Goal Setting with John Hopfensperger

Welcome. This is the Insider's Edge to Real Estate Investing with James Nelson, the principal and head of Avis and Young's Tri State Investment Sales Group. In this program you'll learn game changing strategies to outperform the market. James will teach you how to source, execute and capitalize on the best real estate opportunities in New York and around the world. Now here's your host.

Welcome everyone to show number 161 of the Insider's Edge to Real Estate Investing. This is your host, James Nelson. Thank you as always for joining. Wanted to give a quick reminder that you can find the show notes and a lot of helpful information@JamesNelson.com we're also in the process of updating this for your benefit. We'll start including the weekly articles which I've been submitting to Forbes. You can go find those on Forbes.com in the interim and these articles are there to give you great insight information to help give you the insider's edge to real estate investing. While you're@JamesNelson.com, you can also sign up for our newsletter which was also forthcoming. So a lot of exciting things happening. Just want to be able to offer you all more value. So for today's show we have with us John Hoppensberger. John's going to talk to you about maintaining a healthy balance in life and in business. John has over 30 years of experience in the commercial real estate business as founder and president of CMK Properties where he's developed over $200 million of real estate. He's had a lot of business accomplishments and also as a triathlete and a two time Ironman finisher. We've had I know at least one other Ironman on our show, maybe more so. He's wonderful to hear when our guests have accomplished things outside the real estate realm. John grew up on a dairy farm right outside Green Bay, Wisconsin where he was taught a strong work ethic and he started very early on in construction right out of college and began on a two family fixer upper and did that work himself and then facing a question of whether or not to become a national level general contractor or focused on what he loved doing, which was real estate development investment, he opted for the latter and he has laid out these objectives to grow what were attainable, timely and realistic. He's continued with the strategy and today holds regular meetings with his teams and talk about business goals and together they break them down into people, operations, marketing, sales and financial aspects and has also kept his goals in front of him on his desk. So we talk about goal setting which is hugely important. John today is based out of Brentwood, Tennessee. His CMK property serves a fully integrated real estate investment development and management company and has carried out building to suit projects for major brands and has such clients as Dollar General and Tractor Supply. So for anyone looking to get into the development space, he suggests finding a site for presenting it to potential tenants. And after breaking into the segment, his company has gone on a generate and repeat business to create a portfolio over $385 million with more than $235 million in successful exits. Again, you can go to jamesnelson.com where you can go to the Show Notes and find out how to link in with John and find out more about his company and his website. We're going to have a brief word from our sponsor and we'll get right into that interview with John Hofstensberger.

A Different Approach to Putting Our Clients first Avis and Young's Tri State Investment Sales Group sells multi family office, retail development and specialty sales throughout the New York metro area. As experienced thought leaders in their industry, our 35 member group is available to help you make informed investment decisions by advising you on your current holdings or identifying new opportunities in the marketplace. Our one unified team is built on an industry unique platform which promotes unparalleled collaboration and and teamwork. We share core values of hard work, integrity and expertise. We put our clients first providing tailor made strategies to achieve superior results. Please Visit us at aytristateinvestmentsales.com and follow us on Twitter, LinkedIn and Instagram amesnelsonnyc to learn more.

Welcome everyone. So thrilled to announce that today we have John Hoffensperger with us who is the CEO and founder of CMK Properties. John, thank you so much for joining us.

James, it's my pleasure. I'm a fan of the podcast. Happy to be here.

Wonderful to hear. Well, great. So I was researching your background John. I know you're based now right outside of Nashville. I know you spent some time up in Wisconsin at uw. I actually grew up in Madison. So would love to hear a little bit about your story growing up, how you ended up getting into the business just to set the stage for our audience.

Sure. Yes. So I grew up on a dairy farm just outside of Green Bay, Wisconsin. Go Packers. By the way.

Go Packer.

Go Packer. Through that upbringing though on the farm we really I think was taught a great work ethic. And when we were building a shed, building on the barn, renovating the house, whatever it might be. We did as much work we could ourselves and, and that's why I learned to get handy with construction and had a passion for construction. So right out of college I started buying fixer upper properties. And you know, this is back in 89, probably 1990. So this is, this is way, way back when. And there was some no money down programs and whatnot because I had no money. So I had to figure out how to get seller financing and then maybe borrow a little bit of money to do these projects. But I ended up, my first project was a two family fixer upper in Green Bay and made a ton of mistakes but ultimately got it done, rented it out. I think it was positive cash flowing like $500 a month. When I was done and I was off to the races, I was hooked. I loved it. So from there I ended up starting to build a construction company. I went on to get a general contractor license and grew our project size. So that one was maybe $42,000 back then. And fast forward when I moved To Nashville almost 14 years ago, we were developing condominiums downtown in a typical phase was $42 million. So same fundamentals but many more zeros around it. But that, that really got me hooked in the business and we were a gc well really up until moving here where when we were doing projects in multiple states, we really needed to make a decision, get large and fully commit as a general contractor to go almost nationwide. Are really focused on what I loved and that was the real estate development and investment aspects, owning the real estate. And that's what we did. We got out of general contracting and we're purely a developer now and we're an investment company. And so that was my how I got into the business. And gosh, I've. I've been self employed since college so it was a little different way of getting in the business. But love it.

Wow, what a great start. So John, I want to go back to that first two family purchase because for a lot of people they might say okay, that even though it's no money down, that still seems pretty nerve wracking. And it sounds like you didn't come from a real estate family. So what convinced you to do that? How did you figure it all out? And then I'd like same question for that contracting business. How did you decide to get into that?

Sure. Well, it was interesting. I think I had a cousin who was developing duplexes and I would stay with him from time to time and he would be around the dinner Table at night. He had a full time job working for an insulation company. So I would drive around with him from time to time on construction sites. And back then it'd be pen and paper. He'd be doing the takeoffs or estimating the insulation for the projects. And then at the same time we would stop in at duplexes. He would be building a duplex or two. And he explained, look, the renters are not only paying for these properties for me, but I'm getting positive cash flow or making money while I sleep. And that's his goal was to ultimately get out of the insulation business and just do real estate. And I'd always see him buying and selling. I didn't quite knew how it worked, but I loved the idea of residual income or making money when you sleep versus linear income, right? Working for an hour, getting paid for an hour. So I ended up back then, James, there was Carlton Sheets program. I bought that. And I kind of bought every program I could to learn about real estate, underwriting, residual income and pro forma ing deals. So I built a little pro forma of my own or underwriting modeling in Excel and then tried figuring out back then there was different. They'd call them no money down deals. But I will tell you that first deal was on seller financing or a land contract. And I actually borrowed $5,000 from my mom. So there was some money down, but it was not out of my pocket. And the deal was I'm going to do all the work, I'm going to do all the sweat equity I can. I had it penciled out a plan on how much I thought it would take to renovate the property. Mind you, this is my first one, but it ended up working out great. And I remember I took after this was all said and done and rented out, I took my mom out to lunch, actually give her a check for 10,000, doubled her money. She was thrilled. I was thrilled. But I will tell you a funny story. While renovating that property, I got it to the point where I'm going to spray the whole thing. I'm going to spray both levels. I mask off and this is inside. Plastic off. All the windows, all the trims, plasticked off. I'm in my suit mask, spray it all up. I'm looking around. This looks amazing. And it's in the evening. I leave for a couple hours to let it dry. I come walking back in, I'm going up the steps to the second level. I'm like, oh my God, it's so humid in here. What's going on. I walk in, I didn't open up any windows. There was no airflow. It was so humid, all the paint ran down the walls and it was a disaster. I'd end up wiping everything I could down, sanding it and redoing it. But look, it's.

As long as you walk out alive. I thought that that story could have gone a lot worse. So.

Oh yeah, it could have gotten a lot worse. But you know what, you got to get in the game to do it, to learn it. I say now there's no experience like experience. I'm 32 years into the business and we've done now everything well, you know, Wisconsin and Madison. So we did University of Milwaukee, their last big student housing project before we left. We've done, gosh, back then trying to find our niche in the business. Spec homes, custom built homes, retail centers, historical adaptive reuse track, tax credit projects, TIF projects, multifamily renovation, multifamily new construction, single tenant, net lease, medical office. We built the headquarters to S.C. johnson, Johnson Bank, Johnson Insurance. We've done this wide variety of deals, which I think it was kind of my way of finding my place in the business to our niche and focus that we've landed on and what we ended up doing. But that experience was tremendous. So to your, maybe to your question of that's how I got involved with it and I think it was a matter of, you know what, I'm going to jump in and I'm going to do it. I thought my assumptions were correct. My sweat equity really doing everything I could was my way of bringing equity to the project. And I was not afraid of working. I mean, I got dirty. I hired a jack of all trades for that first one that could do electrical, plumbing, Sheetrock, the things I couldn't do and just kind of did it and figured it out. I think that's part of it. If you're going to be an active investor in the business at some point you've got to get, you know, out of the pen and paper or computer and you've got to, you've got to get busy with a project and make it happen.

So yeah, no, no doubt. And I love that. No experience like experience. So. So it seems like one project would build on each other and I'm sure there was certainly mistakes along the way like, you know, leaving the windows closed when you're doing a paint job. But I, I'm sure each time you did it, you learned. Now tell us about your schooling, John. And first of all, I I find that really fascinating that you were introduced to real estate through Carlton Sheets. I. I still remember that guy when I was in college, needed his late night infomercials. Yeah, you know, the no money down. But I'm glad that someone actually took his advice and it seems to have worked out and started off your career.

So.

But at University of Wisconsin, did you take more real estate classes there or did you. How did you actually end up learning how to underwrite and do all that?

Yeah, no, I was business and some marketing in school. So underwriting on the construction side, I went on and I took courses to get my general contractor license and learned then from doing projects. So that two family, by the way, we did 20 of those or I did 20 of those in two years. So we really got the flywheel turning. But then I would step up to, I think our Next was like 4 units and then 32 units and 100 and some units. But then got into new construction and it was really from moving from renovation and adaptive reuse and getting into new construction projects and surrounding myself. Whatever I didn't know it might be a matter of making sure I had all great engineers, structural site engineers, architects, any designers on board to make sure when we're building new, we were designing it right and then being able to estimate it right. So hiring folks in my company that could fill in those blind spots that I didn't know. So it was really surrounding myself with the best people on the team, whether it be employees or subcontractors, and doing the projects, figuring out the projects and just learning another. I think a key point there's always, you know, we really didn't have YouTube or as much of the Internet resources back then, but there were some fantastic books and those infomercials where I was always. I've always been a big reader and continue to be. I'm a huge Tony Robbins fan. I've gone to all his courses and I think I set goals out. But more for setting a goal, it's then figuring out a plan to get there, breaking it down into a plan and actually scheduling it and doing it. And we do the same thing with our real estate projects, I think very systematic and program driven. So we probably spend as much time and focus energy on our delivery of a project as the finished project. Obviously you want a finished project to be amazing, come in on time and on budget. But we're very much focused on getting from conception, feasibility, due diligence to completion. And I think 99% of the work is done before you put A shovel in the ground, just not taking any shortcuts. We're very methodical in our checklists, our approaches, and that's something that's been kind of ingrained in me since young. So I think your question maybe is, what are we doing now? How are we a developer? What are we doing now? I think you're muted.

Yeah, I was just saying the fact that one project built on the other, but it was certainly kind of learning on the job, so to speak. So that's really fascinating that you would just continue to try to go out and find information, books, anything that was available to you. And I like that idea of planning and breaking it down. I'd be curious. So what else have you gathered from Tony Robbins? Because I also love listening to his stuff. And what have you found that has been applicable to your business?

A lot, I think, you know, there's a. He kind of had a mantra, win the morning, win the day, if you will start the day off right. Life balance. He has his life wheel where it's, you know, family, faith, fitness, finances. If each of that is a spoke in your life wheel and you got a broken spoke or one's out of balance, your life's out of balance. So. And it will never be in perfect balance. But it really made me think about balance in my life and for my team. We're all remote. We've been remote for 13 years. Part of that was because after going to Tony Robbins, when I was back in Wisconsin, I was a workaholic. I love working, but I didn't see my family enough. I was out of balance, wasn't in as great a health as I could have been. And going to his programs made me think about, my gosh, you got to take care of the machine, the mind. So, I mean, I ended up. I've done a couple of Ironmans now, and I couldn't even swim as an adult. I had to learn how to swim at 40 years old to do an Ironman. But that's where he taught me. Look, it's. If you believe it and you go after it, you plan it, and mirror success leaves clues. James. Right. So I met with a great Ironman coach here in Nashville. I met with one of the best swimming coaches. Rather than trying to go out there and flounder in the water on my own, success leaves clues. I think it's taught me that. And. And our team here, we're very much about health. We're about balance. If your children have a sporting event, man, go, you know what? We get our Work done when we need to work hard. I put our team up against anybody. But I think it's the way we've attracted the values of hard work, dedication, faith, family, fitness. I mean we've all been, almost all of us have been doing keto off and on that and we have fun with some of those things together. So that it's more than just work and goal setting. You know, we are, I think if in your life, like many people, spend more time planning their two week vacation or their annual vacation than they do their life for the year, you know, where are you going? Where do you want to end up in your vacation? Where's, where's the stops along the way? And it's the same thing for your life. I'm a big advocate on goal setting. Our company has quarterly goals. The planning is called strategic planning. Right. But we all got to be on the same page with quarterly goals, individual goals. We may miss the target, the bullseye, but at least we're going to be on the board. And then the other part of it is so much. You kind of got me going here. The other part of it is we, we always have our Monday called a big board meeting. It's a whiteboard but, but we do it video where everyone talks about whatever. What are our three main objectives for the week? Right. If all this has to get done, what is it? And now what are your top three for the day? And we do that again Thursday on Big Board Light. But it's always thinking about, it's the 8020 rule again. Kind of quit sorting paper clips. And your top three, three work on them. We call it kiss the pig. The thing you don't want to do. Do it and get it done. So I mean, I'll stop there. I go on and on.

I'm smiling because this is really fantastic. And just to kind of go back and first of all, balance so important, right? Because you know, we talk a lot on the show about just investing and you know, our listeners, everybody wants to be successful, but not at all costs, right? And if you know, it's in spite of having a good family life, having balance, being physically, mentally that well, being is obviously essential. So I love what you had to say about balance. I love also what you had to say about goal setting and breaking it down into manageable pieces. I'm right there with you. In fact, I just finished for the second time Gina Wickman's book on traction and he talks about 90 Day Rocks. So for every quarter, what are those three major objectives? And I didn't realize that that actually had come from Stephen Covey. And there's, you can find this old school video of Stephen Covey where he's got a bunch of these big rocks and he brings this woman up on stage and says, okay, well put, put it in, put it in the jar and there's all these little pebbles in there already and she just can't fit it all in there. And of course then after she's know, given up, he says, all right, now dump the whole thing out. Put the big rocks in first and then, you know, put the little pebbles in over top and it could fill in the rest of the stuff. But then, you know, there wasn't enough room for everything was the point. So get, get rid of the, the little stuff, focus on the big stuff and so, and break it up into manageable chunks. So whether it's the quarterly goals, weekly, daily and have those objectives. So John, what would talk a little bit more about that goal setting for you as a business? Is it certain revenue goals? Is it how many properties are you going to acquire? Just because I really. We don't talk about it enough on this show about actual goal setting. I know goal setting has to be something that's, that's measurable. Right. If there's not a finish line, you can't check the box and say I either did it or not. But can you give the audience a little bit an example of kind of what your daily, weekly or quarterly goals might look like?

Sure. And there's an acronym. I think it's smart, specific, measurable, they say attainable, timely, realistic and timely. So specifically. So I have personal goals, but I'll talk about business goals and what we do. So we break them down into people and operations, into our marketing and sales and then financial. So there's kind of three main areas. And for example, on financial, we'll look at how much we're focused on, bottom line. So net income is most important to us. And we'll also look at equity. We're an investment company. How much equity we raise every year with our investors, we like to increase that a bit every year. So we'll look at how we finished out the year and then what are our goals for the coming year and why. So if we want to increase, let's just say our net income by 10%, for example, what does that look like in terms of project volume? Because we're a developer. So we'll look at some projects we do, might be $2.5 million, let's say a dollar tree for developing versus a, a preschool. A typical preschool that we're doing is seven to $8 million. There's a certain amount of fees in there. Now we're going to say if we want to increase our net income by 10%, what does that mean in revenue? How much more do we need to do in projects? Okay, if we need to do five, three more projects this year, how do we get the projects? Is it with existing customers? Is it new customers? So to make it simple, we'll say we want to. Our company wants to bring on at least one new brand a year. Meaning for us like a tractor supply company or a dollar tree, whoever it is. Okay, great. How are we going to do that? How do you break that down into a measurable plan? We'll break down the plan. Who's the owner of that goal and then what does it look like? If how we. What do we want achieved by the end of Q1, that 90 day chunk, by the end of Q2, Q3 for people goals, it might be training certain skill we want to learn. We might want to send them to a demographic mapping class. A couple of our guys took a, a financial modeling course last year and we said, okay, you want to have that course done by the end of Q1 and we know it's done when you send your completion certificate in. So measurable to us. One thing would be we want to. If you want to just increase your income, you need to make it specific and by one. So if it's personal income, you want to increase your income by X, how are you going to do it? What do you need to do? What actions do you need to take? Who could you meet with that's maybe doing what you want to be doing and learn and glean. Right? So. So that's how we do it. We'll look at. I'd been a dinosaur in terms of branding. James, you're so awesome and building your brand. You got a podcast going, you wrote a book. We've been word of mouth frankly for the last 12 years. We only started getting on LinkedIn and doing some of this branding last November. So that's really a goal for me is to start building our company brand and getting it out there. So how do you do that? Well, we hired I think a great social marketing company and we have weekly meetings. We said, all right, this kind of last thing on my mind needs to be the first thing to keep me accountable. I'm going to have a weekly meeting with the marketing person. We're going to have an action list and they're going to say, what do I have to do? What does Kim in my office have to do? What are they going to do? And then we're going to keep each other accountable and follow up from week to week. And that's been fun. And so that's exactly fantastic.

And I really appreciate your goals.

Visual. I have my goals in front of me on a desk. I read them every day. I see them every day as a reminder. So I'll stop there.

Fabulous. No? And I hope everyone's taking notes and making them actionable. Right. Goals are not, you know, January 1st you stick them in your desk and then December 31st or the next year you open up your desk and see if you hit them or not. It is that taking that big goal and you're breaking it down into actionable steps that are measurable, as you said. So that was really fantastic. And you know, also, I've got to imagine doing an ironman where you didn't even know how to, you know, swim competitively. I'm sure you had to break that down to figure out each step and you get the right coaching. And so it sounds like you're well on your way to the branding opportunity and to let people know what you're doing. And this is a great start to share your story with others. So I have no doubt that you'll certainly be successful in that regard as well. So, John, I want to talk a little bit more about your built to suit business. We have had my friend Carl Wright on the show who's delivered and we talked a lot about how he located sites and how he, he built sites. But I want to ask you a little bit more about. You said one of your goals might be to find a new brand every year. So for our listeners, how does that conversation go? I mean, I'm sure at this point you can say, look, we built for X, Y and Z. Track your supplier. We've done this school. So at this point, you have a track record that you can point to. But for our listeners who are maybe looking to get into this and maybe they would love to figure out how to build a dollar tree, how would you go about landing that tenant? How does that conversation go for those of our listeners who don't understand how this works? Are you getting an exclusive on a certain region? Are you one of many developers they might turn to? I know I'm throwing a lot of questions out there, but I just want you to understand kind of the arc of where I'm going. And then lastly, is it what comes first? Do you find the deal first that might be suitable for them? Explain this whole built to suit business because I think it would definitely be of interest to our audience.

Sure. And so build to suit or single tenant, Net lease is really. When you see, you mentioned Dollar Tree or Dollar General or autozone Valvoline, where you see one building on one piece of property and typically the building is the same. Right. There's maybe one or two versions of it. So it's, it's this repeatable building. McDonald's, Chick Fil, a model. And they're going into. There's certain criteria the tenant is looking for a certain demographic or income or location or visibility or market growth, whatever it may be.

We.

Ended up getting. I think Dollar General was one of our first. And it, it just ended up being tenaciously going after knocking on their doors, trying to get to the right person, trying to get it in like first.

Did you, when you were knocking on their door, were you saying, we are a contractor, we've got a real estate business, we can find and build what you want, or did you actually bring them an opportunity to say, I've been watching what you're looking for in your stores. I have your criteria. We have found the perfect site. We have site control. Can we build this for you? I mean, what was the.

Early on. I would say it's early on, James. I think it was more of the latter. Where to get an opportunity, you need to have a site. Most of these big brands have a preferred developer list and that's who they work with. And if you bring them a site, in some cases we've done it with brands, we'll bring them a site where they'll say, sure, we like your site, but our developer in that region is going to build on it. We'll buy the site from you or maybe ground lease it. That wasn't our goal. But to get in to some of these big brands, you typically need to have a site. Now some, if they're growing at a big enough pace and they need the capacity if they're looking for more developers. If you've got, I think you would need somewhat of a track record in that case to say I've done it or I've got the experience, I'll bird dog the sites. Tell me what you're looking for and I can do it.

But.

Today we start with the tenant because we do have a track record, we're able to build a relationship with a tenant and then we go out and find the site. We don't lead with a site they'll typically let us know where to look and then we're going and finding sites. But if your listeners want to get into it, I think if you many brand flags will have a real estate page or developer page as part of their website and, and you can, or you could dig up their criteria, their site demographics and then if you can go and find a site and get control of it, bring it to them and they like it, that would be your foot in the door. They might appreciate your tenacity ability to bring a site and that would be a way to get your door. It took us three years for tractor supply company. I mean we just finally got going with those guys and it's great but behind the scenes it's been a three year dogged pursuit. But I love that brand, I love the business. They fit our model, our criteria. Like we know we can deliver. Finally we're there. But it wasn't easy.

John, I don't know if you ever attend ICSE but for our listeners it's this giant convention. I mean they, they hold it all over the country but Vegas is the big one that they do in May every year and you can go into a wing and it's basically every single retailer so you actually go to their booth and you could see what they are looking to build and where. But John, with so many options out there, it sounds like you were in hot pursuit of tractor trailer supply. So tell us why you like that. I mean that sounds like a very specific niche. How do you decide? Okay, I'm going to go build a dollar store, I'm going to go build a school, I'm going to go buy tractor trailers. How are you figuring out what you want to build? Because that also might inform our listeners if you want to go and try to implement this strategy. How do you figure out, you know, what is the best tenant and who's actually growing and could make for a good investment?

Man, that's a great question. And it's very, we're very purposeful on who we develop for our partners and it goes back to our company's strategy. So we're a real estate investment company. First and foremost we develop to to own, right? And so we have two customers. One is our are our investors and the second are our tenants. So we have to put equal weight on them. But our filter for what we want to own or develop in real estate just simply there's a few things growing a strong, growing industry that has proven to be Amazon resistant. And now Covid Resistant within that industry. It needs to be. We go at a strong growing markets. So industry market and then the players in that industry have to be a strong track record and balance sheet. So meaning we're not going with startup companies. These are our goal is credit rated, right? They're publicly traded. It is a credit rated tenant or at least credit worthy. Big balance sheet. Two big reasons our mailbox money or your investment returns. Number one is predicated on the ability of that tenant to pay rent. Right. No matter what, up and down for us to collect the rent. So we want a strong growing tenant, big track record. And then kind of going into that we look at the locations and type of real estate. If anything ever went dark or a tenant ceased to exist, could we repurpose or retenant the program? So we're not. Right now we're not doing any QSRs or Quick Service restaurants, but these anyway. So what our company believes in. We like preschools in affluent areas. High demand, big waiting lists. We like that market. Tractor supply company is a discount retailer that caters to a lot of the hobby farmers or people that have pets, plants. They have a big balance sheet. Great. Credit dollar tree is a credit rated company, another discount retailer. We like health care, right. With certain types of healthcare, but that's all of our criteria. So we look at our portfolio and what can we provide for diversity in the portfolio. So I will tell you right now we're going for a certain auto service, whether it be in auto body, tires, brakes, that's kind of the next brand. We're going after our next industry. So for us to answer your question, it's that big filter or criteria that we believe in and go after that is proven to be resilient. And then we want diversity within the portfolio so we're not all heavy with one tenant or one industry.

That's great. Really appreciate your explaining the business. And then now take us through a specific transaction. So let's say you have a piece of land. So let's talk about first of all how you secure it. So are you putting down hard money? Are you putting down a soft deposit? You have the tenant, let's assume they're interested. Are you negotiating a lease simultaneously with the purchase and sale agreement? So you're putting that all together at once and financing. Explain to us how this all comes together.

Yes. So we, we, we get the criteria that our tenant is looking for, first of all. So we start with the tenant and we have some very, very good data analytics software that we subscribe to and pay for, but allows us to take what we'll call the key demand drivers. You know, if it's a preschool, some examples, number of kids under the age of 6, growth rate incomes, whatever it may be. We put the key demand drivers into our mapping data and then we can look at any market in the country. But there's typically specific markets we're going after for this tenant for whatever reason. We can heat map a market where those key demand drivers are the hottest and then we can go boots on the ground and we look for off market properties. On market properties, put together what we think are the best ones and then we will, if there's something we feel like it, checks the box. We'll tie up the property immediately versus going to the tenant and running it through their first round approval.

And John, what is tying up the property mean just to you? Is that going under loi, Is it under agreement? Are you in contract to purchase it? How does that work?

Purchase agreement? So we'll start with an LOI to get the, as you know, get the basic terms on a one or two pager, but then we'll go to a purchase agreement. We've had properties under LOI before that have gone to the tenant for approval and they get sold on us or someone comes in with a better offer. So now we go to a purchase agreement. But then you asked about is it hard money right away or what's the process? We'll go for a due diligence, you know, whether it's 90 day due diligence free. Look period where our money is not hard, it's still refundable. And typically in that 90 days we're able to get a first round approval from a tenant. Yes, they like it, market's right, site's right, but we're not to a lease yet. So then we have to go the next phase is we have to put down some hard money is built in the deal or we'll try and get a next 60 day phase to get to building plans, a budget number and an actual lease agreement. So we don't close on anything, James, until we have a lease agreement signed and then we have to get our financing and all that good stuff. So there's a lot of pieces in our workflow before we close on it. But it's very, it's stages, it's very methodical, but it is pedal to the metal because you know, most sellers, they don't want to hang in there for six months while you're trying to get a lease done. So there's Somewhere along the point, we have to feel comfortable as a buyer putting hard money down. And the seller has to feel comfortable. Okay. They're serious. I got a little hard money for them to leave. It's going to be painful.

Wonderful. Okay, so. And then maybe let's talk about the next step. So you've been able to get the tenant and the purchase. You bring it together at the same time. Now you've closed, now what are you actually building it to spec? So they're giving you their plans. Talk about the actual building process.

Yeah. So in most cases there's prototypical building plans, maybe there's a big and a small building or whatever it is. So we're working with a plan we still have to do. It's got to fit to the site, you have to meet the local parking requirements, water retention, all those other things for the building to fit on the site. So along the way we're working with our architect. And then typically we'll have one or two builders, general contractors we're working with for a given tenant. So they will, before we close, we get what's called a GMP or a guaranteed max price, where the contractor now has locked our number for construction and we'll build in a contingency for any unforeseen. But by the time we close, we're pretty much permit ready. We should be able to pull a permit within 30 days and then we're building it. So we have the contractor, civil architect, mep, all those other consultants have been locked in, ready to go. We close on the land, we've got our equity and debt in place, and then we go vertical and it all goes into. We use smartsheet here. So it's all mapped. The contractor, typically our contractors, all have penalties if they miss the day because we have penalties typically from our tenants. Right. So we have to deliver on a given date because let's just say 45 or 60 days out from delivery or turning over the project. The tenant has to be, they're getting ready for their FF&E, their fixtures, furnishings, equipment, they're hiring their training, they're marketing. So you can't be missing the end date. Right. It's very important. But we, we put construction cameras on every one of our sites, live view, so our investors, our tenants can see what's going on all the time. Our architects for out of state projects and we have weekly project meetings on every project we have going, whether it's in pre development or development construction. So we're pretty buttoned up in those regards. By the time we get to groundbreaking, there's just been so much preparation and work nailed down in the details that it's just managing the construction is a little easier. And I'll say, sorry, will, our guy here who, who sees, who does all that. I make it sound easy. It's not, but, but he's, he's great at it. He's been doing it for 25 years.

It goes back to what you're saying about having the right team and the right people. And we know that's such a big part of success in this business. So John, let's talk a little bit about the investor side now. So talk about how you built up your investor base. And just looking at your site, it looks like you've raised capital mostly in a fund format. So do you go out and raise money from high net worth accredited investors and then you bring them into a fund to go do a certain type of investment? Because it looks like you've done looks like over a dozen funds I think, you know, maybe give people a sense of the scope of what you've been doing.

Sure, yeah. We're on our, this will be our 27th offering coming up. Most of them funds with multiple locations in, but some one off investment LLCs if you will, investment entities. If we're doing a medical office building or a large project, it's typically one building in one llc. And it depends on, is it a. It kind of depends on the type of deal. Some investors love these single tenant deals, some love medical. But the way it works. So just what you said, James. We have accredited investors, I think we're around 230 right now, active accredited investors. We have some wealth advisory firms, smaller family office. We're working with more family office. And the way it started, our first I think Dollar General, I put together 10, you know, myself and 10 investors, my team, I invest in every deal we do. But it started with 10 investors doing the first deal and having them trust me that I knew how to develop and build a Dollar General and it would work out great and you'd get your mailbox money and darn it if it didn't work out great. We've ended up doing 80 of those. But we've grown purely by word of mouth where an investor will tell another investor or we'll send an email out to them and say hey, we have this offering. Or if you're an accredited investor and you like real estate, if you would like to get on our distribution list, we'll send out our next offering kind of A teaser or offering memorandum of what we're doing and then if you're interested, you know, we go from there. But yeah, it's, it's been something. That's how we've grown. We now have a full investor portal, so all the investor documents are held in a portal. You can go on your phone or computer anytime, see your investments with us, your returns. We do quarterly distributions like clockwork. But that has been a really neat part of this business. Our investors are fabulous. We do local events quarterly. Here in Nashville. You'll meet some of the best, just some of the best people. Many of them are retired business people, some are still active C suite people, LP investors. And we keep our. Typically, our minimums are really low, like 50,000. We've have some offerings where it's 25,000 and I wanted to do that to allow investors access to better deals without having to do $250,000. We don't all have that right, but you can be accredited and hopefully you've got 25 or 50,000. Dip your toe in the water and then get to know cmk, our philosophy, and do multiple deals.

John, that's fabulous. And success breeds success. So you've got an incredible thing going there. So with only a couple minutes left, John, what would you say out of all the things you're doing, gives you the inside edge for real estate investing?

Yeah, it's got our people. Really it is. Might sound, I mean that might sound cliche, but I've been doing it for so long. When you find the right people who have shared the shared values and culture, you know, they're dedicated, they're passionate about the business, they're great at what they do. No micromanaging, experienced, just kind of the best of the best, kind of the upper 1% in what they do. And then they get to be real estate owners. Right. We all get to own real estate in this company. Combine that with the passion for process, that, I mean, that's our inside edge. We've done so many we're. And we are, I mean we're, we're, we're boring. We're hitting solid singles and doubles, you know, every time. We're not swinging for the fences. We're not doing the big cool high rise condominiums. I mean we're doing Dollar Tree tractor supply. We, we love them, these preschools. So our inside edge is the people in our process and then just the experience we've refined. We continue to sharpen our knife every day and try and get better. And we love doing that, that's fantastic.

Definitely all about the people and the process. So that's great. And then what advice would you give someone listening now? Maybe they're in college, maybe they want to get into the business. How would you tell them to get? Would it be buying a two family like you did, trying to build this up on their own? Would it be going to work for an investor like yourself? What would you tell someone today?

Yeah, well, if, if you know how you're wired, meaning if you're this entrepreneur, entrepreneurial spirit, where you just feel like, I want to go out there and do it, I want to go and do a property. You're driven that way. Do a property. Right, Go do it. If you're a little more analytical, if you don't have that entrepreneurial zest or maybe that risk appetite, I would definitely say get with a company like ours or a big company, get with Avis and Young or some of the other brokerage groups or development groups. I see a lot of young folks getting into it as an analyst underwriting deals. And I think that's a fabulous way to start understanding how these deals work. First of all, from an analyst standpoint, even if you're not super analytical by nature, no matter what you do in the business, you have to understand how to find out a pro forma deal and how it works. I think that's a great entryway. And from there you could figure out deal like development, marketing, sales, whatever it may be. So that's what I would suggest, maybe one of those two paths.

That's fantastic. Great advice. And John, last but not least, how do people find out more about what you're doing?

Yes. Seeing we're doing some marketing now, James, we're learning. I love what you're doing. So we are. CMK Properties is on LinkedIn. You can go there. I'm on LinkedIn. We have a website, cmkproperties.com so if you're interested in learning more about investing our projects, there's live cameras. You can go to the website, you can go to LinkedIn, you can get a hold of me there. And we'll, we'll love to talk with you.

John, this was fantastic. Thank you so much for taking the time. Thank you for sharing your story. I know the listeners, the audience are really going to be inspired about your story and what you've done. So really appreciate you joining us today.

My sincere pleasure. Thanks for having me, James.

Wonderful. So thank you as always, everyone for joining. If you have not done so already, please go ahead and follow the show. Leave your comments. That's what helps others find out about this. And again, I wish you nothing but the best. We are putting this program together to help give you the inside edge to real estate investing so you can go out and outperform the market. So until next week, this is your host, James Nelson. Thank you so much.

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