Ask The Expert: Overcoming the obstacles to starting out in multifamily with Patrick Grimes and Sarah Hanna.

Transcript

Brian Briscoe:

So Sarah, we got Patrick on the line. What do you want to ask him?

Sarah Hanna:

What obstacles or oppositions did you face when acquiring your first deal and how did you overcome them?

Patrick Grimes:

Quite honestly, there’s a huge dropout rate in this space from people that kind of say, “Hey, I’m going to go do it,” to People that actually make it happen. It’s a combination of oftentimes a career change and being an entrepreneur. And it really takes these two kind of things because in this space, when I mean, I got into it, I didn’t know anybody that was in multifamily. And I wasn’t certain that the first multifamily was it. I just knew single family, wasn’t it? So part of what I did was I partnered up, I started talking to people like Brian. I’ve talked, in fact, his team, we actually got real close to working on a deal together, but you got to kind of find that path.

Brian Briscoe:

Welcome to the Diary of an Apartment Investor Podcast with your host, Brian Briscoe. In this podcast, we bring some of the top professionals in the apartment investing field to discuss various aspects of the apartment investing journey with the sole purpose of educating listeners to make wise investment decisions. The Diary of an Apartment Investor Podcast is sponsored by Four Oaks Capital, bringing you high yield returns through apartment complex investing. Welcome to the Diary of an Apartment Investor Podcast. I’m your host, Brian Briscoe, and very excited for this show today. It’s another one of our ask the experts on, we’ve got two people on the line with us that I think are absolutely amazing. We’ve got Patrick Grimes and Sarah Hanna. And Patrick, you’re up to bat first. So, welcome to the show.

Patrick Grimes:

Thanks, Brian. Excited to be here. I know that back before we had any deals or I had any deals, I met you on Slack channels. We were grinding away doing underwriting. We met at a conference and it’s a couple years down the line now and we both come a long ways and I appreciate you having me on.

Brian Briscoe:

Yeah, it’s fun to see, like you said, we started out brand new together, right around the same time. And it’s fun to see how we’ve both gotten a certain amount of success in completely different directions as well, but happy to talk with you and glad we’ve reconnected after you quite a bit of time. So, thanks for coming on this show again.

Patrick Grimes:

Absolutely. Hey, nice meet you, Sarah. I’m excited to get your-

Sarah Hanna:

Nice meet you too.

Patrick Grimes:

I’m excited to hear your story and get some great questions from you at the end.

Brian Briscoe:

All right.

Sarah Hanna:

It should be fun.

Brian Briscoe:

And I should say welcome Sarah too, but I usually say that at the middle. But Sarah, welcome.

Sarah Hanna:

Thank you for having me.

Brian Briscoe:

Absolutely. This is going to be a good time here. But Patrick, you’re in the hot seat first, so let’s talk about you for a bit. Talk about your background and history and what got you into apartment investing.

Patrick Grimes:

Sure. Well, I started out as a mechanical engineering student and started at machine design automation and robotics. After a couple years of that, I had done some of the winery, I’d done a stent at a Toyota facility and then started automation company. And that owner said, “Hey, look, you need to put all your money in real estate. While this engineering business is cognitively rewarding and a lot of fun, it’s of going to provide you the life you want in your future. It’s highly volatile and you need to invest as much as you can, and as soon as you can.” So I took that to heart, saved up everything, dumped it into a bunch of what I thought were very profitable investments in land. And with developers that had a good track record that we’re going to build on. And all of that went south, because it was back in 2007 when the market was never going to go down.

Patrick Grimes:

And then so ‘8, ‘9, ’10 happened. I was able to avoid BK, but it was very humbling. I learned a lot about the difference between speculating and investing during that time. And then when I came out of it, I kind of dove back into my high tech career, did a couple master’s degrees. And at that point, I realized, “Hey, look, I’m getting bonuses, I need to get back into real estate. And so then it kind of, I sought lesser risky assets and better markets, recession, resilient job makeups and in specific investments where I know I could see a comparable that was already built already there. And I was doing a measurable lift to that. And essentially, the BRRRR method, but I was a whole investor at the time.

Brian Briscoe:

I think a lot of people kind of got burned around that recession time. And so if I’m hearing you right, you went towards a more reliable, more safe way of investing, the development is a little bit of speculative. I mean, you’re making guesses on what’s going to happen three years from now, what the apartment landscape’s going to be like? Whereas with buying existing multifamily, I mean, the risk is a lot different because you typically have years and years and years of rent history, and you can kind of project that into the future. So, you did BRRRR method. Were you talking small multifamily at this point? Or were you getting into like the larger stuff at this?

Patrick Grimes:

Yeah, what you’re saying is right on with the short term bridge debt and hard money necessary to do the development deals, you can be left with that seat when the music stops. And that’s what happened to me. So, with smaller single family, what I could do with all of my own money, I felt was a little lower risk. And because I had comparables, like you’re saying that were income producing, I could buy income producing assets immediately, I started buying, renovating, and holding, but after a while that got to be single family assets and the recession resilient markets. So at California. After a while that got to be very tiring. I was moonlighting it. I needed to figure out a way to trade up, I not sacrificed my family, friends and hobbies outside of my engineering job for my real estate investment career.

Patrick Grimes:

And that’s when I discovered multifamily investing where you can be passive or active, but even on the active side, you can rely on partners to do some of the heavy lifting with you and take on jobs that you like. And so that’s about the time that I met, and when I met my wife, I said, “Look, I can’t continue to burn the midnight candle all the time. I’ve got to find a way to scale. I can’t just do one house at a time. I need to do larger units.” And so that’s why I shifted into multifamily.

Brian Briscoe:

All right. And I assume your wife was supportive with that?

Patrick Grimes:

Well, actually I think you might have met her at one of the events that I took her.

Brian Briscoe:

[crosstalk 00:08:18]. Yes.

Patrick Grimes:

Yeah, yeah. And she’s enchanting, she’s amazing. She’s in animation production, and we had met when she was going to Cal Arts at the time getting her master’s degree. So she’s going gangbusters in that career, but I needed her on board. So I did bring her to various event. It did take some time to kind of educate that, because we had gotten married in California and Beijing where she’s from to kind of educate on what is this financial investment, entrepreneurship, financial freedom, all this stuff, relatively newer concepts. So it took a little time, but once she got on board, she put her vision board together and she was 100% in and she was pushing me and she’s a math wiz. So she helped out, not only in creating 60 passive or I think she’s up to 80 educational videos for our investor base, but she also would help with the underwriting and a great sounding for the business. Being a production manager, producing feature link animation, so very happy to have her.

Brian Briscoe:

So she’s completely in, I mean, she’s all in with you, which is nice. For my wife. I talked about the apartment investing and she was always kind of luke warm on what my moonlight, my burn the candle little job was my side hustle. But when we sold our first investment property and walked away with a big chunk of money, I remember she just looked at me one day and said, “So real estate, huh?” And ever since that, she’s been all in, but end of the day, it’s always important that your partner is support at the minimum supportive, but sounds like you’ve got her very much involved, which is awesome. So one thing I like to ask everybody about is their big burning, why, their motivation for what they do. So what would you say your big burning why is?

Patrick Grimes:

Well, let me partly, because there was a minute there where I was just dumping energy and time and resources into the business and she wasn’t seeing much back, but we just had our first exit, to your point, last year we bought a 27 million and sold at 37 million March to December last year, 208 units in Florida. And that huge win meant a large piece of income coming back. And that was another light bulb. I think it came off, it’s not just on paper now, it’s very real tangible. And so that definitely helped an additional accelerator on the journey. But the burning why, I’m passionate about helping people, and I’m a community builder and I’ve always been that way, even my birthday for 12 years, before COVID I took 40 people up to the wine country on a charter bus for four days and I just loved bringing people together and doing things together.

Patrick Grimes:

So the single family journey was very lonely because it was just me and it was a lot of work. But with multifamily, I get to not only bring great partners like yourself, Brian, and other excellent, very intelligent people out there. And we get to work together to take down an asset where we all bring our superpowers and we do what hopefully you like doing, because if you’re not doing your job, you better be passionate about whatever it is you’re doing in your other time. And at the same time, we’re producing, not just something for ourself, but we’re making the world a better place. We’re providing a cleaner, safer and improved living experience for our tenants because we’re buying these properties that have been neglected and mismanaged, and we are through the process, investing into the communities and the buildings and producing a better return for our investors.

Patrick Grimes:

And not only is that return a good return, but it’s all the tax shielding and inflation hedging and recession resilient type of investments that are completely different from what took me down in the first recession, doing the single family, hard money loans, signing as a guarantor, cross collateralizing resulted in me losing everything. And for the single family investor, whether they know it or not, that’s oftentimes what they’re doing, the flippers and the renters. And on these multifamily, all of our investments are on islands and they’re protected. And I think that burning why is each time I do a deal, not only does it take years off of our working life and provide a better life for our family, but it also does so for our investors and we get to live in this great community and work with great people.

Brian Briscoe:

Yeah. I think this is one of the ultimate win-win situations and probably tack on a couple extra wins on there. So, we’re helping ourselves. Obviously, we’re helping the people we partner with, we’re helping the people who invest with us and we’re helping the people who live in the communities. So I’ve always been a Stephen Covey fan and one of his seven habits is think win, win. But I really think this business is a win, win, win, win scenario where there’s a lot of wins that come from this. And one thing that you mentioned from your experience, it’s also a fairly resilient investment opportunity. You can lose your money, but you’re a lot less likely to lose your money on existing multifamily than what you said to the alternative list, lots of single family or developments. That said, let’s talk about one of the projects you’ve been involved in. Tell us about your first or your favorite or whichever, your most recent, whichever one you most want to talk about.

Patrick Grimes:

Well, by the way, to your point is that mindset of the win-win it’s not shared out there by all the investors. And in fact, when we got this property that we just closed on in Houston, we printed out almost real thick stack of unanswered maintenance requests. This guy had neglected the tenants and through COVID they stopped paying him and a 19% bad debt and which meant uncollected rents. And he lost his building and there was all these deferred maintenance. And so we get to get in there and we get to make the lives better. The tenants give a great return for our investors and build up the community and make it safer. And so I think it’s a great place to be. So you got the whole feel good. So, our company is doing some great things. We’ve really got some momentum. By the end of April, we’ll have about 3000 units across Texas, the Midwest and the Southeast Eastern states, places like Houston and Dallas and Atlanta, Cincinnati, Ohio, various cities in Florida and Northern and Southern Carolinas. And those are all value add multifamily B and C class.

Patrick Grimes:

We’re doing a bit more portfolio type investing now. Right now we’re working on finishing up the raise. It’s a $32 million raise for 772 units. Got it at a seven cap, which means an extraordinary discount. Individual held it for five to 15 years and didn’t renovate it. And now instead of needing to infuse capital, he’s just saying, “Hey, look, I’d rather get it off my plate off market to somebody and take it.” And so it’s incredible opportunity. And I’m really excited because it’s very rare that you can get that kind of a discounted to buy with the rinse and repeat easy renovations to meet market rents, which are leading to two to $300. And one of the benefits of our business structure is that we’re filed as I have a 560, which means I can kind of be forward facing, I can talk about our investments directly. And so that’s one of those opportunities where our investors can come in and all of a sudden one day be diversified across seven properties in two states and a portfolio. And we can immediately start distributing monthly right off the bat.

Brian Briscoe:

Yeah. I like that. I like the modeling, I think portfolios are definitely a great way to go as far as diversification goes. And you said 36 million raise, is that what you said?

Patrick Grimes:

32.

Brian Briscoe:

32 million raise.

Patrick Grimes:

We’re only down to a couple million left actually.

Brian Briscoe:

All right. And that’s significant. I mean, that’s more on one portfolio than our company’s on a whole lot of units so very, very substantial there. Anyway, something you mentioned earlier. You talked about the rinse and repeat, which is something that I think about a lot. You go in and you’re basically doing the same thing you’ve done on other prop properties your first time in, it may be a new experience, but if you’re able to systematize things and figure out the renovations and how to operate the properties, bringing on the second, third and fourth properties, or however many you have is just a rinse and repeat situation. So, it’s one thing that’s very nice about the business. There’s obviously differences between properties and you learn something new with everyone, but for the most part, you can come in and just rinse and repeat what you’ve done down the road or in the next community down.

Patrick Grimes:

And it takes some discipline, because I’m constantly bombarded with those shiny objects, “Oh, go do this vacation rental thing. Or here’s this weird crypto variant,” or this or that. But once you’ve done a project and you’ve executed it and you’ve done it again and you’ve refined and you refined, I find that sticking to our guns, very near criteria, very risk averse, low leveraged, and not major conversions between large assets keeping the upgrade per unit cost down. If you just stick to this rinse and repeat model, just keep after it. And there’s always ways to get a higher return, but not necessarily that level of a risk adjusted return. In other words, I’m, I’m convinced that the tortoise well pays the hair from all the shiny objects out there. If we just keep with the tried and true process.

Brian Briscoe:

Yeah. Funny, you bring up that story. I’ve always wondered about that story. I mean, why couldn’t hair just keep on going? Why can’t you be fast and steady? But I it took me a long time to understand the thing, and I think you’re right slow and steady is going to win the race. When you talk about risk adjustments when I look at risk now and a lot different than I looked at risk 10 or 20 years ago, if somebody has executed the business model before, that brings the risk level down. I mean, you can have a good business plan, you can have a good market, you can have a good property, but if you’ve never executed, that’s a higher risk level. And so something else that you bring to the table is you’ve done it before a couple of times, several times, and when you talk risk adjusted returns, there’s not just the lower level of risk from the properties you guys pick and the business plan, but from the execution side as well.

Patrick Grimes:

Yeah. 100%, the sponsor risk is oftentimes not quite looked at as strong as the deal risk and market risk and the cycle risk of where we’re at. And I think that one other things that strongest individuals like ourselves that have been through a downturn before we’ve seen what happens when the debt market’s dry up and your loan gets bought and sold. And a lot of the times that I’m talking to somebody that hasn’t, they can’t understand the questions I’m asking because they haven’t seen it and been through it. And when we talk about risk adjusted, we’re saying, “Well, we 67% break even occupancy,” means that we’re putting 60% down, not 15% down or 20% down like you see. But that shell of back to the tortoise, it’s a heavier shell to carry.

Patrick Grimes:

But it’s a steady, tried and true, and with the market volatility of BMC class multifamily or workforce housing multifamily, it’s only dropped into the eighties on occupancy even in the downturns we’ve seen. But our breakeven occupancy is well below that. We’re cash flowing on day one, we’ll be able to write it out. We’ve got two, we got six months worth of operating reserve, just earmarked in an account, just in case that means six months worth of expenses. We could float the entire property, we don’t get an income for six months. Tornado Hits, we’re first in line to repair and get back up and running. Because we already have a cash to do it. And then after the fact we can go after our replacement costs, insurance and our loss of revenue, our rent insurance. And the interesting thing is by the time you’ve done that, now you have new buildings which they rolled and it’s less cost to do the renovation of those buildings because you’re renovating now building to the new renovation level and they’re insured for 100% occupancy.

Patrick Grimes:

Well, they weren’t 100% before, but as long as you have the cash on hand to float forward to recover from those and you have not squeezed every dime out of the deal, then it’s a very low risk asset. It’s well capitalized, it’s low leveraged and it can recover and withstand the test of a market cycle or a natural disaster. And I think all of that, it may lower you return. We’re not going to be having 20 plus IRS in our deals. We’re going to have risk adjusted returns, ones that are down because we’ve decreased the risk. But way better to stock market and way more tax advantaged and inflation hedged. And you’re not going to lose it all one day because it’s a hard asset.

Brian Briscoe:

Yeah. Lots of goodness there. So last question for you, what’s next for you?

Patrick Grimes:

Well, so our company has been kind of going through a little bit of a shift where I tend to be more of a head to the grindstone, get the work done engineering type. And I hadn’t done any podcasts before beginning of this year. I hadn’t gotten out there really. And so now we’re finally starting to get the message out. I mean I have a high tech career in automation, robotics, so it’s fairly well known there. And many of those individuals have invested with me and even the guy that originally got me on the real estate path like 20 years ago, he’s still investing with me with my deals today. But now we’re getting the message out there, we’re doing a PBS educational piece. I’ve got which I’d like to offer to your listeners, I contributed a chapter in a book co-authored it with some other people.

Patrick Grimes:

It’s called Persistence, Pivots and Game Changers, Turning Challenges and Opportunities. I’m over here, much better looking guys or everywhere else. But I had hair back then. But there’s Russell Gray from real estate guys, Phil Consleyguitars, Def Leppard Entrepreneurs, NBA, NFL coaches, and players, so there’s a lot of really fun. This is a great project, tells my story, and I’d be happy to give it to your, assign hard copy to your listeners if they want to go to our site and sign up for an investor strategy. So actually we talk about your goals and I believe in this content and I believe in what this story does, it’s a lot of really cool people in here.

Patrick Grimes:

I’d be happy to do that. We did this and we’ve got some information, passive investor guides out there and I am starting a podcast myself, and starting to invest more as I’m a Forbes author now and I’ve got two articles they published and a third on the way. So I’m just trying to work on getting that message out there because financial education is very underserved in the country and generally, globally. And all you learn to do is a savings account and a checking account. And then you trust in 401(k)s. And people don’t even know that means you’re just guaranteed to work forever and diversifying your portfolios.

Brian Briscoe:

Yeah. Until you’re old enough to start pulling the money out, and who wants to do that?

Patrick Grimes:

Exactly. And then your basis dwindles until you pass. And that’s not really legacy wealth in that case.

Brian Briscoe:

Yeah. All right. For anybody listening, if you’re interested in the book offer, we’ll have a link to the website where you can grab that and encourage everybody to take them up on that. So we’re going to shift gears and bring Sarah on. So, I’ve already welcomed you, but guess what? I’m going to welcome you again. Welcome to the show.

Sarah Hanna:

Thank you. I’m excited to be here.

Brian Briscoe:

Awesome. Awesome. So do us a favor and tell us a little bit about yourself.

Sarah Hanna:

Yeah. I live in a small town in Northeastern, Iowa population’s about 10,000 here. I graduated from the University of Northern Iowa in 2020. I graduated with a degree in biology and a minor in chemistry. So, right after college, I worked in a microbiology lab. I had the white coat, I was wearing the gloves and the goggles that is really cool for the first six months, and then I realized there was no growth here. It was a 9:00 to 5:00 job working 40 hours a week. And I thought to myself, “I don’t want to be doing this for the rest of my life, working for my money, trading my time for my money.” And so about a year into that job, I decided to quit and reevaluate, think of new things I could do. And my boyfriend and partner, he’s always been kind of an entrepreneur and he’s always had this kind of ear of this eye on real estate.

Sarah Hanna:

And so I applied to be a property manager in my town with no experience. I had to go through three different interviews to prove that I handle this job in this position, but I wanted to become a property manager, so I could get hands on experience on the operation sides of assets and learn how important it is for your onsite manager, because they can make or break the deal, or make or break the cash flow. And so it’s been great. I’ve been doing that for about six, seven months now, just getting my hands dirty. We are still hunting for our first deal, but we do officially have an LLC up and running, first ascent equity, which was really exciting to go through that process.

Sarah Hanna:

And so we decided to pursue the real estate avenue because we both also work at a CrossFit Gym in town and one of the members there, he’s a pretty big fish in the real estate investing industry. And so we’ve kind of been learning from him and then going to a meetups and hopping on calls like these with experienced investors to better acknowledge and help us get that first deal. Because after that first deal, they say it’s easier. And so super excited to be here and to ask you some questions, Patrick.

Patrick Grimes:

Good for you, Sarah. That’s a great story. I’m glad to see that treading your time for money thing, that happened early on that’s. That’s awesome.

Sarah Hanna:

Yes.

Brian Briscoe:

I wish I would’ve realized that earlier on as well. I mean, I had two degrees in math and quite frankly, I wanted to teach and I was working towards math so I could be able to teach and I realized way, way, way too late after getting two degrees that I was not passionate about math, but you made that discovery a lot sooner, a lot earlier in life than I did, which is good for you. And the other thing that I’d like to say is just good for you for going into a job where you can learn. And that’s something that I wish I would’ve done or had the courage to do when I was a lot younger is go into a job so I can learn a business, learn an industry so that later on in life, I could capitalize on it. And you get in a job of the property management is going to pay lots and lots of dividends later on down the road.

Sarah Hanna:

I think the biggest thing I’ve learned from this job so far is that I don’t want to be a property manager forever. I want to get to the point where I can pay someone to do this job.

Patrick Grimes:

Well, at least you’re starting at one of the toughest jobs, because that’s why I got away from single family because now I have onsite property management. They call me.

Brian Briscoe:

Yeah. Absolutely. Absolutely. Well, let’s talk about your big burning why. You talked a little bit about your motivations, but if you can distill it down to why you want to do this?

Sarah Hanna:

Yeah. And so like a lot of people, I want the financial freedom where you don’t have to worry about what you’re doing is bringing in the income to support yourself and your family. And so I’m really young. I’m 24, so I don’t have a lot of responsibilities right now. I don’t have a family, I don’t have kids, I don’t have a house payment. So I realized right now is my opportunity to really roll up my sleeves, get my hands dirty, spend the next three, five years getting experience and getting those assets built up so that I can eventually do stuff I’m really passionate about that I know won’t bring me any money and that I can still support a family and be there for my family when I do have one. And so I’ve got these crazy passions and ideas. I want to be on Shark Week, and I would love to create content for Shark Week, but I can’t rely on that to put food on the table for a family. And I’d love to somehow be part of Cirque du Soleil, if you’ve ever watched that Cirque in like Vegas.

Patrick Grimes:

Can you do a demonstration for us?

Sarah Hanna:

Oh no, no, not be in it. Be on the board or something.

Patrick Grimes:

Oh, got it. Okay.

Sarah Hanna:

[crosstalk 00:30:25] has failed.

Brian Briscoe:

Yeah. So, there’s somebody in this industry who runs a podcast was actually part of Cirque du Soleil. Started out as a wrestler, he’s Australian by trade, and for some reason I can picture his face, but I can’t think of his name right now, but he went from professional wrestling to Cirque du Soleil. Anyway, a lot of cool stuff there.

Patrick Grimes:

Maybe he’ll do the demonstration.

Sarah Hanna:

Yeah, exactly.

Brian Briscoe:

Yeah. Well, we’ll let him do it, but anyway, lots of cool stuff there. But anyway, come up to my favorite part on the show where I get to sit in the backseat for a second and listen to some magic happen. So Sarah, we got Patrick on the line. What do you want to ask him?

Sarah Hanna:

Yeah. So Patrick, my first question for you is what obstacles or oppositions did you face when acquiring your first to deal and how did you overcome them?

Patrick Grimes:

Yeah. Well, there’s a lot. And quite honestly, there’s a huge dropout rate in the space from people that kind of say, “Hey, I’m going to go do it,” to people that actually make it happen. It’s a combination of oftentimes a career change and being an entrepreneur. And it really takes these two kind of things because in this space, when, I mean, I got into it, I didn’t know anybody that was in multifamily and I wasn’t certain the first multifamily was it. I just knew single family, wasn’t it. I needed to find something else, and I heard all kinds of different strategies and nobody was shining a light saying walk towards it. I picked up some book that were lamps and they led me in different paths and I kind of finally started finding a strategy which made sense.

Patrick Grimes:

And I think when I kind of went through that process, I was doing courses, I was going to seminars and I was taking notes and we were getting nights and weekends at Starbucks with Tina, I invited my wife too. And she went through the videos, didn’t quite take the notes. I did. I’m that guy that will work full time and go do two master’s degrees. A little bit of a glutton for punishment like Brian. But this was kind of my third one, and I kind of treated it that way. So, when you just start, I joined some of the, where I originally met Brian was through a Slack channel where I was getting finally getting deal flow or just going online, finally meeting brokers, and I was submitting offers and uploading, underwriting, getting feedback and just kind grinding it out.

Patrick Grimes:

And there was an old boys club where I would literally go meet with a broker in Tucson, for example, for like the fifth time and then find out he just awarded a pocket deal to another syndicated bakers. And then I’m like, “Well, he’s worked with him like 10 years. So I can’t blame him, but how do you break into that?” And so part of what I did was I partnered up, I started talking to people like Brian, in fact, his team, we actually got real close to working on a deal together, which they’re now exiting which is great. I’m really excited to hear that from them. So kudos Brian on that. I didn’t participate in that. I went some other directions in other kind of assets and other markets actually. But you got to kind of find that path.

Patrick Grimes:

And ultimately, Brian and I took similar paths. We partnered up with different people where we each had our superpowers and each person kind of fell into a niche where you could be excited and you keep bringing deals, you keep showing up. I think a lot of the times people try and push value on me. I get all the time like, “Here’s the deal. Here’s the deal.” I’m like, “Well, that’s not what I’m looking for.” They’re not inquiring, what do you actually need right now? What will advance me? What help do I need? And rather than I need, I need, I need, and I think that’s probably the obstacle that I found was finally finding or opening up my ears. They say when the student’s ready, the teacher will appear. When I opened up my ears and I found what value I could match.

Patrick Grimes:

Then all of a sudden it was obvious. And I did the first deal. And then immediately we started the second deal, without even a blink, and then the third deal was almost in parallel with the second deal, and that law of the first stills happened. When all of cards finally align up and you’ve met the right people, but that happens through the trenches of just getting after it. For a lot, lot … I mean, it’s traveling all over, meeting all kinds of people. A lot of things didn’t go right. I lost money during this time, walking away from deals and traveling and investing and things that I was like, “No, this isn’t right, this isn’t right, this isn’t right.” But each time I said no, it drew me closer to the right people. It attracted the right people. It solidified in my mind what I wanted to do and I gained experience along the way.

Brian Briscoe:

Yeah. I would add to that. There’s a reason why I ask everybody their big burning why on this podcast, because I had a big burning why, and it was bright and burning and red hot, but there were a lot of times where I wanted to give up, I wanted to quit, and it was that big burning why I just would remind myself of that every time, “Hey, this is why I’m doing it.” And Patrick meant, he said trenches, it’s hard, it’s not an easy thing to get into. And that there’s lots of stumbling and lots of failures on the way, and a lot of near misses and a lot of things you have to push through? So when you talk about challenges, everybody has different challenges, but everybody has challenges. So, how did I get through is I had a really clear why, a really clear reason for wanting to do it. And every time things got tough, I just reminded myself that why and pushed.

Patrick Grimes:

knew that the military verbiage there would ring true with Brian.

Brian Briscoe:

Yeah.

Patrick Grimes:

Now, it was Winston Churchill that said, “If you ever find yourself traveling through hell, keep going.”

Brian Briscoe:

Keep going.

Patrick Grimes:

Stay there. Don’t give up.

Brian Briscoe:

Hells the last place you want to stop.

Patrick Grimes:

Yeah, exactly.

Brian Briscoe:

Yeah, keep going.

Sarah Hanna:

Awesome. And so did you have like a moment when you had a mindset shift or how did you have to change that mindset in order to keep moving forward and keep going through those trenches?

Patrick Grimes:

Ultimately, how I got into the business was I brought dozens of deals to specific individuals that shifted over time until I finally found a few. And then one of the guys said, “Hey, let’s work together.” And the mind shift, I think, was in the heart of what I was saying and that’s getting into the first deal of that’s the mind shift for me was first high risk land, getting away from speculation, getting to calculated investments in single family and then scaling to multifamily. But to get the first deal, the mind shift was what does he need from me, listen and probe into that, and then do it all, recorded the Zoom call of everything he had going on. And I did everything I could. And ever since for every deal I’ve done and I’ve been flying out, doing the due diligence, getting grimy and dirty or inviting investors out, literally going through the mud and the down units and the mold and getting the heavy, getting the dirt sifting through it all and reporting.

Patrick Grimes:

And I think what I found out was, well, this guy didn’t need a deal. He’s got deal flow. This guy didn’t need capital. He’s got all the capital he needs. But he’s busy, and he needs key players that are willing to get the work done, are willing to … and I didn’t even know what percentage I was going to get out of my first deal, until after we closed. And that also was with the second deal I had just had a trust that I believed in the deal. I knew what was happening, I understood it inside and out and I was all in. Finally, found a partner that had the same risk averse approach, conservative, underwriting, low leverage, long term fixed interest. All the things that I knew would survive a downturn. And it was the right path for me. I invested in those deals. And at the end of the day, I developed great partnerships moving forward. And I think that was probably … I mean, that helps to answer a little bit.

Sarah Hanna:

Yeah, it does. And it actually started to answer my next question that I have for you, how do you make yourself stand out from everyone else who wants that same opportunity that you do?

Patrick Grimes:

Well, I think showing up consistently to the plate, even if it’s them telling you with your ducks in a row, “This is the work I’ve done. This is what I’ve got. Is this a value to you? Here’s a deal. Here’s my concerns. Here’s why I think it’s good.” They come back, “Well, here’s what you shouldn’t be concerned about. Here’s what you should be concerned about,” they didn’t even think about. But then adjust your process and move forward. And I think learning, paid attention and continuing to show up, you’re going to stand out because there’s a lot of noise out there about this being a get rich quick scheme. It’s like two and a half years from the day I said I’m not going to do single family to the day I actually close them a first multifamily deal.”

Brian Briscoe:

Yeah. It’s not get rich quick.

Patrick Grimes:

It’s not. Yeah.

Brian Briscoe:

Yeah. It’s get rich slow is how I call it.

Patrick Grimes:

Yeah. But it’s true. It’s a steady, tried and true process, but you got to keep getting after it. And I think if you show up in that way where they’re so worried about getting rich on a first deal and they’re so worried about their return and they’re not leading with value, they’re not leading with showing up as somebody who’s going to make their lives easier, give them back their nights with their family and let them go on vacation and be kind of outwardly focused, not only for your partners, the sponsor you’re working with, as well as your investors. Then that they’re going to see right through that.

Brian Briscoe:

Yeah. Yeah. There’s something he said that I’m a firm believer in is just showing up. If you just show up every time, you’re going to set yourself apart from everybody else. All right. Of course, there’s the next level of you’ve got to show up and then do the right thing, but just showing up and consistently showing up at the right place and the right time is going to put you ahead of a lot of people. And then the one thing I’ll add, this podcast for example, is something that I’ve done to try to set myself apart. Everybody does it differently. Everybody has their own individuality that comes to play in it. But for me, setting myself apart part of it is the podcast, part of it is our educational community that we’ve created a lot of what I’ve done has been on LinkedIn. Just posting some very personal lessons learned on LinkedIn, but end of the day, showing up, figuring out what you can do and what your superpowers are and consistently showing up and consistently delivering, strong steady.

Sarah Hanna:

Awesome. Yeah. So my last question is more of asking for some advice. I’m young, I work a couple part-time jobs and I’m deciding whether or not I should get a full-time W2, build up some capital and do real estate investing on the side to get more experience, get the first deal, but still building up the capital with a full-time 5:00 to 9:00 job, or if I should really dedicate myself right now to learning really networking, getting part of teams and dedicating it full-time while having some part-time gig on the side and really immersing myself in this field while I’m young and I don’t have a lot of bills to pay and a lot of responsibility? And so just asking for any advice, suggestions, or experience you may have with this for someone who’s young just getting into the field.

Patrick Grimes:

All right. That’s for me, I forgot. Yeah, you’re first. Well, so I don’t know your specific situation, Sarah. Everybody’s got their financial needs, and anytime you jump out into an entrepreneurial venture, or even if you talk to a financial planner, which I’m not a big fun of, you might agree on one thing and that’s that you do need some reserves, you need emergency reserves like six months to nine months of reserves. And then Robert Kiosaki talks to be financially free, you got to either decrease your expenses or increase your passive income. So, what I like to say is if you can live conservatively and in a way where you have the ability to go to college, or go to a master’s degree, or in my mind, if you start a venture, you need a runway.

Patrick Grimes:

Any entrepreneur needs a runway, I think it’s great to go all in somewhere. And I think that if you have the means and the ability to just go completely all in and show up at any time of day, because when I get a phone call saying, “Hey, we have a deal, it’s in Dallas. We can’t tell anybody about it. Can you get out there?” I ride from Oahu and landed in Dallas that night, that morning. I showed up at the property that next day, and we spent the next three days working units. And then we spent the next three days getting the CapEx budgets and getting this underwritten so that we could decide whether or not we wanted to put the earnest money down and proceed. That was a real need. And so that flexibility, that all in that reliability, if you have the means to go full time, I’d say go full time.

Patrick Grimes:

You offer a whole different level to a sponsor, or if you have some flexibility, if you’re going to take on a job, maybe craft around something that allows you to be available when brokers are there. When you need to talk to lenders or insurance agents, or the only times of day that you’re going to get access to these apartment units to do due diligence walks is typically either weekdays or sometimes weekends, but weekdays between 8:00 and 5:00, 8:00 and 6:00. So if your full-time job prevents you from doing any of that, it certainly reduces the amount of value that you can put. So technically, I’m a contractor, and on the other side, doing machine design automation and robotics, and still to this day, and during COVID when multifamily dried up, it allowed me to dive in there.

Patrick Grimes:

I didn’t get a single order in quarter two from engineering, but I pivoted to COVID automated in 2020, but I pivoted to COVID automated assembly test kits. And then I had two record years, producing automated machinery for test kits. But completely multifamily, completely dried up, there was nothing going on. Nobody could get a loan, everything was frozen. So some flexibility in another high income producing way or something that maybe if it’s not high income producing, but something that’ll keep you going, to meet your needs. There’s some value to that.

Brian Briscoe:

Yeah. I’m also going to borrow from Robert Kiosaki and it goes right along on with what Patrick said, but if you read Rich Dad Poor Dad, he says that, Robert and his wife, Kim, at one point were homeless living out of a car while they were building their business. Now, do you have to go that far? No. But they put all their time, effort and energy into building something and ended up building something that has affected a lot and a lot and a lot of people. But basically, you got to go all in. The longer of a runway you have, the better off you’re going to be. And I had a job, I was active duty military, and I knew what first eligibility for retirement would be. I gave myself a three year runway and I had the job, Patrick said don’t have the one that’s not very flexible. The one where you’re inside a box from 9:00 to 5:00, and you can’t talk with the outside world.

Patrick Grimes:

You were trapped in the Pentagon during COVID, right?

Brian Briscoe:

I was trapped in the Pentagon. Some days I felt like I was trapped, but you can’t walk out at any time, but end of the day, I just had to keep on pushing through. I had to be all in, and I had to make sure that I could still deliver, I could still show up. But go all in, whatever that means for you, if you have that runway, like I said, I had three years of an active duty paycheck that kept on coming in regardless. And that was my runway, and saved up every, every penny that I could. And now I’m in charge. Now I’m flexible.

Patrick Grimes:

Yeah. Now, he’s a rockstar.

Brian Briscoe:

Yeah.

Patrick Grimes:

Beautifully put, Brian.

Brian Briscoe:

Yeah. So anyway, well, thanks a lot to both of you for coming on the show today. We do have to wrap things up. And incidentally, the reason we have to wrap things up is because her business partner, Kyle, is recording with me in about six minutes. So, one final question for both of you, Patrick, you get to go first. How can listeners learn more about you?

Patrick Grimes:

Yeah, sure. So, investonmainstreet.com. I’ll spell it out, investonmain and then street.com is our website. We have a bunch of great content there as well as information about our current investments. In addition to that, if you want to set up an investor strategy call, we’ll ship you a sign hard copy of this book, Persistence, Pivots and Game Changers. Or you can shoot me an email at [email protected], and I’ll be happy to set up a call and chat with you about your goals and see if I can get you in the right direction.

Brian Briscoe:

All right, sounds good. And we’ll have to the website and your email address in the show notes for anybody interested. Sarah, same question for you, how can listeners learn more about you?

Sarah Hanna:

Yeah. So you can find me on LinkedIn, Sarah Hanna, H on the end of Sarah, no H on the end of Hanna. And you can email me at [email protected] Those would probably be the best ways to get ahold of me.

Brian Briscoe:

All right, sounds good. That information will go into the show notes as well for anybody interested. Once again, thank you so much to both of you for your time today. And that’s a wrap.

Patrick Grimes:

Thanks, Brian. And good luck to, Sarah. Happy to-

Sarah Hanna:

Thank you.

Patrick Grimes:

… great to meet you.