Buying Your First Rental Property with David Demers

Join Ken McElroy as he talks with his co-writer, David Demers, about his latest book the ABCs of Buying Rental Property.

Click this link to download chapter 1 of the ABCs of Buying Rental Property: https://bit.ly/BRPBook

To purchase Ken’s book follow this link: https://amzn.to/31BWvXB

Learn more about Ken McElroy and sign up for his video library at: https://kenmcelroy.com/membership-account/membership-levels/

Predicting the Next Real Estate Crash

Join Ken as he answers your questions including what his prediction is on the next real estate crash.

 

 

Predicting the Next Real Estate Crash | Questions with Ken #3

To get a free copy of Ken’s eBook “21 Keys to Real Estate Success” just visit this link: https://7rxyf2er.pages.infusionsoft.net

Better Health as an Entrepreneur with Dr Nicole Srednicki

Ken talks with Dr Nicole Srednicki about his journey for better health and how he is learning new ways and methods for improved wellness. The discussion will be helpful for a broad range of people who are exposed to stressful business situations. Along with working with Ken, Dr. Srednicki works with many entrepreneurs and investors including Robert and Kim Kiyosaki.

Join Ken as he talks with Dr Nicole Srednicki about his journey for better health and how he is learning new ways and methods for improved wellness. Be sure to visit Dr. Srednicki’s website at http://www.ultrahealthyhuman.com/ to learn more about the topics discussed.

About the guest. Dr. Srednicki is a Doctorally Prepared, board-certified Family Nurse Practitioner who graduated Magna Cum Laude, from Georgetown University, in Washington, D.C. She is a primary care provider and is also board certified from the American Academy of Anti-Aging and Regenerative Medicine. Her passion is facilitating wellness retreats in which clients stay onsite at her beautiful oasis in Scottsdale, Arizona, which focuses on internal and external health and beauty transformation. Dr. Srednicki successfully combines conventional and complementary medicine seamlessly in her practice.

 

Podcast Transcripts for Better Health as an Entrepreneur with Dr Nicole Srednicki

Ken (00:00):

Hey everybody. It’s Ken McElroy here with the Ken McElroy podcast. And I’m here with Nicole Shrednicki. Hi Nicole. how are you? Good, thank you. So, um, many of you guys know that I’ve been doing a lot of health conscious things throughout my life. I met Nicole through actually Robert Kiyosaki. Nicole does a lot of Robert and Kim Kiyosaki’s medical treatments.  I’ve learned a lot from her and Radha Gopalan, her partner in the business, ultra healthy human and what we’re going to talk about today are a bunch of things. Now, the reason why I wanted Nicole on the podcast was because Nicole’s your typical, a student that worked really hard, got into the medical field, was in the middle of the grind, making lots of good money but didn’t really have a real quality life. She was working a lot and you know, it takes a lot of work obviously to get through the different medical schools and through the different certifications.

And she was working a lot. And so her quality of life outside of work wasn’t that great even though she was making a lot of money. And so when we met, she ended up taking, leveraging her experience and starting her own business and now has bought some real estate. And we’re going to talk a little bit about that, but that’s part of the journey and part of the path that we wanted to discuss. But Nicole, before we get into that, what are five things that you know, people can do to get a more healthy?  Really simple things that they can do right now today to make them feel better.

 

Nicole(01:44):

So first of all, thank you Ken, for having me on the show. Um, I want to start by saying, so top five things, uh, something that a lot of people don’t really think about is age management. So we start aging very, very young, but we don’t start manifesting symptoms until later in life. And so, you know  there’s basic things like the way we eat and exercising and things like that. But when we think about true age management, we want things to really halt the aging They are the latest science in STEM cell technology. So there’s been a lot of hype about STEM cells, but exosomes are actually the mechanism of action for these STEM cells. And these actually help regenerate your own cells and tissues to keep you young and help to regenerate.

 

if you’re having knee arthritis or an autoimmune issue like asthma, things like that. I think these are huge things that people until they get really sick kind of neglect. And I think it’s something that people need to be mindful of at a very, very young age. Um, and then just, some other things that people can be doing is looking at a heavy metal status. So it’s something that ken, you and I have talked about a lot and our environment unfortunately is horrible no matter how healthy we try to be. So I encourage people to kind of look outside the box and and do things like get your heavy metals checked.

 

Ken (03:17):

So what she’s talking about there is, I did some blood work, actually, I’ve done a bunch of blood work and a lot of doctors don’t take the extra time to look at now I’m not sure exactly, but I know when I was, when I would go to my other doctor, they would go, okay, you’re looking good. But then you actually took it a whole different level. You know, you had a different level of blood working in that blood work we found that I had personally high mercury, high lead and something else. Sure. Aluminum, aluminum. So I had those in my system for whatever reason. But my primary doctor didn’t see that. So. So then we went through this process called kelation. Right? Yeah. So she can explain, cause I think a lot of people go to their primary doctors. And when I started going to you, you’re like, yeah, well this is like the basic thing that we do for blood work or hormone work or whatever. But then there’s a whole other level. Right? Can you walk me through that?

 

Nicole (04:13):

Sure. And that’s, you know, that’s another aspect of preventative medicine or age management and that’s really looking at these fine details. And also part of why I started my own practice, uh, I wasn’t really happy with just conventional medicine for my patients because it, all it did was screen for, you know, very basic disease that might already be there or you know, when something’s already going wrong and you’re having symptoms. But what I do is I try to almost forecast, you know, what’s down the road. And so, you know, I look at very extensive blood work. Heavy metals is one example. I look at inflammatory markers and these, so this looks at, you know, your cellular layers and your tissues, um, to see, you know, is there, is there something abnormal starting very early on that we can stop now so that we don’t have to deal with the ramifications later. Just like heavy metals, heavy metals are known as neurotoxins, they’ll increase your risks of cancer, premature aging, Alzheimer’s disease, horrible diseases that no one ever should have to live with. And so that’s why we did this screening very early on, even though you weren’t having symptoms. And so when we saw that you did have very high levels, we started working to get this out of your tissues so that they didn’t accumulate, which I know time

 

Ken (05:29):

I thought it was cool was I, I was fine on like a hundred things, right? But there were three or four things that I was high on. And what I found most interesting was that, you know, we’re, we’re actually getting preventative, you know, you said these high levels, um, will turn into potentially Alzheimer’s and cancer and things like that. And, uh, what I really found interesting is, uh, my primary doctor about had the same blood obviously for me and they’re within the tolerance level. So they had a tolerance level that was okay to have all this right. And I went to you and you’re like, okay, well our tolerance level is zero. We don’t want you to have any heavy metals. Whereas you go to a primary doctor that they say, okay, it’s okay for you to have a certain amount. So I remember that being well, why would one doctor, you know, say it’s okay to have some heavy metals and you say none, you know? And I think that’s the difference of you know, being healthy, uh, longterm.

 

Nicole (06:30):

Sure, sure. And that’s, that’s also why, you know, I sometimes reference conventional medicine as, as sick care because that’s the way conventional medicine they, they train us to when you’re sick, when you’re so far down the pathway, then we just start treating symptoms instead of stopping this. Which is why I say, no, you should not have any mercury in your blood. Not the acceptable amount that you know, they’re telling you is acceptable. Because they’re putting you in this statistical category with everybody else in the country. And you S you see it look at how, how packed our hospitals are with sick people and people with all of these symptoms and more and more cancer and autoimmune issues. And it’s because we aren’t doing preventative medicine or age management.

 

Ken (07:16):

Right? It’s so important. So the first one with a STEM cell, second one is heavy metals. And what’s the third one?

 

Nicole (07:22):

Yes. So a stress management. So that was actually, I finished my doctorate at Georgetown university, um, about a year and a half ago. And my study of interest was a stress management and I wanted to figure out a way that we can, um, decrease stress levels and improved mindfulness to then, uh, enhance our workout comes and our own, um, the way we function in life and, and our level of, of, you know, the way we, we know that stress can affect everything in our life that can affect our blood pressure, it can affect our relationships, it can affect our business outcomes. And so, you know, doing things, being mindful of this. First of all, you know, we oftentimes build up a tolerance and and say, Oh, I’m not stressed, I’m not stressed. And when you actually measure it, like, you know, when I do a scale with a patient to actually see how stressed they are, they’re like, Oh my gosh, this is one more thing that’s going to cause premature aging and, and it can actually hinder your own thought processes. So as an entrepreneur, being mindful and keeping my stress in check is so important.

 

Ken (08:35):

I know. Here’s the thing though. Like it’s hard to recognize, you know, it’s really hard to recognize when that when uh, dr artist’s book came out, what the eight deadly second opinion, the second opinion, eight deadly diseases. I highly recommend that book. Um, it’s all, all of those things start from stress. Yup, absolutely. You know, basically what he’s saying is every single disease that you get start starts, it manifests actually from stress.

 

Nicole (09:06):

Oftentimes. Yes. And so what, you know, the stress can actually, you know, it affects first our thought process, which can then trigger an emotion. And then over time, these, all of these very subtle changes that we might not recognize, they actually start to, uh, manipulate our ourselves, our tissues in our body. And then this is when disease can actually start.

 

Ken (09:33):

It’s bizarre to me, but it’s true. Right? And so one of the things that I, I think what happens, especially with entrepreneurs is, you know, they’re going a hundred miles an hour and they’re trying to balance their, their health. You know, they’re trying to, they’re on a plane, they’re flying around, they’re in high pressure meetings, you know, they have a lot of times, a lot of employee issues, a lot of financial issues and a lot of things going on. Um, and, um, you know, every phone call sometimes can be stressful and then they go home and you know, and they’re not imbalanced there. It’s, it’s even more. And so, so how do you, how do you recognize stress? Because I know for me, I just like compartmentalized it and moved it over here. And just kept plowing away. And I think that’s what happens a lot of times is people, they were working really, really hard and they’re not recognizing it.

 

Nicole (10:26):

Absolutely. Yeah. So, you know, I think going back to prevention again, making sure that you’re having time for you. You know, for me what I do to help manage my stress is I meditate every morning. I make sure that I’m going to the gym. Those are some of the best ways that I manage my stress. Um, I, you know, I leave sir, I leave time aside for things. Sometimes I just have to take a step back and it is, it’s very hard to recognize. Uh, but I think also having like a health advocate that can help point that out. You know, I often bring this up to my patients when they come in and they’re telling me all of a sudden while I’m having issues, you know, with my sleep or I’m feeling more tired or I’m having headaches, we always go back and assess their stress level.

 

Ken (11:11):

Right? Yeah. I find like even I was thinking of this, I have a friend of mine and he, he literally can’t sleep at night and um, it’s because his mind is going a hundred miles an hour all the time. And um, and I’m like, Hey, like you really need to take, you need to calm down that mind, uh, yours, right. Because once you can calm down and be present and start and be mindful of what you’re thinking, then I think that, you know, you’ll start to get a much, much better sleep. And he started doing meditation and some other things and it started to work.

 

Nicole (11:54):

if I don’t go to the gym, and of course I meditate, uh, not as religiously as you do, but I do. And um, but I find that I come in to the office a lot more grounded, a lot more present and, and I’m making better decisions because I’m not thinking about everything all at once. Sure, sure. And actually going back to the, my thesis when I was working on my doctorate. And you know what actually one component of of I, I trained, uh, the participants in meditation and we, we had a different type of intervention that we use to try to help people become more mindful of their, of their stress management. But something interesting was what people reported was people around them at work. Uh, they were noticing, you know, they had no clue that they were, that they were all of a sudden meditating to try to reduce their stress levels.

 

Nicole (12:46):

But as we went through the study, people around them were actually noticing they were different, they were easier to get along with their decision making capabilities were better. Yeah. So it’s interesting. Yeah. Okay. So meditation is three. What’s for, uh, detoxification? So this is something that it’s a very generalized term. Uh, you know, you hear about detoxification, hear about cleanses, juice cleanses, all different things, and there’s different levels. And you know, one of the things that I work on with, with my clients is to make sure that we pick a detox that’s appropriate for them. And that’s sustainable so that they can not only reach the goal but feel empowered and hopefully sustain some of the benefits. Now I have some patients that come to me for the very first time and they say, Oh no, I, I eat healthy. Um, you know, I feel great.

 

Nicole (13:36):

I don’t need to do this, but sometimes we need to be mindful of our environment and the air we’re breathing. And no matter how healthy we try to eat, you know, sometimes the foods that we’re eating, just like you, you eat healthy. But we found all of these heavy metals and so, you know, it’s all part of age management and kind of taking a step back sometimes clearing out those toxins. And I see, I put basically all of my patients through some type of detoxification program and it’s so fun to watch this because at the end they have all benefited in some way. If it’s decreased joint pain, they have more energy, they’re sleeping better, their skin looks better. Um, you know, so many different things. Just kind of going back to the base.

 

Ken (14:19):

Yeah. You know why, one of the things that I do as you know, is I do these cleanses, you know these, well for me, there are 21, I do two 21 day cleanses a year. And um, I tell you, uh, at the end of that w w you know, the goal is not necessarily lose weight, but at the end of that, uh, my digestion’s better, my site is better, I can actually smell better. Uh, I mean it’s just all the things that you don’t realize, you know, what your body has kind of collecting, you know, during all that process. I have two questions around detox. One is, you know, charcoal, they talk a lot about, you know, I know you’ve given me some charcoal, how does that work? And then also like when you walk into a healthy place and it says, you know, detox juices or whatever, do those work or should, you know, should we be using those?

 

Nicole (15:09):

So those are both great questions. So activated charcoal, I do use that sometimes with patients, but it depends on the situation. So, you know, there’s tons of studies on all different, you know, herbs and supplements and things. But I always, you know, advise my patients to ask when you have questions, don’t just, you know, you hear, you read something or you know, you see something on TV and then just start taking it in mass quantities, thinking, thinking it’s going to be the greatest thing for you. So activated charcoal can be great in certain situations. Uh, you know, very basic, you know, short term detoxification or sometimes when my patients are traveling really far, you know, on airplanes where there’s lots of germs and you know, electromagnetic radiation, um, you know, taking it for a short period of time. But you know, if you’re having gastrointestinal symptoms like diarrhea while you to be quite Frank, you don’t want to be just start taking activated charcoal to try to stop it because you might have actually ingested a bug that could potentially make you very, very sick if you all of a sudden try to stop it.

 

Nicole (16:14):

So there’s a time and a place. And so, you know, you should always ask your, your doctor or your health advocate, you know, if it’s safe to take it for a certain amount of time. So I do like activated charcoal at certain times. Uh, and then, uh, regarding like the juice cleanses. So again, it’s very individualized in what your goals are. But you know, in general when I sometimes advise patients not to do these, you know, seven day juice cleanses because it’s not something sustainable. And I hear over and over again that, you know, you, you drink these juices and, and you know, the first day is horrible and then after a few days you’re feeling pretty good. And you know, for patients that want to lose weight, which is oftentimes why they do it, you know, they lose weight and then the second they’re finished, they binge eat and gain all the weight right back.

 

Nicole (17:03):

And they’re like, okay, why did I just do that? So sometimes it can be good, but, um, sometimes it’s also not the most healthy thing because also with juicing, you have to remember a lot of the nutrients are actually taken out of the juice. Oh wow. So, you know, depending on where you’re getting these, these juices and then the amount of sugar in them, I mean, I am always harping on patients about sugar because sugar is so, yes, it’s so inflammatory. Uh, it, I mean, it increases the risks of diabetes, heart disease, all timers. It’s huge with Alzheimer’s. So, you know, when thinking forward and you know, wanting to keep your mind straight as long as possible, eliminate sugar from your life. And oftentimes juices are so high in, and you know, it can be very misleading because sometimes people will look at the container and say, Oh, there’s only 12 grams of sugar in this, but they forget to look at the serving size, which there’s, you know, three servings in a, in a container of juice that’s 12 ounces. So, yeah. So, you know, it can be very, very misleading. And so I, again, I encourage my patients to, for me, you know, I’m very close with my patients. I want to see them succeed in health. And so, you know, I tell them, text me, email me if you have questions.

 

Ken (18:20):

So www dot ultra healthy human, Nicole, let’s a, those are four great ones. Let’s go to the fifth one. What do you have?

 

Nicole (18:26):

Yes, this is probably the most important and it’s actually a phrase and I actually learned this from Robert Kiyosaki and that is be do have, so everybody, we all want health, wealth and happiness, right? So I’m kind of the the health guru here and um, so you know, as an example, so let’s say, you know, our have is health. We want to be healthy and so we have to do something about it. So, you know, we want to lose weight, so we do a cleanse. Now the third aspect of that, and possibly the most important part of that is the B. And that is kind of what I call like your internal dialogue. So in order to be able to even do what we need to do to have, which is our health, we need to be. So, you know, having our mindset when you’re ready to lose weight, it has to be this, this whole, you know, what’s going inside your head going on inside your head, you know, your willpower, your attitude, your emotional intelligence, all of these are, they all need to be in sync in order to get the end result.

 

Ken (19:35):

That’s right. That’s a really good point. Who do you want to be is probably the biggest thing. We talk a lot about that in financial education as well. I remember there was a, uh, I went to a seminar and the guy who founded and created Canyon ranch spa was the speaker. And I’ll, I always remember what he said at the very beginning. He said, all these people from all over the world, they fly in and they, they’ve, um, they basically, uh, been completely unhealthy. And then they come to me and they want me to fix them in a week. And uh, yeah, he’s like, it doesn’t work that way. You have to be mindful of what you’re doing all the way along and use me as a tool to get better. But there’s no, but most people come to these, you know, I don’t know, whatever you want to call them, fat farms or spas and you know, to try to, you know, Zen dude be Zen and meditate and eat healthy for a week. It doesn’t work that way. And then people leave and they, and they jump right back into their old health and you know, lifestyles. And what you’re saying is what you really need to do is change who you are and you know, figure out who you want to be.

 

Nicole (20:47):

Exactly. You know, and if you’re not, so another example is, you know, somebody that wants to lose weight. And I, you know, I try to explain this aspect to them, but sometimes they’re so stressed or so resistant to the fact that in the past they haven’t been able to lose weight. They’ve already made up their minds somewhere deep down within them they’re saying, you know, I’ve already tried all these diets. Well, I don’t think this detox is going to work, but I’m going to do it because I want to, I want to lose weight. And I say, you need to change that attitude. And you know, some of these things, it can actually start to manifest. That attitude will manifest physically because it will actually, that stress will cause their body to produce more cortisol, which is a stress hormone and cortisol causes you to produce and retain more glucose, which is sugar that’s going to prevent you from losing weight.

 

Ken (21:39):

Wow. Yeah. I could not agree. It’s the same. Believe it or not. It’s interesting because there’s, you know, this is an entrepreneur podcast about, you know, you know, uh, building your financial future and, and um, but really the truth is, is, um, this is all connected because, uh, when I talk to people who want to, you know, they want to be wealthy, for example, whatever that means to them. Let’s say in this particular case, it’s financial. It is the same thing. They, they think of themselves as a poor person and, and, and they can’t get out of that.

 

Nicole (22:16):

Yeah, absolutely. And I think that’s what I think we’re going to talk a little bit more about that when we talk about my real estate journey, and that’s, yeah, that’s a great story.

 

Ken (22:26):

Yeah. Because one of the things that, one of the reasons I wanted you on the show today was because you know, you’ve been super successful in school and obviously what you’re doing in your own business, but then you’ve taken it to the next level and now you’re actually building your financial wealth, and we’re going to talk about that in the next podcast. And Nicole, thank you very, very much for all that great wisdom on health.

 

Nicole (22:47):

Thank you again for having me.

 

Building Your Business from the Ground Up with Tom Hatten

Join Ken McElroy as he interviews Tom Hatten, owner of Mountainside Fitness as he reflects on founding and growing a fitness empire.

Full Transcript:

Ken McElroy: 00:00 So what did you learn from, you know, losing everything, almost losing everything.

Tom Hatten: 00:05 Yeah, I think, you know, I actually ended up at one point filing for bankruptcy is they’re all LLC chapter eleven’s. I, uh, finished it all off right before my birthday in 2000, I think 12 a file on my own, chapter 11, because at that point I had just under $100 million in personal guarantees on real estate. So just say that out loud. Right? Uh, so that had to happen. So that kind of just put everything at the baseline of, you know, what was going wrong in the, in the economy was truly effecting, you know, certainly me and, and I was trying not to let it affect the business because it was just a real estate issue. I was tough and a lot of lessons learning that.

Ken McElroy: 00:44 Welcome to the real estate strategies podcast. I’m Ken McElroy and I’m here to give you creative ideas on how you can get started or continue your journey in real estate. Each week, we will bring you inspiring and informative conversations with successful people and their path to obtaining or investing in real estate. Enjoy the episode.

Ken McElroy: 01:10 Hey everybody Ken McElroy here again, I’m with my good buddy Tom Hatton. Hey Tom,

Tom Hatten: 01:12 How are you doing Ken?

Ken McElroy: 01:13 So Tom and I have known each other a long time. Uh, we’re in YPO (Young Professionals Organization) together. We were an EO together. We’ve got lots of mutual friends together and, we get together from time to time. He’s a very busy guy. He’s got a, a rags to riches story, just like a lot of us and just like myself and, and Tom. Welcome.

Tom Hatten: 01:31 Thank you.

Ken McElroy: 01:31 Yeah. So, and also I want to chat about your new book dream on, so I can’t wait to dig into that a little bit. So, well let’s talk about your story because I was always intrigued with that. Obviously, we had property now in Turkey. Yeah. Not just down the road. And I think that story, um, is the epitome of an entrepreneur. You know what I mean? When you were like sitting there and you go, well, what about this? Do you cut the deal and even I think the guy even got bought your, your your equipment.

Tom Hatten: 01:58 Yeah. Yeah. There was a, that was just a really kind of a magical time, if you can even use that term when the opportunity just kind of presented itself with the right people and, and I was pretty hungry.

Ken McElroy: 02:08 Yeah. But the, then you go to the owner of the center yeah. And a which was called mountain side plaza.

Tom Hatten: 02:15 Yeah. And I asked him to, he did all the ties. He invested 70,000. I was 22 years old, so with no balance sheet, no credits, nothing. You know, I had a car loan and he invests, he put in 70,000 on the tees and then, he paid for the sign, our actual sign on the building and then helped me with some of the equipment. He ended up giving me a loan, um, for like 10 grand that he never asked for back when I wanted to pay him back. He said, don’t pay me back.

Ken McElroy: 02:39 How great is that?

Tom Hatten: 02:40 Yeah. He had lost the center to, um, at that time they needed to be 92% lease. When, uh, when, uh, the ohs boy is 1993 when that crash happened and he was at 88% with two leases in tow and they said, nope, we’re taking the center back. Oh, just don’t worry about paying me the 10 grand. I’m like,

Ken McElroy: 02:57 Wow. I don’t think I knew that. So from there, right. Yeah. So tell me about that first year because I don’t think I dug in on that now. Now how many, how many members do you have?

Tom Hatten: 03:09 Well, we have 18 locations. 1400 employees and just under a hundred thousand members.

Ken McElroy: 03:14 Yeah, well, congratulate.

Tom Hatten: 03:16 Thanks. Thanks.

Ken McElroy: 03:16 So let’s talk about that first year.

Tom Hatten: 03:18 Yeah. That was, I remember not sleeping, that was not part of the deal then. And then trying to figure out how to run a business because I’d never had done that before. How to be a boss, um, how to understand what it meant to build a culture and a product and all that was happening simultaneously while trying to, um, work on the side. I still painted houses on the side because I couldn’t draw any money out of the business. Um, and because the business was open 17 hours a day, there wasn’t a lot of downtime. So it was just an interesting time, but it was so full of energy. There was just a lot of good things happening all the time. And I think that’s what kind of fueled getting through all that.

Ken McElroy: 03:54 Good things happen in gyms, you know, people are generally trying to be healthy. And so I would imagine that’s a pretty cool environment.

Tom Hatten: 04:00 It is. And back when I started, it wasn’t nearly like it is today. You know, the, the world changed and fitness right in the early two thousands and, uh, it was more of a, it could it be a fad? Is this a real business kind of a thing? But people were happy. And I think if we created a culture that made people feel comfortable and it wasn’t just about how you look, it’s about how you felt. I think that was part of the basis of our culture and how we be able to grow.

Ken McElroy: 04:22 So thank you for that. Um, I know, uh, you know, then you started to expand. Obviously you’re like, okay, this works, so let’s go to two. Let’s go to three and now you have 18. Um, and most of that you’ve done on your own, right? You had some investors on the real estate along the way.

Tom Hatten: 04:37 Yeah, we have built about 25 altogether. Some have moved or, you know, I moved out because of the leases were up and stuff. But, uh, I learned pretty quick when I was so young that nobody was really going to keep allowing me to build bigger clubs because our balance sheet just wasn’t big enough. Uh, so it was probably about five years after I opened, four years after I started looking at SBA loans and seeing if I could do that in owner occupied deals. And it did, it worked. 1996 I did my first SBA loans. So about five years after I opened the first, you know, club, um, and built an 18,000 square foot club on two and a half acres and got a million dollar SBA loan. And that’s changed the game because then I did, I started to learn about sale leasebacks and that’s what my partner was, you know, it was really the real estate equity flipping into another.

Ken McElroy: 05:23 Yeah, that’s a really smart cause. The SBA is a small business administration and they have these loans that they give up and coming entrepreneurs. But I think the rule is you have to own it. You have to occupy 51%

Tom Hatten: 05:35 51% of the building and now and then have more than a majority share of the operation.

Ken McElroy: 05:40 Right. What you did. So I did. That became your model.

Tom Hatten: 05:43 That became my model. Yeah, it was interesting. That is something I learned from my father when we were growing up with, with houses. He would live it, we live in a house and then he would go, that’s enough of this and he would sell it and trade up and that’s the way we kind of did it. And I’m like, well this can kind of work in my business. And it was easier because I would say the company was the talent. So we always had that tenant ready to go in there and in that tenant would stay and we would divide, you know, define that lease and then I’d sell it, sell the building. And that worked in the tenant stayed.

Ken McElroy: 06:09 So fast forwarding to today now, so you have the real estate, right? And then you have the Mountain Side, business, right? The kind of occupies the real estate. Is that how it’s all set up?

Tom Hatten: 06:20 It is how it was all set up. And then, you know, probably a lot of the emphasis in the book, what a life changing kind of thing. In 2008 happened and we were building six clubs, three in Arizona and three in Colorado all at the same time. And, and a whole bunch of, you know, stuff going on with that and how he, you know, got the debt and all this kind of stuff. And when everything came crashing down, when all that kind of the dust settled, it took about four years, uh, for all the subtle, that was it. I was done. I kept one building, just, uh, cause they had a lot of meaning and I talk about in this book, but everything else I sold, you know, off and said, that’s it. We’re, we’re done on your real estate because that was just its own functioning beast on it. And it was out of my control how values would go and those things. And I didn’t want that anymore. I just wanted to have the business and you know how that would work.

Ken McElroy: 07:07 So that’s like the perfect segue for where we are right now. Yeah. Right. Because what’s happening in my space is there’s a lot of people going out and expanding like you did and they never had ever, never been through a correction. You know, and they’re, they’re getting bank loans and they’re getting equity and all that kind of stuff. And you know, I’ve been through it too as you know. And uh, so you got all the way down to one property, right?

Tom Hatten: 07:35 One that I own.

Ken McElroy: 07:36 One that you owned back in 2012.

Tom Hatten: 07:38 Yeah, I kept that one. I bought that one. We built a short story here. We built, we were into it for a total of 23 million, appraised at 27 the day we broke ground, a year later we completed the project and it was 2009 that same valuation came in at 14 million.

Ken McElroy: 07:55 Yeah.

Tom Hatten: 07:55 And then it fell all with eight (million).

Ken McElroy: 07:58 This can happen folks, you know, like right

Tom Hatten: 08:00 It’s insane!

Ken McElroy: 08:00 Tom, I mean you’ve been through it. I’ve been through this, you know, and I think what’s happened is, you know, a lot of the people listening here, um, you know, our real estate folks are entrepreneurs and a lot of the guys like you who have been through it, you just come into this next cycle. A little bit more wise.

Tom Hatten: 08:15 Yes. Oh yes. Oh my gosh. Those scars are still there and how all that worked. And you know, how many people were affected down line, whether it was banks, businesses, and so, you know, you name it, people just in general, you know, my best friend killed himself.

Ken McElroy: 08:31 Oh no.

Tom Hatten: 08:31 So it was, uh, it was everything that you could imagine that could come out of all that turmoil happened. Yeah.

Ken McElroy: 08:37 That’s horrible. Sorry to hear that. So what did you learn from, you know, losing everything, almost losing everything.

Tom Hatten: 08:45 Yeah. I think, you know, I actually ended up at one point filing for bankruptcy is they’re all LLC chapter eleven’s. I, uh, finished it all off right before by birthday in 2000, I think 2012 a file on my own, chapter 11, because at that point I had just under $100 million in personal guarantees on real estate. So just say that out loud. Right. Uh, so that had to happen. So that kind of just put everything at the baseline of, what was going wrong in the, in the economy was truly effecting, you know, certainly me and I was trying not to let it affect the business because it was just a real estate issue and I was tough and a lot of lessons learned.

Ken McElroy: 09:24 I’ve been there. I tell you, I talk a lot about these personal guarantees with people they don’t understand. So you may know, I think we’ve talked about this before, but I have no personal guarantees anymore anymore on anything on $800 million worth of stuff. Because of that, you know, because of having gone through that, you go in and I think what’s happening right now is that I just talked to a guy yesterday, you know, he’s doing, he’s sold priceline.com and um, you know, they’re doing mez lending and all this kind of lending. I’m like, dude, like you gotta be careful because you know, like, like this is, this is recourse debt. They’re going to come after you and trust me though, they will. And, um, you know, those real estate values are, he was doing it in Austin, Texas. I’m like, Austin is pretty hot right now. So, so, you know, uh, those real estate values can go up and down pretty quickly. When you were talking about those valuations of $27 million, I went down to 14. Right. That happened in just a few months probably. Yeah. So people don’t, haven’t been, a lot of people haven’t been through this cycle yet. I think it’s a very, very important lesson. And thank you for bringing it up because it’s a lot of people don’t talk about that pain and those scars and, and those, the, you know, I call them, you know, a little hurdles.

Tom Hatten: 10:48 Yeah. Little hurdles. Yeah. I hope people don’t have memory loss. Cause I feel like that, especially in this state where we are back rolling again and you know, our growth is so much determined on credit and certainly housing, it’s a little bit tweaked nowadays I think. But with that, I hope people have,

Ken McElroy: 11:06 Yeah. And then, so really you’ve grown to 18 locations in six years.

Tom Hatten: 11:12 Yeah. I think that we really hit our stride again in 2012 when the, when the dust settled, I sold my clubs in Colorado. I had, you know, the ones here that we had opened up. And then we said, okay, we’re through this let’s go. And we went differently. There’s a different route that we took to kind of get where we are today. Certainly a lot more solid, you know, definitely based on the business, certainly increasing the brand and so forth. And I think that was the big game changer. You know, learning everything from eight to nine where I was super aggressive and didn’t ever think something would happen like it did. Now that still plays in my mind and we’d go out at a different for you.

Ken McElroy: 11:45 Yeah, that’s exactly how I approach things now too is we were just had our investor conferences, I was telling you last week and these guys are like, what you going to buy more deals? I said, guys, we are peaking or not right.

Tom Hatten: 11:57 Sometimes the best things to say no.

Ken McElroy: 11:59 I know. It’s hard though. It’s hard with all these people. You see these cranes and everything going on. I see your gyms all over the place and congratulations on just incredible brand. You’ve built incredible culture. 1400 employees. Um, that’s not an easy thing to do. Um, what uh, what is, uh, what, what is the best thing about owning a gym? You know, and the, the facilities that you have.

Tom Hatten: 12:22 I think it’s the culture. I think it really became, we’re really lucky because a lot of things happen either through the, through just social media, certainly through the crash and then evolution of good health is it became a mainstream business, a real business. And I say because of the crash, because big boxes started to die and retailers started to die, Amazon started to grow and so on. So that left, you know, major boxes available to grow into its created different health club models. But it also said, hey, it’s a sustainable thing. People want this, they want to go to a, you know, health clubs and do that. So I think that progression’s been really nice to the sustainability of the business. And then to know if you do it right, where people truly look at it like in the crash, what we learned is that man is there stress reliever. It’s, their places that are placed that they can bring their kids, they kids have fun or they can just say, hey, I’m just going to get away from everything for a minute. Where you know, I’m in a class or you know, working out.

Ken McElroy: 13:18 What are you guys doing differently in the club? Because I tell you what, here locally in Arizona, you’re definitely heads above any other club.

Tom Hatten: 13:26 Well, thank you. I think what we learned along time ago through the, for the first days when I opened up the you and my first little club, it was how do we create a pack as much value as we can in the box. So we don’t really sell price, you know, I don’t sell high end, you know, let’s say tennis courts or swimming pools. What we’ll do is to say on a 40,000 square foot box, how can we make it feel like the highest end facility United States, by the way it looks, how can we give you the kind of amenities that you would get if you went to a specialty yoga or you know, a high performance, you know, club with your strength equipment. So we’ve had a smashed all that together into this box. It looks and feels very high end, but gives you all these different amenities plus a 4,000 square foot childcare that we changed diapers and you know, don’t all that stuff to where say man for $44, this feels like I’m getting a deal everyday that I walk in.

Ken McElroy: 14:17 Is that what it is now? 44 bucks. 44 times…

Tom Hatten: 14:20 That is the highest price. That’s it. That’s a top price. It goes down from there. You know, couples are less stuff like that, families are less.

Ken McElroy: 14:27 Well think about that. $44 times 100,000 people.

Tom Hatten: 14:32 Yeah. It’s okay.

Ken McElroy: 14:33 Not Bad. Not a bad job buddy.

Tom Hatten: 14:34 Thank you. That’s good.

Ken McElroy: 14:36 So what are some of the downsides of owning in a gym?

Tom Hatten: 14:39 Well, I think in this day and age, it’s funny, there’s not a day or a week. I, oh, I that doesn’t go by that I don’t worry about liability. You know, when you, when you’re smaller, you know, it’s Kinda round front of you. But now when there’s so going on, I mean will, I was like, today’s Day is Wednesday, right? So we’ll put in, I don’t know, 22,000 workouts today will happen through the cloud. So that’s 22,000 possibilities. She hasn’t mentioned the kids in the childcare, which we average about 75 an hour in there. So you think of all the moving parts that could go wrong. You know, that’s what Kinda keeps me up at night and I’ll, thankfully we’ve done great.

Ken McElroy: 15:14 With all your folks.

Tom Hatten: 15:15 All the folks. Yeah. So, uh, and we keep the facilities really maintaining clean, but that’s a worry. Yeah. People getting injured.

Ken McElroy: 15:22 So, you know, we talk about a lot about this reoccurring revenue model. How great is that now? That’s financeable.

Tom Hatten: 15:29 That’s financeable. You Bet. Yeah. It’s a, you know, the old days where it used to be a contract, now it’s an agreement, right? Yes. People can cancel, but it is a subscription base. But that’s everything. Netflix, the HBO, and that’s the way the world is. We held clubs were in front of it. Yep. Thankfully, uh, it just takes a lot of bodies, especially if you have a, you know, more expensive building to, to get to that break even. But once you do, it’s really nice.

Ken McElroy: 15:50 You know, it’s interesting. When I in my apartment business, I used to go to health clubs and hire the salespeople.

Tom Hatten: 15:56 Smart!

Ken McElroy: 15:56 Well because they were always amazing. They were always incredibly well trained, and so you guys, honestly, the health club business has been way ahead of the curve in my opinion in many, many, many ways.

Tom Hatten: 16:09 It’s interesting, we try to sell information based and in the product, so when you come on in, you see everything that’s in front of you and then we’re going to inform you all the things that you’re going to get and then along the way you’re being sold. So it’s not feeling like we’re out in your face, you know, selling, you were doing it through a process the whole way through. Um, and I think that’s worked really well for us. You know, we have a good closing percentage when people come in. We have a good prospect percentage and then I think everybody’s kind of, everybody’s a salesperson in there. Like literally from my main maintenance guys to the girls in the childcare to the my instructors. They’re selling all the time. And not necessarily because there’s saying that, but because of the way they’re functioning.

Ken McElroy: 16:49 Yeah, for sure. Well, I do want to talk to you in the next podcast about your book dream on because, um, and we’ve talked a lot about this and when you are writing it and there’s a lot of incredible stories in here. So, uh, with that, Tom, uh, thank you for this interview and I want to dig into the book next.

Tom Hatten: 17:07 You Bet. Thanks Ken.