Diversify Like the Wealthy: Alternative Investments Explained

Hey, everybody. You are gonna love this episode with my multifamily buddy, Patrick Grimes. He is the CEO and founder of Passive Investing Mastery. He is an entrepreneur, investor, and speaker specializing in alternative investments and recession resilient income strategies across litigation finance, medical receivables, commercial lending, and real estate. Whole lot of stuff. I know him from multifamily days. Patrick is passionate about helping investors build diversified cash flow and long term financial freedom through smart, nontraditional investing approaches. Here's Patrick. Hello, and welcome to the Power Up Your Life podcast. I'm Mandy McAllister.

And I'm Kelly Resendez.

And today, we have one of my friends from multifamily investing, and now he's gone so much broader, And I can't wait for you to hear all of the things he's up to. Patrick Grimes. Patrick, hi. How are you?

Great to be hanging out again, Mandy. Enjoyed having you as the MC for our virtual event. Had 600 people dazzled by your energy, and it was a great it was an awesome event, and glad to be connecting with you here today, Kelly.

Awesome. Very cool. Well, as we get started here, let's just kinda go from the beginning. Tell us a little bit about your background, how you got where you're at now.

I started out a successful $100,000,000 fund manager and, you know, downhill from there. I, started out, you know, my parents were not Easy peasy. Yeah. My parents were not wealthy. I was, my my dad has three PhDs, had three PhDs. So I was more education. They're educators, pastors. And so I was more as a mechanical engineer, went to engineering school, but I was interested. I was interested in investing. I didn't really have that in my life, but it was the founder of the first machine design firm I worked for. I did automation and robotics. And, I was asking him, hey. You know, I we're in we're in all these interesting Up Mandy some some that are now big companies and stuff like that. But it's like, where should I invest? You know, what should I do? And surprised me, this tech titan said, you know, make your money in high-tech and go put it in alts. Go put it in real estate. And, that's what got me down the path. Now I wasn't successful right off the bat, but that's that's where I got started.

Well, goodness. How lucky to get that advice right off the bat. And, you know, coming from all these PhDs to investing in Hawaii, like, how much more Rich Dad Your Dad can you get? I don't even know. But why don't we start off with, just explain to us what you mean by alternative investments because, you know, some people might not know exactly how broad that can be and and which ones are your favorites right now.

Yeah. It's a good question. You know, it a lot of people throw out diversification. I I feel like and from my company, that's a bad word now because people are saying, oh, I'm in diversified stock portfolio Your I'm diversified because I had a REIT in my stock portfolio. All those trend together. So what do you what are you really trying to accomplish with that? And what you're trying to accomplish is getting into an investment which doesn't rise and fall at the same Life, not not riding one financial volatile wave with your portfolio. And that's tough to do because people it's natural. Get really excited about something. Maybe you're all in in your own business, your own medical practice, your own law firm, or your own tech firm, and you're taking all your stocks in your own company. You know, there's it's really tough to step out into the unknown, put some capital to work into something that's different, that has different market fundamentals. It don't maybe it doesn't rise and fall with interest rates Your the dollar or gold or the stock market or oil and gas to continue to build it out. And so when we say alternatives, what we mean is something that's what we call non correlated, something that doesn't rise and fall together. And we step really far away. We don't step to a lot of kinds of real estate. We step from maybe real estate acquisitions and commercial to debt. But when we step from there, we're going into the legal industry where you don't ride those kind of waves. I mean, it's just up into the right. And then we step from there into medical industry where we're talking about fundamental care, injury care, financing medical practices, Up to the right. They simply don't care what's happening with the volatile markets around. And that's what we mean by alts. We mean unveiling those completely different assets, lesser known, non correlated. We can get a little bit higher returns too because so many people are vying for those deals as they are in real estate and stock market.

Yeah. Wow. So great. I mean, I I think so many people are just limited by their retirement account and maybe what, you know, stocks or or anything else. So it's great that you have so many options. So for the person that really doesn't have trust yet, yet they wanna go into this, what type of mindset do you see someone needs to shift in order to open up this idea of creating some of these passive income, you know, verticals or whatnot so that they don't end up poor in retirement like so many people do? Like, what what do they need to shift, and how can you help with that?

It's a really good question, and it's a tough it's a it's a it's a tough game for professionals out there just like I was because, man, I was working with some of the smartest people on the planet at Lockheed, Boeing, Johnson and Johnson, Genentech, Abbott, Tesla. I that was doing rotorist robotic motor assemblies for Tesla. None of those people had any idea that there were alternatives out there that provided more resilience than their own stock. They thought they were gonna get it all, and they were all in. And Mandy my family didn't. Most families don't. Most schools don't give financial education out there, and find the financial IQ of America is really, really low. And as a society Mandy as human race, we're not geared to go jump out into the desert on our own or wander into the forest. In fact, we're community safety and nomadic people that wanna try together. So it's the mindset thing is really tough because first, there's kind of a discovery Mandy then there's the bravery. And I think that to actually step into those places, and I think that really comes from building your tribe. I I didn't know until I knew, and that's why I built my platform, Cost of Investing Mastery, to kinda show the whole deck of cards of all the different alts. But to build the bravery, the education necessary to step out, you gotta find the right people. You know, Mandy is a collector. I know her. Sounds like you are too, out there, and I I think people should spend at least one passive step a day. Usually, it's for me, it's running in the beach every morning. I'm listening to podcasts, audiobook, webinars on different alternative strategies, tax strategies, estate planning, asset protection, weird things Life like crypto Your forex or or cannabis investing or bourbon barrel cask or airline gold mining. We're learning about weird things like that. And then surrounding myself with people like you guys that are out in this space actually doing and being these things. And that's when I feel like I made the real strides as I got comfortable with the assets, learned about them, and then started surrounding myself with the right people.

No. I that that is preaching to the GoBundance Women cry choir, my friend. I I just I think that the more you're around people doing things that you want to do, it it things that bravery that you talked about, it gets so much easier. I wanna double click on that, around the bravery, around the identity to change from the the PhD family into this, you know, Life in in Hawaii entrepreneur. Talk I I I know that I went through some sort of an identity shift, and we talked to so many entrepreneurs that are in this middle space. Tell me a couple of things that you kind of grappled with Mandy what got you through in that identity change from one to the other.

Oh, it was gradual. I never thought I would stop being an engineer, and there's a piece I'm still a geek as you know. I never will grow out of that. And I miss engineering, a lot. I don't miss necessarily the the the grinding lifestyle that it was, but I miss the challenges, the people, the projects. I miss all that. You know, I think if I there were some shifting points. Obviously, I had a big loss. I think I may have mentioned it in 02/2010 during the subprime mortgage collapse. I actually lost my first real estate investment through that. So as a bit that was my first shift. I was battered and beaten and bruised coming out of that. But then I was still a successful engineer. I got a master's in engineering and an MBA. And I when I started researching more deliberately Mandy what I like to call spearfishing, what I wanna do next, it got me back to real estate, but more safer, not predevelopment, but existing assets. Then I was at that time, my mindset was Life, maybe I'll buy, you know, 20 homes, you know, maybe 30, and that'll get me to Life, I'll be able to re maybe retire sooner, but I don't think I'll ever stop engineering. It's funny. It was just wasn't even in my calculus at the time. Then my mindset was like, well, I just gotta work hard. I was busting my ass, traveling around, doing really cool projects. But then I was moonlighting, this Life, not from California, but, I was moonlighting real estate in Texas where the market was much more stable, landlord friendly, and resilient, diversified employment. Did really well, 02/2010. So I was but that I started losing my life. I realized that trying to juggle, you know, doing it all myself, the DIY, and my engineering career, having those two Life, when I met my soon to be wife, I didn't have time for her to become my wife. And so I told her, I was like, this is it. It's my last single family deal. I'm gonna take a break after this, and we got married. That was kind of the first step. And then, you know, simultaneously with that, when we got married, I moved from being a w two to a contractor because I realized, look, in order to do these investments, I need to be off-site. I need to be able to carve out time during the day, not just during the time at night when I'm home with my wife on weekends. And that was a big step for me. It was risky. I am going into a marriage. I took a step back from security and, you know, our Asian conservative parents weren't super stoked about that. So but then fast forward, things, you know, at that Life, the markets were good. Interest rates hadn't skyrocketed yet. So we were doing multifamily, and, we met around some of those times, I think, Mandy. But then my next big transition Kelly free to stop me if you wanna double click on anything here, but

my next transit I think it's such an important idea of that you need to evolve with the things that you're doing in your life.

Right. Yeah. And it, wasn't easy. I had the opportunity through COVID. I had I had record years in automation robotics. In fact, I I started doing there was, like, two quarters when I was sweating bullets because I didn't have any orders. And then I I dove into COVID test kit kit assembly machines Mandy then, then had record record life years for me, and there was a runway there. And just on the outside of that time frame. And at that point, I think I was a partner in, like, 3,000 apartment units to kind of, you know, GP co Up minority, partner in those. And, at that point, I had an opportunity to post COVID reinvent reinvent myself again in in in automation robotics Your take a step back and dive full time into investments and broaden to all these different alts what I really wanted to do. And my wife was pregnant. I think that's when you met my wife actually in Seattle. And the August before my son was born in December, I stepped away from engineering full Life. And I remember the day the engineering email shut down and I panicked Your about twenty minutes. And then I realized I had a full day of investment stuff to do, and I never looked back. And, when I was craving stability and and, I was craving, you know, wanting to be income for the family, I just I said, like, this is I'll never be younger. I'll never be more risk averse. I'll never be able to fail, like like like I can now and recover. This is the this is the chance. I have a runway now. Let's just go for it. And so that's when I founded Passive Investing Mastery because I wanted to build something new and special that was broader than real estate and give back Mandy and scale into alts. And so, here we

are. The Power Up Your Life podcast is powered by GoBundance Women. I could tell you stuff about it, or you could hear from some of our members. Here you go. GoBundance has connected me with an amazing group of entrepreneurial women

that I can learn from and support and grow together.

GoBundance gave me a boardroom of sisters who refused to let me settle. You know, within the first two months of me being a member,

I enrolled someone to help them with their high ticket sales. I got double back my investment within the first, you know, sixty days of being a member. So it was it's incredible. You guys are just amazing, and there's always somebody to look up to in in, in GoBundance. So I love being a member.

That's why you owe it to yourself to check out goabundancewomen.com.

There are so many identity shifts that had to happen during that period. So you've kinda made the transition from being a seasoned investor. Right? You you've done your own investing to now having a community and events, and and you're really a thought leader in this space. So, you know, how how do you kinda make that transition? Like, how did you how did you do that? Because so many people out there don't really know. Like, they become a expert before they've actually done the work themselves and gotten to a level of mastery. You could have easily just continued to invest on your own and made more Women, but, like, kinda what what did what was that calling like for you to wanna create the master mastermind community and events?

Oh, I, I'm still making mistakes. I'm learning from mistakes, though. So I feel like, to some level, I'm making, more calculated choices Mandy diversifying and hedging. And, but, you know, for me, it's just been a Life of learning. And part of the challenge with alternatives alternatives is just really hard to find. You know, there was just a handful of handful of dudes that I was trading the baseball cards of alts with. And one of them was my my debt fund partner now, Lance, and one of them was my litigation fund partner now. And, but and and there was really not many other people out there. Another one, Josh, good friend of Life. He we were just he's in 40 different alts. I mean, so and I had Dennis Shapiro wrote the alternative investing Almanac. I was seeking these people out, having conversations Life, where do you find these? What are these? You know, which ones? And and doing all this research. And I said, why why is there nobody out there just just showing their Mandy? Just here publicly, this is all the stuff I know about. You know? And then when I did that, which is interesting because I was out there sharing every other way to invest other than my own deals to my audience. And my director, Mark, he's like, what are you doing? And I'm like, no. This is this is good stuff. So then we started doing an alternative investing mastery series. And I started bringing on, you know, three panelists Mandy completely different alternatives. You've done Power 80 now Your asset protection or estate planning or tax strategy in addition to what are those quirky non correlated adults. And I said, look, If I if I'm showing my hand is valuable, then let's just show the whole deck. Right? Let's get them all out there. Who else should Up it? And let's get people that have been doing this for ten, fifteen years. This talks about the pros and the cons. Have a real discussion about the stability, the volatility, the the tax advantage, the, all these things, and how to construct portfolios so you can do it safely in asset protection structures efficiently with tax tax strategies Mandy through stability, through markets. I don't know if you can hear my my three l's knocking on the door behind me. I do love that, like, you have leaned into

just the blue ocean as you call it. This idea of it's all going to be better. We can all grow together if we all just share the information, the abundance. Actually, Kelly just wrote The Frequency of Abundance. It's her latest book. So it's you're you're gonna be Cool. All in on that. I'm curious. So we have had, yeah. Right. So a lot of, Women you and I both started in multifamily, the rising tide was lifting all ships. Right? And now that the tide has come back in, we've seen a lot of people swimming naked, Patrick. Right? And no sponsor is gonna hit a a thousand, bat a thousand. We we get that. I'm curious from you as a guy who looks at a ton of sponsors across a ton of different asset classes under that, kinda column of alts. What are maybe one or two key things that people need to know or do when they're vetting a deal sponsor?

Andy, I am not immune to historic interest rates skyrocketing. That is not what I'm immune to. And I my, portfolio of multifamily has taken a hit like many others. And the the the benefit of the strategy which we talk about is non correlated alternatives. So while real estate's down, medical, legal, precious metals, Your, crypto, they're all up. So, I mean, the the idea is not to put a bed into one industry and, you know, certainly, I've had my challenges like the next guy. And each time you learn from them and I think that some of the big lessons learned through, you know, the ups and downs in real estate as well as high-tech, as well as my my my stock portfolio over the years is to zoom out across decades, right, not deals, and see how these people have operated. I've been in enough partnerships and enough deals now to know I should have been in a lot less partnerships and a lot less deals. So I I do I spearfish a bit more. Now I spend a lot of time, in the trenches. I think you really learn how somebody does by observing them, working with them as you get shit done. And if you look at the way that I've pieced together partnerships that I'm no longer in passive investing McAllister Mandy minority in, I they're all my bank accounts. I sign all the p send every k one. So if you look at the way I've structured the company now, complete transparency and, you know, fifty fifty control with operating partners. And those operating partners, they all been doing it for decades. I mean, Lance, my debt fund partners, he started Verivast. He grew up from 0 to 3,000,000,000 in administration exited. Interest rates skyrocketed. I Life, dude, let's set up a debt fund, and it's a perfect time. Like and so we built a friendship for a long Life, and but he's the one guy that I believe Mhmm. Can execute. When everybody was running from debt. We launched a fund Mandy we've had over 14% annualized monthly distributions since inception Women everybody was running from debt. It's incredible equity Life returns in a debt, first position debt, fund. And so, but that's what you get when you you work with people you've seen succeed and fail, and you work with people that have been doing it for decade. I have litigation fund partners, fifteen years. Mandy he's participated in $500,000,000 fines initiated Mandy collaborated efforts to collect 20,000,000,000 Yeah. In litigation funding for mostly institutions. For over fifteen years, he's held senior positions at large institutions Life Fannie Mae. Those are the kind of people I wanna work with. I'm gonna take a lot I'm gonna work with those kind of people. The medical side, look at those those guys have originated over 300,000,000 in in financing agreements with medical practice since 2009. All for institutions. Again, all for institutions, but I'm Life, guys, let's open it up to accredited investors. They shouldn't be one off deals with the blindfold fund. Yeah. So the you know, I'm structuring these things now is taking not the guru, not the not going for the guy that wants to give the old call and try, but go for the people who tried and trued and tested, have been in Wall Street in the dark side, done the institutions, and see opportunities with the credits Mandy share a vision, right, for working a little harder for smaller check sizes, and at lower risk, right, because you put everything in a pool. That's not easy to do. It took you thousands of medical companies, Mandy spoke to hundreds of partners, in order to flush out the right kind of people. Spent, I think I spent over $40 or something just on due diligence going through fifteen years of Power, and and I'm less working a couple months over a hundred and sixty hours just to scratch the surface than a statistical sampling of the track record for my medical fund partner. So it's Life that those are not easy to do, but those are things I didn't have time to do and I wasn't doing as an engineer. And those are things that LPs don't have time to do, the resources do, and these institutional players won't won't look at them, won't even respond to their their emails. So Your it took a platform. It took the ability to say, hey. We can write 10 to we can aggregate 10 to $20,000,000 checks and Yeah. And it took a lot of time and effort energy to get to the point where, you know, somebody can sit out there and hold these guys' feet to the fire with their track record. Mhmm. And and they're willing to partner. So, I mean, sorry for the long answers today, but they're good questions. You can cut me off.

Well, Patrick, you have been a delight, and I feel like, you know, the biggest takeaway is that you need an expert. Like, if you're going to invest in things that are outside of your typical comfort zone or you're not educated that you need to connect with experts like yourself, you know, as you go through. And Life you said, the due diligence of looking at at, you know, fifteen years of history and other things. So that, like, really resonated with me just having been burnt myself. I didn't do my due diligence on some of the GPs that I got into business with Mandy and lessons learned, but, you know, thank you so much. Mandy, what about you?

I love your analogy about spear phishing that I I don't yeah. I just need to be very precise in the things that I'm I'm looking at and I'm I'm drilling down on. And your your commitment to transparency and, collaboration over competition. And, that that is probably the thing that I admire most about you, Patrick. Thank you for coming here to serve us today Mandy what everything that you do with your, your free calls that you put on, with experts. I I'm curious, one thing that we love to ask everyone is what is an introduction or a resource that would change the ballgame for you? What can we or our listeners do to serve you?

Well, I created Passive Investing Mastery because I wanted to get out there all, all the different ways people can invest. And I, I tell people like, look, if you're out there and you're not sure yeah. Like like like, hey. Look. I have my pie chart, and I'm I'm a lot in stock market, maybe bonds, maybe crypto. But, man, this this concept of of alternatives that don't Life, and maybe that makes sense. Get some education. Go to our website, pastinvestingmastery.com. Register for our alternative investing McAllister series. It's free. We have 70 different back episodes, 20 of them. I think Mandy rambling on as an emcee about on there. So doing a great job keeping us on time, like, to the second. And but there's they're incredible sessions and with experts, and you'll learn a lot, you know, and you start to hear patterns. So I I say, you know, do that Mandy then and then you'll get inspiration from surrounding yourself with others. I in fact, I can give I'm happy to give away this book if you'd like.

Great.

Yeah. So we this is a book. It's called Lessons from Thought Leaders Mandy I contributed to it. I got a chapter in it. I'm here next to a Navy SEALs, way cooler than me. Phil Collins, lead guitarist at Def Leppard, an actual rock star, Brian Tracy, Kevin Eastman, Tom Ziegler, Whateley. A lot of really incredible people in here. I was honored to be involved, but I tell my whole Your. And that's the whole point. Surround yourself with people that have seen the ups and downs, seen have had the challenges and persevered, and have got to a place where they have more clarity and more intention Mandy can hold their breath long enough to spearfish the right next move. And I I love it. If you go to passiveinvestingmastery.com/book, passiveinvestingmastery.com/book. Make sure you put the name of this podcast. You know, you can put GoBundance in there. You can put Mandy Kelly something. Put nothing, we're not gonna sign it and send you a copy. But if you put something in there that we can identify, well, either you can download the PDF or we'll sign it and send you a copy. And the inspirations from a lot of these people should should help hopefully, get you to take that time, that next step to get out there and learn every day. Right. The 10 things. One little step. With people. Yeah. That's the two millimeters.

Patrick, thank you so much for joining us today. And anyone, if you if you're listening here and you think someone needs to know about alternative investments, absolutely check out Patrick Grimes and the Alternative Investing Mastery group. Thank you for joining us, and we will see you on the next episode. Thanks, Patrick. Thanks for joining us today on the Power Up Your Life podcast. If you got value from today's episode, make sure that you like and subscribe and send this episode to someone who needs to hear some wins like this. If you need to power up your business, head over to Power Up Your Life Now where you can see all of the resources that our team has to power up your business. We'll see you on the next episode.