Paying Yourself as an Entrepreneur, When to Buy for Equity, and the Rise of the Recreational Investor

Mike DeHaan: [0:00] Investment knowledge is coming from social media, podcasts, YouTube videos, TV shows, like influencers, whatever. And so you have all the people that are doing okay in their life. Right? Or, like, or they're doing really well, and they understand the wealth generation potential of real estate. And so even as the market's going up and down, they're like, I don't really care because I have a long term time horizon. I'm 30 years old. Me and my wife, we each make a buck 50 a year, and we wanna have you know, we wanna be wealthy when we're older. And so they're looking on a thirty year time horizon. They're gonna be interested in real estate, and that did not exist, like, even, like, six years ago, seven years ago.

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 this episode of the collecting keys, Mike and Dan show, where I, Mike DeHaan, and my cohost, Dan Austin, talk business, investing, real estate, and everything in between. Whatever Dan feels like on the day because he's always the loose cannon.

Dan Austin: [1:18] You never know what I'm gonna say.

Mike DeHaan: [1:19] I never I know. Half the time, I'm like, woah. Let's I

Dan Austin: [1:22] haven't been keeping up on my my TikTok superstars. I don't so I don't have a lot of one offs currently.

Mike DeHaan: [1:27] We need we need to bring on our buddy, Aaron, just so he can keep us up to date on all the TikTokers he's always sending over.

Dan Austin: [1:31] He sends some awesome TikTok.

Mike DeHaan: [1:34] Yeah. First off, I gotta give you some appreciation, Dan, for always holding down the fort when my, you know, no kids ass goes in just, like, fucks off for a week in Colorado. So, I mean, I was around a little bit more than usual because I was down in Colorado skiing, and I tore my MCL on the first day, first morning.

Dan Austin: [1:53] Yeah. That's a bummer.

Mike DeHaan: [1:54] It's not too critical. I'm I'm not moving around, and I learned a lot about anatomy and how the MCL is, like, not something that generally needs surgery, and you just kinda, like, rebuild it because there's act

Dan Austin: [2:03] Oh, you don't need it? Is it, like, your appendix? You're like, you take it or

Mike DeHaan: [2:06] take it? Well, you need it, but it's like unlike an ACL, right, which is like on the front and doesn't have any actual, like, blood flow through it, so it can't heal. And when it tears, it's kinda just wrecked. Your MCL actually does have blood flow, so it can actually, like, heal up if you rehab it.

Dan Austin: [2:20] Gotcha.

Mike DeHaan: [2:20] But, yeah, as I appreciate you holding down the shop while I was gone, I was in Vail, Colorado, which is a pretty, like, ritzy area. I've been I've been going there for a long time, like, since way before it was, like, Vail. Like, I remember going there, and it was, kind of a smaller resort.

Dan Austin: [2:34] Would they name it? What was it named?

Mike DeHaan: [2:36] It was so was it was Vail, but it was it wasn't a publicly traded company.

Dan Austin: [2:39] Was it owned by Vail Resorts?

Mike DeHaan: [2:40] It was. Yeah. Yeah. Okay. So, I mean, so so Vail Resorts expanded into the publicly traded entity. Is now that owns tons of different scares around around the country and around the world. Actually, they've started buying international. But I did a little experiment there because, you know, as you're going around, it's always just sticker shocks looking at how much random things cost there. Right? I'm sure. Yeah. And I was I was like, I wonder what all of these people do. Like, I know that it is, you know, affluent by nature. Just like, hey. Skiing is affluent by nature. Right. The area is extra expensive. So every time I had a chance, I would talk to people on the lifts, like in the lodge, whatever, ask where they're from, what they did. And you know what? Shocker. What was the most common, like, pattern was so many people were involved in real estate in some way.

Dan Austin: [3:26] Fascinating. I thought you were gonna say, like, cruise ship singer or something like that.

Mike DeHaan: [3:30] Cruise ship singer? Those people make money? I don't know. I mean Actually,

Dan Austin: [3:34] I don't know if they do or not. They just get free food.

Mike DeHaan: [3:36] Where should we even get that from?

Dan Austin: [3:38] I don't know. I was just trying to think of something that would be random that you might have ran into in Vail.

Mike DeHaan: [3:42] Yeah. I mean, I I guess, I don't know. I assumed it would be a lot of, like, financial investors, like like, you know, advisers or, like, corporate people, things like that. So there was a couple of those, but most people were involved. They had some sort of real estate investment business. They had some sort of fund that they ran that was around real estate. And then there was one guy who I met who was in ecommerce. He sold, like, this line of, of pet solutions, he said. So, basically, they're like he's like a r and d guy. He, like, invented these different kinds of, like, pet products and now has this big store that he sells all stuff on. And I was like, oh, cool. He's outlier. It's not in real estate. And he asked what I did and told him. He goes, oh, that's cool. He's like, do you do anything commercial? And I was like, yeah. A little bit. You know, we've been doing some marketing for different people for that. And he goes, oh, okay. Was a commercial broker for ten years. Like, what's up, basically? Yeah. Basically, real estate guy. That's how he got the freedom to go and develop his pet brand without having to worry about making scratch once he was a commercial broker for ten years.

Mike DeHaan: [4:36] Did very well.

Dan Austin: [4:37] So everybody there was involved in real estate? Mhmm. Like, real estate investors, owners. Yeah. What were they doing?

Mike DeHaan: [4:42] Yeah. Pretty much everything in between. Right? So they had some sort of investment company. They had they were, like, had a brokerage. They were realtor. You know, there was I was I met one guy that was a lender. That was, like, his main business. I mean, it was funny because whenever you meet someone like that and they don't know if you understand what hard money lending is, they, like, try to, like, explain it to you in the basic way. And I'm like, oh, dude. I flip houses. I get it.

Dan Austin: [5:02] Yeah. Yeah. I got you, bro. Yeah. I got you. Wow. So that's, I think speaks to not only the financial security that financial freedom product that real estate gives you, but also the time to do that sort of stuff.

Mike DeHaan: [5:12] Yeah. Exactly. Especially because I was there. We're in middle of February. It's not exactly spring break for kids or people are taking time off.

Dan Austin: [5:19] Or winter break.

Mike DeHaan: [5:20] Mhmm. Yeah. And it was a lot of, you know, retirees this time of year. So, like, older people. And, I mean but I I say that, but there's a lot of people, like, in their thirties and forties too that were there doing stuff. So but, you know, it gives them the freedom and then the ability to go somewhere like that where a burger costs $35. It doesn't break the bank. Crazy, dude. Wow. Yeah. It's crazy. But there was one one day we went out afterwards. We went to this, like, Mexican place. We had ceviche. Me and my wife had ceviche and four margaritas, you know, two margaritas each. It was, like, $127.

Dan Austin: [5:54] Oh my gosh. And the ceviche was really just like the little mini can shrimp that they dump into a bowl.

Mike DeHaan: [6:00] Food there is top notch. Like, food is

Dan Austin: [6:02] Good stuff.

Mike DeHaan: [6:02] Freaking good. Yeah. Like like, at least it's so, like, when I I was in Tahoe for the Go Bunnings event. Mhmm. Well, you know, it was last month. Expensive, and it sucked. Like, honestly

Dan Austin: [6:11] Oh, really? It's a bummer.

Mike DeHaan: [6:12] The food was terrible. Like, the drinks weren't, like, that good. The service was super subpar. Valo, opposite. Food is awesome. Great service. You know, tons of, like, great options on the mountain. Vastly superior product to Palisades.

Dan Austin: [6:27] Have good food. That's, like, at least 70% of why you travel is the good food that you get to enjoy.

Mike DeHaan: [6:32] Yeah. And because of the area too, because it has, like, a lifestyle. So they bring, like, high rated talent that goes and lives there. You know, it's not too far from Denver. And, yeah. So it's it's it was a good vibe. But, yeah, appreciate you holding down the the shop while I was gone. We've had a lot Yeah. A lot of sudden changes going on.

Dan Austin: [6:48] Yeah. We did have a lot of sudden changes, and it was a good chill week, though. I mean, it probably shouldn't have been a chill week, but it was a chill week.

Mike DeHaan: [6:54] Yeah. I mean, it was yeah. It shouldn't have been a chill week, but had a good lesson learned about how it's important to have I mean, a, redundancies in your business. We had to have separation with a a staff member very suddenly that we weren't expecting. And, you know, it's one of those things that once it was done, you know, you kinda realize all the the damage that was being caused Right. While they were still involved. But it's still, like, it leaves a gap that you're not fully prepared for, and we didn't really have a backup plan for it.

Dan Austin: [7:22] Right.

Mike DeHaan: [7:22] So it's been a a you know, it's always kind of a weird journey figuring that out.

Dan Austin: [7:26] Well, it's also hard to have redundancies when you're a smaller business.

Mike DeHaan: [7:29] Right? I know.

Dan Austin: [7:30] You know, it's always challenging on the on, like, the virtual side of things with, VAs and stuff, you could always do that because that's just such a low cost thing. It's not necessarily a good practice. But when you're talking about hiring staff members that are, especially if they're paid by commission, it's really hard to have redundancies because then they have to feed their families too, and so if you have too much redundancy, there's not enough, you know, there's just not enough food to go around for everybody. Yeah. So then you have to, you know, constantly be growing and trying to feed them, which is a whole another topic and conversation there. But, you know, it's tough to have that. And then it's also tough to get people up to speed super quickly.

Mike DeHaan: [8:02] Yeah. It is. And and I think that that's where the systems of it comes in place. Right? Because we kinda had to shuttle someone in. We didn't have our systems who dialed in, so they were frustrated, you know, at the start. But we're getting it figured out. But I will say it was a good way to lighten ass under our fire because I feel like we actually did some decent progress on our

Dan Austin: [8:19] We did. We were making progress, but, yeah, we definitely made a lot of progress real fast.

Mike DeHaan: [8:22] Yeah. All of sudden, you don't have a choice. But yeah. So then, I mean, I don't know. Coming after that, we looked at we're looking at bringing on some more staff. So if you're interested in in working with us, especially in a in a sales role, you should shoot me up on Instagram at Mike underscore Invest. But, yeah, we've been interviewing some folks. We have a couple new folks here starting on. I feel really optimistic about the way we're going, especially because we have several new partners that we've committed to starting on over the next couple months.

Dan Austin: [8:47] Tons of growth on the client side of things.

Mike DeHaan: [8:49] That's Dude,

Dan Austin: [8:50] we can need people.

Mike DeHaan: [8:50] We currently have a waiting list out until June of people that wanna join with our partnership program. So if you guys enter our partnership program

Dan Austin: [8:57] a good program. Well, yeah. People are making money.

Mike DeHaan: [8:59] It will ask you to sort of just, like, start wholesaling properties right away without having to do any work. But, yeah. So we we have people we have two new markets starting up here in March, and we already have several booked for April. We have one booked for May. And I'm like, just wanna make sure that we're dialed in before we can. Right. Too out of control here.

Dan Austin: [9:18] Absolutely.

Mike DeHaan: [9:19] So, you know, we're we're taking like, so that's been a whole other process too. It's like, okay. Well, how do you plan for that and structure that? And it's just like these ridiculous growing pains that if you had told me you would have been trying to figure this out a year ago, I wouldn't have believed you because it's it's been nice.

Dan Austin: [9:35] Yeah. The growth is always incredibly challenging no matter what you're doing in a business or what phase of growth you're at because you're not only trying to operate the business, but you're also trying to grow the

Mike DeHaan: [9:42] business. Exactly.

Dan Austin: [9:43] Which then talks you know, you can start talking about, like, how do you invest? Can you pay yourself? When do you pay yourself? Like, that's just, like, an unknown too for most people. For me, it is. Right? Because if you pay yourself too much, then all of a sudden, you're cutting your knees out from underneath you, and you don't have anything to reinvest in the business.

Mike DeHaan: [9:58] Yeah. And it's it's interesting. I feel like people kinda go through iterations with that. And especially in the the wholesaling style of business, you see this a lot. So, like, people in our our instant investor program, our group coaching program, this is a really common question that comes up when they make their first payday. Because the typical pattern with this business that we've seen across so many markets is it takes, you know, three to four months, and the magic number seems to be around $30,000 in cost before people get their first deal. And, of course, you get that money back. The deal is always smaller than you're expecting it to be unless you get lucky. Yeah. It's always smaller. Yeah. And And then everyone's like, okay. Well, I need to, like, recover some of my costs to put it back in my bank account. But the key is you have to not do that. Right? You need to put it back into the business and keep that momentum going, and then, you know, have the discipline to grow the business and build the system so that you can start making more money on a regular basis.

Dan Austin: [10:49] Yeah. You have to look at that whole, like, lead up to your first piece of revenue as an investment. Mhmm. Don't think of that as I've gotta recover that. Think of that as your investment, and then that allows you to make 50,000, 100,000, 150,000 that year. Exactly. 200,000 the next year. Whatever that is, allows you to buy this is the other part that and it caught us up, is it allows you to potentially buy an eight unit apartment building at 60¢ on the dollar. Yeah. Right? It allows you to buy a six unit or a single family at 50% value. Right? So those are also things that don't necessarily come back to you right away and you don't see as an investment until they're stabilized. You're like, oh, shit. When you look back on the year, you're like, damn, I picked up, like, eight doors this year Mhmm. And have, you know, average, 25% equity across the whole portfolio, which is a massive amount of money for a lot of people. You but you don't see it because it's like, well, where did that money go that I invested in my business at the beginning of the year? Mhmm. It's right there.

Mike DeHaan: [11:38] That discipline is where real wealth and money comes from. Right? Because, like, anybody honestly, if you're listening to this and you're trying to still figure it out, I have bad news. But anybody can go and make 30 to $50,000 in a month. Not everybody can do that repeatedly. Right?

Dan Austin: [11:52] Yes. Like Yeah. You can have a big win. You can pop one off. You know what I mean?

Mike DeHaan: [11:55] Yeah. But, you know, the what you see is very common is have you a lot of people that will, you know, have the big win. They go. They buy some toys. They buy the Ferrari, or they go and they dump all of it into a safe rental property, and now they're back to square one. Right? Mhmm. Whereas if you invest in the system, you learn how to scale that system, and then, you know, you I think one of the hardest things as an entrepreneur is you realistically, especially in the real estate business, you have to kinda get used to spending larger amounts of time without personally making any money and then make bigger chunks that you use to live off for the rest of the year. Right? Right. But it's so challenging, especially coming from a a background where you have a salary, you have a paycheck, you have those sort of things, and you're like, okay. Well, I know I need, you know, $7 a month to live. If I don't make that, I'm not gonna, you know, I'm not gonna be able to to survive. It's like, well, what if after three months or four months, you make $35? Right? That is now more than $7 a month. You just had to forecast for that appropriately. Yes. Right?

Dan Austin: [12:53] Yes. You had to be ready for it. And, like, when you have a good comfortable salary, it's easy to be like, well, I spent all my money this month. That's okay. I'll get the exact same amount next month.

Mike DeHaan: [13:01] Mhmm. Yeah. Yeah. Which is you know? And it takes practice. It takes a level of comfort that I think you have to be willing to deal with. And I will also too, the biggest way to overcome that, if you're kind of in that role, is focus on building a reserve and have way more of a reserve than you think that you need, and then it makes it far easier. Like, even right now, like, I'm I'm sitting on about eighteen months worth of just straight cash, plus I have a fat line of credit if stuff were to get super weird. Just in case we don't make any money for the next eighteen months, the chances of that are extremely low. But doing that allows me to just be like, okay. Fine. I'm just gonna, like, not worry about it at all because I know my bills will be paid. And this, you know, that's budgeting in me going on, like, trips to Vail. Me, you know, going on other stuff that my wife and I have planned, you know, doing some modification of the house, all that sort of thing. We've budgeted the whole year, and now I have that money plus another six months set aside. And so I don't have to worry about living paycheck to paycheck as an entrepreneur, which is a super common problem.

Dan Austin: [13:56] That's one valuable thing about GoBund is one of the valuable, is you're kind of forced to look at what you spend every year

Mike DeHaan: [14:01] Mhmm.

Dan Austin: [14:01] Just in by nature of when you're going over your financial metrics with everybody. Yeah. So you could be like, last year I lived this way and I spent x amount of dollars, so that's my standard of living, whether you wanna go up from there or down from there, like, you know now, I have to make that much money or put that much money aside, and then everything above that is my investing profits that I can invest in something else or do whatever with.

Mike DeHaan: [14:24] Yep. Yeah. Exactly. Your living expenses are taken

Dan Austin: [14:26] care of. You will not you will not be homeless. Yeah. Yeah. Or have to cancel your Netflix subscription.

Mike DeHaan: [14:31] Right. You'll have to go through and look at every, like, $4 charge and be like, well, if I don't get rid of this one, I'm gonna not be able to make scratches.

Dan Austin: [14:37] Because, yeah, it's like I feel like too, like, most people I no. I shouldn't say this, but I feel like most people that I know, like, you have, like, a comfort level that you've learned to spend, and without trying, you're gonna spend that much. Mhmm. And then you're not you're not gonna spend any less, not gonna really spend any more because, like, that's your normal course of life. You're not going out and buying a Ferrari if you can't afford a Ferrari. Yep. But you are, you know, paying for your vehicle and all that sort of stuff. And so it's kinda like this natural groove, you know, and and Yeah. It's not that complicated once you know what that number is.

Mike DeHaan: [15:05] Yeah. I think I think you're completely right. And I think where people get into trouble is when they add on forced liabilities that are outside of that zone. So, you know, when you have people that buy the newer car, they go house broke. Right? They buy the house. They can't actually afford or required to pay monthly if they wanna keep, but it's outside the zone of, like, where they naturally kind of fluctuate.

Dan Austin: [15:26] Right. Where they naturally ride. That's so true. Yep.

Mike DeHaan: [15:28] Yeah. So, yeah, so it's been just lots of lots of business development stuff we've been working on. We gotta have another meeting here with our our business coach here because I was, you just to get caught up on the different processes that we're we're trying to build out. But overall, man, I'm excited. I feel like we have a lot of good things. We have a lot of good momentum going. But then the only complaint that I have right now is the fucking CRM that we use. They released their version three, which I'm sure is great. But I'm like, when you've spent the last three years with something that's, like, kind of the same, and then they just go and, like, change a bunch of shit that they think that you want. Yeah. If you own a software company, don't change things that are already working. Just add new stuff. Like, honestly.

Dan Austin: [16:09] It's like, oh, that's different. It's a treasure hunt. It's like, oh.

Mike DeHaan: [16:11] Like, there's so much of,

Dan Austin: [16:12] Oh, it's different.

Mike DeHaan: [16:13] Yeah. Yeah. And I and I'm so grateful that I've been procrastinating on building the steps and standards for you utilizing CRM because I would have to redo everything. Like, honestly. Like, all the pages are different. The flows are different. Everything's different. I'm like, why would you do that? Like, do you not understand that you have so many people that, like, have significant businesses that rely on what was already there, and you changed it? So I hate it, a, because, you know, we build a significant business off of the process that are already there, then and they decide to, like, change a bunch of the core features so they are now different. So did you know that we can no longer wholesale in the main tab?

Dan Austin: [16:51] I did not know that.

Mike DeHaan: [16:52] So have fun figuring that out. Within they now added a whole new wholesale pipeline.

Dan Austin: [16:56] I saw the wholesale pipeline, and I was like, why did you do that? Like, that's not even necessary.

Mike DeHaan: [17:00] Not necessary at all. But here's other reason I hate it is because the core of the people that use this platform in our business and most of this are sales guys. You know what? And the sales guys notoriously hate having to figure out new technology. They wanna talk to people. They don't wanna have to learn freaking software engineering to start over.

Dan Austin: [17:19] Well, I mean, it sucks too because we've been with this CRM since kind of the start, and so they we have had to go through their growing pains too. Mhmm. But it it speaks to the challenge of using any third party, like your CRM for us, as, like, your main, like, part of your business. Yeah. Because they can make changes that just ultimately affect all of your processes.

Mike DeHaan: [17:38] Yeah. They can. Yeah. But I don't know. I'm just glad I had procrastinated on building out all the standard operating procedures for this stuff for within our business because I'd have to redo all of them now. There you go.

Dan Austin: [17:49] You'll have to redo them all next year anyways.

Mike DeHaan: [17:51] Yeah. Right. They when they release version four. But, yeah, that's the only real grab I have, though. Besides that, everything is rocking. But real estate as a whole is is getting interesting right now, though. I was and this is also where you have to, like, judge headlines pretty heavily.

Dan Austin: [18:06] Yes. And where they're coming from.

Mike DeHaan: [18:07] Yeah. There was this big, headline. I started going around about how in January this year, real estate had experienced its biggest drop since the two thousand and eight recession.

Dan Austin: [18:17] Uh-oh.

Mike DeHaan: [18:18] That's all said. Uh-oh. Yeah. Big red flag. But

Dan Austin: [18:21] When you clicked on that link, was there some advertisements on that page too?

Mike DeHaan: [18:25] Yeah. For, like, flown whatever whatever one that, like, helps men with enlarged prostates pee better. What's that one called? Flomax?

Dan Austin: [18:32] I don't know. Viagra.

Mike DeHaan: [18:34] It's like they still make

Dan Austin: [18:35] up Pfizer's whatever their COVID their COVID freaking thing was. Yeah. Right. Anyways.

Mike DeHaan: [18:41] But you clicked on it, and it had, like, a little quip from realtor.com. It had a link to the realtor.com article. Realtor.com said these are it's had the biggest drop since 2008. I'm like, okay. Clicked on the realtor.com article. And what it said, they just cut off the top of the realtor.com headline where I said it had its biggest drop, but it's still up 6.6% year over year. So, like so literally, it doesn't mean anything at all. Yeah. That's a tough thing

Dan Austin: [19:07] too about all this data. You can, like, interpret anything. You can, like it's like we've been talking about, like, oh my god. The number the number of transactions is going down.

Mike DeHaan: [19:15] Mhmm.

Dan Austin: [19:16] But the price is still up. Like, okay. So what's better? More transactions or prices increasing?

Mike DeHaan: [19:22] Yeah. What I hate is when they they take these really low numbers. If you you've probably noticed this. When we're working with big numbers, they work in quantities, because it sounds big. When they work in small numbers, they work in percentages.

Dan Austin: [19:31] Percentages like that.

Mike DeHaan: [19:32] How the media skews everything to make you believe what they want you to believe. Because, like, let's say let's say you're doing, you know, 10 transactions. Right? And all of a sudden, there's five more. You can say, that's a 50% increase. That sounds absurd.

Dan Austin: [19:48] Yeah.

Mike DeHaan: [19:48] Right? But then, you know, if they were you know, if they if they said, like, oh, there's five more transactions. That doesn't sound very big. You're not gonna

Dan Austin: [19:54] cut that in. Yeah. Exactly.

Mike DeHaan: [19:56] You know? But, like, same same with they they're gonna be let's say you're doing a 100,000,000 transactions. They can say, there's, you know, there's been a million more transactions this month than than last month. It's like a million sounds like a lot, but it's really only 1%. And they just

Dan Austin: [20:08] a tiny amount.

Mike DeHaan: [20:09] Yep. They just mess with it, like, the headlines all the time to try and create some sort of sensational bullshit to get people to, I don't know, read, click on the ads, see the Viagra ads or the Pfizer ads, whatever it is.

Dan Austin: [20:22] What it is. It is all what it is. Yeah. Very very little of it's actually, like, valuable. There is, I mean, there's a lot of economic news that is intriguing, and you do have to dig a little bit and, like, look at it. Like, I think you and I both agree 2008 is not happening right now. It's not going to happen. If something crazy is gonna happen, we're gonna call it the twenty twenty three financial crisis, not the two thousand eight financial crisis because it's totally different economic environment. If you listen to anybody that knows anything from the media side of things, you know, experts and stuff, like, they it's it's a different environment for many, many different reasons. But, you know, I would say too, I read an article kind of opposite of, like, oh, no, the numbers are so crazy, but really not, was how many more cash buyers there are

Mike DeHaan: [21:03] Mhmm.

Dan Austin: [21:04] In today's markets than there were in previous financial markets. And it speaks to the fact that investors can and probably will support the market and won't let the real estate market crash because they're they're let's be honest. There's a lot more real estate investors than you and you and I got started. Right? And a lot of folks that we run with, that we know, that we hang out with, that are real estate investors, still have money and they're they're selling cash because they did just make a pile of money over the last several years, and they're just waiting to redeploy it in the right spaces. So they and they are considered cash buyers or considered investors that can keep the market afloat as it starts going like this because you and I know as well, like, know as well as anybody, like, if if the market starts going down, like, we're just looking for opportunities. We're gonna buy, buy, buy, buy. We're gonna keep buying as much as we can. And so that that keeps the market from actually going down because there's demand.

Mike DeHaan: [21:50] Yeah. I mean, I I think that that's that is something that is extremely unique to the situation right now.

Dan Austin: [21:56] And we have institutions putting billions into the single family real estate market as well. Just to add that

Mike DeHaan: [22:01] in there. So you have that, which is huge. But I also think that, you know, rich dad, poor dad, I I just Googled it. That book came out in 1997. Right? You know, people that read books, they they read that. But, you know, that's where a lot of people that got their star. You go listen to Andy Real Estate podcast, they always ask, what is your favorite business book? And everyone always goes, oh, it's Rich Dad Poor Dad. I read it when I was in college, and it changed my life. Whatever. Like, you know, but there's always people that didn't read, you know, and didn't, like, consume any sort of, like, especially business related books. Yeah. But now going into 2023 versus, like, 2008, even 2008 changes, 2023 change, It's such an incredible rise of financial knowledge, investment knowledge is coming from social media, podcasts, YouTube videos, TV shows, like influencers, whatever. And so you have all the people that are doing okay in their life. Right? Or, like or they're doing really well, and they understand the wealth generation potential of real estate. Mhmm. And so even as the market's going up and down, they're like, I don't really care because I have a long term time horizon. I'm 30 years old.

Mike DeHaan: [23:02] Me and my wife, we each make a buck 50 a year, and we wanna have you know, we wanna be wealthy when we're older. And so they're looking on a thirty year time horizon, and they're gonna be interested in real estate. And that did not exist, like, even, like, six years ago, seven years ago.

Dan Austin: [23:16] Right.

Mike DeHaan: [23:17] Like, I remember even when I first started first started talking with you about real estate when I was living in your house that you're renovating to be a college rental. You and Ted were the only people that I knew that did real estate.

Dan Austin: [23:28] Right.

Mike DeHaan: [23:28] You know? And now now you go everywhere, and people are talking about it. And part of that is influenced by the boom market we just had. But the thing is that has subsided, and now you're having the smarter money Yep. Like, the smaller scale smarter money, the financially responsible people that are, you know, wanting to take interest in it. And I think that that will prevent, you know, too much supply from building up because people are gonna jump on opportunities now.

Dan Austin: [23:53] Yeah. They're gonna exactly. They're gonna see a little duplex for sale that would have cost them $800,000 two years ago. They're gonna say 600, like, mine. Mhmm. It's my buy box.

Mike DeHaan: [24:01] Exactly. I mean, and on top of that too, you have all the people that have done well and that have bought properties. You know? And if they are selling properties, they are going to be $10.31 exchanging into more real estate. Yes. Right? So they're gonna keep the cycle going. Usually, And, they're gonna be moving up a class of some sort, whether that's into, like, a nicer single family home or that is into a commercial property or whatever. And that isn't gonna go away because you have people that have proven to themselves that they can do well with real estate. Mhmm. They now wanna graduate from those, you know, those particular assets, you know, capitalize on some of their gains, and but they wanna stay in real estate because they know they they know how to control it. You know, I'm a perfect example of this. I have my these four sort of, like, c class cash flow properties that I have, which have been great for me for the last three years. I'm in the process of selling them, which should hopefully be closing here on Friday. Nice. And I am currently under contract to buy an a class Airbnb in Austin, Texas. I'm moving out of, like, the c class cash flow headache.

Dan Austin: [24:56] This is coming from the guy who hates Airbnb, by the way.

Mike DeHaan: [24:59] So I'm I hate Airbnb as a core business model. I'm using it. I'm using the Airbnb as a way to cover my cost on an asset that I am very bullish on, which is the Austin market.

Dan Austin: [25:11] You're not doing it for cash flow.

Mike DeHaan: [25:12] I'm not doing it for cash flow. Like Exactly. Like, I wanted to cash flow a little bit so that Obviously. Yeah. So that I I get, you know, some cash and cash return. It doesn't need to be significant. My goal with that property is I am looking to buy in Austin Market. The house that I am currently under contract for was listed at $9.50. I'm buying it for $7.25.

Dan Austin: [25:30] Good for you.

Mike DeHaan: [25:31] Right? Plus they're paying, like, a bunch of closing costs. I'm buying all the furniture that was in the property.

Dan Austin: [25:36] Was it already an Airbnb, or was it was it a primary for somebody?

Mike DeHaan: [25:39] I think it was, a midterm rental. Okay. Because it doesn't have any Airbnb history, but it was fully furnished, and it's furnished nice. But I'm buying all the furniture for it. I'm buying it for $200 less than list. I'm getting a pretty good deal. It's a nice house, fully renovated. Everything's awesome with it. But my hope is that this property in the next ten years is gonna be, like, in Seattle and San Francisco. The other market's gonna be worth, you know, 1,500,000, whatever, you know, $2,000,000. At that point, I can exit and go into something else. Know? And even even better, if I'm worried about paying taxes, I'll go live down there for two years, which wouldn't be terrible, and I'll sell that shit, and I will make a million bucks tax free.

Dan Austin: [26:13] I love it. I think it's a great plan, honestly. It's that difference between where a lot of people talk about cash flow. There's also equity plays. And if you don't have a cash flowing portfolio or a strong strong w two to cover costs, it's probably not you're probably not ready to make equity plays.

Mike DeHaan: [26:26] Exactly. I mean, and that's the thing with it too is they payment's the gonna be significant. So even if it's like I mean, I know I will make some money on Airbnb. If it's a little bit of negative, I don't care because the rest of my portfolio will cover it. You know, if it's if it makes a positive, cool. That's a little bonus. Yep. And, you know, also, as I mentioned before, I have a huge cash reserve, so I have the ability to take that bet right now on, you know, a larger economic view that I think is is gonna be really beneficial. But point being, I am now one of those investors that is buying a house in this market where people desperately want houses, but I'm rolling over the gains that I made over the last several years to do so. And I think there's still a lot of other people that are doing exactly the same thing.

Dan Austin: [27:06] Yeah. I wonder that's a great point too. People will be switching out of Midwest markets into cash flow markets because they did actually get or not cash flow markets, but appreciation markets. Because a lot of out of town investors, they don't wanna live in the Midwest. They just had money and houses were cheap. When the Midwest actually started appreciating more than it typically would historically, and people like yourself have additional money in the Midwest, and they're like, well, I'd actually love to have a home in Austin or a home in LA or a home in Florida and these higher and a more expensive appreciating market or markets that are still appreciating, which tend to be the Sunbelt right now. Mhmm. And they're just gonna reposition that money out of Midwest. Yeah. Potentially. I don't know.

Mike DeHaan: [27:40] I'm sure it'll start to happen. Because, I mean, also too, that's the other thing is I'm selling this property to someone that is newer on the real estate investment journey, and their goal right now is cash flow. The properties that I'm selling are perfect for that. Right? You're not gonna get a huge amount of appreciation. They wanna get a good cash on cash return. They want something that's already set up. It's like, cool. Here you go. Those properties are prepared for that. And now I have had my gains, and I am just moving that on to something else. So, you know, if you are a Midwest investor, start talking to other people that you know that are interested in real estate, especially if they're new and they want cash flow. You might be able to sell them some of your properties without having to go through the listing process. No. Listen. That's exactly what we're doing. I'm selling it to a GoBundance guy that wants to go in and, you know, have some cash flow on these properties. So it's a perfect pass off. So, I mean, I imagine you'll start to see it, like like, more and more recently in in a lot of different markets, especially if you have, like, some of the Midwest properties that are decent. Like, I think if you have, you know, really shitty properties that are, like, $30 in rural Ohio, you're probably gonna be having a hard time.

Mike DeHaan: [28:41] But these are, you know, 150, $200,000 properties in Minnesota that are stable and easy. So those are easier to move.

Dan Austin: [28:49] Yep. They're good properties.

Mike DeHaan: [28:50] Yeah. So, anyway so, yeah, so I think that that'll that'll be make these next little bit really interesting because, I mean, like, that's my biggest view with the way the economy and especially The United States economy, and I guess where our economy too right now is going, that is kind of unprecedented territory, is we are entering the time of the haves and the have nots more so than I think that we've ever seen before. And it's not even just about people that have money, but it's people that are interested in making money and those that aren't.

Dan Austin: [29:21] Yeah. And then people that that educate themselves and understand and learn how the system works.

Mike DeHaan: [29:27] Mhmm.

Dan Austin: [29:27] Because, I mean, let's be honest, if you go back to when you were younger, you maybe didn't quite understand how the system works and you weren't part of the system. Mhmm. But then you figured out, you overthrew education and through some hard work, how the system works, and then you started being, I would say, working outside of the system of what the system wants you to be. Mhmm. Right? Which is go get that w two job and just go work and chip away for forty five years as opposed to investing within that system and making money year over year at a faster rate than the system. And I know I'm saying this word a lot. The system wants you to. Right? The the four zero one k was built to make other people wealthy and for you to be able to put some money away and have some tax advantage, but to not be able to grow really fast and all of a sudden retire when you're 40. Because for the system to work, they need people working longer than twenty years. With real estate, it gives you an opportunity, and more people are able to be educated in this through social media, through the web, all that sort of stuff that's grown so quickly to get educated in how to grow your money and scale your money

Mike DeHaan: [30:27] Yeah.

Dan Austin: [30:27] A lot quicker.

Mike DeHaan: [30:28] Exactly. I think that's exactly the thing is everyone's always talking about this is what the rich are doing. There's a lot more middle class people that are going on to that rich side. Yeah. Not necessarily because, you know, like, they're making more money. They're just making smarter investment decisions, and they're just making one more investment decision than those people that are doing nothing. So that makes that gap grow that much bigger. Right? Which It was it's kind of

Dan Austin: [30:49] a funny conversation, actually, because my wife and I took our daughter to a birthday party this weekend, yesterday, actually. And we went to the mall. It was in the mall. There's, like, an aquarium in our mall, which I don't know. Have you been to a mall recently?

Mike DeHaan: [31:04] Yeah. I mean, I go to Riverside Mall downtown to go to movie.

Dan Austin: [31:06] You go to, like, Hot Topics or something like that?

Mike DeHaan: [31:08] No. No. I go to the movie

Dan Austin: [31:09] theater down there. I wouldn't consider that a mall. I mean, like, I'm thinking traditional malls. Right?

Mike DeHaan: [31:13] That I

Dan Austin: [31:14] guess that technically is, but it's not really.

Mike DeHaan: [31:15] It's pretty nice. They have good restaurants and stuff, and it's right downtown.

Dan Austin: [31:18] It's more of a downtown destination than it is a shopping mall or shopping center. And, you know, growing up, when I was a teenager and and a child, like, that's the place you went. Mhmm. You know, you, like that's where everybody went to get all the stuff, and it was maybe a sign of, like, middle class affluence in a way because, like, there's that's where everybody shopped, like, as far as it had money and all that sort of stuff. Now you go to the mall is not the case. And it's mostly and we live in Washington, so we have a little bit different population, but, like, homeless people charging their cell phones and just kind of an odd, empty feeling. And you talk about, like, the haves and has nots. Like, we were walking to our car, and even even me, my my daughter, because she's weird, wanted to bring an umbrella. It was a perfectly sunny day, so she had an umbrella with her whole princess outfit. She had her birthday dress on, which was like a princess outfit she dialed

Mike DeHaan: [32:05] in. She's four. She just had her look. She's like, this is what I want.

Dan Austin: [32:08] She's this is yeah. Oh, yeah. She's like, dad, I picked all pink because that's my favorite color. She had pink rain boots on, pink dress, all this stuff. Right? She's dialed in for this birthday. And so I'm holding my daughter's umbrella. I'm like, I might we're walking through this, like, tunnel out to the parking garage. I was like, I might have to use this. Like, I was, like, practicing, like, having to, like, shove somebody off. It's not that I saw a bunch of danger, but I just felt different because there is that gap you're talking about, the haves and have nots. It's really in places like Washington, you can see that as the homeless population grows, and the low income population, like, stagnates Yeah. Because they're not able to invest, and they're not educating themselves to do so.

Mike DeHaan: [32:44] Yeah. I mean, it's so so tricky. I mean, like, that that whole situation is gonna be, I think, the big conflict that we deal with over the next several decades is how do you deal with that? Because, by any means, those people need general services. You know, they need food. They need shelter. It has to come from somewhere. And there's you know, especially when you look at the political sphere, there's

Dan Austin: [33:05] half of it that's like

Mike DeHaan: [33:06] they pull up your bootstraps. They gotta figure it out. There's half of it that's like, well, you've done good. Why don't you take care of them? I'm like, don't fucking wanna take care of them.

Dan Austin: [33:12] It's like and there's no neither of them are the right way to do it. No. But they they yeah. Exactly. There's some medium ground. There's some middle ground somewhere. But

Mike DeHaan: [33:19] Yeah. Well, we'll we'll see. But I think I think that's, you know, bigger picture with the with the real estate market. That's I think that that that is the real story outside of the real estate market.

Dan Austin: [33:28] The real story is you'll have to use a four year old's umbrella to fend off people when you're investing in real estate. Right. That's the truth.

Mike DeHaan: [33:36] I mean, you know, it's probably I mean, it would be the worst toy. Like, the worst sort of object to fend off a crazy tenant or something like that when you walk in some weird house. Anyway alright. Cool. Let's wrap this up. Anything else you wanna add, Dan? Anything you're excited about going into the end of q one? We're already in the final month here.

Dan Austin: [33:54] Man, I'm excited just about all the growth that we're seeing in our business and all the problem solving we're gonna have to do because we have a lot of demand. And it's funny, I was talking to one of my guys in my GoPod in GoBundance, Brandon. I think he listens our pod, he may Yeah. Hear Brandon Turner. Actually, kinda rhymes. It's not actually Brandon Turner, but, know, he has his own tribe now that I'm not in. But, like, I was going through with him because he's he's kinda putting together he's a real estate investor trying to put in together his acquisitions pipeline. And as I was talking about it, I was just, like, trying to add up, like, how he could do it and, like, you can't do it cheaper than we can. No. That's the crux of the person not that you shouldn't do it yourself, it's that you

Mike DeHaan: [34:32] can't do it for as cheap

Dan Austin: [34:33] as we can, especially if you're, like, I want to repurpose excess income into this industry, and I know there's a better way to do it than calling an agent.

Mike DeHaan: [34:41] Mhmm.

Dan Austin: [34:41] Right? Because there is a better way. There's a better way to get off market deals. And so what I'm saying, like, if you wanna just have us do run all your marketing, all your data management, like, there's just no way you could do it as good and as cheap as we can. And so that's what excites me is, like, that what we have there and people are knocking on our door saying, like, this is it, and we're able to capture that for people. Yeah. You know? Because, like, there's so you and I grew up in this industry as real estate investors, and you have all these people trying

Mike DeHaan: [35:05] to sell you leads. Mhmm.

Dan Austin: [35:06] They suck. Not lead sellers. We're not we're not trying to do that. And there's, like, this problem, because how cool would it be if you could do that? How much easier would it make your life if you could just go and buy a lead, and every third lead you call, you close the deal, and the closings are up to you. Mhmm. Right? That'd be cool. But most of those people selling leads are junk, and they weren't incentivized to make sure you were successful.

Mike DeHaan: [35:24] Yeah. I know. That that that's a whole other ballgame with that. I was talking to somebody recently that we started working with them, and they asked about those. And they said, yeah. So previously, we were we were doing, you know, these pay per lead things. And they were like, yeah. But, like, it was good. Like, we'd get deals from it. It's like, but at its peak, we were paying, like, $9,000 a deal. I'm like, oh my god. Like, that's three x.

Dan Austin: [35:45] Three times. Yeah.

Mike DeHaan: [35:46] Yeah. So I'm like, like, I understand it. It felt easy, but realize that your ROI is now that much worse.

Dan Austin: [35:51] Yeah.

Mike DeHaan: [35:52] Because you're having to spend three times as much for the deal as if you just found it yourself. Exactly. Yeah. No. That that's good. And, yeah, I guess guess what I'm what I'm excited for here going into the next little bit is, obviously, that stuff. But also with our our instant investor group too, I feel like we've got to get some super solid traction with different folks.

Dan Austin: [36:08] Oh, bro, you missed on the call the other day. You met we were talking about the the McKinney marketing method the other day. He's like he's he's like profiting on his what is it? The junk the junk out? Yeah. His junk out lead gen system, which is he's got a if you have if you don't remember, he has a he figured out, like, that junk out companies would probably go to people's houses that they're getting ready to sell or or situation like that. So after he called one, so he's like, I'm gonna set up a landing page to have people come to me, and then I'll it be like, yeah, I can refer then he refers them out for like a a fee to this other junk out guy for like a $50 fee or whatever. Yeah. So he he always asks, like, if they're selling their house, they're getting ready to sell their house. Right? And so that's just kind of his shtick. He wasn't doing this to make money on the junk out leads, but now he's referring those leads to a junk out guy, and he's making money on that just by creating a quick landing page to say that he is a junk out company.

Mike DeHaan: [37:03] It's incredible. I mean, it's brilliant. And as soon as he gets a deal signed around on that, which he ultimately will, it's like with every other form of marketing Yeah. It just comes down to consistency over time, he's gonna have uncovered something major. We we need to get a McKinney method shirt made with, like,

Dan Austin: [37:17] a trash truck. For sure, dude. Like, I'm just, like, so when you say you're excited about the group, like, the group is doing kick ass stuff that's organic, that's not just us talking to the group, that they're just coming up with ideas and doing things, they're and they're winning. They're killing it. It's awesome.

Mike DeHaan: [37:29] Yeah. I'm super excited to see, like, exactly, like, the ingenuity that's coming out from people as well as starting to get into it. We even have a new guy who's talking about how he's making his own direct mail for, like, a fraction of the cost of, like, a mail house. That was pretty smart. Like, that was super smart what he put together. You get that the whole outline, I was reading that, and I was like, damn. That's, like, next level. Just, like, thinking, and it's Crafty. Takes a little bit of extra work, but it's not crazy rocket science. Awesome. Well, anyways, guys, there's our plugs for you. Promise that wasn't the stage. That was just us getting stuck on what we have going on. But I hope you enjoyed the show. Please go and share with anybody who enjoys podcasts about real estate, business, or, you know, just some banter about the economy and, you know, the weird stuff that we have going on. You sharing this show is the easiest way for all this thing to grow, and we are trying to make this thing pretty big. So any way you can share it would be great. Aside from that, if you wanna get a free guide to start generating off market leads like we do every single month, go to collectingkeyspodcast.com/free. You can get your free five step guide to start generating off market leads. And then if you're interested in working with us or, you know, sort of hearing about how we work with other people, you can go to collectingkeyspodcast.com and click on become an instant investor.

Mike DeHaan: [38:37] There's a little button in the top right that can get you that. Or you can also shoot me or Dan a message on Instagram. I'm at Mike underscore Invest. Dan is at investor man Dan, and we both always love to chat with people. So, yeah, we actually got our first group DM the other day too from someone that was super stoked and saw us both out. I felt pretty special. I was like, I think we've made it.

Dan Austin: [38:56] I've never been in a group DM with you before. This is kinda fun.

Mike DeHaan: [39:00] Okay. So, anyways, guys, thanks for listening. Hit us up, and talk to y'all next week.

Speaker 2: [39:11] Podcasts, and check us out at collectingkeyspodcast.com for tips and guides on starting your own real estate investment and wholesaling business.