Join Our Community – It’s Free!
Today David Dodge and Michael Slane are very excited to share and talk about working in and on the business. You’re going to see a new set from David and Mike if you’re watching the podcast. The most important thing to take away from this episode is, you’re going to get busy, it is important to work on the business but do not stop working in the business. Keep the consistency of your marketing! Do it!
Things that will cover in this episode:
- One of the biggest deals they have ever done
- They moved their office
- Bought out one of their business partner
- Building their own rental portfolio
- Liability insurance
Mike: Welcome back to the discount property investor podcast. Your host, David Dodge and Mike Slane today.
David: Hey guys.
Mike: Today we’re talking about- I guess a lot of different things. So one of those things, you can see we’re kind of in a new studio if you’re watching the video. We’re very excited because we moved offices. We’re in the same building but we moved up a flight just because our lease was up and another one was available and we were downsizing a little bit. One of the companies we were working with was in our sweep before has moved out so we didn’t need as much space so we moved offices and that takes up a ton of time. So what we’re chatting about or what we wanted to chat about was working on the business and working in the business kind of like Dave here just keep working on the podcast and set it in the podcast.
David: That’s right.
Mike: He’s working on-
David: I’m zooming in guys, we’re sitting on the couch today.
Mike: On zooming in, on zooming out. He’s not working in the podcast with me, he’s working on the podcast.
David: That’s right.
Mike: So again that’s- again, that’s what we’re gonna talk about a little bit today, what we’ve got going on, you’re going to see some different sets from us if you watch the videos or watch our podcast because we have changed our recording setup. Again, hopefully we don’t mess up any of the audio quality as we do all this but we are again, just moving offices and you’re going to see some new sets from us so that’s what we’re going to talk about. Dave, I think this has probably been one of the most stressful weeks in my real estate investing career in years.
David: I’d say the last month has been tough, yeah.
Mike: Yeah I mean I was saying last week but yeah, it’s definitely been a long- I mean even -yeah since January, and what do we have going on that’s been so tough?
David: We have a couple things, we have one of the biggest deals that we have ever done closing this Friday. We’ve been working on that for like 3 months give or take. We moved offices which is really only probably half done at this point.
Mike: Yeah, we’re halfway.
David: Luckily for us, we’re only moving up one flight of stairs and there is an elevator. Thank God. So we’re in the same building, we’re not moving across town or even have to get a truck really, it’s just a lot of carrying stuff upstairs. On top of that, we bought out one of our business partners. He’s still partnered with us on some aspects of the business but Mike and I are now going to be building our own rental portfolio, just the two of us which will should be great so we’ll have a bigger piece of that pie. So we’ve been working on buying him out. Man over the last, if we were to take it back just a little farther Mike, we paid off a bunch of bad debt that we had built up, you know, getting ourself up to 75, 77 different properties. We had over a hundred doors at one point and we’re going to get right back there, I’m confident of that but there is a learning process to using the BRRRR method and when we first started using the BRRRR method, we were leaving you know, sometimes fifteen or twenty thousand dollars on the table before we, you know, had the experience, the expertise and the relationships built with the bankers.
Mike: Kind of. We- so Dave I mean we had a bunch that we left some money in but we got a bunch of money back so it averaged out. We were really only leaving about a thousand per door in the properties.
David: That’s true, we averaged out. Right.
Mike: The bad debt was from- again, it’s just a lot of things. I mean again, it’s really easy to pay yourselves plenty when you get the big wholesales and not reinvest it and again we just had bad debt. I mean it happens guys, it’s kind of like anybody with credit card debt, how’d you get there? I don’t know, we just spent the money. I don’t know, we’re just not paying attention.
David: Marketing, yeah lots of stuff but we paid it off which is good and again, that’s another thing that we have been really working on. I think a lot of the stress that we’ve been facing is when you’re doing these larger deals, you can’t just assume things are going to go as planned. You have to do- have a contingency plan into place so we’ve been running around you know getting our own financing to take the deal down and we plan to sell it within- we’ll probably, you know, 50% of the deal of the same day which will be great but we may have to hold part of this deal for up to two weeks, you know, hopefully not that long, hopefully just a couple days but it could be, you know, two maybe even three weeks so we went- we had to go out and had to work with, you know, lender’s, hard money, private money and kind of a mix of all of it to be able to buy this entire deal to do it.
Mike: It gets even more complicated though cuz when you’re buying all these properties- so again, it’s about five million dollars, let’s just call it five million and we got about 50% of it we know is accounted for and going to fund and close and double close and all that, but we’ve got half of it that we’re not confident in the buyer so we have to fund about 50% of it. Well, you can’t just go and borrow- again, we don’t have two and a half million sitting around, again if we did, we’d want to borrow it anyways. So you can’t just borrow money- you can’t just borrow 2 million dollars and be like, don’t worry, these houses are solid. What a lender wants to see is okay, well how much are they really worth? And you know what? Turns out you’re going to need insurance on those because if I fund these and then a week later or a day later-
David: Hour later.
Mike: There’s a hurricane and earthquake.
David: Tropical tornado.
Mike: A tornado, exactly. A shark- what’s the- a sharknado comes out of nowhere and these property- again, who knows? Earthquake, fire, it doesn’t matter, the point is you need liability coverage at the minimum on these assets. Somebody goes and slips and falls and sue’s you during that that twenty-four-hour period that you hold them. So again, we have to have liability insurance so that’s a whole ‘nother can of worms. Even though we have a great insurance broker that we work with, they can’t just turn out 40-50 policies for two and a half million dollars in 24 hours, and this is a little bit outside our normal area so these properties don’t fit the mold of what we’ve been buying in the past so there’s all sorts of things to go on with that.
David: Yeah and we’re buying them in the winter. I mean, today’s the 22nd- 24th of February, the deal should closed on the 26th so that’s two days from now, but we are in February, right? So you know, in the event that the deal doesn’t close the second part right away, we’re going to have to then go out and get utilities turned on in our name and incur more, you know, expenses and stuff. So you know, the cool thing though is, is that we’re basically buying about a hundred houses in one transaction which is what we’ve been doing for the last, you know, call it two and a half, three years over the whole year, right? We’ve been roughly buying about give or take 90-ish houses a year over the last 3 years and now we’re going to- we’re doing this in one single transaction.
David: So that is the cool thing, but just because it’s one transaction and not 90 transactions, you still have just as many moving parts.
Mike: Oh man, if not more and it’s all-
David: The reward should be pretty good too.
Mike: And it’s all on one day which makes it- again, it’s just so much more stress. It just reminds me of when I was a new wholesaler. I mean Dave, I imagine you had the same thing is it’s very stressful, it’s like oh man, what if the buyer doesn’t close? Oh man, what if this? What if that? Like, there’s so much stress involved and you’ve committed so- again, it just- it really raises the stakes, it’s one of those things where I think we say it a lot is you’ve got to get out of your comfort zone like you have to live in that- out of your comfort zone area.
Mike: And this is it for us.
David: This is it.
Mike: Like this is it for me, I am not comfortable with this dollar amount, taking it down on my own but again, it’s you know, it is going to be profitable for us so yeah it’s-
David: Yeah, we’ll have it hopefully closed this week, the end of this week and then again, within 1-2 more, we’ll have the entire thing sold off so essentially we’re wholesaling, that’s the coolest part. Even though we’re having to buy and hold for a couple days or weeks, a part of this package, we’re still wholesaling it. Now, this isn’t one of those type of wholesales where, you know, it’s none of your own money, we are putting some of our money up to secure the transaction but essentially though, you know, we don’t have any exit- we don’t have the goal of our exit being to rent anymore to flip them you know via fixing them up. Now, we can, we could.
Mike: Yeah, that’s a contingency plan.
David: That’s a contingency plan. That’s right.
Mike: Again, if the buyer ends up not closing on the second half of it, that is a possibility and again we’re looking to buy so you know. Again, it’s Illinois so we’re not really that excited about buying and holding there but we’ll do it. I mean a 100% we’ll do it, you know, I mean honestly that would be- that’s be great. I mean we’ve marked our acquisitions for the year then at that point.
David: Yeah, yeah so there’s really- even if that we’re to happen, it’s not- this is not going to be the end of the world but the goal, right? would be to buy and sell and pay all of our lenders back and cancel all the insurance policies that we needed to get in place for you know, one to two weeks, pay out all of the commission’s and everything else and walk away with over six figures of profit. So that’s kind of the goal and, you know, once we get this done and-
Mike: We’ll give out all-
David: -it’s behind us. Yeah, we’ll give out all the details.
Mike: All the details, for sure.
David: Go through all the steps and make a ton of case studies on cuz it’ll definitely be a good learning experience and lots of gold nuggets in there for you.
Mike: Man, we learned- I learned a lot.
David: I learned a ton on this deal.
Mike: Yeah. It’s very, very interesting. So that’s really working in our business and again I- I think that it has occupied quite a bit of our brainpower, our time collectively, we’ve both been in on it, even our partner that we bought out has been involved in that one because this was a deal that, you know, we started back when he was in the business so he’s very, very involved in it as well and get a profit from it so it’s been yeah, it’s been very good but it has taken a lot of mental energy just this one deal, even though it is such a big one and like I said: on top of that, we’re moving on top of that. What else man?
David: There’s never a good time to move, right?
Mike: Yeah, it just isn’t so and- what was it? I think Mike Z was saying: moving your business accounts for approximately two weeks of downtime, like or the equivalent of it or I don’t know remember what it was, it was like 80 hours or something like that and I believe it. I mean, we’ve got- I mean how many different LLC’s that we’re going to come in and have to change mailing addresses on, with the city.
David: The state.
Mike: The state. Then every property we own, we need to send the recorder information, say hey, we’ve moved.
David: For tax records.
Mike: For tax records. All of our bank accounts, we have to change. Our brokerage, we have to notify the-
David: All of the utilities that we would have in our name and sometimes we’re forced to.
David: Definitely with trash and water on multis.
Mike: I mean there’s so many things that yeah, that just go into moving and we’re just moving up one flight of stairs.
Mike: It’s crazy.
David: Good news is that we can monitor what comes downstairs for a couple weeks.
Mike: Yeah, we’ll set a mailbox out there and hopefully the mail lady will bring it up.
David: Yeah, it’s taken two full weeks, roughly 80 hours is not, you know, an exaggeration. It’s going to take every bit of that to move that all over, but the move was good. I mean we basically cut our rent in half, we had a lot of extra space that we really didn’t need, you know and with us being in the age of covid, I hate saying that, but it’s kinda the truth man. The age of coronavirus, a lot of people are downsizing completely and just doing everything virtual but when you’re running a business like we are that has a lot of moving parts, we’re constantly buying rentals you know we’re rehabbing properties, we’re working with bankers, we’re wholesaling, we’re doing tons of marketing. You got to just have a place to meet and to have your guys come get their paychecks from, of course a place to record.
Mike: I think it’s also a personal preference too. Like Dave we-
David: Yeah, I don’t like working from my house.
Mike: We could operate entirely remote.
David: We could.
Mike: We absolutely could.
David: I would not prefer that though.
Mike: Yeah again, I think it’s one of those things where I don’t want to, like I like having the physical location to come to. It’s easier to separate work and home which again I think a lot of people struggle with in the age of covid and even prior to that, the telecommuting, you know, the evolution to people working from home, it definitely interferes with your home life when you have that workstation setup that has full office capabilities so it’s not-
David: Just playing with my camera here, don’t worry about me.
Mike: Which camera are we on? Are we on the right one?
David: Yeah, we’re on the right one. Just testing some different stuff.
Mike: Yeah so it’s just very, very interesting. I’m very happy that we have the office space. I’m excited because we’re kind of getting a lot of new stuff to making it you know more uniform, just kind of more what we wanted. Everybody’s got the same sit-stand desk now, everybody’s got-
David: You know, one of the good things about moving which there’s not very many, but one of the good things that I am looking forward to is the you know, it kind of forces you to go through all the stuff you have and really decide you know, is this going to help me and my business? Is this going to help me you know get in front of more sellers? Is this going to help me stay more organized or is this just trash? Like should I just purge all of this stuff? You know, humans love to acquire stuff, that’s why the storage space is such a great thriving space that Mike and I are trying to get into, right? We’d love to buy some storage units. People love their stuff so this is a great opportunity for us as we’re moving to kind of look at everything and just really you know say hey is this something I’m going to use? Is it going to help me? Is it going to value me? Is it gonna benefit me or is it just going to be another trinket that I’m going to have to clean and dust and worry about, you know? So our goal with moving, you know, upstairs was you know, let’s try to get rid of like half, if not two thirds of just all this stuff because-
Mike: You know what’s funny?
David: – the office we had downstairs, we were there for 5 years, right? 4 and 1/2? Call it 5, we were there for 5 years so you know, you just acquire stuff and when you come back from a property, you may have grabbed something or maybe you have this thing or widget or just lots of stuff. So the ability to just go through and just you know, kind of say hey, I don’t need most of this, let’s either donate it or throw it, toss it, whatever.
Mike: Yeah, I love that, man. I am very not attached to things like so much so that I’m fine getting rid of most things. I’m not saying I’m above it, I a hundred percent, like when something is useful, I have a very tough time getting rid of it.
Mike: So I just bought us a couple new office chairs, well I just brought the old one up. Why? I don’t know, it still works you know like I’m not ready to get rid of it per se, but where am I going with that Dave? I don’t know. What I was going to say is all your stuff is trash, I can throw it away in a heartbeat. That was basically what I was getting at is that it’s easier to throw someone else’s stuff away and I was gonna talk about my wife and she has a lot of stuff and yeah, it’s just other people stuff, very easy to get rid of.
David: It is.
Mike: Very easy to get rid of other people’s stuff.
David: It is, it is. But you know, one of the things that I think one of the lessons that we could, you know, give all the listeners and the viewers is Mike and I have been in business together for about 5 years and we’ve had great success. One of the things that that we and this is something that we’ve done several times is we have gone down the rabbit hole of, you know, doing this or learning that and we’ve stopped our marketing. Now we haven’t done this probably for at least a year, maybe a year-and-a-half?
Mike: We’ve been doing pretty good.
David: Which is great, right? But if you get, you know, consumed in one big deal or you have to move your office or something in your life happens, right? You know, to where you don’t have as much time, don’t forget the number one thing that everybody in our shoes, you know, no matter if you’re a wholesaler, if you’re a fix and flipper, if your landlord, whatever, right? Is you have to keep that marketing going. Do not let that ball hit the ground, right? Keep it going. Keep juggling that ball by all means, because if you don’t have leads, you don’t really have anything, right? This business consists of leads, that’s really what it all comes down to and, you know, people often say well, you know, there’s always going to be houses for sale, well that’s so true but finding the motivated sellers, that’s the hard part, right? So keep that marketing going. If you’re also going through, you know, something with covid related or you’re moving or you’re again consumed on some big project, don’t forget, make the time in the week and it could- it may only take an hour or two but make the time, make it a priority to keep your marketing going out the door and some people that may be as simple as just writing a check to pay for the billboard of the radio, the direct mail, you know, it could be writing a check to your virtual assistants so they can help you, it may be allocating, you know, 10, 15, maybe 20 hours a week so you can do these activities like the cold calling or the cold texting or the driving for dollars but the most important thing guys to take away from this episode is you know, life is going to throw curveballs at you, you’re going to get busy. Sometimes it’s important to work on the business, right? But do not stop working in the business because when you do and you realize that you don’t have any leads and you’re getting ready to sell your two rehabs or whatever you’re doing, you know, you may be behind the curve. You may have to wait another month before enough leads come in that equate to a deal. So don’t stop your marketing, that is the lesson. Anything you want to add on that Mike?
Mike: Yeah, it’s good man. I think that’s very important and it’s tough, it really is tough. I mean again, we struggle with it. It is a balancing that working on the business and working in the business so make sure you again, get a consistent plan to make sure you get marketing out the door. I mean, whatever it takes for you to put that as priority number one, do it.
David: Do it.
Mike: I mean, I think the Dave and I, we’ve had calendars, we’ve had different things and I’m not really even sure why but we have. I mean Dave you’ve been really, really consistent for the last year. I don’t know what’s changed, but we’re really crushing it and I would say good job man.
David: Yeah, thanks, thanks.
Mike: I’m really happy to partner with you.
David: You know I just- I’m really just focused on doing marketing every single day, even if that means that I can only, you know, get 20 minutes of it done today, I just try to make that my number one priority when I walk in the door is you know, what kind of marketing can we get out the door? And then from there, it’s what new leads have come in that we can look at? And then from there, it’s what follow-ups do we need to make so we can continue buying deals? Now when I say follow-ups, it’s not just following up with the seller that you called once or twice that’s- that you can’t get ahold of. It’s following up with everything, follow up is such a broad statement, right? So, I want you to follow up with that person that you can’t get ahold of, absolutely follow up with them. Follow up with the contracts and the offers that you’ve sent recently. Did they get them? Have they reviewed them? Do they have any questions? You know, where do we go from here? Follow up with your best buyers in your buyers list constantly, you know, follow up with them. Ask them what they’re looking for. You know what is the easiest way to wholesale a deal? Is to have a buyer already lined up before you even find a deal because now you can you can zero in your marketing to what they want. If they’re only looking for four families in this one ZIP code, that’s so incredibly easy to just start marketing to those sellers now, right? So follow up with your buyers list, continuously follow up with the title company especially if you have deals that are closing soon. You know, do they have all of your operating agreement and LLC docs? Do they need anything from the seller? Are they able to get a hold of the seller? Are they able to get ahold of the buyer? Step in and help them, right? So follow up is really just kind of keeping your hand on the pulse of the business, right? And making sure that people know that you A) buy houses and B) that you can close. So the follow up part is the most, you know, is probably the most time-consuming part of the process but it’s impossible to follow up with sellers if you don’t already have the leads and that’s where the marketing comes in guys. So lesson today is find some time every single day, even if it’s 10 or 20 minutes, to do some marketing or review the marketing that your team or anybody that you may have hired is doing for you and it’s that simple.
Mike: Dave, it’s almost like we should have wrote a book on this.
David: We did I think.
Mike: Oh yeah, that’s right, we did.
David: That’s right.
Mike: So it’s kind of the three pillars is what I’m talking about.
David: Yeah, it really is.
Mike: Guys, check out the discountpropertyinvestor.com website. We are actually giving away that book for free still to this day. You can download a free copy of it, read it on there or you check it out on Amazon. Again, a couple bucks will buy you that one, very inexpensive. It’s a very quick read but it goes into what the most important things are in wholesaling and yeah, so check that one out, but register on the website, we got a ton of stuff on there as well. In addition to the free book, we got free courses, everything you need to get started in wholesaling real estate.
David: That’s right. discountpropertyinvestor.com, check it out. Guys, don’t forget, keep the consistency in your marketing, it’s literally the number one thing that is important and you know, whenever we- we know immediately when our consistency drops because our lead volume drops and guess what else drops? The number of offers we’re making, the number of contracts we get accepted, the number of closed deals. I mean, it all trickles down. So marketing, marketing, marketing, I cannot stress that enough and once we get our big deal closed and we can relieve some of this stress off of our shoulders guys-
Mike: Ooh, can’t wait.
David: We’re going to come back-
Mike: Can’t wait.
David: -and we’re going to do another episode and we are going to talk all about the details of that deal and talk about the multiple six-figure wholesale profit that we should have done later this week or early next. Awesome. Thanks for listening guys, signing off. Until next time.
Thanks for listening to the discount property investor podcast. If you enjoyed this episode, please like, share, and subscribe to help us reach a wider audience to jump-start your real estate investing career, visit freewholesalecourse.com- the most complete free course on wholesaling real estate ever. We would also appreciate it if you left us a review on iTunes or Stitcher. Thank you in advance for your support and remember you make your money when you buy, you get paid when you sell. Now let’s go build some wealth.
Thanks for Listening
For A Wholesale Step by Step + Simple Systems check out the FREE Wholesale Blueprint: freewholesaleblueprint.com
As always If you liked what you heard please help us grow by adding a review. Your reviews help us rank higher and reach more people. Thank you! Talk to you soon.