Trusting Experts and Building A Team

Speaker 1: [0:02] Welcome to the Collecting Keys Real Estate Investing Podcast with your host, Mike DeHaan and Dan Austin. From wins, losses, horror stories, and tactics for optimizing your business, Mike and Dan take a real uncensored deep dive into the ins and outs of running a full time real estate investment and wholesaling business.

Mike DeHaan: [0:25] What's going on, guys? On this episode of the collecting keys Friday focus, I wanted to touch on something that has been very relevant, I guess, from my own investing and business experience and has also been something that has come up a couple times recently with our instant investor program and just talking to some other newer investors, especially, that are trying to, like, I guess, figure out how to fill the knowledge gap as they are starting to grow and learning how to become an investor. And this is the process of, you know, trusting experts and working with experts and how exactly to, you know, make sure that they are doing what you need them to be doing. So this whole thought process kind of spurred. If you listen to episode 56 that came out this past week, then you heard me talk about the situation with my property manager that I had on two of my personal rental properties that was unable to rent out some a class properties that I owned for, you know, almost two full months, which just didn't make any sense to me. And, you know, I gave them the benefit of the doubt because, you know, they are an expert. They were a professional property management company. We kinda just started working with them. I was like, oh, we'll sort of figure out our flow and, you know, how exactly they're gonna do their process and all that sort of stuff. But after two months, you know, one of which was while I was out of the country and Africa was fine.

Mike DeHaan: [1:48] And the second month while I was here, and I was just watching going, how are these things not getting rented? So ultimately, about two weeks ago, I went to the properties myself. I took some photos, super frustrated. I went and threw them up on Zillow. I had them literally both rented with rent in hand within forty eight hours. Right? So I just sort of called out their issues there of that they were not doing their job correctly. And, you know, after reflecting on that with Dan, we kind of got down a rabbit hole of all the different experts that we've worked with over the past few years that just haven't done their job and that we've had to, you know, sort of intervene with what they were doing. And how dangerous of a situation that is, especially for new investors. Because, like, for me on these rental properties, for example, two months of not collecting rent and having to pay utilities and mortgage and all sorts of stuff, like, realistically cost me about $10,000. I'm fortunately in a situation where I can handle that and I have enough other rental properties that it really just comes out to being a wash. But, I mean, if you're a new investor, that can be extremely detrimental to your finances, especially if they're new properties that you just extended to buy. But, yeah, you always have all these other, I say, influencers and coaches and bigger investors out there saying like, oh, you just find a property manager, just let the experts do it, don't waste your time trying to figure out how to do something that you're not interested in doing. Right? But this was the perfect example of we tried to follow exactly that.

Mike DeHaan: [3:17] We were able to well, I was able to spot the issues that were things not working correctly, and I was able to go in and fix it. Right? And that's existed, as Dan and I were talking, across so many different facets of the business that we've encountered. So I went through and just put together a couple list of different situations that we've encountered where we had an expert that we brought on board, we'd hired them to do a job, and they hadn't done it correctly. And we wouldn't have necessarily have noticed if we didn't have the wherewithal to sort of, like, double check their work and, you know, verify that they are doing what they're supposed to be doing. So, you know, going back to one of our first projects, we immediately encountered a contractor that I'd had a good relationship with previously that came in and was doing some work for us. And as the kind of project was going on, a couple of red flags started showing up, deadlines getting missed, you know, sort of weird things going on. Like, we would call him and he wouldn't get the property. Was supposed to be all sort of stuff. So that sort of took us down the rabbit hole, like, okay. So we have this expert. Let's verify what's going on. And we basically found that he was charging us his premium rate, but was sending over a team of completely new hires that had no idea what they were doing. And he was paying them probably minimum wage to sit outside on the deck of our property and smoke cigarettes and drink Mountain Dew. Larry or not, kidding.

Mike DeHaan: [4:39] That's what they were doing. Well, he was off doing another project. Right? But he was more than happy to charge us his full rate for that. So, again, that was an extra that we hired. Things seemed off, and we had to go and verify and take care of that situation. So, of course, you know, we ended up firing him and finding somebody else. Shortly after that, you know, we started to do some more transactions, have some more costs and income and expenses, all that stuff in our business. We really realized, man, our finances are getting out of control. How do we make sure that we know sort of how much money we're making on that sort stuff? We need to find a bookkeeper. So we went and we asked around a bunch of different investors. They pointed us to this awesome bookkeeping firm. I will say they were smaller investors that said this bookkeeping firm was great. So we went and engaged with this company. They gave us a bookkeeper that they were happy to charge us $85 an hour for, which never seemed to be less than ten hours a month. So it was quite expensive. And then we would go and for the first month, we went and sort of checked the equity positions and our income and all that sort of stuff, and things just didn't seem right. And so, you know, we had a meeting with her, sort of tried to get her onto the right track. It did make it so it makes a little bit more sense with sort of what we were expecting our income and expenses to be.

Mike DeHaan: [5:50] And then two months go by, same issues. Three months go by, same issues. All of a sudden, we're in month four. We're still having the same problem on our books are worse than ever. And so we go and we challenge her. Basically, she tells us that we're wrong. And as we looked more into it, we found that she was actually manually changing some of the numbers. Doing like, literally was manually adjusting things to make them incorrect. I don't know if it was, like, maliciously or she just didn't know what she was doing. But either way, you know, we had to fire her, find a proper bookkeeper, start that whole process again. But, you know, this is something if you're a new investor, you're a new business person, you don't really understand how to verify your numbers, you don't spend the time to do so. You could just be going through the entire year with some third party that is, you know, not doing your stuff correctly and is actually causing you some pretty major harm. And the real kicker on the cake with these people was after we refused to pay them for the last month and I built a case and sent it to the actual company boss, And they basically responded back and said, like, okay. Sorry for your bad experience. If you don't pay this invoice, we'll send you to collections.

Mike DeHaan: [6:57] So, you know, screw them. If you, if you wanna know a company that is, DM me at Mike underscore Invest, and I'll happily share them. I'm not gonna completely blast them here. And then, like, to continue on the financial train right after this one, we started working with a new CPA that we were told was, like, the expert of CPAs that worked with wholesale businesses and, you know, flipping businesses that were just like ours. And so we engaged with them. They're based out of the Seattle area, you know, very large company. They have you know, the guy that runs it, an investor, all this sort of stuff. We go through, does all of our tax returns. You know, we he helps us fix our books. They actually did do a very good job at. Goes through and does our tax returns, sends over our returns to review, and things just, like, don't seem correct at all. There's, like, a lot of things that just seem missed or, like, categorized incorrectly. They had us paying taxes placed that didn't necessarily make sense. Long story short, we basically found out that they had completely omitted a huge number of transactions to our, our taxes that were basically bringing down our bottom line, so we weren't gonna pay as much taxes. They just didn't even include those for some reason, and that had us paying significantly more taxes than we needed to.

Mike DeHaan: [8:07] Right? And, I mean, this is a situation where what could have happened if we hadn't gone back and checked, we could have ended up paying significantly more tax than we needed to, which would have affected our growth for the next year. We'd have had less money. There would have been all sorts of ramifications with that. So on that one, we were actually at least able to fix it and work with them, but then ultimately found out that they didn't fully understand how businesses of our size and scale that we were going for worked, so we had to go and find somebody else to do it the following year. So, you know, those are just a couple situations. We've had a handful of other ones over the years. I mean, especially bringing on internal people as well. It's a whole different thing. I'll say that for another podcast. But the whole point of this podcast and this episode is that I wanna talk about, although someone is an expert and they claim to be an expert and their business is certified and whatever, you need to look out for yourself, and you need to understand that no one is going to care about you and your business and whatever you have going on as much as you are at the end of it. Right? Like, no matter what or how much you're paying them, no matter how qualified they are, they're not going to care about that. So when you're working with these experts, if you have things that seem fishy, you have things that just, like, don't seem right, you have to trust your gut and investigate them. And if you don't know how to do that yourself, go get a second opinion.

Mike DeHaan: [9:25] Like, honestly, go find, like, another company. Go find a friend that has more experience than you. Go find somebody else. Hell, even reach out to me. If it's something simple, I'll I'll be happy to take a look at it for you. But you need to protect yourself and not just trust quote unquote experts by their own word that they're 100% gonna be right all the time, especially if any sort of red flags go up. Because if you do that enough times, you're gonna get yourself into a really bad situation potentially. And especially when you're starting out, those sort of things can, be what sets you back from being able to do big things in the future, at least, you know, make sure it takes a lot longer than it needs to. So anyway, alright. Rant over there. Hopefully, you got something out of this. And if you do have any experts that you've been working with for yourself or your business that, you know, you do are a little bit questionable about, go get a second opinion, you'll be happy that you did. So, anyways, guys, please go ahead and subscribe to this podcast and leave us a five star review wherever you listen to your podcast. Also, go ahead and share it with anyone else who might find it interesting or wants to learn about real estate investing or finance or business or anything like that. Aside from that, you can follow me on Instagram at mike underscore invests.

Mike DeHaan: [10:36] Also, to collectingkeyspodcast.com and sign up for our mail list. We have some really awesome stuff we're gonna be announcing here to wrap up the year that we're super excited about, mostly with some different programs that we're launching and some different ways we're gonna be starting and able to work with you guys. So go ahead and check that out as well. Click the keyspodcast.com. Aside from that, guys, thanks so much for listening and talk to you next week.

Speaker 1: [10:56] Thanks for listening. Please leave us a review on iTunes or wherever you get your podcasts, and check us out at collectingkeyspodcast.com for tips and guides on starting your own real estate investment and wholesaling business.