Getting Into the Wholesale Game | Episode 90
David Dodge is a Real Estate Investor in St. Louis, Missouri. He wrote a book called The Ultimate Guide to Wholesaling Real Estate. His business has two components- an acquisition side and a disposition side. They wholesale properties, flip and sell properties, and buy and hold properties. “We trade convenience for a discount,” David explains, the convenience comes to homeowners who want to sell fast. Their company ‘House Sold Easy’, which they market to sellers, buys homes in cash, uses limited inspections on homes, and closes faster than average. Their goal isn’t to get listings, but to buy properties from the seller at a discount price and either turn around and sell, flip, or hold. They buy just under 100 homes a year. They get 25% of their leads from referrals. They are clear with their homeowners that they don’t pay retail, telling them this in very clear terms right up front. There is a lot of honesty and transparency to sellers; there is no bait-and-switch. This transparency started early in the company when sellers weren’t aware they would be leaving money on the table and deals often fell through. They look for people who need to sell; they don’t need to buy, so when they get a deal on a house it is a win-win for both parties.
“My goal is to solve a problem for these people who are trying to sell a house,” David says. The most ideal situation is when both the seller and the property is distressed. If homeowners don’t want to sell to him right away he connects them with an agent and if they haven’t sold their home a few weeks down the road he follows back up with them. This process can take 3 months, or it can take a year, depending on how quickly the homeowner needs to sell. The disposition side of their company, ‘Discount Property Investor’ is the side of the business that deals with selling homes to investors.
So, what does it look like to get into the wholesale business? “As a wholesaler, all we really do is provide liquidity to the marketplace,” David says, “I will buy any house in St. Louis for the right price… As investors we need to buy this property and have enough meat on the bones to make a profit. The definition of business is the act of making money, so if I can’t buy this property and make money then there is no incentive for me to provide [the seller] with convenience.” Educate potential sellers on their options: they can sell through an agent or they can sell to you at a discounted price quickly for cash. If they go with an agent or make no decision at all, be sure to follow up later. Look for distressed, vacant properties that might have a high propensity to go wholesale; also look for for-sale-by-owner homes.
Dodge did a lot of banded signs and cold calls at the beginning of the business, “If you make 200-300 cold calls you’re going to find someone.” You might not have the resources at the very beginning for paid marketing, but you probably have time to allocate towards cold calling, texting, and building references. Once you have built up your business and budget, then you can start buying marketing. One thing that David reinforces throughout is this, “If you’re starting out, you need to learn how to motivate sellers and trade convenience for a discount.”
To get in touch with David Dodge visit his Instagram @DavidAlanDodge