EP65 Building Des Moines: The Story of Richard Hurd

[00:00:00] What we are today is way bigger and better than I would have dreamed of at that moment in time. You had to keep in mind when I started it was just a matter of survival. You know, just support my family. If I can make enough money to pay the bills, I'm happy. And then you keep working and, you know, doing the best you can, trying to be more innovative. And every now and then, you know, you come across a deal or an opportunity that gives you a little boost.

[00:00:25] From cornfields to high rises, office to industrial, houses to hotels and every other asset class in real estate, we cover the people, the projects and the profit. Welcome to the Investing in Iowa Show. This show is for go doers, action takers and business owners. It's for people like you who are sick of Uncle Sam taking a huge bite of your apple. If you're looking to get ahead of what's taking place in Iowa, learn who is doing what and how you can get in on the action.

[00:00:55] You're in the right place. Hosted by Neil Timmons, an Iowa native who has been involved in over $300 million in real estate right here in Iowa. Recording in studio from West Des Moines. Here's your host, Neil Timmons. I've got Richard Herard here on the show. Richard, welcome. Thank you. Happy to be here. I appreciate it. See, for the audience's sake, who are you? Where are you from? What do you do?

[00:01:20] I'm from Des Moines. Grew up here. We're in the real estate development investment business. I started in 1981, so 43 years ago. You grew up here in town. Where'd you go to school? Lincoln. On the south side, I graduated from Lincoln High School. Yeah. After Lincoln, where'd you go? I went straight into the service. That was during the Vietnam era, and the lottery system had just come out.

[00:01:49] And we were all concerned about—there was no deferments at that point. The lottery system took away the deferments that they had for going to college. So I decided, well, I was just going to enlist. And so I told my dad, and he said, well, I'll have to sign for you because you can't enlist at 17.

[00:02:14] And so I did, and I graduated at 17, went in the service. And when I came back, then I went to Drake. How long were you in the service? Well, actually, I was in for a total of six years, but only on active duty for a while because then I converted to the National Guard, which allowed me to get out of active earlier and spend more years in the system. What'd you learn there?

[00:02:45] That was a great learning experience. I mean, for a kid that's in high school, where if you decide you don't want to be on the football team or the wrestling team, and you just say, well, I'm going to quit, you go into the service, and they own you. I mean, there is no quitting.

[00:03:06] And so it was a great life experience lesson on the way things of the world work, because once you are there, there is no, I'm not going to do this anymore. You're going to do it one way or another. If you don't, then they just send the MPs and put you in the stockade.

[00:03:26] So I learned an awful lot about discipline, about the way the world works, and about how to deal with all those dynamics, because it's a way different world than being in high school. That not going to quit or cannot quit, does that carry with you through your whole life in your professional career there?

[00:03:48] Oh, yeah. I think it teaches you a certain amount of stick-to-itiveness that really matters. Because if you can just say, okay, well, I don't want to do this, I'm not going to do it anymore. That's one thing. If you say, look, I made a commitment to this, and there is no turning back. That's a different mindset. There's no doubt about that.

[00:04:14] As a developer, you have to have that, because everything takes a while, and there's always challenges and circumstances all the way through, versus a whole bunch of other professions. I mean, from decision to achievement, much shorter time frame. Yeah, I mean, when I started, the time frame between concept and reality was much shorter. Yeah.

[00:04:38] Today, the time frame, we just completed Topgolf, and that was a two-year time frame, not from concept, from working with the, starting to get approvals with the city to the time we got it built. I mean, the whole thing was about four years, and from concept to delivery.

[00:05:00] It takes a long time. There's lots of challenges. The whole system allows the citizens more voice today than they used to have, and the cities have more stringent requirements on everything, from traffic to architectural styling and materials and so forth. So, it's changed a lot in the time period that I've been in the business. Leave this service. You go to Drake. What did you study there?

[00:05:29] Liberal arts, but I didn't really like it then. So, again, I was home talking to my dad one day, and I said, Look, I don't really like what I'm doing at Drake. Don't feel like I found my calling, and he said, Well, why don't you try real estate? I said, Well, I don't know anything about real estate, and it never occurred to me. And he said, Well, why don't you think about it?

[00:05:59] And if you're interested, then we'll go out and try to find a house, buy it, and we'll remodel it and resell it and see what you think. And so, we went out and found this just complete junk repo house that was owned by a bank, and went in and did probably 95% of the remodel we did ourselves.

[00:06:25] There were some things, you know, the electrical we hired, but we did all the other stuff. The roof, the interior framing, the sheetrock, the paint, you know, all that stuff. And then we put it on the market and sold it, and it dawned on me. I could make a lot more money doing this than I could getting a job at, I don't know what I was, let's say, 70.

[00:06:53] So, I was 22 at the time. It was better than what I could do out in the job market. So, I thought, Oh, this makes sense. So, I thought, Oh, we'll follow through with this and try to find another one. So, it was just really, yeah, it was organic growth. I mean, just whenever I, if I could find another house that I could buy really cheap, that we could make a big difference with, I would buy it, and then I'd rehab it.

[00:07:23] My dad helped me in the beginning, and then he kind of stepped back, and I just kept doing it. And then it was duplexes, and apartments, and it was kind of up the food chain as I could, as I could afford to. That first house, what year was that? 1973. 73. Yeah. So, you're playing Monopoly, you go up the food chain, right? Houses to hotels, and if you're, you know, if you will.

[00:07:50] How did that, that time frame between 73 and 81, when you started your firm, what did that look like? I was turbulent. Very, very turbulent. But, I mean, you know, I really was, I was making some money, but I was single until 79. So, I didn't require a lot of money to live as a young single guy.

[00:08:16] But, yeah, I was trying, and I was, you know, I was not one of these that got in the business and took off and started making a whole bunch of money really quickly. And I watched some other guys that did, and I thought to myself at the time, I must not have the touch because this guy is doing way better than me. But, yeah, it was an up and down cycle.

[00:08:43] We had the high interest rate period there in 1979 and 80, which was, that was crucial. And then I got married, and then we had our first children in 1980, and those were twins. So, then the pressure became a lot more intense because now I have four people that I support, right? Right. One. Like overnight. Yeah. Yeah, very quickly because my wife had been working up until the babies were born.

[00:09:12] So, it was a struggle. And then once they were born and my wife quit working, then I wasn't making enough money in real estate to survive. So, I took a job working at the railroad.

[00:09:33] So, I'd go in and work from 4 o'clock in the afternoon until midnight every night and then come home, go to bed, get up and do real estate during the day and then go to work at 4 o'clock again. So, that was kind of the schedule that I was on for that period just to make enough money to survive. And I did that for about a year.

[00:09:59] It was like in January of, I don't know what it was, 1982 maybe. And I'm sitting on a switch up in Iowa Falls, Iowa. It's about 10 degrees below zero. I'm sitting out there. We're switching cars to an elevator up there. And I just said to myself, you know, this can't continue.

[00:10:21] You know, I can't work here 8 or 9 hours, go home, grab a few hours of sleep, work real estate 8 or 9. I mean, it just has to end. So, I just went home and I just told my wife, I said, I'm going to quit the railroad. She said, why would you do that? That's the only real job you have. Why don't you just quit the real estate? Because the railroad was a lot more dependable than what I was producing. Yeah.

[00:10:48] Yeah, but I just said, no, that's not the future for me. So, that's what I did. And somehow we kind of eeked by after I quit the railroad. But it was not well received on the home front, let me tell you. Well, pressure either makes dust or makes diamonds. Right. How did you have to change in the early 80s in order to survive or to flourish?

[00:11:18] Obviously, you've heard the saying, necessity is the mother of invention. I mean, if you need to get something done and you're motivated enough, you will find a way to do it. Right? Yes. And I was not going to go back to work on a manual labor type job just to make enough money to live. I thought at that point, I'm married. I'm close to 30. I've got a wife and two kids. I've got to do better than that if I'm going to support them.

[00:11:48] And so, I just modified what I was doing. I started, you know, just building houses, buying repo apartments or office buildings and just anything I could buy to enhance value. It started working out okay. And then one of the apartments buildings that I bought, the city wanted to widen the street out in front.

[00:12:14] And they wanted to buy the apartment building from me, but they wanted to pay me what I bought it for. But I'd spent a bunch of money on it, improving it. And I'd leased it. But anyway, I finally came to the realization that really what they want is enough land to widen the road. And what I want is an apartment building.

[00:12:36] So, I went to them and I said, look, if you can get the ground you want for half the money that is going to cost you to buy my apartment building, would you be interested? And they said, sure. And I said, okay, that's done. Write it up. So, I sold them the ground and I just tore the end of the building off. We just made it from a 12-plex to a 9-plex, sold the land to the city and actually made some decent money there. So, things started turning around at that point. Yeah. What year was that?

[00:13:04] That was 81, probably in 80, 81, somewhere in there. In the 80s. What were your, besides that, what you just described, what was your first big break? Well, I mean, that type of thing. So, I grew up on the south side and most of the people at the city of Des Moines at that time, employees were southsiders or Italians. And so, you go down there. I didn't know anything about what I was doing.

[00:13:31] I go down there and to get a permit and they'd say, well, where's your site plan? Where's it? I don't have one. Well, they would help me out. They'd say, okay, this is what you need to do. Put this on there. And then they'd usher it through the system. I get it done just because I was a young guy from the south side.

[00:13:53] And then I realized that some of the properties I was looking at were owned by Italians who owned them free and clear. And I came to the conclusion that, well, a lot of these guys just wanted a revenue stream. They don't want to manage these properties anymore.

[00:14:13] So, I'd look them up and I'd go to these Italians that owned the properties free and clear and say, look, if you could sell this, get the same amount of revenue every month on contract to me, but you wouldn't have any management. You wouldn't have to deal with the tenants or repairs or city permits. Would you be interested? And most of the time they said yes.

[00:14:38] And so, I bought a lot of properties from that group of people on contract and they all talk. And so, I did the first one and I told them, I'll have your check here every month on the first. And so, I'd hand deliver the contract payment on the first of the month.

[00:15:00] And then he would, that guy would tell somebody, it was like these, they had the MCM Corp and all these different organizations out there that own buildings up and down Southwest 9th. They'd talk and you say, oh, this kid, he bought it. He pays me on the first of the month, every month, hand delivered. So, then I bought a bunch of them that way with very, basically almost no money down.

[00:15:24] You know, it would be the commission, real estate tax preparation, and the first month's rent. That would be about what down payment was. The hand delivery of the check, was that strategic on your part? Yeah, just so that they knew that it was important to me to get them paid. And that was back in the days when there was not computers. So, a lot of times those checks were really not completely cashable.

[00:15:53] So, I would have a couple days to get them covered. And by the time, they cleared the bank. But today, you wouldn't be able to do that. I knew I had a little grace period in there. But I'd get the check to the contract holder on the first. A lot of people from the outside looking in, it seems like they like to specialize. They're in apartments, they're only in apartments. They're in farm ground, they're only in farm ground. You seem to have a different level of expertise.

[00:16:23] Maybe it's just a different mind's eye where you can see something and identify value across multiple asset classes. I don't know. Maybe that was my dad's point when he told me that he thought I'd do good in real estate because I'd always bought, sold cars when I was young, high school. He said, you have an eye for an opportunity and an ability to make things better and sell them for more money.

[00:16:53] And he said, you can transfer that from cars to real estate. And I had not seen that. And that's really, you know, goes to the school of thought that a lot of times parents see things in their kids that kids don't see themselves. But, you know, the real estate thing, I mean, we've owned most all product classes. I mean, single family, multifamily, office, industrial, retail, land.

[00:17:20] And, but we've never really owned assisted living or any of that type of thing. We've never delved in. We've never owned hotel motel. But we've owned all the other stuff. Yeah. Yeah. And, you know, by and large, most of it's been pretty good to us. Hey, Iowa investors. This is Ava Bowkamp, chief of staff at Legacy Impact Investors. Have you thought about adding real estate to your portfolio but don't have the time or desire to play landlord? At Legacy Impact Investors, we do the heavy lifting.

[00:17:50] Our team finds the deals, manages the properties, and handles all the day-to-day operations. Our select group of qualified investors co-invest with us, gaining ownership equity without opening a tenant email or responding to a maintenance call. They just share in the income, appreciation, and tax benefits. These opportunities aren't for everyone. They are for qualified, accredited investors only. If you want to learn more, please visit LegacyImpactInvestors.com to apply.

[00:18:20] I mean, through the 90s, what was, what was a, I'll say a big break, what was the biggest project? What's one of the things that stands out to you in the 90s? Well, one of the big things that happened for us was that I recognized that we needed to get a strategic alliance. I needed to align with some bigger companies that were growing faster, that needed real estate expertise.

[00:18:48] So I just started identifying some companies and thought, well, I'm going to reach out to them. So I called Bill Krauss back, and I don't know what year it was. It must have been late 80s or early 90s. And I was able to get a hold of him. I said, look, you don't know me. At that time, I would have been, you know, probably 36 or 37.

[00:19:16] I said, you know, I'm a relatively young guy in the real estate world. I have three questions for you. I'd like 15 minutes of your time if the answer to any one of the three questions is no, I'll leave and I'll never come back and bother you again. Whatever reason, he took the meeting. I assumed that he would tell me, no, just don't, don't bother me anymore. But he took the meeting. I went over. I said, 15 minutes starts now.

[00:19:44] And the first question was, if you had more capital, would you be able to expand your chain quicker? Would you do that? He said, well, yeah, absolutely. I mean, capital is what helps drive our growth. And I said, well, you know, you own most of your real estate. And he says, yeah, we own virtually all of it. And I said, well, if you don't mind me asking, what type of return do you get on a store? He said, high teens, you know, 17, 18.

[00:20:13] And I said, well, my third question is, if you could sell or develop your real estate for half the cost of what your return is on your stores, would you be interested? He said, well, absolutely. I said, well, you know, there was something to talk about then because we could build those stores for an 8% or 9% return. They could make another 9% or 10% on new stores. So it was good for both parties.

[00:20:40] And I did a lot of come and go stores back then. Everywhere? I mean, yeah, just wherever they wanted them. Yeah. We went wherever. You made multiple states. Oh, we were in Iowa and Oklahoma and just brass. I mean, just wherever they wanted to go. Pretty powerful relationship, I would imagine. And it was, I mean, it was really, it was good for us. And I think it was good for them at the time.

[00:21:06] You got to keep in mind, back in those days, most of the companies owned their own real estate. Right. So that concept was not widely accepted, number one. And number two, there was not a lot of real estate investment trusts weren't out there. You know, now you've got realty income and acreage store and all these companies who do that, go around doing sale leasebacks or developing for big companies.

[00:21:35] But back then, that really wasn't out there much. How did you get the idea to call me? Meaning, how did you get the idea that this would be an avenue that you would go pitch? Just, I go into work one day, I pull into the store, I'm filling my car up and I'm thinking, you know, these guys just, they had just moved to Des Moines at that point. Yeah. You know, they had just moved from Hampton to Des Moines. They're growing, they're local.

[00:22:05] I'm thinking, if anybody might want a real estate partner and loose terms, not real partner, but someone to work with, they'd be a good candidate. I mean, we've done it. We did it with them. We did it with Quick Trip. We did it with Circle K. I mean, since then, you know, lots of different brands. But I just thought, you know, there might be an opportunity here.

[00:22:30] But it worked out and, you know, we were Walgreens developers for years and built a lot of Walgreens stores. And, you know, it's just kind of evolutionary. I mean, you get a relationship, you work on it, you build it, and then something changes. You know, either the, like, come and go, the company sells, or you have change at the top management, CDO changes. They have different ideas. So, nothing lasts forever.

[00:22:58] You're always looking for another relationship. Yeah. What did you do with the real estate? So, you build these things, you develop them. They pay a fee for it. You retail. Did you own the asset then? Yeah, we don't. We don't. You'd own them. Yep. We still own up their books. And then, what'd you do with these assets? Most of them, we, you know, some we'd sell, some we'd keep. I mean, it was no different than when I was buying repo houses. I mean, we're internally funded.

[00:23:24] So, we're not like, our main competition are the publicly traded REITs. So, if they need more money, they just go to the public markets. We're just, right. We're just internally funded. So, every now and then, you know, you need to sell things just to generate capital to keep doing more. And so, you know, I would own some, sell some, you know, just depend on what the capital markets were. Just like the houses. Right.

[00:23:54] Got to pay some bills, sell some houses, want to retain others, put them in the portfolio. Great. Exactly. And then, it just, it multiplies over a period of time. Yeah. I mean, so, I don't know that, I mean, I am big on goal setting, but I don't know that I ever really had a goal to be what we are today. I don't think I really thought that far ahead back in the late 80s or 90s.

[00:24:21] I mean, what we are today is way bigger and better than I think I would have dreamed of at that moment in time. Yeah. Keep in mind, when I started, it was just a matter of survival. You know, just support my family. That's all I was looking for. If I can make enough money to pay the bills, I'm happy. So, that's all it was in the beginning.

[00:24:47] And it was just, you know, then you keep working and, you know, doing the best you can, trying to be more innovative. And every now and then, you know, you come across a deal or an opportunity that gives you a little boost. And, you know, after the come and go stuff, then Cushtard, who's like the, well, the North American, they're like the second largest C-store operator, heard about us somehow.

[00:25:16] And they bought Circle K and they bought the market in Phoenix. And they contacted us. This was way back in 2005. So, this has been quite a while ago, 20 years ago. Yeah. And we bought a whole bunch of stores from them when they bought Circle K, because Circle K owned most of the real estate. And that turned out to be a real big boost for us because they leased them all back and we sold most of them at the time.

[00:25:43] But sometimes you have those types of transactions that really work out for you. 2008, the financial crisis happens. What's going on in your world at that time? Oh, I mean, it was difficult for everybody. Yeah, of course. I mean, capital became unavailable. There's no capital. Banks were looking for repayment.

[00:26:05] If you had revolving debt, they're wanting you to pay your lines off or reduce them dramatically and not renew them. So, that was a difficult time. And then, you know, some of our tenants were really struggling because of everything that was going on. You know, if it's happening to you, it's happening to them on the financial side. The financial market is just completely cratered.

[00:26:34] So, that was a difficult time. I think the good news for us is that we have a lot of essential services tenants. And they were still operating. The ones that are discretionary were the ones that causes the most. Those essential tenants inside the portfolio, well, that's strategic in putting that in assembling the portfolio? Yeah, I mean, we've been doing that for years.

[00:27:03] I had a lot of restaurants for a long time. And not that restaurants are bad, but we really end the herd with restaurants. And we have more food and medical and gas, you know, things that people have to have and survive every day. So, we're stronger in those markets than we are in the discretionary.

[00:27:27] We own some discretionary tenants that sell clothes and outdoor gear and whatever. But we don't have nearly as much of that as we used to. So, coming through 2008, you know, on the backside of it, did it create some opportunities for you? Oh, absolutely. We bought all kinds of stuff during that period. Yeah. I mean, when Obama came out and said nobody needs to go to Vegas, we went to Vegas and started buying stuff. What prompted that?

[00:27:56] Vegas wasn't going away. It's just that we had this mentality that Vegas, nobody needs to go there. Nobody. Shoot, it was totally redlined. You couldn't borrow any money for real estate in Vegas during that period. When the president comes out and says nobody needs to go to Vegas, so we just went out there and started buying things because they were marked way down.

[00:28:25] Most of the things we bought had been under contract two or three times and never closed. And so, we just went out there and pulled a bunch of our money together. Fortunately, we had sold some things right before that and bought, you know, bought a number of properties. And the crazy thing, to me, it was like, it was not if but when Vegas would come back. The opportunity was extraordinarily obvious to you. To me, it was.

[00:28:55] Because, I mean, it's kind of like, it's not going away. Yeah. And there's too much there. And, you know, it was. We just went out there and did what we could do with what resources we had. And when it came back, it came back with a vengeance. We sold everything. We own one thing up in Vegas now. But we sold it all when the market came back strong. That lack of liquidity, that chokehold, deeply depresses prices.

[00:29:22] Oh, it cratered it out there. Talked to brokers at that time. They say, well, we can't even find a lender. They'll make a loan here right now. So, it was, yeah, it was an opportunity for us. Worked out. Do it again. You know, Vegas. I'm not a huge Vegas fan from, you know, just going there as a tourist.

[00:29:48] But as a business opportunity, I'm a pretty big Vegas fan. What asset classes were you involved in there? We had, it was all retail. It was all along Paradise and Flamingo. And, you know, right there, when you come into Vegas, the airport dumps you off onto Paradise. So, we were focused on that corridor. Yeah. So, COVID happens. We'll fast forward a little bit. What was happening in your world at that time?

[00:30:19] That was very ugly. That was worse than the financial crisis because even a lot of the essentials weren't paying because they had, for whatever reason, other divisions or whatever that were shut down. I mean, it's not, it was different than the financial crisis. Yeah. COVID, you know, took everything from operating to non-operating other than a few select lines. Right.

[00:30:48] Good news for us is we own a lot of grocery stores, a lot of convenience stores. And we've done a lot of build-the-suit work for UnityPoint and some other medical companies. You know, and those were all still open. And that was the, you know, really the predominant number of properties in our portfolio.

[00:31:12] Now, the stuff that was sure retail, like everything we built out there next to Jordan Creek Mall. So that whole line out there of Hobby Lobby and Nordstrom Rack and, you know, Dick Sporting, all down the line, they were all just completely high-centered. And that was pretty tough because they just quit paying us. Yeah. The other thing that we have, I guess I forgot to mention this, home improvement.

[00:31:41] And, you know, like Lowe's, those guys were still open too. So they were, they did not shut down during the COVID period. But that was enough to, you know, really make you a little nervous about what's going to happen going forward. And we didn't get any government assistance because we're not a property management company. We're a pure real estate investor and developer. So we technically did not qualify.

[00:32:11] I think that that was a little bit of a, you know, misnomer, but that's just the way it was. How did you navigate those conversations with lenders during that time period? We just, I mean, we just paid them. We didn't not pay anybody. We just used our reserves, our whatever lines of credit we still had that were operating. We just paid and kept forging ahead.

[00:32:37] And we worked with our tenants, tried to structure something that when they got their PPP from the government that they could start paying us, which they did. We had to work out system with them. Yeah. But that's basically how we handled it. When you do borrow, how, how, I guess what I'm going for is what's your viewpoint on borrowing and as it relates to interest rates? Are you like being on the short end of the curve, like stretching things out?

[00:33:07] Kind of depends on what the underlying asset is. The idea of the cash flows of, you know, thinking of a come and go with a 20 year lease. Maybe you have a different viewpoint than an apartment complex, for example. Well, I think it, it depends on a number of things. Number one, what's your goal? I mean, are you, are you owning this for the short term or the long term? If you own it, if you're owning it for the long term, I try to get long term money.

[00:33:35] Rates are appealing and just not have to deal with it. If you're owning it for the short term, if you're, you know, like apartments, if you're buying it and improving it and releasing it and wanting to sell it in a few years. I mean, you don't want to have a big free payment penalty, but staring you in the face when you go to do it. So I'd go short there. We, I mean, we kind of ladder it in most of the time based on what, what's going on in the market.

[00:34:04] So sometimes, I mean, you get inverted yield curves and all kinds of crazy stuff where the short term stuff's more expensive than long term. Today, most of what we do is long term and we, we're not merchant developers. We don't build and flip. Generally speaking, I mean, we do sell things from time to time, but we're not, we're not out there building and putting it on the market. The day that the tenant opens for business, that's not our model.

[00:34:32] If you're a house flipper, execute the birth strategy or do double closings and are in need of money. Little Guy Loans is your go-to lender here in the Des Moines area. Time is money. Loan approvals in 24 hours. Closings in five days. Little Guy Loans was founded by Neil Timmons, an investor just like you. Since he has been in over 10,000 homes in Des Moines, there's never an appraisal. Houses, multifamily and commercial property loans up to 1 million.

[00:35:02] Check out www.littleguyloans.com. I'm going to say that the, since you started open shop, quote unquote, 1981 to today, the industry is, is largely professionalized. Became much more institutionalized than what it ever looked like through that period of time. How have you personally had to change and evolve to match what's, what's taken place in this, this, you know, 40 plus year history?

[00:35:30] Well, I mean, the competition from the, the, uh, real estate investment trusts. I mean, that's pretty brutal. They have more money than you, we have. And it's cheaper. So they got more money, cheaper money and a huge footprint. Yeah. Yeah. Yeah. So for example, if, if we're dealing with a company that is national, not just regional, those guys can go out and do.

[00:36:01] A $400 million deal. We can't do that. It's too big for us. So we got to compete with that on size, on geography, um, interest rate environment or cap rate environment.

[00:36:19] The thing that, where we win is we, number one with relationships, service to the customer after they sell it, because every one of these companies has things going on. Um, um, Hy-Vee, for example, they're always adding aisles online pickup stations and charging stations.

[00:36:42] And, and every time you do that, if you don't own it, which if you're a tenant, you got to go to the landlord and get them to sign off. Oh, these big, these big REITs, they don't care. They're not, it's not helping them to help the tenant. I mean, they're just focused on the next deal and getting bigger price. They're aggregators. They just want more and more and more.

[00:37:04] So we try to create relationships where we will be very responsive, help them get done what they want to do. And the other thing is we are, are just way quicker to do a deal with one of those big REITs takes a long time. They got to have a real estate manager, take a look at it. Then they sent it in.

[00:37:31] They got to have underwriting and a bunch of analysts underwrite it. It's got to go to real estate committee and it's got to go to the legal department to write up a contract. And it's got to go back for final approval from the investment. I mean, how, by the time they do that, we've closed the deal. Yeah. So there are times when companies just want to get it done. They don't want to go through all that. And it may cost them a little bit more because our cost of money is more, but they do it all the time.

[00:38:02] Have you considered going public to roll out? Oh, we, to be a REIT? No. Yeah. We've, we've had lots of opportunities. Sure. I don't, I really don't have a desire to. I mean, we were bigger than a lot of the small REITs in terms of size and assets. But, you know, that doesn't really appeal to me. I mean, that just adds a whole level of complexity that we don't need.

[00:38:31] We don't need the repeat reporting requirements, all the legal requirements. You know, it's just, it's just more, I think we're more profitable and more nimble. And it's just easier for us to function as a private company. I mean, we, it, back in the days when it was hard for us to survive or not really survive,

[00:38:58] hard for us to grow, I should say, that it was more, would have been more appealing. Yeah. Because that just gives you capital. Yeah. But we don't really have a problem borrowing money now if we need to. And so I don't know that it would necessarily be a big benefit for us to go public. If we wanted to just hire a ton of people and just have a nationwide footprint, I suppose maybe.

[00:39:23] But I think at the end of the day, we, I don't know if we'd make any real, any more money than we're making right now. Has that delta between what you can borrow at as a private company versus, versus being a read and access to the, to the public finance? Has the delta shifted over a period of time gotten tighter to make it, to make it less appealing? Or is that the margin still pretty? I think, I think the margin's still about the same.

[00:39:51] I mean, they'll, they're able to borrow probably a hundred basis points lower than we, that's about what it's been. I think it's still about that. Some of them get, the big ones like real, the income get, get rated. And if they're like their investment grade, so they got the highest, you know, quality rating. So make some money a little cheaper, but yeah, again, we wouldn't get to that. You gotta be big.

[00:40:19] You have to get an investment grade rating. What year did you come home from work one day and, and know with certainty you had made it in this business? I don't know. That day I wasn't, I'm still waiting to try to get there. I think that I've realized that we at least have a good understanding of the business and we've been able to survive for 43 years and the business has been good to me.

[00:40:49] I really have no complaints about being in this business. It's, it fits me. Okay. I'm not saying it would fit everybody. Um, I like it. I still enjoy it. I like making deals. I like running the company. So it fits my personality and my needs may not fit everybody's. I mean, I couldn't be a, a doctor.

[00:41:17] I couldn't be a lawyer sitting in front of a computer screen reviewing documents. Everybody's got different talents. Yeah. So what are you most excited about in 2025? Well, I, I'm from a business perspective, but like, I think we're going to see a, uh, hopefully a leveling out and return of the financial markets to some sensibility. I mean, we've had, everything's been kind of upside down the last couple of years.

[00:41:44] It makes it really difficult for high dollar items like real estate to transact. So, um, when the costs of production or the construction costs are high and the interest rates are high, it doesn't matter if it's a house or a building or whatever your, whatever product it is, it makes it difficult for it to get done and transact.

[00:42:09] And so I'm hoping that, um, we'll get interest rates to relax. Um, and if the production of properties and especially commercial stuff has really slowed down. So slowing of that will should reduce the cost of construction. So the cost of construction comes down, interest rates come down, then we can make deals with companies that can pay a rent where we can actually make money right now.

[00:42:38] It's really difficult to find enough room between the construction costs and the interest rate costs and what tenants are willing to pay to make my, make much of any, or that doesn't happen. You don't construct. Right. So we, we have absolutely nothing under construction, right? For that very recent. Sure. We have lots of companies that want things, but we can't make the numbers work. Yeah. And that'll change.

[00:43:07] I think 25, you know, we'll get back into gear. Once we do, there's going to be a lot of pent up demand because there's a lot of, a lot of companies that want to do things. For you, why Iowa? You could, you could do what you do. I know you do it multiple places, but you could live just by anywhere you still choose, but you choose to be here. Why? Oh, it's my home. It's where I'm from. It's where my kids and grandkids live.

[00:43:33] I, uh, you know, I enjoy going to other places. We have houses in other states, but I cannot imagine living as a resident in another state. This is, this is where I'm from. This is, I, for all the crazy things that people talk about here. It's really a good place to live, raise a family, run your business. It's clean. It's safe.

[00:44:03] Get around fairly easily. Um, you know, all the things that come with big cities. We don't have those problems here and, and makes it more enjoyable to live here. I think. Yeah. Right. For the final three questions. Shoot. One piece of advice you would have for your 20 year old self. Um, well, number one, patience. You know, when you're young, you want things to happen immediately.

[00:44:32] And in some regards you need them to happen immediately because you don't have a safety net. I think patience, um, innovation came up with a number of different ways to make money, but I would say stop and think more about how you can carve out a niche that works for you

[00:44:57] that nobody else is doing, which is kind of what we did with the, with the, you know, representing companies and doing sale, these facts or build the suits and that type of thing. That really makes a difference because, you know, if you're, doesn't matter what you do, if you're competing with everybody else on the level playing field. Okay. Why am I, why would I use you rather than use somebody else?

[00:45:24] You need, we needed to find a niche that actually provided some value to our customers that they weren't finding somewhere else. That, that, that's the key. Yeah. In my opinion. And, you know, just, you just have to work really hard and stick to it. If this is huge and just be upfront and honest about what you can and can't do. I mean, we never try to represent that we can do something if we can't do it.

[00:45:53] I mean, it's immensely important because when you're dealing with big companies, the person you're dealing with is reporting that up the line. And if you tell them you can deliver something that you can't deliver and he goes with you, it, you're not going to get another chance because that guy's going to get reprimanded or fired. And I mean, it's just not, so it's in, in extremely important to be upfront and honest about what your capabilities are.

[00:46:23] Two books that changed your life. Oh, you know, I, I read, um, Trump's art of the deal when it came out and I thought it was great. I mean, that was a long time. Sure. Um, but you know, that was in business. That was it. I, in personal life, it's the Bible. I mean, the Bible is such a amazing piece of work and guide for how to live your life.

[00:46:49] And any situation that you may find yourself in, there's, there's advice and a solution inside the Bible in very various ways. So if you were cast away on an Island for one year, you could only get three pieces of data about your business each and every month. What three things must you know each and every month to know how your business is running? Well, I need to, I, number one, you got to know what the top line is.

[00:47:19] Who's paying and who isn't paying? Number two, what do we have that is coming up for maturities, debt maturities? And number three, you know, overhead and, and expenses. I mean, that's really, those three things are really the napkin back of the napkin type information you need to keep track. Richard, I asked lots of questions here. I could talk for hours. I'm sure about who won't.

[00:47:48] What's one question I did not ask that I should have asked. Oh, I, a lot of times people ask me about working for Bill Knapp, which I did for a while. And that was a very interesting experience. I was at the height of his, his power in the city of Des Moines.

[00:48:05] And really, it was a great period of learning for me. And so, a lot of times people want to know what was Bill like back then.

[00:48:26] And he was, he was really a huge personality, bigger, larger than life and helped shape the direction that Des Moines went for the next 20 years. And we're still kind of living in a lot of the things that he worked on. I mean, you know, the sculpture park downtown, MLK extension around that.

[00:48:53] I mean, a lot of the, a lot of it involved downtown, but then his own personal stuff was West developments on the West side. Right. You know, housing and retail and office and that type of thing. When did you work with him? It was in the early 80s. So, I started my company in 81. We operated until 86.

[00:49:18] Then the company went on, but he hired me to do work in the commercial division as a manager with Doug Seidenberg of the commercial brokerage division. So, I worked there for, that's worked there for a while. Well, my company kept going, doing what it did. And that was one of the requirements of going there. And learn, you know, an immense amount of information from Bill at that time.

[00:49:48] For sure, I appreciate you taking the time to connect up and be here. For people that want to find you, follow you, connect with you, learn more about your company. Where can they go? What should they do? You know, our website's herdreality.com. So, it's, you know, you can see pretty much anything you want to see on there. It's got pretty much our whole portfolio, what we do and how to reach us. And so, website is probably the best way. Perfect. Thanks for allowing the show notes, everybody.

[00:50:18] Richard, thank you for being here. Thank you. Thanks for listening. If you're enjoying the show, may I ask a favor of you? Naturally, subscribe so you never miss an episode. But would you rate and leave an honest written review on Apple Podcasts? It does a lot for us here at the show, and I appreciate reading your thoughts. Great guests make for a great show. If you know of another Iowan who would be a great guest, or you yourself have interest in being a guest,

[00:50:44] well, get on our radar, visit Investing in Iowa to fill out an application or recommend a guest. And if you want to connect with me one-on-one, go LegacyImpactInvestors.com. Click on the Invest With Us button in the top right corner, and there you can pick a time for the two of us to get on the calendar and connect. Until next time, keep investing in Iowa.