Josh Cantwell: So, hey there, welcome back. Hey, this is Josh. Thanks so much for being with me today. Today, I have a fantastic interview. And today, we’re going to talk about industrial real estate. This is probably outside of multifamily. Whether multifamily is one, or industrial is two, or vice versa, these are the two darling assets of the COVID era. As everybody got locked down and everybody stayed home, they stayed in their apartments, they stayed in their houses, and they bought product online.

So, today, I’ve brought on my friend. His name is Joel Friedland. It’s just like my company, Freeland, except spelled differently. Joel is the owner of over a hundred industrial buildings, millions of square feet of industrial buildings. He started out at age 22 as an industrial broker. At age 31, he became an industrial investor. Today, he’s got hundreds and hundreds of millions of dollars worth of industrial investments.

And we’re going to talk today a little bit about his company, Brit Properties, BritProperties.com. Some of the things you’re going to learn today in today’s interview, number one is how Joel buys every building, all cash, no debt. Number two, you’re going to learn about how to handle renewals of industrial buildings where you’re increasing the rent per square foot from, let’s say six bucks to eight bucks to nine bucks. You’re also going to get four pieces of advice from Joel that I think are the major takeaway from this interview, whether you’re in multifamily, whether you’re in apartments, whether you’re in self-storage. These four pieces of advice are absolutely fantastic.

And you’re also going to learn about one particular case study where a shark tank investor, a person that went on shark tank, got an investment, became one of Joel’s main clients, and exactly how to map out this investment strategy using this case study. You’re going to love this interview with Joel Friedland from Brit Properties. Here we go.

[INTERVIEW]

Josh Cantwell: So, hey, Joel, listen, I’m so excited to have you on the show to talk about industrial investments and industrial real estate. I’ve been looking forward to this for a long time, especially as a multifamily guy, and I keep hearing all this amazing feedback on multifamily. When I read all the reports from CoStar and Marcus & Millichap, they also talk about over and over and over how industrial has performed so well over the past, especially two years since COVID, but really over the last five or ten years. So, I’m really excited to have your take on the show and talk about industrial investments and industrial commercial real estate. So, thanks for carving out a few minutes for us today.

Joel Friedland: Sure. Great to be here.

Josh Cantwell: So, Joel, let’s talk about the market. Obviously, you’re an expert at industrial investments. You’ve bought over a hundred industrial buildings. You have hundreds of investors, been doing it for over 30 years. But tell me, today, as we sit here wrapping up 2022 and going into 2023, what are some specific projects or some specific things that you’re passionate about in your business? And what do you think are some things that are upcoming in the marketplace that you think you want to capitalize in, in 2023?

Joel Friedland: Sure. Well, first of all, Chicago is the greatest industrial market in the United States.

Josh Cantwell: Oh, big claim right away. The greatest. Surprise, surprise.

Joel Friedland: So, Chicago is really an interesting location. We have 1.3 billion square feet of industrial property and we’re right in the center of the country where rail and trucking all converge. So, every company in the world has to be here. There are 20,000 industrial companies in the Chicago area and there are 8,000 industrial buildings. So, it’s a vast market and it’s just booming. It’s booming everywhere in the world because of the Internet, because of what’s happening with everybody having delivered products from warehouses. Warehouses equal industrial, and that’s what we’ve got.

But our niche is a little bit different. Any product that you have, anything that if you look around your office, everything you can touch was made someplace. These manufacturing facilities where these products are made are everywhere around the country. But Chicago’s got thousands of manufacturers, and that’s our niche. We own buildings where manufacturers make stuff.

Josh Cantwell: So, not just the shipping warehouse is everybody. You’re driving down any freeway in America, in any major city. You see a Wayfair or Amazon distribution facility with trucks sitting outside. We’re not talking about the distribution warehouses. We’re talking about the warehouse where the manufacturer actually sits in the building and manufacture something, they make something.

Joel Friedland: That’s right. I’ll give you an example. You watch Shark Tank, I’m guessing?

Josh Cantwell: Sure. Yeah, we’ve had a few guests from Shark Tank on the show.

Joel Friedland: Oh, that’s great. Well, in year one of Shark Tank, there was a company that was on the show. The guy’s name is Jonathan Miller, and he has a company that makes protein bars. It’s called Element Bars. That first year, by the way, Mark Cuban wasn’t on the show. So, there was a guy by the name of Kevin Harrington.

Josh Cantwell: Kevin Harrington, I’ve had him on the show, yeah.

Joel Friedland: Yeah. Oh, he’s great. So, that particular show, this guy comes on and he says, “I make custom protein bars. You just tell me what ingredients you want. I’ll make the bars. I’ll do a short run, I’ll print the packaging for you.” And they were just wild about the idea, and they were just hammering him saying, “Why do you think the company’s worth that much?” And Kevin was tough on them. But they loved this guy and it was a really interesting business model.

Meanwhile, he changes the whole business model over the past 12 or 13 years. Instead of making custom bars, he figured out that it’s better to make bars for big companies and do what’s called private labeling. So, as an example, if you ever buy a protein bar that says Dannon on it, the Dannon yogurt bars, he makes all of them, millions a year.

So, he pivoted his business and he needed a place to make these things. So, he found us, and we leased 50,000 square feet to him. And he’s one of our typical tenants. He’s got about 80 people working there. They wear these white uniforms, these smocks, and they’ve got their name on it. It’s a fascinating place.

This guy makes millions of protein bars and he pays rent. And the way it works in 50,000 square feet, he pays about six or seven bucks a foot in rent, plus taxes, plus insurance, plus maintenance. And that’s what’s great about industrial. We have net leases, so the tenant pays rent and they take care of everything else. The management is minimal.

Josh Cantwell: Got it. So, you have essentially a large warehouse, 50,000 square feet. This guy needs a place to put all of his equipment, put all of his machines, drop off material, have the material, then put into the machines by humans or through machinery to create the bars. They go back out the back door, back in a different truck, and they get shipped out to whatever their location is.

You provide the 50,000 square feet in some climate-controlled, essentially warehouse so they can operate in there, but they bring in everything else. They pay six or seven bucks a foot, plus the taxes, the insurance, and the maintenance. So, for you, it’s very, very hands-off.

Okay, I get it. So, now, let’s talk to our audience about, first of all, let’s talk to the limited partners in the audience. For all of you, limited partners and passive investors, we’re not making an offer here. But Joel, tell us what’s in it for a limited partner. You’ve got hundreds of limited partners. Some of them have been with you for 20, 25, 30 years, or more. How do those investors get paid? Is that a preferred return? Is it equity? Is it both? How does a typical LP opportunity work?

Joel Friedland: Sure, it’s all of the above. What happens is when they join us, someone might write us a check for, let’s say, $100,000. They get a yield on that based on the cash flow that comes from the property. So, in the case of the Shark Tank tenant, if he’s paying $7 a square foot, it’s $350,000 a year. And theoretically, the property may be worth $5 million. And if it is, that means that they’re making a 7% return.

We do have a preferred return which is running right around 8. It goes up and down depending on what deal it is. If the credit is better, we have AT&T, we have the US Postal Service, we have Instacart in different buildings, the higher the credit, the more well-known the tenant, the lower the return. Because other buyers, when we buy something, they look at it and they say, oh, we’ll take a lower return if it’s the US Postal Service.

So, in the case of the protein bar company, they’re making about a 7% return. We distribute quarterly, we send the money to them by ACH, and we send them a report every quarter, and the idea is a long-term hold. We don’t buy and flip. We don’t look to get out quickly. We’ve owned this building since 2004.

Josh Cantwell: Yeah, well, you’re also signing probably at least a five-year lease, if not a 10-year lease, if not even longer to these grade-A industrial residents that they’re going to move in hundreds of thousands or millions or tens of millions of dollars of equipment into your facility. Nobody wants to really do that twice or three times.

Joel Friedland: We call that sticky. We call that sticky tenants.

Josh Cantwell: They want to park it there and they want to leave it there and just manufacture their goods for either their own company or whether they’re doing private labeling for someone else. So, the idea here is, look, there’s going to be over time, obviously, Joel, things like principal pay down on the loan. There’s going to be overtime appreciation of the building.

As the absorption rate continues to go up, as vacancy continues to go down, with all the products that have to be manufactured to be shipped, all the hard products that people are selling now online that have to be manufactured and then stored somewhere and then sold. I would imagine, the principal pay down maybe 3% to 5% per year on a typical amortization loan, and then maybe another 3% to 5% per year on the appreciation over and above the cash flow. Is that right?

Joel Friedland: Well, I’m going to surprise you with something very strange. You probably have not heard this before, but we don’t do that.

Josh Cantwell: Oh, okay.

Joel Friedland: This is very strange. Now, in this building…

Josh Cantwell: How come?

Joel Friedland: With Element Bars– well, I’ve been doing this a long time. I’ve been through four down cycles. And I can tell you, this is an interesting point of view, a lot of people don’t agree with it and they think I’m an idiot, but my investors don’t think I’m an idiot.

Josh Cantwell: Those are the ones that matter.

Joel Friedland: They like what we’re doing. So, I’ve been really hurt four times. There have been four times when I had debt on properties and things went bad. The worst of it was 2008, but going all the way back to when I started, interest rates in 1981 when I started out were 17%. That can happen. And when that happens, everybody’s screwed because they have these loans and they can’t refinance because the rates have gone up.

So, over the years, I’ve decreased my leverage to be safer. And I finally have come to the conclusion that there are a number of investors who are safety freaks like I am. And no debt means no bank breathing down our neck. So, we’re going to get lower returns. We’re not going to get the leveraged. We’re not like 80% of guys who it’s like a 5 to 1 appreciation when they sell the property. So, we’re very unusual, but we’re also very happy with our strategy.

Josh Cantwell: Sure. I imagine you sleep really well at night. Your investors sleep really well at night. So, you may not get the principal paydown because obviously, there’s no debt. However, with the demand and the absorption rate of these industrial buildings, especially over the last two and a half years with COVID and everybody basically shopping online, I imagine that absorption rate is massive, which means appreciation has happened.

Joel Friedland: Yeah. So, the Element Bars’ situation is unique. I’m going to go back to that one. When he moved into the property five years ago, his rent was about six bucks. And now, it’s close to seven. So, it goes up a little bit every year. His lease is coming up next year. And he called me and he said, “Hey, let’s talk about a renewal.” The problem that I have is I don’t want to shock him with the kind of increases that the market is seeing.

But right now, if he were to go look for another building down the street, you’d have to pay 8.50 or 9 bucks. So, now, I’m struggling with how do I have a good relationship with a tenant and tell him that his rent is about to go up by 30%. And that’s what we’re seeing in this market. These rents are jumping, so the building’s worth a lot more. The return jumps up. Our investors, instead of getting $7, if we get $9 a foot, we’re going to get 10% cash on cash, 2.5% a quarter.

So, it’s hard because I become friends with the tenant. All of our tenants are these great manufacturers with dozens or hundreds of employees. We get to know them very well. And then you become friends with the tenant. It’s not like an apartment where you’ve got hundreds or thousands of apartments and you can’t meet everybody. We know all of our tenants and they become really close with us. In fact, the Element Bars guy, this Jonathan Miller called me up and he says, “Hey, I got some money. I’d like to invest a million dollars with you.” So, I said, “Okay.” So, not only is he our tenant and our friend, but now, he’s an investor and I have to go to him and say, “Hey, you’ve got to increase your rent by 30%.”

Josh Cantwell: By 30%. I mean, how would you ultimately, Joel, position that? I can imagine that there are a lot of landlords and owners like you having that same situation. You have a tenant there that’s been there 5, 10, 15 years. It is a very successful business. You can try and talk man to man. You’re kind of on the same level. You have a massive net worth. He’s got a massive net worth. You very much can see eye to eye. So, it’s not like you just send the guy a letter and shock him with a 35% rent increase. You guys go to the country club, you sit down, and you talk win-win. And how does that go? Help me understand that conversation.

Joel Friedland: It is so hard. It is so difficult. I have to sit down with him and say, “Here’s the market,” and I have to show him comps. I got to show him what other buildings are charging and rent. And he’s going to say, “Okay, but I’ve been a loyal tenant. I’ve paid my rent on time. Don’t do this to me. Please don’t do this to me. Can you just pop it up like 10%?” It is like Shark Tank. It’s a negotiation. So, he knows what it’s like. I think Robert said, this is the best guy I’ve ever seen. He’s the best negotiator we’ve ever seen. Well, it was Season 1. So, they haven’t seen that many.

But the next-door neighbor is a guy who came to the United States as a kid from Latvia and went to work in a plumbing manufacturing business and said, “Hey, I can make walk-in bathtubs as well as color.” So, now, the next-door building has this guy in the same position. He’s paying $5 a foot and the rent is going to be $9 next time.

So, the answer is, I don’t know. I’m not a genius and I hate negotiating, by the way. My least favorite thing, we went on a vacation. We were on the beach down in the Dominican Republic, and my kids walked down the beach and they found these vendors selling hats and shirts. They said, “Come on, Dad, you can negotiate.” I said, “Oh, I hate negotiating.”

Josh Cantwell: Give me a sour feeling. I really just pay full price for the $20 sunglasses that look like Oakley’s that are $250. I’d rather just pay the full 20 bucks instead of negotiate down to 10.

Joel Friedland: Exactly. And it’s the same thing with this. I don’t like negotiating. I love my tenants. It’s a relationship business. What we do is relationships. It’s more relationships than real estate. They both start with RE, but relationships are where it’s at for us. And we’ve got fabulous tenants and these great people, they do all kinds of things.

We have a company. It’s a not-for-profit. It’s called Feed My Starving Children, and church groups come in and they pack food and they send it overseas. And they have missionaries who go all around different parts of third-world countries giving food away. How do I increase their rent? These are great people. I go to their annual gala where they raise money. It’s like I want to give them more than they’re paying and it’s just tough.

Josh Cantwell: Yeah. Do you ever have a conversation, Joel, and go back to your limited partners and say, “Look, this is the market, but we believe in the mission of this tenant, we believe in the mission of our resident”? And sure, we could, as a general partner, as the operator, go back and warrant an increase from six bucks to nine. And that would, of course, increase everybody’s return. So, it’s going to impact people on the LP side of the table saying instead of making 7%, we’re going to make 10%. And for those people, that’s a meaningful increase. That’s a 30% to 35% increase in their total return.

That’s huge, actually, versus going to them and saying, “Well, listen, we’ve got this tenant, this resident that we believe is an incredible resident. They’re going to sign another long-term lease. Your money is going to be very secured for the next 10 years. However, they have an amazing mission. So, I want to give them some kind of discount,” because that’s what would be going through my head, Joel. You guys, you want to take care. You’re the middleman, you’re the operator, you’re the general partner. You want to take care of both sides in the best way you possibly can, right?

Joel Friedland: Right, exactly. Yeah, so I’ve got a very good situation because I’ve been doing this for so long. I have investors who’ve been with me for decades, and a lot of them are retired and a lot of them have a tremendous amount of real estate background.

So, when I went into the real estate business at age 22, I worked for a family. It wasn’t my family, and they owned 83 industrial buildings. And I went to work for them and they were my mentors. My mentor from when I was 22 is now in his 70s. He is now one of my biggest investors.

I left his company when I was 31, so I stayed with them for 10 years, and then started my own business. It was an industrial real estate brokerage business. And I made lots of deals as a broker, bringing tenants to buildings, being the agent for buildings, and being the person negotiating on behalf of the landlord. And he was my main landlord because as a broker, he was my client. Now, he’s my investor.

So, I call him and I say, “Steve, here’s the situation. What do you want me to do? What’s your advice?” I feel terrible popping the rent so high. These guys have been great. So, he gives me his opinion. Now, I’ve got another investor who’s been with me for almost an equal amount of time. The man’s 95 years old. He has so much real estate, so many hundreds of millions of dollars. And he’s also a very big investor. He writes a check when we do our syndications for a million at a time.

And I call him and I said, “So, Steve thinks we ought to do it at eight bucks instead of the nine.” And Nadal says, “Yeah, well, I don’t know the guy, and if you’re at 8.50…” And so, it’s like this balancing act. I’ve got these incredibly sophisticated partners who are like a board of advisors, and so, I don’t have to make the decision myself. And what’s great about it is I can go back to Jonathan Miller and Steve Podolsky, and they are my two biggest investors, and I have to do what they want. So, it’s not a negotiation. It’s a statement of fact, of conversations. I don’t have to own the building. I can own the relationship. And I want to be a good guy with Jonathan.

Josh Cantwell: Yeah. I love it.

Joel Friedland: This is tough.

Josh Cantwell: It is tough. Let me pivot the conversation for a minute to our audience that maybe owns a pretty substantial amount of real estate already, whether it’s self-storage or whether it’s multifamily like me, or whether it’s commercial buildings or residential assisted living. They obviously see the headlines on this industrial space getting gobbled up. The absorption rate’s massive and they want to become an operator, right? Let’s go back to when you were 22 working for someone else, and then 31 when you started your own thing. What kind of advice or what kind of things do you think are on the important checklist? If I wanted to buy my first industrial building, which I have an appetite for, what are some things that I need to be doing? Maybe who’s on my team? What kind of research may I need to do?

I know this is a big open-ended question, but just from a high level, where do you kind of start if you want to buy your first industrial building? Is it market research? Is it getting to know brokers? Is it identifying a certain market where, like Chicago, you’re obviously very bullish on Chicago? And obviously, for obvious reasons, makes a lot of sense. But where does somebody that wanted to be the operator like you, where should somebody begin? Just again, huge question. I know we don’t have time for all of it, but high-level, what’s some advice that you would give those folks?

Joel Friedland: Number one, great mentor. Find somebody who knows the market better than anybody else, become very close with them, and suck up all the information because they have 30 or 40 years of experience and there’s no way you can catch up. The only way that works is to have somebody like that, which is why my investors go with me because that’s who I am to them. When I had a brokerage company, I trained 60 brokers to be industrial real estate experts. So, that’s the key. Someone who knows the most, have a mentor. Someone who can teach you the ropes. Very, very first thing.

Second thing, hyperfocus. You can’t be all over the country and have that kind of relationship with someone in Seattle and someone in L.A. and someone in New Jersey and in Texas. Hyperfocus. We’ve bought buildings in New York and in Florida and Ohio, and I’m done with that. There are 1.3 billion square feet here and there are people who are making millions and billions together as a group in the Chicago area. Hyperfocus. Don’t go trying to figure out how to be all over the country in a market where you don’t even know one market. So, those are the two most important things.

And the third thing is we actually have a group of brokers. It’s called the Society of Industrial and Office Realtors. To belong, you have to be a millionaire, you have to have been in the business for five years, and you have to be someone that made X number of deals and makes a certain amount per year. And in every city, really around the world, not only in the United States and in Canada and Mexico, but in every city, there are these SIORs. And those are the mentors who can teach the business. And I work with those people every day.

So, I know the 300 other industrial people in Chicago well enough that when my son, who works for me calls, and it says my name because I pay for his phone, it says, Joel, I get a text back saying, sorry, I can’t talk right now. What can I do for you? Let me get back to you this afternoon because they think it’s me and they call and I know their voice. They don’t even have to say who they are, I know who they are. So, it’s this incredible total focus on one thing.

And the way we’ve been able to be successful is by going door to door to find deals off market. Of the 100 buildings we bought, 95 have been off market because we’re saturated in this market. My son goes door to door.

Josh Cantwell: Call in owners, brokers are working the phones. Brokers are making the calls themselves. They probably were…

Joel Friedland: How about this? In person.

Josh Cantwell: In person, for sure.

Joel Friedland: In person.

Josh Cantwell: Knocking on doors.

Joel Friedland: Knocking on doors. My son will walk into a manufacturing company and he’ll say, “Who’s the owner? I’d like to talk to them about the real estate.” And usually, he gets right through to somebody because who does that? So, he got attacked by a dog. And by the way, on the window of the door, it says no soliciting. He says, I take that as an invitation. It’s amazing.

Josh Cantwell: Love it. So, Joel, what I heard you say to boil this down, again, really high level, but find a great mentor that’s already been in the business. Maybe if you want to own industrial, I’m sure there are lots of mentorship programs out there you could pay for. The way that Joel did it was he actually became a broker, like he actually got in and did transactions working for a family that owned 83 buildings. So, that was his mentor. He actually kind of learned and earned at the same time. That was number one.

Number two, the second thing you said was hyperfocus, hyper niche, which I’m really happy to hear that. We do the same thing. Like my multifamily investments are very focused in the Cleveland area right now because we do…

Joel Friedland: I love Cleveland.

Josh Cantwell: And then also, we’re expanding just into Columbus because Columbus is like a Sunbelt growth market, especially with Intel, Honda, everything that they’re doing down there. They’re starting to call the greater Columbus area Silicon Heartland.

Joel Friedland: This is my SIOR book.

Josh Cantwell: Yeah.

Joel Friedland: And maybe you can see it.

Josh Cantwell: I can see it.

Joel Friedland: In Columbus, where we used to own a building, I know most of the industrial brokers there.

Josh Cantwell: There you go.

Joel Friedland: Because we had a building there. And in Cleveland, we have friends who are in the business as well. We have these annual meetings.

Josh Cantwell: Some of those guys.

Joel Friedland: If you’re in industrial, it’s a very closed community. People respect other people who’ve been in it for a long time. So, if someone wants to get into the business, they need to find someone who’s already in it and just latch on to them.

Josh Cantwell: Yeah, I love it. And then the third thing you mentioned was the society, the SIOR society, but really what that is at a high level is that’s an immediate network of people that you networked into. You obviously became a member of the club, if you will, by earning your way in through your production, your transactions, and your experience. But that network, again, is so key because typically, you’re going to win some deals against maybe another broker, you’re going to win some deals against another owner, but it’s much better to be kind of cooperating. We call it co-op excision.

So, you’re cooperating and competing at the same time and have a lot of mutual respect for the other guys in the industry because if you’re in it for 30 or 35 years, like Joel, or even in residential real estate and apartments like me for 15, 20 years, you can run across the same people all the time, right? So, sometimes you’re competing, sometimes you’re partnering, sometimes you’re borrowing, sometimes you’re lending, you’re investing with each other. It becomes a pretty close community. That’s amazing stuff.

And the last thing I heard, Joel, was getting outside the box instead of looking at just deals that are on the market listed through a broker, 95% of the stuff you’ve done is door to door, off market, going directly to the owners. I think that’s amazing advice, not only just for industrial but for anybody that’s doing multifamily, that’s doing self-storage, that’s doing residential assisted living communities. Any of the above, those pieces of advice that Joel just gave us can apply to anything that we’re doing. That’s fantastic stuff, Joel.

Joel, I’d love to hear one story about your start. When you were 22, getting going in industrial, you didn’t have 35 years experience, you didn’t have all of these hundred buildings, you didn’t have clients that have major deals from Shark Tank. You kind of started out with probably almost nothing. And you probably have some war stories like some scars, a couple of things that you remember from your start. Tell us about one of those stories. What comes to mind?

Joel Friedland: The greatest one was I was 23 years old and I was going door to door. My boss, Mr. Podolsky, had a building in a neighborhood south of Chicago. It was in a suburb called Alsip, and it was this big, empty building. And the times were tough. It was 300,000 square feet and it was vacant, costing him a fortune. And he said, “I want you to drive around in Alsip and I want you to meet everybody there and find me a tenant.” So, I drove around and I’m looking at it. I’m just overwhelmed. There are hundreds of buildings and all these big companies. I’ve never done this before.

And I walked into a place, it was a manufacturing operation. And I saw these two guys sitting at a desk right next to each other. And I said, “Hey, you guys want to move out of this dump? I’ve got a great building right down the street.” And they said, “You think this is a dump? You think this is a dump?” I said, “I just meant that is you want to move out of here?” One of the brothers, they were two brothers, one says, “We’ll be right back.” So, they disappear and they come back with this old man with a walker. And they said, “This is our dad and he owns this dump.”

Josh Cantwell: Oh.

Joel Friedland: And the father says, “Take him out.” So, one brother takes me under his arm and the other one under his arm, they pick me up and they carry me out of their office, open the door, and throw me down in the parking lot.

Josh Cantwell: Take him out.

Joel Friedland: So, I’d ripped my pants and I said, “Sh*t. This is a tough business.” And I called my boss, I called Mr. Podolsky. I said I got thrown out. I ripped my pants. He says, “I’ll buy you a new suit. You’re doing it right, kid.”

Josh Cantwell: Oh, I love it. I love it. I love it. Well, listen, Joel, as we kind of round third and head for home, I just have a couple of questions for you, more of kind of a lightning round about some advice maybe that you’d give our audience about entrepreneurship. And so, if you were to start right now and you were starting an entrepreneurial journey, what kind of books have you read? What kind of seminars have you been to? What kind of advice have you gotten just around entrepreneurship, not necessarily industrial real estate or multifamily, but about being an entrepreneur? What does it take, do you think, to be a successful entrepreneur?

Joel Friedland: I think I’ve read every book on sales. There are so many. In the old days, I used to go to the bookstore and I would just rifle through some of the books that had titles about the kinds of things entrepreneurship sales. That was great.

But today, I become addicted to watching podcasts. I’ve watched you. I enjoy yours. I think there’s nothing better today than listening to experts talk to each other. I think it’s the greatest. And I believe that the key, as I said before, is find somebody that really knows a lot that you can respect who’s been successful, latch on. That’s the whole ball game.

Josh Cantwell: I love it. I love it. And last question is just around the marketplace as a whole and what’s going on into next year, is there anything that you’re dealing, especially without having any doubt, you’re in that very enviable position of not having to worry about being beholden to a bank? But as rates keep going up, as the market shifts, what do you think, again, our audience should be looking out for or things they should be doing to just position themselves as best as possible as an entrepreneur and as a real estate investor as rates go up and as the market shifts? You’ve been through four downturns. Obviously, we’re expecting another one next year. So, based on your experience in those downturns, what is some advice that you would give our folks to kind of prepare over the next 12 to 24 months for what might be coming?

Joel Friedland: I don’t know if you’ve heard this before, but I believe that a lot of real estate entrepreneurs don’t know it, but they are actually compulsive gamblers. And I think we could do a whole thing on compulsive gambling and real estate operators. They take a lot of risks, they get in over their heads. The answer is don’t get in over your head because when you do, that’s gambling. You can’t put all of your money on red, you can’t put all of your money on a poker hand. It’s crazy. So, the answer to me is, don’t gamble. If something feels like you’re getting in over your skis, that’s where everybody gets hurt. And number one piece of advice, if it feels like gambling, you’re gambling.

Josh Cantwell: You’re gambling. Yeah. If your heart is racing, you get a little sweaty under the armpits.

Joel Friedland: Yeah, you get that feeling where it wells up, yeah. I got to do this. You don’t get to do this. You got to do deals that feel safe and that feel right in this environment because next year may be tough. And just don’t assume you’re going to make a 20% IRR and everything’s going to work because when times get tough, it’s a -20 IRR.

Josh Cantwell: Yeah.

Joel Friedland: And you have to be able to handle it.

Josh Cantwell: It’s great stuff. And let me just add this, too, I think, if you’re in a situation to do deals with no debt, that’s obviously the best position to be in like Joel. If you need debt, maybe you don’t have the investors that I have or that Joel has, get long-term debt. I think one of the best decisions that I’ve made over the last three to five years is securing our investments and our buildings with long-term debt, with five-year, seven-year, nine-year, 12-year terms, whereas so many people went in and got the highest leverage they could because they didn’t have the investor group, the limited partners that they needed.

So, with the highest leverage possible, which means they went with a bridge loan or a SOFR loan with a floating rate. And now, that floating rate, that cap might be expiring or the floating rate is going to pop up, and then they’re going to be, Joel, like you said, back in the early 80s, that rate went from or maybe they secured it at a 4, and now it’s going to be an 8 and it’s going to be amortizing and the deal’s going to bleed, right? So, that’s a major way you can get yourself in deep, deep trouble.

So, Joel, listen, I had a great time today on Accelerated Investor interviewing you, not only about industrial buildings but about your entrepreneurial journey and some advice for our audience. So, thank you so much for everything you wanted to share. I’m sure our audience will want to engage with you. I’ve got a number of investors that ask me all the time, hey Josh, what else do you have? What else do you do? And I’ve taken Joel’s advice and I’ve stayed laser super focused on multifamily, but I do very much believe in industrial and the safety of it, just like you talked about. So, if we have an audience that wants to learn more or invest with you or connect with you, where can they do that?

Joel Friedland: BritProperties.com, that’s B-R-I-T with one T. We named the company after one of our property managers. His name was Brad. It stands for Brad really is terrific.

Josh Cantwell: Really?

Joel Friedland: Yeah.

Josh Cantwell: I would love to be Brad. Hope he’s still been with you forever. That’s a holy cow.

Joel Friedland: I trained Brad. And now, Brad works for First Industrial, and he’s one of the most successful guys in the country.

Josh Cantwell: Brit Properties, BritProperties.com. Guys, there you have it. Joel, thanks so much for joining me today.

Joel Friedland: Josh, thank you.

[CLOSING]

Josh Cantwell: Well, there you have it, guys. Listen, I appreciate all of my Accelerated Investors being on the line with me today and listening to that interview with Joel. I had a great fortune to spend a lot of time with him before the interview and even after the interview, talking about investing in each other’s deals, talking about sharing limited partners, investing in industrial buildings. Just an amazing, amazing interview there.

If you enjoyed it, please smash down right now on the Subscribe button so you’ll never miss another episode of Accelerated Investor. And leave us a five-star rating and review and share this, if you would, all over social media. Guys, I’d be so grateful to hear your feedback, so grateful and so honored to hear your feedback on the show, whether that’s through a rating, whether that’s through a review, whether that’s through a subscription, whether it’s a comment on iTunes or Spotify or YouTube. Let us know how you like the show, good, bad, or otherwise. It’s very meaningful to me to come into your house, come into your head, into your ears, and share this kind of information with you so you can learn how to be a more Accelerated Investor. We’ll see you next time.