D.R. Horton Neighborhoods are the next Mobile Home Parks

Mike DeHaan: [0:01] So for longevity, it's fine. It's only been around there for a long time. We're probably a top 50 real estate podcast in the world. You know what we definitely are? We're definitely the number one podcast, period. I would say based out of Eastern Washington.

Dan Austin: [0:15] We are one of the top dogs here. Like, people know us.

Mike DeHaan: [0:18] I don't think there's anyone else that's beating us in Eastern Washington

Dan Austin: [0:21] for sure. There's people that have tried.

Mike DeHaan: [0:23] There's people

Dan Austin: [0:24] that have tried.

Mike DeHaan: [0:24] Yeah. There's even people that go on and falsify their numbers to try and, like, raise raise money or get ads. The thing is you can verify that those things are false incredibly quickly, and it's really funny.

Dan Austin: [0:36] Yeah. But the average person won't do that.

Mike DeHaan: [0:38] No. I feel like an a sponsor would. Like a real sponsor. Yeah. What's going on, guys? Welcome to collecting keys. I am Mike DeHaan here with my cohost, Dan Austin and Dylan Cook. We better go quick today so Dylan can get to his little showing. Is that, a realtor showing or you, like, at a wholesale showing?

Dylan Koch: [0:55] Wholesale showing.

Mike DeHaan: [0:56] Okay. If it's a realtor showing, I was really gonna bust your balls about how business must be freaking No, rough over

Dylan Koch: [1:03] dude. The listing side, I think we'll only do, like, three or four this year. And it's only because, like, our numbers didn't work out.

Mike DeHaan: [1:09] Yeah. It's like or it's like friends and family or something.

Dylan Koch: [1:12] Yeah. We have one friends and family one. They're always tough when you're like, our wholesale offer is gonna be a $150, but you can list it for $2.25.

Dan Austin: [1:20] Yeah. That's a

Dylan Koch: [1:20] tough one. Why like, having that same conversation back to back just never really

Dan Austin: [1:24] goes pitch. Nobody can ever pull that off. It's so hard, dude.

Mike DeHaan: [1:27] That's why you sign them up for your equity protection program, Dylan.

Dan Austin: [1:31] Don't even go there, dude.

Mike DeHaan: [1:32] And then you just scam them out of money.

Dylan Koch: [1:34] I'm not about the novations either. I've done zero novations. I've tried twice, and I'm like, this is fucking terrible.

Mike DeHaan: [1:39] Whatever happened to that guy? I haven't seen any. He's still around.

Dan Austin: [1:43] Yeah. He's still around.

Dylan Koch: [1:43] He still shows up on social media every once in a while. Beat his chest.

Dan Austin: [1:47] Dude, he's diving into, like, the family stuff and, like, trying to show, like, this is who I am. You know, like, they all are. Right?

Mike DeHaan: [1:52] Has he gotten super religious yet?

Dan Austin: [1:54] He's been in the prayer circles before with Chad.

Mike DeHaan: [1:56] I know he has, but, like, is that his entire platform now?

Dan Austin: [1:58] Oh, not yet. No. No. He's not there yet.

Mike DeHaan: [2:00] If it's not, then he I bet he's doing pretty good then. Because I feel like as soon as that starts to become your primary circle, that's when your you know, the business is bad.

Dan Austin: [2:08] I don't know. They all kinda remind me of used car salesman anyways. They really do. That have turned into used car salesman coaches now. Yeah. Used car. Seriously. It's wild. Dylan, you asked something new. I forgot to tell you what's new. Before we were on a pre show, Dylan asked me what's new, and I forgot. I got a soft serve ice cream machine at my house.

Dylan Koch: [2:29] I'm so happy for you.

Dan Austin: [2:30] So I already have, like, a a legit, like, ice cream. Like, I can make, like, Kraft ice cream, like a legit one. And then, my wife was at Costco the other day, and she took a picture and she's like she snapped it on. She's like, it's a $150, and they're they're closing it up. They're not gonna have it again. And I'm a sucker for can't buy this again.

Mike DeHaan: [2:48] Only a $150?

Dan Austin: [2:49] It was Dude, yes.

Mike DeHaan: [2:50] 150 That's

Dan Austin: [2:51] like a good deal, honestly. And so it's super slick. So you just dump, like, my wife bought some, like, ice cream, like, soft serve mix. It's like in, like, a milk carton. Just dumped it in there, and, thirty five minutes later, boom. Soft serve ice cream, like, froyo style. It was frozen yogurt, I should say, that we had. Cause it's healthier. It's only got like a 100 grams of sugar in it.

Mike DeHaan: [3:09] Yeah. Instead of a 120. And it has no fat it has no fat. So so really it's it's like 19 healthy. It's fat free.

Dan Austin: [3:15] Yeah. Exactly. It's fat free. But the dope thing about it is is you could do like, it's got like a gradient. So it goes from like, what do they call it? It goes from like soft serve ice cream down to like slushie. And it has specific instructions for adding alcohol. Slush slushie margaritas, dude. Nice.

Dylan Koch: [3:33] Your kids are gonna be drinking out of this They'll thing out of be like, whoops. Forgot to pay

Mike DeHaan: [3:37] the Forgot to pay the coals out

Dan Austin: [3:39] there stumbling around with this slushie.

Mike DeHaan: [3:43] That's actually pretty nuts. Like like, so how much does it make? Like

Dan Austin: [3:46] It's got, like, a cylinder in it that's probably like if you can imagine taking like a, what is the square milk carton size? Is that a half gallon or gallon milk?

Mike DeHaan: [3:56] Yeah. But it'd be a half gallon. Half gallon, I think.

Dan Austin: [3:57] Half gallon. It probably if you were to like dump one in there, it would probably fill it up with liquid. But when you do, like, the ice cream, you fill it up halfway and it actually expands into, like, like, a half gallon of ice cream.

Mike DeHaan: [4:10] Yeah. Wow. That's a lot. Yeah.

Dan Austin: [4:11] No. I mean, it's it's actually legit because, I was thinking about buying, like, one of them those, Ninja Creamies or something like that, But this is better, I think.

Mike DeHaan: [4:19] Well, yeah. Because Ninja Creamies people wanna make, like, fake ice cream out of, like, fruit and stuff, but you're just trying to make, like, real ice cream.

Dylan Koch: [4:23] I'm not trying

Dan Austin: [4:24] to Well, that and do you have to, like, pre make it? Like, who

Dylan Koch: [4:26] wants Dan, I want you do take your weight as of this morning. Know. I know. See how this goes for the next couple weeks.

Dan Austin: [4:32] I know, dude. I'm gonna have to get on. I was actually thinking about posting. This is like a facetiously, but also like legit in the GoBundance chat. I'm thinking about taking steroids. Any tips? That's, I was actually thinking about this morning and just seeing what people tell me. Because I was like, dude, would be pretty sweet to do some steroids.

Dylan Koch: [4:48] You get so many people like, oh, I tried this and I did X, Y, Z.

Mike DeHaan: [4:51] That's why

Dan Austin: [4:51] I kind wanted to do it. Yeah. That's what I kind of want do. I want to hear everybody's like-

Dylan Koch: [4:54] You gotta layer it with peptides every third day or some bullshit.

Dan Austin: [4:57] No. I don't want peptides. I want the real stuff, dude.

Dylan Koch: [4:59] Just telling you what the people tell you.

Mike DeHaan: [5:01] The wildest thing about those kind of groups, all the people that are always not all of them. The vast majority of the people that are really into the kind of chemical enhancement stuff, they never look like they are into that. So I'm like, if you're not gonna be a fucking freak, why waste your time? Why even try

Dan Austin: [5:18] to poison yourself? Just take the that's why I'm saying. I'm going from zero to a 100, dude. Like, just give me the steroids. I don't know. It seems like an okay thing to do.

Mike DeHaan: [5:25] Like, like, if you're still, like, kinda squishy or you're not that jack, you'd literally just Yeah. Put stuff in your body from some Chinese factory for no reason. Like, don't Yeah.

Dan Austin: [5:33] Get the good stuff from the Chinese factory for sure. Totally. Also, you know what though? I will say this. I'm coming around. You say Chinese factory like it's a bad thing. China's actually coming around with some pretty legit stuff lately, including the robot games, which I thought was entertaining.

Mike DeHaan: [5:47] That's pretty interesting.

Dan Austin: [5:48] I mean, I think they're ahead of their time there.

Mike DeHaan: [5:50] I think they're ahead of their time in a lot of ways.

Dan Austin: [5:51] I mean, like, nowadays, like, it's like, if it comes from China, it may be a rip off from The US or another country, but they may also just be better at making it at this You know what

Mike DeHaan: [6:02] I mean?

Dylan Koch: [6:02] Yeah. Mean, lot of The United States manufacturing is is in China. So yeah. Yeah. I mean, that's where Apple gets most of their iPhone. Like, of it is made in China and just shipped back over here.

Mike DeHaan: [6:13] Yeah. Something I've heard lot about, but I've never seen here I mean, I guess we saw them a lot when were in Southeast Asia, is the Chinese electric cars Mhmm. Yeah. Which are, like, everywhere. I guess they have them all over, like, Mexico and, you know, South America. Pretty much everywhere in the world, can get these Chinese electric cars now. Besides here.

Dan Austin: [6:30] I believe.

Mike DeHaan: [6:30] Yeah. Besides here.

Dylan Koch: [6:32] You know, there's a geopolitical component to this, Mike, about

Dan Austin: [6:34] Of

Mike DeHaan: [6:34] course, Chris.

Dylan Koch: [6:35] Reliance on oil or, like, being the the petrodollar and stuff and trying to trying to get off of that. And basically, well, if you don't need oil for like obviously, they still need it for like manufacturing industrialization, but if you don't need it for cars

Mike DeHaan: [6:47] Yeah.

Dylan Koch: [6:48] I mean,

Mike DeHaan: [6:48] that's a big part. Makes sense.

Dan Austin: [6:50] Well, yeah, it's a big one. And China also, don't think has the amount of, domestic production as as like The US does. Right? So of course, they wanna get off of it too, which it seems like as you this could be the conspiracy, but I think like as The US went into Venezuela to control that and then into Iran to control that, like, those are places that were giving like, Venezuela was actually giving, like, I guess they call what do call it? Black flag ships? Like oil container ships? I can't remember what they call them. But essentially, like, I don't understand why they're doing it, but like Venezuela is like doing ship transfers and all this like black market oil trading with China. Right? And then Iran obviously was a big supplier. So it's like, is The US trying to do that? It makes you wonder like, why are we so interested in those random countries?

Dylan Koch: [7:34] My understanding was it wasn't even like a it wasn't like an inventory problem where you had plenty of oil. It was the refining process, whether it gets turned into diesel or it gets turned into like regular gasoline or it gets turned into whatever other byproducts that oil can get turned into has been like the real bottleneck when it comes to this kind of

Dan Austin: [7:50] stuff. Interesting. Well, I do know The US tried to sell the oil that they got from Venezuela to China. And I think China was like, nah, we're good. Even though they were buying it before.

Mike DeHaan: [8:01] Yeah. Which makes sense. They're like, nah.

Dan Austin: [8:03] And I can't remember. I was I was watching an Instagram video, so it was true. And they were talking about, like, I think The US I don't even think The US was trying to market up. They were maybe even trying to sell it at a loss or something like that. I can't or like cheaper than what China was paying for

Dylan Koch: [8:16] it Well, they had drained the oil reserve. Right? And that happened under Biden, that happened further under Trump to try to rein in the gas prices. And now it's like to levels where it's like, we might be kinda SOL. So I think the thought process was if we could take Venezuelan's oil, like, kind of flood the market with supply, lower the price, and then the government buys it at a lower price and then replenishes it at, like, a lower price, and then it it goes up. Like so just kinda, like, controlling their own supply and demand on their purchase prices.

Dan Austin: [8:44] Interesting. I knew you knew something about that, Dylan.

Dylan Koch: [8:46] Who knows if that's right?

Dan Austin: [8:47] Probably not.

Mike DeHaan: [8:47] Who knows if any of it's right? Even the politicians, they don't know what's going on. They're just like, how do I get more votes? How do I massage whatever?

Dylan Koch: [8:54] Did you guys see Mitch McConnell's was on the senate floor for, like, twenty straight hours? Who? Mitch McConnell. He's a No. Senator of Kentucky.

Dan Austin: [9:02] Was he not?

Dylan Koch: [9:03] Like a time lapse of like him sitting in one chair for twenty hours straight, not going to the bathroom. Just like, dude, that's the theory, Dan. It's like, was he dead? Like, was someone checking in on him?

Dan Austin: [9:12] Is he wearing a diaper and he's just pissing himself the whole time because he can't

Dylan Koch: [9:16] That was the more likely solution. Yeah.

Dan Austin: [9:18] Ugh. Yeah. There's no way. I also speaking of old dudes, I

Mike DeHaan: [9:21] I thought he died, or

Dylan Koch: [9:22] is he still alive? That was, a rumor.

Dan Austin: [9:24] No. He just had a little a minor medical That was

Mike DeHaan: [9:27] a rumor. But they were saying they were saying, like, weird AI pictures of him, like, in his hospital bed.

Dan Austin: [9:31] Yeah. Holding, like, newspapers of with the date on it. Like

Dylan Koch: [9:34] No one's came out and said he was dead officially. I'm pretty sure. I mean, you could try to fact check me, but I'm pretty sure that's right.

Mike DeHaan: [9:38] He returned home, I guess, a week or so ago. That dude's so old. He can, barely move around. Why is he? Like, Dude,

Dan Austin: [9:45] how many of those politicians are like that? Right? There's gotta be some age limits. Like, at some point in time, when do you like, we all have aging parents. Like, at what point like, everybody has a point to where they're like, think

Mike DeHaan: [9:55] I need to, like, give my

Dan Austin: [9:55] parents advice on this. Right? So when you think of, like, an 80 year old sitting in senate trying to have do, like, a twenty hour vote or something like that, they're not that sharp.

Mike DeHaan: [10:05] And there's nothing better than, like, an 85 year old making a vote on something that's gonna take ten years to implement. A stubborn 85 for the sake of the game.

Dan Austin: [10:14] Well, So a stubborn 85 year old that will not let up on something that happened to him forty years prior. Like, that's how it needs to be. It needs to

Mike DeHaan: [10:20] be just like that. Dude, it's exactly the same as, like, when we used to talk to older sellers. They're like, I just remodeled the kitchen when I bought the house. Like, you bought it in 1996. Yeah. Exactly. That was twenty years ago. Yeah. Like, I understand that time compresses as you get older, but damn.

Dan Austin: [10:35] That's funny. You're listening or you're reading the comments on the call. Newer roof, updated kitchen, updated bathrooms, new carpet, and you're like, okay. Yeah. This is gonna be 30 years old.

Mike DeHaan: [10:44] Yeah. Totally. Yeah. They're the same way. Like, we just did that policy. Like, that is a pre 09/11 policy, sir.

Dan Austin: [10:51] Damn. Terrorism back then.

Mike DeHaan: [10:53] That was during the Bill Clinton administration. That was a long time ago.

Dan Austin: [10:56] Yeah. Exactly. Oh my gosh.

Dylan Koch: [10:58] They should reintroduce as you get older, dry like, you should retake the driving test. Like, you had to take it when you're 16. Like, if you get to, 70 or 75, you should retake it.

Mike DeHaan: [11:06] What if after politicians get above a certain age or, like, even just, in general, I am above a certain age. Let's have, like, every politician when they first get voted into office, they have to take The US citizenship test like all the immigrants do.

Dylan Koch: [11:20] Yeah. Yeah.

Mike DeHaan: [11:20] Yeah. Right? And then they have to redo it, say, like, every, like, five years or something, or or every time they get reelected, they have to do it again.

Dylan Koch: [11:27] Yeah. I think that's fair.

Dan Austin: [11:28] I think that's

Mike DeHaan: [11:29] fair. I feel like that's totally fair. If they're expecting all these, like, people from other countries to know all this shit.

Dylan Koch: [11:34] I think we had to take that my senior year of high school. Did they they did take it? Did you pass? I think so. I don't remember.

Mike DeHaan: [11:40] Was that before your family smuggled you across the border? Like, why'd you have to

Dylan Koch: [11:43] take that?

Dan Austin: [11:43] He's from Palestine, Ohio.

Dylan Koch: [11:44] Well, my mom is an immigrant, but I was born in US soil.

Mike DeHaan: [11:48] So your mom was an immigrant? Dude, by all intents and purposes, you're about to get ousted. Better be careful, Dan. Call him. Take your eyes when you speak down. Yeah. Is she is she legal?

Dan Austin: [11:57] Does she have a green card? Or is she a citizen? Because this really doesn't Citizen.

Dylan Koch: [12:00] Yeah. She she had to take the test when she was Okay. Like

Dan Austin: [12:04] What's her social security number?

Mike DeHaan: [12:07] Yeah. What's what's her maiden name? Wait. Does she come from Canada? Are you Canadian?

Dylan Koch: [12:10] You guys probably have some of this in my previous loan files.

Mike DeHaan: [12:13] Are you Canadian? We probably do actually. Where does

Dan Austin: [12:15] your mom immigrate from?

Dylan Koch: [12:16] No. It's, Britain.

Dan Austin: [12:18] I think I said, like, Georgia.

Dylan Koch: [12:22] Britain? You're Yep. 50%.

Dan Austin: [12:26] Can you speak British?

Dylan Koch: [12:28] No.

Dan Austin: [12:28] Come on. Come on. Give me an accent. Have you

Mike DeHaan: [12:30] ever been to The UK?

Dylan Koch: [12:32] No. I haven't, actually.

Mike DeHaan: [12:33] Okay. It doesn't count. Man, she mustn't be very close to those people. That's unfortunate. I wouldn't be either.

Dan Austin: [12:37] Fucking weird to you. Probably for the best.

Dylan Koch: [12:39] I didn't want to die of heat stroke when we had the plan to go over there.

Mike DeHaan: [12:42] Well, it it wasn't like that ten years ago, Dylan. It was fine.

Dan Austin: [12:46] That's kind of cool. I I did not know that. I learned something new about Dylan. Everybody congratulate Dylan on being a, first generation

Mike DeHaan: [12:53] immigrant? Being a red coat.

Dylan Koch: [12:54] You know, it's funny as I joke because I didn't I I none of this even clicked until I was older. And I was like, man, when I applied to colleges, I should have put that I had immigrant parents on there. I would have got into, like, Stanford or something.

Mike DeHaan: [13:06] Yeah. And then you would have showed up. They would have been like, well, we have this candidate Dylann. They would have said your name Dylann. I'll just for sure. Show up there expecting you to be Indian.

Dan Austin: [13:16] Now it makes sense why you have a how why you have a y in your name. Usually, I see Dylan spelled d I l d o, but you have a y.

Dylan Koch: [13:25] This is from your search history, Dan.

Mike DeHaan: [13:27] From my search history. Okay.

Dylan Koch: [13:30] What do you guys wanna talk about?

Mike DeHaan: [13:31] Well, sounds like you're buying a new property. Cool.

Dylan Koch: [13:33] Trying to. Yeah. I I think I just mentioned on the last show I need some depreciation. And it just goes back to, you know, kind of what you hunt for is the opportunities that will hopefully present themselves. And we had a lead that's been the CRM for forever. So I looked it up. The ownership hadn't changed. I saw his email, so I shot him over an email. And we've gone back and forth a couple times. And so, yeah, 36 units in a suburb out of Cincinnati with a seller finance, like, two year period of 4% interest only. Gives me time to, like, do the major CapEx stuff that's needed, get the NOI up, and then hopefully refinance them out.

Mike DeHaan: [14:09] So so basically, it's like a two year term on that. So it's a is it okay if I read these numbers?

Dylan Koch: [14:14] Yeah. Go ahead.

Mike DeHaan: [14:14] Yeah. So let's see. Have a 2,340,000 acquisition with one thirty four down, 4% IO for two years, and then your expected ARV on an a cap is gonna be 4,000,000. Yep. So I guess, like, is he expecting to be paid off after two years? Yeah. That's fucking sketch, dude. What happens if you don't pay him off? I feel like that's fast for, a 36 unit deal.

Dylan Koch: [14:33] I would argue that it's worth a lot more than 2.34 today

Mike DeHaan: [14:36] even. Sure.

Dylan Koch: [14:37] So you're kind of getting it at a discount.

Mike DeHaan: [14:39] So if things worth more than that today, it could realistically take you six months to get proper debt on that thing. I feel like what you'd wanna do with you is if you close on it, refinance them out right away. Yeah. You'd giving up the 4% IO, but you could probably get a decent IO term with a bank, but just not be on a two year balloon. Cause what you don't want, right, is you don't want to like stir it up and you're doing all this rehab and you're trying to swap out these tenants and the property's unstabilized. And now you only have eight months left and you're cooked.

Dylan Koch: [15:07] Because then you get to take it back at the end of the year too.

Mike DeHaan: [15:09] And you could take it back and you wouldn't have enough time to get the financing, which would take a long ass time right now.

Dylan Koch: [15:13] I guess when we do the actual PSA, you're right. Because you'd want to bake in maybe a year extension, right, or something like that?

Mike DeHaan: [15:20] At least. Yeah. Because like all the industry that's going to want to see a track record with this thing, especially because it's the only property I guess that you own.

Dylan Koch: [15:27] It would be definitely the the largest.

Mike DeHaan: [15:29] You know? And so they will want to see, like, a, like, history of stabilization. Like, they want it to be like, we stabilized it today. They're gonna want to see twelve months

Dan Austin: [15:36] Twelve months.

Mike DeHaan: [15:37] Yeah. Stabilized. Right? A twelve months actual ledger of how this thing performed before they give you decent debt on it.

Dan Austin: [15:42] It would be nice to have like a a built in extension, like multiple, like, two or three extensions, like six month extensions based on financing availability. Mhmm.

Dylan Koch: [15:50] Yeah. Or even maybe do partial payments off if we had got to that point. Basically, the whole thing is don't make it so I'm screwed if it's not to the point where I can get the debt on it.

Dan Austin: [16:00] That's over here too. Yeah. Because two years does go by fast, especially on a 36 unit. You know, there's just so much to do.

Mike DeHaan: [16:05] I mean, seems like a sweet deal. Like, I just would be worried about you putting yourself in a hole.

Dylan Koch: [16:10] Well, the plan, like, with this size would be to get, as we talked about last week, agency, you know, non recourse debt, which, like, is a fancy term. But, like, that would qualify for Fannie Freddie debt if done right.

Mike DeHaan: [16:21] Debt. Yeah. It would for sure. But it's just like you have to be able to show the stabilization and the finance like they want it. And I would say now more than ever, we're really seeing them want a, like a pretty long history with the property. Currently have an investor that can do up to 30 units on DSCRs.

Dylan Koch: [16:36] 30 units on DSCRs?

Mike DeHaan: [16:38] Mhmm.

Dylan Koch: [16:38] Wow.

Mike DeHaan: [16:39] Yeah. Think the game can go a little bit bigger, like thirty, forty unit stuff on DSCRs, which is really like, it's, like, new. Like, that's, like, a whole new product, whereas traditionally you've had to go through.

Dylan Koch: [16:47] I was gonna say, last time I talked to you, thought it was, like, 10.

Mike DeHaan: [16:49] So, yeah. So traditionally, yeah. But like you're starting to see the private money side start to get interest in these kind of deals because there's so many of them that are starting to transact at like a discount. Right? And so to them, they feel like it's pretty good leverage. Yeah. The problem is though, is their underwriting is still so gnarly. Right? And they want such like a detailed track record for how it's actually performing. They want to make sure

Dan Austin: [17:14] it's not a piece of crap.

Mike DeHaan: [17:15] They're also super hard on the operator and they wanna make sure that you're not a dummy because believe it or not, all these people that make these decisions, they're also attuned to, like, all the Instagram bullshit that's been going on and all these idiots that have been digging themselves in a hole, buying these deals they have no business buying. And they don't want that. So basically, what they want is they wanna support the buyer that's bailing out that dummy, that's buying the thing at a discount. They don't wanna refinance the dummy and basically make that dummy their dummy.

Dylan Koch: [17:42] Which the DSCR, mean, I'm thinking I'm using pretty conservative numbers where the expense ratio on this pro form a would be 45%. So your NOI is 55% of that of your revenue, even with, like, vacancy CapEx and stuff. And the DSR is still 1.46 at those levels. Mhmm. So you're right. I think timing is the biggest issue here. And I do think Yeah. My own portfolio and now time in the business, you're right with the experience of, like, not something this large in one building, but overall, the portfolio would be close.

Mike DeHaan: [18:13] You know what's the funny thing that might bite you? Is the fact that you self manage. And I'm not trying to like lecture you Dylan. I'm just like, this is just what we've learned.

Dylan Koch: [18:21] No. No. No. You're good. One of the

Mike DeHaan: [18:22] things that might bite you is the fact that you self manage, and you don't have a relationship with a property management company. So they would feel less confident in you picking a property management company that didn't suck.

Dylan Koch: [18:32] That's hilarious.

Mike DeHaan: [18:33] Yeah. The stuff that they pick at is so stupid.

Dylan Koch: [18:35] What if I told them I went through three property managers in the past three years that I fired them because they all suck.

Dan Austin: [18:41] I wonder if you started your own property manager in a separate entity for property management, if that would be a like, show more of a professional resume.

Dylan Koch: [18:48] I've been recommended to do that before, honestly. Like, even from a liability perspective, like a entity thing, but also accounting. Like, basically run everything through PM and then have your holding companies with the properties, you know, have their own accounts.

Mike DeHaan: [19:01] Yeah. Maybe. It's not a bad idea. Not a bad idea. Yeah. Well, sounds like a a sweet deal Sounds like great deal. Can get together for sure. And then you end up having to deal with that. The project management on that would be huge too. I think that would be a pretty hefty gain. Yeah.

Dylan Koch: [19:14] I was baking in 8% as I did hire PM at 8% gross rents, which I think you could probably do it for less if you're giving something that size. Mhmm. But it's almost like, do you go ahead and give the PM maybe five to 10% equity, so that way they're really incentivized not to fuck it up. And then pay them out on the back end.

Dan Austin: [19:31] They'll still fuck it up, dude. They'll still screw it up. Their PMs have too much going on, like, they can't even survive in that. To me, it seems like you're giving up equity when they would still suck. Because they're still going be incentivized to grow their cash flow and their equity is not cash flow necessarily.

Mike DeHaan: [19:45] Totally. What I would say, Dylan, would be better, especially because your residential portfolio is so big is if you were to buy this, you just hire someone on staff that is your property manager that you pay a salary, and then he gets basically bonus based off of performance of your whole portfolio including this thing. Yeah. Because, like, this will have you what, at, 86 units? Aren't you at 50 units right now?

Dylan Koch: [20:04] Around there. Yeah.

Mike DeHaan: [20:05] Yeah. Totally. You got yeah. Bring someone on, pay them 50 k a year. Yeah. And then like bonus them out.

Dan Austin: [20:10] You're probably at a point where, yeah, you need like either a handyman type or a property manager type that's just like for Maybe you give them an apartment in this place and then they manage all your all your units.

Dylan Koch: [20:20] Actually, that's not a bad idea. You give them like a free place to live being on-site during the whole renovation timeline.

Mike DeHaan: [20:26] Yeah. Yeah. And that would eat your cash flow, obviously, which kind of gets away from your financial freedom goal. But if you're planning to continue buying, I think that's a great investment to make if you can find someone good.

Dylan Koch: [20:34] Yeah. I mean, property management in and of itself is a hard business. It's got low margins. You gotta deal with, the general public pretty much every day of the week almost, especially when you get to that size. I mean, you get work orders, like, at least once a week now, even now.

Dan Austin: [20:48] I think somebody told me at, like, a 100 unit this is, just kind of like general knowledge. But somebody told me it's, like, around a 100 units is, like, that crossover point where it makes sense for you to have your own property manager.

Dylan Koch: [20:59] If you bought. Right? Sure. Yeah.

Dan Austin: [21:00] Yeah. If you can't afford it. But once you have about a 100 units, it's more economical sense for you to hire your own property manager than it is to have third parties. Because third parties, they're gonna take more than the property management fee. People don't understand that, like, everything they do is less efficient and things just cost more. So at that point in time, you you could pay for your property manager yourself.

Dylan Koch: [21:19] What's funny is this portfolio that I'm putting up there. Right? Yeah. Of course, you're doing your due diligence. You're googling, and they have a unit listed for sale. And like, you can see the, like, the contacts that was reached out by their property management company. And it's like a 160, and it's still been listed for thirty days. Are you telling me out of a 160 contacts, you'd have one qualified applicant?

Dan Austin: [21:39] Seriously.

Dylan Koch: [21:40] Yeah. It just shows that the current property manager's not doing the current owner any favors.

Mike DeHaan: [21:45] Yeah. I mean, you'd think so. Or they just, like, have it open all the time because they're just, like, sort of keeping a list of potential tenants every time a unit comes available, they can follow-up. Which I'll honestly, that's market dependent. You're not, like, you're not allowed to do that in Washington. Sort of like keep openings.

Dylan Koch: [22:00] I don't know if you're allowed to that here. But

Mike DeHaan: [22:02] So yeah. Because here it's that's the other thing too with property managers are tricky. Where it would be hard to have someone on staff is like, if you're a hiring professional company, you would hope that they are staying on top of, like, legislation and rule change and all that kind of stuff and doing it correctly. But if it's an employee, that's your job still Gotcha. To do all that

Dylan Koch: [22:17] Yeah.

Mike DeHaan: [22:18] Which is tricky. Because I don't know how frequently things change in Ohio, but in Washington, things change all the time. And the different rules and stuff that come up, like, for me, it just makes my freaking face glaze over when I even hear about it. Like, I just don't even care. And so I it is worth me making less money to just not have to stay on top of those things.

Dylan Koch: [22:36] Yeah. It's like the whole thing about, like, I would never wanna be a broker even if I were an agent.

Mike DeHaan: [22:40] Oh god, no.

Dylan Koch: [22:41] Like, all the legalities and paperwork that goes into being a broker with agents underneath you, like, no thanks.

Mike DeHaan: [22:47] Yeah. And then you had another question that was funny, which I think we should talk about in general. I think it's relevant in the space. Why does it take so long to get payoffs? Do you have, like, a situation where you're waiting to get a payoff?

Dylan Koch: [22:55] Yeah. Three. I was supposed to have two closings today and one closing tomorrow, and that's all we're waiting on.

Mike DeHaan: [22:59] They're not from us, are they?

Dylan Koch: [23:00] No. They're not from you.

Dan Austin: [23:01] We're the best at doing payoffs.

Dylan Koch: [23:02] And Dan and I were talking about it. Some of it could be title company's fault. I don't think it is. And because I'm usually on them. I'm like, hey. Where the hell is the payoffs? One of them is a foreclosure case, which I guess is taking longer because it's in foreclosure, which doesn't really make sense to me.

Mike DeHaan: [23:15] It would have been sold off to a trustee probably. And so it's gonna be like a company that's collecting penalty interest, and they're accumulating fees. So their incentive is to basically drag it out.

Dylan Koch: [23:24] Dude, and I'm talking like three weeks of them, like, us signing on the the forms off.

Dan Austin: [23:29] That's crazy.

Dylan Koch: [23:29] It's 2026. It just seems insane to me that you can't pull up your little screen, principal balance, you know, okay, add on your your late fees or whatever. But, like, it just shouldn't be this hard or difficult.

Mike DeHaan: [23:40] No. So for the foreclosure one's different. For, like, a standard deal, one of the reasons it takes long and so, like, when people come to us and they get a payoff, it's always tricky because it's ultimately out of our hands because we sell our debt like pretty much every lending company does. Right? Very, very few lenders, especially if it's a long term loan, are carrying those in house. So we'll sell the debt. And so, basically, somebody comes to us, they request a payoff. We have to go request it from the note servicing company that our investor requires us to use. K? They send us the payoff. We approve it. Then it goes to the investor, and who knows what they're gonna do? Like like, sometimes they will get back the next day. Sometimes it's two weeks. They haven't even looked at it yet. Don't know why because a lot of, like, the big investors, they're realistically 12 people that work at the company even though they buy a billion dollar worth of debt a year. And if Tim, the mortgage payoff guy, is on vacation, then no one looks at it. You just gotta kind of wait. It's stupid, but that's how it works.

Dylan Koch: [24:39] It's very stupid. And so, of course, the sellers are getting mad at me.

Mike DeHaan: [24:44] Yeah. They get mad at you. Totally. It's the same thing. What's even better is when Tim, the mortgage guy, comes back after two weeks and he goes, oh, the payoff's wrong because of x y z. So then it has to go start all over again. And then he goes on a long weekend because why wouldn't you have a vacation? So he takes another week to come around.

Dylan Koch: [25:00] Or you requested it three weeks ago, and today's Thursday, and be like, Okay, here's payoff. It's good through tomorrow. Like, Okay, bro, I can't change anybody's lives in '24 Like, oh, man.

Mike DeHaan: [25:12] It's all process. It's all part of the antiquated process that exists in space because so much happens with so few people. Right? And then the third parties that are in the middle are an absolute freaking nightmare. There's no servicing companies. The no servicing comes out of property managers of the debt space. Right? Extremely low margins. They have to have this huge volume. Like, the regulations and stuff that they have to follow are surprisingly complex.

Dan Austin: [25:34] And they have to they hire low wage people. A lot of their employees are lower wage bills.

Mike DeHaan: [25:39] They hire low wage people because they're not making any money.

Dan Austin: [25:41] And they only make money on your default interests, so they want you to go into default.

Mike DeHaan: [25:45] Exactly. The incentives aren't aligned with you.

Dylan Koch: [25:47] The incentives are definitely not. Yes. We talk about all the time, and their incentive is to delay it as much as possible, and that pisses me off. Of course.

Mike DeHaan: [25:55] Yeah. Just like a property manager.

Dan Austin: [25:57] That's why Mike and I pride ourselves on having the best servicing and payoff experience in the industry.

Mike DeHaan: [26:02] Absolutely. On those stuffs on our balance sheet, totally. It's so easy.

Dan Austin: [26:05] Yeah. If we keep it, we're the best.

Mike DeHaan: [26:06] We can get a payoff in like fifteen minutes if it's something that we're carrying. So we have to go through the whole process with our investor that you just don't know how long it's gonna take.

Dylan Koch: [26:15] My other favorite is, they put, like, good through 08:31, call it, but they'll have a per diem. You call it, I don't know, $70 a day. But then the title company or the lender won't close then, like, the following day because the good through date wasn't there. But I was like, it it says the per diem. Just fuck it. Just add it. Like, I you know, I'm getting on a soapbox here.

Mike DeHaan: [26:34] But You wanna know what's really fun on our end is when let's say that we make a payoff good through was it? It's the twenty seventh today. We make a payoff good through the fourth, and you close tomorrow. You close on the twentieth, so an extra week. And your title company doesn't, like, backtrack it, and they just give us too much money.

Dylan Koch: [26:52] Oh, yeah.

Mike DeHaan: [26:53] So they basically make you pay more because they're too lazy to subtract To

Dylan Koch: [26:57] do the math. Yeah. Right.

Mike DeHaan: [26:58] And that makes a whole freaking bookkeeping nightmare because then we have to send a checkout, and we have to notice that's the wrong amount of money that they sent us. Right? And the title company doesn't care.

Dylan Koch: [27:06] Yeah. Right. Right. That's a good point. Or they I've had them say, like, they need to collect three extra days supposed to pay off in case it doesn't close or whatever reason. But then you're right. It's on the lender Mhmm. To figure out what that difference is.

Mike DeHaan: [27:17] Yeah. It's a pain the ass.

Dylan Koch: [27:18] You think technology would help with this? But

Mike DeHaan: [27:20] You would think so. It's it's slowly getting there. I mean, even since Dan and I started, there's definitely been, like, some improvements, but it still sucks. You know? And and ultimately, what it comes down to to is, the big, big money at the end of the chain is the one that kind of, like, dictates everything coming down.

Dylan Koch: [27:34] Yeah. Otherwise, you know, with the the business stuff, it's been weird where, like, the wholesale side has been, like, kind of on an uptick, but we have two retail, like, listings right now that we bought and, you know, we flipped, and it's a ghost town. Yeah. And one we have two comps at the one condo within six months of each other, literally the same exact bed bath square footage. I would say that our finishes are even nicer. One sold for $1.67, one sold for $1.62. We are currently price dropped down to $1.58, and I'm literally, I have one showing on Saturday, and that's it.

Mike DeHaan: [28:09] Like Dang. How long have you been on market for?

Dylan Koch: [28:12] I'll tell you. It's probably at least we're probably approaching two months.

Dan Austin: [28:16] Dude, that sucks.

Mike DeHaan: [28:17] God, it's kind the business right now, man.

Dylan Koch: [28:19] Flipping houses is hard. Forty two days.

Mike DeHaan: [28:21] Yeah. I mean, that's that's pretty universal.

Dan Austin: [28:23] So is it possible that, like, the next five years are gonna look like that?

Dylan Koch: [28:27] I've talked to other realtors who are more in tune with the actual retail side of things. And a lot of them do claim seasonality, like people going back to school and like vacations and being August and that kind of stuff.

Mike DeHaan: [28:39] Which is valid.

Dylan Koch: [28:40] Which is valid. But I don't

Dan Austin: [28:42] think it's valid at all. Here's why. Because then the wintertime they're like, oh, it's seasonality. The only time people say it's not a seasonal issue is like March and April. So is that the only time you can sell a house and it goes fast?

Dylan Koch: [28:54] No. And I was just, I was just going to say like, not all of it can be attributed to seasonality, but

Dan Austin: [28:59] We do talk about like, you know, the summer slowdown, which does exist. Like, I get it. Like people are going out on the lake and stuff like that, then school starts, people don't want to move in school, and then winter happens, it's like, you could claim seasonality, but when it was like 2020, '21, '22, you could sell a house in any of those months.

Mike DeHaan: [29:15] Yeah, you could. But that was also the other outlier. Yeah.

Dylan Koch: [29:18] Inventory is still way up too.

Mike DeHaan: [29:20] I mean, that was extreme the other way.

Dan Austin: [29:21] I think the market just sucks that bad. And up here, we're not 2021, '22, the market was that good. So I don't think that we're in a balanced market, I guess, is my point. It's it's not. Because things are getting have been getting worse.

Dylan Koch: [29:34] If we're looking at something to actually buy and renovate right now, one, we're probably taking five to 10% off of ARV or like looking at pendings and seeing what's really pending, but also attributing for longer holding costs, specifically with the loans. Right? If you're used to doing something in three to four months, it might be six to eight months now. And that just is a factor of be sitting on market.

Mike DeHaan: [29:56] I mean, I don't know. That's what it feels like going back to normal. Because the first house I bought to flip in 2018, my mentor at that point said expect to sit on market for sixty to ninety days. And you had to calculate that into your holding cost numbers.

Dylan Koch: [30:09] Yeah.

Mike DeHaan: [30:10] Right? And that was kinda just the expected timeline for a newly remodeled house back then. And that's back when stuff was actually affordable. Right. And I would say the buying mentality around houses was pretty different back then too because how long a house had been on market didn't really matter. And then when they would come and they would ask for things with the house, that was always, like, somewhat reasonable. You know, they would, like, have their inspector go through, and they would do a couple things like, Ellen, we want you to, like, replace the roof. And he'd be like, okay.

Dan Austin: [30:36] Well, that's kind of part

Mike DeHaan: [30:37] of the deal. Whereas, like, now when buyers go in, they're like, I'm going for fucking blood. I'm going in 20% Yeah. Below ask. I'm gonna ask for everything. My realtor is gonna constantly threaten you that if we don't close on time that the buyer's walking. Like, it's just different.

Dylan Koch: [30:54] We gave 8,000 in concessions on our most recent one that we closed.

Mike DeHaan: [30:57] Of course. If you don't, you're stupid. Like, you don't want them to walk. They probably won't, but you don't want to risk it. The thing that

Dan Austin: [31:03] upsets me the most about, like, this market is realtors that are just clearly unethical because I I know a person that put an offer on a house. They're like, we've been watching the house for about five months. So, you know, we're gonna put an offer on it. And the agent's like, ah, we just got another offer. We need you to come up above asking.

Dylan Koch: [31:18] That happens all the Right.

Dan Austin: [31:21] They gave him a full price ass. They gave him a full price offer. Like, you know what? We want we want what you're paying. We're ready to go. After five months on the market, you magically got another offer at the same time.

Dylan Koch: [31:29] And it's amazing how that happens almost every time. I'm like,

Dan Austin: [31:32] shut up, dude. No. No. Especially when you get a full price offer, just accept it and run with it. Know?

Dylan Koch: [31:38] Or, you go under contract. I'm assuming you guys have something similar. Residential property disclosure forms, like the seller is supposed to fill out and tell you what's all wrong with the house. It's not a material defect.

Mike DeHaan: [31:47] Yeah. I just put NA on everything every time.

Dylan Koch: [31:51] That's what most Yeah. People And then let's say you have an inspection. The inspection is sent to your realtor, and then all of these things are, you know, now known aware to you. You're supposed to go back through and rechange your RPD to disclose some of these things that are now have come to light. No one does. Literally nobody actually does that.

Dan Austin: [32:08] Yeah. Of course not. Yeah. That's a big thing in Washington. They changed the laws where you're not allowed you're legally not allowed to give the selling agent or the sellers your, report unless they request it.

Dylan Koch: [32:22] Interesting. So

Dan Austin: [32:23] the seller can't see your inspection report because of that reason. Because then they legally have to go back and update that with say contract falls through and you found that the basement wiring doesn't work, or there is a flood down there and they don't update that.

Dylan Koch: [32:38] Or there's mold in one part of the bathroom ceiling.

Dan Austin: [32:41] Yeah. Yeah. To me, it's like a dumb it's a dumb rule because then the agent's trying explain to me what needs to be repaired in order for the contract to get done. I'm like, just send me the repair part. Like, I'm obviously gonna fix that. Like, well, I know. Do you are you accepting and acknowledging that you want the report? I'm like, no, just tell me exactly what needs to be repaired so we can close this deal.

Dylan Koch: [32:58] No. Actually screenshot just the pages that I want.

Dan Austin: [33:01] 100%. Yeah. And they're all like weird about it. I'm like, and maybe it's just because it has been a newer rule the last couple years and it'll settle out, but it's like so frustrating. It's like, just give it to me. Like, especially when you're a flipper and you're flipping, you're selling a flip. It's like, just give it to me and I'll just figure all this shit out. Like, I don't care.

Dylan Koch: [33:15] Yeah. It's funny because a lot of the times retail and this is when agents should actually train their buyers. Or like, let's say they're like, oh, it needs a new water heater. And the buyer's like freaking out. Like, oh, that that's gonna be super expensive. I don't what to be I was like, it's $1,500. I'll just replace it for you.

Dan Austin: [33:30] Right. Exactly.

Dylan Koch: [33:31] And it doesn't need to be a big deal.

Mike DeHaan: [33:33] Yeah.

Dylan Koch: [33:33] Like

Mike DeHaan: [33:33] Yeah. Exactly. Yeah. But I mean, to it doesn't need to be for us, but you think about the average homeowner, home What you want? Exactly. The average homeowner, right, a thousand dollars is like a big deal. Did you just say Exactly. There you go, Dan. That was just for you. I'm gonna make that your, your nickname.

Dan Austin: [33:54] I want I want that shirt. Can we please get that shirt? I want a homeowner shirt. I have a I have a

Mike DeHaan: [34:00] third grade sense of humor. Yeah.

Dylan Koch: [34:03] There you go.

Mike DeHaan: [34:03] Yeah. Feel like that can be a terminology for when you're getting fucked on a real estate deal.

Dan Austin: [34:08] Let's a homeowner. Let's get a homeowner. Nice. I love it. I'm glad I

Mike DeHaan: [34:14] came today. But like that $50,100 dollars, that water heater, that's like a big deal to random people. You know, when you're a business, completely different because it's just part your revenue. Just like, I don't care.

Dan Austin: [34:21] Well, it's a lot of you. It's like a huge mechanical item, but you're just like, I don't care, dude. Just do it.

Dylan Koch: [34:26] Yeah. Well, I mean, other than foundation issues, what's the biggest thing? A roof or an entire HVAC system?

Mike DeHaan: [34:32] Sewage.

Dylan Koch: [34:33] Yeah, true. Like a sewer backup.

Mike DeHaan: [34:35] Yeah, like a sewage line. That's one that gets us up in Spokane a lot. Could be

Dan Austin: [34:39] like $10. That gets us a lot, yeah.

Dylan Koch: [34:41] Really? Do you guys have like, clay sewage lines?

Mike DeHaan: [34:45] The Orangeburg in old neighborhoods, this, like, kind of weird it looks like a dryer vent kinda.

Dan Austin: [34:49] It's cardboard dipped in pine tar. Interesting. That's what they did for the sewer connection, which typically goes from cast under the house to a clay like a clay tile.

Dylan Koch: [34:58] Yeah.

Dan Austin: [34:58] Yeah. So we have a lot of clay tile, but that's usually, you know, going into the city sewer, so it's not as big of an issue. But yeah, we have a lot of lot of bad trees that go into these crappy connections and terrifying.

Dylan Koch: [35:10] Yeah. Yeah. We have that too. Actually, when I'm looking at a house, like, first time, the first thing I look at is, like, the trees. Not just from, like, the overhangs on the roof, but, like, okay, where's the main waterline? And, like or more likely the main waterline, and where's trees at where the root system could probably get in?

Mike DeHaan: [35:22] Mhmm. Yeah. We pretty much always had to account for having to replace a sewer pipe on everything. And so we would typically not do it. And then if they went and they scoped it, then we would just expect we're gonna have to do it. Yeah. We were just like, well, it's working. We bought the house. We're just gonna leave it alone. And then they feel like

Dan Austin: [35:40] they gotta win. Right? Because they're getting a brand new sewer pipe. Then they negotiate it.

Dylan Koch: [35:43] Yeah. But that could be expensive. You gotta dig up the whole thing, you gotta go across the sidewalk, you know, that Yeah.

Mike DeHaan: [35:47] And what's what's really funny is it's an old neighborhood? They're like, well, this is gonna be really expensive because the sewer pipe is actually 50 feet under the ground, which is a real story that we did. And so instead of replacing it, we basically just installed a permanent clean out so people can just come and clean it out every year or two.

Dan Austin: [36:04] Yeah. Yeah. Or if it goes into the road and it's like on a main road and you Mhmm. You have to pay for traffic control, which could cost you like $10 just for traffic control. Wow. So it's kind of crazy.

Mike DeHaan: [36:14] Yeah. Yeah. Those guys that stand out there with like the stop signs, those guys cost $10 a day. Do you know that?

Dylan Koch: [36:19] No, I didn't, but that seems obscene.

Dan Austin: [36:20] It costs a lot. You know what the best part about that is, at least in the city of Spokane, is you do you have to, like, if you're gonna do anything that you even you step foot into the into the road

Dylan Koch: [36:29] I'll do that job.

Mike DeHaan: [36:30] They're not getting paid that. That's just what it costs.

Dan Austin: [36:33] That's what

Mike DeHaan: [36:33] it costs.

Dan Austin: [36:34] So Spokane, though, the city, like, literally you'll be going down, like, the main highway, like, which is, like, they call, like, Highway 2, which is, the main North South Road that goes through our whole town. And they'll literally just pull up a truck in the middle of the three lane highway and put a cone out and then go down in the sewer line to go clean it out or whatever.

Dylan Koch: [36:53] Yeah. Get decapitated.

Dan Austin: [36:54] But if you did that if you did that, you would have to have like a $100,000 traffic control plan permits and all this sort of stuff. But they'll just literally pull up in the middle of the highway, get out while there's cars going all around them in this truck and then put like a hose down the thing. You're like, wait. I have to pay for all this stuff if I was gonna do this project, but you could just like stop traffic without even a flagger? Yeah. Yeah. Double standard, man. Double standard.

Dylan Koch: [37:16] Government privilege. That's what it sounds like.

Dan Austin: [37:18] Government privilege. Exactly.

Dylan Koch: [37:20] The only other thing I saw that you guys wanna talk about, maybe or not, Berkshire Hathaway, their real estate division. I didn't know they bought such a big homebuilder.

Mike DeHaan: [37:29] Mhmm.

Dan Austin: [37:30] That was the new CEO's first move, wasn't it?

Dylan Koch: [37:33] Yeah. Yeah. Yeah. The Greg guy that took over for Yeah. Oh my god. Why am I blanking on Warren Warren Buffett? Jesus. But then they also bought a bunch of stock at D. R. Horton and Lennar. I've never heard of them, but it was like 1,200,000,000 Huge.

Dan Austin: [37:46] Huge. They're in Spokane.

Dylan Koch: [37:47] Are they? They're not here.

Dan Austin: [37:48] They're not based here, but they're building here.

Dylan Koch: [37:50] D. R. Horton's out here, but not the other one. Meanwhile, contrast that with, like, new build sales on a national level are down 10% year over year. Mhmm. So I don't know. It's just just a sign that, you know, the old Warren Muffet saying of being greedy when others are fearful, or he's going all in on homebuilders in a time where it seems like there's a lot of red. I don't know. I just found it interesting.

Dan Austin: [38:10] It is an interesting play.

Mike DeHaan: [38:12] Well, talking about like 90 year old dudes making decisions. I mean, does he what's gonna happen with the real estate market over the next ten years?

Dan Austin: [38:19] That's what's interesting. Is this a carry on of Warren's legacy? Like, was he saying like, was he going to put this into play, or is this the new CEO's decision to go and

Dylan Koch: [38:27] I think it's a new CEO.

Dan Austin: [38:29] A couple of different direction with it. And he sees BlackRock has been in buying up real estate for for years. And, you know, there is a lot of discussion around.

Mike DeHaan: [38:39] So you're saying he's having FOMO?

Dan Austin: [38:41] Yeah. Exactly. Probably.

Mike DeHaan: [38:43] What other guys are doing is

Dan Austin: [38:44] like, like, Fink come has a lot of real estate. I need to one up him. I think that's the BlackRock CEO's name. I don't know. Yeah. It? Is it? Okay.

Dylan Koch: [38:53] No. It is.

Dan Austin: [38:53] Yeah. It is an interesting play because you're right. Like, home sales are down. I wouldn't say any of the homebuilders are hurting, but it might be them buying it at a discount because the shares are lower because profits are just naturally lower when you're not building houses and they're sitting on a lot of land probably. And so it could be a it could be a good play for the next upswing because like houses trade at a premium. Right? So if you're building like new houses, sorry, trade at a premium. So if you're looking for a boom to create a boom or something like that or a tax play, does Berkshire Hathaway not have a good tax strategy and could they drive investor profits in a weird market where they can't deploy large sums of capital to buy a business? Can they earn basically another 10% EBITDA? I don't I don't know.

Dylan Koch: [39:34] Yeah. I don't know. Greg Abel, who's the replacement, is 64 to answer that question.

Dan Austin: [39:39] He's 64.

Dylan Koch: [39:40] Yeah. Jeez. Doctor Horton is down 13% year over year. So, you know, maybe they do see it as a a buying opportunity.

Mike DeHaan: [39:50] Well, and and to your point, Dan, with the the land, it'd be interesting to see, like, what their balance sheet looks like on, like, a purchase like that. You know? Like, how much

Dylan Koch: [39:56] of it

Mike DeHaan: [39:56] is actual, like, hard assets that they're buying.

Dylan Koch: [39:59] Yeah. That they can get depreciation for. Right?

Mike DeHaan: [40:01] Yeah. Yeah. Either that or, like, they're just sitting on the land because they believe that the land in these concentrated areas is gonna go up. So maybe maybe they're not even building them to be operational homebuilders. Right? But exclusively just to buy all their hard assets and then sell it to one of the other home builders. Right.

Dan Austin: [40:16] What if they spin it out? What well, here, maybe they bought, the one company. They'll spin out their assets to Doctor Horton and, Lennar, who are the actual builders because they don't they didn't buy those, but they bought significant stock. So maybe they're manipulating and saying, hey, what if we what if we do this, take a loss over here on the land or break even but sell to these guys for a profit and make make money?

Dylan Koch: [40:37] Lennar is down 36% year over year. So Wow. That's a lot. They

Dan Austin: [40:42] are building some shit boxes rapidly up here. They are selling them for nothing, dude. Like, they're like, we will sell a new construction three bed, two bath for $2.99 and give you they all are doing this like five year variable rate structure where it's a thirty year, but they get you in like really cheap at the first year. Then every year your rate goes up for five years until you're at like Mhmm. 78%. I don't know. Whatever it is.

Mike DeHaan: [41:05] Seven or 9%. Those neighborhoods are like the mobile home parks of the future.

Dan Austin: [41:09] They are so bad, dude.

Mike DeHaan: [41:11] Like, the the houses are such low quality. Even just, like, going by the ones that have been there for, two years, you can see how much they've disintegrated on the front. Just, like, everything from, like, the paint fading to, like, looking kinda rickety. They're just not they're not hot. Right?

Dan Austin: [41:24] They use the cheapest materials. They get the cheapest labor. And, yeah, they are they're bad. They look all nice and shiny when they're first built, but even then, you can just look at them, the the square boxes.

Mike DeHaan: [41:34] So does a brand new single wide. Honestly. Honestly, it looks pretty nice. It's got the hot tub out the back, dude. It's like a white trash dream right there. Yeah. You know, if you knew that the, 2026 white trash dream was Lennar Homes. Oh, man.

Dan Austin: [41:49] No. It's one step above white trash. It's people that are trying to not be white trash, but then they realize, oh, shit. I am white trash.

Mike DeHaan: [41:55] Yeah. But then for some reason, they still have a car on blocks in the front

Dan Austin: [41:58] yard. I mean, are doing? I'm gonna pull back. Right. No. They have HOA's, dude. I'm gonna pull back.

Mike DeHaan: [42:03] HOA's. So so do mobile home parks.

Dan Austin: [42:06] I'm gonna

Mike DeHaan: [42:06] say we have an

Dan Austin: [42:06] affordability crisis, and I don't wanna be the guy calling people that can't that can't pull themselves up by their bootstraps, white trash. I I I feel bad actually. Because it is it's like the reason why they're building those is because they sell, dude. Not because people want to buy them. People know. Like I've talked to people that have bought like D. R. Horton and they're like, yeah, I know it's a piece of shit, but it's like, it's nicer than the neighborhood down the road that I was in.

Dylan Koch: [42:29] How big are those houses? Think?

Mike DeHaan: [42:31] 1,200 square feet.

Dan Austin: [42:32] They're small.

Dylan Koch: [42:33] Yeah. Oh, really? Are like

Dan Austin: [42:35] 1,100 square feet, three bed, two bath. They're just tiny. And which is honestly not like unique. Like we've had developments up where Mike and I live where they have those like small 1,200 square foot, three bed, two baths. And they do sell. They're great first homes. Right? They're not something that you can really grow a family in.

Dylan Koch: [42:50] So 300,000 by the 1,200, it's 250. They're selling them at $2.50 a square foot. One of their I don't know. Making them $1.75 a square foot? That's $2.10. I mean, that that's decent margins per house.

Dan Austin: [43:02] I mean Yeah. Yeah. But then you gotta look at the financing too that they're getting in because they finance them too.

Mike DeHaan: [43:07] That's a huge play. Like, the financing that they offer is so much more, I wanna say, competitive. It's it's affordable and, like, the immediate for the average person.

Dylan Koch: [43:16] They're not balance shitting that, though. They have to use like, using that with somebody.

Mike DeHaan: [43:19] I think

Dan Austin: [43:20] they are funds, dude. Like, Doctor Horton actually balance sheets their shit.

Mike DeHaan: [43:23] Mhmm. Yeah. Well, they they probably sell it off if it gets big enough. Right? If they get, like, a $100,000,000 built up.

Dan Austin: [43:29] Yeah. Yeah. Yeah. For sure.

Mike DeHaan: [43:31] So anyways. Alright, guys. Well, Dylan, we'll let you get to your your shelling. Thanks. Good luck. Hopefully, it goes well. Come back with a signed deal or don't come back at all. That's why say to my AMs.

Dan Austin: [43:41] Don't don't get a boner while you're walking the house. Yeah. Get a house boner.

Mike DeHaan: [43:46] Get a house boner if the deal gets too good. Homeboners, that was said. Yeah. So k.

Dylan Koch: [43:54] I hope

Mike DeHaan: [43:54] the Dan's gonna be laughing on that while he's out there. Be honest. While you're up there licking your fro yo, you're gonna be like, man, homeboner. That was so funny.

Dan Austin: [44:00] I hope all my boners are homeboners. I don't wanna be an

Dylan Koch: [44:04] You know what? I'm gonna leave. You guys can get continue the conversation with that.

Mike DeHaan: [44:07] Bye. Thanks, everybody. See you.

Dylan Koch: [44:09] See I

Dan Austin: [44:10] don't wanna, like, I don't want, like, a target boner.

Mike DeHaan: [44:12] This episode is sponsored by Sir Lenzelot LLC, also known as SLA Capital, which, if you didn't know, is Dan and I's private lending company. So, yes, we are sponsoring our own show, but what you're do about it? It is our private lending company that offers hard money and DSCR loans to real estate investors of all types. So you can be a new investor, an experienced investor. You can be buying flips. You can be buying rentals, whatever. We can do everything. And not only that, but the rates that we offer are just as competitive, if not cheaper than pretty much every other company out there. So whatever big company you've been working with, bring us their term sheets, and I guarantee that we can probably beat it. We have the same connections they do. We just don't have all the overhead and middlemen. So if you wanna come and check us out, go to slacapital.com/keys, and I will know that you came from the show. And by seeing that you came from here, when you get the closing, you will save $500 on your first loan with us. So slacapital.com/keys, we would love to fund your next deal. Thanks for listening, everyone. If you want more from us, you can shoot us a follow on Instagram. I am at Mike underscore Invest. Dan is at investor man. Dan and Dylan is at Dylan underscore does underscore deals. Choose to follow and send us a DM to let us know what you think of the show.