When to Exit, Adapt, or Double Down on Your Real Estate Strategy

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 need a ton. And otherwise, we appreciate you guys, and let's get into this episode. We've had so many members over the last, like, quarter that are like, I have, like, a lot of money right now, and I don't know what to do with this.

Mike DeHaan: [1:12] What's going on, guys? Welcome to today's episode of the collecting keys real estate investing podcast. This is a real estate operator podcast made by real estate operators for operators so you can continue to grow and expand your business while the market tanks or explodes or does whatever the hell it's doing right now. I don't know. I think I know you talk to. Seems to be all over the place. The average fundamental says that it's gonna be it's kinda looking a little ugly, but I still have talked to people who are like like, literally on the phone earlier today, I was like, well, when interest rates are half of what they are right now in a year, I'm gonna be refinancing everything. I'm like, that's a stupid thing to say, Good let's be

Dan Austin: [1:49] for you, dude. Good for you, dumbass.

Dylan Koch: [1:52] There are very smart people that said that we're going back to like three to 4% rates. Like they already thought we'd be there, they're proven wrong. Like, you know, no one knows.

Dan Austin: [2:00] I was I was I don't remember which podcast it was on, but I was just one of the podcasts they were talking about like, some of the fundamentals actually like point towards like 11% rates. I'm like, holy shit. Like, that would be crazy. Like, back to the, like, eighties. Because if you if you actually just kinda look at like where the treasuries are at, and like, if you look back in history and what it's doing, and I don't remember all of the fundamentals, I'm doing quotations, what the fuck that means. But I was like, that would be crazy.

Dylan Koch: [2:24] I don't think we could get there. And I could be wrong, but there's just no way.

Dan Austin: [2:27] You don't think so? I guess what's your argument? Like, why why was it?

Mike DeHaan: [2:29] So it won't happen because traditionally, right, loans have been based off of the treasuries. Mhmm. Ten year for Fannie Freddie, five year for DSCR. The problem is so like there's also now major institutions that have billions and billions of dollars that are looking for debt. Money, particularly debt, is a perfectly competitive market. If you go and you look at, like, any lender, whether that's a private loan or it's like a DSCR kind of like long term loan, all the costs and rates are kind of in the same ballpark. And so if all of a sudden the trend starts going towards the stuff that's being based on the treasuries getting to like the 11% Mhmm. You're gonna have like the hedge fund that has a $100,000,000,000 that they're gonna put towards notes that will come and say like, okay. Well, you guys can do that. We'll just do them at eight or seven because we're happy with that.

Dan Austin: [3:20] Maybe. I mean, you say that, but like also, I guess for argument's sake, the Fed could just raise the overnight rates if they need to.

Dylan Koch: [3:27] So Mike has a good point about like, there's more demand for that, so like competition would drive the yields down. Mhmm. But the other aspect to this is so try to keep this short winded. Nixon took us off this gold standard in '71. The inflation was kind of the late seventies, early eighties. Volker's the one that got credit for quote unquote crushing inflation by driving interest rates to those ten, eleven, 12 percents. Right? But the overall theme throughout the seventies, eighties, was debt to GDP ratio was like 30 to 40% for The United States.

Mike DeHaan: [3:56] Yeah.

Dylan Koch: [3:56] So amount of debt we had versus over gross American product was 30 to 40%. Now, it's like a 120 to a 125%. And so you can't do that kind of math anymore where it makes sense. We had room for 12% interest rates back then. We don't have room for that now.

Mike DeHaan: [4:10] Yeah. It just wouldn't happen. Right.

Dan Austin: [4:13] That's fascinating. That's a great point of view, Dylan.

Mike DeHaan: [4:15] That's the whole thing is, with debt there is a customer that needs to be willing to pay that for the debt. And if no one's willing to do it, it'll go away.

Dan Austin: [4:21] That is very true.

Mike DeHaan: [4:22] So

Dylan Koch: [4:22] Yeah. So not only just the sheer amount, volume and level of debt, it's the debt relative to the income of The United States.

Dan Austin: [4:29] So if you think about it though, where do we peak at? Like as far as just like typical thirty year fixed? Was it like eights? It was like

Mike DeHaan: [4:35] I think was up to 18. Do you

Dylan Koch: [4:37] mean recently, Dan, or like back then?

Dan Austin: [4:38] Oh, yeah. Yeah. Yeah. Sorry, within the last twelve months.

Mike DeHaan: [4:41] Oh, in past twelve months. Yeah. I was like in the eights.

Dan Austin: [4:44] Yeah. So we really weren't that far from going to 10, which is I would have said a year ago is nuts. There's no way because I would I'm I'm in the same argument as you guys is like, just doesn't make sense because there's no market for it.

Mike DeHaan: [4:54] I mean, that is far away though. Right? Like, eight to 10 is pretty big because there's not only a fundamental difference that has happened to the market, there's also a psychological ceiling there. Right? Like, eventually, you you would get to a point when it was 8.9, 9%, where everyone would just stop doing loans. Right? And like then you you can't sell anything.

Dan Austin: [5:13] Maybe. Maybe because like naturally, something has to happen. Right? Like what so prices would have to drop. So if you could go and and buy a $250,000 house for like a 150.

Mike DeHaan: [5:23] The thing is is that doesn't matter because most people don't think that way. That's too macro for most people. Most people think about what's directly in front of them, which is what's on their Facebook feed. Right? And it's what's in their monthly budget. And so even if they could buy like a discounted house, happen to get a nine and a half percent rate, just because they knew that rates several years ago were 5%,

Dan Austin: [5:41] they wouldn't do it. Yeah. I think the market would slow down for Shrek Rutti. I don't think that it would be enough to stop it because the same humans in the eighties that are today, were the ones buying them at that high rate. So I think people would still, I think things would still move. I think there is a psychological factor where I think the market would have to slow down, and that's the point of high interest rates and when Volkl did that, it was because he wanted to break inflation. And he's like, we're shooting the freaking rates up, and we're going to break this, we're gonna break the job market, and then we're going to come back to reset. And that was the whole point of eighties, which is a different time in general anyways. Sure.

Mike DeHaan: [6:14] I think the major thing that's different between now and anytime in the past is the rate of change that people are accustomed to is significantly faster. Right? So like in the eighties, if people are like, well, we're gonna just wait for five years. Now people don't wait five years for fuck all, dude.

Dan Austin: [6:27] Yeah. But they they didn't though. Right? People still people still did business.

Dylan Koch: [6:31] They had to travel by a fucking newspaper, Dan. They go had to be slower.

Mike DeHaan: [6:34] Totally. But p I'm

Dan Austin: [6:36] just saying people, I mean, people still bought houses because you have all these dummies that are like, I owned a house at twelve percent interest rate. Like, when that's every single baby boomer, you're like, well, I guess people were still buying houses.

Dylan Koch: [6:48] Yeah. I mean, that's true. But the the main argument is that their living expenses were still so much lower even with the 12% rent than they are today. So that's going into the all the boomers are how they are unrealistic with everything.

Dan Austin: [7:00] I will say this, you wanna know why their living expenses were cheaper? This is actually fascinating. I've never heard this. This was like the anti the anti anti boomer conversation. They didn't fucking Uber Eats. They didn't have like all the bullshit that we have and we spend money on now. They're like, sorry guys, we're not eating out tonight. Because they had lower they they didn't live that way.

Mike DeHaan: [7:19] How have you never heard this? I feel like this is like Dave Ramsey one zero one, if you don't spend money on fibroid shit.

Dan Austin: [7:24] I don't listen to Dave Ramsey, dude.

Dylan Koch: [7:25] It's like the hygienic adjustments that the economists use just for like cost of living. I don't buy it. Like, yeah, you have to buy this shit, but like, it's not an apples to apples thing.

Mike DeHaan: [7:34] It's not, for sure. Because, like, I mean, they they had other costs, I'm sure, that were higher. Right? There's, like, in terms of, percentage.

Dylan Koch: [7:40] Yeah. TVs were $2. Yeah.

Mike DeHaan: [7:42] Right. Total. Right. Right.

Dan Austin: [7:43] Yeah. It was tougher to live back then, dude.

Mike DeHaan: [7:45] If you add in like subscriptions, your cell phone, all those different things that you add fundamental, like incremental costs, but it's not like it's for the average person. It's not like it's a huge huge percentage of their income. And if it is, they have the ability to reduce those.

Dan Austin: [8:00] So do you think I guess, I've actually never really gotten into this argument. I always joke about the whole boomer thing, whatever, it's funny. But like, do you guys really think that it was easier for a boomer to make money, a baby boomer to make money?

Mike DeHaan: [8:14] To make money is your general argument? Was it easier to make money? No. I think it was easier to follow a traditional path and make a wage that was sustainable with just the average lifestyle.

Dylan Koch: [8:25] Yes. That's the lie. Make money, no. But what Mike just reiterated, yes.

Mike DeHaan: [8:29] That's the argument? The problem is is

Dan Austin: [8:31] Well, because I think we would all agree right now is the easiest time to make money in fucking history of the world. So easy.

Mike DeHaan: [8:37] And that's the problem. Right? Is those of us that have all figured it out, we do that. And when when it becomes easier to make money, when you go to a phase where the standard is now that you have two income earners per house, so the average household now has more money, when you have people that are doing gigs and other things to make more money, those gradually drive prices up. Because what all the companies look at is they look at consumer patterns. Yeah. For everyone that can't make ends meet, there's other people that are making more money and spending more money. And so it drives up prices, drives up demand, and basically, these people that aren't keeping up and doing the extra stuff, quote unquote, they fall behind. And that's just life.

Dan Austin: [9:09] Is that the baby boomers fault, or is that the millennials fault? That's capitalism's fault.

Mike DeHaan: [9:14] Yeah. Right? Like, I would wouldn't say it's a generational issue on that. That is just the fundamental growth of capitalism,

Dan Austin: [9:20] you know, which is fine.

Dylan Koch: [9:21] There's a fascinating chart out there by just like the Federal Reserve publisher said. But it's basically like productivity versus income. But because of technology, because of cell phones, because of computers, like humans have become more productive in their 40 week jobs. But like Of course. That it's like a exponential curve that productivity goes up, but the wages don't necessarily keep up with that. Even though you're putting out more more and more productivity into the world, into the economy. Interesting.

Mike DeHaan: [9:47] I think the biggest thing is a lot of people want the lifestyle which makes sense to be able to go and like have a single income household with, like, a stay at home spouse to watch the kids, and they wanna be able to go and be a postman, whatever, and, like, have a house and do all sort of things. They like the idealistic view of that. The problem is is that there's so many people that are willing to do more that the people that are like fixated on that lifestyle just fall behind. Yeah. Right? Because like even for me, like when I left my engineering job and I was like, okay, cool. I gotta figure out how to make money. I got a job at a gym. I went and fucking drove for Uber. Mhmm. I would just like do random stuff to make money. It was like obscenely easy, honestly, to pay my mortgage.

Dylan Koch: [10:27] Right.

Mike DeHaan: [10:28] I just had to figure out what you do. And like, I was doing stuff at off hours. I was driving Uber at, you know, 09:00, 10:00 at night. But that's what he had to do to get by. Right? And people aren't willing to do that, don't wanna do that, they have kids, it's inconvenient to do that, totally get it. But like, for everyone that's not willing to do that, there are people like me that were. Right? And that's what sort of goes up.

Dan Austin: [10:47] You're making a bad argument, man. You're on the boomer side here. You just gotta pull yourself up by

Mike DeHaan: [10:51] your bootstraps. Dude, I I'm 100% on the boomer side with this, honestly. Yeah. I have very, very little, like, sympathy for people that live in The United States that can't figure their shit.

Dan Austin: [11:00] Yeah. Like, they're the land of opportunity. Right?

Mike DeHaan: [11:01] Totally, dude. Because you look at how many people come in The United States for fucking nothing Yeah. And they figure it out. Like, if you're already from here, like, you can blame the school system, you can blame your lifestyle, your upbringing, the zip code you're born in, all those sort of things totally. But Yeah. For every person that says that their circumstance is why they can't figure it out, there is somebody else that is the complete counter to them.

Dylan Koch: [11:21] Yeah. Right? Great argument. Yeah. There's like this Venn diagram between the people who, like us, I would say, who figured out the game, we self educated on real estate, on business, on investing and finances, and we are now rewarded for that. But you should also have this other side of the spectrum where you can be the mailman, and be able to at least live a comfortable lifestyle, or cost of living isn't so bad that you're like, I just wanna be a postman. Right? Because the middle having a middle class is a good thing.

Dan Austin: [11:49] By the way, fucking male male men are doing well. Male men are doing well. Don't fucking fool yourself.

Dylan Koch: [11:53] Okay. Pick a different, you know, blue collar trait or whatever it But

Dan Austin: [11:56] The milkman. Don't okay. Blue collar's not even a good choice either. They're doing better than all of us,

Dylan Koch: [12:00] dude. True.

Mike DeHaan: [12:01] Yeah. Right. So I I think there's two main things that on this that regularly, I would say, don't get addressed. Right? Is there is a culture of people I see this a lot on Reddit, or it's my my typical main social media. Is there a lot of people that are like, man, it sucks that you have to have like the hustle culture and the desire to grow all the time because I don't wanna live a lifestyle like that. That's totally fine, but that just means that you get to have a lesser lifestyle than those people that are willing to do it. Right? That's natural selection. That's totally fine. The second thing that was never discussed anywhere, and I don't know why, because I think it's very, important. Some people are dumber than other people, and that is okay. Yeah. There is a range of intelligence and the ability to learn and the ability to apply knowledge that will separate human beings. And for some reason, we try to make all decisions as if everyone is the same level of intelligence. We're not equal, man. We're

Dan Austin: [12:49] not. That's why and Mike and I were actually having another, like, this conversation briefly, not about the intelligence level. Like, it's like the Kobe Bryant theory. Right? Where Kobe Bryant was Kobe Bryant because he fucking had something in his brain that allowed him to work harder and be better. Tiger Woods is same thing. Like, when you go to like the Masters week, Tiger Woods never one time competed in the Masters and played with his son or any of his family earlier in the week. Because he's like, fuck that, I'm here to win. Yeah. I'm not here to have fun. Like, those kind of people

Dylan Koch: [13:15] Tom Brady, another good example.

Dan Austin: [13:16] Tom Brady, they sacrifice and will sacrifice everything to win.

Dylan Koch: [13:21] So they're at one of the spectrum and like the other ones are just like the, you know, people rely off welfare programs is the way I can put

Mike DeHaan: [13:27] that. Yeah. Right. Well, and not only that, but there is a fundamental difference in how people are born. Mhmm. Like some people are born smarter. You can have two parents that have three kids, and there will be one that's the a a student and one's just kind of the c student. There is a level of Genetics. Yeah. There's there's a genetics. There's an nature nurture piece.

Dan Austin: [13:44] There's some nurturing in it too.

Mike DeHaan: [13:45] You can have kids that go through the same school system and work hard, and some of them, like, they crush in math. Other ones, they just suck. What that is, I don't know. But there is a natural difference in intelligence which will basically determine the outcome when it comes with this kind of thing.

Dan Austin: [13:58] As long as they apply themselves in the proper area. Because assuming there's some people in India that are fucking super smart. They're not doing alright.

Mike DeHaan: [14:04] Absolutely, dude. There's people all over the world that are

Dan Austin: [14:06] opportunity. It's

Mike DeHaan: [14:07] they're geniuses and they never get the opportunity to harness that. And that's the way the world works. Right? That's unfortunate, maybe. I don't know. It's also people here that are dumb shit that get very very successful because they learn how to take advantage of the opportunities. And they kinda like scrape by through connections or whatever.

Dylan Koch: [14:22] The to cap this off, there's a tweet that I should have sent you guys the other day. It's from a Britain guy, but he said, 50% of my British friends are 10 x smarter than my American friends, but my American friends are 10 x more self motivated, or like, have a belief system. So they're 50 x Mhmm. In front of my British friends. More successful.

Dan Austin: [14:41] Totally. Interesting.

Dylan Koch: [14:42] So like, the intelligence is there, or might not be there, but they just have the self confidence that they can do it, and so they get more shit done.

Dan Austin: [14:48] Yeah. That's why we won in $17.76 dollars.

Mike DeHaan: [14:51] Yeah. Well, and I think that is like a that really shows like the individualism that exists in The United States, which is kinda unique, honestly. But, you know, for all the people that are like that, it's funny. People like Rip On China, and where there's like the 400,000,000 people that live in prosperity in China, then there's the billion people that don't. Yeah. We don't have that much of like a difference if you look at it in The United States. Right? I'll be curious, I don't know what the ratios are, but we have that same kind of like mentality. Right? Where there's a ton of people that are just like bought into the system. They're into the hustle culture. They're into the land of marketing. They do it very well. And then there's a bunch of other people that just like don't do it, or they're like out in the middle of the fields. They're in the rural areas, made up fuck all, and they just kinda like exist. Right? And the difference between us and China is China's like, yeah, fuck those people. They're over there. We don't care.

Dan Austin: [15:38] Yeah. No. You guys don't wanna be part of the game. Fuck off.

Mike DeHaan: [15:40] Yeah. Whereas like here, they have all the same voting rights. They have this like, all the a lot of policies are written around them. They're kind of like utilized, right, in a different way.

Dylan Koch: [15:50] A depressing theory I saw the other day was, basically, the unwritten and written rules of society are based on the bottom 15, like, percent of the population. Mhmm. Because it's like to protect them and to be like, you have to make this process so idiot proof that everyone can do it, and like, there are levels of the population that are like like that.

Dan Austin: [16:09] It's a school system. Why there's a lot of problems in some of the schools, not all the schools, but some of the schools because of that. It's like the no kid left behind policy. Yeah. Well Like, can you only be as smart as the dumbest kid in your class and that's the legit policy.

Mike DeHaan: [16:19] Yeah. Exactly. So anyways, we we got way off in a

Dylan Koch: [16:23] We got on a tangent there, but

Mike DeHaan: [16:24] Coming there for sure.

Dan Austin: [16:25] Alright. Let's talk about this whole like artificial food coloring. Fucking pissed off about this thing.

Dylan Koch: [16:30] Where's RFK coming on, Dan? You gotta get him on here?

Mike DeHaan: [16:32] Oh my god. No, dude. I wanna talk about these gurus that were watching die left and right because I feel like we haven't done a good guru bashing on here for a while.

Dan Austin: [16:39] Yes. But

Mike DeHaan: [16:40] Yes. I saw this. It was on the ballbusters Instagram, which if you guys don't follow that, you definitely should.

Dan Austin: [16:46] It's pretty good.

Mike DeHaan: [16:47] But he's like he typically takes on gurus. He's done stuff around like pace and, you know, Andy Elliott has been his biggest target recently. How much of a fucking creep Andy Elliott is? God, dude. He's such a weirdo, dude. But his most, like, recent thing we went into and and this isn't I would say this is kinda showing, like, the downfall of the gurus. They're showing, like, how extreme they're getting trying to get attention. Andy Elliott is the sales guy. Go look him up. I don't know. He's he's a dunny. But

Dan Austin: [17:13] He's a dude that wears a shirt with his name on it, so you know what that means.

Mike DeHaan: [17:16] He's like, his whole thing is like, if you don't have a six pack, you can't work for me because you're a piece of shit. And he had his what was I think it was his 14 year old and 10 year old daughter.

Dan Austin: [17:25] Nine year old daughter.

Mike DeHaan: [17:26] Nine year old daughter.

Dan Austin: [17:26] Daughter. Double digits.

Mike DeHaan: [17:27] Yeah. Up on stage basically taking their shirts off to show off their six pack at this event that he was speaking with. It was like David Goggins event too. Was a pretty weird vibe.

Dan Austin: [17:35] Yeah. Was a weird vibe.

Mike DeHaan: [17:37] And like, at what level do you decide that that's appropriate to go in front of your mostly male audience that is gonna be between the ages of 20 and 40, and you have like your teenage daughter up there undressing to show off her abs. It wasn't that

Dan Austin: [17:53] they were taking their shirts off, they're also wearing like and he even addresses it in the video.

Dylan Koch: [17:57] He does. Like he says like don't be perverts, but like he's the one being the pervert up on stage.

Dan Austin: [18:02] Yeah, dude. Like like it's like bro, if you have to say that about your daughters, like my whole thing is is as the father of a daughter, like objectifying your daughter and then the whole thing wasn't even that they had six packs, it was that they had to work for it so that they they got some sort of like shopping spree, which I also think is the fucking stupidest thing ever. And like, they had a diet, so now they're gonna have some sort of eating disorder as a nine year old who worries about having a six pack because their dad only wants them to have a six pack because their dad says you're not allowed to be in the fucking house without a six pack. Yeah. Like what's going on here? This is a weird situation.

Mike DeHaan: [18:32] Super weird. They're showing him going completely off of left field. Right? And he's come under fire on a lot of stuff recently, kinda with how he's there's been a lot of, I don't just like lawsuits or what around kind of his like coachings and different things that fully under delivered on what was being promised for the very very large price points that he was charging.

Dylan Koch: [18:51] Yeah. Was like 25 k for like an hour or some shit like that Yeah. For like some of his coaching stuff.

Mike DeHaan: [18:55] Just like insane and people being very happy about that. But now he takes his daughters up on stage, he's doing this weird thing. And then I guess in that same speech as well, ball bust post another thing where they're talking about how we don't know what it is, but we find that we are explicitly drawn to damaged people. And there the comment from the the Instagram post was like, okay. So you're telling us that you are drawn to people that you can take advantage of? Like, you're like a predator? Exactly. Like, you're like cruising around looking for who who you can embezzle some money out of?

Dan Austin: [19:24] Wild, dude. I'm so surprised that he like has events and like actual people pay to go see it.

Mike DeHaan: [19:30] Dude, like a lot of people.

Dan Austin: [19:31] I don't know, man. Which is wild. Like, what is that culture that you're building within like either your company or yourself that that's the guy you wanna go get sales training from.

Mike DeHaan: [19:40] But so he's going off left field, but then also Pace Pace Morby has had this whole thing. And this like kinda came out of nowhere. And like, it really feels weird to me, where he's like taking this homeless lady, and he's like trying to like prove a point by teaching her how to do real estate. Yeah. And he's had all these videos of like, yeah, I like flew her out on her on this plane. And then he has like all these videos of her like in a classroom, like obviously nodding like they told her to act like she was really learning something. You know? And I'm like, what are you trying to sell? But then the thing that's really fascinating to me is he's doing this weird like, I don't know what the shtick is or what the plan is with that. But we just got a Subtube deal in Spokane. And I was like, we need to figure out to sell this thing. So I went on the Subtube Facebook page, like the big free group they have. And like every single post that's on there, when I like went on the main page, it has like maybe one comment and like less than five interactions with it. And I'm like, did all these people die? There used to be like tons of posts on there.

Dan Austin: [20:40] A lot of action. There's no more Gator lenders, dude.

Mike DeHaan: [20:42] There's nothing, dude. I was like, the whole thing has exploded. Yeah. And I was like, well, were they all fake to begin with? I don't know. And I was literally scrolling through, and then they I finally found a post that had like some traction on it. And it was generally a good question asking about insurance, and it had 30 something posts. But the vast majority of them had nothing. And has that whole community crashed? Then so now I think now Pace is scraping the thinner and thinner part of the bottom of the barrel trying to get people that engaged. Now he's trying to say like, look, even a homeless lady can buy a house. I don't I don't know what he's doing.

Dan Austin: [21:16] So easy. Who knows if she's

Dylan Koch: [21:18] even homeless? Dude, that could have been staged from the start. Yeah.

Dan Austin: [21:20] Who knows who that person is?

Mike DeHaan: [21:22] Totally, dude. It's like his janitor at his place. That's wild. 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'd 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.

Dan Austin: [22:09] I guess we didn't talk about pre show either the whole Ryan Boneta thing, which you may have talked about on the show once before, but like another big guru, that's got a class action lawsuit against him. Who Pace also has a class action lawsuit against him, and now it sounds like Elliot will have some sort of lawsuit against him. Yeah. They're all like over promising, under delivering turds, and they're fucking falling apart. Yeah. But the funny thing is is they're all still they're like the 75 year old actress that's still just trying to go and be the hot young lady in like all the plastic surgery and stuff and they're trying to get these shows and you're like, it just it's just not working for you anymore. You're you're now grandma, like, you're you should be doing grandma casting, not the middle aged mom casting. You're you've grown out of it, and they're just trying to claw at fame, you know what I mean? And like, that's what they're trying to do because I I'm assuming that's their only source of income.

Mike DeHaan: [22:54] It has to be. I'd be curious like what the revenue on those kind of community and stuff currently looks like. Because it can't be good.

Dan Austin: [23:01] Zero, dude. Zero, dude.

Mike DeHaan: [23:03] You know, because it's not like people are seeking out real estate education at all right now. Mm-mm. It's not the not the hot button topic that it was even like last year at this point in time.

Dan Austin: [23:11] My question would be, and because I I just don't generally follow a lot of stuff is, in general, is the online courses, online learning going down right now? Like, is it as a whole industry outside of just real estate? Oh, I'm sure it is. Is it completely compress compressing and just disappearing? I think there was a lot of it, kinda like during the 2020, '23, probably I'll give those three years like time frame, there was a lot of false everything because, know, the economy was pumped with money, everybody's in this weird mindset of working from home, and so maybe that part of that industry, the like self help online, I'm gonna do a side hustle industry blew up. And then now it's just kinda going back to what it should be.

Dylan Koch: [23:52] I think we saw that even in general, but like, even in GoBundance, people would do the Airbnb arbitrage, like, workshops. Yeah. Like super niche workshops where they like sell seats. Drop shipping, like from an Amazon store was another hot one. Like, I don't know, some of these things went through that I think are just a product of rising tides like raise all ships. Right? And so I think everyone money was And I think when money isn't easy anymore, some of those things go away.

Mike DeHaan: [24:20] Now it's AI. Yeah. It is AI. Oh my god. Everyone's trying to sell their AI fucking chatbot that's supposed to like close leads or whatever. I'm just like, shut up. Get out of You're

Dan Austin: [24:29] wrong, losers.

Dylan Koch: [24:30] You're right though. There's always something and and I think that that whole thing Dan is probably on on the out if it isn't already completely collapsed. It's like indicators for our real estate business. The more influencing gurus there are, the poor it's probably frothy and at the top. And now we're here near near the bottom, and hopefully that's like a bottom indicator, and it'll get things will get better.

Mike DeHaan: [24:51] Which I think it will be. Because I mean, we were talking about just like general business numbers and stuff before the show and like, because we did out with our on our scale community call today, we did like a deep dive into KPIs and stuff. And like our April was really solid. I mean, if you look at between our April and May, we have what? About $200 set on the books. So like, I mean, May hasn't even started yet. We already have that teed up. So like stuff's looking fundamentally pretty good. Would say sellers have been pretty open to having conversations. Our direct mail, like, lead flow is down, but the lead quality is up, like, quite a bit. The like, our biggest challenge, and this is where having the gurus and education be on the downfall is kind of a problem is that our buyers dry up. Right? Mhmm. So you guys do more hotels and different things. But I would say, like, if you are doing more hotels, stuff's still selling. We talked about this a little bit last week. We've we've been selling properties that were asked if you're in good markets as long as you're not in Florida or or, you know, some of these other places.

Dan Austin: [25:46] And putting a good product out there and pricing it appropriately is always gonna be the way to do this in this market. And I would say too to add to like the current, I would say, success or just good trajectory we have is reflected in our community as well. We have several people that are, you know, the full time operators in the community that are feeling the same thing. They're having a good q two or good end of q one going into q two, sharing their KPIs. And so I think it's like, not just us being uniquely positioned in our market, it's people that are knowing or doing the right things and playing the fundamentals and doing the business correctly, are seeing that they're having a pretty solid year. And I feel like that happens even in a down market. You're just doing the right thing consistently.

Dylan Koch: [26:24] And a lot of them, you know, and you guys will know this better than I would, but they've been in there for almost a year now. Like, they're kind of like still improving on their their businesses, improving on their sales skills, getting the right people in place. So not only like, they're almost like improving into a down year, whereas like some of us started, we were improving into up years. So it's a little bit different of the of the pace of of business.

Dan Austin: [26:46] Absolutely. And and my argument's always if you can do that on the downhill slope, it's gonna make the uphill slope so much fucking better.

Mike DeHaan: [26:52] Yeah. Way easier. Yeah. So, you know, and I think that's the opportunity, right? Like, something that is repeated a lot by people that have been around, you know, as entrepreneurs for, like, a long time is the most likely indicator of success is your time doing the same thing over and over. It's like a big, you know, like, Al Shmozzi thing or, like, a lot of the, I would say, proper, like, entrepreneurial kind of gurus are like that. And if you go and you look at any of like the big multi multi billionaire people, super successful people, a lot of them, they've run those business for like thirty, forty years. Right? Like a super long time. And in those periods of time, they've had up markets, they've had down markets, they've had sideways markets, they've had conflicts, you know. A lot of them, they went through like nine eleven and fucking wars and like different shit. But they kept doing the same thing. And I think that that's kind of the most important piece of it. Right. You know? And so like if you're doing like wholesaling and flipping, you can do that in any market. It just comes down to, are you willing to do what it takes when stuff does get a little bit weird? Are you willing to take the appropriate risks? Are you willing to, like, potentially lose money? And are you smart enough to kind of adapt your business and continue to grow?

Dylan Koch: [27:55] Playing, I wanna hear your thoughts on this. This is like the devil's advocate take. Because I saw Yeah. Aaron Amuchastegui, if I say his name right Mhmm. Post on Instagram the other day that he's shutting down one of his businesses. And his caption was like, shutting down a business. And his kind of style was like, this happens, you know, but you have to know when to throw in the towel. I have had I've start like, you know, started and stopped dozens of businesses over my my lifespan, but like the average for his is like ten to fifteen years.

Mike DeHaan: [28:25] Sure. Did he say which business he's shutting down?

Dylan Koch: [28:27] No. I I know I could try to find it real quick, but I don't.

Mike DeHaan: [28:30] Do you wanna guess which one it is?

Dylan Koch: [28:31] Probably the building one.

Mike DeHaan: [28:33] No. It's a real estate rock stars.

Dylan Koch: [28:34] Oh, it's a real estate rock stars? Yeah.

Mike DeHaan: [28:35] That's what I would Because he's it's a

Dan Austin: [28:37] Coaching kind of conference y.

Mike DeHaan: [28:39] Yeah. Yeah. Real estate agent coaching. He already wasn't making a major profit off of it, and it goes back to literally we were just talking about where the fall of the education and gurus.

Dan Austin: [28:48] Yep. It's crescent.

Mike DeHaan: [28:49] Right? You're starting to see less of that. And so, his house flipping company's big. I imagine he's still doing that. But then his main focus is he's getting ahead of the curve. So he's an entrepreneur, he's an innovator. If you guys don't follow him on Instagram, should have that things just not aired in much staggy.

Dan Austin: [29:02] It is.

Mike DeHaan: [29:03] Yep. But he's been doing doing this, like, prefabbed home business for a while where basically they take stick built homes and they prefab all the walls in a factory. And then they can just like bring it all out to a build site and they can stand up like a new construction home in like a week and a half Mhmm. Or two weeks. It's crazy. And the homes look great. Like they look like super super nice new construction homes that take

Dan Austin: [29:25] Multi story. It's not like your typical double wide type situation. It's a proper looking home.

Mike DeHaan: [29:30] Yeah. It looks like like a home that would take five to six months to build and cost, you know, 600 to $800,000 in most markets. Mhmm. So that's like a newer thing. So when I met up with him down in Austin last year, he was like just starting that. So I'm pretty sure he's just moving to make that his main focus.

Dylan Koch: [29:46] Which makes sense. If you have so many hours in the day, get rid of something that's not making you money from more hours that is making you a ton of money.

Dan Austin: [29:52] Yep. And take advantage of this is where you said it, Mike, he's like entrepreneurs and innovators, take advantage of the unique circumstances provided to you, which he has very unique circumstances with the Austin market, Texas in general, what he can do. And so obviously, if you can be ahead of the curve and figure that in a in a metro and it becomes a great solution, you can make a shit ton of money, but then also there's scalability outside of your market as these other municipalities and other areas like become the next hot spot where Austin, you know, in ten years from now might not be that spot. He could do whenever he wants to do it. He's ahead of the curve.

Mike DeHaan: [30:22] I would also say going through that is a different business kind of, but it's also fundamentally a similar business to his flipping houses and development stuff he was already doing. Mhmm. It's basically his way of adapting to a new product within that business. So it's not like he's going and starting an Amazon store or doing something completely different. Yeah. You know?

Dylan Koch: [30:39] Right. Yeah. And some of the people that we just alluded to who are in the, you know, Forbes top 50 or whatever. Yeah. Their business name might be the same, but like they're different companies than they were when they started.

Dan Austin: [30:49] A 100%. Oh, absolutely.

Dylan Koch: [30:50] Like Amazon, like 80% of their revenue is AWS. And that wasn't the thing until halfway through Amazon.

Dan Austin: [30:56] Yeah. AWS was just a side thought. They're like, I think we can make some extra money. We need all this compute power for the store, but I think we could sell it. And then, yeah, they turn it into 80% of their business.

Dylan Koch: [31:05] Yeah. Now it's like huge part of their business.

Dan Austin: [31:07] Created an entire industry, dude.

Mike DeHaan: [31:09] Yeah. For sure.

Dan Austin: [31:10] It was a side hustle.

Mike DeHaan: [31:11] It's interesting how many of those companies kinda go that route. Like YouTube was originally a social media platform, you know, and then it became a video platform. I don't remember that, really. Yeah. So, yeah, it was like a meant to be like a MySpace kind of Facebook competitor. Like video sharing though. Yeah. Yeah. So, like, that's why it was like YouTube. Right? It was like a tube for yourself. Mhmm. But then it became just like the the general video platform relatively quickly after. But and it's like there's a lot of those. So I don't know. I mean, when you're looking at stuff, it's just important you're making decisions off the numbers, right, and off your data and off of what other people are doing in your industry. You know, because there's a lot of people that are leaving. But, like, we look at some of, like, our scale people. I would say, like, over the last three months, for the first time, we have and these are these are scale folks who've been with us for a little while and have been kinda like grinding through the ups and downs of the market. We've had so many members over the last like quarter that are like, I have like a lot of money right now and I don't know what to do with it.

Mike DeHaan: [32:12] Which is really interesting because if you go back like six, eight months ago with these same people, they were kinda struggling trying to figure it out. Mhmm. But we had a conversation with that Honors Scale community called Today and then with a member at our meetup last week. And he's like, I've never had so much money before. Like, I don't know. Like, what do you do with all your money? I'm like, just just hold on to it. Right? And there's nothing wrong with having cash available and sitting on cash for better opportunities. Like, we talked about this little bit before the show, like Warren Buffett right now, he's sitting on tons of cash. And what was the number you said, Dylan, about how much the treasury he owns?

Dylan Koch: [32:44] He owns 4.89% of the entire US treasury market. That's fucking crazy.

Mike DeHaan: [32:50] Which is crazy. Which is insane. Yeah. So that's a ton. And and there was this little chart that went around a couple weeks ago after the market took its big dump, and it was showing where all the billionaires were. And everyone was down like twenty, thirty, 40%. And then Warren Buffett was like just up 26 because he sold all the stuff when the stuff was getting weird, and he's been sitting on cash. And if you think about it, right, if you list for most of us, Warren Warren Buffett, but we're obviously, we're not even like a rounding error on his balance sheet. Not even close. If you have like $500,000 and you're sitting on it in cash, and sure, you could like go and try to buy a shitty rental. This guy's super mediocre. He could go and do some loans at that, but you've never done that before. It's kinda risky, whatever. And you take it, and you sit on it for, say, three years, and it's getting whittled away by inflation. It kinda hurts your ego, whatever, but you just hold on to it. But then in three years time, you find a deal that you can go and you can do that deal, and you can make another $500,000. Right? So you basically make a million dollars total. You just made a 33% return over those last three years if you bring it up. That's pretty damn good.

Mike DeHaan: [33:56] You know? And that's way better than going and just like throwing your money into something stupid because you're worried about inflation.

Dylan Koch: [34:01] Just have it work even though you don't know what it is.

Dan Austin: [34:04] Yeah. Exactly. Yeah. Just because you're afraid to lose money. Right?

Mike DeHaan: [34:07] Exactly. It just doesn't make any sense. But I think that when people are new to business or when I would say, if you have a large percent of your net worth sitting in cash and you're used to growing over like past couple of years, there's like this itch that you get kind of like in your soul where you feel like you're missing opportunity if you're not doing something.

Dylan Koch: [34:24] That's valid. And like, you know, Warren Buffett, he's the best temperament of all of these people. Right? He's done the same shit. And so he's like, I'm comfortable sitting on billions of dollars while you guys all go play in the sand and I'll just wait for the right opportunity.

Mike DeHaan: [34:37] Well, that's that's the thing. Right? Is he be sitting on billions of dollars. So he committed a record high cash position.

Dan Austin: [34:42] He even sold some of his Apple, I think, which is a big deal for him.

Dylan Koch: [34:45] He sold Apple like the top. Like literally like the

Mike DeHaan: [34:47] top. Yeah. Berkshire Hathaway has a $334,000,000,000 cash position. How much of that is their total portfolio? That's way bigger than I was expecting.

Dylan Koch: [34:55] That's just cash. I'm pretty sure that's just their cash position.

Dan Austin: [34:58] A $134,000,000,000 cash position? Yeah. I'm guessing they're well over 500,000,000

Mike DeHaan: [35:03] Hathaway in portfolio. Value. Can I say that the total market value?

Dan Austin: [35:08] 500,000,000, 500,000,000,000.

Dylan Koch: [35:09] Of Berkshire Hathaway outlook. Let's see if I can

Mike DeHaan: [35:11] Well, mean, so so if if that's true, that means you're sitting on like 70% cash, which is insane.

Dan Austin: [35:16] Yeah. Yeah. He's been talking about it, not just for like the last year or two, like for the last several years that he's been accumulating cash.

Mike DeHaan: [35:22] Okay. It's 1,150,000,000,000. So sitting at about 30% cash position for their overall Yeah. Portfolio.

Dan Austin: [35:29] Yeah. And and his whole thing, like, I I watched an interview with him a couple years back and he was talking about the biggest challenge of being so rich is that there's actually not that much opportunity, because he can't go and buy, like you and I can, we can go and buy this or that. He's like, what's for sale that's worth $300,000,000,000? There's not many things.

Dylan Koch: [35:48] Yeah. I mean, he's limited by his size

Dan Austin: [35:50] for sure. His size. And in his mind though, when he adds that to further complicate it, he looks at the company's balance sheet and their p and l and he determines what their worth is regardless of what the market trades it at, what its PE is, he determines the value. And so of the companies that he could buy for that much, he only believes in so many of them. And he's not going to sell Apple if he thinks Apple's gonna keep growing Yeah. At a rate that's what he wants.

Dylan Koch: [36:14] The treasuries are paying him four or 5%, somewhere in between those ranges. And he's happy to sit on that even if it's not a like, you can buy tips or inflation adjusted treasuries. But my point is, he's probably waiting for some kind of downturn to happen. And so that when it comes back up, he's getting a 50%, you know, annual compounded growth rate.

Mike DeHaan: [36:34] Yeah. Do you think he's looking

Dan Austin: [36:35] for a general downturn though? Or do you think he's looking at specific markets? Because I don't believe that he buys because there's a general market downturn.

Dylan Koch: [36:43] I would. I would think that.

Dan Austin: [36:44] You know what I mean? Like, there's like there's a recession. What's he gonna go do? Buy 50 Apple stocks and 50 this, some of the things?

Dylan Koch: [36:50] He could load up on some of his own current portfolio, just have larger positions.

Mike DeHaan: [36:53] I just don't think that he's because thinking creative right now, for a 157,000,000,000, he could buy Morocco.

Dylan Koch: [37:02] What the fuck's Morocco?

Dan Austin: [37:03] That's it? The whole country.

Dylan Koch: [37:06] I thought it'd be like a company.

Mike DeHaan: [37:07] No, dude. Yeah. Basically, you'd be buying it on a two x multiple. Their current GDP is a 157,000,000,000. You could buy it on a two x EBITDA of Morocco. That's not a bad deal. Like, can you actually buy a country? I wonder what that would take.

Dylan Koch: [37:20] I guess going back to this, going from, you know, I was a broke college kid at one point, so having like zero money, having money and having what to do with it, and being like a quote unquote professional investor is different and a different skill set than being an operator, especially in real estate. Mhmm.

Dan Austin: [37:37] It is

Mike DeHaan: [37:37] very different.

Dylan Koch: [37:38] I would just lean to people who are who maybe you know are wealthy, like, what do you do with your money, bro? I'm like

Mike DeHaan: [37:42] And here's the thing, is they're gonna probably know fuck all, or they're gonna be going off of their previous experience, which has got them where they are so far. Right? And, also, it's important to understand if your person is that you're talking to is wealthy because they're old and they've been in the market for a while or if they're young because they earned it by generating it in business. Because they're gonna have very, very different opinions. Like, you know, if you if you go and ask Dan's father-in-law about generating wealth, he's gonna talk about putting it in the market because that's what he's done forever. Right? If you go and you talk to I don't know. I'm trying to think of who I would be a good example.

Dylan Koch: [38:15] The other part of this is it's just your your stage of life and what are your goals are Because Totally. You're young and you want a $20,000,000 net worth one day, maybe you do redeploy that capital earlier to try to keep it growing and growing and growing. But if you're 50 years old and you're like, you're pretty content, maybe pay off your mortgage if it's at 7%, because that's a guaranteed 7% return. Like, there's just different avenues

Dan Austin: [38:36] to Timing is a big thing Yeah. And age and where you're at. What's your go back to what Mike said earlier about comments, like what is your capability?

Mike DeHaan: [38:42] Mhmm.

Dylan Koch: [38:42] Also true.

Dan Austin: [38:43] You know? What is your skill set?

Mike DeHaan: [38:45] Yeah. And on that note, just to round this out, I think that when times do get kinda weird and there is general uncertainty, it does make sense to take some chips off the table, maybe delever yourself a little bit. So that way, if case you do end up getting in a situation where the market's heavily trending against your business, you're trying to figure stuff out, at least you're not being left out to dry, you know, and you can just make some business adjustments that kinda cover it.

Dan Austin: [39:06] Exactly.

Dylan Koch: [39:07] You don't wanna be last when that shift starts happening.

Mike DeHaan: [39:10] No. Exactly. You definitely don't.

Dan Austin: [39:11] You wanna you wanna be in the the chair when the music stops.

Mike DeHaan: [39:15] Exactly. Although if you are the last one out when things go down, you're probably gonna be the first one in when goes back up again. So

Dan Austin: [39:21] Very true. Technically, if you never if you never get out

Mike DeHaan: [39:24] You never leave. Yeah. You'll just keep on grinding. So Yeah. Awesome. Alright, guys. Anything else to round out?

Dylan Koch: [39:29] I'm good.

Dan Austin: [39:30] Mhmm. I'm pretty rounded.

Mike DeHaan: [39:31] Alright, guys. Thanks for listening. You guys have a great rest of your week, and, share the show with anybody who might find it interesting or is interested in real estate. I know there's at least, like, couple 100 people interested in real estate still. Go and, like, find them and, share the show with them. It really helps us continue to grow the show. We appreciate it all. So thanks, everybody, and we'll see you guys next week. See you.

Dan Austin: [39:50] See you all.

Mike DeHaan: [39:52] 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.