Martial Arts Professional Magazine

WarriorWiz Terry Bryan, Ph.D.

Terry Bryan, Ph.D. and Extreme Success Academy speaker, teaches you how to use your warrior spirit to win at the real estate game

Interview by NAPMA President Rob Colasanti

Terry Bryan, martial artist, former school owner and real estate coach and entrepreneur, gives you an inside look at how an average martial artist and school owner became a warrior wiz of the real estate biz.

He shares the same secrets and motivations with you, as he does with the members of his inner circle mastermind group, who are all equally focused on benefiting from the passive (and, often massive) income of real estate ownership.

Wealth-building experts, such as Terry Bryan, who are also martial artists, understand your mindset and, therefore, how to change it, so your vision for the future can include many more possibilities. That’s why he was invited to the Extreme Success Academy and why you must attend. You could find your real future in just one weekend! Visit ExtremeSuccessAcademy.com to register today.

Today, Terry Bryan is one of the most successful real estate investment coaches in the U.S., with more than 100 students, some making $100,000 to $200,000 a month. He is also Kiyoshi Terry Bryan, a fellow martial arts professional, with more than 35 years as a student, teacher, school owner and industry advisor.

Inspired by the martial arts in movies and on TV, Bryan started training, as a kid, during the 60s, with some U.S. soldiers that had returned from Vietnam. They were teaching kids to keep them off the streets and away from bad influences.

Bryan joined the military in 1970, traveled throughout the world and trained with whomever he thought was the best at that time. He earned his Black Belt in Taekwondo, and then graduated into the Chinese and Okinawan martial arts. He received a 1^st-Degree Black Belt in Okinawa and now holds a 9^th-Degree Black Belt awarded by the World Karate Federation.
Rob Colasanti: Kiyoshi Terry Bryan is a fellow martial arts professional, who I’ve come to know and respect very much. Terry will be a featured guest and speaker at the 2008 NAPMA Extreme Success Academy in September. He will be helping attendees with school operations, marketing and real estate investment strategies.

Terry, I’ve spent some time with you recently and I am so excited to share some of your knowledge with our NAPMA members and MAPro readers during this interview and at the Extreme Success Academy.

We made sure to include a sidebar in this article about your martial arts background because I want our readers who don’t know you to understand that you’re a seasoned veteran of the martial arts and have been studying for many decades.

It’s my understanding that you were also a school owner; and, with all due respect, that you were a broke martial arts instructor who just couldn’t seem to grow your school. Then, by happenstance, you ran into Stephen Oliver and everything rapidly changed. Terry, please tell us what happened, and the kind of advice Steve gave you that led to such dramatically different results.

Terry: That part of my journey started in Thailand where I lived for three years and trained in Muay Thai. I was one of the first students in the early 70s. I ran kickboxing and karate schools. I had a bachelor’s degree in social work and child psychology and was a probation officer. I taught martial arts as a contribution to the community, to keep kids off the streets and out of gangs. I thought that if you had that love for the martial arts and wanted to give back to the community, then it just didn’t pay well.

In the late 70s, early 80s, I heard that Stephen Oliver was in town; many local school owners didn’t like him, so I was intrigued by what he had to say. I went to one of his Black Belt graduations. I had never seen 2,000 to 3,000 people in a gymnasium watching a Black Belt event; I was amazed.

After the event, I approached him and introduced myself as the head coach of the United State Air Force Academy Karate Team. I asked him, “How is the martial arts business?” He replied, “It’s OK, I did about $1.2 million last year, but it’s getting better.” I was dumbfounded. I thought, “Maybe, you can make money teaching martial arts!”

Rob: That number was unheard of then.

Terry: I think the average monthly tuition was $25 or $30 a month, while Steve was charging $89 a month; people thought he was crazy. I think the martial arts community was very jealous because he was charging a fair price and making money.

After he told me how much he was grossing annually, I asked, “Tell me more about martial arts as a business. He invited me to his schools, watch his intros, rummage through all the files in his program director’s room and take or make copies of forms and other important documents. I was amazed that anyone was willing to give me virtually total access to his operations.

I was dirt broke during my first five years as a karate instructor. I became a millionaire during the next five years simply because I watched what Steve was doing, “swiped” his systems and integrated them with traditional Okinawan Karate.

I think it was during the early 80’s, when I was general secretary of the U.S. Olympic Karate team, that I had one of the biggest, most profitable and traditional Karate schools in the country. In fact, at my peak, I had four schools with approximately 1,200 students. I followed Stephen’s blueprint for multi-school operations and grossed more than $1 million a year, during the late 70s and early 80s, when many schools were broke or barely operating.

Despite of all that success, I experienced what many school owners experience: I opened my first school and it generated excellent gross and net amounts; however, when I opened the second school, the gross sales increased, but the net profits decreased. At first, I thought it was a bad location.

I opened a third school and, again, the gross increased, but the net decreased. I was spending more time dealing with problems and putting out fires, so I opened a fourth school to fix everything and, once again, I experienced a rising gross, but a falling net.

Rob: Yes, that is very common.

Terry: What I discovered is that I hadn’t implemented the systems like I should have, such as a franchise, with a manual and all the aids, which would have saved me a considerable amount of time and reduced most of my problems to a manageable level. At that point, I was trying to re-invent the wheel because I just didn’t know how to handle 1,200 students doing traditional Karate.

Rob: Your experience (and that of many other school owners) reveals the value of systemization. As I watch the evolution of professionalism in the industry, I notice a very robust introduction and integration of systemization in schools across the country of all different styles. The school owners that are doing well today have peeled back the layers and systematized all the components of their schools. I think that’s a sign of the future; wouldn’t you agree?

Terry: Absolutely. Of course, the reason many schools are not systematized is the egos of the owners, who are also typically the instructors. For them, as it was for me, teaching is immensely self-gratifying and comes to represent, almost totally, who and what they are. I had 30 years experience teaching, so I placed a high value on it.

“Implementing systems and outsourcing the various tasks and responsibilities of your business is what separates the school owners that struggle and those that make money.”

Like many school owners today, I did every major and minor task at a school: opening the mail, inputting data, paying the bills, teaching, emptying the trash, etc. When I finally understood the business model for a martial arts school (thanks mostly to Stephen) and implemented that model in my school, I discovered that I could replace the teaching me with a $10- to $15-an-hour instructor.

I learned that a program director was more important and more vital because he or she generated the leads and enrolled the new students. When I started to systematize my schools, my eyes opened wide and I had a radical shift of my mindset. I recognized and understood how to take advantage of the real value of a martial arts school operation.

I think all school owners should systematize their schools as soon as possible. Outsource managing, teaching and program directing, so you can advance your role to that of a business owner and not a worker.

Rob: Let’s talk a little bit about martial arts school operations. Terry, what are the top three reasons too many martial arts school owners can’t seem to grow their schools?

Catching Arrows on Ripley’s Believe It or Not!

By Terry Bryan

People from the TV show, Ripley’s Believe It or Not!, called me one day and asked me to appear on the show and catch arrows with my bare hands. They had obtained my name from one of my instructors, Jim Mather, who had caught an arrow on the 70’s TV show, That’s Incredible! He told them he was now too old to duplicate the stunt, but that they should call me.

I put them off for a time, until they promised to include a segment on the show about the benefits of karate for kids and how it helps to develop self-esteem, confidence, etc. Once I agreed, I talked with the archer and we found 135 mph to be a good speed for the arrow. Jim Mather had given me additional advice to catch the arrow in the same direction it was traveling. During the second day of practice, I finally caught an arrow.

The night before I was scheduled to fly to Los Angeles, I was talking with my Black Belts and told them what I was doing. They wanted to know how I did it. I said, “I listen for the sound as it leaves the bow, and then I start to grab it.” Somehow my comment evolved to, “If that’s all it is, then why don’t you do it blindfolded?” Of course, the Ripley’s people thought that was a great idea, so I caught one that was photographed and then I caught one blindfolded that was videotaped, and I retired the same day.

I want to emphasize that catching an arrow with your bare hands is very dangerous, so do not try this at home or at your dojo. After 30 to 40 years of martial arts training, I had developed the hand strength and learned how to breathe deep, relax and stay calm, and that’s what I did to catch those arrows.

[Editor’s note: Footage of Terry Bryan catching an arrow was included on the May 2008 NAPMA Innovations DVD.]

Terry: I’d say number one is mindset. They must convince themselves that making money is OK; it is a positive outcome. Most of them, as you know, have been taught the traditional point-of-view that to have good quality martial arts, you don’t charge for the training, or a very minimal amount; and if you do charge a tuition, then you’ll bastardize your art.

Second is to understand key basic principles, which is should be a familiar concept to martial artists. After all, most of the martial arts are based on a handful of key elements: be aware, understand strategy, and, in a self-defense situation, moving, blocking and counter-punching.

The same is true with business. If you understand the basics: marketing, sales and providing a high quality of teaching, then you’ll make money.

Third is to implement those systems we discussed earlier, and, as part of that systemization, to outsource the various tasks and responsibilities of your business. That’s what separates the school owners that struggle and those that make money.

Rob: How would you advise school owners to address the issues, the obstacles, to school growth?

Terry: First, do what successful people do and don’t do what unsuccessful people do. I invest huge amounts of money to belong to various inner circles and mastermind groups. I probably invest more than $100,000 a year to belong to the Dan Kennedy/Bill Glazer inner circle.

When you spend time with people who are very successful, you tend to absorb and learn their influence, strategies and experiences. If you want to be a successful school owner, then you must be with other successful school owners. If you hang around people that are broke, then it’s likely you’ll be broke too.

Rob: The money you spend for continuing education is actually an investment. Have you received a decent return on your investment?

Terry: I think it’s a 10-to-1 return on investment for personal development.

Many of these successful people have learned to work on their businesses and not in their businesses. Martial arts professionals should also understand that principle because it means you should start to be the leader, and guide your staff members who actually do the work.

I think the more you spend on your personal development and less on your business, the more successful you are because it’s all about special knowledge today. It’s the one percent of special knowledge you acquire that no one else has than can result in millions of dollars of difference in your income. That applies to martial arts schools or any business. You must have that little edge because we’re in the information world; we’re moving at light speed. You must have that additional information, so you can react quickly; and that separates the very average business owner from the successful business owner.

Rob: That’s what the smartest NAPMA members have been doing and why they’re instructors and school owners who have been members for 13 and 14 years. They know that the small investment they make every month in their membership has generated an excellent return and will continue to do so for years.

Terry: The return on your continuing education investment can literally make an impact in a short period of time, often only days! I go to some of the mastermind group meetings, such as Dan Kennedy’s. I’m in a room for two days with 20 millionaires, absorbing ideas and information from their discussions. By the end of the first day, I’ve already emailed my staff with instructions to start implementing those new ideas, which will generate more than enough revenues to cover my investment in a year’s coaching program.

Rob: That’s another key point, Terry: the speed of implementation. Too often school owners have found a great idea in the NAPMA package or they hear a good idea, but they take too much time to implement it; that’s not how the system works. The idea is to find those good ideas and implement, implement, implement, immediately; and it’s those school owners who are really kicking some butt these days. I see it all the time.

Terry: The days of taking a year to write a business plan full of ideas are over. I’m tight with a number of Internet experts, and they’ll move from an idea to a business plan to a Web site to sell the idea to making money in 24-48 hours. Many people are working at an unbelievable speed today.

Rob: Terry, you’ve transitioned from being a school owner to operating one of the most successful real estate coaching businesses in the country. Approximately how many people do you currently have in your various real estate coaching programs and mastermind groups?

Terry: I have a little more than 100 active members in my coaching program, and they’re all doing very, very well. Some of them are making $100,000 / $200,000 a month. I teach them how to run a business, not just be a real estate investor, which makes my program different than the rest of the world. My members use direct response marketing to find property owners who are motivated to sell, and then put them under contract to keep them long term for cash flow or sell them for cash profits. Many of my coaching members have started coaching programs.

If I opened a karate school today, I wouldn’t spend the first 10 years teaching. I would probably hire an instructor, program director and administrative person from day one, but that’s a different approach from many people. I do the same thing in real estate. I teach them how to hire a transactional broker and administrative person, and then teach them how to do the marketing and run that real estate business successfully from day one.

Rob: How can martial arts instructors, reading this interview, become involved in real estate to create passive income, without losing focus on their school?

Terry: First, if you’re the type of person who is putting in 12-14 hours a day, doing all the work at the school, then you need to learn how to systemize your school. When your marketing program is generating leads, your program director is enrolling new students and your instructional staff is doing a good job, then you’re free to spend more time to pursue other income sources, such as real estate.

I made that transition and my numbers prove that I can generate more income, when I don’t spend most of my time operating a martial arts school. When I was running my school full time, I could sell a basic, 12-month program for approximately $2,000. I could then upgrade that student to our Black Belt program or Master Club for another $6,000 or $7,000. Today, I know that I can spent much less time and make $20,000-$30,000 on one real estate deal.

For me (and my advice to anyone reading this interview), it’s all about the valuable use of my time and focusing on the big rocks and maintaining what’s really important. If you can outsource the $10-per-hour jobs to staff and focus on the big deals, then, in the long run, you will make more money in less time and give yourself plenty of quality time with the people you love and doing what you like to do.

Rob: Would a school owner who wants to profit from your real estate ideas need to obtain a real estate license and become, for all practical purposes, a real estate agent on the side?

Bryan: No, I work with a couple realtors when I need them, just like when I need an attorney or a person to answer the phones at a martial arts school. I’m a business owner. If I need a realtor, then I’ll hire one. The system is easy; it’s changing your mindset that is often difficult for people. In my mastermind group, we are the coaches of our businesses and we bring in the people to do certain parts of the job. Once you learn the systems, you put them to work, so you have to work less.

Rob: Talk to us about the advantages of a school owner owning his or her building versus renting.

Bryan: Unless you are currently renting space in one of my shopping centers, (if that’s true, then disregard everything else I say), there aren’t too many advantages renting versus owning a building for your school.

To be more serious, as I mentioned earlier, benefiting from the advantages of owning your building has as much to do with your mindset (and changing it) as it does the nuts and bolts of real estate and financing.

You must start to think like Ray Kroc, the founder of McDonald’s, who asked a group of MBA students years ago, “What is my business?” Naturally, they answered, “The hamburger business.” He said, “No, I’m in the real estate business. Hamburgers just pay off the mortgages.” When I heard that story, during a mastermind meeting many years ago, it suddenly struck me that I had been looking at the martial arts business with the wrong mindset.

“Many successful people have learned to work on their businesses and not in their businesses. You should start to be the leader, and guide your staff members who actually do the work.”

I told myself, “I’m in the martial arts business; I have several successful karate schools, but I should be in the real estate business.” Once that light bulb went off, I realized that I could use the monthly cash flow from martial arts to pay the mortgages on standalone buildings or shopping centers, and my life changed forever.

The secret of how to become a millionaire in real estate is quite simple: find a million-dollar building and pay it off in 15 years, when it will be worth $2 million. The property will generate $200,000 a year in cash flow forever. If you decide to leave the industry or sell your school, then it is much easier for the buyer to obtain a business loan if there is real estate tied to the business.

I see very few reasons why school owners shouldn’t own their own buildings. Most of them just have this fear that they don’t have enough knowledge, or that they need $200,000 or $300,000 to participate. That’s simply not true. We buy commercial buildings all the time for no money down; in fact, sometimes people pay us to take over some of those buildings

Rob: Your advice to our readers is to stop making their landlords rich. What are the important factors a school owner should consider before they decide to buy rather than rent? In other words, how can they determine that owning is better for them than renting?

Bryan: I think it begins with operating from the short view, instead of the long view. Too many school owners don’t see the big picture and don’t know where they want to be five to 10 years in the future. They’re focused on the short view, just this month; how will they pay their bills in 30 days.

If they took the time to develop a long-view mindset, then they would know that if they do XYZ, then the future would be better for their families. Like I said, once you learn how to structure a deal to pay off a building in 10 or 15 years, you can put $2 to $3 million in your retirement portfolio. That’s a huge nest egg for most people.

Most of the martial arts school owners that I know love what they do, and they will do it for the rest of their lives. For too many of them, school ownership becomes a detriment to their families. The wife is mad because her husband, the school owner, is never home and he is using assets from their personal accounts to pay bills.

It’s better to have a clear strategy that includes a 15- to 20-year real estate investment plan that results in a $2 million retirement portfolio. Suddenly, your wife and family see the value of you being gone two, three or even five nights a week.
Rob: How does the location of your school affect that strategy, for example, a school in Los Angeles versus one in a much smaller market?

Terry: Obviously, the price of the commercial properties will be different. If you’re in Colorado, then we talk about price; if you’re in Texas, then you delete a zero from the price; and if you go to California, then add a zero to the price; the market will demand.

I see this mistake all the time: an instructor opens a school in the downtown area because a building is real cheap; however, you must also be aware of the local demographics because most of potential students and families have lower incomes, so you will struggle at that location forever. If you locate your school in an area of the city where there are higher incomes, then, yes, the cost of a building will be more expensive, but you will make that back because that’s where the students have the money to afford lessons (and at a higher price point). You can give me three ZIP codes in which you want to buy a building within three months, and I know I can find you a commercial building at 15-20% below market, with owner terms and probably no money down.

Rob: Wow. That’s why some of your real estate coaching clients are becoming wealthy. On that note, you mentioned that you have a couple Black Belts in your program, earning $100,000 a month or so. When you first mentioned that to me, I thought that $100,000 a year is a nice passive income, but you said $100,000 a month, that’s incredible. Tell us one of your best mastermind group or coaching program success stories.

Terry: One of the best success stories is Lloyd and Vicki Irvin who run a very successful MMA program in Maryland.

Some of your members may be familiar with Lloyd who is one of the sharpest Internet marketers on the planet. He has made presentation at Stephen Oliver’s Marketing Boot Camps, which is where I met him a few years ago. He was teaching Internet marketing and I was teaching real estate investing and asset protection.

When we had lunch, he mentioned that many of the Internet marketers had fabulous cash flows, but weren’t doing anything to build long-time wealth. We thought there must be a way for us to work together and create a win-win situation. A few years later, he called me and said his wife wanted to go into real estate. He asked if I would visit them, so I could teach her what she needed to know; and she started doing very well.

During a subsequent conversation, Lloyd asked me about my real estate programs. I explained that I typically attract 50-100 people to a free seminar and sell them a one-year, real estate coaching program for approximately $6,500. I told Lloyd that I would show him how I operate my seminars and mastermind groups. He told me that his free Internet seminars usually draw 500 people.

For his first program, we registered 135 people at $6,500 each, o he jumpstarted his real estate business, and now they’re doing well; they’re buying free and clear properties. He is still teaching martial arts full-time because he loves it; and he and Vicki are buying and managing real estate part-time and doing a couple hundred thousand dollars a month.

Now, the Irvin’s represent an elite example, but Lloyd is the kind of guy who doesn’t anything half way. One of his students in Nashville, Ed Clay, he’s doing really well too. I think he did $50,000 his first month in real estate, and still operates his MMA school.

Rob: I recently learned a lesson from Lloyd and Vicki Irvin about implementing ideas quickly that all NAPMA members and school owners should try to emulate. I was at an event in St. Louis, which the Irvin’s attended too. Just before they flew to the event, they made a change to their Web site and, as they were monitoring the numbers, they saw a drop in the responses, based on the change they made. Even though they were out of town at a seminar, they went to a local studio and re-shot a video for their Web site. They immediately placed it on the site and their response numbers leaped into the positive range.

I think that is one of the best lessons in speed to market and immediate implementation that resulted in immediate gain. This is exactly how our members must treat the NAPMA materials they receive every month. It’s so critical that they don’t put those materials on a pile and say, that’s a good idea, I’ll look at it later. The school owners that are really successful today are those who implement the quickest. I’m sure you agree, Terry, because you’re a major implementer.

Bryan: I do move very quickly for real estate investors, but I don’t compare with Lloyd. Dan Kennedy advises that you should try to do more in the next 12 months than you did in the last 12 years, and Lloyd has taken that to the next level. He wants to do, in the next 12 hours, what he did in the last 12 years. He does move quickly. Those around him know that you either keep up or you move out of his way.

I try to promote the same mindset with my real estate coaching clients. Within a year, many of them are making in a month what they were making in a year.

It’s simply because they are using specialized knowledge and implementing quickly. If I find a commercial building that I can acquire today at $0.50 on the dollar, then I must have it under contract today, within the next hour, or it will be gone.

Rob: Terry, in the recent past, I’ve spoken to a number of instructors who decided to build a new commercial building, use part of it for their school and sublease the rest. Is that an effective strategy and, if it is, then what are some of the risks?

Terry: Yes, it’s a good strategy. The biggest risk is that, right now, you can buy an existing building much cheaper than land and a new building. The market is filled with so many motivated sellers.

Many of your readers are probably not aware that I use direct-response marketing to find those sellers, just as they do (or should be doing) to attract new students and parents. I create a targeted list, looking for property owners who may have a troubled business, going through a divorce or are planning to leave the market. Because of the system I use, I can find properties so much cheaper than building them.

A new building can be effective, especially if there are no existing buildings located in the best area for your school. My business model for a new-build is a 20,000-square-foot flex space building, with total cost, depending on your U.S. location, of approximately $1.2 million. The model calls for 50% down and paid, free and clear, in five years. That property will generate $200,000 to $300,000 in cash flow at that point. Right now, you can buy cheaper than you can build.

Rob: During the years, one of the most common questions we receive at NAPMA pertains to lease negotiations, which is definitely not an area of expertise of many instructors. Terry, what are your suggestions when it comes to negotiating a lease?

Terry: First, I suggest a lease with an option to buy the building. If the value of the property increases, then you can capture that equity. Most leases have three primary components: price, terms and conditions. If your landlord is flexible on one of those components, then you can always create a really good deal. Again, you need experience, which, as you stated, most school owners do not.

In most cases, you’ll want to hire an expert to negotiate a commercial property lease. I always hire a good residential/commercial real estate agent or an attorney. Pay someone to do that part of it. You can outsource the entire process, including the money. We often create partnerships with 10 to 20 people, who invest $50,000 to $100,000 each. They provide the money and I buy the building and the split the equity 50/50.

Any school owner can own his or her building. He may have poor credit, but it doesn’t matter because that is our part of the deal. He may not have the money to invest, but I can show him how to raise it. There are so many ways to make a deal.

My attorney writes every article in our contracts, which means every line is a negotiation point; and, by the time, your agent or attorney discusses the whole contract with the landlord, you’ve negotiated a good deal.

Rob: I assuming you always negotiate for something. In other words, you don’t just sign the landlord’s lease. You read it carefully and find something that can be negotiated to make it a better deal for you.

Terry: I use the Brian Tracy flinch: “Is that the best you can do?” That is a technique I train my buyer/brokers to use. If you give someone what he asks, then he will assume that he didn’t ask for enough; but, if you negotiate him down a little bit and then let him negotiate for more, then he figures he received a good deal. You must negotiate from a position of strength.

I also negotiate with all the numbers in mind. I know in advance what numbers that deal must hit to be acceptable to me. I need to be 15-20% below market to be a good deal, so I start my negotiations at 25-30% below and then let the other party talk me up a little bit, but I’m still at my price point.

Rob: Let me ask the same question, Terry, but as it relates to negotiating rent, instead of a purchase. Many NAPMA members and MAPro readers probably have schools in shopping plazas, little storefront locations, so they need to understand the secrets to negotiating for those types of properties.

Terry: Depending on the geographic market and the quality of the location, I think you should be able to negotiate for three or four months of free rent to help you during the start-up period of your business. An alternative is to pay a lower rent for the six months and then increase the rent; again, to help you reduce your operating costs, when you first open your school. You may also be able to negotiate for some of finishing costs (renovations, painting, etc.).

I also suggest that school owners try to eliminate personal guarantees, which is when you are personally responsible for the lease terms, making your personal assets subject to attachment. Many landlords won’t negotiate that point and want you on the hook. You can answer back and ask the landlord to transfer the personal guarantee to your corporation, if you pay the first 18 months of rent on time. You want to negotiate for 15% below the local rental market, so if other businesses in the area are paying $10 a square foot, then you want to negotiate for $8. Often, you can do most of the finishing, since space for martial arts classes doesn’t need much renovation or expensive fixtures. If you ask the landlord to renovate or prepare the space for your specific use, then you have less negotiating space and he will charge a premium rent.

Rob: Some of our readers may not be aware that there is a difference between a prime location and a non-prime location. Please explain the difference and the pros and cons of each.

Terry: As I mentioned previously, you can choose property in a lower-income area of town, since the property’s rent will probably be lower too. You must ask yourself, however, how many high-value students can I expect to attract from the immediate area and whether high-value students from more affluent areas are willing to drive to your location to train?

Most of the research and my experience dictate that it’s better to have a good location, even if it costs a little more. You may not need to be in a larger shopping center or mall with big-name anchor stores and excellent signage. In the martial arts school business model, I think you should invest more in marketing and less in a location because, during your initial telephone conversations with prospects, you can direct them to your location, even if it is not highly visible. You want to be convenient, but that doesn’t mean your school must front on a major traffic artery.

If you’re running the typical martial arts school, with a target of children 4-14 and their parents, then you want to be within a 3-mile radius of affluent neighborhoods with high-dollar rooftops. If you operate an MMA school, with a male, 18-24, target audience, then you want to be next to a highway, so you were more accessible to a larger geographic area and so you could attract males from bars and parties.

You must consider all those factors - the type of school you operate, your skills as a marketer, and knowing your target audience and where it is located - to determine whether any particular property is a prime location for you.

Rob: Some say that it’s easier to make money than to keep it. One of your strengths is asset protection and proper investing. Terry, please explain some basic asset protection strategies. What should our readers know and do to protect their assets?

Terry: First, I will remind them that we live in a litigious society; there are lawsuits everywhere, especially in martial arts. Eventually, someone is hurt and if the injured party can prove negligence, then you’re apt to be sued.

Second, make sure all your assets, your real property, anything with equity, are in separate legal business entities: land trusts, LLCs (limited-liability corporations) and other types of corporations. Even my personal dwelling is in a land trust that is owned by an LLC. I think everyone needs that kind of protection. It’s not to act paranoid, but if you start doing well and making money, then someone will come after you, so you must do this kind of planning from day one.

You’ll need a good asset-protection attorney to help you with this. Third, as I mentioned above, as a general rule, never sign anything personally, if you can avoid it. Sign as the president of your company or the manager of the LLC; and the sooner you have the right business entity, which is doing all of the deals, the more protected you will be.

Rob: You’re saying that the first step is to hire an attorney to create trusts and other entities to protect assets?

Terry: Yes, I think you need an attorney to show you how to do it, and not all attorneys know what they’re doing. In fact, 95% of all attorneys probably don’t understand land trusts, etc. and how to create them, so you’ll need an attorney with specialized knowledge.

You need to outsource that service and find someone that knows what he is doing. You need to do it right away, before you become wealthy because once you have that wealth and it isn’t protected, it’s too late.

Rob: This interview would not be complete without a little more dialogue on sales. After all, we are in the business of marketing and selling martial arts lessons, more so than just teaching classes, everyday. Many instructors are still undercharging for their lessons, so tell us a little bit about price elasticity, as it relates to the martial arts.

Terry: Of course, Stephen Oliver is a real-life example of the correct strategy. He has advocated higher tuitions for years and has tested how people respond to those higher tuitions and discovered that enrollments increased as the tuition did.

He has also discovered (as have many others) that the hardest people to convince that their training is worth more than what they are charging are the school owners and their staffs, not the customers. I see that everywhere. When I first started my real estate coaching program, I structured it as a free initial seminar and then an upgrade to a $6,500 coaching program.

Many people told that was impossible. Those, with similar coaching programs, were offering a free seminar and then a series of upgrades, from $99 or $199 to $2,000, and then six months or a year later a $5,000 or $6,000 upgrade. I decided against all those levels. With my model, I was closing 34% of those attending the free seminar to an upgrade to the coaching program.

If you are located in the right neighborhood, then you should be able to charge $300-$500 a month.

Rob: $300 to $500?

Terry: That should be possible, but I just don’t see anyone doing it.

Rob: Toby Milroy, NAPMA’s vice president of sales and marketing, has a school in the Orlando area and most of his students are paying $339 a month. In fact, I mentioned that to a seminar audience in New York and I saw some jaws open wide.

He does target marketing. He finds specific parents in his community who want their kids to go to the “Montessori” of martial arts. He doesn’t want a school with 800 people students. He has approximately 215 high-value students and much of his results has to do with his marketing ability as well as the price points that he is charging.

Terry: We’re seeing that in every industry across the country. If you focus on the top 5% to 10% of the customers you want, then you will have higher-valued customers, make more money and experience fewer headaches. The business owners who focus on those customers do the best.

Rob: Marketing is certainly a key, but you can’t charge $339 a month in return for shabby service. You must deliver the goods. There are many school owners delivering the goods, but they’re still charging $79 a month, for example, and leaving much money on the table. You’re running a seven-figure real estate business quite successfully. You’re the equivalent of a 10^th-Degree Black Belt in sales. Give us some broad selling tips, Terry. Use your wisdom to help NAPMA members and MAPro readers become better salespeople.

Terry: I think most people that gravitate toward the martial arts, professionally, and want to open a school are probably technicians. They love martial arts and they love teaching, so their forte is probably not sales. You have two choices: learn to be an effective salesperson or hire or train someone to be responsible for that part of your business.

I would think most school owners would be happier following my model: hire sales people to sell and management people to manage and you become the visionary that develops a share vision for everyone. Be your salesperson if you have time to train and produce excellent results; otherwise, you should outsource it.

Rob: That’s great advice. You always try to match the skills of the individual with the requirements of the job. One of the worst mistakes that you could ever make is to put someone in the position of a program director whose job is to sell memberships, when he or she don’t like selling or are not trained or versed in selling. You’re setting him up for failure, and your results will be horrible.

Terry: A good business owner hires slow and fires fast, and that includes you. If you’re not good at the job, then leave that position and hire someone that is.

Rob: The U.S. is experiencing a mortgage meltdown; foreclosures are reaching record highs in many areas and home prices have fallen. You come from the school of thought that states you can become rich in virtually any economy conditions. What are you and your real estate coaching clients doing in this economy to capitalize on the situation?

Terry: I think it is a great time to be buying because you can do short sales with the bank. You can buy good properties, with cash flow from day one, and paying $0.30 to $0.50 on the dollar.

I also think the 80/20 rule is very much in effect. When 80% of the population is talking doom and gloom, then you should be the 20% that are buying. If you want a bigger house, then now’s the time to buy. If you want to buy a commercial building for your school, then now is the time to buy. You simply have to do it right. You can’t pay too much for a property and make it up in volume. That does not work, but when you’re paying only 30, 40 cents on the dollar or below market value, then you should be buying.

Rob: Do you see a turnaround in the housing market coming anytime soon?

Terry: Real estate cycles are using every seven years, with a rise or fall. In Colorado, we think we hit the bottom. We’re expecting to see 10-15% appreciation by 2011, 2012. Now, we’ve had some huge curves with all the foreclosures, but, during the next seven years, all the people that bought now will be very wealthy.

Rob: I’d also like to add that you’re a cancer survivor. I was shocked and inspired when you told me about your amazing story. For the benefit of our readers, I’d like you to talk a little bit about your bout with cancer and specifically focus on how your martial arts training helped you to kick the cancer.

Terry: I think martial arts training gives me (and everyone for that matter) the attitude that you keep on keeping on no matter what. My Karate schools were on autopilot, with systems in place and doing well when the doctor told me I had stage-three cancer and I had a 90% chance I’d be gone in six months. Being the optimistic, I asked him, what’s the good news? He said that was the good news. The bad news was that I would be in chemo and radiation treatment and sick as a dog for the next six months.

I still remember the devastating look on my wife’s face when she returned from the hallway of the office where the nurses had told her it’s not a matter of if, it’s a matter of when, and your one mission is to put his things in order. I turned to my doctor and asked, “What can I do to help you help me?” He responded, “Wow, no one ever asked me that.”

His words of advice, and I’ll share that with everyone, is do as much as you can for as long as you can. I still remember those words and I still tell everyone that’s why I’m on a mission to do as much as I can because, in reality, we’re all terminal. It’s just a matter of time.

I looked at myself physically, mentally and financially, and if you can make $50,000 and that’s all you can do, then that’s great; but if you can make $1 million a year, then should you? I say yes, I think you should.

For me, it was throwing everything I know about western medicine (chemo and radiation), but I also used my tai chi and chi gong. Early very morning, I would have the doctors unplug me and I’d do my tai chi before my treatment. I did the acupuncture and I did herbology and it all worked. At what point is it just mental, mind over matter? I don’t know, but I think, from what I’ve seen, the martial arts definitely have an edge on that. If you think positively and believe that the chi gong, the breathing and the tai chi helps, then I think it does. For me, it made a difference. I’m still here today because of it.

Rob: I think it is mind over matter. It’s good to have you walking the earth with us, Terry. I wanted to talk a little bit further about proper mindset. You touched on it a little bit, but I think we need to expand on the topic. I think it’s the critical determining factor in success. If things ain’t going right upstairs, then the rest just doesn’t work either.

Terry: I spend a couple hours everyday, working on personal development. I read the right books because we’re surrounded by negative people and bad news and negativism on TV. It’s everywhere, so you must surround yourself with very successful people and it must be on an ongoing basis because if you don’t, you’ll fall into that trap.

Computer people say garbage, in garbage out. That’s so true. Zig Ziglar talks about that in his success seminars, but many people will say, “I don’t like positive thinking because next week I’m down again.” Zig says it’s like taking a bath; you must keep doing it. I think success is approximately 70% mental, probably 10% implementation and 10% physical or technical. I think developing the mindset is probably the most powerful thing we can do to create successful people.

Rob: I agree with you completely. I’ve talked to school owners who say, “I just can’t do this or I can’t do that or I had a buddy day last week and no one came.” It just seems as if they’re creating self-fulfilling prophecies. When I talk with more successful school owners, they’re upbeat, optimistic and action-oriented. If they fail at something, such as a Buddy Day, then they keep trying. They always have the right mindset for success, instead of the mindset for failure.

I know that leadership is one of your strengths. You have a very strong military background. Martial arts instructors are leaders and the very nature of their role puts them in that position and I think you’d agree. In your opinion, what are some of the hallmark characteristics of a good leader?

Terry: I think walking the walk and talking the talk at the same time is huge. I think leading by integrity; set your core values and lead that way. It helps so much. Having integrity for yourself and doing the right thing for you and your family is important. I think many martial artists instructors assume a mindset that they must give, give and give to their students. Your students will lose respect for you, unless you’re a leader and show them that it is a priority to take care of yourself and your family. I think if you’re trying to teach respect, then you must show that you have respect for yourself and your business, as well.

Rob: Have you found, as I have, that many martial arts instructors haven’t studied leadership very much?

Terry: I think that is true about most of their personal development. They think about learning martial arts and more technical katas and techniques. The real value of their position is to become leaders in the communities. There are many leadership courses available and I think they need to study leadership, just as they need to study curriculum and personal development. What we’re doing when we run a successful school, as an example of leadership, is to teach character development and leadership qualities. Instructors must step up to the plate and be leaders in their communities and teach their students to be leaders too.

Rob: I think leadership skills can also have a very direct effect on enrollment and retention. It’s difficult to expect your students to remain with you, if you’re not a good leader. They’ll quickly leave your school to find one.

We’re very pleased that you will be a speaker at the upcoming Extreme Success Academy, September 26-28. I understand yours will focus on how to become rich in real estate, if you’re a martial arts school owner. What specific topics will you present during your session, Terry? How will it help those that attend?

Terry: I want to replicate the teaching pattern of a martial arts program. During the first year, you spent much time on motivation and excitement and convincing students to believe that they can. During the second year, students begin to work on the details. During the third year, you teach students the spiritual idea that they can do it, no matter what.

That same pattern applies to real estate. I can show the attendees at the NAPMA Extreme Success Academy how to purchase and manage commercial real estate, but they can hire an attorney to do that for you. What I really want to show them is the potential. I will show them how they can add real estate to what they’re doing right now to increase their net worth and improve their quality of life.

I relate my success to the martial arts. When I went to college, all my term papers referred to the martial arts. I have the same mindset, when I make real estate deals or run my business: it all relates to basic martial arts principles.

This is my way to give back to the community. I made my commitment to NAPMA, Stephen Oliver and all instructors and school owners who want to change their mindsets that I would give back anyway I can. This is my opportunity to give back and show school owners who are interested in the benefits of owning residential and commercial real estate. I’ll teach attitude first and exactly how we do it and then the numbers and how we do it.