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This Dental Specific Podcast is dedicated to the Dental "Entrepreneur" Michael Dinsio, Founder of Next Level Consultants, delivers #TRUTH when starting up a dental practice. From the very first step to getting the keys of a dental practice, Michael shares his raw & unscripted playbook with you. Not only does this podcast provide you with "What To Do" but more importantly "What Not To Do". With over over 15 years of experience & over 150 past clients, Michael delivers an educational and informative program in a real and genuine way. Start w/ Episode 01 - as we go through a STEP by STEP process.
00:04
The is so low to John, I don't even know where to start with that. I guess the problem is, and by the way, I love that question. Interesting, interesting. This is an interesting topic. What's the solution here? Show up, understand your part, and just crush it. Pay per click, social media, we can talk about all this stuff, but what really matters is patient experience, that wow factor.
00:33
Please are you listening to yourself? Come on! What are you talking about? Yeah exactly, so sit back, take notes and listen. Oh, oh, I love this. This is gonna be...
00:49
Startup unscripted. The questions you have with the truths you need to hear. And now your hosts, Michael Dinsio and John Bertagni.
01:08
Okay, guys, thanks for subscribing and jumping on today. We've got a power packed crew today. Joseph Rossi and Associates, our friends in Chicago, definitely best in class in that market and just doing a lot of really cool things for doctors. Thanks for being on guys. you. John, you have history with these guys. Why don't you fill in the crowd of why we chose these yahoos?
01:35
The Yahoo is the operative word there for sure. But most importantly, and it's not because they're Italian, you know, I saw from afar at that point in my life, I was an equipment guy in Chicago and we crossed paths, know, Joe and I, and he really escalated the market in terms of representation of dentists in an urban setting that I've never seen before. you know, everyone knows that I've been around this.
02:05
this country and I've worked a lot of different markets, but what they do for their clients, how they sit hip to hip and how they really understand their market, not only by empirical demographic numbers, but how they really hit the market and understand how it's going to impact the lives in the community by putting these dentists and placing them in the right spaces. So I just have deep, deep respect because they take tons of pride.
02:34
in what they do every single day. I've been following them ever since you guys got on board and just the messaging on LinkedIn and all of your outlets, I've been blown away by your clients and how they respond to you. Why don't you guys give us kind of the history of Rossi real quick at a high level and what you guys are all about and what you're doing for doctors today? Yeah, because you guys evolved too. it's a great story. Pete, why don't you tell us a little bit about
03:03
the evolution of the firm, I know Joe's so humble, he doesn't wanna talk about this stuff. absolutely. What are you working He talks about it. So yeah, Joseph Rossi and Associates, commercial real estate and practice brokerage firm formed in 2011. We represent Dennis in the real estate dealings, whether they're starting up, expanding, relocating.
03:31
renewing a lease or even securing a new lease through practice acquisition. And then we're also here to advise doctors through transition, whether they're selling or buying a practice, whether that's valuation, whether that's through real estate, that's our discipline here. Nice. And the firm has obviously expanded.
03:58
Tell us about the team and the areas of expertise. Yeah. So we got six now, including Joe and I, and Joe and I focused more on the real estate aspect of these transactions. And then we have Jerry West and George Bozanoas that focus on the acquisition side of things. And then Doug in our office is more on just
04:27
outside of dental healthcare, right? Real estate. so, you know, we have a good squad here with a lot of years of real estate under our belt. know, I'm going on here. many deals do you guys think you've done over the years? We've done close to 300 dental specific transactions. And that's a combination of acquisition, startup. That's strong number. years.
04:57
Yeah, the majority of what we do is the startup dental practice is by far our most frequent transaction. And then our clients have kind of grown over the years and their needs kind of evolved as their practice evolved. I'm seeing the McDonald ticker, millions of hamburgers served. How many hundreds of thousands of dollars do you think you have saved these docs?
05:26
300 deals. You know, I was thinking about that we would like to track that because I mean in in one transaction, I mean it could be well north of six figures, know of a hundred thousand or more, you know, it's really relative to You know the tenant improvement allowance. Obviously, there's economic value to Rent abatement because you're not paying rent right? So we save you there
05:54
You know, when do your escalations start? There's a small economic value there. But yeah, it's a lot of data to dissect. yeah, it's well. You guys need to go up on that pedestal, right? mean, come on. Typically in a single startup transaction, our tenant incentive, you know, on a 2000 square foot space equals anywhere from 100 to 250 grand, depending upon like those components. There you go.
06:24
So it's a huge, huge number. It's huge part of the transaction. Well, we're really excited to have you on today. We got some good questions, some some hot seat questions, some softballs, you know, softball Chicago style. But if anybody wanted to reach us or talk about real estate or practice acquisitions.
06:50
We're here free of charge anytime at 312-953-3553. And that's on my cell phone. I love doing this. So don't feel like you're bothering me. Love to talk to you. Bold move. Bold move in the cell phone across the country. I love it. I love it. I mean, and what's cool about it is, you know, it's a family affair. You guys are brother-in-laws.
07:18
Your mom brings in cannolis. mean, I know that goes on. I mean, it's that I think also brings that breeds that, you know, that family piece, because that's what you guys do with all your clients, too, which is sweet. Absolutely. I mean, we have a lot of interest walking through these doors every day as a family owned and operated. We want to bring that to our clients and, you know, we want to make sure that they're successful and their success is our success. Yeah. Well.
07:47
You're doing a healthy job. It's an intimate experience. mean, we drive around, we look at a lot of opportunities that fall apart. The startup isn't for the faint of heart. It's a dynamic process. And you really need somebody to kind of guide you through it, not get too excited, not get too sad about the process. Because, you know, if you're negative,
08:15
the doctor will get negative and it will almost seem kind of too daunting. So we try to keep our clients at an even keel, explore a lot of different opportunities. We like to get to a point with them in the process where they're like, this is what we want to do. Go out and get us this particular opportunity. And that only happens after a lot of trial, error, and even heartache. mean, it's a process to get up and running.
08:45
I just I want to add to that, you guys, because really good real estate firms, people, they they they almost are consultants in themselves, obviously. I mean, we're all kind of consultants in our own way within our field. How do you guys temper this really stressful but exciting situation? Because in a negotiation, we all know if your heart goes in into a deal, you're
09:14
you lost already. It's not a business decision. It's not a second. And let's put the scenario right, that there's a great spot on, you know, Michigan Avenue or on Lincoln or something like that, right? And right in Lincoln Park. And it doesn't even make sense. But the doctor is like, I want to go there. But so let's let's put it in a scenario base. And you're just like, listen,
09:40
You should really look at this other opportunity because that's the real play. Like how do you temper that? That's the real piece of this. What we find as a bigger challenge is a doctor will give us somewhere where they want to be and we'll say you should go in A, B or C building. And we know it's a good opportunity because for the past, for me for the past 14 years, all I've done is look for dental spaces.
10:08
So we kind of know. I'm sorry. Yeah, right. Right. So, you know, they may have a preconceived conception of what's a good space and I'll see a problem in it, but they won't see it until we, you know, go through that process and even look. We tell our doctors, look at it's okay to look at opportunities that don't work and aren't a fit. It's almost by process of elimination where you.
10:37
by showing what you don't like leads you to what does work. And there's just certain attributes that a startup is going to need. So if we have a doctor tell us, I love this spot, but there's no parking, it's really not a good spot. I mean, there's maybe a few markets in the entire Chicagoland area that you could get away with parking, but they're very limited.
11:03
But if we're in a location, we know there should be parking there. They love this spot. There's no parking. You got to tell them, you know, look at some other options. Now we're really getting into, in my mind, now we're really getting into it right here, because how do you guys use like the demographic companies? We got a guy named David James. He owns Real Score. He does demographics for a living. You guys probably do your own demographics.
11:32
I love that you're very sensitive and you have the conversations with the doctors about if they're ready to go to war or if they would rather just have a layup. I love this conversation. Even down to it, what's your marketing budget and how much you have in the tank, in the reserve, right? That's question. Right. How do you guys use that? How do you guys use the data? This is the question. How do you use the data that you get or David James provides you?
12:02
And then how do you like relate relate that to the doctor and then relay that to the streets? Because you guys see stuff on the streets that maybe David James isn't seeing or demographic companies aren't seeing in the data. Right. And that's a great point. The demographics are a great tool to look what's on paper. But there's there's so many other variables that go into it. The demographic
12:32
that we probably use the most is the dentist to density ratio. And we use it from the address of the location you're looking at. And we divide the amount of people by the number of dentists to give you, know, one in some of the competitive suburban markets, it could be as low as one to 300. And then some of the highest demographic to density ratios we've seen are one to
13:01
to 12,000. The other big component of that dentist to density ratio is how far of a radius are you gonna draw people from? For example, if you're in a Walmart anchored center, you're at least feeding from a six, seven mile radius. So that draw alone is a huge, huge advantage. If you're in one of these neighborhoods,
13:30
with not very busy cross streets, you might even be able to only draw from half a mile radius. it's all relative. The demographic reports are only so good of a tool. I've seen spaces that look great as a demographic report, but when you do the field work, it's not that great. Yeah, sorry, Pete, go on, man. I can put good real estate product
14:00
up against a ratio any day of the week, right? Because at the end of the day, you gotta take those studies with a grain of salt. Because if he's, that's for instance, let's say you have 12 dentists within a one mile radius. Well, now we can get real crazy and like, how many of those dentists are doing superior marketing, right? How many of those dentists are in network with the same insurances that you wanna be in network with?
14:26
And it's kind of difficult to get all that information, right? So you kind of take those demos with a grain of salt. But like I said, good real estate product signage, exposure, national code tenancy, parking. That's what you want to achieve, especially in a market like this where it's dense and we rely on other national code tenants to really drive traffic to a location, especially as a startup, because it will catapult the success. I love Pete.
14:53
I love you with that. was a great I mean, Joe, I love you too. I mean, that was a textbook. was cherry on top. Yeah. Doctor, we would rather see you go in a very good site in a competitive market than to be in an inferior site in a weaker market. doctor going into an office building has been dead for years. Over 200 just straight
15:23
startups. And we've only had one person go in a non retail setting. Nice. Back off that. The specialists are still in those types of settings. Yes, referral based your oral surgeon, your endodontist, your periodontist. They're still in second, third floor office space zero signage because they're heavily referral. But as a general dentist, whether you're on practice number one, or practice number 10, it's important to have that
15:52
presence in the market. So I've got a question because you guys do a lot of you. You do a lot of work, right? You do a lot of work in that in that market. You know, what is and I know you actually keep in contact definitely with your your clients, which is one thing that's a tribute to you guys that they still want to actually talk to you. I barely want to but they still want to for some reason. But what's the temperature? What's the temperature in the you know of in the success rate of the people that you're putting in there?
16:22
You I mean, you kind of said you're really helping guide them because a lot of them need your guidance. But, know, where are you seeing more success? Are you seeing people that maybe didn't listen to you? And can you give these, you know, these listeners some, some, some ideas of pitfalls that some of your clients have taken that maybe haven't escalated in a certain way that it should have been if they would have listened, it would have done a little bit quicker and had a little bit more success right out of the gate.
16:52
Yeah, I need to say we're perfect and this has never happened. we haven't yet have a doctor call us and say, why did we do this? You know what I mean? At the end of the day, know, we've were more than just a commercial real estate broker here. Obviously, we're specialized in dental. And so what we do beyond identifying a location is is facilitating the project, right? Creating this team that they need.
17:19
to set them up for success. mean, in my opinion- that team, I mean, this is the way, this is maybe the only softball you're getting on this, because they're gonna come a little bit hotter. I was just about to say, you were running them real soft right now. By the way, blopping them up, blopping them up. Let's go, let's go! No, but I mean, the team, what are you talking about? Like your team internal, or are you talking about- Our team internal, and then-
17:48
industry specific vendors, right? Resources from lending institution, equipment houses, marketing firms, consultants, banking consultants. You know, the whole team that you need from a conversation that we initially have from a doctor to seeing their first patient and beyond that, we have all of those resources at our fingertips, right? So in my opinion, you really got to try hard to fail, especially when we're choosing a good real estate product that, you know, we feel is
18:18
proven time and time again from our past transactional history to be successful, right? So that's, mean, I think you just hit it because there's a reason why we started with, you know, vision, right? And now we're going into, then we go into demographics and then what's right beyond demographics, it's real estate in our whole entire series that we're running here. It's because people come to you guys to help build
18:49
and insulate themselves from problems, right? And that's why we feel it's super important to work with an industry specific, meaning dental specific, healthcare related real estate company. So they understand, you know, that it's not about 10, you know, a hundred thousand cars driving by your place. It might be about parking, because if you can't park with those a hundred thousand cars, there's no reason. Who gives a shit? But it's the fact that if...
19:17
It's your reputation, right? And you go into these micro systems, Seattle, Denver, Chicago, Texas, all of the markets, right? Any market, any market. You've got the players in those marketplaces and you got to find the A players in those marketplaces because if you don't, you could fall into a C player and they could kind of take you down a path that's a little uncharted, right? And so,
19:46
If you treat and that's why I say that the ecosystem in a lot of ways protects our doctors or our clients because if someone refers your doctor to someone that you don't trust or you have a bad story about the team rallies and says, Whoa, that dude did something wrong for one of my clients not too long ago. And I hear a lot about actually I love this topic. Let's keep going with it because
20:12
The good old boys club is a thing in every market. But the reason there's kind of a good old boys club is because we're really protective of our clients. Isn't that the truth? And it's predictable and it works. I mean, there's a surgeon that sometimes does well and sometimes doesn't. Right. Just think about it. If we're not in touch or in tune with a contractor during the real estate negotiation, if we're not in sync with each other,
20:42
the doctor could lose out just with that one vendor, hundreds, know, tens of thousands of dollars. If they're not, you have good vendors in communication with each other will save you and create tons of value. Right. That's right. That's right. Those vetted vendors at the end of the day. Here, I got two uncles that do construction. I'd love to give them business, right? But I never will. And it won't happen because you want to know why I have contractors that have been building
21:11
dental offices for two, three decades. And that's what I need to give to my client. You know, you're gonna you're gonna hear us refer to the my buddy piece, you know, my buddy that's a dentist, my buddy that does it, you know, stay the fuck away from my buddy. Yeah, right. guy that did one project and he's like the most the most amazing, like resource for you. Why? Because he did one startup. Got it. Okay.
21:40
Got it. a reflection of us too, at the end of the day. mean, that's what, it sets us apart, right, from your average real estate broker that we can facilitate this project for you and put you in touch with the best of the best in the industry. Well, you'll hear like, my buddy said this this rent is expensive. Or my buddy said this TI isn't good. We have historical data on over 300 dental offices.
22:09
We know how much square footage they take. We know what their rental rate is. We know what the escalation was. We know how much TI the landlord gave them. We know how much free rent they got. You know, those are the facts. there's no, mean, that's the data we have and nobody else has that proprietary data. And we can show that to you and our clients. These are facts of what it costs to do a dental startup. And we know that.
22:36
And some clients may want to dispute that, that's their problem. That's right. That's right. Absolutely. mean, their commercial real estate is nothing to mess around with. mean, simple language in a lease could equate to tens of thousands of dollars that could end up coming out of your pocket from down to the HVAC system being the wrong size. And then you eventually have to replace that system. And that's $20,000.
23:05
We look at these things from the capability of signage to the integrity of the space becoming a dental office from the HVAC system to the electrical panel that's gonna power your pan and your SIRAC and all the other fun stuff that you want. We've done this. Yeah, you brought it up, man. And Pete, mean, we built out a practice here in, and it was a beautiful barrel building here in Denver.
23:33
Guess what? It needed HVAC. It was like 55 grand that was not accounted for because the octopus and you need to get the airflow. It was insane. Exactly. On the HVAC point though, when do you guys bring in the contractor to walk that space to identify some of that crap that needs to be pulled out so that you don't get burned with the HVAC?
23:59
Maybe you guys can get ahead of that and work with the landlord and get some of that offset. It's immediately, right? Cause we don't want to go. Cause I have to know. about it softball, Mike. I mean, come on. You made the mistake. You made the mistake. that's going to play a huge part in my negotiation process. Right? At the end of the day, it's about extracting as much as we can from the landlord.
24:29
taking every last penny, lends whatever we can out of their pocket and put it in our client's pocket. That actually brings up a good question. Before we get into the money question, John, and I really want to get to that money question, as a consultant and someone that's been in the biz for a little bit and has seen these projects go through the projections, right? Two things.
24:57
It always shocked me that some folks are still calling the outside of the building's phone number and actually trying to work that deal by themselves because they think you guys are gonna cost them too much money or the fee and they're too worried. Great segue for how you guys get. This is the actual question.
25:25
tenant representation or buyer representation services, there's no cost for us to the dentist. We're compensated directly from the landlord or the seller of that building. It's like the same difference of when you're selling your house and you're responsible for the proceeds. So for a doctor to think that, I don't want to call a broker because it's going to cost me something, or I think I'll get a better deal if I don't, they're just sadly mistaken, right?
25:53
hundreds of thousands of dollars out of their credit. It actually works in the reverse. If you call the guy on that sign, that guy is either hired by the landlord or even worse, the landlord himself. Hey, does the fee go up or does the base rent go up or down when someone calls that The landlord's not paying us a fee because you're paying for it. Ten times over.
26:23
That's the fact of the matter. Some of these landlords have done hundreds of real estate transactions and you're calling on this sign blind. I mean, it's such an unfair matchup and some people don't even know it or don't even think about it. But to go back to construction, in order for us to properly negotiate and quantify a space for somebody, we need to have a professional dental contractor going there
26:52
and tell us exactly how much it costs to get the space from current condition to dental condition. And there is a certain standard that a landlord is supposed to turn over the space to you from. And that's where a lot of these landlords will make up the difference on tenants. know, hey, I'll give you a good deal, but I'm gonna give you, I'm not gonna do any of this work that needs to be performed. Some of the base building work alone,
27:21
could be $200,000. So a doctor who's not represented may think they're getting a good deal because they have this preconception of what a good rental level is, but the landlord's not doing any of the work. So we put that whole piece of the puzzle together. And sometimes, know, a doctor will ask us, what is, is this a good deal on this particular space? And we really can't answer their question until all the due diligence is done with the construction.
27:51
with the other economic points of the letter of intent, and then we can give a full assessment. We should be able to give you an exact dollar amount on each location and how much it's going to cost you, down to the penny. This is an exact science, it's not guesswork. That's where people get in trouble where they have guesswork and they think certain things are gonna go a certain way they don't. You have to have all that stuff done. The day you sign the lease, you've already knocked out every variable.
28:21
Once that lease is signed, you're now on the landlord's time. Until that lease is signed, everything is free. So you have to do as much due diligence as possible. That lease signing is really the first time doctors are putting their commitment down. Everything up until the lease signing, they're really not out of pocket, but you're making a 10-year commitment on the lease. So before that lease signing, it all needs to be done. Let's talk about this for a second on the pay of how you guys get paid.
28:50
Here's your hot seat. Here's your hot seat question. Hot seat. Okay. If you're getting paid by the seller, how do you draw the line and continue to represent the buyer in an aggressive way that ultimately could kill the deal or not and sacrifice a commission? The fact that you're getting paid by the seller. I would have more. Yep.
29:19
I'm sorry, the landlord, yes. I've had clients literally say to me, which obviously I didn't believe, but they said, how do I know this is a deal for me? Obviously, there wasn't trust with this real estate person. But how do I know that this is a good deal for me when he is getting paid by the landlord? Right. Well, it's the same reason why a doctor doesn't put in a bad filling in somebody's mouth with
29:48
with maybe materials that aren't the best for the patient. I have pride and ownership in what I do. And that seller wouldn't even respect me if I just made it easy and gave him everything I want. He would never hire me to be his broker. It's about pride in what you're doing. our commission is basically the same whether your rent is $20 or $25. We've built our business
30:18
by having doctors refer us to their friends. If I don't do a good job for this particular client, and they say something bad about me, there's nothing more valuable than that. This is why we've done hundreds of dental practices, because we've done a good job for it. Our clients are gonna sense it. So it's in our interest to fight for their interest.
30:47
And that's how our business. You gotta understand there's not necessarily, there's that communication between us and the property. Right now we're communicating with the landlord or seller's representative, right? And going back and forth with them. And as much as we have a fiduciary responsibility to represent our doctors, that landlord or seller's broker has the same responsibility to that building owner, right? Right. Oh, you know, we're the contrary to that. When we come in and represent their interests and you can
31:16
it's obvious when we're in the negotiation process that we are representing their interests. And like Joe said earlier, it doesn't really matter what the rent is. The commissions for tenant representation, those fees are already worked out between the landlord or seller and their broker. The only difference is that we come in, represent the doctor's interest, and instead of the landlord or seller's broker getting paid a full fee,
31:46
for only representing the landlord or seller, we come in and they split that fee with us. It's called a cooperating commission. By the way, this is exactly what, this is the empowerment that I want our listeners to have, To understand this, this is beautiful. Yeah, if our clients aren't happy, we're not gonna get a transaction done. If they know I'm not fighting for their interest, no deal is gonna happen.
32:13
and we're gonna be out of business. So it's in our interest to do a good job for our clients. And again, that's how the business was built. It's their biggest, by the way, it's their biggest expense is that lease. It's, mean, people think it's equipment or it's the construction, no, man, it's absolutely that lease or that building. And one of the cool things is too, it's, you you guys also don't only do lease hold.
32:39
You you actually find buildings and you actually put people in those spaces. you know, what's that look like in the Chicago market, you know, in the urban setting and then obviously the suburban setting, you know, how do you differentiate that when you put those guys in, hey, I think you should actually do a standalone building right here on this corner. And, and let me add to that. And why would you buy a building right out of the gates? It's a lot, the loan amount.
33:09
and the risk feels like a lot more, but why you go through some of those advantage points as well for owning your own real estate right out the gate. By the way, Mike, you didn't even know I was going to ask this question. And I'm with it. I'm wrong with it. It's all about availability, right? And it's like, you know, whether I'm leasing or buying, is that particular location going to serve my practice based on the variables that we discussed?
33:36
Right? So it's not about the economic at that point, because we'll get through that. Like, you, did you have these questions? Did John leak these questions to you guys? Hey, remember, I remember I didn't, I didn't want this to be the tonight show, Jay Leno edition where everyone knows all the Textbook, text. And just to speak further on that, I mean here as a startup, Dennis, you're.
34:03
there's so much more product in the leasing market than there is purchasing, right? Better product, right? You're not gonna get on an outlaw to, you know, Costco or Sam's Club or next to Starbucks or Chipotle or some of these really strong national tenants by purchasing those buildings. Unless you got a couple million dollars laying around and you wanna do that, great. But I can capture that piece of real estate.
34:30
through leasing. And the other thing with leasing versus buying is buying is just much more cash intensive, right? Where down payment, there's no incentives. Next month, your mortgage is due, your note is due. Whereas in leasing, we're extracting incentives from the landlord and alleviating that initial investment for the startup, right? And in some ways- What you're getting at is rent abatement, meaning delayed payments of your
35:00
And then also $10,000 correct Pete, just to let our listeners know that might not know this piece. Absolutely. What doctors don't realize is that there's incentives that they deserve on a 10 year lease, right? Especially as a medical tenant, they're very sought after by landlords, sometimes just as sought after as a national tenant, right? And so in return for that longterm commitment lease, that 10 year lease, we negotiate like what you said there, John, rent abatement, which means free rent, right?
35:29
typically somewhere between six to eight months, sometimes even a year, right? And then also tenant improvement allowance. You're gonna make X amount of capital investment into leasehold improvements. We want the landlord to invest with you, right? And it just, it's all unique at how much we can extrapolate from the landlord, because every landlord is different from here to across the street and down the street, whether they own one building or whether they own.
35:55
2,000 buildings across the country. It's our job to find that out and see how deep their pockets are and how much we could actually get from them. But those are just two incentives that have economic value to it. We try to freeze your initial rent for the first two, three, four, five years, depending on what we can accomplish. It also has an economic value to it as well. There's tons of variables. I've always said the longer the lease, and this is totally self-serving for you guys.
36:25
But the longer the lease you have, the more stability your practice has. Because you really just never know if you get disabled or you got to move or something crazy happens. I'm on the acquisition side just as much as I am on the startup. How do you, and you guys are too, how do you sell a practice without a strong, long lease? You don't. Well, by the way, banks won't even let you know this, Mike. As a banker, put on your banker hat, man.
36:55
Banks won't even sell. won't even lend the money, if you don't have a 10-year lease. You remember that. I'll put the banker hat on it. Absolutely. You got to have 10 years, but I'm talking about even longer, securing that lease for a long period of time so that potentially you can hand that practice off to someone else. It's valuable.
37:25
these leases, we're not just talking about today. We're talking about five years, 10 years, 15, 20, sometimes 25 years down the line, right? So we're negotiating a 10 year initial term, but we're also negotiating what's called options, right? Options are good for the tenant, bad for the landlord. But we have the right to the space. You're gonna make this huge investment, both economically and the goodwill of your practice, you have to protect that investment.
37:52
You can't have the landlord have any leverage to get you out of that space. So we negotiate the options upfront. And not only do we negotiate them upfront, but we negotiate definitive rates, right? So sometimes what I'll see is a lease that maybe I'm doing a renewal on, somebody signed a 10 year lease and you know, they have an option, but it's at market value. Well, what the hell is market value and who's going to dictate that 10 years from now? It could be 20.
38:19
$30 a square foot more than it was when you signed your lease. But what we do is we negotiate something definitive through what's called escalations. I can get into all that, but at the end of the day, the way I like to structure these leases is that if I sit here and do the math, I can tell you what your rent is gonna be in year 17. And you have the right to the space. And not only do you have the right to the space, but I'm also gonna negotiate that you have the right to assign that lease so that in the event,
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you are sick of the cold and want to move to California or you have an opportunity to sell your practice. Now you have the right to assign that to the new doctor. I've seen acquisitions blow up because they don't have this language in their leases. So we're structuring not only an enter strategy, but also an exit strategy, whether it's in five years or 25 years. Well, it even goes beyond this. mean, here's the reality behind this, Joe, because
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You actually are working on a 15 year, 30 year note from a bank. So people look at the purchase of this space as, my gosh, how am going to afford it? You know, the $600 million building. Well, you're able to spread those payments out over a long period of time. In addition to that. So you're actually building equity. You're your own landlord, meaning your rent base can be whatever the heck you want it to be. And then obviously in the end, you actually have an asset to sell.
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And hopefully at the end of that asset, you could actually sell it with the practice and then have a, you know, a little parachute at the end. Right. You might, you, you could create an income stream for your retirement. you own your building and you're sold to a group, if the lease is properly structured, it could be a great investment tool. So all these things that we talk about today, they're so situational and you know, we give advice differently depending upon.
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where you're at in your stage of your career and your propensity for debt. You're gonna look at debt a lot differently as your career matures. And there's a lot of different aspects of it depending on where you are. Let me echo that because I literally just got off the phone with the seller. I was negotiating the buyer's deal.
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And I literally just got off the phone with the seller and they accepted our deal and I lowballed the practice so bad for the seller because she wasn't willing to reopen for COVID timestamp COVID's happening right now, right? But she sold the practice for $50,000 is how low I got her practice. The point that I'm making is she's in Cupertino, California.
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She, we're buying the building for $1.2 million. So she kind of got her payday because she leveraged the risk by owning her building. Although her practice took a nosedive. Yeah. That's okay. I got 1.2 coming to me, baby. So that's a lot. That's a live example. Right. let me ask you about, let me ask you about debt guys, because
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You're dealing with a lot of young guys too, right? Guys and gals that are coming out of school. in some Midwestern, what is it? 80 grand a year, right? 80 Gs a year is what they're paying. So they're coming out 320, that's if they don't have any debt from before or living expenses, right? So you were talking about being a psychologist or in some terms of helping these guys through from a mindset standpoint.
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you know, what is that conversation like, especially when it comes to not only, you know, you have your monthly student loan debt, but now you have this lease. Are you guys gonna be able to get through this piece? And how are you making sure that they're making, you know, making the right moves with equipment, with marketing, blah, blah, blah, blah. It's very counterintuitive. They have all this debt and now you have to go into a good space. You have to take on more debt in order to get a good space.
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It's sometimes hard, it's sometimes it's hard for them to comprehend. But the alternative is not opening up your own practice, working for somebody and never getting out of the debt. You're gonna have to go into more debt in order to have that higher, that higher net profit than you would be in an associate. It's the only way out. the hard thing is, it's counterintuitive. You have to a lot of money on your
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your practice build out and your rental rate in order to get compensated for it. And you'll be able to pay down your student debt a lot quicker. I can see the passion on that side and it's awesome to be a part of this program with you guys. I wanna remind our listeners, everybody has access to these two. They will have access to you on Facebook. They'll be able to go on.
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answer questions if you're from Chicago or anywhere in that area any any area that Rossi Associates is in please outbound ask them questions subscribe be a follower get a part of this movement but I just want to say thank you both thank you Mike we appreciate the opportunity to chat with you guys on this well hey you know this party continues I might hit end on record but we
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This party could keep going. You know, even if you're not in Chicago, these guys are a resource for you. My God, use them. them. We can help anybody regardless of where they're geographic. And I mean, from my standpoint, guys, you guys know you're some of my favorite people. I feel it, my man. In fact, you know, one of the times that Joe, you and I got to break bread at Club Lago over there on Superior in Orleans, you know,
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In comes my uncle and his entire family. Next thing we know, I don't even know. Maybe my uncle even ate off your plate. I'm not even sure. Yeah, I was just, I was just at a family dinner with 20 people. That's what it's about. That's what Chicago is about. I mean, that's the city of Chicago is, is one of the best cities in all the world in my mind. Um, and you guys are represented in.
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such a fashion with professionalism, but also you embody exactly what Chicago is, which is just, you know, the love of the city, the knowledge of the city, and then giving people, you know, the power behind your knowledge. And you do it better than probably any of the real estate people out there in my mind. So kudos to you. I'm lucky to have you guys as friends and your team, Jerry West, et cetera. I mean,
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some of the best individuals out there. Hey guys, thanks again for logging in, being a part of this. You know, we're super excited about this program. Remember, can always follow us on YouTube, Facebook, Instagram, you name it. We're on all the podcast channels. Please subscribe. Be a part of our Facebook group as well, where we'll be able to bring all of these episodes, the participants and all of our partners to that private group where John and I will be doing some
45:58
free consulting and you'll have access to all of these partners. Log in, be a part of it, ask questions. It's meant to be interactive. So thanks again for tuning in and we'll see you next episode.