Today, David Dodge is going to teach you more about the three money levels of wholesaling. Marketing and growing in the beginning stages can be challenging, so we’re focused on helping you get results fast. So tune in and make sure you take notes!
- The money elements of wholesaling will drive your business towards success.
- Start by marketing to sellers as often as possible.
- Getting your LLC or other setup elements isn’t as important as marketing early on,
- Make offers and track your progress.
- Follow up with your prospects. That’s how deals get done.
Three Pillars Of Beginner Wholesaling With David Dodge
Three Pillars Of Wholesaling
In this episode, we are going to talk about the three pillars of wholesaling and why you should start there. We all want financial freedom and security. Although, a very few of us have been taught how to build long-term wealth while also earning an income. I am here to teach you exactly how you can increase your income and build wealth fast. Rentals are a foolproof way of achieving these goals while also allowing you to pay fewer taxes, invest more of your hard-earned money and ensure a financially secure future for you and your family.
Let’s learn how to work smarter, not harder and how to take control of our finances and make our money work for us. If you are here, you have likely accepted the fact that nobody can become rich and stay wealthy by just working and trading time for money. It is time to shift your focus from short-term gains to long-term wealth creation. In this show, I will teach you how to build wealth and create cashflow all while paying less in taxes. Let’s get started.
I always refer to the 3 pillars of wholesaling as the 3 things that you need to constantly be doing in your business. These are essentially the three legs of a stool. If you remove 1 of these 3 things from your business, your business might grind to a halt or if you are new, it might not ever take off. All three of these things are equally important. Look at them as the three legs of a stool. You need all three of these things for your business to be successful.
Also, the 3 pillars of wholesaling refer to the 3 money-making activities when it comes to wholesaling in your wholesaling business. The activities that you want to focus on that are going to generate the highest return on your time invested are the things that I like to focus on. Let’s jump in quickly here. If you are unfamiliar with what wholesaling is, the simplest way for me to describe it is it is a simple business of flipping contracts.
You are buying or contracting properties at a great price, then turn around and sell those at a good price. You got to leave meat on the bone but you can make a spread. You can do so by finding people that have problems or problem properties. You can offer to help them and solve problems. You do so by buying their house at a discount in exchange for convenience. It is that simple. That is what wholesaling is. Do not over-complicate it if you are new.
The first pillar is marketing to sellers. That might seem obvious but that is the most important thing. A lot of people, when they get into this business, they want to go get an LLC, a business card, a logo, a catchy slogan, find a hard money lender and build a buyers list. They want to do all of these things. Those are all great things to do. You should do all of those things. However, those are not the first things you should do.
Pillar #1. Marketing To Sellers
Those things do not make you money per se. They make your business have a better brand or whatever it may be but you do not need all of these things to get started. A lot of people will get hung up on, “Will I do it in my name or an LLC?” That does not matter. At the end of the day, start doing something and that is marketing to motivated sellers. You need to be having conversations with sellers that have a problem that you can come in and offer convenience to them in exchange for a discount. That is it. Pillar number one is marketing to motivated sellers.
Do not overcomplicate this. There are hundreds of ways to market to motivated sellers hundreds. You can cold call, cold text, do bandit signs, send direct mail, do billboards, radio, television, networking and driving for dollars. The list goes on and on. You just got to start. That’s it. You cannot stop either. Look at it as a stool. If you remove one of these three pillars, the stool is going to fall. These are the money-making activities that are going to matter the most and move the needle. Marketing to sellers, start doing that right away if you are not already. If you are already doing it, keep doing it. It is the lifeblood of our business. You cannot stop marketing to sellers. If you are dabbling your toes in the water when it comes to marketing to sellers, you need to triple down.
Let’s learn how to work smarter, not harder. Let’s learn how to take control of our finances and make our money work for us.
Pillar #2. Making Offers Again
Pillar number two is making offers. It might seem obvious but that is the point. How many offers have you made in the last week? How about in the last month? If you are reading this episode and that number is 0, 1 or 2, you need to pump those numbers up. Those are rookie numbers. Making offers is how you get properties under contract to gain control. If you are wholesaling, go find a buyer, double close or assign and get paid.
If you are like me and you like to buy rental properties, then you got to get it under contract before you can do anything else. If you are looking to fix and flip, it’s the same thing. You have to have properties under contract if you intend to gain control and wholesale them or purchase them for whatever reason that you may want to do with them. Making offers is crucial.
When it comes to making offers, do not think that every offer you make has to be in writing. Start making verbal offers to people. I make people offers via text message. I will call them and leave an offer on their voicemail with what I could pay or the ballpark. I love emailing and sending written offers but do not let that be the thing that holds you back. I do not have a contract or the 5 or 10 minutes to fill it out.
Making a verbal offer is just as important. If they like that offer, go send them a written offer and make it even easier for them. Our business is all about convenience. That is what we do and what we exchange for discounts. It is that simple. Even make it eSign so it is easier for them to sign but at the end of the day, the number of offers you make directly correlates to the number of deals you are going to do.
Think about this for a second. I bought over 100 houses in 2021 and my team is sending 2 or 3 offers every single day. Do you think that would be possible if I was making two offers a month? It would not be possible. You have to be making lots and lots of offers. Some days on a good day, we will make 7, 10 or 12 offers.
Not every one of those offers people like but sometimes they say, “That is a good one. Send it over. We will sign it and send it back.” If you do not try, you will never get there. Start sending offers. Send them out like crazy. The more offers you send and make to people, the higher chance you are going to have to do business with them. The higher chance you have to do business with people means the more deals you are going to get. You know this. It is obvious.
Number one is marketing. Number two is making a ton of offers. Do not overthink the offer. Oftentimes, when I am making offers and I am on the fly, I will pull up a Zestimate, a number from Batch, Prop or any of the software that I love to use. I will make a spread offer of 50% to 60% or 60% to 70% of that number to get the ball rolling and see if we are in the ballpark or not.
If we are in the ballpark, then we will go back and use our MAO formula. We will determine what the real number looks like but we are not going to let that analysis paralysis, not knowing or being unsure stop us. We are going to go out and make a low offer and anchor low. We are typically always willing to pay more than our first offer but if you make a low offer and they accept it, it is icing on the cake.
Making offers is how you get properties under contract to gain control.
That only happens when you get an amazingly low-crazy offer that you would never expect to get accepted. If you do not make it, that will not happen. You have got to get out there and make lots and lots of offers. Do not overthink it. 50$, 60$ or 70% of a Zestimate. You can also use Realtor.com or any of these free sites to help determine a general understanding of what that property’s ballpark ARV is. Take half, send it over and see what they say. It is the easiest way to get going.
Pillar #3. Following Up Again
Pillar number three is following up. It may seem obvious but there are so many people out there that talk to an individual 1 or 2 times. That is it. They are done. They stop. You cannot stop. My system has leads that are several years old and we are closing some of those leads every month. It is crazy. From years ago, we do not stop following up unless 1 of 3 things happens. They sell it to somebody else and us. Hopefully, that is what happens or number three, they would politely tell us to stop and we will quit calling, texting or whatever it is that we are trying to reach these individuals.
This may even surprise you but the average deal that my business, my team and I do, typically takes 4 to 6 months from the time the lead comes in to the time that we are able to close on that deal. Brent is always talking about this. If you are new, you got to jump in and give it 3 or 4 months. You cannot stop. You got to get through that initial push. It is the same thing if you have been in the business for 15 or 18 years. You still have to follow up with all of your prospects. 4 to 6 months is the average time. That is data over about 7 years in my local market with over 700 transactions.
Every month and year that goes on, that number is getting skewed out a little bit because it is giving me the option and the ability to go close a deal that has been in my CRM for 5, 6 or 7 years. Do not stop following up. Follow-up might be one of the most important things. The only reason that I would say that with caution is that you cannot follow up if you do not do the marketing in the first place. The follow-up is impossible if you do not have leads in your system.
All three of these things are equally important. Following up is everything. If you stop after 1, 2 or 3 follow-ups, you are throwing money away on your marketing. The average deal that we close in 4 to 6 months has a minimum of 10 to 15 follow-ups minimum. That means that some of our leads will have 40 or 60. We have even seen leads that have come over that we have closed from years ago that have had 60 to 100 different times that we reached out via phone call, text message, email, following up and communicating back and forth with our motivated sellers. It takes lots of follow-ups. You got to follow up. You cannot stop and throw in the towel. You have to keep going.
Let’s recap the three pillars. Number one is marketing to motivated sellers. There are tons of ways to do it. Start doing it. If you are new and do not know what to do, if they say, “Yes, I will accept your low offer,” then go find another investor or wholesaler in your market and partner up. They will be more than happy to help you go make money on that deal.
Start the marketing. That is what everybody should do. Do not worry about your business name, logo, business card, the colors of this or that or your website, all things that you should do at some point in time. None of that matters if you do not have motivated seller leads coming in to have conversations with you. It is irrelevant. Do not even do that.
Pillar number two is making offers. What good is all of the marketing if you are not going to send offers or make verbal offers? We send offers via phone call, text message and email. I will mail them and hand-deliver them sometimes. Offers mean deals. If you do not make any offers or you are afraid to make offers, then you should either get good at it and embrace that you need to learn it or you should stop marketing altogether because you are throwing money away.
Following up is everything. If you stop after one, two, or three follow-ups, you’re throwing money away on your marketing.
I do not want you to stop marketing. I want you to get good at making offers. Get good at it. Embrace it. I love it whenever somebody says, “You are crazy,” for an offer that I have made them because that means that I have got a similar offer accepted down the road. I am not crazy but they think I am. I am going to keep doing what I am doing, which is hundreds of deals a year. Do not stop with those offers.
Number three, following up is incredibly important. 4 to 6 months is the average time that it takes my team to close a deal. It does not matter if it is a wholesale, a fix and flip, a rental, a BRRRR or creative finance. I am talking from the time the lead comes into my system and the time that we are able to wholesale it or close, fund and own that property. It’s a minimum of 15 or sometimes 20 follow-ups over those 4 to 6 months. It is not uncommon for us to close a deal that has 50 plus follow-ups on it. It is not abnormal at all. It is that important.
Think of these three things as not only money-making activities but also the three legs of a stool. They are that important to where if you remove 1 of these 3 things from your business or let’s say you are starting out and not doing all 3 of these things every day, not just sometimes but all the time, your business will come to a halt or it will never pick up off the ground if you are new. Marketing to sellers, making tons and tons of offers and following up like crazy. That is it. It is so simple.
Why Start With Wholesaling
Why should you start there? You know that I love rental properties and that is my passion but I have wholesaled hundreds of deals. Here’s the reason you should start with wholesaling and this is the same reason I essentially started with it. I was a landlord for ten years first but when I went full-time, I was like, “I want to do this wholesaling thing.” It allows you to get deals. Without deals, it is very difficult to make a great profit on a fix and flip, a great BRRRR deal or a rental that you can add to the portfolio with little to none of your money. You got to get good at finding deals, which means you need to get good at direct-to-seller marketing.
If you decide that you do not want to wholesale these deals that you come across, keep them. I have a saying in my office and I love using it, “We keep the best and wholesale the rest.” The best deals from our direct-to-seller marketing come in and we wholesale those deals that we do not like, the ones that do not meet our buybacks but the ones that come in from that marketing, we get to keep and add them to the rental portfolio, hopefully, using the BRRRR method where we do not have to have any of our money in it or we decide that we want to fix and flip it. Keep the best and wholesale the rest but you have to be doing the marketing, making offers and following up like crazy to get these deals.
It is simple. Start with the marketing and wholesaling mindset because it is going to get you on the phone with a lot of sellers and hopefully, out in the field meeting these sellers and building rapport, which is simple. Smile and make a friend. People want to do business with those that they know, like and trust. What better way to get somebody to know, like and trust you than to show up at their property, smile and be friendly? It is that easy. That is your entire sales course for the day. Be friendly and smile. People will like you and will want to do business with you. That is why you should start from there.
Those are the three pillars of wholesaling. They are the most important things that you should be doing and can be doing. It is been an absolute pleasure being your host. I hope that you have found a ton of value in this episode. If you are interested in creating wealth, buying rentals, using the BRRRR method and achieving both financial and time freedom in your life, go check out BRRRRMethodMastery.com.
Check out what the program is about and sign up for a call with our team if you want to get more information about our awesome community of investors. I look forward to working with you. Remember, you are capable of success and even more importantly, you are worthy of it. Thanks for reading.
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About David Dodge
David Dodge is a real estate coach, author, and investor with over 17 years of experience. David specializes in using the BRRRR Method to acquire Rental Properties with NONE of his own money and has taught others how to generate passive income using his systems. He’s also the co-author of the book “The Brrrr Method” and currently has over 90 properties in his rental portfolio with a goal to grow to over 200 properties in the next 24-36 months.