#36: Joel Friedland, Industrial Real Estate Investor - All cash investments, deal junkies, and finding your calling early in life

We had a building in Northbrook, and I had a young man who was working as my junior agent, and I had trained him in brokerage, and we were showing the building to a company. This young man, his family came from Russia, and although he doesn't look Russian and doesn't speak English with any accent, he's fluent in Russian. So these two guys show up in a Mercedes to look at this building. It's vacant, and we're trying to. We're going to sell it. And they walk in the door and they're talking to each other in Russian in front of us and don't know that Steve speaks fluent Russian. And one. One guy, he goes, blah, blah, blah, blah, whatever. And I didn't understand a word of it. And Steve's listening, you know, his ears out. And he comes over to me and he says, they said that this is the perfect building and they're going to pay whatever they have to.

That's awesome. On today's episode, we have industrial real estate investor Joel Friedland. Steve, I think I just went through. I don't know about you, but I think I just went through a industrial real estate 101. Actually, not even 101. That was probably like 401. That was a master's level degree in industrial real estate.

Jake, this podcast, there was nugget after nugget after nugget. I think this was the most educational podcast we've ever done.

Yeah, yeah. If you're listening and you've been interested in investing in real estate, specific, specifically in industrial real estate, you cannot find a better episode than this. Joel and his team have invested in over 100 industrial real estate deals in the past 2025. Actually, even more than that. I think it's close to 40 years. So they are a wealth of knowledge. So this is an episode for you, but let's just head west. Stay tuned as we discuss all cash investments, deal junkies, and finding your calling in life with our guest, Joel Friedland. This episode is brought to you by Skyline Point Capital. If you're anything like me, you're always considering where to invest your money. Stocks, bonds, crypto, rental, home. The list is literally endless. As we've all seen over the past year, the stock market is unstable, the housing market is just weird, and inflation is on the rise. In times like these, the clear place to invest my money is in multifamily real estate, AKA apartment complexes. Here's why. Returns on real estate investments have little to no correlation with the stock market. There's lower volatility Stable income streams and the tax benefits are insane. And let's not forget that the apartments will typically appreciate in value over time, which means you can walk away with a pretty nice return when the complex is sold in three to five years. Best of all, multifamily investing is passive, so you get all the benefits without the hassle and headache of your typical rental home investment. Getting started has never been easier. Head to skylinepointcapital.com to learn how you can start investing today. I wanted to start with your. I read some of your bio and it's, you know, when you read through it and even go to your LinkedIn, it's pretty evident that you're a serial entrepreneur. You know, you've. You've done a number of things throughout your life. And if I remember correctly, didn't you get started at a young age in business by starting a mowing company, but then hiring other middle schoolers and high schoolers to execute? So you found the business, you started the business, you were the salesman, and then you hired people to mow for you at a young, young age. Is that accurate?

That's exactly what happened. My parents went on a vacation. They went to California in Chicago, where I lived. It was summertime, was springtime. It was actually springtime. It was April, and the summer was coming, and I decided to be an entrepreneur. I was 14, and I went up and down my street where I lived, and I talked to everyone on the street and there were about 60 homes. And I went to each house and said, hey, I'm starting a landscape business. I'd like to cut your lawn this summer. And cold calling one family after the next. And I got my pitch down and I got hired and I got 70 lawns in one weekend.

Holy moly. That's incredible.

Yeah. Now, I don't know if you've ever seen that commercial where the two guys are in the elevator and they got a piece of business. They look at each other and they say, well, now that we got the business, how are we going to handle it now?

What? Now?

Yeah. So I had to figure out how to. How to mow lawns and cut bushes and trim things for 70 different homes in my neighborhood. So I started hiring. I was in middle school, I was 14, started hiring my friends to be lawn cutters and choppers of bushes and trimmers. And I had to hire one of my neighbors who could drive so that we could have a trailer attached to his car and pull the lawnmowers and all the equipment around. I wasn't old enough to drive, and I had to have a driver. So, yeah, it was a real business, but it sucked because if your employees aren't good, the business isn't good. And these were all middle school and high school kids who grew up in an affluent neighborhood. And they didn't know how to work. They didn't really care about it. They said yes, but they didn't mean yes. I got a call from one lady who said, your lawn mowing guys are playing on my kids. Swing set.

Joel break, apparently.

Joel, it's so funny you're talking about lawn mowing. I did the exact same thing in high school. My dad was an insurance man, and he had a client that needed their house painted. And that's how I got started. And then I got. And I got a contract for one of the largest apartment complexes in Omaha. Not knowing what I was doing, I. I also hired my neighborhood kids. It was like Spanky and our gang painting the apartment complex. And it was the craziest thing. But, you know, you learn about life, you know, your first business. And it was lots of fun, lots of issues. Spray painted windows, the cat, the dog, you name it. But I look back at that, and that was probably one of the best times to understand what it means to be an entrepreneur.

The worst thing that happened to me was I used to give people their invoices for their lawn cutting on a monthly basis. And I don't know if you've ever seen it. In many doors, they have a door, a mail slot. And so I was delivering an invoice to someone on my street, and I put my finger into the mail slot to drop the invoice, which was in an envelope. And the dog on the other side grabbed my finger in its teeth. It was a bloody mess. It was so awful. And the guy had white carpet, and the dog's name was mister. And I heard the guy yell, mister, let go of that finger. He drove me to the hospital. They had to wrap it up to stop the bleeding. It was horrible. So, yeah, it can be treacherous being an entrepreneur.

And I remember I'm telling these stories that, you know, you'd have a 40 foot ladder painting, you'd be at the top rung even higher than that, and then leaning way to the right like a monkey. And like no care in the world.

40Ft up today.

Wouldn't even go up six.

More careful about liability today.

Yeah.

How long did. How long did your. This business venture last for?

Many, many summers.

All right, so it didn't flame out the first summer.

No, it lasted Until I was done with my junior year in college at Michigan.

Did you start it as you know, was there an end in. In mind? Was it because you wanted spending money? Was it because you wanted to build something and see if it could work? I mean, what the reason I ask is. I remember when I was a kid, I started a lawn mowing company and the one the I only had one client, it was my next door neighbor and he paid me $25 a week. And that was enough for me. As long as I had my $25 a week, I had covered everything I wanted to buy and I didn't want any more customers.

Well, I figured out since then I was, I enjoy entrepreneurship, I enjoy selling, I enjoy building. It's really the relationships. I enjoyed getting to know people. When I got the 70 people to hire me that weekend, it was just a hoot. It was really fun to, to be able to make the pitch and put on my show and talk about what I was going to do. That that's kind of what I like about real estate too. The relationships and convincing people or explaining things to them. You know, just it's a good jumping off point to get into the real estate world. And so I traded landscaping for real estate.

We had a past guest, John Hoich, good friend of ours. He also started a lawn care service at a younger age. He was mowing lawns at apartments. And correct me if I'm wrong, Steve, but he, if I remember correctly, he heard that the apartment whom he had a contract with was being sold and rather than lose the contract when the apartment sold, he just decided to buy the apartment. That is how he got into real estate, more or less. What was your story? Transitioning from, from mowing to real estate?

Yeah. So when I was a fresh graduate from the University of Michigan, a friend introduced me to a family that owned 80 industrial buildings. And they were looking to hire a property manager and a leasing agent. And I cold called them. I was good at cold calling. I had done that with the lawns. And I cold called this guy, his name was Milton Padolski. And I called him and I actually talked to his son because Milt didn't take the call. And I went in that day and interviewed and Milt and his son sat with me and said, what would you do? This was 1981. They had 10 vacancies out of 80, 80 buildings. What would you do to fill vacancies in our industrial buildings? We need tenants. And I explained my landscaping background and my cold calling successes and I said I would Just cold call the neighbors of the industrial building. I talked to other industrial company owners and see if they would consider moving into one of your vacancies. And Milt was a very gregarious, large man and his son Steve, also very big personality, big guy. And I'm a little guy. And I had these two big guys telling me, you should be in brokerage, industrial brokerage. I didn't even know what they meant.

I don't know what that is. But, yeah, I agree with you.

But I started literally the next day and Milt told me to go driving around in industrial parks. And I went. And I parked my car and I went door to door. And in the first year, I filled up nine of their 10 vacancies. Literally, no joke, just cold calling neighbors.

Wow.

Yeah.

Just going door to door and saying, hey, are you interested in moving?

Yep. Door to door to companies, to manufacturing companies, to and distributors and service companies like H Vac Services and sprinkler companies, manufacturers of industrial products, manufacturers of consumer products.

Yeah.

Big companies, small companies, international companies, local entrepreneurial owned businesses. And I got to know people. There are 16,000 industrial buildings in Chicago and I probably personally been to 15,000 of them. Wow. Wow.

Hey, Joel, how did you create that, that drive? Just a cold call, because that's scary for people. Some people don't like cold calling. Was this, this is the way God made you or that that's who you are?

Yeah. I found there's a guy by the name of Andrew Huberman who's got a podcast. I don't know if you 3, 4, 3 or 4 million people watch it. And he had a guest recently, about a month ago, whose whole concept is you should figure out, looking back to when you were a kid on what got you excited and what you were good at and what sort of made you tingle. And you know when your arms tingle and you feel like you're just doing the right thing, you should figure out what your passion is as soon as you can and then pursue it. And then every day is a good day. And I figured out that I liked meeting people and introducing myself to them and explaining the value proposition that I was bringing. And I just got a kick. I just liked it. And so that's what got me started with the Podolsky family, is I realized, wow, this is something where instead of cutting lawns for 10 bucks a lawn, I can go make deals and make $20,000 by introducing myself to somebody in commissions in a matter of weeks. And that really was fun. I was 22 years old living at home with my folks. And in my first year through cold calling, I made 37 industrial real estate leases and sales.

Wow, that's awesome.

I found my calling.

How do you think you. How do you think you found your calling so early? Sort of dovetailing off of Steve's question. Most people don't even realize what they're good at or what they love or what their calling is until later in life. It sounds like you've. Are we talking early 20s for you at this point?

Yeah, I was 22 actually. I think a lot of it had to do with being angry. I was angry in college that I had to go to class because I didn't like it. It didn't. I heard Sam Zell say the same thing. I hated class. And he went to Michigan too. No, I just. I hated what I was doing and I was desperate to figure out what I might like doing. Were waking up in the morning, I'd be excited to get going day after day. And I looked back at what I had done as a kid and I remember all the lawn stuff and before the lawns even I was. I was selling reselling candy from the convenience store to my neighbor kids, you.

Know.

So I knew that I wanted to be in some sort of people centric selling. And then I got lucky because I met the Podolsky. Steve Podolski became my mentor right away and has remained so. He was my mentor in 1981 in industrial real estate and he still invests with me and mentors me today with a group of others.

Wow.

And Steve and I haven't talked to each other since yesterday. He's in Naples, Florida and we were talking about when I was going to come visit the warm weather and have lunch with him. So I got lucky. I met the right people knowing that I wanted to be in some sort of selling capacity.

I'm going to take a guess that based on your track record of starting businesses, whether it's reselling candy or lawn mowing or whatever, I'm going to guess you took the job of being a broker and turned it into a business in some way, shape or form. Is that accurate?

Totally accurate.

Did you start a brokerage or did you start something else?

Well, first of all, I hired and trained many people while at the Podolsky organization, including cold callers. I put an ad in the paper. In those days there wasn't an Internet and I hired 20 cold callers who I trained how to make cold calls on the phone. And by the way, the first day, at least 2/3 of them failed. They took the job and then I trained them and then they couldn't do it. So I ended up with four really good cold callers who found opportunities so that I can go to meetings every day and not have to make the cold calls anymore. So that turned into a business. And then I trained young brokers to do what I did so that I could leverage my time. And over the years, I've hired approximately 80 brokers and trained them or people that I've hired, have hired. It's like almost like a multi level marketing. I would hire someone and then they, they would be trained by me and then they would hire someone and train them and then someone would be hired by them and they would be trained next. So the Podowskis were syndicators. And I learned after about seven or eight years that syndication was better for me than brokerage. I didn't give up the brokerage, but I started, let's call it a side hustle of putting together acquisitions of industrial buildings because I knew those buildings well. And through all those years, from all, all those industrial real estate clients and living locally and having a lot of contacts in my, in my community, I was able to raise money for my first deal from about 25 investors. They each put in 20 grand. And in my second deal, I had about 75 investors and they each put in about 75,000. So that's how I got started. But the Podowskis seeded both of those deals and taught me how to do that. And then I realized I was not a member of their family and never would be. And so the three children, the daughter, Bonnie, Randy and Steve, the two sons, took over the business from Milt, their dad. And I loved working for them. But I asked them, I said, can I be a partner here? And they said, yeah, you could have 5%. And I'm not a 5% kind of guy.

Sure.

As you can imagine. So I started my own business with three other guys. You ever see the TV show the Wonder Years or the TV show Boy Meets World?

Sure.

So the Savage boys, Fred and Ben, their dad was my original partner. So our first company, the company was called Epic Savage. Epic were the initials of my grandparents. And Savage was Lou's last name. Yeah, he was their dad and two other guys. And we built a brokerage business and a syndication business and a property management business that were all done together. Stayed very close friends with the Podolsky family because you got to stay with the people that brought you. Yeah, and be grateful for them, which I always have. Been. And we built it up. And over the years, we've acquired 100 industrial buildings and syndicated. We've had about 300 investors all together in our various properties. We have 19 properties. They're all in Chicago, they're all industrial. They're primarily manufacturing. And so we've sold of the hundred properties, we've sold 81 of the properties. So that's where we are today. We syndicate about three or four deals a year and our average deal is about $3 million. And we seek an 8% cash on cash yield. All cash, no mortgage. We don't like mortgages. We don't like dealing with banks. And we're the only people that I've ever heard of in the country that do that. We're probably stupid because our IRRs are not magnified with no risk. But we do all cash deals primarily. Occasionally we'll borrow in. Our maximum loan to value ratio is 30%. We will not exceed that.

Joel, has it been that way, that model when you started doing syndications, or did you evolve to that and why.

I evolved to that. And the reason is because I went through four cycles, including 1981, when I started when you couldn't barely get anybody to even talk to you about moving their business. And it culminated in 2008 with some tremendous pressure from lenders on properties were like, Milt Podowski had 10 vacancies in 1981. I had 50 buildings with about 10 vacancies in 2009. And I had loans on all of them and guarantees on all the loans. And so when I came back from being on the call it the funk train, I was really messed up because of all the terrible things that were happening when I got unfunked.

That's a technical. We got that down.

I decided that I don't need to hit home runs or grand slams. I want to consistently hit singles and try to avoid strikeouts. And occasionally we'll get a home run accidentally. But the idea in our case is I cannot emotionally handle significant losses. So my investors now know that this is the case. And a lot of people won't invest with me because they say, look, if I can't get these multiples that are higher based on leverage, why do it? And my answer is because wealthy people don't want to lose their money. They're into preservation. The young guys who want to make a lot of money, let them go borrow money. That's fine. I'm 64. I'm not borrowing money and putting myself under that kind of pressure, especially with industrial buildings. Because they're single tenant buildings and they're either 100% vacant or 100% leased. And if you have a mortgage on 100% vacant building, you are screwed unless you lease it the next day. And that just doesn't happen. Fantasy, Joel.

When I was looking on your website and I was looking at your portfolio and I which was kind of interesting because the majority of your properties are single tenant assets and that's kind of contrary to some of the logic and industrial side, you want multi tenant buildings. So if you have that, can you talk about that, what you like about single tenant 10 to 15,000 square foot buildings? And I think do you still own the 106,000 square foot building in your portfolio?

Yes. And we have three tenants there, which is one of our. We have three multi tenant buildings. One has two tenants and two have three tenants. All the rest of the 16 buildings are single tenant. And the reason that we like signal tenant is because there's a different exit strategy for a single tenant building than there is for a multi tenant building. And that's the user sale. It's almost like doing investing in individual single family homes where it could be an investment if you lease it and you can sell it for a cap rate to somebody, but if the home's vacant, you can sell it to someone who's looking for a house to move into it. The single tenant industrial building philosophy on our part is we believe that there's a 35 or 40% premium when you sell the building vacant to the neighbor who needs it as a tool for their business.

Is that usually your exit plan out of a building?

Always. Always. Not sometimes. Always. We do not sell buildings on a cap rate. We do not sell buildings to investors. My people cold call the neighbors and find the buyer. Like I used to do it when I was in my 20s and by the way, I still do. When I buy a building, I will go to all the neighbors, both sides, both the left side and the right side, the neighbor behind in the two neighbors across the street and I will talk to them and say we're buying this building across the street. I just want to get to know you. In the future, if our tenant ever leaves, would you want to expand by buying another building and having a second property? And the answer is, wow, thanks for coming over. That's my exit strategy. It's to sell it to one of those five neighbors because guess what they'll do? They'll do anything. We have a next door neighbor of a building that we own and we had a tenant for 18 years, which is another reason for single tenant, by the way, Steve, Tenants never leave. They don't leave. They just stay and stay and stay. And the rent goes up every year, so it's really good. But I went to see the tenant that was leaving and I. His name was Jim Patton. His daughter is a Broadway star. She. She was in Jagged Little Pill, and she won the, the, the award for best whatever song in. In it was. It was about Alanis Morissette. It was her. Yeah. So I went to Jim and I said, I'm so sorry you're leaving. And while I was there, I went to the next door neighbor and I said, my tenant's leaving. He said, oh, that is so fantastic. We need a building to expand. And if it's right next door, we can have an overhead door into our parking lot, and we can have an overhead door into their parking lot, and we can connect the two buildings with a hallway and just put a roof over a metal frame and go back and forth. So I said, that's great. He says, we're going to buy it. We'd like to buy it. I said, no, no, no, we don't sell. We're going to lease it to you. He said, no, no, no, we don't lease. We only buy. So after wrangling with them for about a month, they finally leased it. And we could have sold it and we would have made a lot of money on the sale. But we own a line of buildings on that street. It's sort of like playing the game Monopoly. We like owning buildings on that street in that town of Elmhurst, Illinois. It's a favorite of ours. So here's the funny part. About three months after moving in, the neighbor sends me an email saying, joel, we've been thinking about this. We really want to buy this building. And we are willing to for way, way, way, way overpay.

You got my attention now.

So the building's worth $2 million, let's say, to a typical user in the neighborhood. And it's probably worth a million million five, roughly, possibly on a cap rate based on a lease building. So you've got a premium to sell it, but the ultimate premium that, that 40% premium is selling it to the next door neighbor or the people behind who can connect their operations. Yeah, because otherwise they have to buy a building some or lease a building somewhere down the street or somewhere else, and they have to load stuff on trucks to go back and forth. The savings of not having to have a truck going back and forth by Being next door or right behind and connecting is huge. So we went back to him and said, we're sorry, we're keeping the building. It's a, it's in a line of buildings that we're keeping. We'd like to buy your building. So when you, when you move and you buy a bigger building because you want it consolidated, we'll buy your building. And you know, he, he doesn't want to sell this.

Joel, with your strategy of the, the single tenant buildings, I, I can just imagine that the, the submarket of industrial areas you could be in are absolutely critical that you have the neighbors around you and that premise. And could you talk about that and then also talk about, about buying a building that's empty or do you always buy a building if there's tenants in there? Can you elaborate on that when you go to that market?

Yeah. So we used to buy buildings elsewhere in the United States besides Chicago. We bought buildings in Florida, Ohio, New York. And I've determined because there's 16,000 buildings in Chicago and it's one of the biggest industrial markets in the world. And because we have the best highway system connecting the whole country from east to west and from north to south and we have fresh water from Lake Michigan and we've got rail railroad that's really important to industrial because products are shipped on rail. You get caught behind those freight trains and you swear like damn it, have to sit here for five minutes. Those are the trains that bring products from other buildings to buildings like ours that often have actually a rail siding which is interesting. That's how they're built sometimes. The reason that we do Chicago only is because we know that market cold, right? So no one's going to trick us. We're not going to buy some building for too much money and be idiots. And especially in the city of Chicago and close in suburbs near o' Hare Airport that's known as infill industrial because it's inside of where the high population area happens to be in the city and in the suburbs and where there's great transportation both by commuter rail and buses and the highway system and by car. We love those close in locations. So yes, we pick the neighborhoods with great intention and we target certain areas to buy buildings. And I know when someone brings me a deal and it's way far out, like there's a town called Elgin. Sure got to drive for an hour from the city to get to Elgin. We're not going to buy a building in Elgin. I've had a building in Elgin and When it came available during a recession, it sat vacant for a year. I'm not doing that again. When they're in the city or right near o', Hare, even at a bad time, they sell and they lease because that's where the majority of the tenants want to be. And that's how Chicago breaks down in terms of submarkets. Steve. So yes, we pick. There's a town called Elmhurst that I mentioned earlier. We've bought seven buildings there. I love it. It's where all the, the highways meet, the taxes, the real estate taxes are lower. And in the city, I love being right off of the Kennedy Expressway because it's a nice area, nice neighborhood. We just bought four buildings on a street called Belmont Avenue at Western, which everyone in Chicago would know that location. And we have all, all the buildings are leased and we have seven year leases. And I just love the location. If our tenants were to leave, we could lease them or sell them right away.

In the sense of I'm just going to talk about the Omaha area and et cetera. And there's industrial spread out all over the place. Not like Chicago is concentrated in the infills and et cetera. And you see here, you see these 300,000 square foot industrial buildings going up everywhere that seems everywhere and that kind of is dictating the market. And from that side, as you talk to my friends that are in the, that are in that space, the brokers. But it's a. Do you see that in Chicago where all these big 300,000 square foot buildings going up. Did it ever excite you at all to do something like that?

No, I'm not a developer. I will never be a developer. I have been a developer and those were some of the biggest mistakes I made because developing is a whole different business than buying. Buying an existing building you're buying for significantly less than replacement cost. And there's no governmental mess where you have to get approvals, you know, with every developer tells you just trips them up every time is trying to get approvals from a village. The trustees, the building department, we don't want any of those building departments, we don't want any of those trustees. It's simple to go buy a building. We often buy buildings that are leased. We buy them usually from the family that has owned it for decades. Where grandpa started a manufacturing business there and grandpa died and now it's in the third generation. The grandpa's three sons came in and then the three sons had kids and a bunch of cousins run it and now they want to get rid of the business because nobody really likes each other anymore. And so they. That's what happens in family businesses. Everybody gets into like, resentment.

Oh my gosh.

And the brother, the brother marries someone and the wife's a bitch and the other brothers can't stand her. And she starts telling her husband he deserves more. Fight with your brothers for more. So they want to get rid of the business. So they sell the business to a private equity group, but they keep the building and they lease it to the private equity group. Now the same dynamic, which is that they want to get rid of each other as a family. If there's 19 descendants of Grandpa, no one has a very meaningful piece of the deal of the building. So they appoint cousin Jimmy and Jimmy says, I'm gonna sell this building. And Jimmy puts out feelers, and we get the feelers because everybody knows that we buy these little 10 to 30,000 foot buildings from families who want to get rid of their buildings. So Jimmy gets in touch with us and he says, hey, we've got this 30,000 foot building. We'd like $3 million. And I go look at it and I say, okay, 3 million, fine. And I know that I could sell it to the next door neighbor. He forgot to go to the neighbor.

I love it. I love it.

It's a good strategy.

Joel, have you, I think, already know the answer, but I'm going to ask it anyway. You're talking about the, the family manufacturing business. It's in there with all the cousins. Have you ever bought a building with the business?

Never.

Okay.

No. No. We are so laser focused, Steve, that we do, we do one thing, it's all we do. We buy small industrial buildings that are considered B class, B industrial buildings that are single tenant, that have good loading docks, good parking, high ceilings. Those are the three things that matter in industrial. And then the good thing about industrial is they're net leased. So the tenant pays the taxes, insurance, maintenance and utilities. And the management of those single tenant buildings is so much easier than a multi tenant building. You don't have people complaining about what their neighbors doing. You don't have people fighting for parking spaces with their neighbors. You don't have odors that the neighbors are upset about, noises that the neighbors are upset about. Single tenant buildings are just so easy. I can go to Florida for a month and my partner who manages the properties calls me. He says, we have this problem and that problem, but he might have two or three problems in a month. With multi tenant, you have two or three problems in a Day.

Joel, in that single tenant, what is your sweet spot square footage wise for a single tenant? I'm assuming when the building gets so big you got to say it's too big. It really reduces our, our pool of available tenants from that site.

We bought a 42,000 foot building in October. It's bigger than I like. We bought in October also in the same location at the same time from two separate families who used to own the businesses and then just own the buildings. Very simple. That's the formula. One building was 21,000, one was 20,001 was 11,000 square feet. So the 42,000 square footer was the big one. I don't love that. I like anything from about 10,000 to about 30,000 square feet. Reason being the pool of tenants and buyers in a smaller building is much greater than a larger building. It's like a funnel, it's like a triangle. And there are very few tenants when things go bad for the really big 300,000 and 500,000 and million square feet, developers have had no problem filling them up because the Internet's been going crazy with growth and because of onshoring where companies that manufactured products in China or in Vietnam or whatever, they're bringing some back because the supply chain issues that occurred during COVID scared the crap out of people. So now they're bringing a lot of it back to the States and they're manufacturing and they're occupying buildings. So these big monster buildings have been filled up and there's been no lack of tenants. The supply and demand, the supply hasn't been enough for the demand. So industrial is great right now and our type of buildings are really amazing because they're not replaceable. You can't build one of those great big buildings on a site where you've only got a 20,000 foot building. But you can't build a 20,000 foot building because it would cost you $225 a square foot. And we'll buy them for $100 a square foot. So there's nothing being developed that competes with what we do. But if we were in the big building space, we'd be competing with every pension fund that's throwing money at industrial all around the world and they've been successful, but it's not our business.

Yeah, Joe, you were talking about what's happening with onshoring things coming back. Where do you see industrial in the next three to five years? Where is that going? You said you're the typical building dollars per square foot is at 100. Do you see that going up or do you see that going down? And with no leverage on your building, I'm assuming whatever way it goes, it gives you a lot of flexibility to weather any storms coming.

So I watch a tremendous number of podcasts about the economy. There's one in particular, it's called Thoughtful Money, that's hosted by a guy named Adam Taggart, and he has researchers and economists three times a week. And if you listen to one, they'll tell you one thing and you listen to the next one, they'll tell you the opposite thing. I have given up trying to figure out what the economy is going to do and what industrial is going to do. I've been wrong every time. So I just, I've given up.

Welcome to the club.

Yeah, I just, I just have to believe that industrial is going to be the most stable, steady, best return asset class for a long time because there's going to be a lot more on shoring and reshoring, which is more or less the same thing. Companies coming back from overseas and opening up. I was just driving from Florida to Chicago. I was there for a month and we did a driving trip and I was driving home and there was this gigantic battery plant being built that I just couldn't believe what I was seeing. It was so gigantic. And it's here. It's not in China, it's not in India, it's here and it's millions of square feet and it's at a cost of billions of dollars. And industrial is just going to keep chugging. So whatever the economy does, it doesn't even matter to me that much because for our little, all cash, no debt, small buildings, divisions of companies will take them. And if it's not a division, we've got so many gigantic companies in our portfolio that have little divisions in our little buildings. So we get rent. The rent is like steady. It just, just comes because we're not leasing to mom and pop little companies with no history. That's the thing about those industrial multi tenant buildings. They have little units very often and you lease to these people and they're like apartment tenants. They have a little building and they have no money. We can't lease buildings to people who have no money.

Not a good business plan.

That brings up the question, you said the word history, just like anything else. And we have a retail strip and it's one of our better performing centers, but the tenants are so critical and the idea of bringing someone new that's going to start a business in there, we don't Want to do that? I'm assuming you do the exact same thing when you're buying. The longevity of the tenant, the quality of the tenant. Is that something you do or do you have a member of your partnership that goes through that and analyze the tenant itself?

So we have an eight person advisory group including Steve Podowski and a fellow named Nate Wagner and a guy from, from Montreal who's just joined us. These are really, really brilliant real estate minds. And we talk about who the tenant is and what they do and what their financials are. Looking at their financial statements is really important in our business. And the most important thing is to make sure that they don't have the concentration of one major customer that's a huge percentage of their business. Because we've had the experience of someone as a 60% tenant or a tenant of ours as a 60% customer, and that customer calls and says, hey, we're switching vendors. We're not going to have you manufacture these tools anymore. Well, that guy's going to call me and tell me, you can't pay the rent anymore because he's got fixed overhead, he's got 60 employees, he's got his rent, he's got his machines, he's got loans. So we want to make sure, A, that the tenant doesn't have one customer that could put him out of business. B, we want to make sure that his financials are strong enough, that he's got cash, that they don't have too much debt. So we look at the debt ratios, we look at their net worth. We want to make sure that the company is of substance. And when we look at all those things, we discuss them and go over them with our advisory board. And sometimes we have to tell a tenant, no, we can't lease to you. And sometimes we do lease to one of those tenants, but we ask them for a security deposit, often in the form of a letter of credit for six months of rent. Imagine telling a tenant, yeah, you owe me. You're going to have to give me a security deposit of a half year. In industrial. If they find the perfect building, they have to do it. They have no choice. There's no other perfect building. There's only one. There's only one best building for them. And it is a tool for their business so they know what that building needs to be and when they show up. I have the greatest story. When I was brokering, I had a tenant that made mops. It was called Rolomatic Mop. And today it's oh, Cedar. That's the Company and I was their broker and I took them on a tour of buildings and there was a CEO, a CFO and a coo. The C suite got in my Yukon and I drove them to see a bunch of buildings. And we're in the car and I said, guys, you need to be negative because you don't want to tell the broker who represents the landlord how much you like a building. Because they'll run right back to the landlord and say, these guys love the building. You can charge them any rent you want. Don't negotiate, stick with your asking rent. So I tell Ron, the CEO, and Jim, you know, the coo, and I don't remember the other person's name, but I said, guys, here's what you do. Ron, you say, I don't think this is going to work. Jim, you say, we're on a schedule, let's get to the next building. And then the third guy said, say something like, you know, this is okay, but I don't think it's for us. So we walk into the first building and Ron, who's really smart, he runs the company, he looks around, he says, this building is perfect.

Oops.

I love these stories because it's just fun hearing how people, what they do in their business, their model and their strategies. Joel, have you ever bought a building where the tenant is going, hey, this guy's no good, but we love the building.

Yeah. And you asked earlier, would I buy a vacant building? That's sort of like buying a vacant building. I consider that a vacant building. We have a tenant in a building we just bought and we knew that the guy was probably a fly by night kind of a tenant, but we wanted the building, so we bought it. And he did stop paying rent the minute we bought it. And I called him the other day and I said, you need to move out of our building. You haven't paid rent since we bought it. I don't care that much because we bought the building for the value of the building, Right. And now he's going to move out and we'll get a better tenant. So, yeah, we do that. Yes. I have one more great story about people who love buildings. I got this, the greatest one. We had a building in Northbrook, and I had a young man who was working as my junior agent and I trained him in brokerage and we were showing the building to accompany him. This young man, his family came from Russia, and although he doesn't look Russian and doesn't speak English with any accent, he's fluent in Russian. So these Two guys show up in a Mercedes to look at this building. It's vacant. And we're trying to. We're going to sell it. And they walk in the door and they're talking to each other in Russian in front of us and don't know that Steve speaks fluent Russian. And one, one guy, he goes, whatever. And I didn't understand a word of it. And Steve's listening, you know, his ears out. And he comes over to me and he says, they said that this is the perfect building and they're going to pay whatever they have to.

That's awesome.

I love it.

Who would ever thought knowing Russian would help that that much?

That was a really cool deal. That was really great.

You just doubled your, your asking price right there.

Yeah, well, it was, unfortunately during the recession period. So what, what they meant by paying whatever was a lot lower than the number we would have gotten. Yeah. Right now. Yeah.

Yeah. Speaking of recession, you, you made a comment a while back about, you know, you started in 81, you've been through a number of cycles. That includes 2008 and the great Recession. What, what did you learn through 2008? But also the other cycles that that sort of change the way you do business today. You know, we've talked about it, we've been hearing a recession is either here or it's coming. But how have you prepared for an upcoming recession, having gone through a couple of them in the past? And how does that evolved, the way you invest and the way you manage your properties.

Lots of humility as opposed to cockiness. Being vulnerable and knowing that we are always vulnerable and making sure that we do the deals with very little debt and with enough reserves, cash reserves in the bank to cover something that might happen, that's bad, that's good.

Be prepared for a rainy day.

Yeah.

You know, Joel, you and I are in this in the same age bracket and I came up through the manufacturing side that, that was my claim to fame. And, and that's a different journey story. But a good friend of ours has a saying that at our age is. I'm going to probably butcher it, but I'm going to. I'll give it my best. Jake, you jump in here. But he says, why risk what you.

Have.

To buy something? You don't need to possibly end up losing it all. And, and we've all worked. We've got to this stage with our wealth and et cetera. When you say wealth preservation, generational wealth, it's there to keep it going. And if it doesn't look like it's going to be a good deal. Why do it? You don't need the risk.

And yeah, I agree with you on that. Let me just say this. I believe that a lot of real estate players are actually unaware that they are compulsive gamblers.

So. Yeah.

Yep.

It's just their gambling may not be casino. Although a lot of them who are compulsive gamblers in real estate purchases, they may have a problem and they don't know it. And what happens to them if things go bad and they lose everything? They could go to a gambler's anonymous meeting and have everything in common with the people who did the same thing on sports betting, racetrack casinos, stock market. It's a mentality and it's a. There's a lot of character flaws involved in that kind of thinking. And I just am very careful to not have a gambler's mentality when I do my acquisitions. I want to have the opposite of that.

Yeah, we've heard that called being a deal junkie before.

Yeah. I mean, would you invest with a guy who says, hey, I'm a junkie.

And I got this great deal for you and it's this. You're gonna make all this stuff and.

Yeah.

Then do the next one and the next one and the next one.

I have a lot of friends who are in recovery from many different addictions. And when they were actively in their addiction, I wouldn't have invested with them, you know?

Right.

I might today when they're 10 years into recovery and they're better people than anyone I've ever met because they do a 12 step program and they really work on themselves. I would invest with them when they're deep in recovery, but I wouldn't invest with them. When they say I'm a deal junkie, it's like, okay, insert any word other than deal and then decide if even their parents would invest with them.

Well, Joel, we're running up on the end of our time together, but if people want to get a hold of you, if they want to look you up, where can they find you?

Our website, which is BritProperties.com B R I T. There's one T in BritProperties.com.

Wonderful. We'll link everything in the show notes and on social media if anybody wants to find you. But Joel, thank you so much for joining us on this episode of Heading West.

Thank you, Jake. Thanks, Steve.

Appreciate it.

Thanks, Joel. What a pleasure.