Imagine going into business, only to realize you weren’t in the business you thought you were in.
David Dodge, author of The Ultimate Guide to Wholesale Real Estate and The BRRRR Method, thought he was going into the real estate business … but it turned out, he was going into the marketing business.
“Lesson number one — this is a marketing business before it’s an investing business,” Dodge said to Ricci Truong of the CamaPlan Podcast. “Lesson Number Two, let’s lead with integrity and let’s find people that have problems and let’s help ’em solve those problems in exchange for a discount.”
Starting at the ripe old age of 20, Dodge began his real estate investing career the hard way — saving 20% down payments and buying rental properties one at a time. It took him ten years to acquire twelve rentals — barely over one a year.
Hungry to go faster, he started exploring ways a real estate investor could expand quickly without deep pockets or perfect credit. That’s how he found wholesaling.
Solving Problems
Real estate wholesaling, for the uninitiated, is the practice of finding motivated sellers, getting their house under contract for below-market value, and then selling the contract to another real estate investor to close the deal.
The upside — you can do this with no credit and little money out of pocket. The downside — because there has to be enough margin for the investor’s profit and the wholesaler’s fee, you have to get that contract for a low, low price indeed. Meaning the seller has to be very motivated.
How does Dodge do that? See Lesson Number Two — solve problems. He looks for property owners with big problems, and then he offers them a convenient way out of the problems in exchange for a discount on the sale price. The bigger the convenience, the bigger the discount.
Sometimes the problems are with the property itself — ugly, uninhabitable, in need of a complete gut renovation. Other times, however, the problems are peripheral — divorce, death in the family, financial straits.
“I’ve bought houses for people that were going to prison next Tuesday, and they needed to sell now and I helped them,” Dodge said. “And they knew they were leaving money on the table, but I got the deal done in hours versus days. That’s the convenience that we provide.”
From Investing to Marketing
But how do you find people with problems that big? Through marketing, of course. Sending letters, driving for dollars, cold-calling “For Rent” and “For Sale By Owner” signs … There are a million time-honored wholesaler techniques to find motivated sellers.
Dodge, who also wrote the short volume The Three Pillars of Wholesaling, mentors aspiring wholesalers to pick a marketing lane and stick to it. He also advises them to take stock of what they have more of — time or money.
“Anybody that runs any business has to have a budget — a budget of time and a budget of money,” Dodge said. “And the more money you have, the less time you can spend. The more time you have, the more, the less money you may need to spend.”
… and Back Again to Investing
Of course, non-stop marketing got old for David. He got into real estate investing to invest in real estate, not send letters and cold-call.
So, after four years of wholesaling, he began buying some of the deals himself, rather than wholesaling them to other investors. Using the BRRRR method (Buy, Rehab, Rent, Refinance, Repeat), he can put none of his own money into the properties and expand his portfolio exponentially.
Now his marketing machine is on autopilot. He spends maybe $3,000 in marketing to find a deal that pays anywhere from $8,000 to $300,000, while his rental portfolio throws off $20,000 in cash flow every month.
Why does he still wholesale? Because his marketing yields more potential deals than he can handle himself. So, he still sells deals to investors — including those looking for a passive investment to park their self-directed IRA or Solo 401(k) funds.
What Really Matters
At 38 years old, Dodge knows that financial freedom is really about time freedom — the freedom to use your time as you see fit, with no boss to report to.
“You know, yesterday I spent four hours at my lake house,” he said. “I went to the country club with my wife and, you know, had a date, and hung out at the pool and ate dinner. I played ice hockey late last night and scored two.”
“It was the most, most amazing day I’ve had in months. And my wife and I were celebrating how awesome my day was at breakfast this morning, but I would’ve never been able to do all those things”
Listen to the full podcast with David Dodge, where he also dives deep into how investors protect their wealth from taxation.
