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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 to Northwest Arkansas Investing Podcast. Today, we have Tom Allen with us. Tom is a president and principal at Cushman & Wakefield Sage Partners and leads the Hunt Ventures commercial real estate portfolio across Northwest Arkansas, overseeing development, leasing, acquisitions, and asset management across office, retail, and mixed assets
Tom, thanks for coming on. We had you on episode 47. Believe it or not, that's over 40 episodes ago, so time flew by super quick. I thought you were, like, episode 60 or something, but it was episode 47. Can you tell us... Let's just jump right in. We're, we're, we're filming in The Visionaries, correct? Uh, tell us a little bit about this building we're in.
Tom Allen: Well, it's an honor to be here, to, to be a part of this, and my hat's off and congrat- congratulations to you guys for a really c- uh, successful podcast. Thank you. Lots of people are listening and paying attention, so it's an honor to be here. I don't know why you asked me to be here, but [00:01:00] I'll- ... I'll do my best to, uh, to be entertaining a little bit.
Zach Stanley: You've been great. You've been awesome. Tell us a little bit about this building. Any over, like, general data or anything about this building, why it was built. A little bit, dive into that.
Tom Allen: Sure. It's, uh... We changed the name as we were talking earlier. Mm. We, we called this initially The Visionary, and, uh, this building is, is, uh, owned by the Hunt family, Mrs.
Hunt, and, uh, Hunt Ventures and, uh, her company. Obviously, her husband and she were the founders of J.B. Hunt Transport, but they have in their retirement started the real estate development.
Zach Stanley: Yeah.
Tom Allen: And Mr. Hunt had great vision.
Zach Stanley: Right.
Tom Allen: Do we need to stop with that in the background?
Zach Stanley: Well, we're in a live construction site, so- Yeah
uh, we're, we're coming to
Tom Allen: you- Okay, good ... from the- So that, just wanna make sure you can hear me. That's part of,
Zach Stanley: like, what we
Tom Allen: wanted. Yeah. Distractions. I have to always try to focus Tom, focus Tom. Squirrel, but, um-
Zach Stanley: You're good. You're good ...
Tom Allen: but anyway, Mr. Hunt had, had great vision. Yeah. And, uh, but we got to thinking about Mr.
Hunt was not the only great visionary in this market. There are many, many, [00:02:00] but there are some obvious ones in the marketplace such as Don Tyson- Yeah ... and Sam Walton, Mr. Hunt, and many others. And so we thought it was the right thing to do, Mrs. Hunt certainly did, to recognize the, uh, the anchors that built this area of the people who had true vision to come to a big old rock in the northwest corner as, uh, the rock being the soil here.
Yeah. Why did you have trucking companies when there's no interstate? Why did you have, uh, what we built here? And these, these visionaries could see something nobody else could, so it was kind of an honor to all the, all the- Yeah ... the visionaries up here.
Zach Stanley: This b- this building's really awesome. I mean, it, driving by over the years, like, just being like a, being born in '96, I mean, it was nothing.
Um, and then seeing it grow- grow- g- grow up with stuff like this, I mean, it- it's amazing. And we walked a little bit through. Um, it's, it's quite an impressive feat. It's really cool.
Tom Allen: Thank you. Um- You, you did mention, you want me to tell you why, you asked the w- the why we have this here, I can mention real quick about the building.
Yes,
Zach Stanley: I would love, I would love to know why.
Tom Allen: Yeah. So real quick, it's 400,000 square feet total square footage.
Zach Stanley: Yeah.
Tom Allen: Uh, 200,000 [00:03:00] roughly is what's leaseable, rentable- Mm-hmm ... in the area. So we're vertical in that we have two levels of parking underneath. Wow. So this market has grown. Yep. We're not the only ones, but we were one of the leading developers to put parking decks in the area- Mm-hmm
which was new for a, a very suburban market.
Zach Stanley: Yes.
Tom Allen: Um, it is more expensive on the front end, but it pays off in the long term. Mm-hmm. Uh, we have more real estate to develop, to go vertical by doing this.
Zach Stanley: Yes.
Tom Allen: Um, and so it's 400,000 total, 200,000 leaseable.
Zach Stanley: Mm-hmm.
Tom Allen: And, um, we're scheduled to be done in, uh, end of April.
Zach Stanley: Yep.
Tom Allen: And, um, so that's what's unique about this building, and, uh, the floor plates are larger. Mm-hmm. The floor plates here are almost 80,000 square feet. Wow. Typically, we have anywhere from 15 to maybe 25, 30,000 square feet floor plates. Wow. So this one's much bigger.
Zach Stanley: I remember back in episode 47, you were talking about this, like, love where you work type mentality, and maybe implementing some of those features into this building.
Are there some features and things? I know you're, you're talking about wiffle ball on the roof, which you annexed because wiffle balls might fly off the [00:04:00] roof. But is there- ... there things like that, that are- No,
Tom Allen: pickleball.
Zach Stanley: Pickleball. Yeah. Sorry.
Tom Allen: Yeah.
Zach Stanley: Pickleball. Yeah. Um, there are things like that that are, you're implementing in this building?
Tom Allen: Yes. A- and not, not just the wind might blow the balls off the roof, but also there's a dog park next to the pickleball court. Yeah. And we thought that having dogs watching the ball go back and forth was probably not a good idea. A little
Brian Wagers: distracting.
Tom Allen: So, uh, but yeah, we, we nixed that. We will still have the rooftop patio, which will have, um- Uh, outdoor seating.
We'll have the, uh, I call it beanbag toss. I think it's the actual word's cornhole, um, games. Mm-hmm. Shuffleboard. Um, and then just areas to, to ha- to relax and enjoy being outside, outdoor. Part of it's covered, part of it's not, so if the sun's beating down, you can go in the shade. Mm-hmm. If it's raining, you can go in the shade.
And it's right next to a fitness center. We're gonna have another fitness center in the building. It'll be nice. Love that. That, uh, are being used quite a bit in all of our buildings. Mm-hmm. Um, and then these hallways, being larger floor plates, are longer. Yep. So we've got a couple of, uh, coves that we carve out in the long hallways where it's just common area with [00:05:00] sofas and chairs and Wi-Fi areas for people just to park and sit down, and if you wanna get out of the office, then you can go sit down there and- Mm-hmm
have a cup of coffee. And then the third floor lobby, which is, uh, the first floor on the west side where the plaza is, has got a coffee, little coffee shop area to gather, and we're gonna also load this building up with, uh, much more artwork than we have in the past. Okay. That'll be really cool. With some local artists of, uh, interest that, uh, we're happy to support.
And, uh, we're gonna have a nice restaurant on the first floor as well with some outdoor patios, uh, area. Love that. So we're, we're hoping this can be a, a place people can come to work and actually enjoy being here.
Zach Stanley: Yeah.
Tom Allen: Um, and, um-
Zach Stanley: We've definitely seen that shift over
Tom Allen: the
Zach Stanley: years.
Tom Allen: Yeah,
Zach Stanley: yeah. 100%. Brandon?
Brandon Still: So Tom, what kind of tenant profile are you, are you hoping or you or at least have the vision for?
I'm sure you're already working on pre-leasing. That's probably a, a big part of what you do. At least what you can share, what, what do you see the vision for that?
Tom Allen: F- first and foremost, can they pay rent? True. No, that's not it. That's good. That's a good one. Yeah. Uh, obviously that's not, that's [00:06:00] not a, a concern.
We, um- What, I think by just what's been happening is the, uh, the, the really big corporate, uh, CPG companies but others as well, uh, are, are seeking space. We're in a, we're riding a wave in Northwest Arkansas.
Brian Wagers: Mm-hmm.
Tom Allen: Uh, we can't take all the credit for what we're doing here. We're taking advantage of what's here and building what we're building.
But, uh, it's no secret we've had a, um, we've had a grand op- or we've had a ribbon-cutting with Nestle. They're the anchor tenant. They're taking the top floor, fourth floor, so they're- That's great. Awesome ... that type of tenant is what we're looking for. We've got, uh, two other leases signed of that caliber type of tenant.
I don't think I'm able to say who they are just yet.
Zach Stanley: Mm-hmm.
Tom Allen: Uh, but both of those tenants are taking 30,000-plus square feet. That's incredible. And, um, got a restaurant tenant on the first floor who's gonna take the whole first floor retail space facing the east that's about 11 to 12,000 square feet, and it's gonna have a concept that's a little bit different for Northwest Arkansas that will be neat, that you see in some urban markets, but- Love that
it'll be very well received. Mm-hmm. Um, but we're looking for, uh, [00:07:00] tenants that really value a place for their tenants, for their employees to come to work, as I mentioned with the amenities. Yep. Um, and, uh, we're, we're... it's pretty simple from that respect.
Zach Stanley: Yeah.
Tom Allen: We built the building because of the, uh, the occupancy rate and the vacancy rate in the market is such- Mm-hmm
that we had nothing left to lease.
Zach Stanley: Right.
Tom Allen: And why, why sit on the sideline when you know you can lease it if you can build it? Now, construction costs are the all-time high, interest rate's highest they've been in 10, 20 years.
Zach Stanley: Yeah.
Tom Allen: Interest rates are manageable. They're not r- Mm ... they're not ridiculous. We've had worse in our, my lifetime.
Right. Uh, we'd love for them to come down, and- Mm-hmm ... they probably will a little bit more later. But the construction costs are making it to where you build a building like this and your rental rates therefore have to be higher- Yeah ... to get any kind of a return on investment, and, and, and we are getting them.
Yeah. So I hope that answers your question on- That's great. Yeah ... available for tenants. So
Brian Wagers: you, you, 200,000 square foot, to dive into the numbers, 200,000 square foot of rentable. You have 60,000 rented out to
two [00:08:00] 30,000-square-foot, the 12,000-square-foot restaurant, and then Nestle, which has been announced, is taking how many square foot?
Tom Allen: They're taking just over 30,000 square feet.
Brian Wagers: Okay.
Tom Allen: Uh, middle 30s. So
Brian Wagers: you're-
Tom Allen: And then I've got letter of intents, uh, that are serious for, uh, three other tenants that probably add up to another 50,000 square feet.
Zach Stanley: That's incredible. H-
Brian Wagers: how far away are you from have- it being rent-ready here?
Tom Allen: We are scheduled, and Crosston has done an amazing job, we're scheduled to receive, and they deliver to us with a CFO in hand April 30th.
Brandon Still: That's incredible. Amazing.
Brian Wagers: So almost 60, 70% leased up, pre-leased before, you know, four months before even- Yeah.
Tom Allen: Now, they won't open up because there's a lag afterwards that we receive the core and shell of the building with a CFO. The tenants will still be building out their space. Yeah. So they won't be in the building yet, but their leases are signed. It's
Zach Stanley: incredible.
Brian Wagers: What kind of rents are you getting and projecting to get?
Tom Allen: We're asking... We, we did, um, we [00:09:00] didn't do this with Nestle, but we did switch, uh, midstream after Les- after Nestle. Uh, we're going to a triple net rate, which is sort of new in the market. Uh, you see it in Dallas and other big markets that offices are going to triple net leases. So we're going 37.50 a square foot triple net.
Zach Stanley: Wow.
Tom Allen: Which, um, is a, for this market, is high.
Zach Stanley: Mm-hmm.
Tom Allen: Um, but you get what you pay for. Yeah. And, um- People understand it now. It was, was a problem for a long time. I would say before Walmart announced their headquarters, and they're putting the stake down that they're not going anywhere, that they're gonna stay here- Mm-hmm
people started to understand this market was for real, and that, uh- Yeah ... JB Hunt and Tyson and all the others, U of A, you, you name a bunch of other companies, Simmons, all these other companies that are here. Um, and so people understand that this market is thriving, and we're not the East Coast or West Coast in respect of all the vacancy rates and the horror stories you hear about that.
And so they understand that if you want a quality space, uh, it's gonna be new construction. Yeah. And new construction with the costs that are involved, [00:10:00] you're gonna have to pay the rent. And even as high as we are, if you compare to rent, let's say, in San Francisco or New York or somewhere, we're still probably less than that.
Brian Wagers: Oh, yeah.
Tom Allen: So they understand it, and so th- they've had a learning experience to come and understand that. But, um, for the most part, that, that hurdle has been, has been crossed. Yeah. And, um, so that, that's good news.
Zach Stanley: So, uh, episode, Episode 47, we pulled a lot from, like, your background and history and dove into that.
I wanna dive a little bit deeper in this episode into, like, what makes a good deal, where do you see investors mess up, where, when do you say yes, things like that. Um, and so I wanna kick it off with my first question was, when you look at most investors in this market, where do you, where do they overcomplicate things?
Tom Allen: It kinda goes into what I just said. Uh, it depends if the investor is from this market or they're from outside of this market. Mm-hmm. The people in this market, which there are many, understand all the factors that are unique to this market. Mm-hmm. They get that there's growth. They get that there's 40 people moving in here every day.
Mm-hmm. They get that [00:11:00] that is there. They get that our, our governments are pretty friendly to development, although they're we still have issues with them, but- Mm-hmm ... compare this to going to Austin, Texas, or to, or to Atlanta or somewhere like that where it takes months and months to get permits. Mm-hmm.
It's pretty easy to get it done here. So out-of-state, uh, investors don't understand how easy it is to get things done here sometimes.
Zach Stanley: Yeah.
Tom Allen: Local investors get that part of it. A lot of times what I see is they don't... We're such a new market, we have virtually zero historical data.
Zach Stanley: Yeah.
Tom Allen: So you really can't go back 10 years and talk about Class A office space or whatever it is- Mm-hmm
'cause it wasn't, really wasn't here.
Zach Stanley: Yeah.
Tom Allen: And then, and operating expenses, and vacancy rates, and renewal options for tenants. Mm-hmm. All that historical data's really not here, and so they, a lot of these people will manage by spreadsheets, and they're scratching their heads trying to figure it out. They're trying to eliminate risk.
They're trying to eliminate uncertainty, and a lot of that stuff, they're just gonna have to understand the market. And so we always invite them, "Come down to the [00:12:00] market. We have a great airport here. Fly into this airport. We'll pick you up. We'll drive you around. We'll let you see it." And once they see it and they understand- Yeah
and go talk to some of these tenants. Yeah. And they understand that these tenants, if you're looking to buy a building and the options aren't there, and they get concerned that they're not gonna renew- Mm ... most of them renew.
Zach Stanley: Yeah, yeah. '
Tom Allen: Cause they don't wanna lose that space.
Zach Stanley: So you gotta pull from a little bit of, uh, institutional core people when...
You're, you're basically saying you need some core people on the ground to help some of these out of, out-of-state people, uh, facilitate that sec- is that right?
Tom Allen: Yes.
Zach Stanley: Yeah.
Tom Allen: And it doesn't always work. A lot of times I'll have the local person in the office for whoever, whoever it is that we're talking to try to talk to the national folks and let them know, "Hey, what he's telling you is true."
True, yeah. And, uh, sometimes they believe them, and sometimes they don't, and, um, just makes the deal happen faster if they do listen to their local folks.
Zach Stanley: Yeah. Th- this, this next question plays a little bit into that, and it's, what are a few variables that actually matter most in deals? This is gonna be on page two.[00:13:00]
Tom Allen: Um, I wrote down here for myself, it depends on whether or not you're investing to flip the property- Mm-hmm ... or whether you're gonna hold the property.
Zach Stanley: Yeah.
Tom Allen: And, um, if you're looking to flip it, you gotta, you gotta look at the price and you gotta look at what you might get later. You gotta look at the lease rates to see if, um, if they're locked in longterm on, on below market rents- Mm-hmm
or if they don't have any options to renew.
Zach Stanley: Yeah.
Tom Allen: Um, so those are obvious. Obviously you gotta look at, to me, location.
Zach Stanley: Mm-hmm.
Tom Allen: Um, if that tenant does vacate, are you in a location that you can find another tenant easily? Yeah,
Zach Stanley: yep.
Tom Allen: Um, so you know, you don't wanna be in the middle of nowhere- Mm ... and that one big tenant leaves and it's not the most desirable location.
Exactly. If, for example, I don't mean to just focus on, focus on my area, but if it's in Pinnacle, and if it's a quality construction, you got parking-
Zach Stanley: Yep ...
Tom Allen: uh, I wouldn't be worried too much in this market. Mm-hmm. You should be able to re-tenant that space, and should you lose a tenant. And sometimes that's a good thing, [00:14:00] 'cause- Yes
the market changes here so fast, the rates I've, um, negotiated and accepted for some of these buildings that are five or six years old now, they were good rates at the time, but now they're under market.
Zach Stanley: Yeah. Mm-hmm.
Tom Allen: Yeah. But they're locked in on their options.
Zach Stanley: Mm-hmm.
Tom Allen: So it might be a good idea for one of those tenants to leave, and I can get one, or two, or three, or four bucks more a foot- Yep
if they do leave.
Zach Stanley: Yep.
Tom Allen: Those are things to look at. Operating expenses, um, are things that, uh, matter in whether or not you can recover those or not. Yep. That's one of the reasons we're going to triple net, because you couldn't recover all of your operating expenses- Right ... under the old modified, uh, the base year provision.
Brian Wagers: Yeah. Love that. Uh, I like how you said, like getting, getting someone from out of state here, boots on the ground, it tells such a different picture than just looking at spreadsheets. It's hard to say when, you know, Procter & Gamble, I use that example a lot, but there's other CPGs where people come here to work for Procter & Gamble and they intend on say- staying here for one to three years, but then they end up living here for the rest of their life because they love the area and they love the walkability, so.
Zach Stanley: Yeah.
Brian Wagers: I, I think that's [00:15:00] definitely helpful for our listeners out of state to come, come and get boots on the ground, or talk to someone that's on the ground. Mm-hmm. Exactly. Uh, you know, th- continuing on underwriting, what assumptions do you underwrite for every deal?
Tom Allen: Uh, some of the, uh, you know, and, and that's a good question, but it's, it's some of this stuff is just the obvious.
We look, obviously look at rent.
Brandon Still: Mm-hmm.
Tom Allen: Is it what I just went through? Is it under market? Is it at market? Um, if you're a longtime buyer, if, if your rents are at the market and you don't see any room for improvement, but if you're a long time, then I just look and see if it's a credit worthy tenant. Are they gonna stay there?
Are there increases for, uh, escalators for inflation?
Zach Stanley: Mm-hmm.
Tom Allen: That's okay.
Zach Stanley: Yeah.
Tom Allen: Um, the term of the leases, I look for those, uh, in underwriting these. Uh, is the one-year term, is it two years or 5, 10? Mm-hmm. Sometimes the 10 year is not good. Yeah. Sometimes you want them to leave.
Zach Stanley: Yeah.
Tom Allen: Okay?
Zach Stanley: Yeah.
Tom Allen: Uh, are there bumps in the, in the s- you know, as far as the rent goes, whether they're annual or [00:16:00] every five or so years.
Zach Stanley: Yeah.
Tom Allen: I, I talked about options.
Zach Stanley: Yeah.
Tom Allen: And then you look at the market projections, and we've gotten to be a bigger market now where it's not just the overall two county MSA area, but now we've, there's a downtown Bentonville market. Mm-hmm. There's a Pinnacle market, there's a Fayetteville market, there's a Springdale market.
Look at the market projections, says where are people moving into to live, where are they, where are businesses opening-
Brian Wagers: Mm-hmm ...
Tom Allen: what roads are being built. Right now, I-49 is still gonna be main street for the area, but you know, we're looking 10, 20 years, is there gonna be alternative routes north and south-
Brian Wagers: Mm-hmm
Tom Allen: or the west? So those are things we look at for any underwriting, and obviously we look at interest rates. Yeah. Uh, we, you know, it depends on the buyer, what kind of clout they have. Can they get really good rates or is it higher rates? And, um, and again, I'm, I'm not downplaying that... I don't think interest rates are killing deals right now.
Right. Could they be better? Yeah, we could s- because we were so spoiled for so long. Yeah. But these rates were manageable if, if- Yeah ... uh, managed correctly. A
Zach Stanley: common theme that I've [00:17:00] heard, I've heard you talk about is this relationship you have with these bigger tenants that are coming in here, and is that something I, I would think you would think as well as like really big, to have these really good relationships, and the types of relationships, and the type of people.
You're not just putting anybody into the, these buildings. You're, these are people you have relationships with, and you know, like, "Hey, they can support this. This company can support this type of rent." You're not just throwing anybody in. Is that correct?
Tom Allen: Yes.
Zach Stanley: Yeah.
Tom Allen: Relationships are everything. Yeah. That, to me, that's the number one, uh, factor in almost every...
There are a lot of really important things, but- Yeah ... if you don't have relationships, is there the trust? Mm-hmm. I- is there a history? Do they know you're gonna be there-
Brian Wagers: Mm-hmm ...
Tom Allen: uh, to have their back or whatever? But we, Mrs. Hunt and our, uh, Hunt Ventures in, in Sage, uh, prior to even Sage being part of the mix, but the Hunt, uh, Ventures group, I'll mention, for example, the Johnson & Johnson tenant, which is now Kenview, Kimberly-Clark, Unilever-
Zach Stanley: Mm-hmm
Tom Allen: um, uh, several others that I'm forgetting at the moment, that we've [00:18:00] had Kellogg's. Those tenants have been a tenant of hers for 30 years or more.
Zach Stanley: Mm-hmm.
Tom Allen: And there's a trusting relationship to where- There may be a lease, and it may be in black and white that we pay for this or they pay for that. Mm-hmm. But it, when we get the phone call that something's wrong, we look at what's the right thing to do.
Zach Stanley: Yeah.
Tom Allen: And we take care of our tenants. We don't gouge them because I can get another 50 cents a foot. Yeah. I don't gouge them by charging for a hourly fee because a engineer went over and turned a light switch on.
Zach Stanley: Yeah. Mm-hmm.
Tom Allen: Um, so it's long-term. I, I learned back from my days at Walmart when we were leasing up and selling those dark stores.
Zach Stanley: Mm-hmm.
Tom Allen: The, the open store, the super center, had to carry that dark store rent.
Zach Stanley: Yep.
Tom Allen: And that store manager's bonus was paid on profitability of those two stores- Mm-hmm ... one empty and one... And the sooner we could get a tenant in there to mitigate, um, uh, the cost- Right ... the better off the store will perform.
We can sit here and hold out for [00:19:00] pennies and nickels and dimes and things like that, but at the end of the day, um, I don't make any money, Mrs. Hunt doesn't make any money if the space sits empty.
Zach Stanley: Yeah, 100%.
Tom Allen: And, uh, and then we want them... And what I mean by that is on renewals. These tenants have renewed with us because there's been a strong relationship, that at the end of the day, that doesn't mean that there's not problems.
Right. We'll have, we'll have issues and sometimes it gets attorneys involved, but- Right ... it's always been good spirit negotiations for the most part, and we love that. We love to do business- Yeah ... with people that like to do business with us. Mm-hmm. And that's been the real fun part, is to get to know these companies, and they have trust in us and, and, and it goes both ways.
Zach Stanley: That speaks a lot to the character, I think, of really this area of the country, you, and, and just how, um, it probably wouldn't be that way in a lot of other areas of the country, and I think that's what some of these companies love, for sure.
Tom Allen: Yeah.
Zach Stanley: Brandon?
Brandon Still: I think these, I think that reputation's so important, too, when you're thinking about, you know, pre-leasing a building like this.
I mean, when, when others are... Some of these other CPG companies are talking great about you or to, about you to [00:20:00] these other, um, companies is what, you know, it makes that process, I'm sure, a lot easier, the same as any other business, even if it's multifamily or something like that. So- Mm-hmm. Yeah ... I think that's
Tom Allen: super important.
Yeah. Thank you, and that, that matters more than anything to, uh, my company, myself, Mrs. Hunt, and others. And I know there are many other developers that think this, too, but-
Zach Stanley: Right ...
Tom Allen: at the end of the day, that, you know, it c- it comes down to whether or not you can be trusted and whether or not you're doing the right thing.
Zach Stanley: Mm-hmm.
Brandon Still: Yep.
Tom Allen: And, um- So
Zach Stanley: important.
Tom Allen: Yeah.
Zach Stanley: Brandon?
Brandon Still: Absolutely. So Tom, I know, you know, when it comes to a building like this, and there are a lot of zeros on the line, or, or any other investment you're, you're kinda looking at or talking about, what do you think over these years has kinda continued to keep you calm in this under- in a, in an underwriting process or as you're looking at a deal or an opportunity, um, that makes those decisions kind of easy to make?
Tom Allen: Yeah. Well, you know, we are blessed to live in a, in a most fantastic place on the face of the earth, in my opinion. It's just, uh... And so a lot of times I wanna say [00:21:00] we're riding the wave. And, um, one thing that I like to, um, talk about, and, and I can say that, uh, the employees at Sage and my partners at Sage- Uh, think the same way, Mrs.
Hunt thinks the same way, is that we swallow pride.
Brian Wagers: Mm-hmm.
Tom Allen: You know, we, we don't wanna beat our chest and think we're better than anybody else, because we're not.
Brian Wagers: Mm-hmm.
Tom Allen: There's a lot of blessings we get that we get from the good Lord above. We don't know why, but we get it. Yep. And, um- Amen ... so remember that, to be humble in everything that we do.
Zach Stanley: Yes.
Tom Allen: And to give credit where credit is due. I give credit to the Colliers of the world and CBRE of the world, and whoever brings us a deal, they were a part of that- Yeah ... success story. Mm-hmm. And I'm not gonna try to cover that up and say it was all me or all us- Yeah ... because they're a big part of that.
Yes. And so you, you give, uh... So the comfort I have is to know that we've got a, a great real estate market here. Our brokers and our competitors and our developers are all friends. Mm-hmm. We all, and we all trust each other, and we know at the end of the day we're trying to take care of our clients, number one, that's it.
Zach Stanley: Yeah. [00:22:00]
Tom Allen: And when that happens, we all work together.
Zach Stanley: Yeah.
Tom Allen: Uh, I feel good about the market we live in, in that we got the growth of the population coming in here. Mm-hmm. We've got these great, fantastic corporations and organizations. We have great charities and, uh- Yeah ... we have great, you know, we have all these, uh, charities that support, uh, cures for cancer, Alzheimer's, uh, you name it, things like that.
It just shows the spirit of the area that we live in, that we don't just focus on making money or taking care of my, my expensive car or my expensive house. We're out there trying to help others. Yeah. Mm-hmm. So all these things make me really comfortable in the fact that we've got a long-term projection in Northwest Arkansas.
The, I don't know, something could mess it up, and knock on wood that I don't mess it up by saying this. But we, we've got a lot to look forward to, 'cause we've got one of the better places to live in economically and quality of life.
Zach Stanley: I wanna dive us next into kind of act two of the conversation, and that's gonna be kind of these deal, deal filters. One, one thing that I really wanted to ask is, like, what, and I'm, I'm gonna ask [00:23:00] you more, uh, after the show about this, is, like, what's an automatic no for you? When, when, I'm sure you're approached all the time with different opportunities and things.
What's, like, one of your first filters that you're like, "No, uh, this is a no for us"?
Tom Allen: Well, that's, you know, that, that is something you face in almost every new, uh, deal that's presented to you, and it's, uh, there's no science to it. There's, uh... Somebody once said there's the art of the deal, so I don't make anybody mad with that.
But- Yeah. ... there is an art to it in that... And I've been in the business long enough to where I can say I've... one of the older guys now, in that sometimes you have an intuition that are they, are they for real?
Zach Stanley: Mm-hmm.
Tom Allen: Okay? Are they, are they really telling me an accurate story of who they are, what they are, and what's gonna happen?
Zach Stanley: Yeah.
Tom Allen: And then at some point, you gotta determine whether or not they're being honest with you.
Zach Stanley: Mm-hmm.
Tom Allen: And we don't like to... I won't say I've never done a deal with someone that was dishonest, because I'm sure I have.
Zach Stanley: Yeah.
Tom Allen: Uh, but on the front end, if you can determine that they're n- not being honest with you, there's not a real [00:24:00] good chance that we're gonna have a deal- Yeah,
Zach Stanley: yeah
Tom Allen: on that. So honesty, trustworthiness, um, and then character, integrity, morals.
Zach Stanley: Yeah.
Tom Allen: Those all... Those aren't in... If you're looking for... Tom's not talking about economic terms.
Zach Stanley: Mm-hmm.
Tom Allen: To me, those are the first things you look at.
Zach Stanley: Yeah.
Tom Allen: Because if they're lying to you, it doesn't matter what numbers they present to me- Yeah
'cause they're, they're not real.
Zach Stanley: Yes.
Tom Allen: Uh, if the company, they think is, you know, got the best thing since sliced bread- ... but, but, but everybody else is doing it, then you gotta really dig into it. Yeah. So I look at those things, but also, you gotta look, um, you just gotta look at the fundamentals of the, of the deal.
Is, is there, is there room to make this deal work financially?
Brian Wagers: Mm-hmm.
Tom Allen: And even if it doesn't work on the front end and you like who you're dealing with- Mm-hmm ... let's see if we can get there. Right. Let's, let's get out of the box-
Brian Wagers: Mm-hmm ...
Tom Allen: and let's see if we can't figure out a way, whether it's through free rent, a longer term for more TI.
Yeah. Uh, sacrifice some rent on the first few years and then, then bump the rent up the next few years.
Zach Stanley: Yes.
Tom Allen: Uh, those are things I look at- Stay buying ... in [00:25:00] deals.
Zach Stanley: I, I love, I love that you, you have this constant s- theme of like we wanna do business with high character, great moral people, and I think that's something that, you know, when we're sitting in this building, the General Mills bu- or the, the Visionary building, uh, sorry, the, um- Mm-hmm
Founders Plaza building. Mm-hmm. Um, it's, it's all built on relationships, and that's a constant theme I hear from you. That's right. It's a lot of relationship based. Brian?
Brian Wagers: Yeah. And I can attest to that. Uh, I'm doing my first deal with Sage with, with your, your son Matthew. Uh, we're, we're getting ready to close, uh, a, a land deal, and it's my first deal and, uh, it's been going great, so, um...
And also, I, I was walking out of a title company, and Tom and Matt were walking out of the building too the other day, and it wasn't a deal with you guys, but Tom was genuinely happy to see me doing other deals, and he's like, "You know, k- keep doing more deals." Right. So I think that spirit is true, and it, it is that rising tide lifts all boats- Mm-hmm, mm-hmm
uh, community here, so. 100%. Uh, back to deal filters. What's, what's the [00:26:00] first number that you look at and why?
Tom Allen: Well, obviously when you talk about specifics of numbers, you look at price. Mm-hmm. That's the first number you look at.
Brian Wagers: Mm-hmm.
Tom Allen: And you gotta determine whether or not, like I just said before, um, i- is, is that the right price?
Is that what I'm looking for? Or is it, uh ... Is there room to grow or to get there, or are we too far off? Mm-hmm. And, uh, so I look at that first. So it all starts there. So that's the first number I look at, and then it depends on whether it's a lease or a purchase You know, uh, I guess you look at replacement value versus NOI- Mm-hmm
or cap rates, things like that. Um-
Zach Stanley: Yeah ...
Tom Allen: we've turned down representing lots of clients that have come to me asking me to list their properties, and if I think they're being really unrealistic in their expectations, I will politely just say, "I don't think that I'm your person."
Zach Stanley: Yeah.
Tom Allen: Uh, one, it's gonna be a waste of their time and probably our time.
Mm-hmm. And I don't think I'm gonna make you happy, so I think that, you know, either- Right ... i- if we can't come agree to terms, then I don't think I'm your person to represent you. So you look at, look at price and look at [00:27:00] expectations.
Zach Stanley: Putting out future fires. Love that. Brandon?
Brandon Still: For sure. Yeah. Tom, when it, when you come across...
I know over the years you've probably come across attractive deals that you did not end up doing. Um, you know, when you got a lot of things in the fire, um, you know, it's, it's easy to, uh, you know, especially when you have momentum on your side, it, it feels like it's easy to want to jump into every deal.
For you, what does that discipline look like or, or feel like whenever you turn down something because, you know, maybe you've got something, you know, bigger in the pipeline that you, that you're working on?
Tom Allen: Uh, so discipline involves patience. Mm. A little bit of, uh, the ability to be wise in your ways. Um, and then sometimes people who deal with me may criticize me over this part, but patience.
And don't al- you know, sometimes you do have to rush. Sometimes you gotta rush. Mm. But boy, I tell you, I don't know how many times I've rushed uncomfortably, and turns out we've made a mistake.
Zach Stanley: Yeah. Mm.
Tom Allen: And, uh, then that delays it even further.
Zach Stanley: Mm-hmm.
Tom Allen: [00:28:00] Sometimes what's hard, and you just gotta stand firm, is to just say, "It just takes a while.
I'm sorry. We're working on it."
Zach Stanley: Yeah.
Tom Allen: And, uh, and then you have to tell them, you know, there are other things I'm doing, and sometimes a client, you don't... They wanna always feel like you're the, they're the only client, but just be transparent and honest.
Zach Stanley: Mm-hmm.
Tom Allen: I know the people I'm working with, they're just as busy as I am.
Zach Stanley: Yeah.
Tom Allen: And, uh, if I ask for something... Uh, matter of fact, I, I asked for something in our office from a, a young professional, and they felt pressured that it, because it was me asking, they had to get it to me quickly. Mm. And, uh, they did, and I had to send it right back- Yeah ... later. Yeah. And so I... Well, lesson was you can push back with me.
Tell me, "Tom, I can't do that that quick," and I will understand that.
Zach Stanley: Right. Right.
Tom Allen: So patience is something that you've got to, um, look at. Um, when I pass on something that's attractive, just know that there are other deals out there.
Zach Stanley: Mm-hmm.
Tom Allen: And, uh, you don't have to do every great deal, 'cause you know what? Um, my comrades in the business at, at Sage, [00:29:00] and then there's, there's Clint Bennett and Alan Cole and all the others, David Arstein, they- Mm-hmm
they're gonna get these deals too.
Zach Stanley: Yeah.
Tom Allen: Um, I'm not gonna get every deal.
Zach Stanley: Right. For
Tom Allen: sure. And, um, so I just have to rest assured that just because I didn't get that deal, my career is not over.
Zach Stanley: Yeah. Yeah.
Tom Allen: And, uh, just be patient, let it work itself out. And I've been disappointed, and I've thought, "Man, I really wanted that deal, and I didn't get it."
But it, it, you know, and time passes, and I'll get over it, and we'll get another deal at some point.
Brandon Still: Yeah. I think that abundance mindset's, is so important, too, when you're in a market like this that feels a little bit smaller than a Dallas or Kansas City or a Houston. Mm-hmm. But at the end of the day, even a market like, uh, like this, there's, there's deals happening every day.
There's opportunity- Yeah ... everywhere, and, and, uh, you know, just because you miss on one good deal doesn't, doesn't mean the next one's not coming in your lap.
Tom Allen: Yeah. So, it's really good. I'd hate to be in a market where we're the only ones getting deals.
Brandon Still: Yeah.
Tom Allen: Right? Yes. For sure. Yes. 100%. We want, we want everybody to do deals.
You
Brandon Still: want the competitiveness. For
Brian Wagers: sure. It's the same philo- I mean, the Waltons got the same philos- uh, philosophy with their development, too. They want other developers to, to come into the market and be more [00:30:00] attractive.
Zach Stanley: Mm-hmm.
Tom Allen: Well, and that's why we're so successful. We have a lot of really good developers, a lot of- Yeah
really good real estate professionals, a lot of good GCs, a lot of good... We have a lot of them, and thank goodness we do. Yeah. And, uh, we invite a lot of our competitors in the development business to our groundbreaking ceremonies, and they celebrate with us, and we go to theirs. We celebrate them.
Zach Stanley: 100%.
Brian Wagers: A lot of, a lot of visionaries, if you will.
That's right.
Zach Stanley: A lot of, lot of, a lot of visionaries. That's
Brian Wagers: right.
Zach Stanley: Well, uh, Tom, you answered one or two of my questions, so I'm gonna revert over to Brandon for his question for, uh, this market reality portion.
Brandon Still: Yeah, so when it comes to risk and uncertainty, Tom, um, when you've got a little, a lot of big things going, um, does it ever f- feel like too much?
Or, or how do you personally define kind of those, those two different things, risk versus kind of uncertainty when it comes to the future?
Tom Allen: Yeah, that's a good question, and they're not the same. Mm. Risk and uncertainty, they can overlap into the same areas that you have to underwrite and analyze. But, you know, risk to me is a word, [00:31:00] is quantifiable.
It's, you can... You, there's a checklist that you go on and you, and you look to mitigate risk with certain things.
Zach Stanley: Mm.
Tom Allen: Mm-hmm. Market rate rents, options on the renewals, um- You know, cap rates or whatever. There are things that you can quantify on risk.
Zach Stanley: Mm-hmm.
Tom Allen: Uh, but the uncertainty is, is the big one. Mm-hmm. But you never are g- what's uncertain is you're never gonna be certain of what's uncertain.
Brian Wagers: For sure.
Tom Allen: Yep. I sound like somebody there. I won't repeat who that is. But, um, and then there's always gonna be uncertainty. Mm-hmm. And, uh, but what I like about Northwest Arkansas is some of the uncertainties, uh, I think are mitigated and limited because we're so strong here, and we're so well-diversified in, in, uh, not fully recession-proof industries, but-
Zach Stanley: Yeah
Tom Allen: I can't think of any industries better than to have- Yeah ... who we have here.
Zach Stanley: Mm.
Tom Allen: And then the families that have started these companies stay here and invest- Mm-hmm ... their personal wealth in investments. Um-
Zach Stanley: I love how you highlighted that in episode 47. We talked about how the Hunts [00:32:00] poured in, you said up to s- around 70 million, uh, years ago into infrastructure and gutter systems and lights, and that's just something we don't see in other spots in, in the country.
We really don't.
Tom Allen: They believed in Northwest Arkansas, and they were excited to do it. Mm-hmm. And, uh, they, they did that. And so that, it takes that kind of investment. The Waltons are doing that now with what they do. And, uh- Sewer treatment
Brian Wagers: facility and- Tysons
Tom Allen: have done it with Springdale and other places as well.
So, and, you know, you're going down the list, uh- Yeah ... Hudson's, the Simmons and other, George's and everybody else, so. Mm-hmm. I start naming names, I'll make somebody mad. Leave 'em out. But, um- Yeah ... the hype is, uh, here, but you still gotta pay attention to fundamentals. But what better area to have... Man, these, these companies are worldwide leaders.
Tyson, J.B. Hunt, Walmart. Yep. University of Arkansas is now a national leader in what it does.
Zach Stanley: Yes,
Tom Allen: yes. Uh, not in football yet, but it will be.
Brian Wagers: It will be.
Tom Allen: Yeah.
Zach Stanley: Jesus name. W-
Brian Wagers: a- and, and all the good things about NWA investing, is there a common narrative about NWA investing that you might disagree with? [00:33:00]
Tom Allen: You know, I, I think I was looking at this question incorrectly in the beginning, um, so I switched it to those that were looking from outside in t- that narrative.
And so I think it has... I've been doing this for a while, Troy. I remember we were trying to prom- we were trying to pump up the Pinnacle area. Mm-hmm. And we kept saying how great it's gonna be, and we were sold on it. N- nobody else outside of Northwest Arkansas was. Mm-hmm. And I kept saying, "This real estate is gonna go quickly.
You better... You wait." And I sounded like the biggest salesman you could ever think of.
Zach Stanley: Yeah.
Tom Allen: But sure enough, once it popped-
Zach Stanley: Yeah ...
Tom Allen: the, the land and the buildings have gone. And so the scarcity is an issue in that. So, um, the misconception from a national perspective was that, well, we're too small of a market.
Yeah, they're, they're really high on themselves, but what is, what is a Northwest Arkansas? That's a directional- Mm-hmm ... market name. It's not even a city.
Zach Stanley: Yeah.
Tom Allen: What is this? Um- Right ... and then they kept thinking that, um You know, that what if somebody [00:34:00] headquarters leaves? Mm-hmm. And we, we knew the families, we knew they weren't going anywhere.
Um-
Zach Stanley: Yeah ...
Tom Allen: but the, uh, the misperception that office, for example, is depressed in California, on the East Coast, in Chicago, big cities, and that's all you see on the news every day.
Zach Stanley: Yeah.
Tom Allen: But obviously, the news doesn't focus on Northwest Arkansas. Mm-hmm. They don't know what's going on here, and we have to beat it into their heads that this is a unique market.
So that was a mis- um- Mm ... a narrative that we c- had to con- Right ... always deal with. Right.
Zach Stanley: I wanna do, like, a, a shift here, and this could be, like, y- your relationship with your son, um, or really anybody in general. But if you were training a young investor, what would be three to five principles you'd really nail down?
Mm-hmm. This could be, you know, when your son first got in the career, and what were you teaching him, or just somebody general, a young investor in general, something that you would nail down.
Tom Allen: Yeah. Well, in what we do for a living, a lot of people want to do this, um, 'cause they tend to see that those that are successful, and they're like, "Wow, I [00:35:00] wanna do that."
And that's great. Yeah. The ambition is wonderful, and that's what drives a lot of success is, uh, set that goal and do it. But there are a lot of people in our business, and a lot of... I would say the majority of them aren't as successful.
Zach Stanley: Mm-hmm.
Tom Allen: So i- it's kinda like, uh, in some respects, you know, you're, you're thinking, I used to think I was gonna be a Major League baseball player.
Zach Stanley: Same.
Tom Allen: Didn't, didn't happen.
Zach Stanley: You were-
Tom Allen: I worked hard at it- Yeah ... but it just didn't happen.
Zach Stanley: Yeah. Yeah.
Tom Allen: You know, and there's a few that make that, okay? Mm-hmm. And, um, but for example, my son, what I told him was, "You're gonna starve for a while."
Zach Stanley: Mm-hmm.
Tom Allen: You know, this is mostly a commission-based business.
Zach Stanley: Yep.
Tom Allen: And it takes a while.
And like I said, you've gotta develop relationships. You gotta go, and, and if you're young, in your 20s, most of the people, at least when I grew up, and people in their 20s had no money. Today, a lot of 20-year-olds have a lot of money. Yeah. That's different. But most of the people that you're having a relationship with don't have all the money, and the pull, and the influence, but they will.
Yep.
Zach Stanley: Yep.
Tom Allen: So [00:36:00] get the relationships, build the long-term strategy with these people, get to know them, earn their trust, and then when they do get promoted at Walmart or Tyson or wherever they are, or when they do start their own company, or when they inherit money from their family or whatever, and then they start to invest, you're gonna be their guy.
Zach Stanley: Yeah. Yeah.
Tom Allen: And so patience is one. Mm-hmm. But protect your reputation in what you do is what I tell them to do- Yes ... always because your reputation can be gone in a minute, but it takes forever to build it.
Zach Stanley: Yes.
Tom Allen: So just keep doing the right things, and make sure, uh, you're hanging out with the right people, doing the right things- Yeah
and get the reputation for, um, being honest and- Yeah ... trustworthy. But then deal-wise, I, I think it's great to start out, if you're a young man or young woman- Go buy a, a house and rent it
Love
Zach Stanley: that Start
Tom Allen: out small
Zach Stanley: Love that. Love that
Tom Allen: Okay, and build from there. Then maybe go and get a couple duplexes, triplexes, fourplexes.
Mm-hmm. Do that. And, and some people like that so much that that's all they do. [00:37:00] Yeah And make a lot of money doing that.
Zach Stanley: Yes.
Tom Allen: Some people like that. I don't like dealing with residentials. I, I just don't. And, and I own, you know, a little bit of residential. Right Uh, but I think that that's a wise way to start out.
Then maybe go to, if, if you don't have a lot of money, uh, then look at some triple-net investments, single, single-tenant r- single, um, tenant investments that are $3 or $4 or $5 million.
Zach Stanley: Mm-hmm
Tom Allen: Uh, and if you can, if you can do that on your own through a bank or through whatever, great, go for it.
Zach Stanley: Yes.
Tom Allen: But then don't be, don't be afraid of going and talking to some of your friends and get partners.
Zach Stanley: Yep. Yep.
Tom Allen: You can do that at an early age, and, and if you need help structuring those partnerships as to how you're protected and you get some equity and some return on that, you know, do that, but don't be afraid to go out there, Mr. Young or Mrs. Young Investor, and get you some partners involved, and then you can build a team up, and before you know it, you've got yourself a good fund.
Zach Stanley: Yeah, yeah. I, I, I mean, I love that you're saying, like, "Hey, keep it simple," and one of the biggest things you can do is buy your own home, and then move out of that eventually and [00:38:00] rent it out. Yeah. I, I love that. I, I tell that to my people. I'm sure, Brandon, you do as well. Sure. It's one of the first big steps you can take, uh, as a young investor.
I love that.
Brandon Still: So good. Yeah, Tom, we're gonna transition in kind of a rapid-fire round, just a few questions that I think will really kinda help answer, or answer some questions as we round it out. First one here, biggest mistake that you see in this market from either new investors, seasons in- seasoned investors that have come crashing down.
What, what do you think is one of those biggest mistakes you see?
Tom Allen: Um, I think that some people may be over-leveraged in, in what they're trying to acquire.
Zach Stanley: Good answer
Tom Allen: And I think that also, uh, particularly in this market, when you get outside of the, the pinnacles of downtown areas, um, don't... If you're not doing your due diligence to look and see if you can get through the planning commission, see if you can get utilities, to see if you can, you know, whatever, those things that tend to be overlooked for the inexperienced investor-
Brian Wagers: Mm-hmm
Tom Allen: so, um, uh, you've gotta... Those are blocking-and-tackling-type [00:39:00] issues. So I think- Yeah ... and we do see that.
Brandon Still: Mm-hmm.
Tom Allen: So I think those are some mistakes I see in the market.
Brandon Still: That's really good. Most overrated metric you see as a real estate investor.
Tom Allen: Uh, and probably people are gonna disagree with me on this, but, uh, I'm on a bank board, so I gotta wear that hat sometimes.
But- ... I think that interest rates is talked about too much. Okay Um, I think that they're not- They're not ridiculous. They're not, they're not to where you can't make a deal happen. Can they get better? Yeah.
Zach Stanley: Yeah.
Tom Allen: But I think that people focus too much on the interest rates. I think that, um, go back to the old days when if you put skin in the game, I think you need to put some money down.
Mm-hmm. You need to get that, um-
Brandon Still: Yeah ...
Tom Allen: you know, do a, at least a 20/80 deal- Mm-hmm ... if not more. That'll help you on that. Um, overrated metric I talked about before is the, do they have long-term tenants, uh, with options? Uh, do the historical, uh, data and see do they continue to renew, renew, renew? Do they stay there even if they're one-year [00:40:00] renewals?
So I think that those are some metrics I look at.
Brandon Still: That's really good.
Brian Wagers: Yeah.
Brandon Still: Most underrated skill you think when it comes to underwriting deals or just being an investor in general?
Tom Allen: From the investor in general, um, I think you've gotta communicate I think that, uh, some people are blessed to be able to really communicate very well.
Uh, they just got it in their inner being. They can talk, they can observe, they can see body language, and then you just enjoy being around them. Uh, I know a couple of guys that, uh, that I know, that I'm close with, that I'm just amazed at, he's the best, uh, in my mind, uh, at just people liking-
Brian Wagers: Yeah ...
Tom Allen: and, um- Hmm
wanna do deals with him. So be able to communicate.
Brian Wagers: Mm-hmm.
Tom Allen: And not just that you like him, but also know your stuff. Yeah. If you know your stuff and you can communicate it, either... And also writing, uh, whether it be emails or, people don't write letters anymore, but if you can write effectively- Mm ... effective emails, I think that is so- Yeah
helpful in negotiations and getting things done. So communication overall is, I [00:41:00] think, the most underrated skill. You can study spreadsheets and interest rates and IRRs and ROIs. You can have all that, a lot of people do, but if you can't communicate it, it's worthless.
Zach Stanley: Yeah.
Brandon Still: That's so good. Well done. I think there's a culture, too, in Northwest Arkansas of people want to use people that they know and like and trust.
Yeah, 100%. Um, so that communication piece, that relationship piece, I think is really important. Best financial decision you've ever made.
Tom Allen: It's the one I didn't make. That's
Brandon Still: good. That's a good answer.
Tom Allen: I remember my, when I was still working at Walmart, I d- where I live now, I developed a neighborhood, my wife and I did.
Mm-hmm. And we, we didn't build the houses. It was residential, and we live out there, as a matter of fact. Yeah. And, um, bought it at a time when the dirt was cheap, market was still, um, such that you could get deals. It was the first one I ever did, and I, I did real well with it. Yeah. I sold the lots real quick at the prices I asked for, and I thought, "Wow, this was easy."
And, uh, finished it, paid my banker off. At the time it was, um, Gary Kleck [00:42:00] was my banker, and he was at Arvest at the time. And I remember when I finished... So I was... He said, "Let's go do another one, Tom." And I said, "You mean you'll loan me more money?" I didn't realize. I was naive. Yeah. I didn't know bankers made money loaning money.
Zach Stanley: Yeah.
Tom Allen: And I, he says, "Yeah, let's go do another." So I looked around and, uh, saw that prices had quadrupled on dirt since I had done that deal. Yeah. That was alarming, but I thought, "Well, market's on fire." And I got in a corporate jet one day and flew out of the airport, and they, they banked the wings, and I looked down at the dirt and I saw all this red dirt all over as far as the eye could see of residential developments that were being developed.
Zach Stanley: Yeah.
Tom Allen: And I thought, "Oh, my goodness. The competition is fierce, and I'm a novice at this. These people are pros." I said, "I can't compete with that at the prices I gotta pay." So I called up the banker and said, "I'm out." Well, a year later, the Great Recession hit and most of the people who had all that land- Yeah
got stuck with it. Right. I would've been one of them.
Zach Stanley: Wow.
Tom Allen: So my decision to not go out and do that- Mm ... again was kinda like me going to the blackjack table, having my w- [00:43:00] my winnings- Yeah ... and then saying, "I'm going to, I'm gonna walk away."
Zach Stanley: That's
Tom Allen: a God moment. So the best decision was that I didn't-
Zach Stanley: Yeah ...
Tom Allen: I didn't go do that.
Zach Stanley: God was
Brandon Still: watching out
Zach Stanley: for you there.
Brandon Still: It's good to have that foresight too. Uh, last one here: what still excites you about real estate in northwest Arkansas?
Tom Allen: Uh, every day is different, and every tenant's different. All the, uh, different businesses we get to, uh, see and learn about, we get to know a little bit about what they do, and it's fascinating to see.
There's so many smart people- Yeah ... moving in here and starting new companies and new businesses and things that I could never dream of. All the tech companies. So I, I really love real estate in that almost every deal has got something unique and different, whether it's the size of the deal, the square footage of the building, the parcel size, the topography, the zoning, the city, whatever it is that you're dealing with.
There's so many different, um, uh, facts and, and people you're dealing with that, that... It's refreshing. I can... I started out in college being an accountant in a, in a, in [00:44:00] accounting major. Me both. And I learned real quick I can't do that.
Zach Stanley: Yeah, yeah. Yes, yes. I know. That part, Brandon did that too. I, I... He found out- For sure
quickly. 100%. Tom, you've been great. Um, one of our la- one of the last questions I wanna ask is if you had your same experience you had, do you do now, but very limited capital and so you were kind of hitting the reset button on capital, but were, had the experience, where would you start? Um, is it that single-family house or, or, or what would it be for you?
Tom Allen: If it was me with low capital starting out- Yeah ... in this, it'd be the advice I gave earlier. Yeah. I think that, uh, I remember when I was out of college a few years and one of my, uh, friends in college, I was living in Louisiana, and he was buying these, um, houses and duplexes in Fayetteville, and I thought, "Why is he buying that stuff?"
"Well, it's all paid off. It'll save a bunch of money." Yes. And so I, I wish that I had done that, because it was relatively easy entry into the field. Yeah. And, um, so I think that, um, I would start that way. I would also, uh, I've always [00:45:00] been afraid to ask people for their money, but-
Brian Wagers: Mm-hmm ...
Tom Allen: uh, you need to get over that.
Yeah. People with money are used to that. Just don't do it in an offensive way. Just go up and ask them. The worst thing they can say is no. But, you know, a lot of times when you do ask them, they'll tell you, "Well, I'm, I can't do it, but go call so-and-so."
Brian Wagers: Right.
Tom Allen: They're, they're looking at doing something like that.
Yes. So I would advise young, if it was me, I would not be so shy, and I would be asking some people with money, uh, "Hey, y- I wanna go do this. Can you help- Yeah ... can you help fund me?"
Zach Stanley: Great advice. Tom, it's always a pleasure having you on. Thanks for coming on for the second time. Uh, we love this building and it was really cool shooting here.
Uh, thank you, and we look forward to it again.
Tom Allen: Thanks for having
Zach Stanley: me. Thanks, Tom. Thanks.