In this era of consolidation and automation fueled by algorithms and AI, Dan Bernth and his team at Doberstein Lemburg Commercial, Inc., trust their business to a very old-school model: long-term relationships.

Bernth has seen Fort Collins and his business grow over the years. He managed the Fort Collins Pulse Fitness Center (now Raintree Athletic Club) before earning his master’s in finance from Colorado State University.

He got his start at Veldman Morgan Commercial in 1995 before founding Doberstein Lemburg in 2002, which is now among the longest-running local commercial real estate firms in Fort Collins. Currently, there are four staff and three brokers including Bernth.

“We’re a boutique firm that mostly focuses on small businesses,” he said.

Despite being a small firm, Doberstein and Lemburg has an outsized impact on the small business owners it partners with.

The model Bernth and his colleagues employ is investor-centric, but it’s based on having tenants who can eventually buy the investors out.

He and a few other investors will put up the capital for the property and bring in the tenants/business owner as a partner, without an upfront cash contribution. The ownership, which includes the tenant, is split according to the agreement.

This ownership structure—known as tenancy-in-common—allows multiple parties to own shares of a property in a flexible proportion. In Doberstein Lemburg’s model, that often means that the tenant gets a path to full ownership of the building without the upfront capital investment.

As the tenants gain equity in the building, the goal is for them to eventually buy out Bernth and his partners. Bernth added that they have done roughly 120 of these types of deals, and between 30 and 40 of the tenants have bought them out. Of the remaining partnerships, about half of the tenants have obtained an equal stake in the arrangement.

“We do this,” Bernth said, “because SBA loans are hard and they’re not very flexible.”

In some cases, a tenant can start with zero cash in a deal and eventually build hundreds of thousands in equity through the ownership structure. For qualified small business owners facing rising rents and occupancy costs, the path to ownership can mean the difference between simply leasing a space or building long-term wealth.

However, that path to ownership is often navigated against the challenging backdrop of being an entrepreneur in Northern Colorado.

“Owning a small business today in Fort Collins, it’s tough,” Bernth said.

When asked about his primary business challenges, Bernth pointed to rising expenses. “It’s so exponential, that it’s tough for you to pass all those on to your clients and your tenants.”

Costs across most categories have risen in recent years, but insurance and taxes are standouts. Bernth notes that their insurance costs have probably doubled in the last five years.

Generally, his tenants are on triple-net leases where they are, in addition to base rent, responsible for operating expenses including property taxes, building insurance, and maintenance costs (including repairs and utilities).

In a multi-tenant structure these costs are shared proportionally among all tenants, usually based on the square footage they occupy. These rising costs are passed down to the tenants via the triple-net lease agreement.

This is why Bernth and his partners direct a lot of effort towards tax mitigation and protest, by challenging the county’s property valuations. While they don’t always enjoy great success, Bernth recommends it should be done regularly even with residential properties.

“If nothing else, it keeps everybody honest,” he said with a wry grin.

So while he continues to work for his tenants and partners, these days he likes to keep it simple.

“We are, I feel, very blessed,” he said. “Number one, I love what I do and number two, we do good things for good people.”

He’s not sure if he’ll add more people to Doberstein Lemburg again, but it’s certain that he’ll continue growing in some regard.

“There’s no status quo in today’s world,” he said.

When asked what advice he would give to a new entrepreneur, he kept it simple: “Save 10% of everything you earn.”

Contact:
Doberstein Lemburg, Inc.
 (970) 221-1965