How to get the Cheapest Hard Money Loans

Mike DeHaan: [0:02] On Air Brands.

Speaker 2: [0:07] 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: [0:30] What's going on, everybody? Welcome to episode 30 of the Click and Keys real estate investing podcast.

Dan Austin: [0:37] It's our it's this is our dirty 30 birthday right here.

Mike DeHaan: [0:40] Dirty 30. Officially out of our twenties. Yeah.

Dan Austin: [0:44] This is

Mike DeHaan: [0:44] where we're supposed to, like, start getting depressed and look around at all of our podcast friends who are having kids and are getting married. We're trying to figure out what the hell we're doing with ourselves. Is that is that what 30

Dan Austin: [0:54] year old not coming off the waist as easy. You know? Or starting to wake up with, you know, back pain.

Mike DeHaan: [1:01] The the like, real talk though, the little pains that you get, this is something I've talked about with our our staff as well as a little bit younger. I'm like, you know, yeah, my my knee hurts now, like, pretty much constantly. And it started because I was hiking with my wife, and we were walking down, and my knee kinda started to hurt. And now it just does that. It just never went away. So it's, four years ago. Yeah.

Dan Austin: [1:25] And I don't know what happened. You're still good, though, because you can at least point it to an activity. You get to a certain point where it's like, I I don't know. It just hurts. It just hurts.

Mike DeHaan: [1:33] Yeah. I I I slept weird. I woke up funny, and now I'm just broken forever.

Dan Austin: [1:37] Yeah. I was talking to a guy about, an older he was probably in his sixties. He's like, yeah. I don't sleep that great anymore. I was like, oh, man. That's a bummer. I kinda you know, and a lot of people are like that. He's like, well, yeah. It's like, if I sleep too long, my body hurts too much, so I have to wake up. I was like, oh, man. Okay. You know, we're all headed that way. So you

Mike DeHaan: [1:54] know? I think it's unavoidable. I mean and it's it's a catch 22. Right? Because if you do a lot of activity, you kinda wear your body down, and that that sometimes happen. But if you don't do anything, your general strength is just so poor that you're gonna hurt anyway. So I've always come from the standpoint of you might as well do stuff.

Dan Austin: [2:13] You know? Do stuff while you can't.

Mike DeHaan: [2:15] Yeah. For sure. Because you never know when it's gonna when it's gonna go. But, yeah. So I have a new pet peeve though, Dan. Oh. Something that has come up repeatedly in different business podcasts, real estate podcasts, you know, videos, just all these random stuff that I want that I've, that I consume. And it bothers me that there is this current I I don't know if a current trend, or I just recently noticed it, of people who have come on to some kind of success, you know, relatively recently in their lives, like in the last couple of years, and they lead into making this introduction about who they are with, you know, I make x amount of money. I'm worth x amount whatever, but I don't care about the money at all.

Dan Austin: [3:02] Oh, that that's a zinger. Yeah. I can see why that's a pet peeve.

Mike DeHaan: [3:05] And it drives me freaking crazy because, you know, if you a, don't lie. Yes. You do care. And b, I feel like every time that they do it, it's almost like, I don't know, it's like they're trying to be like LeBron. Like, LeBron goes and does like a sick dunk. You know? He's like, oh, yeah. It's it's whatever. She does it all the time. Yeah. You know? But, like, let's let's be honest. You've done something great that most people in your life are trying to do. Mhmm. To pretend like you don't care about the wealth you've created, you're they're trying to do it to show humility. If anything, I think it makes them look like a giant arrogant asshole where they're like, oh, I know I know most people's lives are struggling, but for me, it was really simple, so I don't care.

Dan Austin: [3:46] I, you know, I think yeah. I I think there's several. Yes. This has been going on a while. But I think I do genuinely believe a lot of them. Right? They they don't care about the money. It's because once you already have it, once you've already grown and ground and been grinding and built this awesome thing you have, you're like, well, I don't worry about money. I mean, you and I just had a conversation over lunch about your health. And I and, like, we're like, well, what is it related to? Money. I mean, you you can share it. You know?

Mike DeHaan: [4:16] Well, yeah. Yeah. I guess I guess for context on that, I I'm getting my you know, I've always been kind of a health and fitness guy. I've been getting blood tests done usually twice a year for the last four or five years, you know, maybe not quite that long, maybe like three years. And back when I first started doing them, I was very focused on health and fitness. You know, I was moonlighting as a coach. I was competing at a high level in fitness sports. I was doing all sorts of stuff. You were fit. And I was fit back then. Was super fit. You ate healthy and all that? Yeah. I ate healthy. I measured everything. You know, I took super good care of myself. And I had all sorts of problems with my my blood levels. And I think it kinda goes hand in hand. When I was doing that, I was in the process of learning to build a business, learning about entrepreneurship. I'd left my engineering job. And I was just generally stressed because I

Dan Austin: [5:03] was making no money at all. Not having yeah. You you having a consistent large income or consistent income in general?

Mike DeHaan: [5:09] Yeah. At all. You know, I just started getting into real estate. I was spending a lot of money. I was generally in a very high stress state. Fast forward to now, I work out way less. I'm about fifteen pounds heavier. I don't eat nearly as good. I drink way more alcohol. You know? Just that's just how I roll. You know? Don't judge me. And I go and I've I've done these tests every six months last couple of years, and every time, they've been progressively getting better. And this one, I would say that I am generally in probably the worst shape I've been in, and I'm eating loose I never have, but my blood panels are the best they've ever been to the point that everything is, like, perfect. Right? And so I'm like, fit as it is. Yeah. Yeah. By by all intents and purposes, I am peak health and fitness. And I was talking to the doctor about that, and he was like, well, is your stress level better than it has been? Was like, yeah. It's awesome. You know? Mhmm. Business is going well. Like, we aren't we're off to a stage of growth that I feel super confident about. You know, everything is going great. And he goes, there you go. Stress. Stress. It all comes down to stress. And the easiest way to have very little stress in your life is to have a strong financial base. Right. You know, to have made some money.

Dan Austin: [6:22] There's the old argument is, like, money doesn't create happiness. No. But it does make things a lot less stressful, lot easier for you. Yeah. Right? That's why everybody's marching wants to march. I shouldn't say everybody. A lot of folks in our circles are marching towards financial freedom because they're hoping that that the stress of that, the stress of their goals. Because typically, especially if you're like a high a person that sets high goals, like, you put a lot of stress on yourself to meet those goals.

Mike DeHaan: [6:47] Mhmm.

Dan Austin: [6:47] And when they're financial goals, that's an really easy number to measure. And if you have that in your head, you're creating stress. And if you're taking big risks where you don't have a consistent income and you're still trying to build your wealth Mhmm. Like, is highly stressful. Right? I mean Yeah. And so you and so then when you have these folks that have already hit those metrics or or what we would call financial freedom and they know they have, and they're saying, well, I don't do it for the money. It's like, yeah, maybe not anymore. But you did at one point. But you did at one point.

Mike DeHaan: [7:17] You know?

Dan Austin: [7:17] And the opposite end of the spectrum is the person that's kind of in a more, like, low income status. And they're saying, I don't care about money, and I believe in that situation, it's because they're afraid to take the risk in failing. So they set their bar super low and say money doesn't motivate me. And it it no longer does because all their decisions are made around don't fail. Don't fail. Don't risk. Don't fail.

Mike DeHaan: [7:41] Yeah. Yeah. Well, I I think I think with, you you know, especially the the high income earners who start to say that, I think it's them coming to the realization that when they start making money, that they don't have the sudden desire to start buying Lamborghinis and, like, yachts and stuff.

Dan Austin: [7:59] Yeah.

Mike DeHaan: [8:00] And first off, I would say, a, because you're not rich enough yet. Right. If you had more money, you know, it would probably mean a little more to you. And b, I think it's because that like, for most people, as they realize you start to grow, you know, sure your life gets easier when you have more money. But, also, it doesn't necessarily have to become your identity, and you can become the same person, but you just do what you like to do. You know, and what you what you've always liked to do, you just have more time to do that. Yep. But still, I like, it's the biggest pet peeve because with all those people, you know, you can they can say they don't care about the money. If you went to them and said, okay. Well, if you had a billion dollars, you know, like, more money than you would ever know what to do with, would you still do what you're doing now? Every single one of them would say no. Right. Right? So they absolutely do care about the money. Otherwise, they would not be doing, you know, a business like this where you're going and walking through hoarder houses. Right?

Dan Austin: [8:56] And you're grinding it out and you're you're dealing with stuff that is not necessarily always fun. I mean Yeah. The wins are fun. Right? But then you and I, like, at least for me, like, the bar for, like, a high five win went from, you know, a small fee to, like, that's okay. You know? 50 thousand's kind of an expectation on that one. I'm not too excited about it. And then that always just scales up. I mean, that's why they say, like, pretty wealthy folks like Richard Bronson, Jeff Bezos, like, in their personal lives, they have to do things continuously more extreme because their threshold for excitement. Right? When you have pretty much every when you've accomplished a lot of things and you can kind of pay literally for anything. Whatever you want in this world. So they have to find different ways to to expose themselves to their emotions, their excitement, the adrenaline Yeah. Because there's just you you get to so many points in life where things just aren't as exciting. A $7,500 wholesale fee when you're starting out is amazing because you just did something, you created something. And then as you grow your business, that's a little bit less exciting. It's still good. You still need it, but it's more of an expectation than Mhmm. Than it is a dream.

Dan Austin: [10:04] Yeah.

Mike DeHaan: [10:05] And that's why you have, like, the ultra ultra elite, like, you know, Elon Musk and Bezos. They're like, you know, Richard Branson. They're like, we're going to freaking space. Right? That is the most extreme thing that we can fathom. And that's why you see, you know, people on the other end of the spectrum that are very successful, but not, like, that crazy successful or maybe aren't just as put together. They're more lucky. It's like NFL player or, like, big athletes. They just go on these crazy sex tirades or their sheets on their wife or whatever. Yeah. Tiger Woods. Exactly. Right? Yeah. You know, they're like, I need to make my life more exciting in some way or another. So this is the way that I'm gonna do it because it's the only way that I know how. Right.

Dan Austin: [10:43] Well, I think our life has been I mean, this last week or two has been pretty exciting in our business.

Mike DeHaan: [10:48] Yeah. We've had a we've had a lot

Dan Austin: [10:49] of Lot of good excitement. Mhmm. Walked that, did the final bless off, the final bit of due diligence on that six unit, which is really cool, which is what I love about this deal is it's not a large multifamily, but it is a six unit. Mhmm. And it's on separate lots. So we've done deals like this in the past. And the thing I like about that is it just opens up more exit strategies. I love exit strategies. When you buy a deal and you're like, I have three profitable exit strategies, that's so much better than I think I'll be able to sell this for more than I bought it next year. Right? And so what I mean by that is it's actually two triplexes built. They're side by side, proper triplexes, but they were built on separate lots right next door to each other. So it looks like one lot. I guess you could combine it if you really wanted to. But I like that because when we exit it, what we found is you typically some can get a little bit of higher price point if you're selling a triplex because it's just opening it up to a larger set of buyers. Like, you've got more of your smaller investors that wanna buy a multifamily like that. That's in great condition, by the way. So when you sell them separately, you might, you know, make five or 10% more, maybe, you know, in a crazy market, maybe more. Or you can just sell the whole package as as one and somebody else buys it. The other thing I love about it, which we didn't know until I walked it, was they were Section 8.

Mike DeHaan: [12:11] Mhmm.

Dan Austin: [12:12] Oh, actually, no. Our our, dispo manager told me that. Right? Which I should have presumed because you could tell kind of the tenants seemed like Section 8, not in a bad way, but it just you could just tell kind of that area of the town and all that sort of stuff that they're on housing vouchers. The cool thing about that is is a, we have, like, 40% of upside in rents on this thing. Mhmm. Right? And now you and I aren't into displacing people. Like, that's not our thing. Like, if we don't have to displace people, we don't. Because we don't wanna come in and gentrify this complex and kick all these people out who are getting a reasonable rate on their rent right now. They obviously don't moving for them would be an expense that would be difficult. That would be creating chaos in their life. So with that, though, they're all long standing tenants. In section eight people, there's two there's two, like, groups of people. Some people love it. And some people like, oh, I don't I don't rent to that type of tenant. It's like, why? Right? They're usually not bad tenants. You have to screen them just like you screen anybody else. Right? Just like you would. If you're not doing your due diligence, then that's that's on you as far as your tenant screening goes. Yeah.

Dan Austin: [13:13] But some of these tenants have been there. I think the least time one tenant's been there is, like, four years. Like, that's the lowest. They're up to twenty years. So they're long standing tenants. The units are in pretty good condition. Sure. They need carpet and paint in some of them because you've got a tenant that's lived there for twenty years. Right? And never had any upgrades done. But also, when I talk about 40% of upside in rents, we can typically go work with the housing of the local housing authority and say, hey, these units are rented way below market. We wanna work with you and the tenant. We're not trying to displace anybody, but we need to increase our rents to at least be at market close to market value or whatever. They're usually pretty open to that. And the tenant typically on section eight has a portion that they do have to pay out of the pocket, but, you know, you can always work through that if you're actually open and communicating with the housing authority and the tenant. That's just kind of why I two of the major reasons I love that that that whole project.

Mike DeHaan: [14:03] Yeah. And you're and you're protected. And and I I I think that the negative view of section eight tenants is kinda antiquated because I feel like way back when the kind of people that got section eight were people that generally just didn't take care of themselves. Right. But now with the way that the world has grown, the economy has grown, you know, things have just gotten more expensive in life. Mhmm. There's a lot more people that are really good people. They are just in a low income category. I mean, sure, maybe partly by their own fault, but a lot of them, it's just because they've been doing their thing for the last twenty years. And that thing has now had, like, led to society sort of surpassing their financial ability.

Dan Austin: [14:47] Yeah. Yeah. We all know there's a good conversation that during inflationary times, like and I see it every day is, like, wages don't grow necessarily with the economy all the time. And so you see more and more people to your point, which they have their thing. This is what their employment is. And at one point in time, it was great employment and help them survive and thrive. And now that is no longer needed. And so that they are considered a lower skill person. And so that they aren't keeping up with inflationary, rents and all that sort of stuff. But it's not because they're bad people. Like you said, things grew around them. And, yeah, guys like you and me would not let that happen to us because we have a different mindset, but that's just not everybody else in the world.

Mike DeHaan: [15:27] Yeah. For exactly. And especially in in this situation, from what you were saying, walked it, something's a lot of foreign people that have maybe immigrated here. Mhmm. So, you know, they probably don't have much of a skill set or an education in general. You know, they're probably connected with some something for Or

Dan Austin: [15:44] or they're, like, super highly educated with PhDs, people just won't hire them for some stupid some dumb reason, like doctors and shit. Like, no. It's not gonna work for

Mike DeHaan: [15:52] us here. I know. I'll say something is a doctor, but, you know, they're they're from Nigeria. You know, because we're in Spokane, they just don't like them.

Dan Austin: [15:59] The government wants, like, a $100,000 to relicense them here. And they're like, well, if that's not gonna work, pal. You know? Something dumb like that.

Mike DeHaan: [16:05] Why is that so true? Why is that always exactly how it is? But I don't know. Yeah. So, you know, I think that'll be a a great project. I'm super excited about it. Yeah. Then, I mean, yeah, we have some we have some interesting ones right now too with that. And then some of the other purchases that we're what we're doing, I mean, we've been navigating a few tricky transactions just with, like, probate situation, working with lawyers. We have one right now that I'm hoping that we're gonna get that's like a portfolio of its two duplexes and two single families. And the way we're actually structuring it is a pretty high offer at base value. But, essentially, what we're gonna do is we're gonna buy all of them and sell the single families and use the profits even though it'll be pretty small profits from the single families because there'll be tight deals. But use a little bit of profits there to roll them into our duplexes and bring our cash into the duplexes down to pretty low, and then our cash on cash return should be quite high. Mhmm. So there's you know, getting creative with some of these transactions is just so key right now.

Dan Austin: [17:07] Yeah. Getting creative portfolio. Without, like is a whole another thing. Right? When you're buying a portfolio, we tend you tend to look at every individual piece of that portfolio as its own deal. And it has to be bought at this price to have to meet our profit. Yeah. Well, as a portfolio, that's not how you buy portfolios. A lot of times when you're buying portfolios, you just get stuck with some dogs and you sell those off over time or immediately. But there's two other deals or three other properties in that that aren't dogs for you, and those are the ones why you really bought the portfolio. Yeah. You're taking some risk and you're deploying some capital in the meantime, but you know, overall, having at least part of the pie, a piece of that pie is better than not getting the pie at all.

Mike DeHaan: [17:47] Yeah. And and I think you should still buy well. You know? I don't think you should buy a portfolio where half the properties suck and you No. No. Are really gonna have a have a nightmare there. But, I mean, if you're buying all of them at a little bit of a discount, even if it's not the discount you normally want for a singular property, if you can make the net of all of those come into something that you can shift into a a positive discount for the properties you do like, like, that's, you know, just the power of of volume right there. But I know it's gonna be interesting with some of these portfolios that we have. You're looking at the lending situation because, like, rates right now are getting so insane. I got quoted from a DSCR lender, which is a dollar service cost ratio. Is that what it is?

Dan Austin: [18:24] Debt service.

Mike DeHaan: [18:25] Debt oh, sorry. Debt service cost ratio. So basically, asset based long term lender that'll lend off the cash flow property. We were getting as recently as February, it's now April. So recently, February 2022, we were getting quotes in, like, the mid fours back before the rates are going crazy. I just I just got a rate quote from one of those lenders at 8% on a thirty year loan. That's with points. That's with two points.

Dan Austin: [18:50] Oh my gosh.

Mike DeHaan: [18:51] 8%, dude. We like that. Changing. And what and here's the fascinating thing, though. And we're gonna this is leading into our next topic. So I I got that quote. I went back to a different lender that we've worked with as well. Got a quote for about 7.25. And I was like, this isn't ridiculous, dude. Like, what are hard money rates looking like right now for you? Because that's, like, where you see hard money at hard money rates are at. And they're like, oh, hard money is exactly the same. That's wild. So I'm like, what is what is happening right now? Why are thirty year loans the same as hard money loans with these lenders? It doesn't make any sense. And I'm not really sure. Like, part of me thinks that that is them speculating that the rates going up is gonna be quite temporary. It's gonna come back down. Otherwise, they will Yeah. It wasn't long

Dan Austin: [19:44] ago we did start seeing rates. I I think it was, like, 2018, we saw some pretty high rates. And and then, of course, COVID happened, and so we had to print a bunch of money and change things around. But I do think it's a reactionary effect in the immediate term. So we'll see that we've seen that even the last decade as they've raised rates, and then things get crazy for a minute. And they they'll settle out. Like, I'm not super concerned about it. But it's like, when you're trying to buy in that time, it makes it tough. Right? And so like, it makes it hard to make certain deals work, you have to really pay attention to that.

Mike DeHaan: [20:11] Yeah. And, you know, I think it's just important to have different sort of funding options on the back post. Like, the big thing that we use outside of the DSCR lenders for rental loans is our relationships with commercial lenders.

Dan Austin: [20:25] Yes.

Mike DeHaan: [20:25] And we get commercial loans, which are you know, they hold to their portfolio. So it's usually pretty consistently between, like, four to 5%. It doesn't necessarily fluctuate with the the Fed rate so much.

Dan Austin: [20:36] Right.

Mike DeHaan: [20:36] But, anyway, so that's leading into what we want our educational topic to be this week, which is a question that we get a lot from people in the instant investor program and also just from random people that hit us up on Instagram, which is how exactly do you fund the deals that you find off market? It's a little bit different than going getting a bank loan. So really quick, we're gonna talk about the instant investor program, the group coaching program that we're currently running. You can get information about instantinvestorprogram.com. And then once you're back from that, then we will talk about how we purchase our properties. The instant investor program is our twelve week group coaching program, which includes a self driven course and access to our private investor community. We will take you through the full process of how we find our leads, how we market, how we do our sales and follow-up, and how we determine the best strategy for every opportunity that comes our way. On top of that, you will also join a community of other like minded investors nationwide that are all marching towards the same goals, and you'll have direct access to Dan and myself, you can continue learning and growing with us as we continue to adapt and grow our business. So whether you're a new investor or already established, our systems can help take you to the next level. So if you think you might be a good fit, go to the instantinvestorprogram.com and schedule a call, and we can have you talking to motivated leads in as little as two weeks.

Mike DeHaan: [21:51] Alright. So lending, finding money, how exactly do we close on all of our off market stuff? Typically, it's off market or you're buying something, like, from a wholesaler or you're buying something as is from a seller, you can't go and get a normal bank loan or a normal rental loan primarily because they want the property to be perfect, and they're gonna have kind of an extended timeline that you won't always have. So one of the things that we get asked a lot in our instant investor program and also recently, I I feel like a lot of people on, on Instagram have been asking this, is how exactly do we fund our deals? And so the the main thing that we do is we, I mean, we use other people's money, but other people's money doesn't necessarily mean that we have, like, a rich friend that comes and funds everything for us. But we use hard money in either, what I call fast hard money, which is like local hard money lenders, which will buy pretty much anything in the markets that they know to help lend on that. You know, you're always gonna require a down payment for those sort of deals or slow hard money, should I call it, which is gonna be a lot of the national companies all into this. They're gonna require more due diligence. They were gonna require an appraisal. All this sort of stuff is gonna be cheaper than the fast hard money.

Mike DeHaan: [23:10] And then we do have a couple of private investors that work with us as well, which are just people that we have met over a period of time that we've been doing this business that will lend either all or part of a project secured by a deed of trust just like a normal lender would. And, I mean, there's pluses and minuses to all of them. Right? And, I mean, I think the one of the biggest things to keep in mind, everyone always wants referrals and things like that. And they're like, you know, they quoted me this much. How come they're cheaper for you? It's like, bro, because I've done, like, a 100 deals Yep. In the last two years, you know, like,

Dan Austin: [23:41] coming from time time. I think that's a great point too because Yeah. We yeah. We didn't have that wealthy benefactor that just said, hey. Let me loan you a bunch of money. I have a few million dollars, and I just like you guys, so I'm gonna give you money. We there are people out there like that. If you know them, yeah, leverage them for, you know, for sure. But, like, your your relationships with your lenders are growing their business. Because one of the first things some of these, the fix and flip lenders and the hard money lenders are looking for, and even private money lenders is like, what's your track record? Show me, you that used to like, people used to say, show me your stack of HUD's. Right? Like, what do you got that I should trust? Like, what have you done that I should trust you with? Banks are doing that all the time. Your hard money lenders doing all the time. So a new investor that has never landed with a bank, maybe they own a primary residence, and that's it. This is their first fix and flip. That's on their portfolio. You're gonna get a higher rate. Yep. I mean, just guaranteed. And that's where you're talking about how can we get different rates quoted to us. It's because a, we've worked with those lenders for a longer period of time, and we've made profits for them. Mhmm.

Dan Austin: [24:39] And and b, like, we've proven that we can we can do this. Right? And and more they're salespeople at the end of the day. Right? And so the more that they know that they can trust you to, like, do the deal properly and they're not gonna waste their time, the better that you can negotiate those rates. Yeah. And so that's something to keep in mind. Like, when you start out, like, yeah, you're gonna eat it. And so you're gonna make less profit on the same deal we are because we have better lending relationships as an established business. But that's okay. Like, it will get there. It's not like that's forever. Yeah. You know? And so one of the one of the areas that we talk about for you and me is, like, on when we're pulling the different levers, like, private money is awesome, especially if you have a good relationship with the person because that's your fastest deal. Sometime and then you negotiate those rates with that private lender, whatever they want. We have different rates we've negotiated just like you would with any other lender. A private lender is it's usually a conversation. Mhmm. Right? And their underwriting typically isn't the one that's going to stop you for some silly thing during the process, and they're not gonna typically have crazy fees. Because that's another thing to talk about sometimes, like, with the slow the slow hard money you talk about, Mike, is sometimes we found where they try to sneak in fees.

Mike DeHaan: [25:50] Yeah. There's there's fees and there's bullshit that's involved. I mean, you know, we we've we've we've used these slow hard money lenders. So I guess for context, our fast hard money lenders that we'll use, they can close deal within a week. They typically require 10 to 15% down, and we're usually 11 to 12% interest only on the loan and then two to four points just kinda depending on it. But, you know, no BS. They want, like, photos of the property. They you know, we have a relationship with them now that I can just text the people there and say, hey, here's our deal. And they'll say, Send us some photos, and we'll get it done. It's that simple. With our national hard money, it usually requires a thirty day closing at a minimum. They're gonna require some kind of an appraisal or an inspection, whether that's actually an appraisal out there. Or we did one kinda recently where they went made us go there with a freaking, like, Zoom call. Yeah. And, like, walk around the house and, like, the cell phone reception was all shitty. And the lady was like, can you, like, go back into that room so I can see it? I'm like, it's all the same house. It's not like there's a secret room that has bodies in it. Like, what, like, what are you concerned about here? Yeah.

Mike DeHaan: [26:53] Yeah. You know? So stuff like that, which is just nonsensical. But, you know, the rates there, seven to 8% and, like, one to two points. So quite a bit cheaper. And then with our private lenders, we've done everywhere from, like, what, seven to nine points and one to three point oh, sorry. Seven to nine percent and one to three points. Yeah. And there'll be all sorts of flexibility. But, you know, when you talk to any of these people, if they don't know you, you don't have a good track record, you will be more expensive than all of these numbers. And, yeah, and then this is somewhere that I find a lot of new investors get stuck, and I think it's because they don't have an abundance mindset yet. So they're thinking, I'm only ever gonna do, like, a couple deals. I worked so hard to find this one deal. I need to squeeze everything that I can out of it. So they shop around all these lenders. They waste a bunch of people's time, you know, and they end up maybe even not closing on a deal because they are gonna have to pay, like, $2,500 more than they were hoping. Right. You know? And at the end of the day, you're better off just to pull the trigger, pay the extra points, start establishing the relationship, and show those lender lenders that you're gonna do a kick ass job on this project. And then you know what?

Mike DeHaan: [27:59] It doesn't even take that many. If you do it, like, three times, and they're gonna they recognize you, they know who you are, they're gonna write you checks left and right.

Dan Austin: [28:07] Absolutely. Yeah. They're gonna they're gonna love you because you're making them money too. Right? Yeah. If everybody wins, like, then everybody will be a lot easier to work with over a period of time. And, like, I've done that too where people have asked me if I wanna lend on their deals. I'm like, yeah. Sure. Let me take a look at it. I'm like, okay. Well, you've never done a deal. This isn't the one I underwrite it. It's like, well, that's not that great of a deal. So here's the terms. Right? Like Mhmm. But had you sucked it up and done that one and done another one another one, then I'm gonna be more likely to give you my money, right, and lend that to you for that project because I have confidence that at the end of the day, my money's coming back to me. And that's what everybody's worried about in the lending space is when and how is my money coming back to me.

Mike DeHaan: [28:44] Yep. And and also too with these people, you know, if things change as you're going through the process, they don't like your deal, they want you to do some stuff that's kinda, different in retart regards of, you know, the amount of money they wanted you to put down or the information you wanna provide, don't get butthurt about that because I guarantee you it's not the person who you're talking to's decision. It's their underwriter, and it's just the sales guy. You're just shooting the messenger if you're being ticked. Yeah. Know? It's funny. You hear this all the time. Even when I when I worked sales, get that people will get pissed off me because I would be like, hey. We're gonna have to be, like, 15% down. I know I said 10, but the underwriter doesn't like it because of x y z. They get all pissed off. And it's like, I I don't know what to tell you. Like, all all all you just so you know, by you being a dick, a, I'm not making any money Right. By, you know, having this conversation with you, and b, it's out of my hand, and c, next time you come back, you know what? I'm not gonna wanna work with you and go through this again.

Dan Austin: [29:38] Yeah. Exactly. Exactly.

Mike DeHaan: [29:40] You know? And it I think it's kind of the definition of people stepping over dollars to pick up pennies. Mhmm. And when you're doing a lot of volume, I think those little details matter a lot because let's say you're doing 30 deals in a year. Right, and you're paying, you know, an extra 200 sorry, an extra $2,000 per loan. You know, that's $60. Yeah. Right? That that's a lot of money that you're taking out of your pocket. But if you're only doing a couple deals you're missing out on, I don't know, 3 to $8,000. The alternative is you're probably not gonna just gonna have less opportunities in general, and you're never gonna build that relationship over the long term.

Dan Austin: [30:17] Yep. Exactly. And and I think the key too is as you get into this and if you want to, like, do multiple deals, find those different levers. And and you have to be proactive finding your your funding levers because, like, when we started, what did we have? We had hard money. Right? I think that's what we had, like, one lever. And then, of course, when we would bur properties, we'd go to our local credit union, do all that sort of stuff. And we actually locally have multiple lenders that are, you know, credit union lenders for our burs as well now. But it's like, then we added a private lender. Mhmm. Then we added another hard money lender, which is the slow hard money, and the terms are a little bit better. And we've worked with them. And when we worked with all of them, the terms have gotten even better. Right? And so what we know, though, is when we have different deals in the pipeline, which lever we're going

Mike DeHaan: [30:59] to pull.

Dan Austin: [31:00] Mhmm. Right? And that's important because then you don't think about it and you don't miss out on opportunities because you haven't done the due diligence to line up your funding. Are you gonna get all those levers all at once and be happy with all of them? Probably not. But you definitely should start engaging those those sales folks with within those banks or those hard money lenders or those private lenders that you know, just start talking about it and engaging with them and understanding what those terms would look like for you specifically so that when

Mike DeHaan: [31:24] you do have a deal, you can underwrite your own deal with those terms accordingly. Yeah. And and I think one one final note as well with these these kind of lenders when you're doing a business loan like this, a hard money loan. It's not like getting a bank loan where you're buying a house, where they're just going off of whatever their bank is running off of Fannie Freddie rates. When it's a a hard money loan, they are negotiable. Right? And that's something to really keep in mind as you're going through this process with people. Especially the first quote that they that they give you is probably more expensive than they're actually willing to go if you show that you're organized and that you know what you're doing. Right? So that helps. Because the you know, you call them people all the time call everyone and say, hey. What are your rates? And they're like, 11 and three. I'm like, well, that's expensive. And they're like, yep. So that's where we're at. If you come back to them and say, okay. 11 and 3. Well, here's the deal. Here's my purchase price. Here's what I'm planning to do with it. Here's what I think my ARB is. Here's some photos. You know, we have people lined up ready to do the work. Do you think we have any room on that?

Mike DeHaan: [32:24] I really, really bet that you can get a cheaper rate, you know, or you can get some leniency somewhere along the way, whether that's in down payment size, you know, interest rate points, just like general costs, timeline even, all those things. You know, it it is like a it's a business negotiation. It's a business transaction. And as a result thing

Dan Austin: [32:44] you said in that, though, that's really important is being on top of your shit. Mhmm. Because nobody wants to waste their time with you. And we do this with our closing companies, our title companies, and with our lenders. Like, if they ask you for something, like I'm on it immediately. Right? I don't wait twenty four, forty eight hours to return. It's like, I want to make your job as easy as possible so that you enjoy working with me. It works with all your lenders. It works with your title companies. It works with other investors. Like if you're on it, people enjoy that interaction more, and they're more likely to work with you and give you better terms.

Mike DeHaan: [33:14] Mhmm. Absolutely. Well, in that way, how how do you determine whether you have a good deal or not, Dan?

Dan Austin: [33:21] I say I say if it's a piece of shit or

Mike DeHaan: [33:24] not. I'm gonna say, well, we have a way that we're we're gonna be releasing here very shortly.

Dan Austin: [33:30] We do.

Mike DeHaan: [33:30] Yeah. We do. So we put together a freebie for people that you can go and download now. It is our deal calculator that we use to run analysis on all of our deals. And if you go to collectingkeys.com sorry. Collectingkeyspodcast.com/calculator, Put in your email there, and we will send you the deal calculator, and it will give you the, like, literal step by step process of how we run our ARVs. We we we sorry. We turn our ARVs or running our comps. It has ways that we determine all of our renovation costs, how we determine our offers, whether we're gonna flip the property or wholesale it or or whatever. And it's literally the tool that we use every single day to run all of our stuff, and it can be yours for free. It'll come with a little webinar that teaches you sort of how to use it and how we go through our analysis process. And that way, what you can actually do, which is gonna be awesome, so you can take this calculator, you can take it to your hard money lenders and say, here you go. Here's what I'm seeing with this deal. These are my numbers. What do you think? And they're gonna be a lot more enthusiastic about whatever loan you're bringing them.

Dan Austin: [34:37] It's step by step, and it's exactly literally once we started using that calculator in our business, and we were able to just to give it to our employees who are using it. Like, you don't have to be brainiac to use it. It's, like, so simple. And you can adjust things as far as, like, repair costs in it to make it more local to your market if you want to. But we have I think we're leaving our repair costs in there that we use. I can't remember. Yep. We're leaving those in. And those are general budget items. They're not exact, but they'll get you in the ballpark when you're trying to make offers on these properties. And you're right. Take that those are the exact things your hard money lenders or private money lenders are looking for. Yep. And if

Mike DeHaan: [35:10] you can give all that detail, you can literally run that spreadsheet for the deal, save it as a PDF, send it over to your hard money lender. They're gonna be cool. I know I know exactly what we're dealing with here, and I promise you'll be able to get better rates. So click the keys podcast.com/calculator, and you can go and you can grab that that download and check out our webinar. And then besides that, good stuff, Dan. I know we got some you know, the money key is is super important here. So Yep. Alright, guys. So about time for us to get out of here. You can follow us on Instagram. You can follow the podcast at clicking keys podcast. You can follow me at mike underscore invest. You can follow Dan at investor man Dan. You should go and check out our group coaching program, which is at instantinvestorprogram.com. Go ahead and schedule a call with me or Dan on there to see if you'll be a good fit. We are looking for people I guess right now, have quite a few, like, Southeast, quite a few in the Northwest. Anyone that's in, like, the Midwest or the South or, like, Southwest would be awesome. Get some more geographic diversity in there.

Dan Austin: [36:11] Yes.

Mike DeHaan: [36:11] But the instantmasterprogram.com, check that out. And then besides that, anything else from you, Dan?

Dan Austin: [36:17] Nothing from me. I will say that if you go to Instagram, make sure you follow me because I've already challenged Mike to a weightlifting competition, which he has deferred and declined for many years. So now I'm gonna have to beat him on Instagram. So go give me a follow. Let me get ahead of him in the followers here. So Get We gotta have some we gotta have some competition.

Mike DeHaan: [36:35] When one of us gets to a thousand followers on Instagram, we will have a weightlifting competition, and we will stream that. So that is doesn't matter which one of us it is first. First time one of us gets to a thousand, we're gonna have that weightlifting competition. It's a race. It's a race. Yeah. It's a race where everyone wins, especially me when I smash it.

Dan Austin: [36:57] Yeah. Other than that, signing off. If you have a section eight voucher, come to me. I'll rent to you. I like it.

Mike DeHaan: [37:06] Dan looking for all section eight vouchers right now.

Dan Austin: [37:09] I like it. I want that government check.

Mike DeHaan: [37:11] In fact, if if you want the government check, how about this? We'll buy your house. You can stay there and and get section eight. Live for free. That's the new house hack. Sell to us and get section eight for yourself. Yep. Do it. Perfect. Alright. Thanks, everybody.

Dan Austin: [37:23] Alright. See

Speaker 2: [37:24] you. 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.