Investor Strategies for Today’s Rate Increases & Supply Chain Issues

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 track foreclosures, like, on a weekly basis. And between the four counties that I do this with, it's usually between twenty and thirty a week. The last couple weeks, it's been thirty five and forty and forty five. And this past week, was 56.

Mike DeHaan: [0:53] What is going on, guys? Welcome to today's episode of the collecting keys real estate investing podcast. Today is Wednesday. It's the off market operator radio show. And on this show, it's usually me and my cohost, Dan Austin and Dylan Cook, kinda talking about real estate and business stuff. But Dan is out today. He is at a little army rangers meetup over in Tacoma, Washington. Like, left thinking it was gonna be chill, but I don't know, dude. A bunch of army rangers just, like, reminiscing about their when they peaked during the Iraq war. Sounds like it'll be it'll be an event for sure. But you're stuck with me, Mike DeHaan, and Dylan Cook out of Cincinnati today. And, yeah, see where this thing goes. But we have a lot of stuff going on in the economy and the real estate market and everything else right now with the election, I guess, impending for, like, a month out, which is crazy. And thank god. So we can finally be done and move on.

Dylan Koch: [1:50] I know those commercials on my TV are getting annoying. I'm about to be done, Seth.

Mike DeHaan: [1:54] See, I don't watch TV, Dylan, because I'm too busy, you know, taking cold showers and yelling affirmations in the mirror. Can't be can't be poisoning my mind.

Dylan Koch: [2:02] Or yours do you have the sauna and your meditation and affirmations in the morning too?

Mike DeHaan: [2:07] Exactly. Yeah. Fuck. Goddamn it. But I want a big things, though, pertaining to real estate investors, and this is maybe a little bit late news when this comes out, but the rate cuts that happened last week. And I think the biggest thing with them, and this just kinda shows the general, I don't wanna say, like, lack of intelligence or understanding about how these things work. But they announced a big half percent rate cut, and interest rates went up. And people don't fully comprehend why that would happen. But, Dylan, you understand these things very well. So let's explain it to Elena.

Dylan Koch: [2:40] Yeah, so I mean, it was funny because all you saw online was realtors and mortgage lenders, impending rate cut, time to refi or time to buy a house, and it's kinda not what happened. But to give a very brief overview of just how bonds work in general, let's say that you bought a $100 bond from the federal government for ten years, so a ten year treasury at five percent. So how these used to work is on twice a year, the government would send you basically a $5 check-in the mail, you deposit it, and then at the end of that ten years you'd get you a $100 back. Let's say we're three years into that ten year bond, you're collecting your check, but rates went from 5% down to 3%. Well Mike then can go into the open market and say, hey bond market, you know I have this bond that pays 5%, which is currently better than what's being offered at the 3%. What would you pay me for this 5% bond? And that's when people kinda can do the trading, and when bond prices go up, rates fall down. It's kind of the dynamic in play there. So doing that, so what the Fed controls is the federal funds rate, which is like the overnight lending rate if you are like JPMorgan, Bank of America, they lend money overnight at like point two five basis points, but it's like trillions of dollars. What the mortgage rates follow is actually the ten year treasury, not the federal funds rate.

Dylan Koch: [3:58] But if you were to overlap these two things, like on a graph, they track pretty well with each other. But the further out you are on the curve, that's more market driven than Fed driven. And so basically the Fed now, which is different than what it used to, has what they call a forward guidance. Which is they basically try to illustrate what they're going to do ahead of time. And they very much said to the world, hey, we're gonna cut rates. And if you ask all the economists, they have this thing called a dot plot on their memos, I guess, that they put out, and they pretty much have a confidence interval with these of what they're gonna do. So basically, right up before September 15, everybody that trades bonds knew that they were gonna cut rates. So it was almost like it was front ran a little bit. So everyone that was already trading these things were like, oh they know they're gonna cut rates, and we're already pricing this in. And so when that happened, and it went down 50 basis points, it was almost kinda like a surprise. And surprisingly rates went up instead of down.

Mike DeHaan: [4:52] Okay. Interesting. So why do they trade thirty year mortgages on ten year bonds? That's an actual ignorant question.

Dylan Koch: [5:01] That's a good question. So I actually don't know the answer to that, but historically whenever they do the lending, they do the prime rate as a nickel one, but the thirty year treasuries are based off the ten year. It's always been that way. Wish I had an explanation why. Maybe I can look that up for next week, but I actually don't know the answer to that.

Mike DeHaan: [5:16] Because, like, I've always heard the old sort of, like, theory that they with with banks, the average person pays off their mortgage in, like, seven years to sell the house. So do they, like, intentionally, I guess, based off something that's more near term because they're anticipating most people not carrying past ten years?

Dylan Koch: [5:35] It could be that. That could be part of it. Also, a very few people actually carry out a thirty year loan. They usually refi after five to seven years, which banks like because the normal amortization schedule, all the interest is carried on the front end.

Mike DeHaan: [5:47] Yeah. Do you know why the amortization is carried on the front end like that?

Dylan Koch: [5:50] Because banks pay more money that way?

Mike DeHaan: [5:53] No. See, that's so it's funny because that's the way that anti bank people look at it when really it's just finance. Right? And so it's so you're getting the actual five percent yield on the remaining balance of it, like, every year because you're gonna be making more money

Dylan Koch: [6:08] Yeah.

Mike DeHaan: [6:08] At the front end. And so as it gets paid down less and less and less, it's actually gonna be a literal 5% of your principal on year one, a literal 5% on your principal in year two.

Dylan Koch: [6:17] Of the remaining balance at the end of that duration. Yeah. No. That makes sense.

Mike DeHaan: [6:20] Correct. Yeah. And so if you look at it, it's funny because people always say, like, banks screw you because they take more interest at the front. It's like, no. It's literally just math. Like, that's that's how it's supposed to work with an amortization. So they are getting a literal 5% return every year based off of what, you know, is actually left remaining.

Dylan Koch: [6:36] Who was the guest that I forget the name of it, but this is they were trying to do like that HELOC hack, essentially, was paying their principal mortgage down with their HELOC balance because it's not amortized the same way, and then repaying that?

Mike DeHaan: [6:49] That was Ali Garced. Yeah. And the whole I think that whole thing is pretty flawed. But, basically, the concept with that is that with a HELOC, you can pay interest only, and so you get actual true cash flow, which is higher because you're not forced to pay down the principal.

Dylan Koch: [7:02] Gotcha.

Mike DeHaan: [7:02] Right? And then you you pursue large capital events to pay down the principal on that HELOC. But you still need to make the money to be able to pay off the house, right? Right. It's not like some hack necessarily.

Dylan Koch: [7:12] I was just gonna say, going back to the interest rate thing too, what's funny is they survey all these economists at the Fed, right? The Fed employs like three to 400, like Ph. D. Economists and all that stuff. And they basically asked, know, what do you think is gonna happen at the September meeting? And even though 97% of them said they expect a rate cut, like 90% of them expected 25 basis points or you know, point 25% cut. And they ended up doing a 50% cut. All that to And I say that for the reason, even the people who are the closest to the information got this wrong. Like 90% of people still got this wrong. And so when people make these forecasts and stuff, no one really knows.

Mike DeHaan: [7:50] Well, I would imagine it's almost similar to, like, when a a company has, like, a merger or something, and, like, they're supposed to keep, like, very, very secretive about it so people aren't, like, dumping stock and doing things like that or trying to make, like, decisions that might influence the economy. There has to be a level of secrecy that's required if you're in that decision making process. True. So you don't have insider trading.

Dylan Koch: [8:13] I guess that's true, but why post it after the fact and not just assume that why would you guys post after and say, oh, look. We were alright, but it just came out after the fact. I don't know.

Mike DeHaan: [8:21] Yeah. Yeah. I don't know.

Dylan Koch: [8:22] But I mean, if Nancy Pelosi can insider trade, then I guess why can't they?

Mike DeHaan: [8:26] They don't insider trade. They just work really hard and serve our country, Dylan. It's why all of them go into office with a net worth of $2,000,000, and then from sitting there doing fucking nothing, they're worth 55,000,000.

Dylan Koch: [8:38] With a salary of like 150 to 200 k. Yeah.

Mike DeHaan: [8:40] It's just math. It's just math.

Dylan Koch: [8:42] No. It's funny because I follow that. There's a Twitter slash x account called unusual Actually, there's a platform out now that basically picks whatever Nancy Pelosi or other politicians pick. They automatically, you build a portfolio around their trades. I think it outperforms S and P wild.

Mike DeHaan: [8:58] I mean, it's like Warren index or whatever, where people would just follow what Warren Buffett's doing and just match his trades over a long period of time.

Dylan Koch: [9:06] Yeah. Yeah. Except that this used to be harder because of real time information. They all have to report every quarter. And I guess they have more access to more frequent trades now. I don't know.

Mike DeHaan: [9:16] Like, real talk, they really should make it so that if you are in that sort of position, you can't trade securities.

Dylan Koch: [9:22] At least not something that you specifically govern. If you're in the agriculture division, you can't regulate farmland or whatever it may be.

Mike DeHaan: [9:30] Well, even then, when you're at that level and you're dealing with some of these really large companies, I mean, companies get involved in politics, especially some of the major tech companies and things like that because they have so many parts of what they do that are reliant on the federal economy being able to function.

Dylan Koch: [9:47] Uh-huh.

Mike DeHaan: [9:47] And it's like you're gonna get information that doesn't nobody else has. Totally. Right? It's mean, it's just like when the COVID shutdowns came, there was like a couple graphs that went out that showed like all of the politicians dumping their stock in like the week before the shutdowns happened. Yep. It's like, come on, guys. That's not even like

Dylan Koch: [10:06] It's so blatantly obvious. Like, it's just Yeah. I think what's worse is the punishment for not cooperating or not disclosing your trades or doing this stuff, it's like a $100. It's really like a 100 Yeah. Okay cool, I didn't report it. I made 12,000,000, so I'll pay my $100 fine. Like, anyone will do that any day of the week.

Mike DeHaan: [10:27] Totally. Yeah. No brainer. So what does all this mean for, like, the housing market though? Because that's the big reason everyone's here. Right? So they dropped the basis points right now. So the ten year bond is what the mortgages are based off of, and so rates went up in the short term. But in, like, the next quarter, does that mean that they'll probably start to trend down?

Dylan Koch: [10:45] So everyone still thinks, even with this top line, everyone that they're basically in an easing cycle from now on. So they think that we're gonna continue to get rates, rate drops throughout the next meetings, and depending on who you ask, it's anywhere from a whopping 3% down from where we currently are, and then there's more ones that are more conservative around one to one and a half percent. But regardless, you're still looking at a drop in interest rates from where they are today, and they're starting to, not necessarily in The United States, but globally, like China, they just started their quantitative easing process again too. So you're seeing more liquidity coming into the global economy. All of this to me is more bullish or more constructive for the real estate industry.

Mike DeHaan: [11:29] I bet your Bitcoin roots are just freaking itching.

Dylan Koch: [11:32] They they're good doing well too. Yeah. So, well, it's down today from the, you know, escalation overseas, but

Mike DeHaan: [11:39] Yeah. As as happens, but fascinating. So, yeah, I guess we'll see. Either way, like, I don't know. I would say that if you are considering selling properties in, like, the immediate and you have time, like, I would wait until after the election or going into the spring. Yeah. Because guarantee you, if interest rates do start to go down in the spring, like, down into, like, five and a half or, like, low fives again, shit's gonna be flying off the shelves so fast.

Dylan Koch: [12:01] Well, especially for the the selling side, for flipping and then maybe on selling. One thing that was brought to my attention that I think is interesting is during the 2020, like COVID, when you could get interest rates at two and a half or under 3%, there's a lot of refinancing that happened during that time. So let's say we still go down one and a half, two points from where we are today, we're still not gonna be below those COVID levels. So what percentage of people are actually going to refinance, even if we get those lower levels from where we are now? People are saying, okay, we might not get a refinance from what that we once had, but we could still have a increase in the selling, like flipping market.

Mike DeHaan: [12:40] Yeah. You would think so. Which is gonna be more important now too, because we need that existing inventory to start fluctuating since the docks all shut down today. Because I know that's that's something that's been talked about a lot. Said Jay Scott do a post on Facebook about this, that it's gonna affect the economy, saying probably more than COVID. And one of the immediate things I think of is, you know, if the Democrats get elected in November, they have a big push to, like, what, build 3,000,000 homes

Dylan Koch: [13:08] Uh-huh.

Mike DeHaan: [13:08] Whatever. Is that their number?

Dylan Koch: [13:09] Yeah. Something like that.

Mike DeHaan: [13:10] And if there's suddenly no imports coming in with materials to build houses, how the hell are they gonna build 3,000,000 homes? Like, it's not gonna be possible.

Dylan Koch: [13:18] Totally. And I think this is what I saw, like, a similar post from Jay Scott and some other guys was, basically during COVID, I guess these guys or these port workers kept working, and now they're on strike like no one is working. And so you're not getting imports or really exports from anywhere. And so how long can this go on before you start seeing more ripples in the economy? How many people have to start laying people off, which increases unemployment? And so I don't know how long they can actually hold out before they make a deal.

Mike DeHaan: [13:48] Totally. I mean, existing inventory on real estate, I think, is just gonna become more and more valuable as time goes on. It's gonna become easier to sell because the cost to build all this new stuff is incredibly expensive. Uh-huh. Just like the labor alone, let alone the rising cost of materials. And then all of a sudden, it's shown that the raw material process or, like, the import process is fragile, it's gonna be less desire to do that. And people are gonna move away from the current trend that a lot of contractors and flippers have moved towards, which is new development.

Dylan Koch: [14:17] Yep.

Mike DeHaan: [14:17] That becomes less favorable. They're gonna go back towards flipping houses again just like they were in 2020.

Dylan Koch: [14:22] I mean if you're a big flipper right now, are you trying to stockpile paint LVP?

Mike DeHaan: [14:26] Probably should

Dylan Koch: [14:27] be. Two by fours, plywood, all this stuff?

Mike DeHaan: [14:29] Go to freaking Costco and make it like toilet paper in 2020 and just start stealing all the paint.

Dylan Koch: [14:36] I mean, but seriously though, like, I guess if I'm a big flipper and you're worried about some of these materials, that's not a bad idea, especially, I have to say 90% of materials are imported from places like China and overseas.

Mike DeHaan: [14:48] Well, yeah, that mean, the way the lumber process works is ridiculous, dude. Because that's a huge thing up here in the Northwest. You know, we have major, major lumber exports, and what they do is they cut down all the trees. K? They ship them to China to be processed for a price, and then China sells our own wood back to us. Wow. Right? And then they show up in the Port Of Seattle on these big boats with wood from freaking Oregon. Like, it just doesn't make any sense.

Dylan Koch: [15:14] It's that's so crazy to me. Like, you just shipped it halfway around the world just for that.

Mike DeHaan: [15:19] They just have their, like, their margin along every step of the way. I'm like, come on, guys.

Dylan Koch: [15:22] Well, so I mean, we're it's October 1, and we have the hurricane Helen that's wreaked havoc across, like, the Appalachian Mountains, North Carolina, all this stuff.

Mike DeHaan: [15:30] Yeah. It's not a real thing, dude. That's what I saw on Facebook today. Someone said that was not a real hurricane.

Dylan Koch: [15:35] Sure. Okay. Well, we have the make believe hurricane Helen. We have a global strike on ports, interest rates, and I guess, from what I've read online, China's economy is not doing great either, so they're starting to stimulate their economy. We have oh, and escalation in Iran. So we have all these things kinda all happening at once.

Mike DeHaan: [15:54] Yeah. Iran just dropped a shit ton of missiles on Israel today. Dude, it's an election year. This happens every four years, and for some reason, we always forget. Like, do you remember 2020, dude? No. I don't I don't forgive. That doesn't take away the fact

Dylan Koch: [16:06] that this shit's happening. It's gonna affect everything.

Mike DeHaan: [16:10] No. It'll all be fine as soon as the election's over. It'll just be gone. It'll just disappear. Dude, in 2020, we had freaking COVID. We had the Black Lives Matter thing. Right? We had, like, the whole January 6 thing was afterwards, but there was like that tension building up around that. There was so much great shit. Kobe Bryant died? Come on. You can't make this shit up.

Dylan Koch: [16:29] Well, Pete Reese died yesterday. So we got that.

Mike DeHaan: [16:31] I don't even know who that is.

Dylan Koch: [16:32] Oh, come on. It is a But he's leading hitter in Bemblebee history. Play for the Reds.

Mike DeHaan: [16:37] Yeah. I know.

Dylan Koch: [16:38] Saw a I couple of mean, there's a lot of shit going on in the world. Long story short, you gonna do anything different in your business because of everything that's happening?

Mike DeHaan: [16:47] I am going to hold on to my properties until spring and then sell them instead of selling them right now.

Dylan Koch: [16:53] Is that because of the interest rate thing or a seasonality thing or both?

Mike DeHaan: [16:56] The real answer is because then I will be past my prepayment penalties and all my loans.

Dylan Koch: [17:01] Okay. There you go. Love the honesty.

Mike DeHaan: [17:03] So it's not it's not influenced by the economy at all. No, dude. Like, this is one of the things that as an entrepreneur, I've really especially like a service based entrepreneur, which has a real estate wholesale and flipper, honestly, are. Right? With a service based business, you're not gonna be affected by the economy, like, an insane amount because you only need, like, one person on either side of the transaction, and you don't really have, like, raw materials that are your problem, especially in the wholesale part. If you're if you're taking down renovations and stuff, it's a little bit different because you're gonna be a lot more influenced by, like, the retail buyer pool. Uh-huh. But as a wholesaler, which is our primary way that we make money, when the economy gets shitty, a bunch of people get laid off, a bunch of, you know, bad things happen. More people need to sell their houses at a discount. It was actually better for us. It's harder to find buyers.

Dylan Koch: [17:53] Is it?

Mike DeHaan: [17:54] But for the smaller buyer pool, there's also a shit ton of people that are sitting there looking back at, you know, how they missed out on 2008 and they missed out on 2020, and they're like, oh, yeah. This is my moment right now. Yep. And they're gonna they're gonna be willing to buy, right, as long as you have good deals. And so I think the only thing that really changes is I focus more on having strong relationships and providing value on both sides and less of, like, trying to squeeze as much as I can out of every deal, and I just go for ease and certainty. I hope you guys are enjoying this episode. We are seriously trying to grow this podcast so that the voice of what it really takes to grow a real estate business becomes kind of the norm versus the guru get rich quick b s that everyone is fed on a daily basis. With so many podcasts out there, it is hard for us to get discovered on our own. So a quick ask, please share this episode on your social media accounts. Be that a real story, whatever. And if you tag me at Mike underscore Invest, then I will give you a follow, and I will also send you a DM so that we can have a little chat about your business and any ways I could potentially help you grow. So again, please share on your socials. Tag me at Mike underscore invests, that's with an s at the end, and I'll follow you, and we can have a little DM and convo about your business, and maybe I can help you grow a little bit, or you could just say what's up to you. That'd be awesome. But appreciate everyone, and thanks so much for helping us grow.

Dylan Koch: [19:16] You know what matters most in this business at all times, but especially in times like where we're speaking about, is how discounted can you get the deal? That's the number Is one most important if you get the deal deep enough, you're gonna make money.

Mike DeHaan: [19:27] Exactly. That's literally the only thing that matters. Do you have a good deal or not? So often I talk to different people, especially newer wholesalers, they're like, man, I have this deal. I cannot find a single buyer for it. And I'm like, well, that's because your deal sucks, dude. Like, honestly.

Dylan Koch: [19:40] Yeah. Yep.

Mike DeHaan: [19:41] Right? And they're like, well, no. Because I like this is what the seller wanted. I'm like, yeah. So and then they'll send me the numbers. And I'm like, I see you're at 200. If I was a buyer, I'd wanna be, like, $1.60, dude.

Dylan Koch: [19:50] Mhmm. Yep.

Mike DeHaan: [19:51] Like And they're like, why would they ever sell for that much? She's like, I don't know. But they do it for us multiple times a week. Better figure it out.

Dylan Koch: [19:58] Yeah. And like a lot I think that's a lot of mistake new people make. As soon as they get a someone who's even, like, interested in selling, they, like, refuse to let it go, we'll try to make it work when it it just is this not gonna work?

Mike DeHaan: [20:10] Totally. Here's the thing with, like, all this stuff when you're looking at your real estate business is even during, like, the worst times, maybe except for, like, I don't know, where people buying houses during World War two. I don't know. That might be, like, the most extreme example. But 99% of the time, real estate's still being transacted. And if you're able to be that middleman, especially if you're doing the direct to seller piece of this business, which you should be if you're a serious investor at all, there will always be opportunities to make money. And your job is just to figure out what exactly that looks like. Yep. And it'll change. You might need to have a smaller team. You might need to get more scrappy. You might need to be willing to make less money per deal. Right? But there's always gonna be a way to do it. It's just like, I think that what would be really interesting is if it got to a point where, like, where we would get affected would be, like, if our mailing systems or, like, our marketing systems were no longer able to function.

Dylan Koch: [21:04] Like a supply chain issue?

Mike DeHaan: [21:06] Like, imagine that, dude. Like, all of a sudden, the supply chain gets so out of whack that, like, all of our mass mailing companies that we use don't have paper anymore. But I feel like if we reach that, we're at such an extreme that it's kinda Yeah.

Dylan Koch: [21:20] No. That's a good point. Real estate, it's like a tougher business, in my opinion, where you have to rely on so many other people and systems to actually complete your business. And from the mail house to contractors to all the systems in like CRMs, data management that we use, if one of those goes out, you're kinda like, well shit, what do I do now? And so there are a lot of, I guess, fragility points in a wholesale business. I don't know if anyone's completely worked around yet.

Mike DeHaan: [21:46] I would say that there is, but there isn't, because it's also such an established industry that there's always a backup. True. Like you might not know the backup, you might not like the backup, but it's always there. Know, there's always another lender. There's always another company that's going to provide marketing services. If you can't mail anymore, you can always pick up the phone. If the cell phones go down, then we're all fucked anyway, so don't worry about it. Carrier pigeon. Yeah. Then your your your goal should not be to do real estate anymore. It should be to figure out how we're gonna survive the problem that we have.

Dylan Koch: [22:15] Two things I wanted to touch on real quick related to these points is, I actually did buy like, let me see if you'd buy this deal on the front end. ARB is probably at $2.20, and I bought it for 160,000 as a whole tail. So it's pretty thin on the front, what'd think?

Mike DeHaan: [22:30] Well, so it depends. I know you're an agent, so you're gonna list it yourself. Yep. Are you buying it cash? Yep. So like no loan at all?

Dylan Koch: [22:37] Oh no, we bought it with private money. So $11.11 and one private money on full purchase price.

Mike DeHaan: [22:43] Okay. So what? $2.30 every $2.20? With $1.60? That is tight. I don't know if I would do that. If I was buying it just with my own cash, totally, I would do that because I have no, like, recurring loss that'll happen besides property tax, which would be minimal. Because I mean, if you end up having to sit on a thing for six months, right, all of a sudden, that's an extra, like, $10. Now you're at $1.70, and you're still gonna have your selling cost, and you're getting real tight real quick.

Dylan Koch: [23:10] Yeah. I guess the only reason why I felt confident doing this is one is I know the area super well. I walked it myself, and literally I put $5 into it, like as far as the rehab, obviously there's some more carrying and holding cost with that. But we're under contract to sell in 10/18, and I think I bought it on 08/30. So forty five, yeah, forty five day hold even with being on market, and we're gonna probably net 19. But those are just like the deals that come in that you still have to be able to capitalize on in my opinion, because a lot of times you're not gonna get the 75% minus repairs on every deal.

Mike DeHaan: [23:44] What was the situation with the seller?

Dylan Koch: [23:46] They wanted to basically move. They just wanted to find somewhere else to go. They were on a foreclosure list, but they had like resolved it, but they were still on the list. And they just wanted to move out of their house. And honestly, like, was like, I'll take 160. And she wanted to convenience over anything else. I didn't even fight her out her number.

Mike DeHaan: [24:02] That's like the perfect one where I would probably try to, like, do a novation on that, especially if you're confident you can sell it quickly. Because you could even probably get them a little bit more money, and then you don't have to take any downside risk.

Dylan Koch: [24:12] That's true. Yeah. I didn't even consider that an option, but you could.

Mike DeHaan: [24:16] That's why you're in scale, Dylan. Should've should've brought you the call.

Dylan Koch: [24:19] I'm I'm not gonna lie you, this for the audience, I've tried to do innovation twice and both times, like the the title companies were like, this is fishy. Like Really? Yeah, both times. And it's not my preferred title company because the buyer picked it, but but they neither of them worked out, so.

Mike DeHaan: [24:34] Interesting. Yeah, we've only done a couple, it really depends, but.

Dylan Koch: [24:38] What else I wanna say, with the interest rate thing, the other thing I wanna talk on other than flipping and wholesaling is I bought rental properties with five one arms. Now we're about two or three years into those, but I guess that would be another thing to consider following these interest rates if you're coming up on an arm. Do you have a max interest rate? What are you refinancing into? Is it still gonna cash flow at those new interest rates? Those are asset management things that you could consider on the buy and hold side of the business.

Mike DeHaan: [25:04] This is such a valid question because we are facing some of these coming up because we bought a lot of our stuff in 2020 with commercial loans that have five year adjustments, which will be putting us in 2025 in the fall. Okay. Those will be coming up, and we're trying to decide if it makes sense.

Dylan Koch: [25:20] Do you know about approximately what those rates are when you with the the five ones?

Mike DeHaan: [25:24] I think it's like just prime plus one.

Dylan Koch: [25:25] Okay.

Mike DeHaan: [25:26] But we're out like three right now.

Dylan Koch: [25:27] Yeah. See. And you might be going to six ish?

Mike DeHaan: [25:30] Six.

Dylan Koch: [25:31] Yeah.

Mike DeHaan: [25:31] Yeah. Yeah. So I don't know. I mean, I would say that that's something to be cognizant of as well is if you are running your marketing campaigns, start to especially as we get later in 2025, start to hit absentee owners a little bit more. Cause there might be a lot of people that are on these, like, five year arms. Like, a lot of people were getting during, like, the super low interest rate period that are gonna be in for some tough decisions.

Dylan Koch: [25:54] Uh-huh.

Mike DeHaan: [25:54] And would probably be willing to give you a decent deal just to not have to suddenly jump up to 7% rates or they realize they're not gonna be able to send it on market because that roof that they knew that they needed to fix five years ago that they decided not to do for whatever reason. Right? Like, we had Shelby on the show a while back, and she said so many people are going through that scenario right now where they bought it and they go, that roof will be fine. I got five years on it. I said, well, five years is right now. Yep. And time fucking flies, and you better figure it out.

Dylan Koch: [26:22] Yeah. Totally. And you're gonna have these capex issues. Along those lines, I track foreclosures on a weekly basis. And we've been consistently between the four counties that I do this with, it's usually between twenty and thirty a week. The last couple weeks, it's been 35, and 40, then 45, and this past week it was 56. So I don't know if that's a trend, but it's just something that maybe things are starting to set out for some of these people.

Mike DeHaan: [26:47] Totally. Yeah, and I mean, don't think that's gonna change. Mean, it's been coming for, like, a long time. I think it was last Christmas. They said that most it was a crazy number. It was, like, percent of the accounts that have been opened at Chase were down to, like, under a few thousand dollars. They had, like, started higher. Like, it was, like, really starting to go, and their whole thing was that everyone's, like, COVID savings were starting to run out. And, I mean, that was a year ago. I mean, you can see people struggling out there. It's not like cost of living has gone down. I mean, in our our lead flow has increased a ton from people that I would say are more like normal people, people that are like, I am in a really bad spot, which makes transactions better because you can usually more mutually beneficial, and they are more willing to have a good conversation. But it's definitely not a great, like, bullish indicator for how the general economy is looking. But, yeah, we'll see. I don't know. Like like I've said on on other shows before, right now, you should be doing everything that you can to try to get to a financial enough position that if weird shit does happen, that you can kinda just deal with it. Or capitalize on it. Or capitalize on it if you're ambitious or just deal with it if you're wanting to just, like, have some security. Because I really think that this middle class is gonna keep getting pinched tighter and tighter and tighter and tighter, and that is not going to stop for the foreseeable future.

Dylan Koch: [28:08] I'm with you. I'm in the sim camp.

Mike DeHaan: [28:10] My doomsday for all you guys. Don't be poor. Do everything you can and not be poor. That generally makes life easier. Just just on average. Like like people with money, they might not always be happier, but I tell you what, they have a lot less bullshit problems, and that's just the truth.

Dylan Koch: [28:25] I mean, was it like fifty percent of divorces are financial related? Yeah. This maybe saved your marriage.

Mike DeHaan: [28:31] Yeah. On both sides. Right? Half of them because they have financial struggles, the other half because they're like, we're rich and well, it's usually guys. Like Jeff Bezos is like, I'm rich, and I wanna fuck someone who's half my age and Latina. So gonna make

Dylan Koch: [28:43] So that okay. We're not talking to point 001% of the population.

Mike DeHaan: [28:46] That's true. That is actually a pet peeve of mine is when people, like, use them as, like, such an extreme example to represent, like, all rich people. Right? And I'm like, you realize that there is literally millions and millions of people that are rich that aren't dirtbags that are literally, like like, a rounding error. Their entire round net worth is a rounding error of guys like Jeff Bezos and Elon Musk, and they should not represent the entire population of people that are well to do because it just doesn't make Totally.

Dylan Koch: [29:15] I forget the statistics, but if you take the average of The US population net worth, it's in the same number. But if you take the median, it's a much smaller number because you're taking out those, the people at the point 0001%.

Mike DeHaan: [29:29] Yeah. Which is just how works. Yeah. Which just isn't even, like, close to, you know, people that are that are, I would say, like, are wealthy on an average level. Like, you think about the people that we know that are worth, like, $102,030.40, $50,000,000.

Dylan Koch: [29:43] I

Mike DeHaan: [29:44] mean, like, when you're a $100,000,000,000 net worth, you don't even you have to, like, scroll on, like, sideways on your fucking bank account to see the that that amount. Yeah.

Dylan Koch: [29:53] Throwing in always end up horizontal. It's like a story

Mike DeHaan: [29:56] that you zeroes down. That's the goal. I wanna be rich enough that I have to just have my phone in horizontal to see the bank account, see how much money is

Dylan Koch: [30:06] in there. New goal unlocked. Love it. Yeah. Right.

Mike DeHaan: [30:09] So cool. Awesome. Well, that's a good place to wrap it up. Dylan, thanks for hopping on, buddy. And everybody, thanks for listening. Hopefully, I don't know you can sleep or you're not too stressed. Either way, just take care of yourself and focus on bringing people value. You'll be fine. Totally. That's that's the most important thing you can do. So thanks for listening, everybody. We'll talk to you guys next week.