#252 - How I Built This w/ Chad Randash

Hello, and welcome to the Independent Dealer Podcast, brought to you by Buckeye Dealership Consulting. Another great, great installment of our How I Built this series with good Chad.

Yeah, my friend, my 20 group compadre, Chad Randash from up in Montana. I mean, everything's different in Montana, Jeff. Only old. It's cold. It's only a million people in like 20,000 million acres. I don't know. It's a big place.

More bears than humans.

More bears than humans. And. And Randash is a special kind of bear here. Yeah, super interesting story. I mean, he takes us back from the beginning, which is so awesome. And to hear the trajectory of, of how his dad started and, and finished and, and where Chad is now. You know, 1200 or so accounts, him starting in 07. You know, the difficulties he had from. From the bank from day one. But now the relationship they built now. So interesting.

And to give you guys context, two locations, about 1200 accounts, selling somewhere around 70 cars between the two. Mostly buy here, pay here, a little bit of outside finance, some CAC stuff with 56 employees.

I think you said 56 employees. ACV, you know, around at 8 to $10,000 range. And a guy who knows how to collect and uses data to back up everything he does. Jim. Uh, super interesting. Yeah.

Yeah. And the number one takeaway I want you guys to think about through this conversation is relationships. I think that's the number one thing that I get from this is all of this was made possible and continues to be made possible by the relationships that Chad's made and his dad and. And those types of relationships. They connect up there. So that's a, that's a really great takeaway and something to keep in mind. Real quick, we want to make sure you guys do know about the sponsors of the podcast so we don't have to interrupt you during the interview. Buckeye Dealership Consulting obviously brings you this podcast every single week. They're great sponsors and they back up the buy here, pay here industry and all dealer industry with reinsurance products. Yeah.

And I'm sure, you know, we, we didn't get into this, but in Montana, having a pastime device on your own, your vehicle is. Is number one priority because they're 200 miles away from everything every time they do something, right, Jeff?

Yeah. You don't want to be chasing. You're not driving addresses out there trying to find a car. GPS is crucial to be able to go out and locate your asset as quick as possible.

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Yeah, absolutely. Make sure you're set up now. Now is the time to get your team trained on how to file those taxes when everyone starts getting their W2s in hand. So that's going to happen real soon. So that's all the ads we have. We are going to get straight into the podcast. Here we go.

You are listening to the Independent Dealer podcast with hosts Luke Godw and Jeff Watson. So my dad, you know, we, we. My dad in the 70s, he, he ran at the YMCA and he was in his 30s or 40s or whatever and you know, and that fitness phase was, was pretty big. And so he had a group of friends and these guys were bankers and lawyers and just starting out. They were just young guys. And so he had started an auto parts business called Champion Auto. And my grandfather was one of the first guys that brought Napa to Montana. And my dad had worked for Napa and those guys had a fallen out. And so my dad had moved from Great Falls to Billings and started Champion Auto, which was kind of, you know, mopar type parts for the, for the high performance of those cars. So he had gotten into the 80s, he started expanding in Sheridan, a couple stores in Billings. And then it, the Volcker came in and inflation was out of control and the interest rates and it shut down the oil and gas production around Montana. And So it was 18, 19% and he, he lost everything. And I tell you about these guys because they, they, you know, he, he just, I mean if you've ever gone through anything like this, I mean he was just like a cage animal trying to figure out how the heck he's going to pay these, the bank back that loaned him all this money. And these guys would run with them and they'd say, hey you, you need to declare bankruptcy. You have to. There's no way, Randash, you're going to get out of this. You have to declare bankruptcy. So he just would never do that. He just said, you know, if there's a way, I'm gonna, I'm gonna pay this. You know, at the time it was probably 300, $350,000, which is a lot.

Of money back then.

A lot of money. And he was flat on his butt and he. My parents got divorced and I lived with my dad and I didn't really know the guy that much. He worked a lot. And my mom went off and got married and she moved to California and so my dad tried to make it in Billings For a little bit and he just couldn't make it. And so we moved up to Great Falls. We lived in my grandparents basement and they were snowbirds in Arizona. So him and I shared a room and he worked for a glass guy and he worked for different things and so it just, none of that worked. And so he's, he, he understood cars. He's really good mechanic, really good, really well understood cars. And so he would get a little money together, buy some cars. And we moved back to Billings and he had a little lot and he, it was really smart. He had a, it was an old, it's now a Domino's pizza, but really small little lot and he would put a couple cars out there and he dug a line and it was like a, the old Batman phone. It was a red phone, it was on a pole and had a bubble over it and it's cold here in Montana. He insulated that bubble. And he had a sign that said, you know, if you're interested in one of these cars, call it. So he didn't want to be at the dealership all, you know, whatever it was. I mean, it was a little, little put on potluck. And so he would, he was out trying to figure out the next phase of everything and somebody would call up and say, hey Ed, I'm interested in this car. I'll run on down there. I'll be there in 15, 20 minutes. Sorry. So anyway, so he, he did all that and that's. And then of course people started asking, how do you, you know, will you, will you refinance it? So of course he's, he's trying to pay this, this bank back little by little. And these guys, these lawyers and these bankers and stuff, the guys he started with at the bank, they started making it through. It's a local bank here in Montana. And, and they started becoming wheels in that bank from, you know, vice president of this or whatever. And he paid them all back in the early 90s and they, he had a little bit of money and they, he had this idea he heard about buy here, pay here and he started putting this thing together. And if he could put in $25,000, the bank would loan him five times that amount. So he had $100,000 on a line. And so he would pay those, get those cars, get them sold, and then he'd have to stop for a while and let the cash build up. So that's how he got started doing this business. About that time I was in, in, in high school and, and I just, I Moved to. I had a little scholarship to run track in Missoula. And about a week before. I really like card magic and. And grew up just like magic. So I. There was a guy down at a library that put a book out. It was called Las Vegas Cardmas Guy Ackerman. He's a top card mechanic. So card mechanic is the guy that can cheat really, really well at the table. And that was the kind of magic that I like. And he wrote this book. And I found out he was a professor at UNLV and he taught advanced mathematics. And so like a week before I'm supposed to go to Missoula, I packed up my truck and I wasn't even admitted at unlv, but the Tarkanian scandal was going on, and everything was going on. UNLV was kind of burning to the ground. And I walked in with my 2.8 grade average, I think. And they said, yeah, you can. You can come in here. And I called the old. Where are you? We're supposed to go to Missile. And I'm like, pop, I'm in. I'm in Vegas, buddy. I'm gonna. I'm gonna see what this does down here. So that was it.

He.

He started doing that and I came back and. And would see him once in a while. And he just had a car lot. And my dad was a. I didn't even know what buyer payer was, but he was a used car dealer. And I finished college and. And I got into construction management. I was in Vegas for quite a while doing that. And. And it was a fun time being in a great town with a lot of magic and a lot of construction, a lot of fun. And. And then I got married and I went to Denver. And my wife didn't like Vegas, so I worked for a landscaper in Las Vegas. And when I started with this guy, I didn't know any Spanish, and Denver was three times the size of Vegas. And I didn't understand anything about landscaping. But, you know, I like. I like to work. And the guy I worked for was a hot, hot shot, and he knew how to build a business. And so in five years, we went from like a million dollars in sales to $60 million in sales. We were like one of the 20 landscapers in the United States. We were just flat out after it. We worked for Pulte Homes and Dr. Horton and. And I made a lot of money with this guy. And so I saved a lot. My wife and I lived fairly frugally. And so I had. About my boss. We had A falling out. He. He was going to the Playboy Mansion and going down to Vegas and buying, you know, Rolls Royce Phantoms, and. And we had about 600 guys, and I was running a lot of guys for him. And I just thought, man, I'm going to go out on my own.

And was this.

Chad is in 0506. Okay, so.

Okay.

And so I did. I went. I was still working for him, but behind the scenes, I was maneuvering everything to go against him, my boss. And I bought a. I started a company called Equinox, and I bought a, you know, two or three yellow Dodge trucks. And that was going to be my calling card. I had a bunch of contracts up in Rifle, Colorado, with the oil and gas companies doing erosion control and stuff. And so I was just about ready to pull the trigger on this, and I. I just had this unbelievable guilt. And. Yeah, because this guy. This guy had. Had. Had taken so good care of me. I performed really well for him, but I just felt terrible about. About what I was about to do. And I called my dad and I said, here's the score. Here's what I'm doing. And I. And I'm. I'm sitting outside in front of my house, and I just can't move. I'm just. I just. My heart's racing. I just feel sick. And he goes, well, how much money do you have saved? And I said, you're not going to believe this. I got a half a million dollars saved. I'm 31, 32 years old.

Wow.

And he said, son, I want to show you something that you may interest you. I've got a. I think it was an NABD convention with Ingram Walters in Las Vegas going this weekend. Let me send you a ticket, and let me show you what this business is. I said, pop, I don't know anything about cars. I don't know the difference between a radio and a radiator. And he flew me down there and. And, you know, Ingram Walters comes on stage and. And I was just. It was just unbelievable, the camaraderie of the guys. And we went to a buffet afterwards, and he. He's taken a napkin and he's showing me how this business works. And if you sell 10 cars, the cash flow. And, man, I was hooked. I understood that.

It was like. It was like magic, right? It's like, here we go.

How to take $2 and turn it into $1.

It was unbelievable. So that was in April, and my wife and I, we. We were. She was five months pregnant, and we sold our Little house in Denver and packed up U haul. Now, in the meantime, I, I said, I. I came back and I told my wife, and she didn't. We're high school sweethearts. And I said, baby, we're moving back to Montana. And she goes, no, I really like Denver. I said, I don't care where we go in Montana. We just can't go in buildings because that's where my dad's at. And we're going to start our own dealership up wherever you want to go. I don't care. I'd only been to a few other places in Montana. I mean, lived in Montana all my life, but I just, you know, barely went. Went anywhere. And she said, well, I. I want to go to Bozeman. I got friends in Bozeman. I went to. She went to school in Bozeman. Let's go to Bozeman. So we went to Bozeman, and I started looking around, and my dad would meet me up here. And. And we, you know, at the time, Bozeman was just starting what's known as the Yellowstone Club today. And. And that's right outside of Big Sky. And so the town was on fire. And they were paying 75, 80 bucks to get a. Just to show up up in Big sky for per diem. You know, the people would get paid up there. So you could. It's kind of like it is now where you couldn't hire anybody. So we found a little spot in Belgrade, and I found a little condo, and we were going to do it. We sat down with the bank. And although the bank. It's the same bank my dad uses, these people have no idea what, What. What we're doing right now. The guy's in buildings, too. But this banker, he's a big, tall guy. His name is Joe. And we go in there and, shoot, I don't know what I'm talking about. The old man says, okay, well, here's what we do. You know, we're going to loan to people that have this kind of credit, and we put a warranty on it, and it's our job to get them through the process. And, And Joe's. Joe says, well, why would we ever give you money, a line of credit to loan to people we would never consider loaning to ourselves. So he kind of went through the thing, and begrudgingly. A bunch of conversations later, they. They agreed to do this line of credit. And I was. I was going to have about $800,000 on the finance side, and then I was going to have about 200,000 or $150,000 worth of cars. And I put the money in for the CDs and they would go five times on that. So everything was rolling. And we'd sold the house and we're moving back to, to Bozeman. And on the way down, you know, just AM radio on that U Haul and, and you start hearing about the, the collapse that's happening. The banks are starting to falter and all this stuff. And I'd gotten into Billings on Thursday. We're saying it with my dad and his wife. And I made the call about 3 o' clock saying, hey Joe, we'll be there tomorrow. I'm going to sign the documents for the condo and sign the documents for the lines of credit and we're off to the race. My dad been buying cars and he was just waiting to sell those cars to me so that I had some inventory. And I had hired a guy that was out of pre release just because he was a mechanic. My dad had kind of known of him. And I convinced this guy to move up to Bozeman with me. So it was the kid and the convict starting to car dealership. And is that what you named it?

Kidney.

Should have. But the, the thing was, is that we called over to the bank and the bank, bank, the gal that answered the phone, she says, Chad, let me understand this. You're the manager of your dad's store up in Bozeman? And I said, oh, no, no, no, I, I'm, I'm the owner. She said, and how long have you worked for him? And I said, well, you know, probably two weeks. I mean, how naive I am on this deal. So she said, well, we don't, you know, the world's just starting to burn, right? And I don't know, Joe's not in a meeting right now. I don't know if we could put this together. You should wait a few days. And I said, lady, I'll be there tomorrow morning at 9 o'. Clock. And so we walked in there at 9 and I see Big Joe and he says, Chad, there's absolutely no way that we're doing this.

This was 0809, I guess.

Yeah, 0707.

Okay.

Yeah. And August 07 and, and my wife, you know, she's, she's just in tears because we left Denver anyways.

Oh man.

And she says, what? And I said, what? And Joe just says, there's just no way. There's no way. You have no experience in this. We're not given millions of dollars. There's just. No, no. The world is crumbling. We don't even know what's going on. We got mandates all over that we, you know how we're loaning right now and everything's changed. This is not going through. I said, what about the condo? Nope, you can, you gotta pay for the condo. And so I knew one guy in town, a buddy of mine from grade school and I called them. My wife's just going crazy. I'm saying, buddy, I got to send my wife down to your house. I need to figure this out. And I, I just walked up and down Main street, found every bank and tried to talk to every bank along the way and nobody would have any of this. Now I told you in the beginning, these guys that were running, you know, from the first, from the bank, you know, they had moved up. And the old man never went south on. He, he made good on that promise. Well, what happened is I called dad at seven o' clock at night and, and I just didn't know what to do. He said, let me make a few phone calls. Well, the guy that he originally dealt with was now the president of the Wyoming District and, and his name is Bill. And Bill was just, he was the guy. And Bill had dealt with my dad the whole way. That night I got a call back about 8 o', clock. He says, I just got full of Mr. Hooper and we're going to change the modification of this a little bit. I'm going to back sign you 10% so I'm a 10% owner of this business and I'll backstop you. You go and see Joe Johnson at 9:05 tomorrow and sign those documents and you're on your own. And I went in. It's pretty amazing because it just, it was, it was by God that this happened. And I walk into that store and that guy's like, I don't know who you know kid, but you, you don't screw this up. And I just felt the world on me. Not only, you know, screwing it, having everything that we just left from Denver, my wife, new son, but of course my pop doing this. And so anyways, sign that. And we were off to the races. And unfortunately, you know, the world did burn. But we were good for us that could give loans, right? And so we had clients that would come in that were 625, 650 credit scores and they, they were slowly losing everything. And, and you know, we had a hoopdy of the car back then and I didn't know much about those cars and trying to build a car. And we didn't, we didn't do much to those cars, but I thought we were doing okay. But, but we didn't know what to really do and how to make a good car. And so, you know, but those, those clients came to us and I just promised, I said if, if anything were to happen to this car, you know, we'll take care of it. I think our, our. We had a 2 year, 24, 000 warranty because that's what dad did. But the reality is I just, it was our last name. And so even if we went past that, I just promise these people will do right by you. Just come back and see me and, and make payments. Yes. Sorry.

So like 15 years later.

Chad. Yeah.

How important is what you're talking about right now? Because I know how important it is in our business.

Yeah.

How important is just that to your collections, to everything you do.

It's, it's everything. I mean, I think, I think what happened honestly is that there was so much pressure, so much on me to really understand without having done, been in this business, done anything, never sold cars previously or done anything. Just, just try to dissect this thing and, and figure out what worked and what didn't work. I joined a 20 group about a year later. And I remember going into that 20 group and, and asking guys, how do you make these loans? And the people are always going to pay and. Right. And, and there's a guy in there and he, he just said, boy, you got a lot to learn about this business. You know, and, and I did. And. But we, we went at it in such a way that we question or I questioned everything and we, we went at it, you know, we had 28% delinquency, 4% charge off. I mean, it was, you know, maybe okay, but it just didn't seem right to me, those numbers. And so we, we started off and we went backwards and we said, okay, the number one problem that people are quitting on the note is because the car doesn't work. Right. The car's just not a good car. So let's do what we can do to make a really good car. So we went from a few hundred bucks, four or five hundred bucks of recon to. And started moving that up and, and really replacing a lot of things on that car. So, so once we had a good car, then we started looking at how do you underwrite a deal, right. And what makes a good deal? And so looking at, you know, all the banks would look at gross, Right. Every deal that I Ever understood was always based off of a gross, not a net.

Excuse me. Got you choked up, did we, Chad, asking these hard questions so far.

Anyways.

So we looked at that on the net, and then we could underwrite that better. But that gave the collection team something to collect on.

Chad, one thing's unique about being in Montana. You've got. You've got to worry about how far people drive. And I think so many times in our business is the reason these cars fail and the reason loans fail. Reason loans fail because people drive too much sometimes, and they. And they wear the car out too quickly. You've increased the amount of money you spend on recon. How do you help prepare your car and your customer for the amount of traveling they do? Because we struggle with that every day.

We started with and forever we were a model that was, you know, a very inexpensive car. But we always were looking at the miles. So the miles were the biggest factor. But from a 99 Taurus, I mean, we just stuck with the cars, the four or five cars that we knew the best, the Tauruses and the Impalas and everything else. And we just. We believed in those cars, and we would do the work that would take that. And that is true. The people in Montana, they, you know, a lot of people live in Butte, and they'll drive 75, 80 miles to do the shopping in Bozeman. There isn't any department stores or anything like that. So that's. That's just all over Montana. In billings, we got 150,000 people now, but so they basically are staying in Montreal, in Billings. So I don't know. I just think that, you know, having a good set of crew, the technicians, and having really great guys that go over this. Now, that was always the problem is trying to have that guy. If we. We split it up and we would have everybody kind of look in 60 point the car. That became an issue because everybody saw different things. And so we started isolating this and saying, hey, these are the two or three guys that we're going to trust over and over and over again just to do the initial 60. So we would have congruency. And then what we saw is when our warranty was, you know, the engine and transmission, and then we watch things that would fail. And so we would collect a lot of data. And so when we saw that the fuel pump would fail or the water pump, we started adding that to our warranties. And so we. We go over this quite a bit, and we'll do this a few times a year. And continually look at if the model of car changed or something else came in there. What else can we add back into the warranty that makes sense?

That's interesting. Are you still. I, we, for a long time we were selling Honda Accords. You know, that's kind of like that was it Honda cores, Toyota Camrys. We knew everything about them. Are you still with that model that it's only several models that you deal with?

Pretty much, yeah. That, that's it. And so like I would love to have Honda Accords, I would love to have Toyota cameras. But you know, the, the, the, the dealerships here, they've got them so locked up and they do such a good job on capturing that business that you know, we don't have four Toyota dealers. We got one, right. So if they are doing a five year loan, they're those new car guys, they flat get after it and they recapture that business, recapture that car. And then they've got a satellite used car lot. And so we never see, I hardly ever see those cars that I ever get a chance at. So you know, the, the we. I'm a big fan of gsa. I love GSA cars. I, I'll scour the United States for GSA auctions.

That's because of miles, right?

That's because of the miles. And because they hang, they, they, they fix the car, right? They've got a maintenance program every four or five thousand miles to keep that car going for the government entity. And so we just have a lot of luck with those cars. And that's primarily what they buy. They're not buying Hondas or anything else. So they're buying. Right?

Tell me this, I mean so much of that distance and, and speaking of your locations, I mean how does that handle the logistics between your locations? I mean you physically can't be at both from a management standpoint and a growth when you brought on. I, I guess at some point, you know, if we're kind of talking about your historical timeline from 2007, starting your own place, you then brought in a second location or bought out your father or what happened at that point when you went to two.

So my, my, my dad retired. He was, you know, he was a retired in 2013 and we just weren't ready. I, I really wanted this store, this store in Billings is, is going to be, is a thoroughbred. I mean it just is. It's got the right population, the right amount of, of people that are in tune with what our business provides. And we saw in Bozeman that it was starting to kind of peel back. A lot of people found Bozeman. A lot of outsiders were moving in and you know, it became a millionaire's playground from that Yellowstone Club on down. And the billionaires would kick out the millionaires and the millionaires got into. And so the rents have just gone ballistic. So if you haven't lived there in the last five, six, seven years, it's hard to be middle class in Bozeman, Montana. So we had opened our net and we, we go 250 miles out and people are used driving to us. And of course there's a million people in the state, right? Maybe a million two now, but so there's not a lot of options for what we do. And if the banks are loose enough, you know, they'll get bought. But if they're not, or even if they, you know, are Lucy, they still aren't going to buy what, what we service typically. So people will make the, the journey down to them. Now you know Billy Metzinger, red, white and blue, he's a good friend of mine and, and you know he took off on that Carvana model and of course we want to, you know, that'll solve a lot of problems if we can. Instead of opening real estate open just getting that delivery system down. And I think that's where we would have went. But this store came up. My brother was after Covid. He just, he, he wasn't as passionate about this business and he didn't change much from when he bought it from my dad. He did a job. But you know, the technology and the way we do businesses has radically changed. So when we bought this in April of last year, we just didn't do much. I, I just kind of sat back and, and a lot of these guys have been here 20 years and you know, I bought it for a reason and I bought it for the people basically. I didn't buy anything else but just the crew that was here. So. But that crew had it. We had to kind of mesh in, in how I do business and pretty intense. And we track a lot of things where it was very loose and how they were out doing stuff. So we started in the service and, and they had one person in service and we, we grew it to five people just to handle the clientele and handle them properly. And then now we're working on. We started with our own collection company. So that was fine because that was a new crew to, to handle that. And the person that was collecting out my brother's note, they just, they left. And so we, we Just finished collecting his stuff out. So now we're working on the sales side. And, you know, the, the. The amount of activity will result in, you know, the number of sales if your message and your marketing and your inventory is right, you know. So I don't think there's anything that can stop this store once we finish off this last piece on the, with the sales crew.

Well, that's just.

I've.

I've sat with you in 20 groups, so the way your mind thinks and the, the analytical nature of. Of you want to know every piece of. Of data that, that you can. I mean, is that just the way your mind works, or did you train yourself to do that? Because I, I find that I want to know all this knowledge, but farming that data is so hard. I mean, you have somebody on staff that helps you do that. Well, how, you know, how's that work?

So to kind of just piggyback onto that, onto that, that last question. I mean, what, what had happened is in. In fifth, you know, from 07 to 2021, there was a lot of eggs being broken in this organization. Up in Bozeman, we went through a lot of people, and, you know, I, I'm pretty intense, and I, I will defend anybody who stands with me. I mean, I just will. I got three rules of my organization. Don't lie to me, don't steal from me, but just work your tail off, and I promise I'll pay you what you're worth. I promise you that. So I've been really lucky to have that crew come in into Bozeman. And these people are. I think it's interesting, in my whole organization, everybody that's in upper management or they're all female, they're. They're. They're as loyal to me as I am to them. And I think they're just unbelievable. From our collections with Julia, Raina and Jennifer. Jennifer's my cfo, and these are smart, smart people. And I spin and. And I create a dust storm. And they kind of keep it all together and say, hey, let's, let's take that vision and let's go with it, and let's find out how we can make this work. And so what has happened is, is to come down here every week, you know, takes a toll on myself and my family. And my family is very, you know, just like everybody out there. I mean, families where it is. But these people are my family too. And we've got to. The crew and Bozeman have taken it upon themselves to help me. And, and together Build this thing. And so we just constantly. Somebody's here to. To show them the way that we do it in Bozeman so that we can just gel and. And not have this separation of. Billy says it this way in Bozeman, we are getting to the point where. Where getting this way. And so we can take that data, we can take how. What doesn't work. And we just start with, you know, the easiest stuff, and we just start working our way. I. I look at it like a set of stairs. You can't get step one or step 50 until you start at step one. And so we just, as a group, we say, okay, step one is here. This is what we got to clean up. How do we do this? And, you know, a year later, we see how far that we've came. And they're not as big of changes anymore. They're just minor tweaks now. And we just, you know, God willing, I mean, we just don't rest. And we're constantly in that pursuit of perfection.

So I'm really interested, Chad, if we can just touch real quick on the logistics. You know, you talked about some ownership changes, and so it sounds to me like the billings location. Your brother, did he buy out your dad? And he was running billings for what, seven, eight, nine, ten years until Covid. And then. And then you. And then he said, hey, I'm. You know, this isn't. I'm not really feeling it. And you went in and then bought out your brother.

Yeah. So what we did on that, it was. It was a. It was a pretty neat way of making this work. I think when Brian finished up, he had about 765 accounts, and he owed the bank maybe, I don't know, two and a half, $3 million. Now he probably had 800,000 in CDs back in that. So maybe he owed the bank three, three. But we. We look at it as two, five, because he's got 800 in that. And, you know, so what. What happened is his. His finance company came in, I went and put half a million dollars in, and that would. Or maybe 400, 000. That got us five times that amount. So we had 2 million bucks. So as he. I started at zero. And as his finance company stopped selling cars, everything would come in. Now all of the. We separate. The building is on the, you know, the finance company pays for this amount of rent, and these people work for the finance company. So whatever that expense was, he paid all that expense until we met in the middle. So once we got to about 350 accounts. I took over all the expense. He had zero expense. And he could. He paid the bank off in 14 months on that line. And now he's got the next, you know, year and a half, two years of, of no expense. We collect for him and the lines paid off. So everything we collect for him is his. And it just was a nice way of getting what, what you got. So instead of selling, you know, and trying to discount notes and how much, you know, you don't know. Right. So are they worth 60 cents on the dollar? They were 40 cents. So this just worked out great. And our collection team came in and we projected. We started doing some data and thinking, you know, maybe he's 84, 85 cents on the dollar. The way they collected before was. They were, they were tough, man. They were tough, tough, tough. And yeah, it just made people mad. And, and the service wasn't there to, to help. So I just said, hey, here's my numbers. You know, they're good. Just trust me that we'll. Well, I'll get you to 95 cents or higher on this thing. And, and I think that's where we're going to hit. I think he's going to be 97 cents on the dollar. And it was a riff.

Well, it's a great deal for him.

Yeah, yeah.

That you guys have that. You're treating it as good or better than you would treat your own portfolio. Right?

Yeah. Yep. And in the, in the background, you know, we. I'm going to need more money. Right. So this thing is an animal. How it chews up the first couple of years until you stabilize. And so he's like, man, you know, if you need whatever to, to back against the CDs, the bank likes this deal every. Everybody's in agreement here. And, you know, if I need, if I need more cash, he can help me out on this because I'm helping him out to collect.

And you're still with the Same bank from 2007?

We are, yeah. The same bank that my dad started with in the early 70s. I mean, this bank from, you know, being a local bank to being, you know, a, A good solid bank for Wyoming, Dakotas and Montana.

What I find is when you have those local banks, if they do make it through a financial downturn like a lot of them didn't in 2008. My situation, you are with these little regionals, and then the second. Or you're with these local banks and the second the regional comes in and buys it, or the second that these little banks get so big that now they have a different level of inspection. These unnormal or non conforming type loans like ours get kicked out.

Yeah.

And they come to you one day and they say the higher ups don't like what you guys are doing. You need to amortize this out and we need to get away from you.

So this has been the challenge and you know what we do. I've been through, you know, I started with that guy Joe I was telling you about a couple other guys in between and now I'm with this guy, his name is Shan. And I'll tell you what, you know, the, these are good business guys and they understand, you know, they may not like our business a hundred percent all the time, but we've been very careful to, to, to make sure that banking relationship is, is rock solid, doing the right things, full transparency. And, and I also think, you know, just the conversations we have with them and saying, hey look, this is going to happen, right. We're going to go into a downturn. I'm going to probably lose 25 of my portfolio. Here's the good news now, right? The car prices are going to come down. Yeah, I'm going to pay a quarter. And here's the other thing, guys, I got a quarter point over prime. Yeah. These guys, right, That's a great rate. But they, they, we were always trying to say, okay, here's where we're seeing the next six months, eight months, 10 months of where this business is going. And you know, you guys know during COVID you just didn't know what the heck was going on. So we did the best we could to project, have cash flow analysis and put that out there in front of them and saying if this were to happen, here's our response and here's how we can do this. And this is the first year for the billing store that we came in. And you know, my direction was wrong, my underwriting was wrong. This town has got some challenges that I just wasn't fully had in front of me. And so we made some mistakes. And the minute I knew that, I called the bank and said, here's where we're at. It's still really good, but it's, it's not what we're used to seeing from our Bozeman store. And, and I have no problem, I got no problem paying any of the employees more than what we started with. I mean I'll pay for talent, but I in the same breath, the minute that somebody's holding back on me, I'll talk them through it and try to cheerlead them on, but I have no problem showing them the door. And.

Yeah, I mean, what's great with that relationship with the bank and something that we haven't heard a lot from is how you, I mean you're in constant contact, sharing your projections. And the other thing I thought it was interesting is that they want you to keep money on in a CD to kind of back portion of that loan. Yeah, that, that's interesting. I, I mean that gives them a lot of security, doesn't it, Chad?

Yeah, I think it does. And you know, you look at the, just the amount of cash. I mean, we've, we've been tracking this cash of just what's been going on for, you know, since 07. I mean it's, you know, we're about to break 100 million back and forth through the loans and all of the stuff on a, on a, on a portfolio that's, you know, 9 million bucks. I mean, just. There's so much cash that goes in and out through all the things. So it's a good business to have. But it's, you know, every month I share with them my, my financials, my p. L. Every month I give them static pool reports. Every month I give them once a quarter I share with our 20 group stuff. I mean it's. We are open. You know, they come through, they do an inventory check down here. We do it on zoom up there. I've got an inventory check next, next third or excuse me, Monday. And they come into the office and we spend. After we do the inventory check, then we spend a half hour. We talk about, you know, I'm with MCMC's arm called Magi Loop and I'm excited about it. And, and so we talk about this and how this can speed us up and, and just different ideas just so they know that we're looking at our business and we haven't tasted so much success that we can sit back and relax if we just, you know, it's our intention. And they know my plan. I mean, I'm 48 years old. I don't know what to do in the next seven years except for go as hard as we can. And you know, I got two young kids and so I don't know what the future of. I don't have anybody to buy me out. I don't have a young or anybody else. And so, you know, having all of those things in play, from my estate planning to big life insurance to just wipe out notes if I go on a motorcycle trip or a hiking trip or something and I get wiped out. You know, we, we, I. Unless something catastrophic that I don't understand or didn't think of, the bank is secure. And in, in part of that my family will be secure because I've tried to position this thing that, you know, and I got great friends and I think everybody that I consider great friends in this industry would help me out or help my family out, but at the end of the day they got to go back home, go to work too. And I got 56 employees that I gotta somehow take care of. So all that's really important to me. And we'll see what happens here over the next seven to 10 years and figure out what the, what the plan is then.

Yeah, so that's, it's so true. Like you talk about the relationship with the banks and just having their back and them having your back. It's almost like at times you're that subprime arm of the bank. They can't do those loans, they can't touch them, but they look at you as almost like a satellite location in order to do some loans that they wouldn't typically do. And yeah, that means they're going to have their tentacles kind of in your business, but it's necessary, right? And keeping that relationships huge because you have been in the industry and you see peers and you know that like, okay, if I don't have this local bank, that means I need to go to this capital provider and that means a whole mountain of, of integration and tentacles that would be much, much worse.

Well, I don't know if it's worse. I, I just. Because those, those capital providers, they, they do a great job and they help, you know, guys in our industry all the time. But what we have is, is truly special. And, and that relationship with this bank and, and what, what my dad did to do the right thing is paramount to how this is. And so, you know, we just, we respect that and we hold that up and, and you know, it doesn't mean we don't make mistakes, but we sure try to just do the right thing and the transparency of it and then having the, the look at of what our business is, we're buy here, pay here. I still do radio ads and you know, and I. People listen to radio now. A lot of people listen to serious and they'll listen to their own stuff, but a lot of, a lot of people just listen to local radio. They want to hear the Bobcats or the, or the Grizz and, and we're on those. So you know, I, my message is my price is high and my interest rate is high. Right. We, we don't sell cars here. We sell second chances. If you're looking to do that, improve your credit or, or establish your credit where the place we want to do business with you once or twice and, and hopefully with your on time payments, you never see me again and your car store opens up. But I just hope that, you know, your experience with me is, is so good. At the new car store you say, you know what, I was treated better at Randash than I was at Toyota. So we go after that and that's, you know, it's just what we're about. When somebody walks into our dealership, we say stand up and say hi. If they're asking for where they payments made, we don't point. Hey, it's just down the hall. We walk them, show them, introduce them, thank them. And you know, and that, that has helped us with our ratings. You know, for our Bozeman store we were, you know, we're over a thousand ratings with a 4.7 Google rating on there. Where the new car stores are like 4, 4 with 900. They're not paying attention to what. I love good reviews, but I, I, I love a bad review. And we talk about it as a team. Is it something that we did wrong? How do we make it right? Or it is no matter what we do is are we gonna make this person happy? You know, there's that too. But when we started the billing store, you know, they just didn't pay attention to those things. They didn't think it was important. And so, you know, we started with three one over here and every review just was terrible. So we had to start with that philosophy of what we are, what we do. And I'm honest, I just say, hey, you know, you may not like this. This is how it's going and this is how we react to these situations. We don't push it off the first thing in the morning. We've got a list of people to call from yesterday that have issues of wondering what their car is or payments or whatever. We handle that. Don't push it off because it just, it just weighs on you all day.

Yeah. Some answers.

Better than no answer.

I want to know when you go to Thanksgiving with your brother, do you push that in his face that you got his 3.1 up to a 4.4 on Google or is that something you don't talk about?

Brian's up and up in Sealy and you know One of the smartest guys ever. I know, but he, he's just, he's a maverick, man. I mean, he, he, he, he can build a classic car. He's got a collection of them. They're beautiful. But he's a. No, he's a nomad. He just, he does likes his AR15s and his two dogs and, and that's it. So we talk all the time, but I don't see him much.

So, Chad, to wrap this up, any words of wisdom or advice you would give for dealers that are listening that, that you feel has served you well?

Well, I just, I think, you know, one, one thing that this sounds unusual, but we drive a lot here in Montana and so we can see what the rest of the country is doing, and we, it gives us a chance to react because it's probably not going to happen right away here in those times where we drive. You know, I just, I think deeply about our business and, and how to do that. And I think you got to get away from the hustle and bustle of everything going on and think about what it's going to take for you to move your business to the next level on whatever it is. But the shadow falls from the top, and if you don't put the thought into it, it's hard to lead anybody else to do that for you. This is your business, and you got to think of it all the time, how you can make this better. And so when we said, hey, you can't get step 50 without going to step one, just start at step one and say, on the surface what's in front of me and, and if I could, how could I make this thing better? And you start there.

Got a sage advice, man. I just saying the first step is the hardest sometimes, but you got to start there to do it.

I think so. Thank you, Chad.

Really appreciate it.

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