Real Grit Podcast: From Single Family to 3,000+ Doors

Neil Timmins:
Hey everybody, welcome to Real Grit. I’ve got Patrick Grimes here with me. He’s the founder and CEO at Invest on Main Street. It’s a private equity firm with a mission to enhance busy professionals’ quality life by providing tax-shielded and inflation-hedged passive income with wealth building investments. He’s raised over $20 million from his network of passive investors to accumulate over $200 million portfolio that consists of over 2,700 units in multifamily across the emerging markets around Texas and Southeastern US. And he’s an author. He’s coauthor of the Amazon number one best selling book, which we’re going to get into today. It’s Persistence, Pivots and Game Changers. So I’m excited to have him here. Patrick, how are you?

Patrick Grimes:
I’m great, Neil, and thanks for having me on. I love your show, and the grit really rings true with me because I’ve felt that in numerous occasions.

Neil Timmins:
Well, you’ve got a diverse background in terms of where you started and how you made it through and how you got to here and where we’re at conversation. So talk to me. What was your first entry point into real estate?

Patrick Grimes:
Well, let’s see. So I was educated as an engineer, mechanical engineering, and I started at a machine design firm right out of college. And the owner of that firm said, “Hey, while this engineering stuff is great, you need to put your money in real estate as much as you can, as early as you can. And while this engineering is cognitively rewarding, it’s volatile and you’re going to have a tough time.”

Patrick Grimes:
My entry was to immediately start investing into these what I thought were very good investments at the time, and it was pre-development and building on land, that kind of stuff. And unfortunately, that was 2007 when everybody thought the market was going to go up forever, right?

Neil Timmins:
Right.

Patrick Grimes:
It did fall, and I rode that out and barely avoided BK, negotiated my way through the loans. And I took a hit both financially, they came after me because I was personally guaranteeing everything for income tax even, on the loan forgiveness. Several years before I came crawling out of that one. But then I still was an engineer at the time, so I just kind of dove into that, and that was going to set me free.

Neil Timmins:
The traditional path, right?

Patrick Grimes:
Yeah, exactly.

Neil Timmins:
All right. So you made it through the crisis. Give me a sense of it. How many properties or dollars and cents? What was that like? How many were you dealing with at that time?

Patrick Grimes:
Well, I don’t go too much into my personal finances, I guess. It’s just a private thing for me, but I was underwriting… In a single family sense, a handful of deals every day. And my partners were coming up with constant opportunities, and I had a whole team built out. And I was out in California. I was actually doing those in Texas.

Neil Timmins:
Got it. What classifies a substantial amount? I just wanted a sense of three properties, there was a whole business built around this. Totally understand. So you end up going down this traditional path, that’s going to set you free. And where did that lead you? What did your journey look like there?

Patrick Grimes:
Well, so after I said, “Oh, well, you know what, real estate isn’t all it’s cracked up to be,” I dove into… Because I was in manufacturing, automation and robotics. I did two master’s degrees, one in business administration and one in engineering. And working full time doing a master’s degree, I’m little bit of a glutton for punishment. Doesn’t really set me apart in my family. I’ve got a father with three PhDs, a little sister with a PhD, and she’s a tenure track professor that runs a clinic as well. So, just barely keeping up. But I started putting my hope into company stocks, bonus plans, and worked my way up to her directorship and progressed through three different companies.

Patrick Grimes:
I think that’s when thing came to head because I started feeling like I was about to make it. And there were some opportunities where one specific one, I was actually in a car on the way up to Mammoth with my brothers. All year or long, we had a text thread called Mammoth Brothers for a ski trip that we go on. And I got a call, which absolutely was a pivotal moment because it devastated a project to be working on for like five months that was supposed to give us hundreds of thousands of dollars in passive income on the engineering side, virtually passive.

Patrick Grimes:
And I realized that was once again, somebody that walked in said all the wrong things, the owner signed, scared everybody, the contracts were signed, but then they backed out. And that was when you know what, I haven’t found it yet. I’ve got to figure out how to take control of my own finances. And I kind of started over at that point because I knew that the high tech space was fun sometimes, but it wasn’t a real plan. It was a work until you die plan.

Neil Timmins:
Yeah. What year was that?

Patrick Grimes:
So that was like eight years ago now.

Neil Timmins:
Okay. You’re going to Mammoth, and then you have this epiphany, if you will. And so where did that lead you? It’s time to take control. How did you end up taking control?

Patrick Grimes:
Yeah, so I knew I was pulling pretty good bonuses at the time, so I needed some place to invest. And when I said, look, I want to take charge of it, and I knew that speculating on new construction and land and hoping that the market stays stable wasn’t the right answer… So shifting to buying things that are already existing, but measurably below the comparable, so it’s a very easy business case, very simple engineering problem to solve. And then calculating the cost to get it there. And so I started doing that in single family, buying, renovating and holding. I didn’t know at the time that was the BRRRR method. But then it very quickly became apparent, especially after I met my wife, that I couldn’t moonlight single family. It was taking a long time to build a portfolio. And I needed to stop in order be able to spend time and have that work out.

Patrick Grimes:
So, took a step back. Recalculated, did a bunch of courses, learned a lot of different strategies, and actually settled on scaling into multi-family apartment communities because I knew I could work with team members. I don’t have to do it all myself. I could work with people with decades of experience. I could scale into larger apartment buildings. The math and the calculus was about the same, just slightly different. And it was a more sophisticated business in a legitimate private equity firm versus elbow greasing it and trying to do it all yourself with onsite. So there’s a lot of reasons for it. And so I spent two and a half years actually kind of going residential to commercial, pivoting and learning before I ever gotten my first deal.

Neil Timmins:
Wow. What was the biggest challenge making that transition?

Patrick Grimes:
So in single family, you got all the control, and it’s all your own money. And you can get into it fast. You can immediately, oh, we’ll try this one. Oh, let’s try that one. Because not one of those will take you down, right?

Neil Timmins:
Right.

Patrick Grimes:
And with larger private equity firms, you’ve got to establish yourself to become a private equity firm with lenders and with more sophisticated partners, property management firms that are corporations, not mom and pop property management firms. But you’ve got to learn an entire space. You’ve got to start developing relationships with brokers that are kind of like an old boys club to just start getting deal flow, learn how to underwrite and bring on the right kind of trusted partners because nobody can do it all on their own on the commercial side. And then perhaps aside from the letting some control go to people that have been doing it for decades longer than me, aside from that, it was learning to spend other people’s money, to bring on investors and scale in that way.

Neil Timmins:
Yeah. So you decided to go into multifamily. Tell me about the first property you bought in the multifamily.

Patrick Grimes:
Yeah. So there was a couple close calls where we got into deals we thought that what they were, we got them our contract went and did due diligence and pulled out. But when we finally found one that made a lot of sense, owner who had owned it for a long time, not renovated any of the units, it was in South Carolina, North Augusta. So kind of Georgia, but across the river actually in South Carolina, and actually right across the river from where the Master’s Tournament was.

Neil Timmins:
Oh yeah. Okay. Yeah.

Patrick Grimes:
Not a bad area. And one of the partners I had been working with, I had been sending my deal analysis and underwritings to on a regular basis, he said, “You know what, this is a great one. Let’s work on this together.” So got in there, did just about every job I could, the due diligence, underwriting, the deck, the getting it across the finish line. It was a lot of work. But if I kind of compared that to a single family, I like to say it was about if I subtract the two and a half years leading up to this new education, it was about as much effort that one deal as about one and a half single families, but it was 86 units.

Neil Timmins:
Wow. You got a multiplier effect there.

Patrick Grimes:
Exactly. And then once we got that, then the second deal right on the tail end was okay, we just got this one over the finish line, another one, a deal came up in Dallas, which is an amazing market and a great area. We had other assets in this space my partners had that were doing well. So I flew out there, did the elbow grease and the due diligence, got everything. We were pushing that almost near the finish line. Another great opportunity. It’s actually blowing away projections right now because it just had been unrenovated. And I get excited when I get into a place that I know I can improve and make the tenant’s life better, safer, and healthier, right?

Neil Timmins:
Absolutely.

Patrick Grimes:
And so to me that really energizes me. The second deal… There’s actually a third deal in parallel. And I’ve heard some people call it the law of the first deal, but found another deal because a broker was just like, “Hey, I have another one, pocket listing. You guys are really showing up and doing well.” So we kind of did that in secret. I was living on Oahu in Hawaii at the time, and I did a red eye overnight skeleton crew. We didn’t want to tell people and distract them from the other deal we’re working on. So we came out of it. We’re like, holy crap, this is a great deal, pencils, we’ve got a good offer. Then let’s do that.

Patrick Grimes:
So it was definitely some call it two and a half years in the trenches, putting in offers, traveling, investing, basically taking on what I had called to my wife my third master’s degree, because I was learning all the time, tons of courses. But then once things… found a lot of the wrong partners, found a lot of the wrong deals, but when things finally lined up and we were on the same page, it took off. And so it was really a testament to the scale and power of multifamily versus the slogging along of the single-family world.

Neil Timmins:
Incredible momentum from one to two to three. They just fell like dominoes didn’t they?

Patrick Grimes:
Well, yep, exactly. I was like, wow, everything’s finally lining up. And there was that third deal where I said, “Hey, there’s a system now that we have in place and it’s working.” And that’s when being a systems guy, masters in engineering and undergraduate engineering, I started saying, you know what? I don’t want to chase any of these flashy objects. I had been underwriting retail, and this multifamily down the fairway improvement space where you buy under market and bring it to rinse, just like bring it to market rinse. Just like I was in a single family. If I just rinse and repeat and stick to that, then my investors are going to win. Everybody’s going to win, and we’re all going to go home. Not double our money tomorrow like we were trying to do on new construction, and maybe lose it all along the way. But we’re going to be that tortoise, low leverage, big shell, lot of fortification, but we’re still going to win the race.

Neil Timmins:
And today you’re at over 2,700 units. So bring me current. That’s where you’re at now. Where are you guys headed? What’s in the pipeline for you guys?

Patrick Grimes:
Yeah. So we’ve been doing some really great opportunities, very sporadically specifically through the Southeast, in Texas. As of last week that has actually grown to 3,100 units.

Neil Timmins:
Congratulations.

Patrick Grimes:
Thank you. And this last closing was a true testament to the strategy because we bought a property in Florida at 27 million. We improved it, and then we sold it at 37 million. And our investors said, “Wow, that’s amazing.” Because it was in less than a year’s time. Typically they’re a little longer. But this one we just got in, bought it, got it from off-market deal way under market, unrenovated, place needed really easy improvements, right in our model. So we went ahead and sold it by the popular demand of our investors at the offers we were getting. We exchanged… Only three of the investors pulled out. We had another 30 that stayed. We exchanged all of their funds into a 372 unit in Houston. So they traded up their basis. Now they’re cash flowing at almost a 2X multiple than they were before, and we’re driving the value of the next deal.

Patrick Grimes:
It was really cool to see that momentum and that trust. And so what we’re doing now is we’re working with… It’s a lot of kind of the rinse and repeat, but I’m starting to get my name out there a little more. I mean, being the engineer, head to the grinding stone and getting stuff done. But I started doing podcasts this year, and Neil, and I appreciate you having me on. I’ve got a book out. I’ve been writing for Forbes a lot. I got about a half dozen articles on Forbes. I’m just covering some of the bigger topics of… I’ve had a thousand investor calls. What do they all want to know? Trying to get that story out there that I did, trying to do the risky development and then didn’t work for me. And then trying to do single family flipper.

Patrick Grimes:
But I mean, I was holding, but flipping like you see on the TV. But then at the end of the day, if you trust in somebody that has experience and you partner with somebody, then you can go enjoy your life and family, friends, and hobbies. And somebody else can scale your investment portfolio, not just in stocks, but also in real estate where it’s tax shielded and inflation hedged. And I think that message of investing in commercial real estate, most people don’t even realize that that is available to them because it’s not a traditional approach.

Neil Timmins:
It’s not traditional. You’re right. I think they don’t realize it. And then the next piece of that is they don’t know how to even access the market. They don’t know how to do that. I guess, from your standpoint, you work with investors in that regard. How do they connect with you and maybe how do you help them through that process?

Patrick Grimes:
Yeah. Well, so most investors, they set up a call with me. So if you go to investonmainstreet.com, they’ll see a free strategy call, a discovery call. I meet with them. We talk about what they’re doing, what their goals are, how they’re invested. Most of them don’t think they have the funds to invest. We’ll help unlock that in some cases. Some cases, people are working until they die, but they don’t realize they can put their home equity to work. They’re working until they die, but they don’t realize their IRA or 401k can be… a piece of that can be put into a self-directed account to invest. And some people are just all in the stock market or in their company stocks trying to make it big like I was, and don’t realize what that downside can do to them. So I’ll help with them and just say, “Hey, look, here’s potentially how you could choose to diversify into some of these commercial assets. And that’s what this path looks like.” I have a book, Persistence, Pivots and Game Changers: Turning Challenges into Opportunities. And I wrote a chapter. I’m much better looking here with hair.

Patrick Grimes:
There’s some other people in here, NFL, NBA coaches, Phil Collen, the lead guitarist of Def Leppard. Brian Tracy wrote the forward. It’s an amazing book and tells a lot of great stories from a lot of great people. And if they mention your podcast when they set up that meeting, I’ll ship them a free copy signed of this, because I really do believe in its content.

Neil Timmins:
It’s a number one bests seller on Amazon, is it not?

Patrick Grimes:
Yeah. It is. Worst case, you end up with that.

Neil Timmins:
Yeah. There you go. Set up a meeting and he’s going to… Patrick will send you a signed copy of the book. Well, tell me, I want to talk about the book, Persistence, Pivots and Game Changers. How did the title resonate with you? And I guess talk to me a little about your life, where each of those have… your life has touched on each all three of those.

Patrick Grimes:
Yeah. Well, I was actually at a real estate event and I was talking to a number of people and they were sharing each other’s stories. And one of them said, “Hey, look, I want to put together a book of people like you, people who made it out of the work until you die, made it out of corporate America, but they didn’t do it automatically.” They weren’t born into it. Nobody said, “Hey, here’s the light at the end of the tunnel.” I picked up lamps, every course I did, every investment strategy I tried. And they shared a little bit more and more about the passage ways that you can take until I found through doing things the right way, maybe the wrong way, and each way, a little bit better each time. And they wanted to have that story.

Patrick Grimes:
So it resonated with me because persistence and pivots, man, trying things that busted in housing booms to angling my way into the high tech world, and realizing that’s just going to cause me to work forever, to doing things that worked in single-family. But I realized that there was probably a better way where I wasn’t giving up my family, friends and hobbies to becoming a much more sophisticated and successful private equity firm in the commercial space. And it did take a lot of work, and I think that’s why I resonated so well with the book.

Neil Timmins:
Yeah, no, that’s really tremendous. I mean, real estate has been a complete game changer for you, has it not been?

Patrick Grimes:
Absolutely.

Neil Timmins:
And then especially with what you’re doing in there, it can be a game changer for those who invest in real estate, even indirectly, meaning passively.

Patrick Grimes:
Yeah. And I think that’s just it. Most people think real estate, they think of single family homes. But the reality is there are people that do it every day. And with single family homes, you’re never going to be an expert. So why not put your trust in somebody that knows what they’re doing, an expert?

Neil Timmins:
Yeah. Let’s do this. I want to move on to the final segment, what I call four for impact. Your favorite quote: “No battle was ever won according to plan, but no battle was ever won without one.”

Patrick Grimes:
Yeah. I love that because I tend to be that. And it comes from the machine design robotic side too, because everything I did was a prototype. So you’re always planning. You’re always inventing. You’re always trying to figure out and anticipate what’s going to happen, but you never actually know. Same thing in real estate. When we’re underwriting deals, we’re analyzing, we’re planning for things to go south. Like we have low break, even occupancies. We have reserves in the bank, we have insurance policies. So you plan for that to win the war, and it’s not going to go exactly, but you have a chance to win the war if you do plan. And I think that’s why it resonates with me so much.

Neil Timmins:
Yeah. That’s great. What do you think holds most investors back from hitting their personal next level?

Patrick Grimes:
Well, I think it’s a combination of two things. I think one is people want to do it themself. And for example, when I was in Southern California, my wife and I, and when COVID hit, it was challenging. Not only because of COVID and the quarantine, but also because we were on curfew because the demonstrations that were happening, and there was constant fire. So there was a veil that set. My wife, the dreamer had an idea. Hey, let’s move to Hawaii. And I wanted so desperately to make her dreams come true. But we were so busy. There’s no way I could ever get us moved. That’s just a ton of work. It’s painful. My [inaudible 00:19:19]. There was just no way we could make a move. And it wasn’t until I finally overcame my… I need to just trust in others that are professionals and do this move for us and risk them touching my private possessions.

Patrick Grimes:
And I made that call that two and a half weeks later, we were in Hawaii watching the sunrise. It was hard to ever see that life could be different when I relied on others to do things. And I kind of got past that sense of trust. But it’s really easy to stay in the status quo and just continue life as it is. So I think that people that make that step and give it a shot… And it’s fairly low risk to do it. These are great investments. But people that make that step, there’s a big reward out there.

Neil Timmins:
Outside of real estate, what are you most passionate about?

Patrick Grimes:
Outside of real estate?

Neil Timmins:
Yeah.

Patrick Grimes:
Well, I want to say my wife and my puppy. We have a great family, and kid on the way. And so we’re really excited about that. Yeah, definitely.

Neil Timmins:
Yeah. That’s great. What’s your favorite way to make an impact in the community?

Patrick Grimes:
Well, so the number one way is investing back into our multifamily apartment communities. Now we’ve done a lot of different things within the communities and with also feeding families in the areas of the communities. But when we go into some of these apartments, in Houston, for example, we printed out a stack during due diligence of unanswered maintenance requests that was a ream of paper thick.

Neil Timmins:
Wow.

Patrick Grimes:
These people have been struggling and struggling for a long time, and that owner had a 19% [inaudible 00:20:47]. That means 19% of the tenants weren’t paying their rent. So he lost this building. I get really energized when I get in there, and I’m like, you know what? I can make this life better for them. And so it’s safer now. We’ve patched the fences. We’ve added gating. We’ve added locks and padlocks on the amenities, surveillance. We’ve cleaned it up. We’ve revamped the pool, put in safer playgrounds. And we’re slowly, over the course of time, renovating the units and getting rid of pest issues. And at the end of the day, people’s lives are better. And that really energizes me.

Neil Timmins:
That’s tremendous. Give me the site again for people who want to connect with you, they want to have a conversation to learn about the options to invest on an ongoing basis with you.

Patrick Grimes:
Yeah. So it’s invest on, and then main street, all spelled out, investonmainstreet.com. You can also email me at patrick@investonmainstreet and we’ll set up a meeting. But when you go to that website, there’ll be a button to set up a free strategy session. It’s no pressure. We don’t have any coaching packages. We’re just talking about things. And we’ll provide a value, whatever value you’re willing to share. We’ll tell you, “Hey, this is what we can offer.” And we’ll also send you a copy of the book.

Neil Timmins:
That’s perfect. We’ll make sure we get those links and the website or the email address in the show notes here to be able to connect with you. I appreciate you taking the time to connect Patrick. We’ve got a wonderful story about how you [inaudible 00:22:14] going it alone by being a single family investor, literally doing it all, and doing it in a challenging, risky part of the environment, which is tough to make it through. And you pivoted, which speaks to the book. You’ve pivoted to find, and clearly you found, your niche, now exceeding 3000 units, which is tremendous. And you’re serving investors and allowing them to tap into a proven plan and a strategy, and somebody who’s been there, done that, and has got a proven team in place.

Patrick Grimes:
Awesome. I appreciate it, Neil. Thanks for having me on.

Neil Timmins:
Yeah, I enjoyed the conversation. Hey, for everybody here at Real Grit, I’m Timmins, reminding you that real estate requires real grit. See you next time.