What Happens to Real Estate When People Can't Afford Homes?

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 know, 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.

Dan Austin: [1:04] I hate the fact that they're trying to drive you to a single marketplace that is essentially policed and managed by real estate brokers.

Mike DeHaan: [1:14] What's going on, guys? Welcome to today's episode of the collecting keys real estate investing podcast. This is the show by real estate operators for real estate operators to continue to grow and enhance your business in this ever changing economy. And this is your first time here. I am Mike DeHaan here with my cohost, Dan Austin and Dylan Cook. And Dan and I are actually we're calling in from Utah. We have a little in person meetup with our scale community down here in Solitude, Utah. And tell you what, Solitude is an appropriate name for this little tiny town that we are in. Because like there was we had trouble finding a place, like, to grab a lunch.

Dan Austin: [1:54] It's not easy.

Mike DeHaan: [1:55] I feel like it's, like, the easiest meal for skiing. But beautiful area. You know, we opted here versus, like, Snowbird or Park City, mostly just because it was, a, not, like, $800 a room for the worst hotel that you've ever stayed in. And it's reasonable proximity to everything else. So, you know, we're just driving to town for dinner. We'll figure it out.

Dylan Koch: [2:13] How many how many people are out there from the group?

Dan Austin: [2:15] I think we have about fourteen, thirteen? Eleven, twelve, 13. Yeah. Somewhere in there.

Mike DeHaan: [2:19] Something like that. Yeah. Well, we we were supposed to have more, but then Dylan, you bailed because you're dumb.

Dan Austin: [2:23] Dylan bailed. Flaky flake pants over here.

Dylan Koch: [2:26] I did. No. I'm sorry. It was not my fault.

Mike DeHaan: [2:29] Then we had two more people bail kind of at the last second, so my dinner reservation numbers are all screwed up, but it's fine. Still yeah. I still got a handful, eleven, twelve.

Dan Austin: [2:36] Yeah. It's a good core group.

Dylan Koch: [2:38] Well, what's the real quick, give like the rundown of the agenda. Like, what are you guys gonna do tonight? Like, what are you diving into at the the businesses?

Mike DeHaan: [2:45] Yeah. So tonight, we are this would be great because people are gonna listen to this, and they're gonna be like, we did do that. But yeah. So we are focusing today on fulfillment, like, in business and your, like, personal self, primarily because with the economy and business and stuff being kinda challenging right now, our general belief is that if you have fulfillment in what you're doing, then it's a lot easier to kinda get through the hard times and have less of, a shiny object syndrome. And so we're gonna make that kind of the focus instead of trying to focus on, like, business growth or solving problems or solving constraints, all the other sort of stuff that people do at other masterminds. Just because I I don't think it's specifically the best time for that, just with the way the economy is and kind of the uncertainty that's out there.

Dylan Koch: [3:31] So It helps avoid burnout too, speaking from Perkinol experience. Yeah.

Mike DeHaan: [3:35] It totally helps avoid burnout a ton. Yeah. So we're we're doing that today, and then we're doing a little calling we're calling, like, zero to one. Kinda stole that from GoBundance, but they do their, like, seven to eight, so they go for 7 figures. But so ours is going from, like, newbie to full time. We're we're doing a little interview with Shane, Shane Schrader about that. And so it'll be kind of, like, a deep dive quarter by quarter with, like, the big moments he had and everything else. And then tomorrow night, we're doing we call it the Thunderdome, which is basically the hot seats where everyone gets up and presents stuff around their business, presents their challenges. They'll be able to talk about the outcome of the fulfillment exercise that we're doing today, and they just get it like group feedback and guidance on ways to move things forward.

Dylan Koch: [4:18] I gotta ask because I went to the first Keyes Con, which I know this isn't a Keyes Con, but similar vibe. One of the first exercises we did was like, okay, we do like the script review and like all this kind of stuff, and then Mike just gets up there like, okay, now get in small groups and go call people. So which I think was the the good part of it's like, you know, it's action by default kind of a thing. So if I'm going to, I'm not there, so I don't have any of the backlash, but I would say try to get that in there this weekend too.

Dan Austin: [4:42] We had to plan that.

Mike DeHaan: [4:43] Yeah. Yeah. If we were doing like in the evenings, yeah. It's funny with the group that's here, everyone's relatively experienced, Everyone's closing deals. So I think there is from, like, the first event that you went to, Dylan, there's less of, a fear aspect, like, a not doing the work aspect.

Dylan Koch: [4:58] Sure.

Mike DeHaan: [4:58] Right? Like, everyone is currently doing the work, and it is mostly just, like, are they doing the correct things to get them where they wanna go and avoiding getting caught in like the hamster wheel, or just like the grind, which is very very easy to do as a small business owner.

Dan Austin: [5:14] Yep.

Dylan Koch: [5:14] Yeah. And then, I mean, not to go on a side, but we're in this business, you know, for obviously personal gain and and wealth and whatnot, and don't be the person with $5 in your personal, and 500 in your business. Like, do this to to actually fund your own life.

Mike DeHaan: [5:29] Yeah. I mean, that people, it's so easy to like lose track of that, right? Or to be a real estate investor to be, like, paper rich, but to be cash poor. You know, that's kinda like the old, like, the old landlord joke is that you can, you know, be a millionaire with your real estate, but you can, like, barely pay your own bills. And that's an easy trap to fall into. You know? And I think it the benefit that we have with being in, wholesaling flipping focused businesses is you have the ability to do both. But sometimes if you're not directly planning your strategy or the direction that you kinda wanna go with things, you can miss out on the wealth building opportunities, but also miss out on the cash generating opportunities so you can actually learn like a good lifestyle.

Dylan Koch: [6:11] Totally. And like spending $2 on my personal account is like, damn, that's a lot of money. Spending like 2 k in the business is literally nothing.

Mike DeHaan: [6:18] You don't even think about it. Yeah. You just swipe the card.

Dylan Koch: [6:20] And so, yeah, it's just weird, the perception that you put Yeah.

Dan Austin: [6:23] You have

Dylan Koch: [6:24] in that. Cool. It'll be a fun event.

Mike DeHaan: [6:25] Yeah. Yeah. It's been good. We got skiing today, some late season spring skiing in April. But yeah, was good. And we actually have a pretty good group of skiers too, like wide range of ability levels, but everyone kept up pretty well. So it it was a fun morning.

Dylan Koch: [6:38] I think I ruined my elbow once trying to go down a Black Diamond too early, and I wiped out, took someone else out with me. But that's a story for another time. Danny's shitting a lift mine today, so

Dan Austin: [6:47] Yeah. I ran right into a pole, it did not feel good. Was trying not to hit somebody, I was trying to avoid being that guy.

Dylan Koch: [6:53] Oh, god.

Dan Austin: [6:53] It caught me.

Dylan Koch: [6:54] Well, alright.

Mike DeHaan: [6:55] It hurt.

Dylan Koch: [6:56] Let's dive into it a little bit. The first thing I found which was kind of interesting was a Yahoo Finance article. The basis says, Zillow to ban privately marketed homes escalating an industry fight over secret listings. And the first thing, like an article dives into is I'm just gonna read this excerpt because it sums it up pretty good. Zillow rules set to take effect next month with target homes that received limited public marketing like Instagram posts or exclusive inventory status on a single broker's website without appearing on the MLS. Those properties would be banned from later being posted on the its website, quote unquote, for the life of the listing. So basically, if you're a pocket you have a pocket listing, and you just send it out to like your own brokerage, that would now be not allowed on Zillow. Which, I don't know how you're gonna police that, but this also extends potentially to for sale by owner people. Your thoughts on that, and then we'll maybe dive into a little more.

Dan Austin: [7:52] I hate it. I hate I hate everything about it.

Mike DeHaan: [7:54] All the sub two people are gonna be screwed, dude. Isn't that what they do? They just filter on Zillow by for sale by owner and call those

Dylan Koch: [8:00] people? Yeah. Yes, actually.

Dan Austin: [8:01] That's what realtors do too. That's what everybody's doing. Yeah. I hate this for a lot of reasons. First of all, I hate the fact that they're trying to drive you to a single marketplace that is essentially policed and managed by real estate brokers. That's really fundamentally what it is. And now you're basically driving more and more to an inefficient I think it's gonna be an inefficient marketplace because real estate brokers can still manipulate the market. You know, I was just talking to one of our scale members on the lift today talking about one of the brokers you hired, and the guy is using his estimate to comp properties for his his listings. Like, are you talk like, what? Like, that's not a thing. Right? And so you got all these knuckleheads out here doing that and now you're giving people like us less and less options. Like Zillow, the idea of Zillow was such a great premise because it's like an open marketplace where everybody can compete, but then they've just been slowly catering to the MLS and to NAR because like if you've ever tried to find a for sale by owner or listed a for sale by owner on Zillow, it doesn't automatically show it. You have to manually click over.

Dylan Koch: [8:59] Yeah. Right. Makes it a lot harder.

Dan Austin: [9:01] Yes. It's a pain in the ass, and it's not, even when you filter by that, it's not quite apparent which ones are for sale by owner. So it's really silly, I could see if you wanna adjust those, but you should show any MLS listing with the for sale by owner, or whatever, if broker's really savvy, and he has pocket listings and he can negotiate for the best deal for his sellers, he should be able to do that without having to use some stupid bullshit platform that you have to pay a monthly or quarterly fee to.

Dylan Koch: [9:25] Or for your buyers. I mean, if you're a buyer's agent, like I feel like your worth would be able to find deals that other agents can't get. Not waiting for it to get posted, offering 50 k over asked just so they get it.

Dan Austin: [9:36] Totally. And and as a list agent, your fiduciary responsibilities get the best offer accepted, the highest value for your seller, And on the buyer side, you should be trying to get them the best lowest deal. Right? I don't know. It's just I hate this, Paul. I think it's just stupid.

Mike DeHaan: [9:50] Well, it's it's such a it's a weird thing that we have in our country just because of, like, how the whole process works. Right? Like, you know, that we have these commission based real estate agents who make money based off of the value of the property that they're selling. You have representation on both sides who get paid based off of the value of the property. Sure. They tried to change it with all the NAR stuff, but that's you know, it's still the same thing. They just have to be a little bit different on they word stuff. And, like, is it that much work? Right? Like, if you go to other parts of the world, like, go to different places in Europe, when you go and you do a real estate transaction, say, in The UK, because I have a family that has done this recently, you hire an attorney. It costs, like, one set of fees, you know, 20 or $100, $3 or whatever for them to do, like, the transfer. And then you basically negotiate the price through them, and it's very much like a back and forth that they are just paid to do the work. They're not paid based off of, like, the size of the deal or anything else. So that should be your, like Paid based on the service. Yeah. Or my sister, who's from New Zealand, she just sold her her house that she's owned for a while. And how it works in New Zealand is basically all houses are sold at auction, and basically, like, the auction will be on like a Saturday, and people don't wanna buy a house, they'll get like the list of all the properties they're gonna go to auction, and then they can go and set up times throughout the week to go and, like, look at the house, then they get preapproved by the bank for, like, a certain amount of money. And then they go to the auction, they buy the house, and they can basically buy it up to whatever the bank has preapproved them for. They don't have appraisals. They don't have, like, a real estate agents getting paid on the process.

Mike DeHaan: [11:25] They don't have all these, like, commingling opportunities because they just, don't exist fundamentally. It's like a free market auction that happens.

Dan Austin: [11:32] They cut all the bullshit out.

Dylan Koch: [11:33] Yeah. What you just said right there, I think, is the best part. It's a free market thing, not a centralized database.

Mike DeHaan: [11:38] Like Exactly.

Dan Austin: [11:39] Yes.

Dylan Koch: [11:40] Yes. So I would agree with over something like that over the the current structure.

Mike DeHaan: [11:44] Totally. It's shitty. And then it's

Dan Austin: [11:45] still masked behind all this stuff so people the general population doesn't understand like the buying and the selling, and we've overcomplicated it in The United States on some of this stuff, and and we kinda still keep it behind a veil, which is the broker. Because, like, that information is their power and they basically are trying to lock in their value. In reality, like, your value of selling a $200,000 house does not change the services the same for selling a $2,000,000 house, so then why does it scale up? What it really should be is like when you go to a restaurant, you can tip somebody. Like, you know what, if you work really good, I'll give you 0%, 5%, 10%, whatever. Know? It's like, you should have to work based on the service they're providing.

Dylan Koch: [12:21] Or just based on a fee, and like Mike said, because then you're like, the people who probably need the most representation are probably in that lower threshold.

Mike DeHaan: [12:29] Right.

Dylan Koch: [12:29] And like, a lot of agents purposely don't go after that because you're you're doing the same amount of work for less compensation, right?

Dan Austin: [12:35] Well, here's the bullshit about it too, is you have to you have to choose the compensation for a salesperson before they actually complete the sale. Would you ever do that? No. I think I'm gonna just pay you 3% of that sale, like, and you've never done any work for me yet. Like that's bullshit.

Dylan Koch: [12:50] Yeah. You have to be locked in ahead of time before you even know if they're good or not.

Mike DeHaan: [12:53] Yeah. Exactly. I mean, there's a lot of industries though that are like that, right? Where basically they have set up enough red tape and legislation where, you know, it's hard for it to be dismantled. You know? Like, you have to pay for, like, the licenses and then just kinda the market standard to do things that way. But, like, is there actual value beyond, should it be that complicated? No. I mean, there's, like, like, silly things of like that. Like, if you wanna go and you'd be a a licensed barber. Right? Technically, if you wanna do that, there's like a whole schooling process you have to go to, and it's quite expensive if you wanna learn to, like, cut men's hair appropriately. But, like, why is it like that? It shouldn't be.

Dylan Koch: [13:29] The big companies are the ones actually favor this. They they go like Zillow's for this, and so is Redfin, and all these bigs. Like, that's their moat. Right? If you Mhmm. If you actually go back to it, they're gonna lose market share. So I don't know. The whole incentive is kind of screwed up. Do you guys have dual agency where you are? Like you can represent buyer and seller?

Dan Austin: [13:49] Yeah. You can do it in Washington. Mhmm. Yeah. You have to have a dual agency document.

Dylan Koch: [13:53] Yeah. I mean, have the same thing here, I know some jurisdictions don't even allow that at all.

Dan Austin: [13:57] They don't allow

Dylan Koch: [13:58] that at Which I can understand. Like, how are you gonna actually be a fiduciary responsibility for both? Right.

Mike DeHaan: [14:02] Yeah. Well, we just call it being a wholesaler, typically. Yeah. Exactly.

Dylan Koch: [14:07] True. Right? I mean Yeah.

Mike DeHaan: [14:08] So I

Dylan Koch: [14:08] I don't know if that's gonna affect anything other than like you said, maybe Pace's group will flip out a little bit, but

Mike DeHaan: [14:13] Good. Hopefully they all disappear. Hi.

Dylan Koch: [14:16] I saw someone post the other day of they did like one two sub two deal, and then they posted like, I need a transaction coordinator, I need a project manager. I'm like, okay, sit down lady, you've done like one deal. Yeah.

Dan Austin: [14:26] Slow down dude. Slow down, buddy.

Dylan Koch: [14:29] So okay. Diving into the the second thing, which is actually off the press today, titled this FHA ends the Biden era COVID nineteen loss mitigation waterfall. So long story short is, I guess this COVID nineteen relief never stopped. Right? And and I guess even the people who have the FHA's through there, who've gotten a little bit of heart trouble, there's tacking on, you know, at the end of the loan. And the Trump administration is gonna say, hey, we're gonna put a stop to this. Like, this is coming to an end. So they're just gonna be more stringent, I guess, on on how this is processed going forward. I don't know if it's gonna be retroactive. But in my opinion, you know, this thinking off the top of my head, probably not good for a lot of FHA buyers who bought something in the past couple years.

Mike DeHaan: [15:14] Yeah. It's gonna be underwater. So what exactly did that do? Is this like the thing where they were taking the payments and putting it on the end?

Dylan Koch: [15:20] That is my understanding, yes.

Mike DeHaan: [15:22] Okay. I didn't realize that it had tied back like that far, and the fact that it was still going, because, I mean, COVID was like over five years ago. Right? Like, we've vastly moved beyond yeah. Right.

Dylan Koch: [15:34] Yeah. It's COVID nineteen. Yeah. Six years.

Mike DeHaan: [15:36] Yeah. We we've moved beyond all that at this point. I mean, that is probably the correct move to do that. The problem is is when you have stuff like that, if you just, like, rip the Band Aid off, you kinda leave a ton of people high and dry. But I don't really know another way that you're supposed to do it.

Dan Austin: [15:50] Yeah. Yeah. Without bringing in some other subsidy. Yeah. Like and, know, I think the Trump administration's big thing is going to be is, like, how do we not affect taxpayers, which I don't know if that's, like, the right approach or not because you gotta have some sort of, like like you're saying, Mike, you gotta, like, ease out of that. Like, you know, I think there's gonna be some more people that were the foreclosures that were not happening. I think that's gonna happen. But how do you keep the people not getting screwed over that actually took advantage of this, and now they're just gonna it's gonna just like stop, and they've got such big fees that they're upside down with where the market's at, And now you have, you know, just a bunch more foreclosures. Like, what does that soft landing look like on these?

Dylan Koch: [16:26] Yeah. I mean, there's no way they can go to people who have already, you know, experienced some of these waterfall effects and like, hey, we're gonna retroactively back the now you owe us like, you know, $20 to catch up. No. There's no way you can do that.

Dan Austin: [16:36] No. No. I it's think the people that are still actively tacking shit on that because, clearly, they can't pay their mortgage, and it's not the greatest real estate market to try to sell a house, and most of them probably aren't selling it because they're upside down would be my guess. When you only have 3% down payment requirements, like, don't really have any equity once you tack on a couple fees.

Dylan Koch: [16:54] Especially the past two years too. Right? You know, like, your year that you bought it.

Mike DeHaan: [16:58] It was just such a bad system anyway. I mean, it it basically was subprime mortgages of 2,008, honestly. Like, I will always remember the deal where we had to pay off some dudes, like, $27 credit card in order for him to to have the the debt to income to be able to buy our our property that he was buying with an FHA loan. Like, it just it just doesn't make any sense.

Dylan Koch: [17:21] They probably allowed the the 45%, you know, debt to income or whatever that threshold is. Yeah. You know, now there's stories coming around that their people are allowing 50%, 55%. They're pushing these loans through anyway.

Mike DeHaan: [17:32] What is the incentive for that? Like, actually? It's just really good of their heart?

Dan Austin: [17:37] No. It's driving economics, dude.

Dylan Koch: [17:38] It has to be optics too to extend, don't you think, Dan? Like, if we're during like, you know, the election time, or like, at how good housing is doing, delinquencies are down. Like, can say all that stuff if you're kicking the can down the road.

Dan Austin: [17:50] Yeah. This goes back to what is a president measured on, which is a really shitty thing, which is GDP and economic prosperity. And so every four years, if we have like, have had with, like, Trump buying Trump, like, basically, the last going to be twelve years as you go forward, the president's been just trying to look like they're the best president ever and having the best economic times during, like, the craziest fucking economic times. Right? So they're always gonna kick the can on some of this stuff. They're always gonna extend shit. They're every president's always gonna try to do some spending package that, you know, spurs the economy. And the challenge I have with the FHA is, like, I don't know what the best alternative is right now because I do think homeownership in America, that's what a lot of our economy is based on because it drives so much for people to own their home. And even in just like the the construction piece of it and new homes being built and new homes being repaired and people be able to get into those homes, and then it locks them into like a geographic location so that they're they're feeding that local economy. But I don't know what the other alternative is.

Mike DeHaan: [18:49] Is it do you just

Dan Austin: [18:50] say because I I also think doing putting people in houses that could be upside down, and then they lose their jobs because those are people out there usually at the lower income spectrum from a job and have less job stability. Do you push that to where it's like, you need 5% down, 10% down, and then all of a sudden that stops? They're not able to afford a house?

Dylan Koch: [19:07] My problem with that, Dan, is like, you you put your down payment in the house, and like, sure, yes, there's a lot of second, third order effects to that. But we're a consumer driven economy. If you have 50% of your income going towards your mortgage payment, all that's getting money is interest. Have no discretionary income for consumerism at all. Zero.

Dan Austin: [19:23] Yeah. The financial sector is making fucking handover fist money, but nobody else in the economy is. Right? Because they're collecting all the interest payments.

Dylan Koch: [19:30] Yeah. Very financialized economy, and I get that. And I was This wasn't on the agenda, but it's a kind of a good segue. Last week, Bessette, which is Trump's Secretary of the Treasurer, you said in an interview, and when asked about like the decline in the stock market and like stuff going down, was this is a mag seven issue, not a Main Street issue. Which I was kinda surprised to hear him say, meaning like, he's like Wall Street's had you know, two decades of their time to shine, and it sounds like they're hell bent on helping out Main Street. Now we can all get into the if they're doing the right thing or not, but I have been surprised that they haven't done anything to try to like alleviate that, and I think they're trying to force the Fed's hand, or the fiscal policy. They're okay with just sitting on the sidelines and trying to do this, and forcing other branches of quote unquote the government to step in.

Dan Austin: [20:17] So what are you saying when the max I mean, you're talking like seven top largest companies that are driving the S and P 500?

Dylan Koch: [20:23] Yeah, it's like the Nvidia, Facebook, Amazon, you know, the top seven in market cap.

Dan Austin: [20:27] So if they have a bad quarter, which we know, which we've seen like with like Tesla is one of them for a while, like they're just booming, they're going big, and they're just dragging up the NASDAQ or the S and P five hundred with them, and then if they go down for whatever reason, Batterings call, the whole S and P five hundred index goes down.

Dylan Koch: [20:41] Yeah. So it's very top heavy, but more the dynamics of, Trump 2016 was very much like, look at the stock market. Like I'm great because the stock market's ripping. And now his like barometer for success almost feels like it's a ten year, which is still trending in the wrong direction. But like, he doesn't mention the stock market at all. So it's just kinda weird to see their dynamics and what they're posturing as success, you just previously alluded to. Maybe it's not GDP anymore. Right. Maybe they wanna see more medium wages go up. Maybe they wanna see the middle class actually try to thrive and get manufacturing back. I don't know.

Dan Austin: [21:12] I think at the end of the day, they still really want the stock market to look good, because then they can start talking about it again. I am curious to see how the GDP I think they will change the measurement of GDP. Think we talked about it a while ago, which was they wanna pull out government labor from the GDP measurement. Because that falsely is it's easy to inflate the GDP when you're really not actually producing any gross domestic product, just hiring more government employees, which is in itself not production. It's more of a subsidy.

Dylan Koch: [21:38] It's the same thing as having unemployment below 4% if you just hire the government. Like, it's kind of a bullshit metric.

Dan Austin: [21:44] Yeah, so it's like, let's get away from these bullshit metrics, which could be a good thing, and maybe let's focus on the real metrics that actually show growth, and maybe uncover where we're not able to grow. I don't think manufacturing is gonna be

Dylan Koch: [21:56] Well, it's gonna take time.

Dan Austin: [21:58] It's gonna take time. It's gonna be an eight to ten year plan.

Mike DeHaan: [22:01] We'll never have manufacturing back here because by the time that the companies are even able to start investing in that, the administration will change over and they'll just fucking take everything back.

Dylan Koch: [22:10] Yeah. That is a risk.

Dan Austin: [22:11] Yeah. It is. And I hope that they they do do, like I think everybody agrees, like, the pharmaceuticals and certain manufacturers should come back, try to get chips back in The US and more about, like, some of the critical AI stuff because, like, that's the next frontier. So you'd hope that that manufacturing, regardless of the administration, will be like, yeah, we can we can get on board with that policy. But manufacturing fucking toys for my kids, like nobody wants to do that in The US.

Mike DeHaan: [22:34] Yeah. It's sewing clothes, you know, at mass or have you seen those have you seen like those AI videos of like manufacturing back to The US? Nobody wants that.

Dylan Koch: [22:42] Yes. And they're hilarious. Yes. And they're all

Mike DeHaan: [22:45] like these like super fat people like trying to put like screws in like little iPhones. Yeah. Their little fat fingers. Yeah.

Dylan Koch: [22:52] I saw I saw one on a sewing machine that can look like a sweatshop. Right? Like that's just it's kinda messed up. Yeah. But I don't know. I all to say that like maybe what the historically what they've been used as as success, you know, might be changing a little bit. And Luke Gromen is a is a macro analyst, and he made a good point the other day, is like, because we are so financialized, because there's such a big wealth gap, a lot of the tax receipts that the government gets is from like capital gains exposure. So if you have too big of a drop off in the stock market, you are therefore reducing your the revenue side of what the government can bring in. Right? So that's even more of an incentive to, you know, quote prop it up because increases their revenue. You can attack this from one side, the revenue side or the expense side. And you know, the DOGE community is well intentioned as they may be, it's gonna be very hard to cut a trillion out of the deficit when you can't touch and tie it on this defense, or yeah, or interest expense.

Dan Austin: [23:47] Let alone 2,000,000,000,000.

Mike DeHaan: [23:48] If you can give me about thirty six seconds, I just wanna share our SCALE community with you. So SCALE stands for scaling cash flow, assets, leverage, and equity. It is our exclusive community for real estate operators looking to take this game seriously. In the community, you get to hang out with myself, Dan, Dylan, and other operators around the country who are all working to be the best in their market. We recently did a survey, and every single member said that the community had directly contributed to major growth experience in the last twelve months. On top of that, you get all of our processes around marketing, sales, building a CRM, and you even get preferred relationships with Lowe's and different financing slash lenders so that you can get your deals 100% paid for without a headache. So if that sounds like something you're interested in, go to collectingkeys.com/scale. Let's see if you're a good fit. I don't know. Fundamentally, I think it's gonna lead to a lot of struggle for like the average consumer and the middle class, which as real estate business owners is not ideal because that typically is like the most of our buyers.

Dylan Koch: [24:46] Yeah. Especially if you're flipping.

Mike DeHaan: [24:48] Yeah. If you're flipping, even if you're owning, right, like you if you have a rental property that's worth $500 but you can't sell it for $500, is it actually worth $500? No. No. It's because you got an appraisal that says that if you can't go on a free market and sell it for them, That's not what it's worth. Right? And, you know, even if you're a buy and hold investor, right, like, people are our tenants. If all of a sudden they can't afford things, then you're starting to see what I would call symptoms of, like, this, like, pressure that the middle class is facing with the rise of things like co living. Right? Oh, yeah. And, like, the kind of, like, higher density, like, living, like, residential area stuff that people are doing, like, tiny homes, the increased acceptance of, like, manufactured homes and mobile home parks. Like looking back at it, what's pretty interesting is when like Brandon Turner started getting into mobile home parks back in like what, 2015, whenever that was. And they were talking about people are always gonna need affordable housing. Really what that was is that was the first prediction of like, there's gonna start being a lot more poor people. Right? And they're gonna have to move down into something that they can actually afford. And that's why we've been seeing this slow increase in trend of demand for things like that. And it's gonna be problematic. Right? Like, it's gonna make it very tricky to run a real estate business because, you know, you do need a buyer to be able to monetize your deals.

Mike DeHaan: [26:03] And if it's an investor buyer who can't, you know, flip it to a retail buyer or it's somebody that can't find a tenant for their property, then who's gonna buy it?

Dylan Koch: [26:11] I do. I firmly believe that co living is only an asset class because the money's broken.

Mike DeHaan: [26:15] Of course, it is. Yeah. Absolutely. I went and played disc golf with Craig Curelop this weekend. We talked about co living a ton, and he's like all into it right now.

Dylan Koch: [26:23] Yeah. He's like building a company around it.

Mike DeHaan: [26:25] He is. Yeah. And I I know. And I'm like, dude, you have to understand that this only is gonna work in certain markets. Like, if you try to do that in a market like Spokane, which there are a lot of markets like this in The United States, right, that are, like, under 500,000 people, average income's, like, 40 to $80,000. Right? There isn't, like, super high paying jobs. People can get by. You know, it's a nice place to live. So people can move there. If you do co living in that kind of place, what you end up with is, like, single moms. Right? You know, or, like, divorcees living with, like, weird old dudes that are, like, kinda crackheads or, like, you know, borderline homeless. You know? And you end up with the people that face out housing instability anyways that are getting that because that is now the most affordable option. It's not like this fun Silicon Valley vibe where you have all these tech bros that are just sharing like an eight bedroom house, you know, and throwing like little keggers in their living room like it's college. That's not what exists in most markets in the country.

Dylan Koch: [27:23] I a 100% agree with everything you just said.

Dan Austin: [27:25] I think time has a way of fixing some of these problems because like we always are like in such we look at it in like these market cycles like in what's here now like in front of us. I have like a feeling that some of this like affordable housing stuff will fix itself because you're gonna have a massive wealth transfer from the baby boomers down to the millennials, but more so like there's gonna be a shit ton of housing pop up. As we've grown up in our age group, there's always been this like we're under built, we're under built. That's because like baby boomers were fucking house dragons, right?

Dylan Koch: [27:54] Yeah.

Dan Austin: [27:54] I got my primary, I got my secondary, I've got this, I got that, and now they're all dying in place, and they're not letting go of their first home or their second home, and so I have a belief that with, as Gen Z's a smaller generation, millennials have gone up in this new construction boom, and we're we're established in our on our houses, and we're not trying to, you know, do anything as far as like I feel like the upgrade cycle is different than with baby boomers, and so I think in ten years, there could actually be a shit ton more inventory. It needs to be fixed up. It's old. It's got shag carpet and that weird ugly stone that you always see in these houses, but there'll be a shit ton of inventory which could kind of balance out the actual high cost that we're seeing in affordability. So it's just kind of a thought.

Dylan Koch: [28:36] The demographics definitely play a piece, and the baby boomers is the largest population than the millennials. But the also, the millennials aren't having near as many kids as the baby boomers did either. And so like the size and layout of the house also changes, but now we have everyone who works from home, so they need two home offices, and then the whole, you know, what Instagram says you need and all that kind of stuff. But it is interesting, obviously demographics are very, you know, local dependent. So just check the citydata.gov, I think is their website that this is Do you have a growing market or do you not? Like it's pretty easy to to find that data.

Dan Austin: [29:07] Yeah. So declining, yep.

Mike DeHaan: [29:08] And I'll slightly disagree with you on millennials being established housing as well, Dan, just because I did a quick Google and estimated 55% of millennials own a home.

Dylan Koch: [29:17] 55%, is that what you said?

Mike DeHaan: [29:19] 55%. Yeah. So that's a majority, but that's also still 45% that do not.

Dan Austin: [29:24] How many of them want to? The argument is how many of them want to though?

Mike DeHaan: [29:27] Totally. And that's a hard thing to to justify, But I would imagine that there is a large number of people that want to.

Dan Austin: [29:32] Right. How many millennials want two homes?

Dylan Koch: [29:35] Well, Dan too, like the average age of the first time homeowners are now like 36, 37.

Dan Austin: [29:39] Yeah. I I definitely think the demographics have grown.

Dylan Koch: [29:42] Oh, I think to me that's just saying they're still wanting to buy, but they're just not able to do it until later in in their professional life.

Mike DeHaan: [29:48] For sure. Exactly. That which is very different.

Dan Austin: [29:50] Yeah. I agree. Because baby boomers are buying their first house at 20 years old, 21 years old. Mhmm. Right? So I I agree with that. And there you're right. There's an argument, Mike, that that millennials haven't been able to afford to, but we also, like, a lot of us came of age in, the worst financial crisis in history. Right? So that delayed it. And so that did stem, I think, in affordability. I do agree. I think there's an affordability issue. I'm just wondering, does it get does it resolve itself with a demographic shift?

Dylan Koch: [30:14] Yeah. No, I think I think it definitely can, and like most things, they just take longer.

Dan Austin: [30:17] Or do we need to build fucking 8,000,000 more houses? I don't think we do.

Dylan Koch: [30:20] No, I don't think we do either.

Mike DeHaan: [30:22] No, I don't think we need to I don't think we have a supply issue like that. I think people like to say that, but don't think we do.

Dan Austin: [30:27] It doesn't feel like it.

Mike DeHaan: [30:28] Yeah. You know, and the funny thing is too on that always comes up on, like, social media and stuff, especially when we, like, post houses that we, like, just fixed up. People will say they're making housing, like, unaffordable. Like, you should have seen this shithole before we bought it. Cute, dude. Yeah. Like, like, honestly, that's one of the real issues is that the standards for what a first home is is so different than, like, even when we bought our first houses. Like, the first house I ever bought in 2015, because young for millennia, when I was 24. But we went and I we got a traditional mortgage. I put 20% down that I basically saved up for my entire working career at that point, you know, when I had a decent paying job as an engineer. And it was like this janky little, like, basically cardboard feeling house that was built in 2004. Right? And it was like, you would walk around and it was like loud because the wood was all just like not put together well, and everything was kinda shitty.

Dan Austin: [31:21] The hollow house.

Mike DeHaan: [31:21] Yeah. And you were like, that's what you bought, though. Right? And it was tiny. It was, like, 1,100 square feet. But, like, that was what we did. You know? And we got it, and we, like, painted it to make it feel like home, and we did all these things. But that was the expectation. And then when we moved to Spokane, is more affordable, we were able to buy a much nicer house. Right? But the problem is is like the house that I live in now is kinda what people want their first home to be like. You know? They want it to be like this forever thing, and that's just not a real

Dan Austin: [31:46] estate expectation. No. It is not. You're absolutely right.

Dylan Koch: [31:49] Yeah. And do you think that this stems from social media? Like the Instagram and TikToks of the world?

Mike DeHaan: [31:53] I think so. Probably, for sure. I think that's that's a lot of it. Yeah. It's a it's a comparative, right? Like even back in 2015 when I didn't even know how buying houses worked. Literally, we we got a rental increase for our little apartment. We were living out in Tacoma, and I was like, that's bullshit. That's really expensive. And then I looked up. Was like, literally Google. I was like, how much is a mortgage? And it was like, this is what your average mortgage would be. I was like, that's like $800 cheaper. Why don't we just go buy a house? And we were like, me and my wife were driving to the grocery store, and there was a sign that just said open house. And like, do we just like go there and like tell them we wanna buy it? Like, I don't even know how this works. And we just showed up at this random open house in this neighborhood and met this dude Gavin who ended up being our agent, just because he like he's like, do you guys have an agent? Was like, no.

Dylan Koch: [32:36] Did he dual agent?

Mike DeHaan: [32:37] No. No. He didn't. But like, he helped us like shop around and like find a house and like do all this sort of stuff. I knew nothing about the process because I didn't have social media to create any expectation. Yeah. That's the crux of everything is social media has grown society.

Dylan Koch: [32:49] I mean, my first like, I was renting, I was sharing a roommate with like five people, so my rent was like $500, like stupid cheap. But then I read like the rich dad poor dad thing, and I was like, oh, I can house hack. Which I guess on the same line shouldn't even be a thing if the money wasn't broken. But I just literally someone at my gym was an agent. I was like, and we like bought the second house that we saw, and like he I didn't know anything. And I think there's there's just a slim line between learning the information and then taking action, which I think is like the crux of that.

Mike DeHaan: [33:15] Well, think that's honestly a big thing from, you know, even like ten years ago, is it was that kind of like harder to learn stuff. Like you could Google things and you have like research, but it's kinda works. You kind of were it was better to just take action. And then just like It was. Find someone to show you how to do it. So you you couldn't like buy mastermind courses or follow gurus on TikTok that were gonna teach you how to do shit. You just kinda had to start doing it and you figured it out.

Dan Austin: [33:38] Yep. It's so true.

Dylan Koch: [33:39] They should have like a a guru auditor. You know, like the the politicians have to like put in their IRS like their tax returns or whatever?

Dan Austin: [33:47] Get like an ombudsman for the gurus.

Dylan Koch: [33:49] Yeah. Like they should have like, like, to do the verification process to get some kind of check, have to like submit, like, your revenue is actually what you say it is. Your net profit is actually what you say it is.

Dan Austin: [33:59] Yeah. Yeah. Exactly. Yep. It's like the Mormon church.

Mike DeHaan: [34:02] Yeah. That's why we have like dudes on Instagram, like ballbusters guy, who just always is like calling out like, Andy Elliott for, like, all the crooked shit he's doing. And, like, he will go and, like, do research on a lot of these guys', like, backgrounds in businesses and, like, David. Obviously, had a whole bunch of stuff on pace, but, like, how him and his dad embezzled all this money from their employees.

Dan Austin: [34:21] All their employees' salaries, like, what a bunch of losers, dude.

Dylan Koch: [34:24] Yeah. I mean, it does seem that the larger the following, the more likely it is that there's some shady stuff going on.

Dan Austin: [34:30] More likely they're dead, because that's all they got.

Mike DeHaan: [34:32] Yeah. Anyways, we're coming up on time. What's a what's a good value add for people that they can use this information to continue moving their business forward?

Dylan Koch: [34:41] Oh man, I'd say, you know, lot of stuff we talk about is important, But you know, if I can only answer this how I approach my own business, which I'm still mixing things up, but I'm still doing a lot of the same. Just doing a lot of the same in a different fashion. So still doing direct mail, but trying, you know, some different marketing, different cadences, different lists. And then like, I did people on the show have heard me my struggles with PPL. I just signed up for a new provider. I'm gonna start doing that. And like, already today, it's like the first day it's already been better than the the previous one. And this I don't know. Find ways to make deals happen. That's the best way I can go I can answer that. Mhmm.

Dan Austin: [35:17] Gotta try shit. You gotta take action. You gotta do different things. You can't think that the same old method's gonna keep working. Real estate's hyper local. You gotta figure out by doing what's gonna work in your market. You gotta take action. That's really what it is. It needs to be thoughtful. It needs to be it's not like you can't just freaking throw shit on the wall now and think it's all gonna work. You gotta take thoughtful action.

Mike DeHaan: [35:35] Yeah. And I think like we're you and me were talking about today on the lift, Dan, whenever there's these kind of hiccups and downward trends, that's what creates opportunities. Right? And so I think a big part of it is being willing to learn and adapt. You know, like you said, Dylan, keep trying things but doing them differently because there will be opportunities that come out of this just like there have been in every other issue that's erased over the past, you know, forever.

Dan Austin: [35:58] Of course, always will be opportunity.

Dylan Koch: [35:59] And stay on top of this stuff, you know, as things change, you know, there's such a thing as first mover advantage. Right? If you can do that, you're you're gonna be positioned to make money. And then this worry about your downside. Don't do something that you're it's gonna set you about six months to come out of it.

Mike DeHaan: [36:13] Exactly. You know, and get liquid and be prepared to move an opportunity.

Dan Austin: [36:16] Like, you

Mike DeHaan: [36:16] look at everyone that got super rich in 2012, like when they started buying all these properties, and everyone's like, man, I should have been doing that. The reason you weren't doing that is because you weren't in a position to do so. Right? Yeah. Now you just gotta get yourself so you are in a position to do that if the opportunity starts to come up again.

Dylan Koch: [36:30] Yep. Totally. Cool, guys.

Mike DeHaan: [36:32] Cool. Alright, guys. Well, thanks for listening, everybody. Hopefully, you got some value out of that, and, share this with your friends. It's the greatest way for us to continue growing the show is to be shared with other people. So go ahead and send it to somebody. Post it on your Instagram. Go and shoot us a follow on Instagram and share our little post to your stories. That'll help significantly grow the brand. So thanks for listening, everybody. We'll talk to you guys next week.

Dan Austin: [36:53] See you. See you.

Mike DeHaan: [36:55] 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.