Why Most House Flippers Burn Out

Dan Austin: [0:00] In our industry, they don't know how to measure risk, and they don't understand what's a reasonable amount of risk.

Mike DeHaan: [0:09] What's going on, guys? Welcome to the collecting keys real estate investing podcast here with your host, Mike DeHaan and Dan Austin. Hey. Dylan Cook is out today. I was gonna make a super off color joke, but I'll tell you afterwards, Dan. Remind me. Dylan, it will be out for the next little bit. Don't worry. He's fine. But, yes, you're stuck with Dan and myself. Alright, guys. We're recording this on September 11. So never forget. Very, very big, I would say, life event for everyone that's, like, our age in, like, mid thirties to early forties.

Dan Austin: [0:39] You know what, my my daughter's learning about in school?

Mike DeHaan: [0:43] Nine eleven? No. The great attack. The great is that what they call it? Mhmm.

Dan Austin: [0:47] Oh, wow. Yeah. My wife and her my wife has put her to bed and my daughter was like, oh, we have these books. And so like in free time, she'll like read these books and they're can't remember what they're called, but she's like, was reading this one about the great attack. And my wife's like, what is that? And she's like, well, you know, like where these like airplanes hit these big buildings? And my wife's like, oh, okay. Well, let's talk about that. Like, it's like history that we've lived that now like our kids like, have no idea. Like, they don't have any emotional tie to it. They don't even understand. They call it the great attack.

Mike DeHaan: [1:16] Yeah. That's interesting. I feel like if they're gonna be putting labels on stuff, you gotta, like, send out a notice to the parents. Right. So that when your kid comes and asks about something that you've never heard of before, you can at least, like, know what they're talking about.

Dan Austin: [1:27] Yeah. I was just like, that's so crazy though to think because,

Mike DeHaan: [1:30] I mean, golly, I mean,

Dan Austin: [1:32] it was twenty, what, twenty four years ago now, which is a lifetime legit for, like, my daughter's, like, four times my daughter's life. I mean, do

Mike DeHaan: [1:40] you think that, like, there was kids in the fifties that, like, went to school and they're like, do you know about the battle of the bulge? You know? Like it's like, what was that? He's like, oh, we just called that, you know, whatever. I was there.

Dan Austin: [1:51] You know? But Here's the thing though. It's like, yeah. That well, that's a good point.

Mike DeHaan: [1:54] Because, like, d day, that was, like, actually what the whole event was called. Right? But there's a lot of little battles that we've given names over the years or like events that don't know if they called it that at the time.

Dan Austin: [2:04] Yeah. Probably not. It's like they didn't call World War one World War one.

Mike DeHaan: [2:08] Yeah. It's the Great War. Yeah.

Dan Austin: [2:10] Yeah. Exactly. Know You what the good thing is though, is the winners get the right to history. So That's true.

Mike DeHaan: [2:16] So we get to change it however we want.

Dan Austin: [2:17] We don't know what really happened. We just know we won, and so we got to tell the story of how it actually maybe didn't happen. Totally.

Mike DeHaan: [2:23] It's for better or for worse. Well, Well, we're looking forward to dive into this just because it is super pressing news. So this is we're recording this day after the Charlie Kirk incident. We're not gonna talk about it a lot, but I imagine that by the time you hear this, it should be five days from now, there'll probably be a lot of new things that have come out. I just think that the main thing to keep in mind, especially because in real estate, it's very, very much a republican crowd for a lot of people out there that, I don't know, was a very, very big deal. There's also a lot of us that honestly, I didn't even know who this dude was until he was on South Park, like, two weeks ago. And so if you are, I would say, being enamored and it's not something that you can relate to, the outrage of these people, you're not alone with that. I don't know. To me personally, he's like another shooting statistic as bad as that sounds. It was a very public high profile thing and very terrible thing that happened. But at the same time, have school shootings and different things that happen every single day. When And I don't have a personal attachment to these people at the end of it, I don't know. It's a really challenging thing that happened in The United States yesterday, and it's gonna cause a lot of emotional turmoil and conflict with people. But at the same time, there's a whole population of us who had no attachment and just witnessed a crazy, probably historical event that might turn into, you know, something that our kids talk about. It's like, do you remember the Utah incident in ten years from now?

Mike DeHaan: [3:44] Who knows? But either way, that's all I'm gonna say on it. Just Agree to disagree. Yep. But either way, it's a, you know, we're not gonna expand on it or dive into it too much, but it's a it's a challenging thing. I bet by next Tuesday, this will either be reminding you that that even happened or there will be a bunch more information around it. I'm hoping not then. But More to come. Yeah. More to come. But let's talk about real estate and business. So coming on that end, we are coming into a week with super low term interest rates, which has been actually fascinating. Looking into some of the the product stuff that have been coming around with that on both the investor side and the retail side. I saw a headline this morning that said this week, the mortgage applications are three times higher than they've been at any other point this year so far. Really? So if you if you have flip sitting on the market, that's hopefully a good omen for you. There'll be some more buyers coming out. But of course, when they say, you know, mortgage applications are three times higher, whenever they use general comparisons like that, they can skew it however they want. Yeah. Hire to what? Totally. Or they could be like three times higher in this one rural county in South Carolina. Right? Right. It doesn't necessarily mean that it's nationwide.

Mike DeHaan: [4:54] They also could have like picked a very select period of time, like in this two hour window was like the largest two hour window than any others. So take it with a grain of salt. But either way, from our view on the lender side, we've seen some super, super low rates, especially on long term stuff. To the point that I'm actually considering doing a refinance on a couple of my longer term properties that I've been trying to sell. I've been unable to, and I have like a three and a half, 3.75% rate, but if I'm able to do like a cash out right now at like a high fives or like a low sixes interest only, sure I'll be giving you some cash flow, but the opportunity cost in business is just so much higher than that cash flow that seems to be more and more fleeting right now. And so might not be a bad time to consider that if you've been sitting on some equity, in your properties that you've either been trying to get out by selling or you see it kinda just like wasting away there. But it definitely, at least from what I can remember the past couple years, it seems like probably one of the best times to explore dropping some of those interest rates, you know, if they're super low and make some moves. But, I mean, is this the lowest it's been since like, 2122 time frame?

Dan Austin: [6:03] No. When I was looking at the

Mike DeHaan: [6:04] graph, it was like it was a sick a

Dan Austin: [6:06] little bit lower in this time last year.

Mike DeHaan: [6:08] Was it really?

Dan Austin: [6:09] Was like six point o eight. Yeah. Like, or something.

Mike DeHaan: [6:12] That's like the federal rates though. The DSGRs were definitely not lower back then.

Dan Austin: [6:14] Oh, the DSGRs, yeah. I feel like this is the lowest it's been in yeah. Probably since, like, I'm trying to think of the last DSCR loan we got was, like,

Mike DeHaan: [6:23] 4.5?

Dan Austin: [6:24] And that was in '20 a

Mike DeHaan: [6:25] long time ago though. Yeah. 2022?

Dan Austin: [6:27] So Yeah. And I think they steadily climbed from that point forward

Mike DeHaan: [6:31] Mhmm.

Dan Austin: [6:31] And were not very favorable loans at the time. Yeah. Now they have kind of flipped. And if you're an investor and you're going to keep something single family or whatever, it seems like that's like the loan I that's the loan product I'd be getting. I have some friends that they own they can't get Fannie Freddie because they own more. They got their 10 mortgage maxed out and so they've just gone to, like, commercial loans and stuff like that. Yeah. And I'm talking about DSCR loans and it's, like, clearly a much better product right now for, like, such a lower interest rate. It's, they're long term thirty year fixed

Mike DeHaan: [7:05] people.

Dan Austin: [7:06] Right? Where else are you gonna get that? Nowhere with a good rate and a good, like, actually decent terms compared to like a commercial loan's gonna be fine, but it's gonna have a readjustment period. The rates probably aren't gonna be as low as these DSCRs.

Mike DeHaan: [7:18] Yeah. They're not. Or if they are, you're right. They're going to have like a five year adjustment, a ten year balloon, and they're going be a shorter amortization. Right. But or like something too that we've seen, which I don't know if this is, like, how long ago these came around, but like this thirty year fixed for like smaller multi families up to like 20 units. Right? I think that's pretty interesting as well because those were some of the biggest assets that got crushed during like this multi family collapse over the past couple of years. A lot of the ones that really got hammered were like the big big ones. But there was ton of people that were doing these 10 to 20 units that were forced to get this commercial debt. But now you have like the big money, the hedge funds that are coming and wanting to give thirty year fixed on that product.

Dan Austin: [7:56] Yeah. Which is interesting because it tells me that you got to think about why that is and or what is like the long term results in the next five to ten years.

Mike DeHaan: [8:03] And Yeah.

Dan Austin: [8:04] Obviously money's going there because they think it's a secure asset or that there's reason to believe that the returns there will be better. It's like the risk versus reward thing. And so why wouldn't you wanna be looking at those assets if that's where the big money's going? Because when big money comes, it's just like with the housing market in general, if you're a consumer, they drop the rates. The idea is in a perfect world that that will spur demand. And so then that means prices go up. Right? And so you wanna be on the front end of that.

Mike DeHaan: [8:31] Yeah. Well, the interesting thing with the DSCR lenders that are coming into, like, that smaller multifamily space is they're still analyzing it in a commercial way. They're still looking at cap rates and everything else. Not like they're just like changing to do residential comps, but now they're promising a much longer term debt period. Right? And the rates are quite a bit higher. It's like we quoted one out the other day. It was just a six unit and the, like, duplexes and stuff we've been getting in like the low mid sixes. And the six unit was up at like seven and a half. So it's a good chunk higher, but that's a thirty year fixed mortgage. You don't have to worry about them adjusting rate and needing to do a new assessment, which if you guys don't know how this works, what can theoretically happen is, let's say you get to the five year point with a commercial loan and a multifamily, they're gonna do their rate adjustment. They'll also do a adjustment on the value of the property. If the value of the property has gone down because cap rates have risen, which is this is what destroyed everybody over the last couple of years. Cap rates have gone down, they will say, oh, you actually now need to bring money to the table to keep our loan at a reasonable loan to value for this property. And so what you had happening was you had all these people that were doing these like 150 unit properties and the values of them had gone down significantly because the cap rates had gone up and they're like, oh, now you need to bring $6.08, $10,000,000 to make your loan the appropriate loan to value for you to keep lending with us.

Mike DeHaan: [9:52] And then you had all these operators that were like, okay, cool. I guess you can just take the property back, and then they lose all their investors' money, which was the equity they thought they had in the deal.

Dan Austin: [10:00] Right.

Mike DeHaan: [10:00] Right. You know? Or you have people that start doing other things like trying to raise more money to pay down the debt on the existing properties. Some of the large operators out there were doing these raises. They try and like have enough money to be able to buy down their own debt, you know, or doing silly things like starting other businesses to be able to try and, like, generate that cash. They could do it themselves, and that's just a losing game for everybody. But the the hedge funds aren't doing this because they're doing a thirty year fix. So technically, the risk of that happening will be zero, and you can just hold on to it forever. Like, I don't know what they're gonna do with that debt if they're like planning them you to like sell the property after x periods of time or if they have someone upstream that wants to buy it at a premium. But it's just a really interesting thing I've never seen before.

Dan Austin: [10:44] Yeah. I do. It makes me wonder because, like, there's no way any no way any investment tool or any, like, person's gonna try to hold the debt for for thirty years, especially because the the interesting thing is is, when you actually look at the debt, like most of the interest is collected upfront. The interest rate on the capital is the same. Right? It's just how much capital is deployed. And so it's more favorable to deploy larger money, right, in the beginning because now you're collecting, you know, say 6% on a 150,000 versus 6% on 50,000. And so as those things age, it's more fractionalized. Right? Because there's a bunch of smaller loans in there with like the same amount of interest return, but it's like it's not as favorable to pull your capital that way. So you're like, they're not gonna want these in ten years, let alone even three years probably, but why? What are they gonna do with it? And I'm sure that there is some level of foreclosure rate that they know exists

Mike DeHaan: [11:37] because

Dan Austin: [11:37] it's smart money. And there's probably some level of like, most people sell these things or refinance within seven years. Like, it could be as high as like 90% for all I know. I don't freaking

Mike DeHaan: [11:48] I would imagine it would be much higher than like owner occupants. Right? Like Right. Typically people aren't forever holding 15 unit properties mostly just because the CapEx will catch up to you. Right. Like kind of how a lot of that works is, yeah, you kinda gotta pass the duck. Right? You get it, you squeeze as much out of it as you can. And then once you sort of have the impending issues, you sell it to somebody that sees those issues as their opportunity to create value. And then they can go and do that on their deal. So you're probably right. There's probably some forecasting, a whole bunch of data behind that. I don't know. It's a new thing to me to see that exist.

Dan Austin: [12:22] It's new

Mike DeHaan: [12:23] to me and I like it. Yeah. Either way, would say like a lot of that is very bullish for the like those are very bullish sort of sentiments for the long term of the real estate market despite the fact that things continue to get slower and slower and slower and slower in like the today period. I've seen now, I think every single state is officially in a worse real estate position than it was than it has been over the last five years in terms of like time on market, number of price reductions, listings versus active buyers. For a while, there was a couple of states that were holding on that were still in like an equal position and Washington was one of them. But now we've officially crossed into like the market is less healthy than it was. And I think all states are now in that in that same zone.

Dan Austin: [13:07] Feels that way. We got some flips sitting there for for longer. Not not that they're I shouldn't say that they're on the market because we've had some SIFs sit on the market for the average days on market, which you can't be disappointed with.

Mike DeHaan: [13:18] I know. Right? And that's a realistic expectation, right? Is you need to look at what that average is on market and until you hit that point, you're technically performing as expected.

Dan Austin: [13:27] Yeah, exactly. Your average performance. The one thing that the one got you on that is when you have the best products in that neighborhood because you flip something top to bottom and you did a value add. Right? Like we did an en suite bathroom Mhmm.

Mike DeHaan: [13:40] In the

Dan Austin: [13:40] basement, which is not common in that neighborhood. Right? It's a good neighborhood, good solid neighborhood, what I would consider a right at the medium price point. But you're like, why is this not getting an offer within the first week and a half? Like, you're

Mike DeHaan: [13:52] like,

Dan Austin: [13:53] Now if we get an offer this week, I'll talk to you next week and be like, oh, no, it's perfect, man. We got an offer like Yeah. In fifteen days. Average time on market is forty five, like, but until that happens, you're kind of like, oh, this doesn't feel normal. You know what mean? It just feels a little slower. So I guess compared to what we were selling in the beginning of the year versus now, I could feel

Mike DeHaan: [14:11] that a little bit. I do think there's a big part of that that's like, if you had a period of your life where things were, like, awesome, where you were like a stud. Right? Like, let's say you're you're an athletic guy that's in your mid thirties, but you were like just a freaking star athlete in high school. There's always a little piece of you that, like, everything you do is still kinda like attached to that. It's still kinda like the expectation. You're like, I can lift that. I can run that fast. I feel like that also exists in business where, you know, what you're saying with like the the real estate transactions. There's still a part of us that's, like, in that 2020 and 2021 where it's like, well, this deal can be the one that sells in two days. Right. Right? Like, why wouldn't it be? Like, I can definitely, you know, still bench press that. Right. Totally. But but that's just the reality is that it's not gonna be the case, you know? Mhmm. And I don't think that'll ever go away. Right? That'll always kind of just like linger as like a shadow of like the past, of like the hopes and dreams. But it's important to not let that define your expectations entirely.

Dan Austin: [15:14] Yeah. This I don't know. As you're talking about that, that's all all I ever think about in the these conversations is the dude that's sitting there with ten, fifteen houses on the market who wants to be the big big dog flipper and just doesn't make sense.

Mike DeHaan: [15:28] No, it doesn't.

Dan Austin: [15:28] It makes okay. It makes okay sense in a really good market and it makes less and less sense as the markets aren't really hot.

Mike DeHaan: [15:36] Mhmm.

Dan Austin: [15:36] You know, and then you're in a sluggish market. And the reason why it doesn't make sense, I'm thinking about it not from like a total ROI or like a total income. I'm just thinking about it from a efficiency of your cash and your capital and how hard it is to cycle that money back into your bank and how much risk. And I think this is what people, especially in our industry, they don't know how to measure risk. Mhmm. They don't understand what's a reasonable amount of risk. And so like you take what a guy who's sitting who a guy whose net worth is maybe $800,000. Right? Maybe he's got some stocks, nice little house he lives in, couple rental properties. Nothing crazy, but, know, 800,000 is nothing to look down on. It's a good good amount of money. But they have $1,080,000 flip loans plus, you know, another $300,000 in repair costs out there and they're sitting on the market or in various stages. You know, you got basically, let's just say double, maybe triple your your actual net worth out there in debt sitting in a market that you can't necessarily control.

Mike DeHaan: [16:38] Like

Dan Austin: [16:38] and the upside to that, by the way, is not $3,000,000. The upside is maybe 300,000. And so you go to like a a Wall Street investor, or somebody that's in a hedge fund or REIT, like they're gonna look at that and they're gonna be like, that risk is upside down. Like you're gonna risk three times your net worth and essentially earn a 10% return. And by the way, like three times meaning it will wipe out your net worth and you will not be able to get a loan for seven years.

Mike DeHaan: [17:05] Yeah. I mean, it depends on where that net worth is. If it's an equity and you would lose it with the house, for sure. If it's in like cash and other things, the risk is the asset. Like you give up whatever money you have in there, you can give that back to the bank.

Dan Austin: [17:17] But you're personal guaranteeing all these loans.

Mike DeHaan: [17:19] You're personal guaranteeing it for sure. Like, that's more of a productive conversation that people realize if you're not doing bad stuff. Like, the vast majority of hard money lenders, if you're using like decent hard money lenders, not like the random crooked old dude that's just waiting to steal your money. For which they exist. They exist. We have a very prominent one here that's super problematic that we run into a lot on refinances. If they're like a decent lender, they typically don't wanna clean you out. They just want you to be discussed with the deal. And if you're not going to be, to just work with them on it and let them deal with the shit storm that you caused.

Dan Austin: [17:50] Let them figure out how to get their money back.

Mike DeHaan: [17:52] Yeah. And if you didn't do, like, bad shit, they're normally not gonna see you. Like, that's just not the industry that they're actually in. If you are a real estate wholesaler and flipper and you want to be around other people that are looking to grow and expand your businesses in this ever changing economy, then you need to check out our scale community. Go to collectingkeys.com/scale, and you can get all the details there. But long story short, we are a small tight knit little group of serious real estate entrepreneurs that are looking to really make massive income and not just passive income to this ever changing economy. So if real estate wholesaling flipping is kinda your thing, go to collectingkeys.com/scale. You can book a call with me in there if you want, and I'd love to see if you'd be a good fit. I think that the sort of counterpoint to what you're saying on the risk piece is there's two main things. One is if you can be one of those people that can survive in the hard times, then when it goes to the good times again, you can make such an asymmetrical gain that you will make it so the hard times didn't really matter. Right? You can make make such huge gains in that short short period when times are really good like a lot of the house flippers did in the 2020 and 2021 that were active earlier. Right? They made so much more money than everybody else because they already had their systems built from the prior time and it was a little bit more mediocre. Right?

Mike DeHaan: [19:05] So there's that piece. Also too, if it's a business that you love, like even though you and me, Dan, we've kinda like crossed over on this a little bit just because we've gotten a little bit jaded and we've had some success with the lending and different things. But there are people that love to flip houses and like love that process of like owning real estate and doing different things. And if you love it so much that that slightly reduced return and potentially asymmetrical risk is worth it to you, that's fine. Just own that. It's just like, I would say it's the worst time to be going into that business if it's not something that you're just like super passionate about. Right? If you're trying to like use that to like make your first buck, it's a really rough time to be trying to do it. Or if it's something that you've begrudgingly done for the last whatever number of years and you're just like trying to figure out what your next thing is, it's probably time to just move on and find that next thing.

Dan Austin: [19:54] Right. Yeah. And I would never argue against a person that's like, even if they're starting out in this market, I agree. If you can figure out how do it this market, you'll do it really well in the other markets. But like, I would never argue against a guy doing four flips, one or two at a time, making a $120 a year. That's a freaking awesome that's an awesome salary for working for yourself to realistically working like twenty hours a week if that. Yeah. Like that's pretty sick. And I think that's great. I think to your point when it's like, if you're just starting out and you're trying to be like mister big dog, like 10 flips at a time is a lot. It is

Mike DeHaan: [20:25] a lot.

Dan Austin: [20:26] That's truly a lot. Now, it's not a lot for some people. There's some guys, we have friends this way, like 10 is that's ten's fine. It maybe makes them a little nervous here and there, but they're like, that's what we do. That's we're always carrying 10. Some guys are always carrying 20 and that's fine. I think for the average listener that people we work with, tends a lot. It's a lot of risk for what your capabilities and skill sets are. I wouldn't do it personally. And you and I have done hundreds of deals like it's just I just want to do it. Yeah. I have other opportunities as well though.

Mike DeHaan: [20:52] Well, totally. And the people that are doing more than that, I mean, those are like the 1% of the flipping industry. That is a very, very high caliber flipper. Oh. You shouldn't be making decisions to mirror the professionals in something that you're a semi professional or an amateur at. Just playing a different ballgame.

Dan Austin: [21:09] And also, will just close this out. I've never heard of a guy who's flipping 10 houses at a time and did it for thirty years. It's very rare.

Mike DeHaan: [21:17] Typically, what they do is they expand into a construction company or they start like a franchise or they move on to something else. I'm trying to think, who is the longest flipper? Like, who's been here for the longest that we know? We've had a couple people on the show, like, back when we were doing interviews that have been doing it for, twenty ish years.

Dan Austin: [21:38] Like, that's like their full time gig is flipping. Maybe they have an acquisition arm,

Mike DeHaan: [21:42] but See, so that that's the challenge is like, is that their full time gig or they are a flipper that is also a real estate agent? Yeah. You know? And so like they make a lot of money on the real estate agent side and then they flip houses like opportunistically. Yeah. I I can't think of anybody that's been doing it for more than a couple years that like they're a full time house flipping shop.

Dan Austin: [22:01] Yeah. Yeah. Where they're like, they've got a staff, office crews. Like we know one guy here locally that him and his dad have been doing it.

Mike DeHaan: [22:08] For a long time. He might be close to the longest.

Dan Austin: [22:10] I would say they're probably and they're not doing, you know, a 100 plus a year, but maybe between 50 and a 100 depending on the year. You know what I mean?

Mike DeHaan: [22:18] I don't think they're doing that much.

Dan Austin: [22:19] 50 for sure.

Mike DeHaan: [22:20] You think so? But we can look this up. We got the data now.

Dan Austin: [22:23] On some of it, I think some of it's probably acquired like through line of credits and stuff, but yeah, you yeah, you're right. We can see some of that. But yeah, I would say like probably over the years average would be close to 50. Yeah. And that have been doing it for maybe a decade. Mhmm. But that's rare. They're not even, I wouldn't say trying to do crazy amounts, but

Mike DeHaan: [22:42] Yeah. Yeah. They're probably the closest. I can think of anybody else. I mean, know quite a few that have been around for like five, six years, like 2020, 2019. But by that point, typically people have started to stray, you know, like even some of the like biggest flippers that we know, I mean, wholesaling becomes an inevitable part of the business if you're doing anything direct to seller because you'll eventually if you're even like a tiny bit good at that, you will get more opportunities than you can physically do yourself. I would say those are in like the same sort of wheelhouse. But outside of that, almost everyone strays into other things. Mhmm. So like Ryan Dossi, he's the original group that we came from. He's been doing this for a long time. I think since 2016. But he ultimately started CCF and he has Ballpoint. Yep. And he has, you know, his, sold fast, like, franchise or, like, regional model that they're doing. Cole Cole Porter. Yeah. Cole Porter. And then, like, if you look at, like, a lot of the OG guys, like, Yarber, they've abandoned it completely. They're just, like, running flipping conferences now. Yeah. If you know, what what it seems like is the entrepreneurs that are in the space, they go and start, like, other businesses. And the people that are really entrepreneurs, they go and they start like education platforms. Right.

Dan Austin: [23:51] Yeah. That's kind of it. I mean, there's not that many dudes out there. Like I would think like even like Thatch, like he's kind of an OG that I I don't even know if he flips houses because he just makes so much money now, but he just is like a buyer of houses and really nice properties. He maybe has flipped some houses to build up cash flow and like he but he's dead. He's a 100% all in. He did try to do some coaching stuff for a bit. I don't know if he's still doing it, but

Mike DeHaan: [24:13] I think he is. I know met someone not too long ago through SLA Capital that had, like, been working with him.

Dan Austin: [24:20] Oh, really? He's got

Mike DeHaan: [24:21] a pretty big presence out in Seattle.

Dan Austin: [24:23] Oh, yeah. He's a big dog out there, man.

Mike DeHaan: [24:24] People But the problem is is is he's like the cause for all these dorks that are like, oh, we can take any home and segment off the backyard and condotize it into an ADU and sell that separately. Nobody wants that. Nobody does. Like like, literally, if you think about it, what that what's it gonna ultimately turn into? It's they're gonna they're gonna all do shoddy constructions, you're gonna have a nineteen seventies house in the front, kinda looks like shit. Just throw in your kitchen there. Cool. Nineteen seventies split level. In the back, you're gonna build like this quasi modern ADU that's like just like squeezed back there and they have to like share a driveway. So now you have all these properties that are, like, so close to each other with, like, no middle ground and, like, these really weird mishmash of styles for entire neighborhoods. That's essentially, like, how third world countries look. Like, from the sky, like, when you're flying over some of these really dense places in, like, Southeast Asia and different things, like, oh, yeah. Look at all, like, the tin roofs next to the modern roofs. They're all on top of each other. There's, like, kind of a street where two cars can go past each other, but there's nowhere to park.

Mike DeHaan: [25:25] Like, that's that's what we're moving towards. Power lines work everywhere. For sure. Because half of it's underground. And then, like, with the modern code requirements, you had to run underground to get to the back. But in the front, there's, like, strewn everywhere. We're basically just building Bangkok just way later than the The richest dude in India builds,

Dan Austin: [25:42] in the slums. Apparently, this is a thing in India. And I don't know, don't quote me on this, but I wanna say it was like a billion dollars they spent on building this skyscraper for their home Nice. In the slums of India and they can look down on people. They don't even live there though. Like, they just built it and so once in a while they'll go there, but it's like legit in the slums. It's like one of their homes. But it's a skyscraper, dude.

Mike DeHaan: [26:01] Oh, here's what you could do if you did that. So you have the skyscraper. Like, let's say that you wanna, like, do something nice for the people. You wanna establish hope, which is what you need to do to have a a truly totalitarian society. Right? Once a week, you go and you take like a a ball or something and you inside of it, you put like a little ticket and whoever finds it, they get to like come and have like an all you can eat meal up at the top of your palace. And then you just take a slingshot and you just shoot it off into the village, into like the city below it.

Dan Austin: [26:31] You can't live in your house though.

Mike DeHaan: [26:32] Well, yeah. Not like in your real house. You have like your little quarters where they come and they hang out and eat.

Dan Austin: [26:37] Mukesh Ambani, I guess the religious dude in India, built the skyscraper mansion in Tia in Downtown Mumbai near a densely populated area with many slums. A fact that sparked widespread debate about wealth disparity. The 27 story $2,000,000,000 residence includes features like a 168 car garage and three helipads.

Mike DeHaan: [27:01] See, dude. Yeah. Exactly. You just set them up and they have their dinner in the garage, but they're inside. It'd be great.

Dan Austin: [27:07] Shit. Yeah. Yeah.

Mike DeHaan: [27:08] That's crazy. It is crazy, dude. Now, a 167 car garage, that's a parking structure. That's like when you when you go to the hospital, you know, and you have to, like, go and drive up there.

Dan Austin: [27:17] The article is titled The Richest Among Rats.

Mike DeHaan: [27:21] Oh my god. I love it, dude.

Dan Austin: [27:24] Jesus. Well, I

Mike DeHaan: [27:25] mean, don't know. Are we that far removed from that in some of the places in The United States?

Dan Austin: [27:30] Yeah. You go to, New York City and you've got, like, what do they call that? Billionaires Row.

Mike DeHaan: [27:34] Billionaires Row. Yeah.

Dan Austin: [27:35] They can look down on probably, like, areas of New York City that aren't very nice.

Mike DeHaan: [27:39] Yeah. Well, I mean, that's all in Manhattan. And and so most of Manhattan's, like, I think pretty decent these days. It's cleaned up a lot.

Dan Austin: [27:45] You Yeah. Gotta be able from a 100 stories up, you gotta be able to see the

Mike DeHaan: [27:48] slopes. Oh, yeah.

Dan Austin: [27:49] Don't know. The Bronx or Brooklyn or something. Yeah.

Mike DeHaan: [27:52] Well, that new building they have is pretty wild, like, where the ultra rich people have don't I actually don't know if that dude, was it Ryan Serhant? He's the Oh, yeah. The big realtor there. He spoke at a GoBundance event. Why I follow him. He's pretty charismatic guy, but that's his whole thing is he, like, is the agent that can find buyers for these properties that are worth, like, a $100,000,000. Wild. But they had that one in that super skinny building in Billionaires Row. It had the it was, like, the highest ballroom in the world, I think, or maybe it's just New York. I don't know. But, like, it's, like, at the very top in the when we were in New York last year, it's such a wild building because it's incredibly skinny. Yeah. It looks really out of place. Tenway Tower or the Steinway Tower? Yeah. It's, like, it's, like, super, super thin. Yeah. And does it taper at

Dan Austin: [28:37] the top? I think so. This one looks like a taper.

Mike DeHaan: [28:40] I see a picture of it right here. Yeah. Oh, I think it has to because when they were building it, they had to account for the fact that it was so thin and how the wind was gonna, like, bend the building. Really? Yeah. But, when you're looking at that kind of stuff, I mean, that's the modern equivalent of what you're talking about in India because you have this thing that's worth a $150,000,000, maybe more than that. Oh, yeah. That's like up here. That's like overlooking like the park and like all the people out eating their bagels and stuff in New York down below. You know? And who owns that? The crazy thing is too is that will probably be owned by somebody that goes there like maybe once a year.

Dan Austin: [29:15] My guess is most of those are not owned by Americans. No. No. They're like foreign people that want a place in The United States. And, yeah, they, probably a lot of Chinese, maybe some Indian, so maybe some Russian oligarchs. Probably.

Mike DeHaan: [29:30] I would imagine. Yeah. He's had, like, random celebrities and stuff on his Instagram. He's like, I'm helping Mark Wahlberg find a new $45,000,000 thing in New York City today.

Dan Austin: [29:39] Doesn't Mark Wahlberg have a place there in North Idaho? Probably. Somebody said that, Gazer Ranch there.

Mike DeHaan: [29:45] I could see that. I mean, it seems like his kind of place. You know, come hang out and Dude.

Dan Austin: [29:49] Watch Transformer movies and shit. Right.

Mike DeHaan: [29:52] Yeah. What? Watch. Do you think that's what he does? Do you think he just, like, wanders around Gazza Ranch, like, bar trying to, like, be like, hey, you guys wanna see this really cool movie that I'm in? And it's just like him trying to He's gotta be, dude.

Dan Austin: [30:03] He's such

Mike DeHaan: [30:04] a Isn't he in like one Transformers movie? He's not in whole.

Dan Austin: [30:06] Yeah. That's the only one I've ever seen.

Mike DeHaan: [30:08] Most recent one?

Dan Austin: [30:10] I don't know. I haven't seen one in like a long time.

Mike DeHaan: [30:13] He's just like he's like begging. He's like, look how cool I am. You ought to come see this movie.

Dan Austin: [30:17] He is an odd guy because like he's like, he's in his fifties and he he looks like he's like young and he also dresses like he's young. Like he doesn't like he's an he's gotta be a little bit he's gotta be watching his own movies. Dude.

Mike DeHaan: [30:29] For sure. He he's like, hey, come come and watch come to my house and watch Shooter with me. Come and watch I have Google pulled up. You can watch Ted.

Dan Austin: [30:36] He actually has, I'm starting this room here. He has like 50 kids, but he just when they're born, he bites the stem cells out of their neck And that's how he's

Mike DeHaan: [30:45] That's a South Park reference. Is it really? Yeah. With, Christopher Reeves, you know, Superman. Basically, how he's able to, like, stay alive after his injuries. He, like, eats fetuses. But, I mean, you're not wrong. It could be. Yeah. Just imagine him wandering around and then there's, like, Kim Kardashian and stuff there just like, Mark, fuck off. You're so annoying. And he's like, don't wanna come and watch Uncharted? I'm like, oh god.

Dan Austin: [31:08] Yeah. That's yeah. That's probably what he does. Psychosis. I'm just

Mike DeHaan: [31:11] gonna be shirtless doing push ups the whole time. Don't mind me.

Dan Austin: [31:13] What do you do when you're, like, the most famous person at, like, an area and then another more famous person comes in? Oh. Is that, like, a thing?

Mike DeHaan: [31:21] I bet it is. Well, here's the thing is, like, how much more famous are you than you are? Because, like, for example, if they're here and, like, Jeff Bezos shows up, they're not gonna care because that's, like, such a whole other level. Yeah. You know? But if it's, like, Mark Wahlberg hanging out and then, like, Ryan Reynolds comes and, like, buys a house across the street and it's, like, a little bit nicer.

Dan Austin: [31:40] Yeah. There's definitely some ego there. Right? Yeah. For sure. Totally. It's like, like billionaires with

Mike DeHaan: [31:46] their yachts. Yeah. For sure. Yeah. It has to be.

Dan Austin: [31:49] Zuckerberg's getting into the yacht game, dude. I know I saw some some memes out there. Like, he's a yacht guy now, dude. Is he? He's full republican. Now that Donald Trump state Trump's in office, Zuckerberg is cuts all the way in republican. He's got a freaking yacht, dude. And I don't even think it's battery powered.

Mike DeHaan: [32:03] He's full red hat. I think it's gas powered. I know. He start he started working out. He's got chains

Dan Austin: [32:09] and stuff now. He's got the jujitsu, dude.

Mike DeHaan: [32:12] Yeah. He's going to jujitsu. He's he's he's, like, intentionally he's getting one that new surgery that, like, false bros get where they, like, actually make it look like you have cauliflower ear. You didn't earn it. It's like yeah. It's like it's like lip filler, but for bros, and you get, like, fake cauliflower ear.

Dan Austin: [32:26] Dude, you can just get cauliflower, dude. Just let somebody punch you in the ear.

Mike DeHaan: [32:29] I'm kidding. I don't think that's a real thing, but that would be pretty wild. I was gonna say, I Goodbye. Probably, though. They kinda like they they squish your nose a little bit and they just like really crush up the top of your ears. So like that guy's

Dan Austin: [32:41] that they all those guys look just like that. Is it because they're doing that or is it they do that because they look like that?

Mike DeHaan: [32:47] I think it's because they're doing that. Okay. Because have you ever met a dude that looks like that that didn't come from a wrestling background? No. Exactly. Yeah. Good point.

Dan Austin: [32:56] Fair enough. But So

Mike DeHaan: [32:58] Smashed up in that one.

Dan Austin: [33:00] Just a bunch of ugly things, basically.

Mike DeHaan: [33:02] All of a sudden, you should be walking with, like, a permanent black eye. It's like, I've had that forever. It's like, well, what they do is they put a dye pocket in underneath there and they, like, inject it. So it looks tough.

Dan Austin: [33:11] Okay. So speaking of black eyes, this will be the last bit of topical news we get.

Mike DeHaan: [33:15] I'm just gonna say said black eyes.

Dan Austin: [33:18] Oh, black eyes. Black eyes. Yeah. Okay. What did you say? Was there a g in there? Like a light g? No. No. I was watching this like meme on Instagram in between my, Charlie Kirk videos and

Mike DeHaan: [33:33] You could not escape yesterday. Dude, I just all I wanted to do, like we talked about being in the show, is just like watch some brain candy before bed. All I have is my stream that is full of people that are just like going off on one tangent or the other. And I'm just like, I don't care. Can I just like What size?

Dan Austin: [33:50] The algorithm had it, dude. The algorithm

Mike DeHaan: [33:51] is mild. And I found one video that was different and it was this horrific gas explosion in Mexico City that had all these, like, people on fire. I'm like, goddamn it. I'm just going

Dan Austin: [34:01] to bed.

Mike DeHaan: [34:02] You know, like So, anyways, Scott Betzon, the, he's

Dan Austin: [34:09] the what is he? The secretary of the treasury? What is Scott what is Scott Bettsen? He's like, he's the anomaly because he's like a gay republican

Mike DeHaan: [34:16] Oh god.

Dan Austin: [34:17] That works in Trump's administration. So he's kind of like this this weird anomaly.

Mike DeHaan: [34:21] And like he was talking and he was telling some dude he's gonna beat his ass And then like like legit like said that. And then they were like panned out to like Elon Musk having a black eye. And like now there's the rumors that he punched Elon Musk in

Dan Austin: [34:34] the face in in the White House. I was like, oh, that would be some really cool shit if that actually happened.

Mike DeHaan: [34:38] I could see that and it triggered one of Musk's tisms and he had to leave.

Dan Austin: [34:42] Seriously though, he's probably yeah, dude. If this dude's got a hand, he might have just popped the dude in the face.

Mike DeHaan: [34:48] I could see that. I've I don't I have no idea who this guy is. There's just so many names get thrown around.

Dan Austin: [34:53] Steve Besant. Yeah. He's actually, like, legit. Like, I will say I have seen some of his, like, things, like some of his, like, stuff that he wants to

Mike DeHaan: [35:00] do and stuff that he has. Like, he's good at what he does. Disclosed assets of over $600,000,000.

Dan Austin: [35:07] Yeah. He's rich, dude.

Mike DeHaan: [35:08] Yeah. On a salary of $250,000 annually. Just remember, guys, he just follows the Gordon Ramsey the the Dave Ramsey method. He just does the envelopes and he just puts it in there.

Dan Austin: [35:18] His first job in the government in January, dude. Like, so he's been he's like, he was rich before he became in in the office. So we yeah. He's not a Nancy Pelosi or like

Mike DeHaan: [35:27] Oh, he definitely Oh, he's a he was a hedge fund executive. That makes sense.

Dan Austin: [35:31] I well, I'm trying to find the argument. I wonder who punched him in the face, dude. Somebody punched him in the face, dude. He didn't get it in the gym. He wasn't rolling around doing jujitsu.

Mike DeHaan: [35:39] Him and Mark, brother, are getting real friendly.

Dan Austin: [35:41] And Elon did say there for a

Mike DeHaan: [35:42] while he was gonna fight lizard boy. What are we talking about?

Dan Austin: [35:47] Shit got weird there for a while, dude.

Mike DeHaan: [35:49] It's still weird. It's getting weirder every day. That last

Dan Austin: [35:52] year, it got weird.

Mike DeHaan: [35:53] There's been so much weird do you remember when we bombed Iran in June? Yeah. That's what a thing that we did.

Dan Austin: [35:58] Oh, yeah. Was it Juno that long ago?

Mike DeHaan: [36:00] Yeah. So the the only reason I remember this is because I was in Europe. I was sitting in the airport in London waiting to fly home when there's like the video of like the missiles that come into Iran. And we were like, fuck. Are we like going to war right now? Like, are we gonna be able to get on our flight? And then my wife goes, who's gonna feed the dog tomorrow? I was like, that's first world problems, like, fully. It's so funny. I immediately go, who's gonna take care of the dog? I'm like, what?

Dan Austin: [36:26] While the other poor people from our country are at war.

Mike DeHaan: [36:30] God. Whatever. Anyways, so cool. I don't know. Keep buying houses. Don't over leverage yourself or sell your houses. But stuff's looking up in transactional way.

Dan Austin: [36:42] I think it's good. I think we're in a steady state. If you're in a steady state, that's okay.

Mike DeHaan: [36:47] Yeah. Steady state's good. I think that's actually a really valid point just to round this out is we've been in a steady state for a long time, which is honestly how things probably should be. Yeah. You know, it should there shouldn't be extreme ups or extreme downs. A mild up or a mild down is probably just the way that things are meant to be.

Dan Austin: [37:06] I hope so.

Mike DeHaan: [37:07] Cool. Alright, everybody. Well, thanks for listening. You guys have a great rest your week, and we'll talk to you guys next time. See you. 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 think of the show.