Real Estate Transactions Might Be Changing Forever, The Billion Dollar Scammer

Mike DeHaan: [0:00] But they stopped being able to service the Ponzi scheme, so they went to their next source of capital, which was this CPA company Oh, no. Where they had all these like huge companies, $30.40, $50,000,000 companies that used them for a CPA firm, and they were paying their taxes to the CPA company so they could, like, pay the IRS what they need to do. And they just said, nah. I was just I know they were gonna keep it. What's going on, guys? Welcome to today's episode of the collecting keys real estate investing podcast. This is the real estate show where we teach you how to make massive income rather than just passive income with your real estate business. Boom. If this is your first time here, my name is Mike DeHaan. I'm here with my co host, Dan Austin. And we have been doing this real estate thing full time for a little while now. Four years? A bit. Few 100 deals, all sorts of different businesses. We're slowly filling up the real estate bingo card going through our first foreclosures and stuff right now from our lending business. If you listen to our episode last week, got a whole bunch of stuff going on. And it's only getting more and more interesting in the real estate space as a whole as the economy is just getting getting weirder. Right? Weird. Super weird.

Mike DeHaan: [1:16] And here's the thing, right? When when it comes to business in general, everyone likes to make money, everyone likes to talk about business and do business. But when stuff starts to get tight, people get sensitive, and they start suing each other, you know, scamming each other, and doing weird stuff. And we are seeing that all over the place right now, even with some lots of weird stuff. A lot of

Dan Austin: [1:34] weird stuff.

Mike DeHaan: [1:34] Even with some of the biggest names. And so, I'm still trying to trying to understand the details of this. I'll preface it, but this came out just a couple of hours before this recording about this massive lawsuit that, I guess it's in several states, but juries have gone and found the National Association of Realtors, Keller Williams, Berkshire Hathaway, a bunch of other real estate companies basically guilty of, was it anti Running a cartel. Yeah, basically running a cartel. Guilty of antitrust laws around how they establish real estate commissions and basically inflating commissions. Uh-huh. And current damages are gonna respect to be paid back or $1,800,000,000, but may be climbing to over 5 as billion they continue to review all the different sort of situation.

Dan Austin: [2:23] I'm so excited for this because I'm just seeing like all the realtors like, ugh. Like getting all tense and like they're all gonna get worried. And they should because this is a thing that I think the iBuyers and Zillow and all these people coming into this market using technology and trying to like change the industry, which had a lot of pushback because you had a lot of old, basically, systems, and you and I know this, like, dealing with the real estate agent systems in general, they're so clunky, right? Forms and everything that they're doing, so you have all these people coming in with technology, and it's really kind of been stopped almost because of the old cartel called the NAR, and and you know, the realtor.com, or whatever. National Association of Realtors, yeah. Yep. National Association of Realtors, and and all that sort of stuff. And now, that's all in question. Right? Maybe they can't just get 6%, because that's what a lot of people say, like, why would I pay you 6% to sell a house? And in an up market especially, you probably don't need to. In a market like this, I think there's some argument that an agent brings a ton of value, which I won't ever argue, but either way, should you be giving 6% of your top line revenue, after you're already given a couple percent probably to transfer excise tax, and like maybe another half percent to this or that or whatever, you're you know, you're getting into the eight to 10% range to sell your house.

Mike DeHaan: [3:39] Yeah. Like I said, this like literally just came, sort of came out in like the past couple of hours, and I've been reading through different articles, and trying to find the ones that don't have paywalls because I'm cheap, and I'm not gonna pay for some subscription to read one article. Yeah. I But you seem to understand this a little bit better. So basically, it's antitrust laws. So, it's like something like you kinda did before we got in here. Basically

Dan Austin: [3:59] Yeah. So, like an antitrust law, like typically you think price setting or price gouging is kind of, they kinda come in hand in hand in this. This is my understanding of it, is like with the agents, think about it like a buyer and seller agent, like they talk to each other. Right? The clients don't talk to each other, which is kinda nice when you're in negotiation, because most people are passive, and they don't wanna be negotiating, so you have these agents on their behalf. Well, if you think about it at the highest level, those agents, the buyer agent and the seller agent, are both incentivized to get the highest price, right, because their commission is variable based on the sale price. And so, if you think about it, if they're like, hey man, like, can give you a little bit more money, I know my buyers are qualified for a little bit more, what if we push this up and you select me, or They can do these kind of manipulations of the offer price, so that their commissions are really high, but the net to the seller isn't necessarily better, or the net to the buyer isn't any better, maybe they're worse off. So, that screams antitrust, but we've just kind of lived with it forever because like, that's just what you do, right?

Mike DeHaan: [4:55] Yeah. And the problem is too, is it's gotten even more questionable as well now because especially we saw us in 2021, where you have all these federally approved lending programs, you know, FHA loans, things like that, that basically make it so that anyone can get approved for the loan. And so this was like the whole thing in 2021 is you have the FHA lender that would come in and be like $50,000 over asking price. Right? You have to like give them some, you know, points or whatever on the back end so they could buy it on the rate and be actually able to afford the loan. But the actual commission that the realtors are getting paid on that is significantly more. And they knew that, they're not stupid. Right? They're the ones that are heavily pushing to do that. I mean, we flip several houses where we would have a bunch of conventional buyers with conventional loans that would be like, you know, at market price, a little bit over, and obviously you'd have the FHA person from nowhere would come in $40,000 over. And you're like, oh shit, what is that? Right? And you know, you'd always take

Dan Austin: [5:57] that And

Mike DeHaan: [5:58] the reason this is such a big problem I think too, is I mean, well obviously realtors, in most states they're fiduciary, so they are technically required to have the of best interest in their sellers or their buyers. Of their client. And you know, this is obviously basically saying that they didn't necessarily do that. Yep. But also two, one of the things that's now I guarantee going to come under scrutiny is how freaking easy it is to get a real estate license. Right? Like honestly, because you you now have these people that are checking these boxes saying that like, I understand all these rules, but do they really? If they're all just violating them? Exactly. You know, and that's gonna be another thing come around is I guarantee you there's gonna be some realtors that probably did very, very well in 2021. You know, they have like the look, they went and they sold their realtor services in this hot real estate market to their church and their neighborhood and their CrossFit gym and all their friends and their high school that they went to and all this bullshit.

Dan Austin: [6:52] Their sphere of influence.

Mike DeHaan: [6:54] Yeah, and they did a bunch of illegal stuff, and they didn't even know it. Right? And I guarantee you that that's gonna come back around.

Dan Austin: [7:01] Oh yeah, oh yeah. Absolutely, it will come back around. I mean, it may not directly affect them hard, but their business is not going to exist in that same way.

Mike DeHaan: [7:07] It might affect them. I mean should they be held liable for it? Like if you have a realtor, if you have a realtor that let's say they made like $2,000,000 off of this and all their track record was their friends that couldn't necessarily afford a house, what we're going through and were regularly making 40 or $50,000 offers over asking price to get in these properties for no real reason to be doing that.

Dan Austin: [7:29] Uh-huh. Well, just to get it accepted because that became the standard set by the cartel. Right? Totally. So I guess the point I would make is that either that or their actual broker, because all of their the way it's set up, and so the responsibility just rolls uphill. Right? And so, the henchmen will likely maybe get be able to defer a lot that responsibility to their designated broker, which may be able to defer that up to the the like the Keller Williams, is obviously getting named in this and these other large franchises that may have to be the ones that pay out ultimately. Because like, let's be honest, most of those realtors bought a BMW and like a pool for their house Mhmm. And they don't got that money, so they're not gonna be able to get any of that back from them. I mean, somebody's gonna pay. Mhmm. Right? I mean, that's where they collect 5,000,000,000, and then the interesting thing about this is, and read an article, maybe not realizing it was related to this, but talking about potentially the change in why is the seller paying for the buyer's commission, potentially making that the way that that gets basically paid out on the HUD, is having that being paid through by the buyer Mhmm. As opposed to, like, guess The US is maybe a little bit more unique that we pay, that the seller pays for the buyer's commission off the HUD, when in other places that have real estate brokers like this, that that seller or the buyer is paying their buyer commission to find them the house? So how it works, at least in

Mike DeHaan: [8:49] European countries that I've explored this in, is there's typically a broker that does It's more like a commercial transaction.

Dan Austin: [8:55] Oh, okay.

Mike DeHaan: [8:56] And so like there's like a person that has to listen to the house, they work with the buyer, they work with both sides, and they're literally an individual broker. Gotcha. And you know, and with that I'm sure there's different roles, I'm not fully familiar with it. But most of them don't have like a two party sort of situation like we do here.

Dan Austin: [9:12] Gotcha. Okay. Yeah. So that that would be another and just interesting change that could be tied to this big lawsuit or that we could see going forward in the future.

Mike DeHaan: [9:20] It's interesting though too, right? Because what they're being found guilty of is exactly what wholesalers do, which is what we do all the time. Right? Where we collaborate with each other, you know, we talk with the buyers, like we kinda negotiate both sides fully for The best difference is, and the benefit that we have, is the fact that we're not licensed. Right? We don't have any fiduciary responsibility to anybody.

Dan Austin: [9:42] Yeah, we're just individuals negotiating, right, in good faith.

Mike DeHaan: [9:45] Correct. And we also have equitable interest in the property by signing the contract, which technically opens up to penalty if we fail to perform on that contract, and we don't meet the requirements of that contract. So we carry kind of more quote unquote risk, right, in general. But of course, what we do is we massage the contract so that it reduces our risk as low as possible. Whereas realtors don't have any of that.

Dan Austin: [10:07] Of

Mike DeHaan: [10:07] course. Yeah. But so what's gonna be very interesting to see is, will we start to see a situation where we have retail level wholesalers, right, who are now doing these transactions but off market from each other? Basically off market, right? But you could be like a literal, know, illegal back end realtor that goes and you're like, oh, I have somebody who wants to buy this house, and you can basically negotiate your own fee because you're trying to get away from these rules here.

Dan Austin: [10:37] Yeah. Interesting. There could be a play there, honestly. Yeah. Don't know. There's probably some of that already going on, so I mean, you know, it would make sense. Then maybe it's a state to state thing too, depending on different states of like how they decide to enforce some of that stuff too, because like there's the federal stuff, and then there's like the state laws of like how they would adjust and change this. Cause we're already seeing that, that's why I bring this up with wholesaling in general. Like how they're starting to treat that business in itself from a state level, and so maybe they, who know, I don't know. I'm not gonna pontificate what's gonna happen.

Mike DeHaan: [11:06] Yeah.

Dan Austin: [11:06] Because really, it's NAR's a huge, what would you what do you call that? Lobbyist. They have tons of people all around DC, and we know that our congressmen and women and senators Mhmm. Love real estate. And so we will see how they decide to handle this because it's a big decision. It's a huge decision.

Mike DeHaan: [11:25] Yeah. And ultimately too, like it's a system that has been broken for a very very long time. Everyone's know that it's been broken for a very long time. Yeah. And this could be just one of the many tipping points that causes it to see a extreme change.

Dan Austin: [11:39] You know what? Here's what's gonna happen. In ten years, this is gonna be like Sarbanes Oxley. Sarbanes Oxley, I'm not even getting the details of that, but like that's always kind of, it kinda makes things complicated. It came out after like 2008, like issues, right? Google it, I'm not gonna waste our time here talking about it, but it kinda makes things like a pain in the ass, from like a reporting standpoint, financial auditing standpoint. You're like, why do we have do all this? Like, oh, Sarbanes Oxley. And it's because some people were taking advantage of the situation. Doesn't mean that people, those same people aren't taking advantage of situations, because they are. So in this case, what'll happen is we'll have like another one or two forms that you have to fill out, disclosure forms that nobody ever reads. And they're like, what is this for? They're like, well, you remember back in 2023, they had this stupid frigging lawsuit, now we all have to fill out these extra forms. Probably, probably,

Mike DeHaan: [12:22] they'll have fill the non collusion form.

Dan Austin: [12:25] Seriously, like, yeah, we're not colluding, I swear, wink wink. Yeah. Yeah. Oh my god. Anyway. There's another one out there. What are we looking at?

Mike DeHaan: [12:31] This one I'm really excited about because this was everywhere. I know. We have

Dan Austin: [12:35] a personal kind of like connection to

Mike DeHaan: [12:36] this one. We do. Yeah. So I'm just fascinated with the unbelievable rise of scammers that are just sort of like coming due over the last year.

Dan Austin: [12:46] Yeah. Their loans are all getting called basically now. They're they're on borrowed time.

Mike DeHaan: [12:50] Exactly. Every time things get weird in the world, all the scumbags come And these guys in particular.

Dan Austin: [12:57] I'm laughing because this is feels like so juicy. We have some gossip and you I know you're getting excited.

Mike DeHaan: [13:01] I am excited. So this was introduced to us because this was actually one of our sales guys. This is his old boss. Mhmm. So he or one of our sales guys before he came and worked for us doing acquisitions, he worked for a company that was basically doing fundraising, and you know, helping find like off market deals for the syndication company. And so, you know, they're doing all that sort of stuff, he's doing that thing, that's fine. And these guys are kinda big deals. Like, we actually tried to help them move a multifamily deal earlier this year. They had like this big one in Savannah, Georgia that they were trying to move. We've helped them find buyers. Some stuff was kinda like weird about it. I didn't really feel good about it, so we ended up not pushing it too hard. Anyway, so I guess go forward over the past couple years, these guys have been on every podcast, speaking on stages, they're putting on huge events, they're doing all this weird stuff. Driving the fast cars. Yeah, trying the fast cars, the thing. All of a sudden, like a month ago, they disappeared. Right? It's off face to death. All social media, everything gone. And so anyway, so they had like this syndication business.

Mike DeHaan: [14:04] Their main business was a CPA firm based out of Chattanooga, Tennessee called Croft and Frost. If you wanna go look them up, this is all over everywhere, all over Reddit, and the news, and everything. And that was their primary business, and they basically had the real estate businesses in Tangent. And the accounting business they had was worth like a $150,000,000, allegedly. And they had been going forever. It's like a legacy company. Basically, the entire thing just like shut up shop overnight. Like all the employees showed up and they're like a sign on the door saying, company's shutting down. See you later. And this is like two days before taxes were meant to be due. Right? So this is like super recently. Like for the for the end of year, you know, the extended taxes. Yeah. Yeah. Disappointed last day's year. Anyway, all this stuff has now started to come out about what they were doing is basically they were stealing all of the money that they were syndicating to buy these properties. They didn't buy like any of these properties. They were just making raising the money and keeping it. And then they were paying their investors back with other money that they were raising. Classic pyramid scheme.

Dan Austin: [15:07] Classic Ponzi scheme.

Mike DeHaan: [15:07] Ponzi scheme, right? I'd say totally fine. We've seen that before. But they stopped being able to service the Ponzi scheme, so they went to their next source of capital, which was this CPA company Oh, Where they had all these huge companies, $30.40, $50,000,000 companies that used them for a CPA firm. And this is the kind of area where somebody's daddy started the Ironworks company and was working with his buddy's CPA firm, and then their kids moved into the company and they worked together and like this whole thing. And they were paying their taxes to the CPA company so they could like pay the IRS or whatever they need to do. And they just said, nah. I was just saying that they were gonna keep it. Trash. So they were like collecting. The thing is they have been doing this for the past couple of years. Oh my god. But because it takes the IRS time to sort of like get caught up on like the not paid taxes. All of a sudden, everyone started coming around. Right? IRS started coming around everybody being like, hey, you're always like a $700,000 penalty because you didn't pay your taxes in 2022. And everyone's like, woah, wait, what? Yeah, we did. And then, you know, obviously, were starting to be inquiries and inquiries and inquiries and inquiries, and now the guys disappeared off face of the earth. All social media gone.

Mike DeHaan: [16:15] Like they probably just got in their jet, like went to South America and have disappeared. And they've stole like hundreds of millions of dollars. Dirt bags. That sucks. That's terrible. Crazy. But the funny thing is too that's always so fascinating about this is they were doing illegal stuff for so long.

Dan Austin: [16:31] Mhmm.

Mike DeHaan: [16:32] Why are you talking on stages, bro? Yeah. Dude. Why Seriously. Are you going on every podcast?

Dan Austin: [16:38] Here's my thought is like it like, I always say it's a slippery slope to get into the whole like, you know, Rob Peter, paid Paul, Ponzi scheme type stuff, like maybe you start out, like, I always assume that the person's gonna start out trying to do something, and then they fail, ego gets involved, they think, hey man, if I could just, I'll just take this money, I'll raise some more money, we'll pay these guys off, get them out, we'll tell them that they got the the same the return that we were supposed to get them, and then investment will get better. I I believe in myself so much it'll get better, they just keep doing that, and they keep doing that, and then they put it off, and finally it crashes down, because upon this team, it can only be ran for so long. These guys, I feel like, maybe started that way, but then we're like, YOLO, like, let's just

Mike DeHaan: [17:16] do this. Totally.

Dan Austin: [17:18] And then in that case, you're right. Why would you go on stages? Just grab a pile of money and run. Mhmm. Like, don't even try because you're going to get caught. Like you can only not pay another company's taxes for so long. Totally. Right?

Mike DeHaan: [17:29] Yeah. I mean, exactly. It's 100% going to get caught up with.

Dan Austin: [17:33] Yeah. There's no question. Like, you have that big of an ego? You're like, they'll never catch me. The federal government will never catch me.

Mike DeHaan: [17:39] No. But that's like literally what these guys thought, especially this one dude.

Dan Austin: [17:43] They're like, oh, they're gonna hire 80,000 more IRS agents, they'll still never catch us.

Mike DeHaan: [17:46] Yeah. So the Frost guy just just disappeared. This other dude, Croft, I don't know his first name, but before, I don't if I can find it again, I found his personal website, Paul Croft, and on his personal website Oh, here it is maybe. So this is a guy that owns a CPA company. Oh, it's a PDF, I'll put this in the show notes so you guys can see So he talks about his rags to riches story, his unique ability to form impactful relationships, has enriched his personal and professional life, blah blah blah. Today his net worth is north of $700,000,000 and he has goals to become a billionaire in the next year.

Dan Austin: [18:21] Right? No guy that looks like this, I'm pulling up his Instagram, is worth $700,000,000. No. He's got He's

Mike DeHaan: [18:26] getting fucking pictures

Dan Austin: [18:27] of He's got three gold chains on his neck

Mike DeHaan: [18:30] His crosses?

Dan Austin: [18:31] Just looks like a total nerd.

Mike DeHaan: [18:32] Yeah, dude. But like, you know, and he has all these companies and different things he was doing, but the fact that he's just putting out there as someone that owns a CPA firm, right? So in my mind, if you're someone that owns a CPA company, and you're talking about how you're worth $700,000,000, and you're gonna be worth a billion dollars the next year, that's suspect as hell.

Dan Austin: [18:52] Totally. Like how do you get that big of

Mike DeHaan: [18:54] a in your net worth? Way.

Dan Austin: [18:57] Yeah. So anyway. It's too bad. On his Instagram, it looks like he's got a young son who's probably not gonna get to see his dad for five to ten years or however long you go to prison for something like this.

Mike DeHaan: [19:05] But he doesn't give a shit about that kid. He probably doesn't. A weird narcissist man, but wild. Just anyway, it was just sort of seeing another pretty large syndication investment company come crashing down like that. Because they were doing a lot of stuff. They were very big names. And then to sort of see how it also came together with something that people tend to view as being very trustworthy, right? And just like a CPA firm. Like, no one's really ever super skeptical about what their accountant's doing, especially with it's being a massive company like

Dan Austin: [19:36] that. Of course, right? They're like, oh yeah, bunch of nerds.

Mike DeHaan: [19:39] Yeah, exactly. I'll like, our

Dan Austin: [19:40] accountant every once in while, like, know, I'll get a letter that say we didn't pay our taxes, or it'll be like, oh, you know, because just like the filings or whatever, and I 100% trust him. Like, I send him a picture, I'm like, hey, can you take a look at this? He's like, yeah, we got it. I a 100% assume he's got it. Like, I have no distrust in him. Yeah.

Mike DeHaan: [19:56] Totally. Well I mean also, I think it's crazy. So is his on his sheet, this is probably all fabricated, but either way, he has it that his CPA firm, Crofts and Frost, was making revenue between 400 and $500,000,000 annually. As a CPA

Dan Austin: [20:12] company, dude. He's basically like one of the big four. He's claiming to be like a big four CPA company like KPMG or some shit. No, you're not pro.

Mike DeHaan: [20:21] Well, yeah. Like, you know, you have them pay you and then you steal their money. Works out great.

Dan Austin: [20:25] Such massive lies. Anyways,

Mike DeHaan: [20:27] I'm just so enthralled to see what other big names are gonna continue to go down. Right? I mean, we've we've seen this. We've had like a bunch of podcasters go down for raising money. Talked about that on several Instagram rails. You know, we talked about on here a few times. You know, we know Pace Morby's coming

Dan Austin: [20:43] with his bullshit. Somebody something's gonna happen over there. Right?

Mike DeHaan: [20:47] I'm saying I'm starting to see more and more stuff about sub two people like in his group and like his free Facebook group of people being like, oh, I'm getting sued by the seller, by the bank, by different people that are involved because they're not doing things right. Totally. Like the the world that whole world's gonna come crashing down. Know the history of launch is gonna come out too.

Dan Austin: [21:04] Absolutely. And like two to three years, if you've been trying to like get on bigger pockets or something, it'll be easy once they have half of their influencers in jail.

Mike DeHaan: [21:12] Right. They're all gone.

Dan Austin: [21:14] They're all gone from just being, you know, you know what I mean. So there's one other one that I wanted to talk about in this same vein, because I think it's the one you had texted me a couple nights ago about the office buildings Yeah. Defaults. Like, so remind me what that was, was that which market was that, or was that national specific, but tell the whole story, but also

Mike DeHaan: [21:31] So I think it was in Austin. I'm honestly not sure of the location.

Dan Austin: [21:35] It was a specific like large metro though.

Mike DeHaan: [21:37] Yeah it was. So Aaron Nemucestegui shared it on Instagram, and if you're into like real estate, just like macroeconomics at all, he's a fantastic follow. He's so into it. He has no bullshit opinions on stuff. She talked about this article, I think it was in Austin, but there was a skyscraper, like a $90,000,000 skyscraper that had been bought over the past five years. They had gone to fill it up with tenants, done everything right. The thing was fully performing, fully rented, everything with it was great. It came to the balloon payment for the commercial loan, which if you've never gotten a commercial loan before guys, typically how it works is it'll be like a ten year loan, and they will have an adjustment or review period at between five or seven years, where basically they can say like, is this property still making sense for us? Do we wanna call it? Do we wanna adjust it? What does that look like? So they got to this five year standpoint, and the lender on this skyscraper basically just said like, cool, we're calling the loan. We don't wanna hold this in our portfolio anymore. We want you to pay it off. And this is a property that is 100% fully performing, so they have no reason to do this.

Dan Austin: [22:46] Yeah, very good up, yeah.

Mike DeHaan: [22:47] Other than the fact that they don't wanna hold it on their debt anymore. And the investors that hold this property, right, that bought it and have this debt, Their options were either to go and refinance the loan, which at current 9% interest rates does not make sense unless they go and raise an obscene amount of money, like they're not gonna be able to anything, they're gonna take a huge loss, or to walk away. And so, they walked away. And the bank is now foreclosing on this perfectly valid skyscraper in downtown whatever market it was. I think it might

Dan Austin: [23:18] have been Atlanta on that one, was that one Atlanta?

Mike DeHaan: [23:20] It might have been Atlanta, maybe.

Dan Austin: [23:21] I think that one was Atlanta, which again, doesn't matter, it's a huge metro, right?

Mike DeHaan: [23:25] But the only people who get fucked in this are all of the private investors who put money into the syndication, and now all that equity is gone because the general partners walked away from it, the bank is getting their property, right, at probably a good discount that they know is fully performing. So like, yeah, absolutely. Mhmm. Right? And it's just like that's unheard of before.

Dan Austin: [23:44] Wasn't there another one that you sent me that showed like every office building in that metro defaulted? Yeah. That was the one I was thinking about. That one was more crazy.

Mike DeHaan: [23:52] So that that's even another one. Yeah, we're getting another rabbit hole now. So it was for the this was in last October. So this isn't in a single metro. This is in the country. Okay.

Dan Austin: [24:04] The entire country. The United States Of America. Land of the free, home of the brave. Mhmm.

Mike DeHaan: [24:08] Yeah. So basically all of these commercial loans for office buildings that were just that are set up like I described, where they have they're getting called, basically have five years, they have a five year review. Every single one that was maturing in the month of September, nine out of 10 of those defaulted. That's crazy. Right? So that means that basically Nine out of 10. 88.9% of the loans that were coming due in September, they either refused to refinance or the buyers defaulted and they went into some poor foreclosure. Right? So that's total loans of $672,000,000, with only 83,000,000 actually getting paid off.

Dan Austin: [24:45] That's pretty nuts. So yeah, that's 500,000,000. That's insane. In one month, so that happens month over month consecutively. You're gonna have a lot of investors, which happen to be like, also like people's retirements by the way, like hedge funds Really? And stuff like that. People's big pension plans invest in big office buildings like that. So that definitely has some rippling effects across the economy. That's pretty major.

Mike DeHaan: [25:10] Yeah. And so it said the majority of the investors in these types properties were exactly that. So basically, wealth management funds, retirement funds, insurance companies. We typically like to hold a triple net style stuff. And here's the great thing too about the fact that a bunch of all these insurance companies losing their ass on this. Guess where they're gonna make up that money? Coming back to all of us.

Dan Austin: [25:31] Exactly. That's exactly, they have to, right? So they got into a secure what has been for decades a secure, safe investment. A skyscraper probably comes out, people show up every day, they punch in, they punch out, that's how the American world or American economy works. Very safe, and now it's not safe. So then the question is, is yeah, like, where do they, they have to get their returns, right? For their investors, so they're gonna have to start increasing costs elsewhere, that's going to have a trickle down effect on the economy. Yeah, I don't know though, like, what is the next good play then? The next safe haven? Because like office space is unique too, it's like there's like I was reading an article about this a few months ago, like typically when we see a distressed asset, like that's what we invest in on a residential side. When you see a distressed asset, a lot of times, either you take it, renovate it somehow, and then re operate it the same way, or you take it and reposition. And in commercial, a lot of times, repositioning is what you have to do, because like, maybe if you think about it on a small scale, like a strip mall, you know, maybe we're not, I don't know, like, you don't need to go to a nail salon on that strip mall anymore, so in that area it's not gonna work, but you reposition that as something else. Yeah. With an office building, they were built with the intention of offices, and so people automatically say, well, just condo it out. You can't, because their infrastructure in the building is cost prohibitive to do that.

Dan Austin: [26:47] You just can't do that in a lot of these big skyscrapers, a lot these big office buildings, because just the way that they're built. So like, what do you do to reposition? There's gotta be something there. Somebody's smart enough gonna figure it out, but I mean, or maybe everybody's just gonna band together and say, we need to get your asses back in the office.

Mike DeHaan: [27:03] Yeah. Yeah. I mean, it's a great question, right? And you know, it's something to address for sure because our goal is to help you learn how to create massive income, not just like look at all this and be like, where, fuck? Right?

Dan Austin: [27:14] Yeah, because we're definitely not, there's opportunity here. There's opportunity. I'm trying to figure it out.

Mike DeHaan: [27:18] Yeah, so I mean, I honestly still think that there's a ton of opportunity on the residential side. I mean that's the reason I like residential real estate, because even when the market gets weird, people still need places to live. Know, people used to always go towards the commercial stuff because industry has been strong in The United States for a while, but that's just getting kinda weird. I think anything around affordable housing, there's probably a lot of opportunities still. Know, mobile home communities. We just had Amanda Cruz come talk to our instant investor group last week, and she had a ton of great insight on mobile home communities. I imagine there's gonna be even more opportunities with stuff like that. I don't know. I personally like the stuff that we're looking at, I either want it to be in like the starter home price point where there's always gonna be a buyer. Because even if like the current starter home buyers start to suck ass and get wrecked, right, you're gonna have the next group that's gonna come down there. And then if the class b's start getting wrecked, the class a's are gonna come down there. Exactly. You all you have basically have generations of shit before things get completely bad. Right? Totally.

Mike DeHaan: [28:22] In the starter home price point. And then aside from that, any way that you can secure more beneficial debt. And I don't think that's necessarily from sub twos because I also think that all these people that are doing sub twos, the financial institutions are going to come calling for that money. Yeah. That's at 2%. That's at 3%, especially when banks start taking losses. They're gonna be like, or we could just get all that capital back and sell this house. And what everyone's always saying on that is like, well, banks aren't in the house flipping business. And you're like, you're right, they haven't been, but all of a sudden when that house flipping opportunity becomes a, you know, multi billion dollar opportunity for them, they're gonna be they're gonna become a house flipping business very very quickly.

Dan Austin: [29:03] Yeah. You know think JPMorgan Chase wants to do that? Yeah, some of them are already investing billions in turnkey rentals.

Mike DeHaan: [29:09] Exactly, and all of a sudden they start calling all these sub two loans to take all these houses back, I wouldn't do that. So I think that the best debt that you can get right now is if you can negotiate beneficial seller finance terms with, you know, people that already have their cash in the deal. Right? You know, they're an owner that has property paid off, or you're able to like get them paid off and then you have them carry the note because then you control the debt. Absolutely. Even though they technically are the ones that own the debt, if you establish the debt, and it is a mom and pop person, control it because you're gonna be more educated about it than they are versus you'll never have that with a bank.

Dan Austin: [29:45] And you're gonna do that with an established relationship with the seller because you should not do, you know, shit with crazy people anyways. So, you should be vetting them just like they should be vetting you. Here's my theory on the sub two. This is way, be way out there because I I still do think it's like a good transaction to do. Like, there's certain situations, especially on the commercial side, this is actually surprisingly a little bit more common to see something like this as it would than it would be like from a mom and pop selling you their house sub two. But here's my theory. Some like dude's gonna go through like a sub two course, they're gonna learn how to do it online somehow, and their dad's gonna happen to be like a middle management hard charger at a bank, and he's gonna hear about it, he's like, what the hell are you talking about? You can't do that, that shit's illegal. He's gonna be like, look at this, there's millions of people talking about this online, and that dude's gonna be like, there's my promotion dog, and he's gonna go, he's gonna pitch it, and then they're gonna find some nerd in the IT department, he's gonna be like, hey, is there a way, like, if we could just like take all the addresses where our loans are attached to, and then look and see like, all the owners, if there's any changes on those county records, and some nerds are be like, absolutely, we're build like a web scraper, we'll do this, we'll set up an excel spreadsheet, and then you can take a percentage of how much money you're gonna save the bank, and he gonna get promoted to like VP for this, and that's how he's gonna stake it.

Dan Austin: [30:55] That's how it's all gonna collapse.

Mike DeHaan: [30:56] Yeah. Exactly. I can already see the Netflix movie about it, or like the Who Made the Big Short was the director? He's selling several movies that are kinda like that stuff.

Dan Austin: [31:05] Oh. I don't know.

Mike DeHaan: [31:07] I can't remember. Don't know. I'm I'm not sure I like movie names. Martin's Risky. See, that's what I thought, but that's he's Wolf of Wall Street. Right? Oh, okay. But he's like kinda that fast out. Adam McKay, I've never heard

Dan Austin: [31:16] of him. So never mind. I'm talking about him. Yeah.

Mike DeHaan: [31:18] But yeah, there'll be a movie about that. Right? That's like, that's the housing crisis that's gonna come on top of all of the the commercial stuff

Dan Austin: [31:27] that's coming down. The storyline's gonna be like, hey, you know, for history, we always said that commercial residential was decoupled, and then this one smart dude found out that they weren't, and then he shorted it all. Because office space was crashing, we all didn't realize how it was all coupled together and it collapsed.

Mike DeHaan: [31:43] Yeah. It is. It's just super fascinating. Like, I don't know, I feel like this stuff has been building up for a while. If you look at that situation with that skyscraper we talked about, we look at embezzlement as crazy as this Croft and Frost thing, whatever the fuck their names are, that we talked about. You look at this thing with the National Association of Realtors, like those are all very major things Mhmm. That have happened in a very short period of time. I feel like is just the beginning of like a lot of stuff that's gonna come over the next couple of months.

Dan Austin: [32:19] Yeah. When you're playing with like assets at that large, that are that large, and like you said, you rattled off types of people that are investing in it, like there is gotta be some trickle down effects there. Yeah. I don't know what those look like. I will say that what I'm gonna continue to do is like do what I know, I'm gonna stay in my lane, and continue to invest in real estate, because I know, especially if you're investing locally, real estate is hyper local. We don't have an office market here that's going to totally affect the commercial space here. Obviously, people's retirement funds and people that are invested in these big firms are going to feel that, but, for us, like, residential is our sweet spot here locally, and we're gonna look at opportunity and continue to invest as we normally would.

Mike DeHaan: [32:58] That's fair.

Dan Austin: [32:58] We're just going to make sure that we're not overextending ourselves because you never know if there's more opportunity out there, you wanna have money in front of

Mike DeHaan: [33:06] you. Exactly. Yeah. And, you know, it's just it's all the beginning, especially too as, you know, they're saying everyone's COVID savings are gonna be disappearing here, if they haven't already over the next couple of months. Yeah. I think stuff's finally gonna start to get weird. People haven't seen it forever. We're gonna be going into nine, ten, 11% interest rates, you know, with inflation, with people at rock bottom savings right into an election year, next year's gonna be freaking I wild, really think so.

Dan Austin: [33:34] It's gonna be hot. You think it's gonna be hot? I don't know what to think. I'm a like, I'm kinda so bullish, but I have no idea what to what to think honestly. I think the holidays, like, get post holidays is going to be like that's where shit's gonna start getting figured out. So what's gonna shake out is gonna shake out.

Mike DeHaan: [33:49] The one thing that I am bullish on is there will always be ways for people to make money if you are in the position and the mindset to try and figure out how to make money. Yeah. Right? In a capitalist country like The United States, you should do everything that you can to not be lower middle class, like literally anything. And if you can get past that, and you can sort of stay in that crowd, you'll probably be fine.

Dan Austin: [34:17] Right? Yeah. A good example of that is like war. Like The US has prospered anytime there's a war, which makes you think like, why are we Look at all these wars going on right now in the world. The US has always prospered, and it's because there's people like, yeah, typically you think that'd be bad for the economy. The people that figure out how to sell bullets, they're doing alright. I mean,

Mike DeHaan: [34:34] look look at the entire, you know, Russian oligarchs and all that. Right? Those are all the dudes that figured out how to do it during the communist.

Dan Austin: [34:40] Figured out how to hustle. Yep.

Mike DeHaan: [34:42] You know what I'm not saying? That's right. You know, that's not necessarily how it should be. We should there should be a huge us and them thing that exists, but unfortunately, that is the truth.

Dan Austin: [34:50] Right? You gotta educate yourself, man. You got you. You gotta get after there and figure shit out. Mhmm. Nobody else is gonna do it for you. Yeah. Cool.

Mike DeHaan: [34:56] Anything else, Dan, before we finish up?

Dan Austin: [34:57] Nope. No.

Mike DeHaan: [34:58] Let's roll. Right on, guys.

Dan Austin: [34:59] Thanks for shooting.

Mike DeHaan: [35:00] Yeah. There you go. Yeah. Happy Halloween is Halloween. So cool, guys. Well, we appreciate you all. If you have any other scams or crazy stories, you should send them to us. Yeah. You should message them to either of us on Instagram. I'm at Mike underscore invests. Dan is at investor main. Dan, you can also email me if you really want at mike@collectingkeys.com.

Dan Austin: [35:23] The sleezier the better.

Mike DeHaan: [35:24] The sleezier the

Dan Austin: [35:24] better. We just I mean, wait. Keep it related to like real estate. I mean, I don't need to get virus on my computer, but definitely like, yeah. We like the gossip.

Mike DeHaan: [35:32] I'm just infatuated right now with like all this shit that's going on. Like it's so mind blowing to me. But I would love to check it out. Send it me on Instagram, email it to me, that'd be awesome. And besides that guys, share this with your friends. It's a great way to help us grow and we really appreciate it. And every person that you tell technically is worth 1.8 other people that they're gonna tell to you. So basically, you're helping us exponentially grow according to Please. What like dudes like Altramosie and other people say, which they should be doing.

Dan Austin: [35:59] I believe it.

Mike DeHaan: [35:59] So

Dan Austin: [35:59] yeah. Definitely do it. Like, we appreciate everybody, all of our listeners, and they'll we don't have any advertisements, so like, we get paid by your love and affection.

Mike DeHaan: [36:08] Exactly. Cool. Well, thanks, everybody. Appreciate you all, and we'll talk to you next week.