Can 3D Printed Homes Solve the Housing Affordability Crisis?

Mike DeHaan: [0:00] Really quick before the show starts, in case you haven't heard, we have a growing community of investors called the scale community, which is full of people learning to make massive income with their real estate businesses, so they can reach financial freedom a little bit faster than building a rental portfolio solely over time, because honestly, that takes decades and who has time for that. So if you're an investor who is serious about growing and creating a scalable business without needing to be a slave to it twenty four seven, then go to collectingkeys.com/scale and apply. And if you're a good fit, we would love to have you join the community. So again, collectingkeys.com/scale. Go ahead and apply, and we'll see if you're a good fit.

Dylan Koch: [0:38] If you get an inspection on a new build home, it's still gonna be 50 pages long.

Mike DeHaan: [0:43] What is going on, guys? Welcome to today's episode of the collecting keys real estate investing podcast. Today is Wednesday. It's the off market operator radio show. And I am your host, Mike DeHaan here with my co host, Dan Austin and Dylan Cook. And on these Wednesday shows, we talk about what's going on in our real estate businesses, what you should probably know about the market concerning your real estate business, and kind of just whatever else you feel like for the week. And so on this random Wednesday, I guess, we shortly after Labor Day, we're recording this. It's starting to get into, I would say, what is traditionally our busier season with our real estate business in September, October, that time frame. August is traditionally very slow. So if you're going through August and you're like, man, this kind of sucks ass, it wasn't just you. I promise. It's very much like industry wide. And it's funny if you go back to 2021, Dan. I forget. I think October, November, it was like half of our revenue for the entire year.

Dylan Koch: [1:44] Yeah. We were two months. We're rich.

Dan Austin: [1:46] You're rich.

Mike DeHaan: [1:47] Yep. Dude, we we made like $500 in like two months. It was awesome. Made a shitload

Dylan Koch: [1:51] of was looking at last year's stuff, and I it was almost flip flopped. My August was a lot better than my September. This year, I only did two deals in August, but we had five in escrow between now and the twentieth.

Mike DeHaan: [2:02] Yeah. We it's traditionally been pretty hot for us. I think though I don't know what winter's like over there in Cincinnati, but up here in in Washington State, it gets, like, real dark and real cold, like, quick, and it sticks around a while. So we always end up months. Right. Sticks around until June. And so there's always this, I would say, like urgency that comes from sellers where they're trying to get stuff done. So they don't end up having to like sell or move like in like the dead cold.

Dan Austin: [2:30] It seems like it slows down like into the fall, but that's when also a landlord action picks up, because they always wanna sell before the end of the year. So kinda going into the end of the year kinda balances out, and then you get back on that retail side where people are like, well, I need to move now, all of a sudden when the sun pokes out like March, April time frame.

Dylan Koch: [2:45] Yeah. We had some last year, we did, I think it was five or six deals in January, and most of those were because like people wanting to wait until the new year

Dan Austin: [2:53] So common.

Dylan Koch: [2:53] To sell things. Right? Yep. Totally true.

Mike DeHaan: [2:56] Yep. Yeah. Yeah. And that's why I always tell people too, like, don't just because you're expecting to be slower during the holidays, don't pause your marketing like Thanksgiving, Christmas time, because that money that you spend then is gonna be what pays your bills in January when stuff eventually does come around.

Dan Austin: [3:10] Yeah. If you stop you remember, like, when we first started, like, our competitors were like, oh, I take the month of December off. I don't do anything. And guess what happens in January? You basically take it off too because it's slow because you shut everything down. It's like, totally get you don't wanna work as much during the holidays, family, all this stuff. But market, do the bare minimum, keep it going because that's what makes your q one like super badass.

Mike DeHaan: [3:30] That first year, January 1, I remember we like doubled down on that. We just made a bunch of money in October, and that was actually when we discovered the concept of a lead manager. And we brought on Ricardo at the end of January,

Dan Austin: [3:42] and then were

Mike DeHaan: [3:43] swinging deals. And then that March was when we had, like, our huge, huge month where we just made the other half of our money for 20 of our money. Yeah. Yeah. Just doing two different months. Yeah. Okay.

Dylan Koch: [3:54] Out of 12. But it's funny you brought in Ricardo, and I've I've been looking at 2023 and 2024, and like my business pretty much has looked the same as far as like number of deals. We'll do a little bit more revenue this year, but I've also flipped a little bit more this year. But marketing spend's been about the same, and it's kind of been just like a, I don't know, kinda dull. There's not much excitement. But now that I just hired this EA, her first day was the first, I always got this bigger kind of reinitiated, I don't know what to say. But now I'm going down a different path, like doing all these Loom videos, all this kind of stuff. So that's been good. I think that's been a new business change for me.

Mike DeHaan: [4:27] This is a this is a really good talking point for people that are listening that are maybe about to hire their first person, have been a sole operator for a while. Give us, like, the two biggest tips for someone who has been a, you know, successful operator by themselves and is now bringing on somebody that they're handing the reins to a little bit in their business?

Dylan Koch: [4:46] Yeah. So the first one that comes to mind is the concept of hiring someone to free up your time, to do more things, is one is make sure you're actually freeing up your time to be more productive and not just taking vacation or doing something. But two, everyone can hear that concept, conceptually understand it, but until you actually feel it and you see that person actually do the work and it's done right, that just happened to me, and I don't know, it just creates something like, holy shit, this is real. And know, so for example, we pull manually foreclosure data pretty much every week, and I created some Loom videos. She did it. It's Tuesday morning, and all of them are already preset where they need to be, and we're dialing them this morning. And that usually takes me probably like three hours to do over the weekend.

Dan Austin: [5:29] Was that

Mike DeHaan: [5:29] like an moment for you that like, oh, I understand human leverage all of a sudden?

Dylan Koch: [5:34] Yeah, and now it's Now my brain is saying, what else can I get rid of? And then you know, and so she'll do

Dan Austin: [5:39] She's gonna be full time before you know, dude.

Dylan Koch: [5:41] Yeah. She she wants it. I hope so, man. Even with the rental properties. Right? Like, so now I was playing a property manager 8%, but we're gonna bring that all back in house, you know, for all that stuff. So

Mike DeHaan: [5:51] So that that's a good, I would say, like, result. And and waiting to get to the point too where we're at. We closed 10 deals in August, closed through escrow. I couldn't tell you a single address, single anything about

Dan Austin: [6:02] I don't know any of them. Yeah. Except for ones here in Spokane, but that's about it. Yeah. That's just because we live here.

Dylan Koch: [6:08] Yeah. Which makes sense for you guys' business model, but I think, if I have her, I eventually hire an acquisitions person, then myself, and then maybe one other project manager, dispo, whatever that may look like. I'm happy with that. And I think I can kill it with just those people. And I can still be involved in the day to day, know the addresses, meet some of the sellers. I'm okay with that. So

Mike DeHaan: [6:29] You're okay with that right now because that's your next step. Once you get there, you're like, man, what if I didn't have to do anything?

Dan Austin: [6:34] Right. Seriously.

Mike DeHaan: [6:35] So that that's a good result. What do you think, like, for somebody that was listening and wanted to have that same outcome with their first hire? What do you think is like the reason you were able to achieve that with this person? Because a lot of people don't have successful first hires.

Dylan Koch: [6:48] So, yeah, I don't I don't know if I told you this, Mike, but I actually have a previous relationship with this this new assistant.

Dan Austin: [6:53] Mhmm.

Dylan Koch: [6:54] She was my lead technician actually from my pharmacy days. And so I already knew she's reliable, I already knew she's a good worker, and I knew that she's resourceful, like she could figure things out on her own. She was already kind of in charge of the other techs when we worked there. My biggest hesitation was, we both don't know what we don't know. Because she didn't have an admin role, like she didn't know some of this stuff. But I figured, you know, I've got most of this stuff kinda down already, just learning what I know and passing it on to her. But I did do the DISC assessments, I went through six or seven interviews. I gave her the same

Mike DeHaan: [7:25] Six or seven interviews with No.

Dylan Koch: [7:27] No. No. No. In No. Sorry. No. Was

Mike DeHaan: [7:30] like, Jesus Christ. Fucking merrier already.

Dylan Koch: [7:33] Still interviewed a whole bunch of other people, and I just truly thought she was the best fit at the end of it.

Dan Austin: [7:38] That's that's good stuff. I like that too. You're gonna you're gonna, like, have, I don't know, like this whole new well, you got a baby coming too, so that'll be super helpful to have her browsing. So you're gonna have this whole new, like, respect for your time, I think, after this too. When you hire that person, they come in and they start becoming productive. Now you're like, Mike said, was like, what else can you hand off to? And like, what does that next phase look like? I do like your idea, like, next person coming stepping in on the back end of your transactions. Right? So you've got her helping out with all this stuff on on the front end, and then if you have a person on the back end of those transactions, like, whether that's a project manager or a dispositions manager, like you're saying, I mean, that could be awesome for you. That could save a ton of your time, because you're clearly good at all of it. You've been successful. It's just where's the best use of your time in that state? If that remains on acquisitions, keep doing acquisitions and start hiring out around yourself. Exactly. And that's kind of

Dylan Koch: [8:27] the plan going forward for now.

Dan Austin: [8:28] And

Mike DeHaan: [8:28] so did you recruit her? Did she, like, apply to a job listing that

Dylan Koch: [8:31] you So I put it out on what was the website you guys mentioned at KeysCon? No, not WiseHare, was something else. I forget. WellFound? WellFound. Yeah, did that. But also just posted on all my social media channels. And she was at a gig. I didn't go recruit her. She just saw it. And I think based on, you know, we had a good working relationship before, and she trusts me, and she reached out.

Mike DeHaan: [8:55] That's cool. There you go. Right on. And then hopefully if you have to fire her, doesn't get really weird.

Dylan Koch: [8:59] Yeah. Hopefully. Fingers crossed.

Dan Austin: [9:01] It's a me, not you thing. Right.

Mike DeHaan: [9:03] You know, but firing people is a part of business.

Dan Austin: [9:06] It is. And it's not always because they weren't good at their job. That's that's the unfortunate part about business. Sometimes there's misalignment of skills. Sometimes they do suck at their jobs. Sometimes your business is pivoting rapidly. And when you hire that person, you are actually taking a step forward or you're pivoting or you're taking a little bit of a gamble or a risk in your business, and you needed people for it. And it doesn't always work out that way. And so sometimes your gamble or your risk is just that, and you lose money, and you're saying, hey. Sorry, can't keep you on board. I think the lesson in all of it is is don't ever be afraid to hire, you know, because you're scared of what paying them, or you're scared that you can't accomplish what you were setting what you're setting out to be, because then you'll never know. You'll never have an answer to that. She'll be the fear will take over.

Dylan Koch: [9:49] And with that, Dan, I'm I'm paying her $20 an hour for starting at twenty to twenty five hours a week. You multiply that out, I mean, it's gonna cost me 30 ish thousand dollars on the whole year. If you work for a whole year, what

Dan Austin: [10:03] if it's only six months to find out that it's not a good fit or that you don't need that person in your business? Yeah. So you think about it on that level. You're right. It's 30 grand's like one deal, but it really might only be like half the deal before, you know, you have to make a change or whatever. And I'm saying that is in a way is like, don't always think about you risking the full annual salary because like there's actually Mike and I have hired a shit pile of people, and not all of them have gone full cycle. Very, you know, I would say a third of them have gone more than a year.

Dylan Koch: [10:28] What's your updated number, Mike? Do you know? Because I know you've said on podcasts before how many total people have you had through your organization.

Mike DeHaan: [10:35] Let me look at how many people we've had, like, on our Slack. So if you include all the people that we've had for Simply Leads, it's gonna be a lot now.

Dan Austin: [10:45] Yeah. It'd be a

Mike DeHaan: [10:45] lot had a freaking, like, trying to think of the right word, like a village of people over in Egypt, pretty much.

Dan Austin: [10:52] It's one apartment building.

Mike DeHaan: [10:54] Yeah. It sounds like honestly, though. So if I go and I look at our total members, we have 40 active team members. So as people that like currently work for us, we should include all of our other ones. We've had 96 members total that have been involved in our Slack at one point or another. So that's 56 people that have worked for us at one point that no longer do.

Dan Austin: [11:17] Yeah. Some capacity.

Mike DeHaan: [11:19] Yeah. So that's, like, more than one a month.

Dylan Koch: [11:21] And to twenty twenty one?

Mike DeHaan: [11:23] No. It'll be since 2020.

Dylan Koch: [11:25] Since 2020. Okay. So four, almost five years.

Dan Austin: [11:27] It's not like we're chopping people's heads off. It's some of it's meant to be temporary work, know. A lot of it's virtuals and VAs and stuff like that that you're using for a specific thing. We've also had several companies and, but yeah, you just get used to it, I guess.

Dylan Koch: [11:40] So, I mean, the point in all this is like, you know, you're four years through business, you've had 96 total people through, 40 still active, and if you ask yourself in the beginning of 2020, do you think it'd look like that? The answer's probably hell no. No. Right? But you just have to adapt as you move along.

Dan Austin: [11:55] Why would we need all those people is what we would've thought. And if we were running a traditional wholesale business this whole time, we wouldn't have needed that many people. I mean, you just don't. I mean, there's some of bigger markets where people might have a sales team of four or five plus a bunch of other VAs and stuff, but it's not necessarily required for every single operator.

Mike DeHaan: [12:12] Yeah. And science people go quick. Like, fucking Pat Stevers, bro. You probably listen to this too. Works for us for two days.

Dan Austin: [12:19] Two days. I gave him, like, two hours. He said it wasn't cut out. He wasn't cut out for it.

Mike DeHaan: [12:24] Yeah. Talked to big game. He came in. Congratulations. So if you listen to this, I still regret. She's like, why waste my time, bro? Yeah, man. There's all sorts of dust. Remember that dude?

Dan Austin: [12:36] Oh, yeah. Dust was a great guy. Just kind of his own problem. He was his own biggest problem.

Mike DeHaan: [12:41] He showed up with the pace Morby had on every day, ready to roll, ready to do acquisition.

Dan Austin: [12:45] Well, he could calculate a creative finance deal, like, was so smart. He would like, dude, he was like Pace Morby's, I don't know, A plus student, but he could never close a deal, because he was just taught too many numbers. I mean, he would make your head spin. He'd be like, well, we could do we could do a second, tenth mortgage. Like, what? What did you get spinning? Did I give her a nine?

Mike DeHaan: [13:07] But anyways, one of the things that I regularly notice, and I've said this on other shows before, high level entrepreneurs, they view staff, team members as a mostly expendable resource, which might sound bad, I guess, to like a small business, but

Dan Austin: [13:24] I wouldn't call it that. I would call it a I would call it a switch that you will have to turn on and off at at a given notice because that's what business requires. And as a small business or even medium sized business, you should be pushing the limits if you're trying to grow. Like, you're not trying to grow, you won't ever be pushing limits. But if you're trying to push the limits, it's something you have to be able to turn on and off, like, quickly.

Mike DeHaan: [13:43] Yeah. I mean, it's kinda like making offers too, where, like, people are starting out, they're, like, terrified to get a contract if they don't have the entire thing planned out. It's like, you gotta shoot the shot and, like, just sorta see what happens with it. Right? You know? And just like with deals, the great thing with houses, there's hundreds of millions of houses in The United States. Right? Something like that. I don't know how many hours there are. There's probably a 100,000,000.

Dan Austin: [14:03] And there's always a 100,000,000 people trashing them.

Mike DeHaan: [14:06] Yeah. Exactly. There's there's a lot of people that are trashing us. There's a ton of them to always choose from. And just like with humans, this is something that I say to one of our other senior staff all the time when they get kind of tied up on stuff. So the great thing about people is there's, like, 8,000,000,000 of them. We need to find replacement for somebody, we probably can.

Dylan Koch: [14:22] Yep. Totally. But, I mean, about the, you know, how many houses there are in The United States and whatever. But, you know, we talk about on this show frequently about affordability problems, you know, and now no one can afford a house, and we'll get into interest rates and policy decisions. But one thing that's always kind of been, you know, deflationary in nature is technology. Right? Technology is supposed to make things cheaper over time. But we haven't really seen that with houses until, I guess, there's some companies out there who are claiming that they can basically three d print these homes using these big printers and this special proprietary cement that builds houses in half the time and half the cost.

Mike DeHaan: [15:01] What a great segue, by the way, John. I was we talked before the show that we were gonna go down this rabbit hole, and I was like, don't know how the fuck we're coming back. So good job.

Dylan Koch: [15:09] I actually thought you were leading me into that. So No. There you

Dan Austin: [15:11] Good job. Good you're you'd be a good news anchor.

Mike DeHaan: [15:14] Yeah. Right.

Dylan Koch: [15:14] I don't know about that. In other news today, it's brain for radio. So

Mike DeHaan: [15:18] Yeah. Yeah. But so so, yeah, we've seen these three d printed houses. You know, you sent out this video where they're, like, basically using this cement printing machine that looks like it's like putting frosting on cake.

Dan Austin: [15:29] Does look delicious.

Mike DeHaan: [15:30] Yeah. Right. To make these houses. But we've seen different iterations of this, though, too.

Dan Austin: [15:35] Let me just tell you what I wanna say. Like, so I was thinking that when they're printing it, what if, like, it was in Spokane and a homeless person you know homeless people, right? They just walk into it and just it's just like a muddy mess. Would it be like you know? Like, could you see that?

Dylan Koch: [15:50] I think they have someone on-site during the pouring stages of this.

Dan Austin: [15:54] I agree, but I'm just saying, have you been to Spokane?

Dylan Koch: [15:56] I mean, yes, I have actually, once.

Mike DeHaan: [15:58] Yeah. Oh, I mean, yes, we had lunch with you.

Dylan Koch: [16:01] I met you, Dan, if you remember that.

Dan Austin: [16:04] Oh, that's right. You were here in Spokane like last summer. Yeah. Oh, that's great.

Mike DeHaan: [16:08] Yeah. There's been, like, different iterations of this. This this this one's like the concrete pouring. We've seen people talking about the fab homes for a There's people that were doing, like, the different, like, homes out of the recycled objects, like the storage containers and different things. None of them seem to have really stuck. I mean, I guess I don't know the full benefit of doing this concrete method that you sent over. But I I don't know. My my immediate concern is what happens when, like, the wall just, like, cracks because concrete cracks all the time. Like, do they prevent that? You know? And, like, isn't it gonna be, like, insanely heavy? I don't know. Are there concerns over earthquakes and shit?

Dylan Koch: [16:49] So all good questions, and some of them I think remain unanswered. But they are building these small subdivisions like this area in Texas. So I guess only time will tell. But I have some of the same things.

Mike DeHaan: [17:00] Yeah. Where every deal that we've ever tried to do down there has major foundation issues that make the house unviable for some reason. And

Dylan Koch: [17:06] I don't think these have basements. It has to be on a slab or

Dan Austin: [17:09] crawl space. Could you do it? You could probably do a basement, couldn't you? Don't you think?

Dylan Koch: [17:13] I don't know. Can you put footers and then put build the cement on top of it? Probably.

Dan Austin: [17:18] Why not? I mean, why not? Yeah. Like, it's been around for, like, ten years. I've seen many videos over the years, like, iterations, and, like, there is one company that was actually there, like, making them, badass, like, really cool, modern, and stuff. At the end of the day, though, they're still pretty freaking ugly. And then if you don't want them to be ugly, then you need to drywall them, and you need to put siding on them at some level. So then that basically just takes away most all of your cost savings, I would imagine, because you have a bunch of work you'd have to do to to side it and to drywall and do all that other whatever the stuff is that you would do to a home, I just don't know that they'll ever catch on. I I think from an affordable housing standpoint of prefabbed home, like, what they're doing now so you'll have the ones that like ship is like a unit, like a trailer basically, but they'll also have ones which they're they stole this from the commercial industry, where you could like literally build, like tilt up walls, they would build them right there on the ground and just tilt them up instead of like framing walls. So they do that for houses now and factories.

Dan Austin: [18:16] So they're kind of like normally, like, they're kind of prefab homes, but they're also kind of homes. Like, they're like houses, and they would be hard to tell that they weren't like the typical trailer, because they weren't necessarily built to like ride on wheels. They were just built in a factory, the walls were, and then they can ship them to the site and stand them all up together. And then so the idea being is you're able to build it faster. That, to me, would make more sense from an affordability standpoint than big, ugly, concrete houses that nobody actually wants to live in.

Mike DeHaan: [18:45] Well, and that's the key too. It's like the ones that actually look good. So like I'll I'll share this. You guys can check this out on YouTube. But like these houses, they're trying to make them look like normal houses. Right. But they just kind of don't. Like, I don't know, if people wanted a cheap house, they didn't care what they look like. They would just live in a mobile home.

Dan Austin: [19:04] I don't know. That's interesting.

Dylan Koch: [19:05] But like, do you when they're, you know, printing this, do they frame, I don't know, all the mechanicals, like your plumbing, your that's all probably gonna sit on the inside cell, around like framing.

Dan Austin: [19:15] The video you sent says because there's a gap in the walls, though it's like always does like this like oval shaped thing. Yeah. That's where you can run your wires and your pipes.

Dylan Koch: [19:23] So great. If there's ever a problem, you have to bust through concrete instead of drywall. That's what I was thinking.

Dan Austin: [19:28] Right? Exactly. You're like, oh, this will be fun. But then that concrete you're cutting is literally the structure of your house, so you probably can't cut it.

Dylan Koch: [19:35] Yeah. And what do insurance companies think with these things? Are they are they more expensive? Are they less expensive? I bet

Dan Austin: [19:40] you they won't insure them.

Mike DeHaan: [19:42] Probably.

Dan Austin: [19:42] Even though they're probably good to insure as far as other than falling down there, you can't burn them. Like, are you gonna do?

Mike DeHaan: [19:48] Auto take is like a wall to like fall on somebody, and then it's like impossible to freaking replace.

Dylan Koch: [19:54] Yeah. Right?

Mike DeHaan: [19:55] Because it's not like you can just truss in a new wall. Like, what happens if you

Dylan Koch: [19:59] Bring back in the printer? Yeah.

Mike DeHaan: [20:00] You can't do that. Right? What happens if like like, let's say like a car crashed in the side of the house, something extreme. How do you fix it? I don't understand.

Dan Austin: [20:08] Do you have to get your three d printer out there and have it just squirt shit all over the side of your house? I don't know. It's like toothpaste.

Mike DeHaan: [20:15] You just go to Home Depot and rent a concrete printer That'll sell you. Exactly, dude.

Dan Austin: [20:20] You're like, look, I made this statue.

Dylan Koch: [20:22] Yeah. My point in sharing this is we talk about affordability being a problem, houses are too expensive, and even talking to some builders here, not like spec home builders, but if they're building at 150, $200 a square foot, $200 a square foot, 2,000 square feet, that's $400. That's more than the price, like, median home price where we live. Like, this building in the traditional sense economically isn't there unless you're, like, these high end selling million dollar plus homes. Yo. If you don't follow me on Instagram, which is at mike underscore invests, by

Mike DeHaan: [20:53] the way, then you might not know that we officially have a new mission as a brand, and that is to help 2,000 real estate investors build million dollar businesses. Obviously, to do that, we need to get in front of as many people as possible. So quick little ask to help us reach that goal. First, shoot me a follow on Instagram at Mike underscore invests. Second, follow collecting keys podcast on Instagram. That's at collecting keys podcast all written out. And third, every time the algorithm is kind enough to show you a post from either of us, share it on your story or in your post and tag us. If you do that, I'll DM you and we can have a little DM conversation about what is preventing you from having that million dollar business that everyone is seeking. And we can see if we can come up with a plan to help you make that massive income, not just passive income. So again, if you see any of our posts, just go ahead, reshare them, tag us and let everyone know that you enjoy the content we produce. It will help us a ton. And then I'll be happy to help you as well. Let's also have a capitalistic conversation about this. Right? Let's say that in one of these, you know, whether it's concrete houses or the prefab houses, that they can go and they can get the build cost to be half or a third of what it currently is.

Mike DeHaan: [22:09] Do we really honestly believe that they are going to lower the price of houses?

Dan Austin: [22:13] God, no. That lots are gonna increase.

Mike DeHaan: [22:16] Yeah. Well, yeah, exactly. They're they're just gonna make more profit.

Dylan Koch: [22:19] I think if they could come into, like, a subdivision here in Cincinnati and say, we have this new house. Three bed, two bath, 1,500 square feet, and it's $215, and it's in a decent part of town or $250. I think people would buy that over a traditional house that's selling for like the low 3 hundreds in the same area.

Dan Austin: [22:36] But you're assuming that they would come in and sell for $2.15 when they're like, well price per square foot says this should sell for 400, let's price it at $3.75. Right? They're gonna still price them low, right?

Dylan Koch: [22:46] So you're just saying they're gonna take the above reduce price by very small percentage?

Dan Austin: [22:51] I mean, everything in the real estate market is based on appraised value, based on square feet mostly, right? So it's like, it is what it is. I mean, they look at them differently.

Mike DeHaan: [23:00] They're not gonna sell them affordably out of charity.

Dan Austin: [23:02] What likely would happen is they would sell it at market value like they do now, like a trailer, and then it just depreciates like a car over time, so you're left with the value of the land and then some

Dylan Koch: [23:11] That's worst case.

Dan Austin: [23:13] Yeah. You know what I mean? So I do think that there's a solution in between, like, I think the whole ADU or multi generational living or something like from an affordable housing standpoint and a real estate investment standpoint. I mean, imagine if you could just take you own a single family home anywhere in the city, and you could just crane over an ADU and just set it on blocks or on a foundation. Have somebody come in there, put a little concrete slab out there, you got your utilities there, and like a train car style thing, like, that just literally just cranes in, boop, plops it in, now you have another unit with a kitchen, bathroom, everything.

Dylan Koch: [23:46] As an investor, I would do that if it was economical. Right. If it

Dan Austin: [23:49] was economical. And it totally could be if they were priced to be economical, and you don't look at the capitalist mindset and say, well, I think grandma and grandpa would pay this much, you know, for it just because they want an extra space in their house and they can afford Mhmm.

Mike DeHaan: [24:03] Well, I guess here's my question. Would you guys do that for your primary homes?

Dylan Koch: [24:06] This, like, concrete style?

Mike DeHaan: [24:08] No. Just like like what Dan just said. If you had the ability to just place an ADU I

Dan Austin: [24:12] would. I would for additional space. Like, if I could train in something and have, like, a sick ass gym in my backyard, like, that would be cool.

Mike DeHaan: [24:19] For yourself. Right?

Dylan Koch: [24:21] Yeah. Yeah. He's saying if you'd rent it out to somebody else.

Mike DeHaan: [24:23] Yeah. If you had to rent it out. No. So that so that that's my argument

Dan Austin: [24:26] against all, like a poor millennial or gen z. Like, I don't care.

Mike DeHaan: [24:29] Totally.

Dan Austin: [24:30] But that's most of the population. If they could reduce their mortgage by, like, a thousand bucks a month, they would.

Dylan Koch: [24:35] It's like forcing your house to be a house hacking.

Mike DeHaan: [24:37] Which is already a small portion of the population. So where where I'm going to with that is, like, people always type, I was like, well, we're looking towards an ADU is increased density. That's gonna be a cultural shift in American society that would have to happen.

Dan Austin: [24:49] It has to have a a law a shift in laws first, and then it has to be driven by economics and then a cultural shift. Right? Like, because you have to have the funny thing enough, culture can be influenced by money. That's weird. And so it given enough economic constraints, that'll become the cultural norm like we see in Seattle right now. They've had the laws, you know, maybe a decade ahead of us. People are going over there. They're not maybe their primaries, but they're taking investment properties and hacking them up. California, you're seeing the same thing where they're just like shoving random boxes onto lots, and there's no parking or anything, and they will sell them for a shit ton of money more than they paid for them because the economics are such that it's still like, to rent a I'm just gonna throw a number out there, to rent a studio nearby might be $3,000. So they're like, well, shit. I can clock an ADU in my backyard for 300. That's 1% rule. That makes tons of Mhmm.

Mike DeHaan: [25:43] Yeah. See a lot in Austin too. Like, if you look at Airbnb's on Austin, in Austin, pretty much every single one is like an ADU on the back of somebody's thing.

Dylan Koch: [25:51] They're just offsetting their new tax burden. That's all they're doing.

Mike DeHaan: [25:53] Well, totally. Right?

Dan Austin: [25:54] Right. No shit.

Mike DeHaan: [25:55] Like, all that stuff, like, it only works with the affordable housing issue if people in control, which are the people that own the properties, want to support that, which, realistically, most of us that own our own homes do not wanna do that. Right? Like, it's not my ideal living situation. Even if I could, like, rent it out for, you know, a few grand a month, I'm not gonna go and pop a freaking thing in my backyard and give up some of my space to rent that out just because.

Dan Austin: [26:24] But you also don't live in an affordable housing crisis situation or density situation. Right? So some of these bigger cities where you see the economics are driving it, it's gonna happen, and it is happening.

Mike DeHaan: [26:34] Yeah. But what I'm saying is, like, that has to be a decision that's made by the person who's not in a financially distressed situation. Right? Like, the people that want that are the people that don't have the home. The people that have the home are like, no. Fuck that. It's your problem.

Dan Austin: [26:47] Yeah. Yeah. Yeah. So yeah. I guess

Dylan Koch: [26:49] This is kinda why I think rent by the room has become more popular in some of these major areas. It's because it becomes more profitable for that person who owns the home. And now they're renting each bedroom out by for, like, a thousand to $1,500 a month. There's five bedrooms or whatever.

Mike DeHaan: [27:05] What I think would be more likely would be, like, a landlord if they have a single family home. Like, we could do this with Frederick, and I do it in five seconds. So you have this house. Yeah. It's a good sized house. It's on the front of, like, a slightly oversized corner lot. If we can easily pop up another unit in the back of that and rent that out too, especially if it has a separate entry area, absolutely. But guarantee if there was a homeowner that owned that house, they would very likely not

Dan Austin: [27:27] do it. Right. Yeah. Homeowners, I don't see doing it as much straight away. I think homeowners would do it more from a and I have seen this, and it is the people with money is well, it's millennials that kinda have some money, but their parents do, is they buy a nicer house that has, like, a mother-in-law suite, and then they live together with their in laws because then they can afford the nicer house. And so you see that a lot, like the so I could see somebody saying, oh, I love this house. What if we just stuck mom in the trailer that looks cool and hip, and we just pay money for so I could see that, but I I think the economic driver is gonna be more towards the investor. And if you think about it this way, all these hedge funds that have been buying up single family homes, and then they go and influence the law to make it so locally, you can just drop an ADU that's super cheap and easy. And now all a sudden, they have a bunch of prefab ADUs they can drop on these, and then they increase the cash flow on their properties, increase the value of their, you know, already large portfolio. I can see, like, those types of drivers affecting it, and and not necessarily because of affordable housing, but because there was somebody that could make more money if the drivers are there.

Dan Austin: [28:31] They have to be there for us. Like, to build a stick built ADU on Frederick, for example, doesn't make any sense. If it's $200 a square foot to build this thing and we need to be, say, 800 square feet at least, what is that? 160,000 to build? Are you gonna invest 160,000 in a market where there's no ADUs for the the silly appraisals, appraisers to actually get a real true comp from? Probably not. It's too big of a risk.

Mike DeHaan: [28:53] Exactly. You don't wanna be the unicorn in the neighborhood.

Dan Austin: [28:56] Exactly.

Mike DeHaan: [28:57] It's a great way to just get undervalued for what you have.

Dan Austin: [28:59] Ultimately,

Mike DeHaan: [29:00] the affordability housing issue is super complicated, and I don't think that the solution is building cheaper houses. I think that'll just lead to more profitable home builders.

Dylan Koch: [29:12] Related to that, there's, you know, a common known expression, like, they don't build them like they used to. Right? And a lot of this gets, I think, placed on marketed as corporate greed, or late stage capitalism, or whatever it may be. But if you just think about it, like from these builders are trying to, you know, make an increase of revenues year over year, but the profits try to stay the same. But their input costs, their raw materials are going up, so now they're buying shittier materials to try to keep those low, because if they raise their prices too high, they're gonna price themself out of the market. Totally. So now it's just like this dilemma where the quality of houses quote unquote are getting worse even though they're new builds, and it's just from the fact that everything in on the Inco side is getting more expensive as

Dan Austin: [29:52] well. Absolutely. It's it's a problem. And if you actually look at, the engineering specs for a lot of building materials, most of them are like like the OSB, like, which is like most of your structure, There's like a fifty year lifespan. So it's like, your house shouldn't last more than fifty years is basically what they're saying.

Dylan Koch: [30:08] Or two by fours aren't even two by fours anymore. They're like, they're like slightly smaller or some shit.

Dan Austin: [30:13] Yeah. There's there's all that that stuff, like windows. I'm sure that I haven't looked at windows, but their engineered life is probably like six years because they don't seem to last that long. I

Mike DeHaan: [30:22] know. No shit.

Dylan Koch: [30:23] And builder grade, I mean, has a bad rep to it. But because you see problems, like, you get a new inspection on a new build home, it's still gonna be 50 pages long.

Dan Austin: [30:31] Oh yeah. Yeah, exactly.

Mike DeHaan: [30:33] So I guess what's the moral of the story here? Don't be poor?

Dan Austin: [30:35] Well, if you're poor, listen

Dylan Koch: [30:37] to collecting I guess don't be poor, or someone solve this. I do think if you can, no not gonna solve, but do something in this affordable housing space and actually do it right, should be worth a lot of money.

Mike DeHaan: [30:48] Yeah. Yeah. I think that the one thing that everyone can do is work their ass off to try and buy their way out of these problems. Because along with the fact that all these problems exist in The United States is, you know, people like to rip on The US for various things. If you go and you talk to people from pretty much any other country, they will be envious at the availability of opportunity that exists in The US, and how easy it is to like start a business and make money and like be taken seriously. Like, even when I was at the I'm going to the Alex Ramosy thing again for the next round on tomorrow. But when I went a few months ago, there's people there from Germany, from Australia, from Canada, from South America, from The UK, from all over. And just talking to, like, actual entrepreneurs, like, the Instagram people, but, like, actual, like, people trying to build businesses from those countries, they're like, United States is the best country in the world to fucking build business.

Dylan Koch: [31:44] Mhmm.

Mike DeHaan: [31:45] Right? To, like, to try and, like, make your own money even though things, like, culturally seem better in these other places. If you are somebody that's a go getter, you have more availability that way here than anywhere else.

Dylan Koch: [31:57] You know, you just see that internationally, but you also see that within the the Continental United States anyway. People leaving California to go to Texas or Florida where there's no income tax. They're gonna save

Dan Austin: [32:06] They'll go to the best places, yeah, for business.

Dylan Koch: [32:08] $20,000,000 just by moving their like, where their headquarters

Dan Austin: [32:11] Yeah. Totally.

Mike DeHaan: [32:13] And so, you know, if you yeah. If you don't wanna have to deal with this affordability issue, I guess, make it so that you don't have to.

Dan Austin: [32:18] So the question is, do you wanna be cultured but poor or rich and not give a fuck?

Mike DeHaan: [32:23] What what does that mean?

Dan Austin: [32:24] Cultured but poor? Well, you said, like, these other European countries might have culture, but it's not as good to do business. Right? So it's like, well, what do you wanna what do wanna do? Do you wanna live in California where the beaches are beautiful, or do you wanna live in Texas where you gotta get bit by snakes and make a shit ton of money?

Mike DeHaan: [32:38] Yeah. That's a question. Or right now with the Internet, you can live in California and make money in Texas.

Dan Austin: [32:42] This is very true. Yeah. I was

Dylan Koch: [32:43] gonna say virtual obviously plays a part in there, but someone that we've interviewed on the pod before just said, you know, revenue solves a lot of problems. Right? You just closed, what, two deals and he's like, yeah. And so relating this to people listening, like, honestly, just making more money solves a lot of problems. And yes, like, money's not the end all be all, but it it sure helps.

Mike DeHaan: [33:03] Yeah. I mean, that's a a good quote from comedian. Yeah. A good quote from comedian Daniel Tosh. He's really old. As people say, money doesn't buy happiness, but does buy a jet ski. You ever seen an unhappy person on a jet ski? I don't think so.

Dan Austin: [33:15] Yeah. Buys a house for you to live in.

Mike DeHaan: [33:17] Yeah. Right.

Dan Austin: [33:18] Buys you jet skis.

Mike DeHaan: [33:19] Yeah. So we'll see what happens.

Dylan Koch: [33:21] Curious what this landscape looks like, you know, five to ten years from now.

Dan Austin: [33:24] My strong belief is that affordable housing is part of the political engine as well, and it's getting politicized just like a lot of these other things, and there is lots of opportunity for housing. It's just who is in control, who's that's creating the restricted the restriction because supply and demand is the fundamentals of economics, and we got nothing but land, and we got lots of houses across the country, but somehow we have people that are homeless.

Mike DeHaan: [33:49] And ultimately, what'll happen, the feds too, because what they can't control is they can't control the supply line directly. They can't control the cost for labor directly. Right? Not in a way that makes things cheaper. They can do so much, provide incentives, but they can't, like, force people to do things. But what they can control is the like, what it takes for people to get into homes. And so what we're gonna see is, like, we've continued to see is more subsidies towards first time homebuyers, different kinds of mortgage programs that are backed by the federal government so people can get into things that are quote, unquote, more affordable when really they're just like longer drawn out debt, forty year mortgages, fifty year mortgages, things like that.

Dylan Koch: [34:28] Down payment assistance. Down payment assistance. All that sort

Mike DeHaan: [34:31] of stuff is gonna be the big patch that they just, like, stick and pretend like it's gonna fix anything when it's actually not. And then, you know, it'll kick the can down the lane for the next six years until it's somebody else's problem, and that's what they do.

Dan Austin: [34:42] I would argue too that's not an affordable housing solution. It's a GDP solution. It's how do we get more gross domestic product? Housing and construction. Boom. Go.

Dylan Koch: [34:52] Yeah. These are how big it is, and honestly, we're a we're a spending based economy, and so they just want people to keep spending more money.

Mike DeHaan: [34:58] Yep. So there you go. Go So buy a bunch of houses, everybody, because the US government will keep inflating your value.

Dan Austin: [35:03] They'll go up in prices.

Mike DeHaan: [35:04] Yeah. When they start giving everyone what do we talk about a couple of weeks ago, $25,000 for down payment assistance, that's gonna add $25 right to the top of all your properties. So there you go. Cool. Anything else guys wrap up? Right on. Alright, guys. Well, thanks for listening. You guys have a great start to your September. And remember, guys, lean into that marketing start pushing those leads that you have in your pipeline, because you have a little bit of time before the holidays when everyone kind of starts to shut down and get weird. So it's time to start making that fall money now. Because once you get to November, December, you know, it's gonna get a little bit slower. So don't screw around. Enjoy the rest of your the end of your summer, but also make sure that you're putting the work into because, I don't know. No one wants to be going broke into the holidays. It's like the worst time to have a slump. Right on. Alright. Thanks for listening everybody. And we'll talk to you guys next week.

Dan Austin: [35:54] See you. See you.