Flipping in this Downward Market, Our views on "Morning Routines", and How to Analyze "Statistics" on the News

Mike DeHaan: [0:00] Yeah. I saw you. Tarl Yarber. Shout out to him. I don't know him, but you lost some big money this year, dude.

Dan Austin: [0:06] And this is public knowledge. I'm not calling you out.

Mike DeHaan: [0:08] But on his yeah. He's a big time flipper. You know, he's super involved in bigger pockets. He hangs out with Brandon Turner and all these sort of dudes. And he posted, like, a 100 something thousand dollar loss, I don't know, like, month or so ago, and he just posted about another, like, $45,000 loss. And they're just, like, you know, cutting what they can and just trying to get them off the books at this point. Yeah. But

Dan Austin: [0:30] And he's an experienced guy. Like, I would trust his knowledge base. And so it can happen to anybody, but, you know, sometimes the train has to stop somewhere.

Mike DeHaan: [0:39] Mhmm.

Dan Austin: [0:39] And whatever the bag you're holding is the bag you're holding. And if that bag's a $100,000 loss Sure.

Speaker 3: [0:45] Yeah. Welcome to the collecting keys real estate investing podcast with your host, Mike DeHaan and Dan Austin. From wins, losses, horror stories, and tactics for optimizing your business, Mike and Dan take a real uncensored deep dive into the ins and outs of running a full time real estate investment and wholesaling business.

Mike DeHaan: [1:11] What's going on, guys? On episode 64 of the collecting keys real estate investing podcast, Dan and I are kicking off into our new routine here. Doing this weekly instead of, like, biweekly.

Dan Austin: [1:25] Much

Mike DeHaan: [1:25] work. Which is funny because we we originally started doing it weekly. And then, you know, we shifted to biweekly doing the interviews in between, and now we're back doing weekly again. Because, I mean, let's be honest. There is a small sick audience that only wants to hear us talk and doesn't listen to any of our interviews. This is what they're after.

Dan Austin: [1:43] So we decided to small subset of people that just love the mic and the engine.

Mike DeHaan: [1:49] Yeah. Thank you. Four

Dan Austin: [1:50] four, maybe five people.

Mike DeHaan: [1:51] Exact yeah. I mean, maybe I can tell you That's enough. The people that do not fit into that is our wives because that's why we can't hang she's ever listened. I I know mine has very occasionally. Usually, when I say, like, hey. What'd you think about this one? She has me a sympathy listen. But that's why we can't really hang out socially anymore is because it would be me and Dan basically doing an episode of the podcast because this is how we always talk, while our wives, who are both somewhat introverted, just sat there and wished that they were anywhere except there. So

Dan Austin: [2:20] Except for the Mike and Dan show.

Mike DeHaan: [2:21] Yeah. Right. I know. The funny thing is is that term actually was coined by my wife when, after we did a a trip to Hawaii. And, I remember one particular day where you and me and my my mom was there, and Stacy was there, and Madison was there. And they all just sat there, and you and me just talked for, like, three hours. And then finally, like

Dan Austin: [2:45] We didn't even notice.

Mike DeHaan: [2:46] Even notice. And then, like like, later they left, and then Madison was like, it's like, man. Well, like, she said to my mom, she was like, it's like, man, I'm, like, slightly exhausted after sitting down and listening to the Mike and Dan show for three hours. Like, can I say? We just got you know, we just get excited about stuff, and we can just talk about nothing forever.

Dan Austin: [3:04] To say. We got a lot to say Yeah. About real estate and crypto and whatever else we I don't even know what else we talk about. Mountain biking, maybe?

Mike DeHaan: [3:11] Mountain bi maybe a little bit back then. I don't know. Like, we were like well, that was a while ago because I was just starting to get into business. I think that was actually the first time we went back before I even god. Like, years ago now. That was because I think that was the same time that I read the four hour work week, and I decided that I was gonna

Dan Austin: [3:27] Yeah. That was five years ago.

Mike DeHaan: [3:29] Yeah. It was five years ago. I decided I was gonna leave the corporate world after, you know, a week in Hawaii and reading The four Hour Workweek. And I remember, like, literally, you and me were up on the the patio in our, room, and it was like, what if we could be like these dudes down here that are, like, working, but we can make, like, a thousand dollars while we're here? Wouldn't that be sick?

Dan Austin: [3:51] Right? You know? That yeah. True story. That's how this all began. Yeah. It began right then and there. It is. Trying to make a thousand bucks.

Mike DeHaan: [3:57] Yeah. Thousand bucks. And then we'll figure well, I guess, time we went to Hawaii together, which was, what, three three years, four years later

Dan Austin: [4:03] Yeah.

Mike DeHaan: [4:03] We closed a I think it was a $20,000 deal while we were there, while we were, like Dropped up. Slightly drunk on Bloody Marys, and we, like, we're calling the seller back because she had just said that she didn't wanna sell anymore. Oh, yeah. And I was super upset about it. And and you came up, and you were like, like, what are you doing? And I was like, oh, I just talked to whatever her name was. And she's that's You call her back right now. And we did. And we got we closed the deal on the phone. It was great.

Dan Austin: [4:32] Hell, yeah. Yeah. That was a good deal too. Yeah. Yeah. See? All things start in Hawaii. I mean, on the porch looking at other people.

Mike DeHaan: [4:42] Yeah. It's a great inspiration. That's why, like, you know, Brandon Turner and, like, other people move there. Because, mean, that is one thing I can say, because if you are someone that can afford to move to Hawaii, a lot of the other people that are gonna be in your neighborhood that also moved there are also gonna be rich and successful. So you're gonna immediately be putting yourself into a network full of people that are like that.

Dan Austin: [5:04] Yeah. And I would say too, like, getting in, like, this concept of flow or, like, or just motivation even, going to somewhere where you're really happy Mhmm. Gets you into that flow state where you start thinking way bigger. 100%. Why it could be there for people. It could just be a random trip to somewhere on the weekend. You're just like, this is badass. I wanna do this all the time.

Mike DeHaan: [5:22] Yeah. I mean, that's definitely true. Like, I mean, that's one of the big reasons I like to travel a lot is every time I go somewhere where I have, like, a good time to get you out of your element, I always find I get, like, the most creative, yeah, know, just in my general thoughts and, you know, even, like, work wise, lifestyle wise. Like, whatever I've been working on suddenly becomes easier to think of when you're not Yeah. Stuck, like, in your home where you just have, like, the distractions of, like, even little stuff. Like, I need to do the dishes. You know, I need to take my dog out. I need all sort of things. If you can just, like, get out of that and you're just immersed in, like, learning new experiences and being able to, I don't know, reach that flow, like you said, it's amazing how uncomplicated things suddenly seem.

Dan Austin: [6:02] I know the years is like you're traveling and and not that traveling is always easy, but, like, mine has been historically not that I don't get it when I travel either, but, like

Mike DeHaan: [6:09] Mhmm.

Dan Austin: [6:09] Doing something hard. For me, it used to be, like, mountaineering all the time and going on like a 50 mile mountaineering trek up the side of a mountain. Yeah. You're like just sucking. It's like, oh, if I could do this, I can totally do something else. Yeah. Like, I could totally go start a business or totally do this or totally be way better at life than this because, like, you're just, like, in this mental state where you can't really think of like, when you're, like, at altitude and you're sweating and you got, like, 75 pounds of gear on your back, you're on a rope going across the glacier, you can really only focus on a couple two or three things, and all the other noise has to wash out. Mhmm. Because you just can't it's kinda like when you're working out. Don't know if you've ever done this. Dudes in the gym are super good at math.

Mike DeHaan: [6:51] Mhmm.

Dan Austin: [6:52] Like, in their head when they're working out, they're like, okay. I did nine. Nine divided by three times 44, I have seven reps left. Mhmm. Yeah. Right. You know?

Mike DeHaan: [7:00] Like, you

Dan Austin: [7:00] can also, like because you can only focus on one thing. All the other noise goes away. It was kind of the same me.

Mike DeHaan: [7:06] Yeah. I think that, you know, we talk about mountain range. That's why a lot of high performers get into extreme sports and or, like like, not an extreme sports, but, like, high discipline sports or, like, high effort sports. Like, you know Sure. See a lot of a lot of c suite sort of people, they get into triathlons or, like, Ironman or these sort of things because it is such a high high suffering sport, I guess. I don't wanna say high intensity.

Dan Austin: [7:30] It's a challenge.

Mike DeHaan: [7:31] It is. Right? And it's it's a lot of it's mental. And that's the thing too is, like, when it comes to, like, those endurance sports, so much of it is mental. You have, like, a general fitness level, you can complete those things if you have the mental toughness. And for those sort of people that have a lot going on on their day to day basis, it's a perfect reason for them to not think about anything else or to be able to have, like, that sort of flow focus, and then they only think about the things that are in their subconscious, which are typically the problems they're trying to solve. You know? Do you think

Dan Austin: [8:00] that also correlates to, like, the 2AM, like, wide awake thinking about things?

Mike DeHaan: [8:05] Maybe. I mean so so here's the difference, though, right, is because I'll I'll get that when I'm stressed. Like, I'll get, like, the, you know, wake up and be, like, fixated on something, but it's always kinda like doom and gloom. Like, you know, the the 2AM, 3AM thoughts. Whereas I will have those same thought process processes when I'm traveling, when I'm like, for me, I always get on a plane. Like, something about, like, going through the traveling process where I'm on the plane. I just find out I'm super focused on whatever. Even if I'm, like, watching a movie on a plane, I'm not watching the movie. I'm sitting there staring at the screen thinking about other shit.

Dan Austin: [8:38] Right. Yeah.

Mike DeHaan: [8:39] Right? And I will think about the same problem that keeps me awake at 3AM. But when I'm in, like, that sort of flowed state, it is not scary. It's very easy to be rational and to come up with actually actionable steps on it. Yeah. You know? Whereas, like, at 3AM, I'm like, uh-oh. It's so bad. Like, everything's terrible.

Dan Austin: [8:55] Yeah. But that's a that's a great idea or topic, though, because, like, that is what drives a lot of people's Mhmm. Decisions is that 2AM, like, fearful thought. Yeah. But if you can have that same exact like, put that on pause, and if you can have that same exact conversation with yourself, maybe it's in the gym working out, maybe it's traveling, maybe you're just driving listening to a motivational podcast like the Mike and Dan show.

Mike DeHaan: [9:18] Yeah. Right.

Dan Austin: [9:19] Yeah. But you can reframe that fear and put it into something that's actually productive than laying there in bed or being in that fearful state of like, gosh. Should I flip a house right now? Oh, what am I doing? I got this place under contract. I'm gonna lose my ass. It's like, no. How about how are you not gonna lose your ass? You're like, how are you gonna make this thing and be a winner? Mhmm.

Mike DeHaan: [9:36] Yeah. And I mean, and I think that that is a major reason that a lot of people do tend to struggle with stuff is because especially if they're you know, they have a career, they have kids, they have family obligations, they have all sort of stuff, they're still gonna have those 3AM stressors that wake them up, but they never have the flow opportunity to actually work through them. When, you know, the second you wake up, you're not dealing with your kids. You know, the second your kids are gone, you're going to work. You're at work. You're pissed off all day. You know, a lot of people don't exercise. A lot of people, they don't do anything that actually encourage that sort of creativity. So then, you know, instead, they go home. They have some drinks. They watch some Netflix, and they're fucking depressed, they go to bed, and they wake up, and they do it all over again.

Dan Austin: [10:20] Dude, like, I can speak to that. Like, I'm in, like, a, like, a weird spot in life because I have a six month old. So, like, that's my life right now with our daughter. And so it's challenging, but I have to be very, conscientious of that. Like, I still try to make sure I'm working out. I still try to make sure that I'm giving myself space to think, but it's super hard. And so I could, like, I could totally empathize with folks that do that, but it's like, get off your ass. Get out of that rut, man.

Mike DeHaan: [10:45] Totally.

Dan Austin: [10:45] Because it can feel like you're trapped in a situation for a long time unless you actually do something about it.

Mike DeHaan: [10:50] Yeah. Well, I think it's important to do something for you. You know? And you see that a lot. I remember when I used to coach at the gym, you get this from a lot of parents is they would say that they felt guilty about coming into the gym because, you know, they had kids that they wanna spend time with all sorts of stuff. But the thing is is going through that process I mean, fitness level aside, like, you know, getting fit is, I would say, is not a selfish thing because that's longevity you're gonna have for

Dan Austin: [11:12] your kids and your family. Four years in your life.

Mike DeHaan: [11:14] Just focusing on the mental importance of that. You can't say it's selfish because it's going to make you more present with your family. It's gonna you know, having that sort of discipline, whatever that is, whether, know, whether that's working out or that's meditation or that's going to the sauna or going for, like, a daily walk or anything that sort of gets you into that flow state is not it's the opposite of selfish because it's making you be able to be more present and more productive and, you know Right. Better with your family and your and your kids and just your life in general. So

Dan Austin: [11:45] 100%. Anyway Gotta get there.

Mike DeHaan: [11:47] Yeah. But big stuff. I don't know. How the fuck can we get on a topic? Because I

Dan Austin: [11:50] don't know. I don't even ever talk about flow speed, but that's, like, like, that's not my thing. That like, whatever.

Mike DeHaan: [11:55] Not only do It's important. Yeah. Not only do we not talk about that, I hate that shit because I find that so many people now this is I'm gonna be completely contradicted to what I was saying. That's all they talk about, but they're not, like, actually doing anything. Because a lot of people, they, like, will fix it on, like, well, you know, Joe Rogan, he does the hot cold therapy.

Dan Austin: [12:13] Ice bath. Yeah.

Mike DeHaan: [12:13] He does it. He gets a massage. He goes and he does jujitsu, and then he goes, like, a journal. He does I don't even know what Joe Rogan does. But he lists up, like, 47 things before he starts his day. It's And like, yeah. But he's rich. He's he's allowed to do that. You're not allowed to do that. You need to just get to work.

Dan Austin: [12:28] He was out there making money and making things happen for probably a few decades. Yeah. You know, I it's like, I wake

Mike DeHaan: [12:34] up at 4AM, and

Dan Austin: [12:35] then I start my work day at noon. Yeah. But in between 4AM and noon, I'm taking my mud bath. I I I'm I'm tanning my perineum.

Mike DeHaan: [12:44] Yeah. Exactly. Whatever the

Dan Austin: [12:46] hell they call.

Mike DeHaan: [12:46] Yeah. But but I Do some weird shit. I feel like that's gone away a little bit. That was such a thing, like, five years ago where, like, every almost one time, like, their morning routines and, like, the entrepreneurial sort of, like, mindset on stuff. But it was all the people that promoted that were people that are already hyper successful when, really, most people just needed to, you know, have, like, your one thing for your mental health, and you just need to get to work.

Dan Austin: [13:06] Well, I think people are making people make money on the fact that most people aren't disciplined enough to Correct. Put a framework around their life. So you've got, like, the miracle morning with, like, Hal Elrod and all those folks. You've got those types of books where all that is is Mhmm. Discipline, putting discipline into your life where you have no discipline because then you feel control of what you can do. And it's like, if you can actually just put discipline in your life, you'll be fine. Like, you and I are pretty anti morning routine guys. For me, I don't know for you, but for me, like, I don't wake up and do the workout and drink two gallons of water and do all these different things. I wake up and do what I need to to get to work and because that's my mental capacity Mhmm. Is the highest, and then it starts tapering off during the day. Then before I hit physical and mental fatigue, I try to hit a workout because then that lifts up my my mental capacity again, and I can do it like in a dumb mindset. Like, I don't need to be smart when I'm working out. That's going to elevate my mental toughness as it's as it's kind of waiting for the day. So, like, I don't I don't know. People call it what they will.

Dan Austin: [14:08] I just do what works for my body and my brain.

Mike DeHaan: [14:10] Yeah. Exactly. And there isn't some magic routine that's gonna make someone more successful. No.

Dan Austin: [14:14] And I have discipline. That's it. At that that Whatever that is, have some damn discipline.

Mike DeHaan: [14:17] Takes practice. You know? Like, honestly, it does for a lot of people. But, I mean, there's all the little trendy things you see out there. Like, Miracle Morning is a good one. You see this so much. Like, you know, Vivid Visions, like another one you see that's just all about creating discipline towards having that vision and that goal. Yep. 75 hard. Yeah. Everyone and their mom is doing 75 hard right now. And it's just like, literally, all that is is a regimented over the top set of routines that you're supposed to do, and the whole thing is it doesn't. If you can commit to something for 75 days, guess what? Like, you just established discipline. That is what you ultimately got from it. You don't even know you're

Dan Austin: [14:53] losing Who cares about how much water you're doing? It was a disciplinary matter.

Mike DeHaan: [14:57] And many people are doing it, like, in a stupid way where they're like, well, I needed to hit my gallon of water, and I'd only had half a gallon. It was 09:00 at night. So I drank a half gallon of water, and then I was up pissing all night. It's like, there you go, you dumb shit. You shouldn't have done that.

Dan Austin: [15:07] I just lost a night of sleep. Yeah. That is dumb. I don't

Mike DeHaan: [15:12] do that game.

Dan Austin: [15:12] Yeah. Anyway so Yeah. Off that topic. Sorry, Tangent. Yeah. That was rough.

Mike DeHaan: [15:17] Yeah. Yeah. So there there's our there's our views on, like, the entrepreneurial habits and discipline. They are extremely important. They're also stupid.

Dan Austin: [15:27] Exactly. My general That's the truth.

Mike DeHaan: [15:31] Yeah. General views on everything. I think that's me in a nutshell right there. So Right. But, yeah, what's what's going on in the real estate world, Dan?

Dan Austin: [15:39] I I'm trying to figure it out just like everybody else. I'm reading the headlines, and I'm getting fearful.

Mike DeHaan: [15:43] Yeah.

Dan Austin: [15:43] I'm not in flow. I'm scared.

Mike DeHaan: [15:44] I know. I'm scared. The the thing that drives me crazy about how stuff is right now is just because the, like, number of transactions and prices and everything like that are so skewed from what they've been historically, especially, like, the transactional numbers that you're seeing. Yeah. So you keep seeing all these stupid freaking articles that are, like, you know, for like, foreclosures are up 70%, you know, on your like like, year over year, it's like Right. Well, yeah, because last year, especially due to COVID, there was, like, 100. Mhmm. And now there's 170, but the historical number is, like, 4,000. Right? So it's, like, so headlines. Yeah. It's so far off the reality of what it's been. And, like, any number is gonna skew things an incredible percentage one way or the other. Yep. You know? Clickbait.

Dan Austin: [16:27] I don't know who's guilty or who should be blamed for this whole clickbait media team, but that's that's exactly what that is. I mean, these headlines to try to get people to read them, and then there's, like, actually no data to back it up other than they pulled out some piece of information that was secondhand and skewed and means nothing.

Mike DeHaan: [16:44] Well, I think the clickbait come was it was it Nixon? Back when Nixon was president that they made it so that news you could, like, advertise on the news and, like, news could become for profit. Well, then

Dan Austin: [16:56] Ask him.

Mike DeHaan: [16:57] Well, I don't I don't know. Someone can fact check me on that, but I'm pretty sure it was, like, back that sort of time frame, and that's when modern American media sort of started and why And

Dan Austin: [17:06] Dick Nixon.

Mike DeHaan: [17:06] Yeah. And then, like, you know, Fox News, those sort of things became, like, quote, unquote, entertainment. Right. Where it's all just about getting views and those sort of things because a lot of them, they sell advertising rights. Mhmm. Which is, you know, they make more money the more people watch it. So they do things that are extremely inflammatory and just encourage people to engage with it. Right? So they can Absolutely.

Dan Austin: [17:25] We know that.

Mike DeHaan: [17:26] But that was illegal for a long time. I'm pretty sure they have, like, sixties or seventies that that was that changed, and then they started doing that. But, yeah, I mean, the real estate world though right now is weird, like, because rates seem to be changing so insanely much, like, every couple of weeks as no one knows, like, what the feds are planning to do over the short term, kinda like I committed to last week. I'm I'm gonna still double down, but I think in March time frame, we're gonna start rates start to see rates coming back down and settling, and we'll start to see the market really level out again.

Dan Austin: [17:54] We just got quoted today. What was our what did you say our when you're talking to our loan guy, you said that rate is higher than our hard money rate that we're refinancing out of.

Mike DeHaan: [18:03] Yeah. Yeah. So we so we have this property that spurred the episode we had a couple weeks ago about what to do when you can't sell a flip. Because we have a flip right now that we've been, you know, working on it for almost a full year. I said, quote, I'm working on it. We bought it last January. It is now December 2022. Took us six months to get the owner out after we, like, we let them stay there for little while. We were too nice. They took advantage of us. They did all this bullshit. They, like, sabotaged the house. If you guys go check out my Instagram, we did a walk through. It's the video on on my Instagram at Mike underscore Invest where we had them freezers that were full of rotting meat, and we found, like, all the gun parts out in the shed. It's it's a great one. You can go go check that out. But it took us forever to get there, and then the reno took a while because it was such a big house. And then we finally got it listed, and the market had already turned. So now we're stuck with this house. It's kind of a higher price point. And, ultimately, what's happening is pushing up in, at the end of January, we have our balloon payment. The lender is like, nah. We're not gonna extend you because we got this loan. Rates were crazy low. So we have a hard money loan on this property for, like, seven and a quarter percent.

Mike DeHaan: [19:08] Yeah. So Pretty good rate. Yeah. So what we're we're planning to do right now is to refinance it, hold on to it until the spring, and then list it again with a little bit better buying time because I think the market

Dan Austin: [19:18] Yeah. We're planning to rent it out. We'll probably just leave it at the age

Mike DeHaan: [19:20] of Exactly. We'll just, like, sit on it and and and, you know, eat the monthly cost for a little bit and then try to sell when the market's a little more favorable both with the weather and then I'd hopefully with the rates as well. Yep. But, yeah, so we had a meeting with our our loan guy. What is is Fairway a broker? What do you think Fairway Mortgage like? Brokerage. As a as a broker. So so they actually go and they broker our loan to somebody else? Or do they do they service the loan themselves and they just sell it?

Dan Austin: [19:44] Oh, I don't think they service it. No.

Mike DeHaan: [19:46] They don't service it? Okay.

Dan Austin: [19:47] I don't know. We should bring them on and ask them.

Mike DeHaan: [19:49] Yeah. Actually, that that would be a decent call, especially I know we have a couple of GoBundance guys that are that are pretty big in fairways. That would be interesting to sort of get, like That would be cool. Yeah. But so, anyway, their thirty year rates we're getting quoted for the refinance are like, we're, like the lowest one was, like, 7.625. So it's now higher than the hard money loan that we've had for the entire year, which Right. Is just, I think, a testament to where we're at. But at the same time, you know, back when we got this loan, the thirty year rates were, like, still three. So, you know, it's kinda just the reality of the situation. But

Dan Austin: [20:22] Yeah. Yeah. And that I mean, maybe that speaks to that they will settle out. We were talking about maybe 5%, you're thinking?

Mike DeHaan: [20:28] Yeah. Well, I mean Next year. Yeah. Like like, I just think that that's sort of where the sweet spot is anyway for, like, the post 2008 market. Right? Because, like

Dan Austin: [20:37] Well, people were refinancing in the two thousand tens. Right? It's probably late as, like, 2014, 15 refinancing or financing to 5%. Yeah. Absolutely. That Like, that was normal.

Mike DeHaan: [20:49] That was great. So so, I mean, like, the first couple of rental properties I bought in 2018, I was 5.5.

Dan Austin: [20:55] Yeah. Oh, that's right. I forgot about that.

Mike DeHaan: [20:57] My primary home my first primary home I bought in 2014 over in Tacoma, we were at 5.25.

Dan Austin: [21:03] Yep. It was super common. Yeah. Right? To have that rate.

Mike DeHaan: [21:05] Mhmm. And then even, like like, DSCR loans, if you're using private lenders, one of the first burs I did, I refinanced with DSCR lender, and I was a 7.75%. And that was what yeah. That was what you got back then. You know? Yeah. Yeah.

Dan Austin: [21:19] We had just that weird subsidized by the federal government low, low rate. Mhmm. And if you took advantage of it, that's awesome. If not, we're just gonna go back to where we were. And the house that we have now that we're trying to sell at 5% sells better than it does in '7 and a half percent.

Mike DeHaan: [21:37] Yeah. Because it's like a $500,000 house. You know? That that's a lot of money here to pay that difference off on those those couple percentage points. Yeah. But one of the biggest questions you've been getting though from people has been about flipping houses in this market. Mhmm. I don't know. Like, what what are your opinions on that? I know we've backed off from buying any sort of, like, flip style properties over the last couple of months. I mean, big part of that is we're starting to look towards marketing and buying larger assets just as our you know, we've I guess we decided a couple weeks ago that we're kinda sick of crack houses and just, like, dealing with psycho people. Yeah. So I think going into this new year, one of our goals is to start to scale the larger assets and just sort of see, you know, how our marketing does with those. But

Dan Austin: [22:20] Yeah. Well, I think for us too, like, it's a unique decision for everybody. For us, we had a good run dealing with crackheads. We made some good money. It put us in a position, a strong position to continue our business in whatever fashion we think is right without having to worry about making payroll. And I also think that for us, where we recognize our performance in context of where we wanna perform is midsize multifamily assets. Totally. Like, we we're good at marketing to them. We're good at locking them up when we find a good deal, and now we also have the cash to pay a higher premium for them than we would have starting out when we're dealing with single family crackheads.

Mike DeHaan: [22:58] Mhmm. Yeah. I mean and and not even necessarily midsize, but, like, if we get some sweet duplexes, I'd love to buy some more.

Dan Austin: [23:04] Oh, yeah. I mean, anything multifamily, of course.

Mike DeHaan: [23:06] You know, eve even up to I don't know. I think, like, twenty, thirty units would be a pretty good sweet spot because that's below institutional money, but it's large enough that I know we could raise if we needed to.

Dan Austin: [23:16] Yeah. There's still a lot of mom and pops out there running 12 units, eight units, 16 units

Mike DeHaan: [23:21] Yeah.

Dan Austin: [23:21] That we can market to.

Mike DeHaan: [23:22] Yeah. And and, you know, we have own a couple well, I guess we own about a eight unit and a six unit that do okay for us. But, you know, flipping houses right now, it's just like a little different ballgame. And I think that, you know, the main thing that I would be super cautious of would be just, like, buying things that are outside of the kind of what I would call the affordable price point in your market. Totally. And that's not the average price point. Right? Because in Spokane, the average price point is about 450,000. Yep. If I'm looking at, like and and and the big problem with that is that is skewed by some of the properties here that are very high price points, especially if we don't have a huge number of, like, general population in areas. That brings it up. We've got a lot of

Dan Austin: [24:03] one $1,200,000 homes that have sold in the last six months.

Mike DeHaan: [24:06] Yeah. We do. And then also too, I mean, Spokane and you have to look at your own market to see this, but Spokane is pretty divided income level wise. So there is, like, a ton of people who and this was this was true last year too. So the most competitive market was, like, the lower price point. The second most competitive market was, the 600 to $800,000 price range.

Dan Austin: [24:25] Right.

Mike DeHaan: [24:26] Right? And that still exists. Right? But but still just in terms of, like, there's a lot of people that live in that sort of price point. I mean, that's like, you know, that's where you and I are. But a lot of those people, they aren't buying flipped houses. They're buying new builds. They're buying, like, you know, custom stuff. They'll honestly, a lot of them would even rather buy fixers and Right. You know, like, do something to fix themselves. But, like, it's kinda like that middle price point, like the, you know, 300 to 600. That's really weird here because people are either moving up to the nice ones or they're staying lower. Yep. And then, obviously, the primo primo stuff is harder to move. But, like Right. What I would like, flipping houses right now, I would just wanna be down in, like, what I would call, like, the the blue collar or, like, the working class price point because that's where most people are gonna be.

Dan Austin: [25:12] I would call it not just affordable, but value. Value. Right? Yeah. Like, value. What are you getting for your money? Because just because you can Mhmm. Go and buy a three bed, one bath, nineteen twenties built home with 1,200 square feet doesn't mean you're getting value.

Mike DeHaan: [25:26] That's true.

Dan Austin: [25:27] Yeah. Right? Because that could be a shitty house that you're buying that has a terrible floor plan. But you could go up the road for the same price and buy a three bed, two bath with an unfinished basement, same square feet, but built in the nineteen sixties, nineteen seventies, a better floor plan, better structure, you know, just newer upgrades. There's value in that one compared to the other one. Yeah. What are you getting? Just because you're at

Mike DeHaan: [25:48] that

Dan Austin: [25:48] affordable or middle ground price point where most the vast people the people that can afford 500,000 are stepping down into that, and the people that can't afford 500,000 can only afford that, so you just have a wider swath of affordable clients to buy those from.

Mike DeHaan: [26:03] Yeah. Yeah. It has to have value, though. It does. Yeah. And and, you know, they if the buyer pool isn't there, at the end of the day, when you're flipping a house, you are servicing the retail buyers. So you need to create the product that retail buyers want and can afford. And like you said, Dan, you know, it's it's creating that value house. So you wanna be buying, I would say, like, not weird, not unique houses in kind of that affordable price point. Yep. And you wanna make them tasteful and appealing to, like, whoever that client is going to be.

Dan Austin: [26:37] And Yeah. And make it better than the one next door.

Mike DeHaan: [26:40] Mhmm.

Dan Austin: [26:41] When you're rehabbing it, I would say you've got a budget to have a little bit of a cleaner rehab.

Mike DeHaan: [26:45] Yeah.

Dan Austin: [26:46] You're right. You're right. You can't buy weird shit. Like, we've done some weird shit, and it worked.

Mike DeHaan: [26:50] It did.

Dan Austin: [26:51] And it made us money. Right now, would not be pushing to buy something weird just because it's the only thing available in front of you right now. And then, yeah, making it to where there's value and that people want to live in that house or that neighborhood.

Mike DeHaan: [27:04] Mhmm.

Dan Austin: [27:04] And then I would say pricing in just like all the dorks were doing last year with the appreciated ARV.

Mike DeHaan: [27:10] Yeah. That was such a freaking

Dan Austin: [27:11] I'm all I'm all for depreciated ARV right now. Like, drop it 10% from what what the comps look at comps, I would say thirty and ninety days if you have to go to six months, but six months is almost way too old. Right? But if that's what you have to do, if you can do comps thirty, thirty, and ninety days along with days on market and pending sales right now, that's your comp, then and then take off a little chunk.

Mike DeHaan: [27:36] Yeah. I'm gonna I'm gonna repeat what you just said. I think that's super valid, and that's something that people in our our instant investor program have been asking as well is about comping right now instead of using historicals, using, like you said, those those pending and, like, the immediate recent sales.

Dan Austin: [27:49] Yep.

Mike DeHaan: [27:50] And and, like, looking at days on market to sort of, like, see if that was a competitive price or not. Because, you know, what we've always done in the past and what we've taught in our program is, you know, you go through, you look at the stuff over the last, you know, three to six months, and that's how you get your value. But just with the way things are trending, you know, what something sold for six months ago is very different from something we'll sell for now. And, like, honestly, the main thing is seeing what stuff is currently pending for and looking at days on market to try and, like, hypothesize how where you need to be compared to that to be competitive. Because Mhmm. You know, sure, something can be pending for, you know, at asking price. But if it was on the market for a hundred days, you probably don't wanna use that. You know? You can also probably be certain that there are some concessions or some other sort of expenses on that, you know, even assuming it's even going to be going for that price that you're showing us paying out on sale, it could also close for even less than that. But you can assume that there's gonna be some sort of trade between the seller and the buyer for the transaction to go through at that price point.

Mike DeHaan: [28:49] Whereas, you know, last year, you could look at historicals, and you would even be going up. Like I said, appreciation area. You saw all over Seattle with these, like, dipshit wholesalers that were out there that were, like, getting things at 90% of value and be and saying, but, yeah, but in three months, it'll go up another 20%. And people were buying those properties like idiots. Yep. Oh

Dan Austin: [29:07] my god. And they're losing money on it.

Mike DeHaan: [29:10] What do you know? Yeah. They're

Dan Austin: [29:11] There's some big players in Seattle, like you said, posting, on Instagram. They're losing some big chunks.

Mike DeHaan: [29:16] Yeah. I saw you. Tarl Yarber. Shout out to him. I don't know him, but you've lost some big money this year, dude. And this

Dan Austin: [29:22] is public knowledge. I'm not calling you out.

Mike DeHaan: [29:24] But on his yeah. He's a big time flipper. You know, he's super involved in bigger part pockets. He hangs out with Brandon Turner and all these sort of dudes. And he posted, like, a 100 something thousand dollar loss, I don't know, like, a month or so ago, and he just posted about another, like, $45,000 loss. And they're just, like, you know, cutting what they can and just trying to get them off the books at this point. But

Dan Austin: [29:46] he's an experienced guy. Like, I would trust his knowledge base. And so it can happen to anybody, but, you know, sometimes the train has to stop somewhere. Mhmm. And whatever the bag you're holding is the bag you're holding. And if that bag's a $100,000 loss Yeah. You know?

Mike DeHaan: [30:02] Yeah. And if

Dan Austin: [30:02] you don't have the equipment like we do to stabilize a property and throw it in our portfolio and absorb it for a short period of time or a long period of time, like, you're gonna be in trouble because you have to sell. Like, if you're just a flipper and that's the only toolset you have, you have to sell at a loss.

Mike DeHaan: [30:16] Yeah. Well, I mean, even the one that we're, you know, refinancing right now, if we had a contract accepted on that one that ended up going out because of the potty pads, which I think I talked about last week at the freaking, you know, the previous owner had left it there. We are gonna lose, what, 25 on that. Yeah. And, I mean, we still could very well lose on it next spring, but, you know, we're gonna at least shoot our shot and and see what happens. And worst case scenario, we're gonna have a bunch of money tied up, and it will have, like, kind of a breakeven rental if we're lucky. But Yeah. You know, we can we can figure out sort of what to do with it at that point. But Yep. I mean, that is kind of the fresher thing, though, about how this past year has gone, man, is we have so much capital tied up.

Dan Austin: [30:54] What I know. We were talking about that earlier today. We have a lot of

Mike DeHaan: [30:56] Yeah.

Dan Austin: [30:56] What hundreds of thousands of dollars tied up.

Mike DeHaan: [30:58] What do we think about a 500,000 tied up just from this year on the stuff that we kind of had to get weird on or, like, we couldn't sell? So, like, we have that that that property that we couldn't sell. We have this the freaking condo that you guys heard us talk about months ago Somebody said with the insurance bullshit that we still can't sell, and I don't know what's gonna happen with that one. And then we have this lot that we talked about a few weeks ago that we were planning. We spent some pretty significant money doing all the work on the land for that. And now Mhmm. We're told that we can't sell it because the lender refuses to work with us on repositioning the loan.

Dan Austin: [31:32] Yeah. We had to sign around and everything.

Mike DeHaan: [31:34] I know. I know. And then the freaking insurance house for the oil leak. Like, we have more money tied up into that than we were expecting. So Yeah. Yeah. You know? If you guys wanna get into real estate, these are the fun things that can happen. But Yeah. On top of that, with all the bullshit, I don't know. I still gotta travel for twelve weeks this year. So, I mean, it's okay.

Dan Austin: [31:54] Well, I mean, it's an argument of, yeah, you have a lower return on equity when you have money tied up that you know you could put somewhere else, but at the same time, it's at least tied up in a pretty good asset that's still appreciating through this. Yeah. And it's there. Right? So, like, we will be able to access it. We're just not gonna access it how soon we wanted to access it. And it always seems to be that way in this business because real estate is illiquid, and it doesn't move as fast as you want it to. Exactly. Which is also why wholesaling is great because wholesaling typically does move faster so you can accumulate cash. Yeah. But then again, like we always say, don't count your chickens before the eggs have hashed or don't whatever you call it. I don't know. Yeah. Well Don't count don't count that money till it's in your bank account because those deals can sometimes not happen.

Mike DeHaan: [32:33] Exactly. Yeah. I mean and and it's been a regular occurrence, especially when you're getting into the off market realm where, you

Dan Austin: [32:39] know, there's just a lot

Mike DeHaan: [32:40] of people involved and a lot of things can go sideways that you never predict.

Dan Austin: [32:44] That's why you gotta get in flow state, man, so that you can just, like, ride the wave.

Mike DeHaan: [32:48] Full circle. Bringing a full circle. But yeah. Guess so. So the flip in this market, step one, eight step morning routine. Mhmm. Get into your flow state. Hot bath, cold bath, high intensity workout, go for a walk, eat Chai tea. Chai tea. Yeah. Eat eat chai tea with MCT oil in it. Else are you supposed to do? Microdose. My my yeah. Microdose psilocybin. Take a quarter of an edible. Go Oh, now

Dan Austin: [33:16] you're speaking my language. Starting to talk here.

Mike DeHaan: [33:20] I I don't know. Go prayer. Write in your journal. Do your affirmations. I don't know. Jerk off. Whatever the fuck else you're supposed to do. Yeah. How you'll be successful. Do all that. Yeah. And then that's that's how you start flipping in this market. And then buy buy properties that are not unique, that are at, like, the affordable value price point, like the starter home style of houses. I think that's gonna be key. Yep. And then I would keep your renovations relatively simple. Yes. I do not think that this is the time to be doing crazy things like, you know, doing, like, a bump out or, like, doing, like, you know, knocking down a bunch of walls and trying to reframe the house unless it's super clear and and basic what you're gonna do. Yeah. So super simple renos and, like, that kind of affordable price point is where it needs to be. Absolutely.

Dan Austin: [34:10] And it's where due diligence matters Exactly. When you talk about Reno and all that.

Mike DeHaan: [34:13] Yep. And when you're analyzing your opportunities, look at pending sales and time on market and not historicals from six six months ago because that is no longer gonna be accurate if we're gonna be able to get. So Accurate. Cool. Right on, guys. Well, I think that that kinda covers it. Any last thoughts on any of that, Dan?

Dan Austin: [34:29] No. I love it. I think you summarized it really well, especially your miracle morning.

Mike DeHaan: [34:34] That's the most important thing. Do that. I said seven steps. I think it was 13. So, you know, you can Get after after

Dan Austin: [34:43] Do it.

Mike DeHaan: [34:43] Yeah. As long as you wake up at four and you don't start working till 1PM, that is what they all tell you to do.

Dan Austin: [34:49] So Key to success right there.

Mike DeHaan: [34:50] Exactly. So awesome, guys. Well, thanks so much for listening. Please go and leave us a five star review. We have as of the time of this recording, we have twenty five five star reviews. Oh. Until we get to 50 reviews, so that's 25 people. You go and leave us a five star review, you send it to me on Instagram at Mike underscore Invest. I will send you a free collecting keys podcast T shirt. They're pretty cool. I should be wearing one for this video, but I'm not. But you can go and check us out on YouTube.

Dan Austin: [35:15] Do it, man. Go send the five star review to Mike. Those shirts are worth it. I'm not They are I want another one.

Mike DeHaan: [35:20] They're nice Try Blend shirts. So go leave us a five star review. I've listened to your podcast. Send me a screenshot on iTunes. I will send you a free T shirt. Aside from that, guys, if you want to start generating off market leads, you can go to collectingkeyspodcast.com/free. You can get Dan and I's free five step guide to how you can start generating off market leads in little as two weeks. Be a great way to get going if you have any interest in getting into this business full time. Mm-mm. Aside from that, talk to you guys next week.

Dan Austin: [35:46] See you.

Speaker 3: [35:48] Thanks for listening. Please leave us a review on iTunes or wherever you get your podcasts, and check us out at collectingkeyspodcast.com for tips and guides on starting your own real estate investment and wholesaling business.