Should You Invest in Industrial Real Estate Debt-Free? A 40-Year Veteran’s Unconventional Strategy
Investing in industrial real estate without bank debt sounds crazy to most investors. After all, leverage is what makes real estate so profitable, right? But after losing nearly everything in 2008, veteran industrial investor Joel Friedland made a radical decision: he’d never borrow from a bank again. In this episode of The Real Estate Investing Club, Joel shares how his debt-free strategy has protected 300 investors across 107 industrial properties—and why he believes this approach might be more important than ever in 2025.
Quick Answer: Is Debt-Free Industrial Real Estate Investing Viable?
Yes, but with trade-offs. Debt-free industrial investing offers 12-14% average annual returns with significantly lower risk, compared to leveraged deals that target 18%+ IRR but expose investors to foreclosure risk during market downturns. This strategy works best for small-box Class B industrial properties (under 100,000 square feet) with long-term manufacturing tenants who sign 10-15 year leases with annual rent escalations. While returns are lower than leveraged investments, the complete elimination of foreclosure risk and monthly debt payments makes this approach ideal for conservative investors seeking stable, long-term cash flow.
Why a Veteran Industrial Investor Abandoned Leverage Forever
Joel Friedland didn’t start as a conservative investor. For decades, he used aggressive leverage to build a 50-property portfolio. “When the market’s going up, even an idiot can make money,” Joel admits candidly. During the boom years, his average return on 50% of his portfolio was an impressive 40% IRR.
But 2008 changed everything.
The $70 Million Wake-Up Call
When the global financial crisis hit, Joel found himself personally guaranteeing $70 million in bank debt across 10 troubled properties. “I thought I was going to lose my house. I thought I was going to lose all my buildings. I thought my investors were going to lose all their money,” he recalls.
The experience pushed him into a depression. He worried the headlines would read: “Joel Friedland fails spectacularly.” But instead of giving up, he fought through it—and learned a critical lesson that would reshape his entire investment philosophy.
Joel references the biblical principle from Proverbs: the borrower becomes enslaved to the lender. After surviving 2008, he discovered this truth firsthand. The banks owned him. They controlled his destiny, regardless of his experience or intentions.
The Post-Crisis Pivot: Building a Debt-Free Industrial Empire
After working through the crisis, Joel made a decision that sets him apart from virtually every other syndicator in America. Among approximately 4,000 syndicators with $100 million or more in assets, Joel’s firm is the only one operating entirely debt-free.
Since adopting this strategy, Brit Properties has acquired 107 industrial buildings worth approximately $300 million, working with 300 investors, many of whom have been with him for over three decades. They’ve sold 82 buildings and currently own 25 properties.
The investor profile has changed dramatically. Joel now works with what he calls “freakishly risk averse” investors who prioritize capital preservation over maximum returns. They’re willing to accept 12-14% average annual returns instead of 18%+ IRR in exchange for sleeping well at night.
Understanding Small-Box Class B Industrial: The Overlooked Gold Mine
Not all industrial real estate is created equal. When most people think “industrial,” they picture massive Amazon fulfillment centers along highways. But Joel specializes in something completely different.
What Makes Small-Box Industrial Different
Small-box Class B industrial properties are typically found in older industrial parks with names like “Industrial Drive,” while newer developments are called business parks with curved streets and ponds. These properties range from 10,000 to 100,000 square feet and cater to a completely different tenant base than big-box distribution centers.
Recent market data supports Joel’s focus on smaller properties. Smaller industrial facilities continue seeing strong demand, with development of buildings sized 100,000 square feet and above falling by approximately 50% compared to 2022-2023 levels. This supply constraint creates a competitive advantage for existing small-box owners.
The Manufacturing Advantage
Of Joel’s 25 current buildings, 17 house manufacturing operations. These aren’t simple warehouses—they’re specialized facilities with expensive equipment and highly trained technical workers making parts for aerospace, medical devices, and countless other industries.
“Anything and everything that is in your home or your office or your school or your hospital is made in an industrial building and then warehoused in an industrial building,” Joel explains. This creates incredible tenant stability because relocating manufacturing operations is extremely costly and disruptive.
One of Joel’s tenants, a magnet manufacturer, signed a 15-year lease because moving their specialized equipment would be prohibitively expensive. With 3% annual rent increases built into the lease, this single tenant relationship transformed a 7-8% initial yield into an average of 9.5-10% over the lease term.
The Real Numbers: What Debt-Free Returns Look Like
Let’s address the elephant in the room: debt-free investing produces lower returns. There’s no way around it. But understanding the actual numbers reveals why some investors find this trade-off compelling.
The Return Reality Check
Joel’s debt-free strategy typically generates:
- Initial cash yield: 7-8%
- Average yield over hold period: 11%
- Property appreciation: 3% annually (conservative estimate)
- Total average annual return: 12-14%
- IRR: Typically 12% (accounting for time value of money)
Compare this to leveraged deals that commonly promise 18%+ IRR. The difference is substantial—until you factor in risk.
The Math Behind Long-Term Holds
Joel’s strategy relies on very long hold periods, often 15-20 years. Here’s how the mathematics work in his favor:
If a property’s value increases 5% annually, it doubles in 20 years. Combined with an 11% average cash flow yield over that period, the total return approaches 16%—though the IRR would be lower at around 12-14% due to the time value of money.
Even with conservative 3% annual appreciation, the combination of stable cash flow and modest property value growth creates compelling risk-adjusted returns without the foreclosure risk that comes with leverage.
When Debt-Free Beats Leveraged Investing
The debt-free advantage becomes most apparent during market stress. As of Q3 2025, the U.S. industrial market experienced its twelfth consecutive quarter of rising vacancy rates, reaching 7.5% nationally. For leveraged investors, rising vacancies combined with debt service can quickly become catastrophic.
Joel’s debt-free properties don’t face this pressure. If a tenant leaves, he has time to find the right replacement without the bank breathing down his neck. “Without a mortgage, you don’t need renters right away,” he explains. This flexibility is worth sacrificing some upside.
The 2025 Industrial Market: Why Now Matters
Understanding Joel’s strategy requires understanding where the industrial market stands today and where it’s heading.
Current Market Dynamics
Industrial properties have been highly sought after for years due to e-commerce growth and last-mile delivery demand, though supply and demand are beginning to even out as the sector matures. This normalization actually favors Joel’s conservative approach.
Net absorption turned positive in Q3 2025 after a slight dip in Q2, driven by renewed tenant confidence and greater clarity on U.S. trade policy, signaling improving sentiment despite lingering economic uncertainty. The market is stabilizing, but volatility remains a concern.
The Reshoring Catalyst
One of the most significant long-term tailwinds for U.S. industrial real estate is manufacturing reshoring. Government incentives, shifting global dynamics, and trade policies are driving companies to re-evaluate offshore production, increasing demand for manufacturing, logistics, and distribution space.
When asked if he’s seeing this on the ground, Joel tempers expectations: “No, not yet. It takes years and years to set up a manufacturing operation and the planning that goes into it. The strategy is a years-long process. We won’t see any of this for four to five years if it happens.”
This is where Joel’s long-term, patient approach aligns perfectly with market fundamentals. While speculative investors chase quick flips, Joel is positioning for a manufacturing renaissance that could take a decade to fully materialize.
The Bubble Question
Joel believes we’re currently in a bubble—not just in industrial real estate, but across the entire U.S. economy. “I don’t think that there’s such a thing as a tree grows all the way to the sky and never stops. There’s going to be a downturn,” he warns.
This belief informs his entire strategy. During downturns, highly leveraged investors become forced sellers. Debt-free investors like Joel can not only survive but acquire distressed properties from overleveraged competitors—exactly what he did after 2008.
The Hidden Benefit: Liquidity Through Community
One underappreciated advantage of Joel’s long-term, debt-free approach is the liquidity it creates for investors through an unusual mechanism: a large, loyal investor base.
How Portfolio Liquidity Works
Most real estate syndications are illiquid by nature. If you invest in a 5-7 year hold property, you’re locked in until the sponsor sells. But Joel’s 300-investor network creates a secondary market.
“If people want to get out of our deals, they call me and they say, I’d like liquidity. And because we have so many investors, I can make a phone call and get them out in one day,” Joel explains.
This works because Joel maintains long-term relationships with investors who trust his track record. When one investor needs to exit, another investor who’s been waiting for an opportunity to invest can take their place. The property never needs to be sold to provide investor liquidity.
This creates the best of both worlds: long-term buy-and-hold stability for the properties themselves, with flexibility for individual investors who experience life changes.
The Tenant Retention Strategy: Single vs. Multi-Tenant
Joel’s properties are predominantly single-tenant buildings, which seems risky until you understand his tenant selection and retention philosophy.
The Single-Tenant Risk-Reward Profile
“In our business, because they’re single tenant buildings, the big risk is a vacancy because it’s either 100% vacant or 100% leased,” Joel acknowledges. This binary outcome makes tenant retention critical.
His strategy centers on one simple principle: if you can keep the tenant, you don’t sell, no matter what.
A Real-World Example: The $600,000 Decision
Joel shares a revealing story about a building in Schiller Park that his firm bought for $1.14 million in June 2024. A developer offered $1.75 million after just one year—a spectacular $610,000 profit (53% return) in twelve months.
Most investors would jump at this opportunity. But Joel’s team had a decision to make when the tenant’s lease came up for renewal. They proposed increasing rent from $6 per square foot to $9—a 50% increase. The tenant’s response? “Go fuck yourselves. We’re moving out.”
While negotiating with the difficult buyer whose lawyer was making the deal “messy,” the tenant called back. After surveying the market, they decided to stay and accept the rent increase. Now Joel faced a choice: take the $610,000 profit with a renewal tenant, or keep the property for long-term cash flow.
After consulting with his eight-person advisory board of major investors, Joel decided to keep the building. “We think that the equity is still in the deal. We still think it’s worth $1.75 million, but we’re going to keep it and get the cash flow and maybe sell it another day.”
This decision perfectly illustrates his philosophy: stable, long-term cash flow from a quality tenant beats a quick profit—especially without debt pressure forcing his hand.
When to Sell: Joel’s Decision Framework
Despite his buy-and-hold philosophy, Joel has sold 82 of his 107 properties. So when does he actually pull the trigger?
The Simple Strategy
Joel’s sale decision process is remarkably straightforward: “If we can keep the tenant, we don’t sell no matter what. And if the tenant leaves, we look at selling it versus leasing it to a new tenant.”
When a property goes vacant, Joel’s team:
- Determines an acceptable sale price
- Lists the property for lease (not for sale)
- Keeps a list of interested buyers who inquire
- Waits 3-6 months for a new tenant
- Evaluates the carrying cost (Joel estimates $20,000/month for a 25,000 SF building with no mortgage)
- Decides whether to continue marketing for lease or sell for a profit
This approach allows Joel to test the leasing market without committing to a sale, while maintaining the flexibility to pivot if carrying costs become too burdensome or an exceptional offer emerges.
Every Deal is Different
When asked if he’s ever sold a performing property with low return on equity, Joel’s response is telling: “Every deal is different. We’ve sold 82 buildings, I can give you 82 stories, and every single one of them is different than every other one. It’s like snowflakes. Everyone is different. We never know.”
This honest assessment reveals an important truth: there’s no perfect formula. Each decision depends on the specific property, tenant situation, market conditions, investor needs, and available opportunities.
Finding Deals: The Lost Art of Door-Knocking
In an era dominated by direct mail, digital marketing, and online lead generation, Joel’s acquisition strategy is refreshingly old-school—and highly effective.
The Summer Intern Strategy
Joel has bought three buildings in the last six weeks using a remarkably simple approach: cold calling and door-knocking with summer interns.
Here’s how it works:
Joel hired six summer interns and targeted Wooddale, Illinois, a town with 202 industrial buildings totaling 9.2 million square feet. He divided the town six ways, assigning each intern approximately 33 companies to call on daily until they reached the property owner.
“We wait for the Mercedes or the fancy car to come during lunchtime to the building. And then they go in the side door, not the front door. And we wait and then we approach who looks like the owner,” Joel explains.
The McDonald’s Bag Story
One intern’s persistence perfectly illustrates Joel’s approach. The intern spotted someone carrying a McDonald’s bag into a building and asked if he was the owner. He was. The intern complimented his lunch choice, built rapport, and asked if he’d sell. The owner said no and told him to go away.
The intern returned seven times. On the seventh visit, the owner finally said yes. “The McDonald’s bag died,” Joel jokes—but that persistence resulted in a deal.
This old-school approach works because most investors have abandoned it. While competitors send mailers and emails that get ignored, Joel’s team is building face-to-face relationships with property owners who might not even realize they’re ready to sell until someone asks seven times.
The Risk Trade-Off: Lower Returns for Peace of Mind
Joel is remarkably candid about his strategy’s limitations. He’s not trying to convince everyone to invest debt-free. Instead, he’s offering a specific solution for a specific investor profile.
Who Shouldn’t Invest Debt-Free
“If someone wants an 18% IRR, we’re not the guys. Because if you do shoot for an 18% IRR, you’ve got to be doing something that’s risky,” Joel states plainly.
He actually encourages investors to diversify across different risk profiles: “I don’t think people should invest only in safe, safe, safe things. You need to take risk. So people who go in with someone who’s got the debt like you do, I strongly support that.”
For younger investors especially, Joel recommends taking more risk with appropriate due diligence and diversification. The debt-free approach is for “the little corner of somebody’s portfolio that they want to have super safe for cash flow.”
The 66-Year-Old Perspective
“I’m 66. And at my age, I just don’t want to end up living in my kid’s basement because I blew all my money being too much of a risk taker,” Joel admits.
This age-based perspective matters. An investor in their 30s with decades to recover from losses can justify aggressive leverage and risk-taking. An investor in their 60s approaching or in retirement needs capital preservation and reliable income more than maximum returns.
Joel’s strategy isn’t about finding the best possible returns—it’s about finding the best risk-adjusted returns for a specific life stage and risk tolerance.
The Succession Plan Nobody Talks About
In one of the most unique moments of the interview, Joel raises something virtually no other syndicator discusses: succession planning.
The Question Every Investor Should Ask
“Everybody needs to know the succession plan of the people they invest with,” Joel emphasizes. “What happens if the guy dies? What happens if he gets sick? Who takes over, who’s in charge, how well have you thought that through?”
This is especially critical for debt-free, long-term hold strategies. If Joel’s deals are designed for 15-20 year holds, investors need confidence that the operation will continue smoothly if something happens to him.
Joel offers to send investors a copy of Brit Properties’ formal succession plan—something he’s never seen another syndicator do proactively.
At 66 years old, Joel has thought deeply about this. “I’ve gotta think about these things,” he notes. This level of planning demonstrates the thoroughness that comes from four decades in the business and genuine concern for investor interests beyond his own tenure.
Lessons from 40 Years: The Biggest Mistakes
Joel’s career offers a masterclass in what not to do, learned through painful experience.
The Costly Mistake: Wrong Property, Wrong Strategy
When asked about a deal that went sideways, Joel describes buying a building that violated his core investment criteria: “I bought a building that was too big. We buy small buildings. It was too big. So there weren’t enough tenants. There’s more tenants for smaller buildings.”
The problems compounded:
- He used debt (violating his post-2008 principle)
- The building had a one-year tenant lease (too short)
- He assumed the tenant would probably stay (wrong)
- The market crashed in 2008
The building sat vacant for an extended period. Joel eventually sold it for $2.5 million—a $1 million loss on the $3.5 million purchase price.
The lesson? Stick to your investment criteria. Even with decades of experience, straying from core principles leads to trouble. Joel now focuses exclusively on smaller buildings with long-term tenants, and never uses debt.
The Highlight Reel: When Everything Goes Right
On the flip side, Joel shares his best deal: buying a building in Elmhurst, Illinois from the Keebler Cookie Company. The property had a massive parking lot—exactly what Comcast needed for their regional operations.
Comcast signed a 15-year lease, and Joel’s firm generated a 35% average annual return over the full lease term. Two years ago, when Comcast’s lease ended, they sold the building to a trucking company.
This deal worked because it met all of Joel’s criteria: the right location, the right tenant need, a long-term lease, and patient execution. “One in a lifetime,” Joel calls it—but he was positioned to capitalize when opportunity knocked.
The Future of Industrial: Trends to Watch
Looking ahead, several trends will shape industrial real estate investing over the next decade.
Manufacturing Reshoring Timeline
While reshoring gets significant media attention, Joel cautions against expecting immediate impacts. Manufacturing facility planning and construction takes 4-5 years minimum. Investors betting on reshoring need patient capital and long-term hold strategies.
Trump’s policy changes and tariffs aim to fuel a reshoring trend, further increasing demand for industrial space, but the timeline matters more than the trend itself.
The AI and Data Center Connection
AI adoption is quickly growing across all industries, driving increased demand for data centers. While this primarily affects a different industrial subsector, the broader technology adoption in manufacturing creates demand for modern, flexible industrial space.
Small-Box Supply Constraints
While properties sized 100,000 square feet and above still outnumber them, development of these larger-scale properties has fallen by approximately 50%, indicating that investors and occupiers see value in smaller, well-positioned properties with modern amenities.
This supply constraint in Joel’s preferred size range creates a structural advantage. Developers focus on larger projects because they’re easier to finance and build. This leaves the small-box market underserved—exactly where Joel operates.
Key Takeaways: Is Debt-Free Industrial Right for You?
Joel Friedland’s unconventional approach challenges real estate investing orthodoxy. Here’s what you need to consider:
Debt-free industrial investing works best when:
- Capital preservation matters more than maximum returns
- You have patient capital for 15-20 year holds
- You target small-box properties (under 100,000 SF) with manufacturing tenants
- You can find properties with long-term lease potential
- You’re in or approaching retirement and need stable income
This strategy isn’t ideal if:
- You’re young with decades to recover from setbacks
- You need maximum leverage to scale quickly
- You want 18%+ IRR instead of 12-14% returns
- You can’t tie up capital for extended periods
- You prefer shorter-term value-add plays
The critical insight from Joel’s four decades of experience? Risk management matters more than maximizing returns. The investors who survive and thrive through multiple market cycles are those who can weather the downturns without being forced to sell.
As Joel learned in 2008, “the borrower is a slave to the lender.” Eliminating that relationship costs you upside, but it also eliminates the downside that can destroy decades of wealth building overnight.
For the right investor profile, that trade-off might be the smartest decision you never knew you could make.
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