Common Mistakes Of Real Estate Investors Trying to Scale

Mike DeHaan: [0:00] Real quick, guys. If you want to take your real estate investing business from 6 to 7 figures in the next twelve months, and you wanna do without being a slave to your business, then you have to check out our scale community. You can get the full details at collectingkeys.com/scale. But very basically, it is a community of like minded investors who are working to become the absolute top tier investors in their market. Along with three coaching calls per week led by Dan and myself, we also have a whole bunch of videos and materials that go into all the different SOPs that we use to run our business on a daily basis. This includes how we manage our sales team, how we hire, how we do our marketing systems, how we get the best assignment fees possible, how we do renovations, how we do all the different kinds of creative financing. And if you are serious about taking your real estate business to the next level, it is absolutely something that you should check out. So go to collectingkeys.com/scale, see all the details, and see if you're a good fit. Almost anything that you need in this business can be done with like a base level software Yes. To get up to the point where you're making 7 figures, like multi 7 figures.

Dan Austin: [1:07] Absolutely.

Mike DeHaan: [1:13] What is going on, guys? Welcome to today's episode of the collecting keys, a real estate investing podcast. This is the show we teach you to make massive income, not just passive income, but your real estate investing business. This is your first time here on these Wednesday Mike and Dan shows, you're joined by myself, Mike DeHaan, and my cohost here at Dan Austin.

Dan Austin: [1:35] To

Mike DeHaan: [1:36] you. While we talk about real estate investing, business, and whatever else we feel like. I think it's funny that we call this the Mike and Dan show now, when like for the first year, it was only like Mike and Dan show every week for like a while.

Dan Austin: [1:48] I know, you're right. You're absolutely right, that is kinda funny. What did we call it before, just the show?

Mike DeHaan: [1:52] Well I guess. I mean, started adding Collecting teas. We started adding interviews like a year into this, which we do on Mondays now. I just had, I guess, Craig Kurlap on week that we're recording this, but we're a week behind, so I don't know what's coming out next week after. Yeah. But we did interviews, then we added the Friday Focus episodes, because you know when it comes to podcasts and audio content, the thing is is the platforms promote people to get a lot of downloads and a lot of listeners, and if you have more episodes, you get more downloads and listeners, shit's by math.

Dan Austin: [2:24] There you go.

Mike DeHaan: [2:24] That's why people release a lot of episodes every single week. But, yeah, it's weird that I could dance you for a while. But I also feel like at that point in time it was easier just to do that as the sole show. Yeah. Because we were more in the weeds on our business and we hadn't grown to kind of our national enterprise yet where we have a big team, we're not necessarily out walking houses ourself anymore. Like Good. Imagine not necessarily, I mean literally never. And we are more like business owners these days, whereas back then we were traditional real estate guys.

Dan Austin: [2:54] Well, I think before too, we, because we were kind of just doing the the operator thing, like most of our stories and things were around walking properties. And now it's the Mike and Dan show, we talk a lot more about business and strategy and how to scale and those sorts of things, because ultimately, everybody that gets into this business wants to do it for a reason, one reason or the other, and that is to scale some some level of income, whether that's to add an income stream, or passive income through acquisition of rental properties. But what we found to do that shit is you gotta you gotta get the scale, then you gotta systematize it, so that's just where our interests have been.

Mike DeHaan: [3:26] Yeah, exactly. And I think that everyone kinda goes through the same process in this business where they start out, they don't believe it's gonna work, they hustle and grind, they get their first couple deals done, make one or two decent checks, and then they're like, wanna do more of that. So they double down on their own systems without thinking around I guess, they double down on their own marketing and process without thinking about own opportunity cost or how to actually systematize it or how to bring on staff. And so many people that we talk to through social media or that we work within the scale community, they have gotten to this position where they're making money, they just don't wanna be working a hundred hours a week to do it. And they also don't wanna have this phase that everyone in real estate tends to fall into where one month they make $50 and then they don't know where their money's gonna come from over the next quarter.

Dan Austin: [4:15] Right.

Mike DeHaan: [4:15] Which all of a sudden if you do that for like an entire year, you realize you worked really hard and you didn't actually net that much at the end of it. So what's the point?

Dan Austin: [4:23] Yeah. I'm thinking as you're talking, like there's two big phases when you start out in this business before you get to like maturity, or some level of maturity. The first phase is, you're like committed and you're marketing. And you don't have a lot of leads, so you're not sure what to do with your time. Maybe you're working a day job, so that's filling your time, or maybe you're doing something else that's filling your time, but like, you have all this like freedom, because there's nothing there yet. And you might do a deal here, do a deal there, but you don't have like this consistent lead flow. Then you graduate to the phase where you kind of figured it out and you've gotten enough months of marketing. Maybe you're like at, you know, six to twelve months, somewhere there in that phase where you've you've marketed for a while, you have leads you should be following up with, you have your commitment to spending a certain amount of money every month on marketing, and now you're there, but you're at what you just said, like you're working a hundred hours a week because you feel like if you get off the hamster wheel, the money machine will stop printing money, and that, and it will. Mhmm.

Mike DeHaan: [5:19] Yeah. And I would say that's probably one of the most like mentally challenging parts of, I don't know, I'd say like everyone's financial journey is you're now spoiled from the traditional w two mindset that most people have. You understand that there's this opportunity there where you could make a lot of money, you could reach financial freedom, And all of a sudden, just trading your time for money at a w two doesn't make sense anymore. But you still don't quite know how to do it consistently. And for some people, they're in that for years. Other people, it can be like decades, depending on how long it takes them to learn how to do the process. It's almost like torturous, right? And I think that that's where, you know, the old sort of adage that like entrepreneurs will work for eighty hours to avoid working forty. Right. That is exactly why that exists because also there's no guarantee you're ever gonna get out of either. Yeah. You know, and if you're not intelligent about it. But I think the the good thing about modern times is, you know, with the existence of people like Al Shamosi, and like also these YouTube channels you can I get free was gonna say, yeah, the Collecting Keys podcast? Know, with Mike and Dan, you can actually like learn for free how to do these things because if you went back to like the nineties, everyone, if you wanted to get into business, go and get an MBA, you rack up some more debt, and you go and get taught by some professor how to do business, even though he's never done a business himself, what really is it Yeah, gonna teach no shit.

Dan Austin: [6:42] Yeah, I would say too like back then, the information wasn't really available to do this business, like real I think one of the reasons why real estate was kind of done only by a few people in the nineties is just because the dissemination of information education wasn't there now, because nothing's inherently hard. Yeah. It's just at this point, with the tools available to us, and now like all the YouTube content, and all the people teaching it to use those tools properly to optimize it, it's so much easier. Right? I mean, think about like, getting the list back in '92. Like, who are you going to even market to? To get that list was a huge lift. You had to know a few secrets just to get that, which weren't available online because there wasn't a website to go to.

Mike DeHaan: [7:20] Dude, think about getting the list in like 2018. Like, shit. Oh, Even back when we started, like PropStream Yeah. Which is what we get a lot of our listing right now, was kinda And it was a little bit janky, and it wasn't super reliable. So we had to spend a lot of time spot checking stuff. I mean I remember talking to a friend of mine who had the opportunity to buy PropStream for like a million dollars. This is back like not that long ago, six or seven years ago. And they were like, no. This is a shitty platform. So then PropStream grew and they end up selling to a different company for like a 100,000,000, you know, five years later, whatever it was. They sold a couple years That's crazy.

Dan Austin: [7:56] That's crazy.

Mike DeHaan: [7:57] Like like things change so fast. And that's just the nature of business and technology. And as we continue to, you know, get more sophisticated and more sophisticated players enter the real estate space, specifically the off market real estate space, that's gonna become more prevalent. It's important to kinda know what's happening, find out what works for you, and I would say most importantly not get caught up in all of the bullshit and things that people try to sell you because they acknowledge that everyone's trying to find the next place to click because honestly most of it is bullshit.

Dan Austin: [8:27] You know what this reminds me of? I'm gonna give you a straight up awesome analogy, is in a lot of these gyms and like these women specific workouts Absolutely. I've seen some pretty awesome ones. The one the one I love, but is not my favorite so far, the one I love is where they wear these like bouncy shoes and they dance around and do aerobics together, but they're like these shoes with like leaf springs underneath them and they can jump really high. And the newest one I saw was women, they attach to the bungee cords and they dance around, so it takes like the weight of their body and puts it into a bungee cord. That is the equivalent, the gym, the fitness equivalent of some of the shit out there teaching you, this AI blah blah blah crap, or this new tool that's going to get you more leads, it's like likely not going to.

Mike DeHaan: [9:11] We should turn that into like a social media post, because I've seen like those that you're talking about and the the meme usually on it is like, or like the verbiage on it is usually that Gen X women will do anything except lift a weight, right? So I feel like we could probably do the real estate version of like, or Gen Z real estate investors will do anything except call lead.

Dan Austin: [9:29] There you go, that is it. That's so true. Because like that's what it comes down to. Like we get a lot of questions around this, what is the secret sauce, or like, will this work? Because there's a ton of stuff online, and I'm always surprised people will be like, even in the scale group, be like, has anybody heard about this? And I'm like, I have not. Never. Never even seen it before online, but for whatever reason, because they're doing probably a lot of Google searching of like how to do things, like they're gonna get targeted with certain stuff, know, that makes total sense. But yeah, like some of this stuff, it's like, dude, just pick up the phone call people, if you call enough people, you talk to enough of these people, eventually somebody will raise their hand and say, I wanna have a conversation with you about selling my property. Yeah. And then you can have that conversation.

Mike DeHaan: [10:05] Yeah. And once you have the leads, keep calling them. You don't just like call them one time and you're done. Yeah. Right, like we actually had this

Dan Austin: [10:11] Yes.

Mike DeHaan: [10:11] This conversation on our our group coaching call today, where a guy was like, you know, we do his lead generation for him through our Simply Leads company. And he was like, yeah, so I get these cold colleagues that come in, you know, I like do my research on them, and then by the time I called them like five days later, they don't really remember talking to the caller. I'm like, well the problem

Dan Austin: [10:32] is you should be calling

Mike DeHaan: [10:33] them the same day, even if you're gonna do your due diligence, that's fine. Just immediately establish that relationship and let them know what's going to happen over the next couple of days before you can make an offer. You don't need to go into it fully educated. You know, it's a people business, you should be talking to people all the time.

Dan Austin: [10:48] It's a 100% a people business on every front of the business, right? And two of the things that I've probably, if I could take anything away from Alex Tremozi, not to over quote him on this podcast, but I do think he's has a lot of good wisdom, is it's very unreasonable to think you'll be good at something when you start

Mike DeHaan: [11:05] out. True.

Dan Austin: [11:05] So if it's hard, it should it should be frickin' hard. Mhmm. Like it's, you've never done it before, so when you pick up the phone to cold call somebody, or you pick up, you've got a male lead that came in, and you're like, well, gotta call this person, and follow-up with them after I gave them a lowball offer, like that is hard, and you're not going to be good at, but you have to do it to get better at it. And then the second thing that I kind of just take from what he said is, what you're doing in business, like, you're going to need to do a lot more of it, a lot more than you think you should need to do, right? Like, you can't just send one batch of mail, do one round of cold calls, and think that's going to get you to be a millionaire real estate investor. Like, whatever you think you need to do to grow the business to where you want, times that probably by a 100.

Mike DeHaan: [11:45] I mean, also say to you, you have to be doing those things with intention, because if you're just like putting in with no intention around it, you're not gonna Of get so. And I think that's the next phase where people tend to get stuck, is they're man, I'm making 100 calls a week and I still suck at it. It's like, how often are you learning about how to do better? How often are you analyze how you botch that conversation and being brutally honest with yourself about what you need to do differently next time. You're not willing to let yourself and find a buddy or join a group, that's honestly the big reason that we are big on programs and we started scale, and we were very active in the group that we started in years ago, is because that accountability forces you to like recognize your own weaknesses and make adjustments to them. Because if you don't, you'll just spin your wheels. And that's that's the unfortunate truth with that. Absolutely, man. Yeah. So anyways, that early phase of business is always tough. But the great thing is, as you know, business has become more sophisticated, you know, even though it's more competitive now and there's all these different things that kinda distract you, it is easier to not have to do like a lot of like the really crappy things in business. Right? Or like to be able to outsource them because not only are you more educated as an entrepreneur, but you can find like virtual assistants that are more educated. You can find other people that are very easy to network with due to the internet that can help you learn. You can find softwares and systems that come with automations that do a lot of the things that you need to do in your business.

Mike DeHaan: [13:13] Now here's the other thing too, is there's this old antiquated view about how you need to build this up that's really custom. Like I heard that I was talking to this guy on Instagram who was in Josh and Tiffany High's group, whatever it's called. And this pissed me off to the core that he said one of the biggest things they do is when you join their community is they convince people to buy this $3,000 podium setup, right? Yeah. In order to be able to nurture the leads the way that they teach you to do it. That is the most horseshit thing that I have ever heard. There is no reason

Dan Austin: [13:48] That's snake oil, dude.

Mike DeHaan: [13:49] Absolutely. Like that is the taking advantage of ignorant real estate people that are separate from technology to the max. Because a, Podio's not that complicated, can build it out yourself however you want. B, there are so many off the shelf products that can take you to multi millions of dollars of revenue, that will cost you a couple 100 a month, maybe.

Dan Austin: [14:11] So let's theorize this, what could a Podio setup be could do? We use RE Simply, that's the one we've used for a long time. What could a $3,000 Podio build out do for you that you couldn't do in another system like Ari Simply?

Mike DeHaan: [14:24] Dude, I can't even begin to imagine what they're sort of pitching on it that's so important. Right? Like, is it by having live transfers? Well, Ari Simply does that. Right? Is it being able to categorize leads the appropriate way? Is it being able to do drip campaigns? Automated follow ups?

Dan Austin: [14:38] I was gonna say, let me guess. It's drip campaigns, which you and I have proven are a waste of time in

Mike DeHaan: [14:43] this case. We know what they probably do. They probably have some integration that uses like quote unquote AI or some bullshit, and that's why it costs $3,000. Yeah. You know? And then I was talking to him more, asking him certain base questions, and you know, he started to open up a little bit. And he was like, yeah, I'm pretty sure that they also break it occasionally. So that way you have to go and hire their overseas developer for way too much money to come in and fix it for you. I'm just like

Dan Austin: [15:06] Oh man.

Mike DeHaan: [15:07] Rack it. Like don't ever buy into stuff like that. Like there, almost anything that you need in this business can be done with like a base level software at this point, to get up to the point where you're making 7 figures. Multi 7 figures, honestly.

Dan Austin: [15:20] And there's no real shortcut to Yeah. There really isn't. Like, there's no Podio software setup, there's no drip campaign that's better, there's no cold calling script that's that much better. Like there's just nothing that's better than just putting in the legwork, following the steps consistently over and over again, and just calling people, talking to people, showing up to appointments, consistently marketing, it's just basics, it's just basic business.

Mike DeHaan: [15:41] Yeah, and you know, literally all we do, is what I always tell people on other shows that I'm on, is we just do like jump shot and bounce pass basketball. Right? It's the most like Exactly. Lane Jane business. We pull all of the macro and micro lists that you can learn about on YouTube from Popstream. We mail them at a mass level that's targeted based off people that are most likely to wanna sell at a discount, and then we take the larger list like the rest of the people that are less motivated, and we put them with our cold calling SMS company, and we mark to them at volume. And we do that repeatedly month after month after month after month, and lo and behold to you that with enough volume, you close a lot of deals. Like it's really not that hard.

Dan Austin: [16:21] Well the key is once we start we don't stop.

Mike DeHaan: [16:23] Correct.

Dan Austin: [16:24] And that's where I think people get caught up, they try to get cute, they try to get like tricky and like, well what if I stop mailing this list and put that money over here, maybe I'll make more money. It's like, no. You're already building a flywheel, you're already building a snowball over here, just keep going, don't stop. Don't say, hey, I'm a little stretched thin on money because I got a flip going and my rental property's vacant, no, like all that stuff is secondary to your marketing machine because that snowball, once you stop, it starts shrinking, starts melting right away.

Mike DeHaan: [16:51] Right. You gotta keep

Dan Austin: [16:52] it going because you and I, we've seen this too many times. People do that, they stop, oh, it's just for a month. Well, guess what? You just literally stopped all your momentum, and now you gotta start back up, it's a lot harder to start back

Mike DeHaan: [17:02] up Yeah.

Dan Austin: [17:03] To get going, especially because you gotta spend money and and you're you're just it's a losing battle at that point.

Mike DeHaan: [17:07] Yeah. And it's important to be monitoring for results so you can see if there's any trends that happen over a long period of time in a negative direction. Right? I think a leather issue is a lot of people look at things month by month, which isn't really a good indicator of success with your marketing. So we look like quarter by quarter. And we'll, know, on a month by month basis your cost per leader, cost per deal can double. But if over like a six month span it averages out to what you expect, then you're good. Right? And if it started by trending up at the end of the six months, watch it for the next couple months to be able to make decisions, and Yep. Then you make make changes from there. But the change that you make should be minor. You shouldn't be like reinventing So the whole for example, we've recently just made a change with our our direct mail sequence. So we have a six month direct mail sequence that we run, that we've been running for a couple of years now, and we started to notice that by the sixth month, things were starting to increase a lot in terms of our cost

Dan Austin: [17:59] Cost twice.

Mike DeHaan: [18:00] Cost per lead and our cost per deal was almost doubling from the previous few months, and that was a reoccurring thing that happened in several markets. And so we said, well, let's try something different for that, see what it looks like. And so we basically introduced a new type of mail. We're doing these kind of branded postcards, which we haven't done for a long time, which are very brand heavy, and they have to call to action, they're gonna appeal to a different audience. We can reach out to a lot more people with that. We're gonna monitor that for the next few phases and see how that brings down our cost per liter, if it affects it, if it goes up maybe, and then we'll make another adjustment from there. Yep. Hey. We really appreciate being a listener of the collecting keys podcast. Did you know that we also are on social media and on YouTube? You should go and shoot us a follow on those as well. You can find both Dan and I on Instagram. I am at Mike underscore invests. Dan is at investor man Dan. You can also find short clips from the show at collecting keys podcast on Instagram. And if you wanna see our faces talking while listening to this show or you wanna check out some of our crazy animated adventures, we've been putting together into some funny little web cartoons that sort of show the crazy stories that guests tell on the show, then you should go over to YouTube and check out the collecting keys channel. Shoot us a subscribe over there. It really helps continue to grow our audience. We really, really appreciate it. Well, anyways, enjoy the rest of the show you guys.

Mike DeHaan: [19:14] We appreciate you all. One of the problems I think when you're new is making a change like that feels risky because you don't have proof of concept yet. Right. You don't have like any sort of reserves or or backup in your pipeline. But that's also why it's important to be doing things consistently and to not only on the marketing side, but the sales side. Cause then you know that worst case scenario, your lead flow goes down, but at least you can be calling all the leads that you've already paid for, already generated to be able to produce revenue.

Dan Austin: [19:39] Totally. Yeah. And it it's one of Marketing's one of those things, it's like a business asset. And now that we do marketing, not just for real estate assets, for our business, it's different, our partnership program, our calling company, the different kind of businesses you and I run, it goes back to that, oh, it does feel risky, because we've never done this before, and you know, we've been, we spent money on marketing over the years, and now it's getting to the point to where it's like, every single company in the capitalist economy that we call America would not be doing marketing if it didn't work. They would not be marketing on social media, they would not be doing all these different types of marketing and KPIs, all that stuff if it didn't work. So at some level, the thousands of wholesalers out there wouldn't be doing this if it didn't work, when you take it all the way back down to the wholesale operation. So it's like, it does feel scary, it does feel risky, but if you do it, like, it will work, the flywheel does spin. I don't know what else to tell you, it will work, but if you don't put in the work, it won't. Yeah. It won't do anything for you.

Mike DeHaan: [20:32] And it's gonna be really uncomfortable, you're not really gonna know what to do sometimes, you're try and figure out, you know, like I said before the end, that's what hard feels like. Congratulations. I thought it was gonna be Yeah, exactly.

Dan Austin: [20:42] Yeah, and don't sell yourself short when it starts getting hard. Don't, everybody has like the thought of fear, like, oh, I fucked up, like this is not who I am, I can't do this. Like, people that are worth a $100,000,000 have that same conversation in their head when they wake up in the morning. They still question themselves, but the difference is, is they've grown a skill to say, you know what, I know that I can do this. History has told me I can do this. History has told me that I'm a different person than the slob sitting over there not doing shit, but going to work every single day, collecting a paycheck, right? You've chosen this path, you've done all, you've done a ton of legwork to get to this point to start an off market real estate business, you're different. So now, when it gets hard, you just gotta tell yourself the right, the voice in your head has to be like, I can do this. I'm gonna get one little bit better every single day when I pick up the phone and do my follow-up, it's just a, it's a mindset thing. I just say that because there's not a lot

Mike DeHaan: [21:33] of difference between me and

Dan Austin: [21:33] you and then the folks that we coach in the scale community or the other people out there that are doing this business, except for we've seasoned that little, we've seasoned that little mindset thing in our brain of like, I can do this, I can do this, you know, over and over again.

Mike DeHaan: [21:46] Yeah, that's a perfect segue to announce the collecting keys affirmation journal with the mirror on the front. Yes.

Dan Austin: [21:51] And then

Mike DeHaan: [21:51] start shouting Yes. Should actually, that that's, I don't know when we made that joke like six months ago. I feel like we should pursue that though, I feel like that's hilarious.

Dan Austin: [21:59] We will. We just gotta get one of our team members to just make it, it's not hard.

Mike DeHaan: [22:03] Yeah. I mean, We'll it's not have

Dan Austin: [22:05] Ramon. Hey Ramon, go and make this for us, get it all set up on our website with Daniel, we'll start selling them. Maybe we should just pre let's pre sell them.

Mike DeHaan: [22:11] Pre sell them, there you go. The Kickstarter.

Dan Austin: [22:13] Proof of concept. If you guys want it, we'll there's but enough people who'll

Mike DeHaan: [22:17] make Yeah, problem is people actually have to listen to this show first,

Dan Austin: [22:19] and that's the first word of If you know somebody that could benefit from this show, please share it to them, and we will send you a free Collections Keyes Life Affirmation Planner. Yeah. What do we call

Mike DeHaan: [22:29] it, life? Yeah. With with a self motivating mirror on the front. Yeah. Is that Yeah. This app self kind of thing.

Dan Austin: [22:35] It's actually, it's an a it's an AI journal. It's an AI journal with a self motivating mirror in it, so you actually don't have to do any work. It's got ChatGPT built into it. Yeah. It's pretty slick.

Mike DeHaan: [22:46] Yeah, as AI, it is run by asshole intelligence, you dick. Figuring out. AIDS? Yeah. Oh, stupid. That's that was a good joke. Hell yeah. Alright. Well, aside from that, I mean we got deals closing finally, we've had tons of delays and we're finally getting stuff moving. Think we had five over the last couple of days that have all closed, and then we have five or six more over the next few days. So really excited to get things routed out here because it gets a while where like the transaction process where every single one is just facing issues. I mean, it's part of the game, but it's always a frustrating thing. And we finally have one of these wrap deals that we've been trying to do for a while closing. Yes. That according to people on the internet is a very simple thing allegedly. But we had a hiccup for the last little bit over something that, who would have thought, a fricking insurance.

Dan Austin: [23:41] Right? Insurance is always a thing.

Mike DeHaan: [23:43] Which according to the episode with Pace on on was it Travel Millionaire? It's like, oh you just use like our insurance company. It's not a real thing, but it's literally not. No. And you talk to any insurance company, they're like, can't do what he's saying. Yeah. And so we've had to kind of figure out a strategy here to make it legal and legit, so that we don't, you know, leave the buyer out high and dry or ourselves because we're gonna have like a additional loan on this or get in trouble from the lender for not carrying insurance and have

Dan Austin: [24:09] them call the call the loan. Here's the trick and I was gonna do a Friday focus like a case study on this one. The thing with insurance to highlight why any of the creative finance stuff where you're leaving a mortgage in place. The reason why it's critical is that the bank has a due on sale clause. Meaning, that if you sell the property and legally no longer hold title, they can call the loan due, they can. They may call the loan due. And you want to do things without them finding out is it illegal? I don't believe it's illegal anywhere to sell a property and not tell the bank. I don't think so. So I But I'm Don't quote me on that because

Mike DeHaan: [24:43] I don't know what I was. Having a deck that I'm not gonna violate the loan.

Dan Austin: [24:46] I'm not gonna just make bold I'm not gonna make bold faced lies, know, because there is such thing called mortgage fraud and all that stuff. I have no idea, so don't quote me on this. But, you don't want them to find out. And so, the insurance is an interesting one. So, a lot of people are like, oh, you just need to get, the buyer needs an insurance policy. The challenge with this is, is the buyer gets an insurance policy and then you leave your insurance policy in place with the lender listed as the insured. So this buyer say owns the house for five years, and you have a five year balloon, nothing happens, good to go, the loan gets paid off, add a refinance where they sell the product. Cool. And you don't want the due on sale clause in that time period, so you keep your policy in place and have theirs. The problem is, is in that five year period, something happens, like the house burns down, you are, basically still owe the loan. Mhmm. And he has an insurance policy that doesn't have a lender on it. They have you as the lender listed on it for just the equity piece, you can do that. You can't just arbitrarily throw that lender on there because then that lender is going to get notified that somebody new is on the policy. So what Pace pitches usually in these cases, and he says it's because most investors are idiots and they don't know how to do this, so we use a specific insurance company that essentially will put the buyers insurance in place, and keep yours in place, and then in a week after that cancel your policy, so then nobody's the wiser.

Dan Austin: [26:02] It's like, Pat doesn't fix shit actually. It's just another way to pitch a company that he may be affiliated with. However, what you can do, which there's still the risk of due on sale and what we're doing, so our insurance company would not just add the buyer to our policy. They said, no, no, no, if he has title, we will not insure anybody on the property that doesn't hold title. So he holds title, so his name goes on the insurance policy, and then we are listed as an additionally insured person, and then the lender is listed as the lender. So meaning if the house burns down, he skips town, we are still covered as additionally insured because we still personally guarantee that mortgage. So then we can pay the mortgage off, or the mortgage company can get paid off, the lender can get paid off in the event that the house doesn't get rebuilt. That's the whole thing here, you're trying to avoid a due on sale trigger, and make sure that the house is safe during an insurance claim, and two policies will not do that because the insurance companies will not do that. Your insurance policy with you not on title will not nope. The insurance company's like, fuck you, I'm not paying that. You don't even own the house. Thank you, by the way, for paying me a $100 a month for the last sixty months.

Mike DeHaan: [27:09] Yeah. And see that, the big problem too with that whole situation, and I think what they do on do that sub to your insurance company, whatever it is, is now you're not only you're hoping that the lender doesn't find out about the change, you're also hoping the insurance company doesn't find out. The thing is is that when there is a problem, they will find out, and then everyone's gonna be left high and dry, you're all gonna be completely fucked when somebody goes and burns the house down, which across all the people doing these kind of things will eventually happen, has probably already happened several times. And if you know anyone that has bought or sold a subject to property that has then had an insurance claim and had issues with it, or if they haven't, figured it out, please let me know. I would love to hear more about it. Totally. Because I would love it, yep. So like the stuff that I sold subject to, how we did it, we actually had the buyer basically take a power of attorney over me to be able to claim those funds on behalf of me for the property. But I guess that's not the way you're supposed to do it, but that was what the attorney that we worked with told us to do it and it makes sense, I guess logically. Only risk is right now is that if I die, as we have learned, the power of attorney is no longer a valid document.

Dan Austin: [28:12] They go away.

Mike DeHaan: [28:13] This is admittedly a risk that is out there for the buyer at this point. I don't really think it makes sense for us to be kind of rocking the boat, just hope that I don't die in the next few years. Right. I guess we'll figure that out.

Dan Austin: [28:23] Absolutely. Well, if you do die, he just needs to get his own insurance on it, which he should be able to. Yeah. It's still just the risk of him triggering the due on sale. He can still get insurance, right? It's just the risk, because what happens when you get insurance on a property, is the lender always requests to have an updated insurance binder. So, your insurance policy expires, they get a new, your insurance provider provides them with a new, hey, this is the policy from January 1 till December 31 this year, and so when your buyer gets a new policy, the lender's going to be like, hey, where's my in, like when your existing policy comes due, the lender's gonna be like, you don't have insurance on this property, And the buyers are gonna like, oh, yes, I do. And they're gonna be like, who the fuck are you? Yeah. Right. You're not you're not my Yeah.

Mike DeHaan: [29:06] As a result, it's not like, oh, well we promise you'd do, you know, give the insurance on the property. They just go, no, cool, we're off the hook. Thanks for all the premiums you've been paying, but we are out. Totally. See you later.

Dan Austin: [29:16] Totally. Yeah, exactly. And it complicated just one step further because Pace Morby did a video on this was, oh, this happens sometimes, once in a while, and he did a video of him signing documents, which he was probably just signing shit with covered grounds. He was signing a document basically saying, well they just deed it back to me and then we'll get it all resolved, or I'll deed it back to the seller, we'll get it all resolved, and then we'll just do another deed back to me basically, quickly so that, because the the lender company won't, they're too stupid to figure that They out, found it once, but they won't find it twice. But dude, in some states like Washington, there's excise tax. I know. So on both sides of that trade, if that actually worked, that's up 4% of the sale cost now that seller you bought it from, and you have to figure that out. That could be like on a $400,000 house transfer, the state of Washington wants their excise tax.

Mike DeHaan: [30:04] You just do a quick claim dude, just go down there to the county office and report it yourself. Just don't pay any size tax. That's what Trumps Yeah. They'll need money or credit to do this.

Dan Austin: [30:14] That's what my haters that don't know how to do sub two the right way would do.

Mike DeHaan: [30:17] Yeah. So now I'm gonna deflect everything by trying to show people experience, take them on helicopters and stuff, because I know that my time is narrowly, like you know, it's whittling away very very quickly. Anyways, so we got that closed now though, which I'm excited for, and I do feel like we have done it the correct way. Actually I will say that the big benefit that we've had is we found this buyer from that community, that group. And so we've had these back and forths with the attorneys, and we've had some of these, I would say like questions, but because he's in the same boat, and be like, this doesn't fucking make any sense. He's been very communicative and very open to also learning about how it's been done, and very supportive about doing it the correct way, and so mutually beneficial. Yep. You know, and I it would be a different story if it was a situation where you're like buying it from a crackhead or something. Like it just doesn't, it wouldn't be feasible

Dan Austin: [31:04] at It wouldn't be feasible and if you were selling it to somebody that was just, like you're trying to sell to a retail buyer this way.

Mike DeHaan: [31:11] Yeah, no way. Not just retail buyer, but

Dan Austin: [31:13] just anybody that's ignorant, and like, we've tried that before, and guess what? Dude walked out, not on this particular property, but the dude walked out on closing day. He signed half the documents and got through it, was like, nope, I'm not doing it.

Mike DeHaan: [31:23] Yeah, that was fun.

Dan Austin: [31:24] What a waste of time. That was fun, right?

Mike DeHaan: [31:27] And then the clothing journey's like, well we still want our money, and we're like, well I guess you're not wrong, goddamn it.

Dan Austin: [31:31] That was another three months of battling this guy, because he had his whole down payment at the lawyer's office, like $30, and he's like, want my money back, I was like, I don't control that, dude. Yeah. You walked out, you had all the loan documents to review, you knew exactly what we were doing, and so we had to negotiate with him to have him pay at least half the lawyer costs. What a nightmare. What a pain, what a pain.

Mike DeHaan: [31:52] Anyways, so closing those out, and then I guess our current thing as well, is we're just getting ready for our second Keyes Con event here in Palm Springs. It's gonna be that second weekend of June, which I'm super excited for. But, we have it's gonna be hot down there in the desert. We have a sick house with a super nice pool that we're gonna be bringing, I guess, what, 12 scale members out to. We're gonna be doing a two day minister class with deep dive into their business.

Dan Austin: [32:16] Just teach them how to scale. Everything we talk about, they get in like two days and it's just gonna be it's always an amazing event. I love this thing.

Mike DeHaan: [32:23] Yeah. I'm really excited for it. So we got a guest speaker coming down this time as well. He's gonna be leading some of the stuff specifically around sales, which I think is gonna be awesome. Mhmm. We also have a handful different, like, I would say changes that we've made from the first one just to make it even better. I mean, as we continue to do these for our members, we'll just need to optimize it. And it's funny, I've come to find that like Yeah. The first event that we did last one was like one of my highlights of last year. And I had a lot of like cool stuff last year, but I thought it was so fun. And I'm excited to be able to do more of these things. It's funny, and I can see why like, I don't know, like as a guru sort of type people get really into doing these kind of events.

Dan Austin: [33:02] It is like In person events.

Mike DeHaan: [33:03] A really good time, like honestly.

Dan Austin: [33:05] Yeah, it's a good time, like I don't know, I think you and I both also appreciate like a curated experience, so like we like doing that for other people. We've had it done for us when we go to events, but also getting to see the impact of being around a group of entrepreneurs, very like minded, all investing in your success just as much as you are in your own success. It's like they own you, like they own where you're going with your business, because we're a virtual, we're a virtual group, right? And we meet multiple times a week, but getting in, there's still, you can't get beyond the benefit of being in person and doing a deep dive, where only you're focused on your business and those around you, and so that relationship and that network and that bond goes so far into the future. It's with them, it's so cool to see how people act not just there, but how their businesses grow like the next two to three to six months, you know, after that.

Mike DeHaan: [33:51] Well also too, think one of the benefits we have, and I guess to to toot our own owner a little bit, is that we've been to a lot of stuff like this, where it's like a lot of like information, but not necessarily a lot of like actionable value. And so to put our own spin on it, we provide a lot of information, but then we have people taking the action at the event Right. Like specifically. So there's no way that they can just sit there for two and a half days and take a bunch of notes and go home and do nothing. Yeah. Because we force them to do it at the event. Yeah. And so they will get results whether they like it or not. Totally. Yeah. You will.

Dan Austin: [34:22] You can't.

Mike DeHaan: [34:22] You can't. So, yeah. Anyways, if you're interested in optimizing the market like we talked about, or figuring out how to do wraps and stuff correctly, or wanna come to an event like KeyesCon, sure click on keys.com/scale and check out our scale community and see if you're a good fit. Absolutely. Besides that guys, we appreciate you guys listening. Please share this show with anyone else who might find it interesting, or you can just send people to collectingkeys.com/scale as well. Think that they would be a good fit for the community and we'll note on that. If you have like a business partner, you have those sort of things, we welcome groups. We have a lot of people that have partners in there as well. So don't be afraid to apply as an entire company if you have a business partner that would be a part with you. So we appreciate you guys listening, and we'll talk to you next week. See you.