Should You Invest Differently If You Have Kids?

Mike DeHaan: [0:00] Really quick before the show starts, in case you haven't heard, we have a growing community of investors called the scale community, which is full of people learning to make massive income with their real estate businesses so they can reach financial freedom a little bit faster than building a rental portfolio solely over time, because honestly, that takes decades and who has time for that? So if you're an investor who is serious about growing and creating a scalable business without needing to be a slave to it twenty four seven, then go to collectingkeys.com/scale and apply. And if you're a good fit, we would love to have you join the community. So, again, collectingkeys.com/scale. Go ahead and apply, and we'll see if you're a good fit. I think the most valuable thing that you cannot steal in real estate or not copy is your network.

Dan Austin: [0:44] Yep.

Mike DeHaan: [0:44] Right? And that's that's built through relationships and trust over a period of time. But I would say you can buy that network. What is going on, guys? Welcome to today's episode of the collecting keys real estate investing podcast. Today is Wednesday. It's the off market operator radio show. And I am your host, Mike DeHaan here with my cohost, Dan Austin and Dylan Cook. Dylan is back this week. New kiddo about a We week had Cody on last week if you guys got that one. But, dude, how does it feel? You are taking to Dab Life wonderfully in the first week?

Dylan Koch: [1:23] Yeah. I mean, all things considered, pretty good. Everyone's like, you'll get used to the lack of sleep. So I'm still waiting for the get used to part. But

Mike DeHaan: [1:30] You don't look that tired yet, so it's not hitting you that hard. Although it did take you about three minutes to figure out your headphones weren't plugged

Dan Austin: [1:36] in when you

Mike DeHaan: [1:37] offered them.

Dylan Koch: [1:37] See that's my excuse, the brain fog and waking up every three hours, but other than that man it's been good, and I know we talked about previously, I think I hired my assistant, think one of the better times because we still had some work getting done these past ten days even with the delivery and whatnot, so that was good.

Mike DeHaan: [1:53] Nice, that's awesome. Sweet, and so I guess what, one week old?

Dylan Koch: [1:57] Yeah, ten days as you're born on the fourteenth, rocking and rolling now. Everyone's mom's checking out, baby's checking out, so then now it's just getting in bed routine and hopefully getting back to the business here shortly.

Mike DeHaan: [2:09] Sweet. And so how do you balance that in that first week span?

Dylan Koch: [2:13] There's no balancing the first week.

Dan Austin: [2:16] It's just running around, gettin' your shit done.

Dylan Koch: [2:18] Yeah, you're taking care of the baby, you're taking care of your new mom, especially my wife had to have a c section, so that's a little bit more extensive.

Dan Austin: [2:23] But

Dylan Koch: [2:25] when things come in through my phone, I have this basically screenshot, send to Kayla who's my new assistant, okay, you handle this? Or send them a contact or two, Then it's just taken care of from that way. Answering a text or a phone call in the hospital isn't too bad, but for example, follow-up calls in the CRM. That's not happening. Something like that. But some of the admin stuff or the flip stuff

Dan Austin: [2:44] that we're doing is still not done. Yeah.

Mike DeHaan: [2:46] So theoretical situation. K? Baby is crowning. You see on your phone, I would like to sell my property tomorrow. What do you do?

Dylan Koch: [2:56] That I'm not I won't even know that notification came in.

Mike DeHaan: [3:00] No, you sound like your Apple Watch, everyone's Apple Watch is always on.

Dylan Koch: [3:02] It's not even a question Mike.

Dan Austin: [3:06] It's an $80,000 wholesale fee.

Dylan Koch: [3:09] You know, maybe if I was first starting that'd be a different question, but I'm in a position now where it doesn't matter.

Dan Austin: [3:14] Think about with compound interest, if you put $80 into a Bitcoin for your daughter, how how well off would she be?

Dylan Koch: [3:21] Well, I'm gonna do that anyway. So I don't I'll find out.

Mike DeHaan: [3:23] Oh. Oh, fancy pants over here. Already rich. Wow. No. It's okay. She if she if you had been able to pay for her entire college because you signed a deal at the moment of her birth, she would have totally understood if you'd Yep.

Dylan Koch: [3:37] Probably. To her.

Dan Austin: [3:38] Yeah. Yeah. I again, so How was the bed? How was the bed in the hospital room?

Dylan Koch: [3:43] Dude, it sucked. And they were there for, like, three or four nights.

Dan Austin: [3:46] Oh, because you had the c section. Yeah, dude. That's tough. That's tough duty right there.

Mike DeHaan: [3:50] That's like the most universal thing I think I've heard from all men I know that have had kids is how terrible is the situation as, like, in the hospital. But my thought is also about what about the person who's having birth?

Dan Austin: [4:02] They're expected to give birth. Right? Like, they're expected to be in pain, all that sort of stuff. Right? Okay. Here's I'll I'll just share you my experience because I didn't read any books. I didn't do any research. And at the time it wasn't viral on the internet for dudes to talk about how bad the bed was, or the chair or whatever. Like now it seems like a very common thing, maybe it's because I'm on the dad algorithm. But I literally showed up, went to the birthing center, we had this suite room, everything's good, set up, my wife pre packed my snacks, because she knows I would want some snacks and all that stuff. She's going through the thing, and then the minute that it's time to like give birth, the nurse literally just says, Come over here, and she hands me a lake. And I'm like, what am I am I participating in my wife giving birth? Like, I literally thought I was an innocent bystander. It's not the case. You have to be there. I was holding a leg, I was doing the whole thing, and I was not trained to do that, and I was not expecting

Mike DeHaan: [4:51] Well, that's what you get for giving birth up in Idaho where they don't have women's health, so.

Dan Austin: [4:55] This is in Washington, dude.

Mike DeHaan: [4:56] It was their first time, bro. They had no idea what was going This

Dan Austin: [4:59] was my first time. And they're like, yeah. And it was just as casual as could be, like that's how it was supposed to be and then

Dylan Koch: [5:06] Hey, that sounds better than thirty six hours of labor and not being able to sleep on that fucking couch and

Dan Austin: [5:12] then Yeah. Yeah.

Dylan Koch: [5:13] Was a rough That's right.

Dan Austin: [5:14] Four or

Dylan Koch: [5:14] five days, but we're through it now, I'm not I'm not complaining.

Dan Austin: [5:16] That's the hardest part, you just got through the hardest part. I hope so. Yeah. Besides your daughter's first boyfriend.

Mike DeHaan: [5:22] So how does, you know, this new experience in the fatherhood, Dylan, change your view over investing everything else? I know this is a common topic with real estate investors. I think this is honestly a pretty good conversation for the show around legacy, family wealth, what your actual investment strategy looks like, probably changed. You know, I don't if you're thinking about this beforehand or if, like, I've also heard a lot people say, well, the second my kid was born, my entire view on the world changed. But you're pretty calculated.

Dylan Koch: [5:52] Yeah. I I've heard that that latter statement too. And, I mean, for me, honestly, it it didn't. And I don't think that's taking away from the affection that you have for your daughter is probably already, you know, still there. But I don't think my investment decisions will change all that much in the near future. Now I am doing like the whole cool story, and who knows if it's the best ROI or not. But we have a six unit that I'll probably, you know, refine quick claim over to her and whatever show that responsibility. And hopefully, you know, as she's growing up, we can take her to it, she can see it, help manage it when she gets a certain age, that kind of stuff. As for a monetary perspective, I think we're gonna be okay regardless. It's more, I don't wanna have the quote unquote born on third base mentality for the offspring that we do. Don't have baseball every

Mike DeHaan: [6:38] year, I don't know what that means.

Dylan Koch: [6:39] You're born with an unfair advantage because your parents are wealthy, essentially is what it comes down to. And because my parents were wealthy, I wasn't wealthy, I've had to grow in everything we have until this point, so how do you instill the work ethic, the dedication, the delayed gratification it took to get to this point, and not just handing over the properties and assets that you have at a certain age. Yeah. That's my biggest, like, dilemma. Not, okay, we're gonna be wealthy. That's how you know? Sure.

Mike DeHaan: [7:03] I mean, that's such an interesting sort of concept I've always tried to figure out. Right? Because there's obviously people that come from very wealthy families that do very well, you know, whether they like take over part of the family business or, you know, whether it's just them being motivated to go to school. Whether that's nature and nurture, I don't know. But everyone knows those people, right, that have never really had to worry about anything. Never even really had to get a real job, but just were able to jump into wherever they were pushed, and it turned out fine.

Dylan Koch: [7:32] Yeah. But their whole legacy thing of I don't expect my daughter to take over the family portfolio one day,

Mike DeHaan: [7:40] or

Dylan Koch: [7:40] her offspring to take over the family. Like, don't want this to be like a I'm setting this up for four or five generations, because history shows us that's just not the case. Like the Vanderbilts lose all of their wealth like the third or fourth Vanderbilt or whatever.

Mike DeHaan: [7:52] Well, that's the old adage, right, is that the first generation builds it, the second generation grows it, the third generation destroys it. That's how you historically would say.

Dan Austin: [7:59] Yeah. You're not gonna know those people anyways, who cares Exactly. What happens to

Dylan Koch: [8:02] Yeah. So from that aspect of it, hear some guys in Gobind and say like the whole legacy piece, you know, won't say it's not important, but it's definitely not super high up there in my herocracy list, I guess.

Dan Austin: [8:14] One of the comments I made to my wife yesterday, it was totally not even talk we weren't thinking about this this topic at all, but it was something with the kids, and I was like, you know, we're gonna raise them in a soft environment. We should make it at least somewhat hard for them. Meaning, like, in the simple terms, it's like that's Dan Lingo for like, obviously, we worked our tails off to do well so that our kids can have opportunity, but I'm going to have to find opportunities for hardship, kinda create opportunity for hardship, and by hardship, I don't mean things that are gonna decimate them, but learn how to work hard, give them the opportunity to fail. Like right now, my daughter's in this groove, so I've done the same thing as you Dylan, where both my kids have a house, they're student rentals, And Cole, my son, goes with me all the time, mostly because now at this point, I'm like the old curmudgeon landlord, and he provides a soft touch to that. When I show up to like these 19 year old girls, I'm like, why is this not working when it was working? Last time, told you I have to shut down here.

Dylan Koch: [9:14] You know what I mean? But,

Dan Austin: [9:16] you know, my daughter's at this she used to go with me. Now she's like, I don't wanna go. I don't wanna go. And, like, what is the consequence for that? Obviously, she's only six, so I'm not creating consequences for her, but as she gets older, she doesn't wanna participate, but her brother does. What is the lesson she needs to learn there, she needs to pay for that labor, Someone's gotta pay for it. If someone else is doing the work for you, you have to have some sort of hardship with that. So just creating those opportunities without being a total dick and realizing that at some point in time, you're going to provide trauma doing quotations to your child because everybody has that. They're like, man, my parents did this and I did not like it. And some people's is more like stupid than other people, where some people are like, yeah, I grew up in a brothel because my mom was a crackhead. Like that's

Dylan Koch: [9:59] different trauma, right?

Mike DeHaan: [10:01] Yeah, But

Dan Austin: [10:01] we all have our own trauma, right? Whatever that trauma is, it's trivial to some people, but you just recognize that at some point in time you're gonna be the trauma creator for your child.

Dylan Koch: [10:11] Yeah, I think a lot of us look at it from a financial end too. If I go back in time when I was 19 years old, I'm like, Mom and Dad, I'm struggling with financial aids and money, they've been like, Good luck.

Dan Austin: [10:21] That sounds tough.

Mike DeHaan: [10:22] Yeah.

Dan Austin: [10:22] Us too. That sucks.

Dylan Koch: [10:24] But if we get to that shit nineteen years from now, I would hope that I'd be like, Okay, do I give them money then or not? That's kind of the dilemma or the thought process I'd have. Yeah.

Mike DeHaan: [10:35] Yeah. Well, so I have a slightly interesting being able to take on this because I do come from a family that's pretty well off. Right? And one of the things that's kinda weird about that is that I never talked with my parents about money or anything else. And even though my parents, like, drove, like, decent cars, you know, they weren't, like, driving Ferraris or anything, but we you know, they would drive, an Audi, right, instead of, like, the old random Suburban that, like, my friends had. You know? Or, like, we went to Europe when I was a kid, you know, like, several times. It was not an uncommon thing for us to do. But as far as they, like, I don't know, treated me or presented our lives to most people, it was just like everybody else. You know, I still had to scrub the baseboards boards for my my weekend chores. Right? Or, like, I still, you know, went to public school or, like, everything else that

Dan Austin: [11:23] we would do. I'm imagining you scrubbing baseboards right now because I can't imagine you do that in your own house.

Mike DeHaan: [11:28] Fuck no, dude. I pay people for that. But but, like, you know you know what I mean? Like, I did a lot of, like, the traditional stuff.

Dan Austin: [11:35] So it'd be a little Michael on the baseboards scrubbing the baseboard. I get it. That's

Mike DeHaan: [11:39] so And the thing that's kinda interesting is I didn't even really understand the full financial picture until I was in college. Right? And even a little bit after that. I still went and got a job and did all these other things. I paid for my own apartment. I did all that sort of stuff exactly the same.

Dylan Koch: [11:53] So you weren't expecting anything.

Mike DeHaan: [11:54] That's I think the good I wasn't expecting anything. Yeah. But the funny thing is though is that I still definitely had like this, I don't know, personality where I did not wanna do what the normal path was. That's like a big reason that I ultimately burned out and left engineering. Because, like, from day one, I knew that I didn't wanna do what everyone else was doing. And I don't know why because that was the expectation that was given to me. And something that I've regularly thought about is if I had been, I don't know, more exposed to kind of the fact that my parents had a successful business, they had money, and they had approached life a different way already. I bet you that I could be further along than I am now because I would have discovered, I would say, like, the opportunity that exists in the world earlier instead of needing to, like, you know, go through this entire experience, like, going to college, paying for all the shit, like going being an engineer for five years and hating that, and then not discovering that I was not about that life until I was 28 years old. I bet you I could have discovered that at, like, 22. Right? And had an extra five years.

Dylan Koch: [13:00] Yeah. To that point, I've had, I think, similar, I guess, discoveries is the best way to put that. It was like growing up in a small town USA, we were my parents worked in factories all our life. And it was like, basically, your education is your ticket out from that. But it was never discussed of entrepreneurship was never even like it, we're taught to be good employees not and you would buy my kind of natural, like sets that I did not I was like very much and I was a good employee. It wasn't till 2425, or I'm like that this other world even existed. And you almost have to untrain your mind of like, and that's actually probably even somewhat comes up the business today, because I don't feel as productive when I'm doing creative tasks versus when I'm just in the CRM making calls. That's when I feel my most productive, but I might not necessarily be that way.

Dan Austin: [13:46] Fascinating.

Mike DeHaan: [13:47] Yeah. I mean and I think there's such a huge nature nurture component to entrepreneurship in general. Right? And I think a lot of people when they have found some success and they have kids, one of the things that you don't really know, right, is if somebody is not necessarily entrepreneurial and you expose them to financial security or you kinda like, you know, put them on third base or whatever you said, they're more inclined to just be like, well, peace. Fuck. I don't have to do anything. Right? Versus if they're more entrepreneurially driven, they're going to be more inclined to, like, try and do something with it or make more of it. And that's hard because I don't know at what age you start to, like, see that in people or if you even ever do.

Dan Austin: [14:26] Yeah. Well, I you know, you think back to your your personal experience is like, I don't know that you can guarantee what you would have done had you not done certain things. Like, have your parents exposed you a certain way to it differently? Maybe your parents were like, man, if we let Michael go loose on this, he's kinda gonna do some crazy shit. Maybe we want him to go and stay, learn how to at least follow a leader first before he becomes a leader. You never know.

Dylan Koch: [14:51] Well, I used to do stuff though

Mike DeHaan: [14:52] that was very entrepreneurial as a kid. I remember something I would do is we would have, like, these, like, little academic awards or whatever where you could win, you know, like, a pencil or, like, the little knickknacks or dumb stuff in elementary school. What I used to do because I was relatively intelligent, I would win those regularly. And I would go to the dumb kids, and they would like like, I want that. And I would say, I'll sell you this for like 0.25. Right? And I used to just I

Dylan Koch: [15:20] That's what

Dan Austin: [15:20] I'm saying, though. Maybe your

Dylan Koch: [15:21] parents kid up for failure. His parents think he's so fucking smart. Yeah. I used do that stuff, like, all the time.

Dan Austin: [15:27] Said he needs to learn how to do this for good and not just evil first. Hey.

Mike DeHaan: [15:31] I was an opportunist. That's why I'm dirty wholesaler now dude, I just recognized, wait a minute.

Dan Austin: [15:36] Exactly right? Recognize value, recognize a gap in the marketplace, yeah. I think in general, yeah, the whole idea of legacy building and there's no right way to do it, you're probably gonna fuck it up some way, and personally, don't think you should be worried about what three or four or five generations are saying about you, or if your name's on a building, you're something like, I think people get really wrapped up in what they have. I don't know that I believe in the whole die with zero motto or mentality. It's like, I don't know, you guys are in this situation like, you're like, hey, if you have parents, you're like, I don't give a shit if you spend all your money. Like, I don't need it, I don't wanna like spend every penny you worked your ass off, don't think about me when you're thinking about leaving something. I loved earning everything I've earned, I know where I'm at, I know what my capabilities are, like I don't need that. That's not a disrespectful thing, but just enjoy it. Don't not enjoy it because I'm watching your life, and it's like, have fun as much as you want. It's your life, it's not my life.

Dylan Koch: [16:32] You see this dynamic play on some probate cases though of families who got each other's throats for what seems to be minimal amounts of money when some of these estates pan out. It ruins families.

Dan Austin: [16:42] Yeah. That deaths can ruin families because of what they the perceived transfer of wealth is even if it's something like you're saying, Dylan, might be trivial.

Mike DeHaan: [16:50] Yeah. People take it personally too. Right? Especially when it's like a bunch of kids and I can't believe you left it to Jimmy. You know? Like, come on. Get over it. But I don't know. It's an interesting conversation, and so people are so different about it too. Like, we see this a lot in GoBundance as well where a lot of people, I would say, especially if they're religious or they have these sort of, like, larger family values, really are more interested in, like, kind of, like, that longer term multigenerational legacy wealth. But us over here, I'm pretty sure we're all a bunch of heathens, which is like Well,

Dan Austin: [17:20] spend it all at the casino, baby.

Mike DeHaan: [17:22] Yeah. Right. Yo. If you don't follow me on Instagram, which is that mike underscore invests, by the way, then you might not know that we officially have a new mission as a brand, and that is to help 2,000 real estate investors build million dollar businesses. Obviously, to do that, we need to get in front of as many people as possible. So quick little ask to help us reach that goal. First, shoot me a follow on Instagram at Mike underscore invests. Second, follow collecting keys podcast on Instagram. That's at collecting keys podcast all written out. And third, every time the algorithm is kind enough to show you a post from either of us, share it on your story or in your post and tag us. If you do that, I'll DM you and we can have a little DM conversation about what is preventing you from having that million dollar business that everyone is seeking. And we can see if we can come up with a plan to help you make that massive income, not just passive income. So again, if you see any of our posts, just go ahead, reshare them, tag us, and let everyone know that you enjoy the content we produce. It will help us a ton, and then I'll be happy to help you as well.

Dylan Koch: [18:27] Or mostly then talk about like, think and strategize in decades.

Dan Austin: [18:31] Mhmm.

Dylan Koch: [18:31] Right? Especially with our businesses. And so it's hard to like take the the concept of thinking for twenty, thirty years from now, and pulling that back and not spending that money. But Mike, I wanted to just ask you, and we touched on this in our scale community Slack channel, but you had that second meeting with the Hormozies, right? And I had a personal question that came up, was like, did they talk anything about trying to quantify the intangible stuff? Like actually putting numbers around what a brand is worth, or intellectual property if you're a certain kind of business with some certain software or something like that?

Mike DeHaan: [19:06] They didn't with any of our stuff, because none of it's inherently that complicated. Right? Like, if you have things that have a very high barrier to entry like software, right, or, like, some kind of, like, manufacturing process that you figured out that's took you, like, five years to do, that sort of stuff totally. But when it comes down to, like, a marketing and sales process and a financing process, which is very much like what real estate is at its core

Dylan Koch: [19:30] Yeah.

Mike DeHaan: [19:31] They're just like, anyone with money can do what you do. You just gotta get better at doing it and learn how to do it more efficiently. So there's not a huge amount of, like, enterprise value that they give to stuff like that in regards to real estate. I think the most valuable thing that you cannot steal in real estate or not copy is your network. Right? And that's because that's built through relationships and trust over a period of time. But I would say you can buy that network if you have a Yeah. Pocketbook.

Dan Austin: [19:59] Yeah. That makes sense. I think part of that still ties to branding though, like your network. Ish. Not necessarily paid branding or public branding, but your brand as a person is what helps build a strong network.

Dylan Koch: [20:10] Well on that note, I were to send my painting contractor, like my painter, or let's say my drawing, the other guy, I know the prices I get are gonna be better than what he gives somebody else, just with that relationship. So even if you give the same contact or resource, it might not be worth the same amount. Totally.

Mike DeHaan: [20:27] That's true. Yeah, absolutely.

Dylan Koch: [20:29] And then I guess the follow-up question to that is what about the scale part of that membership count? Having 5,000 members versus 50,000 members. Like, obviously, that is the 50,000 is more valuable, has more reach, but I guess I wanna know how to try to quantify that on how they view it as a private equity company.

Mike DeHaan: [20:47] Yeah. So in terms of how they value the group, if it was larger versus smaller?

Dylan Koch: [20:54] More of, I guess, value the community as a whole. You know, like, what is your enterprise value based on this? I guess reverse engineering the math of you have this many paid members versus this like, a larger amount paid members, and then the net that that's able to cast. Yeah. So the big thing

Mike DeHaan: [21:12] that they look at, right, when it comes to any sort of like paid product, especially recurring stuff, is they'll look at the the LTV to CAC, they call it, or the lifetime value to the customer acquisition cost. And if you have a group of 50,000 members, but your customer acquisition cost is almost the same as your lifetime value, then it's not really worth anything. See, that doesn't matter. Right? If you have a group of 20 people and your customer acquisition cost is $2,000 and your lifetime value is $50,000 for each one, that's a very, very valuable business. Right? Mhmm. You know, like, like, a lot of stuff they look at, it's kinda like a fancy way of saying what's your, like, return on ad spend. But when it comes to, like, a real estate specific business, we don't typically have a recurring lifetime value of our sellers. We do with our buyers. Right? I think one of the things that's very hard to apply to real estate when it comes to, like, all of Alex ramosianacquisitions.com stuff is a lot of people in their business, especially if they're a wholesalers, their main struggles are on the deal sourcing and getting contracts. And so people view that as their product, when in reality, your product is your buyers list. Just having good buyers that are actually willing to pay because if you don't, you can't make money. And so that contract acquisition process is more of like your procurement of your products.

Mike DeHaan: [22:34] And so I think when a lot of real estate people listen to Akshay Mosey's stuff, they try to apply it to the wrong part of the business. And realistically, if you look at, like, lifetime value or your cost, like, a good buyer or, like, to buy a house, right, if you're gonna flip it, those are things that you can actually manipulate a little bit more and that you can use a lot of their general principles to kind of, like, build out and process size and measure. But the loss leader component of that, they look at things with such a long time horizon that there's no such thing as, like, a loss leader. Right? It's an investment.

Dylan Koch: [23:07] That makes sense.

Mike DeHaan: [23:08] It's It's not like they have something that you're gonna be carrying as a loss for half a decade, five years. You'll be carrying as a loss for three months. They would just say, that's just part of doing the business.

Dylan Koch: [23:17] The loss leader thing is interesting because in the context that I think most people think of it as is Amazon was okay with losing money for five years, so they got up and created market share, which you really can't do that, in my opinion, in an off market wholesale business.

Dan Austin: [23:34] If you're losing money, there's, I mean

Dylan Koch: [23:36] You're just losing money, yeah.

Dan Austin: [23:37] Exactly. Well, there's no other typical product, know, like a loss leader would mean that you have another product that is leading

Dylan Koch: [23:43] Something else to sell, yeah.

Dan Austin: [23:44] You know what mean, that's making money, like for Amazon AWS has been what makes Prime even doable. AWS is a deca billion dollar revenue stream, and it's super easy for them to operate.

Mike DeHaan: [23:55] I mean, in so many of these massive massive companies, they can have stuff like that, but it's because their lifetime value is so huge.

Dan Austin: [24:01] Yeah. There's a lot to be said though. Like, think about this, Mike, I guess, just in business in general for anybody that's starting a business, like we started some other adjacent businesses, like Simple Leads for example. Like, at what point is losing money every month as an off market real estate person a loss versus an investment? That's where if you're gonna start up, you're listening to this, you've never sent a marketing campaign, maybe you own some rental properties or whatever, you've been an investor, but not like a business owner, what does that look like as losing? How much, how often, what should you expect?

Dylan Koch: [24:33] Actually, can I interject? This might be a good example. The podcast, right? You guys don't take advertisers. You cost money for you guys to run this. Could the podcast be viewed as a loss leader for the scale community that you guys have? Whereas the podcast might quote unquote lose money every month, but if you get some new members from it, that could generate some money.

Mike DeHaan: [24:52] It totally could. Honestly too, a big thing is that the scale community for a while was a loss leader for our partnership program.

Dan Austin: [25:00] Yeah.

Mike DeHaan: [25:00] Right? Where we are we are standing up to separate people. Like, scale scale as a whole has never turned a profit. Right? It has been a pipeline to basically fund the marketing acquisitions get people into our partnership program

Dylan Koch: [25:14] Mhmm.

Mike DeHaan: [25:14] You know, which we did for several years. And now as we sort of start to move away from that a little bit, what's actually been very interesting for Dan and I is figuring out how to, I would say, like, change that around so that the scale community becomes a profitable enterprise while also still being able to deliver, like, the same product that people are getting. I can see why people shell out and become like these

Dan Austin: [25:39] Sellouts.

Mike DeHaan: [25:40] Sellout people that are like affiliating everything and everything's all bullshit. Like, let's just get people in the door or whatever. Because the velocity of money is extremely high with high ticket sales. Mhmm. But if your churn is extremely high as well, don't know. I don't really understand what the point of that is.

Dan Austin: [25:54] It's a balance too when you talk about the community like that. Because when Mike and I, we added up recently because we were kinda doing some forecasting the amount of money we spend a month on this whole shtick. Not gonna say it live, but it's a lot of money. It's more than most people would imagine.

Mike DeHaan: [26:08] It's like so stupid how much money we spend, honestly.

Dan Austin: [26:10] It's a lot per month. Yeah. But the thing that we with scale in the community, it was it was kind of more of a project for us to do. It wasn't like started intentionally to be like, let's be community operators. But the interesting thing is is like, how do you operate like a community that's sustainable, but is it like what Mike said, people just selling out and shilling bullshit? Because like, we don't have affiliates within our group for shit we don't use. We use everything that we give our folks affiliates for at a high level, and otherwise, we wouldn't do it.

Dylan Koch: [26:41] And there's only a handful. It's not like you're I can speak from experience. It's only a certain very small amount of venues.

Mike DeHaan: [26:48] Right. Totally. Yeah. Well, and then also too with the scale community. Right? Or, like, having this kind of paid community where people are verified operators because they're paying a significant amount of money to be in there. It's a good, you know, loss leader or, like, small profit center right for, like, our lending business,

Dylan Koch: [27:05] which we have

Mike DeHaan: [27:06] made hundreds of thousands of dollars off of, mostly lending to scale members to other buyers that we have sold deals to. We have sold deals around the country to people that are within that group and made hundreds of thousands of dollars off of that with connections that we might have not had previously. And

Dylan Koch: [27:20] this is my whole point of the origination of the question, is quantifying that, or trying to quantify that. Okay, is this branch created this amount of money, this branch created this Is this a hard thing to wrap your head around?

Dan Austin: [27:31] It is. It really is, yeah. Like, the podcast, I think you hit the nick of the nail, Andy. If you just look at just the production of the podcast, it has been worth every penny that we've spent on it, even though, well, it's not even actually that much when you only look at production. Mean, it's more than most people are willing to spend, and there's big brands out there that don't spend what we do on the production, which is surprising because they're so cheap. Because they look at, most people look at podcasts as advertising revenue, which is like, so stupid. It's not worth even doing that. Mhmm. But the brand it's built and the community it's allowed us to build has allowed us to monetize the different parts of our business, such as, like Mike just mentioned, the lending business and those things that we actually are able to take income and invest it back into essentially ourselves, which we can then make more money on. We're controlling every every kind of aspect of it for ourselves on an investment side.

Mike DeHaan: [28:20] Well, also, I just think any business in general that has a community aspect to it. And this can be the same for, you know, everyone that has a real estate wholesaling and flipping business. Right? I probably I'd be willing to bet that most of you guys are in a market that has, like, someone that's kind of like one of the bigger companies in town that hosts a meetup.

Dan Austin: [28:40] Definitely.

Mike DeHaan: [28:40] What do you think that is? Right? That is their version of, like, the local scale community, and they are using that as a source to find buyers and find opportunities for their business. They will always have an easier time selling deals than people that do not have that. Right? And then when it comes to scale, like, especially with our partnership program, are running that at, like, a really, really high volume. There was a lot more opportunity to, like, move products and stuff that were in there because we had this national brand. Like, if we had tried to stand up in some market across the country and we didn't know anybody that was there outside of, like, the one partner, it was always gonna be harder to do that versus having, like, this national presence. We have a bunch of people that are all connected within their own spider webs of whoever, And all of a sudden, the world becomes so much smaller to get deals done. Because the funny thing is, it goes back to what we talked about at the very beginning, a huge part of real estate that makes things valuable is your network. Right? And who all is in your sphere of influence? And any part of real estate kind of has that same challenge. Back to the lending business in particular, we're talking about this for the show too. One of the other members, he posted this win in GoBundance Facebook about how he had just made $64,000 in a month with his lending business.

Mike DeHaan: [29:52] And the most common comments underneath that were, what's your lead source for those loans? And I I sent it to Dan. I was like, bro, we gotta go more on the lending business. We already have the lead source. We have so many people that need loans from us. We don't have enough money.

Dan Austin: [30:07] Like underwritten quality people, because otherwise we wouldn't let them in the community or do business with them. Right?

Mike DeHaan: [30:12] Yeah. Exactly.

Dan Austin: [30:12] So it's like that's the best kind of lead.

Dylan Koch: [30:15] With that best kind of lead too, it's like from the people who are listening or just off market operators, your best deals or your best leads are referrals. They don't cost Yes, any absolutely.

Dan Austin: [30:24] Every time. 100%.

Dylan Koch: [30:25] Your return on ad spend is infinite.

Dan Austin: [30:27] Yeah, which goes again, back to the branding part of the discussion that Dylan brought up earlier, is your brand via your network does actually make you more money than just being a guy. Like if you think you're gonna, this is the one, I guess, I would parlay this conversation into is like, if you think you're gonna start this business and sit in your house and send out marketing to people, and just make phone calls and never have to actually communicate with people like at a network level, you're probably not gonna make it this business. This is a team sport, this isn't a sit in your office type thing and just be a nerd on data and marketing because that doesn't get you anywhere. Doesn't matter how many cool systems you build around this business, how many cool spreadsheets you have, it's that personal brand via your network that is where you're gonna monetize this business.

Dylan Koch: [31:09] Here's a fun fact. My revenue per deal between four different channels, SMS, direct mail, cold calling, and Elkhart referral in there, referral is my second highest revenue per deal out of those four channels.

Mike DeHaan: [31:22] I said that.

Dan Austin: [31:23] Yeah. That's amazing. I believe it.

Mike DeHaan: [31:24] Makes sense. I mean, we we got a fat deal off a referral that Dan got earlier this year.

Dan Austin: [31:28] Which one was that? It's like

Mike DeHaan: [31:29] $440. I wanted that friend of a friend or something. Oh, yes. Yes. Yes. Yeah. You know, I don't wanna put too much on out there.

Dan Austin: [31:37] Tell too many people about that.

Mike DeHaan: [31:38] Yeah. Totally. Right. And then in terms of, like, what a loss leader could potentially be if you're trying to sort of, like, comprehend that as a wholesaler, I looked in at the very first deal that we sold to these guys that really kinda beat us up on our wholesale fee. And, you know, I wouldn't even necessarily say it was a loss because technically we made money even though we're still in the red for the business. We could have sold so much more to somebody else, but instead we built good graces with the top buyer in our market, and we sold them dozens and dozens of deals and made hundreds of thousands of dollars off of them over the following years because we had that respect, we had that connection, that relationship, and we gave them a deal that they crushed it on on their first one. Sure. We were ignorant to it, but, hey, it paid out over the long run. Yeah. Well,

Dan Austin: [32:19] I think too with that being said is there's something to be said about giving people or selling people a good deal. Don't short yourself on profits, but don't also be that guy that's pushing everything. You're like, well, I think the ARV is 5% over what it is. I think the rehab budget is 10% below what you advertise it is. You know what I mean? Because every deal has a buyer, and you will find people. We have a person in Spokane that this is how they operate, and they do very well. But everybody that buys a deal from them recently doesn't do well. They lose money on it.

Dylan Koch: [32:50] Probably doesn't end up buying a second deal from them.

Dan Austin: [32:52] And there's a reason why there are almost always newbies that go to their meetup and learn how to do this, and then decide that they're gonna buy a deal from this person. There's lot of trust and rapport built, and then they lose money on it. It's like there's something to be said about the longevity and staying power of your business by selling people good solid deals that will, because if they win, they're gonna come buy another one from you.

Dylan Koch: [33:10] If you have a good buyer, and let's say it's already you've got it signed up, and then someone else comes in and says, I'll give you 5 k more, don't chase the 5 k.

Dan Austin: [33:18] Yeah, don't. Don't worry about it.

Dylan Koch: [33:19] Don't get greedy. Just sell your guy to a guy, and there'll be plenty more efficiency. If he comes to says, we're offer you 25 k more, then maybe have that discussion. Exactly.

Dan Austin: [33:27] Then you go to your buyer and you're like, bro, this is 20 They're like, yeah, totally, 25 ks, Sell it to that guy.

Mike DeHaan: [33:32] Honestly, here's great way to approach the situation. You go back to your buyer and say, hey. I know you really wanna buy this deal. I already got that off me this much more. If I give you $10,000, will you walk away? Probably do it, honestly.

Dylan Koch: [33:43] Yeah. Because then you're still net coming out on top.

Dan Austin: [33:45] Yeah. Yeah. Yeah. Exactly.

Mike DeHaan: [33:46] I would do that unless it was like a really sick deal. Someone's like, I'll give you $10,000 check if

Dan Austin: [33:51] you just Yeah, dude.

Mike DeHaan: [33:51] Like, yeah. Let's do it.

Dan Austin: [33:53] Sounds fun. Absolutely. Cool.

Mike DeHaan: [33:54] So answer your question, Dylan. We kinda went all over

Dylan Koch: [33:56] No. It did. I think that was a good overall good discussion about everything. And I think tying it all together, it's hard for a lot of the business acumen to get tied back to this this business. I think we try to do a good job of that.

Mike DeHaan: [34:09] So yeah, well, it's funny, the more that I have obviously started to learn about basic business, the more I've realized how much it actually does apply to real estate even though it feels like it doesn't a lot of the time, especially because, like, our transaction cycle is so long. And the way that it works is we're really just brokering both sides. Right? And there's a lot of different pieces to it. But at its core, real estate is like any other business. Right? It's marketing. There's sales. There's operations. It's kind of it. Like, there's It's simple. If you don't have those things, you can't have any business regardless of what it feels like. Mhmm.

Dylan Koch: [34:46] Simple, but not easy.

Dan Austin: [34:47] There you go.

Mike DeHaan: [34:48] Definitely simple, but not easy.

Dylan Koch: [34:50] Alright. Well, guys, thanks for listening to us today. Hopefully, you got some value out of that. You should go to collectingkeys.com/academy. We just launched this new thing. It is basically like our course that used to be behind the multiple thousand dollar paywall at scale that you can

Mike DeHaan: [35:08] now get for just a couple $100. Click the fuse.com/scale.

Dylan Koch: [35:12] We have a Facebook group. We have, like, 60 something videos that goes through all of the BS about how we

Mike DeHaan: [35:17] build our business every step of the way from marketing, sales, disposition, everything else. And then, we will be doing somewhat regular calls for about twice a month over there as well. So you can connect with me, Dan, and maybe Dylan a time or two to just like get some help and help you get started on your business. And then once you do that, and you start crushing it, and you decide that you

Dylan Koch: [35:36] really want to take to the

Mike DeHaan: [35:37] next level, then we can decide if scale makes sense for you. But claytoncues.com/academy. Check that out. And we appreciate you

Dan Austin: [35:43] guys checking out.

Mike DeHaan: [35:44] So thanks, everybody. See you later.

Dan Austin: [35:45] See you. See you.