BRRRR Method with David Dodge

With over 17 years of experience, St. Louis Real Estate Investor David Dodge is passionate about helping other entrepreneurs achieve success in the industry that provided his own. David first began investing in real estate at the age of 20 while attending the University of Missouri-Columbia. From there, his career skyrocketed. Today, David and his team have wholesaled over 500 houses. Leveraging his industry expertise, David has co-authored three books and even launched a podcast, “Discount Property Investor”, where he teaches people all the ins and outs of wholesaling real estate, along with tips and tricks for marketing, landlording, and rehabbing properties. “I was inspired to get into this industry for a few reasons,” he explains. “I wanted passive income and tax advantages, but I also wanted to be my own boss. I wanted to have the freedom to travel and do what I wanted to do in my own timeframe!”

Episode Highlights Here:

David:

One of the things that we’ve been doing Pierce is we have been asking for them to give us 25-year amortization terms versus 20. And that just helps with

Pierce:

You know you got 90 rentals, right? And, you know, what are you doing is like to prepare for what’s coming down the pipe here?

David:

Well, over the last six months, I’ve been, I’ve been refinancing my properties into 30-year loans. So that’s been helpful. And I don’t have all, you know, I don’t have 90 properties, I have 90 units. But that consists of probably around 65 individual properties. And so I got about 10% of those on 30 years at this point, which is nice, maybe even 15%. But the other ones that I have lately, you know, over the last year and a half, two years, instead of opting for a three-year fixed rate on a 20-year amortization, that doesn’t balloon and never do loans, that balloon. And the reason that I don’t like the balloons, that balloon is because the amortization schedule is how you get wealthy. So if you don’t understand amortization, you definitely need to learn that. And if you have a loan that balloons every three years, you’re starting over on your amortization every three years. So what I like to do is I like to work with the local banks, local banks, and local credit unions, for multiple reasons. Number one, they’re going to lend what’s called portfolio lending, typically, meaning they’re going to underwrite in originate your loan, and then they’re going to keep it in house, it’s going to be part of their portfolio, they’re not going to take it to Wall Street and sell that loan off. So number one, I like to use the local banks and credit unions because of that. Number two, I like to use the local banks and credit unions, because they’re just going to be easier to work with, you’re not going to have 49 points of contact transferring from call center to call center. During the underwriting stage, you’re just going to be working with Jim or Tom or Todd. And that’s it, it’s just going to be easy. And then last but not least, the local banks love to lend to local people. That’s their business. Right? So if you’re a local person dealing with a local bank, and you’re trying to buy a local property, that’s their bread and butter, they want you they love working with you. So local banks and credit unions are great. But to answer your question, over the last year and a half, we’ve been transferring or renewing our loans when they come due. Or that’s even wrong when they renew. And we were and we are locking in five-year fixed rates with them versus three-year fixed rate, and we pay a little more for those. But with the uncertainty in the market right now, it just makes sense to do so. Also, one of the things that we’ve been doing Pierce is we have been asking for them to give us 25-year amortization terms versus 20. And that just helps with the cash flow.

Pierce:

Absolutely. So increasing your amortization terms, helping with your cash flow, refining, if you can with local banks, so you’re not having to deal with

David:

We don’t use any big banks, Wells Fargo, Chase, US Bank, Bank of America, PNC you name it, I avoid them like like the plague. The reason is, man, they don’t care about my business. Who am I? I’m just some little guy in St. Louis, Missouri, that’s got a few Million Dollar Portfolio. They don’t care about me. I’m nobody to them. Right, right. But when I walk into the credit union down the street, and I tell them my own, you know, 65 properties, they’re like, We want your business. What can we do Dave to earn your business? So I mean, why would I not want to work with those people versus these other people that don’t care about me? I’m not I don’t.