Creative Strategies in Closing Deals and Finding Buyers

Mike DeHaan: [0:02] On Air Brands. Things are kinda weird right now. Things might go down in, the next couple of years. But five, six years from now, that project that you were so pissed off about that has been been cash flowing for a little bit and has now gone back up in value, and now you've built up some equity, and now you're able to sell it and make really good money. You're not gonna give shit not that one that got got pinned down.

Speaker 2: [0:24] 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: [0:48] What's going on, everybody? Welcome to episode 42 of the collecting keys real estate investing podcast. 42. We're we're 10 away from a full year from 52 episodes worth.

Dan Austin: [1:00] That's that's pretty good. That's pretty cool. Yeah. I feel like we're we're that's, like, a 1% podcasting just to make it to

Mike DeHaan: [1:07] Make it to one year.

Dan Austin: [1:08] 52, 52 episodes, honestly.

Mike DeHaan: [1:10] Well, I I think the statistic they say is, like, 90% of podcasts that start never make more than 10 episodes or, like, never make it that far.

Dan Austin: [1:18] We're in top 10%.

Mike DeHaan: [1:19] Yeah.

Dan Austin: [1:20] Welcome back. Collecting Key is a top 10% podcast worldwide.

Mike DeHaan: [1:24] In terms of episodes and nothing else. But, yeah, it's been an interesting last little bit here. This business, man, like the stories you get from sellers and, like, these transactions, like, just can't make stuff up.

Dan Austin: [1:42] They're the stories of legends.

Mike DeHaan: [1:43] It it is. Like, it it's, like, nonsensical. Like, it sounds like a a silly movie, like half the things that happen. Like, you know, you think of these ridiculous situations that happen in, like, early two thousands comedy movies. You know, that's, like, the kind of stuff that happens all the You

Dan Austin: [1:59] can't make it up. It's just like you sit around, like, you could just sometimes I do this too. Just, like, think about sellers and, like, their face pops in my head or, like, the story or, like, a picture that I see of a seller in one of James' photos, like, pops in my head and then the story comes in and I just laugh. Like, the base the baseball bat I have in the background here. Right? Yeah. Right. I mean, that's a great seller story. I mean, is seller junk. Right?

Mike DeHaan: [2:21] And like Yeah.

Dan Austin: [2:22] That whole property, that whole situation is so weird, but that was like an average story.

Mike DeHaan: [2:26] I know. Yeah. If you have you go you go check out check out this video on on YouTube. We have this baseball bat that Dan has propped up on the wall behind him. It has James' name burned into it, which was left for us

Dan Austin: [2:38] by the Our act manager.

Mike DeHaan: [2:40] Yeah. Yeah. James, our act manager. Have from our our the seller, like

Dan Austin: [2:43] Well, this is why they

Mike DeHaan: [2:44] didn't like him, I guess, and burned his name into a baseball bat because it was for him and left it in the garage.

Dan Austin: [2:50] I don't know. They they did some weird shit, but, like, they just told story of them. I mean, this was a crappy, crappy house. Yeah. I had no idea that the seller lived across the street.

Mike DeHaan: [3:01] Oh, yeah. You're right. It was the kid that carved the baseball bat that burned the name into it. Yeah.

Dan Austin: [3:06] Yeah. But I'm like, this house was junk and trash and like the whole neighborhood did not like it. Right. But like it was just sitting there. I mean, there's the whole front yard, the whole backyard, and then the seller was across the street. All she had to do is walk over there and tell them to pick up their shit. She I didn't know she owned it. Then like them packing it all in an RV and they still had so much crap there and poop. The whole basement was filled with poop. So weird. Yeah. Yeah. That's an average story, though.

Mike DeHaan: [3:32] That was. Yeah. Classic classic hoarder house. But the current one, though so we have this letter that went out, and this person calls in at 01:30 in the morning, which, you know, sounds weird, but, like, it is kinda weird. But, also, I mean, I don't know. We market to a lot of crackheads, so people you know, they're on their own time. They're been sleeping all day coming off of their high and then decide to call us at 01:30 in the morning. But the person that was on the phone was, like, surprisingly, like, up like, high energy, like, upbeat, like, very sort of put together sounding. So it was a really strange sort of call, and we trying to figure out, are they, like, in Europe? Are they, like, overseas somewhere and it's, like, morning for them, and they don't understand they're calling us at 01:30 in the morning, which we we've done deals with people overseas before, like owners, who live out of the area now and just kept the property here. So we're trying to figure it out, doing some research on the property, and then we're like, well, there's a senior tax exemption on the property. So maybe there's, like, an older person that lives there, and we're dealing with, like, the kids or something like that. So, basically, James shows up to this house. And there's this older lady there and, you know, comes out, and it we didn't realize that she

Dan Austin: [4:48] was laughing.

Mike DeHaan: [4:49] I I shouldn't laugh. It was kinda messed up. But she's like, she was deaf and mute. Right? And so she has, like she's literally unable to communicate in a normal way. So James is having to, you know, communicate via message. And how this lady was able to call in, again, why she chose at 01:30 in the morning? I'm not entirely sure, probably, because she might be a crackhead. But she, like, goes through this service, which is actually kinda cool. Basically, she gets on Zoom. The person calls us, listens to us, signs back to her, and then she, like, signs to them. And, you know, they say that she have a communication over the phone, which is which is pretty cool. Right? But, anyway, like, it's super weird. This old lady who can't hear, she can't speak, squatters have moved into the house against her will and are now cohabitating with her. And it's become a situation where they're all just kind of okay with it. Like, she isn't, but she doesn't wanna leave and doesn't really know what to do. And I think is also benefiting from their drugs, or at least that's what James said. So she's just kind of, like, letting them live there, and she calls them her guests. But it's just like a constant revolving door of these drug addicts that are coming in and out of this house while this lady owns it and lives there, and then just, like, lets that happen.

Mike DeHaan: [6:04] Or is, like, unable to stop that from happening. Even though, I guess, if she called the police and was like, hey. I have these trespassers. If you get them removed. But she doesn't wanna do that. Or maybe because she can't freaking call them. She can't speak or do anything. It's just like it's just like She can't talk to him.

Dan Austin: [6:18] She can't talk to him.

Mike DeHaan: [6:18] She can't do anything. Right?

Dan Austin: [6:20] I like with Helen Keller here, man.

Mike DeHaan: [6:21] Yeah. Yeah. Pretty much. Like, honestly, though. And so it's like, what we're having to do is she decided that she does want out. And so we're buying this house, and we're working with the people that use, like, the Zoom system that she works to help her negotiate to buy a mobile home that she wants to move into with the money she's gonna be getting. And so there's, like, this whole culture of, like, the the mute and deaf support community that we're now getting involved in to help this lady complete a transaction so she can escape this the illegal roommates that have just moved in with her and are now cooking meth in her kitchen. Like, it's just like it's

Dan Austin: [7:02] I I can't wait. I can't wait to give this to our closing agent because she, like, she our closing agents deal some shit. But I cannot wait to see her face when this shows up on her desk, and she has to have a Zoom session open with this deaf mute, maybe a meth or crack addicted seller.

Mike DeHaan: [7:20] Yeah. I think it's more than 50% likelihood that she's also using. But, like, yeah, it's just such a weird deal. You know? And it's like the kind of stuff too you look at. People are like, you know, investors charge so much money for their deals versus realtors, whatever. But, like, this is the kind of thing that, like, 99% of realtors I know for a fact would be like, yeah. I'm not gonna deal with this. They they can't even DocuSign. I have to get off the golf course. I'm not gonna deal with this situation.

Dan Austin: [7:47] Well, we bought at such a low price that the commission, again, you're right. They're like, no. I don't deal with that. Yeah. Unless, I guess, you're super thirsty or hungry, but then they also probably a lot of, people that would be that super thirsty are probably newer and they'll have the skill set or tools that work through this type of transaction where there's just so many roadblocks. So many.

Mike DeHaan: [8:05] So many. Yeah. Exactly. And and, you know, and it's a pretty high risk sort of deal as well. I mean, we're having a low price, but it's major fixer upper. You know, we're gonna have an unknowing number of squatters you're gonna have to deal with. Like, it could be two. It could be 10. Like, you know, it's a high likelihood when they know that the property sold that they should go and just steal everything from the house, like the furnace, the hot water heater, rip all the copper out. Like, all those sort of things, it's a high possibility it gets stolen before we sell it. I'm sorry.

Dan Austin: [8:37] Before we buy we have to do, like, the the board board shit up type thing. Yeah. But the other thing, I mean, we got a such a price point. It's almost worth just bulldozing it, and then we can build a new house on it or a new dupe a new duplex.

Mike DeHaan: [8:50] Yeah. If it was in a better neighborhood, I'd say so for sure. I just don't know if I like that neighborhood for a new build stuff. People are doing it over there, though. But I mean yeah.

Dan Austin: [8:59] People do. Yeah. Bulldoze and put a trailer on it.

Mike DeHaan: [9:02] Yeah. Right. Throw a mobile down. Honestly. Yeah. I mean, when honestly, though, now with how the with how the city of Spokane has changed, and they're allowing you now to build duplexes everywhere, there's probably a lot more value in it than there would have been three weeks Yeah. But Yep. So yeah. So we're dealing with that sort of situation right now. And then we have another one, which I'm is a screaming deal, but there's so many red flags on this deal. So James, our acquisitions manager, who's local here, has never actually seen the seller, which is highly suspect and worrisome to me, yeah, on this deal. I don't even know this yet, Dan. But so he's been working with, like This is the

Dan Austin: [9:49] one we got under contract already?

Mike DeHaan: [9:50] Yeah. So he he's he's work been working with, like, this other person who is, like, helping them, but isn't affiliated with the family or the lady that owns it. And James has never actually seen the owner. And when when the contract got signed, because the person couldn't do DocuSign, he went to the house, met, like, the contact, and then the contact's like, oh, yeah. I'll get her to go sign it. And, like, went inside, got it signed, and then, like, came out with, like, a signed thing. James has swung by the house yesterday and, like, hasn't seen the person. So there's some weird stuff

Dan Austin: [10:27] going dead in a freezer. This person's in a freezer.

Mike DeHaan: [10:30] It might be. Like, honestly. And I and, like, we're kind of at a point well, James said the one one thing that is positive is the handwriting is very distinctly different from what this guy, like, wrote on some of the things versus the signature. But even then, like, who knows? So so I made it very clear to James that he needs to go and get have a conversation with this seller to make sure that we actually know what's going on and that she's actually doing this at her own will before we do anything too serious. But There's some bangers. Because there's apparently

Dan Austin: [11:07] I love it.

Mike DeHaan: [11:08] Some serial killer who's trying to, like, sell the house of the person that he murdered. Like, at least that's what it feels like. You know? I'm just like, oh my god.

Dan Austin: [11:17] Yeah. Just It has it has been a hell of week just on on every front. Right? Like

Mike DeHaan: [11:21] So much baggage.

Dan Austin: [11:23] You know, we have we have our, one flip that were our last one, our last bit of inventory. The neighbor hates me. She's been calling me over and over and over like three times a week at least, telling me to mow the grass.

Mike DeHaan: [11:37] Yeah. I mean, you know, maybe you should respect the neighborhood, Dan. You're just being such a

Dan Austin: [11:43] should. And normally, here's thing, is normally I would. No, you're absolutely right. Normally, we try to do that. Like we wanna don't wanna be like, it's a nice neighborhood. But the issue like the issue is it's like, lady, we're pretty sure people are being sex trafficked through this house before and lots of drugs. I mean, found drugs there when we walked, right? Like people doing drugs. You should be happy. You should be thanking us that we're cleaning up your neighborhood. Instead, she's calling about the lawn being an issue because it's overgrown, which is not like a big lawn. Like you can't see it from the road because this house sits up high. So the only parts that look like crap are like, I think next to her house where the fence where she can see into the backyard. Yeah. Which is fine. I get it. But anyways, she called the fire department. She's filed city complaints, which if you know anything about our city, doesn't mean anything. They have no way to find you or there's nothing they

Mike DeHaan: [12:32] can do.

Dan Austin: [12:33] There's nothing they're going to do for your grass. Don't. But anyways, I guess the positive thing is a firefighter went there because they called the fire department on us. The dude calls me and he's like, Hey, just so you know, the back door here is open at this house. And I was like, Oh yeah. And he's like, Oh, by the way, you should mow the lawn so the lady stops calling us. I was like, Okay, yeah, I'll take care of it. So anyways, they sent her handyman out there and he's like, Yeah, we're going have to put some padlocks on all these doors. There's like three doors to this house because somebody had broken in and taken a shower in the house. And I was like, what? Who does that? So I'm wondering if it could have been somebody related to the old seller. Again, it's not like in a weird neighborhood or a weird area where homeless people would be walking by. But then again, the homeless population is crazy right now. Maybe they're just everywhere and there's zombies just walking around and see that because it would be really hard other than the fact that it probably looks vacant because the lawn looks like shit.

Mike DeHaan: [13:33] There was weird stuff going on with that house though, before we bought like, like, we don't we don't we still don't know what the full situation was, but there was, the seller that was living there that had all these subleases with, random people that she refused to give us any information on and was, like, just a it was a revolving door. And at one point, think she said, more than 60 people have lived in this house over the last couple of years. Right. So I'm like, is it you know? And and I asked her. I was like, is this like a like a women's shelter? Is this like a rehab facility? Like, we don't care. We just sort of need to know, especially if it's like, you know, there's been people coming back, like, being like, oh, where'd my my women's refuge go? I was like, well, sorry. Now it's gone. Yeah. Like, is helpful information that would be good. No. And she refused to tell us, so I'm gonna assume that it was something highly illegal. Otherwise, she would have given us some level of information.

Dan Austin: [14:26] They yeah. They're doing some shady, some weird. I mean, obviously, we found guns and weapons and drugs and all sorts of stuff at this property that was just like, okay. Whatever.

Mike DeHaan: [14:34] You know what I mean? Yeah.

Dan Austin: [14:36] Full of the whole place of full time. If you go on

Mike DeHaan: [14:37] our Instagram, we actually have like a little a little tour that we posted where you can go and see all the stuff. And they were so spiteful about it. They left all their their, like, this frozen meat in their freezers and unplugged all of them before they moved out.

Dan Austin: [14:50] It was so bad. Yeah. It was so bad. They'd left a big dump in the toilet. I mean, did everything. I'm pretty sure they brought garbage to this house. Anyhow, that's old news. All that we got over that. We cleaned the house out, all that sort of stuff. And we've been sitting on, we're about to start, I don't know, are we gonna start construction on like next week, you think? Is that what we're gonna I

Mike DeHaan: [15:09] think so. Did the guy No, call

Dan Austin: [15:11] he didn't call me. So that might be another story. Yeah. Anyhow, so yeah, we got that all done, but I'm like, somebody's bringing in to take a shower. Like what? What the hell is going on here? You know, so long story short, I'm glad I didn't move along because then, the firefighter friend called me and wanted to make an offer on the house. You know, I'm like, he's like, yeah. So my friend went there, he's a firefighter and said that your lawn needs to be mowed on this. I was like, Yeah, yeah, yeah. He's like, Man, it looks like you're gonna scream a deal on this thing. I was like, Yes, but that does not mean that the sales price is gonna be any different than what we're asking for it. Anyhow, I haven't heard back from him. Should call him. Yeah, you know, so where something bad happens, somebody breaks in because your lawn is unmowed because you're being a shitty neighbor and takes a shower in your house, it brings you an offer on a property before you've even renovated it.

Mike DeHaan: [16:00] Yeah. Right. Maybe. Or is it typical firefighters out there talking talking shit about whatever schemes they're working on? Yeah. It seems to be like that that age demographic, young firefighters, man. Spend a lot of time.

Dan Austin: [16:13] Yeah. They're like, dude. Yeah. I I I only I work like six days a month. I $120 a year. It's got my side hustle over here.

Mike DeHaan: [16:20] Yeah. Right. I mean, good for good

Dan Austin: [16:22] for them, the ones

Mike DeHaan: [16:22] that do it, but there's also a lot of them that just go off. Yeah. Exactly. Just kidding firefighters. We we nothing against you firefighters, just a stereotype that is always true.

Dan Austin: [16:33] But Yes. Always true. You guys are always in great you guys are always in great shape.

Mike DeHaan: [16:38] Exactly. Yep. Don't walk on. But yeah. I mean

Dan Austin: [16:43] Well, which does remind me. I did I did I did hire a personal trainer just so in case the listeners care. I did hire your coach Will.

Mike DeHaan: [16:51] Oh, did you really?

Dan Austin: [16:52] Which has been working out great. Yeah.

Mike DeHaan: [16:53] Nice. Yeah.

Dan Austin: [16:54] How long have you been working with him for? Maybe a month now. Nice. To get to get Doing like a lot of rehab stuff on my my injuries, and so that's been helpful. He's been programming for me around those sorts of injuries, which is better than what I'm doing. So, yeah, that's it's a health goal of mine this year. So Sweet.

Mike DeHaan: [17:11] Right on. He will get I'll get from a plug then. So both use them now. So, yeah, if you're into fitness and you have injuries, things like that, I was the same when I started working with them just from my years of beating my body up doing dumb shit. But, yeah, I work with Will Trujillo, think his name is from Crafty Coaching. He does remote coaching stuff for his physical trainer, physical therapist. Does a lot of rehab work and now does my strength training stuff. Yeah. Check it out if you need a need a coach and reasonably good price for what you get to for all custom. It's not like a templated plan.

Dan Austin: [17:41] Oh, yeah. Yeah. Yeah. No. And I chat with him, like, on every workout, like, message him. Like, he messages you back and you can give him stuff and he passed it back and forth. And so I'm I'm really happy with it. It's definitely been helpful to have so many programming. So, for me, if I have a you know, a I'm just a fitness person in general, but also when you're busy programming it is the worst. It's like eating hell. I always put it together too. It's like the worst part about making dinner is thinking about what to make for dinner when your family gets home from work and school and that. It's not actually eating it. It's just the thought or making it. It's the thought of actually having to figure out what you want. And so when you have somebody programming your meals or programming your parts of your life, it's way easier. Yeah. It makes it easier.

Mike DeHaan: [18:21] Exactly. Yeah. So, yeah, I mean, and if you're into entrepreneurship or, you know, anything business related and you're not taking care of yourself, then you gotta figure that out. Because honestly, it's so much easier to focus and just to have more energy when you're not a fat sack of shit. So and you have some level of strength and conditioning. The physical strength and conditioning carries over the mental. That's 100% sure.

Dan Austin: [18:45] Absolutely. Anyhow, that's a super side tangent, but I keep meaning bring that up to tell you that I've been using them. So thanks for the for the referral. But, hey, you know, we're we're here to talk about all aspects of life. Yeah. Just real estate. One of the

Mike DeHaan: [18:55] two. Life business real estate. The instant investor program is our twelve week group coaching program, which includes a self driven course and access to our private investor community. We will take you through the full process of how we find our leads, how we market, how we do our sales and follow-up, and how we determine the best strategy for every opportunity that comes our way. On top of that, you will also join a community of other like minded investors nationwide that are all marching towards the same goals, and you will have direct access to Dan and myself so you can continue learning and growing with us as we continue to adapt and grow our business. So whether you're a new investor or already established, our systems can help take you to the next level. So if you think you might be a good fit, go to the instantinvestorprogram.com and schedule a call, and we can have you talking to motivated leads in as little as two weeks. Sounds like we finally got an offer on that other cabin that we fixed up. So we bought these two little dinky lake cabins last should we buy those, like, April, maybe? April, March, something like that. Yeah, somewhere there. Yeah. One of them we sold, we renovated and sold pretty quickly for cash offer, no real contingencies. The other one took a little bit longer to fix up

Dan Austin: [20:01] just because it was a

Mike DeHaan: [20:02] little bit bigger. We have a little more problems with it. And of course in that process to renovate the second one, the mark started to turn. So we've been kind of trying to figure it out. But I think you got a cash offer you said. It's a little bit below ask,

Dan Austin: [20:14] but Yeah, right now it is. I think we'll I think I'll negotiate with it. But I mean, this is like to all you haters out there that do not want to buy this deal because we did try to wholesale it. I know. So, know, we were under contract total on it was like, was it 300 for both of them?

Mike DeHaan: [20:27] We paid 300 total for the entire thing. So

Dan Austin: [20:32] Yeah. And so we wanted to let it go for like $3.20 and then overall our basically our, our, total exit on both of them is going to be over 500. So it's like, there's plenty of room. I mean, is that? That's a lot of room right between the two of them. And so, but people like, oh, there's nothing to do with that. Nothing to do with Well, we had a lot of interest on them and cash offers.

Mike DeHaan: [20:55] Yeah. I know. And this goes back to what we've talked about so many times, tricky thing with finding buyers on any deal right now. And I I just and, like, again, I can't understand. Like, this one, it was very clear. We were at $3,300. We tried to sell them for, I think, $3.30 is what we're trying to dispose them for. And literally, no one even wanted to look at them because aren't, like, on the water. And everyone's like, no one wants a lake place that isn't on the water. And I was like, that's what your privileged ass person with money thinks. Yeah. There's tons of people that

Dan Austin: [21:23] would

Mike DeHaan: [21:23] love to be water adjacent, right, and have a home that's, like, near the water that has, you know, deeded lake access, has everything else. You just can't, like, look out your kitchen window and be on the lake.

Dan Austin: [21:33] Yeah. Right? And so it's lake vibe. Everybody likes a lake vibe.

Mike DeHaan: [21:36] Everyone likes lake vibe. Right? And the the price has to reflect that. But it was two properties for 330 gram we're asking. No one had any interest. And so now our total sale is gonna be over 500 for the two of them. And I mean, the renovation costs across both is probably like 60, maybe 70 for between two of them.

Dan Austin: [21:52] Yeah. $6,070,000 probably. And then you got some carry costs in there. But yeah, I mean, say even if you say we're all in I I gotta run the numbers. Say we're all in a 100,000 on these things. So we're in

Mike DeHaan: [22:01] 400.

Dan Austin: [22:02] There's still over a 100,000 in profit. Yeah.

Mike DeHaan: [22:04] Yeah. We've we've we've over on 400, and we're selling for just over 500 with all of our sales costs. We should net about 75 to 80,000. Easy. So that means if we'd been able to disco it for 30, someone came to same thing, they would have made 50 to whatever thousand bucks. Right? So so and people probably could have renovated a lot cheaper than us too.

Dan Austin: [22:21] Oh, yeah. And that's that's with us doing, like, our renovations, which is like, hey, the wiring is kind of screwed up. Should we just hide it in the walls? Like, no, we don't do that stuff. We just like, we take care of it. Like, we upgraded plumbing, we upgraded electrical, which we could have gotten away with not doing because these are cabins. Like, we did we had to go a little extra mile on some of the rentals, which cost us time and money. But it's like, that's just how, I don't know. I just have a hard time covering things up with paint and caulk when I know it's like a super big dike issue. Yeah. Yeah. So we had to spend an extra thousand bucks rewiring a couple circuits on one of them. Who cares? Like, at least I can go to sleep at night knowing that the 75 year old lady who bought the one lake cabin from us going to die by fire. Yeah.

Mike DeHaan: [23:02] I feel better about it. It's okay. Exactly. So

Dan Austin: [23:05] I guess the moral to the moral of the story is like, just because your buyers won't buy doesn't mean you don't have a good deal. And we've proven that time and time again on almost all of our flips that we typically we're not a full time flipping operation, but we will flip opportunistically and or if we know there's still a good deal, but buyers just won't buy it. We've paid several $100,000 this year by doing that.

Mike DeHaan: [23:26] Yeah. I mean, ease easily. Right? And, you know, also, don't be afraid to get your hands dirty. Think it's a good deal? Because that's another thing that a lot of people will do if they're trying to be a wholesale operation. Even some of the people in our instant investor group, get deals that are pretty good, but they're like, man, I gotta let it go because I can't find a buyer. I'm like, no one can find a buyer right now. Like, not not

Dan Austin: [23:47] Doesn't mean it's a bad deal.

Mike DeHaan: [23:47] Yeah. And that's what we've been coaching people on is, like, get it at an extra conservative price. And if you can get it, be prepared to close on it. You know? And if worst case, you go into it, you start renovating it, and you're like, man, I'm not gonna be able to make as much money for it to be worth it, but you're able to turn it into a rental, then do that. Right? And then just wait it out for, like, a little bit. You know? If you're able to refinance, pull out a good chunk of your money, and just turn it into a rental for a little bit, then you have another exit that you can just wait for a while. Yeah. You know? Because, like, if it's if it's there's a rental, if there's a tenant in there and the rent is covering your base on it, things are kinda weird right now. Things might go down in, like, the next couple of years. But five, six years from now, that project that you were so pissed off about that has been been cash flowing for a little bit and has now gone back up in value, and now you've built up some equity. Now you're able to sell it and make really good money. You're not gonna give shit about that one that got got pinned down. You know, I would say the only caveat being that if it's putting you in a major financial situation or if it's greatly affecting your ability to buy more assets because you're just aggressively trying to grow, then maybe offload it. But let's be honest, it's not most people. Most people are looking to do, you know, one to four projects a year. You know, they have chance to recoup their money, you know, between their deals, whatever.

Mike DeHaan: [25:04] But unless you're trying to do this as an institutional sized business or like a full on business, there's really no point in being cut in your losses if you have these different strategies.

Dan Austin: [25:14] Yeah. And I think about it right now too is, you and I have always talked about having multiple exits. And I think about it right now, for sure, if you're going to be putting properties under contract and you can't sell them, you decide to take it down, give yourself minimum two exits. Yeah. Two exits, like that's all you need, then then I feel comfortable and safe. So you get under contract, you can't find a buyer, what are your two Xs? First is you can still flip it. So you need to have pretty conservative numbers. But if you a lot of times, that's still hard to do is it's really hard to get something in a downward market that you feel confident flipping. But if you can, and you start flipping it, and then you realize you can't get the sales price you want on the back end, your option two, your other strategy is just to hold it. And you can still do a refinance. It's not like banks aren't going to refinance you, especially if you already have a previous relationship with a lender, and they know your business. But then you can hold it even if it's at breakeven cash flow after your set asides. What to your point, Mike, like five or six years from now, you're not going to care. And I can almost assure you with 95% confidence rents are going to keep going up over the next several years.

Dan Austin: [26:14] So maybe your breakeven now after set asides, next year, you're probably going to be $100 positive. You're after that $200 positive. Like that's just to me where I see and have felt rents going right now.

Mike DeHaan: [26:24] Yeah, for sure. I mean, and as the affordability keeps getting crazy and crazy for buying houses, that's definitely not gonna change. Know, think rents might start to come down a little bit maybe, but that's not gonna stop. Like, that's primarily gonna be in places where there isn't a large tenant base, which, I mean, even here in in Spokane, if you look somewhere that people are moving, housing supply is starting to increase, but the tenant base is still so incredibly massive. And now, you know, with the supply of houses increasing, but the interest rates also going up, even if there's more houses available, less people are gonna be able to buy them because they can afford so much less house than they could have a couple, you know, a year ago.

Dan Austin: [27:01] Yeah. One, if you think about it, think we talked about it last week was that for the first time ever, not percent ever, for the first time in recent years, it's more affordable to rent than buy. I know. And that's because interest rates have gone up. And if I'm thinking about this, I'm going to start thinking out loud here for a second is that if you if you look at it, that over the last several years, interest rates have been super low. So people have been able to afford more housing. Typically, the people that are still renting during that time are folks that A, have really poor credit and just can't get a loan or B, don't have enough down payment, even that 3% FHA down payment. Those are the ones I'm saying are forced to rent. And so what's happened during that period of time is everybody in America wants to live the American dream, so to speak, and buy that house. So as people are buying up all this inventory, there's less and less rental stock out there. And so everybody's these millennials are finally getting their first house. They're finally out of the financial crisis. They're finally able to save up that down payment, buy their first house, maybe they're stepping up into another house. And at the same time, are these people that are being forced to rent. And that property that was a rental is now somebody's home.

Dan Austin: [28:07] And so that's off. Now you have decreasing rental units available also at a time where people are coming of age with the Gen Z and then millennials are finally moving around their parents basement or whatever the boomers always say about us are moving out, right? They're expanding their families and all that sort of stuff. And so there's just a lack of supply, which is continuously driving that up. Well, now we're at a different point. It's not that people are trying to are buying off that stock. What it is, is that it's just more affordable to rent and buy because people can't buy. So that now there's going to be more people on the rental side. So what I'm saying, I guess, long story short is it really seems like at least in my time, rent rates usually always go up. Yes, sometimes they can soften a little bit, but bad economy where it's more affordable rent, more people are renting. Good economy where interest rates are low, people are buying off that rental stock, driving up the demand for rent.

Mike DeHaan: [29:00] Yeah, exactly. You can't lose. Mean, the real estate is consistency over time with everything. You know, the trends are that every part of it goes up over time if you look back as long as they've been tracking it. Right? So whether that's rental rates, that's housing prices over the you wait long enough, they will increase in value, which is like most investing. You said houses, most like, lot of stocks if you're buying high quality stocks or like that. I think the only thing maybe not is is cryptocurrency, but even then, that's a whole other ballgame. But yeah. I mean, in in going into these deals as well, one of the things is is as stuff starts to shift, you know, if you're worried about prices coming down, you're worried about being able to sell properties, those sort of things. We've been doing a lot more creative financing stuff. We actually have two right now Yeah. That we're buying on well, we're we're we're buying them with a creative financing in terms of basically a seller wrap.

Dan Austin: [29:55] Mhmm.

Mike DeHaan: [29:55] So we're taking over their mortgage. We're to the seller wrap. So their existing mortgages stay staying in place. We're taking over their mortgage. And then in order to get the surplus that they need, right, the sellers are are willing to wait out for a little bit. The surplus that they need for their profit, we're basically having them carry a second mortgage on it. Right? So for example, in this one I have right now, their their current mortgage is about 90,000. We're gonna do a second mortgage of about 60,000 to get them to a $150,000 total sales price, which is more than we can pay for cash. 0% interest, right, on on their second mortgage. So all the payment depends can be going to our principal. And then our exit on it, which is gonna be pretty interesting. We've never done one of these before. But our our dispo person over in that market, they have a buyer that is gonna buy it from us on another rep. So we're gonna see how how that amazing. Which is amazing. So they're basically gonna pay us a down payment to secure their spot, which is where our, like, major business profit's gonna come. And then we are selling it to them on terms with a amount that's larger than our total amount of the subject to plus the second mortgage. We will have monthly cash flow every single month as well as principal being paid down on the second mortgage on the second note that's ours. Right.

Mike DeHaan: [31:15] And then they're gonna have basically a five year balloon, the end buyer will, where they have to refinance us out, and we will be able to collect in cash at that point. You know, obviously, that down payment we've already got, and then all the principal they've paid down over that that five years, plus all the interest that we've collected that we're charging them for the opportunity to do it. So I think if you look at it, the total let me see if we find the exact numbers on here. It goes from being a deal where there wasn't really anything there. Our total profit if they exit us in five years is a $119,000 on this deal.

Dan Austin: [31:50] That's pretty amazing.

Mike DeHaan: [31:51] On a 100 and

Dan Austin: [31:52] Right. I mean, create a deal.

Mike DeHaan: [31:53] Purchases, create a deal. Yeah. It's gonna take four years to do that. Oh, sorry. Five years to do that. But if it goes out, like, that's pretty awesome. If all goes off, there's a lot of moving parts. It's pretty complex. But Right. You know, something we've been we've been working to learn about. We have a guy on our team that's really sort of skilled at at crafting these different scenarios. And, you know, we have a dispo person in that market who's skilled at finding individuals who are wanting to buy houses this way. And basically said that that the key buyer for this is culturally Hispanics, they don't have a lot of credit. It's very often it's very common for them to have a lot of cash because they they don't normally use banks and stuff like that quite quite like like, you know, white Americans do. So they're not lendable. Right? Like, they can't show bank accounts. They don't can't show credit to a banks. They can't get mortgages. So what they do is they'll buy these sort of, like, seller wraps with these creative deals from investors because it's the only way that they can own a home.

Dan Austin: [32:51] Right.

Mike DeHaan: [32:52] And, you know, so so our guy that we're working with over there, he's like, yeah. So typical practice what it goes is, you know, they get into the property over the next five years. They know that they have to save x amount of money to buy you out, and that's what they do. And then they exit, and they take pride on it. Like, he's like, I wouldn't be surprised if it happens even a little bit earlier. So.

Dan Austin: [33:08] Wow. Well, I mean, it's just such a cool thing too. And why everybody's saying, Oh, you can't buy right now, you can't buy. They're sitting on the sidelines. This is a strategy to actually continue to buy and continue to grow because everybody knows people because this is where you become a millionaire is when everybody else is on the sidelines, you're buying during these kind of downward markets. It goes back to reminds me of like Brandon Turner always talking about putting your team in place. And I would say we've kind of grown past that piece. But like when you think about it, who is our team? We know we need a great dispositions guy on the ground and we have him who's kicking ass and he knows how to sell these types of contracts. We needed somebody that can negotiate these with sellers that could figure these out. So we got that person on the team and we'd really truly did build our team or we added to our team. We supplemented our team to adapt to the new market.

Mike DeHaan: [34:00] Yeah, for sure. And the thing is with these creative deals, you look at the profit potential on this. Right? So it's a house that, you know, market value just looking at the notes here again. Market value, we have at about a 190,000. We're banging for a 150 on this wrap. K? So wholesale is not really anything flipped. There's not really a whole lot of juice there. So it's a $150,000 purchase, and our total profit after four years is gonna be a $119,000. So everyone thinks that you have to do all these ridiculous deals. That's ridiculous. Right? It's like you you think this $180,000, this is what, like, small time syndicators that are syndicating 12 to 25 unit apartment complexes try to get on their syndications over four years. We're gonna get that same profit on a $150,000 single family home. And I would say it's less less waste money. Our out of pocket zero because we're actually getting paid Zero. We're getting paid to buy it because we're gonna be charging a down payment to our end buyer. You know?

Dan Austin: [34:56] Ain't that cool?

Mike DeHaan: [34:57] And you think about you want know, someone says they wanna be a millionaire. If you can structure a $119,000 property, you can structure 10 deals like this, you just made $1,200,000. Right? There you You mean

Dan Austin: [35:06] 10 deals. That's the solution.

Mike DeHaan: [35:08] 10 deals with single family homes. That's all it takes.

Dan Austin: [35:11] Wow. Yeah. And no money out of pocket.

Mike DeHaan: [35:13] And no money out of pocket. I mean, money out of pocket for marketing, but, like, that Right.

Dan Austin: [35:17] Yeah. Yeah. We ran our business systems. Right? But as far as, like, to acquire the properties, man, that is, I mean, mind blowing.

Mike DeHaan: [35:23] Yeah. I mean, I'm I'm having my own mind blown right now as I think about it as big picture. Like, I haven't really Right. Yeah. I've got holistic It's like we

Dan Austin: [35:29] well, honestly, like, we've put all these pieces in place because we, like, knew it was, like, an important pivot we need to make. Like, we started doing this a couple months ago, actually longer than that. But now, yeah, you're saying it out loud. I'm like, oh, shit. That's that's why I maybe I didn't even think it was gonna good.

Mike DeHaan: [35:44] Oh, yeah. It's it's a good deal, man. Like, that's bigger than I pursue these. And then, like, so we have another one in the same market that we're doing this with. And our total profit I mean, on the bottom. Total profit at four years is $73,000. Right? Wow. So, you know, not quite as sexy as a 120, but still that's pretty dang good to having no money in the deal.

Dan Austin: [36:07] Balance out. They balance out. You know? Like, $1.20 plus, like, 80. It's 200. It's $100,100,000 dollars a deal.

Mike DeHaan: [36:12] Well, either way, that's that's $200,000 off of two single family homes, both of which have a an ARV under $200,000.

Dan Austin: [36:20] I thought about this the other night while I was laying in bed Yeah. Because that's what I do with a 1.5 old at home. Yeah. Maybe I would, would you sell your house like your primary like this?

Mike DeHaan: [36:32] I'm like a wrap like that. Yeah, I think I would.

Dan Austin: [36:36] Yeah. Because I was thinking about it, right? So with the high interest rate, so I have, just full disclosure, I have a 2.25% interest rate on my home. Super low rate. Really awesome. My house is worth more than two times the debt, right? So it just wouldn't make sense to just do like a substitute of my loan and my loan is assumable. So I have this huge stack of equity in there. And somebody that's going be buying my house is probably going to be more of a high net worth person and will have the down payment. But they also might be sophisticated enough to understand like, hey, I can assume his debt at 2 and a quarter and then pay him say a down payment, maybe a couple $100,000 down payment. And then have me carry it. I would even carry that like say current interest rates are six. I'd even be willing to carry it at five or six, like somewhere that I wouldn't want to, I wouldn't need a premium. But I'm also getting a pretty decent down payment out of them. And then I'm getting my recurring income from that equity. But the most important thing to me is then I can offer it at a higher price. Because naturally if my house, when I bought it, say it's 2.25 interest rate, I understand that if I'm selling it at a 6% interest rate, it's likely not going to sell for what it should have sold six months ago when rates were lower. Right? So now I can sell it for what I want to get out of it. I guess is my point.

Mike DeHaan: [37:55] Yeah. Yeah. Mean, think I I primary when you put it on the end there that could you be having to sell at a lower price than you could have a few months ago, for sure. I mean, in a lower interest rate environment, I wouldn't do that because, you know, if you sell your primary, you live there for two years. It doesn't make sense. It's all tax free. Right? But I would consider selling pretty much all of my rental properties like that. Especially right now, if someone's going to buy, like, one of my if I decide to sell one of my single family rentals and someone wants to buy it, but I don't wanna pay a shit ton of taxes, and they don't wanna have a 7% interest rate. Say, like, hey. I'll give it to you at a 5% interest rate. I know you're willing to pay 400 for it. I'll sell it to you for $4.50 at 3%, and and I just need this amount of down payment. That way I can recover some money that I can roll over to something else, but then I'm also not losing my cash flow. And I'm getting at a higher interest higher price point at the end of it. So Right. I mean, I think there's if you're looking to offload properties right now, and all a sudden, you're not getting the offer prices that you want, that's definitely something to explore.

Dan Austin: [38:53] Abs I think so. And especially if you like the mailbox money idea, and you don't necessarily need access to that capital right away. Yeah. I I know for some of my my personal rentals, that's how I'll probably exit them.

Mike DeHaan: [39:03] Yeah.

Dan Austin: [39:04] Like my longer term holds and stuff like that is some sort of seller financing or something.

Mike DeHaan: [39:08] Yeah. You gotta do is just bundle it. Right? So I was asking about this too. Was like, I have all of my stuff in Spokane. Like, What if I just like bundled all of them and sold them for like a small premium, but as like on terms? So I was just getting like fat mailbox money without really having to do anything because I've offloaded all the risk on it. And it would just be a one singular chunk that came in. And, you know, I'll do that on appreciation and stuff like that. But, I mean, all my properties I have in Spokane are pretty desirable, so I'm gonna probably explore down the line. Yep. So anyway, cool guys. Well, this was a a show of just catching up with us, all the things we're working on. Obviously, we have a lot of different opportunities that we're pursuing right now. Anything else you wanna add, Dan, before we sign off here?

Dan Austin: [39:50] No. Yeah. I mean, if you guys want to participate in these opportunities, give us a call, hit us up on Instagram, whatever it is. We love working in several different markets. We'd love to partner and do JVs with people, teach you how to do it, whatever. Yeah. We're

Mike DeHaan: [40:03] here. Yeah. We got we got lots going on. So we've been doing JV with people in different markets. So that's something that interests you, hit us up on Instagram. I'm at Mike underscore Invest. Dan is at InvestorMan. Dan, you can also send us an email at Mike@CollectiveEastPodcast.com if you wanna talk about that. If you wanna learn how to do this yourself and you wanna make big money on your own, if you go to the instantinvestorprogram.com, it's our group mastermind program. We have been we've had a couple of our our folks really starting to get after it. One of our guys on his first batch of mail he sent out, it sounds like he might get two, maybe three deals just on the first first one that he

Dan Austin: [40:38] sent I love his approach. Yeah. He's already got an appointment. His first call, he got an appointment. His second call, he got a referral because he's also a realtor.

Mike DeHaan: [40:44] Yeah. So he's make making some great money right off the bat. So instantinvestorprogram.com. Go in there and book a call with me so we see if you're a good fit for it. It's not for everyone. Mostly for people that really wanna get after it. So a little bit of a application process there, but nothing too crazy. Besides that, follow us on Instagram again. I'm Michael Skornfest. Dan's at investor man. Dan. Oh,

Dan Austin: [41:05] yes. Follow follow follow follow.

Mike DeHaan: [41:06] And if you find this podcast valuable, you know, anyone that would be interested in it, share it, subscribe it, leave us a five star review. All those things are super helpful. And besides that, thanks everybody, and we will talk to you guys next week.

Dan Austin: [41:18] See you all next week.

Speaker 2: [41:20] Thanks for listening. Please leave us a review on iTunes or wherever you get your and check us out at collectingkeyspodcast.com for tips and guides on starting your own real estate investment and wholesaling business.