Cash for Keys: How to Get Tenants and Money Moving

Mike DeHaan: [0:02] On Air Brands.

Speaker 2: [0:07] Welcome to the collecting keys real estate investing podcast with your host, Mike DeHaan and Dan Austin. From wins, losses, horror stories, and tactics for optimizing your business, Mike and Dan take a real uncensored deep dive into the ins and outs of running a full time real estate investment and wholesaling business.

Mike DeHaan: [0:32] What's going on, everybody? Welcome to episode 27 of the collecting keys real estate investing podcast. We are in full on just like project mode right now. We have several active projects going. You know, we have one wrapping up that was super quick. I mean, we got several that we just closed on. I think it's funny this week, I remember looking at my calendar, and I was like, oh, this week should be pretty good. And then it was freaking crazy. And it's funny because I realized that I don't put, like, closings on my calendar. It's only, you know, five closings in a week, even when, you know, you have staff that help with a lot of it and things are, you know, like, wholesale stuff, we don't necessarily have to go to the closing. There's still always just the nuances of BS.

Dan Austin: [1:16] Yeah. I actually realized Monday this this last week how important it is to put stuff on your calendar, like appraisals, inspections, all that sort of stuff because especially if you have tenant occupied properties or your Airbnbs like that, like, there's so many things you have to coordinate. So if you don't put those on your calendar, it's so easy to look because, you know, I'm coordinating right now several appraisals, several different inspections, several different contractors. Right? And it's, like, so easy to get lost in that. And, you know, we've made it work, but then once you scale to a certain bit, like, you can't just make it work anymore. You have to have a little bit of organization.

Mike DeHaan: [1:48] Yeah. I yeah. And and that's the transition, I think, from, you know, sort of a starter business to, I guess, like, a a business that's doing really consistent deals on on a regular basis is, you know, what we're we're used to being able to just sort of, you know, those little things that's just part of the project, and you just sort of mentally commit to that. But all of sudden, when you have those little details times 15, you know, you need to specifically set aside time for that. Yeah. Yep. Yeah. Especially when there's closings and there's situations with tenants and and all these sort of things that have a strict timeline, you know, you like Mhmm. They'll sneak up on you so quickly. I mean, even this week, we we bought a bought a property, and we had to make some changes to the lease. But in the state of Washington, lease changes, you have to give a certain notice. And the the notice only comes into only technically begins the timeline the month after the month after you serve the notice. So we are at the end of the month, and if we didn't serve everything that day, then it wasn't technically gonna kick in for two months in that period. So you're scrambling all over the place trying to get things done, and all of a sudden, an entire day is gone because you didn't account for that.

Dan Austin: [3:01] Right. Talking to a lawyer, figuring out what you gotta do, all the little details that happened to it. Yeah. Yeah. Cool. Yeah. Anyhow, we got lots going on, though. We just listed a project out in Idaho, which is great that it went, we've already got offer. I think we got our first offer in, like, a few hours Mhmm. And started to get offers coming in over ask. So, hopefully, by next week, we'll have a deal signed around, and that's it. Yeah. I was actually looking at the numbers on that one. And it's interesting because when I look at just at a high level, and this is not at all, like, an indicator of a deal or not deal. But if we bring in something as a wholesale, like, if there's a $150,000 spread specific to our market, like, know we're probably going to be able to profit, like, on a flip, at least, like, around 75,000.

Mike DeHaan: [3:44] Mhmm.

Dan Austin: [3:44] And that because that accounts for your rehab costs, all your selling costs, all your lending costs, all that sort of stuff. And so just looking at it, if it's just like an average deal for us in this one, kinda we looked at it as about a $100,000 spread. But because we did an Ovation agreement on it where we did not have to take title or get lending, the owner carried the contract, carried his existing contract on it, we didn't have to do that. And it was a pretty decent house. So the rehab cost, we I knew it gonna be, like, about half of what our major rehab costs are. Yeah. So it's just interesting seeing that just right away. Like, I was just looking at those numbers. I'm like, oh, a $100,000 spread, but we're still gonna make a similar amount of money because the rehab was lower, and we didn't have all the lending costs. And even if it goes over ask, which it looks like it's going to, we're just we're doing great on it.

Mike DeHaan: [4:28] Yeah. And that was a a sort of a trademark, I would say, professional investor deal because at face value, if you're going at that from an amateur investor standpoint, right, like, you had to you're trying to purchase it cash. The seller didn't you know, he had a number that didn't really make sense for a cash purchase because of all the associated costs. Like, it did not fit the formula of, you know, ARV times 75% minus repairs, whatever people look for. For all intents and purposes, it wasn't a good deal unless you were willing to solve the problem that existed there. And this is the difference between, you know, people like us that do a lot of deals and, you know, and pros and the amateurs out there who are wondering why the hell they can't find any deals. Right. You know? Because after connecting with this guy, we realized, okay. You know, this novation agreement will be the best. It basically took the transactional costs and halved them. They don't have an account for lending costs and all those sort of things. And then also too, as we went through the process, because the seller now had a vested interest in the property still, we were able to use him for cheap labor a few times.

Dan Austin: [5:34] Yeah. Yeah. We were actually. I had him do the I had him do the yard cleanup on it, and he's pretty hard up for money. So I was like, hey. I'll pay you. He's like, okay. He went over there, and he did a good job actually. So, yeah, it worked out great. And it like, speaking about, like, professional versus, like, you know, newbie or amateurs or people that aren't willing to look at the unique opportunity, we have the two lake cabins we bought, which we did try to dispo because we're busy. We're like, hey, let's just try to get rid of these things. You know, we picked them up for, like, I think combined for both of them. They're right next door to each other for, like, 300, and nobody wanted them. They're like, oh, it's it's not the perfect deal. Well Yeah. We decided to put them up both once we got them, put them up, we listed both of them. We already got one signed around for, like, 2 forties. $2.40. Right? And

Mike DeHaan: [6:17] so it's like We've

Dan Austin: [6:19] done nothing to it. So they're okay. So now we've already if you look at them as a $150,000 each, we got one at $2.40, so there's 90,000. We didn't do anything to it. Literally signed it around in a week. And now we actually started renovating the other one because it was in a little bit it's just a little bit smaller, and it was a little bit more clear cut on the project. And we're going underway with that one, and it's unique. Like, we're working with our contractor, and he's like, yeah, running into some issues, but, we're overcoming them and we're gonna, you know, make it profitable. It's not gonna be an issue. We had some wiring concerns, but because it's so small, like, could rewire the whole thing for, like, a third of the cost if we were to rewire, like, a full on house. Right? And so our risk we know on something small like that is pretty limited because if you had to rebuild the whole thing, you'd still be okay. But, you know, once we get that wrapped up here in probably a few weeks, we're gonna profit on that. And so it's like not giving up on these, like, oh, it's not perfect. It's not ideal. It's not what they teach. It's like, well, yeah. Mhmm. But if that's if you wait for what they teach, you're only gonna do one deal a year, maybe.

Mike DeHaan: [7:21] Yeah. And what and especially these ones too. I remember we sent them out. We didn't even have a big fee on it. So we, you know, we had it at 300,000. We're trying to sell it for, like, $3,153.20. So if somebody had bought that and done the exact same thing we're doing, still probably gonna make, like, $6,570,000 dollars. Right? You know, like like, we're gonna be playing making close to a 100 on all those. But it's funny because we sent those out, and we got kinda bombarded with, like, shit talkers on it. Like, this is this doesn't make any sense, blah blah blah blah. Like, people were just sort of picking at them. And I'm like, I'm sorry. It's not a carpet and paint flip in a b class neighborhood that, you know, that Brandon Turner and pick her pocket center. He doesn't flip houses. David Green said this is the exact house you need to find in his book. Yeah. Right? We're we're finding the situation that, you know, exists for these sellers, right, where they didn't have the ability to fix up these houses. And that's something else as well as they had tried to sell them on the market last year, right, and hadn't been able to. And, honestly, I'm not sure why. I think maybe at that time, they were just listed a little bit too high. And then also too, if you look at the original listing photos and things like that, they just weren't as, I guess, like, honest as ours. So people were you know, they tried to basically glow them up and sell it as, a turnkey property. Yeah.

Mike DeHaan: [8:37] But then, you know, we were very open that these are fixer uppers. Like, you're gonna have to do work, and that's gonna get a different kind of buyer that's gonna look at it. You know? And it just you know, people tend to they they they tend to take no action instead of taking consistent action. And at the end of the day, taking consistent action is what gives you success in anything that you do in your life.

Dan Austin: [8:57] And look at the data. Like, there's comps that prove that.

Mike DeHaan: [9:00] I think

Dan Austin: [9:01] people like, you walk a property. And I do this too because that's my job in our business is I look at all the negatives of the property, right, so that so that we know what we're gonna have to do. But then it's like, okay. Go back and look at the data. So in an ideal world, this would be a beautiful HD flip. We HD TV flip. We'd do it all. It'd be perfect. But the comps aren't asking us to do that. Mhmm. And the comps tell us what the price should be and can be because they're recent, and and they don't look that much different than our cabin. Right? And so, like, let's renovate them to that point and sell them. And in this case, we don't have to renovate that one. We're just gonna renovate the next one.

Mike DeHaan: [9:35] Yeah. And and you're you're completely right. The comps 100% justify the price that we are looking for. And that was the other thing that was funny was, you know, there's a house, I guess, house, another little cabin that's, like, three lots down. You know, it's very close by. That's, like, tiny. It's just just like one of our same footprint, you know, slightly different style, but same basic size, and it sold for, I think it was, like, $2.35 or something last year. Yeah. And I remember sending that to people that were, like, looking at it to potentially buy, and they're like, oh, but that house looks not nothing like the one that you're sending out. I'm like, I know. That's the freaking point. Yeah. That's why you're buying it at a discount so you can use money to make it look like the nice one.

Dan Austin: [10:16] Yeah. But here's I mean, here's the thing. Right? We we say this scared money don't make money. Right? And you do have to take risks. That's what you're doing. You're taking what is an undervalued asset. Just like if you're gonna buy a stock that you think is undervalued, like a Warren Buffett type play because you believe in the fundamentals of that asset. And so you're inevitably going to have to take a risk.

Mike DeHaan: [10:36] Mhmm.

Dan Austin: [10:37] Yeah. That's the bottom line.

Mike DeHaan: [10:38] For sure. I mean, if if you don't wanna be doing that, then, I mean, you can go buy turnkey rentals and get your 6% cash on cash return. But if you want a 300 x cash on cash return on your house flip,

Dan Austin: [10:51] you gotta take those risks. Absolutely. And and I think about the the flip we're going through. Right? Or that we've listed, we signed around. It's a condo, and nobody wanted it. Right? We're like, man, the margins on this are fat. And we have ran into issues on that selling it because of the the situation, which would have not been a we would have never known that. Any buyer would have never known the issues we're run into with the condo insurance not being sufficient. And so what did we do? Did did we give up?

Mike DeHaan: [11:19] Yeah. And I Yeah. It wasn't in the back check on that. Think we talked about this last week, but the the the issue is that the the insurance is not sufficient for a a future buyer's lender. So a lender basically won't lend on this condo because the HOA insurance that they provide does not cover the replacement cost of the property. Right? And there's there's no way that we could have known this. Well, I mean, especially, I don't necessarily know if it was an issue when we bought the property four months ago. It's become an issue because of the rate of increase in property values. Right? So but, yeah, it's like you're saying, you know, that could have been something that would have scared people away. And, you know, we went into it. We'd obviously know about the situation. We've haven't you know, we sold it. We were, like, two days out from a successful sale, which we would have I mean, grossed what, like, $80 or something on it. Yeah. And now we have to basically kick it down the road for another couple months while I figure out this HOA situation. And we've been you you know, the initial intention it's funny. This is why communicating through just, like, text and emails and stuff is always dangerous because just reading through some of the things in the HOA president and the lenders that were going back and forth, you're like, oh my god. These people are such stuff that need to understand.

Mike DeHaan: [12:31] Exactly. Yeah. You know? But but then we we met with the HOA president yesterday. She's freaking awesome. She's on it. She has ideas. She's like, let's figure this out together. Super helpful. So I'm extremely confident we'll get it figured out here pretty quickly.

Dan Austin: [12:46] Well, immediately what we immediately what we did too is like, okay. So the buyers are like, oh, this seems complicated. We're backing out. Mhmm. It's like, okay. Fine. Fair enough. But, like, immediately, what we did was we called our our insurance agent. We're like, hey, find us an insurance policy for this thing. And then we dove into the CC and Rs, the HOA, the documents, and lo and behold, and then, of course, you talk to the underwriter for that lender. And, basically, it's like, yeah, just change it to where you can have your own policy on the building. Simple. Yeah. And the HOA president's already open to it. We're gonna meet with the HOA. I'm confident in a week or two, we're gonna have this thing turn around. We'll probably sign it around for more than we had originally. Mhmm.

Mike DeHaan: [13:24] Yeah. And and the funny thing is is that people will avoid that because it's they don't really necessarily know how to figure it out. And here's the thing. You don't have to know how to figure it out. You just have to know who does know how to figure it out.

Dan Austin: [13:35] Yeah. Yeah. We didn't know how to figure it out initially.

Mike DeHaan: [13:38] So I made we made, like, three phone calls, which is a total of maybe twenty minutes of my time, and it's gonna get figured out by people now. Like Yep. And then that and that's that's you know, you look at the income potential for that for those twenty minute phone calls, that's like, you know, a $160,000 an hour or something. Right. Absolutely. Very simple. But yeah. I mean, there's always things like that. I mean, even with this we we bought this little duplex with an ADU a while back in. And same sort of thing. There's a funny little situation. So, like I mean, you said you talked about someone tell someone about this recently.

Dan Austin: [14:16] Yeah. So I I I guess I'll step back. So one of my listings I have, it's a it's a great place. Like, we were gonna buy it. We couldn't, out of out of value that made sense to them. We realized that there's more value if we listed it for them, so we listed it for them. Got an overask offer, which was still below ARV, and there's still room. It was an investor that wanted to fix it up and understood that. But then they got scared. They're like, oh, there's just too much work. So they came back with us after the inspection, like a 40,000 price drop. Was like, no. No. That's just not gonna happen. You can't no. And then they're like, well and what it really was was hidden under there because then the the the buyer's agent that I had to get on the phone with him, they're like, we're we're just really concerned with the tenants in there. I talked to my lawyer and it could be a problem. Like, yeah. And they agreed on the contract to close early, which was part of the deal because I gave them I chose a lower offer because they were willing to close early so that we could just sell the place before the tenants were required to move out because we had to issue notice that we were selling, and then they would have ninety days to move out. So they're gonna close about a month early.

Dan Austin: [15:20] Perfect. You're an investor. That's what you do. Right? You take on other people's problems. So she's getting scared and wanted a huge price drop and all these sorts of things. And in that conversation, I was like, well, hey. You know, if this doesn't work out, like, we come across, you know, deals all the time. Do you want me to send them your way, or does investor and the agent was like, oh, yeah. And I I definitely me and my husband, we look for properties too. And and I started thinking about it, I saw a center one, which is the it's a nice house, big house, with an ADU in the back. And I'm like, this is a sweet deal. Like, we bought this for ourselves, but we've got so much on our plate. We'd probably be willing to dispo it to you. And then she her response was like, oh, yeah. I walked that one a few years ago. It has a funky layout. I'm like, what? Like, that's your that's your benchmark for when you pass up on a deal that's still when we just put it to it, it'd still have at least a 150,000, if not 200,000 of margin on it. And, you know, we're not even making near that much. We know we can make that much if we did, like, a full renovation, but that's really not what we wanna do on this place. And so I'm like, that is why you you walked in a few years ago and has a funky layout. Like, it's a huge house. You can change the layout. Like, what?

Mike DeHaan: [16:24] Well well, that and then they were, you know, worried about the ADU not being permitted even though, you know, it has its own electric meter. Does it have its own water meter over there?

Dan Austin: [16:32] Yeah. It's separate. Like yeah. Because I get I get calls from the water company that the tenants in there haven't been paying, they have a big water bill on both the units. And so, like, yeah, it's all separate, which tells me already that it's gonna be grandfathered in. And if you call the city, they'll let you pull retro permits in our market. So all you gotta do is one phone call, pull retro permits. And also, like, there's no way it wasn't built originally because it's above the garage, so it's part of the house. Right? Like, it's not like just, like, completely newly constructed thing that never existed. Like, you're going to be safe. But if you just take five minutes to make a phone call, you're gonna know that. Mhmm.

Mike DeHaan: [17:07] Yeah. I mean and you're you're completely right. Make that phone call. You know, talk to the tenant. You know, do whatever you need to do. And that's actually a perfect transition into what we wanted to make our educational topic today was cash for keys, which has been a big part of our business. And we have bought so many properties where literally the main problem was that the landlord did not wanna have a conversation with the tenant and because they didn't think they could get them out. And, really, they just they just didn't wanna talk to them, and they've given up hundreds

Dan Austin: [17:38] of thousands of dollars worth

Mike DeHaan: [17:39] of equity because of that. That works well for us. But, yeah, we'll talk about that in a second. But really quick, just wanna see something about our instant investor program, which is off to a, you know, pretty good start. Healthy Healthy start. We got a good little group going. People are starting to make moves. Yeah. Some quick information about the instant investor program, and we'll be back in just a second. Hey, guys. I wanted to take a second to talk to you about our instant investor program. The instant investor program is our group coaching program, and it is an eight week program with the goal being to have you talking to motivated sellers within the first two weeks. Believe it or not, you don't have to be the person that's out there overpaying for investment properties and competing with everybody else on the MLS. You also don't have to be one of those investors that flushes thousands of dollars down the toilet on ineffective marketing methods. To talk to motivated sellers on a regular basis, all you need is an effective marketing system, and we will give you the system that we have been using for the last two years as well as a weekly call where you can sit in with us and other investors and just be a part of a group discussion while everyone works to optimize and grow their businesses.

Mike DeHaan: [18:45] At the end of the day, our goal is to create a like minded community of people who not only are trying to grow as real estate investors, but as people and as business owners so they can go and take the knowledge they learn from us and use that to change their lives just like Dan and I have been able to do. So the question I have for you is, do you really wanna keep sort of standing by and waiting for these opportunities to land in your lap, or do you wanna get started right now? And if you're ready to jump in and start changing your life for the better, go to instantinvestorprogram.com and book a call with me, we can hop on a call and see if the program's right for you. Alright. Cash for keys. Dan, this is kinda your territory, man. Because, typically, I'm not super involved in any of the places after you buy them. So I know you've had these conversations with a lot of people, you know, some good, some bad. But, you know, what what's your take on sort of how to go about this process, which is realistically very, very important if you're gonna be buying off market properties, especially because tenant problems are one of the most common situations that we're able to buy things at with a big discount.

Dan Austin: [19:49] Yeah. Absolutely. Like, a lot of landlords are surprisingly scared or afraid to talk to their tenants or disturb their tenants for whatever reason. I I don't know why it is. Because sometimes the tenants are perfectly fine. Right? I know. Cool. I need to move. Right on. Yeah. Other times, they're, like, obviously, buttholes, but you still have your steps you can go through.

Mike DeHaan: [20:09] Yeah. So Especially older people, it seems like. We see this a lot. Yeah. And and the really unfortunate thing is too is a lot of times, like, tenants definitely sign me, but, like, once you sort of, you know, talk to them like an adult, they'll they'll admit they're like, I was just taking taking advantage of this old person. Like, I'm I realize I'm not gonna get away with it anymore.

Dan Austin: [20:29] Yeah. Yeah. You show up and you have your ducks in a row and they're like, okay. Yeah. You know, they get it. And so, I think couple things, like, obviously, you gotta be firm but fair. Right? And you're walking a fine line with some of these tenants. So if you go in guns a blazing, that could delay it. Right? Because ultimately, like, if we're in our market, other markets are a lot easier to get rid of people. Right? And and these markets that we operate in on the West Coast, it's very, very tenant friendly. So, especially during COVID, it was a challenge because you didn't really have any recourse to get people out because there's obviously an eviction moratorium. But going into it, if you come guns a blazing, you could potentially push it out ninety days because we have ninety day notice to have people leave if we're going to sell. Mhmm. So, like, if you're gonna flip a property. Well, with that, like, that's when the eviction process starts. So then if you could you could you could buy a property and potentially be six months out of of figuring this thing out and then finally getting them out.

Mike DeHaan: [21:30] Mhmm.

Dan Austin: [21:31] So you're walking in fine line. Don't come in guns a blazing, but also you have to be somewhat firm. And I'll start with, like, one where we probably didn't we failed, but we still got them out in the ninety days, but it wasn't good. So it was actually back when you and I were in Hawaii when we closed on the property. I still remember having the conversation with the lady, she was very cordial. I said, hey. Just so you know, we're planning to flip the house, and so you're gonna have to move out. We're not going to issue you notices to put time pressure on you. You know, we're not gonna do a ninety day, all this sort of stuff, but we can and we will. And so she's like, okay. That's perfect. And I and I said, hey. We'll help you move. If I need to get you a moving company, a moving truck, whatever, we're going to help find you a place if we need to, well, being overly nice and, and open with her. Well, they didn't do anything. They didn't move. They, they said, I can't find a place. And then, so we put, a previous employee that we had worked for us on it, which happens. They piss them off for some reason. I don't know why. They they piss these tenants off. And so that the tenant got riled up and then it turned into we were the bad landlords kick him kicking him out. But we were spending hours trying to find them places and nothing was ever good enough for them. Because first of all, what they want is a nicer place for the same price they're paying. And typically in these properties, they're getting either free rent or, like, way discounted.

Dan Austin: [22:51] Like this one was probably at least half the market rate it and was less. Property. Yeah, it was even less. And this was not a nice property. It was gross. And so anyhow, they like their expectations were that they would get a nicer place for the same amount of money. And it's like, that's, I can't do that. Like, I can't find you something in that price range. If you will, I can move you into a similar location. Anyhow, they they push back. They push back. It turned into kind of a mess. They end up leaving all their crap there, which is fine.

Mike DeHaan: [23:19] That was so crazy. I remember we went there and because so, you know, what ended up happening is we just listed this property Mhmm. Because the the rule was you had you could issue a notice of intent to sell, but you had to list the property. So that was basically to stop landlords from just issuing that and then not actually selling it. Right? So we listed the property at, like, a stupid high price that we're like, no one's gonna buy in this condition, and then we accepted an offer for, like, 30 fine.

Dan Austin: [23:44] They'll move

Mike DeHaan: [23:44] out. $30 over

Dan Austin: [23:46] on this. It was, like, 50,000 over ask.

Mike DeHaan: [23:49] Was it 50,000?

Dan Austin: [23:50] Yeah. It was, like, it was, like, we listed, like, $2.30. No. Maybe yeah. I think it was, like, $2.30, we listed it. It started around, like, $2.80 or something like that.

Mike DeHaan: [23:57] It's something stupid. Yeah. Yeah. And so, you know, as someone who just really wanted this neighborhood for some reason, and the only condition was we had to get the tenants out. So we had to wait this whole ninety day process. I remember right before it was supposed to close, we went there and we're like, alright. You guys gotta be out tomorrow. And, you know, I remember you came out and you're like, oh my god. They haven't packed up anything. There's no way.

Dan Austin: [24:15] Not not even a suitcase. Not even a suitcase. So we didn't we had a delay in closing a week. And the funny thing about this is this is another one of those where other investors wouldn't touch it. It was gonna list. We bought it all. You reached out to the agent that was said, Hey, I'm gonna list it. And we went and bought it for a discount from what they're gonna list it for because, oh, there's tenants in it. Right? Like, so we took it down and did all the work. Anyhow, we had to issue a ninety day notice in that process. So we bought it back in like July and we didn't close until December because finally we had issued the ninety day notice. Guess what? When we did that, they were pissed. The tenants were mad, but it was like, okay, there's no cash for keys in this situation. So with that one, like, I think we're a little bit too fair. We need to be a little bit more firm upfront and have a little bit, and we should have just issued the ninety day, but been like, Hey, we have to do this. This is part of our process. We have ninety days to move out. We would have saved ourselves a few months on the back end. But to do this whole process, like, we just did one, but I think Judd did it for us yesterday.

Mike DeHaan: [25:13] Right? Well, this is the one I talked about in the first half of the episode that we just bought where we realized we had to do some tenant situations. Yeah. And and and so and so the thing with this, this house is pretty much turnkey. Like, it needs a paint job, you said. And, you know, the guys already renovated most of the house, and they were not paying rent. They hadn't paid rent forever. And we're buying it with, like, a $90,000 spread or something just, like, as it sits. Doesn't need anything. But the people, the owners were afraid to deal with the tenants who they're taking advantage of them.

Dan Austin: [25:43] You know? Yeah. So what basically we did was immediately we closed on it the last day of the month, immediately, had had Judd put all the paperwork together, talked to our lawyer. And this is a weird one too because they have six adults in the house or five adults, and every adult has to be issued a notice in the state of Washington. So it went and posted five notices, and then you have to mail it to them, and then basically got our guy on it to say, hey, kind of that firm but fair, here's the range of cash for keys we're gonna give. It was like 2,000 to 5,000. Talked to her. Yep, I'll take that. That's I think it had been, like, $3,000. Yep. Be out by the end of this month as opposed to ninety days from now, which is fantastic for us because it puts us right in the time to wholetail this thing in buying season.

Mike DeHaan: [26:25] Yeah. Yeah. Exactly. And and what it'll do is, you know, basically, we're spending this $3,000 now that on a conversation that the other person was afraid to afraid to have, and we're gonna be able just to list this thing as is and make, like, $50.60 grand.

Dan Austin: [26:44] Yeah. And I would say, like, with this one, it's like fast forward to how we've kind of perfected this. This is that firm but fair. Right? So we just went through the process. Like, do your do your due diligence, get all the paperwork done, and then work with them. And that's exactly what we did, and it's gonna work out great. I think one of the the funnier ones that we did was that seven unit we flipped, though, where we were all over the place on that one, and we got I think one of our cash for keys was our refrigerator.

Mike DeHaan: [27:10] Well, yeah. So so that whole deal, we bought this very distressed seven unit, again, from a a landlord who had all these these tenant problems. There was a lot of other stuff with it, but we also found out that the they the the people, not all of them were inherently scummy people, but the landlord was a real asshole. So they basically made a collective decision to say, screw this guy. We're not gonna pay rent anymore. Mhmm. But we went in there. Some of the tenants were fine. We're able to work with them. Some of them were really, really sketchy. So we had to work on getting them out with some cash for keys. And there was, of course, there's the one guy that was a real bastard. And we started out at, like, $1,000 that worked for some of them. They were at, like, 2,500. And this guy's like, I'm not leaving for less than $5. And we're like, okay. That's fine. Our our goal with this property was literally to get the tenants out and then just sell it, basically, as a fixer upper apartment complex or somebody. This thing had so much work that needed to be done. We we didn't have the ability to do it at that time. Yep. But so we go show up with this guy, and this this is the guy that's like, you know, he's doing meth at the property. He's bringing hookers over there. Dudes. Yeah.

Mike DeHaan: [28:17] Huggers are getting high on meth and running around naked, like, at the property. Like, it's it's a bad deal.

Dan Austin: [28:22] Yeah. And every time we had got a tenant out, had, like, put boards on the window because a new squatter would move in. Mhmm.

Mike DeHaan: [28:27] Yeah. Rough area. Just not not our jam to to buy this thing, but, I guess, to keep this thing for the long term. But yeah. So we're dealing with this tenant. We show up with $5,000 of cash, and he's basically like, I'm not leaving unless I take that refrigerator. And the funny the funny thing is is, you know, I know that there's investors that would have been like, no. That's bullshit. Like, I'm already giving you way more than anyone else. I'm not letting you take the refrigerator. Big picture. You're about to flip this thing and make so much money. Let him take the shitty refrigerator that's probably full of mold anyway. You know? And and this dude, he he's like, you know, he was so proud of himself getting this refrigerator. And his buddy rolls up in this crappy sedan, and they just, like, strap it to the top of the sedan and drive away. I'm like, cool. Your fridge now no longer works, Brooks. You just tipped it over.

Dan Austin: [29:10] Well and, like, the thing is is the guy was moving into an hourly motel. What are you gonna do with a refrigerator? And by the way, that dude doesn't eat. Like, he was doing drugs and eating McDonald's maybe. So, yeah, I I I would say maybe just to, like, summarize this whole thing is, like, don't step over dollars to pick up dimes. Because when you look at your spread on these things, if you have to pay somebody 5,000, yeah, it sucks that you're paying them 5,000, but you're gonna make more money and that tenant is more of a risk to your property than anything. And also looking at it, like, being creative, like, like, we've showed up and helped people move. Like, when we started out, like, we trailer truck, like, let's go help this person move. You know, if we have to rent a U Haul, like, that's $500, that's nothing. If that's what gets them motivated, if they're especially if they're older people, like, moving is a big deal for them. And so it's like, you know what? Let's do that for you. Like, they don't necessarily even care about the money. They just need that help to move. So get creative with that. What do they need? On this one we're doing now, we're going the cash for keys, part of it's gonna go to the deposit of their new place. So it's like, Get access to property manager. We're gonna pay that deposit for you, and then the excess will come to you after we walk through the property and you've moved out. I mean, that's very straightforward and simple.

Dan Austin: [30:21] And so it's just figuring out what their biggest challenge with moving will be and helping them along. If it's money just because they can't afford to, like, actually put a deposit on a place and do first and last because some landlords do. You're moving into a $1,400 place and you need $5 to move in. Like, that's hard for people. So if we can help that, then we will. And so being creative, being firm but fair, and also not worrying about the little pennies that you might be losing when you have such a big back end exit.

Mike DeHaan: [30:47] Yeah. I mean, even more at its core, it's just not being afraid to talk to people and to treat people like human beings is the biggest thing. I mean, that this is something that's always driven me crazy about real estate in general is there's very much this us and them mentality between landlords and tenants. You might say this. We've been talking about how tenants are scummy for the last half an hour. I know. But at the same time, I mean, there's it's not tenants are scummy. It's just there's scummy people that are in the world. And but at the same time, you have to, like, let them show you that that's their side because there's a lot of people that will be perceived that way just because they are a renter or they're they live in a distressed property. And then once you kind of get to the root of who they are, you talk to them like human beings, you treat them fairly, they'll show their true colors. And you probably will be surprised 90% of the time how willing they are to work with you. And, you know, honestly, they probably just have some situations in their life that you maybe can't understand, and you seem to be sympathetic to that. You know? But on that same vein, don't let them take advantage of you. Get everything in writing.

Mike DeHaan: [31:50] Do things by the books. But don't be afraid, you know, to sacrifice a little bit of your profit to help out these other human beings that are in a rough situation. You know, they're being they're being displaced so that you can probably make more money than they make in an entire year. You need to understand years. You know, multiple years, honestly. Right? And you need to understand that. And if you're not gonna be, you know, willing to give them fairness, then, honestly, this Christmas probably isn't right for you if you wanna, you know, also keep your soul as a good person. You know? And that's something that's so so undervalued in real estate, and I don't know why. You know, it's it's but it's one of the reasons as well that landlords get such a bad rap.

Dan Austin: [32:28] Yep. Absolutely. Agreed.

Mike DeHaan: [32:31] Either way, you know, but don't be afraid to talk to people. And if you wanna be an investor and thinking about having these conversations, you're just like, absolutely hell. No way I'm gonna do that, then honestly, you don't wanna make that much money. And Mhmm. Like, if you find deals that have that, give us a call

Dan Austin: [32:46] because we will buy them all. We will buy them

Mike DeHaan: [32:48] from you. You know, without even without even a question. Now we've made so much money off of properties from people that were just afraid to have hard conversations. And at the end of the day, hard conversations are the easiest way to avoid any sort of issues in your life, whether that's, you know, with an investment property, you know, that you're losing money on, whether that's in your marriage, you know, whether that's in, like, friendships, like your employment, you know, even, like, anything like that. If you just have some on your mind, you have something you need to figure out, try talking to people. You'd be amazed at what you can get done.

Dan Austin: [33:19] Simple. Is it that simple? Wow.

Mike DeHaan: [33:20] It it is. Exactly.

Dan Austin: [33:22] You're absolutely right, though. It is that simple. So

Mike DeHaan: [33:24] cool. Anyway, alright. Any last words on Cash for Keys, Dan?

Dan Austin: [33:29] No. I think that kinda sums it up. Just Mhmm. Talk to people, listen to them, solve problems, be firm but fair, and get creative.

Mike DeHaan: [33:37] Yeah. And, honestly, too, I would say with the spreads that you can get with cash for keys versus, like, flipping a house, Honestly, there's a lot of places that we bought. I mean, that that one you mentioned with the the tenant that we had to that just, like, abandoned all their stuff. We made more we made actually more money than if we had spent the money to renovate it and flip it because we were able to sell it as a flipper as a fixer upper to another person. Right? So, like, the the honestly, learning to be good at cash for keys is a great way to flip a house with very, very little money and to make equal to or more profit sometimes.

Dan Austin: [34:12] Yep. All you gotta do is solve one problem.

Mike DeHaan: [34:14] Mhmm. Yep. All about solving problems. Cool. Alright. Well, follow us on socials, guys. I am on Instagram at Mike underscore Invest. Dan is at investor man Dan. You can follow the podcast at collecting keys podcast on Instagram. Our guys have started to do some pretty sweet highlight things on there. If you wanna catch little tidbits of the show again, there's a great way to sort of keep on top from there. Also, you should go and download and subscribe to our podcast. Those are the ways that really help us get up the ranks. We appreciate it if you do that. Like, I I think I said this last time too, if you're new to the show, go and download every single past episode. Then And if you don't listen to all of them, just delete half of them because those downloads have increased our metrics and will help us show up. So go into go do that. We are at episode 27, so it won't take you, like, three minutes, and it would do us a ton of help. Besides that, our instant investor program is off to a very healthy very healthy start. We got some guys in there that are starting to get some traction. They're getting phone calls. Some people I I don't know if Daryl ended up closing on his deal or not. Either way, they're starting to get close. So to join in, we have a fun little community that's building out there. You can check out those details at instantinvestorprogram.com and schedule a call, and we'd love to chat with you, sir, see if you'd be a good fit.

Mike DeHaan: [35:33] And then besides that, any last words, Dan? Anything else to mention?

Dan Austin: [35:36] No. I'll just sign us out, man.

Mike DeHaan: [35:38] Alright. Let's hear it.

Dan Austin: [35:40] This is investor man Dan with Mike Invest. And as the great Michael Scott once said, I'm not superstitious. I'm a littlestitious. I'm And feeling good about this week. I'm feeling good about this week for our listeners. For us, it's gonna be big stuff. Hit us up in the DMs. Let us know the problems you're solving, your wins, your losses. We wanna hear it.

Mike DeHaan: [35:58] You're working on the close. I'll give you an a for effort, but a d for execution. That was Yeah. Sound very good.

Dan Austin: [36:03] I like that. Mike Scott

Mike DeHaan: [36:05] is great. Alright. We'll keep we'll keep working on it. That's gonna be the thing. It's the Yeah. Iffy sign off. Alright. Thanks, everybody. See you next week.

Speaker 2: [36:17] Thanks for listening. Please leave us a review on iTunes or wherever you get your podcasts, and check us out at collectingkeyspodcast.com for tips and guides on starting your own real estate investment and wholesaling business.