MI354: Faith, Mentorship, and the Road to a $12M Portfolio w/ Adrian Frederick

0:00You're listening to TIP. I was in a great place professionally, marriage and ministry. I'm also clergy. So I was, by all accounts, in a very good spot. But I was underneath it all. I felt like I was dying inside. I was depressed and I couldn't figure out why. Everyone is impressed about me except me. I feel like I'm barely scratching the surface. Like I'm just going through the motions of what success looks like, but I don't feel successful. And so we met for lunch and he said, here's what I want you to do. I want you to make a love to hate to list for the next 60 days. I want you just to journal what you love to do and what you hate to do.

0:40Like what gives you energy and you're passionate about and write down what it just drains you. Just it feels like, oh, why am I doing this? Why am I here? Right. Hey guys, in today's episode, I had the pleasure of sitting down and talking with my good friend and former corporate lawyer turned real estate entrepreneur, Adrian Frederick, to talk about how to make a career change and pursue your highest calling. You'll also learn about what his first trip to the Berkshire Hathaway annual meeting was like, how he got his start in real estate, how to find the right mentors and mastermind groups, what his current real estate strategy is, how his faith influences everything he does, and so much more.

1:21Adrian is a former corporate lawyer turned serial entrepreneur, real estate investor, and general contractor who left a successful law career to pursue his true passions in real estate. He's gone on to build a$12 million portfolio in just three years while also successfully launching his own general contracting business. Without further delay, let's dive into today's episode with Adrian Frederick.

1:49Celebrating 10 years, you are listening to Millennial Investing by the Investors Podcast Network. Since 2014, we interviewed successful entrepreneurs, business leaders, and investors to help educate and inspire the millennial generation. Now for your host, Patrick Donnelly.

2:15Hey, everybody. Welcome to the Millennial Investing Podcast. I'm your host today, Patrick Donnelly. And joining me in the studio today is my friend, Adrian Frederick. Adrian, welcome to the show. Thanks for having me, Pat. Glad to be here today. Looking forward to it. We've been working on this for a while. I'm glad we're making it happen. We're going to talk about real estate, your background as a corporate lawyer. We're going to get into your faith a little bit, a lot of different things. This is going to be a fun interview. I just wanted to hear a little bit. You've got a unique background growing up, and I wanted to start off with that, just kind of touch on what it was like growing up for you.

2:49Growing up for me was very interesting. I grew up in Brooklyn, New York, born and raised. My parents are from New York. Well, my mom is at least, and my dad is from the island of Barbados. Very diverse, rich upbringing in culture. Holidays, the food was always very interesting, right? You'd have the US side, right? My mom, her family was from the South. So I'd have like macaroni and cheese and collard greens. And then my dad's side, I'd have oxtail and curry goat. So it was a very interesting holiday, but it was a great upbringing because I I had a lot of great values brought forward from my dad's side and my mom's side.

3:30So I want to hear a little bit more. You ended up going to Norfolk State, right? And tell me a little bit about kind of your career aspirations growing up, because your dad was what he was involved in some kind of government service. Is that right? So my dad worked for the United Nations for almost 40 years. He retired from the UN. He started there as a young man and stayed. He worked, his day job was in personnel, but he did a lot of diplomatic related missions for the UN. And so all of those things are things that he doesn't really talk about, but it's stuff that he's very proud of. And he served in that vein for the UN for several years.

4:08So I just was interested, like when you were as a young man, what were some of your like career aspirations? What did you think you were going to be when you grew up? So I knew since I was eight, I wanted to be an attorney. I didn't know what type of attorney, but I knew from young, I think I read too many Encyclopedia Brown books and watched too much Matlock. And my mom kept buying them and I was eating them like food. I just kept reading those books and every new series. And so Mysteries, Agatha Christie, anything that had to do with solving a crime or really advocating for someone was like a very instinctive, natural thing for me.

4:46And so I just knew I wanted to practice law. Now, over time, what that was would change because of my personality. So the thought process of when to advocate for people and loving to learn and be in the know and to use that information to help people, that's always been there. I don't think that'll ever change, but I think the type of law changed because of my personality. So I dreamed of being in the courtroom, of having that Johnny Cochran moment of the glove that's unfit, you must have quit, big aha moment, right? But my personality, I hate conflict. I just absolutely abhor conflict. So for me, I realized that I'm more conciliatory.

5:29I'm more about bringing people together, building bridges. How can we figure things out? Heck, how can we make some money? right? As opposed to focusing or majoring in the minor, how can we figure things out? And so it probably is the reason why I became a contracts and corporate lawyer. So I know that you've done that Strength Finders 2.0, and some of your top strengths are like learning, strategy, intellection, all of that's perfect for the law, I would imagine. It certainly has been helpful. It certainly has helped me. And even as a lawyer, I evolved in realizing that I really was a business person moonlighting as a lawyer.

6:11And I really was a better business partner to you with a legal brain who could help you strategically think about what it is you're trying to do. So I could help you strategically plan where you want to go and grow to. And I think that was the biggest asset. So even though I worked for a major law firm, eventually, right, I did the whole small firm. I was a solo. I did the small firm that I went to. a large mega firm. But probably where I feel like I added the most value was the transition to in-house corporate counsel. Were you entrepreneurial as a kid or did you have some kind of modeling that people around you that were entrepreneurial and business-minded?

6:52So interestingly enough, no. When I think about it, I really didn't identify anyone as an entrepreneur around me, even though in Brooklyn, everyone's an entrepreneur, whether you know it or not. So when you go around the corner to the supermarket, to the bodega, and there's a whole family working in the supermarket down to the three-year-old that's pressing the buttons on the cash register, you laugh at that family like, why are these kids working in here? But they were a family of entrepreneurs. I just didn't know what to call it. I was entrepreneurial and didn't even understand it, right? I had my first business when I was eight.

7:25I sold packs of bubble yum in class. So one day I was sitting in class and I blew a big bubble and it was huge. It almost like went all over my face and the kids laughed at first. And then the kid next to me said, hey, can I get one? And I don't know what it was in me that made me say, yeah, for 50 cents. and he went in his pocket and gave me 50 cents and I gave him a piece of gum. And then somebody next to me, next to him said, Hey, can I get a piece of gum? And I said, 25 cents. And they gave me 25 cents. This is wow. I got 75 cents now. So I blew another bubble when the teacher turned around.

8:03Didn't know that that was my marketing plan, right? See the product. Yeah. See the product. My marketing strategy was blow the biggest bubbles you can let that sucker splash on your face. But guess what? That day I went to my mom and said, hey, we need to go to the supermarket. They sold five packs of bubble yum, five in a pack for$1.25. And I made like$30 that week on gum. My mother was like, what are you doing? Where did this money come from? And I told her. So she helped me to keep my supply up. My first company was, it was straight arbitrage opportunity, right? I was the bubble young boy. Yeah.

8:42So I did that all through second grade. I love it. I think Warren Buffett did something similar. And I know you were just out at the Berkshire event, I believe. I want to hear a bit about that. They call it Woodstock for Capitalists. So I want to hear how it went. Woodstock for Capitalists. It was fascinating. 50 ,000 people or whatever filled this whole stadium, not an empty seat in there, right? And I mean, and you're all cramped in and the energy is like palpable. And then like they play this incredible video that shares the story of Warren Buffett and Charlie Munger for like the last however long they've been doing this.

9:22But really their relationship and all the sound bites of them at this event every year, the way they move is like Ernie and Bert, like Lacey and Cagney, like Laverne and Shirley. I mean, they when you see one, you see the other and the energy was just so great during the video. I think what was also apparent is the value of Charlie. Right. Warren, he absolutely made it clear that Charlie was the big deal. Right. Charlie was six years his senior in age. He learned so much from him, but their level of friendship and mutual respect was just so significant. And I think they really captured that story well.

10:05It also showed like, wow, this isn't the same without Charlie. So as awesome as Warren is, it didn't have the same energy when they had the successors up there and then who the next person is up, I think it's Greg Ensel, right? So whoever his successor is, and then Ajit, who was over their insurance line. Had you been before? Was this your first time there? This was my first time going. So this was like a whole, I was so excited and I was still excited. I got to see Warren Buffett and listen to his insights and how he still perceives everything. And it's so matter of fact, it's so practical. I feel like in today's time, everybody has like a new shtick and they feel like they've got this new thing, this new way of thinking about things that's going to make them a gazillionaire.

10:55But Warren Buffett is very practical and Berkshire has been successful, not because they chase the shiny, sexy coin. I mean, there's nothing sexy about DairyCoin. There's nothing sexy about Brooks walking shoes, right? But man, are those shoes comfortable. I've got five pairs, right? Literally. All right. So he's not chasing the shiny coin. He's chasing fundamentals. It's kind of interesting to me. I did a episode last week about Warren and Charlie. And I think Charlie originally called the decision to buy Brooks, sure dumb to Warren. He's like, this is a dumb purchase, but since you've done it, why don't you use this as a holding company and just buy wonderful businesses at quality businesses at good prices?

11:37And he really changed how he thought about investing. I mean, he was like a pure cigar butt, Benjamin Graham kind of investor. And I think Charlie really changed his mind about how to invest. He did. And he definitely acknowledges that. I mean, he started literally meeting with friends and a family telling them about what he did and what he was doing. And they said, hey, we'll give you a hundred grand. And he was so, he so marveled at what the investors thought about him to trust him. That's really why he does this, right? He's interested in hearing feedback from shareholders directly from the person that owns one share, right?

12:18It's great that you own a thousand, but the person that owns five shares really made a conscious decision to buy those five shares. And he wants to know, do you believe in our company? Do you believe in our brands? Do you believe in what we're invested in? Am I making the right move here? Because it's the everyday person that drives those companies to success. Let's take a quick break and hear from today's sponsors. Even Einstein had blind spots. That's why modern science is built on the idea of peer review. Investing may be more art than science, but that doesn't make pure feedback any less valuable.

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13:34That's theinvestorspodcast.com slash intrinsic value community. Support for the show comes from public.com. You're thoughtful about where your money goes. you've got your core holdings, some recurring crypto buys, maybe even a few strategic option plays on the side. The point is you're engaged with your investments and public gets that. That's why they built an investing platform for those who take it seriously. On public, you can put together a multi-asset portfolio for the long haul. Stocks, bonds, options, crypto, it's all there. Plus, industry leading yields on your cash with no fees or minimums.

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15:18To begin getting smarter about investing, just visit theinvestorspodcast.com slash get started with stocks. That's theinvestorspodcast.com slash get started with stocks. And for a limited time, you can use code stocks15 for a 15 % discount at checkout. All right, back to the show. I wanted to hear a little bit about if those two guys, Warren and Charlie, have they influenced you about how you think about your own investing in real estate and things like that? Have any other principles worn off on you? No, not yet, because I didn't know much about them other than high level about Warren and Charlie.

15:58So I didn't let them inform my decisions. Probably the most influential person originally on real estate would be my mentor and partner, Steve Woffin. He really, I think, played a huge part in shaping how I saw real estate, how I saw how money moves and the power of real estate to create multi-generational wealth. I mean, early on, I thought about the stock market, but the one thing that never really made sense to me was, man, even if I make a fortune on this one stock and boy, but I love to, if I sell it, it's gone. The moment I sell it, it's gone. And now it's like, man, then what? What's next?

16:38And so you're always chasing that next thing. Oh, and by the way, a third of it's gone or 40 % is gone in capital gains. So how do I figure out something that's the gift that keeps on giving? And so Steve very simply said, well, there's just so many ways to make money in real estate. I mean, if you have the asset, it's tangible. You can collateralize it to go and do something else. You can do a cash out refi, which is a non-taxable event. And so literally you can pay yourself. You can make money off of that, right? You can cash flow. You can get rent off of that asset. The asset depreciates. So now you are reducing your taxable income.

17:21Oh, and by the way, it appreciates. So you literally are making money while you sleep. So it's just so many different ways to make money in real estate that it really was a driver for me to bet on myself and to to actually cash out my 401k a number of times to say, hey, I'm never going to get to where I want to get to from a retirement standpoint with 300 grand and a 401k. But what if I took that 300 grand and bought four duplexes, right? What would that do for it? What if I then paid off those duplexes and put it into a trust and now into a retirement based trust where now all of that gain is just, it just continues to grow and grow.

18:05And that's my retirement. Wouldn't that look a whole lot different? Well, it does look a whole lot different. Now we're talking about instead of$300 ,000 in a retirement, there's four and a half million in a retirement, in a seven-year span. So literally, you can supercharge what your future looks like as opposed to relying on the government to raise the age, to move the ball for money that you'll never touch. And by the time you do, you're like coughing and on your last breath. So I love the government. There's a lot of directions I could go here, but I wanted to touch on the importance of your mentor, Steve.

18:40He's been a game changer, it sounds like for you, You totally kind of changed the direction of your life. Talk to me a little bit about how you guys met and then any advice you have for like younger people to meet people like this who are influential, who can really have a huge impact on your life. What kind of thoughts do you have for how you can kind of foster those relationships? So I met Steve in 2003. It was a mentor protege program for the Fisher College of Business. So I was doing a JD MBA program at the Ohio State University. I was in law school and business school full time, law school by day, business school by night, and then probably crying in between those periods and a thumb in my mouth or something.

19:22I don't know. But as people say, wow, that's so great. And I say, no, I probably was just a glutton for punishment. But yeah, I did law school by day, business school by night. And in this program, you're paired with a local CEO for three months and you're supposed to just shadow them, go to some meetings, learn how they CEO stuff. OK, cool. But we actually hit it off, became friends and would eventually one day become business partners. And now we're in 2024. So what I'd say is advice for people is keep an open mind about who you're going to meet and be open to that. That person may not look like you may have a different background, may have a different belief system, but they absolutely can be a champion in your life.

20:10So I believe that there are mentors, which really to me are guides. Right. And then you have people who are sponsors. Right. Those people are the ones that are willing to put your name at the table. They're willing to bring your name up in a strategic way. But the champion is the one who's willing to sell it. They're willing to put their reputation on the line for you. And I feel like Steve in various spaces has been mentor, has been sponsor, has been champion for me. But he's also been friend and father figure for several years. So I really do feel like in many respects, I've been blessed to have him as a bonus dad.

20:58He is incredible. He gives me, you know, he's tough. He's kind and tough at the same time. He's going to give you firm, straight conversations like he would his own sons. And sometimes those conversations aren't touchy feely, especially when it comes to money. Right. And investments. But it's good because I didn't grow up with that ecosystem, right? I didn't grow up knowing about how to treat your investors, how to treat your partner, what are expectations when you join venture. And so I've learned all of that from him. But most importantly, we have shared values. What really made that connection for us was faith, right?

21:36We both absolutely love Jesus, right? His family, his wife. They are brimming with love for Jesus Christ. that shaped their whole lifestyle. He didn't grow up as a believer. So for him, he has a very authentic faith, much like you, Pat, in the sense that it wasn't his thing. It wasn't always his thing. He didn't grow up in church where this was his belief system. He really wrestled with this whole faith thing. And once he got it. And so by the time I met him, he already had him. He had a real relationship with God. And so we connected two very different worlds, two very different people, two very different pockets, but we connected through our love of faith, family, shared values, and we use that to build bridges for everything else in our life.

22:29Man, there's so much I want to talk about here. You said a while ago about the importance of betting on yourself, and I believe Steve helped you with that. You were a corporate attorney at a regional bank here in Columbus. I think you told me a story about how he helped you think about making that transition. I know he had you write a business plan for what you wanted to do, but can you go into some of the advice he had for you as you left your stable corporate job for the life of a real estate investor? Yes. This is probably around 2019. This was in 2019. We're approaching 2020. And I was in a great place professionally, marriage and ministry.

23:10I'm also clergy. So I was, by all accounts, in a very good spot. But I was underneath it all. I felt like I was dying inside. I was depressed. And I couldn't figure out why. And so I called Steve up and said, hey, I'm really not in a good place. And I can't figure out why. Everyone is impressed about me except me. I feel like I'm barely scratching the surface. I'm just going through the motions of what success looks like, but I don't feel successful. And so we met for lunch and he said, here's what I want you to do. I want you to make a love to hate to list for the next 60 days. I want you just to journal what you love to do and what you hate to do, like what gives you energy and you're passionate about and write down what just drains you.

23:57It feels like, oh, why am I doing this? Why am I here? So I did. I wrote down the things that I like and the things I don't like. I wrote down, hey, I love designing things. I think I watched way too much HGTV, admittedly. And so I love designing things. I could literally be in a space and see, oh man, maybe we should put a bathroom here. Maybe we should move a wall. Maybe we should paint it this color. Man, I love that color palette. This furniture works in this style house. And so it really opened me up to seeing things that I hadn't really seen before. And then I said, man, I hate paperwork, which is very fascinating because I'm a contracts lawyer.

24:38Obviously still, I hate arguing with people. I love to make people laugh. I love to bring people together. I love to see the light bulb go off where people who were in conflict figure out that we're better together. And so all of those things started to shape my comments. And when we got back up, he circled things on the page and he said, this is really fascinating. Do you know what's not on your left two side? And I said, what? And he said, practicing law. And tears just started to stream down my face, I had not realized that wasn't on the list, that it really wasn't even on the list. It wasn't on my hate to list.

25:20It just wasn't on the list. And so that's when I knew it was time. I needed to make a shift. What was at the top was design, construction, renovating, ministry, building bridges, but practicing law was not on the list. So at that point, I had to make some real choices and then talk to the people closest to me to see if I was crazy. And also because we built up so much pride in the role of being an attorney, I'm the first in my family for my father to come from very humble beginnings, right? It's a source of pride to him too. It's a source of pride for my whole family as an African-American. And so I had to reconcile that And almost like a death, I had to grieve the idea of me being an attorney.

26:11I had to grieve it. I had to work through all the pride I had built up in it in order to be able to say, I'm OK. I can do something else. Right. And I'm ready to move on. And so I had to work through that for a couple of months. But once I did, I went to my wife and had the conversation and she was so supportive that it just gave me the energy to say, now I'm going to talk to my parents. And now that was a hard discussion. Right. My dad was like, hey, why don't you go back and pray about that? Right. Oh, it'll pass. And so I think it kind of took my dad a bit to get over the idea. But once he did, he was sold out.