Patrick Featured on The Do Zone Podcast Hosted By John Thomas

Patrick Featured on The Do Zone Podcast Hosted By John Thomas

Audio Only: Patrick Featured on The Do Zone Podcast Hosted By John Thomas

by Patrick Grimes | John Thomas

Transcript

Josh Thomas:
In today’s episode, Patrick Grimes shares one of the most sincere comments I’ve ever heard about analysis paralysis in it. He says there’s a lot of successful engineers in real estate, but there’s a lot more who are still contemplating the possibilities of getting into real estate. If that message resonates with you, if that defines you, pay attention, you’re going to want to hear how Patrick, a high tech machine design and robotics engineer, broke through the analysis paralysis and was able to get more than 3000 units in multifamily in a very short time.

Josh Thomas:
Are you hitting a wall in your business because you feel like you’re too busy. Do you ever wish there were more hours in a day? This podcast is for hyper focused entrepreneurs who want to learn the secrets of superhuman productivity. Together, we’re going to kit procrastination in the teeth. We’re going to slice through BS excuses like a Katana blade. We don’t ever wonder what happened because we are the ones that made it happen. My name is Josh Thomas, you’ve now entered The Do Zone. Welcome to the DZ Tribe.

Josh Thomas:
The only true wisdom is in knowing nothing, Socrates. DZ Tribe, Josh Thomas, if you haven’t already check out thedozone.com for productivity, tips, accountability, and just a bunch of really badass human beings looking to get more stuff done, once again, hat’s thedozone.com. Today’s guest is Patrick Grimes. Patrick is the CEO and founder of Invest on Main Street with holdings that include general partner ownership of a multifamily real estate portfolio valued over $300 million, including 3,000 plus units across the Southeastern United States and Texas. And Patrick co-authored an Amazon number one best selling book, Persistence, Pivots, and Game Changers, and writes articles on investing and commercial real estate for Forbes, an Inman author. Patrick, so glad to have you on here today. Welcome to The Do Zone, say what’s up to the tribe and tell us something you believe is the key to getting stuff done that most people wouldn’t think of.

Patrick Grimes:
Well, I’m excited to be here, Josh. I’ve followed you for quite some time and even participated in a mastermind program, was very impressed by your capability and your skills and helped me, certainly launch me forward. And hey to the tribe out there on The Do Zone, it’s definitely a topic that rings true to me. And so what is something that most people don’t think about, was your question, right?

Josh Thomas:
That’s right.

Patrick Grimes:
Yeah so without diving into too many details, perfection is something that you’ll never reach and I struggled my whole life trying to do things all on my own, and it wasn’t until I started partnering with both partners at my level and bringing on employees and virtual assistance and contractors that I was able to scale. I think the challenge was keeping control over the process.

Patrick Grimes:
And I think the best tip I could probably share that a lot of people don’t think about, is when you start to document your processes and try and get control over your procedures, there’s this kind of idea that you have to have a perfectly written standard operating procedure for everything in your business and it’s simply not true. In fact, we run forward and in the minute we see something that didn’t work out right, we create a Google doc and we’ll just title it, “A procedure for such and such.” And then that one piece of the process that needed better direction, we’ll document.

Patrick Grimes:
And then as we move forward, if something else breaks down, the next one piece of that process we’ll document. And we don’t have a procedure that shows all the steps of everything, because a lot of it’s common sense, and a lot of it requires some intuitive, but where it breaks down, is when we need to provide direction and we need to provide control gates and then that’s all we document. So I think it’s better to just dive in there and start with a piece of the puzzle to fix when it breaks down and not try and fix something that’s not broken.

Josh Thomas:
Yeah. Well said. And what you’re really alluding to here is about building the airplane while it’s in the air, building the ship while it’s out to sea, I’ve heard that set of few different ways, but what you’re saying is, “Look, let’s start running and if one of our muscles gets tweaked, let’s take care of that when it comes up.” And have you always thought that way or is that a kind of a new development recently? Because I know you’ve had some stratospheric success recently, so is this something that you just kind of figured out as you were going?

Patrick Grimes:
Well, my story is I did high tech machine design and robotics, so I was working with a lot of very interesting, intelligent people in my space, but in the real estate world, I’ve been working in real estate about two years less than I’ve been doing engineering. But in the real estate world, I felt like I needed to do all the jobs myself, so I did a pre-development and I rode down a downturn. I got into single family. I was finding the deals, analyzing the deals, taking them down, managing the renovations, all that stuff all on my own. So no, I wasn’t. I was using my own money. I wasn’t bringing in a lot of assistance and help along the way, wasn’t until I decided to pivot into multifamily because I… But single family was working, don’t get me wrong. I mean, I was successful. And it’s hard to think outside of the status quo if something’s working, but it’s still a lot of time away from my family, friends and hobbies, and when I met my wife, I needed to do something that freed it up.

Patrick Grimes:
So it wasn’t until I started partnering up with people that were much more successful, trusting and verifying that and working towards a much greater vision, but leveraging the capabilities of others, that I began to see tremendous success in scaling into multifamily syndications. And being the masters in engineering and MBA grad, I felt like I needed to follow the textbook business plan at first. Took me two and a half years before I got into a multifamily deal and I was trying to gain control every step, do everything myself, but then I realized, well, that’s not how the partners I’m working with do it, they run for it. When something breaks down, then they go to the time to document what broke down and then they have gates and controls in for that one piece. But they don’t go write a standard operating procedure for every single part of their business. And that just simply doesn’t make sense and you need to hire people that don’t need that, but you can still write them as you need them or whatever pieces are that you need them, I guess, was what I was referring to earlier.

Josh Thomas:
Yeah, I think what you’re really leaning into here is you are a very methodical person and robotics, mechanical engineering and robotics and that sounds complicated.

Patrick Grimes:
Oh yeah. Yeah, 100…

Josh Thomas:
It sounds very exacting and very precise. And it also sounds like in order for you to even run a test, you have to create the exact right environment, you have to remove all of the variables, and before you can even push the button, because you’re dealing with a machine that may cost millions of dollars, you got to make sure everything is correct before you push that button, because if not, you could have an expensive mistake on your hands. And what you learned, and you tried to transfer that into real estate and then that was sort of working, but it was a grind. What I really extracted from that, is when you started surrounding yourself with other people who were operating differently and they were achieving more success faster than you were, it kind of clicked something in your brain? Is that what happened? Yeah.

Patrick Grimes:
Yeah, 100%. Yeah, exactly. Yeah. I started seeing that you can trust, you can find the right partners, and it took years to find what I felt like were the right, like-minded partners with the right value set, but you can, modeling their success and the ways that they were able to empower and bring the right people under the umbrella to launch them forward, absolutely. Yeah. And things really start to go forward at that point and the analysis paralysis of the high tech machine design guy that I was, because you’re absolutely right, every custom machine that we built was a one of a kind operating prototype that was the final product, you don’t really have a lot of margin for error.

Patrick Grimes:
So I like to say I the quote, “I never won a war that went to plan, but I never won war that I didn’t plan thoroughly.” I can’t remember who that was, [inaudible 00:09:28] or Winston Churchill or something. But for me, that makes a lot of sense because it leans into the analysis that we do in our deals, you got to plan to win those wars and it’s not going to go to plan, but you can analyze to a point to where you have a plan that will win in the battlefield, but then you’ve got to be kind of agile as you go.

Josh Thomas:
So let’s get some perspective because being in the high tech industry, designing machines, designing robots, multimillion dollar, one of a kind prototypes, you are the poster child of analysis paralysis.

Patrick Grimes:
Yeah. 100%. Yeah.

Josh Thomas:
Nobody in this planet should have more permission than you to say, “Wait, let’s make sure this is right.” And so, you were able to, I won’t say overcome that, but harness and manage it. And I bet that there’s somebody listening to this podcast right now that is contemplating whether or not they should take that action, whether they should make that decision, whether they should make that investment, whether they should start that business, whether they should partner up with that one guy. You kind of yada, yada, yadad over the best part. How did you make that shift? You of all people with this background that you have, how were you able to ultimately, “Okay, I’m going to be like those guys”?

Patrick Grimes:
Well, somebody told me when I was in an event that there’s a lot of successful engineers in real estate, but I made the comment back to them, “I think there’s a lot more that are still analyzing the possibility of getting into real estate.” Because it’s really, to your point, you can calculate some, but there’s a lot of environmental factors at play there that can [inaudible 00:11:43]. And I think at the end of the day, I went through a downturn. I went through the 08 downturn in pre-development. I’ve seen how the financial models can break down and I’ve seen how the lending environment, the debt markets, and I’ve seen how the consumer markets for the demand can shift. And I think that having gone through a loss, gave me a perspective on how you can fortify a real estate deal to survive that. And right now, it took me a while to find the right strategies and I picked up courses like the lamps, there was no light at the end of the tunnel, I was shedding light here, there, I’ll go this way or that way or vacation rentals or bubble, whatever.

Patrick Grimes:
But then I finally started to see like, “Okay, this is a longer path, but this multifamily in recession resilient markets, with employment makeup, that’s diversified, that has in the past survived recessions, very low leverage, so not roll high returning deals, but you’re not going to lose it all along the way, you’re going to be the tortoise with a fortified shell, with a lot of capital reserves in the bank, again, a little lower returns.

Patrick Grimes:
Find the right partners that are willing to take these deals down with me and the investors that are willing to accept a high risk adjusted return or a low risk return. I think when I finally leaned into that and I got through all the noise of the get rich quick and to the people that really had a sustained model, was when I was able to finally lean in and, “You know what? This makes a lot of sense.” When I found that partner, we just started doing deals, worked a little harder to find those investors that are okay with the 15% return and not a 30% return, but they know they won’t lose it all along the way. And I think that’s where it really started to make sense and I could speak from a passion of understanding and experience towards the model itself.

Josh Thomas:
And so that’s a great segue into a more specific topic about what you’re doing with multifamily. And so you and I know each other, we’re connected because of multifamily. And I get to question all of the time, “Well is now the right time to invest? Things are kind of bananas right now, man. I think I should wait until the market cools off.” Or, “I think I should wait until the market heats up,” or, “I think I should wait for any time that’s not right now,” to contemplate the possibilities of getting into real estate, like your engineer friends are doing. What kind of perspective have you been able to gain as somebody who did go ahead and jump in, who has lived through a downturn? What do you say about people who are not sure of now’s the right time to get in?

Patrick Grimes:
Well, and I was having this conversation with some of my investors and I’ve been planning for this recession since I went through the last one, and I’ve been structuring deals assuming, in fact, every single one of decks has the line, “This is built around us going through another eight, nine and 10, type of bust again.” So I’m in the asset because, and this business model because of its recession resilience, and I know that we can ride out a recession and still cash flow. And so when we’re in it, or on the cusp of it, I see opportunity. There’s opportunity for us, the individuals that have found investors willing to take a little lower return for investments that are in the emerging markets, but will weather the storm. And I can kind of go into a couple of them, because I talked to thousands of investors and so the buzz words of inflation and interest rate and all this stuff, I can kind of touch on a couple of those if you’d like me to?

Josh Thomas:
Yeah, just real quick. I mean, it’s not a real estate podcast, but we’ve got a lot of people out there that are looking for strategic ways to place their funds. And a lot of people are pulling things out and going with cash right now and that’s okay, but at a high level, somebody that’s not sure if they should invest in real estate because of the timing because of the market, what are some general recommendations that you can make to either help somebody feel better about investing in real estate or to cement their decision that, “Okay, I’m going to wait”? Some general guidelines that somebody might look for at a high level.

Patrick Grimes:
Yeah. So if you’re a single family or a multi-family fix and flipper, this is the wrong time to do that. And I would actually argue that it’s always the wrong time to do that. Because I used to do it and there’s an out sized level of litigation, legal and financial risk associated with that model. But if you’re talking about real estate in commercial assets, commercial multifamily type of real estates, and you’re not potentially doing it yourself, you’re going at it with a sponsor or a firm that is modeled around fixing interest rates for long periods of time, so that you’re not at interest rate risk. Right now we’re buying rate caps or doing long term fixed interest, which means the interest rates we’re locking in today are going to be advantageous because we’re getting cheaper debt than we will tomorrow. So with interest rates rising, we’re actually getting a cheaper asset. Our buying power is higher today. So down the road, somebody’s more likely to assume our loan than to restructure the deal if we sell because they’ll be buying an asset with a lower interest rate.

Patrick Grimes:
So it’s actually on the rise, it makes sense to buy and lock if or locking in interest rates, like we are. If inflation’s on the rise, well, I have an article in Forbes. You can look at Patrick Grimes, Forbes and inflation, which talks about how in rental income property, specifically large multi-family properties, we tend to make money with inflation. And that’s because our rents within the workforce housing that we do, we don’t do new construction, just existing construction, our rents track with inflation. Well sure our expenses do too, but our expenses are only half our rents, so our rents only have to grow at half the rate the expenses do to break even. So traditionally it’s not only a hedge against inflation, but oftentimes we can make money, more return, by a out sized proportion in an inflationary environment.

Patrick Grimes:
Now on the other side, you’re saying, “Well, what if the residents can’t afford the greater price?” Well, that’s why we go for sort of what we call that, not luxury prime and urban housing, because those tend to be during a recession when people move out of the single fam, but they move out into the existing [inaudible 00:19:02]. A dollar in gas or a dollar for milk’s really not going to affect their ability to pay their rent. Meanwhile, what you find out is their buying power’s gone down during a recession, so they’re going to continue to rent. It’s not the right time to buy a home. So we find compression or more demand for our units through a recession in an inflationary environment.

Josh Thomas:
So it’s really fascinating to me that you kind of flipped the script here. Well, interest rates are going up, that’s a great time to buy because it means that as interest rates continue to rise, it’s only going to make our asset cheaper and more attractive to somebody because we have a lower interest rate and it’s fixed. That’s a new perspective that I had not quite heard before, so that’s awesome. Patrick, go ahead.

Patrick Grimes:
No, there’s layers to it, but we can only cover so much because they may say, “Well, vendors’ rate prices will go down.” Well, we do a strategy which we buy under market and we raise prices and we raise income and inflation will raise with us. And so there’s lots of levels to it, but it is the reason why we’re in the strategy is to make money in recessions, is to hedge with downturns and build generational wealth. And the wealthy have been investing in multifamily and steering their capital too. It’s there for many, many late generations. It’s just now that we’ve started doing syndications that it’s available to us, that we can benefit from that as well.

Josh Thomas:
That’s right. And Patrick, it’s fascinating, I love how your brain works. Especially with that kind of building machines, background and turning that towards real estate. What I’d love to do is I’d love to crack open that beautiful noggin of yours and see how your brain works. We’re going to do The Do Zone diagnostic. Are you ready?

Patrick Grimes:
Okay. All right. Diagnostic. Here we go.

Josh Thomas:
Yep. So this is a series of five questions I ask every guest so that we can see how your brain works and soak up all that knowledge that we can, just rapid fire, first thing that comes to mind. Number one, what’s one thing you do that keeps you focused on your goals?

Patrick Grimes:
So in the morning I run on the beach here and I listen to podcast and thought leadership platforms. And I take moments that reset my brain in that thought leadership space and the inspirational space, and then I reset my daily objectives during those runs.

Josh Thomas:
Nice. And what do you do Patrick to get back on track when you lose that focus?

Patrick Grimes:
Depends on how far out of focus I am. I oftentimes will go on little retreats for myself. I’ve spent a week in Sedona, I’ve spent a week at a meditation retreat, I’ve traveled the world twice, a couple years abroad. So depends on how… After I’ve done master’s programs, I’ve been a bit of a traveler.

Josh Thomas:
Nice. Yeah. I have more questions about that later, but first, who is your support group and how do they keep you accountable?

Patrick Grimes:
Well, Josh, you were it for every day for a little while when I joined your program in the morning, that was a amazing launch forward for our business and I appreciated that. And so there is a couple masterminds that I’m a part of that tackle different areas of my business, some on the real estate operations sides and some on the real estate capital raising side. And it’s great to be able to come there, get accountability for what I’m working on, state my objectives, and then just be real about the struggles that I’m having and then just be affirmed that everybody’s having them too and working to navigate through them.

Josh Thomas:
Nice. And here’s an interesting question to see how your brain really works. How do you approach a difficult project that you’re not quite sure how to complete?

Patrick Grimes:
So being in the high tech space, every single project I’ve ever done was a one of a kind machine, so that would be my everyday life. And I tend to spend time researching how others are approaching it. I reach out on Indeed or Upwork to speak to some consultants or people that are experts in the niche and then kind of compile and see what kind of similar answers I’m getting. And then we give it a shot at little steps at a time and then reassess and then tackle.

Josh Thomas:
Okay. Got it. Yeah, that makes sense. And last question, what’s the number one pro tip that you would give to somebody looking to get more stuff done in less time?

Patrick Grimes:
Time blocking has got to be it because the time blocking component really has the two components to it. It’s trying to figure out the few things, the what’s the 10% of things that will actually move the needle for your company and blocking out time for that. Because I can be busy every day, keeping the status quo, but if I didn’t time block out of my week, what are the few activities that’ll make everything unnecessary that I can do, then I wouldn’t ever get to them.

Josh Thomas:
Yeah, you got it, man. Makes sense. And I’m a big fan of time blocking myself. And so that’s one of the things that you were able to do to make this transition into real estate. And we’ve been talking about real estate, you’ve been displaying some of your expertise. Tell us a little bit more about that. I know you’ve got a book. Tell us about the book, tell us about anybody who’s listening right now that may want to engage with you. What does that person need to look like and what ways can you help them?

Patrick Grimes:
Preferably a little more hair than I have, I prefer. No. Yeah. So Invest on Main Street, we’re doing deals in low risk markets, low risk assets, and structuring them financially in a very low risk way. And so we’re currently working on opportunities in Atlanta and Texas. So obviously if people want to meet, I’d love to meet them if there’s some interest. I have a book, Persistence, Pivots and Game Changers, Turning Challenges and Opportunities. Brian Tracy did the forward. There’s NFL, NBA coaches, players, entrepreneurs, artists, and Phil Collen, the lead guitarist of the Def Leppard, all did a chapter in this, and me, myself with hair. And that’s not a wig, I used to actually have hair.

Patrick Grimes:
And it made it Amazon number one best seller, it was a really fun project full of great stories from amazing people. I’d be happy to give a free copy to your listeners if they want to go to investonmainstreet.com, invest on main and then street.com and then set up a call and we can talk about your goals. But right now what we’re looking at is I had been keeping my head to the grinding stone and getting deals done for many years and I’m finally getting my name out there. I’ve been doing podcasts, I’m a Forbes author, I’ve got half a dozen articles, speak towards knowledge and this book. So I’m working on giving back to the people that I work with and I’ve got a passion for helping people along their journey.

Josh Thomas:
That’s awesome. And so investonmainstreet.com and they can book a call and speak directly with you or somebody on your team, right?

Patrick Grimes:
Yeah. Well, right now I’m, I’m taking those calls and worst case is you end up with a Amazon number one best seller and we’ll ship it to you.

Josh Thomas:
Yeah. Awesome. And so if, if somebody’s going to book that call and talk to you, can you describe, aside from them having more hair than you, can you describe who, who would be a good fit to potentially talk to you about investing in multifamily?

Patrick Grimes:
Well, I think traditionally, most individuals have what you call a very narrow financial IQ, not because it’s their fault, but because America traditionally leaves it up to the 401k account of somebody’s employer. Maybe they’ve earned enough to grow into getting their own IRA in addition to that, supplementing that. Maybe they’ve even got a financial planner and that financial planner’s putting them into products, but what you find is all three of these are heavily weighted in the stock market. Financial planners, IRA, will only put you in similar things. Financial planners are incentivized and don’t practice selling away, will only put you in the same kind of index funds and mutual funds.

Patrick Grimes:
So if somebody’s wanting to get into real estate, wanting to diversify into real estate, I’ve helped individuals invest cash or help take a piece of their IRA or 401k and self-direct it, and put it into income generating real estate and emerging markets. Or do your rental properties, which can have out sized risk from a legal or financial perspective if you’re doing it in your own name, and 1031 exchange those into larger apartment buildings as a partner with us. Or I have friends that, or individuals that booked the time saying, “Look, we own our house outright. We’ve got $2 million, but we’re still going to work for another 10 years. Does that make sense?” And they got a HELOC, they invested in mine and a couple other deals and they retired the following year because they decided to put some of their home equity to work, so those are all potential things that I help people do. So if any of that applies or just want to poke fun at me for losing my hair, happy to do the call.

Josh Thomas:
That’s the sixth time you brought up your [inaudible 00:29:12]. For those of you that are just listening audio, there’s a picture of Patrick on the cover of the book where he very clearly has hair and the one that I’m looking at on the video very clearly has misplaced that hair, and maybe someday it’ll come back, man, don’t worry about it.

Patrick Grimes:
Yeah. I’m still getting used to it. So I had an investor call and say, Oh, you have this little wave. Good job shaving your hair off because there was this little wave on your forehead.” I’m like, “Oh my gosh.”

Josh Thomas:
No, that wasn’t a shave, buddy. Awesome. Well, Patrick, this has been excellent. Especially the little mini clinic in there about investing during a potential recession and during a record breaking inflation and just flipping that on its head and saying, “Well, actually, that’s a good thing,” that right there was worth the price of admission. So thank you very much for coming on here and sharing your time with us.

Josh Thomas:
Patrick Grimes, everybody. For those of you who are interested in connecting with him directly, he has graciously offered a free copy of his Amazon number one best seller, which is called Persistence, Pivots and Game Changers. If you go to investonmainstreet.com, go to investonmainstreet.com, and you can schedule a call, you can speak with Patrick or someone on his team and they will be happy to answer any questions that you have about potentially investing in real estate and see if it might be a good fit for you. You can also connect with us on thedozone.com. We’re also on the social medias, you can find me on Instagram and Facebook. If you are a busy entrepreneur looking to get to the next level, you want to check that out, thedozone.com, for more productivity, tips, tools and strategies. Until next time, remember we all have the same 24 hours in a day, what are you going to do with yours?

Josh Thomas:
I have a job for you. Open up your phone or get out a piece of paper and write down these three questions. Number one, what is one important task I can get completely done today? Number two, when can I start it? And number three, what impact will that have on my life? Now answer these questions as best you can every single day this week, then commit to taking action daily. Now you’re in The Do Zone, baby. Let’s go.

Josh Thomas:
Need some help with accountability? Are you stuck where you’re at? Not sure how to break through the barrier in front of you? Join the DZ tribe for free by visiting thedozone.com. We’re a group of hyperactive entrepreneurs who want to help you get more stuff done. Oh, one more thing. If you know somebody who needs to hear this message, share it with them, text them email them, send them a DM on social media, smoke signals, carrier pigeons, whatever. Be sure to tag us at The Do Zone. Also, keep the five star written reviews coming over on iTunes, that helps new people find the show, hear it, and get themselves into The Do Zone as well. And always remember, the road to success is paved with imperfect action. So what are you waiting for? Go do something already. See you next time.

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