1 00:00:03,066 --> 00:00:05,133 welcome to Dental Unscripted 2 00:00:10,866 --> 00:00:12,666 for Mike Dinsio and Paula Quinn 3 00:00:12,666 --> 00:00:14,700 break down the practice ownership journey 4 00:00:14,700 --> 00:00:16,666 one episode at a time 5 00:00:20,366 --> 00:00:21,166 starting up 6 00:00:21,166 --> 00:00:23,900 buying and running a successful dental practice 7 00:00:37,400 --> 00:00:38,300 all right all right 8 00:00:38,300 --> 00:00:41,033 welcome back to another episode of Dental Unscripted 9 00:00:41,033 --> 00:00:42,700 my name is Michael Dinsio 10 00:00:43,100 --> 00:00:45,000 uh we also have uh 11 00:00:45,033 --> 00:00:48,033 our other co host star of the show 12 00:00:48,033 --> 00:00:49,200 Miss Paula Quinn 13 00:00:49,700 --> 00:00:53,600 and today we're talking about all things dental leases 14 00:00:53,600 --> 00:00:56,300 so super fun super fun topic 15 00:00:56,300 --> 00:00:58,866 however it comes up all the time 16 00:00:59,100 --> 00:01:01,300 somehow I get dragged into the conversation 17 00:01:01,300 --> 00:01:04,666 yet there's a real estate person and an attorney 18 00:01:04,666 --> 00:01:05,766 and all these people 19 00:01:05,766 --> 00:01:09,466 and I get asked some of the most basic questions of a 20 00:01:09,466 --> 00:01:11,566 of a lease and I don't wanna answer them 21 00:01:11,566 --> 00:01:14,600 so I figured let's have a podcast and uh 22 00:01:14,600 --> 00:01:17,366 bring in a professional that really knows this stuff 23 00:01:17,366 --> 00:01:19,933 like it's their everyday job 24 00:01:20,100 --> 00:01:22,100 so welcome to the show Dan Gleissner 25 00:01:22,100 --> 00:01:23,500 Dan's been on the program before 26 00:01:23,500 --> 00:01:24,700 welcome back my friend 27 00:01:24,700 --> 00:01:26,100 thank you for having me 28 00:01:26,200 --> 00:01:27,833 I'm not sure I want to answer those questions either 29 00:01:27,833 --> 00:01:29,533 though haha 30 00:01:29,666 --> 00:01:30,700 well it's your job 31 00:01:30,700 --> 00:01:32,666 so you're gonna have to um 32 00:01:32,900 --> 00:01:33,800 no man uh 33 00:01:34,266 --> 00:01:35,400 welcome back we had 34 00:01:35,400 --> 00:01:36,466 we had a great uh 35 00:01:36,466 --> 00:01:38,466 episode the last time you were on 36 00:01:38,466 --> 00:01:40,600 and I think just like Dan is 37 00:01:41,500 --> 00:01:42,766 they're you know 38 00:01:42,766 --> 00:01:43,833 they they're very 39 00:01:43,833 --> 00:01:44,766 very important 40 00:01:44,766 --> 00:01:47,366 and it gets overlooked and how important they are 41 00:01:47,366 --> 00:01:50,033 and it's super important to have the right people 42 00:01:50,033 --> 00:01:52,566 look at these things and 43 00:01:52,566 --> 00:01:54,000 um you know 44 00:01:54,000 --> 00:01:56,066 they're complex situations and so I 45 00:01:56,066 --> 00:01:59,733 I think for any doctor that's um 46 00:01:59,866 --> 00:02:03,900 buying or starting or even owns a practice and 47 00:02:04,066 --> 00:02:06,000 you know their lease is coming due 48 00:02:06,000 --> 00:02:08,600 all this stuff is really really important 49 00:02:09,166 --> 00:02:09,566 um 50 00:02:09,566 --> 00:02:12,966 and so thank you for being on the show and contributing 51 00:02:13,100 --> 00:02:15,100 a little housekeeping if you're watching this 52 00:02:15,100 --> 00:02:19,800 on startup unscripted or Dental Acquisition Unscripted 53 00:02:19,800 --> 00:02:24,233 we're merging to one brand that's easy and simple 54 00:02:24,233 --> 00:02:27,066 called Dental Unscripted and the goal is 55 00:02:27,066 --> 00:02:27,900 is to have 56 00:02:28,233 --> 00:02:31,200 episodes that don't just talk about start or buy 57 00:02:31,200 --> 00:02:34,666 but also how to run your practice and tips and tricks 58 00:02:35,100 --> 00:02:37,700 uh Paul and I just did one this morning about hygiene 59 00:02:37,700 --> 00:02:39,433 if you if you caught that 60 00:02:39,433 --> 00:02:41,233 how to boost your hygiene department 61 00:02:41,233 --> 00:02:43,900 we've talked about culture in a practice 62 00:02:43,900 --> 00:02:45,466 we talked about some leadership stuff 63 00:02:45,466 --> 00:02:49,500 so all things that you guys need to be thinking about 64 00:02:49,500 --> 00:02:51,100 if you are buying or starting 65 00:02:51,100 --> 00:02:53,233 but also a lot of you own 66 00:02:53,233 --> 00:02:55,833 now we love to have new content 67 00:02:55,833 --> 00:02:58,133 so dental and script is the answer there 68 00:02:58,400 --> 00:02:59,100 um okay 69 00:02:59,100 --> 00:02:59,966 without further do 70 00:02:59,966 --> 00:03:02,800 we're 3 minutes in and I know if I don't hit it quick 71 00:03:02,800 --> 00:03:03,600 we're gonna lose you 72 00:03:03,600 --> 00:03:06,600 and you'll turn it off on your way to work or home 73 00:03:06,600 --> 00:03:09,400 so with all without further do Dan 74 00:03:09,400 --> 00:03:11,033 why don't you give us a little bit about your 75 00:03:11,033 --> 00:03:12,000 your new company 76 00:03:12,000 --> 00:03:16,066 congratulations on launching your new uh agency want 77 00:03:16,066 --> 00:03:17,500 want you to tell us a little bit about 78 00:03:17,500 --> 00:03:21,133 like that and then we'll get into some fun lease stuff 79 00:03:21,166 --> 00:03:21,966 yeah um 80 00:03:22,466 --> 00:03:23,033 Allied Healthcare 81 00:03:23,033 --> 00:03:24,633 Real Estate is a commercial real estate firm 82 00:03:24,633 --> 00:03:25,900 we're based out of Colorado 83 00:03:25,900 --> 00:03:27,600 we specialize in healthcare 84 00:03:28,066 --> 00:03:30,800 I specifically work with dentists day in and day out 85 00:03:30,800 --> 00:03:33,100 I've been in the dental field since 2008 86 00:03:34,800 --> 00:03:36,300 that's it short and sweet 87 00:03:36,300 --> 00:03:37,366 I love it um 88 00:03:37,366 --> 00:03:39,200 I think it's really yeah 89 00:03:39,200 --> 00:03:42,000 there's no there's no reason to mix words um 90 00:03:42,000 --> 00:03:43,000 I think it's really 91 00:03:43,000 --> 00:03:45,666 important to have a dental professional 92 00:03:46,366 --> 00:03:48,500 obviously handle the situation 93 00:03:48,500 --> 00:03:51,766 I I sometimes get into the whole well 94 00:03:51,766 --> 00:03:54,366 I've got a buddy or 95 00:03:54,366 --> 00:03:58,800 this guy has negotiated a couple dental leases before 96 00:03:58,833 --> 00:04:00,700 I think he can do it 97 00:04:01,233 --> 00:04:03,066 I cringe when I hear that 98 00:04:03,066 --> 00:04:04,766 how would you respond to that 99 00:04:04,766 --> 00:04:09,400 because no a real estate agent can't do this stuff like 100 00:04:09,433 --> 00:04:10,666 and so like what are the risk 101 00:04:10,666 --> 00:04:11,766 is that what you mean Michael 102 00:04:11,766 --> 00:04:12,300 like yeah 103 00:04:12,300 --> 00:04:14,366 like why why yeah 104 00:04:14,366 --> 00:04:16,866 what like don't you catch if you're not 105 00:04:16,866 --> 00:04:19,500 if you haven't done this you know yeah 106 00:04:19,500 --> 00:04:21,233 there's there's a lot of nuance to dental lease 107 00:04:21,233 --> 00:04:21,866 I mean the 108 00:04:21,866 --> 00:04:23,733 the analogy would be like hey 109 00:04:24,566 --> 00:04:26,966 my chiropractor should be able to clean my teeth right 110 00:04:26,966 --> 00:04:30,166 they're both doctors how dare you go there 111 00:04:30,433 --> 00:04:31,766 so but it's 112 00:04:31,766 --> 00:04:33,233 that's that's the reality of it 113 00:04:33,233 --> 00:04:34,200 so it's I mean 114 00:04:34,200 --> 00:04:35,433 if you specialize in something 115 00:04:35,433 --> 00:04:37,266 you're gonna know the ins and outs of 116 00:04:37,266 --> 00:04:37,866 of it all 117 00:04:37,866 --> 00:04:39,800 and then what it takes to put a project together 118 00:04:39,800 --> 00:04:41,500 I mean if we're looking at a startup 119 00:04:41,666 --> 00:04:44,600 there is a lot that goes on and uh 120 00:04:44,800 --> 00:04:47,066 majority of it has to involve around the bank 121 00:04:47,266 --> 00:04:49,033 so we have to understand the parameters of the bank 122 00:04:49,033 --> 00:04:50,766 and negotiate with the bank 123 00:04:50,766 --> 00:04:52,900 and get their blessing before we sign anything 124 00:04:53,400 --> 00:04:54,400 a lot of commercial real estate 125 00:04:54,400 --> 00:04:55,966 brokers will just go out and find a space 126 00:04:55,966 --> 00:04:57,666 and get the doctor sign right away 127 00:04:57,666 --> 00:05:00,600 because that's their job they don't understand 128 00:05:00,700 --> 00:05:02,500 what's on the back end with financing 129 00:05:02,500 --> 00:05:05,400 or do they truly care right 130 00:05:05,400 --> 00:05:06,766 they're they just want to move on 131 00:05:06,766 --> 00:05:10,966 get their commission and call on the next general 132 00:05:11,833 --> 00:05:15,266 commercial real estate requirement yeah 133 00:05:15,266 --> 00:05:16,066 no I 134 00:05:16,066 --> 00:05:16,366 I 135 00:05:16,366 --> 00:05:21,000 I'll never forget a comment from another broker and Dan 136 00:05:21,000 --> 00:05:21,600 you know him 137 00:05:21,600 --> 00:05:24,500 his name is Christian Gyle and he's out of Arizona 138 00:05:24,566 --> 00:05:25,466 and we did a 139 00:05:25,466 --> 00:05:28,133 a week of Shark Week with real estate folks 140 00:05:28,433 --> 00:05:31,333 and he said that brokers have commission breath 141 00:05:31,500 --> 00:05:33,166 all the time oh yeah 142 00:05:33,400 --> 00:05:35,400 and I'll never forget that comment 143 00:05:35,400 --> 00:05:37,466 um and it's so true 144 00:05:38,200 --> 00:05:40,833 brokers can real estate professionals 145 00:05:40,833 --> 00:05:42,900 brokers whatever you want to call them they 146 00:05:42,900 --> 00:05:45,033 they have a job to do and they're trying to make money 147 00:05:45,033 --> 00:05:48,366 and right they work for free until they 148 00:05:48,400 --> 00:05:50,833 until they get paid and um 149 00:05:50,833 --> 00:05:53,166 I think I think it's um 150 00:05:53,166 --> 00:05:53,966 it's it's 151 00:05:53,966 --> 00:05:55,300 it's it's the reality 152 00:05:55,300 --> 00:05:57,666 and I I think it's great that you 153 00:05:58,033 --> 00:06:00,400 I've started this organization that thinks something 154 00:06:00,433 --> 00:06:02,333 thinks a little differently and um 155 00:06:02,600 --> 00:06:03,466 what are some of those 156 00:06:03,466 --> 00:06:05,700 ways I know you do lease renewals 157 00:06:05,700 --> 00:06:09,100 I know you look at leases for for free as a service 158 00:06:09,100 --> 00:06:11,466 like what are some of those things that you guys do 159 00:06:11,466 --> 00:06:15,466 that won't require a fee but every doctor needs to do 160 00:06:16,200 --> 00:06:18,266 oh yeah so a lease assessment 161 00:06:18,266 --> 00:06:21,400 understand if you're where you are within your market 162 00:06:21,466 --> 00:06:23,600 uh in general right now 163 00:06:23,600 --> 00:06:25,600 the press does a pretty good job of saying 164 00:06:25,600 --> 00:06:27,900 that commercial market is down right 165 00:06:27,900 --> 00:06:29,200 if you hear about commercial real estate 166 00:06:29,200 --> 00:06:29,700 you're thinking like 167 00:06:29,700 --> 00:06:32,666 I'm gonna go steal a building right now for 168 00:06:32,666 --> 00:06:36,233 for pennies and that's not the case 169 00:06:36,233 --> 00:06:37,700 but sometimes it can be the case 170 00:06:37,700 --> 00:06:39,633 it's variable right like I'm 171 00:06:39,633 --> 00:06:40,866 I'm in Colorado 172 00:06:40,866 --> 00:06:42,700 and I can get you a screaming deal downtown 173 00:06:42,700 --> 00:06:44,433 I promise you a really 174 00:06:44,433 --> 00:06:46,700 really good deal on a general office space 175 00:06:46,700 --> 00:06:48,833 because there's vacant towers and 176 00:06:48,833 --> 00:06:50,566 but do you want to be downtown 177 00:06:50,566 --> 00:06:52,633 and if I'm a startup doctor 178 00:06:52,633 --> 00:06:54,633 and I want to be on the north side 179 00:06:54,633 --> 00:06:56,800 where all the growth is happening northeast 180 00:06:57,166 --> 00:06:59,566 I can't get a piece of commercial real estate 181 00:06:59,566 --> 00:07:01,200 it's not being built fast enough 182 00:07:01,200 --> 00:07:02,766 it's at all time market highs 183 00:07:03,100 --> 00:07:05,500 and the landlords are being super picky 184 00:07:06,100 --> 00:07:07,133 so it's 185 00:07:07,633 --> 00:07:09,600 it's understanding where you are within the market 186 00:07:09,600 --> 00:07:11,300 I think that's first and foremost 187 00:07:11,300 --> 00:07:13,533 understanding the value of your build out 188 00:07:13,633 --> 00:07:16,666 and whether the landlord understands that value or not 189 00:07:16,800 --> 00:07:18,800 uh because there is significance 190 00:07:18,800 --> 00:07:19,033 I mean 191 00:07:19,033 --> 00:07:20,666 we're talking about hundreds of thousands of dental 192 00:07:20,666 --> 00:07:22,100 infrastructure that's 193 00:07:22,100 --> 00:07:23,166 built into that space 194 00:07:23,166 --> 00:07:24,966 that's different than the next door suite 195 00:07:25,766 --> 00:07:28,166 uh it's understanding when your renewal date is 196 00:07:28,166 --> 00:07:31,466 and how to leverage that we like to talk to tenants 197 00:07:31,466 --> 00:07:33,466 two years out and put a game plan together 198 00:07:33,466 --> 00:07:35,033 I mean if they're looking to go ground up 199 00:07:35,033 --> 00:07:36,766 we probably need a little bit more time 200 00:07:36,866 --> 00:07:39,000 but given the cost of construction 201 00:07:39,000 --> 00:07:39,700 depending where you're at 202 00:07:39,700 --> 00:07:41,100 ground up hasn't really been an option 203 00:07:41,100 --> 00:07:44,166 in the past couple years so you guys have done a 204 00:07:44,166 --> 00:07:46,433 you guys have done a great job helping me 205 00:07:46,433 --> 00:07:48,500 and some of our clients um 206 00:07:48,900 --> 00:07:50,400 specifically in Colorado 207 00:07:50,400 --> 00:07:53,500 where you'll look at acquisition leases 208 00:07:53,500 --> 00:07:56,866 and before we actually ink the deal 209 00:07:57,366 --> 00:07:59,366 you'll give us some comparisons 210 00:07:59,366 --> 00:08:00,500 you'll you'll take a 211 00:08:00,500 --> 00:08:03,633 a look at a lease review if there's room for you 212 00:08:03,633 --> 00:08:04,600 you're you're there 213 00:08:04,600 --> 00:08:06,666 but if there's no room for you you'll 214 00:08:06,800 --> 00:08:08,200 you'll sit on the sideline 215 00:08:08,200 --> 00:08:09,266 and I love that about you 216 00:08:09,266 --> 00:08:11,000 you've always done that uh 217 00:08:11,000 --> 00:08:12,833 even at your previous company 218 00:08:12,833 --> 00:08:15,766 and that's a huge service to the industry to me 219 00:08:15,800 --> 00:08:16,633 to dentist I 220 00:08:16,633 --> 00:08:20,866 I don't think people really appreciate good brokers 221 00:08:20,866 --> 00:08:22,866 like you guys are in 222 00:08:22,866 --> 00:08:24,266 the great information 223 00:08:24,266 --> 00:08:28,200 you can offer without asking for a fee and um 224 00:08:28,200 --> 00:08:31,100 knowing your lease and really getting into it matters 225 00:08:31,100 --> 00:08:32,966 and and um yeah 226 00:08:32,966 --> 00:08:34,366 it's awesome that you guys do that 227 00:08:34,366 --> 00:08:36,233 so thank you for that let's 228 00:08:36,233 --> 00:08:37,766 let's let's pivot 229 00:08:37,900 --> 00:08:39,833 um and Paula 230 00:08:39,833 --> 00:08:41,400 when you owned uh 231 00:08:41,566 --> 00:08:43,300 you might not have even remembered any of 232 00:08:43,300 --> 00:08:45,233 this stuff but uh 233 00:08:45,233 --> 00:08:47,800 we're gonna cover one of the topics that was really 234 00:08:47,800 --> 00:08:50,166 important to you when you sold your practice 235 00:08:50,166 --> 00:08:52,866 and so if you remember any of this stuff 236 00:08:52,866 --> 00:08:54,666 when you were looking at your lease 237 00:08:54,666 --> 00:08:56,566 maybe you will maybe you won't 238 00:08:56,633 --> 00:08:58,033 but I'd like to get into like 239 00:08:58,033 --> 00:09:01,300 some of the intricacies of the actual lease that cause 240 00:09:01,466 --> 00:09:03,133 people a lot of like the 241 00:09:03,466 --> 00:09:04,900 you know I don't know anxiousness 242 00:09:04,900 --> 00:09:07,666 I think everybody really thinks about the price 243 00:09:07,666 --> 00:09:08,833 the price the price the price 244 00:09:08,833 --> 00:09:11,266 the escalation the I 245 00:09:11,266 --> 00:09:12,700 it just like I used to be a lender 246 00:09:12,700 --> 00:09:14,200 they think about interest rates 247 00:09:14,366 --> 00:09:15,700 the interest rate the interest rate 248 00:09:15,700 --> 00:09:17,300 interest rate and there's a lot of other shit 249 00:09:17,300 --> 00:09:18,466 they needed to be thinking about 250 00:09:18,466 --> 00:09:21,766 other than just rate like payment terms and uh 251 00:09:21,866 --> 00:09:25,466 interest only periods and how much working capital 252 00:09:25,466 --> 00:09:25,600 like 253 00:09:25,600 --> 00:09:28,366 there's so much more than just the dang interest rate 254 00:09:28,366 --> 00:09:30,800 and I think that's what happens in your world Dan 255 00:09:30,800 --> 00:09:32,166 and in the lease rates 256 00:09:32,466 --> 00:09:34,066 so I wanna get out of the lease rate 257 00:09:34,066 --> 00:09:35,033 let's not talk about lease rates 258 00:09:35,033 --> 00:09:36,633 but let's talk about the other things 259 00:09:36,633 --> 00:09:38,166 that you need to think about 260 00:09:38,166 --> 00:09:40,066 when you're when you're looking at a lease 261 00:09:40,166 --> 00:09:41,600 what are some of those things Dan 262 00:09:41,600 --> 00:09:43,766 that you would like to highlight 263 00:09:43,766 --> 00:09:46,500 I didn't give you much preparation so uh 264 00:09:46,500 --> 00:09:48,633 in in typical unscripted fashion 265 00:09:48,633 --> 00:09:50,633 but what do you get a lot of questions about 266 00:09:50,633 --> 00:09:53,266 with these leases if they actually read the lease 267 00:09:53,566 --> 00:09:54,833 oh yeah 268 00:09:54,833 --> 00:09:57,266 it's understanding um 269 00:09:57,500 --> 00:09:59,466 assignment language is is a big one 270 00:09:59,466 --> 00:10:01,666 exclusivity is a big one uh 271 00:10:01,666 --> 00:10:03,200 understanding uh 272 00:10:03,433 --> 00:10:06,866 triple nets is is always a gotcha 273 00:10:06,866 --> 00:10:08,766 and then especially if you're a business owner 274 00:10:08,833 --> 00:10:10,866 and you've been in the space for more than a year 275 00:10:10,966 --> 00:10:12,300 the triple nets will come up 276 00:10:12,300 --> 00:10:14,566 and there's a lot of questions around that um 277 00:10:14,566 --> 00:10:15,400 uh you know 278 00:10:15,400 --> 00:10:17,966 a lot of the lease is gonna be attorney based 279 00:10:18,200 --> 00:10:21,066 and there's always should be an attorney on the team 280 00:10:21,066 --> 00:10:22,300 I'm not an attorney 281 00:10:22,366 --> 00:10:24,166 my goal is to negotiate the business points 282 00:10:24,166 --> 00:10:25,233 and get the business points 283 00:10:25,233 --> 00:10:29,000 right in the lease and some of those teeter on illegal 284 00:10:29,100 --> 00:10:30,866 and should they be talked about 285 00:10:30,866 --> 00:10:31,866 in the letter of intent 286 00:10:31,866 --> 00:10:33,100 the non binding letter of intent 287 00:10:33,100 --> 00:10:36,033 and then those ideas then inserted into the lease 288 00:10:36,033 --> 00:10:37,366 that will be legally reviewed 289 00:10:37,766 --> 00:10:38,366 so it's 290 00:10:38,366 --> 00:10:40,233 it's depending on where you're at in your career 291 00:10:40,233 --> 00:10:41,066 what you're looking for 292 00:10:41,066 --> 00:10:43,566 how to separate yourself or how to protect yourself 293 00:10:44,266 --> 00:10:45,433 yeah well 294 00:10:45,433 --> 00:10:47,000 let's hit the big one 295 00:10:47,400 --> 00:10:50,933 exclusivity and assignments because I think 296 00:10:51,466 --> 00:10:51,900 well what 297 00:10:51,900 --> 00:10:53,966 what the hell is it I know what it is you 298 00:10:53,966 --> 00:10:55,233 you tell everybody else what 299 00:10:55,233 --> 00:10:59,033 what does that mean exclusivity and it's two topics 300 00:10:59,033 --> 00:11:00,300 but let's hit them both yeah 301 00:11:00,366 --> 00:11:02,066 so if you have an exclusive in the building 302 00:11:02,066 --> 00:11:03,266 that means that no other 303 00:11:03,400 --> 00:11:05,200 we'll say general dentist as the example 304 00:11:05,200 --> 00:11:06,400 that no other general dentist can 305 00:11:06,400 --> 00:11:08,166 can practice in that building 306 00:11:08,266 --> 00:11:09,833 so you're it for for 307 00:11:09,833 --> 00:11:12,166 the building and um 308 00:11:12,400 --> 00:11:14,333 a lot of doctors get caught up in that 309 00:11:14,900 --> 00:11:17,600 and it's important if you're looking at a retail space 310 00:11:17,600 --> 00:11:18,933 so if you're in a strip center 311 00:11:18,966 --> 00:11:21,600 you're likely gonna be spending more on rent 312 00:11:21,600 --> 00:11:23,566 than you would in a general office building 313 00:11:23,633 --> 00:11:24,966 and that's because you have signage 314 00:11:24,966 --> 00:11:26,766 and that signage is you know free 315 00:11:26,766 --> 00:11:29,266 quote unquote free marketing 316 00:11:29,400 --> 00:11:31,033 so you have to pay for that right 317 00:11:31,033 --> 00:11:32,500 that's the air quote free 318 00:11:33,066 --> 00:11:37,300 so you'll get concessions like exclusivity for 319 00:11:38,500 --> 00:11:40,866 other general dentist that can't practice in there 320 00:11:41,000 --> 00:11:43,200 and that's because again you're already paying for it 321 00:11:43,200 --> 00:11:45,033 and if another general dentist were to move in 322 00:11:45,033 --> 00:11:46,033 then there's no 323 00:11:46,033 --> 00:11:48,400 point in paying the additional rent to have it 324 00:11:48,833 --> 00:11:50,433 so that's where it's standard 325 00:11:50,433 --> 00:11:50,833 and we 326 00:11:50,833 --> 00:11:54,266 we see that in strip centers or stand alone buildings 327 00:11:54,266 --> 00:11:56,033 then we transition to a general office 328 00:11:56,033 --> 00:11:58,133 or a medical office building 329 00:11:58,400 --> 00:11:59,766 and we'll start with general office 330 00:11:59,766 --> 00:12:00,866 where there could be a CPA 331 00:12:00,866 --> 00:12:02,066 next door to a dental office 332 00:12:02,066 --> 00:12:04,666 next to an attorney next to a chiropractor 333 00:12:05,100 --> 00:12:09,366 and those lease rates tend to be a little bit less 334 00:12:10,666 --> 00:12:14,066 and you don't get as much with that right 335 00:12:14,066 --> 00:12:16,200 so there's no signage there's no nothing there 336 00:12:16,200 --> 00:12:17,600 it's just you get office space 337 00:12:17,600 --> 00:12:20,666 very cheap rent and you go uh 338 00:12:20,666 --> 00:12:22,466 to have that exclusivity there is difficult 339 00:12:22,466 --> 00:12:24,766 cause now you're hamstringing the doctor from 340 00:12:24,900 --> 00:12:26,366 leasing the rest of the building 341 00:12:27,566 --> 00:12:28,000 right 342 00:12:28,000 --> 00:12:30,500 so or the the owner of the building your your hands 343 00:12:30,500 --> 00:12:31,300 yeah 344 00:12:31,466 --> 00:12:32,500 the landlord the landlord 345 00:12:32,500 --> 00:12:34,066 so the landlord's not able to 346 00:12:34,066 --> 00:12:35,600 to lease more of the building out 347 00:12:35,600 --> 00:12:37,933 so they don't want to do that so um 348 00:12:39,033 --> 00:12:40,800 and if you're driving by a general office building 349 00:12:40,800 --> 00:12:42,566 you don't know if a dentist is in there or not 350 00:12:43,000 --> 00:12:45,666 the reality of having a dentist right next door to you 351 00:12:45,666 --> 00:12:48,433 and a patient walking by office a 352 00:12:48,433 --> 00:12:49,900 when they're going to Office B and saying hey 353 00:12:49,900 --> 00:12:53,200 I'm gonna switch my doctor is very very low right 354 00:12:53,200 --> 00:12:55,666 it's that's a that's an astric type situation 355 00:12:55,766 --> 00:12:59,733 so when negotiating business points in a office space 356 00:12:59,966 --> 00:13:01,833 spend your time on lease rate 357 00:13:01,833 --> 00:13:03,233 spend your time on free rent 358 00:13:03,233 --> 00:13:05,366 spend your time on tenant improvement allowance 359 00:13:05,633 --> 00:13:08,533 things that will actually help your cash flow and in 360 00:13:10,166 --> 00:13:13,133 help separate yourself when you need the separation 361 00:13:13,500 --> 00:13:14,833 versus you know 362 00:13:14,833 --> 00:13:15,800 trying to have exclusivity 363 00:13:15,800 --> 00:13:18,133 cause if a general Dennis was to be in that area 364 00:13:18,200 --> 00:13:19,500 they're gonna be in that area 365 00:13:19,500 --> 00:13:21,200 regardless if it's in your building or not 366 00:13:21,200 --> 00:13:21,766 it could be a block 367 00:13:21,766 --> 00:13:24,066 I almost think like if you switch dentist 368 00:13:24,066 --> 00:13:24,766 you're probably gonna 369 00:13:24,766 --> 00:13:26,400 wanna stay away from the building 370 00:13:26,400 --> 00:13:29,066 you're probably not gonna wanna walk by your dentist 371 00:13:29,066 --> 00:13:30,466 to admit you're probably gonna be like 372 00:13:30,466 --> 00:13:33,200 I'm just getting out of this building in general right 373 00:13:33,200 --> 00:13:34,033 I mean right 374 00:13:34,033 --> 00:13:35,166 absolutely right yeah 375 00:13:35,166 --> 00:13:36,066 you're gonna yes 376 00:13:36,066 --> 00:13:38,266 you're not gonna go back you don't wanna be seen 377 00:13:38,266 --> 00:13:39,900 you don't wanna have that awkward conversation right 378 00:13:39,900 --> 00:13:41,833 right exactly oh 379 00:13:41,833 --> 00:13:42,700 like slide her 380 00:13:42,700 --> 00:13:44,766 away and like especially if you owe money 381 00:13:44,766 --> 00:13:46,766 you're not going back right 382 00:13:47,666 --> 00:13:48,433 Dan Dan 383 00:13:48,433 --> 00:13:51,066 I've gotten I've gotten into weird 384 00:13:51,066 --> 00:13:54,233 conversations about the exclusivity thing 385 00:13:54,233 --> 00:13:58,366 where a general dentist wants to do Ortho 386 00:13:58,366 --> 00:14:01,300 or wants to do some pedo some pediatrics 387 00:14:01,666 --> 00:14:04,400 and they're fighting for this exclusivity 388 00:14:04,400 --> 00:14:06,600 and then it starts getting real weird 389 00:14:06,600 --> 00:14:09,233 where it gets very specific 390 00:14:09,233 --> 00:14:12,500 like can't do children's trophies or like 391 00:14:12,500 --> 00:14:14,700 like it starts getting real specific 392 00:14:14,700 --> 00:14:18,800 and I've heard you correct it you debunk this 393 00:14:18,833 --> 00:14:21,833 but I've heard the more specific it is 394 00:14:21,833 --> 00:14:23,466 the more it hurts you kind of a thing 395 00:14:23,466 --> 00:14:25,200 or do you want to stay broad 396 00:14:25,433 --> 00:14:26,966 like what's the strategy there 397 00:14:26,966 --> 00:14:30,833 because again GPS could ask for exclusivity 398 00:14:30,833 --> 00:14:32,766 and then want to do clear liners 399 00:14:33,100 --> 00:14:34,066 and next thing you know 400 00:14:34,066 --> 00:14:35,700 you're in a lawsuit or whatever 401 00:14:35,700 --> 00:14:38,166 so what what's the idea there 402 00:14:38,200 --> 00:14:39,200 yeah so again 403 00:14:39,200 --> 00:14:41,666 if if your business model is 404 00:14:41,666 --> 00:14:43,233 general dentistry and orthodontics 405 00:14:43,233 --> 00:14:46,000 and you want to advertise that on a on a sign 406 00:14:46,000 --> 00:14:48,266 then you can negotiate for general dentistry 407 00:14:48,266 --> 00:14:50,566 and orthodontics in a retail center 408 00:14:50,566 --> 00:14:51,766 if you're in a medical office building 409 00:14:51,766 --> 00:14:52,800 or office building again 410 00:14:52,800 --> 00:14:54,866 the the chance that you get exclusive is very low 411 00:14:54,866 --> 00:14:58,666 to begin with and and if you are going for that 412 00:14:58,666 --> 00:15:00,700 you have to call out what your use is 413 00:15:00,700 --> 00:15:03,000 general dentistry is a little tricky right 414 00:15:03,000 --> 00:15:05,433 cause that means it encompasses all dentistry 415 00:15:05,433 --> 00:15:09,766 whereas if you're pediatric or ortho or oral surgery 416 00:15:09,866 --> 00:15:11,500 you're very specific in what you do 417 00:15:11,500 --> 00:15:12,900 so you can't call out like hey 418 00:15:12,900 --> 00:15:14,433 I I have this broad term 419 00:15:14,433 --> 00:15:17,700 where I can do a whole bunch of different procedures so 420 00:15:17,700 --> 00:15:18,300 uh it's 421 00:15:18,300 --> 00:15:19,800 that's always a catch and it 422 00:15:19,800 --> 00:15:22,200 I've seen it ruin relationships uh 423 00:15:22,200 --> 00:15:23,866 within the market if they're in the same building 424 00:15:23,866 --> 00:15:27,000 because again doctors have the right mindset of 425 00:15:27,000 --> 00:15:28,800 they're trying to protect themselves 426 00:15:28,900 --> 00:15:31,400 but this general dentist was already doing 427 00:15:31,400 --> 00:15:32,666 child procedures to begin with 428 00:15:32,666 --> 00:15:34,100 most likely right 429 00:15:34,100 --> 00:15:36,233 it's gonna be a family practice and the 430 00:15:36,233 --> 00:15:36,700 that general 431 00:15:36,700 --> 00:15:38,966 dentist is gonna know where their boundaries are 432 00:15:38,966 --> 00:15:40,966 and when to send off to a specialist 433 00:15:41,166 --> 00:15:43,433 but if that general dentist was across the street 434 00:15:43,433 --> 00:15:45,566 they'd still be doing the child trophies 435 00:15:45,800 --> 00:15:48,766 and it's all you're doing is creating detention with 436 00:15:48,966 --> 00:15:50,966 your partner in the industry 437 00:15:50,966 --> 00:15:52,300 for no reason right 438 00:15:52,300 --> 00:15:54,166 both practices can be successful 439 00:15:54,166 --> 00:15:55,366 if a general dentist is 440 00:15:55,366 --> 00:15:58,566 is stealing trophies from a pediatric dentist 441 00:15:58,766 --> 00:16:00,666 and the pediatric dentist is not succeeding 442 00:16:00,666 --> 00:16:03,233 it's not because of that general dentist right 443 00:16:03,233 --> 00:16:04,066 there's other problems 444 00:16:04,633 --> 00:16:05,100 yeah get 445 00:16:05,100 --> 00:16:07,000 it gets very weird like I 446 00:16:07,000 --> 00:16:08,933 I feel like uh 447 00:16:09,066 --> 00:16:11,466 you know in the moment a 448 00:16:11,466 --> 00:16:13,500 a lot of our clients a lot of your clients 449 00:16:13,500 --> 00:16:15,733 they get caught up in the negotiation 450 00:16:16,000 --> 00:16:19,366 and I feel like it's our job as professionals to just 451 00:16:19,366 --> 00:16:19,966 like hey 452 00:16:19,966 --> 00:16:21,366 let's take a step back and 453 00:16:21,366 --> 00:16:23,366 and talk about what this actually means 454 00:16:23,366 --> 00:16:25,100 for your business and I think 455 00:16:25,100 --> 00:16:26,433 I think that's why they've hired us 456 00:16:26,433 --> 00:16:28,666 but in the in the in 457 00:16:28,666 --> 00:16:30,500 the world of negotiating 458 00:16:30,500 --> 00:16:35,000 it's like you start narrowing down on this clause 459 00:16:35,033 --> 00:16:35,833 and they're like well 460 00:16:35,833 --> 00:16:37,500 what if I do want to get into Ortho 461 00:16:37,500 --> 00:16:39,800 let's box everybody out it's like okay 462 00:16:39,800 --> 00:16:41,100 let's just take a deep breath 463 00:16:41,100 --> 00:16:43,800 but um yeah um 464 00:16:44,200 --> 00:16:46,266 once it becomes more real 465 00:16:46,366 --> 00:16:48,500 that's usually like the deals happening 466 00:16:48,500 --> 00:16:50,266 especially if you're a startup 467 00:16:50,466 --> 00:16:52,400 and you haven't owned your own business before 468 00:16:52,400 --> 00:16:56,600 and you're about to go $750,000 in debt with a loan and 469 00:16:56,600 --> 00:16:57,633 you know risk everything 470 00:16:57,633 --> 00:17:00,233 push your chips all in to do this uh 471 00:17:00,233 --> 00:17:03,500 that's when the narrow focus on one or two 472 00:17:03,666 --> 00:17:08,466 it's emotional items really come out because it's not 473 00:17:08,466 --> 00:17:10,900 it's probably not really the exclusivity 474 00:17:10,966 --> 00:17:12,166 it's more along the lines of 475 00:17:12,166 --> 00:17:13,700 it needs to be perfect in my mind 476 00:17:13,700 --> 00:17:15,466 in order for me to move forward 477 00:17:15,566 --> 00:17:18,000 so we have to take a step back and take a look at 478 00:17:18,000 --> 00:17:19,400 look at the economics that you're getting 479 00:17:19,400 --> 00:17:21,366 look at the area look at the demographics 480 00:17:21,500 --> 00:17:22,466 look at this opportunity 481 00:17:22,466 --> 00:17:24,566 you're about to start your own business in 482 00:17:24,666 --> 00:17:26,833 and whether you have this exclusivity clause or not 483 00:17:26,833 --> 00:17:29,166 it's really not gonna change how you do 484 00:17:29,666 --> 00:17:32,000 no that's well said okay 485 00:17:32,000 --> 00:17:33,200 let's pivot Paula 486 00:17:33,200 --> 00:17:35,466 when you sold your practice 487 00:17:37,033 --> 00:17:38,866 when you sold your practice 488 00:17:40,200 --> 00:17:43,466 how would have it how would have it felt 489 00:17:43,866 --> 00:17:46,600 I said that weird but how would have it felt 490 00:17:46,766 --> 00:17:48,400 if you were trying to sell to 491 00:17:48,400 --> 00:17:49,766 the doctor that you sold to 492 00:17:49,766 --> 00:17:51,300 and the landlord said 493 00:17:51,833 --> 00:17:53,100 I don't think so 494 00:17:54,466 --> 00:17:57,500 that'd be a problem if the landlord didn't let you 495 00:17:57,800 --> 00:17:59,866 give your lease to the next person 496 00:17:59,866 --> 00:18:01,700 that'd be a problem yeah 497 00:18:01,700 --> 00:18:03,366 I didn't even know that was possible 498 00:18:04,166 --> 00:18:05,900 yeah that's what assignments are 499 00:18:05,900 --> 00:18:07,800 so let's talk about assignments 500 00:18:08,100 --> 00:18:10,266 my landlord was my landlord was super cool 501 00:18:10,266 --> 00:18:12,100 like he didn't give a dude your land 502 00:18:12,100 --> 00:18:13,666 your landlord was so cool 503 00:18:13,666 --> 00:18:15,866 like half the stuff he didn't care 504 00:18:16,000 --> 00:18:17,766 but but it is a real thing 505 00:18:17,766 --> 00:18:18,866 I didn't know it was a real 506 00:18:18,866 --> 00:18:21,600 I remember you saying something and I was like what 507 00:18:21,700 --> 00:18:23,566 yeah he was like whatever sure 508 00:18:23,566 --> 00:18:25,633 you know whatever yeah 509 00:18:25,633 --> 00:18:29,833 so Dan how often do you see assignments being a problem 510 00:18:29,833 --> 00:18:33,266 on the first draft lease and you read and you're like 511 00:18:33,266 --> 00:18:34,466 dude that's not gonna work 512 00:18:34,466 --> 00:18:36,600 like how how often does that come up 513 00:18:36,633 --> 00:18:37,900 uh about half the time 514 00:18:37,900 --> 00:18:39,833 the language is pretty pretty severe 515 00:18:39,833 --> 00:18:40,600 so uh 516 00:18:40,600 --> 00:18:42,100 sometimes there's language 517 00:18:42,200 --> 00:18:44,300 in the assignment that if you request an assignment 518 00:18:44,300 --> 00:18:45,766 the landlord can terminate your lease 519 00:18:46,700 --> 00:18:50,066 so the whole immediately terminate 520 00:18:50,100 --> 00:18:51,066 so wait I 521 00:18:51,066 --> 00:18:53,700 so I was gonna ask you about some pit balls 522 00:18:53,700 --> 00:18:55,633 of not having someone like you 523 00:18:55,633 --> 00:18:57,900 and this is probably one of the biggest ones 524 00:18:57,900 --> 00:19:02,566 they're gonna sign something and yeah 525 00:19:02,566 --> 00:19:04,500 well it's back well it's back to being a 526 00:19:06,166 --> 00:19:08,700 it's back to being a dental specific broker 527 00:19:08,700 --> 00:19:11,100 if a residential broker was looking at this lease 528 00:19:11,100 --> 00:19:12,966 they wouldn't think anything of it 529 00:19:13,200 --> 00:19:14,600 but Dan sitting here thinking 530 00:19:14,600 --> 00:19:15,800 this doctor's gonna sell it 531 00:19:15,800 --> 00:19:18,266 some point right the whole point of having a commercial 532 00:19:18,266 --> 00:19:19,666 space is to own a business 533 00:19:19,966 --> 00:19:21,200 and that business is worth 534 00:19:21,200 --> 00:19:22,566 as much as you can sell it for 535 00:19:22,566 --> 00:19:24,800 or how liquid it is and 536 00:19:24,800 --> 00:19:26,400 majority of the goodwill is tied up 537 00:19:26,400 --> 00:19:27,900 within that location 538 00:19:28,266 --> 00:19:30,700 so if if we don't have the goodwill 539 00:19:30,700 --> 00:19:31,966 I don't know what we're selling for 540 00:19:31,966 --> 00:19:33,133 it's gonna be a chart sale 541 00:19:33,233 --> 00:19:33,466 so 542 00:19:33,466 --> 00:19:35,600 now we're talking about pennies on the dollar versus 543 00:19:35,600 --> 00:19:38,500 you know over production so it's 544 00:19:40,000 --> 00:19:42,133 sorry I just Learned something 545 00:19:42,266 --> 00:19:45,833 ha ha ha yeah so Michael handles all this I 546 00:19:45,833 --> 00:19:48,900 I stay in my clinical world but wow 547 00:19:49,033 --> 00:19:50,333 so so 50 548 00:19:50,500 --> 00:19:53,433 55 0% of the time 549 00:19:53,433 --> 00:19:56,066 they'll be an aggressive assignment clause 550 00:19:56,200 --> 00:19:58,766 or favors the lender yes yeah 551 00:19:58,766 --> 00:20:00,166 not that aggressive that's 552 00:20:00,166 --> 00:20:03,000 that's more outlier type situation determination 553 00:20:03,000 --> 00:20:06,400 but that we see that we'll call it 5% of the time uh 554 00:20:06,466 --> 00:20:09,133 majority of the assignment is just saying uh 555 00:20:09,666 --> 00:20:13,100 landlord's pure discretion whether you can do it or not 556 00:20:13,100 --> 00:20:14,400 and what we're looking for is 557 00:20:14,400 --> 00:20:15,766 we're looking for the levers 558 00:20:16,000 --> 00:20:17,800 to have the assignment happen 559 00:20:17,966 --> 00:20:20,466 so a lot of times we're explaining to the landlord 560 00:20:20,600 --> 00:20:22,966 why this needs to happen right 561 00:20:22,966 --> 00:20:25,366 because one day we will be able to sell the practice 562 00:20:25,366 --> 00:20:26,766 or we'll need to sell the practice 563 00:20:26,766 --> 00:20:29,066 so we have to have the opportunity to 564 00:20:29,233 --> 00:20:31,366 so there's the assignment of just 565 00:20:31,400 --> 00:20:33,800 moving the practice into someone else's name 566 00:20:33,900 --> 00:20:36,100 and then there's the bigger issue 567 00:20:36,100 --> 00:20:37,966 that most people get tripped up on 568 00:20:38,666 --> 00:20:41,733 is the financial guarantee piece 569 00:20:41,866 --> 00:20:43,966 whether we can get 570 00:20:44,033 --> 00:20:46,400 whether we can get off the lease or we have to stay on 571 00:20:46,700 --> 00:20:48,066 the tricky part 572 00:20:48,266 --> 00:20:50,600 the tricky part is when you sell a practice 573 00:20:51,100 --> 00:20:53,966 in your midterm so say you have five years remaining 574 00:20:54,300 --> 00:20:56,000 and you have a five year option 575 00:20:56,500 --> 00:20:57,966 so we have 10 years on paper 576 00:20:57,966 --> 00:20:59,700 that practice is financeable 577 00:21:01,066 --> 00:21:03,800 we hope that it's assignable right 578 00:21:03,800 --> 00:21:06,466 we can get go from Doctor a to Doctor B 579 00:21:06,633 --> 00:21:09,500 but does Doctor a have to stay on the lease 580 00:21:09,500 --> 00:21:10,466 after the sale 581 00:21:11,066 --> 00:21:13,900 and 50% of the time I'd say yes 582 00:21:14,266 --> 00:21:16,066 so and it's 583 00:21:16,066 --> 00:21:18,833 let's let I wanna ask one question on that Dan 584 00:21:18,833 --> 00:21:23,066 is there ever an assignment of where it's specific 585 00:21:23,066 --> 00:21:24,966 that it has to be another dentist 586 00:21:25,000 --> 00:21:26,366 like not okay 587 00:21:26,366 --> 00:21:27,966 a like business yeah 588 00:21:27,966 --> 00:21:29,066 okay yeah 589 00:21:29,066 --> 00:21:32,566 and usually like that is that usually a requirement 590 00:21:32,566 --> 00:21:33,866 okay and I 591 00:21:33,866 --> 00:21:36,666 and I want to bring this full circle because this 592 00:21:36,666 --> 00:21:38,466 this idea of assignment so 593 00:21:38,466 --> 00:21:40,833 so important let's back up 594 00:21:40,833 --> 00:21:42,366 the landlords aren't jerks 595 00:21:42,366 --> 00:21:44,433 I mean that some of them can be total jerks 596 00:21:44,433 --> 00:21:46,466 but the landlords aren't jerks 597 00:21:46,466 --> 00:21:48,300 they have a deal with Paula 598 00:21:48,300 --> 00:21:49,866 Paula owns the practice 599 00:21:50,566 --> 00:21:53,000 Paula's been paying her rent for years 600 00:21:53,000 --> 00:21:56,033 they trust Paula now all of a sudden 601 00:21:56,033 --> 00:21:58,133 because Paula wants to sell to Dan 602 00:21:58,633 --> 00:21:59,833 they don't know Dan 603 00:21:59,833 --> 00:22:01,800 but they have an agreement with Paula 604 00:22:02,100 --> 00:22:04,833 so the landlord sitting back saying well 605 00:22:04,833 --> 00:22:07,300 I signed a 10 year deal with Paula 606 00:22:07,433 --> 00:22:10,100 I I don't necessarily 607 00:22:10,100 --> 00:22:13,300 want to deal with Dan unless Dan is a good dude 608 00:22:13,566 --> 00:22:15,433 and that's where the landlords are coming from 609 00:22:15,433 --> 00:22:16,300 but wait but 610 00:22:16,300 --> 00:22:20,000 but a contract is a contract and even if dance I mean 611 00:22:20,000 --> 00:22:22,033 if dance has a contract he's in it 612 00:22:22,033 --> 00:22:26,666 he can't not pay if he doesn't pay he can be sued right 613 00:22:26,666 --> 00:22:28,900 so but yeah so professional 614 00:22:28,900 --> 00:22:30,700 sorry Dan we're taking over in the 615 00:22:30,700 --> 00:22:33,766 in the example that I'm buying your practice Paula 616 00:22:34,566 --> 00:22:36,300 if you're retiring you're probably 617 00:22:36,300 --> 00:22:37,500 you probably have 618 00:22:37,633 --> 00:22:39,800 a net worth of a couple million dollars 619 00:22:40,600 --> 00:22:42,433 I'm a brand new dental student 620 00:22:42,433 --> 00:22:44,200 I've been practicing at a corporate office 621 00:22:44,200 --> 00:22:46,733 for two years I have a negative net worth 622 00:22:47,666 --> 00:22:51,366 that doesn't give the the landlord financial fuzzies 623 00:22:51,433 --> 00:22:54,533 warm fuzzies security that I'm coming in 624 00:22:54,600 --> 00:22:55,800 so it's like wait 625 00:22:55,800 --> 00:22:56,100 I 626 00:22:56,100 --> 00:22:59,066 I want the security of Paula because she's worth this 627 00:22:59,066 --> 00:22:59,900 if something happens 628 00:22:59,900 --> 00:23:01,800 she can pay for the lease cause at the end of the day 629 00:23:01,800 --> 00:23:04,366 all I care about is for this land this 630 00:23:04,500 --> 00:23:06,800 this payment to come in on this 631 00:23:06,800 --> 00:23:08,900 on the space dance coming in 632 00:23:08,900 --> 00:23:11,200 he's not worth anything I'm nervous 633 00:23:11,200 --> 00:23:12,833 I got I got no teeth here 634 00:23:12,833 --> 00:23:16,500 what do I do so that's yeah yes 635 00:23:16,600 --> 00:23:17,866 so um 636 00:23:19,166 --> 00:23:19,833 so that's the 637 00:23:19,833 --> 00:23:22,100 the nuance of the negotiation at that point right 638 00:23:22,100 --> 00:23:24,066 is what how can we bridge the gap 639 00:23:24,066 --> 00:23:25,833 is it additional security deposit 640 00:23:25,833 --> 00:23:29,266 is it Paula you have to stay on for 12 months uh 641 00:23:29,266 --> 00:23:31,433 and then burn off is it that you 642 00:23:31,433 --> 00:23:34,300 have to stay on the entire time for this five years 643 00:23:34,300 --> 00:23:37,666 and then Dan will take over the option in year 6 644 00:23:37,766 --> 00:23:39,466 so all that's going through the landlord's head 645 00:23:39,466 --> 00:23:41,900 because all they care about is the money coming in 646 00:23:41,900 --> 00:23:43,500 and how how can they secure it 647 00:23:43,500 --> 00:23:47,033 so it's a lot of education with landlords about that 648 00:23:47,033 --> 00:23:48,966 and it's it's always very touchy 649 00:23:48,966 --> 00:23:49,766 because 650 00:23:50,266 --> 00:23:52,700 it's such an emotional process to sell your business 651 00:23:52,700 --> 00:23:53,100 like it's 652 00:23:53,100 --> 00:23:56,866 it's your child and you think that you're done 653 00:23:57,033 --> 00:23:59,566 but all of a sudden you have this least Lumen over you 654 00:23:59,633 --> 00:24:01,400 right like I'm trying to go and it's one 655 00:24:01,566 --> 00:24:04,200 and it's one of the last things that gets addressed 656 00:24:04,200 --> 00:24:07,066 which it it almost should be one of the first things 657 00:24:07,300 --> 00:24:11,266 but just by the way the cadence works and why the 658 00:24:11,266 --> 00:24:12,400 the bro I'm a lawyer yeah 659 00:24:12,400 --> 00:24:14,600 you gotta make sure you like the practice first 660 00:24:14,600 --> 00:24:15,466 or it's like 661 00:24:15,466 --> 00:24:17,400 there's so much stuff to figure out before 662 00:24:17,400 --> 00:24:18,800 but I see what you're saying yeah 663 00:24:18,800 --> 00:24:21,566 cause you get here and now like dance talking 664 00:24:21,566 --> 00:24:22,700 there's this 665 00:24:23,966 --> 00:24:26,866 there's this other thing and so like we're 666 00:24:26,866 --> 00:24:28,033 what we're talking about is 667 00:24:28,033 --> 00:24:29,700 I don't wanna get into acquisition stuff 668 00:24:29,700 --> 00:24:31,600 cause that's exactly what we're doing right now 669 00:24:31,600 --> 00:24:34,000 is kind of discussing acquisition stuff 670 00:24:34,033 --> 00:24:36,900 but like when you sign a lease as a startup 671 00:24:36,900 --> 00:24:39,033 or you're relocating and building your 672 00:24:39,033 --> 00:24:40,466 your brand new beautiful office 673 00:24:40,466 --> 00:24:44,800 you're an established doctor or start up someday 674 00:24:44,800 --> 00:24:46,400 you you're gonna wanna transition it 675 00:24:46,400 --> 00:24:47,300 to someone if 676 00:24:47,300 --> 00:24:49,133 even if you're in distress 677 00:24:49,500 --> 00:24:50,700 and you can't make your bills 678 00:24:50,700 --> 00:24:53,233 you're gonna I had a a DOC in Colorado actually 679 00:24:53,233 --> 00:24:55,633 she got she found out she was sick really quickly 680 00:24:55,633 --> 00:24:57,100 after she opened her doors 681 00:24:57,433 --> 00:24:59,066 she was stuck and we had to 682 00:24:59,066 --> 00:25:01,033 we had to get her out of the situation 683 00:25:01,033 --> 00:25:05,166 and she had zero sales but she had to do that 684 00:25:05,166 --> 00:25:06,566 and having guys like Dan 685 00:25:06,566 --> 00:25:08,300 the hell Dan probably was the one that negotiated 686 00:25:08,300 --> 00:25:11,400 but I I think assignments so important 687 00:25:11,400 --> 00:25:15,333 it's something to check the box it's it's a very again 688 00:25:15,366 --> 00:25:16,966 rates are one thing 689 00:25:16,966 --> 00:25:18,666 exclusivities another thing like this 690 00:25:18,666 --> 00:25:22,266 these little things really need to be touched 691 00:25:22,500 --> 00:25:24,066 we're 25 minutes into the show 692 00:25:24,066 --> 00:25:25,300 I don't mean to keep going 693 00:25:25,300 --> 00:25:27,600 but I really wanna cover something that you said 694 00:25:27,600 --> 00:25:28,566 and that was 695 00:25:29,100 --> 00:25:31,066 uh you know again 696 00:25:31,066 --> 00:25:33,366 it's not just interest rate and escalation 697 00:25:33,366 --> 00:25:34,800 but there's other expenses 698 00:25:34,800 --> 00:25:37,666 and I have a hard time explaining it 699 00:25:37,666 --> 00:25:41,500 because it comes down to hey look 700 00:25:41,500 --> 00:25:44,700 we're renting this building from somebody 701 00:25:44,966 --> 00:25:46,700 or this space from somebody 702 00:25:46,766 --> 00:25:49,300 but now I gotta pay all their bills too 703 00:25:49,300 --> 00:25:50,600 and they own the building 704 00:25:50,600 --> 00:25:52,133 like how's that work 705 00:25:52,400 --> 00:25:55,000 and it's such a I had a problem with that I 706 00:25:55,666 --> 00:25:56,066 of course 707 00:25:56,066 --> 00:25:59,033 everybody everybody does and then what's covered 708 00:25:59,033 --> 00:26:00,400 and what's what is this yeah 709 00:26:00,400 --> 00:26:01,466 what's covered 710 00:26:01,466 --> 00:26:05,000 the roof the a a H back like what is this 711 00:26:05,266 --> 00:26:07,966 and I and I think it it comes down to like well if 712 00:26:07,966 --> 00:26:10,266 I'm paying you money 713 00:26:10,366 --> 00:26:13,200 why aren't you taking that money and paying your bills 714 00:26:13,200 --> 00:26:15,433 but that's just not how the lease world works 715 00:26:15,433 --> 00:26:17,700 so so the question you 716 00:26:17,700 --> 00:26:18,566 you said it Dan 717 00:26:18,566 --> 00:26:20,500 what's triple net uh 718 00:26:20,500 --> 00:26:21,766 Dan what's triple net 719 00:26:21,766 --> 00:26:25,033 and how do you explain this ridiculous and why 720 00:26:25,033 --> 00:26:27,300 why are we responsible yeah 721 00:26:27,300 --> 00:26:28,133 so uh 722 00:26:28,600 --> 00:26:29,266 yeah this is 723 00:26:29,266 --> 00:26:30,733 this is a a long one 724 00:26:30,866 --> 00:26:31,666 so uh 725 00:26:31,800 --> 00:26:34,766 triple nets are a three pass throughs 726 00:26:34,933 --> 00:26:36,033 essentially to the tenant 727 00:26:36,033 --> 00:26:36,966 and you pay your prorated 728 00:26:36,966 --> 00:26:38,200 share of each of these pass throughs 729 00:26:38,200 --> 00:26:40,333 so the first pass through is property taxes 730 00:26:40,666 --> 00:26:40,966 so 731 00:26:40,966 --> 00:26:43,366 if you're in a building where it's 10,000 square feet 732 00:26:43,366 --> 00:26:45,466 you occupy 2,000 square feet 733 00:26:45,466 --> 00:26:47,400 you're paying 20% of the property taxes 734 00:26:47,400 --> 00:26:50,333 for that building the next is property insurance 735 00:26:50,500 --> 00:26:52,466 which is usually pretty small 736 00:26:52,566 --> 00:26:54,666 but the insurance world has gone upside down 737 00:26:54,666 --> 00:26:56,200 in the past couple of years 738 00:26:56,200 --> 00:26:59,466 and we're seeing increases of insurance 100 to 250% 739 00:26:59,600 --> 00:27:01,833 so it's a nominal fee right now 740 00:27:01,833 --> 00:27:03,600 but it's still it's growing 741 00:27:03,700 --> 00:27:06,233 so that prorate share is passed through 742 00:27:06,233 --> 00:27:08,100 so property taxes on the building 743 00:27:08,433 --> 00:27:10,466 and then proper insurance on the building 744 00:27:10,466 --> 00:27:11,500 those are the two 745 00:27:12,100 --> 00:27:16,500 the next one is the enigma of camps 746 00:27:17,433 --> 00:27:17,966 so that's oh 747 00:27:17,966 --> 00:27:20,200 so Cam is the third end right 748 00:27:20,200 --> 00:27:21,500 well why do people okay 749 00:27:21,500 --> 00:27:22,466 let's go to that 750 00:27:22,466 --> 00:27:25,466 but some people pull that out for some reason 751 00:27:25,466 --> 00:27:27,066 it's just how it's built or how 752 00:27:27,066 --> 00:27:28,866 what they see how it's written 753 00:27:28,966 --> 00:27:30,466 but it's it's 754 00:27:30,466 --> 00:27:31,966 it's commonary maintenance 755 00:27:31,966 --> 00:27:32,466 it's what 756 00:27:32,466 --> 00:27:35,566 it is and it's what's it cost to run the building 757 00:27:36,033 --> 00:27:38,466 landscaping snow removal 758 00:27:39,300 --> 00:27:42,500 ha uh it could be if there's 759 00:27:43,766 --> 00:27:45,266 common area restrooms 760 00:27:45,266 --> 00:27:46,766 it could be supplies for the restrooms 761 00:27:46,766 --> 00:27:48,300 it could be water for those restrooms 762 00:27:48,300 --> 00:27:49,900 utilities for those restrooms 763 00:27:50,000 --> 00:27:52,666 depending on the type of property it is 764 00:27:52,666 --> 00:27:53,866 or how the lease is written 765 00:27:53,866 --> 00:27:55,766 it could be roof it could be HVAC 766 00:27:56,066 --> 00:27:57,700 it could be property management fees 767 00:27:57,700 --> 00:27:59,100 could be property management assessment 768 00:27:59,100 --> 00:28:01,766 it could be snow snow 769 00:28:01,900 --> 00:28:04,933 could it be snow removal you said that 770 00:28:05,100 --> 00:28:06,300 oh you did OK 771 00:28:06,433 --> 00:28:08,466 it could be restriping the parking lot I mean 772 00:28:10,700 --> 00:28:12,966 it's wild what it can all encompass 773 00:28:12,966 --> 00:28:15,300 and each landlord's got it written differently 774 00:28:15,300 --> 00:28:18,366 so depending on how the lease is written 775 00:28:18,433 --> 00:28:21,966 and you wanna just watch out for the catch all 776 00:28:22,000 --> 00:28:23,866 that everything is passed through 777 00:28:23,900 --> 00:28:26,200 and you wanna understand the breakdown of that 778 00:28:26,200 --> 00:28:28,266 triple net prior to signing the lease 779 00:28:28,500 --> 00:28:30,066 like what is the landlord passing through 780 00:28:30,066 --> 00:28:32,466 what's been the historicals the past couple of years 781 00:28:32,466 --> 00:28:34,100 what percent has it increased 782 00:28:34,466 --> 00:28:36,100 because what a triple net is 783 00:28:36,100 --> 00:28:36,900 is 784 00:28:37,266 --> 00:28:41,200 it's an estimated expense based upon historical years 785 00:28:41,400 --> 00:28:44,800 so we'll say that a space is leasing for $30 786 00:28:44,800 --> 00:28:46,966 that's how it's advertised plus triple net 787 00:28:47,300 --> 00:28:51,266 so you you see $30 and you think that's a good deal 788 00:28:51,700 --> 00:28:51,900 then 789 00:28:51,900 --> 00:28:54,200 you come find out that the triple nets are really $12 790 00:28:54,200 --> 00:28:55,066 a square foot 791 00:28:55,300 --> 00:28:58,700 so now we're looking at a lease rate of $42 gross 792 00:28:59,166 --> 00:29:00,466 and that's a marketing scheme that's 793 00:29:00,466 --> 00:29:01,766 done like that on purpose 794 00:29:01,766 --> 00:29:04,000 to attract potential tenants of the building 795 00:29:04,000 --> 00:29:04,433 you're like oh 796 00:29:04,433 --> 00:29:06,266 thirty's good I like that 797 00:29:06,266 --> 00:29:07,633 then you find out the total gross 798 00:29:07,633 --> 00:29:08,400 you're like oh 799 00:29:08,400 --> 00:29:09,833 that's why it's advertised like that 800 00:29:09,833 --> 00:29:11,500 this makes more sense so 801 00:29:11,500 --> 00:29:14,800 that $12 is an estimate based upon either projections 802 00:29:14,800 --> 00:29:15,833 or historicals 803 00:29:15,833 --> 00:29:17,766 if it's a brand new building you're projecting 804 00:29:17,966 --> 00:29:20,400 if it's historicals then you have data at least 805 00:29:20,400 --> 00:29:22,100 and hopefully you're with an earshot 806 00:29:22,233 --> 00:29:24,033 but what happens is January 807 00:29:24,033 --> 00:29:24,833 go ahead 808 00:29:25,400 --> 00:29:26,433 I get sorry 809 00:29:26,433 --> 00:29:27,833 I didn't mean to cut you off there 810 00:29:27,833 --> 00:29:29,500 I wanted you to finish but like I 811 00:29:29,500 --> 00:29:32,866 I guess I'm thinking if so 812 00:29:32,866 --> 00:29:35,533 so you said it and I just want you to say it again 813 00:29:35,866 --> 00:29:40,800 um the landlord does give you a breakdown of how 814 00:29:40,800 --> 00:29:43,233 of what that looks like before you sign it 815 00:29:43,233 --> 00:29:45,366 that that happens if you ask you yeah 816 00:29:45,366 --> 00:29:46,166 you can ask 817 00:29:46,566 --> 00:29:48,866 they should be able to give you some of the buckets 818 00:29:48,866 --> 00:29:50,600 to see what it all incorporates 819 00:29:50,666 --> 00:29:53,933 I mean you could be opening Pandora's box because then 820 00:29:54,200 --> 00:29:55,966 uh tenants think that they can 821 00:29:55,966 --> 00:29:57,166 control some of those expenses 822 00:29:57,166 --> 00:30:00,500 which will get to but in reality you can't right 823 00:30:00,500 --> 00:30:01,800 that's the landlord's in it 824 00:30:01,800 --> 00:30:03,766 to make a profit off their building 825 00:30:03,833 --> 00:30:05,466 they're getting paid base rent 826 00:30:05,700 --> 00:30:06,766 that's the market rate 827 00:30:06,766 --> 00:30:08,666 and then those pass throughs are your expenses 828 00:30:10,200 --> 00:30:13,166 so I have I'm a landlord for a home 829 00:30:13,166 --> 00:30:14,600 and what I'm hearing is 830 00:30:14,600 --> 00:30:17,666 I should buy a building because everything can be 831 00:30:17,666 --> 00:30:20,466 passed through the tenant right 832 00:30:21,233 --> 00:30:23,566 where I'm still responsible for everything 833 00:30:23,566 --> 00:30:25,033 that happens to the house 834 00:30:25,033 --> 00:30:28,000 I like the building idea better wow 835 00:30:28,000 --> 00:30:28,700 yeah I 836 00:30:28,700 --> 00:30:29,400 I guess I'm I 837 00:30:29,400 --> 00:30:32,233 I guess I'm thinking here that like folks 838 00:30:32,233 --> 00:30:33,600 I want you guys to think about this 839 00:30:33,600 --> 00:30:36,500 so you you wanna look at this 840 00:30:36,500 --> 00:30:39,833 because let's say Paula owns the building 841 00:30:39,833 --> 00:30:40,366 cause that's 842 00:30:40,366 --> 00:30:42,700 she just came up with a new business plan tonight 843 00:30:43,066 --> 00:30:46,900 so Paula owns the building and I'm her business partner 844 00:30:46,900 --> 00:30:48,600 which is a true story okay 845 00:30:48,600 --> 00:30:53,133 so I own a small a snow removal company 846 00:30:53,666 --> 00:30:55,666 and I have a contract with Paula 847 00:30:55,666 --> 00:30:57,666 who happens to be my business partner 848 00:30:57,700 --> 00:31:00,700 and I Jack up her rates on snow removal 849 00:31:00,900 --> 00:31:04,100 and I cut her in on that profit of snow removal 850 00:31:04,366 --> 00:31:08,800 so there the the triple net expenses can be 851 00:31:08,800 --> 00:31:10,766 I've seen weird stuff before 852 00:31:10,766 --> 00:31:15,900 like that scenario where expenses aren't respond 853 00:31:15,900 --> 00:31:18,033 like they're not very solid 854 00:31:18,033 --> 00:31:20,966 so do you guys do do you look at that Dan 855 00:31:20,966 --> 00:31:22,300 how does that like competitive 856 00:31:22,300 --> 00:31:25,566 like it's like why are they why is there snow removal 857 00:31:25,800 --> 00:31:27,333 thousand bucks a month 858 00:31:27,466 --> 00:31:30,466 and it goes all the way into June 859 00:31:30,800 --> 00:31:34,166 so it's so for our clients 860 00:31:34,166 --> 00:31:36,966 we'll take a look at year over year 861 00:31:36,966 --> 00:31:39,100 because the way the triple nets work are 862 00:31:39,100 --> 00:31:39,900 it's an estimate 863 00:31:39,900 --> 00:31:43,533 so we'll say the $12 a square foot landlord said hey 864 00:31:43,633 --> 00:31:47,200 $12 for 2025 and 2026 865 00:31:47,200 --> 00:31:49,700 all of a sudden come February January 866 00:31:49,700 --> 00:31:52,200 they get a Bill for $6,000 of 867 00:31:52,200 --> 00:31:53,066 assessments 868 00:31:53,366 --> 00:31:55,900 and that's because the landlord reconciled their books 869 00:31:55,900 --> 00:31:59,133 of what the actual expenses were for 2025 870 00:31:59,266 --> 00:32:02,700 and if they were short tenant needs to pay up 871 00:32:03,600 --> 00:32:04,500 PA Paula 872 00:32:04,500 --> 00:32:09,366 we just got an email from Doctor Rock in Arizona 873 00:32:09,366 --> 00:32:12,766 and he was pissed that he got that 5 874 00:32:12,766 --> 00:32:14,200 600 dollar Bill 875 00:32:14,300 --> 00:32:17,766 and it was because the landlord underpaid 876 00:32:17,766 --> 00:32:19,100 his triple nets 877 00:32:19,166 --> 00:32:23,000 and so he had to pay the difference because they miss 878 00:32:23,000 --> 00:32:26,100 they misestimated it on the space 879 00:32:26,466 --> 00:32:28,466 yeah so it's all it is is an estimate 880 00:32:28,466 --> 00:32:30,266 what about whoever was in the building before 881 00:32:30,266 --> 00:32:32,200 why weren't they responsible 882 00:32:32,300 --> 00:32:33,833 why don't they would have got prorated 883 00:32:33,833 --> 00:32:36,400 they would have got prorated if you leave middle yeah 884 00:32:36,400 --> 00:32:38,200 so Doctor Rock for example 885 00:32:38,200 --> 00:32:39,233 if he was in the building 886 00:32:39,233 --> 00:32:41,633 uh February through December 887 00:32:41,633 --> 00:32:42,033 he would have paid 888 00:32:42,033 --> 00:32:43,700 February through December assessments 889 00:32:43,700 --> 00:32:45,066 he wouldn't have paid for January 890 00:32:46,033 --> 00:32:46,900 uh but that's 891 00:32:46,900 --> 00:32:47,900 that's how that works 892 00:32:47,900 --> 00:32:50,300 so that estimate is just an estimate 893 00:32:50,300 --> 00:32:51,900 and then at the beginning of the year 894 00:32:51,900 --> 00:32:53,666 they'll they'll reconcile their books 895 00:32:53,766 --> 00:32:55,700 if they overestimate estimated 896 00:32:55,700 --> 00:32:57,333 they'll get a credit on their account 897 00:32:57,500 --> 00:33:00,066 if they underestimated the tenant has to pay 898 00:33:00,066 --> 00:33:01,433 but you're looking if it 899 00:33:01,433 --> 00:33:02,966 if you happen to get in a building 900 00:33:02,966 --> 00:33:04,233 that was already there you're 901 00:33:04,233 --> 00:33:07,400 you look at historicals you help the yeah 902 00:33:07,400 --> 00:33:10,800 so it's like we're not there's no way we can 903 00:33:11,466 --> 00:33:13,633 do we ask did you reconcile your books 904 00:33:13,633 --> 00:33:14,900 do we ask them that 905 00:33:14,900 --> 00:33:16,600 so they reconcile their books every year 906 00:33:16,633 --> 00:33:17,300 uh it's just 907 00:33:17,300 --> 00:33:20,833 whether or not they're cooked or not those books 908 00:33:20,833 --> 00:33:23,033 so it's if they have the buddy 909 00:33:23,033 --> 00:33:24,900 that is a snow removal specialist 910 00:33:24,900 --> 00:33:28,033 that charges 500% of what market is 911 00:33:28,033 --> 00:33:29,300 we're doing like 912 00:33:29,300 --> 00:33:32,733 like we don't like we don't own snow removal companies 913 00:33:32,800 --> 00:33:35,666 we don't know how much snow removal should cost 914 00:33:35,666 --> 00:33:36,766 or shouldn't cost 915 00:33:37,100 --> 00:33:41,000 so you're trying to take the landlord at their word 916 00:33:41,233 --> 00:33:41,866 however like 917 00:33:41,866 --> 00:33:44,066 so there's multiple things here with that though 918 00:33:44,066 --> 00:33:44,966 cause if you're the landlord 919 00:33:44,966 --> 00:33:47,166 you wanna have triple nets as low as possible 920 00:33:47,433 --> 00:33:48,500 cause if you have vacancy 921 00:33:48,500 --> 00:33:49,733 you're paying those costs 922 00:33:49,966 --> 00:33:53,233 and if you if your expenses are through the roof 923 00:33:53,233 --> 00:33:55,300 your tenants are pissed you 924 00:33:55,300 --> 00:33:57,566 I mean that's not a good way to keep your tenants 925 00:33:57,766 --> 00:34:00,966 so a smart landlord will not cook the books 926 00:34:01,000 --> 00:34:03,200 they will keep running their business at a low 927 00:34:03,200 --> 00:34:05,500 low cost to keep everyone happy 928 00:34:05,633 --> 00:34:08,400 and when taxes come in which taxes are the lump 929 00:34:08,400 --> 00:34:11,833 majority sum of the triple nets 930 00:34:11,833 --> 00:34:14,033 at least the first n 931 00:34:14,033 --> 00:34:17,266 the first n that you said is property taxes 932 00:34:17,433 --> 00:34:20,466 and then as soon as they get their assessment 933 00:34:20,466 --> 00:34:21,400 and if it's gone up 934 00:34:21,400 --> 00:34:23,666 they should be contesting that assessment 935 00:34:24,600 --> 00:34:25,600 but yeah it's 936 00:34:25,666 --> 00:34:28,900 it's it's tricky and it's frustrating every single year 937 00:34:28,900 --> 00:34:30,966 because every year you're gonna get that Bill 938 00:34:31,066 --> 00:34:32,100 so it's almost 939 00:34:33,400 --> 00:34:34,466 let's let's talk 940 00:34:34,466 --> 00:34:35,766 I I love that 941 00:34:35,766 --> 00:34:38,700 I mean this has been a fantastic conversation already 942 00:34:39,500 --> 00:34:41,166 I can just send this podcast 943 00:34:41,166 --> 00:34:43,200 to every startup that starts asking these questions 944 00:34:43,200 --> 00:34:44,466 be like hey just just watch this 945 00:34:44,466 --> 00:34:46,066 I'll save me a coaching call 946 00:34:46,066 --> 00:34:48,566 and it'll be better than what the way I could say it 947 00:34:48,566 --> 00:34:52,900 but I know enough to be dangerous Dan 948 00:34:53,266 --> 00:34:56,433 help me out in talking about the big things 949 00:34:56,433 --> 00:34:59,500 because I think the big things need to be discussed 950 00:34:59,500 --> 00:35:03,733 and I'm thinking HVAC replacement I'm thinking roofs 951 00:35:04,166 --> 00:35:08,666 how do you protect our lease sir 952 00:35:08,666 --> 00:35:13,400 leases leases on oh shit 953 00:35:13,400 --> 00:35:16,533 I just signed a lease and the H back 954 00:35:16,566 --> 00:35:18,666 remember we had that happen here in a Z 955 00:35:18,666 --> 00:35:20,066 we had that happen yeah 956 00:35:20,066 --> 00:35:22,566 now we're talking about Arizona stuff not snow plow 957 00:35:22,566 --> 00:35:25,033 let's go the other way H back 958 00:35:25,033 --> 00:35:27,000 they're all the air conditioning going out 959 00:35:27,800 --> 00:35:29,366 yeah because I've seen it don't Dan 960 00:35:29,366 --> 00:35:31,300 don't you guys negotiate that out 961 00:35:31,300 --> 00:35:32,866 or something like that no 962 00:35:32,866 --> 00:35:34,266 it it depends on the on the property 963 00:35:34,266 --> 00:35:35,766 so if you're in a medical office building 964 00:35:35,766 --> 00:35:38,066 typically the HVAC's gonna be on the landlord 965 00:35:38,066 --> 00:35:39,266 it's gonna be landlord's expense 966 00:35:39,266 --> 00:35:42,300 general office building they could do an assessment 967 00:35:42,300 --> 00:35:44,933 and charge back to the client for 968 00:35:45,233 --> 00:35:47,400 some of those costs hopefully not a lump sum 969 00:35:47,566 --> 00:35:49,633 it's just and then a retail space 970 00:35:49,633 --> 00:35:52,266 the H back in the roof are typically on 971 00:35:52,266 --> 00:35:54,466 on the tenant on the tenant 972 00:35:54,466 --> 00:35:57,733 so it's trying to negotiate where you're not hitting 973 00:35:58,000 --> 00:36:00,000 you're not getting billed for that capital improvement 974 00:36:00,000 --> 00:36:03,300 all at once you're getting billed over the lifespan 975 00:36:03,300 --> 00:36:07,033 of that H back unit so instead instead of you know 976 00:36:07,033 --> 00:36:07,566 30 thousand 977 00:36:07,566 --> 00:36:10,600 dollar Bill that's now spread out over 20 years 978 00:36:10,866 --> 00:36:12,266 that's just part of the cost 979 00:36:12,700 --> 00:36:14,033 so that makes sense 980 00:36:14,033 --> 00:36:16,300 even though the H back may never go out 981 00:36:16,300 --> 00:36:18,633 you're just paying right 982 00:36:18,633 --> 00:36:22,000 prorata of the life of the life of that asset 983 00:36:22,000 --> 00:36:24,433 so so you gotta 984 00:36:24,433 --> 00:36:25,433 you gotta hire 985 00:36:25,433 --> 00:36:28,500 crane operators to put these HVACs up on the roof 986 00:36:28,500 --> 00:36:30,300 we saw one the other day Paula 987 00:36:30,400 --> 00:36:32,166 and that that's expensive 988 00:36:32,166 --> 00:36:35,666 and so to to replace an HVAC system on the 989 00:36:35,666 --> 00:36:38,966 20th floor of whatever building is really expensive 990 00:36:38,966 --> 00:36:42,766 not to mention the other H backs might be okay 991 00:36:42,766 --> 00:36:44,400 but they could go out at any point 992 00:36:44,400 --> 00:36:45,166 so now 993 00:36:45,166 --> 00:36:47,633 now we have the crane operator there and paid for 994 00:36:47,633 --> 00:36:49,866 so we might as well just do all of them 995 00:36:49,866 --> 00:36:52,166 and then imagine all those leases 996 00:36:52,166 --> 00:36:54,700 paying all of that one lump sum boom 997 00:36:54,700 --> 00:36:56,666 and then you know 998 00:36:56,666 --> 00:37:00,333 the the H vax good for maybe another 50 years 999 00:37:00,366 --> 00:37:03,200 but that poor those poor LC's in that moment 1000 00:37:03,200 --> 00:37:04,433 had to pay for all of that 1001 00:37:04,433 --> 00:37:06,466 so if Dan's on the job 1002 00:37:06,466 --> 00:37:08,366 he's gonna try to spread that cost over 1003 00:37:08,366 --> 00:37:10,333 maybe 20 years or something 1004 00:37:10,366 --> 00:37:13,466 so that's something that you negotiate Dan or no yeah 1005 00:37:13,466 --> 00:37:16,766 no that's that's an item that we look for gotchas right 1006 00:37:16,766 --> 00:37:18,566 like we're trying to stay away from gotchas 1007 00:37:18,566 --> 00:37:20,166 we're if we're a startup 1008 00:37:20,600 --> 00:37:22,900 cash flow is is king for us right 1009 00:37:22,900 --> 00:37:27,300 we we have to minimize all of our costs as possible 1010 00:37:27,300 --> 00:37:29,766 so if a big gotcha pops up 1011 00:37:29,766 --> 00:37:33,166 then that's that could be really bad for us 1012 00:37:33,366 --> 00:37:35,666 so it's how do we minimize that risk 1013 00:37:35,666 --> 00:37:37,966 like can we first start by saying 1014 00:37:37,966 --> 00:37:40,466 hey landlord age backs 100% on you 1015 00:37:40,800 --> 00:37:43,666 and then in the negotiations and and go back and forth 1016 00:37:43,666 --> 00:37:45,466 and then end up at well 1017 00:37:45,466 --> 00:37:47,666 if a large capital improvement goes out 1018 00:37:47,666 --> 00:37:48,966 or need is needed 1019 00:37:49,033 --> 00:37:50,900 then we can spread that over the lifespan of that 1020 00:37:50,900 --> 00:37:52,433 that unit and it's 1021 00:37:52,433 --> 00:37:54,166 it's not fun cause you're still paying that Bill 1022 00:37:54,166 --> 00:37:56,133 but you're not paying that Bill in a lump sum 1023 00:37:56,833 --> 00:37:58,500 yeah so in the residential world 1024 00:37:58,500 --> 00:38:01,200 it's kind of called a special assessment of some sort 1025 00:38:01,200 --> 00:38:01,566 right 1026 00:38:01,566 --> 00:38:05,633 like a big thing that needs to be right like your HOA 1027 00:38:05,633 --> 00:38:08,033 you get the HOA dues but then a big 1028 00:38:08,033 --> 00:38:10,166 like an elevator goes out of your complex 1029 00:38:10,166 --> 00:38:12,000 that's like a special assessment 1030 00:38:12,100 --> 00:38:13,900 maybe some of you have heard that before 1031 00:38:13,900 --> 00:38:15,733 but same thing in the commercial world 1032 00:38:15,966 --> 00:38:16,800 um 1033 00:38:17,500 --> 00:38:18,066 yeah I mean 1034 00:38:18,066 --> 00:38:20,233 like needless to say like 1035 00:38:20,233 --> 00:38:23,566 there's a lot to a lease that you gotta look at 1036 00:38:23,566 --> 00:38:25,600 other than just simple base rents 1037 00:38:25,600 --> 00:38:27,966 but what I heard there was that base rent 1038 00:38:28,266 --> 00:38:31,866 is the actual profit for the landlord 1039 00:38:31,900 --> 00:38:36,600 and then their expenses are kind of covered in Cam 1040 00:38:36,666 --> 00:38:39,166 aka triple net lumped in 1041 00:38:39,233 --> 00:38:41,900 so you're paying all the expenses 1042 00:38:42,066 --> 00:38:44,866 and overhead of the landlord's building 1043 00:38:45,400 --> 00:38:47,533 including all of the improvements 1044 00:38:48,066 --> 00:38:50,466 and then the base rent is pure profit 1045 00:38:50,466 --> 00:38:51,700 that's what I heard yeah 1046 00:38:51,700 --> 00:38:53,166 assuming that's paid off right 1047 00:38:53,166 --> 00:38:54,166 the most you know 1048 00:38:54,166 --> 00:38:56,400 probably majority or overwhelming 1049 00:38:56,433 --> 00:38:58,300 landlords are in debt for their building 1050 00:38:58,300 --> 00:39:01,566 so that's paying for to cover their debt 1051 00:39:01,566 --> 00:39:05,100 and then anything remaining after that would be profit 1052 00:39:05,900 --> 00:39:06,800 love it 1053 00:39:07,766 --> 00:39:09,200 Paul any questions about that 1054 00:39:09,200 --> 00:39:11,466 I mean I know you're yeah 1055 00:39:11,833 --> 00:39:12,433 um Dan 1056 00:39:12,433 --> 00:39:14,133 I Learned a lot I mean 1057 00:39:15,233 --> 00:39:16,500 I'm just hoping 1058 00:39:17,233 --> 00:39:18,666 I'm hoping that 1059 00:39:18,800 --> 00:39:21,233 people don't associate this negativity with me 1060 00:39:21,233 --> 00:39:23,033 so when they see see me they're like 1061 00:39:23,033 --> 00:39:26,000 oh you're the triple net guy no no 1062 00:39:26,000 --> 00:39:27,933 I I think I'm a 1063 00:39:27,966 --> 00:39:31,733 you're the guy that protects them from making a 1064 00:39:31,800 --> 00:39:33,800 costly mistake when it comes 1065 00:39:33,800 --> 00:39:37,533 signing a lease with triple net yeah 1066 00:39:37,700 --> 00:39:39,000 I you know 1067 00:39:39,000 --> 00:39:42,133 I guess I found that over the years 1068 00:39:42,466 --> 00:39:45,066 the more people are educated about what they're doing 1069 00:39:45,066 --> 00:39:47,533 the faster they're running towards the deal 1070 00:39:47,900 --> 00:39:49,200 if if 1071 00:39:49,200 --> 00:39:51,166 if if you're being 1072 00:39:51,166 --> 00:39:53,766 if you're in a situation where you feel like 1073 00:39:54,033 --> 00:39:58,233 your broker isn't going through all this stuff um 1074 00:39:58,233 --> 00:39:59,633 maybe you need to give Dan a call 1075 00:39:59,633 --> 00:40:00,466 not that Dan 1076 00:40:00,466 --> 00:40:02,200 wants to get in the middle of a relationship 1077 00:40:02,200 --> 00:40:04,966 you already have but you gotta look at this stuff 1078 00:40:04,966 --> 00:40:06,733 it's important you gotta know your lease 1079 00:40:07,133 --> 00:40:09,733 you gotta know what options you have and don't have 1080 00:40:09,800 --> 00:40:11,233 and to Dan's point 1081 00:40:11,233 --> 00:40:12,833 in the very beginning of this conversation is 1082 00:40:12,833 --> 00:40:16,300 sometimes not all the deal points are important to you 1083 00:40:16,400 --> 00:40:16,766 so 1084 00:40:16,766 --> 00:40:19,233 don't die on the hill over something that's not really 1085 00:40:19,233 --> 00:40:22,700 important and maybe that gives Dan the ability to press 1086 00:40:22,700 --> 00:40:24,533 on something that is important 1087 00:40:24,666 --> 00:40:26,066 that's called a negotiation 1088 00:40:26,066 --> 00:40:26,300 I think 1089 00:40:26,300 --> 00:40:28,433 that's really important to understand the differences 1090 00:40:28,433 --> 00:40:29,933 so um 1091 00:40:30,666 --> 00:40:31,666 Dan any 1092 00:40:31,666 --> 00:40:33,866 any last kind of minute 1093 00:40:33,866 --> 00:40:37,166 last kind of thoughts about complexities of lease 1094 00:40:37,166 --> 00:40:39,166 and we covered a lot of really good stuff here 1095 00:40:39,166 --> 00:40:42,266 but any anything else you wanna say that 1096 00:40:42,266 --> 00:40:44,400 that kind of closes this topic up 1097 00:40:44,700 --> 00:40:45,633 yeah so 1098 00:40:45,633 --> 00:40:48,866 all of those conversations are the business end upfront 1099 00:40:48,866 --> 00:40:51,333 and then all those get inserted into a lease 1100 00:40:51,566 --> 00:40:53,033 and then you gotta go through it again 1101 00:40:53,033 --> 00:40:55,066 but from a legal ease perspective 1102 00:40:55,266 --> 00:40:56,166 which is you know 1103 00:40:56,166 --> 00:40:58,200 a completely different lens 1104 00:40:58,500 --> 00:40:59,900 so it is it's 1105 00:40:59,900 --> 00:41:01,833 it's a thorough process it 1106 00:41:01,833 --> 00:41:02,500 it shouldn't 1107 00:41:02,500 --> 00:41:04,600 you shouldn't get a lease and sign it within a week 1108 00:41:04,633 --> 00:41:06,366 in likelihood it's gonna take 1109 00:41:06,666 --> 00:41:07,033 you know 1110 00:41:07,033 --> 00:41:09,400 four to six weeks to get through that lease properly 1111 00:41:09,566 --> 00:41:11,466 and go back and forth with the landlord 1112 00:41:12,200 --> 00:41:15,433 would you say from the moment Dan Gleissner sends an LOI 1113 00:41:15,433 --> 00:41:19,833 to the moment it goes through your process 1114 00:41:19,833 --> 00:41:21,966 then legal like you just said 1115 00:41:22,500 --> 00:41:24,766 what's the average time frame for that 1116 00:41:24,766 --> 00:41:26,400 yeah two to four months 1117 00:41:26,900 --> 00:41:28,100 two to that's what I thought yeah 1118 00:41:28,100 --> 00:41:29,966 two to four months four months would be long 1119 00:41:29,966 --> 00:41:31,466 but it but for sure yeah 1120 00:41:31,466 --> 00:41:33,066 it could take that long okay 1121 00:41:33,300 --> 00:41:35,133 very cool um 1122 00:41:35,866 --> 00:41:38,033 thank you so much for your brain 1123 00:41:38,033 --> 00:41:40,400 your acumen your service to the industry 1124 00:41:40,400 --> 00:41:43,200 it's been it's been really good um 1125 00:41:43,633 --> 00:41:47,266 we will be putting Dan's information down below and and 1126 00:41:47,266 --> 00:41:48,166 uh and if 1127 00:41:48,166 --> 00:41:51,866 if you're seeing this on YouTube or any of the podcast 1128 00:41:51,866 --> 00:41:54,166 we'll put in the description links to get 1129 00:41:54,166 --> 00:41:56,466 get a hold of Dan like I said 1130 00:41:56,466 --> 00:41:58,800 it cost nothing to have Dan look at your lease 1131 00:41:58,800 --> 00:41:59,900 like literally nothing 1132 00:41:59,900 --> 00:42:04,066 so have a professional like Dan look at that lease 1133 00:42:04,066 --> 00:42:06,400 just to spell out everything that you're 1134 00:42:06,400 --> 00:42:07,700 you're dealing with 1135 00:42:07,700 --> 00:42:09,766 so that you know your lease really well 1136 00:42:09,766 --> 00:42:12,666 and what options you have and um 1137 00:42:12,666 --> 00:42:14,166 and make make the right decision 1138 00:42:14,166 --> 00:42:18,400 I and I will say for those of you that own practices um 1139 00:42:19,000 --> 00:42:21,300 or or folks that um 1140 00:42:21,500 --> 00:42:24,666 you know though thinking about making a change 1141 00:42:24,866 --> 00:42:26,700 one of the biggest things is 1142 00:42:26,700 --> 00:42:27,500 look at your lease 1143 00:42:27,500 --> 00:42:29,866 at least two years before it expires 1144 00:42:30,400 --> 00:42:30,966 because and Dan 1145 00:42:30,966 --> 00:42:32,066 I know you'd say the same 1146 00:42:32,066 --> 00:42:34,300 because what is Dan gonna do 1147 00:42:34,666 --> 00:42:37,366 with a lease that expires in three months 1148 00:42:37,633 --> 00:42:39,633 uh he's got no leverage with the landlord 1149 00:42:39,633 --> 00:42:43,033 but if if you approach Dan to review your lease 1150 00:42:43,033 --> 00:42:44,433 two years before it expires 1151 00:42:44,433 --> 00:42:45,866 he can do a lot with that 1152 00:42:45,866 --> 00:42:47,400 that time um 1153 00:42:47,400 --> 00:42:49,766 a lot of people a lot of people go to you Dan 1154 00:42:49,766 --> 00:42:51,866 I'm sure last minute and you're like what 1155 00:42:52,066 --> 00:42:53,233 you're screwed buddy 1156 00:42:53,233 --> 00:42:55,066 so yeah we have to find a turnkey option 1157 00:42:55,066 --> 00:42:56,166 in order to create leverage 1158 00:42:56,166 --> 00:42:57,233 but yeah it's you 1159 00:42:57,233 --> 00:42:59,400 we want to be on the offense versus the defense 1160 00:42:59,400 --> 00:43:01,733 and we want we want to assert our game plan 1161 00:43:01,900 --> 00:43:04,333 and maximize that through proper timing 1162 00:43:05,400 --> 00:43:06,466 yeah I love it 1163 00:43:06,466 --> 00:43:07,433 I love it well again 1164 00:43:07,433 --> 00:43:08,566 thanks so much Dan 1165 00:43:08,566 --> 00:43:10,166 folks please like subscribe 1166 00:43:10,166 --> 00:43:13,100 do all the things but Dan's information will be there 1167 00:43:13,100 --> 00:43:13,900 Paula 1168 00:43:14,200 --> 00:43:16,766 I think we've got a new business strategy at next level 1169 00:43:16,766 --> 00:43:18,233 so let's go buy some buildings 1170 00:43:18,233 --> 00:43:20,800 Dan you will represent us on that building 1171 00:43:21,166 --> 00:43:22,366 uh without further do 1172 00:43:22,366 --> 00:43:23,433 let's shut the program down 1173 00:43:23,433 --> 00:43:25,166 but thanks so much guys for your time today 1174 00:43:25,400 --> 00:43:25,600 alright alright 1175 00:43:25,600 --> 00:43:26,400 thank you 1176 00:43:27,100 --> 00:43:28,466 see you guys see you 1177 00:43:38,800 --> 00:43:41,700 thanks for listening let us know how you like the show 1178 00:43:43,066 --> 00:43:45,266 rate us on apple and Spotify 1179 00:43:48,266 --> 00:43:50,300 subscribe and follow for more