DNRE87 - David Dodge: The Three Pillars of Wholesaling Real Estate
Here’s a snapshot of a few things we talked about…
· Who is the Clark Kent, When It Comes to David Dodge? [00:01:04]
· Where Did He Learn About House Hacking? [00:02:56]
· How Did He Fund His First Property? [00:04:11]
· How to Find Deals and Market to the Sellers [00:11:28]
· Areas that David Works in [00:21:46]
· How to Market to Get a Deal [00:25:50]
· Softwares to Know About Good Deals [00:34:22]
· Who Should You Hire First If You are Starting Up? [00:38:47]
· One Thing He Wishes He Had Implemented Sooner to Accelerate His Journey? [00:43:53]
In this episode, Casanova and David talk about wholesaling real estate, the power of marketing and how you can generate and convert leads.
David says that he has been interested in real estate since a young age. He says that he just knew that he wanted to be a real estate investor in some way, shape or form. David bought his first rental property when he was 20, and it was house hacking. From there, he was able to acquire more properties over the next seven, eight years.
David adds that he had teachers and mentors who strongly emphasized the importance of being an owner in real estate. You can flip stuff for short-term profits, but when it comes to tax strategy and wealth creation, being an owner, it's the way to go.
During the first 10 years of his real estate investing career, David worked part time jobs as well. Although he was able to acquire properties, he says that it was slow, and he did it wrong. As for the financing, the bank would give an 80% loan, and he would deposit the 20%. In the beginning, he would borrow money from friends and family for the down payment.
David says that at the age of 30, he learnt that if you want to find great deals, you have to avoid the MLS at all costs. Changing their mode of operation, David and his partners flipped close to 700 properties and while they aren't even really in the property flipping game.
He adds that he focuses a lot on marketing. They market all over the city and their intentions and goals are to find really good rental properties which fit their buy box, that they can use the BRRRR Method to acquire, or nice fun, easy, nearby fix and flips.
David adds that they don't like buying properties that need more money to fix up than the purchase just because the risk is really high there. Currently, he has 56 rental properties, mostly singles, twos and some fours.
He shares that he did it wrong for the first 10 years, because he didn't know that you could directly market to sellers and avoid the MLS, avoid the agent and avoid paying full retail. He adds that you got to be good at marketing. It will allow you to find somebody that has a problem. All we do as real estate investors or wholesalers regardless, is help people solve problems and demand a discount.
David says that all they really do is that they exchange convenience, quick cash, as is, for a discount. He says that you should be bold about it, and that's the business; the bigger discount they give, the more convenience he is going to offer them.
He adds that the reason that discounts are so important is because you make your money when you buy, you get paid, when you sell, they are two different things. So you have to buy at a discount, the lower you buy a property, the less risk you have when you become the investor and you go and you fix and flip it, or you add it to the portfolio of rentals.
So the lower you can buy, the less risk you can have, and the more opportunities you have to fund it. That is why you got to really learn how to buy at a discount and the MLS is the wrong place. Don't try to find deals on the MLS because the whole process of listing properties is anti-discount.
David adds that if you want to find deals, you have to learn how to basically bypass agents, find people that have problems, and learn how to market directly to sellers. That's basically the best approach, and you can do it in a number of ways. At the end of the day, all of the marketing leads to one place, a phone call. So quit overthinking it, get good at marketing.
He says that the goal is to get 150, 200 houses and then just rapidly try to pay those properties down. They use the BRRRR Method and don't typically spend money on buying a house anymore. So whenever they buy it, they buy it with somebody else's money.
David adds that if you want to be a real estate investor, start with deal finding, start with marketing, start with wholesale, because it's going to teach you how to come across deals. Then what you can do is, you can run, and cherry pick the best ones.
He says that if you want to find deals, you need to have 10 people call you every day, because one in 30 of them is going to be a deal. He adds people are always willing to let you call back, if you position yourself, like you want to help.
David adds that the name of the game is to get your phone ringing. If you don't have money to invest, which is totally normal then you have to spend time ringing other people's phones. That's a people’s business, real estate is just the product that we're looking for. It has nothing to do with the business. The business is marketing and people.
He says that people often quit because they're not willing to make the marketing investment. You have to be willing to take the time and invest into following up. He adds that when making an offer, pull away, disqualify yourself as being the retail guy, go in as an investor, go in with the mindset that you're going to make a profit, and be transparent.
David says that avoid the MLS just when you're buying property, but the MLS is your greatest tool because it shows you the current value of the nearby properties, which are comps. He also uses PropStream and Batch Leads to determine the ARV.
He adds that if you don't have a ton of time, but you do have a little bit of capital, go hire some cold callers and some cold texters and it can be all virtual people. He has four people that do nothing but marketing all day long. He says that the three pillars of wholesaling are marketing, making offers, and following up, they're all three super equally important.
David says that having virtual assistants is just leverage as time is his most valuable asset. If you want to be a full-time real estate investor, then start doing activities real estate investors do.
· “Books, podcasts, teachers, mentors, online courses, seminars, you name it, man. Like if there's something that's going on with real estate, like I want to be a part of it…”
· “No matter what you gotta do, be an owner. Somebody else is going to make you wealthy…”
· “I just didn't take no for an answer, man. I said, I'm going to do this. And a hurdle would come in my way, and I jumped over it and keep running…”
· “So all the marketing, 100% of the marketing is to try to find something that fits the buy box. So the buy box is a rental property that can get me 250 bucks in cash flow a month…”
· “My book is just my documentation of what I did and how I did it to do at the time, a hundred BRRRRs…”
· “We have a little funny slogan or saying at the office. ‘Keep the best and just wholesale the rest’, like so simple…”
· [You are] not a real estate investor in my eyes, when you're a wholesaler, you're a marketer…
· “If you're good at writing contracts, like I am, you can write in specific clauses that eliminate your risk to zero…”
· “The definition of business Casanova, it's the act of making money. So why hide behind the business like you're not going to make a freaking profit, right?”
· “You can mitigate your risk by paying 30 or 40% under the market value, if you get a property at 60 cents on the dollar, you can literally screw up three times and still break even on that deal…”
· “What's the purpose of marketing it's to get the phone ringing, period…”
· “Anybody on my team that brings us a deal, we'll give them two grand…”
· “Driving for dollars is one of the best ways to find deals…”
· “How do you go about finding a great property that you can use the BRRRR Method on guys? You got to get a deal on it…”
· “The average deal is four to six months old…”
· “There's no secret guys, go get bandit signs, hang them in the neighborhood, drive around it, write down addresses or get Deal Machine or BatchDriven…”
· “Make a friend, don't try to sell people on anything…”
· “I use a ton of softwares because I just like them because I think that they just make human life a lot easier…”
· “Those who don't follow up continuously are leaving 80% of the deals on the table…”
· “You gotta be making offers to all the people that you're marketing to…”
· “You don't need good sales skills. Just make a friend and let them know that this is a business that you're an investor in that you got to do this for a discount…”
· The BRRRR Method: Build a Rental Empire with Nothing Out of Pocket by David Dodge and Mike Slane
· PropStream Real Estate Investment Software
· Batch Leads Software
· The Three Pillars of Wholesaling Real Estate: Learn How to Wholesale - by David Dodge
· Discount Property Investor - Real Estate Coaching & Education
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