129. House Hacking to BRRRR to Multifamily with David Dodge

Hey, welcome back to the Average Joe Finances Podcast, everybody. I'm your host, Mike Cavaggioni and today's guest is David Dodge. Super excited to have him on here. He's gonna share his story about what he does as a real estate investor. So David, welcome to the show.

Hey Mike, thanks for having me, buddy. Much appreciated.

Yeah, absolutely. Hey, I wanna start this off the same way I start every episode, and that is, we wanna know more about you. So if you could, share your story. Yeah you can go into as much detail as you want but we wanna know about you and how you got started in real estate.

Yeah, you got it, Mike. Thanks for having me, man. So I am 37 years old and I started investing in real estate at the age of 20. So I've been at this for almost 18 years at this point. And for the most part, I had a professor in college that had a course. It was a finance 101. I was a personal financial planning type of a degree when I went to college. So I had to take a bunch of basic finance classes and one of my, one of my finance 1 0 1 classes, I had this professor and he gave us all Rich Dad Port Ed, first day of. And the class was basically based on Rich Dad, Poor Dad. It was so cool. It was amazing. At the age, this is, I was probably 19 or 20 at the time. I think I might have been 19. But anyway, we learned about passive income and all the things that Rich Dad Poor Dad teaches, and I was hooked ever since then. So at the age of 20, which, maybe that year, maybe the year after, I decided to buy my first property and I did a relatively simple strategy. That a lot of people do when they're starting out, and it's called house hacking. So I bought a house, it was a four bedroom house. I rented out three of the other rooms to some of my buddies when we were in college. And basically lived for free, Mike. It was, it was nice and easy, but I had to borrow $30,000 from my family to get into the deal, right? I paid full retail, got an agent, went to the MLS, got a property under contract, went to the bank and the bank said, Hey, we're gonna give you an 80% loan. It's $150,000 property. So I needed 30 grand. So I borrowed that money from my family and then I paid that money back over, a year or two of just working part-time jobs in college and some full-time jobs over the summer and having a lawn care business and just random little entrepreneural things. Long story short, not to bore everybody is over the next 10 years, I had various jobs. I had various entrepreneurial, businesses where I would sell products online or build websites for people or just do random things and I would use real estate as a place to park money. I've never really been that great at saving money, but I've been really good at paying debt. Really good. So what I would do is I would keep borrowing money or I would save money and I would do like I did and I did the house hacking three thing three times, I was in college. And then the next seven years, I had different businesses, I had different jobs, but I continued to buy essentially a house year and in fact, at the end of that 10 year period, I had 12 houses. Now I didn't have these houses paid off. I had 80% loans on all of them. I either had to save 30 grand rough or I had to borrow it and pay it back over a year or two's time. So as you can see, this is a very slow strategy. It's a very, unscalable strategy. It requires you to save 30 grand or have access to it, then go use that as your down payment to get a loan and I was written these properties out of self-manage them, managing them for the first seven to 10 years. And then Mike, I decided I wanted to go full time into real estate and I didn't want to be an agent or a broker cuz I didn't want to deal with showing people houses and whatnot. I'm actually part owner of a brokerage now. I'm not an agent or a broker still to this day, but my business partner is, and I own half the brokerage. But at the time, and I went full time, I didn't want to do any of that. I wanted to just be an investor and in fact, I would go to REITE Clubs. And I would meet people at these REITE Clubs that had the a hundred houses, 150 houses. I think I met a guy in the first six months of, wanting to be a full-time investor. So this is about seven, eight years ago, and he had 400 houses. And I'm thinking, man, it took me 10 years to get to 12. It's gonna take me 10 lifetimes, 20 lifetimes, 50 lifetime to get to 400 houses. How are these people doing this right? What are, what does this guy know that I don't know? And I literally sold the random businesses that I was running, quit any random jobs that I had, and I dove in and I read a bunch of books, listened to podcasts like this, very one we're listening to or today, and talking on today, and immerse myself in how to do real estate with little to no money, how to do real estate with little to no credit. And I stumbled across wholesaling and I learned that the first 12 houses that I had bought over that 10 year period I had paid full retail for. I knew that at the time, but I didn't really know much about motivated sellers and how to find deals and that they even existed. And again, I immersed myself in creative financing and wholesaling and I struggled for about three and a half months. And then I hired a coach and within two or three weeks I got a deal and I made I don't know, I wasn't much, maybe seven or eight grand on that deal. But then a week or two later, I got another deal and I made 12 grand on it, and then a week or two later I got another deal and I made like 10 or 11 grand on it and I basically made 30,000 bucks over the course of, maybe three months. Now this is post three months of struggle with no money. Hired a coach within three months, I had done three or four deals in May, 30 grand. So the whole process took me six and a half months. And I really wish, this is gonna be probably one of your questions at the end, but I'm gonna say it now. I'm say it then too. I really wish I hired a coach day one. Cause it would've saved me that three and a half months of struggle. But regardless, that's how I got my footing in real estate and how I went from being a passive investor to an active investor. When I went full time, I went into wholesale. So did that for about three years exclusively, Mike. I didn't really do much fix and flips back then. I was a wholesaler for three years and I still wholesale to this day. We just did one last week. We usually do a couple a month at this point, but the wholesale deals I do now, I'm not looking for them. They're deals that don't meet our buy box from our marketing efforts. We keep the best, we wholesale the rest. That makes for a great title. Keep the best, Wholesale the rest, right?

That might just be the title of this episode.

That might just be the title, man. And I encourage everybody to use that. Take it, steal it, run with it. I didn't create that saying someone else did. I heard it at an investment club seven years ago, but that's what I do. I live by this, right? So I keep the best that I wholesale the rest. So I still do that. But for three years, Mike, I did that exclusively and then, I woke up one day and I think it was my wife was giving me trouble about not making enough money or something, and I'm like, Man, I got into real estate at the age of 20. This is five years ago, right? That I had this epiphany. I got into real estate at the age of 20 and I had gotten some rental properties and I was making some passive income at the time, like 12 properties times that by maybe 300 bucks a month. I was making just a little less than 4,000 a month, my expenses were seven or eight. And yeah, long story short, I had this epiphany and I'm like, Man, the whole Stanley has a full time job is hard. It's the transaction treadmill. As soon as you do a deal and you get paid, you're starting over and you need to reinvest anywhere from 10 to 50% of those profits back into the business. Not a bad thing, but it's not making me wealthy. So I took the skills that I had learned over those three years of exclusively wholesaling properties, marketing direct to seller, running appointments, negotiating, making friends, building confidence. And I coupled that with the previous 10 years of experience I had buying rentals and now I had all these tools in my belt to really rocket fuel, rocket fuel on my business essentially. So I decided, hey, let's keep this marketing going cuz this is how we're getting discounted deals. But instead of wholesaling, 100% of them, let's start keeping the best deals and fix and flip those deals or adding those deals to our portfolio of rentals. And that's when I stumbled across the BRRRR method. And of course I did creative financing then subject to and owner financing. And I still to this day do those things. And as the interest rates go, I'm gonna be doing more of those things. But I stumbled across the BRRRR method. And the BRRRR method is nothing more than an acronym, B with four Rs. It's a simple strategy that real estate investors can use and my definition of the BRRRR method Michael is it's a strategy that real estate investors use to acquire assets with little to no money, rapidly. That's my definition. I've done 200 BRRRR deals, by the way, I've written a book on the BRRRR method. It's on Amazon. It's 378 pages. There's a few other people that have written books on the BRRRR method, and I often get asked the question, How does yours compare to theirs? I don't know. I've never read theirs. Mine's based on experience from 200 deals.

Awesome.

So I started cherry picking these deals, Mike, and in the beginning when I was doing the BRRRR method, I was leaving 10 or 15 grand in a property. But to me that was a home run cause it's way better than 30,000, the average price point when I started was about one 50, and oddly enough, it's maybe 180 to one 90 now, so it hasn't moved that much and 20% down, 30 plus thousand. If you can do it for 10 or 15, that's great. Over time I refined my skill and now I average $1,200 out of pocket, which means after three or four months of cash flow, I don't have any money in that deal and it's infinite returns at that point. So it's really cool. So the rest is history. Thanks for listening. Hopefully I didn't bore anybody. I've been in the game 18 years. I've been fulltime for eight, done about a thousand transactions in my life. Over the last eight years, I've done 700 plus wholesale deals, 200 plus BRRRR deals and my passion is building my portfolio of rentals. I own 65 houses right now. I own another 30 plus units in in apartments. I have 13, 14, 15 units on our contract right now. Love fixing and flipping, usually do anywhere from one to three to time on the side. It's more of a hobby for me than it is a business. Of course, I make money though. And I love teaching and coaching at this point. My portfolio brings in over 20,000 a month passively. I'm gonna continue to grow that but at this point I just love to help people learn how awesome real estate is and how investing doesn't have to be complicated, doesn't have to be hard. In fact, it's very simple if you're consistent and you a couple things. Lesson number one guys, real estate investing starts with marketing. So really what that means is that we're in a marketing business before we're in any other business. And then, yeah, we can invest and take risk and fix and flip and add rentals and do these things, but we can't find these things on the MLS typically. Typically, maybe a few. I buy about a hundred houses a year, Mike, on average, and I usually get less than five on the market a year. Maybe two, maybe three. Not many.

Yeah

and that's an average over seven or eight years of time, Average, about hundred houses a year, maybe five or less are on the MLS. So 95% of the properties that I'm buying are off market because that's where you find deals. You don't typically find deals on the mls. And again, at this point, I just love to help people give back, teach them that, real estate doesn't have to be hard. It's very simple. But you gotta understand that it's a marketing business. That's lesson number one. And then lesson number two is you make your money when you buy, you get paid when you sell. Now we all wanna get paid, but we won't get paid very much if we don't buy good. And you might even buy bad and not get paid at all and actually have to pay money to sell that. So how do we make money in real estate? We don't make it when we sell it. We get paid when we sell. We make money in real estate when we buy deals. It's that simple. Lesson number one. This is a marketing business. Lesson number two, you make your money when you buy, so the rest is history. Mike, I love teaching people. I love podcasts and I'm grateful to be here. Happy to chat with you about it. The BRRR method is my passion because it allows me to acquire rentals with little to no money Again, my average at this point is $1,200 outta pocket. Some deals I can walk with money. I did one about a month ago where I walked with 7,000 bucks on a deal, did one maybe five or six months ago, where I walked with $53,000 on a deal. That means I have no money invested. I bought it with somebody else's money. I rehabbed it. I rent, I. Let's see, Bought it, rehabbed it, rented. And then I took it to a bank and I refinanced it and I was able to pay back my lender for the purchase, the rehab, the closing, the utilities, the holding costs, and the interest added the asset to my portfolio, cash flowing asset with little to no capital expenditures needed because I rehabbed it already, at least for the next 5, 7, 10 years. And then refinance that at a long term fixed rate. And I'm creating a lot of debt for myself, but it's good debt and I love good debt because good debt's, debt that someone else pays off for you. Bad debt is debt you have to pay off. I don't have any bad debt, happy to say that, but I got a lot of good debt and that's what's making me a millionaire. It's making me rich because every single month, not only does my portfolio spit off 20,000 plus dollars worth of cash flow, which by the way is taxed way less than earned income, cause the government wants to reward people for providing housing to their neighbor and their fellow American. And on top of that, all of these tenants that are renting these properties are paying these properties down 20 to $30,000 a month. So you can see how this is going to snowball your wealth. Additionally, when I buy rental properties and I capture 30, 40, $50,000 worth of equity in these deals, I'm not taxed on that equity. That's one thing I think that a lot of people, they don't realize regardless if they're in real estate or not. And this is something that you will be hard pressed to have a financial planner talk to you about, which I think is goes against their fiduciary duty to you is that you are taxed on income when it comes to the IRS tax code. You are not taxed on wealth. So if you create wealth, you don't pay any tax. When you create income, you pay tax. So now that you know this, and now that the listeners know this, hopefully you did. Most people, 99.9% of people don 't. Now that you know this, are you gonna wake up tomorrow and focus on making more money or creating more wealth? Me, I don't want more income. Of course, I want more income, but I don't need it. Let's reword it. I don't need it. What I want and need is wealth because it doesn't, it's not tax, it doesn't require me to pay a tax on it. Now, if I go buy a property, let's say it's got $50,000 worth of equity, cause I bought it at a discount and I rehabbed it, and I forced appreciation above and beyond what I spent in my rehab. And I now have, let's say, $50,000 worth of equity. That's if I want that money, I can sell that property, and then I have an incoming event, which is gonna be taxable, but I don't have to sell that property if I don't need that money, number one. And number two, if I do need that money, there's an alternative to selling that property, and that's going out and getting a loan against that. And that loan isn't income either it's debt and you aren't taxed on wealth or debt only income. So I make a good income, but I've essentially tried to cap my income at this point and try to keep it below a certain level because the more money I make, the more money I have to pay. Uncle Sam, I don't like paying taxes. I hope, hopefully every single person listening to this or watching this agrees. If they don't like paying taxes either, taxes suck. They get mismanaged. They're robbing us of our money, our hard earned money. So how do you prevent taxes or mitigate them or reduce them legally? Keyword there. Legally. You buy real estate, you focus your efforts on creating wealth, not income. Now, the great thing about rentals is they do both. They create income and they create wealth. But here's the coolest part. The income that are is created from these rentals is taxed a lot less because it's passive income versus earned income. There's five different buckets in which the IRS will tax you on your income, and the earned income is the highest tax. The passive income is the lowest tax. That ain't fair. Let's be honest. That shit ain't fair, but it's the law. What? Crazy. Guess why? It's the law. I'll tell you, I know. It's because rich people write laws to protect rich people. When's the last time you saw somebody at Taco Bell or Jack in the Box? And no offense to anyone that works at these establishments. But when is the last time you saw them become a senator? To my knowledge, it's never happened. It costs a lot of money to run to be a senator or a state representative. It's wealthy people that get these rules. These are our lawmakers guys. These are the people that are writing the laws. They're slipping in laws, in rules, in loopholes, any which way they can to protect them and their friends. Here's the beautiful thing. The beautiful thing is we can play by those rules too, and we can do it legally. So we're gonna focus our efforts on creating wealth, we're gonna focus our efforts on using real estate to prevent paying taxes, and we're even gonna use real estate to pass on a legacy to our children's tax free. But if we don't use real estate, we're gonna have to get really creative with trust and wills and all these things to even have a shot at preventing the death tax. With real estate it's black and white. So that's what I love about real estate. That's my past. I'm happy to be here. And I feel like I'm doing all the talking.

I mean that's the episode. No, I'm kidding. . Hey. So a lot to unpack here, David with everything you were talking about. I was taking these notes. Really great stuff. You completely ran the gamut of what you've done since you started investing. First thing I wanna point out here is, You started investing at the age of 20? There's a lot of people that I bring on this show that they always say, like when I ask 'em like, what's, what's one thing you wish you would've did when you were, or differently or things like that. And they say, I wish I would've started when I was younger. . That's one of the biggest things I hear all the time. I wish I would've started when I was younger. I had a guy on not too long ago that started at the age of 26, and even he said, I wish I started when I was younger. Like maybe when I was 20. Now I got somebody on the show that started when he was 20 and look at what's going on here.

That's right.

I wanna point something out here that you know, that class that you took back at was it Missouri? Missouri, Columbia University. Missouri. In Columbia

Yep. University of Missouri, Columbia, Yep.

If everybody would get into a class like that when they start college or even have a class like that in high school, where the first thing that happens is they hand you rich dad, poor dad, and they base the class around that. You're setting up a whole classroom of people up for success to become wealthy and become millionaires, future millionaires. So the fact that you were able to learn that at a much younger age than what most people do is huge. And I think it's a testament to what you were able to build since then. And even though I know you said, Oh over the 10 year period I bought 12 properties and then I started going to these REITEs and I met somebody that had 400 properties in that same amount of time and I'm like, It'll take me 10 lifetimes to get there. But realistically, if you look at where you were at 30 years old, what you did from 20 to 30 versus what other people have done from 20-30, you were already light years ahead of what other people are doing. And to think that you have 12 cash flowing properties, and the fact that you start off with house hacking is even better, right? So you're essentially getting yourself to a point where you're starting off life and living for free, essentially. That's huge. And being able to just buy a property a year. If somebody does that over a 10 year period like you did, essentially, you can be financially independent just from that in general as you're paying these assets down. But you wanted to take it a step further. You started seeing what some of these other people are doing, so you wanted to jump in there and go big and you did. There's a couple different things that I think this episode could be named. One of my wrote down, like you said before, was keep the best, wholesale the rest. But I also like you know, you make your money when you buy and you get paid when you sell. I think that's awesome. So two, two very awesome phrases that I think people should take away from this. Because it is. It's when you make the deal, that's where you're making your money. That's where you make your bread, right? And then when you sell, that's when you get to eat. So that's when you way to look at it, right?

And one thing you just said too which I love, and, it's, you said a lot of people wish that they started earlier and a lot of times when I tell I don't really have a lesson, number three, I have 300 lessons, and lesson number three and 300 can all be equally the same, but number one, number two are in that order, right? The lesson number three essentially is don't wait to buy real estate. Buy real estate and wait.

Yep.

And the quicker you can do that, the quicker you can create wealth and income. Don't get me wrong, guys, I love income. My real estate portfolio pays me over 20 grand a month to sit on my butt. In fact, I'm at home right now sitting in my favorite leather chair hanging out. I left my office today at two o'clock and came home and spent some time with my wife, and I'm here today enjoying this time with you, right? I love the income side of it, but I don't want to go take my income to a million or $2 million a year when I could pivot those efforts into creating a 1 million or $2 million worth of wealth a year and pay no taxes on. And then access that capital as needed through either selling it or borrowing against it, which would be my personal favorite thing to do, because then I can get access to that equity without paying taxes on it as right there as well. I'm a real estate professional and I'm an entrepreneur, but I'm really a tax nerd at the end of the day because I know that it is that important. So let me just say one more thing and then we can get back to your thoughts here. If you ask the average person on the street, Mike, how much they pay in taxes, most people are gonna say, I don't know, maybe 35%. And they're not wrong, but they're way wrong. Here's why. They may pay roughly 35% in income tax when they earn the money, but they're discounting all the other taxes So when you go to the grocery store, unless you live in one or two states that don't have income tax, most do. When you go to the grocery store, you're gonna pay between eight and 10% sales tax. So when you buy your eggs, you buy your milk, you buy your broccoli, 10% on top. When you buy your gas, your beer, your cigs, whatever you're into, you're paying sales tax and even more taxes on certain items. It could be as high as 15%. So you're paying 35% when you make your money. You're paying 10% when you spend it, and then when you buy things like houses, boats, cars, trailers, or fees, airplanes, certain things cost you money to own 'em every year. With personal property taxes or real estate taxes, that's gonna vary. It's typically a small amount. Could be anywhere from one to 5%, but it's tacked on to the 35% and the 10%. Now you got another, let's call it 5%, and then if you die and you don't have it set up right your kids are gonna be paying taxes on that. So what I'm getting at is the amount of taxes that we all pay isn't 35%, which most people will say roughly, it's actually 55%. And when you start to learn these things, you start to get frustrated with the system. And a lot of people, they don't necessarily have these desires and goals to make a bunch more money because they get to pay. The more money you make, the bigger piece of the pie the government gets. You're actually rewarded to make less money. It's not right. It's stupid, right? So me personally, I know these things. I learned these things at a young age and every day when I wake up, I'm not focused on making more money. I'm focused on creating more wealth, and I think everybody should try to have that mindset. Because if you're making more money and you're paying more taxes, you can't snowball anything. But when you're making wealth and creating wealth by getting equity and property and not paying taxes, and you can borrow against that to go buy more wealth or create more wealth, it can truly snowball and it's made me millions of dollars worth of, I have millions of dollars worth of equity in my real estate.

That's huge.

Millions. And it's not because I'm great or smart, it's because I'm patient and I buy deals. And I use strategies to get those deals and acquire those deals with little to no money and my focus isn't selling them and making profits that are taxable. It's keeping 'em, and then using tax benefits like depreciation and other things to increase my expenses without actually increasing my expenses, phantom expense depreciation to pay less and less taxes. My effective tax rate is less than 20%, and most people's is closer to 40%. Again, I'm not special. The only difference between me and them is that I know that this that this game we play isn't a fair one. I don't necessarily even agree with it, but it's the law and if I don't play by these rules, I'm just gonna get robbed. So I try to play the play by the rule.

That's huge because David as you're saying as you said earlier you buy real estate and wait, right? So you purchase these assets and you're holding onto them. And again, like you said, you're able to claim this depreciation and other items like that. And you mentioned something else that was even more key, that you're a real estate professional, right? So as a real estate professional, you get to claim more depreciation and other things like that for your taxes. Then, somebody who's working a W2 job and going to work every day, working their nine to five and having to pay, their fair share of taxes. So it's not about so much learning the real estate game, like you were saying, it is learning about the tax code and it's learning about, how to play by the same rules that the wealthy and like the 1% play by. Cause like you said, this opportunity is something that everyone here. In this country has an opportunity to benefit from, right? We can all sit here and invest in real estate. It's just a matter of how you go about doing it. Now you started off right, You were, you borrowed $30,000 to get your first property when you were house hacking, right? And as you were going throughout the time, you were, either saving up the money or borrowing it to put those down payments down and you were paying full market value cuz you were finding 'em off the MLS. And then you got to go to a real estate meetup and learn that there's so many different ways to do this using OPM right? Other people's money and other different ways to find these down payments to, to make these deals happen at a much lower than full market value because you're finding motivated sellers and things like that. So off market deals, which is huge.

That's exactly right.

Yeah. And now I'm pointing this out because I'm talking about the importance of going to a real estate meetup and the importance of networking and meeting people that are like-minded to you, that are trying to do better for themselves and thinking bigger. So it's really important that you surround yourself with people that are doing these big things. Cause you know the famous saying that you are the average of the top five people you hang around with, right? So surround yourself with people that are doing much better than you because guarantee, if you're hanging out with five millionaires, you're gonna be the sixth one, soon enough.

Yep. That's exactly right. That's exactly right. You're gonna learn those things that they're doing.

Exactly. Now particularly, I want to ask you about something because I know you said that your bread and butter has been like the BRRRR method, right? And you were keeping the best and wholesaling the rest. But now the market is starting to shift, right? And you're starting to see with these interest rates going up, And with the home prices are still staying the same. You don't really see them dropping too much. Maybe they're dipping a little bit, but it's not significant to the difference that people are paying with these higher interest rates. Do you see that affecting what your current strategy is with the BRRRR method and flipping versus what you're doing a year ago?

Yeah. Absolutely. With me, rates are gonna squeeze landlords, they're gonna squeeze BRRRR investors. So the way to counteract it is three or four things we can do. Number one, we can buy better deals, get 'em at lower prices to where the interest, the higher interest that we're gonna pay now versus what we would've paid maybe a year ago is offset by getting a better deal. That's number one. Number two, we can look to buy properties subject to and not even need a loan. We can make the seller. We can use the seller's existing loan, which if it's over a year or two old, it's gonna have a pretty good rate. Typically speaking. Number three is we can buy properties from people that have loans in place and we can actually assume the loan. So subject two is different, that's just taking over the payments, and maybe you do move the deed, but you're essentially, you have the opportunity of a due on sale clause being flagged. Some people will use smoke and mirrors and they'll put the entity in the name. Let's say John Doe owns a property that you're buying, they'll do John Doe LLC so it doesn't look like, you might be the owner of John Doe llc, not John Doe, right? So there's lots of strategies there. So obviously better deals, number one, creative financing and subject two, number two. But number three is that we can actually assume the loan. We can actually contact the mortgage company and say, Hey, we're gonna assume it. We're gonna need to get qualified, and they're gonna have to approve us, but we can actually take it over subject two without it being subject two. We're gonna assume that loan. So we're starting to pivot into doing some more of those. I'm not gonna stop buying rentals because it goes against the whole purpose or the whole, mantra of don't wait to buy real estate and wait. We have pivoted to doing more wholesaling over the last few months as rates go up and we're definitely more selective with, our ARVs and our rehab budgets we're definitely being much more conservative with both. But whenever these things happen, it also thins the herd. Inventory's been historically low over the last 12 months and it's also, what that's done is it's made it a little bit more difficult for us to find deals, but it also thins the herd. So it's less people looking for 'em at the end of the day. I don't think that the market's gonna tank or crash. Yeah, we may have a little recession but that's healthy. If we didn't, it would be scary. And the best money that I've ever made in wholesaling or flipping has been in recessionary periods. It's been in markets that have been trending down or have been flat. Not ones that are appreciating. So there's always gonna be a pro and account, But I'm here to stay. I'm not going away. Over the last two years I've started to migrate from small commercial loans with three and five year fixed rates to 30 year fixed rates to my LLC through some of these hybrid lenders where you pay a little bit more upfront for the closing costs. You may have free payment penalties, but you can fix a rate to your entity for 25 or 30 years, and I've probably gotten, I'd say a third a little less than that, but pretty good, pretty close to a third of all my mortgages on 30 year notes, under four and a half or 5%, which is good for a commercial loan. So there's lots of things that I'm doing to repair, but what I'm not doing, Mike, is slowing down my marketing or stopping it, because yeah, we're adding leads to the system just like we always have. But we may be converting less and less of there, that's okay because we're getting these leads still and we're following up with these leads and we're using these new creative strategies like assuming loans and subject two to be able to still get ourself into positions where we can make money on deals, we can wholesale deals, we can add deals to the portfolio, we can fix and flip those deals. Our buy box has gotten a little bit tighter, but it would be foolish of if it didn't, that would be loose. That would be, not very conservative. And as the economy starts to tighten up a little bit, we as business owners need to do the same. So it's only healthy to take a look at your books every now and then and say, Hey, maybe we need to lean this out a little bit. Maybe we need to slow down on this or that. But don't stop.

Yeah, absolutely. Yeah. Don't stop. And also one of the things you're talking about is you're looking at different strategies other creative strategies to help these people out that are in extra miss and they still have a problem that they need to solve, right? Which is they need to, sell their home. They can't make the payment anymore. Things like that. You're providing a solution to their problem still. Which is fantastic. So I think, honestly, David through your intro and just a few questions I was able to ask, we've really extracted so much value out of this interview. It's been absolutely fantastic. So I'd like to. Go ahead and transition this into a portion of the podcast that we call the Final Round, where I'm gonna ask you four hard hitting questions that are going to be a testament to who your character is, but I think I already know what some of these answers are gonna be just from having this short conversation with you. So if you're ready to go, we'll get this party started.

I'm ready to rock. Let's do it.

All right. Let's do it. So the first question of the final round is, what's the biggest mistake you've ever made?

The biggest mistake I've ever made, let's put it this way. I've done close to a thousand transactions and I've only lost money on three deals. All three of those deals shared two common things that I did wrong. So I would say the biggest mistake is A, overestimating my ARV or B, underestimating my repairs And here's the cool thing you can do. You can get one of those two wrong on a deal and break even, or even make some money still. But when you get both of those two things wrong, you're gonna lose money. So the three times. Boy I lost money on three deals out of about a thousand. It's pretty good batting average, but both times I overestimated my ARV while simultaneously underestimating my repairs and I got in trouble. So don't do those two things.

Yeah don't finagle the numbers to make it work for you. Fantastic lesson learned.

You can finagle 'em, but don't finagle them out of reality.

Yep. It's always the things like that happen that, you could call it a mistake or things like that, but realistically you could look at it now and say, Hey, it was just an expensive education. You just paid to learn something right there. Awesome. Okay, so the next question to the final round is, what is something that you've learned that you wish you knew when you first started and you touched on this already, but just curious to see if you have anything different on that.

Yeah, so really I would say, Don't wait to buy real estate, buy real estate and wait. That was a big thing. And I acted on that right away. But I wish I would've bought more real estate at least prior to two years ago and held it because we've seen some crazy appreciation over the last two years. Another thing is that I wish I learned out the gate that this is a marketing business. It took me 10 years to learn that lesson, 10 years. And then it probably took me another one or two years after I went full time to learn that the money's made when you buy the deal, not when you sell it, you get paid when you sell. That's obvious, but it's made when you buy it. So there's two or three things right there, but they all are equally important.

Awesome. Yeah. Great things that, you know, great lessons to take moving on. And for my listeners, this question right now is probably the biggest one. And that's, do you have any tips or tricks that you would recommend to someone that is just getting started today?

Yeah, absolutely. Hire a coach. There's a lot of people that have success on their own, but there's 10 times as many people that don't and they give up and they quit and they fail, or at least they do in their eyes. And the cost of hiring a coach is gonna be very small in the big scheme of things. I know people that say, I hired a coach maybe six months ago, $25,000 is what I paid him, and he coached me for 60 days. I think we spoke once a week. During that time. We didn't talk that much, but the value I received was worth it. Sometimes people will say, Oh, I don't have the three grand or the five grand, or the whatever. Usually you can typically get a coach for, less than five or six grand, a quality one, and they're like, I don't wanna spend that money. I don't wanna make that investment or take that risk. But if that coach can make 10 extra money, a hundred extra money, a thousand X, that investment, doesn't it seem foolish to not take that investment? So here's a perfect example. When I first started full-time in this business eight years ago, even though I had 12 rental properties that were paying me passively every month I had 63 grand of credit card debt. And I stumbled and chuffed, or, I spun my at tires for what I say, three and a half months. That's about right. And then I hired a coach. I was 63 grand in debt when I did that coach, I think, cost me five grand. So I went from 63,000 in debt to 68,000 in debt. 12 months later, not even, probably eight months later, I didn't have any debt at all. That coach helped me, taught me so much. And sped up that timeframe of failure to minimal days and weeks versus another three months or six months. So I would simply say, guys, the number one thing I could tell anybody and everybody that's, that's looking to truly do this, not just dabble, jump in, make this a full-time gig. Maybe you make it a part-time gig, that's fine too. But essentially create passive income and achieve financial freedom, it's a hard go at it by yourself. Find a mentor, find a coach, and get that guidance that you need to get you to where you want to be.

Yeah, David, fantastic point. I believe in hiring a coach and having a mentor. It's one of those things that, if you have somebody that's pushing you and driving you it's gonna make you go harder cuz you're not just doing it for yourself at this point right now. You're like, Hey I committed to this. I spent significant money on this, I wanna get that value back. So when you commit to something like that, it's one of those things that motivates you to push yourself to say, You know what, I don't wanna fail because if I fail, that means I just, I spent this money for nothing. So that's definitely a driver, definitely a motivator. Okay. So I have one final question in the final round, and this is besides your own do you have a favorite business, investing or real estate related book or podcast, or both?

Yeah. I would say most more so books. I've read some really good books over the last couple of months and I would say my top three even would be The Gap in the Game and WHO, NOT, HOW, which are both written by the same author. And then the third book would probably be I gotta go with Rich Dad, Poor Dad cause that's what got me in this game. Those are great books.

Yeah. Fantastic selection. Fantastic. David so again, like I said earlier, before we even started the final round, so much value from this this short conversation that we had it's been absolutely amazing. I know the people that are listening right now, they're saying, Man, David's story is really inspirational. And some of the things that he's done, I wanna do myself, so I wanna find some more information about him. So do you have any social media or a website you can share with us so that we can find more information about you?

Yeah, I do. I do. Mike, thank you so much for offering man. You can follow me on Instagram. It's my full name, David Allen Dodge. That's d a v i d a l a n d o d g e. That's my Instagram handle. And then I do offer coaching. I help people get their first deal. It's really one of my favorite things to do. In fact, I have a call tonight with maybe 20 or 30 students and it's a zero to one model. And I also coach the BRRRR method. I teach people how to buy rentals, how to do with little to no money, how to create wealth, how to create passive income. And you can actually learn about both of those programs over on wholesalinginc.com. If you go to that website, you can learn more about it. You can book a call with our team, and you can set up a time to figure out if the program's gonna be right for you. I love helping my students, like every, all my students get my cell phone number. We do one to two weekly group coaching calls as a group, and then we typically will do another call or so just in smaller groups or even more on one. I give them access to me to help with their business. I give them access to look inside of my business. So I can actually see what it looks like to, buy and sell anywhere from five to 10 houses a month. And at the end of the day, my favorite thing to do though is to help them get that first deal, or in some cases, quit that job that they hate. I love it. I love helping. I love giving back. I love being a mentor to people, and I love helping people and coaching them and showing them that this business doesn't have to be hard. We can make it really hard if you want, but we don't have to. It can be very simple. And we don't need to get lost in the weeds. And a lot of people, they come to me and they have the worst case of analysis paralysis. They don't know what to do next. And I'm really good at saying, Hey, let's get rid of all this noise and all this nonsense and let's just focus on these two or three things that matter and let's get you a deal. And I can often get people deals, their first deals in less than two months if they're willing to put in the work.

Hell yeah. All right. Hey, for those of you listening that's where you could find more information about David and everything that he's got going on. Go follow him on Instagram, go visit his website, check out his coaching program. If you don't have a coach, hey, he might be a good one for you to check out to get your first deal, especially if you're looking to get your first deal right now. David super awesome having you on the show with me. Thank you so much for joining me today. This was truly a blast.

Awesome, Mike. Thanks for having me. I look forward to doing more of these with you down the road and again, I really appreciate you having me on the show today to provide some value to your audience.

Absolutely. Aloha from Hawaii.