June 9, 2025 • 22 mins
What if one strategic decision in 1677 could create $15 billion in wealth that lasts 345 years?
In this episode, Arie tells the incredible story of the Grosvenor family - the British dynasty that survived the Great Fire of London, two World Wars, multiple market crashes, and Brexit while building one of the world's largest real estate empires.
It all started with Thomas Grosvenor's marriage to 12-year-old Mary Davies and her "worthless" 500 acres of London swampland. While everyone else saw marshes, Thomas saw the future of London. His decision to hold instead of flip created a dynasty that still owns Mayfair and Belgravia today.
In This Episode, You'll Discover:
- The 99-year lease strategy that generated 300+ years of passive income
- Why the Grosvenors NEVER sell their core assets (and how this applies to your portfolio)
- How they survived German bombs, death taxes, and economic crashes
- The 6 timeless principles that built their $15 billion empire
- Why focusing on tenant quality beats chasing maximum rents
- How to think like a dynasty builder instead of a property trader
Key Takeaways:
- Location timing: Buy in the path of progress, then wait for progress to come to you
- Never sell core assets - the Grosvenors haven't sold a London property in 345 years
- Income first, appreciation second - those 1720s ground rents still pay today
- Quality tenants create quality assets
- Think in decades, not years
- Geographic diversification with strategic consistency
Whether you're buying your first duplex or building a multi-million dollar portfolio, the Grosvenor principles of patient capital and generational thinking will change how you approach real estate investing.
Plus: Arie shares personal stories about chasing maximum rents vs. tenant quality, raising kids to preserve wealth, and why time is your greatest investment asset.
Think well, act wisely, and build something timeless.
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If you want to learn about new investment opportunities through Lombard Equities Group (accredited investors only), please reach out here.
Think Well. Act Wisely. Build Something Timeless.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
SPEAKER_00 (00:01):
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 astory that's going to rock your
world and make you think aboutbuilding your own dynasty a
little bit differently.
What if I told you that onefamily has owned the same London
(00:23):
real estate for over 300 yearsand they're worth$15 billion
today?
Not 15 million, 15 billion witha B.
Well, most real estate fortuneslast maybe two to three
generations.
You know the old saying, and Ikeep repeating it ad nauseum on
all social media platforms, butfirst generation builds it,
(00:43):
second generation maintains it,third generation blows it up.
Well, the Grosvenor family hassurvived everything history
could throw at them.
And we're going to learn fromwhat they've done.
They survived the Great Fire ofLondon, the Napoleonic Wars, two
World Wars, the GreatDepression, multiple property
(01:04):
crashes, Brexit, and they'restill standing.
In fact, they're not juststanding, they're thriving.
Today, they own Mayfair andBelgravia.
If you've ever been to London,these are the neighborhoods
where a parking spot costs morethan most people's cars.
We are talking about some of themost expensive real estate on
(01:24):
the planet.
But here's the thing that'sgoing to make you rethink
everything you know about realestate investing.
This entire empire,$15 billionworth, started with one
strategic marriage in 1677.
One decision.
One family that understoodsomething about real estate that
most investors today still don'tgrant.
(01:49):
So settle in.
Let me tell you the story of howpatient capital builds
dynasties.
And more importantly, as wealways focus on on The Timeless
Investor, what we can steal fromtheir playbook to build our own
real estate or operatingempires.
All right, guys, let's start atthe beginning, London, 1677.
(02:13):
Picture this.
The city is still rebuildingfrom the Great Fire 11 years
before.
Most of London is cramped,dirty, and frankly, probably
pretty miserable.
But there's this young guy namedThomas Grosvenor.
He's from a decent family up inCheshire.
I don't know if I said thatright.
Cheshire?
(02:33):
Cheshire?
But he's not wealthy.
He's not poor, but he'sdefinitely not rich.
And then there's Mary Davies.
She's 12 years old.
I know.
I understand.
Different times, guys, differenttimes, totally acceptable then.
And she's just inherited 500acres of land west of London.
But here's the thing.
It's basically swampland,marshes.
(02:54):
Nobody wants it.
It's outside the city.
It floods regularly, and mostpeople think it's worthless.
So what happens?
Thomas Grosvenor marries MaryDavies.
Now, this was an arrangedmarriage.
Again, we're dealing withdifferent times here.
And when it happened, peoplethought Thomas got a pretty
mediocre deal.
Mary Davies had land, but it wasbasically useless farmland in
(03:16):
the middle of nowhere.
But Thomas saw it differently.
He looked at that swampy landand he thought, you know what?
London is growing.
And when London grows, it'sgoing to grow west.
And that is where this wholestory starts.
One guy who saw the potentialwhere everyone else saw a swamp.
Now, Thomas didn't just sit onthis land.
(03:37):
In the 1720s, he startsdeveloping it.
But here's where it getsinteresting, 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 GrosvenorSquare, these beautiful
townhouses for wealthyaristocrats.
But instead of selling theproperties outright, he does
(03:58):
something clever.
He sells 99-year leases.
Now, think about this for asecond.
The buyer gets to use the landand own the building for 99
years.
They pay Thomas an upfront feeplus annual ground rent.
But when those 99 years are up,the land and the building go
back to the Grosvenor family forfree.
(04:19):
It's brilliant.
Thomas gets steady income fromthe ground rents.
He gets development feesupfront.
And at the end of the lease, heowns everything, the land he
started with, plus all thebuildings and other people paid
to construct.
This is amazing.
Ladies and gentlemen, patientcapital at its finest.
Think about that.
(04:40):
Seriously, think about that.
You lease your land out for 99years.
It's gone.
In your lifetime, you're notgoing to get it back.
Think about the long-term timeperspective to make an
investment decision that's a99-year investment decision.
(05:01):
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 Squareis the place to live in London.
We're talking dukes, earls, thewealthiest families in England.
(05:24):
The Grosvenors created London'sfirst luxury neighborhood.
But he's not done.
In the 1820s, his descendantsmake another brilliant move.
They partner with a masterbuilder named Thomas Cubitt to
develop an area calledBelgravia.
Now, Belgravia is even moreambitious than Grosvenor Square.
(05:44):
They're not just buildinghouses.
They're building an entireneighborhood from scratch.
Uniform architecture, strictbuilding codes, selective about
who can live there.
They're creating a brand.
And it works.
Belgravia becomes synonymouswith wealth and power.
If you live in Belgravia, you'vemade it.
And guess who owns all thatland?
(06:05):
The Grosvenor family.
Now let me fast forward througha couple centuries of challenges
because this is where the storygets really interesting.
The Grosvenors survivedeverything.
The Napoleonic Wars, they keepcollecting ground rents.
The Industrial Revolutioncompletely changes London.
They adapt and they redeveloptheir properties.
(06:26):
World War I, the governmenttries to confiscate their land
for the war effort, but theyfight it off.
World War II is particularlybrutal.
German bombs destroyed buildingsall across their properties.
But here's the thing.
Bombs can destroy buildings, butthey can't destroy land.
And remember, the grosssonorities own the land.
(06:46):
So they rebuild, and they'restronger than ever.
But the real test comes withdeath taxes.
Every time the head of thefamily dies, the British
government wants a massive chunkof your estate.
We're talking 40%, 50%,sometimes 60% of everything.
And typically, they build thesestructures in place in most
Western democracies to try toprevent this exact situation.
There's a stated desire toprevent having a landed
(07:09):
aristocracy that passes wealthforever and never removes
themselves.
But what do the Grosvenors do?
They get creative.
Trusts, foundations, legalstructures that protect the land
ownership across generations.
They realize that preservingwealth is just as important as
building it.
So let me jump now to the modernera because this is where the
(07:29):
numbers get absolutely wild.
Gerald Grosvenor becomes the 6thDuke of Westminster in 1979.
He inherits an estate worthmaybe 500 million pounds.
It's good money.
It's not world-changing money,but it's pretty good.
I think most of us would behappy with 500 million pounds.
But by the time Gerald dies in2016, the estate is worth over
(07:52):
10 billion pounds.
10 billion.
In one generation, he more thandoubled a 300-year-old fortune.
Well, how?
He does two things.
First, he expanded globally.
The Grosvenors start buyingprime real estate in major
cities around the world.
New York, Sydney, Tokyo, HongKong.
They export...
(08:12):
Their London model everywhere.
But second, and this iscritical, like critical, guys,
because people don't usuallymake this decision.
They never sell their coreLondon holdings, ever.
While other families are cashingout and diversifying into stocks
and bonds, the gross fenorsdoubled down on what made them
wealthy in the first place.
(08:33):
Prime London real estate.
And you see it so much in thisday and age.
Wealthy families with realestate portfolios and the
inheritors pick it up and theyjust want the cash and they
liquidate it.
They liquidate it and they losethe compounding.
They lose the discipline thatcomes with owning it and they
torpedo the family's wealth.
(08:55):
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 youngestbillionaires in the world.
And it's all because his familyunderstood something about real
estate that most people miss.
Maybe next time around, guys, wewill come back as young Hugh
(09:17):
Grosvenor.
It'll be an interestingexperience in life.
But let's move on.
Let's move on to what can welearn?
So we have 345 years of historyfrom the Grosvenor family.
And as always in the TimelessInvestor, we're not just
(09:38):
learning history and talkingabout history because we find it
fun.
Although I find it very fun.
I'm sure you do too, if you'relistening.
And there's so many unexploredstories out there that are so
worth learning about.
But as always, we want to tie itback.
to our core principles, how tobe a better timeless investor,
(10:02):
how to be a better human being,like how to learn.
So what are the principles thatthe 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 thebest location in London.
(10:24):
He bought land that would becomethe best location in London.
Then he waited for London tocome to him.
You know what that means?
Stop chasing the hot markets.
Stop trying to time the perfectentry.
Find supply-constrained marketswhere you believe long-term
growth is inevitable.
Then be patient.
(10:47):
Think in 100-year terms.
I've been saying this aboutSeattle, about San Francisco,
about Portland.
These aren't the fastest-growingcities But there's cities where
you literally cannot buildenough housing to meet demand.
That, in my humble opinion, iswhere wealth compounds.
Functional, well, notfunctional, dysfunctional
scarcity leads to greatappreciation.
(11:10):
The city, London, is a greatexample of this.
You cannot build.
You cannot knock anything down.
And look at the growth scores.
There's untold numbers ofEnglish families that have owned
a lot of land for a long time inLondon, and they're doing very
well.
The second principle, neversell.
Never sell core assets, butmaybe just never sell.
(11:31):
The Grosvenors have owned thesame properties for over 300
years.
They've had countlessopportunities 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 thatyou'll never sell?
I mean, I love this because thegross planers are the OGs at
this, right?
(11:52):
Warren Buffett made this morefamous recently with his buy and
hold and never let go strategy.
But these guys were doing ithundreds of years before Buffett
was even born.
And as you think about your realestate portfolio, are you
constantly trading up, tradingout?
Are you trying to optimize everysingle deal?
The gross planers would say,That is amateur hour.
(12:13):
Find your best assets and holdthem forever.
The third principle, incomefirst, appreciation second.
Those ground leases that ThomasGrosvenor set up in the 1720s
are still paying the familytoday.
That's 300 years of steady cashflow.
I mean, think about that.
(12:34):
And this is why we right now areobsessed with cash flowing
properties.
Appreciation is nice, and Iwrote a piece about this last
week.
It's not controllable.
It's subject to the whims of avery volatile and wild market.
Cash flow is real, in yourpocket, right there.
(12:55):
And you have it, it buildssecurity.
When markets crash, and theywill always crash, you will need
income to survive the storm.
You will need income from yourproperties to survive and to
hold firm through that time.
If you're buying nothing butcash equity appreciation plays,
that's the kind of deal you getyour head chopped off in in a
(13:18):
really bad period.
So focus on cash flow.
Fourth principle, qualitytenants create quality assets.
The gross fenors have alwaysbeen incredibly selective about
who lives in their buildings.
They'd rather have fewer highquality tenants than a bunch of
problem tenants paying maximumrent.
And honestly, I see this mistakeall the time.
(13:39):
Investors will often chase everydollar of rent without thinking
about tenant quality.
But bad tenants destroyproperties.
Good tenants, by contrast, areliterally worth their weight in
gold.
They will maintain and improveyour property.
They will take care of it.
There's a corollary to this, aslight detour.
But in the early days of mycareer, we'd pursue value-add
(13:59):
investment deals.
And we would go for max rent.
Like, oh, this is the number Iunderwrote 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 hugeamounts of turnover, and the
rents came back down.
And I realized in hindsight, ifyour deal needs– and by the way,
(14:22):
the deal is fine, right?
But if your deal requires maxpossible rent to pencil, it's
not a good deal.
I'd rather be like 100 to 200under the max possible rent and
have longevity and happyresidents that live there for a
long time and take an ownershipmentality, honestly.
Now you can go the oppositedirection, right?
(14:42):
Like we can have a reallyinexpensive building and
sometimes those tenants canreally destroy units as well.
So it's not like there's aperfect answer here, but I
thought it was an interestinganecdote just to bring in.
The fifth principle, leveragetime.
not just money.
I always say to investors, timesolves many ills in real estate
(15:04):
investing.
The longer you hold, the betteryou get.
The Grosvenors had 345 years ofcompound growth.
That is their unfair advantage,and we obviously cannot
replicate that overnight.
We can't even replicate that inour lifetime.
But you can start thinking indecades instead of years.
You can teach your children tothink in decades instead of
(15:25):
years.
Stop trying to get rich quickly.
Start trying to get richpermanently and set your
children up, your children'schildren up with legacy and a
dynasty.
And the final principle,diversify geographically, but
concentrate your strategy.
The Grosvenors own properties inover 60 cities worldwide now,
(15:47):
but they do the same thing inevery market.
They buy prime real estate.
They hold it forever.
They focus on quality overquantity.
And obviously at this point,They could probably bear taking
on an expensive building in HongKong, for example, because the
rest of their portfolio cansupport them.
But here's the thing.
You don't need to reinvent thewheel in every market.
(16:08):
Find your strategy, then exportit.
Stick with it.
Now, there's another principle Iwant to dive into here just for
a second, and it's a little lessrelevant to those of us that are
trying to build our empirestoday, but it's really
important.
How are you raising your kids?
Honestly.
Really important question.
(16:29):
What is remarkable about thisstory?
As I researched it and thoughtabout it, and I wrote about this
in my book, Timeless Wealth, aswell, it's an incredible story,
incredible family, the power oflocation, the power of
compounding, the power ofholding, the power of visionary
ideals for what you can do withthe land.
But the thing that stands out tome is that many, 350 years of
(16:53):
successive generationsgenerations of this family have
not squandered the familyfortune.
They have kept it.
How are we training, teaching,guiding our own children, our
own progeny, our own descendantsto do the right thing to not
squander wealth?
I don't know the answer.
(17:14):
We have four kids.
I'm working on it.
It's a work in progress overhere.
And ranging from six months toeight years old.
I don't know the answer.
I'm trying to figure it out.
We had a funny anecdote recentlywhere my son drove by.
He was with my sister-in-law.
And he and my nephew went to aMcDonald's.
And they were being rude in thebackseat or whatever.
And my sister-in-law says, hey,guys, you're being rude.
(17:36):
This could be you someday.
You could be working atMcDonald's.
And my son said, no, I'm goingto work for my dad.
And I was like, oh man, he'seight.
It's like, we are on a wrongfooting here.
That's the wrong attitude.
It's not the right attitude tobe 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.
(17:56):
I had a buddy when I was aGoldman who was a Swiss prince,
an actual prince with a ring,the whole thing.
And he was a Goldman.
His family owned a private bankthat was hundreds of years old.
And he said the family rule wasthey could not work for the
family as their first job at acollege.
They had to go elsewhere andprove themselves in an
(18:17):
environment where success wasnot just handed to them on a
platter before they could comeback to the family bank.
So many, I mean, maybe we'll doan episode someday on like
family generational planning orwhatever.
It's kind of a niche topic, butit's fascinating.
And it's like, it's the reasonthey're even here.
There are so many people thathad a lot of real estate, by the
way, in 1720 London, but wedon't know who they are.
(18:39):
Because they sold it.
They got rid of it at some pointbecause some descendant needed
it for gambling or needed it forwhatever 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 arenot going to build a$15 billion
(19:01):
real estate empire, although Iwish that for all of you.
That would be amazing.
But the principles, honestly,are the same.
If you're buying your firstduplex or your 100th apartment
building, buy the best locationyou can afford.
Focus on cash flow.
Never sell your winners.
Think in decades.
Quality over quantity.
(19:21):
And here's the big one.
Define what success looks likefor you.
The gross fenors are not tryingto maximize quarterly returns.
They're trying to buildsomething that lasts for
generations.
So what are you trying to build?
Are you trying to flip your wayto wealth?
Are you chasing the latest realestate trend?
Or are you building somethingpermanent?
(19:43):
And you know what I find tobe...
other than the longevity of thefamily and whatnot, but to be
the most remarkable thing aboutthis story is that it all
started with one decision in1677.
Thomas Grosvenor saw potentialwhere others saw swampland, and
instead of flipping for a quickprofit, his family held it for
345 years.
That is not luck.
That's not even skill.
(20:04):
That is a life philosophy thatguided the family from the very
beginning.
So while most real estateinvestors, in my humble opinion,
are trying to tie markets andflip properties and do three to
five year holds, the grossowners have been playing a
completely different game.
They are not real estatetraders.
They are real estate collectors.
(20:24):
So the question for you is, areyou building a portfolio for
today or are you building adynasty?
Because the difference hereisn't just strategy.
It's time horizon.
All right, so that's a wrap fortoday's episode.
If this story changed how youthink about real estate
investing, do me a favor,please, and share it with
(20:46):
someone who needs to hear it.
Next week, we're going to diveinto another generational wealth
story, but this one starts verydifferently.
We're talking about someone whocame to America with absolutely
nothing and built the firstgreat American real estate
fortune.
The story of how a poor Germanimmigrant became America's
richest man.
(21:08):
Until then, remember, time isyour greatest asset.
It is the one thing you cannotuse 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 thealgorithms, with all those
undecided people who glance overthe Timeless Investor Show and
(21:28):
say, I don't know, maybe Ishould 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 outhere for a recent review we
(21:50):
received from a Kurosh ZZZ.
Thank you, Kurosh.
I appreciate the review.
And provided you guys keepwriting reviews.
I'll keep giving nice shout outsat the end of each week.
With that, think well, actwisely, and build something
(22:11):
timeless.
I'm Ari Van Gemeren, and thishas been the Timeless Investor
Show.
I look forward to seeing younext week.
May you conquer, may time be onyour side, and may you build
something lasting.
Thank you.
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 astory that's going to rock your
world and make you think aboutbuilding your own dynasty a
little bit differently.
What if I told you that onefamily has owned the same London
(00:23):
real estate for over 300 yearsand they're worth$15 billion
today?
Not 15 million, 15 billion witha B.
Well, most real estate fortuneslast maybe two to three
generations.
You know the old saying, and Ikeep repeating it ad nauseum on
all social media platforms, butfirst generation builds it,
(00:43):
second generation maintains it,third generation blows it up.
Well, the Grosvenor family hassurvived everything history
could throw at them.
And we're going to learn fromwhat they've done.
They survived the Great Fire ofLondon, the Napoleonic Wars, two
World Wars, the GreatDepression, multiple property
(01:04):
crashes, Brexit, and they'restill standing.
In fact, they're not juststanding, they're thriving.
Today, they own Mayfair andBelgravia.
If you've ever been to London,these are the neighborhoods
where a parking spot costs morethan most people's cars.
We are talking about some of themost expensive real estate on
(01:24):
the planet.
But here's the thing that'sgoing to make you rethink
everything you know about realestate investing.
This entire empire,$15 billionworth, started with one
strategic marriage in 1677.
One decision.
One family that understoodsomething about real estate that
most investors today still don'tgrant.
(01:49):
So settle in.
Let me tell you the story of howpatient capital builds
dynasties.
And more importantly, as wealways focus on on The Timeless
Investor, what we can steal fromtheir playbook to build our own
real estate or operatingempires.
All right, guys, let's start atthe beginning, London, 1677.
(02:13):
Picture this.
The city is still rebuildingfrom the Great Fire 11 years
before.
Most of London is cramped,dirty, and frankly, probably
pretty miserable.
But there's this young guy namedThomas Grosvenor.
He's from a decent family up inCheshire.
I don't know if I said thatright.
Cheshire?
(02:33):
Cheshire?
But he's not wealthy.
He's not poor, but he'sdefinitely not rich.
And then there's Mary Davies.
She's 12 years old.
I know.
I understand.
Different times, guys, differenttimes, totally acceptable then.
And she's just inherited 500acres of land west of London.
But here's the thing.
It's basically swampland,marshes.
(02:54):
Nobody wants it.
It's outside the city.
It floods regularly, and mostpeople think it's worthless.
So what happens?
Thomas Grosvenor marries MaryDavies.
Now, this was an arrangedmarriage.
Again, we're dealing withdifferent times here.
And when it happened, peoplethought Thomas got a pretty
mediocre deal.
Mary Davies had land, but it wasbasically useless farmland in
(03:16):
the middle of nowhere.
But Thomas saw it differently.
He looked at that swampy landand he thought, you know what?
London is growing.
And when London grows, it'sgoing to grow west.
And that is where this wholestory starts.
One guy who saw the potentialwhere everyone else saw a swamp.
Now, Thomas didn't just sit onthis land.
(03:37):
In the 1720s, he startsdeveloping it.
But here's where it getsinteresting, 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 GrosvenorSquare, these beautiful
townhouses for wealthyaristocrats.
But instead of selling theproperties outright, he does
(03:58):
something clever.
He sells 99-year leases.
Now, think about this for asecond.
The buyer gets to use the landand own the building for 99
years.
They pay Thomas an upfront feeplus annual ground rent.
But when those 99 years are up,the land and the building go
back to the Grosvenor family forfree.
(04:19):
It's brilliant.
Thomas gets steady income fromthe ground rents.
He gets development feesupfront.
And at the end of the lease, heowns everything, the land he
started with, plus all thebuildings and other people paid
to construct.
This is amazing.
Ladies and gentlemen, patientcapital at its finest.
Think about that.
(04:40):
Seriously, think about that.
You lease your land out for 99years.
It's gone.
In your lifetime, you're notgoing to get it back.
Think about the long-term timeperspective to make an
investment decision that's a99-year investment decision.
(05:01):
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 Squareis the place to live in London.
We're talking dukes, earls, thewealthiest families in England.
(05:24):
The Grosvenors created London'sfirst luxury neighborhood.
But he's not done.
In the 1820s, his descendantsmake another brilliant move.
They partner with a masterbuilder named Thomas Cubitt to
develop an area calledBelgravia.
Now, Belgravia is even moreambitious than Grosvenor Square.
(05:44):
They're not just buildinghouses.
They're building an entireneighborhood from scratch.
Uniform architecture, strictbuilding codes, selective about
who can live there.
They're creating a brand.
And it works.
Belgravia becomes synonymouswith wealth and power.
If you live in Belgravia, you'vemade it.
And guess who owns all thatland?
(06:05):
The Grosvenor family.
Now let me fast forward througha couple centuries of challenges
because this is where the storygets really interesting.
The Grosvenors survivedeverything.
The Napoleonic Wars, they keepcollecting ground rents.
The Industrial Revolutioncompletely changes London.
They adapt and they redeveloptheir properties.
(06:26):
World War I, the governmenttries to confiscate their land
for the war effort, but theyfight it off.
World War II is particularlybrutal.
German bombs destroyed buildingsall across their properties.
But here's the thing.
Bombs can destroy buildings, butthey can't destroy land.
And remember, the grosssonorities own the land.
(06:46):
So they rebuild, and they'restronger than ever.
But the real test comes withdeath taxes.
Every time the head of thefamily dies, the British
government wants a massive chunkof your estate.
We're talking 40%, 50%,sometimes 60% of everything.
And typically, they build thesestructures in place in most
Western democracies to try toprevent this exact situation.
There's a stated desire toprevent having a landed
(07:09):
aristocracy that passes wealthforever and never removes
themselves.
But what do the Grosvenors do?
They get creative.
Trusts, foundations, legalstructures that protect the land
ownership across generations.
They realize that preservingwealth is just as important as
building it.
So let me jump now to the modernera because this is where the
(07:29):
numbers get absolutely wild.
Gerald Grosvenor becomes the 6thDuke of Westminster in 1979.
He inherits an estate worthmaybe 500 million pounds.
It's good money.
It's not world-changing money,but it's pretty good.
I think most of us would behappy with 500 million pounds.
But by the time Gerald dies in2016, the estate is worth over
(07:52):
10 billion pounds.
10 billion.
In one generation, he more thandoubled a 300-year-old fortune.
Well, how?
He does two things.
First, he expanded globally.
The Grosvenors start buyingprime real estate in major
cities around the world.
New York, Sydney, Tokyo, HongKong.
They export...
(08:12):
Their London model everywhere.
But second, and this iscritical, like critical, guys,
because people don't usuallymake this decision.
They never sell their coreLondon holdings, ever.
While other families are cashingout and diversifying into stocks
and bonds, the gross fenorsdoubled down on what made them
wealthy in the first place.
(08:33):
Prime London real estate.
And you see it so much in thisday and age.
Wealthy families with realestate portfolios and the
inheritors pick it up and theyjust want the cash and they
liquidate it.
They liquidate it and they losethe compounding.
They lose the discipline thatcomes with owning it and they
torpedo the family's wealth.
(08:55):
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 youngestbillionaires in the world.
And it's all because his familyunderstood something about real
estate that most people miss.
Maybe next time around, guys, wewill come back as young Hugh
(09:17):
Grosvenor.
It'll be an interestingexperience in life.
But let's move on.
Let's move on to what can welearn?
So we have 345 years of historyfrom the Grosvenor family.
And as always in the TimelessInvestor, we're not just
(09:38):
learning history and talkingabout history because we find it
fun.
Although I find it very fun.
I'm sure you do too, if you'relistening.
And there's so many unexploredstories out there that are so
worth learning about.
But as always, we want to tie itback.
to our core principles, how tobe a better timeless investor,
(10:02):
how to be a better human being,like how to learn.
So what are the principles thatthe 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 thebest location in London.
(10:24):
He bought land that would becomethe best location in London.
Then he waited for London tocome to him.
You know what that means?
Stop chasing the hot markets.
Stop trying to time the perfectentry.
Find supply-constrained marketswhere you believe long-term
growth is inevitable.
Then be patient.
(10:47):
Think in 100-year terms.
I've been saying this aboutSeattle, about San Francisco,
about Portland.
These aren't the fastest-growingcities But there's cities where
you literally cannot buildenough housing to meet demand.
That, in my humble opinion, iswhere wealth compounds.
Functional, well, notfunctional, dysfunctional
scarcity leads to greatappreciation.
(11:10):
The city, London, is a greatexample of this.
You cannot build.
You cannot knock anything down.
And look at the growth scores.
There's untold numbers ofEnglish families that have owned
a lot of land for a long time inLondon, and they're doing very
well.
The second principle, neversell.
Never sell core assets, butmaybe just never sell.
(11:31):
The Grosvenors have owned thesame properties for over 300
years.
They've had countlessopportunities 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 thatyou'll never sell?
I mean, I love this because thegross planers are the OGs at
this, right?
(11:52):
Warren Buffett made this morefamous recently with his buy and
hold and never let go strategy.
But these guys were doing ithundreds of years before Buffett
was even born.
And as you think about your realestate portfolio, are you
constantly trading up, tradingout?
Are you trying to optimize everysingle deal?
The gross planers would say,That is amateur hour.
(12:13):
Find your best assets and holdthem forever.
The third principle, incomefirst, appreciation second.
Those ground leases that ThomasGrosvenor set up in the 1720s
are still paying the familytoday.
That's 300 years of steady cashflow.
I mean, think about that.
(12:34):
And this is why we right now areobsessed with cash flowing
properties.
Appreciation is nice, and Iwrote a piece about this last
week.
It's not controllable.
It's subject to the whims of avery volatile and wild market.
Cash flow is real, in yourpocket, right there.
(12:55):
And you have it, it buildssecurity.
When markets crash, and theywill always crash, you will need
income to survive the storm.
You will need income from yourproperties to survive and to
hold firm through that time.
If you're buying nothing butcash equity appreciation plays,
that's the kind of deal you getyour head chopped off in in a
(13:18):
really bad period.
So focus on cash flow.
Fourth principle, qualitytenants create quality assets.
The gross fenors have alwaysbeen incredibly selective about
who lives in their buildings.
They'd rather have fewer highquality tenants than a bunch of
problem tenants paying maximumrent.
And honestly, I see this mistakeall the time.
(13:39):
Investors will often chase everydollar of rent without thinking
about tenant quality.
But bad tenants destroyproperties.
Good tenants, by contrast, areliterally worth their weight in
gold.
They will maintain and improveyour property.
They will take care of it.
There's a corollary to this, aslight detour.
But in the early days of mycareer, we'd pursue value-add
(13:59):
investment deals.
And we would go for max rent.
Like, oh, this is the number Iunderwrote 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 hugeamounts of turnover, and the
rents came back down.
And I realized in hindsight, ifyour deal needs– and by the way,
(14:22):
the deal is fine, right?
But if your deal requires maxpossible rent to pencil, it's
not a good deal.
I'd rather be like 100 to 200under the max possible rent and
have longevity and happyresidents that live there for a
long time and take an ownershipmentality, honestly.
Now you can go the oppositedirection, right?
(14:42):
Like we can have a reallyinexpensive building and
sometimes those tenants canreally destroy units as well.
So it's not like there's aperfect answer here, but I
thought it was an interestinganecdote just to bring in.
The fifth principle, leveragetime.
not just money.
I always say to investors, timesolves many ills in real estate
(15:04):
investing.
The longer you hold, the betteryou get.
The Grosvenors had 345 years ofcompound growth.
That is their unfair advantage,and we obviously cannot
replicate that overnight.
We can't even replicate that inour lifetime.
But you can start thinking indecades instead of years.
You can teach your children tothink in decades instead of
(15:25):
years.
Stop trying to get rich quickly.
Start trying to get richpermanently and set your
children up, your children'schildren up with legacy and a
dynasty.
And the final principle,diversify geographically, but
concentrate your strategy.
The Grosvenors own properties inover 60 cities worldwide now,
(15:47):
but they do the same thing inevery market.
They buy prime real estate.
They hold it forever.
They focus on quality overquantity.
And obviously at this point,They could probably bear taking
on an expensive building in HongKong, for example, because the
rest of their portfolio cansupport them.
But here's the thing.
You don't need to reinvent thewheel in every market.
(16:08):
Find your strategy, then exportit.
Stick with it.
Now, there's another principle Iwant to dive into here just for
a second, and it's a little lessrelevant to those of us that are
trying to build our empirestoday, but it's really
important.
How are you raising your kids?
Honestly.
Really important question.
(16:29):
What is remarkable about thisstory?
As I researched it and thoughtabout it, and I wrote about this
in my book, Timeless Wealth, aswell, it's an incredible story,
incredible family, the power oflocation, the power of
compounding, the power ofholding, the power of visionary
ideals for what you can do withthe land.
But the thing that stands out tome is that many, 350 years of
(16:53):
successive generationsgenerations of this family have
not squandered the familyfortune.
They have kept it.
How are we training, teaching,guiding our own children, our
own progeny, our own descendantsto do the right thing to not
squander wealth?
I don't know the answer.
(17:14):
We have four kids.
I'm working on it.
It's a work in progress overhere.
And ranging from six months toeight years old.
I don't know the answer.
I'm trying to figure it out.
We had a funny anecdote recentlywhere my son drove by.
He was with my sister-in-law.
And he and my nephew went to aMcDonald's.
And they were being rude in thebackseat or whatever.
And my sister-in-law says, hey,guys, you're being rude.
(17:36):
This could be you someday.
You could be working atMcDonald's.
And my son said, no, I'm goingto work for my dad.
And I was like, oh man, he'seight.
It's like, we are on a wrongfooting here.
That's the wrong attitude.
It's not the right attitude tobe 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.
(17:56):
I had a buddy when I was aGoldman who was a Swiss prince,
an actual prince with a ring,the whole thing.
And he was a Goldman.
His family owned a private bankthat was hundreds of years old.
And he said the family rule wasthey could not work for the
family as their first job at acollege.
They had to go elsewhere andprove themselves in an
(18:17):
environment where success wasnot just handed to them on a
platter before they could comeback to the family bank.
So many, I mean, maybe we'll doan episode someday on like
family generational planning orwhatever.
It's kind of a niche topic, butit's fascinating.
And it's like, it's the reasonthey're even here.
There are so many people thathad a lot of real estate, by the
way, in 1720 London, but wedon't know who they are.
(18:39):
Because they sold it.
They got rid of it at some pointbecause some descendant needed
it for gambling or needed it forwhatever 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 arenot going to build a$15 billion
(19:01):
real estate empire, although Iwish that for all of you.
That would be amazing.
But the principles, honestly,are the same.
If you're buying your firstduplex or your 100th apartment
building, buy the best locationyou can afford.
Focus on cash flow.
Never sell your winners.
Think in decades.
Quality over quantity.
(19:21):
And here's the big one.
Define what success looks likefor you.
The gross fenors are not tryingto maximize quarterly returns.
They're trying to buildsomething that lasts for
generations.
So what are you trying to build?
Are you trying to flip your wayto wealth?
Are you chasing the latest realestate trend?
Or are you building somethingpermanent?
(19:43):
And you know what I find tobe...
other than the longevity of thefamily and whatnot, but to be
the most remarkable thing aboutthis story is that it all
started with one decision in1677.
Thomas Grosvenor saw potentialwhere others saw swampland, and
instead of flipping for a quickprofit, his family held it for
345 years.
That is not luck.
That's not even skill.
(20:04):
That is a life philosophy thatguided the family from the very
beginning.
So while most real estateinvestors, in my humble opinion,
are trying to tie markets andflip properties and do three to
five year holds, the grossowners have been playing a
completely different game.
They are not real estatetraders.
They are real estate collectors.
(20:24):
So the question for you is, areyou building a portfolio for
today or are you building adynasty?
Because the difference hereisn't just strategy.
It's time horizon.
All right, so that's a wrap fortoday's episode.
If this story changed how youthink about real estate
investing, do me a favor,please, and share it with
(20:46):
someone who needs to hear it.
Next week, we're going to diveinto another generational wealth
story, but this one starts verydifferently.
We're talking about someone whocame to America with absolutely
nothing and built the firstgreat American real estate
fortune.
The story of how a poor Germanimmigrant became America's
richest man.
(21:08):
Until then, remember, time isyour greatest asset.
It is the one thing you cannotuse 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 thealgorithms, with all those
undecided people who glance overthe Timeless Investor Show and
(21:28):
say, I don't know, maybe Ishould 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 outhere for a recent review we
(21:50):
received from a Kurosh ZZZ.
Thank you, Kurosh.
I appreciate the review.
And provided you guys keepwriting reviews.
I'll keep giving nice shout outsat the end of each week.
With that, think well, actwisely, and build something
(22:11):
timeless.
I'm Ari Van Gemeren, and thishas been the Timeless Investor
Show.
I look forward to seeing younext week.
May you conquer, may time be onyour side, and may you build
something lasting.
Thank you.
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