Welcome back to the Timeless Investor Show. I'm Ari Van Gemeren, your host, student of history, and real estate fund manager. Today, I want to tell you a story that's going to rock your world and make you think about building your own dynasty a little bit differently. What if I told you that one family has owned the same London real estate for over 300 years and they're worth$15 billion today? Not 15 million, 15 billion with a B. Well, most real estate fortunes last maybe two to three generations. You know the old saying, and I keep repeating it ad nauseum on all social media platforms, but first generation builds it, second generation maintains it, third generation blows it up. Well, the Grosvenor family has survived everything history could throw at them. And we're going to learn from what they've done. They survived the Great Fire of London, the Napoleonic Wars, two World Wars, the Great Depression, multiple property crashes, Brexit, and they're still standing. In fact, they're not just standing, they're thriving. Today, they own Mayfair and Belgravia. If you've ever been to London, these are the neighborhoods where a parking spot costs more than most people's cars. We are talking about some of the most expensive real estate on the planet. But here's the thing that's going to make you rethink everything you know about real estate investing. This entire empire,$15 billion worth, started with one strategic marriage in 1677. One decision. One family that understood something about real estate that most investors today still don't grant. So settle in. Let me tell you the story of how patient capital builds dynasties. And more importantly, as we always focus on on The Timeless Investor, what we can steal from their playbook to build our own real estate or operating empires. All right, guys, let's start at the beginning, London, 1677. Picture this. The city is still rebuilding from the Great Fire 11 years before. Most of London is cramped, dirty, and frankly, probably pretty miserable. But there's this young guy named Thomas Grosvenor. He's from a decent family up in Cheshire. I don't know if I said that right. Cheshire? Cheshire? But he's not wealthy. He's not poor, but he's definitely not rich. And then there's Mary Davies. She's 12 years old. I know. I understand. Different times, guys, different times, totally acceptable then. And she's just inherited 500 acres of land west of London. But here's the thing. It's basically swampland, marshes. Nobody wants it. It's outside the city. It floods regularly, and most people think it's worthless. So what happens? Thomas Grosvenor marries Mary Davies. Now, this was an arranged marriage. Again, we're dealing with different times here. And when it happened, people thought Thomas got a pretty mediocre deal. Mary Davies had land, but it was basically useless farmland in the middle of nowhere. But Thomas saw it differently. He looked at that swampy land and he thought, you know what? London is growing. And when London grows, it's going to grow west. And that is where this whole story starts. One guy who saw the potential where everyone else saw a swamp. Now, Thomas didn't just sit on this land. In the 1720s, he starts developing it. But here's where it gets interesting, and here's where you need to pay attention, because this is the strategy that built his empire. Thomas doesn't sell the land. He develops it into Grosvenor Square, these beautiful townhouses for wealthy aristocrats. But instead of selling the properties outright, he does something clever. He sells 99-year leases. Now, think about this for a second. The buyer gets to use the land and own the building for 99 years. They pay Thomas an upfront fee plus annual ground rent. But when those 99 years are up, the land and the building go back to the Grosvenor family for free. It's brilliant. Thomas gets steady income from the ground rents. He gets development fees upfront. And at the end of the lease, he owns everything, the land he started with, plus all the buildings and other people paid to construct. This is amazing. Ladies and gentlemen, patient capital at its finest. Think about that. Seriously, think about that. You lease your land out for 99 years. It's gone. In your lifetime, you're not going to get it back. Think about the long-term time perspective to make an investment decision that's a 99-year investment decision. I mean, it's fascinating. And this is literally, guys, this is patient capital at its most core element, right? And it worked. By the 1740s, Grosvenor Square is the place to live in London. We're talking dukes, earls, the wealthiest families in England. The Grosvenors created London's first luxury neighborhood. But he's not done. In the 1820s, his descendants make another brilliant move. They partner with a master builder named Thomas Cubitt to develop an area called Belgravia. Now, Belgravia is even more ambitious than Grosvenor Square. They're not just building houses. They're building an entire neighborhood from scratch. Uniform architecture, strict building codes, selective about who can live there. They're creating a brand. And it works. Belgravia becomes synonymous with wealth and power. If you live in Belgravia, you've made it. And guess who owns all that land? The Grosvenor family. Now let me fast forward through a couple centuries of challenges because this is where the story gets really interesting. The Grosvenors survived everything. The Napoleonic Wars, they keep collecting ground rents. The Industrial Revolution completely changes London. They adapt and they redevelop their properties. World War I, the government tries to confiscate their land for the war effort, but they fight it off. World War II is particularly brutal. German bombs destroyed buildings all across their properties. But here's the thing. Bombs can destroy buildings, but they can't destroy land. And remember, the gross sonorities own the land. So they rebuild, and they're stronger than ever. But the real test comes with death taxes. Every time the head of the family dies, the British government wants a massive chunk of your estate. We're talking 40%, 50%, sometimes 60% of everything. And typically, they build these structures in place in most Western democracies to try to prevent this exact situation. There's a stated desire to prevent having a landed aristocracy that passes wealth forever and never removes themselves. But what do the Grosvenors do? They get creative. Trusts, foundations, legal structures that protect the land ownership across generations. They realize that preserving wealth is just as important as building it. So let me jump now to the modern era because this is where the numbers get absolutely wild. Gerald Grosvenor becomes the 6th Duke of Westminster in 1979. He inherits an estate worth maybe 500 million pounds. It's good money. It's not world-changing money, but it's pretty good. I think most of us would be happy with 500 million pounds. But by the time Gerald dies in 2016, the estate is worth over 10 billion pounds. 10 billion. In one generation, he more than doubled a 300-year-old fortune. Well, how? He does two things. First, he expanded globally. The Grosvenors start buying prime real estate in major cities around the world. New York, Sydney, Tokyo, Hong Kong. They export... Their London model everywhere. But second, and this is critical, like critical, guys, because people don't usually make this decision. They never sell their core London holdings, ever. While other families are cashing out and diversifying into stocks and bonds, the gross fenors doubled down on what made them wealthy in the first place. Prime London real estate. And you see it so much in this day and age. Wealthy families with real estate portfolios and the inheritors pick it up and they just want the cash and they liquidate it. They liquidate it and they lose the compounding. They lose the discipline that comes with owning it and they torpedo the family's wealth. And today, Gerald's son, Hugh, is the 7th Duke of Westminster. At age 25... He's worth over$15 billion. He's one of the youngest billionaires in the world. And it's all because his family understood something about real estate that most people miss. Maybe next time around, guys, we will come back as young Hugh Grosvenor. It'll be an interesting experience in life. But let's move on. Let's move on to what can we learn? So we have 345 years of history from the Grosvenor family. And as always in the Timeless Investor, we're not just learning history and talking about history because we find it fun. Although I find it very fun. I'm sure you do too, if you're listening. And there's so many unexplored stories out there that are so worth learning about. But as always, we want to tie it back. to our core principles, how to be a better timeless investor, how to be a better human being, like how to learn. So what are the principles that the Grosvenors used to build their dynasty? The first principle, you know, you probably knew I was going to say it, location, location, location, but patient location. Thomas Grosvenor didn't buy the best location in London. He bought land that would become the best location in London. Then he waited for London to come to him. You know what that means? Stop chasing the hot markets. Stop trying to time the perfect entry. Find supply-constrained markets where you believe long-term growth is inevitable. Then be patient. Think in 100-year terms. I've been saying this about Seattle, about San Francisco, about Portland. These aren't the fastest-growing cities But there's cities where you literally cannot build enough housing to meet demand. That, in my humble opinion, is where wealth compounds. Functional, well, not functional, dysfunctional scarcity leads to great appreciation. The city, London, is a great example of this. You cannot build. You cannot knock anything down. And look at the growth scores. There's untold numbers of English families that have owned a lot of land for a long time in London, and they're doing very well. The second principle, never sell. Never sell core assets, but maybe just never sell. The Grosvenors have owned the same properties for over 300 years. They've had countless opportunities to cash out at the top of various market cycles, and they've never done it. Not once. Think about your own portfolio. Do you have core assets that you'll never sell? I mean, I love this because the gross planers are the OGs at this, right? Warren Buffett made this more famous recently with his buy and hold and never let go strategy. But these guys were doing it hundreds of years before Buffett was even born. And as you think about your real estate portfolio, are you constantly trading up, trading out? Are you trying to optimize every single deal? The gross planers would say, That is amateur hour. Find your best assets and hold them forever. The third principle, income first, appreciation second. Those ground leases that Thomas Grosvenor set up in the 1720s are still paying the family today. That's 300 years of steady cash flow. I mean, think about that. And this is why we right now are obsessed with cash flowing properties. Appreciation is nice, and I wrote a piece about this last week. It's not controllable. It's subject to the whims of a very volatile and wild market. Cash flow is real, in your pocket, right there. And you have it, it builds security. When markets crash, and they will always crash, you will need income to survive the storm. You will need income from your properties to survive and to hold firm through that time. If you're buying nothing but cash equity appreciation plays, that's the kind of deal you get your head chopped off in in a really bad period. So focus on cash flow. Fourth principle, quality tenants create quality assets. The gross fenors have always been incredibly selective about who lives in their buildings. They'd rather have fewer high quality tenants than a bunch of problem tenants paying maximum rent. And honestly, I see this mistake all the time. Investors will often chase every dollar of rent without thinking about tenant quality. But bad tenants destroy properties. Good tenants, by contrast, are literally worth their weight in gold. They will maintain and improve your property. They will take care of it. There's a corollary to this, a slight detour. But in the early days of my career, we'd pursue value-add investment deals. And we would go for max rent. Like, oh, this is the number I underwrote to. Let's get more. Let's get more. Let's do bigger and better. And we did it, right? We did it. It was awesome. And then they all left. Massive turnover, like huge amounts of turnover, and the rents came back down. And I realized in hindsight, if your deal needs– and by the way, the deal is fine, right? But if your deal requires max possible rent to pencil, it's not a good deal. I'd rather be like 100 to 200 under the max possible rent and have longevity and happy residents that live there for a long time and take an ownership mentality, honestly. Now you can go the opposite direction, right? Like we can have a really inexpensive building and sometimes those tenants can really destroy units as well. So it's not like there's a perfect answer here, but I thought it was an interesting anecdote just to bring in. The fifth principle, leverage time. not just money. I always say to investors, time solves many ills in real estate investing. The longer you hold, the better you get. The Grosvenors had 345 years of compound growth. That is their unfair advantage, and we obviously cannot replicate that overnight. We can't even replicate that in our lifetime. But you can start thinking in decades instead of years. You can teach your children to think in decades instead of years. Stop trying to get rich quickly. Start trying to get rich permanently and set your children up, your children's children up with legacy and a dynasty. And the final principle, diversify geographically, but concentrate your strategy. The Grosvenors own properties in over 60 cities worldwide now, but they do the same thing in every market. They buy prime real estate. They hold it forever. They focus on quality over quantity. And obviously at this point, They could probably bear taking on an expensive building in Hong Kong, for example, because the rest of their portfolio can support them. But here's the thing. You don't need to reinvent the wheel in every market. Find your strategy, then export it. Stick with it. Now, there's another principle I want to dive into here just for a second, and it's a little less relevant to those of us that are trying to build our empires today, but it's really important. How are you raising your kids? Honestly. Really important question. What is remarkable about this story? As I researched it and thought about it, and I wrote about this in my book, Timeless Wealth, as well, it's an incredible story, incredible family, the power of location, the power of compounding, the power of holding, the power of visionary ideals for what you can do with the land. But the thing that stands out to me is that many, 350 years of successive generations generations of this family have not squandered the family fortune. They have kept it. How are we training, teaching, guiding our own children, our own progeny, our own descendants to do the right thing to not squander wealth? I don't know the answer. We have four kids. I'm working on it. It's a work in progress over here. And ranging from six months to eight years old. I don't know the answer. I'm trying to figure it out. We had a funny anecdote recently where my son drove by. He was with my sister-in-law. And he and my nephew went to a McDonald's. And they were being rude in the backseat or whatever. And my sister-in-law says, hey, guys, you're being rude. This could be you someday. You could be working at McDonald's. And my son said, no, I'm going to work for my dad. And I was like, oh man, he's eight. It's like, we are on a wrong footing here. That's the wrong attitude. It's not the right attitude to be like, it doesn't matter. I'm going to go work for my dad. He's got a company, blah, blah, blah. Had to set him straight. Had to set him straight. I had a buddy when I was a Goldman who was a Swiss prince, an actual prince with a ring, the whole thing. And he was a Goldman. His family owned a private bank that was hundreds of years old. And he said the family rule was they could not work for the family as their first job at a college. They had to go elsewhere and prove themselves in an environment where success was not just handed to them on a platter before they could come back to the family bank. So many, I mean, maybe we'll do an episode someday on like family generational planning or whatever. It's kind of a niche topic, but it's fascinating. And it's like, it's the reason they're even here. There are so many people that had a lot of real estate, by the way, in 1720 London, but we don't know who they are. Because they sold it. They got rid of it at some point because some descendant needed it for gambling or needed it for whatever it is. He had a great business idea, right? He had a great business idea. He took it all out. It's all gone. Poof, gone. How do you prevent that? I don't know. So look, I know most of us are not going to build a$15 billion real estate empire, although I wish that for all of you. That would be amazing. But the principles, honestly, are the same. If you're buying your first duplex or your 100th apartment building, buy the best location you can afford. Focus on cash flow. Never sell your winners. Think in decades. Quality over quantity. And here's the big one. Define what success looks like for you. The gross fenors are not trying to maximize quarterly returns. They're trying to build something that lasts for generations. So what are you trying to build? Are you trying to flip your way to wealth? Are you chasing the latest real estate trend? Or are you building something permanent? And you know what I find to be... other than the longevity of the family and whatnot, but to be the most remarkable thing about this story is that it all started with one decision in 1677. Thomas Grosvenor saw potential where others saw swampland, and instead of flipping for a quick profit, his family held it for 345 years. That is not luck. That's not even skill. That is a life philosophy that guided the family from the very beginning. So while most real estate investors, in my humble opinion, are trying to tie markets and flip properties and do three to five year holds, the gross owners have been playing a completely different game. They are not real estate traders. They are real estate collectors. So the question for you is, are you building a portfolio for today or are you building a dynasty? Because the difference here isn't just strategy. It's time horizon. All right, so that's a wrap for today's episode. If this story changed how you think about real estate investing, do me a favor, please, and share it with someone who needs to hear it. Next week, we're going to dive into another generational wealth story, but this one starts very differently. We're talking about someone who came to America with absolutely nothing and built the first great American real estate fortune. The story of how a poor German immigrant became America's richest man. Until then, remember, time is your greatest asset. It is the one thing you cannot use more of. So use it wisely. If you haven't done so already, please be sure to leave a written review for our show. It really, really helps with the algorithms, with all those undecided people who glance over the Timeless Investor Show and say, I don't know, maybe I should watch it. I don't know. Not a lot of reviews. I don't know. I'm going to move on. So I want to give a shout out here for a recent review we received from a Kurosh ZZZ. Thank you, Kurosh. I appreciate the review. And provided you guys keep writing reviews. I'll keep giving nice shout outs at the end of each week. With that, think well, act wisely, and build something timeless. I'm Ari Van Gemeren, and this has been the Timeless Investor Show. I look forward to seeing you next week. May you conquer, may time be on your side, and may you build something lasting. Thank you.