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Show Summary
In this episode of the Real Estate Pros podcast, host Michelle Kesil interviews Derrick Davis, owner of Building Equity Investments. Derrick shares his journey into wholesaling real estate, the keys to his business growth, and his strategies for creative financing. He discusses his future goals of acquiring multifamily properties and the importance of persistence in the real estate industry. Derrick also highlights common mistakes new investors make and the lessons he’s learned throughout his career.
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Derrick Davis (00:00)
So the way that I was able to make it work was to go ahead and offer him a seller finance. And I told him, hey, I would either have to drop my price way down. We’re gonna have to be pretty much at 130, or we can go ahead and buy this on Creative Finance. I’ll do it for 145.I’ll give you, I gave him $20,000 as a down payment and that property is completely paid off. So he’s just, you know, gonna sell or finance the remaining 125 to us.
Michelle Kesil (01:49)
Hey, everybody. Welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil. And today I’m joined by someone I’m looking forward to chatting with, Derrick Davis, who is the owner of Building Equity Investments in Dallas, Texas. And he’s been wholesaling real estate since 2019. So excited to have you here today, Derrick.Derrick Davis (02:11)
Thank you. Thank you for welcoming me.Michelle Kesil (02:14)
Of course, I our listeners are going to take something away from how you’re approaching wholesaling and yeah, getting started into flipping as well. So let’s dive in.Derrick Davis (02:24)
Absolutely.Michelle Kesil (02:26)
First off, for those not yet familiar with you and your work, can you share what your main focus is?Derrick Davis (02:33)
So ⁓ like you said, I started wholesaling in 2019. So we do a good amount of wholesale deals here in DFW, but I also do deals outside of Dallas. We’re pretty much all over Texas. We’ve done deals in Florida, Missouri, Illinois. So we’re pretty well versed in the wholesaling field, but we are also starting to do our own.Flips as well and we are eventually going to get into development
Michelle Kesil (03:09)
Awesome. And is this only in Texas or are you operating in other markets as well?Derrick Davis (03:15)
Well, yeah, like I was saying, ⁓ Texas is the main market, but ⁓ we actually were under contract to buy property in Florida in the Fort Lauderdale area that we’re going to flip as well. we, honestly, the way I look at it is with real estate, as long as I can make money on it, learn a little bit about the market, look at the comps, things of that nature, ⁓ we’re willing to go anywhere, honestly.Michelle Kesil (03:42)
Awesome. How did you get started as an investor?Derrick Davis (03:46)
So ⁓ I got started because in 2019, I actually owned a ⁓ debt collection agency. And one of the guys that I was working with in collections, ⁓ we had stopped working together, but when we got back in contact, he was telling me that he was getting into wholesaling real estate. He purchased a course and he basically let me review the course, go through the course as well. And afterreviewing all the information, going through the course, I was like, man, this sounds awesome. So I was at the time restructuring my collection agency to kind of do something different within collections. We were going to more so be working with local, ⁓ local dealerships to help them to recover the vehicles that they may not have a tracking device on. Cause I was good at, you know, skip tracing people and finding people and things of that nature. But then when he, you know, sent me the wholesaling course,
I kind of just dived deep into that. I was good at skip tracing and things like that already. And talking on the phone with people and things like that. So I got started with that. And after that, we kind of worked together for about three or four years. ⁓ And now for the most part, I’m heading the company myself, but I do have other partners that I work with as far as my private lenders and things of that nature.
Michelle Kesil (06:02)
Awesome. What do you feel have been some of the main keys that made the biggest difference in allowing your business to be able to grow and to run smoothly?Derrick Davis (06:14)
⁓ Some of the things that have been able to help me grow and run smoothly. think like my probably my experience, know with already You know being good on the phone right because I was making the calls myself first before I had VA’s working But you know, that’s one of the things you know already kind of like having that experience, you know to be able to step in ⁓ and ⁓ That’s yeah, that’s probably one of the main things kind of having that experience alreadyAnd then also obviously, you know, having good VAs, know, kind of already having the experience of knowing how to pinpoint some of the best virtual assistants and ⁓ things of that nature.
Michelle Kesil (06:53)
Yeah, how was it hiring team members? Like how did that process go for you?Derrick Davis (06:59)
It was pretty good. actually already at first I was working with a ⁓ company out of India that was doing my ⁓ collections for me. And so they had supplied me with some people. We were working together for a couple of years when I first started. ⁓ But now I just more so a lot of times like a lot of other people, I get talent off of Upwork, things of that nature. I actually have had some USA cold callers as well. I had an office at one point as well.with some talent here in the States that was either cold calling or around the time when we started doing PPL, they would also follow up with those leads as well. obviously growing and having a team is definitely pertinent to success for sure.
Michelle Kesil (07:48)
Definitely. And so besides wholesaling, what other types of investments have you gotten into?Derrick Davis (07:56)
So yeah, outside of wholesaling, are ⁓ starting to do some of our own flips. ⁓ We did ⁓ one recently in Venus, Texas, where, ⁓ you know, I like to do a lot of creative deals. was always, ⁓ well, I was doing cash deals at first, but then you start learning creative finance as far as, on the wholesale side. So I would wholesale a of my creative finance deals out to other investors andWith that knowledge, I was able to start buying some properties with Creative Finance. So, know, toward the end of last year, we sold one, like I said, in Venus. We gave the owner who was a retired landlord. He was also at one point on the foreclosure list as well. We reached out to him and when he was first on the foreclosure list, right, and then we ended up…
I don’t think he was ready to sell at that point, but then some months later he reached back out to us and we ended up working out a deal with him. We gave him a down payment on the property. We did all the renovations and then basically when it was time to sell, we gave him the rest of the cash. Basically it was about 15,000 upfront to him and then 22,000 on the backend. And then we started making his mortgage payments while we were doing the flip until it was sold. ⁓
I think I was telling you earlier, just closed on another property today in Fort Worth that we’re going to use as a flip as well. And I bought that one on Creative Finance too.
Michelle Kesil (09:31)
Awesome. Can you expand on the creative financing? What does that look like for you?Derrick Davis (09:36)
Yeah, I mean, so I’ll kind of explain like this current deal that we just snatched up in Fort Worth. So on that property, ARV is about $265,000 to $270,000. And initially, we were under contract with them for $148,000, right? And we were looking to wholesale it. Originally, we had it out for about $162,000.for the wholesale price. ⁓ And some of my investors, were looking at it and they were looking at the amount of work that it needed. I’m not going to lie. I think we were just a little off on the repairs. We were thinking about 40 for ⁓ the repairs, but it is going to be a little more than 50. I would say anywhere between 50 to 60K is what we’re going to be spending to really get it all the way up to par to get resold on market.
And so I couldn’t really get the numbers to work either for us as a cash deal or for any of my investors To wholesale it as a cash deal either, you know, even trying to go down to about 155 156, you know My investors were looking at it like I don’t know because it does need foundation work, know I was thinking based on what he told me he had some foundation work already done and he hadn’t gotten you know, like all the cracks fixed and the door some of the doors weren’t opening and shutting, know properly so
We were thinking that the foundation would have been okay, but after having it evaluated, it is gonna need foundation work. We have to do some work to the roof. So it’s some larger components that have to be done to the property.
So the way that I was able to make it work was to go ahead and offer him a seller finance. And I told him, hey, I would either have to drop my price way down. We’re gonna have to be pretty much at 130, or we can go ahead and buy this on Creative Finance. I’ll do it for 145.
I’ll give you, I gave him $20,000 as a down payment and that property is completely paid off. So he’s just, you know, gonna sell or finance the remaining 125 to us.
And we also, we got it worked out to where there’s no interest and no monthly payments either. So we just have to pay him off within 12 months of owning the property, which we feel like, you know, doing the renovations and putting it on market, that’s a pretty fast.
market, the houses are selling pretty quick over there. So, you know, we feel like we can have it done at least within six months.
Michelle Kesil (12:37)
Yeah, amazing that you were able to get that deal done that way.Derrick Davis (12:42)
Absolutely, absolutely creative finance for the win.Michelle Kesil (12:46)
And what are you most focusing on solving or scaling to next in your business?Derrick Davis (12:54)
That’s a good question. I am mostly focused on, ⁓ we really want to find a multifamily property. That is the goal. honestly, would say that’s the goal to get to there. We want to start acquiring multifamily. However, I would say probably we’re mostly focused on just acquiring good deals right now so we can wholesale, stack a lot more money in the bank andYou know whether it’s a wholesale or flip, you know, it just depends on you know how the numbers work out if it’s going to be for us to buy ourselves or if we want to wholesale it we just also locked up a property in Florida it’s land that would that is going to be a good wholesale deal and ⁓ So that that’s mostly what we’re looking to do We’re looking to you know, build our bank up and then use that money to acquire a multifamily property
Michelle Kesil (13:48)
Amazing? Why specifically multifamily?Derrick Davis (13:52)
Well, just because getting a lot of doors, I feel like it wants is a good way to scale your business. And we’re also looking to make some passive income with wholesaling that’s active. I would say flipping is active as well. But we’re looking to acquire something where we can just get the monthly rent. obviously, there’s still maintenance and things of that nature. I know it’s not just a walk in the park. However, we want something where we can just have a lot of monthly income flowing in as well.And I think I did mention to you possibly that we bought land as well in Missouri that we want to have rezoned. So we want to also build our own multifamily up there. Right now that property is zoned for ⁓ duplex, but we want to get it rezoned so we can build about nine or 10 units.
Michelle Kesil (14:42)
Amazing. And how would that project look? Are you going to be the developer as well?Derrick Davis (14:49)
⁓ Well, I would have to hire a developer to work with us on that one. ⁓ But we would obviously head the project, kind of make the final decisions, things of that nature.Michelle Kesil (15:02)
Awesome. Is there anything specifically you’re looking forward to this year as far as any opportunities that are coming up?Derrick Davis (15:52)
Opportunities, I mean I just have a lot of goals myself. I want to start, you know, making more content and You know, that’s one of the things I definitely feel like I need to make more of I Want to you know, put some of my you know materials out there as far as you know training and things of that nature I do have a course. Well, not a course, but I basically have a coaching, you know program that I just put together So I just really kind of want to expand on thatI also have a program I put together for people that are looking to invest. They really just don’t have the time and ⁓ basically they can buy leads through us, right? Because we’re doing PPL, so we wanna be able to help people out. I did have one person that already joined that, so I wanna expand on that as well.
Michelle Kesil (16:44)
Amazing. Yeah. Can you share more about these courses? Like who they’re for, what they’re like supporting people with?Derrick Davis (16:51)
Yeah, yeah, so pretty much like with the the like the coaching, you know, I want to be able to help someone, you know, get started on their wholesale business. So it’s more so geared towards people who are kind of on the outside looking in. They probably don’t really know much about wholesaling or real estate. Right. And, know, they want to get in. Maybe they already have a full time job ⁓ or, you know, maybe they, you know, have another business, but they want to learn how to do this business. So basically we will.get your system set up for you. We will show you where to get the leads. We’ll help you to hire a VA. We’ll show you where you can buy leads, PPL, or start some of your own campaigns. And ⁓ with the other process that we’re offering is ⁓ the vetted leads, where we can just basically buy the vetted leads for you. Excuse me. And then you will… ⁓
Basically, we’ll do everything pretty much from A to Z, right? So we’ll get in contact with the homeowner, verify all the information about the property. We’re running comps on the property. So we’re finding the buyer if it’s going to be a wholesale deal or obviously if we’re going to flip it, we’ll take it down, pay all the cost to purchase the property and the cost for the flip, everything from A to Z. you, obviously,
buys into that program, they would get a percentage of the sale of the property or the wholesale assignment fee.
Michelle Kesil (18:26)
Amazing, sounds like a great program for people.Derrick Davis (18:29)
Absolutely.Michelle Kesil (18:31)
What are maybe some of the main mistakes you see people make in the beginning of their journey that you’re going to help them mitigate through this?Derrick Davis (18:40)
one of the main things I feel like is giving up too early. You know, a lot of people, ⁓ you know, they’ll, they’ll make calls or, know, maybe they’ll even buy leads, you know? ⁓ and if they don’t get a deal, maybe, don’t know, in the first couple of weeks, the first month, you know, then they’re, they’re on to doing something different. So I just feel like stick with it because with real estate, you know, there, there’s so much money that you can make. ⁓ there’s so much that you can learn and.I just feel like that’s one of the main things people make the mistake on is just giving up too early or pivoting to something else too quick.
Michelle Kesil (19:17)
Yeah, definitely. It’s a long game.Derrick Davis (19:21)
It’s definitely a long game. I definitely agree with you there. And even through the slow times and the hard times, I feel like you have to stick with it. If you want to get a side hustle or whatever you have to do in order to make some money, if things are kind of going down, I get that. But just completely quitting is just not an option.Michelle Kesil (19:40)
Yeah, totally. What are some obstacles that you overcome as you’ve been on this journey?Derrick Davis (19:47)
⁓ Probably the slow seasons. Just kind of, like I said, just sticking with it. And ⁓ one lesson I had to learn is kind of saving. Sometimes you get that big wholesale check. one year I had, ⁓ we were making decent money at the beginning of the year, right? But then things started to get kind of not so good, right?So one thing I would just say is, know, especially when you’re wholesaling and you don’t have assets that are paying you monthly, right? You want to make sure you’re saving, you know, and watching the money that you spend because it’s real easy to start taking vacations and, you know, start buying all these things thinking that, okay, every month is going to be like this. But, you know, sometimes, you know, you can hit a snag and that doesn’t really, it doesn’t really matter how big your business is because, you know, even if you’re used to making, I don’t know, you know, let’s just say a few hundred a month, you know, and then that dips.
to 50,000 for a month, but your expenses are super high and you have all these things planned out, all these expenses that you’re spending that’s not necessarily in the business, that can be a hard hit to you. So definitely watch your income and be frugal.
Michelle Kesil (20:59)
Absolutely. Are there any like surprises that you know you didn’t expect on this journey that now looking back you can like see them more clearly?Derrick Davis (21:12)
surprises, I think kind of like, you know, what I was talking about, you know, with you just now, I think when I first got in, I was thinking, you know, hey, once, you know, once the money starts coming in, you know, regularly, that will always be the case, right? But I think, and then also learning markets as well, what’s going on in the market, because also when I got in in 2019, the market was good, you know, 2019 and all through the pandemic, the market was great. Real estate was great, right?But one thing that I remember kind of being at a conference, talking to different people, was one lady, every time we went to a conference, she was always talking about the market and how can you make money when the market is down and things of that nature. And a lot of us newer people in investing, were kind of telling her like, well, we don’t really pay attention to all that because the market is great. We’re gonna make money regardless. As long as you get properties under contract, you’re gonna make money.
But again, when you start to get to a downturn, us people that weren’t around in 2008 and things of that nature, ⁓ you start to learn that lesson that the market can definitely pivot. The market can definitely go down and the money changes, right? Because there was a period where we were still locking up deals here and there, but we weren’t able to sell them because, you know, buyers were not really buying like that. Or it might’ve been a little harder to get contracts because sellers wanted such a high price and the market just wasn’t there anymore.
Definitely that, that’s one of the biggest surprises and lessons that I feel like I’ve learned as well.
Michelle Kesil (22:45)
Definitely makes sense. So before we wrap up here, if someone wants to reach out, connect, learn more, where can people find you and connect with you?Derrick Davis (22:47)
Yeah.Good question. I mean Facebook is where I’m most active. ⁓ I know that’s probably kind of old school to some of the younger people, but but I’m at Derrick Davis III which is the Roman numeral three. So Derrick Davis three on ⁓ Instagram. My Instagram is pretty dry, but ⁓ it’s DEE one basically the number one. So DEE one here. H E R E. ⁓
On Twitter or X, my business account is equity underscore building. I also just started a YouTube channel as well, and it’s a real estate news checklist. So we have a few videos on there with some property walkthroughs. And also I talk about the flip that I did in Venus where we got a deposit. This wasn’t the profit, but we got a deposit for $130,000 after we did that flip.
Michelle Kesil (23:53)
Awesome. Appreciate your time, your story, and your perspective. Thank you for being here.Derrick Davis (23:59)
No problem, I appreciate you having me and I hope to come back sometime soon.Michelle Kesil (24:03)
Of course. And for the listeners tuning in, you got value, make sure you’ve subscribed. We’ve got more conversations with operators like Derrick who are building real businesses and we’ll see you on the next episode.
