From Strategy to Execution: John Cusumano’s Approach to Rural Commercial Real Estate
Welcome to another episode of the A.CRE Consulting Podcast! This time, we’re excited to feature John Cusumano, Founder of Cusco, a visionary platform reshaping retail development in rural America. With a wealth of experience as Vice President of Real Estate at MRP Capital Group, where he oversaw a $250 million portfolio of Walmart shadow centers, and his time in landlord and advisory services at CBRE, John brings unmatched expertise to his mission of revitalizing smaller communities. Cusco focuses on transforming retail spaces into thriving hubs by strategically partnering with national brands to enhance local economies.
In this insightful conversation, John shares his journey from corporate roles to launching his entrepreneurial venture. He delves into the unique challenges and rewards of developing in rural markets, the innovative strategies that guide his investments, and the personal growth that has fueled his success. Whether you’re curious about rural development, retail real estate, or the leap to entrepreneurship, this episode offers a wealth of knowledge and inspiration. Join us as we explore John’s transformative approach to creating opportunity and value in communities across the Midwest and beyond.
John Cusumano, Michael and Alex talk about the approach to Rural Commercial Real Estate
Or Listen to this Episode
Resources from this Episode
Episode Transcript
John Cusumano – Founder of CUSCO
[00:00:10]
Michael Belasco:
Welcome to another episode of the ACRE consulting podcast. I guess. Alex, we’re going to go with this name now. So we have yet to come up with a formal name for this podcast, but I think this is going to be it,
[00:00:23]
Alex:
PCR consultant Podcast.
[00:00:25]
Michael Belasco:
And we’re very excited today. Uh, we have a great guest on John Cusimano, who’s doing some really exciting things in the retail space. Um, and we’re, we’re excited to get into it. So a brief background on John. John is a seasoned commercial real estate professional with a passion for rural development. He’s the driving force behind Cusco.
And prior to launching Cusco, John served as the vice president of real estate at MRP Capital Group, where he played a vital role in acquiring large portfolios of Walmart shadow centers, totaling more than 70 plus
[00:01:00]
properties valued at over 250 million. John’s prior experience includes landlord and advisory services at CBRE, CBRE.
And he’s a graduate of DePaul university and a member of, of ICSC, uh, and is dedicated to building a future where rural America thrives. John, thank you for joining us.
John Cusumano:
Absolutely. I appreciate you guys having me on and, um, I’m excited to, obviously it’s always great to get, get to talk about your platform and what you’re working on and I always love to, you know, try to find every opportunity possible to do that, so I appreciate you guys inviting me.
Michael Belasco:
Yeah, great. And what your, your strategy is very unique, um, especially in the retail space. There’s, there’s a lot to get into here, but you know, the old adage of retail follows rooftops. This feels a little unique on the surface.
So I want to get into your strategy. Why don’t you talk a little bit more about what you’re doing, uh, just as an overview for our, our listeners, and then we can go into the why’s behind it.
So, so, you know, the
[00:02:00]
floor is yours.
John Cusumano:
no, absolutely. And I appreciate the intro there. The, the background of my experience at my prior company allowed me to get access into this new world that, you know, you really didn’t know existed in small towns, you know, they followed Walmart, uh, around the country and looked at, you know, buying Walmart. Shadow centers, strip centers that are next to top performing Walmarts in small towns. And that opened up my eyes to a larger opportunity. And I’m very fortunate with that opportunity that I had to work there for so long and help build and grow that company and got unbelievable experience. And through all that, you kind of cultivate some relationships with some of the national retailers that I like to work with and try to, you know, like to work with and try to work with and help them grow their brands in smaller towns. Throughout the country and you know, really what you kind of find and it’s, it’s a hard thing to wrap your head around unless you’ve been there, unless you’ve had experience going to a small town, uh,
[00:03:00]
there’s an economy there. There’s people that live there and a lot of times the Walmart or the retail, a little corridor where the Kroger Publix, Walmart, Lowe’s, Home Depot, et cetera. They’re the oasis in the desert, and people drive from 30, 40 minutes away to, to, go to that Walmart and go shopping there. And a lot of times in retail, everybody in, you know, top call it 25 MSAs or bigger populated areas. They’re looking at one to three to five mile population radiuses. To justify their, you know, criteria and demographics, population density, et cetera. Those same measure measurements apply to small towns, except you have to kind of explain and done this a lot in my careers, that in small towns, one to three to five mile radiuses can reach up to, you know, 25, 35 miles. It’s the same amount of people that live within that 35 mile radius, but they
[00:04:00]
all come in. And, you know, they’ll spend all their time shopping in that small town. So retailers are kind of slowly and they have been exploring and, you know, growing a lot more in rural markets because they can see the benefit of it. And I like going to those markets just because it’s, you know, there’s a huge level of fulfillment when you go to those communities and you bring in a national brand that provides higher paying jobs. You know, maybe if it’s a corporate business that they’re providing a certain level of benefits. And that is huge because a lot of those, the people that live there, they get really, really excited about all that. So there’s a lot of fulfillment on that and that, and that lens. And then also, you know, retailers find some areas where it could be challenging to grow because of the environment right now, where historically they rely on preferred developers, Here’s a list, go buy me dirt and go build it.
And they flip out of
[00:05:00]
it. Well, right now I think it’s, you know, no, uh, secret that it’s the construction environment and the interest rate environment becomes, it becomes very, very challenging for developers to go build. So my strategy kind of started to pick up when a lot of the retailers would call me my prior job and say, Hey, developer one sideways. Can you find us something to build or buy, or can you put us into one of your shopping centers? And so then I started to think, well, there’s kind of a preferred developer concept here, but a preferred landlord kind of go find something existing and go buy it, put in the retailer. So that’s, that’s loosely the strategy right there.
And
what I’m working on, uh, throughout the country.
Michael Belasco:
So fascinating. So it’s, it’s almost like, are you finding yourself. Having to have deeper conversations with prospective tenants. Like when you are looking at a property, do you have a tenant in mind? Do you get a
[00:06:00]
tenant ready to go for a location? How does it all work in turn? Or is it different each deal?
Maybe you find a property, you find a tenant that might be a good fit. How does that all go deal by deal with
John Cusumano:
Yeah, it depends on the retailer. Some of them, we, we can get comfortable with each other where, Hey, here’s a list. Go and look in these markets for us. And then there’s also, if you’re a real estate. You know, operator, you have to go find good real estate and good opportunities. So you look for those and then, okay, well, this tenant, this tenant, this retailer, this retailer, this restaurant, they’re all not in this market.
Michael Belasco:
Yeah,
John Cusumano:
Can we, you know, put something together and put you guys in and what also, you know, there’s another huge variable to this whole thing. Corporate is a different business model than a retailer that is a franchisee model. So you can, you might find a home run site and it might be a good opportunity for that retailer, but does their franchisee. And can they grow there? Do they have the
[00:07:00]
means or the resources to grow into that market?
Michael Belasco:
awesome. So where are you guys now? How, how new are you? Give us the whole sort of background. Like, when did you guys launch? Where are you present today?
John Cusumano:
Yeah, so
Michael Belasco:
geographically?
John Cusumano:
yeah, so I started this platform about 7 months ago to the date. Almost, um, is when I officially left, uh, my prior company and geographically speaking, I will look anywhere that are border states to Missouri or kind of that South Southeast in mid. uh, pockets, uh, markets that I’m familiar with that I’ve been to or spend time in. And the first property that I acquired was a little over a month and a half ago. It’s actually been almost two months now. Um, bought a little strip center, a little over 5, 000 square feet in Moberly, Missouri. which is in the upper central part of Missouri. And, uh, yeah, I just, I just bought that and getting my arms around it.
And the original plan was to acquire that for a
[00:08:00]
national cell phone operator and it didn’t go as planned, but your first deal is never supposed to go as planned.
It’s supposed to change 25 different times.
And most deals do, you know, change a bunch of times, but this one, it was a, it was still get a great opportunity to buy and I love it.
And it’s, uh, We’re working on with some national fast food restaurants or quick service restaurants that will be able to occupy that last space. And it’s got two other tenants. And so really a lot of my job is to try to figure out where are these markets that these retailers are growing in. So I can start doing my research and start getting on the phone, start digging up some potential opportunities. And, and, and going about it that way.
Michael Belasco:
Yeah. So a lot of this is, is understanding the criteria. So I assume you’re
building a list of these. Of these tenants that are, you’re trying to bring in, figuring out what their boxes are for real estate professionals. It’s a buy box for, for these tenants. I guess you can call it a lease box,
John Cusumano:
Mm hmm.
Michael Belasco:
all these boxes,
[00:09:00]
then they’re, they’re likely going to fit.
And I love what you said about the first deal. Like this is, you know, you’re, you have this incredible background, right? A lot of institutional experience, a lot of know how you get out on your own. And it’s all like, you have all this. Personal experience. I’m sure you have a large network of people to to tap into and things have to happen on the fly.
And like you said, nothing goes as planned, but you have to take your step out and take that
that first step. What? And I’m going to bring this a lot for our audience. What? Made you feel that you were ready because I love where you are right now, right? In your, in your career, you have this big background, you had this, this large group you work with now you’re at what, what made you decide now was the time to go out and strike out?. Yeah,
John Cusumano:
Well, I had like personal aspirations of, I wanted to own real estate. I wanted to start my own company. And loved the prior company I was at because it was entrepreneurial. And it was, I was the 11th
[00:10:00]
employee there. And I was just in this, just constant growth mode. And figuring out new processes. Managing people being the Swiss army knife in certain situations.
And I think if I didn’t get that experience of when I did in my, in my twenties, that I would have, I don’t know if I would have been ready. And I had seen a lot there and I was super, again, I can’t tell you how much I was fortunate. That I had that opportunity and just the amount of growth and the amount of crisis situations that I was thrown into at a young age, that kind of got me to really, really grow up, uh, in my professional career and seen a lot. And after a while, you know, I might’ve thought like, Hey, I’m ready. But I guess you’re really never ready until you start doing it. And then you start like, start getting into it all. And you’re like, shit, I don’t know what I’m doing here. But you kind of get through it though. You kind of figure it out. And, um, I know I would not have been ready three years ago or
[00:11:00]
four years ago for that matter. Uh, it’s just a matter of. Your level of confidence and, and going out there and doing it. And, uh, I kinda just really, you know, could probably pinpoint that was the timeline in the last year I felt that, um, about a year ago and, uh, started planning and starting thinking of ideas. And actually, you know, really the biggest thing is, is all you gotta do is listen to you’re in the service business at the end of the day. And if you’re an owner operator, if you’re an owner, your principal, whatever you’re servicing investors, you’re servicing your retailers and your tenants, you kind of just got to listen to what what’s going on out there. What are they missing? What’s, what’s the challenges? Why can’t they open up stores in rural America? Why isn’t it this piece of real estate good for you guys? What’s better about this location across the street? Try to understand those mechanics. And the other thing that you had touched on too, which is part of this buy box criteria is that you have to listen to what.
[00:12:00]
These retailers criteria are the criteria is because you might be going into a vacant building or there’s a vacancy there and you’re working with a restaurant operator and it wasn’t a restaurant. So then I have to factor that’s going to be very, very expensive to build out a restaurant right now.
So that, that kind of hinders your buy criteria when you have to go do that.
And there’s a lot of, you know, very, very call it, um, nuances when you’re looking at, um, certain acquisitions.
Michael Belasco:
Yeah. I love there’s, there’s a lot to unpack there, but what I want to hit, hit on is you said. At the end of the day, you were in a service industry. A lot of people, and I love that you said that because a lot of people don’t realize that, like if you realize real estate is everything in a weird way, right?
We have our lens on, we are real estate professionals. But you do everything from your entire life, from being born to living, to working, to dying, like to everything that you could
[00:13:00]
possibly entertain, everything you could possibly do. You serve in a weird way, not to be like overdramatic, but we serve humanity and we’re the background of humanity, right?
In a lot of ways. And again, that’s a little overdramatic. But you have to listen, right? We are sort of the conduits. And if you are hearing something, you know, that’s the goal. It’s not about like, okay, what can, what can I do to better myself? Right. It’s how can I better serve? The people that are going to be using, there’s like not only the end user, but the tenants themselves.
So I love that. And you’re hitting a niche because a lot of people, you know, Walmart is the exception to the rule and you guys kind of latched onto them in your previous company, which is a great idea because Walmart’s seldom, if ever, as far as I’m concerned, closed down. If they do, they’re moving down the street to a better facility, right?
Which happened in a. In a town near me. So let’s go back to now into your, your strategy for a little bit in that lens of being like a service provider. So what are some of the criteria specifically even for the
[00:14:00]
end user for the town? Right? Like, yes, you want to better the employment opportunities. You know, how do you identify?
The needs, and it could be as simple as, Hey, we have a map. I’m just curious. Like, how do you pick and choose? Is it, you start off looking at available properties and then do the macro back out into the location. Do you pinpoint locations for our user, for our listeners out there who are trying to hone in on site selection and strategy, any insights that you have?
John Cusumano:
Yeah. Uh, I would say patience is very, very key in all of this because something that you might have been chasing six months ago could come back, could come back around and could be on the market. And site selection is very, very challenging. Uh, particularly inventory is not really, there hasn’t been a huge surplus as of late. And, and there’s obviously a ton of different real estate platforms that you can look at to see what’s available on the market. And that can be part of
[00:15:00]
your site selection. Uh, there’s, I mean, there’s tons of them out there and there’s a lot of free ones that are out there. And then there’s also, uh, you gotta, in small towns, there’s a lot of the leads or possible opportunities.
You got to get in your car and go drive because they’re the sign in the window could be the size of this piece of paper and just says, For lease by owner. And you’re not going to see that on Google maps and Google maps. And sometimes in some of these cases is an open or as an updated for three years. So you got to really go to a lot of these towns as well and look for that. And you can tap into your network and you start to slowly peel back some landlords that also own in these smaller towns. And Hey, what’d you think about selling this? And I know you’re moving on to bigger grocery anchor stuff nowadays, and you kind of just have to really. You gotta be on the phone a lot and you gotta be looking at different leads and different, um, opportunities,
[00:16:00]
but it’s not, it’s not a short term game. It’s a long term game and it’ll test your patience on finding opportunities. Congrats.
Michael Belasco:
quick scheme. It’s like a longterm, you know, You got to, you got to get your base hits. You got to get stability. What I’ve noticed. And so you and I, you know, you and I are in a similar spot right now. I just launched my platform. I’m doing outdoor hospitality next to, you know, outdoor bucket list destinations. And, um, we just got funded for our 1st development project. We’re developing it. And it is rural ish, right? I mean, we’re out next to, you know, national parks. Right. And, um, what I’ve noticed is like, once you get your first one done, things start showing up and this is for the listeners out there who are about to be where John and, and, and myself are, which is once you do that, like things, you got your first deal.
Once I get stabilized, you know, and I’m sure like other people are
[00:17:00]
showing up out of the woodworks. Like we announced our project. And all of a sudden we’re getting a lot of emails, even from local folks in the area, you know, property perspective, property managers towns next door where the planning, uh, you know, the head of planning is reaching out because they want to connect.
So getting that 1st, 1 done. And finding that is very critical to sort of opening the doors to potentially the next opportunities. It feels like this huge lift and maybe you’re experiencing some of that as well. Where like you get your first one done, then all of a sudden people start to show up and say, okay, you can get this first one done now.
I want to kind of see
John Cusumano:
Absolutely.
Michael Belasco:
next. And maybe you have some stories about that based on like, Hey, you already have the experience, the shadow anchors. of of Walmart, you know, kind of is it rhymes with what you’re doing. So.
Curious if you’ve had any, like, Hey, all of a sudden, like the momentum’s being, Hmm.
John Cusumano:
and you know, when you’re under contract and you’re trying to
[00:18:00]
buy this property and there’s all of the thoughts that are going through and spiraling that if I don’t buy this, then what, what do I do? Or I got to close on this thing and I still really, really liked the real estate that I bought. And it’s, it’s, it’s a very, very good deal. I bought it. Right. From a price point, and I still, you know, was able to execute on it, even though it didn’t go to the original plan. But after you do that, there’s a certain level of credibility that you get. And, uh, obviously the other piece that, uh, talking about lead generation or finding opportunities. Is leveraging your platform in your social media network or, you know, whatever that might be on LinkedIn. For example, you post something, okay. A broker’s like, Hey, I got something that I think might be fitting your criteria. All of a sudden you’re looking at a couple other deals. Because brokers like buyers, they like guys who can close on stuff.
It gives them confidence that, Hey, I can present this opportunity to you. And you just bought something. I feel a lot more confident that, Hey, you could maybe buy this. It fits your box.
[00:19:00]
And so that’s another really interesting thing that, uh, is becoming a lot more popular and prominent in our business is finding those types of opportunities out there. And my approach, and this is, uh, something that I feel very strongly about, And I’m not making bucks off this first deal. My fruit, my, my logic was go after something that’s small, that I know I can go manage by myself. And I can go take on, get my arms around and, uh, call it your, your base hit. And, and go start from there, uh, and not try to buy something that’s super out of my, you know, bandwidth handle and just take that philosophy, just start, start small. And I made it a goal that I would buy a property before I was 30 years old. And I did that. And, and it was huge sigh of relief. You get it done. You’re just like, Oh, wow. Okay.
Michael Belasco:
Yeah.
John Cusumano:
get really, really good at this. Let’s automate this thing. Let’s really, really get this thing up and running.
[00:20:00]
How do I get this streamlined process?
So for when the next property I buy, it’ll be very, you know, easier to go into it. And this is how I work is how I like to do it. What softwares do I need to use, et cetera, and getting comfortable with that. And that, that was very, very important to me. And, um, going in the future, you got to look at it. It’s owning real estate.
I could, you know, I have a 30, 40, 50 year career that I can go work on. It’s not like I need to get something done tomorrow. Cause I have a, a boss telling me. Hey, you got to get this done out the door. I’m looking at the longterm.
Michael Belasco:
Yes. It’s the infinite game. I love that. You said that you cut your teeth first. Not only I love that approach too, but other people just, they want to go big. Right. Cause, and first of all, if you want to go too big too soon, you may not get there. Right. And there’s a lot of things you don’t know, doing something small, like you said.
You get to see all the nitty gritty, all the details. And a lot of the things you’ll do on the small deal you’ll do on the big deal, but you’ll,
[00:21:00]
you’ll get to touch everything, everything from like, and you have, I mean, your experience in like, you know, land, you know, landlord advisor, you know, all like the leasing, but some people, a lot of people come into real estate, they don’t have the nitty gritty of that.
Right. You do a small one. First, you touch that. Even everything from getting insurance. You know, like just touching everything, like on my site from development, even getting the payment that like, I, you know, I was previously an institutional shop working on large scale development. I saw a ton, you know, but being able to touch it personally and putting your own, like, uh, your own flavor or your own input, you can design your own process taking, you know, it’s almost like standing on the shoulders of giants.
You’re taking what you’ve learned from your previous company, but doing it in your own way. Taking the small piece, moving up to the bigger one, but instilling your processes, automating, right? There are certain things that I’ve done on this project, and I’m sure you’re doing with your building that you’re going to take with you that are unique to you, but it’s how you like
[00:22:00]
to get it done, right?
It’s your own company and it’s going to scale up from there. So I appreciate that, like starting small, something you can wrap your arms around and then building and scaling from there,
John Cusumano:
I think what’s more important that you might’ve said, or you may maybe miss it, but jot down and figure out what didn’t work or what you didn’t like for the next one,
Michael Belasco:
Right.
John Cusumano:
figure out what worked, but then figure out what maybe you should have done sooner, or maybe you should have used this company for this, or you should have, you know, maybe, you know, done diff just little nuances throughout the process that, you know, I’m all about learning from experiences and how do you develop and grow and grow and grow and grow and learn from all that.
Michael Belasco:
Love it. Love it. Alex, I’m going to kick it over to you. I don’t know if you have any questions or want to chime in. We’ve been, we’ve been talking a lot. I don’t know if there’s anything you want to add.
Alex:
Yeah. Yeah. So funny enough, I actually started my career at landlord, um, advisory at CBRE, just an internship. But that’s how I got my, uh, what You know, my toes in the water in the
[00:23:00]
business. And I remember the first thing I did was just like reviewing a bunch of office leases and I’d never seen anything.
So, you know, for those that start out in brokerage, particularly leasing brokers, trying to move on to the principal side, you know, at what point did you know, I think I want to be on the investment side or I want to pursue this and what advice do you have to people want to follow the same path?
John Cusumano:
My, my two cents on that was I got good experience at CBRE and loved it. Love learning how to do the deal, doing a lease, making your landlords happy, different clients, kind of getting a little bit of exposure to their investment vehicles and how at least, you know, factors into all that. And I left that company because the opportunity I got at my prior job was kind of what I was looking for.
Not to be vague, but I was like, I wanted to go into a little entrepreneurial environment where. you’re just a number at the end of the day, where can I go be a part of something and something that was growing, but
[00:24:00]
not growing to the part point of where the company went and bought 70 properties in over two and a half years. And going to the, uh, getting brokerage experience is very critical for when you go to a principal side, because it gives you a different, Uh, level of experience and confidence and deal making and, uh, et cetera. But when you get to the principal side, my biggest advice is look for a company that is going to value, value you and value you as a, you know, actual team.
And that’ll, you’ll be a part of something. Uh, and that, that’s, that’s, those are hard to find. And cause at a principal, you need to invest in people because. You’re managing assets, you’re managing investors, assets, brokers, or, you know, there’s trying to do a deal and move on to the next one.
Alex:
That’s a really good point. And then, you know, given that you’re out on your own and your strategy is really unique, especially going into these rural areas that there may not be as high availability of
[00:25:00]
capital. You know, how have you overcome that challenge and brought capital to these areas? Is it, you know, having those national tenants that are coming in right behind you?
Is that been part of the story that you’ve pitched?
John Cusumano:
Yeah. It’s, it’s that, and having the expertise to, uh, communicate and give everybody, you have, it’s just all about the confidence in what you’re doing and believe in the strategy. And that gives you the ability to raise capital and execute on your business strategy and has all of the variables that you just mentioned is the national tenants and knowing what is it going to cost to do a build out.
And it’s, I don’t think to summarize when we are tied back into from the beginning of the conversation of when, what is I ready? I wouldn’t have been ready three years ago for this exact reason. I’ve been able to know how to communicate to the investor pool that I have this level of experience and here are the retailers that I do work with and here is my expertise and how I’m going to go execute on that. That’s where, uh, every investor
[00:26:00]
is looking for a good sponsor and a good, good opportunity. So, uh, I did, you know, for my first one, I was, I’m actually very proud of myself that I was able to execute with the investor group that I did. And so I’m, I need to look for another one for him
Michael Belasco:
Yeah. Yeah. Capital is the hardest piece. I think when you’re first getting started to, it’s like finding the opportunity and then, you know, maybe you had a hundred nose before that yes comes in, but once you get the yes and you do well, it’d be again, like we were saying earlier, it becomes, it becomes a lot easier.
John Cusumano:
and always, uh, don’t, I learned about, I learned this and I was just very, very underestimating. My ability to execute. So it’s the, uh, the old saying is don’t, uh, what do you call it? Don’t, um, over promise or
Michael Belasco:
yeah.
John Cusumano:
under promise over deliver.
Michael Belasco:
No, over, yeah, don’t, don’t over promise and under deliver, but yeah,
yeah, exactly. Yeah.
John Cusumano:
Yeah. So
[00:27:00]
that was my whole methodology with one of the tenants that were in the shopping center. I just conservatively gave a renewal rate that I think I’ll be able to get them to. And they still thought that was, Oh, that seems a little like a big, that seems like a big increase. And I ended up doubling the increase that I had told them.
And they were like, Whoa, okay. That’s amazing. I can’t believe you did that.
Michael Belasco:
A conservative sponsor. Is that what I’m hearing?
John Cusumano:
Yeah. Yeah. Well, I didn’t want to, you know, shoot for the stars and then get myself into trouble when they say, well, you told us you were going to renew them like this. And I ended up doubling it because I knew deep down inside, that’s what I could do. But there, I think there’s a lot of groups out there that maybe tell their investor pool, Hey, I’m going to, you know, have a. 50 percent IRR and really end up getting them a 15 percent IRR. And then everyone’s kind of scratching their head. Like he told us you were going to do something different. Just be transparent, honest.
Michael Belasco:
that. I think that’s critical. That is critical to you. First of all, make sure you’re not kidding yourself. A lot of people get
[00:28:00]
excited, especially in the start. Uh, it’s my first deal. I’m going to do whatever it takes. Don’t kid yourself. You said something earlier about being patient. I think it was under the lens of deals might come back to you, but also be patient and acknowledge that just because you’re excited to get going.
So don’t kid yourself about the numbers you think. Sometimes you could even tell yourself, this is a moon shot, but I think I can get it. You know, the worst thing to do what you’re saying is tell the investor pool that you’re convincing for the first time to come on board with you. Um, and we talked about this before.
I, I say this alive. I forget even where I heard it, but the type 1 and the type 2 hours of real estate, the type 1 hour is. The deal you did and you shouldn’t have done and you only get one or two of those type two hour you get infinite of It’s the deal that maybe you should have done but you didn’t do so bringing your investors along in that type one Deal on your first one you have to start all over again finding your new capital pool, right?
You you do the right thing and be very conservative Upfront,
[00:29:00]
realistic, convince yourself. The deal is good with the conservative metrics that you used. You doubled it in your scenario. You’ll do incredible. Like you said, the, the word, what is it? It’s a under promise over deliver, which is
John Cusumano:
Some of the, yeah. One of my favorite quotes, uh, a guy that got me into the business when I was in, I, he got me my internship at CBRE before I got a full time job there. He, and I catch up regularly, but he had just said that sometimes the best deals are the ones you don’t do.
Michael Belasco:
Yes.
John Cusumano:
And that could be a lease because the build out is too expensive.
That could be a property and things are just getting a little iffy and gray. And some, you got to look at it that way too. Some, some of the best deals you do are the ones that you don’t do
Michael Belasco:
Do you get,
John Cusumano:
upside down underwater, et cetera.
Michael Belasco:
do you ever get like the, like whenever I’m, I love like the acquisition side, I always get a rush when, uh, I’m looking at new deals. I get very excited about it. And, uh, you know, you want to convince yourself and then you really got to,
[00:30:00]
it’s almost like adrenaline. I don’t know if you feel the same feeling.
It’s like you
find a new deal. It shows up, the broker’s got a nice flashy picture, you know, and you’re like, Oh, this looks great. You know, for me, it’s like, Oh, this is by, I’m doing outside. It’s like by a lake and blah, blah, blah. And then, yeah. You know, a day goes by two days go by and you kind of calm, you have to do that.
And then you kind of get calmed down and then you bring it back to reality. Some people can’t bring it back to it. They, it’s like, it’s like a junkie mode almost. Right. It’s like you get that adrenaline kick and you want to try to find ways to keep it going. Stop that, you know? And, uh, so I’m sure you get that feeling.
A lot of us do, which is why I think a lot of us love real estate, especially on the acquisition side, it’s like,
John Cusumano:
All of it. I mean, all of the,
all of the pieces that. I get, you guys don’t know me that well, but I get jacked out very, very easily. So I always have to kind of just
Michael Belasco:
Yeah,
John Cusumano:
because I get really, really excited, even about getting a leasing sign up, fired up
Michael Belasco:
that’s a big deal.
John Cusumano:
just like
[00:31:00]
all, all of the little things I get excited about.
And I think that’s pretty important too, is just not losing that enthusiasm. And I think, you know, that is something that I will. Do my best to try to carry out to my career’s enthusiasm.
Michael Belasco:
Yeah. Passion. You wake up every day
John Cusumano:
Oh, absolutely.
Michael Belasco:
which is why, well, yeah,
John Cusumano:
so I’m sure you’ve talked about this a ton on your platform, but just in terms of your strategy did was, I mean, there was probably a point in time that you had to take a lot of planning and vetting will this work, who else does this, what’s your competition in landscape and, or were you at another company that had like did the same thing?
And then you
Michael Belasco:
I didn’t. So I was at it. So, um, you know, I started institutional shop. I was at Heinz, uh, where I started left, um, this, you know, ACRE allowed me the opportunity to leave and I was going to start my own shop. I ended up at, um, stable with properties, um, with, I don’t know,
[00:32:00]
you know, my, the co founder of a Sherry Spencer, who’s still there today.
And what I saw was just this incredible opportunity in niche real estate. They went after STNL. They had a unique strategy of, you know, aggregating STNL portfolios, using a lot of tech, but it opened my eyes up to just the opportunities of the smaller niche spaces and capital, less sophistication in the space, not a lot of institutional capital yet.
And just this whole world of where there’s yield and institutions are coming. All right. So. You know, at that time when I was at stable and I left and I started looking at, you know, even the single family rental space, not built to rent, but like plucking off one or two in a, in an aggregated area and it had legs.
Management was very intensive, though. I kind of realized and then interest rates kind of went up and it sort of tanked it. So I was back to the drawing board. Um, the R. V. RVs,
[00:33:00]
you know, camping, glamping, all that stuff really piqued my interest. You know, I think I saw a study from RVIA and just showed this graph of like a 70 percent growth from COVID in RV ownership.
Right. So for me, it’s no matter how sophisticated or simple it’s. Is demand greater than supply? And is there attractive price? I say this all the time, right? Is demand greater than supply? And is there attractive pricing, right? Demand is greater than supply and multifamily, but there’s not attractive pricing, right?
It’s to everybody’s in there in that space. And, um, this space had all the markings of these opportunities, very fragmented, very non institutional, hard to find. I love like outdoors and all, you know, I’m, I’m a big camper. I love hiking and all that. So it just, to your point about the passion and getting excited, it was like, wow, this could be a space.
That not only is my personal passion involved, but like, there’s actually like my industry expertise can be applied. So, you know, we had found a site. Our first one was right next to Olympic national
[00:34:00]
park, ended up being a great site for all the reasons I mentioned, reasons I mentioned, but the challenge, like you said, is what you had in your strategy is you had a, what you did prior rhymes very nicely with what you’re doing today, right?
Walmart, shadow world, you’re into that space. And it’s, it’s a great, for me, it was like, What’s your business in RVs? I don’t have any, right? I don’t have, I don’t know it. I wasn’t in the space before. So my challenge, I had a site. We tied it up. We had capital to close on the land, but I had to go out and convince capital that we could do this.
We can manage this space. Right? And that to me, I got tons of connections to capital, but it’s a small space, right? Like we were raising six, 7 million. I’m Institute. I know the institutional people. They’re not investing in this deal. So I had to meet a whole new group of people and very interested, but you’re too early.
No, no, no, no, no, no, no. Constance, right? For the capital. So my
[00:35:00]
Resolution to that was finding the experts that I could partner with. Right? So I found someone, uh, guy named Cody Fishel, who, um, he’s, he’s our, on our advice. He advises us. He’s working hand in hand on us with this first project. He has other stuff going on to bringing him in, allowed the credibility to get capital excited, to get them involved.
Now you have the real estate expertise. You have the subject matter expertise. And you had the team now here that can now go out and, and execute. So, you know, for me, it was more finding the opportunity, finding the deal, putting together the pieces that, that I needed
John Cusumano:
quick, quick timeout. So the, uh, The plan is to go look for an existing RV park, construct new,
Michael Belasco:
both. So we’re developing this first one, anything that fits into this portfolio. So we’re building a portfolio of these outdoor bucket list destination parks. We are capable of doing development. We have that expertise in house.
[00:36:00]
Um, and then we have, now we’re going to build our own internal. Property management team that could actually manage for other groups as well.
But we’ll have this with this first one, the brands RV at, so RV at Olympics, the first one, and now we’re looking at the dream RV at Yellowstone RV at, you know, Grand Canyon, Grand Canyon may be impossible, but
John Cusumano:
So is
there a surplus? I mean, I’m not super, super familiar, but is there a surplus of RV parks, near national parks all across the
country?
Michael Belasco:
there’s not, there’s, it’s, it’s a very high barrier to entry. What’d you think? There’s just tons of land everywhere, but some places there’s like there’s water rights. We went under contract in Bryce Canyon and we, we couldn’t get the, it was, you know, contingent upon approvals. We couldn’t get the water rights.
Um, can you mention construction, getting labor out there to make it feasible to develop like labor material? It’s hard to find these develop developer pools. So there isn’t enough of this. So there’s this huge growth in outdoor.
[00:37:00]
Camping are being, you know, it went from like, I think it was like 7 to 12 million or yes, 7 or 8 million RV owners to 12 million postcode.
Um, so that was the supply demand imbalance that we saw. And there hasn’t been enough properties built to catch up to that. And there’s a lot of niche strategies within the space. But, um,
John Cusumano:
So do you have like a certain level of, cause you’re tracking down some certain population requirements, annual visits,
have visits ticked up in a certain, you know, You know, year, six months, whatever. So you’re, you’re, I’m, I, I, I’m not sure what the data, I mean, they’re probably what public data on national parks that allow you to look at that type of foot traffic.
Michael Belasco:
Yes, so there’s public. So sometimes when we’re not always looking at national parks, but yeah, so the national parks have data, they have visitor data. Now it gets tricky like Olympic National Parks, massive, and there’s 10 different entrances and how do you know where you’re buying? That’s where the
[00:38:00]
main traffic is.
Right? So there’s nuance, which creates. That’s the risk reward opportunity. If you can get down into the data, you can’t go get an STR report. You can’t go to CoStar for RV parks. That’s the opportunity. So can a group like us come in and standardize this, this. Yeah,
John Cusumano:
I mean, when you’re in my, in my mind or my, my past experience here with this deal, I bought Moberly, you know, there’s obviously confidence you have to instill on the lending side is the same on the investor side, because investors say, well, who’s going to buy this if you sell it or how are you actually going to exit it and what Well, the bank says, well, what are the credit worthiness of the tenants?
But they all ask the same questions. And it’s like, I don’t want to put them in the same box, but they kind of are the way that they ask questions and the same similar results. So for you, for your strategy, the. On the. lending side, was there, because this is kind of, you know, more of a, obviously more popular modern
[00:39:00]
day, I mean, there’s parks and destinations have existed forever, but to put an RV park next to it, that’s a little more innovative. Is that been a challenge on the lending side and trying to explain that to, you know,
Michael Belasco:
I wouldn’t say it’s, yeah, and I wouldn’t say it’s, uh, it’s definitely outside of the typical lender box and RV parks aren’t, I wouldn’t say like, they’re not, I mean, they’re, they’re definitely not revolutionary. We’re doing some unique things in there, but, you know, putting hospitality stuff next to national park, you can get comfortable.
The key for us is we found a local, um, That, um, was familiar with the area and that helped a lot because they know the area, they get the strategy and then they base it on like we had to come up with a lot of data. We have a ton of proof and validation that you could get comfortable around. I mean, we went and counted every single site within every RV park and figured out what the true competition is.
We had both on the supply demand.
[00:40:00]
We, we tried to track down the data as, as, as much as we could, Hard as we could basically the imbalance is great enough, you know, so that helped get a lender comfortable The other thing that happened was um, and this is a bit serendipitous for us, although it wasn’t contingent We already got a lender signed up A park down the street sold an RV park for 30 percent above what our all in costs were for development.
So that helped.
Uh, so that’s the attractive pricing piece. Now, I don’t think you can get that again. We, we, we found the right site. It was, there was some circumstances that allow us to close on it. That might be a double, maybe a triple, I don’t know, but that’s not going to happen in every Location, you know, um, so yeah, it’s different.
It’s a high, you got to find, um, lenders that are more conducive to like hospitality, right? What’s for construction. What’s the takeout going to be? Do I feel comfortable? I mean, Olympic is a top 10 national park, right? And even through COVID, it was
[00:41:00]
still in the millions of visitors. So you get a little more comfort, you know, we’re the closest transient park.
So. There are metrics that get people comfortable again, construction’s risky. We put a lot down too. I mean, we have about 30 plus percent equity on this deal in. So I think that that helps as well.
John Cusumano:
yeah, I would imagine that would get any bank comfortable.
Michael Belasco:
but yeah, let me flip it back to you.
So you’re in rural, you’re in rural, uh, areas, which I imagine. You know, shadow anchors, right. And, um, well actually no shadow anchor. Some of our listeners are new to the space. Why don’t you briefly give a, uh, overview of what, what shadow anchor is. And then let’s go back to the lending thing.
So I want to ask you
John Cusumano:
Yeah. absolutely.
Michael Belasco:
anchor. Yeah.
John Cusumano:
So, uh, you know, think of a department store or a grocery store because it’s in theory, the same exact thing. There’s grocery anchored retail, which is the little strip that’s attached to a Publix, Kroger, Meyer, Hy Vee, whatever, there’s a little retail strip that’s in front of it.
[00:42:00]
And then there’s Walmart shadows that are the same thing, honestly, at the end of the day, but then that became, it’s like this whole branding thing, a home Depot, shadow, shadow center, low shadow center. Goodwill shadow center, whatever it might be. It’s just a little strip center or shopping center. It’s either attached or in front of.
And the, the, the, the,
marketing piece to it is they shadow that big anchor because a ton of traffic’s coming there. And that’s why it’s a good opportunity to either move your business there or pop, buy this, this product. This shadow center.
Michael Belasco:
Yeah. So a grocery anchor, you own the anchor, a shadow anchor. You’re not connect the technical. You’re
John Cusumano:
the difference. Exactly.
Michael Belasco:
Yeah, so you’re buying it. So it’s a retail that has no major anchor, but your proximity makes you a shower. So talk about, um, like, what’s the lending space like, you know, act like this is, you know, I get lending on grocery anchored.
I get it on here too. I’d love for you to explain like.
John Cusumano:
Well, fortunately, yeah. Fortunately, uh,
[00:43:00]
for what I’m doing, the actual deal size from a dollar standpoint, isn’t a ton, so that helps me out a lot because are they trying 10 million loan or half a million dollar loan or, you know, anyone in that one to 3 million box from all the banks I’ve talked to is, you know, The approval process is still tough and strenuous.
It’s just not as the magnitude of maxing out that bank’s lending limit. And given the strategy of what I had planned on doing and will do is try to have the lease already baked, ready to go, creates a really risk adverse strategy to the banks or. You know, comfortable and very open to working with me wherever I need to go. Uh, now when you’re talking about double digit million dollar deals, those are a little bit harder. And then for this particular property, I brought 40 percent of the equity to the table
Michael Belasco:
yeah,
John Cusumano:
and then ended up being
[00:44:00]
60 percent of the equity because the loan amount changed when I didn’t get the sign lease for the vacancy and. Got a price reduction and was able to, you know, so close on it. But when I get a signed lease or when that gets baked, there’s funds allocated with the bank that they had ready to go to kind of fund the build out. So it’ll just change. It’s just,
Michael Belasco:
Yeah
John Cusumano:
just another nuance.
Michael Belasco:
yeah, but that but that’s it. There was a common theme in both of ours Which for our listeners is is a good point is that go out and get your friends and family equity wherever the equity can come From first for if you need the debt because the large the more money you have in More comfortable
John Cusumano:
Yeah. I mean, any bank that you’re bringing over 30 plus percent that are going to be comfortable with that.
They’re going to love that.
Michael Belasco:
Yeah. Awesome. I’ll John. This was such a great conversation. It was great to have you
on. Um, I don’t know if you have any optional, if you have any parting words for the listeners, um, feel free to feel free to drop something in and, uh, we can wrap this up.
John Cusumano:
Yeah. No, the only thing that I would
[00:45:00]
leave with is do go about your job. If you don’t like it right now. Be really, really good at it because it will only open up more doors for you. There’s a lot of people that are always a lot of younger guys that you talk to or girls, and they’re like, I’m getting stuck.
And it’s the first six months, or I’ve been in this company for a year, two years, not getting the mentorship. I’m not getting the leadership that I want or the experience that I want. Just stick it out. Be really, really good at that job. And either you’ll get an opportunity somewhere else, or you maybe feel confident and comfortable enough to maybe go start your own thing and be an entrepreneur, but you don’t know everything.
Not all of us have rounded the bases yet. And have that mindset, knowing that be humble and be actual truthful to yourself that you don’t know everything. If you’re going to go start a business.
Michael Belasco:
Very well said. I will. John. Thank you so much.
John Cusumano:
Absolutely. I appreciate it. And thank you guys for setting this up and I would love to stay in touch.
Michael Belasco:
Awesome.
Definitely. And we will, we’ll, uh, probably
[00:46:00]
we like to bring our guests back on over time. So it’d be great to have you back on and to our listeners out there. Um, you know, thanks for listening and we’ll see you on the next episode.
