September 2, 2025 • 33 mins
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Ed Mathews (00:38):
Greetings and salutations, Real Estate
Undergrounders.
It is Ed Mathews with RealEstate Underground.
Thank you so much for joiningus.
I really appreciate you makingus a small part of your day.
With me today is Patrick Grimesfrom Passive Investing Mastery
and a whole bunch of otherthings we're going to talk about
.
Patrick, welcome to the showand thank you for your time
today.
Patrick Grimes (00:58):
Love the idea of the Real Estate Underground.
I'm really excited to have thisconversation because I felt
like I was actually doing realestate underground for a while.
Ed Mathews (01:06):
Yeah, and one of the things that we're always really
excited to talk about ismultifamily rates, but not a lot
of deals penciling and we'reall looking at different asset
classes.
You focus on a handful that arereally interesting.
For those folks who haven'tdiscovered you online yet, or
elsewhere, why don't you tell usa little bit about who you are
and what you do for a living?
Patrick Grimes (01:24):
Sure so Patrick Grimeson, the CEO and founder of
Passive Investing Mastery.
But just like probably most ofyour listeners, I was once a
high paid professional incorporate America doing in my
case it was machine design,automation and robotics and
slamming away to build financescame from meager upbringings.
I was wanting something morefor my family and wanting
(01:47):
nowhere to invest.
My advice that I got early onfrom actually the founder of the
machine design firm I work for,he said go invest in
alternatives.
My only regret was notinvesting more in real estate
sooner, and that was prettyawesome because I thought he was
going to say here's a high-techstock or here's the startup
(02:07):
that we have the insider in,because we're doing Gizmo or
Gadget for them, which we were,and they were there and there
was someone.
But he gave me some wisdom toinvest in.
Ed Mathews (02:16):
Yeah actually a really good.
So I'm a former tech guy myselfdifferent world, I was a
software and services guy, butyeah, actually a technology
leader.
A very close friend of minegave me a rich dad, poor dad,
and it opened my eyes and I'mlike, wait a minute, you don't
invest in other VC funds andtech?
He goes.
I do, but a lot of my assetsare heading into real estate and
(02:38):
you should consider it as well,and it fundamentally changed my
life.
So alternative assets aresomething I think it's a cheat
code to break free from a W-2job if you don't want that job.
Yep.
So tell us about your operation.
You have a handful of funds andother things that you work on
and you actually focus on ahandful of really interesting
(03:00):
alternative assets.
So tell me more about that.
Patrick Grimes (03:02):
I learned early that you can't be all in one
industry market, and I learnedthat through both being in high
tech, in the stock sense drivenstock market, through the booms
and busts.
I learned that also throughreal estate.
I lost everything in 2009 and10.
Snot-nosed engineer out ofcollege thought I could rule the
world, like many people didback then.
Market was never going to godown, heavily indexed into a
(03:25):
pre-development, personallyguaranteed a loan, and all of a
sudden one day that flippedupside down.
I was brutal, embarrassing,financially injuring, but I was
successful.
So I learned early on that youcan't just be in the stock
market, you can't just be in onall in on real estate and you
can't be in speculative.
You need to be in on all in onreal estate and you can't be in
speculative.
You need to be in recessionresilient and what we call
(03:48):
non-correlated investments, onesthat don't have the same market
fundamentals.
That means it's not good enoughto be in a bunch of different
stocks in a stock portfolio witha financial planner on your IRA
account, because those are allsentiment driven by the same
market fundamentals.
You can't just be in a lot ofkinds of real estate, because
those are all driven by caprates and demand and similar
(04:09):
market fundamentals that causethem to go on major swings
together, and so you need tobegin these kind of lesser known
alternatives.
Ed Mathews (04:16):
Yeah, so let's talk about those.
You do litigation investment.
You are also into some of theother favorite alternative
investments, so let's talk aboutlitigation first.
I'm slightly familiar with itin that I've read about it, but
I can't say I'm an expert in anyway.
Patrick Grimes (04:31):
Yeah, anytime you're thinking to yourself hey,
look, I want to be in this Vreal estate, which is just a
steady state, is the legalindustry?
Or healthcare, education,things that don't rely on market
fundamentals that are affectedby swings?
(04:54):
People still need reskillingand upskilling and downturns.
They need healthcare and thenin the legal industry, it turns
out that people really needlawyers in really good times
right, big boobs.
Bad times, they get verylitigious and they really need
lawyers.
You look at our graphs on ourwebsite to look at the dollar,
look at gold, look at oil andgas, look at real estate, look
at the S&P just go on wild rides.
(05:15):
And then things like legal,especially legal and healthcare
they're just straight as anarrow.
I'll come to the right.
When you want to get exposureto an industry like that,
because you want to be able toinvest in something that builds
resilience in your portfolionon-correlated allocation you're
thinking more like hey, this iswhat the private equity, this
is what the hedge funds, this iswhat the sovereign funds,
people that are interested inreturns over lifetimes,
(05:39):
resilient returns and portfolioallocation how are you going to
get access to that?
So, within the legal industryand portfolio allocation, how
are you going to get access tothat.
So within the legal industryit's actually not that complex.
It's not like the airlineindustry where there's a
thousand parts, a million partsin a plane and there's all these
different suppliers and allthese different vendors.
The legal industry it'srepresentation.
There's hourly rates, there'scourt fees, there's filing fees,
(06:01):
there's expert witness fees,but it's just essentially people
representing.
And then you've got to figureout what are their needs.
And it turns out that there's alarge part of the legal industry
that works under contingencyfee and that's not pro bono,
because it's not that they'regoing at it saying, hey, mr, I
see that you were harmed.
These are attorneys saying, hey, look, there has been some harm
(06:25):
done, usually on a mass scale,and there's a big bad Goliath
out there.
Some of those are sometimes aDOJ, like Camp Lejeune when they
fed contaminated water at theMarine base for 17 years.
And we've got a couple thousandof those people that were
collateralizing in our fundhelping attorneys support them,
(06:47):
fund helping attorneys supportthem.
Or hundreds of farmers orlandscapers that were affected
by paraquat, a bunch of sexualassault victims, just when a
case against the LA JuvenileDetention Center you can Google
that billions of dollarshorrible mistreated our young.
I'm a Southern California guy,so before we get into Hawaii,
and so you can invest in theseattorneys and you can support
their ability to bring onindividuals that were harmed in
(07:08):
a similar way to the casesthey're working on.
You can support their cost, themarket and you can support
their operating costs to getthose cases to the finish line,
to settlement, and then you canparticipate in the proceeds of
the settlement that comes backfrom those.
So who creates?
Ed Mathews (07:23):
that marketplace.
Patrick Grimes (07:24):
You know what it's like.
Who created the real estatedebt marketplace?
Because we have a real estatedebt fund and operators in the
real estate industry.
They come to us and they saylook, I either want to buy a
property or I want to improve aproperty.
Can I get capital to acquire orcapex to improve a building so
that I can provide housing totenants?
These attorneys are sayingwhere is it created?
(07:46):
I guess fundamentally it'screated by a bunch of evil.
That's happened.
Third-party litigation financestarted in America in 1910.
That was the big Hallmark casewhen all these people were
walking around smokingcigarettes and then they
realized I think Americantobacco, they might be lying to
us.
I don't think these areactually healthy because we're
all dying from every illnesses.
And that was a big hallmarkcase and they went against
(08:08):
American tobacco.
So maybe that's where it'screated.
But when you have thousands ortens of thousands of people
going against a big bad Goliath,then these attorneys are saying
, look, this is a really goodcase.
They run it on their owndiamond nickel to get it into
the courts and get the expertwitnesses and the testimony out
there, and they're nearingsettlement.
They're nearing the finish line.
They're like look, hey, patrickand Dave, my partner.
(08:30):
If we just had another millionor $5 million, we could find
another thousand or 5,000 peoplethat were similarly harmed.
It would make this even moredangerous.
It would try and get us acrossthe finish line.
Or we need to save anothermillion or 5 million to get this
to settlement.
And here are the terms right.
And so it's really hisattorneys saying look, we need
(08:52):
to find some kind of investorthat will help us provide this
access to justice for those thatotherwise wouldn't be able to
afford it.
Ed Mathews (08:59):
Yep, so are you taking a piece like almost an
equity stake in the attorney'sfees that they're?
I would imagine that if they,when they win or they settle
that they're taking 20, 30, 40,whatever percent of the overall
judgment and then do you take apercentage of that or is it more
(09:19):
?
You had mentioned a debt fundearlier, and so I'm curious is
it more of a debt relationshipor a mix of both, or something
else?
Patrick Grimes (09:27):
A little bit of a hybrid.
Every kind of litigationfinance company is different.
I don't think any are the sameand just like in real estate,
it's like saying, oh, you're inreal estate, then there's a
million ways to supportattorneys in this process and
there's people doing reallyspeculative things early on.
I don't do that.
People doing very late staged,near the finish line, that's
more ush.
People doing class action orbig commercial fights, which is
(09:51):
big company.
I guess company weren't doingthat Late stage where there's
thousands of individual harmclaimants, gets one Goliath Not
class action but mass tort orsingle event where it's sexual
assault claims and stuff.
In that particular case thoseattorneys are saying, hey, look,
here's the value of our assets.
And just like in real estate,where you can get an appraiser
(10:12):
to value your apartmentbuildings, you can get a law
firm valuation specialist toevaluate a law firm's docket of
clients, confirm their clients'medical records, confirm their
exposure and put a value orevaluate to see if it's all
there and then we can say okayon that value.
Just like in real estate, wecan do a loan to value and
sometimes we'll call it a loan,sometimes we'll call it a
(10:33):
prepaid forward contract.
That's better because it comesback as capital gains and then
you can put a lien against it,just like how we have a deed but
you put a financing agreementand, unlike in real estate, how
it's just principal and interest, it tends to be that there is a
waterfall approach with theseattorneys Got it, the attorneys,
their fees, usually, as yousaid, 20, 30, 40%, and then,
(10:56):
before they get anything, wetend to get made whole plus some
and then, as the caseoutperforms, we have a waterfall
coming back to us based on theproceeds Gotcha.
Ed Mathews (11:07):
And this is a longer term play right.
I know you're getting in latestage, but my experience with
some of this litigation is thatsome of it is paid over time,
Some of it actually getsappealed and there's no money
exchanged until the appellateprocess plays out.
How does that work in thisscenario?
Patrick Grimes (11:27):
Yeah, again, every company is different in
how they're approaching it, andespecially the ones that are
large, big commercial companyafter commercial company, those
can get appealed forever.
We tend to be ones that incases where they've been baking,
like in the case of CampLejeune, that harm was done for
15 years, it's been going on forfive years in the courts and
(11:48):
there was already a law passedproviding a settlement, grant,
saying, based on your condition,here's what, and your time
exposed, here's your settlement.
And so that's very different,right, because it's super easy
to underwrite the value.
Or, in the case of Roundup,they've already been lots of
settlements On a case of sexualassault.
There's case law to show whatthose settlements are worth.
Right, we tend to be engagingOnce it's through the courts.
(12:12):
They've done their discovery,they found some kind of
misconduct or coverup, they'llmove by the defendant.
They're already negotiatingsettlements or there's already a
case law to suggest, so we canunderwrite it.
So we're at a point where, yeah, probably been going on at
least seven years, in some casesmaybe 10.
But we're jumping on the bustowards the finish line and that
(12:33):
doesn't mean we're getting 10xreturns, and that doesn't mean
we're getting 10x returns.
Now, if you jump on the busreally early for an angel round
or a venture round for a company, you get 100x returns.
You jump on with an oil and gasinvestor early on you can get
100x or lose it.
Our game is really just beforesettlement.
How can we engage so that we'rein maybe two years, three years
(12:56):
out on the outside, four andfive through a diversified fund?
Settlements over a five-yearperiod is our target and mostly
middle loaded, where the backend is just a few things
squeaking through, and that'sreally where we intend to try
and get on the bus.
Ed Mathews (13:10):
Okay, great.
And who is your typicalinvestor?
You mentioned sovereign fundsand institutional players.
Are they your clients as well?
Are you operating in paralleland it's more guys like Ed who's
looking to get out of?
I'm an accredited investor andI'm looking to get out of a
portion of my portfolio andlooking to exchange either 1031
(13:33):
exchange in, if that's possible,which I want to talk about, or
take the tax hit and move itover to this type of asset class
just to diversify my ownportfolio.
So I'm curious who is theperson who's picking up the
phone and calling you typicallyand I know it depends, but I'm
just curious.
Patrick Grimes (13:52):
That's a really good question, because what was
it?
Four or five years ago I wastalking to my partner, david
Guzman, amongst others hey, Iwanna get exposure to litigation
finance, I wanna get into legalfunding, I wanna invest in the
legal industry, and the checksizes they were looking for were
minimum 20 million.
Dennis Shapiro wrote theAlternative Investing Almanac.
Me and him were inconversations at one point
(14:12):
trying to get a legal fundtogether, and we couldn't find
attorneys that would play at ourlevel in the millions, and so
it tends to be a very well-knownasset class at the
institutional level.
The private equity levelcoveted for its non-correlation
and what we call inefficiency,meaning outsized returns for
lower risk.
It's an inefficient market, butthere was nothing open to
(14:35):
accredited investors we couldfind.
And so when my now partner,dave, hung up his hat in private
equity and moved from New Yorkto California and said, hey,
patrick, let's do it, let's setup an accredited investor fund,
there's a niche part of thiswhere there are some attorneys
that only want 10 millionminimums to 50 million minimums,
but then there's a market forthese attorneys that are
(14:57):
overlooked, that can do 500, 1million, 2 million check sizes.
Let's go after that.
By the way.
I've been in the industry 15years, I know these guys.
Let's open it up to accreditedinvestors, which is what I've
been asking for.
I've been working at, I've beentrying to get my way in for a
long time, and so this is thefirst one we know of that allows
for access to these kinds ofinstitutions, or our specific
(15:21):
late-staged combination ofsingle event and mass tort
exposure and returns.
We're the only one we know ofthat.
Just be yourself, ed, a hundredthousand minimum investor, kind
of nervous right now.
They call us typically hey look,man, I'm in the stock market.
We just got done with the Fedrate hike 11 out of less.
We also have a trade war goingon that could cause a bust, but
(15:42):
we also have two proxy wars andwe just bombed Iran Well, and
are debts spiraling out ofcontrol, with the world's
biggest economies, the BRICSnations, betting against the
dollar?
The engineer in me is sayingbasically, it always makes sense
to diversify intorecession-resilient,
non-correlated investments.
Two years ago was the best time, today is the next best time,
(16:03):
and so those are the people thatare calling.
I just want to add a littleslice of the pie, something else
.
Ed Mathews (16:08):
And you're not pushing all your chips to the
center of the table.
Can I peel off a few percentagepoints and get exposure to this
opportunity, among others thatare non-multifamily or whatever
asset class you're focused on?
Yeah, no, it makes a lot ofsense to me.
So, in terms of your thinkingin the market when you're
looking at these types of dealsyou fund, obviously what you
(16:34):
said really resonated with me.
A lot of this is much like realestate is relationship driven.
You've got probably a cadre ofattorneys and firms that you
work with over time, and theirpractices tend to focus on types
of litigation that align wellwith the types of cases that
you're willing to fund as well.
I'm curious about that wholeprocess from a marketing
(16:57):
perspective.
Is this simplyrelationship-based or are you
looking to grow that sphere ofinfluence in terms of the
attorneys that you work with?
Are you in growth mode?
Where are you in terms of yourmaturation cycle?
Patrick Grimes (17:11):
Yeah, when Dave and I set up shop, we kept a lot
of our own money in the fundand started building up what we
setting up shop as a kind of asmall balance legal funder
Exactly and that really pickedup steam.
And now we're to the pointwhere we have huge demand beyond
the capital that we have raised, which is good, and so now we
(17:32):
get to really open up our salesand start to see some great
growth.
There are sequential funds,though you know 100 investors
per fund is how we do it.
I made it on the filings, whichis good, because then you can
get on the bus and you'll startseeing returns back and we'll
close that one down sooner.
(17:57):
Well, my partner, david.
He started back when I losteverything in 2009 and 10.
He was actually with theagencies and he was fighting the
whole street for fraud and hespent, through the subprime
mortgage collapse, about threequarters of a billion dollars,
collecting 20 billion dollarsfor the benefit of the taxpayer
in litigation funding, literallygoing against the fraud that
happened, basically against theentire street of lenders at that
time, and so his experience inlitigation finance started then
(18:18):
and since then he's made it acore focus of his.
So through that process he madea lot of relationships and it's
not dissimilar for real estate.
It's a relationship, especiallythe good deals and the people
you want to work with, that youhave a long trust with and it's
the same in our debt fund mypartner Lance 15 years in debt.
We've both had our trials andtribulations through the
(18:40):
subprimaries collapse andvirtually almost everything
we've originated has beenthrough a relationship in that
fund as well.
So I think it's the best way.
Ed Mathews (18:48):
Couldn't agree more because it it pre-vetted and you
know what you're getting intobecause there's a working
relationship there.
You don't have to go through arigorous underwriting process,
but there are a couple of boxeschecked already when you go into
that process.
If you and I have been doingthis for a period of time and
there's a level of understandingand comfort and expectations
(19:11):
and all that, I agree.
Okay.
So I would like to get into thefinal five, if that's okay with
you.
Yeah, no problem, and so it is.
I'm always interested in howleaders like yourself, how they
think, how they approach theirdays, their weeks, their
business and other things.
So let's start with Mondaymornings.
Obviously, you've done verywell.
(19:31):
You and I are having aconversation.
I'm in Connecticut, you're inHawaii.
Connecticut's nice, butHawaii's nicer.
So hats off to you.
And when you reach a certainlevel in terms of your net worth
and career development and allthat, the mortgages are paid,
the kids are cared of, thefamilies are taken care of.
Nevertheless, you get out ofbed on Monday morning and you go
(19:52):
to work, and so I'm curious.
I look at that as purpose,right, and so I'm curious in
terms of what gets you out ofbed on Monday morning.
What's your?
Patrick Grimes (20:01):
purpose.
So, first of all, every morningI wake up and I go on a run or
I'll go to the gym, and I'malways listening to some kind of
audio book, ted talk,educational series or something
that's like my meditative startof the day.
So I'm up usually before thesun rises and I'm running along
the beach here, but immediatelyafter that, on Monday mornings,
I get to spend it with my twoand a half year old.
(20:21):
Once he wakes up, I get him inthe mornings, which is a key
part of my day.
Specifically on Mondays, I gethim for an hour or two and then
my wife joins us and we get togo to his keiki, which is kids
keiki kicks, which is his soccerleague that he's in, and I love
it.
It's just a lot of fun.
Sometimes he gets a littlenervous and I got to hold his
(20:42):
hand running around the field,but that's the way to start your
Monday right.
That's how it happens.
That's how it happens.
Ed Mathews (20:47):
Yeah, that would get me out of bed, no problem at
all.
I tell people who have littlekids so mine, my girls are 22
and eight going on 18.
So I've already had thatexperience of the toddlers.
It's the best thing you'll everdo and I'm so happy for you
that you get to do it.
I'm always interested inmentorship and we don't get
(21:07):
where we've gotten without helpand I fundamentally believe that
A lot of that help is justadvice, right, but somebody who
takes a liking to you and throwsan arm around you and says, hey
, look, you really need to bethinking about this and this, or
asking that real poignantquestion, that kind of stops you
and makes you think about am Igoing down the right path?
So I'm curious, in yourexperience, what's the best
advice you ever got and who gaveit to you?
(21:27):
So I'm curious in yourexperience, what's the best
advice you ever got and who gaveit to you?
Patrick Grimes (21:30):
There's probably 20 different things I can say
over time from my grad schoolteachers, master's in
engineering and business, but Iwould probably go back to what
really triggered me into Alts.
Because that co-founder thatmachine design firm that I
worked for, I was smart, I wasdoing well, I was working, I was
(21:50):
growing quick, and he put hisarm around me, essentially
proverbially, and said look,don't put everything in high
tech.
If you want the future for yourfinancial future, for yourself
and your family, make your highmoney in high tech and dump it
in an alternative.
And that was such a cool thingbecause I at that time and for
the next 10, 15 years that I wasstill working at places like
(22:12):
Facebook and Google and Lockheedand Raytheon and Tesla and
doing really cool stuff likeablation catheters and heart
valves and the rotating part ofTesla's motor and Lockheed solar
satellite.
I was working with some of thesmartest people in the world and
why I have my platform now isto educate them on the fact that
we all knew the 50 stocks.
Nobody knew the 50 alternativesthat you can invest in, and I
(22:34):
would have never had that kindof awakening not a moment to
even approach that space hadthat advice not been given to me
.
Ed Mathews (22:42):
And at a young age too.
So that's wonderful.
I fundamentally believe that welearn more from our mistakes
than we do from our successes,and so I'm curious about a
professional mistake or maybeeven just a decision that you
made in the past that you lookback and you go man, I would
love to have that decision back.
So I'm curious about aparticular decision that kind of
(23:04):
sticks out that you look backat and think I would love to
redo that.
And how did you recover?
How did you move forward afterthat?
Patrick Grimes (23:12):
So early on I was on top of the world.
I mean, I went through school,did well, won competitions in
design, got a really goodmachine design job.
Right out of college I figured,man, I can do anything.
I didn't seek out the rightkind of partners early.
I didn't seek out, do anything.
I didn't seek out the rightkind of partners early.
I didn't seek out ones that hadenough immersive in their space
(23:34):
for enough cycles andunfortunately that led to a
couple failures.
I was going to do it all myselfand not use help.
I did not partner up.
I lost everything in 2009 and 10, right.
And then the second time I didit.
I was in single family and Iwas doing well.
I got my master's inengineering, mba and I found my
way back to recession.
(23:54):
Resilient investments, houstonbased.
I was in California, buying inHouston and I was doing really
well.
But I got caught in that guruDIY trap.
This time it was a DIY trapmeant I was just trading my time
away from my family, friendsand hobbies because I wasn't
learning how to partner, Iwasn't building something to
scale, and so, while I was verysuccessful, I didn't lose all my
(24:16):
money, but I lost my life thattime, and it wasn't until I took
a break, married my wife andsaid I'm not going to go do that
.
I'm going to learn how topartner that I.
I actually found a balance, anability to scale.
Ed Mathews (24:31):
And I'll tell you, time freedom, as you experience
every Monday morning when you gooff with your two-year-old and
give your wife a break to dowhatever she's doing in that
time that is what I've learnedis probably one of, if not the
most valuable thing you get fromstarting a business like the
ones that you and I run.
It's a gift, there's no otherway to describe it.
Agreed business like the onesthat you and I run it's a gift,
there's no other way to describeit Agreed.
(24:54):
So I'm also curious.
I think I saw you with yourphone and Audible, and so I'm
curious about you know that bookthat you're focused on, if
there is one, and I'm alsocurious about who you're paying
attention to these days, yeah.
Patrick Grimes (25:02):
So when you said hey, like I'm gonna ask you
about your favorite book, I wasscrolling through like the yeah,
I've been an Audible subscribersince college, when it wasn't
Amazon back when it was oldschool Audible, and I'm just
looking for hundreds of booksand I'm rereading books.
I think that sort of.
One of the coolest books thatwas recommended to me recently
was why we Sleep, and it's avery humbling book because it
changed just about everything.
(25:24):
Your success, your happiness,how healthy you are, how long
you live are all directlycorrelated to one thing that's
entirely near control and that'ssleep.
And I just it's been veryhumbling, right, because that's
the one thing that I had chosento sacrifice many times
throughout my life and to theextent where I just got a whoop
(25:46):
watch.
And this whoop watch it's not aa watch, it's a whoop band, but
it has a immense amount ofhealth tracking, raids my sleeps
and a bunch of categories,shows the cycles, tells me my
recovery strain, and it hasallowed me to really respect
sleep and build health, and itactually gives you an age that
you're aging at to really cometo grips with how healthy I'm
being, and I think that thosetwo things changed my life over
(26:09):
the last year, fascinating whywe and the whoop W-H-O-O-P band
yeah.
Ed Mathews (26:16):
That I've heard of the book.
I hadn't that just made myaudible list as well.
Patrick Grimes (26:19):
Your mind's going to be blown.
Ed Mathews (26:20):
I guarantee it.
I'm curious, though, because itchanges my experience in
interviewing lots of leaders,both from the real estate space,
other assets like you and myrelationships in the tech world.
Success changes the definitionas you progress through that
journey.
I'm curious sitting where yousit today, how are you defining
success in your life?
Patrick Grimes (26:41):
And our mission and our company all comes down
to, so that you have the timewith your friends, family and
hobbies and for the causes youcare about most in this world.
The resources isn't justfinancial right, it's your
energy and your time.
And so I really think that whenI pivoted from the W-2 to a
contractor which allowed me tospend more time with my wife,
(27:02):
allowed me to partner up andscale after we got married, that
was a big pivot.
And then when I left thatcontracting role for full-time
investments and I was more incontrol over my time and
location, then when my wife cameout and said, hey, I don't like
Bird Bank anymore, she justfeatured LinkedIn, animated
films there and that Glendale'sDisney and DreamWorks and why
don't we move to Hawaii?
(27:23):
We were remote, so I was ableto just flip the switch and go
to Hawaii.
We were remote, so I was ableto just flip the switch and go.
And I think that the ability toset my life up for time and
location freedom createdhappiness, even without immense
financial freedom.
It created time and resources.
And then financial freedom, ofcourse, to finance is an
important part and, as I'verealized before, if you don't do
(27:43):
that right, maybe you haveindependence, but if it's in one
market and one industry, it'llcollapse.
So we talk more about financialsecurity across allocations of
the non-correlated alternativesthat allow for more resilience,
because I've seen it disappear.
I've seen it.
That's what we talk about.
Ed Mathews (27:59):
Yeah, and it's interesting.
You talk about time freedom andI'm going back to being a dad
and you only get 18 summers withthem.
I can tell you, because I'mexperiencing it literally as we
speak, at about 18, 19 years oldthey still love you, but they
don't want to hang out with you.
They want to go hang out withtheir friends and explore the
world and eventually go off tocollege and become a young adult
(28:21):
and a full-blown adult.
You look back like I look backon my kids in the time that
we've spent together.
I've been full time since 2018.
So all of their adolescence andteenage years, I was around and
I wouldn't trade that foranything.
Nothing could ever make metrade that, and I'm happy.
(28:42):
That is your experience as well.
You started way earlier than Idid, so hats off to you on that.
Happy, that is your experienceas well.
You started way earlier than Idid, so hats off to you on that.
So, patrick, you've built atremendous set of businesses and
I'm really happy for youCongratulations.
But I'm curious when you're nottalking about this stuff, right
, asset classes and real estateand all the other things that
we've been talking about, whatdo you like to do for-?
Patrick Grimes (29:04):
Yeah, but when Kelly makes you stronger.
So I and I've actually wantedto talk about this for a while
because I actually I'm anadventure enthusiast.
I've traveled through.
He was almost 30 countries, thebase camp of everest whitewater
.
After the grand canyon, fujishasta, it's mount cyanide,
three sacred mountains in china.
14 years in colorado, been onthe john mirir Trail for 24 days
(29:27):
.
I'm like an outdoorsy nut andhere on the island I'm picking
up kites.
It's challenging.
I'm really good at the board.
It's tough to do at the sametime.
I've been doing somespearfishing here and there, but
daily I'm out in nature, I'mrunning and love swimming and do
some surfing.
There's about 500 surfers righthere on the surfing, one wave
and all at the same time atWaikiki Beach.
(29:48):
So that's a little battedsometimes, but I love getting
out there and I love just beingwith nature and I was raised
that way.
I grew up near YosemiteNational Park and I went to
Yosemite High School and I wassailing and skiing, water,
snowboarding it was all thatstuff.
Ed Mathews (30:04):
Awesome.
So if people want to learn moreabout you or your business,
what's the best way to get intouch?
Patrick Grimes (30:10):
A lot of people are listening to this.
They can look.
I would love to learn aboutwhat investments I can carve out
a slice of the pie of my wealthand how do you get
non-correlated things and buildsecurity, true diversity.
And I have thisinvestwithpatrick.
com as a PDF that lists myfavorite alternatives, because
people are always asking me.
I host a series on the PassiveInvesting Mastery series,
(30:33):
talking about alternatives,which you can go to our website.
But that download provides thatand you can just read the list
or you can go further back andread about the ones you're
interested in.
So investwithpatrick.
com is one.
I also have a book that I'dlove to offer.
You guys want to go topassiveinvestingmastery.
com.
It's all spelled outpassiveinvestingmastery.
com/ book and it's lessons fromthought leaders.
(30:58):
I tell my whole story aboutlosing it all and getting a
high-tech master's and doingsingle family and losing my time
and then learning how to tradeup to larger, diverse,
non-correlated alternatives.
But there's some other peoplein here too.
I did my own.
It was a bestseller, butthere's, like Phil Collins, lead
guitarist at Def Leppard,fascinating.
There's Brian Tracy, dennisWaitley, tom Ziegler Some really
(31:21):
fascinating people.
This is a really fun bookLessons from Thought Leaders.
But if you don't put the nameof this podcast in the form,
we're not going to send you acopy, but you can download a PDF
or you can.
As long as you put the name ofthis podcast in the form so we
know where you came from and nota random, we'll sign it and
send it out to you.
But we also have on our websiteto really set up a call.
So, regardless of where you'reat and your investing journey,
(31:44):
part of what I love to do isjust chat with investors and
jump on a call and maybe we'llget you pointed at some
alternatives that fit your,whether it's with our offerings
or not.
We have about 50 we've doveinto in our alternative
investing mastery series whichyou can register for and we'll
get you pointed in the rightdirection.
Ed Mathews (32:00):
Awesome.
Patrick Grimes, thank you somuch for spending some time with
us, especially from paradise.
I wish you continued successand once again, thank you for
your time today,
Patrick Grimes (32:09):
glad to be here.
Greetings and salutations, Real Estate
Undergrounders.
It is Ed Mathews with RealEstate Underground.
Thank you so much for joiningus.
I really appreciate you makingus a small part of your day.
With me today is Patrick Grimesfrom Passive Investing Mastery
and a whole bunch of otherthings we're going to talk about
.
Patrick, welcome to the showand thank you for your time
today.
Patrick Grimes (00:58):
Love the idea of the Real Estate Underground.
I'm really excited to have thisconversation because I felt
like I was actually doing realestate underground for a while.
Ed Mathews (01:06):
Yeah, and one of the things that we're always really
excited to talk about ismultifamily rates, but not a lot
of deals penciling and we'reall looking at different asset
classes.
You focus on a handful that arereally interesting.
For those folks who haven'tdiscovered you online yet, or
elsewhere, why don't you tell usa little bit about who you are
and what you do for a living?
Patrick Grimes (01:24):
Sure so Patrick Grimeson, the CEO and founder of
Passive Investing Mastery.
But just like probably most ofyour listeners, I was once a
high paid professional incorporate America doing in my
case it was machine design,automation and robotics and
slamming away to build financescame from meager upbringings.
I was wanting something morefor my family and wanting
(01:47):
nowhere to invest.
My advice that I got early onfrom actually the founder of the
machine design firm I work for,he said go invest in
alternatives.
My only regret was notinvesting more in real estate
sooner, and that was prettyawesome because I thought he was
going to say here's a high-techstock or here's the startup
(02:07):
that we have the insider in,because we're doing Gizmo or
Gadget for them, which we were,and they were there and there
was someone.
But he gave me some wisdom toinvest in.
Ed Mathews (02:16):
Yeah actually a really good.
So I'm a former tech guy myselfdifferent world, I was a
software and services guy, butyeah, actually a technology
leader.
A very close friend of minegave me a rich dad, poor dad,
and it opened my eyes and I'mlike, wait a minute, you don't
invest in other VC funds andtech?
He goes.
I do, but a lot of my assetsare heading into real estate and
(02:38):
you should consider it as well,and it fundamentally changed my
life.
So alternative assets aresomething I think it's a cheat
code to break free from a W-2job if you don't want that job.
Yep.
So tell us about your operation.
You have a handful of funds andother things that you work on
and you actually focus on ahandful of really interesting
(03:00):
alternative assets.
So tell me more about that.
Patrick Grimes (03:02):
I learned early that you can't be all in one
industry market, and I learnedthat through both being in high
tech, in the stock sense drivenstock market, through the booms
and busts.
I learned that also throughreal estate.
I lost everything in 2009 and10.
Snot-nosed engineer out ofcollege thought I could rule the
world, like many people didback then.
Market was never going to godown, heavily indexed into a
(03:25):
pre-development, personallyguaranteed a loan, and all of a
sudden one day that flippedupside down.
I was brutal, embarrassing,financially injuring, but I was
successful.
So I learned early on that youcan't just be in the stock
market, you can't just be in onall in on real estate and you
can't be in speculative.
You need to be in on all in onreal estate and you can't be in
speculative.
You need to be in recessionresilient and what we call
(03:48):
non-correlated investments, onesthat don't have the same market
fundamentals.
That means it's not good enoughto be in a bunch of different
stocks in a stock portfolio witha financial planner on your IRA
account, because those are allsentiment driven by the same
market fundamentals.
You can't just be in a lot ofkinds of real estate, because
those are all driven by caprates and demand and similar
(04:09):
market fundamentals that causethem to go on major swings
together, and so you need tobegin these kind of lesser known
alternatives.
Ed Mathews (04:16):
Yeah, so let's talk about those.
You do litigation investment.
You are also into some of theother favorite alternative
investments, so let's talk aboutlitigation first.
I'm slightly familiar with itin that I've read about it, but
I can't say I'm an expert in anyway.
Patrick Grimes (04:31):
Yeah, anytime you're thinking to yourself hey,
look, I want to be in this Vreal estate, which is just a
steady state, is the legalindustry?
Or healthcare, education,things that don't rely on market
fundamentals that are affectedby swings?
(04:54):
People still need reskillingand upskilling and downturns.
They need healthcare and thenin the legal industry, it turns
out that people really needlawyers in really good times
right, big boobs.
Bad times, they get verylitigious and they really need
lawyers.
You look at our graphs on ourwebsite to look at the dollar,
look at gold, look at oil andgas, look at real estate, look
at the S&P just go on wild rides.
(05:15):
And then things like legal,especially legal and healthcare
they're just straight as anarrow.
I'll come to the right.
When you want to get exposureto an industry like that,
because you want to be able toinvest in something that builds
resilience in your portfolionon-correlated allocation you're
thinking more like hey, this iswhat the private equity, this
is what the hedge funds, this iswhat the sovereign funds,
people that are interested inreturns over lifetimes,
(05:39):
resilient returns and portfolioallocation how are you going to
get access to that?
So, within the legal industryand portfolio allocation, how
are you going to get access tothat.
So within the legal industryit's actually not that complex.
It's not like the airlineindustry where there's a
thousand parts, a million partsin a plane and there's all these
different suppliers and allthese different vendors.
The legal industry it'srepresentation.
There's hourly rates, there'scourt fees, there's filing fees,
(06:01):
there's expert witness fees,but it's just essentially people
representing.
And then you've got to figureout what are their needs.
And it turns out that there's alarge part of the legal industry
that works under contingencyfee and that's not pro bono,
because it's not that they'regoing at it saying, hey, mr, I
see that you were harmed.
These are attorneys saying, hey, look, there has been some harm
(06:25):
done, usually on a mass scale,and there's a big bad Goliath
out there.
Some of those are sometimes aDOJ, like Camp Lejeune when they
fed contaminated water at theMarine base for 17 years.
And we've got a couple thousandof those people that were
collateralizing in our fundhelping attorneys support them,
(06:47):
fund helping attorneys supportthem.
Or hundreds of farmers orlandscapers that were affected
by paraquat, a bunch of sexualassault victims, just when a
case against the LA JuvenileDetention Center you can Google
that billions of dollarshorrible mistreated our young.
I'm a Southern California guy,so before we get into Hawaii,
and so you can invest in theseattorneys and you can support
their ability to bring onindividuals that were harmed in
(07:08):
a similar way to the casesthey're working on.
You can support their cost, themarket and you can support
their operating costs to getthose cases to the finish line,
to settlement, and then you canparticipate in the proceeds of
the settlement that comes backfrom those.
So who creates?
Ed Mathews (07:23):
that marketplace.
Patrick Grimes (07:24):
You know what it's like.
Who created the real estatedebt marketplace?
Because we have a real estatedebt fund and operators in the
real estate industry.
They come to us and they saylook, I either want to buy a
property or I want to improve aproperty.
Can I get capital to acquire orcapex to improve a building so
that I can provide housing totenants?
These attorneys are sayingwhere is it created?
(07:46):
I guess fundamentally it'screated by a bunch of evil.
That's happened.
Third-party litigation financestarted in America in 1910.
That was the big Hallmark casewhen all these people were
walking around smokingcigarettes and then they
realized I think Americantobacco, they might be lying to
us.
I don't think these areactually healthy because we're
all dying from every illnesses.
And that was a big hallmarkcase and they went against
(08:08):
American tobacco.
So maybe that's where it'screated.
But when you have thousands ortens of thousands of people
going against a big bad Goliath,then these attorneys are saying
, look, this is a really goodcase.
They run it on their owndiamond nickel to get it into
the courts and get the expertwitnesses and the testimony out
there, and they're nearingsettlement.
They're nearing the finish line.
They're like look, hey, patrickand Dave, my partner.
(08:30):
If we just had another millionor $5 million, we could find
another thousand or 5,000 peoplethat were similarly harmed.
It would make this even moredangerous.
It would try and get us acrossthe finish line.
Or we need to save anothermillion or 5 million to get this
to settlement.
And here are the terms right.
And so it's really hisattorneys saying look, we need
(08:52):
to find some kind of investorthat will help us provide this
access to justice for those thatotherwise wouldn't be able to
afford it.
Ed Mathews (08:59):
Yep, so are you taking a piece like almost an
equity stake in the attorney'sfees that they're?
I would imagine that if they,when they win or they settle
that they're taking 20, 30, 40,whatever percent of the overall
judgment and then do you take apercentage of that or is it more
(09:19):
?
You had mentioned a debt fundearlier, and so I'm curious is
it more of a debt relationshipor a mix of both, or something
else?
Patrick Grimes (09:27):
A little bit of a hybrid.
Every kind of litigationfinance company is different.
I don't think any are the sameand just like in real estate,
it's like saying, oh, you're inreal estate, then there's a
million ways to supportattorneys in this process and
there's people doing reallyspeculative things early on.
I don't do that.
People doing very late staged,near the finish line, that's
more ush.
People doing class action orbig commercial fights, which is
(09:51):
big company.
I guess company weren't doingthat Late stage where there's
thousands of individual harmclaimants, gets one Goliath Not
class action but mass tort orsingle event where it's sexual
assault claims and stuff.
In that particular case thoseattorneys are saying, hey, look,
here's the value of our assets.
And just like in real estate,where you can get an appraiser
(10:12):
to value your apartmentbuildings, you can get a law
firm valuation specialist toevaluate a law firm's docket of
clients, confirm their clients'medical records, confirm their
exposure and put a value orevaluate to see if it's all
there and then we can say okayon that value.
Just like in real estate, wecan do a loan to value and
sometimes we'll call it a loan,sometimes we'll call it a
(10:33):
prepaid forward contract.
That's better because it comesback as capital gains and then
you can put a lien against it,just like how we have a deed but
you put a financing agreementand, unlike in real estate, how
it's just principal and interest, it tends to be that there is a
waterfall approach with theseattorneys Got it, the attorneys,
their fees, usually, as yousaid, 20, 30, 40%, and then,
(10:56):
before they get anything, wetend to get made whole plus some
and then, as the caseoutperforms, we have a waterfall
coming back to us based on theproceeds Gotcha.
Ed Mathews (11:07):
And this is a longer term play right.
I know you're getting in latestage, but my experience with
some of this litigation is thatsome of it is paid over time,
Some of it actually getsappealed and there's no money
exchanged until the appellateprocess plays out.
How does that work in thisscenario?
Patrick Grimes (11:27):
Yeah, again, every company is different in
how they're approaching it, andespecially the ones that are
large, big commercial companyafter commercial company, those
can get appealed forever.
We tend to be ones that incases where they've been baking,
like in the case of CampLejeune, that harm was done for
15 years, it's been going on forfive years in the courts and
(11:48):
there was already a law passedproviding a settlement, grant,
saying, based on your condition,here's what, and your time
exposed, here's your settlement.
And so that's very different,right, because it's super easy
to underwrite the value.
Or, in the case of Roundup,they've already been lots of
settlements On a case of sexualassault.
There's case law to show whatthose settlements are worth.
Right, we tend to be engagingOnce it's through the courts.
(12:12):
They've done their discovery,they found some kind of
misconduct or coverup, they'llmove by the defendant.
They're already negotiatingsettlements or there's already a
case law to suggest, so we canunderwrite it.
So we're at a point where, yeah, probably been going on at
least seven years, in some casesmaybe 10.
But we're jumping on the bustowards the finish line and that
(12:33):
doesn't mean we're getting 10xreturns, and that doesn't mean
we're getting 10x returns.
Now, if you jump on the busreally early for an angel round
or a venture round for a company, you get 100x returns.
You jump on with an oil and gasinvestor early on you can get
100x or lose it.
Our game is really just beforesettlement.
How can we engage so that we'rein maybe two years, three years
(12:56):
out on the outside, four andfive through a diversified fund?
Settlements over a five-yearperiod is our target and mostly
middle loaded, where the backend is just a few things
squeaking through, and that'sreally where we intend to try
and get on the bus.
Ed Mathews (13:10):
Okay, great.
And who is your typicalinvestor?
You mentioned sovereign fundsand institutional players.
Are they your clients as well?
Are you operating in paralleland it's more guys like Ed who's
looking to get out of?
I'm an accredited investor andI'm looking to get out of a
portion of my portfolio andlooking to exchange either 1031
(13:33):
exchange in, if that's possible,which I want to talk about, or
take the tax hit and move itover to this type of asset class
just to diversify my ownportfolio.
So I'm curious who is theperson who's picking up the
phone and calling you typicallyand I know it depends, but I'm
just curious.
Patrick Grimes (13:52):
That's a really good question, because what was
it?
Four or five years ago I wastalking to my partner, david
Guzman, amongst others hey, Iwanna get exposure to litigation
finance, I wanna get into legalfunding, I wanna invest in the
legal industry, and the checksizes they were looking for were
minimum 20 million.
Dennis Shapiro wrote theAlternative Investing Almanac.
Me and him were inconversations at one point
(14:12):
trying to get a legal fundtogether, and we couldn't find
attorneys that would play at ourlevel in the millions, and so
it tends to be a very well-knownasset class at the
institutional level.
The private equity levelcoveted for its non-correlation
and what we call inefficiency,meaning outsized returns for
lower risk.
It's an inefficient market, butthere was nothing open to
(14:35):
accredited investors we couldfind.
And so when my now partner,dave, hung up his hat in private
equity and moved from New Yorkto California and said, hey,
patrick, let's do it, let's setup an accredited investor fund,
there's a niche part of thiswhere there are some attorneys
that only want 10 millionminimums to 50 million minimums,
but then there's a market forthese attorneys that are
(14:57):
overlooked, that can do 500, 1million, 2 million check sizes.
Let's go after that.
By the way.
I've been in the industry 15years, I know these guys.
Let's open it up to accreditedinvestors, which is what I've
been asking for.
I've been working at, I've beentrying to get my way in for a
long time, and so this is thefirst one we know of that allows
for access to these kinds ofinstitutions, or our specific
(15:21):
late-staged combination ofsingle event and mass tort
exposure and returns.
We're the only one we know ofthat.
Just be yourself, ed, a hundredthousand minimum investor, kind
of nervous right now.
They call us typically hey look,man, I'm in the stock market.
We just got done with the Fedrate hike 11 out of less.
We also have a trade war goingon that could cause a bust, but
(15:42):
we also have two proxy wars andwe just bombed Iran Well, and
are debts spiraling out ofcontrol, with the world's
biggest economies, the BRICSnations, betting against the
dollar?
The engineer in me is sayingbasically, it always makes sense
to diversify intorecession-resilient,
non-correlated investments.
Two years ago was the best time, today is the next best time,
(16:03):
and so those are the people thatare calling.
I just want to add a littleslice of the pie, something else
.
Ed Mathews (16:08):
And you're not pushing all your chips to the
center of the table.
Can I peel off a few percentagepoints and get exposure to this
opportunity, among others thatare non-multifamily or whatever
asset class you're focused on?
Yeah, no, it makes a lot ofsense to me.
So, in terms of your thinkingin the market when you're
looking at these types of dealsyou fund, obviously what you
(16:34):
said really resonated with me.
A lot of this is much like realestate is relationship driven.
You've got probably a cadre ofattorneys and firms that you
work with over time, and theirpractices tend to focus on types
of litigation that align wellwith the types of cases that
you're willing to fund as well.
I'm curious about that wholeprocess from a marketing
(16:57):
perspective.
Is this simplyrelationship-based or are you
looking to grow that sphere ofinfluence in terms of the
attorneys that you work with?
Are you in growth mode?
Where are you in terms of yourmaturation cycle?
Patrick Grimes (17:11):
Yeah, when Dave and I set up shop, we kept a lot
of our own money in the fundand started building up what we
setting up shop as a kind of asmall balance legal funder
Exactly and that really pickedup steam.
And now we're to the pointwhere we have huge demand beyond
the capital that we have raised, which is good, and so now we
(17:32):
get to really open up our salesand start to see some great
growth.
There are sequential funds,though you know 100 investors
per fund is how we do it.
I made it on the filings, whichis good, because then you can
get on the bus and you'll startseeing returns back and we'll
close that one down sooner.
(17:57):
Well, my partner, david.
He started back when I losteverything in 2009 and 10.
He was actually with theagencies and he was fighting the
whole street for fraud and hespent, through the subprime
mortgage collapse, about threequarters of a billion dollars,
collecting 20 billion dollarsfor the benefit of the taxpayer
in litigation funding, literallygoing against the fraud that
happened, basically against theentire street of lenders at that
time, and so his experience inlitigation finance started then
(18:18):
and since then he's made it acore focus of his.
So through that process he madea lot of relationships and it's
not dissimilar for real estate.
It's a relationship, especiallythe good deals and the people
you want to work with, that youhave a long trust with and it's
the same in our debt fund mypartner Lance 15 years in debt.
We've both had our trials andtribulations through the
(18:40):
subprimaries collapse andvirtually almost everything
we've originated has beenthrough a relationship in that
fund as well.
So I think it's the best way.
Ed Mathews (18:48):
Couldn't agree more because it it pre-vetted and you
know what you're getting intobecause there's a working
relationship there.
You don't have to go through arigorous underwriting process,
but there are a couple of boxeschecked already when you go into
that process.
If you and I have been doingthis for a period of time and
there's a level of understandingand comfort and expectations
(19:11):
and all that, I agree.
Okay.
So I would like to get into thefinal five, if that's okay with
you.
Yeah, no problem, and so it is.
I'm always interested in howleaders like yourself, how they
think, how they approach theirdays, their weeks, their
business and other things.
So let's start with Mondaymornings.
Obviously, you've done verywell.
(19:31):
You and I are having aconversation.
I'm in Connecticut, you're inHawaii.
Connecticut's nice, butHawaii's nicer.
So hats off to you.
And when you reach a certainlevel in terms of your net worth
and career development and allthat, the mortgages are paid,
the kids are cared of, thefamilies are taken care of.
Nevertheless, you get out ofbed on Monday morning and you go
(19:52):
to work, and so I'm curious.
I look at that as purpose,right, and so I'm curious in
terms of what gets you out ofbed on Monday morning.
What's your?
Patrick Grimes (20:01):
purpose.
So, first of all, every morningI wake up and I go on a run or
I'll go to the gym, and I'malways listening to some kind of
audio book, ted talk,educational series or something
that's like my meditative startof the day.
So I'm up usually before thesun rises and I'm running along
the beach here, but immediatelyafter that, on Monday mornings,
I get to spend it with my twoand a half year old.
(20:21):
Once he wakes up, I get him inthe mornings, which is a key
part of my day.
Specifically on Mondays, I gethim for an hour or two and then
my wife joins us and we get togo to his keiki, which is kids
keiki kicks, which is his soccerleague that he's in, and I love
it.
It's just a lot of fun.
Sometimes he gets a littlenervous and I got to hold his
(20:42):
hand running around the field,but that's the way to start your
Monday right.
That's how it happens.
That's how it happens.
Ed Mathews (20:47):
Yeah, that would get me out of bed, no problem at
all.
I tell people who have littlekids so mine, my girls are 22
and eight going on 18.
So I've already had thatexperience of the toddlers.
It's the best thing you'll everdo and I'm so happy for you
that you get to do it.
I'm always interested inmentorship and we don't get
(21:07):
where we've gotten without helpand I fundamentally believe that
A lot of that help is justadvice, right, but somebody who
takes a liking to you and throwsan arm around you and says, hey
, look, you really need to bethinking about this and this, or
asking that real poignantquestion, that kind of stops you
and makes you think about am Igoing down the right path?
So I'm curious, in yourexperience, what's the best
advice you ever got and who gaveit to you?
(21:27):
So I'm curious in yourexperience, what's the best
advice you ever got and who gaveit to you?
Patrick Grimes (21:30):
There's probably 20 different things I can say
over time from my grad schoolteachers, master's in
engineering and business, but Iwould probably go back to what
really triggered me into Alts.
Because that co-founder thatmachine design firm that I
worked for, I was smart, I wasdoing well, I was working, I was
(21:50):
growing quick, and he put hisarm around me, essentially
proverbially, and said look,don't put everything in high
tech.
If you want the future for yourfinancial future, for yourself
and your family, make your highmoney in high tech and dump it
in an alternative.
And that was such a cool thingbecause I at that time and for
the next 10, 15 years that I wasstill working at places like
(22:12):
Facebook and Google and Lockheedand Raytheon and Tesla and
doing really cool stuff likeablation catheters and heart
valves and the rotating part ofTesla's motor and Lockheed solar
satellite.
I was working with some of thesmartest people in the world and
why I have my platform now isto educate them on the fact that
we all knew the 50 stocks.
Nobody knew the 50 alternativesthat you can invest in, and I
(22:34):
would have never had that kindof awakening not a moment to
even approach that space hadthat advice not been given to me
.
Ed Mathews (22:42):
And at a young age too.
So that's wonderful.
I fundamentally believe that welearn more from our mistakes
than we do from our successes,and so I'm curious about a
professional mistake or maybeeven just a decision that you
made in the past that you lookback and you go man, I would
love to have that decision back.
So I'm curious about aparticular decision that kind of
(23:04):
sticks out that you look backat and think I would love to
redo that.
And how did you recover?
How did you move forward afterthat?
Patrick Grimes (23:12):
So early on I was on top of the world.
I mean, I went through school,did well, won competitions in
design, got a really goodmachine design job.
Right out of college I figured,man, I can do anything.
I didn't seek out the rightkind of partners early.
I didn't seek out, do anything.
I didn't seek out the rightkind of partners early.
I didn't seek out ones that hadenough immersive in their space
(23:34):
for enough cycles andunfortunately that led to a
couple failures.
I was going to do it all myselfand not use help.
I did not partner up.
I lost everything in 2009 and 10, right.
And then the second time I didit.
I was in single family and Iwas doing well.
I got my master's inengineering, mba and I found my
way back to recession.
(23:54):
Resilient investments, houstonbased.
I was in California, buying inHouston and I was doing really
well.
But I got caught in that guruDIY trap.
This time it was a DIY trapmeant I was just trading my time
away from my family, friendsand hobbies because I wasn't
learning how to partner, Iwasn't building something to
scale, and so, while I was verysuccessful, I didn't lose all my
(24:16):
money, but I lost my life thattime, and it wasn't until I took
a break, married my wife andsaid I'm not going to go do that
.
I'm going to learn how topartner that I.
I actually found a balance, anability to scale.
Ed Mathews (24:31):
And I'll tell you, time freedom, as you experience
every Monday morning when you gooff with your two-year-old and
give your wife a break to dowhatever she's doing in that
time that is what I've learnedis probably one of, if not the
most valuable thing you get fromstarting a business like the
ones that you and I run.
It's a gift, there's no otherway to describe it.
Agreed business like the onesthat you and I run it's a gift,
there's no other way to describeit Agreed.
(24:54):
So I'm also curious.
I think I saw you with yourphone and Audible, and so I'm
curious about you know that bookthat you're focused on, if
there is one, and I'm alsocurious about who you're paying
attention to these days, yeah.
Patrick Grimes (25:02):
So when you said hey, like I'm gonna ask you
about your favorite book, I wasscrolling through like the yeah,
I've been an Audible subscribersince college, when it wasn't
Amazon back when it was oldschool Audible, and I'm just
looking for hundreds of booksand I'm rereading books.
I think that sort of.
One of the coolest books thatwas recommended to me recently
was why we Sleep, and it's avery humbling book because it
changed just about everything.
(25:24):
Your success, your happiness,how healthy you are, how long
you live are all directlycorrelated to one thing that's
entirely near control and that'ssleep.
And I just it's been veryhumbling, right, because that's
the one thing that I had chosento sacrifice many times
throughout my life and to theextent where I just got a whoop
(25:46):
watch.
And this whoop watch it's not aa watch, it's a whoop band, but
it has a immense amount ofhealth tracking, raids my sleeps
and a bunch of categories,shows the cycles, tells me my
recovery strain, and it hasallowed me to really respect
sleep and build health, and itactually gives you an age that
you're aging at to really cometo grips with how healthy I'm
being, and I think that thosetwo things changed my life over
(26:09):
the last year, fascinating whywe and the whoop W-H-O-O-P band
yeah.
Ed Mathews (26:16):
That I've heard of the book.
I hadn't that just made myaudible list as well.
Patrick Grimes (26:19):
Your mind's going to be blown.
Ed Mathews (26:20):
I guarantee it.
I'm curious, though, because itchanges my experience in
interviewing lots of leaders,both from the real estate space,
other assets like you and myrelationships in the tech world.
Success changes the definitionas you progress through that
journey.
I'm curious sitting where yousit today, how are you defining
success in your life?
Patrick Grimes (26:41):
And our mission and our company all comes down
to, so that you have the timewith your friends, family and
hobbies and for the causes youcare about most in this world.
The resources isn't justfinancial right, it's your
energy and your time.
And so I really think that whenI pivoted from the W-2 to a
contractor which allowed me tospend more time with my wife,
(27:02):
allowed me to partner up andscale after we got married, that
was a big pivot.
And then when I left thatcontracting role for full-time
investments and I was more incontrol over my time and
location, then when my wife cameout and said, hey, I don't like
Bird Bank anymore, she justfeatured LinkedIn, animated
films there and that Glendale'sDisney and DreamWorks and why
don't we move to Hawaii?
(27:23):
We were remote, so I was ableto just flip the switch and go
to Hawaii.
We were remote, so I was ableto just flip the switch and go.
And I think that the ability toset my life up for time and
location freedom createdhappiness, even without immense
financial freedom.
It created time and resources.
And then financial freedom, ofcourse, to finance is an
important part and, as I'verealized before, if you don't do
(27:43):
that right, maybe you haveindependence, but if it's in one
market and one industry, it'llcollapse.
So we talk more about financialsecurity across allocations of
the non-correlated alternativesthat allow for more resilience,
because I've seen it disappear.
I've seen it.
That's what we talk about.
Ed Mathews (27:59):
Yeah, and it's interesting.
You talk about time freedom andI'm going back to being a dad
and you only get 18 summers withthem.
I can tell you, because I'mexperiencing it literally as we
speak, at about 18, 19 years oldthey still love you, but they
don't want to hang out with you.
They want to go hang out withtheir friends and explore the
world and eventually go off tocollege and become a young adult
(28:21):
and a full-blown adult.
You look back like I look backon my kids in the time that
we've spent together.
I've been full time since 2018.
So all of their adolescence andteenage years, I was around and
I wouldn't trade that foranything.
Nothing could ever make metrade that, and I'm happy.
(28:42):
That is your experience as well.
You started way earlier than Idid, so hats off to you on that.
Happy, that is your experienceas well.
You started way earlier than Idid, so hats off to you on that.
So, patrick, you've built atremendous set of businesses and
I'm really happy for youCongratulations.
But I'm curious when you're nottalking about this stuff, right
, asset classes and real estateand all the other things that
we've been talking about, whatdo you like to do for-?
Patrick Grimes (29:04):
Yeah, but when Kelly makes you stronger.
So I and I've actually wantedto talk about this for a while
because I actually I'm anadventure enthusiast.
I've traveled through.
He was almost 30 countries, thebase camp of everest whitewater
.
After the grand canyon, fujishasta, it's mount cyanide,
three sacred mountains in china.
14 years in colorado, been onthe john mirir Trail for 24 days
(29:27):
.
I'm like an outdoorsy nut andhere on the island I'm picking
up kites.
It's challenging.
I'm really good at the board.
It's tough to do at the sametime.
I've been doing somespearfishing here and there, but
daily I'm out in nature, I'mrunning and love swimming and do
some surfing.
There's about 500 surfers righthere on the surfing, one wave
and all at the same time atWaikiki Beach.
(29:48):
So that's a little battedsometimes, but I love getting
out there and I love just beingwith nature and I was raised
that way.
I grew up near YosemiteNational Park and I went to
Yosemite High School and I wassailing and skiing, water,
snowboarding it was all thatstuff.
Ed Mathews (30:04):
Awesome.
So if people want to learn moreabout you or your business,
what's the best way to get intouch?
Patrick Grimes (30:10):
A lot of people are listening to this.
They can look.
I would love to learn aboutwhat investments I can carve out
a slice of the pie of my wealthand how do you get
non-correlated things and buildsecurity, true diversity.
And I have thisinvestwithpatrick.
com as a PDF that lists myfavorite alternatives, because
people are always asking me.
I host a series on the PassiveInvesting Mastery series,
(30:33):
talking about alternatives,which you can go to our website.
But that download provides thatand you can just read the list
or you can go further back andread about the ones you're
interested in.
So investwithpatrick.
com is one.
I also have a book that I'dlove to offer.
You guys want to go topassiveinvestingmastery.
com.
It's all spelled outpassiveinvestingmastery.
com/ book and it's lessons fromthought leaders.
(30:58):
I tell my whole story aboutlosing it all and getting a
high-tech master's and doingsingle family and losing my time
and then learning how to tradeup to larger, diverse,
non-correlated alternatives.
But there's some other peoplein here too.
I did my own.
It was a bestseller, butthere's, like Phil Collins, lead
guitarist at Def Leppard,fascinating.
There's Brian Tracy, dennisWaitley, tom Ziegler Some really
(31:21):
fascinating people.
This is a really fun bookLessons from Thought Leaders.
But if you don't put the nameof this podcast in the form,
we're not going to send you acopy, but you can download a PDF
or you can.
As long as you put the name ofthis podcast in the form so we
know where you came from and nota random, we'll sign it and
send it out to you.
But we also have on our websiteto really set up a call.
So, regardless of where you'reat and your investing journey,
(31:44):
part of what I love to do isjust chat with investors and
jump on a call and maybe we'llget you pointed at some
alternatives that fit your,whether it's with our offerings
or not.
We have about 50 we've doveinto in our alternative
investing mastery series whichyou can register for and we'll
get you pointed in the rightdirection.
Ed Mathews (32:00):
Awesome.
Patrick Grimes, thank you somuch for spending some time with
us, especially from paradise.
I wish you continued successand once again, thank you for
your time today,
Patrick Grimes (32:09):
glad to be here.
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