The Truth About Cash Flow, Buying Turnkey Properties at Discounts

Mike DeHaan: [0:00] Talking to one of our guys who's doing our accelerator program right now, he got his first deal from the leads that we have been generating for him in the accelerator program. Hell yeah. And he said that he walked in and he's like, you know, ma'am, you have a beautiful house. Why don't you just listen? You could definitely get more. She goes, I know, but I I just don't even wanna do that. I just want this to be done and over with.

Dan Austin: [0:18] And

Mike DeHaan: [0:19] that is a very common conversation. Whereas I feel like when we started this business back in, you know, 2020, 2021, we would kind of, like, hear about that, but we never saw it.

Dan Austin: [0:28] Yeah. We never experienced that.

Mike DeHaan: [0:36] What's going on, guys? Welcome to today's episode, the collecting keys real estate investing podcast. If this is your first time here, I am Mike DeHaan, and I'm here with my cohost, Dan Austin. And this is the real estate show we teach you to make massive income, not just passive income through real estate investing. And I'll be honest, if we're looking at how interest rates are and just how risk is general, I'm starting to think that passive income is complete bullshit for a rental property investor.

Dan Austin: [1:03] It has completely disappeared for most people right now. If you're trying to be a real estate and actually hold things, it's tough. Not that you can't, because you can, we're working on one right now, but it's challenging.

Mike DeHaan: [1:15] It's just not the same as it was in the past, right? And I saw this post by Brandon Turner from X Bigger Pockets Host on Instagram and it was like the ways to actually make cash flow from rental properties in 2024.

Dan Austin: [1:29] Oh, he must be copying my Instagram dirtbag.

Mike DeHaan: [1:32] He was actually. He actually quoted you on it. But it said, know, short term rentals, like senior living, assisted living, mobile home parks

Dan Austin: [1:41] I like that.

Mike DeHaan: [1:42] And something, one of the other ones on there. But the things that I thought were interesting about it were, one, all the things that he described aren't necessarily like the traditional real estate investment. Those are different businesses that you have to start that have whole other systems involved Yeah. Outside of just like a hard asset besides like a rental property, which you can kinda plug and play. And number two, he was quite brilliant because at the very end he goes, and if you wanna know how you can just invest with me and make passive income through mobile home parks, then DM me. He's trying to raise money for his fund. I'm like DM me. That guy has a good social media team right there.

Dan Austin: [2:15] Well, yes. He does. Right? The interesting thing about that is is that's actually shit to pay attention to too, because all last year and the year before, he was raising capital for like a class bad house, huge Mhmm. Apartment buildings. Right? Like, big old nice things, and now he's talking about storage, which is interesting to me, and mobile home parks, which makes sense, because they already have expertise in that. So if I'm sitting back there at like Opendoor, you know that's what it's called, Opendoor Capital, right? Yeah. I'm gonna say, what's our core business? We gotta get back into it, we're losing money. Our core business, we started out in mobile home park investing, we have that as a core pillar, we've been buying mobile home parks this whole time, let's focus on that, and wait out the multi family issue. Mhmm. So, anyhow, that's just an interesting thing that's beyond him just raising money I think and just beyond a social media post if you actually read between the lines.

Mike DeHaan: [3:03] Yeah. And I mean also too, it's just like when you look at things like that, I think it's okay to come to the realization that if your goal is to get passive cash flow, which it is for everybody, now is honestly just not the time to be doing that. And it sucks, you're gonna have to stick with your W two a little bit longer. If your only sort of methodology with how you wanna pursue that is by buying properties and getting a mortgage and putting in a property manager and making it passive, that was always gonna take long originally. Now it's gonna take extra long. And really if you want financial freedom now versus waiting out for the interest rates and everything to change, you are going to have to make a lot of money, which honestly, would argue it's easier anyway. That's why we have our whole

Dan Austin: [3:46] Yeah.

Mike DeHaan: [3:46] Thing with this show that do massive income before passive income because from our experience, it is like legitimately easier to make millions of dollars than it is to replace like a decent paying w two with passive cash flow from assets.

Dan Austin: [4:00] Uh-huh. Like real passive cash flow.

Mike DeHaan: [4:02] And that's from that's coming from back when we were doing stuff at two and a half, 3% interest rates. Now at nine, it's even fricking harder.

Dan Austin: [4:08] It's super challenging, right? And like, I think that there is like this arc that I've kind of observed, because you and I are in masterminds with other folks too, that have done very very well in real estate, and that's their tool and mechanism for how they've built a lot of wealth. And a lot of them started like, pre 2008, or like in the two thousand teens, like early teens, and they spent ten years just cutting their teeth, and building building building, and now they're sitting back worth $5.10, 15,000,000 easy, if not more, and they're like, yeah, this is exactly how you can make wealth, but right now, like that tool's not happening, and those are the same people that are sitting back and not necessarily buying, or they're buying from a different position, and I always get worried in making sure that I convey this proper to people, and we're coaching them, and then they because people like to say, well, what would you do? Well, if I'm ahead of you one, two, or three steps, it's probably not the same as what you're doing, or you're just starting out, or you're at phase one or two of your investing career, because I have a different financial setup, and I have a different risk profile than you do.

Dan Austin: [5:11] So, for us, like you and I talk, we'll we'll take take risk, like monthly risk, as far as a negative or slightly breakeven cash flowing property, to buy a $100,000 in equity, that we can absorb into our portfolio, and we know in three or four years that a $100,000 is going to be a 125,000, and we're going to be able to cash that money out. Where a lot A new investor, I would not recommend doing that.

Mike DeHaan: [5:34] Mhmm.

Dan Austin: [5:34] So that deal would not be something I would advise you to buy, but for me, yeah, it works.

Mike DeHaan: [5:39] Yeah. Absolutely right. And like that's because of the investment side, and then when it comes on the money making side, I mean, we know people that are in like that $5.10, $15,000,000 range who have a ton of wealth potential, right? Their cash flow varies like an investor, but they don't have any money. Right. So they're rich on paper, but they can't do anything. Yep. Right? Because they never built the skill set. They were able to buy a bunch of, you know, cabins in the Smokies or whatever, but they never developed that vertical income arm. And so now we're talking about like these sort of risks and things that we'd like to make. They don't even have the opportunity to do that anymore.

Dan Austin: [6:13] Yeah, they don't even have the skill set to create Yeah, that that's where like we talk about and we focus, you and I, as like a lot of our personal development is on business, business systems, business processes, how to scale a business, because we took real estate and we've treated it as a business and scaled it. We're not perfect by any means, but we're doing it the best to our abilities, and now, like, the confidence to take that and plop it over to a roofing company, or plop it over to, I don't know, pick a company, we can certainly do that. And that's the skill and that's the capital asset you have.

Mike DeHaan: [6:43] And I also think that that's the reason so many people, they kinda get into the real estate space, you know, wholesaling, flipping, whatever it is, start to take it seriously and start to do well. Uh-huh. They start to shift towards other parts of business that are like real estate adjacent, but not necessarily real estate. Like we know a lot of flippers right now who have gone and started like general construction companies or roofing companies, or you know, people that were like wholesalers or marketing based companies like ours, know, just like we started like our mastermind. You know, we started the marketing arm of our business. Right? We have like our accelerator program that we're building out. It's because that is like such an easy way to take the skill set that you've developed and scale revenue in a way that is not directly related to what the housing market is doing in your investment zone.

Dan Austin: [7:28] Mhmm.

Mike DeHaan: [7:29] You know? And so many people, there's kinda like the age old thing of like someone who starts like a mastermind, they're doing it because they're not good enough to do it themselves, which is you know, sometimes true, no doubt. Sure.

Dan Austin: [7:40] Those who can't do, or those who can't do those who can't teach. Yeah. I've been guilty of saying that.

Mike DeHaan: [7:45] Totally. Right? And I mean, I thought that until I started meeting people who had legitimate operations and coaching programs. You do it because honestly, the time commitment is relatively low. Right? It's very easy to apply the same skills that you've learned to build another business that can do very well. Yeah. And it's super gratifying to get people to the same level this year. Right? Or like seeing people kinda go through the same steps. Know, it's kinda like the same way that people get a lot of satisfaction walking watching their kids. You see them like go through experiences that you remember sort of like struggling through and seeing them grow. Yep. Except it's with like a 35 year old man that wants to spend more time with his kids. Right?

Dan Austin: [8:21] Exactly. Right. This is a really good topic because I just finished listening to Arnold Schwarzenegger's book, Be Useful, and he has a line in, like, towards the end, which kinda ties together to the title, and it speaks to why people do this. And he has this, I'm gonna paraphrase this quote, because I gotta shorten it down, but it's you can call me anything except for a self made man, and he kinda goes into this monologue about like how each step of the way, he had to do the reps in the gym. Mhmm. He had to do the practicing of his acting and his accent and all that, So nobody did the work for him, but he certainly didn't do it on his own. And then he kinda goes into that because of that, you have the obligation to send the ladder back down and to lift the next group up and to be useful. I just thought that was super powerful and it speaks to like why you would do Right? People are like, oh, you must be doing it for selfish reasons. And yes, there's a ton of people that do it for like financially selfish reasons.

Mike DeHaan: [9:17] Yeah.

Dan Austin: [9:18] Selfishly, it's to give back and that you have that obligation and you feel that way when you're only one step ahead of somebody even, like it's a perfect time to give back and recognize that that's how you become bigger and better is by helping other people. Yeah.

Mike DeHaan: [9:32] I love that. I've heard different narrations of that too. I think, wanna say it's maybe David Osborne from GoBundance where his thing is, you're selfish to not share all you've learned with those that are behind you. Yeah. Which I mean is totally valid. Because that's like kind of their whole reason, one of their main reasons they started GoBundance was they wanted to be able to share what they've learned about business and, you know, leading an epic life with the other people that are in that community.

Dan Austin: [9:53] Think about that. So that is so valuable. Think about it like David Osborne is worth over 200,000,000 now.

Mike DeHaan: [9:59] Mhmm.

Dan Austin: [10:00] Obviously a wealthy dude. He does not necessarily need to provide time or value to the folks of GoBundance, but he does. And we pay quite a bit of money. Like, you do the math on GoBundance as an organization, like, it makes a fair amount of money. Not anything crazy, but a fair amount. There's costs associated with that running it, but that is not hitting his bottom line. He does not give a crap about that. He makes more less money contributing time to GoBundance than he would his So, own it's fascinating that a person like that would say the same thing in his position, and still be prepared to give back and teach people.

Mike DeHaan: [10:33] Yeah. Man, there's a lot of different iterations of that. Anyways Off of

Dan Austin: [10:37] that topic. Yeah. Let's talk about what's going on in our business and the market and stuff, man.

Mike DeHaan: [10:40] I mean, the market's been so interesting right now, man. So we had a crazy week to end last week. We ended up getting nine signed around last week and seven of them were between 05:30PM on Thursday and 1PM on Friday.

Dan Austin: [10:55] I know, I couldn't keep up. I was like, is my Slack, is it glitching out? I thought I already said congrats on Yeah. That just going off.

Mike DeHaan: [11:03] It was crazy. Like that's one thing with that is that's kind of how this business works. Regardless of how big you try to go, this business is always one of ebbs and flows. It's just the differences that you have scale, instead of the ebbs and flows being like, oh, you got zero to you got like two in a week. It goes from you got two in a week to you got 10 in a week. And you know, somewhere in between. And it makes, you know, cash flow is always a challenge with this business because of that. But there's something with like, I don't know, being a people facing business, say it's the moon cycles, the universe, people are all kind of on the same calendar, the same sort of like mental clock. People tend to make decisions at the same time, whether that's sellers or that's buyers, whatever that looks like. And so, know, we always get into these phases where all of a sudden we're super crazy busy. But one of the things that's so interesting, though, is we've had this major increase in properties that I would say are like near turnkey, or they're like very high quality properties where the seller knows they could sell them for more. They know it probably needs like a tiny bit of work, or it's like not as desirable as the other house in the neighborhood, but it's still fine. And they are willing to take a pretty massively reduced offer just to be done with the property. And sometimes these properties have even been listed for, like, six months and had no bites, and we'll get them for, you know, 25% less than they were listed for. And that's become such a reoccurring pattern.

Mike DeHaan: [12:30] Right? And like Yeah. Even talking to one of our guys who's doing our accelerator program right now, he got his first deal

Dan Austin: [12:36] Hell yeah. From, you know, the

Mike DeHaan: [12:37] the leads that we've been generating for him in the accelerator program. And he said that he walked in, he's like, you know, ma'am, you have a beautiful house. Like, why don't you just listen? You could definitely get more. And she goes, I know, but I I just don't even wanna do that. I just want this to be done and over with.

Dan Austin: [12:50] And that

Mike DeHaan: [12:51] is a very common conversation. Whereas I feel like when we started this business back in, you know, 2020, 2021, we would kind of like hear about that, but we never saw it.

Dan Austin: [13:01] Yeah. We never experienced that.

Mike DeHaan: [13:03] Right? Yeah. Like at all. We were always just dealing with crackheads. And that was that's why if you go back two years in the show, all we do is talk about crackheads because that's what we're dealing with all the time. Right?

Dan Austin: [13:12] Yeah. We haven't even talked about crackheads in a

Mike DeHaan: [13:13] little bit. Like, honestly, for quite a while. And I think it's because most of them, they are in a place where they've lost their homes at this point, or if they did so, they don't have anywhere to So now we are truly turning into what I would call like a services based business, where instead of it being a situation where it's like someone is completely screwed and like they don't have a choice, they are 100% opting to you know, walk away from significant equity in order to use us, use our service of you know, be giving them a guaranteed sale on their house.

Dan Austin: [13:44] Well, and if you think about it, it's all context, but if you think about like a situation, so say somebody gets to the point to where they need to sell their home, or they want to sell their home, and that they've made that choice now in 2023, and they've watched their neighbor and their friends and their family go through this battle of selling their house on the market, and people walking through, and people telling them their house sucks, price dropping in, and taking six months for them, because their realtor overpriced it, and there's all this stuff that really can affect the emotional standpoint of a person trying to sell their home. Like, there's nothing worse than somebody walking through your house, like 50 different people actually, and telling you your house sucks, they're not gonna make an offer, even after you drop the price, all this stuff. And so, if you're a person, like I said, who has to sell it, or has the need to sell for whatever family reason, or you just wanna move, you're like, I don't wanna deal with that crap. I don't want people walking through my house, telling me it sucks. I kinda know it sucks a little bit. I'm honest about my situation, and they're like, I don't wanna go go through what my sister went through. I I don't wanna go through what, you know, my friend Sally did, let's just sell it and let's move on and make it quick and I can get from point A to point B much quicker with this

Mike DeHaan: [14:49] Totally right. And you know, if you can get decent properties, like even if you have to lock in more expensive debt, I mean, and they're in A Class areas in parts of the country where people actually wanna live, you might as well buy it. You know, because that's also why it's so important to be buying properties at a discount. If you're buying an A Class property in a nice part of the country for 70¢ in the dollar, you and you have to get some expensive debt, whatever, but then the market takes a 25% dump, you're still at least on top. You're good. Right?

Dan Austin: [15:19] You're still okay.

Mike DeHaan: [15:20] You're doing pretty good.

Dan Austin: [15:21] And that's a good point because like, you know, we started off the showtime about how hard it is to buy for and it is hard to buy for cash flow, but it's not necessarily difficult to buy for equity Uh-huh. If you can negotiate the right prices. And if you can sustain a two year period, like dealing with kind of like this property that's just this thing, and it's not like making you a ton of money, I think that's where the people are gonna shine and those are gonna be the winners when we look back on this couple year period and be like, damn it, just like we talk about people that were buying houses by the droves in 2010, they're doing alright right now. But, back then, it was not quite apparent what the exit was going to be. Yeah. It was different. It was hard. Totally.

Mike DeHaan: [16:00] And I think that's something that's so under spoken is, you know, people are talking about the uncertainty in the market right now, they shouldn't be buying. We've had, I don't know, probably about a dozen investors on this show at this point who were buying even before and during the downturn, that continued buying through 'six, 'seven, And they all say the exact things like, yeah, we had no idea what was gonna happen. We just knew that if we bought stuff at prices that made sense for us or were at discounted rates, then we would be fine. I mean, even Aaron Amuch Steggi, when he came on, he was flipping during the downturn. Yeah. So he had his exit prices, and they also just had the timeline about what they expected the market to be dropping every month, and they were basically just trying to race it and get out before

Dan Austin: [16:39] Yep.

Mike DeHaan: [16:39] The low price got to wherever they were at. Totally. And that's why that dude's worth like, you know, $50,000,000 now and owns hundreds of hundreds of properties because he was willing to, you know, put his nuts on the line, and stuff was really weird.

Dan Austin: [16:52] Yeah. Yeah. And if you think about it, if you actually, whatever you wanna do in life that is in your head that seems like challenging, if you actually put it on paper and write down the steps you'd have to take to do that, like how do you flip during a market? And you don't know what's gonna happen next week or next month, but how do you do it? You're like, well, I know that hot properties in my market are sitting on the MLS for sixty two days. They have an average price drop of this percentage. If I'm going to buy a house now, I need to price it to sell it super fast, which means if I assume it goes down two or 3% a month for three months while I'm flipping this house, my actual ARV is less than that. Uh-huh. So negotiate those prices on the properties you can, and then you can continue to flip during a downturn. It's like this, instead of this. Like, everybody wants to flip during an uphill market because you buy it and it's worth more when you Like, sell that's awesome. Right? But on the downhill, you gotta buy it and it's worth less than you thought it would be, so you just have to price that into your numbers.

Mike DeHaan: [17:47] Yeah. And I think the number one thing too is, just because it's business, and it's macroeconomics, you can never be 100% certain, so you gotta kinda like pull the trigger.

Dan Austin: [17:56] Absolutely not. Yeah, you have to, that's why it's investing, that's why there's big winners, there's big losers, right? You don't ever hear a guy that goes to casino and only spends $20 and loses, and it's like, god damn it. It's like, the dude that won $10 though, he's put some money on the line.

Mike DeHaan: [18:09] Yeah, right, exactly. Not that

Dan Austin: [18:11] I advocate for gambling, it is fun though.

Mike DeHaan: [18:13] Yeah. You know, you and me, if if we live somewhere where gambling will be successful, we'd probably get in trouble on a regular basis.

Dan Austin: [18:18] Like in Vegas, we're like, you go to the gas station, like, I'll throw $5 in.

Mike DeHaan: [18:22] Yeah. I'm not dangerous, man. You're not I like to have a good time. Need We to find a way to do like a good like Christmas party for our team again like we did. We only ever did that one years ago. Remember we brought James and Judd to the casino and we gave them their $5,000 bonuses in cash.

Dan Austin: [18:37] Bought them a steak dinner and then yeah.

Mike DeHaan: [18:39] Yeah. Then they proceeded to each spend like $25 playing blackjack and that was it because they were too afraid.

Dan Austin: [18:46] Until like, you remember when I go to I go to James into like making the bet because I was he's like bro, like he was like down or something like that. I was like put it all out there dude. Was like put it he's like no dude, can't. And in hindsight, that's like a total dick move on my part. But I ended up I was like, I will pay you. I will pay you whatever you lose if you lose again. And he actually won. And I can't remember how much he won. It was like a couple 100.

Mike DeHaan: [19:06] It was a couple $100. Yeah. Just like just like hazing your freaking employees.

Dan Austin: [19:11] Totally. In hindsight, it was yeah, kinda not a good thing.

Mike DeHaan: [19:13] That was years ago. That was back when we were like super small business, know, you're just just making you do dumb stuff, know, but Yeah.

Dan Austin: [19:19] You have fun. You buy people steak dinner, give them some cash and let them you know, get debaucherous.

Mike DeHaan: [19:23] Yeah. That's funny. But yeah, so you know, has been been interesting though, just sort of like see that pan out. And then finally, seems like the phone issues are behind us with all the the 10 DLC requirements. So if you guys do any sort of, you know, online calling or use texting services, you've probably seen a wide range of issues with those services over the past couple of months. If you haven't seen issues or like, I haven't heard about that, then you should probably go check with your service provider because I guarantee that they're having issues, they're just not telling you about them. Right. But it was massively affecting our response rates within our CRM. It was massively affecting our SMS market that we run. But it all appears to be turning up. I also think that's the reason that we got a bunch of deals signed around last week because I personally think that the CRM that we use, they did not fully disclose when they were having all these issues months ago. Of course not. Because we started to see this huge decrease in responses, and we were like, because because of the summer, like, people aren't doing stuff, whatever. But then it became like an official issue that they talked about, and it got even worse. And now all of a sudden, it's like 20 times better.

Mike DeHaan: [20:31] So I'm pretty sure that which I mean, Mitch, if you look at a business, business perspective from their end, it makes sense. So they came and they're like, hey, we're gonna have cell phone, you know, we're gonna have texting and calling issues for the next two months, they would have lost their entire usership. Right?

Dan Austin: [20:45] Oh, right. But everybody You have to. Major business, you have to bail. If if somebody is like, you're gonna miss out on most of your calls, see you. Mhmm.

Mike DeHaan: [20:51] Yeah. And and it sucked and it pissed me off they did that, but I fully understand why. But all in all across the board, we've seen a huge increase in talk time and in response rates from all of our sellers. So that's probably been a benefit we've seen too. But outside that man, I mean, I think the challenge right now is just the market as a whole for looking at buyers. Like there's definitely a lot of buyers out there, but like a lot of our partners and like our key buyers, they're just kind of being a little bit hesitant because they're sitting on the market like a long time.

Dan Austin: [21:20] Yeah. Well, a lot of stuff that they bought earlier this year or, you know, during the summer that's still sitting there. And so everybody's kinda sitting there like, I know I need to buy if I'm gonna keep this machine going, but I just don't feel comfortable and I have three, four, five, some guys 10 properties sitting on the market. Yeah. And so they, you know, they wanna take a step back, and they wanna kinda reassess what they're doing, and it's one of those, that is the cash flow issue, right? It's like, not that these people can't buy another property, it's like, hey, I know what cash flow could look like if I have to wait another ninety days, or if I have to price drop, and I take a loss on this one, and I take a smaller win than I thought on that one, that's where it becomes a tough situation, so you don't wanna overload your plate, and that's just kind of what we're seeing. I feel like people are getting to their limits. There's still people buying though. There's still people wholesaling and flipping, but it's just like you gotta take extra time to find What

Mike DeHaan: [22:05] do you think the answer is to that? Because you look back 2021, we would sell things to like the major flippers because they had large operations, were buying everything. But then the mom and pops were a great option. Know, people that flip like one house a year or one house in their life because they would overpay for everything. And they were happy to make $10,000 on a flip whereas a course, professional group would never do that. Then we went to 2022 and all the mom and pops completely disappeared. And it was only like the top flippers. And we've kind of been in that zone since you know, middle twenty twenty two. And now as we get, you know, kind of the end of twenty twenty three here, we now have the professional flippers that are kind of, I don't want, they're just like slowing down a little bit. The mom and pops have like kind of come back a tiny bit, but not a lot. So who's gonna be like the the new buyers? Do you think it's just like you kind of need to nurture the the top buyers in every market and just sort of like be available like when they're ready? Or do you think like is it time to go back to institutional money? You know, there's a lot of people that are selling to hedge funds. We never really had the benefit of that because they didn't operate in our market up here.

Mike DeHaan: [23:14] I'm trying

Dan Austin: [23:14] to figure out what like the best strategy is going forward. It seems like kind of what we're seeing, and I've been hearing this word a lot, which is wholetailing. Mhmm. So basically wholesalers become the flippers, if they're not already flippers, or you become your own buyer and you start flipping. That's one option. But I do think that that wholesale, when we talk about seeing these people that have like, pretty much so retail ready properties, that are willing to sell at a discount and move flexibly or quickly, one of the two, I do think that that's an option for guys that where it's like, yeah, you can maybe find a buyer for a small fee, or you just, yeah, the buyers in your market just aren't buying something like that, that product. Mhmm. It's time to just turn that around and wholesale it because there's still an inventory issue on the market, and prices somehow are up six percent year to date according to CoreLogic. I don't know how it doesn't feel that way. I do think some other markets are probably booing it, and it really talks to like how hyper local real estate can be. But I think that's one option. I mean, I don't really I mean, what would you do?

Mike DeHaan: [24:12] Yeah. I don't know. I mean, I think the only one thing that I've seen a lot of recently, just like for income generation on like the deal finding side, because I'm seeing this huge, I mean the sub two thing, right, is such a huge I don't wanna say it's upcoming. It's very prevalent right now. And this what worries me about that is you get a ton of people that are negotiating these sub two deals with houses that have been like been on the market for a while, or they, you know, have like no equity, things like that, and agreeing to take over the mortgage and then finding like a newbie investor that wants to buy a quote unquote creative finance deal, which is the flavor of the month, and is willing to put $20,000 down and overpay for this property so that they can secure cheap debt, when they're not in a position to actually be securing cheap debt. I mean, I think that's something that a lot of people are doing that I don't necessarily agree with. I also think that's gonna lead to a lot of issues in general with both the investor pool and when the banks start calling all of those, which will happen. When it comes to kinda like traditional real estate, honestly, I think one of the best things that someone can do is outside of like the wholesaling part is work on trying to figure out how to raise money. Okay. And planning to hold stuff where you're not quite as subject to the bank loans.

Mike DeHaan: [25:24] Yeah. Yeah. And see if you can you know, buy properties like even if you're doing it something like you have a fund, know, you have like a bringing like a private investor, you secure something with like seller financing as opposed to, you know, you know, they say they owe like 50%, you bring like a private investor to buy out the 50% and then you have the seller carry additional if needed. You know, I I think that you just need to get creative and be able to recognize opportunity right now to be able to maximize stuff. When it's something that's traditional wholesale, or like just straight cash offer, I think wholesaling is probably the way to go. Or I also do think that right now you need to be nurturing your buyer relationships. And instead of like having the mentality be the like when I find a deal, one of my buyers will want it instead being like, I'm gonna bring the best possible deal to my buyers so that they choose my deal over the other deals that they have available to them. Right? And it's literally gonna be more like, they're gonna be selective of what they choose, so you wanna make it so that they'd select your deal instead of what the other wholesalers have or their other deal finders have. Right.

Dan Austin: [26:31] And build that trust and that relationship with that person. Yeah. I I guess I have some additional thoughts and like, are going through my head as you were talking, and I absolutely agree with like the recognizing opportunity, and I would add to that, what is your investment plan? Uh-huh. So most people, I lose sight of this sometimes myself, is like, don't have an investment plan. So when you see, you're just like trying to find an opportunity, hey, can I make something happen with this? Hey, can I make something happen with that? And in reality, it may be, but what is your strategy? So when you talk about, if you can go and raise capital to buy things, like you and I have gone back and forth on this, like we should just buy Right. And if we had done that, we'd have Yeah. Lots of properties, if we could have raised the capital at that time. And so, if your investment strategy is to build a good strong portfolio that you 100% believe in, in five years from now, go raise the capital, buy things that are going to go in that, knowing that you're probably not going to get a major return on money, you personally, right away, but that you strongly believe in your investment strategy of five years from now, you're gonna be able to make an exit, because rents do go up, prices do go up, and if you can secure these properties, today, even only at a 15% discount. So, if you're buying a good turn ish key house at a 15% discount, that's still 15%, right? And so then, if over a five year period it goes up, and now you have 25% equity in this thing, that's a good chunk of money if you can do that on scale. Okay.

Dan Austin: [27:50] And I do, like, I have a belief that the market itself is pretty strong, so like I know you're talking about like sub twos, and like some of these creative deals falling apart, I do think that will happen, but I don't think that there's enough loss to affect largely the actual like single family, small multi family, like the mom and pop, and the Us type people. Because I still know that hedge funds are still buying single family homes. I hear. Investment banks are still looking to invest in turnkey rentals. But I do think what could happen on a macro scale, you and I have talked about before, like this office space thing, which we've all been talking about for like a year, but it is like freaking weird. Yeah. Like crazy weird, because that affects a lot of people's retirement accounts and pension funds, and that can trickle down a little bit. We were talking about multi family, and all these people that bought, thinking, well, I'll just we're gonna get into 1% cap rates soon, it'll just keep compressing, it can't keep compressing, so they bought at a three cap, thinking that they'll sell in two years, three years, four years, at a two cap, or one cap, which just didn't happen, and they're actually expanding to four, five, and six caps, that multi family debt is going to come due as well, so there's gonna be distress on the commercial office side of things, there's gonna be distress with other people's retirements, and other people's cash savings that they invested with little Johnny, who said he was gonna be a real estate syndicator, is going to, that they're gonna lose it, and I think overall what that does is it kinda tightens the belt up of people, because they're seeing their retirement counts go down, they're seeing their life savings go away, they're seeing issues with these other assets that are not related to the single family market, which then will affect it by maybe a little bit more of a contraction there.

Dan Austin: [29:28] I just don't see it being like a bank loan issue for the single family, because people still are carrying a ton of equity in their property.

Mike DeHaan: [29:34] Yeah. For sure. Yeah. When it comes to the commercial stuff too, I was actually thinking about this, and I think it's any sort of alternative asset. I think in my opinion, I think residential real estate is the safest real estate because people will always need somewhere to live. Of course. I think any kind of residential, whether that's, you know, multi families, like single family homes, mobile home parks, types of units where people actually like reside there are gonna be the safest because we have such a major supply issue with that, right? When it comes to this commercial stuff, you know people are talking about buying these properties under the assumption that it will eventually come back. Okay? That people will eventually need to utilize that property again. But if you look at the way that society is going, that's not necessarily true. You know? And this is like kinda like an extreme example, but you look at a lot of like ancient civilizations. Right? They all have like some big ass fucking structure that they built that eventually they'd like stop using for some reason. Like seriously. Right? And there's no reason that skyscrapers aren't gonna be those things for us. Yeah. Right?

Mike DeHaan: [30:42] Or like they won't start with the skyscrapers. It'll start with like the strip malls. Right? And then there will be a time where like, yeah, that place was abandoned twenty years ago, and then all the strip malls are abandoned twenty years ago. Right? And no one used them again. I mean, case of point, look at all the shopping malls all across The United States that have been abandoned, and now they're like, what do we do with these? We turn them into like pickleball courts? You know, they're trying to figure out what to do. Right? That's the exact same thing can happen with all these commercial office style buildings. Mhmm. As he moved towards remote work, as he moved towards people just having less desire to work in general, right, or like less need for staff members as people start taking administrative staff overseas, start bringing in more automation. I mean, people think that these, you know, a $100,000,000 skyscraper that no one wants to use, is that worth a $100,000,000?

Dan Austin: [31:32] It's worth nothing

Mike DeHaan: [31:33] at that point. It's worth nothing, honestly.

Dan Austin: [31:35] It's worth whatever somebody's willing to pay for it, I guess, and it's probably not a 100,000,000.

Mike DeHaan: [31:39] Yeah. Right. Exactly. It's literally what someone's worth to pay for it, or like unless someone goes and does like a big modification so that it becomes something that is relevant to the times, it's not worth anything. So I think that that space in general, people need to be extremely cautious.

Dan Austin: [31:52] Well, the good thing is though is like none of our listeners are probably buying $100,000,000 skyscrapers.

Mike DeHaan: [31:57] Yeah. Right. But like, but there are probably listeners that are buying $500,000 commercial properties. Mhmm. Right? Think I think those are the ones that it starts with because society as a whole does not have a desire to protect that.

Dan Austin: [32:10] Right.

Mike DeHaan: [32:10] When people have like an iconic skyscraper in Austin, Texas that is getting foreclosed on and no one uses it anymore, people are like, oh, but like I remember seeing whatever tower, you know, and like there's like a desire for them to like maintain that because it's nostalgic. Mhmm. We're just talking about like the random commercial office building, the one that you probably went to that your dental's office was in as a kid or your pediatrician or had, I don't know, your mom's CPA was in there. Those are gonna go away. They're not gonna be used for much longer. Right? In my opinion. So I don't know. It's interesting just to kinda try to pontificate what that's all gonna look like.

Dan Austin: [32:49] Yeah. Who knows? But there's definitely it's gonna look I think we can all agree it's probably gonna look different. I just don't see how it can be the same going forward for much longer, you know, in the next ten, twenty years something's gonna look drastically different. I do think in the near term, as that all shakes out, it will still continue to affect the macro economy just because those are such, there's such a large amount of money invested in those commercial type assets, and large large multi family, from the everyday upper middle class Americans that have the ability to invest in those, through their pensions, and through their retirement accounts, and through their savings accounts, And so as those get affected, as those get devalued, of course, they're gonna have to tighten the belt somewhere else, because they're gonna say, I have less money than I thought I did.

Mike DeHaan: [33:28] Exactly right, and when it gets there, who knows what's gonna happen from that point. That's how history works, always kinda try to predict it, and then, you know, just be agile enough to deal with whatever comes your way.

Dan Austin: [33:40] But Yeah. Unfortunately, they might be calling us and we will help them move their property.

Mike DeHaan: [33:44] Exactly. And that's that's why you wanna be in our seat. Because at the end of it, as a real estate investor, unfortunately, you tend to win when a lot of other people lose. But it is what it is. Yep.

Dan Austin: [33:54] So Especially if you're buying distressed assets. Yep. Exactly.

Mike DeHaan: [33:57] So Mhmm. Cool. Anything else here before we we wrap up?

Dan Austin: [34:00] No. Good conversation. Right on.

Mike DeHaan: [34:03] Cool, guys. Well, thanks so much for joining us. If you enjoyed this show, you should please go and share with anyone else who might find it interesting. And you should also shoot us both a follow on Instagram. We have been adding a ton of stuff on there recently, trying to bring you guys as much value as we can. I am at Mike underscore Invests, and Dan is at Investment Man Dan. Go ahead, introduce a follow, and send us a DM. And let us know if there's anything you'd like us to address on this show or how we can help you with your real estate game to your next level. And you should definitely go and give Dan a follow because he's had this huge uptick of like 45 to 60 year old moms because he keeps talking about his kitchen renovations. And, you know, he's over there.

Dan Austin: [34:42] If you're a 45 or six year old mom, I want you. Come on in. Bring it with me. But I also want people that are asking investor questions. Yeah.

Mike DeHaan: [34:49] Right. You only wanna provide free entertainment to the right crowds too. So but anyways, give us a follow there, guys. We appreciate it, and we'll talk to you next week.

Dan Austin: [34:57] See y'all.