6 Years of Real Estate Lessons in 24 Minutes

Mike DeHaan: [0:00] I've been in real estate for six years. I've done close to 500 transactions. And now I own a real estate brand called collecting keys that owns a series of other companies, everything from an investment company to an education brand to a bunch of different marketing services for other real estate investors. Throughout the period of time, I've been able to build a decent portfolio that lets me live the lifestyle that I want. I have a wholesaling business that does a couple million dollars a year. And then I've also helped dozens of other investors build businesses just like mine through the different service companies that we offer. I've gone through a lot in a relatively short period of time. And in this video, I'm going to give you six years worth of knowledge that I have accumulated going from being a corporate engineer to a multi seven figure real estate owner slash investor in just a six year span. My goal is by watching this single video, you'll be able to learn from all the hard lessons that I went through so that you don't have to learn them quite as harshly as I did. Alright. So list number one, you can make millions of dollars in any asset class, and you really need to just pick one and be willing to stick with it for the long haul. In my time running the collecting keys podcast, I have met, like, decamillionaires in pretty much every single asset class you can possibly imagine. Everything from, like, single family to multifamily to mobile home parks, Airbnb, you know, land flippers, people doing rent by the room, people doing sober living, seriously, everything. And when people first discover real estate investing and they listen to biggerpox and like that, what usually happens is they kind of go down this rabbit hole where they're trying to learn about everything all at once. They're reading every kind of book, every listening to every podcast, watching every YouTube video, following every influencer, trying to find the thing that is best.

Mike DeHaan: [1:44] And the problem is what normally happens when people do that is they end up wasting a very significant amount of time when, really, they would have been better off just fully committing to that and going all in on it. I mean, that's easier said than done because, honestly, what always happens with pretty much every single person I've met is they start something. It gets a little bit hard. They decide that the thing that there's they are pursuing, that asset class they are trying to buy is not good. It's saturated. It's overcomplicated, whatever it is, and they are jumping around to something new every single month. And as a result, they can work for half a year, a whole year, many years, and have nothing to show for it at the end. And so the lesson here is to commit to whichever one kind of stands out with you. Go into it with a long term mindset, and just like go into it as heavily as you can. You know, find a coach, spend money to learn, join communities, things like that. And that's ultimately how you'll build success in any kind of asset. Lesson number two, you can truly go broke buying great deals, especially if you don't have, like, a super high income. Here's thing. Real estate costs money. Right?

Mike DeHaan: [2:48] There's no ifs, ands, or buts about it. There is a financial component to doing a real estate transaction that you cannot avoid. Everyone typically starts real estate kind of for the same reason. They want to go and get some kind of passive cash flow or some kind of wealth generation that will allow them to have financial freedom so they can just, like, hang out on the beach, do whatever, you know, hang out their kids, live their lifestyle while that passive income comes into their mailbox. While that's all well and good and definitely possible, the problem is is that early on, people tend to kinda throttle their growth by buying properties way too early. Ultimately what happens is you'll have somebody that will make a massive investment like say 40 or $50,000 which is a huge part of the liquidity to get like a couple $100 a month, maybe even a couple $1,000 a month, they're unbelievably lucky. But the problem is is they can't buy another property for a super long period of time. And the thing is, if buying one property puts you years away from buying the next one, then you're gonna take decades or longer to be able to get real financial freedom where you're making actual money and not kinda just like rice and beans money. Right? You know, and kinda despite what gurus say, you know, things like getting into property as a seller financing was zero down, using other people's money, buying these sub two with no money out of pocket.

Mike DeHaan: [4:02] Like, all this stuff's kind of a myth, and you need to understand that. Like, that is a very, very small number of opportunities even exist. And so you need to focus on making money first. Like, a big part of the collecting keys podcast, you folks are making massive income before passive income. And the reason for that is because I learned very early on that if you throw all of your money into one or two properties, you're gonna really have to grind to get out of it. And you can completely avoid that from the get go by just focusing on making money as early on as possible. You know, if you want that to be in real estate, that can come from a number of different things. That can be from wholesaling, from flipping houses, from being a realtor, being a contractor, right, doing, like, some sort of JV business where you are, like, helping people get deals together and getting a cut of the deals. Whatever it is, it doesn't matter, but you need to learn how to make, like, big money, and then the passive income will come significantly faster. Our lesson number three, everyone is marketing to an offering on the same deals, so don't let that discourage you and just make as good of an offer as you can and be aggressive with your offers and provide good service.

Mike DeHaan: [5:05] So one of the things that gets thrown around a lot in the real estate business is talking about how markets or different asset classes are saturated. And here's the thing. Everyone wants to get wealthy or get rich. Right? Everyone that is playing game of real estate has the exact same goals as you. And so everything is going to be saturated ultimately. Right? Like, if you've truly discovered some super duper secret that no one else is playing in, honestly, you should probably be a little bit worried because the fact that nobody's playing in it probably means that it isn't that good of an idea. You know, everyone wants to kinda have, like, the next big thing, and people will spend hours, weeks, months, even years kind of hunting for that when really what you need to do is look at what other successful people are doing and just copy them. Like, literally just do the exact same thing. Like, you're not trying to build Tesla. You don't need to have some incredibly complex IP. There's so many properties out there. There's so much money to be made in each transaction. There's just like such a huge flow of currency in all directions that there is plenty of space for you to carve out enough of a piece for you to be able to reach your goals.

Mike DeHaan: [6:06] You can build an incredible business by just doing exactly what everyone else is doing. So if you wanna be competitive in your quote, unquote saturated real estate space, make better connections, make better offers, provide better service to your sellers and the people that are helping put your deals together, and money will inevitably come. Part lesson number four, what is considered a good deal is completely subjective. I can't tell you how many times I've been asked by people either in my scale community or on Instagram or even just, like, random meetups, like my opinion on a deal. And I kind of hate that question because, honestly, my view of a good deal is different from everybody else's view of a good deal. Like, the ideal price for a property or the ideal sort of, like, strategy is gonna be different on based on everyone's opinions. Know, You everyone has different costs of money. Some people have to go get hard money loans. Some people have a ton of cash. Right? It's gonna have a different cost of labor. So people are gonna do the work themselves, and people are going to hire their brother who's gonna work for cheap. People are gonna go and hire a construction company that's gonna charge a lot to build things out. Like, ultimately, there is an infinite number of variables in analyzing each deal. And those are just like the internal things.

Mike DeHaan: [7:14] Right? There's also the external perception that people have. People will like different kinds of neighborhoods for different reasons. People will look at different hard statistics about areas to decide what is worth their time. For me, I don't buy anything that's earlier than nineteen fifties, mostly because I don't like the older homes, and I don't like the additional work that comes with them and kind of the unexpected nature. I know a ton of people, especially in my local town here, that only buy older homes, mostly because those are where, like, the best neighborhoods are a lot of the time, more established school districts, kind of older money. Honestly, my ideal investment property is, like, spec neighborhoods where all the houses are the same. Things are relatively easy to put together, and I don't have to worry about any surprises with, like, electric utilities or anything like that. And so if you look at all that and everyone's experiences, who's technically right when a deal is good or not? The answer is who knows? Literally, one of the best deals I ever did, I was unable to wholesale it for a $10,000 fee because nobody liked it. We flipped it. We made $85 because we believed in the deal. But, again, it is completely subjective everyone's situation. So ultimately, what needs to happen is you need to know your numbers, your investment goals, your liquidity requirements for moving forward and buying more deals, map those things out and know where you stand, and then it's much easier to know if yourself deals good or not.

Mike DeHaan: [8:29] And you don't have to try and make a decision based off of other people's experiences, which don't reflect your own. Number five, you need contractors to be fast, cheap, and high quality. That's kind of impossible. You can really only have two of those things. And if you do happen to find a good contractor, you need to understand that they will have a limited shelf life for your business. This is always one of the hardest ones for people to learn because when it does come around, usually they get bit pretty bad. Right? Because contractors in general are kinda like a funny breed of people. The barrier to entry to become a licensed contractor is kind of easy. You just go file some paperwork and get your license. And people that sort of go into that line of business notoriously are not the best at things like, you know, marketing systems, communications, general finance. And as a result, they're typically kind of hard to find, and they're even harder to work with, especially ones that are willing to work for real estate investors. I mean, there are ones that kinda have their stuff figured out, but those guys aren't gonna work for you. Those people are going and installing full kitchens for $20,000 when you're trying to get them to spend $20,000 to do an entire house. And so it takes an already limited quantity and makes it even harder to find because you need a special breed of an already special breed.

Mike DeHaan: [9:41] K? And as a result, you kind of always need to be recruiting because because once you kind of find like an awesome contractor, and they're working for you, and they've done a couple deals for you, so suddenly, they can get booked by other investors as they kind of get ambitious and try to do more deals. They realize they can go and make way more money doing work that's probably a little bit easier not working for you. They can just disappear off the face of the earth because they have some kind of personal or substance abuse problems. They wanna move away, or they just don't wanna do their job anymore because they're older and it's breaking their joints down. If that happens when you're in mid project or your project is kinda tight, you can be in big trouble all of a sudden if you have no backup plan. And so when you find a good contractor, hold them super close, treat them well, pay them on time. Do not share their information unless it's with, you know, really, really good reason. And understand that you will only have them for a limited period of time. So work with them as much as you possibly can when you have that period. And that's okay. You'll just have to make sure that you're always hunting for the next one. Alright. Lesson number six, private investors or, quote, unquote, other people's money is also a debt that needs to be paid off. People kinda treat it like free money, and it's not so this message is kind of like oldest time at this point when it comes to real estate.

Mike DeHaan: [10:57] And if you go back to, like, those old VHS tapes that people used to order, you can hear people talking about how to use other people's money to flip houses and make money. But the problem is is it's unethical, and the way that people approach it is not inherently correct. Right? I kinda, like, hate this sort of trope around other people's money because the problem is that, like, legit people, they, like, know what they're doing. They kinda know that it's not that simple, and it's kinda BS. And so, ultimately, who ends up getting drawn to it is people that don't have any money. Right? And they potentially don't understand the consequences of borrowing money from other people, or they don't understand that they can lose. Like, people kinda go into it, and they convince their friend or their dad or their grandma or their neighbor or some poor guy they meet at a real estate meetup to go and, you know, take a loan against their four zero one k or take out a HELOC or give them all their savings to go and, like, do this project together. But they don't know what they're doing, and then the investor is also ignorant, and that's kind of just a recipe for disaster. So full disclosure, I got started doing this. Like, when I started flipping houses, I met a couple at a local real estate meetup, and they paid for the house. And I brought all the hustle, and we made a little bit of money on the first couple of houses. But the thing is, when you go down this route, you need to understand that things can go wrong, and you need to be in a position where you're going to treat their money like a bank, and you are going to be willing to pay them off even if that means you you're having to sell your own house, your own your own assets, pull out all of your own liquidity to be able to do it. Because if they trust you to do a deal and you fail and you lose somebody else's money without good reason or with any sort of negligence, it's not only an ethical problem, but you are going to have your reputation absolutely destroyed, and you will be out of business before you even start it.

Mike DeHaan: [12:44] Using other people's money is definitely I think you should explore as you grow. When you're early on, be super, super cautious, understand the risks, and don't treat it like it's not bank money just because it's a friend of a friend who is willingly trusting you with a large investment of their own. Alright. Item number seven. Anyone who actively brags about vanity metrics such as assets under management, door count, quote, unquote, cash flow, doesn't know what they're talking about, you should take everything they say with a grain of salt. The real estate people tend to have egos. Like, I would say that kind of exists with all business owners and entrepreneurs, but real estate people in particular tend to have very large egos. My kind of hypothesis with this is it's because it's not an overly complex business. And so people that figure it out when they're looking around at everyone else that hasn't, they tend to feel like they're the coolest guy out there. Right? The problem is is that, like, honestly, a lot of the people with the biggest egos are kind of full of it. And so when you start getting involved in the community, you will hear certain things that people very, very proudly proclaim about their own success and their own business. The vast majority of it is complete nonsense and doesn't actually mean anything. As an example, let's say someone that comes in and they start talking very proudly how they have a 100,000,000 assets under management. You can probably go click at any random real estate profile on Instagram, and you will see something that says, like, x whatever m a u m.

Mike DeHaan: [14:07] Right? Million assets under management. But it doesn't give you the full story, and it doesn't tell you how much they actually own of that. Like, they literally could have a syndication and own a teeny tiny piece of it, and they're not actually worth anything. But they were like a, you know, 1% limited partner for a much larger company that owns all these properties. Right? Or just help to raise the money for all these properties. Same thing kinda goes with door count. This is one that really drives me crazy. I feel like this is very common with people that kind of failed at residential and try to get into, like, multifamily stuff is you'll see them say things like, oh, this is how I bought 500 doors last year. And then you then you kinda dive into them a little bit, and it turns out that they put, like, $50,000 into a syndication. And now I guess they technically do own 500 doors, but not actually. Like, they own, like, less than a tenth of a percent of it. But, hey, they're gonna put that out on Instagram and try to sell you some course around private investing anyway. And then when it comes to cash flow, this is always my personal favorite one Because, honestly, like, these people are would say, like, less, like, malicious or less, like, egotistical, and a lot of them are honestly just ignorant.

Mike DeHaan: [15:11] Like, when you see a lot of people that are kinda getting into the cash flow bragging, it'll be a situation of, like, a property rents for $2,000. Their mortgage is a thousand dollars, and they're like, boom, I have a thousand dollars in cash flow. But of course, it doesn't account for any sort of capital expenses, sort of maintenance, any sort of vacancy in the property, any sort of like increases in taxes or insurance. And so realistically, all said and done, they maybe have, like, $200 in real cash flow, but you can't tell them that because they haven't learned their hard lessons yet. And so if you're meeting people and you're trying to figure out if they're legit or not, the things that actual successful people will talk about will typically be their cost per deal or their, like, you know, their transactional rate, how many deals they're doing on a monthly basis. They will talk about their revenue and their net profit of their business. They'll talk about the kinds of returns they get for their investors. They're not gonna talk about these little vanity match just make them sound super, super cool. They're gonna be they're talking about a lot more kinda like boring business metrics because, honestly, that is what success actually looks like as a business owner. And it's important to know this so that when you are networking with people, you're working you're trying to figure out who to do deals with, who to trust, who to listen to, you can pick up the BS a little bit earlier on so that you're not getting dragged down the road just to find out that someone isn't living up to the expectation that they said they were.

Mike DeHaan: [16:27] Item number eight, wholesaling real estate is one of the fastest real estate businesses where a one or two person operation can make 7 figures per year without debt and only relying on a pure hustle. I know I said in the first one that, you know, you have to just pick something and go into it, and you can make millions in every asset class. That's totally true. But if you compound that with kinda like the second point I had about making massive income, right, wholesaling, in my opinion, is one of the easiest ways to do that as a newbie and with a small business. And sorry. Let me rephrase that. It's not one of the easiest. It's one of the simplest. I could go back in time. I would have started wholesaling sooner. Just kinda like build my bank account. Like, it's you know, I said it's not an easy business. It's a simple business. There are no doubt, like, otherwise, you can make, like, more money. Like, if you go and, you know, you're flipping houses, you're on average gonna make more money than doing wholesale. If you're doing, like, a multifamily, like, repositioning where you're adding a couple million dollars in value to multifamily deal, you're gonna make more money doing that. If you're doing like these land entitlements, subplots, you'll definitely make more money doing that. The problem is those take, like, insane amounts of time, and there's no guarantee. The thing is with wholesaling is once you kind of get it up and running, you can legitimately make like an average annual US salary in like three to four weeks, like just on like a rolling basis. Once your leads are kind of built out, you have your sales process running, you're closing deals on a regular basis.

Mike DeHaan: [17:51] It's not uncommon for people to be cashing $4,050.60, $70,000 checks every single month. And I'm literally not exaggerating with that. Right? Because this rate at which these deals move is so fast, and the only money that you are having to come out of pocket is typically going to be your marketing expenses and any sort of, like, systems that you're running a CRM, those sort of things. For us, our average cost per deal with our wholesale company is about $4,000 Our average return or ad spend is about seven times that, okay. That means that for every $1,000 that we put into our marketing system, we expect to get about $7,000 back. So everyone says, well, why don't you just keep doing that and scale more and more? Well, that's what we do. Like, literally, is the core of our business. We have scaled that up to a point where we kind of reaching like staff limitations. If the number of deals were coming through, And to grow, we'd have to build up more staff, more complex system expand into other markets. And we did that up to a point, and we've kinda reached an area where we're happy. We're just letting things roll for right now, and we just continue to make money like that every single month, year after year. Again, And, like I said, it's not an easy business, but it's a simple business. It's very easy to replicate.

Mike DeHaan: [18:57] This is like literally why I started the scale community, because I got so infatuated with the rate at which people can achieve life changing income and start generating life changing wealth. Because here's the other thing too. Right? Let's say you wanna do long term wealth generation and buy a portfolio. If you have the wholesale process dialed in, you can buy properties at even better discount. You can buy them a lot faster because you're generating massive income at the same time. It is literally possible for someone to go from nobody to worth million dollars plus in less than a year and be making multiple x's of their their previous income. And no, I'm not exaggerating about that. It's a lot of work. It's a very, very sort of like, I would say, grindy thing to build out, especially early on, but it is repeatable. And if I had known that when I started doing real estate in 2018, and I hadn't waited until mid twenty twenty to kind of get into that, my entire financial position will be completely different now because I would have an extra two and a half years of generating that kind of revenue. So if you wanna go faster, you're willing to commit full time, I would highly recommend that you consider wholesaling as part of your journey because you will be able to get turn things on very, very quickly if you work hard enough and you get a little bit lucky. Item number nine, gurus get a lot of hate, but there are some good ones out there. You just have to know how to find them. Health, wealth, and love are kinda like the greatest marketing tactics that people use to sell like any product.

Mike DeHaan: [20:19] Right? You try to take that concept of marketing and you combine it with the major wealth opportunities that exist with real estate. And, of course, what that means is you have a ton of gurus out there that are pitching you on financial freedom or easy money or all sort of other stuff. And, of course, that's generally not how it works. And I guess, technically, I am a guru now as well because I do have content. You know, I have a podcast. I make these videos, and I do have a community and mastermind that. But the thing is, like, what makes good gurus different from everyone else are the gurus that are actually, like, operators as well as part of their their community, and they're not just, professional content creators and marketers. The real estate community is super fast paced. There's an insane amount of money in people that go into real estate in every facet. Right? And if you have a a guru or a coach who stops operating and purely just becomes kinda like the person that runs their community or the professional podcaster or the professional YouTuber or whatever, they're gonna get out of touch very, very quickly. And so if you're trying to kind of figure out like a a guru to follow or like influencers to follow, look for people that have active businesses that talk about them openly, that test and share things that they are working on in their business and trying to improve. Because if they don't do that very, very quickly, they are going to be completely outdated, and the text they kind of preach are gonna no longer be valid. And at that point, you know, they're gonna continue trying to sell you because that's how they make their money, but you're not gonna get nearly as much value as you could if you follow someone that's actually playing the game.

Mike DeHaan: [21:52] And lastly, item number 10, and this is the most important one if you ask me. This is a kind of philosophical concept. For most of us, real estate isn't the thing. It's just the thing that's gonna get us to the thing. And this is a quote from Aaron Mujsteghi, who I consider one of my mentors. And if you don't know who that is, you can go look him up. He was actually on collecting his podcast episode one thirty five. You wanna check that out. But he's one of the highest caliber real estate entrepreneurs that I've met. He or I mentors, and I went to a meetup of his last fall. And he opened it with this line that real estate isn't the thing. Real estate is the thing to get us to the thing. K? And it's something that I've sort of, like, pondered periodically since then, and I've repeated several times because I think it's a really good reminder that the value of real estate isn't like to just, like, build this massive portfolio and be kinda like a, you know, real estate hoarding monster. K? It is the fact that it is such a simple business that is easily repeatable, but can get you to the lifestyle that you want. And I think this is a really important message to kind of understand. Because when you're building out your real estate business, you're kinda getting in the weeds, you're talking to sellers, you're getting rejected, you're having close calls on deals. It can get very, very grindy very quickly. Okay?

Mike DeHaan: [23:04] And it can get super easy to get burned out, try to change directions, try to do these different things. And so if you can get beyond having goals that are just business related or just portfolio related and focus instead on, like, what is my lifestyle going to look like? You know, what about these random Tuesdays that I can take off to go hang out with my kids? What about these trips that I'm able to go on because I've built this much wealth over the past couple of years? If you focus on those things and what real estate has gotten you to, it is much easier to take a step back and just keep moving on and continuing to do your business. K? Especially with real estate because, like, the transaction time of stuff is kind of slow. Very, very rarely does stuff happen that has, like, an immediate upward or downward effect. And so focusing on that end result and the fact that real estate is what's gotten you there makes it easier to continue to refine your craft, continue to to ride your path, right, and and and move things forward. And then, you know, avoid any of the lady in the red dress or, like, the squirrel syndrome or shiny objects and whatever you wanna call it when things start to get a little bit tough.

Mike DeHaan: [24:09] Anyways, guys, if you found this valuable, please share it with somebody else. Subscribe to my podcast, collecting keys. Check out my YouTube channel and subscribe to that there if if you're watching it on the channel. You should follow me on Instagram at Mike underscore Invest if you wanna see some more short form stuff. Aside from that, I really appreciate you guys listening, and make sure you follow along as we continue to help people get to 7 figures and beyond. Thanks, everyone.