Getting Seller Contracts Is Only Half The Battle

Speaker 1: [0:02] Welcome to the collecting keys real estate investing podcast with your host, Mike DeHaan and Dan Austin. From wins, losses, horror stories, and tactics for optimizing your business, Mike and Dan take a real uncensored deep dive into the ins and outs of running a full time real estate investment and wholesaling business.

Mike DeHaan: [0:26] Hey. Just a quick note. You'll notice I introduced the show as the no BS real estate investing show. At episode three, we changed the name of the podcast to collecting keys. So just ignore that. Sorry about the confusion. What's up? Mike and Dan here. Episode two, no BS real estate investing show. Been quite a week, Dan. We've had some I feel like this was a pretty good week because it it was like our first sort of a span of time and like a little bit where you've had like some consistency in terms of like closing and deals. Because I feel like we've been either slammed or like barren off and on for the last like six months. And now we've had, you know, some new stuff signed around this week. We had some stuff closed this week. We have some stuff closing next week. Well, I guess we have what, two closings this week, the one retail lead, the one wholesale lead in Knoxville. We got a Knoxville lead on actual assignment closing next week. Week after that, we hopefully have two closing in Spokane. And then I think that'll put us at closings for a little bit, but sounds like we're gonna be getting another one potentially signed around tomorrow in Knoxville. So that will put us at another with that, maybe two contracts for the week.

Mike DeHaan: [1:42] I don't know, man. I'm getting all over the place with everything. This is this is why we need to hire that new transaction coordinator because our transactions are just getting all over the place, especially when we have yeah. Especially when we have stuff, like, with you know, I I don't know what it is about the real estate world right now, but I feel like everyone has no excuse to not be available, but people are less available than they were before. It's getting busy. This.

Dan Austin: [2:08] Yeah. I agree. Well and even me this week. This is one of those weeks where it, like, tests my Just gotta desire to

Mike DeHaan: [2:15] have a job. We can just rip that band aid off, be done with that.

Dan Austin: [2:19] It's just been one of those terrible weeks where I'm like, why do I show up to this job? And Yeah.

Mike DeHaan: [2:27] Been busy. Yeah. I know. Yeah. I should

Dan Austin: [2:32] have done it a long time ago, but anyhow but then you you start throwing on top of all the other stuff we got going on in our home market, in our virtual market, and contracts. It'll be negotiating. The new person. Signing new stuff and trying to close out stuff, refinance it. So what else manager to

Mike DeHaan: [2:47] sort of help manage the the transactions and help us find buyers for our assignments. And I know it it's it's this week, especially because we've been trying to assign so many deals has been a good proof, like, good form of proof for me that we should hire that rollout because especially when you're throwing something out to the open market. Like, you know, if you have a contract that you're trying to assign to like an individual, you know, it's different when you're trying to assign a deal to somebody that, you know, you know, is good to close. And, you know, they're going to be good for it. But, you know, with some of the stuff we've had, there were deals that our traditional buyers that we've gone past gone to in the past, they don't want for various reasons. So then we're having to go and throw them out to the open market. And it's amazing to me. I don't I don't know why there's so many people out there that talks such a big game about wanting deals and wanting to get into real estate. And then you send them like the most basic deals. Like one of the properties you've been trying to offload this week. Granted it is like a slightly more expensive house. There's a little bit more higher cost to sort of do the project. But it's like cosmetic, there's no crazy stuff going on. There's no CapEx items. And I had so many people who've been looking for what they say, they're like, I want an A class cosmetic flip.

Mike DeHaan: [4:11] And I was like, okay, perfect. Here you go. Here's your A class cosmetic flip. Here is the door code to get access to the property. It's vacant, there's no tenants. It's already cleaned. You literally just got to go in there and start laying floor, rip out a kitchen, do your thing, Right? And all of them are like, great. That sounds awesome. I'm gonna go take a look. Then never hear anything again. You wanna know the best way for me to never send you a deal is you never even respond to me.

Dan Austin: [4:40] Yeah. Everybody's a buyer till it's time to buy. Yeah. Right? Yeah. And that's that's, like, frustrating too, because it's one of those deals that's like, there's a good we know there's a good spread on it. Right? And it's a pretty safe neighborhood to it's not one of these, like, oh, yeah. It's the nicest house in the neighborhood. It's just like it's a good neighborhood, good part of town. And you're right. There's nothing crazy to do to it. But at the same time, it's like, why are people being such weenies about this?

Mike DeHaan: [5:09] Right? Like Yeah. Right. I know. And and it's funny because, know, we're we're still deciding if we wanna take it down and just do it ourselves. I mean, the only reason that we don't is because, you know, as you pointed out yesterday, what we have three is it three? Well, we guess we have one project to finish up. We have one that's going to be coming vacant. The second Airbnb that might need a little bit of stuff. And we have two rental properties that we still need to rehab, you know, and it's hard enough to find people. So when you already have the active rehab plus the three upcoming, and now you add in a fourth, like a fifth one into that mix. It's like, we just don't have the capacity to be starting from scratch or like letting that sit for months since it's a $400,000 property. But I know it's just fascinating that people won't even respond, you know, because it it's like, you know, if you wanna go on a date with somebody and they say, yeah, where do you wanna go? And you just say, I don't know. You pick. And then you never text them again. That's not gonna go very well. Right? It's exactly the same. I don't know, man.

Dan Austin: [6:09] Yeah, no, it's yeah. Buyers seem to be able to find every excuse like, oh, well, it's kind of late in the year. Oh, well, that's kind of expensive. Oh, well, you know, I really want the one where I do carpeted paint.

Mike DeHaan: [6:22] Yep. But then I guarantee you that the same people are going to reach out to me in like three months or six months, especially when the New York costs around and they're like, Hey, I need a property. Can you send me something? I'm gonna say no, I can't. You missed your chance. You know, even if they don't buy it, just at least like make me an offer. Like have an open conversation and try to find something. But I don't know. Anyway, sometimes people seem to put their money where their mouth is or, you know, at least pretend like they're actually going to and not just waste my time. I'll get off my, off my high horse now, but, I know it'll be, be interesting too, as we start to expand and we're doing more of these assignments, especially doing them in Knoxville, where we don't actually know the individuals there as well. And it's not gonna be as much of, a referral basis like it is here, sort of what that looks like because, I mean, I imagine it's the same issue down there as it is everywhere else.

Dan Austin: [7:18] Yeah. I mean, even just dispel on that one deal last week, like, I don't know. I think 30 people said they want to see it. Mhmm. And one dude responded.

Mike DeHaan: [7:29] Yeah. Right? Yeah. It's like it's like, why? Yeah.

Dan Austin: [7:32] It's like, emailed it and then followed up with everybody. Nothing, nothing, nothing. And then the one dude that responded, he's going to be a good buyer. But it's just, I want to see it, but I don't know why. Yeah, you know, yeah, I

Mike DeHaan: [7:44] know, it's fascinating. I knew I think one of the biggest things that I learned from doing all that this week, it's outside of the norm of what we've done for all the deals over the past freaking almost two years now, which is crazy. Is that there's the two selling processes, one to get the contract, which is everyone focuses on, and then B to actually sell the deal is a whole different process. And so I've been, you know, sort of had the realization that if you really want to make money and capitalize on every opportunity, that's, you know, you need to find a system for that and find someone who's going to dedicate their time to that 100%, you know, coming on top of that too, we're also having to navigate all the stuff with the sellers, you know, because right now James, he was our acquisitions guy, has been helping facilitate a lot of stuff with the sellers, which is taking away from getting more contracts, you know, because he's the point of contact that has the relationship. And so he's been going out there and doing all that. And that's a whole nother full time job that he's doing on top of this full time job doing sales. You know, so even with this mobile home that we have, he was already out there this past week, helping the guy like load up stuff into the truck and getting documents signed and all this sort of stuff. And it's just like, you know, becomes a mega full time job pretty quick with a lot of the types of sellers that we work with.

Dan Austin: [9:04] Yeah. You don't want to distract too from the main point, his main direction, right, which is to get sellers to

Mike DeHaan: [9:10] sell them the house. Exactly. Right. Yep. And move on to

Dan Austin: [9:13] the next one once you get it locked up and move on to the next one. Because if you if it as we found, if you distract yourself in other parts of the business, and all of a sudden your acquisition slow down, you're like, crap. You know, catches up. Right? You've got to, you know, optimizing that stream of leads coming in, and leads going out to your buyers is important.

Mike DeHaan: [9:34] Exactly. Yeah. And it's, it's key. And it's a difficult challenge, especially when you're buying rentals too. I mean, we've already encountered that, where we bought some rentals, you know, especially early on, and that tied up all of our money. And then all of a sudden, don't have any money for marketing. So we're basically at a standstill waiting for, you know, a refi to finish, you can pull some money out so you can start marketing again, which you know, has been a whole other process. I mean, how long did we wait for our property to refinance? When we finally signed for it yesterday, it was supposed to close like the end of September. What is it? October 15. And it finally closed. Yeah, but even then we didn't get the money for it today.

Dan Austin: [10:12] I noticed that and I talked to our private lender. I like, did you get your money? He's like, I don't know what you're talking about. They didn't call me. Like, Oh, man, there's some incompetence going on in this triangle here.

Mike DeHaan: [10:22] Yeah, seriously, I do not understand,

Dan Austin: [10:25] but nothing. That's a good point too. Like nothing goes like, you're like, okay, this is going to be this day, many days rehab, and maybe you hit that target, but then closing agents throw a wrench in it, or whatever. Every there's always like, you have to have some contingency and then add 10% to that because it's like, I don't think we've had one transaction that was like, perfect. Yeah. You know, I will say actually that Knoxville closing, I don't know if we we got paid for that. But like, that one actually went really well from the guys. Like, yeah. Monday, he dropped off some earnest money and Friday, he we we closed today.

Mike DeHaan: [10:58] So Yeah. We actually We did get the we did get the cash for that. Well, it was smooth after, you know, we told the the buyer to not be calling the seller. Yeah. And telling him about the outside arrangement that was going on.

Dan Austin: [11:09] You know, the best thing about that is I actually talked to him again earlier this week is he was talking to that seller before we were. And so he he definitely wasn't trying to do anything shady. So he was talking to him, couldn't lock it up, apparently. And then we sold bought the tomb for a fee. Whatever.

Mike DeHaan: [11:26] Yeah. Well, I mean, that that's why we exist though too. I mean, you couldn't lock it up. We we were talking to that guy for over three months to get that contract signed around, you know, and I I don't know how much how many times our our guys have reached out to him, like probably dozens, like maybe 30 or 40 trying to get the thing signed around before they finally did. But that's also the process, you know, and if you wanna do this business, that's what you have to do. Whether that's you reaching out yourself or that's, you know, you hire a team to do that for you, you know, and having your CRM in place to be able to do all that in your systems, that's literally gonna be different between getting deals and not getting deals for 99% people. Right. Right. So, but yeah. So what's, how's all your stuff going? Get your rehabs done. Everything moving?

Dan Austin: [12:16] Oh man. I feel like I just keep adding things to it. Yeah. Just, now everything's running smooth. Yeah. No. No. No complaints on the property management side of things. Rehabs are continuing to go forward. It's just when I say keep adding things to it, it's like, oh, yeah, we gotta do that at this unit or, this is an opportunity. And then also always thinking about something we can do to keep our contractor engaged. Right? We're kind of at that point to where this is this is, or if we had an in house crew, and we were kind of running low on on deals, we'd be wanting to search and find a deal to keep our crew busy. But what we're trying to do is keep our contractor busy. He's he's a ten ninety nine. He doesn't work for for us directly, so he can go and get other work. Right? Mhmm. And so it's like, okay. What can I do knowing that he might be taking other projects from other people to keep him engaged with us? Right? And we've got so trying to line those things up as well so we can just pull the trigger when the time comes. Well, so

Mike DeHaan: [13:14] what about the other rentals we talked about just before? You say he's gonna be doing on those, though.

Dan Austin: [13:18] Yep. Yeah. He is. But it's like lining all that stuff up. Right? And figuring out what that entails and and the material packages and what we're gonna do and what the costs associated with those are. And those are like we've got a couple right now. They're like half to dos. Mhmm. But we just gotta finish up. And mostly from other crappy contractors we hired that didn't do a great job. But then other stuff like the other garage conversion we wanna do, having that ready to rock and roll, which means prepping the tenant to see how we can fit that in. Because I could see, you know, say, come December, January, if we're not doing an active flip or an active rehab on a newer, like, a newer property, like, hey, can we plug him into that, right, to keep him engaged and keep him moving so that right when we find that next deal, he's ready to move from that project to the next one. Right? Yeah.

Mike DeHaan: [14:06] So I mean, it Hard. It it is hard. And and it's funny you say about the contractors not doing what they're supposed to be doing. So I guess, you know, we've done quite a few rehabs now. I mean, quite a few jobs. I don't even know what the number would be. But I mean, I feel like the guy we have now is our first one. I sent you the second one we've had that's been good. You know, when we did the garage conversion there, James over there was pretty good. Yeah. But, you know, he just had other options that were that were better for him. But besides that, I mean, every contract we've had has had caused major problems. So I guess in your experience, like, like, what do you think people can learn from that? Like, like, how do they better vet these people with that situation? Because that's a very common outcome. And and we're we're fortunate enough that we've had assignment fees and, you know, we already had like rental income stuff coming in before we started doing these large rehabs. So we can kind of weather that storm. But there's a lot of people out there, if they're like gonna flip a house or do a rehab and they go $25,000 over budget, they're in big trouble. Yep. You know?

Dan Austin: [15:12] I mean, I would say we haven't, like, gone necessarily over budget because a contractor, like, we've been able to manage that piece pretty well because, like, I'll just straight up not pay the guy if he's doing crappy work or kick him off the job site, which we've done before. I would say the biggest, like, learning for us and I don't know that I've cracked the nut on this, but especially early on because it's like we've been doing some pretty big rehabs, like huge value ads. Right? Like, took a duplex that was technically a one one and made it both both units three twos. Right? We just took a four a three one and made it a four two. Right? So we're doing some, like, serious stuff that makes sense for what we're doing, but it's not a four week project. Right?

Mike DeHaan: [15:54] Yeah.

Dan Austin: [15:54] But we find a contractor, starts out good, and then halfway through the project, you realize the contractor stinks. Right?

Mike DeHaan: [16:02] Mhmm.

Dan Austin: [16:02] And what do you do then? You're like, well, we just gotta get this thing done. We gotta get this thing done. And so kinda drag that out instead of firing them on the spot. That's, like, number one mistake. Yeah. But the higher mistake is finding the contractor once you get the deal. That's what we've done. And the reason why that's happened to us is because we've taken these longer rehabs. And then in that time, we've bought another property that we wanna rehab. And so we don't wanna reuse this guy once he's finished with that project. So we fire them, bring on a new person and scramble to bring on a new person, because we're like, hey, this property has been sitting vacant for two weeks, we got to get someone on it. Right? And I would say, at the end of the day, you just gotta, like, step back. Right? And you're probably gonna go through a few contractors, but building that bench strength, which was really hard during COVID. Because there wasn't a lot of meetups where you could like run into contractors. And everybody's a contractor right now. Right? So it's like, okay, which means nobody's a contractor. And so that's, that's also been a challenge, right? Like, if you can build up, like, we need probably for our business if we weren't doing it in house, like, or three contractors, but for each trade. Right? Two or three electricians, two or three plumbers, two or three GCs, so that we can, you know, hey. We've got that guy engaged.

Dan Austin: [17:17] He's good. Let's call this guy to do this project or, hey. This guy sucks. Like, let's move to this next guy and be able to pivot quickly. Otherwise, you kinda get in that vicious cycle. Right? Crappy contractor drags on your project. You get to the next project and same thing. But, yeah, you're right. We finally got a guy that works and we, you know, paid dearly to find him, but, you know, we're in the right spot now.

Mike DeHaan: [17:41] Yeah. I mean, at the end of the day, when, you know, it's a project like we're doing where we're looking at the long term wealth generation and cash flow, doesn't it really matter if we pay a little bit more for like a nice steady rehab. It's not like it's a really tight flip that we're trying to, you know, we only have like $7,000 of margin to try and squeeze it out, which I mean, which is where a lot of people are, especially if they're not finding their own deals. But I would say it's a really challenging problem. And, you know, I think especially with the whole employment situation right now, it must be a national thing everywhere, I would imagine. You know, I know Washington is especially difficult because we have such crazy high minimum wage. So people can go, you know, pretty much anywhere and make pretty decent money. So we have, you know, handyman right now that are asking for 80 to $100 an hour.

Dan Austin: [18:27] Yeah. Elections that are $2.50 an hour.

Mike DeHaan: [18:30] Yeah. Remember hiring handyman back when I first started doing this $2,053 an hour was like a good one. Found a crappy one for $20 an hour. Now like a mediocre one is $80 an hour. And you know, if you want like a good one, they're now a general contractor. So they're not going to do your handyman work. They're going to instead be watching YouTube videos for how to install a skylight in someone's house, which is actually a true story that I know someone that did that and they charged them incredible amount of money and they had no idea what they were doing. They told us they were on the ladder watching a YouTube video about how to install a skylight and they charged people like thousands of dollars, which is super messed up. It's like going into a surgery and the doctor's like, all right, so how do I cut this thing inside of your body? Say, Oh my God.

Dan Austin: [19:22] Well, I'm like, as anybody listening can tell, like, this is like a challenge for us in our business because it is such a huge resource suck and time suck to do multiple projects at once. And we do have kind of a project manager slash operations manager part time that's helping out and that's helped relieve a lot of things. But it's just such a like, it's such a resource. And it's, you know, the other thing, like you've talked to, you listen to other podcasts and they're like, well, I give my contractor the contract that they signed. It's like, cool. I've tried that. You know, I remember one night I taped it to the wall with a punch list line for line on a Sunday night after talking to the guy who's supposed to show up Monday, I show up Monday afternoon, things ripped apart in the garbage. Like they don't, they don't care. Right. Like until you get that good contractor. So like there's all these things that you try that just don't work, even though like, that's best practice, right? Like, oh, we have this huge matrix for how we assess these projects. It's like, dude, no, like that. These guys just don't. That's their their investor grade contractors for a reason.

Mike DeHaan: [20:29] Yeah. And well, I think that whole thing too is like the perfect excuse for people to spend their time. You know, I guess like to waste their time planning about how they're going to do it and not actually doing it. I mean, there's so many people that are like, Oh, I'm gonna buy a house to flip. But at first I'm working on how I'm gonna build my scope of work template. And one of my favorite piece of advice that you hear, you know, unlike bigger pockets, some of those other ones, I'd hope they don't still say this. I haven't heard of her quite a while, but there'll be like, so you pay, you know, installments of like, you pay them at 50 percent done and then you're at completion. And then you give them like a bonus if they're done early and you give them a penalty if they're done late. I think in David Green's Burr book, he says exactly that. Which I mean, I think that probably four or five years ago, that was maybe decent advice. Sure. But now like you go to a contract and you say, yeah, I'm not gonna pay you anything until it's halfway done. They'll just leave and never come back. Because they're going to go find somebody else that'll pay them the whole thing up front. And then they're not even obligated to finish it.

Mike DeHaan: [21:31] Yep. You know, yeah. I went through that

Dan Austin: [21:33] a lot with several contractors over the last few years where they're like, Okay, I need a deposit. And I'm like, Well, I'm buying the materials. Yeah, why do you need a deposit? Right? And so yeah, I've had that before. Here's a good story. I had a contractor, I was like, Okay, you're gonna buy the materials cool. And so then he didn't show up for three weeks. And he asked me for more money, because he spent my materials money already on a different project. So you run through these. What I found for us, which is a little bit more work, the way it's working well for us is we order the materials package, at least generally, you know, the 90% materials package up front. And then from a labor standpoint is I do pay the contractor either depending on progress, weekly or biweekly, right, just to make sure that they're getting paid for their labor, especially if they're full time dedicated to a project. Because that is somewhat fair. Think like you can't wait till the end if it's a six to eight week, twelve week project, right. But if you keep feeding them money, and I think with, with our, our guy now, incentives to finish early would probably be the way to go. Incentives to finish on time is not the way to go because if I'm that contractor, I'm going to make sure that I put about 15% pad on my schedule. And I'm not going to want to commit to that anyways because shit does happen, Like on this rehab we did, and I want shit to happen because this is a good example on our current rehab. He was checking the floors before he laid the flooring in. And he's like, man, your floors are like wonky. Well, lo and behold, we needed a jack up part of the house.

Dan Austin: [23:08] It wasn't like major. The jack up the main supporting beam and put new supports in it. Right? It costs us like $800. Right? Yeah. But the $34,000 in flooring that would have been flopping around on it because there's a bunch of divots in it would have cost us way more. Right? And so I'm glad that we took the extra few days to do that, as opposed to him saying, I'm gonna lose money if I don't get this thing slammed together.

Mike DeHaan: [23:31] Yeah. Right. I was gonna say at least he did that because I know we've had other situations where they haven't checked the floor and then the stuff gets all wacky or we had those as one idiots who, you know, didn't, you know, they didn't check for anything with them. They didn't even like, for the cabinets to show up and they started laying the floor and they're going to put the cabinets on top of the floor.

Dan Austin: [23:51] Yeah. That one and then argue with me that that's how they do it. I'm like, that is cool. That's how you do it. But that's not how we

Mike DeHaan: [23:57] do it. And that's like the worst practice ever.

Dan Austin: [23:59] Yeah. Who does that? With a floating floor that's gotta be moving this wood material. Like, that's just not I don't know. I've it blows my mind. I'm sorry. I'm speechless. Speechless.

Mike DeHaan: [24:09] Yeah. Yeah.

Dan Austin: [24:11] No. And you have to argue with them about how they it's like, I'm sure you do it that way. And it makes sense because it's fast. Mhmm. Throw the floor down, drop your cabinets on top of it, but you're not going to be here when the floor is buckling up and we're dealing with a $2,500 problem.

Mike DeHaan: [24:26] Yeah, exactly. But yeah, anyway, interesting problems. I mean, it's also a good reason for us to be shifting away from like doing like the, any sort of flips or like rehab flips are gonna be selling. Cause you know what mean? Like I said, if it's long term wealth in a rental, that makes sense. But if you look at, especially with the system and the team that we've built for us to tie up $50.60, 70,000 in a flip to even like this one that we have has like a $75,000 spread from our standpoint. If we were to do that, cool. We can make $70,000 in like four or five months once it sells. We can take that same $50.60, 70,000 they're gonna go into that. We can like double down on our marketing in a new market. And we can make that every single month in wholesale fees, comfortably, you know, even looking at this. So like this past month we spent was actually our biggest month spent in marketing, I think actually September was in October, it's like, it kind of carried over for six weeks. So I went on vacation. But then you look at our deal flow, and like our revenue flow, and from actual transactional deals, it's gonna be our biggest revenue month that we've ever had that hasn't had, I guess like a win that is excessive. A lot of the other ones that we've had like big months, like, oh, we had a $60,000 wholesale fee that kind of like padded those numbers, you know, or we like had a house flip where we made $55.

Mike DeHaan: [25:56] Like this one is all like smaller transactions and it's going to be pretty significant revenue. And it's because we spent an extra, I guess $8,000 in marketing than we've ever spent in the past. And it's like, well now if we double down and that was just in one market. Now if we double down, we do that in multiple markets, then we can, there's no reason we shouldn't be making significantly more. But I think point being, that's why it's so important to build like those different systems in your business. Because if you rely just on like one thing, you know, if you want to make real money and you want to do this, then, you know, you can't really be relying on other people to bring you the opportunities. You know, I think anybody who relies on realtors or wholesalers or anybody else to find their own deals, I'm sorry to find their deals for them, it's just never going to be able to really grow at this if you want to do this business full time. But, you know, also not for everyone. Like, like you said before, like, talking about lifestyle businesses and you're saying, we build a pretty sweet lifestyle where we get to walk through these houses full of a decade's worth of people's trash and volunteer to say, Yes, I would like this one, please. That sounds wonderful.

Mike DeHaan: [27:11] Most people don't want to do that.

Dan Austin: [27:13] Yeah. I agree. Well, I mean, yeah, it just speaks to the numbers. Right? But you can't do that without the systems because, like, we've done it before where you dump a bunch of marketing, but you don't have the follow-up systems. You don't have anything you can do to grab those leads. You're almost, like, burning money. You're still gonna get

Mike DeHaan: [27:29] a little bit more. Mhmm.

Dan Austin: [27:30] But now that we have pretty solid systems for that, I think we can actually utilize the extra money and we can see the the one to one or one to two or whatever the ratio is of more spend to more revenue.

Mike DeHaan: [27:43] Yeah. Exactly. Well, and the thing that's nice too is is the CRM that we use are simply I'll put a link for that in notes for this as well. But it's great because it allows us to monitor all that in one system. So we actually know how everything's doing and we can track everything there. Because, know, like I said before, we spent all that, we don't have the follow-up systems. We don't have the way to measure any of that. You also don't even know what's coming back for your marketing. So at the end of the day, if you don't know that, maybe you wouldn't even know that you should pass on that $70,000 flip because you don't even realize that the $12,000 marketing you're going to spend is going to make you way more money than that potentially.

Dan Austin: [28:22] Yeah, well, it's it's hard to get out of that groove. Because when you're first starting out, you're just looking at everything as far as revenue, right? You're like, well, that could be $70. You're like, well, we we could totally do $70. That'd be nice, right? And so you do that. And then all of a sudden, you realize looking back, what you lost out on. As a new business, right? That's what we've kind of done, especially with the rental side of things. It's like, man, this is a sweet rental property. It's like, okay, let's take it down. Let's do all these things to it. Six months later, it's all ready to go. But, like, we've lost, you know, traction while we were trying to build our system. Now, we have systems, we can take down rental properties a little bit more efficiently, but everything's can be a distraction and you gotta focus like, what is my main intention? Am I gonna be a house flipper? Am I gonna be a wholesaler? Am I gonna just try to buy rental properties? And they all come with pros and cons. Right? Like, if you're just wholesaling to buy rental properties, you're still going to take a long time to buy rental properties if you're sucking all your resources to that.

Mike DeHaan: [29:18] Yep. Yep, exactly. And it's a fine balance. Think just, you know, take some experience and some practice. But at the same time, you know, a lot of people will not jump into it because they're worried about being over encumbered, but you're never going to learn until you start trying. That's kind of the key thing. You got

Dan Austin: [29:34] to jump in. And if you're afraid to do it, get a partner so that you guys spread the risk on both lose money. Exactly right. That's what I did.

Mike DeHaan: [29:41] I found Dan and I said, I have this idea. Secretly, I don't have any money, but you don't need to know that because I know you have money. So I'll just use yours. But hey, worked out.

Dan Austin: [29:52] Hey, hey, I'm happy. I'm glad to be that guy. I like to take risk. You know what I mean?

Mike DeHaan: [29:57] Yeah. Right. Yeah. See, yeah, it's been a fun ride. Yeah. Perfect. So coming up on our time here. So what's you got a good learning lesson, horror story? Anything good to say about this past week?

Dan Austin: [30:11] I think for me, it was actually kind of reflecting on as we talked about this this flip we were talking about doing, no buyers for it and all that is just like cutting deals loose. And also this week, we had to renegotiate the trailer park that we had locked up at 1.3. Ran the numbers, got some advice for some some friends on how to analyze the deal, and really came back at it's it's a one it's a $1,000,000 park for what we need to have. And that's still, I didn't think was, like, at a discount, but that's actually what it was probably worth. And

Mike DeHaan: [30:43] Well, in in its current state, we decided that fixed up, it'd be worth 1.3, but we basically paying retail for it while it still had all the problems existing. Right.

Dan Austin: [30:52] Exactly. That's a better way to put it. Thank you. And so just, like, knowing, like, everything isn't a deal for you. You know what I mean? And being able to cut those things loose and then work work with the sellers, work with whoever to kind of, like, do the right thing for your business. Right? Mhmm. Honestly, because, like, the trailer park seller wasn't happy when I had to call him. Right? It's like, hey, I'm sorry, but this is I gave him exactly why. Right? This is how it is this business. I told you this was a possibility. Right? And then looking at this, potential flip is like, gosh, I don't like to pass up on good revenue, and do something cool to a property and improve a neighborhood. But it's like, what, you know, what are we gonna do? What are we gonna lose by getting distracted by that? Exactly.

Mike DeHaan: [31:39] And and having that that bigger picture mindset for it. That makes sense. Yeah. What about you? Yeah. So I actually got a good one. I don't even know if you've heard this story yet about we're gonna become the mobile home slash trailer kings here pretty quick, man. We got so many mobile home leads coming in for some reason. 11. So we have the one, I don't know you've heard the recordings with this guy who has been like telling our call reps about how he's a time traveler. And yeah. And and how he, you know, he's like from the future and he's like come back in time. He's like a scholar and he was like a Vietnam vet and he's just like, he has a purple heart, like all this just a total whack job sort of dude. And we completely discounted the deal. Just because like the the calls that we would get were insane. Right? But, you know, we had our boy Ricardo down in Nicaragua, he's our lead manager. And he just doesn't care like about a situation. He'll call everybody. And just like, you know, his sort of philosophy is like, I don't know, people are always full of it. We'll see what happens. So after we ignored this lead for a while, he called them up, scheduled a meeting for our acquisition manager, James. James goes out there and we're like, waiting to hear what this horse story is gonna be. So he's like, the guy's definitely interesting. But he's actually pretty put together and his mobile home isn't bad.

Mike DeHaan: [33:02] And he's just like kind of a guy, he's like, hey, I wanna move over to the West Side. He said he has kids over there. And actually has college degrees and he has a PhD and stuff. He's a smart dude. And I think he literally was like just screwing with our call center and just saying weird shit. But anyway, so we got and we got mutual acceptance on purchasing this mobile home. He said he wanted 16,000 for it. And James was like, well, how about 10? And the guy was like, okay, that sounds great sort of deal. And we've sort of run numbers on it. And it's like, as it sits, I mean, we could potentially rent that thing for like, $708,100 bucks a month. It's like a nice ish double wide. And as he said, he's been calling people forever and we're the first ones to ever actually give him time of day. I'm like, because you're calling people telling them that you're a time traveler, man. Like, no one wants to, like, go and deal with a crazy person or worse, like, get viewed out like you're taking advantage of the crazy person. But James showed up, he's like, actually, he's pretty square. I think he was just screwing with everybody. Think the big lesson there is don't discount any leads that come in. You spend money on them, go and give them a fair shot because you never know. And with this one, we could either flip it, probably make some decent money or we could keep it as like a low income rental, is in desperate need in Spokane right now.

Mike DeHaan: [34:25] And I mean, if we bought it for $10, let's say I have to put five into it and we can rent that thing for $6,700 a month. That ROI is ridiculous.

Dan Austin: [34:33] Yeah. That's a good deal. Don't care who you are. Exactly.

Mike DeHaan: [34:36] Right. Yeah. And anybody who says otherwise is a liar. But yeah. So we got that. And we got we got another one that's very similar to that as well that we'll probably be getting next week. But yeah. I like it. Interesting stuff, man. You can never make up the people that you that you encounter in this business.

Dan Austin: [34:53] Now it reminds me of old Bert, the guy that what did he, Frisk our acquisitions manager because he thought she was in the CIA?

Mike DeHaan: [35:03] Yeah. Unlike the the second or third time she went out there, he started getting very suspect and had to check her for a wire, which is definitely not kosher. I mean, she was a trooper. She was like willing to put up with that. Was like, please don't ever let a seller touch you ever again. Like that is unacceptable. But anyway, so I was wondering, there's also a reason a lot of people conceal carry when they go and walk houses too because there's some weirdos out there.

Dan Austin: [35:28] Sure. Oh, yeah. Yeah. You get some sketchy situations. I mean, we've fortunately had no violence, which is good, but it definitely feels sketchy. Yeah, exactly.

Mike DeHaan: [35:37] But yeah, stories for another time. But alright, call it for this week. Thanks, Dan. Guys should go and subscribe wherever you listen to your podcast, watching this on YouTube. I don't know why you'd ever do that and wanna see our faces or two talking heads talk to each other. But you should subscribe to the channel. And I'll put a note about the CRM that we use down in the notes here. And, talk to you guys next week. Yep. See you. See you.

Speaker 1: [36:02] 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.