#29: Dean Hodges, Franchisee & Real Estate Investor - How to evaluate opportunities, extreme generosity, and building a God-led business

So the reason I bought the properties is so I could get AAA locations and not charge my companies as much rent. And so I just try to cover the cost until there is no cost and then keep the rent as low as I can so the business continues to be successful. And these people that are working hard within the walls of my business can make better bonuses. I've been able to, between the money I had to begin with running debt up, you know, bank debt up, and then paying it off, and now being able to do it again, I've been able to grow rapidly and hold on to the real estate. And I just think that's better because it just seems like over time real estate goes up. It's not a straight line. We don't see it published in the paper like stocks.

On today's episode, we have franchisee and real estate investor Dean Hodges. Steve we live in Omaha, Nebraska. This is Omaha is well known for being the hometown of Warren Buffett. And one of the things that, you know, we know about Warren Buffett and most people know is that he, he's one of those guys who lives very frugally. He drives an old beat up pickup truck and he's one of those guys that if you just, if, if you didn't know who he was, you've never seen him before and you looked at him, you never know how successful he actually is. Today's guest, Dean Hodges, is the exact same way. I mean he's, I'm not going to compare him to Warren Buffett in Success, but. And Dean is highly successful and you would never know about it. And he's just one of those guys that you won't hear anything about him in the press. You know, I don't think he has any social media, but he's got this humble approach to success that's really refreshing.

Jake. Dean sure does. It was a great interview. And it seemed like we were only talking for 10 minutes, but we went on for more than an hour. But the neat thing about Dean is I love his approach on business. Is Christ like God given talent and ability, how he works with his employees, with his wife and his kids to grow the business? Even in the 60s, age wise, he's thinking how can he grow the business and impact Christ with what he's been blessed with? And I thought it was real interesting when he was saying that he lives paycheck to paycheck, not because he spends anything, but how he allocates his times and his resources to God and to him. It was a great interview.

It was I think that's a good. I think that'll wet the whistle of the listeners. So let's just head west. Stay tuned as we discuss how to evaluate opportunities, extreme generosity and building a God led business with our guest, Dean Hodges. This episode is brought to you by Skyline Point Capital. If you're anything like me, you're always considering where to invest your money. Stocks, bonds, crypto and rental home. The list is literally endless. As we've all seen over the past year, the stock market is unstable, the housing market is just weird, and inflation is on the rise. In times like these, the clear place to invest my money is in multifamily real estate, AKA apartment complexes. Here's why. Returns on real estate investments have little to no correlation with the stock market. There's lower volatility, stable income streams, and the tax benefits are insane. And let's not forget that the apartments will typically appreciate in value over time, which means you can walk away with a pretty nice return when the complex is sold in three to five years. Best of all, multifamily investing is passive, so you get all the benefits without the hassle and headache. And of your typical rental home investment. Getting started has never been easier. Head to skylinepointcapital.com to learn how you can start investing today. Dean what I love about you is you're a guy who likes to keep private. Like, if you try to search for you online, you won't find you. You just, you don't have any profiles, you don't have any pictures of you. There's no, there's no bios. Like you're a fairly private person. But, but kind of paradoxically, for those of us in this community of Omaha, you're very well known. Everybody knows your name. You know, you're the guy who's, who's brought the franchise of Jimmy John's to Omaha. You've purchased a fair amount and you're fairly well known in real estate and in starting businesses and franchising. So I thought we'd start with Jimmy John's. And how you got started in the Jimmy John's franchising, what led you to that and why Jimmy John specifically?

Yeah, it was kind of easy. My son Matt went, he was a all state soccer player at Millard West. I think he was all state two or three of the years he went there and he went to Eastern Illinois on a soccer and academic scholarship. He was pretty smart kid, too. But we bought a house there initially because we thought it would be better to own one and he could rent it to his buddies. So the house was filled up with other soccer players and other athletes. And the first month, we got our credit card statement, And I had 28 charges for something called Jimmy John's and about four charges for gasoline and nothing else.

Yeah.

So I. And. And most of the charges were five bucks, eight bucks. It wasn't bad. But I called him and I said, you know, we got this Dr. Johns thing here in Omaha. And I said, we have a good friend who's a chiropractor, Dr. John, not related to the Dr. John's we know about. But I said, are you going to something that's a little nefarious? And they sell videos and things. I mean, what is this Jimmy John's? And so he laughed about it, and he said, no, dad. He goes, they're like little kings, but they deliver. So he said, we'll get back from a soccer match, we'll be sitting around the fire having some beers, and someone will say, let's get Jimmy John's. And like, five minutes later, they're there. Well, the original, very first Jimmy John's ever opened is two blocks from that house. Wow. So they were eating from the original Jimmy John's. And there's some other stories down the line I could talk about related to that with some other employees and, you know, that whole small world thing. But my first thought was, Matt, you're 19. What are you doing sitting around a fire drinking?

Yeah, right.

But then I. I went online, and that was about the time I. I think I got my first cell phone. I didn't have a cell phone before that hadn't been on the Internet. And so I went on the Internet, looked up Jimmy John's, and Jimmy's this bigger than life guy. He's like 6 foot 4. He passed himself a chef. And so all of his videos in the early days of Jimmy John's, he had the full white chef get up with the chef hat. And he was. He was 6, 4, like I said. But he was probably 400, 440 pounds. He's a big man. But on his website, he made fun of himself. You could, like, squeeze his middle. You could slap his head off the ground, back and forth. It was really a cool introduction to the Internet. But the first thing I saw was all the signs and how pretty and clean their stores looked. And I thought, if this is anything near as good as Little Kings, this is going to be a hit, because the stores look clean.

They.

They're kind of in your face. And they had really cool signs, a lot of Warren Buffett quotes are on the signs in the stores and really great witticisms. And he was making fun of himself. And so I thought this was pretty cool. So I started to look at it from my investment advisor standpoint. I was a stockbroker, and so I got all the financials, looked at the financials, and I thought, you know, this thing looks better than anything I've ever invested in my client's money in. In the stock market. And so one day I called Matt up at college and I said, would you and any of your friends be interested in doing this? This was in mid-2004. And he said, well, Nick Masgay, a good friend of his who's a financial advisor now at Renaissance, he was in Lincoln finishing up school and playing a little club soccer, because they didn't have men's soccer down at Lincoln, but they had the first Jimmy John's that came in 2003 in Lincoln. So he was eating Jimmy John's, and the two of them got together and decided to bring their parents in. So we were going to do a partnership. Nick Masgay, his parents, Matt and myself and the kids were actually going to run it. We were just going to fund it. And so I think it was July of 04. Nick, Matt and I went to Elgin, Illinois, where their franchise operations were, and we interviewed with them. And of course, I had a lot of financial questions, just a lot of operational questions, and they weren't answering them. And after about the third question, I said, why don't you answer my questions? Well, we're going to start asking you questions, and you guys are going to have to write a little one or two page paper, each of you, on why we should accept you as franchisees.

Okay.

We asked the questions. You don't get to ask questions. So then I just turned around and said, okay, fire away. And I put my sales hat on and sold us. And then we collectively kind of made up our paper as we drove back to Omaha, submitted it the next day, and they called us, begging us to open the first Jimmy John's here. So.

And that was here in Omaha?

Yeah. So that's how we got started.

And you said, what year are we talking about at this point? Is it 04?

Well, July of 04, we did that. We were accepted on the franchise agreement. September of 04, before April, Matt decided he was going to stay and finish his college career and play one more season of soccer. And the Mask called me and said, we're still in. 24 hours later, Nick called me and said, I'm out. I want to be a stockbroker like you were. And then his parents called me five minutes later, said they were out and they wanted me to call and get most of our money back. We had put down a $25,000 franchise deposit and we could get 20 of it back, we'd have to forfeit 5. And I told them all, that's fine. I'm just going to do it anyway. Don't worry about the money. I didn't take 2500 from him. We just. We just went on and did it. In fact, I gave him their half back and went forward with it. And the cool thing was my middle son, Pat, he was just started at uno, been to school for a couple weeks in that fall, early September, and he said, oh, and he was working at Planet Sub. And I said, would you, you know, come join us? He goes, yeah, I don't want to do this school anyway. So he gave notice that at Planet Sub and he quit. And then by the time we opened 11-14-05, Matt joined us, too. So he was there in the beginning. Matt and Pat were right alongside with me. And. And I think it wasn't very long after that we started hiring kids that I coached in soccer or basketball or baseball. So those connections were probably more deeply cemented in the boys and their friendship, but they were all kids that I coached. And here we are 18 years later, and I've got at least 10 that were with us day one that are still with us. Wow.

So did you. Did you evaluate any other franchises throughout this, or was it Jimmy John's? And it made sense. And so you did it and then it worked and you just kept adding to it or.

Yeah, the latter part of what you said is probably closer to the truth. I. I had just seen some other things and just to venture off onto the real estate side a little bit, I grew up in Bellevue, and there was Peterson Motorcycle Shop, that was on 7375 and about Cornhusker, a little bit south of Cornhusker. And I had bought motorcycles when I was 16, 17, 18 from them. And. And there was a really cool corner spot after Cornhusker was paved right there at Cornhusker 7375. And I was just a dumb young kid that, you know, I worked hard and made minimum wage but didn't have a lot of money. And I said, you know, someday this corner is going to be populated with little office buildings, maybe some retail, maybe a gas station or grocery store. This would be A killer purchase. And I think about three years later it was all filled up. Lots of different buildings, two, three story buildings, lots of different things. Gosh, what I'd give to have some money to do something like that. Well, fast forward a couple years. 1986. Two things happened that same year that just still bug me about real estate. There was a. I lived on Bellevue Boulevard then 808 Bellevue Boulevard South. Right across the street was about 100-year-old stone home sitting in the woods. It was beautiful home, old but just. And I never did get to go in it. Well, it went for sale in 86 when the savings and loan bust happened. Jake, you probably don't know about that.

Were you born then, Jake?

I was born. I was a year old though.

Yeah. Well, anyway, it was a catastrophe and it really put a crimp in the, in the housing market and the savings and loans wet bust everywhere and they put this house up for sale and they were asking 235 and I sat there and looked at that thing for about a year and a half. Didn't seem like anything was going to happen. And one day I, and I was starting to make a little bit of money in the brokerage business. Not a lot yet. Didn't have two nickels to rub together but I thought ought to buy that move across the street and the six acres of woods that went with it could be turned into a really cool housing addition. No real idea how much. And there was a connection at the top on Bellevue Boulevard, but down on the bottom on what they call Jewel Road down in Bellevue. Well, someone finally bought it. They only paid 205 for it. They built 13 $400,000 houses in those woods. Now I don't know how much, you know, a person could probably still lose money doing that but. But it seemed like a major league home run. And then about a year later I'm driving back and forth on 370 and I thought the same thing at 36th and Cornhuskers. I did. Or not Cornholes 36 and 370 as I did. Cornhusker 73, 75. Well there was 160 acre farm for sale. They were asking 225 for 160 acres of farmland. Right on 370 and 36.

Good deal.

Yeah. Had a little more money, no courage. I didn't do it.

Don't feel bad.

John Thompson of Putt Putt fame, his son Dean Thompson, who ended up with a great career at Uno and I think even became the ad there for a while. He bought it again, it sat forever. So he did pay 225. He paid like 189 for 160 acres. Well, you guys know that area. I mean there's probably 50 retail outlets, there's a bunch of really tall ass buildings, there's grocery store, there's a movie theater. I mean, I bet you that's worth 15 million and there's 5 million a year in rent, something like that. You know, obviously a lot more money got put into it than the 189, but it was just one heck of a deal. And I think the cool thing about that in real estate is you can see the future. Right? It's just like when Dave Lanahan bought all the corridor on center street and put in trees and shrubs. And every year he's just growing dollar bills as those things get bigger. But then as the city moves out there and you start developing it, you sell pieces of ground and then you develop pieces of ground and next thing you have an empire of real estate. It just, yeah, it's just so cool. And everyone knows the growth quarter of the city, you got the northwest and you got the Southwest. That's all you can do. The further you get ahead of it, the more time you have, the better you can do. So.

So I've got a question here.

So you've.

We started talking about Jimmy John's and how you saw an opportunity and you immediately took action on it. And then you've shared a couple examples of where, you know, didn't take action for one reason or another.

Right.

What's the difference in those scenarios? Why?

Oh, there is no difference. That's the reason I ventured off and seemed to go on a tangent. I had all those opportunities that I missed that were right under my nose and I thought about them. And so when the Jimmy John opportunity came and my kids were interested and I looked at it from an investment perspective, it was a no brainer. And I think if there was any little difference, although again, you know, with real estate, it's heavily leveraged. I mean to buy $189,000 property, that ranch, at least initially, maybe I would have had to put $35,000 down. It's not like a huge initial investment. Yes, you've got to get more money. You got to sell bankers or investors on the idea to participate with you. But with Jimmy John's I had to put 25,000 down. I had to go find a spot to lease and I had to, I had to rent and pay rent and you typically get A period of time to do your build out and then so many months of free rent and. And then it starts. And so revenue starts and rent starts. And so you don't have all that much money in it to begin with. The first Jimmy John's in terms of one that I didn't own was one of the more expensive is 550,000. But I just 72 t my IRA and took my whole IRA out before I was 59 and a half. Didn't pay a penalty, paid taxes over four years, and I used the 800,000 I took out that I had saved over 35 years of work and did my first two Jimmy John's and had no debt. So just. But if I didn't do that, I would have had to convince someone to lend me the money for the build out and, you know, still would have been successful.

Yeah, so it was, it was those past failures to seize an opportunity that led to you. Once you got Jimmy John's, you're like, I gotta move quickly. Cause I've swung and missed a couple times on not seizing an opportunity. Do you now, because of that, do you now have a set of criteria that allows you to make quicker decisions? How do you go about evaluating opportunities to know, okay, I need to seize this immediately or pass on it?

Well, I think that's where my faith comes in a little bit. So that's a great question. Someone, a parent of a girl that I coached in soccer, who worked for Echo Labs here in Omaha, moved down to Houston to run a much bigger area, bigger division down there, is still down there with him. He sent me a book. I remember the guy's first name is Terry. I can't quite think of the last name. I'll get it to you if you need it for viewers. But it, it's a book where this guy was big in the oil industry and he worked with a guy who taught him everything he knew. And then that guy passed away. And he kind of then went out on his own. And he was a very good Christian man and, and felt like it should be God's will and not his will. And so he used this process, he wrote this book about how he makes his decisions. And at first it was just big decisions, like the next investment idea that comes along or someone puts something in my path that I, I think might be a good investment, you would use this process. Now he started using it in all his decisions. And I gotta admit, over time I've done the same thing. Because it really should be about what God wants for Us and not what we want. And it's really hard because as human beings, when we want something, we really want it and we rationalize maybe even the merits of it. So this is just a great process and it's worked really well for me. But I gather all the facts like you would in any investment opportunity. All the pluses, all the minuses, all the costs, expenses, issues, how it's going to impact my family life, how it's going to affect the other things I already do in business, how many hours I'm going to have to work, all those things. You just gather as much facts as you need to make a decision. But then you stop and you pray to God about whether or not he blesses it, whether that's his will or your will, whether he wants you to do it. And then the real important key, and this is very difficult for people who are a types and like to get things done, but you have to get neutral. So step three is getting neutral and really just kind of letting it go and saying, hey, if it happens, it happens. If it doesn't, it doesn't. And the interesting thing about that is every time I've stepped into it without hearing from God, because step four is hearing from Him. It's like stepping in a bag of you know what that someone left on your front porch, ran the doorbell and ran you. You really step in it and doesn't work. I'm, and I would almost say I'm 100% failure rate where I've made the decision without God and where you do wait for Him. What I have found is the answer comes quickly. It's like for example, Hawaiian Bros. I turned it over to my kids and asked them to follow the same process and they started seeing and hearing from God in different ways and that really led them down that road. But even though I gave them the ultimate decision on that one, I prayed that night that I finally got neutral and left it with God. And the next day I get a call from my head of HR and they just hired a new HR gal. Not only was she of Hawaiian descent, but her family started a a Hawaiian inspired food plate diner that's in the same vein as Hawaiian Bros in some little town in Utah. And they were very successful, but they didn't want to expand. Someone else who happened to stop in there to eat, who saw the opportunity came and bought them out, let them continue to run their store. But they're franchising all across the country in a company called Mo Bettis. I don't know if you've seen them, but down in Kansas City they have a few of them Hawaiian Bros. Much, much better. But there were all these things that God started showing me the very next day that it was just one thing after another. I had a guy that called me about our spot where we put our Williamsburg pizza next to Jimmy John's at 168th. And he said, we met once at a Christian meeting with cbmc. And I remembered you and kind of put your name down. I've been watching what you're doing. He's a real estate development guy. He said, my wife is Hawaiian and we're thinking about opening our own little Hawaiian diner. And we were wondering if we could rent that space next year. Jimmy John's at 168. And that was the day that. Well, the next day after, I basically prayed about it and left it with God and he's wanting to rent my space. Not where we're going to put Hawaiian Bros, but to put a very similar inspired kind of lunch plate Hawaiian diner in. I mean, it just. Those kind of things just happen, I think when. When he wants you to do it and is kind of, you know, putting his positive blessing on it as opposed to not hearing anything. And usually if he doesn't want me to do it, I hear nothing. I mean, I can't even twist or spin scripture to my way. It's like there's just. There's nothing in it. And if I step out there in it, like I said, it just fails. And there are times now where I'll pray. Like I think I was telling you the other day, I had a gentleman call and want me to donate like 7 or 8, $9,000 towards chairs for their new church. And we had had a previous engagement where things didn't work out quite. I gave him the money without even thinking it didn't work out. And this time I just stayed patient. And a month later, when he called to have lunch and update things, he had already gotten all the chairs he needed from my church, from Love Church. And. And I didn't know we had a bunch of chairs we were sitting on somewhere. He thought I did it. He thought I called Todd and the guys at the church, o', Connell, and said, hey, these guys need some chairs. Do you have them? And so he was just calling to update and it was already taken care of by God. I had nothing to do with it.

Yeah, Dean, I was going to ask you the question, but you already answered it is when God says don't do anything. You said God is silent with You?

Yeah.

What does that look like?

Well, again, it really comes more from the way he answers me when I ask. And he is basically saying yes. I get it from so many different things. I read so many different directions. It's even like in 1983 when I was first a broker. Late August I think it was 82, I had a seminar at a Plattsmith high school and I had some pretty well heeled investors who came and they were, they were just looking for some answers and I had a whole plan of what I was going to talk about. And that night I just, I was not sure about it. I didn't feel comfortable. I'd never given a speech other than forced to in, in 12th grade. And I, I just prayed about it that night. And the next day I woke up and I had this whole idea about asset allocation. I never heard the words, never read anything about asset allocation. At that point I couldn't really tell you even the definition of asset allocation. I went in there and gave a full speech that ended up landing a ton of really good clients who stayed with me my whole career until they passed away. And we did really, really, really well with them using this whole asset allocation model that I knew nothing about. But it wasn't just a matter of speaking from my mouth what asset allocation is. It was an entire plan. And to this day I don't know of one other company who does asset allocating the way I did. Most people have an automatic rebalancing every quarter, you know, so like if you're supposed to be 60, 40 equities to fixed income and you are at 6,000, 139, they put you back at 60, 40 every three months at the end of the quarter. This was designed so that you would let your winners run for a period of time. You had to be 10% out of balance to rebalance. So it could happen any day, not the end of the quarter. You could sit in equities the way you were and not make a single trade for three years. But if you looked at your portfolio and you were 67, 69, 70%, you were 10% out of balance, you had to rebalance. And we went, the first customers, the ones at that seminar, went 17 years, never had a losing year, turned in one case 380,000 into 5.5 million in 17 years.

Wow.

And we only allocated out of the market five times and therefore back in five times. The average length of time we had to wait after we allocated out was between two and 30 days. And the average length of time we waited to get back in was 15 months. Wow. So.

Yeah, you were talking about how God speaks to you. And I think God speaks to different people different ways.

Yep.

I. I bought a company. We were number two in the industry back in 2004. 4. We. We were number two. I bought company number three and we met with our team about, you know, do we go? And a lot of. A lot of the people didn't want to do it, but the financials looked really good. So I made the final decision. And it took a while, but I'd get this knot in my stomach when I'd wake up in the morning about the deal. And as the day went on, I'd look at the numbers. This is a great deal. We got to do this deal. And it repeated for about 30 days. And in 30 days, we did the deal. And you talked about stepping in was so bad. That's when we came up with the phrase on our company, not to believe your own BS culture matters. When I bought this company, we moved the whole company and people, employees to Nebraska. We did not. We did not meet. We did not mesh. It was terrible. And it is so funny after that event, I know when I get that feel, it could be on a big thing or a little thing. And when I get that feel, I go back to when I didn't listen to God and he just said, okay, I told you not to do it, but you did it anyway. So here it is. It's amazing how that happens.

Yep. It's.

And listening and. And having the patience not to do something. Because in my mind, guide God looks. God knows what's going on around the corners. He knows what's going to happen further down the road. And Jake knows. I have another story, but for a different time is when I was racing Iron man in Brazil. Totally it. Total story. But sometimes when you chase the money for yourself, that's not what God wants you to do.

Right?

Yeah. Yeah. We've done a. We've done a fair amount of interviews with. With Christian businessmen and women. And it seems like those who come, who have your set of, you know, approach to doing business where, okay, I take this thing to God, any big or small decision, I'm first going to. To God. Those who approach it from a place of humility, of like, I really don't care which way this goes. I just want to. I want to run it by the boss, so to speak.

Right.

That you start to see that there's less times where, you know, you're stepping in that proverbial bag. Of, of. Yeah, doo, doo. Trying to think of the right word that was appropriate. That's not to say that everything's gonna be rosy and like it's always gonna work out. Because sometimes, sometimes you need to go through that experience in order to learn whatever God has in store for you. But I find it interesting that those who come humbly and say, lord, I don't really care, you just tell me which way you want to go and I'll go that way. They come with no preconceived notions. They come with no desire for confirmation bias. They're not looking for God to, you know, put the stamp on approval of the thing they're already going to do. It tends to work out fairly well.

Right.

When you don't listen or when you come with the wrong motive, kind of sometimes find yourself in hot water.

Yeah, that's been my experience every time. So again, I don't believe in a prosperity doctrine. It's not that at all. And again, you know, I was thinking on as I was driving back to the office today, just then, again, I don't know if this has merit or anywhere to go in the conversation per se, but you know, they're often talking about when it comes to election time, about the number of people living paycheck to paycheck. And I was thinking about as successful as I've been the last 20 years, I still kind of live paycheck to paycheck because I'm either reinvesting all a large part of my money or I'm giving it to charity or I'm giving it to the government. And so, you know, no one's going to cry for me that, you know, somehow I'm short. But I live paycheck to paycheck still today. And, and I do it by design. And I think a big part of living in life, obviously is working, striving, looking to succeed. And if you don't have that, and in a lot of cases, I mean, certainly if you don't have God in your life, you've got very little. If you don't have people in your life and relationships, you don't have anything. But work is a big part of our life for most of our lives. And I gotta say, I like work more than vacation. I like work more than most things. And so you have to have things that you're striving toward and working on and working with and, and interacting with people. And I just think work is, gets a black eye for all the wrong reasons, you know, especially in school, you know, These kids that are going to school and aren't working 20, 30, 40 hours while they're going to school, it's just, they're missing out.

Can we, I want to back up real quick because you, you touched on something that I had not heard said before. But you live paycheck to paycheck by design. Does that mean that you, you have like a zero balance budget? And whatever comes in, I'm pushing right back out, whether it's reinvestment, taxes, or giving, but I am intentionally zeroing out my budget every month.

Yes, I.

Can you through that a little bit?

Well, yeah, I just, quite a few years ago, I, I, I made a plan and, and I don't know if it's making up for lost time, but when, when I, I first got involved in the church and we would go to church, when the collection plate came around, I would look at my wallet and hope that I had a few ones. And I would, I would grab them in a way that they almost crumpled up. And I, I didn't do this, but I almost like rained them down as the plate went by so people could, you know, and, and if there was only a twenty, or dare there be a hundred and a twenty, I kind of reluctantly fold the twenty like in a tent and then drop it in there. But you know, in all seriousness, I, I felt greedy, right? I was, I wasn't given much and I was very reluctant to give what I gave. I worked hard for it. I didn't understand all that. And it wasn't until I was reading the Bible daily and, and not hearing it from the preachers, but because, you know, they're just a messenger and, and trying to get your money, it seemed like, but I would, when I read it and understood about it, I immediately started tithing. And when I could, I tithe more. And I made a pact probably six, seven years ago before I die, I'd like to live off 10% of what I make and give away. 90. Just reverse.

Yeah, I love that.

Okay. And, and so that's, that's just the way I think.

I bet you have some incredible stories though, of, of that's a big leap of faith. You know, a reverse, I mean, a tithe is in a lot of ways, and for those listening, a tithe is, it's giving back 10% of your, of your income back to, you know, to God through the church, through, you know, whatever avenues that you see fit. But a reverse tithe is keeping 10, giving 90. And that's a huge leap of faith. But I would imagine that there is some. There have been some incredible stories that have come from that leap of faith, and I'm sure some are financial and, you know, and whatnot, but I'm sure there's even more in just, like, the peace that you live with or ways you're able to bless and just incredible stories. And he come to mind that have come up from that leap of faith.

Not really, because I. I don't, you know, like, the right hand's not supposed to know what the left hand's doing, so. So not many people even know what I just told you guys, and. And what that looks like exactly changes. I mean, I actually. Three years after I made that pact, I. I actually had a year where I was there, right? And then, you know, Covid hits and, you know, I cut my. My actual paycheck to nothing right away. And then we went through the whole PPP thing, and so I had to have a salary. So even today, I'm paying myself about 40,000 in. In terms of salary. My subass distributions are still substantial, but they're down about half of what they were at the peak. You know, we've seen minimum wage really go from 725, 750 to now we're having to hire starting people at $18 an hour. Everyone else ratchets up from there. So, I mean, again, we're still doing very well with. With what we've got overall. But, you know, I've shared more of the company with people, so we get less that way. We get less because there's not as much left over for distribution. Taxes are higher, wages are higher, you know, all those things. So there's not as much. So part of the way that I got there was the income came down. But everything that I give in charity every year goes up. You know, everyone needs more. More people have their hand out, and I don't backtrack or take away from what I've been obligated, in a sense, to give. And so the amount I'm giving just keeps ratcheting up. And the amount that I'm taking home has come down. And so I'm not far away right now. But we purposely, at the end of 2015, when we bought nine stores in Colorado Springs, Jimmy John's, that is, we again, were just thinking about how much total debt we had where we were in the economy and in answering to prayer, I woke up one morning knowing that that was the top for restaurant unit expansion and for Jimmy John's specifically. And so I told the boys we were Going to spend the next seven years, kind of like the seven years of drought and the seven years of, of plenty, you know, in Joseph's day.

Yeah.

And, and I felt like it was that same way. So we looked at 2023 as the, as the bottom of the market. So we grew very slowly in terms of anything new we would do or any expansion, and we just concentrate on paying down debt. So we went from 20 million in debt seven years ago to no debt March of this year. And so right at this point, we're in a position now again with bank financing primarily and cash flow. We're expanding into Hawaiian bros. Williamsburg, pizza, some coffee, you know, and we're going to go crazy here the next seven years.

Hey, Dean, it's fascinating listening to your story about your giving, your philosophy behind it and your plan. If you've heard about the Green family at Hobby Lobby.

Yep.

And the books of giving it all away.

Yeah.

By the time you go, you give it all away. Do you have a plan and a philosophy with your estate? When, when God calls you home, what would you. What does that look like? And I, I'm asking because I'm going through that.

Yeah.

What does it look like?

Well, I mean, part of what I've done, and your brother helped me with some of the early planning and insurance and things like that. But I, I told David when we first sat down, gosh, 18 years ago, I said, the way that I'm going to give it away while I'm living, I will limit my estate size to a certain level. And so this is how much life insurance I need because we're not there yet and we have all this debt we're putting on to build Jimmy John's. If I were to die prematurely, the family would hurt by that. Right. And so I bought enough insurance to cover any estate taxes and any debt that we might have over time as they came due, especially the term insurance, which gets more expensive the longer we live. I could cut that out and cut that back. And the actual estate value has gone up to those levels and the debt has gone away. And so we reached that peak, actually pretty quickly. And one of the annual meetings I had with your brother, he wanted to increase my insurance quite a lot. Go figure. But I said, dave, we're in the same boat. And I said, what else has changed? When we started this, we had a 600,000 personal exemption. Now we have 11 million personal exemption. So I said, I need insurance. I need less insurance than I did. And I've capped this because I'm Giving it away as we go. So the part that I'll have left when I go, and again, heaven forbid, you know, my wife go before me or any of my kids. But if they're all still in it and still around, they'll inherit and get all the business and they'll get to do the business. The life insurance should pay any tax or residual tax or debt that might be there. So they'll own the business completely outright. The insurance that's in excess of anything they might need and insurance that I specifically bought within my charitable foundation will all populate the foundation. And then the people who are on my board who have had very little to do with it until my death at that time, are instructed to either take those charities that we were giving to and the proportions we were giving and take the money and distribute it accordingly and be done with it if that's what they want. But if they have a charitable heart at that point, want to either add to it or continue on it in it, they can leave the money in and then handle it the way they want. Right now, everything that I give to it every year, we distribute 100% of it. We're not building a legacy. But in the event of my demise, when that happens, insurance money will fill that back up at least one more time and then that money can be distributed.

You had talked about you're moving past Jimmy John's or not past Jimmy John's. You're venturing into the Hawaiian Bros And a few other coffee pizza. Are there any symmetries that make that transition from possible? Like for instance, are you thinking of buying the real estate property, building the building and then putting all of them in that location and they won't cannibalize each other so it makes sense. Or what's your kind of thought process behind going to each one of those different brands?

That's a great question and you're absolutely spot on. I mean that's a great segue for listeners.

I did not know that ahead of time. Yeah, these aren't loaded questions.

No, it's a great segue. Obviously, if you have a successful end use for your real estate, you're a whole lot better off because you're not having to manage other people and hope that they manage their business well and hope that they continue to pay you rent or they pay you on time and so they don't constantly ignore you and not pay you and you got to chase them down. And eventually people that were once maybe friends, you know, you gotta at some point send them down the road so you can get someone in there, they'll pay the rent. So if it to that end, most of the properties that I've bought so far have just been Jimmy John's. I own it, I build it. It's usually an A, A plus location drive through. And it started because there were places I wanted to be in the city but there wasn't a place to rent. So then I found a place to buy and you know, it's just worked out really well and the, and the sales have been a lot higher in those A plus locations. As you know, it's all about location, location, location as everybody in real estate says. So fast forward to today. You're looking at doing things where you buy a little bit bigger piece of ground or an A Plus location today doesn't cost 350, 400,000, it costs a million and a half. So now you're spending serious money to get the best locations and now you're going, well Jimmy John's would do good there, but ain't going to do good enough to fund the nut, the investment and the real estate, the building. So you go, I really want to put two things there or I want to put three things there. And other than a couple locations, I've not built a place and rented to someone else. It's just not something that I want to get into. I suppose again I can, I can hire people to take care of that for me. There's a cost in that. I haven't wanted to have to manage that. So up to today I've pretty much just done my single use. Well now with Hawaiian Bros. Which is kind of a newer brand, they started Kansas City five years ago, they build now 3,200 square foot double drive through pickup lane on about an acre. They're doing 4.7 million a store per year on average. They just opened one in Davenport a month ago. They did 600,000 the first month. The first month in Davenport. Okay, so it just makes sense, right? And so you buy an acre and a quarter and you need maybe about.08.9 for that footprint of Hawaiian Bros. Well now maybe you got room on the other side for a drive through and 800 square foot coffee kiosk. So you, you're going to do well with the Hawaiian Bros from a business perspective and it's going to really make that real estate hum, because you're going to charge them a lot of rent because they can afford it. Right? But now you go, well I got this property over here, I could put more green space in or more parking, but I got enough, I don't need it. So let's throw coffee in there. And again I could go find someone to go in and be a renter. But if I can buy into a coffee business that's good and homegrown and, and got good Christian business men that run it, why not partner in that situation and own the real estate together and, and own the business together. And so what I'm doing more now. My kids have full control of Jimmy John's and pizza. The, the. I've got a guy that's been with me since 07 that's going to run the Hawaiian Bros. And I got a partner that's going to run the coffee and I just have to kind of orchestrate it and finance it and say yes or no or whatever. But having anywhere from one to four personal uses for real estate, I mean I can see a day and a property in the right location where I have all four of my concepts in there. I, I potentially going to buy a very, very expensive, probably the primo corner in the whole city. And just the little 0.82 of an acre is a million two, right?

Yeah.

If I can figure out how to get at least three and maybe my offices on that property and go up a story, I might actually be able to make that $1.2 million less than an acre work. Right?

Yeah.

So. And again, you guys have been in real estate more than I've been in it. But I love people. I love working with people, I love training people, I love working side by side. But they're nothing like real estate. You don't need people very much. And for, for being a people lover, I think it's fair for me to say it. It's just nice to be able to make money off something that you don't have. All the things, you know, sickness, drama, wage increases, taxes. I mean there's a lot of things come with having a business that has a lot of employees like you do in the restaurant business. So real estate gives you that other thing, the other thing, because I just turned 65, even though I'm not thinking about it, for me, because I don't see retirement.

You're old.

I just as soon see my kids when they get old if they don't go the same way I do and work forever. Being able at some point, if they wanted to sell Jimmy John's and sell Hawaiian Bros. And sell the coffee and sell the, the pizza and hold the real estate, you hire a property manager and you just go live where you want to live and do what you want to do. That's not me. I'm not going to do that. But someone down the line, someone down the line in the family can, can do that and it'll, it'll be a great opportunity. And part of the reason I've left all my real estate in the company is the people that we've allowed to become shareholders, including my kids, they all benefit from it all. You know, if I was going to separate it, I would have probably just separated to begin with and kept that in a different pot. And that would be benefiting me now and, and maybe even more for charity, I guess. But I, I just really want to benefit the people that have been along on this ride with us.

Dean, there isn't a week that goes by that I don't get 5 to 10 offers for a Starbucks, a Chick Fil A, anything in the franchise arena that they're selling off the property with a triple net lease.

I know.

Can you talk about that? What, what is happening? Are they taking the cash for growth or trying to just. Can you elaborate on that?

Yeah, I, you know, I can't speak for absolute sure, Steve, but I believe that's the reason I get calls from guys all over the country that do that for people. And it's funny because they, they would call me about my properties that I own and, and want me to do that. And the thing is, when you do that, you put yourself on a path to pay a lot more rent with your business. So the reason I bought the properties is so I could get AAA locations and not charge my companies as much rent. And so I just try to cover the cost until there is no cost and then keep the rent as low as I can so the business continues to be successful. And these people that are working hard within the walls of my business can make better bonuses and, and live better. Right. And, and so that works really well. If I wanted to grow supersonic and even faster than what I've grown, I would do what you're suggesting. I would sell these properties, get that capital without having to borrow it, and then I would either take some of it or reinvest it in more properties and more businesses and grow faster. And it's just really a strategy that some people use. And I've been able to, between the money I had to begin with running debt up, you know, bank debt up, and then paying it off, and now being able to do it again, I've been able to grow rapidly and hold on to the real estate and I just think that's better because it just seems like over time real estate goes up. It's not a straight line. We don't see it published in the paper like stocks. And so you don't see the variation in valuation that I'm sure still takes place. But as they say, they're not making any more of it. And if you're buying the right place, you have the right business uses for it, it's not going to go down in value. And once you've paid it off, you can charge what rent you want on your business side or you could, you know, charge increases because that's what everybody does and that makes the real estate worth more. And that's why I've left it all in. So there's no real conflicts of interest. We can make decisions that are best first and foremost for the people within our business and secondarily for valuation. And it really is our culture is people first, customer second, and then there's a few others, but that's the way we think.

Dean, it's refreshing to hear how you run your business and how Christ centered people centered focus that you have and you're growing the business for everybody. And when, when you see the companies that are doing the triple net, you could tell they're growing. And with the rate so high and multifamily at a, at an all time, not an all time low, but a low because of interest rates and etc. You see people gravitating to the cash of a triple net lease and, but even those are not cheap, they're expensive for, for just that cash flow. But it's interesting to see as you, as you know, how real estate changes, asset class changes over the year and what's hot and, and where things are going. But no, that's awesome. Thank you very much.

Yeah, that was good, good, good question there, Jake.

Well, Dean, we're coming up on an hour here, so I want to finish up our time together with what we call a speed round. This is a quick couple questions for listeners to get to know you a little bit better. Since you are so hard to find out anything about on the Internet, we.

Had to pull information out of.

Dean.

Yeah, I know. So I want to ask a couple quick questions, you give a couple of quick answers and then wrap it up.

Okay.

Do you have any daily rituals that you absolutely swear by?

Usually before I do anything else, I read scripture every day. Every day.

Which book has had the greatest impact on you? And I know you'll probably say the Bible, so you could say that, but then you have to give me another one as well.

It has, but I'm not going to say that because the first time I read John, I zipped my Bible shut and didn't open again for nine years because it scared me. And, and then every time I read it, I still struggled. And so, and forgive my 65 year old mind, but this could be a business book too.

Business book. Anything outside the Bible, Anything.

I'd say a recent one, to tell you the truth. A recent book that I read is Traction by Gino Wickman, eos. You guys are familiar with it?

Oh, yeah.

It's not like I feel like I could have wrote it. I mean, I read it and it felt like a good pair of slippers that I had for a long time. I knew it, I understood it, but I love it. And it probably was the single best thing I've read and implemented to help my kids grow in the leadership within the business. It's had a profound effect, particularly on my middle son who's the head of operations for our whole company and mostly oversees the 37 Jimmy John stores. But my older son who's president, it's really started to have an impact on him. But my whole team of leadership, it's really been good. So reading that through. And again, you know when you get a good book and you read a chapter and you then read the second chapter, but you go back and read the first chapter before you read the third. I read through the book one time, but I think I read the book six times. And then he turned me on To Good to Great by Jim Collins, which I actually read when that first came out back in 2000. But I read it as a stockbroker more as to see what he was looking at to find investments within the public securities market. This time reading it after Traction, it's a better book than the first time I read through it. So those two books, in fact, it's funny you ask that. Not that I keep them around for this, but they're within reaching distance of my desk because I use them almost like an encyclopedia if I have a question about something. So those two, for some reason, forgive me, but who, who was the guy at Saddleback Church and what's the big book that he wrote?

Purpose Driven or.

Yeah, Purpose Driven Life. Driven Life, yeah, that's the real answer. Okay. The reason I got into scripture on a daily basis was I read Purpose Driven Life and it did. It took me till the 9th time I read it that I started looking at the references because there's a lot of reference points, and in the back, he has the scripture that he's actually referencing. So I started reading the scripture that he was referencing and talking about, and it started to make sense. And because of that book, I picked the Bible back up, and where I would read something that really struck home, I would then go read that whole chapter.

Yeah.

Get the context. And the Bible started making sense. And so that probably is the single most. Had the biggest. Most profound impact on me of anything I've ever read, including the Bible, is that book.

That's great. And he's. He's well known for the reverse tithe as well.

Oh, well, that's where I got the idea to begin with. Oh, there you go. Okay. Yeah.

All right, next question. What's one piece of real estate advice that you'd give to others?

Probably biggest one would be, don't be afraid to jump in. It's. It. It's not that hard. It's leveraged. But if, again, you have a. And for me, this would maybe be the more defining point. If you have a purpose for it yourself and you can, to some degree, control that purpose and its success, then the real estate is going to be more successful and just start. Just start somewhere and. And learn as you go. And I would just say, you know, get rid of the leverage as fast as you can. It's good to have it, but get rid of it and then use it again. Okay. You know, don't just keep levering so that when the recession hits and everything turns upside down, that you got to give it all away. See, at this stage, if I pay everything off and Now I own 10 properties, and I don't know what they're worth, but let's say they were just worth a million apiece. I got 10 million of real estate that can now easily buy $3 million worth of new real estate that if I put businesses in them that are successful, those businesses should, all other things being equal, take care of that 3 million of debt. But I was able to get it because of this, that I already have this paid for.

That's good. All right, final question. This is a Heading west type question. So the title of the podcast is.

Called Heading west, and I look west.

Yeah. Right. In a lot of ways, it's a progression of where you began and where you ended up and all the things that happened in between. But this question is for where you're going. Where do you want to end up? So as you head west in life and in business and in faith, whatever you want to choose any of them, where do you hope it ends up?

I hope that I'm sitting kind of. I don't want to say on the top like I'm the top, like I'm the king. But I'm involved in an empire of many different businesses with a lot of people that I've met along the way that appreciated our approach to life, faith, business people and want to come along and be a part of it. And that the leaders that step forward have similar values and beliefs and will pick up the mantle of the various pieces so that again, I can just look upon it and smile at their success and the overall success of the company and just kind of enjoy that aspect of it.

Yeah.

Does that make sense?

I love that. That makes a ton of sense.

Sure does.

Well, Dean, thanks so much for joining us today. That was an absolute blast to hear your story about how you started with Jimmy Johnson, just to see the progression from there forward. So just thanks again for joining us.

It was fun. It seemed like about 15 minutes.

Dean.

It was an absolute blast. Thank you.

Thanks, Steve. I appreciate you guys asking me to do it. It was.