JF2244: Wholesaling Made Easy With David Dodge

David is the Founder of House Sold Easy, a full-time investor and Author of “The Ultimate Guide to Wholesale Real Estate”. He is a St. Louis Real Estate Investor with over 15 years of experience. He first started investing in Real Estate when he was in college, at the age of 20 while attending the University of Missouri-Columbia. David specializes in wholesaling real estate as well as teaching others how easy it is to learn how they too can wholesale real estate for profits.

David Dodge Real Estate Background:

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“Doing deals doesn’t cost anything if you do it right but getting leads does, it either cost time or money” – David Dodge

TRANSCRIPTION

Theo Hicks: Hello best ever listeners and welcome to the Best Real Estate Investing Advice Ever Show. I’m Theo Hicks and today I’m speaking with David Dodge.

David, how are you doing today?

David Dodge: Hey, Theo, I’m doing great, man. Thank you for having me. I’m grateful for your time and let’s talk some real estate, buddy. Let’s do it.

Theo Hicks: Let’s do it. I appreciate you joining us, looking forward to it. So before we talk real estate, let me give your biographical information really quickly. So he’s the founder of House Sold Easy. He’s a full-time investor and author of The Ultimate Guide to Wholesaling Real Estate. He has 15 years of real estate experience and his team has wholesaled over 500 houses and he personally owns 60 rentals. He is based in the St. Louis and you can say hi to him at his podcast, which is Discount Property Investor.

So, David, do you mind telling us a little bit more about your background and what you’re focused on today?

David Dodge: I would be happy to. So my background is in sales and marketing. Basically out of college, I had sales and marketing jobs. I started investing in real estate when I was really young. I was about 20; but for the first 10 years—I have 15 years of experience, right? The first 10, I was very passively investing. I was paying retail for houses, I was getting loans, putting down 20%, getting them on the MLS, and I was just renting them out. Basically, just a way for me to park cash. I’ve never really been good at saving money, Theo, so I just figured this is going to be a good way for me to basically put savings on autopilot. So I would save a little bit to be able to buy something. And again over the first 10 years, I maybe bought one house a year or one every other year and got about nine houses in the first 10 years, all these rentals, paid retail for all of them, had loans… The first couple I didn’t even have the money to buy it. I would borrow the 20% from family or friends and then even get co-signers,  just to get in the game, and to pay people back over time.

So to speed things up and not bore everybody, basically, about five years ago, I learned this thing called wholesaling. And I learned that there’s these people out there that are motivated to sell. Who would have ever thought, right? And that you don’t have to pay retail for properties. And you can do all this creative stuff to control properties and flip houses, with none of your own money. Sounds crazy, and like an infomercial and like, “You can do it with none of your money! You can do it!” But that’s the case, it’s so true.

Now the catch and the caveat that nobody wants to tell you until they’re ready to sell you their $30,000 program, is that it costs money to get the leads. But doing the deal is actually none of your own money typically, right? But the leads don’t come free. They don’t just fall in your lap. So you have to spend money to get these leads. But if you can create a business that markets well to find these people, these leads are very, very lucrative. So that’s basically what I’ve been up to the last five years. When I learned about wholesaling and started doing deals, I quit all my jobs doing sales and marketing and I went full time. In the last 15 to 18 months, we took our portfolio from about 15 to 65 using a method called the BRRR method.

So what we do is we do a lot of marketing. And then we keep the best deals for ourselves and we flip them as fix and flips, or add them to our portfolio. And we just wholesale everything else that either doesn’t make sense for us or maybe has a quick 10-15 K to help fund other projects. So we do a lot of all of it. So currently, we’ve got about 65 rentals, wholesaling eight to 10 a month on average, sometimes more, sometimes less, and we have anywhere from eight to 15 projects going on. Some of those are fixing flips, some of those are fix, rent, refi, repeats, so the BRRRs. We still have to fix them in order to do that process.

So that’s kind of what I do, I’m full time at it. I love helping people and teaching people that this is possible that you can flip houses with little to no money. I do make it very direct and transparent though that you have to spend time or money to get these leads though. Those cost time or money, and that’s it, period; or both. But once you get them, you can get really creative.

And like you said, I wrote a book called The Ultimate Guide to Wholesaling Real Estate, which really teaches everything you need to know about wholesaling and how it works. We just published our second book, Theo, called The BRRR Method. It’s about building a rental empire with nothing out of pocket. We’ve essentially added 100 doors to our portfolio. I count properties when I say 65, but we’ve had about 100 doors to our portfolio in the last 15 months, and we’ve averaged about $1,200 a property, so maybe about 40 to 45 properties in total. And our averages are getting lower and lower to where hopefully they’ll be at a zero, a net zero soon, when we’re buying these properties.

So that’s kind of who I am and what I do and stand for, my man. Thanks for having me.

Theo Hicks: Thanks for sharing that. A lot of different directions we can go. The first thing I want to ask you… So when you’re wholesaling, are you doing the assigning the contract or do you do the double close?

David Dodge: Whatever makes the most sense. To me, it doesn’t matter, because you’ve got to close it regardless to get paid. So ideally, we’ll assign, but then again if there’s a large spread in there, and we think that that may deter the buyer or cause any problems, then we’ll double close. We have a really good relationship with three or four title companies in town and they dry-fund our deals for us, so we don’t even need to bring money to the table to purchase. But you don’t have to either. There’s ways around it. Some title companies and states and attorneys or whatnot, they may require transactional funding, but you don’t even need it if you know the right people. So just make a relationship with those people; that’s kind of how we do it. So we do both, to answer your question.

Theo Hicks: So you’re saying that assigning a contract, obviously, you don’t need to bring any money. But if you double close, the title company will front you the money to close and then you pay them back once you sell the property?

David Dodge: You never even get the money. You never even get the money, they hold it. But they’ll use the end buyers money to purchase it, and then transfer the title simultaneously, and then give you the difference. So yes, that’s called a double closed dry-fund. That’s what we refer to it as.

Theo Hicks: And you mentioned that—

David Dodge: If you double closed and you need the money, then you’d have to bring your own money or get a transactional lender to come in for an hour or a day or whatever it is. But again, you don’t need it. We can do these dry-funded double closes. That’s correct. Pretty cool.

Theo Hicks:  Okay. Yeah, that’s cool. So you said that ideally, you do the assigning the contract. So when would you have to do a double close, as opposed to assigning?

David Dodge: When selling it to a buyer that can’t buy it on assignment, because of their lender. Sometimes the lenders want to see the seller take possession and not wholesale. So that happens sometimes. Other times, if we have a large spread – let’s say I buy a property for 20k and I sell it for 40k. Well, it’s okay to pay the extra $800 in closing fees – that’s the total basically – to not let the seller know that you’re making that amount of money because it may deter them and make them not want to execute that thing. So assignments are great; you don’t have any costs. But there’s pros and cons with both ways.

So the pros with the double close would be that you can conceal the profits, at least for a couple of weeks. And it also helps your top line – not your bottom line, your top line – on your taxes if you can show large amounts of money coming in and out of your business, which helps later in the process of getting loans, which you may need for the BRRR method, right? So all this kind of ties together.

So double closes actually help my financials and my tax statements, because they can see $5 million, $7 million or $10 million worth of real estate come into my wholesale business and then go out the very same day with profits on it.

So those are some of the advantages of a double close.

The cons are just the cost; anywhere from 800 to two grand typically, to double close a deal. Hopefully, you can do it for less. In assignment, you have pros of no costs. That’s basically the only pro, right? You have to disclose your entire agreement. And that assignee has to step into your shoes to fulfill whatever you agreed with the seller; great option. Pro is no cost. But the con with an assignment is that you have to be 100% transparent right away and let them know. If I buy a property for two grand and sell it for 20k, do you think that the buyer is going to be cool with me getting 18 grand? Not typically. So just pay 800 bucks to hide it. It’s good. As long as they see the deal at the closing table, it doesn’t matter what your profits are. And that’s really the reason why we have the option and we choose what works best at the current time.

You know, more money isn’t always better, especially when it comes to real estate deals. More money isn’t better. People say, “Well, Dave, how do you choose what you do with the deals that come in?” We do tons of marketing and I keep the best and sell the rest as I said earlier, but the best doesn’t necessarily mean that I’m going to make 60 grand if it takes me eight months. If I can make 23,000 next Tuesday, hey, that’s best right now. So it’s not always biggest, it’s best. So we keep the best deals for ourselves and we just wholesale everything else out. So that’s kind of the difference in what we do.

Theo Hicks: First of all, I never heard a wholesaler talk about the top line that you mentioned before. That was an interesting thing.

David Dodge: That’s because most wholesalers don’t have 65 rental properties, and have studied the BRRR method and mastered it. In order to do the BRRR method, there’s two things that you have to have that are really, really, really important. You have to be bankable for one, because you can’t refi out. If you can’t refi out, the strategy is totally broken. You’re going to end up getting stuck with properties that you bought, using harder private money at a high interest rate and you’re going to be stuck with them if you can’t pay those people back. So you’ve got to be bankable.

And the second thing is you have to add the value. And you do so by buying at a discount and increasing the value by rehabbing. Basically, three things. But those three things are needed to do it.

So yes, adding to the top line helps your financial statement. It’s going to help you be bankable. Most people don’t think of that at all, right? Because it’s not really doing anything but just creating a little bit more work of having to manage that. The profits are the same, but you can actually use that to your advantage to show that your business is creating millions of dollars of revenue, when in fact you’re not even using any of your own money to do it.

So there’s so many advantages. But yes, absolutely. I love that you touched on that, because that’s not really talked about.

Theo Hicks: It’s not. It’s not. Yeah, so even if I don’t use my own money to do the double closes, whether it’s the title company funding those funds, it still counts as if I did that transaction.

David Dodge: 100%. Last year we wholesaled a deal, it was 700 grand, we made 30,000 on it. We put $100 into escrow as earnest money. So our total cost was $100. It came back too, and then we had credit of buying and selling the house at 700,000.

Theo Hicks: Okay.

David Dodge: Yeah, absolutely. Now that’s top line. It’s a 700 grand cost and then you have the income of 730 in this example. So 30 grand is the bottom line either way. Even if it’s an assignment, you still get 30 grand at the bottom, basically. So why not add those numbers to the top and help your business look like a professional business that it is?

Theo Hicks: Yeah. All right. So you mentioned in the beginning, you’ve mentioned multiple times the importance of the leads… So maybe tell us, as I’m sure you’re doing a bunch of other things – you said you’re doing 8 to 10 deals per month, on average; what would be the number one lead source for those deals? So what lead generating strategy do you use that results in the most closed deals?

David Dodge: So this is crazy, because I actually give this all away for people and I tell people exactly what I do. And I’ve even built a course on it that I’d love to give to the people for free. But it’s so simple, and I have several students right now that are crushing it with the same approach. So we use PropStream and we drive for dollars. So we build our own lists and we purchase lists. We go after vacants, we go after absentee owns, we go after high equities… We analyze our market though. We’re not just blanket marketing. We’re looking for deals in areas that could be great fix and flips or they could be great rentals, because that’s basically what you wholesale to, right? You wholesale to an investor that’s going to do one of those two things.

So we find the areas and analyze via PropStream how to find those areas. And then we pull those lists. Or we’ll drive for dollars. Our best three deals came from driving for dollars at this point, one over six figures. And then what we do is we cold call and we cold text these individuals. Occasionally, we’ll send mail, but that’s it. That’s the whole system; we cold call and we cold text. Occasionally, we’ll send mail. And that’s basically all of the list-dependent marketing that we do. We also do some non-list dependent marketing, which is just a small radio budget of two grand a month. That’s it, nothing crazy. But we are on the radio, which brings in a wide net as well. So just another approach. And then we’ll do bandit sign campaigns from time to time, but typically, that’s like once a quarter, and we’ll put out 600 of them. So it’s like enough to get out to where they stick around in some places for a couple weeks. But that’s about it, right?

So most of it, 80/20 principle here, Theo, is skip tracing from lists that we create or we export out of our system, and cold call or cold text those individuals. And we’re relentless. That’s really what it comes down to. If they tell us to quit calling them, we will. But if we can’t get a hold of them, then we’re going to keep trying, we’re going to call them we’re going to text them, we’re going to eventually maybe send a letter to them. We do a lot of driving to people’s houses and knocking on their doors, if there’s a huge spread on a deal that we see that’s just ready to be grabbed.

Theo Hicks: And what about your buyers’ list? How do you source your buyers’ list?

David Dodge: So the buyers list – we have a buyers list, but lately, we’ve been pivoting kind of more of listing as many deals as we can on the MLS. We’re finding that we can get those deals sold for more. So we have a pretty adequate list here in St. Louis where we do our investing; it’s maybe four or five thousand buyers. At one time it was 14k, but we’ve just kind of tried to clean it up and get the junk off of there. I’d like to cut it in half even more, because just less is more. We want the real buyers, not the tire kickers. But honestly, having a buyer’s list is great and all, but nowadays with Facebook marketplace and Facebook groups, you can sell deals just as easily by posting in there if you’re active, as you can blasting out to an entire list via email or text message. Obviously, these are strategies that we use on both sides. We do all of this. But ideally, we’ll have three or four buyers in a zip code that we know either want rentals or rehabs. And then when we get a deal, we can call that individual person and not have to mess with entire blasts. I’d like to get away from the blasts, because it just creates more work when you sell a deal right away, and then you have 35 people that want to see it, and it’s sold. So it just depends on what you’re doing.

But if you’re new – Craigslist, Facebook Marketplace, local Facebook groups will get deals sold. Having a buyers list is obviously going to help as well, but it’s not anything that you can’t create. I have students right now that are finding deals by downloading lists from PropStream, cold calling or cold texting them, and then once they get them under contract, they’re going into PropStream and they’re pulling cash buyers list in that zip code and cold calling and cold texting the cash buyers, that they don’t even know, cold, saying, “Hey, I just got a property under contract. I see bought one down the street last year. Do you have any interest?” He’s done to date, made about 17 grand just doing that strategy right there. That’s it. That’s exactly what he’s doing.

So I like to look at it this way – wholesaling is so incredibly simple. But it’s not easy. Those are two different things. It’s hard, because you got to trade time or money to get these leads. You’ve got to trade time by operating the cold calling, dialers or the texting platforms and searching the leads and skip tracing them and going and looking at them, or you have to spend money to pay someone else to do that… And/or do marketing like direct mail or the radio or just kind of an automated process, but the calls start coming to you.

So really the difference is, is it outbound marketing or is it inbound? Of course, we like to do both. But our monthly budget for marketing isn’t crazy. It used to be like 12 to 15 grand. I know people that are spending 30,000, 50,000 or 60,000 a month. It’s awesome if they’re crushing it, but we were able to scale our marketing back to maybe 4000 a month, sometimes less, sometimes 3500, and the amount of deals that we are still doing compared to when we were spending 10, 12, 15 is about 60% to 70% with a fourth, a fifth of the ad spend. So sometimes again, bigger isn’t better. And when I say ‘best’, it doesn’t mean that’s the biggest or the biggest spread. It just means what is more efficient, what is needed now. So that’s just kind of where I come from.

So yeah, inbound marketing, outbound marketing… I think your question was about cash buyers. We can pull those lists. We generate these things in real-time on every deal that we’re selling. Whenever people see our marketing, we watermark our photos and we have a website, so they come in and we’re getting opt-ins to that list every day, sometimes every hour. But typically, if you’re new – and that’s the thing, most people listening to these podcasts don’t own 65 rental properties and have wholesaled 500 deals. They’re looking to do their first deal, so it’s so incredibly simple – you’ve just got to put in the time, right? So doing deals doesn’t cost any money if you do it right, and I love teaching it, but getting the leads does. It costs time or money, one of the two, and most of the time both. If you’re willing to put in the time or the money to get these leads, you can make a tremendous amount of money doing it.

Theo Hicks: Alright, David, are you ready for the best ever lightning round?

David Dodge: Let’s go!

Theo Hicks: Alright. First, a quick word from our sponsor.

Break: [00:20:46] to [00:21:39]

Theo Hicks: Okay, David, what is the best ever book you’ve recently read?

David Dodge: The best ever book I’ve recently read is Relentless by Tim Grover. I’m not even into sports, but that book just kind of gives you the mindset of those who are ultra successful, and what they do to earn it and get it. And they earn it. So Relentless by Tim Grover. It’s a great book, motivational book, mindset book.

Theo Hicks: If your business were to collapse today, what would you do next?

David Dodge: Start another one that does the exact same thing I do now. I would get PropStream, I would get a dialer and maybe a texting service and I would just start searching for motivated sellers. And I would be back in business in 15 hours.

Theo Hicks: Tell us about the best deal you’ve done. Remember, best, as you said, doesn’t mean the most money… But it could be.

David Dodge: Yeah, I’d say the best deal we did was we bought a house for $2,000 driving for dollars. And we sold it for $132,000 to the city. It took us about 18 months to do the deal, because we were basically working with FEMA and the city. And it was a flooded house that had a [unintelligible [00:22:41].17] but the seller was motivated and didn’t want to wait. They knew that that money was coming, but they needed the money today and they took $2,500. They didn’t think it was gonna be worth 120k, and neither did we, but it ended up appraising, and yeah, we made about 118 grand on that deal. It was awesome. Invested $2,500.

So again, we had a little bit in it, but we had to actually close on this one. That’s why there was money invested, versus having to double close or assign. We took possession, but it was a wholesale the whole way. We had no intentions of keeping it or waiting it out.

Theo Hicks: What is the best ever way you like to give back?

David Dodge: Man, I have free courses that I give people for free. So if you want to learn how to wholesale real estate, go to http://freewholesalecourse.com/. If you want to learn how to become a landlord and use the BRRR method, go to https://www.freelandlordcourse.com/. These courses are probably between four and six hours in length, and it’s everything I do in my business, and I give it away. People charge a thousand bucks for courses like this. Mine’s free, https://www.freelandlordcourse.com/ and https://www.freewholesalecourse.com/.

On top of that, I do a podcast which as you guys know, you’re hearing me on one. That’s the Discount Property Investor Podcast. And again, we just talk about our business, the deals that we’re doing, the creative things that we do daily, the houses that we’re buying with the BRRR strategy and how that whole process works. We love giving back, Theo, and I want to thank you for having me on today, just so I can have the opportunity to teach people how amazing real estate investing really is.

Theo Hicks: Yeah, we appreciate you coming on the show as well. And I guess you answered my last lightning round question, which was—

David Dodge: What was it?

Theo Hicks: Where is the ever place to reach you? You gave us your two websites, the free courses, as well as your podcast.

David Dodge: Guys, if you go on the free course, either one, you can actually reach out to me via text. There’s numbers that are on those pages directly and I answer those questions throughout the day. I probably have about 1200 people at this point that I’m in communication with, and it’s not necessarily coaching, but I send out tips and tricks. And if you have a specific question that it only takes me a minute to answer, I got you.

Theo Hicks: Well, David, thank you for coming on the show today and telling us about your wholesaling process. So I think the biggest takeaway for me and something I had not heard of before was, as I’ve already mentioned, the adding to your top line by doing a double close that allows you to be more attractive to banks.

David Dodge:    Yeah, just give your HUDs to your accountant. That’s all you got to do, so they can show the money flow. It doesn’t have to be in your account or not, though. It’s in your business name. And there’s a title showing the transfer of title with you on it, like in the chain of title. So yeah, absolutely. Just give that to your accountant and boom, you’ll be getting loans in no time, guys.

Theo Hicks: Yeah. And then we also talked about how you create leads, you mentioned PropStream. And that wasn’t just on the front end, but you also mentioned the back end, you’ve got some of your clients who—

David Dodge: Isn’t that awesome, Theo? Obviously, we know that they do motivated seller leads, we know they do cash buyers, but one of my students literally has that in a dialer and that’s it. It’s all he’s doing. And he got a deal in just a couple of days from cold calling some people. He found a motivated seller in a neighborhood and just never even went to the property and said, “Hey, I can’t pay you what you’re asking, but I can give you x,” and he said, “I’ll do it.” And then he literally went in the same day on PropStream, exported some cash buyers in that area, made four or five phone call… People were looking at the property that day, and the next morning he had a contract on it. I think he made seven grand on that deal.

Theo Hicks: Yeah, well—

David Dodge: And that is just one approach. Obviously, there’s lots of approaches, but why I mentioned that and highlighted it a second time, and I’m glad you brought it, up is because it really is that simple. Didn’t say easy, though, guys. Simple. He put in a lot of time making all those calls and prospecting, and he sent the offer. Did you send an offer today? Probably not. Travis, how many offers did you send today? Two? I’ve sent three. That’s how you get deals done. You’ve got to send offers! But he did it, and then that’s how it works.

So yeah. Theo, thank you for having me again, man. I really appreciate you.

Theo Hicks: Absolutely. We appreciate you as well. And best ever listeners, make sure you check out those free trainings, make sure you check out his podcast, and until tomorrow, have the best ever day.

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