A Lender Called The Loan On Our Subject To Deal

Mike DeHaan: [0:00] Acquired some duplexes subject to last week. And approximately forty eight hours later, we received some nice correspondence from the lender that they were calling their loan due for these three properties. That's what's a $586,000 loan for these three duplexes that we are now working to get refinanced out. What's going on guys? Welcome to today's episode of the Collecting Keys Real Estate Investing Podcast. Today is Wednesday. It's the Mike and Dan show. This is the show where I, Mike DeHaan and my co host here at Dan Austin Good. Talk about real estate investing, wealth and whatever else we feel like for the week. And this is your first time to Collecting Keys, this is the show where we talk about how to make massive income, not just passive income through real estate investing. Because people don't realize that real estate doesn't have to be a get rich slow game. You can make a lot of money in this if you want to. There's a reason that you see a lot of real estate bros Instagram these days, it's because it's not that complicated to figure it out. If you just kinda put your head down and put it.

Dan Austin: [1:10] Would I be considered a real estate pro?

Mike DeHaan: [1:12] Dude, sometimes we get there. Is slightly worrisome, honestly. Yeah.

Dan Austin: [1:16] We have had long conversations about this.

Mike DeHaan: [1:19] You know, you really try not to be, but there's like certain things that just come up every so often. I don't know, I thought we don't do a lot of the typical real estate bro stuffs.

Dan Austin: [1:27] No we don't.

Mike DeHaan: [1:28] We're not like playing golf on like a Tuesday morning and taking pictures of our, like having our friend take a picture of us on the phone, on the golf course and being like, deals never stop baby. Rise ever.

Dan Austin: [1:40] Don't worry, we're out here working for you, our clients. Sounds terrible.

Mike DeHaan: [1:44] Doing deals on a boat, hashtag real estate life. It's like

Dan Austin: [1:47] my worst one, that is some cringe. Like, real estate brokers, that was like, now that now we're stepping in the broker world because they're easier to make fun of, but like that was like all of like '21 and the first half of twenty two, and now it's just crickets, now all you hear is like, date the rate, buy the home, you're like, you guys aren't even like grinding out there anymore.

Mike DeHaan: [2:05] I know, well it's like, you used to be in a boat, now is that a studio apartment, like where are you?

Dan Austin: [2:10] Exactly. I mean, we're making fun of brokers, but that's also most real estate investors right now. Anybody that's transactional focused, like lenders and loan brokers too, it's tough because transactions and have slowed everybody's just fighting for stuff, you know what I mean? So it's like, it's tough but you gotta keep, if you're gonna be in the game long term, you gotta be, you gotta do something.

Mike DeHaan: [2:30] Yeah. Well, mean, that's the great thing about investing, right, is if you learn how to identify opportunity, then you do in fact keep assets for yourself with a kind of a long term vision or you do buy stuff at a hefty discount, which you should be doing as an investor, there's really no reason you can't make money in any market. Slow down a little bit versus 2021, myself was on fire. Versus a realtor, it is very hard to be making a lot of money right now, just because there isn't a ton of transactions and transactions are taking a lot longer than they were.

Dan Austin: [2:58] Totally, yeah. You list a house and you know, could be ninety to one hundred and twenty, one hundred and eighty days before you see any money out of that thing and so it's a long transaction cycle and it's one of those things too that actually is a thing in like, you know, we're not in like the realtor space, but like that's where they always try to coach these new people like, take your commissions when it's good, when the market's great, and everybody's making three, four hundred thousand dollars a year in commissions, and invest that into your passive income so that you can stay in the game long enough to hit that next upward cycle and that's how you make the wealth in anything is like, you can take your massive income, invest it so you have passive income in the low troughs and then you're back in the game when it's high again.

Mike DeHaan: [3:37] Yeah, see that would be smart thing to do instead they go, I'm investing in a boat, I'm investing in getting a tip job and I'm gonna go out, I'm investing in my marketing for my future real estate brand.

Dan Austin: [3:48] And it's like

Mike DeHaan: [3:49] you tell yourself whatever you

Dan Austin: [3:50] Yeah, gotta get that suit dog.

Mike DeHaan: [3:52] It's not gonna work. Yeah, buying the the $20,000 suit and the nice car, gotta look the part if you're gonna you know be in the real estate game. My favorite is when you get those guys and they're like, people are gonna like trust me with these, I need to look the part. I'm like, bro you sell $200,000 houses in Spokane, Washington. Like no one wants that at all.

Dan Austin: [4:10] Right, exactly. Nobody needs to trust you right now.

Mike DeHaan: [4:12] I mean, if you're in Newport Beach, absolutely have the $20,000 suit and like the sports car because when you're selling a $5,000,000 house, that is kind of the expectation.

Dan Austin: [4:22] That's what they expect. They don't wanna be having you show up in your Toyota Camry. Right? They wanna know that they can talk to you eye to eye.

Mike DeHaan: [4:29] Yeah. Then they, you know, they kinda get each other and and you know, imagine those circles as well, that sort of price point house are probably really really small. So, you know, probably helps if you like, know, network with that. Anyways, we digress. We have some super fun drama that I'm very Breaking excited news. To talk So as you all know, if you're in the real estate investment space, subject to mortgages or I guess subject to transactions rather are all the rage right now. There is people out there, one in particular space, Porby, whatever his name is, arrives at Schmiesch Morby. Schmiesch Morby, who likes to go around and talk about all these subject to transactions where you can buy houses basically for free. You can just quick claim the property into your name, take over the mortgage, inherit these super low rates, and that's how you're supposed to get deals right now. All well and good, perfectly valid concept. But as he likes to say, it is extremely low risk. And this thing that exists called the due on sale clause, which allows lenders to call in their loans due if there is a change of title. You don't have to worry about that because lenders never call it. He said in the thousands of deals he's done, it's only happened like once or twice.

Dan Austin: [5:41] I think one time he even claimed to have due on sale clause insurance, which by I the way does not think he said that like on a podcast.

Mike DeHaan: [5:48] Oh, dude. Everything he He says did this, saw this video the other day that he did, the other thing was yesterday, and he was talking about like the power of meetups. Kept saying this to other people and he's like, I was at a meetup, I turned to this one guy and I said, what do you need right now? And he's like, I'm trying to do this development, I need a million dollars to complete it. And he goes, okay, and so I turned to my left, and I talked to this guy and I said, what do you need right now? And he's like, I have a million, dollars, I need to figure out what to do with it. I introduced them to each other. Like get the fuck out of here. That

Dan Austin: [6:16] Definitely did not did not happen. Most of meetups I go to, people don't have a million dollars, that's why they're at the meetup.

Mike DeHaan: [6:22] Exactly. Yeah. And but anyway, complete digression. But this due on sale clause, we bought some duplexes. I guess we acquired some duplexes subject to last week. And approximately forty eight hours later, we received some nice correspondence from the lender that they were calling their loan due for these three properties. And, you know, it is December at time of recording, but basically, we bought these properties doing the full process with the subject twos, which you can learn about how to do it the correct way if you go to collectingqs.com/subtwo. We have a little course we put together about how you're supposed to structure these deals to protect yourself and to protect the seller. We went off through all that exactly as in that course. We got through, it's a DSCR lender. So basically an investment grade lender, they typically hold more of their loans on the books, do different things. My hypothesis is that end of the year, they were probably doing their auditing on all their loans, they saw the title change, they called us, they like basically saw the new LLC, they looked us up because LLC contacts typically public knowledge.

Dan Austin: [7:29] They definitely saw our LLC name and were like

Mike DeHaan: [7:31] what

Dan Austin: [7:31] the fuck?

Mike DeHaan: [7:31] Probably did. Yeah. But they figured out who we were, they called us, wanna know the situation. I'm not trying to commit fraud. So we didn't like try to lie that we were connected to the previous owner. Yeah. There's no point lying, that is And no literally point a lying. To go to jail. So we told them that we had

Dan Austin: [7:49] Or not make Yeah,

Mike DeHaan: [7:49] not easy. It So we told them we bought these properties, received an email the next day saying that they're calling their loan due at the end of the month. And so that's what's a $586,000 loan for these three duplexes that we are now working to get refinanced out.

Dan Austin: [8:07] And

Mike DeHaan: [8:08] it's been an interesting ordeal because the first response that I had back, the guy who like emailed us, he was one of the partners Total dork. Yes, total dork, That the loan agreement has been violated and they will be calling loan due. Thirty days.

Dan Austin: [8:20] Thirty days, they said they gave us thirty days.

Mike DeHaan: [8:21] Yeah, I responded back and said like, gotcha, like I understand, is there any way that we can get approved for the loan with you? You know, it's like basically assume, we do all these different things. We had a bunch of back and forth, the guy was totally noncommittal and freaking drove me crazy for the past week. And then finally today, they said, no, they're not going to allow it, they would rather just get paid off. So we are working with a different lender to get the loan going.

Dan Austin: [8:43] Which is interesting because that their business is a loan origination, you would think that they would want to make the money because they're gonna get paid off either way, and even even sharing with them like, hey, we've done hundreds of transactions, like we're not just some schmuck that listened to a course online and trying to go sub two, like, we're willing to work with you guys, like let's do it, and they're just, I don't know, they're kind of just, that's what I've always kind of theorized with this is like, there could be one person inside of a bank or an institution that just says, I'm going to be the hard dick on this, Mhmm. And then you're this. And so, you know, you get made the example.

Mike DeHaan: [9:16] And they totally could, right? Like if you think about the complexity of what that would take for a bank to do an investigation like that, it would not be very hard. All they'd have to do is you know, get their entire sheet of their loans, go through and you could pay a VA to do this. Wells Fargo could freaking go on Fiverr and hire a $5 an hour to go through and check every single loan, the title of the loan versus who is, you know, actually to title the loan versus title the property.

Dan Austin: [9:42] Totally.

Mike DeHaan: [9:43] And anyone that's different, they just fly it and they give them a call.

Dan Austin: [9:45] Yep. Right?

Mike DeHaan: [9:46] Exactly. And and that's something that very theoretically could happen. And I think that the fact that this happened so quickly, is a great example of what could potentially start happening here in the future. You know, and we are fortunate in the way that we are able to, you know, we have lender connections, we're able to move this relatively quickly. One of the interesting situations that we have realized we're going to face here, is that most lenders, they have seasoning requirements for refinances. So a lot of people may be thinking in the situation, okay that's great, I'm gonna just go get a refinance for the loan amount that I'm inheriting. No, because we haven't owned it for ninety days, okay, or six months with some lenders, so other lenders are not letting us refinance right now. Basically, they're making us do what's called a delayed purchase loan, where they are refinancing it as if we had purchased it, and since we didn't put any money down on these properties, they are making us bring 10% down on this purchase, which is like $60. So if we were newbies that did it, I just happened to have $60,000 lying around, we'd be in big fricking trouble in.

Dan Austin: [10:49] Right. So, if you had no money and you were going to go into a sub two deal, because that's how you do real estate with no money, you really just put yourself in your own And I think the key thing to note here is, is like when you're doing these types of transactions, the more complex they are, the more risk, typically the more risky they are, And with that additional risk, you just need to understand, like, what your reserves need to be like and how you need to operate around that. Because, like, there's guys out there that are out there picking up ten, twelve properties all on subject to. Now, if your whole portfolio is based around that, A, good for you for you to be able to find that many deals, like, that are sub two capable, are vape, I'm assuming those are deals if you own them, but really, that is super risky because if even if one of those gets called, or two or three, you're in really big trouble. Now, the risk is still relatively low, but as we're showing and explaining, where people doing real estate investing, real transactions, we're always super candid and open on what's going on in our business and you're seeing this happen in real time with us. So it's definitely possible. And it's not like we're the needle in the haystack, right? It's just definitely possible. It probably happens more often than people know, we just have a platform to share it

Mike DeHaan: [11:52] with you. Yeah. I mean, well it does happen, because you see it even like the free group and it's funny because I always see those get posted and then the posters seem to disappear. I'm pretty sure they go and they audit them and they delete them. Oh yeah. You know like, if you are finding your own subject to deals, you're trying to negotiate them with sellers, if you're buying these sort of deals from wholesalers or other people, these are realistically things that can happen to you. And it's very important that you have a backup plan. You need to have a backup plan for lenders that you're going to go to. And I say lenders plural, because I went through five different lenders before I found one that was going to work with us. We're fortunate that we have all these different relationships, we've been in the business for a while, that we had options. If you needed to start from scratch, you could be completely upshoot's creek in the situation, right? Also making sure you have some form of liquidity, even if you are playing the no money down game, you need to have, either a rich family member, a line of credit, own four zero one ks you can draw

Dan Austin: [12:46] on

Mike DeHaan: [12:46] cash, it is, you need to have that available to bail yourself out. Is a huge thing with cash, right? Is cash is A, it's a way to grow your portfolio and have investment opportunities. It is also a form of security insurance when things ultimately go wrong in your business and with your real estate portfolio.

Dan Austin: [13:04] Totally.

Mike DeHaan: [13:04] Okay? If you don't have liquidity of some form, even if you just like have like a rental portfolio, you're not looking to actively buy. If you have no liquidity and something goes wrong, you can get in very big trouble very very quickly.

Dan Austin: [13:15] And that's where, I mean, most people like run their issues, is liquidity. When things get tough, money gets tight. And that's honestly, and like, body teams, that's why they always fracture, because they they run out of liquidity. Yeah. Same thing with everybody else that's, if you're in real estate especially, because it is a capital intensive business, having liquidity and different levers, like, doesn't mean you sit on 500 k, a million dollars in cash, you know, that's a lot of money to be sitting idle, but you should definitely have multiple lines of credits where you can. Obviously, cards are good, business credit cards, especially ones that don't have limits that you can use temporary Your own cash, you you mentioned four zero one k, any type of lever. Even if it's like 25 k here, 50 k here, and it all adds up together where you can pull these levers as needed, that is so important. I think for you and I, like that's been one of the ways that we've been able to continue to operate, even when we have shit like this happening, because not only is this happening, but we also have an investor who has requested to have their money back properly. We knew this was gonna happen, we're going to be giving him money back, so we were planning to kind of shift some things around to give him his money back, and then we have this issue, and potentially, who knows, we could have another $100,000 issue within our business, our portfolio. We've definitely been doing a lot of renovations on our rental properties that are probably over the next, between two months ago and two months from now, we're gonna be putting a $100 into our rental properties for various reasons, right?

Dan Austin: [14:29] So, you know, we are pulling on these different liquid lines of money to handle this and if we hadn't done that, one thing could screw you up. Totally. One more dollar, if you don't have liquidity, could be the thing that breaks the catalyst back.

Mike DeHaan: [14:42] Yeah, and this is why I think it's so important to have like this massive income component to your business. You know, and so many people they try to get into like the the lean fire real estate game. So lean fires like the financial independent retire early. They have like the lean version, is basically I cut all of my expenses and I try to live off very small amount. And basically, I'm poor. Where I

Dan Austin: [15:07] grew up, that's called It's being

Mike DeHaan: [15:09] called being but not you know, too poor to have like just only subsidies, right, or whatever. I don't know. But people try to do that with real estate, but the problem is is that is just ultimately setting yourself up for disaster. Like you will have problems. And then same with if you were kind of doing one foot in, foot out of real estate, and you just have like a standard job that doesn't give you the ability to withstand some of these major financial turbulent situations, Totally. You will eventually face a major crisis. And you know, and it's funny, in hindsight too, I've thought about this, we've bought a lot of distressed properties from landlords that are like put together people, and you meet them and they're like they have a job, they're stuck in your time, why don't they fix the property, know, why don't they do this? They didn't have enough frickin' money, you know? Yeah, Or

Dan Austin: [15:54] they put their souls in a bind, know. Here's a good example, I always remember this one, we bought a property from an older couple that were retired, they were like school teachers, like had a great careers, you know, did all sorts of stuff, they retired, they did good, and they moved from Spokane to like, it was like New York, and they bought a property that had a vineyard on it, like this was their retirement. So they did that, and then at some point in time it was time to sell that vineyard, and they put some of that money into a property in Spokane. And then they're moving back to Spokane, and lo and behold, they need to sell this property. So, is a huge chunk of their retirement. They pay like say $200 for this. I don't know what their complete net worth was, but it wasn't enough, you know, to be like, we're comfortable losing more money, you know what I mean? And so, they sold us the house because they had one rental property and the tenant stopped paying because of COVID and he was a dirtbag and they had, you know, taken what was their dream, sold it, wrapped it into some different investments and this happened to be one of them and it failed. Yeah? That's what happens, right?

Dan Austin: [16:51] If you don't have the ability to manage these properties and they were in a situation where they didn't have a massive income component because they were retired and they had done this move after they were retired, which is even probably tougher to do if you can't sustain like a storm, so to speak. Yeah.

Mike DeHaan: [17:04] I mean and it doesn't matter how nice the properties are that you buy, how careful you are with your underwriting, you know, like how good your property manager is, how well you screen your tenants. There will always be something that happens, just regardless. I mean, I have a new build rental property that I had to put $6,000 into this year because the furnace and the AC unit just died for some reason. That's like The house is like six years old,

Dan Austin: [17:31] a little over than that.

Mike DeHaan: [17:32] No. Yeah. Four years old.

Dan Austin: [17:33] Yeah. We have houses we have houses with twenty year furnaces That's so true. Chugging along. You you just don't know.

Mike DeHaan: [17:38] That's exactly the point. You just don't know. Yeah. Right? Yeah. And it's just interesting to see this. To have the sub two one come full circle like this, I don't know, it's funny like

Dan Austin: [17:49] The funny thing is, let me add to this, so we literally just launched our free sub two course. Like literally the same day. The same day, the same week, right? And we launched that course because, and this was something that we did to for our instant investor group, like we gave it to them first, this was like a while ago, we decided there's so much crap out there, where it's like, pay $10,000 for this course, so we can give you a line of bullshit. Not that they're not teaching you how to do stuff too, but they're teaching you how to like a line of bullshit on the back end. So in our course, we just stripped it down to the bare bones and said, here are the major issues with what you know, could go wrong and here's how to fix it, how to mitigate it and protect everybody in the transaction including this seller.

Mike DeHaan: [18:29] Right?

Dan Austin: [18:29] And so he just launched that because of that, and then lo and behold, you couldn't script this any different, right? Lo and behold, we have literally a week later something get called due on sale. Holy shit.

Mike DeHaan: [18:39] Just crazy, I know. And the fact that we've like ripped on that whole movement for so long too, and like really talked about the understated risks and like how overzealous people are to do these kinds of and to have one that honestly was pretty cut and dry, like there's no reason that it should have gotten as weird as it did, but like just like clockwork all can be like that, just.

Dan Austin: [18:58] We should do like, well we can append a case study, so like if you go to collecting keys, where is it collectingkeys.com/subtwo, and you have until, or are we still limiting until January 1?

Mike DeHaan: [19:09] I think that's the plan right now, yeah.

Dan Austin: [19:10] Yeah, January 1 it's going to go, you know, only be exclusive access to our instant investor group, so you have to join our group to get it, but we'll get it away for free if you go and download it now, I think you just put in your email, we will send you like an email when we will append like maybe a twenty minute case study on what happened to

Mike DeHaan: [19:27] us Yeah.

Dan Austin: [19:27] To that course, you can get that for free, but you gotta go get it now so we have your email. Hey,

Mike DeHaan: [19:30] that's a good one actually, and how to actually get out a subject used to go wrong.

Dan Austin: [19:34] How to get out of it, now that we'll have like a real case study, I'd like, I guess in a way this is a good thing for those that are going to go and get that course because you'll get a real world example of what to do when things go wrong.

Mike DeHaan: [19:45] Yeah, and not just something that's be like, it never happens and if it does, you just gotta buy my subject to insurance from my fake company that doesn't actually freaking exist.

Dan Austin: [19:53] That doesn't exist. Just pay me money. So But we should start that. Actually, company.

Mike DeHaan: [19:57] Subject to insurance? Where's the money getting coming from?

Dan Austin: [20:00] But actually not like just call it subject to

Mike DeHaan: [20:03] I know. It's almost like if you have a fake lending company called Flip Funds that you just write fake proof of funds for $20,

Dan Austin: [20:09] and now you're just being a dick.

Mike DeHaan: [20:12] Nah man, like it was interesting but this is how I also knew that I was a grizzled veteran. Because this whole thing panned out and I was just like, God damn it. Like it wasn't like a stressful thing, it's like another thing that we have to deal with. But it's funny, that was one of the biggest sort of comments that people from our mastermind groups had about this or like people I told about, they're like, are you like freaked out? And I'm like, no, it's just another thing. I don't know. There's nothing you can do There's about also too, I was saying to you before the show, I'm super grateful that I have you as like my partner for this because you're like the only other person I know that's like enough of just like kind of a logical blockhead where you're just like, getting emotional about this isn't gonna fix anything, so you might as well just Right.

Dan Austin: [20:52] A lot of help.

Mike DeHaan: [20:52] You know, straight line and honest about the situation, so.

Dan Austin: [20:55] I agree, and it also speaks to not just being like a veteran and having things like go wrong in this, to us in this situation, but like Yeah. Just the preparedness that we always have. You and I always talk about like, there's times where we've given up on deals or opportunity that like was right in front of us, where we're like, you know what, that's pushing too far For past where we need to be from a, just having the proper levers, or ability to pull multiple levers, because like as we talked about the different liquidity levers, as you pull on those, you have less to pull. Yeah. And so, we have kind of like this mental bandwidth of limit, where we wanna stay within, that for some reason you and I have like fallen into the same category. Like we're not like way extreme on anything, like we kind of like our decision making on that kind of coincides, even though I tend to be one way and you tend to be another way in different parts of your business, right? So, I do think having that, having set up a business such that we're able to weather the storms is key, and a lot of people, when they're talking about all the cool shit they're doing, they either don't have that set up or they're not talking about that, so people kinda get caught up in the storm of like, I just wanna be like them and do what they're doing, and then they get they lose their ass.

Mike DeHaan: [21:57] Yeah. And it only takes one deal like this to to cause major major problems for you. Right? And that's a reason it's good to be conservative and not just be always doubling down is you start to do it sort of scale, you start taking on larger larger risks. One deal that goes bad can destroy you. Mhmm. Yeah. Honestly.

Dan Austin: [22:19] Yeah, yeah, it's important too to like, give yourself some profits over time, so you're not just rolling in a lot, it's a bad habit is to continuously roll your profits into your business, and the next thing you know, because if you think, what is like, there's a stat out there, like most businesses don't make it past one year, like small businesses, and then like, or most started

Mike DeHaan: [22:35] Oh, okay. Yeah, I'm sure.

Dan Austin: [22:37] Most, almost like 90% don't make it past five years. So, if you just are a statistician, you should recognize that you might not even be in business in five years from now, so you should definitely pay yourself something between now and then before that business goes away and you don't have anything to show for it.

Mike DeHaan: [22:50] I'd be interested to see that stat, make sure like it didn't include like single person LLCs or things like that, because I feel like it's so easy of a stat to skew.

Dan Austin: [22:59] I'm trying to use it for my conversation here, so stop messing it up.

Mike DeHaan: [23:03] Yeah yeah, you're trying to make it your truth, you're trying to do the mainstream media thing where you just influence the

Dan Austin: [23:08] Yeah exactly.

Mike DeHaan: [23:09] Statistic to support your point.

Dan Austin: [23:11] But like if you think about it, because there's so many people too like business wise, like that start restaurants and stuff like that, that just they like don't ever make it, right, know what mean? So there is a lot, I think there is something to it, but you're right, this statistic might be a little bit skewed. But I guarantee you for wholesalers, it's 99%.

Mike DeHaan: [23:25] Oh dude, most of them don't even get as far as starting LLC, or even better, they start the LLC but they never actually market or make any offers. They just shut it down. So you deal with a lot of those all the time.

Dan Austin: [23:35] Absolutely man. I agree.

Mike DeHaan: [23:36] So anyways, that's our current drama to sort of finish out the year, which has been interesting. Something else for the little tool belt, guess. One more life experience. One more thing for the God.

Dan Austin: [23:49] One more notch on the belt.

Mike DeHaan: [23:50] For the real estate bingo card that we talked about like a month ago.

Dan Austin: [23:54] I know. Gosh dang. Some of these I don't really want these I don't wanna have to

Mike DeHaan: [23:57] say No. Yeah. Right. Yeah. It's like it's like doom bingo. It's like bad if you get them. It's all bad shit.

Dan Austin: [24:03] Yeah. Exactly. When yeah. When you get bingo, you're screwed.

Mike DeHaan: [24:06] Yeah. Right. Got the trifecta, baby. Cool. Besides that, though, I don't think we have anything too crazy going on. Actually been a pretty productive December Mhmm. In terms of like lead flow. I've been surprised at how high our lead flow has been compared to previous years.

Dan Austin: [24:19] That gets to like more than usual.

Mike DeHaan: [24:20] For December it's way more which than is interesting.

Dan Austin: [24:23] Like I'm not like my socks aren't blown off, but also like the quality I feel Yeah,

Mike DeHaan: [24:26] is yeah, I mean we've been getting a lot of people coming in that are like, and it's funny because it's not even the typical December, like, oh I need to start really quick for taxes, but there are people that are like, hey I've been sitting on this house as a major problem and now I'm starting to figure it out. What I keep going back to with this, I've been thinking about this a lot, is I think it was JPMorgan Chase, they had like an article that came out, it was over the summer, was in like August, and they were saying that if you look at the cash flow and the consumer debt, everyone's like quote unquote COVID savings and reserves, and you know, from all the consumer accounts they can see was what we're going to be running out in December. I would imagine we're honestly kind of reaching that, because we have been getting a ton of people that are like pre foreclosures, they have like kind of weird financial stuff going on that they don't always disclose to us until we get to the house, and they're like, actually I'm a client bankruptcy, know, get a lot of those. And I'm wondering if that's basically just like the timing and the fact that it's Christmas and it's winter is purely just coincidental and it's really just like the larger economic impact of kind of what they were talking about over the summer. I think so. Yeah.

Dan Austin: [25:31] I think there's something to be said about it, right? Because I'm reading an article from the bostonfed.org, I just pulled it up from 11/07/2023, that just basically says they're gone now. It's gone. Pandemic era excess savings is almost entirely depleted as of November 7. So JPMorgan Chase actually had a good forecast there according to your article that you quote existed that I don't know if it does, but I feel like I remember that also.

Mike DeHaan: [25:57] So I heard it on Erin Mucci Steggi's show, I'm gonna say it was like in August, because I remember specifically listening to it when I was in Montana over the summer.

Dan Austin: [26:04] Okay. It's fact, if he said it honestly, it's probably fact.

Mike DeHaan: [26:07] Dude, he's like one of the few guys that I like listen to what he says and not just like kinda question everything.

Dan Austin: [26:12] By the way, did he go blonde?

Mike DeHaan: [26:13] I think I have I thought that on this.

Dan Austin: [26:15] I was gonna make a comment on his post, I was like, did you go like, really interesting article, did you go blonde?

Mike DeHaan: [26:19] I saw that. You should.

Dan Austin: [26:21] Okay, Emma, okay, maybe I'll comment next time I see it, because I just wasn't sure, was like, damn it, I can't tell, the lighting was kinda weird.

Mike DeHaan: [26:27] He's kind of a funny guy, he likes to like go out, go to concerts and stuff. I'm like, did you go on to like an M and M show and you're trying to like look like Marshall Mathers, and what are you doing? But I love yeah, so I like that's kind of my assumption, and so I'm also assuming that going into next year stuff might start to get really weird really quick. Because also even some larger economic indicators that we're starting to see here locally, I don't if people are seeing the same things other places, but we're having a lot of restaurants and stuff start to shut down here in town, a lot of local businesses citing like financial issues and lack of business are starting to disappear here locally. And I'm kind of assuming that's happening other places too. But like it's just a lot of, you know, not a lot of business like it's expensive to go out these days with inflation, expensive to have a business because of staff costs, rising minimum wage, different things. And a lot of people just have less money. So I don't know, I do think that we are really going to be going into a true recession here soon, like in this next year?

Dan Austin: [27:30] You think so? I don't know, gotta formulate my opinion, my plan is to formulate it over the next couple weeks and really dive into that because I have people on both sides of this argument that I really trust that are saying opposite things and it's hard for me to kind of put together

Mike DeHaan: [27:43] Yeah, I think it's gonna be like a consumer based recession, right? So like people aren't gonna be spending a lot of money on luxuries, but I also don't think that there is that many people whose you know, necessities are going to be threatened compared to like past stuff. Right? Like you're not gonna see a ton of people are like losing their homes compared to 2008 or you know, the Great Depression obviously. But you're gonna see people doing a lot less discretionary spending and just Right.

Dan Austin: [28:10] A big pullback in that. I I have understood that. I do agree with that, like logically, because like, they're saying 2023 is more of a business recession, and they'll be the b to b, and they'll be back in 2024 and so from an investment standpoint, you're probably good, right? Like if you wanna continue to invest. Yeah. But yeah, you're right from a consumer standpoint, which could be good for us because then people need to, you know, sell their house, there's, there's a little bit more financial distress there. And this is something that like, why inflation hurts people. Inflation hurts because wages never go up the same amount. It pisses me off, it's I get it from a capitalist standpoint, running a corporation standpoint, give your people as little as possible so you can make more profits, because your profits are truly driven by the market, and you need to make quarterly earnings.

Mike DeHaan: [28:56] You need

Dan Austin: [28:56] to make annual earnings. You have a price per share, your profit per share, that you're like giving out and needs to be within a bandwidth to your investors when they see it, they're like, you're too high or too low, they don't reward you if you earn over earn or under

Mike DeHaan: [29:10] earn, right?

Dan Austin: [29:10] They really get upset about that. But, if inflation is running over 9%, how can you argue that a no, no pay raise, or a 3%, or a 5% pay raise is okay? For most companies, if they're even doing a cost of living increases two to 3% over the last several years, and they're gonna dole out 5% and give you a high five and a good job, look, gave you even more money than usual, but we all know inflation was running really high, and so that's where it really starts to hurt, because if wages can go up with it, then it's fine, which is a great thing for everybody, but also maybe not the best for the economy, because it's continuously, it just feeds the inflation more, but it's just so a frustrating mindset for most Americans, and a reality for most Americans, and why the inflation hurts them so much.

Mike DeHaan: [29:54] Yeah, and there's always this massive misconception I think with business owners that people do that selfishly because they're trying to steal more money for themselves, which sometimes there's like that, right? As a business

Dan Austin: [30:05] think there's some of that.

Mike DeHaan: [30:06] For sure, but as a business owner, sorry, but I do deserve to make more money than my employees.

Dan Austin: [30:11] Yes.

Mike DeHaan: [30:12] Right? Because we have been doing this thing for five years, people regularly ask, because people say garbage is pretty fast, well yeah, because I've worked twelve hours a day, six to seven days a week for the last five years, okay? We've put a lot into it, we've done a lot of personal investments, financial investments, life sacrifices, a lot of risk, A lot of different things too.

Dan Austin: [30:32] Taking a lot of risk.

Mike DeHaan: [30:33] But I do also think there's a hell of lot of businesses out there that just aren't doing very well, You know, and even though inflation's at 9%, they're probably pushing that profit margin to a point that you know, they're probably stretching to even have those staff members. They literally can't afford to increase everyone's pay, heal up with inflation. And that's the reality of small businesses right now. So like especially if you have some of these lower margin businesses that people do, like restaurants like coffee shops. I mean, they can only charge so much for a sandwich, right before people stop paying for it, just on principle. Yeah, you can only turn so many cups of coffee in an hour. Yep. And after a while you're going to reach a point where you literally are at like kind of the maximum amount that you can charge and your staff still has a certain expectation where they wanna get paid, and those become an issue and the only thing that you can give up at that point is profit margin. Mhmm. And it's not like, you know, people that own coffee shops are making millions of dollars, right, like honestly.

Dan Austin: [31:25] Right. And in some scenarios you can really truly put yourself in a position where the small business owner's actually making less and you would be very surprised. Oh, yeah. I've been looking at P and L's of business owners and stuff this last year and some of them are not making as much money as they're risking, to be honest.

Mike DeHaan: [31:40] No, not at all.

Dan Austin: [31:41] It's tough. It's definitely a weird situation though, like, because there's a balance in how you can provide jobs and as well as providing a good environment for your staff to work in and have that, and giving them additional benefits outside of to whose make it work for you as a small business owner. But really the point of this, for me, the conversation is really like, being in a position to be a business owner and an investor is where you wanna be, you don't want, you want inflation to be on your side. So, we argue that as a business owner, or as a corporation, the shareholders are driving that, well you need to become the shareholder, because shareholders are one giving money to companies to invest, that's where you wanna be. You wanna be the shareholder whether that's of your own business, of shareholder real estate, of stocks, or whatever your investment choice is, because when inflation goes up, those do go up in value.

Mike DeHaan: [32:28] Exactly. Yeah. You know, 100%. Just like everything else, I think it's so important to be in charge of your own destiny if you really wanna have security. You know, I made an Instagram post, I think it was last week or couple weeks ago, that got a lot of response. But it was kind of a controversial topic where The US is absolutely the land of opportunity, know, and I acknowledge that and so many people moved to The US because of that, but if you don't wanna take that opportunity, you're probably better off living in most other countries.

Dan Austin: [32:57] Yeah, from a lifestyle standpoint, there could be a lot of other opportunity for people.

Mike DeHaan: [33:01] For sure, like if you're someone that just wants to like go to your super basic job, isn't that stressful, and then you wanna go home and like, you know, just play your video games or like just, you know, do your crafts or do whatever, The United States is a hard place to live. Like honestly, like you're not gonna be able to afford that many luxuries. Like you'll be able to do some basic stuff, you're not gonna get a lot of time off like the, you know, maternity, parental stuff sucks

Dan Austin: [33:23] or working

Mike DeHaan: [33:24] culture, healthcare sucks, compared to a lot of other places in terms of like cost, not in terms of the actual care that you receive because there's a reason that people come to The United States to get surgeries and things, right? But if that's outside of your ability to pay for it, it's outside of your affordability, you probably should go somewhere else and that's an unfortunate truth.

Dan Austin: [33:43] I heard they take longer lunch breaks in Spain, I think that's where I wanna go and they have free healthcare.

Mike DeHaan: [33:47] Yeah they do, yeah they have siestas.

Dan Austin: [33:49] Can I drink on my lunch break, that's what I care about? That is frowned upon in The US unless you're a business owner.

Mike DeHaan: [33:54] You can do that in a lot of places.

Dan Austin: [33:55] Just not in America.

Mike DeHaan: [33:56] Just not in The States.

Dan Austin: [33:57] Yeah. Well, mean, unless you're

Mike DeHaan: [33:59] in construction. Yes. I mean, if you're in construction, you're you're pouring vodka into your white monster can before you get to the work God.

Dan Austin: [34:08] Damn it. That's rough. My wife and I, I don't know if you've seen this before, side tangent, so like, when we go for walks, like, through the entrance into our neighborhood, and there's these like little teeny shooters of like plastic like vodka bottles, that is like, that's an alcohol, Oh, totally. Drink it on the way home, throw it out the window, and we're like narrowing it down to who we think might be the Oh

Mike DeHaan: [34:28] shit, there's probably someone that like walks around your neighborhood and like drinks those, and their spouse doesn't know.

Dan Austin: [34:34] No. This is totally a person that comes home from work and throws them out the window so their spouses can see that they've been drinking shooters because they're probably not supposed to be drinking.

Mike DeHaan: [34:42] Take a little mouthwash from the driveway, you got all figured out.

Dan Austin: [34:45] Seriously, like, so we have like, we're like investigating this, kind of, we've narrowed it down to a certain area of the neighborhood.

Mike DeHaan: [34:50] We really try to make jokes about alcoholism, it's fucked up, it's a major problem.

Dan Austin: [34:53] Yeah, mean, I'm not joking about it, I'm just saying, I'm just trying to track out who the fricking litter bug is.

Mike DeHaan: [34:57] Especially in your neighborhood, those are nice neighborhood bastards. But yeah, what we were joking about before, we making the joke about the bingo card with because I'm two getting called, and one of the guys in our mastermind, Dan Del Corio out of Dallas, Milk. He goes by Milk. He posted, he said, is there a bingo card for making friends with a bird on a house walk? And it's a picture of him with this little bird on his shoulder. I don't even dude, the things that happen in this business are just like, what is the context? Well, we'll have to report back next week and let you guys know.

Dan Austin: [35:29] Dude seriously, know, I'm gonna, I'll post this photo, somebody sent me a photo of them walking a property where there's two toilets side I by was like, why is this so common? Like when in off market real estate, I'm not even surprised, I'm like, oh two toilets, yeah, that's totally, that's most bathrooms.

Mike DeHaan: [35:44] Yeah, I don't know man. Yeah, he's just hanging out with a bird, and it's funny because Dan's like a big dude, he's kinda like a man's man, here he is just hanging him out with this little bird. Like I don't even

Dan Austin: [35:52] Little parakeet. I think it's a parakeet. I don't know. I hate birds, man. My mom used to like birds growing up, I hate them. Yeah. Like chirping in the house.

Mike DeHaan: [36:00] Yeah, I wasn't sure if not sure. I'll tell you what, owls are freaking cool.

Dan Austin: [36:02] Owls are cool, but they're super scary.

Mike DeHaan: [36:04] When I held those owls in Japan, freaking scary, dude. I was waiting for it to kill me.

Dan Austin: [36:08] Those are cute ones though. Have a big one.

Mike DeHaan: [36:10] Second biggest owl of the world. Oh, yeah. What kind of owl

Dan Austin: [36:12] is that? The biggest owl in the world?

Mike DeHaan: [36:14] It's the second biggest. It's like the Eurasian owl.

Dan Austin: [36:17] What, he's like two feet tall?

Mike DeHaan: [36:19] Yeah, I mean, look at yeah, I'll send you the pictures on my Instagram. Dude, it's like bigger than my head, like they're it's massive and I had it on my shoulder.

Dan Austin: [36:25] I mean, I've seen the owls like even around my house, I've seen them fly around at night and they're like,

Mike DeHaan: [36:29] their wingspan is like Yeah. Huge. They're massive. The big one's like six to eight feet. Yeah. This one has six foot wingspan and you could like hold it but they're funny. You'd really like because they're birds, but it could definitely like buck you up because it was upset. Anyway, we're off in the gutter.

Dan Austin: [36:43] Sorry.

Mike DeHaan: [36:43] Right on guys. Well, I guess all that we have for you today. We should make these bingo cards though. I feel like there's a lot of random things we could put on there.

Dan Austin: [36:50] We should. Oh, that's a great idea. Let's do

Mike DeHaan: [36:53] it. What we should do is we should have a competition. Yeah. We can make these bingo cards, and the first person to get like a bingo or like a blackout, and they can send like photo evidence of each one will send like a thousand dollars or something.

Dan Austin: [37:05] I like it dude. Some sort of competition. Yeah.

Mike DeHaan: [37:07] Yeah. Or what we do, let's say you buy a bingo card for like $5 and whoever sells, like whoever like completes it first with photo evidence, they get like the pool of like all the one that did it.

Dan Austin: [37:19] Guess the pool? Guess the pool? I like that idea. We should

Mike DeHaan: [37:21] we should explore this. Think there's something there.

Dan Austin: [37:23] I like this. Alright. Let's get our guy on it. Wholesaler Bingo. Dude, okay, I'm I'm into it. Let's go.

Mike DeHaan: [37:30] Awesome. Cool guys. Look out for Wholesaler Bingo coming to collecting keys podcast near you.

Dan Austin: [37:37] That's so funny.

Mike DeHaan: [37:38] Thanks for listening everybody. We appreciate it. If you want to get our free subject to course, which you will be able to get until 01/01/2024, where you can learn how to protect yourself so that when your subject to transaction that you bought that you thought you're being so smart about gets called just like ours did, that you're not in a bad spot. You can go to collectingkeys.com/subtwo, you can grab that and it's like forty five minutes, but we've been getting some good feedback on it so far. And it will give you everything you need know to do those those transactions correctly. Besides that everybody, follow me on Instagram at Mike underscore invest and follow Dan at investor man at Dan, and talk to you later. Thanks everybody. See you.