This System Saves Us Thousands on Rehabs

Mike DeHaan: [0:00] Real quick before we jump into the show, we created the collecting keys podcast to be a real estate investing podcast that is created by real estate operators for real estate operators. And we want operators everywhere to know what it really takes these days to be successful in this business rather than all the fluff that all the other content creators and podcasters out there make. And so one of the challenges with this is that it's challenging to grow because most operators are too busy out there working. Right? And they aren't always learning or actively seeking new learning material. And so if you could please share this show with any fellow operators you know, you you can text it to them. You can post it on your socials. You can leave us a good review that you then share somewhere. That would be amazing. But really, whatever, it really helps us continue to get excited to create content, and it will also help you because everyone that you expose us to will get better as a real estate operator and close more deals. So if you could do that for us, it would really mean a ton. And otherwise, we appreciate you guys, and let's get into this episode.

Dylan Koch: [1:04] There's never a reason to me to do this franchise model for off market

Dan Austin: [1:08] real estate. Right. But, you know, people do, and they're they are successful. I have a good friend that's very successful, home investors, franchisee. Alright. Welcome back to another episode of the Dylan and Dan show, also known as Collecting Keys Real Estate Investing Podcast, where we like to talk about all sorts of shenanigans, do off market real estate for you operators out there, because, know, I think we used to have the tagline of massive overpassive income. I think that's still important speaking to your topic. You have massive income, Dylan. Don't say you don't. You're a rich dude. We're gonna probably talk about that today, and maybe have you do a tell all story on your financial portfolio. No. But Mike is not here. So we're gonna have a little more fun today. A little less structure, a little less like stupid things talked about. This is gonna be down to earth real just two bros.

Dylan Koch: [1:56] I believe on Mike wanna go on one of his rants. Yeah. You know, with that being said, what I don't know if he's in Portugal or something right now.

Dan Austin: [2:03] And Yep.

Dylan Koch: [2:03] I think it is important to note that because, you know, you have you guys, your business, and all the facets of what you're doing, it would be a lot harder for me to go to Portugal and fuck off for two weeks. I'm not saying that's what he's doing, but like

Dan Austin: [2:14] Yeah. It'd be

Dylan Koch: [2:14] a lot harder for me to happen.

Dan Austin: [2:15] Yeah. It would be. And then in our situation, Mike working part time from Portugal is him fucking off because like, he's kind of like a like a steady, just always there. You know

Dylan Koch: [2:26] what I Yeah.

Dan Austin: [2:27] Like he because he because right now he's no kids, know. He's not like us. He's childless. Him and his wife are both entrepreneurs. They both work remotely. And so his life is like, well, I have a laptop, I can do this. And so his little slack bubble's green most hours of the day, you know, he works and then he plays hard too. So it is him screwing off. But it is nice that we have we've kind of built our business that way, just always. Because Mike, that's been a major, you know, intention for him is to able to pick up and work and do what he wants when he wants, which is for me, but to a less extent, because I've always had kids since him and I started. I had a baby when him and I first started as partners. And, I just that to me, it was more like I just want the freedom to be able to if I need to do something with my child or or whatever, or just have that additional, I don't know, what would you call, like financial wherewithal to support

Dylan Koch: [3:18] a family. Think the trade offs outside of like, you're you're taking a financial risk for a hopefully an exponentially financial reward Mhmm. Is just like, I wouldn't say like, I definitely work more hours than probably most w two people, but it's the flexibility of those hours. Right? I'm not clocked in from nine to five. I Right. Take my my daughter to daycare. I pick her up every single day. Yep. Right? I can go do something at get my haircut at 01:00 in the afternoon on a Tuesday Yep. If I wanted. Just like random trade offs like that that they do have their perks. But at the same time, it's 09:00 at night, and I'm like, okay. What do I need to get done? Like, what is that?

Dan Austin: [3:53] You always have something to get done.

Dylan Koch: [3:54] Yeah. Or a lead comes in in the middle of the night, and then you're just like, you know, you want to get to it as quickly as possible. And

Dan Austin: [4:00] Totally.

Dylan Koch: [4:00] So you just you never switch it off. There's no off Yeah.

Dan Austin: [4:04] And the nice thing honestly about having a partner, and I don't know entrepreneurship without a partner, because Mike and I have just as two entrepreneurs, we've always been like working together. I don't know, but like it's nice having that security blanket. You do give up half of everything, which sucks. You have to build twice as big to do the same thing. Like Mike and I need to build twice as big to build the same thing that you're building. But it is it is nice having that like, hey, you wanna take, you know, like an extra look at this? Or hey, I'm screwing off for the rest of the week, dude. I just don't have it in me. Or like I'm traveling like Mike is, and I can sit there and pick up the slack when necessary and vice versa. But it is nice. I was actually having, speaking of like just like entrepreneurship and leaning into it, a conversation with my younger brother today. He's down in Colorado doing a job. So my, his background is blue collar. So he kind of worked his way up through a union doing like millwright, like hydroelectric, like dams and facility, like repairing like a big dam, right? And he has you don't tell me what to do attitude. So he was born to be an entrepreneur. Like he just, he can't do it. But he recently quit a job, this was probably two years ago, and at all costs just kind of has has figured it out. And you know, he's now in a situation because a lot of what he does is really, it's almost like labor brokering. So he has an expertise in how to do these, like how to repair these dams.

Dan Austin: [5:24] And so these big giant companies need him to come in and do the work. And the amount of money he's making now is way, way, way more than he. I mean, he had a good, you know, multi 6 figure W-two before, but now it's just way more. And but it's way more at once. And so then the consistency is different. Yep. And so for him, he, we were talking about is like, dude, it would be nice, but I have to make sure that this money carries me out through the next six or eight months, because the job market or like the labor market and the the I'll say job market for his type of work is really weird right now. Where, you know, these are, you know, tens, $2,030,000,000 dollar projects that may be people might be saying, you know what? Let's hold off until next year. Let's see what rates are doing, and let's see what's happening, you know, because they have to go and get big big investors to come in and help, you know, do these giant projects.

Dylan Koch: [6:12] Right. And like the uncertainty right now too probably even Mhmm. Exemplifies that.

Dan Austin: [6:17] Yeah. But I you know, he can go and make $15.20 grand a week, right? And doing all this stuff, and then But he has to get himself out there to look for the next job and the further jobs. So he's just, you know, getting used to that inconsistent income, which I think is really relative or really related to like how we live in this business. It's like feast or famine sometimes. And you were talking about that.

Dylan Koch: [6:36] My mobile banking app has I don't know why they do this, but they literally have like a graph form of your account balances.

Dan Austin: [6:44] I bet it's so awesome.

Dylan Koch: [6:45] It's like a saw too. It's like like a sine wave, like peaks and troughs, like Yeah. All the whole time. And I will consistently say like cash management, as an entrepreneur, it's probably difficult. But especially in the real estate space when you're taking down multiple deals or multiple projects at one time is very challenging when you're when you're doing the fix and flips, you have rentals, you are trying to send out more like marketing or dispo stuff, like salaries, like it it Yeah. It's all it's hard. Like it it's it takes someone like, you can't just fly by night some of that stuff.

Dan Austin: [7:17] Oh, absolutely not. Yeah. I couldn't imagine like, you know, on the scale of like a a a business our side, like our our type of business, but like on like a 100,000,000 scale, like being the the treasury manager of having to make sure there's the appropriate amount of money in the bank account when transactions are happening, it could be such a nightmare because in this business, you don't know. Like, you're like, oh, it's closing Friday, and then a month later, hasn't closed, or it's two days pushed or whatever. Yeah. Like, there's so many things, these deals and transactions get so complicated. And like one of the things you were talking about is just like the team it takes to get a damn deal closed.

Dylan Koch: [7:49] One, it takes the team. Two, you never count the money until it's actually in your account because Yeah.

Dan Austin: [7:54] 100%.

Dylan Koch: [7:55] They could fall apart the last second. But there's been some deals recently where like, I guess the Rolodex that I built up over the past couple years has paid some dividends because there are the and some newer buyers that wanna get started in in, you know, rentals or fix and flips, whatever it may be, but they didn't have the insurance connection. They didn't have the lenders that they needed. Mhmm. So I was able to introduce them to those said people. Yep. And because of that, we were able to get the deal done even though their original people said, we, know, we can't do a deal like this.

Dan Austin: [8:23] Yeah. So You need those people.

Dylan Koch: [8:25] Not only is who you know important, but it's also was worth tens of thousands of dollars in the past couple

Dan Austin: [8:29] of Yeah. It that's what gets you from doing four deals a month to five deals a month. Know? It's those are like it's those little margins that push you to the edge and getting sometimes getting any deals done, because they get so complicated. And I would say, for me, even just the last year as we've really leaned into our lending business and had to learn more about that going from, yeah, we do loans to know we're a lender now. Learning about the intricacies of behind the scenes has been super helpful of like understanding. Because like, you you always look at it from a buyer's perspective or a wholesale your wholesaling deal or whatever, and you're saying, okay, well, we gotta get this deal closed. Oh, why is the lender being a, you know, a prick about this? Or why is it getting delayed? Well, now I know. I know some of the things and the like you're talking about knowing the right insurance brokers, knowing the right, like, title exceptions and things that to get something across the finish line with a lender. What are they looking at? There's just so many like especially when you have a lender. Hard money and private money lenders less is less so than like a DSCR or like a, you know, Fannie Freddie lender. But you're still having to meet their minimum requirements.

Dan Austin: [9:32] And depending on where you're getting the money from, it could really turn your deal sideways. On top of all the other BS you have to do to drag your seller and your buyer to the table anyways. Yeah. Just so much.

Dylan Koch: [9:41] Right. Whether your seller is a drunk alcoholic.

Dan Austin: [9:45] Yeah. Yep.

Dylan Koch: [9:46] Or or a flight risk or, you know, you think that, you know, okay, they're gonna walk away with $50. That'd be enough of an incentive for them to show up to the closing table sober. You know, sometimes that's not not always the case.

Dan Austin: [9:58] When you got addiction, man, that addiction wins every time. We talked about on the scale coaching call or community call today. I know Dylan's ran into this a bunch. We had a seller go to jail on a Novation deal we were working on, and then we have one that's an alcoholic that we're just trying. She actually, I think, after we record, I'm gonna go check, she was supposed to sign with Tidal like an hour ago. So I'm hoping that she showed up sober. She likes to apologize during the day, and then just rant at how big of a piece of crap I am at night, and all this bullshit that I'm going through or putting her through. And it's like, well, actually, I'm not. I'm helping you. Yeah. Know. Don't have get foreclosed on.

Dylan Koch: [10:36] I've had a a deal fall apart at the closing table because the seller showed up intoxicated. He, legit, the cops are almost called because he's like, I'm walking out here with some money. I'm like, not

Dan Austin: [10:46] Please don't. No. Please don't say that. Yeah.

Dylan Koch: [10:49] Not today.

Dan Austin: [10:49] It's like saying I have a bomb in the airport. Like, just don't do it, dude.

Dylan Koch: [10:52] Yeah. Luckily, his soon to be ex wife was with him and was able to talk him. Oh, like, we'll come back tomorrow and get it.

Dan Austin: [10:58] Like Oh my god.

Dylan Koch: [10:59] But like, this this kind of stuff happens. You when you start this business, you never can even muster up and imagine things that happen.

Dan Austin: [11:07] Yeah. You you kinda think you can you think you can fathom it. Like, you're the, oh, I know what I but like, when you're in this situation and like you've got money on the line and everything, you're like, it's just oh my god. It just gets so much more detailed and stressful. And you're trying to you're trying to deal with I mean, people have real problems. Like dealing with them. And that's why they're coming to us in the off market game like real, real, real problems, whether that's, you know, mental illness, like that's being, you know, self medicated through alcohol and drugs. It's just deep financial stress where they can't make a good decision for the life of them, because they're just under the gun the whole- all the time. And then you deal with all the other stuff with families involved, and tenants, and kids, and all sorts of weird stuff. There is a It's crazy.

Dylan Koch: [11:53] As a quick aside, there is a a probate ish deal that came across our desk the other day. And I was diving into it, and I learned that there's, like, eight heirs to the property.

Dan Austin: [12:04] Oh, yeah. That's fun.

Dylan Koch: [12:05] I don't even know if this is worth it. Like, do you even try? Because in my experience, if there's, like, three or more, it's it always ends up bad. So Yep. We're I mean, we'll give it a shot. But if they give any kind of pushback, I don't think I will pursue it that much.

Dan Austin: [12:18] Yeah. I know. The the probate ones are interesting. It's gotta be a fat deal if you know there's multiple heirs. Because out of eight heirs, someone probably hates one of those people and They're told. Other, and they were like, I refuse to sign it. I if if Betty's making $4, nope. I'm not doing it. I'll lose 4 Or

Dylan Koch: [12:33] they're like, you know, that Zillow says it's worth $2.50. Why are we selling it for $1.75? I was like, bro, like Yeah. You know, they do the same thing.

Dan Austin: [12:40] Have you been there in the last twenty years? Well, no.

Dylan Koch: [12:43] Yeah. But well,

Dan Austin: [12:43] it's kind of a piece of crap.

Dylan Koch: [12:45] Yeah. Right. And then, I don't know. Like, how's business for you guys right now both on like okay. Have three innovations, like ones that are listed, like mid rehab, or ones to assign. Like, are you still firing on all cylinders and now it's June?

Dan Austin: [12:58] We are firing on all cylinders more so than we have all year. And right now, it's kinda like all of our projects, like we're like, I would say like, wholesale novation flips. Like they're all kind of coming to a head right now, which is, I guess unintentional, but also intentional. The beginning of the year, obviously, had a ton of wholesale deals. And I say obviously because that's when flippers are really buying, that's buying season, you know, like January until probably April. Because May, by the end of May, like selling season has kind of peaked and is going started to slow down in the summer. So everybody wants to and everybody sets their like goals to, hey, it's 2025. Yeah. I'm gonna do all this. So it's easy to get people to buy. And it just, that's just how it worked out for us too. And so then we, now we're catching up to a bunch of the weird leads, like the Novations. So you mentioned, yeah, we've got three properties listed. All three are Novations. We would have a fourth one in flight that's Novation, but the seller went to jail, and so we're not gonna work with him. I don't I don't partner with people on Novations that aren't like people I'd partner with on something else. Right. It's not worth it. And then, we just sold a flip, And we try to only do one big flip at a time. And so we're doing a big flip right now that we just started this week.

Dan Austin: [14:09] So that's that's gonna be probably a seven week project ideally. And then we'll get that that on the market before summer ends. And then yeah, we have a handful of probably three or four wholesale deals in escrow. We've got a couple more get signed this week. So we'll probably have, yeah, five or six wholesale deals in escrow going into next week. And so yeah, I would say we're firing on all cylinders, we're jamming. We're putting a lot of money out there. Listings are going so so. We got one offer on one of our three innovations like within the first twenty four hours, and that one we knew we would. It was it's just we had a lot of good perks for that neighborhood. The other two, one's in a rural town. We've got a potential cash buyer on it, which would be great. He's a pilot, so it's near like a small rural airport. And so he kinda likes it.

Dylan Koch: [14:57] Nice. Those those are the those are the ones that take a specific buyer if it's gonna find it.

Dan Austin: [15:01] Exactly. And then the other one we'll see, it's like a $20.15 build. We're priced pretty decently, but it's I just it's hard to tell on that one, because you would think it'd fly off the off the shelf. But it's also in an area where there's other new homes too, so a lot

Dylan Koch: [15:16] of When do the Novation ones, and then let's say they come back post inspection and they want $10,000 worth of repairs, how do you navigate that?

Dan Austin: [15:26] Okay. So depends on a couple things, but mostly what we've communicated with the seller. So on any of these three, if we have that issue, we're going back to the seller and saying, hey, we need a price reduction. Dude, the furnace is bad, or the roof has to get replaced. If it's gonna be like the ticky tacky thousand bucks, and we've talked to them and told them we would we would pick up any repairs for no reason, we're gonna do those. Because it's gonna be easier for us. We're just gonna do it. We're not gonna bother the seller. On the three that we have now, if we had a large item on any of them, we would go back to the seller and be like, hey, this was obviously unexpected. You would have had to deal with this no matter what. Exactly. And all three sellers would be like, yeah, I get it.

Dylan Koch: [16:04] Yeah. This I've I've never actually formally done a Novation. And so, you know, the one time I've tried it just didn't work out. So Yeah. Just was curious how that worked out.

Dan Austin: [16:13] I don't like them. I don't like them. And then I'm I was at one point last week, I had four in our pipeline. I was like, damn it, dude. Like, I just I okay. When I say I don't like them, I think they have a purpose, and they have a a place, and it really depends on the sellers. So for example, the three sellers we're dealing with, one, she's actually a title agent here in town, and this the house we're doing was a parent that passed away, and it's like an hour and a half from Spokane. It's a mobile home or like a manufactured home. Really cool manufactured like double wide on a full daylighted basement with a big detached shop. Really cool setup, but it was gross. It needed, like new carpet, new paint. It just needed to be fixed up. And she's like, I don't wanna go back and forth doing this thing. I just don't wanna deal with it. If you guys are willing to just like handle it all for me, then heck yeah. Then I don't I don't have to do anything. And so that's why she was incentivized. The there was an old guy whose wife had had passed away, like a 2015 new build. It just had been lived in and never like they never did anything to it. So it was just like the carpets were kind of gross.

Dan Austin: [17:17] The walls were kind of dirty. The fixtures were kind of like it just wasn't it needed a few thousand dollars worth of work. And the old guy's like, my wife died. I just wanna get out of this house, and I don't wanna deal with any of this. I'm moving to Montana just to get away, and I just wanna walk away. Okay. Cool. And then the third guy, he was a contractor that has was working on building his own house, like out somewhere in a rural area. And he wanted to basically have this know what he was gonna get paid, and when it was gonna close, so he could get his takeout loan on his Yeah. New build

Dylan Koch: [17:49] home So or logistically Mhmm.

Dan Austin: [17:52] Yep. And that was the one that will end. He wanted to this was like a this has been like a six month deal for us, because we had to wait for him, and then it finally kinda came to fruition. But that and that was like the most narrow margin, but it's like if we had a major thing, we would just be like, hey dude, we gotta go back to you. And he would get it.

Dylan Koch: [18:09] I've actually only lost money on one fix and flip deal. And it was when I tried to partner with the seller who is also a contractor, and it ended up just biting in the ass. Because this work with shit, and then Oh, yeah, dude.

Dan Austin: [18:20] Oh, yeah. Yeah. This guy's like, I'm a contractor, so I go and walk the house before we we're getting ready to go do paint and carpet. I bring our contractor over there. And I'm looking at it, and I'm like, yep. This guy was definitely a contractor. Just everything's half done, not done Yeah.

Dylan Koch: [18:34] It's not done right. And they they show it off like they're so proud of

Dan Austin: [18:37] it. And then they're like I did this.

Dylan Koch: [18:39] You know? You're like, cool. Redid this bathroom all by myself. I was like, I can tell. Yeah. I

Dan Austin: [18:45] can see that that tile is gonna have some problems. Yeah. Right. Oh, yeah, dude.

Dylan Koch: [18:49] It's kind of the the same over here. It's like, you know, it's the whole you send out marketing, deals come in. You, you know, you go on a lull, like, managing the the cash flow and intake. But we have eight that have recently taken down that are in either like mid rehab, in the listing stage, you know, I have to get the tenants out of some. And then there's five more in escrow that I'd like to just assign or find buyers for. So handling the dispo.

Dan Austin: [19:11] That's a lot in escrow though. I mean, really 13?

Dylan Koch: [19:13] Yeah. Total? Yeah. Between the between inventory and and escrow is 13. And so and all of them have either June or July dates. Right? So I don't know. It's I've had I feel like I'm barely above water in some of these right now on top of managing the new leads that come in and, you know, all the this this this stuff that goes with running an off market business.

Dan Austin: [19:31] Oh, yeah.

Dylan Koch: [19:32] I'm like, do I hire a project manager? Or is this just like a season where you you buckle down and you get through it, and then, you know, you're on the other side of it in couple in ninety days.

Mike DeHaan: [19:40] Hey. So you've heard us mention our scale community before, and I don't have a lot of time, so here are the quick highlights. In scale, you get all of our processes and systems that we use to do about a 150 deals every single year. You also get a community of investors that are verified crushing it in their markets. Otherwise, they wouldn't even be members. And that way, you don't have to waste time with nonstarters like you find in other groups. You also get preferred relationships with marketing companies and even lenders that will give you 100% financing. If you just heard all that and said, nah. I don't really need it. That's not gonna help me. I don't know what to tell you. You're lying to yourself because all those things are guaranteed to help you explode your business and buy more deals next year. So go to collectingkeys.com/scale, and let's see if you qualify.

Dan Austin: [20:22] That's such a good question though, like like, to hire a product manager because it's like, that you're I I feel like you're committing to being a flipping company.

Dylan Koch: [20:29] Yeah. And I don't want to be a flipping company. Yeah. Even though I've I've been less likely to assign something because I'm trying to maximize revenue right now, and I feel like taking titles is a better way to do that.

Dan Austin: [20:40] I we have a mutual friend that lives in Montana that's a home builder. And I loved his model because he was doing a and he was this isn't for flips, again, this he's a home builder. It was like $8,000 per home, and he told his guy that he was trying to do like, don't know what it is, like ten ten houses a year or something like that. And so he was paying basically a project manager per project, but he's essentially committed full time to him, And he was able to get, you know, the project manager was the guy, was able to make a $100 a year. I just thought that was a great way to do it. Because you're not saying, I'm gonna give you 10% as a GC or anything like that. You're keeping the construction in house, you're bringing a project manager in, but you're not committing yourself to a salary. I don't know that that works well with flipping. Know? Yeah. Like I like that theory. Like the idea of like a fixed flat fee per project. That's the nice thing about new construction though is you can't do that because you can forecast it.

Dylan Koch: [21:31] Your stuff doesn't really change all that much. Yeah. Your layouts are the same. Your materials are the same.

Dan Austin: [21:35] Yep.

Dylan Koch: [21:36] That's the other thing. And like, I've had to resource some more contractors because, you know, my go to two or three guys, they can't do eight at one time. Right? Exactly. And one of them was a freaking bust. So Really? Yeah. Fire them and get them off the job and like so that's the thing. And like on top of I'd order most of the materials because I don't want them to rip me off of material costs. Yep. And so Exactly. It's just don't know.

Dan Austin: [21:58] How do you do that? I'm sure there's some folks listening here that wanna know how you're how you're managing your materials. Because I have I have started using a little bit of technology on this, and I'll share my my stuff after you go. But like, how how are you doing that?

Dylan Koch: [22:10] I mean, it's not fancy. I have an Excel sheet that basically of all the stuff we've used before. I don't change a lot of things up. So paint's the same. The backsplashes are the same. The countertops are the same. This basically, it's all the same material. So I'll just copy and paste the material things. The only thing that changes is, like, the measurements. Right? Like, your countertops are gonna be different, like, that of stuff. Yeah. It's mostly Home Depot. Sometimes it's Lowe's, and then the Granite, you know, you we use some like local people here that are for that. But Right. I don't know if that answers your question. But Yeah.

Dan Austin: [22:36] No. So the reason why I bring this is because I was very much still like that. And then recently, I started using some of the Lowe's pro stuff, because I personally don't like Lowe's at all. I just don't like going in store or anything like that. Mhmm. But their technology When we were setting up some pro discounts for the scale community, and Home Depot was like the worst. Like they were like, no, we don't do that. I'm like, I know you do national accounts, and they're like, nope, I mean, they just nobody. And like Lowe's actually was like, yeah, we we do this and all this sort of stuff. And so then with that, I got some training on their systems. And so along with some of the discounts they give, it's which is decent, you can go in there and you can build like templates for projects. So what I have, for example, is a 24 inch vanity bathroom. So in Spokane, you're gonna have a bathroom that's gonna be standard, and this is gonna be most of America. You're gonna have a 60 inch wide bathtub, and you're gonna have a toilet that's gonna be built for 12 and a half inch off of the wall, all that sort of stuff. And you're gonna have a 24 inch, a 36 inch, or a 48 inch vanity that fits in most of the houses that we're doing these projects from.

Dan Austin: [23:39] Unless it's something quirky, but the standard workforce housing that we're always working in, that's it. And so when you get a 24 inch vanity, you always get the vanity light that is that proper width, and you get the mirror that's that proper width. You get the same faucet. Yep. But then I know when I'm replacing a vanity, I'm always doing I'm always getting my guys new supply lines, valves, all So that so it's a package. So then I go to Lowe's. I talked to my contractor, like, is this 24 inches vanity? Yep. Okay. Cool. I click turn that into a quote, which then converts it into like my cart or whatever, my project, and then I can order it all. And when you go through Lowe's, when you set up like the quote on their pro desk, you actually get better discounts, which is a weird

Dylan Koch: [24:16] thing DSP program or something like that.

Dan Austin: [24:18] Yeah. It's weird that they do it that way. Think it's stupid, but it's like, whatever. Just do it. And then if you get their LCA account, like their commercial account, which is like just their credit card with a like a commercial account, you can just put stuff on, then you get more more discount as well. But the nice thing, and my point bringing that up, is that I can just go in there and say it's a 24 inch bathroom, 36 inch bathroom, whatever. Then the same thing goes Yeah. For

Dylan Koch: [24:41] Piecing together every single thing that you're doing that I'm doing. But mine's just in my order history.

Dan Austin: [24:46] Yeah. Exactly. Which and that's how I used to do it. It'd be like order again, or I'd like, oh, this is the one I want. And then you can kinda go you can go to Amazon if that's where you wanna buy all your flights and your fixtures and all that stuff. Yeah. You just kinda have

Dylan Koch: [24:56] your Cabinet pulls for the audience. Yeah. Where you get all your cabinet pulls.

Dan Austin: [24:58] Yeah. Exactly. This is my black. This is my nickel that you know what I mean? Yeah. So when I was when I used to do a lot more, what I would do is I had a designer that we'd pay like $500 to, and she would go in there and I would say, hey, I'm trying to keep the existing kitchen cabinets. Tell me everything I need to do to make this look good. And she would be like, okay. This color, that color. It was way less stressful because then I could just because there's only, like, three colors you're gonna pick for anything.

Dylan Koch: [25:19] For $500, this is a steal. Because It is great. I feel like most off market people, myself included, I'm really dumb when it comes to design. That's why you just do white and black freaking everything. Everything. But I feel like rentals, that's fine. But, like, I feel like almost today, you need a little bit more popper. Like, you need something that stands out bit more. You need to be a little bit better. Like, feature walls that had a little, they almost look like quarter

Dan Austin: [25:42] slats or whatever.

Dylan Koch: [25:42] Yeah. Yeah. Yeah. Yeah. Yeah. Like all that kind of stuff. Like, I don't do any of that typically. Or like you got

Dan Austin: [25:47] like a powder bath. You gotta have like some cool little unique tile in there that's like the little teeny tiles that have like a design. Yeah. Yeah. Yeah. So I wasn't doing that shit back then. I was just like, hey, I wanna keep some of this stuff here, but I don't want it to look gross. Because one thing I don't like is when you go into a house and you see like matte black pools or matte black like doorknob, and then like a nickel like hinge, and then like gold

Dylan Koch: [26:07] like gold in kitchen.

Dan Austin: [26:09] Like it gets like, you're like, okay, it doesn't tie together. And a simple change of just tying it all together will actually drive more revenue because people are coming in and they're like, oh, this looks like it was well done. Just like a new build. It looks like a spec build versus haste, this is a designer home. People just it just looks better. It doesn't cost much more.

Dylan Koch: [26:28] Well, on that too, like, don't try to pitch pennies on the finished stuff. Because like the Right. Like to us, we're like, oh, that's an easy fix. That's $50. Right? But to like a first time home buyer or someone's buying the house, if they see something that's just a little bit off, their their first impression is like, well, what else did they did they not do right? Right? And so, you know, my good example of this is we bought a place I was trying to hold tail, and I literally did nothing to it. I put it on the market for what it appraised at. Had a couple showings, but, like, no offers. Like, nothing. Wow. And then I put I repainted it, freshened up the landscaping, put new carpet, new paint, real it didn't even touch the kitchen or the baths. Yeah. And listed it for $50 more, and we're our contract in two days.

Dan Austin: [27:11] Yeah. There you go. Curb appeal matters, and then, like, having that, like, fresh look when you come in, it matters, dude.

Dylan Koch: [27:17] A 100%. Especially if you're selling to owner occupants, FHA buyers, first time buyers, etcetera.

Dan Austin: [27:22] Yeah. Yep. So eight projects going in for Dylan. That's awesome. When are you gonna clear them off your books? What's your goal here?

Dylan Koch: [27:29] Well, I like all of them to be at least under contract by end of June for July closings. This is the ideal situation, but you know how that goes. Which means they'll probably all close in, like, fucking September or something

Dan Austin: [27:41] like Absolutely. Absolutely.

Dylan Koch: [27:43] On the revenue side, I mean, all of these are the thought process I went through was, okay. You know, these are gonna be gener- directionally correct, but not accurate. Like, $300 in, accounts receivable between all these projects.

Dan Austin: [27:54] That's for sure.

Dylan Koch: [27:55] And that's about what we've done year to date. Whereas if I were to wholesale these, I mean, they're maybe a 100 to a 150 between all

Dan Austin: [28:03] of So you're doubling

Dylan Koch: [28:04] the revenue just by taking on that burden. And to me, I'm like, I need to maximize revenue because the cost per lead is kinda going up. That's I that's and my extra strategy here is, like, if something does go wrong, I could refinance to these, they could be rentals, and they wouldn't kill me. Right. Right? I could and I could sell them a year or two from now.

Dan Austin: [28:23] Yeah. That's a unique thing in your market, in the that you can take some of these and turn them into rentals, and I'm assuming you're not gonna be negative cash flow on a bunch of them.

Dylan Koch: [28:31] No. I mean, they could be pretty close to breakeven. Yeah. Even with the set asides, they're like that. So you know, take 15% off the top or whatever.

Dan Austin: [28:39] That's that's, I think that's just a good point to share, because, you know, Mike and I might say like, dude, no way, don't wanna do that, because we can't. We're gonna lose $500 a month on a house or a thousand bucks a month, just because the mar- the differences in the markets, where for you it is an option, and so you can press a little harder. Where I might not wanna do more than four at a time, you're be to do eight, because you're like, hey, the realistically, all eight aren't going bad, if two or three go bad, I can throw it in my portfolio, breakeven, you can absorb it, you're fine. Not just not the case for us.

Dylan Koch: [29:07] I was actually listening, this is a while ago, but it stuck with me. Cam Cathcart on the Better Life

Dan Austin: [29:11] Mhmm.

Dylan Koch: [29:12] Podcast. He used to work for basic, a regional wholesaling company in the St. Louis area before he did what he does now.

Dan Austin: [29:19] Mhmm.

Dylan Koch: [29:19] And they were reviewing the company's KPIs. And bay the long story short is they basically lost money on like five deals throughout the year out of, 250. Wow. And he's like, well, we lost, you know, a $100 on these five deals. But the CEO, the person in charge was like, okay. Well, next year, if these are our metrics, there's no reason why we shouldn't try to double our business. Because your winners more than make up for your losers.

Mike DeHaan: [29:44] Yeah.

Dan Austin: [29:44] Right? And Way more.

Dylan Koch: [29:45] Yeah. And so that that difference in, okay, you lose $10.15 grand on one, you can Yep. The worst spot is if you're doing one or two deals at a time, and you have that loss. Yeah. Right? So there is there is more to scale aspect of doing these that it's almost more safe, I guess.

Dan Austin: [29:59] Totally. Yeah. Don't know if I could do $2.50 though. Golly. That'd be a lot.

Dylan Koch: [30:04] Yeah. Well, they had a huge operation. Right? You know, the

Dan Austin: [30:06] Even then, jeez, that's a lot. I mean, good for them. Some people can manage and handle that. That's that seems like a lot

Dylan Koch: [30:11] to just I it is a lot. And I this is a little off topic, but I had a a new franchisee reach out to me today. And it's like Homefestors, but it's not well, let's see if can find the name of it.

Dan Austin: [30:21] Backyard Homebars?

Dylan Koch: [30:21] That wasn't Backyard Homebars. I would have told them to get fucked. It was like new home new home I don't know. But I looked into it and I this guy called me and I was like, bro, this sounds exactly like Homevestors.

Dan Austin: [30:34] Is it like a newer franchise you're saying?

Dylan Koch: [30:36] Yeah. I think so. I never heard of him before. And I was asking him questions when he called, maybe he wants to buy some deals. But they expect them to they don't give any marketing spend, but they still get like some of the revenue. And I was just like, I'm thinking about this. Like, there's never a reason to me to do this franchise model for off market real estate.

Dan Austin: [30:54] Yeah. Especially for you. You've you've figured it out.

Dylan Koch: [30:56] Unless they're gonna provide you the leads, but they don't.

Dan Austin: [30:59] Yeah. You figured it. You personally figured it out though. Somebody that's a semi preneur is, you know, that's the allure. Right? You just step into it. But if they're not gonna give you what you need, at least HomeVestors, although they charge you for everything, they give you everything you need. You know, they they have a pretty well oiled system. I would not choose HomeVestors, but, know, people do, and they're they are successful. I have a good friend that's very successful HomeVestors franchisee.

Dylan Koch: [31:20] Really? Maybe the I feel like he's in the minority in that.

Dan Austin: [31:22] But I'm kinda He's in the 1%. He's in the 1%.

Dylan Koch: [31:24] Yeah. No. He's in the

Dan Austin: [31:25] 1%. You're there's like 1,200 franchisees, and he's probably in the top 120 for sure.

Dylan Koch: [31:30] Okay.

Dan Austin: [31:30] You know

Dylan Koch: [31:30] what I mean?

Dan Austin: [31:31] Yeah. And they've been doing it since twenty ten ish, twenty twelve ish, somewhere in that time frame.

Dylan Koch: [31:35] So Good for him for being able to adapt over the years at that.

Dan Austin: [31:39] Because it's

Dylan Koch: [31:39] lot different now than it was then.

Dan Austin: [31:41] Yeah. It's kind of surprising that you'll be There's a lot of home buying franchises you don't really know that exist out there. Like, when we were doing the research to set up our franchise, like we had Who was it? Do you know Ken Corsini? He's like an HGTV guy.

Dylan Koch: [31:54] I was gonna say that name Yeah. Sounds

Dan Austin: [31:56] Him and his wife have a franchise. I think it's called like Red Red Barn Homebuyers. I mean, by all accounts, it's it's they do a good job. Like, I have nothing bad to say about them. But like, was like, that's weird. I didn't know that existed. And there's quite a few I'd be curious to know how Joe Homebuyer's doing, because that was the old guy the guy that started Wholesaling Inc. He owns Joe Homebuyer, and I just can't imagine it's doing so hot because they didn't provide any support to their franchisees. They just sold these. I know there's one guy here in Spokane that started one, and he went to you, like, the same year. Like, just was like, nah, this sucks.

Dylan Koch: [32:29] New Again Houses.

Dan Austin: [32:30] New Again Houses.

Dylan Koch: [32:31] Oh, okay. I guess it started in Bristol, Tennessee, and this guy just got market share up here. Oh. I don't know. I just like to me, if you like, because all these have franchise fees. Right? You need like $20.30 grand just to put down.

Dan Austin: [32:43] Yeah. Yeah. You gotta you gotta pay quite a bit. Like some of the the and like home investors, for example, you might have to pay 80 to $100 depending on the demand for the franchise in that market.

Dylan Koch: [32:50] But imagine if you just put that money into marketing.

Dan Austin: [32:52] Oh, yeah. Exactly. Totally. A 100%. Okay. Because that money's gone. Right? I mean, granted you do get the systems and the SOPs, and you get their call center, and they'll do all the mail for you. But the downside is, is you have no insight into that. Yeah. So our friend that does the HomeVestors franchise here, like to him, it's foreign. He's like, don't know, dude. I just pay him more money, and then they send me more leads. He's like, that's Yeah. All

Dylan Koch: [33:13] mean, I mean, that's great for them.

Dan Austin: [33:15] Yeah.

Dylan Koch: [33:15] I get it. But at the same time, like you need proof of concept before you spend 75 to a $100.

Dan Austin: [33:20] Oh, A 100%. Yeah. Because not only do you have that, but then you have the call center fees, so they charge you per minute for the HomeVestors franchises. Then they charge you for your software, because then they have a they have like a build out of Salesforce that you that you use, with all these tools in it that that most people don't use, which is kind of funny. But you gotta pay monthly for that, then you gotta pay a percentage of all of your deals. Even if they're flips and buy and hold, you have to pay a percentage of the appraised value.

Dylan Koch: [33:44] Yeah. It's just so hard to, I feel like, not like, the conflict of interest separated in in a scenario like that.

Dan Austin: [33:52] But Yep. Yeah.

Dylan Koch: [33:53] I mean, you guys did you guys go into 2025 with a revenue goal that you're like are you still I guess, are you still on track for that?

Dan Austin: [34:00] Or No. We're not. We did. I think our well, I wouldn't say we're not on track, but I think our revenue goal for this year was 2,500,000.

Dylan Koch: [34:08] That's a lot.

Dan Austin: [34:08] I don't think we'll hit that. The thing interesting about us is like half our company well, all of our company is basically gone for the month of June except for me. So I'm running the whole damn thing for the month of June and into July, and that's a lot with the lending business as well. So we'll probably already naturally just see a decrease. There's just not enough. We're just there's just not enough available resources. But like we had a little bit slower start to the year, but hopefully we can get somewhere near that. I just don't think we'll hit it.

Dylan Koch: [34:36] Yeah. And that's the whole thing, you know, if your if your goal is 2.5 and you get to even two or 1.5, it's is that really a loss? No.

Dan Austin: [34:43] No. We yeah. We're making money. We have decently high margins because we have the partnership structure we have, and we don't have a lot staff right now. The only actual paid staff we have is cold callers

Dylan Koch: [34:52] Yeah.

Dan Austin: [34:53] That we have in house. The American cold callers that actually come to our office and call every day. That's it.

Dylan Koch: [34:57] Real quick, we can wrap this up. How new are they? And how has it gone from having American based cold callers to, you know, the traditional cold callers that people use in this business?

Dan Austin: [35:05] So the three that we have right now, we have two young guys and then a young lady. She just graduated college, but she's like working towards like real estate license. And the other two guys are just one's graduated 18 and the other one's I think like 20.

Dylan Koch: [35:17] I guess how much are they calling?

Dan Austin: [35:18] It varies week to week, but they're basically part time.

Dylan Koch: [35:21] Okay.

Dan Austin: [35:21] Think about fifteen to twenty hours

Dylan Koch: [35:23] a week each. Single line dialer?

Dan Austin: [35:25] No, we give them a three line dialer.

Dylan Koch: [35:26] Three line dialer?

Dan Austin: [35:26] Yeah. So yes, they're doing good. I think because they're very inexperienced, and they're not only learning real estate, they're learning cold calling. They're it's like we knew going into it that we're gonna have to commit some time and resources to grow their skills. And ideally, you know, that that happens. And you know, we'd love it if if one of them like, you know, grew into it, got into real estate, we could bring him in as like a junior acquisitions manager. That would be like the ideal situation. That was kind of the idea is like, hey, let's let's pour into them, let's teach them, run some like educational stuff for them to get them kind of into real estate, get them excited about things. But I would say, I personally would like to see them doing more, but they're not working full time. So from the lead gen side, there's just not enough leads coming in for what you would think

Dylan Koch: [36:11] Yeah.

Dan Austin: [36:12] For them. But I mean, they're accumulating only working, say, fifty five, sixty hours a week between the three of them, you're gonna give the Egyptian caller that's gonna get you five to five to 10 leads a week. So it's not like it's that much.

Dylan Koch: [36:22] I know. It's just different. I didn't know the conversion rate, and you probably don't have enough data to even support this yet, but

Dan Austin: [36:28] Not yet. We don't. We actually did a check-in with for our L 10, and I was like, there's no point in even looking at this. Like, we're making a decision for this information because we committed to six months or three months. I can't remember what we committed to. And then we would look at the data and see what we wanna do. And so yeah, we're only a couple months into it. And we the bummer about Washington state is like minimum wage is kind of high. It's like $16.66 an hour plus payroll tax. So you're damn near paying them like $18 an hour.

Dylan Koch: [36:51] You should have incorporated somewhere else.

Dan Austin: [36:52] I seriously, I know, right? We Get some cold callers out in Cincinnati. But for I say that, so for you that are listening, you can pay 5 or $6 an hour to get a really good Egyptian cold caller. Or if you're in a, like, a lower minimum wage state, say minimum wage is like $8 an hour, pay them $9 an hour. For somebody, like, you're you'll probably you'll you'll do well. If you especially if they're committed really in diving into it, and you're teaching them and coaching them.

Dylan Koch: [37:15] Yeah. You gotta coach them. You have to do call reviews. You can't just say repetition, and then assume they're gonna get better.

Dan Austin: [37:21] Absolutely. And so that's what we've we've had to implement on our end too, some of that some of the coaching call review, which at the timing is great because then, like, our sales lead is out of the country for the next, like, six weeks. So that sucks. But he'll come back refreshed, guess, and hopefully, we'll have some cold call leads for him to fall with. Yep.

Dylan Koch: [37:37] So Well, cool, Dan. Anything else to report on for the week?

Dan Austin: [37:41] Nope. We will no. I think this week's gonna end hopefully nicely for us, and we're gonna get we're gonna get a decent closing on this alcoholic's house that we're hopefully gonna help her not lose all of her equity, and she can move on from it. We're gonna make a little scratch on it. That's gonna be hopefully next week when we do the podcast, I can report out on that one. The drama.

Dylan Koch: [38:02] Just get her a there's not a gift card to AA. Don't

Dan Austin: [38:06] yeah. I'll get her a coin. A one day a one day chip. How about that?

Dylan Koch: [38:09] Yeah. There you go.

Dan Austin: [38:10] You one day.

Dylan Koch: [38:11] There you go.

Dan Austin: [38:11] You've you've you're you're gonna earn this today. I promise.

Dylan Koch: [38:13] It's like the serenity prayer or something like that. I don't remember. Exactly. Yeah.

Dan Austin: [38:16] Yes. You're right.

Dylan Koch: [38:17] Cool, man.

Dan Austin: [38:17] Alright. Alright, guys. Have a great week, and hit us up on Instagram if you wanna know how how much money Dylan makes every single year that he can have a stay at home wife part time. Dylan underscore does underscore deals You got it. At Instagram. Yeah. Alright. See you guys.

Mike DeHaan: [38:36] 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.