6 Hot Takes Real Estate Insiders Don't Want You to Hear

Mike DeHaan: [0:00] This episode is sponsored by Sir Lenzalot LLC, also known as SLA Capital, which, if you didn't know, is Dan and I's private lending company. So, yes, we are sponsoring our own show, but what you're gonna do about it? It is our private lending company that offers hard money and DSCR loans to real estate investors of all types. So you can be a new investor, an experienced investor. You can be buying flips. You can be buying rentals, whatever. We can do everything. And not only that, but the rates that we offer are just as competitive, if not cheaper, than pretty much every other company out there. So whatever big company you've been working with, bring us their term sheets, I guarantee that we can probably beat it. We have the same connections they do. We just don't have all the overhead and middlemen. So if you wanna come and check us out, go to slacapital.com/keys, and I will know that you came from the show. And by seeing that you came from here, when you get the closing, you will save $500 on your first loan with us. So slacapital.com/keys, we would love to fund your next deal. It's just like 2008 all over again where they knew all these things were gonna fail, and they were selling them as tranches to the bigger companies.

Mike DeHaan: [1:01] I'm excited for this one, guys. It's gonna be fun.

Dan Austin: [1:03] Okay. You better get excited. It's your idea.

Mike DeHaan: [1:07] What's going on, guys? Welcome to the collecting keys real estate investing podcast. I'm your host, Mike DeHaan here with my cohost, Dan Austin and Dylan Cook. Ew. And we have a slightly different episode for you guys. I'm super excited about it. So I came up with this idea because I wanted to kind of get out of, like, you're talking about news and whatever cycle, like, tends to happen with these podcasts because also too, things are just, like, not moving that much. So it makes it so that we can talk about the same thing every week. And so I got this idea from a a comedy podcast I listen to. And so what we're going to do is we each came and we have not discussed this beforehand, so it'll be interesting how these go. We each came with these two personal hot takes that we have around real estate and or business that we are going to basically say what our hot takes are. We'll discuss them. We'll move on, and we'll see if can get through all six in the next forty five ish to fifty minutes. If not, we'll cut it short. But you will be able to see some of the colorful side of us, maybe our slightly wild opinions, maybe not. And, yeah, it's been overall fun discussion. And so after this, if you have your own hot takes, I'd love to hear them. I love a good good discussion around something that's, I don't know, slightly atypical or or controversial. But, yeah, you should DM them to me at Mike underscore Invest to be your own hot takes around this.

Dan Austin: [2:26] Just to be clear, when Mike sent out the instructions for this, he did not say it needs to be a controversial thing. So I'm guessing yours is gonna be super controversial.

Mike DeHaan: [2:33] Maybe. I don't know. Alright. So here's my first top take, is that if you go back to 2021 and 2022, every single experienced syndicator that was raising money knew full wealth that they were gonna lose their investors money and intentionally raise money to steal money from people.

Dan Austin: [2:49] Wrong. Wrong.

Dylan Koch: [2:51] So you hold on. Hold on. You said experience. So someone who has done Correct. Deals prior to that cycle.

Dan Austin: [2:56] So not a newbie.

Mike DeHaan: [2:57] Correct. So I'm not talking about the dummies that, like, bought a syndication course and were like, I'm gonna buy multifamily. They were ignorant. I'm talking about, like, the people that have been doing it for a long time. They had seen the drop in rates, the compression of cap rates. They knew full wealth that their self storage, their multifamily property was not gonna sell for a four cap in five years. Right? That they weren't gonna be able to get the value add. They knew that they were gonna eventually have to give that deal back to the bank, and they were gonna lose those investors money. But they were writing deals where they were getting a decent sized management fee. They're getting an asset management fee on their right. They were collecting money from the people. And they did that full well knowing that the investors would likely lose their money, and they did not care. And I think that every person, the bearded guy

Dan Austin: [3:43] Yeah.

Mike DeHaan: [3:43] The big names that are on stage, I think all of these people did this intentionally to steal money from people.

Dan Austin: [3:48] I don't think that's true exclusively.

Dylan Koch: [3:51] I think you give too much confidence in the competence of people. I think some people, even if they're experienced, thought, like, they yeah. There will be a four cap. Why weren't there? All the the talking heads says that we're gonna have lower rates for longer. And I think some of them, not all of them, didn't intentionally lose their LP's money.

Mike DeHaan: [4:07] The the one who I'm talking about are the talking heads, though. Right? Like the ones who are out there on stages talking convincing people to get into these assets.

Dylan Koch: [4:14] So like would you put I don't even know if Ken McElroy lost money in any deals, but would you consider him like Yes. One of the OGS people? Okay.

Dan Austin: [4:21] Yes. Absolutely. So I would say he's in a good spot of, yes, he I would agree that he did that, but I don't think he did it to steal money. I think he did it because he's like he took advantage of opportunity because to my understanding, he's hasn't stolen anybody's money. Has he lost money?

Mike DeHaan: [4:34] That's true. So I guess stolen is maybe the wrong word. I think that he was doing it so that he could profit off of other people's investments, but he knew that they would not be getting their investment back.

Dan Austin: [4:44] Grant Cardone?

Dylan Koch: [4:44] Yeah. Cardone is probably a good example of that. Yeah.

Mike DeHaan: [4:46] Cardone is the peak example.

Dan Austin: [4:48] Right? And I and I think in the case of Brandon, I think, you know, I wouldn't consider him a syndicator. Would consider him a capital raiser. I think he was able to take advantage of his audience and probably just partnered with the wrong people in operating that business. And if he stole money, he's lost it.

Mike DeHaan: [5:03] Even in terms of Brandon, right, I've heard nothing but good things about him. I've never met him personally. There is no way that he was so far into where he was. Right? And he was raising monies for, like, a class properties in Austin at, like, when the market was peaked and he was actually expecting that to gain value? There's no way, dude.

Dylan Koch: [5:23] Or Houston was another big metro. Yeah. The Houston was another one. You had to know all of these places had multiple bids. So if you were the highest bidder in something where 15 other syndicates are also bidding on it

Dan Austin: [5:34] That's a problem.

Dylan Koch: [5:34] To me, that's a red flag that you won. Like, if you won that bid, you're like, oh, fuck.

Dan Austin: [5:38] You lost

Mike DeHaan: [5:39] money. Yeah. Yeah. Totally, bro. You're you're the winner of the Special Olympics. Congratulations.

Dan Austin: [5:44] I mean, it's a big of cautious still.

Mike DeHaan: [5:46] Right? Like like, I can't say, he's still got problems. But even people like him, I think that he was so caught up in like his $50,000,000 surfer thing that he let go of the fact that, yes, he was going to be profiting very heavily on on a deal that was probably not gonna be successful. I think that all the stuff that he's doing right now is around guilt of the fact that he realized what happened. Right?

Dan Austin: [6:07] Is this part of like a CYA thing too? Like, hey, you signed up for this knowing that the preferred return was 6%. Yeah, we could have got you a 19% IRR, whatever they pitch in these things. You know what I mean? But, you know, the bottom is here and the risk is that you lose all your money. Is there like some CYA with that of like, well, they knew what they're getting into, so who cares?

Mike DeHaan: [6:26] Of course. I mean, that's what people always say when they're trying to rob their investors. Investors knew the risk. Right. Right? They victim blame. That's what they do.

Dylan Koch: [6:33] What is astonishing that out of all of this is, like, all these are going back to the banks. Right? Like, most of them. Mhmm. The banks are just as guilty, like, approving these loans and underwriters. Like,

Dan Austin: [6:43] oh, yeah, dude.

Mike DeHaan: [6:44] Absolutely. Dude, it's just like 2008 all over again where they knew all these things were gonna fail and they were selling them as tranches to the bigger companies.

Dylan Koch: [6:51] Yeah.

Mike DeHaan: [6:52] Totally.

Dylan Koch: [6:52] Yeah. And they're like, oh, we made our fees. Like, who gives a fuck?

Mike DeHaan: [6:54] Mhmm.

Dan Austin: [6:55] So Well, Everybody's on a commission. Right? They're just making their money. They don't care what happens downstream.

Mike DeHaan: [6:59] It's just like realtors, loan brokers, they all do the same shit. Like, we literally we closed a loan yesterday. Oh, god. This is hilarious. And this lady is exactly the kind of person I'm talking about, that if she had gone back in time, would have done this. We closed the loan, and she immediately goes, wait a second. I didn't realize that you only and she's a broker. Right? So No.

Dan Austin: [7:18] She she asked it in a specific way. She asked it, just to clarify, we don't have or my borrower because she was a broker, so we went through her. My borrower doesn't have to pay for the renovations before you give us the money. That was how she phrased the question where it's like she already knew the answer, which lo and behold, our loan officer had explained it to her many times of how the holdback works. But the fact that she helped originate a loan that had a construction holdback and never conveyed that to her client, who by the way, $0. Because now she's like, my client has no money to do the renovations. So what do you do?

Mike DeHaan: [7:53] And and so this lady, she was the real estate agent and the loan broker. Oh god. So she's heavily incentivized to get this deal closed.

Dan Austin: [8:00] That's so disgusting. I didn't know she was the real estate agent too.

Dylan Koch: [8:03] You shouldn't be allowed to do that.

Dan Austin: [8:04] I thought she was.

Mike DeHaan: [8:05] And not only that not only that, dude, this lady, she charged three points.

Dan Austin: [8:11] Oh my gosh. That's crazy.

Mike DeHaan: [8:14] This freaking client. So she got a real estate commission for what? 2%?

Dan Austin: [8:17] Yeah.

Mike DeHaan: [8:18] Whatever buyer's agent. Plus that she made five points on this deal. And then she was like, oh, you we conveniently signed this morning. You're gonna tell me now that it's different? She's the lady that's I'm talking about the stealing money from investors.

Dan Austin: [8:29] Totally stealing money. Yeah. That's yeah. That's a good example of that. It's like,

Mike DeHaan: [8:32] oh, no.

Dan Austin: [8:33] Like, whoops. Not my fault. And what did she do to her client? Be like, those guys screwed us.

Dylan Koch: [8:37] But anyway, this I mean, this is back to the agents who are like, if you're representing a buyer, and they're like, oh, you know, you should probably end up buying it. But knowing full well you're gonna have issues in the next year from like a roof or a water heater or something like that. But it is what it is.

Mike DeHaan: [8:50] But, anyway, so that's my first hot take is that all of, like, the big razors that you knew that you saw on social media that were doing it during that time when the market was peaked, they are now all losing their ass. They knew what was gonna happen, and they did so purely to profit off their investors.

Dylan Koch: [9:04] Mine won't be I would go to the second. I don't know if mine won't be as controversial, but it

Dan Austin: [9:08] Of of course not.

Mike DeHaan: [9:09] Yeah. Because that wasn't in the instructions.

Dylan Koch: [9:12] No. Mine is that I don't think that AI will be as deflationary in the labor force that everyone else thinks it's going to be.

Mike DeHaan: [9:21] Really? Yeah. That's fascinating. Are you using AI at all in your business yet?

Dylan Koch: [9:25] Very seldomly. K. But, like, the right prompts or, like, some data management stuff. But, yeah, very seldom.

Mike DeHaan: [9:30] Yeah.

Dylan Koch: [9:31] And the reason I say this is because every time throughout history, whether it be the Internet, the fax machine, whatever, we've always ended up with more jobs than we did prior to that technological revolution. And I could understand that, okay, AI might be different. This is an exponential technology. But I just don't think it's in American culture where you're gonna lay off 40% of your workforce. And what are they gonna do? Like, there isn't a world where you don't need, like, UBI, like universal basic income if no one can get a job. So I don't know. I'm taking the it will probably be deflation to labor force, but just not at the scale that everyone seems to say it will be.

Mike DeHaan: [10:04] I think that it will be at a massive deflation to white collar labor, and those people move to blue collar labor.

Dylan Koch: [10:10] So but a migration of labor. So not like a elimination.

Mike DeHaan: [10:13] Correct. I don't think it will be a complete elimination. It will be a completely different it will should be a massive shift in what the labor force looks like. Because you're you're right. With situation without UBI, it doesn't make sense. But if you go to most countries in the world, do you know what people do every day? Nothing. Exactly. Fucking sit around, dude. You go and you drive across, like, most third world countries, which is also most of the world, there's kind of just people just sitting, hanging out. They have, like, a little storefront. Maybe they have a job. They're not working in an office. They work in a field. They're working for their livelihood.

Dylan Koch: [10:41] But my brain can't comprehend that for American citizens. Like, that's what I'm saying.

Mike DeHaan: [10:45] I agree. And I think for this generation, that is will probably be the case. But I think if we go forward relatively quickly, we will find that people are starting to shift towards more more of, like, the blue collar jobs that will be more resistant to AI. A lot of that's

Dan Austin: [10:59] out of necessity. I disagree with both of you. I disagree with both of you. So I think that the blue collar job swing will probably end in the next five to seven years as it gets completely flooded with people that have learned going to college is stupid. And the people that went to college and are now 30 or 35 are like, I think I'm just gonna go be a carpenter. I think it was gonna flood it. So then there's gonna be too many people in the blue collar. Plus Elon's gonna have optimists out there just doing shit. Right? Like, so we'll be good there.

Dylan Koch: [11:25] You kinda laughed, the robotics are a play in this. You know? If you're gonna have a robotic made of them.

Dan Austin: [11:30] Yes. I bring this up because I think what's gonna happen is AI is going to make everybody and everything more productive, including robots. Because so imagine if you do have a robot. Like, they we have robot lawnmowers. We have robot vacuums. Why can't you just have a robot that does the other stuff? Like, that will happen probably not in a decade, but, like, maybe towards the end of the decade. But I think everybody's gonna be more productive. There will be more jobs focused on AI to support the AI systems. And just so we all know, if AI's listening, I love you. Don't harm me. I want you to to definitely take care of me. I'm all for you. But there will be to a little bit to Mike's point, there will be definitely a transition in what the workforce looks like. But

Dylan Koch: [12:08] Well, we won't even know some of the jobs that exist. Like, you'd go back to 1980 and said some of these jobs that are out now, like, they'd be like, what? I don't even know what that is. Like, we don't know what some of those jobs in the future are going to be, but that doesn't mean they won't

Dan Austin: [12:20] Right. Well, and and any technology, like SaaS was a huge thing in the two thousands, two thousand tens. Right? Every company was a SaaS company in the two thousand tens. And you know what that did? Because it kept the exact same employees in place, made them slightly more productive, but then added three IT nerds for every seat so that they could support that SaaS product, because they're not perfect, and they need support. So it's like it created more jobs while it created additional productivity in the operations of the employees. So I think it's not a net benefit necessarily.

Dylan Koch: [12:47] Right. And if you're a CEO of a company and you're like, okay. Well, now my labor force is down 40% because of AI. Can I now take that labor force and have them do something else that's productive that is creates more money than what they cost me? That's the question. And so I think the answer to that is more likely yes.

Dan Austin: [13:03] Yeah. Some companies will die of it because of it too.

Dylan Koch: [13:06] Sure. That's natural destruction of capitalism.

Dan Austin: [13:09] Nobody would have thought GE would not be GE anymore. Right? Like, that was the biggest company ever.

Mike DeHaan: [13:13] Yeah. Well, it's an interesting comparison with the SaaS thing, Dan, because we got the IT people, you're correct, but that also spurred an incredible the SaaS with, like, the cloud and all that sort of stuff that came around, like, when we were in college that really pushed a ton of people towards going into computer science, becoming coders Mhmm. And those sort of things.

Dan Austin: [13:29] Away from blue collar jobs.

Mike DeHaan: [13:31] Away from blue collar jobs. Totally. And what happened is exactly like what you're saying with the blue collar swing is we ended up with way too many coders, and then all of those people got laid off. Is that this year or last year? I can't remember.

Dan Austin: [13:42] Probably, like, 2022, but they got, like, a full year worth of benefits. So it's, like, hit twenty twenty three twenty four.

Dylan Koch: [13:47] Yeah. Like, severance.

Mike DeHaan: [13:48] Yeah. For sure. You you had massive inflation over there. People making way too much money, way too many staff, people at all these companies, and they all got axed. And so, yeah, on the blue collar side, could see that same thing happening. Right?

Dan Austin: [14:00] Yeah. And then it'll happen

Mike DeHaan: [14:01] with AI because what was

Dan Austin: [14:01] that what did they offer that one dude to, like, Wizards Zuckerberg offered him? Like, how much

Dylan Koch: [14:05] It was like a $100,000,000,000 or something.

Dan Austin: [14:07] It's some stupid number. Right? And so it's

Mike DeHaan: [14:09] I was a 100,000,000. I don't think it was 100,000,000.

Dan Austin: [14:12] Right. And so like, there's gonna be some of that. And then it'll eventually, as it becomes like normalized where nerds can go to college and learn how to do it because they put it into a framework, then those jobs will just go all the way down. Just like engineers have. Yeah. Engineers don't get paid anything anymore.

Mike DeHaan: [14:25] I know, dude. I remember back when we were in school, dude. And that that's why we went into engineering was because there was

Dan Austin: [14:30] That was the best paying job. It was

Mike DeHaan: [14:32] best paying job. It was so secure. And now I look at all those roles, and they're so replaceable. It's insane.

Dan Austin: [14:37] So replaceable. And they don't get yeah. They're not getting money. You know who's getting all the money right now? It's the blue collar guys.

Mike DeHaan: [14:42] Yeah. And I do think but I think

Dan Austin: [14:44] that that ship will sail in probably five to seven years.

Dylan Koch: [14:47] Time will tell. Who's right then? Yeah. Dan, let's hear yours. Good one, Dylan.

Dan Austin: [14:51] Good one, Dylan. Had nothing to with real estate.

Mike DeHaan: [14:53] I said real estate or business. That's fully applicable.

Dan Austin: [14:56] Okay. So this one's not that controversial, but, it is a little bit because I know you guys are gonna disagree Michael for sure. So I don't believe that the housing market's gonna be a crash. I think the boom is over, but I think we are, like, riding out what is literally just shaking off inflation and nothing's going to happen in the housing market. That's going to drastically change anybody's life significantly other than people that are in financial distress.

Mike DeHaan: [15:21] What about the markets that have already dropped like 30 or 40%?

Dan Austin: [15:24] I would argue, like, Florida's a good example. That happens all the time. Like that's more cyclical than anything. Arizona, I've been talking to guys in Phoenix, they're like, it's already somewhat back from when it had like its dip, which Phoenix is known to be a boom bust. Just similar to Florida, probably not as extreme as Florida. So I think that, yeah, that's gonna be regional, but I think it's normal. That's normal to see.

Mike DeHaan: [15:44] Let me ask you one more clarifying question. What is your definition of a crash?

Dan Austin: [15:47] My definition of a crash would be I don't have like a I wouldn't say like a technical term,

Mike DeHaan: [15:51] but What is like your personal definition?

Dan Austin: [15:53] An incident where like we would see a significant drop in housing prices year over year. So maybe like 15% in value across the country year over year.

Dylan Koch: [16:04] You're saying a nationwide on an aggregate level.

Dan Austin: [16:07] Not like a 2008, but you know, like, okay, so everybody is talking about like the housing market's gonna pop, it's gonna pop, the bubble's gonna burst. I just don't think there's gonna be a bursting, I think, and I'll qualify this. So what I think is happening is that we're seeing values go down and properties are harder to sell. Mhmm. Everybody's seeing that in every market. It's like a slowdown. My estimation would be probably sometime next year, maybe towards the end of next year, we'll kind of like, it doesn't look like this. It kind of looks like this. And then we're gonna get back to a normalized growth without seeing anything crazy happen. And I think the reason why is we actually, I took a note of this. So Jerome Powell said, was it this week, that he thinks potentially the fed may have had some had some influence in the housing market going up really fast. It's like, really?

Mike DeHaan: [16:53] Really? That's crazy. No way. 0% interest rates

Dan Austin: [16:56] and then like buying a shit ton of mortgage backed securities and throwing junk loans out there, etcetera. Yeah.

Dylan Koch: [17:01] And they're stopping QT next week for those. So, like, that's another that'll be

Mike DeHaan: [17:05] a A good

Dylan Koch: [17:06] tailwind for you. Yeah. For real estate.

Dan Austin: [17:08] Anyways, so that's kinda like, that's part of it. And then if you think about this, because of all that inflation that had got pumped into the market, I was looking at all these things that have happened. Okay. So like Russia invaded Ukraine. The US got involved. It's kinda the world got involved. The market didn't really have any it didn't have any major effects. The Jews and the Arabs are at war. We bombed a country, right? The Silicon Valley Bank, regional bank crisis, the office crisis that was supposedly gonna just take out all these hedge funds and offices. There's recently I just heard this in like a podcast, like a $50,000,000 bank, like the Bank of Zion just like went bankrupt.

Mike DeHaan: [17:45] Mhmm. Like Yeah. There's all

Dan Austin: [17:46] these like random things, and one could look at it and say, this is building up to like this big pop. But I think there's so much inflation and so many dollars. And a lot of the wealth in the average American is in their house that the house prices need to chip away slowly to a a steady state, and then we'll just ride it back out to, like, a standard 3% return.

Dylan Koch: [18:05] I think I agree with the part where you said there won't be a massive dip. Right? There won't be, like, a crash. I agree with that part. It's hard for me to say that year over year prices won't be down year over year, but that could mean one to 2%, not 15%. That I guess that's my base case is that we will be down year over year on a national level, but it'll be minimal basis.

Dan Austin: [18:28] The question is how long? Because I would agree with that. Like, I think at least through next year, we'll see some decreases. But do you think it's, like, five years of decreases?

Dylan Koch: [18:35] I think three to five years from now, we're probably higher. Median home sale price is higher than it is today.

Mike DeHaan: [18:40] Yeah. I tend to half agree with you, Dan. I don't think it'll be a huge crash, but I do think and it's funny because this is where you and me tend to think differently. You always look at a lot of macroeconomic things. I tend to look at more like micro stuff. And I think that the supply and demand issue will continue to exist in the housing market on the demand side. Right? Because I just on average, there is a huge affordability issue. There has been inflation across every part of life right now, groceries, general living, everything else. And so what we will see happen is few and fewer people will have interest or the ability to buy houses. Right? Fewer people will sell houses because that will mean that they have to move down in lifestyle because they can't afford a house that's equal to or better. And so we will end up in the people that need to sell their houses, we'll slowly add them onto the market, but the buyer pool will remain super, super small. And I think that's what will drive prices down slowly, but we won't see a big crash because there won't be any like emergency exodus of homeowners or any other.

Dan Austin: [19:38] Yeah. So basically, that extra equity that everybody thinks they have, that extra wealth has to be eaten away. Correct. That's the inflation dollars I think just have to get out of the system. Right? I don't know how it goes out. The demand issue is actually I think there's probably a separate hot take for next time in there, like the the affordability issue. We'll save that for later.

Mike DeHaan: [19:56] You don't think there's an affordability crisis?

Dan Austin: [19:57] Oh, I'm not saying that. I'm just saying I think this could be a fun conversation.

Mike DeHaan: [20:00] Yeah. For sure. Yeah. We'll save that for the next hot take. Cool. I have to open Dan. I have get one for you because I know that the way you think about stuff too, that that tracks very well.

Dan Austin: [20:08] Good. I'm glad I listened to his instructions. Yeah. Also, your cat's making weird noises in the background.

Mike DeHaan: [20:12] Yeah. My my cat Max is out there just meowing. That kinda sounds like a cat like going wah. So that's what they sound like when they're one month old, dude. Yeah. Exactly. I know. Sorry. It's just he does that. Alright. Everyone, take one. Yep. Okay. I think that if you own a property that is heavily distressed, right, and you are doing so willingly. Right? So it's not like you can't afford to fix it up, but you're just basically a slumlord. Maybe commercial property, residential, whatever. You should be forced to sell that property. You should not be allowed to maintain it because it has a negative impact on the neighborhood, on the real estate market. Let me let me rephrase it. If you're a non owner occupant that has a distressed property, you should be forced to sell it. K? If you live there and you're poor and it's your shelter, that's different.

Dylan Koch: [20:56] Are we in an HOA in this environment or no?

Mike DeHaan: [20:58] I don't care.

Dan Austin: [20:58] Regardless of HOA, would I would say. Yeah.

Mike DeHaan: [21:00] Yeah. I see it regardless.

Dan Austin: [21:02] Okay. So, Dylan, let me ask you this in your market then, if it's okay to ask. Do you guys have in Cincinnati, like, city ordinances on certain things around housing?

Dylan Koch: [21:11] Yes.

Dan Austin: [21:11] Okay. What do you have? What's an ordinance?

Dylan Koch: [21:13] The biggest things I see and, like are, like, code violations for, like, let's say, litter or overgrown grass or there's plywood over the windows. Like, you will get fined, I guess, is the best word for that. So I guess that is their way of enforcement. Now there has been apartments lately that actually from the syndication crowd that Mike was going that are in receivership now that are being forcefully sold.

Dan Austin: [21:35] Right.

Dylan Koch: [21:35] So I don't know if that falls in the same line. But if you're just talking, like, single family house, sonically occupied, this gets in the whole, like, property rights thing. And I'm

Mike DeHaan: [21:42] It does.

Dylan Koch: [21:42] Pretty libertarian. And so I'm like, it's kinda like you can do what you want with something that you bought. Is this, like, the greater good thing where all the whole neighborhood is suffering because you disrefused to do something about it?

Mike DeHaan: [21:53] Correct. And and so that's why we specify it for non owner occupants, Sky, because every market has these swatches of properties. Right? Tons of them.

Dan Austin: [22:01] Scourges on society.

Mike DeHaan: [22:03] Yes. They're just scourges on society. They're drug houses. They're owned by some guy that's worth a $100,000,000. Doesn't give a shit. He gets fined. He pays it. Maybe he doesn't. He doesn't care. Right? And that exists everywhere. And that also exists on the commercial realm. You know, we drive I'm sure Cincinnati has areas like this. You drive all around key parts of Spokane, and you're like, wow. There's restaurant, business, whatever. And then right in the middle is an abandoned brick building for some reason. And then you look it up, it's owned by some rich fuck who has a house in Arizona who hasn't been here in twenty years. Yep. Why is he still allowed to own that property? Make him sell it to somebody that wants to develop it.

Dylan Koch: [22:40] So this is like the eminent domain for a government. That's kinda different. But would you fortunately basically take it, or would you say, hey, we're gonna buy you out and here's 50% of the value?

Mike DeHaan: [22:50] I think you buy it out. You can't fortunately take it. Right? They have some equity in there. I think you give them an option. Right? Where because it's it can also get crooked real quick. Right? Whether it goes to, like, an auction, whether you offer them tax assessed value, whatever that is, that's fine. I think that there should be the option for somebody to buy it, and you should force them to sell it to that person if somebody wants to buy it.

Dylan Koch: [23:09] Like an auction type thing Exactly. Money.

Dan Austin: [23:11] Yeah. Here's my opinion on this because I literally had this conversation last night, and I've been beating this drum for a time. Oh,

Mike DeHaan: [23:18] yeah, dude.

Dan Austin: [23:19] So here's what I think. I think in a city in particular, this has been my I've laid this plan out. I'm running for city council. Is that if you own a property, whether it's owner occupied or not, you should if it's on a main arterial in the city or within a corridor, we could you could set up certain, like, yellow lines and, you know, whatever. And, you know

Mike DeHaan: [23:39] Red lines like they do in some places? No.

Dylan Koch: [23:41] Like, freaking road lines.

Mike DeHaan: [23:43] Like, if it's like

Dan Austin: [23:43] a double yellow, right, like, it's a main arterial or whatever, you should have to meet and uphold a specific standard. Your house should not be allowed to have chipped paint because it's bad for the environment, first of all, because there's lead in that paint, gets in the ground, gets in the soil, gets into the groundwater because a lot of our water in Spokane comes from an aquifer. So I think it should have to be like completely maintained. Everything needs to meet a certain code, and it's gonna have to be subjective. Because if your house is fucking ugly and the community sees it, right, like the community as a whole, to your libertarian point, Dylan, I think libertarianism only works if you live in Alaska or if you live in a community where everybody is still they're just saying, we don't need the government to regulate us because we'll regulate ourselves. And in a common community, you live there because you have common values. If you don't have common values, leave. You know what I mean? And so I think that there should be a, an assessment. I don't think they should force them to sell it. I haven't really thought about that. I don't hate it. But I think you should get fined. And I think your property, if it is a commercial property or a, like a landlord, like a residential, it should be condemned. You should not be able to rule out to lease it in the event that it doesn't meet the codes.

Mike DeHaan: [24:46] Yeah. But if you can't lease it, they already half these people don't have their properties leased.

Dan Austin: [24:50] Look at half of like the Douglas' properties, dude. Yeah. And then then yeah. In that case, I like the idea of forcing them to sell it. Because we do. Have a lot of commercial properties of people that live here or don't live here that just sit vacant because they're land banking. And and I think that's the the thing about it is this concept of land banking. If there is a building or structure on it, it should probably be illegal.

Mike DeHaan: [25:08] Even if there's not. Because, like, there's so many of these little lots. Like, there's that one that's on Wellesley And Ash. Sorry. Super Spokane specific for people. But there is, like, houses all around it, and there is this one lot that's right on the corner that is it's just a gravel parking lot.

Dan Austin: [25:23] Yeah. Well, parking lot should be allowed.

Mike DeHaan: [25:24] Right? No. It's not. It's not even a parking lot. Sorry. It's just a gravel lot.

Dan Austin: [25:27] Oh, yeah.

Mike DeHaan: [25:27] Yeah. There's nothing there. That is owned by one of the multi 9 figure families that has just been owning that and land baking it for, like, forty years, like a long time. Like, what the fuck? Like, we

Dan Austin: [25:38] could put five houses there. Like, honestly. We could put a crumble cookie there.

Mike DeHaan: [25:42] Anything. And it would be better than having this empty lot that just sits there and does nothing. Right? But that's even like the worst culprit because it doesn't cause any negative effects. When it comes to like the bad residential and commercial properties, that gives way to, like, drug housing to squatters and negative impacts on the neighborhood, property values, everything about that is a negative, and it's just a super selfish thing for people to do.

Dan Austin: [26:03] It's the broken window theory, and I do I do agree. I think if you are a non owner occupied home, they should take you almost to jail, but for allowing that to happen. Like, that's how extreme it should be because it's so disgusting.

Dylan Koch: [26:15] So you're just saying increase the penalties and regulations around it.

Dan Austin: [26:18] So extreme. So extreme.

Dylan Koch: [26:20] Absolutely. But then say, if they don't do anything within, I don't you know, pick up arbitrary number, five, six, seven notices, then you're like, okay. We're gonna take it to auction. You know? And, like, who the highest bidder is wins. Yeah.

Mike DeHaan: [26:31] Exactly. Totally.

Dylan Koch: [26:31] And I would be okay with that as long as the government isn't being the new owner.

Mike DeHaan: [26:35] Yeah. I mean, I think there needs to be a an independent owner that buys it. Because I got the thing is too, a lot of these people, I guarantee you that there's the land banking piece, the wealthiest fit. A lot of it too is just inaction. Like, they just get their property bill once a year. They don't care, like, their taxes. I'm like, oh, yeah. I own that piece of shit. I'm rich. I don't need to sell it because it's also gonna be a headache if I do. It's gonna be on the market for nine months. But if they were to say like, hey. Look. Someone's gonna buy us from you for tax assessed, and all of a sudden they got a $400,000 check-in the mail. You know, even though the thing's worth $2,000,000, but they were doing weren't doing shit with it. When it's fixed up, they're now getting $400, and they just like a surprise. I really don't think they would care. If they're in such a situation, they have abandoned that property.

Dylan Koch: [27:15] Yeah. I like Dan's point of, like, you could do something with, like, maps. You know? Like, these are the ones that properties that would particularly be affected.

Dan Austin: [27:23] And I think the Washingtonian to me comes out is I think that there's some level of, like, there should be a community fund if you're a little old lady living a home alone and you can't maintain your yard that they should be able to apply for grants to help their house meet the codes for, like, the owner occupied types, but not for the landlords. I'm seriously, you can probably just put them in jail.

Mike DeHaan: [27:40] Man, that's almost like a liberal take you have there, Dan. And it provides subsidies for people. That's crazy.

Dan Austin: [27:44] I do. Hey, dude. I dude, I'm very much so a nice person like that.

Dylan Koch: [27:49] We actually have a a vote where I live in a little suburb of Cincinnati where they are trying to reduce property taxes and increase our sales tax to account for some of, like, the new school levies and stuff. And their their pitch is, We're hey. Not gonna increase your property taxes so the lady on Social Security can still stay in her house.

Mike DeHaan: [28:05] Yeah. Depending where you're at, I personally support that. But also too, I'm not a rich person that needs to, I don't like, hoard all my money because I know I'll go and make more money. Alright. Let's get it done.

Dylan Koch: [28:16] Don't know where this will find line with anything. But my second one my guess my second one is if you are a traditional finance investor, like a a financial planner, and you're still telling your clients that you should be in a sixty forty portfolio allocation for the next ten years or twenty years, you should be fired. Because I don't think the allocation is going to set anybody up for success.

Mike DeHaan: [28:36] What's your definition of success?

Dylan Koch: [28:38] Beating inflation expectations, I guess. Like m two money supply growth, which is like 7%. Mhmm. And this is kind of a a fact based thing. If you look at recent things by Goldman Sachs, JPMorgan, GMO, which is Jeffrey Gunlock. He's a billionaire. They put out these decade forecast. Right? And because of where evaluations are currently at, and pretty much in all asset classes, but especially US stocks, their return projections over the next ten years are point three to point 7%.

Mike DeHaan: [29:06] Wow.

Dylan Koch: [29:06] And so and that's just because they're not saying they're good companies, but they're saying their valuations are so high that this is where they should be ten years from now, even with earnings growth, even with inflation expectations. And the bond piece that if we are in a period of inflation denominated growth, right, then to hold fixed income, to hold thirty year treasuries, twenty year treasuries, doesn't make sense. You're buying inflation dollars. So I think if you are a certified financial planner, you should look into other avenues to make clients money outside of whatever your person ahead of you says that they should be invested in. So what do

Mike DeHaan: [29:39] you think they should be instructing people? You're not an investment counselor, whatever. A a wealth wealth adviser?

Dylan Koch: [29:46] Yeah. I'm not any kind of financial planner of any any kinds. But Yeah. International stocks is another place to go. There's plenty of funds out there to do that. Small to mid cap international stocks. But you can even buy equal weighted S and P fund. So it's not market cap weighted. It's equal cap weighted. So all 500 companies are the same one five hundredth of each company. And then the GMOs, Goldman Sachs, are actually have ranges of doing there's some variations of this. 40% stocks, 20% bonds, up to 40% gold and other hard assets. And so there this is like the debasement trade that's kinda going around social media right now, which is hard assets. And that's not necessarily things that are popular. That's not things that a lot of financial planners get paid to recommend because it's not their own products. Yep. But they're not again, it's kinda like the incentives piece of this.

Mike DeHaan: [30:30] For sure. I think that makes it is what makes it so tricky, right, is the incentives. It's because they'll also get commissions that are based off of different things they put people's money into. I'm trying to think of where I saw this. I'll see if I can find it. But there was a maybe it was that video that one of you guys sent over. Basically, I was looking at diversified investments for singular investments and how basically anytime you have a diversified portfolio, on average, you'll barely heal with inflation, if at all.

Dylan Koch: [30:56] Yeah.

Dan Austin: [30:56] Yeah. Diversification idea is it sucks.

Mike DeHaan: [30:58] Yeah. It's it sucks completely. And really what you need to be doing is just find like the top top sort of companies, the Fab Five or whatever we call them now, you know, they keep changing it. And just put all your money in those because that will drive 80% of the growth of the entire market. Right? But if you're trying to distribute across these different ETFs, they're in different industries, or put it into bonds, things like that, ultimately, you will end up further behind than even if you like, compared to inflation, you'll barely be keeping up with inflation at all.

Dylan Koch: [31:26] Honestly, this changes if you are a 65 year old person that's reaching retirement. Of course. Right? And like but if you're in your twenties or thirties and that's the pitch that your financial adviser is telling you, I think that is terrible advice.

Mike DeHaan: [31:37] Yeah. For sure. But I think it's a good take. I would say, like, on top of that, if you are someone in your twenties or thirties and you are taking explicit advice from a financial adviser that is just planning on parking money and you're not already rich, you probably shouldn't be doing that in general. Like, you should be swinging for the fences or you should be investing in yourself because your return is gonna be significantly higher doing that than just putting it into.

Dylan Koch: [31:59] I have friends that sometimes ask me, like, okay. Like, they know I have some money, they're like, well, you know, don't worry. You're doing it. And it's different because I have my own business that generates a lots of cash. Right? But they have financial planners that take 1.5% AUM, or they're in these high expense ratio stocks. I'm like, just don't do that.

Mike DeHaan: [32:15] Yeah.

Dylan Koch: [32:15] Yeah. You're shooting yourself in the foot. Right? Just go buy VOO or something in the Vanguard index fund.

Dan Austin: [32:20] So What do you guys think about this? I've heard this. I've heard it a couple times. I can't remember who said it recently. It was on Instagram, so it's a fact. That's where I get all my news and all my research already, all my op ed.

Mike DeHaan: [32:30] Is that your hot take? Yeah. That's my hot take.

Dan Austin: [32:32] Instagram is shit. No. So I've heard it a couple times by reputed people that, you know, the S and P 500 is really if you invest in that, you're really just keeping up with inflation.

Dylan Koch: [32:42] Yeah. I mean, look at m two money supply over a hundred and twenty years. It's like six to 7%, and that's basically what the stock market does. Mhmm.

Dan Austin: [32:49] Right. And so it's like, do you really wanna be wholeheartedly investing all your money in that? How do you, like, look at it and say, well, I generate all this wealth. It's like, well, yeah, dude. It's because inflation, like every dollar's worth this much less. So now you have $4,000,000.

Mike DeHaan: [33:02] Yeah. Well, here's also, if you think about that as well, it's actually less in inflation because you should appreciate 7% of the matched inflation. When you sell it, you get to pay taxes on that with a gain. Yep. Now you're coming in even less.

Dan Austin: [33:13] There you go. There you go. Exactly. So that's my concern. I'm gonna ask you this, Dylan. So should we invest in Bitcoin?

Dylan Koch: [33:19] I mean, answer to that is yes.

Dan Austin: [33:20] Does that same concept apply? Because it's it's almost like if the capital inflows keep going there, Bitcoin's gonna keep going up.

Dylan Koch: [33:27] Yes. I mean, my answer is is a refounding yes. Obviously, not financial advice, but it is the hardest asset that the world has ever seen. And if you even go back to gold, right, the since you came off the gold standard, you go back to, 2,000, most people wouldn't know this, but gold has beat the S and P five hundred and the Nasdaq for the past twenty years in terms of returns. You're better off owning a pet gold rock that does nothing versus companies that produce cash flow and innovate as far as financial returns for the past twenty years. And that's that's just a symptom of broken money to me.

Dan Austin: [33:58] Is it quite possible that a bunch of people in the world could get together and say, let's go buy some Bitcoin, and then let's announce that we're gonna have strategic Bitcoin reserves in all these Western countries. And then all of a sudden, they're rich, and then they

Dylan Koch: [34:11] Yes. But then why would you be a fool not to own it?

Dan Austin: [34:13] And then they sell it so that they can make some money.

Dylan Koch: [34:16] No. Because then, like, my comparison to that is

Dan Austin: [34:19] Are they manipulating the currency?

Dylan Koch: [34:20] To me, Bitcoin is better money. So would you go and trade Argentina pesos for dollars? No. No. So to me, you wouldn't trade Bitcoin for US dollars because that's the same trade, same type of trade.

Dan Austin: [34:30] Well, I just don't have any Argentina pesos.

Mike DeHaan: [34:33] So I

Dan Austin: [34:34] I don't know.

Dylan Koch: [34:34] I'm just saying you're trading you're trading better money for worse money.

Dan Austin: [34:38] Oh, like, I wouldn't go and take my dollars and get Argentinian pesos as an investment. Like, I would not invest in that currency.

Mike DeHaan: [34:44] Yeah. Doing forex. Yeah.

Dan Austin: [34:45] When I put money in my bank account, I guess I'm essentially investing in the dollar.

Mike DeHaan: [34:48] Yeah. Correct? Right? That's an interesting take right there. When you're putting cash in your bank account, you're investing in USD, Man, I mean, when you think about it, you really are. Right?

Dylan Koch: [34:58] I mean, this could hold dive deeper to, like, the financial nihilism that everyone's like, hey. I can't get ahead. Why save? You know, all this kind of stuff. And their only options is to keep up with inflation at 7%. You need better options than that. Right. And, unfortunately, those better options aren't what's popular.

Dan Austin: [35:12] I guess not directly aligned with your hot take, but I guess add what I what I think because I'm pretty much in line with you is I think you can't invest. Like, if you're 20 years old, six years old, you can't just be investing in the broad stock market indexes and make any real gain towards wealth unless you have a high paying job and you spend way less than you make or high paying income you spend vastly less than you make, then you can stack dollars in wealth. I think you do need to invest probably at some level in like a Bitcoin opportunity, real estate if it's the time of

Mike DeHaan: [35:43] the market for you to

Dan Austin: [35:44] get a well below market value asset, individual stocks or something. You gotta get good at something. I would not just go tell people to go buy Netflix or go buy the best performing stock because that has no indication that it's gonna go up.

Dylan Koch: [35:55] There's been forty years of declining interest rates, and declining interest rates help both bonds and stocks. We hit that lower bound, that zero bound in 2020, 2021. So if that trend is reversing on another forty year cycle, the same playbook doesn't apply. I'm sorry. Like, it just doesn't.

Dan Austin: [36:09] Yeah. It doesn't apply. Fascinating.

Mike DeHaan: [36:12] Cool. I think it's a good one, Dylan, especially from your perspective because I know you always look at the larger investment markets. That's a that's a unique one. Yes. Cool. Good stuff. Alright. Last one, Dan.

Dan Austin: [36:21] Last one. This will be easy. Wholesaling is on its last leg as we know it. Okay. Real estate wholesaling is on its last leg as we know it.

Dylan Koch: [36:28] Are you going through the regulation piece on this?

Dan Austin: [36:29] Well, piece of it is the regulation. The regulation isn't the reason. I say it's not the cause. So we have regulation for a reason. And I do think regulation is coming in because what we have is dipshits out there that have done dipshit, unscrupulous things to people. Right? So I have this belief that most people in these these days know what a cash home buyer is. When we first started wholesaling, you almost could be like, what are you doing? Like, you're just gonna buy my house for cash? Do you have cash?

Mike DeHaan: [36:58] You have that

Dan Austin: [36:58] much cash? Right? People would just assume that. Right? They didn't know what's going on. And so now they know what it is. They've been marketed to you on every medium. And then you have people like we have local guys here in town that do scummy stuff. I mean, Mike knows them. I don't know if you wanna name drop anybody, but they do scummy things. They're kind of

Mike DeHaan: [37:14] sleazy They're home sleazy. Right?

Dan Austin: [37:16] And they they do sleazy things and the word's getting out. Right? And it's not only getting out to people in the real estate industry, but it's getting out to consumers because there's enough of them now that they see this person on the billboard and they're like, yeah, that guy ripped me off. Or I've I went and talked to this account later and they're like, did you do? You know what I mean? And so they're not that people are that way. Like, I feel like Mike and I never did that. I know you don't do that. Don't I know there's a lot of great operators? And so the reason why I say it's on its last leg is because there are as we know, is there are good operators like this. The the onesie twosies are are gonna disappear in this market. This market's not gonna sustain them. The guys that stick around and do good are going to have to operate in regulation because of the dirtbags. I think part of the lift now is to get into the industry, the hurdle's higher. It's no longer a no money industry because of the sophistication of the data, the mail, the mass mailing, the mass marketing, and the leg up in finances you need to have to be able to do that is going to be kinda being kept by the people like you, Dylan, in Cincinnati, the people that have a well established good business.

Dan Austin: [38:17] However, you're gonna have to able to operate in regulations, and that's gonna mean you're gonna have to be able to do double closes. You're gonna have to vertically integrate your business to be able to have cash reserves and be able to have high quality lenders to do the business. And I think because of the next five years of, like, real estate market conditions, most of the money's gonna be made in the wholesale flipping strategy. And I purposely left off Novation because I think that's gonna get kanked as well.

Dylan Koch: [38:42] I hope it does.

Dan Austin: [38:43] Because there's there's too many people doing fucking weird shit. And it's technically a net listing, which is illegal in most states. Right? They're just getting around it. I do think the high quality people will stay around. They're not gonna be homebuyers like they are now, but you're gonna end up doing more wholetails and more flips just to keep profits going.

Dylan Koch: [38:59] I don't know the top take, but I agree with pretty much everything you just said.

Mike DeHaan: [39:02] I think that we would all agree with Dan, but I would say that there would probably be a large portion of the population that would strongly disagree with you. If you go and, like, find any of, like, the the Pace Morby, the Jamil crowd, like, the people that are like, oh, there will always be a way for people to do it. Like, we're gonna find what we're gonna do is we're gonna buy it in a trust, and then we're gonna sell the trust to the buyer for a fee. Like, any these fuck, like, dumb shit. Yeah. They and they're they're probably right, but I think that to your point, Dan, that will also get shut down too. And I think that whatever workaround people find, just like it's taken them so long to start cracking on on wholesaling, every new workaround will get shut down faster and faster and faster and faster until you're basically stuck being a wholesale flipping shop or you're required to be licensed to do it correctly.

Dan Austin: [39:45] They're on to you.

Dylan Koch: [39:46] I think some of these will come back too. Like, you know, like, for example, let's say you wholesaled some old lady's place, and for and you made a $100 on it, which I've never done, but let's say that happened. And And then now the kid finds out, like, two months later, like, you did what? Like and then he's gonna be like and he let's say he's wealthy or they're wealthy. The family no. They're gonna try to go after the wholesaler, right, for being and then I think you're gonna see some of those pop up as time goes on.

Mike DeHaan: [40:11] Oh, yeah. Yeah. Well, I think I'm sure those are already happening. We just don't necessarily hear about them.

Dylan Koch: [40:15] I I agree. Right? Yeah. I agree. Yeah.

Mike DeHaan: [40:17] So Y is a great hot take for the audience, Dan. I do agree with you fundamentally, but like I said, I think that there will be a lot of people that would disagree.

Dylan Koch: [40:23] You guys are just saying this because you just pushed shut down your your backyard homebuyers business. Exactly.

Dan Austin: [40:29] But I really have thought about this a lot lately, and I don't think it's like like we have a lot of folks in the scale community that I would say are smaller operators. I don't think those are the ones going away. I think they're good. They have been operating and they've figured out how to operate in this industry. I just think there's so many people the way we all grew up in the industry where like every there's a lot of food for everybody. It's not gonna be that way anymore. And you have to be an exceptional operator, you have to be able to operate within regulations, which is how a good business operates. If you can operate within regulations, you're doing alright.

Mike DeHaan: [40:57] Yeah. I think the first ones that go down will be the mid sized companies, you know, not like the ones that are doing $510,000,000 a year, which do exist in these large states. Right? But the ones that are doing like 1 to 3,000,000. And in order to be profitable because they have a big overhead, have a ton of ways, they're having to do the shady tactics. They're having to price drop sellers. They're having to like manipulate newbie buyers to overpay for things. You know, they're having to like beat up their contractors and title agents and everything to squeeze as much as they can out of all the deals by cutting their own fees. Right? Those are the people that will go away very, very quickly. And I would imagine there's probably even quite a few of that have already started to disappear because of those things going sideways.

Dylan Koch: [41:34] You know what? If you're a prosecutor that decide, you should just reach out to all the local title companies and say, hey. Who do you no longer work for? Oh, absolutely. That's like the the honeypot right there.

Mike DeHaan: [41:45] Totally, Yeah. Alright. Cool. Well, guys, let me know what you thought about that. I thought that was a fun episode. DM me on Instagram, Mike underscore Invest. Let me know if you liked it, didn't like it. Also, let me know your own hot takes. If you have a good one, I won't name you, but I'll share it on here, and maybe we can banter about that too. Because, you know, we love some good controversial topics. But, anyways, guys, thanks for listening. We'll talk to you guys next week.

Dan Austin: [42:05] See you.

Dylan Koch: [42:06] See you.

Mike DeHaan: [42:07] Thanks for listening, everyone. If you want more from us, you can shoot us a follow on Instagram. I am at Mike underscore Invest. Dan is at investor man. Dan and Dylan is at Dylan underscore does underscore deals. Choose to follow and send us a DM to let us know what you think of the show.