DJE Texas (00:02.414)
Welcome to the DJ podcast where you will learn about real estate investing from real life examples. Here's your host, Devon Elder.

DJE Texas (00:16.622)
Hello, welcome to the show. My guest today is Joel Friedland. He's the principal of Brit Properties. He's been in real estate for over 40 years as an industrial broker, investor, and syndicator. They currently have 19 properties in the Chicago area with 250 investors in these projects. Really enjoyed my conversation with Joel. He's been through four downturns. So we talk about.

spent some time on his worst, which is 2008. And he was very transparent on kind of going through that process and some of the lessons learned, which I think is important for people to hear now in 2024, where we're seeing some distress that people are going through in real estate due to interest rates predominantly. So really appreciated his transparency there and ultimately what got him through to the other side. And then that is informed their approach now, which is to get these projects in Chicago.

the Chicago area, all cash, debt free, and not put leverage on anything. So they kind of went extreme in the other direction, which is an amazing place to be if you're a real estate owner. So very careful stewards of investor capital in that regard. So we do talk a lot about industrial. We talk a lot about the team, how he's built the team, what the team looks like now. Obviously, a lessons learned over a long career in real estate.

Talk a little bit about Chicago as a market and then they're exclusively focused on industrial. So just some of the ins and outs of being an industrial investor there, but very genuine, smart guy. I really enjoyed my conversation with Joel and I hope you do too. This episode is brought to you by DJE Texas Management Group, a San Antonio, Texas based real estate investment firm with a track record of transacting on several hundred million dollars of multifamily.

land and industrial deals throughout Texas. EJE has been in business for over a decade and is approaching 100 team members in San Antonio. To learn more about DJE, visit djetexas .com or the link in the show notes of this episode. This episode is also brought to you by apartmenteducators .com, a complete ecosystem for professionals to learn how to find, finance and operate large multifamily properties for profit.

DJE Texas (02:39.758)
can get started with a free mini course and learn more at apartmenteducators .com or visit the link in the notes.

Joel, welcome to the show. Really glad to have you. How are you, sir? I am doing great. It's nice to see you today. Yeah. Yeah. Thanks for making some time. And I look forward to diving in here and talking shop. So many things to get into on your company, how you built it, current market, all that stuff. But as just kind of an introduction here for folks listening that maybe haven't been introduced to you.

What's your background and what brought you into this, into this real estate games? Sure. So I grew up in a suburb of Chicago called Highland Park. And when I graduated from college, I went to the university of Michigan. I wanted to be in real estate desperately. I had no idea what that meant. I just knew I wanted to be in real estate. And a friend of mine introduced me to a family that was a father, two sons and a daughter.

that had an 84 building portfolio of industrial properties all around the Chicago area. They were looking for a leasing agent. It was 1981. Interest rates were about 20%. It was outrageous. And they had 10 vacancies in their 84 properties. And I, as a kid, I was a landscaper. I cut a bunch of lawns. In one weekend, I convinced 40 separate,

homeowners to hire me to let me be their lawn cutter and trimmer of their bushes. So I knew how to make cold calls. And when I interviewed, it was August, right after I had graduated in June, and the father says to me, what would you do to fill up our empty buildings, young man? And I said, I'd go cold calling in industrial parks and I'd pull tenants out of other people's buildings. Just came up with that idea in the interview. He said,

DJE Texas (04:43.406)
You are so hired. That's right. Sounds great. Yeah. So I became an agent for them. And then I started doing general brokerage for industrial companies, for warehouse manufacturing companies. And I sold a lot of buildings as the agent, as the selling agent. I represented tenants as a tenant rep. And then about 10 years in.

I realized the family that I worked for, their last name was Podolsky. They were very, very wealthy. And I thought, I don't think they made all their money by being an agent. So I went to the dad and to one of the sons, Steve. And I said, guys, I want to be a developer and I want to be a syndicator like you. And they said, it's about time young man. Yeah.

So they said, we'll put up a third of the money that you need and we'll help you find other investors. You have to put up money and you have to find investors. Go find a deal. So I went out and I found a piece of land. It was one acre in a town called Gurney, Illinois. And I found a contractor sort of like what you do where he's really close with me. And he agreed to invest some of his contract into owning the building with us.

Excellent. And he actually brought in the excavator, the concrete guy and the masonry contractor in addition to himself. And we built a building. We did $560 ,000 of equity. It was a 14 ,000 foot building. We found a tenant in the first week. That was my doing because I was the agent. Yeah, sure. And I put 20 ,000 in, everybody put the equivalent of 20 ,000 in.

So we had a bunch of investors in our syndicated deal. And I just went from there. I've done since then, a hundred acquisitions, mostly in the Chicago area. Some in Florida, Ohio, New York, but that's what I do. I'm a finder of deals. Now I don't like to build anymore. I just like to buy existing for less than replacement cost. And we currently own 19 buildings. We've sold 80 of them.

DJE Texas (07:00.526)
And I'm looking today, today I looked at two buildings right near O 'Hare Airport to buy one's 16 ,000 feet and one is 35 ,000 feet. And it's kind of fun. You know, we find buildings to buy. We have great tenants.

Is most of this industrial? You stayed with that asset class for the most part? 100 % industrial. Yeah. Class B. Class B. Yep. Yep. We don't do any of those big Amazon, big box warehouses that you see on the side of the highway. We leave that to the pension funds. They've got unlimited money. I don't want to compete with them. You know, don't take a five or a six cap. We need a seven or an eight cap. So we have to do a different kind of business. Yep, for sure. For sure. It makes sense. We.

kind of the same in the multifamily. I'd love to buy some class A just built stuff and just hold it forever. But we need to get some kind of yield for for L. P. S. Out of it. And it's just can't get it. Um, what does it typical tenant look like? So we're like we play a little bit of industrial, but it's kind of a different thing. And I'm I'm always curious, you know, is it are you trying to fill 10 ,000 square feet with a single tenant? Is it is it all over the map for your kind of footprint of an individual tenant? What does that look like?

We have 16 single tenant buildings and we have three multi -tenant buildings. The three multi -tenant buildings, one's 100 ,000 square feet. We have three tenants. So they average about 30 ,000 feet. One of our multi -tenants is 43 ,000 feet. So we've got a company that manufactures exhibits for children's museums in about 25 ,000 square feet.

And then the rest of the building is occupied by a distributor of HVAC equipment. And then I've got a really interesting one in the city. There's this area in Chicago that's called the Fulton market that has just exploded with a high end office, high end residential restaurants. It's become like the hot area. What's the place in San Antonio by the river? Like the cool place. The Pearl. Yep. So this area has become the new Pearl. This is.

DJE Texas (09:13.582)
It's so hot that people all around the country know the Fulton Market. So accidentally, I bought two buildings there in 2007. I didn't know it was going to happen. I didn't know the neighborhood. There were literally, it was such a bad neighborhood that when I looked at the building, there were condoms on the sidewalk and hypodermic needles on the lawn. Perfect. And I just had a feeling something good would happen there. And we got lucky.

We leased it to the US Postal Service. Okay, what kind of they don't leave that? Yeah, I was gonna say they don't leave. They don't leave. We got it. Well, they keep renewing. They keep going in five year increments, but they have nowhere to go. Sure. So they have to be there. Yeah.

And that was so it it penciled for you as is without this genius foresight of all this area turning around. It worked for you guys kind of on its own. Yeah, it was so accidental. I bought it and I thought, all right, if I can get six bucks a foot net, I can make a nice little 10 % return for the investment group. Sure. And so we found the Postal Service. They made the deal with us.

And they took most of the building, but left a little section available. And we found a medical supplier that took the little section. And the post office, by the way, I don't care if they hear this, they're the worst tenant we've ever had. Is that right? Yeah. Yeah. They are sloppy. They don't pay the rent on time. They're disorganized. They've been rough. They've been really rough, but. Yeah.

The area, we were getting six bucks a foot originally from them. And when the area turned and it became the hottest area in the Midwest, in that little neighborhood, the rent went up and we're now getting $19 a foot net. And you get net from the Postal Service too. Yeah. We told them the market's gone up, we want $20 net. And they insisted on having an independent rental appraisal done. And it came back at $19 .50 a foot.

DJE Texas (11:30.094)
You can have 50 cents. Exactly. They made their bed, right? The medical group moved out and the company that moved in recently is called Instacart. You know who they are? The grocery delivery service? Yeah. I've got a great story for you about that one.

You know, I'm a syndicator and I have investors who go into my deals for 50 grand, a hundred grand, whatever it is. And we bought some properties last year and I took a group of seven people to see the properties right on the Chicago river, 1200 feet of frontage on the river. The tenants make fruit juice concentrate. Companies called Tampico. That's our tenant. You can find them in grocery stores. You can find them all over there. They're all over the world. Sure. Yeah. So I took.

I took this group of seven investors to see these buildings to get them excited because they're really cool. And we went for a little bite of food afterwards to a nearby restaurant. And I said to one of the investors, potential investors, I said, so what do you think? He said, I really liked the buildings. He said, tell me about some of your other stuff. I said, oh, well, I have a building.

where I've got the two worst tenants I've ever seen. First of all, the postal service, they're really, really slow at paying and they're sloppy and they throw garbage right in the parking lot and they never clean it up. And the other one is one of the dumbest companies I've ever heard of. I don't think they make any money. I think it's just like an idea. It's called Instacart. And I'm telling you, I've tried to go visit with them and they're nasty people. When I go see them, most tenants are nice. Come on in, you're the landlord. It's like,

No, you need to wait in the lobby. And then they make me wait for half an hour. I said, this, this Instacart boy, man, I don't get it. I don't know how they're going to stay in business. I said, so what do you do? He says, I'm the head of IT for Instacart. I said, Oh, I just called your company. One of the worst companies I've ever seen. He said, don't worry about it. Foot in mouth. Yeah, exactly. He didn't take it personally though. So, uh, no, it's funny. I guess.

DJE Texas (13:48.43)
I mean, I would have a VC backed. I mean, I guess they're still going, right? I don't, I don't really follow them, but I'm not even sure. I think they, they either were going public or they went public. They pay the rent. They're better than the post service. Yeah. That's good. You get set these guys up on triple net and like a monthly, you don't like set them up on an ACH. I mean, what are they mailing checks in that they're, that they're doing some tenants pay by ACH, some tenants, the post office pays by check. Of course they do. Yeah. Yeah.

And they mail it. When I renewed their lease the last time, I went and had a meeting with them. And I said, here, here's the document I need you to sign. I said, why don't you sign it here? I'll bring it back to my office and I'll FedEx it back to you. And the guy said, what did you just say? I said, oh, sorry. FedEx, that's our competitor. Cheaper.

I've put my foot in my mouth several times in that building. Yeah. I love it. How about the the joys of owning stuff in Chicago? I was out there a couple years ago and we went out for the evening. I don't know that I've been more cold in my life. Is it are you running into a lot of issues there? We're down in Texas where we have our own problems related to the heat and everything. But how those Chicago winners as a as a landlord as an owner?

As a landlord, it's not bad. As just a person of my age, most of my friends who are smart go to Arizona or to Florida or Hawaii for the winter. Right. And I go for a little time down to Florida, but it's cold in the winter. It's cold. I don't it's not great, but Chicago is a great city. If it had better weather, it would be the biggest city probably in the world. It is. It is a world class city. It is beautiful.

And our temperatures are bad, but the problems that people have all over the country with weather disasters, we don't have fires, we don't have earthquakes, we don't have hurricanes. So our insurance is reasonable. You know, if you can put up with the weather half the year, it's really a great place. It's not Alaska, so it's not that bad, but Chicago is a city.

DJE Texas (16:12.846)
There's culture. You can go to a play. You can go to theater. You can, you know, theater is play, but you can go to a musical. There's art museums. There's just all kinds of cultural things, but also it's just a big city. There's a lot of commerce. There's every, every major company is here in an industrial. It's really great. It's the biggest industrial market in the country. We have.

about a billion and a half square feet of industrial. We've got 16 ,000 buildings. We're right where all the highways and all the rail lines converge from the East coast to the West coast, from North to South. This is the place to be from a logistics standpoint. Yeah, so our industrial market is really, really healthy.

All the institutions want to be here. Everybody loves industrial in Chicago.

Yeah, there's so much gravity to that to that city over, you know, with its history and proximity to a lot of things. And it is a beautiful city. Are that so as far as you know, heaters going out, things like that, is that that's probably one of the things that's on the landlord, right? Everything else is kind of on the tenant to repair. But you've got what roofs HVAC heaters. Yeah, landlord usually takes the roof. Landlord usually takes HVAC.

replacement, not repairs and not maintenance. Okay, nice. Some tenants get kind of funky when they negotiate and they ask for certain things that aren't standard. And we figure out a way to do it. We figure out a way to maybe charge a little more rent, sort of like an insurance policy. For example, someone may say, hey, I don't want to replace your parking lot. So we'll say, okay, we'll pay an extra dime of square foot in rent and we'll take the parking lot. Nice.

DJE Texas (18:12.11)
as long as they don't damage it. Sure. Yeah, it's very, it's very nuanced and very one off. We inherited a building last year that's mostly multi, but it's a mixed use kind of took it over from a partnership that I was in and it was our first kind of stab at some retail. And it was not something I really wanted to take over, but that's how we ended up with it. And so, you know, we got like Dunkin donuts as a, as a tenant and some other tenants and every little thing is this negotiation where.

We're just kind of putting people in a multifamily unit that we say, Hey, this is the rent and here's your standard lease and move in. So that's been an interesting learning curve for us. I want to talk a little bit about syndication, how you guys are putting capital together. And it sounds like you got, you know, by virtue of the company that you're already working with and those relationships right into syndication.

with that first deal and if just kind of never look back, have you altered how you're structuring these deals over the years or how do you put together, let's say, you know, your next acquisition? Yeah, they're all the same. It's a cookie cutter. We use the same private placement memorandum for every deal. We have a securities lawyer who likes to review it every so often just to update it. But currently we have about

75 active industrial investors. They're in multifamily, they're in other things. Usually they're serial investors. Sometimes we get someone who's never done it, who just happens to know us and they say, oh yeah, I'd like to invest with you, sure. I don't know industrial, but we get people who do multifamily, who do other industrial, who do self storage. And our average investor, we don't do a fund.

We just don't do funds. We do individual deals so people can pick and choose what they feel comfortable with. And I'll give you an example of one. We're under contracted by a property that's right next to O 'Hare Airport. It's 16 ,000 square feet. I was there today. We were talking about that in another conversation. You and I was at that building today. And...

DJE Texas (20:30.798)
It's a great building. It's got parking, it's got a loading dock, it's got two drive -in doors to drive inside, and it's leased by a delivery service. They deliver for some of the retail stores, they deliver for the GAP, and they deliver food. It's a lot of overnight delivery. And the deal's about a million five, so about $100 a square foot. And the idea is we pay all cash. We don't, we're,

like your recent deal, we don't do debt when we buy a building, we just buy it. So we put together a syndication. It's nice on the front end. It is, it is. And we've got enough investors where we know we can fill a deal if it's like say under 3 million, we can fill a deal in a couple of weeks. And we buy all cash, so our average investor may be,

75 ,000 because some do as little as 25 ,000. Even the wealthiest people do 25 ,000 sometimes. Just to spread it around. And some do as, huh? Just to spread it around, spread their risk around. Yeah, yeah, yeah. They may have 60 deals. Yep. And I've got a bunch of people who do 250 ,000 or 300 ,000. So they're all over the board in terms of the amount. And what I do is I say to them, look, I've got this tenant,

It's an 8 % return. There's no leverage. And we're a little different than most people. We don't, we don't finance out. We just keep them all debt free. And some people think we're morons to do that, but we like it. And there's a group of us that feel really comfortable with that. If you can get an 8 % unlevered yield and you look really good the last couple of years, right? I mean,

you're just kind of immune to all this market stuff. So you guys go in cash, group of investors, and the game plan is never, never leverage it. No, I've only done one cash out finance once. We had a 15 year lease with Comcast and we financed 87 % of the total amount. And for 15 years they paid rent and they paid our mortgage down.

DJE Texas (22:55.15)
But other than that one deal out of a hundred deals, we have never pulled out money doing refinancing. Our theory is let's have no debt. We have some deals that still have debt from the old days. Our average LTV is about 17, 18%. Ah, love it. Yeah. Yeah. And I did a deal actually, the Tampico deal was a $13 million raise.

And my 70 something investors weren't enough people at the average to raise the whole 13 million. So we have a bank we like and we borrowed 30%. So we borrowed 3 .9 million out of the 13 million and we came up with 9 .1 million in equity. And I felt bad about it. I felt kind of ashamed because I told people, hey, we only do. Yeah. Everybody was okay with it.

They were okay with it, but I wasn't, but I couldn't raise that much money because our typical deal is 3 million, 4 million, million and a half. So it was really a stretch for me to do that. And I felt like, Hey, we really want to buy this thing. We won't be able to close if we don't borrow some money. Yeah. I don't know from where I sit and a lot of people sit 30 % leverage. Um, looking pretty good. Did you guys keep staying that long?

long -term? Yeah, yeah. I would say in this case, we might even pay it off. We might raise more. We bought it on October 19th and I made a deal with the bank. It's this bank we have a lot of deals with. It's called Union National Bank. We love them. So they were very favorable in their terms. On October 19th, we closed and I said, I want an interest only loan for a year and I want to be able to pay it off.

at the end of the year with no penalty. And our banker, Jay Dicey said, I understand you wanna cash out with equity, right? I said, yeah. So maybe starting July or August, we might raise the 3 .9 and just substitute it in for the debt and just take the debt out. But there's a downside to this. You can't make giant returns if you're not leveraged. Right, yeah, that's kind of the key to getting those.

DJE Texas (25:24.078)
getting those larger returns, but boy, I bet you sleep well at night. I do. That's the thing. Yeah. Yeah. Yeah. I sleep really well at night. There was a time when I didn't in 2008, which was my worst of my four downturns. We had 50 buildings at that time and we had loans on all 50. We were at seven banks. Yep.

And just like the Podolsky family that in 1981 had 10 vacant buildings, they had 10 vacant out of 84. Right. I had 10 vacant out of 50. Tenants just moved out in 2008, 2009 when their leases were up, they downsized. Yeah. And I was in a world of hurt because we owed all this money and we had a bunch of vacancies, which were impossible to carry because we had to carry the mortgage.

taxes, the insurance, the maintenance, and the utilities. I call it five ways of spending all your money when you don't have any. So it was really, it was rough. It was very, very rough. And I had to work extra hard to get through it. It was very, very challenging. Yeah. I see a lot of that going on right now in 2024. Was that painful experience kind of the catalyst for saying, hey, we're just going in no debt?

Yeah. This is never going to happen to me again. Exactly. My mental health is something that's very important to me because my mental health in 2008 through about 2014 wasn't good. I had some depression. I had some anxiety. I was just, I thought I'd maybe put my investor group in a position to lose everything. Right. Sure. A bunch of our friends went bankrupt.

And I just worked tooth and nail and just kept going to save the portfolio from falling into a state of disaster. I was in a state of disaster, but the portfolio fortunately came through and I just made up my mind I can't do that anymore. Yeah. Yeah. I think, you know, having a lot of these conversations right now with, with other operators that are going.

DJE Texas (27:43.214)
through their version of that now in 2024. What was the thing that saw you through? That's not a short period of time. This is sustained massive stress over a multi -year period when the whole world was falling apart again, right? But what got you through that period? Well, a number of things. I'll be really honest about what I went through and how difficult it was. Number one,

great family support. My parents were both living, my in -laws were both living, my wife was supportive. They stood by me, they supported me. We did things to try to distract from the difficulties. That was one, and probably the most important one. It was tough on my kids. My kids were young at the time, and they saw me going through this. It was really tough. The second thing is, I found a really good therapist, a counselor, and I went,

every Saturday afternoon to just unload my misery. And so I would transfer it from my being miserable in my mind. I said, his name is Joel too, by the way, which is really funny. So I used to say, uh, whenever I had a decision to make, I'd always say, Hey, I've got to talk to Joel about that. And people would say, what are you insane? You call yourself by yourself, by your name? Yeah. No, the other Joel. Yeah. So I went to.

I went to this guy every Saturday at two o 'clock and I unloaded on him, which was really helpful. Right. And I actually, uh, did some, uh, I would call it serious medication. You know, you, when you're in a depression, I think there's a statistic that about one in five people take some kind of medication for either depression or anxiety. That's why those in the general population. Yeah. Yeah. Yeah.

Yeah, people just have problems. And at the time my problem was feeling like this immense pressure. It was like a ton of bricks landed on me and that helped. It took a little while to find the right medication because not every medication works with every person's chemistry. So those things really helped. And then, you know what the number one thing was, was working to come out of a...

DJE Texas (30:05.23)
a disastrous mental health situation like that in a financial, really just deteriorated state, working. The more I worked, the better I felt. And so I hired a group of people to come in and organize our files. Sometimes, throwing things away and organizing is a form of relaxation for some people.

Sure. I just organized 20 something years of files and every day I had an organizational project. So every day I had something good to feel about, something to feel good about because, you know, we would take just cabinets full of files and reduce them down to just a few files and go electronic. So I was feeling like I was making some progress every day.

And that was helpful, because at the end of the day, hey, I accomplished a lot today. I got rid of two filing cabinets worth of papers. And with all those things, apparently the best thing that can happen when the market is bad is the market gets better. And it did. The cycles, they go up and down and up and down. I've been through four down cycles. And I knew it would happen eventually. I just had to live through it.

and things got better. Today, those buildings that we still own, that we owned back then, are all worth at least 50 % more because we survived. We had the staying power.

DJE Texas (31:43.086)
that's there's so much good stuff in there. I remember when COVID hit, you talk about working and celebrating any win you can. I remember I get on the scale in the morning and go, that's a number I've got some control over. I don't know if our buildings are going to go to 50 % occupancy, if the world's going to end. That was pretty unprecedented for me and a lot of us. And it was like, that was the win for the day is, hey, my health and my weight are in control and I can control that. And it sucked that that was.

That was the only thing really to celebrate that day, but he had something. No, but that's big. You know what? Yeah. Being healthy, working out, eating well, and being at a weight that you feel comfortable with. One of my favorite shows is my 600 pound life. You ever see that? I've heard of it. I haven't seen it. Yeah. It's a, it's a great show. It's about these people who somehow became 600 or 700 pounders and how they, they desperately try to lose weight and they see this doctor in Houston.

that if they lose enough, he's willing to do a gastric bypass of their stomach. And they call him doctor now. He's a doctor who came over from Iran and he's got an accent and he's a little old guy and he's got jet black hair, even though he's 79 years old. And he's got this great accent and it's just a great show. So when I work out, when I'm on my elliptical, sometimes I watch that show for inspiration.

You know, I only need to lose ten pounds and these people need to lose three hundred pounds. So yes, that that every time you lose a few pounds and you feel really good about your target weight, that is a that's a day that's a win. Absolutely. Right. Right. And then, you know, it's I feel like I'm having this conversation with people a lot right now. It's you know, you just have to hold on. These things will get there. You know, you're 50 percent appreciation on the portfolio, but.

you know, properties under water or whatever at any given point, you know, it's not any value for anybody bailing now if there's any way to just stay in the game and see it through the other side. But that is, uh, yeah, it's taxing. And I really think there's no experience in life like being responsible for a large amount of other people's capital. I just don't know that there's for sure. Similar to for sure.

DJE Texas (34:07.182)
Yeah. One of the things I do today that I think is really helpful is I've got a group of eight of my investors who are smart and capable and experienced. And I've created what I call an advisory board. I don't buy a building without the advisory board signing off on it when we have a big decision to make. And they're a great support system for when something goes wrong. So that's a really, really good thing to have. And I didn't have that back in 08. I had.

three partners and my partners were like, let's go, let's buy everything we can and put as much debt on it as we can. And my advisory board's not like that. These are conservative people who like the no debt, all cash acquisitions. And they're great at asking questions in the due diligence process. They don't let anything slip by. They ask the really tough questions.

It's sort of like having a permanent board of mentors, eight mentors who are bright, capable thinkers. I love it. Yeah, that's fantastic and invaluable. I imagine. I love this approach. This is like really something to aspire to. You're getting into a situation with no debt and long -term leases. How do you, has that impacted the way you approach insurance or other things on due diligence? I mean, you know, you don't have to,

You can get a phase one if you're buying cash. You don't have to get a set of cash. No, we do. We do. You guys get those, but you're doing it because of your own diligence, not because somebody's making you. Is the approach to insurance any different because you're cash buyers? No. First of all, I know that there are places where insurance is so expensive right now because of natural disasters. Oh my gosh. We are so lucky here in Chicago.

We don't have natural disasters, but because of that, our insurance rates went up this year, 18%, as opposed to 180%, like some people around the country. Are you seeing high insurance in your market? Yeah, we're seeing it in San Antonio, but there's properties in Houston that are uninsurable, and I don't know what these guys are doing. They just had lunch with a loan broker today, and he was talking about a

DJE Texas (36:32.142)
property in a coastal market in Texas. Good property, long -term tenants, clean, not that old, couldn't get a bid on an insurance renewal. And it's just crazy. So we're seeing that for sure. Yeah. Yeah. Another thing, by the way, in Chicago that makes me feel really good is there's no water insecurity. We've got Lake Michigan. So we have an endless source of fresh water.

I have a friend who's a water expert, freshwater expert. And first of all, water is polluted. You've got all these micro plastics in the water because of all these plastic containers, bottles and everything. But in many places in the country, there's not enough water. And in 20 years, some of these areas are going to run out and they're going to figure out how to get water in. We've got this great fresh water source, which is amazing.

which is why we have a lot of food manufacturers here. We've got several food manufacturers in our buildings who use a lot of water.

So that's really important about that. As an advantage. Yeah, that's huge. You get the lakes right there. Yeah. I believe that the Great Lakes represent 20 % of all the natural freshwater in the entire world. And it's crazy, isn't it? Yeah, that is crazy. And it's clean. It's clean water. Yeah. Yeah. Yeah, that's huge. I'd never considered that. So you've got...

a really fantastic strategy on the acquisition and the hold. I love it. You've got your group of investors. What does the team look like today to kind of support all this given that, hey, it's not a three -year flip. It's not a five -year apartment syndication in and out. What does it take to kind of keep all this stuff going on? So the back office is always the most important thing to make sure things don't get out of control. I have a controller who does the accounting who's been with me for 21 years.

DJE Texas (38:36.782)
Excellent. My brother, who happens to be, I hope he doesn't mind me saying this, on the autism spectrum, he works in the accounting department with the controller. His job is to do the AP. He's really good at it. He's the one who creates the payments, whether it's an ACH or a check. And it's nice to have him there because he keeps his eye on everything. He's so honest. He would never think of doing anything. He's just straight thinking.

So they do the accounting. We don't need much more than that because almost all of our buildings are single tenant. There's just not a lot of money going in and going out because it's, buildings are big and just large payments for things, but a lot less service. You pay your taxes and insurance once a year, right? Yeah. Yeah. Yeah. So that's not, and then I've got a partner who's a property manager. I trust him completely. His name is Eric Schneider.

I would say that there's nobody better at property management and industrial than this guy. He is so on top of it. And he also does our due diligence. I also have a son in the business. He does, I would call it investor relations. We do a trip to Florida every winter. We go for about a month and he comes down to Florida and we have lunches and dinners with the investors. He sets everything up. It's really fun.

It's getting to know everybody, get to know their family, see their winter homes down there on the Gulf or on the ocean. It's really fun. And then I have a woman, we call her the chief of staff. And she takes care of a lot of stuff that has to be done. Compliance work with the states, with the SEC, sending out the K1s to the investors. We've got a portal that we use called Juniper Square.

which our investors can go in at any time and see exactly where they stand. They can get their K -1s. They can look at their most recent distribution. We do quarterly distributions. We do them by ACH. So really it's a pretty lean group. And I'd say the most important thing in any syndication group is the succession plan. And we have a great one. We've got the eight advisors who are always available and love helping us.

DJE Texas (41:02.03)
One guy who's in Naples, Florida and one who's in Montreal, those are the two leaders of the PAC. And then Eric knows everything that I know. So if something happened to me, Eric would be able to take over in an instant. And then Sam, my son, who's in the business, a little too new to be in the line of succession, but with the help of the two leaders of the PAC, the two leaders of the advisory board, he'd be able to at least

bring a lot to the table and figure out if Eric and I were both dead, who would be the next person in line. Right. And I've got a list of people. I've got one, two, and three that have all accepted and said, yes, if you guys go down in an airplane crash, we'll take over, which is really nice. So succession planning is really important. So what's in the office is important, but what's behind the office is equally important to us.

Yeah, that's huge. I love it. We've probably got some room to grow there. I mean, we've got policies and procedures and people that could step in and do things and insurance policies that would pay out if I get hit by a bus. But it feels to me like that's kind of a big focus for us over the next, call it two years, to really flesh that out. And having that board of advisors, I really, really.

course, I really like owning a bunch of stuff debt free too. So that's something to aspire to for sure. Yeah. I love it. Well, Joel, this has been great. I really appreciate I appreciate transparency on on the difficult stuff. I think people need to hear that more benefit from that. And I just love talking to other entrepreneurs who have built businesses. What do you see ahead? You know, we're talking mid early 2024 kind of Q1.

What's on the agenda for the year ahead here for you guys? Well, I think there's going to be a downturn. So we're preparing for it. We're being very careful to make sure that our leases are long enough to get through what I call bridging through some of the bad stuff. I heard one of your guests on a podcast talking about the coming debt implosion in the United States and maybe in the world because there's just so much debt out there.

DJE Texas (43:23.118)
I believe that that's true. I agree with him and being prepared for us means just having tremendous staying power in case something disastrous happens. The debt bomb could be a black swan like the mortgage crisis was in 2008. I don't know, but there's gotta be a downturn soon. So we're buying buildings carefully. We're buying ones that we feel have really good geometry. They lay out well. They have good loading docks. They have...

the right amount of office, the right ceiling heights, the right amount of parking. So it's really just being careful about the product, the buildings to make sure that they're not buildings that we're gonna get stuck with if tenants start fleeing. We wanna be the first place that a tenant would look to. Yeah, yeah, I love it. Love the strategy. If somebody listening wants to connect with you, learn more about what you guys are doing, where do we send them?

We have a website, it's BRIT Properties, B -R -I -T with one T properties. And it's named after one of our property managers. I sold a business a number of years ago. We sold our company and restarted in 2014 after we sold out to TransWestern actually, a Texas company. And so I started up after being there for a while, I left.

TransWestern, they were my new bosses. We started a new company. We needed the name of the company and we had a property manager named Brad. And so I said, we're going to call the company Brit. Brad really is terrific. So you love that, huh? He was so happy. I didn't have to give him a title or anything. Now the company was named after him. Oh, that's too bad. That's true. Yeah.

Well, very good. We'll link to that in the show notes. If you're listening, you can scroll through to the description and click through and visit Joel and the company there. It's been a real pleasure, Joel. Thank you so much. Yeah. Thank you so much. All right. Take care.

DJE Texas (45:34.99)
Thank you for listening to the DJE Podcast. For more information, please go to djetexas .com.