patrick how are you

i’m okay how you doing jim man you look sharp today you’re the one that looks sharp i have a

little less sharpness on the top well i have absolutely none for i’ve got

two landing strips right here i think that’s where i was headed with my wife that does my covet cuts decided

it was time to to go go for the go for the big cut yeah you know i always told my wife my

entire life that uh if it ever got to that point i would just shave it all off and so i did that once and it scared her

so badly that i decided i couldn’t go that route i’ll tell you when it until we uh when

we were getting married she kept saying hey i’m going to shave off your beard i’m going to shave off your beard on our

honeymoon i finally let her do it right and then immediately she’s like let’s shave your head let’s shave your head

now that my head’s shaved she won’t let me shave the beard so yeah they uh they do uh reserve that

prerogative to change their mind don’t they absolutely are you in the islands

i know so my wife and i uh recently i mean i had been flying between texas and

and charlotte and florida doing the red eyes uh so often that i i was coming home and i was

trying to do so many stops it would be four to seven days sprints right off the island

and uh and eventually i just said hey i think it’s better that we at least position

closer uh on the mainland and she does some contract work with um

uh feature linked animations with disney and dreamworks and nickelodeon so we moved to newport beach that’s where i’m

at right now she’s got the ocean view now i don’t have the ocean view anymore i’ve kind of got a little bit of the baby you can’t really see it but um yeah

so i got demoted but we’re uh yeah we’re so we’re in newport beach out on the peninsula it’s beautiful and it’s it’s easy for for me

for some of the engineering stuff that i do here in southern california and for her as well and then i’ve been hopping of

course to the near states in the southeastern texas without having to do a six-hour time change yeah did uh how

long were you guys uh in hawaii uh hmm was it almost two years year and a

half two years something like that yeah and and when did you make the change and come back uh to the mainland uh february

so we just got back yeah we barely got settled here yeah and are are you

are you missing hawaii at all or not yet yeah you know what i i mean i’m still running along the beach the beach is

like 30 yards that way but um i it’s cold

i haven’t got in the water and i’ve learned to put on thermals now

again and i mean i it’s healthier you know longer term option for us but you know of course

we’re going to miss hawaii and perhaps perhaps when things settle down with traveling um so much it will make sense

for us to return yeah well you know my uh you know that i told

you my son my middle son had moved out there and is living on kauai uh and

uh when we were there this summer uh he said that uh dad i’m never leaving

you know he says we’re we love it here we’re never gonna leave you know my kids are are going to be raised here and

then i got a text yesterday saying dad i was just offered uh a 50 grand bonus if

i you know up my salary by 50 grand if i would come back to chicago and

i’m like okay why did he send me that text if he’s never leaving wouldn’t he just not send me the text and i said son

you need to be careful and i said your mom is over here about to pass out and she’s jumping up and down and about to

cry you know because she’s uh gonna have her grandkids back but uh then i had to tell her calm down calm down you know

this is not you know you can’t know that he’s coming back so we’ll see what happens

but so it’s for after um and i i want to thank patrick i am a guest

host today for the gob network’s capital raise weekly meeting

every wednesday at one o’clock central and uh as a guest host

today was supposed to be a networking day but uh i have a very special friend that

i asked if he could set in with me and just have a casual conversation as if it’s just the two of us talking

and that’s mr patrick grimes which i was going to say is from hawaii but

we’ll amend that to california and i want to start just by

the way i you know typically um [Music] have a conversation with people that

i’ve not met before patrick and i think this would be maybe a great structure

for you and me today uh is as if i’ve never met you and what would i uh what

would i want to know about you and uh how would we uh do that and before i go

any further i need to make sure that not only are we

recording but is vinky here today anyone see vinky

okay no let me see if i can do this without crashing the system

here we’re going to try to go live on the internet

okay so uh again i’ll repeat uh jim biggs guest host for our regular

wednesday capital raise meeting for the gob network and as guest host today i

invited my friend patrick grimes to sit down and have a a casual conversation with us

and let everyone get to know him as if uh we were meeting him for the first time and and trying to build a

relationship and get to know each other a little bit better before we started investing in big deals together

so typically the way i would do that is i would ask patrick um you know tell me

about you give me your life story uh in a short synopsis where were you born

where were you raised if that’s different brothers and sisters what was your

family life like mom and dad what did they do and

you know were they entrepreneurs or were they working class people

and you know where did you go to school what did you study uh what did your w-2 life

look like and lastly uh well not lastly then are you married do you have

children and uh and then lastly is why are you interested in real estate how

did you get involved in real estate and what are you doing in that space so

i’ll turn it over to you and let you give us your life story well i feel like with that kind of intro

i feel like i should be laid out on the couch and relax with a little fountain and then spill all the beans and

with a little notepad writing things right [Laughter]

i obviously don’t have any experience doing that yeah so

thank you very much jim for um uh reaching out happy happy to jump on i

didn’t really know what to expect so it seems like it’s gonna be pretty easy uh yeah so i well my dad was in the air

force so i was born in italy actually and we spent some time jumping around the united states spent some time in florida

before we ended up in northern california so i grew up so in the mountains south side

yosemite national park saw a mountain boy up there and i got into high-tech stuff pretty pretty

young age i was building electronics and legos so i i i got turned nerd and i kept true

pretty much for most of my career to that went to uh mechanical engineering school

and started with machine design automation robotics so i mean it’s it’s still working great

for me and during covet i pivoted entirely into automated test kits for coveted

uh diagnostics and i had two record ears on that side so in parallel with that though the first manager that i had

in in engineering said hey the act he was part owner of the company and he said hey the reality is that all my

money is in real estate i do this engineering for fun but that’s what it is it’s not a good investment it’s

volatile it’s cognitively rewarding but challenging and i took it to heart saved up everything i

had and invested uh in some what i thought to be were

great due diligence well analyzed and solid deals

development deals in 2007. and obviously the market was never going to go down

then and you couldn’t go wrong in real estate well 8 9 10 11 happened and i hit i hit

south pretty hard so i came crawling out of that and did do bk

was able to go through foreclosure with negotiating debt forgiveness with

an attorney which i paid taxes on for that to uncle sam

and i kind of dove back into my career and did a master’s in business administration masters in engineering

while doing high-tech assembly automation for companies like spacex lockheed tesla doing a bunch of really

cool stuff you know 40-60 hours a week later i started realizing my bonuses were coming

in and i still had the voice you got to get back into real estate right so then i started looking for investment

vehicles that were lower risk and uh in markets that were inflation resistant

right that had job makeups which would stay true and had tests of time uh

behind them and not speculating not buying uh you know boats where you just double

money into them but by income producing assets and not trying to invent a property through uh and development and hope and

wish and prey on the other side you have of something that’s income producing but maybe buy something that’s a little distressed but surrounded by comparables

that you can renovate it to or upgrade it to so after after a bunch of that i started buying uh moonlighting

essentially the bur method but i had no idea at the time what the burn method was i got my heads in the clouds doing

engineering work i just i listened to audible found some books on hold investing and i just started

buying distressed and renovating and refinancing and holding um and then i went did that very

successfully um and i’m currently trading those up to multi-family but that went on until i met my wife and i

decided you know the reality is a lot of people that invest in real estate they think hey i’ve gotta sacrifice my free time my

hobbies and my family in order to succeed because i have a job right

and or i can just passively invest in the stock market not do that uh the reality is i think that’s the

residential single family or wholesaler flipper those are the people that are doing a job and and multi-family you can scale right you

can bring on more people you can get in partners that’ll help you out and it’s not all consuming and you can even

invest passively and accomplish the same goals but have somebody else in charge of keeping the velocity of capital

higher so i had a conversation with my wife she was there for my last closing

and at that point we did get married once in california and once in beijing uh and then i started taking her to some

some seminars and she was there for my multi-family seminars and she was there for my last closing and a single family

and then we we got into it from there it took about two and a half years before i got in our first deal at that point

and uh that i don’t know if that brings us up to date with where you’re at

jim yeah so um interesting question so uh dad was in the air force and uh and you

were born in italy which was uh really interesting how old were you when you guys came back stateside

i was in first grade so i’m not exactly sure and so uh at that time were you speaking

english or italian oh english yeah english okay so born born with english

at base and not uh and probably uh um every playground everything was all the

other kids on base and um and mom did she was she stayed home

raised the kids mom or did she also work yeah both my parents worked pretty hard

i mean my mom was uh she was she did things like she was administrative assistant for a while she was an administrator of a kids camp so we spent

a lot of time in the mountains winter summer camps there my my father

was uh went kind of from the high tech space as well and the air force kind of pivoted into machining

uh and then went into uh education uh was a pastor

of a church a couple times and i then went on to get three phds and

education and and evolution and uh divinity uh and so a very interesting childhood

from that front and uh now he uh was a past uh educator for most of his career

and does he teach elementary school college high school uh high school and is now retired and

now retired okay and one of your first investors or no

uh they were early on investors but at this point i think they’re off into their own

uh set plan for their finances moving forward yeah fantastic i know for many

of us that’s the very first person we go to for the first investment to get it done and so did you have brothers and sisters

or were your only child yeah older brother younger sisters i’m a middle child middle okay and it’s

interesting because uh i i don’t know what your sister or your brother do but uh of my three boys uh the only one that

has any interest whatsoever in real estate uh is the middle one the middle guy the one that we worried about the

most that he was you know middle child syndrome having all kinds of problems but uh so

where in that career path was it that uh was it that boss or mentor or colleague

that said hey all my money’s in real estate was that the spark uh that started the whole interest

in real estate i believe so yeah because i i didn’t uh didn’t really know i knew that there was

more that i wanted to do than just engineering and i was kind of searching for what that was and he was definitely

a mentor and then when he started articulating the reasons why it made a ton of sense and you know i was interested in

investing as early as i can and so that’s that’s what started the whole thing yeah fantastic and so uh your wife you

were not married uh in 2008 during the crash correct yeah we are on our

fifth year now okay and how did you guys meet at a conference or are you trying to invest in a deal

yeah so she uh is a little rock star herself she was living in beijing she

went to the beijing dance academy and then worked at the center for the arts in square

and then went to vienna to do classical music production then learned about disney and fell in

love with disney because they didn’t have a lot of exposure to that in china so she decides hey i’m going to kind of do a blend of production and music and

i’m going to go do animation and so she got a scholarship to get her master’s degree

at the school disney started at cal arts here in southern california so i met her while she was a student at

cal arts and she was doing combination of animation and live action stuff and

we met up at uh at a party um in studio city and we hit it off and things went really

well and you know we ended up getting married and her dad said at the wedding that it wasn’t her plan their plan for her to

stay in america but now she works at uh she’s worked at a combination of disney dreamworks and nickelodeon she’s

production management now she’s she’s she’s killing it yeah she does sound like a rock star so

congratulations uh by the way and uh do you guys have any kids or plan on having any kids it’s impo it’s part of the plan

part of the plan okay fantastic and uh so circling back around to

multi-family when when did you decide to go all-in on multi-family and

correct me if i’m wrong but your path in was through capital raising correct or

wrong uh no so originally i spent many years underwriting uh searching for

deals flying around uh taught meeting with brokers and uh it was eventually when i started just

bringing deals to numerous sponsors i ultimately did a mentorship program

uh coaching program and that helped because of coming from a very conservative

background just the numbers itself which came a little easier to me um easier even to my wife she’s she’s

math wiz we could do the numbers but it wasn’t enough to know kind of through what has gone wrong and what will go

wrong in these deals kind of build that confidence and so we had a number of different individuals we were bringing

deals to and kind of learning and then through covid it was eventually uh

i just kept showing up to the plate and doing that until one operator said hey look i’m totally overwhelmed i’ve

got a deal in north carolina do you want to come help out and so uh that’s kind of started my

co-sponsorship career where i jumped in there and i i did the the you know doing

due diligence underwriting doing i’ve done all the decks for every deal investor relations working on the

syndication docs and i’m also a kp on or a guarantor on many of those

probably half of the deals that i’ve done at this point yeah so i find it fascinating because uh

we have so many engineers in this field that i guess are either tired of their

day job uh and or like my youngest son who uh had a free ride as an engineer at

uh u of i and then went down there and realized he couldn’t draw a stick figure and and got washed out and had to start

over but apparently a lot of dissatisfied engineers and so it would make sense that you

would fall right into underwriting having an analytical mind and and being very comfortable with

spreadsheets and stuff like that and so talk about your personality uh you know you do so

well at raising capital it just seems to be so natural for you uh and many of us

struggle with that i find that it’s the hardest part of the business for most people that uh they

are so uncomfortable doing it or they just can’t figure out how to do it or their circle of influence uh is not such

that they can raise capital from the circle of influence so talk to me a little bit about that are you a natural

extrovert and uh why are you so good at raising capital well

i think everything’s relative right i don’t know if i’d go tooting my horn that i’m really good at raising capital um you know i’ve done a lot of deals but

i may have raised over 20 million at this point that’s probably true um i think that my

uh to your point i’m i’m i i don’t lead as a kepler is in fact my primary job uh if that’s all

that there is that’s not what i’m interested in i i go heavy into the details of the analysis

i’m in the units walking them doing due diligence confirming the capex budgets

and making sure that this is a real deal i’ve got my own money i’m signed on many of the deals

and uh i think the the part of it where i’m doing all that and i believe in it and i believe in what it

can do for investors you know the older generations are and the younger generations are needing to work for the

rest of their lives or their financial education just really isn’t there um they’re told to invest in these

products that are going to dwindle down their uh you know their their savings as they

retire they’ll never be able to live retire early or live their retirement their dreams and so i believe in what it

does i think that that if you showing up to the plate you’re working hard you’re getting after

it and you know people are attracted to that and when i i have lots of people that have trusted

me with multi-million dollar automation projects for my career and uh it’s not a lot it’s there’s not a

big difference between that right if you show up with the right with the right mentality with the right solution with the right problem

and it’s something that other people are interested in as well then they’ll be attracted by that

so am i hearing you correctly saying i’m i’m not necessarily a natural

capital raiser i just really believe in this so much that it just comes out

right well i guess yeah i mean i know i know that there are people out there i’m a capital raiser right and they’re they’re kind of salesmen at

heart and you know they’re looking at conversion data and stuff and uh not necessarily my style i think i’m

an engineer and analyst a hard worker and i’ll work full time and go get two master’s degrees right at work is easy

i think the sort of the byproduct of putting together a deal is you’ve got to have the you’ve got to source the deal

right which includes the underwriting and getting the loan and all that and you’ve got to asset manage the deal

and i’ve done asset management on single family and on that pre-development stuff i was doing and i’m not passionate about

that part taking something from 90 to 95 to 100

i’m more passionate about getting these deals together structuring these deals and that shows up in my engineering career because when i do custom machine

design and robotics automation i’m i’m the guy conceiving of it and building

the first and the only one of its kind and then it goes into a facility where a

process engineer takes it to completion so my person personality just lends itself well to that front-end hunt uh

the the kind of the data side as well as the um as well as the getting in there and

making it all work from the due diligence and the underwriting side and then bridging the capital side which is the

third pillar and that’s kind of just it’s part of the cycle of the business right you go from one to the next to the

next fantastic so if you could go back um 10

years 15 years and advise yourself uh about the business is

there anything that you would do differently or any major thing that you would tell your younger self uh to look

out for and and try to really concentrate on any particular piece

yeah uh well 10 if if you’re going far far enough back i’d say don’t develo don’t uh speculate

don’t invest in land and uh short term hard money loans and bridge dead

and these things that will blow up right that everybody was doing before 2007 i think probably the a lot of the hardship

that i had during that time was a a great lesson for me and it’s

shifted the way i look at things and i look at a lot of deals now and like wow that they’re never ever going

to be involved in this deal because i’ve seen how they can go south and this person just doesn’t get it but i think

that if i was to get myself an advice way back then it would be hey you know let you know

perhaps seek more um wiser people that have seen downturns

before sooner and align your growth path with the risk and and look at your portfolio in terms

of don’t put every penny in one in this highly risky stuff right and that’s that’s where i was at and i

think if i fast forwarded through my single family um you know career

i was uh kind of like it’s my own money let’s just do it all myself right if i make

mistakes it’s not a problem right um and i’m busy but you know but i think that had i thought a little bit bigger

and considered that i don’t like doing all the jobs i’m passionate about all the jobs

and these commercial assets if i partner up they’re more lucrative for everybody and

they’re lower risk and you can they’re they’re so lucrative you can bring on people with decades of

experience of track record of success right and property managers that are on site and i think i’d probably because i

i got little bugs in my air saying hey why are you only doing single family you should be doing a large multi-family i

just nah i got it i want to keep control i think i if if if i was to give myself 10 years ago you

know advice that’s probably what it would be is partner up you know find the right people work harder to find the right

people and do fewer deals but do the right kind of deals and

if you had the same opportunity just let’s say three four years ago is there

anything that you would advise yourself if you could go back in time

just three or four years ago um well no because i had taken a break because i was with my wife

and i was doing in transition and i think that i was in the right transition so

was kovit a great thing for you uh not i mean not covet itself but

the dynamics of what happened because of covid uh was that an accelerant for for

you and your career do you think i don’t i don’t necessarily think so i think on the engineering side it just

happened to uh help uh from the assembly of covert test kits you know those are

two record years one after the next but uh there was a whole quarter where there was no orders coming in so that was a

pretty hard pivot on the engineering side but on the real estate side uh i would have we’d be in deals

we’d be in deals already if that was okay i mean even without kobe right um so i i wouldn’t necessarily say

it was it would definitely change the landscape of deals there’s been a lot more loan assumptions because the debt

markets kind of dried up and there was a break where we couldn’t do a lot uh in the real estate side because you just simply

couldn’t get favorable lending and and i was still underwriting just as

conservatively before as we are during covet i mean the the deals i’m working on you’ve got a 50

breakeven occupancy a 67 breakeven occupancy the loan to values are 60 and 70

so i mean there there’s even in the downturn of seven eight nine

we only saw occupancies in b and c class multi-family drop into the 80s so i i

was going into it like code would happen well it happened nothing changed from the underwriting perspective maybe just on the debt

product side and and the the strategy there so i’m i’m fairly happy with the

progress that we’ve made and the path that we’ve been on on the multi-family side and i think i think things are going along well for us yeah i think any

of us would be happy to be on that path with you so but um also wanted to know

uh because it is our our weekly capital raise uh do you think uh uh that being

in the engineering world uh and having that network did you play

very heavily uh into that world to find your investors or was it uh broader than

that and and talk a little bit about what you’ve done uh to

expand that ability well yeah so um

the first deal uh was kind of everybody pitching in on the

capital side there was no as well as everything else because the reality is the sponsor i was working

with didn’t really need capital he had it all it was he needed help right and

so on that first deal it was just hey i’ve got some you know friends and family and it’s true through you know

15 years of doing high tech assembly automation i developed relationships with individuals that did invest with me

and they still are and had before right um and so those there was very little to

nobody that i think everybody had a long-term relationship with over five years in that first deal that invested

right the second deal we got a few referrals um and they were 506 c deals which means we could we

could put out be a little more forward-facing and share people i’ve only done accredited investors only hundred

thousand minimums and five or six c reg d deals right so um i can be forward facing uh in those

and uh yeah so that that the second deal i ended up raising twice i think uh what i

did for the first and i want to say that there was a couple people that were newer some of them were referrals and i

see by the third deal is when i really saw um sort of the machine of

the processes kind of get working through where i saw capital begin to come through

more than just the one-on-one i’ve known you for a while and

it was more referral based you saw people kind of getting more attracted to the post people are like oh he’s done

more than one of these or two of these and all three of these okay let’s have a conversation with them people i didn’t expect to reach out

reached out uh you know college buddies that had turned out made it big

invested in you know half my deals now and i didn’t even know right so uh and then since then yeah i think it’s gone

from like a hundred percent to of people i’ve known for over five ten years to maybe

the second deal was maybe uh maybe ninety percent third deal maybe 75 and i would say beyond that it’s

maybe maybe half or you know a third and the rest are just people attracted

to the asset class and the investments that we’re doing so um am i correct or wrong in saying

that it’s grown by word of mouth it’s grown organically that you didn’t

necessarily have a really regulated plan

to attract capital well so we we read every book that we could find when we started

out and i think hunter thompson’s was probably the best book on raising capital and he talks about putting a

platform together and me from the high tech space well that’s easy for me right so we got a website

uh i wrote a lead magnet passive investor guide you can check it out it it really it has all the graphs in and i

was telling you about recession resilience and and all that stuff and all the benefits of commercial multi-family uh we got a

crm so we could at least bring people in and share our deals our friends and others right

and uh um yeah yeah then we started we started going forward facing putting things on social media people would find

us register for webinars and so that did attract and then we you know sent out emails put out some blogs

i’ve got an amazon number one bestselling book i contributed for that you can find on my website

um and i’ve now at this point i’ve got i published on forbes twice with my third one coming out next week

and uh there’s a pbs episode that i’m going to be doing later this year

and i was just in bazinga and a couple other articles that

i’m beginning to write so i think that the the intention is to really get yourself out there

and as you know people find you they’ll look at you and kind of spy on

you for you know three or four deals uh and at that point they may reach out one

day and i’ll look at my crm and i’ll be like wait a minute you were there for like three webinars and i’ll start off

the call hey you’ve been spying on me like i love doing that right i don’t know why

but it’s really cool to meet people that that really like hung out and were interested and then finally

came around but that that happens a long it’s a no-like trust built over time yeah

and if you were to advise a young person that’s uh you know they they are going

to concentrate on trying to raise capital but uh they don’t necessarily

have the network uh to do so are there any particular uh you know could you

draw a path for them and what would that look like any particular tools that you would recommend for them that you know

hey first off you’ve got to get a website or you should do this

yeah well i mean when i started out i just basically did to the t i what

hunter thompson wrote in his book and his uh it’s raising capital for commercial real estate i think is what

it’s called and i i’ve numerous people have asked me and i said just do everything he’s got

in there just do it all just exactly the way you know and i think i’m pretty lighter on the social

media you know constant posting than some others but um you definitely need

some kind of platform you need a website you need to create a brand who are you share it and why are you people care

about that they invest in the person because you got to think of the private placements these private equity

they’re not audited so you come automatically right with this you know this government this fiduciary kind of

audit you know agency coming in like you’re doing a wreath but the reits are really bad investments

they’re tagging every penny coming is taxed they’re diluted they’re under a ton of pressure to spend a lot of

capital it’s a terrible investment right but but make it easy for them

to trust you to know like trust you because that’s really what it is in a real estate private equity because

they don’t have somebody going behind the scenes and auditing you uh and so you’ll find i think that they invest into the person and the asset

both but if the person’s not there they’re not going to look at the asset and what i’m learning is that the more

that i get myself out there the more that no like trust happens without me having to do 100 of that one-on-one

fantastic so i want to open it up a little bit uh patrick is there uh well

first off let me ask you uh what’s the uh a question or a couple of questions that

i should have asked you that i didn’t i what my favorite color is i think you

were pretty good jim nobody’s ever gone through to like my childhood like you have before so

uh i think i’ve i’ve answered it all at this point well then i’m gonna guess your favorite color is green

yes how do you know that well it’s my favorite color and it’s not necessarily because of the money but uh

but that doesn’t hurt well my 40th birthday is on st patrick’s day coming up so that might tell you a little bit

and if you can’t see but my eyes are a little green so it turns out there’s a couple different reasons why i like

yeah same here um but uh so i will uh ask if anyone on the panel wants to ask

questions and um i don’t know i’ve seen that vinky came in uh she knows i’m i’m not high

tech so if we have any questions coming from the internet um anyone just step forward and ask patrick

whatever you want it’s just a casual conversation with friends and we’re getting to know each other and

rick wants to know how much was your first raise yeah so specifics on financials within

deals and what each partner does are traditionally not shared but it was between half a million and

three quarters of a million and patrick was that first one the

hardest one well the first one was terrifying you know the first one because um

i had done i had actually flown around looked at like they say hundreds of deals i had underwritten deals i had

even said i haven’t even started raising capital and gotten to the point where we were had the private placement and we

were you know a couple different deals before we walked away so i had a lot of money invested in

a lot of deals before when i was like well this one’s really happening and

i did i did just i just did every single thing that i was asked to do that i found that could be done without asking

i just did it and so that one was just a dash to the finish line it was a lot of work it was terrifying but it went well

so i’m going to keep asking questions if no one if no one doesn’t and i guess i should change my screen so

i can see if anyone has their hands raised um but um i um

i still find it terrifying you know every single time um and i do uh have a

strong belief that it’s the the thing that most deals that don’t

happen it’s the biggest reason they don’t happen uh and the biggest reason uh for failure uh in trying to move

things forward but having said that i i also believe that

uh it’s the fastest way to success it’s the fastest way to get on a deal because

every deal needs capital and if you can raise capital you’re comfortable doing it then uh you can get in a deal

as soon as you want to get in one there’s someone out there that needs money every day but rick go ahead and

ask your question yeah my question is more basic so

in terms of the processes what are the different stages that you take your

a contact who has been coming to you just watching you versus to the point

where that person is qualified and gets into a deep do you classify do you

does your crm or do you have a process to take them through these different stages

well our stages are so you have investors that you are just in your database you have ones that you’ve

spoken to right uh and then you have ones that have registered for the webinar

ones that have attended the webinar ones that have put in a soft commitment right

and then ones that have actually are pinning investment invested i think really those are our stages and it’s not super um

i’d say it’s not it’s not super complex i we we do tend to you know

ramp down emails if they’ve registered and then try and make connection if they attended

we put polls in the webinars so that we know if they’re looking for questions you try not to try not to harass these

people i like i said a lot of these guys a lot of these attendees are just spying on me for two or three deals and

um the reality is uh i’ve never had trouble closing a deal because of capital and

i’ve never been needy for that and i think that’s just how we structured our our partnerships everybody brings more

than just capital and so i i i caution people jim’s talks about well bring capital d i caution people all the time

your primary job should not be capital raising and my primary job is never capital raising because then they’re

you’re on the hook for potentially operating like a broker-dealer and so

but to answer your question um uh when you get on the phone with the

investors when on that first call when you’ve had that conversation is when you can kind of structure what it is they’re looking for because i

really want to know who they are what they’re doing i’m an accredited investor only a fund

so i typically ask what their net worth is you know how much i i don’t ever and the reason why i’m doing a credit

investor only is because i feel better being a smaller percentage of somebody’s net worth right i want this to be a well

diversified i don’t want people to be in the situation i was where i put everything everything in the first downturn into a highly risky deal

right i may really want to do it i’m going to say hey this isn’t the right my minimums are too high find somebody with a smaller minimum right

but i’ll see whether if they’re if they’re younger and if they’re leading towards

uh accelerating their escape from retirement well that’s a very different conversation right if it’s somebody

that’s really concerned about inflation well that’s a fear-driven motivation that’s a very different conversation

right uh somebody that just hates taxes or a combination of these three or if they’re right approaching

retirement or after during retirement well these are people that are looking for income generation asset protection

legacy wealth building well that’s a completely different conversation and so

it’s more about meeting them where they’re at and getting that relatable we’re all human trying to figure this out where

are you at this is my experience i’m not a cpa financial planner attorney

i’m a real estate dude but but i do some engineering stuff and i’m educated but the reality is that’s all i know and

this is kind of my suggestion but i can’t give you advice right you need to talk to your own team but here’s the

things out there right and so i think that’s kind of how i approach it and and kind of that like you said how

do you tailor it so uh wakefield has a question patrick

he wants to know uh first off thank you for sharing your story but do you suggest building your website

your brand and the content before you start raising and any tips on how you

put together your content and what software platforms or other tools do you

use yeah and so this is where i think hunter thompson does does a really good job because

in his book um which i again everybody should read that if this is any where if you’re interested at all in ever doing

this because the systems and processes are are important in every business and

everywhere in every business right you’re talking to an engineer so um i’ve heard some people say oh start

in excel or bob no just don’t do it uh you know i know somebody who’s actually raising a ton of money and all he uses

is notepad on his phone and i’m just like what don’t make things so difficult on you right you know there’s very inexpensive

platforms like active campaign for example that are used by some of the bigger gurus out

there and they allow you to very quickly put in deal stages very quickly upload put in lists segment the list

and tag people based on calls they allow you know they can if somebody set up a calendly appointment with you you can

automatically create an entry you can send them a here’s who we are in a 405 drip email sequence and then they can

start getting your educational content like hopefully you’re doing blogs and educating people

and adding contributing to the to their uh bringing value to them as well as

deals and saying hey here’s what i’ve got going on right and and so that if you set that up right away

then your life just scales and becomes a lot easier if you’re trying to do this later you know you’re busy when you when

you’re doing a deal for me it’s all hands on deck it’s super challenges tons of stuff to

do this not a get rich quick scheme you want to get all this stuff set up in advance

right but don’t be like the analysis paralysis guy i struggle with that too right

set your goals set your timelines and just make it happen it’ll never be perfect on the website um man if you go

to my website right now invest on mainstreet.com i started with a video of me just talking about investments like

this is who i am this is an engineering guy you know and if you’re frustrated with the you know whatever the market and

blah blah blah we’ve got investments for you right just be authentic and honest tell your

story i’ve got a couple steps of how things work on there it’s an old school website it’s not a billion dollar re website i’m

not trying to look like that i’m trying to look like authentic and transparent and i just tell my story and um build on it over time i started

putting some real cool stuff on there like hey i’m a forbes author now and this and that you know but at the beginning it was just you know pretty

short little website didn’t even have a portfolio page but i had an opt-in with a lead magnet the lead magnet is

something you created which adds value to their life and it tracks them to give you their name phone number and email

right and that’s that’s how it all begins and that’s kind of the basics of what you might want they answer all the questions

yeah uh oleg had a question but i think you just answered it without uh us even having to ask uh with activecampaign and

um don’t rely uh just on an excel spreadsheet um and and of course a

website and there’s uh many other pieces out there uh a lot of other tools to be

used but i i wanted to ask um if how what is the importance of the phone

call well so if you’re a 506 b

um regdy 506 b type of offering

then you would require a pre-existing and substantive relationship with the

investor and until then you actually can’t share that you have a deal so uh various attorneys will say

what does preexisting is substantive mean there’s in your attorneys probably find

10 different definitions of that out there um but the phone call is critical because you know that is when i believe

that in a 506b world which i’ve never been i’ve only been a 506 c accredited investors only

but i believe that is when you can finally get to know them put notes in your crm of who they are what they’re

doing their their net worth if they’ll tell you if they’re accredited or not and what are their plans

uh for retirement and for wells building and are you a good fit right and how

right and i think all those things are important because they’re real people and you want partners for a long term

you don’t want to one hit wonder that was a bad fit you’re married to these people for like three to five years

this is your one chance to vet these people right and there’s plenty of people out there

you know you don’t want a bad fit and so i for the 506b world that’s that

to me is when the gate for now you can in your crm tag you know probably which i’ve never done

right pre-existing stuff so now you can then introduce them to deals as they come up but my understanding is

you’re not but in 56b world the call is um you don’t have that checkbox where you have to have a pre-existing or

substitutive a sea world 506 c world you don’t have to have that pre-existing substantive relationship

i want to know uh if on that call it’s uh uh i i want to know all the things that i

described earlier right it’s still the same am i a good fit are they sophisticated should they be doing do i think they should do i want to partner

with them and you know and why and i put all them take all those notes and i put it in there and then when i find deals that may fit

them i text them hey last time we spoke you wanted a deal like this it was higher cash flow higher tax advantages

or not high taxable but big yield and and you wanted this and why right or

it’s a 1031 exchange opportunity i just published in forbes on how to do 1031 exchanges and i just

did a uh with an angel i just did a 1031 exchange um like

full on webinar thing yesterday and um and so right now it’s a big focus for me

is helping people that want to get out of single family properties and trade up portfolios and multi-family deals and

um that’s i i think it’s that’s what i’m doing and it’s what a lot of people that want to live their retirement without tenants

toys and trash and want to see their money their funds scale and grow without

win still enjoy their life um in retirement i think that’s a great option for them so that’s also something

i’m kind of looking at too so i mean and then if you ask them other things like do you have

retirement accounts do you have uh you know do you have a cpa um you know all the ims are you accredited

investor if not i can get you in contact with a cpa if you’re 1031 i have an intermediary if you’re looking for a

retirement account to roll stuff over into i have a couple partners right these people know our investments

they’re good options for you and so try and add value like that even if they’re planning to invest with me or not

but i don’t have like here’s your 100 steps to a phone call written out for you it’s

just it’s just instinctual for me when i have that conversation

so i um my my question really uh in regard to the phone call not so much

necessarily a structure to the call but the importance of the call as it regards uh

successfully raising the capital even if it’s a 506 c do most of your investors

have a phone call or do you get a substantial amount of money just through

the automation i i don’t well i’ve had people put in soft commitments before

who just have been spying on me but i won’t accept their investment until i get on the phone with them

and and you’re actually it is it is on you as the uh syndicator uh to make sure

that you’re not taking the anti-money laundering act to make sure you’re not taking funds that you

should be taking so getting on the phone uh to make sure that you have a no like

trust you want to marry these guys you believe them you know they’re not going to be a hassle right all that stuff’s really important

it’s um it’s not like a reg d uh where where they’re sorry reg a where it’s a

you know there’s a stock market type placement uh these are these are people that you’re married to they’re partners

you really need to know so if if no one’s going to volunteer any

more questions i’m going to call on the class so to speak so everyone get ready with a question so i’m going to go to uh

someone strong right out of the gate uh yannick what question would you burning

question would you want to ask patrick hey yannick how you doing how’s it going patrick it’s going all

right good to see you again nice to see you too i uh i actually i wanted to congratulate you on your uh recent uh

interview which was great which i listened to uh last night actually for the first time it was um

what’s that podcast that you recently did well i did rod cliffs and michael blocks

michael blanc’s it was great great interview man thanks well i did jim jim beat him out on the

personal details about my innermost feelings in life in my young childhood but

yeah it’s nice those are all terrifying to do uh but i i really enjoyed it and i had a

lot of gratitude for michael block because you know as running to his podcast is one of the

things that was just constantly messaging why are you in single family why you’re in a single family

that’s what did it it’s one of the ones that did it yeah cool um well i guess i guess my question would be more related

to [Music] a canadian capital raising which i don’t know if

that’s really your specialty uh or if you know any canadians uh raising

capital um obviously there’s uh there are a few roadblocks uh but you know uh

also a canadian trying to do a 1031 exchange like you i have a one to four portfolio uh that

uh i would love to transition out of into um uh you know multifamily so uh is

there any roadblocks uh in terms of canadians trying to do that have you ever transitioned a canadian investor uh

into multi-family uh that that would be my question no i was just looking for um i visited

cpi capital uh there’s a couple that are from canada that are just doing a great job with content recently do you know

them yes uh eva in august yeah yeah i think i they’re they’re they seem like

great people i don’t know too well but but they you know they have some good content out there about it um now you

brought up two things 1031 is the united states irs law so i i’m uncertain

well if there it wouldn’t apply to any asset in canada that i know i mean is that but but i i’m not an accountant and

i’m not a financial planner or an attorney so this is not tax financial or legal advice

but most of the canadians that i’m speaking to at the end of the day

all they’ve got to do is create a tax id number in the united states and

typically they create an entity and they don’t want to do the llc they want to do the llp because if they do the llc

unlike us in america they’ll be double taxed in canada um just for

clarification on that too make sure that llp then isn’t buying into an llc

because then they run into the same issue so it’s important they talk to their cross-border accountant about that one

but if they’re getting another getting into like an lp investment that’s fine yeah so so in the syndication world

and they need to create an llp state side right tax id number and then i i use

corporate direct that’s the same company that the rich dad poor dad guys for everybody too and i said i mean i

could go to like five different websites and get find all the pieces you need and then create my own operating agreement

but i’d just rather pay like the 350 bucks for a wyoming llc to them and just they you know it’s just all one one spot

and it’s just real simple uh and that’s typically where i leave it sure the the the 1031 apparently because

the properties are in the u.s right and they’re lps so apparently

canadians can 1031 exchange in that scenario but i still have to uh dig a little bit deeper i found some

information of people actually doing it so just that makes sense it would make sense because if they’re doing settling

up the taxes stateside then they’re paying taxes stateside and then if they’re exchanging as an as

a united states entity from one property to the next as long as the tax

id is the same right they go from one tax id exchange to another same tax that you said entity that matters right then

when they’re doing the roll up for that entity or they’re doing the taxes for entity it makes sense that they wouldn’t have to

thank you thanks johnny so davide uh what question are you dying to ask patrick

hey how you doing guys hi patrick thank you for sharing all the all the knowledge here

uh let’s see um i i i feel kind of what you went through

you know you said you spent a lot of time underwriting a lot of deals because you the numbers came easy to you um

and that’s kind of where you gravitated the most initially and then you were asked by another experienced

operator to to help out um i feel like that’s where matt has spent a ton of time two plus years

underwriting a lot of deals and finding that perfect deal and uh that that hasn’t arrived that day

hasn’t arrived yet so um i’m starting to uh work on connecting with like trustworthy

operators where i can be feel comfortable bringing my investors to so um how easy or how difficult was it

for you to bring or to switch your mindset from finding that deal for yourself

to bringing your investors to another operator’s deal and and basically operating under their

infrastructure managing your investors under their infrastructure and

so on well first let me say um you if you’re on the gp for a deal it’s

your deal uh you’re just as responsible for the success and failure uh

even from a legal perspective from a securities perspective it’s your deal

uh so the the uh part of joining somebody else’s deal and

they’re gonna it’s their deal and you know you’re not responsible or you’re not also the equal responsibility for

everything working it’s kind of a misconception i think in the space and the operators that

treat other people that join as co-sponsors as if you’re lesser than me

uh is inappropriate because the reality is if if that deal gets under

investigation by the sec everybody’s investors uh get subpoenaed

everybody is on the bench right everybody’s emails um so

i you need to take ownership over that deal as if it’s yours you need

to underwrite it because it is yours and you need to do the due diligence on that deal you need to i create the decks

myself so that i know every step of the story of every single deal is something i

believe right i’m not i’ve always i’ve always created my own decks for every deal and it takes a long time it’s a lot of

work um and so but it’s because you gotta have that ownership because it’s your

neck on the line right i mean bronson hill just did a podcast with a guy who

uh was a sponsor and he went to prison i mean you got to be careful you know who uh

uh who you partner with and you got to make sure they know that you are a partner

right uh how do so their infrastructure well i i co-brand uh the decks that i’ve done

with with the my co-sponsors right and i put both out there i believe

transparency is really important um and some i guess some people are worried like

hey uh what if they search for their name and you know find out that you’re who your

partners are i was like well that’s the point right uh i’m not going to you know falsely say i’m doing

this on my own and when it’s not true right and they should be able to do the due diligence

on me and my partner and and i’ve had lps come by and say hey look can i do a background check numerous times and

typically i mean we have a lot of background checks because i’m signing on loans but uh you know i often times have that and

i pass it forward and i’ve done background checks on co-sponsors and learn some interesting things

about them but you know you go hey you have anything to disclose right now nothing that would ever be alarming

right but you know if you’re investing hundreds of thousands of people’s hard-earned retirement

they’ve spent their time away from their family to work harder and late nights this is their college fund or

their what they’re going to survive on or leave to their heirs what would you do if it was your money

right it is my money because i’m investing in every single deal but what would you do if you’re investing as much

as them i think that’s that’s really what’s important to think about

so patrick uh i want to thank you so very much for coming on short notice and

uh so much for sharing uh with us and and allowing us to get to know you uh

and so i want to end with uh how can people get in touch with you uh and uh

is your book on amazon or on your website um let you take it from there

well i just got a shipment of these in so yannick yours is coming um but yeah so if you go to the website and

you set up for you know prospective investors i as a free welcome gift uh to our community

or investor club i do ship a sign hard copy of the book and there’s better people looking on

here than me there’s um uh there’s the uh uh lead guitarist of

def leppard russell gray from the real estate guys some uh speaker authors nfl

nba coaches players and i wrote a chapter in the book amazon number one bestseller invest on mainstream.com

and you’ll see instead of buying it set up a an investor call and we’ll talk about your goals

what you’re looking to accomplish and uh so if you’re a prospective investor go for that and we’ll send you

this there’s a little flyer in it that i put in it too uh and uh and if you’re interested in

1031 exchanges i have uh not only the forbes articles out but i have a uh on the website a white paper

uh for that’ll step you through everything you need to know for 1031 exchanging into multi-family and if

you’re just brand new to multi-family i have an investor guide right that you can it’s a smart investor guide and it

goes through my whole process where i come from having lost it all one time and kind of building it back slowly

it kind of goes through the whole business case there and what’s the easiest way to get in touch with you is it through the website

okay so you can do patrick invest on mainstreet.com is my email patrick at invest on

main and street all spelled out dot com uh or for an email or you can go to my website and there’s a contact us forum

there’s a couple meeting ways to sign up for our list as well as a way to sign up to schedule a time on

my calendar fantastic thank you patrick i just want to end with everyone that’s listening on

the internet uh as a reminder the second annual gob network conference

is coming up in july on the 13th and 14th in the great city of chicago

and we’re super excited very very different format if you want to

buy tickets or just learn more about it go to thegobnetwork.com and check it out

thanks everyone hey jim thank you for your time

sorry if you haven’t said you want to give me a call after this um i i will as soon as i uh can hamad i

do have one other phone call i’m free um so yeah give me a call okay all right

great fantastic thanks appreciate everyone joining