Inside Industrial Real Estate: Joel Friedland’s No-Debt Investing Wisdom

 

Join us on the latest episode of Passive Investing from Left Field, featuring industrial real estate syndicator Joel Friedland. With over 40 years of experience, Joel shares his insights on the importance of due diligence and how understanding tenants and real estate taxes is crucial to the success of real estate deals. Below are some of the key takeaways from the episode where Joel explains why his company opts for all-cash deals with no debt and the priorities he sets for tenant selection to ensure stability and security. 

About Joel Friedland

Joel Friedland is an industrial real estate syndicator with over 40 years of experience and nearly 100 acquisitions in the Chicago area totaling ~3 million square feet. He has over 200 investors and takes a unique approach focused on no-debt deals and preservation of capital.

On a day-to-day basis, Joel manages his portfolio of 16 industrial buildings in Chicago. He is actively seeking new deals and partners to join his group.

Key Takeaways

Here are some of the key takeaways from Joel’s appearance on Passive Investing from Left Field:

  1. The importance of vetting tenants in industrial real estate – Evaluating financial statements, debt levels, and major customer dependencies helps ensure stability and avoid risks.
  2. Joel’s unique no-debt approach – He does all-cash deals with no debt, preferred by many long-time investors who prioritize consistency and stability over leveraged returns.
  3. Long-term focused – Average hold is 7 years, with a focus on selling buildings to user companies at a premium. This provides liquidity options but concentrates on buy and hold.
  4. Due diligence is crucial – Thorough due diligence on tenants, building conditions, real estate taxes, and more is vital when evaluating industrial deals.

Joel’s Journey Into Industrial Real Estate

Joel first got a taste for real estate right after graduating college in 1981 when he was hired by a family that owned 6 million square feet of industrial properties in Chicago. He recalled, “It was really fun, I could do it. It was fun – you probably haven’t heard anybody say cold calling is fun.”

Over the next 10 years, Joel worked on the leasing side for the family, learning the ins and outs of Chicago’s vast industrial real estate market with over 16,000 buildings and 1.5 billion square feet.

In 1989, Joel embarked on his first syndication – raising ~$560,000 from a network of individual investors to acquire a small industrial property. From there, he steadily built up his track record completing deals and forming valuable relationships over 30+ years.

All-Cash, No-Debt Approach

When asked about his strategy, Joel explained, “We buy all cash, no mortgages. If we buy a building for $1 million we have to be getting $80k a year in rent because our investors like to get 2% quarterly.”

He targets an 8% annual return, paid out evenly each quarter to his investors. By eliminating debt, he avoids key risks like foreclosure, heavy interest payments, and pressure from lenders.

Joel acknowledges the leverage benefits he misses out on but focuses on the stability. He commented, “Does it hurt us in terms of the magnification you get from leverage that we don’t have? Yes, but there is a group of investors that doesn’t care about that, they just want to make their 8% knowing that it’s consistent.”

Careful Tenant Selection

In industrial real estate, selecting tenants carefully is crucial since spaces can be challenging to re-lease if vacated. Joel targets manufacturing companies as tenants and vets them by:

  • Reviewing financial statements
  • Understanding their debt levels
  • Identifying major customers and dependencies

He also prefers tenants with corporate parents or financial backing, avoiding risky startups. Independence, scale, diversity of customers, and stability help ensure tenants can fulfill long-term obligations.

Mitigating Investor Risk

Two key ways Joel mitigates investor risk, beyond avoiding debt, include:

  1. Niche approach – Smaller Class B/C buildings from 10k-50k square feet reduce exposure versus giant warehouses. He employs a tighter focus on the Chicago market.
  2. Decision-making process – Joel runs all deals by an 8-person advisory board of experienced real estate professionals to validate diligence and assumptions.

He also stressed the importance of thoughtful succession planning and transparency through regular reporting to demonstrate responsible management and governance.

Advice For Evaluating Operators

When asked how LP investors should evaluate industrial operators like himself, Joel offered a few key suggestions:

  • Review the PPM carefully as an initial filter
  • Make sure critical questions get answered directly by the decision maker
  • Look for operators who focus on the details – real estate taxes, building specifications, neighboring tenants, and due diligence process
  • Verify there is proper succession planning for longevity and stability

He noted smaller investors can start with as little as $25k to build trust. But more importantly, operators should instill confidence that they are true local experts who make careful, informed decisions.

Exits and Liquidity

While Joel takes a long-term hold approach with buildings, averaging 7 year terms, he understands LP investors still need options. The most typical exit route involves selling buildings at premium valuations directly to owner-occupant companies rather than investors.

Additionally, Joel facilitates liquidity through Rule 144 transfers where investors buy/sell amongst themselves after holding for 1+ years, avoiding the need to list properties. Legal agreements handle price negotiations and Joel oversees proper tax treatment.

No-Debt Investing Wisdom

If you listen to just one episode on industrial real estate investing strategies, make it this one. Joel brings hard-earned lessons from navigating four decades of shifting cycles and uncertainties. His transparent approach and unique no-debt model offer incredible insights even beyond industrial.

Take Your Investing to the Next Level

If you enjoyed Joel’s wisdom and want to continue learning from experts like him, the LFI Community is for you. We provide unmatched education, exclusive investment opportunities, and a network of experienced professionals – everything you need to take your investing to the next level.

Become a LFI Infielder to gain access to members-only content and webinars with industry veterans. Get exposure to off-market real estate deals you won’t find anywhere else and know fellow investors have your back on your journey.

The LFI Community offers the education, insights, and support to help accelerate your success in passive investing. Click here to learn more and join us.

This article is for educational purposes only and is not to be relied upon as the basis for entering into any transaction or advisory relationship or making any investment decision. All investments involve the risk of loss, including the loss of principal. Past performance, and any performance results reflected in this article, is not an indication of future results.

Chris Franckhauser

Vice President of Strategy & Growth, Advisory Partner

Chris Franckhauser, Vice President of Strategy & Growth, Advisory Partner for Left Field Investors, has been involved in real estate since 2008. He started with one single-family fix and flip, and he was hooked. He then scaled, completing five more over a brief period. While he enjoyed the journey and the financial tailwinds that came with each completed project, being an active investor with a W2 at the time, became too much to manage with a young and growing family. Seeing this was not easily scalable or sustainable long term, he searched for alternative ideas on where to invest. He explored other passive income streams but kept coming back to his two passions; real estate and time with his family. He discovered syndications after reconnecting with a former colleague and LFI Founder. He joined Left Field Investors in 2023 and has quickly immersed himself into the community and as a key member of our team.  

Chris earned a B.S. from The Ohio State University. After years in healthcare technology and medical devices, from startups to Fortune 15 companies, Chris shifted his efforts to consulting and owning a small apparel business when he is not working with LFI (Left Field Investors) or on his personal passive investments. A few years ago, Chris and his family left the cold life in Ohio for lake life in the Carolinas. Chris lives in Tega Cay, South Carolina with his wife and two kids. In his free time, he enjoys exploring all the things the Carolinas offer, from the beaches to the mountains and everywhere in between, volunteering at the school, coaching his kids’ sports teams and cheering on the Buckeyes from afar.  

Chris knows investing is a team sport. Being a strategic thinker and analytical by nature, the ability to collaborate with like-minded individuals in the Left Field Community and other communities is invaluable.  

Jim Pfeifer

President, Chief Executive Officer, Founder

Jim Pfeifer is one of the founders of Left Field Investors and the host of the Passive Investing from Left Field podcast. Left Field Investors is a group dedicated to educating and assisting like-minded investors negotiate the nuances of the passive investing landscape and world of syndications. Jim is a former financial advisor who became frustrated with the one-path-fits-all approach of the standard financial services industry. Jim now concentrates on investing in real assets that produce cash flow and is committed to sharing his knowledge with others who are interested in learning a different way to grow wealth.

Jim not only advises and helps people get started in passive real estate syndications, he also invests alongside them in small groups to allow for diversification among multiple investments and syndication sponsors. Jim believes the most important factor in a successful syndication is finding a sponsor that he knows, likes and trusts.

He has invested in over 100 passive syndications including apartments, mobile homes, self-storage, private lending and notes, ATM’s, commercial and industrial triple net leases, assisted living facilities and international coffee farms and cacao producers. Jim is constantly looking for new investment ideas that match his philosophy of real assets producing cash flow as well as looking for new sponsors with whom he can build quality, long-term relationships. Jim earned a degree in Finance & Marketing from the University of Oregon and a Master’s in Business Education from The Ohio State University. He has worked as a reinsurance underwriter, high school finance teacher, financial advisor and now works exclusively as a full-time passive investor. Jim lives in Dublin, Ohio with his wife, three kids and two dogs. In his free time, he loves to ski, play Ultimate frisbee and cheer on the Buckeyes.

Jim earned a degree in Finance & Marketing from the University of Oregon and a Master’s in Business Education from The Ohio State University. He has worked as a reinsurance underwriter, high school finance teacher, financial advisor and now works exclusively as a full-time passive investor. Jim lives in Dublin, Ohio with his wife, three kids and two dogs. In his free time, he loves to ski, play Ultimate frisbee and cheer on the Buckeyes.

Chad Ackerman

Chief Operating Officer, Founder

Chad is the Founder & Chief Operating Officer of Left Field Investors and the host of the LFI Spotlight podcast. Chad was in banking most of his career with a focus on data analytics, but in March of 2023 he left his W2 to become LFI’s second full time employee.

Chad always had a passion for real estate, so his analytics skills translated well into the deal analyzer side of the business. Through his training, education and networking Chad was able to align his passive investing to compliment his involvement with LFI while allowing him to grow his wealth and take steps towards financial freedom. He has appreciated the help he’s received from others along his journey which is why he is excited to host the LFI Spotlight podcast and share the experience of other investors and industry experts to assist those that are looking for education for their own journey.

Chad has a Bachelor’s Degree in Business with a Minor in Real Estate from the University of Cincinnati. He is working to educate his two teenagers in the passive investing world. In his spare time he likes to golf, kayak, and check out the local brewery scene.

Ryan Steig

Chief Financial Officer, Founder

Ryan Stieg started down the path of passive investing like many of us did, after he picked up a little purple book called Rich Dad, Poor Dad. The problem was that he did that in college and didn’t take action to start investing passively until many years later when that itch to invest passively crept back up.

Ryan became an accidental landlord after moving from Phoenix back to Montana in 2007, a rental he kept until 2016 when he started investing more intentionally. Since 2016, Ryan has focused (or should we say lack thereof) on all different kinds of investing, always returning to real estate and business as his mainstay. Ryan has a small portfolio of one-to-three-unit rentals across four different markets in the US. He has also invested in over fifty real estate syndication investments individually or with an investment group or tribe. Working to diversify in multiple asset classes, Ryan invests in multi-family, note funds, NNN industrial, retail, office, self-storage, online businesses, start-ups, and several other asset classes that further cement his self-diagnosis of “shiny object syndrome”.

However, with all of those reaches over the years, Ryan still believes in the long-term success and tenets of passive, cash-flow-focused investing with proven syndicators and shared knowledge in investing.

When he’s not working with LFI or on his personal passive investments, he recently opened a new Club Pilates franchise studio after an insurance career. Outside of that, he can be found with his wife watching whatever sport one of their two boys is involved in during that particular season.

Steve Suh

Chief Content Officer, Founder

Steve Suh, one of the founders of Left Field Investors and its Chief Content Officer, has been involved with real estate and alternative assets since 2005. Like many, he saw his net worth plummet during the two major stock market crashes in the early 2000s. Since then, he vowed to find other ways to invest his money. Reading Rich Dad, Poor Dad gave Steve the impetus to learn about real estate investing. He first became a landlord after purchasing his office condo. He then invested passively as a limited partner in oil and gas drilling syndications but quickly learned the importance of scrutinizing sponsors when he stopped getting returns after only a few months. Steve came back to real estate by buying a few small residential rentals. Seeing that this was not easily scalable, he searched for alternative ideas. After listening to hundreds of podcasts and attending numerous real estate investing meetings, he determined that passively investing in real estate syndications was the best avenue to get great, risk-adjusted returns. He has invested in dozens of syndications involving apartment buildings, self-storage facilities, resort properties, ATMs, Bitcoin mining funds, car washes, a coffee farm, and even a Broadway show.

When Steve is not vetting commercial real estate syndications in the evenings, he is stomping out eye diseases and improving vision during the day as an ophthalmologist. He enjoys playing in his tennis and pickleball leagues and rooting for his Buckeyes and Steelers football teams. In the past several years, he took up running and has completed three full marathons, including the New York City Marathon. He is always on a quest to find great pizza, BBQ brisket, and bourbon. He enjoys traveling with his wife and their three adult kids. They usually go on a medical mission trip once a year to southern Mexico to provide eye surgeries and glasses to the residents. Steve has enjoyed being a part of Left Field Investors to help others learn about the merits of passive, real asset investments.

Sean Donnelly

Chief Culture Officer, Founder

Sean holds a W2 job in the finance sector and began his real estate investing journey shortly after earning his MBA. Unfortunately, it could not have begun at a worse time … anyone remember 2007 … but even the recession provided worthy lessons. Sean stayed in the game continuing to find his place, progressing from flipping to owning single and multi-family rentals to now funding opportunities through syndications. While Sean is still heavily invested in the equities market and holds a small portfolio of rentals, he strongly believes passive investing is the best way to offset the cyclical nature of traditional investment vehicles as well as avoid the headaches of direct property ownership. Through consistent cash flow, long term yield and available tax benefits, the diversification offered with passive investing brings a welcomed balance to an otherwise turbulent investing scheme. What Sean likes most about the syndication space is that the investment opportunities are not “one size fits all” and the community of investors genuinely want to help.

He earned a B.S. in Finance from Iowa State University in 1995 and a MBA from Otterbein University in 2007. Sean has lived in eight states but has called Ohio home for the last 20+.  When not attending his children’s various school/sporting events, Sean can be found running, golfing, shooting or fly-fishing.

Patrick Wills

Chief Information Officer, Advisory Partner

An active real estate investor since 2017, Patrick Wills’ investing journey began like many others – after reading the “purple book” by Robert Kiyosaki. Patrick started with single family rentals, and while they performed well, he quickly realized their inability to scale efficiently while remaining passive. He discovered syndications via podcasts and local meetups and never looked back. He joined Left Field Investors in 2022 as a member and has quickly become an integral part of the team as Vice President of Technology.

An I.T. Systems Engineer by trade, he experienced the limitations of traditional Wall Street investing firsthand in his career and knew there had to be a better way to truly have financial freedom.

Unfortunately, that better way is inaccessible to those who need it most. His mission is to make alternative investments accessible to everyone who seeks to take control of their financial future and to pursue their passions in life.

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