Episode 109
From Overhead to Opportunity: Space as a Strategic Play with Tom McCrossin
How does owning the property where a business operates affect the business's ability to adapt and succeed overall?
Tom McCrossin, a real estate business owner who specializes in acquiring and revamping industrial properties for blue-collar businesses, joins the conversation. This episode touches on various leasing options, tenant responsibilities, and the importance of choosing the right real estate partner.
We also highlight the financial implications and challenges of commercial real estate investments.
We explore the nuances of commercial real estate ownership and its crucial role in a business's success and flexibility.
We also discuss the essential factors to consider when deciding whether to purchase or lease your business space and the potential risks and benefits associated with each route.
This episode of BCBS offers valuable insights into how strategic real estate decisions can bolster a business’s growth and adaptability.Equip yourself with the knowledge to make informed choices about your business's real estate strategy.
Highlights:
- Owning vs. Leasing: The differences between owning the real estate your business operates in versus leasing it. Consider the impact on business flexibility, costs, and long-term success.
- Real Estate Partnerships: Emphasis is placed on the importance of finding a reliable real estate partner who can align with your business needs and help secure the ideal space.
- Relocation Challenges: Relocating a business can be costly and disrupt productivity. The episode discusses strategies to navigate these challenges effectively.
- Leasing Details: In-depth discussions include tenant responsibilities in various lease types, like triple net and modified gross leases, and why understanding these details is crucial for business owners.
- Financial Planning: Tom underscores the necessity of careful financial planning and logical decision-making when it comes to investing in commercial real estate, to avoid unexpected expenses and financial pitfalls.
Connect with Tom:
Connect with us:
Steve Doyle:
Brad Herda:
This podcast uses the following third-party services for analysis:
Chartable - https://chartable.com/privacy
Transcript
Welcome to Blue Collar B's, a podcast that busts the popular myth that we can't find good people, highlighting how the different generations of today, the boomers, Gen X, millennials and Gen Z, are redefining work so that the industrial revolution that started in the US stays in the US. The Blue Collar B's podcast helps blue collar business owners like you build a business that'll thrive for decades to come by turning that blue collar bullshit into some blue collar business solutions.
Brad Herda [:In this episode, you're going to learn that profit is for the mission. Value of the business is more than the property you own. Space is a tool, not overhead. Everyone should listen to that section, and business is all about people.
Steven Doyle [:Our guest today is Tom McCrossen, who is taking outdated industrial properties and turning them into assets for growing and thriving blue collar businesses. We hope you enjoy the show. Welcome back to Blue collar B's, Brad. How are you doing today, my friend?
Brad Herda [:I am doing very wonderful, sir. Very, very wonderful in this great mid December day where it's 40 degrees and cloudy, but no snow, no rain. Probably not going to have a white Christmas this year, but that's okay.
Steven Doyle [:Oh, you're just, you know, raining on so many people's parades. Who cares?
Brad Herda [:Yeah. This episode is going to air in April or May. No one's going to give a shit. Right?
Steven Doyle [:It's going to be snowing then. So just remember at Christmas when you wanted all your snow, now you got it right.
Brad Herda [:As I'm trying to get on the golf course, and it's going to be snowing in the middle of April. Perfect.
Steven Doyle [:Awesome.
Tom Mc Crossin [:It'll be.
Steven Doyle [:It'll be fantastic. So, great weather, great temperatures out right now. So I'm assuming we have a great guest today, Brad, who do we got?
Brad Herda [:Well, let's see. We'll. We'll find out. That's for calling me old earlier, Tom.
Tom Mc Crossin [:Just so you know how, Brad, before you just you know.
Brad Herda [:Our guest today is Tom McCrossen. He is a very unique individual in my network that I get got to come to know. He buys industrial properties. And when he talk. When I met him the first time, we started talking about, wow, that's pretty cool. There's nobody else I know that does those things. He's not looking for the sexy, fancy, high end stuff. He's looking for the dark, dirty, dangerous shit that people need to go and make things and build things and create things with and support industry out there that most don't want to even touch.
Brad Herda [:So, Tom, welcome to the show today to talk about industrial properties, property management, and all the fun things that you do to support the blue collar world.
Tom Mc Crossin [:I love what I do, Brad. Four years ago, I was working in contracting, being an estimator, and someone invited me into an opportunity to buy a warehouse with them. The rest, as they say, is history. The uglier the better is what I tell people. If it needs a roof, I'll put it on. If it needs a parking lot, let's tear it out and figure out what do we need to do to have it better. Drain. My business is real estate, and to do that, we need tenants, we need space.
Tom Mc Crossin [:And combined, we have a fantastic partnership.
Steven Doyle [:Awesome. So before we get going on asking you some pretty cool questions, we already got lined up. Let our listeners know, which generation do you fit in with? Identify with whatever it is your generation determines that you call yourselves it.
Tom Mc Crossin [:Now, I think if you look at age and year, birth or whatever, I found that millennial category, but I am on the older spectrum, all right, the end of the spectrum, that we like to go out and work and do activity. And. And personally, I like working with my hands. So I guess I would be the oddball of the millennials.
Steven Doyle [:All right.
Brad Herda [:All right. There we go. Name of the show, millennial oddball. Perfect.
Steven Doyle [:There we go. We've got it now. That's fantastic. That's awesome.
Brad Herda [:So you support, obviously, industrial manufacturing space. How have you seen the differences between old guys like myself? Which. Right, whatever. And then the younger generation, the millennials, either the older millennials or even the younger millennials, and now soon to be the gen zs, how are you seeing their. Their attitude towards property ownership versus leasing and those types of things?
Tom Mc Crossin [:I know when I talk to younger business owners, guys that, you know, we're electricians, carpenters, plumbers, heating contractors that were in the field, and they decide, hey, I can go do this for my own. You know, I can go sell jobs and I can create a business, and then, you know, define business for those guys, you know, just because you work out of your garage and you make a little bit more money than you did as an employee, but now you have all the challenges as being a business owner. You have the administrative tasks, you have the billing, you have the collections, and yada, yada. Those guys, I think, I believe that they understand that they can make more money reinvesting into their business than they can by putting a down payment on a billing. And the reason I say that is because they would rather go out and hire additional service technicians or plumbers or electricians or whatever their skill set is and have additional work so that they're calculating with the help of guys like Brad to understand what does it cost them to operate? What does it cost them to service a client? How much does it cost to acquire a new client? Those aren't like $$5.10 activities, right? Like, nobody's working. Nobody's working for $15 an hour. When you start, everybody wants 25, 30, $40. I don't even know what some of those guys start at, but things I hear and buddies of mine that operate those businesses, they go, everybody thinks this is easy.
Tom Mc Crossin [:It's easy to go out and start a business. It's easy to go out and sell jobs. It's really easy when you have a 40 hours workday and your family and friend says, hey, hey, Brad, I know you do electrical for your day job. You want to come over and work for $25 an hour. And I know, I've had that question. And they go, Tom, I wouldn't show up to your house for a $100 now. And so going back to the question, the younger guys starting business, you know, they wanna, they want to create an a business. They want process.
Tom Mc Crossin [:They wanna go out and get jobs and produce them and have profit, right? And so if they take their profit instead of investing in another service tech, and they go out and buy a building, I always say to every business owner, what is your focus, your business or the real estate? And they say, you know what? It's the business. I said, so why do you want to own the real estate? My business is real estate. My business is not being an electrician. My business is not being a plumber, is not manufacturing and operating a CNC machine. My business is the real estate and the management of the real estate. And so if we focus on the real estate and you focus on your business, I guarantee both of us will make more money.
Brad Herda [:Mm hmm.
Tom Mc Crossin [:Because when you focus on one task, one focus, we all do better. I I'm an add KId from five years old to today. I cannot focus. But warehouses, industrial, manufacturing, man, I live and breathe this stuff. And, and that's what I always tell other business owners that live and breathe their trade, whether they're a carpenter, electrician, I keep repeating those because that's, that's who I deal with.
Steven Doyle [:Right?
Tom Mc Crossin [:Deal with those trades. And if you can perfect what you're doing in your trade, you don't have to worry about the fact that a roof costs half a million dollars. You don't have to worry about that. The parking lot and the asphalt contractor that comes out is going to get you for a change order. And that change order is going to be more than what you made of, you know, when you're 21 years old. I mean, those costs are, they're elaborately expensive. That's not a great way to say it, but it's expensive on real estate.
Brad Herda [:It is true, though. It is very, very true. And I can appreciate how you phrase that question. It's, you know, are you a, are you a business owner? Are you a landlord? And those are two very different things.
Tom Mc Crossin [:They're very different things. And, and guys that I know that have bought buildings and they had a, you know, a sub tenant. So let's say it's a small 10,000 square foot box and I use box, you know, just very vaguely four walls in a row. You got a box and you can, you can divide it either with a fence or a wall or depending on your relationship with, you know, a co tenant in your space. You may not even be concerned that, you know, if you're storing. I had tent. They want to store fitness equipment in my space and they're like, well if someone wants to steal a treadmill that's in the building, I'm going to know who stole it. And secondly, it's like 1200 pounds, so good luck towing it out yourself, by all means.
Tom Mc Crossin [:So depending on the relationship with who your co tenant is. Yes, there is the concept. Buy the building, have somebody else help pay the mortgage. But now in the middle of, you know, a Wednesday at 02:00 you're in a customer's house, you're fixing whatever it is that they need fix that day, whatever you're doing. And the co tenant goes, hey, the roofs leak and, and so now you got to stop what you're doing. You got to call the roofer, you got to go meet the roofer. We all know that in the trades, the dollar made of is best use. When you're focused on that, that task, if you're an electrician charging $125 an hour, your time is worth something.
Tom Mc Crossin [:I think we can all, you know, we're home. We're, you know, I think we walk into a lot of friends houses and they're electrician or a plumber. And I keep using those because that's just, that just comes naturally to think about. Easier. Yes, easy. And nobody's got a finished project at home, right? I renovated my house seven years ago. We still don't have finished steps to the basement. Cause why finish?
Brad Herda [:Is your wife happy about that?
Tom Mc Crossin [:I'm sure if she watches she'd go, why did you talk about that? Because the example is the same at.
Brad Herda [:Everybody'S house that's in the trades, 1000% accurate.
Tom Mc Crossin [:You got the electrician that has exposed copper wires that are wire nutted in the basement because you need an extension cord. Instead of buying a real extension cord, you use the extra Romex out of the back of your truck, which maybe you never even paid for it because it's your employer's Romex, right?
Brad Herda [:Yeah. Hey, we don't want to get into accusations here.
Tom Mc Crossin [:But I go back to just, you know, there's all these little things that add up, and over time, you go, well, that doesn't really bother me, so I'm not going to address it. So if you take that same concept at your house and now you bought a commercial building, you're not improving the value of the real estate. Yes, you have this equity pay down through a mortgage, but it's such. It's so miniscule, you know, with interest rates being at 8% or 9%. If you go SBA, the fees that are getting charged and the way you have to acquire it, and more importantly, the amount of capital required, if you buy a million dollar building and you need to do 25% down, it's 250 grand. Well, if you're already struggling for cash flow in your business, why take that kind of hit? And we also live in a now society, right? Everybody wants everything now. They want the fancy truck, they want the fancy, you know, the fancy house, and they want everything fancy.
Brad Herda [:They want their basement stairs finished. God damn it.
Steven Doyle [:Yeah.
Tom Mc Crossin [:I just bought a new sport car, and I can't fathom buying paying more than $200 for one. It doesn't matter.
Steven Doyle [:So, Tom, what are some trends that you are seeing in the commercial space with the younger generation, as boomers like Brad are looking to move on from their business?
Tom Mc Crossin [:I don't know if I've experienced a whole lot of that. From my perspective, I've thought about adding some of those service businesses that help our real estate portfolio. I think there's always, you know, everybody wants to create a business and have an exit strategy, but without having those processes and procedures and having a, you know, ten people on staff, you know, you yourself and I are hard to sell. Right? Because if someone came to me and said, hey, Tom, let me buy your management company, it's me, myself, and I. There's not much. There's not much there, right? And so when I talk to younger business owners who want, you know, let's not even talk younger. Let's talk guys that have been doing it for 30 years, they're ready to retire, that they. They want to get out of this scenario that they're in.
Tom Mc Crossin [:They want to exit. A lot of those guys, the only thing that they've had is the concept of the real estate. And I'm talking about not buying your real estate. And these guys all own the real estate. Correct. That's the only value that they have in their business, is the piece of real estate the business is in. And so, again, I go back. If you focus on your task and your business that you've.
Tom Mc Crossin [:You've started and you perfected and you have passion for, you can create a ton more value in your business than the piece of real estate. And if you do want to invest in real estate, then find other guys who can operate it and partner with them because their business is the real estate.
Brad Herda [:Correct. I just had a. I just did a business calculation for a firm down on the south side of Waukesha county, and we're going through it and get the number. And he looks at it and can see. I can see this very dejected look on his FACE of the number that we came up with, and he goes, he's LIKE, is this include the building? I'm like, because he also owns the building underneath the other LLC. I said, nope, this is just the business. Oh, good. Because I'm like, I was really, really concerned.
Brad Herda [:Like, nope, the building's not part of your business. The building's part of your other entity. That's not part of it. And I said, are you going to sell the building with the property or with the business? He's like, absolutely. I don't want to be a landlord for anybody else. Okay, well, there you go. There you have it. And that's the issue.
Brad Herda [:It's like, no, the old guys that have the buildings, that have the businesses in them, they don't want to own the building anymore because they don't want to be the landlord because they know it's pain in the ass.
Tom Mc Crossin [:But if you do that all the time, and I handle all these tenants and I handle those service maintenance requests, then, you know, I'll be the Landlord for Life, right?
Brad Herda [:Because that's your business. Right.
Steven Doyle [:The.
Brad Herda [:The manufacturer making widgets, that property management's not his. Not the business. It happened to be the business because he was on. It was. It was part of his daily life. It's like living in your house. You take care of it, you do those things and make that happen. If we're gonna sell the business and try to keep the building, well, hold time out.
Brad Herda [:That's a very different world and a very different lifestyle and a very different opportunity. And most of the guys I talked to, of the older generations, when they get out, no, the building is their Safety net. To be able to exit the business and be able to retire effectively because they didn't do the right stuff with the BusiNesS, unfortunately. But they got the building to fall back on.
Tom Mc Crossin [:Yep. And I think, you know, I had a conversation with a guy last week. He bought a manufacturer. He's actually bought two manufacturing businesses and he was very adamant, I want to buy the real estate. I want to own the real estate. My business is in the. Why? Why do you want to own this piece of real estate? Again, I go back to the question like, what's your focus? Are you trying to spend your time, are you working on your time to improve your manufacturing process? Or are you trying to play both sides of the coin where rather than put, if you have the extra cash, so let's say your manufacturing business does spit out, you know, 10% net, because there are some manufacturing businesses that operate very well and they've been lifelong cash flow machines. Then, then go find a different way to invest that, because what you can challenge yourself in is you buy this piece of real estate and now you're pigeonholed that you can't be flexible as a business if you are in a space.
Tom Mc Crossin [:I just had this happen with a tenant. He moved in 2500 months later, he signed a giant contract and had to get more product. He had to upgrade his space from 2500 to 7000 sqft.
Steven Doyle [:Wow.
Tom Mc Crossin [:Because, because of our flexibility, because we work with tenants and can move them from space to space, we can fathom to say, hey, we can let you out of this, but you're going to go rent from another one of my buildings because I'm not going to let that customer go. Right. Yeah, just, that's not my business.
Brad Herda [:Hey. Nope.
Tom Mc Crossin [:Hey, let me, let me commit you to this lease and you can go rent from Joe down the street because I'm that nice of a guy. Like, that's, that's not how my business works, but what it does work and how I can provide value back to you, mister business owner. We can move you into a bigger space or position you into a building that you grow into instead of grow out of. And that's another concept that's happening a lot right now. As 2021 2022 was occurring, everyone wanted more space, more space, more space. And now the economy has shifted quite drastically. And we're seeing, I haven't experienced it in our portfolio, but you're seeing and hearing in the marketplace of businesses that are either subleasing space, which means that I'm still responsible for the lease that I signed, but I have a means of bringing another tenant in to take the extra space we don't need, or their lease is expiring, and instead of staying, they're gonna go find space that's smaller to reduce their overhead expense.
Steven Doyle [:Right.
Tom Mc Crossin [:And I guess I say overhead expense, and I challenge that, because space is a tool. The warehouse, the box, the space you operate in is actually a tool to the business. And I don't believe you should look at that as overhead.
Brad Herda [:I love that. I absolutely love that. And that is one of the reasons why I think when we first met at the coffee shop two years ago, three years ago, whatever it was, and you brought that concept up, I'm like, yeah, that is. That is something different that most aren't talking about or looking at. And that's why I really appreciate you for what you do, because you're able to have that conversation with a business owner and potentially talk them out of a bad decision or have them think about it slightly differently. And that's. That's the beauty of building up, you know, network of strong people, because it's like, hey, how do you. How do you think about that differently? Because it's.
Brad Herda [:It's. You're right. It's not an. It's. It's an asset. It's a tool. It's an opportunity.
Tom Mc Crossin [:It, it. You know, I had a tenant that they. They do. They run a CNC shop.
Brad Herda [:Yeah.
Tom Mc Crossin [:They run three shifts. The other day, he commented to me, they run. They run four shifts. I said, four shifts? How's that work? He goes, well, Monday through Friday is 24 hours a day, and Saturday's 12 hours. Four shifts. It's like, wow, that's one way to. One way to operate. But more importantly, their focus is production.
Tom Mc Crossin [:And so if you're going to buy a million dollar machine that only runs 40 hours a week, you're leaving the other 80 hours in a five day workweek on a machine that has production, production capabilities. Right?
Brad Herda [:Yeah.
Tom Mc Crossin [:So if you have that million dollars that runs 247-24-6245 right. You can generate more revenue with that one machine. You may end up having to hire someone to run maybe 40 hours a week of a dedicated person to ensure that machine is running at its peak performance. But they're looking at their machine as the tool. Right. So I look at the building as the tool to run your business. And so when you start looking at the ROI on the space and how do you ensure that it's not too tall, it's not too short, it works for what your business needs.
Brad Herda [:Hey, doctor Seuss.
Tom Mc Crossin [:You end up realizing that there's lots of different options for your business to run in. And without the right partner, without the right advisor, you end up again getting stuck in a bad spot. There's lots of businesses right now that. That want more space. The part of the puzzle that's challenging is the cost to move.
Steven Doyle [:Right?
Tom Mc Crossin [:Cost to expand the down. You know, if you're moving your machines from one facility to another, how much is it going to cost you? And lost productivity on top of the labor and the cost to move the machine, you got to bring in this, this heavy equipment moving company. You don't just hire two men in a truck to move your, your 40,000 pound press.
Brad Herda [:Right? Right. So just to go off of that. And this is a plug for. Hopefully I can get her on the show. We've been. I've been working on her for a while. So Stacia Hobson, she just came out with this awesome book. I've read through it.
Brad Herda [:The move to profit. It is all about relocating a business and navigating the risk to that bottom line. She had moved her business from Illinois. She's moved her business twice, once inside Illinois and then from Illinois to Mississippi, I believe it was. And so she has talked about. She's moved her factory twice now.
Steven Doyle [:Wow.
Brad Herda [:It's a manufacturing.
Tom Mc Crossin [:Third time manufacturer moving.
Brad Herda [:Well, you know, that's.
Steven Doyle [:What do you think?
Brad Herda [:Get the book. Read the book.
Tom Mc Crossin [:Wow.
Brad Herda [:But she moved because of taxes and just. Illinois was just a bad place to be at the end of the day. So she moved to a completely different culture, completely different thing. And so that cost of move is really, really important to have that consideration. But there are ways to go about doing it. And too often, again, because they're not looking at. They're looking at it all as an expense versus an opportunity. You take the wrong approach, you have the wrong mindset and you end up screwing the pooch because it's a fire drill versus a planned event.
Tom Mc Crossin [:It's like this tenant of mine who rented 2500, then had to move to 7000. In the process of him immediately moving in, he renovated a bathroom which he hasn't finished yet. And so he's got that cost. He's got the releasing cost that, that he got. He agreed to. Right. I said, hey, we can be flexible, but this cost of releasing your space is, I didn't decide to move you in and move out, but all of those costs add up. And so then there's the challenge of how do you, how do you take care of those surprise costs? And how do you.
Tom Mc Crossin [:Having a valued partner for your space can. Can eliminate some of those challenges. Right? Because if he wasn't another, he could have been subjected to, you know, a $70,000 bill for the termination of his lease if the landlord didn't have that ability to be flexed, if that. That partner that does the space with you as a business isn't looking. How do you, you know, our business is space, but more importantly, our business is people. Yep. And. And so every time we have to turn and find a new tenant, it, it's not an inexpensive endeavor, and it's kind of like finding new customers.
Brad Herda [:You still put the for rent sign out in the building, and it just happens to go right away.
Steven Doyle [:It just happens.
Brad Herda [:It just doesn't happen like that. People driving by industrial parks all the time just say, oh, there's a space for sale. It's like, it's like the we're hiring sign, isn't it?
Tom Mc Crossin [:So growing up, I think we're all familiar with the, with the sign in the window and going, why is the. Why is that space still for rent? Why is there a sign in the yard?
Steven Doyle [:I.
Tom Mc Crossin [:Well, sometimes there's a relationship that says, hey, Mister landlord, can I put a sign in the yard? I know you don't need to rent your space, but we want phone call traffic, and so you'll see that. And then secondly, one of the pieces that when we're renting space or we're leasing space, it's really important that the business we're renting to is financially stable. Yep. Right?
Brad Herda [:So you are such a picky landlord.
Steven Doyle [:So picky.
Tom Mc Crossin [:Well, let me ask you this. How many customers have you had that didn't pay your bill?
Brad Herda [:They eventually all pay.
Tom Mc Crossin [:I find that hard to believe, Brad.
Brad Herda [:They eventually all pay. I learned a lot in those first few years. So I did have some. I did have some bad debt that we had to do some write offs with because I made some very poor decisions.
Tom Mc Crossin [:And I bring this up because I two just quickly rented space when I started my business and said, oh, you got money in the bank, you're gonna pay your bill. Here's some space. Six months later, $35,000 lost rent, plus legal. I got my space back, and from there, I would rather sit on empty space than rent if the tenant isn't gonna pay the bill.
Brad Herda [:Right.
Steven Doyle [:Right.
Brad Herda [:I hear you.
Steven Doyle [:Yeah. So, Tom, just real quick, what are, like, three things that business owners that are currently thinking about buying, they're currently running, but they're thinking about buying physical property. What are three quick things that you would like them to understand on if they did, it'll impact their business?
Tom Mc Crossin [:I got a good one. Bought a bill. All right. Received the tax bill. It went up 66%. The tenants responsible for the tax bill, that increase was $44,000. So my question is, how does that impact your business? If you got a surprise $44,000 bill, the next question is, if you buy a building, and again, your business isn't buying buildings, you're going to rely on some 30 party inspector who's only going to call out the cosmetic bullshit that they find. And it's snow covered rough, and you find out six months later it needs a new roof.
Tom Mc Crossin [:And that bill is 150,000. So now you're up to almost 210,000, if I do my math right. 66 and 100. 5200. Ten. How does that impact your life? How does that impact your business, and how are you going to pay for those things, and how do you move forward now?
Steven Doyle [:Right.
Tom Mc Crossin [:Some people would say, well, I'll just go sell more jobs. I'll go sell more business. Well, if you're a CNC shop and it's really hard to get new CNC customers, it's not an easy, put the.
Brad Herda [:Buckets up high enough with the. While you put. It's not the bucket. You get the teepee tent with the hose on it, so that way you direct the water away from the machine until we can hit the roof. That's what you do in that sense. And you're laughing because I've seen it, tom. You've seen it, and you know exactly what I'm talking about.
Tom Mc Crossin [:I walked through this building. Broker called me up and said, I got a great building for you. It's a good price per square foot. It's a rainy Tuesday afternoon. We walk in, and he goes, oh, and the roof, the roof. The roof needs some help before we walk. Okay. I bet you there was more than, like, 27 buckets trying to catch water in this building.
Tom Mc Crossin [:And I said to them, I said, did you expect all of this? No, they told me they fixed some stuff, and I said, and you want me to buy it with the concept again, earlier in the show, I said, I buy the uglier the better. But you got to make sense of what you're doing. In business, it's got to make sense dollars. It's got to make logic. You can't pay a high cost of material thinking you're just going to go and turn around and charge it back to the tenant. And if you do run into that experience where you just keep getting the bill, I talked to lots of smaller tenants and when you ask them about this concept called a triple net lease, which can be a benefit to the tenant and a benefit to the landlord. Because depending on, depending on what the condition of is on, if you have a full time maintenance guy in your shop, there are cost savings by having a triple net lease. But a lot of times what I've experienced is that landlords think that this is an endless build back to the tenant.
Tom Mc Crossin [:There is no thought or care what it costs or how it gets done. This isn't my problem. The lease says the tenant, when I call my tenant up and I said.
Brad Herda [:Hey, hey, the tenants responsible for maintenance, can you define what maintenance is? Anything I don't want to pay is what maintenance is for many landlords. Bullshit.
Tom Mc Crossin [:I can't disagree with that, Brad. And you know, our vision, our value is to ensure that, yes, there is the expectation that the tenant pays for those items of repair. But the other thing to think about is if you damage it, you should pay for it.
Brad Herda [:Correct?
Tom Mc Crossin [:Yeah. There's a lot of liability language and leases or whatnot. And if your semi trucks are driving over the parking lot and you have 50 trucks a day, that parking lot is going to last a lot less than if I have a business that gets one semi truck a week. That's maintenance. Now you can exclude the replacement of the parking lot. I would challenge to say, hey, I'm not the one that had 50 trucks a day. We can figure out a way to make sure.
Brad Herda [:But you're the one who said yes to me. So it's your fault. You're the one who decided to say yes.
Steven Doyle [:Right?
Tom Mc Crossin [:You are correct, Brad. You are correct. But, so let's just recap and say triple net leases, if you understand what your risks are, they can be positive. If you don't understand it, they are, they are the detriment to a small business.
Steven Doyle [:Yep.
Tom Mc Crossin [:And to offset that, to go to a modified gross lease and get on the same page with the landlord, you may pay a little bit more in rent, but what you're capping is your exposure of expense.
Steven Doyle [:Yep.
Tom Mc Crossin [:On a modified gross rent, you know consistently, like you go rent an apartment, your rent's fifteen hundred dollars a month for a three bedroom and in a modified gross rent, you know, okay, so every tenant, whether you're renting an apartment, you're renting a business, you should pay for electric and gas. If you find a building that, that's included in rent, congratulations. You're never going to have anything improved upon.
Steven Doyle [:Right.
Tom Mc Crossin [:But you are, because it's just not being operated to improve the space. Now, if you are paying for gas, electric, that there are ways to reduce the cost. There are things you can do. But everybody that rents an apartment buys a house. You pay an electric gas bill. That should be standard, right? You shouldn't sometimes take the risk that the tax bill won't go up or that the roof repairs are, you know, the roof's 40 years old, and so the landlord continues to charge back $5,000 or $20,000 a year in roof maintenance. That roof has lived its life. And so those are ways to, to ensure you're working with the right partner, because, again, space is a tool.
Tom Mc Crossin [:This is not just like, let me, you know, I get lots of calls of, I'm in my garage. I got, I got cash today. I can rent tomorrow. There's plenty of other Craigslist ads that, that'll go rent to you.
Steven Doyle [:Right.
Tom Mc Crossin [:But if you want legitimate professional space, you have to be a legitimate professional business.
Brad Herda [:So, so as our listeners are predominantly Midwest focused as we go through here, how is they're listening to this show, we've got, who knows who's going to listen and show up? And you mentioned before the show, you're looking to, you know, kind of be in that eight hour radius of Wisconsin. How are people going to get ahold of you, Tom? How are people going to find you in your business? Because you are speaking very logically, pragmatically, and partnership wise to many business owners who have been screwed, screwed over tremendously by landlords in the past. And it seems like you are running your business different than many of the other large property management and building holding firms in the midwest. So how do people find you to try to get on that path of partnership versus adversarial relationships?
Tom Mc Crossin [:I think if you want to personally get to know who I am, you can follow me on Instagram. Omcrossen, you are Instagram.
Steven Doyle [:Wow.
Tom Mc Crossin [:Hey. So I don't know why. I just tend to, you know, I was on Facebook when I was younger. I still am on Facebook, but Instagram just seems to, like, be the most, you know, real raw. Hey, here's a picture of my dog. One more moment. And here's a picture of a project of construction, tenant improvement that we're doing, or here's, here's a picture of a building we looked at. And then the next place you can find and kind of follow what you know the story of Tom McCross and his LinkedIn.
Tom Mc Crossin [:And I'm working to be a little more consistent on those, those, those posts on LinkedIn and sharing articles and sharing progress. And so I'm trying to be. I am getting better.
Brad Herda [:You're not trying, you're doing. There's a difference.
Tom Mc Crossin [:I am doing.
Steven Doyle [:Thank you, Brandon.
Tom Mc Crossin [:And I think that's something else that when we think about those that are trying to build a business, we should give them 110% pat on the back because that is such a hard thing to start. And anybody that is starting, the only way you get better is to do right.
Steven Doyle [:Right.
Tom Mc Crossin [:And so if you're not doing and you're just critiquing, I think there's a, there's a quote that I've seen recently and it said, those who are better than you will never downplay what you've done. Right. Those that are doing better are only going to come and support you as you're trying to do better. It's those that aren't as great or aren't willing to put in the work that continue to critique in a negative way. So if you're doing a business and you're starting from scratch, congratulations.
Brad Herda [:And that's a great place to end this. And I appreciate, I appreciate you having, being part of your network and being available to promote the things that you have and you being a resource for some of my peeps as well. So thank you for your generosity and time as well.
Tom Mc Crossin [:And I also very much appreciate the opportunity to share what we're doing, how we're doing it. Brad and very nice to meet you today. Steve, nice to meet you. Manufacturers. I love blue collar atmosphere. I mean, there's so many good people in this, in this industry. It's, it's fantastic.
Brad Herda [:So, yeah, thank you so much and we will talk again soon.
Tom Mc Crossin [:Sir, thank you.
Brad Herda [:Thank you for listening to Blue Collar B's, brought to you by vision for business solutions and professional business Coaching, Inc. If you'd like to learn more on today's topic, just reach out to Steve Doyle or myself, Brad Hurta. Please, like share, rate and review this show as feedback is the only way we can get better. Let's keep blue collar businesses strong for generations to come.
