Build a Real Estate Empire & Gym Empire + How she did it Mid-Recession (Part 1) (Interview with Kisa Davison)

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Highlights from the interview

[06:43] – The personal and financial crisis Kisa went through, and how Yoga ended up being her saving grace

[13:40] – Opening her first gym in the middle of recession… and being immediately profitable

[17:40] – How they successfully started with an under $10K budget to launch their first gym

[19:52] – A pre-launch fundraising formula — how Kisa raised money to open their gym with a Pizza Party and a paid-in-full membership offer

[23:35] – Building a Real Estate Gym Empire

About our Guest

I’m so excited because today I’m talking to Kisa Davison, who is the co-founder and head coach at Straight Blast Gym of Montana, which has three locations — in Kalispell, Whitefish, and Missoula.

She also coaches other fitness entrepreneurs. In addition, she has four nearly grown kids and even has time to manage her family’s residential construction company and investment properties. 

In addition, if there could be more, she has much charity work and she has founded Gorilla Booster Club, a nonprofit to support Montana grappling athletes.

She clearly has systems to run her gym efficiently and she’s accomplished a lot. So, I’m so excited to have her.

Edited transcription of Fitness Business Secrets Podcast, Episode 26

Kristy: How are you doing today, Kisa?

Kisa: I’m doing great. Thanks so much. Thanks for having me on this, Kristy. Full disclosure, this is maybe the second or third podcast I’ve ever been on, so forgive me if I’m a little rusty.

Kristy: You sound great. I think you’ll probably give us some real information, which is what we’re all here to hear. You have three gyms and I know that you’re actually partners with your husband, and you’ve had these gyms for a while. So, there’s a lot of things and experiences that I think you can share with our listeners.

The personal and financial crisis Kisa went through, and how Yoga ended up being her saving grace

[06:43] Kristy: The first thing I’m going to start with was, how did you even get into the fitness industry? I think you started off in real estate.

Kisa: I did actually. Before real estate, I worked in telecom and before telecom I worked in education in literacy, specifically community literacy. 

I was not a very active kid growing up at all. In terms of sports and organized athletics, it just wasn’t my jam. But, in my freshman year at college, it was actually one of my grandmothers who recommended that I start yoga. 

I have pretty severe scoliosis and she said that is exactly what she would do for her scoliosis. Of course, I asked her, “Do you do yoga, grandma?” 

She’s like, “No. I would never do that.” 

She recommended that I start yoga, and I did. I picked up a book at the library and started kind of self-teaching. Eventually, I picked up a couple of classes and fell in love with the practice. 

I picked up a book at the library and started kind of self-teaching. Eventually, I picked up a couple of classes and fell in love with the practice. 

Now, given it wasn’t necessarily a sport, but I really fell in love with the practice and the process of learning how my body works and learning to pay attention, to dig deep, and to focus. 

Also, just learning that those immobilities, limitations, and obstacles that I used to perceive didn’t necessarily have to be obstacles. They could actually be opportunities for growth and for strength.

So, when I started yoga, it was just kind of a personal practice of mine. I did yoga throughout all my pregnancies. When my youngest son was a few months old, I just almost had a nervous breakdown. Actually, I probably did have a nervous breakdown. 

I had four kids, three and a half and younger. My oldest has severe seizure disorder caused by a brain malformation, cortical dysplasia. 

I was just at my wit’s end. The house we market was starting to fall apart. Our business was starting to fall apart. 

I was on the phone with my mother and she said, “You need to get your ass into a yoga class with a teacher. You don’t have to be in charge. Just go learn from someone. Take a break.” And, I did. 

So, I walked into a studio that was just down the street from my house, and within months, I was completely devoted to this practice of Iyengar Yoga. 

I had probably been training with Paul, my teacher for maybe six months, and he said, “Have you ever thought about teaching?”

I said, “Absolutely not. I’ve never thought about that, but it sounds fun. Sure, why not?” 

So, he trained me to teach, and at the same time, my world is falling apart. I found that the practice gave me a sort of strength, stability and stillness that I really needed to get through these tough times that we were going through at that time.

Long story short, I threw myself into teaching yoga. My husband, at the same time, was training in jiu jitsu. We lived just outside of Portland, Oregon at that time, and he was also coaching in Jujitsu. We ended up moving to Kalispell, Montana for construction and real estate. 

The market was a little bit slower to fall apart here in Montana, but it definitely fell apart. When it did fall apart, we found that the only thing we had to fall back on, both for our mental state of mind, but also as an income generating activity, was our coaching. 

So, he was coaching Jujitsu. I was coaching Yoga. We decided to open up the very first Straight Blast Gym in Montana.

 I guess that’s not only how I got into fitness, but you can see how tightly intertwined fitness has been for me in coaching and also as a business owner. 

Kristy: Yeah. So, I think you mentioned that it was around 2008 that you guys opened Straight Blast Gym.

Kisa: That’s correct. The headquarters for SBG is in Portland, Oregon. The founder of SBG, Matt Thornton, is my husband’s coach and my coach as well. He gave us permission to open an affiliate location. There’s actually 75 plus affiliate locations all over the world, probably the most notable one is in Ireland.

John Kavanagh runs that gym and his kind of most popular MMA fighter, Conor McGregor, is kind of a household name in the UFC. So, we’re three locations out of many locations worldwide, but all the locations are individually owned. 

Kristy: Oh, wow. So, would you call them franchises where you pay a franchise fee?

Kisa: No. Officially, it’s an association, so you pay a licensing fee to be able to get permission to use all the trademarks, materials, the logo and the name. Then, as an association, we follow kind of a very specific way of coaching. 

Matt Thornton developed this system of coaching and training in the martial arts probably 25 years ago. A liveliness where instead of repeating dead patterns and kind of pretending as if you know what it means to have a resisting opponent, you actually get in and train with a resisting opponent.

It cuts down on some of the kind of fantasy martial arts where, for example, some of the katas that people do, they look beautiful and it’s very much like a dance. But, when it comes down to an actual altercation, would this actually work? 

That system of training is definitely shared by all the SBGs worldwide, as well as the business practice and the kind of coaching experience that we create for all of our students and members.

I think it’s best summarized by our slogan, “One tribe, One vibe.” Meaning I can walk into any SBG in the world and not only will the material and training practices be familiar to me, but I’ll be welcomed with open arms as a sister or cousin from a different gym. 

So, that international organization, although it’s really just a loosely defined association, the loyalty and the commitment to authentic training practices is definitely shared worldwide. 

Opening her first gym in the middle of recession… and being immediately profitable

[13:40] Kristy: That’s awesome. In 2008, in the middle or the beginning of this recession, you guys opened your own gym. I understand you just moved, so that was expensive and you probably put a lot of money into this real estate project that you guys were doing.

How much did it cost for you to open this gym? Especially if someone was thinking about opening a gym at this time. How long did it take you guys to be profitable?

Kisa: We were immediately profitable, and here’s how we did it. First of all, I think it’s important, especially in times like this, for us to remind ourselves that the key to moving forward is to move forward. We have to be comfortable with what’s uncomfortable. 

There have been so many times in my life where my husband and I looked at each other, we took a deep breath and our eyes got really big and I went, “Let’s go. Let’s do it.”

There have been so many times in my life where my husband and I looked at each other, we took a deep breath and our eyes got really big and I went, “Let’s go. Let’s do it.”

When times are good, we don’t always think about the worst case scenario, but as a general practice, it’s one that I’ve adopted over the years. During that time in 2008 when we opened the gym, it was all we could do. 

It was Thanksgiving and my husband had just been laid off from his company. It was the dead of winter in Montana. I was a realtor and my husband being laid off from his company meant that the houses he was supposed to build and that I was supposed to sell were never going to happen. So, I suddenly had no clients in a very small community that was in the middle of a recession. It wasn’t going to work.

We looked at each other and I said, “Look. I don’t want to leave Montana. I love it here. I want to raise our kids here.”

He agreed, and I said, “Well, what else can we do?”

And, my husband said, “Well, there’s only two things I know how to do. I can build houses and I can teach jiu jitsu.”

I said, “Well, let’s open a gym.”

So, we found a space and signed a six month lease. It was 750 square feet and $750 a month. My husband was getting unemployment checks for those six months for a family of four. I think he was bringing in $1,638 a month. We just hustled. 

One of my friends recently kind of coined this term or this title for me that I’m the ‘crisis cowgirl’, and we laugh about it, but what that really means is that when the shit hits the fan, I know how to hustle.

I picked up whatever teaching gigs I could get here and there. I was actually running books for a local grocery store. Whatever we could do to keep food on the table, while the gym was kind of our side hustle. We showed up to clean the bathrooms, mop the mats, shovel the walk, coach the classes and sign everybody up.

It took six months and we had quickly outgrown our space. There was a building across the street since we’d moved to town. This building sits right on the corner and two sides of it are windows. I’ve always thought that would make such a beautiful yoga room with all the great sunlight.

So, we went over across the street because the business that was in that space had closed down. We talked to the landlords, and ended up signing a year lease for 1,800 square feet. About six months later, we had outgrown that space. We went to the landlords and said, “We need more space. We don’t want to leave.”

They said, “Why don’t you swap spaces with us?”

The total building is about 7,000 square feet. In the end, about another two years later, we ended up purchasing the building from them. I guess just to cut to the chase, that’s how quickly and how well our business grew during a time when it was a recession and no one was growing.

How they successfully started with an under $10K budget to launch their first gym

[17:40] Kristy: That’s amazing. When you started that first space that was 750 square feet, how much did it cost for you to get all the materials and the equipment in there? Did you have to renovate a bathroom?

Kisa: We did a lot of cleanup and painting, and it’s amazing what a can of paint will do to any space. We fixed the space up in such a way that it felt clean, comfortable, and welcoming, but at the end of the day, it was utilitarian. 

We didn’t spend money on making it fancy. We spent money on getting the equipment we needed. I actually recently found in one of my notebooks a note from my dad because during this time I called him up and he said, “Why don’t you move back home? There’s plenty of construction jobs in Western Kansas.” 

I believe my words were, “Thanks, but no thanks.”

I had no desire to move back to Western Kansas, but I did ask him for a loan. He said, “How much do you need?”

I can’t remember this amount now. I think it was $1,348 or $1,342 or something like that. That was what I needed to buy the yoga props and some of the miscellaneous materials we needed. So, he sent me a check for that and it was a long term loan that I still haven’t paid back to this day. He won’t let me.  

Then, we also purchased abused mats for the jiu jitsu students and used tatami mats. We were able to negotiate with the gym owner who was shutting his gym down, and we were able to purchase those in installment payments. Overall, it costs us about $4,000 to $5,000 to open the gym just in equipment, plus the rent and the utilities. 

It was inexpensive by today’s standards, but remember, we were also in a recession. Landlords were dropping their prices. People were scrambling to try and sell whatever goods they had because they didn’t know where their next paycheck was coming from and we just were able to take advantage of that opportunity.

A pre-launch fundraising formula — how Kisa raised money to open their gym with a Pizza Party and a paid-in-full membership offer

[19:52] Kisa: What we also did during that time is that we got very creative in raising the capital. So, my dad loaned some money, but what we also did was we invited a group of guys that my husband had been training with.

There was a very loose group of people who were practicing jiu jitsu or training when we moved to town, and my husband immediately clicked in with them. He was a purple belt at that time, and the most skilled in the area, so he quickly became the coach that everyone looked to. 

When we decided we were going to open a gym, we contacted everyone, met at a local pizza joint, bought everybody pizza and beer, and then put in front of them a draft schedule for the new upcoming SBG location and cut a deal. 

We said, “Anyone who’s willing to help us put up this capital, we’re selling a one year membership for I think it was $1,068 for one year, or if you’d like to pay your first month right now, that’ll help us collect and start to generate the capital we need to get this place open.” This was at the end of November, right after Thanksgiving. 

All of those people were absolutely committed to seeing us open an SBG location. They loved the way my husband and I coached. They were willing to pay upfront to make sure that we could be there. They were also the guys who helped us remodel, clean, paint, and move equipment. 

What we’ve done from the beginning was to create an environment where people feel like they not only are getting something from the group, but that they are needed to give something back to the group.

What we’ve done from the beginning was to create an environment where people feel like they not only are getting something from the group, but that they are needed to give something back to the group. That theme has carried through to even how we run our operations today.

Kristy: It sounds like you created a really strong community and also made it a creative way to build up some startup capital. 

Kisa: There were two of our friends who paid in full for that year, Ryan and Zach. Ryan, to this day, is one of our employees. He’s a black belt in jujitsu and a brown belt in judo. He trains and works. In fact, I just saw him at the gym this morning. 

Even though we’re officially closed for the Coronavirus, shelter in place and my family, we still go down to the gym to lift weights in the morning, and Ryan’s there cleaning and getting caught up on maintenance projects. 

Then, Zack is still around. He lives in a different city now, but still trains. Those two have been loyal from day one, and they will be until the day they die.

Kristy: That’s awesome. It’s also nice. I live in a sort of urban area near New York city. It’s nice to hear about just the community feel of that. I see that really is what has kept your gym strong. How many members do you guys have now in maybe per location?

Kisa: Kalispell is our largest location. That was the first location, and we have 457 members. I know that number specifically because my husband and I contacted every single member last Sunday to check in and make sure that they saw a video that we had recorded discussing what our strategy was during the CoVid closure.  

So, 457 in Kalispell. We have around 240 members in Whitefish and another 260 members in Missoula. Kalispell is 11 years old. Whitefish is five years old and Missoula just celebrated two years.  

Building a Real Estate Gym Empire

[23:35] Kristy: In Kalispell, how many square feet did that end up being?

Kisa: 7,000 square feet. 

Kristy: Wow. So, you did the whole building then? 

Kisa: We did. We purchased the whole building eight years ago. 

Kristy: That’s awesome. Has that worked out really well for you guys from an expense and tax perspective?

Kisa: 100%, because we were able to purchase that building at I wouldn’t say at rock bottom recession price, but it was definitely at a good time in the market. 

Now, we have a considerable amount of equity in that building, and that’s what allowed us to purchase our Missoula building and our Whitefish building. We have a partner in our Whitefish building, but it’s what really kick-started our investment portfolio. 

Kristy: Wow. That’s exciting. So, your three fitness businesses are actually also part of a real estate portfolio because you have equity in them.

Kisa: A hundred percent. 

Kristy: That’s smart. I think a lot of people would aspire to that. When opening these additional locations, you must have felt very confident that you could replicate the model and the operations. 

What are the things you feel operationally have made it successful for you to open two other locations? It’s quite a feat. That’s hard. 

Kisa: Let me just clarify. In our other two locations, we have junior partners. That actually was a key component in the success of those two locations because of the overriding theme, like I said before, of the international organization, but definitely the underlying glue of our day-to-day operations really is tribe. 

Not only our members, but our staff has to feel 100% committed to what we’re doing. We all have to understand, and everyone understands and agrees that it’s about more than just the training. It’s about more than just yoga, fitness, jujitsu, and MMA.

It’s really about the team and the tribe. One of the first books that I read just because I love this author, and coincidentally, I read this book at a time when we were just opening the first location. Alan de Botton wrote a book called Religion for Atheists. 

Basically, it’s a philosophical and kind of sociological accounting of how churches are more than just places of worship. The need that a church fulfills in any given community is a place where people can gather, celebrate or mourn together. Where people can appreciate art and basically live their lives, so to speak, from end to end. 

It was a powerful book for me to read at that time because I thought that’s really what every place, whether it was a gym, a social group, even an apartment  building, or any place that I’ve really felt like I belonged to a group, I also have felt a sense of devotion to the people within that group. 

So, our junior partners in both the Missoula and Whitefish locations are 100% devoted to the training method. 

Gus is in our Missoula location. He’s one of my husband’s first black belts. His wife, Becca, is a purple belt in jujitsu. Daniel, who is our junior partner in the Whitefish location, is also one of my husband’s black belts.

They know what it means to train the SPG way, but more importantly, they’re devoted to the Montana tribe and team. That’s important not only in running day-to-day operations, but it’s also important in relaying that and almost onboarding new students to that sort of philosophy. 

Kristy: That seems really smart. So, the two junior partners or the one for each location, did they train at your gym for a while, and then become inspired and approach you, or did you approach them? 

Kisa: They trained for a while with us and they approached us. We’re going to open up a fourth location in Bozeman in the next couple of years. Again, that’s another one of my husband’s students who’s approached him. 

Kristy: What do you tell them now regarding startup costs? What do you estimate and about what size do you tell them to find?

Also, are you guys always trying to buy the building now? Is that your process? 

Kisa: In the Whitefish location where we rented for the first five years, we actually just recently purchased that building. It’s kind of what we call the McDonald’s model where if you know about the history of McDonald’s, they’re really not so much a restaurant franchise as they are a real estate company that runs restaurants in their facilities.

For my husband and I, our long term goal is to leave a legacy not just for our children, families, and grandchildren, but also for the people who are involved with our day-to-day gym. 

For my husband and I, our long term goal is to leave a legacy not just for our children, families, and grandchildren, but also for the people who are involved with our day-to-day gym. 

So, if I drop dead tomorrow– God help us –I know that someone will be there to pick up what I’m doing now not just because they know how to do it, but they also know why it’s important.

Part of just the nuts and bolts of that legacy is that business really can come and go, and particularly fitness businesses can come and go with the trends. 

We can think back to so many fitness businesses that have had to change over the years. It seemed like everybody had a CrossFit gym many years ago, and now, every time one dies, two more pop up. It’s because those people are committed to the CrossFit way of doing things, but maybe not necessarily the business itself. 

What we decided is in order for us to build this legacy, to be able to leave behind real estate was what we knew best, and also real estate as a long term investment. So, I knew that it was going to be around for much longer than just my lifespan. 

Kristy: That’s awesome. For the real estate, does your company buy the building, and then your junior partner is a co-owner in only the gym business itself? 

Kisa: Correct. Our development company, Davison Development, owns investment properties. With Iron Star, which is our residential construction company, we will build homes, whether it’s spec homes to sell, custom homes for custom clients, or build our own projects to hold.

Then, we have each individual gym have a separate LLC with junior partners. The junior partners buy in at a 20% level for X number of dollars, and that can be anywhere from 60,000 to 100,000, depending on what we think the startup costs are going to be.  

They don’t put any more money in, but as they meet certain milestones, their percentage holding in the company increases. So, they’re rewarded with equity in the company for their success in day-to-day operations.

Then, the building that we purchased in Missoula is owned by my personal company, Davison Development. When we purchase another building because we’ve outgrown that Missoula building, then we will partner with those junior partners on that real estate investment.

Gus, Becca, and Daniel, in our Whitefish location, we’ve partnered with them to purchase the building that we moved that business into. They are family in many ways. They’re as much a part of building this statewide, and really international organization as we are. 

It’s important to us that we also build that legacy for them and with them. 

Kristy: That’s interesting because I completely agree that you have to have a tribe. Someone who’s super committed and actually has some sweat in the game when opening the business, but I’ve never thought about making them have sweat in the game for the building, which takes it to a whole other level. It’s cool. 

Kisa: It’s not easy. A partnership in business is no different than a partnership in marriage, friendship, a parent-child relationship, or a student-coach relationship because there’s a lot to negotiate. Everyone has to agree on what we’re all bringing to the table, and everyone has to bring a certain amount of value to the table.

In the case of the partnership for the businesses, what Travis and I bring to the table are the systems, the experience, and the reputation. It’s rare that we face a situation in any of the two new locations that we hadn’t faced before. At least once in our existing location.

In the case of the partnership for the businesses, what Travis and I bring to the table are the systems, the experience, and the reputation.

That level of experience has value. It might not be a monetary value or that monetary value might be a moving target, but it has value. 

Kristy: Absolutely. It sounded really smart how you guys did the junior partners. You mentioned 20%, and they would bring in $60,000 to $100,000.

How much do you guys bring in? Because I know part of your value is your experience and that makes a lot of sense. 

Kisa: In both cases, what we brought to the table was our experience. For example, we purchased the building in Missoula, so we were on the hook for the actual real estate that that gym was moving into. 

Especially in these markets, you would think in Northwest Montana that real estate would be really cheap and easy, and it’s just not.

It’s actually quite expensive to construct things here, and existing buildings often need a lot of updating and maintenance work to bring everything up to code in order to be able to open a commercial location.

So, in both cases, that’s what we brought to the table. 

Kristy: Do the gym entities still pay rent? 

Kisa: Yes. But, in both cases, because we’re the owners of the building, we’re not looking to make a profit. We’re looking for half the expenses to be covered, and there’s a little bit more leeway there. 

For example, we did a stair-step lease agreement with the Missoula building knowing full well that it was going to take a year to build up a membership to be able to support market value for rent. I can’t remember exactly how it broke down, but basically for the first six months, there was no rent.

The next six months, it was 30% market value. Then, we stepped up from there. Two years later, Missoula is paying Missoula. The gym business is paying market value for rent. 

Commercial real estate is the way to go

Kristy: I know that you mentioned $750 for 750 square feet. What is the rent like now maybe in Missoula? 

Kisa: In Missoula, the commercial lease rates are for anywhere from $12 to $18 a foot annually, and then triple nets on top of that. So, you’re looking anywhere from basically $1 to $1.50 a foot. Your triple nets on top of that would include taxes, which are really quite high taxes, insurance and whatever maintenance is required on the building. 

I’m telling you right now. Commercial real estate is the way to go. Once you own the property, the leasee takes care of everything. 

I’m telling you right now. Commercial real estate is the way to go. Once you own the property, the leasee takes care of everything. 

Kristy: It’s kind of really smart. I once had looked at a building to buy and there was a commercial space, but it was such an interesting space that I was worried about finding a tenant. I thought if I could just create a business and automatically increase its value.

I don’t know if that’s how you guys priced your purchase, but because you’re buying a vacant building, were you able to get a good discount on it? 

Kisa: No. Actually, in our Whitefish location, we did negotiate a decent deal there. In our Missoula location, we were also able to negotiate again because my background is in real estate and development and construction.

I’ve realized now that I do have a strong skill set there. I think the key is to be creative and to be also very honest and upfront, “Look. We want to purchase the building. We’re going to put a brand new built business in it. Are you willing to carry the contract for the first year?”

In both cases that we purchased those buildings from, actually all three cases, the owners own the buildings outright. They didn’t have any mortgages on them. In that case, an owner can carry a contract, so you’re not involving a bank. You could have a smaller down payment.

You might pay a little bit more in interest, but in that scenario, then we’ve got one, two, or three years to be able to build equity and to do the improvements. So, when it is time to refinance, not only do we have a strong application because we have a business that’s paying rent, but we also have some equity built because the market has increased or we’ve put improvements in place.

That’s what the lending institutions are really looking for. They want a strong, all around picture of this building. 

Stay tuned for the Part 2 of this interview with Kisa!

Kisa Davison

Facebook: Kisa Davison
Personal Website: Kisa Davison
Website: SBG Montana

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