The Debt Trap Impacting Real Estate Investors w/ Drew Wiard

Mike DeHaan: [0:00] This episode is sponsored by Sir Lenzelot LLC, also known as SLA Capital, which, if you didn't know, is Dan and I's private lending company. So, yes, we are sponsoring our own show, but what you gonna do about it? It is our private lending company that offers hard money and DSCR loans to real estate investors of all types. So you can be a new investor, an experienced investor. You can be buying flips. You can be buying rentals, whatever. We can do everything. And not only that, but the rates that we offer are just as competitive, if not cheaper, than pretty much every other company out there. So whatever big company you've been working with, bring us their term sheets, I guarantee that we can probably beat it. We have the same connections they do. We just don't have all the overhead and middlemen. So if you wanna come and check us out, go to slacapital.com/keys, and I will know that you came from the show. And by seeing that you came from here, when you get the closing, you will save $500 on your first loan with us. So slacapital.com/keys, we would love to fund your next deal. The problem with this whole system is now they're saying that they're actually revamping how they're gonna start doing credit scores.

Dan Austin: [1:02] Let's talk about guns and politics.

Mike DeHaan: [1:04] Guns and politics. I think that that that is probably not the brand of show that we wanna go towards. There's already plenty of other shows people can listen to that do that.

Dan Austin: [1:12] We just go to Mike's Instagram. We'll see it.

Mike DeHaan: [1:14] What's going on, guys? Welcome to the Collecting Keys Real Estate Investing Podcast. Sorry about that background noise there. You probably heard some sniveling little man at an office over there trying to impersonate me on social media, and no one could hear it because of our great intro song. Oh, darn it. So You want me

Dan Austin: [1:31] to restate it for the whole audience?

Mike DeHaan: [1:32] No. We got we got a show to do. But welcome to the show today, guys. We have a great friend of the show, Drew Wiard today, the flying investor. See you're a third time on the show.

Drew Wiard: [1:42] Yeah. Thanks for your third time.

Mike DeHaan: [1:44] Yeah. And you're one of, like Repeat offender. I would call one of my, like, OG real estate friends. I've known you for a long, long time. And I think one of the things that both you and I have stated openly many times is you and me are so different in pretty much every single way, but for some reason, we still go along really, really well. Yep. From just, like, basic life principles to how we approach business to everything else. But, you know, there's also a thing that happens where you can be friends with people that have different opinions than you as shocking as that is to people.

Drew Wiard: [2:14] Yeah. There should there should be more of that going around. I don't I don't understand all the division and all that. Let's just disagree and get along.

Mike DeHaan: [2:20] Exactly. But, dude, well, thank you so much for coming on the show. Just for people who don't know who you are, give us a quick, like, thirty seconds about where you're at, what you're doing now, and why people should care about having you on the show today.

Drew Wiard: [2:30] Yeah. Sure. So today, I'm, you know, in my mid forties, but I graduated, from pharmacy school years ago, just like Dylan. Did that for, I don't know, fifteen years. Somewhere along the line, I started buying single families, just kinda one, two, three at a time, and it was never to really set me free or to ditch the job, it was just, you know, I was the sole breadwinner while mom was at home raising kids, and so rocked that for a while until real estate got big enough that I could walk away from the W-two, and it's not that I was rolling in money from it by any means, but it was enough to replace pharmacy. So did single family for a while, my partner and I started buying some commercial buildings. Along the way, we acquired and kind of rolled up three different businesses and that's been an adventure for better or for worse. Yeah. But now today, pretty much this whole calendar year at 2025, we've been going hard at commercial real estate and most specifically industrial real estate. And it has been, not only has it gone well, but it's been really gratifying. Like I feel like I'm kind of falling into my highest and best use or what really gives you purpose and stuff. So that's kinda where we're at.

Mike DeHaan: [3:36] Nice. That's awesome, dude. And one of the things I always appreciate about how you approach these, you're so incredibly patient and thoughtful with stuff, which I think is a shockingly rare thing in the social media age. But and it's funny too. You mentioned the other business. I think the first couple episodes that we had with you, which are probably a year spread apart each. We had one where you talked about just like your real estate business. And I think the second one, almost entirely talked about your business acquisitions that you had done, which I know I've had I don't know if you've had, like, a conclusion or you've had a change over there, but we can save that for for another time. But you have changed course quite a few times over the past few years, and then I'm glad to see that you've found your, I would say, niche with the commercial stuff. I know that's going really well for you.

Dylan Koch: [4:15] Yeah. Well, Drew has been indirectly mentioned probably several times on the podcast. Like, you know

Mike DeHaan: [4:20] He totally has, honestly. Maybe not by name, but about stuff that that he's doing because you're such a, I would say, like, a reliable person in the space. Right? Like, I know that when you when you're into getting involved in stuff, it's not a lot of fluff. And then when it comes to the commercial space, especially, I feel like there's nothing but bullshit out there.

Drew Wiard: [4:38] Yeah. The commercial stuff is tricky. Right? Because there's in the single family world, it's relatable. Most everyone lives in a house or knows someone that lives in a house, like it's super relatable. And so there's a guru for every aspect of it, and you can make money a 100 different ways in single family. And there's 10 gurus in each one of those paths, right? When it comes to commercial, I mean, commercial could be large multifamily or storage or industrial or retail or office or mixed use, and there's just, you know, industrial land. Like, there's all sorts of different paths, but there are some of those niches have some pretty major gurus that operate within them, but others are tough. And admittedly, like, the industrial niche specifically has been really tough. You know, a couple years ago when I was trying to figure it out, there are very few books, very few mentors, things like that. So there's a little mystery around it.

Dan Austin: [5:23] Cool, man. You've been investing in the commercial space for a while now. As Mike was talking and you're giving your background, just made me think, know, it's somewhat similar to the pivots Mike and I have made several different businesses, but Mike and I have made a lot of different pivots and all felt like it was growing towards something. And we've we've done a lot of different things all at the same time, which I think you've done too. Are you in the spot that you're going to be in for the next five years with just going all in on on CRE? Or are you just seeing a great opportunity within your market and you have the skill set to go onto that? What is next steps or forever steps?

Drew Wiard: [6:01] Yeah. Really good question. I mean, I think what we've all seen, we've all at least the four of us have been in the game long enough that we've seen people chase the trends, right? Whatever is trending and maybe that's buying a business, maybe that's jumping into whatever asset class is hot. And, you know, for us, I think as we've kind of reassessed, we've got, you know, ten years of investing in between myself and then my partner's done it for seven or eight, right? So, we can kind of look back and say, which aspects of this do we like and what do we not like? And I think if you're really trying to decide what niche to pursue, you really have to ask like, what do I want my life to look like? Right? Well, I've done enough flips to know that's not what I want my life to look like. I really enjoyed owning businesses and being in that leadership role and all of that, but it's, I mean, it's a lot of work and phone calls and it never leaves your mind and all that. That's not really the life I wanna live either indefinitely, you know? So the asset class that we landed on really centers around some very thoughtful introspection and and talking about, like, what kind of life do we wanna live, and what kind of money does it take to get there, and what sort of asset class is going to allow us to arrive there. Now, the niche that we're in, it's kind of a a nice, like, the market is is treating it well at the moment. But I think we will stick with this asset class regardless of the ups and downs of the market because we're gonna buy on fundamentals, and it points towards who we wanna be and the lives we wanna live five, ten, twenty, thirty years from now.

Mike DeHaan: [7:26] Right. Yeah. That makes sense. But you have to be in the game to kinda learn that, which I think is always the tricky thing. And I think the problem with people that are jumping around to so many things so frequently is you never actually get enough exposure to like the to the business as a whole to sort of figure out what niche you wanna fall into. You know, anybody that listened last week, you heard Dan and I's announcement that we basically have stepped away from our our home buying business and are shifting heavily towards the lending business, our private lending business, which has been doing very, very well. But the thing is is if we were to be making that pivot without having that, like, a proof of concept and b, like, having gone through the kind of initial stages of that business, it would be kind of dumb for us to make that pivot because we wouldn't know even what the opportunity looks like, what the actual ins and outs are. Because when it comes to something like, you know, private lending or any other business, everything has its downsides and its complexities and its limitations. And the reason that the private lending drew us was because it's honestly, it's the same skill set for us in terms of, like, a high transaction style of business is like the wholesaling. But the difference is that it allows us to expand our marketplace beyond just like properties that we're involved in.

Mike DeHaan: [8:39] And we can work on properties of people in our circle and different things. And then just from like an institutional level, it just sort of like fit us a little bit better because it's a more established industry with like more professionals, which is what we were craving after six years of dealing with crackheads and unreliable buyers and all this other b s that comes with the wholesale side. But we are never gonna have the circumstance where we can cash up $60,000 wholesale fee again. Right? That's just not something that happens in the private lending space. And so that's your trade off is it's the more, I would say, consistent money in exchange for, like, the the big money that you can get on a surprise fund basis on the wholesaling and flipping side. So either way, I think it's a good pivot for you, Drew. I think you'll do very, very well with that.

Drew Wiard: [9:22] Yeah. Well and and likewise for you guys as well. I mean, it's not that there's anything wrong with wholesaling. Right? We've all got good buddies that are just kill I mean, Dylan's still rocking and rolling, and he's a stone's throw from me, you know, so, like, it still works, I think. But it's there's never anything wrong with taking a season to be introspective and saying, like, who am I today that I wasn't five years ago? Like, where am I going next and all of that? That's that's a healthy exercise to go through. And I I say that as someone who really got trapped in single family for a long time because in my market, it was like shooting fish in a barrel. Mhmm. And I should have let go of it a while ago, not because there's anything wrong with it. I still own them, and I I will for a while. But I didn't allow myself to grow my mindset and scale up to the next thing. You know? So I think taking a pause every now and then and and seeing if what you're doing is really still in alignment is really valuable.

Mike DeHaan: [10:12] It is. We'll have

Dylan Koch: [10:13] to pat Drew on the back one more time, then we can move on. But it's like, Drew could buy a house for $15 back when he first started, know, like something like that. Not an hour, $200. But my point in saying that is he kept doing it. You kept doing business. You kept reiterating where other people I know it is. I'm like, oh, this is harder now and give up. Right? And so you kept iterating, kept learning the entire decade plus you've been doing this.

Mike DeHaan: [10:35] Yep. So I think that's a good transition, Drew, cause you've been around for a while. I mean, longer than all of us. Like, you said ten years in the business. Yeah. Give twenty twenty five. And you've seen, I would say, the ups and downs even more extreme in your market. Because like Dylan just said, you used to be able to buy a house for $15, and now they're so much more expensive. I remember being when we were at one of Ryan Dossi's, I think, we were in Florida. And I can't remember the exact quote that you said is, but it was along the lines of like, when you knew that we were in a bubble was when your market was appreciating because your market never appreciated. Yeah. Right? In in Midwest Indiana. I think that was one of those, like, long drives because we all booked that Airbnb that was, like, an hour away from everything for some reason. Yeah. Far away.

Dan Austin: [11:18] I was

Mike DeHaan: [11:19] like, yeah. Was, like, 21

Dan Austin: [11:20] or 22, wasn't it? Yeah.

Drew Wiard: [11:21] I did 20.

Mike DeHaan: [11:21] Yeah. I remember chatting with you and and yours. Was really interesting. And so with that being said, like, what's your kind of take on just the general market and what we're kind of expecting here? So I have like a couple of headlines that I I pulled up. Some are are relatively shocking. Right? So like, with the foreclosure stuff, there's been a 17% increase in foreclosures this quarter versus last quarter, which is 17% could be a little or a lot. 17% increase.

Dan Austin: [11:49] Okay. From quarter to quarter.

Mike DeHaan: [11:50] From quarter to quarter. Yeah. So it's increasing significantly. But like also at the same time, 17% of, like, depending on what that number is, need to be a lot or a little. Right? And so there's always like the headlines.

Dan Austin: [12:01] Right. But the velocity is there at least.

Mike DeHaan: [12:03] It's increasing for sure. So you're seeing that. You're also seeing this still like a pretty steady sort of pattern of cash purchases on homes as opposed to people buying things with lenders. Realtor.com had a thing that said one in three homes, home sales were for all cash over the last I think it said six so far this year. And it was most predominant in, like, high end homes and very, very cheap homes. And so, like, stuff is, like, still moving, but it's just not, like, beneficial on the retail homeowner side. And the problem is is if you're a in the residential business, that's ultimately who your final customer is, regardless of whether you like it or not. Like, even if you have rental properties, eventually, if you wanna sell that asset, it has to be to a retail buyer more than likely. Even if it's like a duplex or something and interest rates suck, you're not gonna be able to find a buyer for it even if it's a great property because it doesn't make sense. So what's your take though? Like, where do you where do you think things are headed? Or like, what's the realistic outcome that we face here?

Drew Wiard: [13:01] Yeah. I mean, it's a fair question. Admittedly, my focus is a little more on the business side and how businesses are doing and employment and things like that. But we've known for a long time that consumer credit is like at all time high and people are tapping into 401ks and savings rates are going down. The wild thing is that we've been saying that for two or three years. I know. Every year, it's like, well, this Christmas, America spent more on presents than they ever had. So I can't wrap my head around it. Like at some point, the spending on comfort and subscriptions and entitledness, like, has to come back and bite us. But the government keeps printing new money and finding ways to outspend itself, so why can't the people?

Mike DeHaan: [13:43] Yeah. One of the things that's pretty interesting about how it's all set up though is, you know, we're obviously a debt based economy, right? Like we have a credit system and most people's spending power and ability to buy homes, which is typically their logic assets based on their credit, which has become an increasingly more challenging issue as people are like have less money, the lower class are less able to build credit, they don't own assets, they can't like get credit lines to build better credit, those sort things. Like the problem with this whole system is now they're saying that they're actually revamping how they're gonna start doing credit scores. I don't if you guys heard about this. But they're gonna start taking into account, like, are you on time with, like, your utility bills? They're gonna require landlords to report rental data. And they're gonna put that towards people's credit scores with basically the thought being it will allow people to get more debt because they will qualify for higher credit. But that's just gonna change, like, the whole kind of narrative around what the debt side of the industry even looks like. You know? If all of a sudden the pool of people becomes that much larger, is it gonna be like a supply and demand thing? Are we gonna start qualifying people for, like, larger death that they shouldn't actually be getting? You know? Because there's an argument on both sides of it. It's like such an artificial system that what happens in every case, like in 2008, as soon as people get into like a hard period, they just change the rules so that like more and more people can now participate.

Mike DeHaan: [15:00] And then ultimately, it goes tits up just like it did with all like the ninja loans and everything else.

Dylan Koch: [15:05] Well, that's uneven to mention the

Mike DeHaan: [15:08] the FHA stuff that we

Dylan Koch: [15:08] talked about a couple months ago that like they're already probably qualifying people with a 60% debt to income that probably shouldn't have qualified in the first place, which didn't include student or loan payments where which are now, like, due now or coming due very soon. So I'm not surprised that they're that they're changing the rules, but you can only kick the can down for so long. I think all of us, not just in this room or in this Zoom call, but everyone's like surprised at how long they can kick the can down the road. This has been going on for, you know, a decade plus.

Dan Austin: [15:38] It's not if, it's when does the shoe drop. And if the shoe drops in a hundred years, who cares?

Dylan Koch: [15:43] Your kids' grandkids.

Mike DeHaan: [15:45] Mean, yeah. You're not wrong. You're not wrong. I mean, that's how a lot of these policies are made is it's to solve this problem. Like, right now during their time in office or their time as, the chairman. But then once it gets to the next guy, if it's just basically kicking the can.

Dan Austin: [16:01] Yeah. Well, it seems like it's not to solve the problem. It's to get it's to garner more votes. Right? And to garner more favor if you're a politician.

Dylan Koch: [16:08] People were shocked when Jerome Powell took a second term, like fulfilled the second term. Because he's like they're basically like, man, like, you're in a very tough spot. Are you sure you want to be like the guy in charge if this goes belly up? Right. And it must have just been like a pride thing because he still did, but

Mike DeHaan: [16:22] here we are. Well, one of the things that's kind of funny is if you think about it from like a super macro level, it's almost like its own form of like socialism, right? Because instead of providing subsidies, it's like the capitalistic form of socialism. Because instead of providing subsidies, what you do is you can take more people's money because they now qualify for for it. It, Right? And so they reduce the barrier to entry to be able to get this money. Right? But in order for them to be able to do it, you have to have some kind of like subsidy or change to the larger system for them to even be able to qualify for it. And so it's like, it ultimately just pads the top people's pockets while giving sure more people opportunities, but at the same time, it will also set up more people for failure.

Dan Austin: [17:00] What's the deal with this? And speaking of that, because I'm not I'm not so sure I, like, have enough information to talk about this idea of, like, changing the credit score to give people more debt. But like I've been hearing more and more about Affirm, this company that you can basically just buy shit on like, I don't know, Uber Eats and Amazon and just pay with Affirm, a f f I r f.

Dylan Koch: [17:22] It's like Klarna too. Right? Isn't it just like a pay now?

Mike DeHaan: [17:24] It's like Klarna. Klarna is the other one. Yeah.

Dylan Koch: [17:27] Yeah. Like the pay now or pay later thing.

Dan Austin: [17:30] Yeah. That seems to be weird. Right? Like putting all your personal finances on like a net 30, like, which is I guess okay, but like it's not really a good idea.

Mike DeHaan: [17:38] It's the online version of a payday loan. Right? Like they're giving your money right now and then you just gotta go and pay it back with interest later. Yeah.

Dan Austin: [17:45] I think the scarier thing is that you can kind of do it with everything. Right? Like people are buying TVs at Kmart anymore. They're buying a burger for $30 on Uber Eats because they don't wanna go pick it up.

Mike DeHaan: [17:56] Yeah.

Dan Austin: [17:56] That to me is the scary bubble a little bit.

Mike DeHaan: [17:58] Yeah. It was the I think it was Prime Day last year, which, you usually come around like November. So Prime Day maybe it was Black Friday. But the it was, like, 30% of transactions had used, a buy now paid pay later payment system. Really? It was an incredibly high amount.

Dylan Koch: [18:13] Is there any information on on what age of the population is doing that? Because I would assume it's the younger generation.

Mike DeHaan: [18:18] Mostly younger people. Yeah. Because also too, there's a a trend with them not having credit cards. They'll use like the buy now pay later kind of things, which is also silly because they don't build any credit, which is necessary for our society. And they don't

Dan Austin: [18:30] get any of them those miles, man. You gotta get them.

Mike DeHaan: [18:32] I know. Yeah. They're like, goddamn. I gotta I gotta sell feet picks to fly first class. It's like, no. You just gotta get a Delta Platinum card, bro.

Dan Austin: [18:40] Not gonna get Delta. Yeah.

Dylan Koch: [18:45] That's the problem. They don't qualify for the Delta Platinum card. They got rejected.

Mike DeHaan: [18:49] Yeah. Exactly. No. We don't get it. They're using too much Klarna. Yeah. Right?

Dan Austin: [18:55] So is that an STD Klarna? Is that what that is, Dylan?

Dylan Koch: [18:59] One, why are you asking me? Yeah.

Drew Wiard: [19:01] Right. You're

Mike DeHaan: [19:02] my only

Drew Wiard: [19:02] doctor friend I know.

Mike DeHaan: [19:04] I think that's the name of the new, like, chemical you're supposed to take instead of vaccines that RFK is really into. Give yourself a little little shot of Klarna in the leg.

Dylan Koch: [19:12] See, we were gonna talk about politics, and then you can't give Mike a fucking inch.

Drew Wiard: [19:17] I know. Right? There's dude, I just I just gotta

Mike DeHaan: [19:20] take jabs. You know? The the fact that now South Park is no longer just, like, creating parody, they're just, like, copying real life. That's a problem. South Park used to be the show where, like I mean, the the first episode was about a giant anal probe coming out of Eric Hartman's ass. Right? And, like, this has been the king of absurdity forever, But now they're, like, out of ideas, and they just copy what's actually happening because it's just it's just so insane. It's pretty easy.

Dylan Koch: [19:44] Along the whole, like like, as a 50,000 foot view for the debt and economic stuff, there's something called the Cantillion effect that people can look up if they want, but it basically talks about this k shaped economy that we're that we're referring to where the wealth basically keep on getting wealthier and the poor people get poorer based on the credit systems that are already in place. And this has a natural like, a a limitation. It's just further than anyone thinks it is. And that kind of intertwines with Ray Dalio's popular for the the long term debt cycle theory. And these usually come to head at, like, the same times. And so no one can say, like, this is what it's gonna be from this point forward, but doesn't matter what economic thought you follow. It's like, we have too much debt. The only way out of it is to inflate away the dollar. And to inflate away the dollar, the debasement trade is to own hard assets or a business that prints money. And that's like how I'm approaching a decade of my investing life.

Mike DeHaan: [20:35] I appreciate what you said there too, Dylan, about approaching from the decade. Because I also think that so many people, they think about these topics and think about it over a lifetime, or they think about it in the very immediate, which I think both are incorrect.

Dylan Koch: [20:46] Yeah.

Mike DeHaan: [20:46] Right. I think you need to be looking at things over like five to ten year life cycles because that's realistically when drastic changes will happen.

Dylan Koch: [20:53] Investable time horizons should be five to ten years, not two decades in my opinion. Yeah.

Dan Austin: [20:59] It definitely feels too like and and you said something like that similar like a while ago that kinda stuck with me, Dylan. It's like this cycle, you gotta accumulate assets. Mhmm. Like that's the only way you're gonna get ahead. And I think all four of us sitting here today have that somewhat mantra and have for the last decade. But it's like, if you have assets no matter what they are, like just buy them. Like don't sit on cash necessarily unless you're strategic. But also like make sure you can build a business that kicks off cash flow so you can acquire more assets unless you have a good path to getting massively discounted assets like if you're a wholesaler.

Dylan Koch: [21:31] Which is harder for that that lower tier that we sometimes talk about that, you know, the younger generation. Though, I don't know. I know there's environmental differences for everyone, but like, I didn't come from a a family with money and we I figured it out. Now I feel like there's still that chance that you can still figure it out.

Dan Austin: [21:45] I don't know what it is on the large level of making large income, but I do know from like the base level of making income, it's way easier today than when I was first trying to get a job. Mhmm. When I was, you know, 16, 17, 18, the ability to make to make money doing different gigs and things like that is is vastly easier. The thing that I find, this is probably just me being an old man, is that the teenage to like, you know, and I have I have like 14 college tenants right now. Like the teenage to like, I would say 21 year old, you can't give them money to do anything. They're like, I'm good. My my nephews, my nephew's friends, kids in my neighborhood, very few of them. And it's not that all of them are this way, that's an absolute

Mike DeHaan: [22:24] Why are you bribing all of these children in your neighborhood?

Dylan Koch: [22:29] Cut my lawn, I'll pay you $50, now I'm good.

Dan Austin: [22:31] But it's like my, the last few years, and I know you guys have heard me talk about this, but it's like, it's a struggle to be like, hey, I will give you $50 to rake these pine needles right here in this small circle. And they're like, I'm good. And they just go back to doing whatever they do, which is not anything more productive than making money.

Drew Wiard: [22:47] Well, to your point, Dan, like I think in today's economy, gig economy, investing, like whatever you do, like, your point that I think you were making is it's easier to make money today because there's so many different paths to get there. I would agree with that, but that also has to be met with someone that has drive, right? And I think the people who are driven, like Dylan was saying, he figured it out. You know, no one showed him the path, but he figured it out, but he's a smart guy. He's driven, better himself, all that kind of stuff. Right? I think those kids coming up, they're gonna figure it out. Whereas those who don't have drive, maybe the opposite is true, where there is less opportunity to fall ass backwards into a living. I don't there's no extra political commentary on that. I'm just saying I think there is there's amazing opportunity, but you gotta show up.

Dan Austin: [23:29] Yeah. There's so much opportunity. It's almost too much. And then I'll also say is the the folks that don't have drive may also just not have direction and the direction to go and drive. Like, you grow up in certain circumstances and you don't have a certain vision given to you, so it's harder for you to find that path. I do believe that. There's some of that. But yeah, it's I know for sure you can make a lot of little money, but just stepping in as a 20 year old traveling salesman like all these baby boomers did where you're gonna make a $100 a year career path, like that does not exist as a proportion of the population. Like, it's just not as easy to find those career paths where you just locked in for forty years.

Mike DeHaan: [24:04] Yeah. There's a lot of pieces to it. Like, I also think just in general too, cheap entertainment is so easy to get. Right? And, you know, with social media, I mean, there's a free entertainment. Right? And if you look back over why people typically had a desire to earn money, typically for a lifestyle. If you don't care about your lifestyle, you don't need to earn a lot of money. You can live on food stamps. Can do whatever. And so even when a lot of us that are on, like, the millennial generation Drew, I think you're technically still millennial. Right?

Drew Wiard: [24:34] Am the oldest millennial. Yeah.

Mike DeHaan: [24:35] You're in 1980. Yeah. So He's the elder. The elder.

Dylan Koch: [24:37] I'm right

Mike DeHaan: [24:38] behind you. But, like, your whole thing or getting money was so that you could have more freedom to do stuff that you wanted to do. You know? You could have, like, a nicer house. You could travel. You could do more hobbies. You know? You could get, like, your I was gonna say butt wings. I know it's not what you call the butt fan thing. The paramotor. Fawn paramotor. Yeah. And that shit, like, costs money. Right? To be able to do that, you have to have a job where you can afford it. But now if people don't have that inclination because they're so easily entertained with like free social media and everything else, like they don't have the drive to make that money, Dan. Like Right. Like when when I was in college and somebody offered me $50 to go and like cut grass or something, like, remember going home for the summer and I would just be doing odd, like, landscaping jobs and stuff. It's because I wanted, like, beer money when I went back to school. Yeah. You know? Like, honestly, that was the driver for it was to be able to to just go out and do stuff where they don't have that anymore. I actually read this Reddit post. Hey. I thought it was kinda interesting. It was like an an ask Reddit and it said, people that are, like, 25 and still live in your mom's basement, what's wrong with you? Why are you like that? And the most upvoted comment, actually thought was very insightful. And he was like, I'm literally this person. He's like, I'm 24 years old.

Mike DeHaan: [25:48] I do not have a job. I did not go to college. I still live in my mom's basement. I spend most of my days reading and playing video games. And he basically said that he came from a family where his parents were weren't bad. They were present, but they weren't necessarily persistent and they didn't like encourage him to do anything. So they never put him into hobbies, never put him into sports. He never really had interest. Basically, would go to school. He would come home. He would maybe do his homework. He'd play video games. And then when he graduated, there was never any turning point where things transitioned into quote unquote adulthood. He didn't go to college. Didn't like move out. Didn't do anything. And his parents just kinda just let him do that. And so he was basically in the cycle of time, but there never actually being like a distinct point of like, you are an adult now. And so what happens is he gets into his twenties and he's now a juvenile, and he has no life experiences or skills or drive to do anything because he's never had to adopt it. And I think that's probably super common, you know?

Dylan Koch: [26:41] So is that a parental thing that you would suggest or a culture thing or a mixture of both?

Mike DeHaan: [26:45] I think it's a mixture of both. Right? It's a societal issue and a parental issue. Because, like, I mean, there's always been parents that are like that. The difference is when we were younger, we got fucking bored and we went and, like, did stuff. You know? Like, the because, like, god, I can't sit in here and play Goldeneye again. You've already done that.

Dylan Koch: [27:02] When I turned 16, got my license the day I turned 16. Now there's kids that, like, don't get them, like, till they're, like, 20 years old. Like, why do I need to drive? I'm like, I don't understand. I will never understand.

Mike DeHaan: [27:10] When I grew up in Montana, it was like right when I was in that 15, 16 age, I could actually get my driver's license at 14 if I passed took driver's ed. And so I, like, busted my ass to do it. So I got my driver's license in my freshman year of high school. Wow. And I did that explicitly so that I did not have to stay at my house. So I could, like, just go and do anything. And I used to drive around in my mom's, like, old minivan, and I would have, like, eight kids in there. And we would just run around and do, like, hoodlum shit because we had nothing else to fucking

Drew Wiard: [27:38] do. Yeah. Like, that

Mike DeHaan: [27:40] was what we did.

Dan Austin: [27:40] Hours drive there in Montana, you gotta have a car.

Mike DeHaan: [27:43] Yeah. And and and it wasn't like we didn't have games. I was still a geek. Like, there was one I remember this particular Sunday was a beautiful, beautiful day outside, and I was, like, 16. I went to my friend's house, we built a computer. Like fucking nerds.

Dylan Koch: [27:55] You are a nerd. Yeah.

Mike DeHaan: [27:56] And so we did that so that we could play World of Warcraft together. Right? But even then, that you eventually got bored of doing that and you would just go do something else.

Dan Austin: [28:03] Yeah. So

Mike DeHaan: [28:04] I don't know. I think big picture, the major concern with that is from like a real estate and business standpoint is like the consumer base for everything is gonna get smaller. You know? And if we have all these assets, you're trying to start these businesses, if no one's gonna pay you for them, they're eventually not gonna be worth anything. And like where you're starting to see now, this is actually a really interesting statistic. I'm curious what it would look like is if you were to look at the increase in like shareholder value and stocks, how much of that is gonna be coming down to, like I mean, obviously, money going into it, but how much future revenue is gonna be driven by cost savings by, like, having AI and overseas talent and stuff come in and basically axe their salary overhead versus actual more revenue. You know? So the revenues stay the same, but their profit will increase just because they're reducing their overhead such an excessive amount. I mean, I imagine if it isn't significant already, it will be very, very soon.

Dylan Koch: [28:56] Yeah. Well, a lot of the, like, AI that we interface with on a daily basis, like the large language models, ChadGBTs, Crocs, like that kind of stuff, a lot of them are money losers right now. Like, data centers are very expensive to run. The raw materials to build those data centers are very expensive.

Mike DeHaan: [29:11] Those are, as the companies but you think about like, let's say that there's a, you know, dollars 50,000,000 company that now has their entire marketing department that they brought down to two people. They used to be 20, right? Because they are able to use ChatGPT to do a lot of the different stuff now. And so their overhead went from being a 100,000 a month in that department to 10.

Dylan Koch: [29:31] Yes. That part I agree with. But they're outsourcing that AI, not building the AI.

Dan Austin: [29:35] Yeah. I don't I don't see that as a problem. That's just like saying, hey, when we came out with software programs, they it's gonna gonna eliminate jobs, and it did. And then it created a whole pile more jobs.

Dylan Koch: [29:44] Every technological innovation has created more jobs than it's displaced. Now that's Yeah. Who knows if that'll happen with AI or not? Because there's a lot of smart people saying that this will be the first time that's not the case. Yeah. But only time will tell.

Dan Austin: [29:55] Yeah. Only time will tell. I I do say I am always bullish on the human race to figure shit out.

Drew Wiard: [30:00] Yeah. I agree with all of that to tie it back to the discussion we were having earlier, though, about families redlining and foreclosures taking up and all that kind of stuff. Honestly, that's my biggest concern is that they're gonna run out of credit because everybody wants credit. Everyone wants to keep spending. We're gonna find ways to keep spending for better, for worse. But if we do see this this labor shift in the AI world, which I am all for, I think it will lead to new forms of employment and new levels of productivity. But I think people's jobs changed and no other generation has been more poorly suited to be able to adapt because they weren't redlining like we all seem to be right now. And so that's really my concern is I think, I don't know that I see the housing market falling out or crashing or like disappearing by any means, but it could be enough of a quick exodus from the labor force that no one has four weeks to be able to fund themselves anymore.

Dan Austin: [30:54] Totally. Yeah. And it seems like that, like there's always localized issues and there's always like an industry that dies. I think we're seeing the software developer industry die. I think that was probably led I believe it was led when Elon started laying guys off, then every other tech company started laying guys off because they were just like, we don't need all you people regardless because they over hired during COVID. Right? And then they figured out like, oh, you can run this company with a third of the staff. Okay. Let's do it. But that was like the first round of like, we're just bloated. Now it's like, okay, the next round is like, you guys are just using ChatGPT or whatever they use to do to do programming. They're like, okay, now we really don't need you guys. We only need a handful of you guys. So I I do think like there's industries that will completely flip upside down and change. Good thing for those guys is they're also nerds, they can go be AI nerds and probably do something on the back end of AI. Like, you just get retake.

Mike DeHaan: [31:42] We know that's not what they're gonna do though. Like, we've met so many of these guys through GoBundance and different things where they're like 25, and they're spending $500,000 a year at Netflix, and they just got laid off. And now their personal worth is $500,000 a year, which is not achievable anywhere else except for in that incredibly small bubble that they had managed to squeeze themselves into.

Dylan Koch: [32:01] Or when it was real manic and they had three or four jobs at a time, like, all making that kind of salary. Right.

Dan Austin: [32:06] That was great. I mean, good for those guys. They did a good job. I know.

Dylan Koch: [32:09] But with, like, the job loss stuff, I think they should and if you're a local market and there's one employer and that one employer is a tech company, which is I guess that's probably a very small subdivision of cities. But like that would be the time where I maybe I'd be scared if I was in that market. Because if they lay off half their stuff, boom, there goes the whole town. Right? Like there goes like 30% of the jobs in that one location.

Mike DeHaan: [32:28] Mhmm.

Dan Austin: [32:29] Yeah. You know, a lot of people I think the Midwest probably saw some of this benefit. You guys like like in Cincinnati, Fort Wayne is. I think so. And I know Mike and I have talked to several folks like legit, like we're in an industry on a coastal market and they moved to the Midwest after COVID because they could work remotely. And so I think like there's like that dispersion of jobs. And I think for some of those people that maybe like you're saying Dylan, maybe it's San Francisco, maybe it's Austin. They eventually say, wow, this is really freaking expensive and I no longer have a job. I'm going to go back to or go to a Midwest town where I can buy a single family home and still live the American dream.

Dylan Koch: [33:02] And be more affordable. But the opposite is also true. Mean, years ago when they, you know, the early two thousands when China got in the WTO and they outsourced all manufacturing production overseas, That's when a lot of these towns that where Drew and I live got hollowed out for lack of a better term. So a lot of those jobs left around those times.

Drew Wiard: [33:16] Yeah. And, Dylan, I don't know if you're seeing it where you're at, but there there really is a very notable influx into the Midwest right now. Yes. And I wouldn't say it's like in droves where you see like Austin exploding, but you're seeing growth in cities that have just kind of been stagnant for a while. And I think a lot of that really is an affordability issue, or we're seeing a lot of it used to be that people would move away to go to college, and then they'd stay there. And then they move their family back because it's very wholesome and church and, like, their parents live here. And so we would see that. But now people are staying through the whole course of it much more, than they were before. And then the other thing, though, is, like, a lot of people will live here, but then there'll be snowbirds in Florida or some in the winter and things like that. And given the taxes down there, given the insurance and hurricanes and stuff like, we're just seeing more and more people coming back to the Midwest. Like some of the biggest growth cities right now are places like Fort Wayne, Grand Rapids. I don't know how Cincinnati's doing, but I mean Pretty good. Places that you wouldn't really have previously highlighted. Again, not that you try to chase a market that's rapidly growing, but I would consider investing in some of these markets in a way that I hadn't considered.

Dylan Koch: [34:23] Well, and a lot of it is, like you're in industrial Jersey, you probably talked to this, the one of the growing sectors of the economy is still logistics. And then so like they need these industrial and warehouse spaces for all of the, I dunno, transportation, for lack of a better term, goes on with that, the Amazon data centers, all that kind of stuff.

Drew Wiard: [34:41] Yeah. Yeah. And whether it's, you know, everything's kind of hub and spoke, right? Where stuff gets flown in or shipped in from somewhere else, but then it kind of fingers out into all these other little markets. Whether you're the distributor who's sending stuff out or you're a small little shop on the receiving end, we talked about before, people aren't stopping to, they're not slowing down their spending, right? So we're seeing a lot of demand for that sort of stuff.

Mike DeHaan: [35:03] Yeah. Yeah. I mean, it's funny. If you go to most states, that probably exists in some capacity as well. So I actually just looked it up, Dan. The two fastest growing cities in Washington State are Spokane and Tri Cities, which which is really funny to me.

Dan Austin: [35:15] That is kind of funny that we still would have the fat I mean, I don't know what that means in relation to the I 5 Corridor, but, you

Mike DeHaan: [35:20] know Yeah. But, I mean, it's people moving away from, like, the big tech area to somewhere that has a similar environment, but, like, a higher just, like, more bang for your buck. I don't wanna say higher quality of life because that's how you you get into a fist fight with people. But you get more bang for your buck in terms of housing, in terms of, like, living expenses, everything else.

Dylan Koch: [35:35] How far are you guys from, like, Seattle for the us who aren't on the West Coast?

Mike DeHaan: [35:38] 300 miles. Yeah. It's it's like a four and a half hour drive or, like, a thirty minute flight. Say it's far enough that when people talk about Washington, they forget about us entirely.

Dylan Koch: [35:47] Sure.

Drew Wiard: [35:47] Yeah. Like Seattle. Yeah. Yeah.

Mike DeHaan: [35:49] So well, Drew, what are you what are you thinking on, like, the commercial side just to wrap this up and bring this full circle with your stuff? Is, like, any of, like, kind of the macroeconomic stuff or these patterns affecting you on the commercial side since all of your tenants are almost exclusively businesses? Yeah. Right? Like, do you have any concerns around those sort of things? Or

Dylan Koch: [36:07] Can I ask an adjacent question? Yeah. To that? Are you still underwriting your commercial stuff via like a cap rate calculation? And is that dependent on the market that you're analyzing in?

Drew Wiard: [36:17] Yeah. So really good question. I could answer it a number of ways. We do. We use cap rates quite a bit. So our model is sometimes we use our own money, but then we'll go get bank debt. But a lot of times we're bringing in investors now and we will probably start looking towards a fund model and like with the momentum that we've got, the deals that we're closing, we'll probably have to start going that way. But we know that certain properties won't cash flow and I can't provide enough returns to certain investors unless we get it at a pretty significantly high cap rate. So our portfolio right now is humming at about 13 to 14 cap, which is really good. We're acquiring probably nine and a half to 11 and a half cap rates that are in place day one. So, you know, like our investments, we invest for cash flow as opposed to having to completely redo a project. Now we're open to taking those and we've done some of those, but when we bring investors on, we want it to cash flow day one as opposed to a lot of the syndications and things where they bought the apartment, they had to right size it in the next two or three years, and, you know, they had to do the thing, whatever the thing was, and then people started getting paid. So we're pretty rigorous for their underwriting, but I think I have a lot of people asking me like, hey, if I wanted to shift to commercial, should I do that? And if I may, I would just speak to some of the warnings that come with commercial because yes, it's true that if you could buy 10 houses, I would rather buy one warehouse, right? And they all cost the same, right?

Drew Wiard: [37:45] Less headaches, economies of scale, all that kind of stuff. But people need to know that sometimes when these commercial properties go empty, they are big empty for months. Those debt payments, you might have a $9,000 mortgage payment every single month. I mean, it could wreck some people. And so I see some people chasing after it and I encourage it and I wish them the best and I'll be here to help them if they have any questions and things like that. But you really, really need to sharpen your sword before you start swinging at commercial.

Mike DeHaan: [38:15] Yeah. And the and that kind of like, those are the assets where people got the most roasted over the last few years as well. So they were buying trying to force that appreciation, like you were saying, instead of buying a decent cap rates on day one. And biggest names out there are getting completely cooked right now on a lot of deals that they bought in '22 and '23. Yep. Drew? Well, really quick before we go, where can people find you? I follow you or reach out to you.

Drew Wiard: [38:38] Yeah. Easiest way is probably just on Instagram at the flying investor. I spend a lot of time on Facebook. Too much time on Facebook, but either one of those would be just fine.

Mike DeHaan: [38:46] Yeah. If you go and find a a post, like any kind of political post far right or far left, you will find Drew in the comment section just stirring the pot just because that's what he likes to do.

Drew Wiard: [38:57] Yeah. And not and not because I have a strong opinion. Like, I am a No. Just just

Dylan Koch: [39:01] for sure.

Drew Wiard: [39:01] Wild moderate. But I man, you give me a stick, and I'm just I'm just gonna Yeah.

Dan Austin: [39:06] I feel you, Drew. I love it. Yeah. That's one of reasons

Mike DeHaan: [39:08] we get on so well. So awesome. Alright, everybody. Thanks for listening. We'll talk to you guys next week. See you.

Dylan Koch: [39:12] See you.

Mike DeHaan: [39:14] Thanks for listening, everyone. If you want more from us, you can shoot us a follow on Instagram. I am at Mike underscore Invest. Dan is at Investor Man. Dan and Dylan is at Dylan underscore Does underscore Deals. Choose to follow and send us a DM to let us know what you think of the show.