Table of Contents - Does Wholesaling Really Work Long Term with Dave Dinkel
Dave Debeau [00:00:08] OK, everyone, this is Dave Debeau with another episode of the Property Profits Real Estate podcast. And today I have the pleasure of speaking with Mr. Dave Dinkle. Dave, how are you doing today?
Dave Dinkel [00:00:21] Doing great.
Dave Debeau [00:00:22] All right, Dave, where are you calling in from today?
Dave Dinkel [00:00:26] I'm calling in from South Florida,
Dave Debeau [00:00:28] beautiful south Florida. Well, that's great. Your weather is a heck of a lot better than it is up here. And for those of you who haven't met Dave or heard from Dave before, he's a very, very experienced real estate entrepreneur. He's been investing since nineteen seventy five and he knows a heck of a lot about wholesaling properties. So, Dave, how approximately how many deals have you done since nineteen seventy five.
Dave Dinkel [00:00:53] Well over five thousand. I don't, I haven't counted after five thousand. We're doing twelve hundred a year now so it's like I don't have any idea anymore.
Dave Debeau [00:01:03] All right, so if you want to know about wholesaling, this is definitely the gentleman to to be listening to. So again, Dave, as I mentioned, a lot of our listeners, we do have some listeners in the United States, a lot of our listeners are in Canada. So you guys are listening to this. If you hear some American references, that's fine. Just understand that wholesaling the concept works just as well here in Canada as it does in the States. So, first of all, Dave, again, welcome for being on the call. If you don't mind, if we just start out with what is your definition of wholesaling?
Dave Dinkel [00:01:38] Wholesaling is putting a property under contract and then reselling the property in some states that requires reselling the contract. But typically what you're going to do is have an A to B transaction and A B to C. I prefer they closed the same day,
Dave Debeau [00:01:55] simultaneous close
Dave Dinkel [00:01:56] to answer double closing. And that's pretty much it. I mean, it's very, very simple. Once you understand the gymnastics of it, I'm
Dave Debeau [00:02:04] going to say, yeah. So bottom line, what you're doing is you're finding a property. Ideally, you're getting a deal on that, getting under market value. Then you turn around and you find somebody else who wants to buy that property and you sell them the right to purchase that property and you make a profit and the prices on the spread and the price. All right. Dave, how did you first get started in real estate? Back in seventy five?
Dave Dinkel [00:02:30] Well, there was no one else. What we had to do. I was interested in larger profits. I was a chemical engineer. I got into the stock brokerage business and I love the liquidity of it, but I didn't like the unknown. When I looked at real estate, I could see a physical asset evaluated. So but there was no wholesaling. All I could do is rehab. So now in rehab for probably twenty five years. And the only thing I didn't like about it initially was I can't sell it fast enough. Buyers are picky. It was just a pain in the neck. Yeah, I developed a round robin auction system I called fizbo power selling system that brings in anywhere from 50 to two hundred people and what normally would be called an open house. But it's not. And the people bid against themselves and ultimately it sells for more than you can get an appraisal. So you qualify the people. How much of a down payment do you have? The guy with the biggest down payment gets it because you have to worry about appraisals because we were only rehabbing about three to five deals a year. I expanded that philosophy. I'm going to say into one of the people that came in and said, I can't afford it. I don't have good credit. So my concern was, you're willing to buy a house, I will repair your credit free. Now, what free means is you're going to pay for it, but it's closing in my next rehab. I give you all the money back for it. So what I did is I built a pipeline of about 30 to 60 people in credit restoration. And as soon as I could finish a house, I could crank them out. So we went from up to 30 to 50 a year, up to one hundred a year doing rehabs, rehabs, strictly rehab. So there was no wholesale. And after a certain amount of time, we had three construction crews, three different counties. And then I said too many moving parts and too much risk financially in terms of liability. So we started to look at the made fifty six thousand dollars net profits on rehabs, but thirty five thousand on wholesaling. And I said to her, this is not a big decision. We do two of those. They only take a week or two, whereas we have three to six months involved in rehab. Right. We started just wholesaling. And the key to our success in wholesaling is I tell my students, the bigger your buyers list, the more money you're going to make.
Dave Debeau [00:04:52] Well, that makes sense, that makes sense. All right, so you've got the transition from going rehabs and then you got to do creatively filling the buyers list for those. And then you what did you did you stumble into wholesaling or how did that come about?
Dave Dinkel [00:05:07] I had other investors coming to me and saying there were rivers. Do you have any other properties? And because we had kind of an ongoing prospecting mode, we would get properties that we couldn't rehab just didn't have enough capability. So I said, yeah, and I realized, whoa, this is really pretty good. Don't have to patch Payneham do anything else. Let's pass them right along. And then we just shifted over into strictly wholesaling.
Dave Debeau [00:05:33] Well, I'm familiar with wholesaling, but thirty five thousand dollars spread on a wholesale deal is a lot more than what I'm I'm used to hearing about. So how are you able to get that big of a spread or are you just an amazing negotiator and able to get a three way way under market type?
Dave Dinkel [00:05:50] I just did a what I called a 30 day challenge, a little video on YouTube. If you go to YouTube, put in Dave Dinkle Design and it'll come up. And the reason I did the video was because a lot of people were saying to me, there are no list of deals. And I have an axiom, even if it's been on the MLS for more than five days, it's not a deal, but it can be made into a deal. So I picked 30 deals, which took twenty four days to finish. Half of more or less than half of them weren't the average profit unless the deals was twenty eight thousand. This is net profit after all. Costs on unlisted deals direct with sellers was thirty two thousand. Wow. Your question is how do we do that? We have a technique of negotiating that ultimately brings us a larger profit. If somebody comes to me and says, I can make two thousand dollars on this assignment, you can't make a living doing that. You have to learn how to expand your profit margins. And there's a lot in it. That's what I
Dave Debeau [00:06:50] do. I obviously can't explain the whole thing, I guess. Well, there you go. So maybe I'm confusing assignments with wholesaling. So what would be the different assignments?
Dave Dinkel [00:06:59] You don't make any money in assignments. I mean, that's if you want bird dogs, you talk to them about doing assignments and you send them out there. Now, what you have to learn how to do is make spreads. And I Mayak seem as if it's more than fifteen thousand don't do an assignment because the either the seller or the NBA is going to say, you're gouging me, you've made too much money and they're not going to close. They're going to try to whittle you down at closing. Right. So I, I'm a proponent of both double closing. If you have a decent profit. Ten thousand or less a sign the contract. There's no other question. Just don't pay double closing if you don't have to.
Dave Debeau [00:07:37] All right. That makes sense. So you've learned a lot. And knowing what you know now, what would you do differently if you started all over again from scratch?
Dave Dinkel [00:07:47] OK, let's say that you came to me and blindfolded me, took me up on a plane, dropped me in an unknown city. There you go. What would I do then if I only had a laptop and no money for advertising? First thing I would do in the evening is build my buyers list. And in the daytime, at either drive for dollars if I had a car or I Dornoch. And that's the way to start it. And if you couldn't drive because you didn't have a car and didn't want to pay for Uber, what I would suggest you do is learn how to wholesale to other wholesalers and resell their deals by a very successful students that never see a property, never put up in earnest money deposit, and just have built large buyers lists and resell other wholesaler's deals.
Dave Debeau [00:08:28] Just get a little little cut in there.
Dave Dinkel [00:08:31] Well, when you say little, sometimes I'll see you because I do the transactional funding and a to be leg where the B to C is making nine thousand, but then there's a C to delay. And because he had a better buyers list, he's reselling that wholesale deal for another 40 grand. Wow. Now. So you got to have the strong buyers list if you're going to succeed.
Dave Debeau [00:08:55] That makes sense. So, Dave, you've been working with people for many, many years, teaching, training, coaching, that kind of stuff. What are some of the biggest mistakes you see newbie real estate investors making when they're just getting started?
Dave Dinkel [00:09:09] I call it archaic thinking because I don't do things the way most people do. And one of the things that people believe is they have to make a perfect offer. They have to understand they have to repair value. They have to estimate repairs and then make the perfect offer. That's not what we do. We have a systemize program that's automated, just simply makes an offer. Now, if our offer is accepted, we pay too much. So we know that, though, and we have an inspection period. If we're not paid, if we are not accepted, which is what? Ninety nine percent of the time we expect to happen, we then start into this negotiation around process that we have. And only two things can happen. Somebody else pays too much money. We can't compete with that and let them get stuck with the property over the last man standing. And actually, in many cases, the realtor will call us back and say, by the way, is your offer still good two months later? Right. And it's not. We have to renegotiate.
Dave Debeau [00:10:07] I think that's the key word there is you get it tied up if they accept the offer too easily, that you're worried that you overpaid or you might overpaid, then you get it tied up and then you renegotiate and get the price.
Dave Dinkel [00:10:21] This is a game. And when you learn how to play it very well, negotiation is the biggest part of it.
Dave Debeau [00:10:27] All right, Dave, so when you're working with real estate investors, who's kind of your ideal kind of person that you'd like to work with
Dave Dinkel [00:10:35] the most successful students? I have came to me not having done any deals or having the absolute newbies, but open minded newbies, the newbies who come to me and have watched a thousand YouTube videos are very set in their ways. They're indoctrinated into, you have to know LRB, you have to know repairs. No, you don't. So I can't fight that. And I say this all the time. I spend 30 percent of my day arguing with new students who have never done a deal, trying to convince me that they're doing it wrong and they're not doing anything.
Dave Debeau [00:11:12] So what do you think is the biggest problem you solve for newbie investors?
Dave Dinkel [00:11:16] I think overcoming fears. I've diagnosed twenty eight serious fears. And what I did is I solve every one of them. It's very simple. I put them in. The videos are on my YouTube channel. So if you said to me, I can't do that because tell me what it is. B number twenty nine, I'd be surprised.
Dave Debeau [00:11:34] I would think if you documented twenty eight of them, you pretty much heard everything there is. Yeah. Sounds like it. So let's say somebody wants to get going with wholesaling. What would be one action they could take a valuable action they could take to get started? You know, obviously as a hiring a coach in that sort of thing, but an actual action to get into the wholesaling business.
Dave Dinkel [00:11:58] Well, that's a good question. I would say interview your coach. In other words, instead of going to a meeting and having two hundred people in the room and rushing to the back and so on and so forth, if you can't talk to the mentor or the coach, something's wrong because he's the one who should be guiding you, not somebody else out of another city that wasn't successful in their own right. This is a serious game. Once you learn how to play it, it's amazing. You have to fail forward. And I tell students is don't get discouraged. The more you fail, the closer you are to success. And it's true.
Dave Debeau [00:12:34] All right. So, David, you probably heard this before because you've been in the business for a long time. But people might say, well, wholesaling sounds great for making chunks of money, but what about long term wealth creation through holding on to real estate or getting some passive so-called passive income from rental revenues, those sort of things? What is your take on that
Dave Dinkel [00:12:56] in the real world? With my students? Here's what I do. I focus on wholesale, wholesale, wholesale. As they do that, they're going to cherry pick out what are incredibly good rehabs instead of reselling them. I get them into the mode of here's the cost estimates. You cannot go wrong. I don't say that, but I know they can't because they just got too big a spread to try and focus them on lipstick on a pig rather than a complete rehab. Just touch it up. Countertops, flooring, maybe a bathroom, vanity, but no building the new kitchen and all the getting eighty five or 90 percent of retail. The next thing they get into as they continue to have a cash flow because they're still wholesaling, because they'll come into a rental property and the rental property is at a cap rate of twelve and the rest of the market's at six. And I say to them, here's an opportunity. Here's how you get financing. Here's one to hold. I just had a student purchase, a cap rate of four percent, and I encouraged it because the rents were one third of market value. Wow. So now that's four percent turns into twelve.
Dave Debeau [00:14:01] Yeah, yeah, yeah. So basically, if I understand you correctly, it's what you're encouraging your students to do is focus on wholesaling. And every once in a while a superduper deal is going to come along. It makes sense for them to either rehab themselves or to buy and hold, maybe rehab. But hold is a long term rental property, is that correct?
Dave Dinkel [00:14:21] Correct. When you learn how to wholesale rental properties, as we do now, and I have owned over a thousand doors, but never more than two days. And what we do is we wholesale it on a formula, let's call a rental return calculator. So if we buy it on a 15 percent cap rate and sell it on an eight percent cap rate, which is market value, that could be a forty thousand dollar spread, quite encourage the students. And it's also typically about two to three years of net income. So we've never had a tenant or tallit to accumulate wealth. You're going to have to have something now for myself. People say to me all the time, what do you do since you don't like tenants and tallit? I loan money. My cap rates run from 20 to 40 percent. They're not cap rates or net income on loans.
Dave Debeau [00:15:08] So you're basically a hard money lender.
Dave Dinkel [00:15:11] I'm basically a transactional funder. OK, not a hard money. I don't like hard money lending. It comes with the market risk of carrying it both for transactional funding. I'm the lowest guy in the industry. I get one point fifty dollars higher fee for one day. Now, the question is, how many days a year can I do it for as many as I can.
Dave Debeau [00:15:33] There you go. All right, well, that makes sense, so maybe talk a little bit about your YouTube channel. What is it? People just type Dekel into YouTube to find your videos.
Dave Dinkel [00:15:43] It's all they have to do. Type it in. And one of the first videos is going to be a 30 day challenge. The benefit is, I tell you where the deals came from to. So one of the obvious question is, where do you get your deals, you'll see them right there.
Dave Debeau [00:15:57] Makes sense, perfect. All right, are there any other places that you'd like to send people if they want to find out more about you and what you're up to date just produced?
Dave Dinkel [00:16:06] I do a lot of production of books. I like to produce courses and books. And I just finished one what I call hybrid ism. It's the biggest change in the real estate industry in 50 years. That's also the subtitle. And basically it talks about how realtors can morph into investors. They have credibility with a license. They can prospect for sellers in two formats. Let me listed, by the way, it's in really bad shape. I can say. Why are you selling the most important question you can ask a seller and if it's time related, you can buy the property from you don't need money to do it. I show you how to do that all in the book. If you send me an email, it's Dave Dinkle at Gmail. I'll send you the book at no cost.
Dave Debeau [00:16:50] All right. That's fantastic. OK, and just to wrap things up, I've got about one more minute here, Dave. What would be the most valuable tip that you would give people based on all your years of experience?
Dave Dinkel [00:17:04] Well, that's a good one. And I'd have to say to you that do not be overcome by failure. If you said to me, I have students that single handedly produce over a million dollars in debt a year, they don't have 15 people in crews and stuff like that. And he said to me, what's different about them? It's that they don't quit. They take the grief and aggravation every day and just keep pedaling. The results are phenomenal. Real estate has no equal in terms of generating cash flow, a minimum cost and everything. I don't have a big inventory in the garage and so on. So persistence and persistence. I have what I call a trilogy of truths, and it's very simple. Three words, three times. I am fearless. No more excuses and it doesn't matter. And on the I am fearless. That doesn't mean you're reckless leader. It means the things you don't want to do. You do them first, go after them and get them done. No more excuses. That's why people don't procrastinate and they don't get ahead. And that's my three stories.
Dave Debeau [00:18:12] Perfect. What was the last word again? They had no more excuses.
Dave Dinkel [00:18:16] I am fearless, no more excuses. And it doesn't matter 99 percent of the time the things we worry about when they finally happened, they weren't what we thought. And after being in this world for seventy four years, I can tell you with a lot of experience, the things that are most devastating are the things we never thought were going to happen, like an automobile accident. You can't plan for that, right? It's not you that did the accident. That's the other guy.
Dave Debeau [00:18:41] So he. We worry about. Never comes to pass anyhow, right?
Dave Dinkel [00:18:45] Most typically, when it does, it's not what we thought it was
Dave Debeau [00:18:47] going to be as big of a deal. Very well said. Well, very nice to meet you virtually online. And thank you very much.
Dave Dinkel [00:18:56] Thank you very much. Have a great day.
Dave Debeau [00:18:58] Well, thanks very much for checking out the property profits podcast. And you like what we're doing here. Please head on over to iTunes, subscribe read us and leave us the review. He very much appreciated. And if you're looking to create a regular flow of inbound investor inquiries about your real estate deals, then I invite you to attend one of my upcoming live online demonstrations. And you can check that out at Investor Attraction Demo Dotcom Ticker.