Patrick Featured on The GOB Network of Apartment Investors with Real Estate Investing Podcast Hosted by Jim Biggs

On this episode of GOB Network with Real Estate Investing, Patrick joins K. Trevor Thompson and me to explain how he brought value to an experienced operator to get into his first multifamily deal.
Patrick shares his experience with the Law of the First Deal, describing how his role on the team shifted as his portfolio grew.

Listen in for Patrick’s insight on mitigating the risks of multifamily investing and find out why partnering up is the best way to scale your business and get on the fast track to financial freedom!

2:14
little less sharpness on the top well i have absolutely none for i’ve got

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

2:27
it was time to to go go for the go for the big cut yeah you know i always told my wife my

2:33
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

2:40
so badly that i decided i couldn’t go that route i’ll tell you when it until we uh when

2:47
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

2:52
honeymoon i finally let her do it right and then immediately she’s like let’s shave your head let’s shave your head

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

3:04
prerogative to change their mind don’t they absolutely are you in the islands

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

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

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

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

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

3:40
uh feature linked animations with disney and dreamworks and nickelodeon so we moved to newport beach that’s where i’m

3:46
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

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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

4:00
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

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

4:13
long were you guys uh in hawaii uh hmm was it almost two years year and a

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

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

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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

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

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

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

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

5:02
for us to return yeah well you know my uh you know that i told

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

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

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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

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

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

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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

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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

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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

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

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

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

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

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

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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

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

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

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

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

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

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

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

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recording but is vinky here today anyone see vinky

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

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

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

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

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

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

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

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

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

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

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family life like mom and dad what did they do and

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you know were they entrepreneurs or were they working class people

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

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

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

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

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

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

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with a little notepad writing things right [Laughter]

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

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

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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

9:38
force so i was born in italy actually and we spent some time jumping around the united states spent some time in florida

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

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

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

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

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

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

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

10:29
in in engineering said hey the act he was part owner of the company and he said hey the reality is that all my

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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

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

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

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great due diligence well analyzed and solid deals

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

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

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

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was able to go through foreclosure with negotiating debt forgiveness with

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

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

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

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

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

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

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

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

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

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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

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

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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

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

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

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

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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

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

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

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

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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

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

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

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

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

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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

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

13:56
jim yeah so um interesting question so uh dad was in the air force and uh and you

14:03
were born in italy which was uh really interesting how old were you when you guys came back stateside

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

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

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

14:30
other kids on base and um and mom did she was she stayed home

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

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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

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

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

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uh and then went into uh education uh was a pastor

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

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

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

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

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now retired okay and one of your first investors or no

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

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

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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

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

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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

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

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

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

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

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

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

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

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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

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

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

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

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

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

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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

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

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

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

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

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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

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

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

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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

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

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

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

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

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

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bringing deals to numerous sponsors i ultimately did a mentorship program

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

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

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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

19:27
wrong in these deals kind of build that confidence and so we had a number of different individuals we were bringing

19:32
deals to and kind of learning and then through covid it was eventually uh

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

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

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

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

20:01
syndication docs and i’m also a kp on or a guarantor on many of those

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

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

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

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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

20:32
over but apparently a lot of dissatisfied engineers and so it would make sense that you

20:37
would fall right into underwriting having an analytical mind and and being very comfortable with

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

20:51
well at raising capital it just seems to be so natural for you uh and many of us

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

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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

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

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

21:22
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

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

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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

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

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

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

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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

22:05
can do for investors you know the older generations are and the younger generations are needing to work for the

22:11
rest of their lives or their financial education just really isn’t there um they’re told to invest in these

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

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

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

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

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

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

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

23:00
so am i hearing you correctly saying i’m i’m not necessarily a natural

23:06
capital raiser i just really believe in this so much that it just comes out

23:13
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

23:20
heart and you know they’re looking at conversion data and stuff and uh not necessarily my style i think i’m

23:26
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

23:34
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

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

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

23:52
that part taking something from 90 to 95 to 100

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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

24:03
design and robotics automation i’m i’m the guy conceiving of it and building

24:08
the first and the only one of its kind and then it goes into a facility where a

24:14
process engineer takes it to completion so my person personality just lends itself well to that front-end hunt uh

24:20
the the kind of the data side as well as the um as well as the getting in there and

24:26
making it all work from the due diligence and the underwriting side and then bridging the capital side which is the

24:32
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

24:37
next fantastic so if you could go back um 10

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years 15 years and advise yourself uh about the business is

24:50
there anything that you would do differently or any major thing that you would tell your younger self uh to look

24:57
out for and and try to really concentrate on any particular piece

25:03
yeah uh well 10 if if you’re going far far enough back i’d say don’t develo don’t uh speculate

25:10
don’t invest in land and uh short term hard money loans and bridge dead

25:16
and these things that will blow up right that everybody was doing before 2007 i think probably the a lot of the hardship

25:24
that i had during that time was a a great lesson for me and it’s

25:29
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

25:34
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

25:39
that if i was to get myself an advice way back then it would be hey you know let you know

25:46
perhaps seek more um wiser people that have seen downturns

25:51
before sooner and align your growth path with the risk and and look at your portfolio in terms

25:58
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

26:03
think if i fast forwarded through my single family um you know career

26:10
i was uh kind of like it’s my own money let’s just do it all myself right if i make

26:15
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

26:23
and considered that i don’t like doing all the jobs i’m passionate about all the jobs

26:28
and these commercial assets if i partner up they’re more lucrative for everybody and

26:34
they’re lower risk and you can they’re they’re so lucrative you can bring on people with decades of

26:39
experience of track record of success right and property managers that are on site and i think i’d probably because i

26:46
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

26:52
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

27:00
know advice that’s probably what it would be is partner up you know find the right people work harder to find the right

27:05
people and do fewer deals but do the right kind of deals and

27:11
if you had the same opportunity just let’s say three four years ago is there

27:17
anything that you would advise yourself if you could go back in time

27:23
just three or four years ago um well no because i had taken a break because i was with my wife

27:30
and i was doing in transition and i think that i was in the right transition so

27:35
was kovit a great thing for you uh not i mean not covet itself but

27:41
the dynamics of what happened because of covid uh was that an accelerant for for

27:47
you and your career do you think i don’t i don’t necessarily think so i think on the engineering side it just

27:53
happened to uh help uh from the assembly of covert test kits you know those are

27:58
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

28:04
pretty hard pivot on the engineering side but on the real estate side uh i would have we’d be in deals

28:11
we’d be in deals already if that was okay i mean even without kobe right um so i i wouldn’t necessarily say

28:18
it was it would definitely change the landscape of deals there’s been a lot more loan assumptions because the debt

28:23
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

28:30
couldn’t get favorable lending and and i was still underwriting just as

28:35
conservatively before as we are during covet i mean the the deals i’m working on you’ve got a 50

28:41
breakeven occupancy a 67 breakeven occupancy the loan to values are 60 and 70

28:48
so i mean there there’s even in the downturn of seven eight nine

28:53
we only saw occupancies in b and c class multi-family drop into the 80s so i i

28:58
was going into it like code would happen well it happened nothing changed from the underwriting perspective maybe just on the debt

29:05
product side and and the the strategy there so i’m i’m fairly happy with the

29:10
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

29:17
of us would be happy to be on that path with you so but um also wanted to know

29:24
uh because it is our our weekly capital raise uh do you think uh uh that being

29:30
in the engineering world uh and having that network did you play

29:35
very heavily uh into that world to find your investors or was it uh broader than

29:43
that and and talk a little bit about what you’ve done uh to

29:49
expand that ability well yeah so um

29:54
the first deal uh was kind of everybody pitching in on the

30:01
capital side there was no as well as everything else because the reality is the sponsor i was working

30:06
with didn’t really need capital he had it all it was he needed help right and

30:12
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

30:18
15 years of doing high tech assembly automation i developed relationships with individuals that did invest with me

30:24
and they still are and had before right um and so those there was very little to

30:30
nobody that i think everybody had a long-term relationship with over five years in that first deal that invested

30:35
right the second deal we got a few referrals um and they were 506 c deals which means we could we

30:41
could put out be a little more forward-facing and share people i’ve only done accredited investors only hundred

30:48
thousand minimums and five or six c reg d deals right so um i can be forward facing uh in those

30:55
and uh yeah so that that the second deal i ended up raising twice i think uh what i

31:01
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

31:07
see by the third deal is when i really saw um sort of the machine of

31:12
the processes kind of get working through where i saw capital begin to come through

31:18
more than just the one-on-one i’ve known you for a while and

31:24
it was more referral based you saw people kind of getting more attracted to the post people are like oh he’s done

31:29
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

31:35
reached out uh you know college buddies that had turned out made it big

31:42
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

31:47
from like a hundred percent to of people i’ve known for over five ten years to maybe

31:55
the second deal was maybe uh maybe ninety percent third deal maybe 75 and i would say beyond that it’s

32:01
maybe maybe half or you know a third and the rest are just people attracted

32:06
to the asset class and the investments that we’re doing so um am i correct or wrong in saying

32:13
that it’s grown by word of mouth it’s grown organically that you didn’t

32:19
necessarily have a really regulated plan

32:25
to attract capital well so we we read every book that we could find when we started

32:31
out and i think hunter thompson’s was probably the best book on raising capital and he talks about putting a

32:36
platform together and me from the high tech space well that’s easy for me right so we got a website

32:42
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

32:48
was telling you about recession resilience and and all that stuff and all the benefits of commercial multi-family uh we got a

32:55
crm so we could at least bring people in and share our deals our friends and others right

33:01
and uh um yeah yeah then we started we started going forward facing putting things on social media people would find

33:08
us register for webinars and so that did attract and then we you know sent out emails put out some blogs

33:14
i’ve got an amazon number one bestselling book i contributed for that you can find on my website

33:19
um and i’ve now at this point i’ve got i published on forbes twice with my third one coming out next week

33:26
and uh there’s a pbs episode that i’m going to be doing later this year

33:32
and i was just in bazinga and a couple other articles that

33:38
i’m beginning to write so i think that the the intention is to really get yourself out there

33:43
and as you know people find you they’ll look at you and kind of spy on

33:49
you for you know three or four deals uh and at that point they may reach out one

33:54
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

34:00
the call hey you’ve been spying on me like i love doing that right i don’t know why

34:05
but it’s really cool to meet people that that really like hung out and were interested and then finally

34:11
came around but that that happens a long it’s a no-like trust built over time yeah

34:17
and if you were to advise a young person that’s uh you know they they are going

34:23
to concentrate on trying to raise capital but uh they don’t necessarily

34:29
have the network uh to do so are there any particular uh you know could you

34:34
draw a path for them and what would that look like any particular tools that you would recommend for them that you know

34:40
hey first off you’ve got to get a website or you should do this

34:46
yeah well i mean when i started out i just basically did to the t i what

34:51
hunter thompson wrote in his book and his uh it’s raising capital for commercial real estate i think is what

34:56
it’s called and i i’ve numerous people have asked me and i said just do everything he’s got

35:02
in there just do it all just exactly the way you know and i think i’m pretty lighter on the social

35:08
media you know constant posting than some others but um you definitely need

35:14
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

35:21
about that they invest in the person because you got to think of the private placements these private equity

35:28
they’re not audited so you come automatically right with this you know this government this fiduciary kind of

35:35
audit you know agency coming in like you’re doing a wreath but the reits are really bad investments

35:41
they’re tagging every penny coming is taxed they’re diluted they’re under a ton of pressure to spend a lot of

35:46
capital it’s a terrible investment right but but make it easy for them

35:53
to trust you to know like trust you because that’s really what it is in a real estate private equity because

35:58
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

36:06
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

36:11
that i get myself out there the more that no like trust happens without me having to do 100 of that one-on-one

36:19
fantastic so i want to open it up a little bit uh patrick is there uh well

36:24
first off let me ask you uh what’s the uh a question or a couple of questions that

36:31
i should have asked you that i didn’t i what my favorite color is i think you

36:37
were pretty good jim nobody’s ever gone through to like my childhood like you have before so

36:42
uh i think i’ve i’ve answered it all at this point well then i’m gonna guess your favorite color is green

36:48
yes how do you know that well it’s my favorite color and it’s not necessarily because of the money but uh

36:56
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

37:02
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

37:07
yeah same here um but uh so i will uh ask if anyone on the panel wants to ask

37:14
questions and um i don’t know i’ve seen that vinky came in uh she knows i’m i’m not high

37:21
tech so if we have any questions coming from the internet um anyone just step forward and ask patrick

37:27
whatever you want it’s just a casual conversation with friends and we’re getting to know each other and

37:34
rick wants to know how much was your first raise yeah so specifics on financials within

37:41
deals and what each partner does are traditionally not shared but it was between half a million and

37:47
three quarters of a million and patrick was that first one the

37:53
hardest one well the first one was terrifying you know the first one because um

38:00
i had done i had actually flown around looked at like they say hundreds of deals i had underwritten deals i had

38:07
even said i haven’t even started raising capital and gotten to the point where we were had the private placement and we

38:13
were you know a couple different deals before we walked away so i had a lot of money invested in

38:19
a lot of deals before when i was like well this one’s really happening and

38:24
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

38:30
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

38:39
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

38:46
i can see if anyone has their hands raised um but um i um

38:52
i still find it terrifying you know every single time um and i do uh have a

38:58
strong belief that it’s the the thing that most deals that don’t

39:03
happen it’s the biggest reason they don’t happen uh and the biggest reason uh for failure uh in trying to move

39:10
things forward but having said that i i also believe that

39:16
uh it’s the fastest way to success it’s the fastest way to get on a deal because

39:21
every deal needs capital and if you can raise capital you’re comfortable doing it then uh you can get in a deal

39:29
as soon as you want to get in one there’s someone out there that needs money every day but rick go ahead and

39:34
ask your question yeah my question is more basic so

39:40
in terms of the processes what are the different stages that you take your

39:46
a contact who has been coming to you just watching you versus to the point

39:51
where that person is qualified and gets into a deep do you classify do you

39:58
does your crm or do you have a process to take them through these different stages

40:08
well our stages are so you have investors that you are just in your database you have ones that you’ve

40:14
spoken to right uh and then you have ones that have registered for the webinar

40:21
ones that have attended the webinar ones that have put in a soft commitment right

40:26
and then ones that have actually are pinning investment invested i think really those are our stages and it’s not super um

40:34
i’d say it’s not it’s not super complex i we we do tend to you know

40:41
ramp down emails if they’ve registered and then try and make connection if they attended

40:46
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

40:52
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

40:59
um the reality is uh i’ve never had trouble closing a deal because of capital and

41:06
i’ve never been needy for that and i think that’s just how we structured our our partnerships everybody brings more

41:13
than just capital and so i i i caution people jim’s talks about well bring capital d i caution people all the time

41:19
your primary job should not be capital raising and my primary job is never capital raising because then they’re

41:25
you’re on the hook for potentially operating like a broker-dealer and so

41:30
but to answer your question um uh when you get on the phone with the

41:36
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

41:42
really want to know who they are what they’re doing i’m an accredited investor only a fund

41:48
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

41:54
investor only is because i feel better being a smaller percentage of somebody’s net worth right i want this to be a well

42:00
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

42:07
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

42:13
but i’ll see whether if they’re if they’re younger and if they’re leading towards

42:19
uh accelerating their escape from retirement well that’s a very different conversation right if it’s somebody

42:25
that’s really concerned about inflation well that’s a fear-driven motivation that’s a very different conversation

42:30
right uh somebody that just hates taxes or a combination of these three or if they’re right approaching

42:37
retirement or after during retirement well these are people that are looking for income generation asset protection

42:42
legacy wealth building well that’s a completely different conversation and so

42:48
it’s more about meeting them where they’re at and getting that relatable we’re all human trying to figure this out where

42:54
are you at this is my experience i’m not a cpa financial planner attorney

42:59
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

43:05
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

43:10
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

43:17
do you tailor it so uh wakefield has a question patrick

43:23
he wants to know uh first off thank you for sharing your story but do you suggest building your website

43:31
your brand and the content before you start raising and any tips on how you

43:36
put together your content and what software platforms or other tools do you

43:42
use yeah and so this is where i think hunter thompson does does a really good job because

43:47
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

43:53
this because the systems and processes are are important in every business and

44:00
everywhere in every business right you’re talking to an engineer so um i’ve heard some people say oh start

44:06
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

44:12
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

44:19
platforms like active campaign for example that are used by some of the bigger gurus out

44:24
there and they allow you to very quickly put in deal stages very quickly upload put in lists segment the list

44:33
and tag people based on calls they allow you know they can if somebody set up a calendly appointment with you you can

44:39
automatically create an entry you can send them a here’s who we are in a 405 drip email sequence and then they can

44:46
start getting your educational content like hopefully you’re doing blogs and educating people

44:52
and adding contributing to the to their uh bringing value to them as well as

44:57
deals and saying hey here’s what i’ve got going on right and and so that if you set that up right away

45:04
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

45:10
you’re doing a deal for me it’s all hands on deck it’s super challenges tons of stuff to

45:16
do this not a get rich quick scheme you want to get all this stuff set up in advance

45:21
right but don’t be like the analysis paralysis guy i struggle with that too right

45:26
set your goals set your timelines and just make it happen it’ll never be perfect on the website um man if you go

45:32
to my website right now invest on mainstreet.com i started with a video of me just talking about investments like

45:40
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

45:46
blah blah blah we’ve got investments for you right just be authentic and honest tell your

45:52
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

45:59
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

46:06
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

46:12
short little website didn’t even have a portfolio page but i had an opt-in with a lead magnet the lead magnet is

46:19
something you created which adds value to their life and it tracks them to give you their name phone number and email

46:26
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

46:33
yeah uh oleg had a question but i think you just answered it without uh us even having to ask uh with activecampaign and

46:40
um don’t rely uh just on an excel spreadsheet um and and of course a

46:46
website and there’s uh many other pieces out there uh a lot of other tools to be

46:51
used but i i wanted to ask um if how what is the importance of the phone

46:58
call well so if you’re a 506 b

47:03
um regdy 506 b type of offering

47:09
then you would require a pre-existing and substantive relationship with the

47:15
investor and until then you actually can’t share that you have a deal so uh various attorneys will say

47:22
what does preexisting is substantive mean there’s in your attorneys probably find

47:28
10 different definitions of that out there um but the phone call is critical because you know that is when i believe

47:34
that in a 506b world which i’ve never been i’ve only been a 506 c accredited investors only

47:40
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

47:46
doing their their net worth if they’ll tell you if they’re accredited or not and what are their plans

47:52
uh for retirement and for wells building and are you a good fit right and how

47:57
right and i think all those things are important because they’re real people and you want partners for a long term

48:03
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

48:09
this is your one chance to vet these people right and there’s plenty of people out there

48:14
you know you don’t want a bad fit and so i for the 506b world that’s that

48:19
to me is when the gate for now you can in your crm tag you know probably which i’ve never done

48:26
right pre-existing stuff so now you can then introduce them to deals as they come up but my understanding is

48:31
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

48:37
substitutive a sea world 506 c world you don’t have to have that pre-existing substantive relationship

48:43
i want to know uh if on that call it’s uh uh i i want to know all the things that i

48:50
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

48:56
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

49:03
them i text them hey last time we spoke you wanted a deal like this it was higher cash flow higher tax advantages

49:09
or not high taxable but big yield and and you wanted this and why right or

49:14
it’s a 1031 exchange opportunity i just published in forbes on how to do 1031 exchanges and i just

49:21
did a uh with an angel i just did a 1031 exchange um like

49:27
full on webinar thing yesterday and um and so right now it’s a big focus for me

49:32
is helping people that want to get out of single family properties and trade up portfolios and multi-family deals and

49:39
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

49:44
toys and trash and want to see their money their funds scale and grow without

49:50
win still enjoy their life um in retirement i think that’s a great option for them so that’s also something

49:56
i’m kind of looking at too so i mean and then if you ask them other things like do you have

50:01
retirement accounts do you have uh you know do you have a cpa um you know all the ims are you accredited

50:07
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

50:13
retirement account to roll stuff over into i have a couple partners right these people know our investments

50:19
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

50:24
but i don’t have like here’s your 100 steps to a phone call written out for you it’s

50:29
just it’s just instinctual for me when i have that conversation

50:35
so i um my my question really uh in regard to the phone call not so much

50:42
necessarily a structure to the call but the importance of the call as it regards uh

50:49
successfully raising the capital even if it’s a 506 c do most of your investors

50:54
have a phone call or do you get a substantial amount of money just through

51:00
the automation i i don’t well i’ve had people put in soft commitments before

51:07
who just have been spying on me but i won’t accept their investment until i get on the phone with them

51:13
and and you’re actually it is it is on you as the uh syndicator uh to make sure

51:19
that you’re not taking the anti-money laundering act to make sure you’re not taking funds that you

51:24
should be taking so getting on the phone uh to make sure that you have a no like

51:30
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

51:36
it’s um it’s not like a reg d uh where where they’re sorry reg a where it’s a

51:42
you know there’s a stock market type placement uh these are these are people that you’re married to they’re partners

51:48
you really need to know so if if no one’s going to volunteer any

51:55
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

52:02
someone strong right out of the gate uh yannick what question would you burning

52:07
question would you want to ask patrick hey yannick how you doing how’s it going patrick it’s going all

52:14
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

52:21
interview which was great which i listened to uh last night actually for the first time it was um

52:27
what’s that podcast that you recently did well i did rod cliffs and michael blocks

52:32
michael blanc’s it was great great interview man thanks well i did jim jim beat him out on the

52:39
personal details about my innermost feelings in life in my young childhood but

52:44
yeah it’s nice those are all terrifying to do uh but i i really enjoyed it and i had a

52:51
lot of gratitude for michael block because you know as running to his podcast is one of the

52:56
things that was just constantly messaging why are you in single family why you’re in a single family

53:02
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

53:09
to [Music] a canadian capital raising which i don’t know if

53:14
that’s really your specialty uh or if you know any canadians uh raising

53:19
capital um obviously there’s uh there are a few roadblocks uh but you know uh

53:25
also a canadian trying to do a 1031 exchange like you i have a one to four portfolio uh that

53:34
uh i would love to transition out of into um uh you know multifamily so uh is

53:42
there any roadblocks uh in terms of canadians trying to do that have you ever transitioned a canadian investor uh

53:50
into multi-family uh that that would be my question no i was just looking for um i visited

53:58
cpi capital uh there’s a couple that are from canada that are just doing a great job with content recently do you know

54:04
them yes uh eva in august yeah yeah i think i they’re they’re they seem like

54:09
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

54:15
brought up two things 1031 is the united states irs law so i i’m uncertain

54:22
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

54:29
i’m not a financial planner or an attorney so this is not tax financial or legal advice

54:34
but most of the canadians that i’m speaking to at the end of the day

54:40
all they’ve got to do is create a tax id number in the united states and

54:45
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

54:53
unlike us in america they’ll be double taxed in canada um just for

54:58
clarification on that too make sure that llp then isn’t buying into an llc

55:04
because then they run into the same issue so it’s important they talk to their cross-border accountant about that one

55:11
but if they’re getting another getting into like an lp investment that’s fine yeah so so in the syndication world

55:19
and they need to create an llp state side right tax id number and then i i use

55:25
corporate direct that’s the same company that the rich dad poor dad guys for everybody too and i said i mean i

55:32
could go to like five different websites and get find all the pieces you need and then create my own operating agreement

55:37
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

55:44
and it’s just real simple uh and that’s typically where i leave it sure the the the 1031 apparently because

55:52
the properties are in the u.s right and they’re lps so apparently

55:58
canadians can 1031 exchange in that scenario but i still have to uh dig a little bit deeper i found some

56:05
information of people actually doing it so just that makes sense it would make sense because if they’re doing settling

56:11
up the taxes stateside then they’re paying taxes stateside and then if they’re exchanging as an as

56:17
a united states entity from one property to the next as long as the tax

56:23
id is the same right they go from one tax id exchange to another same tax that you said entity that matters right then

56:30
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

56:36
thank you thanks johnny so davide uh what question are you dying to ask patrick

56:46
hey how you doing guys hi patrick thank you for sharing all the all the knowledge here

56:53
uh let’s see um i i i feel kind of what you went through

56:59
you know you said you spent a lot of time underwriting a lot of deals because you the numbers came easy to you um

57:05
and that’s kind of where you gravitated the most initially and then you were asked by another experienced

57:11
operator to to help out um i feel like that’s where matt has spent a ton of time two plus years

57:18
underwriting a lot of deals and finding that perfect deal and uh that that hasn’t arrived that day

57:25
hasn’t arrived yet so um i’m starting to uh work on connecting with like trustworthy

57:31
operators where i can be feel comfortable bringing my investors to so um how easy or how difficult was it

57:38
for you to bring or to switch your mindset from finding that deal for yourself

57:45
to bringing your investors to another operator’s deal and and basically operating under their

57:52
infrastructure managing your investors under their infrastructure and

57:58
so on well first let me say um you if you’re on the gp for a deal it’s

58:04
your deal uh you’re just as responsible for the success and failure uh

58:11
even from a legal perspective from a securities perspective it’s your deal

58:18
uh so the the uh part of joining somebody else’s deal and

58:23
they’re gonna it’s their deal and you know you’re not responsible or you’re not also the equal responsibility for

58:30
everything working it’s kind of a misconception i think in the space and the operators that

58:37
treat other people that join as co-sponsors as if you’re lesser than me

58:42
uh is inappropriate because the reality is if if that deal gets under

58:48
investigation by the sec everybody’s investors uh get subpoenaed

58:54
everybody is on the bench right everybody’s emails um so

58:59
i you need to take ownership over that deal as if it’s yours you need

59:05
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

59:12
myself so that i know every step of the story of every single deal is something i

59:17
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

59:24
work um and so but it’s because you gotta have that ownership because it’s your

59:29
neck on the line right i mean bronson hill just did a podcast with a guy who

59:35
uh was a sponsor and he went to prison i mean you got to be careful you know who uh

59:42
uh who you partner with and you got to make sure they know that you are a partner

59:48
right uh how do so their infrastructure well i i co-brand uh the decks that i’ve done

59:54
with with the my co-sponsors right and i put both out there i believe

1:00:01
transparency is really important um and some i guess some people are worried like

1:00:06
hey uh what if they search for their name and you know find out that you’re who your

1:00:13
partners are i was like well that’s the point right uh i’m not going to you know falsely say i’m doing

1:00:20
this on my own and when it’s not true right and they should be able to do the due diligence

1:00:26
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

1:00:32
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

1:00:38
i pass it forward and i’ve done background checks on co-sponsors and learn some interesting things

1:00:44
about them but you know you go hey you have anything to disclose right now nothing that would ever be alarming

1:00:49
right but you know if you’re investing hundreds of thousands of people’s hard-earned retirement

1:00:55
they’ve spent their time away from their family to work harder and late nights this is their college fund or

1:01:02
their what they’re going to survive on or leave to their heirs what would you do if it was your money

1:01:08
right it is my money because i’m investing in every single deal but what would you do if you’re investing as much

1:01:13
as them i think that’s that’s really what’s important to think about

1:01:18
so patrick uh i want to thank you so very much for coming on short notice and

1:01:23
uh so much for sharing uh with us and and allowing us to get to know you uh

1:01:29
and so i want to end with uh how can people get in touch with you uh and uh

1:01:35
is your book on amazon or on your website um let you take it from there

1:01:42
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

1:01:48
you set up for you know prospective investors i as a free welcome gift uh to our community

1:01:55
or investor club i do ship a sign hard copy of the book and there’s better people looking on

1:02:02
here than me there’s um uh there’s the uh uh lead guitarist of

1:02:07
def leppard russell gray from the real estate guys some uh speaker authors nfl

1:02:13
nba coaches players and i wrote a chapter in the book amazon number one bestseller invest on mainstream.com

1:02:20
and you’ll see instead of buying it set up a an investor call and we’ll talk about your goals

1:02:25
what you’re looking to accomplish and uh so if you’re a prospective investor go for that and we’ll send you

1:02:31
this there’s a little flyer in it that i put in it too uh and uh and if you’re interested in

1:02:37
1031 exchanges i have uh not only the forbes articles out but i have a uh on the website a white paper

1:02:44
uh for that’ll step you through everything you need to know for 1031 exchanging into multi-family and if

1:02:49
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

1:02:55
goes through my whole process where i come from having lost it all one time and kind of building it back slowly

1:03:01
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

1:03:08
okay so you can do patrick invest on mainstreet.com is my email patrick at invest on

1:03:14
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

1:03:21
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

1:03:27
my calendar fantastic thank you patrick i just want to end with everyone that’s listening on

1:03:34
the internet uh as a reminder the second annual gob network conference

1:03:39
is coming up in july on the 13th and 14th in the great city of chicago

1:03:46
and we’re super excited very very different format if you want to

1:03:51
buy tickets or just learn more about it go to thegobnetwork.com and check it out

1:03:57
thanks everyone hey jim thank you for your time

1:04:02
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

1:04:10
do have one other phone call i’m free um so yeah give me a call okay all right

1:04:16
great fantastic thanks appreciate everyone joining