Mark: Today on PowerTips Unscripted, we talked to Chris Landis, owner of Landis Architects Builders in Washington, DC. We are all so busy running our businesses that we often don’t realize there are other potential revenue generating investments that align with our present and future business needs. Chris, thanks. You should consider helping businesses that lease their office space as an added revenue stream.

Mark: And he’s going to explain this innovative revenue source in just a minute.

Chris: But be the ball. Stay.

Victoria: Do you understand the words that are coming out of my mind? Hi, I’m Victoria Downing and welcome to PowerTips Unscripted where we talk about tips, tactics and techniques to help you build a strong, profitable remodeling company. And I’m here with my co-host, Mark Harari.

Mark: Hidey ho. How are you?

Victoria: I’m great. How about yourself?

Mark: I’m doing pretty good considering the day we’re having.

Victoria: Yeah, it’s been a little fraught with error, hasn’t it?

Mark: A little bit. So hopefully this gets a little better.

Victoria: Yeah. You know, I’m kind of excited about today’s episode because we’re going to be talking about diversifying your one’s services.

Mark: I love, love, love thinking outside of the box. And getting creative. And I think this is a pretty cool idea.

Victoria: Yeah. So let’s get into it, shall we?

Chris: Sure.

Victoria: Our guest today is Chris Landis. He’s a founder of Landis Architects Builders in Washington, DC. Chris has been a long time member of our roundtables program, and he’s super generous and shares, and this is his second appearance on PowerTips Unscripted. Plus, he’s been a presenter at our Building and Effective Design Process Master class. So he’s he’s just a super generous guy.

Victoria: And we’re delighted to have him and welcome Chris.

Chris: Thank you guys.

Victoria: Hey, it’s great having your back. So I appreciate you taking the time and energy to be here with us. Now you want to talk today a little bit about a unique diversification that these folks can add to their, quiver of services. Why don’t you tell me a little? Just to give you a in a nutshell, what’s this concept?

Victoria: What’s this diversification?

Chris: Well, I mean, really a start. It starts organically. And I think a lot of your members are probably already involved in something like this or doing something like this. Really? Initially it started with our need for commercial space. Initially, my brother was working out of his basement and had four people in his basement. I had nine people in my attic and and our wives were getting, you know, pretty fed up with that, that routine, you know, and they told us, you know, we needed to be out of the house.

Chris: And so we went around and searched around for a commercial space that we could occupy and renovate or do whatever. And we found something. And that’s a longer story, and I can get into more of the details. But we ultimately ended up buying an old warehouse and then realizing we couldn’t add a story. So we ended up tearing it down and we built a three story building.

Chris: We had 60% of the space was actually not needed by us. We could rent it out. So we did that and we we occupied the top floor 5000ft². Anyway, the building is a revenue generator. It also is appreciating, it hasn’t appreciated greatly. At the end of the day, it will be as valuable, if not more valuable than our business.

Chris: So so that’s an opportunity for people out there, not only your members, but then you can you can sell that whole experience and all that knowledge to other businesses who are busy doing their business and don’t know about, you know, how much space they’re going to need or what it cost to renovate or renovating or getting permit or any of that that, that part of it.

Chris: And in the past, and we’re in DC, luckily. But we have a lot of we have a lot of international companies and national companies that want presence in DC, whether it’s a lobby shop downtown, they buy a townhouse downtown, and they have two bedrooms on the top of their corporate executives. They have 1 or 2 floors. The first floor usually is a, is a is an expanded river, revamped kitchen and then a large meeting space so they can have board meetings.

Chris: They can have other lobbyists come over there. They can have presentations on the second floor. They might have a couple staff members. And then on the top they have executive apartments that their chief executive can fly in and do something instead of staying in a hotel.

Victoria: So really, you’re talking about two different ways to increase revenue in a company, one, by purchasing your own building for your business, and two, using the knowledge that you gained in doing that to offer to other businesses who might want to do the same thing. That right?

Chris: Absolutely. Well, let’s attack those.

Victoria: One at a time. So you folks decided to purchase your own building and not only just for your business, but to purchase or build a building that could accommodate tenants as well. Why did you decide to go that route versus the less risky, I would think are less expensive? Perhaps idea of just renting a leasing space?

Chris: Well, I mean, we were using our houses, so that’s obviously a great way to start. It’s the least overhead. You, you know, you commute upstairs. But turnover. So that’s the best way to do things. But, you know, at a certain point and a certain growth, you get, you, you can no longer do that. And, in a lot of neighborhoods, it’s not necessarily legal after you get 1 or 2 people in your house.

Chris: So, you got to think of other alternatives. The reason we, we went for the expanded, version is because obviously, if you have any growth in mind, you will need space to grow into. And you don’t want to rent that space necessarily to start with. But in five years, if you grow it, you know, 10% year, you need 50% more space.

Chris: If you grow at 20%, you need 100% more space in five years. And a lot of, you know, you look at the trajectory of the other a lot of these companies out there, these dot coms, there are all these people that I mean, they’re growing by leaps and bounds. So if you do that, you can take that space back in 2 to 3 years.

Chris: If it’s leased out, you could we could take these other floors in our building if we needed them. And when we need them. Okay.

Victoria: All right. So how is it, you know, when you purchased this and built it, did you do it under a separate company?

Chris: Absolutely. You want to set it up as an LLC?

Victoria: Why is that?

Chris: Well, two reasons. One is liability. So the LLC is a company. It’s not connected to your your your company. It’s a separate company. So if a corp if they pierce your corporate veil in terms of your remodeling company or construction company, they can’t get to the LLC that owns the property. So it’s a separate part of money. And the risk there’s no they can’t get into that into your other pocket.

Victoria: So you and your brother own that separately.

Chris: Absolutely.

Victoria: Okay. And then your company pays rent to the LLC.

Chris: Absolutely.

Victoria: Okay. Now, you know, I know this is kind of a little bit tricky legally, but market rate slightly above market rate. What what’s a what’s a allowed.

Chris: Well, I mean really market rate is is what’s allowed. Obviously there’s a lot of you know, there’s a certain amount of gray area around that. We pay ourselves what we think is market rate. Obviously it goes from one pocket to the other. So it really the only reason it might matter is, you know, if you have an investment in real estate that’s passive income tax at a different rate than active income is not, so there are some games to be played there.

Chris: Tax not games, but I mean tax strategies, let’s put it that way. Yes.

Victoria: Well okay. Great. All right. So when you were in the midst of doing all this, what are like the top two lessons you learned, things that you then put into place later on in offering these services to others? The top two things.

Chris: Well, one is that it’s a it’s an asset that appreciates. Not only do you get depreciation on the building, which, you know, takes place over 27.5 years, but you control it. You control your space. It’s it’s an asset. It’s a it’s an employee attractor. If you have nice office space and a nice place to work, and you’re only going to make that kind of investment if you own it.

Chris: Generally it’s a, it’s a, it’s a game changer there. Wow. So it’s a it’s a, it’s a, it’s an employee magnet. And it’s, it’s also a customer magnet because if your place looks good and professional, I mean, obviously it’s all about professionalism. At the end of the day and appearances.

Victoria: Yeah. And you know you’re building and your offices are very, very attractive clean, modern, contemporary and beautiful and I also know that you do high end projects and you’re not, one of the people that are trying to compete on price when you bring the service to the table and your office really reflects that. So I could I could see how that really is a good fit.

Victoria: Okay. So now when you’re thinking about offering the services of analyzing properties and, and building it out for an office to other businesses, I imagine you’re using some of those points that you just made in your sales pitch to them.

Chris: Absolutely. And it really depends on where they where they come in. I would say most of the people that have approached us, you know, already have a building in mind. They’ve already done the due diligence on that. And they employed a real estate broker. They call property, and now they have a program, but now they want to renovate, do the drawings, get permits, and then renovate their space.

Chris: So we’ve done that for other other corporation or corporate entities.

Victoria: So how is it different than remodeling for homeowners?

Chris: It really is not. I mean, a lot of these are residential properties that are there. They’re converted into business properties or the zoning has changed or they’re allowed a certain, commercial use. So in that sense, it’s really not. The only component that you could add on is, first of all, you’d have to change your marketing strategy and go after some businesses because normally you’re just trying to target homeowners in the demographic that you’re interested in.

Chris: But now you can go after small businesses or businesses that are growing. And that’s something that, you know, we need to focus on. And I need to, I need to develop that further. Because then you can you can you could offer, you know, research the analysis. You can hook up with a bank or a real estate broker who are all very happy to give loans and stuff.

Chris: And so show the small growing business how this is, a really a great idea. And good for their bottom line.

Victoria: Okay, great. So but usually if you’ve when you’re developing this concept. Right, if you were another remodeler and you were thinking about developing this concept, is it that you would go to the real estate agents and say, if you have somebody is looking at a property, we can help them come up with the game plan for how to renovate it and make it really work for them.

Victoria: Or would you go directly to the small businesses that are leasing? However you’d find those and market directly to them that buying is the better way to go and start in front of the top.

Chris: Right? Well, you know, we already go to real estate agents and brokers for residential. We do much and learn as we do breakfast. And we have a whole presentation to real estate agents in terms of how we can help them sell and enable their clients. So this is just a twist on that, really. You’re already going you’re going to go more to the commercial agent broker as opposed to the residential.

Victoria: Okay. So it’s just a different it’s a different audience within the real estate world.

Chris: Okay. I know it is. People who do commercial tend to be a separate breed and they specialize in that.

Victoria: You know, I think that’s kind of interesting because I bet there’s a ton of our listeners right now who are not going after the real estate agents for the residential side, but if they were already that have those contacts and be able to make that flip over to the commercial side pretty easily, I would think.

Chris: Absolutely, because that’s a whole nother podcast.

Victoria: Yes, exactly. Now talk to me a little bit about the difference in money flow. Like, you know, when I remodel or when a homeowner is going to do remodeling, there’s a certain way that the money, they go out, mostly people are doing financing it themselves and yada yada. Is it different in the commercial world with small businesses? Are they getting is a bank financed?

Victoria: Are the payments delayed? You can you work with their money upfront?

Chris: Absolutely. You’re going to develop a spreadsheet. Obviously they’re paying rent somewhere. So you know that their their rent is available to service debt. And so you just have you just have to work backwards as to how much they can borrow. Then they may have savings. They may have, you know, you need to talk to, to them and their bank or if they’re expanding, they’re going to have to put money into their company to expand.

Chris: You’re going to have to get that from somewhere too. So why not expand in your own space for all the reasons that I’ve mentioned. So this is the discussion, and this is where you create a spreadsheet and you talk about all the different costs. But obviously at the end of the day, it’s about what their monthly not is going to be just like a homeowner, what their rent is going to be, what their and then you’re going to show them, you know, their, their appreciation or what, what in 30 years are going to end up with on their books.

Victoria: So in that example, you were literally started with the small business owner and hitting them first with the pitch that you should be owning your own building instead of leasing. Well, we can show you why exactly. And then you hook them up with a real estate, a commercial real estate agent or broker who will help them find the appropriate property with the goal that once this property is purchased, you continue to be part of that loop, and you’re the one who gets the renovation.

Chris: And, and, and, and a bank or two. And we’re doing the spreadsheets and we’ve, we’ve done a pre analysis of how many employees they have, how much space they need, what type of office spaces they need, what functions they need in that space. So we’re coming up with a pro forma sort of what the real estate agent’s going to be searching for, because we need to know how many square feet we need, know how many parking spaces.

Chris: We need to know all that information that’s going to make them really happy about their space and their employees. Really happy.

Mark: Chris, aside from real estate agents and such, how else do you reach these potential business owners? Do you do luncheon learns or workshops or anything like that?

Chris: I know we have. We’ve been sort of very passive waiting for this stuff to come in across the fence. And like I said, we’ve done a number of trade organizations, corporate lobbying offices, things like that. But, I, I am gearing up to go more after this, this, this thing. And, you know, one of the things that we do in marketing is we write, we we write, we get a list of all the new home owners that are purchased a home every week, and we do a direct mailing.

Chris: We could do the same thing with businesses that are growing or profitable or whatever. There’s there’s there’s there’s lists like that available.

Victoria: No, Chris, it sounds like there’s a lot of different kind of expertise that’s needed in the initial outlays. Like you were talking about how much space do they need? What are the functions they need, how much, how many employees will they need as they grow? There’s a lot of expertise in there.

Chris: What there is.

Victoria: Is it that.

Chris: Yeah, I mean, obviously it’s one of these things you can build it and they will come. So what I mean by that is to have the model, if you’ve done a few, if you’ve done your own headquarters or you’ve done a few other corporate offices, you’re going to have a category on your website, in your portfolio page, and you’re going to show that you can do that, and then people are going to find you that way, okay?

Chris: They’re going to say, hey, you know what? I saw you do houses and I need something for my house, but I also have a company over here, and I want to I want to expand. And I see you could do that too. There’s a branding thing there. You don’t want to confuse homeowners, you know, with too much commercial.

Chris: They’ll think you just do commercial. You may want to create a different website, a different company name, all that kind of stuff. It’s sort of like the Toyota and the Lexus. I mean, they’re very different. Anyway, you got to you got to think all that stuff through. Okay.

Victoria: All right.

Chris: Great.

Victoria: What would be what do you think would be is are there any standards for like markup or margin that you’d be looking forward to project that. Is that different than a residential property?

Chris: You know, I’ll tell you, the truth is we’ve gotten the margins to, you know, e you promulgate for residential. We’ve gotten those in commercial.

Victoria: All right. That’s awesome. Glad to hear that. It’s just and I know you, do a presentation during our, building an effective design process. And you are all about holding that margin in selling your value and not backing down. So I could see you’re doing that with this as well.

Chris: Well, also, you know, on the analysis front end, you’re going to you’re going to have fees in there. Obviously there’s a lot of times that, you know, either with a real estate broker or searching for the right place coming up with these options. So that’s like that’s like a feasibility study or a master plan. And you’re, you know, you’re just that’s what you’re doing.

Chris: They’re they’re signing on for some, you know, it’s just like a tax account for a, a lawyer. They’re signing up for some professional services and they’ve got to be willing to pay for it. And it’s you know, it’s it can be a huge value to them down the road.

Mark: Chris, have you had any upsell cross sales opportunities, with past clients that were potentially business owners as well?

Chris: You know, I need to think about that one would, yeah. I can’t think of anything right off the bat.

Mark: It seems like for all of our listeners out there, that would be a good opportunity if they want to try to do this, to go back to their past log of of past clients and any that are business owners and such, they could approach them about an opportunity like this.

Chris: Absolutely. I mean, they’re all, you know, they’re all professionals. They work for somebody or they’re the head of their own little company. And you know what it’s like. It’s like you come behind so many people and and you say, well, who did you use last? And then they say, well, I use this guy, but I wasn’t either that happy with them or I didn’t ask him because I didn’t think he could do this more complicated job.

Chris: Well, hey, I can do your office, I can, I can expand your world. But they don’t they don’t associate it that way because you’re there to do a new kitchen for them, or you’re there to do an addition on the back of their house.

Victoria: Right. I think I think this is really a great idea. You know, we had that discussion, and I know it takes a lot of it does take a lot of research and a lot of thought when you’re going to be thinking about buying a building for yourself. But so if you if the numbers can work for you, I know it is a huge, wealth builder for a lot of our members and other business owners.

Chris: So you could have bought a building, Victoria, and you could you could be 20 years into it now and ten years away from owning it. And I could it could be worth $3 million. And basically, bingo, there’s your retirement plan.

Victoria: I’m kicking myself, Chris. I’m kicking myself.

Chris: Well, thank.

Victoria: You so much for this. That was really a really fascinating stuff. And I’m sure that. Will you be willing to answer some questions if any of our listeners have specific questions for you?

Chris: Absolutely. Free.

Mark: And, Chris, are you willing to answer some questions for me right now?

Chris: Fire away.

Mark: Oh.

Chris: And now here’s the Remodelers advantage lightning round. It’s a tri.

Mark: It’s put 60s on the clock. What’s your favorite business book and why?

Chris: Great Game of Business is certainly one of them. It’s about showing your employees and the money, and it’s like, you know, the analogy is if you go to a baseball game, you want to know what the score as well. So many companies, you go to the baseball game and nobody knows what the score is. So how can you expect them to do better.

Mark: If you were the owner of a remodeling company, what do you think you’d be doing?

Chris: Well, in this present environment, I could be president of the United States and do a pretty good job. I think. I don’t know.

Victoria: If I want that.

Chris: Man who.

Mark: What do you not very good at?

Chris: Well, according to my wife, it’s many things.

Mark: Your room, your desk or your car. Which do you clean first?

Chris: My car.

Mark: What’s your biggest pet peeve?

Chris: My biggest pet peeves is people forgetting about the processes that we’ve already established.

Mark: How many basketballs would fit in your office?

Chris: Oh, probably about a thousand.

Victoria: That’s nice. This big, spacious office. Well, so, Chris, this has been awesome. Thank you for sharing your thoughts on this diversification. And I’m all about, the the recommendation of people trying to buy their own space if they can work for them in their market and offering those services to others. It’s a great idea. I think, you know, diversification is an important way to keep the company stable, safe.

Victoria: And I think this is, this will makes a lot of sense. So thank you very much.

Chris: You’re welcome.

Victoria: Now, before you go, I want you to share with our listening audience your five words of wisdom and why they resonate with you.

Chris: Well, I always liked time serves no sale.

Victoria: Okay. Forward to wisdom in your case. And why do those resonate with you?

Chris: Well, how many times have you, you know, stressed out the process and somebody has either gone somewhere else or decided to do something else with their money?

Victoria: So that’s right. So you’re saying make it quick, get it in the bin.

Chris: And always leave the ball in their court. You know, make make sure that they need to get back to you with an answer. All right. Ask for the business. Don’t just say hem and haw and show up and throw up and do all that kind of good stuff and give them a lot of data that they don’t really know how to win their way through.

Chris: Okay.

Victoria: Perfect. That was good. Thank you so much, Chris. We would love to have you on again, and I very much appreciate it and look forward to seeing you at our next Design Process Masterclass coming up later this year.

Chris: Looking forward to it.

Victoria: That was really interesting. You know, I have always thought that owning one’s own building was a fabulous way to build wealth.

Mark: It’s a very good idea. I wonder if you ever had anybody tell you to do that before?

Victoria: Yeah. As I said to Chris, I’m kicking myself. I mean, I wish we would have purchased and it just seems like such a daunting thing at the time. But you know what? If I would have had somebody like Landis there to help me or some of our other members to help me analyze it through? I would have cut down on the stress.

Victoria: And, you know, by now, like Chris said, we could be 30 years into owning a building like Altium.

Mark: Oh, listen to Mark Healthy and well, hopefully.

Victoria: Our members will listen to Chris.

Mark: Yes.

Victoria: And think about it. And, you know, again, once you build or remodel your own property, would have learned so much about the design and space needs and all that, that helping other business owners seems like a no brainer.

Mark: You know what? I really liked that he, so glad he mentioned was the idea that, you if you’re going to do this or you’re offering commercial work, you should at minimum maybe give it a different brand and possibly even a, you know, its own website. I just I see it so often on websites that I’m asked to review, especially when I’m out doing well, when I used to do speaking engagements and I do my blue tape walkthrough, you know, so many websites I see right there on the homepage.

Mark: Click here for commercial work, click here for residential work. And it’s just you don’t connect with anybody. People think you’re just trying to be everything to everyone. And I just think it’s a huge mistake. It’s a completely different audience.

Victoria: Yes, it is.

Mark: So, so I love that he mentioned the branding challenges involved with that. And yes, I think if you’re going to do it, have a different website for it.

Victoria: You know, I think that so many of our members, I have just the skills that would be perfect for it. And again I diversifying one services helps especially in just uncertain times or when a crisis hits I you know I remember when the last downturn came and those people that had some diverse some diverse services to offer made it through nicely.

Victoria: Same things happen. And now when this all hit back in March and people are starting to look at what they could do, there are a number of people that jumped on things like a new, exterior remodeling division. Right? This could have been a great one too.

Mark: So this is very good stuff, and I’m really glad. And Chris is doing a design, masterclass for us. Right?

Victoria: Yes, he did the one we did earlier in the year. We’re going to be doing another one later this year. Yeah.

Mark: It’s not scheduled yet is it? No. Okay. Well yeah. Well you all have to keep your ears open for that. So yeah.

Victoria: It’s we go through their whole process with us.

Mark: That’s great. Good. Well we want to really thank Chris. He’s super busy right now. He’s got a lot of balls in the air. And, to take the time out to share this great innovative idea with our listening audience is is very kind of him. Yes. And of course, we want to thank you for listening week in and week out.

Mark: I am Mark Harari.

Victoria: And I’m Victoria Downing. See you next week. This has been another episode of PowerTips Unscripted the Remodelers Guide to Business. Visit w w w dot Remodelers advantage.com to learn more about roundtables. Our world class peer advisory program. There you can also find information about our business consulting services, upcoming live events, and much more. And finally, don’t forget to subscribe to the show and comment on iTunes.