Inflation Is Here To Stay

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

Mike DeHaan: [0:28] What's going on, everybody? Welcome to episode three of what was the No BS Real Estate Investing Show. But after some research about other podcasts with similar names, we decided to change it up a little bit. So this is now the Collecting Keys real estate investing podcast. And that name kinda comes from Dan a little while back as we started buying rentals and, you know, sort of like looking at what exactly we were doing. We were collecting properties almost like you would baseball cards. And you essentially end up with, you know, a whole bunch of keys. So if you're looking at building a rental portfolio, that's what you're doing. You are building a collection of these rental portfolios and hence collecting keys. So here we are. How you doing, Dan?

Dan Austin: [1:15] Good. Good. Yeah. And I think the funny part about that is is, twofold. There was a lot of BS podcasts out there, but this is not one of them.

Mike DeHaan: [1:25] Yeah. That's true.

Dan Austin: [1:26] Collecting keys, daughter was in here this morning and I've thrown a lot of keys away, but you do collect keys. Some are useless and my daughter was asking, What's this key for dad? And I'm like, I have no idea.

Mike DeHaan: [1:39] I know and you're even organized dude. My little, I don't even necessarily like a key drawer. My junk drawer is just full of keys. And like there's so many of them. Like I have several properties that I rent that have had the same tenant for three years now. And a couple of them have gone vacant over like the past summer and I've swapped out tenants. And I'll have to go over there and I'm like, shit, how am I even gonna get into this property? I don't even know where the keys are. Like I have like garage door openers and I don't know what house they're for. I have no idea.

Dan Austin: [2:10] But you're definitely afraid to throw them away because you're like I might need these but in reality you're like I have no idea what to use this for.

Mike DeHaan: [2:16] Yeah, exactly. So I just have a bunch of miscellaneous keys. It's when I actually found a couple of garage door openers not too long ago. And I just like, I have a couple of houses that are really close to each other. And I went and I drove by them and I just like clicked the garage door openers really quick. I don't know if tenants are home or not, just because I was trying to figure out which ones are one. And to probably sit in there like, what the hell? Their garage door just opened. So, yeah, don't worry about it. Just trying to drive by. But anyway, I guess that's an okay problem to have, to have enough stuff. But I mean, mean, you've worked with me long enough to know that I'm such a disorganized person when it comes to all of that and like all of our paperwork and everything. I don't know, think this is why you want to get to that scale where you can just outsource that to somebody and just have it be like here, here's all our closing statements and all of our receipts and whatever. Please just take care of this.

Dan Austin: [3:09] Yeah, absolutely. That's where I spent a lot of my evenings this weekend or this week working with our bookkeepers because it's just like it just turns into a shit show so fast. Right?

Mike DeHaan: [3:19] Yeah. It's

Dan Austin: [3:19] like I have all these things and I'm like, this is all wrong. We gotta fix it.

Mike DeHaan: [3:24] Yeah.

Dan Austin: [3:24] Gotta have somebody else doing that for us all the time.

Mike DeHaan: [3:28] What's so silly about that? I mean, feel like anybody that's This is like the unspoken problem of like a real estate investment business. And it's hilarious because you look at the different groups that we're involved with, whether that's, you know, CCF, Ryan's group, or like GoBundance or whatever, people are always looking for like accountants or bookkeepers that know real estate. Because like, you know, a lot of them out there, funny. I feel like they don't even necessarily know how complicated it is. Because like, I mean, we've gone through what, three or four now where they're like, Oh, do you know how to do bookkeeping for real estate investment company? Like, Yeah, totally. And then you get them into your books and they just screw everything up, You know? And it's like, if you didn't know, don't tell, don't say that you did. Like it's not something that just a book, it's not like selling widgets on an e commerce store where it's like you have a transaction. You know, there's like the depreciation, you know, there's the interest and the principal separation on your rental properties. There's so many different things that go into it. And I don't know, they just like try to like fake it and then they send you a bill for a thousand dollars, even though they

Dan Austin: [4:35] just screwed it all up. Are you bitter? Are you bitter? I

Mike DeHaan: [4:40] feel like this is what's gonna become. It's just me being bitter about some arbitrary thing. But

Dan Austin: [4:45] Well, get it because like, this week, right? Like, we have a $121,000 transaction on our books from a cash out refinance. She's like, what is this? And I'm like, oh, it's a cash out refinance. She's like, oh, is it revenue? I'm like, no, it's not revenue.

Mike DeHaan: [5:01] It's debt.

Dan Austin: [5:02] Yeah. You know what I mean? And so it's just like, how do I how do I account for it? I'm like, I don't know. I'm paying you to find that out.

Mike DeHaan: [5:09] I know. I know. And even on my stuff, you know, they're sending me all these like random questions about, well, I realized I was going through my books and I noticed that all of my interest that was being paid down was being accounted for in one property. And I was like, where the hell is the reductions on the other properties? And she was like, oh, I didn't realize there were other payments. And I was like, what did you think these deductions were on here? I was like, it's not that complicated. Especially because I have made a point of trying to be organized. I put in all the statements for last year and like once point and then I don't know. It's

Dan Austin: [5:47] unfortunate. Mean, it's one of those things where like bookkeeping is still considered probably like a low skill thing, but it is a lot of work. So the the pay is not there. I mean, do pay kind of a lot for bookkeeping.

Mike DeHaan: [6:00] Yeah.

Dan Austin: [6:00] But even so for what you need, it's like, we're not paying them people enough to wanna learn how to do it correctly. Mhmm. I mean,

Mike DeHaan: [6:07] Well, I feel like that's, you know, that challenge can be found in a lot of roles for like a mid sized business. I mean, I don't know, are we like a small business or a mid sized business? What's that based off of?

Dan Austin: [6:19] Is it

Mike DeHaan: [6:20] a revenue?

Dan Austin: [6:20] Think we're small,

Mike DeHaan: [6:21] but Very small. I mean, we don't have a lot of staff, but I mean, if you look at like our revenue by staff, it's pretty decent. I mean, we're not, you know, making $10,000,000 a year off but at the same time, our overhead's so low. But I mean, you know, because if you get big enough, you can hire somebody full time to do that at a cost. You know, it kinda just makes sense because they learn your system. You know, whether that's a bookkeeper or an admin or, you know, an in house property manager, those tasks that are kind of like the assistance tasks. You know, if you're small or, you know, you're even like mid sized and you go, you probably don't have enough revenue to make sense to hire that person full time. So you outsource to someone else. But then they don't care because they're not actually indebted to your system. But it's also like expensive to pay those people. So it almost You makes no kind of get stuck in this cycle of like, I have to basically commit to making less money and having more headaches. Or I have to, you know, sorry, and having more, sorry, I have to commit to making more money, but having more headaches by not having those people. Or I can have less money and slightly less headaches by having that person. And there isn't really like a win situation to that.

Dan Austin: [7:40] Yeah, I have an idea. I'm thinking here. So remember how, I don't know, three, four months ago we were talking about buying our Tesla houses? Yeah. Maybe we need to put that on the back burner and buy our bookkeeper house.

Mike DeHaan: [7:52] I mean, it might not be a bad idea. What and what what do you mean by by Tesla house? Explain that So to

Dan Austin: [7:56] as every any good investor knows, right? You gotta you gotta buy an asset to pay for your liability. And the you know, I'm still torn between buying my my Tesla Plaid Mode or a Ferrari or something with those lights. Only edge that

Mike DeHaan: [8:12] is Humble brag over here.

Dan Austin: [8:14] The only the only the only advantage that Tesla has is autopilot so I can still make money while I'm driving, where I feel like the Ferrari needs like full attention.

Mike DeHaan: [8:24] It definitely does.

Dan Austin: [8:26] But anyhow, point being right, we're trying to buy some assets if we want something that is just kind of like, I just want it. There's no reason to need it. But Tesla Platador is pretty badass, right? So why don't we just buy something that pays for it?

Mike DeHaan: [8:42] Yeah, so exactly. And you know, that's, I mean, that is kind of the benefit of buying assets is, you know, you can get into a position of, okay, well, I'm gonna, you know, buy this property. It's gonna give me x amount per cash flow. And then, you know, if you wanna buy the Tesla, the Model S, the Platix or $140, you know, you can buy that right now with what, 7,000, 8,000 down. The payment's like $1,800 a month, I think, when I was like the other day. So I was like, say you get, you know, for us, that's what two properties, I guess, which are typical cash flow properties like $900 a month. You know, you get a couple and you're willing to, you know, if you have enough to cover all the rest of your stuff and you want that just to be for toys, you can get into a pretty sweet car without having to spend a lot of money if you have the assets to cover it.

Dan Austin: [9:25] Yeah. Which is actually a fun conversation to have, like, any new investors listening is like the exercise that that you did and then and then in turn showed me, which is like calculate the monthly expense of like your ideal life. Yep. Just add it up. What do you need? You need to maybe a house payment. I don't know, whatever your living situation is. Maybe you want a Tesla Cloud mode. It's $1,800. You need a cell phone, you need medical insurance, whatever all that is, and add it up and then just start working towards that number. Because it's surprisingly not that hard. Once you know that number and you and you start buying cash flowing assets or getting that that passive income from whatever source, it's not that hard once you start stacking it to get to that number. You just have to know what that number is and then work towards it.

Mike DeHaan: [10:11] Yeah, exactly. Especially if you're doing the transactions like we are with like wholesaling or flipping where you can make larger chunks of money. Mean, so yeah, because I did that at the Mastermind with Ryan last year. And I'm a relatively simple person. I think my number was like 14 or $15,000 a month, which is a decent chunk of money for somebody with a salary. But when you're doing wholesale deals and flip deals on the regular, that's like one deal a month. Even with us, it's fiftyfifty owners. That's like one or two deals. And it's not even counting our rental income. That's my number to cover my mortgage, the general expense I have on food, all the luxuries I tend to enjoy, plus some splurges on there. I had like, you know, a vacation property, I had a nicer car, all that sort of stuff. And it just comes down to being strategic and somebody that is getting started or you have a couple of props you want to scale, is a, yeah, like I said, it's kind of a fun exercise just to sort of, you know, realize how doable that is. I think the only challenge that comes to that, when I went to that mastermind, there was one group, were a couple, our friends down in Knoxville that we flipped that property with actually. Their number was like 500 a month. Oh, good.

Mike DeHaan: [11:25] And it's like, that's a little more significant. But even then, we were able to break it down and be like, all right, so if you actually wanna do that, this is how many transactions per month plus what your cash flow would have to look like. And it's all measurable and you can just sort of build to that. But yeah, an element. Then it it it I found that long term, what that did is it made me, I guess, like more motivated to, like, strive for more and not necessarily, like, settle for what I thought was possible because you realize how doable that is and be like, well, like dream dream life. Like, what could that actually look like? Mhmm. You know?

Dan Austin: [12:03] Yeah. I think a lot of too in the investor world and especially in the real estate world, like frugality is like praised. It's like a super good thing. And a lot of real estate investors are frugal because they're like, if I reduce my expenses, then my cash flow from my real estate can cover my lifestyle, and I can be an entrepreneur or not have to work for a w two. And I don't I think you and I both committed to like, well, I don't want to live frugally. I wanna live good and I wanna have a good time. Doesn't mean that we're not smart with our money, but it like you see, you have to set your goals higher. Right? Then Totally. Oh, I'm I'm just covering my bare minimum expenses and I'll have food on the plate. It's like, no. I want steak on my plate.

Mike DeHaan: [12:45] Yeah. Right. Yeah. Well, and I think it's different personalities too, you know, because there's a lot of people that are happy with like the frugal lifestyle, which is totally fine. You know, going back to, I don't know if you ever were into like the old school sort of fire, like Mr. Money Mustache or those sort of folks. You know, but they're literally like, you know, save as much of your money as you can and, like, find, like, your basic minimum number and then you can fire or, you know, get financial independence or retire early. And then you can focus on stuff that you do like. And, like, you know, some people just do that as like to live a really more, I don't know, like a simpler life because they hate working. Some people use that to like try and build businesses and that sort of stuff. And, you know, I think for us, it sort of came down to, all right, it frees up your time to go and make other revenue, make more revenue once your monthly note is paid for. And if you are willing and able to use your newfound time to do that, it's an extremely powerful position to be in. And it's shocking how when you are fully committed and things aren't like a side hustle anymore, how easy it is to honestly make like good money. Mhmm.

Dan Austin: [13:55] But Yeah. A $100,000 a year as a real estate investor or an entrepreneur in anything really. I mean, I guess unless you pick a really bad business, but it's not hard to hit $100,000 a year. But in corporate America, that's actually like there's you still don't unless you're in like, you know, maybe Silicon Valley or the tech industry, like quite a few industries, like a $100,000 still is not your starting salary.

Mike DeHaan: [14:22] Yeah. You know, and there's the trade off being, you know, obviously in a corporate environment, it's gonna be guaranteed. And for ours, it's not. Mean, we've had months. Yeah, that's true. We've had months where we've made nothing and then we have a month where we each make $60.70 grand and that works out pretty well. But it all balances out. And then we've had months too where it's like, well, gotta pay money ourselves into the business for payroll because things just went a little sideways this month or stuff got delayed or whatever. But, you know, it's the trade off. After a while, it's when I realized over the last, honestly, just like couple of months how my mind set has shifted with how the business is going to on the systems and things optimized. Like stuff like that doesn't really stress me out anymore or like missed opportunities or whatever because I know we're gonna have more. Like our marketing is just so regular and so consistent that it's like, oh, we dropped the ball on that one. It's alright, we got, you know, 17 more in the hopper. Like some of those will come together and we'll figure it out. And now it's more like how can we optimize and like really like be more efficient as opposed to, God, I hope we can make something this month.

Dan Austin: [15:35] Yeah. Well, and having that abundance mindset, right, that you're talking about. It's like, you know there's gonna be more opportunity and that you've learned how to create opportunity, most importantly, and you build like a little bit of confidence when you learn how to create opportunity. The more opportunity you create, the more confidence you have. And it's like a it's like a loop, right? It just keeps going. And I think the fun, like thing to look back on and reflect on, like as a entrepreneur in this space anyways, is we collect a salary now from our business, right? That's just in our overheads. Yeah, that's pretty cool. Like as opposed to like, yeah, we've got a big win. We're paying ourselves out. It's like, every month we're paying ourselves and then we're gonna pay ourselves again when we have, you know, money to do so, which is more frequently than not.

Mike DeHaan: [16:19] Yeah, totally. I mean, yeah, small salary, you know, for tax reasons, but it's still nice to have. It pays my mortgage, so I can't complain.

Dan Austin: [16:26] Yeah, mean, it's definitely something that, you know, you just it goes back to that mind shift you're talking about too, right? It's like, before, especially when we first started, we're like, are we gonna pay ourselves for? Like, we're make sure we make payroll or that we have enough money for marketing, which is kind of the wrong mindset to be in because we all and we knew in our head like, oh, the pay your first pay yourself first model, but we still weren't able to practice it.

Mike DeHaan: [16:50] Yeah, well I mean, you know, it's kind of harder to do when you're not from that standpoint of having that financial independence though because you wanna invest everything.

Dan Austin: [16:59] Yeah, exactly. That's what we were doing.

Mike DeHaan: [17:01] Yeah, but at the same time the risk of that is like we talked about way back when we first started shifting towards paying ourselves, you don't wanna be the people to start a business and you keep doing more and more and more and more and then things go south for X, Y, Z reason and you're walking away with nothing because you just poured everything back into the business.

Dan Austin: [17:21] Sure, yep.

Mike DeHaan: [17:22] You know, I think that's why it's important to take some chips off the table whenever you can because in worst case scenario, your business goes bust, real estate goes whatever. It's like, well, at least don't put some money in your personal savings, it's still there. Unless you collected something from it, you didn't just waste years of your life and endless amounts of stress and headache for nothing.

Dan Austin: [17:45] Yeah. But, yeah. Yeah. Talking about payroll, we just added some additional payroll, I think, today. Do we agree to that? I mean, that what we're doing?

Mike DeHaan: [17:55] Yeah. I think so. Yeah. As far as I'm concerned, as far as he's concerned, mean, I'm talking right down. He thinks

Dan Austin: [18:00] he's worth your

Mike DeHaan: [18:00] question. So Judd, if you're listening, here's your official job offer on our podcast. You listened to it, you said you would. So if you don't bring this up on Monday, I'm gonna assume that you didn't listen. You're officially fired. But yeah. So that that'll be it'll be interesting. And it's funny as I've been working on our systems for his role. So it's gonna be Jud's gonna be coming on as our transaction coordinator slash dispositions manager. So he's gonna be facilitating deals getting done after our acquisitions manager gets contracts signed. You know, whether that means he's assigning contracts to, you know, other buyers versus the wholesale, he's assisting us closing for a rental or for a flip, you know, he's helping sellers move out of properties or find where they're gonna go or helping with their paperwork, whatever they need to do. Stuff that we're all kind of like you, me and James and everyone's kind of doing sort of just sporadically right now. He's gonna be taking that solely on. And it's funny because when we're kinda doing it, it seems like it's pretty basic. But as I've been going into getting all of the documentation for him to get started, I feel like there's like a lot of stuff that's involved.

Mike DeHaan: [19:16] You know? Because I've had to I've approached it with the thought of like, well, if I was explaining this to somebody that, you know, like a child or somebody that knew nothing, what would they need to know? And there is a lot that we just like assume, right? You know, and then that is just natural because you've been doing this for a while. And you realize how complex the actual sales process is after you have the contract signed. You know, because just like sellers aren't predictable, buyers, especially on a wholesale deal, are not predictable either. Like we had some friends ours who are also our main competitors in town. Cody, I'm gonna put you on blast for this deal right now, if you ever listen to this. They posted this deal on Facebook that was like the worst property. Like this place was so beat to hell. I saw the photos and I like, Oh my God. Like something that honestly we wouldn't even touch because it's just so much work. For a price that I was like, That's like a really expensive price to that property with not a lot of upside. And I kind of like, I texted him and kinda like teased him. I was like, good luck with that. And he's like, oh bro, I sold that in fifteen minutes. And I was like, what? Like how? It was like 155 for this house. It needs a 100% everything remodel.

Mike DeHaan: [20:26] It's like a two bed, one bath, 800 square feet. Comps are like two thirty ish, two forty. So you know, there's probably like a $90,000 total spread, but a house needs $6,070,000 worth of work. And I'm like, who the hell buys that? I don't understand. But then, you know, we've had ones that have like these huge spreads, but they're like, kind of like a higher price point, or they're like, I don't know, they're just like kind of more, don't wanna say like unique properties. They're just like not like cheap cheap and people don't want them.

Dan Austin: [20:57] Yeah. It's like the idea of why people buy penny stocks because they're like, well, it's just so cheap, but it's like the ROI still is the same as if it wasn't a penny stock, right?

Mike DeHaan: [21:06] Yeah, exactly. Yeah. So Cody, good for you. Am I jealous? Yes. Screw you. This is a good deal. I'm glad you made money, but still, he even said yesterday, text me back. He's like, bro, was like, I don't know. We didn't want that deal. It's like, I don't know how, like what buyers are thinking most of the time. And it's just a fascinating thing. But my point being though, you know, with the disposition side of it, there's a whole process of being able to find that person and market it and, you know, determining what a good price is for that. You know, because he told me too, he's like, it's like I sold it so fast, could probably price that too low. I was like, honestly, you probably did. Probably could have gotten another 5 or maybe $10,000 out of that somehow. But, you know, so I think having someone fully committed to that will be really interesting and it'll be, I'll be curious to know, like, how how that's able to improve, like, in our business with somebody 100 fully like developing that a little bit. Because right now, you know, we kind of like throw spaghetti against the wall and stuff's been able to come together because there's so many hungry buyers. But as we've gotten into the holidays, it has been harder to move properties. Think people are just not as interested in buying.

Mike DeHaan: [22:20] But

Dan Austin: [22:20] Yeah. Yeah. And I apologize. It's pouring down right in my house and my neighbor's bowing.

Mike DeHaan: [22:25] We can't hear you.

Dan Austin: [22:26] Okay. Good.

Mike DeHaan: [22:27] Yeah. Sorry

Dan Austin: [22:29] if you can't. Yeah. It is weird. Right? Like, we talked about this, I don't know, a week or two ago is like the different things that buyers put in their heads of why they're not going to buy seasonal or whatever. But I don't know personally, I'm still bullish even through the winter in the markets we're in. I don't see it going down, which is like a whole nother conversation maybe to have about like inflation and how that's going to affect the industry. And a lot of people are talking about it. But, I mean, it's probably continues to be a good time to buy. Because knowing inflation is going up, house prices probably aren't gonna go down.

Mike DeHaan: [23:05] Yeah, yeah. Well, I know you bring that up because we both listened to this podcast today. Podcast called Capital Hacking. Do you remember the name of the guy? Should have wrote that down.

Dan Austin: [23:17] I don't know. He's a go bro.

Mike DeHaan: [23:18] Don't Yeah. He's a

Dan Austin: [23:19] his name in him up.

Mike DeHaan: [23:20] He's goBundance guy. I'm gonna look it up really quick because I don't wanna, like, forget him. Yeah. It was with Jason Hartman was the guy they interviewed on the Capital Hacking podcast with Josh McCallon and Eric Cabral. But he's a it's like an economist that works with Ken McElroy. And, you know, Ken McElroy is a very big wig. Let's see. He must be close to a billionaire, multifamily. I don't

Dan Austin: [23:46] know his net worth, but he's definitely a top guy in the multifamily space.

Mike DeHaan: [23:49] Yeah. And just like economic economics in general. And he was talking about, you know, the whole inflation picture and how a lot of people are viewing it completely incorrectly because they're basically looking at inflation or, like, looking at, like, housing and and things like that that they consider to be bubbles. And they're, you know, they're considering like housing for bubbles has gone up in prices or whatever. But he's saying that where people are mistaken is they view it as a bubble because they're comparing it to the US dollar. Because in their mind, the US dollar is stagnant. But the problem is, you know, the US dollar is decreasing in value. So the fact that houses are increasing and the US dollar is going down kind of means they're staying the same, you know, which a lot of people kind of understand that. But the key he was saying is if you look at the prices of property versus the average consumer price index for a lot of things, houses are actually kind of right on par with everything else, which is actually pretty frightening if you think about it. Because that means every single person that doesn't own real assets, their wealth is decreasing at an incredibly shocking rate.

Mike DeHaan: [24:58] Know, and basically what, like I took away, the main takeaway I took from it is I was like, why the hell are we wholesaling or flipping anything? Like honestly, we should just take all of our money and just park it in hard assets, whether that be real estate, Bitcoin, I guess I'm an guy. I don't like Bitcoin. Gold, like whatever, something that's gonna be not necessarily tied to the dollar, but tied to consumer price index a little bit more.

Dan Austin: [25:29] Hard assets. Yeah, hard assets. Like protected assets.

Mike DeHaan: [25:32] Yeah, or honestly, like at this point, even securities. Even though I know the stock market can go up and down, everyone that has significant money, no one wants to be in cash. So they're gonna be pumping it into securities if they're not real estate people.

Dan Austin: [25:46] Agreed. Then I think the argument too on the capital hacking podcast was that the real estate such a great tool for it because you said park all of our money. Well, let's park all of everybody else's money too. Right? And using using the advantages of inflationary periods to break down your debt to reduce your debt. Because if if your debts fixed, the fixed amount of debt, but your house keeps going up in price and your rent keeps going up in price, that debt becomes such a minor number. Know, that's where you talk about people buying houses if they cash flow $1. Right? Because over a period of time, the house appreciates and the rent's gonna keep going up. So that $1 of cash flow in three years might actually be $500 in cash flow. Yep. And you have $200,000 of equity.

Mike DeHaan: [26:35] Yep. Yeah, exactly. Yeah. And he kinda I wish I had the exact numbers or details if I broke that down. But he talks about, you know, the people that if you look at inflation since like the seventies, the people that bought properties at like even at like 7% interest rate in the 70s and they paid it down over thirty years, they never refinanced it. If you look at the amount that they paid versus inflation and appreciation of the real estate market, they actually like made money every month by renting from themselves. Know, so instead of it, you know, even though they saw, you know, dollars 800 leaving their account or whatever, it was actually the same as if they were depositing $100 into their own account by paying it into their house, you know, in terms of like their net worth, sure it's not in cash, but in terms of their net worth, because of how different that 7% interest was, how much lower that was than the effect of inflation and the appreciation on the actual value of the asset. And, you know, looking at what rates are now, you know, it's that that number is just going to be exponentially greater in the future. And, you know, I think that that's why a lot of people, you know, I'm doing this right now as well, are just basically max leveraging everything at super low interest rates. Because you can go and you can get this cash or it's tied to a debt, but if that debt's being paid for, you know, it's covered asset by a renter, then you can get a huge amount of money basically tax free if it's a cash out refi.

Mike DeHaan: [28:02] And you can use that to buy other assets and outpace inflation pretty easily right now without having to pay taxes or deal with that whole situation. But I don't know, it's funny that podcast was slightly alarming. Many because I'd never heard it from that perspective before. The main things I heard about inflation are people that are either super political one way or the other or they just don't know what the hell they're talking about. Right. You know, but they hear somebody that's like, to break it down that thoroughly, I was kinda like, okay, you know, like why would we ever sell anything? Especially because we have the ability to buy stuff. I mean, even the stuff we have down in Knoxville right now. We can buy some of those properties and we can be into them for like 5 to $7,000 down because the property is so cheap. So why the hell wouldn't we do that? That's like our earnest money on properties here.

Dan Austin: [28:55] Yeah. And even if it's not a known as an appreciation market over a period of time, I mean, it still will go up in value, especially if inflation is impacting it. But it's that debt pay down piece too. Right? That we're getting, we're fixing it, we're locking it in at a fixed amount of debt over a And period of time, as inflation goes up, that debt stays the same and gets smaller paid by the renters.

Mike DeHaan: [29:20] Yeah, and even if it doesn't appreciate that much, the cash flow potential over there because rents are surprisingly universal across a lot of The United States, even though property values vary a lot. As we've, we have one in contract over in Knoxville right now that we've been looking at wholesaling and haven't had a whole lot of nibbles on it. Probably should've been a little bit greedy with our wholesale fee, I'm being honest. But it's like a two bed, well, it's a three bed, one bath. It's about 900 square feet. Like that property here would be 250,000 to 260,000 probably. And would probably rent for like 15 to $1,600. The same property over there, we have it in our account for $70,000 It needs maybe like $20.25000 worth of work. You know, it's not a big house. So we'd be into it for, let's say 95. And then it should appraise you all to cash a refi between 140 to 150, but it rents for 1,300 to $1,400 So our payment is gonna be based on $150,000 purchase, can be way less than $250,000 purchase, but the rent isn't that different. You know, it's like $200 a month, you know? So we'll be able to cash flow 400, so like somewhere between 300 to $500 about $4,000 depending on what we could get for rent, Have all of our money out and have just an asset over there that's just chugging along and not need to put nearly as much out of pocket to get that deal done like we would over here. Yep, agreed. Plus we'd be in a more landlord friendly market.

Mike DeHaan: [30:54] Whereas up here, your tenants can be killing each other inside the walls of your property and you can't kick them out. Down there, if people are doing bad stuff, you can just get rid of them.

Dan Austin: [31:04] Yeah. When I was talking to that one buyer down there in Knoxville, he we were talking about eviction rules and laws. He's like, oh, no. We just basically drag them out of their house down here. I was like, oh, well, that is different than I'm used to dealing with.

Mike DeHaan: [31:16] And it's not that that's what we ever wanna do, but still, like, you know, up here, we've had so many issues. I mean, when when we we flipped this little apartment complex up here and we had a tenant that was a very avid meth user who was regularly bringing home women of the night, who he would then give them meth, and they would be sprinting around this complex knocking at other people's doors, butt naked, screaming for help because he was sexually assaulting them. And the police wouldn't get involved. We couldn't evict this person. We couldn't do anything about this. And this happened over and over and over again. But Washington State law is like, well, we don't want them to be out in the streets or we don't want them to be in jail so it's your problem. So what we ended up having to do is paying this guy $5 and give him the refrigerator just to get him to go be somebody else's problem.

Dan Austin: [32:08] Is Give him the refrigerator. That was the big part.

Mike DeHaan: [32:11] And straps it onto what was like a little sedan that they pulled up in. That's so stupid.

Dan Austin: [32:16] Love it, man.

Mike DeHaan: [32:17] Anyway, well, that was pretty good. That thirty minutes flew by. That was not the conversation I was expecting to have, but I feel like that was a good conversation.

Dan Austin: [32:26] Yeah. Never know. It's Yeah. Just gotta go with the flow of the river. Know? Sometimes it just works out that way.

Mike DeHaan: [32:31] Yeah. I like it. You got a lesson learned or horror story from this past week?

Dan Austin: [32:37] No horror stories. Yeah. It was actually a pretty pretty smooth week. Would say lesson learned really talking about, you know, we're hiring our dispositions manager and just reflecting back on that. You know me, I'm always kind of like, I wanna think about things, right, before I do them. And just trying to do this dispo down in Knoxville this week, which now I know why it was harder because your price was greedy. I was thinking it was gonna be 80. You said now go 90. Right? But it's

Mike DeHaan: [33:07] Even at eight, we have people want it at what we have it at.

Dan Austin: [33:10] I know. I know. But anyhow, like try just like thinking about that and how how much more we need to mature that process, which takes time. Well, we can just buy our time back and have somebody else mature that process for us and then take it down and then be on that full time so we can get those $90,000 wholesale, you know, deal or going on whatever. And so there's just the lesson learned there is like hiring. Right? Putting the right people in the right place and letting that system grow beyond you.

Mike DeHaan: [33:44] Yeah. Doing that the who not how like you sort Yeah. Of hear Like it. Exactly. I don't think I have a good horror story that would be necessarily good for audio. We had one seller this week that was just off the chain with his text messages, but without context, not really a good story. If we could ever write a book out of those text messages, it was incredible. But I think I had a good lesson this week. So we have this Airbnb that we're wrapping up. And in our mastermind group, we have a handful of people that do the short term rentals. And I went and posted in there and was like, hey, we're getting ready to furnish these things. Anybody have any tips? And someone sent us this Excel spreadsheet of basically everything that they buy for other short term rentals with prices and links for all of it. And A, thank you so much for sharing that, Brady. And P, I realized how important it is to ask for help and how I feel like we both had the most dude response ever to that. Where we were thinking about couches and beds and not shit like towels or know, duvet covers. I was like, I guess you do need all that stuff. Toilet paper. Toilet paper. Yeah, exactly. Things that I hadn't even thought to budget for that you obviously need in that kind of property. So I guess lesson learned there is ask other people for guidance when you're doing something new because Airbnb's are super new for us. And we would have learned that eventually, but just like by posting a question in our little Slack community that saved us. So it would have been probably some really embarrassing first bookings, when we didn't And have something super B, just like a ton of headache of us having to probably do 50 trips out there. Cause we're like, God damn, we didn't think about dish soap.

Mike DeHaan: [35:30] We're having to do that over and over and over again. Don't be afraid to ask for help even if you feel like you've been doing this for a while. We've done like what, 50 transactions almost now and we're still just like wearing stuff all the time.

Dan Austin: [35:43] Big lesson there. That's a good lesson honestly. Asking for help and using it's like the network effect as well. Using your network.

Mike DeHaan: [35:51] Yep, 100%. So cool. Well right on. Thanks everybody. So we will be the collecting keys podcast. This is episode three for us. And if you guys wouldn't mind going and subscribing, I'm already listening to your podcast. Leave us a five star review. That would be pretty rad. You can follow me mike underscore invest on Instagram. You can follow Dan at investor man Dan on Instagram. You can also hit us up with a DM on there if you wanna say hi. And, yeah, thanks for listening everybody. Take it out, Yeah,

Dan Austin: [36:24] I'll take it out. Why don't you get out there and go collect some keys?

Mike DeHaan: [36:27] Oh, at that. Cheesy as they come. We'll work on that. That's terrible. Yeah. Oh, man. Thanks everybody. See you next week.

Speaker 1: [36:42] 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.