each page, or at the end of this post. No time like the present.
I’m sure a lot of you have already heard everybody under the sun talking about writing your goals for the new year, so I’ll save my breath on that. You already know how important that is.
Equally important, however, is that you focus on what you are grateful for. That’s not just for Thanksgiving. Really try to make this a year that you consider often what you have and are thankful for. You get more of what you focus on, so it’s best to focus on what you’re glad you have. Why not make it a point to think about these things every morning during breakfast?
That’s a great profit for very little ‘work’. Not quite the $50,000 that another wholesale house flip made us, but I’m not going to complain.
I recently did a live (and free) webinar for my subscribers that talked more in depth about this deal. If you didn’t know about it, I’m sorry. (yet another reason to go ahead and subscribe…)
I’ll go over much of the details here for those of you that did not make it or even know about it.
Here’s a picture of the house:
Not that bad. Looks can be deceiving though.
The house needed about $25,000 in repairs. The general list of repairs needed (main items) is here:
This lead came from my website, the one mentioned earlier in this post.
The sellers didn’t appear too motivated just from their answers to the questions on the website. For the asking price, they entered, “Make An Offer.” For the ‘least they would take’ question, they put, “You First.”
That doesn’t really sound like a motivated seller.
The reason for selling was that it was an estate. I liked that. They also didn’t owe anything on it. I also liked that.
Even though they didn’t seem motivated, there was potential. I went to meet them at the house.
I looked the house over and didn’t really care for it. The sellers were great people though and we talked for a long time about a lot of different subjects. One of the subjects was about the house and how much of a drain it was on them, time and money-wise.
Being that I didn’t really care for the house, or the neighbors’ houses (trashy neighbors – junk in the yards), the bad addition on the back of the house, the amount of repairs needed and just the number of other rehabs I already had going, I decided to offer an amount that would make sense for me. An amount that would allow us to wholesale the house. Always remember to make an offer anyway.
|After Repaired Value (ARV)||$130,000|
|65% of ARV||-$84,500|
|Maximum Allowable Offer||$59,500|
So the difference between what I could have offered had I wanted to buy, fix up and retail the house, and what I offered, was $16,500. That was the amount of room I had for negotiations and for my eventual wholesale fee.
They told me they wanted to think about it and talk it over with the rest of the family. At this point, I honestly thought my competition would get this one.
The next day they accepted my offer! They told me they liked me so much that they didn’t even bother calling anybody else. This just goes to show you that it’s not always about how much money you are offering.
I had purchase costs of $44,491.06 (Title Policy, Doc Prep, Escrow, Insurance, Taxes) and selling costs of $1,052.56.
I ended up selling it to the second person I told about the deal. They paid $60,000 and closed within 2 weeks.
I chose to close on this one first and then resell, instead of assigning the contractor for a couple reasons.
When all was said and done, I ended up pocketing $14,456.38.
$60,000 (final sale price) – 44,491.06 (buying costs) – $1,052.56 (selling costs) = $14,456.38.
Not bad. Gotta love wholesale deals.
Thanks for visiting the blog and reading along.
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DannyPrevious: 207: Virtual Wholesaling
Great post Danny. Really enjoy seeing the way you look at deals. I just picked up a small deal from the bank which based on the recent sales in the area it could go for about 89K. It needs about 13-15K in work. Would like to wholesale it but if I don’t get close to my wholesale fee I am really considering rehabbing it. At what price would you try to pick up a deal like this?
You should be able to find someone willing to take it down for $45k-$50k. Depending on typical days on market that’s about where I’d want to be.
Great Deal Danny! It’s the only thing that makes filtering through all the leads worth it 😉
That and the stories we end up with each week. Just saw a house that I seriously had trouble taking a breath in… couldn’t wait to get out of there.
It’s been a while. How are things?
Great wholesale deal Danny! I am always a bit apprehensive about foundation issues. Is there ever a level of foundation issues where you say to yourself “nope , not gonna touch this one” ?
If the foundation is real bad, like cracks that are greater than 1/4″ apart or where one side is raised up above the other side of the crack, I will try to see if I can make it work as a rental for a landlord. If the foundation is sloped but seems intact, it’s usually not a problem.
Something to be careful of is slab leaks. Those can be a nightmare if they are really bad. If the slab is bulged upward this can be a sign of a bad slab leak.
Fantastic post with real-life details!!! I love it. Glad you’re back online, too. 😀
Glad to be back!
Danny, I really enjoy the blog and all the rich content provided. Thank you! Question though: from your newsletter on the 31st you mentioned you were going to be discussing more about birddogging and wholesaling for beginners in your forthcoming article. Needless to say I was very excited for this but didn’t see a lot of this besides the recent story on your wholesaling endeavor. Is this still to come? Looking forward to it!
You should be receiving that shortly.
Danny, great deal and post. Actually, let me take this oppertunity to say thanks for all your blogs posts and email you send out…FOR FREE!.
One question – did you know the ARV of the property and make the offer at the initial meeting with them or did you get back to them after some research?
Great question, Mike.
I make it a point to know the ARV or at least a good idea of it before I head out. Sometimes I will need to drive by some of the comps to double-check my ARV. I do that when I go to visit the sellers.
I knew the ARV before I went to see it and made the offer during that initial visit. It’s always better to make the offer face-to-face.
I really appreciate you getting back with me earlier today. I have been reading nonstop for the past several weeks and am thrilled to have come across your website. Earlier this morning you responded back to me that it would be beneficial for me to consider bird-dogging and wholesaling to reach my goals of perhaps doing some rehabs faster. I understand the concepts of both, just not the how to. I am in the military (for another 2 years)and dont really have alot of friends with bank full of money sitting there waiting for me to come to them to sell them a house that I struck up a deal to sell to them for $50k and the homeowners are going to sell to me for $45k. From my understanding this is wholesaling, and the investors do the rehabbing. I never took ownership. My first question is where do I find these investors? And second, my credit isn’t exactly an 850, wouldnt I have to be approved from a bank in the first place for me to make that offer to the homeowner? If not, what keeps the investor from seeing what the homeowner was willing to sell to me and not just undercutting me by going straight to the homeowner. Please forgive my naive to the real estate world, I want to get in badly, but am trying to figure out where to start. Thanks again for taking your time to answer everyone back.
You can find investor buyers in a lot of places. You can attend your local Real Estate Investor Association (REIA) meetings and find them there. You can call on all the ‘We Buy Houses’ type ads in the newspaper, yellow pages, online, on bandit signs and basically anywhere you find them.
The key is to find out who is buying the most and are the biggest players in your area. If you can find 3 or 4 big players, they will probably buy over 95% of the deals you sell.
You don’t need to have approval from a bank for financing to make offers to homeowners. You tell them you are paying cash, because your end buyers should be paying cash and they will be the ones closing because you are assigning the contract to them for your wholesale fee. Don’t worry about them going behind your back. You will already have the house under contract and MOST investors will respect that because they will want to continue buying deals from you that they didn’t find themselves. There is a way to cloud title if you feel like an investor is going behind your back, but you should take one step at a time.
What are some good ways to get comfortable with determining accurate or reliable ARV numbers? My greatest sticking point getting started is gear of investing on a turkey that seemed right on paper.
Thank you very much for making this information so personable and relatable.
Determining ARV (after repair value – in case anybody doesn’t know) is more an art than a science. There is no real easy answer. The more you run comps and determine values, the better you will become at it.
You could ask a Realtor to sit down with you and show you how they determine values. Just ask them to show you how they do CMA’s (comparative market analysis).
The main thing is to find houses in the same or nearby (within a half mile) and similar neighborhood that have sold within the last 3 to 6 months. Throw out any extremes like a house that sold for 30k or 200k when the bulk of them sold for 100k. Make sure the square footage is close as well. Don’t use comps from 1200sf houses for a 3000sf house by multiplying the sold price per square foot from the smaller houses to determine value for the bigger house.
After a while you will be able to get to where you can determine value pretty accurately within about 5 minutes.
The process really isn’t that hard but there is a lot to watch out for. This might be a good idea for one of my next posts. I’ll try to cover this more in depth soon.
Hey Danny, how often do you assign deals rather than wholesaling them? Do you have any posts explaining your step-by-step assignment of contract process? I’m always interested to hear how others handle this process.
Another great post, btw!
Yes. I birddog leads more often than I wholesale. Just depends on how busy I am. If I’ve got a lot going on, it’s hard for me to be timely in looking at all the properties (and I get lazy from time to time :)).
I have people that I trust that I send leads to. When I birddog, I just text, email or call them with the details of the deal (including seller contact information). This will also include how much I expect for the referral if they do the deal. That’s it.
Each lead birddogged is kept in a spreadsheet and I keep track of which ones work out and which ones don’t. I randomly call sellers from time to time just to double-check.
Would you be willing to share your numbers for offers/contracts/closes? For example, in 2012 I made 14 written offers, got 12 contracts, and closed 4 deals. Another 4 deals are still under contract and may (better!) close in 2013. The last 4 fell apart.
Anyone else want to compare stats? Is there an average for these ratios that anyone knows about?
Sadly, I don’t have that calculated for 2012 yet. But, I typically will contract about 1 out of 4-8 of the ones I make offers on because I heavily screen my leads. I don’t have any fall apart.
Thanks for sharing yours and I hope others will chime in.
@Danny – what % of leads do you think you screen out? Meaning, when you by 1 out of 8 how many more do you think you didn’t make offers on?
I’d say lately it’s been about 1 out of every 5-10 I will go out and make an offer on. It’s hard to tell without looking at the overall average because sometimes I will have 4 good leads out of 6 and then sometimes will have 10 leads that are all duds.
Over the last 6 months I’ve run into several that had deal-breaker title problems. Danny, how do you avoid these? I don’t want to spend the time and money to get a title search run before I even get the property under contract – somebody could grab it out from under me while I’m waiting for results. Any suggestions?
Sorry to jump in here, but what kind of contract are you using to make offers? I typically don’t pull a title search until the property is under contract. The contract I use doesn’t require me to put down a deposit, and there is a contingency for an acceptable inspection and title search (which we worry about AFTER the owner has agreed to sell to us). I understand your frustration, I used to get caught up on this problem too when I was starting out.
Sorry it took a while to respond. I missed this one until I saw Seth’s response. Thanks for responding, Seth.
I agree with Seth. You should be contracting them and then having your title company run the title search.
I rarely have title issues come up that can’t be taken care of before closing. I’m surprised that you are finding so many with ‘deal-breaker’ problems. What kinds of problems have you found?
Ok, as a newbie here. it appears Wholeselling is the way I am going to have to get started. If you meet with the seller and they have agreed to sell the home to you, then you wholesale to someone else seems like it would make the seller a little uneasy. I assume you had a buyer lined up before you even made the offer? Also where are you getting the contracts?
Great stuff here.
Thank you for your time.
That is a common misconception. Usually the seller doesn’t even know or care. As long as they are getting what you agreed to, they are happy. I’ve never had a seller get angry about it. At least not that I know of.
I do not have a buyer already lined up before I make an offer. I find them after I have the house under contract.