Financial Pitfalls We're Avoiding in 2025

Mike DeHaan: [0:00] Real quick before we jump into the show, we created the collecting keys podcast to be a real estate investing podcast that is created by real estate operators for real estate operators. And we want operators everywhere to know what it really takes these days to be successful in this business rather than all the fluff that all the other content creators and podcasters out there make. And so one of the challenges with this is that it's challenging to grow because most operators are too busy out there working. Right? And they aren't always learning or actively seeking new learning material. And so if you could please share this show with any fellow operators you know. You know, you can text it to them. You can post it on your socials. You can leave us a good review that you then share somewhere. That would be amazing. But really, whatever, it really helps us continue to get excited to create content, and it will also help you because everyone that you expose us to will get better as a real estate operator and close more deals. So if you could do that for us, it would really mean a ton. And otherwise, we appreciate you guys, and let's get into this episode.

Dylan Koch: [1:05] One thing that I think is under talked about in the real estate investment community is just like your debt stack on all your properties. You need to be aware of that because if everything is readjusting in the same year, you might have a problem on your hands.

Mike DeHaan: [1:18] What is going on, guys? Welcome to today's episode of the collecting keys real estate investing podcast. The first official recording of the new year. I guess we have prerecorded the last one. But, yeah, this is your first time to the show. This is a real estate investor show by operators, for operators so you can know what is actually working to grow your real estate business in this current market economy and, you know, with all the stuff going on out there. So I am Mike DeHaan here with my cohost, Dan Austin and Dylan Cook. And what's going on, guys? How was your your New Year's off to so far? I've been going good. I know Dan and Ash is thinking of some deals. Dylan, maybe he's doing some deals. I don't know.

Dylan Koch: [2:01] Dan, we got a lot of deals in escrow, but some of these have been proven to have really, really tricky title problems. We'll touch on one here in a bit, but it's been a mess.

Mike DeHaan: [2:11] That's how it works, dude. You just never know. Right? Like, even with that's wholesaling. Ceiling. Even with the cleanest seller. We have a deal right now that, like, it's a divorce situation. The seller's like a upper income guy. He's like a nice house, a class neighborhood, all and of sudden, have a company that's like, yeah. I think they might be, like, doing some funky stuff with the, like, the deed on this house. They, like, illegally transferred it to himself from their father. And so now, that's something that we have to deal with as part of the gig.

Dylan Koch: [2:40] Yep. I had a fake power someone fake a power of attorney once. Like, there's, like, their the son to their own parent trying to deed the property to sell it. It's freaking wild stuff in this business.

Dan Austin: [2:49] People do weird shit like that. The worst part about it, this guy's a lawyer. I know.

Dylan Koch: [2:53] Also, knows how he knows the loopholes to to pull. Yeah.

Dan Austin: [2:56] Maybe. He didn't seem that smart when I met him.

Mike DeHaan: [2:58] I mean, are educated. Right? They're not smart.

Dan Austin: [3:02] Yeah. In this case, it's kind of a funny story on ours like too, because it's like our ACT manager on this one is like, it just seems like a nice guy. I'm like, absolutely. But like when you actually like take everything into context and line it up, you're like, oh, he's like a normal dude selling a really nice property that he could list for a $150,000 more. Everything seems to be good. He's easy to work with. He's a lawyer. You put it all into context, and you're like, and he's pushing to close really fast? Weird.

Dylan Koch: [3:31] Yeah. That's the red flag.

Dan Austin: [3:32] Yeah. You know? And then it's just like

Dylan Koch: [3:34] How quickly can we get this done?

Dan Austin: [3:35] Yeah. And then it's like you look backwards, and you're like, oh, yeah. He's definitely trying to do something illegal. Hopefully, it works out though. Maybe we're just being judgmental.

Mike DeHaan: [3:42] To be fair, the title company did say that he was being very cooperative so far. And so it is highly possible that it is a situation of, like, dad was unavailable, sick, whatever. He's like, I'll just sign it for him. Nobody will notice. Now they're like, hey. Can't do that. They caught him. So we'll figure it out. But either way, it's good to be back to it. I always find that and we talked about this a little last week, but going through this holiday period as an entrepreneur are always a little bit tricky because especially in real estate, it's not like, you know, if you're selling widgets or something where you can, like, do, like, a New Year sale or, like, a Christmas sale or whatever, and you can, like, actually have something to drive your business forward. With real estate, everything's kinda dead because sellers don't wanna sell. Buyers don't really care to buy. They're taking time off. Title companies are kinda like, you know, lenders aren't really doing anything. It's like, what do you do? You kinda just build some processes and stuff?

Dylan Koch: [4:33] Yeah. A lot of my dialogue with sellers have been, hey. You know, it's the start of the new year. We're trying to buy, you know, a couple properties in q one of twenty twenty five. Just like kinda start the conversation, and that usually is like at least a good segue to start the conversation. So just like the, hey, you wanna sell your house? Like kind of a thing that people do.

Mike DeHaan: [4:51] And getting back to it this week, it's been fun. And I will say since Dan and I downscaled, and we now have our smaller career, we're going local again. First time in past couple days, it actually felt like fun getting into it again after just being, like, kind of a grind with this massive thing over the last couple of years. So

Dan Austin: [5:06] Yeah. You get more involved with the deals. It's a little more exciting.

Mike DeHaan: [5:09] Yeah. And I'm I'm fully in my role at the armchair quarterback. So I sit here, and I, like, just watch the CRM, and, lead comes in.

Dan Austin: [5:16] I'm like, hey. Yeah. Mike doesn't actually

Mike DeHaan: [5:18] do anything. Dude, I I am the overseer. Right? I'm, like, mission control. I literally just, like, sit here. I put on some EDM. I have the CRM on one screen and, like, whatever I'm working on on the other. And every time a notification comes in, I immediately make sure that the team's on it. So I'm

Dan Austin: [5:33] just a fucking pest. If Mike could if Mike could, he would replace

Mike DeHaan: [5:37] I probably should.

Dylan Koch: [5:38] Think he's do you sell, like, a stopwatch? You know, it's, like, timing them?

Dan Austin: [5:42] No. If you if you could, you would just have robots that worked. Be like, hey, robot a Yeah. I would. Do this. Hey, robot b Yeah. You've wasted too much time. The latency point four seconds is too slow in this lead.

Dylan Koch: [5:53] Dan, what he doesn't tell you is he's got a third monitor with Reddit just going down on the side.

Dan Austin: [5:57] Wait. It's just no. It's just plugged into his brain. Just Reddit's just fucking scrolling super fast. Yeah.

Mike DeHaan: [6:02] But and I do have kinda robust they're called VAs, and they're really the next best thing if you have good ones. Let's be honest.

Dan Austin: [6:08] Oh, man. No way. Yeah.

Mike DeHaan: [6:10] Anyways, alright. News and events this week. Dylan, what do we got?

Dylan Koch: [6:14] Kinda the same old stuff. One is the the thirty year fixed rate, and this is if you are like a prime borrower. $7.40 credit, owner occupied, like, all the good stuff is a 6.71% as of today. So I mean, you're an investor loan, the quotes I've got lately are high sevens, low eights, DSCR loans. So anything I'm underwriting, even if it's multifamily, I'm like, I can't do this. So it might be the time of not pace more being it, but trying to really do some creative finance deals if you're trying to buy and hold anything in 2025.

Mike DeHaan: [6:42] You know what, like, honestly, the worst thing about the DSCR loans is? And it's not like the rates, those fluctuate, whatever. It's the fact that it's impossible to get them without getting completely screwed on their prepayment penalties.

Dan Austin: [6:55] Yeah. That does

Mike DeHaan: [6:55] suck. Like, they always wanna have these, you know, five four three two one step downs. And this is something that I've continued to learn years later when there's a property was like, oh, you know, I'll just deal with it for right now at seven and a half percent. It's not gonna cash you that much. And then the next year, you get a freaking tax increase. Now you're a cash flow negative. The next year, happens again. Rents don't go up, and now you're losing money. You know, I kinda wanna sell this or refinance. The rates have come down. Well, that's too bad. It's gonna cost you fucking $8 to refinance it because they have this prepayment penalty.

Dylan Koch: [7:26] Yeah. There's one for you right now I kinda wanna sell, but I'm not literally not because my prepayment's not over until September 2025.

Mike DeHaan: [7:32] Yeah. I've strategically delayed selling a couple properties to get, like, most of the way through the prepayments by only having to pay, like, 2% instead of five or, you know, whatever. Because, like, the couple that I had, they have, like, kinda big step downs. So there was one that was, like, when the rates were super low, it was, like, for the first two years, it was, like, five points. I mean, it was crazy. And then it dropped to three, and now it's down to two. They, like, held it higher for longer to make sure I wasn't gonna fuck around with it.

Dylan Koch: [8:01] Yeah. I mean, one thing that I think is under talked about in the real estate investment community, it's just like your debt stack on all your properties. Like, how they're structured? When do they amortize? When do your arms adjust? All of that kind of stuff is like, you know, you need to be aware of that. Because if everything is readjusting in the same year, you might have a problem on your hands.

Mike DeHaan: [8:20] But we we absolutely work. So we're gonna have a bunch of five year adjustments coming up next year, Dan.

Dan Austin: [8:24] Yeah. It does happen. You gotta pay attention to that sort of stuff. Lender cost, lender fees just in general. The all the soft costs that are what eat away at your overall ROI, and if you actually really pay attention to anything like that. Like Yeah. One of the things I noticed when we were getting some of our GSCR loans is the quotes versus the actual cost. It's almost frustrating how different it is. You have to be careful.

Dylan Koch: [8:44] Oh, did be is the quotes of like, oh, you'll get 70%. Yeah. If you pay down five points. Like, it's stupid.

Dan Austin: [8:50] Yeah. Or by the way, we have $4,000 in fees that we'll just throw in there that are outside of normal fees you would see. And then if you don't catch them, we're gonna leave them. But if you catch them, we might take them off.

Dylan Koch: [9:00] Oh, and they won't tell you until you're two days off from

Dan Austin: [9:01] closing.

Dylan Koch: [9:02] This hoping that you're like, oh, sorry. It must you're committed now.

Mike DeHaan: [9:06] That was a whole thing two years ago now. Was it two years? Yeah. It was 2023. I sold a small portfolio of props that I owned in the Midwest, and I was rolling over a decent sized gain. Like, my cost basis on it was, like, $2.10, and I sold these things for 500. Right? So I had a pretty big tax burden that was coming. And so I tried to do a $10.31 exchange. I was gonna buy the short term rental down in Austin. And it happened at the same time that there was this huge increase in rates and all this other stuff. And then all of a sudden, just with the cost to close, you know, the $10.31 costs, like, to actually get this deal done, to actually do the purchase, was gonna be almost as much as if I just paid the taxes on the money. And I was like, why would I do that? Like, I might as well just pay the taxes and have unencumbered access to my capital instead of buying, like, honestly, a really mediocre deal and saving realistically $15 on taxes. No way.

Dan Austin: [10:04] Yeah. And then you're being stuck with a a deal probably right now that you wouldn't be happy with.

Dylan Koch: [10:08] Yeah. When was that? Because Austins have

Mike DeHaan: [10:09] been going downhill. Austin fucking tanked. I guarantee I would've

Dan Austin: [10:12] lost my

Mike DeHaan: [10:12] ass on that.

Dan Austin: [10:13] Yeah. See? Sometimes the best deal

Mike DeHaan: [10:15] is not doing a deal. I know. Yeah. But I had to pay taxes. Yeah. You know? And that

Dylan Koch: [10:18] really upsets

Mike DeHaan: [10:19] people, but sometimes it is the right decision.

Dylan Koch: [10:21] It is. I guess one other thing to note is, like, anything that's kind of related to housing that's publicly traded is now pretty much like down on the year. These are the REITs, invitation homes, homebuilders. Is this down on the

Mike DeHaan: [10:33] year since like last Thursday, or is this like for the last twelve months?

Dylan Koch: [10:37] No. No. No. Like, sorry. No. 2024 through like the present. Yeah. Not a week into the year.

Dan Austin: [10:44] That's not surprising. Was there a point in time where they were forecasting that they'd be higher? Because like that to me, it just feels a little slower. So all that stuff when it's transaction based would be slower.

Dylan Koch: [10:54] Yeah. And a lot of markets are so forward looking right now. They were seeing the, oh, Fed's gonna, you know, drop rates, and they're kind of pricing some of that stuff in.

Dan Austin: [11:01] Just didn't happen.

Mike DeHaan: [11:02] Yeah. It's not I mean, going into like I feel like that's where stuff in particular around the election is always a little bit hairier. It's just so import export related, it's also very consumer driven. Right? And consumers tend to, like, freeze. Like, we all saw that, you know, trying to to just generate leads going up to the election.

Dylan Koch: [11:20] You know what a metric we should look see if we can look up? HDTV viewership. How many people are at home watching

Dan Austin: [11:26] That's actually the weather vane for real estate right there. That's so true.

Dylan Koch: [11:30] Dude, I mean, it was in the air there for a while. Everyone was like, dude, like, wanna do their own DIY, post it on their social medias about it, and I see a lot a lot less of that now.

Dan Austin: [11:38] You know what they should actually do? It should be an HDTV show, but it'll be

Mike DeHaan: [11:42] where are they now?

Dan Austin: [11:43] And it'll be like all of the like, the property brothers, like Toric, Chip and Joanne, well, they're billionaires. But

Dylan Koch: [11:48] They already made their money. You need the ones that started a couple of the past Man, remember

Mike DeHaan: [11:51] we talked about doing that with, like, real estate gurus, like, trying to figure out the ones from, like, years ago and from where they were?

Dan Austin: [11:57] Like, oh, the

Mike DeHaan: [11:58] the problem did go.

Dylan Koch: [12:00] Yeah. All the ones that are on the early bigger pockets days, like, where where are they now?

Mike DeHaan: [12:04] The thing is they all disappeared, like, eight years ago, No one's seen them since. Might be AI.

Dylan Koch: [12:08] Yeah. Well, they made their money from 2010 to now, and they're just like, I'm out. See you.

Dan Austin: [12:12] They're like, I'm good.

Mike DeHaan: [12:14] Yeah. So, I mean, what does that mean big picture with real estate? I don't know. Like, real estate in general is just so I feel like it's more speculative right now than it's been in like a long time if you're looking at it from like a short term time horizon.

Dylan Koch: [12:26] I'm personally in my market, I'm just more likely to wholesale right now than I am to flip. It's just, you know, unless it's a a really good deal and like my medium price point or lower, you know, because those are so confident, but anything in that medium range to high range, I'm just kinda staying away from if I can't wholesale it.

Dan Austin: [12:45] It feels like what you gotta do going into 2025, and I don't know when the when we turn, but it's like you've gotta be in the game, stay in the game. If you're gonna make your money long term in real estate, you need to stay in the game, do what you can do, and eventually, we're gonna be at this like inflection point, but it'll be like a downward inflection point ready to come back up, and you'll be positioned to just start seeing the deals coming, and you'll be able to climb all the way up from slow times to fast times again, you know, Because flippers are gonna keep flipping. There's always ever ever since I've been alive, I've known that there's been flippers that flip houses, right? So if you're in the business of finding deals off market and selling the flippers, like, you will make your money, and you wanna be there at the right time instead of like walking away or or standing on the sidelines like so many people do. Like, oh, I'll just wait. I'll just hold off. I'll just hold off.

Dylan Koch: [13:32] When that turn happens, you're just gonna have such a head start on everybody else because you have everything down already, man.

Dan Austin: [13:37] It's just all right

Dylan Koch: [13:38] there in

Dan Austin: [13:38] front

Mike DeHaan: [13:38] of mean, just like everyone that really made insane money in 2021, it's because they were already playing the game in the years before that. I mean, honestly, even Dan and I, one of the reasons we were able to do so well was, you know, I had been flipping houses since 2018. Dan had been buying rentals since, what, 2016 when you bought your first one. So we were already familiar with, like, the base level stuff. And then as we started to ramp up our marketing, that was going into 2020. And so when the market was stupid in 2021, a lot of people were getting start up. We already had our base built. Right? And then there was other people that were like that tenfold. They've been doing it since 2010. Yeah. And I I think that just on this note with with the stocks and everything else, the macro indicators mean so little, honestly. I really think that, like, the microeconomic factors are what matter more with, you know, what you should be making your real estate decisions on if you're working in your local market.

Dylan Koch: [14:29] Yeah. Right. I know we've said on the show before. I mean, check your local parlance that are being pulled on locally. Right? See where the new developments are happening. You can do all that kind of stuff. If I'm playing devil's advocate on the buy and hold side, is I'm pretty confident, and you know, no one knows when. But we'll have a day of five, maybe 4% interest rates again. So if you can find a place that breaks even, you know, now, or the rest of your portfolio can kind of subsidize that, you know, and it's a great area, I'd still buy something like that, because I think you will actually be able to refinance one day, and own an asset that you're like, man, I wish I bought that five years ago, or whatever it may be.

Dan Austin: [15:03] Yeah. If you wanna buy real estate, like, and it's a good deal and you like it, there's nothing wrong with doing that kind of deal, right? I think there's opportunity out there, and you have to be You can't just only buy when interest rates are low, because usually when interest rates are low, property values are up. You know, that's just kind of how it works. And so you kind of need to start buying. Ideally, you're buying right at that cusp, because then immediately you can benefit from the the refinance. Right? You just don't know when that's gonna happen, so you do have to take those swings once in a while.

Mike DeHaan: [15:29] Totally. And then you got another note here, boutique hotel. Is that something specific? Like, just just like how that's the current craze that's driving me fucking insane?

Dan Austin: [15:39] Yes. Speaking of Airbnb sucks. Airbnb's out. Everybody was basically running a boutique hotel, and then they're doing what everybody thought about when they went into the syndications and multifamily. Like, if one house is good, a 100 under the same roof is even better, which theoretically, maybe. And so now everybody that did Airbnb is like, well, I'm basically running a full on hospitality business, and I heard a couple cool people boutique hotels, which are really those, like, really shitty motels on the side of the road by the airport.

Mike DeHaan: [16:05] Dude, I know. That that's the thing that's so funny to me about this movement is, like, they look at, a resort, right, somewhere, and they're like, I'm gonna try and make that. What if I bought this Motel six on the interstate in Oklahoma? And I put in a pool, and I made the walls fun color. And I went and I got furniture from IKEA, so it looks trendy even though it's shitty furniture, but I put those in the rooms.

Dylan Koch: [16:31] Yep. Don't forget your cold plunge in your sauna.

Dan Austin: [16:34] Yeah. Because it's a boutique hotel.

Mike DeHaan: [16:35] But there's so much traffic, though. Do people drive through here all summer? Like, there's so And

Dan Austin: [16:41] they'll want a cold plunge while they're here.

Mike DeHaan: [16:44] I'm not bought in.

Dylan Koch: [16:46] I mean, I just don't get it, man. I I like, it's been like an Instagram craze lately, and, you know, maybe they'll make some money. I just I can't get there.

Mike DeHaan: [16:53] So I'm not that into that at all. I would say of the recent like, we've seen a lot of real estate fads over the last three and three years and a bit we've been doing this show, and that one to me seems the dumbest because it's such a forced, like, escape from reality, like, honestly.

Dan Austin: [17:11] Yeah. Yeah. There's few places where, like, a beauty boutique hotel works, and those are usually in nice areas. Totally. Right? Like, if you're in, like, Palm Springs or something Palm Springs, a mountain town, a lake town, somewhere where you can get, like, a 16 unit older motel, fix it up, and make it like a badass destination because you're in a badass destination. But, you

Mike DeHaan: [17:30] know, I'm in I'm in rural Iowa buying this hotel. You know? But, oh, but Iowa State's only forty five minutes away. Where are the parents gonna stay when they come visit? Yeah. Not there. Sorry.

Dan Austin: [17:41] It's not gonna work. I guess, I'll say this. I think there's opportunity anywhere you go. You just gotta stop trying to copy what other people are doing. And I'll give you a good example of what comes to mind, because I I I was talking to a guy recently. So down in like Central Idaho, which is generally a badass outdoor location. Location. Right? It it's not like on the map, like as far as like Yellowstone goes, but you know, like you're gonna go hunting and fishing, and people think of Idaho just as like backcountry. Right? So there's this guy down there who does like fishing, like salmon fishing guides, and people from all over the country come there and pay thousands of dollars to go on these boats. So he bought this like janky ass piece of property on the side of the river outside of a small, small town of like 400 people, but that's like where good fishing kind of is. And instead of building an RV park, he put a bunch of tiny homes on there, and then he condo ed a bunch of them out. And like all these fishermen dudes will pay $200,000 for this like thing that he built for 60. It's a very unique niche to that location, and it's really creative, and nobody else is doing what he did in that area, and it made total sense.

Dan Austin: [18:43] You can kind of think of that as like the boutique hotel, like example, where in the situations where it makes sense, you can apply it. But most of the time, it's just like just like the whole buying a business, crap, fad, or anything. Like, you're just trying to apply or water down what somebody else is doing, and it just doesn't fit for every situation.

Dylan Koch: [19:00] Well, sounds like, one, location. Two, like and then, like you said. But two, his cost basis sounds like it was really low. Exactly. So, like, his risk is, like, you know, very minimal compared to buying something for a million bucks and putting a million into it or whatever it may be.

Mike DeHaan: [19:13] Hey. So you've heard us mention our scale community before, and I don't have a lot of time, so here are the quick highlights. In scale, you get all of our processes and systems that we use to do about a 150 deals every single year. You also get a community of investors that are verified crushing it in their markets. Otherwise, they wouldn't even be members. And that way, you don't have to waste time with nonstarters like you find in other groups. You also get preferred relationships with marketing companies and even lenders that will give you 100% financing. If you just heard all that and said, nah. I don't really need it. That's not gonna help me. I don't know what to tell you. You're lying to yourself because all those things are guaranteed to help you explode your business and buy more deals next year. So go to collectingkeys.com/scale, and let's see if you qualify. Here's the other current fad that's been rising very quickly over the past that I cannot fully believe in is co living. Right? This is a tough one. This is

Dan Austin: [20:05] a tough one. Yeah. Unless you're a drug addict and you're acquired by the state.

Dylan Koch: [20:09] Yeah. That's group homes. They're different, Dan.

Mike DeHaan: [20:10] Oh, so right.

Dan Austin: [20:11] I'm so out of touch.

Mike DeHaan: [20:12] So the co living thing, I think, I've seen it come up, and Sam Waggart's the big guy that does his, you know, buddy of mine, gobundance, and he's done very, very well with himself with it. Where it started to hit me that this was something that was getting out of hand, when I had this guy, he messaged me. He might even listen to the show. He messaged me and said that he heard me. He heard the episode that we have with him, and he's super into co living, and he thinks that our area up here really needs some co living stuff. So he's getting into that. And I'm like, no, dude. That is not the culture in Spokane, Washington where people will live in a cardboard box on five acres. Just because it's on five acres, no one wants to live in a big house with a bunch of random stranger they rent around.

Dan Austin: [20:55] Well, then you just go down the whole list of like Spokane is not a, like, walking city. We're not a cab city. We're not an Uber city. We're a drive to our location city, which means everybody needs cars. There's no transit. Good way to get around. Like, there's just so many like, there's so many cultural things that you have to get over. And then the way we're built, we're like an urban sprawl. So, like, you're gonna be pretty far away from anything if you're going to live in one of these houses.

Mike DeHaan: [21:17] Totally. Like, you're in, like, Austin, you know, where there's a bunch of tech guys that are just, like, all 23, and they just wanna live in their room, and they, like, have their virtual jobs, and you can literally get an Uber anywhere, anytime, and it costs, like, $12. It's not that expensive. Right? Or where where Sam does it is in Charlotte, similar sort of thing. There's a huge sort of, like, density of young people that are moving there and all these companies. But the vast majority of The United States, I think it is a terrible model. But it's also honestly, if you do put it together, it's gonna kinda fuck up the housing market. Because you're gonna be taking all these houses that should be family homes, and you're gonna be trying to put them together for, like, a bunch of grown adults to rent the room in. Right? And then ultimately, you're gonna be like, well, I can't find these people, so I guess I'm gonna end up with meth heads, random construction workers who are, like, you know, on work release. Right? Just like whatever other random person, like, for some reason is trying to do this in this town where it doesn't make sense.

Dylan Koch: [22:14] And it's management intent to Totally. If the tenants are bickering with each other, like, you are the mediator

Mike DeHaan: [22:19] in that sitter.

Dan Austin: [22:21] Well yeah. And and, yeah, the whole lease setup and how some of these cities don't even allow that. Like, I know in Spokane, what is it like that In the city, you can't have more than is it four unrelated parties in the same house?

Mike DeHaan: [22:33] Mhmm.

Dan Austin: [22:33] Like, so you got all these, like, rules in most cities where they because they are like, we don't want this.

Dylan Koch: [22:38] And your business model can change on the stroke of a pen. They can be like, oh, we don't want this anymore. Yeah.

Dan Austin: [22:42] Yeah. Airbnb. Yeah. Exactly. Right?

Mike DeHaan: [22:44] And then well, there's weird stuff they'll do to get around that. Because I remember Sam talking about this is he'll be like, oh, what we do is we start an LLC, and, basically, we make them all owners of the LLC. We And say that as part of the LLC, they're allowed to live there. So now they're all related by a business. I'm like, that's not gonna work most places.

Dan Austin: [23:00] You're like, that I mean, okay. That's fine. You know?

Dylan Koch: [23:04] So I mean but I don't know. It just seems like for the headache like, if even if you clear an extra thousand a month, like, is it worth it, man?

Mike DeHaan: [23:11] Like

Dan Austin: [23:11] Dude, go find something else that takes you, like, the same amount of time that makes you a thousand bucks. Honestly, anything.

Mike DeHaan: [23:17] Or go do one wholesale deal and make $25,000. And Yeah. It's way less work than trying to piece together.

Dan Austin: [23:23] I know. It's so much easier, dude. So much easier.

Dylan Koch: [23:26] Mutual friend of ours who lives well, now in Idaho, but does a lot of this in

Mike DeHaan: [23:31] the car area.

Dylan Koch: [23:32] Maybe we can stick on

Mike DeHaan: [23:32] too. Yes. Old Craigie poo. That's right. I'll I'll call out Craig on the show. He wouldn't mind. Bring him business anyway, because he has a very good agent at what he does, to be fair.

Dylan Koch: [23:41] Oh, yeah. He's awesome. But I know he's big into co living.

Mike DeHaan: [23:44] But again, in Denver, I think that works. Right? It's a huge city. Makes sense. Is built for that. Most of the country just doesn't.

Dan Austin: [23:50] Well, and the properties he has, he's like got these OG properties from Denver that he's had for a while. Right? And so, like, he has multiple exits on those anyways. He could probably just rent those for nothing and still make money.

Mike DeHaan: [24:01] Yeah. All such a Cool. Alright. How's everything going with our businesses? What we got going on, Dylan?

Dylan Koch: [24:06] I mean, we're still slinging deals. Actually, just right before this call started, I'm gonna accept one. But I wanna ask you guys about it's actually a title issue. I wanna see what you guys would do in this situation. ARV on this place is probably $3,153.25. Rehab is probably like 60 k. Wow. We have it for $1.15. Great price.

Dan Austin: [24:25] Beautiful price. Really good price.

Dylan Koch: [24:27] But the issue is that the seller or I should say this, the guy who's living in there who has signed the contract, has a land contract with the original seller. Mhmm. This land contract basically says that he can sell it. However, they need like the approval of the original guy. Right? Original guy has a very common name, has changed his name, and is now incarcerated.

Dan Austin: [24:50] Oh, jeez.

Dylan Koch: [24:52] So and now they we've done this title search, and the original guy who's incarcerated, because of his common name, is basically saying there's a bunch of liens against this place, about $10,000 worth, that he is unwilling to cooperate and say, like, you know, these aren't me, or he's not gonna sign any payoff authorization form. So I was like, what do we do? Do we just let it die? And what I'm going to right now, what I'm talking to with the attorneys is, because the total lien amount is like $10,000, it's still a good deal. If you asked me to pay 10,000 more for the deal, I'd still buy it. So I think right now, I'm gonna buy it with these liens attached to it. No really title insurance, and then try to do a quiet title after the fact. And basically clean slate at like once we own it, which is a risk. But I think given the spread, I'm willing to do it. But I wanna know if you guys would have any other takes.

Dan Austin: [25:39] I got a couple questions. So when you say I don't understand why there's the point that he has a common name. It's because you can't actually find the guy, or it's because he has a name that was hard to find?

Dylan Koch: [25:48] Because I'm making this up. Let's say it's John Smith. And so they do a title search, and they could look search John Smith if there's a child support, if there's a state tax, federal tax. They all kind of are associated with the name in the county. So then you have to prove that they're not associated with that person and that parcel.

Dan Austin: [26:04] Okay. So you actually know where the seller himself is.

Dylan Koch: [26:07] I know what jail he's in. Yeah. Okay. So you can talk to

Dan Austin: [26:10] him if well, maybe.

Dylan Koch: [26:11] But he's not be he's not willing to say, like or sign off on any of them, say these are this is or is not me.

Mike DeHaan: [26:17] He's not willing to sign off on any

Dan Austin: [26:19] of them. So you're saying, I will not confirm nor deny.

Dylan Koch: [26:21] Really nothing. And because sorry. Little other added tidbit. He is foreclosing on the guy that has a land contract with because the land contract guy is not paying him. So he would rather just probably get the property back. Sure.

Mike DeHaan: [26:33] So he's kind of fighting you then on him.

Dylan Koch: [26:36] Yeah. Yeah. He's purposely playing hardball.

Dan Austin: [26:39] So you could buy it do you see, you're saying that you could buy it from this guy, title. You won't get title insurance, but they'll, you know, they'll do the They'll do the

Dylan Koch: [26:46] transfer the deed. Yeah.

Dan Austin: [26:47] Yep. And this guy will leave the house, ideally. Right?

Dylan Koch: [26:51] Yes. Yes. Leave the house. Close.

Dan Austin: [26:53] He'll he'll probably get a little scratch or something like that to get him out of there. And then once that happens, you can go do quiet title, and ideally, he doesn't read the newspaper that you put that in?

Dylan Koch: [27:02] Yeah. Pretty much. Which I don't know if they get newspaper in prison, but

Mike DeHaan: [27:06] I would they probably do.

Dan Austin: [27:07] They could probably search the Internet on their time. Here's what I would do, I would Google that.

Dylan Koch: [27:13] But worst case, it's like, okay, that goes through. And I feel like based on some of the conversations I've had with the attorney sellers, let's say I throw them $15.20 grand, make these things go away.

Mike DeHaan: [27:22] I mean, it's a tough deal. Right? Like We're both just thinking. I don't really know. Somebody has to do the deal.

Dylan Koch: [27:29] Or you just wait for this thing to get he actually does get foreclosed on by this guy, then just go straight to him and see if he'll sell it at that point.

Mike DeHaan: [27:35] Yeah. It is tricky. Since the purchase, the ARV is like $3.50, and you're buying for $3.15. Okay. Oh, yeah. So then you're buying it for like

Dylan Koch: [27:43] $3.15. $3.15, like $3.20.

Dan Austin: [27:45] So you're like at $11.75 all in on this, maybe $1.85 all in on this? Yeah. So you got it, it's a great deal.

Mike DeHaan: [27:51] And what's that, like there's no reno?

Dylan Koch: [27:53] No, it's like 60 to 65 ks in reno.

Mike DeHaan: [27:55] Okay.

Dylan Koch: [27:56] But our purchase price is 115.

Dan Austin: [27:58] So I mean, I think there's a big risk. So you're risking basically a $115,000 that this guy raises his hand and said, no, I own that place.

Dylan Koch: [28:05] Yeah, I guess.

Dan Austin: [28:07] But the only thing that's not getting cleared is the 10 k in liens. Would those people be the ones that would be able to raise the flag on this?

Dylan Koch: [28:14] That is my understanding, yes. That is the one they're saying, like, these are associated with.

Dan Austin: [28:18] And then can you just pay them directly?

Dylan Koch: [28:20] I don't think I can pay them directly without him signing off on them.

Mike DeHaan: [28:24] See, that's the tricky thing. Right? Well, because

Dan Austin: [28:27] you could buy a property with liens against it. Right? You can buy with all the encumbrances and liens.

Dylan Koch: [28:31] Yes. You can. But then you're like, my trick will be if I go to sell it.

Dan Austin: [28:34] You go to sell

Dylan Koch: [28:35] it And then these are gonna pop right back up again.

Dan Austin: [28:37] Yeah. Well, you got a few months to figure that out. Exactly.

Mike DeHaan: [28:40] Can you not like work with the lien holders directly? I would imagine you could.

Dylan Koch: [28:44] I don't know how to get ahold of this guy. I mean, I guess I could try to go to him in prison or like, I've tried to skip trace him.

Mike DeHaan: [28:49] It doesn't work. Well, he's not

Dan Austin: [28:50] the lienholder though. Right? Yeah. Once you pull title once you pull title, you'll have the itemized. You know?

Dylan Koch: [28:55] No. I have not tried that. That's a good idea though.

Mike DeHaan: [28:57] That's what I would do, and see if you can get them to say like, hey. This property is in a foreclosure process. I am buying it. You have these liens on this property. You probably even get it for less. Would you be willing to if I pay you half Yeah. Know, I just pay you in cash, like, your next week, would you be willing to to move it?

Dylan Koch: [29:13] And assign a release to it? Yeah. That's probably the best way to go.

Dan Austin: [29:17] Yeah. A good example of this is like, especially with private notes, like I've been getting this a lot lately, just even direct mail. But there's people out there that will like pursue like specific first position liens and mail those people and say, hey, I wanna buy your lien. And so I know like people would be, you know, that's a method for people to buy properties, or buy liens against properties, and so it could probably work for anything, because all you're trying to do is just pay them off. So as long as you can get ahold of them, which you typically can.

Dylan Koch: [29:44] Yeah, why would they not want that?

Dan Austin: [29:45] Exactly. And then you just have to get a a lean release waiver signed or whatever they call that in in Ohio, and just they'll do it, you'll be good.

Mike DeHaan: [29:53] There you

Dylan Koch: [29:54] go. I know what I'm doing tomorrow.

Mike DeHaan: [29:55] Yeah. I mean, it sound like, it's definitely worth to squeeze, like, for sure. I just think it's way outside the box. And any yeah. If anyone got lost on

Dan Austin: [30:02] that Totally.

Mike DeHaan: [30:03] Yeah. Yeah. Hit me up on Instagram. I'll try to explain it to a little more.

Dylan Koch: [30:07] Yeah. Sorry if that was complicated. Was one of the most complicated ones I've had to deal with. So and these are real case scenarios.

Dan Austin: [30:12] These are, like, almost weekly, if not monthly. You know what I mean? Like, on well, for if you're running an operation, you're running into shit like this all the time.

Mike DeHaan: [30:19] Totally. I mean, it's endless. It's like a little bullshit that comes up.

Dylan Koch: [30:24] I will say for the audience, if this was like a $5,000 wholesale fee, I'd probably just say fuck No way, dude.

Dan Austin: [30:29] Yeah. Yeah. You're not you've got so much opportunity to move on. Don't get hung up on it.

Mike DeHaan: [30:33] We got a nice wholesale close today. We got one signed around at right before the sorry. On New Year's Day, I think. Yeah. I mean, stuff's been moving pretty well. We got quite a few closings scheduled here for this month. Yeah. All in all, like, we're off to a good start. I think we already have a hundred and thirty, hundred and forty thousand dollars worth of expected revenue, and we're on, you know, first week of January.

Dylan Koch: [30:57] So That's awesome.

Mike DeHaan: [30:58] Not a bad place to be, especially because we were pretty quiet going into this year as we were, you know, kinda winding down. But, yeah, I mean, it's kinda business as usual right now. It's just been an adjustment sort of with a new team and getting used to doing stuff in person against even virtual for so long. Yeah. I mean, the market as a whole here has been as long as you're in, like, the affordable price point range, has been relatively hot. I listed one of my rental properties for sale last Friday. Got a full price offer on Sunday night. So it was on market for two days, and it's like a strong buyer, $10,000 EMD nonrefundable closing beginning of February. You know, that's like best neighborhood in Spokane, though. So if you're, like, doing stuff like that and I did spend

Dylan Koch: [31:42] Yeah.

Mike DeHaan: [31:42] $6 doing the floors and paint and everything else, making it look good, and it did.

Dylan Koch: [31:46] Did you offer a 3% buyer's commission?

Mike DeHaan: [31:49] I think it was two. Two?

Dan Austin: [31:51] Agents are pretty hungry. They'll do anything.

Mike DeHaan: [31:53] Yeah. So, yeah, it's it's two on on seller, two on buyer side. So yeah. I mean, all all in all, it was like, those kind of properties are still moving, and so it's just being strategic around the stuff that we wanna take down and how we're kind of approaching these negotiations.

Dan Austin: [32:06] Yeah. So going into the end of the last year, end of twenty twenty four, I will say, like, the big time flippers that we sold a lot of our deals to were not buying anything. Because they had their goals in January. I wanna do this many deals. And then they got a bunch of deals. They did a bunch, and then they had a bunch on the books towards the end the year, and all of them were like, just wanna clear what I got. I just wanna clear what I've got. So going into q one of twenty twenty five, I'm expecting those buyers to come back around, But we've had in the meantime, like the little onesie twosie wholesale buyers that like, you know, they flip one house at a time that were now the floodgate's open for them. They're like, my god, have all this opportunity, because it's not getting picked up by these big flippers. And so it's been nice to wholesale deals to them and keep them kind of in our network, but then I think our mainstay big buyers will kind of just drop right back in probably mid end of January once their books are completely cleaned off of all the properties that they don't want anymore.

Mike DeHaan: [33:00] I've had a lot more people too. Like, a lot a lot more flippers that are I would say we used to do stuff with, like, years ago that have been starting to, like, wake up again. So I feel like it'll be a pretty strong, like, investor buyer period here over the next little bit. So we'll see. Alright. Any big weekly lessons for me that you guys as we wind this thing up?

Dan Austin: [33:20] Let's see. I would say a big weekly lesson or maybe it's been a couple weeks because I haven't been on the show for a bit, is just dealing with some buyers. They're just so it can frustrate you, and you gotta be careful.

Mike DeHaan: [33:32] Oh, you mean like the buyer we have that's using his mommy's house as cross collateral?

Dan Austin: [33:36] Right.

Mike DeHaan: [33:36] Wow. Seriously. It's like a

Dan Austin: [33:39] young Yeah. So here's the deal. Like, you know, trust your gut, and like, we have this house that we're wholesaling, and honestly it was gonna be a tough one to sell anyways. So I talked to this guy, and know he's like a younger kid. He's like, Oh, I've done several deals in town. He sent me a proof of funds, which was legit. I was like, Oh, yeah, this is a lender in town, all this stuff. He's doing like the right things, and then we get to the point to where we're gonna walk the property. And I told him, I was like, Hey, you know, he wanted to bring his contractor, and I was like, Ah, no man, I'd rather just be you. And he's like, well, if I can bring my contractor, it'd be helpful. So I'm like, okay. Perfect. So I was like, you could bring your contractor. Well, then turns out he's not only bringing his contractor, which I don't think he ever had a contractor, but he's bringing his wife or some young girl that looks like she's 19, and then some old dude, and then some other person. Like, brought four people to this walkthrough where I told the seller, hey, I'm bringing two people with me. So he brings these four people who are just milling around this guy's house.

Mike DeHaan: [34:38] Oh, god.

Dan Austin: [34:39] And I was like, oh my god. And I told him, was like, you know, if you don't mind, like, if you're gonna have your contractor show up or whoever, make sure they they look like a contractor, like, just in case, like, it wasn't a contractor. So his contractor the clothing that his contractor wore was a DeWalt's earpiece around his neck. And then and then the buyer, this kid, puts on a Patagonia shirt because that's rough and tough.

Dylan Koch: [35:02] Oh I was

Dan Austin: [35:03] like, what is happening here? But then, he's kinda telling me all this stuff, and I've been pretty I'm usually pretty aware of situations and like what's going on and kind of reading into it, and so I was really specific about like, hey, if you're gonna do this, like he wanted to try to go conventional. I was like, you can't go conventional. We went back and forth on that, and I told him, I was like, you gotta pay cash, that's the only way you're buying this thing. And anyhow, like just the way he was acting, I was like, This kid's acting kind of squirrely. I wanna lock him in on this, like high earnest money, do all that sort of stuff, and everything's good, but then like title company, like he's like fighting me. I was like, Dude, give me your lender's phone number. I'm gonna talk to him. And he was just fighting me, I'm like, I've done tons of deals, and all this stuff, all these red flags. And it turns out our title company's like, Yeah, so I talked to your buyer, and yeah, so Colleen, because he said, Hey, I need you to put my wife Colleen on the addendum, so I wrote, you know, Colleen, add buyer's spouse Colleen, because it's, you know, community property state in Washington, you have to do that anyways.

Dan Austin: [35:58] Well, turns out Colleen's his mom, and he's cross collateralizing her a house to get this damn loan, which I don't really care about. But it's like those little things, like the red flags around buyers, you gotta be careful.

Dylan Koch: [36:10] I hope it works out for them.

Dan Austin: [36:12] Yeah. It's just like the little red flags that people raise. You need to vent them out and like really pay attention to them, let your spidey senses, you know, tell you what to do next because, you know, the kid's an idiot.

Dylan Koch: [36:22] Which is why, like, if you have repeat buyers that you know are good, sometimes they're worth just selling to them, even if you're getting paid 5 k less. Right? Just knowing it's a done deal.

Dan Austin: [36:33] Yes. 100%. You don't have to stress about anything. You don't do anything. You just know it's gonna happen.

Mike DeHaan: [36:37] Well, I think the big lesson there though too, Dan, is Samar, I give you credit on this deal is you did walk the guy through a lot of the stuff that he needs to do. You worked with his lender. You had the conversations on his end that he was unable to have. Right? And I feel like there's tends to be this whole thing with like, well, if you're gonna be a buyer, you should know all this, but that's not always the case.

Dan Austin: [37:00] Yeah. You you have young people. You help out.

Mike DeHaan: [37:03] Yeah. And our well, in our job as the wholesaler, as the intermediary on this, is to make sure that both sides know what they're doing. And, yes, you have to walk the seller through all their bullshit because that's standard. Sometimes you have to do the same thing with the buyer, and being willing to do that is where you make your money. Right? Because otherwise, this deal was a hard one to sell. Right? It's a higher price point home. It is a property that has, like, some quirks, like, for the neighborhood and different things. Right? And we had several people that were interested, but he offered us the best price. And it's like, is that worth the extra 5 or $10,000 for you to do that? Absolutely. Of course, it is. Yeah. Well, and he was

Dan Austin: [37:34] also the only person willing to pay use private money. A lot of them were conventional. Even like our investor buyers, I would love this for my personal house. It's like, how do you go conventional? Well, you really can't. There's not a good way to do it. There's yeah. There's a lot of stuff.

Dylan Koch: [37:48] You'd have to like double close it, but then you're just jump have to jump through a whole lot of hibs.

Dan Austin: [37:52] Yep. Exactly. And we have excise tax, so that's 4% of the transaction total to actually double close, and so it just gets weird. And I think the the lesson too is just to when you think someone's lying to you, they probably are. So he wasn't lying to me at the extent where I don't trust him. He was just lying to me at the extent he wasn't sharing his full situation so that I could help him through it. Like, I don't care if you're collateralizing your, like, grandmother's left leg to buy this house. Doesn't bother me one bit. I just didn't even know that so that I when I call and I don't I don't get kinda surprised, right, by what's happening, and then the title company is like, what's going on? This isn't his wife. It's like, nope. It sure isn't. That's his So good lesson there.

Dylan Koch: [38:31] Yeah. I mean, mine's kind of on the the same lines. But, you know, once you do this business for a while, and, you know, competence creates confidence. And at the beginning of my wholesale journey, you know, if I had a deal, and I'd reach out to buyers, if you're trying to reverse wholesale it, and you're like and they're like, oh, man, I can't do 200, but I can do $1.90. And then I'd go back to the seller and try to get a price reduction, so I can make my 5 to 10 k. Now, it's just like be stern in the price if you know your numbers. It's like, they'll try to keep beat you down, they'll beat you down. They want a good price too, but they'll just be like, no, man. Like, this is the price. Take it or leave it. And then being able to have that confidence and just like doing that now is I think I don't know. It just feels good. Come a long way too.

Mike DeHaan: [39:07] Totally. And just like people get commission breath when they're trying to make lowball offers to sellers and they give too much going up on price, you can do the same thing on the buyer side. You wanna know what's actually like a pretty powerful place to be in is when you

Dan Austin: [39:19] have a buyer that's like,

Mike DeHaan: [39:20] well, I need to be $5,000 lower, and you go, well, that's too bad. I'll go sell it to somebody else. You'd be surprised at how quickly they can suddenly pay you $5,000 more.

Dylan Koch: [39:27] Yep. Or even if like you're like, well, you know, or I'll take it down myself. You know? Like, you had the funds to do that too. And if Yeah. You if you're not pitching pennies, you can have the authority to do that.

Dan Austin: [39:37] Yeah. I don't know. I might just do this one myself. If I don't get $1.50, might as well just do it myself. That's that's the line.

Dylan Koch: [39:44] Yeah. Or I have, you know, five to 10 other guys I wanna see it too. So

Mike DeHaan: [39:48] Cool. Right on, guys. So good lessons there. Alright, everyone. Well, thanks for tuning in this week. You guys have a great one, and we'll talk to you guys next Tuesday. Alright. See you, everybody.

Dylan Koch: [39:58] See you. See you.

Mike DeHaan: [40:00] 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

Dylan Koch: [40:14] of the show.