Posted on: March 04, 2022
WI 900 | Rental Properties

 

Perhaps you’re considering venturing into the world of real estate yourself, and you don’t know how to get started because it can get overwhelming sometimes. Try becoming a rental property owner! There’s little to no money involved; it builds up cash flow and is a great way to increase your wealth. And now might be a good time to explore the opportunity because homeownership rates are at their LOWEST level.

If you’re still hesitant, don’t worry because our guest for this episode will break down the benefits for you. Today, we are joined by the newest coach of Wholesaling Inc. as he talks about everything that you need to know in doing rentals! Learn how he mastered the BRRRR strategy and leveraged his way up by listening to this session.

From House Hacking to Flipping Over 700 Houses to Owning Almost 100 Rentals

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The team at REVA will help you find the perfect VA with the right set of skills to help grow your business. For a limited time, just for scheduling your discovery call, you will receive a free gift. I’m not going to tell you what it is. You will have to go to the page to find out but trust me, it will be worth your time. Again, head over to WholesalingInc.com/reva and schedule your free, no-obligation discovery call and receive a free gift for scheduling the call. That is a pretty good deal. Good luck and let’s get into this episode.

I have an amazing episode for you. We are introducing a brand-new Wholesaling Inc coach. In Wholesaling Inc, we pride ourselves on students first. If this decision does not help the student, we do not make it. We do not go through with it. We have found one of the most amazing coaches to bring on to our Wholesaling Inc community or our tribe of coaches to help you win, do more deals, find that first deal, get out of the bondage and allow you to live the American dream. Freedom is what has provided me so much with my land business.

I’m going to introduce you to a new coach. He has the student-first mentality. He has got the gift of gab, got so much energy, and most importantly, the heart to see others succeed and win in what they are doing. We are going to talk about how you can change your life by acquiring one rental a year or maybe one rental a month and putting this on a hyper-scale. We are going to talk about these 5 or 6 reasons why it is an absolute no-brainer to buy a rental. I hope you enjoy this episode. Let’s jump right in.

I have got the newest coach of Wholesaling Inc. This guy is a powerhouse. He has flipped over 700 houses. He owns 80 something rentals. He probably owns more than that now. Let me introduce you to Double D, David Dodge. How is it going?

I’m doing awesome. Thank you so much for having me. I’m excited to have this opportunity to teach and share. I am thrilled.

It is my pleasure. I’m excited to be able to interview you because you interviewed me on your awesome show. We’ve finally got you pulled over to the Wholesaling Inc world. It has been a long time coming. You bring in a lot of enthusiasm. You are going to be amazing for our students because here at Wholesaling Inc, we are student-first, and I do not even have to say it because our audience knows it. Let’s bring the value in this episode, talk about your course, and what you are doing.

I can’t even relate to flipping 700 homes and owning 80 rental properties. I’m the land guy, and why do I love land? It is because it is super simple. It gave me financial freedom, time freedom, and geography freedom. It released me from the bondage of being in the military and having a W-2 job but when I hear 80 plus rentals, and as I said, it is probably more than that, and 700 houses, it seems like an entire small Army could accomplish that. First, I want to know about your background, where you come from, and why the heck did you flip 700 houses and own 80 rentals. Let’s start from where did David Dodge come from?

I will try to keep it short because I can talk and talk. I started in this business many years ago. I was in college. I started when I was twenty years old. Like most people in college, I didn’t have any money. I started with house hacking. To be honest, I did it wrong for the first ten years but I was still buying rental properties, so that is still a huge win, of course. Why do I say that I did it wrong? Here’s why. I was buying properties off the MLS or via an agent in full retail. There is nothing wrong with MLS or agents but let’s avoid paying full retail. That is the whole reason that we can make money in real estate. The easy way is to buy discounted properties.

I started doing that in college. I was house hacking. I didn’t have any money as I mentioned. I went out and got a conventional loan that was 80%, which required me to have 20% down. The first house I bought was $150,000 and 20% of $150,000 is $30,000. I didn’t have that, so I borrowed it from my friends, family, grandparents, and paid them back over the course of a year or two, which was great but I acquired a rental and started house hacking with that. I did that three times while I was in school.

Over the next seven years, I had various jobs in sales, marketing, and entrepreneurship having small businesses, doing random things here and there. I was buying a house a year. At the end of the 10-year period, I had acquired 12 rental properties. My goal is to help as many people as I can acquire rentals but not take 10 years to get to 12. You can pick up 10 or 12 in the first year or two, or sooner even. That is how I’ve got my start.

When it comes to wholesaling, at the end of the day, we find somebody that has a distressed property or maybe a distressing situation in their life and offer to help them by giving them convenience.

About a few years ago, I went full-time in this business and learned about wholesaling. Anybody who is reading this, you are in the right place. You can get discounted properties direct from the seller in exchange for convenience. That is all we do at the end of the day when it comes to wholesaling. We find somebody that has a distressed property or maybe a distressing situation in their life and we offer to help them by giving them convenience.

That is it but here is the kicker. We are always demanding a discount. If we are going to give somebody convenience, and convenience comes in a lot of shapes and sizes but typically speaking, it is a cash offer. It is buying the property or the land as is. We are buying it quickly. That is a relative term. Traditionally speaking, buying and selling a house takes you 2 to 3 months and we can do it in 2 to 3 weeks, so it is very quick, and that is what I did when I learned about wholesaling.

Over the last couple of years, we flipped over 700 properties. Wholesaling is great. I love it. I will never stop wholesaling. However, I love rental properties even more, and the reason is that wholesaling is a transactional business. Once you do a deal, you get paid. In your case, you can even help and teach people how to keep getting paid, which is amazing but again, you are starting over every time that you do a wholesale deal.

With rental properties, you get checks forever. You get paid every month. You can get paid while you are sleeping, on vacation, and so forth. Over the last couple of years, I have dug deep into buying rental properties and I have mastered the BRRRR method. The best thing about the BRRRR method is it allows you to acquire rental properties with little to none of your own money. Over the last few years, I have done over 200 of these BRRRR deals. When I first started, I was still leaving in $10,000, $12,000 or $15,000 into a property, which is still better than $30,000 with the first 10 or 12 I did, but now, I have mastered this to where I can do this with little to none of my own money.

Here is the cool part. Sometimes, I will do this and I will walk with money. I can acquire a rental property, fix it up, get it rented, and then, I can pay back the private or hard money lenders that I’m borrowing from when I go to my refi and walk away with $5,000 or $10,000. I did one not a long time ago.

It was a commercial building, a little strip center. We bought it and rehabbed it a little bit. It was already rented but we went in and updated it a little bit. We didn’t need to get it rented because it was already rented, then we refinanced it and I walked with $53,000, so I acquired an asset that is cashflowing and I’ve got paid. You can do this in a lot of different ways but at the end of the day, it is all about rental properties.

You piqued every reader’s attention right there. That has been my problem with the BRRRR method. Please explain what the heck does BRRRR method means. When I think of the BRRRR method, I’m thinking I’m going to get a sand spur in my foot or something. Please explain that for anybody that does not know what the BRRRR method is.

BRRRR in itself is an acronym. The B stands for Buy but really, it is buy at a discount. You do not want to be like Dave in his first ten years. Instead, do what Dave does now, which I love helping and teaching people but you’ve got to buy these properties at discounts or direct to seller. It is going to make the entire process much easier and it will prevent you from leaving $10,000, $15,000 or $30,000 in it in the end.

That was my BRRRR method failure. I bought my office building. I thought I was going to do the whole BRRRR but then I’ve got stuck and there was $40,000 left in the building. I was thinking I was getting it back, and I didn’t but I didn’t buy it at a deep enough discount.

If you bought it at a discount, you would have, though.

Keep going.

No problem. The first letter B is Buy at a discount, and then there are four Rs. The first R would be to Rehab or Renovate. It is either one of those words. It is the same thing and same meaning but you are going to update the property via the rehab. The next R is to Rent it out or hire a management company to do it for you. I have done it both ways. For the first ten years, I did my own property management.

Now, I just want to go buy 5, 10 or 15 houses a month, and trying to buy or acquire and manage the rehabs on top of the property management, is difficult to do both, so I hire a manager and they help me with all of that. The next R is to go to a bank. It could be a local bank or a credit union. There are a couple of people that I’m working with now that are on the national level, which is really helpful if you do not live in the market that you are investing in. It doesn’t matter to them.

WI 900 | Rental Properties

Rental Properties: Convenience comes in a lot of shapes and sizes, but typically speaking, it is a cash offer. It is buying the property or the land as is.

 

It is important to those guys that can’t cashflow in their market, so you have that.

The third R is to Refinance the property. Here’s the thing. I didn’t even mention this but I do not use any of my own money. I borrow from private and hard money lenders 100%. I borrow the purchase, the rehab, and then I will typically borrow anywhere from $5,000 to $25,000 extra to help cover closing costs, holding costs, any overages that I may have on my rehab, and to put money in my pocket when I buy the property. I will borrow it all but then I go to the bank and refinance all of that back so that private or hard money lender gets all of their money back plus interest. They love it. They want to keep lending. It is creating multiple wins.

The fourth and final R is Repeat. It is just a skill. Here is the coolest part about the BRRRR method. You do not have to do one at a time. I have, at any given time, 10 to 15 or sometimes even more properties going through this method. They are somewhere within the process. I’m either in the process of buying them, rehabbing, and renovating them or the property management might be leasing them, or they may be rented already and just waiting to be refinanced. It is very scalable.

Again, I have bought about 200 of these. I wish I would have kept every one of them but we often will sell them turnkey, and there is a reason for that. One, we have to fund our operations. Sometimes, we will sell them off to make some quick cash but other times, we might do what is called portfolio rebalancing. As I grow as an investor and a landlord, there might be certain parts of town that degrading where it might not be the best idea to be in that area long-term. For a couple of years, no problem. That is why sometimes we will sell properties off as we buy new ones to make sure that the portfolio is constantly heading in an upward trending direction.

Let me play devil’s advocate here. Let me talk about the reader saying, “This sounds great but I have got a full-time job. I’m in the military. I have got three children and a wife. I also work twelve-hour days. How do I get started in doing this? You have done 200 of these. I just want to do one. How do I get started?” I know the answer but I want to know what you have to say.

Anybody can do this. One of my favorite things is whenever I can help my students achieve financial freedom. That is the goal and my passion. Buying rentals is awesome but it is just a vehicle to create income on autopilot so you can have financial freedom. I always tell my students, “If you have a job, do not quit your job. Not yet at least.

Let’s get you some rentals first, and then you can go do that,” because having that W-2 income is going to be very important and helpful to get the loan on the refi but people that have 40-hour plus jobs or just jobs and a family and children may not have a ton of time. The great thing is you can use leverage in this business. Leverage is one of my favorite words because it allows you to use other people to achieve this.

I would imagine you, of course, but most of the readers have heard of OPM, Other People’s Money. That is a way of leveraging resources or capital to get into these properties but you can also leverage local wholesalers to find the deals. You can then leverage general contractors to do the renovations and the rehabs. You can also leverage property management companies to get them rented, collect the rent, and deal with the tenants.

You can leverage the banks to refinance and pay everybody back to where you are in this all with none of your own money, ideally but even if you leave a little in, so what? Last but not least, you can leverage a team and/or virtual assistants to help with all the follow-up, lead generation, and marketing if you are doing that or whatever it may be to where you can free up your time. Anybody can do this. It does not require you to even be that smart because I assure you, I am not the smartest guy but I know that with this strategy, you are almost guaranteeing yourself to create wealth if you are in it long enough. This is a long-term game. This is a long-term play.

The average rental property that we own cashflows about $350 a month. Some of them are only $200 or $250. Some of them are $700 or $800 a month. I have a couple that is about $800 a month, and most of mine are just single-family rentals. I’m starting to scale more into smaller apartment complexes as I mature as an investor. The one that we bought is going to cashflow about $2,500 a month.

How many homes do you have to have a monopoly for that hotel?

That is four houses for a hotel but to answer your question without getting too sidetracked, anybody can do this. You do not necessarily have to jump in and do 10 or 15 at a time like me. You can start with 1, 2 or 3 but here is the coolest part as I had mentioned earlier. I love helping people achieve financial freedom. Rental properties are the easiest way to do it in my opinion because of the ability to leverage all these other people to help you achieve that result, and you can work backward. How much does it cost you to live? What’s the minimum do you need to live?

In the military, it is $6,000 a month.

Buying rentals is awesome. It is a vehicle to create income on autopilot so you can have financial freedom.

That is perfect. We’ve got a number. Here’s the cool thing. There are lenders that I can connect my students with that will do 30-year fixed loans to LLCs. You are capped on a 30-year loan typically or up to about ten in your personal name, but now, you can get these loans in your LLC, which is awesome. $6,000 divided by $350 is $17.14, we are going to round down for simple math. You only need to get seventeen rentals to achieve the same amount of income that you need to live.

All you need to be financially free is to match the amount of money that requires your minimum. $6,000 might be a lot to some of these readers. Some of these readers might only have $2,000 or $3,000 a month to meet their minimums. At that point, we only need to get 5, 6 or 7 rentals, and then you can quit your job or maybe you love your job and you can choose to work your job on your schedule.

I want to go back a couple of minutes. There is so much I want to break down. Honestly, I’m thinking I want to go out and get some of this leverage you keep talking about. I’m thinking, “I could do seventeen houses quickly.” We will talk about this but I have got to buy houses because we make so much darn money in land and there is nothing to depreciate. There is bonus depreciation, cost segregation, and whatever you are familiar with but buying houses in my apartment complex and the office that we have has helped me almost cut my tax bill almost down to nothing. We’ve got to get into that.

I didn’t even mention that. There are about six things that I love about rentals. There is probably 40 or 50, to be honest, with you but the top six, I covered this in fine detail with Chris Arnold on a previous episode but we will dive in really quickly to it. Number one is cashflow. Each of these rentals that we buy pays you every month, so you are making money by owning these properties.

Number two is good debt. This is debt that somebody else pays off. Wouldn’t it be cool if you could go buy a car, go to Nordstrom and get a new outfit or maybe buy a toy, and then somebody else paid it off for you? That doesn’t typically happen but with rentals, it does. It is good debt. It is not bad debt. Leverage is number three, and I mentioned how you can use leverage in every step of this process.

Number four is appreciation. Appreciation, to me, is icing on the cake. I do not rely on it. I do not bet on appreciation. It is not something that I’m gambling on but over a long enough time, things are going to cost more. It is inflation. Inflation matters when it comes to the price of goods and services, and having a property is just that.

Number five is probably one of my favorites behind leverage. It is tax benefits. Every one of these properties that you own, the government wants to thank and reward you for offering housing to your fellow Americans. It’s because of that, they let you depreciate that house, which means that you get to have a phantom expense on your taxes, so you get to offset your income with that depreciation.

That is a powerful point. You cannot move past it. Let’s say I’m a doctor and that I make $200,000 a year. Let’s keep it simple. How much is the government taking from me every year? For every $100,000 I make, they probably take about $40,000. They are probably taxing that doctor $80,0000 a year on $200,000 a month.

Let me enlighten you really quickly. This is good, bad, and scary at the same time. That 40% is what the government takes when he or she gets paid. That is the income tax but that is not where taxes stop, so then, you go out and buy a house, a car, a boat, a plane or anything like that. You are going to have an annual cost or tax to own it, and then you go to the grocery store to buy milk, eggs or the gas pump to buy gas and you are getting taxed when you spend your money. You are getting taxed when you earn it, when you spend it, and when you buy certain items annually. 55% to 60% of your money goes to Uncle Sam.

That is the powerful part about owning real estate. Let’s say that if I can save that 40% that I’m paying in income tax and all these things. If I bought a house that I let someone live in for free and they paid me whatever the mortgage was, I did that enough. I would get a raise of almost $80,000 a year.

You reduce your taxes but also, someone else is paying down the debt, so over time, that property is going to pay itself off. The benefits are wild. It is crazy. Last but not least, number six is wealth creation. This is another thing and it goes hand in hand with the taxes. This is a great example. Let’s say this particular doctor makes $200,000 a year, and that is all income so all of that is taxable but let’s say that I go out and I can buy a rental property that has $25,000 worth of equity in it and I buy ten of those.

That is $250,000 of wealth that I created. You do not pay tax when you create wealth. You only pay tax when you earn income or create income. That is one of my favorite things as well. All of these things are awesome but if you can create $100,000, $200,000 or $300,000 a year in equity or wealth, you do not pay $1 in taxes on that. You only pay tax on your income.

Let me add a 7th one because I’m going to make your presentation even longer. I’m ready to take your course, by the way, so I hope there is a coach’s discount. I’m going to take this BRRRR course because I’m more fired up than ever about rental properties. Since 1977, rent prices have steadily gone up. I do not care what the housing market is doing. It can be up, down or sideways. You name it.

WI 900 | Rental Properties

Rental Properties: Wholesaling is a transactional business. Once you do a deal, you get paid and start over every time. With rental properties, you can get paid while you are sleeping, on vacation, and so forth.

 

In my town in Florida, rental prices rents have gone up by 52%. There is a 7th one right there. You said things cost more every year because of inflation or whatever it is. Your income is going to go up but your payment is going to say the same because you told me you do 30-year fixed mortgages. Your debt is always going to stay the same and your income can only go up.

Your income comes up so you are going to create more cashflow but also, the amount that you owe on the property is fixed. Look at it like this. Over time, it gets easier to pay because you are making more money but the amount that you have to pay every month stays the same.

Rents get paid down and payments stay the same.

You nailed it. It is my passion to do the BRRRR method. It is buying rental properties. The BRRRR method is just a strategy that we use to do it at scale but also acquire properties with little to none of my own money. As I said in the beginning, I was leaving $10,000, $12,000 or maybe $15,000 in a property, and that was whenever I started doing BRRRR.

Prior to that, I was leaving $30,000 in a property, but now, I have mastered this technique and I want to save everybody the hassle of doing it wrong for ten years or even doing it right as I did for the first year or two. Jump right to where I’m at now where you can do this with little to none of your own money, and in some cases, walk away from acquiring an asset but also getting paid to do it. How cool is that?

It is a no-brainer. If you are getting any value out of this episode or maybe you are getting an energy boost from Double D here and his passion, share this episode with somebody that will benefit from it. It can be your brother, sister, a friend at work, or whoever might benefit from it. Also, do me an even better favor. The algorithm loves when you rate and review the show, whether you tune in to it on Apple, Spotify or wherever you tune in to your favorite shows. Please rate us and give us a five-star review.

That is going to help us out as well and allow David and me to help more people get out of the bondage that we have created for our lives. We go to work, so we can fund our lifestyles but if you acquired doing what David has done, from one a year, you will be a multimillionaire by the time you retire because you have got appreciation. I do not care if you bank on that or not. It happens. You’ve got your mortgage paid down. You’ve got tax benefits. Your income is only going to go up. David, my last question is how can people find out more about you?

Head on over to the WholesalingInc.com/rentals. You can learn more about the program. You can book a call with our team and learn more about how we can help you start buying properties using the BRRRR method if you like but if you just want to buy some rentals too, we can help you with that. The goal would be to help you achieve financial freedom. That is what I have the biggest passion for. Rentals are amazing, and that is the vehicle but the goal is financial freedom.

Share this episode on your Instagram and tag us, #WholesalingInc or #Rentals and share this because I guarantee you, someone needs this. I think about my father who has done manual labor his entire life. If he would have just started purchasing rentals at twenty years old like David Dodge, my dad would no longer be working. There is someone out there that needs this, and you read it. He has done all these deals. He bought the twelve rentals by the time he was 30. I’m seeing about 68 more rentals acquired in the last couple of years, so he has put this on overdrive.

In 2021 alone, we bought over 50. Sometimes, we will sell them off to rebalance the portfolio but you can scale this super-fast.

You obviously have, number one, cashflow. Number two, is good debt that someone else is paying off. Number three is leverage. You are not just leveraging your lender, your contractor, your network, and your team but those people are also leveraging you because you are bringing them all this business. They need you. You are a valuable person in their ecosystem.

Number four is appreciation. That is where the house grows in value. Number five is you get to use what the government allowed us to use. They used to provide housing in Detroit, Michigan. Look how well that went for them, so now, they incentivize guys like David Dodge to provide good, safe, and clean housing for families. I didn’t write down number six. What was it?

It is wealth creation. You are not taxed on your wealth. You are only taxed on your income, so make it your goal. This may sound crazy but of course, I need income, and I love income but my goal isn’t to increase my income. It is to increase my wealth because the wealth isn’t taxed, owning rentals and using the BRRRR method has made me a millionaire. It can make every one of the readers win too if they just start now. Do not wait to buy real estate. Buy real estate and wait. We have all read it. That is what you’ve got to do.

Thank you so much for jumping on here with me. I am so happy to see you launch with Wholesaling Inc. The BRRRR method mastery is going to change so many lives, and it doesn’t matter where you are starting out. You can start doing this now. God bless. Thanks for joining me.

 

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About Brent Bowers

863Brent Bowers is an investor and coach with a focus on buying and selling vacant land. As an Army Officer with over 8 years of service, Brent was spending a great deal of time away from his family, and he knew he needed to make some changes in order to be more present with his wife and children. In a short period of time, Brent was able to expand his business,  hire a team, and (most importantly) spend quality time with his family while still working hard and helping others.

While Brent invests in many different types of real estate, his favorite investment strategy deals with buying and selling vacant land, and he enjoys sharing his expertise in this area with his coaching clients. Brent chooses to live his life based on Bob Burg’s quote, “Your influence is determined by how abundantly you place other people’s interests first.” He is passionate about helping other people find success in real estate investing, particularly in land investments.

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