Should We Sell All Our Rental Properties?

Mike DeHaan: [0:00] Real quick, guys. If you want to take your real estate investing business from 6 to 7 figures in the next twelve months, and you wanna do without being a slave to your business, then you have to check out our scale community. You can get the full details at collectingkeys.com/scale. But very basically, it is a community of like minded investors who are working to become the absolute top tier investors in their market. Along with three coaching calls per week led by Dan and myself, we also have a whole bunch of videos and materials that go into all the different SOPs that we use to run our business on a daily basis. This includes how we manage our sales team, how we hire, how we do our marketing systems, how we get the best assignment fees possible, how we do renovations, how we do all the different kinds of creative financing. And if you are serious about taking your real estate business to the next level, it is absolutely something that you should check out. So go to collectingkeys.com/scale, see all the details, and see if you're a good fit. I just sold one of my rentals was mailed primary, and I put it up at a price that I thought was gonna be too much, and even my realtors were like, okay, I was gonna be like the maximum of what you're probably gonna get for it. And I was like, yeah, that's fine.

Mike DeHaan: [1:10] If I to sit on it for a couple of months, that's fine. $20 over ask, twenty four hours later. What is going on, guys? Welcome to today's episode of the collecting keys real estate investing podcast. This is the show where we teach you to make massive income, not just passive income with your real estate investing business. And if this is your first time here, my name is Mike DeHaan, here with my cohost, Dan Austin. Hey. And on this Wednesday Mike and Dan shows, we talk about real estate, investing, business, and whatever else we should feel like for that week. And tell you what Dan, is we are getting heavily into like, what I would call like the selling season. We're currently, I like the you know, first third of April as we're recording this. It's April 8, you gotta listen to it about a week after this. But we are technically in like the best period of time to list a house or list a property in order to get like the most buyers that are interested. And looking at everything, I don't know. I'm at that phase right now especially with the equity that we've accumulated and just the way that like property tax, insurance, everything goes.

Dan Austin: [2:20] Right.

Mike DeHaan: [2:20] I'm just like why don't I just why don't we just sell all of our rentals? Right. Like honestly, dude.

Dan Austin: [2:25] You totally could.

Mike DeHaan: [2:26] The like well, the problem is with stuff, and I was actually looking at this, with the way that property taxes have increased again for like the second year in a row, massive amount with the increase in valuations. This is the downside that no one talked about when all the props are appreciating in 2021. The taxes and insurance and everything have gone through the fricking roof, dude.

Dan Austin: [2:45] Yeah.

Mike DeHaan: [2:45] And like, I have so many properties that I was like, heck yeah, I'm gonna be cash flowing like a beast with my, you know, 3% interest rates. They don't make any money.

Dan Austin: [2:53] Yeah, I think it's timing, right? Because I think taxes and like county taxes and stuff, they lag at least a year or two behind, if not more. So when we were buying, like, could look back and property taxes for a property were the same, so you're like, reasonably they'll bump up a little bit because we paid more for it, or something like that. And then, in our county, and I guarantee it's happening all over, because our county's not the only one that knows about this, is they have like software now, that does like these pretty accurate, like live appraisals, so they can just click a button and say reappraise, based on whatever information it takes in there. And I'm like, damn it, like on some of my properties, they actually have the appraised value higher than what I actually think I could sell it for. You can go back and ask them to reduce those taxes and stuff like that, but that's a whole process, right? It's like a dick ass packet you gotta submit. Yeah. But because of this, their ability to quickly run these appraisals, essentially every year they could just rerun it and then it comes up with whatever value they want. And they're the government, by the way, they're the government, so if they say that's what it is, that's what it is until you say otherwise.

Mike DeHaan: [3:54] It's crazy man, like honestly. Like there's so many, especially right now, the rent has not kept pace with the tax increases. Yeah. No. Even just got up like a tiny bit. It's not double. Right? Like that, I just pulled up my my tripod, so our accounting assessors. So last year, the taxes were $3,925 property, which I'll say is probably a little bit low for that property. It's like a good location, good size, natural triplex, like true built. Taxes got increased to $7,863.

Dan Austin: [4:24] That's actually pretty crazy.

Mike DeHaan: [4:26] They doubled, dude. All of a sudden, that's like an extra $4,000 a year that I was expecting to make in cash flow off this that I'm just not getting.

Dan Austin: [4:35] That's actually pretty nice.

Mike DeHaan: [4:36] No. And this is the one that that still makes money. You know? If I look at my single families, most of them went from being at like $500 a month in cash flow, which is pretty good, to making nothing, like honestly.

Dan Austin: [4:48] You know what's interesting about it too is like some of my properties, like the taxes, like I'm looking at one of my single family homes, which rightfully so, I I bought it for $1.50, I could sell it for $4.50, so you would think the taxes on it would go up. It was twenty six hundred three years ago, and this year it's 3,200. Yeah. So like, yeah, I guess percentage wise it's gone up, but it hasn't affected my cash flow on that property, but then other properties that they've doubled.

Mike DeHaan: [5:11] Yeah. Crazy. So like my one of my single families went from 2,700 to almost 4,000. Right? So that's a 100 plus dollars off now into that. And you know, with that rent, I would say have gone down in that neighborhood for the most part.

Dan Austin: [5:29] This is interesting. So you know I've talked about this before, taxes and insurance are probably like the two big things in properties that have gone up. In the last twelve months, everybody's been noticing it a ton. But like, how come rents haven't gone up, but everybody else is saying there's a housing shortage? Isn't that a weird thing? Like there's like, hey, there's a housing shortage, we're 3,000,000 units below what we need to be at. And honestly, like new builds are still kinda selling, houses are still kinda selling relative to the prices of last year, right? They're not like not selling, know, people are getting, you got an over asked price on your property. Mhmm. So there's still a decent buyer's market. It just makes no sense of how, you know, a couple years ago we could throw it up for rent and anybody would pay anything and now people are like, man, they're the same amount of houses, they're the same amount of units.

Mike DeHaan: [6:15] The thing that I don't understand, they always talk about it was a housing shortage, where are all the people at right now? That could be somewhere. There like are there that I many people don't know. Yeah. Like is that what they mean by housing shortage? Like they currently live with their parents and they like want to live somewhere else? Like is that actually a housing shortage? I mean it's not like we have all these homeless people that are applying for rentals. Yeah. No. Yeah. I I don't know.

Dan Austin: [6:37] That's where the housing shortage thing is always baffled me because I'm like, do we really? Yeah. Because there's still like vacant houses when you drive around Spokane where we're at.

Mike DeHaan: [6:43] There's plenty of them all over the place, you know. Like, if you go and you look at places for rent, there's a ton of places up for rent right now. And so then, yeah, here's here's the

Dan Austin: [6:50] thing, if you put your place up for rent and you get zero app, because if you go on like Zillow, there'll be places that, you know, have like one or You can see how many views they have, like, are not a lot of views. Yeah. Right? But then you'll see like, we just brought online a 300 unit apartment complex, not we, but people in our market, know, are building apartment complexes. So it's like, okay, there's 300 new units right there. Mhmm. Where's the housing shortage? Where's the affordability I know. Because we do have that. It is hard for some people to afford properties in our town. We've been in appreciation market for several years now.

Mike DeHaan: [7:20] Yeah. And I guess how do they determine that? Because, I mean, well, they say it's supposed to be demand is oversupplied, but technically, there's still supply there, so it can't be that much over.

Dan Austin: [7:29] I don't know. Guess people just don't wanna live in the shitholes that we're talking about.

Mike DeHaan: [7:33] But dude, got like a class places though

Dan Austin: [7:35] that Yeah, that's are like

Mike DeHaan: [7:36] below full market rent Yeah. That are having trouble getting filled.

Dan Austin: [7:40] Well apparently, they're not below full market rent. Merely, they're above full. Apparently full market rent means something different to them.

Mike DeHaan: [7:47] See, which the the thing is is honestly, it's just like the quality of renters that are out there is just like shit. Yeah.

Dan Austin: [7:54] They're pretty bad.

Mike DeHaan: [7:55] They're the ones that make money. Like I had one people that applied to live in one of my a class places. Nice couple, make good money. They had $9,000 in liabilities on their credit for vehicles. Okay? And we're not

Dan Austin: [8:10] Are you talking like a month payments?

Mike DeHaan: [8:11] A month. A month. Almost $10,000. And it's not just like for cars. They had cars on there. They had snowmobiles, they had motorcycles, they had boats, they had other stuff.

Dan Austin: [8:22] 9,000. Months?

Mike DeHaan: [8:24] Like $10 a month. They were used to pay for all these years.

Dan Austin: [8:26] Dude, you can't afford your bicycle. Don't be putting it on credit.

Mike DeHaan: [8:30] Yeah. And they were calling us and they were like, they're really complaining because they're having a really hard time finding somewhere to go and they needed to find somewhere to go now because the property they were in was being sold. I'm like, bet you do. Because you have more than the average household income in vehicle liabilities. It's you're gonna be hard for you to find anywhere.

Dan Austin: [8:47] That's a lot. And you're renting.

Mike DeHaan: [8:49] And also too, I'm sitting here thinking, I'm like, I don't really wanna have them rent my properties. Where the hell are gonna put all these vehicles? In the driveway? Yeah.

Dan Austin: [8:54] Yeah. On the streets. HOA's gonna

Mike DeHaan: [8:56] be pissed. I know. Yeah. But yeah, there's been like weird ones like that, or there was another one that applied for a different property that had, they had three animals that were like emotional support animals. They didn't have three people Super Just three emotional support animals for one person. I don't Yeah. I don't get it.

Dan Austin: [9:17] And they'll still say one's mixed, you're like, okay, know what that means. It's a pit bull. Yeah, right. Nothing wrong with a pit bull, like honestly like, you know, I feel like there's

Mike DeHaan: [9:25] a lot of room to

Dan Austin: [9:25] lie about that, but like there's HOAs, like my old HOA, and this one I live in now might be the same, is like, they do not allow you to have bulls or German Basically any dog that could kill you, like they're like, you can have that here.

Mike DeHaan: [9:38] Which I think is a perfectly valid thing. Right? Like honestly. And it's not that they're discriminating against people because they usually, you know, certain demographics issues pit bulls. It's like you are looking to bring an animal that has the potential to kill the child that's in the street that is playing whatever. It's like, well great dance to do that too. I was like, yeah, but like their temperament, they're much less likely. Right? Like honestly, it just it is, what is the likelihood of that happening?

Dan Austin: [10:03] Two things I don't like in this world. I will not live with an animal that can kill me and eat me alive. Like I said, I love I love, you know, like all breeds, it's fine, whatever, but I still, it's a principle. If you can eat me or hurt me, kill me, not gonna be here. And I don't like weeds that can grow taller than me.

Mike DeHaan: [10:17] Weeds that can grow taller than you? Like, don't worry. Like, how do feel about not weeds? Are are you like afraid of corn?

Dan Austin: [10:22] Not true. Trees are cool.

Mike DeHaan: [10:23] Trees are cool. But like, you know, you're out in

Dan Austin: [10:25] the forest and there's these weeds getting in your face and you can't see over them. You don't know if there's

Mike DeHaan: [10:29] a snake slithering in there. Stumble.

Dan Austin: [10:30] You wanna fuck that.

Mike DeHaan: [10:31] That's what really sucks for YouTube because you're what, five four? So like everything solid. Oh,

Dan Austin: [10:36] wow. I tell you, don't take my inches away from me, dog. Oh boy.

Mike DeHaan: [10:39] You're at five four and

Dan Austin: [10:40] a half, I'll give it back Oh god.

Mike DeHaan: [10:42] No, it's just like looking at the whole portfolio though, and I know we've talked about this before around the opportunity cost, but I would say it's never felt like something that I'm more interested in doing than right. Especially because like you said, I just sold one of my rentals which was mailed primary, and I put it up at a price that I thought was gonna be too much, and even my realtors were like, okay, was gonna be like the maximum of what you're probably gonna get for it. And I was like, yeah, that's fine. If I have to sit on it for a couple months, that's fine.

Dan Austin: [11:08] You're like, yo, lo.

Mike DeHaan: [11:09] $20 over ask, twenty four hours later, not gonna hear me complaining about that. Right? So I'm looking

Dan Austin: [11:15] at it if demand.

Mike DeHaan: [11:17] Mhmm. So there's affordability and housing shortage, Dan, nobody can

Dan Austin: [11:21] Of buy course, you're right.

Mike DeHaan: [11:23] But for me I'm looking at all of them like, we have decent properties, like why would we not just sell them, walk away with a few million bucks, we could go, we could buy like a commercial unit, we could go and put it in our hard money lending company, I could go and just put it in a fucking savings account, make more money than I'm making right now, like honestly.

Dan Austin: [11:40] So I ran the numbers. Well, I ran many scenarios, but I was talking to you that, like, if I just took, like, a million dollars in equity, right, sold you sold all of our shit, made it easy, took a million dollars in equity and just put it in anything that makes 9%. And I use 9% because looking at the IRA that I have and I don't like do anything active with it, like the historical returns were just under 10%, which I think I mostly invested in that, like the S and P 500 and like essentially large index funds just to track the market. So it's reasonable to think and

Mike DeHaan: [12:11] I think

Dan Austin: [12:11] the S and P 500 actually historically returns like 9%. So it's reasonable to think based on that I could get 9%. So if I just did that and just put it in there, in twenty years I would have $7,000,000 doing nothing.

Mike DeHaan: [12:24] I don't know. The problem I have with doing that with stocks is it like does go down, right? They can

Dan Austin: [12:29] do it anything.

Mike DeHaan: [12:30] I'm just

Dan Austin: [12:30] saying stocks, you should probably allocate something to like, like a 20% allocation or 30% allocation to something over here, something over there, you know, fund, you have syndications, you could use, like I like the idea of taking 200 k and using that money to flip houses, something that you could actively do something with, but doesn't require like, you all the time. Yeah. So, if you did like, an allocation of five things across 20%, like you should reasonably be able to get 9%. Like if you can't, just fucking give up and go put it in market and go put it in an S and P 500 fund and don't think. Yeah.

Mike DeHaan: [13:03] I don't know. That probably yeah. So the problem I have with stocks is trading up bigger things things also go down. I also don't fully believe in like the stock market. I think a lot of it's kinda just like b s. Right? Like they call it the giant financial casino for a reason. It definitely feels that way to me. And I understand people do make money off of it. I don't know. I would rather put it into like a debt fund or like my own kind of debt that is still in the asset class that I understand, which is real estate, and that I can hedge my risk appropriately there and I can just get like a fixed return instead of having to, you know, do like, hold on to these properties where I have to worry about increased taxes. Right? Or I have to, you know, worry about major repairs that are going to ultimately happen on these properties, or I have to worry about the transaction costs. That's the other thing as well with a lot of these is, you know, realistically, when we sell these, there's gonna be seven to 9% that gets axed off of the value of it immediately when you go to sell it.

Dan Austin: [13:58] So I guess ask you this then, because what you're saying is essentially, and I strongly believe and invest what you know, I I do believe that. Do you think, you, like okay, so I'm saying I'm gonna take a million dollars of equity, and I'm gonna get, I'm gonna seven x that over twenty years, which isn't like amazing, right? But do you think your equity sitting in your properties is going to seven x in that same period of time?

Mike DeHaan: [14:18] I would say no, like if I look at, like over the next twenty years you said?

Dan Austin: [14:23] Yeah. No. This is a twenty year timeline.

Mike DeHaan: [14:25] I don't think so because I think that the rapid appreciation that we've already seen in the market, like what I kind of view that as at this point, especially I've looked at how the last couple years have gone, I really think that like the 2020 through 2022 real estate boom was honestly borrowing from the appreciation over the next ten years. Right? And I do think that especially now like affordability is still an issue. People generally aren't making more money. If anything, lot of are making less money. A lot of people that have bought homes are not planning to go anywhere. If they are, for them to move up in price point is tricky with interest rates and different things. I don't know. I just feel like almost everywhere property prices are gonna stay pretty consistent. Yeah. And so the only gains you're gonna get are either from cash flow or from the debt paid out which is not gonna yield me a seven nights return over twenty years.

Dan Austin: [15:18] I would I think there's an argument saying that we didn't necessarily steal all the appreciation from the future. We probably caught up from like 2009 till 2020. Like, we probably caught up a little bit or 2018. And there's actually some interesting graphs that show like, and I don't remember any of these graphs, so don't quote me on this shit, but like, some graphs that kinda show like these, like this dip, and then like the actual trend of where it should have been, and us kinda catching up in this time frame. However, that doesn't mean that there's not gonna be any changes for the next three to five years, which I think there's a good chance that you're not going to get a major major increase in equity. And also, it seems like

Mike DeHaan: [15:53] a headache It does. To own these. It's just a pain in ass.

Dan Austin: [15:57] Right. Unless you go bigger, unless you go and buy a bunch more, like a pile more, which I think you should, like I think, all this to be said, that if you're out there building a portfolio right now actively, especially if you're getting started, like I think you should. Like I don't think that's a bad thing, it's just like for us, what we're pontificating here is like, what if we just took this chunk of equity now that we have it, because we built it doing something we know and we were able to do all

Mike DeHaan: [16:19] this value add. One of

Dan Austin: [16:20] the reasons why we have a good fair amount of equity is because we did some major value add stuff.

Mike DeHaan: [16:23] Mhmm.

Dan Austin: [16:24] We bought at a deep discount, we added a ton of value doing conversions, or just like cleaning these places up, getting a refinance, all that sort of stuff, or we added tenants, increased rents, so we did value add to increase the value here, now we have this chunk of equity, multi 7 figures. So what do we do with that to continue a massive growth, and also optimize that money while we're creating massive income from other business streams? Because we're still out there wholesaling and flipping and stuff, all that sort of stuff, right?

Mike DeHaan: [16:51] Yeah. Well, mean, and we did all that combined with the fact that we were doing through a rapidly appreciating market. Like, if you're being completely honest, we got fully lucky on that, and that like was our Bitcoin, honestly, right? It almost makes more sense to me to sell out of all the ones we have, realize those gains, and then almost like start over, honestly. Like set it back to your buying things at a discount at the current market value assuming they're not gonna go down. You have realized your gains from your previous deals, right? And you're gonna start just like building it up now and then you will have an equivalent sort of future appreciation based off of the current values and not off of like the past values. You know, it's like it's like if you bought Amazon at $10 and it went to a $100, Right? Do you just keep letting it run or do you realize those gains and then you start buying again at, you know, a $100. Right? What do they call it? The dollar cost averaging. This kind of the where basically you rebuy in and you exit at different points while you own it. I think can do the same thing with real estate, honestly.

Dan Austin: [17:49] I think you should. I I definitely think you should do that. I mean, I guess you could just have a long term game and just like, I'm just gonna always add to these assets and always pay these assets down. To me, that's less of an active position, and any time you're taking a less active position, you're going to typically make less money. Right? The more passive it is, it's like being an LP in a a part of a syndication, you're going to make much less money, you know, dollar for dollar, cash on cash return, than you would if you were the one managing that whole process of the acquisition and all that stuff.

Mike DeHaan: [18:21] Yeah, mean, and you can even capture that, recapture that equity and use it to buy a larger set of assets, right, like a larger portfolio, honestly. So like right now, across our stuff we have like a 40% equity position, like I do a lot across a lot of my if I sold all of those and I rebought into things that were, I was either either able to buy at a discount that I was able to pull out my money, or I was able to buy you know, even if I was doing it traditionally where I was putting 25% down, now numbers wise, it's like a larger total value versus like the 40% equity that I have. So I wanted to keep playing the real estate game exactly the same. I could just releverage into a higher level of debt. Right? Step it up. Yeah. Hey. We really appreciate being a listener of the collecting keys podcast. Did you know that we also are on social media and on YouTube? You should go and shoot us a follow on those as well. You can find both Dan and I on Instagram. I am at Mike underscore invests. Dan is at investor man Dan. You can also find short clips from the show at collecting keys podcast on Instagram. And if you wanna see our faces talking while listening to this show or you wanna check out some of our crazy animated adventures, we've been putting together into some funny little web cartoons that sort of show the crazy stories that guests tell on the show, then you should go over to YouTube and check out the collecting keys channel. Shoot us a subscribe over there. It really helps continue to grow our audience. We really, really appreciate it. Well, anyways, enjoy the rest of show you guys.

Mike DeHaan: [19:47] We appreciate you all. One of those like when I have all this money tied up, it's just like and I'm not getting the return on it. It just it's just hard to get excited about it. But one of the it's funny. One the challenging things that I have is, you know, we have a freaking real estate podcast and we have the skill community and other things. And And it's like, if I feel like if I sell all of my stuff, I have like an identity crisis.

Dan Austin: [20:06] Yeah. It's like who are you?

Mike DeHaan: [20:07] I'm no longer I'm no longer the real Right? Estate

Dan Austin: [20:10] because I sold

Mike DeHaan: [20:11] all of my properties. And is that a bad thing? I don't know. You should hit me up on Instagram at Mike underscore Invest and be like, you're a fucking seller. I'd be selling your properties. Don't do that.

Dan Austin: [20:18] Total seller. Yeah. I think there's probably something to be said about that, but I I mean, most of our skill and education doesn't really have anything to do with property management. Yeah. Totally. Or even owning properties because that's just pretty easy to figure out.

Mike DeHaan: [20:30] Yeah. It's fine. It's just it just comes down to like what is the correct financial decision to do for that opportunity cost? Because I also do think that like right now, I do think it is a pretty strong time to sell properties. It has been slow for the past couple years. People are like sort of starting to wake up and get excited about it again. And if I look, you know, they keep saying that there's an affordability and a supply and demand issue. I'm like, well does that mean that the demand is limited? And after a period of time that demand's gonna go down again and so we're gonna miss the window? I don't know, maybe.

Dan Austin: [21:01] Yeah, I think too, there's probably like, I guess to add to your point here is like, there is this cycle of being like an in estate entrepreneur and investor, and some people choose to stay like they love the single family game, and they they're additive, right? They just wanna be like, I'm getting to a 100 houses. Because there's some huge benefits with scale when you have a 100 houses. Property management, you can have staff, you have all these things that you can do to make your life easier, and that's just their goal. But there's also folks that kinda come in, they start as wholesalers, they make a bunch of cash, they buy some properties at discount, then they they upgrade that equity into something maybe larger like a multi family or into commercial assets, and then people take those and then they maybe actively upgrade those into more, even more passive, get into the debt funds, become the banks, start loaning money out to people, like, so there's like these options. It's almost, it's like a choose your own destiny game, where you can kind of pick these different branches, and each time you're kind of upgrading and making making it to where you make more money, and you make more money more easily. And And it's just depending on which, there's so many paths you can take, and so part of the cycle is is, you know, we came out of being wholesalers, we were getting after things, busting our ass, you know, cutting our teeth, made a bunch of income, bunch of equity, Now, we're thinking like, how do we reposition that? All that hard work and effort, not that we're getting away from real estate, how do we reposition that into something bigger, better, different?

Mike DeHaan: [22:24] It's gonna like yield more appropriate returns for everything that's sitting there, you know?

Dan Austin: [22:28] Yeah. Because now, like, let's be honest. Now, every hour you spend working on the business is a 100 times more valuable than it was four years ago.

Mike DeHaan: [22:38] Absolutely. Totally. Right. And that's such an understated part, I think of growing businesses, your own opportunity cost of your time, especially once you have leverage with team members and other things like that. And I mean, you look at like your business, if our business grows 10%, I mean, that's $500,000 a year almost. Right? Like, that's that's a significantly higher increase than a property that's gonna appreciate 10% gain $50,000 period.

Dan Austin: [23:08] Or which would be and it would be hard to hit 10% year over year. Right? In a property right now.

Mike DeHaan: [23:12] Exactly. Yeah. But realistically, you could sell properties and make them grow your business 10% a year.

Dan Austin: [23:18] Mhmm.

Mike DeHaan: [23:18] Right? Or like 10% for a year that can be sticky and and be a recurring thing. Yeah. So, yeah. I don't know. It's just my my current sort of kerfuffle as what I've been thinking trying to trying to Your figure current conundrum. Conundrum.

Dan Austin: [23:31] I'm in that with you, man. It's like, do you how do you how do you pivot and make the right decisions? Because really, I mean, let's be honest, like, life, you you kind of get one shot at every day. Like, every decision you make, like, you can't go back to that day. Not saying you can't retry and do stuff the next day, but, you know, you wanna do the best with what you have while you have it.

Mike DeHaan: [23:52] Mhmm. Yeah. I mean, yeah, and they I I think was it Hermozy's thing with that is he goes, every was it every year that you make $90,000 a year is that your opportunity cost is like $900,000 if you didn't know how to make a million dollars that year.

Dan Austin: [24:07] That's a good way. That's a good way to

Mike DeHaan: [24:08] look at it. Yeah. And so it's like if you're if you're willing to step away from that, you know, $100,000 a year job to learn how to make a million dollars, your total ROI will be significantly higher because you're gonna like learn how to make more money.

Dan Austin: [24:21] This is a good a good point.

Mike DeHaan: [24:22] He says in a much more eloquent way with a much sexier voice than I have. So go listen to all of his stuff.

Dan Austin: [24:28] That's why he's bigger than us. If we could talk like that, we would definitely be doing better in life.

Mike DeHaan: [24:33] Yeah. For sure. Fuck no shit. So anyways, that's something I was trying to figure out. Because like also on the, you know, the wholesale transaction side, like stuff's clicking. We're getting lots of leads, we're getting lots of deals. Yeah. And I still get some of them, I'm like, man, you could re leverage that capital into stuff that's like has more upside potential because you're starting from square one and you haven't already gone through that appreciation process, which has petered out. Yeah. You know? Or you're able to get into something that is like, I would say like fresh, remodeled, know, you've put in the money into it, it's not something that we've already held for four or five years and has had a bunch of tenants gone through and you know there's gonna be some issues with it, you're just like, yeah. That can be the next guy's problem.

Dan Austin: [25:14] Yeah, exactly. And and and sometimes like, let's just be honest, on the property, just like, the glitter's rubbed off, you know? Oh, yeah.

Mike DeHaan: [25:20] Oh, yeah.

Dan Austin: [25:21] It's gone.

Mike DeHaan: [25:21] Yeah. I I went through one of mine, it was the last one I turned over to my property manager a couple weeks ago. And I walked through then I was like, man, this place is beat to shit. Right? So I've I've had I've owned it for six years. I've had four sets of tenants in there. It's turned over a lot. Not because it's a bad property. Honestly, the problem is that it is an a class property. And A class people tend to wanna buy homes. That's right. So they have the ability to, they use your rental as like a gap sort of year to save up money or find the home they wanna rent and then they move out. Every single move in and move out, you have people moving boxes, moving furniture, know, rubbing up against walls, doing like you know, digging the

Dan Austin: [26:00] The move outs.

Mike DeHaan: [26:00] The move outs are where it's

Dan Austin: [26:01] all the worst things happen, dude.

Mike DeHaan: [26:03] Yeah, always. And like after you repair things so many times, you're just like, man, the floors are beat up to hell. Like the the trim, like all these things, I could get the house ready to sell and like it looked tip top again. It's gonna cost me $20 to do that. Yeah. So I there goes the entire earnings.

Dan Austin: [26:19] Yes.

Mike DeHaan: [26:19] On the entire time that I owned it.

Dan Austin: [26:21] Yeah. You know the interesting about a lot of that stuff is you can't use like tenant deposits for normal wear and tear which is all

Mike DeHaan: [26:26] about stuff

Dan Austin: [26:26] in normal wear and tear. Right?

Mike DeHaan: [26:27] So I know.

Dan Austin: [26:28] Like you there. But it reminds that reminds me of we went Mike and Dan OG stopped, walked the property together this weekend and talked about I know. Talked about some repairs on the DIY homeowner stuff, like that was pretty cool.

Mike DeHaan: [26:43] Yeah. There's some weird stuff. I wanna know what the water situation was. We're also getting the true acquisition sales experience right now because the lady has since ghosts.

Dan Austin: [26:52] I'm great here. She dude, you you I think here okay. So let's talk about this. So she wants $1.75 Yeah. Which is a great price, let's be honest, for that house.

Mike DeHaan: [27:00] I think the water issue is a big thing. I do think that I

Dan Austin: [27:02] don't think it is a big deal, like, to be honest. Yeah. We should have talked about that beforehand. Like, I don't think it is. It's right below where the bathroom's at, all the plumbing's right there. There's cast iron sewer and just like the the plumbing. Right? Like the lines, you could see somebody had done some repairs. So it's probably just, you know, the toilet leaking down there or something like that. Nothing big. But it was a gross house. It needs, you know, for a what do you think? How many square feet is that upstairs? 900,000?

Mike DeHaan: [27:27] Yeah. It's 1,100 maybe. 1,100. Think it's what it says online.

Dan Austin: [27:30] Yeah. Needs like 75

Mike DeHaan: [27:30] The thing is, I don't think $1.75 is a good price though. Yeah. Because you're right. It needs $75,000 worth of work. It's gonna put you in at $2.50. The thing's only gonna be worth realistically $3.10. Yeah. When it's done, you take into cost, like that's not a good deal for somebody. I think $1.50 is a much better price.

Dan Austin: [27:46] It is probably a much better price when you when you say that. Yeah. When you put the numbers in on it. I was thinking more like $3.25 sale price on the low end. That's a stretch. You think so?

Mike DeHaan: [27:55] That's a stretch. Especially because the layout of it's weird, dude.

Dan Austin: [27:58] It is an odd layout.

Mike DeHaan: [27:58] Yeah. You you can go and look at both of our Instagrams and you can see some of it. Because like, has like this weird hallway kitchen that you see in some of these old houses, and then like the master bedroom has like an exterior door that like goes into the patio in kinda like a weird way.

Dan Austin: [28:12] Bro, that's a walkout, dog.

Mike DeHaan: [28:13] It's but the way it's positioned in the room doesn't make any sense. Like it's kinda like where the bed should go almost.

Dan Austin: [28:19] Home. It was homemade. It's because the guy did it himself.

Mike DeHaan: [28:21] He added that door? Oh, yeah. No way. For sure. Yeah. It's this the things that you see, it's just in yeah. It does never makes any sense, but Yeah.

Dan Austin: [28:29] It was trash.

Mike DeHaan: [28:30] It was good to get out there though again. Like, I enjoyed walking the property. I also realized how just like jaded I am by properties in general because, you know, it was a pretty like wrecked house, a lot of stuff with it, and I just felt nothing. Yeah. I was like, just another day.

Dan Austin: [28:44] Not even excited. Yeah. I wasn't excited either. Was just walking it. It was a good time. It was a nice little day out on Sunday just go check it out. Yeah. I immediately saw the house. I was like, oh, yeah. Perfect. I was like, it screams drug addict. Was it it screams drug addict son that got to live here and didn't pay rent?

Mike DeHaan: [29:00] Then that's exactly what it But interesting to add an extra question about this property though, this is I'd be curious to know what list you're thinking about this too. One of the biggest items that will be very expensive to fix on this property that I think needs to be done is the driveway and sidewalk.

Dan Austin: [29:16] Yeah. That's trash.

Mike DeHaan: [29:17] I've never seen a driveway and sidewalk in worse shape than that. And I'm like, that's a $15,000 fix right there. Like, honest, has to be expensive as hell.

Dan Austin: [29:26] The driveway at least. Yeah. It was a long driveway.

Mike DeHaan: [29:29] It's huge. Long driveway and like and like the sidewalk was so beat down that at first on the photos, when I looked at it from street view, I thought it was like a gravel Yeah. Sidewalk.

Dan Austin: [29:38] That whole neighborhood's like that.

Mike DeHaan: [29:40] But like that's something that would turn off buyers if you're going to sell the house.

Dan Austin: [29:43] Yeah. And the worst part about it is the city typically is required to maintain those, but in that situation, if you want it fixed, you're just gonna have to pay to do it. In the end, you would Yeah. Sidewalks and driveways are a big one. And I also think like landscaping too can like really bite people in the ass. Like, we've done it where we didn't landscape. I love trying to sell properties in the winter because you don't have to landscape it. Like, if it's like smash landscaping, like, just not good, there's snow on the ground, you're like golden. But yeah, it could add up a lot.

Mike DeHaan: [30:09] I mean, and speaking of that one too, it's landscaping with weird DIY stuff. You noticed if you were leaving, there was a little sprinkler. Oh, yeah. He used pecs. He

Dan Austin: [30:17] used indoor pecs line as a sprinkler system. I was like, oh, this is terrible. And then there's the other things that get you fences and decks. Like, fences aren't as bad, but decks will just freaking eat your budget away. Like, there's so many little things on the exterior that, you know, you that you honestly, like, 2020 to 2022, you could kinda overlook or kinda put lipstick on a pig because people just dealt with it as long as that inside looked new and had fresh carpet. Now people are looking at all that stuff.

Mike DeHaan: [30:44] Yeah. And those are all things that add an incredible amount of cost. Yeah. You know, so many people, especially when they're new investors, they think about kitchen, bathrooms, flooring, whatever, absolutely. But the exterior of the house, if they are like I would say less than mediocre Mhmm. Like they are exponential in terms of like devalued Oh, that they add to the house.

Dan Austin: [31:04] Curl curb appeal thing.

Mike DeHaan: [31:06] Yeah. Like if something's kinda like okay, people can get get away with it, know, whatever. Oh, those the deck needs to be refinished. I'll deal with that myself in like seven years, whatever. But when the the driveway is the concrete's literally so bad that it's like just crumbling.

Dan Austin: [31:21] Crumbling, dude.

Mike DeHaan: [31:22] But like it it looked like I don't even know. It looked like it was gravel, but it wasn't. Yeah. Was just horrible. Yeah. You know? And yeah. And then just so many of those little things. I'm like that's realistically we're saying $75,000 to rehab. If you include that, I was probably pushing a 100. Looking at all the exterior pieces. You're probably right.

Dan Austin: [31:36] Especially because you gotta clean up all the just the weird shit that the guy had there and like Mhmm. Weird yard art Yeah. That he attached to the house on the outside that needed to be removed.

Mike DeHaan: [31:46] Yeah. So I don't know. We'll see. But yeah, it was so good to get there. We didn't wear our blue shirts though. I I felt like we missed out.

Dan Austin: [31:53] We gotta get we gotta get to the shirts. I still have my somewhere I think like

Mike DeHaan: [31:57] The idea. I saw her hanging on.

Dan Austin: [31:59] We're such dorks too. We had our polos. Two polos. So those should be good old days.

Mike DeHaan: [32:04] I just like that that that's like still our photos I collecting don't know. Keys website. But that we took those before we'd ever done any Deal. Know, downtown.

Dan Austin: [32:12] We went to like the park, got like a nice background, so iconic iconic fixtures, the the Cock Tower in the background.

Mike DeHaan: [32:19] Yeah. Oh, man. Our wives were like, you guys are so dumb.

Dan Austin: [32:22] We're like,

Mike DeHaan: [32:22] you know, even so

Dan Austin: [32:24] rich. Shut up. We showed them

Mike DeHaan: [32:28] and they still don't care.

Dan Austin: [32:29] Yeah. No shit. We did show them like Stacy's like, I don't even my wife doesn't even know what properties we own.

Mike DeHaan: [32:34] Yeah. Right. Mine doesn't All she knows is that every once in a while I have her like sign like a mortgage document saying that she will go into crippling debt if we fail to pay it and she has no idea what she's signing.

Dan Austin: [32:43] When when I showed my wife how much debt we have, she was like, what? How many to how much? I'm like, don't worry, we're good.

Mike DeHaan: [32:50] It's like, it's more like 12,000,000. Don't worry about it. It's fine.

Dan Austin: [32:53] We got good DSCR, we're fine.

Mike DeHaan: [32:54] Yeah. Hey, if it wasn't gonna work, they wouldn't give us the debt. Okay. That's true.

Dan Austin: [32:59] The banks would not just write us a check if it wasn't a solid deal. No.

Mike DeHaan: [33:02] Banks never give bad loans that they shouldn't be giving, unless you're getting a subsidized loan and you're overpaying for a property that you definitely can't afford. Oh, bad. As long as you're buying it from me, don't really care if you do that. And you're giving me $30,000 of rasking for it.

Dan Austin: [33:16] Right. You know how I know that's not true? We've lost money on houses.

Mike DeHaan: [33:20] We have. Right? And they will

Dan Austin: [33:21] show you money on a bad deal. Yeah. We've only had a couple losses. No. Here's the thing though, is it's not a bad deal for them. For them. Yeah.

Mike DeHaan: [33:30] I mean, they're they're the ones that get paid

Dan Austin: [33:31] Yeah. Exactly.

Mike DeHaan: [33:32] Over anybody else. Exactly.

Dan Austin: [33:33] So It's a good spot to

Mike DeHaan: [33:34] be. Yeah. So Anyways. But, yeah, just just looking at the pipeline now. I don't know. I'll figure out what I wanna do with them. Should just sell everything. What like, what we should do is we we can influence the market. We can just put all of our properties on the market and take everyone else's values. We'll undercut all

Dan Austin: [33:49] of Totally. People will like, look at this landlord trying to sell all this shithole properties. Yeah. That's what they'll think.

Mike DeHaan: [33:54] How big do you think a portfolio needs to be to sell like as a portfolio?

Dan Austin: [33:58] I'm gonna guess like 10 plus.

Mike DeHaan: [34:02] You think 10?

Dan Austin: [34:02] Yeah. Like for a like a bank. Like 10 properties. 10 properties like for a bank to look at. It's probably gotta be it's probably not just a unit size, but also a dollar amount. And then and and I think here's here's how I think about it, like if we went to like our bank, depending on the mood that they're in, I feel like they would look at certain things if we were to position it right the right way, like hey, here's here's how good of a deal this is, you know, for you guys to lend on it as a portfolio. I don't think right now they would do that unless it was like, I don't even know if we brought them a 100 units right now if they would lend on it as a portfolio right now, maybe. They're just so weird right now, our bank specifically.

Mike DeHaan: [34:38] Yeah. I mean, I don't know. Think they're over capitalized.

Dan Austin: [34:41] I think it's because they've got the one guy that you and I both know that's like losing his ass and like he's a huge part of their balance sheet.

Mike DeHaan: [34:47] He was literally like a quarter of their balance sheet at one point and he's getting wrecked.

Dan Austin: [34:51] We should ask Matt about that and see if he knows anything.

Mike DeHaan: [34:54] He was he allowed to tell us? Do do they have like HIPAA for banks where like

Dan Austin: [34:57] they I don't can't want his tell social security number. Just want you to know, wink twice if this dude is fucking up your balance sheet.

Mike DeHaan: [35:04] Yeah. Alright. Get him liquored

Dan Austin: [35:06] up on the golf course.

Mike DeHaan: [35:08] What you gotta do is you just gotta wait, like if you ever wanna find dirt on somebody, just find like, just wait for the one piece of negative press come out about them and then you can ask about that. And then if you're like, oh that was already in the local paper, perfect. They'll tell you everything. Yeah. That guy's But

Dan Austin: [35:22] if they're bag.

Mike DeHaan: [35:23] Before that that initial seal is broken of, you know, can we talk shit about that person yet? Nobody wants.

Dan Austin: [35:29] Nobody wants to be that guy, especially if there's still money being made. Except for us. Like more than Yeah. We pop the seal on that shit too quickly,

Mike DeHaan: [35:36] too easily. Yeah. Anyways, cool. Well, that's enough rambling for today. Anything else you wanna add on before we leave? No. Let's get here. Right on. Well, thanks guys. We appreciate you all listening. If you think that we should sell all of our properties, you should send us DM on Yeah.

Dan Austin: [35:51] I'm at

Mike DeHaan: [35:51] mike underscore invest, Dan's at investor man Dan. And will you hate us if we do that and think we're impostors? If you do, if you will think that, I don't think I'll care. But I would just curious to, I would just be curious to see a poll.

Dan Austin: [36:03] Let's make a deal if you wanna buy some shit.

Mike DeHaan: [36:05] Yeah, right. If you wanna buy a bunch of properties that I just told you don't cash flow very well anymore because of all the taxes, they're definitely not gonna cash flow at current 8% rates. But you know, it's for, as all those sub two dorks say, it's for the long games. For long people with a long term vision.

Dan Austin: [36:21] It's for a good I'm just gonna start to say it's for a good cause. For a good cause.

Mike DeHaan: [36:24] For the FCYs was on gonna the say that damn it. It's still true. So anyways guys, do your shit y'all listening, and we'll talk to you guys next week.

Dan Austin: [36:33] See you.