Landlords Make Landlords Look Bad

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 the Collecting Keys Real Estate Investing Podcast. My name is Mike DeHaan. I'm here with Dan Austin. How are doing today, Dan?

Dan Austin: [0:39] I am doing good.

Mike DeHaan: [0:41] It's a great Friday. Yeah. I've been on kid duty today.

Dan Austin: [0:44] Yep. Yeah. I kind

Mike DeHaan: [0:45] of been a busy day.

Dan Austin: [0:46] It's been triple duty taking care of, my daughter, Livy. But that's fun. Good time.

Mike DeHaan: [0:51] I mean

Dan Austin: [0:51] Nice to be able to do that.

Mike DeHaan: [0:52] Yeah. I mean, because probably good. I mean, where's the nanny though, man? You're all so successful over here with this business. I know. You know, I feel like I feel like that's when you with the nanny. You know, the absent parent likes only people that

Dan Austin: [1:05] we know. I'm all in on the life assist. I think the life assist is a better investment than the nanny because the nanny is, like, focused on your kid and, like, you know, you can you can pay other people to take care of your kid. But someone to take care of the little crap that just you have to do, like, hey. Call people. Think, I don't know. Yesterday, day before, I I think I was, like, talking to, like, people. Like, little minute tasks having to call to organize things for probably five, six hours.

Mike DeHaan: [1:29] Yeah. Just a little bit of Yeah. You wanna spend time with your kid though too. Yeah. I mean, I I think that's a lot of people's, you know, that that's why they hire the life assistant so they can, you know, not have to have nanny anymore. Right. Instead they can have well, I guess, you know, what like, how do they describe a life assistant at the at the meetup? Like, what I guess.

Dan Austin: [1:48] I don't know. I didn't pay too much attention to how it was described, but, like because I think some people might use it differently than I would.

Mike DeHaan: [1:55] Attention. You fall all the way down to Florida to not pay attention at

Dan Austin: [1:59] the No. I mean, not I don't mean that. Like, I didn't take too much, stake in, like, how I think it's, like, however you want. Like, I wasn't like, oh, that's how I do it. I just think about, like, the little stuff that you could have somebody do. And like, my daughter's old enough now where like a nanny isn't like, like, she'll take care of herself. Like she learned how to zipper coat herself like two weeks ago. So like, we're already like, she's almost 18. Right? She's self sufficient.

Mike DeHaan: [2:23] Yeah. I guess for for modern kids that might be the new barrier. They're ready for college.

Dan Austin: [2:30] Right. But yeah, mean, just like running around town, it's weird too. Like, you know, I've been working remotely for a couple of years now and like leaving my house is like a thing. Like I got, you know, I don't know. It's just like a thing. And so like, if you could just have somebody in the morning, bring you the crap you need and have run around town, make all the phone calls you need. Cause there's so many little teeny tasks throughout your day that if you could hand those off, like, they're not necessarily worth automating or you can't automate them. But if you could just, like, push it off onto somebody, then they can take care of it.

Mike DeHaan: [3:00] Yeah. Well, even, like, dumb stuff, you know, like, you know, paying your utility bill or, like, you know, responding to whatever thing comes in the mail from your bank or whatever. Like, stuff that you can't quite automate, but it's so easy. I mean, it to just, like, sit on your desk Yeah. And for you to not actually respond to it. You can see why, like, really successful people have, like, family offices and that sort of thing.

Dan Austin: [3:25] Yeah. I mean, yeah, you definitely yeah. I mean, I've got, like, my, like, my line of credit is a pain in the ass to pay. So, like, they mail me an invoice. And because when I was doing it, I didn't sign up with a bank account or whatever, which is my mistake. And so I need to go there and sign up for a bank account so that I can have it automatically withdraw out of it so I don't have to worry about paying it because, like, that line of credit's gonna go up and down all the time, right, depending on what, you know, we're using it for. But then it sits on my desk until I have to absolutely pay it before it's late. And then I have to go there to pay it because it's going to be late. Right. And so it's like, well, if I could just have somebody like call and set this stuff up or take care of it for me, I wouldn't have to do that. Talking about, you know, things just sitting on my desk.

Mike DeHaan: [4:07] Yeah. And not only that with your personal stuff, but now with, you know, all the different entities that we have, you have the same shit come for all the different entities all the time that has their same, you know, monthly tax bill that we have to pay, or like the license that we have to renew, whatever. It's funny thing. It's so difficult. Most people think they're so busy with actually their own personal stuff. Also, you throw in half a dozen entities on top of that, which all have the same responsibilities. Yeah. You know, you can really see how people get into that like messy middle sort of phase of entrepreneurship where you're not like quite a one man show anymore, but you can't really hire like an admin for $60 a year to like handle all your stuff. So things are just kind of, you know, a tornado of nonsense constantly.

Dan Austin: [4:55] Yeah. Yeah. I feel like that's why they probably say a lot of small business owners like are a wreck, like as far as like they're just organization, it's because there's just so many things to do and you just you're always looking at, like, growing the revenue. Right? And you and you know you have to do the other crap. You just don't do it because you're focused on growing the revenue.

Mike DeHaan: [5:11] Yeah. You know? And then on top of that, you're trying to spend time with your family, do the grocery shopping, some sort of social life, get some sort of sleep, take care of yourself. I think that's one of the things that was a good sort of discussion point at the meetup last week. Was, you know, it's very easy to be really good on like one facet of your life, be that, you know, fitness, family, business, whatever, but you have to let all the other stuff go. Like, you know, as a trade off versus, you know, like balancing all those things is really, really challenging. That's why I see so many people who are like successful business owners or successful athletes or whatever. And then they die when they're like 45 years old because like their health or whatever, everything else just like sort of went sideways on them.

Dan Austin: [5:57] Right. So so what are you focusing on? Because you're not focusing on fitness Cause I know I could beat you in a weightlifting competition.

Mike DeHaan: [6:06] Get out of here. You can beat me on like a five k run and that's about it.

Dan Austin: [6:10] Don't even give it out.

Mike DeHaan: [6:11] Maybe like a three day mountain climb. You know, you beat me on that. Yeah.

Dan Austin: [6:15] Give me anything that takes, like like, just stupidity to just keep pushing yourself, I'll do that.

Mike DeHaan: [6:20] Yeah. Well, I mean, yeah, you you have the the background of being an RV ranger for, what, seven years or whatever. Like, I'm never gonna do anything that's as stupid as the shake you guys did out there. But now I'm just an

Dan Austin: [6:32] old guy that used to do that.

Mike DeHaan: [6:34] Yeah. Right? Well, mean, either way, that stays with you. Yeah. But No. I don't know. Yeah. Don't know. My my my I mean, for me, that's a good question though. I mean, that is a a struggle because my focus has been on the business side of things pretty heavily and the financial side of things. And, you know, my I am fortunate that I came into this position with a decent enough, I guess, health and fitness background, but, it's not really work for me to do that. You know, like maintain not being completely useless. Got a good base,

Dan Austin: [7:03] a good base

Mike DeHaan: [7:03] Yeah, of good base, right? Yeah, exactly. You know, base base level of fitness and then same with like my relationship with my wife. Like we have a good base, so it's not really difficult to maintain that. Sure. But you know, I think it's a lot of people that go into struggle with turmoil or like neglecting other parts of their life. That's what

Dan Austin: [7:21] get right. Yeah. It doesn't get better. It doesn't make it any I

Mike DeHaan: [7:24] know. Right. Know, it's like people who who have, a troublesome relationship, and they're like, oh, now we're gonna try to have kids to fix it. It's like, you're gonna bring an extra stressor into your stressor. It's like, that's not gonna work.

Dan Austin: [7:34] Yeah. Don't do that. Yeah.

Mike DeHaan: [7:36] Anyway. It's like that's I feel like that's new age entrepreneurship is trying to figure out all that to have a better whole life, but it's something that is super valuable to people.

Dan Austin: [7:46] Yeah. I saw a video. I can't remember where it was. It was a stupid video, but it was like the dude talking about, like, why it's so hard to, like, hire people right now. And he's like, yeah. Because people figured out they don't wanna work for your dumbass for minimum wage and go and, like, like, do a hustle and, like, make just as much money or have that freedom to have that well balanced life. And that's like, was like, that is so true. Like even in $70.80000 year job, a lot of people are like, Nope. Not working for you for that much, you know? Yeah. So

Mike DeHaan: [8:14] Cool. I mean, that brings up a great question. I mean, it is easy to make a general living if you're a put together person and you're a driven person, you know, to be able to pay your bills. Like, it's hard to get rich. If you just like to have, you know, you own a house and you have like a fixed mortgage payment that you can afford, you know, you have your general living expenses. Like, I mean, the average person, average household, like looking at, you know, my wife and I back before we started inflating our lifestyle a little

Dan Austin: [8:43] Yeah.

Mike DeHaan: [8:44] That happens. We could live on like, know, $4 a month, $5 a month as a household with no kids. Easy. Honestly, know, we had our mortgage payment was like $1,200 a month. You know, we had spent like, you know, certain amount on food and we even ate, know, good. We meal prepped all our stuff. We didn't eat out an insane amount. For two people to go and hustle and figure out how to make $5,000 a month, honestly, is not difficult. No, no, that's not. Like, you know, if you wanna do all the gigs and stuff that are out there, you know, you you can go drive for Uber, mix with doing some Rover, you know, mix with selling some shit on eBay, mix with I don't know. What what else what else people do? Like, just Odd odd know. With a TaskRabbit. Do we have that here? Right. I don't

Dan Austin: [9:28] think we have that in Spokane. We need that in Spokane because I could use the hell out of that.

Mike DeHaan: [9:31] Right. But like, it's not it's not difficult. I mean, back when I got laid off from my my development job, you know, right when COVID first started, I was driving for Uber. I was making, you know, $400 a week doing Uber Eats for like a couple hours a day.

Dan Austin: [9:45] It's pretty awesome to be able to

Mike DeHaan: [9:47] That's not that's not bad. I would drive from five to 7PM, like pretty much Monday through Saturday. So it's that like ten hours, twelve hours. And I'd usually make between $350 $400 And that was include that was that's considering my gas cost. Wow. You know, so if I did that every single week, what's that $1,600, you know, and then I use the other twenty hours, not quite twenty hours. So I had to sleep. The other like twelve hours I had in the day to go and do something else. You know, it could very easy figure out where to make a thousand extra bucks a month. Totally. Totally. Anyway, probably sound like a bunch of rich assholes even saying shit like that because all the people that we talk to all the time that, you know, have, like, a household income of $1,200 and just three adults, and I can never figure that out.

Dan Austin: [10:33] Yeah. It's about education. Right? I mean, that's what it comes down to, educating yourself on what's beyond kind of the things that you're taught in school. Yeah, there's definitely much more than state funded education through the public school system and learning how to, I don't know, whatever they try. I don't even know what they're trying to teach you in math, sciences, all that crap. To go get a job. Like there's other education. If you can educate yourself a different way. Yeah. You're you're gonna be out that mindset you're talking about. You're gonna be able to do that. You're gonna be able to go and wholesale 14 houses in a month.

Mike DeHaan: [11:08] Yeah. Right. Or whatever we

Dan Austin: [11:09] did last month. I'm just trying to brag.

Mike DeHaan: [11:11] Yeah. So I I said you want you want the actual statistic. I actually I ran our KPIs yesterday. So since October 1 through yesterday, we've signed 14 contracts.

Dan Austin: [11:23] Perfect.

Mike DeHaan: [11:24] So, yeah, that's, you know, just over two per week. I mean, we've had a couple go sideways for various reasons. So, you know, out of those 14, we should probably close 10 at the end after it's all said and done. But, I mean, honestly, if you look at kind of the nature of this business, that isn't too bad. I think anyone that has a 100% close is probably missing out on a lot of stuff. Yeah. And also to you, the situation that we have missed have been pretty extreme situations of Oh,

Dan Austin: [11:52] sorry. My daughter's joining me. She's bringing me some treats

Mike DeHaan: [11:57] for the podcast. Keep me energized. That's just what I need. But the ones that have outside are in pretty extreme situations. You know, we have the kidnapping guy. You know, we have the guy that didn't show up for closing. Is that an October one? I don't remember. We had the one where there was basically that we this one, the tenant was trying to exercise a lease option. He sell to us. And then the owner of the property who was supposed to be selling to the tenant decided that they didn't wanna follow through with it. So that kinda went sideways. You know, all just outstanding stuff. But, you know, it's gonna happen. Yeah.

Dan Austin: [12:35] You can't win them all, but it's good to be, you know, in the game, right, for that many contracts as opposed to we maybe got one this week or whatever. You know? Exactly. So then if we're gonna close 10, I'm just trying to kinda pull the thread on this. Like, what are we looking at as far as revenue goes, you think? Because I think all 10 of those would be trying to think through them if any of them would be a flip for us or buy and holds.

Mike DeHaan: [13:03] Well, the eight unit. It's a buying hold.

Dan Austin: [13:05] Oh, yeah. That would be a buying hold. Okay.

Mike DeHaan: [13:07] Yeah. So you'd print that out. Outside outside of those, they'll be what? You have a flip in there? We might I don't remember. I can pull up

Dan Austin: [13:15] our thing. No. Because we're gonna sell that to the act our act manager.

Mike DeHaan: [13:18] Oh, that's true. Yeah. So out of all the ones that we have, we about I think what we come down to, like, a buck 20 in revenue across everything. We have a couple that we haven't assigned yet. So I best bet we did 120, 140 in revenue, probably.

Dan Austin: [13:38] It's pretty awesome. Yeah, I

Mike DeHaan: [13:40] can't complain about that for a month. Know, by that, that is all compounding over the past couple months. Because the reason the month was so crazy was because we spent significant marketing in basically August up until October. So the other thing too was a lot of these deals that we got, we mailed back in, like, August. Yeah. Yeah. You know, and we're talking to them for the past several months and we had the follow-up process and everything like that.

Dan Austin: [14:02] That's kinda what I think, like, when we're talking to people, like, new people that are getting in this is like, yeah, you can't just send out a batch of letters and then think you're gonna make money that same month. You kinda just have to consistently do it and, like, have this, like, expectation, which we didn't when we started, which is, this ninety day expectation. Like, if you start today in ninety days, you'll probably be making money. Yeah. But Exactly. You can't just send a batch and work.

Mike DeHaan: [14:26] What's up? If you're willing to put in the time, so you could also, you know, light a bunch of market money on fire and then not be willing to call people and work the leads. That would be a very easy thing to do if you if you want.

Dan Austin: [14:36] Yeah. Yeah. Yeah. No. And that's what I my next point too is those, like, if you're really into it, like that ninety days, so you drop mail. Well, you better be dropping mail that at thirty days, sixty days and ninety days again, because if you're just working the lead, you get in as they come out from that batch of mail. Cool. You got some contracts out of it, but then you're going to wait another ninety days from their contract. We're now in the set, in the set where if we're mailing consistently every month that we're always working those leads as they come in. Sometimes you get the lay downs, right. That are like two weeks to contract, but then you're working, you have all this backlog of leads that you're able to work. You can consistently close five, six, seven, ten deals a month.

Mike DeHaan: [15:12] Yeah. Exactly. And even then, I I think our our average time of a contact to contract is still about forty days. So when they when they first call us, it takes just over a month, which, you know, when you're starting out, it feels like an eternity because you need the money so badly.

Dan Austin: [15:27] Right. That's to is that to that's to close or to contract?

Mike DeHaan: [15:30] That's the contract. Yeah. So that's what I guess that's

Dan Austin: [15:33] where I'm coming with the ninety days because you got another thirty on top of that seventy five. So

Mike DeHaan: [15:37] Yeah. Exactly. So, you know, it takes three months to start getting any money back, but you don't have any money and you drop in $56,000 on marketing. That feels like a really long time.

Dan Austin: [15:47] Absolutely. But I also think that you made a good point too about, you know, we dropped some of the biggest batch we've done, but the fruits of that are showing and it kind of shows that, Hey, if you're working your leads properly, the more money you spend on marketing, it's pretty likely that you're going to make more money.

Mike DeHaan: [16:05] Yeah, exactly. You know, even though it can vary, you know, and every time that we do it, even still, it feels like I'm, you know, pulling the lever on the giant slot machine. But, you know, it keeps rolling around, you know, it hasn't failed us so far.

Dan Austin: [16:19] Yeah, can't complain.

Mike DeHaan: [16:21] It all kind of bids up. It's always seems to be too that if it's raining, it's pouring. Right. I feel like there's times like even even like I was talking to James, act guy, we went to lunch the other day. And it's like, last week was like super slow. But the week before I was slammed and this week is slammed. Mhmm. And I'm like, what is what like, but there's no difference. There's no there's no new mail that hit. It was basically just like everyone gets ready to go at the same time for some reason. I don't

Dan Austin: [16:45] know why. Something happens out there in the cosmos. I don't know what.

Mike DeHaan: [16:48] Full full moon. We start checking the moon cycles. Probably something that's lining up with people.

Dan Austin: [16:54] That'll be interesting to see how, like, December goes, as we get in the holidays. Because, you know, everybody talks about it slowing down, but, I mean, I feel like, you know, we're in our groove too to see, like, what does that look like Mhmm. You know, if we're gonna actually, like, have a dead month or people are still ready to sell. Because I feel like we last year, were still contracting stuff in the throughout the holiday time frame.

Mike DeHaan: [17:15] Yeah. We got some of our best ones. Yeah. We got some of our best ones last year. We got what? The Montgomery Duplex. We got the Cedar Flip. We got both those in December last year right before Christmas.

Dan Austin: [17:25] That's right. Yeah. Yeah. So I think Hutchinson, we got, like, November, didn't we? Because I don't think we started rehabbing that until

Mike DeHaan: [17:32] Yeah. We're, like, October, November.

Dan Austin: [17:34] Yeah. So Yeah. So anyway.

Mike DeHaan: [17:38] So Yeah. Exactly. But I know when were going through some of our leads today, I kinda had this like this moment of what's the right word? Like it's like almost like reflection or like almost like was almost like a little bit of depression that came up as we were looking through our different stuff. And I was like, how fuck, how shitty some of these properties are? The fact that there are people and they're all occupied, that there are property owners out there that put tenants in some of these properties and like, just allow them to live that way. Like, we were trying to talk about it after a meeting this morning. Was like, this is why people think that the states should regulate landlords. Cause they're like, they're living in like the worst possible living environments you can imagine. Cause the because the landlord just refused to take care of their properties. You know? And the thing that And it's so crazy. And I think that fucking sucks about it is those are always the ones that like the impossible contracts to get. Because the people are freaking greedy. They're like and they're like, oh, no. I'm not selling this property. It's like, I have some family pinned in here that has no choice to go anywhere because they have no credit. And, you know, I'm just gonna basically let them live in this filth and run the house into the ground, you know, and it sucks because then like that goes out in the news, everyone's like, we need to regulate landlords. Then you look at like all of our places, draw nice and dialed in. You know, we got good families and all good tenants and all of them.

Mike DeHaan: [19:10] It's like, yeah, no one's gonna complain about that, but we're gonna get slapped with the same BS that the

Dan Austin: [19:15] Oh, absolutely. Yeah. Yeah. It's super frustrating. And for you to call house shitty is pretty big because I feel like all the dealers are like, this is great deal. I'm like, that's kinda shitty. But we still make

Mike DeHaan: [19:26] out so far.

Dan Austin: [19:26] They've all worked out. Yeah. Yeah. But, yeah, some of those photos, was just like, come on. Are you kidding me? Like, how do you even allow that to happen? Yeah. Like a hole in the roof. Yeah.

Mike DeHaan: [19:36] Well, I like, that's what James said. The guy at one of the houses was like, yeah. There's a big hole in the side of the house and there's animals living in there and we can hear them every night. You know? And then you look at the exterior of this photo and there's of this property and there's these huge holes in it everywhere, like all the siding stripped off, there's like water damage, there's mold. And there's like three units in this thing. But these people that are just stuck there because, you know, they can't go anywhere else, you know, and it's like, yeah, I don't wanna necessarily fix up the money, but picks up the money. There's no upside, but still they let it get to that position in the first place.

Dan Austin: [20:11] Yeah. And I mean, I don't know. I feel like we own quite a few properties. I just can't imagine one of our properties getting that bad. No. And that's also why I'm like pro, like fix the problems up front. I know a lot of folks that want to try to get into property as, as little as possible. But if can buy it at a discount and you can still burr most, if not all your money out of it, you're still ahead. And so if you have a little bit of siding issue, like repair it because that will get bad. If you have a roof issue repair it, because it's just like, it compounds over the years. Cause like, I don't know about you, but once we get it stabilized, like I don't think about a property. Right. Like it just keeps going. Right. Unless, you know, obviously the, the, the work that you got to do to keep the lights on and all that sort of stuff. But like, I don't think about, I haven't thought about Hutchinson in a while. Like, other than wanting to kick out the one dude tenant so we could raise rents and remodel that unit so we could raise rents on on it just because that's a better ROI for us.

Mike DeHaan: [21:06] But at the same time, I mean, we kinda leave them in there because a, the unit's fine. You know, like, I need somewhere to go. It's not causing any problems. Mhmm. You know? And I can't yeah. Exactly. And it's a decent unit at the end of the day. Yep. Like, honestly, for us to wanna adjust it is would be a better financial decision. Like, you know, like big picture, I guess, but at the same time, it's like, I don't know. It's a nice place. And like, honestly, I don't know where else that guy would go. So we'll just leave it.

Dan Austin: [21:30] Yeah, I don't know either.

Mike DeHaan: [21:32] Whereas whereas I feel like what a lot of other landlords do is they would either kick him out and be like, cool, not my problem. I need the extra couple $100 a month. Or what they would do is they would just let it go into squalor because the guy's underpaying, which I mean, that's what the previous owner did before we bought it. Yeah. You know, that place was, you know, decently rough before we picked it up, put a whole new roof on that thing. But I know it's just super fascinating. You know, some of the stuff is crazy. And now in Knoxville too, the slumlords are holding another level. Some

Dan Austin: [22:03] of those pictures are bad.

Mike DeHaan: [22:04] So bad. This is like the freaking kitchen. It looks like the rainforest cafe in there with all the mold hanging down from the ceiling, and there's people that live there. Jamie went off of that dude $8 for the house today.

Dan Austin: [22:17] Did he say yes? No. I don't think so.

Mike DeHaan: [22:20] But, like, like, you can't save the house. Like, the houses aren't worth that much. And, like, you look at the paper trail, the guys own the house for, like, fifteen years. There's no way it's been like that the whole time.

Dan Austin: [22:30] Is he a local investor or out of town investor?

Mike DeHaan: [22:32] It looks like he's local. I mean, their mailing stuff is in in town there.

Dan Austin: [22:36] Wow. Well, I guess that goes to the I don't remember. We were talking about a while ago. Was like, oh, down here, we just make them nice enough and throw people in it. Yeah. It's like,

Mike DeHaan: [22:46] alright. Yeah. That one guy that we talked to, he was kind of saying is they basically buy it and he picked up like one thing so that you can sell it to the next person. So I forget what that property was, but you could see the transaction. Like one person had bought it for 6,000. One person had bought it for like 9,000. One had bought it for 15. The guy had recently bought it for 18. He was trying to sell it to us for like 22. I'm like, why? Like, and the place was like not livable.

Dan Austin: [23:12] Yeah. Yeah. Some of those places too, you're just like, how? I I can't even fathom it. Like, that that's a possibility that someone would live there. Because, like, there's still nicer units that would rent for the same amount of money. But some people also like the tenants in some cases do choose to live in those, those areas. But yeah, definitely. You know, you heard my opinion on this, which is like, Hey, I feel like they should hire some city inspectors. And if there's a landlord that's got a house like that, you should put a lien on it. Like, don't make it, don't screw me over, you know, cause I'm a good landlord, but go after those dudes that are buttholes. Cause it's, it's not just about the tenants. Like, yeah, that's one thing, but it's about the neighborhoods. Especially if you own that shitty house in my neighborhood, where it's bringing down my property values and everybody else's property values around them. And it's also a risk. And it brings in people like squatters because they're like, nobody cares about this house.

Mike DeHaan: [24:03] I know.

Dan Austin: [24:04] Right? And they just start doing weird stuff. Yeah. And then letting animals live in the damn ceiling,

Mike DeHaan: [24:10] Yeah. Well, mean, that I mean, that's a whole other dilemma too is then you get the bad tenants in there. As long as you do have a decent landlord, but then you have bad tenants. Although I feel like if you have a an on top of it landlord, you very rarely have bad tenants. And except for the situations that we see where there's like an older landlord who would just like way too trusting with people. Yep. You know, but but then you have some of them like like a lot of the houses are trashed by the tenants because when the tenant moves in the house already trashed, they're not gonna take care of it. You know, when they're in there. It's like, it's like, you know, you if you get get a rental car and the rental cars all beat to shit, are you gonna care if you like wing the door on something as you're driving around like a parking garage?

Dan Austin: [24:51] No. Of course not.

Mike DeHaan: [24:52] But if they, you know, if they gave you one that's in like great shape and you like whack the door on the side of the parking garage, you open it up, you'll be a little bit more confident. Yeah.

Dan Austin: [25:00] Exactly.

Mike DeHaan: [25:01] Yeah. It's very good point.

Dan Austin: [25:03] Yeah. I know they do some weird stuff.

Mike DeHaan: [25:04] But, yeah, James went to the other one today. They called me The basement was full of dog and cat shit. And he was there with like a realtor that like hadn't seen the house yet. And basically, people were like, oh, yeah, so this cash buyer is gonna come look at it. If we can't agree on a price with them, then we're gonna use you to list it. And the realtor, like, walked in the house and immediately started, like, dry heaving because it smelled so bad. And, like, literally, the the entire basement had a layer of cat and dog shit everywhere. And there are people living in here. Right? And these are these this exact situation is there's the crappy landlords, you have this property in like a nice little cul de sac. And this property has like a tarp instead of a garage door. You know, it has like, you know, the windows are all busted and there's tenants in here. And I'm like, what is like, what came first? The property or the tenant?

Dan Austin: [26:00] Right. How do you allow like, how do you live with the poop? James is probably in there. He's, looking at the realtor. I can just imagine. He's like, oh, this ain't bad. Don't worry about it.

Mike DeHaan: [26:09] That's exactly

Dan Austin: [26:13] Oh, that's great. It's fascinating. But Yeah. People people are I don't know what the right word for that is. Terrible. I don't know.

Mike DeHaan: [26:21] Something. Yeah. Well, I mean, yeah. It makes it's a it's a tough it's a human problem on both sides. Right. You know? Because yeah. Like and I don't know. You can point fingers at one way or the other and depending on, I think kind of what position you're in, you'll side with one side or the other. You know, like all the tenants always think that it's the landlord's fault, the landlord always thinks the tenant's fault. Right. And it leads into this big circle that kind of just comes down to, you know, everything ending poorly, but then the regulators, obviously not going to go after the people that don't have any money. They're going go after the landlords who are, you know, fortunate enough to have the properties and where the ones end up getting slapped, like having to do inspections or all this sort of stuff. You're starting to see that places too. And if you probably own in Minnesota, you're required to get an inspection once a year and have a license to be a landlord over there.

Dan Austin: [27:09] What is the cost of the inspection?

Mike DeHaan: [27:11] It's not a lot. It's like $20. It's a pretty cheap it's an extra $20 a year that, know, you gotta pay. And then they come out and they basically look at your property or you have to have a you can get it waived because you'll have to pay for the license fee if you have a property management company. But if you're like a mom and pop landlord over there, you have to get inspected by the city once a year to make sure your property is decent.

Dan Austin: [27:34] That's reasonable as long as they don't like walk through the property and just look at like, well, the electrical's up to code and the plumbing's not leaking. Like, as long as they're like, hey, this is a pile of crap house. Sorry. Yeah. You're not renting it out. You know what I mean?

Mike DeHaan: [27:47] Yeah. Or I mean, I I think it could go two ways. Right? Because there there could be either I feel like there could be a situation that they're going through and they're like, oh, you know, there's there's chipped paint on the baseboards. Right.

Dan Austin: [27:59] You

Mike DeHaan: [27:59] can't rent this house. Yeah. That's gotta be perfect. Or it could be the situation where the house is terrible and they're like, well, it's functional. So we're just gonna, like, gonna let it slide. And that creates, like, another problem altogether.

Dan Austin: [28:11] Yeah. What'd be interesting, though, is, like, there's no way to do this. Anytime the government gets involved, it gets too bureaucratic and bullshit. But, like, you know, if they had an inspector that, you know, like had like the same neighborhood or same 100 houses or something. Right. And so they could see if there's, you know, degradation over a period of time and then like, see if something's going on. Cause that's kind of what seems like happens sometimes is like tenant decides that they're going to be a meth head halfway through their lease. And then they're all of a sudden they're ripping shit out of

Mike DeHaan: [28:40] the walls, you know, and

Dan Austin: [28:41] the landlord has been cruising on this thing for a while and he has no idea. Right. And then they stop paying and all sorts of stuff happens and you go in there and you're like, oh man, now the house is a piece of crap. Landlord rents it to some other method because that's the next willing and paying person to live in a shithole. Yeah. Or like the

Mike DeHaan: [28:59] or the tenant leaves or like yeah. Exactly. Weird stuff happens. Like there's that one that we walked with Homefront last year, that basically there was the guide bought it, he'd rented out to a couple that was like child checked out. And then the couple, the husband, they like went to jail. Okay. And the landlord wasn't the owner. So then the wife got a new boyfriend who went into the house. The new boyfriend who wasn't on the lease kicked the wife out of the house. And then the house then the house basically became a revolving door of prostitutes. Like, that never stopped.

Dan Austin: [29:37] Oh, man.

Mike DeHaan: [29:38] You know? But it's like you can't you can't predict that. No. You know? So

Dan Austin: [29:43] no. Man, we are, like, really in the depths of property ownership right now.

Mike DeHaan: [29:47] Oh, I've been like, sheet can't make up the stories.

Dan Austin: [29:51] You can't. It's surprising. Like, in this business, the first thing I was surprised with is like, about how many people live. Like just weird that I don't know, scummy, gross, even in a nice neighborhood, affluent neighborhoods, even if they make good money, they're still disgusting in the way they live and take care of their home. Like, they don't clean them or whatever it is. Right? It's just surprisingly the population. I don't know. What do you think? Like, 30% of America's like that based on the number of houses we've seen here? Because it's not just our market. We've got two markets that we're marketing in, we see the same shit down there.

Mike DeHaan: [30:27] Yeah. And that they're exactly right too, even like the good neighborhoods. So we've been to a place where, like, both adults in the house and they have kids have, like, high paying jobs and like everything about them put together, but their house is just an absolute disaster. You know, with like, you know, major maintenance issues, you know, like packed, like stacked high piles of food everywhere, huge piles of garbage. And it's like in like, you know, an A class neighborhood and from the outside, can tell it doesn't look bad because the office can afford professional landscaping service. Right. You know, but they never got the shower leak fixed upstairs and now it's always, you know, a rainforest of mold to grow in their kid's bedroom. But yeah. Super interesting. I don't know. Maybe we just sound spoiled. I don't know.

Dan Austin: [31:15] Quite possibly, but I don't think that's the case. I I just yeah.

Mike DeHaan: [31:19] Yeah. Anyway, fascinating. That was a quick thirty minutes. That kind of a that kinda hits your time there. Any good lessons learned this week?

Dan Austin: [31:34] Yeah. Just like I don't know if there's a lesson, and maybe I'm repeating myself. But on some of the stuff, like, from the business standpoint, like, having that admin assistant type person to do stuff, like, I was just trying to organize telling you talk about taxes, like, you know, shit, you know, how many properties we have and the tax payments and all that stuff and trying to figure out a good way to track that and automate that so that, like, there's like a good single point of contact to go back and look at things and the different things we pay for, like usernames and passwords, how many of those I've got stacked up on a piece of paper and trying to figure that out. Like, I'm trying to set it all up to to have somebody do it, somebody else do it in the event that that happens. But there's just, yeah, there's a lot of little detailed stuff that catches up to you. I spent most of the week dealing with a lot of that crap and switching bookkeepers. I don't know what the lesson there is, but maybe it's like interview, like five bookkeepers and ask them to ask them questions about real estate because our, this is our third bookkeeper. Yeah. I don't know. Like, and they don't last very long And I have learned more than they know about it.

Dan Austin: [32:39] And so I was telling you earlier this week, like, should not open that up, the the QuickBooks and get immediately stressed out.

Mike DeHaan: [32:46] Yeah. You know? Like, I should just

Dan Austin: [32:48] be able go in there and pull reports instead of me having to, like, fix the bookkeeper's mistakes and be like, what are you doing?

Mike DeHaan: [32:55] That's literally yeah. 100% the opposite about a bookkeeper. In fact, the bookkeeper should be sending you the reports. So you know what's going on with your business. You don't have to think about it anymore.

Dan Austin: [33:03] Exactly. And I don't have to be like, how come you didn't do it like the rest of the books? Like, why is that property vastly different into the accounts than all the other, like, eight that are in there right now?

Mike DeHaan: [33:16] Yeah. So yeah. So did you fire them?

Dan Austin: [33:19] Yeah. Yeah. I yeah. And our our new bookkeeper is, like, $15 dollar $15 an hour cheaper. Perfect. Is that

Mike DeHaan: [33:26] the one in Spokane? Yeah. Yeah. Awesome. Don't know if they did that

Dan Austin: [33:29] yet, but I told them, I was like, hey. By the way, we're firing our bookkeeper. I know I was supposed to meet with you on Tuesday, but how about this? What do you charge per hour? Can you send me a zoom link so we can chat? So we're gonna do that and I can kind of quiz him and see what's going on. The tough thing is a lot of times the accountant is like, oh yeah, we got a good bookkeeper. And the accountants kind of know what they're doing generally speaking, then but they hand you off to their bookkeeper and their bookkeepers are not as savvy. Yeah.

Mike DeHaan: [33:55] Yeah. For sure. Well, we figured out because I gotta get on my books figured out too because our old ones are still doing mine. And I just did a bunch of refis this week and it's gonna completely change everything. And I don't even want them to touch it.

Dan Austin: [34:09] I just want them be done.

Mike DeHaan: [34:10] And I can just have the new people set it up and I can just move on.

Dan Austin: [34:13] Yeah. Yeah. You're gonna have some wacky stuff if you do that because I I can't even change it because I'm like, I don't even

Mike DeHaan: [34:19] know the logic to what they did here.

Dan Austin: [34:21] Yeah. Right. Yeah. It's pretty bad. But this is like a well established, like bookkeeping firm that we're not, it's not like fly by the night stuff that we're using. So it's just surprising. And sometimes I think it's also that they're, they're charging you to train people And the person, the bookkeeper that we're using, like the one that's, like, not the boss, but the one that's on our books definitely does not scream, I know what I'm doing.

Mike DeHaan: [34:45] Yeah. Well, I think also too, as you found over and over again, something like that, it's a specific type of knowledge that we need for our business versus, you know, if we were like selling widgets, it's very different. Much simpler. Way easier. Money in money out with us, we're doing the depreciation, the debt pay down, the appreciation of the assets. There's the CapEx expenses versus the maintenance versus the different kinds of income we have. Rental income is taxed differently than our wholesale and flip income. It just creates a fiasco of problems. Think the average bookkeeper can't figure out, but let me let me help nonstop. Yeah. This is why, you know, if anyone wants to be a business owner, I think it's easy or you make, you know, they don't, they think business owners don't justify the fat money that they can make compared to employees. It's like, because we spend our nights and weekends thinking about this shit. Yeah. And paying people stupid amounts of money. So like, you know, I look at this bookkeeper, we've gonna have wasted what, probably six or seven thousand dollars paying them to do stuff that we're gonna have to completely redo now.

Dan Austin: [35:51] Yeah. And that's the other point of my conversation with the new bookkeeper is like, dude. I just paid a buttload of money to reconcile these books. And I know you weren't the person that did it, but, like, how can we make this a little easier on the old pocket book here? Because I can't pay that same amount for you to re reconcile things. Exactly. I just want you to set it up and automate it and I'll do what I need to do to keep it going.

Mike DeHaan: [36:13] Yeah. Yeah. Makes sense. Cool. Alright. Good good place to stop, I think. Thanks for listening everybody. You can follow us at collecting keys podcast on Instagram. It's a little slow over there stills. We're getting everything set up. We'll have our website here pretty soon collectingkeyspodcast.com. You can follow me directly on Instagram at Mike underscore invest. You can follow Dan at investor man Dan. Go ahead and send us a DM over there. And then besides that, if you guys could subscribe and give us a review, a good review. You can keep your bad reviews to yourself. Good review on wherever you listen to podcast. No bad reviews. Appreciate it. And, see you guys next week.

Dan Austin: [36:56] Yep. Catch you all later.

Speaker 1: [37:00] 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.