Patrick Grimes Is on a Mission to Change Multi-Family Real Estate for Investors and Tenants Alike

Multifamily properties can be great for investors because they can make a lot more money relative to the effort involved compared to other property types due to the size of the stores and the economies of scale. Because of this, industry giants like Grant Cardone focus exclusively on this asset class. But investors who specialize in this niche often get a bad rap because many are just making profits, often leaving tenants in a subpar living environment. But real estate investor Patrick Grimes says it doesn’t have to be and shouldn’t be.

Unfortunately, many investors try to squeeze every ounce of profit out of a property for themselves, leaving little to nothing to adequately care for their tenants, knowing they can get away with it.

It is not uncommon for repairs to be unduly delayed and routine maintenance to be ignored. And in many cases, there’s no on-site property management, leaving tenants with a faceless and unaccountable person on the other end of the phone to communicate with as they try to resolve problems with their apartment. Due to the nationwide housing shortage, tenants do not have many other options. Especially in growth markets like Florida and Texas.

He believes investors can provide their tenants with a cleaner, safer and better overall living environment while achieving an excellent return on investment.

“This is not a zero-sum game. When you properly structure a deal and foster a culture of service within your management team, you can create a win-win scenario for everyone involved in the transaction. This includes buyers, sellers and even the occupants of the apartment building,” explains Grimes.

His perspective seems rare among investors these days.

We’ve all heard the horror stories of slumlords who only care about the bottom line and make tenants suffer in run-down, pest-infested and crime-ridden buildings. In fact, many of us have even lived in such a place at some point in our lives, because let’s face it – it’s unfortunately all too common. To change that, he founded his company Invest on Main Street.

Grimes has lived all over the country during his younger years, including in several apartments where the owners have not cared about the tenants. So he knows exactly how it feels. And after losing everything during the 2008 real estate crash, he had to start over. In doing so, he completely revised his own investment approach. Today he invests in large apartment buildings rather than single-family homes, and instead of incurring massive debt on every deal, he minimizes debt by buying a very specific type of property. He focuses on distressed properties that he can acquire cheaply, renovate to improve the quality of life for tenants, and then generate significant, long-term returns for his investors.

Grimes says this is the wiser long-term approach.

“If you provide your residents with a poor living environment, you might make a little more money in the short term, but this approach also lowers rental income. When word gets around within the community and bad Yelp reviews are posted, the residents they want won’t apply, revenue goes up, rents go down, and vacancies go up. In desperation, property managers will inevitably relax applicants’ income and credit requirements, sometimes stopping or overlooking bad credit checks, leading to increased rent defaults, evictions and crime, perpetuating the cycle. Besides, that’s just ethically wrong.”

He explains that a balanced approach by investors leads to a stable investment that is more resilient to economic challenges. This is especially important as the country faces economic uncertainty and rising inflation. This approach also creates a better living environment for tenants while still providing a significant return on investment. It’s the best of both worlds.

Grimes believes that entrepreneurs have a duty to look beyond profit and find ways to add value to all relationships connected to their businesses and the communities in which they operate.

Brands in other industries have been doing this for a while. Patagonia donates a portion of its profits to environmental protection. The Black Rifle Coffee Company operates an advocacy program for veterans in transition. Salesforce gives employees seven days of PTO to volunteer for charities of their choice. And Whole Foods is involved with several foundations that support nutrition, wellness, and community. However, the real estate industry is generally lagging behind in this area, but perhaps the tide is turning.