19 June 2023

In this week’s episode, Patrick Donley (@jpatrickdonley) sits down with Pace Morby to discuss his new book, “Wealth Without Cash”. You’ll learn how to build a portfolio of off-market deals without using your own cash, what the difference is between subject-to and seller financing, how to find motivated sellers, how to overcome common seller objections and create win-win scenarios, and much more.

Pace Morby is the host of A&E’s TV show “Triple Digit Flip” and a widely known expert on the subject-to strategy. He has used dozens of virtually unknown methods to acquire 1,000 doors nationwide and a portfolio totaling $150 million in assets—including fix-and-flips, new builds, wholesale deals, mobile home parks, and short-term rentals.

Each week, he teaches tens of thousands of online students creative financing and shares his knowledge with more than a million followers across social media. He is also the co-host of the Wholesale Hotline and Sunday Service real estate podcasts.



  • What Pace learned from his father about real estate.
  • How the story of an F150 helps sellers understand terms and becoming the bank.
  • What he learned from his first mentor.
  • What the “bunny story” is all about and how solving people’s problems helps everyone.
  • Why it’s a requirement for success to do things you don’t understand how to do yet.
  • What the difference is between “subject to” and seller financing?
  • Strategies to find motivated sellers.
  • Why 85% of Pace’s deals are structured using creative financing.
  • What the process of creating Wealth Without Cash was like along with the video companion guide.
  • Who the book is designed for.
  • How creative financing provides a wide variety of tools to close deals.
  • Understanding the 7 layers of your “why”.
  • Why his real job is as a storyteller and educator.
  • And much, much more!


Disclaimer: The transcript that follows has been generated using artificial intelligence. We strive to be as accurate as possible, but minor errors and slightly off timestamps may be present due to platform differences.

[00:00:02] Pace Morby: And so my job when I’m talking to sellers or agents is to build rapport, get information about who they are. I tell a different story. I try to tie it into their life, and I don’t go into them saying, subject to, seller finance, novation agreements. I don’t talk about notes and deeds of trusts and wraparound mortgages.

[00:00:18] Pace Morby: They don’t know what these terms are. So I have to tell stories that meet them on their level.

[00:00:26] Patrick Donley: Hey everybody. In this week’s episode, I got to sit down with Pace Morby to talk about his new book, “Wealth without Cash”. You’ll learn how to build a portfolio of off-market deals without using your own cash. What the difference is between subject to and seller financing, how to find motivated sellers, how to overcome common seller objections, and create win-win scenarios and a whole lot more.

[00:00:46] Patrick Donley: Pace is the host of A&E’s TV show, “Triple Digit Flip”, and is a widely known expert on the subject to strategy. He’s used dozens of virtually unknown methods to acquire 1000 doors nationwide and a portfolio totalling 150 million in assets, including fix and flips, new builds, wholesale deals, mobile home parks, and short-term rentals.

[00:01:06] Patrick Donley: Each week Pace teaches tens of thousands of online students creative financing and shares his knowledge with more than a million followers across social media. He’s also the co-host of the “Wholesale Hotline” and Sunday Service Real Estate Podcast. There’s no one out there quite like Pace, and in this episode, he brought the heat.

[00:01:23] Patrick Donley: If you lack capital and need some creative ideas on how to build your real estate portfolio, make sure you check out this episode. And so without further delay, let’s get into this week’s episode with Pace Morby.

[00:01:38] Intro: You are listening to Real Estate 101 by The Investor’s Podcast Network, where you host Robert Leonard and Patrick Donley interview successful investors from various real estate investing niches to help educate you on your real estate investing journey.

[00:02:01] Patrick Donley: Hey everybody. Welcome to the Real Estate 101 Show. I’m your host today, Patrick Donley, and with me today is a guest we’ve had on before Pace Morby. Pace, welcome to the show. 

[00:02:10] Pace Morby: Thank you, Patrick. I appreciate your time. Thank you. 

[00:02:13] Patrick Donley: Yeah. I want to thank you for joining us. You had an interview a little about a year ago with my co-host Robert Leonard, that I’ve been listening to as a two-part series, which I really enjoyed.

[00:02:22] Patrick Donley: You’ve recently come out with a book, which I’ve had the pleasure of reading called I don’t know if the fans or listeners can hear it, see it, but it’s called “Wealth without Cash”. Really well done book put out by BiggerPockets. We’re going to get into the book for sure, but before we get into it, I just wanted to hear a couple of personal stories about you.

[00:02:40] Patrick Donley: I wanted to hear first about your father and just how he has influenced your real estate investing, and then I also wanted to hear the F-150 story, so if you could kind of go into both of those, that’d be awesome. 

[00:02:51] Pace Morby: Of course, yes. You know, it’s interesting. I think our job as parents and fathers, mothers, all that is to do a better job than our parents did with us, right?

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[00:03:01] Pace Morby: Take all the resources that our parents captured, went out and executed on. All the education they got all the experience they got and gave all of that to us to hopefully raise us to another level. Our job is to go and take all of that and then go do the same thing for our kids or for future generations if we decide, you know, not to have children.

[00:03:19] Pace Morby: My dad did a great job of that, meaning he took my grandfather’s life, which was working two jobs, 10 kids in their household, working his guts out at the power plant, and then working side jobs as a contractor. My dad took that and said, all right, I’m going to go to college. I’m going to become a CPA. I’m going to go do all these things.

[00:03:36] Pace Morby: But in the same process, he said, man, I’m not making enough money. My grandfather didn’t go to college. My father did go to college. And he’s thinking, I’m upgrading. Well, my dad decided he’s got a moonlight as well, and so he started moonlighting. And you know, the one thing my dad never got to, Even though he talked about it a lot, he never got to a point where he became a full real estate investor.

[00:03:58] Pace Morby: He talked about real estate all the time. When my dad and I were driving around in his F-150 when I was younger, going to job sites and painting and all that kind of stuff for his moonlighting career, he would talk to me about case, you have to buy real estate. You have to buy real estate. You’d have to buy, you have to buy real estate.

[00:04:14] Pace Morby: My dad would listen to, you know, the time cassettes. He would, he had all sorts of things he would listen to. But unfortunately my never, my dad never got past the point of just buying real estate for his own personal family, and it was because he was really trading his time for money. And so when I got into my twenties and I started realizing, oh my gosh, I’m doing the same thing my dad was doing, which was trading my time for money.

[00:04:38] Pace Morby: There was a day where I asked my dad, I said, Hey, what should I do to make more money? And my dad’s answer based on the experience that he had at that point. Was work harder, work more hours, put more time in. And I was like, dad I’m working every minute of the day as a contractor. I can’t do this anymore.

[00:04:55] Pace Morby: And then I realized that my father, you know, would talk about real estate a lot, but he never really got into real estate besides buying houses for his own family. And so I made a decision. I said, I ha that’s the part of the curse, not the curse, but the basically the upgrading, the generational upgrades that I have to do.

[00:05:12] Pace Morby: I have to be the one that gets into real estate. And so I made it a goal. Well, guess what? I ended up talking about it for years and years as well, all the way until I was 28 years old. And finally, as a contractor, I met somebody in my new circle of influence. Besides my father that actually grabbed me by the shoulder and said, let me show you how to go get your first deal because I’m watching you work your guts out on my projects.

[00:05:35] Pace Morby: Her name was Bethany Willis, and Bethany says, dude, you should not be a contractor. And I’m like, yeah, but I don’t really know anything else. She’s like, okay, and that’s a good excuse because why? And she really held me accountable. She showed me how to go get my first deal. She showed me where leads came from.

[00:05:49] Pace Morby: She showed me how to comp things. She showed me how to fill out paperwork. And then I got my first deal, which a lot of people heard the bunny story about how I got my first deal and how I helped to rehome some lady’s bunnies, and that’s how she decided to sell her house to me versus my 30 other competitors on that deal.

[00:06:05] Pace Morby: Can you go and all of 

[00:06:06] Patrick Donley: that came, can you go into that a little bit for our listeners that haven’t, aren’t familiar with the bunny story?

[00:06:08] Pace Morby: Sure, sure. Bethany, essentially, I had done three jobs for her as her contractor, so I was flipping her houses. And I had a big, massive crew. My, my main customers were open door, OfferPad and Zillow.

[00:06:23] Pace Morby: I was a big contractor, so I put in a lot of hours, built a good sized company. Bethany Willis hires me because I have a good reputation around town. I use social media to broadcast, Hey, I’m a contractor. I’m doing these things. Here’s my before. Here’s my after. Anyway, she finds me, hires me. I do two jobs for her successfully.

[00:06:39] Pace Morby: On time, on budget. She calls me, Hey, I’ve got another house that I want to flip. Come meet me at the house for a bit. Cool. I go to the house. I’m parked in front of the house. I’m there 30 minutes early, catching up on text messages, et cetera. Bethany pulls up behind me, knocks on the glass on my door, is like, get out of your truck.

[00:06:54] Pace Morby: Come sit on the back of this tailgate. So she pulls, opens up my tailgate, sits next to me, and she grabs me by the shoulder. I can still remember feeling it, dig into my right shoulder as she grabbed me by the shoulder. I can feel her talents essentially. And she said, why aren’t you in real estate? And I said I am in real estate.

[00:07:09] Pace Morby: Look at all these houses. I’m flipping. She, no, you are not in real estate. You are a service provider to people who are in real estate, and it was like a punch to the gut. And then she, you know, was critical of a lot of other people in that think they’re in real estate. She said, you are as replaceable as a mobile notary to a real estate transaction.

[00:07:33] Pace Morby: You can be replaced with a simple Google search, new contractor, Mesa, Arizona. I can replace you in five minutes. Guess who can’t be replaced? Is the real estate investor, the person who owns the asset. I control the ship. I direct where it goes, both good and bad, right? If I make money, it’s all on me. If I lose money, it’s all on me.

[00:07:54] Pace Morby: And she even pointed out to me, she said, I said, so what should I do? Get my real estate license? She’s like, ha, no. A real estate license is actually a deviation from going and becoming a real estate investor. You will brainwash yourself into just going out and getting listings and again, becoming a service provider.

[00:08:11] Pace Morby: You are not a real estate investor unless you own the asset. I’m like, okay, well how do I do that? And she told me how to send out postcards and I, this is a long story I won’t go into, it’s very nuanced, but I’ll be very succinct here. She taught me how to send out postcards, which I don’t do anymore. It’s very expensive to do that.

[00:08:28] Pace Morby: But I sent out postcards, this is about nine years ago, and I got my first couple of leads missed the first two phone calls from my inbound calls. People got my postcards sitting on their counter when they got home from work and they go, oh, I, yeah, I do want to sell my house for cash. I’ll call you. I missed the first two calls, and the reason I missed the first two calls is because I was literally installing somebody else’s toilet in one of their flips.

[00:08:50] Pace Morby: And what does that tell you? What does that tell you? When opportunity is smacking me in the face, I still couldn’t even answer the phone call. And why was that? It’s because I was putting my hands on somebody else’s projects and I was serving them and their business and convincing myself that I was in real estate.

[00:09:09] Pace Morby: I wasn’t. I was a service provider. I get home that night after missing the first two phone calls, my wife, she says, Hey, how’s the, have you gotten any calls yet? And I go, yeah, I had two calls come in today, but I missed them because I was doing X, Y, and Z. And she’s like, oh sweetheart. And she was really nice and sweet about it.

[00:09:24] Pace Morby: She goes, but you need to call them. And I go, yeah, I’ll call them tomorrow. And she points out to me, Patrick Pace, when we go out to dinner and you call a restaurant ahead of time and you say, what’s the, wait if they say any more than 10 minutes? You are immediately saying thank you, we’ll call somebody else.

[00:09:41] Pace Morby: So do you think these people that called you today are going to wait for you to call them tomorrow? Or do you think they’ve called the next postcard or the next letter? Mike? That’s a really great point. So I go, all right, I’m going to call them and I go to call them and boom, my phone starts ringing with another lead.

[00:09:56] Pace Morby: Okay. And what, how do I know it? It was a lead. I knew it was a lead because I set my postcards up to forward a phone number to me, and I programmed that phone number in my phone as postcard lead. Okay? So every time somebody would call off my postcards, it would pop up on my phone saying postcard lead. I pick up the phone, I answer the phone, and it’s a lead named Janie Munson, my first deal I ever got.

[00:10:17] Pace Morby: So I spoiled the plot for you. And Janie Munson says, Hey I’m a retiring school teacher. I need to sell my house. I’m going to retire from Arizona and I’m going to go live in Oregon where my family is and have more people around me that I know and blood relatives, et cetera. I need to sell my house. I go, oh, okay.

[00:10:34] Pace Morby: I didn’t even know what to do. I didn’t even know how to set the appointment. Like, people look at me now, they go, oh yeah, must be nice dude. I knew nothing. I knew nothing. Bethany Willis had to force me to send out postcards. I missed the first two phone calls. I didn’t even know how to set the appointment.

[00:10:50] Pace Morby: I literally put Janie Munson, the lady who just called me on hold so I could call Bethany Willis and say, how do I set the appointment? That’s how stupid I was. And I’m saying that to give everybody permission here, that it’s not just, okay, it is a requirement for success for you to go and do things you don’t know how to do in order to learn them.

[00:11:10] Pace Morby: So Bethany tells me how to go set the appointment. I go up and I’m driving up to the house. I realize this is the next day. Now I’m going up to the house to meet with Janie Munson, and I’m like, oh my gosh. I don’t like, I don’t know what to pay for this house. I don’t know anything about comping. And so who do I call?

[00:11:25] Pace Morby: I call Bethany Willis. Bethany Willis tells me you gotta buy the house for $150,000 or less in order to make money. Okay? So I get to the house, I’m talking to Janie Munson and I, you know, we kind of walk through the house to the kitchen. We kind of meander to the kitchen as you do, and there’s a stack of postcards, there’s a stack of letters, there’s a stack of real estate agent business cards all in her counter, and she’s got notes on them and she, I’m like, wow.

[00:11:50] Pace Morby: She’s like really interested in selling her house. And I look at all this stuff and the first thing that came to mind was a very important question that I ask every seller now or my team now ask every seller. And the question was, wow, Janie, what’s kept you from selling the house so far? What are you looking for that you weren’t able to get with all these other people?

[00:12:09] Pace Morby: And Janie says, well, I have an offer and I need to get a higher offer than what I currently have. And I go, what’s that offer? She says, $165,000, which is $15,000 more than what Bethany Willis told me I could pay as my max offer. So I told Janie, I don’t know if I can help you. I think you should probably sell to one of these other people.

[00:12:29] Pace Morby: I think you should take 1 65. She says, you’re not even going to gimme an offer. I go, no. How can I, my offer is way lower than where you know you need to be and you’re a retiring school teacher. This is your last asset. You deserve to sell this for as much as you possibly can. I can’t be that person. I’m way too low to even give you an offer.

[00:12:47] Pace Morby: She thought it was a sales strategy. She thought I was sitting there trying to manipulate her, anchor her. And so she says, okay, well I guess what? What do we do? I guess I leave. That’s all I knew to do. So I’m leaving the house and I’m in the front door threshold and I turn to her and I go, Hey, is there anything I can do to help you on your move?

[00:13:05] Pace Morby: Anything that you need. You’re single woman, you’re raising your granddaughter and you know your daughter’s living your house. You probably may need some physical help. Maybe in your move I could load your truck. I could do whatever you need. Like I could, my guys could come over and help box things up.

[00:13:20] Pace Morby: Remember, I’m a contractor. I got a lot of employees. She’s like, I’m so confused. Like, you want to help me, but you don’t want to even give me an offer. Like, who are you? And she says to me, what are you a boy scout? Like saying it, you know, facetiously? And I said, yeah, actually I am. I’m an Eagle Scout. My parents wouldn’t let me get my driver’s license till I was an Eagle Scout.

[00:13:41] Pace Morby: So yeah, I’m an Eagle Scout. She’s like, whoa, you really want to help me? I go, yeah, I really want to help you. I can’t buy your house. Love to help you. What do you need? She goes, well, I have this really big problem, and it’s one of the reasons why I haven’t sold the house yet is because I haven’t figured out what to do with this problem.

[00:13:57] Pace Morby: I go, okay, now she’s got me super intrigued, like, what’s this big problem? And she says, are you ready for weird? I go, yeah I’m down for it. Like I’m here for it. What do you got? So she says, let’s go to my backyard. I’m like, all right. So we walk through her house, we go to the backyard, she opens up the sliding glass door, and I walk into her backyard and I see three Flemish bunnies.

[00:14:17] Pace Morby: Okay. Flemish Bunny, if you look it up, Flemish bunnies get to be the size of a four-year-old child. They are massive, like 65 pounds humongous bunnies, like it looks like a toddler in a bunny suit. That’s how big these are. And she says, I need to rehome these bunnies. My granddaughter brought them home one day, you know, six years ago, and we thought they were going to be cute little bunnies, and now they’ve turned into like human-sized bunnies.

[00:14:42] Pace Morby: And I can’t take these to Oregon. I can’t afford to feed them. I need to get this off my books essentially because they’re costing me a lot of money, but they’ve become like family and I need to find somebody that I can trust to take these bunnies. I’m like, how weird has this been? Like I get a call off a postcard.

[00:14:57] Pace Morby: Now I’m all of a sudden in somebody’s backyard trying to rehome their bunnies. And if I could have told myself that, that actually is like 99% of this entire real estate business. I would’ve jumped in this business way faster because that is like every time I’m talking to a seller off market or getting a deep discount or buying their house with creative finance, it’s because I’m helping them do something along these lines.

[00:15:19] Pace Morby: So Janie says, I need to rehome these bunnies. Do you know anybody? I go, yeah, I know somebody. So I literally open up my phone, I call my mom and I go, mom, you know, I’m 30 years old at this point. So my, I call my mom and I go, Hey mom, I’ve got Janie Munson on speaker phone. Here’s her situation. Can you help me?

[00:15:34] Pace Morby: My mom shows up to the house 45 minutes later in a truck I’ve never seen before. I had no idea. Still to this day, don’t know where that truck came from. Pulls up in a red truck, takes the bunnies, gives me a hug, tells Janie thank you, and then she takes off and Janie’s like, wow. I have been trying to solve this problem for a year and a half.

[00:15:54] Pace Morby: And every single person that came to this house, none of them asked me how they could help me, and you not even wanting to give me an offer. Decided to help me and not just ask me to help, but like actually follow through within an hour of me asking you, you have solved a problem I couldn’t solve in a year.

[00:16:10] Pace Morby: I go, okay, well have a great day. She’s like, wow, you’re really not going to give me an offer? Nope, I can’t afford your house. You want too much money? Have a great day. Gave her a hug. Walk away. Two weeks later, I get a call, Janie Munson. Pace. Today’s the day I have to make a decision. I put it on my calendar. I have to make a decision on who I’m selling my house to, and I have come to the conclusion, you are the only person I want to sell my house to.

[00:16:35] Pace Morby: And I’m like, wow, I’m so honored. I’m so blown away. But Janie, I can’t afford to pay over $165,000. You should take the other offer. She goes, I don’t care what your offer is, Pace. I trust you as a human being and you provided more value to me in all of these months of me researching all of these people.

[00:16:53] Pace Morby: 15 people came to my house before you, and 15 people came to my house after you, and you were the only person that asked me how you could help me. You were the only person that didn’t look at my house and criticize my single pane windows, my roof that was falling apart. My hot water heater. My air conditioning unit is super old and barely hanging on by a thread, and all you did was show me love and thank me for being a teacher because you loved your teachers.

[00:17:17] Pace Morby: Nobody, not one person. They showed up and they were their fancy cars. They showed up with their name tags on their shirt. They showed up in their colored shirts and their business cards. You are the only person that showed up as a human being, and she says, I don’t care what your offer is. Get the paperwork, come up to my house, let’s get the deal done.

[00:17:34] Pace Morby: I ended up buying this house for $150,000. People that, that are listening to this now are like, where’d you come up with 150 grand? Well, I didn’t. I got a contract for 150,000 and I sold that contract to Bethany Willis for 175,000. Bethany Willis bought the house for me for 175,000. So I wholesaled my first deal and I made 25 grand for probably three hours worth of work.

[00:17:57] Pace Morby: And in my conversations with Bethany, she was congratulating me and I said, man, I had no idea like how fun this business is. I get to just help people all the time. And she says, Pace, you learned the most valuable lesson in real estate on your first deal, and you should consider yourself lucky. I go, what?

[00:18:12] Pace Morby: What’s the lesson? She says, two things. Same thing, but two different, she’s like, I want to say it two different ways. Number one, when you buy a house and you’re trying to be an investor, it’s never about the house. I’m like, wow, that’s interesting. She’s like, you didn’t even know what to look at. You didn’t know what to, how to comp it.

[00:18:29] Pace Morby: All you did was dig into the lady’s problem and help her solve and give her the service. It wasn’t about the house, it was about her as the individual. And if the fact that it took you one deal to fi find that out, it took me 10 years to find that out. And once I found that out, my conversion rate tripled, quadrupled, et cetera.

[00:18:45] Pace Morby: And the second way to say this Pace is that you found her bunnies. And I was like, wow. She said, think about this. Everybody else was just in the house, criticizing the house, yet you took the extra step to get behind the scene, get into her psyche, and ask her to get into her backyard where her real problems were.

[00:19:04] Pace Morby: Nobody was invited into the backyard, nobody was invited to understand the real problems. You understand this now, that if you find the bunnies of every seller, you will win. And I was blown away. And here’s what happened. I was sending out postcards generating a lot of leads. And opening escrow on a lot of cash deals.

[00:19:21] Pace Morby: I was doing a good job. And then my escrow officer, her name is Eileen Brown, she’s like, who are you dude? You’ve gotten like three contracts in a week. And I was like, yeah, because I’m, I know how to find the bunnies. She’s like, excuse me. And I tell her the story and she’s like, oh, okay. How many leads are you, do you got for every contract?

[00:19:37] Pace Morby: I go, well that’s kind of the problem. I’m generating a lot of leads right now. But I can’t help everybody. I can’t find their bunnies or basically their bunnies are locked up and she’s like, what do you mean? I go, they don’t have any, a lot of these people don’t have equity. They just did a cash out refi last year.

[00:19:51] Pace Morby: They, maybe they bought the house just six months ago. They don’t have a lot of equity. They got a job transfer or I get a lot of sellers that are just really aggressive on their sales price and they just want to sell at a really high price. And she’s like, Pace Those people have bunnies. They’re just different shapes and sizes.

[00:20:07] Pace Morby: I can show you how to find those bunnies. It’s called subject to and seller finance. And I’m like, you’re joking me. Well, what I don’t what subject what she’s like. It’s called subject to. It’s where these people who have no equity have payments on their houses. You can just take over the payments on those houses and then turn those houses into cash flowing properties.

[00:20:27] Pace Morby: And then the tenants that you put in those houses can pay down those mortgages and you can cash flow and. I’m like, wait, what? Wait, I can take over somebody’s mortgage. She’s like, yeah, it’s a different colored bunny, but it is a bunny. It’s a problem. Somebody’s problem is their bunnies is what you’re telling me, right Pace?

[00:20:42] Pace Morby: I go, yeah. So she goes, go back to all your leads that didn’t have equity, and your sellers that want too much money. The ones that want too much money are typically seller finance. The people that want that have no equity are subject to. And within my first 30 days of doing deals, I was able to double, triple, and then now quadruple my conversion rate by using these strategies subject to in seller finance.

[00:21:02] Pace Morby: And I learned from Eileen Brown, my, my escrow officer, that I could wholesale these deals. I could fix and flip them depending on, you know, the situation and I could buy and hold them and put them in my portfolio. And if you guys on the podcast, you can’t see this, but you can look at my map if you guys are watching this.

[00:21:18] Pace Morby: We now have 1800 doors all over the country. 1800 doors on every single one of them was purchased with creative strategies, subject to seller finance, novation agreements, lease options method. All sorts of wrap, you know, wraparound mortgages, all these things that are really cool, and I didn’t know what they were, and it was because nobody simply explained them to me until Eileen Brown explained them to me and tell the bunny story.

[00:21:42] Pace Morby: I was like, okay. So the practice of buying discounted real estate and being an investor is finding people who have problems and figuring out how to solve those problems for them so that they have the convenience. And relief so that they’ll give you a discount on their home. Or if they can’t give you a discount on their home, you can just take over their payments and solve their problem.

[00:22:03] Pace Morby: And nobody explained that to me. I call my dad. My dad calls me. Okay? This is where it ties back in with my dad. My dad calls me, he goes, man, How’s this real estate thing going, man, you broke the curse like you got into real estate. I go, man, dad, you wouldn’t believe it. He goes, oh I’m blown away. Your mom just told me the story about these bunnies that she brought home.

[00:22:21] Pace Morby: Like what was that all about? I go, oh, that wasn’t even the cool part. Dad and I start telling him about subject to and seller finance and lease options and all these cool things that I’m doing, and he says, I go, have you ever heard of subject to and seller finance? And my dad says, yeah, how do you think we lived in every single home you grew up in since the day you were born, until you were 20 when you moved out?

[00:22:39] Pace Morby: And I’m like, what are you talking about? And he says, well, you know, we have 12 kids Pace. I worked as a CPA in the daytime making $60,000 a year, and then I had to moonlight and bring in cash under the table as a contractor. No bank would give me a loan. So I had to go out and work with sellers to give me rent to own.

[00:22:56] Pace Morby: And then I learned about just taking over mortgage payments on subject to. Then I started figuring out seller finance and I said, dad, why did you never, why didn’t you like start branching into real estate investing yourself? And he says, because I was too busy installing other people’s toilets at their houses.

[00:23:13] Pace Morby: I was too busy trading my time for money, and so I’m lucky. I’m grateful for my parents. I’m grateful for my dad amplifying me to a point where I could break the family curse and actually get into real estate and be the one that changes the trajectory of all of our future generations’ lives as having true wealth and having houses make money for us rather than we make money by touching houses, which is what I did as a contractor.

[00:23:36] Pace Morby: So the F-150 story ties in where I got so good at this. I got so good at creative finance and explaining things to sellers because I would use stories that made sense to sellers, just like I just did with the bunny story. I get so many people call me and they go, Hey, Pace, I got a deal. I go, great. Tell me about it.

[00:23:53] Pace Morby: And they’re telling me about it. And I said, so where do the bunnies, why would the seller sell to you at a discount? Why would the seller give you a good deal? Why would the seller let you take over payments? Why would the seller finance you? What are the bunnies? And these people that think they understand how to get into real estate investing are just looking at random houses on the MLS guys, people that are selling on the MLS typically don’t have bunnies.

[00:24:14] Pace Morby: They, bunnies are the motivation. Bunnies are the reason why they need to sell to you at a discount quickly, or bunnies are the reason they gotta let you take over their payments. You gotta find the bunnies and you gotta start where the bunnies exist, which would be foreclosure, probate, expired listings.

[00:24:31] Pace Morby: People that have long days on market with real estate agents on the mls. I would never call a deal on the MLS or try and buy a deal on the MLS unless it’s been on the MLS for over 90 days because now I know that they’re going through some pain. They haven’t gotten offers. They’re having a challenge.

[00:24:45] Pace Morby: That’s so easy to see that they have bunnies that I can help rehome. Well, I got so good at this. I got so good at this that I started having wholesalers and real estate agents in town call me and say, I have a lead and we don’t know what to do with it because the seller wants too much money. And I would just go on these appointments and I basically, we, everybody in town ca started calling it the Pace method, which was taking people’s dead leads.

[00:25:09] Pace Morby: At least what they called dead leads. And I would go and make money on these dead leads. And I got to a point where I actually liked the dead leads way more than I liked the leads that were willing to sell to me at a discount. I wanted the ones that were impossible because that’s where I was making the most money, and I had the seller.

[00:25:25] Pace Morby: It was a wholesaler. His name is Tim. Tim calls me up one day and he goes, Pace, I’ve got this seller, and the seller is, she wants $110,000 for this property that me as a wholesaler, I gotta offer like 40, 50 grand on this in order to me assign to assign it to a fix and flipper in order for them to have enough meat on the bone to go and sell it for one 10, it’s worth one 10 renovated, but this lady wants one 10 right now.

[00:25:49] Pace Morby: I go, okay, great. I love that. That’s a great lead for me. He’s like, how is that a great lead? I go because I know how to solve the problem. I know how to identify her bunnies and I know how to liberate and rehome those bunnies and solve her problem. And so I go to this appointment. Su seller’s name is Susan and Dale, and this is the first time I used the F-150 story to get a seller to understand what terms were.

[00:26:11] Pace Morby: So I go to the appointment. Tim’s there, Susan, Dale. The owners are there. We’re in the carport because this property, three bed, two bath house. This property, by the way, if anybody wants to look it up, it’s 1906 South 70th place in Mesa, Arizona. I still own it to this day. We meet in the carport. There’s tenants in the property.

[00:26:28] Pace Morby: We’re sitting there talking, basically in the carport. The tenants leave. So we go inside the house, we’re now in the kitchen. We’re chatting, and I go. So Susan, what’s kept you from selling the house so far? Same question I ask every single seller. My team asked every single seller, what’s kept you from selling the house so far?

[00:26:45] Pace Morby: She says, well, because everybody’s low balling me. Yeah, it’s typical. I go, I think that’s why I was brought here and introduced to you. Let me guess. You’re probably getting offers somewhere around 40, maybe $50,000, and you’re wondering why all these investors are low balling you. She’s like, yeah, that’s like exactly the offers I’m getting.

[00:27:06] Pace Morby: How do you know? I go, because if I was going to give you a cash offer, I would give you the same cash offer and. I would then be duking it out with these other investors, so they’re not investors, they’re wholesalers. And I would be duking it out with other people trying to compete with them and trying to throw them under the bus and say, these aren’t good people to sell to.

[00:27:24] Pace Morby: I’m a better investor to sell to because I’m honest and I’m trustworthy and I can close faster. It’s like, Susan, those advantages, like everybody has those advantages. The reason I’m here is because I’m a superhuman. I can solve your problem at a level that other people can’t. She’s like, so you’re telling me you’re not going to give me a cash offer?

[00:27:41] Pace Morby: I go, Nope, I’m not going to give you a cash offer. Because if I was. You would also say, I’m going to low ball you, so I’m not going to give you a cash offer. She’s like, okay, well then how are you going to buy my house? I go, well, Susan, if I was willing to come up to $110,000, which is astronomical compared to what everybody else is offering you, would you be willing to give me terms.

[00:28:01] Pace Morby: Susan has no idea what terms are, most people don’t know what terms are, and so I came up with really great, easy stories to tell people, to kind of help them understand what terms meant. So I always lead with that. I say, well, would you be willing to give me terms knowing that the seller will not know what that means and it will cause them to pause and go Terms, which then tease me up to tell me, tell my F-150 story, which I’ve told a thousand times.

[00:28:24] Pace Morby: My students have told this a thousand times. People take it from my YouTube videos, and everybody has permission to take this story and go use this story to explain things to a seller. So this is the F-150 story. I go, all right, Susan, let me tell you what terms are, I’m a contractor, I trade. That’s what I did for a very long time.

[00:28:40] Pace Morby: I had an F-150 World’s most popular truck, and this truck hit 320,000 miles, and it was a truck we were using that four guys would sit in the truck, they’d go from job to job, they’d paint houses. And this truck was a catalyst and a tool to make money for my company. And it got to a point where I was having engine failure and overheating and all sorts of things, and it was actually causing me more headaches than it was giving me benefits.

[00:29:06] Pace Morby: Probably similar to the house that we’re talking about right now. Your tenants are giving you a hard time. They’re not paying on time. You’re constantly dealing with them, and this is where some of her bunnies start coming out. Okay? She has family members renting the house from her, taking advantage of her, and then complaining to the rest of her family about how she’s always demanding her rent on time, and that she doesn’t understand the hardships that they’re going through.

[00:29:30] Pace Morby: And what kind of Christian is she because she is demanding to be paid every single month. These are bunnies. Okay? These are the bunnies that Susan had. So I obviously extracted all that in the upfront conversations. I already knew that before I went into the F-150 story. So I said, so just kind of similar to what’s going on with your house.

[00:29:47] Pace Morby: You’ve got more problems than the benefits. And you’re looking to offload the property, but you don’t want to just get rid of the property. You want to get as much as you possibly can. Well, guess what? I’m no different than you. I decided that I was going to sell this F-150, so I go to Kelly Blue book, which is the Zillow for cars, basically.

[00:30:07] Pace Morby: Okay? And she says, Oh, okay, cool. Yeah. All right. Well, yeah, great. Yeah, that’s kinda like the Zillow for cars. So I’m starting to tie these two parallels together and I said, I look at the Kelley Blue Book, I see the truck’s worth five grand. And I said, oh, hell no. I’m not selling this truck for five grand.

[00:30:23] Pace Morby: It makes me way more money than that. I’m going to go put this on Craigslist to see if there’s any silly idiot that’s going to pay 10 grand for it. So I put this truck on Craigslist. For 10 grand, and I said, I’m just as belligerent as you, Susan. You want $110,000 for a house that everybody else is offering 40, $50,000.

[00:30:42] Pace Morby: You want what you want? Well, guess what I wanted? What I wanted to, but unfortunately I didn’t get any emails. I didn’t get any phone calls. I didn’t get anybody to even criticize me about my high offer. Three months goes by and I didn’t sell the truck. Nobody even messaged me one time. Just way too high.

[00:30:58] Pace Morby: After those three months are up, my wife comes to me and says, Pace, every morning I have to drive around this truck parked in our driveway. It’s not a lot, but I gotta kind of watch out for it. I gotta worry about it. And then when I come home, I gotta do the same thing. Can you sell the truck, please? And I go to my wife.

[00:31:13] Pace Morby: I’m like, sweetheart, I’m not going to go put this truck on Craigslist for five grand, because if I do, I’m going to get an offer for $3,100 and this person is going to go, I’ll give you all cash offer for $3,100. That’s what you’re going through right now, Susan. Everybody’s coming in and low balling you.

[00:31:30] Pace Morby: Everybody’s low balling you because they want to leave meat on the bone for themselves as you can understand. And I said, so I decided I’m not going to do that. And I told my wife, I’m not going to do it. She says, well, why don’t you just take payments? And I’m like, oh my gosh, that’s so genius. So this is what I did, Susan.

[00:31:46] Pace Morby: I went back to Craigslist and I changed one thing. I said, F-150 will take payments. And within 30 minutes I had to turn that ad off because I was swarmed and swarmed with people. Where are you? I’ll come and give you a thousand dollars down right now. So Susan, did I sell that truck for $10,000?

[00:32:05] Pace Morby: She said probably. I go, I sold it for $12,500 with a thousand dollars down, $350 monthly payments for the next several months until that was paid off. And she’s like, wow. And I go, that is terms, it’s where I, the seller, give my buyer terms, okay. Down payment, interest rate, length of time that they’re, and I become the bank.

[00:32:26] Pace Morby: So what I’m asking you to do, Susan, is to become the bank. And the gentleman who bought my truck from me gave me a thousand dollars down. He then made monthly payments to me and I got the number I wanted. I made way more money because I was willing to be patient and play the bank. And the best part about it, Susan, I was able to help a family and I was able to help this gentleman who bought my truck.

[00:32:47] Pace Morby: Guess what he did? He was an auto mechanic starting a paint company. He fixed up all the truck issues. He did that himself, and he went and put that truck into operation and he made a lot more money on that truck. So some people might look at him and go, man, you overpaid for that truck, Jose. No, he did not.

[00:33:04] Pace Morby: Because the value of something is never the purchase price. The value of something is always what you can do with it and what money you can generate from it. So Susan, if you’re willing to give me terms that can allow me to go make money on this, I would be willing to come up to your $110,000. She’s like, done.

[00:33:22] Pace Morby: What do we gotta do? I go, well, you tell me. You’re the bank. You’re the bank of Susan. I’m coming in, applying to you. How do I get a loan? How can you sell or finance this house? To me, she says, I want $20,000 down and 8% interest. I’m like, okay, that’s a problem. Okay. Everything’s a teeter-totter. Okay? You want a high purchase price on one side so that your one side of the teeter-totter is really high.

[00:33:44] Pace Morby: Well, then if you want a high purchase price, then the other side of the teeter-totter needs to be really low. And that would be a low or no down payment or a low or no interest rate. So what do you want? Do you want a high purchase price or do you want a high per down payment? She says, I want a high purchase price.

[00:33:58] Pace Morby: I go, then let’s do a no down payment and no interest because you want to sell the house for a really high price of 110 grand. She says, I can’t do that. I’ll give you no interest, but I will. I need a down payment. I go, okay, cool. Why don’t we do this? You pay closing costs. Okay, so she paid closing costs on this house.

[00:34:16] Pace Morby: I’ll take over your tenants so you don’t have to evict your family. I already knew what I was doing. I knew the problem with her tenants was actually that it was a family member renting from a family member, and the second I took over the property, all of those problems would go away. All of them would go away.

[00:34:31] Pace Morby: Guess what? Those people are still renting the property. They’re on time every single month. And it’s because they were taking advantage of a family member. That’s all it came down to. So me being in that situation was actually better. So I never had to renovate this property, which was cool. And she says, I want, okay, I want $10,000 down.

[00:34:47] Pace Morby: I go, no problem. I’ll give you $10,000 down, but here’s how I want to do it. Every six months, I will give you five grand above the payments. She goes, okay, so what I did is here’s kind of how it works. The tenant was paying $1,650 a month. Now they’re about $2,000 a month, but they’re, they were at $1,650 a month.

[00:35:05] Pace Morby: And the way I structured this deal, which I’ll get into in a second, I was netting $1,000 every single month after my payment to Susan, which I’ll tell you, I structured my payment to her after my insurance, my taxes, my vacancy repairs. I was netting a thousand dollars every single month. So imagine I go, I’ll give you a down payment, but I won’t give it to you when we close escrow.

[00:35:25] Pace Morby: I’ll give it to you six months later, and then I’ll give you another portion of it. Six months after that. So I accumulate a thousand dollars in cashflow for six months. Now I’ve got six grand in cashflow. I take that six grand pull, five grand out of it hand five grand to her, and that pays down her down payment.

[00:35:40] Pace Morby: Then six months later, I pay another $5,000 out of the cashflow from the property. So I got closing costs paid for by her, took over the tenant, so no renovation. I got 0% seller finance, and I didn’t have to put any money upfront. She allowed me to pay my down payment out of the cashflow of the property.

[00:35:57] Pace Morby: I’ve done this hundreds of times. And if you’re willing to meet the seller at their number, especially in a seller finance situation, sellers that are willing to sell her finance just really want to win on one thing. They want to sell at the maximum amount of money as possible. And so, how did I structure the payment to her?

[00:36:13] Pace Morby: My payment to her was $375 a month. Again, going back to the bunnies, the story of the bunnies is this. She says we want to retire Pace. We are sick of begging our family member to pay the rent. We just want to go and retire and travel around the country in an RV one month here, one month there, one month here, one month there.

[00:36:34] Pace Morby: Obviously obtain that information. I waited to utilize that as am as ammunition for a later portion of the conversation. And now is the time where I use that information as ammunition. And I said, so what kind of payment are you looking for? She says, I don’t know what would you pay? And I said, well, how much does it cost you guys to rent a typical RV spot when you guys are traveling around the country?

[00:36:56] Pace Morby: She said, $375. I go, okay, why don’t we just set up the payment for $375? So you never have to worry about paying another RV spot rental ever again, and you and your husband get to go around the country and just travel. She goes, okay, that sounds great. I didn’t have to use this fancy spreadsheet. I didn’t have to use some magic calculator.

[00:37:14] Pace Morby: I just understood her motivation. I understood what she wanted to accomplish, and I helped find her bunnies and rehome those bunnies, if that makes sense. The F-150 story, I’ve told this a thousand times, and it breaks seller. It just breaks it down to the most simple version, a vehicle. I took payments on a vehicle.

[00:37:33] Pace Morby: I let somebody pay over the value of that vehicle because they didn’t want to use their credit or they didn’t have credit. They used very little money down and I won. Okay, I won. I sold that truck for two and a half times its value because I was willing to give somebody terms. And so I go around the country and I’m buying houses a lot of times at 91 cents on the dollar, 98 cents on the dollar.

[00:37:54] Pace Morby: I’m paying almost full retail all of the time, but guess what I’m getting? I’m getting a lot of no money down, low money down, very low interest rates. I’m taking over mortgage payments at 2%. I just got a deal in Hawaii. Last week, two acres on the ocean seller. Let me take over their 2% interest rate.

[00:38:12] Pace Morby: They have a guest house in the back that’s already cash flowing. Payments already being made by tenants in the back. Now I gotta fill the main house and I’ll do an Airbnb there. I’ll probably never see that property. You think at this point, oh, you can go visit all these houses. No, I don’t have time for that.

[00:38:26] Pace Morby: We have so many deals that we’re buying all over the country, and so creative finance changed my life. I didn’t have the money to buy these assets. I have not had my credit pulled. I have not talked to a lender. I’ll give you, I’ll give you a really good example of this. I decided I want to buy a house in Montana on a lake.

[00:38:42] Pace Morby: Kalispell Whitefish area up in Montana. So one of my students, newer students, calls me up and he goes, Hey, I’m a real estate agent up here. I’ll help you fi I keep hearing you say you want to have a house that you can fish on. You want water, you know, flowing through it, or you want to be on a lake, I can help you.

[00:38:56] Pace Morby: I go, yeah, but I’m not going to buy anything that’s cash, so you gotta go find me creative. He goes, oh, there’s no creative finance deals up here. It’s too ritzy, it’s too nice. I go, Okay. There are literally hundreds of deals everywhere. And so after a couple of zooms with him and coaching him along and showing him how to go find them, he, here’s what he said.

[00:39:14] Pace Morby: He goes, I will go find these, but I want you to also do me a favor and go get pre-qualified for a loan. Okay, cool. So I call his mortgage officer up there in Kalispell. That was about six weeks ago. I have still not got pre-approved because I’m a business owner. I claim nothing on my taxes. Right. So she’s having a hell of a time getting me pre-approved, even though we make our companies generate millions of dollars.

[00:39:36] Pace Morby: He goes in three days, finds me 12 properties on seller finance. And he’s just like, I’m blown away. I’m blown away that there’s that many deals out here for seller finance or taking over mortgages. I just wasn’t paying attention. I go, no, you just, it’s not that you weren’t paying attention, that you didn’t have the information in your head for your head to pay attention for you.

[00:39:55] Pace Morby: It’s called the frequency effect, or I call it the Tacoma Effect. Other people Use, there’s some scientific name for it. But when I bought my first Toyota Tacoma, I thought I was the coolest kid. I was like, I got a Toyota Tacoma. Nobody else has a Toyota Tacoma. And then all of a sudden I’m driving around and I’m like, holy crap.

[00:40:10] Pace Morby: Everybody has a Toyota Tacoma. It’s the same thing with creative finance. Once you know it’s there, you can’t unsee it. It’s there and it starts popping up, and what you focus on expands and then all of a sudden there’s deals everywhere. And we’re at a point now where 85% of the deals we do. Are all creative finance.

[00:40:28] Pace Morby: Only 15% of them do we use cash, 85% of our deals. Multifamily RV parks, land, single family homes. Storefronts come. We’re looking at a strip mall right now. We’re even buying businesses with creative finance right now. We got a CPA firm that we’re negotiating right now. No money down. They will give us a hundred grand the day we close escrow out of their pocket to take over their company.

[00:40:52] Pace Morby: Understanding people’s bunnies is what this is all about. Why would a CPA firm sell to me with no money down and give me a hundred grand to take over their business on day one? You know why? Is because the CPA a has 15 people working underneath him. They have a great business, but now the CPA wants to retire, but he never put anybody in charge.

[00:41:12] Pace Morby: He never built a real business that didn’t rely on him. So he’s saying, I’m going to retire, and now this business I put 40 years of my life into is going to die because I didn’t know how to operationally build a succinct and like a manufacturing line where I could step away and not have to be in this business and I could actually retire.

[00:41:30] Pace Morby: I need to basically pay somebody to take over my business so I can have a check come in every single month through my retirement. Otherwise, this business will implode. So we come along, take over his CPA firm, we put some a c o in place, a CFO, and we start running this business. He gives us a hundred grand upfront to go hire people, and then all he wants is he says, pay me 10 grand a month until I die.

[00:41:53] Pace Morby: That’s creative finance. Buying businesses, buying cars, buying houses, apartment complexes. I will never use cash ever again. It is the only time we use cash is if we’re wholeselling or we’re fixing and flipping. But to acquire and put things in my portfolio, 100% of it has always been creative finance, subject to seller finance or the Marvi method.

[00:42:13] Patrick Donley: So many good stories that Pace. I really appreciate your storytelling abilities. It’s incredible. I want to get into the book though. Talk to me little bit about, it’s called “Wealth without Cash”. It comes out in May. I want to hear about what the inspiration was for it, what the writing process was like. My co-host, Robert, who wrote a book about house hacking, and it sounded like a pretty grueling process.

[00:42:33] Patrick Donley: Talking to him. Just talk a little bit about the inspiration for it, why you wrote it, who it’s designed for, and just like what the process was like for you. 

[00:42:42] Pace Morby: I did not like writing a book, and so I ended up having to hire a ghost writer. I’m great at speaking, I’m great at telling stories. I’m great up in front of a whiteboard, on camera, on stage.

[00:42:51] Pace Morby: I’m great at those things, but sitting down and keeping me still is an impossibility. So I hired a ghost writer to go through and have conversations with me and me tell stories, and he took those and put those into the book. I just feel like a book just can’t do a hundred percent justice of what I want to talk about.

[00:43:06] Pace Morby: So what I did also, and I love videos so much, I created a video companion guide that comes with the book. So every single chapter gets three hours of whiteboard videos and stories about deals and why this and terminology. It is a masterclass of creative finance. The book is basically the appetizer. The video companion guide is just the meat and potatoes, and it is so cool to have gone through that process.

[00:43:30] Pace Morby: It took a year and a half. I still have two more videos that we’re still putting together. Mad Dash for the release on May 2nd. And it was grueling. It was hard on, on July 4th, last year when the book was completed, I couldn’t even read the book because I was so excited. I was like, okay. I’m like, oh my gosh, I got, I want to do more.

[00:43:47] Pace Morby: I want to add more information to this. And BiggerPockets, an amazing collaborator, reminded me to simplify. So it’s only 200 pages. It’s really an appetizer into creative finance. And then the Video Companion Guide really gives you a ton of power, and that video companion guide is free when you buy the book, which is really cool.

[00:44:05] Patrick Donley: That’s amazing. I did not know that you did the Video companion guide too, so I will put links in the show notes for that. Talk to us about who the book’s designed for. Is it for the beginning investor, for something a little more advanced? What would you say about that? 

[00:44:19] Pace Morby: It’s definitely not for the advanced.

[00:44:21] Pace Morby: I’d say that there’s a lot of things in the Video Companion Guide that are way advanced, but the book itself is just an appetizer. It’s just there to let you know what these terms are, that these things exist. And then for you to dig a little bit deeper. Otherwise, this book, I mean, creative Finance is so much more diverse than Burr.

[00:44:38] Pace Morby: It’s so much diverse than much more diverse than Cash Deals. To put it into perspective, I look at like, let’s say as a contractor, I’d pull up to a job site and have a truck full of tools and a trailer full of tools and everything you could imagine, Jack hammers to drills and saws and everything. You can imagine a cash offer to me is a hammer.

[00:44:57] Pace Morby: It’s all it is a hammer. Creative finance is all of the other tools. It is so diverse. It is so deep and so wide that you can go to an appointment. And use such a variety of tools that a 200 page book is never going to be able to tell you all of that. So the book is really for beginners to let them know that it exists and that these things are there, and then for them to go out and start doing the research and go onto some of the BiggerPockets forums and go onto the BiggerPockets YouTube channel and listen to some of these videos that I’ve done and give way more in depth stories.

[00:45:28] Pace Morby: The Video companion guide is then basically 30 hours of just unbelievable, like I’ll give you a good example. When I did the video companion guide, I was like, I want a live audience. So I have a studio. I brought in 15 people into the live audience, and the day that I press record on the first video for the video companion guide, I get a text message from one of my sellers homeowner, lives in Boston, has a house in Boston, and he says, Pace.

[00:45:54] Pace Morby: We’ve been negotiating for the last couple of weeks. I’m in Phoenix for a convention. I think your offices are here in Phoenix. Any chance we could meet up and finalize the deal today? I go, yeah, but I’m recording in my studio with an audience. Do you mind just stopping by here? And he goes, no problem. So literally the first video you will watch is a seller walking into my studio and going, all right, how are we going to do this deal?

[00:46:18] Pace Morby: And for an hour and a half, I broke down subject to for him, and I gave him an offer, shook hands. I bought his house right there on live camera, only to be seen in the video companion guide. So an hour and a half appointment face-to-face with the seller. Talking real live. Here’s the address, here’s the numbers, here’s why I would buy it.

[00:46:36] Pace Morby: That one video alone is a masterpiece. The book could never do that, and so the book is an appetizer that hopefully leads you into the main course meal, which is the video companion guide. 

[00:46:46] Patrick Donley: That’s really awesome. I am eager to look into all of that. I wanted to talk a little bit about your why. Early in the book, you talk about the seven layers of why.

[00:46:54] Patrick Donley: Yeah. Can you explain to us that idea? And then I also wanted to hear what your Pace Morby’s, “why” is. 

[00:47:01] Pace Morby: Yeah, it’s interesting, you know, somebody took me through this practice, actually it was Dean Graziosi when I became friends with Dean. And Dean says, what do you want to do? And I tell him, I want to do, I want to become a billionaire.

[00:47:11] Pace Morby: And he goes, why? I go, well, because I can provide for my family. I then I pause and I was like, so I can provide for my family? He goes, okay, but why? And oh my gosh, what a practice of depth of like really getting into this. And then you really realize like, wow, okay, I actually don’t know my why. So when you go through the seven layers of why, it really forces you to get deep and deep, and you have to stop.

[00:47:34] Pace Morby: If you have not gotten to your seventh layer, then you truly don’t understand your why. Okay? Now for me, my why is I was put on this earth by a creator, whether it’s God or the universe or whatever. I was put on this earth to help my other mankind, and I would be wasting my life if I was not obtaining resources and experiences and then turning around and giving those back.

[00:47:56] Pace Morby: My why is that this is my purpose. I was put on this earth as an instrument, as a tool, as whatever to help other people go and find their why, find their purpose, and find financial freedom. And so the reason I do all the things I do is because I’m supposed to. I’m required to. It’s my responsibility, it is my duty, and I am li I’m trying to live up to my creator’s requirements of me.

[00:48:18] Patrick Donley: I love it. I wanted to get into a little bit more of just. There’s so much to creative financing, but, and you’ve kind of touched on, you know, some of this as you’ve have, you’ve told some of your stories, but for our listeners that have no idea about subject to and seller financing, just at a high level, what are the differences between those two?

[00:48:36] Pace Morby: The two differences between a subject to and seller finance means subject to means there’s an existing debt on the asset. So the asset is a house, could be a car, could be a business, right? So let’s take a business, for example, If I go to buy a business and I’m talking to a company and they go buy us for 2 million, and I go, great.

[00:48:55] Pace Morby: What do your books look like? And they go, well, we have an sba, a loan for 2 million. Okay. I go, great, so I’ll just, how about I just take over your SBA loan and I just make payments on the SBA loan and you walk away? That’s called subject to. I literally took over payments on their debts and I took over the asset by transferring the ownership into my name.

[00:49:13] Pace Morby: That’s subject to same thing with a car. I buy a car subject to, I go to a car owner and I go, Looks like you’re having a hard time selling that on Craigslist. It’s been on Craigslist for a hundred days. Would you let me just take over your payments and I can just take over car payments? Same thing with a house.

[00:49:27] Pace Morby: Hey, looks like your house has been on the market for 120 days. Can I just take over Your payments subject to is taking over an existing debt that is already there. And the benefit of that is that you’re getting, you don’t have to go through an application, you don’t have to talk to a bank. Nobody check cares about your credit.

[00:49:44] Pace Morby: Nobody cares about your job history. Nobody cares about your tax returns. None of that. Thousands of deals we’ve done. Nobody’s ever asked for any of those things. That’s subject to seller Finance means. Let’s say I go to somebody who has a car in Craigslist and I call them up and I go, can I take over payments?

[00:49:59] Pace Morby: They go, oh, I don’t. I don’t have any payments. I own this Free and clear. I go, okay, well then seller finance it to me. Okay? Seller finance means that the thing that I’m buying is paid off and the seller is going to finance me. This is why we call it seller financing. The seller is financing me, and they are becoming the bank.

[00:50:17] Pace Morby: So I have to then work out an agreement with that seller like I did with Susan. I go, okay, what down payment do you want? Okay. And the four parts to that are purchase price, down payment, interest rate, and length of time. They’re willing to take payments. And so that’s seller financing. Finding things that are paid off, free and clear.

[00:50:33] Pace Morby: And by the way, a lot of people don’t realize this, but 40% of all the homes in the United States are paid off free and clear. 40%. So you go look at 10 houses, it’s like 38.9% for basically 40%. People don’t realize that. So when you’re calling sellers and they just want too much money, that’s typically a seller finance situation.

[00:50:52] Pace Morby: Now I, the way I determine these very simply is I say subject to typically has pain. There’s some sort of debt, there’s pain there, there’s pain that you have to solve. They’re going through foreclosure, they can’t afford the payment. Something is going on. Okay. Seller Finances typically gain. They are looking for gain.

[00:51:11] Pace Morby: They, all they want to do is win. They want a high purchase price. And so subject to and seller finance are different, not only in the sense that subject to has a debt attached to it, and seller finance is paid off, free and clear. But it’s also different in the sense that the people you are buying the house from on subject to are going through a really hard time.

[00:51:29] Pace Morby: The people that you’re buying on seller finance are typically the opposite. They’re very well off. They don’t need the money. They just want to make sure that they sell at the highest possible price. Like I’ve got a 43 unit in San Angelo, Texas, so multi-family. I bought last year on seller finance seller.

[00:51:44] Pace Morby: Mario was like, I’ll seller finance you, but I want 3 million bucks. Okay. I go, okay. You would probably get a cash offer for this for like 2.7, maybe 2.6, I’ll pay you 3 million. And the seller Barno was like, really? You’ll pay me 3 million. I go, yeah, but on terms, I’ll give you no down payment, 3% interest and I want 50.

[00:52:04] Pace Morby: Your term. Mario says, okay, great. He wins. He got $3 million on his books that he’ll collect payments for the next 50 years. And some people go, why would a seller do that? Typically, the people that are asking, why would a seller do that? Are not well off enough to truly understand why a seller would do that.

[00:52:22] Pace Morby: Sellers are well off in seller financing if you go on my YouTube channel. I have an interview with Mario, the guy that sold me the 43 unit with 50 year note, no down payment, 3% interest, and he gives us 19 reasons why he sold to me on seller finance. 19 reasons tax benefits avoids, he avoids real estate agents.

[00:52:42] Pace Morby: No surveys had to be done. He didn’t have to do any repairs. He got way more money. He added interest to the way more money he got. So not only did he get $300,000 more, he also will get interest on top of that, that he’ll end up making 5 million, 6 million on that total asset over the length of 50 years by becoming the bank.

[00:53:01] Pace Morby: He doesn’t have to deal with tenants anymore. Right now, the seller finance, the agreement that him and I put together called a note, he has a note that is secured against real estate. It’s the safest investment. I mean, what’s he going to do with the 3 million bucks if I gave it to him in cash? He’s going to go do what he wants to retire.

[00:53:18] Pace Morby: He doesn’t want to go invest in something he has to manage. So becoming the bank alleviates the need for him to manage a property anymore. You don’t call the bank when the toilets go bad. You don’t call the bank when the roof goes bad. So I’m upgrading these landlords in into the lender and I’m making their life really easy.

[00:53:34] Pace Morby: So seller finance, free and clear subject to has a debt attached to it. 

[00:53:40] Patrick Donley: Do you view your role primarily in trying to do these deals as one, as an educator? Is that one of your biggest things that you’re trying to do? It seems like in many cases that’s your primary role. 

[00:53:51] Pace Morby: It is the primary role. It’s one of the reasons.

[00:53:53] Pace Morby: If you guys look in my backdrop behind me, you’ll see that I have a gentleman over my shoulder right here. His name is Big Boi. He’s from a rap group called Outkast and cool thing is I own real estate with Big Boi now, which is nice. But more importantly, the reason why I have him over my shoulders to remind me that my job is to be a storyteller.

[00:54:15] Pace Morby: I tell stories to sellers. I tell stories to real estate agents. I tell stories to private money lenders all day long because telling stories gets people to understand the concept of what I’m doing and what I’m trying to accomplish. So, Yeah, I mean, sellers don’t know what subject to in seller finance is.

[00:54:29] Pace Morby: That’s my job to explain it to them in a third grade language. So instead of me being so high level telling a story about an F-150 and taking over payments, I could tell you one of the best stories I ever I could ever tell you. This is about a two minute story. Best story I could ever tell you. I have a camera guy that does my YouTube videos, gets hired, and he comes into my studio day one.

[00:54:52] Pace Morby: And he says, man, I’m working for the sub two guy. I’m so excited. I’m working for the sub two guy, and one of my other camera guys says, dude, I’ve been here for a year, and you come in here, you think you know what sub two is? You don’t know what sub two is, and the new camera guy’s name’s Jose. He says, yeah, but I don’t need to know.

[00:55:08] Pace Morby: I go, dude, you need to know if we’re, if you’re going to be my camera guy, you need to know what subject to is. And he goes, okay, tell me what subject to is. So I look at him and I go, okay, you’re a camera guy. I’m going to explain this to you in terms that you’ll understand. He says, okay. I go, what’s a camera and a light, like a light that you would really want as a camera guy?

[00:55:27] Pace Morby: He goes, oh, I want the A seven. I want the Sony A seven S three. I want the G master lens. I want the aperture D one 20 light. That’s my perfect combo. Okay, cool. Watch me. So I have him come over to my computer. I go on Craigslist and I go and I type in these terms and I find somebody has a similar combo of camera equipment that they’re selling, and I make three phone calls.

[00:55:49] Pace Morby: The first guy says No. Second guy says no, but the third guy says yes to this. I go, Hey, my name is Pace Morby. I am a wedding videographer and I’m hoping to build my business, but I need some help. I see you’re selling a bundle. I want to buy that bundle. I won’t even negotiate on price, but I need you to let me make payments on that bundle of camera equipment.

[00:56:12] Pace Morby: And the guy goes, you’re not going to negotiate on my price. I go, Nope. I imagine everybody else is trying to low ball you. 500 bucks, 700 bucks, whatever it is. He goes, okay, great. Can you send me some of your stuff so I can at least know you know what to do with the equipment? I go, no problem. I go, here’s my YouTube channel.

[00:56:25] Pace Morby: So I send in my YouTube channel, guy goes, okay, when do you want to come pick it up? Guy sells me a $3,800 camera. A few thousand dollars worth of lenses, a thousand dollars lighting kit, all of this with a hundred dollars down. And he said, everyti. And I set it up where I go $300 monthly payments as I take that equipment and go make money with it.

[00:56:44] Pace Morby: Doing wedding photographer. I’m not a wedding videographer. But that was the story I told the seller to understand why I needed the this stuff on terms. So Jose, I hang up the phone, Jose looks at me and he goes, you just bought my dream equipment. On payments and I go, yep, that’s called subject to, or seller finance.

[00:57:02] Pace Morby: And that’s what I do with houses. He’s like, wait, you can do that with houses? I go, yeah, you can do with anything you want a boat? I just bought an RV with it. I just, you know, I bought RV parks, mobile home parks, what do you want? What do you want? You name something and I can buy it with terms. And Jose goes and gets the camera, he gets the lighting, gets the lenses, does all that stuff.

[00:57:21] Pace Morby: And he goes and shoots, you know, side projects and he makes that $300 monthly payment to that guy that now is no longer the seller. He’s now the bank, and Jose makes a $300 monthly payment to him. And if I tried to explain that to Jose in housing terms, it would’ve taken an hour. But because I explained it to him in camera terms, he immediately got it.

[00:57:41] Pace Morby: And so my job when I’m talking to sellers or agents is to build rapport, get information about who they are. You know, if I have a seller that is a third grade teacher, I tie in stories about a crayon. You know, okay, well here’s what we could do with this. And here I tell a different story. I try to tie it into their life.

[00:57:57] Pace Morby: And I don’t go into them saying, subject to, seller finance, novation agreements. I don’t talk about notes and deeds of trust and wraparound mortgages. They don’t know what these terms are. So I have to tell stories that meet them on their level. 

[00:58:10] Patrick Donley: It’s great. The book goes into all of that. I highly encourage people to check it out when it comes out.

[00:58:15] Patrick Donley: Pace. How can people find out about you, reach out to you? What’s the best way for them to do that? You’ve got a lot of different platforms that you’re on. 

[00:58:22] Pace Morby: I’d say go to YouTube where you get about 4 million views a month on our YouTube channel so people seem to like it and DM me on Instagram. I’m the one that actually DMs and does all this stuff.

[00:58:31] Pace Morby: So thank you so much. I appreciate it. 

[00:58:33] Patrick Donley: Thank you. I really enjoy the book and best of luck with it. 

[00:58:37] Pace Morby: Thank you so much. 

[00:58:38] Patrick Donley: Okay folks, that’s all I had for today’s episode. I hope you enjoyed the show, and I’ll see you back here real soon. 

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