RG 356 – Investing in Industrial vs. Multifamily Real Estate with Joel Friedland

This week, we feature one of the most successful real estate investors we’ve had on the show to date. With over 40 years of experience, Joel Friedland of Brit Properties tells us about his humble beginnings and how he built the empire he has today.

Joel Friedland is the Founder of Brit Properties, an investment firm that connects investors to Chicago industrial real estate syndications. But before that, Joel co-founded Epic Savage Realty Partners, where he completed hundreds of transactions and led the leadership development team for over 20 years.

Today, Joel has numerous multi-million dollar deals behind him and more to come as he maximizes the industrial real estate scene in Windy City. We’re thrilled to have him on the show to share what it’s like to lease and manage industrial real estate properties, something that our multifamily investors may not all be familiar with.

Interested in becoming an Investor with Reed? Click here to join his Investor email list.

Joel also describes the pitfalls he encountered through the years, including the 2008 recession and how the speedbumps helped him become the smarter investor he is today. Join us on this episode to learn all about Joel’s experiences, learnings, and motivations as an investor and leader.

KEY TAKEAWAYS

• Risk-averse investors want to protect the fortune that they’ve already got.
• Mortgages are a significant risk for leased industrial properties.
• Diversification is essential no matter what, and putting all your eggs in one basket increases the risk of bankruptcy.

Investing with other investors and syndicators you trust can be a great way to expand your knowledge.

LINKS
https://www.linkedin.com/in/joel-friedland-sior-5508a791/
https://britproperties.com/

Be Bold, Be Brave and Go Give Life a Crack!
Remember to join my Investor Database for the latest Investment Offerings!

Reed Goossens (00:00):

Good day. Good day, guys. Now, before we dive into today’s show, I want you to let you know that some of you may be aware that over the past eight years, I have built a substantial multi-family real estate portfolio here in the US, worth over half a billion dollars. And in that time, my passive investors have received fantastic double-digit returns. And now you too can invest directly into my deals for as little as $50,000. So if you’re an interested investor, head over to reedgoossens.com to find out more. That’s reedgoossens.com. Now, back into the show.

Joel Friedland (00:41):

You haven’t heard this before. We do only all cash deals, no mortgages ever.

Reed Goossens (00:47):

Mm.

Joel Friedland (00:47):

Yes. We are risk averse investors. Our people that join us are not looking to make a fortune. They’re looking not to lose the fortune they’ve already got.

Speaker 3 (01:08):

Welcome to investing in the US, a podcast for real estate investors, business owners, and aspiring entrepreneurs looking to break into the US market. Join Reed as he interviews, go-getters, risk takers, and the best in the business about their journey towards financial freedom and the sheer joy of creating something from nothing.

Reed Goossens (01:28):

Good day Good day, a ladies and gentlemen, and welcome to another cracking edition of investing in the US Podcast from Los Angeles. I’m your host, Reed Goossens. Good is always to be with us on the show. Now, I’m glad that you’ve all tuned in to learn from my incredible guests, and each and every one of them are the cream of the crop here in the United States when it comes to real estate investing, business investing, and entrepreneurship. Each show I try and tease out their incredible stories of how they have successfully created their businesses here in the us, how they’ve created financial freedom, massive amounts of cashflow, and ultimately created extraordinary lives for themselves and their families. Life by design, as I like to say. Hopefully these guests will inspire all of my cracking listeners, which are you guys, to get off the couch and go and take massive amounts of action.

Reed Goossens (02:15):

If these guys can do it, so can you. Now, as you know, I’m all about sharing the knowledge with my loyal listeners, which is you guys, and there’s absolutely no BS on this show, just straight into the nuts and bolts. Now, if you do like this show, the easiest way to give back is to give us a review on iTunes, and you can follow me on Facebook and Twitter by searching at Reed Goossens. You can find the show wherever you podcast on iTunes, SoundCloud, Stitcher, and Google Play. But you can also find these episodes up on my YouTube channel. So head over to reed gossen.com, click on the video link, and it’ll take you to the video recordings of these podcasts where you can see my ugly mug, but the beautiful faces of my guests each and every week. All right, enough outta me. Let’s get cracking. And into today’s show,

Reed Goossens (03:05):

Turn the show. I have the pleasure of speaking with Joel Friedland. Joel is a 40 year track record in industrial real estate. He was the co-founder of Epic Savage Realty Partners in 1991, and he oversaw the hiring and mentor of over 60 industrial real estate professionals, many of whom became his partners. His group sold the firm to an international real estate company back in 2014. And since then, Joel has gone on to to perform Brit Properties where he owns and manages a portfolio of 15 industrial buildings with over 250 investors in Chicago. As an industrial real estate broker and owner, Joel has secured over 2000 industrial pieces of properties, leases and sales. His greatest accomplishment is maintaining valued relationships spanning over five decades. I’m really pumped and excited to have him on the show today to share he’s incredible wealth with us. But enough outta me. Let’s get him out here. Good day, Joel, welcome to the show. How you doing today, mate? Great

Joel Friedland (03:54):

Reed. Nice to see you.

Reed Goossens (03:56):

Nice to see you too. And we’re just discussing a little bit offline that you are the first person over seven and a half years, nearly 400 episodes. We’re finally gonna talk about industrial real estate, which is really, it’s been, I would say the, the bell of the ball, uh, over covid. Uh, we won’t, and I wanna get into that in a little bit. But before we do, can you rewind the clock and tell me how you made your first ever dollar as a kid?

Joel Friedland (04:18):

Sure. Um, , it’s a crazy story. Uh, I, I was in, uh, middle school. I was 14 years old, and I, my dad was, uh, getting his PhD and was working a job while, while going to school, uh, as a 30 something year old. Uh, and so money was a little tight. We lived in an upscale area, not the biggest house, not the fanciest, uh, car. But we, we were in a position where when I needed or wanted to do something, money was always an issue. So I decided to start a landscaping company. I’m sure you’ve heard this before, but when I was 14, I went door to door cold calling in my neighborhood and I convinced 70 people, 70 families to let me handle their landscaping. And it took me one weekend to get all 70. Wow. Then after getting those, by the way, my parents were out of town.

Joel Friedland (05:18):

They were on vacation when I did this, so they had no idea. Then , I hired 40 high school and junior high school kids to work for me to cut the lawns and trim the bushes, uh, do the plantings, pick weeds, and I couldn’t drive. I was only 14. So I had to hire a couple of the kids who had had their driver’s licenses. And I went out and I rented, uh, trailers to haul the lawnmowers and all the equipment. So I had this crazy buzzing business going on, and I did it for a number of years, uh, until after college.

Reed Goossens (05:56):

That’s incredible. It’s a very, uh, advanced for a 14 year old. Right. Like, to, to to think of there, there’s a difference between mowing the neighbor’s yard for five bucks on the weekend to going out and getting 70, essentially contracts, and then, you know, having the where wherewithal the self-awareness to go, I need to go, you know, scale this. So, so what

Joel Friedland (06:15):

Was, I was very convincing when I went door to door to get the, the lawns lined up. the biggest problem, , I’ve got so many stories, but the biggest problem is labor. Mm-hmm. , getting these kids to work. Mm-hmm. , these were suburban kids. They didn’t work. They played basketball after school. I, I had a hard time getting them to push the lawnmowers and, and they would stop and lay around on the lawn and hang out with each other. And some of my clients would call me and say, Hey, you know, your kids are your, your guys are playing on my swing set,

Reed Goossens (06:45):

. Well, walk me through the humble beginnings into what you’ve built today. Obviously, we, we mentioned the intro. You’ve, you’ve, you, you started a company, you’ve been in the industry for over 40 years, so did you just stumble into it, or, or what was it, was there a corporate career before it? Like what, what, where was the beginnings?

Joel Friedland (07:04):

No, I, I graduated from the University of Michigan and I decided I wanted to be in real estate and I set up appointments with people who are the top real estate people in Chicago, because I’m a very good cold caller. So I called people who today, you’d know their names that are on the Forbes 500 or whatever, Forbes 400. These are people who were real players back when I was 22 years old. And I couldn’t get a job working in a corporate position because I didn’t have a master’s degree. But I was introduced to a man named Milton Podolski and his two sons and daughter, they owned an industrial real estate empire in Chicago. They had 84 buildings, and Milt was more or less the same age I am now. He was in his early sixties, and I, I cold called him and I went in and interviewed and I said, I’d like to be in property management cause I didn’t know the difference between management and acquisition and, and sales and brokerage.

Joel Friedland (08:04):

And he talked to me for 15 minutes and he said, I, I brought you in here cuz my son needed a manager, but you’re not gonna be a manager. You cold called and got 70 lawns when you were 14, you need to be in brokerage. So his son comes into the conference room and he says, dad, have you got my guy ready for me? And, uh, Milt said to his son, Randy, you’re not getting this guy. This guy’s working for me. . So, so I ended up going into the brokerage business, um, instead of the management business. And Milt had a son named Steve Polowski, who became one of my two mentors, uh, Milton the son, and a third guy named Richard Levy, who, um, taught me the business. And I learned so much from them. They had a multi hundred million dollar portfolio, and they were early syndicators. They were syndicators in the 1960s.

Reed Goossens (08:57):

Wow.

Joel Friedland (08:58):

So I did a lot of leasing. I went door to door in industrial parks to find tenants the same way that I did when I went for lawns door to door. And that worked. And after, uh, about eight years, I went to Milton, I said, I love working for Steve. He’s a genius. I love working for Richard, but I wanna work with you. I want you to teach me the syndication business. And this was in 1989, um, and I was just about 30 years old. He said, I will, you, you have it coming. You, you’ve done a good job. I’ll put up one third of the money for your first syndication, but you’ve gotta get the rest of the money and you gotta find the property. So I went out and I found a property. It was, uh, 14,000 square foot building. It was a $560,000 deal.

Joel Friedland (09:46):

Milk put up a third of the money. He introduced me by giving me phone numbers of other investors. He said, you have to call them and get them. I’m not gonna tell them to go in. You gotta convince ’em. And I went, and I, I met with his investors and then I went to my own people that I had met through brokerage and other, um, personal and business relationships. And I got, uh, a group of guys to each one put in $20,000. And they all said to me the same thing, you need to put in $20,000. So I began with my first investment at age 30 as the syndicator, uh, with my mentor watching me and teaching me how to do it. And after that, I wanted the Podolski family to adopt me because it was a family business. And they offered me 5% of the company.

Joel Friedland (10:36):

And I said, guys, I love you, but I’ve gotta go start a company and do my own thing because I’ll, I’ll never be a real senior person here in terms of ownership and alignment. Mm-hmm. and I left on really good terms. So Steve Polowski today is still one of my great advisors and mentors. He is in his seventies, he and his wife and another investor, and his wife and I and my wife are all having dinner next Saturday. Steve and invests in my current deals. I don’t do a deal without calling him to ask him about the details still. And this is 43 years later. That’s incredible from when I first started with him. So yeah, maintaining long-term relationships is very important. So I started a business doing brokerage to make a living while doing syndication. Uh, I don’t know if you’re familiar being, uh, from Australia with the TV show called The Wonder Years that played here.

Reed Goossens (11:31):

. I’ve heard of it. I’ve never seen it. . So

Joel Friedland (11:34):

The, the, the star of the show, his last name was Savage, and he had a brother who also got a show on a BBC called Boy Meets World. Their dad was my partner when I started my business. So it was called Epic, Savage and Epic were the initials of my grandparents, and Savage was his name. And so there were four of us and we went out and we started, uh, brokering and syndicating. We built up a business and over a period of time, uh, the brokerage business became large and we ended up selling it in 2014 to Transwestern. So we had what they call liquidity event. And we retained all the buildings that we had, uh, syndicated. And by the time we sold that business, we had syndicated 90 properties. Wow. Uh, maybe two and a half, uh, million square feet. 3 million square feet, roughly worth 200 to 300 million depending how you looked at it. And we kept the portfolio and we kept syndicating. And I continue to do the same thing today. And I have 250 investors. I know all of them. It’s really important to me that this is not an internet thing. I have to know my investors. I keep track of who they are, who their families are, what they do, where they’re from, and they know me and I know them. One of my great habits is to talk to at least three investors every day no matter what.

Reed Goossens (13:04):

Hmm. That’s incredible.

Joel Friedland (13:06):

That’s, yeah. Yeah. And it’s all been industrial. Hmm. We, we tried doing some deals outta town and uh, we had mixed luck with that. We did Ohio, Florida, New York. And ultimately, uh, it, it became obvious to me that there’s enough industrial real estate in Chicago that I don’t have to go anywhere, but here it’s the biggest, uh, centralized industrial market in the country. It’s not bigger than, than the tri-state area in New York. And it’s, it’s really not bigger than, than the Los Angeles area, but those are very spread out. Chicago to drive from my office to any building is a half an hour. Right. And so that’s important because we have this, this like micro focus. There are 8,000 freestanding industrial buildings in Chicago. I’ve cold called 7,000 of them at least. And my staff continues to cold call them. We find a lot of our buildings just by knocking on doors and by networking. And so there’s 1.3 billion square feet of industrial, uh, there’s enough to keep us busy here forever. Yeah. We’ll never be expert enough. Cuz the newest deal that happens tomorrow is new information that we need to know.

Reed Goossens (14:21):

Well, that’s, it’s, it’s incredible story in and around. And probably a real good lesson for a lot of people listening about you can do it in your backyard. And so many people leased in beginning and like me, right? I was living in New York, I live in LA now. I went outta state for better cap rates. Right. I didn’t know what was in my backyard. And I bet you, I used to work for a developer here, um, camp Baab off from ensemble real estate. And uh, you know, he, all he did was, you know, LA places where, you know, we, we’ll call em, you know, real, real blue chip type of markets that, you know, aren’t, aren’t going anywhere. So, um, but with that being said, what I would like to get into Joel is, is around, you know, I’m an engi, I’m a former engineer. I’m structural engineer. So I’m really, you know, analytical. And I love when I’ve got experts like yourself really to get on. I ask you questions to be like curious about how the hell, I’m never gonna be the 10,000 hours that you’ve got, but I’m gonna like, I’m gonna get it. Right. So as we, as you look at a deal and you look at you, you mentioned, I think 3 billion. Was it 3 billion square feet? Was that, was that the number you used?

Joel Friedland (15:20):

1.3 billion in Chicago?

Reed Goossens (15:21):

1.31, 1.3 billion. What are the, what are the drivers in and around that you look at from a macro point of view? And let’s start with the macro and then sort of work into the micro of what makes a deal or what makes an area a desirable for you to say yes or no to?

Joel Friedland (15:37):

Okay. So first of all, industrial needs to be defined as to what it is. If somebody’s listening to this and they don’t know what industrial is, industrial means manufacturing or distribution. Those are the only two things that industrial means. There can be service companies that occupy industrial buildings as well, but service companies store things. They don’t, they need a w it’s a wear if you have a warehouse need, it’s an industrial property. Mm-hmm. . So I’ll give you some.

Reed Goossens (16:06):

So, so, so, so just, just an example. Flex space is not what you wouldn’t call industrial.

Joel Friedland (16:09):

Correct. I hate flex space. Flex space is, is it’s not good enough to be office and it’s not good enough to be industrial

Reed Goossens (16:15):

.

Joel Friedland (16:16):

And it’s the last thing, it’s the last thing that leases when there’s a problem and it’s the most expensive thing to, to re-tenant because of build outs and tis, some people love it. I’ve been through four cycles every down cycle. Flex space is bad. Mm-hmm. , simple industrial buildings. Indu an industrial building, generally speaking, is a warehouse that has a little bit of office, which is the sales, administrative and executive office in the front. If it’s a privately owned business. I’ll give you some examples. We have a tenant that was on Shark Tank in year one. Mm-hmm. , uh, the company is called Element Bars. They make protein bars. The owners, Jonathan Miller and Jonathan started the company just out of thin air and then went on Shark Tank and made a deal on Shark Tank. And then went and built this tremendously successful business just being a great entrepreneur.

Joel Friedland (17:19):

And they made millions and millions of protein bars a month. millions a month, like many, many millions a year. He’s got 80 employees. He occupied a building originally when he started the business and then he grew into another building. And the, the second building he bought, I think it was 15,000 square feet. And he operated out of there. And then when he grew, he had the lease building down the street for expansion. And now he was in two buildings. And it’s really hard when you have your chocolate coming in and you have your oatmeal coming in and you have to bring it into one building and then move it to another building to, to put it through the ovens and, and the, and the drying process and everything else with all your people split up with trucks running back and forth. Industrial companies like to be in one building, it’s called a consolidation.

Joel Friedland (18:13):

So he found us on the internet cuz we owned a building in a place called North Lawndale in the city. He wantedto be in the city of Chicago, cuz the labor’s easier to get there. And he approached me and he said, I’ve been trying to buy a building for four years for my consolidation. I’ve not been able to find one. They’re, they’re hard to come by. He said, I know you own this building and I understand that your prior tenant was best croutons, which supplied croutons to McDonald’s and to Wendy’s. And they moved out, I think they moved to St. Louis after they were our tenant. And so Jonathan said, I wanna see your building, uh, on Roosevelt Road. And we showed it to him and he says, okay, I don’t want a lease, I wanna buy, but if you won’t sell it to me, I’ll lease it from you.

Joel Friedland (18:58):

So he took it as is no carpet, no paint, no nothing, triple net lease, which means he pays us rent, he pays us $6 a square foot for 50,000 feet, that’s $300,000 a year. And he pays the taxes, which are about a dollar a square foot, which is 50,000. And the other expenses, which together are about 50,000. So his total cost all ins about $400,000 a year. And the rent goes up every year. We manage all of our properties. So we collect the rent, we do the accounting. And when there’s a problem, if there’s a sewer problem or a sprinkler problem or an H V A C or a parking lot, we, we get involved and we help the tenant to fix it. We give them resources, but they fix everything and they pay for it. It’s, it’s the opposite of, of multifamily. Right. We don’t pay for anything.

Joel Friedland (19:50):

And usually freestanding buildings, they cut their own lawn, they plow their own snow. In Chicago, they do all their own maintenance. We don’t even hear from them. We just get the rent. So Jonathan, uh, has been doing great. I think he’s gonna do 18 million in, in, uh, revenue this year. And he came to me and he said he needs to expand. I happen to have the building next door and I have a tenant who is looking for a larger building. So I’m going to wait for a few months and negotiate a termination with the tenant that’s leaving next door. And then connect Jonathan’s current building to our building next door. And then his rent will double. Except for one thing, industrial has been so good that the rent has gone up from $6 a foot to nine and a half dollars a foot. That’s the market now.

Joel Friedland (20:42):

Wow. So right now, Jonathan’s upset because he said, it, I wanted to buy a building where I could have fixed my costs. I couldn’t find one. And now I’m sitting here and you’re telling me my rent’s gonna go up 40%. And I said, that’s the market. I I the market is the market. In the meantime, we built a really nice relationship and I am a syndicator and he knows what I do and he’s been making a fortune. So he said to me, I’ve got some money, I’d like to invest a million dollars. Can I go into one of your deals? So I said, how about this? I’ll put you in two of my deals, put a half million in each one. And so now he’s one of my investors and my tenant, this creates a conflict because if I’m negotiating with him as my partner on other things, and my friend, how do I charge him nine 50 when he tells me he only wants to pay $8 instead of nine 50?

Joel Friedland (21:36):

Cuz $6 is what he’s paying now in the jump . It’s a, it’s a big jump. So what I did was, I, I have a younger partner who’s really adept at everything in our business, which is, I call this the succession plan, which is really important in a business. And Eric and Jonathan are now negotiating not only for the renewal for the 50,000 feet, but for the additional 50,000 feet next door. And I’m staying out of it because I have, um, I have a horse in the race, you know mm-hmm. , he’s my friend. Mm-hmm.

Reed Goossens (22:11):

Joel Friedland (22:11):

Mm-hmm. . So I represent a group of 80 investors in this deal, and a bunch of people who each have $50,000 in a deal are not looking for me to go give a favor to my other friend.

Reed Goossens (22:22):

Right, right. Yeah. Okay. Yeah. So that’s the problem. Yeah. But, but back to my original question, just from a macro point of view, are, are you looking at like access to freeways? Are you looking at oh, locations in and around like, you know, obviously there’s industrial areas within every city. Right. You know, the, the town planning’s, like you’re gonna go over there and that’s, historically we’re gonna go very rarely changes. And most cities have them. Right. It’s usually adjacent to the CBD. So people can, you know, tr you know, get, get two point easy labor. So what are you looking at in terms of the macro and then let’s get into more into the Sure.

Joel Friedland (22:56):

Well we have, we have over 400 industrial parks here.

Reed Goossens (22:59):

Mm-hmm.

Joel Friedland (23:00):

And those 400 industrial parks are spread out in multiple counties. Uh, the, what’s called infill is what’s closest to the O’Hare airport and to the city of Chicago and in the city. And we focus mostly on infill. Yep. The reason is because the density of population, which means employees, cuz companies and industrial need employees to work in their, in their factories and their warehouses. And they, so they wanna be near where there’s a lot of people that they can hire. We like the infill sites the best. They, they are the ones that fill up the quickest in a bad market. They’re the ones that get the highest rent in a good market. So we’re, we’re a certain number of miles away from O’Hare airport and from downtown Chicago with most of our buildings we currently that

Reed Goossens (23:50):

Yeah. That, that, that, that insulates you from fluctuating. Cause you know that the O Chicago O’Hare airport ain’t going anywhere.

Joel Friedland (23:57):

Ain’t going anywhere. And, and we have some buildings that are way out in the, in this way, west suburbs and the way North suburbs. Mm-hmm. , they scare me. I they’re not my favorites, you know, I Right, right. We have them and there was a reason why we bought them, but yes, they’re near the tollways, they’re near the highways. Uh, they, they’re near places where there’s labor. They’re in safe markets where, where there’s, uh, not crime as a problem. Mm-hmm.

Reed Goossens (24:21):

, do you look at average household income in an area? Like one, you don’t even worry about that. No, you don’t. Yeah, it’s

Joel Friedland (24:26):

Different. No, I, I know all 400 industrial parks. If you said, I want you to go to the Meridian Business campus in Aurora, I would get in my car and I’d drive there. I wouldn’t need any directions. And I can tell you that there’s 62 buildings there, for example. Mm-hmm. , we own, we own one of them. We’ve used to own three of them. We sold two of them. And I don’t love the area, it’s too far. It’s what’s called, it’s in an area called the Fox Valley. That’s an area when things go bad, it’s not close enough to the center of where the population is and where the employees are, where people, there’s a lot of people who live in Aurora and in the nearby suburbs, there’s a suburb called Naperville next door in Warrenville and Batavia. And they all have industrial parks. But I, I strongly prefer the safety of a great location, which is in Phil. Mm-hmm. , in addition, macro. Um, there’s three kinds of industrial. One kind is called class A or core. And those are those giant buildings that are brand new, that are built right on the side of the tollway in every city.

Reed Goossens (25:34):

Tilts up construction, they go up very easy.

Joel Friedland (25:36):

Yeah. We call it precast here, here. They make it in a factory, in, in better climates, they make it on site where they pour the concrete into a mold, uh, into a form. So those are great buildings, but institutions buy those. And the, the yield when we own those is intolerable to my investors. . They, they don’t wanna take the low kind of returns that institutions are willing to take. Institutions have too much money, so they have to buy what the prevailing rate is. We we’re more nichey. So we look for smaller deals that are in the B and C category. We prefer B buildings. They’re a little older, a little smaller, lower ceiling, not as many loading docks, maybe some other issues that are some obsolescence issues because they’re from the 1980s or the 1990s. Uh, we love those buildings and many of them are freestanding, and tenants love to be in their own building as opposed to a multi-tenant building where there might be four units and they’re squeezed in the middle. Mm-hmm. , they might make noise, they might have odors. They, they, they have all different reasons why they want their own freestanding building. It looks more impressive. Right. So we buy those B buildings. We do buy C buildings. Those are a little older and a little lower ceiling , you know, they, they, they have more, more obsolescence, but there’s a market for them if they’re small enough, because what’s,

Reed Goossens (27:02):

What’s, what’s small to you?

Joel Friedland (27:04):

Our, our average building size is 25,000 square

Reed Goossens (27:07):

Feet. Mm. Okay. So they’re not, it’s not, not, I can, I can see it in my mind’s eyes, it’s not, not these massive, huge open spaces. Yeah. Gotcha. Okay. Yeah.

Joel Friedland (27:15):

No, no. Jonathan Miller’s in 50,000 square feet, and the, the, the latest building built for Amazon in our market was a million square feet. Wow. Wow. So you could fit, you could fit 20 of my buildings inside the Amazon building, , but it also reduces the risk to have more buildings, uh, that are smaller, smaller and the smallest and have more of them. Mm-hmm.

Reed Goossens (27:37):

.

Joel Friedland (27:37):

And so my investors like a better return. And so on the B and c, I’m able to get an 8% yield most of the time. Sometimes it starts at seven. We, we won’t, we won’t take a 5% return. And here’s the thing that’s gonna blow your mind if you haven’t heard this before. We do only all cash deals, no mortgages ever.

Reed Goossens (27:59):

Mm.

Joel Friedland (28:00):

We are risk averse investors. Our people that join us are not looking to make a fortune. They’re looking not to lose the fortune they’ve already got. Right. So we do these all cash deals. Interest rates do interest me, I am interested in it as, as sort of like an academic thing about the economy. But we have some older deals where we do have mortgages. In 2008, in what was my fourth real serious downturn. I had 50 buildings and I had 60% mortgages. And let me just say, I thought I was like hot, right? , I, I was a big player except for one thing. When the market tanked in 2008, I was not only not a big player, I had seven banks chasing me. Because when tenants don’t pay the full rent and you have a mortgage, you can’t afford your mortgage. That’s a big risk.

Joel Friedland (28:57):

In industrial, if you have a freestanding building, it’s either a hundred percent leased or it’s a hundred percent vacant. Right? And if it’s vacant and there’s a mortgage every month, you gotta pay the mortgage and the taxes, the insurance, and the maintenance and the heat and the electric. And I ended up, because there was trouble everywhere in deep, deep water, and I had to fight my way through literally years of, I would call it misery, that couch behind me. I was on that couch. I was in a depression. I needed family support to come out of it. I needed counseling to come out of it. I needed medication to come out of it. I, I believe that there’s a huge, uh, mental health element to every business decision that everyone makes at all times.

Reed Goossens (29:51):

For those of you who are interested in staying up to date with all the latest happenings in my business, or to learn more about passively investing directly into my multi-family value add deals, then head over to reedgoossens.com And sign up for my monthly newsletter. By signing up, you’ll automatically be notified about my new up and coming investment opportunities. You’ll be able to stay up to date with all the latest real estate news here in the United States and much, much more. So head over to reedgoossens.com and sign up today. Now back into the show with your, you mentioned, I think it was 80 odd buildings you had now, or I can’t remember how

Joel Friedland (30:31):

Many, 15 buildings,

Reed Goossens (30:32):

15 buildings, but just couldn’t you use it like a portfolio loan so you could a you know, you could take the risks at, you know, building number one Yeah. It goes outta biz. But you then you’re, you’re mitigating the risk over more businesses and thus that reduces the liability of that someone goes outta business. You’ve got these other businesses there that can keep it chugging along.

Joel Friedland (30:55):

It could, it could. Most people say that, that, um, real estate is only a leverage business.

Reed Goossens (31:01):

Right.

Joel Friedland (31:02):

And you know what? It’s not true. I’m the exception. I’m the exception of the rule. I I have investors who, um, love no mortgages. It doesn’t matter if it’s in a pool. I don’t want my, I had a number of buildings cross-collateralized at the bank, which Yeah. One goes bad, the other ones are Yep. For it.

Reed Goossens (31:23):

House of cards. Um,

Joel Friedland (31:25):

My investors are sleep at night. People. I, I watched one of your podcasts and you had Jillian Hellman.

Reed Goossens (31:31):

Yes.

Joel Friedland (31:32):

And I subscribed to her theory, which is sleep at night. Mm-hmm. , my investors do not have to worry about my deals getting in trouble or we can’t handle it. I was in that once I was in my forties, now I’m in my sixties. My investors or people who have sold businesses or they’re very successful doctors, dentists, lawyers, executives. And when I first decided to do all cash no mortgage, I called my accountant and I told him that, and he said, no one’s gonna invest in that. And I said, well then I need a new accountant because I’m doing it. And that’s really the, the differentiator between us and anybody else. I’m, I’m happy with a nice long-term, I don’t know, 10% cash on cash return plus some upside to maybe make a 14 i r r. That makes me happy.

Reed Goossens (32:30):

Yep. No, it’s good to you bring that up because at least in across a lot of the commercial real estate industry in the last, we’ll call it decades since the, since oh eight. Right. Um, and I don’t have as much gray hair as you. I’ve, this is gonna be my first down major downturn I’m gonna go through and, you know, um, there’s some sleepless nights that I’ve had already. Right. So, you know, there’s the, we we’re all like that. But, but a lot of investors are, at least in the multifamily space, they’ve doubled their, we, I’ve doubled investors monies in less than three years. Like it’s insane returns. Right. The IRRs in the, with the three handle, like, I remember having an old financial, uh, mentor of mine. He said, if anything’s got a three handle in the i r r you, you’re lying .

Reed Goossens (33:07):

But we’ve produced that and now people think that’s the norm. And, and I, I, you know, I come from a country, if you w your money every 10 years, you’re doing just fine. Right. And, and, and real estate is a long, long-term game and trying to wean people off that over the last four to six years. And human beings have short-term memories anyway, , you know, so to, but, but understanding the risk associated. Cause I bet you if I said, oh, here’s a 25% irr ground up built construction deal, or here’s a 13% no debt deal, you know, you who, what are you gonna go for all the 24 and investors, you know, at least some retail investors will, will, will organically or mentally go, go to, sorry, subconsciously go to the 24. Cause it’s a bigger number. Yeah.

Joel Friedland (33:47):

Right. But not understand. I have a lot of theories. I have a lot of theories on what you’re talking about. And, and I talked to my investors about them at length. They joined me. First of all, diversification is critically important no matter what.

Reed Goossens (33:59):

Correct.

Joel Friedland (34:00):

Because I have a friend who bought a stock at 50 cents a share and it went up to a hundred dollars a share. And he had a 400 million net worth and he never sold it. And then it went bankrupt and he lost 400 million. I call that gambling. This is a really close friend of mine. And he’s, he, he really had a problem there. I mean, he, no one wants anything like that to happen. That’s the opposite of what I, what I, um, believe in. And what I tell people that I would recommend for them, there is a certain amount of, um, I would call it net worth that, that you have to figure out what you’ve got and where it is. And you’ve got the 1% that have a net worth of 11 million or greater and you’ve got the 2% that have 5 million, uh, or greater.

Joel Friedland (34:48):

And then you’ve got the 3%, which is 3 million or greater, and then the 4%, which is two and a half million. And it start as, as you go into the larger percentages, like a 6%, a 6% person might have a million and a half dollars net worth. I tell people that they’re all different kinds of investments. I’m not saying my way is the only way. You should definitely invest in multiple different strategies, including the stock market, including bonds, uh, maybe t-bills, maybe T notes, whatever. And I’m in all that stuff. Um, but I say to them in my stuff, I want you to not put more than 3% of your personal net worth. It would be stupid for you to do that. However, I want that 3% to be your sleep at night. 3% on the one end of the scale, which is the safest end.

Joel Friedland (35:40):

So I fill with my, with my syndication, um, philosophy, a certain part of a person’s portfolio. And then I’ve got a friend who’s got an an investor, he’s got a hundred million net worth and he makes 4 million a year without working. And his feeling is that every year he’s gonna invest 400,000 in something that’s so risky and such a gamble that if he loses it, so what? And he loses it a lot, . Cause he, you know, he goes into these, but that’s, but he’s with me and with me, he’s got 4 million, which is 4%, which is too much by a little bit. And it’s just safe money cuz it’s all cash. And it throws him right now, he is been with me for a while. It throws him about an 11% return cash on cash.

Reed Goossens (36:27):

That’s, that’s in, that’s incredible. And I think that’s, it’s such a good thing to realize that 3%. And I’m glad you, you were able to quantify that for people because I think a lot of syndicators out there don’t, they’re like, I just need to fill this deal up and I don’t care where the money comes from. And not having that more holistic approach with your investors, which I’m sure hamstrung you for a period of time, but I bet you it was only small. I bet you it was only small in the beginning. And as you started to educate them about why, where you sit on that spectrum, so many people could then become comfortable and say, yes, I’m gonna invest with Joel. And that makes so much sense.

Joel Friedland (36:57):

Yeah. Yeah. I I I’m not saying if you’ve got a bunch of multifamily and you’ve got a 60% l t v mult, multifamily, uh, with loans with debt is much safer than a single building, freestanding building. But I also tell people they should invest in more than one building with me. So if they’ve got 300,000 to invest, I say, why don’t you go in with a hundred thousand each on three of my deals? So now you’ve got a, a little diversification in your thing that’s skewed to be the safest thing that you can do in real estate, which is with no doubt.

Reed Goossens (37:29):

Right. Completely agree. Yeah. Well, Joel, I could talk to you for hours, my friend, but I wanna be very respectful of your time. We’ve already been chatting here for, for well over, uh, 35 minutes quickly towards the end of the show. What’s your, what’s your, what’s your thoughts on the economy right now?

Joel Friedland (37:43):

Uh, give me a balloon. Give me a pin. pop. It’s gonna pop. I don’t know when, it may be next week, it may be next month, it may be next year. But things have been good for too long. And this is unrealistic. It’s not the way the economy works. I took economics at the University of Michigan and what I learned is that the economy doesn’t grow to the sky. There are times when it goes bad and it’s, there’s gonna be a problem.

Reed Goossens (38:08):

Do you think it’s gonna be as big as oh eight or,

Joel Friedland (38:11):

I don’t know. My partner called me this morning, he said, the markets are up. Maybe there won’t be anything. Maybe it’ll be a no landing or a soft landing. And I said, uh, no. .

Reed Goossens (38:23):

Well, yeah, I, I completely agree. And I think there’s gonna be, there’s gotta be some, um, you know, turbulence in her head. It can’t, it can’t continue to continue to go up. And my only fear is, you know, was svb, what else, what other things are lurking in the water out there that we just don’t know about? Right. And, and I think that’s, that’s the thing that’s so why people are, a lot of my investors are sitting on the sideline as they should be. Right. We’re still trying to turn over rocks and tools, still trying to find deals. I think it’s a great time to buy because people are scared, but it’s trying to convince your equity to say, look, this is good for a reason, but he, you know, it’s still a safe investment. But to your point, like having those, you those really in depth conversations, so Yeah.

Joel Friedland (39:01):

Yeah. What I do, by the way, is I, I we buy our buildings ourselves first and we syndicate after we own them so we can take our time and pick our investors.

Reed Goossens (39:09):

Yes. You’re you’re at a different stage than I am my friend, but that’s okay. That’s okay. That’s okay. We’ll get there. We’ll get there. I’m only, I’m 37. We’ll get there. , I, I

Joel Friedland (39:15):

Think you’re doing great. I think you’re doing really great.

Reed Goossens (39:18):

Thank you my friend. Thank you. Well, look, and, and looking up to people like yourself and, and having those little tidbits and conversations like this is so important. Helps me become a better syndicator myself because I do need to, you know, to be honest, I do have a frank conversation with my investors. Say, look, where do you want to be in the, the risk spectrum here? I can be a portion of it. I don’t need to be all of it. And, and I think that is a wise thing to come. I I do actually say to my investors when I, when when someone says, why should I invest with rsn? And I said, well, you shouldn’t just invest with RSN. You should invest with as many people as you can because the jobs act changed the way you can invest. And that’s a good thing for you as the investors. So become wise. And I can, I can even refer you to other operators that I invest with personally. So I think it’s a great way to be and have that, you know, abundance mindset because then people like, oh, okay, maybe he doesn’t want my money. You know, Yeah,

Joel Friedland (39:59):

I do. I refer my investors to other syndicators who I trust and vice versa.

Reed Goossens (40:05):

Yep. Yep. Well, Joel, at the end of, uh, every, uh, interview, we’d like to jump into the top five investing tips. You ready to get into it?

Joel Friedland (40:11):

Sure,

Reed Goossens (40:12):

Mate. What’s the day? How, how about you practice to keep on track towards your goals?

Joel Friedland (40:16):

Well, , I mentioned before, I, I talk to three of my investors minimum every day. I wanna make sure I know how they’re doing and I want them to know how we’re doing. There are days, literally, I’m not kidding, where I talk to 10 investors in a day and, uh, I wanna know what’s happening with their kids and with their vacations. I just said, how is Hawaii? I just sent an email to somebody . So that’s really important

Reed Goossens (40:41):

Touching base. I think that’s, that, that is really important and it helps build you as not just, uh, you know, you’re an old school type of guy. I can tell that, that, that that’s the way you’ve always done business. And that’s the way you have 250 investors that come about around again and again and again. So, so I love that. Uh, question number two is, what is, who has been the most influential person in your career to date?

Joel Friedland (41:02):

I would say, uh, fellow named Nate Wagner. It’s a tie between Nate Wagner and Steve Podolski, my original mentor. And Nate, who I met later in life. I’ve only had him as a friend and investor for 20 years. So he is a new friend.

Reed Goossens (41:18):

.

Joel Friedland (41:19):

But Nate, Nate has a lot of philosophies and one of them is staying power is everything. And he’s got a lot of sayings like that. And I don’t, I don’t buy any properties on behalf of my groups without Nate and Steve both signing off in addition to another group of six or seven people that I I go to before I buy anything.

Reed Goossens (41:38):

That’s, that’s a great, that’s great to have that network of people to vet a deal. I think that’s so powerful and something that you clearly have developed over the years, so, so kudos to you. Um, question number three is, what’s the most influential tool in your business? When I say a tool, it could be a physical tool, like a journal, you know, or a phone. And I already think I know what the answer is. Or it could be a piece of software that you can’t run the business without. What, what is it?

Joel Friedland (41:59):

It’s a mental thing actually. Uh, it’s four letters. It’s a four letter word. It’s wait, w a i t and it stands for what am I thinking and ready for this one? Why am I talking? So when I’m talking to somebody, oftentimes I could give an impulsive answer to something. And rather than doing that, I like to say to them, can I get back to you on that? And sometimes it’s just good to be quiet and listen. And so why am I talking goes back to let’s listen instead of talking, maybe I should shut up and hear more about what Reed has to say.

Reed Goossens (42:43):

No, I think that’s, that’s my, my, my mother always said, you got two ears and one mouth. You know, listen before you start opening your mouth. That’s, that’s, that’s, that’s awesome. So question number four is 40 years in real estate. I’m sure you’ve had some values. You mentioned sleeping on the couch behind you. What has been the biggest failure in your career? What’d you learn from that?

Joel Friedland (43:00):

So I don’t develop, um, okay. If you watch some of the, uh, videos, uh, the podcasts of, uh, Sam Zel mm-hmm. , he’ll tell, he says the same thing. He, he passed away recently and he was one of my local heroes. My neighbor, two doors away from where I grew up was his in-house lawyer. And I just love this whole story of Sam Zel and, uh, he says, I don’t develop, it’s, it’s, uh, too much trouble, too much risk, too much time, and I have to pay the top of the market because I’m paying top, top labor rates, top material rates. I’m gonna buy properties for under replacement costs that people like, as much as they would like something new. And I developed a, i, I bought a piece of land, my partner made me buy it. I just said, okay. Okay. Okay. And it was one of the worst things we ever did because we’re just not developers.

Reed Goossens (43:50):

Right? Yep. Stick to your, stick to your lane and what you do. No, I I like that. I like that, uh, philosophy. I think that’s, that’s wise Mate. Last question is, where can people reach you to continue the conversation that be in your sphere? Where do they go?

Joel Friedland (44:00):

They go to britproperties.com, that’s Brit Properties. And, uh, we’ve got some resource, uh, materials there. My favorite thing is, uh, we do have, uh, our offerings or one of our offerings on there. And if you go to the offering section, there’s an article called Why You Should Not Invest With Us

Reed Goossens (44:23):

. I’m gonna read that. It’s a good article. It it be a good, it’d be a good thing to, to take some perspective, but, uh, yeah, it’sgood. Okay. So, so, so, um, britproperties.com Right, right. Awesome stuff my friend. Look, I wanna thank you so much for jumping on today’s show. I just wanna reflect some of the things I took away. I think, you know, one of the big things is it’s 40 years of real estate experience here. Like you have so much knowledge, uh, your, your, what you mentioned earlier about, um, the, the mental health decisions around business is I see it playing out in real life today with not only my business, but other syndicators who are similar age to me, who maybe overextended themselves and now have rate caps coming due and all that sort of stuff. And it’s causing a lot of headaches.

Reed Goossens (45:04):

Um, so it’s happening in real time. So it is, it’s, you struck a chord there with me. Um, but also just your way in which you approach your having no debt, I think that’s incredible. And then having a piece of someone’s portfolio, you don’t wanna have the whole thing. You are just there for that one particular niche. And you’re only in Chicago, right? You tried other places, it’s your backyard. You, you’re really, you’re a, a super expert on it and that’s what makes you the best, right? That’s what makes you, people wanna come back to you again and again and again. You don’t have 20,000 followers on Instagram. You have 250 people who will invest with you time and time again. And I bet you if they see a phone call from you coming from Joel, they’re gonna pick it up and they’re gonna know what to expect. And that’s because you’ve built those relationships. And I think that’s so, so important. And there’s some of the things that I took away from, from today’s show. Did, did I leave anything out?

Joel Friedland (45:50):

No, that was great. And, and I want you to know that, um, I think what you’re doing, I I, I’ve watched a number of your podcasts and I’ve watched you as a guest. I think what you’re doing is great and uh, I’d like to talk to you about your stuff actually. Okay.

Reed Goossens (46:04):

Okay. Okay. Well let’s, let’s definitely chat offline, my friend. But with that being said, I wanna wrap up this show. Thank you again so much for jumping on today’s show. Enjoy the rest of your week. Enjoy the weekend cuz it is a Friday and we’ll catch up very, very soon. Thanks.

Joel Friedland (46:16):

Take care.

Reed Goossens (46:17):

Well there you have another cracking episode jam pack with some incredible advice from Joel. Remember, head over to www.britproperties.com and check out why you shouldn’t invest with those guys. I’m actually really, really interested to read that article, uh, get over there and, and fill out what, what Joel and his team are doing, because I think it’s really important some of the takeaways from today’s show about no debt, having, uh, a long-term vision with your investors and having, knowing where you fit in their, you know, diversification portfolio. And that’s the self-awareness you need, that thathas probably been developed over 40 years of what Joel has been doing. So remember to check over to britproperties.com. I wanna thank you all for tuning in to continue to grow your financial IQ because it’s all about here on this show. The easiest way to give back is to give it a five-star review on iTunes. And we’re gonna do this all again next week. Just remember, be bold, be brave, and go give life.