The New American Dream: Real Estate Investing In A Renter Nation

Mike DeHaan: [0:00] You are a real estate investor, you have probably heard all about subject to real estate. And also if you're a real estate investor, you probably don't really know a lot of the ins and outs of how to do subject to correctly. That is why we created our free subject to course. You can go and grab at collectingkeys.com/subtwo. We will go through all the ins and outs about how to do subject to correctly and legally so that you don't put yourself or the seller in a bad spot by kind of ignoring the small details. So if that's something that you're interested in, go to collectingkeys.com/subtwo, and you'll know exactly where to go from there.

Dan Austin: [0:33] If you're operating now and you're able to get through like weather it, like we're seeing it, and this is obviously real estate's hyper specific or hyper local. If you're able to operate in a tough environment where rents have stayed flat, prices, you know, it's hard to get properties under contract, or it's hard to get the the prices you want on the exit. If you're operating now, you're gonna always be able to operate.

Mike DeHaan: [0:52] Mhmm. Right? Because you're doing it in

Dan Austin: [0:53] a tough time. Like you and I started wholesaling during COVID, like literally right before COVID, think our first batch went out March 2020. That was tough to, it was January, but yeah. Was it January? So yeah. Yeah. Like it was tough to operate, only granted for us it was only maybe the first eight to ten months, but like Mhmm. The world was like literally going crazy, right? Like, didn't know and what was right now, we don't know what the end looks like for this like weird, very friction y market. There's going to be the light at the end of the tunnel though, it's like there, it'll happen, we know historically. It's just a matter of what do you do in the in the meantime to continue to operate and to stay growing in a time where it's hard to.

Mike DeHaan: [1:40] What's going on, guys? Welcome to today's episode of the collecting keys real estate investing podcast. If this is your first time here, this is the show where we teach you to make massive income, not just passive income with your real estate investing business. I am Mike DeHaan here with my co host, Dan Austin. Cool. And on these Wednesday shows, we talk about real estate investing and whatever else we feel like worth the week. So we are coming into the middle of March, already near the end of q one, and it has been interesting to say the least to see what is happening with our business, and you know, would say the real estate market as a whole.

Dan Austin: [2:20] Have we found the gold at the end of the rainbow? Or do we have to wait till Saint Patrick's Day? I guess when this airs, it'll be Saint Patrick's Day probably. I don't know what date Saint Patrick Day is.

Mike DeHaan: [2:30] It's it's in March. I mean, I've seen like Saint Patrick things at Costco.

Dan Austin: [2:35] So Bro, I No. No. That you see that like two months ago.

Mike DeHaan: [2:38] That right. Yeah. Yeah, Ryan. Was a while ago.

Dan Austin: [2:41] I built a sick ass leprechaun trap with my daughter this weekend. So I'm pretty excited.

Mike DeHaan: [2:46] I think we're to catch a leprechaun. A leprechaun trap. What does what does that mean?

Dan Austin: [2:49] What do you put like? So that's a new thing. Right?

Mike DeHaan: [2:51] But like some wacky charms, like underneath like a shoebox with like a stick so it falls down.

Dan Austin: [2:55] I'm so glad you say that. Because like I feel like when I was a kid, maybe I just didn't do things like my parents didn't participate in it. But I think there's a lot of new things like Elf on the Shelf and leprechaun traps and things that Pinterest has made popularized. So like part of my daughter's homework was to make a leprechaun trap. Okay? So we're gonna catch this little bastard.

Mike DeHaan: [3:15] So what are you gonna like dress your son up like a little leprechaun and have him get caught in it just so it's super exciting?

Dan Austin: [3:20] Oh, dude. He would love it. That would be actually pretty hilarious. Yeah. That's funny.

Mike DeHaan: [3:24] I mean, that's cool. Guess, make some of the fringe holidays interesting. So I can't even remember if we did things for something like Saint Patrick's Day when I was a kid.

Dan Austin: [3:33] No. Like even like Valentine's Day, we'd kinda do stuff like that, but it's just a little bit more. I mean, you know, my daughter's in kindergarten, so they make a big

Mike DeHaan: [3:40] Yeah, right.

Dan Austin: [3:40] Big deal out of all that stuff. So, yeah, there's definitely holidays we're celebrating, and I'm like, does that really count?

Mike DeHaan: [3:47] I mean, think of something to do. Yeah. I would rather have that because I feel like we went for a span where you were not allowed to do any holidays at all This is true. In school because everything was racist or offensive to somebody.

Dan Austin: [3:57] Right. You know what I still love they do? This is messed up. The kids with peanut allergies have to be separated. I mean, for health reasons, but I'm also like, oh man, so they went like no peanuts at school. Right? I get it if your kid has like a nut allergy, it's like super dangerous. Right? But then my daughter was telling me that like, I can't remember how it works, but like if you have that like, you have to sit at another table. Was like, oh man, that's sad.

Mike DeHaan: [4:22] Yeah. They put it on another table, they make them use a different bathroom, they have to go in and out of different doorways.

Dan Austin: [4:27] So bad, dude.

Mike DeHaan: [4:28] We're getting real real into the segregation realm very quickly over peanut allergies. Yeah.

Dan Austin: [4:33] Go backwards. Sorry if you have a peanut allergy, but get the hell out of here. You don't belong. We don't like you here.

Mike DeHaan: [4:40] I mean, it's it's for their safety, that's what they used to tell people as well.

Dan Austin: [4:43] Seriously.

Mike DeHaan: [4:43] But now like the hot season has definitely started Right. To really be noticeable, I would say especially in like the starter home price point. You know, people that are listing stuff in the starter home sort of price point are selling very very quickly. Found a lot of sellers coming out wanting to sell stuff sooner rather than later. And you know, it's just that time of year and I think that it's been very indicative that this year 2024 is going to be a very strong real estate year in general, not just for investors but for people in the industry overall. Unless you're in the commercial real estate realm, in which case there has been nothing but disasters over there, which we talked about a little bit last week with Brandon Turner's fund that has been collapsing and a lot of other, you know, GoBundance guys and like guys that we know that are very sort of well known operators that have presences. I've just been hearing murmurs that so many large funds have been going very very badly. To the point that I have a passive income gobodins call that I hop on, and the theme of the call this past week was purely how much money is everybody losing right now? Which is really frightening because the entire thing with these limited partnerships, the different kind of passive investments, is people have sold it as a safe and secure investment that you can't lose. Like basically you have some sort of equity position, you get a pref, you get a longer term upside.

Mike DeHaan: [6:03] But the problem is so many of these deals are now underwater to the point that the operators, the GPs cannot actually recover their investors money, and so they're losing.

Dan Austin: [6:13] Yep.

Mike DeHaan: [6:14] Right? Like you can see them, you can do whatever, you signed the investment documents when you chose to invest in their fund and you're kinda SOL at that point. Yeah. And so you have a lot of these big commercial multi family operators that are bounding out of the game completely right now.

Dan Austin: [6:28] Yeah. And this is why it's so when the money's

Mike DeHaan: [6:31] cheap Mhmm.

Dan Austin: [6:31] Which it was the last, you know, several years where a lot of these people kinda came into like form and created their funds, everything seems to be going good, everybody's on social media talking about like how great things so, and you just think because people are doing things Uh-huh. That you're missing out by not doing it, or that that's a good deal, or that they're doing really good. For a lot of these guys, they're still out there on social media talking about doing more deals their existing deals aren't doing well. So don't just assume because people, a lot of people, especially the criminals, they don't just bow out and walk away. I'm not saying certain, I'm not saying people that we've talked about on the show are criminals, but like, if you're incentivized to close transactions because you have transaction fees, you have asset management fees, you have property management fees, whatever fees you built in, you're incentivized to do more. Mhmm. That's what it

Mike DeHaan: [7:19] is.

Dan Austin: [7:19] Yeah. It's kinda like I always joke around, like when the market's down, flippers gotta eat too, so they keep flipping. It doesn't necessarily mean it's a good idea for you to start flipping.

Mike DeHaan: [7:27] Yeah. You know where it starts to get real fishy is when you start to see people that are in that realm promoting things Yeah. Yeah. That you should be kind of suspect of, but they're trying to like spin them in a good light. Right. Right? Yeah. I've seen this one get shared a couple times. Actually, don't know the guy who originally posted it, but basically it was like one of those Instagram tweet posts. We've done those before on our social medias before. But it said, you should never give your money to a GP that does not collect an administrative fee because that means that they're not gonna have enough revenue to pay the team to get the deal done. Right?

Dan Austin: [8:04] Interesting.

Mike DeHaan: [8:05] And that's very interesting because a lot of other people are saying right now, one of the reasons a lot of this shit has gone sideways is because you have all of these GPs who are making all of their money in that administration fee at

Dan Austin: [8:18] the Oh yeah.

Mike DeHaan: [8:18] And that way they are no longer actually incentivized to make the deal perform, and that's a bonus. But they're essentially professional fundraisers who have a deal and if the deal goes sideways, they already made their money so they don't really care. Now you have these people that are saying like, oh well, if they don't do that, then you shouldn't get the money. Like, that doesn't make any freaking sense.

Dan Austin: [8:36] Here's a good benchmark to that, you and I were both on a call with Matt Atkinson from Millionaire Mindcast, if you

Mike DeHaan: [8:43] guys He have heard of

Dan Austin: [8:44] was talking about raising money for commercial deals, and his take was, if you're not putting your own money in the deal, if you're not participating in it, you should not be collecting a fee. Exactly. Makes sense, right? That seems fair, that seems reasonable because if you don't believe in it enough to put your money in it, or you don't have enough money, you should be profiting off of other people's money.

Mike DeHaan: [9:03] Mhmm. And Matt, if you go check out his show, Millionaire Mindcast, highly ethical, very very good reputation. He has been in the real estate space for over ten years, and has nothing but good things to be said about him no matter who you talk to. I would listen to him rather than the random GP operator who started two years ago, who is now, I guarantee you we made this post in reaction to some flack that he probably received.

Dan Austin: [9:28] Guarantee it. And he probably has like a 2% fee too, right? Like a real high one.

Mike DeHaan: [9:32] Yeah, yeah, you know, and so we're starting to see that, or like on the flipper side, the one that always gets me, is you see people that are like, don't invest in real estate, you know, have you ever heard of private lending? Instead you can just invest with me and I'll give you 12%, you don't have to worry about anything. And I was like, oh, check out our ebook, where we teach you what private lending is, and all the things that you should look for, and then we can upsell you to invest with me the entire time without actually learning how to protect yourself. It's like they are doing this because they are trying to influence you Yeah. Yeah. To do the thing that they are struggling with which is getting money to pay their own bills Totally. Because they are not able to do deals and make successful deals in this current market. And it's, I mean you're just starting to see that a ton. I mean even locally we have a very big operator developer here who I know from people inside his sphere, he is absolutely crumbling, and everything that he is touched right now is turning to shit. He's getting a bunch of lawsuits lined up against him. Mhmm. But I see him on social media all the time talking about all the great things he's doing. You know, there's stuff in like local press that's always talking about him and doing these different things. Even just the other day he talked about like a new office that they were opening and a new fund that they were launching. I'm like bro, you're losing your ass, I know this.

Mike DeHaan: [10:48] But you would never know.

Dan Austin: [10:49] No, that's what I mean is like just because people are doing things doesn't mean they're doing well. Yes. And I feel like at some point some of these people are sociopaths. Like I know the guy you're talking about in there might be, there's something wrong with people that continue to do things even though history is telling them in recent years stop doing it. You're not doing a good job, why are you continuing, like you're basically saying, well I lost that person money, so I'm just gonna go get money from this person. This person wants me to pay them back, I'm just gonna go get money from that person. Called Ponzi scheme, it's called Piff a investor, stop doing that, just stop. Yeah. So, it's unfortunate. Yeah, you never know what's behind the veil or what's going on and I think we continue to just see that for you and I, we I feel pretty good that we've highlighted this since we started this podcast. That was one of the points at starting the podcast was highlighting the stuff that we've done, the stuff that we've done well, but also the stuff that you and I have personally done poorly at, our failures, the things we see around us because it's a bear, you just Look it. Nobody wants to talk about it.

Mike DeHaan: [11:48] Yeah. I mean, we always run into different things. Right? Like that's kind of part of the game. It's like we were just talking right before the show. It's like we have portfolio right now that is hemorrhaging money because of all the different capex items that we knew about years ago and we bought stuff that, of course, all are starting to come around Right. Because that's the way the universe works. You know, it's having trouble getting stuff rented, but at least we have good interest rates and relatively strong equity and things, so it's not the end of the world.

Dan Austin: [12:14] Well, that brings out a good point too. Yeah. It's like, when we, especially when you're in a buying frenzy, like we were, because it was easy to buy, our interest rates were low, and you're like, yeah, but I'm buying equity, totally, but you can't eat equity. Mhmm. You have to feed the baby somehow, and when that equity is still there, but then you have capex, you know, capital calls basically for your own company, hey we gotta do a roof, we gotta do this, hey we had this major issue that cost $30, that happens and you have cash flow to cover, like for us, when we took on properties, have cash flow to cover negative or flat, or small maintenance things for properties. But then when you have these major capex issues that are gonna, I mean I think in the last four or five months we've spent well over a $100,000

Mike DeHaan: [12:56] Mhmm, really?

Dan Austin: [12:57] Of money to put it right back into properties. Granted, we could sell them, we don't want to though, and this actually brings up a good point, I was responding to another group I'm in, another mastermind, about somebody's like, when would you actually take on a negative cash flow rate prop?

Mike DeHaan: [13:11] Uh-huh.

Dan Austin: [13:12] And the reality is, we did, I wouldn't do it right now necessarily unless I was, like there's some criteria I would want, like I would want a great debt structure, meaning I'm getting like 0% seller financing, which we have those. I am getting a shit ton of equity, which we have properties like that, that we have a lot of equity, $2,300,000 of equity, but no cash flow. And, one of those two, and we have cash flow for the rest of our portfolio to absorb it, as well as, it doesn't affect my lifestyle to do

Mike DeHaan: [13:40] that. Mhmm.

Dan Austin: [13:41] Yeah. Some of this stuff though when you're like, hey, gotta turn this unit for $40, $30, it might start affecting my lifestyle. You do enough of those.

Mike DeHaan: [13:48] The challenge is it becomes a slippery slope.

Dan Austin: [13:50] Mhmm.

Mike DeHaan: [13:51] I mean this is, you know, we've done this, we're currently in kind of a situation honestly, where we've done this with one, and then one goes slightly awry, the next one goes slightly awry. And next thing you know, we have like one deal that we're able to carry, but we're having to also carry the other half of them. Just because we've been unable to rent properties, or we've had downtime, unexpected vacancies. Yep. Right? And so that's like honestly the big risk with if you're choosing to buy these negative cash flow properties, or these ones that you know are not necessarily going to perform right out of the gates, or you have to do some sort of like large restructuring or medication or whatever. Is if things don't go to plan, then it's going to be an ongoing problem that you're gonna have to deal with. Right? And it's like it's a liability that already exists there, and then when you ultimately have future liabilities which you will, you now have just extra pain that you have to deal with unless you room to deal with stuff that for sure will happen, just part of being involved.

Dan Austin: [14:45] So the cool thing is though, is if you're operating now and you're able to get through like weather it, like we're seeing it, and this is obviously real estate's hyper specific or hyper local. If you're able to operate in a tough environment where rents have stayed flat, prices, you know, it's hard to get properties under contract, or it's hard to get the the prices you want on the exit. If you're operating now, you're gonna always be able to operate.

Mike DeHaan: [15:06] Mhmm. Right, because you're doing it in

Dan Austin: [15:07] a tough time. Like you and I started wholesaling during COVID, like literally right before COVID. I think our first batch went out March 2020.

Mike DeHaan: [15:15] It was January, but yeah.

Dan Austin: [15:17] Was it January? So yeah, like it was tough to operate, only granted for us it was only maybe the first eight to ten months, but like Mhmm. The world was like literally going crazy, right? Like we didn't know what was happening, and right now we don't know what the end looks like for this like weird, very friction y market. There's going to be the light at the end of the tunnel though, it's like there, it'll happen, we know historically. It's just a matter of what do you do in the in the meantime to continue to operate and to stay growing in a time where it's hard to.

Mike DeHaan: [15:47] Yeah. I mean you say that but I don't necessarily agree that that's true. Right? Like that if you can make it through right now that you can do well in the future because honestly a lot of the people that we have competed with that are no longer around, were of that exact mindset. Right? They were around for five years, everything was going well, they couldn't adapt with the times, they couldn't develop new technology, they couldn't understand the new strategies you have to take in the real estate business. And more sophisticated people came around, or like new people with less bloat, they were able to be more agile Sure. Were able to come in and take over the market, right? I mean honestly if you look at our partnership program that we run, so our partnership program's a part of our wholesale operation where basically we stand up and operate businesses for people. So we bring our marketing and our sales team into people's markets, they basically become the primary beneficiary of that team's efforts and they get you know, the bulk of the deals and we get a small cut of all of them. But if you look at the people that we work with on that, most people are exactly what I'm talking about where they are real estate educated, they are usually decent operators in their own right, but then they look at how we have built out the data systems, how we've built out the sales systems, the sophistication that we have behind what we run and they go, I don't wanna do that. My options are to either be made obsolete or to just not have any opportunities at all, were to work with you guys. And so they decide to do that. But there's tons of other people who just kinda go away.

Dan Austin: [17:15] Right.

Mike DeHaan: [17:15] Like honestly, if you look at locally here in Spokane, and it's not just just Spokane, it's other markets too, how many people are even still around that were investing in 2018 and '19?

Dan Austin: [17:23] Right. Well, it's because they can't adapt, right? That's what I

Mike DeHaan: [17:26] mean though,

Dan Austin: [17:27] is like if you can adapt to this market condition, or you're just starting out, and you can grow through this period of time, you're gonna be better on the other end of this. Yeah. But if you think, and I consistently say this, if you think what got you through the zero interest rate period of history, which was an amazing time to be investing in real estate is what's gonna get you through this, it's not. Because prices aren't skyrocketing, you can't, you know what stopped immediately was the wholesaler sending out appreciated ARVs.

Mike DeHaan: [17:54] Mhmm. Totally. That stopped very very quickly.

Dan Austin: [17:56] That was a fun run there for like eight to twelve months. Appreciate the ARV. What the hell is that?

Mike DeHaan: [18:01] Hey, we really appreciate you being a listener of the collecting keys podcast. Did you know that we also are on social media and on YouTube? You should go and shoot us a follow on those as well. You can find both Dan and I on Instagram. I am at Mike underscore invests. Dan is at investor main Dan. You can also find short clips from the show at collecting keys podcast on Instagram. And if you wanna see our faces talking while you're listening to this show or you wanna check out some of our crazy animated adventures we've been putting together into some funny little web cartoons that sort of show the crazy stories that guests tell on the show, then you should go over to YouTube and check out the collecting keys channel. Shoot us a subscribe over there. It really helps in human grow our audience. We really, really appreciate it. Well, anyways, enjoy the rest of the show you guys. We appreciate you all. Dude, that was a crazy period of time. So they appreciated ARV if you guys missed this. You weren't around back then or you weren't in any of these like super hot markets like the Seattle area. You would have these wholesalers that would have these deals that were locked up way too high. They would send it out for disposition and it would say like, here's our purchase price, the appreciated ARV, if you look ahead three months based on the market is this. And people would buy off that basically trying to like time the market. And that period of time was so crazy, so I was working at the hard money company at the time.

Mike DeHaan: [19:16] We had people whose loans were going into default, and they were like, my appreciation right now is more than your default, your penalty interest rates. So they would just let it go into pre foreclosure, and then sell it like two or three months later, because they knew it would take that long to go through the foreclosure process. And these are like sophisticated people. These aren't dirtbags. These are people that had Yeah. You know, done hundreds of properties over the previous years in the Seattle area.

Dan Austin: [19:40] Right.

Mike DeHaan: [19:41] And it'd be like, I'm just gonna write out your 18% penalty interest to make an extra $50.60, $70,000.

Dan Austin: [19:46] Mhmm. I'm gonna start sending out depreciated ARV deals. Be like, hey, in six months this will be worth $36,000 less and you're still gonna make a 12% cash on cash.

Mike DeHaan: [19:57] No shit, right? I mean, I think one thing though on that note that is different this time around versus you know, kind of previous, I guess times in history, like in terms of people being more sophisticated, is just the presence of institutional money is so significant. Especially now that the 0% interest rate sort of period is over, you now have all these hedge funds and different firms that are chasing yield. And real estate has proven to be something that they like because it's a hard asset. They have the ability to you know, kind of like manipulate numbers with it. They have tax benefits that the IRS gives them. But also too, a lot of people don't understand that hedge funds do this. But when they go and they buy up a large amount of real estate in a certain area, and this is what Aaron Imuchsteki talked about in his episode a little while back, if you guys listen to that one. But they'll literally go and they'll buy an entire neighborhood, and now they set the comps. Uh-huh. Right? And so if they go to sell properties and they're worried about them appraising or different things, they have now set the value because they bought all of them. Yep. And so they are, they have figured out the loopholes in the system that they are abusing. Perfect.

Mike DeHaan: [21:05] You know, and they are more than happy to continue doing that because they have billions and billions of dollars that they will put towards these properties.

Dan Austin: [21:12] Think about this too, how simple it is, and I remember when this was happening is like, say you buy, you're a hedge fund, you buy a 100 houses, you can get, say you're buying a new developer, you're doing like a build to rent, and the builders like breakeven cost is like $1.50 a square foot, and you go in there and you're like Mhmm. Hey, I know you wanna sell this at 200 a square foot, your breakeven's at $1.50, but I'm gonna them all from you, you don't even have to think, just build. Yeah. And I'm gonna pay $1.80. Mhmm. So you can buy it on margin. But then what you do is you say, okay, there's a few houses down the road, I'm gonna overpay for those houses.

Mike DeHaan: [21:42] Mhmm.

Dan Austin: [21:42] So those houses are selling at 200 square foot, I'm gonna pay $2.15 a square foot. You only have to do that a few houses, and you now just set the comp at $2.15. Mhmm. Go and set those values. Are willing to pay what the market bears, right? And now you just increased, you know, $15 per square foot on say a 100 houses because you went and overpaid for three or four. That's how it works.

Mike DeHaan: [22:04] And when people talk about like, well what was like Zillow Homebuyer, what was Opendoor doing, what are they still trying to do? It's basically this. You know, they are setting the comps for on current sales for future deals that they're putting together, they're planning to buy or they have these agreements to do it. And like with new builds, see it's very very common and you've seen different things on social media and stuff like that about that where you have these entire new developments that are bought up by hedge funds. But it's also just because they are manipulating the exit strategy on these deals. And people will go, well, they're all sitting vacant for six, eight months. They don't care because if they can sell them for a 30% gain after twenty four months, that's still a 15% yield for them on an annual basis. Which is huge actually. Plus tax benefits. Like for them, they're trying to go on the market at eight to 9%, they are happy to do

Dan Austin: [22:53] that. Yep.

Mike DeHaan: [22:54] But to the point too, I've seen this article getting shared on social media a few times and people are are taking the article out of context. But the article says that, it's a report that 44% of all single family home purchases were from private investors in 2023. It's like a medium article, which means that it's bullshit. It's like blog, and it's taking fully out of context because if you click on like the links that they refer, it's talking about 43% of investment properties that were purchased. Yeah. Which is not the entire real estate market, okay? But they just picked off the part that they knew would be inflammatory and get people to click on it.

Dan Austin: [23:29] I hate this shit.

Mike DeHaan: [23:30] But either way, the fact that 43% of investment properties were purchased by financial institutions like large hedge funds is pretty wild. Yep. If you think about it. Because they have essentially come in and it will be a handful of parties, I don't know, couple dozen maybe, that are buying 50 of the deals nationwide in residential real estate.

Dan Austin: [23:51] So you're saying basically of that, of investment properties, is this single family or just all investment properties or is this per unit?

Mike DeHaan: [23:58] Single family home investments.

Dan Austin: [24:01] So basically half of them were bought by institutional money?

Mike DeHaan: [24:04] By, yeah, by basically private equity firms.

Dan Austin: [24:07] Okay. Private equity. And then the other half is various investors and

Mike DeHaan: [24:11] Is gonna be like us, LCs, smaller investment companies Yeah. Mom and pops, things like that.

Dan Austin: [24:19] Yeah. We've been seeing that, like investment banks even going in and dropping a billion here in turnkey, and like, I remember talking about this on an episode maybe last year, Elon Musk was dropping like 1,000,000,000 in Austin single family development for his employees.

Mike DeHaan: [24:34] Isn't that crazy?

Dan Austin: [24:34] But there's a reason why he's doing it, right? There's a ton of investment strategy there. He's taking investor money and basically investing in real estate, right?

Mike DeHaan: [24:42] Mhmm.

Dan Austin: [24:43] And so there's a lot of that and that that's kinda funny how like times have changed too, like I think Elon Musk is in that situation and some of these people that are doing it. You know, back in the day people would you know, stand up a factory and there would be no town, so then the factory would do, build the city around it and you'd call it like, you know, a company town, the grocery store, everything, you could buy everything on credit, they would just take it out of your paycheck, Right?

Mike DeHaan: [25:06] Mhmm.

Dan Austin: [25:07] And so, kind of going back full circle where these big people that have the money, which were the old, back in the day, the factory builders, people who were operating the factory, is the same shit. Mean, Elon Musk runs a factory. Banks Okay. I mean, hedge funds, I mean, basically that's what we're talking about. They're just, they're investing in something that a lot of people think is a, you know, God given right or whatever you wanna call it, which is housing and shelter, and they're taking ownership over it.

Mike DeHaan: [25:32] Mhmm. Yeah. Rentronation, right? People are saying the American dream and all those sort of things is sort of defined by home ownership. Is, know, lot people don't realize is a kind of unique thing to the Very unique. If you go a lot of places, people don't own their homes.

Dan Austin: [25:47] Right. I mean, I have the time, like I remember Grant Cardone saying that several years ago, he's like, don't own my own home, and you know he's all flashy and being himself, but like, in reality, he's not wrong. Because like homeownership, although has been great to Americans, and myself included, there's a lot of like bad things that come with homeownership. As we're fighting out, insurance, if you're in certain areas, maintenance.

Mike DeHaan: [26:09] You gotta take everything he says with a grain of salt though, should be like, yeah, don't own my own home. Grant Enterprises owns it.

Dan Austin: [26:14] Right, of course. But but his, yeah, no shit, right? But his point was that he doesn't see his, and you shouldn't do this, your primary residence shouldn't be considered an asset. However, most Americans, it is an asset because if you, what happens, this is my theory, is say you're a baby boomer, you bought your house, you know the joke goes around, you bought your house for like 3 pennies and now you're selling it for $2,000,000 and you're like, oh, I worked hard. Right? But reality is, is you stay in that house until you can no longer physically stay there because of age, and then you

Mike DeHaan: [26:43] take that

Dan Austin: [26:44] lump sum of money and pay for long term care. That's like my theory in my head, like if you did it, and you had no other savings, and your house is worth, you know, 500,000 more than you could sell for $500,000 profit, you could do that and now you have some care for a few years. That's like the benefit, but outside of that you can't really use it as an investment. In fact Sure. To be an accredited investor you can't even count your primary residence in

Mike DeHaan: [27:05] that number. Well I mean one of the reasons our stuff structures that way though is because mortgage backed securities is such a huge part of The US Economy. Oh, yeah? Economy. Yeah. You know, that's I mean, also that's very different from other places.

Dan Austin: [27:18] Very much so.

Mike DeHaan: [27:19] I don't don't think most people realize that is set up intentionally so that people are basically investing in themselves and the government is profiting off of you because you are paying interest to them through your mortgage. Like the whole thing with that is an alternative to to strictly social security where they're like, oh, if you if we carry your debt and you're buying real estate from us and you're paying us interest, you will have that nest egg when you retire and we will have to give you us benefits when you're

Dan Austin: [27:45] That's a great perspective.

Mike DeHaan: [27:47] It's all with intention. People don't understand that. They think it's like a gift or like a right. All done in a way that's meant to reduce the like end of life workload as much as they can when people get older and the government is expected to care for you at that.

Dan Austin: [28:04] Yep. I like that perspective. Haven't actually heard it looked at that way.

Mike DeHaan: [28:07] Yeah. That's actually a big thing if you watch The Big Short. They talk about that at the very beginning when they're going through I don't remember that. That's fine.

Dan Austin: [28:15] I'll to rewatch that part.

Mike DeHaan: [28:16] You should watch it. It's right at the beginning of the movie where they're basically going through how the mortgage backed security industry came to be and like why the government was so interested in it. They kinda touched on it a little bit, but

Dan Austin: [28:27] I think there's probably a lot to GDP growth as well because of the way that they're able to allow banks to loan out money and that's how they incentivize and spark the economy, right? Is through lending, and like financing. And then, of course, we're a big building nation, so like, construction is economy, a big part of our GDP because you consume goods and you put people to work and so, and we have nothing but land to build houses on in America.

Mike DeHaan: [28:53] Mhmm. That's definitely true. There's more land here than pretty much anywhere else that people

Dan Austin: [28:59] Mhmm. Kinda

Mike DeHaan: [29:00] do stuff on. So, yeah, either way, point of all this being though, it's never been more important I think to make sure you're staying up to the times with your real estate business. Like just because you had something that has worked in the past does not mean it will continue to work in the future. You need to make sure that you are monitoring your performance, you're monitoring your marketing, you're pivoting, you're making things better. I mean like even with our stuff, we have our sort of direct mail sequence and our outbound marketing that we've done for a while. We have to look at it every single month and make sure this stuff is still performing. Right? And then, well, I guess what we have come to find has been that our marketing has stayed relatively consistent over the past couple years through the lead generation. But now what we are needing to be more competitive, and this is a huge thing that we focus on with a lot of people at scale, which I'm going to find is really funny because so many people fix it on the marketing because it feels passive and it feels easy, and they think that's the secret. But really learning the sales side of it, and learning to actually have a sales and follow-up process, and be able to you know stay on top of your leads is where you make real money right now.

Mike DeHaan: [30:04] Totally. And the people that have neglected that, and are focused purely on the marketing side aren't doing anything.

Dan Austin: [30:09] No, they're not able to.

Mike DeHaan: [30:10] They're not able to, right? Like because they are competing with the people that are getting the exact same leads that we're all marketing to, but have a much stronger sales process, and a much stronger follow-up.

Dan Austin: [30:20] You know what, if you want to come and look at my 20 marketing channels for 997, I'll be happy to show them to you.

Mike DeHaan: [30:27] For $9.97? Don't know

Dan Austin: [30:28] if you've

Mike DeHaan: [30:29] ever We seen that

Dan Austin: [30:31] have 20 marketing channels, there's some people out there that are kind of big brand names in the industry talking about how many marketing channels that they have, it's like, no, who gives a shit? Like just learn how to convert people.

Mike DeHaan: [30:41] How many of them do you think are, that they try to sell you?

Dan Austin: [30:45] None. Maybe two.

Mike DeHaan: [30:46] That are actually different? Dare say that I can say that there's like three. They're gonna say they have letters, they have postcards, they have envelopes on it. It's gonna be like three kinds of direct mail that they count as three different ones, because they're gonna go, well, that's what we track. Right? They're gonna have cold callers, then we're gonna have overseas cold callers, then we're gonna have this cold calling company that we use, and those are all different. Mean, those same fundamental fucking thing.

Dan Austin: [31:08] Right.

Mike DeHaan: [31:09] It's not 20 different kinds of marketing. It make any sense?

Dan Austin: [31:11] Facebook ads, Instagram ads, TikTok ads, Google ads.

Mike DeHaan: [31:14] Right. Yeah. Yeah. But I think you're

Dan Austin: [31:16] right though. I think the conversion is what matters. And this is a good a good example of this would be like, you could go and build like outside of real estate, say you're gonna sell widgets, you could go and pay a consultant to build a badass lead funnel for you and get people to click and come and look at, I mean, cool branding, great marketing, say you're selling widget, whatever it is, I don't know, little leprechaun dolls for Saint Patrick's Day, you can easily do that. But if you can't convert sales, there's no conversion, because you suck at sales or your sales process doesn't work, it doesn't matter how much you spend on ads and advertising because you're not going to make nearly as much profit as you could if you had that skill of converting people.

Mike DeHaan: [31:52] Yeah. I mean, it doesn't need to be your own skill either, right? It's learning to like build a structured follow-up process, learning to leverage overseas talent

Dan Austin: [32:00] Mhmm.

Mike DeHaan: [32:00] Which is amazing to me that it's still such a reoccurring question where people get their mind blown about how to do that.

Dan Austin: [32:05] Right. There's so many skilled people to out in the world that you can have that are not that hard to manage and They're not. And get into your system. And then you have hammered out SOPs to say, do these things.

Mike DeHaan: [32:17] Yeah. And then they will do them very well

Dan Austin: [32:19] and then you can adapt and adjust them as needed as you see fit in your business. But like, it works for us.

Mike DeHaan: [32:25] Mhmm. I mean, works for anybody that has a legitimate business right now that's doing a high volume of deals just because they're good at sales. It's not because they're good at marketing. You know, but that that is this sort of generations form of competitive advantage. We go forward six months, it will probably be different. And I say here's what I would if say you go back to like 2019, 2020, early two thousand twenty one, it was all about marketing. How could you get in front of the most people, right, that would be willing to sell you their home at a discount, especially when the market was super hot. When the market slowed down, it was all about your buyers list. Right, 2022 was how connected were you to be able to take your razor thin deals and sell them to somebody because And you had a this is why you've seen a lot of people that have really grown over the last like year or two that have like a really strong disposition process. They had a really big buyers list. They were really good at making connections. Now, you're being able to start to sell deals with whoever again. So it's like, who can compete with the people that have learned from the marketing situation in in nineteen, twenty, twenty one, who now have taken advantage of the disposition strategies by having their own list, having social media, investing in investor lift, is an incredibly expensive platform, learning how to do all that correctly. Now it's who can actually convert both sides with a strong sales process. And what the next iteration's going to be later in this year, next year, who knows?

Mike DeHaan: [33:47] It'll honestly, my opinion, is it'll be who has the most money. Right? To reinvest and do like the most sophisticated things. The people that are banking money, that are building funds, that are getting outside investment are going to wipe everyone else out of the water because they will have a couple million bucks a year that they can invest into actually building these things correctly.

Dan Austin: [34:06] Agreed. I mean, you're absolutely right and like, and we've seen that too, there's there's been like, you mentioned this evolution of sophistication in the business too, and so the people that are taking that approach and are taking the quick cash grab approach are like, let me hustle this newbie buyer for an extra $10 on this fee, it sinks their ship, like just so I can make some more money now, it's not gonna work, it's not. Yeah, it's gonna need to

Mike DeHaan: [34:26] go away very very very quickly, or it'll be like for people that wanna squeak out a couple deals here and there and kind of live in that hustle and near death sort of life cycle all the time. Yeah. And that's that's gonna be what it'll look like for them.

Dan Austin: [34:40] Sure.

Mike DeHaan: [34:41] Cool. Anything else for you to wrap up?

Dan Austin: [34:42] No, man. I'm good.

Mike DeHaan: [34:44] Alright, everybody. Well, we appreciate you all listening. You should go and subscribe to the show, and share with anybody else who might be interested in real estate or the general market. So we do a little bit of a deep dive on this one. But we appreciate you all, and we'll talk you guys next week.

Dan Austin: [34:59] See you.