Real Estate Reserve Podcast

Transcript

Ian Horowitz:

While we’re in sweatshirts here on the East Coast, why don’t we bring in our guest from sunny Honolulu. Patrick, what’s up, brother? How you doing?

Patrick Grimes:

Hey, glad to be here guys. And do a lot of cool stuff just like me, so I’m sure this is going to be a fun conversation.

Ian Horowitz:

Yeah. Real quick, the only thing we care about is, do you have to own a sweatshirt living in Honolulu? Because I’m about sick and tired of the cold out here.

Patrick Grimes:

No, no, you don’t. And even our jackets are light windbreakerish and even this colored shirt ends here just above my elbow.

Ian Horowitz:

All right. Well, thank you for rubbing it in, but I set myself up for failure. Patrick, why don’t you do this? Why don’t you give us a quick intro and then we’ll hop into what you do.

Patrick Grimes:

Yeah. So Patrick, Founder of Passive Investing Mastery. I was, like many of your listeners, a successful high paid professional out there doing really cool work. I got a master’s in engineering and a bachelor’s in engineering and an MBA, and I was doing automation robotics and loving it. But realized early on that it really wasn’t the only thing and felt the volatility of high tech and the markets having lived through the subprime mortgage collapse and dot-com bust and all that. So knew that, as you were saying earlier, building yourself like a family office, looking towards those who are succeeding, where are they investing? How are they investing? And they’re not all in one thing. They’re not all in on one market cycle. And so built our platform around introducing people to those lesser known alternatives and sponsoring investments to help build out more true security in their portfolios.

Jason Balin:

What were some early on investments that you got into? And did you self-fund those investments? Did you bring in capital investors to help you raise them? I’m curious about early on some of the stuff that got you involved.

Patrick Grimes:

Well, involved in real estate or just-

Jason Balin:

No, any asset class, any asset class.

Patrick Grimes:

Yeah. So I mean, I was involved in the stock market early in my career as a snot-nosed engineer. And I felt that the pains, like I said, through the dot-com boom. I invested in real estate back before 2009 and ’10 before the subprime mortgage collapsed. And I did that primarily with my own money. And I was trying to… I figured, hey, I’m a successful engineer. I can also be a successful real estate investor. That’s probably going to be a cinch. And so my first foray was pre-development, which turns out to be quite a bit more speculative than I thought and struggled through that, especially in the subprime mortgage collapse.

Ian Horowitz:

Yeah, no, I mean, I think that’s a pretty standard trajectory that people take to get into investing. Why? Because Wall Street is the biggest institution that’s out there and they’re like, “Oh, well, take your money, you’re working. Whether you’re in a high paying job or a low paying job, you got to put money in your 401k or your deferred comp or whatever plan you got set up.” That’s where everybody steps into investing.

Now, you highlighted some bumps and bruises you had there in a little bit of a time period from the dot-com bubble. I guess that was ’99, ’01, somewhere in there. Then you talk about ’08, you got kind of beat up again there. Do you think it was just being a young entrepreneur thinking that you knew it? If you look back on it today, what telltale signs would you say, “Okay, if I saw this again, how can I learn from that?”

Patrick Grimes:

Yeah, so I mean, I didn’t quite understand leverage back then. Everybody’s saying invest as much as you can, as soon as you can, real estate will never go down. I was a little bit naive. I didn’t zoom out far enough into looking at stability of markets, volatility of markets specifically in real estate, and that it’s on a cycle, 10, 15 year cycle. And I just happened to hit the wrong side of that. And had I been a bit smarter, I probably would’ve diversified sooner.

I didn’t quite understand cashflow. It wasn’t until later on that I really got introduced to the purple book Cashflow Quadrant. And then subsequent to that, I started buying things that are existing assets, less speculative, that can support themselves, stand themselves up. And most importantly, looking to diversify, not trying to put all your eggs in one basket, especially in one market, which was ultimately my goal.

And it’s become a bit of a life mission for me at this point is constantly working towards that true financial security, not just independence because I’m cash flowing in a property or two or even a dozen, but security because I’m cash flowing from a dozen different, completely fundamentally different asset classes.

Jason Balin:

Yeah. Yeah, no, it makes sense. And one thing that I hear and I see all the time is, when’s the right time to get into passive investments compared to… Because a lot of times you need your own cash in order to get passive investments. And I might be slightly wrong with that on some instances, but a lot of folks, a lot of real estate investors, we know they have active investments and they make money. They wholesale properties, they flip houses, they own rental properties, and all of that stuff’s hard work.

And they make good cashflow in general, but they’re scared to take chips off the table and put it into a passive investment. What I would call a passive investment where it’s like, “Hey, take a few hundred, whatever, take $100,000, put it here through a syndication or through a promissory note or through something, even a stock pick, whatever it is, and have that money working for you.” When do you think is kind of the good time to do that compared to more active/leverage types of assets? Because it’s like, well, if I have $100,000, why would I just put it over into this asset that spits me out 1,000 bucks a month when I could take that $100,000 and I could actively flip four houses and put $25,000 in each and get a loan to do the rest. I can turn that 100,000 into another 100,000 in a year. I can’t do that in a passive investment. What are your opinions or advice for someone that’s in that situation?

Patrick Grimes:

Well, I mean, it’s really tough out there because just like I was really successful in engineering, I thought, “Hey, I can be the master of other things too.” And it’s hard to give away control of your funds to somebody else and say, “Hey, can you help invest this?” And sort of ego admit, “Hey, I think that you potentially have better experience than me and could contribute in a more efficient way to this.”

And so it’s like there’s a challenge of learning to trust and learning to partner. A lot of people just never have the ability in their investing world to learn. On the contrary, they passively invest their 401k all the time because it’s defacto okay to give it to a financial planner and they’re not involved in any decisions or have no knowledge about what’s going on behind the scenes in any of those fundamental companies.

And they’ve learned to partner through going to college, doing group assignments and then going to work where you’re cross-functionally working with… you’re required to cross-associate work with a bunch of professionals because you joined the company because you know it’s important to have a large team of diversified talents and personalities very good at what they do to have an efficiently operating business.

And so the challenge people come is like, when, what day do you start looking at your investment portfolio like what it is? It’s a business. It’s productive funds for the purpose of growth and stability. And so if you think about your investment portfolio the same way that you think about just your daily job, how you operate, you collaborate, you’ll be drawn towards learning to partner, learning to collaborate, learning to work with others, which ultimately results in some passive way. And there’s really three reasons, and I don’t want to talk for too long, but there’s really three things, reasons why it ultimately results in becoming passive.

Ian Horowitz:

Yeah. No, I mean, that definitely makes sense. And obviously the point of the podcast is to let you talk, let’s hear it. What are those reasons? We definitely want to hear that.

Patrick Grimes:

Well, so I think the first thing that commonly happens, and I’ve tripped up on all these, is people get caught in the guru trap, or they just like, “Hey, look, I’m going to sign up for this guru and it’s going to be in this one thing and pay some fee and promise of financial security.” And they end up in, if they are one of the… Even the high ticket 20, 40,000 dollar programs, 95% of those people wash out, right? They don’t actually perform. It’s because it’s a personality or it’s just a sham kind of.

And so those Guru programs don’t necessarily produce, but even if you are one of the very few that succeed, you end up highly indexed and over-allocated doing it all yourself in one asset class. And so I call the second thing is the DIY trap. So even if you fight through and you’re one of the few that has an entrepreneurial mindset that could be a professional in one area and also succeed at another, and you get through and you’re like that 5%, now you’re all in, maybe like I was, high tech and then just real estate.

But what happens? Real estate goes for a ride, high tech goes for a ride, right? Now you don’t have security. You have maybe independence from your lawyer, your doctor, whatever it is, your day job, but you don’t have security because this thing you’re all in on, it rides a cyclic market too. And so that DIY trap, like I have to be in control, never gets you there true financial security with a quality of life. And so just like I found myself prior trying to grow my portfolio, moonlighting it at night and working by day as an engineer, I traded time away from my family, friends and hobbies. And so the only way to build true resilience, the only way to build true security is to become invested and exposed to lots of different industries. Ones that don’t have the same underlying correlated market drivers.

And so what are those? I mean, sure, stock market’s one and real estate’s one. Well, what about energy? What about medical? What about the legal industry? What about CPA firms or plumbers? These are markets, these are industries that fundamentally aren’t driven together, the underlying fundamentals don’t rise and fall. So the third thing is you have to partner. Nobody can be a master of all these. Nobody can spend 10 lifetimes becoming a master in 10 completely fundamentally different industries without learning to partner. The only path to security is through some aspect of paths of investing.

Jason Balin:

Yeah. No, I mean, it’s hard to know how to do everything. And even if you know how to do everything, you don’t have all the time in the day to be able to invest in every asset, you need that. And maybe that goes back to the question earlier related to like, that’s the leverage. It’s not necessarily leveraging money, you’re leveraging people to help you do these other deals. So even if it’s an active type of business where it’s not active for you, you’re just using leverage with having other people run that, which helps you make a return. All right, so I got to know what litigation funding investments means. Let’s talk about that type of… Is that an asset class? Is that the way to state it? What type of investment is that?

Patrick Grimes:

Yeah, it’s an asset class. And so I mean, we do litigation funding, but back up to what is litigation funding overall? It’s when a third party comes in and supports somebody going through litigation. It could be that person that’s defending themself from a lawsuit, or it could be that plaintiff, somebody made a complaint or claimant, somebody’s saying they’re owed a claim against the defendant. And somebody’s that third party that steps and says, “Hey, I’ll help fund you.” That’s litigation finance. And it’s when those two can’t agree on something and so they decide to resolve that dispute through the legal system, that’s what litigation is.

So in America, the first big litigation funding… Kind of like what really set the stage for litigation funding in America was in 1910, although it’s been thousands of years and it goes back to lords of lands and when they would support their peasants that are living to protect their borders and stuff. But in 1910, it was big American tobacco that was out there peddling cigarettes saying that they’re healthy and there was a bunch of harmed individuals, these individuals whom were dying horrific deaths, cancer.

And they started realizing that, “Hey, look, actually I think they’re lying to us. I don’t think these are fundamentally healthy,” but how could you ever go up against American tobacco? Well, it took third party funders to step in and say, “Look, I think these harmed individuals that otherwise wouldn’t have access to justice here have the right case and I think we should hold this evil organization accountable and responsible.” And so they stepped in and funded these plaintiffs, these people that are making a complaint, stating a claim that they were wrong and settled in billions of dollars and started making change, true change towards making our country a safer place.

Similar cases like that today are the ones that we’re involved in. We just won a big one, sexual assault case with the LA Juvenile Detention Center where they abused thousands of individuals over decades and didn’t take the necessary steps to protect our youth. There was a $2 billion or $4 billion settlement that just was announced that last year. Camp Lejeune, our country didn’t protect our soldiers, or the marine at a marine base in Camp Lejeune, and they drink contaminated water for 17 years. And now they’re civilians, their families, military veterans are dying of these horrific diseases.

There’s an attorney where we’re funding an attorney who’s representing 2,000 of these guys and they’re all looking at getting somewhere between 100 and 400 plus thousand dollars settlements to help ease the pain of this lifelong terminal illness that they got through drinking contaminated water that they were drinking full knowledge of the DOJ.

So there’s a lot of cases like that out there where people just need somebody to step in. And in our case, we’re looking to provide access to justice through enabling attorneys to work under contingency, which means they’ll defer their fee until they win the case and we’ll invest in those attorneys, allowing them to be able to operate for free until settlement, not pro bono, but free until settlement, just like we do with real estate operators. We help real estate operators acquire properties and approve properties and we take a lien out, we help attorneys acquire clients and operating expenses to work for those clients to get to a settlement and we take a lien out against them.

Ian Horowitz:

Yeah, it makes sense today. I’m not going to lie, you’re talking and I’m going through your deck over here at the same time. We have a group of lawyers who invest with us and they do something similar, but they’re actually the attorneys. They do the securities type stuff. And if I’m reading some of your debt correctly that you guys are basically funding the attorneys to be able to reach out to the class action type lawsuits and then you guys are getting proceeds of their settlement that they’re getting for taking on the case contingent, right? I guess that’s kind of how it works.

Patrick Grimes:

Yeah. And in our specific case, we’re not doing class action, we’re doing single event or mass tort. It’s a little bit different, but absolutely. I think class action, maybe people have been involved and they got like $50, $80. The mass torts really produce meaningful change, meaningful results, and those tend to result in hundreds of thousands of dollars in settlements to the claimant. But everything else you said, yeah, that’s right.

Jason Balin:

And when you guys are doing this, are you creating some sort of fund or syndication where in essence you’re raising capital from investors that want to potentially invest in these class action lawsuits or however it’s set up?

Patrick Grimes:

Yeah. Just like we have a diversified pool of capital that we raise for originating loans in real estate or diversified capital where we purchase commercial real estate. We have a fund where we raise capital to, it’s called the diversified litigation portfolio where we originate many different investments with thousands of individual cases.

Jason Balin:

And it’s collateralized by the law firm and I’m trying to think what it’s collateralized by, I guess it’s guarantee of the law firm and whatever assets they have?

Patrick Grimes:

Yeah. So just like in a real estate deal where you put together a financing agreement and there’s a personal guarantee and there’s a piece of property that you put a lien against and the attorneys that have been around for a long time have a lot of skin in the game. You put the personal guarantee, you put the company backstopping it, and then you collateralize the specific contingency fee agreements that they have and we target mostly late staged cases that are near settlement where they’re looking for the capital so we can underwrite it. We have a good feeling of what those are settling for either with this law firm or similar cases. And so we have the ability to diversify a portfolio actually to clip a pretty significant return.

Ian Horowitz:

All right, I think I get that. You get it, Jason? I mean, it’s relatively simple. They’re securitizing from a business standpoint, UCC agreement or whatever it is. I’m more interested, how do you stumble on this? How are you even acquiring law firms or like, “Hey, man, sure, lend me some money.” Because I’m having trouble getting over that hump of deal flow and acquisition. Where does that even come from?

Patrick Grimes:

Yeah. I mean, a lot of the industries out there that are super efficient, like mortgage lending, right? There’s so many operators doing it and there’s such a supply that a lot of it’s really common and easy to get involved and so that most of the returns are priced out of it. I mean, that’s why single families are like 6, 7, 8%, right? But in other industries which are a little more boutique like the litigation fund or like medical receivables financing, financing doctors that we’re doing, those are industries that are less efficient. There isn’t large registries where you can go through and trade that paper, and a lot of it’s relationship based. So my partner has been working for 15 years doing litigation funding and he’s spent hundreds of millions of dollars collecting billions in litigation proceeds. And so through a decade and a half of being involved in the industry, it’s a lot of relationship-based communication and deals and you work with people that you know.

Jason Balin:

Yeah. No, I think it’s the same thing. It’s just what we’re not like, you know what I mean? If we were reversed and you jumped in my business, I jumped in your business, you don’t necessarily have the same relationships. It’s just a different type of asset class and it’s… No, it’s interesting. Definitely jumped out in my mind because I’d never heard of it before, but it certainly makes sense. What other fun non-traditional asset classes have you invested in?

Ian Horowitz:

What other fun funds do you have?

Patrick Grimes:

Well, so behind the scenes, we’re doing a lot of stuff. I mean, there’s a ton that we… And in fact, on my website, if you go to investwithpatrick.com, I actually have a download, which is my 10 favorite alternative investments that anybody can participate in to start building true financial security. And they’re right there, and I actually list them. And then if you skip ahead, you can dig in. I write a lot on each of them. And so there’s a lot of them out there, but specifically, I listed some of them before, but not just the stock market or real estate, but also oil and gas, legal and medical are the ones that I think all provide true non-correlated resilience. And right now we’re in the process of launching, which we’ve been working on for a long time behind the scenes, but finally making it available to investors, a medical fund.

The medical fund, like legal, I don’t know if I mentioned this earlier, but with legal, attorneys are busy at good times, when people get litigious, and bad times, they’re very busy. The medical, it’s just up and to the right. If you look at the industry, you’re going to see real estate, you’re going to see the stock market, gold, you’re going to see forex, you’re going to see oil and gas, volatile all over the place with industries that have recession resilience and non-correlation to broader markets like legal and medical, it’s just up and to the right.

So investing in financing doctors in the same way that we’re financing real estate operators and attorneys is another way to take your pie and take one slice of it and be like, “You know what? I’m going to allocate something here.” And then if the rest of it falls apart, the returns that come back from this slice won’t be correlated, won’t be driven or affected by the rest of my pie. And each time I do that, I sleep a little bit better at night.

But other industries besides that, CPA firms, now there’s some disruption there. So I caution people against CPA firms. And the reason why I caution people now is because it used to be that I was this Venn diagram of non-correlation ring and recession resilience ring. And I wanted those where each new investment would be non-correlated to the rest and I wanted it to be recession resilient.

But now I have a third ring I’ve been diagramming for the last few years and it’s been resilience to AI disruption because so many industries right now might vaporize very quickly. And I have big concerns about CPA firms at this time and their long-term resilience. But at the end of the day, people still need a place to live, one, people still need representation when they’re harmed, two, and people still need to go to physical places to get care when they’re injured, three. And so I’m looking specifically at those kinds of asset classes, which you can look 10, 20 years out and not see a clear path for them to find AI obsolescence.

Ian Horowitz:

Yeah. I mean, as a robotics engineer, I would assume that you are cognizant of what AI is going to do. And I would think number four, and this is a selfish question for Jason and I, and Jason doesn’t even know what’s about to come. But since we’re both big fans of Landman, and I watch all the shows, and you talked about oil and gas, and then you got all the stuff when we’re recording this, I think we just seized another ship, a Russian ghost ship of oil.

I don’t really understand all of it, but if you believe some of the stuff you see in Landman, that it might be true, that everything runs on oil and we need it out of the ground, but then there’s also this delta of like, hey, it can only be so cheap, otherwise it doesn’t make any sense. And you got the political realm of electric cars and whatever else is going on from a political standpoint, what’s your bullishness or non-bullishness in oil and gas? Because now that I watch Landman, every Facebook ad that I open is you need to invest in oil, you need to invest in oil. And I’m like, “Well, that show’s pretty cool. I got to do it. Sign me up.” And I’m like, “Oh, nevermind because I know it’s the riskiest business.” But Jerry Jones owns the Cowboys because of it. There’s a lot of rich people because of it. So I’m just kind of interested in your opinion on oil and gas, and I do see it’s one of your safe picks.

Patrick Grimes:

Well, I don’t want to say safe picks. In fact, I address the… If you’re talking about in my… Actually, I address the range of risk profiles from ones that are producing rights on royalties all the way through to wildcatting and somewhere in between working interests on proven developed sites. And I even go as far as to say you have to have the stomach for it because my family is… I mean, we’re pretty intimately aware my grandpa’s dad had oil fields and it’s not substantial and it’s not huge, but basically my parents or my grandparents and then my… I’ve been collecting oil royalties and we’ve seen it just go up over time and we’ve seen it vaporize and we’ve seen it go up over time. And now my mom is still collecting these and she just went up recently, so she’s actually…

And so it is a volatile industry. And I address that if you look at the charts in our decks, you’re going to see oil and gas go up and down. But the point is those ups are not correlated. They’re not timed with the other downs. And so the idea is that you net half win. If you place bets in your portfolio on different market cycles, you’ll net be ahead. And it’s not, but the more addressed you’re… I haven’t seen Landman. I’ll have to look that up. We don’t really watch TV in our household. However-

Ian Horowitz:

I don’t either, but Jason convinced me to watch it and it’s worth your time investment. I promise you.

Patrick Grimes:

Yeah, I’ll take a look at it, especially if I’m getting asked about it. I guess now I got to be relevant enough to answer questions. But whether or not you like oil and gas or you believe it’s necessary, this country is in an extraordinary energy crunch right now. And I think it was 2.5% of the country’s GDP is just in development of AI data centers. So if you literally subtract out the GDP contributed towards building AI data centers, and then you also subtract out the growth of GDP through government spending, we’re like sub 1% of GDP. So the majority of the country is actually propped up on the development of AI data centers.

And just a couple days ago, AMD said they’re on a yottaflop, a yottaflop. I mean, when I was a kid and an engineer, it’s not going to make any sense to you, but the advancements are like this, but also the extraordinary amount of energy required to run and cool those data centers is a major crisis. We had a crisis in it before in energy, now we’re talking about quadrupling the needs in a short number of years of energy in this country, and there’s no real clear path. There’s a bunch of scrambling to do so and there is a ton of disruptive technologies coming out, which I believe in and are going to work, but take time to adopt.

At the same time, AI could wipe out CPA firms in the next two to three or five years. If you look at the consultants that have… Large consultancy companies have stopped hiring junior CPAs. If you look at the numbers, but with energy, how many years are we out from obsolescence of oil and gas? And do we see the energy growing or declining? It’s declining at an exponential scale.

I don’t see oil and gas going away at all in the next 20, 30 years. There’s too much infrastructure and industry built around it right now. It’s going to be a generational gap necessary to actually make a dent. And if you’re looking for the next 5 to 10 years for an allocation, I don’t think you’re going to have any trouble finding a place in oil and gas. Now, it doesn’t mean it won’t necessarily perform all that time because there’s some volatility to it. But it does mean you’re probably going to have an allocation that while it may go up and down, it’s not going to go up and down at the same time the rest of your portfolio.

Ian Horowitz:

Yeah. And I think this is from your recommended investments, and you were talking about profiling oil and gas, I think I’m reading this right, in real time or this is mineral rights, but it’s similar type stuff where you’re talking about the risk moderation of oil and gas, correct?

Patrick Grimes:

Yeah. So if you’re doing producing mineral rights, I mean, it’s fairly low, but you’re only going to clip 8 to 10, maybe 12% returns in good years on the aggregate. But if you’re doing… I didn’t even list exploration on here because I don’t think people should invest in that. And that’s what most people think about, wildcatting when they think about… In every industry, there’s people out angel investing, venture investing, or wildcatting in oil and gas, or speculating in pre-development like I did in real estate. And then in every industry on the other end of the spectrum, there are people investing in producing existing assets. And so you can, in either side, in any industry, in our legal industry, we’re at late staged lawsuits. Been through the courts, case precedent, set, we see it clear, we can underwrite the outcome, we see it clear. In any industry, you can find that way in which you can invest in a much lower risk profile.

Ian Horowitz:

Yeah. Right, exactly. You like knowing the known, the expected outcome, giving up some higher rates of returns, but in exchange for that, a ton of security, which probably makes sense with your background of being an engineer and probably abundantly cautious, right?

Patrick Grimes:

Well, for the record, I have lost money in oil and gas investing for the tax benefits and working interest.

Ian Horowitz:

Sure.

Patrick Grimes:

And so I got really excited when I addressed that, I think, in that document. So I do think there’s a place in anybody’s portfolio for growth, but you can’t let that tax tail wag the dog. I’ve been there, done that.

Ian Horowitz:

Hey, man, I like the honesty. That’s all you can ask for. You win some, you lose some, but you’re always learning. And I think that’s something resilient that we’re seeing here and it’s coming through in everything that you’re talking about and the ability. I got one more question before we let you go. And Jason and I, so the way this podcast started is every morning we literally talk. I probably talk to Jason maybe more than I do my wife some days. And we’re not business partners, we’re just friends. We do a lot of deals together.

But something that’s come up recently is like I was telling him, I said, “I think I might be like a real estate generalist. I like all things real estate. I can understand lending. I can understand flipping. I can understand commercial. I understand all these different asset classes.” Kind of getting that similar viewpoint from you of like, “Hey, it’s all just capital that’s being allocated.”

I don’t want to call you a generalist because I don’t know if you find it as a compliment or disrespect. That’s not what I’m saying here. I guess what I’m saying is how do you have the ability to be able to allocate the capital, knowing that you have the right working partners and being able to get into all these different industries to give you the diversification, which in my mind, generalist is a compliment. And I hope you understand where I’m coming from.

Patrick Grimes:

I’m struggling to find the question in there. How do I have the what to be able to-

Ian Horowitz:

How have you figured out how to be able to deploy capital in litigation, real estate, oil and gas?

Patrick Grimes:

Well, I mean, so I’ve walked away from a lot more investments that I’ve walked towards. I think for every three or four that I start doing due diligence on, I walk away. I was really close to investing in large portfolios of life settlements, which is investing in life insurance policies, talking about a non-correlated return. But through my research, found that it wasn’t a favorable investment, which actually I think that came true from what I’ve seen from the performance. I’ve done similar things with… Like, on affordable housing, there’s been multiple strategies which I thought were advantageous. I lost probably 30 grand getting close to one and then backing out of it. I did the same thing with CPA firms. I got close to one and then backed out of it.

And then I kissed a lot of frogs along the way. I mean, my litigation funding partner, almost six years ago or something, I was trying to do a deal with him, but he worked for a private equity company that would only take 20, 30, 50 million dollar checks. And then the guy who wrote The Alternative Investing Almanac, we talked about doing a litigation fund five plus years ago, couldn’t get it going.

So it takes a long time, especially to break into some of these industries. The company, the partners that I’m working with in the medical side, they’ve been doing it since 2009, and they were probably the 10th or 15th group. Learning to partner, learning how to trust, learning how to due diligence, knowing what questions to ask and being patient because you really get to know somebody through getting shit done, through working through the trenches and seeing how they operate when things aren’t easy. And it takes some time to do that. And I think building those kinds of relationships, and I’ve been in enough deals and enough partnerships now to know that I should have been in a lot less deals and a lot less partnerships. And so it’s a lot less painful to walk away after spending a lot of time with somebody than it is getting married to that person three or four or five years later.

Jason Balin:

Yeah. I mean, I think to sum up what a lot of this conversation was about, and I think maybe for even where Ian was going is education obviously is very important. Don’t just dive into anything. Educate yourself, make sure it’s a comfortable asset. I mean, there’s lots of things that I would like to say that I would invest in, but my personality type won’t allow me to invest in those things. And I think some people, they have the opposite. They’re like, “Hey, I’m just going to jump all in and I’m going to figure it out.” So I think education’s big. I think diversification is something that you hit on a lot.

Again, you might claim yourself as, “Hey, I’m a generalist and I like anything on the real estate side.” And Patrick might just have a little bit more diversification. But then I think most importantly is being opportunistic and understand what an opportunity is. So many people, I mean, I know a lot of very successful real estate investors and a lot of the times they can’t see an opportunity if it smacks them upside their head. They just don’t understand how to structure some of these deals, they can’t see outside the box and they’re just very simple on like, “Hey…”

And simple is not a bad word. I think simple is good, but there’s… At least… I was on a podcast earlier today and someone was asking me, the host was asking me about what I thought of this upcoming year, 2026. And I was like, “I think there’s going to be a lot of opportunities out there if you’re creative and you can figure out a way to structure them.” And for people that have been riding the markets and waves and cashing in on the good times that didn’t build proper foundations from the beginning and don’t even know what they’re doing, they’re just like, “Oh, hey, let’s buy a property. And it made money. Great. I’ll go do it again. I’ll go do it again. I’ll go do it again,” without really learning or going to suffer. And the ones that understand how to structure deals and be opportunistic, I think will have a lot of success as market shift.

Ian Horowitz:

100%, 100%. That’s all you can do. Get up every day and try. I’m still trying to figure out if Patrick’s drinking ahead of us or if he’s behind us. I know he’s in Hawaii, but-

Patrick Grimes:

This is my espresso.

Ian Horowitz:

I’m sure it was an espresso, but I saw it. But anyway, one thing we like to-

Patrick Grimes:

told me I had to drink it slow or else it looks like I’m taking shots.

Ian Horowitz:

Yeah, there you go. Hey man, listen, you’re on the beach, we’re over here in the freezing cold, so joke’s on us. But with all that being said, one thing that we like to ask everyone before they go is, what’s one book or podcast that you think everybody should go check out? I know you mentioned the purple little book, everybody knows about that one. Give us something else that you got.

Patrick Grimes:

Well, I mentioned mine, which was the Passive Investing Mastery series. And I think that’s really amazing because it’s the only one that actually agnostically talks about every different kind of alternative investing strategy outside of the stock market. We bring on panelists, love to have you guys on, to talk about them. And I think that’s amazing. But just being vulnerable here for a minute, I’ve seen so much just because there’s been so much pain and suffrage in the investing space with post-COVID delinquencies and interest rates. There’s so much pain and anguish going on that there’s been so much divorce surrounding it. I’ve really been investing a lot in mental health. And I’ve seen so many of my friends go through divorce recently, especially in the real estate space.

I actually started reading this book called The Bulletproof Husband, and it’s been really fascinating to me to go through it. And I think it’s just a really interesting book for those out there. I mean, because I run every morning on the beach here and I’m listening to podcasts and educational books and stuff. And I just, to take time out now to invest in my family, I’ve got my three-year-old here, I got my wife, and just to invest in being a better person at home, I think that’s just so cool. I think it’s been really neat and I recommend that in the new year.

Ian Horowitz:

Yep. We’ll get that down in the show notes along with all your other links, which we’ll give you here in a second to tell everybody. But I do agree, half the battle is not only producing income, but the reason we all do this is probably for time freedom and the ability to be with our kids. So that is a true definition of wealth. So we respect that there. Patrick, where’s the best place people can find you on the internet? I’ve already downloaded a few of your documents while we’ve been on here. And just in my quick glances, they’re very, very informative, especially one of the pitch decks about litigation and stuff. It’s been just interesting to see all the different cases. Where can people find that on the internet?

Patrick Grimes:

Yeah, passiveinvestingmastery.com, all spelled out passiveinvestingmastery.com. And if you go to Passive Investing Mastery, the book, at the top, you’re going to see our open investments where you can learn about our current… Below that, you’re going to see our Alternative Investing Mastery series where we talk about blue ocean approach. I host a panel every couple of weeks. We have over 50 different kinds of alternative investing strategies we dig into with experts in each of those respective fields. Highly recommend registering for that.

And if anybody’s interested, I have a book. I love talking to people. It’s one of the things now that I’m full-time in investments now for quite some time. I love talking wherever you’re at. Happy to have a meeting with you. There’s a calendar invite, a calendar right on my website. I always leave time. Didn’t have any in December, but I always leave time here in the new year to meet with investors wherever you’re at. If we’re not the right step for you, if we’re not the right company to invest with, and we have a large catalog of others because we host a panel that presents on all of them.

But if you would like, I actually give away a book, passiveinvestingmastery.com/book, passiveinvestingmastery.com/book, and we sign them and send them out. And it talks about lessons from thought leaders. And I tell my whole story, from high tech to losing it all, to single family apartments, energy, to legal, to private credit, commercial, all the stuff that I’m doing and what we’re doing in the future here. And if it helps inspire somebody along that same path, then definitely love to share that.

Ian Horowitz:

Right on. We’ll get that in the show notes. Guys, make sure you go and check that out. Patrick’s just getting his day started all the way out there on the West Coast, so we’re going to let him get out of here. But this was super informative. Guys, if you’ve got any value out of this show, and I’m sure, I know I did, give it a share. Liking and subscribing our page doesn’t do anything, but giving a share helps out Patrick. He helped us out and you can see that he’s not a guru. I love the fact that he called out, don’t invest with them, so that’s super exciting. So you hit all the key metrics we like. And guys, we will catch you on the next one.

Patrick Grimes:

Thanks for having me.