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In this episode of the Investor Fuel Podcast, host Leo Wehdeking interviews Adam The Brit, a seasoned real estate investor who shares his journey from starting in the Netherlands to building a substantial portfolio in the United States. Adam discusses his strategies for managing real estate, navigating financial crises, and the importance of networking. He also shares insights on current trends in the real estate market, including the impact of AI and the shift towards higher quality assets.
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Investor Fuel Show Transcript:
Adam The Brit (00:00)
I went to Phoenix and ⁓ I bought 50 homes fromdifferent banks.
those homes were bought for an average of $27,000 a door and the average foreclosed mortgage amounts were $230,000. So a little under 10 cents on the dollar, right? And people looked at me at the time, they’re like, you’re crazy. You know, you’ve got this property in Houston, you can’t sell and you’re out buying 50 houses in Phoenix.
you’ve got to
try and compartmentalize the problems in one area. And if you can profit in another,
hopefully the profit in the one area offsets the losses in the other area.
Leo Wehdeking (02:09)
Hey everyone, welcome to Investor Fuel Podcast. My name is Leo. I’m your host today. And today I’m joined with someone I’ve been looking to chatting with for a long time. How’s Adam who’s been making actually serious moves in the real estate industry. Glad to have you here Adam. How are you?Adam The Brit (02:31)
Excited to be here Leo, yeah, pretty good man, pretty good. Sunny day today and yeah, it’s ⁓ start. guess we’ve had the sort of summer slow down a little bit. Start of September, let’s go.Leo Wehdeking (02:43)
Very good, very good. Some people, you know, they start saying that when September comes, you feel like it’s December, you know, because of the air. So very good, very good. ⁓ I’m very glad to have you here, man. Listen, I think our listeners are really going to take something away from how you’ve been ⁓ dealing with all the… ⁓ with your own portfolio, okay? Can you, you know, tell us a little bit…How were you able to build up the portfolio that you have right now?
Adam The Brit (03:19)
Sure, well, I came to the States in 2000 ⁓ from the Netherlands and I had a semiconductor distribution company there ⁓ and I was looking to open an office in the States and I’d started buying commercial real estate as a sort of a side business in the Netherlands and when I moved to Houston originally, ⁓I started buying apartment buildings with the excess money I was making from that trading business and kind of grew it to maybe, I don’t know, seven or eight buildings, maybe 150 units, smaller properties and was overseas actually at the time and found out that our property manager had been stealing a whole bunch of money. And I was like, man, this sucks. There’s so many moving parts and ⁓
there must be a better way to invest in real estate, ⁓ you know, where you’re not dealing so much with tenants and toilets and there’s not so much turnover. And so I kind of started looking at triple net leased real estate as an opportunity. And so I bought my first triple net lease building in ⁓ 2004 and grew that portfolio ⁓ to where it is today, ⁓ which is about 1.3, 1.4 million square feet. And it’s roughly split 50-50. ⁓
multi-tenant industrial, it’s kind of known as small bay industrial, ⁓ and then multi-tenant retail. And along the way, of course, you know, there’s been the financial crisis. I did get back into apartments and homes
a little while in 09, ⁓ buying hundreds of houses for pennies on the dollar, which we can talk about if you like. But, you know, the fundamental backbone to the business since then has been triple net lease real estate.
And the reason I think that is an interesting asset class is because it really allows you to scale. And like I said, there’s less moving pieces. It’s a lot easier to underwrite. ⁓ And to me, it’s a more favorable asset class.
Leo Wehdeking (06:20)
All right, perfect, Adam, you know, something that really caught my attention about you was the way that you’ve been able to handle your business by yourself and build up the 1.3 million square feet of ⁓ multi-tenant retail and also industrial. All right. ⁓ Now that’s not easy to do. All right. So what’s what’s been the key, okay, to keeping that machinerunning smoothly the way that you do.
Adam The Brit (06:53)
So I think the key is, know, initially you’ve got to do everything yourself, right? ⁓ If you should never hire someone to do something, if you don’t know how to do it yourself. ⁓ So I think the key is, know, especially when you’re starting out, you know, you’ve got to be the chief cook and the bottle washer, right? You’ve got to do everything. Soup to nuts, you’ve got to know how to lease. You’ve got to how to manage. You’ve got to know how to turn units. You’ve got to know how to fix, you know, ACs. You’ve got to know how to shop for stuff.So you kind of really understand the nuts and bolts of the business. This is applicable to anything, not just real estate. And then once you kind of have that knowledge, you’ve got to look at what you ultimately, or where you ultimately want to go with the business, right? I mean, if you don’t know where you want to take it, ⁓ you’re going to go around and in circles. So I kind of set, as I call it, my life GPS, where I wanted my life to go, and then how I was going to get there.
And I realized that having had a number of operating businesses in the past, I realized my strength is not managing people. And I’ve also seen ⁓ many market circles over the years and have seen that companies will take on loads of staff, you invest a lot of money in that. And then when the market turns, you can’t afford to keep them and all that human capital is gone and that investment basically goes with it. ⁓
But on the lead up to that, you’re often buying buildings or products or whatever, just to support the payroll basically. So it kind of is a feed the beast problem. And I didn’t want to be in that situation. I wanted to be able to pick and choose. So I made a conscious effort to ⁓ choose assets that I felt I had a very strong knowledge in and then ⁓ hire experts that have.
you know, or companies basically like subcontract the, you know, the management and the leasing out to that, ⁓ you know, allow me to then scale or contract depending on the market, but it allows me not to have a payroll and no payroll means no expenses, no office, no staff, no, and a lot less drama. ⁓ so it means you can also function from, you know, anywhere in the world. ⁓ and, ⁓ you know, the trade off to that is obviously that
you know, no one does something as good as you do, but you know, you have to realize if you want to scale that you can’t do everything, right? So you have to be okay with maybe not 100 % good, but you know, 80 or 90 % good. So that’s kind of, you know, my playbook as it were.
Leo Wehdeking (09:22)
Thank you.Alright, alright. Wow, that’s actually pretty cool, man. Okay, the way that you’ve been able to navigate the whole process, the whole learning process, because you have to learn a little bit about everything to become the person that you are right now. Am I right?
Adam The Brit (09:50)
Absolutely. mean, you you, you, know, you should never ask someone to do something number one that you are not prepared to do yourself is kind of the old adage, right?And then on top of that, you know, I think that, you know, if you, if you don’t understand something or know something, you’re not going to know if someone’s ripping you off or, know, you’ve got to know, you’ve got to have a good knowledge. This is a big boy business. You can make a lot of money, but you can lose a lot of money, right?
So you’ve really got to know what you’re doing. And I think that you really have to have a strong basic understanding of the asset classes that you’re in, the markets that you’re in, because otherwise, you’re not going to recognize when mistakes get made or and when you’re making a mistake. And obviously, the best way to learn is to make mistakes and hopefully learn from that so you don’t make them again.
Leo Wehdeking (11:21)
Exactly.All right. All right. Now, ⁓ I know that every operator, you know, at a moment, you know, where things get real, okay, maybe a deal went sideways, or maybe a hot time that you had to pivot fast. Would you mind sharing ⁓ one of those moments?
Adam The Brit (11:47)
know, I think the scariest time probably was, you know, during the last financial crisis ⁓ when ⁓ the, you know, everything was kind of rocking and rolling. And you may remember the time, you know, you jump in a taxi from the airport to, you know, downtown wherever, and the taxi driver would just be telling you, yeah, just bought, you know, another three rental homes andEveryone was a real estate investor and I think people kind of sort of lifted up with the euphoria of free money or easy money. I had, at the time I was doing spec home, high-end spec home construction. I had four homes sitting completed, at the time I think they were costing me like 50,000 a month to hold.
and the market was dropping at the same time my commercial buildings, some of the tenants were having trouble and it was looking really, really shaky. And at that moment, you really have to kind of look beyond the noise and look at how you can potentially profit from the chaos. And so at that time, I realized that,
Leo Wehdeking (13:00)
Okay.from decaying.
Adam The Brit (13:12)
many markets were really getting hit badly with foreclosures and stuff. And so even though I had four houses in Houston at the time, probably six, $7 million of spec homes on the ground finished that were costing me money and my tenants were a little shaky, some of them in my commercial buildings, ⁓went to Phoenix and ⁓ I bought 50 homes from… ⁓
different banks. They were just listed on the MLS and those homes bought for an average of $27,000 a door and the average foreclosed mortgage amounts were $230,000. So a little under 10 cents on the dollar, right? And people looked at me at the time, they’re like, you’re crazy. You know, you’ve got this property in Houston, you can’t sell and you’re out buying 50 houses in Phoenix. And you know, what are you doing? But you know, here’s the thing, you know, you’ve got to
try and compartmentalize the problems in one area. And if you can profit in another,
hopefully the profit in the one area offsets the losses in the other area. So in that instance, we took those 50 homes. We paid ⁓ just over a million dollars for, around a million, just over a million. And within 90 days, we’d ⁓ sold them ⁓ basically like a rent to own.
for a little over $3 million. ⁓ Because at the time, you know, there was a housing crisis because all these people had got ⁓ kicked out of their homes. And so we were basically selling them for the same price as rent. And so people could build some equity back in their lives at the time, you know, a lot of people have been foreclosed. And so that was a scary time
for a little while, ⁓ just because there was so much chaos, right? ⁓
But like I mentioned before, there’s always an opportunity. Every negative always has a positive. You’ve just got to find that positive and then block out the noise of the other stuff. And it’s not that easy, but yeah, the problem comes when there’s just noise and there’s no opportunity. But thankfully, there always seems to be something good, even if there’s a lot of bad. And you just got to find the good.
Leo Wehdeking (16:17)
Well, actually, you know, a lot of people, don’t like to share that kind of stuff. You know, when when you know, when things got real, you know, they I don’t know, they feel scared. And honestly, for me, that is what separates the folks who just dabble from the ones who stay in the long term, which actually you did. You know, you saw an opportunity somewhere else where there was no noise or maybe a little noise.All right. And you were able to balance your finance, you know, so that’s actually very good. Very good. Now let me ask you something, ⁓ Adam, what are the most, what are you most focused in right now on solving or scaling?
Adam The Brit (17:04)
So I’m actually, right now I think ⁓ there’s a fundamental change coming ⁓ in a lot of things. think AI is going to significantly impact ⁓ real estate and ⁓ how people work and how people do things. think, and I’m not quite sure, I see a lot of, I’m a little older than maybe some of your listeners, but there’s a lot of parallels to be drawn from the internet and it’s sort of…acceleration, ⁓ certainly at the end of the 1990s. ⁓ But I think it’s going to be a lot more instrumental than it was then, and it’s going to move a lot quicker. ⁓ There’s obviously a lot of ⁓ interest around data centers ⁓ and finding land for data centers. ⁓ The issue with data centers is that they require a lot of ⁓ energy. ⁓ So you’ve got to find
land that has access to the right kind of energy ⁓ sources. ⁓ I think there’s a lot of noise around interest rates and immigration and that kind of thing, which is maybe changing my thesis a little bit. I’ve historically been really focused on immigrant-centric ⁓ commercial real estate that serves an immigrant demographic, which in my
you know, opinion is underserved in this country. ⁓ So I think there’s going to be a flight to quality that typically is when times get tough. ⁓ So I’m looking to, ⁓ and I’m also, you know, getting to an age where I’m looking to maybe have slightly less moving pieces. So I’m looking to trade out of some of the more ⁓ involving sensors that I have into maybe slightly higher quality sensors.
⁓ It’s challenging right now because certainly retail is still quite strong. It’s hard to find ⁓ any kind of value add component to it. Most centres are fully baked and I don’t like to buy fully baked product. I like to add value. ⁓
I think that ⁓ the multi-tenant industrial space, I believe, has ⁓ become a bit too trendy, for lack of a better word. There’s a lot of money chasing that kind of product where there wasn’t before. think ⁓ rental rates have probably ⁓ outgrown a lot of the tenants’ ability to pay ⁓ and a lot of these
properties are sold with the assumption of increasing rental rates and I wouldn’t necessarily subscribe to that theory. I think they’ll probably stay flat or maybe soften a little bit in, you know, market dependent, of course. So I’m probably looking to scale back a little bit in the much smaller Bay and maybe move into slightly larger Bay. So my average Bay sizes for my portfolio is probably about 1,750 square foot per space.
Leo Wehdeking (19:53)
Yeah.Adam The Brit (20:11)
So I’m looking to probably move more into the sort of five, 10, 15,000 square foot spaces. So a bigger tenant, maybe more established tenants that maybe have longer waltz on them, lease rates. Because the multi-tenant industrial space is somewhat like, I guess for people that don’t know the business, it’s kind of probably the closest thing to multifamily. The lease is a short term.typically one year, sometimes three years. You know, have many tenants in one building, much like a multifamily building. You know, the difference is most or often those leases are triple net leased. So, you you’re not responsible for the toilets and, you know, the AC when it breaks down, et cetera, et cetera, like you would be in an apartment building. So it’s, you know, it’s quite attractive. It’s also a great hedge against inflation, but, you know, with that comes a lot more moving pieces.
⁓ And the tenants are typically not as ⁓ credit worthy as a larger company that would require a larger space.
Leo Wehdeking (21:18)
Alright, perfect, perfect. Now, Adam, I know that a lot of people listening are either earlier in their journey or looking to level up at least, okay? And I think they will benefit ⁓ from hearing this, alright? So when it comes about relationships and growing your network, I know that you work on your own, ⁓ but what’s made the biggest difference for you?Adam The Brit (21:43)
So I think, you know, I think the first thing that, you know, I think a lot of people forget, the first thing you’ve really got to think about, I think when you start out in life, you know, when you’re in your late teens, is what am I trying, where do I want to end up? What does my life look like when I’m, you know, 40, or 30, when I’m 40, when I’m 50, when I’m 60, you know, when I’m, when I’m retiring, what do I want my life to look like, right?And then, you know, you really have to kind of design your, you know, life GPS. It’s like, you know, where am I going and how am I going to get there? And then, you know, once you’ve kind of decided what that might look like, then, you know, you’ve got to look around you and say, okay, who are the people that could help me get there? What are the kind of, you know, asset classes or businesses I could do to help me on that journey?
to where I want to ultimately end up and what do I need to do to get there? So, I think it comes around a lot of things. It comes around education and that can be as simple as reading books on whatever it is, real estate investing or even the simplifying out, rich dad, poor dad or whatever it might be, right? ⁓ It can be joining ⁓ local ⁓ business organizations or ⁓ REAs.
⁓ you know, and for the real estate people, ⁓ nonprofits where, know, you get together every month with a bunch of people in your local area, who talk about real estate and, know, maybe finding some people that you kind of resonate with there. And then, you know, after you kind of get some knowledge, you know, joining, ⁓ paid masterminds, ⁓ and, ⁓ you know, in the, in the space that you’re interested in, be it, you know, ⁓ commercial real estate or apartments or.
flipping homes or whatever it might be. ⁓ And they always say that your network ⁓ is basically your network and you become the sum total of the five people you spend the most time with. So make sure you spend time with people that have the same goals and same ideas as you. Because a lot of people, especially when you’re younger, if you have big dreams, a lot of people will maybe try and
pour water on that fire, that energy that you’ve got because they’re scared that you’re going to get ahead and leave them behind or whatever. So you have to kind of evolving as a person, keep moving the goal forward and make sure that your friend group and your associates align with your interests and your ethics going forward.
⁓ and you know, it, it changes over time. You know, you have to reset those goals as you go. ⁓ cause obviously when you’re, you know, when I was 20 years old, you know, I had, you know, very different realities than I do, you know, in my fifties, right? So, ⁓ you know, you have to keep remembering to reset those goals and keep growing. But, know, remember in life, you know, you typically get what you asked for. So make sure you’re asking for enough. You know, there’s a.
a reason that Grant Card owned it so well, you know, 10x, right? You don’t 2x, you 10x. Because if you’re going to ask for 2x, you might hit 2x. If you get 10x, then you just succeeded a lot further. always ask for more.
Leo Wehdeking (25:22)
Okay, all right, perfect. ⁓ Listen Adam, before we wrap up, okay, if someone wanted to reach out to you, connect with you, maybe collaborate or learn about what you’re doing, what’s the best way for them to reach out to you?Adam The Brit (25:39)
Okay, so the best wayis either to connect on LinkedIn, ⁓ Adam the Brit. You can also reach me. I’m happy to answer questions by email. ⁓ The email is adam at adamthbrit.com. And I’m also going to be bringing out a book ⁓ early next year. ⁓ We’ve talked a lot about, you know, deciding on where you want to go in life and it’s called Your Life GPS.
⁓ grind, pivot, succeed, and it’s the entrepreneurs roadmap to your ideal life. So I’m partnering with a charity called bills.org and they provide ⁓ entrepreneurial education to underprivileged high schoolers across the country. And I’m donating 100 % of the profits to them. ⁓ So look out for that as well. It’s going to be on social, et cetera. ⁓ But in the interim, the best way is probably through LinkedIn.
Leo Wehdeking (26:39)
Perfect. Well, listen, Adam, I really appreciate your time, okay, your story and also your perspective. We need more people like you in this space who are doing it the right way. Thanks again for being here.Adam The Brit (26:50)
Appreciate it.Leo Wehdeking (26:51)
Thanks again for being here and for those of you ⁓ tuning in, if you got value from this, make sure you’re subscribed. All right. We’ve got more conversations with people with us or with operators like Adam. Okay. Who are out there building real businesses. All right. So we’ll see you on the next episode.
