← 🎙️ Local Real Estate Developers
🎙️ Local Real Estate Developers
The Local Developer Who Refused to Give Up on Main Street | EP#58
00:55:24
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- [00:00]
A
This is the Local Real Estate Developer Podcast, where we share the stories of locals across the country who took that empty lot or that old building and turned it into something awesome that their community needs. I'm Christy Candle and I've been a real estate developer my entire career. My co host, Rafael, is a commercial broker, and together we're sharing the stories of locals making a huge impact on their communities. And what we've learned is you don't need millions in the bank or decades of experience to get started. You just need the confidence, tools, and the right people around you. This podcast is your chance to gain the confidence to get in the game. Because real estate development isn't just for the insiders anymore. It's for people like you, too.
- [00:41]
B
Welcome to Local Real Estate Developer Podcast. I'm your co host, Rafael Collasso. I'm a commercial broker, investor and developer located here in Louisville, Kentucky. And I'm excited to be here with my co host, Christy Candle, who's going to be actually leaving for the doctor here shortly. So it's exciting to hear about your trip when you get back.
- [00:59]
A
Yeah, very excited about this. Ever since I went on a dive trip to Roatan, everyone had said, you gotta go dive in the doctor. You gotta go dive there. And then I met another friend in real estate. She happens to live there with her husband, and I was like, great, I love the local experience. We're coming. So. Yeah. And when I'm not on vacation, I. I do real estate development. I also teach locals how to become developers, and that's why we formed this podcast. And today I'm very excited about our guest because he also comes from the county I grew up in in Ohio. Another and is an amazing example of the fact that you can, as a local, make a difference in your community without millions of dollars, and that there's really cool ways to do it. So, Luke, welcome to the show.
- [01:42]
C
Hey, really good to be here with you guys. Thanks for the invite.
- [01:45]
A
Yeah. So one of the things we like to do when, when we have a guest on is first give a little bit of background of who you are, where you came from, and, like, what even maybe got you into being curious about real estate in the first place.
- [01:58]
C
Yeah. I always start my. My story with the preface that I'm still trying to decide what I want to be when I grow up. So as we were talking about right before we started, I grew up in Mount Gilead, Ohio, Morrow County, a small town. And I started mowing lawns when I was a young kid. And like A lot of kids do in, in middle school to try to make a few bucks with a mower that I bought at a garage sale. And the difference is that I've been continuing to have that business for the last 30 years. And so from what I started in middle school to what we have today as a landscaping business that covers, I don't know, eight or 10 counties in central Ohio. We've got a couple of locations in Marion and Columbus and we've, we've got a great business there. So that was one track I was running down. I also, we won't go deep into this, but I went to pharmacy school and earned a doctor of pharmacy degree. Had a short stint in, in pharmacy world. And then along the way I found this bug for real estate. And where I got that was actually also in middle school my parents bought their first property and I got to do some of the work and it was just, you know, your classic fixer upper, really rough condition and they didn't know what they were doing. I did, certainly didn't know what I was doing. I was like 13, but got exposed to that. Learned how to sweat copper pipe and wire up some light fixtures and do some demo. And one of the contractors was a friend and he was very kind to show me some stuff and it kind of got me excited about that. And so a few years later, when I was 19 in college, I bought my first rental property. And I mean by today's standards, I guess we'd call it a house hack. It was a little bit non traditional. I was at Ohio Northern University in Ada, Ohio and I bought a five bedroom house at the end of my sophomore year in college and that I rented out the other rooms, I lived in one of them and then rented out the other four rooms. And I learned a lot through that experience. You know, all the, all the first time homeowner things. You know, the, you had an old boiler, the pipes would freeze, you had to replace some windows and doors and strip wallpaper and put a new roof on and all those fun things. And one thing led to another and you know, so I learned a lot that process. I was actually going through some old paperwork the other day in my office and I found where I bought the house for $85,000. I sold the house 12 years later for less than what I paid for it. But honestly, there's some, some dynamics there. But, but honestly, I mean I learned so much through that process and it gave me confidence to continue doing things in the future that it, I think it was well Worth it. So bought some single family, multifamily, did some flips, and then eventually got into doing real estate development. Not. Not on my radar, not my plan. But about eight years ago, we bought eight buildings all at one time, quietly built them, bought them, and kind of assembled a grouping all on one block on South Main street in downtown Marion, and had a vision to redevelop that area to be the center of dining, shopping, and entertainment in our downtown. And it was a bold move. I had no idea what I was doing, no idea what I was getting into. And it's led to the last eight years of a really wild ride of learning and growing and creating something really special here in our community.
- [05:30]
B
That's exciting. And I appreciate you sharing insights about your first investment, particularly when it comes to buying a home and then renting out the other rooms. I think that's probably the best way to get started. That's how I got started. I bought a fourplex and rented out the other units, and that enabled me to learn a lot about dealing with tenant. How do you manage tenants? How do you vet people when you have those issues? And I've had situations where I've had to evict people. It's just part of the process. You learn through that. And there's always things that come up that you have to either hire someone to fix, or sometimes when it's too expensive to handle, you say, okay, well, maybe I just need to figure out what I'm doing just to kind of mitigate that in some way. So I think there's no better lesson to learn and learn in a way that is more cost effective than to house hack, because it's definitely one of the best ways to do that.
- [06:21]
C
Yeah, totally agree. And I mean, I'd never heard that term house hack, you know, till 10, 15 years after that was actually what I did. But in today's terms, that's. That's what we would call it. And it was, yeah, a much lower risk way to kind of foray into real estate while I was still in college and again, learned a ton of lessons. And I. I always tell people, like, just take the first step and just take action if you're interested in something. And that's what I've been doing in the 20 years, since. 25 years, I guess, since I bought that first piece of property. Just kind of like taking the next step, taking action, just figuring it out. And when you put yourself in that situation, I anyway, have found that that's the best way is to just do it. And then figure it out.
- [07:10]
B
So, out of curiosity, regarding the. The vision for these buildings in your historic downtown, what made you decide to take that jump? Because you described your history of having bought residential properties, small, multifamily, doing some flips, you know, buying prop commercial, the strip of commercial properties in your downtown. And, you know, a little bit offline, we were talking about historic component. I'm not sure if that's part. These are the projects you're describing that maybe had that historic component as well. What made you decide to take that ju. Because it seems like it was probably a decent shift or not. Maybe not even shift, but, you know, a decent change in perspective.
- [07:52]
C
It was a significant jump. And I think that I realized it was a jump, but I didn't have any concept of how much of a jump it truly was. And so what I realized was there are significant differences between residential code and commercial code. You know, life safety elements, fire safety elements, just much larger building and mechanical systems. And then there's the historic element, too. Not only are we dealing with buildings that are between 101, almost 200 years old, but we're also dealing with, in some cases, one project in particular. I was telling you before we started that we're doing a historic tax credit project that brings in a whole different element of requirements and red tape and everything that has to be taken into account. And development is difficult enough and you layer in some of those elements. And we had a pretty steep learning curve. But really, to answer your question, Rafael, the reason that we took that jump was just because we saw a need and an opportunity. And Marion, Ohio, is where I'm raising my family and where I have a business and have had for many years. I care about this community. I care about the people in this community. I believed that we could do better. I believed that we deserve to have a great downtown. And as I studied other thriving communities around Ohio and beyond, I saw that the really special ones had a great historic downtown. And I believed that I was seeing more of a comeback. It was becoming more in vogue again to have that walkability, have adaptive reuse, have cool places, unique places. The younger generations are rejecting some of the big box stores and the chains and really want authentic experiences. They want to live in places that are unique and cool and have soul. And I saw all of those factors and just thought, why not Marion, Ohio? And then I started looking around and it's like, well, we're not going to get some big developer to come out here from a big city and do this project. It's way too speculative, and there's nothing proven. And so there is no they. You know, so often communities are like, well, they need to do something with our downtown. They need to bring some new businesses. They need to bring a coffee shop or fix up these old buildings or knock them down and create parking lots. But the reality is that there's no they. There's only we. And as a community, we've got to pull together and create these projects and get them figured out. And so I was kind of going through a little bit of a midlife seizure, I guess, where I was like, man, I've built a business and I've learned some things about real estate. And I think that the things that I've learned thus far would serve me to try to take this leap. And just. I figured things out before, and I've built businesses and done real estate projects. And so how hard could it be? Well, turns out it's actually really freaking difficult. But that was my attitude that got me into it. And then it took tenacity and a lot of discipline and resolve to actually complete those projects. And then we've went on to do. We've done 20 projects in our downtown in the last eight years. We've taken a big bite and are really seeing some momentum, and We've helped nearly 50 businesses start in our downtown or recruit businesses from elsewhere to come join us. And so it's been a really gratifying overall project, But a lot of learning along the way, I can assure you.
- [11:31]
A
Yeah, clearly it didn't stop you from going. But it reminds me back when I first got into development and my mentors would go, that's a you project because you've got the energy and you can go do it. And they'd also say, and you don't know what you don't know, because they understood how hard it would be, but they also knew that I would have the tenacity and the willpower to go, oh, I'm gonna figure it out. And, wow, didn't know that coming, but, all right, I'm going to go figure it out. And I have the energy to go figure it out. So it's. It. We need that. And especially in our. Our communities, we. We need our local catalyst. Someone has to get the ball rolling. Last night, I was at the Bonita Springs downtown alliance meeting, and we were talking about the fact that it was, again, another local who took the risk. And he started buying up parcels early because he understood what could happen. And then he realized, well, instead of just sitting on It, I need to be the catalyst that starts it. So he created the first couple locations and then the. To come in around the area. And now it's, now there's the momentum. And so now everyone's starting to jump in and in five to 10 years it will look totally different. But it took that local starting it and putting that initiative in and going, okay, like, this is my community, I'm invested, I'm going to live here. So I know that I'm not going to make the return right away, but in the long run, we're all going to win.
- [12:47]
C
That's exactly right. We call that patient capital.
- [12:50]
A
Yeah, exactly, exactly. There's. There's no getting rich quick. There's just a getting rich or getting well off slowly and growing it. That's where it's like if you have those intangibles to where you get to live and feel, you get to go, oh, there's more energy down here. I'm excited to go see the community and go meet at the pizza place and go to the ice cream shop. That's where it all kind of adds together to where it's well beyond the dollars that, that come in.
- [13:14]
C
Yeah.
- [13:14]
A
Which it. Yeah, go ahead.
- [13:16]
C
I was just going to say there's. And there's no shortage of communities that, that need this. I mean, I, I drive through and I'm sure you do too, you know, all throughout the entire United States and beyond where there's communities that, that need revitalization, they need reimagination, and they just need local people to say, we deserve better than this, we can do better than this. Don't let the big box stores come to the fringes of our community and define who we're going to be. We don't want to be the place with the commercial corridor that looks like any town USA that's got all the big box chains and somebody can drive through a town and it doesn't look any different than the last 10 that they drove through. We want something special. We want something unique. We want something. When we bring friends from out of town, we take them downtown and we say, look at what we've built here. Look at these local places. Look at these local entrepreneurs that are putting these restaurants, these boutiques, these coffee shops and you know, craft beer bars like that can be places that are really special and unique, that you can only find one place in the world. And so, you know, that really gets me fired up, obviously. And look, I will tell somebody right up front that there is way, way easier ways to make a dollar in real estate than doing this. But I would say that there are few that feel as purposeful and gratifying over the long term than revitalizing your own local community. So we say that we, we work at the intersection of for profit and for. Again, there's easier ways to make a buck, but few that are going to create the lasting value and impact locally as these types of projects.
- [15:04]
A
100%. I think we have something like 16,000 communities in the US that have a population under 10,000 people. And that's where. Straight to your point. If you can flip that house, you can take that downtown commercial building and you can do something with it. So, I mean, that's endless opportunities where the big developers are not coming in and it's you that. That local who gets to be the one who gets to be the change maker.
- [15:26]
C
Yeah, absolutely.
- [15:27]
A
So early on in your, in your projects, you said there were some big differences, and it's in the, the commercial code and how that goes as you were even acquiring the properties, because you said you had pretty much bought the block. How did you go about financing that? And maybe a little bit about the dollars, if you can, just to kind of put that in perspective to go. It's not millions and millions of dollars.
- [15:49]
C
Yeah, yeah. So when we went around and kind of quietly assembled the properties just to give a little bit more color and context. So this is one block, South Main Street, Marion, Ohio. At the time, the block was 80% vacant. And so there was not a lot going on. There was one restaurant, a couple attorney offices, a secondhand clothing store, tattoo shop, and a bank. And that was about it. Otherwise, there was a lot of empty buildings, empty second floors, empty first floors. And so when we kind of surveyed that scene and looked around, my thought was just like, man, there's, there's so much opportunity here. And I can see how this could come together. And it definitely starts with that vision. But then we just went around and started approaching. There was a couple of properties that were on the market there. One sold at auction, and then the others, though, were just going and looking up the public records, finding out who owned the building and reaching out to them, trying to find a friend of a friend, sending, you know, messages on Facebook, messenger, or skip tracing and trying to find their number. And I mean, just all these, you know, kind of sleuthing to find out who owned these buildings, because some of them were absentee owners. And so just figured out a way to get ahold of people and then started, you know, making offers. And so to give again some context. I mean, these buildings were all purchased for between 20 and $75,000 apiece. And these are like Main street buildings. A lot of them were like, you know, one or two storefronts with one or two, you know, former residential spaces on the second floor that maybe hadn't been occupied for many, many years in most cases or they had been, you know, really crappy apartments and you know, were not hardly livable and needed to be completely gut renovated. And so yeah, I mean, it didn't start with a ton of dollars. I mean, I think we acquired everything, you know, eight buildings for less than half a million dollars. And we pretty much scraped together the cash to do that. There weren't banks that were going to finance vacant buildings, of course, but then when we went to go do some renovations, we essentially like did like a commercial version of a brrrr, you know. So again, I don't know that I even at the time knew what that was or had language around that, but I was just like, well, if we pay cash for it, we pay cash for the renovations and then we force some value, then we can cash out, refinance it and roll that to the next project and then kind of keep doing that. And for some of the small, little bit smaller projects, it worked reasonably well. We didn't necessarily get as much cash out as we would have liked because what we found with both those and our kind of first major like flagship project was, which was a wedding venue, which was like a million plus dollar project, we found that banks were not super excited to loan on, you know, this particular type of project at this particular point in time because there was not a lot going on. I mean, these were relatively speculative investments. And what I didn't understand about banks that I now do is that, you know, banks are in the money rental business. They're not in the, you know, the business of like speculating or you know, they want to be basically assured that they're going to get their money back no matter what happens. And so even though I had an existing business, even though I had other real estate, even though I'd done flips and you know, all these long term holds of other real estate assets that wasn't quite good enough to just for me to take on one of these commercial projects. So the first couple were, they were tough. We had to do some tall talking, had to do some convincing, some tours, you know, some renderings, different things like that. And we had to get a little bit creative to make the numbers work and be able to get the first couple financed. And then once that track record started to build, once we were like, okay, we've done this project, we've done this project, we've done this project. We've placed commercial tenants, we've placed residential tenants, we've created businesses, we're cash flowing and it's just incrementally gotten a little bit easier every time. And now we work with several banks and they're very competitive on our projects because they know that we're going to come through. And we've done projects successfully before.
- [20:23]
A
And when you're talking banks, are you talking regional banks to the area who know the market? Are you talking the chases? The bank of America is the Wells Fargos.
- [20:31]
C
Yeah, these.
- [20:31]
A
Hey, can we chat for a second? Since you're listening to this podcast, you're already thinking like a developer. You see the potential in your community and you're ready to do more than just watch from the sidelines. That's exactly why we created the local Developer Vault. It's a free resource full of tools, templates and trainings to help you take action. And here's the best part. When you sign up, you'll also get access to our local real estate developer community. It's full of people just like you who are making real things happen in their neighborhoods. So don't just listen to the stories. Become the next one that we spotlight on our show, the link in the show notes to unlock the vault and join our movement.
- [21:07]
C
They're all small local and regional banks. So the first bank that loaned to us was actually the one bank that I mentioned on the block. You know, it's literally like they're loaning on the building next to them because, you know, in that case it's like, well, they're like, well, yeah, I mean, we would like to see that get fixed up. It looks terrible now and so it would make us look better. And so maybe, maybe we are willing to take a little more risk than the bank in the next town over with this type of project. And then the other bank was a credit union that was also local to our community that, you know, worked with us initially on that project. And they didn't want to completely take all the risk, so we had to find another way to finance part of it. And then they syndicated the loan. So I mean, we're just learning lots of things. On these very first couple deals with the financing part, I didn't even think that would be the issue. I thought that the challenge would be construction. Well, that was just one sliver of the development pie, as you guys well know, but I didn't know at the time.
- [22:06]
B
Yeah, it's amazing how lenders. And again, you, you see the vision as the developer, and for you, it makes sense. And you may very well even be in the, the business. You know, let's say you're, you're in brokerage, as I am, and a lot of times I can say, hey, this, this space can rent out for this amount of money. And I know there's tenants looking, and a lot of them are like, well, where's the piece of paper that tells me that this lease is signed? And everything else in order to really solidify this as an investment opportunity? And so, you know, we face some challenges with projects we've taken on where we had to identify a tenant and get them committed to the site. And then at that point, the bank's like, okay, well now you have a contract and now we can, you know, get comfortable with this idea. But over time, as you start to build that repertoire and that and that portfolio, you're 100% right. Lenders start to say, oh, well, this person has done projects like this before. Here's how they performed. You know, the, they're well within the, you know, LTV ratios for what we expect. And ultimately you become a lot more attractive to, to lenders to finance projects. But that takes time. And the first time you do it, oftentimes you eat a little crow and it's just part of it.
- [23:17]
C
Yeah, yeah, exactly, right. Something I would share that I've just started doing the last year or so, and it's been really meaningful and I would encourage others to do it if you can get your lenders to agree, and that is that. I've done a series of lender tours where I've actually invited lenders down, not just the relationship manager. So in many cases, you know, the commercial lender or the relationship manager, they'll walk a project, they'll look at it with me and everything, but they're still just the mouthpiece of my vision to the loan committee or whoever. And so instead I asked if they thought that they could get some of their underwriting team, some of their loan committee, some of their executives to come and walk our projects and look and see. And so I could do some show and tell. And I shared, you know, I started the meeting with, you know, some greetings and everything. I was like, you've already all seen my financials, so there's nothing you're going to ask me that I wouldn't end up sharing with you at some point or haven't already. So I'm completely open book here. Let's talk about these deals. I'm happy to talk about what went well, what didn't, what we've learned, how we're improving all the good and the bad. And so I think they really appreciated that transparency. And it was remarkable how many of them were like, wow, this, none of what I saw today came through on the spreadsheets that you send us. But instead they were just like, okay, we completely understand how you're building an ecosystem, how you're creating these different commercial clusters, how you're stacking the residential, how you're, how you're marketing these businesses, how you're recruiting businesses, how you're filling your loft apartment spaces, how you're running your Airbnbs, and, and I just showed them and it was so much more meaningful. And so I would encourage others to do that, particularly if you're doing these types of investments that are a little bit different, maybe a little harder for kind of the traditional banker to wrap their head around. It's been really helpful for us. And then we've also started sending an end of year summary that explains different projects that we've done. And again, I mean, it's hard for them to kind of take all the pieces of our financial statements and, and be able to build a narrative. So if we put that narrative on a sheet or two and send it to them, that's much more helpful. And so that has also been really well received. These are things that I never knew to do, but have just started doing and have been met with really good results.
- [25:50]
A
Yeah, those are things that nobody teaches you, nobody tells you about, and you realize that development is all about relationships and how do you make them stronger? How do you build deeper relationships? How do you build the trust? How do you build. Literally, it's that in person.
- [26:03]
C
Let's.
- [26:04]
A
Let's show you. So you can feel it, you can see it. Yeah, that's. That's so huge. And something that, that is, I think, just. Yeah. Because it's so not known. There's two projects I'm working on and in telling our partners as we're setting up meetings with the regional banks and like, guys, we're selling ourselves to them as much as, like, it's not just about the project and numbers. They need to understand our background, where we're, what we're bringing to the table as people. They need to believe in us, they need to like us, they need to understand the vision. Because they're going to go sell us to their internal team. And these are, these are all the things like that we're, that we're doing as part of relationship building to go, okay. And a lot of us don't necessarily want to go, ooh, hey, I'm, I'm a badass, I'm really good at this and talk ourselves up. But it's, it's, you do kind of in a way need to go, okay, what things are going to check mark their boxes to go, oh, you can do this because you have worked with the state of California, you have done public private partnerships, you have worked with venture capital or this or that, like, and customizing to each one. But it's just like you do need to kind of go, okay, here's what we've done. This is why we can perform.
- [27:07]
C
I love that you highlighted that just because I have realized as we've went through this that man, so much does hinge on relationships. And so, I mean, we've been talking a lot about lending relationships, but even relationships with potential tenants. You know, we've done some restaurant build outs, for example, recently, and we've invested significant amounts of money, hundreds of thousands of dollars apiece to do the tenant improvements on these projects. And, you know, we're entering into long term leases with these folks. And, you know, we're almost like a bank in the sense that, you know, we're having to sort of vet these folks and make sure that we believe that their financials are solid, that their operating systems are solid and that they're moving forward, which is difficult. These are not like, you know, national tenants. These are, you know, local mom and pop, maybe a, you know, small chain, regional chain or whatever. And so it's difficult to do that. But we develop a relationship and you get a feel for people. And I have a saying that it's tough to do a good deal with a bad guy and it's tough to do a bad deal with a good guy. And as you said, I mean it, so much of it comes down to trust and building relationships with people and figuring it out. Because a lot of things can go sideways in a deal. And you've got to know that the people that you're working with, either across the table or on your side of the table, that they're willing to, you know, they're as committed to this journey as I am because things are going to go sideways and we have to be able to adapt, pivot and work together towards a common outcome. Because that's what development's all about. It's being told no, it's taking conflicting situations. You know, the buyer inspector wants this, but the tenant wants this and the building departments wants this, but the public utilities want that. And it's trying to navigate all of that to just say, how can we work together to make this work? That's literally developing. I wish somebody would have told me that earlier, but it's just like, you know, I could either be pounding my head against the wall because I'm so frustrated about it, or I can realize that that's literally my job as a developer, is to bring all these broken systems together and find if there's a way forward or not.
- [29:15]
A
Yep, yep, exactly. My sister used to ask what I did and I'm like, I'm just a professional problem solver. I have a PhD in MIH. Make it happen. Like, yeah, that's it.
- [29:24]
C
That's. Yeah, I love that definition.
- [29:27]
B
It goes back to the root cause. What? The root. The thing that stems from all this is communication. And I think that regardless of relationship, if you're constantly in communication with people and you're describing a situation where you invite the lenders on site and you show them what you've been doing, you likely share the challenges you faced, how you've overcame them, and that helps build trust, that helps them get uncomfortable with the idea that even if things happen, because again, things are going to happen, that you have a good head on your shoulders and you're able to circum or navigate some of these tumultuous waters. And so I think it's a great idea. And I'm glad that you shared that on this podcast because I'm sure that there's going to be people that try to incorporate some of that into their own projects.
- [30:11]
A
Well, I've only taken the, the customer facing people. I've never taken the underwriter. So that is. I'm like, game on. On that.
- [30:17]
B
Yeah, yeah, I've never done that either.
- [30:19]
C
We've done very eye opening for them.
- [30:21]
B
Yeah, yeah. Well, especially underwriters, because I feel like, you know, you have this idea of an underwriter being in like a, you know, a room, a little box sitting in front of a computer, There's a
- [30:31]
C
lot of big pile of beans and they're just, they're just counting them and
- [30:35]
A
they're just, they don't realize there's a human factor. There's a community, there's a town, there's intangibles that you can't put on those spreadsheets.
- [30:41]
C
Yeah, yeah, yeah.
- [30:42]
B
And you know, oftentimes you rely on your banker to kind of convey the message or the, or the vision to the underwriter. And sometimes if you can just get them out of the, their, get it from away from their desk and show them physically now, it helps create that color that in the future, if a deal comes across their desk and it's tied to you, they say, oh, well, I have this understanding, more understanding of what this person is about and the types of projects they deliver. And as much as you say, oh, it's all about the numbers and dollars and cents, a lot of times too, especially if it's a local bank, that does play into their decision making process. So I think it's important to do.
- [31:19]
C
Yeah, exactly. I mean, they're loaning to a person, you know, yes, it's for a project, but especially in the small developer world where we're, you know, we're personally guaranteeing all of our debt and all of that, like they're loaning to me. And so, I mean, my word is only as good as the way that I've treated them on other deals. And so, you know, I have to make good on that. And, you know, my, my reputation is all I have with them. And so I've got to ensure that they know what I'm about and that they have confidence that if I say I'm going to do it, I'm going to do it. And so, yeah, I mean, it's important to build that level of trust as a foundation, definitely.
- [32:01]
B
So one of the questions I have was related. Oh, go ahead, Kristi.
- [32:05]
A
I was just going to say I'm curious because knowing it's a smaller town and knowing that you then bought up several properties, what was the community's feedback as they realized, oh, it's a local doing it. Like, did you become the greedy developer though, that was doing it? Did you get the support and how did you maybe bring them along for that?
- [32:21]
C
This is a timely topic, Christy. So I would say that I'll kind of take you through the life cycle and that is that early on people were very excited. So, you know, we bought these eight buildings, released the information for the project, which we called Main Street Reimagined, and you know, everyone's very excited and we started making progress. A lot of community support. And then Covid happened in there and that upended a lot of things. That's a, that's a whole other podcast. But, but basically, you know, community support has remained strong. There's been a core group of supporters, people that have come out, you know, and as we've helped stand up new businesses and invited new entrepreneurs and seen people come and start new businesses, new restaurants, new boutiques, new entertainment venues, there's additional waves of support and their friends and family, and just more and more that way. But what I will caution, folks, is that there does come a point where the critics can definitely take the microphone and try to start steering the narrative differently. And I would say that in the beginning, the critics were more like, this isn't going to work. Nothing's downtown. There's no parking. Just tear those buildings down. And I think you have to be prepared for some of that, you know, through the process, sometimes there's other, you know, frustrations or feedback. And I think there's a very fine line between making sure that you're positioning yourself to hear constructive criticism, to hear public input, to hear what the community wants and be able to respond to that and incorporate that, but also like, realizing that there's some people who literally are just going to criticize not constructively. They're going to. They're going to come after you personally, they're going to come after your family, they're going to do things, you know, that are really unfortunate. And. And sometimes it. There's not a real clear reason why. And so, unfortunately, I've kind of been the.
- [34:26]
B
The.
- [34:27]
C
Been in the. In the line of fire a little bit here recently, not necessarily for any certain decision. I didn't bulldoze any buildings or, you know, take anyone's home or anything. We opened three, four new restaurants in the last few months, and we've been having a lot of great momentum. And for whatever reason, just it seemed like a good time to maybe take a few shots, I guess, and share some misinformation, share some totally bogus claims, you know, about me personally or my team or, you know, my relationship with the city officials or, you know, those sorts of things. And so, unfortunately, that is just also part of the deal. I think that folks have to be a little bit prepared for. And, you know, I shared with someone recently, I said, you know, I didn't, like, set out to be a public figure. I was just, like, doing something I was passionate about and really doing what I believed that, you know, I was called to do here in our community and make things better one building at a time. And somewhere along the way, I got a little famous and infamous in different circles. And so I've, you know, I've just got to be aware that that's a reality. Obviously, I want to conduct myself In a way that's professional and caring. And again, I have an ear for constructive feedback. But also there's a little bit of just having to be able to kind of put aside some of the unfair criticisms that come realize that it's part of the deal and keep moving forward.
- [35:54]
A
Yeah, I think part of that I'm just thinking I've lived in a lot of small towns of 2,000 to 7,000 people. I live in another one now. Like Tahoe was another one, Ohio was another one. When like even here in Fort Myers beach after the hurricane, we had the property owners of the whale end up being the thing that brought us back to life because they, when they decided to rebuild and make that investment, they were the locals, the first locals who put that flag in the ground that says we're going to be part of making this 10 to 15 year rebuild happen. Because we got completely wiped out. And everyone was just like, thank goodness. Like, like that was our hope that we needed to be resilient and to go. They ended up buying a couple other properties so they could then keep turning those. They created a WhatsApp F&B to take all the businesses together because of rising tide lifts, all ships. And it's crazy how once they get big enough to where then people who don't take any action start sending those shots. It's, it's very disheartening because it's like, wait, they literally are helping me the resurgence that. And they're. And having known them like they are doing this for the community and everything, all of their actions show that. But I think part of it is a mirror. People look into a mirror and they go, I now feel bad that I didn't take any action or have want to take the risk. So I think part of it is that. And you just become big enough. They're like, okay, cool, I'm gonna take, I'm gonna take shots at you because now you're the big bad developer. So like you said, the, the point on this is if you're going to become a leader and it doesn't matter if it's in business, if it's in development or whatnot, you are going to not have everyone on your side and your why has to be strong enough. So when you do have those shots come at you that you go, you know what? I've got haters now. Great. I'm big enough to have haters. And my impact has reached a ripple effect to the point where I do. And I'm gonna let it roll off because. Because not all of them should be taken in. And some of them, though, great. You could have good positive or feedback that goes, yeah, I'll tweak this next time. That was great. But it's. It's that. That, you know, you. We say we want something, but what. What are the unintended consequences or what are the. What does that actually mean to. To get the thing we say we want?
- [37:57]
C
Yeah, yeah. Right over my shoulder here, there's a sign that says, criticism is the price of leadership. And recently shared this on social media when, you know, some of this kind of misinformation came out. And, you know, I. I didn't defend myself. I didn't, you know, go back at these folks or whatever. You know, they're certainly entitled to their opinion. But I just said, you know, I. I have to stay firm to my convictions. I've got to lead my family, my. Well, I've got to show up doing the very best that I can for the community. And some people are still going to criticize, and that's. That's okay. That's the right. But I have to be strong enough in my. Why, just as you said that, that I've got to know that I'm moving forward with confidence and believing the very best. And it is amazing. You know, again, there's some folks that chirp about things, but there's such a small percentage in the grand scheme. We can't get knocked off kilter just by a handful of people, you know, just, you know, being critical because they're critical of other people. You know, if you look at, you know, that's the kind of the bigger picture where it's like, you know, if they're the ones that are criticizing this public official or that public official or this other person or this, you know, it's like, eventually, if they get around to me, you know, so be it. That's probably bound to happen. And so it's just something that we have to accept and keep moving forward. So, you know, I think there's something that's not talked about very much. You know, I certainly didn't hear this on any podcast when we were starting out to where I was like, okay, yeah, check. Great. Yep. Be prepared to be, you know, criticized and ridiculed or made fun of or parodied online. But here we are, and, you know, we've got to keep doing what we're doing, and we believe in, again, that working at the intersection of for profit and for purpose.
- [39:41]
B
That's a great point. And I mean, you're Never going to be criticized by someone who's doing the same thing or more than you. It's always someone who is in the corner and they just like to chirp and that's it. So there's a gentleman that I know who had said consider the source. Whenever someone says something and you know, based on what your judgment is, then you can determine whether or not it's really worth considering as input. One thing I'm curious about is as part of these projects, I mean obviously you're renovating these projects and you want to be able to deliver something that is going to be meaningful and useful to the community. How did you find the tenants and talk about a little bit about maybe structuring the partnerships on some of the, the build outs for some of these commercial tenants specifically, just because you've got, you said you just rolled out four restaurant spaces over the last year. So that's as we were aware as being in the space. That's a pretty significant investment that you made.
- [40:39]
C
Yeah, yeah. So recruiting has been one of the more challenging parts and I think that it's one of the parts that really can trip up especially smaller community developers like us where you're trying to do mixed use development. And so this was another thing that I was woefully naive about when we first started out. Just like the banks that I thought were just going to, you know, write us a big check when we were ready to start our construction. I thought that, you know, build it and they will come, that we would just, you know, have this vision and other people would be excited about it and they'd want to bring their business and open up in one of our buildings. And so when we first started, we announced Main street reimagined, we started doing a bit little, a little bit of the construction work. And so I, you know, we knew that we wanted an ice cream shop, we wanted a hair salon, we wanted a coffee shop. And so we went to, you know, neighboring communities or places a county or two away at, you know, where there was those amenities and we said, hey, would you like to look at coming to Marion and bringing a second or third location of your concept? We really love what you do and we're building this ecosystem and we know that we, that we're going to drive traffic and da da da da. And and they came and they looked and they were very kind. But all of those tours ended the same way, which was them saying, you know, this is unfortunately just too speculative too early and you know, we've got to see the Traffic. We've got to see other success stories before we're going to come here. Even if you're going to do all the tenant improvements, even if, you know, we just show up and the work is done, there's still a real cost to us in time and energy and money. And so, you know, we're not going to make that le. And so really what we found was that we had to create our own weather a little bit. And so we actually started a few businesses to get the ball rolling. So we started an ice cream and sandwich shop. We started a wedding venue. We started a hair salon. We started another small event venue, and those are the first four businesses on the block. And that really created momentum. It proved the concepts. It also proved to be very difficult, especially as Covid hit three weeks after we opened our wedding venue. So, you know, again, there's a whole host of challenges that come up. But the bottom line is, you know, we did. We just took the next step to move towards the vision that we had. And so eventually, once we did prove that concept, we created some traffic. Then we started to be able to recruit the right tenants, the right mix and outside tenants. And there got to be a point. I mean, actually, at one point, we opened another wedding venue, An Italian restaurant, a catering business, and we're running, like, eight, 10 businesses. And it was just. I mean, the wheels were about ready to fall off, and I did have a business partner on some of those. And, you know, we were trying to keep all these balls in the air. And eventually we kind of found a way to, you know, why don't you take a couple of these? I'll take some of these. We'll separate. Well, you know, we're still friends. Like, we're going to operate in different lanes and just kind of, like, simplify a little bit. And that was the right move. I think we did that a few years ago. But again, it was sort of what we felt we needed to do to get the momentum going. And then I just, you know, people ask, like, how have you recruited these other restaurants or boutiques and entertainment? And it's really just like, I just say, I hustle, you know, Like, I'm always on the lookout for somebody that I think has a talent. I'm going to craft shows and vendor fairs and finding people that make products, and maybe they're not ready to have a storefront, but maybe I can connect them to one of our boutique owners and they can highlight their product. And, you know, it's. It's still a good relationship. I don't really get anything out of it necessarily, but creating something special and helping another entrepreneur with restaurants, creating a
- [44:32]
A
stronger ecosystem to where you're like, you're helping them be more successful to where your job doesn't stop. As a landlord of going, cool, I'm collecting the rent, you guys go be successful. If you're truly collaborating and doing that, you are doing that and your job continues that way.
- [44:47]
C
Yes, it's finding the people, mentoring them, help resource them. And then we also provide marketing support. And again, it's not just like place a tenant and then it's mailbox money. We're supporting this ecosystem, helping them as much as we can, promoting them. And so it's, it's become way more than what I imagined from that perspective. But over time it's continued to build and create something really special.
- [45:17]
A
Yeah. And I know a lot of people who, who are doing the same thing. They'll, they'll offer definitely marketing because that's part of the bigger ecosystem, sometimes accounting. Because as a, as a business owner, we all know the thing that you signed up to do business for is only a small percentage of what it takes to actually run a business. And there is so much that happens. So I think the being able to use your insights and maybe have a scale of reach of different things to have different resources or software that tenants could use to help them help themselves. It seems to, seems to be working in lots of markets to go, okay, you're just creating a self sustaining ecosystem and sharing all the resources and that's how everyone can, can be successful.
- [45:55]
C
Yeah, yeah. And I mean I'm an entrepreneur so like I love entrepreneurs and I love talking shop and I love you know, kind of inside baseball. So like, like I'm learning about their businesses again, maybe I'm offering them support. Maybe it's just fascinating or I'm seeing trends of different things that are happening or sales or you know, what's happening, what's working marketing wise, what's working with this or that. And so, you know, it's to me it's fun to also see those Main street businesses succeeding. And you know, it's not always up and to the right. There's a lot of bumps along the way, but we're learning together. And then I can take what I've learned from this and you know, operating a business or being in relationship with one of our tenants and maybe it can take that information and help someone else who's starting out or trying to grow a business and you know, add value to Them, which adds value to our community. And then if that makes them successful as one of our tenants and they can stay long term and it helps us repay our, you know, heavy investments that we've put into these projects, then that's, that's good for everybody.
- [46:58]
B
That's great. That's some great advice. So obviously this, this episode so far has been really value packed, and I'm really appreciative of the insights you shared. You know what, what advice would you give to someone who is looking to get started in real estate development? Maybe they have never taken on a project, or maybe they have some experience on the residential side, but they want to take on either their first commercial adaptive reuse or some other form of commercial development. What advice would you give that maybe is a good starting point?
- [47:28]
C
Yeah, I mean, there's so much that I've learned along the way, and most of it's just been through hard knocks. But I would say that if I were starting again today, I think that, you know, if I were giving advice to myself, I would say, first of all, take action, take action. And for me, as I mentioned earlier, sometimes I've just got to paint myself in a corner and then figure out a way to get creative to get out of it. And that's just the way that I work. It's probably not the smartest way, but it's worked for me because, you know, when you only have one way out, you're, you got to figure it out. And that is what I've done. But I would say that if I were starting again today, there are so many great resources and groups that I've discovered along the way. I know you guys have, have, you know, a group and some training and masterminding that you offer. There's, you know, so many others, you know, different. Even guests that you've had on your podcast, you know, mutual friends of ours, Jason Duff with Small Nation, Katie Neeson with Katie, develops in Texas. You know, doing totally different types of projects and, you know, align with some of them, learn from them. But that event, like, that's only going to take you so far. So to be able to learn so many of these concepts that I had to learn the hard way would have been, have been way less painful. But in the end, I still would have had to take action in order to get out there and learn the rest of the lessons. And so don't be afraid of failing. Don't be afraid of, you know, losing some money on your first deal or two or three. I mean, like that, that is just the way that it happens sometimes. The great thing is that real estate is forgiving. And so over time, and so that is where we've elected to pretty much buy and hold everything. As I said, patient capital. Some of our deals have went sideways, some of them, we've spent way more than what we expected to. But over the long term, you know, if my intent is to hold these 10, 15, 20 years or more, it's going to work out. And so that's where I just tell people like, don't be scared to, that everything's not going to go right. It's not going to go right. So just go in with that expectation and you won't be disappointed. And, but you're going to learn and you're going to be better for the next one and then the next one and the next one. And that's how we've just incrementally taken, taken on larger and larger projects because we learn and we, we grow, we adapt, and then we have the skills and the knowledge to be able to do something a little bigger, a little different, and you grow from there.
- [49:55]
B
Great advice. And, and to your point about taking the lumps is that those are lessons you learn that you then apply to future projects. We talked a little bit off air about, you know, you working through and finalizing this historic development. And you know, you mentioned having spent way more than you expected. And you know, you may or may not round out with the credits you receive, whether or not it was worth it. But at the end of the day, it's like, now I have this experience that I can take on to the next project, and you better believe that this next project we take on, there's going to be some inefficiencies that you're able to improve upon, and it's only going to benefit you long term. So it's almost got tuition. Sometimes life is about paying tuition. Whether you pay tuition to an institution or you pay tuition on the projects you take on, that's your choice.
- [50:40]
C
Yeah, I used to call it stupid tax. I've tried to reframe it now as tuition makes me feel better because tuition implies that I'm, you know, paying something. I'm investing in myself to get better for the future. And that really is what it is. You're exactly right. So when we can go at it with that attitude, we're a lot happier along the way as well. So pay the tuition, learn the things, and then put it to work on the next one.
- [51:03]
B
Yep.
- [51:04]
A
As you, as you look forward and you Go into what the, what the next phases are. Are you looking to solely stay in Marion, or are you considering doing some other local communities or what is it? What does the future look like for you guys as you get into 5 to 10?
- [51:19]
C
I'm thinking about that some more. We still have a couple other projects, at least, that we're looking to do that are of some size and probably some smaller, you know, infill things or, you know, maybe a little bit more on buildings that we already own. So there's. There's plans for the next few years at least, but, you know, beyond that, I don't know for sure. I'm kind of holding. Holding my plans loosely. I definitely think that there's opportunities in other communities. I've seen that with some other developers that I've become really great friends with, and I think there's opportunities for partnerships. I think there's opportunities for, you know, maybe taking down some things together with some others that I've met. So. Tbd, stay tuned on that. We'll, you know, circle back in a few years and I'll give you an update on where, where life has taken. I didn't ever think that I'd be here, so I don't. Yeah, I don't place any bets or, or talk in absolutes at all about where I'm going to be in, in another five to ten years. But I'm. I'm grateful for the journey. I'm grateful for everything I've learned and continue to learn and, and the people that I've met along the way. I mean, this is what makes life worth living. And so I think, think that it's really meaningful work that I've enjoyed. And so we'll see where it goes from here. So stay tuned.
- [52:35]
A
So, so true. I keep seeing posts on Instagram that are like, with the 2024 version of you and the 2025 and 2026, if they all got together, they would have no idea what they're talking about. And that's, that's what happens when you're taking massive action and be like, whoa.
- [52:48]
C
Whoa. Yeah. Whoa.
- [52:50]
A
Okay, cool. All right, universe, what do you got?
- [52:52]
C
Yeah, yeah, exactly.
- [52:55]
A
Well, this was awesome. Thank you so much for coming on. This was so great on so many levels. Like, Raphael said that you just touching on things that don't normally get talked about, but it's real. And clearly, even though this stuff is happening and things you deal with, you're still in the game. You're still doing it. You're not going anywhere just because it's hard. Doesn't mean you quit, it just means you go. Okay, this is the hard I choose. So thank you so much for coming on.
- [53:17]
C
Yeah, my pleasure. Thanks again for, for doing what you guys do to educate the community. And so it, I, I am happy to share some of my lessons as well and keep paying it forward because again, this is work that needs done in so many different other communities and so I'd love to see it happen. So folks are out there and want to reach out if I can be a resource. Happy to do so.
- [53:39]
B
Yeah, if you don't mind, share a little bit about how people get in touch with you if they have any questions or just want to reach out.
- [53:45]
C
Yeah, yeah, sure. So I also have a podcast. I am in a little bit of a break here currently, but recorded 52 episodes of the Main Street Reimbursement Reimagined podcast. And so that's unpacking some of these lessons and it's talking with some of the different entrepreneurs that have started in our community and also going to other communities and talking with developers there. And so again, if this type of stuff interests you, I think you would find some value there. So again, it's the Main Street Reimagined podcast. You can follow along on our socials. It's Henry Development Group or Luke Henry. You know, welcome to Reach out personally and you know, I do a lot of tours here in Marion and so we're always happy to add value. If somebody's passing through or wants to make a trip, I, you know, give them a little bit of a nickel tour around of what we've done and how we've done it. And just like with those lender tours, I'm kind of an open book because I just, I want to see this happen in more places. So if I can help make that happen, I'm happy to do that.
- [54:44]
B
Great. And we'll make sure to incorporate that in the show notes so you guys can reach out to Luke. But Luke, we obviously greatly appreciate your time. I know I got a lot of value from this episode. I'm looking forward to hearing the feedback from the audience again. Thank you again for your time. For those of you guys who are watching on YouTube, please like and subscribe. It makes a huge impact on our ability to reach a broader audience and we greatly appreciate the support along with that. If you guys are watching this in a podcast format, whether that's Apple Podcast or Spotify, please, please, please leave a five star review. The more five star Earth review reviews we achieve the broader reach we achieve, and ultimately, more and more people will be inspired to take on their first real estate development project. So thanks again so much for tuning in, and we'll see you all next time.