Consumer Debt Concerns, Increase in Underwater Sellers, Can Rent Keep Rising?

Mike DeHaan: [0:00] We can't just keep putting more and more people into smaller and smaller living situations and expect that to be fine. Just not how it's gonna work. You know, because also the rents go up, the property values go up, taxes go up, rents go up again to cover the increased taxes. Eventually, it's gotta break somewhere. Mhmm. What's going on, guys? Welcome to this episode of the collecting key real estate investing podcast, and we are here in August already, which I cannot believe how quick this year is going.

Dan Austin: [0:35] Got our annual HOA meeting tonight.

Mike DeHaan: [0:37] Yes. Yeah. Absolutely. That was top of the calendar for me. Yeah. Was the annual HOA meeting. You know what's kinda weird is I live in this

Dan Austin: [0:45] When the HOA president is gonna be upset you're not there.

Mike DeHaan: [0:48] Oh, that HOA meeting. Oh, shit. Talked about that during the show.

Dan Austin: [0:51] What HOA did you think it was?

Mike DeHaan: [0:53] I've had them in for your house.

Dan Austin: [0:55] Oh, no. No.

Mike DeHaan: [0:55] Right on, guys. If this is your first time here, my name is Mike DeHaan and I am here with my cohost, Dan Austin. And this is the Wednesday Mike and Dan show where we talk about real estate investing, business, and Other shit. You know, HOAs apparently, which is the hot topic. Yeah. So we should talk about an update on this property though. So the quick too long didn't read version, this is a condo that we flipped last year that we had sold We didn't flip. Yeah, so that we were planning to flip it, We bought this thing, hoarder house, awesome renovation, place is great. Beautiful. Yeah, looked beautiful. Put it on the market, had it sold, we had 85,000 in net profit coming our way. And then two days before closing, the buyer's lender, who we also happen to know, because you know small community. Oh yeah, fair about that. Calls us and he's like, hey guys we can't finance this property because the HOA that is in this condo situation, the insurance that they have is not adequate for our lender needs. Right? And we're like, okay. And so I guess, what was the basic situation? Was basically the insurance only had the replacement cost value, but the cost to replace the structure was less than the value of the property. So basically, it did not cover the loan amount that the lenders were providing.

Dan Austin: [2:21] Yeah. The lender would not approve it because, yeah, if they're gonna loan on it at, say, 300,000, the replacement cost, that was only like 200,000, and they're like, there's this gap here. And the reason why that was the case is because the HOA, there's a long standing history here, but the short version of this HOA had filed claims because there was two burst pipes in two different units. And because of that, they're not able to get any better quality insurance, which is just bullshit. So we're having to sit on it for, what, two years until we can get our insurance policy reviewed, so we're we're obviously renting it out. And it's not like a condo building like you think like

Mike DeHaan: [2:53] a five story building. It's like a duplex. Right?

Dan Austin: [2:55] So there's like four duplexes in this Glen Gill Court HOA. And literally nobody wants the insurance policy. Everybody wants their own insurance, but they're all kind of hosed and screwed right now.

Mike DeHaan: [3:06] Yeah. And it's such a dumb situation because, like, you know, completely out of everybody's control, It was handled poorly kind of at the start, it sounds like. The HOA doesn't actually do anything because we bought this house as a hoarder house with so many issues wrong with it. And the lady that owned this condo, she lived across the street in a different freaking condo. So she could see this shenanigans going on for years before we bought it.

Dan Austin: [3:33] And go to the HOA meeting and not say anything. Like, I was like, I didn't realize I was hurt. I was like talking shit on the house, and how much money we were gonna profit, and all that sort of stuff at the first HOA meeting we went to.

Mike DeHaan: [3:43] Oh my god. Yeah. So but and even then, if it does come together, because right now literally everyone's screwed. Like, mean, we're fortunate because we're investors that, you know, do this kind of for a living, so we can park a rent, a tenant in there, have a rental, whatever. But there are people in my community that have put their life savings into buying this house, this property, and can't sell it. Yeah. Like, they're stuck there forever. Yeah. Unless they get this insurance situation It's

Dan Austin: [4:10] situation. Unfortunate because we had 6 figures of cash coming back to us, and with the market, it's definitely not gonna get the price we had originally because they went over ask. Yeah. So, you know, we'll probably be getting a little less profit, but hopefully still getting some money back out of that thing.

Mike DeHaan: [4:26] I mean, should. Our debt isn't too crazy. Because we had it sold at what, like $3.40 or something crazy?

Dan Austin: [4:31] Yeah, something like that. Our list price was like $3.15. It went over on an escalation, and that will my guess is we'll probably be able to sell it next year for like 300.

Mike DeHaan: [4:39] $303.99. That's kinda what I was thinking Yeah. I mean, you know, it's a nice property. It's not a large lot. If we went and like cleaned up the landscaping a little bit, maybe a little bit more. But at the same time, it's also still like attached to another unit. So Yeah. It's not quite as desirable. But, you know, so we have our HOA meeting. So we should go see Quinn. I'm sure she's really excited to be taking her little break from the school district to wherever she works.

Dan Austin: [5:01] Oh, yeah. She is on vacation. Bad about that.

Mike DeHaan: [5:05] Yeah. And you know, just then what did she try to penalize us for? Was there something dumb that our tenants did that she didn't like and she tried to charge us and we were like, the house used to be a hoarder house.

Dan Austin: [5:15] I probably just deleted that email and just ignored it. I'm sure she did. Those tenants were of course were placed by our previous employee and they were also kinda dummies, so I'm not Yeah.

Mike DeHaan: [5:26] So They were super trashy, but it still was better than the hoarder house than it was after. Yeah.

Dan Austin: [5:31] So much better, dude. So Yeah.

Mike DeHaan: [5:34] Yeah. Like, we played this game long enough, you know, things weird things happen. But I will say that this is a it was a big lesson for us. If you're ever doing anything with condos, we checked the CC and Rs and everything, and it was fine. Yeah. But we never would have thought to check the insurance. Right. And the thing is we we bought it with a loan.

Dan Austin: [5:51] Yeah. We did. Hard money loan.

Mike DeHaan: [5:53] But our loan our loan amount was less than the insurance that they provided, so they didn't care. It was the post lift value that caused

Dan Austin: [6:00] this problem. Some mall nuance that now we'll never make that mistake again. And hopefully, listeners won't have to make it because we made it for you.

Mike DeHaan: [6:08] Yeah. So, I mean, for me, the big most stories are cool. Not gonna do condos anymore.

Dan Austin: [6:13] Yeah. Know. Just a

Mike DeHaan: [6:14] lot of extra steps there, but it was just such an easy deal. It seemed like at the time. But Yeah. So that's blast into the past for us. It's little rental property that does okay. Yeah. You know, like, break even. We have some cheap ish debt. We'll figure it out. Yeah. We aight. Yeah. Bigger picture though. There's finally started to be some talk about what the economy is doing again, which has been kind of interesting to sort of see that come together between all of the extra senior citizens and lizard people that run the economy that seem to be just overwhelming the news right now.

Dan Austin: [6:49] I don't

Mike DeHaan: [6:49] know if you saw that thing where like Mitch McConnell just like stopped talking.

Dan Austin: [6:52] Dude, that was so great.

Mike DeHaan: [6:54] His brain caught on fire,

Dan Austin: [6:55] like, I've been saying, and I'm not the only one, I'm just not original Dan Austin, I've been saying for a while, we need to have a cutoff on age for politicians. Oh, yeah. Because I was like, some of these people, you think about your grandparents, you're like, I would never have my grandparents running this country, like, they're past their prime. Nothing wrong with them. Once you're in your eighties and nineties, you shouldn't be in office and power, like, you're just past your prime. Then, like, most of our congress and senate, not most, but a good portion of the leaders are in that.

Mike DeHaan: [7:23] Yeah. I saw this joke headline the other day, reposted it, and it was like, family making tough decision about whether to put grandpa into hostess or nominate to run for Senate. I saw that too. That's hilarious. You might have sent that to me.

Dan Austin: [7:38] Yeah. Would say. Yeah. That's funny. Yeah. I like all the memes of like Mitch McConnell and I'm not even gonna like whatever the headline is and then it's just him staring into the crammer like his picture floating around. Oh god.

Mike DeHaan: [7:49] It's it's the worst. Classic. But between all that shit going on, there, you know, people are starting to talk about some of the signs of the economy getting weird, tied to inflation, tied to reduced earnings, all sorts of things. But one of the things they've been talking about is consumer debt rather versus their spending. So like how much credit card debt and things people are carrying from month to month. And this is actually an interesting statistic, and I'm wondering what's your cause of this, but they're saying that people right now that are not paying off their credit cards from month to month is currently up to like 66%, where I was only at like 32% a couple of years ago. So it's essentially doubled. And what exactly that means Why do you think that's the case?

Dan Austin: [8:32] Why do you think people are more credit card debt?

Mike DeHaan: [8:34] Tough's expensive right now, dude, and people aren't necessarily making more money. I mean, my wife and I, we went out to lunch, was it two weeks ago? We got like a sandwich, and it was like two like, you know, two sandwiches and a side was like $40.

Dan Austin: [8:48] Guys went to McDonald's and No. Got a $40 McDouble?

Mike DeHaan: [8:51] No. Went to some local place here, but like the sandwiches base were like $17.18 bucks.

Dan Austin: [8:57] Yeah. No. It's so expensive. Is food do you think food's like the ones the most expensive right now? Because I don't know. I don't buy a lot of other shit.

Mike DeHaan: [9:03] So for Washington State, it's increased a lot because we also changed the rules about typical employees where they now have to make minimum minimum wage on top of making tips. Well that's

Dan Austin: [9:13] been that way forever though.

Mike DeHaan: [9:14] It's been that way for a couple years, not that long, but That's finally

Dan Austin: [9:17] in Idaho, that's different like that though. Idaho, you still don't have to do that, I don't think. And if they change that rule

Mike DeHaan: [9:22] No you don't, most places you don't. So that's why it's so expensive in Washington because, know, hey, this is how capitalism works, guys. You change the rules, it passes down to the consumer. Wow. Crazy.

Dan Austin: [9:33] Well, the other thing is even the grocery store is expensive, and I'm not tipping my my bag boy even though they want it.

Mike DeHaan: [9:40] We were on a little road trip and went to the gas station, and I bought like a energy drink at the gas station, and it wanted a tip on there. I was like, you didn't do anything.

Dan Austin: [9:49] Dude, I love that, bro. Like, seriously, like, you know what? If I knew you weren't making $20 an hour right now.

Mike DeHaan: [9:54] I know, I know.

Dan Austin: [9:55] I'm a generous tipper too, but the gas stations are little excessive.

Mike DeHaan: [9:59] Yeah, but I mean I think that's a big thing, just stuff's just expensive right now, groceries are expensive, is expensive most places. You know, and people still are trying to do stuff with their life. So just like general entertainment expenses and everything. And actually, I think the real problem is, too many people are going to these damn Taylor Swift concerts and paying like $2

Dan Austin: [10:18] a ticket rep they're paying. That's wild.

Mike DeHaan: [10:20] That's really what most of the credit card debt is.

Dan Austin: [10:22] Wild, the whole thing. I mean, I'll give it to you. It looks like it's probably a really good show. You're getting your entertainment.

Mike DeHaan: [10:29] It's three and a half hours.

Dan Austin: [10:31] I know. Of one person.

Mike DeHaan: [10:33] Of one person. Yeah. Because the set is like 47 songs.

Dan Austin: [10:37] Yeah. That's legit. She's awesome. She does that like night after night. I don't know how many she would take days off. She's like a robot at this point.

Mike DeHaan: [10:44] I think that that's the real story is like good for her because that is like that is legitimately impressive. Amazing. She's meant to make I think $500,000,000 off of this tour. Wow. But I don't think that there's anything that I wanna do for three and a half hours. At all, if it works. No. I'm not going to

Dan Austin: [11:01] the concert for three and half hours, yeah.

Mike DeHaan: [11:02] No. No way.

Dan Austin: [11:03] I'm not even going to the Barbie movie if it was three and a half hours.

Mike DeHaan: [11:06] No. No. I mean, definitely not going to that for three and half hours. You go see it twice and it would be the same amount of time.

Dan Austin: [11:11] Alright. So the consumer debt thing though, I think what you're saying here is is very valid, but do we really have to worry about that large in the large economy? The larger picture, like how does that affect what we care about which is real estate and being able to buy real estate?

Mike DeHaan: [11:27] For us, doesn't. For, you know, the affluent, that's not really a big issue. Right? Where the biggest thing is that Self described. I mean, it's the truth. You look it up. Sorry, Dan. You you do pretty well for yourself.

Dan Austin: [11:39] Yeah. I am affluent.

Mike DeHaan: [11:40] I mean the barrier is shockingly low.

Dan Austin: [11:44] When you say that, I immediately think I'm like, is it like? The b or a, you know, influenza? Influenza, yeah. Right. Which one are you?

Mike DeHaan: [11:52] So but the biggest thing, the reason it's a talking point is because that's been one of the biggest indicators of stuff getting a little bit weird in the economy over the past few years because Consumer debt. Consumer debt, you know, because all of a sudden you have these credit card companies and things like that that are, you know, tied to banks, tied to financial institutions. If people start falling behind on that and defaulting on it, it's just like with mortgages. Right? People default on those. The money has to come from somewhere. Right? And they can take action. They can do these different things, and it can just lead to more problems down the line, and it puts more and more people into a bad financial situation. Which is something that we're already dealing with kind of across most of the country anyway, where you're still seeing rents increase, but people aren't necessarily making more money. That's why you see so many of these situations right now of like people getting into these alternative living environments. I mean we have, how many different rental advocates have we had recently that are things like, oh, it's like two adult families that are not necessarily related that are living together. Yeah. It's because that's how they can afford to live in like a decent place.

Dan Austin: [12:55] Yeah, yeah exactly.

Mike DeHaan: [12:56] Or like we're starting to see more and more of that and eventually that's going to, well first off, what it does is it kinda creates this self fulfilling prophecy of like, well, they're gonna pay more for rent, so rent's gonna keep going up, and it's gonna keep being more and more of a problem. But eventually it's gonna turn over somewhere. Like it has to. We can't just keep putting more and more people into smaller and smaller living situations and expect that to be fine. Just not how it's gonna work. You know, because also the rents go up, the property values go up, taxes go up, rents go up again to cover the increased taxes. Eventually, it's gotta break somewhere.

Dan Austin: [13:32] What about all these rent by the room guys?

Mike DeHaan: [13:34] That's that's what I'm saying.

Dan Austin: [13:35] Well, that was a big thing in 2021, 2022. And is that like an early indicator that maybe a market's too hot, that things are gonna have to pop? Because like people are only doing rent by the room because they can't afford Yeah. In that location to rent a

Mike DeHaan: [13:48] whole place or don't have this sense that they need a whole place and then they grow up and they say, I do need a backyard because I like my dog. Well that's the thing that is the talking point with that, right? Is so the rent by the room thing, I don't know if I heard about people doing that in most cities. You're talking about that in like Seattle or San Francisco

Dan Austin: [14:05] Big big

Mike DeHaan: [14:06] metros. Austin, Texas, big metros where they're renting to Young professionals. Ex employees or whatever the freaking top company

Dan Austin: [14:13] says. Ex.

Mike DeHaan: [14:15] Ex? Yeah. You know, they're they're renting to those employees who are like single people that just like want a freaking broom closet to live in. When you start to get families or start to look at school districts, people don't want are gonna, like, be renting by their room to stay in a good school All of a sudden, it's like houses in Costa Rica not Costa Rica. That's pretty nice. In some crappy country in Southeast Asia where they sleep with, like, six people in a 10 foot by 10 foot room. Is that what's gonna get to in The US? I hope not.

Dan Austin: [14:44] I think we still got a lot of room to grow. We're good.

Mike DeHaan: [14:47] We do? Yeah. We got

Dan Austin: [14:48] a lot of room to grow. We got a lot of urban sprawl capabilities. For sure. It'll be alright. When you're on an island or something, like you're compressing into a nation, and people are generally tribal, right? So they're staying within their nation walls, so grow up.

Mike DeHaan: [15:01] This is the tricky thing though with just like the economics, is we have a lot of room to grow, but with how expensive everything is, how expensive labor is, you can't build affordable housing. You can only build high end housing.

Dan Austin: [15:15] Right. You know? Yeah. This is a tough conversation because I don't really know what the right answer is. And I'm kind of a forever bull and I'm not worried about it, but I think there could be some challenges ahead.

Mike DeHaan: [15:25] I mean, if you're on the right end of it, it's all good, but it's a kind of will eventually lead to the haves and the have nots even more than there

Dan Austin: [15:31] already is. But if affluent guys like yourself are able to tip when you buy a rock star and you pay your taxes, then we can help give these people a hand up. That's what we need is more handouts. Genuine contribution is a main pillar in GoBundance, Mike. I want you to know that.

Mike DeHaan: [15:49] Hey, I like to give a good tip when there's good service, they gotta earn it too. I'm not gonna give them that handouts. Because you're absolute. Yeah. No. But I mean, it is a serious thing though. So even looking at the first house that I bought here in Spokane, it was back in 2017, that was a new build house, right, that I paid $200,000 for. You can't even build a house for $200,000 anymore. You know, especially one that's that size.

Dan Austin: [16:15] No, construction wise you can't. Well, the materials are actually at the reasonable price that you could. The labor is not, and that's because people have all inflated, it's hard to go. It's it's like like they always say as a business owner, you can't give somebody a raise and take it back. So make sure they're deserving of it, you're giving it to them for the right reasons. And you think, like, well, is the bubble gonna pop or whatever? Really, what it comes down to is there's a shit ton of money pumped into the economy during COVID. Right? Just a ton of money, more so than any other time in that short short

Mike DeHaan: [16:44] of a period.

Dan Austin: [16:45] And so everything, inflation rose everything. Uh-huh. Will the prices drop? Probably not. They have to siphon the there's like, I guess, two ways to get out of this, but like the main one people talk about is like siphoning the money out of the system through quantitative tightening, which is an economic term that who cares what it means, but really what it comes down to is essentially sucking money out, so that there's not that excess supply. But, in reality, it's just enough time has to go by, and this is my opinion, for prices to stabilize and be reasonable again. So if a house costs now $300,000 to build, not 200, that just has to become the new price. Yeah. Absolutely. And wages, and the big thing is wages have to catch up. And I'm not gonna lie, corporations, due to capitalism, are stingy bastards.

Mike DeHaan: [17:30] Mhmm.

Dan Austin: [17:31] They do not wanna give you pay raises, because their shareholders don't wanna give you pay raises, because their shareholders are affluent, and they're assholes. They are focused on one thing, that's profits. Profits first, and that's how it works, that's capitalism. Sorry if you don't like it, but that's how the system works, and why the system is so efficient. And so until companies get wages up, we're not going to be able to see that reset of price expectations.

Mike DeHaan: [17:54] Yeah. Yeah. I mean, you know, it's all super valid, right? And I think the plus side of the capitalism comment conversation is you can't get yourself on the right side of it. It takes a lot of work, and it takes a lot of hustle, and you gotta make a bunch of good decisions without straying from the path. But people can do it, people do it all the time. It's not even rocket science. When you look at, with everything being expensive, just realize people will pay those expensive prices to you if

Dan Austin: [18:21] you can offer the service. For sure, and America's the best place to get on the right side of capitalism. We do allow that. There's not a lot of restrictions for the average person, and that's why you see so many people that go from like zero to hero in America, and those stories are true because of the reasons of the opportunities we have for that.

Mike DeHaan: [18:38] Exactly. Yeah, mean, you know, and the reason you read about it in like a newspaper and it's not a movie, is because it's like that common, right? Now is when someone's like from Bangladesh, that's when they make the Hollywood movie because he's like, he's the one in a billion. Right.

Dan Austin: [18:52] Or like Slumdog Millenack. Exactly. That was a

Mike DeHaan: [18:55] good movie.

Dan Austin: [18:55] Like that movie. That was

Mike DeHaan: [18:56] a good movie. But you know, and I think though the big picture, one of the main points is if stuff does turn over, I don't think it's going to directly affect real estate, at least not in the immediate, because a lot of people have this golden handcuff sort of effect with the real estate right now, especially those who kind of figured it out in like 2020, 2021, got into these stable living situations, and they're kind of seeing the turmoil. They have super low interest rates. People now have this belief that it will never get any better, so they're not gonna go anywhere.

Dan Austin: [19:27] At least

Mike DeHaan: [19:28] not in like the now. Maybe in like a decade when their house is starting to get worn down and they're like, damn, I gotta put a roof on this now and roofs now cost $85,000. Right. Maybe I shouldn't I can't afford that.

Dan Austin: [19:40] Yeah. So I think there's probably some benefit to that golden handcuff thing is, and there's probably a lot more people that bought a duplex that are living in half of it than there were four years ago.

Mike DeHaan: [19:49] For

Dan Austin: [19:50] sure. Which is awesome for stabilizing the housing market because people cannot be able to they could lose their job, but they could still have some level of income coming in for that house, as opposed to where it would've been just guys like you and me owning that and being like, hey, pay your rent please, or we're gonna have to kick you out. Mhmm. So it's just a different situation. So there's a great I think that's a positive in some of the house hacking group Totally. People have probably helped.

Mike DeHaan: [20:12] Well, that's a whole other conversation too. And that's something that I talked about on Friday Folks I did a couple weeks ago. But what I think is gonna happen with the housing market is on top of all the actual economic factors that are still out of everyone's control, one of the biggest things that is in everyone's control is the number of people that have financial knowledge and have like financial drive to like do things with themselves Right. Is so much higher than it was ten years ago.

Dan Austin: [20:39] Yeah, and there's so much more opportunity for a side hustle. Mhmm.

Mike DeHaan: [20:42] Yeah. Or or like to invest in real estate. You know, you have people that are going and making these decisions to like house hack their home, this or buy a duplex and live in one side or rent out the other, do these live in flips, or do these different things to get themselves to the next level. Whereas like you know ten years ago, fifteen years ago if you did that, were kinda like the weirdo. Now that's like the cool thing to do. So the volume of people that are trying to take advantage of those situations is becoming more and more abundant, right?

Dan Austin: [21:12] Maybe that's the solution to affordable housing is capitalism is naturally fixing it. Because you are creating these different housing opportunities, and people are taking a different approach to lowering their cost of housing.

Mike DeHaan: [21:22] Yeah. I mean, I think the challenge with that is, you know, and this this is like the red versus blue thing is, you know, the the red side of it says, you can figure it out. Here's kinda way to do it. And the blue says, well, it's not their responsibility to have to figure it out. Right? Basically, you know, because it's based on like where they're from, like what their upbringing was, there's all these other factors that are against their control, which there's some truth

Dan Austin: [21:45] to it. Privilege not privileged. Exactly, right? Opportunity.

Mike DeHaan: [21:48] So I don't know, it's interesting. Either way I just think it's, if you have the ability to keep buying houses right now, you definitely should. Yeah. And you should accumulate as many of them as you can if you wanna be setting yourself up very well. Because I don't think that the actual value of real estate is gonna go anywhere soon.

Dan Austin: [22:06] Yeah. And don't be locked in this idea of gold at handcuffs of your interest rate. Don't let your interest rate dictate financial decisions because that doesn't really necessarily matter. Like, great. It's great. Like, I've got a 2.25% interest rate on my primary house. Does that mean I should keep it forever? Maybe, maybe not. Well, I don't have any idea, but probably not. Yeah. Like any house I have, right, I refinanced out of 3% mortgages last year into 5% mortgages. Mhmm. That sucked from a cash flow perspective, but I was able to get my cash flow back because as interest rates were rising, so was rents, and I was able to take money and repurpose it and replace it.

Mike DeHaan: [22:39] Yeah. And you're able

Dan Austin: [22:40] do Way

Mike DeHaan: [22:40] more cash flow. Exactly. Use that equity, you get net significantly higher than you lost. Right? And that's like the next level of thinking about when you start to learn about business and debt is like the opportunity cost of all of the money and equity that you have in these properties. Mhmm. I mean, even you know, if you have that 3% mortgage, if you have like a large down payment, if your equity is huge compared to your debt on the property, you can probably make a hell of a lot more than your difference would be if you were to go and buy like another property. Absolutely, and what

Dan Austin: [23:08] if you kinda step back and observe it, people generally get scared, or nervous, or say it's too risky when they see or feel money moving. Right? Anytime money's transaction, they're oh, that's too much of a risk. So, I think the opposite of that. The counter to that is having money, or equity, or whatever value sitting in an asset just getting stale, that's risky, and not paying attention to it, and not treating it as a business. So when you buy a rental property, treating it as a business, When you're flipping a house, not treating that as a business, like, that's risky. And so, like, don't let your money get stale sitting there in one spot, and don't just move money around, but, like, move it when it makes the sense, when the numbers the numbers don't lie, right? Kinda like Shakira's hips, they do not lie. Wow. Worse analogy ever. Damn it. I've been waiting for that one for months.

Mike DeHaan: [23:55] Yeah. I mean, you know, you're right. And I think But they don't lie. They don't lie. Yeah. And that's why it's so important as well to be active with your finances where I think a lot of people just aren't. Especially with your NW two, most people they live month by month, the money comes in, it goes out. You're over here cracking up about your stupid jokes still.

Dan Austin: [24:13] I'm laughing. Sorry. I was laughing at myself. I don't I don't come out. I don't do that very often.

Mike DeHaan: [24:18] That was terrible. That was terrible. Just so proud of yourself. Did didn't she go to jail? Or is she in prison right now? Shakira? Yeah. I'm sure she went to prison for a tax evasion.

Dan Austin: [24:27] Oh, no.

Mike DeHaan: [24:29] Really? Yeah. Is like this is a few months ago. This is old news at this point. Damn it. See, did she stand trial? Second tax fraud? Eight years in prison? I don't see her getting charged yet though. I don't know. Anyway, it's a Yeah.

Dan Austin: [24:43] Sucks. But Yeah. Sorry, Dan. I never get that. Those hits do lie. It's too

Mike DeHaan: [24:49] lie to the tax man.

Dan Austin: [24:51] Yes. Exactly. Anyhow, back on track. They've contract.

Mike DeHaan: [24:55] I don't even where we're anymore. So, no. I I think that this is the active role with your finances is so important if you want to do something with yourself. Many people focus on trying to I didn't fly yourself over there. If you're trying to just get out of the month to month income and expense mindset, know, and a lot of people don't wanna do that because they're just always trying to get the next raise or whatever. But there's so many ways that you can your financial position and your earnings without just by diving in a little bit deeper. W two pay raises. Are you still good? You're still over here snickering? I'm back.

Dan Austin: [25:32] We're talking about W two pay raises that suck. No, I guess. I don't know.

Mike DeHaan: [25:35] I was gonna talk about, move on to what our business is doing.

Dan Austin: [25:37] Okay. Yeah. What is our business doing?

Mike DeHaan: [25:39] So, I mean, we've just wrapped up the month of July, and we got what, 16 new contracts. Had 700

Dan Austin: [25:48] something leads you said?

Mike DeHaan: [25:50] 700 leads. We had an insane number of leads across all of our markets with all of our partners. We had about eight closings. We had some several closings get pushed into this month. We currently have about 16 in escrow. It's funny. We've there's been this huge influx in properties that are like underwater. Yeah. Yeah. Like, not literally, but like there Yeah. We had one that was literally underwater that we talked to. Poor lady. Nice. I felt bad for her. But the other ones that are, you know, their offer price that we can offer is quite a bit less than their debt. And almost all of them are situations where people bought with FHA loans over the last several years, and the property is in really poor condition. Yep. And it got approved for the FHA loan because the buyer went and painted this the paint chips on the outside, or whatever bullshit thing that's the only thing they apparently care about. Of course. FHA loans. Been there, done that. But we're running into this like a ton all of a sudden. Like, I feel like we didn't see that for years just because that market was so high. And I don't wanna say we've had that conversation a dozen times in the last month with different leads.

Dan Austin: [26:54] Yeah. It's gonna maybe a telltale sign.

Mike DeHaan: [26:57] I mean, it's it's just super interesting, and I I think it just goes back as well to like the faulty lending practices that they were doing. I was like, oh, really? So maybe you shouldn't have been giving people 3% down mortgages if they didn't actually That's have any

Dan Austin: [27:11] the big problem, the bank doesn't give a shit about the condition of the house. Only thing that they care about is reserves to pay their mortgage.

Mike DeHaan: [27:17] But in reality, you should be like, we'll give you

Dan Austin: [27:21] a zero percent down loan, but you have to have 5% of the property in an account for maintenance because a lot of those first time home buyer houses, I I was listing some of them, they were not in great condition. Terrible. And people Terrible. Barely, they could barely afford them, and the house needed a new roof, and all that stuff was quite apparent. It wasn't like we were hiding it, or the sellers were hiding it, it was that that's just that was the only available inventory, and people were capitalizing on that, because that's like a once in a lifetime opportunity where you were able to take your house to the full depreciation level, not do shit to it, and sell it for a pile of cash. I know. That doesn't No, happen

Mike DeHaan: [27:57] it really doesn't. And a bunch

Dan Austin: [27:59] of young couples with little babies have houses with leaky roofs now.

Mike DeHaan: [28:03] That's right. And that's it. I don't know. Well, it's such a weird sort of situation too, because, like, we sold several flips like that to those sort of people, and they would pay way too high prices for things. Yeah.

Dan Austin: [28:13] It's like

Mike DeHaan: [28:14] all the time, left and right. And the house would be an absolute disaster, but right before closing, they'd come, they'd do their inspection, but we noticed that at the very top of the roof, the paint is peeling, so you guys gotta go up there and fix that. I'm like, okay. Go do that. And they'd be like, you're just gonna ignore the fact that the plumbing doesn't work right or whatever. But now all those people, they can't afford to maintain these fixed rubbers that they And two years later that's coming to bite people. Yep. But I mean, we had one that we sold, didn't we have to give them like a $70 credit? Otherwise, they weren't gonna be able to get approved for their loan?

Dan Austin: [28:45] Yeah. Was some stupid stuff like that.

Mike DeHaan: [28:47] Like, yeah, we've had enough

Dan Austin: [28:48] of those situations where like, come on man.

Mike DeHaan: [28:49] Well it was an insanely small amount of money. Was like, if you're even getting that close, you shouldn't be getting the loan anyway.

Dan Austin: [28:55] Right. For sure.

Mike DeHaan: [28:56] Because you know what costs $70 in a house? Like nothing. Like, everything costs at least 10 x that, if not more.

Dan Austin: [29:04] Yeah. Hot water tank? Jesus. Those are expensive now. We used to pay like a thousand bucks, $1,200 that was replaced. The last one we had to replace was like 2,000. Really? Yeah. Not the hot water tank's the same. The labor just jumps up.

Mike DeHaan: [29:16] Yeah. Vitality can hook us up like he used to. Apparently not. Bring the old Russian guy that tried to sold me a gun when I went to God about that.

Dan Austin: [29:24] Yeah. We have so we have some good local HVAC people around here.

Mike DeHaan: [29:29] Yeah. That's funny, man. So I don't know, whatever the situation will be, put that stuff in, it'll be interesting. But all in all though, I mean it was a good general month for our business. You know, we've been working on getting the sales guys kind of like buttoned up. We brought on some new people into our partnership program, watching a couple markets down in Florida as well as a market in South Carolina. We've had several people join our 7 figure investor mentorship program.

Dan Austin: [29:54] Shit's blowing up. We just got a lot

Mike DeHaan: [29:55] of stuff moving right now, man. It's been fun

Dan Austin: [29:57] to see. Are you most excited about? What's the most exciting one?

Mike DeHaan: [30:01] I don't wanna talk about the potential most excited one yet because nothing's come from it yet and I don't wanna jinx it.

Dan Austin: [30:07] Are you talking about the thing that we talked about a

Mike DeHaan: [30:09] couple weeks ago? Did we talk about it on Ian? I don't think we did.

Dan Austin: [30:12] Not on the show. No. Of course not.

Mike DeHaan: [30:14] Yeah. Okay. Yeah. Then we we know we both maybe something coming soon. If it doesn't come together, we'll still talk about it. But until I hear what's coming next.

Dan Austin: [30:22] Yeah. I'm not gonna say shit.

Mike DeHaan: [30:23] Yeah. You shouldn't say anything. I'm gonna jinx Yeah. But outside of that, I'm I'm super excited with how some of our partners have been coming together with their markets. We have several markets that have almost turned on to like what it feels like autopilot mode. Yeah. Where they're just like super good, vibing between our acquisition manager and our sales team and what they're doing, and it just has been churning opportunities which has been really fun to watch. Yep. And then also too, guess one of the other things I'm really excited about is, in our seven Figure Investor Mastermind group, our group coaching program, we have people that are making legitimate money. The point that, so we have one guy, Dylan Cook, who just made his first $100,000 month, which is insane. That is crazy. And that's like net profit, the bottom of all his expenses and everything, that's awesome. We have several people that are making, have made their salaries from previous years in like a couple of weeks. And you know, it's just super exciting to watch those people start to come together, so. Yeah, they're crushing it.

Dan Austin: [31:22] Yeah, I'm looking at Dylan's deals right now that has breakdown in like SMS leads, direct mail leads, both which we heavily preach Uh-huh. And just crushing it. And you got a little little five k bumps here and then $60,000 profit here, $30,000 profit here. It's like, it all adds up and like, that's what we try to tell our partners too. Like, a little five k bump, it is worth your time.

Mike DeHaan: [31:41] Mhmm.

Dan Austin: [31:42] Because you gotta do a few base hits. Then you get double, then you get a home run, then you get a grand slam. It just it just is so additive in this business. Don't think that just because you only can make $10 on an average on a deal doesn't mean you're gonna pop out $60,000 profit here and there. Yeah. Because you do.

Mike DeHaan: [31:56] I mean, it's all about just getting the systems, the consistency going, and since that's what we focus on is like how do you build this as a repeatable system and not as something that's going to make you be like a slave to it or you get like kinda lucky one time. Right. It's just so cool to watch people get to that point where they're like, kinda like doing the thing, I'm not just doing it once. I'm doing it over and over and over again. Yep. And that's where, like, lives start to get changed. So that's been super cool. That has been fun. But yeah. So, anyways, anything else? No, man. Brian into the rest of the summer. So we're rolling. So right on, guys. Well, hopefully, you enjoyed our ramblings of the week. If you did, you should share this with people. It's the easiest way for us to grow the show is for you to tell your friends, anyone that you know is into real estate or investing, or just wants to know like how to make money. Even if they like don't really wanna do real estate or invest or do business, they just wanna do the mental masturbation as Alex Tremozi always says, of listening to people talk about making money, you should enjoy the show. You might enjoy it.

Dan Austin: [32:59] Yeah. Mike's not fluent. He can talk about money all day long.

Mike DeHaan: [33:02] Goddamn it.

Dan Austin: [33:05] Doug, let that one go.

Mike DeHaan: [33:06] I know. I accidentally buried myself with that. So anyways, guys, go and share with people. That's a great way to help us continue to grow. You should also follow us on Instagram. I'm at Mike underscore invest. Dan is at investor man. Dan, shoot us a DM. Let us know what you think. Let us know what you're doing for investments, and we would love to hear from you. Believe it or not, we do this because we want people to reach out to us, not just because we kinda, you know, feel like it wanna be behind a mirror or whatever. Yes. Reach out. So reach out. Just know what's going on. And, appreciate you guys. So thanks for listening. I'll talk to y'all next week. See y'all.