How AI Could Change Real Estate Forever

Dan Austin: [0:00] Hey. The market's gonna crash. All these things are gonna happen. It's gonna get real bad. But we're just, like, here, and, like, the state is saying these things, but what's going on?

Mike DeHaan: [0:10] There's always, like, the the what are they doing with it? But, like, also, like, I think the most understated thing with rentals is the amount of money that goes into doing, like, a property turn. Right? Especially if you've had somebody that's been in there for, like, a couple of years. And so, like, on this one unit and, like, people were in there for three years, easy tenants, always paid, whatever. They just like you know, it's it's a triplex. So basically, we had to replace screen doors, fix trim, fix all these sort of things, just random stuff, little knickknacky costs. Dollars $2.34 here, 125 for disposing of some bushes or something. Bathroom sink cleared of hair blockage. Two college age girls, that's going to happen. Video camera inspection to confirm the city line is still clear, which is I'm actually glad that they did that because I have had issues with the sewer line, and it's probably before. So maybe a little knicky knacky to charge me for that, but also probably gonna save me money later. Then the full rent turnover because I had to paint it. I had to fix a bunch of stuff. I had to just, like, do odds and ends because I hadn't done that for the last couple of tenants.

Mike DeHaan: [1:22] So that was almost $3. Let's see. Replacing drip plans, appliance bulbs, mini blinds, labor to inspect the unit to ensure everything, $700. Wait.

Dan Austin: [1:34] Labor for the inspection?

Mike DeHaan: [1:36] It's basically it was like a bunch of, like, repairs, like, little shit. Just like the labor for it. Full cleaning service, seven hours, $300, which is fair.

Dan Austin: [1:44] Yeah.

Mike DeHaan: [1:45] Like, all like, there's there's the the issue I have is that nothing on there. I'm, like, actually, like, yeah. What the fuck? Like, it's all valid. Yeah. You know? It's just so much. It's just so much money.

Dan Austin: [1:55] Costs, and it just adds up.

Mike DeHaan: [1:57] And that's re like, very realistically, that is, like, the cash flow on this property for the next, like, six months, at least. I don't know. Anyways, let's go.

Dan Austin: [2:05] That's real estate.

Mike DeHaan: [2:06] Yeah. It's why it makes it so hard to, like, believe any of these dorks.

Dan Austin: [2:10] And no no rent increases in sight.

Mike DeHaan: [2:13] Dude, welcome to Collecting Keys. Mike DeHaan here with my cohost, Dan Austin and Dylan Cook. And, Dan, you're right. No rent increases in sight at all. And in fact, I've had to bring rents down on these units pretty significantly. And so one of them, so I had to do basically bring rent down and give a rental credit for the first several months to get somebody in there. And so basically, it's a unit that I used to rent for 1,800, four bed, two bath unit. I now had to rent it for $14.50 and give a $250 credit for the first three months to get it leased out after I've been on market for several months. And it's like a nice unit. Like, I've already, like, redone it. You know? It has, like, a garage. Overall, it's generally pretty decent, But that's the way it is. And you know what? Property tax is still going up.

Dylan Koch: [3:02] Was this in the winter time frame too? Like, as you're trying to rent it and whatnot? Of course it was.

Mike DeHaan: [3:08] Yeah. You know?

Dylan Koch: [3:09] Yeah. So December Yeah. We had offer two months of half rent. Basically, like, one month of rent. Yeah. And then we got you know, now it's up to what I think it should be. But still, there's these concessions out there that you never hear a guru talk about. And on the property manager side thing too, I'm not saying your company did this, but I've gone through several where it's like, oh, we had to, you know, snake the sewer line or something. It's like $2. I like, I could have done that for 400.

Mike DeHaan: [3:39] Yeah.

Dylan Koch: [3:39] Like, they they will pet they will add on and pocket the difference between what they charge you and what it actually costs them.

Mike DeHaan: [3:45] Yeah. Well, I I'm fortunately, I don't think the r's will do that where they, like, pocket the difference. But what they will do is they will call, like, the most expensive option because they're the only ones that answer the phone when they call it. You know? So, like, for, like, the sewer line issue, there's a lot of people that can work on that for cheap, but instead they call, like, the Roto Rooter or, like, the emergency people who come out and they charge you, like, $500 to do something that, like, a plumbing company would do for, like, $1.50. You know? And so, like, that's I don't know. Like, like, it's hard because they have their own efficiencies too, it's like how much of if you look at their dollar per hour cost to work in your property, it does not make sense for them as a business to call around and get you the best deal. They don't give a shit. Like like, they're not making any money off your property anyway. They're making

Dan Austin: [4:36] They have 8%.

Mike DeHaan: [4:37] They have

Dan Austin: [4:37] to have some reasonable stuff, though. Right? Like, if they're always expensive, they're not gonna have they're not gonna have anybody. And there's some property managers that do they just suck like that. I think the one that we we both use is reasonable. They have some ins they have some internal labor too that they can use for, like, the turnovers, which tends to be reasonable. Like, you can't be upset about it. I think the biggest I mean, the turnover's a turnover unless you have a property manager that's, like, trying to steal money from you. It's the renting of these things and how long it takes sometimes when you know if you were doing it yourself, granted you'd have to do showings and all that stuff, you could probably do it much faster. It's because they're trying to do a 100 right. Of

Dylan Koch: [5:14] Biggest pet peeve, Dan. And like, oh, we threw it up on Zillow. Like, no. Went on Craigslist, Facebook Marketplace. Like, I have literally found all of like, we self manage now, but I used to have PM. And how long it would take them versus how long it would take me is literally like a nine day difference.

Mike DeHaan: [5:29] Oh, yeah, dude. Like, that was one of the reasons Dan and I have jumped around, like, five different property managers. And the good thing with these ones that we have now, it's a Hornberger Group in Spokane. They're great if you guys are in this area. Like, they at least give, like, updates with stuff that's been kinda sitting if it's listed so you know they're doing something. Like, the most extreme example, several years ago, Dan and I, we hired this product management company that was the company that's, like, one of the big dick real site say guys in town. I hope that the goes worst. To, like, talk at events, everyone were like, oh god. Fucking Tyler's here. He's the best. Like, it's he's he's the worst. He's the fucking crook for sure. But, like, his property management company, which several people are like, oh, yeah. They're great. We hired this lady. And okay. First off, this is this is gonna be rude. When somebody shows up and then you meet them and they're, like like, super overweight and, like, greasy, like like like, it it's one thing if you're, like, you're kinda overweight, you, like, took took time to make yourself presentable. Like, that's that's fine. But, like, you obviously didn't give a shit, and you're, like, don't take care of your body, and you showed up to, like, this initial meeting, and you don't look good.

Mike DeHaan: [6:34] I'm like, I already know it's gonna be a fucking disaster. Right? Because you can't take the general pride in yourself. I know that your work is not gonna be the same. That's just like a general belief that I have in human beings is what you do in the morning and how you sort of, like, get yourself ready for the day is gonna carry across everything else. So there was, like, this initial thing. Was like, I don't know. And so, anyway, we go. She totally just like the fact that she's tied to this company. That's, like, kinda what she's leaning on. Give her some of our properties. Give her, like, my whole whole portfolio and everything. It's in '22. I go to Africa for five weeks. K? One of my properties goes vacant, like, right before I leave. I come back. The thing and this is, an a class property in '22 when it was so easy to lease stuff. And I come back, and it's still vacant. And I'm like, what the fuck? Like, I don't understand. So I, like, went behind her back. I posted it for rent on Friday. I had it leased up, money in the bank on Sunday with, like, a a plus tenant. And I called her, I was like, what the hell are we doing? And she was like, yeah. We'll just cancel our arrangement. I'll give you keys back. She didn't even, like, fight me.

Dylan Koch: [7:37] Yeah. She knew was fun.

Mike DeHaan: [7:39] Yeah. Like, she didn't even argue. Like, the whole legal arrangement that we had, she was just like, yeah.

Dylan Koch: [7:44] I don't care. One thing I like to do is I'll look at rental comps and like, okay. I think, you know, we should rent it for this. And I'll ask them. I was like, what do you think we should rent it for? And it's always like $400 more than I think is reasonable. Because they want to get they want to make more money. Right? And I'm like, no. This is going to sit for way too long. Like, we have to and we'll try a little bit. I'll say, you can post it for like a week and see if you get any lucks, but like that's it.

Mike DeHaan: [8:08] Yeah. See, and then like so not only is that conversation important, but also, I would say something that carries a lot of weight is when you have these these companies that make mistakes and they fess up to it and they, you know, help fix it. Right? And so in that exact example, Dylan, that property that that unit I mentioned before that's empty for a while, they did exactly what you said is they went off of they list it higher than it probably should have been. They were looking at, like, what I leased it for previously. They're looking at what other things in the market we're currently leasing for and weren't or, like, currently listed for but not actively leasing for. And so it sat for several months, right, until we finally got down to a price. Because also rental listings, just like property sales, if they sit on the market for a while, people look at those and they're like, why the fuck is this thing been listed for rent for two months? It must be a shitty property. So they don't look at it, and it causes issues. And so I finally got it leased up, and they actually waived their lease fees and everything else because they acknowledged that they made a mistake.

Dylan Koch: [9:05] Good. That's good. You know?

Mike DeHaan: [9:07] And it does like, it was $600, not the $22,800 that I missed on rent for those two months, but it's still something. Right? And they owned up to the issue, which I

Dylan Koch: [9:16] I am in the firm believer that well, one, if you are just getting started real estate, you should self manage. Just get experience doing it. You should know what's right, what's legal, etcetera. Or I'm in the same camp. Like, if you shouldn't probably own one or two rental properties, like, it's not worth it. Like, well, let's I guess, let's say that you should own zero, you should own at least 10. And the other side of that is if you're gonna go straight into property management, you'd be better be making an assload more money doing something else where that differ that all those things that we just talked about are inconsequential to the overall, like, what else you're doing.

Mike DeHaan: [9:47] Yeah. Well, I would say small business in general. Like, if you were going to be starting a business, it's going to be like you running the entire thing or like you and like a couple employees or you know, you have like there's focus on hiring like subcontractors, things like that. You should do everything in that business. Right? Whether that's a real estate business, whether if you're if you're going to flip houses, you don't need to go and like flip a house yourself. But you should at least go and, like like, lay a line of flooring. You know? Just, like, understand, like, what that is so that way when a guy comes and tells you it's gonna be $15,000, you're like, okay. That seems kinda fucking wild. You know? That gives you context. You know? Like, go and, like, install a toilet one time just so you know what that takes.

Dylan Koch: [10:28] So you could take multiple trips to Home Depot and get pissed off and Yeah.

Mike DeHaan: [10:32] Get shit

Dylan Koch: [10:32] all over yourself.

Mike DeHaan: [10:33] Then you learn what your time is worth. Right? And then, like, same with, like, any other business. If you're gonna start a lending business, you should go and you should do your own underwriting. You should do your own loan processing. You should have the borrower that tells you a sweet game and then doesn't fucking pay you on month one. Right? You do that, and it sucks. But that's kind of how you learn how to not make mistakes. And property management's exactly the same. Right? If you never manage your own property, you don't know what these companies what these shitty companies are gonna do without your knowledge. And the funny thing is is I think that so many people are averse to that because they listen to these people that, you know, make $10.20, $50,000,000 a year selling education. And they're like, know what your time is worth. I'm like, you're a fucking admin at a company. You make $75,000 a year. I applaud you for wanting to do something bigger. Your time is worth nothing. They can say that because their time is literally worth thousands of dollars an hour.

Dylan Koch: [11:23] You know? My second property we ever owned, I was there at, like, 09:00 at night with a pair of pliers trying to unrust this, like, sink that clogged up. And I was like, I had no idea what the hell I was doing, man. Like Got it. But you you just do it at the beginning. You earn your stripes.

Mike DeHaan: [11:36] So Totally, dude. But, I mean, that's where I got a lot of my confidence even get into real estate was when I moved back to Spokane. I lived into what was Dan's first rental. He basically let me live there for So nice, without Dan. Having to sign a a lease. Yeah. It was very nice, honestly. Like like in hindsight, that was a great hookup. And and, basically, what he wanted was to have his mortgage covered while he did some work on it to get it ready. You know? And so, like, my wife and lived upstairs, and Dan was, like, doing all this shit down in the basement. And he would just, like, come over on, like, a Saturday, start working on the house. You know? And I would just sit there and watch him, like, just piece shit together. And I was like, this hard.

Dylan Koch: [12:13] If Dan can

Mike DeHaan: [12:13] do it, I can I'm I'm I'm all upstairs, like, playing video games and shit, and he'll be like, hey. Can you help me install this wall? Yeah.

Dylan Koch: [12:19] I'm like, bro.

Mike DeHaan: [12:20] You're like, that's how you do it. Finish this. I'm trying to finish this dungeon run. I'm way too busy.

Dan Austin: [12:25] Yeah. It's it's one of those things, you know, like when you have to where they say, if your friends jumped off a building, would you do it too? You're like, well, yeah. If they lived, why not? You know? Like, you watch somebody how to do it. I mean, I learned how to do it from a friend. You're like, oh, that's that's that easy.

Mike DeHaan: [12:39] Oh. You can literally learn everything

Dylan Koch: [12:41] on YouTube right now. They're like, you type in how to refresh water heater. Like, you'll figure it out.

Dan Austin: [12:44] You'll figure it out.

Dylan Koch: [12:45] You might get hurt, but you'll figure it out.

Mike DeHaan: [12:46] Yeah. That's a great analogy for you, Dan. Because I remember the last time we went skiing together twelve years ago And there was, like, this little tiny cliff. Was, like You're, like large. It was not. It was, like, it was, oh, whatever. And and so I large. You're, like, you should get this. And I went, okay. I go and I hit it. And then you're up there with my wife, and you start talking shit to her, and then she hits it. And then you're like, shit. Now I gotta do it. And you had no you had no, like, place. Was

Dan Austin: [13:15] still skiing probably under 10 times at that point in my life.

Mike DeHaan: [13:18] Oh, for sure. But you you hit it, and then you cross your skis, and you eat eight shakes. You roll down the hill. It was great.

Dan Austin: [13:24] I didn't get

Mike DeHaan: [13:24] hurt, though. You didn't. Because that's because you were a spry young man back then. It's crazy. Now you definitely would.

Dan Austin: [13:30] Yes. For real.

Dylan Koch: [13:32] So Matti Vaughn got Care Flighted off the mountain.

Mike DeHaan: [13:35] Yeah. God. That would suck. You guys see Lindsey Vonn eat shit at the Olympics? Yeah. God. I should have

Dan Austin: [13:40] gambled on that. I knew that was gonna happen.

Mike DeHaan: [13:42] You should have. When does she want her knee out? Yeah. Well, she already had blown her knee out. And then so for her to, like, do that again but the wreck was nasty, dude. Like, it was actually pretty controversial because they have, like, those flag gates, which they've talked about getting rid of for a while. And it's because, essentially, she, like, caught her shoulder. Oh. And it was in the first, like, ten seconds of the run.

Dan Austin: [14:03] Too bad.

Mike DeHaan: [14:04] And so she went down so hard, and she, like, had had, like, a broken femur and all this shit. Oh, I don't

Dan Austin: [14:09] know how she broke her leg.

Mike DeHaan: [14:11] Yeah, dude. She was messed up. It was very

Dan Austin: [14:13] She should just not see like that anymore.

Mike DeHaan: [14:17] She's in her forties.

Dan Austin: [14:18] I know.

Dylan Koch: [14:18] Which is crazy. 41, which is nuts. Yeah.

Mike DeHaan: [14:20] Yeah. She's got more balls than I do. That's for sure.

Dan Austin: [14:23] I mean, yeah, that's nuts.

Dylan Koch: [14:25] Yeah. No pun intended there, Dan.

Mike DeHaan: [14:26] No. No pun intended. Anyways, so what are we working on today this week, guys? I know we got I don't mean any, like, general news we wanna talk about. Dylan, you sent over a bunch of, like, economic stuff, which I'm gonna I mean, we can't talk about any of these actual statistics around surging delinquencies and The US home sales falling and labor market being weak. Because the administration says everything's the best it's ever been. So you're just wrong. We don't talk about fake news here.

Dan Austin: [14:56] Well, here's what I don't understand. Let's let's talk about this for a minute. Is, you know, was it '20 I guess beginning of last year was, like, hey. The market's gonna crash. All these things are gonna happen. It's gonna get real bad. But we're just like here. And like the state is saying these things, but what's going on?

Mike DeHaan: [15:15] Like, why? Like, like, what do you mean? I mean, I mean, I don't think different not experienced.

Dan Austin: [15:20] There's a lot of sentiment that like, we're basically the country's over and we're going to not exist as financially as we ever have. Like, as we have in the past. And like, obviously the data is saying other like, it's like, Oh yeah, it's not looking super hot, but I mean, like, we're like here, like, it's like seems relatively okay. So where I guess I'm trying to figure out why.

Dylan Koch: [15:43] Well, I'll start off with saying, then we talk about the K shaped economy a lot. And the upper 50% accounts for 90% of the spending or something stupid, whatever that statistic is. So I would say, being sensitive, I guess, is like, we don't probably experience a lot with like the bottom 50% do. And I think that's probably where a lot of the struggle is economically for a lot of people.

Mike DeHaan: [16:09] Yeah. I think I that's exactly we've talked about it on the show before. It's the bubbles that we live in, right, of our social circles, the things that we're involved in. I mean, small business owners, like even like in our neighborhoods, right, we live in like nicer parts of town. We're not directly connected to a lot of the people that are feeling the pressure of increased costs. You know? And I and I know these people are experiencing increased costs because my wife and I, when I do like our monthly bookkeeping, I see how our costs have increased over the past several years, and it's not like our lifestyle has inflated that much over the past several years. You know? It's just like the general cost of, like, you know, restaurants, groceries, insurance, the same stuff that other people pay for. Like, it has gone up exponentially, but I also know that those people's income has not gone up exponentially.

Dylan Koch: [16:54] One thing as an anecdote is like, in the off market business specifically, deals are still hard right now. So you would think, you know, like, if the if this people are struggling, that might result in more of distro sales. But, you know, our our market our cost per deal is still up and like our marketing and the nominal amount is up, and we're doing less deals. So like, I don't know what the

Dan Austin: [17:16] Would you would you make an argument, though, that, like and I'm I'm trying to test this. Is that there's is there a lot of money available out there? You just gotta go grab it? And not specific to wholesaling only. I'm talking macroeconomics here in The within The US.

Dylan Koch: [17:31] I don't know if I'm understanding

Dan Austin: [17:32] because it feels like it feels like there's still a lot of money out there. You just have to go get it. Like, it's not a it's not a macroeconomy thing. Like, assets are so well valued. And like you're saying on the higher end of things, say the upper 50% of the countries that owns assets, even if you own your own home, that's a big step. Right? Like, in wealth building. And so it feels like in in my bubble that there's money out and available. People just have to get it. And I'm not saying this is a it's not a pick yourself up by your bootstraps thing. It's that the money is it feels like it's in the system and it's existing. People that have the wherewithal or the insight or the connections are able to grab it.

Mike DeHaan: [18:13] Yeah. I think that's exactly it is they have to have the wherewithal and the connections, and a lot of people just don't have that. And I think we are seeing this especially with Sirlenz a lot because we are getting an exposure to the side of the finance world that most people never see. And we see how eagerly the big money is buying up debt on secured investment real estate. Right? Like, rates are coming down. Like, we have hedge funds that are competing for our business. Right? Like, it is it is really weird to be in this place where there's there is so much opportunity on the top end. But the biggest constraint that we run into is qualified borrowers. Even if, like, their properties are good, borrowers don't have a lot of money. How many prop borrowers do have to have liquidity issues, Dan?

Dylan Koch: [19:00] Yeah.

Mike DeHaan: [19:00] All of them.

Dan Austin: [19:01] And I and I will say that is there are some pros. Extreme liquidity issues, but but

Mike DeHaan: [19:05] go ahead.

Dylan Koch: [19:06] Are you able to share what are they looking for in general as far as liquid like, 10% of asset? Like, what what's their threshold?

Mike DeHaan: [19:12] It's not not as much as you think. Liquidity?

Dan Austin: [19:14] Like Yeah.

Mike DeHaan: [19:15] For liquidity.

Dan Austin: [19:16] Yeah. Well, you gotta be able to close the loan, of course. And then you gotta have Yeah. You have to have a

Mike DeHaan: [19:20] Dude, you do laugh. But like, seriously, people are like, people that own 25 properties will show bank statements whether you not have enough

Dan Austin: [19:28] to put a down They'll have like $4,500 in their bank. And you're woah.

Dylan Koch: [19:31] I don't understand.

Dan Austin: [19:32] Yeah. It's crazy. It's crazy. Yeah, typically you've, you gotta have some reserves, three to six months of interest reserves to pay or to pay for reserves for your interest payments. And then you've gotta have 10 to 20% of the rehab as liquidity post closing.

Dylan Koch: [19:45] Do they ever change the escrow requirements for that to, like, soften their blow? Like, you have to have six months backed up for taxes and insurance and payments?

Dan Austin: [19:53] Well, yes. That's what I mean is you gotta have for your payments. You gotta have three to six months depending on the the investor.

Dylan Koch: [19:58] Yeah. But I'm saying, like, in their checking account or in the escrow Oh,

Dan Austin: [20:02] in their checking account, we just validate that they have that post close liquidity. And you're thinking about it on a construction loan, as long as they have that in their account, it's fine because they also have say 30 or $40 that they're paying on that's in escrow for their construction. There's an assumption is if you at least have enough money post closing your account to cover 20% of the rehab plus six months or three months of PITI, Even if you spend that money on a car, like, you still have money coming towards you from that construction holdback.

Dylan Koch: [20:33] Okay. So you're I mean, it is less than I would I would think. But

Mike DeHaan: [20:36] Yeah. Yeah. But like, dude, like, it's our biggest problem is people Credit's always questionable with real estate investors. People max out their credit cards to different things. But that's workable. The liquidity thing is so challenging because it's pretty much like you have it or you don't. There's no real gray area like there is with credit. Even if someone has low credit, we can typically get it waived if they're like get a letter of explanation where like, oh, well, had this HELOC. I didn't realize it wasn't on autopay, and so I missed a payment, and my credit took a hit, whatever. But when it comes to money, if you don't have it, like, I don't know what to do. Like, is you can get it from, like, a friend, but it has to be in your account. Like and then you gotta figure out that whole arrangement. Don't tell us about it because we're not supposed to know that you do that. Yeah. You know? Like like, there's it it's such a massive issue. And, you know, we're talking about the k shaped economy. I do think that, like, that lower half of that k is probably wider than we is, like, larger than we think. You know? I wouldn't even think it's, like, fifty fifty. I would say it's probably, like, seventy thirty.

Dylan Koch: [21:35] It's bottom heavy. Like, if you were to graph it out.

Dan Austin: [21:37] Very much so. Population wise, for sure. Yeah.

Mike DeHaan: [21:40] Yeah. Population wise,

Dan Austin: [21:41] for sure.

Dylan Koch: [21:41] The nominal amount is definitely a lot more people in that bottom. Yes. I agree.

Mike DeHaan: [21:45] Yeah. So you know? And then but then also too, how many people mess up their liquidity by making investments that are relatively illiquid even if they aren't buying real estate? How many people I've talked over the last little bit that have an insane amount of money in their four zero one k's but have no money in their, like, checking accounts. Mhmm. And they feel trapped and sure their four zero one k's were something, but they're 38, they're 39.

Dylan Koch: [22:11] Yeah. What are

Mike DeHaan: [22:12] gonna do? Like, I don't really have a lot of money to do anything when it's all in there. I can't. And and and either they can't sell it because of whatever or they're, like, afraid to do it because they don't wanna pay the penalties or they're bought into, like, the thing that they need to have that. Right? That whole fucking scam that we all get sold when we get our first jobs. But, like, that's a part of the system where those companies that own that, those dudes are making so much money off of your investments in their programs. Yeah. Right? And it's just basically taking away the ability to have that spending and flexibility with the average person. Even like good like high income people.

Dylan Koch: [22:48] Having your this I mean, kind of a tangent so you don't have to go here. But having your your income, your insurance, and your retirement tied to employer is very dumb.

Dan Austin: [22:57] Yeah. It can all get taken away super fast. Right? Mhmm. And was bad day.

Mike DeHaan: [23:02] Know? Dude, like It's all gone. Like, what was it? Was it two weeks ago UPS announced that they're laying off 30,000 people?

Dylan Koch: [23:08] Mhmm.

Mike DeHaan: [23:09] Like, that was like a one of those careers that for a long time was like I remember people talking about, like, really good careers that were, like, relatively easy to get. They're like, yeah. The average UPS guy makes $100,000 a year. Like, here's all that stuff. I I guarantee you within that 30,000, there was a large percentage of them that, like, that was their gravy train that they were gonna be doing for of their life, and now that is just gone. And what do those people do?

Dylan Koch: [23:31] Yeah. Well, it's important about that headline is it wasn't tech. Right? UPS is a logistics company. Yeah. Tech ones, you can kind of understand with AI and how they overbuilt and all this kind of stuff.

Mike DeHaan: [23:40] But Totally. And but then also at least with tech, you, like, you can get a parallel job to that. It's kinda easy. So you look at, like, UPS as an example. Those guys are gonna go and be delivery drivers somewhere else. Do other delivery companies have the same perks and benefits? I don't know. No. Because the guys know of, like, three.

Dan Austin: [23:57] Those those last mile guys, man, they just throw shit at your house. Like, you're lucky you've had to

Mike DeHaan: [24:01] get your shoes off. You know, like, those

Dan Austin: [24:03] random ones, especially around Christmas time that's like, dude, by the way it's set up at my house, I've gone out of I've been leaving my house, like, 5AM, and I see some random person walking through my yard. Like, it's wild. It's the scariest thing.

Mike DeHaan: [24:15] You're like, what the hell are they doing?

Dan Austin: [24:16] Then they've got like an Amazon package. Nothing with them. Yeah. Just a beat up off beat up ass, like, Honda Accord. You're like, oh my god. Mhmm. Wild.

Dylan Koch: [24:24] We had we had two Amazon drivers literally, like, pass each other on our sidewalk at our house because they're two different packages, two different drivers at the same time.

Dan Austin: [24:32] I was like, wow. Their system is not it's not perfect yet, but they're gonna all be replaced with drones soon anyway. So

Mike DeHaan: [24:38] Yeah. Do do you know they already have drones in certain markets, Dylan?

Dylan Koch: [24:41] Certain markets. Yeah. Yeah. That's like Domino's Pizza that will deliver by, like, a

Dan Austin: [24:46] Are you kidding me?

Dylan Koch: [24:47] Like a droid. A droid.

Mike DeHaan: [24:49] Yeah. But that that's a gimmick. So so we have an employee in Dallas. He says that, like, Walmart,

Dan Austin: [24:54] one of the

Mike DeHaan: [24:54] grocery stores just says, they have, like, actual aerial drones that will deliver stuff to his house. Yeah. Oh, HEB.

Dan Austin: [24:59] That's wild. Yeah. HEB has drones.

Mike DeHaan: [25:00] That's right. And then no. They have

Dan Austin: [25:01] the robots on the street. You guys might have those in Cincy. We don't have those in Spokane, but we don't have good enough sidewalks probably.

Dylan Koch: [25:07] I was going through the Kroger there. They had, a robot, like, scan the aisles for inventory. I'm like, what the fuck is happening What? Right Yeah. That's pretty awesome. Yeah.

Mike DeHaan: [25:14] I'll like the yeah, once it's scanning for inventory, pretty soon it's gonna be like scanning everyone's faces to see what kind of American

Dylan Koch: [25:19] Oh, you totally.

Dan Austin: [25:20] Dude, like, did you so okay. So listen to this. Somebody was brought this up to me the other day, like yesterday or whatever, about how this, like, Savannah Guthrie's mom being kidnapped thing, how they are like, oh, we can match that person's eyes up to our database. You're like, woah, woah, woah, what? Like, who's how how can you just have a database of random people's eyes so they have they're already doing that without your

Dylan Koch: [25:44] clear like clear the at the airport or TSA PreCheck. I mean, that's how all those things work. And I have both those things. And I'm like, usually privacy, like, you know, at least on the side of more private, and I'm like, I'm out there, man. I do this podcast. I'm gonna lose data. Yeah.

Dan Austin: [25:57] There's no hiding. Gone, dude.

Dylan Koch: [25:59] Your Yeah.

Dan Austin: [25:59] Right. Social security number, phone number, all that stuff.

Mike DeHaan: [26:02] Did did you guys see that that ring commercial? That's Oh

Dylan Koch: [26:06] my god. Is so fucked up.

Mike DeHaan: [26:08] Yeah. Was I there? Yeah. So I didn't watch anything with Super Bowl. I saw that people talking about it. So based so Ring, you know the doorbells. They had this commercial that I guess the whole pitch for it was how they're using AI now to essentially use the doorbells to find lost pets. And so it'll be like, if you lose a pet, you can post it. And then all the Ring doorbells will talk to each other and try to identify if it's

Dylan Koch: [26:33] It's default on. Not default Default on. Oh, really interesting. The update was like default. I'd say I had We have a ring and I had to go in and turn it off.

Mike DeHaan: [26:40] Yeah. But like the whole argument is, is like, this is like the start of like the surveillance. Oh, dude. You know, if you're giving everyone like, cameras are always gonna make this giant, like, mesh, and they're now all talking to each other, you know, which, like, is funny. It feels very dystopian. That's actually, like, not uncommon in other countries. Like, if you go to, The UK, everything is like that. Like, you can't really go anywhere in London without being on campus.

Dan Austin: [27:04] Like the difference with that is and, like, China is another big one that people talk about. But the the I think the difference is the government owns those. So you're like, okay. Well, in The US, the government will just be like, cool. Ring. If you want us to tell you that tell people you're Epstein's Island, you need to give us access to all that shit. So they act like The US acts like they don't have access to They they've got access.

Mike DeHaan: [27:23] Well, also, not only does the, you know, the government own, that kind of system, but these are things that are on people's private property. Yeah. You know, that they can be doing this without their knowledge. You know? And basically, everyone that, you know, if they didn't see that commercial and question it, they now have this Ring doorbell that is going to be scanning for everything, and they'll have no idea.

Dan Austin: [27:44] They don't have Ring It's

Dylan Koch: [27:45] just like the terms and conditions that you always sign on for anything anymore. Like, you always have to create an account for something. It's like, I basically pledge that you can steal anything. Like, you can have my social security number.

Dan Austin: [27:54] 56. Okay. Yeah.

Mike DeHaan: [27:56] Yeah. Did you guys you guys ever, like, download, like, a new app that's, like, something completely pointless? Like Canva, let's say, as an example. And it goes, do you wanna give Canva the ability to, make and receive calls on your behalf? I'm like, no. Why would I want them not? You know? Yeah. But there's no

Dylan Koch: [28:11] way you're trying answer. Favorite is when the app is asked for like location services. It's like always allow ask app not to chat, not to track or the left one's like decline. But the middle one is like, okay, I can request that you don't, but you're basically telling me that you probably so will.

Dan Austin: [28:28] Yeah. It's nuts. Yeah. So, one thought I had to bring it back to economic stuff when it comes to like these, like droids and all this sort of stuff. I'm kind of bullish in in the sense of I feel like there's a lot of I don't wanna call it dry powder, but there's just a lot of room to grow with that as those things, I think, in the next five years. Obviously, we've been talking about this AI bubble, but I think there's a ton of growth in AI still and the application of it. Like, we're just like at the tip of it. But, and maybe there's a bubble with the chips. I do think that we'll figure that piece out with the chips and the power system in a different way, likely software. But with, like, all of the stuff with the Tesla's releasing, and then you've got, what is it? Starlink and SpaceX, they're they're merging with x AI. So they're gonna go public, so there's something that's gonna go on there. Like, it just seems like there's a lot on that forefront of this autonomous business industry.

Dylan Koch: [29:29] I think the naysayers for AR are one, the the revenue model because, okay, you pay $200 a month, you know, for a Claude or or any of these stuff. You need a lot of people paying $200 a month to justify the build hundreds of billions of dollars that they're going to do in CapEx now. So like, that's the bubble part, I think is around the finances. I don't I think it'll definitely change how the economy works.

Dan Austin: [29:53] It's just Right.

Dylan Koch: [29:53] Well, and

Dan Austin: [29:53] I think a lot of that's gonna have to be coming from the industry, which are the people that have the money. There's like the I mean, the the funny thing is a lot of those companies are the ones building the AI too. Right? The Teslas and the Microsofts and the Amazons and all that sort of stuff that have the capital to implement this at a mass scale, but they're also building their own.

Dylan Koch: [30:11] This is interesting that I'm this is way outside of my knowledge base and you guys might know better if especially Mike, he's a nerd. But Tesla filed for a patent that's basically like a new TCIP, like an Internet protocol, so that it its AI agents can better communicate with each other. So that is like the level of what I know. So I don't know how that changes things. I don't know other than that, but I thought I like, okay, well, TCIP, I know has been around for forty years. Right? It's been like the standard for a long time. So I I feel that's

Dan Austin: [30:43] a new more rapid communication. Maybe it's more streamlined, less human language

Mike DeHaan: [30:49] in it. There's like yeah. That that is interesting. I mean, that's that's getting out into, the nerd realm beyond me. Yeah.

Dan Austin: [30:56] Real. That's super nerd stuff.

Mike DeHaan: [30:57] I mean, that does make sense though, right, that they would want their own system that they can fully control. Because also if they patent that, they don't have to use just like the general Internet providers that exist out there. You know, they can kinda do whatever they want. They don't have to get throttled.

Dan Austin: [31:13] Well, they're gonna create their own Internet with, Starlink anyways at some level. That's true. You know? They'll probably have to have all their own like, I if they do that, they would have to have all their own base stations. And I know I had a friend that worked at SpaceX, and his job was to go out and scout real estate. This was several years ago for towers on the ground. Right? And so they were, they build their towers. Because you can't get satellite when

Mike DeHaan: [31:32] you're in your house. Right?

Dan Austin: [31:33] So the whole idea is like, well, they're just gonna have cell phones everywhere. It's like, well, no, because when you're indoors, you have to be able

Mike DeHaan: [31:38] to see the satellite. Right?

Dan Austin: [31:40] Mhmm. But if you have repeaters on the ground that do it, basically cell towers, then you don't. Right? You can have a different network for that. But that's real maybe that's where they're headed in their direction.

Mike DeHaan: [31:50] Yeah. It does feel like we are kind of on the brink of a lot of technological breakthroughs that we've been talking about for, like, a long time. Like, you know, it it it kind of feels similar to, like, when I was started at college and, like, I had a couple of people that I knew that had smartphones. And then by the time I graduated, we all had smartphones and all had Instagram and social media on our phones. So that was over the course of four years. It happened so fast. And I feel like we're kind of nearing that with this integration of like, automation and robotics. I don't even want to say AI yet because I'm a little bit of a skeptic over, like, what AI really looks like and how many people are talking about these AI products that don't actually know what AI means. You know? And they're basically just using it because it's buzz.

Dan Austin: [32:37] I think we're gonna see it more just in everything, everyday life that we like there'll be like a layer. Right? Like, think about this. Yeah. Like grocery delivery, for example. There's probably gonna be massive automation and AI involved in that Because system right now it actually works pretty good, but you also have some people that do like the really shittiest shopping for you. So they're like, oh, I replaced this bar of soap with shampoo. And you're like, well, that's not the same thing. You know what I mean? Because it's so there, I think with automated robots making those decisions instead of people, it's going to change it. And I think that's going to take some AI and some sort of systems on the back end too. So I think we just won't see it as a consumer as much, but that'll be a big part of our life.

Mike DeHaan: [33:16] Usually, like small stuff where things will make like small decisions like that at a more efficient level.

Dylan Koch: [33:23] One thing that I saw that was interesting, and I don't know if this is true or not, but I guess there's some insurance providers now that will give you a better rate if you have Tesla's like full full self driving.

Dan Austin: [33:33] Really? That's

Dylan Koch: [33:34] kinda crazy, actually. Enabled. Yeah. Like, from all the testing, they're like, well, this is better than humans. So we will discount you if you're not a human driver accounting for human error. The great thing is is it

Dan Austin: [33:42] it is better than humans. I've done it before. 99.9% of the time, it's probably better than humans. Do you wanna be that point one percent?

Mike DeHaan: [33:49] Dude, dude, when we went to the AAPL in Vegas in November, the Uber that picked us up at the airport, he didn't even drive the car. He literally just got in the car and just put

Dan Austin: [33:58] up He didn't.

Mike DeHaan: [33:59] He just he just put it on auto drive and just fucking

Dan Austin: [34:01] took And I was like, it but you have to have your hand on the steering wheel. He's like, no, don't.

Mike DeHaan: [34:04] He's like, no, don't.

Dan Austin: [34:06] Just sitting there. But here's the thing though. That's awesome for that guy. His job's gone next year Absolutely. Because Tesla knows that and they're launching their and that's where the other, like, they're, they're getting ready to truly launch, driverless cars and Tesla's launch. I think it's gonna be 2027.

Dylan Koch: [34:22] They don't, they won't even have steering wheels.

Dan Austin: [34:23] That's right. Exactly. And so like Waymo, they're gonna be not as competitive as Tesla because Waymo is they're taking a car and they're retrofitting it, right? Where Tesla's building a car and then they have the system for autonomous driving and there won't be the only players in there. Waymo's definitely gonna be up there still, but I mean, it's gonna completely change the economics. So now you can truly get a ride downtown to the bar for $5 because there's no driver to pay. There's nobody like,

Dylan Koch: [34:50] no, I think that's right.

Dan Austin: [34:51] It's gonna completely change it. And that's an AI application where I think we're still at the very, very, like, we're not even to the horizon yet. Like it's just about to pop and that's gonna be a huge economy. It's gonna shift things that K I think that K shaped economy for a lot of immigrants and low income people that tend to do that gig economy, that Uber driver stuff, that's just going to they're gonna have to pivot.

Dylan Koch: [35:14] Mike had a post about like basic AI not doing what he wanted it to do. Right? But there's a there's a popular article going around Twitter right now that basically says like, something big is changing. And the whole premise is like, all of the AI hyperscalers right now focus on the large language models and code, because computers talk to each other, code is easier for them than human language. And he's like, I think and this guy's ahead of Anthropic, one of the bigger guys that wrote it. And basically was saying, we're to the breaking point now, at least with like, I can type a prompt in the Claude of an app that I want, and it will do the UI. I'll come back four hours later and it's done. And I pay either don't have to change it at all or I to make like one edit.

Mike DeHaan: [35:58] That's why.

Dylan Koch: [35:58] Right? He's like

Mike DeHaan: [35:59] Maybe a lot more edits. As soon as you start playing with it, you realize how fucked up that is. Okay. That that was the whole point of my post though. Right? Is Yes. Not not to cut you off is that it is so good at, like, confidently giving you an answer and then gaslighting you when you question it. Right? And so so I I literally just did this whole workshop in Breckenridge with a guy that's like, this is like his career. This is like what he's been doing for the last, like, five years, his AI stuff. K? And he has, like, built up this whole thing, and he has all sorts of stuff. And that was I was oh, that's pretty cool. So I started playing with it more. And so what I've been trying to do is build out an AI that basically will follow our in house SOPs to review documents and just, like, give me some general information in the the loan documents or from the borrower documents so you can verify it. The problem is is I can put in the same set of documents with the same set of instructions. It does different things each time. And then it'll be like, here you go. Here's what you wanted. And it's always wrong. I like, it's never 100% right. Like like, the correct level will vary. And then a second I question it, it will be like, you're right. I'm so sorry. I don't know why I did that.

Mike DeHaan: [37:05] I'm like Do mind

Dylan Koch: [37:05] me asking which one you used?

Mike DeHaan: [37:07] So I I've tried with both. So when I I with the one that I did with the the workshop in Breckenridge was on Claude, and then the one I've been doing since then is on ChatGPT. I prefer ChatGPT for this kind of, like, use case. I feel like it interacts a little bit better. Claudia, that is definitely one for people that are building, like, external applications. Yeah. But they they I was still getting, like, similar sort of responses with each one. And the problem is is when you first get it back, you're like, damn. That was sweet. That was great. And then you start looking at it, and you're like, wait a second. Like, I don't understand why it shows this. And, like, it it's stuff that's very, very simple. You know? It's not like it's having to, like, dig through, like, complex documents. I'm like, look at this term sheet and let me know what the interest rate is. And there's a line that says fucking interest rate, and it doesn't pick that. And I'm like, I don't know why. It just does other stuff.

Dylan Koch: [37:57] One thing that I've used Claude for recently that has worked, and I do need some edits, but it's definitely faster, is when you export all your marketing lists and it gives you their the bulked up version of the Excel sheet, I'll just upload that and I'll upload what I want it to look like. And it does a very good job of putting it in the correct format.

Mike DeHaan: [38:16] Yeah.

Dylan Koch: [38:16] Even with trusts and LLCs and stuff like that. So Yeah. Well,

Mike DeHaan: [38:21] I feel like stuff like that's almost better because it's like it's like less, like, subjective. Like, it's all Sure. Kind of the same. You know? And and there's, like like, stuff that lives in its ecosystem that's, like, so similar to that. Whereas if you're giving it like something to read or comprehend, even if it's similar to other stuff, it can't like make that parallel because it's still focused on like that singular document. Does that make sense?

Dylan Koch: [38:44] Yeah. No, it does. The going back to the article just real quick,

Mike DeHaan: [38:47] the the

Dylan Koch: [38:48] author's conclusion, and obviously we have different opinions here, is like, once this code thing is solved, all these people are going to start trying to solve for other things. And that's when he thinks the next couple of years are going look a lot different than deep sea in the past twelve to twenty four months in AI.

Mike DeHaan: [39:06] For sure. And it's not that we have different opinions. I'm just currently going through a project here that's made me super skeptical.

Dan Austin: [39:12] It's not where you needed to be

Mike DeHaan: [39:13] yet. It's not. And the problem I have with it is I would say that I have just kind of like listened to so many people that are so bought into this that claim to be using it for all these things. And my conclusion, because I'm when it comes to stuff like this, I'm pretty detail oriented. I know how to build applications. I coded for several years. I've worked as an engineer. Like, I understand this piece. A lot of the people that I know that are the biggest, like, just promoters of AI, I'm like, what is your background? I'm like, oh, it's not anything technical at all. And you're telling me how you're doing, using it for all this stuff. And so just looking at their sort of situation, I'm pretty confident that they are just getting those wrong results. And they're just like, boom. Done.

Dan Austin: [39:54] They're like,

Dylan Koch: [39:54] it's been out the So the results must be right.

Mike DeHaan: [39:56] Yeah. Exactly. Validation. They're not, like, questioning it at all. They're just, like, base they're, like, the same people that, like, see, like, a video on Facebook that obviously doesn't make sense. And they're like, holy fuck. Did you see Right. Like, you're you're just like, did you do you really think that, like, a panda and a penguin are just gonna be friends? Like, that doesn't make logical sense.

Dan Austin: [40:17] AI just tearing old people apart on the online. Yeah.

Mike DeHaan: [40:20] But they're not even old.

Dan Austin: [40:22] A

Mike DeHaan: [40:22] lot of these people are, like 35 and I'm like That that's Well,

Dylan Koch: [40:25] I actually know someone that got like, basically, like theft, I guess, from an AI that sounded like their relative. Like, hey. I need you to send me $5. And it was like a it was an elderly lady that got it. But like, still, like, that shit happens.

Mike DeHaan: [40:39] Oh, yeah, dude. All the three of us are totally primed to have our parents ripped off since we have so much audio content out there. Oh, yeah. Totally. They could easily just Yeah.

Dan Austin: [40:48] Can you pull this down?

Mike DeHaan: [40:49] Dylan. Yeah. Yeah. If if I ever call you, Dylan, and I need you to bail me out of jail with your Bitcoin, I it's not me.

Dan Austin: [40:56] I promise. I'll do that

Dylan Koch: [40:56] right now. Like a pass raise.

Dan Austin: [40:58] It's me. Yeah.

Mike DeHaan: [40:59] Yeah. Right. I need a safe word, gerbil. I don't say gerbil. It's

Dylan Koch: [41:03] not real.

Mike DeHaan: [41:05] So, anyways, guys, anything else to wrap up?

Dylan Koch: [41:07] No. Mean, real quick. Do you guys think how do you think this AI will change real estate in in general? Whether lending or on, like, the off market stuff. Do you have any opinions on that?

Mike DeHaan: [41:17] So I I think that ultimately where it can change it I mean, the obvious place is in the inefficiency of the title and escrow process and just like the document handling process. Right? I think the biggest challenge is because those industries are so archaic and so just like they're they're pretty I won't say they're I don't actually know if they're regulated. I'm sure they are at some level, like, a pretty pretty decent amount. But, like, people are so comfortable with the cumbersome nature of them. The adoption of a real solution will take a very, very long time.

Dan Austin: [41:50] I think it's gonna completely I think it has a potential completely change the entire real estate transaction and just the whole the whole industry. I think that the institutions will probably fight it because the institutions, let's be candid, are mostly like 50 year old women, that are working as escrow agents and then lawyers who are not known to want change. They're all about the books and the library and the precedents and documents. Right? I think that there is probably going to be some people that come into the industry and completely change it. Like, like from a tech, like a, like a tech, imagine a tech company becoming a title company. Right? And then I think on the front end of that, the government is going to have to and will implement some technology via AI that helps with the recording and the document process, which is big part of real estate why it's slow because it goes by county, county to county. I mean, imagine back in the day when you couldn't, most counties, you couldn't go and see the parcel numbers and stuff in a map format. Now most counties, if not all counties have the ability to virtually go and look up your property and the property, you know, on, on a parcel map most, I think all.

Dan Austin: [42:55] And so like that's completely changed it. I think there's just gonna be that on the government side of things that allow a tech company to come in and completely, when I say tech, I mean like a techie company come in and completely change how we transact real estate.

Mike DeHaan: [43:08] It's gonna

Dylan Koch: [43:08] change it. The limiting factor will be regulations.

Dan Austin: [43:11] I think there will obviously with anything and then there's just gonna be, into Mike's point, I don't think it's going to be the WFG title and the first American title necessarily that are the ones that that have that will completely turn it upside down. I think if they're smart, which I'm I'm sure, like, First Am and stuff is, like, they're gonna implement this, and it's gonna it's going to take out a lot of people's jobs or enhance It's their

Dylan Koch: [43:35] hard to be like the the Uber analogy where Uber just came in and did it anyway. And then like they said, basically, f the taxi companies. It's really hard to do that when you have so many different jurisdictions and like Yeah. Specifically the recording piece of all of this in in in states and counties.

Dan Austin: [43:50] Totally. It'll probably happen in a place like San Francisco is where it'll start or New York. Right? You know, places where they've already talked about even tokenizing real estate because you have forward thinking people there and you have a lot of money. And so that's probably where it'll happen. And then it'll, it'll, you know, catch on and likely change things. But for sure, from also on the lending side of things, all we know all the big private lenders, I'm sure all the conventional lenders are implementing AI right now. It's making their employees much more accurate and efficient because Mike talks about the mistakes it makes. Guess what? Employees make a lot of mistakes too. They do. Totally. You know what I mean? It's like, are you paying that mistake, you know, $60 a year or are you paying it $20 a month? Yeah. Yeah.

Dylan Koch: [44:28] It's a very valid and real example.

Mike DeHaan: [44:30] So Totally. But then you still have to have the $6,000 a year employee to argue with the $20 And month then you just have the blind leading the blind. Yeah. You know? So anyways. Alright, guys. Well, thanks for listening. You guys have a great rest of your week, and we'll talk to you guys next time.

Dan Austin: [44:44] See you.

Dylan Koch: [44:45] See you.

Mike DeHaan: [44:45] This episode is sponsored by Sir Lenzelot LLC, also known as SLA Capital, which if you didn't know, is Dan and I's private lending company. So, yes, we are sponsoring our own show, but what you're do about it? It is our private lending company that offers hard money and DSCR loans to real estate investors of all types. So you can be a new investor, an experienced investor. You can be buying flips. You can be buying rentals, whatever. We can do everything. And not only that, but the rates that we offer are just as competitive, if not cheaper, than pretty much every other company out there. So whatever big company you've been working with, bring us their term sheets, I guarantee that we can probably beat it. We have the same connections they do. We just don't have all the overhead and middlemen. So if you wanna come and check us out, go to slacapital.com/keys, and I will know that you came from the show. And by seeing that you came from here, when you get the closing, you will save $500 on your first loan with us. So slacapital.com/keys, we would love to fund your next deal. Thanks for listening, everyone. If you want more from us, you can shoot us a follow on Instagram. I am at Mike underscore Invest. Dan is at investor man. Dan and Dylan is at Dylan underscore does underscore deals. Choose to follow and send us a DM to let us know what you think of the show.