How to Invest in Real Estate with NO Money OR Credit w/Pace Morby

this is real estate rookie episode 280. every time on a subject 2 deal seller gets the number they want agent gets paid their commission and I get a property where I have an interest rate below four percent attached to it with a payment that I can go on cash flow immediately without a credit check and I pay a lot of times 85 to 99 of retail value so everybody wins the sellers get more money the agents get paid commission and I don't have to go to a bank everybody wins in the transaction my name is Ashley care and I'm here with my co-host Tony Robinson and welcome to the real estate rookie podcast where every week twice a week we bring you the inspiration motivation and stories you need to hear to kick start your investing journey and rookie audience do we have a show for you guys today we've got the one and only Pace morby on the real estate rookie podcast and if you don't know Pace pace is well known in the BP Community but Pace also has a new book out called wealth without cash supercharge real estate investing what's subject to seller financing and other creative deals and a pace comes Ono to break things down all about creative financing yeah he also talks about he gives this golf analogy as to why you may be playing this real estate game with just a putter when you should have all of your clubs um so I thought that was a super interesting analogy but very very relatable yeah almost like David Green asked right with the uh the metaphor is there it was good and then we we actually walk through how to get a deal today as in get a deal in one day so the main reason we have on as Tony mentioned that uh Pace just wrote a book wealth without cash so head to biggerpockets.com wealth without cash to pre-order this book make sure you pre-order before May 2nd Pace actually goes through what you get with the pre-order besides just the book and let me tell you these are opportunities like I think me and Tony might just purchase a couple books to kind of you know get our get the entries one of the prizes I'll just hint at one of them but you can literally get on a television show with Pace um if you're one of the lucky winners here um Pace also in addition to the book coming out he's got a boot camp coming out with Bigger Pockets about creative financing and subject two and that starts uh June 18th and then ends on August 26th so if you guys head over to bigger box dot com forward slash boot camps you can learn more about the creative Finance boot camp and of course if you are just a rookie investor and want to learn anything and everything about getting started in real estate there's also the rookie boot camp that I am co-hosting with Tyler Madden that will be starting those same dates uh over the summer peace welcome back to the show the last time we got together with you we were actually live at bpcon and got to do a live recording and now we're we're back to being virtual so how have you been that was special San Diego BP gone now the new BP con is in Disney World essentially Orlando yeah so it's not in Disney World I just look at Orlando I'm like all of Orlando is Disney World did you see that we're actually going to Universal one night too they rented out Universal Studios I saw that like the last night as like the cap like party I'm super excited about that hey so I don't know if you know this but that was one of our best performing YouTube videos or I think it was the best performing YouTube video for the real estate rookie podcast also wow that's cool you got some big shoes to fill today brother I just was so excited to hang out with you guys you guys were great to me and um Tony your spouse and just everybody in the whole Bigger Pockets um leadership it was just so cool to hang out backstage and do that podcast so thank you so much for having me back no of course brother and we're here to talk about something special today right like Pace you have entered uh rare air as now an officially published Bigger Pockets author and uh obviously we're gonna talk about your new book man wealth without cash supercharge your real estate investing was subject to seller financing and other creative deals but before we do man you're obviously the the king of all things creative Finance we thought it'd be cool for the rookie audience just to kind of get a quick breakdown of what it actually means to do a deal subject to what is seller financing on kind of what are some of these creative strategies um so Ash I don't know where should we start what do we want to we got your wealth of knowledge base I just want to make sure we give the audience the the best stuff yeah let's start with what are the options for creative financing when I started investing I didn't even know you could go to a bank to get a loan I just thought you had to have cash to buy a property because my mentor that's what he did he used cash to buy properties so what are ways that you can do creative financing and let's start with that I think the biggest challenge in real estate is that there are so many ways to succeed right whether it's from the Burr strategy yes using cash all of these things that creative Finance I think is very daunting for people because what it does is it takes the 10 ways to Str to be successful in real estate in cash or traditional methods and it multiplies by 10. like there's literally a hundred different ways to make money with creative Finance uh maybe even more I've never seen a transaction ever identical to another transaction because of how creative you can be with it but what exactly does that mean so if you look at this here's what you'll see you'll see that there are all everything starts with a seller right whatever deal you're working there's always a seller of a property involved and then that seller is either a represented by a real estate agent or B they are unrepresented right and we what we call is real estate agent those are on market and up unrepresented we call those off Market okay whatever strategy you choose you're going to go after a seller in one way or the other A or B that's basically it going on Market I see something on the MLS or Zillow and I'm going to reach out to this real estate agent and I'm going to try and get this real estate agent to help me work a deal with this seller or B direct to seller you're going to the seller direct maybe based off of a pain Point like probate foreclosure expired listing whatever it may be and you're working leads okay so here's where creative Finance comes in what I learned is that when I was doing nothing but traditional lead gen I would have to generate about 50 leads for every two deals that I did why well sometimes the sellers are not motivated they don't want to sell at all and they're maybe just kicking tires but what I found more often than not it was either a b or a combination of both of them which was C it was either a the seller wants too much money okay and even agents run into this all the time where an agent will go talk to a seller seller says I want you to list my property the agent sees that the property is worth three hundred thousand dollars by comping it and then the seller says I want 350 000 so you have basically unrealistic sellers right when I first started Ashley I also did not know that people could get a hard money loan I thought a hard money loan was like a loan shark with the baseball bat exactly like they're going to break your kneecaps if you don't pay them back right what you don't know hurts you dramatically and what creative Finance does is it helps those sellers that want too much money okay B for example and then B is maybe a seller has a lack of equity okay and you're seeing this more and more and more right now especially if you look in Maricopa County where I live I live in Maricopa County Phoenix area and you pull up expired listings okay if you're a rookie write this word down expired listings you want to go get a subject two deal today go after expired listings typically agents are representing a seller the agent has six months typically in 99 of arrangements to sell that house for the homeowner and if they can't then that listing gets broken and the agent no longer represents that seller and now that becomes what we call an expired or unlisted or de-listed property if you want a subject to deal that's that's where you go is expired listing can you just tell everyone where they can get those expired listings what are the stuff to take so first day first off I would make friends with real estate agents because the easiest and freest like the free cheapest way to get them is just get them from a listing agent or real estate agent who has access to the MLS because they get the the information for free okay second place I would go is I would go to maybe prop stream uh Bigger Pockets as um great software as well there's so many different ways to to pull that up we get ours from prop stream paste this really quickly not to not to go too far down the rabbit hole but say I'm a brand new investor I've never done a deal before yeah and I want to reach out to agents for the purposes you just mentioned what am I saying to them to get them to take me seriously and actually give me deal flow Okay cool so this is great this is where I'll tie that all into your question so either hey I was running I'd go generate 50 leads I would go get two of those deals cash right because I'd have super motivated sellers out of 50 leads right the other 48 they either seller wants too much money or the seller has a lack of lack of equity or a combination of both which is C so what I learned is that I could utilize subject to and seller finance and there's a handful of other things as well but I won't go into them because we only have we have limited time but like Novation agreements and lease options and all of those types of things another strategy I talk about in the book is called the morbi method which is a strategy I created about five years ago and we won't go into that today but there's so many ways to to make money the primary two primary things you want to go after are subject to and seller finance so what you're doing is if you're going to reach out to an agent what you want to do is you want to start off the conversation always about their commissions always hey my name is pace morby and if I was able to get your commissions paid would your seller be open to terms right and some agents know what terms are some agents don't and basically navigating that conversation some agents go what do you mean terms you go well would your seller if again if I could get your commissions paid would your seller be open to me taking over their existing payments or if your seller doesn't have payments and they own the house free and clear would they be open to seller financing the property to me now the agent will hesitate sometimes they'll go look by the way I'm not going to negotiate the sales price I will even come up to the number that the seller and you are looking for I will get your commissions paid but I am a terms buyer I'm going to buy only on terms okay now the process of subject to in seller finance here's what I found when I would go after these 50 leads two deals turn into cash and another eight deals will get done with creative I found that utilizing creative Finance subject two which we can jump into what that is in just a second and seller finance utilizing these two strategies I could 4X my conversion rate and 4x my monetization and by the way it is way easier to buy a property subject to than it is with cash way easier the only reason why people are confused by subject two is because it's not always talked about and it's new it's kind of like when Ashley and I both learned oh wait people aren't actually cash buyers like 99 of people are not buying with cash they're actually if you use the correct wording you would say I'm a hard money buyer that's real we're not cash buyers we're hard money buyers We Buy Houses to flip them using hard money so it's just like learning a new language subject to sounds confusing but it's actually way easier it's faster to close at a title company there's five less people involved it's way easier to get under contract there's rarely inspections there's never any appraisals there's no banks involved there's no loan payoff requests there's no applications there's none of that going on which are all the complicated parts of a cash transaction and so in subject two you don't have any of those things so it is way easier for me to go to a homeowner and say your asking price is not the problem for me whether you're willing to do terms or not is my main concern and say you're not going to negotiate my sales price no I'm not all I want is I want the interest rate I'm not even I tell sellers all the time I'm not really buying your house I'm buying the interest rate attached to your house that's really what I want your house just so happens to come with it pays so much so much good information there brother so much and I just want to pause for a second because I want to I want to clarify a few things for our rookies before we keep going so um first um if we take one one step back can you define what subject to means and Define what seller financing means and explain how those two concepts are different um from going to like a traditional bank to get financing on a property of course yeah so let's let's look at it like a car let's say I want to go buy a Toyota Prius and I go to a bank to go get a Toyota I go to the car dealership the car dealership says okay well what do you want how much can you afford and then what do they do they go to their finance department they run your credit they look at your job credentials they look at your W-2 they look at all the things just like you do through a mortgage and they see if you're worthy enough to buy that car okay great in a car transaction much like a real estate transaction you are paying over retail for every house by the way do you know every homeowner pays over retail for every house that they buy no homeowner buys houses with equities they they buy at full retail on the MLS and after all their commissions and closing costs and all their additional fees and all the moving expenses to get into the house every homeowner starts by buying a house underwater right but it takes months to go through that process so I look at that and I go if Equity is not the main goal in the very beginning Equity will build over time my tenants will pay down over time really what I want to do is avoid going through the bank so why don't I just go to somebody that has a Toyota Prius and say hey do you have a car payment on that Toyota Prius they say yes I go great how can I just take over the payments on that Toyota Prius instead of me going to a car dealership paying over retail getting a new loan going through the whole process can I just make the payments on your existing loan seller says yes and if you go on my YouTube channel I bought a Kia subject to where I found a seller that goes look I bought this on a dealership last year it doesn't have any equity and I'm trying to sell the Kia on Craigslist but I'm getting lowballed welcome to real estate that's the same thing homeowners buy a house a year later they try and buy it for a job uh transfer or maybe they're getting redeployed if they're in the military they go to sell to a real estate agent how much does it cost to sell a house through a real estate agent three percent three percent and another three to four percent in closing costs um home warranties inspection items Etc you're like ten percent to sell a house it costs ten percent to sell a house so for a seller that doesn't have a lot of equity I just go to the seller and say can I just take over your payments and that is the process of subject two I take the deed right because here's here's where here's the big difference if I run if I go to Craigslist right now and I start calling people that own Toyota Priuses you're going to run into some people that own them outright right they paid cash for those cars and you're going to run into some people that still have car payments on those cars seller finance means the house is paid or the car is paid off and I can just say hey I'd like to buy your car on payments what payments do you want to set up where I just make you a monthly payment and you become my bank that is called seller finance seller is financing me seller finance and in subject two I just go oh you have a car payment no problem I'll just take over the car payment exactly what it is I'll log into your account I'll make the payment every single month registration gets put in my name ownership gets put into my name and I'm the owner of the car but the payment stays in your name we avoid all the bank fees the only person that makes money when I go get a new bank loan to pay off your existing bank loan our two Banks you don't make any more money and I definitely don't make any money so what am I doing going and getting a new loan to pay off an old loan why don't you just let me take over the old loan and I'm not call talking about assumptions I've never gone through a credit check nobody's ever looked at my job history nobody's ever looked at my bank account see how much money I have in it nothing out of all the transactions we do so subject two is when somebody has an existing set of payments that I can take over an existing debt seller finance means I work directly with the seller and we structure a payment that works for the seller Pace before you go into seller financing more I just want to note that when you were on an episode 236 we did go through as to why a seller would do that like why would they trust somebody taking over their payments so if you guys want to learn more about that go back and listen to that episode as to like how come that doesn't affect their DTI like how you use the third party servicer all those things so if you really want to learn more about subject two go back and listen to that episode yeah so the so what I'm essentially doing is I'm going to homeowners or agents I probably half the deals I do are with agents involved the other half are with seller with Sellers and why is it half and half it's half and half because I go to the agents first and I tell the agents hey it looks like your house has been listed for over 100 days and cash buyers are already telling you this is not a good fit for the marketplace you're asking too much money I will be one of the only buyers you you will speak to that do not care about the purchase price so if I could get your commissions paid would you be open to talking to your seller about me taking over existing payments or creating a payment structure that makes sense for both of us fifty percent of the agents say yes fifty percent of the agents say no so the fifty percent of agents that say no do you know what we do is we put them in our CRM and we track the house until it doesn't sell and when it goes expired we then call the seller directly and say hi we tried talking to your agent about this house two months ago and talking about taking over payments did your agent ever bring that up to you nope my agent never presented your offer to me great would you be open to create a fi would you be open to letting us take over your payments they go you would be willing to do that so the paradigm shift for me was like the same Paradise ship Paradigm Shift you had Ashley when you went from learning from one person that buying cash is how Real Estate Investors make money to realizing that 99 of Real Estate Investors don't use their own cash they use private money or hard money there was that whole light bulb moment of like oh my gosh what have I been missing the cell it's the same thing with me when I got into creative Finance I used to think that sellers would be not open to this and then when you actually have the conversation with the seller the seller is like wow you would be open to that it is the polar opposite of what you would assume now of course just like if I walked into my neighborhood knocked on my neighbor's door and said hi I'd like to buy your house most homeowners houses are not for sale so you're not just going to talk to a random person to buy their house whether it's cash or creative or even listing through an agent 90 percent of houses are not first 95 percent of houses are not for sale nor will they be for the next couple years so what you're doing in this situation is I'm looking for agents that have listings that are over a hundred days and then we start reaching out to the agent saying hey I'm I am a cash buyer however if this house was a good fit for a cash buyer it probably already would have sold however I'm also a terms buyer so if I can get your commission paid in the process would your seller be open to letting me take over payments or seller financing again fifty percent of agents are educated on this and they get excited at the at the prospect the other fifty percent of agents that are new or unseasoned or their broker hasn't taught them this they go no or yes I'll present it to my seller but I know they'll say no we just wait until the listing goes expired and then we buy those deals anyway Pace just one one clarifying question here um so when and you know this is if I'm putting myself in the in the seller's shoes and we're doing a subject two deal this is the one thing that I think would make me nervous is if if Tony and Pace agree to a deal subject to where pace is taking over my mortgage and I'm transferring title to Pace but my name still stays on the actual mortgage documents what happens to Tony if Pace decides to stop paying well there's a there's a handful of things this is where maybe we get a little bit into the weeds if you're okay with it in every single state there's something called an executory contract okay you've you guys have heard of them under different words land contract contract for deed agreement for sale these types of things you ever guys have ever heard those terms before okay that's called an executory contract all states this is legal and what that what is that it means that I can take over your payments but you still hold the deed as security just in case I fail to make payments so it's a light it's a subject to light basically it is the exact process of me buying and controlling the property except the deed never transfers into the buyer's name the seller puts it into a safety deposit box or whatever way you want to hold it the deed stays in limbo until the buyer pays off the house sells the house or refinances the house when I did a subject to deal we actually had the seller sign over the deed but it was never filed our attorney almost held it in escrow what state was that in Florida New York okay New York so New York would be contract for deed or a land contract so um depending on what attorney you went with and they hold it in limbo as security for the seller now why don't I just do that all the time why don't I just do that in a way where I do an executory contract it's kind of it's even simpler right it's like well now the seller has security the problem with that is that the buyer does not have the ability to write that property off on their taxes utilizing depreciation so if I'm a real estate investor one of the most attractive things to me is actually when you're brand new and you're a rookie you really want cash flow but once you get to a point of cash flow where it's paying for your expenses and your lifestyle and employees and all that kind of stuff the main motivator for me to buy properties is no longer cash flow the main motivator for me is to buy as many properties as I can so I pay zero dollars in taxes every year and so if I buy on an agreement for sale that's what we call it in Arizona or a land contract in Florida or contract for deed in New York City they're all the same thing they're just called something different per state exactly the same thing umbrella term is executory contract and if you guys are watching this or listening to this you can type in Pace morby executory contract on YouTube and I have a lot more information about it but um you did an executory contract because what that does is it keeps the seller even at a higher level of security but what it does is do a disservice to the buyer where the buyer no longer can use that property as a tax benefit yeah we did it where the it was held until the property the back taxes were paid off so it was held as kind of Leverage for that and then once the back taxes were paid off then it went into the the Farm LLC and then it was continued the payment so it's like a mix of them I guess yeah we call that a dating contract a dating contract means you guys are dating for a certain amount of time until you decide to finalize and get married and so you dated you were dating and you had control and you were in a relationship and then when that thing whatever that trigger was sometimes it's down payment assistance sometimes it's an IRS lien some times it's a mechanics Lane sometimes it's a tax thing like what you're talking about Ashley and then once that is cleared and handled then the deed will transfer into the buyer's name and consummate that dating contract so do you think it for somebody that is maybe going to be in a situation like that to make sure that that kind of trigger happens in the tax year that they're purchasing the property so that for those tax advantages their name will be on the deed for that that current texture that they bought it you can you can use depreciation in any year you own a property so even if you decide not to utilize depreciation on let's say I buy a house one two three main street and I decide oh wow I've already wiped out all my income this year from the other houses I bought but now I have five or six houses that I don't really need for tax benefits you can always save those for next year or the year after so you're not forced to use depreciation in the first year you own the house so it's a good question if you need the tax benefits then yes if you don't need the tax benefits then you don't need to worry about that and you can wait until the following year man we could talk I could talk about taxes for literally like four hours it's one of the most intriguing things that like I haven't paid income taxes in seven years and it blows my mind people go how do I make more money I go keep more money like immediately a way to make 30 40 more money than what you're making today is don't give 30 of it to the IRS keep it and the way we do that is by by being isn't it weird we get incentivized to invest in real estate the IRS is like here's a bonus go invest in real estate keep up keep your money just as long as you put into an investment what it's it's crazy so that's the reason why subject two is so alluring is because now I have the deed in my name just like you did Ashley you just had a hiccup where now your hiccup was taxes Tony's reference or question is um discussing the hiccup between a seller being overly concerned about having somebody have the deed in their name and the mortgage in the seller's name that's easy easy to overcome by one of two things one be a more credible and better negotiator which is me or two say okay well if you are worried about having the deed in my name or my name on title while your name is on the mortgage why don't we just do an executory contract where we hold the deed in limbo until I execute on a cell a refinance or pay the property off because what you get right even if Ashley if you if your attorney kept that property in limbo for 25 years okay that's a traditional like land contract contract for deed bond for deed agreement for sales just again executory contract if they kept it in limbo you always have control of the property and guess what you get you get all the cash flow you get all the appreciation you get all the loan paid down let's say you bought it subject to and your tenants are paying down that existing loan you get the credit for that the only thing you don't get is the tax bonus or the depreciation and so it's not it's 90 as good as a subject two deal but man 90 is pretty cool too yeah I think that's so great to clarify those two things for everyone because they are two completely different options in that one aspect and that's where it goes into looking at what your own goals are your why or what you're trying to strive for in real estate and if the tax advantages is a really big thing and you went and did the land contract and you realized oh no I'm not going to get any of those tax benefits and that was the sole reason that I was trying to get into real estate anyway so I'm really glad we went through and and clarified that yeah I mean and this this is the thing is like I could talk about executor contracts Arbitrage lease option all these other strategies there's so many strategies to buy real estate and all it comes down to is this in the very to like distill this down to something very simple if I'm playing golf am I going to win or defeat my opponent if they have a full bag of 14 clubs if I only have one Club no because if you understand golf you've got a driver to hit the ball really far you've got a putter to just putt it two or three feet or a couple of inches in some situations you imagine trying to chip a ball with a driver or try and get a driver to hit a ball out of a sand trap essentially what people are doing is they're showing up to a real estate transaction with a putter when somebody like me shows up to a real estate transaction with a full bag of golf clubs and they look at what's going on how can I help the seller how can I help the agent get their commissions and how do I get into this deal with no credit check no credentials and actually using if I need to if I need to bring money to the table bring a private money lender and all that comes down to is all of the options so executory contracts like what we talked about right so Tony sellers willing to do a subject to deal but they're overly concerned about their security easy executory contract right seller wants to sell the property to me but they want to make sure that I'm as as credible as I say I am okay do a dating contract like Yeah Ashley did say for six months Let's do an executory contract where I am I have control of the asset and after six months it converts to a full sub 2 deal because now I've shown you for six months I can make my payments on time manage the property and put a tenant in the house you can set up this is this is not even possible in a cash transaction none of this is possible and so all these sellers that want too high of a purchase price guys I will pay some in some situations 50 to 70 000 over a retail um ask an agent has something listed at 600 Grand and in order for me to get into that deal with no money out of pocket and really low interest rate I'll go well what's the number that gets you excited about giving me the terms that excite me and they go well we have it listed for 600 but if you buy it for 650 we'll do a no down and zero percent interest deal or a two percent interest or a three percent interest deal great I give you the lever on your side that gets you excited and you give me the lever on my side that gets me excited you can't do that in cash and so to distill this down to the most basic version is if I talk to 50 people or 50 opportunities whether it's coming from a wholesaler an agent or directly to a seller or a probate attorney referral or where whatever the resource or wherever the source of the lead comes from let's say I gather 50 leads everybody is offering a cash offer you're gonna get two deals out of those 50. I'm gonna get 10. right that's all this comes down to is how can I have more tools to bring to the to the situation to help everybody involved and the I would say the biggest problem with creative Finance what do you think what do you guys think is the biggest problem with creative Finance lack of understanding yeah the number one person that doesn't understand it is the licensed agent having that middle man well what it is is they get a license okay so all my partners are licensed I choose not to be licensed but all my partners are licensed there's a benefit to being licensed but we see a lot of real estate agents that are not trained by their broker or nobody's talking about it at their brokerage they're not hanging out with other Real Estate Investors so when somebody brings an opportunity to their client subject to seller finance executory contract lease option Arbitrage whatever the strategy is the agent immediately goes I didn't hear about this in real estate school my Brokers never brought this up that must mean it's illegal and so what happens is the agents are not educating themselves and they're not learning how do I double or triple my commissions by bringing more tools to my sellers they're not going out there and doing learning that on their own because nobody's telling them to do so and so one of the big things that we're doing this year is our goal our initiative Big Goal I have is I have three attorneys and myself going around the country and we are creating continued education courses for licensed real estate agents so that they can learn subject to from attorneys and for myself Arizona's first Georgia second Florida Texas Etc and we're going around and teaching through their continued education course that their Brokers um will are able to approve and they get their continued education credits learning subject to and seller finance so instead of me complaining about the industry and saying my gosh why aren't these agents doing this I go why don't these agents know this is because somebody's not taken the workload on their back and said let me go educate them legally and how to do this properly and more importantly teach the Brokers to teach their agents so once a month we have an agent class in my office it's free for eight if you're as long as you're a licensed real estate agent is free we usually get 1700 people that sign up we can only let three 100 people in the door and we do this for free six hours once a month and I bring in an attorney and an escrow officer that's been doing creative Finance for 48 years I believe as give and give and give to the to the industry because what ends up happening is then agents bring me deals and they go oh my gosh I had no idea I could do this so that's honestly the biggest problem with the industry it's not even the sellers the sellers are excited about these opportunities they love it seller finance helps mitigate capital gains the sellers get more money the sellers get a percentage and a return and securitize investment against their own real estate that they understand could you tell I could talk about this for like 25 hours but it's so much good stuff pace and there's so many angles to it which again you know which is why I think people need to go pick up a copy of your book wealth without cash you talk about a lot of those in there it's not the book can I tell you something I did about the book because I'm not I hate to say this but I'm not a big reader what I did is I made that book so special I made every chapter gets a three hour Deep dive on the context of that chapter by me creating a video companion guide kind of like when I was reading the Bible for the first time I'm reading the Old Testament I'm like what the heck is going on in the Old Testament this thing is the weirdest thing these weird names and people stabbing each other it's like why is the Bible telling me about all this weird stuff and then somebody came to me and goes hey read this companion guide it's a it's a companion guide that helps you understand the context of each chapter each verse in the Bible and all of a sudden the Bible became super cool to me and I it was so fun so I said when I write a book A book with Bigger Pockets I want to create a video companion guide so every chapter gets three hours of context on whiteboards and breaking down deals the first chapter of the book check this out this is so freaking cool I'm I bring in a live audience to record this video companion guide in my studio right over like 15 feet away I've got like 15 people in I go all right guys welcome to the video companion guide with Bigger Pockets and my phone rings and I look down at it and it's a seller that I've been negotiating with on a deal in Boston Massachusetts he says Hey Pace I'm in town in Arizona thought maybe we could I could just stop by your office and you could we could finalize the details of my deal I go yeah come over I'm recording if you don't mind just come over to the studio so for an hour and a half I broke down my pit my pitch my negotiating and I lock up a live deal in the first hour and a half of the video companion guide right there for the Bigger Pockets whoever buys and um pre-orders that book you'll get that the seller's like wow so we're you're just gonna negotiate with me right here with cameras in my face I go what better place to do it the audience is sitting there like I can't believe pace is pitching and just bought a duplex in Boston subject to in an hour and then I you know went through every objection he had he had six objections I went through every single one of them live with a live seller and then we signed the contract he leaves and now I already own the property so if you're if you want to really learn subject two and seller finance that book is going to help you but the video companion guide you get with it is a master class it is so awesome is that just for pre-order Pace like I want to make sure that's clear it's only for pre-order yeah yeah everyone does pre-order to get that because that is going to be huge value to everyone so you guys don't want to miss out there yeah and I've got like chapter 17 is about the legalities of subject two seller finance lease option and I have an upcoming class coming in two weeks where I have two attorneys my escrow officer and we're doing a six hour breakdown of how deals are done legally and referencing the irs's website like the IRS tells you as a buyer and a seller how to handle your taxes when you buy or sell subject to then there's all sorts of legislation that references subject to Nationwide it's everywhere so I go through and I'm doing a six hour class on that and they get that six hour class that is the companion for chapter 17. so chapter 17 is eight pages but you get a six hour legal class attached to that chapter for the the pre-order Pace we're running out of time here but always it's a classic with me for our rookie audience I want to give kind of an example a scenario so just imagine that you are sitting on a park bench you have no money no cell phone and you need to do a real estate deal today to be able to eat tomorrow easy what what would you do just kind of break that down for us real quick and no existing contact space right like you can't tap into the people that you already know like you're starting from from zero this is easy and I didn't know it was easy it's like again back to Ashley's reference earlier it's like I didn't know what I didn't know you know so here's what I I own a nationwide title company so I understand our title companies work at a pretty deep level there's always a marketing department in every Title Company okay they're the people like have you guys ever done lunch and learns with title and escrow officers like they come in and they pay for your meetups and stuff like that or they sponsor things for you no you've never done that no okay if you guys are doing meetups in your local town get a title company and say hey do you guys have a marketing department I could talk to they'll come in and pay for all your food all your you know marketing everything wow every branch of my title company and every title company I know has a monthly budget of about ten thousand dollars that they can go and do lunch and learns for mortgage officers um real estate agents and Real Estate Investors okay so what I would do I'm sitting on a park bench the first thing that I do is I walk to any Title Company there's as many title companies or closing attorneys in every state as there are Starbucks like they are everywhere drive around Google it look on just walk down the street you cannot go a mile in Phoenix Dallas anywhere without seeing escrow title title and escrow closing whatever walk in there and say can I talk to somebody in your marketing department and what does the marketing department do their entire job is to get investors like me Real Estate Investors or real estate agents and loan officers to send files to their title company I even challenge Bigger Pockets to document this by the way I said guys I can show your audience how to like get a camera guy on me for six hours what I'll start on a park bench no cell phone not even a dollar they were like well you can start with a hundred bucks I'm like no I want any money I go to the title company and I say can you guys pull a list for me the best place to get a free list with free phone numbers where you don't have to pay for skip tracing your marketing department at a title company any title company will do this okay and what you say is you go I want all the expired listings that have expired in the last 60 days and I want all their phone numbers and um there's in Phoenix that's about 600 that's too many people for me to call in one day I can't call 600 people in a day so I'm going to now make that list even smaller so I say I want people that have purchased their home between 2018 and 2021 why because they all have three percent interest rate on average I then also want to make sure that they have a VA loan or an FHA loan why actually low down payment so they don't have a ton of equity boom so now I've got a list of people that tried selling so I already know they tried to sell their listings expired so I didn't have to tell them that their house wasn't worth what they were trying to get the market told them that the agent told them that I then make sure that I get interest rates at the interest rates I want to buy a subject to deal and then I make sure that they don't have Equity you put those four filters on it you'll get a 600 name list down to probably 80 to 100 people okay what I do is I then call those people and I say hey my name is Pace I see your house was on the market I'm just wondering what were you looking for on the market that you were not able to obtain and I let the seller talk the seller says well the agent can do this the agent this the agent that blah blah well good thing is I'm not an agent I'm a real estate investor and while most people that have submitted offers to you tried to buy your house with cash I come with a different set of tools I have the ability to take over payments and get you the number you need to get out of that house by the way I've already done this before multiple times and I've recorded and documented the whole thing we did this like three months ago so you'll get a seller within 80 calls in one day you'll get probably four or five people that are willing to do a deal with you that day I would then have the title company print out the contract for me I would then either a ask somebody at the title company to drop me off or take me to the appointment or B I would do a DocuSign through the title company to the seller using their computers okay the next thing I would do is once I have the contract right subject to taking over the mortgage I would call somebody that does Airbnb I would call somebody who does sober living or primarily sober living this is the easiest one to do sober living I'd call up one of my sober living operators and say hey I know you're looking for more houses to rent I will let you rent this property from me put your sober living facility in here but I need a deposit today on the rent I need a first and a last month's deposit and I can take money right there cash before I even close escrow on the deal and I can buy my food I can buy Uber I can get a cell phone I can do whatever I need to do in one day I can have money in my pocket from thin air and that list is a guaranteed like if you went to a title company got that list made 80 calls and you couldn't get a seller to say yes then you didn't make a single call that's there's there's no other plausible reason why you wouldn't get a house under contract is that you literally just didn't do the work I really want to have a follow-up episode where we have one of our listeners who actually does this and contacts us and tell us how they got their their first deal just by doing this oh that'd be great yeah that would be super cool so whoever does that let us know if you guys ever have you guys ever want to do this I'm throwing this on the table if you ever have you want to run a contest where like somebody comes and spends a day with me and does this by my side I will take them out in the field we will both start on a park bench and I will walk them through and show them how to do it I'll walk to the title company I'll show them how to get the list I'll do half the phone calls for them and let them and document the whole thing and then have them come on I'll do whatever you want it is the easiest way to get a deal today get paid today that I've ever I've ever thought of now I could assign that deal too but I don't I don't do a lot of wholesale anymore I do about probably 85 of what I do is buy and hold I keep everything primarily and I'll do some uh assignments but not a lot 15 a month maybe probably closer to like five percent I would keep the deal but you could assign it to somebody like me in one day and I'll pay you I'll pay you money right now five grand for an assignment 10 grand for an assignment 15 grand for an assignment Ash that might even be a cool episode for like me and you to go to to Arizona with Payson and see if we can knock that out in a day for our for our rookie audience that would be sick and then he sends us out on our own and we competeers let's see who gets a deal first you could even do a live audience where you're like hey let's set up at the title company and have Pace make the calls and have like a live audience of 10 15 newbies sitting there and watching us do it and then you'll here's what happens action gets other people to take action so when people are in the room with me making calls you're like oh my gosh that's it that's all you're doing yeah it's literally it's so simple that the biggest reason people fail is because they overthink how simple it really is what I think of right there when you said you know people taking action makes others want to take action I think a Forest Gump when he starts running and you know by the end he's just had all these other people that just start following the same on a run too seriously and that that is really what this industry needs is more people that are taking action like you guys right and leading the charge and creating communities and because we all learn through we're all monkey see monkey do like I cannot learn how to frame a house by watching YouTube I have to be on site and watch people pick up the hammer and grab why are you using a screw gun versus a hammer on that situation well because the angle here and I can't get the angle of attack so I'm using a screw gun to go you have to learn on the job and people have to be willing to let you learn by your side and so I I've always let people go on appointments with me go to title companies with me because that's how I learn and that's how I assume everybody else needs to learn as well Pizza I just want to let people understand how impactful these strategies can be if done the right way so how many how many deals have you done or how many units do you have right now currently that are subject to the I mean I'm everywhere look at look at this board right so we will do I'll probably this year my target is to buy another 500 single-family homes this year wow 500 single-family homes all subject to and and seller finance we currently have roughly 1800 doors in our portfolio not a single one of those doors required a credit check like nobody asked for my job credentials nobody asked me for how long is the money sitting in your account seasoned none of those questions were ever asked not once on any 1800 doors we have and again you look at this whole entire board if you look down here I've got a deal right here in Hawaii circled two percent uh subject to deal an acre and a half on the water in Alaska Anchorage same thing it was over here there we go now I've got a Anchorage Alaska bought a duplex uh last week two and a half percent subject to deal I will buy deals from Alaska to Boston there's not a state you can't buy in California New Jersey New York all the places that are challenging to do wholesale you can do subject to in all 50 states and I'm doing them so here's how impactful it is people that don't understand subject to and seller finance look at a big Haystack and they're thinking oh I gotta find some cash deals those needles in the haystack I look at the haystack and I go subject to and seller finance is the haystack it it's everywhere it is the whole entire market for me I don't even look at Cash deals I don't waste my time on cash deals why would I look at Cash deals and the other the the thing that's the most impactful when I was primarily wholesaling you know eight nine years ago I realized yes the seller gains the convenience and speed of a wholesale transaction by selling their house at a deep discount but the reality is when I use subject two and seller finance it is the only transaction in real estate that is a true win-win-win wholesale the seller has to take it in the shorts in order for the wholesaler to get an assignment fee in order for the uh fix and flipper to sell it and make money and that that re that transaction requires that and it is perfectly fine and it is needed in the industry for sure but what happens a lot of times is or every time on a subject to deal seller gets the number they want agent gets paid their commission and I get a property where I have an interest rate below four percent attached to it with a payment that I can go on cash flow immediately without a credit check and I pay a lot of times 85 to 99 of retail value so everybody wins the sellers get more money the agents get paid commission and I don't have to go to a bank everybody wins in the transaction Pace what uh what a master class brother on how people can get started in real estate investing today and I I think it's super timely because there's a lot of folks that are hesitant to get started especially in our our rookie Community right A lot of these folks that are listening haven't done any deals before so I think this gives them a great uh like you said I guess another tool in their tool belt to get starter brother so um obviously Pace man if you can't just tell people uh the details of the book when the pre-order starts um and and all the the goodies that come along with it uh the pre-order is pretty cool where I I was like I told Bigger Pockets I said how can we make this book so special like I think there's people that will win uh a day with 10 people will win a day with Jamil and I on our TV show for season three they'll get it we'll fly them out um another 10 people will be able to do a whole class with me in person in my Phoenix office and then everybody that pre-orders before May 2nd when the book comes out will get basically a 20-hour master class on Creative Finance two to three hours per chapter on average giving full context because as much as I love reading I'd rather listen to stuff and that's why audiobooks are powerful so of course the audiobook is there too but the video companion guide really breaks down whiteboards and teaches you The Listener or the consumer the way I needed to be taught in the very beginning and if I taught if if I learned everything in this book when I first started it would have cut my learning curve down by probably five years I had to go figure it out slowly and surely so I condensed it pretty powerfully and um gave you guys as much as I possibly could for for the people that decide to pre-order so thank you for giving me the platform to talk about it Pace I also want to mention that you are doing a boot camp too for Bigger Pockets on creative financing so you can go to biggerpockets.com boot camps and that bootcamp starts this summer well pace thank you so much for joining us thank you guys so much appreciate you I'm Ashley at welcome rentals he's Tony at Tony J Robinson and we will be back on Wednesday with another guests [Music]

Channel: Real Estate Rookie

Views: 44,820

Keywords: how to invest in real estate with no money, pace morby, how to buy rental property with no money, creative finance, subject to, how to buy real estate with no money, how to buy real estate with no money down, no money down real estate, real estate, real estate investing, invest in real estate, how to invest in real estate, buying rental property, sub ject to deals, passive income, biggerpockets, real estate rookie, real estate rookie podcast, podcast

Id: vDoRITXplC8

Length: 52min 2sec (3122 seconds)

Published: Sat Apr 22 2023