Joel Friedland

Because I have watched what's happened to office building owners who have had too much debt, and to multifamily who had too much debt, and floating rate debt, and made some errors in judgment. And I'm looking at it and I'm saying, "Boy, if we had debt, I don't know what mistakes I would have made." But with no debt, my investors are safer, and I'm safer, and I sleep better at night.

Ed Mathews

If you're within three feet of me, we're probably talking about real estate, much to my family's chagrin. But here's the thing, most people see 7% rates and freeze. I see opportunity. They're waiting for the perfect deal, and I've analyzed thousands of them, and perfect just doesn't exist. So I talk to operators across every asset class, flippers, multifamily syndicators, note investors, and whatever else is working. No sales pitches allowed, just real lessons from people actually doing it. I'm Ed Mathews, and this is Real Estate Underground. Greetings and salutations, Real Estate Undergrounders. It is Ed Mathews with the Real Estate Underground. Thank you again so much for joining us today. I am sincerely grateful for being a part of your day. A- as I just told the gentleman who's joining us today, I have really been looking forward to this interview. This man I had the honor and pleasure of interviewing about three years ago, almost to the day, if I'm not mistaken. It was May of 2023. Joel Friedland of Brit Properties welcome back to the show. Thank you so much for joining us, and I have to tell you some of the takeaways. So I love that we provide an educational platform for real estate investors, whether multifamily or industrial like you or other asset classes. And I fundamentally believe that we can all learn from one another, and I can tell you directly that the lessons you taught in that show, I have used in my own business, and I've weathered some pretty serious storms. And I was absolutely fascinated by your business model, which we are gonna get into today. But also, your approach and the way you, that you think about the real estate markets. It fundamentally changed the way the moment we finished that conversation, I started changing our business model to mirror a lot of the things that you do, and I just wanted to let you know that I'm grateful. So welcome back, and I can't wait to have this conversation.

Joel Friedland

Ed, I am honored to be with you again and to have you say such nice things. Thank you for that.

Ed Mathews

Truly. Yeah. Joel, for those folks that don't know about you and don't know about the industrial space, why don't you tell us a little bit about you and Brit Properties and anything else you'd like to mention?

Joel Friedland

My background, I'm 67 years old, so last time you and I did a podcast- You were a

Ed Mathews

spry 64.

Joel Friedland

Yeah, I was 64. A lot of things have happened personally, and a lot of things have happened in business, and they both affect each other, as

Ed Mathews

yeah.

Joel Friedland

My biggest issue is that we just went through this health scare that you know about with my wife. She was diagnosed w- with pancreas cancer, which is lethal 87% of the time, and she went through treatments, and she had surgery, and we're two years out, and she is doing remarkably well, so- Wonderful we're really grateful for that. And since the last time we talked, we have had two more grandchildren, so now we've got four, and they all live near us, which is great, which keeps Stacy extremely busy and extremely happy.

Ed Mathews

That's important.

Joel Friedland

Business-wise we've been buying a lot of industrial buildings like we always have, and last year we bought seven You, you may remember that I am hopefully, or possibly I'd rather say the most risk-averse real estate investor in the United States. We do our acquisitions of our industrial buildings debt-free. We still do that. I have put a little debt on a couple of them. We- we've got a 21% loan-to-value ratio on a 26,000-foot building in Wood Dale, Illinois, and we have a few others that have 30% loan-to-value that we did years ago. But I don't wanna do that anymore. Because I have watched what's happened to office building owners who have had too much debt, and to multifamily who had too much debt, and floating rate debt, and made some errors in judgment. And I'm looking at it and I'm saying, "Boy, if we had debt, I don't know what mistakes I would have made." But with no debt, my investors are safer, and I'm safer, and I sleep better at night. I can't tell you that it's brilliant, 'cause it isn't, 'cause if you don't have leverage, you can't make gigantic returns-

Ed Mathews

Right

Joel Friedland

like you can if you leverage up 70%. So it's just dollar for dollar. If we make a dollar, we earn a dollar. We don't have that multiple from leverage. But I could tell you some stories about what we are doing, and specifically why we buy small industrial buildings, single tenant only, no multi-tenant, no shallow bay, no flex. Just single tenant buildings where they're between, let's say, 7,000 square feet and 30,000 square feet. And generally, we buy them from families that have manufacturing companies in the buildings that their grandfather or their dad started decades ago, and now it's just time to let them go and lease them back. So we're doing sale leasebacks.

Ed Mathews

Excellent. And one of the things that I've seen I somehow recall that we had talked about this, but I've definitely seen it in the interim, and that is that the debt real estate investors are in desperate need of a 12-step program to wean themselves off of bank leverage. A- and so I was wondering if you could comment a little more on that.

Joel Friedland

Yeah. I believe that real estate investors who take a lot of risk and put a lot of debt on their deals are not that different from people who go to the casino and play blackjack or craps. Because they're taking a risk that if the market tanks and they have all that debt, that they're not gonna be able to necessarily sleep at night and survive. And I'm not saying that it's bad to do that and I respect real estate investors no matter how they do it, if they do good due diligence and they're careful, and they're experienced, and they know what they're doing. But when you hear someone say, "I'm a deal junkie," you don't wanna be an anything junkie.

Ed Mathews

Right.

Joel Friedland

There- So there are all these 12-step programs for people with addictions, and one is AA that was founded by Bill Wilson, and one is CA for Cocaine Anonymous, and- there's Overeaters Anonymous. There are all these anonymous meetings that people go to, and they love the meetings, and they work on their character defects and on what they do wrong. Gamblers Anonymous is for people who gamble with their money in a way where it hurts them. And the Gamblers Anonymous concept is let's figure out what gambling means to you if you're a gambler and you've gotten in trouble. And anyone who's gotten in deep trouble owning real estate, who's... when... My wife was sitting in that chair in 2008 when I told her that I had $70 million in personal guarantees on 50 buildings, and that 10 of my buildings looked like we weren't gonna be able to keep them without selling them for a loss. She fell back in her chair and she said, "Oh my God, I didn't know." Most of these guys or women who are these real estate gamblers don't tell their spouses, and that's another thing that, that addicted gamblers do, is they hide what they're doing from their loved ones and from people that they know through, through- throughout their lives. They just, they hide it because s- somewhere deep down they know they're taking way too much risk.

Ed Mathews

Right.

Joel Friedland

They just know it, but they're doing it. It's easier to come up with 30% down and borrow 70% than come up with 70% down and borrow 30%.

Ed Mathews

Right.

Joel Friedland

So I have I made a decision about 10 years ago that I think I was gambling in real estate with all that debt, and I said, "No more. No more." And that's when I set a boundary, and my boundary was 30% maximum LTV, but three out of every four deals I do I'm gonna do with no debt. And that's the opposite to me of gambling. That's my boundary.

Ed Mathews

That's stewardship.

Joel Friedland

It- I might be an idiot, right? I could be an idiot, but it's the way I have to do it for my own emotional health and for my family's wellbeing.

Ed Mathews

And I- I'll be the first to admit, there, there have been times in my own real estate career where I was over-leveraged and staring at the And I got, and I ended up selling that property, had to sell it at a loss, thank God, but didn't make anywhere near what we could have and, or should have had we done it differently. And the the thing I carry with me is staring at the ceiling at 2:00 AM trying to figure out what the heck are we gonna do, 'cause I was on the hook for a pretty big banknote in terms of my own personal guarantees, and it was scary. And-

Joel Friedland

Yeah. In '08, I think you know this because, you know- you and I know each other, but in, in '08, I went into this horrible emotional depression, and I was on that couch and I couldn't get off, and it was for months and months. And I'm not gonna pull any punches. I thought about is it worth even living a- anymore? Do I wanna be alive anymore? I didn't really have suicidal i- ideation or whatever they call it. I wasn't thinking of taking pills, but I was at that point where it just, life felt hopeless. I was so deep in debt and it was so much anguish. Everyone in my family was worried about me and they were watching me really carefully, and I never wanna go back to that place. That pain was so palpable. It just, it overtook everything in my life. Every thought, every day, every night was just misery because I was in so much trouble with so much debt. And the decision that I made was that the cause of the trouble was not that I was in the real estate business, it's that the way I was structuring deals, the way everybody does it, just was with too much risk. So these days we look for little deals, and the reason we do little deals, which are usually under $5 million, is because I can raise that.

Ed Mathews

Right.

Joel Friedland

I had to raise 9 million for a deal a few years ago. I was freaking nervous. It's a lot of money to raise from people. Yes, it is. 50- $50,000 and $100,000 per clip, right? At 100,000 for 9 million, I need 90 investors. If it's 50,000, I need 180 investors, 180 conversations, 'cause I have to explain every deal to each investor to an extent.

Ed Mathews

Right.

Joel Friedland

They wanna know all the details. Why should I go into this? Why should I not go into this? And I have to know the reasons why they should and I have to know the risks and tell them why maybe they shouldn't.

Ed Mathews

And so when you're... and to get 90, you're talking to a lot more than 180 people. Y- you have a track record and a cadre of followers, so it's a different dynamic for you. But, someone who is thinking about weaning themselves off of bank leverage That's a tr- that's a huge transition. Yeah. And like I said, we deal with a much smaller pool of investor partners here. And if I had to go to the folks that I know and the ones that know and trust, and trust us I'd need a whole lot more people to do that. So for me what that meant was it doesn't mean we aren't, it doesn't mean we aren't chasing deals. We're just chasing smaller deals. Let's hit singles and doubles and grow that, right? And so that's what we've been doing over the last few years.

Joel Friedland

The hardest part for me which I've told you a few times, is finding deals.

Ed Mathews

Indeed.

Joel Friedland

If the good deal works, the bad deal doesn't work. So how do you find a deal that, a property that has all of the physical attributes that I want? I'm very picky. I want to have a building that's got loading docks that are easily accessible by over-the-road trailers. It mu- industrial buildings must have easily accessible loading docks. No dock, no- not interested. They have to have a certain ceiling height, and it depends on the size. The bigger the building, the higher the ceiling height. If I buy a 25,000 square foot building, it's got to have an 18-foot clear ceiling. Higher is better always, because industrial companies have machines that are tall and they stack their pallets, the pallet- pallets of product like you see in racks. And they, and they- Yeah can't really... In 14 foot clear, that's fine for a little building. That's fine for 10,000 feet. They don't need racks because it's not a big warehouse like Amazon.

Ed Mathews

Right.

Joel Friedland

But that ceiling height is really critical. And also, as I, I've said many times, parking is the number one thing. If the building doesn't have enough car parking for the employees and the visitors, and there aren't usually very many visitors, there's usually the people who work on the factory floor and the people who work in the office. But the ratio that we like is 1.5 cars per 1,000 square feet. And the docks, we like to have at least one dock up to 30,000 feet. We prefer two docks. And the ceiling height, 14 feet for the small buildings. But absolutely for sure, I don't want any buildings over 30,000 square feet unless they have 20-foot ceilings.

Ed Mathews

And one of the things you mentioned actually two things we were talking about, was one, you're very selective in the towns that i- in your local area that you focus on. And, a- and I thought I was bragging when I told you about my 1,208 properties that I'd like to own, thinking I had gotten it down to a manageable number. And you said I only 700 in my communities." I'm like, "Okay. Then I need to do a better job of culling down," because the, A- and so I'm, I'm- When you're that clear on your buy box and you're that clear on the geo that you're looking in, it starts to become pretty obvious that there is a finite and very discoverable set of properties that you can potentially acquire. And in fact, I think you mentioned earlier that one of your strategies is literally knocking on doors.

Joel Friedland

Yeah. Currently we have three young guys. It- looking for buildings is a young guy job.

Ed Mathews

It's, it's-

Joel Friedland

It's not a sev- 67-year-old guy job. Although I do it. You're

Ed Mathews

a 56-year-old guy.

Joel Friedland

I do it. I want you to know I do it. I go to industrial parks and I knock on doors and I find deals. I show the young guys that the old guy can still do it.

Ed Mathews

Right.

Joel Friedland

And I go with them. Last year one of our summer interns found a deal.

Ed Mathews

Nice.

Joel Friedland

Yeah. He walked into a building, it was 10,000 feet in a town called Wooddale, which is one of the towns we will buy in. One of the... We have 20, 20 towns of the 200 towns in the Chicago area that we would buy in, and the other 180, no interest. So- 'Cause the values don't go up the, they don't look nice, the curb appeal's bad, they're old buildings, they're not functional. Or they're in the wrong county and the taxes are too high. 20 towns, I'm looking at 700 buildings within those 20 towns of the 17,000 industrial buildings in Chicago. So the other 16,300, no interest. Someone brings me one of those deals, the answer is no, not interested. No. We know what we want.

Ed Mathews

And that focus has to help you in terms of operating as well. I'm, I am curious about more economic trends and since the last time we've talked there's been a pretty big push to repatriate industrial manufacturing. And I'm curious i- if that has f- affected you or changed your thinking in terms of the properties that you're seeing and the opportunities that you're seeing in the market.

Joel Friedland

It makes me optimistic to believe that the majority of the country does believe that we should be making things here. But the political way of looking at this, which is bring it all back, does not match the economics where you can't make a product here in a warehouse in Chicago where we are or where you are in Connecticut or in Texas- or in any of the red states, in the smile states. You can't make a product that sells on the shelf in Target for $30. You can't make it here- Because it would cost you $30.

Ed Mathews

Right.

Joel Friedland

So you'd make You'd lose money on that product on the shelf. I have a friend who's in the toy- the educational toy business, and he makes a lot of his products in China, so he just went through a situation with the tariffs, and he makes them in India. And the reality is that almost every product on every shelf that's maybe not food made locally the company that manufactures it has to consider offshore manufacturing, because you can make the product for $8 there, or you can make it for $30 here. So there's certain things that can be done here and must be done here because of national security issues.

Ed Mathews

Sure.

Joel Friedland

But no. The answer is no. Th- there, there's always gonna be offshore manufacturing. They're not bringing it all back. But yes, I like the fact that the attitude is, "Let's make it here." I think that's-

Ed Mathews

that's a good thing. Yeah, the sentiment is right. It's the actual how it plays out that's more interesting. It's A- and I know that flex industrial is not part of your investment thesis although it's something that I've been looking at quite a bit here in the Northeast. Maybe it For me it's because 37% of the people that have mortgages, h- single family homes have either they have a mortgage under 4%, and another 33 or so percent have their own properties free and clear. So they're, instead of moving, 'cause you can't replace that, right? Instead of moving, they are rehabbing and renovating their houses. And if they want a nice new kitchen, they build one instead of going and buying one, right? And so the flex industrial space- Has become a really hot asset class here in the Northeast for that exact reason. And so plumbers, HVAC y- electricians, and I'm curious, I know that's part of your I know that's part of your I'm sure it's very active in your area as well because Illinois and Connecticut economically tend to trend in parallel. And some- you're not very interested in that space, and I'm curious what that I don't

Joel Friedland

I don't like flex space and I don't like multi-tenant buildings. The reason we have a group of people in the United States who like to own their own buildings where they manufacture or distribute their products. It's a very large group. We have a lot of people who are tenants. Generally speaking, when you lease a flex building or a multi-tenant building to seven tenants, you're gonna get low credit short-termers who can move out anytime. And when you have a manufacturing company that's been in business for 30 years and they're in their own building and they own it, they're not going anywhere. So when we buy our buildings, we buy from those type of people that have a freestanding building with a lot of machines that they can't move.

Ed Mathews

Yeah.

Joel Friedland

As opposed to landscapers, lighting companies pool boy companies.

Ed Mathews

Right.

Joel Friedland

We don't want any of those fly... Not, they're not fly by night, but we don't want any of those who can fly away at night.

Ed Mathews

They're transient companies, for sure.

Joel Friedland

Yeah. And they're just not... There's not as much depth to the to the financial backing and strength of the company. So we have 26 buildings, and more than half of them have been occupied by the same tenant for longer than 25 years. That's not true in these multi-tenant buildings for the most part. They come and go. Worse than that for me is I like to have two exit strategies, and one exit strategy is to sell a building to another investor on a cap rate.

Ed Mathews

Okay.

Joel Friedland

Just like multifamily. So a multi-tenant building is just a different use, which is industrial, for cap rate purchases and sales. The difference is that I have a secondary secret sauce, I'm telling you my secret sauce exit strategy for the buildings we buy that are single tenant, which is when the tenant leaves- the neighbor who would love to own a building, and he may be in one of those multi-tenant buildings and he couldn't find one to buy, that we sell to those users because they want pride of ownership, they don't wanna piss the money away anymore in rent. You can't have an exit strategy with a seven-tenant building to sell it to a user. Nobody who's in 3,000 feet is gonna buy a 21,000 square foot building to occupy 3,000 feet.

Ed Mathews

Right.

Joel Friedland

They don't have the money, they don't have the depth, they don't have- Yeah, it

Ed Mathews

doesn't make sense

Joel Friedland

the capital. So we have sold This is a crazy number. We've sold 82 buildings of the 108 that we bought, so we have 26 remaining, and of the 82 that we've sold, 77 of them have been to user owners. Now, they pay a premium over what it would be what someone would pay for the building if it was leased on a cap rate. And I'm gonna give you a perfect ex- example. We bought a building in a town here called St. Charles, where we already owned another building, and this building was 22,000 square feet. And we bought it vacant, which we hardly ever do. Usually we do a sale lease back where we have the tenant stay for a few years and hopefully renew their lease and they'll stay for more years. We buy usually from these families who love to stay in the building with their business but cash out so they can all the brothers and sisters- Who are the grandchildren of the founder all take their cash out. So we give them the money, they take their cash, and they go buy their summer home. We have this one building on Stern Avenue in St. Charles. We bought it in terrible condition. Someone who was occupying it had obviously money problems. The roof was shot. The bricks were crap. The doors were shot. The HVAC was crap. The parking lot's crap. So the building is probably worth to a user $3 million. We bought it from the seller because we know how to fix them up. This is a fixer-upper. We bought it for a million nine, and we knew we were gonna spend 400,000 to fix it up, so we're into it for 2.3 million. I went door-to-door canvassing in the neighborhood myself two weeks ago, and I called on the neighbor across the street, Jim. I walked in and I said, "We just bought that building across the street." He said, "Shit, I would've bought that building." We got there first. Jim says, "I need I'm in 12,000 feet and I need 22,000 feet, and I'd like to stay on this street." So I said okay. We'll lease it to you." He says no, I'm a buyer." I said, "Okay. What would you offer?" He wasn't sure, so he hired an industrial real estate broker who's an expert in the market, a guy named Michael, who I've known for years. And Michael calls me and he says, "Jim wants to buy the building and I know you're only into it for a million nine." I said, "No, Michael, we're into it for 2.4. We spent- $400,000 and we also had acquisition costs." He said, "Jim will pay you a million dollars over what you paid to buy it." And I said, "No, we're keeping it." He said, "Come on, are you crazy?" I said, "I think I am crazy." So Michael calls me back a few days later. He says, "Here's an... i'll sweeten the pot. Jim will sell you his building, which is 12,000 feet, so you can still own a building on this street, and he'll still pay you a million dollar profit on your building." And I said, "Let me get back to you on that." So yesterday, I talked to Michael. I said, "Okay, we'll do it. We'll buy Jim's building. He can have ours." So we're into this thing for 2.4 million. We're... it ended up getting worse than that. He's only at 3.3 million as a purchase price, and we're in for 2.4. But we've owned it since December, but now we have a problem, which is if you sell a building before a year is up, you have to pay ordinary income tax. Yeah. Yeah. You don't get capital gains. So I'm not sure how to handle that, because if we could wait till December, my investors will get 20% more money because the government won't get that, 'cause of the capital gains benefit. So that's what a user sale strategy is, and that's why we sold 77 to the people in the area as opposed to, "Hey, it's leased and we'll sell you the building for a seven cap or a six cap."

Ed Mathews

Sure.

Joel Friedland

We don't do that.

Ed Mathews

And so when you decide to sell a building, what drives that?

Joel Friedland

Either it's a, an outsized profit or we had a tenant and the tenant left and we haven't filled it with a new tenant, we have to decide do we carry it vacant or do we let it go and take the profit today?

Ed Mathews

Okay. And-

Joel Friedland

But it's a lot like your business, 'cause you, in your debt fund you loan money to people who do homes, right?

Ed Mathews

That's right.

Joel Friedland

And it's the same thing. A home is someone really needs or wants, they love it, and they'll pay more than someone who's buying something for a cap rate. Yes?

Ed Mathews

Correct. Absolutely.

Joel Friedland

So w- you're in the same model we are, but you do it with single family homes and we do it with single tenant buildings.

Ed Mathews

Yeah, it's all the sa- it's very similar models, right? In that- Yeah even the smaller multifamily where you're you're buying value add it's the same play, it's just writ large, right?

Joel Friedland

Yeah. Yeah.

Ed Mathews

Okay, and then when you sell are you selling for, is it always for cash, or do you do any seller financing or to manage cap gains, or you just want out and you take whatever-

Joel Friedland

No,

Ed Mathews

we're dealing

Joel Friedland

with, we're dealing with millionaires. They don't need to have any financing. They- They're

Ed Mathews

not, they're not looking

Joel Friedland

to balance- They either pay cash or they g- or they go to their bank and they buy it on the line of credit. And so- i'll give you an example. Another one, we bought a building in the city, it's 20,000 square feet. You can see that 20,000 feet's our favorite size. Cause the companies that occupy them are big enough that they can afford to pay the rent and they've got deep pockets.

Ed Mathews

Yep.

Joel Friedland

So this is a company called Beverage Flavors, and they make flavorings for drinks. And it's owned by a family, the company is, and we bought the building and we leased it back to them for seven years. They contacted me, fortunately they're closing on Monday, they're selling the business. And fortunately we're taping this today and it's not going out tomorrow because I don't want anyone to see, oh, I'm talking about them selling their business before it's- Your secret's safe. Yeah. Okay. So they get approached by this company out of Kalamazoo, Michigan, that it's 10 times larger than their company and it's backed by the largest private equity group in the world a group called Warburg Pincus. They're huge. Multi-billion. So the Warburg company, the company that Warburg as a private equity group is buying and are gonna be running is now gonna be replacing the family that own the company, the Beverage Flavors, and they're gonna change the name to the same name as the company in Kalamazoo. But this is the situation, if it's 20,000 feet and it's freestanding- Great companies want that. They don't wanna be in a multi-tenant building with shared walls where someone could have an odor next door, they could have a noise next door, they could fight for parking in the parking lot. The roof leaks, you don't know if the leak's coming from over there or if it's coming from right above us. The single-tenant building just makes rich people happy. And that's-

Ed Mathews

It's simple, right? There's... it removes a ton of complexity.

Joel Friedland

Yeah. Exactly.

Ed Mathews

And as a, as an old friend of mine used to say, it limits brain damage as well.

Joel Friedland

Exactly.

Ed Mathews

Joel, so one of the things that I did see is that you have brought, I believe, your son Sam into the business. You mentioned he's also traveling, so I don't know if that's still the case. But, I'm curious about how you're teaching your brother Mark, who I also know has been involved how are you teaching them the discipline of a no-debt acquisition strategy and passing that on to your son and whoever else is in- and Mark, and whoever else is involved?

Joel Friedland

They understand, 'cause they were with me when I went through my hell and my depression and my very difficult time 16 years ago.

Ed Mathews

Yeah.

Joel Friedland

17 years ago. And they s- they saw it and they know why I'm coming from where I'm coming from, with the no debt and, or very low debt. And they understand it. They know that if they're gonna work with me that's just what our foundation is all about. We have a deep foundation. You build a house, it's gotta have a foundation. Yeah. It can't be just built on dirt.

Ed Mathews

Yeah.

Joel Friedland

And my foundation is very well spelled out in the office. Mark and I were talking today, and he's making some cold calls to find some properties, and we were playing with the script. "Hi, this is Mark Friedland. I'm calling to see if you might consider selling your industrial building. We're local buyers. We own 26 buildings. We pay cash with no mortgage, and we'd love to lease it back to you." So Mark and I were scripting today a little bit. We have two summer interns, and we're h- the reason we were doing it is we wanna help them with the best script. So they actually go on the street door to door and they walk in. Not y- they walk right in. They just walk in. I

Ed Mathews

love that.

Joel Friedland

And they have the name in our database of the owner of the building, and they ask for the owner. They often get thrown out. "Goodbye. No, we're not selling."

Ed Mathews

Go pound sand, kid.

Joel Friedland

Yeah, but yesterday Mason found one and Brandon found two that are maybes. Everybody understands my philosophy, and if they wanna be part of my organization, it, I'm driving it. I'm the driver, and my, m- as a driver, it's this really risk-averse program, and I'm, I can't change it 'cause I have to have mental health that works for me.

Ed Mathews

Couldn't agree more. Couldn't agree more. A- and so when you're talking with potential investor partners and they're, they're buying into the model what is their thinking in terms of the problem you're solving for them? These are not correct me if I'm wrong, these are not, 20-plus percent returns on these are singles and doubles, and sometimes you hit it out of the park. But- Yeah so I'm curious what their thinking is as they're coming into evaluating the opportunities that you uncover, you and your team uncover.

Joel Friedland

So there are two separate mentalities of investor. There's the investor who's made a lot of money, has a lot of money, and doesn't wanna lose it. And then there's the investor who's like a gambler, maybe doesn't have as much and says, "I better get going. I better take some risk and make some big upside." And I tell the people who wanna take the risk and the big upside, if they want to invest with me, I'm gonna be the little corner of their portfolio that we're not taking those kinds of risks. And if they say, "Yeah, I could use a corner of my portfolio to be stable and steady," they'll go in. But if they're really the throw it at the wall and hope for the best and make-

Ed Mathews

Cowboys

Joel Friedland

yeah, 10 times your money if it works and lose all your money if it doesn't, those are generally speaking not gonna be my people. But the wealthy folks, my, of my 250 investors, I'm gonna guess the average net worth is probably $20 million And they're not looking to get rich quick. They're already rich. They're just looking for somewhere to put their money that's not the casino of the stock market. We know the stock market can go way up and can go way down. And I watch this Thoughtful Money economics podcast that has all these really smart people talking about how this market's gonna crash and that market's gonna crash. And my answer is the people who join me who are these risk-averse folks, they really don't care if they buy in with me and the market crashes, 'cause we won't feel it- Doesn't matter the same way that everybody else does, and their money in those deals is like their safe money.

Ed Mathews

Right.

Joel Friedland

Yeah.

Ed Mathews

Yeah, it's a diversification play, and you're not swinging for the fences. That is that is truly valuable. And it's unique because when I've had these conversations with multifamily investors, it's like I'm talking to a puppy and I just made a very loud high-pitched sound, and their heads tilt like, "I don't understand the words coming out of your mouth." And it's it's very funny. Like I said, we, we've done a couple of these deals where one was very thin on the leverage and the other was no leverage whatsoever. In fact, I'm doing a deal potentially, I- it just got handed to me this morning, and we ran some numbers and presented them about an hour and a half ago as a matter of fact that I think we're in the ballpark of where they wanna be. And it is a heavy renovation project. It's 19 units here in the local area. And I'm going into it all cash. I'm not putting leverage on that.

Joel Friedland

I'm glad that you heard me a few years ago when we- I did when we talked about it. Loud and clear. That you liked it. I'm not an evangelist for debt-free thinking that everybody should do it, or maybe that even anybody should do it. I'm glad that there aren't very many people... I think there's 4,000 syndicators in the United States, that's a rough number, with $50 million or more under, under as- Yeah of assets under management. And I would say that there probably are less than five that do mostly debt-free. And the interesting thing is I don't know who the other four are.

Ed Mathews

So I'm not at that level- I've got one investor- So I'm not one of them, I can tell you that.

Joel Friedland

I've got one investor who puts $200,000 into everything I do. Yeah. And he calls me and he says, "Who else does what you do? Since you do it, you should know." And I s- I said, "Mark I don't have any idea who else does this." He says when you find them, you call me."

Ed Mathews

Cause I'd like to do business with them as well, right?

Joel Friedland

Right,

Ed Mathews

exactly. That's hilarious. Well-

Joel Friedland

Yeah

Ed Mathews

someday I'll grow up to be that maybe. Y- the one thing that I am really curious about, and you touched on it, but I'd like to, I'd like to drill into it before we go to the lightning round is you do... You have used leverage, although, y- quite s- quite a small slice of the deals. What made you decide at, strategically and even tactically to use that bank leverage?

Joel Friedland

I was younger.

Ed Mathews

Okay.

Joel Friedland

I was able to take more risk. I had a partner that pushed the crap out of me to take more risk and borrow more money, and it was just a different mindset. I hadn't gone through the downturn that was so devastating, and we were optimistic. In 2002, I bought 17 buildings, and I put debt on all of it. Everything was more than 60% leverage. And we- some of them are gigantic grand slam home runs. But what happened was some of them, when we came to 2008, hit the wall.

Ed Mathews

Yeah.

Joel Friedland

And I, I just don't believe that there's any reason to convince other people not to use leverage. Real estate's a leverage business. Sure. So I'm not trying to convince anyone that my way is the right way. It's just the right way for me. The best deal we ever made, we bought Keebler cookies 100,000 square foot building in Elmhurst, Illinois. It's where they had the hollow tree and all the elves in a room. Like, all the toys. And I walked in and I saw this hollow tree in, in the... and my friend stole the elf. So- So they got bought out by Kellogg's.

Ed Mathews

Yeah.

Joel Friedland

And I looked at this building, and I drove by it for months and months, and I called the broker and I said "I know this has been on the market for a long time. I'd like to buy it." And I did. I bought it for $6 million, and we put leverage on it, and it went vacant. And Comcast, which is a very large company, needed 100,000 square feet in Elmhurst with the parking lot for their Xfinity vans, and there were 550 parking spaces for 100,000 square feet, which is highly unusual. So they signed a 15-year lease, and we ended up making... This is crazy. The IRR for a 15-year lease was 40%. That's not 40% for a couple years and then get rid of it. That's 40% across the board for 15 years. So we bought it for 6 million. We sold it for 17 million, and our equity was 2 million- because we had leverage. It was such an incredible grand slam home run. You can't do that... if we had bought it all cash, we still would have done really well, but you can't do that kind of home run necessarily without putting a mortgage on.

Ed Mathews

Amen to that. So yeah, that makes sense, but y- you're in a different place right now, and swinging for the fences is not really where you wanna be. And I, I hear you. It's y- I think there is a place for leverage in, in my business but I'm very circumspect to do it. I need a really good reason before I'll consider it at this point.

Joel Friedland

I'll give you a baseball analogy. If you knew, forget singles, doubles, home runs, and all that, if you knew that you had a way as a batter to never strike out, you're the only batter in the entire world who will never strike out, ever.

Ed Mathews

Right.

Joel Friedland

Okay? Now, you might hit the ball and it might be a single, and you might walk, but you never strike out, which is every batter's goal. Impossible. The batter looks at the umpire and goes, "Ha, that wasn't a strike." Bad things happen to real estate owners. "Ah, that shouldn't have happened." That's exactly how I feel. I feel like we're the batter that will never strike out. We might have a walk. We might get a single. We might get a double. We might even get a home run every now and then. But if a strikeout is losing all your marbles, we're not gonna strike out because with no debt or 30% max, no bank is gonna tell us we've struck out.

Ed Mathews

Right.

Joel Friedland

Sell your building, Joel. You... I don't know if I told you, in the Bible it said, in, in Proverbs 22, it says, "The borrower is the slave to the lender." Interesting. We don't wanna be anyone's slave.

Ed Mathews

Right.

Joel Friedland

It's like I got all these little sayings that have to do with safety,

Ed Mathews

yeah. It's it- it's a, it's an absolutely fascinating business model. It is truly unique. I do not know, and I know a lot of investors, I do not know anyone other than you that does it this way. And I hope the folks that are listening out there really take listen and to what Joel's talking about because this isn't necessarily a universal strategy for you. You may still need leverage to do what you wanna do, but this is absolutely a viable way to build wealth slowly and conservatively over time. So if I were... I'm 56. If I were 35 this is something that I would probably do more than I do today because I know time is my friend, right?

Joel Friedland

For sure

Ed Mathews

And and even at 56, I'm doing it more and more because as Joel has mentioned and I alluded to I do not like brain damage. And it's, I sleep a whole lot better knowing that the couple of deals we've done that are very low and no leverage are safe and sound, and I don't really care what happens to the rest of the market.

Joel Friedland

I love it.

Ed Mathews

Yeah. It's- Thank,

Joel Friedland

Thank you for giving me some credit for that.

Ed Mathews

I- sole credit for that. You are literally the only person that I know in this business that has given me that advice, and I took it, and I'm grateful.

Joel Friedland

I'm glad.

Ed Mathews

So it's, yeah, you didn't have an influence. You had a profound effect on the way that I think about real estate.

Joel Friedland

I'd say.

Ed Mathews

And I am grateful. So with that, let's get into the lightning round. How are you on time, Joel?

Joel Friedland

I'm good.

Ed Mathews

Okay. Final five. So obviously you've done extremely well. You're, you've taken care of the things you need to take care of in terms of your family and all that, and nevertheless, you still go to work on Monday mornings. And I'm c- I look at that. I had the benefit of working with some pretty amazing people in Silicon Valley, and same thing. They had more money than they knew what to do with. I w- I had one boss who literally bought the Russian embassy in San Francisco and made it his home, right? So we're talking billions of dollars, and nevertheless, that guy, Keith Krach, and you and others get up and go to work. I'm curious wha- what drives you? What is your purpose?

Joel Friedland

I'm gonna give you two answers. Number one, I'm gonna tell you that my mother's 89, and she's a marriage counselor, and she still does it. And she goes out to lunch with her 89-year-old friends, and she loves them and they're great, but she says, "They got nothing going on." They their brains are not engaged in helping people or in working or in challenges. It's "Let's go play bridge. Let's go to this lunch. Let's go to that lunch. Let's play a little golf." So number one is mom's is my idol in terms of working all the way. And Nate Wagner, who's my 98-year-old partner, he didn't stop working until he was 95, and maybe that's why he's 99. So that's number one. Number two, people sell their businesses. Really wealthy billionaire-type people sell their businesses, and what do they do when they're older? They go into real estate investing.

Ed Mathews

Yeah.

Joel Friedland

So it's not even to them, it's not a business. It's a hobby. And so I'm in a business that, that rich people go into when they have all the money in the world and have to figure out what to do. They pick our business.

Ed Mathews

Right.

Joel Friedland

And we get to be in it forever.

Ed Mathews

That's phenomenal. Yeah, it's it's interesting. I had a friend of mine ask me not that long ago, he's and he's done very well for himself. He just sold his company and he's thinking about retiring. And he said, "When are you gonna retire?" And I said, "Never. Why would I?" Yeah. I can do one or two y- deals a year forever.

Joel Friedland

Yeah

Ed Mathews

I said, "I'm gonna stop when I can't see the paper and my hand shakes so much I can't make the signature. Then I'm done."

Joel Friedland

Yeah, exactly.

Ed Mathews

But as long as my brain can figure out the deal I'm in, so Joel, obviously you've been a big influence in my life, and I know others. But I'm also really curious about the people that you've had in your life who've influenced you, your mentors. And I'm curious about the best advice you ever got, and who was the person who gave it to you?

Joel Friedland

I had four mentors when I was 22, when I worked for the Podolsky family: Richard Steve Randy and Milt. It was a family business. And they were the greatest mentors ever. For 10 years, they taught me every day, and I think that's what people have to do. They have to find a mentor or a group of mentors who are just amazing. Steve Podolsky, to this day, is still an investor with me. He goes into at least half of my deals. He's in his 70s. Stacy and I and another f- couple who are She's got pancreas cancer as well, are getting together for dinner next month with the Podolskys. It's building mentorships that last forever And the Podowski family was it. And then now Nate Wagner, who's my 99-year-old friend, big time real estate guy, we have breakfast every Saturday, and I'm writing a book called Breakfasts With Nate.

Ed Mathews

Oh, I can't wait.

Joel Friedland

Yeah. Yeah.

Ed Mathews

Where are you in the process? Are you getting to- Chapter

Joel Friedland

one.

Ed Mathews

Oh, okay. All right. That's okay. That's good. I had a mentor, his name's Mike Gonnerman, and every, He was the CFO of a company that I worked for, and for whatever reason took a liking to me. And I would have breakfast with him every every once a month at the Newtown Marriott just outside Boston, and I'd buy him scrambled eggs and I would basically spend 45 minutes... i'd spend 15 minutes telling him, at that point where I was in technology, how we're conquering the world and, setting the world on fire, and then he'd spend the next 45 minutes telling me how I was screwing up and another five minutes on how to fix it. And it's, having those people in your life is invaluable.

Joel Friedland

I've bought Nate breakfast almost every Saturday for 15 years, and I can tell you that I've spent at least $20,000 on breakfast.

Ed Mathews

Money well spent.

Joel Friedland

I won't let him pay.

Ed Mathews

Yeah. Good. Y- you're... He's given you the benefit of a lifetime of experience, so why would you? And it's only scrambled eggs. It's gonna be okay. I'm g- I'm also curious about, you've been in an opportunity and you've seen... You've been in multiple opportunities and you've seen a lot of market changes. And I'm, I wanna ask you, and it may be a painful question, but I wanna get your insights anyway. When you look back on your career and you look at decisions that you've made, what's one that sticks with you that you look back, knowing what you know today, you look back on it and go, "Oh, I would love to have that one back"? And how did you manage your way through it?

Joel Friedland

Yeah. My partner was 10 years younger, Dave, and he said to me, I think it was 2007, right before the crash. He said, "We need to be in other kinds of real estate. Let's do retail." And I said, "Oh, I don't wanna do retail." He said, "I've got two parcels. We're gonna buy the old RC Cola plant on the south side of Chicago, which is gonna be a retail development. It's 11 acres. Let's buy that. And there's a place in Vernon Hills, it's six acres. It's on Milwaukee Avenue. There's a lot of traffic. Let's buy that and let's develop retail: restaurants, banks, McDonald's, sh- strip centers." I said, "Dave, I don't wanna do that." He said, "Do you trust me?" I said, "Of course." He said, "Go with me on this. I'll make you money every day." We lost money every day.

Ed Mathews

Yeah.

Joel Friedland

And then on both of those deals, we lost money, both of them. When you look at my track record of 82 sales, we've had losses. We've had 10 losses. Two of them were the retail redevelopment idiocy that I agreed to.

Ed Mathews

Yeah.

Joel Friedland

It's not what we do. It's not my expertise.

Ed Mathews

So the advice

Joel Friedland

there is stick- The timing was horrible. The timing was horrible

Ed Mathews

yeah, timing matters, and stick to your knitting, right?

Joel Friedland

Yeah. We lost millions.

Ed Mathews

I'm sorry to hear that, but it looks like you've recovered nicely, so I'm happy for that. So I'm curious about the the book on your nightstand. What are you reading these days? Who are you paying attention to?

Joel Friedland

I am reading 1929- by Andrew Ross Sorkin. He draws all of these parallels between what's happening in 2026 to what was happening in 2028, right before the stock market crashed and the Great Depression.

Ed Mathews

1928.

Joel Friedland

1928. Excuse me. Yeah. I'm in the wrong century. But this 1928 period with all these hotshots who were controlling the market and worked for these big companies and driving things, and then the decisions they made and the crazy things they did and the risks they took and the hubris, that, that cockiness-

Ed Mathews

Yeah

Joel Friedland

and they just got crushed. And he wrote this book to say, "Look, it could happen again. This is what happened then, and here's how it happened, and here's who the players were." It's been very interesting.

Ed Mathews

I'm looking forward to reading it. It's like I ad- like I told you earlier, the reason I ask that question is selfishly motivated, and that is because I'm looking to build my own reading list, so thank you. So Joel, last question, and then we'll move on to the close. How do you define success in your life?

Joel Friedland

It's by the relationships of mutual trust

Ed Mathews

Well, Joel, once again, I am grateful and I'm really happy to see you. I'm glad Stacy's doing well, and I'm glad you're doing well. And I'm curious when you are I think I know the answer to this, but when you're not talking about real estate, what do you like to do for fun?

Joel Friedland

Gardening.

Ed Mathews

Not what I thought. Gar- All right. I figured you were gonna go grandchildren, but okay.

Joel Friedland

Grand- it all starts with G.

Ed Mathews

There you go.

Joel Friedland

Right.

Ed Mathews

Gardening. So tell me more.

Joel Friedland

We have lived in the same house for 36 years, and I have planted a minimum of 100 various kinds of plants every year. So I've planted thousands and thousands of plants. If you walk around our property, we have all these different hostas and hydrangeas. I've learned where to put them if they do well in the sun, and where to put them if they do well in the shade. And Stacy loves color, so when she got sick, she said, "Honey, I love color. I went to the nursery and I bought all these flowers," and just it's yellow and it's purple and it's pink and it's orange, and it's just so much fun. I get my hands dirty. I get my clothes dirty. I ruin my shoes. I get poison ivy. It's like everything that you can imagine in gardening. But gardening's like a metaphor for life, and it's the same as building a portfolio. You, you build your gardens a little at a time, and they grow and they expand. And you take care of them and you water them, and it's just so much fun. I love stepping back after planting 30 plants and seeing what I put in there. I go, "Stace, come out. Come out. I gotta show you what I put in." And she comes out and she goes, "Oh, yeah, that's really nice." She's sick of it.

Ed Mathews

That's how you know you're doing it right, though, is when, the people that asked for it are like, "Okay, enough," right?

Joel Friedland

Yeah.

Ed Mathews

Joel, if people wanna learn more about you or your business, what's the best way to do that?

Joel Friedland

The website is britproperties.com. B-R-I-T with one T properties.com.

Ed Mathews

All right. Joel Friedland, thank you. It's good to see you. Good. And continued good fortune, sir.

Joel Friedland

You too. Thank you.