We Tried To Settle Our Beef w/ Pace Morby & Here’s What Happened

Mike DeHaan: [0:00] Real quick, guys. If you want to take your real estate investing business from 6 to 7 figures in the next twelve months, and you wanna do without being a slave to your business, then you have to check out our scale community. You can get the full details at collectingkeys.com/scale. But very basically, it is a community of like minded investors who are working to become the absolute top tier investors in their market. Along with three coaching calls per week led by Dan and myself, we also have a whole bunch of videos and materials that go into all the different SOPs that we use to run our business on a daily basis. This includes how we manage our sales team, how we hire, how we do our marketing systems, how we get the best assignment fees possible, how we do renovations, how we do all the different kinds of creative financing. And if you are serious about taking your real estate business to the next level, it is absolutely something that you should check out. So go to collectingkeys.com/scale, see all the details and see if you're a good fit. If you're doing marketing, if you're doing sales, if you're managing transactions, if you're managing your projects for fix and flips, whatever it is, it's really important to sort of like monitor your stress levels, honestly. Yes.

Mike DeHaan: [1:11] Or like what I would call just like your oh shit factor. Like if you feel like you're constantly like, oh shit, that didn't go right. It probably means that you need to just go back and assess either your team or your systems because you're probably reaching the limitation of what your current system can sustain. What is going on, guys? Welcome to today's episode of the collecting keys real estate investing podcast. This is the show we're teaching to make massive income, not just passive income with your real estate investing business. This is episode two zero two. And if it's your first time here

Dan Austin: [1:49] Did I miss two zero one?

Mike DeHaan: [1:51] No. Two o ones are are gonna be our interview episode. They came out this past Friday.

Dan Austin: [1:54] Oh, okay. Because I was

Mike DeHaan: [1:55] like, did I miss two zero one? No. This is your first time here. I am Mike Daun, here with my cohost, Dan Austin. And on these Wednesday Mike and Dan shows we talk about real estate, investing, business and whatever else we feel like. And if you guys are unfamiliar with us and our general, I don't know, views, we are very opinionated people and we also like to have beef with random individuals, particularly if they're out in the space, you know, especially the real estate space. So a of goofers, lot of people talk about trash. And a particular person that we like to talk a lot of trash on or have beef with is Hace Morby of Sub two. And I am so excited, Dan, because I've had my first direct interaction with him. I liked it. After these years of you know, just sort of seeing from afar and

Dan Austin: [2:47] Just saying stuff out in the ether and not really getting anything back.

Mike DeHaan: [2:51] Yeah. And you know, and being open that I'm not okay with the way that he oversimplifies subject to, and the way that he has created this community, or a bunch of people who are taking these predatory tactics to swindle both sellers and buyers into buying deals that make no financial logical sense.

Dan Austin: [3:06] The thing I will say before, I wanna preface this, a couple things. Sure. Two things. First, I think it's hilarious that like, because you listen to the same, the Tri Millionaires podcast, I listened to there where Pace Morby was on there and Jamie had made, asked some questions, taken a poll of people and you had actually posted some questions in our Facebook group about like, hey, ask these questions, which he did. Yep. Which was good, I think. The funny thing is I think that the way we both think alike, we're like, oh, he said to DM him, let's talk some shit. Boom. Yeah. DM'd him and the other thing I like about it, I wanna mention is I do respect the fact that he actually did honor what he said halfway.

Mike DeHaan: [3:41] Correct.

Dan Austin: [3:41] Which is hit me up in the DMs, I will get I love my haters and I will get back to you. And he he did.

Mike DeHaan: [3:47] Yeah. Exactly. So I guess just to just to clarify that really quick because he was on a show called Tribe of Millionaires, is the Go Abundance podcast, which Dan and I are both very involved in Go Abundance. We know the host of that show. And he asked people for questions. We both inquired, and he got Pace actually to show up on this interview. It was a very hard thing to do. And at the very end of the show, Pace said, if he has any haters, send him a DM on Instagram, and he'll be more than happy to address the concerns. And I was literally on an airplane listening to this, and I paid for WiFi immediately to

Dan Austin: [4:16] do this.

Mike DeHaan: [4:17] Just so I could send a DM with all of my concerns from the episode. Yeah. And the episode was fine. I mean, Jamie did about as good as he could do with his relatively limited knowledge Yeah. Of like being a real estate operator. Started out

Dan Austin: [4:28] pretty good. He was asking some pretty strong questions that were like obviously questions that people had wrote in to to have asked, which were good questions.

Mike DeHaan: [4:35] Yeah. But he was not quite enough of like an experienced operator with transaction volume to like know kind of the probing questions that I would have asked.

Dan Austin: [4:42] Like level two and level three questions once you follow-up questions to ask.

Mike DeHaan: [4:46] Yeah. And so Pace had, you know, pretty surface level responses. And so I DM'd him with like a list of the things that I have problems with about subject to, the things that he never seems to address. And he sent me back that same day, a few hours later, like a video response. I know you got one too.

Dan Austin: [5:03] Which is pretty awesome, like in a way that he did

Mike DeHaan: [5:05] that. Totally.

Dan Austin: [5:06] Because we could use it however we want.

Mike DeHaan: [5:08] I know. And at first, I was I texted you and I was like, do you think it's like a canned thing? You said no. He addressed he addressed yours very specifically.

Dan Austin: [5:15] Very specific with mine too. Yep.

Mike DeHaan: [5:16] Yeah. And but then he followed up with a handful of DMs and first off, he sent me a link to his YouTube page and he said, I have 2,900 videos, most of them are four to six hours long, all of your concerns are addressed in there, go look in those. Okay, and then he said, I responded back and I was like, well, do you like have any more specific direction? There's a ton of material in there. Tell me where to go, I would be happy to go and find these answers myself. And then he sent over some other jargon and he said, I'm happy to invite you out to my office in Arizona. I'll bring our attorneys, our escrow officers, we can do a class if you'd like. And I said, awesome, that sounds great. I was like, let me know when. I will pay my own way down there. I am more than happy to make the trip and be educated. And I was like, we can do it this week if you want, I don't really care.

Dan Austin: [6:05] I'll even pay you for the time.

Mike DeHaan: [6:07] Yeah. Time, right? Honestly, you

Dan Austin: [6:08] want a thousand bucks an hour? I'll do it.

Mike DeHaan: [6:10] And to that he kind of diverted it.

Dan Austin: [6:11] That's weird.

Mike DeHaan: [6:12] And then he went on this weird sort of tangent about how he does too much content and people that tend to hate don't fully consume all of it, which is impossible to do and that's fine. And then he threw this curveball at me and he said, another issue I have is that the hateful people are usually white men who are just are just full of jealousy and envy.

Dan Austin: [6:35] He said that on the TON pod on the Tribe Millionaires podcast too, I was like, where are you taking that dude? Like, why is it white white men?

Mike DeHaan: [6:42] Oh my god. It's completely irrelevant. But I I said that that's not the case at all. I know plenty of wealthy people and you know, do not have the same sort of animosity because they don't go out and lie to the masses and become like the main brand built off of And so anyway, I tried to like go back and forth with a handful of things. And basically what he just kept doing was he just kept trying to like one up me over and over and over again. Mhmm. Like he kept going to, you know, I travel around, I own 500,000,000 real estate. I went to, I'm sorry, a 110 cities last year meeting with members. He's like, I understand. It's crazy. I'm the only person who gives so much time to my community. I have 5,000,000 people who watch my YouTube channel monthly. He did all these sort of things. And I kept being like, hey cool, so when do you wanna find me? Yeah. When

Dan Austin: [7:30] am I getting my trip?

Mike DeHaan: [7:32] And he eventually completely brushed that off. And I went back and forth with him for like over an hour. And then ultimately he never came back around to that. And he, well he said, I'll invite my three haters, we can hang out all day. And I said, anytime over the summer let me know. And he said, great, he'll post a story about it this week, he has yet to do that. And then ultimately he started sending me these voice messages, which was quite funny actually because I was in the car. And so like my wife was like listening to him and sending responses for me. And my wife's response was like, God, I feel like he's just so condescending.

Dan Austin: [8:03] It's kinda weird, yeah.

Mike DeHaan: [8:04] It's like so unnecessary cause he went from wanting to take me out to no longer not wanting me to come out, but then said he's like He sends me this voice message, he's like, hey, if you want to, we can have you come and join one of our calls, and we'll have over a thousand people there on my calls. And what you can do is you can address them, and you can tell them all the things that you don't like about what they do in the subject to community, and they can provide you some guidance and they'll prob and because we're all abundance mindset, they'll probably wanna do deals and JV's and stuff with you. And I responded, absolutely. Send me the invite. Tell me when the calls are, here's my email, invite me to one, I'll show up. And he just responded with, we do 38 calls a week, not even joking. These are all different kinds of calls that we do, we have our attorneys, we have all these experts. And I was like, that's amazing. Here's my email. Add me to one. I will happily come one versus a thousand, and tell them all the things that I don't like about what you guys do. And he sent me another voicemail, basically talking about how big his community is and all these other things. And I said thanks, third time, here's my email, send me an invite, I will happily come on, and then he just liked it, and then we stopped responding.

Dan Austin: [9:13] Wow. He won't engage, he'll engage at

Mike DeHaan: [9:15] the service

Dan Austin: [9:16] level, he just won't, yeah. Took a different pro, I took a more like very specific approach with my questions. I was like, here's exactly like what I don't like, and the ones that I zoned in on and he responded really focused on was insurance. I said, hey, on the podcast, you talk about having to use a specific insurance company and the way he explained it was, and this is where Jamie did not dive in any deeper, which was at a point where you really could have, where Pace said that he has a special insurance company that uses four sub two insurance and he does that and basically what they do is you keep the seller's insurance in place, then you get insurance through this other special sub two insurance company and a week later, the sub two insurance agent calls the seller's insurance and cancels it. A week later, the question is is, and I ask this, why do you need to do that? It seems like you're going and playing like cloak and dagger, like you're going behind other people's back. I was just asked specifically, why do you need to have two insurers for a week? Like what's the reason? And you and I both know what the reason is, and the reason is is because you do not wanna trigger a due on sale clause when you call the lender and change insurance companies.

Mike DeHaan: [10:29] You're trying

Dan Austin: [10:29] to avoid that. So, among other things. And also, there is a problem with having two insurers on there. It's not, and he explains it as you're being double insured, it's perfect. Like if something bad happens, two people pay you. It's like that's not how insurance companies work. You and I know firsthand that's not how insurance companies work. Their whole goal is to not pay you and if they have a reason to say that they're not the payee, they're definitely not going to pay out.

Mike DeHaan: [10:52] Exactly. And so I guess just to simplify that, if you have two insurance companies, they're both going to basically say it's the other one's responsibility and neither one is actually gonna provide the insurance, you might as well just have none.

Dan Austin: [11:02] Right, exactly. Or and if they do come to terms, it's gonna be months and months later, so you're gonna be out whatever the problem is, right? Yeah. And so, anyways, so he, yeah, he as well sent me a video message kinda saying some of the same stuff that you had brought up, which cool, and good on him and he responded, like you said, like the same day, which was kinda cool. And then the the voice message, because I kept pinging him on the on the insurance, so he sends me a voice message and he gave me the link to steadilypartner.com, which is the insurance company he uses, the guy name is book a call with Lucas, which I was, I totally will, talk to Lucas about this. Basically, it's because people don't know how to do insurance and they don't know how to do it themselves and they screw it up when you're doing sub two deals, so you have to go through, so he says, I taught this insurance company how to do it and they know how to do it the right way now, so that's why we have to use it, because people don't know how to do it. I'm thinking of my head like, man insurance agents have been around a long time, I've bought a lot of properties, I know how to get insurance. There's no tricky thing about it. Unless you're trying to do something where you're going behind someone's back Which playing this cloak and dagger is the whole part about Sub two, it's just like, he'll never answer those things directly on the podcast he did and he just kept diverting the conversation which he's a very overbearing and tactical speaker when it comes to if you're asking him questions, he's a politician, he just diverts it and he says, I've done thousands of these deals, my sellers give me hugs and buy me gifts and tell me how great I am, and goes down that path and like never directly answers the question at hand.

Dan Austin: [12:30] That's why I think you can, a lot of people, if you have confirmation bias, because you're like, I want this, this to work out. This get rich quick, no money down, real estate investing, they want it to work so they have confirmation bias, they're like, yeah, he has thousands of people that are, he's done thousands of these deals, and you know how hard it is to do that, first of all? And second of all, it's like, people are just calling you and hugging you and sending you Christmas cards.

Mike DeHaan: [12:55] Yeah, that's not how this business works at all. And the fact that he kept saying that too was like really weird, that's such a weird, narcissistic thing to say. Yeah. You know, and the biggest red flag as well is, you're right, with the insurance company, his answer to everything that doesn't make sense, he goes, oh that's because people don't know how to do it, and I had to teach him how to do it. So you're telling me there are all these multi billion dollar, trillion dollar freaking industries have no idea how to do anything of what you do, that means that it's not real. Right? Like honestly. That means that it is a fake thing that you are exaggerating, and you're probably making some alternative company that he has ownership in that is structuring ways in the gray that he has somehow been able to justify. Mhmm. Right? And the thing is is he kept doing that over and over and over again, but then at the same time in that episode he goes, subject to has been around forever. If you look at every single realtor doc, it has the option to purchase subject to. So everyone should know how to do this, but then also no one knows how to freaking do it. And he has to teach them how to do it. You have to use a special specific company, which also tend to share similar names to his brands.

Dan Austin: [14:01] Yeah.

Mike DeHaan: [14:01] Right? And the whole thing is just asinine. And we know what it comes down to, it's not because I'm a white dude this jealous. Right? It's not because like I look at all the opportunity he's created, I'm like, I wish I thought of that at all. It's the fact that he is a grifter, that is a politician that has convinced people that he has this magic formula, and he lies and sort manipulates his way to make it into a tangible thing, which is not legitimate at all.

Dan Austin: [14:29] Right.

Mike DeHaan: [14:29] Right? And it's just so crazy to me. And I have yet to see him have a conversation with an actual operator that isn't playing the same game. Totally. Because like everyone that we talk to that is an actual operator that is doing any sort of volume in this business or has the experience where they've taken their licks, they've done complex transactions, you know, they've kinda gone around the block with owning rentals, doing traditional sits and flips, doing wholesaling, doing creative financing stuff. They all look at him and they're like, I have a really weird feeling just about him like in his vibe, it doesn't make sense.

Dan Austin: [14:59] It doesn't make sense.

Mike DeHaan: [15:00] But the problem is is like all the long form stuff he does is with people that are literally doing the exact same like, yeah, we're gonna just get a bunch of money from these idiots, or they're from people that don't have that level of experience and so they can't ask the actual hard hitting question.

Dan Austin: [15:15] Totally.

Mike DeHaan: [15:16] Right? And I don't know. And like, if this ever gets back to him, which you guys should go and DM him this episode and say like, you talked to these guys last week and you left them on read. We wanna have that conversation, I'd be more than happy to, but like I don't want surface level fricking responses to the actual challenging questions. Yeah. You know, it's But I don't know, either way, he's still the biggest richest dude out there and we're just nobodies, but it's Yeah.

Dan Austin: [15:43] We hate us. We are haters.

Mike DeHaan: [15:45] Yeah. But I mean, I Also, if any of you are in that community and you would like me to come and face you guys one versus 1,000, I am more than happy to do that. I'm fully confident

Dan Austin: [15:55] Damn dog throwing down.

Mike DeHaan: [15:56] Yeah. And what we do, and the knowledge that we've built.

Dan Austin: [15:59] I'm 1000% confident I could go in the room and have a intelligent conversation about this and and not have a single person in there tell me how they're doing this at scale and they're doing ethically and they're able to do it without these weird tools that you

Mike DeHaan: [16:13] need to do it with. Yeah. And these weird things that are so outside of the industry norms, industries that have been around forever, you know. And I said to him as well, one of my messages, I was like, dude, I seriously do that you can change my mind and show me this legitimate because with my sort of background and my skill set of building out a marketing and sales team

Dan Austin: [16:36] Mhmm.

Mike DeHaan: [16:36] If you can truly change my mind and show me how easy it is, I will make so much money.

Dan Austin: [16:42] Right. If it's really that easy, yeah.

Mike DeHaan: [16:44] If it's really that easy, I already have the base, like we will destroy. Oh, yeah. He just brushed that off and says like, oh, just come to my come to one of my calls. We have 39 of them a week, but I can't tell you when any of them are. Shut the fuck. So steep.

Dan Austin: [16:58] 39 a week? Yeah, whatever.

Mike DeHaan: [17:01] Yeah, no wonder you have a bunch of people out there that are failing because they can't go to any of them. Yeah. Right, they

Dan Austin: [17:06] have jobs. They have jobs, exactly. 39 calls a week and they also none of them have the calendar invites because nobody knows where they are.

Mike DeHaan: [17:12] Yeah. Anyway, that was my excitement for the weekend and last week. But I don't know, see, maybe we'll get an impromptu invite down to Phoenix to go and see what he does.

Dan Austin: [17:24] I hope so, I'll be there in a few weeks, so this should let Yeah, me come to the

Mike DeHaan: [17:29] there we go. Also, what

Dan Austin: [17:31] is with all these like somewhat well-to-do real estate guys that have done, I should say real estate guys, but like you know, online you know, influencers in the real estate space that are like pretending to be cowboys now. Like they have like cowboy hats, like Ryan Pineda was doing it, Pace Morby's doing it. I don't know dude. A bunch of these guys like, we went on this dude ranch, and I'm like, and nothing wrong with dude ranches, right? But every time I hear that, I think of something that's just not good. Like what

Mike DeHaan: [17:56] happens on dude ranch? I guess I haven't seen that. I also feel like there's a certain generation that like, really likes to go and do man shit out at like a ranch.

Dan Austin: [18:05] I don't know, like Brian Bonita, I feel like he's like not any different than our age group.

Mike DeHaan: [18:10] Like not by age. I mean, well, I I would say you're a little older than me. I'd say a lot of guys I'm talking about are probably closer to your age, not mine. She a little bit older than me.

Dan Austin: [18:17] So like how old are you?

Mike DeHaan: [18:18] Me, I'm 33.

Dan Austin: [18:20] So yeah, five year difference?

Mike DeHaan: [18:21] Yeah. I feel like that's not a lot. It is not a lot but like, it kind of is. Mean, because we've we've talked about this because I grew up with the internet from a very young age, you didn't.

Dan Austin: [18:31] Yeah. You grow I we talk about this a lot because you're a millennial trying to be a gen z. So you are on the younger trend of things. You take the worst traits of gen z and you take those on it. So you have the worst of millennial and the worst of gen z.

Mike DeHaan: [18:45] You know how I know that there's a difference? Because you get so offended every single time this comes up. But they I I don't know what that is though. I've seen that as well with like the weird identity things. Mean that whole group of inside baseball players in the real estate influencer space is just like ridiculous honestly.

Dan Austin: [19:03] Yeah.

Mike DeHaan: [19:03] And silly. They just do anything to get eyes, to get views, to sell whatever product they have. I don't even know how many deals those guys do. And if they don't, that's fine. Just don't pretend like you do. Yeah. You know, like honestly.

Dan Austin: [19:17] Mean, it's okay to a certain extent. Yeah. Just don't act like you do. Or like don't keep trying to teach the same shit that worked ten years ago because it doesn't work today. Just Yeah. Can't. That's business in general.

Mike DeHaan: [19:27] Mhmm. Totally. And mean that that's like my biggest knock on a lot of those guys is they it it's not that different from like the successful entrepreneur who's like, oh well I do the cold baths and everything like that. It's like, well, what you do like, what you did to get successful is not that. Right? Now it's like basically what got you rich is not what you're doing right now. It's a little bit different. The same with like a lot of these people that are trying to teach these real estate methodologies they did in like 2016, and now they're preaching as like a gospel in 2024. Yeah. So it just doesn't make any sense at all.

Dan Austin: [19:59] No. It's an unfortunate situation.

Mike DeHaan: [20:00] Yeah. Whatever. Anyways, alright. We'll move on from that though. But that was my my high horse conversation. Hey. We really appreciate you being a listener of the collecting keys podcast. Did you know that we also are on social media and on YouTube? Should go and shoot us a follow on those as well. You can find both Dan and I on Instagram. I am at Mike underscore invests. Dan is at investor man Dan. You can also find short clips from the show at collecting keys podcast on Instagram. And if you wanna see our faces talking while listening to this show or you wanna check out some of our crazy animated adventures we've been putting together into some funny little web cartoons that sort of show the crazy stories that guests tell on the show, then you should go over to YouTube and check out the collecting keys channel. Shoot us a subscribe over there. It really helps continue to grow our audience. We really, really appreciate it. Well, anyways, enjoy the rest of show you guys. We appreciate you all.

Dan Austin: [20:52] One thing to note when I was staring at my screen, so next year and and I'm saying this on the podcast because I'd love to people the people that went to KeyesCon and got their free swag because they went to KeyesCon. That's that's why it's worth going. I really feel like the low but it's little low.

Mike DeHaan: [21:06] It is low on that, you know, and that is probably poor q c on our on our part. Yeah.

Dan Austin: [21:12] Up here for the screen, you know, so I have it on the screen so I can get that free hashtag keyescon twenty twenty three.

Mike DeHaan: [21:17] For sure. That is poor cc. I will be honest though, with that I got put up because our our guy put together, that I think is just like the default location where it's like, here you go. It's going on the shirt.

Dan Austin: [21:26] Yeah. On like the print shop. That's kinda what I assumed. I was like, gosh, I can't see

Mike DeHaan: [21:30] it when I look down. It's like below your nipples, dude.

Dan Austin: [21:33] Look on the YouTube channel and tell what you all think. I'm glad I'm glad my coffee cup since we're talking about like video stuff. I'm glad my my coffee cup this thing changes colors when it's hot.

Mike DeHaan: [21:43] Yeah. Nice. Did I tell you about that? There you go. Fancy. But your kids love that.

Dan Austin: [21:48] No. So what's behind this is not okay for YouTube or that YouTube would have to bleep it out.

Mike DeHaan: [21:54] Okay.

Dan Austin: [21:55] Yeah. So a good friend of mine gave me this coffee cup specifically to get me caught off guard. You know what's that big black dude's name? You know what I'm talking about? The guy from COVID, everybody that's leaning down on his knees. What's his name?

Mike DeHaan: [22:07] Or Yeah. I I have no idea who that is. I've I know what the name you're talking about.

Dan Austin: [22:09] You know

Mike DeHaan: [22:10] what I'm talking about. I don't know how

Dan Austin: [22:11] else to say it. And so my in laws were over the other day and I was making a cup of coffee and all of a sudden I looked down and this whole coffee cup is white, it's black, if you're watching the audio version. Yeah. And this dude's on there and I'm like, oh my god, dude.

Mike DeHaan: [22:25] And your mother in law's holding it.

Dan Austin: [22:26] Yeah. She I was just like, oh my god, dude. This is like what a Troy, I know Troy listens to the podcast so he got me, dude.

Mike DeHaan: [22:32] Yeah. That's funny.

Dan Austin: [22:33] But the best part about it is I'm still drinking out of it like two days later.

Mike DeHaan: [22:36] I mean, might as well. It's a cup. Does it does a job.

Dan Austin: [22:39] Yeah. Sorry about that.

Mike DeHaan: [22:40] Anyways, but yeah, for for the KeysCon twenty twenty four, which we have coming up here in June, we'll we'll get some

Dan Austin: [22:45] get some updated shirt locations.

Mike DeHaan: [22:48] Yeah. Yeah. I was gonna I was gonna do a mall or so. Cool. But besides that, business is buzzing. We have been busy busy busy getting a bunch of closings figured out. And I guess our first deal of the year, but we had to drop. We've had to drop today. But besides that, we've had a 100% close rate so far which has been great. And yeah, mean, just been getting everything sort of like ironed out with like trying to figure out how to handle the closings at a little bit more volume. Because after a while, the system we have is like, there's no way to figure out how inefficient your systems are than when you start to grow. And you're like this worked great up to this amount of volume now that we're exceeding that. We really need to you know get things a little bit more unlocked. That's the same pattern for if you're doing marketing, if you're doing sales, if you're managing transactions, if you're managing your projects for fix and flips, whatever it is, it's really important to sort of like monitor kinda like your stress levels, Yes. Or like what I would call just like your your oh shit factor. Like if you feel like you're constantly like, oh shit, that didn't go right. It probably means that you need to just go back and assess either your team or your systems because you're probably reaching the limitation of what your current system can sustain. Yep. Yeah. You said like,

Dan Austin: [24:05] so almost like you're like, if you feel like you're constantly losing control, like you can't control everything, it's probably because you don't have the right systems in place.

Mike DeHaan: [24:11] Or enough staff or something along those lines, right?

Dan Austin: [24:14] Yeah. Staff, systems, yeah. Doesn't always have to be a system. I know we talk about systems and SOPs all the time. Sometimes things can be solved by just having a person.

Mike DeHaan: [24:21] It can. Or or like just having something like actually documented written out. Is this is an interesting thing that I've come to find as I've gotten involved in a few different entrepreneurial groups that I would say have newer entrepreneurs. Is when you say you're gonna systematize something, what they imagine is that you're building out some really complex set of automations that make things go like like a system, right? Yeah. Like you're

Dan Austin: [24:45] You push a button and it goes boop,

Mike DeHaan: [24:47] push a button and Yeah. But that's not what it means at all. Like honestly, most quote unquote systems are just like a repeated process for doing something that can be done by yourself, it can be done by a virtual assistant, it can be done by like combination of different like email sequences, or like checks and balances that are like a combination of software with like a manual touch. It's about having a repeated way that you do the same thing so that you know what the anticipated outcomes

Dan Austin: [25:12] would be. Mhmm.

Mike DeHaan: [25:13] You know, and it's not about like creating the most complex like connections of integrations and Zapier Zaps and Zapier Zaps, whatever that system's called, and all these different things to try and make like this perfect thing. And I feel like new entrepreneurs, new business owners, they tend to fix it on that and try to put those together because it is like a quote unquote productive procrastination tool. Like they don't wanna be doing their follow ups, so instead they're like, I'm gonna build the perfect automated follow-up system. It's like, or you could just freaking call them. Have 60 leads. Totally. You don't need to do an automated follow-up process.

Dan Austin: [25:49] Yeah. A lot of times the the an SOP or a process is really just to highlight the exceptions and pick those out. Because if you try to capture every exception, which is like what you're talking about trying to make this thing perfect, like you're never going to get it because there's always going to be exceptions and so you baseline what is normal and that gets processed and then you have a process for kicking out the exceptions, so as somebody can make the decision like you as the owner or the leader of that part of the company, you can make a decision what to do and then that person can now complete that portion of it just with that single decision because sometimes it is a nuanced approach and it takes a human eye on things and that's okay. You just don't want that to be too much because otherwise then the exceptions really aren't, they're not exceptions anymore, they're just part of the system they need to be put back into the SOP.

Mike DeHaan: [26:34] Exactly. And just because you build out a system and you have people in place to do it too, this is another recurring challenge that we've been seeing. Particularly with people in scale that have started to build out their sales teams, is they go like, oh yeah, I feel like things are, they fall off the rails every so often. Like, well yeah, you have to monitor it and maintain it.

Dan Austin: [26:53] Right.

Mike DeHaan: [26:54] Like you can't just go like, cool, here's the process, have fun, person in The Philippines, just go do this now. If you never like maintain it and actually check to make sure they're doing it, people will get lazy, they will take shortcuts, they will try to like find a way that requires them to have to put less effort into it. Like that is literally human nature.

Dan Austin: [27:14] Or they'll just forget. They'll just forget because honestly people like Here's the other thing, when you write out an SOP and step by step, yeah, people are gonna read it and look through it once. But if there's no reason to, they're not gonna just

Mike DeHaan: [27:25] like check that every single day. Nobody brain And

Dan Austin: [27:29] so things just get the balls get dropped and you have to kind of manage it and that's why we have managers and management systems in place.

Mike DeHaan: [27:35] Yeah. And honestly, I'll say most of time you're lucky if they read through it. Most people they're gonna just start tinkering with stuff. Yeah. And then they will go and reference it when they have questions. Especially if you're when you're bringing on sales guys, I would say probably every single sales guy we've ever brought on, we give them like the entire onboarding SOPs, they proceed to open it maybe and just go nah. And they just go on to the CRM and start calling people. Then they'll ask you questions. Yeah, they're like, hey, so I need to figure out how to comp this deal, how do I do that? It's like, well did you look at a calculator in the SOPs? And they go, what are the SOPs? I haven't seen them. You've been here for three weeks. Yeah. What is he 51?

Dan Austin: [28:14] It's so true. It is so true. Yeah.

Mike DeHaan: [28:16] Which is fine. Like I don't know, would rather have people I will say I would rather have people that do that enthusiastically, as long as they're willing to learn and adapt within the business once you sort of point them where to go, as opposed to having the person that comes in for two weeks and they take, you know, what should be a two day onboarding process and drag it out forever because they're afraid to get started.

Dan Austin: [28:37] If you

Mike DeHaan: [28:37] ever have that person, you should probably just fire them because they're not gonna do it.

Dan Austin: [28:40] Yeah. Yeah. If they're a salesperson, they're not already making a call in their first few days, like, they're probably not a salesperson.

Mike DeHaan: [28:46] Yeah. Same thing on that too is when you have new salespeople that come in, they will botch calls. Like absolutely. And you have to accept that and allow them to learn from that, and remind yourself that that was literally you before you hired this person. You were the were the one that would sometimes botch the calls and just because it's somebody else doesn't mean that you can, you know, bring down the hand of God.

Dan Austin: [29:09] Yeah. Absolutely. Yeah. There's the the training curve and then there's also just the constant like things do happen, shit happens, people aren't perfect, you you were never perfect so don't think you were. And you might even see early on like a dip in your in your sales, your closings or whatever the task is like productivity for that, but as that person, if you follow-up and if you train and retrain and kinda give them the feedback, like the feedback loop of saying here's where I think you could do better, here's where you drop the ball. If you don't give them that then they're never gonna get better but if you are, they actually get better over time. You can't expect people to come into your company and do things well right away. It just doesn't happen especially because even though you try to document things, you try to have systems, it's still like a black hole for most of these people, they don't know where the bookends are until they've kinda learned it. You have to like, it's like any new thing, you kinda gotta push around until you find where the bookends, where the boundaries are of that skill or that task and you're like, okay, now I can see what good looks like and what great could be.

Mike DeHaan: [30:01] Yeah. Exactly. And you know, it's for some reason, I I think a bunch of people are newer, they're less kind to that. Probably they have less of an abundance mindset. They still feel like every single opportunity is precious. But if you have go back to that system where you're doing things on a repeated basis, there will always be more opportunities that come your way. Right? For sure. Honestly. So besides that, we got transactions going. Our rental property stuff is still a freaking nightmare. So we got bedbugs, you said? Mhmm. And now we're basically gonna gas that entire unit which is this has been going on for like months now.

Dan Austin: [30:31] Yeah. It's an unfortunate situation, mostly because the pest company that our property manager uses is maybe just not the best company. And so in lieu of them returning our money like I had requested after the first month, just give us our money back, it was like $2 or something like that, they proceeded to go back to that place multiple times, six, probably seven times at this point. And every time they're like, poof, there's still bed bugs here.

Mike DeHaan: [30:57] Yeah, it's still gone.

Dan Austin: [30:57] I wonder why, let's just do the same exact thing and these are, we did get to the point where they cut holes in the wall and like gassed inside the walls and they're like, golly, we've never seen this before and I'm like, I don't know, did you go to the unit next door? Like, no, we didn't see any in there. I'm like, yeah, but like, I don't know, I didn't see any bed bugs when I was in this house either, and that house next door is full of crazy. And they already said, they already said, yeah, it was pretty gross in that unit, there was a lot of crap in there. I was like, and you don't think there's bed bugs in there?

Mike DeHaan: [31:25] Right. Yeah. I don't know. Hopefully we'll get it figured out at some point. But Yeah. I mean hopefully it'll be relatively easy to fill once it's done.

Dan Austin: [31:33] It's like four or five grand in missed revenue. It's okay. It's not a big deal.

Mike DeHaan: [31:36] Yeah. I mean that's the name of the game though. That's why we always say if you're gonna own rental properties, you should do it at some sort of scale because otherwise, know, these sort of things, if like this was your only property, that's 4 or $5 of missed revenue that's also an expense to you.

Dan Austin: [31:51] Mhmm. Versus, know,

Mike DeHaan: [31:52] the fact that we have a little portfolio at least it kinda like covers itself.

Dan Austin: [31:55] Totally.

Mike DeHaan: [31:55] Even though we don't make any money, it doesn't necessarily like lose on a monthly basis.

Dan Austin: [32:00] Yeah. You probably, you know, actually the truth of it is you probably should just have one ten or more.

Mike DeHaan: [32:05] Right. Like only one or like a shit ton.

Dan Austin: [32:07] Yeah. Like properties. Like one because yeah, you can float it, you know, you have little excess income so that's why you have the rental property, it's easier to manage, it's less likely to have issues because you're on top of it. But beyond one, there's no point in having two, three or four. There really isn't.

Mike DeHaan: [32:22] Yeah. Well I mean I've heard that about a lot of businesses though in general, because owning rental properties is fundamentally a business. But I've heard people say like, let's see you own like a gym, You probably shouldn't like have one gym location and open like, oh, the South Side gym location. Right? Right. Because you're gonna have basically just more problems, but not enough revenue to actually outsource it correctly. But if you open a chain of gyms and you have like six of them, then you have enough scale that you can cross over systems. You can probably cross over staff, you can have different like general managers that can go across both places.

Dan Austin: [32:54] Yeah. I agree with you. A lot of brick and mortar business especially is like that, is like once you have enough to have like a general manager, like you can actually start growing and scaling and it's less work for you and more income because, but if you have like one or two, you may not need an, like your general manager maybe can manage 10. So you're paying a 100% for 20% capacity. Right? So you really need to get to that scale quickly so you can do that. Otherwise, you're just running around doing everything half assed.

Mike DeHaan: [33:22] Mhmm.

Dan Austin: [33:23] Same thing with rental properties.

Mike DeHaan: [33:24] Exactly. Right? Rental properties are even like wholesale business, know, or like flipping business. If you decide that you're gonna do one deal a month and you're perfectly comfortable doing that, the problem is if you don't do one deal a month, do zero deals. And that means you have no revenue and you only have expenses. Exactly. Right? Or like we I remember that father son group that we met a while back, and their whole business plan, I guess like their dad's retirement or whatever, is they would flip one house a year and they would just like live off of that and they would go spend time at the lake and do whatever. It's like, that's awesome. What happens when you lose your ass in that one flip? Right. Right? Or you're not able to find a property to flip? Does that mean that you're just not making any money for the year?

Dan Austin: [33:59] Yeah. You're like literally just riding the margins so Like you need to have a little bit of scale, little bit of excess so that, you know, maybe you didn't do 10 this year, but you

Mike DeHaan: [34:06] did eight. You still live off of eight flips. Yeah. Yeah. So I mean, it's just like, I guess look at your goals because if you're okay with that volatility and you know, you just literally wanna focus on spending time with your kids or whatever, that's

Dan Austin: [34:25] fine. Let's I guess be honest, like bigger isn't always better. Know, there could there is a there is still that growth cycle where as you're getting bigger, and this is like going back to the beginning of this conversation is like the difference between one and ten units is nine more units, and that just doesn't happen overnight for most people. And so when you talk about that, or you know, maybe you're doing one wholesale deal on average a month, to get to five, like there's a lot in between that, and so getting bigger isn't better, because in that growth phase, if you don't get out of it, or takes you five years, you might say, I don't wanna get out of it, like I don't wanna do that, I was happier with one, my margins were huge, like you and I know this, like our margins, when we were doing less deals, when we were doing like three or four a month, our margins were huge, the staff margins. Because you don't need any of

Mike DeHaan: [35:09] the overhead staff that we have now doing 20 deals a month. I know. I've actually been thinking about this recently as I was looking at like our gross margin on our business. And I think back to when it was just like awesome, two people and we were making good money.

Dan Austin: [35:23] Oh, yeah.

Mike DeHaan: [35:24] Now yeah. I was looking on Stripe. And between that and then all of our our wholesale deals, basically between our partnership program, our wholesale deals, and scale, We've done about 800 k in gross revenue already for 2024 in the first quarter. That's pretty sweet. That's a really solid year. But we're not getting paid very much right now because we're reinvesting so much in the business and we have so

Dan Austin: [35:51] much We've really created about a million dollars in value in q one and that doesn't necessarily trickle down to your wallet.

Mike DeHaan: [35:59] No. Like not at all. Right? And it's it's very different because we have staff that we pay for, you know, we're we're putting some good money into the Keys Con event that we're putting on in June. We're reinvesting a lot of money into our software system that we're building out for the scale, not for sale for the partnership members, the back of home buyers partners. We just acquired SimplyLeads, the marketing, texting and cold calling company which has taken more capital.

Dan Austin: [36:27] Yep.

Mike DeHaan: [36:27] Right? And then all of a sudden, it's just like, oh, well I guess we're not actually making any personal paychecks even though the fact that we've had almost a million dollars come through our bank account in three months.

Dan Austin: [36:37] Yeah. Yeah. It's all that reinvestment, man.

Mike DeHaan: [36:39] Yeah. And the funny thing is that's just from the collecting keys businesses, that's not including our lending business or our rental properties. Yeah. Right? Mhmm. That's, I think that's what, basically people don't fully understand that.

Dan Austin: [36:50] Or our personal wholesale flips that we do here in Spokane that are just in tune. Yeah.

Mike DeHaan: [36:55] Exactly. And then that's also too, you guys are ever listening to other people and they talk about how they have a multi 7 figure year business, right? So I guess for context, we have done, across all our business, we've probably done a million dollars this year already at the end of Q1. And we have made, or what we paid our, we pay ourselves what like $4 a month as our base

Dan Austin: [37:16] Our pay salaries 5, yeah.

Mike DeHaan: [37:18] 5, yeah. $60 a year each. And so that's all that we have personally made across Everything all else has been reinvested.

Dan Austin: [37:23] Yeah. I mean it could be another bank account somewhere, but yeah, don't really track it that way. Yeah.

Mike DeHaan: [37:28] Yeah. So point being, people can be completely full of shit and they can talk about all these numbers, but if they don't tell you their net profit, you have no idea what they're doing.

Dan Austin: [37:37] Yeah. And I guess for context, especially as you like look at other businesses and you're trying to compare yourself and you have smaller businesses like a small wholesale operation where you're doing a couple two three deals a month, you're gonna have 60 to 7% margins. Mhmm. Like it's true, like you should Absolutely. And that's awesome. As you get bigger and bigger, those margins get smaller, but the numbers get bigger, right? So you know, most people are doing like, most people are developing a software program like us and some of the other things that we're doing because we have different visions for our business outside of just the core business of wholesaling and flipping and buying rental properties. But if you're looking just at the macro level from a small business standpoint, like 10% EBITDA, like 10% margin is probably good. If you can find a business that's doing more than that, that's probably a really good business to look into depending on what the sale price is. So you know, you can see a business, it's not uncommon to see businesses doing 3 to 5,000,000 a year Yeah. Revenue and then the owner to be vacant 3 to 500,000 Easily. Yeah. Which is you know, that 10%. The tough thing is is if you want to own that business, you either need to build it from ground up, which that owner probably spent five to ten years or longer building that, and you're gonna have some debt to buy it because you know, they're gonna want a multiple of that 3 to 500,000 and that debt does not come cheap. SBA loans are expensive, solar financing costs money and so it's tough to crack into that as well.

Dan Austin: [38:55] But those are good margin numbers that I see.

Mike DeHaan: [38:57] It is. I I think a good point of context for that is, you know, Alex Tremozzi with his acquisition.com stuff. He always says that he is a cash flow investor. He wants cash flowing business like that. That's his focus. His base criteria for he says this on every podcast. For companies that are looking out for acquisition.com now, is it needs to be 10,000,000 top line and 1,000,000 net profit. Okay. So he's looking for businesses that have a 10% like true profit margin. Right? And in his mind, that is a pretty solid like aggressive business that has upside. So you think about for all the people that don't qualify for that realistically, people are significant than that on a actual net profit.

Dan Austin: [39:37] Yeah, absolutely. Yeah. So I

Mike DeHaan: [39:39] don't know. It's just that it's important to have context as you're growing businesses, and like understanding that the trade off for having larger systems or people in place, honestly being able to have a little bit more of like a flexible lifestyle and more upside, is you will make less money. That's okay. That is okay. You can also grind your way to million plus dollars with a team of three people. We've done that as well. That's what we did back in 2021. And now we're trying to do something bigger than that. And it requires a lot more investment and human capital. Cool. Right on. Anything else to wrap up, Dan?

Dan Austin: [40:12] No. I like it. Let's do it.

Mike DeHaan: [40:14] Right on, guys. Well, appreciate you all listening. Share this with your friends, family, neighbor, hair cutter, that Uber driver who like asks you what you do, just tell them that you're a real estate investor. You listen to this really cool podcast that you should also listen to. Yes. I still follow the Uber driver that we had after he went to Steve's mastermind.

Dan Austin: [40:30] Lift with Zoe dog. I see him once in a while in my stories.

Mike DeHaan: [40:33] Getting back in the gym. Shout out to Lift with Zoe on Instagram.

Dan Austin: [40:36] Probably does not listen to our podcast.

Mike DeHaan: [40:37] He definitely doesn't. If but anyways, guys, appreciate you all listening, and we'll talk to you guys next week.

Dan Austin: [40:43] See you.