Real Money vs. Fake Equity: Is Inflation Killing Your Returns?

Mike DeHaan: [0:00] Real quick before we jump into the show, we created the collecting keys podcast to be a real estate investing podcast that is created by real estate operators for real estate operators. And we want operators everywhere to know what it really takes these days to be successful in this business rather than all the fluff that all the other content creators and podcasters out there make. And so one of the challenges with this is that it's challenging to grow because most operators are too busy out there working. Right? And they aren't always learning or actively seeking new learning material. And so if you could please share this show with any fellow operators you know, you you can text it to them. You can post it on your socials. You can leave us a good review that you then share somewhere. That would be amazing. But really, whatever, it really helps us continue to get excited to create content, and it will also help you because everyone that you expose us to will get better as a real estate operator and close more deals. So if you could do that for us, it would really need a ton. And, otherwise, we appreciate you guys, and let's get into this episode. If your real estate values stay the same and the value of the dollar you're creating to fundamentally drop an immense amount. Like, that is also equally bad. What is going on, guys?

Mike DeHaan: [1:16] Welcome to today's episode of the collecting keys real estate investing podcast. It is just me, Mike DeHaan, and Dylan Cook today. Danger Dan Austin is not here. So is he gonna maybe, like, a worse nickname for him because he, like, keeps putting you on blast, but that's what came to mind right away.

Dylan Koch: [1:32] I can't believe that last week you guys actually left it in the freaking recording.

Mike DeHaan: [1:38] Oh, it's fine. Nobody catches up on those. Everyone respects you too much for that. But what's going on, guys? It's your first time here. This is a real estate operator show by real estate operators for real estate operators. And we like to talk about real estate business, the economy, and, you know, how to continue making money so that all the shit that's going on in world doesn't affect you as much as it is for all of your poor friends. So cool, man. Well, appreciate you hopping on with me even though Dan was out. And something I wanted to start with because I felt like this is a really relevant topic. It is a little bit like higher level economic thinking. But I think it's super relevant because I feel like one of the most common conversations I see happening right now between, I don't know, I'd say like small business people. People that aren't like so rich yet that they don't have to care about these kinds of things. But those of us that are still sort of figuring it out is around like what's going to get your highest rate of return. You know, a lot of talk around like the stock market. Stocks hit all time high last week. And so there's all these sort of things. And then what kind of like spurred this line of thing that we're going to dive into is I talked to one of my cousins who's in Europe. And they were basically saying that there are many stocks that are all time highs in USD, but not compared to the Euro. And so that took us down this rabbit hole of like, well, are the stocks actually growing, or is the US dollar actually just, like, decreasing in value that much that we are, like, watching the wrong thing?

Mike DeHaan: [3:00] And what was this can you break this down in, like, the explain, like, I'm five version of what you sent over, Dylan?

Dylan Koch: [3:05] Yeah. I'll do my best. So dollar dominance is a very it's common among political talk and, I guess, economics. But people think strong dollar. If you think, like, strong, you usually think it's a good thing. That doesn't necessarily mean it's a good thing as far as, like, your trading partners, what assets are are priced in and that kind of stuff. In fact, Trump wants a weaker dollar. So that way Mhmm. We look more lendable, we can import more, etcetera. So the how this is kind of measured, it's called the Dixie or DXY, but has to be relative to something else. So the dollar versus the euro, dollar versus everything else. It's a basket of, like, the biggest currencies. So it's the euro, the yen, the pound, but the euro compromises almost 60% of that basket. And so it kind of depends on their exchange rate, what's going up, what's going down, versus how other things get priced.

Mike DeHaan: [3:57] Mhmm. Sure. Okay. And so I think, like, the the big thing with a lot of this is that, you know, the US dollar at least the dollar index has fallen, what, 10%?

Dylan Koch: [4:08] Year to date. Yeah.

Mike DeHaan: [4:09] Year to date. So it's fallen a ton. So that basically means that if you go back to like the world stage at the beginning of the year, the US dollar was 10%

Dylan Koch: [4:18] stronger viable.

Mike DeHaan: [4:20] Than it is now, and the euro has not fundamentally stayed the same. And then I guess the big thing with this as well is you were saying that if you aggregate this over a very long period of time, gold and the dollar have fundamentally stayed, like, equal. Is that what you said?

Dylan Koch: [4:34] So no. A good thing to illustrate this to bring the, I guess, a third party into it is if you measure the S and P 500 in dollar terms from 1980 Mhmm. You know, it's pretty much like up into the right. Yeah. You can take out the recessions in there, but whatever. It's pretty much up into the right up to so I I don't know what it's at, but almost like 6,000 today if you looked up SPY. But if you were to take that same s and p 500, which is like basically by market cap, and you price it in gold as a denominator instead of dollars, it's basically been flat for forty five years, because gold has gone up just as much as the S and P has in that same period of time.

Mike DeHaan: [5:13] Yeah. Interesting. So I think, like, the big sort of takeaway and the reason I wanna talk about this is because there's kind of this whole, I don't know, old mentality, right, of which which does fundamentally make sense about how you don't wanna be in dollars. You wanna be in assets because assets will go up, you know, while the dollar kind of like does its thing. But how does it start to matter when the assets kind of like either stay the same and the base value they're comparing it to, I. E, the US dollar starts to really like lose value? Because like and and specifically in terms of real estate, you hear tons of people that say like, I just keep buying real estate, so I'm holding assets. But if your real estate values stay the same, and the value of the dollar you're creating to fundamentally drop an immense amount, like that is also equally bad.

Dylan Koch: [5:59] I would view it as the dollar has lost its purchasing power, which is like you're kind of tying in inflation here, basically since the formation of the Federal Reserve, which is in 1913. So over one hundred years ago. And we didn't have the dollar's reserve currency until 1941, I think, is the Brentwoods Agreement. And that was still backed by gold. And then that wasn't off that until 1971, when Nick is that is like, since then the, like the forex market, like dollars versus everything else. And since 1971, the dollars have been the premier currency around the world. Okay. But now, people have been calling for like the death of the dollar for a long time. Right? Like, it's happened 2008. I started QE, everyone's like, no one's gonna want dollars. But the fact of the matter is like, the dollar is still what they call the cleanest dirty shirt of all the other currencies, because what's going to replace the dollar right now? It's not the yen. It's not the euro. It's not anything anything else. So there's still a flight to dollars, and I think we're a long way away before people stop using it. But if I'm looking from a 50,000 foot view, I think the weakness in the dollar is a trend that is going to continue. So I would rather be in assets like real estate, like Bitcoin, like gold, like even like fine art. So like things that can't be printed by the central banks are things that are probably going to go up more than the weakness of the dollar.

Mike DeHaan: [7:18] Sure. Yeah. Like, reflects a lot of the general views people have had. I don't know. I think overall, just big picture. I the one thing that is completely, I would say, exponentially scalable is just investing in yourself and learning how to like make money. I would say like now more than ever, that's so important because, you know, we're already seeing like more and more millionaires every day. Right? Expenses and things are starting to increase. The value of the dollar worldwide is getting worse. And so you just gotta kinda, like, get to a position where you're so wealthy that you can deal with it. Because if you're kinda, like, reliant on linear growth at this point, you're just gonna get fucked because we're experiencing essentially exponential decay.

Dylan Koch: [7:59] Yeah. And people go back and forth, like, you know, they wanted that $5,000 a month in income to replace their w two or whatever. One, know that's rather difficult with rental properties. But $25,000 isn't gonna get you much in today's world. Especially, like, especially if you live where, like, you live or even where I live, that's really not that much.

Mike DeHaan: [8:17] No. Yeah. It's it's crazy how much is, like, basic stuff is increasing costs. So If you had to

Dylan Koch: [8:22] guess what I'm gonna go back to 1971 when we went off the gold standard. What a million dollars would be adjusted for inflation today.

Mike DeHaan: [8:32] A million dollars just for inflation? 3.7.

Dylan Koch: [8:36] So it only goes through May 2025. And this is through the Bureau of Labor Statistics. So this is government data. Basic 8,000,000. Eight zero seven seven. That's crazy. Since the seventies? '71. So, basically, if you were a millionaire in 1971, you'd have to be equivalent worth of $8,000,000 in the bank to be the same purchasing power as fifty years ago.

Mike DeHaan: [8:56] Which is insane to think about. But, like, if I think about the rich guys that I know, like the guys that are worth, you know, let's say 10,000,000 plus, they typically live the lifestyle of what I thought a millionaire was when I was a kid.

Dylan Koch: [9:07] Right. Yeah. No. That's a good, you know, like data point.

Mike DeHaan: [9:10] Yeah. A completely subjective data point. They, like, have the, you know, the big house and, like, the multiple houses and the vacations and, like, everything like that that when I imagined a millionaire, like, when I watched Home Alone as a kid and I was like, what the fuck is Kevin's dad? The guys that do that are now worth 10,000,000 plus. They're not worth 2,000,000

Dylan Koch: [9:28] plus. Those are the ones like, I don't know. You wanna do this when you're, hopefully, in your thirties or forties, not necessarily when you're 60 or 70 years old, and you can't really enjoy the fruits of your labor much anymore.

Mike DeHaan: [9:40] Yeah. So that's why folks on that massive income, not just the passive income piece, because the passive income isn't isn't gonna be worth that much anymore, especially when it keeps getting stripped away with taxes and everything else.

Dylan Koch: [9:51] I was at that GoBundance event not too long ago. And one of the takeaways was one, they have like much bigger problems than I do because this was more for champions, even though I was I'm not part of that group. But they had like a little round table there at the end too. And basically, they're like, fuck you money number is 25,000,000. Is there they're basically based on I can make a 4% net rate of return on basically my my net worth somehow to make a million dollars a year.

Mike DeHaan: [10:20] Yeah. Yeah. Which is a lot, like, how you live your lifestyle. But for me to spend a million dollars a year would be like an extreme stretch. I already kinda do everything that I wanna do. Like, I can't imagine five x ing my spend more than that. Like, seven x ing my annual spend.

Dylan Koch: [10:37] No. That would be a huge jump for us. Probably about the same.

Mike DeHaan: [10:40] Yeah. Some people I would say say I don't think large enough, but I don't know. I live in a nice house. I got I fly first class to Asia and Europe. Like, I don't have to worry about stuff. I would have to just be kind of frivolously spending money on bullshit to spend $83,000 a month.

Dylan Koch: [10:55] Well, see, when you when you break it up per month, that actually seems pretty crazy. $80 a month? Yeah.

Mike DeHaan: [11:00] It's insane, dude. Like, what are you buying? Like, I mean, you even you think about this. Right? Like, spending a million dollars a year, if you go and buy, like, a a Ferrari for you and your wife, like, a $200,000 car on financing, what's that monthly payment gonna be like? $6 each? Just fully guessing. Let's say it is. That seems maybe high, maybe low. I don't know. That's $12.

Dylan Koch: [11:22] I think it's a little high, but yeah. Maybe.

Mike DeHaan: [11:23] Yeah. So that's as high. $12 just for the cars. Right? You still got $65,000 to fuck around with after that. Yep. A $100,000,000 a year.

Dylan Koch: [11:33] Well, one of the first scale things that we did, Mike, if you remember the first KeyesCon, we did, that goal or dream setting exercise or, like, your ideal life. And I've done it a couple times now, but I think me even, like, stretching, it's, like, $300 a year. And that's, me trying to come up with shit. Right? So it's a lot less than I think people think, unless your goal is to fly private, you know, all the time.

Mike DeHaan: [11:56] It would be interesting to, like, see like, do that exercise across, like, generations. If you had, say, a gen x and then, like, a millennial and then, a, you know, gen z or, like, a younger person, how those expenses and budgets kind of shift. Because I would bet you that millennials on average are the lowest just because we are they do tend be very experienced folks and not super consumeristic. Gen X people that I know anyway, they tend to be a lot more into like, I wanna have like my vacation home at the lake and like, I wanna have my boats and I wanna be able to do all this extra stuff. And then Gen Zs, I don't know what they spend money on, but I do know that on that there was a survey that went around that said that they considered a good income, not high income, a good income to be, like, $560,000 a year. Did you see that?

Dylan Koch: [12:44] Very unrealistic.

Mike DeHaan: [12:45] Yeah. So so, like, they obviously are looking to spend money on something.

Dylan Koch: [12:50] I'm wondering if that's just like Right. They don't even know what shit costs.

Mike DeHaan: [12:53] They're just ignorant. Right? It's like Bill Gates trying to say how much a gallon of milk cost, and they're like, $11. I don't know. I just well, that's what is what it cost me because I ordered off of, you know, fucking Instacart.

Dylan Koch: [13:06] Yeah. But there's a point to, like, okay. We're talking about, like, the fat fire or, like, you know, the people who are worth a shit ton versus just the financial security. Whereas, like, the past, I bet, two months, we had to replace a hot water heater in our house, a washing machine.

Mike DeHaan: [13:21] Mhmm.

Dylan Koch: [13:21] My car got a flat tire. And I think there's one other thing I'm missing. So, like, four, like, larger ticket items, probably over a thousand bucks each, where at least we're in the position where we're like, yeah. This sucks and it's annoying, but I'm not worrying about my next paycheck that comes in to pay for

Mike DeHaan: [13:36] it. For sure. Right?

Dylan Koch: [13:37] So it's just like the financial security versus the financial freedom.

Mike DeHaan: [13:40] Yeah. So there's the financial security. There's the financial freedom, right, where you can, you know, live your life that I've think about it. But then there's like the financial abundance piece, which I do think that especially in like the GoBindance world and different things, people do kind of get into that where they wanna be able to like give a certain amount where it's like meaningful or impactful. So like for me, I'm in a situation where like if there's a cause that comes through you or something I believe in that's cool and they're like, you know, oh, do you wanna like give money? I can give like, you know, couple thousand bucks and like not think about it. Right? If I feel good about it, I like it. That's fine. I'm not doing that every day, but a few times a year totally. But like there is a level where if people wanna be able to give like know, have a foundation where they pay $50,000 a year for something, that's a whole other ballgame.

Dylan Koch: [14:22] I don't know, man. It's just like the you dream big, and if you don't get it, you know, you're still better off in a better situation. So.

Mike DeHaan: [14:28] Yeah. And I will say that that whole discussion, that is assuming you're not paying taxes. Yes. But so because, like, if you're making a million dollars a year and you are paying taxes, you're down to, what, $600 probably?

Dylan Koch: [14:38] Probably 6 to 7 if you're

Mike DeHaan: [14:39] So either way, you still have $55,000 that you need to figure out to spend on a basis, which is, you know, more than what my starting salary was out of college in a whole year. But it's interesting. You know, I think that just focusing on that income piece, though, is is more important now than ever. And what's funny too is I do feel like there's been a movement towards that with like, you know, the rise of like Alex Remozzi and like this business buying and a lot of those sort of things, which is kind of interesting. Because when I got into real estate back in the day with bigger pockets, everything was around like financial freedom. But now with like the small business buying stuff, you're starting to see a lot of push towards like making like real money. Right? I also think this is where you why you've seen the rise of like the sales gurus that are, like, the worst thing to happen to social media ever. Like, the Andy Eliots and those sort of fucking dorks.

Dylan Koch: [15:31] Wasn't there one that that we'd send amongst each other about a guy, like, basically, like, don't ask me if you need a ride to work or can't use a bathroom or some shit. I don't remember.

Mike DeHaan: [15:40] Yes. So he he has, a door to door sales team. And so, basically, what they do is they go and they drop everyone off in their, like, areas that they're canvassing the neighborhoods. Right? So they're going and knocking on doors. And his whole, like, video, which he recorded and decided to post, like, this is where, you know, they have real bad decision making skills, was essentially saying that if one of the people needs the bathroom, they shouldn't call to go and be picked up and go use the bathroom because it's not worth his time to go and, like, take his staff member to, like, take shit or whatever. Right? So I just and then then, like, the point he was trying to get to was, like, just tell your staff member to order an Uber. But, like, okay. We're getting down to, like, the basic level of, like, human function here. It makes sense if you're doing things like that, and there is, a level of, I would say, like, wasted time and money or something there. But, like, come on. Like, be realistic. You're basic like, what it sounds like is you're telling your sales team to just like wear diapers when they're out there walking the neighborhood. You know? But we're starting to see a rise of like that kind of content. And it's because the message is talking about learning how to get rich as opposed to learning learning how to like have financial freedom again. And I'm wondering if that's like just the the new generation. That's kinda what they vibe with because millennials were so lifestyle driven that the financial freedom message really drove them. It's fascinating to sort of like see it all sort of come together.

Mike DeHaan: [17:02] And I think that it's a sign of the times where, you know, people are looking to have more than just like comfort, right? I also think there's a lot of millennials now as well that they've probably reached like some level of financial freedom, but they're quickly realizing that the financial freedom that they reached like two years ago is no longer valid just with the rising costs. Yep. You know? Because that's like the big thing that that whole like FIRE model with like the 4% rule and everything else doesn't account for is a rapid devaluation of US dollar and inflation.

Dylan Koch: [17:31] Yeah. And if anyone who wants, like, a deep dive on this, I mean, one, you could DM me, and we can try to talk about it. But there is, like, a couple big, very big themes out there. Ray Dalio is, like, the known for his long term debt cycle. And there's another demographer. His name is Neil Howe, and he has something called the fourth turning. And, you know, putting two and two together, there's probably a reason why they think that the long term debt cycle coincides with what Neil Howe would describe a fourth turning, which is this increased populism. Basically, the wealth the bigger wealth divide and everything that we're gonna go through in full transparency, it sounds like it's only gonna get worse for the next couple of years. And then there is another the hopefully a the first turning on the other side of this, which is would be more in line with, like, the early nineteen, like, post World War two. You know, we brought industry back to America, all this kind of

Mike DeHaan: [18:23] The problem is is for there to be a post World War two, that kinda has to be the World War two event. You know, there has to be, like, the tipping point.

Dylan Koch: [18:29] And I'm not disagreeing with that. I actually think that's more likely than not.

Mike DeHaan: [18:32] 100%. Like, there has to be some kind of tipping point. It won't just, like, naturally go back towards that. You know, if you look at most times in human history where there's been, like, a big, I would say, like, rebalancing like that, there's been some sort of major event where, you know, whether it's, like, the French Revolution or it's World War two or it's I don't know. There's lots of other wars. I mean, it always seems to be a conflict or a war of some kind.

Dylan Koch: [18:57] Yeah. They've all been kinetic wars lately. I mean, if I had put money on it, which I'm not calling for this by any means, it would be something to do with Taiwan, China, and The United States.

Mike DeHaan: [19:07] Maybe. I don't know, dude. I think, like, China is just in such a long game right now. Hey. So you've heard us mention our scale community before, and I don't have a lot of time, so here are the quick highlights. In scale, you get all of our processes and systems that we use to do about a 150 deals every single year. You also get a community of investors that are verified crushing it in their markets. Otherwise, they wouldn't even be members. And that way, you don't have to waste time with nonstarters like you find in other groups. You also get preferred relationships with marketing companies and even lenders that will give you 100% financing. If you just heard all that and said, nah. I don't really need it. That's not gonna help me. I don't know what to tell you. You're lying to yourself because all those things are guaranteed to help you explode your business and buy more deals next year. So go to collectingkeys.com/scale, and let's see if you qualify. What's actually really interesting, having just gotten back from Europe, is how much adoption you see of, like, Chinese technology there versus here, you don't see any of it in The United States. So, like, the big thing there's cars. Right? So I was there with my uncle.

Mike DeHaan: [20:08] They're looking at getting an electric car. They are getting a Chinese electric vehicle that looks very similar to a Tesla, honestly. And it costs about a, I don't know, 50% of the price. It has a measured interior. It has better distance. Everything else about it is like, it seems fundamentally better. And that is their choice of car that they're getting. And then very coincidentally, I had this conversation with them like two weeks ago. I saw this article today talking about Chinese technology and how it's getting more and more popular throughout a lot of the large parts of Asia and Europe. And, you know, they how vastly more advanced they are than US technology. I don't think it'll necessarily be like a kinetic event. I really do think that there could just be like a slow burn where that'd be kinetic event, I think in The US might just be like an internal fucking thing. And everyone else just goes, see you nerds over there on your island. You're so far away from all of us. We don't have to care about you. You know? And they just kinda do their own thing.

Dylan Koch: [21:06] It's funny because Tesla makes a lot of their cars in China.

Mike DeHaan: [21:10] I know. Right? Dude, they're probably just skimming

Dylan Koch: [21:13] the parts off the top of the pallet. Probably. Yeah. Those free materials.

Mike DeHaan: [21:19] Like, why that's what they've done everywhere else. So

Dylan Koch: [21:22] Yeah. Stolen IP, all this kind of stuff. And I don't wanna get down the, like, the the China rabbit hole. It's it's, dude and I listen to a lot of content. I listen to a lot of podcasts, read a bunch of articles, and I'll read one. I'll be like, that was so sophisticated and well thought out. That makes a lot of sense. And then I'll hear one a complete one eighty view and, like, you know, that was real thought out. That made a lot of sense. And it's very hard to differentiate like, okay, which one do you actually think is more probable?

Mike DeHaan: [21:45] For sure. Yeah. I don't know. I think that just in general, it's any country that has like a massive degree of separation between the vast like the majority of the population, like will eventually have major issues. Like the best countries are ones that are homogenous in some way. And even places like China, right, they are a communist country, but the people there are all kind of like the same. And they have a large enough population that has money that they can just sort of like not care about the 800,000,000 people that don't. Right? So there's still a power imbalance, but it's the ones that are in control and are, you know, producing. Right? I think that's the main thing is that they have enough of population that can continue to produce despite that, whereas like The US does not.

Dylan Koch: [22:35] Let's talk about failed syndication.

Mike DeHaan: [22:39] Yeah. I know. This has been a hot topic as well with all the Brandon Turner deals we've been seeing go sideways. So I guess on this deal, you sent over a little screenshot and it's several of Brandon Turner's Opendoor Capital deals completely collapsing and people kind of losing everything. And so on this one, the one you sent, invested $55,000 This has been a disappointing experience. There is a webinar scheduled for the twenty fourth to discuss the current sales performance. NOI, 50.65%. And so it sounds like people are

Dylan Koch: [23:12] Basically and what I got from that is and from reading further comments that you don't have access to is at this point in the life cycle of this deal, they wanted to be like almost 90% to the projected NOI, and they're at 50.

Mike DeHaan: [23:23] Yeah. Well, I mean, here's the real thing with this, right? It's getting extra spicy because Brandon Turner was involved and kind of like raised money. But like if they're communicating and the assets underperformed, that's one thing. At the same time that this is happening, there's also guys that were relatively big names that have literally just, like, stolen money or lost everything and then, like, jumped ship. I mean, if they're still moving forward as, you know, they're allowed to do and they're communicating, I don't have a ton of hate there.

Dylan Koch: [23:54] I don't have a ton of hate either. A different one that I'll have to send you. And, this is from Reddit, so who knows the actual legitimacy of all of these? But I was just I'll read this. Was I reading the d this is from a commenter. I was reading their details of their cash flow fund two. I saw that they could use the money raised in this fund in their previous funds, which led me to this post.

Mike DeHaan: [24:15] Nice. That's a little sketchy.

Dylan Koch: [24:17] That's the a little sketchy. So, like, are you raising it's basically sounds like almost Ponzi ish. Right? Like, if you're raising money to fund the previous deals. So and, again, I don't wanna talk bad about in terms of say he I don't think there's any disingenuous part of this. He probably thought he was doing everyone a favor by, you know, indicating and, you know, doing these deals. But even in GoBundance, you know, they kinda differentiated these in between what? Good person, bad deal, bad person, bad deal, and the straight up crooks. Right?

Mike DeHaan: [24:45] Yeah. So for not that long ago, probably eighteen months ago, there was a whole call for guys that were invested in an opener capital fund, where they talked about how they had just done a capital call, where they needed to raise $6,000,000 to cover the gap fund on an adjustable rate commercial loan that was changing. Right? Like in order to keep the loan current at the reserve amount that was required, they need to come up with $6,000,000 to pay down the lender or whatever they needed to do. So that's how far off like their whole number was in that. And so I remember when Brandon came in, like, did like a pitch on one of those calls because they were desperately trying to come up with the $6,000,000 to bail out this sinking ship deal.

Dylan Koch: [25:29] Do you know an LP, are you obligated to help fund more of the deal? Like, is that in your LP agreement? It depends. So they like,

Mike DeHaan: [25:38] they can't force you to

Dylan Koch: [25:39] pay money. Right?

Mike DeHaan: [25:41] Like, but what it can look like is if you don't do it, you'll essentially forfeit your equity or shares.

Dylan Koch: [25:46] Wow.

Mike DeHaan: [25:47] So but they can't like, you know, go and log into your account and like pull money out directly. But it's in your best interest to do so a lot of the times. But you do need to make a judgment call if it makes sense. Like, are you gonna walk away from your losses now, or are you going to contribute more money and your loss will be greater? That's kind of the ultimatum that you have to decide. And, you know, it's like it's hard because I think that when people are new to these kind of investments, what they are essentially sold and how they go into it, especially if they are somebody that has never lost money before, they're like, oh, I put it in and I'm gonna get a 2% equity multiple in five years. I don't have to do anything. That's amazing. Right? And then all of sudden when that doesn't turn out that way, people get very, very upset. But there is a fundamental risk in investing. Right? Like, especially when you're doing something like that, where you have no secured debt, and even they write a promissory note or something else, they can declare bankruptcy and you get nothing. Yeah. I don't know. It's a tricky thing.

Dylan Koch: [26:44] I think I'm more surprised from I would have would have assumed that Brandon specifically would have had the people around him to not be this far upside down or sideways in a deal.

Mike DeHaan: [26:58] But here's here's how it goes though, dude, is he's a human being that became very, very successful very quickly. He's fundamentally a young guy too. Right? Like, he just turned 40. I would honestly say he probably lacks wisdom just because he has mostly been around since the last big issue. Right? Like back in 2008. And so with that, how how those things normally go is you become a person of influence. Everyone comes in and says like, oh, you should come partner up. We'll throw you some money here. We'll give you some equity. All you have to do is just like speak about it. We'll give you these things. It's going to cost you nothing. You're going to make all this money. And that happens, happens, happens. They go well, they go well, they go well, they go well. Then all of a sudden, one person comes in that's maybe less well intentioned, less experienced, doesn't quite have the ability to get these deals done. They break into the ranks on that. They pitch him the same thing that he has now heard 15 times before. He agrees to it. And now his face is on it even though they're the reason that it's going down.

Dylan Koch: [27:56] Yep.

Mike DeHaan: [27:56] You know? You hear their shit over and over. It's like the whole situation with Ryan Pineda and the NFTs, I did a whole, like, Friday Focus YouTube video about that. I do think that Ryan Pineda is kind of a criminal. But there is an argument to say that when that happened back in 2021 or 2022, whenever that was, he was a person with a big following. And these NFT bros who, shocker, are criminals, right, came and said, hey, Ryan. We can make a fuck ton of money if you do this NFT project. You wanna be a part of it? And he went, hell, yeah. Just sign the dotted line without even understanding it.

Dylan Koch: [28:28] We're gonna rug pull all of your audience, but, you know, who cares?

Mike DeHaan: [28:31] Yeah. Totally. You know? And then by the time it all comes crashing down, the guys who kind of had nothing, they've made their money, they've rode off into the sunset, and then the one who was the face becomes the scapegoat of it. And with Opendoor Capital, I'm not saying that it's quite that extreme, but I mean, I I'm sure that there were there are some situations that are similar to that that have played

Dylan Koch: [28:53] I think and I don't know if it's this way generally for millennials. I would think specifically for Gen Z is there's almost like this. It was coined financial nihilism on a podcast that I listened to, which is basically like they've given up hope on ever being able to afford quote unquote, the American dream or being financially secure, because it's nearly impossible to afford a house nowadays. Everything's fucking expensive. Wages haven't kept up over the past twenty to thirty years in line with those increased prices. And so they the reason why they go further on the risk curve, they try to make it on a meme stock is because they're like, this is the only chance I got. And so I think there's something to be said in that general instance that goes along with everything that we just said earlier.

Mike DeHaan: [29:34] Yeah. I mean, there's probably a lot of things there. I think there's the impatience piece. And, you know, there's also a the fact that social media just only feeds you people that, like, have gotten lucky and made the big wins. Right? It makes you feel like that's normal when it's not.

Dylan Koch: [29:48] Well, if you want something that's tried and true, you can join scale, and we'll teach you how to make at least $20 a month.

Mike DeHaan: [29:54] Exactly. Right? When and that's the crazy thing too, honestly, is once you kind of understand business, like how easy it is to make, like, a good income. To make, like, big, big money is hard. But to realistically replace any w two salary is not challenging, especially in the real estate world where you are trading expensive things that have a lot of room for profit margin. Yep. You know, whether it's the real estate itself, whether you're getting into lending, whether you're a real estate agent, like whatever that is, there are large portions there for you to capture on every transaction. And it feels very, very challenging when you're getting started because there's lots you don't know. But it would actually be an interesting statistic to see because there's always a lot of talk around how many real estate, like realtors and stuff fail. But I would bet that if you were to take the number of people that start in real estate or real estate investing over a, say, like a ten year time horizon, you take that versus any other business, you take all the newbies, I would bet you that there is a higher success rate for real estate people than probably any other business.

Dylan Koch: [30:57] I would agree with that. And then if you start out wholesaling, I mean, you really don't have a whole lot of risk at the beginning either. You're not fronting a whole bunch of capital.

Mike DeHaan: [31:05] Yeah. Especially if you're willing to work and hit the phones and do the hard stuff. We've had people that come in and get started with almost nothing, and then they're making $20,000 three months later, they're like, Holy shit. That was crazy. And then they do it again. And they do it again.

Dylan Koch: [31:19] There's, speaking to your like, thing of business too. There's like, don't even know what Nextdoor is. It's like the Facebook for old grumpy people. Yeah. Anyway, there's someone posted like, I just got an HVAC quote to get a new furnace and AC condenser, and got quoted $25, you know, is this a good price for my house? It's this many square feet. I'm like, I could call my HVAC guy, say, hey, we'll do it for 20. And I'd make 10. Like, Yeah. Like, right. That

Mike DeHaan: [31:48] just Yeah.

Dylan Koch: [31:48] Shows the difference of, like, the stuff that's out there too and the margins that that motherfucker is trying to get.

Mike DeHaan: [31:53] I know. Right? But, like, point being is there's it's so easy to kind of piece that together once you know kind of where like how to create value and where it exists and just a basic level of selling. And the cool thing is once you're doing it with one business, it's very easy to do with another. So with like our SLA capital, our lending business, from in March of this year, so it was at four months ago, we had our best month ever and we did $8,000 in actual profit off of points and fees, right? In June, we just did 52,000.

Dylan Koch: [32:26] That's fucking awesome.

Mike DeHaan: [32:27] In July, we're gonna do more than that with what's on the books already. Okay? But it's because we know how to create value. We've built the network. Right? We know how to run a general business and processes and piece things together. And we have like the knowledge in the industry to be able to like combine everything and have it be somewhat efficient. And so realistically, that business will do over a million dollars next year. I'm sure probably million and 0.5 to 2, because we already have like the basis of it built out and we built out that skill set. And so that's why you hear these people talk about how the first million is the hardest. They're not talking about like that in like a linear fashion for you. It's talking about learning how to create that first million dollars because you don't have the skill set yet. It takes the most time, but once you kind of understand, it's significantly easier to do that going forwards.

Dylan Koch: [33:14] Yep. Yep. Hormozi's actually frame around this is like, your cost of not making a million dollars a year is just the difference between a million dollars and whatever you make So if it's you make a $100, that cost you is $900,000.

Mike DeHaan: [33:28] Mhmm. Yeah. Which is true. It's funny. It's it's a very like it's something that sounds like so douchey, like so easy to say, like when you're like a rich person. Right? And when you're like new and like you can't even fathom that, it just sounds outrageous. But it's it's totally true. Right? And the opportunity comes down to like, if you spend five years making nothing, and then in year five, you make a million dollars, you just made $200,000 for the past five years, you made nothing. That's pretty damn good.

Dylan Koch: [33:59] Actually, real quick before before we log off too and switching subjects again, let's talk about the flip that I closed on today, actually. Yeah. That I put in the Slack channel because I this I think it provides good context.

Mike DeHaan: [34:10] Mhmm.

Dylan Koch: [34:11] So for the audience, basically, I I bought a flip in 01/03/2025. We are selling it today, and the net profit well, post pretax profit's like $35. And it was $50, but we had a couple things with this where we only had two showings. One of those showings made a full price offer, but then they had their inspection. And basically, at the inspection, they wanted a lot of stuff done. And I didn't feel like I was in a position to really, like, lean back on anything that they were requesting, the biggest thing being a new roof. So long story short is I put $20 into the post inspection items, which brought, you know, from 55 down to 35. Point being, and all this is this was a six month hold. So making about $2,627,000 post tax, that's $434,400 a month that I made, you know, and that for the risk that I put up, we sold it for $275. You know, is that really worth it? And, you know, with the dialogue we were having in the group is it probably wasn't. But what do you do in that instance? You keep going.

Mike DeHaan: [35:18] Well, you have to. But I like the way that you frame that though, where you said you made the $40,100 dollars a month. Right? Because if you tell someone, it's like, oh, we're gonna flip a house and we're only gonna make $26,000. That sounds terrible. Yeah. You're like, why would we do that? But then if you frame it like, well, technically over it, we made $404,700 dollars a month. You go to the average person, like we talked about at the show, who's trying to make, you know, $5 a month in passive income, you're pretty damn close. Yeah. Right? Like, honestly. It's it's fundamentally the same thing. Well, I mean, you have a lot of the risk when you're going and buying property to try and get that passive income too. You just don't realize it yet because you're ignorant when that's still your goal. So I guess with all that being said on this, we we had, like, a whole massive conversation on Slack about it, you know, breaking down, like, your cost per hour and all these different things. Would you do it again? What would you do different next time?

Dylan Koch: [36:02] So I will say I'd do it again. But for a more intangible side of it, where I got two new, like, contractors slash, like, subs that I will probably continue to use on future deals. So sorry for dollar amount on that. What I would do differently is I'd probably buy it again. But what I tried to do at the beginning of this one was pretty much just list it immediately. And when it didn't sell the first time, we took it back off to do the rehab. But that took forty five days of extra holding costs. Yeah. Right. So that was a big chunk.

Mike DeHaan: [36:34] Yeah. I mean, it's always so easy to have like a game tape until it's, you know, once the game actually starts, it's hard to stick to the plan sometimes.

Dylan Koch: [36:41] The most I would have made train to wholesale was 5 k. So, like, I maximize revenue, which was the kind of the goal I'm trying to do this year. But at the same time, you gotta look at it from both sides of the aisle. Like, I would not consider this like a a great deal at this point.

Mike DeHaan: [36:55] But, know, base hits are what keeps the business going while you look for the great deals. That's kinda how the whole industry works. Cool. Awesome, man. Well, thanks for hopping on with me. Right on, guys. Thanks for listening. You should go and subscribe. Share the show with your friends. It helps us continue to grow his word-of-mouth. Especially these days, man. Podcasts are freaking hard. It's funny. I've I know the podcasting world is getting tricky because every podcaster that I know is, like, super diehard on freaking YouTube right now. And, my god, dude. I can't take any more, like, pictures on my Facebook feed that are, like, 47 year old men making fucking mister beast faces on YouTube thumbnails. I'm like, can we stop this, please?

Dylan Koch: [37:32] This is some cringe for me.

Mike DeHaan: [37:33] You know what I'm talking about? Yeah. I know you've seen the same thing, dude. It's terrible.

Dylan Koch: [37:36] I don't even lie. Just like, keep scrolling. Don't even watch.

Mike DeHaan: [37:40] I know. I'm like, like, no one's no one wants this. Like, I know you got one video that, like, a bunch of people allegedly watched, but, no, they didn't. I'm sorry. I don't know. So cool. Anyways, guys, we appreciate you listening. We'll talk to guys next Thanks for listening, everyone. If you want more from us, you can shoot us a follow on Instagram. I am at Mike underscore Invest. Dan is at Investor Man. Dan and Dylan is at Dylan underscore does underscore deals. Choose to follow and send us a DM to let us know what you think of the show.