How to Make Money When the Real Estate Market Slows Down

Mike DeHaan: [0:00] Really quick before the show starts, in case you haven't heard, we have a growing community of investors called the scale community, which is full of people learning to make massive income with their real estate businesses so they can reach financial freedom a little bit faster than building a rental portfolio solely over time, because honestly, that takes decades. And who has time for that? So if you're an investor who is serious about growing and creating a scalable business without needing to be a slave to it twenty four seven, then go to collectingkeys.com/scale and apply. And if you're a good fit, we would love to have you join the community. So, again, collectingkeys.com/scale. Go ahead and apply, and we'll see if you're a good fit.

Dylan Koch: [0:38] I'm trying to ramp up my business at the beginning of 2025. It's slower. Trades are getting more expensive. Houses are still getting more expensive. We're going into a slower time of year. On the marketing side, I can always spend so much money in direct mail. Other channels are also slow. What are you gonna be doing, I guess, as the year kinda closes out?

Dan Austin: [0:56] Hey there. Welcome back to another episode of the collecting keys real estate investing podcast, the podcast where we talk about how to make massive income, not just passive income. Passive income is boring. Massive income is cool. Massive income buys Ferraris. Massive income buys retirement. I don't know what you're into, Dylan, but I like Ferraris and Fast Cars. Probably won't ever own one, though.

Dylan Koch: [1:17] I see. I like both. Isn't it Ferrari? You you have to know somebody to buy a Ferrari. You can't just go to, like, a dealership or some shit.

Dan Austin: [1:24] I think, yes. Like, you because, like, I think they're at a point in, like, the backlog if you I don't know what it's called. Like, where to get a new Ferrari, you have to be a Ferrari owner. And so you won't get on the list. You're not on the list to get the next Ferrari, so you can only buy it used technically, or some people will buy them and then sell them for more immediately. And I don't know if it's Ferraris. It could be fucking Buicks for all I know what this is, but I know I've talked to people that are into, like, sports cars like that or exotic cars. And I don't know if you can own one or if you have to legit buy one new to get on that to be like a Ferrari owner quotes.

Dylan Koch: [2:00] Yeah. I don't know. I but, I mean, I like nice cars, but I definitely won't spend the hundreds of thousands of dollars that comes with owning a Ferrari.

Dan Austin: [2:08] Yeah. No. I mean, the coolest thing I'll probably get is like a Tesla one day. I don't know.

Dylan Koch: [2:12] Yeah. I'm not all that into the electric car thing as much as I think other people, but I would like a Ford, like, Raptor. That'd be cool.

Dan Austin: [2:18] You're a dirty oil snob.

Dylan Koch: [2:20] Yeah. Fuck the environment.

Dan Austin: [2:23] I hate the environment. Speaking about the environment, this is a good segue, the real estate environment. We're talking pre show. Boring. Like, there's, like, nothing. Like, it reminds me of, like, early twenty twenty three. Maybe even it was back in 2022 where Mike and I were like, bro, what are we talking about on the podcast? Like, there's nothing. There's not even a headline talking about interest rates. It was just so slow. We just had to, like, start talking about shit. Like, there's just not a lot going on right now.

Dylan Koch: [2:47] Not a lot going on. I think everyone's kind of with the election in the air, they're just kind of waiting it out. And, you know, rates are still kind of going up. I'm a little bit slower. Even for this time of year, I'm slower. I talked to other people in my market, They're a little bit slower, which is challenging because I, you know, I'm trying to ramp up in 2024. So it's just like, you know, what do you do?

Dan Austin: [3:05] Yeah. Yeah. Yeah. You wanna grow, and you're and I know you invested a lot in your marketing. So it's like, what do you do? We're kind of the same boat. We have currently 16 in escrow. We'll definitely be dropping one, so that's 15, which is honestly pretty average for us. And we're spread out across, I think, actively, like, six or seven markets right now. So that's kind of, like, spread out amongst all those markets. So some are actually doing good. Some are, like, not doing anything. Like, home market

Dylan Koch: [3:30] How's it going for you guys then locally in Spokane?

Dan Austin: [3:33] We used to have, like, three in escrow still. One's a JV deal. Actually, no. Four. We have two JV deals, one mobile home park we're wholesaling, and then one other one. Oh, that's gonna be a quiet title issue, so it's gonna be a few months before we close out on that one. And, of course, that's like a $10,000 fee. Silly.

Dylan Koch: [3:51] The ones with the hard the most amount of work are usually the lowest fees.

Dan Austin: [3:55] Exactly. Yeah. So locally, though, like, we haven't contracted a lot. So what we are actually doing right now is so we're partnering JV ing deals because there's a ton of people out there that could potentially be a deal finder, right, that everybody can pop a deal off now now and again. Right? And so we have that's where a couple of those JV deals came from that we contracted in in October, closing in November. And then we're actually just looking at some MLS stuff, which is a huge that's not something we typically do, but it's like, okay, look at some days on market. Look at some of those, like, entry level home prices where, you know, it's like meant to be a flip and they were trying to get more money. Somebody probably sent them a letter and they couldn't lock it up, and so they tried listing it. You know, some of those where you might be able to just throw out some cash offers there. And then our marketing is performing okay. Like, it's not like we have a ton of low hanging fruit, so we're just, like, in the point that we've got a handful of leads that are, like, you're just looking at them, you just know it's gonna be fight the whole time. Just reading the notes, listening to calls, it's just like, ugh, you know, it's not fun.

Dylan Koch: [4:56] Yeah. I mean, it's kind of similar around here, obviously, not the same volume, but one assignment that's closing this Friday, another one that's closing on the twenty second, and then a flip that's closing on the twentieth. So those are all be good. But those are all like, you know, kind of deals that are already accounted for, like on the acquisition side or contracted. There's only one right now that I have. And I don't know, some of like that latest round of mail that I sent out, I've had got a couple calls. But it's been more of, like, the ARV on this last one's probably like $2.15 max. Like, was comfortable, like $20.05. And this I walked it. I was like, offered the guy 150, which I thought was like kind of aggressive. And he's like, have an offer for 180. Like, I was like, you should take it. I can't. I don't know what to tell you, bro. You should take it. You're dumb for not. So this kind of stuff like that. And I actually am I did one MLS deal last month to kind of what you're talking about, where you kind of already know they're motivated, like they want to sell, but you just gotta, you know, usually their marks way too high. So you're offering $75,100 k less than what it's listed for.

Dan Austin: [5:59] Right. Yeah. Work if you can, like this one will like work with the realtors, talk to them, see what hey. Okay. What's the what's your person look like? Because, like, you'll see some people just throw blind offers out there. It's just like, don't be a dummy. Like, just go and at least call the realtor. Give them some respect and say, hey, dude. What's your client looking for?

Dylan Koch: [6:16] What do

Dan Austin: [6:16] they look like? I see you've been on the market. It's obvious. I'm an investor. I would love to put a deal together with you guys, and I will close if we agree to a price. What do you think?

Dylan Koch: [6:24] Yep. Simple like that. No. That's perfect. And there are actually, there's two people that I know of in my market that are basically getting deals on the MLS locked up, but they're trying to wholesale them. When you type it in, they're like, I got a deal, and you type it in, you know, 123 Main Street, and you see that's quote, unquote pending on the MLS. You're like, you've gotta be kidding me. And then they they just try to hold like, try to assign it during their inspection period, and they never I've never seen it actually work.

Dan Austin: [6:47] No. 100% if you're listening to this and you're thinking about doing that, don't do that. That's just stupid. It doesn't make sense for a lot of reasons, and you look like a dummy because people know it, people see it, and then you lose all respect. And I I've gotten those deals before too. Hey, man. I got a deal. We love I know you said you're you buy anything, and you look at it and you're like, yeah. I don't buy those. Just call the a I'll just call the agent myself, and when you fall out a contract, they'll get it for the same price. Like

Dylan Koch: [7:13] Or less.

Dan Austin: [7:13] Right. Or less. Exactly. Because now they're upset that you that you didn't follow through, and they'll just take anything motivated with somebody that has an actual proof of funds for cash. You know what I mean?

Dylan Koch: [7:22] Yep. Yep. Or if, like, the biggest, like, pet peeve is it's listed at $2.50, and they're like, I can get you a deal at $2.45. I'm like, like, that's really not that much of a difference, man.

Dan Austin: [7:33] Like Yeah. Yeah.

Dylan Koch: [7:34] If it's on MLS, someone would have bought it at $2.50. Like, that's just what it is.

Dan Austin: [7:38] Absolutely. You know, I think too, we had a conversation in the scale community coaching call today. If you are listening here and you don't know what the scale community is, sorry. I've been told we should explain this more because I talked to people, they're like, I don't even know you guys had a community. It's a group. Dylan's part of it. You're an OG in the scale community. It's our off market real estate community. We talk about off market stuff. We have a lot of people in there. We we coach. We train. We talk. We partner. We do all sorts of stuff in the community. It's super valuable to us, and I think the people that show up every day seem to think it's pretty cool too. So if you wanna learn more about the scale community, go to our website. What is our website? Collectingkeys.com/scale?

Dylan Koch: [8:18] Don't ask me. This I would just Google it.

Dan Austin: [8:20] I I just Google it. I think we're on Google. Anyways, back from my side. We're having our coaching call today, and one of the guys was talking about it. He's like, hey. What do I do? Like, I feel like I have all these deals that are 80% ARV. They don't need a ton of work. They're great wholesale deals. How do you guys analyze deals, like, with multiple exits? And we kinda talked about the multiple exit thing and, like, how I look at deals and kind of, like, what my filtered and funnel looks like. But the real point of the story here is is he mentioned that he has a unique situation where he gets really good funding for his deals. He has kind of a competitive advantage compared to other people in his market where he has low cost money, I'm assuming private money, that all he has basically do is pay for his closing costs at title, which also shout out. His dad is also a title attorney, so he gets a decent price there. And I was like, dude, that's your competitive advantage right there is I don't have that where I have easy access to money that I can go and buy these wholesale deals, put a little bit of money into them, and and sell them. And so that when you look at a deal like that, you know, you should take that into account. Don't take advice from people that don't have that same competitive advantage because in your market or in a market like this, you can if you have a competitive advantage, go and carve out something. And that competitive advantage doesn't necessarily mean you have to have a private investor with deep pockets. It's just like carve out that niche. Like, what is that that you get really good at?

Dan Austin: [9:40] And guys like Dylan or me might not be doing that or businesses are set up differently or maybe we are, like, in our own little rights. You know what mean? Like, for Mike and I, when we first started, one of the big things that we carved out was we'd take these, like, sloppy looking properties and we'd add square footage to them so that when we would go and do a refinance on a burr, the additional, like, 200 square feet at 200 to $250 per foot would add a ton of value, we'd be able to burr the property. So we could take a seemingly okay deal that other people would pass on. We'd finish a basement. We'd convert a garage. We'd do all these things that would add that square footage because that was kind of like our niche, and that's how we did some fat, like, legit huge cash out refinances, which was a springboard for us. That was just like a little niche on deals that other people would look away from.

Dylan Koch: [10:21] Totally. I mean, that was great. And then, like, I have my own agent's license because I can list my own flips. So I can say I can offer 3% more on the front end because I know that won't be a cost to me on the back end.

Dan Austin: [10:31] Right. Totally. It's just like, what is that little niche?

Dylan Koch: [10:33] Yeah. Cheaper money. Adding bedrooms is another huge one, especially from, like, two to three or three to four, like Yeah. Stuff like that. And, you know, that takes practice. But your leads today coming today are not gonna be the 70 to 75% minus repairs, minus your wholesale fee. Like, there'll be few and far between. So you have to figure out other ways to do it. I think I talked about on the podcast that I double closed someone who wanted a house hack. Right? And so like, I that involved a relationship with a lender who was okay with that and didn't need any kind of season period for a double close. Right? So it comes down to these connections and who you know and who what your buyers are looking for.

Dan Austin: [11:09] Absolutely. Yeah. Your your network alone might be your competitive advantage or your niche that you dive into. I know people that suck at most things in life, but they've done a really good job networking and connect they're connectors as I would call them. And so they've made a living being connectors, and that's awesome. Good for them. It's a it's a niche that they can carve out. So, like, things that you're good at or things that you see or know, do it. Don't just listen to what the gurus are telling you to do on the Internet because they aren't doing what you're doing.

Dylan Koch: [11:34] I mean, there are people who legit have a whole business model around raising private money. All they there's no affluent people. If they need to go raise 50,000,000 and making 1% on 50,000,000, you're still having a pretty good payday.

Dan Austin: [11:45] That's a sweet I need that problem. I wanna know more rich people. If you're rich and you're out there, hit me up. Instagram, investor man Dan.

Dylan Koch: [11:53] I'll take

Dan Austin: [11:53] your money.

Dylan Koch: [11:54] I'll offer you 1% better than Dan, so you can find me at Dylan underscore Does underscore Deals.

Dan Austin: [12:00] Just, just group text us. We'll, we'll have a little negotiation, in a three way chat. We'll see what we can get you. 30%.

Dylan Koch: [12:07] One thing that kinda came up, Dan, I didn't know if you had any opinions on this, it kind of intertwines with a lot of the topics we have on the podcast and real estate in general. It's just like affordability is a big one. But the CNBC article was basically the average age of the first time buyer reaches an all time high. And actually before, don't know if you saw it already, would you have a guess of what it would be before I even showed you?

Dan Austin: [12:30] I would probably guess the average age is 38.

Dylan Koch: [12:33] Okay. Well, that's because you saw it. But like, before I saw the article, I'm like, I would put it in the late 20s, early 30s.

Dan Austin: [12:39] I would have said like 28, 29. Yeah.

Dylan Koch: [12:42] So that was kind of a surprise to me. And it goes on to say that that was three years older than 2023. And compared to the late nineteen eighties, that's what it was. It was the late twenties.

Dan Austin: [12:54] Which even that seems high for me. I would have been like 21 in the nineteen eighties. So many people but maybe it's because I'm from, you know, an area or region where it was just common for people to go and have

Dylan Koch: [13:04] born in the eighties?

Dan Austin: [13:05] Yeah. I was. Yeah.

Dylan Koch: [13:07] Yeah. There's different things that this pulls on. One is like, people in the 1980s didn't have the student loan problem that people have nowadays. So their debt to income is a lot lower. Houses are much more expensive.

Dan Austin: [13:18] They had interest rate issues, though.

Dylan Koch: [13:19] Yeah. But my one biggest pet peeves is when a boomer tells me like, oh, I bought this place, my interest rate was 13%. I was like, yeah, but you bought it for $20. Right.

Dan Austin: [13:28] Right.

Dylan Koch: [13:28] It's a relative game from price to what like the median wages are. And if you like would overlay those two things onto each other, wages, yes, goes up, I don't know what it is probably eight to 9% a year. But home prices have gone up 20 to something percent a year, right, cumulatively. So that gap just keeps getting bigger and bigger and bigger, combined with the student loan problems, combined with the shortage of housing that happened over 2008. It's like a recipe for, you know, renting forever, less homeownership. And what kind of, I don't know, intricacies does this have throughout, like, The United States?

Dan Austin: [14:05] Yeah. Yeah. Debt seems to be crazier. Right? Especially when you bring in the student loan thing.

Dylan Koch: [14:09] Yeah.

Dan Austin: [14:10] If you have student loans out there, I'm sorry. That sucks. It's not a good thing. It can be crippling for people that even in that are in high income jobs, whether you're a doctor or anything like that. I have actually a friend who's a doctor, and she steered her daughter away from being a doctor because she said and and she's a pretty, I would say, well established doctor in her field in a large hospital and runs a department. And she steered her daughter away and said, here's the logic. When you're a doctor, you don't make any income for say twelve years while you're becoming whatever. And to become like a doctor that does make money, you need to become essentially a surgeon is what her logic was, or have some sort of specialty. So, yeah, you're out there for twelve years trying to become a doctor, and then your first several years, like you're not really making that much money. Right? Like, you're starting to, but you're early in your career. But your early career becomes in your mid thirties. So you you could alternatively, her daughter, which she ended up going into computer science at the time, went into computer science and got a job and right out of college at 22 was making 6 figure salary as a computer science type person doing probably programming or engineering or something like that. And so her logic was for less work, because you don't have to stay up late at night and do all these crazy things like you do as a doctor, you can just go do this. And by the time you're the same age as when you graduate and you're actually starting to hit your median income as a doctor, you'll have already made more money and had a better lifestyle up to that point.

Dan Austin: [15:30] So the end, because then she was taking into account also the student loans that you have to fricking pay off, the $500,000 of student loans, and so that is like super crippling to people. So that being said, with millennials being like the first true generation to be strapped with student loan debt on a massive scale, definitely doesn't surprise me that's creeping up. And then on top of that, like, the Gen Z and even some of the millennials to some degree, not really even caring about homeownership for a good reason. Like Yeah. I get it. Like, they're like, I don't wanna have to mow my lawn. I don't wanna have to fix the plumbing.

Dylan Koch: [16:02] Well, the cultural norms have definitely changed. Like, eighties, that was still like American dream. Right? Patriotism. I need to own my own home. White pick a fence. All this stuff. That is not the general sentiment, I would agree, of the younger population.

Dan Austin: [16:14] I'll add to this too. I think that the housing crisis in 2008 probably contributed to the increase as well because it did delay, well, building no. You know, they stopped building for a long time. And so the the consensus is is that there's, like, a lack of new homes coming online, which has driven up costs even further. And people just weren't buying houses. People, like, legit really weren't buying houses between 2009 and like 2016. They just weren't. Not like, it was not common for people to be like, yeah, we're buying a house, like young people, because it just was like hard. You know? Like, I bought my first house I think in 2012, and it was just like such a weird market. Like, there wasn't no. Sorry. 2013. There wasn't like a lot of stuff going on. It was just like, well, there's five houses to choose from in here. And you're like, like, it just wasn't a lot.

Dylan Koch: [17:06] Yeah. And the average days on market then was probably sixty, ninety, a hundred and twenty.

Dan Austin: [17:10] At least. Yeah.

Dylan Koch: [17:11] Yeah. Lately. And, like, that would be the expectation if you listed your house. Like, okay. It might take four to six months. Now you're freaking out if you don't have an offer in forty eight hours.

Dan Austin: [17:18] Oh, Maybe

Dylan Koch: [17:19] it's not that extreme anymore, but, like, that's just such, like, two different parallels.

Dan Austin: [17:23] Yeah. And

Dylan Koch: [17:24] going back to your I think I had a I saw a study on this one, so I'll see if I can dig it up. But it basically compared, like, doctor's salary Mhmm. Versus, like, a UPS driver.

Dan Austin: [17:32] Yeah.

Dylan Koch: [17:33] And the UPS driver at age 21, like, he started putting in money in like a four zero one k IRA, like, basically maxed out all the traditional methods of retirement. Yeah. Not including any type of entrepreneurship. And then they track the doctor at age like 35. So the UPS driver had like a fifteen year head start for compounding.

Dan Austin: [17:48] Yep.

Dylan Koch: [17:48] It literally took to, like, age 70 or 75 for the doctor to catch back up to the UPS driver.

Dan Austin: [17:53] Really?

Dylan Koch: [17:54] Because he had fifteen years of head start of compounding interest.

Dan Austin: [17:57] Was it using just basically a general, like, whatever you call doctor?

Dylan Koch: [18:00] The median salary of whatever their occupations were maxing out retirement in each. So they both had the same returns.

Dan Austin: [18:06] Yeah.

Dylan Koch: [18:07] But the doctor was able to stockpile a lot more money because of his income, but it was fifteen years later.

Dan Austin: [18:13] Yeah. Yeah. I think everybody knows everybody learned from Dave Ramsey, like, the time value is so much more important than the amount of money you put into savings.

Dylan Koch: [18:22] But that's why I think a lot of I don't know. Like, a lot of people don't wanna do the I think it's more popular today to be in trades than it was in the past twenty years because of some of the reasons that we talked about.

Dan Austin: [18:33] Oh, totally. It's yeah. I think we'll have a I think we'll have a blue collar boom in going into the, you know, mid and late twenties here, like, years, not ages, because, like, I feel like during 2000 and let's start at, like, 2010 till 2020, we had a STEM boom. Everybody was going to college to become an engineer. Even like when I I went to school later in life, I went in 2010 to become an engineer, and that was because, like, the market sucked. And I was like, well, this seems like you'll at least have a job. And there was, like, 16 people, and I went to a small school. There was like 16 people. We had like one building. Fast forward to like 2019, 2018, like nine or ten years later, they had like two or three new engineering buildings. The school was like massive for just engineering, and they couldn't get people to go to school for the other things like pre med and whatnot because everybody's going into STEM, and the application rates to go to college were going through the roof and everything, and now you're starting to see parents, people like me telling people like, I wouldn't go. Like if you want to be an entrepreneur, the best way to go be an entrepreneur right now is probably go through the trades. Like to have a very successful thing, and I say that because like in a lot of states, not all, but in a lot of states, to own a plumbing company, you have to have a master's plumber license, which means you have to become a plumber first, which is usually apprenticeship of five years. And then once you do that, you have to pass the test to become a master plumber. If you get that far, you're probably just gonna start your own business rather than go work for somebody else, because why would you do that?

Dan Austin: [20:05] Why would you you know? And that's not across the board, but it's most commonly most people that can do that do that. And if you're not a plumber, you can't start a plumbing business. So the competition for you and your plumbing business is just other plumbers. And guess what? There hasn't been a lot of people going to the plumbing trade. And I know more plumbers now that make so much money, and they have the choice to go make $200 a year as a plumber for somebody or go and make a shit ton more owning their own business.

Dylan Koch: [20:26] Dude, even the plumber that we use that I use for, like, the rehabs and stuff, he could make so much more money if he wanted to. But he literally works like fifteen, twenty hours a week, makes bank and just do whatever the hell he wants on the side.

Dan Austin: [20:37] Yeah. He's living a dream.

Dylan Koch: [20:38] So it comes down to, like, personal decision. I I was trying to send you this thing, but there's a software developer job postings on Indeed in The United States. And this is Federal Reserve of St. Louis data. And it literally it's just like an upside down V. Like, was nothing in 2020, peaked to 220,000 per whatever in 2022, and now it's basically back down to nothing.

Dan Austin: [21:04] Down to nothing. Yeah.

Mike DeHaan: [21:05] Yo. If you don't follow me on Instagram, which is at Mike underscore invests, by the way, then you might not know that we officially have a new mission as a brand, and that is to help 2,000 real estate investors build million dollar businesses. Obviously, to do that, we need to get in front of as many people as possible. So quick little ask to help us reach that goal. First, shoot me a follow on Instagram at Mike underscore invests. Second, follow collecting keys podcast on Instagram. That's at collecting keys podcast all written out. And third, every time the algorithm is kind enough to show you a post from either of us, share it on your story or in your post and tag us. If you do that, I'll DM you, and we can have a little DM conversation about what is preventing you from having that million dollar business that everyone is seeking. And we can see if we can come up with a plan to help you make that massive passive income. So again, if you see any of our posts, just go ahead, reshare them, tag us, and let everyone know that you enjoy the content we produce. It will help us a ton, and then I'll be happy to help you as well.

Dan Austin: [22:10] Well, and I think with anything, this has been my belief, like computer science, for example. The term science is like a true thing. Like, back in the day, like, you kinda had to be a scientist because you're, like, solving problems and you're creating things. Engineering has always been much more of a, like, apply principles that have already been scientisted, if you will, or whatever a good fancy way of saying that is is, like, people out there create shit, and then engineers take that shit, whatever that is, whether that's physics or anything, and apply it to something. Right? They build an airplane. You're not creating flight as an engineer. You're building an airplane based on the principles that other people have figured out, other people by the scientists is what I mean. So computer science was such that. And now it's mostly just engineering where you're just cutting and pasting it. It's even easier than engineering because most of your stuff, can just go and cut and paste like GitHub or one of these like places where you go to get code and you just copy and paste it.

Mike DeHaan: [23:06] And then

Dan Austin: [23:06] it was just a bunch Neanderthals doing this that had no that didn't even have to go to college because they were honestly smarter than the dummies that went to college, figured all this stuff out, and then they just got to it got flooded with people just because it's no longer science. It's more just engineering of the product. And and if you look at this, when I graduated college, I bet if you were to go I know, like, if were to go be an electrical engineer somewhere, starting salary would be, like, 60,000. If you were to go be a computer engineer, scientist, or doing, like, coding, would have been at least 100,000. Right? And now I think it's just balancing out to where you can't get a job as a computer scientist anymore.

Dylan Koch: [23:39] I was at a local GoBundance thing down in Cincinnati earlier this last week.

Dan Austin: [23:44] Oh, yeah.

Dylan Koch: [23:44] And one of the guys who just joined is literally does like AI programming, like I the languages are I don't I don't really know what that means. But he wants to leave that he might buy a custom homebuilder business.

Dan Austin: [23:58] Really?

Dylan Koch: [23:58] Like an SBA loan, and the seller is going to carry back like a decent he basically has like no money out of pocket to buy this thing. And so we're kind of like grilling him at this lunch that we were having because like, bro, you don't have any experience with like the homebuilder like part of this. Like, are you sure this is a good idea?

Dan Austin: [24:14] He's like, I like homes.

Dylan Koch: [24:16] Yeah. And he's like, the margins look good. He's like, and the biggest biggest thing was I can take my tech background and make this business so much more efficient is what you hear. But to me, that's just like a red flag because you will not know if something goes wrong, what to what to do or what to fix.

Dan Austin: [24:31] That is a tough one, especially when you're going into the trades. One thing that I found is if it's not a well like, a custom home building business is likely more of a small business where the owner is probably a really key person in that Mhmm. And probably key to the success, either relationships and knowledge or at least one or the other.

Dylan Koch: [24:48] This home builder, for reference, builds, like, the max of seven homes a year.

Dan Austin: [24:51] Yeah. That's tough for me to be okay with that. Because, like, custom home building has great margins, especially but it's like your brand. Right? It's your last name. That's why most of these custom home builders have that on their T shirt that says their last name. Right? Because they're that's what their people are known by, like Cook Homes or whatever. You know what I mean?

Dylan Koch: [25:08] Right. Your whole customer base could go away unless that seller owner agrees to stay on for, you know, a decent amount of time during the transition.

Dan Austin: [25:15] Right. Right. Well, yeah, that might help out. But it's just it's not as easy as a transition. That's not where I would go. I would when you're buying any business that has to do with trades, there's a cultural thing that you have to learn and understand how to manage those trades very specifically. And you have to understand somewhat of the construction stuff to be at least good and be able to spot the bullshit. Because if you don't know anything, people are just gonna, like, screw you over, then all a sudden your customers are like, what's going on here? This product sucks. And you have no idea why because you don't understand what good looks like. And so it's really problematic for people trying to get into, like, the owning a business in the trades, in my opinion.

Dylan Koch: [25:48] Yeah. But the the thing is is, like, this guy, he makes really good money, like several $100,000 a year. Yeah.

Dan Austin: [25:54] Let's do that.

Dylan Koch: [25:55] Yeah. It's like, maybe, like, stockpile some cash or invest this. Do syndication funds to give all that up while trying to grow this. Yeah. I just want you to set up your stuff up for financial ruin. Like

Dan Austin: [26:05] Yeah. Yeah. You see that with a lot of guys where you're like, what are you doing now? You're making $4,500,000, and you wanna flip houses? You know?

Dylan Koch: [26:13] Yeah. But tying all this back, Dan, I know I'm I'm trying to ramp up my business in 2020, the beginning of 2025. It's slower. Trades are getting more expensive. Houses are still getting more expensive. We're going into a slower time of year. On the marketing side, I can always spend so much money in direct mail. Other channels are also slow, cold calling, pay per click. I know people doing some TV ads that I haven't really explored. What are you gonna be doing, I guess, as the year kind of closes out?

Dan Austin: [26:41] My advocacy for our company has been and still is is to just keep doing direct mail. Do more direct mail. We've talked about internally doing some PPC. I know you and I have talked about Bateman Collective as one of those companies out there that's hot right now because they're getting good advertisement with some of the OG gurus. I have no experience with them being good in a bad company. I'm not saying that they're bad. I just don't understand why I would pay somebody else to do my PPC, especially because most of them charge a ton. A lot of the advertising stuff that people do, whether that's for, you know, PPC for home buying businesses or or Facebook ads for your fitness business, it's not overly complicated. The people that are the most successful though are ridiculously good looking or have some really good niche that caught fire, like something good that caught fire and got a following quickly, and then they were able to milk that over a long period of time and keep growing it. Very few people these days on like if you look at just social media marketing, really can just build an organic following over a long period of time and just be like, look, I have a million followers.

Dan Austin: [27:42] Like, I worked really hard without having something to bring to the table. My strong belief why I don't think PPC is necessarily where you wanna be is because if you scroll through your feed, go to Facebook right now. If you're if you're sitting there, if you're driving, try not to text and drive all out this one time, and just Google sell my house fast for cash. Just go like, do that on your phone. Do it in Google. Go and click on one of the ads that pop up on your Facebook feed. Just click on one of them that's like some random lady saying they want to buy your house. It looks usually a decent looking lady is usually who does it. And there's like 50 of them. I'm pretty sure they're AI bots. Click on it, and then start looking at all the ads that you get for all the different companies that are trying to

Dylan Koch: [28:23] do that. Yeah. Because then they'll get retargeted. Yep. A 100%.

Dan Austin: [28:26] 100 A percent. And then you'll be like, oh, there's a lot of people doing this, and there's a lot of bigger companies trying to do this, and there's a lot of people doing it on behalf of other people, spending people's money. So I'm just not sold. Mike might have a different opinion on it, but right now, I don't think that's the way to go. I do think that if you have the cash, personal brand is good, whether that's on social media, TV, and radio could. Billboards could be good. But that isn't so much for the sellers. That's more for the buyers.

Dylan Koch: [28:52] Yeah. I would agree with all that. And the thing with paper, you see, like, most things are a race to the bottom as far as price. Pay per click is a race to the top. Right. Like, as more people get into it is it gets more and more expensive. And you're almost bidding against other people for the same amount of deals.

Dan Austin: [29:06] That's a great point. I don't know.

Dylan Koch: [29:08] I'm just I'm trying to rack my brain if I know, do you hire another cold caught? Do you extend out list? Do you just keep going deeper? Does I need to do the the amount of revenue I wanna do next year? Like, I will have to increase my deal flow, and that's I'm trying to figure out what that mostly looks like right now.

Dan Austin: [29:23] Here's a strong belief I have. For for whatever reason, direct mail still works.

Dylan Koch: [29:27] No. I'm not saying it doesn't.

Dan Austin: [29:28] No. No. I get that. I'm I'm gonna build up to something. Like, for some reason, still works. Like and even if you like, I don't know, eighteen months ago, I actually had this idea. Maybe it was two years ago. Like, I had to build a deck, and so I built it myself because I got a bunch of bids for like $100,000 So I just brought in our contract. We're using our flips to help me do it, and we just framed it up and all this stuff. Right? But I was like, oh my god, I could just spin up a direct mail campaign, and I could send this out to people, and that would be my business. And then I would just like take those bids, and then I would just give them to contractors and basically wholesale these contracts to build decks. Right? Which would work. I haven't done it yet, but I've had people that listen to podcasts say that they would love to try it, I was like, go and do it. I hope you are successful. That would be awesome. But my point being is I know that works. I know a guy that does direct mail for his service based business. It works good because people get it. The right people get it at the right time. Not everybody gets it at the right time, but people get it when they need it. Same thing with selling your house. It works. When somebody calls you with a little bit of an accent and this is coming from a guy who owns a cold calling company.

Dan Austin: [30:27] Like, when somebody calls you with a little bit of an accent, you know, maybe it's not the best experience on the phone, you're less likely to build a good relationship and sell something. The idea with cold calling is that you do it enough times though, it's way cheaper than mail, you'll get people. And we've proven that. We know that. We're working cold calling leads in our business right now. It's we've closed cold calling leads this year too. It works. But from a scale standpoint, do you wanna just triple, quadruple callers? I don't think in today's the way the business looks, that's as efficient. That's very efficient because then you have a lot more leads to go through. And we know with cold calling, you know this Dylan, you've been cold calling for a while, there's a lot of leads you have to get through that aren't good. Right? It's just the nature of the beast. Same thing with any marketing stuff, but-

Dylan Koch: [31:08] The cold calling thing, you're exactly right. And a lot of times you'd have the conversation and be like, hey, you know, I'm my VA you say their name, but like, you know, Kimmy called you earlier. Sorry about that. You know, my name is Dylan. And you can kind of build that back up as long as you know their motivation, you could still close those deals. The other thing I was gonna say is just how much this business has changed even when I got in it a year ago is like, one, there's hedge funds that still bought my market, and I did sell to them. They don't buy anymore. Like, all of them are pretty much net sellers. SMS was a third of my business in 2023. It's zero now. And so those two things combined, it's like, you always have to continue to pivot, find other things that work. That's like the brand of being an entrepreneur. And we'll still end up 2023 versus 2024 about the same as far as ad spend and revenue, but it just looks different.

Dan Austin: [31:55] Right. Right. Did you have to work harder for it, do you think this year?

Dylan Koch: [31:59] I would say no. But the reason I would say that is one, I I have brought on more help at the end of this year. And two, I did more flips in 2024 than I did in 2023. And I have a really good relationship with some crews that I don't really have to manage it a lot. And obviously, the profit margins on a flip are a lot higher than they are in a wholesale deal.

Dan Austin: [32:17] Right. Right. So you can make more money.

Dylan Koch: [32:19] Exactly. Even though the deal amount is about the same, the revenue is a little bit larger, the profit per deal is a little bit bigger.

Dan Austin: [32:25] Absolutely. Yeah. That makes sense. And so it's just more efficient that you can do less deals and make more money kind of thing when you're flipping like that.

Dylan Koch: [32:31] Correct.

Dan Austin: [32:32] Yeah. Back to the to the question too is I think that if you can really go if you're gonna spend more money for almost everybody out there that's listening to this, I guarantee you could spend more on direct mail. If you're spending zero, you could spend $5,000 more. If you're doing 3,000, you can do another 3,000. And I guarantee you'll get more out of that. And you could depending on where you're at, you could throw in like a cold calling thing, like a caller, whether you do it in house or or outsource it. I think I don't think that's a bad thing. You need to give it a few months, see if it produces in your market the way you want it to, or if you rather just do more direct mail. But I don't think that trying to pivot to something new, especially because you saw a freaking ad that's I've seen it now a couple of different times. Again, it's coming back around, which is the AI, what do they call it? The AI predictive data.

Dylan Koch: [33:23] Predictive data or predictive list.

Dan Austin: [33:26] We are predicting data. That's what PropStream is doing. PropStream is saying, here's a person with a lien on their house. We think they might wanna sell their house. That's predictive data. They're not doing anything differently. And if they are, they're stupid because most of the people putting those things together right now either a, don't know real estate well or b, they don't know AI and shit. Right? They don't know understand that back end thing. So they're just like, oh, yeah. It's AI. It's predictive.

Dylan Koch: [33:48] Did I tell you I fell for one of those once at the beginning? No. Yeah. I spent it was called DataFlick, and it was supposed to be this proprietary list that other people didn't have. So I put up the money. And let me tell you, I've I've I think I did one DataFlick deal, and I spent way more money than that DataFlick deal provided. What did

Dan Austin: [34:07] you spend on it?

Dylan Koch: [34:07] It was like $20.20 k for like six months.

Dan Austin: [34:10] Okay. So six months of data for every single month?

Dylan Koch: [34:13] So it's like most things where the first month was the bulk of it, but they'd rerun it every month, and it'd add a couple thousand, you know, each month.

Dan Austin: [34:19] Oh, okay. If there was new, it would adjust the records based on stuff.

Dylan Koch: [34:23] Correct.

Dan Austin: [34:24] So is it the same shit you would get from, like, PropStream or DealMachine?

Dylan Koch: [34:27] Some of it. I mean, sometimes they were on they were on another list, but they still didn't it was almost counterintuitive because they weren't on any of the list that I could find, and none of them wanted to sell. So what were they kind of targeting?

Dan Austin: [34:38] Yeah. Exactly.

Dylan Koch: [34:39] The the only, like, that thing I could find was length of ownership. And like, so quote unquote, maybe seniors. It was they owned the property for a long time.

Dan Austin: [34:46] Yeah, which is a great filter. You can do that in PropStream or DealMachine. And you can also say this person has liens, and they haven't paid their tax bill. I bet you they are more motivated than the person that just owns a property and is old. 100%. You should mail the people with two, like, liens and property tax issues first. And so that to me is just such a stupid thing. So don't get caught up in that. It's so basic. The the real operators out there that I know that are operators like yourself, Dylan even, and other people that are just in our sphere, they're doubling down. They're doing their direct mail stuff. They are not trying to hop from new sexy thing to sexy thing. They do what works. And it might not just be direct mail for them, but they're doing what works for them, and they're just doubling down on that. I think that's how you grow your business, and that's how you get through these tough times because I think as we go through the election, by the time this airs should be over, which I think is almost like a holiday in that it slows people down. Like Thanksgiving week, people don't make decisions about selling their house on Thanksgiving week, right? So it's like you can't really do much there, and so you kind of get through that, and then you have early December, but then Christmas comes around, then New Year's. Nobody does shit between Christmas and New Year's, you might as well just take that week off, you know, do some light follow-up and answer the phone if people call. But we have this extra thing called election that has slowed us down, I think, and then as we get through the holidays, all the work you put in now should show fruit in January, and January kicks off a new year.

Dylan Koch: [36:09] Yeah. And I've said this on the show before. January of last year, I think I did five deals because of what you everything you just said. And a lot of the conversations I've had with sellers that are willing to sell right now are mostly other investors. And that's for tax purposes, mostly. Right. They are going into the next year. Like, it's both ways. I need to sell this year or, hey, I wanna sell next year.

Dan Austin: [36:29] Right. Right. When I restart my ditaxable income or something like that.

Dylan Koch: [36:33] Exactly. It's like, this kinda depends on on what you're targeting, and and those conversations are different whether you're talking to an under occupant or you're talking to, you know, another landlord.

Dan Austin: [36:42] I'll close this out with one final comment because I know we're gonna run long, I think you and I could chat all night about this because it is interesting stuff to talk about when you're talking about your business. But we oftentimes try to and it's fun to talk about making decisions for our business from a week to week, month to month basis when it really should be a quarterly look back and a quarterly look forward on what you wanna do, especially when it comes to marketing. Coca Cola doesn't build a marketing plan month to month. They probably do a multiyear and then quarterly monitoring of that. So just remember that in your business when you're doing this. Don't get too upset about a slow week or slow month. It's just how it is. We've been talking about it on the podcast for the last few weeks. It's just it is what it is, but you gotta find out what you can do now to make money because there are tons of opportunities out there still to figure out how to make money even if that's not sourcing a perfect bird deal. So with that, if you want to tell Dylan and I we're wrong, hit me up on Instagram. DMs are always welcome at investor man dan. Dylan underscore does underscore deals as well. I know he loves that. He'll send you all sorts of good information because Dylan just loves talking to people. Right, Dylan?

Dylan Koch: [37:44] Yeah. I mean, don't just say, you know, come in and ask for something, but if you wanna have a good conversation about your business, I'd be happy to do that.

Dan Austin: [37:50] Don't just send him shit. Send him new send him news articles about how he's wrong about stuff and make him super

Dylan Koch: [37:56] Please. I welcome that.

Dan Austin: [37:58] Make them super political too, please, because we're at that season. By the time this airs, you can send whatever other side of the aisle one to Dylan and make him mad. Anyhow, let's get out of here, Dylan. Everybody have a good week. We'll see you all next week.