Struggling to find off-market deals? Dedric Polite, co-host of A&E series 50/50 Flip, shares his strategy for finding direct-to-seller deals, and how his method helped him close on his latest mobile home park.
Dedric Polite | Real Estate Background
- Chief Investment Officer of Be Polite Properties LLC, which owns and operates income producing single-family, multifamily, and commercial real estate.
- Portfolio: GP of 42-unit mobile home park and 66 units.
- He and his wife, Krystal Polite, host the A&E home series 50/50 Flip, a six-episode series following the Polites as they renovate and flip 10 single-family and multifamily homes, each one for under $50,000 and all in under 50 days.
- Based in: Burlington, NC
- Say hi to him at:
- www.dedricandkrystal.com
- 50/50 Flip
- Facebook: Dedric, Krystal
- Instagram: @dedricpolite, @bepoliteproperties
- LinkedIn: Dedric, Krystal
- YouTube
- Best Ever Book: Never Split the Difference by Chris Voss
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TRANSCRIPT
Slocomb Reed: Best Ever listeners, welcome to The Best Real Estate Investing Advice Ever Show. I’m Slocomb Reed and I’m here with Dedric Polite. Dedric is joining us from Burlington, North Carolina. He’s the chief investment officer of Be Polite Properties. He is currently GP of 66 residential units and a 42-unit mobile home park. Dedric, can you start us off with a little more about your background and what you’re currently focused on?
Dedric Polite: Sure. Great to be on, Slocomb. Thanks for having me on the show. I’m a long-time listener of the Best Ever podcast. I remember listening to it eight years ago when I first got started. We are full-time real estate investors here in North Carolina. I got into real estate in 2017, started out with the goal to build a large portfolio of cash-flowing rental properties. We got into wholesaling first, because we didn’t have a lot of cash when we first started. We used wholesale checks in order to buy rental properties. Over time, we got into flipping houses; that’s actually how we landed on a TV show. We’re actually on the TV on A&E, we have a home renovation television show called 50/50 Flip, that I can talk a little bit more about… So I’m excited to be here.
Slocomb Reed: Awesome. You just started in real estate investing five years ago?
Dedric Polite: Yep.
Slocomb Reed: Gotcha. When did you buy your first commercial property?
Dedric Polite: Well, good question. So I started 2017, but I have to rewind a little bit. I actually bought my first investment property in 2007. Went to school, graduated college, did what your parents told you to do, “Go to school, get good grades, get a good job with benefits.” 2004, I graduated from Amherst College, got into pharmaceutical sales, was a pharma rep in the Boston area… I read Rich Dad Poor Dad a few years earlier, and I was like, “I’ve got to buy some real estate.” What I did was I do what people now call house-hacking. I bought a triplex in Boston, Massachusetts, I lived in the ground floor unit, I rented out the top two units, it paid my mortgage. I maybe spent 300 or 400 bucks out of pocket each month, and that was my first property.
Then I went back to just working my job. I had a good nine-to-five corporate job, so I didn’t really do too much. I continued to buy books and go to seminars here and there, but I was more of a watcherpreneur at that point. That was until I met my wife. My wife was a serial entrepreneur. Again, we were both working jobs. We got into franchises, so we bought a franchise in 2016. We ran that for a couple of years, and we sold that franchise.
Slocomb Reed: What franchise?
Dedric Polite: It was animal rides, animal scooters. If you’ve ever been to your local mall, you see these little furry scooters riding around with kids…
Slocomb Reed: Ah, okay, gotcha.
Dedric Polite: We brought that and we grew it, three locations in two different states, had like 13 employees. This is why we both were working jobs, we owned this business on the side. We sold that in 2017 and we dove into real estate at that point. It took about a year for us to fire my wife’s boss, and about two years to fire my boss to go full-time into real estate investing. But a mobile home park would be the first commercial property we bought. Again, we bought other multifamilies where they’ve been three-unit, four-unit properties.
Slocomb Reed: Gotcha. Dedric, I’m a house-hacker, too; my starter home was a four-family close to downtown Cincinnati. When my wife was pregnant and it was time for us to move out of downtown and get a larger place, I ended up talking her into a really nice three-family in a neighborhood here called Northside, so we’re on house hack number two.
Dedric Polite: Nice, nice.
Slocomb Reed: So your commercial property is this mobile home park, 42 units. Where is it?
Dedric Polite: It’s in a town called Mebane, North Carolina. It’s about 30 minutes from Durham, North Carolina.
Slocomb Reed: Gotcha. What got you into mobile home parks?
Dedric Polite: That’s a good question. When I first heard about mobile home park investing, I was turned off, like most people might be. We’re like, “Trailer parks? You mean there’s really money in trailer parks?” As I did research, I learned that it has the highest cash on cash return of any commercial real estate, so that definitely piqued my interest. We’ve been looking to buy a mobile home park for quite some time; for some time, we started marketing directly to them. We were fortunate enough to find a seller that was in his 90s and he was looking to sell off his entire portfolio, which included several small multi families and a mobile home park. We actually were able to negotiate some pretty sweet seller financing terms to purchase a mobile home park.
Slocomb Reed: Tell us about those terms.
Dedric Polite: We bought the mobile home park for $800,000. The kicker was we negotiated seller-financed terms of a $10,000 down payment, the seller agreed to hold a note for $790,000, principal-only payments, no interest of $2,000 a month for 84 months. As is, this mobile home park – we just closed on it about a month ago – it’s worth a million as-is, we bought if for $800,000. After repair value, it’s probably closer to 1.5 million. But we’re not planning to sell it, we’re going to keep it long-term as a cash-flowing property. But you know, it was some pretty sweet terms on it.
Slocomb Reed: Is everything you’ve bought right there in North Carolina?
Dedric Polite: No, we own some property in Boston. I still own that one I bought in 2007. We started buying properties in Cleveland, Ohio before COVID; we had accumulated about 12 or 14 units there. Then COVID hit, so we had a hard time going back and forth and finding a contractor, so we sold everything we had in Cleveland. Right now, our focus is on North Carolina and in the Southeast.
Slocomb Reed: Gotcha. Nice. So do you guys self-manage them?
Dedric Polite: No. We started out self-managing, definitely been there, done that. But now, our properties are managed by a property manager. We also do short-term rentals, so we have quite a few Airbnb’s. So we have two property managers, because those are two different beasts; the long-term rentals have a property manager, and then our Airbnb’s have a separate property manager.
Slocomb Reed: Gotcha. Dedric, what is the biggest challenge you’ve had to overcome as you’ve gone full-time in real estate?
Dedric Polite: That’s a good question. The biggest challenge I think is always deal flow. I think if you find the deals, you can find the money. But that’s one of the things we specialize in, is marketing directly to sellers to find off-market deals for motivated sellers. So we’ve done a pretty good job of finding those off-market deals. Almost nothing that we buy is on market, it’s all direct-to-seller. But I think in today’s environment, with it being such a hot seller’s market, it’s gotten more and more difficult to find deals where the numbers make sense.
Slocomb Reed: Totally. I get that, Dedric. The only things I’ve ever bought on-market were for me and my wife to live in ourselves. Everything else, I’ve gotten off-market for a very similar reason. On-market deals just don’t have the same cash flow, and I have, especially now, the bandwidth for some serious off-market lead gen. Let me ask about that, Dedric. You’re going direct-to-seller – how is it that you’re getting in front of sellers right now?
Dedric Polite: Various ways. Cold calling works very well; text messaging, direct mail, a lot of referrals as well… People have gotten to know us in the market as serious cash buyers and people who deliver… So those are some of the ways we generate off-market deals.
Slocomb Reed: It sounds like you’ve got a lot going on. Did you say that you have people you’ve purchased from who are referring other owners to you?
Dedric Polite: Oh, yeah.
Slocomb Reed: Nice. Going direct to seller, Dedric, when you’re speaking with a property owner who has some genuine interest in selling their property, do you have an idea of how often those sellers are also engaged with other buyers and getting other offers, and how often you’re the only buyer at the table?
Dedric Polite: That’s a great question. Of course, you want that percentage where you’re the only one that they’re talking to be as high as possible. But we live in a real world here, so I would say, out of 10, probably 80% of the time there are other buyers in play, and 20% of the times there are not. We try to stack the odds in our favor where we’re the only or the first person that gets to them. We assess their needs and we can meet all their needs, so they don’t need to talk with anyone else. That’s really the goal where you can negotiate typically the best terms, where you’re not getting outbid by other cash buyers, people paying crazy prices and willing to accept minimal returns… Which is happening every day in this market.
Slocomb Reed: Yeah, totally. Even with going direct-to-seller, doing your cold calling, your text marketing, and direct mail, things like that, 80% of the time you’re still coming across sellers who are being approached by other people at the same time. The deals that you’re buying – how many of them are coming from the 80% where it’s competitive, and how many are coming from the 20% where you’re the only show in town?
Dedric Polite: That’s a good question. I’ve never really looked at those numbers. Just anecdotally, I would say probably 50/50. 50% come from that 20% where we’re the only game in town, and those are easy to pull the trigger to buy, because you’re usually getting it at a really good price if they’re truly motivated. The other 50% comes from where you’re competing against other offers and you have to get creative with how to win that deal.
Break: [00:12:16] – [00:14:12]
Slocomb Reed: Dedric, you talked about the mobile home park… Tell us about another time that you got creative to win a deal direct-to-seller in a competitive situation.
Dedric Polite: That’s a good one. One of them was a house in Charlotte. We came across this property in Charlotte half a mile from where the Carolina Panthers football team plays, walking distance there. We were the first ones to be on the scene, talking to the seller. We sent them a postcard, we found a driver for dollars, sent her postcards, she called us back, did the appointment, made an offer. A couple of days later when she was supposed to get back to us, she did say that there was someone else in play.
“Someone else contacted me, they want to buy it. You have competition.” What we did in that case was we offered other things, other than just a sale price. This was an older lady, she was in her 60s, she lived by herself, she had accumulated all this stuff over the years, so we offered her two things. We said, “First of all, we’ll help you move. When we buy the house, you don’t have to figure out how to move all this stuff; we’ll pay for your moving.” And, we offered to pay for a year of storage of her stuff, because she was downsizing from this four-bedroom house into a one-bedroom apartment. So by offering those two things, which most people wouldn’t think of, we were able to win that deal.
Slocomb Reed: Nice. I know some people would be chomping at the bit to hear more about the way that you negotiated the mobile home park deal. It sounds like part of the reason you were able to get it is that you were also interested in those three and four-family properties that the seller was looking to sell. What do you think are the factors that led the seller to a price of 800, which seems a little low, and to seller-finance 790 of that on principal-only payments? What are the factors that led to the seller being interested in and willing to take terms like that?
Dedric Polite: That’s a great question, Slocomb. I think it’s two things. One is we built a relationship with the seller, and two is we built trust with him. We met the seller in 2018. Again, we found one of his properties driving for dollars. We first got in touch with him, he’s like, “Yeah, I’ve got a four-unit I want to sell, as is.” We looked at it, it was completely trashed and we realized why he wanted to sell it. But when we looked this seller up, he owns 70 units. And oh, he was like 90. So we’re like, “Okay.” When I first met with him, I said, “With all due respect, sir, I would like to buy your whole portfolio.” He was like, “Well, slow down. You’re a [unintelligible [00:16:40].06]” He wasn’t ready to sell the whole thing, but he was like, “I’ll sell you this first one. Let’s see how you do.”
We bought the first one, it was a fourplex we bought for 55,000. That’s like some Cleveland, Ohio prices right there… But it needed everything. I mean, it needed everything, or a demo. So we were going to remodel it and rent it, do the BRRRR strategy, but this was early in our renovation experience career, so we were like, “Well, we got the renovation numbers.” We thought it was going to cost like 80 to 90 grand to fix it up. It turns out, it was going to cost like 150 to fix it up. So we’re like, “Um, I don’t think we want to take on this gut renovation of a four-unit where we’ve never done anything this big.” So we actually sold it; we put it on the MLS and sold it as-is. We bought it for 45 and we sold it for 55 as is on the MLS.
So we got out of that deal without losing money, but we performed. That led to the next deal; the next property he sold us was a single-family house he owned in Durham. Again, it was kind of a hairy situation; it had a failed septic tank and no one would touch this property, no one wanted it, because it was some type of special septic and needed to go through city approvals. We ended up buying that property when no one else could buy it from them, so we delivered on that. That’s when he started to be like, “Okay, I’m willing to accept some owner finance terms.” Because we’re like, “Hey, we want to buy two other four-units you have and a mobile home park.” After we’ve proven ourselves on a few deals and he saw that we were trustworthy, that’s what he’s like “Okay, I’d be willing to do seller financing.”
Slocomb Reed: You said you closed on that just recently, end of 2021?
Dedric Polite: Which one?
Slocomb Reed: The mobile home park.
Dedric Polite: The mobile home park, we closed on that officially last month. We had it under contract for five months, but closed on it last month.
Slocomb Reed: So January of 2022, with a seller you originally connected with in 2018?
Dedric Polite: Absolutely.
Slocomb Reed: So it sounds like part of the secret here was your staying power and just follow up, and your willingness to perform on some of the smaller deals to gain trust, for sure. Yeah, get on base a couple of times and it lead to a home run. That’s awesome. Since you went full-time in real estate, Dedric, what would you say is the most important skill you’ve developed?
Dedric Polite: That’s a good question. I think the skill that’s paid off the most has been negotiating skills. Everything in life is a negotiation, but especially in real estate. Honing your negotiating skills is something; it can earn you an extra 20,000 per deal, it can earn you extra million on a deal if you know how to negotiate.
Slocomb Reed: For our Best Ever listeners, Dedric, do you have any recommendations on how they can develop their negotiating skills?
Dedric Polite: Yes. Again, people think you’ve got to be born a great negotiator. I wasn’t born a great negotiator, I had to learn it. One of the books I read was a book called Never Split the Difference by Chris Voss. Some of you have probably heard of that, Never Split the Difference. His background is he is a former FBI hostage negotiator. So we’re negotiating real estate deals, but you learn from someone who’s negotiating life and death situations. I read that book three or four years ago and I still read it once a year, because the tips you can pick up on negotiating from there made me millions of dollars.
Slocomb Reed: Nice. Dedric, are you ready for our Best Ever lightning round?
Dedric Polite: Yes.
Slocomb Reed: What is your Best Ever way to give back?
Dedric Polite: Best Ever way to give back… One of the things we do before we start a lot of our rehabs is we’ll go to a local homeless shelter and we’ll hire some of the guys from there who are skilled tradesmen. Like, you’ve got carpenters, plumbers, and people like that who just maybe are on hard times. We’ll hire them to do the demo and clean out on a lot of our properties. Some of them we’ll actually even give them full-time jobs. That’s one of the ways we like to give back.
Slocomb Reed: Wow. Let’s sit on this for a moment. You’re going to homeless shelters to find people to do the demo for your rehabs. How reliable have you found that workforce to be?
Dedric Polite: I would say fairly reliable. One of the things we have to do is — a lot of times they don’t have cars, so we have to send one of our guys to pick them up in the truck and bring them to and from; that kind of comes with the territory. But other than that, these are folks that, again, were productive members of society. They’ve just fallen on hard times for whatever reason, and I like to try to give them an opportunity to earn an honest day’s work.
Slocomb Reed: That’s awesome. Dedric, what’s the best book you’ve recently read?
Dedric Polite: I would say it’s that Never Split the Difference by Chris Voss. Anyone, especially anyone interested in real estate investing, I think it’s a must-read.
Slocomb Reed: What is the Best Ever lesson you’ve learned in a deal?
Dedric Polite: Best Ever lesson I’ve learned in a deal… that’s a good question. I would say do what you say you’re going to do. If you say you can do a deal, perform on that deal, because that speaks to your reputation. And again, with us being able to buy that mobile home park and buy pretty much this one seller’s whole portfolio, it was because we delivered and we were able to close on what we said we would.
Slocomb Reed: Awesome. What’s your Best Ever advice?
Dedric Polite: My Best Ever advice would be to just take action. Once you’ve done all the educating, you’ve read the books and taken the seminars, don’t be afraid to take action. You’ve got to make mistakes. I made mistakes, I still make mistakes every day. But you learn from those mistakes, you pick yourself back up, and you just fail your way forward.
Slocomb Reed: Where can our Best Ever listeners get in touch with you?
Dedric Polite: On all social media, Dedric Polite. You can also lookup Be Polite Properties, which is my company name. We’re on Instagram, Facebook, we have a YouTube channel under Be Polite Properties, Twitter, LinkedIn… All social media is just Dedric Polite or Be Polite Properties. In addition, we do have our television show 50/50 Flip, which airs on A&E every Saturday at 12 noon Eastern. They can check out the behind-the-scenes of how we renovate and flip houses and build wealth.
Slocomb Reed: Great. Well, Best Ever listeners, thanks for tuning in. If you’ve gotten value from this interview with Dedric Polite, please subscribe to our podcasts, leave us a five-star review. If you know someone else who would get value from listening to this episode, please share it with them. Thank you and have a Best Ever day.
Dedric Polite: Thanks, Slocomb.
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