Joel Friedland's Journey Through Trials and Triumphs in Industrial Spaces

One of them is the gentleman I'm interviewing today . So I just appreciate all of you . I always ask for likes , subscriptions , reviews , five stars , of course . Keep following , keep making the Dwanderful universe get bigger and bigger , because you're just really doing a great job helping me build my little slice of the pie .

So this is the most Dwan-der-ful real estate podcast ever . My name is Dwan Bent Twyford , I'm your host , I'm America's most sought after real estate investor , and our motto at Dwan-derful is people before profits . So if that resonates with you , you're at the right place at the right time .

I'm your girl and today we have Joel Friedland , and he is our wicked smart guy today . So how are you , Mr Joel ?

So you are the first , like the superstar , the first one to open up this topic . But what I like to do first is have you just tell us in a quick summary who you are , what you do , how we get a hold of you in your own words , and then we'll go back and find out how you came to be .

We've got the US Postal Service , we have AT&T , we've got Instacart and then we've got a little company that started doing testing for COVID , and when COVID became less of a health crisis over the past year they weren't so busy and they got in financial trouble and they haven't paid rent in a few months .

But industrial buildings are occupied by many kinds of companies , including laboratories that would fall into the category of industrial . I started in 1981 working for a family that owned 84 industrial buildings ?

Okay , so now two things we're going to talk about is that you talk about trauma mistakes that people have made in their investing , and also I have not interviewed anyone that does industrial real estate . So I love that because I mean anything can be in like a , anything can be in an industrial building .

You know anyone who stores something in a warehouse ?

There was one that has three buildings that are side-by-side , attached with a storage unit and a parking lot , so it's five parcels , but the middle one they used to work on , I think , like really big , like semis and big trucks like that , because the ceiling is crazy high and the people that left it there's all these cranes and all these things and that come

down from the ceiling , I think , to lift engines and things and they left all of it there . They just left everything that's like and it's bad . That means you have to clean it out I know I was like , oh my god , look at all this . We need to have an auction here . There's so much stuff in this building , but it's like a big , giant building .

I would have thought the people owned it , and maybe they did , and that's how we ended up with it or rented it . But everyone's like , oh , I want to rent your building . It's like really .

The only people that own real estate are wealthy people , because they have so much money that they say , well , rather than renting , since I have so much money , I'm going to buy my own building and rent it to myself . But usually companies don't own the building .

It's owned by the family that owns the business , and then they make money by owning the real estate .

It's like so they have to go down , to like the block away where there's a big parking lot . But if people are like , oh , I have to walk two blocks , it's too far , it's like , oh my God , just go for the walk , I know .

So the employees have to come , and if it's raining or snowing they have to come in , doesn't matter .

I've interviewed people that help people through , you know , traumas childhood traumas , divorces and etc . But I have also seen many people myself personally like , oh , I bought a house , or I rehabbed a house , or I bought a building , or someone ripped me off , or it didn't work out , I lost my life savings and they just quit . They're like I'm done forever .

I say , well , don't be done forever , like you can recuperate from that .

And I've had situations where it's been devastatingly bad and I have investors . I'm a syndicator , so I have a couple hundred investors and it's very public . When you have a bad deal and you've got 50 or a hundred investors with you who each put in 50 or a hundred thousand dollars , and now you have to tell them what's happening . You can't hide it .

If it's your own deal or you've got one investor , nobody needs to know , but when you're a syndicator , you have to . By what are known as the securities laws , the SEC , the Securities and Exchange Commission , requires that you disclose your track record to people who might want to invest . So I've had a very difficult eight days .

The last eight days for me have been maybe the toughest eight days I've had in five years , because , yep , yep , and I'll tell you why it's been reliving trauma and I'll tell you what happened . You why it's been reliving trauma and I'll tell you what happened .

Over the last 35 years , I bought about 100 buildings with investors , and in 2008 , I had about 50 buildings with hundreds of investors , and when the global financial crisis started in 2008 and 2009, . The global financial crisis started in 2008 and 2009, .

Some of our buildings had some financial problems , such as tenants that went out of business or tenants that moved out , and then the buildings were vacant and we couldn't fill them up because nobody was moving , because companies were just , you know , they were white knuckling it just to stay in business .

Nobody was looking to spend the money to move to a new building . So I've had this really difficult thing in the back of my mind , which is I have to disclose my losses to people . But how do you do it ? So my lawyer , who's in Philadelphia , said you need to give people a list of your deals .

So I put together a list and the list said I've had 99 deals and I listed how many were really great deals and how many were good deals and how many were okay deals , and then the last line was how many deals where we lost money and , by the way , lost some or all of our money on a deal which can happen .

So I had this little chart and the investors who I know say oh yeah , it's really terrible that you lost money on those deals 10 out of a hundred deals . We've lost money . And a very large investor came to me a couple of weeks ago and he said I want to see the nature of your losses , I want to see what you lost money on and why .

And I had to make a decision as to whether I was going to come up with a list of every deal that I've ever done and explain the good ones and the bad ones , and I decided to do it .

And when I went through those things back in 08 , through the aftermath of the crisis , which was all the way really through 2016 , struggling to keep buildings from going back to a lender , just really working hard , really working hard to make it right .

So for the last eight days I've had to relive the specifics of all those terrible things that happened and I made a list of what went wrong and then I explained it in a paragraph . Here's what went wrong and it's really interesting . It's like I don't know if you're familiar with the 12 steps of recovery for people who have addictions .

I don't know as well , but I'm familiar with it really admitting that there's a problem , admitting that you're a gambler or you're an alcoholic or a drug addict or a food addict or a sex addict or whatever you might be . And step one is writing up all the things that brought you to a 12-step program to try to recover .

And more or less my list was 10 things that brought me to the place that I was , where I felt that some of my deals were too risky and , by the way , risk sometimes goes with the word bet or goes with the word gamble stumble .

So I had to sort of admit to myself that I took more risk than I might have when I was younger and had these deals that went bad . And then just I said to my wife I'm just so depressed , I'm looking at all these things that happened 15 years ago .

But it's coming back because I'm making the list , you know , and it was really really hard , it was really difficult , but I finished it

. I finished it last night , oh yeah , and yeah , yeah , hang on , it's in my garbage , can hang on one yeah , no , and thank you for sharing something like a personal story like that .

So I have pages and pages of the good deals and the bad deals and I had to relive all these bad deals and it was so hard , it was so difficult . Yeah , so you're my first person I'm talking to after coming out of my deep hole of reliving trauma , and I'm so glad to see you because we're talking positive things .

But people need to know that when you take a risk , you can lose , and when you lose , it's okay to mourn your loss and to feel bad about it .

But now we just had our 22nd anniversary and I told him at this point , after being my third husband , I said listen , we're going to go till death . Do us part and don't make me call in that clause early , because I'm not getting divorced and I got a back on 10 acres . Man , don't make me call that in .

And you're exposed to the public and you do have to mourn that . I think people don't give enough credit to like the grieving process of yeah well .

And you know what I do . That's really different than anybody . I do all cash deals with no mortgages most of the time , because the one thing that the deals had in common that we lost money on is they had 65 to 80% loan to value debt .

And I would say , of the 4,000 syndicators who have portfolios of over $50 million worth of property I've done a little study , I think it's 4,000 of us I'm probably the only one who does no debt deals and a lot of people think I'm an idiot . They say well , you make money in real estate because of the leverage . And my answer is you know what ?

I learned some lessons from a lot of leverage , and my investors and I are risk averse . And there are people who are like that who say you know what ? I'd rather make a 12% return with no debt than try to shoot for a 20% return with debt where I can incur a loss if things go bad .

And right now a lot of people are struggling because they had floating rate debt and they're going to lose the properties and give them back to the lender or sell for a loss . I'm not in that position , luckily , because my deals have no debt . But boy , this trauma of looking at the ones that were trouble .

It's like enough to scare the crap out of you from doing more risky deals . And you can do more risky deals for a different reason than I can . Industrial buildings are large and they're freestanding and they're single tenant and they're either 100 percent vacant or 100 percent leased .

So in my world it almost forces me , if I don't want to take risk , to avoid the debt , the debt . But you can do it , because if you buy a half a million dollar retail building or an apartment building or a home or whatever , you can put debt on it , because if one deal goes bad , you can cover the payments .

But on a deal like mine , where it's a $10 million property , I can't cover that . If it goes bad , the bank's going to want to get paid . Banks have no sense of humor .

You know it's true Like there's always some risk in anything but in real estate especially . You know , one of the things I preach to my students is I say buy all your rentals and pay cash for them , so if there's ever a giant crash in the market , you don't lose all your stuff in one big swoop .

And everybody else that teaches is like leverage your rentals , use that money to buy more stuff and buy more stuff is like leverage your rentals , use that money to buy more stuff and buy more stuff and buy my yeah . But if you keep buying more stuff and then , like covid , some giant thing comes along , you lose all of your shit in one big giant shot .

So I I am that person that constantly preaches pay like , if you want to wholesale , wholesale four or five deals and then pay cash for a rental or cash for a building , pay cash for stuff so you don't ever get stuck .

And I've been , and that's because in the beginning I lost some rentals and it was like , oh well , that wasn't very smart , I haven't all myself leveraged up to the eyeballs , and so I learned , you know , and now it's like I try not to have debt on anything . If I , if I can and if I do , it's very .

But I'm totally against mortgaging everything to borrow more money to buy more stuff .

And then people you know , then the big crash came and I mean I know people that lost hundreds of millions , 50 , 100 million dollars , people that owned you know three or four hundred rentals and just like got completely wiped out . It's like , oh , my God , yeah .

They're probably today were double what we sold them for in 2012 . And if I just had the staying power , we would have done great . But when you're under pressure to pay the bank and pay the taxes and the insurance and the maintenance and the utilities , it makes it very difficult if a bunch of bad ones happen all at once .

And that's what's happening to people today with these damn floating rates where they didn't realize that 4% interest rates on loans wasn't normal . It was abnormal . Normal is probably 7% loans . You look back on the average for the last 50 years , there were just 11 years , 12 years where it was that low and when I got in the business , interest rates were 10% .

There's 90 good , there's 10 bad , and you worked yourself through that . What is the next step that someone would take to be like okay , I went through it Just like you showed us , these are my deals , here's my thing I still want to say in business . I still want to keep moving forward , Like what is your next step going to be ?

And then , if the answer is yes , what's your line in the sand that makes you feel safe and that makes you feel like you're using good judgment ? I think that good judgment

or common sense is extremely uncommon . Most people do things . I think it is too .

That's not a life-changing decision . If it was a mistake , it's not . How can it even be a mistake ? It's usually the right thing . Small decisions that are impulsive are okay , but the thing is , impulsive decisions can kill you . They can really kill you . They literally .

It's a serious thing and it's whatever decision that somebody makes that is against their physical or mental health and their future and their family's well-being it's very easy to make those decisions on the fly and not realize it .

It's very easy to make those decisions on the fly and not realize it , and so my main focus really is to make really good decisions . And I have a tool you want to hear my tool . It's the word W-A-I-T , which stands for why am I talking ? You know , because sometimes we say things and we say , uh-oh , I just put my foot in my mouth .

Why did I say that Sometimes the better part of judgment is to listen and be quiet ? So W-A-I-T . Why am I talking ? I use that a lot with my wife and my kids .

You know , I'm I used to be really insanely destructively impulsive , and now I'm older and wiser and it's like , okay , now I'm just gonna wait , I'm gonna just think about I used to be really insanely destructively impulsive and now I'm older and wiser and it's like , okay , now I'm just going to wait , I'm going to just think about something I'm going to , you

know , but like that , like , oh , let's go to Florida , yeah , I don't need to think about that , let's go . How fast can we get to the airport ? But yeah , I think , why am I talking is a really good thing for people in all the areas of your life . Another way to interpret WAIT .

Wait also stands for in journaling what am I thinking Like really thinking through , what is it that exactly I'm trying to accomplish , and is it helpful or is it hurtful and am I hurting somebody or myself or am I going down the wrong path ? So what am I thinking is really important too . So the W-A-I-T is really important too , and that's that .

So the WAIT is a tool for me for those two avenues . And getting back to what do you do to restart after a loss ? I think it's study what you did wrong and try not to do it again .

After the second date I was like , okay , maybe like a little , a little too quick , maybe this time I'll just like date and kind of wait , you know , test the waters , and then now , 20 years later , not being so impulsive ended up being a good thing for me . In that arena there's a lot of luck involved in making decisions too .

And sometimes in marriage you get in with someone you know who's an abuser and you didn't know it . They were charming and you got married and boom , they're verbally or physically abusive and you didn't see it coming .

He's got four million people watch his podcast about how people think he's a professor at Stanford . You know , dopamine makes you feel good when you're depressed or feeling crappy . Doing something impulsive that's really fun takes away the crappy feeling .

If we went at 90% of everything that we touch our finger to , I think that's way high on the chart of success .

And what we make the mistake as entrepreneurs is we keep building and building and building and building somewhat impulsively , and a mistake can happen and it can topple the entire empire .

You have to have a higher risk factor than the person that works at a factory for 30 years and gets their paycheck and their retirement . You obviously have to have a higher risk factor , otherwise we would all be entrepreneurs . But I think at some point as an entrepreneur you do have to .

And I think that's about like a decade ago I was kind of like you know you do have to . And I think that's about like a decade ago I was kind of like you know , we've done this , we built this , we own all this . Like does it stop or do you level off , or do you you know ? And then we started buying those towns in Clinton , Iowa .

It's like let's just work on this town . Let's spend like five years and let's work on this town and kind of see where do we want to go , you know , next after we do that . So we're sort of like we're in a building working , but like kind of whole , like let's just work on this town for a while . We're both 65 .

This will be a fun project till we're 70 , and then we'll see .

There's an old saying I'd rather do one thing 10,000 times to be successful than do 10,000 things once , and you know who that really applies to Doctors . If you need surgery , if you have kidney cancer as an example , my mother had kidney cancer and two months ago ago she got diagnosed . Who do you pick to do the surgery ?

You pick the kidney surgery doctor that's 40 or older , who's done about 500 of them a year . For the last 10 years he's done 5,000 kidney surgeries For the last 10 years he's done 5,000 kidney surgeries . Yeah , that's who you trust . You trust someone with a laser focus , and they're going to be the ones who are sought after .

So , in my case , I do nothing but industrial , nothing but Chicago area , because it's a giant industrial market where money can be made and where the cap rates , by the way , are much better than on the East Coast and the West Coast , where cap rates are in the sixes and in Chicago it's about eight , which is really important .

But it's a laser focus , with a laser focus on avoiding debt . And so you know , I do one thing I'm like the kidney guy , and you are too by doing Clinton . One thing I'm like the kidney guy , and

you are too by doing Clinton your commitment is to Clinton to do lots of things in one place .

Someone referred me to him and somehow someone else canceled . I got a spot earlier and I was like done and he's like oh yeah , I do like 250 a year minimum . I was like that's my guy and he's like 50 .

If you're testing the waters , I am not your girl , um , but but in , in our little town it's a little , it's uh , so it's a fairly big town itself . I should know how many people are in the town , but I don't often .

But the downtown is like three blocks this way and three blocks it's a little nine block area and it's right on the river and they're doing like this city re-beautification and we're like , oh , you know , built from there , we go there to visit family .

And I was like this little day and I used to always keep saying , like the last decade , this little town just needs some love . And then we made a phone call . We saw a building for sale . Then we bought a building . It was like , oh , we're in this little downtown partnership . We bought another building , another building .

Then we started to realize , anytime they want to do like a music festival or they want to do anything , everybody's got to vote . You own to do like a music festival or you want to do anything , everybody's got to vote . You own a building , you get a vote . So we're like , hey , let's do christmas in july and they go . We tried that eight years ago .

It didn't work and they voted us down . I was like , okay , let's do , uh , winter festival . Oh , we tried that , you know , six years ago . It didn't work and I kept getting voted down . I'm like listen , I watch hallmark movies all day . I know , when there's Winterfest , februaryfest , marchfest , st Patrick's Day , like everything needs to have an event .

That's how you get people to come back to an old downtown . So finally I go to the girl that's in charge and said listen , how much property do I need to own to control the vote ? She's like well , you need this many more , which is how we ended up with 26 .

It's like okay , now when we vote , we're like , yes , we're in and everyone's like all right because we've have you ?

There's a bar where everybody goes to have their drinks and their meals and it's beautiful scenery . It's one of my favorite shows that I've ever seen . It reminds me of your Clinton story .

Well , it's 26 parcels high at this point . So but you just , maybe you'll become the mayor . That's what I always tell Bill you can become the mayor , you should be the mayor . I don't want to be the mayor . I'm like , oh my God , it'd be so much fun just for like a year or two . Just be the mayor .

But the next one is what is the biggest goal that you have right now in front of you , joel , your biggest goal , and how can we at DeWonderful , how can we help you reach that goal ?

We have about 70 regular investors who go into almost all of our deals and I'm hoping to add a few investors every couple months that we don't know , because if we do buy four buildings , let's say for 3 million each , it's $12 million , and if people are putting in 25 , 50 , $100,000 , it takes a lot of people to fill up each one with the investor group .

So that's the main goal and the secondary , but maybe even more important , is we go door-to-door , knocking on doors of industrial buildings to ask the companies inside , to ask the owners of the companies if they would consider selling . That's how we find our deals .

Okay , so we're going to switch to complete topics here . Tell me your favorite band of all time Earth .

And a few minutes later I was like , okay , I know all this music and I didn't realize it was at Earth Wind , fire . I was like , oh my God , and it was so great , yeah , they're great , and what's your favorite ? food .

Except then when we leave , you know they have that , they put the grease on and they put the big fire up and all that .

So I took dwonderful and I made a new word , so dwonderfulcom and I'm the same on TikTok , instagram , facebook , youtube , everything at DwanDerful . And I always ask you to do me a favor .

If you had fun today , if you learned , if you listened , if you just , you know , joel really like seriously shared his heart with us today , which was I appreciate that so much about you for doing that . It's really awesome . Uh , I just want you to subscribe and , uh , hit the little button so you are notified every time a new show comes up .

If you want to watch this , because I mean , like , look how fun we are , they need to see us and watch us and not just listen . So if you want to watch us , you go over to my YouTube channel and it's in the show notes Wonderful Real Estate and watch the show today . Joel's awesome . You know , I'm always awesome and we're fun to watch .

So , some people I always encourage people because you know , for me personally , joel , I've had to just sit down and watch people do a podcast because I like to watch and I see people interact and I know people like they listen when they're running and jogging and they're doing whatever .

But if I'm exercising or doing things like that , I do everything in silence , like I think and I get in my head and I do everything . I drive in silence and it's and everyone's like you know , you drove a four-hour drive and you listen to me . Me , I was like no , I just rode in silence . I'm just I'm thinking . I got stuff going on .

I'm thinking through it . That's how I process all my stuff , and so when I want to watch shows , I like to sit down and watch them on YouTube , because I like to see the people and see the face of the person , that I'm hearing their voice . I like to match the face with the voice .

So if you want to see us , we're on the YouTube and also on my website , dwanefulcom . If you opt in over there , I've got a couple free gifts for you , so stay involved . Okay , last thing of the day , joel , last thing , I want you to give us a parting word of wisdom , but only a single word , one actual word .

It's already there and I feel like you'd be great guiding people through the industrial side of things . I want to see some of your buildings . They sound great yeah , they're really .