Our Predictions for 2023 and the 3 Best Investments You Can Make

Mike DeHaan: [0:00] When times are good, you can, I guess, be a little bit more impulsive with your purchases? You can take a little bit more risk. You know, you can sort of stick your neck out there a little bit more. And it's easier to get FOMO when it's like that, but I also think can get away with it. Yeah. When times are kind of stagnant or they're going backwards, although I've been hearing a lot of people say that, you know, people are talking about 2023 recession. A lot of people are saying that the recession's already happened, and 2023 is gonna be kinda like leveling leveling out. Yeah. But when you start to get into that more negative period, it's always that fine balance of, like, you seem to be more selective about your deals, and you do wanna save your cash for when the when the best deals come around.

Speaker 2: [0:39] 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: [1:03] What's going on, guys? Welcome to the collecting keys podcast, specifically the Mike and Dan show. So every Wednesday, Mike and Dan, that's me. I'm Mike DeHaan. This is Dan Austin. We talk about everything business, real estate, the economy, and whatever else is on our mind at the time. So thanks for joining us today. This is this is the episode that you

Dan Austin: [1:24] can expect me, Dan, to bring the BDE, the Big Dan energy.

Mike DeHaan: [1:29] Man, that's like that's like I wanted that one. A terrible dad joke. Did your daughter tell you that one or what? But I hope she

Dan Austin: [1:35] did not tell me that one. She does say some funny shit, but she's not at that level

Mike DeHaan: [1:39] I'm gonna start I'm gonna start saying that around daughter. It's like, oh, like, she's like feeling sassy. It was true that she never talked to me, so was

Dan Austin: [1:45] like, is Some big dad some big

Mike DeHaan: [1:46] dad big dad energy. Yeah. She's gonna go to school and tell everyone she's got BDE today.

Dan Austin: [1:50] Oh, my god. Please don't bring that up. Like, I'm gonna get punished for all the shit that I used to tell my nephews when they were younger, when they were like my daughter's age. Used to say messed up shit to them all the time to get them to do stupid stuff around my brothers. I'm gonna get punished for that for sure.

Mike DeHaan: [2:05] Well, yeah. I mean, I hope so. It's only about that as Karb, especially because I think you got the lone daughter too. So you got a lot more to

Dan Austin: [2:11] I do. I've got the only only girl in the family. Uh-oh.

Mike DeHaan: [2:14] Anyway, so well, thanks for joining us today, guys. This is our well, I guess, for all of you, happy New Year. We are recording this before the New Year's, but you're gonna be listening to it afterwards. So

Dan Austin: [2:25] Post Christmas, before New Year recording?

Mike DeHaan: [2:27] Yeah. Yeah. For us, but the post New Year's release. Today, we are going to be diving into, I guess, kind of a look at where our business stands, and some of our predictions going into the New Year, and some of the stuff we're gonna be dealing with going into the New Year to hopefully help you sort of predict what you're gonna do, and hopefully overcome some of the bullshit that we're dealing with that come out to the end of the year. So anyways, guys, go and leave us a five star review if you enjoy this episode, and share it with anyone who has interest in real estate, finance, or any of that. That is the easiest way for us to start growing. So I'll start growing, continue growing. We've been growing pretty well, so I can't complain. So we have been having all sorts of fun stuff going on though to wrap up the year, especially with the weather associated. It all just seemed like it was, you know, rolling pretty well with a lot of our properties we were talking about. It's gonna be nice to have things stabilized a little bit. Right. And then we've just had, you know, as happens when you own a bunch of rental properties, just issues popping up, you know, which you Right.

Dan Austin: [3:25] Yeah. It's kinda funny how that happens. It's like everything's quiet for a long time, and then all of a sudden, it's just

Mike DeHaan: [3:29] like pop pop pop pop pop. It always comes in waves to you. I don't know why. Because we we were kind of in the clear for a little bit. But, you know, it's like, the weather definitely doesn't help, and this is one of the downsides of living summer where we have seasons. You know, you can see why people say, like, oh, I'm only gonna buy properties in the Sunbelt

Dan Austin: [3:45] I know.

Mike DeHaan: [3:45] Where everybody's old, so they don't hurt my properties, and they don't have weather. So if it ever breaks.

Dan Austin: [3:51] Seriously, like, I wonder what that's like because wintertime is, like, this time of year is just always seems to, like, think and it's because it gets so cold here. Like, the heat extremes that we get versus the cold extremes that we get, things like move in houses. Like, things break because they move, like, they shift. Right? Like, we had the big one we're dealing with which this is interesting. We should talk through this and I'd love to get feedback from any listeners that would would have done it differently, but we had pipes. I don't know that they froze or what happened because they were actually in the house, but they started leaking. So the kitchen sink started leaking. Two weeks before this, we got a request that the hot water tank was leaking and we needed to replace it. I was like, okay. And this this property was under a property manager, unfortunately. No more. We fired them as of two days ago.

Mike DeHaan: [4:37] Again, if you guys have listened to the past couple months, this is we've already fired for these property managers from other properties, so it's just not looking

Dan Austin: [4:44] good for So there's there

Mike DeHaan: [4:45] yeah.

Dan Austin: [4:45] It's not looking for them. So where was that? Okay. Anyhow, so we replaced this hot water tank. They cost us more than if we would have just done it ourselves, right, through our contractors, all that, whatever. Then fast forward two weeks to a few days ago, get a urgent call, which mind you, this is under property management. Why am I getting the call? I shouldn't be. Right? But it's like the tenant's last resort, she has my phone number from another issue that I made the mistake of texting her. This is like last year, stuff like that. Anyways, so what it comes out is is that underneath the floor when she walks on it, she's walking basically on water, but it's not wet, it's just the the floating floor is floating on freaking water. We had brand new flooring installed when we bought this thing, and so turns out so we we end up having to put her in a hotel room because we gotta completely rip all the flooring. So this is what we did. This is where I'd love to get feedback on what people have done. We've never had that I don't think we've ever had this major issue, or most tenants that we've had are like, no, I'm good. I'll chill. Like, if you guys just wanna fix that bathroom or you guys wanna do this. So this this tenant specifically is kind of a I don't wanna say pain in the ass, but she's, you know, just kinda is a pain in the ass. She sucks.

Dan Austin: [5:49] That's fine. So so we again, another tenant we placed. So we put her up in a hotel room and, of course, now she wants, like, meal tickets and stuff like that to, like, pay for her meals and all these sorts of things, and so it's like a 100. We're looking at, like, Airbnb's, couldn't find one anyways. I was like, just she has two kids. I was like, just pick something you want. If it's within reasonable price, we'll pay for it. Got her hotel, comes with free breakfast, all these sorts of things. So she's out for about five days doing that. Of course, she's still texting me wanting no updates on this whole thing, which again, I gotta block her number soon and get her to start texting our actual in house property manager that we have now. So what it what it turns out to be, it's a nineteen fifties built home, it has galvanized plumbing in the walls from the kitchen sink. There's all these connections behind the wall, those connections basically came apart, which is they're metal and they're screwed together, so it'd be hard to come apart. So it's combination of old and rotted and just the cold weather kind of moving shit, right, like we talked about, and it was leaking from behind the kitchen cabinet, underneath the floor, so we got our guy in there, he started doing all this troubleshooting, it's not good, and so at at the same exact time, the electric heaters and the home stopped working, and we ended up having to, like, rewire a bunch of stuff and put in new electrical panels from the old fuse boxes. Things we would have loved to do on this property, plumbing and electrical, when we first bought it, but we did not have the money. You know, talked about this, like, we did everything we could for that property to do what we needed to do.

Dan Austin: [7:15] Hindsight, would we have upgraded some of that stuff? Absolutely. But we didn't touch the kitchen, so there's no need to mess with the plumbing. We didn't touch anything electrical, so there's no need to mess with electrical. So it was like these things that we just didn't have the time and money to do, and we didn't really need to do them at the time, and now they're kicking us in the ass.

Mike DeHaan: [7:30] Yeah. I mean, and that's the that's the way it goes though too with these things is, you know, everyone it's funny. I posted about that on my my Instagram at Mike underscore and Pest, if

Dan Austin: [7:38] you guys wanna check me

Mike DeHaan: [7:39] out there. But and, you know, people were commenting, it's like, oh, that's why you replace all the plumbing, you do a rehab. I'm like, I know. We didn't freaking do a rehab. We left it alone. Exactly. And also to you, we were, like you said, we were at a position where we were starting the business. This was several years ago. And we were super budget conscious, and we knew that we were playing with fire, and that it was gonna be future Mike and Dan's problem. So we just asked him to hit that.

Dan Austin: [8:02] And this future Mike and Dan's problem and And here's the thing

Mike DeHaan: [8:04] And now the future is here.

Dan Austin: [8:05] Here's the thing is like, with that, I agree, like, you know me, like, I'm all about over rehabbing and I rehab things that people don't see. I love to redo electrical, I love to redo plumbing because then I know it's perfect. Is this is one of those things where, like, the cabinets were bulletproof. Mhmm. Like, why would we replace kitchen cabinets? It was, everything was good and clean, and we knew that plumbing is old and we have other nineteen fifties properties, but to replace it, you're cutting open walls, you're doing all sorts of shit. We're replacing it now because not only was that sewer that that connection bad, like, whole main sewer connection was gal or it was actually cast iron, and it was coming apart from, I think, just, like, the expanding and contracting of hot and cold from the seasons and it just finally this was the year. It was pretty cold there for a week, so this was the final year that it just all came apart.

Mike DeHaan: [8:53] Dude, it was it was super cold. We had, like, a 60 degree temperature swing over a couple of days because it was like minus 20, and then all of a sudden, it was like 40 degrees forty eight hours later. You know, and that stuff's not good for anything.

Dan Austin: [9:06] No. Absolutely not. And so that temperature swing is what kicked your ass. So if you live in a market where you have like huge temperature swings, basically anything like, I don't know, like above like whatever that line would be north Yeah. North of that line, like this year, especially get your ass kicked. And it this year too, the last couple years, if you lived in other states like Texas and whatnot Mhmm. We also had some problems, but it does cost you a lot of money. It is a pain in the ass when you have these major temporary swings. But the resolution, we're getting the plumbing all fixed up, all the leaks are done. We were able to it's a floating floor, which I love. It's like that Taplock flooring. We pulled it all up. Unfortunately, it was all kinda screwed up, we had to buy new stuff, but I mean, that stuff lays back down. So within a day and a half, we already had it all gutted, cleaned up, we bleached the floors, did all that mold mitigation to make sure we don't have mold, dehumidifier, get all the moisture out of it, floors are already back in, and today, which would be day, I guess, 2.5, they're replumbing everything and having it set up, it should be done by the end of the so pretty quick turnaround.

Mike DeHaan: [10:03] And that's awesome, and that's why it's so important to build these contacts as well, and also to have, you know, a reserve set up. I think that's the biggest mistake a lot of people make when they get into rental properties is they don't account for future problems. And this I I it drives me crazy with different influencers that you see online. They'll be like, oh, I have this property that I bought that has a thousand dollar a month payment. I rent it out for $2,000 a month. I make a thousand dollars a month on this property. It's like that is just 100% not true.

Dan Austin: [10:30] No, you don't. You make $500 a month on it if you properly have reserves, and then it's gonna take you a year to build those reserves of that $500 being 6,000. You know what I mean? And so

Mike DeHaan: [10:38] like Exactly. And they and they fail to look at the, you know, aggregated cost of the large items. So even if they make a thousand dollars a month for a year, right, eventually, you're gonna have that, you know, 5,000, $6,000 fix. Like, I don't know if this is gonna cost us damn much. Ballpark What's estimate?

Dan Austin: [10:54] It's gonna be about $56,000.

Mike DeHaan: [10:55] $56,000, which honestly seems to be about the standard price for when you have, I would say, like, oopsie stuff that happens. Yeah. Like, honestly. And so you need to take that 5,006 thousand dollars, you know, figure that's gonna cost you $500 a month. Right? If you save that up every single month, and that's your gonna be real cash flow off the $2,000 rent with the $1,000 payment. Put $500 aside for your reserves that you know is gonna eventually gonna have to get paid, you know, regardless of when it happens, like, will happen. Like, your property even if it's a new house, there will be an issue

Dan Austin: [11:31] at There's some always an issue where there's a major tenant turn something crazy happens. It's just law of averages. It's gonna happen. That's why I always recommend when you stabilize a new property, like, just for that first year, unless you have just like outrageously high cash flow. For that first year, you don't take any money from it, all your all your cash flow goes to building up reserves, until you get to a point to where, I don't know, say you have 10 properties and you've got, I don't know, like twenty five, thirty thousand reserves, you don't need to do that. Right? Now you have 25 to $30,000 of reserves to cover your properties, and there's a scale factor of what you should feel comfortable with, but like, you should just always think about that, like, all my cash flow for first twelve months goes to reserves for this property, because inevitably, it might not be till year five, but inevitably that happens, and once that once you have that good base of reserves for your portfolio or for each property, however you set it up, like, then you're good, then you can start peeling off cash flow like nobody's business, and that you get to keep that and you get to spend that on your Ferrari, but until then, make sure you're covered because there's nothing worse than being like, oh, crap. I have $5,000 in the bank, and I just had a $5,000 accident, and now I have no money for the next accident, and you're putting it on your credit card.

Mike DeHaan: [12:35] Yeah. Exactly. Yeah. And that's why, you know, if when you see these, it's always like younger people to, which, know, I fall into this. So they're like, oh, we bought five properties this year. And now I make $5,000 a month in cash flow. And now we travel Europe full time. They are either one lying to you, B, they're on the brink of financial disaster, or three, they're trying to sell you something and that is actually their main business is selling you some bullshit. If their sales pitches, like I bought this house and my mortgage payment is $1,200. I rented out for 1,500. Cash flow 300. Wrong. Lying. Back They're they're probably losing money on that deal.

Dan Austin: [13:09] If they just missed, like, all of the other stuff. Yeah. Exactly. They just missed all the other stuff that's in between, including what I always call set asides, which is that CapEx and OpEx set aside every month that you have for a problem. Yeah. Because you're gonna use it.

Mike DeHaan: [13:19] Yeah. And and people always ask, like, what is an appropriate amount to set aside? Some people say like 10%, like, we've always kind of operated from the zone of like, we wanna have 10 to $15,000 per property that just sort of sort of sitting there and we build up that reserve and then we take cash flow after that. You know, what what makes sense for you, you can kind of end up can kind of figure that out for yourself. And and like, one thing I will say as well as you can be slightly less conservative with that, if you have high income, you have like other forms of income, right, that are, you know, especially connected to real estate stuff where you can make pretty decent money. Like, that's the one thing that we have the advantage of is because, you know, we wholesale, we flip properties, we have other business, we do these things. We don't have to be as conservative. But if you're working a $60,000 a year job, right, you probably can't afford a random $5,000 like issue that pops up out of the blue. That's gonna be an entire month of your paycheck. Right? So you need to you know, look at your financial picture to figure that out. So Yeah. So that's our that was

Dan Austin: [14:15] our major year end ask, because then we had a bunch of other little things that happened, like hot water tanks here and there and other little bullshit that, you know.

Mike DeHaan: [14:21] Yeah. We had that. Well, then I had one of my personal rentals where I also had a water issue, which has happened randomly over the past three years, and we could never figure out why. And I think we finally found the problem this time when they went and snaked it, looking for roots, and they found a bunch of tampons that were stuck in the sewer line.

Dan Austin: [14:37] Those are feminine hygiene products for for those others out there.

Mike DeHaan: [14:41] For those few guys in The States that don't believe in women's rights. But that's probably a lot of our listeners. I shouldn't make that joke.

Dan Austin: [14:49] I don't know how you got to that point. I just was saying the proper name for it, and you come up with freaking people women that need to be locked in basements.

Mike DeHaan: [14:56] I mean, that's that's there's we have several states in our country that borderline think that. Yeah. That's true. But

Dan Austin: [15:03] Okay. I'll get it.

Mike DeHaan: [15:03] Alright. Let's get past that. But yeah. So, you know, and that was kinda like a I mean, I'm glad that we have a resolution of that, because it's something that's occurred three times now. It always results in issues, and I could never figure out what the hell it was. And now it appears that that that was a pretty definite cause. So, you know, now we can send them a notice to not do that.

Dan Austin: [15:22] Yeah. It's funny because when you told me that when you told me that, I was just like, yeah, I have like signs in my student rentals because I don't know that all young women know that, like, you're not supposed to do that and I guess yeah. Young women never mind. Soon as say something else, but young women, I don't know that they necessarily always know that and like, I have a sign next to my toilets in my properties.

Mike DeHaan: [15:43] Which is funny that they wouldn't know that had they ever been to a public bathroom in like any restaurant or gas station or anywhere where they always have signs that say, you know, to flush them and products out of the toilet.

Dan Austin: [15:52] Yeah. Don't know. I think that some of just don't care either.

Mike DeHaan: [15:56] Yeah. I think that's a big part of it too and it's like, well

Dan Austin: [15:58] and you said there's like, what, four four adult women living there for

Mike DeHaan: [16:01] Yeah. So there there's like a mom and two daughters that live there. Yeah. So who knows what who the culprit is. But either way, that was my main dilemma. They're going into the the holiday winter period. And, of course, it floods downstairs and it, like, messes up half their living area. It always occurs it always seems to occur around the holidays. Right? Does these things always do? Like, people need to go and end up in hotels or things like that. Fortunately, because there's a four bed, two bath place, they have, like, a lot of room. You know, it's hard to find work and things like that around Christmas and New Year's as well.

Dan Austin: [16:33] So it

Mike DeHaan: [16:33] just has to sit and have to deal with it Yeah. You know, on a more prolonged schedule than I

Dan Austin: [16:38] would like. But Yeah. Our duplex flooding was like on Christmas. I was like, cool.

Mike DeHaan: [16:42] Yeah. No. Of course.

Dan Austin: [16:44] I got our typical handyman, I literally I texted him like several days ago. I finally just got a message back. Is that Dustin? And I was like, yeah. He's He's like, like, I'm heading to the mountains. Yeah. I'll call you when I get back. I was like, that's like a week later, dude. You alright, Yeah.

Mike DeHaan: [16:59] Right. It happens. It happens. He's probably out filming Bigfoot. You know, that's like his his side gig is he's like That's that's least videographer for Bigfoot hunters, You know? Isn't that weird? Like like like weird in like an awesome way, like, never would guess that. That's why have you seen

Dan Austin: [17:13] the tailgate on his pickup? It's a naked Sasquatch

Mike DeHaan: [17:16] Is it really?

Dan Austin: [17:17] Laying down.

Mike DeHaan: [17:17] Oh, that's funny. I haven't seen that.

Dan Austin: [17:19] Yeah. Yeah. It's like a hairy naked Sasquatch, like, like airbrushed onto this tailgate.

Mike DeHaan: [17:23] I never noticed that. That's funny. Yeah. So that's I guess that's our business woes and our ups and downs. And, you know, going into the New Year right now, I mean, we're still trying to figure out like our total view on everything. I mean, with our for our business, we have Yeah. What we know, we started working with all these different partners with our partnership program. So right now, we're working on optimizing what a lot of those marketing and sales processes look like. So you if you guys are new here, we have we have our Collect A Key seven Figure Investor Program, which is our our group coaching program. And as a premium sort of offering to that, we have, like our marketing and partnerships programs where basically, it's the same thing where we teach people how to run full time real estate businesses, and how to be wholesalers. But with our partnership and marketing programs, basically, we do a lot of the heavy lifting, you know, as an additional cost associated with it. But you don't have to come and figure out as much the BS. It's for people that maybe have a little bit more money than than time, or they wanna press like the quick start button on on the whole thing. But, like, we're working on really optimizing those right now, figuring out the best marketing tactics in all these various markets that we're working in, And, you know, helping people sort of, I guess, solve their investment goals going into the near as much as our own. So that's kind of been our main focus.

Mike DeHaan: [18:41] And then, I mean, locally for our investment stuff, trying to figure out whether we wanna keep pursuing buying holds with the higher interest rates, whether we just wanna sort of stack cash and stabilize things, you know. So it's it's kinda like a weird time, I guess, because it's almost like you don't wanna give up all of your your dry powder, your cash on deals when you think when it feels like there's gonna be really, really good stuff coming up here

Dan Austin: [19:06] in the feels like it's not there yet, but you also don't wanna like miss opportunity. But it's like, you know, you and I looked at a a pocket listing last night for a realtor. That was like a decent deal. It was like, okay. Like, we're looking at it and I but I'm like, I don't want any interest in X. It's not like the perfect purchase.

Mike DeHaan: [19:19] Uh-huh.

Dan Austin: [19:19] And I can just go on Zillow right now and look at other duplexes that I'd rather own that I'm not buying right now that are, like, last year would have been sold like snap of a finger Totally. For way too much money. They're still listed for too much in my opinion. But, like, I can go out there recently. I know I could go buy a multifamily property in Spokane.

Mike DeHaan: [19:35] Yeah. For okay price. Yeah. And I think that's the change in the economic times as well that we that you need to sort of start to consider is when times are good, you can, I guess, be a little bit more impulsive with your purchases? You can take a little bit more risk. You know, you can sort of stick your neck out there a little bit more. And, you know, it's easier to get FOMO when it's like that, but I was thinking get away with it. Yeah. When times are kind of stagnant or they're going backwards, although I've been hearing a lot of people say that, you know, people are talking about 2023 recession. A lot of people are saying that the recession's already happened, and 2023 is gonna be kinda like the leveling leveling out. Yep. But when you start to get into that more negative period, it's always that fine balance of, like, you seem to be more selective about your deals, and you do wanna save your cash for when that when the best deals come around, kinda like you said. And it's important not to get phone up, but to always be putting yourself in a position where you're gonna be able to capitalize on the good stuff that comes and also knowing what exactly that looks like to you. Right? Because that's another thing people say, like, how do I know if it's a great deal?

Mike DeHaan: [20:34] It's like, well, you gotta kind of look at your own investment goals and

Dan Austin: [20:37] your own long term goals. Yeah. You have to look long term, like, what are you what do you believe, like, is gonna happen in the next twelve months? Why do you believe that? And how do you how do you make decisions based on your investment goals within that being your context? Like, for me, I personally think that there's probably going to be more opportunity in 2023 than there has this year. I don't think it's gonna be crazy, you know, dripping with opportunity. I just think there's gonna be a better opportunity, so I don't wanna make a decision now that uses my cash. Because a lot of things you're doing right now, unfortunately, does suck up your cash. If you're buying right now, it's gonna suck up your cash because interest rates are so high and it's gonna be really hard to get financing or some sort of per property, like the cash out refinances are just tougher right now. They're just tough. So you're gonna have to be locking money if you're buying.

Mike DeHaan: [21:22] Yeah. I think that's especially true if you have a long term mindset, which you should if you're gonna be a real estate investor, where it's like, realistically, you miss out on stuff in the next six to eight months, who really cares? Because over the next ten years, you're gonna be actively looking for things. You know, there will be opportunities that come around, which make those ones that you pass on

Dan Austin: [21:37] not that big of a deal.

Mike DeHaan: [21:39] That's a good transition, though. So what do you think? What are your predictions going into 2023? I've been, you know, reading a lot, like other people's predictions and, you know, what what exactly, you know, experts are thinking, what exactly, you know, our peers are thinking. And I think the general verdict is people have no idea.

Dan Austin: [22:00] As usual, nobody has any freaking idea.

Mike DeHaan: [22:02] No. Nobody has any idea. I think the one thing that is mutually agreed upon by everyone is that, you know, next year is not gonna be like a rocket ship year. But a lot of people are saying it's gonna be like the year where they're fueling the rocket ship for when stuff potentially starts to take off again in 2024, 2025.

Dan Austin: [22:21] I think so. Yeah. Here's what I guess, I would I'll just put out on the table what I know. What I know is that I still think think there's a lot of cash on the sidelines ready to go. I still think there's a lot of money in the system, which makes it difficult for anything to like just completely disappear and like be that rock bottom like 2008, which everybody thinks about, right? From a real estate market standpoint, I was just looking at statistics. So the severely behind mortgage number, which is like, you're behind your mortgage by three months, is trending downward still. November 2021, it was at was at 1.3%, and now it's at point 64%. So, like, half of last year. In 2010, that number was 5.5%. So there's not that many people behind on their mortgages, what I'm saying. On top of that, we already know tons of people have a ton of equity. And so if you bought in 2019 or before, you have you're not going to lose. You're not gonna go upside down in your house, I believe. 2020, I don't think so. I bought a new house in 2020. I still have vast amounts of equity in it. You start getting the 2021, you could potentially go upside down. With 2022, you're probably upside down in your house right now, which isn't a bad thing because again, only point 64% of people are three months are behind on their mortgage. So you're not gonna if all those people that were out there saying, I can't wait till the market fails or goes upside down, I'm gonna buy all these houses.

Dan Austin: [23:40] A, no, you're not. Interest rates too high. B, no, you're not. Because there's no foreclosures. Where are the foreclosures at? They're not coming out at least from what the national statistics are showing. So I think there's a lot of money to recap that still on the sidelines that can be infused given the opportunity, they will jump into the market, which will keep the market buoyed. The real estate market, I don't see it failing and just bottoming out, I do see some prices resetting and trending down, and we still don't know when the interest rates are going to stop climbing. I know that I I know that they're going to start keep increasing rates through q one. I don't see why they would stop. So with that being said, like, there's like this aren't buying, people aren't selling because these the interest rates are still going up, they're still trying to get inflation, there's still money on the sidelines, which is helping to buoy inflation as well. So we're kind of like, to your point, Mike, 2023 is like this weird year. Is it gonna be a recession or is the recession past? I don't really care about that. I just know that 2023 is not gonna be a super terrible year, so I'm gonna a super good year.

Mike DeHaan: [24:40] Yeah. Yeah. And, you know, and and that seems to be kind of the mutual opinion. So, like, looking at different headlines, you know, like realtor.com, their their chief economist said that their expectation is gonna be like a nobody's market pretty much with Right. You know, high high price point homes and people not wanting to go with the equity, but with limited buying options just because of the affordability issue that we have and the interest rates are gonna remain high. Bloomberg said that they think that the they don't expect to see any change downward in the interest rates until potentially q three, if not q four of next year. Wow. So I think that it'll stick around for most of the year. That being said, a lot of different people are saying that they think that the stock market will start to make a comeback, which is always an interesting because like, the thing with real estate is just because the asset prices move slower than stocks is, you know, real estate tends to mirror the stock market, but just in kind of like a delayed fashion. You know, the stocks already tanked. Real estate came down a few months later. If stocks start to go up again, you can expect real estate to

Dan Austin: [25:41] kinda do the same. Just historically, that's what's always happened. Maybe three to six months behind that.

Mike DeHaan: [25:45] Right? Exactly. Yeah. So everyone's sort of seeing as being like the rebounding year, and the and the something that I've heard say a lot is that, you know, people are are talking about recession risks in 2013 oh, sorry, 2013, I'm ten years behind. 2023, many people are saying the recession has already happened, and just for political reasons, you know, we had midterms this year, we had all sorts of stuff going on this year, no one in the federal government was going to admit that. They're not

Dan Austin: [26:14] gonna admit it. And also, in the in their defense, the unemployment rate didn't change. Like, it's still, like, record That's what they're saying. So you're thinking, like, people have jobs. In fact, we can't even fill all the jobs we have. There's still money on the sidelines, which everybody knows that. Like, is this really a recession? Does it feel like a recession? But I believe that it yes, technically, it was.

Mike DeHaan: [26:34] Yeah. And and something that I heard on on another podcast, actually, that was really interesting view on on the employment side of it was, you know, there's so much news right now about these massive layoffs from tech companies and Mhmm. You know, kinda like these luxury based companies. Right? You know? Right. Netflix, all this sort of stuff. And who really gives a shit about this? Like, honestly, if you like like, it sucks for those people. Yeah. If you look at the big picture of the economy, those are not indicative of the economy because it is them They don't create any Well well, yeah, they create luxury items, and also too, they were inflated because their stocks were ridiculous. Right? And they need to you know, they had money to burn. They're bringing on people. They're building in redundancies. Right. Now that stocks have gone down, stocks have gone down, they are, you know, eliminating all that unnecessary overhead. Right. But if you look at the companies that actually are indicative of the healthy economy, you know, like industry, right? So companies like like they were saying, you know, Walmart, you look at something like the the home building companies, things like that.

Mike DeHaan: [27:31] All of those people are aggressively hiring and cannot find enough people.

Dan Austin: [27:35] Right. Well, it's that it's like, they actually create tangible things, so like, what if Twitter went away tomorrow, like, what is that creating other than jobs? Like, it's not really creating much, like, gross domestic product value, like you're saying, like, manufacturing, home build, home building, like in in construction is like one of the biggest leading Mhmm. For our economy. Right? That's what just fuels jobs.

Mike DeHaan: [27:55] Yeah. Yeah. And then even though home building has slowed down, those companies are still aggressively hiring people to try and get the stuff done that they do have on the books.

Dan Austin: [28:03] Do they still

Mike DeHaan: [28:04] have know, or same with, grocery stores, logistics companies. And like I said, Twitter could go away. Netflix could go away. Your life would not change at all. Right? Like like, I mean, what would suck, like, you'd have less fun stuff to do. But, if you look at your actual life, like, it's not that big of a deal. Okay. If, you know, like, the grocery store logistics companies, if those go away, you're kinda fucked.

Dan Austin: [28:24] Right.

Mike DeHaan: [28:24] You're still, you know, aggressively trying to find people to come and, you know, keep their their stuff going.

Dan Austin: [28:30] And there's supply chain shortages too in those types of hard products and commodities still too. So you're starting to you're still that's why I think we're still seeing inflation buoyed up, is there still shortages of things. Yeah. Yeah. Which could probably, and I don't know for sure, but could probably be tied to the fact that they can't find people to work these jobs. Probably.

Mike DeHaan: [28:46] Yeah. And and some aspects. But I will say there's

Dan Austin: [28:49] gonna be some some Twitter programmers that are now going to be working in the supply chain. Yeah. Because they don't I

Mike DeHaan: [28:55] mean, maybe. What is your take on this rise of automation in in robots, and a lot of these different service industries, though? You're starting to see it everywhere, you know. So, like, they just opened the first fully automated McDonald's, I think it was in Texas. And then, if you look overseas as well, I actually saw this headline talking about how, if you're going to China on business, you can book a self driving chauffeur to drive you around.

Dan Austin: [29:20] That's pretty sick.

Mike DeHaan: [29:20] As part of, like, one of the main, you know, business chauffeur companies, instead of them sending a driver, they send an automated car that will drive you around the Chinese roads. So they have their own self driving car.

Dan Austin: [29:31] Here's what I think. I think that we're gonna see I think we're gonna see a lot of low skill jobs disappear that aren't gonna be needed in the next ten to twenty years, and I don't think that's a problem.

Mike DeHaan: [29:40] Yeah. Well, I mean, I like low skill and even high skill. So last week, you've heard us joke about the the AI chat stuff and how we were gonna

Dan Austin: [29:48] Dude, that shit

Mike DeHaan: [29:48] is badass. I know how we're and I was saying it super sarcastically about how I was gonna use it to build all these s SOPs and these different things. Well, it's pretty You

Dan Austin: [29:56] will.

Mike DeHaan: [29:56] Sweet because we're doing it.

Dan Austin: [29:59] I need to get a referral code. What what is it called? What is the website called? I I have it oh, it's

Mike DeHaan: [30:03] Well, it's it's free, so there's no referral code. We we would just be using chat GPT, which is the the main one that see you a lot people use because it's free.

Dan Austin: [30:10] It's

Mike DeHaan: [30:10] sick. But there's, like, know, the Jasper AI one, which is a paid service, and I've been doing some more research. It might be worth paying for just because of, like, how much more in-depth of instructions you can give it. But like, we're we're currently putting together processes for our sales teams and for other things right now. And you can just tell it like, oh, I want you to write a, you know, follow-up process for like this kind of lead, and it just spits it out. And it's not perfect. Like, can't just like do it and copy and paste and say I'm done. But it gives you the framework that will go and make that from being a, you know, two hour task to a fifteen minute task to

Dan Austin: [30:43] a thirty minute task. It's amazing. Go to go check out by next week, when this thing drops, go check out my Instagram, investor man dan. I'm posting a post that I had it right, a post of what you should be doing flipping versus wholesaling, and it was legit. Yeah. That's all I typed in. Yeah. It's crazy.

Mike DeHaan: [30:59] It's super impressive, but but point being, you know, so we have, like, the automation coming in the service industry, right, from, like, for us, things like that. But also in the high skill industry. Right? So, like, even right now with a lot of these, you can have them type up code, and there's probably people that are listening, like, is old news, bro. This is gonna on for, a month. But we're too busy running a business, man. I don't have time to be sitting, like, dinking around with whatever's on the Internet all the

Dan Austin: [31:20] time. No shit. But, you know, you can have

Mike DeHaan: [31:23] it write code. You can have it, like, create designs. You can have it create custom art and pictures. You can have it, like, you know, create, like, even basic legal stuff. People are using it to write, like, contracts, write papers, do research, and it just, like, does all of it for you. So basically, it takes the you know, if you're gonna do research, traditionally, you would go on Google and say, like, oh, I don't know. I'm gonna look up Genghis Khan. Now, you can have it go and say, like, tell me about Genghis Khan's empire. And it will actually do it in, long form style with something that is more than just, like, you know, having to click through a bunch of different sources to figure out what you're looking for.

Dan Austin: [31:58] Write me a 10,000 word essay with 12 font on Genghis Khan.

Mike DeHaan: [32:04] I mean, honestly, you probably can. You should try that afterwards.

Dan Austin: [32:07] Submit on on your blackboard.com for your school.

Mike DeHaan: [32:11] Yeah. Right. Get around the plagiarisms of the I mean, I've heard about people, like, doing that. Like, I think the question comes is, you know, if everyone has the same prompt and, like, 10 kids go and do the same thing, how similar are they going to be? Right?

Dan Austin: [32:24] Right. They could probably cross reference the plagiarism to the both of them, but if it's AI, it's hard enough to know that. Yeah. I would type in write it and make sure I don't get caught for plagiarism.

Mike DeHaan: [32:33] Yeah. You get the instructions.

Dan Austin: [32:35] I mean, it's smart enough, dude. It's rich it's ridiculous. Yeah. You're right. So Yeah. We're automating a lot of jobs, I don't think it matters because I do think that there's still like creation. There's still creation above these these low skilled or high skilled jobs that are getting automated that need people still need to create and still need to be participant participants in the economy, and I think regardless, like, humans will find ways to be like, oh, there's a lot of dumb humans out there. Yes. They've always existed and they always will exist. There'll be dumb humans that just don't do anything to help themselves. They're not listeners to our podcast. I don't care. But all the the vast majority, the bulk of people will find ways to contribute and they'll create even better and newer stuff. So I'm not worried about this whole automation killing the I mean, I think what's likely to kill the population is that people just don't have enough kids anymore.

Mike DeHaan: [33:23] Yeah. I mean, there's a it's a whole other body we go down to as well. So all other, like, wormhole, I guess, you can jump into with that stuff because there's like a lot of different factors But I don't know. I I like what you're saying though, there is interesting about there always be the people that'll be contributing, though, those that won't be. I just think that as the population grows, I mean, it's always a percentage. Right? Like, what eighty eighty twenty roll probably. Honestly, you can say that. And as the population grows and grows, the twenty ten of people that are contributing 80 of the productivity, know, you it's gonna have to contribute to help more and more people, and that's just gonna get stretched. But, you know, it's interesting. I mean, like, if you look at a lot of stuff that's coming together, it does kinda remind me like about a lot of those, you know, sci fi movies that you see where it's like, oh, well, there's like the elites that kind of like, you know, that are super rich and everyone hates them, and everyone lives in squalor, but the elites are if you look at those movies, they're honestly the ones who fucking created everything. Like, they're the ones like, it's always like the tech billionaire who's actually evil, and all it takes is like four generations of like tech billionaires to find the ones like, why don't we have like all the cretins down on the planet? Like, why don't we just like not do that and just live in the space station? Exactly. And then, you know, like, freaking Matt Damon or whatever comes, and he's like, we gotta take these down the space station.

Mike DeHaan: [34:35] And then, you know, it always ends with a guy getting killed, and then life still sucks for everyone. So nice job. Beach man, terrible. But

Dan Austin: [34:43] Yeah. That's basically, like, reality, dude. That's the life we live.

Mike DeHaan: [34:48] Anyway, so yeah, we'll see we'll see we'll see how that that comes together. But cool. Yeah. So I guess general verdict, coming into the near, no one really knows.

Dan Austin: [34:58] I call them a stalemate.

Mike DeHaan: [34:59] Yeah, it's gonna be a bit of a stalemate, I think is the the main consensus. And our primary strategy is going to be one of patience and consistency. And I would say that as you are making investment decisions, be a little more conservative about it. And the one thing that we have proven to be true over and over again, though, is that if you are buying high quality assets at a discounted price, you really can't lose, Like, honestly, it just and you do that over a prolonged period of time with a long long term time horizon, you cannot lose if you do that.

Dan Austin: [35:31] So Yeah. And don't take that advice as taking twelve months off because you're just not sure. Because you'll I don't know how many how many investing months or years you get in your life, maybe it's forty or sixty, are you really willing to give one up because you just wanted to settle the sidelines? Think you still gotta make moves, you just gotta be conservative about them and and make them in context of what you're trying to do in the larger picture. Yeah.

Mike DeHaan: [35:53] Absolutely. Well, and so here's what I'll say. I'll finish up. Here are the three, I think the three best investments that you can make going in 2023. Right? Should be a three best. So first one will be a main financial investment will be buy discounted real estate, right? That is one that you can mathematically prove the return at the point of purchase. Right? You can say like this house is worth 400,000 buying for $300,000 I automatically have a spread right there, it's gonna be a very high ROI on that money. Okay. Whether you sell it, keep it, you know, it's paper game, whatever. Second one will be investing in your network. Okay. Now, especially when times are low, spend money, join masterminds, get around people that are doing big things now want to do things in the future. And don't be afraid to, like, spend good money to be around people. Like, people always say, like, why do these groups cost, like, $10? It is a barrier to entry to keep out the people that shouldn't feed You know? And and, yeah, it sucks that we've joined groups, and we've had that hesitation of spending that money. But if you can come over that hurdle, and you go into those groups, and you create value, and you look to receive value as well, you would be surprised at the incredible amount of growth you can get from that.

Mike DeHaan: [37:01] And the third thing I would say is invest in your education. Right? Don't be afraid to spend money on that either. Like you can learn a lot from the school of YouTube. But after a while, you will reach a limitation on that because I hate to say it but like the best people do you want you to pay for, you know, their customized help. So like we just hired a business coach that we paid really good money for, you know, going into this new year, but The most

Dan Austin: [37:23] we've ever paid for anything.

Mike DeHaan: [37:24] Most most we've ever paid for anything, honestly. Yeah. So, you know, you can go and pay for a coach, pay for courses, pay for, I don't know, group coaching, whatever that looks like, whatever you can afford. If it's something that you think will help you grow, don't be afraid to spend that money. And, you know, I think especially that one and the networking one, those will be the highest ROI potential even compared to the discounted real estate. Right? Like Absolutely. Know, I mean, even like our initial group that we joined, the Allstate Coaching, we paid $5,000 for that we did not have. We have have we a thousand x that money yet? I mean, if you look at asset value, we have 2,000 x that money. Right? We've done we've made millions and millions of dollars, thanks to that $5,000 purchase.

Dan Austin: [38:05] From that one decision, that single decision. Exactly. So That's crazy. That is crazy to think about. I will add though, there's an option four of what you should be doing, and that would be investing in my new product, which is going to be BDE t shirts, Big Dad Energy. I think there's something in the market for that. So Mike Michael, get that up on our website and you guys can pre order those.

Mike DeHaan: [38:30] Man, you threw that out there. Alright. I gotta make a note. We're gonna make some BDE t shirts. I don't know. You said Big Dad. I like Big Dan energy better.

Dan Austin: [38:38] Okay. Get the Big Dan and it'll be a bald guy with his thumbs up on the back And it's kinda like the FBI shirts that you get when you're, like, in, like, Mexico. It's just, like, says female body inspector. It's the same thing. They're really popular. A lot of people are gonna love. It's a great Christmas gift or belated Christmas gift, birthday gift forever.

Mike DeHaan: [38:54] Alright. Well, seriously, I'm gonna I'm gonna go I'm gonna put our our designer on making those because that would be awesome. Things start happening,

Dan Austin: [38:59] so we

Mike DeHaan: [39:00] can add that to our Collecting Keys merch. Alright, guys. Well, thank so much for listening. Quick side tangent on Collecting Keys merch. If you want a free Collecting Keys t shirt, they are pretty sick. If you go and leave us a five star review on iTunes, and you send me a screenshot on Instagram, I will send you a free Collecting Keys t shirt up until we have 50 reviews on there. I think we're at 30 something right now. So, you know, go ahead and take leave a five star review. Send me a screenshot. I'll send you a shirt for free. And I'll an eye out for the BD t shirts as well. They'll be coming. So anyways, guys, thanks so much for listening. Go leave this five star review and get that free shirt and share this podcast with anyone who has any interest in real estate investing business. Two guys just talking nonsense as well. I don't know. I think sometimes we're entertaining. We've been told we're entertaining occasionally.

Dan Austin: [39:46] I have fun.

Mike DeHaan: [39:46] I have fun. That's all that matters, really. So thanks so much for listening, everybody, and talk to you guys next week. See you.

Speaker 2: [39:52] 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.