EP161: Own your building, don't rent. An interview with Paul Neal

Yeah. Yeah, absolutely. Well, first of all, the book is called Unleash Your Business, Unlock Wealth, Autonomy, and Control by Buying Your Building and Firing Your Landlord. I'm into firing landlords. background 30,000 foot view. I got into real estate finance in the late 90s and have been in that business and have had a couple of businesses, but that's really been my passion. And I started on the residential side, but sort of migrated over into commercial because most of my clients ended up being business owners and entrepreneurs. And I started to notice trend that a lot of them had businesses that were generating a lot of cash. They were doing well. But most of them didn't have any ownership. And a lot of them were coming to me and asking to buy and invest in like investment real estate, like, you know, single family homes and some small multifamily and all that, which we did and we still do. But I started to notice that most of them were still renting the space that their business was operating in. And I'm like, hey, this is crazy because, you know, there's some of the same benefits that you can get with other investment real estate you can get for your own building and much more actually, there's a lot more opportunity. So I started to really shift my focus there a number of years ago. And it's been a passion because now we've seen so many awesome outcomes from that and things that people have been able to do. I'm sure we'll get into some of that as we talk. But that's why I wrote the book. It basically outlines the opportunity, the missed opportunity for a lot of people and sort of the process and what's involved. Because there's a lot to it. And so it's really an education piece to help. entrepreneurs and business owners understand what's involved in the process because there's really nowhere to go for it, you know, other than the local bank and they don't really tell you anything. They just, you know, they just tell you, you know, what they want, that sort of thing. So that's why.

they're walking on a potential goldmine. It's like there was this book I read many years ago called Acres of Diamonds by Russell, somebody or another. But anyway, it's a short, short little book. And Russell Conrad, I think. Anyway, it talks about, you know, that we're walking on acres of diamonds in our own backyard. Everyone's looking, you know, the grass is greener over there. You know, it's always greener across the way. But, you know, we neglect what's right under our feet. And so this idea. So, for instance, this idea of. you know, you're in your building and you're leasing the space and you're paying, you know, thousands of dollars every month to someone else, you know, and it's a trade-off, right? They're allowing you to use the space. And so you need a space. It's good. You got to run your business, but you can have a lot more. And so... I had these guys come to me, Brad, that want to buy investment real estate. And typically on investment real estate, you're looking at 20% or 25% down. And the crazy thing about it is, is if you buy the building that your business operates out of, or a building, or build a building that your business operates out of, then we can do that for a lot less money down, believe it or not. Zero to 10% in many cases. And so it's like, wow, you're leveraging all this money for... some other tenant and now you're going to be a landlord for somebody, but you could be your own landlord of your own business and do it for less. So, yeah.

Well, so there is a whole, you mentioned residential real estate. a minute ago. And so there's, there's a lot of parallels there, but a lot of differences. So most everybody you understand and your listeners understand the residential world, you know, that you can go buy a house. You're going to go to a bank or a mortgage company or something. And everybody pretty much plays by the same set of rules, right? Because those rules are defined by. what they call these government-sponsored entities, Fannie Mae, Freddie Mac, Ginnie Mae. They write the rules because they end up securitizing all the loans that are done by these banks and mortgage companies. And so you might get a little difference in your interest rate or term based on where you go, but it's going to be marginal for the most part. The commercial world is completely different. The commercial world, commercial loans aren't regulated by any body or they're not. purchased and securitized by any one group like Fannie Mae or Freddie Mac. So you have, you have, um, local banks that do loans. You have national banks that do loans. You have SBA-backed loans, which can be a really good loan based on how it's structured. You have independent private investors that will fund loans. You have insurance companies that will fund commercial loans. So I won't say it's the Wild West, but there's a lot more variation and opportunity because it's not one entity defining all of the rules, if that makes sense.

Yeah, no, that's great. And I see that a lot. And that's very common for the successful contractors and service-based businesses. They start at home and they sort of graduate themselves out as they get more and more success. And so that's sort of bootstrapping your way up, which is how most businesses do it, quite frankly. Most aren't going to Wall Street, getting a venture capital or whatever. So what I tell people is really when you get to the point where you've got, you know, three, four, five years of business under your belt, you've got consistent cash flow coming in and you've got sort of a vision of where you're going and it's sustainable. Right. Because in the beginning, when you're when you're working from home and then you're maybe busting out to that first small space, that might be appropriate to lease at that point because you're still kind of getting your sea legs. Right. You're building your customer base. You're starting to build repeat customers. You get some employees and all that. But once you've got that and you've got a team, you might maybe have three, four, five employees, something like that. You know, maybe you're doing I don't know. I've seen different revenue numbers, but, you know. on the low end, maybe a half a million a year in revenue, and maybe you're growing from there. And you have some resources. And now's the time where you should really start considering this opportunity to buy a building. Because, you know, think about the parallel of buying your family home, right? So when you first start out, most people, they, like when my wife and I got married, we rented for a while because A, we didn't know we're going to be in the area. B, we didn't have a lot of financial resources. We didn't inherit a lot of money. So, you know, we have to kind of find our way. But as our business started to become successful, then we made enough money that we, hey, we want to buy a house. And the reason we want to buy a house, even though it wasn't our dream house, was because we could start taking part of that mortgage payment, to your point, paying some equity, paying down the mortgage, getting some tax advantages. And then as the market. you know, over time, the value of that house would grow, then that equity position would grow. Then we could use that to, to when we outgrew the first house and we had a family, like we need more space. We had to struggle a little bit in the beginning because, you know, we had to come up with down payment and all that. But now we've got this equity in this house that, that when we sold the house, we use that for the down payment on the next house. Right. And it done that a couple of times. And so. Buying a building is not that much different with a business as a business are going to evolve over time and they're going to get hopefully larger and larger over time, right, is the goal, or at least to a certain point. And then maybe you want to just run the business or maybe sell the business or maybe start a second business or whatnot. Because a lot of businesses, and I see a lot in your space too, where successful contractors will spin up secondary related businesses, right? So like I've got one right now, very similar track record to yours. He does high-end remodels. He's down at the beach and he's been in business about, I think, eight years, something like that. Well, all of his businesses repeat and referral now. And he'd been renting a space for the last few years and we got to talking. And so long story short. He's building a warehouse space now,12,000 square feet, and he's going to occupy about 7,000 or 8,000 feet of that, and he's going to rent out the other space. And oh, by the way, he's also in the last year spun up a related HVAC company because all of his customers that want remodels, they all have HVAC issues from time to time. And so they're always asking him for referrals. So he's like, well, I'll just get a company and I'll hire a guy and all that. And so he's going to bring that into his building. So now he's got this building that he's got room for his current business in this new little fledgling startup, and he's going to rent out part of it. And that rent is going to help defer the whole, almost the entire mortgage payment, believe it or not. So in his case, he paid rent for a while, positioned himself where now I've got a solid business that's growing. I have sort of a vision of where I want to go. And I'm going to buy, in this case, build a building a little bit larger than he needed. which is a strategy, right? And so then he could rent out part of it. And then assuming his business continues to grow, his plan is that he won't kick out, that's really a bad term, but one of his tenants, he'll ask them not to renew the lease at some point. So then he could expand into that space and he could continue to expand in the building that he owns. But in the meantime, they're paying the freight on the building. So he's getting, he's not wasting his rent dollars. He's building equity. And he's positioning himself for future growth in the building itself. So there's some reasons. But again, it wasn't day one out of his house. It was after a few years of stability and some growth and consistent customer base. And you sort of have a sense when you know you're like that, right? Where your business is like, it's going to come in and you've got enough customers in your base that keep coming and refer you like, okay, I feel good about this and it's growing and now I have some future.

It's typically 10%. Okay. So 10% of the project cost. So like in his scenario, you know, it's, it's about a million dollar building. And so he's bringing about a hundred thousand to the, to the deal. if you get into really special use buildings, it could be a little bit more like I have one that's building up an indoor pool facility because they're a pool training company. So that's, that's kind of a unique business, right? I mean, it's like an office warehouse flex space, you know, can be used in a lot of different ways, a lot of different businesses, but an indoor pool, not so much. So in that case, it'll be more like 15%, but, but that's generally the, the exposure and the way we, we prefer you not put so much into the building. We want some, but what's more interesting to us is after the transaction that you have sufficient liquidity and working capital so that you can continue your operations and you're not stressed. If you take all your money, you know, that's on the sideline and put it into the bricks and mortar and you don't have operating capital or you're stressing that, then that's not a good position for you to be in. And so we'd rather have a little lower down payment and then... you know, and then have money on the sideline in that scenario.

We have a client, great friend, Nathan, who had a small trucking business and he down at the port, he would, his short haul, he would, the ships would come in and he would take the, take the goods from the ships. and store it temporarily in warehouses that he would rent. And then he would then move it to long haul shippers. Anyway, he had an opportunity to buy a warehouse that came available down near the port. And he thought, hey, I can, my customers are already paying big bucks for the short term storage. I can just, if I do it for them, I'll just get in that revenue stream. I'm already doing the work. And so he went to his local banking relationship and they wanted 20 or 25% down and he had the money, but. But again, it would have taxed him and he's trying to grow a business and growing businesses take a lot of cash, right? Because you got to advertise and hire people and get equipment and buy new trucks and things like that, right? So we were able to do it for 10% down. It made all the difference because he was able to get in the building and now he's got the money on the sideline. So he's got plenty of operating capital, not a lot of stress. And then now he's, you know, he's got the revenue stream coming in as a result. So there are different ways to skin the cat. And the problem, the misconception that a lot of people have is because when they start thinking about this idea, a lot of times they'll just go to the local bank that they've been dealing with with their deposits. Because to your point, I started with this local bank when I was in my house and I've got my customers, all my accounts are set up there, right? And it's too difficult to want to move my bank accounts. And so I'm going to go talk to those guys and then they'll say, yeah, well, typically you want 20% down if they do it at all. Banks are notorious for saying no, just because that's, they really don't want to loan you the money. They want your deposits is really what they want, but they don't really want to loan you the money. They'll loan it to you for cars and credit cards and short-term boats and things like that, where the terms are shorter. They're not as interested in doing real estate long-term because it ties their money up for a lot longer. So they will do it, don't get me wrong. But they're going to give you one option. And, you know, as a contractor, right? Look, if you have one tool, you got one saw in your toolbox, you're going to use that saw every single time, right? No matter if the project or the job needs it or not.

Yeah, that's a bit tricky. So if they're buying consistent, you know, existing building and they want to do some build out inside, that's not such a big deal. That's that's easy. If they want to buy or they want to build a brand new building from scratch and they want to be the GC, that's a little trickier because lenders want sort of a third party. What I've seen a lot of contractors do is they have contractor relationships with other contractors. And so they'll work with somebody that they trust that is the GC of record. And they'll handle the GC aspects and they can sub out a lot of the work to the contractor, legally and ethically, and there's no problem with that. But they always want, all the lenders are going to want a third party kind of in there to make sure, you know. It's doable, Brad, but it's really, really, it's not worth the pain and suffering, you know.

Well, it might be. It might be. And again, like I said, a lot of times you can work out a collegial relationship with another GC, you know, that makes it even easier. Yeah.

Yeah. There's obviously the difference between reality and how people operate. We try to do everything ethically, morally, legally. You're going to do that. And, you know, and that does bring up a point, though, that that one of the things that I always like to stress is in this process, it's really critical that, you know, if you're going to go into buying a building that that we talk about the dirt up front, you know, like any potential issues and things like that, any skeletons in the closet or whatever, because. it will come out in the process. You can't hide anything today anymore, you know, particularly when it comes to lending. I mean, they've got databases on this, that, and everything. They're connected to, you know, who knows what. So most of the time, it's not an issue. We can deal with things. We just need to know up front so we have a plan to mitigate. And if we know early, you know, banks and lenders and investors are generally okay with that. You're like, hey, I had this issue. You know, here's what happened. Like, okay, cool. No big deal. But when, but, but if you go to your local bank and you don't tell them any of that and you go in the process and then they find out three weeks into the process, then it's not good because they, they, it's kind of once burned twice shy is how they operate. So first impressions are important and we try to help people, Hey, uncover that. So we have like a 53 question questionnaire we've come up with. It sounds like a lot. It doesn't take that long to answer, but it helps uncover things that you wouldn't think about. that will come up in the process. So that way there's no secrets or mysteries that are going to, you know, landmines are going to blow up downstream.

Main points, a couple of things, expectations process is going to take longer than a residential. loan so if you go buy a house generally can go into contract and close in 30 days sometimes faster when you're looking at commercial space there's more due diligence involved generally it's a 60 to 90 day process i tell people that if you're if you're thinking about buying a building that you should really start considering the process six to 12 months out so you can start getting your ducks in order we like to do that for them and just because there's more involved so when you actually go into contract on a commercial building, you're going to have a, what they call a due diligence period. So generally the due diligence period is going to be 30 to 60 days. And that's where you, you have the opportunity to, um, to, to make sure you're going to be approved for the, for funding, uh, to make sure that there's no environmental issues with the property, which is another thing that we have to discover. Like, particularly if, um, you buy a property that may have had like. gasoline tanks on it at one point okay so um We're going to do an environmental, if it's an office building, it's a pretty simple, fast and easy thing. If it's, again, like an old gas station, it's a little bit more involved. But you don't want to get hamstrung with somebody else's liability. So it's to protect you really at the end of the day. The appraisal, there's always a commercial appraisal. Those are more involved than a residential appraisal. Residential appraisals typically, you know,20 pages long. Commercial is going to be probably about 150 pages long, or it goes into market demographics and a lot of detail. So that takes longer. in the process. And the thing I really suggest is a lot of guys will talk to their residential real estate agent about helping them find commercial space. And it's just a bad decision for a number of reasons. One, commercial real estate agents, it's a smaller universe in a town. where you might have thousands of residential realtors, you might have a hundred or maybe a couple of hundred commercial real estate agents. And the commercial agents know each other because they do transactions with each other all the time. A lot of properties are not, there's no Zillow for commercial real estate. I mean, there's LoopNet and there's a few sources where you can find properties for sale, but a lot of it's off market stuff. And a lot of it is like these commercial realtors know that, hey, This building over here in six months, the lease expires, and we know that they're looking to go do something. And you're not going to find that in any public database, but they know.

And so you want to partner with one that's knowledgeable, knows the local community, and is dialed in because they can help, A, find you deals, and B, really understand. you know, what your needs are. They'll help you with your needs and what you're trying to do. The other reason why residential guys and gals aren't the best choice is a lot of times their expectations are not correct. Again, they want to close in 30 days. And so they write these contracts that are residentially related. I see them, I get them like all the time. And I'm like, you know, there's a closing date,30 days, but commercials 60 to 90 days long is just the way the process goes. 60 days if your financials are in order and we have what we need up front. 90 days if we have to pluck things out of people and like, I need this, I need this, I need that, you know. And or if you get into holidays, you know, they throw commercial works at a different pace as well. You know, they talk about banker's hours. That's kind of a true statement. Yeah. So expectations are important. And again, back to that short timeframe, this due diligence period, a lot of times on a commercial building, you're going to put an earnest money deposit down. And like in residential, that earnest money deposit is going to be refundable to you if you don't close in most cases. But in commercial, if you pass your due diligence period and you haven't opted out of the contract, your earnest money turns hard. And so you'll lose that money if you don't close on the deal. So there's some differences there that you should be aware of. Expectations, timeline, preparation. And, but again, it's easy to mitigate all that. You just have to know what you're getting into and don't jump right in and say, you know, my, oh, I just got noticed my lease is coming due in a month. Now I need to go buy a building. I'm like, not a good choice, right? You know, get a six months extension and now let's talk about it. You know, let's dig in and do what's going to be right for you because it's a long-term commitment, right? I mean, that's the other thing. This is not a short-term commitment. It's a long-term commitment, but there's tremendous benefits to it, but you just got to know what you're getting into.

That's exactly right. That's exactly right.

Yeah. Yeah, no, absolutely. It's an ounce of prevention is worth a pound of treatment. And that is right because you don't have that in residential, right? I mean, it just doesn't exist. But in commercial, you hit the nail on the head. It's about protecting everybody, right? Because we want to protect you because we want you to be successful because you've got to pay the loan off. We're going to loan money. We want to make a return on our investment, right? I think Will Rogers said, I'm more concerned about the return of my investment than the return on my investment. And so we want to make sure, first of all, we get the money back. And if there's an EPA claim out there, you know, who knows what's going to happen.

right.

You're absolutely right, Brad. No, that's the typical, typically good commercial realtor is going to do that with every client because he's like you and your, and your, your coaching clients, right? It's one thing to have a customer or a client. It's another thing to have a customer or client for life that comes back again and again and refers you to other people. And you want to serve. And most people don't buy or lease commercial space on a regular basis, maybe once or twice in their life, right? I mean, if you're even a business owner. So same thing when it comes to buying. And that's why you need an advocate. And that's why I wrote the book, If You're Going to Buy, because the same kind of concept applies. You have a commercial realtor. who's going to help negotiate the terms of the contract. But you need a third party also to help you understand the loan terms that are out there. So we work with about 100 plus different banks and investors nationally, and they're all different based on your situation. Some of them are going to want your spouse to guarantee the loan. Some of them are going to want to put your home, to put a lien on your primary home. Some of them are going to want what they call covenants. And so it's a lot of gobbledygook, right? To you, to someone who doesn't know, but what it says is that we want your financials every year. And we're going to look at, I mean, if your business starts not doing so well, then now you're violating the loan covenant. So technically we could call this loan. Or if you make late payments on a credit card, now you're in default on our loan, even though you've made loan payments on time. So you got to know what you're getting into and you can avoid those if you do, or somebody's looking out for that. I already talked about putting deposits, I think, in your local bank. That's what they want. They might do a loan for you, but they're going to require deposits. And really, do you want to put all your eggs in one basket? I mean, if you get into trouble, do you want the people that have your loan to also have all your cash? I don't know. Maybe. So, and you need... You need someone who can educate you on the options and then also advocate for you because it's a, you know, there's on any potential issues that are there, you know, it's like, how do we mitigate this? Well, they had this issue this year. The cashflow wasn't this good last year, but this year it is. How do we, how do we mitigate or, you know, see beyond that to make this work kind of thing.

right. Exactly. Exactly. My cousin Vinny, he's great. The two Utes will get the, they want to buy this building.

Yeah. Yeah, you do. And anyone, and I think anyone that you can get a sense that again, if someone's trying to put you put you into a product or put you into a certain space or whatever. You got to kind of question their motives. You really, you want someone, no matter who you're working with on the, on the real estate side, the lending side or whatever, that's going to, going to find out what your needs are, what your concerns are, what your goals are, and then try to try to present options for you to make intelligent choices to say, well, you know, if you go this route, here's the pros and cons here. If you go this route, here's the pros and cons here. You could also go this route. but understand what you're getting into before you commit. And it's not my responsibility to make the decision for you, but it's my responsibility. It's the real estate agent's responsibility to give you options based upon what I know about you and your business and what you're trying to do, and then answer questions and have some dialogue. But ultimately, it's up to you to make the choice. But eyes wide open, right? You know what you're going into.

Well, kind of the question, the general answer we give is it depends, but building is going to be more expensive today, unless you can mitigate some of the costs because you are a general contractor and you can work that deal out and you get some discounts there. So in that scenario, building could be the better route. If you build, you can build specifically to suit to your processes, your customer experience, your employee experience, things that I have a friend, Steve, who's a commercial contractor. He builds commercial buildings and he has a cabinet company as well. He's like part owner. He was able to buy out the other owner after a few years. Anyway, they, they own the building and he went in once the other guy who was running the business, he bought him out. Steve brought in a manager who was more used to like modern processes and things. And they renovated the inside of the building completely, retooled it, put in one machine, some kind of CNC machine to build these cabinets. And he was literally able to almost double his output with the same crew in the same building because he built it out exactly the way he wanted to. Basically, the only thing that remained the same was a shell of the building, and they went in and just basically gutted the interior. So it's a case-by-case basis. When you're financing a new construction, there are some contingencies you have to finance for. So that could add to the expense. Like we generally add an extra 10% to what we think the cost is going to be into the loan. Also, generally, you're not making interest payments on the loan while you're building the building. So that eight or nine-month period. Someone has to pay interest. So what happens is we'll basically create an interest reserve in the loan. So that's basically added to the loan. So you've got some additional potential expenses there when you're building versus when you just buy something that's already freestanding. But they both can work based on your situation. You could still get the same benefits from both of the equity appreciation, the tax advantages and the control.

Yeah. Yeah. So, I mean, so let's say you, you, you get a starter building, let's say maybe talk about your 2,500 square foot warehouse space. You buy that. Maybe you've got 800 feet in the front is your office and the rest is for your, your vans and equipment and that sort of thing. And you're there over the course of three, four, five years and about three years into it, you're like, man, this thing is really growing. I've got more staff. I got more vans. Um, I'm having to park them outside and, you know, and, um, In fact, the guy building the building, one of the things is he, that's one of his motivations. He kept getting, when people were stealing catalytic converters, they would like, they would cut the catalytic converters off his trucks and just, just a mess. But, and even in a nice area. So you're like, okay, now I have some equity in this building. You bought it for X number. And now three, four years later, it's worth a lot more. Not to mention you paid some of the, the equity. You know, paid some of the mortgage balance down. So you have a couple of options now. So now you're like, okay, I want to build. I know what I want. I've got enough cashflow that I can build extra space so I can rent part of that out and maybe grow into it. Or I don't want the hassle. I just want to buy something that's built, but you, now you've got time. And so you can either then sell that space and, and take the equity and plug it into the new building, or you could keep that. building. And now you can lease that out to a tenant. And so now you're a commercial landlord yourself. And so that's cash flowing. Let them continue to pay that off. And you're getting the tax advantages and all that and the appreciation on the building. Let somebody else pay the freight. So it's not that much different from residential. And again, it's where residential people will house hack that when they come into building their investment portfolio, where particularly the young and the single people will do it. They'll go buy a house. or maybe a duplex with very little minimum down because you don't have to have a lot down when you're buying residential. And they'll stay in it for a year or two. And then they'll do the same thing to another house. So move to another primary residence where they're an owner-occupant. They move in it, but they keep the other house as a rental. And they keep doing this for a number of years. And so they have four, five, six homes that they've accumulated. Same thing you could do in commercial because commercial owner-occupied real estate. which basically means your business is going to occupy that space or 50% of the space if it's existing. If you're building it new, it has to be 60%. But as long as you're the owner occupant, you can get in that space for zero to 10% down. Okay. Typically 10 is a good number to go by, but in many cases, less based upon cashflow and that sort of thing. So you could do that for a few years, then move to another one and move to another one. Or if your business is expanding and you want to open a whole other business in a different town or a different part of town, you could keep that building and you're still operating your business there. And then you go buy another building across town and your business is going to operate there as well. That's also owner occupied. As a business, you can have more than one owner occupied building as you expand over time. Whereas if you're a residential client. You can only have one owner-occupied house because you're going to live in it, right? But your business, like I have a dentist who did this. He came out of dental school. His idea was he didn't really want to clean teeth. He really wanted to build a dental practice that he could expand over time and create cash flow and then maybe sell it. So he came out with this design to buy a building. Now, he couldn't afford it in the first couple of years, but once he got things rolling, he bought that building. Then, as his practice grew, he said, I'm going to buy one on the other side of town. He bought a building on the other side of town, hired a dentist to come in there, out of school, who didn't have his own practice. Ten years later, he's got four or five buildings now. They're all owner-occupied business because it's all his dental practice, even though he's not the dentist in there practicing. Now, he's got a dental practice that's cash flowing out the wazoo. But he's also got a real estate business that's worth a ton of money and just getting worth more and more every day. And it's deferring some of the taxes that he would have to pay as a dentist because you know, as a successful business owner, you start making some money, you start losing tax deductions. So by owning the space, you can get some tax deductions that you don't qualify for because generally you have like a real estate company that buys the building and then your business. is the operating company and your business will lease the building from your operating company. So you're, you're both the tenant and the landlord. It's kind of funny, but anyway.

Yeah, exactly. Exactly. So, so to your point, long winded answer. I think I got up a little bit on a snowy road, but, but the idea was, yeah, you can start small and you can scale over time as your business scales and grows and, and. And again, as you start secondary businesses and tertiary businesses, that sort of thing.

i have not but you talk about mcdonald's restaurants that story yeah

actually in my book i put the story in there about ray crock and mcdonald's and okay i have a couple of a couple of friends uh clients that that did that with car washes. And so their idea was 14 years ago to get in the car wash business, but it was really because they wanted to buy high valued real estate and they wanted something to pay for it as the property appreciated value over time. And so they started with a small kind of rinky-deak car wash. And then they leveraged that through what's called 1031 exchanges. They would take the equity and appreciation and roll it to larger ones. And over the course of 14 years, it was all about Really, the operating company just basically paying them a salary, but covering the expenses. But the real payout was in the equity appreciation of the property underneath the building. And they sold last year for a very, very healthy sum, a nice eight-figure sum. And so what a payout. And oh, by the way, they... They deferred a lot of taxes because every time they sold a property, they did a 1031 tax exchange and rolled it in. And so they didn't have to pay any tax on that throughout the whole process. So there's things you can do. I was talking to somebody the other day. It wasn't my client, but she was a chiropractor. And she said she knew, had a client that had a successful business and had bought their building. And they used the equity in their building to buy a competitor, a competitor's business. So there's a lot of things you can do with your, it's almost like Brad, you create this forced savings account. I think we said at the beginning is a lot of high, higher income, like professionals or business owners. You have high income, you have a tendency to spend it, right? I mean, larger, nicer house, get a little nicer boat, right? a couple of ATVs, motorcycles, all that, pretty soon, you know, you're living up to your income and you're still paying rent. But at least if you're living up to your income and you're paying a mortgage on a building that you own, at some point you're going to own this asset, free and clear, which makes your business more valuable when you go to sell. If you want to sell a construction business or whatever, if you don't have any assets, it's just you. then you're just selling sort of a customer base and a lot of blue sky, right? But if you've got a business with systems and customers and, oh, by the way, this building that goes with it, it's worth a lot more. And you can open the door to many more potential buyers because it's easier to finance a business with real estate than just a business per se. And so more people can qualify to buy that business from you. So therefore, you get a higher price.

Yeah, it's totally true. It's amazing. You look back, time passes, right? Five years,10 years,15 years. And you're like, dag on it, man. Where'd it go? But you're like... Oh, look, at least I have some equity in my house. You know, I've been making this payment and it's worth how much am I able to sell the house for, you know? And so you're like, wow, that's pretty cool. But time passes either way.

Yeah. So we, it's a great question. So we have a process. We start with an ownership strategy session where we just basically have a 15,15,20 minute conversation and we cover some of the key points of, of what it takes, what it would take to qualify to buy, you know, a property. And, um, and at that point, if it looks like that, somebody's legitimate and like, yeah, they're, they're, they're, we think they can do it based on what they've told us and those key considerations. Then we enter into a formal relationship. We call it our signature buyer readiness program, where it's basically a three to six month program where we pre-underwrite your situation. We, as I said earlier, we start with like a 53 question questionnaire to uncover your goals, your current situation, your future dreams, any issues that might be out there. We deep dive on financials. So a lot of times we'll partner up with your accountant or CPA and get all the financial documents to kind of save you all that hassle, kind of in a concierge kind of role. Once we get all that information and understand what you're trying to do, then we do an analysis and say, okay, Brad, you know, here's how much building you can afford. Here's why, here's some different loan programs. Here's the pros and cons of each. What resonates with you? And we have a dialogue. And then once at that point, if you feel like you're ready to move forward, then we can either partner you with a commercial agent or help you work with a commercial real estate agent where we're now a team to say, okay, this agent and us from a financing standpoint and you from the buyer, the borrower, are all on the same sheet of music. So everyone knows what you're negotiating for. Everyone knows the opportunity. So basically. Ultimately, what we bring to the table is knowledge, education, and a stress-free experience because we handle the stuff up front. So you're not telling your team, hey, I'm going to go buy a building. And then you find out, well, maybe you're not because there was something you didn't know about. We're going to handle that all up front without being a distraction of what you're doing in your day-to-day business so you can continue to work in or on your business and that we can be there as your guide, essentially.

So one that I currently read, but I read the Bible all the time, actually. It's a lot of wisdom there. A lot of wisdom. We try to run our life on that. Okay, there you go. So from a secular standpoint, U squared is one of my favorite. There's a compendium to that, the quantum, the quantum, what's it called? Anyway, Price Pritchett wrote U squared. And it actually is kind of a, I think he's a faithful guy, but it's kind of a secular perspective on a lot of the principles of the Bible in terms of how you can have a quantum leap in your life and your business. You don't have to move in a sort of a linear fashion. and there's a lot more going on out there than just what we see, right? And so, and I'm a firm believer in that. And so that book, Quantum Leap and U Squared by Price Pritchett, they're really thin, Brad. I mean, you can read them literally, you know, cover to cover in about 30 minutes, but each page is like one chapter and each page is like something you're going to chew. It's like rope, you're going to chew on it. You're like, wow, this is pretty interesting. um, like his concept of, you know, work, um, maybe it's not working harder, maybe it's working less, you know, and he, and he talks about that and, and, and just real quick background about him. He's, he, he studied, um, psychology and like of success in college, got a PhD, but he got really, he really like, um, cut his teeth on. When he came out of school, he worked in like Fortune 500, like Bain and company was big consulting companies. And his job was to interview or be on the team that interviewed like corporate CEOs and C-level corporate people for jobs. And he started to realize pretty quickly that they all had pretty much the same resume. So how do you choose one over the other if they, you know, their resume is pretty much the same? I mean, how do I know? And he started looking for sort of commonalities on. why some were more successful than others outside of sort of, you know, their, their, their education and training and that sort of thing. And he encapsulated it. And so he started a training company. He's been doing it for 30 years. I mean, it's pretty, pretty phenomenal stuff, but that's a great book.

Yeah. Y O U squared. And also quantum, I think it's quantum leap. They're, they're, they're almost the same. They're a little modification of one or the other. I've got them both. So. Okay. Yeah. Price Bridget.

Oh, I think it'll be, it'll, you, I think you'll love it. Yeah, I think so.

Yeah, Brad, it's been a blast, man. I appreciate you having me on today. I really enjoyed it.