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Northwest Arkansas's go-to show for real estate agents, brokers, and investors looking to zoom in on the local market. Join us as we sit down with the leading voices in the area to hear how they're investing in NWA.
Hosted by (in order from left to right) Brian Wagers, Zach Stanley, and Brandon Still.
Zach Stanley: [00:00:00] Welcome back to Northwest Arkansas Investing Podcast. Today, we're sitting in The Blume, and our guest owns a building. TJ Lefler is the founder of Lefler Capital and former principal at Sage Partners. He built a portfolio of roughly 30 commercial properties worth more than $250 million across Arkansas.
The room we're sitting in, in this, is his playbook in action, turned a nine-story classic A tower across from the original Walmart home office into a modern amenity office campus. TJ, we're glad to have you with us. We had you on, gosh, I can't even remember what episode. It felt like probably a year ago.
Yeah,
Brian Wagers: just search NWA Investing TJ Lefler and it'll pop up. Yeah. That was a great one too.
Zach Stanley: It feels like about a year ago when you were just kind of talking about this project, and- I think
TJ Lefler: we had just acquired it.
Zach Stanley: Just acquired it. Yeah. Mm-hmm. And so we're, we're now sitting in the, uh, realization of that.
Um, when you walk inside a building like this before you buy it, what do you see that most investors walk right past?
TJ Lefler: Well, I, I buy local, so I, I'm from Arkansas, born and [00:01:00] raised. Yeah. And so far I've only bought in Arkansas, so I just feel like I have a local perspective of what the people want here, mainly because it's what I would want.
Zach Stanley: Mm-hmm.
TJ Lefler: And so I look at, I look at offices or any other- Mm-hmm ... class of real estate for that matter, and I just think, is it, is there something I can make it more fun? I like, I like fun. Mm-hmm.
Zach Stanley: Yeah.
TJ Lefler: Is there something I can do to make this more fun for you to wanna be here?
Zach Stanley: Mm-hmm.
TJ Lefler: And then I think about on a real estate perspective, if this is gonna be on the market for lease, how are we gonna up the competition?
Mm-hmm. You're looking at 20 office buildings. Why would you choose us? Yeah. I wanna give you 10 reasons to choose us over somebody else.
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So when you walked in this building to start, you, you saw a, a big opportunity there, correct? It
TJ Lefler: w-
Zach Stanley: you were- Yeah ... you saw-
TJ Lefler: It's a great location. There were so many things coming, and thankfully almost everything we said to, like, our investment group who's behind us on this has happened. Mainly the infrastructure on the roads.
8th Street goes to the interstate.
Zach Stanley: Mm-hmm.
TJ Lefler: It was under construction. You couldn't get here from the interstate. That has opened. It's a multi-lane road that's super easy to get [00:03:00] to. Yeah. The park catty-corner to us that's under construction, it's either almost complete or it'll be complete, I think, later this year.
Yep. And it's, um, it's happening. And then across the street, the old campus, you know, we didn't know what that was gonna be or do, but it is currently being demolished, as you guys could see. Yeah. It's, it's a huge tear-down, and that's gonna be a new STEM college. So that, we're excited- Wow ... about that too.
Brian Wagers: That's, that's gonna be awesome. Yeah, that's, like, fresh couple days ago. Mm-hmm. Those renderings that came out. Those look amazing.
TJ Lefler: It looks amazing. Yes, really cool. We're excited about that too. But the building is a very Class A nice. Vendor-wise, has all the things you want as far as docking goes for product storage.
Brian Wagers: Mm-hmm.
TJ Lefler: Um, conf- everything, every office is like, like you would want. Yeah. But a lot of other buildings have the same thing. So whenever we were walking through this I, I don't know. My, my gut was just like, we need to make this more, more Bentonville, the way Bentonville is now. This building is almost 20 years old.
Zach Stanley: Mm-hmm.
TJ Lefler: And it was built like a normal office building. Mm-hmm. But Bentonville has changed a lot in the last [00:04:00] 20 years. Yes. A lot. And so you can see what all we're wearing in here, which is either a no collar or just a collared T-shirt. Yeah. We're not wearing suits. Um, we like to bring our dogs to work. We kind of bike to work up here.
Mm-hmm. Some sort. Uh, yeah, yeah. Um, but we, um, we just wanted you to feel like you can be anything when you're in the building, and so we've colored the building up in the lobby. You can see- Yeah ... we colored it up. We have a lot of art that was either commissioned or we bought and placed in the building.
Mm-hmm. Um, we redid every floor, the bathroom. We did modernize the bath- every bathroom in the building, but essentially the building is just, it's got more smell. It's got more sound. Mm. There's music in the building, in the elevator lobbies. Yeah. It's got a lot more color to it. It just, we talked about it earlier, the, the vibe.
Yeah. Mm-hmm. Like, it just feels- Yeah ... more fun to be here. And, like, post-COVID office environment, you know, you don't have to be in the office every day. Yeah. So if we're trying to get you to come to the office, whether you're the CEO or the manager of an office and you want your [00:05:00] employees to be here, let's collaboratively together give them a reason to wanna be
Zach Stanley: here.
Right.
TJ Lefler: Mm-hmm. Which is this lounge that we're in, this 5,000 square foot lounge that we converted. This is just hangout space. Mm-hmm. There's a cool kitchen here. We have lunches. Mm-hmm. We have breakfast, cereal bars. We have happy hours with beer and wine. We have the golf simulator y'all saw. Heck yeah. We have all this here to want you to be here, but that was our idea, was get people to want, want not only just come to the of- want to come to the office, and want to hang out, and want to collaborate, want to meet people.
Bentonville is already a place where we all do this all the time. Like I was telling you, y'all did this for this podcast. Mm-hmm. You guys have other jobs. Yeah. But, like, you're so entrepreneurial, you came up with a new idea on top of that just because, like, that's what it's like. Everybody does that around here.
Yeah. Your environment here is like, let's go. Let's create. Let's build. And so that's kinda what we saw that we needed to put into the building.
Brandon Still: Yeah. Was there any inspiration from certain buildings around Northwest Arkansas or experiences that you've seen elsewhere- ... that, that kinda went into this, or [00:06:00] was it just kind of a mix of, of everything?
TJ Lefler: I don't think this has been done here. I don't know why we came up with it the way we did. It was total- You know, uh- Just passion.
Brandon Still: Yeah, yeah.
TJ Lefler: I
Brandon Still: think it's
TJ Lefler: a- I mean, I came up with a name. We did use a, a branding company to come up with a name. We ended up with the name. I came up with this name. I was on vacation on a run, and I saw this name on a, a multi-use complex, and I was just like, "Oh, god, that'd be really cool up there."
You know? Yeah. Like, your office comes in here and grows with it, with here, with us. Mm-hmm. And, um, but the amenity thing, I think, you know, other, other buildings like The Ledger and things, they... there's co-working buildings. We- Yeah ... we are not a co-working building.
Zach Stanley: Right.
TJ Lefler: But there are, um, you know, Pinnacle's got one with Mrs.
Hunt, too. They, they have offices where you walk in and you're... The idea of collaborating with other people, not just your own office- Mm ... that, that was a part of it. Um- Right ... but this is really just an amenity for the building. Yeah. So you don't have, we don't have day [00:07:00] passes. If you're a, if you're a tenant in the building, a new tenant coming to us, you can have this lounge.
Mm-hmm. And if you're a current tenant, we're adding it on as an amenity fee, but-
Zach Stanley: Right ...
TJ Lefler: um, but the new tenants that come here, it's kind of part of the package.
Zach Stanley: Yeah. It
Brian Wagers: looks great when you walk in. Like you said, like, I got a good feeling when I came in here, like the vibes and the
Zach Stanley: house. Yeah, I think, like, it...
I'm trying to think of how to say it, but it just feels good. Like, it- Mm. I don't, I mean-
Brian Wagers: I like the name, too. The Blume, it looks like, looks where it should be. Mm-hmm. And- Yeah.
Zach Stanley: Yeah ...
Brian Wagers: I think that's a unique perspective, like you talked a- you're putting yourselves in, in the shoes of the end u- like, what would I...
Like, if I was an off- like, if I was officing here, too- Mm Mm, mm ... serving to Walmart or not, what would I like? I think that's- Yes ...
Zach Stanley: unique. Yeah. Yeah. Well, I, I, I was trying to think of a way to frame this question, but it- How do you, when you walk into a building like this, like how do you make it simple when you feel maybe other investors make it complicated for, for a deal like this, when you're structuring it, putting it together?
I don't know.
TJ Lefler: Yeah, definitely, I see a lot of other like pro formas and financial models, [00:08:00] and when you're sending those out to investors... And, and keep in mind, my investors that like we have here and other buildings that we have, they're not institutional companies. It's, I would, you know, in quotations, friends and family money.
Mm-hmm. They're either high net worth people or they're literally friend... Just whatever we, um... It's not, they don't need to see a 30-page in depth- Yeah ... 'cause they, at the end of the day, they're trusting, they're trusting me and the other general partners that I have in a particular
Zach Stanley: deal. Mm-hmm, mm-hmm.
TJ Lefler: Now, we need to show them the numbers, and you gotta show them the income and the real expenses, and I'm gonna show them the plan of what I wanna do.
Zach Stanley: And just say, "Bro, trust me."
TJ Lefler: Yeah. So you don't, you don't... I do more than bro trust me- ... but I also don't do a 30-pager that they're like, "This is so weedy. I'm in the weeds." Yeah. And honestly, I don't know if this is really gonna happen. Mm-hmm. Like you're telling me in year three I'm gonna do all this stuff and my IRR is gonna be this, but- And where
Brian Wagers: do you underwrite that the STEM university is gonna be?
TJ Lefler: Yeah, we don't- Yeah, we don't know. I mean, we don't, we didn't know that, but- Well- Yeah,
Zach Stanley: but- Well, I, I, uh, uh, diving into that, [00:09:00] do you feel like at the beginning you had to do those 30 pages, then the, the trust be- developed over time with these investors, and then now they're like, "Okay," like, "We need to show you this, this, and this"?
Or how did that work at the start of y'all's relationships? I mean...
TJ Lefler: Um, well the start, I wasn't smart enough to do that
Zach Stanley: anyways. It's probably the right answer.
Brandon Still: So the more complex
Zach Stanley: as the
TJ Lefler: deal size has gotten larger, right? It's kind, yeah, it's kind of the other way because I wasn't... I have a finance real estate degree, but most of those classes were geared towards residential anyways.
Yeah. And, and so I just, it wasn't like an office building like this. And so what I've, what I've learned is reputation is just a really big deal for people to trust you, so I started on smaller deals and they kind of got bigger, and then I'm gladly use partners. Mm-hmm. And so like I have, like on this building, it's a bigger deal.
I have four general partners, not just me, that are in the building. Yeah. And they all have an expertise. There's an attorney, there's a development partner, there's a brokerage partner, and me. Yeah. And so we all kind of have our strengths, which we use each other's strengths totally and trust each other totally.
Zach Stanley: Mm-hmm.
TJ Lefler: Um, like we do that, and then [00:10:00] we, um- We talked to our investors kind of about our cash on cash is a really big deal. Where we are today, like this building, for example, was 50% occupied- Yeah ... when we bought it. We're now at 86% a little over a year in.
Zach Stanley: Congrats. That's awesome. Yeah.
TJ Lefler: And it's, we're, we're working on our way up, but we've only, we, uh, we unveiled the building not, not more than 60 days ago.
Zach Stanley: Yeah.
TJ Lefler: It had been under construction for a while because we've, we've put, I don't know, 4 million-ish into it. Yeah. But, um, but it took a while to get all that done. But we've had weekly meeting, but there was, the ultimately our investors know that we're week- meeting weekly and even more than that, showing the building, working on construction, bidding.
We bid out, like our development partner bid out the thing, everything three or four different ways. Um, so we just kinda had a big team on it and I shared in everything. I could have You know, taking it in and done it all myself.
Zach Stanley: Yeah.
TJ Lefler: I realized a long time ago that I can't do that. Yeah. Like, I can do that on one project, not this big, but like one.
Zach Stanley: Yep.
TJ Lefler: But if I- my goal, you know, with my [00:11:00] company is to take the 250 million to 500 to- Mm ... a billion dollars in like, in assets.
Zach Stanley: Right.
TJ Lefler: And in order to do that, I have got to not only have partners and share the wealth, but I've gotta have employees that come along and help too.
Brian Wagers: Right. Speaking of that, when did you bring on Bradford?
TJ Lefler: So Bradford came on a little over a year ago, and what I like about Bradford is he's got these strengths that I don't have. Mm. So like, I love buying things and making them better, and I do that because I'm- I feel like I'm not as educated, and I just, it's already built.
Zach Stanley: Yeah.
TJ Lefler: He has got the development knowledge.
And so taking something from ground up, I've done it, I just don't feel like I'm very good at it. Yeah. And so he is way better at it, and on top of that, I trust him, he trusts me. Yeah. And so, um, he has come on, and now we have multiple things either under construction, under contract. We've got town homes we're doing.
We're doing actually four randomly, we've never done this before, but four custom homes- Okay, cool ... downtown Bentonville.
Brian Wagers: Cool.
TJ Lefler: And they're really high-end.
Brian Wagers: Yeah.
TJ Lefler: We just bought this land, and, uh, we paid a lot of money for it. We're like, "What do we do with it?" And so we just liked it, and so that was what we came [00:12:00] up with.
Zach Stanley: Yeah.
TJ Lefler: And so he's running that deal. Um, but on this one for example, I kinda had the vision, but when I go do the bathrooms, and I do the lounge, and I'm talking about how to get the budget down but also get the quality up-
Zach Stanley: Mm-hmm ...
TJ Lefler: I get frustrated pretty quick- Yeah ... with, you know, the numbers, and they're all too high all the time.
As y'all know, you know- Yep ... construction numbers are always too high at first. Mm-hmm. You gotta figure it out. And so he took all that on. Yeah. So he made it kinda... He's a big reason why it's-
Zach Stanley: Sounds like all your GPs are very str- strategic and strong- Yes ... in areas that you might be weak, and that sounds- Yes
like a big part of the success here.
TJ Lefler: And I'm totally willing to share in all that. Yeah. Because you know what happens after this deal? Another one comes. Mm-hmm. And then another one comes, and then... And you wanna, you wanna have a reputation where you get that next phone call on that next deal. This was an off-market deal that we got the call on.
Mm-hmm. And so I wanna make sure that we share in everything and I'm not stingy, and that way when this is done, could I have made a little more personal money? Maybe. Mm. But I wouldn't get the next deal. Right. And so I'd rather, I'd rather do more deals [00:13:00] with more people and have more fun.
Brian Wagers: Yeah, 100%. That's great.
What's one thing... So we, we, I know you don't get too much into the weeds of the underwriting, but what's so- one assumption for value add projects like this and other ones, strictly value add, what's something that you always try to underwrite?
TJ Lefler: Well, I, I do know, I know the market pretty well here, you know.
Um, and so when I'm underwriting, and, and luckily now, you know, we've, we've really focused on developing relationships with brokers to get to see more deals. Mm-hmm. So we're seeing all these deals coming in. Yeah.
Brian Wagers: Yeah. We talked a lot about that on the last episode-
TJ Lefler: Mm-hmm ... so
Brian Wagers: for people to listen.
TJ Lefler: Yeah.
Brian Wagers: Yeah, yeah.
TJ Lefler: And when I'm getting these deals though, you get pitched deals, and a lot of them are like, "Well, yeah, it's here today, but in a year it's gonna be way over here. It's great." Mm-hmm. And I have to like- K- k- take that in and say, "Is that accurate?" Mm. Like, are we really gonna triple the rents in a year or something?
Zach Stanley: Yeah, yeah.
TJ Lefler: And so for me, I have to really figure out where we really are on income expenses. Are there any major expenses, mainly capital expenses [00:14:00] we don't know about- Mm ... that will really kill you? Like, like it could be elevators, it could be a roof- Mm-hmm ... it could be heating and air. The more you- How much does
Brian Wagers: that keep, cost to upkeep here, right?
TJ Lefler: The... Oh, yeah. The upkeep alone is one thing. But if, but if like, well, elevators in particular. Those- You take those light bulbs that you think you can go replace a light bulb. No, it's $12,000 for a light bulb. Oh my gosh. No, I'm just- Yeah, yeah, yeah ... I'm joking. Yeah. But it's because they're proprietary in the way they handle- Yeah
those elevators are so safety. Mm-hmm. You can't just go replace a light bulb.
Zach Stanley: Yeah.
TJ Lefler: But you have to kind of know that kind of stuff, and that'll eat you up. Um, the heating and air, for example, is another big issue that could eat you up also.
Zach Stanley: Mm-hmm.
TJ Lefler: Um, so I look out for major capital expenses. I make sure the income really is coming in the way it's supposed to be coming in.
And then using my market knowledge, I kind of know where I feel comfortable going with the rent. Mm-hmm. So on some buildings, and it could be a warehouse building or whatever, and maybe the warehouse rent is $7 a foot.
Zach Stanley: Yeah.
TJ Lefler: And I know the market is 12, but what is the condition of the building? So I'll go in there and figure out, [00:15:00] yes, if I can buy it, do X, Y, Z to it, make it more of a market building, I can go to 12.
But you've got to make sure those expenses and the construction cost to get to that number is gonna be right. Mm-hmm. Mm-hmm. So there's just a lot of assumptions that you get from peop- I- ultimately, it's, it's me- Yeah ... and what I think. But you've got all these brokers, contractors, everybody else is gonna help you.
But at the end of the day, you can't totally trust.
Zach Stanley: Yeah.
TJ Lefler: You gotta trust yourself, because if somebody tells me it costs 200 grand to redo this to get it to X Yeah, do you believe it or not? Yeah. Like, I have to figure that stuff out on my own.
Zach Stanley: Yes.
TJ Lefler: Once I'm good with all that, to get it from point A to point B, I can get that rent up to the market rent, and it kind of works.
Zach Stanley: Mm-hmm.
TJ Lefler: But that's, that's the major stuff that I look at. Um- Mm-hmm. Yeah ... uh, you know, uh, after, after that, you know, there's so many financial metrics you can look at and tell investors your return is gonna be X, Y, Z, whatever. And also, I, I like cash on [00:16:00] cash, 'cause I like telling people, "You give me 10 grand, I give you a grand back a year, 10% return."
Brian Wagers: Yep.
TJ Lefler: There's more to it than that. You're paying down debt. There's appreciation.
Brian Wagers: Mm-hmm.
TJ Lefler: But I don't like telling people it's a 40% return with all that when it doesn't feel like that.
Brian Wagers: Right.
TJ Lefler: If I'm giving you $1,000 back, it feels like a 10% return.
Brian Wagers: Yes.
TJ Lefler: Um, so I keep that kind of stuff simple. But after I do what I say I'm gonna do and make it, make it, um, point A to point B, and I kind of add the value-
Brian Wagers: Mm-hmm
TJ Lefler: I don't, I really don't know what the return's gonna be. Yeah. I just know it's gonna work. Yeah. Because if I'm, if I'm taking a property that's below market, and I'm making it a market property through redoing it and getting that $7 rent to 12- Mm-hmm ... you know that's a good deal. Now, how good is that? I don't know, because in three years, the market up here changes so much.
Brian Wagers: Yep.
TJ Lefler: Traditionally, it's going up, but I, I just know it's gonna work. Right. So I hate telling people it's gonna be a 1000% return. Mm-hmm. Yeah. It may not be, but I know it's gonna work.
Zach Stanley: Right.
Brandon Still: Right.
Brian Wagers: Yeah. And for the guys [00:17:00] listening not on Spotify or YouTube, TJ was patting his, his gut
Brandon Still: right there. That's
Brian Wagers: right.
Yeah, you're right. He could feel it right there. A
Brandon Still: lot of it is that knack and that gut. That's right. Uh, I want to go back to your time as a broker, too, just a little bit. You spent about 16 years as a broker, and then kind of went into, into where you are now. What do you think you learned from being a broker that sets you up really well to, to do what you're doing now?
TJ Lefler: Yeah, so being a broker, I g- I get a lot of people, you know, coming out of college that, that want to get in this business, 'cause it's fun, obviously. Mm-hmm.
Brandon Still: And,
TJ Lefler: um, being a broker, you see so much more.
Zach Stanley: Mm-hmm.
TJ Lefler: You're not as in the deal as I am, and I don't know- You know, like I feel obviously super obligated to this building in particular, or any building because I've, I have like a loan against it, I've got debt against it, I've got investors.
Brian Wagers: Mm-hmm.
TJ Lefler: Um, but if I own, you know, 30 or 40 buildings, I might do 30 or 40 transactions a year as a broker. So you see a lot more and a lot more array of properties [00:18:00] and things- Mm ... going on. So I do like that. I like that I did that.
Brandon Still: Mm.
TJ Lefler: Um, but it, um... It's just like a, it's just a piece of, like, knowing the market.
Yeah. So now, now I feel like I know the market so much better. I'm getting pitched buildings to buy that I helped lease 10 years ago.
Brian Wagers: That's,
TJ Lefler: that's real. And so now I'm able to like, "Oh yeah, I know that building. I remember the clear height," and whatever it is.
Brian Wagers: Yeah.
TJ Lefler: And I can either say yes or no.
Brian Wagers: That's amazing.
TJ Lefler: Yeah.
Brian Wagers: You were part of the sending out the ROSI proforma. Like, you know, as a broker, did you ever like... I mean, I guess it-
TJ Lefler: So no, I didn't get that far because I, I wasn't gonna like tell people you should... I, I, I was really more saying, and I get this now 'cause I... It, it is funny 'cause I'm on different sides of, like I'm either a landlord dealing with a tenant on a lease, or I'm like, as a, I'm a buyer now, not the broker.
Brian Wagers: Mm-hmm.
TJ Lefler: As a broker, you're traditionally, you know, there's obviously there's some salesy people that are just like, "This is the best thing ever," but they don't know. They just... Here. Yeah, yeah. Um, I always, as a broker, I knew it was a good deal, but I couldn't li- I [00:19:00] didn't develop like a financial model or something.
I just would kind of send it to them and say, "Here's why it's a good deal."
Zach Stanley: Mm-hmm. "
TJ Lefler: There's nothing like this on the market. I know compared to comps, it's below market, it's off market," whatever it is. Yeah. That's kind of as far as I got. Yeah. Um, now that I'm the owner, I'm taking... Now brokers are doing that to me now, and I'm taking that information and I'm, and I'm plugging it in on my own, and they're right, but they may be missing something like even though it's a good deal, it's off market, if I buy it for this and I lease it for this, I still break even.
Yeah.
Zach Stanley: Yeah.
TJ Lefler: For example, one of the big things for me, and this is like not exactly right, but- I- if you think about a normal deal and you're just getting a loan, 80/20 loan- Mm-hmm ... putting 20% down on a property, and you talk about cap rates on buildings, a lot of, a lot of these commercial buildings, they talk about cap rates, and they take the NOI and divide it by a cap rate, and that's kind of the price.
Zach Stanley: Mm-hmm.
TJ Lefler: Well, if I pay an eight cap, which is a really market cap, it's an 8%, [00:20:00] and if it was an all cash deal, it's like an 8% return.
Zach Stanley: Mm-hmm.
TJ Lefler: But if you leverage deals up, you think you get a higher return because you're not using all of your own cash on a deal.
Zach Stanley: Right.
TJ Lefler: But rates right now are like, whatever, mid-sixes.
Zach Stanley: Yeah.
TJ Lefler: It actually, they pitched me deals at an eight cap, and I'm getting a loan for a six-and-a-half cap. If you put that in a model, it actually, like, is a 2% return.
Zach Stanley: Yeah.
TJ Lefler: It doesn't really work.
Zach Stanley: Yeah.
TJ Lefler: So not everybody knows that, but after you do that a few times, you're like, "I have to quit looking at eight. I gotta look at-" Yeah
you get... Or I gotta figure out a way to take that and twist it around and get a new tenant or add some building- Yeah ... and make it a higher deal to make it make sense. Sound like you
Zach Stanley: have a really good filter for-
TJ Lefler: I think so. Yeah. And I, and I mean, you know, I'm, I'm not always right. I mean, there's definitely deals that I get pitched that I don't like the area, and I turn around a year later, and I look at it driving by, and I'm like, "Oh, dang it."
Zach Stanley: Yeah, yeah. "
TJ Lefler: I should've done that deal." Yeah. There's definitely a few deals in my head that I see multi-level buildings going up, and I was like [00:21:00] 300,000 off from it. It looks like it's a $40 million project, and I'm like, "Shoot."
Zach Stanley: Yeah. Like,
TJ Lefler: I should've just, I should've just paid it, you know? Yeah. But I couldn't do it, and so I just...
But I also So far I hadn't had... I don't want a bad deal.
Zach Stanley: Yeah.
TJ Lefler: And I-
Zach Stanley: On, on this deal specifically, you know, you just wrapped up, what? 60, 60 days ago or so with construction. Was there any part from like, you know, we, when, when we first started our podcast so 60 days ago that, like, you were thrown a curve ball, um, in this deal?
Or was it, was it as you underwrote, like pretty straight forward?
TJ Lefler: Well, yeah, we've, we've had a lot of, we've had a lot of curve balls. Um, not huge ones. Okay. It's all up and down. So when you buy a building like this, you know, so like I said, we were, we did the bathrooms, we did the lobby, we did the lounge, we did pickleball, we did it outside, we did all new landscaping.
And when you do that before you buy, like we don't have everything hard bid. Mm-hmm. We're just like, "Okay, I think this is gonna be $50,000. This is gonna be $8,000." And then you get in here and like, well, this, this lounge in particular was an [00:22:00] old tenant space.
Zach Stanley: Uh-huh.
TJ Lefler: And the large conference room that we have for the tenants that holds like 80 people- Yep
that actually mostly was there.
Zach Stanley: Mm.
TJ Lefler: We didn't touch that room until like, I don't know, I'd say 120 days ago. Yeah. Well, we get in there, and we're like, "Shoot, the technology doesn't work."
Zach Stanley: Ah. "
TJ Lefler: Why doesn't it work?" Well, we thought it worked And so we kind of had to get all that redone. Right. And so there are, there were definitely ups and downs.
I, I think, I believe we are within, like, $100,000 of our budget. Oh, nice. Which is really good. And it honestly-
Zach Stanley: Really good ...
TJ Lefler: I could not have done that at all.
Zach Stanley: Yeah.
TJ Lefler: So, and like in my company now, when it started out, it was just me obviously, but now I have project managers. Mm. And the project manager oversees the property manager and our contractors, and just makes sure on a weekly basis that things are going well.
Zach Stanley: Yeah.
TJ Lefler: So he's involved. Of course, Bradford got involved, and we're bidding out all these different projects. Um, we also did things like, like on the lounge space here We had drawn in bathrooms for the lounge.
Zach Stanley: [00:23:00] Yep.
TJ Lefler: Um, we got into it, and we realized that was gonna be another 3 or 400,000 bucks.
Zach Stanley: Mm.
TJ Lefler: And we were like, "I mean, they're down the hall.
Do we have to do them?" So we cut those out.
Zach Stanley: Yeah.
TJ Lefler: But there was something else, I'm trying to think of what it was, that, that took us over budget somewhere else. It just, it, it
Zach Stanley: definitely was- Well, the great thing is, is it doesn't sound like... I mean, that sounds like those are more like maybe change-ups as opposed to, like, a big old sweeping curve ball or something like that.
Yeah. Like-
TJ Lefler: Yeah ...
Zach Stanley: it, it was... I mean, and of course when you're underwriting a deal, you're, you're underwriting for, like, okay, what if something happens here? What if something happens? You're, you're, you're- Yeah ... you're, uh, we'll call in sales, like, blocking your exits and things like that. Yeah. So I mean, that, that sounds great for a project like this.
Like 100K off- Yeah ... on something like this. Yes.
Brian Wagers: 40 mi- well, over 40
Zach Stanley: million, right? 40 million.
TJ Lefler: Well, it i- it is. Well, I'm-
Brian Wagers: Four million construction budget. Really the four million is what I'm talking
TJ Lefler: about. Four million construction budget. Yeah. Yeah.
Zach Stanley: That's a great percentage.
TJ Lefler: Um, there, we are right. We really just swapped things out.
For example, I really wanted to do, like, LED lights all over the building. Mm. I had, like, this rain effect I was gonna do. And you know, have you ever priced out LED lights? They're like- No ... a million dollars.
Brian Wagers: That's what I was gonna say. [00:24:00] Million dollars
TJ Lefler: later. I was like, "You get those on Amazon for like, or Walmart, like .com for like 20 bucks."
Like- Yeah, yeah,
Brian Wagers: yeah.
TJ Lefler: But no, it's, um- You know, it looks, looks
Brian Wagers: great without them.
TJ Lefler: Yeah, but I just, it looks fine without them. I kind of had to, like... I had a vision in my head, and then you kind of go look at it over and over and week by week, and you're like, "Okay, you know, I don't have to have them." Yeah. But for a while, I, like, really wanted them.
We did renderings and everything, and it's just kind of how it turned out.
Brandon Still: Yeah. Um- Yeah, how much of that, too, is just things that you want to do? Or do you, is there even a designer involved with a lot of this stuff? Or is-
TJ Lefler: Oh, yeah. Yeah. Yeah, I definitely need to mention the designer. So, um, the outside vision and the sign and all that, we had a group in Searcy called Think Advertising.
Brandon Still: Okay.
TJ Lefler: Um, they helped us with a lot of the logo. Mm. Like, we came up with a name. They ran us through all the other alternatives just to make sure. 'Cause when you unveil the name, you know, of course I, and I, like, I did kind of come up with this one, but we came up with others and ended up on it. I was super self-conscious that I was gonna, like, say it.
It's like saying a baby name. Mm. Like, "We're gonna name our son blah." They're like, "Really?" Like- I, so I just- Fixing to have him ... was worried about that. Yeah. So we kind of ran through that process They helped us with [00:25:00] like, um, sort of the color palette and the logo, but then the design company is actually my wife.
So her and her partner, Megan Teeter, they did all the interior on the lobby. Mm-hmm. The, uh, computer guy you see.
Brian Wagers: Yeah.
TJ Lefler: They commissioned the art on the bottom floor. It's local. A lot of this art is local artists in Northwest Arkansas. Oh, I
Brian Wagers: noticed that. Mm. So you definitely have to mention the- They did a great job
designer then. Oh, yeah. Your wife. They did... I
TJ Lefler: mean, they did an amazing job. I mean, the la- Yeah. Shout
Brian Wagers: out Mrs. Lefler.
TJ Lefler: That's right. Yeah, that's right. So it's Lefler Teeter Designs, and they did the lobby when you walk in. That was all white. It was just white. They colored that whole wall up. They designed that.
Um, the lobby, the lo- I mean, the lobby, the lounge in here, which was a complete redo with everything from the flooring to the chairs, all the wallpaper on every floor- Mm-hmm ... the moss wall. They controlled all that stuff. Yeah. So they did a great job, yeah.
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Brian Wagers: You talked about cap rates. And I guess what's the difference when you're looking at it stabilized versus going in cap rate? 'Cause this obviously was 50% occ- or less occupied- Mm ... when you had it. So I mean, I'm sure the go- going in cap rate was a lot different than, "Okay, here we are at 90%- Yeah ... full."
TJ Lefler: Cap rates to me are really only for stabilized assets.
Like, when you, when you buy something half full or half empty, however you're looking at it, the cap rate, you know, could be a two cap- Hmm ... which would definitely not make any money for anybody.
Brian Wagers: Yeah.
TJ Lefler: But once you fill it up, it's a 20 cap. Yeah. So, you know, I don't really look at cap rates unless it's a fully leased, stabilized asset.
And so, um-
Brian Wagers: More so [00:27:00] on the exit, I guess, too.
TJ Lefler: Yeah, so when- 'Cause
Brian Wagers: you're bringing it to the point
TJ Lefler: of stabilization. Well, yeah. So when I'm buying this, I looked at it more on a dollar per square foot because we paid 150 a foot for it- Mm ... which is, you know, a third of what it would cost to build it. Yeah. So we knew that.
But when I'm looking at it when it's fully stabilized, and then, yes, when we have an exit, that will be a cap rate. Mm. And so, you know, we, our goal here is to fill it up. Our goal was to do what we said we would do, and we just did that. Mm. And so let's let the market hopefully react to it, and it... We filled it up, and then we're gonna look at it and say, "Well, how in demand is this?"
Mm. "Should we raise rents?"
Brian Wagers: Yeah.
TJ Lefler: Because if we do raise rents, at that point, when it's stabilized, every dollar that we raise on our rent is gonna be on a cap rate, and you can kinda multiply that rent NOI by a cap rate. Mm. And so we don't know what the cap rate's gonna be at that time. You know, national office cap rates have been super high, which has made the prices super low nationally, but Bentonville's been a lot different.
Mm. So, [00:28:00] um, and Northwest Arkansas's been a lot different. So we're not really, we're not wor- we're not worried about what the cap rate's gonna be because we have so much vacancy to fill up that it really won't matter if it's a seven or a nine. It's just gonna be good for us because we did a good job filling up half of a empty building, which happens to be 250,000 feet, so it's a huge
Zach Stanley: Yeah.
It's a
TJ Lefler: big building. So it, it'd be different if it was a very small building, but it's just so big that-
Zach Stanley: Yeah ...
TJ Lefler: we look at it a little
Zach Stanley: differently. You talked a little, like nationally and locally, like macro and micro. Like, uh, when a lot of areas in the nation are experiencing like dead office space, like- Mm
why do you feel North- Northwest Arkansas is different in that space? I
TJ Lefler: think it's because of the players that are, that are here and the... and what, you know, what Walmart and JB Hunt and Tyson and the university has done to bring people to our area- Mm ... from all over the world. They're bringing them here for a reason.
They're all entrepreneurial people. They wanna grow in their career.
Zach Stanley: Mm.
TJ Lefler: They wanna d- you know, have a [00:29:00] great lifestyle. And so- We, here, it, it, people wanna come, they're coming here to work. They're coming here mainly to work in an office-type format. Yeah. We don't have a lot... We have all types of jobs coming in, but a lot of them are, you know, highly paid professional-
Zach Stanley: Mm-hmm
TJ Lefler: you know, workers that work in an office. Yeah. And so that, other areas just, I, I don't know if, and I don't know, of course, I can't talk about other areas 'cause I'm not there, but I know the major benefactors of our area are pouring money into new campuses- Mm-hmm ... and new, new buildings, and they're all focused on growing.
I mean, you can tell everybody that's, that's here, not only do they wanna grow, but they're investing in our area.
Brian Wagers: Mm-hmm.
TJ Lefler: Yep. And, yeah.
Brandon Still: What's
Brian Wagers: your take- Hard to
Brandon Still: find... Go ahead.
Brian Wagers: What, what's your take on different a- office asset classes? 'Cause I would say, like, you know, not as an office expert, but looking outside, you took this from, like, a B...
I don't know, it seemed like a B on the outside, into an A. Yeah. Like, what's your take on B class versus A class? Is there a C class office?
TJ Lefler: You know, [00:30:00] that's, um... It's probably a good question for, like, someone that does more broadly than I do. Yeah. Like, I, I, if I'm gonna do something for me and my company, I've gotta hang my hat on being different.
Zach Stanley: Mm-hmm.
TJ Lefler: I, I don't like just buying something because it's a good deal necessarily.
Zach Stanley: Yeah.
TJ Lefler: If I'm one of 20 options for you to go, like if you're looking for office space and there's 30 class B options, and I'm just one of them, I've gotta, like, hang my hat on myself with, like, well, I'm gonna win because of location.
Zach Stanley: Setting yourself apart.
TJ Lefler: Yeah. Yeah, yeah. And so I like, I do think, I do think and what I see is class A is growing here. I think, um, everybody wants the newest, coolest thing.
Zach Stanley: Mm-hmm.
TJ Lefler: You know, they wanna go to the newest, coolest restaurant.
Zach Stanley: Mm-hmm.
TJ Lefler: They wanna be in the newest, coolest office building. I mean, we already did go up on our rent on this building because we kind of threw in our amenity space here.
Zach Stanley: Mm-hmm.
TJ Lefler: And had... No one cares. They just, they just wanna go [00:31:00] to the coolest, newest thing- Yeah ... and be a part of the newest, coolest thing. And so everything we have in Northwest Arkansas is really pretty new. And so everybody's like- Mm ... where's the newest townhome? Where's the newest office? Where's the newest restaurant?
Zach Stanley: Mm-hmm.
TJ Lefler: So, um, I, I hear that, and if I'm gonna own office, I really want it to be something that is new and cool.
Zach Stanley: Mm-hmm.
TJ Lefler: Um, now, now a lot of people are making a lot of good money on class B and C office. Yeah. Mm-hmm. And it could be based off location. I mean, there's always gonna be a low-cost provider that's gonna like say, "Well, I've d- I've got the cheapest office.
Somebody's just gonna want an office from me."
Zach Stanley: Right.
TJ Lefler: I just don't personally want to do that.
Zach Stanley: Right.
Brandon Still: Yeah. It seems like Tom Allen has that same sentiment. We interviewed him- Yeah ... and, and it, he mentioned on, on one of the podcasts that they keep building these great buildings, and they keep having all these amenities, and they keep putting a price out that, that they don't think they can touch, and they keep touching it.
Yeah. You know? And it's like, I don't know if you've, you've seen the same. It seems like the expectation for tenants, which are usually v- Walmart vendors-
Brian Wagers: Mm-hmm ...
Brandon Still: keep going up, and you, they want the [00:32:00] golf simulator, they want the pickleball, they want the lounge.
Brian Wagers: Mm-hmm.
Brandon Still: Stuff like that is... I mean, is that pretty accurate to what you've seen out there?
TJ Lefler: Yeah. Early for, it's for sure an early sign of success. I think what we have, like we're having a pickleball tournament for our employees- Mm-hmm ... you know, this, this month. And I think... Like, we, I believe in it. I think it's a great- I think, and I, I'm not building like, like, like Tom is. Like, they're building new buildings.
I'm kind of buying these older buildings.
Zach Stanley: Right.
TJ Lefler: But I do think, like, if I'm gonna buy an older building, I wanna throw these amenities in there. Mm-hmm. Because I just feel like that, to me, is what sets it apart from others.
Zach Stanley: Yeah.
TJ Lefler: But he's right. I mean, you know, construction costs continue to go up, and I've been doing this 20 years now.
I cannot think of a year where they went down.
Zach Stanley: Mm-hmm.
TJ Lefler: They just continually kind of rise.
Zach Stanley: Yeah, yeah.
TJ Lefler: Um, home prices, commercial prices. So he... Every time, you know, you build a new office building, you're like, "Dang, this cost is crazy. Can we get this rent to justify the cost?"
Zach Stanley: Mm-hmm.
TJ Lefler: And that's what he's thinking, but he continues to do it.
Yeah. Because the market is just saying, "I wanna be [00:33:00] the newest, coolest thing." Yeah. And it is an employee retention tool for- Yeah ... that new company moving into that new building.
Zach Stanley: For sure.
TJ Lefler: And so if you move into this building, you don't have to necessarily have as many conference rooms, 'cause we've got them in the, the, in here.
Zach Stanley: Mm-hmm.
TJ Lefler: If you want your employee to take a break and hit some golf balls for 20 minutes, 'cause it's good for their mental health- Yeah ... we got that. We got the pickleball. If you wanna collaborate and meet other people, you can do that in here.
Zach Stanley: Mm-hmm.
TJ Lefler: So I just... And yes, it does cost more to be here than a Class B building, but I've just
In my head it works, and the, so far the market has shown that it works.
Zach Stanley: Do you, do you feel weary at all about that we keep throwing these prices out there and it keeps getting touched, and it keeps getting touched? And do you, do you have to forward think about like, okay, like is there a restabilization at some point?
Or do you feel like there's still more ceiling to give?
TJ Lefler: The reason I think we're gonna be okay, and this could be wrong in my head, is the bigger markets, if you go look at them- Mm ... they're way bigger than us. Yeah. I mean, a lot of them are [00:34:00] 10, $20 a foot plus triple nets. Mm-hmm. I mean, a lot of them, and I think Tom's doing this now too, but- Mm-hmm
some of these newer buildings that are being built are actually converting office rents from full service to triple net.
Zach Stanley: Yep.
TJ Lefler: And it seems to be working. Yeah. And that, peop- other big cities have been doing that for a long time. I remember when we were like at 25 to $28 a foot on new buildings- Mm ... which now it's almost double that.
But- Yeah,
Zach Stanley: mm-hmm ...
TJ Lefler: um, Dallas in particular, we were looking at another building, and Dallas was like 40 triple net, which the triple nets can be $8. Mm, yeah. So we're at 28, they're at 48. So the same company, which that's another thing we are fortunate here, a lot of these names that are here are in Dallas or Philadelphia or New York or whatever.
They're already paying- They're already- ... $20 a foot more there. Yeah. I know they think they don't have to here, but construction costs are kind of the same everywhere. Yeah. So they haven't really batted an eye at it because they've been paying it for years- Mm-hmm ... in these big markets. So I don't think we're in...
I mean, you know, of course anything can happen, and I'm- Yeah ... constantly worried about the national [00:35:00] economy and something happening, but-
Zach Stanley: Right ...
TJ Lefler: I don't see it right now.
Zach Stanley: Yeah. Um, when... I want, I want to kind of give an over-encompassing question. So we take a time machine back, and you're 25 years old, and you're a young investor.
What are like three to five things, it could be just three or if you want to name more, that you would like nail down as a young investor? You're just getting started, uh, either principles or things that you would do, kind of in that realm.
TJ Lefler: Yeah, I mean, everybody's built a different way. Um, I'm built in a way that I really don't want to fail at all.
Zach Stanley: Mm-hmm.
TJ Lefler: And, um, it's kind of like a fear, and so sometimes that can be bad. You know? Like, I know some of the, you know, larger, you know, people that we all know, influential people in the world, have failed a ton. Mm. Um, I mean, I'm thinking like Richard Branson or somebody. Yeah, yeah. That has like made, really, really successful but had a lot of failures also, but the successes all outweigh the failures.
Zach Stanley: Mm-hmm.
TJ Lefler: I don't like to fail at all. And I, I don't, and I, I think it hurts me sometimes from doing even [00:36:00] more.
Zach Stanley: Mm-hmm.
TJ Lefler: But I would say You know, don't go too fa- Because of how I'm built- Yeah ... you know, don't go too fast- Mm-hmm
but learn all you can. Yeah. And so when I'm talking to, like, younger people graduating college, like, don't worry about making so much money this year. Yeah. Like, if you're gonna be in this career, it's a lifelong career- Yep ... and it gets bigger and bigger and bigger.
Zach Stanley: Mm-hmm.
TJ Lefler: But you gotta spend the first years learning from other people, working for free, working for nothing, just learning how they do what they do.
Because information is so valuable that if you just didn't know something, it can ruin your first- Mm-hmm ... billion-dollar transaction. Mm. You get in there and you, you don't realize you need a new roof on something, and all of a sudden, kaput, there goes your contingency money.
Zach Stanley: Mm-hmm. Mm-hmm.
TJ Lefler: Mm-hmm. So I would say do whatever you can to get the people that know what they're talking about to give you information, and follow them around-
Zach Stanley: Yeah
TJ Lefler: and add, help them add value. You know, like, why would they give that information to you?
Zach Stanley: Yeah.
TJ Lefler: Give them something back [00:37:00] in, like, the way of something they don't have. Mm-hmm. So I would say yeah, just, just spend time learning.
Zach Stanley: Yeah.
TJ Lefler: And, um, you know, I, I have kids obviously, and work. I'm constantly helping them with things.
And I try to get them to learn on their own.
Zach Stanley: Mm-hmm.
TJ Lefler: Like, don't just ask me when you have an idea. Go research for a while. Mm-hmm. We have the internet. Mm-hmm. Don't use YouTube for-
Zach Stanley: Yeah ...
TJ Lefler: shorts. Use it, use it for, like, how do I build a business? Mm-hmm. Um, you know, that sort of thing.
Zach Stanley: Yeah.
TJ Lefler: Then come to me and say, "I've kind of done this.
What about this?"
Zach Stanley: Yes.
TJ Lefler: And so I would say, you know, as much learning as possible.
Zach Stanley: So, like, when a, when a, let's say, an intern from, someone from college comes to you, like, what... How s- how can someone like that, like, they have no real, like, head value. Like, how could they provide value to someone like you in your, in your shoes today?
Like, what would that look like?
TJ Lefler: So there's a lot of, you know, old-school tactics I still use today, driving around to properties- Mm ... checking on them today.
Zach Stanley: Yeah.
TJ Lefler: When I was a broker, you know, Arkansas's still not a... I mean, there's a lot going on here.
Zach Stanley: [00:38:00] Mm-hmm.
TJ Lefler: But you get outside of our Little Rock, Arkansas bubble, and, you know, a lot of properties are not listed online.
Zach Stanley: Mm-hmm.
TJ Lefler: Like, you have to drive by and see a sign. Even on commercial, you've gotta drive by and see a sign to know if something's actually available. Mm-hmm. So driving the market- Yeah ... what does that property look like today? I know what Google Earth says it looks like a year ago.
Zach Stanley: Mm-hmm.
TJ Lefler: But driving properties, giving good hands-on information- Yeah
actually talking to other owners and people that are in buildings, finding out from a tenant what's going on, information like that, that I don't have time to do-
Brian Wagers: Right ...
TJ Lefler: is very helpful. Very valuable. Yeah. Yeah. Very valuable to
Brian Wagers: me. And TJ dropped a ton of nuggets and tips on our last episode, too. I know I mentioned it before.
But, like, there's, like, the principle of making things be- like, which I believe in a lot in what I'm doing. But, like, make it, how can I make it better? And I think that's great. Yeah. Uh- Yeah ... Brandon, do you wanna take us through the fire round?
Brandon Still: Yes. We, we've got a little fire round- Okay. ... couple of questions- All right, cool
we'll, we'll run through real quick. Okay.
TJ Lefler: Yeah.
Brandon Still: Um, what do, what do you think the biggest mistake that you see in this market, uh, for investors that, [00:39:00] that do fail?
TJ Lefler: I mean, I, ugh, I think, I think our market is very getting inflated with national and international investors, and the other markets are very, like a lot higher on land prices and costs and everything, and where things are going.
We are a growing market, but are we gonna double in a year? I don't think so. Yeah. So there's a lot of people that buy things and overpay thinking it's gonna be worth it in a year. Mm-hmm. And it, it might be, but it might take 10 years.
Brandon Still: Yep.
TJ Lefler: So there, it's a little inflated, and then of course people's valuation on properties sometimes today when it's worth five, they want 20 because- Yeah
well, everything's better. And so- ... you have to like- Yeah ... scale that down a little bit. Yep. And we're definitely growing, but some- we're not growing as much as everybody thinks.
Brandon Still: Yeah. Yeah. Absolutely. I think you mentioned this one already, but most overrated metric that you see?
TJ Lefler: Um, I would say, um... Man, this is rapid fire, but it's making me pause.
What [00:40:00] kind
Brandon Still: of pause? You, you did mention cap rate at one point.
TJ Lefler: Yeah. I think, I do think cap rates can be, uh, overrated, o- overrated on a, on certain buildings. So, um- Mm ... if it's not stabilized, I don't really look at the cap rate. Yeah. Mm. So I do hear that a lot. "It's an, it's an eight cap, it's great." Um,
Brandon Still: that's- Mm
a good one. Yeah. Yeah. Yeah. Uh, best financial decision you've ever made?
TJ Lefler: So far, every deal has kind of panned out the way we've wanted it to. I think it's, for me, the best financial decision for sure is the ones that I didn't make. Yeah. I mean, the, the one, the properties that I've said no to. I, it is hard in the moment, like it's really...
I mean, I, of course the way I'm built, I want to, I'm kind of like a pleaser. Yeah. And so when somebody's sending me a deal and I'm looking at it, I'm like, "Yeah, yeah, yeah, yeah, yeah." And then I'm like, "Ah, it's kind of a no," but I don't want to tell them it's
Zach Stanley: a no. Yeah. Yeah.
TJ Lefler: Telling that, telling that person it's not for me is the best decision that you can make, because you wake up the next morning like refreshed, and I don't care if somebody else made a billion dollars [00:41:00] on it.
I just feel better that I didn't lose on it.
Brandon Still: Mm-hmm. That's good. Yeah. La- last one. Uh, asset type that's performed the best in this market that you have?
TJ Lefler: I'm still on the warehouse kick. Mm-hmm. Um, we just bought land on the interstate to build new warehouses, 10 acres in, um, in Springdale. I think, um, you know, I've got a lot of flex warehouse- Mm-hmm
and that's just super, uh, high in demand, low in supply.
Brian Wagers: Mm-hmm.
TJ Lefler: But a lot of the one, a lot of the stuff I have is older too, which really, you know, the cool thing about older warehouse buildings, they don't have problems still.
Brian Wagers: Mm-hmm.
TJ Lefler: Um, I'm now trying to do kind of freestanding... You know, warehouses are getting more popular, where, like, people want more.
Yeah, yeah. It traditionally was, "I don't care, four walls, I'll take it."
Brandon Still: Yep.
TJ Lefler: Now there's a little more to it, so I'm trying to build a little more, you can call it class A warehouse.
Brandon Still: Yeah.
TJ Lefler: Yeah. Um, but yeah.
Brandon Still: Is that flex with office and warehouse?
TJ Lefler: Yeah. It'll be fle- flex is office, like a, call it 80/20, where you got 20% office to it- Yeah
80% warehouse. But there's [00:42:00] amenities that people want: higher clear heights, uh, sprinkled buildings, overhead doors-
Zach Stanley: Mm-hmm ...
TJ Lefler: maybe a dock. Right. But a lot of these buildings that are smaller don't have to have a dock. But I'm trying to cater to those type of people where, um, you get a freestanding building with some yard space.
Yeah. Yard space is in high demand. It's hard to get yard... Yard space is land. Yeah. Right. So usually people have land, they want to build something on it. So if you can get a freestanding building with some yard space and it's conveniently located, I think you're gold. Yeah.
Zach Stanley: Yeah.
TJ Lefler: The problem is kind of getting the land price to work out.
Zach Stanley: Yeah.
TJ Lefler: But that is what I feel like if you can execute that, um... I probably shouldn't be giving that away.
Zach Stanley: That's what I want to do. We'll cut that out. Yeah, dropping, dropping a lot of bombs. I will... Do you want to get- Drop a couple of gold nuggets. T- TJ, do you want to get your, can we get your favorite, uh, low-key, uh, food spot in Northwest Arkansas?
TJ Lefler: You know, I've got three kids, and I'm constantly going to practices, so I don't have a lot of... I mean, I live in Fayetteville. I'm a- always in Rogers and Bentonville. We actually go to downtown Springdale a bunch- Yeah ... because if you... You know, I think the, one of the cool things about our area that, you know, there's a lot of things that used [00:43:00] to be farmland, now it's conveniently lo- located.
You know, if you live in Fayetteville, you kind of go to the square, which has got some great restaurants. We love going to Atlas- Mm-hmm ... and things like that. But from our house, actually, if you just go on crossover, you're in Springdale quicker than you're in downtown Fayetteville.
Zach Stanley: Yeah.
TJ Lefler: So we go to downtown Springdale a bunch.
It's just, it's easier. Um, my favorite thing to do, honestly, is to park somewhere, go for a jog on the trail anywhere. Yeah. I like bringing my... I mean, it's like, my, like, happy place is, like, going on a jog with my kids- Yeah ... scootering behind me. Mm-hmm. We end up in downtown Springdale-
Zach Stanley: Mm-hmm ...
TJ Lefler: and eat and go back.
Zach Stanley: Yep. Yeah, that's awesome. I love doing that. Experience intact, but very limited capital. You had to make your first investment or first move, what are you doing in Northwest Arkansas?
TJ Lefler: Uh, you know, I am a partner guy, and I, I'm really... I think I said some of this on the last podcast, but I just believe in setting big time expectations.
Mm. And I'm running the deal, and there's a lot of trust in that. There's a lot of people that aren't partners. Mm. [00:44:00] So if you're, if you have no capital and you have no partners, it's pretty hard to make something happen.
Zach Stanley: Yeah.
TJ Lefler: Most people, I have told, start with a duplex.
Zach Stanley: Yeah.
TJ Lefler: If you have limited capital, because you can live in one side, rent the other.
I know people that have done that, that I've even told to do that. Mm. Within six months you rent the other side, then you're buying another one. Yeah. And after you get that feeling of taking on a loan on yourself and the responsibility of having to pay that loan back- Mm ... within six or eight months of you renting that out, taking the loan out, and you're done, y- your stomach is a little easier.
Yeah. Like, "This kind of works." Mm. And then, and then when you go back to the bank the second time, you have history.
Zach Stanley: Mm-hmm.
TJ Lefler: And then you have the history of that first duplex to get another duplex. Yeah. And they're gonna keep running with you. And all of a sudden, instead of doing one duplex, oh, there's a pack of four duplexes.
Zach Stanley: Yeah. Mm-hmm. And
TJ Lefler: it kind of grows from there.
Zach Stanley: Mm.
TJ Lefler: Uh, to me a duplex is just a way of, um, you living in the side if you have to.
Zach Stanley: Mm.
TJ Lefler: And it's a cheaper way to get in for... You know, commercial buildings- Yeah ... are obviously, they start out just being a lot [00:45:00] more on
Zach Stanley: the dollar. BJ, it was great having you on the show.
TJ Lefler: Yeah.
Zach Stanley: So appreciate your time, and it's, you did a great job.
TJ Lefler: You guys are doing great. Thanks for everything. Thanks for having me again. Thanks for coming up here and joining the Wild Springs.
Zach Stanley: It was awesome.
TJ Lefler: Appreciate
you. Yeah. Thanks, guys. All right. See you guys.