The Koerner Office - Business Ideas and Deep Dives with Chris Koerner - Viral Treasure Hunts, E-Recycling and 2 More Business ideas! Ep. #77

Episode Date: October 11, 2024

HoldCo Bros are back! Nik and I talk about electronics recycling and how it's possible to enjoy 100% gross margins in this industry. We also break down the fascinating treasure hunt business, featuring Project Skydrop - a real-world treasure hunt with $27,000 in gold at stake. Plus, we discuss some hacky, kitschy ideas involving guerrilla marketing and Chrome extensions-type ideas that anyone can try.Learn more about Nik here: http://linktr.ee/cofoundersnikTimestamps below. Enjoy!---Watch this on YouTube instead here: tkopod.co/p-ytAsk me a question on or off the show here: http://tkopod.co/p-askLearn more about me: http://tkopod.co/p-cjkLearn about my company: http://tkopod.co/p-cofFollow me on Twitter here: http://tkopod.co/p-xFree weekly business ideas newsletter: http://tkopod.co/p-nlShare this podcast: http://tkopod.co/p-allScrape small business data: http://tkopod.co/p-os---00:00 Highlights & Introduction01:10 Introducing Project SkyDrop01:18 How Project SkyDrop Works02:02 Discussion on Entry Fees and Rules04:33 Comparing Similar Treasure Hunts06:08 Business Ideas and Fundraising16:32 Perfumatic Update20:36 Hacky Ideas: Let's Grade Them!21:38 Amazon Late Deliveries: A Hidden Opportunity23:35 Automating Consumer Advocacy30:03 Commercial Real Estate: A Deep Dive31:10 Pros and Cons of Self Storage Investments35:30 Sourcing Off-Market Deals39:25 Getting Started in Real Estate

I'll bring in a box. I'll brand it. I'll leave it in the wrestling room. You send out an email to the parents. And they bring in old electronics and just put them in the box. And then I will list them on eBay, sell them and give you guys a cut of the money. And so it's like it's a perfect business because people just donate for free, stuff that they already have. Welcome to the Kerner office. If you hear any background noise on this intro today, it's because I'm recording from the Kansas City Airport because the show must go on. Today is another episode of Holdco Bros with me and my business partner, Hugh Lesky, and we talked about several pretty interesting things. We talked about the treasure hunt business. We talked about electronic recycling and the electronic fundraiser business, which isn't really an industry, but it's a business that I've done in the past that I loved and worked really well. And I think one of you guys should copy.

Then we talked about a couple kind of hacky, kitchy, Chrome extension-ish type ideas that I think you'll love. So please like and subscribe, share with a friend, and we'll see you next time. All right. Are we doing this, Nick? Let's freaking do this, dude. Okay. So our good friend Will sent me an idea.

Not an idea. This is a business. That's pretty interesting. And I think people could copy it in different ways. Okay. You ready? You ready? I'm ready. You ready? Okay. I never heard of this until yesterday. It's called Project Skydrop. Okay. What is Project Skydrop? I'm going to read this from the website. Project Skydrop is a real world treasure hunt. A precious object made of 10 Troy ounces of 24K pure gold has been placed somewhere in a circle that starts out 500 miles in diameter. Over the course of three weeks, that circle shrinks day by day. At the end of the hunt, the circle will shrink down to a single foot, pinpointing the exact treasure location. People who join the hunt receive daily clues in the form of aerial photographs of the treasure

taken from higher and higher altitudes. Half of each entry fee contributes to an additional cash bounty that grows over time as more people join. The first person to locate the treasure and take it wins the hunt and claims the cash bounty. How genius is this? Dude, that's a freaking, that's amazing. How much is the entry price? I don't even know.

I'm looking right now. And is it an all or nothing? Is it like, oh, second place gets this, third place gets this? Or is it like, look, you're first or you're last? Like Ricky Bobby's dad would say. Listen, Ricky, if he ain't first, you're last. Well, that don't make no sense. There's second.

There's third. Heck, there's even fourth. Okay, so it's $27,000 worth of gold, which is about, it's 10 ounces. join now. It is $20. So if you join for $20, you receive an exclusive members-only clue each day by email and text message. Each clue is, I love this. I can't even read. I'm just so excited right now.

We need to get these guys to pay us. Each clue is an aerial photograph of the treasure location taken from higher and higher altitudes. Clues are sent between nine and three each day and first joined, first sent order. By joining today, you will get your clues earlier in the day than somebody who joins tomorrow, gain instant access to clues from previous days. Is there a pricing tier? Is it just $20 or is it like for 50 you can get early? It's just $20.

It looks like it's just $20. Dude, that's amazing. And the website is so simple. There's nothing really to click on. It has a proof of appraisal showing that it's real gold. It has pictures of where it is. And then it has a USA member zip code map. And you can see that most of the members happen to live in an area that's close to this.

The pricing is so smart. Because it's like, why would I not pay 20 bucks? Like, it's a Yolo type of purchase, right? Like, oh, yeah, $27,000 just for the gold. Yeah, I'll spend $20. Have you ever seen those videos on YouTube of the guy where they're like, find out where I am? And it's like a woman and she might be sitting at a table and it's like almost no other clues. And he just reverse engineers it.

And he's like, okay, well, it looks like there's a tea. If I lighten the contrast, yep, there it is right there. It's this restaurant. And if I go to Google and he like finds it within five minutes, this is that. This is like that on steroids. Yeah, that guy would crush it at this. They need to ban him for life from this. What you're saying is like the first day's pictures is like an inch from the gold.

Second day is a foot. Third day is 10 feet. Like those might not be the right distances, but that's how it works. Like each additional day you get a higher and higher level view of where this gold is. Yeah. I believe that's right. I'm looking at 923. Yeah, it just keeps zooming out.

When did it start? I think just a couple days ago. That is freaking smart. So there's another company doing this, Utah treasure hunts.com. They do this a couple times a year. So one of the podcast listeners named Parker, shout out to Parker sent this to me. And he said, a couple of realtors have been doing it for a couple years now.

They get some exposure for their companies and whatnot, but it's more of a passion project. Long story short, they hide a treasure chest somewhere in Utah. and then release a cryptic poem with clues that lead to it. They supposedly don't make any money from doing this. The only return I can see them making is growing their email list and social media hauling. They do get some sponsors to help with a cash prize,

but their costs are increasing with their growing email lists and server needs, yada, yada, yada, yada. Can we talk about anytime I hear someone's like, we don't even make any money from this? We've talked about this. We've talked about this on this pod. Yeah, either like they're dumb and they don't know how to monetize or they're lying.

I refuse to believe otherwise. they're lying. Most of the time they're lying. And they're like doing all this mental gymnastics where they're like, well, technically like the treasure box costs us $1,000. And to pay to find it, we get $100,000. But each of us spent a year's worth of our time planning this. Yeah. On an hourly way you calculate.

And so like actually, actually it costs us 160,000. We lost money on it. I freaking hate that. That's so stupid. It reminds me of the calico cut pants skit from I Think You Should Leave. He was like, you got to donate because he's totally underwater. He's only eating hamburgers to survive right now. Like keeping a website active is so expensive.

So how could people copy this? I think it's fairly simple. If you have something of intrinsic value, right, not like, oh, I have a marketing agency and I'll do a month free for you. Like, no, I have this gold bar or I have this 67 Chaville. Chavelle that I want that's in mint condition. Anything that you have that's in that $10,000 to $30,000 price range, and then you put the dollar amount, the entry fee at that $20, I think you could do this with. I've assigned baseball from so-and-so. I have a, like, I'm trying to even think what else you could auction off, but you could even say like

one Bitcoin, right? Like, you could have the cold storage, like, right? You print it off and then you hide it somewhere and somebody has to actually go out and find it. And literally the first person who finds it gets that Bitcoin because it's a piece paper that they can then scan their wallet, but I think you could do it with a lot of things. The hard part is, A, getting the momentum because it's such a high price to win, and it's such a low barrier of entry, the 20 bucks, I would assume it catches wildfire pretty quickly. But you probably want some type of an audience in order to get it launched. And the second thing is, you can't do a bad job of hiding it. Like, I had a friend in high school who there was this radio contest and they were, I can't

remember what it was, but they would like hid something and they would give clues every day on the radio of where it was hidden. And it was supposed to be like this 30 day event. And in day two, my friend who's super smart, Jimmy Riley, shout out. I don't know if he's listening. He found out where it was. And he wrote into the radio station. He's like, yeah, yeah, it's in this water tower in Chicago or something like that. And so they like had to stop the, you know, the competition because he found it in day two. But they're like totally. ruined what they were trying to do, which was like create buzz around the radio station, more people to listen, right?

So I would think if you are somebody who has a business and you want to have a guerrilla marketing event or tactic, then I would find something that is of value. Like we could do this with our businesses. We basically say we're going to put $30,000 to marketing this year. And so this is what it will be. And then the treasure hunt is essentially the marketing, the buzz around the treasure hunt comes back to us. I think that people could partner with local influencers to do this in any local market. And it doesn't need to be 26 grand. It could be five grand in DFW. You partner with a couple

Instagram accounts that focus on DFW restaurants or travel or Airbnbs. You partner with them. And you could do it every quarter or every month. This is really interesting. You could go and find like 10 local businesses or more and say, hey, we're doing this marketing thing. Here's the cost. And they have to throw in something free. Maybe a restaurant is like free pizza for a year. And it's like one pizza every single week for your family for a year. And then the nail salon says like, whatever, free nails for a year, whatever. And they like, you combine all of those contributions from these businesses and say this treasure chest is worth $30,000. Right. And then because you're in this local market, you hide it. And then like the local market gets into it. I'm sure you could

leverage some Facebook group, Twitter, Instagram, local, local influence. like you're saying, but then it could be small businesses participating in this. They get free publicity. You would charge something to them, obviously. And it would just like, that would just be so much fun. Couldn't you imagine having this, there'd be like a treasure hunt with your kids? Remember? Dude, remember 10 years ago?

I can remember what it was. I came out to Dallas as when Pokemon Go was really popular. And we drove to some outlet mall. I don't even know what it was. This was, you must be like, I've never played Pokemon Go. You're crazy. We get to that mall and like you look over and you see somebody with their kid and they're like on their phone. And I'm like, what the freak are they doing?

He's like, oh my gosh, they found a Pokemon. Carson. Carson, what's here? I was like, I think it's a, it's the Rizzler. Dad. Is that a Balbosaur? It's not a Balbaesor? Right.

It was like, but it created this cool environment where the dad and the son could actually go and do something together. Like a family could actually go and do this treasure hunt. That would be a really cool component to it is make it family friendly. I like the idea of partnering with businesses. is because it's the same value, but without having to spend $30,000. It's like a negative cack customer acquisition costs. You go to like 10 different restaurants, maybe like a velvet taco, like a regional chain, not like a Chili's, but like something that's native to DFW that has a budget for something like this.

You find five of them. You get them to pay a few grand for this attention and promotion and then free tacos for a year. And so like the literal value of this is $10, $20,000, $30,000. But you got paid $10, $20,000. to do it. And then you partner with the influencers and then they promote it. And instead of having to buy a $30,000 gold bar and hoping that people buy $30,000 worth of tickets to offset it like a lottery, you're profitable on day one. Do you know what I would do? If I, if my kids team was like, we're going to do a fundraiser and they all like do the same fundraisers, right? Like we're selling

cookies or they sell those little booklets or whatever it is. This would be a really cool test of a fundraiser. Wouldn't that be freaking cool? It would be. unite the community in a way. Yeah. Gertley posted about this recently where he's like, I have a friend of mine who makes over a million dollars a year making pancakes for nonprofits. And he works like 80 days a year. And basically his business model is anytime that these nonprofits have like a pancake breakfast or like something for the community, they hire his friend's company. His friend has like 50% margins and he goes and just makes pancakes, right?

That's his business. You could do this in your local community. Like you could be like, hey, church. hey high school, hey soccer club, hey, girl scouts, whatever it is. You could do multiple. This is the thing that I do is I coordinate these treasure hunts and I get local businesses to contribute and this is the way we create the buzz. On average, this is how much money we raise and this is my fee, et cetera.

But like that could be a business locally is creating these sort of fundraising nonprofits with the treasure hunt component to it. I love it. And while we're talking about school fundraisers, let me go off script for a minute. because I did one of these and some business ideas that just like I execute and it works and then I move on and then years later no one else is doing it. And it's like, why isn't anyone doing this? This works.

So school fundraisers. I used to coach wrestling at Bob Jones High School. Shout out. Madison, Alabama. And we have funders. No. That's not what I said. We have a fundraiser every year and we would sell cheesecakes.

We'd buy them for like $15 and then the wrestlers would go door to door. in the neighborhoods and selling for like $45, $50. Okay. And it's a good business. Like in order to have any fundraiser, you have to have a lot of margin because there's so many middlemen involved. Right. And so the year after we did this, I was like, hey, guys, how about we do a different

fundraiser? I own a company called phone restore. We recycle iPhones. Let's do an electronics drive. I remember this. I'll bring in a box. I'll brand it. I'll leave it in the wrestling room.

You send out an email to the parents. And they bring in old electronics and just put them in the, box. And then I will list them on eBay, sell them, and give you guys a cut of the money. And so it's like, it's a perfect business because people just donate for free, stuff that they already have. And maybe it's a keyboard that really has no value. Maybe it's an iPhone worth $150. Well, that's worth like six cheesecakes. And no one has to spend any money, except some rando on eBay on the other side of the country. Everybody does the same fundraisers. It's the same thing every time. Oh, yeah. We'll have the parents bake some cookies. And

and we'll sell them off. They're going to raise the money because people are like, they want to support that kid, right, or that cause. Not because, oh, I really want this food or that product. But if you could pair a very appealing product or offering with these fundraisers, like you did with Bob Vance Federation's high school wrestling, that's a win for everybody, right? Like it's not just, oh, give a little Timmy 20 bucks because he's raising money.

I could actually use getting rid of a lot of these old electronics. Yeah, and we also did a point system. A lot of like the fundraisers have like a competition where it's like, yeah, all right, kids, whoever raises the most money gets free, all of a garden. But so I had a point system where it was like, however many dollars your device is worth, that's like a point to you. So that incentivized people to not just bring in an old keyboard or something that they knew was worthless. They would want to bring in a Nintendo Switch or an iPhone. I don't even remember what the prize was. But what's great about this is you don't have to do it with one school. You could do it like with every sports team at a high school. Any organization in your community that ever does fundraisers, like off the top of my head,

Girl Scouts, Boy Scouts, high schools, churches, elementary schools. Yep. And there's probably dozens more than I'm not even thinking of that are always looking for cool ways to differentiate themselves and get and raise more money. This is a public call out. So I want to hear someone do this. And what's great about this business is a lot of the people listening have kids. And even if the kids in preschool, you could have a fundraiser there, or high school, it doesn't matter. If this idea excites you, I want you to go out and do it and approach your elementary school or your middle school, your high school, at whatever it is, your church, and just pose this idea and see if you can gather some electronics, sell them on eBay or Facebook marketplace and report back.

And we'll have you on and talk to you about how it went because this is a business that anyone could do. Like what you just said is key. there's no downside to this test. The downside is you're left with a bunch of electronics. You don't know what to do with because you couldn't sell them on eBay, right? But you didn't come out of pocket and buy all of this stuff. That's right. I like it.

Yeah. That's a good one. I guess that's our fundraising segment. And now you know. You know why the treasure hunt idea works? Like this treasure hunt idea will always work because I can't speak for women, but it is ingrained in the male DNA. to want to treasure hunt, period. End of story.

I don't care who you are. And that will never go away. Yeah, we hunt and they gather, right? Edit that up, Maham. Me, man, you woman. All right. Should we give the people what they want, a perfumatic update?

Let's do it. Why don't you go ahead? All right. Go ahead. Quick summary, for those who don't know, the long and short of it is, Chris posted a reel to Instagram and YouTube, two months ago at this point,

two and a half months ago at this point. We got a bunch of inbound. And the real was of a perfume vending machine. People found it very interesting. And so because we had so many leads that came in, it was like 2,500 leads, we decided, let's talk to the manufacturer, negotiate a relationship and sell these things in the United States. And so we started doing that two months ago. And in August, yes, in August, we did $61,000 of sales. So far in September, we've done $52,000 of sales, but we are on track to pass our August numbers, which is awesome. We are in the middle of negotiating the exclusivity rights to North America with the manufacturer, which has been awesome.

We've built out, hired and built out a sales team that we have actually qualifying these leads and having conversations for people. And quick plug, we are hiring for two sales positions. So if you're someone who either has been a setter or a closer in the past or work the phones, you're good with people and you want to come work with Chris and I, email us, Chris or Nick at cofounders.com. Anyways, so we've been working on building this infrastructure. It's like anything that you do, right?

It always takes longer than you think and it always costs more than you thought. But I'm like Chris and I are both, well, maybe I won't speak for you. I'm really, really excited about the progress that we've made. We've got like real systems in place. We've got real follow-up processes. Perfumatic, which is the company that we're working with, has they run on Barcelona time, but we're learning to work with them and work through it. it and I'm just stoked for what happens in Q4.

Oh, the last thing is for the first month, we didn't have our prices dialed in. So our gross margin was like 34%. I just crunched the numbers. We've now fixed our pricing and our gross margins are 43%. So not quite the 50% that we were hoping for, but they've been much improved. And I'm stoked. It's awesome. I love how you said fixed our pricing because it reminds me of whenever you get an email

from a company that's raising their prices, they never say they're raising their prices. they always say like there's a price adjustment or like we're correcting like it's just like I know what you're saying our prices were messed up because we weren't upcharging at all the accessories so I get what you're saying but it's also funny let me just explain it like so there is this perfume vending machine and then there are accessories that you can pay for to add on to it accessories might be a coin or bill acceptor credit card acceptor there's a stand that's an accessory there's a TV that you can have on it. It's an accessory. So like all of these things cost more money. The only thing that we were marking up was the original machine. Any accessory that people purchased, we were just passing

through. Like there was no markup on that margin, which was insane because some of these things were an additional thousand or 1500, I think even $2,000 in some cases. So we ended up fixing that where we ended up creating the same margin on those accessories as we did on the original unit. But that's what I mean by fixing pricing because otherwise it was it was not working did you just admit to price fixing yeah i did edit that out mohammed what you're saying doesn't make sense nick because it sounds like we kind of launched something too fast and then really screwed up something very fundamental so i don't think that was us are you sure that was us this has been a fun project though because i think this is the first time that you and i soup to nuts are like really in the weeds together launching

something. Most of the time we've launched something, it's been like, oh, Chris is launching it, and I'll come in and out for a minute. Or, oh, Nick's running this, shot this business. Chris will come in and out for a minute. But this has been fun. I'm really excited about the infrastructure we're building and what this means for the next thing that we do because the flywheel is going, my friend. It is gaining momentum. It is. It is indeed. All right. I got a couple of little hacky ideas for you. I want you to grade them. I'm going to grade them. They're kind of similar. So I'm going to pair them together. All right.

Hacky ideas. I'm freaking ready for this. I love hacky ideas. All right. I love this because this is something that like an indie hacker could build. I don't know how they're going to make a lot of money. So I'm saying that up front. It would be a fun project.

And either one has the opportunity to go viral because of what they are. Number one, we all order stuff on Amazon. In fact, the average Americans spend $1,600 a year on Amazon. Really? Yeah. Yep. And about 10% of those. those orders are late.

Late being, all right, we expect to arrive between 7 a.m. and 11 a.m. and it arrives that afternoon. So it doesn't have to be the next day, just late. Yeah. Now, Nick, have you ever had something arrive late on Amazon and complained via like a chat or customer support? I have not. My wife has. Okay.

Well, your wife and I are similar. We're both very frugal. Mm-hmm. And we've gone full Karen on an Amazon associate at some point or another. And Amazon is what is Jeff Bezos obsessed with? The customer experience. The customer experience. They are always wrong.

The customer is always right. Okay. And so basically if something arrives late and you complain about it, they will bend over backwards to make it right. Sometimes they'll refund you and let you keep it. I'm sure they have an algorithm based on the price of the item and what type of thing it is. But basically, they will make it right more than they need to. So at LCD cycle. about 10 years ago, we used to use a service called 71 pounds. I don't know if they're still in business anymore.

71 pounds? Yep. Yep. Okay. And I love this business because they would, they had an automation that would dispute FedEx packages if they were late from like the shippers perspective. So we shipped a ton of FedEx packages every day and FedEx has a guarantee in their terms of service. If it's late, we'll give you a refund. But you have to fill out a big form. It's a bunch of paperwork. And most of these. packages cost $15 a ship. It's just not worth of business owner's time. So they had an automation that would fill up the form and send it automatically. And their revenue model was they would take 40% of everything they saved you. It's a great offer. Like, what do I have to lose? I'm not doing this today. Right. Right. So it is the same model with Amazon just on a consumer basis. So it's a chatbot,

basically, that is free. And it just logs in your, your Amazon account through an API, which is currently available and monitors to see if something's late or not. And if it's late, it hops on the chat and goes full Karen with a customer associate and saves you money or makes you money back. And it monetizes by taking a percentage of the savings. So whereas 71 pounds was from the shippers perspective, this would be a chat bot for the consumer. Yep. Free to use. Because I've never done it on Amazon.

You and Jess have, obviously. you never talk to anybody. It's literally just a chat bot. No, it's a human over chat. But that's what I mean. Sorry, that's what I mean. You're just chatting with somebody?

Yeah. Yeah. Why would you not make that? There's a fairly big company. I forget the name that does this for like Comcast and AT&T and it will negotiate your bill. They'll say, hey, I'm canceling. No, no, no. And it knows what their script is.

So it uses that against them and saves you money. So this is like already an established business, even for consumers. Why not for Amazon? Well, I mean, it's interesting because if you think about it broadly, a lot of companies make money because of the friction that they introduce in their processes. Strategically introduced friction. We talked about this last week. Healthcare companies. Dude, lots of healthcare companies will just blanketly deny claims to a provider.

Like if I'm a physician and I bill a healthcare company, they'll just get an automatic rejection. And then you have to rebuild it and magically they pay you because they just assume that some percentage of those. physicians aren't going to rebuild that claim. So they keep it, right? Or they're like very technical with what they asked for and maybe something technically was missing. But that's on the healthcare side of things. I read a statistic once that gift cards is like 10 to 20% of all gift cards go unused, which is like there's a whole industry around that. Right. Right. So it's like there are in my mind, the Amazon example is an example of sort of the friction that exists. with, and I don't even know what I would call it, with claiming your full value, basically.

You know what I mean? So that's an interesting framework to think about these opportunities from. I'm picturing a reel that could promote this and that could go viral. You ready? The first part is just clips of Jeff Bezo saying, the customer, our focus is the customer, the customer. We're obsessed about the customer. That's like five seconds.

And then the next five seconds are just screenshots of late, late, like screenshots from Amazon or from your email from Amazon, late, late. we're sorry, we're late, late, late, late, making it seem like it happens a lot more than 10% because they're actually quite good at not being late. Sure, sure. And then it's just like, stop getting screwed over with late Amazon packages. Dispute is on.

There it is. Dispute is on? Dispute is on. It's the worst name. Rapp. Yeah. Going to name cheap. Going to name cheap. I like that.

I like that idea. I think that's an interesting idea. Essentially, you're advocating on behalf of the consumer. It could be for Amazon. It could be for Walmart. more deliveries. It could be probably a service for like disputing credit card transactions as well. Yep. Dude. Okay. Funny story. When I had my first real liquidity event, I didn't buy anything.

I wanted to buy something. I really wanted to buy a Lincoln Aviator because they're freaking super sick cars. But I didn't. I waited. I didn't buy anything for a year, which is kind of the advice that I heard. It was what it was. But I did get one thing. Do you know what it was? You're like, it's kind of the advice that I heard from like the grown woman that lives with me in my house. No, the grown woman that lived with me said, you can't buy anything. So. Not even food. All right.

So the one thing. The one thing that I got was this card. And I know it sounds stupid. American Express for those listening. This was the American Express platinum card. And it's metal. I mean, it feels super cool in your hand. So you had a seven figure.

liquidity event and your one splurge was a credit card with what a $500 annual fee. $750. Okay. And you call me cheap. Anyways, so, which my wife hated. She's like, $750 a year. What are we even getting for that? And I was like, it's a metal card, Jessica.

It's a credit card. Do you hear it? I don't, what do you mean? I don't understand. When I handed it to people. Hello. Hello. You're knocking on the card. When I hand it to people and I go, oh, wow. That's what I'm going for here, dude. Anyways, when I decided, and I'm doing air quotes, when I decided to cancel that card before it auto renewed, I had to go, I had to cancel it.

But I didn't talk to anybody. I freaking spent an hour. I spent an hour canceling the stupid freaking credit card. Nazvin, you got to go full guru and be like, and my hourly rate is way more than $750. I spent probably close to $17,000 just canceling that credit card. Worth of time. Yeah. Yeah. Time equals money. Anyways, because these salespeople are all trained on the same, or whoever it was on the

other end is all trained in the same thing. I'm like, are you sure? We can give you this new promo rate. Oh, we could actually give you this XYZ thing to entice you to stay with us. And it takes forever because they got to like get through their script. If you could have a chat bot that like goes and cancels subscriptions. I think they have that. But what we could do is make, like, some of these, you have to call them and do it.

And the technology is already here where you can use AI, an AI voice, to have that same conversation like we used to only be able to do over chat. So it could just be the same thing, but just phone calls only. I love it. Take a percentage of what they save you. Yeah. Overall, I love the framework, though, of like, okay, what can we automate or use AI to take friction or uncomfortable situations for the consumer?

Because there are a lot of people, you and Jess, you're fine calling up Amazon. Be like, hey, this package was 14 minutes late, right? And whatever, you get some refund. Me, I'm going to be like, nah, that guy's probably having a hard day. That's not worth it. You know what I mean? Yep.

I am a beta. You beta not call yourself that. You're worth more than that. Oh, Chris, thank you. A couple weeks ago, I had, her name is Lauren Rothlisberger on my podcast. And it was a niconomics, for those who don't know, my podcast is called Nicanomics. And she has a company that owns commercial real estate, self-storage.

Ever since that conversation, I have just become, not ever since, for a while now, I become obsessed with commercial real estate. It's a big reason why we bought the park in Waco because I was like, dude, I really want to buy some commercial real estate. Let's get into this space. And everybody talks about how cool it is. And I've always just thought it would be so nice to have a business, like a mailbox business, right? A mailbox business where we just get a check in the mail, triple net lease.

It's taken care of whatever. I always view that as like the dream, so speak. Anyways, so she came on to my podcast and she talked about the space. And I'm just going to like do some overviews. Do you know what like the average net margin is for self storage? 42%. Yeah, it's close. It's supposedly, it's between 30%.

30 and 40%. Okay. It's like the average net margin. Okay. Now, there are some major pros to commercial real estate and I'll list them out. Pro number one, it's a real estate backed asset. So you're not buying a services business that can go down 100% in value because you lose all your customers.

Like there's a limited, they ain't making more real estate. There's a limited supply of real estate and that's what's backing this asset. It's a limited supply. So that helps maintain the value. It's got predictable cash flows. which are amazing. It's got fairly high barriers to entry. Unless you have some capital to put down, you can't just buy a self-storage. It's recurring revenue, right? Everybody in the SMB space loves, ooh, it's a SaaS product. And it's not labor intensive. If you have one of these large

self-storage facilities, you don't have a bunch of labor that you're managing. So there's a million things why it's attractive. You get cash flows over time. The asset appreciates. It's a very safe investment. There are a lot of cons to it, though, right? The cons are very limited upside. In that particular facility, maybe you increase rents, but you're not going to like triple your NLI every single year. It is capital intensive to expand. So if you want to buy other facilities, you've got to put money into buying more real estate. It's slow and it's steady. Getting in is hard, right? Like the first deal is the hardest because you don't really know anything about real estate and you've got to find someone who does know. And if you're going to put $200,000 into a

piece of real estate and you're going to take a million and a half dollar loan, like, that's a big swing for someone who doesn't know anything about the real estate space. Right. So it's hard to get into. And for the most part in these self-storage deals, there are no deals. Right. Like everybody wants to look at it and be like, oh, I want to get it for as cheap as I can because then there's lots of upside. Like, no, people are paying like four or five, six caps for these purchases. And what the cap rate essentially means is that's the rate of return on the asset value. So it's a little bit above just a treasury, which you're getting 5% at, to go buy real estate and self-storage facilities, you're going to purchase them at a 6, 7 cap.

Maybe you'll get a much better cap, but what I'm saying is like by and large, the deals that you're seeing that are brokered are kind of in that space, right? Did I miss anything with the pros and cons of self-storage commercial real estate? No, I think there are still deals out there. Connor, friend of the pod, he buys self-storage only off-market and he gets really, really good cap rates. There's fewer than mobile home and RV park storage, but more than people might think off-market. That's why I want to go with this. A lot of times we're focused on the side hustle.

Oh, I could spend this business up and I'm making $50 grand a year. Or I could do X, Y, Z thing and make $50,000 a pop. But I don't think what people realize is you can do the side hustle with real estate. It doesn't necessarily produce the same amount of consistent cash flows. But what I mean by that is Lauren has like a very predictable process. And basically what she's done is she's become an expert in her local market. She only buys in her local market. So what she's saying is like, I know where the good areas are, the bad areas are.

I know what a good price is and what a bad price is. I know what market is. I also know what people will pay. I know what developments are being put in place around them. Like she knows it so well that she's able to take a bigger swing, maybe than she otherwise would have, to buy something that isn't necessarily a deal. So she becomes an expert in her local market.

And then the first property that she buys was with her money, but also she went and raised some outside investor money and she did a seller note. But step three, she does some value ad, she raised rents, and then she ended up selling that property and rolling it into another property, right? But the piece I'm trying to take from here is like, I think we spend a lot of time looking for the side hustle and you can do that. But I also think that commercial real estate is a proven way to make anybody a millionaire over time. And if you just started looking in your local market for deals and familiarizing yourself with deals, then when the right deal comes across your business, plate, you can pounce on it and start getting into the real estate game. The reason I wanted to

bring this up is because I wanted to talk to you about how would you source off market deals? Because I'm a big believer in get your experience on market and then buy off market because you're going to get a better deal. You'll probably get better terms with the seller. You'll probably have a better chance of actually closing than if you go on market. Otherwise, you've got to work through a broker, etc. But I also don't think you should go off market without having experience first because that's just a recipe for disaster. So what would you do or how would you go about looking for that first piece of commercial real estate off market? I think the part about like looking in your local market is one of the most important things that you said there. That's just like the big risk is that

you can completely screw something up because you're looking at something on a spreadsheet and you're like, oh, wow, this deal over here in Washington is killer deal. Look at these numbers, but you might not know about zoning regulation changes or a new employer coming or leaving town, whereas every single local in that area will know those things. So I can't emphasize that enough. I don't think it has to be your local market. I think preferably it is, but it has to be the same market, your first deal at least. Or a market that you know better than average.

Yeah. It's just too big of a risk, right? Especially if you're trying to do it as a quote-unquote side hustle. Once you've got some experience under your belt, maybe you go into other markets that you don't know as well. Because you know what risks to look for. But yeah, local market. Sorry. Go ahead.

I think the biggest benefit of buying on market is you've got a third party, hopefully one that you trust, that like blesses the deal. Maybe it's the listing broker. Maybe it's your buying broker. But at least you have someone in the industry. This isn't always the case. there are a lot of terrible brokers out there. Someone in the industry putting his reputation, his or her reputation on a deal. So you can at least feel safe knowing, okay, this is listed on the market. Other people are looking at it. I'm not crazy. Whereas if you go find an off market

property, you might have just called that person on the day that they found out that they had a massive environmental issue. And they're very much excited about selling and you don't know the questions to ask. Whereas if a broker was listing that, he would know. So for your first deal, on market makes a lot of sense. How would I find an off market deal? Like driving for dollars is by far the least efficient, but most effective, which is just driving around, finding a piece of real estate and talking to the owner face to face. There's always a tradeoff between efficiency and effectiveness, driving for dollars.

You can't get any more efficient than talking to someone face to face. But it's, sorry, effective, but it's very, very inefficient, time consuming. on the complete other end of the spectrum, effective, most efficient is texting people, just saying, hey, like, I love your property. I'm here in the area. Do you have any interest in selling? And then getting them on the call as soon as possible and then getting them in person as soon as possible.

That's like both ends of the spectrum there. And I've actually started doing this is just getting to know people who, let's say, they're at my church or my kid's school and their parents of other kids at the kid's school. And I hear that they're in real estate or they're in commercial real estate. state, I just start getting to know them and asking them questions and just saying like, hey, I'm open. If you ever find a deal in this area, you've got to get your reps in, even going and talking to brokers and just understanding what is a good cap rate, what do I look at and do diligence,

what makes sense? When the right deal actually does come your way, you're going to screw it up. You're going to think, oh, I got to get a better price. Oh, I got to get better terms. Oh, I got to get whatever because you don't actually know what market is. And I see so many first-time buyers, so many first-time buyers, F up because they just don't know how the deal process works. Like they think something's way more important than it actually is because they just don't

understand it. They're scared. They don't know all the risks or all of the non-risk that look like risks that actually go into the deal process. So I think just getting started and starting to look and just saying, okay, a year from now, I'm going to buy my first property. But this first year, I'm just getting my reps in. I'm just getting my reps in.

Because if you can get into that, a self-storage facility and you can get into these with $100,000 down, like, I'm not saying it's, you. easy to get $100,000, but given enough time and enough self-discipline, you can get $100,000. And once you get into that first one and it's cash flowing, then you start building equity. Then you can take the equity from that and roll it into another one. Again, it's not going to make you a million dollars overnight, but it is the most proven and consistent way to make you a millionaire over time. Yeah.

The hard part is like the listener base of this, myself included, because I listen to my own podcast, is the opposite, bias for action. Let's start now. Let's sell it before you have it. Let's buy the domain name right this second. That's the opposite advice of what is needful in commercial real estate. If you want to get into commercial real estate like I do, you can still have a bias for action. Bias for action is just starting to talk to people, like getting to a deal, like understanding the process, right?

It's hard to direct that the right way because I think most people, like, they translate that to me. I want to buy a park or. Yeah, because there's not the same deal as soon as I can. Yeah, yeah, yeah. They're not the same dope. I mean hit and like seeing the results. Yeah. So, okay, that was it.

All right, what did you think? If you end up starting that electronics recycling slash fundraiser business, please let us know and we will feature you on the show. We want to know how it goes. Share it with friend. See you later.