When to Sell Your Real Estate, Deciding When to Step Back or Go Big, and Developing Financial Maturity

Mike DeHaan: [0:00] You reach an inflection point where you've built enough of a rental portfolio, and you're like, I could realistically live off this money. And some people do that. That's fine. They step back. They, you know, wholesale winter fields a year. They go there, but the beach with their kids, those all sorts of things. That's fine. There's the other people that are like, I could be looking at jets right now. Like, I can't I can't start.

Dan Austin: [0:21] Here we go. Here we go.

Mike DeHaan: [0:22] I could go and lean into this and learn how to make real money.

Dan Austin: [0:25] Yeah.

Mike DeHaan: [0:32] Alright, guys. Welcome to this episode of the Collecting Keys Real Estate Investing Podcast. Today is Wednesday. It's the Mike and Dan show where I, Mike DeHaan, and my cohost here, Dan Austin, talk about real estate, investing, business, and everything in between. Well, Dan, congratulations. We finally sold a property. Woo hoo. Which is sometimes like like Big win. Big win. No. I'm joking because we were talking just before we got on air about how when you've been doing this for long enough, and you've bought and sold enough properties, like, it's not really an exciting thing anymore. It becomes an expectation. Right?

Dan Austin: [1:14] Yeah. If it's an average win. I guess if it was like a spectacular win, or we had something to be excited about within the realm of what we had to do to get it or something, you know, then maybe

Mike DeHaan: [1:25] it's think it was like super messy or weird or something like that, but it's like, it's just so standard. We

Dan Austin: [1:29] actually bought the building, neither of us have ever been there. We've rented it out with mostly the same tenants, raised rents, did some turnover. We immediately had it under property management, and since then, we literally have done nothing.

Mike DeHaan: [1:42] Yeah. It's been super easy, you know, and one of the reasons why we've opted to sell it, so as the market started to get into like a stalemate, right, like you can't say it's going down, can't say it's going up, some people say it's crashing, some people saying it's not, It is absolutely just like the standoff right now. Right? You don't know who's gonna shoot first, which direction is gonna go. Yeah. And so we made the conscious decision a little while back to offload kind of like our outlier properties, the stuff that is just like slightly different from the rest of them. So, you know, I sold five properties that I owned virtually here at the end of the year. You know, recovered $240,000 worth of capital, plus, you know, made a very healthy profit on that because I bought them in 2020. This property, it's an eight unit apartment complex that we own that is like an hour and a half away from everything else that we own. It's in a Two hours away. Two hours away. Right? It's in like a very rural area.

Dan Austin: [2:36] Close to the Canadian border.

Mike DeHaan: [2:37] Close to Canadian border. Yeah. We bought it in, actually on 12/30/2021.

Dan Austin: [2:43] Thirty first wasn't it? Like was it the day before the first or did we have an extra little banner? Had to do it before the end of the year for

Mike DeHaan: [2:49] tax Yeah, for the seller, so we had to kinda like scramble with it, it was all this stuff. But you know, like you said, we've never been to it. We just had a property manager that raised rents for us, and stabilized it, and it's been pretty straightforward, and we decided to list it on the market just because it is an outlier, and kinda like a rural town. And we just said like, if we can sell it for this, we might as well, and then sure enough, it's been up for a few months. Yeah.

Dan Austin: [3:12] Don't see any time in the near future twelve, twenty four months, it going up in value. I don't see it going down in value, but I don't see it going up in value, and I guess stepping back to it, it's a pretty good deal for us in the sense of we had no money out of pocket really on this thing, we bought it at a good discount, we took other people's money for the down payment because we bought it traditionally, we didn't try to burr it or do anything like that, we just straight bought it from the seller, and like you were saying, we just rented it, it was about, each rent was like $4.95 per unit, and we got them up to $7.50 straight away, pretty much right when we could, which was a few months after we bought it, we got them all up to that, had a couple units turned, but nothing crazy. Yep. So we've got all the rents up, and we've just been sitting there on the cash flow, and the cash flow's been good, but it's not like, oh my gosh, we're cash flowing so much, that we just love it, it's just like normal cash flow for what you'd expect for an eight unit that's performing average. And so yeah, of course, we're gonna give up some passive income, but we're taking the money off the table, because, like we said, it's in a rural market, I call it like trimming the feathers on the bird, this is the time where, you know, get rid of some of those things that don't really serve you anymore, and we can take that money, and we can get a much higher ROI somewhere else with it at this point in time.

Mike DeHaan: [4:26] Yeah, exactly. So we bought it with other people's money. We ended up paying him off with some lines of credit and other things. We have some of our own cash in it now because of that. But all in all, we're gonna be netting after it's all said and done, but we bought it for $4.75, we signed our purchase sale for $6.45. So after cost we're gonna be netting like what, 140,000 probably?

Dan Austin: [4:48] Yeah, 140, 150,000 in actual net net after we pay ourselves back for the

Mike DeHaan: [4:53] Yeah, down then we're getting back like an extra, you know, a 120,000. So all in all, we're gonna be making a decent profit each and then bringing in like an extra 120 that we can put towards our current business that we're really focused on, which is our collecting keys partnership program, our wholesaling business, and all these things that are just much more appetizing to us right now with the questions that are sort of lingering in the long term real estate market. So, you know, it's been good. But one of the things that I don't wanna say is alarming, it was just sort of a weird feeling, was we had the offer come in. We had it listed on the market. Cool. We signed it. Whatever. Literally no emotion. Whereas, like, the the brokers that are involved are, like, emailing back for like, yeah. Great job. This is a great deal. They're, how are five? I'm like, work to have to go through this. It's just oh my god.

Dan Austin: [5:44] Yeah. It is gonna be work. And then they now now the buyers want all this information, and I'm like, I don't really want to give it to you because it's like, I gotta go get P Like and what? Then I have to like email this to you and then they wanna like we have a couple units coming vacant and they wanna participate in listing and I'm like, I don't want to do that. I just want to fill the units as if we owned it, and if you guys happen to buy it, you get what you get. Because it's not like we're not going to maximize this, because just in case, if we don't sell this property, I don't wanna be under renting a unit just to get it rented. Like, that has nothing that's nobody's benefit. Yeah. But I also don't wanna have to deal with it. And it's like this weird place where the reason why we got into this business is to build a portfolio, and we actually did build ourselves a nice little portfolio quite quickly, but then we've transitioned into growing our other more active income businesses, which is kind of a bummer because in a way that we have this, I don't know what the, maybe it's just not apathy, maybe it's apathy towards our portfolio, because we're like, oh, that's work, and the cash flow Mhmm.

Dan Austin: [6:45] You say this, Mike, you know, what is it, get massive income over passive income? Yeah. The cash flow is great from our properties, it definitely puts food on the table type thing, but like when you're looking over here at some of the fees on the wholesale side that we collect and all that sort of stuff, it's like, well, that massive income is so much more fun to make, so you have this like, ugh, this is work for a tenth of the profits, basically, but it's good profits because it does feed the family and come in while you're sleeping.

Mike DeHaan: [7:11] Yeah, and I think kinda what it is is it's easy to have a little bit of a sunk cost bias when you build out your portfolio, right? You work really hard to buy all these properties, do all this sort of stuff, and then it's kinda hard to get rid of, especially because if you're in the real estate space, and you're doing it with any store level, people always wanna know your door count, They wanna know what your portfolio is worth. And you are opting to reduce that even though it doesn't mean anything.

Dan Austin: [7:37] Yep.

Mike DeHaan: [7:38] You know, because it's a vanity metric.

Dan Austin: [7:39] It's a vanity metric, but it does. There's a little

Mike DeHaan: [7:41] ego to Totally. Right? But the people will go and say, oh, I own 300 doors. 99% of the time, people are full of shit. It means they're like a limited partner in something, and they don't own actually own most of those. But reducing that number hits the ego a little bit. You put a lot of time and money into accumulating those assets, so it can be hard to look at it big picture and step away. But I think there's kind of this arc that real estate people go through, especially if you start to take this business serious and you start to pursue it full time, where you're like, I want to be able to live off of my rental income. Mhmm. And in the course of doing that, if you do it with any sort of speed, you will start to get skills that let you achieve massive income. Right? You learn how to wholesale. You learn how to flip. You learn how to identify opportunities. You do all these sort of things. And then after a while, you kinda reach an inflection point. K? You reach an inflection point where you've built enough of a rental portfolio, and you're like, I could realistically live off this money. And some people do that. That's fine. They step back. Wholesale 100 deals They a go there, put the beach with their kids, those all sorts of things. That's fine. There's the other people that are like, I could be looking at jets right now. I could start.

Mike DeHaan: [8:49] There we go. There we could go and lean into this and learn how to make real money. Right? Like big money where I can fly first class. I can have the luxury items. I can do all sorts of things. I don't hate working. I wanna pursue that.

Dan Austin: [9:01] Right.

Mike DeHaan: [9:02] And at that sort of inflection point, you decide what you want your food to look like, and you gotta make a decision. And I think the people that end up doing nothing are the ones who are sort of drawn, They feel like they need to go one way, but they really wanna go the other, they're not honest with themselves. So they kinda wanna go towards the massive income, but they still feel like they should care more about the rental portfolio than they do, so they never actually recapitalize all that money, or vice versa, they feel like they need to pursue the luxury items, but really they're kinda lazy and they wanna live off their rental income, which is totally fine. Yep. You just need to be honest about it and make a decision, right?

Dan Austin: [9:40] Yeah. That's such a good point because you said it right, sunk cost bias, whether that's time or money into these properties, it is a lot of work to accumulate them, and it takes a period of time.

Mike DeHaan: [9:51] Mhmm.

Dan Austin: [9:51] But you have to remember, I guess they don't have to be, but they should be temporary. If you're trying to optimize and maximize your ROE and ROI, because what inevitably happens is you own a property long enough, big things start to fail. And of course, you're putting set asides for your maintenance and your capital expenditures, so over a period of time, you should save up enough money to replace a furnace, but a lot of that's math equations, and the properties most people are buying these days, because it just seems like the last few years, the numbers have been this way, and the reason why a lot of people are going into short term rentals, sober living, adult living, because they need cash flow for these properties, right? Because the cash flow, dollars 200 a door is great, but sometimes it's not enough when you're buying a distressed asset to replace major items that go bad. Mhmm. And so I look at it on a seven year cycle, and I don't know where I got that number from, but it's been in my head of property ownership is about seven years, and if you think about it, if you're borrowing properties like we hear a lot of folks do traditionally, you're buying a property, you're renovating it, you're renting it, you're refinancing it, all that sort of stuff, hopefully you have no money into it, That takes maybe a twelve month period of time, six months if you're doing it quick and it's a good market. And then you're gonna rent it for a while, and all those renovations that you put in there, maybe you did LVP, you painted the walls, you did some kitchen upgrades, those things start wearing out at about seven years and start looking like crap. Yep. And then within that seven year period, like maybe it's because it's lucky number seven, a roof starts leaking, or a furnace starts leaking, or something happens to the property, a flood, we've had basins flood, we've had all sorts of issues happen, that's about the time when those start happening, and so sell that thing while you can maximize all the cash flow you collected, and your ROI during that period of time, and then go equity out of it, and reposition another property where you can now get a higher ROI, and skip the line, and skip all of the freaking crap of dealing with renovating that property again.

Dan Austin: [11:47] One thing I don't like to do is renovate a property twice. Mhmm. It's just a lot of like stress, a lot of headache, and a lot of money. Yeah. Just do it once, bury it, and then sell it in seven years. That's kind of my model. It could be six years, could be ten years, I don't know where that actual economic value is squeezed out of the property, but you're also looking at the depreciation and stuff like that. Keeping a property forever, it just doesn't necessarily make sense.

Mike DeHaan: [12:08] Well, and even larger than just maximizing that return, right, it comes down to your opportunity cost at that period of time. Mhmm. Like for us right now, our business is on a great tear. Mean, you look at our our wholesale business right now, I mean, we got 19 properties in escrow at this moment, we got way what, 16 more contracts out, half of which will probably get signed.

Dan Austin: [12:25] Mhmm.

Mike DeHaan: [12:26] If we take this money that we are, you know, our return on equity is decently low at this point, if you look at the cash flow, it's probably like 2%, and we roll it into this business, we roll it into our hard money lending business Mhmm. All those things are gonna yield us a significantly higher rate of return. Oh, yeah. And we have the opportunity to do that. So that makes more sense right now. And the thing is, it's nice, because we've built up a decent portfolio, we still have a lot of other assets that we can use for the tax benefits. It's not like we owned one property and we're getting rid of it. And basically just recovering some dry powder. And there's so many people, especially when they're starting out, I I hear this from people who have been doing this for like a few years, and this is how I know that they are an amateur in this space. They will say, oh, I don't look to sell anything ever. I look at everything I'm gonna own it for the next thirty years. I'm like, you don't know what that's gonna look like. Honestly, it's a very amateurish, immature way to look at your finance, and to look at your business, to say, every single property I look at, I'm expecting to own it for the next thirty years. It's just like if you had stock portfolio, and you bought all of the hottest companies right now, and you said, Cool, I'm gonna leave this for the next thirty years, and I'll never look at it again. Well, what happens when bought Disney, and they start doing some weird stuff in the political sphere?

Dan Austin: [13:51] They get kicked out of Florida.

Mike DeHaan: [13:52] But seriously though, right? And their stuff starts to tank. If you don't monitor that, you're gonna lose money.

Dan Austin: [13:57] And your portfolio manager can tell the same thing, they're

Mike DeHaan: [13:59] gonna move

Dan Austin: [13:59] you in and out of things as economically feasible and makes the most sense. That's just yeah. That's great. You I wanna bring up a point too that you hit on and maybe pull the thread on is having multiple verticals Mhmm. In your business. You might think of yourself as just a rental property owner, but like, what are other verticals that you could go and create income? So, you mentioned our hard money lending company. That was just a byproduct of us being in a situation of saying, hey, we could do loans, let's do loans, and next thing you know, you have a business that gives you at minimum 18 to 20% IRR, over a long period of time. And so if you're thinking about, I could sell a property where I may be cash flowing some money, my ROE's really low, what if I just started loaning that money out? It's not hard, you could become a private lender, and maybe that's what you can aspire to, is say, hey, I'm gonna buy a property every single year, and then over this period of time, I'm gonna start selling them in that cash, I'm going to put into my hard money, or private money lending fund, or maybe it's a property management business, or some other vertical that also gets you excited. Yeah. Like, let the real estate portfolio feed you, and it doesn't just have to be cash flow.

Mike DeHaan: [15:01] Yeah, I mean, and that's a great way to build other opportunities off of needs that you have, right, or things that you're already kind of an expert on. So like our hard money business, literally how this started was several years ago. It kind of started with the loan that I did, because we were wholesaling a deal, and the buyer came to us like three days before closing and was like, hey, my lender backed out. Don't think I can do this deal. And I was like, Well, I have money. I'll lend on you. I'll lend for you.

Dan Austin: [15:30] I'll loan this to you.

Mike DeHaan: [15:30] I was like, I've already underwritten the deal. I know that it's good. We're selling it to you. And I was like, Yeah, I just need your credit score. I want some bank statements to know that you have some money to deal with it, and I wanna know what your plan is. Got all that from her. She was a veterinarian. She had a bunch of money in the bank. She had great credit. She was just a new investor. I said, cool. I'll lend you. It's 11.5 and three points. I said, great. Just took it, I loaned on it, I parked $110 or whatever it was for that year that it took her to do that project, so it was a pretty big project. Yep. And I made a great return on that money. And that spurred the conversation of like, well, why don't we do this with other people who need lending? And it allows us to kinda double dip, triple dip sometimes even on these deals, because you're also a realtor, you would also list stuff for people on the back know? And there's Right. There's so many different ways that you can take your current circumstance and make extra money. Know? So like if you're a rental property investor, that you talked about having the property management company. Right? That's great. As you go through, you might start to be like, man, I'm turning these units, and it's a real pain in my ass. So why don't you start like a cleaning company that marketed specifically to people that had rental properties? There's a great vertical for you right there. But if you roll up outside your property, and you're like, man, this grass looks like shit. Yeah.

Mike DeHaan: [16:46] I need to find some way to, like, make the outside of my properties look better. Well, you know something that's really annoying as a landlord? Getting your general landscaping done. Right? Especially if you want something that looks decent, so there's a great vertical there that someone could capitalize on.

Dan Austin: [16:59] Things that are adjacent to your profit centers already that add just another layer of income. Being a wholesaler, having an ability to do private lending is great, because you're already underwriting the deals, as you mentioned, and now you have a way to lend money to really qualified buyers, because you can sell them to who you want to also underwrite for the loan. So those little things that are adjacent to your other profit centers make so much more sense, and that's really how everything we've always done has evolved. It doesn't mean it's the right or the best way, it's just like that's how everything we've done has really evolved from us solving a problem, or us just saying we need to iterate on our business to continue to grow.

Mike DeHaan: [17:33] Yeah, or what are people that are in our sphere asking for, right? So even we started this podcast with, I don't even know why we started this podcast at this point. We didn't have any real agenda. We kinda did it I had

Dan Austin: [17:43] no idea.

Mike DeHaan: [17:43] Because we probably saw something where Brandon Turner said, you need to have a personal brand because I just raised $50,000,000 in a week. And I was like, we need a personal brand. We should go start this show.

Dan Austin: [17:52] Yeah. Exactly.

Mike DeHaan: [17:52] Maybe somebody will listen. And then sure enough, people started listening. And so we started the Instant Investor Program, which is our group coaching program, and we have the different tiers of that. So we started the Instant Investor Program because people were hitting us up, and they were like, hey, I wanna know what you do. And literally the first version of the Instant Investor Program was we did a little webinar where we had, what, 20 something people come on. And afterwards, everyone was like, I can't believe you just did this for free. Are you dumb? And we were like, well, I guess we should charge for it. And so that turned into the Instant Investor Program, which is the group coaching program. And then we started having people join that, They were like, this is a lot of work. Can I just pay you to do this for me? And we said, well, sure. So we started the pro program, which is us Why not? Basically running everything for you. And then we got people that were like, well, wanna take this super seriously. Can you guys just find deals for me in my market, and I'll pay you to do that? And we said, yeah, probably. We can figure that out. The partnership program was born. Yep. And there we go. And it's literally just always things that are in tangent to what you're already doing, and identifying the opportunities.

Dan Austin: [18:55] I don't know what else people would ask us to do, but go ahead and feel free to ask us, we'll probably be able to iterate on it and create something

Mike DeHaan: [19:00] for We'll figure it out, we can do an opportunity together, whatever it I looks

Dan Austin: [19:05] don't know what gets more service y than, hey, we're gonna find deals and get them under contract for you and give them to you. That's pretty awesome. I guess maybe we could I don't know, I'm not gonna do this, I'm gonna stop. Was about to say maybe we could just flip them for Oh them god, no, that's a nightmare.

Mike DeHaan: [19:19] Well, some people do that though. I don't

Dan Austin: [19:20] wanna do it. That's true.

Mike DeHaan: [19:21] I remember, I mean we explored that very loosely a while back. Remember there was that guy out of Seattle that he would call us pretty regularly, he was like a dentist, he was like, So I wanna flip properties out there. And he's like, I don't wanna do any of the gross work, I just wanna pick out countertops and stuff. I think we actually have a small business plan about what this could look like, and we just opted not to go through with it. Yeah. But yeah, I don't know. I think the big thing is being willing to take shots, and identifying what fits your skillset and capabilities, and just trying to figure things out. Because especially once you get started in business, and here's the thing, but with real estate, and this rental property, all sorts of stuff, it is one of the easiest ways to build guaranteed money. But ultimately, if you don't actively try to produce more revenue, you're not gonna ever have a big growth. There's a reason they have that joke that real estate investors don't have any real money, like it's all in equity, but you can have a super high net worth. Right? It's because

Dan Austin: [20:23] Oh, yeah. We know a

Mike DeHaan: [20:24] of Totally. Tons of people. Right? It's because they never actually take the skills that they learn by getting into those rental properties. They never recapitalize their equity or any of that sort of stuff, and they just park this money, and they just sort of live a meager life, and that's great. And then they retire. They're worth $5,000,000. Yep. They lived on food stamps their entire life, but at least they didn't have to go to a day job. Right. Don't I wanna do that.

Dan Austin: [20:47] Or they did do a day job and they kept growing their portfolio. Yeah, the challenge is because you know if you sell a property, it's gonna be worth more in the future, so that's like the hard part to get over, but you're making a great point that like, you really wanna live on food stamps just to have a high net worth and a lot of equity when you can actually go out there and use that money? It doesn't have to be in a shitty business, it doesn't have to be real estate related, it's just like go out there and find a way to make active income, because I think quite possibly what's going to help a person leave their job is to prove that they can make more active income. Passive income's the great security blanket, right? But if you can prove that you can make income, then That's there you an important thing.

Mike DeHaan: [21:24] The crazy thing is, is once you're sort of indoctrinated into that mindset, that entrepreneur mindset where you learn how to identify opportunity and how to make money, you'll realize very quickly that most salaries, you can kinda just screw around and replace them. Honestly, though, really? Got a $5,060,000 dollar a year salary. If you're making $50.60 grand a year, and you're now working at a job that you love, and you believe in the vision, and has upside for you, go do anything else, honestly.

Dan Austin: [21:53] Yeah. Yeah, you can get $5,060,000 in salary easily. And here's what I'll say, the people that are making $5,060,000 on salary are actually probably working harder than the person making like 150 to 200 on salary. Absolutely. You know, and so it should be even easier for you to step out and figure that out because you can make 50 to $60,000 in real estate a year without working nearly as hard as you do at your WT, probably doing twenty hours a week.

Mike DeHaan: [22:17] Yeah. Totally. It's funny, Gary Vee, I'm not a big Gary Vee fan, but he saw this video that I really, really appreciated. He was talking about Gen Zs and how Gen Zs aren't really joining the workplace. And he's like, yeah, Gen Z doesn't wanna come sit in your stinky old office for $55,000 a year. They figured out that they can make $60,000 a year just making TikToks at home. Seriously though. Wait. What are you gonna do?

Dan Austin: [22:41] Right? That's capitalism at its finest. Yeah. If you're not giving people an incentive to come work for you, giving them opportunity, then yeah, they shouldn't show up to your office.

Mike DeHaan: [22:51] I love actually what you just said there. That's such a valid point of that is capitalism at its finest. Because the people that bitch about that the most are the biggest capitalists. Because they need the low wage job to run their business that they haven't built inappropriate profit margins for. But then all the people who they're like, Oh, they're bums, they're doing whatever. It's like, they're real capitalists. They're identifying that they can be fully in control of their own income, and they are setting that up for themselves. No, no, it's just interesting. Anyway, yeah. So we're we're selling that property, which will be good. Hopefully, I mean, it all goes smooth. We'll see.

Dan Austin: [23:26] One of these days I'm gonna get onto that that little bungalow we have and do a lease to own option on that one. I just haven't had the wherewithal to go out there, get the tenants out of it, and like, you know what I mean? Like go through the process, because it would be a fun little project to to at least do a lease to own on, you know what I mean? And when I say project, I don't mean renovate it, but I just mean like, there's two, I guess, disabled adults that live there, developmentally disabled adults that live there, and we tried selling it to the family members, and they're like, oh yeah, we're gonna buy it, and then they don't wanna buy it, and then we're gonna buy it, we're not it's like, you know what, I'm not gonna screw with you guys anymore, obviously not gonna buy it. We've owned it. How long we owned it?

Mike DeHaan: [24:02] Year a half. I think about two years, October. Yeah.

Dan Austin: [24:05] Yeah. Great little thing. We don't even I don't even think we make money on other than we get a great 0% interest loan against it that is just, you know, principal pay down at which is awesome. Anyways, yeah, good little deal to lease to own, because we could really actually get some pretty good cash flow on that, and just have it off the books. The depreciation.

Mike DeHaan: [24:23] Yeah, and you know, we can keep our 0% debt, right, which is really why we bought

Dan Austin: [24:27] those in

Mike DeHaan: [24:27] the first place. But that's what I'm talking about though. That is something that when you have opportunities, and this is also a big reason about why you should consider selling properties. I put this on Instagram the other day too. Is if it no longer fits your vision or your goals for your life, you should absolutely look at downsizing or selling some of your real estate. Because what's gonna happen is, not only opportunity to cost you money, you're gonna start to neglect things because they are just not important to you. So this is a perfect example. We are absolutely making less of a return on that investment because you have better shit to do with your time than to pursue that, honestly. Right? Yeah. It's getting neglected. And you know, that's sort of what happens. And I know quite a few people, especially over the last, I don't know, eighteen months, younger people who have started to like, who have bought real estate portfolios over the last handful of years, and they start to get into business, and they're like, I realized I don't really care about my houses anymore. Yeah. You know, and it's like, I can get a property manager, but then the second year property manager calls, he's like, hey, so we need to know if we need to spend $400 to replace the dryer.

Mike DeHaan: [25:33] You're just like, I don't even wanna be having this conversation. Yeah. Yep. You know? And it it just becomes a drag on on stuff. And you can build systems around it. You can get an assistant. Can do all that sort of stuff. But ultimately, if you're not careful, you're gonna neglect things, and that's when people started getting problems. Actually think that that's probably why there's so many of these landlords that are out there where you're like, how the hell did you buy 19 houses? You feel like you can't get your shit together. You You have to meet them at a bar to get the PSA signed on a Tuesday at 11AM because that's where they hang out. It's like, I bet you at some point that they were on it, and they just got burned out, and instead of just getting rid of everything, they were just like, It just got out of hand. That's how it goes.

Dan Austin: [26:13] Well, especially because a lot of those landlords tend to be older gentlemen. Yeah. I don't know that we've had an older lady actually that's in that situation, but older dudes.

Mike DeHaan: [26:20] I think we have, yeah.

Dan Austin: [26:21] And I think it's because when they started investing, there wasn't the systems, it was just like super basic, that's how you do it. You fundamentally could, and I know for people that do this, that they buy and manage large portfolios, forty, fifty single family homes, and they get excited about that, that's their main business, and they continue to buy, and I would assume on the tail end, they're selling some of their properties to keep growing their portfolio, but just refreshing that capital. But yeah, if you have other verticals with the massive income, it gets harder and harder to actually not neglect them just because it's like set and forget it, so three sixty days out of the year, a property is not gonna be bothersome. But those days, those five days, when it is, it's just like, maybe it's because it's not bothering you for so long, and then when it does, you're like, are you kidding me? And then it always comes in threes, so it's never just the one thing, and so maybe that's part of it too, where you're just like, I just don't wanna deal with it.

Mike DeHaan: [27:12] Yeah, it's always the one thing, and it always seems to be like, when you're at the airport, like about to get on a plane, and you get a, your tenant that you haven't heard from in eight months suddenly calls you, doesn't even text you, calls you and you're no,

Dan Austin: [27:24] what is going on? They're like, for like three days, like three days ago, I noticed that the hot water tank was leaking. I'm gonna call you

Mike DeHaan: [27:30] right now. For real though. But we probably sound so fucking entitled.

Dan Austin: [27:35] I know. We're bitching. We're we're bitching because we're in that mode. Good.

Mike DeHaan: [27:39] It's not even important to us anymore.

Dan Austin: [27:40] Such a drag.

Mike DeHaan: [27:42] Just interesting going through that iteration, I guess, as entrepreneurs. Because especially if you listen to this show, even like a year ago, We were all about buying assets and doing all that sort of stuff, which

Dan Austin: [27:53] is We're doing a lot of renovations

Mike DeHaan: [27:54] It's just, as you grow and evolve, you kinda learn what's important to you. And I think the big thing is you need to look at what your goals actually are, and align your financial decisions with that, and understand that your goals can change quickly. Your goals can change in one year, if you have a good year.

Dan Austin: [28:16] Yeah. Shit, sometimes mine change in

Mike DeHaan: [28:17] a Seriously though, no, mean you joke about that. Did stuff, hired a business coach, and the first couple meetings we had with him, literally my entire viewpoint on what the next year's gonna look like changed 100%. Happened over the course of two weeks. Yep. Right? And I was like, cool, well, I no longer care about all the stuff that I thought about I did when I wrote my New Year's resolutions two weeks Yeah,

Dan Austin: [28:40] exactly. Yeah, that's all trash.

Mike DeHaan: [28:42] Yeah, you know? And all of sudden your goals just get that much higher because you've, I forget the name for the tumor vivid, but once your viewpoint has been changed, or your basis point has been changed, you can't unknow that information.

Dan Austin: [28:57] Like once you get a new perspective kind of thing?

Mike DeHaan: [28:59] Yeah, maybe that's what it Once you get a new perspective, you change that back. That perspective is there forever. Interesting. Yeah, and

Dan Austin: [29:07] I think too, it's partly having different seasons in your life, and you're investing in very well next year, it would be a different point of view on our position for whatever And so I think it's just having that conversation out loud that it's okay sometimes when you're like, fuck these rental properties. You You and I go back for it, we're like, we'll just sell it all. And not because they're bad, it's not like because, oh, we were getting all these phone calls from tenants or whatever, it's just like sometimes you're like, we could take all this capital and re put it over here, that seems like fun, I wanna try something else.

Mike DeHaan: [29:36] Well, also, gee, it starts to accumulate more equity and more capital. You can probably do things that are less risky to achieve your goals, honestly. I said, to develop a portfolio, if your goal is to say, to make $10,000 a month, which is a lot of people's goals. You'll see a lot of people say between 5 and $20,000 depending on where they live, and what their expectations for their lifestyle are. That's a shit ton of real estate, honestly. Yeah. That is. And people will say like, oh, I did that with four Airbnbs. Like, you're a liar, first off. And second off, that isn't guaranteed to go on for nearly as long as a long term rental, which is gonna be a lot more stable. Airbnb is a lot

Dan Austin: [30:13] risk prone. Mean, even in our they're about to change rules in the city of Spokane. So like, yeah.

Mike DeHaan: [30:17] I mean, on on that note, really quick, I go back, they just did this study, and there's like 674 Airbnbs in Spokane, and they've only issued 80 business licenses. Oh, wow. Well, we're one of the 80 people, literally. Yeah. So there's a there's a shit ton of people that are breaking the rules. But point being, it's a lot of real estate, and what very likely could happen, if you accumulate that real estate to make your $10,000 a month over a period of time, you'll be able to look at it and be like, Wow, my equity in all these properties is several million dollars. Right? You wanna know a better way to make $10,000 with way less risk? Sell all of that, take your $2,500,000 and go and put it into a fund that's gonna pay you an 8% press, plus like a multiple, right, that's more than $10,000 a month, with no risk, like no expense risk.

Dan Austin: [31:08] Yeah, exactly, with much less risk, or go into a syndication where you're gonna have some upside, or just be a private lender if you wanna stay in the real estate, I mean, there's just so many ways. Go put an S and P 500, who cares? Yeah. But yeah, it's just like a lower risk, and lower risk financially, but also lower risk from a time standpoint, because as we always say, real estate, as we've learned, is not passive, it's not at all passive. No matter when you think it's passive, it all of sudden's not passive, it just isn't.

Mike DeHaan: [31:35] Yeah, and there's still risk, you know, like if you put it with a bad operator, or a fund goes sideways, But you're gonna have a lot less things like, Oh, well there was a windstorm in it. Now you gotta spend $15,000 on a new roof. Right? Which we know realistically, if you had all that money tied up in equity, having that cash is gonna hurt when you have to write that check. You're gonna to get it from somewhere, unless you got a line of credit or something. Mhmm.

Dan Austin: [31:57] Yeah, or even if you're like, well I have insurance. It's like, absolutely, but guess get ready for a four month battle.

Mike DeHaan: [32:01] Right. Get ready for a great lesson that most real estate investors have learned about, your insurance doesn't actually do anything, so why does it cost so much money?

Dan Austin: [32:09] You know? Exactly. They make you fight tooth and nail for every penny they give you. Which is funny, because on the flip side, if you smash your car into something, I've never had anybody argue what it costs to repair No. Know what mean? They're like, take it to the repair shop, and we'll fix it. You're like, good deal. You get your car back, looks like the same color, I'm happy, but your house, they're like, yeah. Yeah, no, I I just don't think that furnace is gonna get replaced, because that's a that's an appliance, and it's actually not part of the home, so it's not in your it's not covered. Yeah. You're like, yeah, but like, a car drove through my house and smashed the furnace. Like, yeah, but you know, just doesn't count the same.

Mike DeHaan: [32:43] That actually is really interesting though. I wonder why that is about how You're right, they'll write you a check for your car without even thinking about it, as long as you can prove that it wasn't your fault. But your house, it can be not your fault. There can be a windstorm, they'll come out, and they'll be like, do we really need to replace all that?

Dan Austin: [32:58] Well, shit. Even if it's your fault in your car, like, I've smashed into stuff, and they're like, did that happen? I'm like, I smashed into that. They're like, oh, okay. Here's a check. I mean, they'll take care of it. Right? You know what

Mike DeHaan: [33:07] I mean?

Dan Austin: [33:07] But your house, yeah, you're like a tree's on it, they're like, well, I think we can get away with just gluing the shingles back on.

Mike DeHaan: [33:13] Yeah, I know. Yeah. Like, well, we're gonna cut up the tree, and we're gonna leave it in your yard, and now you have to pay $12,000 to get Yeah. That all the

Dan Austin: [33:22] You're responsible for the tree that's not covered by insurance.

Mike DeHaan: [33:26] I know it's now a major hazard and it blocks the road, but we will cut it to the edge of the road. It blocks the sidewalk, and the HOA's gonna sue your ass for that, but that's your problem.

Dan Austin: [33:36] Man, that hasn't ever happened.

Mike DeHaan: [33:38] Not the odds, it's happened to other people.

Dan Austin: [33:40] I know, it's just so stupid. Anyways,

Mike DeHaan: [33:42] that's been kind of our recent lesson over the last week though. And I think the big takeaway for people is too, as you have your rental properties, you have your portfolio, make sure that you're assessing your portfolio and yourself on a semi regular basis. Like quarterly, semi annually, yearly, whatever kinda fits your life cadence. If you're someone that's sort of moving fast and trying to make a lot of aggressive step ups in your life, do it monthly even. Yep. Right? But if you're someone that you're kinda in your zone, you got young kids, your life's gonna looking for the same for the next ten years, do it annually. Whatever. Just figure out what fits your vibe, but make sure that you're not neglecting it, you are revealing your investments and your financial situation, and also be honest about it too. That's another thing too. Yeah, we tell a lot. A lot of people, they like to look at that and get influenced by outward things a

Dan Austin: [34:32] little bit. It's like what they think they need to do because of what they've heard from It's other like you gotta do what you gotta do, and you gotta be okay with treating yourself. Sometimes you have to sell a property, pay the taxes, and buy yourself a Tesla.

Mike DeHaan: [34:43] I that's your plan, isn't it?

Dan Austin: [34:45] Like, if you really, if there's something that you've desired in your life, like honestly, it's happened, this happens to all of we all have these stories, but there's all too often, I've just even recently this week, like four or five people I know that are young, in their thirties that have passed away, or in that kind of age group, you're like, you know what, you don't have very many years left, or you just don't know. So sometimes if you work your ass off, and you've got a little bit sitting there treating I

Mike DeHaan: [35:09] mean,

Dan Austin: [35:09] I don't know, maybe it's not a Tesla, whatever

Mike DeHaan: [35:11] that Yeah, are you asking me?

Dan Austin: [35:12] I don't know.

Mike DeHaan: [35:12] No. Okay.

Dan Austin: [35:14] No, I'm not asking you, I'm just saying.

Mike DeHaan: [35:16] Yeah, because for me, it's definitely not that. I'm debating if I even need a car, because I never go anywhere.

Dan Austin: [35:21] Yeah, I mean, yeah, I like to use the Tesla, because I think it would be great, but I have a lot of other things on my list that I would prefer to do or own before that, but it's just like, sometimes you think about things as investors, by the numbers, and I gotta reinvest this, it's like, you know what, yeah, but sometimes, if you actually are honest with yourself of what you wanna do with your investments in your life, and you look at you accumulated 10 properties, and you've got 10,000,000, or a million in equity, what's wrong with selling one of them, and taking that money, paying taxes on it? Now you got $75,000 and buying something fucking badass, or going on a

Mike DeHaan: [35:55] epic I mean, fully support that, but it's funny. Don't forget that,

Dan Austin: [35:59] you know what I mean? That's why we're doing this.

Mike DeHaan: [36:01] Yeah, I I think that's really, really valuable. There's no point in working that hard to try and change your life to not actually change your life after you've achieved it, which is shockingly common.

Dan Austin: [36:12] Mhmm. Well, it's too easy, right? Because you're just an investor at that point. You're just like, more, more, more, more. But you're all you're not a I don't know who says this. Is it Brandon Turner or something? It's like, you're not a whole life millionaire at that You're just a millionaire. Yeah. That's true.

Mike DeHaan: [36:23] Yeah. I don't know says that either. But

Dan Austin: [36:26] Maybe I should. I don't know.

Mike DeHaan: [36:27] You're a whole life millionaire. That'd be fair. So We can figure out something else there when we put together our I'm looking at Jets shirt, which is gonna be my new thing. That's my goal. Nice. So awesome. We'll do with that what you will, guys. That is your words of wisdom from two guys who apparently sound really stuck up when they talk about their portfolios that

Dan Austin: [36:48] we should be. We're just grumpy this week.

Mike DeHaan: [36:50] It's freaking hot out, man. You know? It's like up to Yeah. We we we passed the novelty of the nice weather now. I'm like, It's like 95 degrees outside today.

Dan Austin: [36:57] Yeah. I was like, ugh. So Yeah. Feel burned.

Mike DeHaan: [37:01] So anyways, guys, thanks for listening. Please share this show with anybody that you know in your circle who might enjoy it. It's the easiest way for us to grow this show. And just go tell everyone about it. Tell the person you sit next to on the bus, or you carpool with, or your cubicle mate, or your I don't know. Is there a holiday coming up? I got fourth of July here in a couple couple weeks. Till yeah. June. June's

Dan Austin: [37:24] coming up.

Mike DeHaan: [37:24] Go to your Juneteenth celebrations. Go and tell one of your friends.

Dan Austin: [37:28] Just bring cluck bring up collecting keys. Be like, you know what? Juneteenth reminds you of these two guys, Mike and Dan, off of collecting keys. Let's what's new.

Mike DeHaan: [37:35] These two white guys celebrate Juneteenth. Yeah. Absolutely. Yes. So god. But, yeah, share with everybody. That'd be great. And besides that, you should go to collectingkeyspodcast.com/free. Get your free five set guide to start generating off market leads. And then eventually, can have a big portfolio that you bitch about too. You're very lucky. So anyways, guys, thanks for listening. We'll talk to you all next week.

Dan Austin: [37:57] See you.