Will Real Estate Crash in 2022?

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Speaker 2: [1:02] Welcome to the collecting keys real estate investing podcast with your host, Mike DeHaan and Dan Austin. From wins, losses, horror stories, and tactics for optimizing your business, Mike and Dan take a real uncensored deep dive into the ins and outs of running a full time real estate investment and wholesaling business.

Dan Austin: [1:26] Oh, I forgot. I got videos up on the drive. I'll we can look at them after this.

Mike DeHaan: [1:31] Perfect. Cool. We're recording. So Alright. Those videos. Check out those videos on the YouTube channel. What's going on, everybody? Welcome to episode 13 of the Collecting Keys Real Estate Investing Podcast. This is our first episode of 2022. It is currently January 2. Have your New Year's resolutions, your personal ones anyway, already gone to shit, Dan? You've had a full twenty four hours. I'm sure you have a treat, have a cookie or something this morning. Well,

Dan Austin: [2:00] yeah, I don't even do New Year's resolutions because I know what I suck at what I'm gonna do. But, yeah, mean, all of my resolutions to have spare time and free time is already gone.

Mike DeHaan: [2:10] Yeah. So I know. I've I've honestly never been a good, like, resolutions or goals guy in general. It's funny. You you me I think after this, we're gonna have a talk to, you have a meeting just to talk to your business goals and stuff for the year. Spoiler alert, I don't really have much because I realized I'm not a good goals guy. I've always been the person of, well, I know what's gonna be the next step forward. And I kinda just focus on that in the immediate. And then that's what I've done for the last four or five years now. And lo and behold, if you just take an immediate step all the time and don't focus on six years down the track, you can actually move pretty fast, you know, and it can get you over than you'd ever expect.

Dan Austin: [2:52] Yeah. I'm I'm like, I've always been kind of slightly the anti New Year's resolution guy because I'm like, well, if you want to get in shape or something, you know, just do it. Like, I remember back when I used to go to a gym, You know, new the January was like the worst time. Right? All the people come in, it's just busy and you're trying to do your workout and there's somebody else in their squat rack doing curls or whatever. And then by February, it's all cleared back out. Right?

Mike DeHaan: [3:17] And so

Dan Austin: [3:18] it's just like, if you really truly want to do something, just do it that day. Don't wait for a date because back to what you're saying about being consistent. If you're just consistent all the time, you're going to probably, you know, exceed where you're going to go. You're going to surpass that. But I do like to set goals. But I like I have a challenge. You know, some people are like, well, just 10 extra goal, the Grant Cardone idea. Right? Mhmm. But I like to look at the data of, like, what is realistic? Because if you're constantly 10 x ing and you're constantly missing your goals, sure, the idea being that you're still going further than you would have, but, like, you gotta be able to, like, celebrate your wins. And that's, like, a big thing of, like, I don't really do very often. I don't, like, look back and say, oh, here's my five highlights from last year. I just see them as every day. But, like, if you're always missing your goals because you're just setting something unrealistic, you're not celebrating. You're not having something tangible to go to. And, you know, back to the data. Like, I like to look at the data and say, okay. Here's what we did last year. And if we if we just incrementally changed it or we we spent more on marketing or we did did x, y, or z, then that should get us to here.

Mike DeHaan: [4:24] Yeah. Yeah. For sure. Well, I mean, I think, like, the whole 10 x principle like that, though, is definitely more geared towards like, if you're new to whatever you're trying to do, you know, like, if you're new to real estate, right, for example, and you're like, wanna buy a rental property this year. And, you know, you read Grant Cardone's book or something else is like, why don't you buy 10 rental properties next year? Right. You know, you I get you can get and like, honestly, that is not that different. You know, once you get some But for us, we have a goal of buying 50 rental properties this year, and we want a taxable to 500. That is extremely different.

Dan Austin: [4:57] Yeah. Yeah. And you you probably can. Right? We could. But then you're I think at some level, you're compromising on other things Yeah. As far as, you know, buying 500 perfect bird rental properties is near impossible. I don't know. Brandon Turner never did it that I know of.

Mike DeHaan: [5:13] So Yeah. Right. Well, not not only that, but then you have the limitations that are out of your control, you know, like just the whole time of the transactional process in real estate. You know, it's like for you to do a BRRRR, for us to do a BRRRR, it's gonna take a minimum of four months typically. You know, if it's like a quick deal. So you're gonna have, if we wanted to do 500 this year over four months. So that means that, you know, at like, what's that? That's every third of the year, we have to have a 180 of them going.

Dan Austin: [5:44] Yeah. Yeah. Basically basically like a 125 doors quarter. Right?

Mike DeHaan: [5:49] Yeah. Exactly. So I think when you start to do scale, things like that, it's like, well, you can't, you know, maybe if like 500 units, but that's still also like a different whole process. So maybe it's like 50, that's like a real estate goal is like, well, why don't we, you know, double that or do like, you know, 150% of that. And that still makes it more like a breaching our expectations, but also is realistic by, you know, how the business actually works. But I know it's, it's, it's always funny to me because I always feel like there's so many people that I know that I follow, you know, personally in, in business relationships, I follow on social media and they like go and they're like, I'm going to read 52 books this year. I'm going to lose 30 pounds. I'm going to put on 10 pounds of muscle. I'm going to make a million dollars. They list off this huge list of things. And I'll, then I'll be like, I'm pretty sure you are at like, you've done like none of this stuff ever. Like, why is,

Dan Austin: [6:41] you know? Well, it will for me too. There's some goals like the, the reading a book one is a good one. Like, I just don't like reading that much and I don't have time in my day to read very often. I do listen to books. I do read, but like, some people are pretty good at it. Like, I am going to read a book a week and they do it. I'm like, I just have no interest in that. Yeah. Cause then at some point they all just are the same thing.

Mike DeHaan: [7:01] They and that's, that's the thing too. Right? Is I know that I, I I I was on that train for a little while, especially when I was starting out. And it was valuable when I was starting out in in business and real estate and stuff. Yeah, like you said, after you've read a half a dozen books that all say the same stuff Mhmm. Or, you know, or or, like, there's there's so many books that are written that are, you know, have like one concept that they take 300 pages to talk about for some reason. Yep. You know, like the 10 x rule. Mhmm. You know, there's like a whole book about that. And literally, the premise is doing 10 times of whatever you're trying to do isn't 10 times harder than doing that thing. You know? So you might as well just like go bigger.

Dan Austin: [7:41] You know what I do?

Mike DeHaan: [7:42] Ex an actual that just describes it. You you can save your time now.

Dan Austin: [7:46] Honestly, a lot of times, like, I'll just read the first few chapters of a book.

Mike DeHaan: [7:49] Yeah.

Dan Austin: [7:50] And I get the concepts and I don't need the rest of it. So there's a there's a life hack.

Mike DeHaan: [7:54] Yeah. Yeah. I know what book. Yeah. Exactly. Well, there there was this company for a while. Don't know if they're still around called, like, like Blinkist, I think or something. Oh, yeah. Yeah. Yeah. And you can and basically they were like the audio cliff notes for any book. And it was actually pretty good. Like I I use that to listen to a lot of the classics. And, you know, it gives you enough of understanding what it's about that if someone says like, oh, you ever read, you know, how to make friends and influence people? And you can say, you know, no, you haven't, but you know enough about it because you listened to the fifteen minutes synopsis. Exactly. And you can have a conversation about it now. But I know it's always it's always kind of funny. But, yeah, anyways, that kind of year. But one of the things I want to talk about going into 2022 was the real estate market in general. And, you know, where exactly you think and I think things are gonna be going because it's I I it's funny. Going into last year, no one would have predicted the explosion, I guess, that we had in valuations. I mean, you know, for some some markets in The United States to be up thirty, forty, 50%, freaking Coeur D'Alene, Idaho was up 85%, like last August from the year before. I mean, that's unprecedented. Right?

Mike DeHaan: [9:14] So now going into this year, I mean, it's pretty safe to say that that's not going to happen again, purely just because, you know, if things were to double twice, don't even know who's buying those at that point. You know, we're already at an unaffordable price point for a lot of people. So, you know, I guess, what do you what is your thoughts on where the market's going to go in terms of like, the retail market, the investment market, you know, just like big picture valuations? What are you sort of thinking, Dan?

Dan Austin: [9:45] You know, so just my initial pass, kind of what I know, what I've seen is I agree it's it can't double again. There might be some price points, that do continue to rise a little bit higher. Like, I think the lower price point always is is going to have higher appreciation right now. Just because there is room for, you know, if you're buying a house for $2.50 and for it to go to 300, people are still buying it. But for a million dollars to go to a million, 2,000,000, 3, I think people are going to start tapering off. But I think it's gonna be more moderate. I think it's gonna grow. I mean, because big part of his inflation rate

Mike DeHaan: [10:22] Mhmm.

Dan Austin: [10:23] Is still growing. I think we're still expecting, you know, 6% inflation next year. We're already getting slammed with it on the building materials again, for whatever reason, I don't know. We started a project and within a week of us starting the project, two by fours went up $2, right? Like, what? Yeah. What's going on? You know? And that's just one piece of material, but tons of materials like that. So inflation is gonna, you know, I think continue to go up. People are forecasting, you know, some some rate hikes, which could temper it a little bit depending on where they go as long as they stick to it, right, as opposed to what they've done in the past, which is go back down or stay flat for longer than they they said they would on their rate hikes. I don't know. I'm I'm guessing most markets are gonna still see, you know, multi single digit growth rate though, you know, five, six, 7%.

Mike DeHaan: [11:15] Yeah. Yeah. So I mean, in my mind, I think one of the biggest things that people don't necessarily consider when they look at all this is the psychology of buyers and sellers. Right? And there's gonna be a lot of people now. I mean, you see a lot in Spokane already, where people say, can't believe that that house costs that much. Mhmm. You know? And while prices are where they're at, and they keep going, people are going to have that same mentality for several years until they just sort of get accustomed to that's what houses cost now. Right. You know, and I imagine a lot of markets are kind of similar. So, you know, what I what I sort of see is, you know, you have these people that locked in, you know, basically realize their gains on the house that they were living in, sold, moved into their, you know, kind of like next ten year house at like a two and a half percent interest rate. So their payment is the same on their $700,000 house they just bought as it was in the $300,000 house they bought five years ago and just sold for $600. Right? So they have the same payment in this nice giant brand new house, or, you know, like their their their upgraded house. They're not going to move anywhere for a while. I mean, where are they going to go? I think that's the big thing that's changed is people no longer will have that room to move up. You know, I mean, there are always people out there that didn't sell last year or couldn't find something to move into or whatever. But that pool is gonna be smaller, I think, than people that did, because of how frantic it was last

Dan Austin: [12:44] Well, and if you think about it, rate, I mean, if rates do go up, that's going to make the cost of housing more expensive in the near term. Right? Because house prices don't adjust right away. Right? So inflation goes up. It takes there's a lag on the prices of what people are trying to sell their house for. But you're right. If you locked in, you know, your $500,000 house for two and a half percent, two and a quarter percent in rates go up to four. Yeah. You can't, you can't afford the $7.50 house that you were going to move into in five years or one year that you were waiting to move into. Because honestly, it's it's more expensive, even if it's at the same price point. And so I do think that people will see prices and not necessarily look too deeply into the rates before they buy. If prices start kind of tipping downwards because rates are going up, but I definitely think you had a huge movement. First time home buyers, people that could finally buy a house and then people that are stepping into their house. Then the baby boomers for the most part have just stayed right there in their house that they've been in for thirty years, they're going to die in that house. That's kind of like a known fact of how baby boomers are aging in place and all that sort of stuff. So in one sense, there's definitely a supply constraint. But then the demand constraint, I think, is also because of interest rates going up and because not as many people are moving around. Right? I don't know how that'll affect new construction.

Dan Austin: [14:08] It's not something I pay too close attention to. And there is a lot of folks out there saying, oh, we're still multimillion dollar or multimillion units underbuilt for The United States. But there's some great counter arguments of why that's bullshit that we actually aren't underbuilt. And so that's, that's something that I'm out of. I'm getting over my skis talking about, but it's an interesting conversation there too.

Mike DeHaan: [14:30] Yeah, for sure. Well, I mean, I, yeah, I think it's just, you're going see a lot of other people staying in place because you know, for them to move, they're going to have to be downgrading their house because their rates are so low. So if rates go up, you know, prices might drop. But then you know, people aren't necessarily going to take a haircut on their house either. They're just going to stay there at their payment that they can afford. You know, I think that's one the big decisions in 2,008 is that because of how strict they were with their lending practices this time around, you know, and they're forcing people to typically have decent down payments to waive the prime mortgage insurance, all that sort of stuff. People are pretty motivated to have equity in their properties. If people start to see the housing prices go down, I think with how affordable things were with the rates, people are being able to afford their, their payments now, instead of like trying to downsize, people are going to stay put, you know, so I think the demand is going to stay high for people that are, you know, especially the first time home buyers and people that are looking to get out of the houses, know, kind of like lower level. But the people that are in like the 500 to $700,000 range or like the, I would say middle upper class sort of range in most places, those people aren't going to go anywhere because they're not going take a haircut on their house that they just paid a lot for, and they're not going to pay the same amount for a cheaper house or a similar house.

Dan Austin: [15:50] And it's psychology. Everybody talks about rates, right? And they're like, why I've got a two and a half percent rate on this house? Why would I want to give that up for a four? Right? Or five, you know, depending on how high they go. And I totally understand that because now you're paying more in interest, but people in their mind to think when they see that statement on their on their on their loan docs, it says how much you're paying an interest, like that's a psychological thing for people as well. Oh, well, I'm saving so much on interest. Right? But I think what all that says to me in what we're talking about is for as an investor, is just stick to the lower price points because your your worst case exit, if you're say your house flipper, your worst case exit is trying to hold on to something, just renting it out. That lower price point will always rent out. There's still gonna be great demand for rental properties, I think. I don't see any reason why there's not going to be great demand, especially as you're talking about, if there is some some slowdown in the market or certain people aren't moving. There's still all this rental stock out there that needs people, people need a place to live that aren't going to buy a house anyways, regardless of what's going on. And so if you can stay to those lower price points, your flip exits are going to be much quicker, you're not going to be carrying, I don't want to be carrying a $600,000 flip into the end of next summer.

Dan Austin: [17:02] Right? That's just, I don't think a great idea. And you and I have looked at properties like that even going into the wintertime this year, we're kinda like, we could do it. We know the numbers work out, but is that somewhere we wanna put our money right now? And instead Yeah. Went put it and deployed it into multiple, you know, smaller, you know, lower price point deals that are gonna still net us, if not, you know, the same, if not more. For sure.

Mike DeHaan: [17:23] Yeah. But on that same note, I would say that in that lower price point market, you know, the frenzy is going to have died down quite a bit. Like, I I cannot imagine this next year, we're gonna be seeing all the stuff we saw this past year of people paying, you know, $50.60, $70,000 over asking for like a $200,000 house. You know, like, especially because like with how everything's so inflated, you know, people are not not gonna be willing to go that go that much over for the kind of shit boxes that people were selling last year. You know, and I I think if anything from a investor standpoint, there's gonna be a lot more opportunities for us from an off market perspective because of that. Yeah. Because these houses did have a lot of work or that people needed to get out from underneath from for whatever reason, they're not gonna be able to just throw it up and just have someone come snapping at it anymore because people do have that psychological perception that houses are overpriced.

Dan Austin: [18:13] Yeah. Could be an argument though in the investor space. It will stay highly competitive because there's a lot of investors with money to move where on the market MLS or something like that. You're right. I don't see that it creates an opportunity for us investors. Still think there's quite a few investors that are in that market area that are pretty strong right now financially and ready to keep moving or need to keep moving. And so we're going to start seeing we'll still we'll continue to see that competition. But you're right. I don't think we'll be competing with the average home buyer. We were last year that we were competing with everybody. It wasn't just some investors.

Mike DeHaan: [18:49] Yeah. Well, I mean, there always be, like, competition now on the investor side for the chumps that are buying off the MLS as their full time source. Right? I mean, like, that's not gonna go away, especially as there's been now an even larger drive towards, like, the financial financial independence movement with the great resignation and all this sort of stuff. Everyone's like, you know, oh, I now work in remote. Like I, you know, have this extra money. You know, I'm trying to buy rental property so I don't have to work this shitty job anymore. Right. And all those people are like, well, I want to invest in real estate, but I don't want to work too hard. So I'm gonna go work with a realtor. Right. And those people can go and fight all they want. What I'm talking about is people like us who are sourcing their own deals. Right. And it's gonna get a lot more opportunity.

Dan Austin: [19:31] I think so too. I think there's still other off market folks though, that are in good positions that are, that are strong or have the opportunity be strong. I think most of those folks, we're going to continue to outpace them though because of our systems and what we're doing to source those deals and how we're closing those deals. I just think we're our system is far better, far superior than a lot of folks out there, and that's not bragging. That's just time tested. Yeah,

Mike DeHaan: [19:57] for sure. I mean, and it's like every market, right? Like, know, there's a couple of our, our main competitors here and us do 90% of the off market deals, I would say. And I mean, I think it's like, what's it? Like it's 80%, right? It's eightytwenty rule. Like 20% of the investors do 80 of the deals. Right. Just like that everywhere. But, you know, and I think just some of the ways that things have changed in the, the government and the financial standpoint, the financial sector as well with now banks are allowed to foreclose again. Right? You know, state city city is allowed to foreclose again. You know, they're now basically able to move forward with a lot of the penalties that were possible last year, which is one of the reasons a lot of houses were sitting. So I know, like, Pierce County over on the on the West Side, I think that their first auction for the year, which is next weekend, it has, like, 70 something properties that are gonna be coming up for auction, which is actually still pretty low for Pierce County, believe it or not. But as compared to all of last year, it was like five. Yeah, because there's Right. Yeah, exactly. They're starting to play catch, and I was gonna be 70. And then I wouldn't be surprised if in months after that, we're looking at 100 plus houses going to auction every year in Pierce County. So now from like an investor standpoint, you know, for an off market marketing standpoint, it's like, well, we start hitting those ones, right?

Mike DeHaan: [21:14] Those those pre foreclosure lists, those people that are in trouble with the banks, if you can start getting in front of those people and giving them an option to walk away with something before the bank just takes their money, takes their equity and takes their property, there's probably a pretty good opportunity there since now that actually is a legitimate threat. Whereas like last year, you know, we talked to a lot of people that were in foreclosure and they were just like, well, you know, they haven't kicked me out yet. So I'm just gonna stay here.

Dan Austin: [21:42] Yeah. Are a lot of people that are like, well, I think the government will just will just forgive all this. And I'm like, maybe, you know, in some cases, maybe, but, maybe not.

Mike DeHaan: [21:52] Maybe they might do. I mean, they're giving giving a forgiving all the student loans that that keeps coming up. Tell you what, if I was somebody that had a bunch of student loans, and I'd spent the last, like, you know, five to ten years, being like a hardworking citizen, busting my ass to pay off my student loans. And then, you know, you have all your friends that have just been, I don't know, fucking around or not, like, putting towards those extra payments. And then uncle Sam just comes and forgives all them, and now you've just literally wasted hundreds of thousands of dollars paying out a student loan, I'd be so pissed.

Dan Austin: [22:21] Right. Oh, yeah. Yeah. Yeah. Seriously. Yeah. I the whole student loan thing is just a racket, man. It's I I feel bad for those that actually went and got really good jobs. Even if you're a lawyer or doctor, you're crippled still. Like, you went and got dead on all that stuff, there's people in their forties, fifties still paying that shit off. It's

Mike DeHaan: [22:39] Yeah. It's too bad. Yeah. It's the real the real scam of the Yeah. American dream is the worst case. That's a talk another time. Yeah, so with the real estate side of it, though, you know, the rental side is really interesting to me as well, especially if you look at a lot of markets and how the rental rates have climbed, because you're right that there's always going to be demand for it. But the one thing that I'm constantly thinking of, especially when I look at like other rental properties in town, and this isn't even thinking about the Airbnb side of it as well, which I imagine eventually cities are gonna start to shut down Airbnb's. So I was looking at the Airbnb's in Spokane the other day, and I was like, most of these are single family homes that could be long term rentals or could be like owned by somebody. But instead, they're owned by investors that are renting out on like a short term basis, and there's no way that they're all rented all the time. But, you know, so there's that. But then like, for the rental rate aspect, we're getting to a point here pretty quickly, especially for the crappy some of the houses are out there. People can't afford those rates, Especially it comes down to like those middle ones, especially you're always gonna need affordable housing. And there's always gonna be a demand for like luxury rentals, think for the traveling people are like, I have a A class rental up near here where a military family just moved into, you know, they're paying $2,600 a month for my single family home. But, know, he's in the air force makes like $90 a year.

Mike DeHaan: [24:08] She's works for one of the health districts here makes like $60 a year. And the only plan to be here for three years, you know. They just want like a nice rental and a good school district before they move out again. You know, no demand for that. But it's like the middle tier ones where you're like, well, this is in like a C class neighborhood You're off you want in $700 $1,700 a month for this house that hasn't been renovated since the sixties.

Dan Austin: [24:32] Right.

Mike DeHaan: [24:32] Probably nothing in it works. Like, that can't be sustainable. And there's people that are buying a lot of properties assuming things like that.

Dan Austin: [24:41] Yeah. I mean, I don't think the rent the rent growth like we've seen just like the house price growth is gonna be sustainable. I don't see the rents, you know, declining, though. Yeah. I just don't understand why

Mike DeHaan: [24:53] it would decline. For sure. I mean, and the demand for rentals just shows they're not going to decline. Right? Right. I mean, we've had some of these properties, you know, our properties are nice in these kind of C class areas, we renovate them, but you know, we'll put them up for 16 to $700 a month. And then, I mean, for one of the most recent ones you did for that yet, like 50 applicants in the first twenty four hours.

Dan Austin: [25:15] No, had over a 100.

Mike DeHaan: [25:17] 100. Yeah. For like, you know, it was a nice place, but that's, that's a pretty hefty price point for people.

Dan Austin: [25:23] It is. You're absolutely right for the size and all that sort of stuff. And I mean, we have nice properties too. People see the pictures like, damn, that's cool. Courts countertops, new cabinets, all that sort of stuff. So they show well, but, you know, the neighborhood's not like the premium neighborhood, which go up the road a few miles to a nicer neighborhood. You could rent a newer house for 4,100. No problem. You know? But, yeah, it's it's interesting too, because a lot of folks when they buy, I shouldn't say a lot, but I've talked to that they actually calculate into their returns, a rent appreciation, which is smart, but you see that mostly on multifamily, like, you know, multifamily, you're going to add in that because that's part of the whole package, one to two, one to 3%. But on single family homes, we don't do that. That's just a part of it that, know, But, if you bank on that, you're buying at a premium price and you're, you know, hit hit maybe a 100, dollars 200 in cash flow a month. And then you're like, well, but next year I'll get a $25 rent increase the year after that year after that, then I'll be cash flow in 500. I'm locked in at long term debt. I just don't think that that's something you should bank on in single family.

Dan Austin: [26:31] Yeah.

Mike DeHaan: [26:32] For sure. Yeah. Especially at the rate that we've been going at too. Think that's where a lot of people, you know, gonna get themselves into trouble. Okay. So I guess, you know, going into this next year from a real estate investment standpoint, what would you think your, you know, one of your top tips would be for somebody that was looking to, you know, get started investing this year or, you know, was maybe have like a couple of rentals and was looking to scale up a little bit, you know, I like not necessarily geared towards like professional investors because they're going to kind of have their own game plan. Like, you know, we know what we're going to do, but, know, for the average investor out there, what do you think would be your your main tip or things thing to think about for 2022?

Dan Austin: [27:16] It's it's not something that I wouldn't I would share 2021, 2023 is is when you're buying it, you buy it right. Honestly, like, stick to those price points that are good. Don't stretch and go into a d neighborhood or even a c minus. I would be like c plus b minus neighborhoods and find that deal that works for you for the next three to five years. It doesn't have to be a home run where it's your thirty year legacy property, but stick to the the fringes of the nicer neighborhoods. Don't don't venture off and to get there. It's a great deal because I just think you're gonna, you're not going to be happy about it. You know, you're not going to get the same upswings as you would have gotten in 2021 or yeah, 2021 as you're going to get in 2022.

Mike DeHaan: [27:58] Yeah, for sure. Yeah, like that. Yeah, I think I think my perspective is, you know, you're completely right is making sure that there is a position there when you buy the property. And that you don't need for the market to increase further for it to make sense, you know, even though you are gonna plan to hold it for a longer period of time, I would say make sure that it makes sense when you purchase it based on the market conditions, or whether you can make it make sense by doing a value add to it. Right? You know, if it's a deal that you're getting at a discount, you know, and you're able to pull your money out of it and get infinite returns, you're able to add some additional square footage. Mhmm. You know, you're able to do something creative with it to make it make sense, like focus on those deals, and not on the turnkey ones that you're buying at scratch return or super low return, they're going to be better. And, you know, better quote, unquote, in the long term, but they're safe, right? I mean, honestly, this isn't really the time, I wouldn't say to be buying like those safe turnkey sort of investments, you know, you got to be getting your hands dirty, and you got to sort of know how to create that value a little bit whenever you can, whether that's through the purchase process and marketing for your own properties and securing your own deals, or that's through, you know, doing a value add on the property itself.

Mike DeHaan: [29:15] So, you know, and yeah. It's a it's an interesting thing because, you know, a lot of people don't necessarily wanna do that. But I think that's what's gonna make and break a lot of people. And I imagine over the next few years when there is a correction, there's gonna be a lot of people that are exposed for the fact that they overbought because, you know, they were expecting things to go some way and they didn't, you know, or they tried to rely on something like going back to Airbnb, know so many people that are buying these properties above market value, because as an Airbnb, it'll cash flow XYZ. It's like, what's gonna happen when all these cities are like, you know what, we have a really big issue with our residents being able to find homes, we're now gonna cap Airbnb's in the city at 100.

Dan Austin: [29:58] Right. Yeah.

Mike DeHaan: [29:59] And you better hope like hell you can get it. Because like, I don't think they'll typically make them go away. But they'll suddenly start to add some hurdles to

Dan Austin: [30:07] make them work. For sure. Different taxes, all sorts of stuff they can do, different licensing that you have to have that kind of would preclude other folks. Yeah. Yeah. I I agree. I mean, real estate is about showing up every day, being consistent for the long term. And so if you're if you are investing for the near term, then you're really not investing. You're speculating, and you're you're basically looking at the same market conditions hoping that they they stay in place while you're doing what you're doing, you know, flipping. You know, you could get overexposed in a market where you're feeling like a little teeter tottery, get six, seven flips going on all the same time and then boom, wipes you out. I mean, you hear that story quite often from 2007, 2008. And if you're, if you're buying rental properties for the long term, yeah, buy them right, buy them in decent neighborhoods, find that value add. Because if you're banking on this market staying the same way it is, you're getting yourself in trouble. Yeah. Eventually. Not saying it's going to tank or go down or there's going be these big problems. It's just, that's how you should be. You should be that way in five years from now, ten years from now too.

Mike DeHaan: [31:09] Exactly. Yeah. And even if things don't go down, but they stay the same, you know, and your market, your, return stays poor mediocre, that's almost worse because now you're locked into this thing and you're not getting any return on your money.

Dan Austin: [31:23] Right.

Mike DeHaan: [31:23] You know, and like, sure, your your deal is doing okay. But in order to exit from it, you're basically going to be coming out at zero or you're going to be potentially losing money for paying for it after you consider that transactional costs. Yeah. But

Dan Austin: [31:35] it doesn't mean you can't do stuff. Like I, I feel confident we've got quite a bit going on. I mean, we have probably well over 7 figures in hard money out right now, would imagine. If I add it all up, you know, and that's, you know, hard money, high interest rates, all that sort of stuff. But I'm confident in everything that we have that hard money on right now as we're renovating it, as we're refinancing that there's still good good deals. If we had to sell them, we'd be okay. If we kept them, we'd be okay, depending no matter what we're doing with them. So it doesn't mean you can't do a lot of deals. Just means you need to be patient and do the right deals. Yep. Exactly.

Mike DeHaan: [32:06] And I think patience is the biggest key for a lot of people, which can be hard sometimes when, you know, especially you have, you mean even guys like us, you know, just get started or you hear that all the time. It's like, you do. You gotta get started smartly, you know, intelligently and not just, recklessly. Right. But either way, the best way to do it is to find your own deals. So should go to our website, collectingkeyspodcast.com. And there you can download our five step process to start generating off market leads. It's a great way to get started on the new year. In fact, when this came out, this comes out on Wednesday. If you go through and you use the direct mail house that we talked about in their open letter marketing, if you use our code, keys five, you'll get 5% off. That's one of the mail houses we use. The other one is ballpoint marketing, which is a little bit different. But either way, if you go and you order some mail when this comes out, which will be let's see. This will be coming out on January 5. You could go order some mail and you could have it be sent out on January 10. That's awesome. You could be getting leads by January 13 or fourteenth. So if you go through that process in our in our five step guide, you literally be having people call you, you know, a week after you hear this. This is the time

Dan Austin: [33:23] to be hitting it hard. Mean, we're hitting it hard. We've already got all of our mail ordered, of our marketing set. We're hitting it hard.

Mike DeHaan: [33:29] Yep. Yep. And that's not an exaggeration either. Like literally seven days, seven to eight days after you hear this, you can have people calling you if you go through those that process. Yeah. Clickingkeyspodcast.com. Go check that out. And, you know, follow us on socials. My name is Mike Tahan at Mike underscore invest on Instagram. Dan Austin at investor man Dan. You can also follow our podcast at clicking keys podcast on Instagram. And, working on some YouTube stuff. We're working on some different educational stuff for this year. We got a lot of stuff coming up. So if you wouldn't mind going and subscribing, leaving us a review, shooting me a DM, letting me know what you think, what you like, what you don't like, I'll be sure feedback. And, yeah, 2022 is gonna be a good year. It's gonna be an interesting year to sort of see what happens, but I'm excited for it. It's gonna be a good year. I I can feel it. Cool. Right on. Anything else from you, Dan?

Dan Austin: [34:23] No. Nothing else for me. Just, stay warm out there. It's frigid cold here in Spokane. Okay.

Mike DeHaan: [34:29] I remember everyone, you know, down people down in, Texas or whatever. Snuggies.

Dan Austin: [34:32] Yeah. 80 degrees. They're like, what are

Mike DeHaan: [34:34] you talking about? Yeah. Right. But cool. Alright, everybody. Thanks for listening. Talk to you next week. See y'all.

Speaker 2: [34:42] Thanks for listening. Please leave us a review on iTunes or wherever you get your podcasts, and check us out at collectingkeyspodcast.com for tips and guides on starting your own real estate investment and wholesaling business.