Martial Arts Professional Magazine

You may never thought you could play and win the commercial real estate game, but you can with the help of Chris Hurn and Mercantile Commercial Capital. His company specializes in creating opportunities for small business owners, including martial arts school owners, to purchase their buildings.

Mr. Hurn explains why a commercial real estate portfolio may be the perfect complement to your martial arts school operations. Real estate ownership can lead to a strong and solid financial base, so you can dramatically grow your school, open multiple schools and secure your financial future.

This interview is the just the beginning of what Mr. Hurn can do for you. There’s much more to learn, so register for the 2008 NAPMA Extreme Success Academy today at ExtremeSuccessAcademy.com.

It certainly seems that his company, given its direction and accomplishments, is a perfect fit for the martial arts industry and our members. That is why we have extended an invitation to Chris, which he has graciously accepted, to speak at the 2008 NAPMA Extreme Success Academy, Sept. 25 - 28, in Clearwater, Florida.

NAPMA members are encouraged to register for the Academy at ExtremeSuccessAcademy.com. If you’re not a member, register to attend the Extreme Success Academy, and take advantage of all the benefits offered by a NAPMA membership with our free 60-day trial membership. Go to ExtremeSuccessAcademy.com.

During his presentation at the Extreme Success Academy, Chris will be expanding on the concepts we are about to discuss in this interview: the practical steps of financing the purchase of commercial property as well as how to make those purchases to create long-term wealth and a retirement plan for you.

Milroy: I met Chris Hurn during 2007 at a local business mastermind meeting in Orlando, Florida. NAPMA and our members are very excited about what he brings to the table and I’m glad to be able to work more closely with Chris.

That leads to my first question, Chris, would you please explain to our readers what you mean by wealth creation for small businesses?

Hurn: Let me start by saying that we love to work with entrepreneurs and small business owners. We’re humbled by their enthusiasm, excitement and passion for what they’re doing, and martial artists are some of most passionate, since they are changing lives.

We’ve worked with a few school owners during the years, but we know we can help create some additional wealth for martial art school owners faster and easier and, candidly, even hassle-free, by utilizing the services that we provide. That’s the basis of this interview and my presentation at the Extreme Success Academy in September.

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• Register by June 14, 2008, at the current Early-Bird rate - 45% minimum members’ discount!
• Go to ExtremeSuccessAcademy.com NOW for Early registration discounts.
• Your registration fee includes a FREE Staff Training Session on Friday, September 26.
• Register for the NEW A to Z Blueprint Seminar to be held Thursday, Sept. 25 - also at a huge discount!
• Register a spouse, partner or key employee at half your tuition (maximum of two) for both the Extreme Success Academy and the A to Z Blueprint Seminar (separate tuitions).
• Two equal monthly payments (July and August) if your tuition totals more than $500.
• Discounted room rates for NAPMA members, but they are limited, so reserve your room today!
• Attend a special reception for the first 100 members to enroll: meet some of your favorite martial arts celebrities and be photographed with them.

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Many people start a business with the expectation that it will create wealth, and that it is certainly one way to achieve that end. I think there is another or additional way that is simple and easy for a martial arts school owner or any small businessperson: owning commercial property. This could be the property his or her business currently occupies, a new, existing building or building a new one.

The first secret I teach business owners is to separate the ownership of their business from any commercial real estate they may purchase and own. If you decide to sell your business or close it, then you still retain that real estate as an asset that could be part of your retirement strategy.

Unfortunately, recent statistics reveal that 61% of small business owners in America have saved zero for their retirement, but by retaining ownership of the real estate, you can lease it to whoever bought your business, or lease it on the open market.

The ultimate goal is to give you the opportunity to create wealth for yourself, instead of a landlord.

Milroy: I would argue that probably more than 61% of martial arts school owners don’t have a retirement plan. There are many schools that gross less than $300,000 or $400,000 a year, and probably net $30,000 to $50,000, maybe $60,000, a year, and that’s being liberal. It’s very difficult to create much wealth from those numbers.

Not to be condescending to the industry, but certainly many martial artists, just like many dance school owners or chiropractors, for example, open businesses not because they wanted to create a great livelihood or wealth, but because they love to practice their professions. Most school owners are martial artists and considered it a hobby for many years; it was only natural to evolve from hobbyist to school owner.

I think we should emphasize that being able to own commercial property has absolutely no bearing on their role as instructors or impact on the quality of their students. The purpose is to give schools owner another method to create some long-term wealth and a retirement fund.

Your company’s creed is “Fulfilling dreams with smarter financing.” Explain what you mean by “smarter financing” and what it means for martial arts school owners?

Hurn: Let’s start with “fulfilling dreams.” My experience has told me that many small business owners have defied the odds to open their businesses. They cast aside the suggestions and advice of their families and friends who said they were crazy to start their own businesses, but they did it anyway.

Probably, the first American dream we have beaten into our heads is home ownership. It just makes sense to pay “rent” to you every month, which is really a savings account that is building equity for the long-term.

The second American dream is to be your own boss, to work for yourself. For many, if not most, martial arts school owners that is one of the driving forces. They didn’t want to work for others; they wanted to be the instructor and the boss.

I propose that the third American dream, which is not given much attention by many people other than myself, is to own commercial real estate. After having been in business for three to five years, a light bulb suddenly goes off for astute business owners that the rent they pay every month is making the landlord wealthy. Those business owners could be using that monthly payment to make themselves wealthy, instead.

This can be particularly significant for martial arts school owners because they must have a facility, a school, to teach classes. Some do teach in their homes, but, depending on their municipalities, they could be violating building codes, zoning ordinances, health regulations and their residential insurance policies.

You know the scenario in your industry: a martial artist decides to open a school, so he rents space in a retail strip center or mall. This works to a degree, but if he owned a freestanding building, he would add substantial value to his business. His business is more prominent on the street; he has a better facility to improve student quality, which maximizes retention; and the public just naturally gravitates to that type of commercial property.

Owning commercial property, and especially the building where your business is located, is a smart way to fulfill all your dreams. You started a business, large or small, for a purpose - personal, professional and/or philanthropic - and making business smart choices will help you live and share your passion for martial arts with more people.

The “smarter financing” portion of our creed refers to the specialized services we provide to help business owners realize the dream of commercial property ownership. We’re considered America’s experts at what we call a smart choice commercial loan.

Many of your readers have been discouraged from even considering the ownership of commercial real estate because if they walked into a typical commercial banker’s offices tomorrow and say that they want to buy the property where their business are located, then 99.9% of them will be told they need a 20 to 25% down payment. Most small business owners don’t have access to that much cash.

A Short History of a Small Business Banker

Mercantile Commercial Capital, located in Orlando, Florida, was founded in February 2003, as a licensed mortgage lender, specializing in the SBA 504 Loan Program. Based on their combined experience in the lending, real estate and consulting fields, the company’s founders felt there was a strong need for such a beneficial loan program within the commercial real estate industry.

The company was expressly created to focus exclusively on providing 90% loan-to-cost financing for small to mid-sized business owners to purchase or construct commercial real estate. With this type of lending, business owners can obtain the highest cash-on-cash return available, with financing that is cash flow- and capital-sensitive to their businesses.

Having funded more than $323 million dollars to more than 188 business owners and created many jobs in the process, Mercantile Commercial Capital has won numerous awards as a top employer and top mortgage-lending producer in Central Florida. The U.S. Small Business Administration’s (SBA) also recognized it as the Financial Services Champion of the Year for both Florida and the Southeast; and the National Association of Development Companies’ (NADCO) named MCC Bankers of the Year.

Inc. Magazine named Mercantile Commercial Capital as one of the 500 fasting growing companies in America.

What makes my company unique is that only a 10% down payment of the total project amount is required to finance property. What makes this a smart choice is the concept of equity savings, which the biggest real estate developers and owners, such as Donald Trump, use as the basis of their decisions about buying property. I would think that any strategy that works for Donald Trump is worth consideration by small business owners.

Equity savings simply means that you put as little cash down as possible to maximize the return on your available cash. Let’s say you give that commercial banker $100,000 in cash, as a 20% down payment, to buy a $500,000 building (or even $30,000 to buy a $150,000 building). That money is now sitting in your newly purchased building, appreciating at 3-4% per year, which is the historical average for commercial property. The smart businessperson realizes, however, that he or she could receive a much greater percentage return on that cash somewhere else.

“I think there is another or additional way [to create wealth] that is simple and easy for a martial arts school owner or any small businessperson: owning commercial property.”

Milroy: I think it is important for our readers to understand that your system was developed to make the process simple, easy and painless and that you can offer a financing package that amortizes the property for a much longer term than a local bank.

It’s a completely different way to approach a commercial real estate project; this isn’t just another bank. Chris, please explain your system in more detail, in terms of the cost of capitalization, etc.

Hurn: As I stated, our down payment requirement is usually half to one-third of what an ordinary bank would require. That’s a critical distinction because capital is the lifeblood of every small business, so that is the first obvious reason why small business owners are excited about our system.

The second difference between a typical bank and us is that we finance loan to cost, not loan to value. Let me explain those terms.

In most cases, an ordinary bank will loan you money on the lesser of two ways to determine the value of the property: the purchase price or appraised value. For example, someone decides to buy a building worth one million dollars, but he can purchase it for $800,000.

That’s a great deal, but there isn’t a bank in this country that will provide financing based on the million-dollar value; therefore, you have embedded equity in your project. You can probably obtain hard money loans on the million, or even seller financing, but most banks finance on the lesser amount: purchase price or appraised value, which translates into 75-80% financing.

We calculate the financing, based on the total project cost. We consider not only the purchase price, but also any renovations, in the case of ground-up construction; land plus the hard construction costs; the soft construction costs; permit, license, architectural and engineering fees; furniture, fixtures and equipment (FF&E); and the closing cost. We total all those numbers and generally finance 90% loan to cost.

There are two exceptions. First, if you were a true start-up business, then we would ask for an extra 5% down. The second exception is a special purpose property; but a typical martial arts school is basically a box with a roof, similar to a warehouse property, which gives us no pause to finance that kind of project.

Again, that 90% financing of loan to cost makes a big difference because it really means that your out-of-pocket cash, or down payment and expenses, is minimized like no other bank loan.

The third primary difference between most banks and Mercantile Commercial Capital is the loan terms. Generally, we offer a bit longer loan term. Most community banks will do a 15- or 20-year amortization on a property. This is very different than the residential market. Too many people, and probably many of your readers, want to compare their home mortgage to commercial property financing. These are very different animals.

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“The first secret I teach business owners is to separate the ownership of their business from any commercial real estate they may purchase and own.”

The bottom line is that the residential housing market is much more fluid and larger than the commercial market, so residential loans are considered less of a risk, even during the current economic climate.

Bankers must always consider the worst-case scenario, which is the mortgagee can’t make the payment, so the bank must take the house or commercial property. That’s why a commercial property has a bit higher interest rate than residential loans, usually a percentage point to a point and a half, and why residential loans have a bit longer terms.

It’s very common to obtain a 30-year amortization on a home mortgage; some states even offer 40-year amortizations. You generally don’t see that on the commercial side. It’s also why it’s very common, until recently, to receive 100% financing for home mortgages, but it’s uncommon for commercial loans. The highest advance rate you’ll ever see is 90% loan to cost, like what we do, and that’s because of the perceived risk factor.

Commercial banks will only offer 15 to 20 years amortization; and, today, that is more likely to be only 15 years because they’re very focused on resolving the many problems with their residential loans, so they don’t have much of an appetite for more commercial loans.

To our benefit, that’s why we’re having our best quarter ever, and we’re so busy. We’re actually receiving referrals from other banks with which we’ve competed in the past. They still want to serve their commercial clients, but they can’t because of so much focus on their residential loans.

Whereas, we are offering fully amortized terms of 20- to 25-year, which means no balloon payments, while many commercial banks are re-instituting those types of payments. A balloon payment requires that the principal balance of the loan is due after 3, 5, 7 or 10 years. Those with balloon payments find that they must refinance the balance, with additional costs, because they can’t make the payment.

There’s no guarantee that the bank will consider your type of business a reasonable risk if or when you must refinance. I worked for G.E. Capital years ago and we had a loan moratorium on general contractors because one general contractor in Atlanta went bankrupt and poisoned our entire firm on that type of client. That’s part of the fluid nature of the ordinary banking world; however, you don’t have that risk with our company.

Milroy: I have a personal experience that might help our readers understand the great wealth of knowledge you just provided.

I looked at a plot of land where I wanted to build a commercial structure with two units: I wanted of approximately 5,500 square feet for my school and then a second unit also 5,500 square feet to lease - a total of 11,000 square feet. When I was elbow deep in the project, I started to hear the bank officer mention many of the details above, such as seven- and 15-year amortizations. I thought the bank was being conservative.

Hurn: That’s typical for land-only deals; the bank doesn’t want vacant land sitting on its balance sheet for a long time. The bank wants to develop the land or sell it.

Milroy: That’s exactly right. In my case, your willingness to finance a percentage of the total cost of the project would have been a smarter alternative than the bank. I had the cost of the land, construction of the building and resolving the drainage issues. The bank was not interested in helping me with those additional costs; it just wanted the land and building portion of the project.

Hurn: That’s because you would have lowered the bank’s risk if you paid those additional costs from your pocket - that’s what they like. It increases your risk, but it lowers the bank’s risk. The risk continuum: anytime you lower the risk to the business owner, it increases the risk to the bank, and vice versa. The bank won’t say a thing, expecting you to shell out cash for the $30,000 architectural fee. The bank knows you’re forced to pay or that’s the end of the project.

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Milroy: That’s exactly right. School owners who are considering this type of project can also learn from the conclusion of my story: Chris’ firm helped me avoid all those issues. We now have a much more robust relationship; and you’re funding as much as 90% of the entire project costs and amortizing for as many as 25 years, instead of seven or 15.

Hurn: It’s fundamentally cash flow-sensitive financing. During good economic times, most people and businesses don’t save for bad economic times. Conversely, during bad economic times, everyone panics because they do have reserves.

I want to give you the opportunity to have your cake and eat it too. Our clients have the most cash flow-sensitive financing available, the longest terms available in the commercial mortgage industry, the least amount of capital down, and the least expensive capital in the market, from an interest rate perspective, which we discuss below.

Once you have all those financial advantages in place, you can weather the economic cycles and storms. Our system is a much better financing structure for small business owners than commercial banks.

Milroy: You said you would explain how you could provide your clients with the “least expensive capital in the market, from an interest rate perspective.” I’m holding your feet to the fire on this one because it’s quite a mouthful. Isn’t this related to another concept of yours: the conspiracy of ordinary banking?

Hurn: In most banking circles, I’m considered public enemy number one because I’m willing to reveal many of the taboo subjects that banks would rather remain hidden. Part of my reputation is because I own my firm. I have an entrepreneurial perspective, unlike the 20-year banking employee who doesn’t have to meet payroll every two weeks and is only responsible for following bank policies. Because my perspective is different, I’ve chosen to think long term and not short-term, which how banks works, if they’re not caught at it.

Not only do I lead with the best commercial loan product, but also it’s a product that I use myself. You probably can’t find a handful of commercial bankers in the country that believe in their products enough, or are entrepreneurial enough, to use their own products, but in fact, I do.

Another taboo subject protected by the conspiracy of ordinary bankers is that any bank in the country can offer the same primary commercial loan product that is a specialty at my firm. As I mentioned, we call it the “smart choice commercial loan”; its technical name is a 504 loan.

Although commercial banks can offer you that product, they will seldom offer it as an option because they don’t make as much money with that type of loan. It’s all about compensation.

“The first secret I teach business owners is to separate the ownership of their business from any commercial real estate they may purchase and own.”

Most bankers are paid a percentage of the loans they close. The basic structure of a smart choice commercial loan is a first mortgage (or trustee, depending on your location) for 50% of the total project cost and a 40% second mortgage. For reasons I explain below, the banker can only make half of what he could make because he can only loan money for that first mortgage. Is it any wonder there is a conspiracy? They have no interest or advantage in offering a smart choice commercial loan.

Let go a bit deeper into the conspiracy: remember, my smart choice commercial loan is 90% loan to cost. The second mortgage of 40% mentioned above is government guaranteed just like a VA or FHA loan, or a loan that you sell to Freddie Mac or Fannie Mae. The mortgage is a government-guaranteed bond; $300 to $400 million of these loans are issued on Wall Street every month.

Because those bonds are government guaranteed, the bondholders accept a lower yield. The interest rate you would pay for the second mortgage is effectively the yield the bondholder receives. The bondholders are typically pension funds, college endowments and similar groups. They buy second mortgages on owner-occupied commercial real estate. Since they can accept a lower yield, you actually pay a much lower interest rate, approximately 1.5% less than the prevailing market rates from most banks.

What’s even more important is the second mortgage term is 20 years. There aren’t 20-year fixed-rate products in ordinary commercial mortgages. That makes my concept absolute dynamite because it is the least expensive capital for a business owner that wants to buy a commercial property. That’s what makes me come to work everyday because I’m excited by the positive impact we have on the lives of our clients.

I don’t want any business owner and your readers to experience the following scenario: You go to your banker and tell him you are considering the purchase of commercial property, and you ask him to help you. The banker starts by asking for 20% to 25% down, which means he is making a 75-80% loan to value. That banker will make money on 75-80% of your loan.

If you hem and haw and say, “Gee, I’m just a martial arts studio owner; I don’t have that kind of money”; or “I’ll have to tap all my retirement accounts and other assets. Don’t you have a low-down payment program similar to when I bought my house?”

Typically, the banker will hem and haw back at you and finally come clean and say, “Yes, I have a small business loan program.” He’s invariably referring to what’s called the SBA-7A loan. If you’re project is less than $2 million, then most bankers will mention an SBA-7A loan as an option. It’s a good deal for the banker because he can offer you a 90% loan to cost financing just like my smart choice commercial loan. Now, the banker makes money on a 90% mortgage, instead of a 75 or 80% mortgage.

The problem with the SBA-7A loan is that it’s a bad deal for most business owners. There are a number of reasons. First, this kind of loan is usually priced off the prime rate, so it floats as the prime increases or decreases. Recently, the prime has been decreasing, which is great, but the prime could also increase and then you paying a higher interest rate.

SBA-7A is a fully collateralized loan program, which has contributed to the SBA’s the bad reputation in some circles. In many cases, you must collateralize the loan with a second mortgage on your home and/or pledge additional collateral, such as receivables and inventory. If you own another piece of land, then you must cross-collateralize it and make other financial arrangements that ties up your assets and restricts your ability to be more flexible, to be able to tap debt, so that you can grow your company faster. It’s just not a good situation for a hard asset, such as real estate, in my opinion.

Therefore, the banker has three choices: a 75 or 80% conventional deal, a 90% SBA-7A loan, or a smart choice commercial loan, such as ours; but, of course, like I said, he can only make half as much money because that third loan option has a 50% first mortgage.

That is the heart of the conspiracy of ordinary bankers. They don’t want someone like me educating people like you about smart choice commercial loan. Candidly, I would be totally disingenuous if I didn’t try to educate you because it’s a program I believe in and use myself. I’ve re-branded it the smart choice commercial loan because smart business owners know it’s a better use of their capital than parking it in properties, which only lowers the bank’s risk. I’m more concerned about our client’s risk than the bank’s risk.

Many of your readers have been discouraged from even considering the ownership of commercial real estate because…[they] need a 20 to 25% down payment.”

Milroy: You’ve built your company and made it competitive with banks because you offer the products that the bank would rather not offer to the business community directly.

Hurn: That’s exactly right. In fact, one of our best ads has the headline, “What your banker failed to mention,” or “the loan that your banker failed to mention.” As you said, that is our competitive edge: preying on that dynamic. Banks would rather see you fail to do the due diligence to learn this information and avoid the conspiracy or ordinary bankers.

Even though my firm makes a little less money, I’m more concerned about the long-term than the short-term win - for my clients and me. The long-term benefits are that my clients save a bunch of money, build a bunch of equity in an appreciable asset, and are wealthier for it.

They’re able to grow their businesses faster because they didn’t have to put as much cash down, which, as I mentioned, gives them a more cash flow-sensitive mortgage, with its longer terms and lower monthly payments. These benefits can lead to a school owner opening a second, third or more schools sooner and, in most cases, they’ll call me to help buy those buildings too.

The financial flexibility and benefits of my loan helps my clients to think more long term, and that means they are likely to be better long-term clients of mine. Your readers and I are business owners, we’re entrepreneurs. It’s not just about tomorrow or next week; it’s about next year, the next 10 years, the next 20 years; that’s what matters to us.

As I said earlier, I always lead with the best commercial loan product, so I receive repeat business. I have many borrowers who have bought a second, third or fourth building through me, just in the last 5 1/2 years.

Milroy: Your approach and product seems to be exactly congruent with what our school owners are thinking and the opportunity that can really move them to the next level. Of course, we can’t explain your entire program and its advantages in a short interview, which is why Chris will be speaking at the 2008 NAPMA Extreme Success Academy.

If the idea of owning your building appeals to you at all, then I’m sure you’ll have many more questions and concerns - market issues, school development issues and issues that related specifically to you. Trust me, this is a prime focus for us at the Extreme Success Academy. There is so much more you need to know before you can jump into these waters, which is why you must attend the Academy in September. (Register at ExtremeSuccessAcademy.com.)

The Mile High Karate franchise program has placed this concept on the agenda for the regional directors. We want our directors and franchisees to see that owning their buildings is a huge asset base and equity play for them. It also allows them to expand their influence through the martial arts community and throughout their communities as corporate citizens, great business owners, and now real estate owners as well. It’s a whole other paradigm.

Hurn: It’s a win-win for everyone. They become better franchisees because they recognize that you’re concerned about more than just what else you’ll try to sell them. You’re actually concerned about their long-term success and the wealth they can create. My program is equally beneficial to the independent school owner who may have less capital to invest than a franchisee.

In either case, my smart choice commercial loan allows you to keep more of your cash, so you can market your business. If you plow all your cash into a huge down payment, required by a bank, then you won’t have two nickels to rub together and not much of a marketing program. Again, that’s why this is called cash flow-sensitive financing; I’m sensitive to the reality of your cash flow.

Milroy: You’re exactly right; cash flow is the essence of martial arts schools. If you don’t have the budget to generate leads and enroll new students every month, then you’ve basically shot yourself in the foot, for lack of a better term.

Obviously, your associates and you are recognized as experts in your niche. What motivates you? Why did you choose this niche for your company? Many of our readers would probably like to know your entrepreneurial path, since it might help them develop their mindsets for long-term success.

Hurn: I wanted to build a company that offered the best product and provided it in the best way, and that’s exactly what we’ve done. I don’t want to be all things to all people. I want to focus on a narrow niche in the marketplace, and dominate it.

It’s the same strategy that a martial arts school owner or any small business owner can use to focus their energy, capital and marketing on a niche in which they can succeed. Being a generalist is not a good strategy, but being a specialist, serving your customers better than the competition and dominating your market is a much better long-term strategy.

When your readers and I are able to focus every day on our specialties, we’re able to learn everything about those niches and acquire a knowledge base that’s far superior to our competitors’.

Milroy: What you’re describing isn’t any different than a martial arts school, or any other business for that matter. It’s always better to specialize and drive higher profitability to higher price points, to have a higher perception of value in the market.

Much of the feedback we receive at NAPMA reveals a correlation between specialization and profitability. In general, it seems that those schools that focus on a core program, with a core set of upgrade programs tend to do the best. The schools that trend the other direction, with multiple programs - a cardio-kickboxing program, a Tai Chi program, a kids program, an adults program, a Krav Maga program and an XMA program - tend to be less profitable, less successful because the market is very confused.

Milroy: If I’m a martial arts schools owner, how will you serve me differently and better than the local bank?

Hurn: Our customers tell us that we have fanatical service. I actually consider that as a compliment. We’ve been told that if it weren’t for us and our persistence and constant follow-up and driving the train to the closing, so to speak, then they would have never made it there on their own, left to their own devices.

All of our clients are making a living because they have the expertise to serve their customers, patients or martial arts students. Presumably, they are experts at what they do, and we are experts at what we do.

A new program we now offer is what we call our commercial loan concierge. It provides you with a virtual hands-off, hands-free experience when you decide to finance your commercial property with us.

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Come to the Extreme Success Academy to learn the secrets and business-building strategies from Terry Bryan, Chris Hurn and other speakers from outside the industry - but also come to be inspired by the careers, thoughts and leadership of great martial arts masters and instructors.

Maybe a more important benefit of our commercial loan concierge program is that it reduces your anxiety about borrowing money. I would venture to say even Donald Trump, deep in the inner recesses of his brain, probably is a little nervous sometimes when he decides to take on another multi-million or multi-billon dollar property. You just never know. Some of the deal is outside your control - even Trump’s.

The program starts with you authorizing us to speak with your attorney, accountant, financial planner, commercial real estate broker and/or any other business advisors; these are the people who will be involved in this transaction. We’ll work with them to obtain any documentation and information we’ll need. You’re able to minimize your involvement, so you can focus on your expertise as we focus on ours, for you.

You’ll be notified by phone or e-mail within 24 hours, if you’ve been pre-approved. This is a guaranteed turnaround time for our pre-approval process. You often don’t receive this level of service from an ordinary lender. The quick approval turnaround also helps to neutralize that borrowing anxiety.

Then, we’ll call and schedule a convenient date to close. We’ve also reduced the number of documents you must sign to seven, so you’re done in minutes. That’s all of your involvement in the process. I haven’t seen it done anywhere else before, it’s kind of unique.

Milroy: I have the personal experience of buying commercial property, with no one to hold my hand. When you buy a house today, the residential real estate agents take care of everything for you. All you have to do is be at the closing and sign the papers. It doesn’t work that way in commercial real estate. What you’ve created is similar to the experience of buying a house. You’re providing the level of service that our readers would receive from a residential real estate broker, and applied it to the commercial.

Hurn: Most bankers in the industry stare down their noses at you, and, in their minds, you should hope for the privilege of doing business with them. That isn’t exactly customer-friendly, in my opinion. We’re not wired that way. We’re a little bit different. The commercial financing industry has not quite advanced as far as I have.

Milroy: You are definitely ahead of the curve. Another question that many our readers would like answered is whether your location in Florida affects your ability to serve customers throughout the U.S.?

Hurn: It doesn’t affect our clients or my company at all. I’ve closed loans in 28 states and Puerto Rico. It’s not an issue; we don’t have any geographic restrictions. Interestingly, and probably a big shock to your readers, is that I’ve never met the borrowers in 27 of those 28 states. That’s totally heresy in the banking world.

We are confident that we walk our talk and deliver on our promises, so there’s no reason why you shouldn’t be able to do a deal with us over the phone, fax and e-mail. All my people are very, very good at that. We build trust by doing what we say we’ll do. Candidly, most business owners, including martial arts school owners, don’t have the time to do the dog and pony show for the local banker who visits once a month and pitch him on why he should give you a commercial loan.

Our customer-friendly approach is very appealing, which has been slowly evolving in our industry during the last 10 to 15 years. I couldn’t have operated my business in the financial climate of the past, but the pace of life is just so fast that most of our out-of-state borrowers appreciate our ability to serve them long distance. They don’t see this as a negative at all, and, hopefully, neither of your readers.

Milroy: The natural concern, when I’m making a buying decision, is whom do I contact if I have a question, concern, problem or issue, or I wake in the middle of the night in a cold sweat. You have served me phenomenally well, in that regard, having communicated with you via email at two or three o’clock in the morning. That extra level of service should makes anyone feel very comfortable to do business with you.

Hurn: Ours is a real novel approach, Toby, in an industry that is still very stodgy and conservative. You could ask 100 commercial bankers and they would all tell you that I’ve lost my mind, but obviously I haven’t. I’m just serving my customers in a much better, more efficient and newer way.

Milroy: That is a point on which we try to train school owners too. Whenever you find yourself explaining a situation by saying, “We’ve just always done it that way,” challenge yourself to analyze what you’re doing because, in most cases, the way you’ve always done it doesn’t necessarily mean that’s the best way or the right way; usually, it’s what you haven’t changed yet.

Hurn: I’ve tried to think that way from the first day of my business. I started it with the mindset that I wanted to do something different than what was being done in the industry. I wanted to change totally the conventions in the industry. In fact, just about everything we do is 180 degrees differently than what you experience or what you would see done at most other commercial bank. Our customer service was purposely developed to be different, and I attribute a tremendous amount of our success right to that mindset.

Milroy: Chris, you’re a part of Dan Kennedy’s Platinum mastermind group, which is the model we’ve used to develop our Inner Circle and Peak Performers groups. Based on your experience, what is the value of being a member of such a group? How has that experience helped you to expand your business? How has it changed your thinking?

Hurn: That’s a broad question that I could answer in many different ways. Obviously, it’s been phenomenal for the people in my mastermind group and myself. Last year, one member of the group increased his revenues by 400%, another by 900%.

I’m sure you’ve all heard the adage that the teacher learns more than the student; and, as martial arts school owners, you probably experience that often. I certainly am in that situation. I schedule a whole day every month, away from my core business, to meet with my mastermind coaching group members. I facilitate our discussion and work on all their businesses and, in the process, discover many ideas for my business. A phenomenal dynamic occurs that results in lifelong friendships and some severe, but positive, impacts on each other’s businesses. It’s tough to find likeminded folks; people that are forward focused, progressing and trying constantly to improve their business for the better.

It’s not always about the All-American buck; it is partially, but it’s also about lifestyle. It’s about how you want to live your life. What charities do you want to support? Do you want your kids in private school or public school? What kind of car do you want to drive? How often do you want to go on vacations with your kids? Do you want to be able to travel at a moment’s notice half way across the country to see a relative who is very ill? Many day-to-day employees don’t have those kinds of opportunities, but the better your business grows, the more profound your business becomes.

Through a mastermind group, all sorts of opportunities become available to you; and, obviously, I encourage anyone to become involved in such a group, whether its with NAPMA or others, but it’s really important to plug in somewhere. You’ve heard the expression, no man is an island. You can’t grow a business on an island. I see that unfortunate mindset all the time in business owners and employees. They’re just worn out from running their businesses improperly. They’re resistant to someone with a fresh set of eyes to make some recommendations to them. It’s really critically important. I can’t say enough about it. To all those reading this interview, you’re absolutely fooling yourselves if you don’t become involved in a mastermind group.

Milroy: The primary goal of Miko Peled, one of our Inner Circle members, was to expand his business, so he could visit his family in Israel three weeks a year. During the previous 25 years of operating a martial arts school, he was unable to take that much time off. After a year and a half in the transformation coaching program and the mastermind group, he was able to structure his business, so he could accomplish that goal.

Miko is a brilliant guy, but, frankly, when he came to the group he acted defeated. He was stuck in the day-to-day operations of his business the way he always had; but it only took a couple of tweaks to set him on the right road.

What I’ve experienced is that a mastermind group helps you dramatically increase your learning curve and the speed at which you can accomplish things. That’s one of the benefits that make mastermind groups so valuable.

“…the rent they pay every month is making the landlord wealthy. Those [school owners] could be using that monthly payment to make themselves wealthy, instead.”

My last question for you, Chris, relates to your appearance at the 2008 NAPMA Extreme Success Academy. If I’m a NAPMA member or a MAPro reader who is planning to join NAPMA, so he or she can attend the Academy, then what ideas and information will I take from your presentation? What will we discuss that will help me create wealth and a financial future for myself, utilizing your program and services?

Hurn: I plan to explain in much more detail and depth many of the topics presented in this interview. I want to provide Academy attendees with many more examples of when it works and when it doesn’t work. I want to make sure that the audience has the right mindset for why they would want to own commercial real estate and especially their current facilities. Candidly, real estate ownership is just the first step on the success ladder, in my opinion.

As you know, I’m also a business coach and a consultant as well as owning other businesses and sitting on the boards of others, so I can answer many general business-growth questions. When I was a management consultant, traveling around the country and working with various businesses, I realized the same truth that Dan Kennedy mentions all the time: No business is different.

It all comes down to people and processes. There are people problems and there are process problems. Those are generally the two major categories of issues that business owners face. I may not know much about the daily operations of a martial arts school, but I have years and years of successful business experience, so I’ll have answers to important questions, not just real estate.

Milroy: To add to what you’ve said, Chris, we will peel back all the layers of the process, so Academy attendees understand the technical part of owning commercial real estate. We will expose the audience to all the steps you must take from a business and market point-of-view to be prepared for this opportunity. Many martial arts school owners sometimes have trouble understanding this point. We want to help you evaluate your current situation: the building you now occupy, the demographic of your market area, the amount of traffic, etc.

Attending the 2008 NAPMA Extreme Success Academy and learning from Chris and other business experts will help to reduce the calls we receive at NAPMA. Too many school owners say, “I’ve been teaching for 25 years, but I have no retirement fund, I have no equity in my business. My school is not a business asset.” They suddenly discover they can’t sell it, so they just close the doors when they are done teaching.

Hurn: It’s just sad. It just doesn’t have to happen like that. It’s just not smart. There’s another way; and, candidly, it’s not their fault necessarily. They just didn’t know the secrets I could have taught them and the bankers in the mainstream commercial finance world that have given them the wrong information for years and years.