The BEST Way To Force Equity Increase in a Rental Property

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Speaker 3: [1:38] Welcome to the collecting keys real estate investing podcast with your host, Mike DeHaan and Dan Austin. From wins, losses, horror stories, and tactics for optimizing your business, Mike and Dan take a real uncensored deep dive into the ins and outs of running a full time real estate investment and wholesaling business.

Mike DeHaan: [2:05] What's going on everybody? Welcome to episode 10 of the collecting keys real estate investing podcast. This is take two. We had a a re I guess say an air with the first recording of this. So we're gonna redo a couple days later. But it's okay. Because I felt like we were a little bit rushed the first time. So I think we'll be, you know, come out a little bit better. So, yeah, we're clicking these real estate podcast. My name is Mike DeHaan. I'm here with my business partner, Dan Austin. We run a real estate investing wholesaling business up in the Pacific Northwest, and we are diving into the actual roots of running this business through everything from rental properties, Airbnb's, wholesales flips, you name it. We've kind of touched all of it.

Dan Austin: [2:50] And We're almost good at some of it too.

Mike DeHaan: [2:52] Almost. Depending on the day.

Mike DeHaan: [2:56] Yeah.

Mike DeHaan: [2:56] You know, definitely the you're not specializing in anything, but sort of jack of all trades, which honestly though, I I would say that one thing we are good at though is creating opportunities from stuff that people write off. Sure. Because Oh, yeah. Yeah. We've had so many killer deals that have turned out to be awesome, but they're just not, you know, like bread and butter, you know, doing wacky shit, like cutting in staircases and, you know, like, what else have we done? Like, finishing basements, you know, removing walls, like, living areas, you know, eliminating bedrooms, some people would say is, like, blasphemous, but, you know, we've done that to basically make a layout that much more appealing as, a rental. You know, garage conversions, Yeah.

Dan Austin: [3:41] Done a lot of weird stuff, but it I mean, it's not weird when you look at the the dollars and cents of everything.

Mike DeHaan: [3:46] Yeah. Exactly. Well, I mean, at the core of it, you know, especially if you're buying stuff at a discount and you're trying to, you know, burr property, you know, buy rehab, rent, refinance, repeat. In order for that to work, you need to increase the value of the property as much as you can. And this is one of the biggest issues I think a lot of people struggle is, you know, they look at like traditional, sort of, like, the traditional viewpoint of, like, what a flip is where you buy a shady property, you make the kitchen look good, you make the bathrooms modern, whatever. And it's, like, that's only get that's gonna increase your value for sure. But, you know, a lot of the houses that we buy aren't that bad.

Dan Austin: [4:22] Like Right.

Mike DeHaan: [4:23] Yeah. You

Mike DeHaan: [4:23] you can buy it and you put in some granite countertops, but it's not gonna increase the value as much as increasing the square footage.

Dan Austin: [4:30] No. Yeah. And it's learning where to spend your money. I mean, that's always what people talk about. Like, where do spend the money? And they say kitchen sell, but when you're doing it from an investment standpoint, that's not necessarily the value add you always need to do. Right? Yeah. We do a lot of, you know, Monday, I think we're gonna start breaking up the concrete and another property of ours to add a bathroom. And that's solely from a comp standpoint. Add add the square footage, finish the basement. In our market, we have quite a few houses that were built in the fifties, and they didn't have finished basins, but they were ready to go. Mhmm.

Mike DeHaan: [5:03] You

Dan Austin: [5:03] know? It's all there.

Mike DeHaan: [5:05] Well and with our model too, with our folks being on these rental properties and being able to increase the value for ourselves, you know, that what that process looks like when you're exiting, I guess you're you're trying to pull your cash out. The appraiser goes and looks at the actual value. Right? And and this is gonna come down to cost per square footage of the nearby properties. They will then, take that cost per square footage, multiply it by your square footage, give you the value of your property. Versus, like, when you're selling it on the market, you know, realistically, what an appraiser's gonna do is they're gonna say, like, oh, what's your purchase price? Yeah. Sure. It's gonna be right on the money. You guys want the transaction to get done, they don't care. So, you know, at that rate, I think the the kitchen and stuff, carries a little bit more value than if you're just going straight to an appraiser on a refinance because it's a rental property. Honestly, like, they'll look at the like for like with some of those details. At the end of the day, they don't really care. You know, especially in this market where it's so hot and stuff that isn't as fixed up, isn't as modernized, is selling for just as high as the modern properties. I mean Well, that

Dan Austin: [6:10] this is a good conversation because this is like a lot of folks that that teach the the BRRRR model. You know, everybody's talking about it these days. They don't talk about the actual appraisal piece. Like, in the perfect world, you you buy a house, you renovate it, and then it appraises for the value you want it because that's after restored value. But that's not always the case because a lot of the appraisers are used to saying, oh, this sold on the MLS for 300. Gosh. My appraisal's right at 300. Right. You know? I've had appraisers knock off, you know, $5,000 because I covered up a fireplace because it was crappy. I didn't wanna really do anything with it. So we drywalled over it. And it's like, well, that's 5,000 off. It's like, woah. Wait. Okay. So then you start looking at what does matter. And, you know, garages do, add. That's a checkbox on their little, you know, machine that they, you know, put all this stuff into. But then you have to look at what is the price per square foot going for right now versus losing some percentage for not having a garage. And if the price per square foot's higher, then you're gonna go that way. Other things that matter is like, for us, especially you gotta realize when you're buying off market, the appraiser has to work harder because they don't know necessarily. They're used to saying, oh, it sold for this six months ago. Why the heck is it worth $200,000 more now? Why do you think so?

Dan Austin: [7:27] But if you can talk to your appraiser and say, yeah, we bought it off market direct from the seller, they're gonna say, oh, okay. That makes sense. So I can't really use that as a comp, basically, that it was only worth 200 last six, you know, six months ago. And then other things of like the renovations you do and talking to them, appraiser, you gotta kinda, you don't have to, they're not supposed to take your input, but you can share with them that information. And another good thing is talking about the comps. Like we've had some really good tailwinds because we've had comps before. They're just outrageous, like not even in the same neighborhood, but then you tell the appraiser like these are our comps. Then they look at it and they're like, oh, okay. Yeah. It makes my job easier. Some of them are jerks and they're like, I don't care what you say. I'm an appraiser. But if you, if you can have a good relationship with them and communicate with them, you can usually get more favorable terms. Totally.

Mike DeHaan: [8:12] 100%. And and, I mean and also too, it's like it's like everything else. It's a relationship, right, with these people. So when we've done appraisals, like, some of my own stuff as well, I always try to make sure that I'm there and I meet them and I kinda connect with the appraiser. And, you know, I'll tell them explicitly what I want to be getting for my number, which I'm doing refinances. And I'll I mean, it's just like a sales process. Right? I'll always say higher than I actually want it to be. So that way when it come when when they're like, well, I can't quite give you that, but they like you know, they they wanna appease me. Yep. Because we had a good connection, and they give me that number. It's a little bit lower. It's like, perfect. That's actually what I was okay with.

Dan Austin: [8:47] Yeah. Exactly. You're right. It's like you got anchor them high. Yeah. But, you know, you do enough deals in town. Like, you start seeing the same appraisers around. Yeah. You know, we're kind of in an appraisal crisis right now because there's just not enough appraisers around. But, yeah, you start kind of building relationships and knowing knowing who they are, and they kinda get used to it. They're like, okay. I get it. Yep. These guys do know what they're doing. So if they say something, it's it's more of a fact than just a BS thing. Yeah.

Mike DeHaan: [9:11] For sure. You know? And and it's yeah. It's there's there's an art to it. And then, you know, like you said, figuring out what the true value ads are.

Mike DeHaan: [9:18] Right.

Mike DeHaan: [9:18] You know, like you mentioned, giving up the garage for another bedroom or something like that. Like, the one that we did that on, it was a one bed, one bath property with a tiny garage that wasn't really useful for a modern car. So we took that little garage and converted it into a two bed, one bath property, which was significantly more violent than a one bed, one bath property. Even though we lost the garage, like, you know, the garage is worth, like, $7,500. I think we calculated, but the extra badges are worth, like, 35,000. Exactly. So net, that's obviously a major positive. Yeah. Huge. Dude. Yeah. Exactly. And then we have another property we're looking to do exactly the same thing. It's currently a two one, that we're gonna be turning into May well, I guess, we haven't totally finalized this into a 03/02. 03/02. Yeah. It's like a little closet that could pretty easily turn into bathroom, it seems like. Yep.

Dan Austin: [10:05] And from functionality, if the garage is junk, like, don't worry about it. You know what I mean? And we live in a climate where there's snow and, obviously, a garage is preferable. But on the the house you're talking about, which is our next Airbnb, is the garage. You can't park anything in it except for a small ladybug. Is that what they're called or a slug bug? Whatever the heck they

Mike DeHaan: [10:22] call it.

Dan Austin: [10:22] Volkswagen. Volkswagen bug. Yeah. Yeah.

Mike DeHaan: [10:25] You know? Bright, like, mint green slug bug that she parked in. Probably the only car that's in there besides maybe, like, a Fiat.

Dan Austin: [10:32] A motorcycle. Yeah. You

Mike DeHaan: [10:36] know, just yeah. It's I mean, that that's where the money's made and it's funny because so many people don't necessarily wanna do those items because they're, you know, a little bit trickier and a little more costly than just, you know, ripping out a kitchen and updating it. But, I mean, that's where we we make almost all of our money. Yeah. You know, and then you know that one is just to refinance out pretty much everything. So a lot of our properties we have just a tiny bit of cash in them, you know, if any at all.

Dan Austin: [11:02] Right. Yeah, exactly. And if you can do those numbers and have those kind of like, we know what it's going to cost to add a bathroom in a basement on, it's not like we're just doing this willy nilly. We've done it before several times. And so we kind of know our costs and we know what buildings we can do it to. You don't want to try to do that on a building that it's just not a good idea to do it on, you know, low ceilings and rock foundations or something weird like that. But if it was built in 1950s and after it's a slam dunk, just the way they set up the plumbing and all that sort of stuff, the construction standards are standardized and you just kind of know. And so just the process it's go get a sewer guy to scope it and paint on the ground where the sewer line goes. And that tells

Mike DeHaan: [11:39] you where to put your.

Dan Austin: [11:41] Yeah, honestly. And then you, you break it up concrete. That's just manual labor and concrete's cheap to fill back in the hole. And then just the plumbing expense is probably the most expensive because everything else is two by fours and drywall.

Mike DeHaan: [11:52] Yeah. Yeah. Exactly. It's it's all repeatable. It's all the same thing after a while. Yep. Yeah. Speaking of processes, I know you had a really great experience with our our first Airbnb. Yeah. Our first Airbnb went live last Friday. Figuring out that process a little bit, you know, which involves, we learned, prescreening the potential renters, not just initially accepting everybody.

Dan Austin: [12:17] Even that, I don't know if that works because they had good reviews. But yeah, so I'll I'll start with yeah. It was our first ever Airbnb went live, and we're pretty stoked because we went live and, like, pretty much was, like, a week ago and pretty much every day was booked for the month minus, like, some mid midweek stuff. But our first guest was all week, Monday through Friday. And she said in her message, you know, when she booked it that, you know, we're a military family. We're just looking to stay here for a bit before we head out of town. I was like, okay. Like, husband, wife, kids. That's fine. And then everything was going fine. They checked in. No no questions. And then checkout was Friday at 10AM. And our cleaner showed up and basically said, there's a dog in the house and people still here. Like, oh my gosh. So I, like, messaged the the tenant the guest and nothing. No answer. And so I'm like, okay. Crap. I'm gonna have to show up. Anyhow, so I show up and there's a dog, like a big dog and the house is trash. Like, I'm just looking through the windows because I don't wanna bust in on him. I'm, like, knocking on the door. No answer. No answer. I call the lady and tell her, I'm like, hey. It's, you know, 12:15. Checkout is at 10AM. And she's like, oh, really? Like, totally nonchalant.

Dan Austin: [13:33] Like, wasn't like, I don't care. She was just totally like, I don't care. Like, whatever. I was like, well, you need to leave. And she's like, oh, okay. Let me call my husband, I guess. So I'm just sitting there waiting, and this guy shows up. He's in a military uniform. We have an air force base here in town. And as a previous army guy, I think, you know, very lowly of the air force folks anyways. So, and I can say that. And he has this young kid in an air force uniform shows up, runs inside and he's just in there. And I'm just waiting. So I'm like, I'm not gonna leave until these people leave because I just wanna make sure. Cause I wanna tell the cleaners to get here right away because we had another guest coming in at 4PM. Ideally six hours clean it, do the laundry, all that, blah, blah, blah. You know? So the clock's ticking. And then, like, some other dude shows up in, another, you know, air force guy shows in military uniform. He had a sweet mustache, all that sort of stuff. And he comes running in, and they're just in there. I don't know what they're doing. And all of a sudden, they start coming out of the house, like, with boxes and trash bags full of stuff. I'm like for a second, I'm like, are they, like, robbing us? Like, what's going on?

Dan Austin: [14:35] And then they just, plants. They were pulling out plants, like, everything, but a fish tank they came out with. Like, they had moved into the Airbnb. They I don't know what their plan was, but they moved in. It was the weirdest thing I've ever seen.

Mike DeHaan: [14:48] They were filming a porno in there,

Dan Austin: [14:49] dude. They're doing something.

Mike DeHaan: [14:51] They did their props, like, their setup.

Dan Austin: [14:53] Yeah. Right? It was so weird. And, like, it took us so long. I'm not it wasn't like, oh, we're in and out in twenty minutes. Like, it took them, like, forever to get out. And then all of sudden they come out. Yeah. It's like a huge dog, which of course, like they didn't say they're bringing a dog and, you know, on Airbnb, it's nice to have a dog and you're supposed to bring a kennel, all that sort of stuff if you're going to do it. But it was just like mind blowing. And then. So I text the cleaners. I'm like, I gotta go to another appointment. They I'm they're they just pulled they took off a text to cleaners. They're awesome. They showed like five minutes later. So I I I take off, get home. And, the cleaners like, yeah. So these people left a bunch of stuff here, including like jewelry, like diamond rings and earrings and like weird stuff that I'm like, you don't usually just leave that. And the worst part about it is they've never asked for their stuff back. So I just told them to lock it in the basement cleaning closet and I should go up there and like, I don't know, maybe we should make a little extra profit on this stuff. But, like, I would have thought they would have messaged me like, hey. By the way, we left a bunch of stuff there.

Mike DeHaan: [15:50] I mean, yeah. I mean, I think we need to reach out to them and see if they want it. But if not, what's the appropriate amount of time to wait for these guys?

Dan Austin: [15:56] I don't know. Right? Yeah. Seriously. Like, just like who does that? Like that for our first guest. Right? Like, that is my expectations at Airbnb were a little different than

Mike DeHaan: [16:08] that. So Well, the second one we've had since it seemed good, though.

Dan Austin: [16:12] Yeah. The second guy and I messaged the second guy like, hey. Just so you know this happened. He's like, oh, no worry. He's like, we're not even gonna get in till late. So I was like, sweet. So they had we had plenty of time to get it set and ready to go. Although the cleaners did leave the towels in the dryer, I think. They, or something like that. They didn't take them out. Because I told them, was like, don't just don't wash it. Just throw it all in the cleaner's closet and we'll come around the next time and do all the laundry. And so the dude actually, like, folded it all. Like the next guest, he's like, yeah. So I folded all the laundry that was in there. I was like, man, what a nice guy. Like, what a nice guy. Like, totally, like, polar opposite guest. I was like,

Mike DeHaan: [16:45] nice, buddy. Which which I think that'll be most people. I mean, I don't know. Like, I I mean, I I've gone to stay in Airbnbs and been pretty rowdy, but tell you what, you'd never know by the time we left. It's always spotless.

Dan Austin: [16:56] Right. That's and that's nice to do. Right? You don't wanna trash someone's house.

Mike DeHaan: [17:00] Yeah. Exactly. That's so weird with the person. Like, you know, their milk were they were they, like, traveling somewhere? Like, passing through? But then seeing them, why would they have stayed there for five days?

Dan Austin: [17:08] Why would they have moved their entire life savings of belongings in?

Mike DeHaan: [17:12] Yeah. Well, that's what I'm thinking. Maybe they were moving. Right? They didn't wanna, like, leave it in the car. And, you know Maybe. You have a car theft, you know, car break in issue in Spokane. You know, you leave, like, all your bags and stuff in there. People walk around that neighborhood, like, it's not unheard of to think someone smashing your window and stealing your stuff.

Dan Austin: [17:29] They are totally, I do not want somebody stealing my potted plants. Better bring those inside. That's the one.

Mike DeHaan: [17:36] Those would die. Those make more sense than like the boxes. That's come on.

Dan Austin: [17:41] Oh, man. It's fascinating. Yeah. It was it was interesting, but we got over it. We're we're good. We're on the mend now.

Mike DeHaan: [17:48] So Yeah. Yeah. No. It'll it'll be it'll it'll be cool to see how it goes. I mean, our our first response to it, I was I was pretty excited about. Because, I mean, we got yesterday, we got booked up and we already have bookings out. There's a couple in January, couple in February. Mhmm. You know? March. Booked. If somebody wants you

Dan Austin: [18:05] to email. Yeah. And that's where, like, pricing comes in too. Like, we gotta pay attention because there's a lot of local events. Like, one one of them that dinged was like, oh, we're coming in town for the high school basketball tournament. Every year they have a state tournament in Spokane. Mhmm. So okay. So that's a hot weekend, but then I was like, oh, shoot. We usually have college women and or men's NCAA, know, regional tournaments here. So they're having the women's tournament here in March. So I was like, okay. We need to get in there and dial up that pricing so that we can hit all of those every weekend. And that's kind of my assumption with Airbnb is if you wanted to maximize your profits, you do need to dial in all your weekends and all your events and your pricing and not just rely on, a national pricing company that's gonna hit the holidays and, oh, it's summer's typically hot. So we increase prices like, well, which days in the summer are the hottest so that we can maximize those profits knowing that there's gonna be slow days like the Tuesday through Thursday or whatever. You know what I mean? Especially during the wintertime here.

Mike DeHaan: [18:57] Yeah. That's a valid point. You don't even yeah. I think those sort of events will come here. I mean, we got HoopFest, you know, which is what, like, the largest

Dan Austin: [19:05] Three on three. Yeah.

Mike DeHaan: [19:06] Basketball tournament in the country. People come from all over The United States for that. You know, we got Bloomsday, which is a big it's a 10 k run that people come from all over the Northwest for. You got a lot of random stuff. I mean, honestly, even if there's, like, big Gonzaga basketball games Mhmm. Yep. That that would definitely be something to to look into.

Dan Austin: [19:24] Or Yep.

Mike DeHaan: [19:25] I wonder

Mike DeHaan: [19:25] if things

Mike DeHaan: [19:25] like comforts. Like, you know, if, like let's say that, like, Metallica was playing here. Do you think that that would be I mean, that's gonna drop people from somewhere.

Dan Austin: [19:33] No. But if Elton John was playing here, now that's different ballgame. That's true. Yeah. No. I think you're right. And there's just, like, those little nuances too. Like, oh, it's mom's weekend at, you know, whatever college, stuff like that where you just if you think I if you dial that in, you can really maximize your profit. Because otherwise, what I'm realizing is if just put on set and forget it, you you're not gonna get the best pricing. You're probably gonna be missing, like, 30% of your profits, honestly.

Mike DeHaan: [19:58] Yeah. Which yeah. Exactly. It'd be significant. You know, I mean, even if you can charge an extra 100, 100 and dollars a night for a weekend, you know, that's an extra $500. Yeah, exactly. That's very significant. Yeah, no, it'll be a cool thing to figure out. And then it'll be interesting too to know how so so this one property we have is, you know, in a nicer neighborhood right by this area called Manitow Park, which is, you know, like a how would you describe Manitow Park? It's like a very sort of

Dan Austin: [20:27] rich It's like it's like a central place to live. Yeah. It's like Central Park in New York City, but for a town of, a quarter million. Exactly. Right? So not at all like Central Park, but nice.

Mike DeHaan: [20:38] Yeah. Right. Yeah. But it's nice, you know, and it's close to everything. And there it's like a place that professionals and stuff would wanna stay or, you know, like It's close to hospitals,

Dan Austin: [20:47] close to the downtown

Mike DeHaan: [20:48] core. Exactly. Yeah. So we we have that one. And then our other one that should be launching, what, in the next week or so is, like, walking distance to downtown, walking distance to, like, the trendy rush one of the interesting restaurant areas in town Yeah. Which will 100% be like, let's be honest, like a bachelor party sort of house. Yeah. A bachelorette party sort of house, you know, or, like, people that are wanting to go party. And, you know, it's kinda like a definitely not as nice of a house as the one by the park, but it'll be interesting to know, like, see how the the rent out rates, you know, the rental rates and things like that vary in, like, occupancy rates. Because, I mean, I bet there will be a difference. Oh, for sure. You know, it'll it'll I think it'll just be, like, a little bit of experimenting, start figuring that out. We gotta start figuring out the KPIs and that sort of stuff. But yeah. Now it's it's interesting. And one of the things I've I've realized too with with Airbnb, which I guess I've heard this before as well is that, you know, it's there's there's the rentals and the flip side is very much like real estate investing. Can kinda set it and forget it. But the Airbnb's is definitely like a hospitality business, you know? And there's like the little things that will probably go significantly farther than you even realize. Right.

Mike DeHaan: [22:03] You know, like I was thinking, okay, I have this old patio furniture that's still at one of my rentals. We gotta go and get that stuff and set it over there. Because I mean, like that, we built built a brand new deck on this thing. We have, like, a nice sitting area out there with, like, a barbecue or something. You know, over the summer like that, we'll make do dividends for people, you know? Totally. Or like, you know, even just like, I don't know, adding some recreational stuff somewhere at house, like, you

Dan Austin: [22:30] know, some cornhole in the back or some sort of Oh, I thought you're gonna say marijuana. Recreational stuff. Yeah. Right. Games. You're right.

Mike DeHaan: [22:39] Yeah. Yeah. Just games or whatever, you know, so people have something to do, especially because we do have that sort of open area in the back for right now. Yeah. You know, I think that there's there's a lot of opportunities there. But, yeah, it'll be it'll be good. I'm excited about it. Yeah. And then what else do we have going on last week?

Dan Austin: [22:57] Well, we started the renovation on our flip. Well Yeah. Yeah. Sorta started. We got it closed. We got it cleaned out.

Mike DeHaan: [23:04] Yeah.

Dan Austin: [23:04] We did. Much crap in there. Oh my gosh.

Mike DeHaan: [23:07] Yeah. We talked about that one a little bit last week. If we got it finally got it cleaned out, and crazily enough, it smells worst. I've never had that happen. No. Yeah. It's even in this hole.

Dan Austin: [23:18] Yeah. But it was, it's one of those deals where like, you don't know what you're getting into. Cause like, as I walked in again, after it got all cleaned out, it's like, every window is broken.

Mike DeHaan: [23:27] But you

Dan Austin: [23:27] it wasn't really quite apparent, right, that they were broken even from the outside, but then you get inside and now there's not stuff stacked for the, to the ceiling. You're like, okay, we gotta do windows now. Little budgetary stuff you gotta account for in kind of your, your, reserves on a, on a property when you're doing stuff because it has cost. Yeah, exactly. Little stuff that you just know is gonna happen.

Mike DeHaan: [23:47] For sure. Yeah. So we got that one. And then, I guess, our one of our next sort of big things, like, that's that's coming up is so people always sort of reach out and they ask how what's the best way to get started in real estate? And, you know, everyone always says go network with people, go find people that do what you wanna do and connect with them. And our acquisitions manager, James, basically made that leap six months ago now when he started working with us. You know, he was left his other job to come work for us. He's making less money at the start because it's so commission based. And, you know, his goal was basically just getting the flipping houses. And we have, I guess, the honor of connecting with his first flip house that I think funding today or tomorrow. Yep. But so he's buying the house from the business. And he didn't quite have enough money to make the down payment plus the renovation. So I'm personally partnering with him to get the deal closed for him connecting with a lender. And he's gonna be doing the rehab himself, put in the sweat equity. And he should be making, you know, pretty good money off this deal. Think anywhere from like 30 to 50,000 depending on how it sells. And, you know, that all came from bringing us tremendous value. We're more than happy to connect him with a sweet deal.

Dan Austin: [25:05] So I guess one of

Mike DeHaan: [25:07] the big biggest things, you know, if you wanna if you really wanna get started investing in real estate or flipping property or whatever, bring people that are actually doing that value and they will return the favor. And a lot of people don't necessarily seem to realize what exactly that takes. But, you know, he's been busting his ass for us for six months. So for us to give him a light on deal like that is is pretty easy decision for us to make.

Dan Austin: [25:29] Yeah. I mean, and that's like textbook. Like, if you were to simplify exactly what you said is he knew he made a decision. He had no experience in real estate to start. He made a decision he wanted to be in real estate. He sought out folks and found us. We hired him. Yep. And he's you work his butt off. And now not only do we hire him, we're giving him his first real estate deal. He's gonna flip it. He networked with people. He got you to help him lend it down. And so, you know, that's value to you as well. You you need to park money. Right? Yeah. And you're helping him connect him to a lender so that you can help get him better rates than, you know, typically a new investor would. So you're sweetening the pot just as much. He's he's brought tremendous value to our Right? Yeah. But you've also been able to sweeten the pot because of that. So that's paying him dividends. And I was doing it like I was thinking about that, like a guy, a guy doing that, like starting from zero to where he's at now is just amazing. But, know, he's gonna be he could be easily if he keeps doing what he's doing, he's knocking on the door of quite a bit of money every year for annual salary going from working for a company Mhmm.

Dan Austin: [26:31] Totally outside of our our realm to well into 6 figures. Oh, yeah. Easily. You know?

Mike DeHaan: [26:37] Easily. I mean, if you look at his total commission, I mean, it was started with July, but if he'd been that the entire year, he'd make $6.06 figures this year. And that's not even including his you know, if he does his flip and he said he wants to do a couple more next year, he was able to do two, three flips next year plus be getting commissions on the same deal, same sort of what's the right word I'm thinking of? You know, same sort of clip that he's been getting this year. Yep. You know, he'll be making multi 6 figures next year probably.

Dan Austin: [27:04] He's gonna make more money than us. Shit. Right? But, yeah, he's you know what

Mike DeHaan: [27:08] I mean? Though but

Dan Austin: [27:09] it's, like, simple. Like, it's not I guess my point in bringing that up is trying to simplify it. It's not that complex because then you add in so you go do this and you're you at first, the leap is tough for people. Right? Because they're like, oh, I gotta go and like sacrifice. They feel like it's a sacrifice, but really it's this mutual beneficial thing. And then you add that fact that he can easily get two or three flips a year because he is part of the lead flow. He's the one generating that. Right? You know, as far as bringing them in. And so if he does that and adds two or three flips on top of his job, which is very doable, like that is a lot of that's a lot of income life changing for a lot of people.

Mike DeHaan: [27:44] For sure. Yeah. And, you know, like I said, people people feel like it's a trade off. But if you look at it net, even if it's an immediate sort of reduction in your pay or security, if you're successful over a year, it's a net positive with, like, know, 10 x result probably for a lot of people.

Dan Austin: [28:01] Right.

Mike DeHaan: [28:01] Yep. But, I mean, that's that's kinda what it takes. And and I think a lot of people as well, the the short term discomfort for long term rewards, they don't realize how quickly that can actually change. I mean, you know, I only started investing in 2018, know, and And things have changed a you were just a couple of years before that, you know, things go exponential and they exponentially grow once you sort of get inertia. I mean, I was kinda looking at our numbers and I was like so first year I bought I guess it was three properties. And then after that, I bought was it five? The year after that with yours, you know, I guess, the second year was five, but mostly of those are flips and one rental. The year after that, I bought five rentals and then Yumi bought four rentals, think. So that's nine total. And this year, our total doors, we bought, like so we're we're gonna I think my portfolio plus our dorm is gonna be at 40. So I think that's jointly we're at, like, what, '26, 27 Something? Yeah. Somewhere in there. I don't know.

Dan Austin: [29:03] It changes every week, it seems like, depending on We what we're

Mike DeHaan: [29:07] change our minds on things. Yeah.

Mike DeHaan: [29:08] And then we just,

Mike DeHaan: [29:09] you know, we buy things that we tend to flip and then we keep and we buy things we intend to keep and then we flip.

Dan Austin: [29:14] Yep. And it does just happen. You gotta show up. You gotta be consistent. It takes it does take patience, but it it does it kinda just all of a sudden you look back to, like, holy cow. I how did I do four flips and then add these doors? And it was just by showing up every day.

Mike DeHaan: [29:28] Yeah. Exactly. But yeah. Anyway, I think, you know, so what people say it's taking massive action consistently, that's sort where it comes down to and being willing to be uncomfortable with that long term reward. Because tell you what, you know, when when you're ensure to get the power to, you know, make 50 or $60,000 off, like, a single deal, all of a sudden, your $80,000 salary seems like Yeah. Totally. So,

Dan Austin: [29:55] anyway, I think it's a

Mike DeHaan: [29:56] good place to stop there. Any good lessons learned this week, Dan?

Dan Austin: [30:01] Yeah. I I would go back to the Airbnb story. It's it's like talking about systems. You know, we are long term rental guys. We're kind of dabbling in the Airbnb space. But even with our long term rentals, like, me, it's like always a rush to get that door open for tenants or guests for Airbnb's to move in. And really in the back of my mind, it's like, we got carry costs. We let's get this thing out. We're missing out on revenue. But at the end of the day, it's really not in the percentage of the project. It's really not that much money to carry it a week or two longer. And like, just figure your system out. Because when we went live with Airbnb, like, I still hadn't figured out the cleaners. Like, I kinda had a I had, like, a plan a, but no plan b. And I like to have a plan b, and we ended up having to find a plan b and went with plan b on the cleaner situation, while guests were there. Like, we were still figuring that out. So and then then I got, know, we got caught with our pants down with this guest not moving out on time. Right? And so just take your time. And there there's the there's like a a line between analysis paralysis and not paying attention to anything and just going, you know, head first into things and dialing that in and taking the time to make sure you go down your checklist, that you have things going like, it's definitely totally okay to go in with your feet first, if you're willing to work and hustle.

Dan Austin: [31:13] But like I'm at a point to where I'm like, I don't want to have to work that hard. Let me just take the extra time to like dial this thing and get the systems in. Cause there's been plenty of times where we've got tenants moving in and we're like, oh, this light switch isn't working all of a sudden. Despite the fact that we do checks, like after a renovation is done, we check everything, but sometimes there's just these little weird things that happen. And so taking the time to your systems in because it's a lot less stressful. I can assure you that.

Mike DeHaan: [31:36] Yeah. That's true. Yeah. That's a good point. I guess the counterpoint that I would say is there's no quicker way to learn by putting yourself under extreme pressure.

Dan Austin: [31:45] Absolutely. Like, you'll figure it out. Yeah. That's kinda how I've done a lot of things.

Mike DeHaan: [31:50] Yeah. I mean, how many times is there been stuff you're like, oh, I need to do that. And then all of a sudden, it's like, this needs to be figured out in twenty minutes. Yeah. Yeah. Procrastinating on for two weeks. It's your best work. Yeah. Yeah. I like it. Alright. My name is Mike DeHaan. You can find me on Instagram at Mike underscore invest. My business partner here is Dan Austin. You can find out Instagram at investor man. Dan, go ahead and give us a follow on Instagram and like and subscribe to our podcast here. We'd appreciate it. And give us some five star reviews. If you have things that aren't five star to say, shoot me a DM instead. And then our our website's gonna be going live here, collectingkeyspodcast.com. If you go on there and give us your email, you will get our five step guide to start generating off market leads, which pretty much outlines the exact way that we got started with our business, like, literally the first five steps that we sort of took. It's a little ebook. It's like, I think, like, five, six pages. It's pretty quick,

Dan Austin: [32:50] but lot of value in there, honestly. Because that's what it really comes down to. It is simple. You just gotta focus and be consistent, show up every day.

Mike DeHaan: [32:59] Yep. Just gotta jump into it. So cool. Right on everybody. Have a good week, and we'll talk to you next Wednesday.

Dan Austin: [33:04] See you all next week.

Speaker 3: [33:18] Thanks for listening. Please leave us a review on iTunes or wherever you get your podcasts, and check us out at collectingkeyspodcast.com for tips and guides on starting your own real estate investment and wholesaling business.