Ep 450: Sustainable Success: Building a Reliable ROI in Industrial Real Estate With Joel Friedland

Transcript

hey welcome to the hi with us podcast I'm your host Daniel Martinez today I have special guest Joel friedin from

[Music] [Applause]

Chicago uh we're talking a little bit off camera about Chicago stuff and uh Me growing Up Chicago it's always

interesting um how long you been in Chicago by the way I grew up in Highland Park which is a northern suburb so I've

been here all my life 64 years wow yeah it's quite a journey yeah I love

Chicago but not in the winter in the winter time I go to Florida for a few months how long you been doing that just

the last few years my kids grew up I now have grandkids my kids are adults so we don't have to be here except to play

with the grandkids yeah I I love uh I try not to go Chicago in the winter I

still have family in the Chicago land area it's just like I hate the cold and I used to work outside because I think

we talked about that I used to work outside um and I was was like I had the full like three layers of clothes like

winter like uh special military boots that protect you from freezing um and it was it was I had all

the works um I do not miss Chicago the only thing I miss from Chicago is the food the food is amazing it's topnotch

um I do recommend but other than that I'm good my my wife my wife uh she's like

let's move to Atlanta I'm like let's go when do you want to go tomorrow or next week like I'm ready to go because man

that that weather was killing me and I felt I always felt like crazy about it because my dad worked on the roads he literally worked outside for 30 years I

don't know how my dad did it but I got opportunity I'm out I'm out

yeah I'm with you on that but I'm glad you at least get the opportunity to go to Florida because

that's something I would do if I still live there the weather is nothing to be trifled with it's Florida Florida's

great in the winter yeah 100% so um real quick by bio what you've done how you

been doing it for um you have you on the podcast because I'm going to have some interesting questions for you but just

give everybody a little background what you do and how you've been doing it how long you been doing yeah sure so when I was 22 and I graduated from the

University of Michigan where was also cold uh in the winter time I went into

the real estate business but I went right into industrial I found a family

that owned 84 industrial buildings wow and they were looking for someone to be a leasing agent and it was 1981 interest

rates were 177% and the padowski family was looking for a sales guy to be an

industrial real estate broker being an industrial real estate broker is a lot like being a Home Broker but instead of

taking people to see houses you take them to see manufacturing buildings and

distribution buildings which are in industrial parks there there's millions

and millions of people in this country country who work in industrial buildings yep in the Chicago area we have 1.5

billion square feet we have 16,000 buildings so when I worked for the padowski they had a bunch of vacancies

because the times were tough it was a during an economic downturn and I went door to-door canvasing uh to find

tenants for their buildings in industrial parks I would park my car in an industrial neighborhood and then I'd

go stop in and i' try to get to see the owners of manufact uring companies the

buildings we work on are called B and C industrial they're much smaller than those gigantic things you see on the

side of the tollway that are being built now for Amazon yep and so it's a different animal we we have a lot of

companies that make stuff everything in your house everything in your office everything everywhere you go it's made

up of many components that were all manufactured in an industrial building and then brought together and many of

those components are then assembled to to make other products like if you have a microphone there's got to be 200

pieces in it that means literally hundreds of companies are a supplier to

the microphone Manufacturing Company yep so I I ended up learning about that and

I I ended up making relationships as a broker for 10 years with hundreds of

wealthy people who own their own businesses and that gave me the ability

to because of those relationships start syndicating and buying property with those friends and clients becoming my

investors for 20 30 50 $100,000 each and I started putting deals together to buy

the buildings that I used to broker and I still I still am a broker by the way

I'm still an industrial real estate broker I do fewer deals on a selective basis for clients that I love there you

go um and it's it's a good living you if you you lease an industrial

building uh for $2 million a year for five years it's a $400,000 commission so

when those come up I still do them but mostly not mostly about two-thirds of my

time or half my time I'm looking for buildings in Chicago laser focused because there's so much here I don't

need to go anywhere else yeah to buy buildings and Syndicate them to a group

of 60 investors or 80 investors or hundred and we own the buildings long

term and we try to make an 8% starting yield and we try to make profits when we sell them okay um I I talked to a lot of

uh a few industrial Brokers and uh do you I never heard this term till I talked to one but um the where you get

part of the you get paid up front for finding a tenant which is like the first three months then you might get a paid a portion no you get it you get it all up

front almost everywhere in the country there are a couple markets where they pay as you go but if I make a 30,000

square foot lease as a broker with a tenant and it's a 10year lease let's say and let's say the rent is $10 a foot

which is 300,000 a year it's $3 million the commission on that about four and a half or five percent call it 5 percent

so it's 150 Grand and it's all paid on the day they sign the lease wow okay

Industrial real estate trends and lease renewals.

yeah yeah I I was talking to somebody and they said that they get paid partial like they paid for like a portion of the

rents for years that that's in very very few markets almost every Market is paid

up front Okay see nuances you know I had no idea I like I'm very I'm very new to

industrial space I'm actually from um my PRI experience I've dealt with a lot of like shipping companies and Pick and

Pack and a lot of that I used to be a truck driver too and I would do shippers and stuff like that so I've been on the

other side of it so I've seen a lot of the the warehous housing from my point

of view and like some of these warehouses they have like one or two employees and they just sit around and then whenever a truck shows up they load

it up it's just like storage yeah we we have bigger companies than that most of our buildings that we

own for example we need a lot of parking spaces because a lot of people work there yeah but if a building is 30,000

square feet generally speaking they have 30 employees it's it's usually about one employee per thousand square feet and if

it's a manufacturing operation or if it's heavy on sales office or Administrative Office it could be more

like two people for every thousand square feet so we own a 50,000 foot building where they they make protein

bars okay and it's 50,000 feed he has 80 employees we've got another company that

we do business with they're in the the pork processing business and they it's a

giant commercial butcher shop so it's 100,000 square feet with 120

employees that's so so crazy yeah now uh this is I I love I love I

love industrial like there's so much like literally it's like the shell and then they'll do the tenants will come to

a buildout and put in whatever they need to do so you can have versatility of a protein to a butcher shop in each one of

them and then they they don't leave you most of the time because it's it's hard to like pick up and move those things so

usually if you get a tenant in there that's putting in a lot of stuff that he just going to stay there for a while is that right yeah we have one building in

the city on trip Avenue by the way trip Avenue is the street on which Walt Disney was born in Chicago so he's like

us he's he was from here uh it's a 33,000 foot building and the Tenant is a

division of a much larger company and they make Safety products for the

welding industry and they've been in the building since the 1990s early

1990s so 30 years plus and every time

their leasee comes up every five years they seem to renew and here's why you're totally right they don't want to pick up

their machines and move them that's expensive yep but also labor is really hard to find and

when you train somebody how to make some kind of product and they're working in

the place for a few years they become experts now they become the shift supervisor let's say and they hire

people and they train those people so now you got 30 employees who are highly

trained if they move far away from there and the people are used to coming there and they live

nearby what happens is you run the risk of losing your people and you can't run an industrial business without your

people it's not like office space where the reason that office buildings are in so much trouble today is because anyone

in an office can work from their home office yeah look at my this is my home office it's got all the amenities

including close to the kitchen so people want to work at home like you do right you're at home your kids are in the

other room it's great that's amazing with industrial people have to go to work yeah because there's stuff that

they have to move and they have to pick things up and they have to use the forklift truck and they have to assemble things so industrial has not been hurt

by the uh internet and zoom meetings and

Microsoft meetings in fact it's gone the other way because of the internet stores

cloes and warehouses now deliver stuff to your house yep so they need more need more people there yeah yeah they it's

really a trend and it's been happening for the past four years dramatically and

rents have gone up between 50 and 80% in four years wow yeah that's rent growth

Real estate investing and property management.

of between call it uh 12% to even 20% a

year that's that's amazing that's actually pretty crazy that's pretty crazy you think about it um I think just

the rent growth alone and then I didn't even think about the trends of of people shipping stuff that's huge too I mean

that's got of increase the values I'm sure you've done all right since then well our buildings have gone up in value

and our rents have gone up but it's really hard I I get become I become friends with our tenants because we're

we're Hands-On property manager yeah and the protein bar guy I love the guy he's

fantastic um and we'll go into the fact that he invested with us a million dollars in

another deal which you and I need to talk about that yeah but he's got a

business that probably does 12 or 15 million a year in volume and when he

moved into the building five years ago the rent was six bucks a foot and it's now the market for that building for

that 50,000 feet has gone up to $111 a foot so when I went to him and I said

hey your rent's going to go up he said whoa whoa whoa whoa whoa wait a minute aren't we friends yes we're friends but

I have an investor group and you're a tenant and even though we're Partners on a different deal I need to get Market

rent I'm a fiduciary to my investors yep so we're negotiating the rate we don't

want him to move out because if he moves out there's a vacancy that's a risk could stay vacant for a while so we're

gonna make a deal somewhere in between what he thinks he should be paying and what the market is yeah

that's that's that's good I you as a good landlord I think I think you have to you have the same you have the same

responsibility that you do as just as as a housing landlord but it's different it's a little different relationship but

you have the same responsibility to I mean those people those workers and especially your investors as well so I

think it's a fine line and you got to ride that line sometimes it is it's really hard I I've been struggling with

this because I like the guy so much in his businesses is great he he was on

Shark Tank in year one okay there you go yeah so he's if you watch the episode

It's called element bars on Shark Tank it's a fantastic episode okay I have to

see if I find it yeah check it up on YouTube um so um industrial uh how many

buildings do you own in the Chicago land area right now we have 20 at the moment

over the years though Daniel we've done 100 Acquisitions in the Chicago area

over a 30 something year per period of time and they're all similar in that

they're mostly single tenant buildings as opposed to multi-tenant yep and they're mostly smaller they're mostly

under 100,000 square feet and in fact our favorite size is 20,000 square

feet is there a reason why you like single tenant over multi-tenant yeah there's about 25

reasons I'll give you the top three all right go ahead number one managing a

Real estate investing and expansion strategies.

single tenant building is easy compared to a multi-tenant because there's one tenant they take care of cutting the

lawn trimming the bushes they take care of all the problems with the driveway

they do repairs on the roof repairs on the walls it's a what's called a net

lease where the tenant pays almost everything not quite everything but almost everything is if they own it so

single tenants great if you've got a Five Tenant building you're battling with each each tenant about who's

responsible for the potholes and you have to build each one on a prata basis for the snow plowing and for the

landscaping and all the other maintenance and then there's sharing of the parking lot and they get into arguments who's who's whose spaces are

there are they anyway who can work work can they Park and so that that's single tenants easier

that's number one number two you probably never heard of this we don't

sell on a cap rate when we sell it's when a building is coming vacant and we

sell to a user which is another manufacturer distributor in the area

that needs a building and very often as crazy as this sounds we sell it to the

next door neighbor because as companies grow yeah it's it's a it's a really it's

called user exit strategy and the idea is let's say let's

say you're manufacturing uh cheesecake okay and you've got big ovens they have what are

called tunnel ovens and you've got these huge uh pieces of equipment where the

when it comes out of the oven the the cheesecakes uh cool off and then they go by conveyor belt into a freezer like a

blast freezer below zero yeah and then you've got all these areas where people

are uh putting um different kinds of toppings like strawberries or chocolate

chips or whatever then you also have all your packaging equipment and you also if

you're in that business have to have a cooled Warehouse you can't make food in a hot sweaty Place excuse me

so sorry it's my uh fact machine ringing so you you you need to huh so what's the

back machine yeah I don't know anymore I still have one sorry about that couldn't resist

when I was a kid there was no such thing as a fax machine we only had Messengers to bring things back and forth so so the

um the way that a guy in the cheesecake business would grow yeah instead of

saying hey I'm in 50,000 feet and I need 100,000 feet you don't want to move that

operation it would cost $20 million to move yep so moving 50,000 feet of of

manufacturing costs Millions so let's say that the building next door comes

available and let's say the buildings are separated by just a parking lot and

you could have an Overhead Door in one building facing the overhead door in the other building and then you could build

a small passageway where there's a roof and walls and forklift trucks and people can

go back and forth between the two buildings then you save the $20 million

of the moving cost by buying the building next door so let's say that the building next door is another 50,000

feet 50,000 feet in our market today would probably sell for5 million $100 a

square foot but if it's the next door neighbor and he's trying not to spend 20

million to move oh you get a premium oh do you get a premium you get a we we

think it's between a 25 and 40% premium wow yeah so instead of being a $100 a

Industrial building benefits and challenges.

foot it could be $140 a foot because in industrial a user building single tenant

building is nothing more than a very large tool for someone's business it's

like a tool it's like a machine without the building you can't make your money

so that that's the reason the second reason that single tenant buildings are so fantastic and there's the third major

reason is because tenants like having their own freestanding building they

don't want to share a wall you know how your kids are on the other side of the wall from where you are at home right now yeah so if there were some noisy

operation next door in a multi-tenant building with just a wall you hear it there's this there's this one industrial

building where they're moving in um a bodybuilding operation industrial buildings have sports uses too sometimes

because it's cheaper than retail for lease this guy's moving his operation in next to a building that we

own and they're separated buildings but he's gonna have what's called techno

music you know these muscle guys they play this bum Bam Bam Bam Bam music it's

like it's like so loud and so annoying if you have your own building you don't

have the neighbor either making a smell or a noise or breaking through the wall and

stealing your stuff so I have a funny story with this uh one of the places I used to go deliver when I was like a

truck driver it was always next to the dog food plant so literally when you drive in that that the industrial park

everywhere smelled like dog food yeah the worst it was the yeah yeah yeah

that's why dog food companies should not be in a multi- building and neither same with Tire comp do you know how bad tires

smell when they're in a warehouse and intire warehouses I've been there I've been there I've done it and if there's a

fire that's another thing if you have a freestanding building and the neighbor has a fire imagine a tire warehouse

catching on fire do you know with that smoke is like it's this black thick terrible smelling smoke that would kill

you if you breathe it for a couple minutes yep so by by having a freestanding building you don't have any

of that risk wow I I love I love your point number two I've never thought

about that but having getting a premium on on freeing buildings in my head I'm always thinking commercial cap rate cap rate cap rate but I mean are you

targeting businesses that have a large operator next door that you can sell to in the future is

that it's so hard to find buildings that we're just lucky to find them no matter who the neighbor is we we get lucky we

we have one building we have a there's a town in called Elmhurst I know right near oare yep and we have uh a number of

buildings in the Elmhurst Industrial Park actually on a street called Industrial dve Drive which is

appropriate and on Industrial Drive we have a building at 706 industrial we own the building next door um as well and

then on the other side of the building is another company that occupies a building and they it's a it's an

industrial type use they have guys who climb up and work on cell towers so you

know when you see those big dishes and those all that equipment and all those crazy things so all that stuff is made

in a warehouse but someone also has to install it so these guys are the installers the repair guys for for cell

tower uh equipment so they're in this building our building is 21,000 fet and

their building is 20,000 feet and they needed to expand so our tenant leaves after 18 years in our building at 718

industrial and we didn't even have a chance to put it on the market we go canvasing door too like I used to when a

building's coming on so I went next door and I said hey the building next door is coming on the market and they said oh

we'd like to buy it and and I said 'well we love Elmhurst and we want to keep it

so you can be a tenant but you can't be a buyer they said well we're going to run our equipment back and forth between

the overhead doors between the two buildings in Chicago there's over 600 buildings that are attached to the building next door wow okay yeah and so

we said we said to the guy you have to lease we will not sell so he's desperate

he signs a lease because he has to be there it's next door yeah the rent didn't even matter so much he would pay

a little extra to be next door and every so often like every few months he sends me an email saying Joel I want to buy

the building next door and I will way way way overpay you ever hear anybody say that

Industrial real estate investing and capital raising.

that's a good sign that's a good sign right there you ever you ever sell a property where the buyer says I'm willing to way way way overpay that's

good that's a good email yeah only only I said it to my partners I said look at this it's like he actually said the

words and our answer was still no you're you're gonna wait we're wait

for a rainy day I'm gon I'm gonna die owning that building that's funny um that's that's a

good story I I love the stories man I think I think uh there's a lot of opportunity in industrial I think it's

I've looked into it and I've I've seen and I've learned a lot of different things I'll get into it eventually but um it's just it's just a fun it's a fun

uh fun story you got fun stories that's good stuff I have so many I could bore the crap out of you with all my stories

about industrial companies um let's kind of pivot into uh Capital raising because as these things

are very expensive um you you've been doing this for a long time because you said when you first started you said you

uh you had a high net worth individuals that were your friends um I'm sure that that kind of helps out a lot but um how

has that transitioned has there been rough and hard times raising capital for these buildings do people you have to like introduce people to the asset class

because they might not even understand industrial yeah yeah exactly it most people know what a multifamily complex

is yeah you drive by them most people know what a retail store a restaurant self- storage office building but industrial

parks are hidden behind stuff you can't you don't usually drive by too many the ones on the tollway are different they

took they would take an Old Farm that some farming family had for 75

years and they'd buy the farm for a fortune and then start building these pre-cast concrete buildings with a

lineup of docks like the kind of used to back into when you were driving and they have offices on both ends so they could

divide it in the middle and least half to one company and half to the other or in quarters or in quarters they don't

like to divide them today they try to lease the whole 500,000 square feet to Amazon or or someone like that yeah

every major company Michaels um crafts they have a giant

Warehouse uh every every company that makes a product or sells a product has a giant Warehouse somewhere and sometimes

many medical supply companies there's a company called Medline that's operated out of Chicago they maybe they have 50

industrial buildings of great size they needed an entire uh real estate

department inside the company just to manage their industrial buildings the problem the ones we work

on are much smaller and the reason they're smaller the big ones are owned by Pension funds and they have unlimited

money really and they'll take a much lower return

my investors won't take a five or six% return they they need to start at seven or

eight um and it has to have some real upside and it can't be tied to a cap rate sale because a cap rate sale

doesn't work if cap rates are going up and right now they're going up yeah fluctuates and if you if you buy at a

low cap rate and sell at a high cap rate you lose a lot of money it's a lot of gross yeah so so my investors are do you

I'm gonna ask you a question question do you know how much money the 1centers have as a net worth because I have all

these facts and figures um I would say the 1centers

probably have one to 10 one to five children okay so the one percenters I'm

not talking about in in total I'm talking about each person 11 million as a person or as a family okay it it is in

the it is in the trillions you are correct absolutely there's the 1centers have far more money than than the lowest

50% which that's a whole political discussion yeah but if you are a person

Investment strategies for high net worth individuals.

with 11 million or more of that worth that includes billionaires that includes people with hundreds of millions but all

you need is 11 million to be in the 1% and then the 2% is

about six million to 11 million and the 3% the top 3% richest people are

somewhere between 4 million and six million okay

okay those type of people who I know you are looking for for your syndication for your fund right you're doing a $25

million fund the people who are able to put a million dollars in have to be in the top

1% you can't talk to anybody if you're if you're minimum is a million if

they're not in the top 1% they don't qualify for your fund correct unless you're to lower your minimum which I I

think I'm guessing you would right for someone someone says I want to put in 250 you wouldn't turn them down special

cases yeah yeah so the people that that invest with me are in the top three%

they have anywhere between let's say three million net worth up to

unlimited and my minimum is 25,000 and the reason that we have a

25,000 minimum is because even the richest people are smart enough to know that diversification is a good idea so

if I bring them 10 deals in two years if I buy five deals a year and we do them deal by deal we don't have a fund yeah

and they want to put in 25,000 per deal in 10 deals that's

250,000 if someone's got a $3 million net worth you know that's 9% of their net worth I don't think anyone should

invest more than 3% of their net worth in any one deal ever because it's too

risky it's just a theory of diversification so

the people that invest with me generally average 100,000 per deal per deal yeah

but I have a bunch of 25s and 50s and 75,000 investors per deal and then I've got a bunch of people who are 250 300

500 and a million we don't have too many people higher than a million because our deals are3 million

to5 million and if I had someone that wanted to put in three million they would own 60% of the deal yeah so it's

it's a balancing act if I did a fund I could raise a lot more from wealthier

people at higher numbers but we don't do a fund okay how long you been running that

syndication model since 1989 wow I was born in 92 by the way so

when you were three years old I was doing about my eighth deal negative three right

you know how you get rich I'll tell you how you get rich how do you get rich tell me Joel you live you live long

enough I I've got my investors that invest with me in the big numbers are

old nobody I don't have too many people who are in their 30s in even 40s

certainly not in their 20s who invest large amounts with us because they haven't made their Fortune unless their

parents died and they were rich and they they inherited money um I I I love that you say that

because I think time a lot of people they they put too much much pressure on themselves to become rich when they're young but really an amplification of

time gets you there yeah it it it does and it's being Frugal as as opposed to

being a big shot you don't you don't need a fancy car when you don't have money because that's stupid you know

that's ego right and you don't need a fancy house when you don't have money that's ego so the people that

that invest with me generally speaking are like the million Millionaire Next

Door people from the book you wouldn't know how wealthy they are based on the way that they live generally because now

some of them have their own airplanes and some of them have uh houses in multiple cities you know south of France

um Bahamas whatever Hawaii but for the most part people who are in the top 1%

but don't have hundreds of millions they don't want to run out of money and you can outlive your money if

your lifestyle is too too high yep and and I'll tell you one more thing

the other way to get rich is to not be a gambler you can get rich young by being

a gambler and taking a lot of high risk high-risk High reward but in high-risk High reward deals you're going to lose

your money most of the time in those kind of deals most of them don't work so the key to in my opinion to

wealth to great wealth is to be careful not be an overs spender build great business have consistent income coming

in from your business and eventually maybe sell the business for a fortune and now you have like a big nest egg

like 200 million or whatever but those people have worked very very hard and many of them who sell their businesses

are the children and grandchildren of the founders yeah um can you give a tip to H how do

you how do you find these highet worth people um as far as like where where do they hang out do they go to the country

club do they go to Cigar Bar everywhere there they're people who go everywhere that you don't know who

they are because on their forehead it doesn't say 80 million net worth so you can't really tell so they're they're

they're at restaurants they're on vacations uh they're at the grocery

store do you know the best place to meet wealthy investors is in grocery store in a wealthy

neighborhood that's the best place or how about at the cleaners picking up your your Dy cleaning my

partner was a guy named l savage you ever hear of the TV show Boy Meets World yes I've heard of it okay there's

another show called The Wonder Years my partner Lou Savage was the father of the stars of those two shows and he was from

Chicago he lived in Glenco they had to move to LA because his kids were on TV so now they're in now they're in Los

Angeles and unfortunately he has passed away but the kids are still alive and the mother is Lou used to tell me that

he met most of his good clients picking up dry cleaning at the cleaners in his

neighborhood because you'd be standing there waiting for them to like sort the pants and the shirts and all that and

while you're waiting for someone who's sorting you talk to the person you say hey how you doing good well you got a

lot of uh lot of pants there yeah yeah I I love uh Levis or you know I love the

Mugsy brand or whatever oh wow what do you do oh yeah well I have a company I

manufacture you know those those uh mats that go underne the chair at people's desks yep company that makes

those that's me and so now you know that he's got a lot of pants and he owns a company that makes floor mats for the

desk chairs and so then Lou would say to him uh so where are you located oh I'm

an elro Village over narrow here oh cool I'm an industrial real estate broker I I help people move their companies H what

street are you on oh I'm on Morse Avenue 101 Morse oh you know what I own the

building across the street from you oh that's cool Lou wow yeah I have the building at 1050 Morse so Hey listen

here's my card uh do can I give me your number I'll give you a call oh sure Lou

here put it in your phone so now Lou knows this guy Robert that he never met

before that he met at the dry cleaners and he goes and he sees the guy at his place takes a tour and sees how they

make the floor mats and then says Hey listen I'm buying a building about two

blocks from here and I'm looking for investors you want to take a look at the uh at the private placement memorandum

yeah look at it there you go dry cleaner make make makes it sound too

hard I think this is a I I like that question because I think um it's it's a

very old school way of doing things going to the dry cleaner which is

good I like I like the old school way to do things I think it's tried and true but times have changed you still got the

fax machine do you still fax people with ppms no no no no no no I don't use the

fax machine you know a lot of uh doctors still use fax machines yes so when I get

medical reports from the hospital of the doctor some of these they're like dinosaurs they still only send them by

fa so I have this just so that I can get medical reports that's funny I remember when I

started my trucking company I had I had to have a fax number because Trucking is Antiquated too so I actually set up a

digital fax number where anybody that fax something in I would get in my email oh that's brilliant that's a brilliant

idea so tell me about your $25 million fund so uh we are raising $25 million

for land acquisition we buy and seller finance land to individuals so we take a

um un um a large large acreage that people can't buy and we break it down

and sell it back to the individual people again because it's too large to for so we subdivide and sell and sell

our finance is our model so looking to buy and create uh and usually when we

break it down it's just like the wholesale model you create you buy and book and you separate it down we we can usually sell it for two to three ex of

value once we break it down into smaller sizes oh that's great so do you have to get entitlements like you have to get uh

approvals from the municipalities to subdivide sometimes in Texas Texas has

an amazing rule where it's 10 acres or more you don't have to go through the municipalities so we actually did our quickest subdivide in under 30 days days

so we're trying to move uh Capital faster so uh we're doing a lot we're doing smaller stuff too but it really depends uh we're trying to we've done a

couple smaller deals were like under 20 acres and subdivide down to one acre lat or smaller but our bread and butter is

like larger acreage 350 Acres break it down into 15 to 20 lots and then we'll sell them off so they're fin so so do do

you have to put in the roads no uh we're hunting for properties that have a lot of Frontage so we cut off the road so

we're not actually putting it in any infrastructure I see and then no water no sour um water sometimes we have to

put in a water line depends how close we are to the city or if we're in rural areas sometimes we have to put in a well

and we can actually do a shared well using a MUD district in Texas yeah and that's how we create uh water and then

septic is anything over three4 of an acre so as long as we have electric which electric is everywhere we can get

water access and they can put a septic tank they're good to go sounds like a great model it's if you don't have to do

the infrastructure and you don't need to go through the municipalities it takes every problem

that would make you like not sleep well at night off the table it's really smart I I I love it too because it's um the a

lot of a lot of uh like developers they take on all this inherent risk when they take on building infrastructure and

infrastructure when you go to County spec you got to put roads sidewalks curbs fire all that stuff and usually

we're at what we're doing we don't have to deal with that stuff so it's us skirting the rules and knowing the law

in that state or County to do you do you have anything right now that you're currently dividing a lot of things a lot

of things we have like 12 million under contract right now what what what cities are they near they're all they're all in

Texas um we have stuff from uh the the main area we have do a lot of stuff in like Dallas the triangle Dallas Houston

to San Antonio and Austin of course and then we'll do stuff in the middle so as us as our given area we did a 350 acre

deal outside of Dallas and Greenville Texas we have stuff we have a lot of stuff in San Antonio because that's our

partners based out of so we do a lot of stuff around San Antonio but we'll go anywhere in Texas so my son-in-law is

from San Antonio oh yeah and he thinks he knows everything about barbecue you know barbecue is a big deal

right in Texas so he says you know here in Chicago where he now lives uh with

with our daughter he says you know Chicago area doesn't really understand good barbecue but I will tell you that

there is a restaurant here called Smoke okay and he has been there and he says

that may be as good as anything in Texas and I'm going there tomorrow to buy food

for Thanksgiving you know as we're talking it's just before Thanksgiving so it's November and I'm gonna go there and I'm

GNA just get tons of food for a big group that we're having Thanksgiving with at smoke it's the greatest place

that's uh sounds like a plan um I think it's I I love Chicago Chicago has good

food and this is where like I Chicago food is is a crazy place but there's always good food in every specialty like

if you're German Jewish Chinese it doesn't even matter like Arab it's the

best oh yeah we have Mediterranean food every culture we have Hispanic food from

every culture and yeah I mean there's there's so many great restaurants so many like

hundreds and hundreds of great restaurants Chicago is an incredible city um so let me ask you if you don't

mind another question about your model hit so you think that you're GNA have a

million dollar minimum for the fund I think I don't know this is my first time doing it um we're kind of fa failing

forward and figuring it out but um yeah we're gon we're try and do that where where will you get those investors from

generally um at first we're trying to pull a list and do some type of marketing um we do have people that are

already interested at that price point and then we might do ads um to Target them directly using some type of

Facebook Google or both ads yeah you'll have to let me know if that works I don't know if it works it may uh we did

some marketing to find new investors because our group of investors is large we have 250 investors but from time to

time if we do a new deal not every one of them will go into every deal so in fact probably 80% won't go into our next

deal we don't know which 20% will go into the next deal so if it's 20% of 250

investors that's like 50 investors for any given deal so if we're raising at an

average of 100,000 if we're raising 8 million I need 80 investors which is 30

more than the 50 that I've got on average which still means you need to get like a 100 more to fill up that 20%

so I need to get I need to get more well it depends if if they're at 50,000 or 25,000 it takes a long time but what we

do is we we hire marketing firms to help us put our name out there to investors

and it it doesn't work that well the cleaners is a better place to meet a new investor the grocery store or a referral

from an existing investor we get a lot of people who's who have a family like two cousins and then a sister and then

an uncle and it seems to multiply by referral that way but you can't count on

that so we do a little bit of advertising one of the things that I find is the most

effective is um being on a podcast like this and

then the audience of the podcaster is a different group than my group and maybe

one person might call or email us on the website from hearing me on a podcast and

usually because they get to know us much better listening for a half hour or 45 minutes it's it's like you're you're

it's a warm call when they call they already know my story they already know My Philosophy they know that I'm friends with Danel I mean all those things and

that's good but we we did a bunch of emails and we sent a million emails okay

o over we hired a company to do that two investors joined us out of a million

emails wow that's not too good um and I'm really glad you said

podcasting um that's one of it wasn't necessarily the main reason why I started podcasting as a whole but it was one of the benefits I've been seeing in

the background happen and after the fact is that we'll get investors come through

the fact come through the door knock on the door in some way shape or form um one thing I'll say to this is maybe starting your own podcasts targeting

them directly and then you can run ads to the podcast because one thing I I've known with um High net worth individuals

they want they want to find you online yeah and they want and a lot of times especially if you're asking for a big

ass they're looking for they want to know you they want to get to know you without necess having a conversation so yeah the podcast gives you the ability

of amplification of your time and ability because we're having we've been on here 45 minutes right as of since we

started but this 45 minutes can be replayed thousands of times with thousands exactly it lives on the internet forever yes exactly so you get

the multiplication amplification of that so that's a big benefit um this is one

thing May haven't thought of is run ads to your podcast itself or your podcast

episode yeah I I've been on a bunch of podcasts as a guest I don't have my own podcast I don't believe I ever will I

don't have the um I don't have the desire to do that but as a podcast guest

I say to the people who are the hosts you should definitely run an ad I know you do I've seen your ads for the CRM

yeah I think you you guys are doing a great job of advertising on your own podcast and when you have guests and

they send it to their audience they get to see your commercial I think that's brilliant of you and I will tell you

that um most people don't do that some do but most don't and I give you tons of

credit for being quite a genius in marketing for doing that I really give you a lot of credit for that well the

other thing is uh I learned this just been watching people online is that you can have sponsors where you bring in

sponsors but you get the best amplifcation when you're the sponsor so respons well I again I I'm not gonna do

my own podcast I I would rather be on a hundred podcasts as a guest and not have to produce anything yeah and I'm sure it

would pay it would pay out beautifully it would have lots of benefits to have my own podcast but I'm just not going to

do it I'm 64 I'm Gonna Leave it to you young guys to be the host I'll just be a guest I I understand I understand I

think When I'm 64 I think I'll be a definitely different person and I'll be a little bit more relaxed

and right now right now right now I got time I got time to build up and grow so I'm like how many kids three see you're

a busy guy you three kids a business a podcast I mean you are in that time of

life where everything's going on I'm in the time of life where I have time to think about things and relax and go on

vacations and go to Florida go to Florida I went to Panama uh this year with my wife it was one of the greatest

trips we ever had that Panama Canal is really amazing in the history of it I

have a book um it was written about the the disaster

that happened when the French tried to build the canal and people were dying of

all kinds of of diseases because yeah the insects and and the Americans came

in and had a different way of doing it and figured out a way to kill the insects so that people wouldn't die of the diseases but when you see those

giant ships going through there and how they connect the uh Atlantic to the Pacific it's it's fascinating and that's

all part of the supply chain which is what you and I are talking about for industrial products that are in

industrial buildings here in in the states in Canada and Mexico they all come from China Vietnam India and it's

an amazing thing they Stack Up thousands of those containers you know 16 wide by

20 high and they just float across the ocean and bring them to the ports here

and then they they put them on Railroad by the way Chicago is great because the railroads all converge through the

middle of the country which is US yep so do all the trucking lines all the all the major tollways so Chicago is amazing

because it's the Hub I used to I used to get stuck in a

train every day and if you're not from Chicago you don't know what I'm talking about yeah

there's railroad crossings and you sit there for for 10 minutes waiting for the 160 cars to pass 160 rail cars used to

count them like if it has two engines it's 130 to 160 it's 160s yeah you have

to find an alternate route when you get stuck there you have to do a turn and go a different way oh people don't understand people

don't understand if you're not from Chicago I used the funny thing is those uh a railroad crossing that had two

tracks it was literally uh two blocks away from my house so I was always dealing with trains my whole life those

was the worst yeah yeah they're good for industry but bad for people yeah um what

is a quote that is yours or somebody else's that you resonate with what's a what a quote Oh a quote um showing up is

90% of getting something done showing up so many people think

about doing something and they just don't do it you just have to go going to the cleaners going sending out the

emails making the calls being on podcasts you know you got to be a doer and so showing up is 90% of getting

something done I always equate this to the a lot of people want to become successful but they don't even walk out

the front door to become successful yeah it's they're in the dream world yeah

I'll make it there all right yeah dream dream world without without action is

not a thing that results in any success yeah that's a good quote I like that one

uh working people find you online I got Brit properties.com if they want to invest with you uh anywhere else and

where can they find all your podcasts all one spot um they're all you can get them all on Brit properties okay there

you go.com and it's one t in brit a lot of people can't get to us because they try to make Brit into two two two T's

but um yeah we've got a lot of the podcasts on on there and then on the internet of course my name Joel

freedland YouTube and then I don't know I've got maybe 50 that I've done this

year and they're all pretty similar I'm kind of getting sick of the same thing

in everyone this was better was this different yeah this was different this was better it was better it was better

not I don't want to say it's better because that's not fair to everybody who did a great job it's better for me that

I'm not saying exactly the same thing again I I have a mentor who's been my

mentor for 42 years and he watches all of these because I send them all his name is Steve padowski and he sent me an

email the other day he said you know what he said I didn't like the last one

I said why not he said well you didn't mention my name I said I'll mention his name how

you doing Steve there you go Steve Bowski the man is the best industrial real estate thinker of anybody I've ever

come across but he also said I didn't like it because you kept doing the same thing you always do change it up man so

Daniel changed it up this was really much better better for me not better

again Whit know we got all these we got all

these really great ones you know Chad grii we got all these great guys who who've done wonderful podcasts but but I

need to figure out how to do something different that's going to be a little more interesting informative and entertaining than the

prior ones well I'm happy to help contribute my thank you my own little way thank you

shout out to Steve thanks for watching thanks for tuning in nice to meet

you everybody here go like share subscribe thank you Joel for coming on uh thanks for sharing some knowledge I I

learned a lot I learned a lot so I'm excited hopefully I listen a lot too I learned a lot too I really think

your idea of going for the high uh minimum is is pretty brilliant as

well because you don't have to it's not as much work but you also will get to

your goal if you're successful at it if you were going in 50s and 100s you'd have to work for years to get to 25

million so I think that's very thoughtful and I'm encouraged that

you're going to try it and I think you'll succeed um I think ambition a lot of

people I go by this motto is that you you got a dream bigger than what you think you can accomplish so I just shoot

for the moon and I'll get close enough I love it I think that's great I shoot for the moon get close enough for everybody

here go like share subscribe share with a friend we'll see you in the next episode go check out Brit properties.com with ont we'll see you in the next

episode thanks for tuning in bye guys if you would like to receive hot leads right to your cell phone in a text

message check out Hive leads. and you can receive the same leads we've been receiving in our campaign for three and a half years it's made us successful in

the land game check us out

Ep 450: Sustainable Success: Building a Reliable ROI in Industrial Real Estate With Joel Friedland

Daniel Esteban Martinez

Joel Friedland