#163 - From Pilot Spouse to Café Owner with Brenda Gage

[00:00:00] Hey everyone, before we get to the show, we wanted to announce a very special event that's happening in Las Vegas, Nevada, October 8th and 9th. It's the Passive Income Pilots Conference. We've been talking about doing this for years and it's finally actually happening. It's happening this year, 2026. So this October 8th and 9th, as you mentioned, Tait, in Las Vegas, you fly in on the 7th. We're going to have a happy hour meetup and then there's two jam packed days in a row where you're going to learn about lots of things.

[00:00:29] How do you save money on taxes, asset protection? What investment strategies are actually working in 2026 for pilots that have been tremendously successful? We're going to do alternative investing and real estate investing and even talk about some things that are outside the box that maybe pilots aren't really thinking about. Tait, what else are we going to be doing at the event?

[00:00:49] Well, we're going to have a huge panel of experts. It's going to be a big conference. We have 250 tickets for sale. And when you buy a ticket, you actually get to bring a spouse for free. Now you can't bring your brother or your friend or the FO that you're flying with. For free, they have to buy their own ticket, but spouses come for free.

[00:01:06] Go to passiveincomepilots.com. You click on conferences and the tickets are on sale right now for $4.97. Prices do increase in August. So we encourage you to book early. It's at the M Resort and Casino in Las Vegas, Nevada. Yeah, what's really fun is that it's on a Thursday and a Friday. So if you want to turn it into a Vegas weekend, bring your spouse. Maybe your spouse doesn't want to go to every single event. That's okay.

[00:01:29] Right. But they can pop in for the ones they want to see. And then you guys can turn it into an awesome weekend. Totally optional on that. But we look forward to seeing you at our very first ever PIP live event in Las Vegas. See you there. Hey, everyone. Welcome back to Passive Income Pilots. Tait Duryea, Ryan Gibson here for another week of financial education. This week, we're talking about buying businesses. How are you doing, Ryan?

[00:01:52] I'm doing good. It's the hottest day of the year in Seattle, which means it's a scorcher. It's going to hit 90 degrees today, which I think is kind of a laughable temperature for the rest of the country. But hottest day of the year in Seattle. And this is the hottest episode that we've recorded in 2026, right?

[00:02:09] It is. Actually, it really, really was a good episode. I mean, like I said on the show, we've been talking about doing an episode about buying businesses, not franchises, but actual mom and pop businesses for a long time. We could have gone on for three hours. I'd love to have another conversation with Brenda at some point, really get into the weeds of the operational nightmares that she's experienced.

[00:02:32] But what an unbelievable story. Spouse of a pilot, went out there on her own, found a brick and mortar business, a chain of cafes that she ended up buying, building up. I mean, she's grown EBITDA by over 50% in the last three years. Just a wild success story. Six million dollars. Yeah. Crazy. Amazing.

[00:02:55] And, you know, I think what's to me, like we could have brought on like a Cody Sanchez or some kind of guru that that sells a course on how to buy businesses. Brenda is not that she went out and did it. She went out, got told no a bunch of times. And I think she's going to be extremely relatable to our audience today, especially since her husband works at the airlines and she's a spouse, obviously, of an airline pilot. Right.

[00:03:24] So like I know that we have a lot of spouse listeners that are like, I wonder what I could get involved in based on my pilot spouse schedule. Right. Like irregular schedule, not around, like infrequent flying. Right. Every month, you don't know what the next schedule is going to be like. Here's a here's a tried and true person that went and actually pulled the trigger, got told no a bunch of times and succeeded. And I think that's what makes this like this. This is as real as it gets, guys.

[00:03:52] Like if you're thinking about how do I go buy a business? How do I go make cash flow? How do I do something as a side hustle? This is the episode. So with that. Let's get to the show. Welcome to Passive Income Pilots, where pilots upgrade their money. This is the definitive source for personal finance and investment tactics for aviators. We interview world renowned experts and share these lessons with the flying community.

[00:04:22] So if you're ready for practical knowledge and insights, let's roll. Brenda, welcome to the show. I'm very stoked to have this episode with you. It was so nice meeting you at one of your restaurants. I think it was in Issaquah and seeing your staff meeting and getting everybody in action. But before we get into it, Brenda, would you just mind giving us a little bit about your background? Yeah. So I am born and raised in the Northwest. My husband and I were high school sweethearts.

[00:04:48] He's a pilot for Alaska Airlines and he actually did Embry Riddle. So our first seven years of marriage, we lived in Atlanta because he was flying for ASA at that time. And we have three kids. We wanted to come back to the Northwest. I've had sort of a checkered career in a way just because his schedule would change so often that in order to be the great mom that I wanted to be,

[00:05:12] I had to find jobs that would allow me to make the most amount of money in the least amount of time with maximum flexibility, right? Because the schedule would change. And we really wanted to be the ones kind of raising our kids. And so, you know, for many years, we were sort of like ships passing in the night because he'd get home. He'd try to bid where he would be home for sure, like Monday, Tuesday, Wednesday, because those were typically like in office type days. And then, you know, I worked for a home builder so I could kind of flex on the weekends with the nanny.

[00:05:41] And we just kind of like worked really hard to do that for a number of years. But my goal was always to do my own thing. And I always wanted to own a business, but I was just too afraid to do that when the kids were little. So our agreement was once the third one got into school full time, I could start deciding what I kind of wanted to do when I grew up. And of course, COVID pushed that back a little bit. She started kindergarten on Zoom, which is a different podcast. I'll probably cry. It's awful. But we got through it.

[00:06:11] And so it took me a full year of trying to figure out what to do. And I always kind of went back to food and beverage. I'd worked in restaurants. My husband and I both did for many years on and off. And I originally thought, well, maybe I want to buy like a franchise. So in my spare time, I would make these dorky spreadsheets and be like, what's it cost? For McDonald's or KFC or, you know, just any number of them. Surprisingly, KFCs do quite well.

[00:06:41] But then I just couldn't really fall in love with a franchise. At the same time, I realized they were pretty expensive and it took quite a while to really make money back. And I would say the biggest takeaway that I learned during that amount of time was that really, if you want to make money, you've got to be willing to do at least three. Three always felt like, okay, you know, you're making a hundred grand off your McDonald's.

[00:07:09] So you probably need at least three. Three stores. Kind of of anything. Three coffee shops. Whatever it is. Like if you really want to make it worthwhile. Because I was doing quite well, you know, where I was. It just felt like I needed to do more than maybe meets the eye. So once I put all that together and I couldn't fall in love with the franchise model, I decided to just try to go and see what restaurants were making money that maybe weren't a franchise model. And I was like, maybe I could find a little coffee shop.

[00:07:38] And, you know, maybe there's three of them. So I looked on a lot of different websites. You know, there's LoopNet. There's all kinds of different ones. But the one that I've had the most success with is a site called BizBuySell. And or ByBizSell. One of those two. I think it's Biz. Anyway, it saved in my browser. Thank you. It saved in my browser. And it allows you to filter for certain things. So I started filtering for cash flow.

[00:08:04] Which, by the way, restaurants and cash flow don't typically go together. So it's an interesting journey to just realize how many businesses are out there where you're just basically a volunteer. Which I didn't have that kind of time to spare. And so ultimately, I found cafes. And yes, there were eight, actually. And that was more than I maybe had bargained for in the beginning. But it took me down this rabbit hole to where I am today.

[00:08:32] And it's been a pretty exciting journey. I really want to unpack all this and how you bought it and how you built it and all of this. But I want to kind of, for the audience, skip to the end real quick. And can we just get a sneak peek of what the business looks like now? I mean, Ryan filled me in a little bit before the show on the incredible amount of success that you've had. Yeah. Yeah. Anyone with the SBA lending and things like that. Because there really wasn't a guidebook for me. I had to just kind of figure it out over time.

[00:08:58] Luckily, because I was permitting multimillion dollar homes on Mercer Island and Bellevue. And like the permitting checklist and the loans. Like I had enough practice at it that I was like, well, it's a checklist. You know, how do you eat an elephant one bite at a time, you know? Right. Just so it did feel daunting. But it did take a really long time. So the three year anniversary of purchasing the cafes was 7-Eleven. So I've now owned them for three years.

[00:09:27] I do have an 18% silent partner as well. She has her own side business. And so when I purchased the cafes, I think they were doing about 16.7 million a year, three years ago. And we finished last year at 21 million. So we've actually had quite a lot of growth. And we, you know, I could go into all the different things that we've done to achieve that, including, you know, keeping the culture very family friendly. And then last September.

[00:09:54] So I purchased those through the 7A program. And then last September, my husband and I bought Larson's Bakery. And actually, we bought the building as well through the SBA 504 program. And now I'm in the process of actually refinancing the cafes for a much better interest loan and getting out of the SBA loan for the cafes because it's been three years. And I am looking at a new business to purchase as we speak.

[00:10:24] So that's how it's going. Amazing. You know, so for those that are married to pilots, you know, you know, as soon as that last kid's out of the house, go buy a $21 million business. It's that easy. Just go on the Internet, put it, put it in the cart, put it in the cart, hit buy now. And then poof, you've got eight cafes and it's that easy, right? No, I. There you go. It does bring me a lot of joy.

[00:10:47] And I do think being married to a pilot helps in a lot of ways because like you have to be comfortable with being sort of flexibly busy and not necessarily knowing what your schedule is going to be like. And a lot of pilots, you know, our financial planner is this guy that used to fly with my husband at ASA. And he flew for many years and then finally hung it up because he did so well in his financial planning business that he purchased.

[00:11:11] But I think it's a very ripe career for spouses or pilots to do additional things. I mean, you have a lot of time on your hands and especially purchasing a business. Well, it doesn't have to be cafes. I mean, there's a lot of businesses. In fact, when I go on to the website now and I'm on there almost daily, like, you know, some people like Zillow in their spare time. Like, I have become like a complete junkie just to see what businesses are out there.

[00:11:40] And so a lot of people look like in their area. But I actually take out all the filters for area because you kind of never know, right? A business could be great in a part of the country that you're like, oh, I could handle going there, especially pilots. We have flight benefits like you can go check it out. So I take out the criteria for where it is in the country and I literally just start with the highest cash flow. And then I also filter for recency because now I've seen a lot of the older listings.

[00:12:10] And so I look at what businesses are selling with a cash flow of 10 million, then 5 million, then 3 million, then 1 million. Sometimes I'll go down to 750 if I'm looking for someone else. But that's my personal criteria. And it's really interesting to see what businesses are doing well in what parts of the country and just reflect on that. I mean, even if you're not interested in it, it's just great data, if that makes sense. So I've been wanting to talk about buying businesses on this show for years now.

[00:12:39] We've talked about buying franchises, which is another way that you brought up. But starting a business is very difficult. Both Ryan and I have started businesses from scratch. And I'm not saying that anybody out there is not capable of doing that as well, but many businesses fail. And we're in this situation now where many baby boomers are aging out of their businesses. And there's this massive amount of mom and pop businesses coming to market.

[00:13:10] And retirees are generally willing to part ways with them for, I don't want to say below market value, but they're certainly not asking astronomical multiples because they just want out. They just want to retire. And they don't really have an exit plan. Their kids maybe don't want to take over. And so I think this is one of the first times that we actually talked about Biz Buy Sell on this show. Maybe you could give the audience a little bit more of a background of what that site is, how it works.

[00:13:36] If people want to go poke around like you're kind of comparing it to Zillow, what's some wisdom that they could take away in terms of just window shopping some businesses? Yeah. So LoopNet is one that I look at also that's more for buildings, which is a whole different category.

[00:13:53] And, you know, if you want to break down the SBA lending programs, the exciting thing about them is that for the 7A program, you can borrow up to $5 million, a little more if you put money down. And for the 504, I think it goes up to maybe 5.5 for a building.

[00:14:16] Now, the criteria is that the business has to occupy at least 80% of the building that you're purchasing because the government thought process is, you know, they don't want you to buy a business and then have rent kick you out of the business. The 504 one is actually pretty exciting because the collateral is the building itself and you might get the business as well.

[00:14:39] So the way that I structured the bakery within that one was very advantageous compared to the 7A where, yeah, it's great that they're going to loan you money, but you are going to have to put your house behind it. So, I mean, you want to make sure that you're doing things that you feel very confident in, which is why when I go to a site like Biz by Sell, I'm really filtering for cash flow because I kind of figure I could get excited about a lot of different businesses for the right amount of cash flow.

[00:15:05] So, maybe other people, you know, maybe they're like, well, I only want to be in Washington. You know, right now with everything going on in Washington, I have a very strong desire to find businesses outside of Washington State, even though I don't plan on leaving the state. It just, to me, sort of mitigates the risk. And so, basically, you can just go in there and it lists businesses that are for sale. And there's many, many, many, many businesses for sale. Well, you can look at any number of businesses.

[00:15:35] Many of them are for a very cheap price, but they also often don't have cash flow or just are starting. And so, when you start to see what people want, you're right. A lot of retirees that don't have kids that want to take it, they still want their business cared for. They want the legacy respected. They've worked decades to build this thing.

[00:15:59] And actually, I've had a lot of luck with the sellers also really believing in me because I'm not a private equity guy. You know, I actually consider myself like I have a secret little cape on and I'm like saving businesses from that fate because I have found that, you know, the goals are different in venture capital and private equity. And, you know, they want to buy something, keep it a couple years, flip it.

[00:16:25] That's not the goal of a lot of legacy business owners that really want something to stay in the family. And so, you'll find on this website just any business under the sun. I mean, I compare it to Zillow because that's really how it feels. Now, it won't often say the name of the business. You have to sign an NDA. So, you know, you make a profile. You sign an NDA.

[00:16:46] Sometimes if it's a higher grossing business, they'll want a personal financial statement or they'll want to see that you have money in accounts before they'll give, you know, divulge information. Sometimes they even say, do you have any relevant experience in the field, especially for the ones that are, you know, higher dollar value generating. Some people, I've told a lot of people how to do this.

[00:17:10] None of them have purchased a business off of it yet, although I don't see why because I think it's like almost like a game at this point. And I'm like, gosh, there's so many great businesses out there to love. But everyone has, you know, different life goals. But I find it to be very simple. You know, the process is not difficult to look through. And then they'll start sending you more information than you can really think about the business. A lot of times I've found if it looks too good to be true, it probably is.

[00:17:39] So, you know, you'll be like, oh, wow, this business is bringing in five million dollars a year. Why do they only want five million dollars for it? Right. And then when you get their tax returns or you start, you know, looking under the hood, you're like, oh, they just have this one weird anomaly year, but they've actually lost money for 10 years.

[00:17:56] Right. So my personal criteria is I am very like if this was a dating app, my business type that I'm personally attracted to is like a legacy business that's been family owned and operated for a really long time, has just stable revenue. It just needs someone to go in there and love it. And I'm willing to pay a fair market price for that.

[00:18:20] Right. You know, it's it's it's one thing to go on, you know, the biz buy sell site and, you know, do this criteria search and get frustrated after looking, you know, at 10 or 12 businesses. Can you give a rough order of magnitude? Like how many businesses did you look at before actually moving forward with these eight cafes?

[00:18:41] The cafes came to me relatively quickly, but I would say it took another two years of looking almost daily before I found the next one that was interesting to me. And I, you know, I wake up in the middle of the night. I can't sleep. I'm like, wonder if anyone's listed anything new, because you'll find kind of like a hot property. The good ones are going to go quickly.

[00:19:03] So being up to speed on what is out there is important and being ready to take action quickly is important. So I think the cafes was kind of destiny, honestly. I mean, when I was a little girl, my mom was a stay at home mom and my dad didn't make a ton of money.

[00:19:22] But we took care of a lot of our elderly grandparents and, you know, great aunt and my mom would take us to this really cute cafe chain that was in Tacoma at the time called the Plush Pippin. And they had fresh, you know, breakfast and lunch and fresh baked pies. And so the first time I walked into the cafes, I mean, I bawled. Like it felt like I didn't know what I had been looking for. And I had absolutely no idea how I was going to pull off a transaction of that size.

[00:19:52] Right. My husband and I don't come from a lot of money. I mean, he's doing well as a pilot, but we have three kids. And it was a big leap of faith. But I felt absolutely compelled to move forward on that property. And once that one worked out well and a few years go by, it's kind of now you kind of know what you know and it gets easier from there.

[00:20:13] I do think it's interesting how you were emotional about what you found, but you're also very practical about having a defined business criteria of cash flow and stability and all that. But then you've kind of interjected your DNA into this business with the end state goal of continuing on the owner's legacy. I think that's a very compelling story, right? It's a very good pitch.

[00:20:42] Like if I took a lot of pride in a business that I owned for 70 years and you came along and you're like, you know, and I know you're going to tell us in a minute. But like when I was visiting your cafe, you put your cell phone number on the receipt, not your assistant cell phone number, not some answering service number, your cell phone number. That's probably you're recording this podcast on right now. And, and like someone could text you and say, like, I just left your restaurant and it's amazing. And I think that's so interesting.

[00:21:11] But can you, can you kind of, I don't think you have a, like, I think what's my question is, is you really don't have a food and beverage background. You didn't go to culinary school from my understanding. Like you didn't get trained by some amazing chef or go to some school that teaches you how to do cafes. So like, how do you go from, I mean, like in the listeners, like tuning in, like, this is very impressive. Like you buy a business producing $15 million a year of revenue.

[00:21:39] You have no background or experience. And now it's built producing $21 million, you know, just three years later with somebody who was basically, you know, not in this industry. Can you kind of talk about like, how does someone do that? I mean, what, that's really impressive. Well, thank you. I mean, so I did work in restaurants on and off. You did. Okay. Right. So I felt very comfortable with the way that the restaurant industry worked.

[00:22:08] So I not, you know, it was my first job. I was a hostess and my husband wanted to date me. And I told him that he needed to get a job. So I got him a job as a busser and we worked together. So, I mean, I had definitely been in and out of restaurants for enough years that I felt comfortable in that category from the front of the house side, you know, certainly not cooking. But I, I guess I would just say there are a lot of businesses that I could personally feel excited about.

[00:22:37] And I, I think once you feel comfortable that a widget is a widget, a business is a business, right? You've got payroll, you've got, you know, insurance, you've got rent, you've got, you know, then you just kind of want to, you want to find something that you could see yourself sitting in and it feels fun. So, you know, I think it's a lot of business, right? So I find the rest of the industry to be very, very fun to me. But, you know, I was trying to convince my sister-in-law to buy this really cute dog washing business in Puyallup.

[00:23:06] And I was like, you love dogs, you love animals. I wouldn't want to wash dogs, right? Even if it was me, I mean, I guess if it was making the same revenue as the cafes, I'd find a way to get excited about it. But, you know, that wouldn't be my natural first step, right? And so, you know, if you're going to do it, I mean, it is all encompassing, right? Like I started getting calls at 5 a.m., but that doesn't really stress me out. I'm married to someone that comes and goes. And so I definitely think there is a little bit of a mindset.

[00:23:34] But after that, it just gets really, to me, really fun. And I think everyone has something that they would think is fun once they really started looking at enough businesses. And they're like, gosh, this makes money. I enjoy it. Now, culture is very important to me. And there's about 250 employees. I was very happy that, you know, we had 100% retention of all staff, which, you know, a lot of times in transitions, that can be challenging.

[00:24:01] And I would say that I do put a lot of time and effort into working on relationships. So if you're not a social person, cafes probably wouldn't be for you, right? You guys do like storage facilities, I think, right? So like less people-y, that's okay, right? You know, I know what I lean into. And when I chose to put my cell phone number in every check presenter, people were thinking that that was crazy.

[00:24:28] But I get probably texts from around four to six customers a day on average. And I text them back immediately. You know, I did it in the beginning because, you know, if you get a Yelp review and someone was upset, I'm like, gosh, I wish they would have just reached out to me directly. I would have been happy to make it right. Right. In the end, I've just been so grateful that actually it's been this really neat way for me to connect with customers.

[00:24:56] And most of them just have really wonderful things to say. And I respond to them right away. And then I take a screenshot and I send it to the server and the manager. I send it to the kitchen or I have like text threads with the front of the house and the back of the house. And so if someone's called out in like a really neat way, I like to kind of send it to everyone. So it's ended up being like a really great culture tool. And it's also helped the managers realize that, like, I am a peacemaker at heart.

[00:25:21] So they're a lot less worried about coming to me when something's wrong because my goal is to make it right. So I don't want a culture where people are hiding things from me. Right. That can be very dangerous. And they know that, you know, when things do go wrong, which they're going to, we just get through it together. That's so cool. Yeah. No, it makes a lot of sense. And I think what you've basically described is that as business owners, we're in the people business actually no matter what. Right.

[00:25:45] Because, you know, I may have 47,000 customers that don't talk to us on a regular basis necessarily as a storage operator, but I have, you know, 200 employees. Right. And those people want recognition. They want support. They want to know that they've got a leader, you know, in the seat driving culture and that is responsive and positive. And you clearly, like, I feel it through this podcast. Like, you are very passionate about people.

[00:26:12] You know, 100% retention rate on a takeover of a business is impressive for two reasons. One, it's impressive that everybody stuck around and you clearly gave them a messaging that they're safe. It's okay. You can still work here. And two, it's impressive that you made them all work like that. You kind of re-interviewed them, right. And determined that they're still, you know, a big part of this business and that they can keep their jobs.

[00:26:37] Because a lot of like PE shops and businesses that get purchased, like there's a lot of turnover only because, you know, the new management comes in and basically says, we don't, we want to do it a certain way. And if you don't want to do it that way, get out of here. Right. So that's like impressive for a couple of reasons. I wanted to transition to financing this, right? Because I think a lot of people that are- That's exactly what I wanted to get into. Yeah. A lot of people are probably listening to this and saying like, oh, it's probably because she had a big trust fund or had a lot of money or, you know, had this background.

[00:27:06] And I know you didn't. So that's why I wanted to bring this up. I really want to, I don't want to over, you know, I don't want to say this is easy, but, you know, kind of talk about like the financing, right? Like you didn't have millions and millions of dollars to invest. How did you put together the money to buy this business? Yeah. Okay. So one of the really cool things about the SBA loan program, which I didn't really know about.

[00:27:28] I mean, I started researching it after I had found this business that was just far more expensive than I had anticipating falling in love with. Right. Right. And again, I did have a comfort level because I was working in home construction with, I built a custom home program. And so I had helped a lot of families go through these multimillion dollar loans with banks that just gave me a certain comfort level with doing it.

[00:27:54] That now I try to help people understand, hey, the first time you buy a home, it feels scary. Right. But like the second time, it's not so bad. Right. And so it's kind of like anything. You just have to practice it. The cool thing about the SBA loan is, is they're very, very happy to loan you money, especially to an existing business, because they know that you're getting cash flow from day one. And so it's much easier for them to commit to it. And they typically only want only 10 percent down.

[00:28:24] Right. And so, you know, that's an overcomable amount of money. You know, if you find a business where there's cash flow, 10 percent down allows you to take a large loan out. So now in the course of the cafes, so we had to take some money out of like I decided I was willing to cash in some of my retirement fund. Right.

[00:28:49] And to make up for the other part with the cafes, they were like, well, we're going to put your house on the hook and, you know, other things that if I stop paying. So, you know, I had to really believe in myself. Right. It's not for the faint of heart. But, you know, you could certainly in the beginning, I was thinking of something much smaller. And the cool thing, as I was saying, is if you find one where there's real estate attached to it, it's actually infinitely easier because then the real estate itself becomes the collateral.

[00:29:17] And maybe the business already operates inside of it. And then now you actually also have an asset. So in both programs, they're really only asking for 10 percent down, which, yes, it's a lot of money. But it's kind of like, again, in my case, I was kind of willing to trust myself over a retirement program. And luckily, because Jared does have a really great retirement, my husband through Alaska, we were able to divide and conquer where I was like, well, you protect that.

[00:29:46] And this and I'm going to do this. I'm willing to take a risk on on my side. That's amazing. And your partner, you have a partner, you said you had an 18 percent partner in the business. Kind of explain what was your thought around having a partner and what did they do to contribute to the partnership or what do they do? Yeah. So she basically helps put cash down for the transaction because the cafes were large and she owns her own. She owns a Botox practice so that we stop aging, which is helpful. That's completely separate.

[00:30:15] So I meet with her a couple of times a year and kind of show her cash flows and financials and stuff. But she basically was just a cash injection for the purchase of cafes. Just to recap this, if you're kind of like following along, the SBA is the Small Business Administration. And the government basically has a backed loan program to fund small business in America. And so this is for somebody that is trying to do exactly what Brenda did.

[00:30:44] So if you're wondering, like, who is going to lend to my business? Like, I would start with the SBA. And I've personally gone through this. And one of my first self-storage is we considered doing an SBA loan. I went through the whole approval process, got approved, ultimately decided I wanted to go a different route. But really what it's, you know, you can actually start with a regular bank branch, from my understanding, and they will have an SBA office that they sort of refer you to. And then you kind of go through this approval process.

[00:31:14] Warning out there, though. You know, Brenda said something so subtly that I want to pull out, which is Brenda used to develop luxury homes in Bellevue, or on the east side of Seattle. Yeah. Right? And so, like, that didn't mean that it translates into cafes or anything like that. But, like, there is a tremendous amount of paperwork organization going through, like, the entitlement, the permitting process,

[00:31:42] you know, getting approvals, going to the city, talking to people. Right? There's a lot of stuff that goes into that. I can relate as a real estate developer to those approval processes. And so having sort of something like that in your background will make you a little more capable, ready, willing to go through all the hoops the SBA is going to put you through. Because they're going to put you through the ringer. A lot of reports, a lot of entities, a lot of approval process. It takes a really long time.

[00:32:11] And so I do think, you know, you mentioned that that experience kind of helped you. But I think that's a big deal because I think people, like, you have such a great attitude, like I've said three times. But, like, when you go and buy a business, you kind of need to have that thick skin, great attitude. Because just before the show, I mean, as a small example, you're like, I had to run up to one of my places and replace an air conditioner or something.

[00:32:38] You know, this isn't like something that you put your feet up on the desk, you know. And I know there's a lot of promoters out there. And, you know, I won't name names. But they're like, you could just go buy up all these businesses and make all this money. And it's going to be great. Take my course for $3,995 next month. And you're going to learn how to do this. And basically, you're going to kind of learn that, like, you need to have grit. You need to have a great attitude. And you need to be able to put up with a lot of BS, right, to start your own business.

[00:33:07] And so I think if you're listening to this, like, you can do this. But, like, you got to be ready. Can you kind of speak to the, like, the mental toughness, the things that happen? Maybe tell us a few stories of just, like, getting punched in the face and kind of how you sort of dealt with it. Yeah. And one quick thing about the SBA program that I think it's important that I didn't understand just before we closed that chapter. And then I'll love to tell you about all the times I was punched in the face emotionally.

[00:33:35] So with the cafes, as an example, you know, it was a large purchase and it was right out of COVID and everyone was allergic to restaurants. And so I went through, I don't want to say being interviewed by, but I would set up these Zoom interviews with all of these different banks that did SBA lending. And most of them would turn me down, not for any other reason than it was in a franchise.

[00:34:01] So, like, an SBA loan, especially because this was right out of COVID and restaurants were just, you know, not what banks wanted to touch. But I realized that banks have a lot of leeway in the SBA lending process. And you do need to find a bank that has an appetite for the type of business that you want to do and has the ability to loan up to that amount. So some small business banks, they are just never in a loan more than $250,000. It's just not the kind of bank that they are.

[00:34:31] Right. So, you know, there is a little bit of and again, what helps me in the construction loan process was that a lot of these families were taking out a five, $10 million loan to build this custom home. And so I also saw how to match the right bank for what someone was trying to do. You weren't just going to go to any old bank to get a construction loan. Not all banks wanted to do a construction loan. And so the same is true for SBA lending. Not all banks want to do it.

[00:34:58] Not all banks have the appetite for certain types of businesses and not all banks have the appetite to go up to the $5 million mark. Just, you know, just because the government will back you to that level doesn't mean the bank's going to have the appetite for it. So I would be down on Zoom and my husband would hear me and he would come down and he'd be like, when are you giving up? He'd hear these guys be like, well, it'd be a lot cooler if it was a Papa John's, you know, being like, just look at the numbers, like let the data speak for itself.

[00:35:26] And I finally got a hold of this random bank in Wisconsin of all places. And it was called First Business Bank. And for whatever reason, it's a big bank, but they only loan to businesses. They don't have like a consumer facing product. And the CEO, his son happened to be this chef. And so for whatever reason, they were open to it. And I got on the next plane and I was like, I'm going to come meet you in person. And they were like, people don't do that. And I was like, yeah, well, I do.

[00:35:55] So see you tomorrow. So I flew out there and met with them in person. You know, when I wanted to purchase the cafes, it was sort of at an inopportune time for restaurants specifically because it was coming right out of COVID. So even though this company had fared very well and the cash flow was strong, SBA loans really prefer a franchise model. And franchise models are actually pre-approved in a way, depending on the franchise.

[00:36:21] And the reason is obvious because if the operator sucks at it, it's easy to sell a subway because it's still a subway and you can still kind of know what a subway is going to do in general. Although, by the way, a single subway operator makes maybe $40,000 to $60,000 a year if they're lucky. So you definitely would want to think twice about buying just one of those. Anyhow.

[00:36:42] But my point is just that it's important to navigate it, to not feel overwhelmed with the fact that not all banks are going to, you know, look at it in the right way. And you've got to find the right bank. In hindsight, I've now realized that one of the best things to do is to go to the bank where that company is already, you know, whatever bank they're using is a great place to start. Right.

[00:37:07] Because if you think about it, if they have an SBA loan, so like right now I had to go to Wisconsin originally. I had a higher interest rate. It was like 9.5, 10%. But now local banks are telling me that as long as I'm keeping that, you know, it's $21 million a year that they'll take me down to like six, five and a half percent. And so now I'm refinancing and I'm actually refinancing out of the SBA loan program three years later because I've proven that I can do it, which is exciting.

[00:37:37] But I didn't think to go to Wofford originally. It's the local bank that we do the business through. But now I'm like, yeah, start there. They already know the business. Right. If it's a good business, they're a great start. That makes total sense. This is such an important thing because I think this is where people get caught up. Right. So my very first flip at Spartan Investment Group, I did a house flip. I called 26 lenders. They all said no. The 27th lender said yes.

[00:38:01] And I think that, you know, you're like if you think about all like the holes in the Swiss cheese model here, it's like you have to find a business you like. You have to have criteria. You have to find a lender. You have to have the down payment. You have to, you know, all these things have to happen and every single hoop to go through is going to be met with a ton of resistance. So, you know, just for all those business, all those people out there that are aspiring entrepreneurs and that want to start a business, like keep pushing. Right.

[00:38:28] Like, you know, my capital markets guy does our loans now for all of our individual self-storage properties. I mean, he's calling a dozen lenders per property. It's just it's just what you do. And I love the fact that you talked about, hey, who had the debt on the property before? Go to them. Right. Right. And then the other thing that I like, and maybe this isn't as applicable to cafes, but put the name of the business in Google and then zoom out a little bit and type the word bank.

[00:38:52] And then the bank branches that are around that business start calling those bank branches and being like, hey, can I talk to your commercial lending department? I'm trying to buy the business, you know, two miles down the road from your property. Right. Right. Because a lot of these lenders want to have, for whatever reason, a physical branch in the market that they're lending to. So, you know, I don't know how that is applicable to this particular business, but that that could be.

[00:39:20] Um, and then the last thing I'll say about that is like SBA lenders, like there's some big SBA lenders in the country. I think Wells Fargo is one of the largest and then Live Oak Bank out in North Carolina is like, I think the second or maybe even the largest SBA lender. So there are some big national powerhouse lenders for those that are like looking for how to get financing.

[00:39:41] And now with AI and Google and all the stuff that's on the internet and YouTube, there's so many resources now to, to kind of talk through like, you know, financing and structuring and things like that. So anyway, I thought that it was pretty interesting. Brenda. One of the ones though, that was not very nice to me. They were like, if only you were a Papa John. So, you know, even though they're the big, it doesn't mean that they're going to understand what you're trying to do. And so you're right. I mean, you just have to kind of be resilient and, you know, water off. Yeah. One more thing on that.

[00:40:09] I did want to say, yeah, that's really important because just because the bank is telling you, no, not because your idea or your business sucks. You're the bank is telling you, no, because you're not fitting into their box. And I think that's really important to understand because they're like, well, you're not a Papa John's. Like what that might send you into is like, well, then I need to go find a Papa John's device. No, no, no, no, no. This, like you said, the bank might not have enough money. They might not have enough capacity. They might be limited in what they can do. That's all their own. Like that's their world.

[00:40:38] And, you know, it's interesting. These banks come and go to like sometimes these banks have their checkbook open and then they'll like put all their money out and then they're like closed. And then it's like, wait a minute. I thought you said it's like, nope, we've already deployed all of our capital. Sorry. Go find another lender. And that's just part of the game. So, you know, I mean, for anybody that has only bought a house with a W-2 income, that might be a foreign concept that like 26 banks will say no.

[00:41:03] And then the 27th says yes, because it's like, you know, you buy a house, you fit the DTI ratio. Right. And like every bank is going to say yes and finance that transaction. So it might be a foreign concept for people to go, oh, I have to actually call around to find somebody that says yes. And it's like, yeah, that's how it works. I want to switch gears a little bit, Brenda, because I know we're coming short on time. Let's talk about the transaction. When you buy a real property, you typically use a broker, a real estate agent, an escrow company.

[00:41:30] How did the actual transaction occur and what parties were involved? Yeah, so for me, I typically have used the listing agent. Right. And then I don't like to have an agent on my side. I just use an attorney. Now, the listing agent, especially in the larger transactions, also typically have kind of taken it through their somewhat preferred lender.

[00:41:56] And that's also usually a good place to start because, of course, if it's their preferred lender and you're using them, they're going to want you to be successful because now they can trust that the guy is like, yeah, she's, you know, I can vouch for her or him. And so typically, you know, the listing agent obviously wants the deal to close and they have been able to do a lot of the heavy lifting in terms of writing up a contract that then I send through my attorney.

[00:42:26] But I would say, I always say it's kind of like having a baby. So, like, it takes about as much time. Right. Right. So, like, I remember thinking, gosh, by the time, but from the time I first found the cafes and wanted to purchase them to the time that they closed, it was like about nine months. And from the time I found the bakery, it closes about nine months. That's amazing. And it was funny because the listing agent kept being like, oh, no, I think it's going to go faster.

[00:42:56] And I was like, listen, this is a bakery baby and it will be born when it's good and ready. You know, I love that. So you just have to kind of go at it like, you know, you're excited the whole time. It allows you to keep doing other things and you just keep going.

[00:43:13] But now I found, you know, working on the third transaction, it's going much faster and more seamlessly because I think once you kind of work through your systems and processes and now I'm now I'm like, well, yeah. Yeah. And on the day that you closed, the day that it was born, were you I mean, that had to have been an incredibly emotional day. Yeah. The night before, I remember just having like almost an out of body experience.

[00:43:41] It's been we've been working on a very long time. And then all of a sudden they were like, yeah, it's going to close tomorrow. You know, and you're like, wait, what? You know, because you're like, wait, you know, rush, wait, rush, wait. So we were out at our cabin in Packwood and we were with some good friends of ours that own a couple of businesses. And the guy who's a good friend of mine was like, well, what are you going to do tomorrow? And I said, I think I'm going to cry and hug everyone and just tell them how grateful I am. And he was like, well, don't do crazy to not do that.

[00:44:09] I was like, no, I'm going to do it. And remember, we had this funny like back and forth where we still laugh about it now. And, you know, everyone has to own and operate a business the way in which feels most authentic to them. But from my point of view, you know, I was like, gosh, I've been on the other side. I know what it feels like to be an employee. And, you know, that gave me the understanding and actually a much better, I think, relatability to be like, well, how would I want someone to greet me as a new owner?

[00:44:38] On the flip side, they loved the old owner. And so I get this bright pink dress with strawberries all over it. And I'm so excited. Right. And the previous owner sends me to pick up some banana bread and I'm meeting at the commissary. And he holds the little team together and he's like, great news. I sold the business. This is the new owner. And I have this little speech prepared in my head. Well, half of them started crying. They like loved right.

[00:45:09] It's a very humbling moment to be like, wait, I've got my strawberry dress on. I'm ready to tell you how excited I am. And, you know, they really weren't ready to hear it at that time. And but it was great that they loved Ryan. And Ryan agreed to work with me for the first six months to train me. So we worked together. In hindsight, that could have gone really poorly for both of us. But it worked out really, really well. And, you know, how you do one thing is how you do everything.

[00:45:38] Right. Like I met my husband at 14 and I'm 47. So I just kind of gave everyone time and space. I'm like, you know what? I am who I am. I get that this is a lot. But, you know, if you stand by me, I'll stand by you. Let's have fun and do the right thing, you know. And so, you know, that's the thing about a family business. They probably hopefully really liked the other family. Right.

[00:46:01] So you have to be a little bit humble to realize, you know, you're not necessarily going to come in and they're going to be glad right away. On the flip side, I know full well if they would have sold to like a venture capital fund or, you know, it just would have gone down way differently. And like I said, in the end, everyone stayed and it's been really, really wonderful and gratifying. Well, and it's amazing that you didn't treat your seller or the transaction like a hostage negotiation, right? Like you were a partner with your seller.

[00:46:31] You worked with them. And that's really important to how a business transitions. We actually, two portfolios that we bought last year, we did the same thing. The seller like actually worked with our team on the CapEx stuff. And there was a really smooth transition post transaction, which I think is like really important to do. You know, this isn't a transaction like buying a used car where you show up and you're just like, oh, there's some dings and dents and paint scratches. I'm going to try to cut you for every hundred bucks I can or a thousand bucks I can.

[00:47:01] And then I'm going to give you money and I'm never going to talk to you again. Like this is sounds like a very, you know, thoughtful partnership of transitioning a business because there's hundreds of people that are impacted that can make or break your business, by the way. A hundred percent. Right. Yeah. And so you being there, I mean, that's leadership. That's what that is. Right. You being there, you caring, you having this speech planned and then being able to be flexible and say, oh, well, I guess this isn't about me right now.

[00:47:29] This is about all the people that work here. Right. That's who it's really about. And I have to be there for them. And I think that's like that cannot be underscored enough. I thought it was really good. Well, Brenda, thank you so much for coming on and being very generous with your time, especially during the summer, especially on the hottest day of the year in Seattle. I would love to, you know, how do people get in touch with you? But most importantly, what are your cafes and where are they, if you don't mind?

[00:47:58] So we can go visit them and be good customers. Yeah, please do. You can go to cafesinc.com and they're all listed. They're mostly named after the city they're in. So the Mamish Cafe, Issaquah Cafe, Woodinville Cafe, right? There's the Crystal Creek in Bothell, Village Square in Redmond, Mucklekeo, Speedway, Sawmill Cafe. They're all kind of just named after the little area that they're in. And they have really kooky, fun themes. So one's like a ferry boat theme. One's a train theme.

[00:48:25] Like they're super, super sweet and individual. If people want to ask me questions, I'm always fast to see a text. You guys can certainly pass out my cell phone number. I'm always on my phone. That's brave. You're brave. You are really brave. Certainly, you can send me an email. But, you know, I don't have the kind of job where I'm in front of a computer all the time, right? I'm out like, you know, I'm heading right here back to Issaquah to make sure that the hot water heater got installed so we can open tomorrow.

[00:48:53] So, you know, that's where my phone is my world just because it allows me to kind of think on my feet and be reactive. But I'm grateful to you guys. And I really do want this to be an encouraging message to anyone that's thinking of purchasing a business. I actually think it's the best thing I could have ever done, even with the scary things and some of the things that maybe went wrong. And I will say I think pilots are very, very well suited to take on an extra thing or their spouses.

[00:49:22] And if anyone wants more personal help, like it would bring me a lot of pleasure to help someone shortcut some of the things that I had to learn the hard way. So send them my way. I love it. Amazing. Well, thanks so much again, Brenda, for coming on. Thank you so much for your time. Yeah. And to all those listeners out there, I hope this inspired you. It inspired me. And for now, we'll catch you on the next episode. Bye. Bye.

[00:49:52] Well, thanks again, everybody, for listening to the show. Before you leave, don't forget, we're meeting for the PIP live events in October 8th and 9th in Las Vegas, Nevada. If you enjoy our content, what you're hearing, what we're talking about, and you want to network with other pilots who are doing what you're doing, tax and legal and investment professionals, see you in Las Vegas. Go to PassiveIncomePilots.com to get your tickets. Ticket prices do go up in August. So jump on that as soon as you can. Thanks, everybody.