Somebody that’s watching this right now, that’s like, I’ve never owned a piece of real estate. I’ve never had any momentum. I don’t have any track history. I could never do what pace is doing. I’m telling you right now, everything I do, you could do it today. And I’ll tell you guys how to make money today doing what I’m doing. Can you imagine buying hundreds of millions of dollars of real estate, cash flowing real estate, never having a credit check, never having to put money down and none of it being in your name? And I gave the guy a dollar down.

Why? Why was a guy willing to sell a 20 acre parcel, 8000 square foot, brand new build, with a 3500 square foot brand new barn, why was he willing to sell that to me? $3. 7 million for $1 then. Amazing, right? Well, this is exactly what my next guest, Pace Morby, has managed to do. He has completely changed the world as we know it, which is takes money to make money.

He is going to walk us through his exact process. And what you could do if you were starting literally from zero, how you make your first move, your second move, your third move, and how you could buy hundreds of millions of dollars worth of assets just like him. He has changed the game. He’s rewriting the financial books, he’s disrupting the financial institutions that are legit, that are old, legacy corrupt and they’re falling apart.

He’s going to show us a new way. So, pace, man, we’ve been talking for a long time. Before we start recording, as you’ve got me convinced to just sell everything and go into bitcoin. Mark, don’t. Don’t do that. It’s part of the game, right? So it’s one asset that you can leverage. So that’s where I want to jump in, actually. I want to talk about the money game.

So I kind of laid out the money game, as we both agree, is to get assets. You’re obviously acquiring thousands of properties. I talk about market disruptors and so we talk about disrupting markets. I like to think about the five legacy institutions that need to be disrupted. So media, I think you’re doing a good job on that finance. You’re obviously disrupting finance. I also think about health needs to be disrupted, education needs to be disrupted.

Like, these are decrepit institutions and you’re really disrupting a couple of those for sure. You’re the king of creative finance. I don’t know, self proclaimed team, I’m giving you that. But let’s talk about the money game for a second. Okay, so we talked about the game of money, getting assets. What game are you playing? I’m playing the game of holding. Right. We talked about that as well. Storing my wealth inside of hard assets that I can understand.

I’m a contractor by trade. You and I did, you know, you’ve done a lot of building in your life. I am a contractor, basically. My father, twelve kids, I was one of twelve kids, learned how to work with my hands and the barbarian in me, the person that just wants to build stuff, understands brick and mortar. So the game that I’ve been playing for the last ten years is just accumulating a lot of cash flow and rentals and keeping them, holding them, keeping kind of like Ken McElroy, another guest that you had recently, amazing episode.

If you guys haven’t watched that episode, go watch that. I’m playing the same game Ken’s playing, which is to acquire as many properties as you can. Acquire as many properties as I can without any money, without any credit, without credentials, w two, without tax returns, without any of that kind of stuff, like literally everything that people thought they needed to buy real estate. I obliterated all of those things and said, how about we just pretend I have none of those things and I’ll still go out and buy a real estate.

So I focused on creative finance, which allows me to do all of that. That’s the game. That’s the game. That’s what I want to talk about. The game I play is that, which is I have 2000 rentals in my portfolio. I’ve never used a bank, I’ve never pulled my credit, literally never pulled my credit. Never, never pulled well on other things. Like when I was 16, I bought my first car, 18 when I bought my first car.

But I have nothing on my credit. I don’t even know what my credit report is and I have half a billion dollars in assets in my portfolio. So. Wow. Yeah, no banks, nothing at all. I’ll get people that will send me letters and emails. Hey pace, I’d love to be your lender. I’m like, I don’t need lenders. I work directly with the sellers and I buy their houses, RV parks, mobile home parks, multifamily and a lot of single family started in single family and I basically took what everybody told you, which is you need big down payments.

No, you don’t. You need credit. I absolutely do not need credit for anything I’m doing. You need a w two, you need a good safe w two. You and I both, like, are unemployable human beings. So I’ve no, I’ve never had a w two in that sense. And credentials, like tax returns, seasoned money in your bank account. Right. Like a lot of lenders will go, well, we’ll give you money to buy this thing, but we want to see if seasons cash.

Nobody even checks my bank balance when I buy these assets. So I’m playing a different game. That’s what I want to talk about, the different game. So, you know, what happens is we get these antidote stories, these quotes in our head, and people, Tony Robbins would call it, like, chains of false belief. And so the chain of false belief, and I believe you wrote a book to address this one, is it takes money to make money.

So people have heard that it takes money to make money and then they allow that to sort of hold them back. And you wrote a book which was how to make money with no money. Yeah. It’s called wealth without cash. Wealth without cash, yeah. And, you know, similar to you, like when you got into the game, right? You were buying VA repos. Like the VA took a house back over and they’re giving you these houses with no money down.

Before you had done that, you were like, there’s no way I’m going to get into real estate. I’m 19 years old. What do I have? I don’t have credentials. I don’t have a w two in that sense. I don’t have cash. I don’t have credit. Credit. And the VA is just like, take this house. Yeah. You don’t. I was. I was so new and naive that I didn’t know that those things would hold me back.

Yeah. I just thought it was being done. I was like, cool. Isn’t that funny? Yeah. Meanwhile, there’s millions of people across the country that are like, how I wish I could get into real estate. Meanwhile, a 19 year old, you, is here in LA, of all places, getting a deal with no money down. Right. Like, you didn’t have to challenge those beliefs. Thank goodness you didn’t. I did.

My beliefs were my dad. Ironically, I’m hanging out with Tony Robbins in like a week. I’ll be at his private house with him and Dean Graziosi. I get to do that every summer, which is fun. And my dad and I would go drive around on construction jobs and my dad would listen to tapes from Tony Robbins. He would tell me, Pace, you got to get into real estate.

We got to save these down payments. And that’s the programming I got in my life from everywhere. All the programming I got was, you need all of those things. I call it the three c’s. You need cash, credit credentials. Credentials are like tax returns, a w two, or even seasoned money sitting in your bank account. And so I unfortunately got into construction 20, from age 20 to age 30.

And I lied to myself and I didn’t do the research. I basically, for my twenties, I made a lot of money. My biggest customers were opendoor offer pad and zillow. And so I was doing all their rental turns, and I convinced myself I was in real estate. By doing so. I’m like, oh, I am in real estate. I’ve made it. I’m in real estate. I’m touching all these houses.

I’m doing all these things. Had massive crews, did all these things. And it wasn’t until I had a lady named Bethany that came to me, and she’s like, you’re lying to yourself. You’re not actually in real estate. You are a slave to the people who are in real estate. You need to get into real estate. And my answer was, well, I don’t have any cash. I don’t have any credit.

I don’t have any credentials. I like, I have my own business. Nobody will give me a loan. And she’s like, what does that have to do with anything? And she showed me the path, and she sat down with me, taught me how to get my first real estate deal. I made $25,000 just kind of selling it to her. And I was off to the races. And I’m like, I got addicted to it.

Yeah, I learned OPM other people’s money. And so I always said, man, I deal with investing mostly. And so, like, investors are always looking for good deals. And so, like, if you have a good deal, there’s always money for that. But you did it without OPM. I mean, you’re literally going after the bank’s money. I mean, you’re assuming loans. So let’s talk about that. Creative finance. That’s kind of your specialty, creative finance.

So what is this creative finance? You’re not using other people’s money necess, in a way you are, but not in the traditional way that I thought. You’re not going out and try, like, get an investor to, like, go in. Yeah, that was another skill, too. Another skill that you’re referencing in OPM is a very daunting skill, which is raising capital. And when you’re, when you’re brand new, you’re like, how do I talk to somebody about taking money from their four hundred one k and putting into my real estate deal.

Yeah. That sounds like a very daunting task. And it is. And there’s people that take years to learn how to do that, especially with no credentials. Especially no credentials, no track history, no nothing. Right? Like, somebody that’s watching this right now, that’s like, I’ve never owned a piece of real estate. I’ve never had any momentum. I don’t have any track history. I could never do what pace is doing.

I’m telling you right now, I’m looking straight at you. Everything I do, you can do incredibly. Like, you could do it today. And I’ll tell you guys, like, how to make money today, doing what I’m doing. Yeah, I wanna dig into that. Yeah, I’d love to. And what I do is I do not assume loans. Okay? An assumption requires a credit check. I don’t do assumptions. I do what’s called subject to, and subject to means I’m going to.

Let’s just do it this way. It’s very simple for people that are watching. Let’s say that I’m brand new. You drop me in the middle of a cornfield in Oklahoma. We’re obviously in SoCal right now. Everybody, your audience knows you’re in SoCal. You drive me in the middle of nowhere, Oklahoma. I’ve never even been there. I have no resources. I have no network. I have not even a phone.

And I need to make money today. Well, what do I need? I need a phone. Okay? So I’m going to run to a library. I’m going to go on Craigslist. And what I’m going to do is I’m going to look for a phone. And I asked the library, hey, can I use your phone? I’m going to try and reach out to this person or message them on Craigslist, and I’m going to try and buy a phone with no money down.

This is how creative finance works. I’ll get into real estate, how it works with real estate, but this is how it works with phones. It helps people that are brand new to this really understand it. I see a guy that’s had his iPhone 14 listed for a couple of weeks. It’s listed a little bit high. He’s obviously planning on somebody lowballing him. And so I reach out to him and I go, hey, I see your iPhone 15 is listed for dollar 600, and it hasn’t sold yet.

I will pay you that dollar 600, but I want to pay it to you monthly. I’ll pay you $60 a month for the next ten months. Would you be willing to do that? And the seller says, yeah, I haven’t sold it. I have a little bit of pain. I want to get rid of this phone. I’m cool taking payments. That’s called seller finance. Price or the terms. Price or terms, right? So I’m not going to argue the price and I’ll tell the seller straight up, hey, I’m not going to argue your price.

I’m sure other people are probably offering 400, 5500, I’ll give you your 600. But for you doing, you know, selling this property to me or this phone to me on seller finance, I will give you that price. So you get price, I get terms. And so what I actually do is I’ve done this live on my YouTube as well, where I’ll call and I’ll buy camera equipment, cars, planes, businesses, all without any money down by just saying, hey, I see your price that you’re looking for.

Will you let me just make you payments? Now, what would I do with that phone? I pick up that phone now, we all know, like, I could do a thousand things with a phone to go start making money today. I could cold call, I could work for another company. I could Uber eats. I could do a thousand different things to make money today using a cell phone. So I don’t care about the $60.

What I care about is I just got a phone, an asset that I can go and make more money than what the thing is costing me, right? That’s seller finance. Now let’s say I call another person and they go, hey, I’ll make you $60 payments to that phone. They go, I can’t do that. I’d love to do that, but I have payments I owe to at and t.

I have not paid the phone off yet. All I do is I go, let me just take over your payments to at and t. And they go, oh, you can do that? Yeah, of course I can do that. So I’ll buy a phone on Craigslist by just taking over the payments that they already have with at and t. I don’t have to do a credit check. I don’t have to get at and t’s approval.

I just take the phone and I make the payments on their behalf. That’s called subject to. So I do this with real estate. So now what I do is I’ll go, all right, what asset class do we like? Do we like single family? We like rv parks? Do we like dirt? Do we like multifamily? What do we like hotels? Doesn’t matter. I can go on a variety of websites.

I’ll give you a couple of, like, specific ones. If I was gonna start today and I had to make money today, here’s what I would do. I would go on Craigsie crexi. com, and I’d go on Craigsli, and I would filter owner finance. They have listings on owner finance. I could buy a gas station. I could buy a car wash. I could buy a cash flowing asset today with no money down by just calling a seller and saying, hey, I’d like to make payments to you if you would sell this to me at the price you’re offering.

I’m not calling people that just listed it today. I’m calling people that listed it five months ago and still haven’t sold it. So I’m finding people have specific pain, and I’m buying something that’s making monthly income, basically. So, best asset that I’ve done is actually right down the road in Yuma. It’s an 85 unit mobile home park, and the seller’s retiring. If a seller of an 85 unit mobile home park that’s owned this thing for 20 years, he self managed it for 20 years.

If he wants to retire, mark, without paying taxes, how does he sell that asset? Yeah. Good luck. Good luck. You don’t you leverage it with debt. You either leverage it with debt, which now you’re not retiring. You’re still in the game. You’re still playing that game. Or b, you sell it and you 1031 into a larger asset, which now he has a larger headache. Yeah. That’s not retirement for a lot of these mom and pop sellers.

So what seller finance does is Seller finance allows me to help him mitigate all his capital gains tax. So I go to the seller, and I go, hey, I see you’re trying to sell that mobile home park. If you do a zero down deal, no money down, and you sell it to me at 0% interest, which I bought at 0% interest, I will give you that $600,000 you’ve been trying to sell it for for the last nine months.

Seller says, okay. And so I make a payment to that seller for $11,000 a month. He’s got 30 years of $11,000 monthly payments, and that park brings in $35,000 a month in cash, in all the rents, and after management, all the expenses. I net somewhere around $20,000 a month on a zero down 0% interest. Mobile home park. That sounds daunting. But you can do this with single family.

You can do this with multifamily. You can do it with apartment buildings, all that kind of stuff. So, I mean, I get that, you know, we talked about a lot. I’ve done a lot of hard money loans and stuff like that, which is then you’re at least guaranteed. I did, you know, invoice factory. I’ve done a lot of types of loans, but there’s some sort of guarantee. Cause I don’t know who you are.

I don’t know what your credit is. So I’m gonna give you this phone. I mean, let’s just go back to the phone example. I’m gonna give you this $600 phone. But, like, how do I know you don’t just run off with the phone? Yeah, or if I’m, if you’re gonna take over my payments at and t. But, like, what if you don’t make the payment and then I don’t have the phone and I’m on the hook for the loan? Yeah.

There’s definitely risk involved. Same thing with a hard money loan. There is no guarantee. Right. You could. Why? I have the trustee. Yeah. But even at the end of the day, if you, let’s say that I borrow money from a hard money lender and I take the money, I go buy the asset, and I mismanage my construction, and I screw things up and then I stop making the payments.

Happened. There you go. So hard money lenders don’t have guarantees. Banks don’t have guarantees. There is no guarantee in life. So there is. There’s no absolute guarantee. So that, I’m sure it’s a question that you get asked all the time. If I’m going to call back to the first example, I’m going to call on Craigslist and say, hey, let me take over your phone. I would imagine the first question I would have, someone offered that to me is like, how do I know you’re gonna pay me? Great question.

It’s probably number one. And if you’re gonna pay ATT, what happens if you don’t pay? And now I don’t have the phone and I got paid. It’s a risk. That’s the number one question people ask. How do you answer that? Couple of things. First and foremost, great question. And yes, that is a very big risk that they have to take. So after they have to weigh their risk and their reward.

Right. It’s just like buying bitcoin. Could the thing go from $56,000 today down to $20,000 in two months? Could happen. Right. So there’s risk associated with everything. The thing you have to weigh is, what’s the gain that I really want? So I’m looking for a seller who I already know has a motivation of selling something at a specific price, and they have failed to do so. So I’m going to them and saying, hey, you’re obviously looking for a reward.

Here’s the risk that I want you to trade. Are you willing to do that? And so the answer you’re going to get, just like anything in business, you’re going to get no’s a lot of them. I actually had, this was really interesting. About six years ago, I had one of my friends goes, hey, can I come and shadow your office? Your acquisition people are making calls to the sellers and buying all these properties on seller finance and subject to, can I shadow you? And I go, yeah, come on to the office.

I won’t be in town, but go to the office. He hangs out of the office all day long. At the end of the day, he calls me, goes, bro, I just had, like, the greatest epiphany. I’ve been. Just been holding myself back. And I go, what was the epiphany? What was the thing you learned? And he goes, I spent all day with your team, and the number one thing I took away was how many times they hear the word no? And they just keep going, sales 101.

Sales 101. And so, of course, I can make it sound easy. It does require picking up the phone, and it does require you doing some of those things. Now, the other side of it is, if you don’t want to be the person on the phone negotiating and getting people convinced to give their house and hand the keys over, you can also be just a buyer. Right. We assign a lot of these deals, bird dogging, as you called it.

Right. I’ll find a deal and I’ll go, that’s not really a deal I want, but I’ll structure it, and then I’ll just sell it to somebody and go, hey, you can take this zero down seller finance deal over for $20,000 or whatever. I know. Like, obviously, like, selling businesses, this happens all the time. Yeah, we just bought. We just bought one with creative finance, $7 million business, like, six months ago, just took over 50% of the company with no money down.

Yeah. So, so that. And then even, like, the. The RV park, like, you’re talking about mobile home park or whatever it was. I mean, if there’s an asset and you stop paying, I just take the asset back. Yeah. So worst case scenario, I got to take the business back. Maybe it’s not as in good shape or the RV parks, not as good shape or whatever, but I can deal with that versus when there’s a loan involved.

You know, now there’s like, because legally I’m still going to be on the hook for the loan, correct? Yeah. Your credit is still on the hook. Yeah. So you’ve taken over the loan, but I’m on the hook, correct. Yeah. So let’s paint the picture of somebody that’s typically selling subject to, okay. Seller finance is usually the person selling on seller finance. What they’re looking for is gain. The person that’s selling on subject to is usually trying to avoid some sort of pain.

So I call it pain and gain. Pain and gain and pain. Seller finance, sellers that just want too much money. Right. I’m trying to retire. I know that when I sell this property on the MLS, I’ve got to pay agents, I’ve got to pay closing costs. Now I’ve got, you know, capital gains tax. So I’m going to sell it as high as I possibly can. You know, it’s kind of like you, like you have this building that you’re in right now.

You had it listed for, you had an offer at 11 million, but you had a moment like every other seller does where like I’m going to wait for the twelve. Yep. Right. So I get, we find those sellers specifically and now in 2024, 2025, the technology is so insane that I can just zero in on the exact seller that’s tried to sell the house. Maybe they’re a little bit overpriced.

And in that analogy of this building, for example, so it ended up going back to the bank. Right. We talked about that. So if somebody would have said, hey, I’ll give you the twelve, but I’m going to take over payments. I really have nothing to lose at that point. Correct. Because I’m already going to lose the building anyway. So it’s like, okay, sure, I get the million. And worst case scenario, I’m on the hook for the loan.

I have to give it back anyway. Yep. So you are in a painful situation of like, hey, I have a loan in place that’s gonna go back to the bank. The bank’s gonna foreclose on me. I go to those sellers and just go, let me just save you from foreclosure. So right now, for example, you look at the nation, let’s just look at Maricopa county where I’m at.

We have an active about 18,000 people in foreclosure in just my county, every county has foreclosures. There’s not a single county in the United States that does not have an abundance of foreclosures. Even with real estate at all time highs. Even with real estate at an all time high. Another really interesting statistic that I’ll bring up next of, like where you can find a lot of these deals, expired listings.

I’ll touch on that in a second. But expire foreclosures. So somebody who’s in foreclosure, here’s what we typically do. We call them two weeks before they get foreclosed on. They’ve already tried to get a loan modification. They’ve already tried to list the property. They’ve already tried to work with wholesalers or other people. They have two weeks to the foreclosure. I call them up and we go, hey, you’re gonna lose your credit.

Your credit’s gonna get destroyed. You’re gonna lose your home. How about you just let me take over payments and I’ll help you get into another, I’ll help you get into a rental, help you get into an apartment. I’ll help your family move or whatever else. We’ll even bring a moving truck, whatever those people are selling their house subject to. Do you think a single question in their mind is like, I care about what happens to the house afterwards? No, no.

And so people go, well, what if, and what if, and what if the seller says, what happens if you don’t make my payments? This seller that we have targeted, which there are thousands and thousands and thousands of them today, right now, you can go on foreclosures. com, hundreds of thousands of foreclosures. These people are like, please take over my payments. It’s not a question of what happens if you don’t make the payment.

They’re just saying, mark, will you please take over my freaking payments? In the situation you were in on this house, if I called you back then and said, hey, mark, I know this house is going to go back to the bank tomorrow, if I caught up your arrears, your late payments, and I put a little bit of money in your pocket, would you let me take over the payments? You would have been like, are you kidding me? Yeah, absolutely.

Because of the writ. At the writ, I was already going to lose it. You were in pain. So, like, there was, there was. I couldn’t have gotten worse off. There you go. And that’s subject to. So when I’m buying a house from somebody, subject to, that’s typically their pain. I’m going to them and saying, I’m saving your credit. I’m solving your. Your problem. I’m helping you stay in the house maybe another 30 days.

I will take over the house. Now, what am I doing with the house? I’m just turning into a rental, into a cash flowing asset. Right now, on the seller finance side, it’s different. Seller finance is always somebody’s like, I’ll give you a good example. I just bought a ranch in Montana where I spend my summers, and I gave the guy a dollar down payment. Why? Why was a guy willing to sell a 20 acre parcel, 8,008,000 square foot, brand new build, with a 3500 square foot brand new barn? Why was he willing to sell that to me? $3.

7 million for $1 down. Couple of reasons why. One, he wanted 3. 7 million because in his mind, he’s like, that’s my locked in profit. I’m okay waiting for a while because I’m just gonna take that, pay a bunch of capital gains tax on it, and then I have to go find a new place for that investment to go. Yeah. So he’s like, oh, I’ll mitigate my capital gains tax.

Selling to pays. And the larger the down payment the seller receives, the more capital gains tax they pay. So an intelligent seller selling to you on seller finance does not want a down payment. My rv park that I bought just right down the road from Glacier National Park, $5 million, Eric. The seller’s like, I want. It’s a $5 million purchase. He says, I want $500,000 down. I go, Eric, you don’t want any money down.

He goes, what do you mean? I go, let’s get your CPA on the call. How much are you going to pay at $500,000 when I give you this $500,000, you’re going to pay $200,000 in capital gains tax on that down payment. You want as little amount of money as humanly possible upfront. That makes you feel safe. And so. All right. Gets the CPA involved. Involved? The CPA goes, yeah, like, Pace’s argument is very valid, but you should have some security.

So we went, we settled for $200,000 down on a $5 million purchase. What is that, 4%? How does that work on the cap gain? So, on a $5 million purchase, he was in at 2 million. So there’s going to be a 3 million cap. Cap gains. Right. So, but if you bought it for a dollar down or 200,000 down, does that adjust the purchase price? That you’re buying.

No, what it does is it allows him to. It allows him to stretch out his gain. You only get taxed on money you receive. Right. So if he spreads out his gain over ten years and he’s receiving that money over the next ten years, he can now have other offsets and other write offs against that gain. Whereas, like, right now, let’s say that he. His cost basis is 2 million.

He sells it to me for five. He’s got a $3 million gain. He’s got agents and all these other people he’s got to pay. It’s such a freaking expensive way to sell property. He’s got that, let’s say, $2. 5 million leftover. He’s going to pay 40% of that. What is that? Basically a million. He’s going to walk away with $1. 5 million on his gain today. Yeah. Whereas if he just goes, I’ll wait ten years for that, and I’ll let pace make me payments, those that gain gets paid incrementally over those ten years.

How do they even calculate that a CPA does it? Yeah, because you’re paying. You’re supposed to be paying cap gains tax every year. Yeah. So what he does is I’m getting 100,000 on a $5 million purchase. Like, where does that even come into play? So what ends up happening? So, for example, Eric, the seller that sold the RV park to me in Glacier, he says, if I make payments.

If you make payments to me in year one, which 2024, this is the first year that I’m making payments to him, I will take the cap gains that I have and I will find other write offs and other things that will go against that cap gain. So essentially, I’ll figure out how to wipe out my cap gain. So you can’t do that in one year. If you just give him $3 million in one year.

But if you spread it out over ten years, he can find $300,000 in write offs on a yearly basis for the next ten years. So essentially, it gives him one point, one point five million dollars extra in his pocket. But is that because you’ve. You’ve sort of filed what the sales price is, but you’re only paying tax on what you’ve received? But they know. But they know the gains that’s coming because you’ve kind of declared what that price.

Yep. So he has a whole map written by my CpA. The map will write out exactly what he needs to go out and find in write off. So he doesn’t have to pay any of the gains. Yeah, got it. Okay, so you love single family homes. You’ve done it with multifamily. I started in single family, and that was the. That was the tough thing for me. Me, like, you start.

Where you started is based on who showed you the path, right? So, like, your buddy and, like, them shining the light on the path that you followed. Same thing with me. So I started in single family. I got to 200 rentals, probably in about a four year timeframe. All no money down. Most mostly no money down, no credit check, none of that kind of stuff. And then I was like, dude, I should be doing 20 unit and 50 unit and 150 units.

So, lar. So I started. The last five years, I’ve really done a lot more multifamily. I’d say 75% of my portfolio is multifamily, 25% of it single family. But most people think of me as a single family guy because that’s my branding online, because it makes sense for my audience to watch me talk about single family. It’s easier to comprehend. Like, we’re not talking about IRR and we’re not talking about crazy stuff, people that are just starting out.

Single family is the best place to go for them to get started and make money today for a bunch of reasons. We call it the investing space. The bread and butter. Yeah, it’s the bread and butter. The three twos. Yeah, yeah. And for a lot of reasons, we talked about, one, a building that you bought that you found out needed a lot of work, a lot of plumbing.

So, for example, you buy a bigger building, there’s a lot of bigger risks that you could fall into. Yeah, that property. Mo, the seller actually interviewed him on my YouTube channel, the seller of that. So I bought a 30 unit deal in Corpus Christi. No money down, no interest. And he gave me 50 year note. So he gives me 50 years to pay him. Why would mo do that? Right.

Well, again, seller finance. This was not me taking over debt. This was. The seller owned the property outright. He was a grocery store owner. And his CPA a long time ago was like, you need to buy real estate to save your money, your butt on taxes. Yeah. But he never learned how to manage real estate, so he mismanaged his property for basically 20 years. I come along, I go, mo, let me help you retire from multifamily, and I’ll give you a payment plan that you can receive all this money long term.

Mo goes, this is amazing. I can save money on taxes. I don’t have to pay a real estate agent. This is awesome. You’ll make monthly payments to me, and even after I’m dead, those monthly payments will go to my family, which is ultimately what I bought the multifamily for in the first place, and I can get a higher purchase price. All the things that he loved. What happened with that property is mo never took care of the property.

And so even though I went in to start renovating it and getting, you know, raising rents, we found that the plumbing had never been touched in 30 years. And so I had to go in and spend a bunch of money and bring in a partner to bring money to the table. Multifamily can absolutely kick you. Kick you right in the teeth, because it’s much larger problems, for sure.

I moved here from Corpus Christi. Oh, you did? Yeah, my dad was in the air force, so we lived down there. But it’s a great spot. I don’t know. Sleepy town now. Yeah. Seems pretty sleepy. Yeah. It reminds me of the zig ziglar quote. I think he said it, which is, you help other people get what they want, and you get what you want. I’ve never done a deal.

This is, I think, the most misunderstood thing. People will watch me online, and they’ll go, oh, you’re taking over people’s payments. You’re taking advantage of people. I’m like, listen to every interview I’ve ever done with my seller, and they will tell you, pay saved my life. Right. Like, I understand how to solve some of these problems utilizing these methods. I’ve never once had a seller. I get sellers that text me, happy birthday.

Five years after I bought their house, they. Oh, yeah, because they want you to keep paying them. Well, yeah, either. Either. If they bought. If they sold to me on seller finance, they are my bank, and so they obviously want that relationship. But what about the sellers that are like, here’s the keys to my house, take over my payments with Wells Fargo. Right. Those people still text me years later, and they have nothing to gain from that other than we just have a good relationship.

Right? So what’s crazy is that people listening to this, you are one day away from making money with this kind of stuff. And I’ll tell you, here’s what I would do if I had to start all over. I would go to expired listings. People don’t realize how big this is. Every day across the country, 15,000 real estate agents get fired. 15,000 real estate agents. So with this whole inventory, it’s bullshit.

All people like, oh, there’s an inventory problem? Oh, there is an inventory problem. If there’s an inventory problem, then why did 15,000 agents over the last six months, this is how it culminates. These 15,000 agents get hired six months ago for six months, they fail to sell the house. Oh, we have a big inventory problem, don’t we? On the six month, what happens to an agent is they lose their job with the seller and they get fired.

It becomes what we call an expired listing, a canceled listing, or what I call a failed agent listing. 15,000 of these pop up every day, Monday through Friday, every single day. So what are you looking at? You’re looking at 75,000 listings a week. Agents get fired. 75,000 listings a week. So when you look at that, these sellers have already gone on market for six months. They’ve on, they’re on market for six months.

Who’s told them their house is not worth what they thought it was worth? Somebody else for six months? Yeah, the market told market told them. Everybody told them the market’s not worth the house is not worth the fourplex is not worth it, whatever. And so I will call the day after the agent gets fired and go, hey, my name is Pace Morby. I obviously don’t do the calls anymore.

My team does. My name is Pace Morby. I’m sure you’re sick of dealing with real estate agents. Don’t blame you. I’m a buyer. I’d like to sit down with you today and figure out how to buy your house. Are you open to letting me take over existing payments, or are you open to letting me make payments to you and you becoming the bank? The line I use with the seller all the time is I’d like to upgrade you from the landlord to the lender.

And you know this because you’ve been a lender. The greatest job in all of real estate is becoming the lender. Yeah. And so I convinced the seller, I go, you don’t want to be the landlord. That’s if they have equity and they’re going to finance. Right. So you got to figure that out before. Yeah. And we, you asked that one or two questions, and you’re done. Yeah. And so you could do a variety of things with this house.

Let’s say. I’ll give you a good example. So I told you before we started the show, I have a student named Andrew McGuire. He was a real estate agent for a number of years. The real estate pipeline dries up. As we all know, 2023 rates are high. Interest rates are just forcing buyers not to buy conventionally. So Andrew’s entire pipeline as an agent dries up. So in October, he’s, like, looking for a job.

Sees a YouTube video of mine talking about expired listings, and I thought, he’s gonna pull up an Andrew McGuire video. I’m like, hell, yeah, that’d be great. So Andrew Maguire jumps into my community. He learns how to call expired listings. Like, oh, I could just call these people, get them under contract, subject to or seller finance. And I don’t have to be the buyer. I could just get them under contract and sell it to a buyer and make a fee.

What the heck? Like, as an agent, you don’t learn that you can make assignment fees. So his first deal he does is a fourplex. I end up buying the deal. He makes $21,000. It was literally a one call close. He says, hey, would you be willing to sell or finance the fourplex? And the seller says, yeah, I was wondering why the agent never even pitched any of this stuff to me.

Most sellers in fourplexes or higher, multifamily, they actually understand seller finance. I’m sure you’ve done deals with a lot of people that understand seller finance, that they actually will pitch or bring the ideas to you. And so Andrew made 21 grand, and I think it was a matter of, like, maybe three days doing the deal with me. That’s how fast this business can go, even in a compressed, really challenging market.

Go after the expired listings where agents are failing. Why are they failing? They’re failing all the time. No matter what market up, down, left, or right, there’s always expired listings. But right now, they’re extraordinarily high, because agents are trying to sell houses to buyers who are. Who have to go get 7% interest rates. Right. Why are we not. Why are we doing that? Why am I asking a buyer to go to get a 7% rate to pay off my 3% rate? Why not just have the buyer come in and take over the rate at 3%? The only people that are making money in these transactions are the freaking banks.

So that’s what we’re doing. We’re just going directly to the seller? For the most part, I bypass real estate agents as well. I love it. I remember. When was it? It was. I think I was probably back in my big run. So probably late nineties, early two thousands. A lot of people were doing, like, wrapped loans, so they were taking over loan, but then reselling it. But then that was pretty illegal, I think, right? No, wraps are not illegal or someone frowned upon where it’s where it’s frowned upon on wraps is that you have a non qualified buyer doing the deal.

So what’s cool, I do wraps as well, and they’re legal in all 50 states. What you’re essentially doing, what I don’t love about a wrap is that I’m taking over somebody else’s payments on their house, let’s say. And then I don’t tell them now because I’m the owner. I have the deed. I control the deed. The deed comes in my name in a sub two transaction. I’m now going and finding, let’s say I call them mattress buyers.

People have cash in their mattress, but they’ll never qualify for a bank loan. I then resell the house to them, but I, let’s say I bought it from them at 300,000, took over their loan at 300,000, and I sell it to this guy at 400,000. I build in $100,000 in equity, and I arbitrage the 3% rate. I’m charging this person 7%. That’s a wrap, right. I’m wrapping the existing loan with my loan.

I’m wrapping them together. What a lot of people are doing is they’re bringing in non qualified buyers to buy that house, and they’re trying to wash their hands of the transaction. It’s not the right way to do it. You got to qualify. You got to qualify that buyer. That’s where people get. It gets frowned upon. How are you getting qualified when you buy it, though? I’m not. The thing.

What we’re talking about is I’m taking somebody else’s loan that they trusted me with, and I have an agreement with them, and I’m then reselling to somebody that that person’s never met. That’s where the disconnect is. So you being an honest, good actor, you’re acting in good faith, and you know what you’re capable of, and so you feel good about taking it because you know you can do it.

But. But if you give it to somebody else that you don’t feel good, you don’t have good faith about, then you’re. Yeah. And you’re trying. You’ll take a down payment. They’ll take down payments on these buyers. Right. 30, $40,000 down payments from these buyers, pocket the money. Whether these people have the ability to pay that payment or not, that’s not their concern. They want that 30, $40,000, and they’re crossing their fingers, hoping that these people make the payment.

Meanwhile, the person that sold the house to you via subject to, trusted you to make the payments. You. You and your company, they verified you. They checked you out. They built that relationship, that rapport with you, and. And then you go behind them and resell the loan to somebody else. It’s perfectly legal. It just. You shouldn’t do it that way. It’s unethical. Yeah, I suppose if you were gonna do that and you give it to one of those types of buyers who can’t qualify, the mattress cash buyers, as you say, and then they default, well, you can take the property back and just give it to somebody else.

Yeah. We call it the after party. The after party. I actually. You have whole terms for all these? Yeah. Cause, I mean, we do them a lot, right? So, like, the party is, I just bought somebody’s house subject to. I took over a 3% rate. No credit check. No, I helped a seller. Amazing is party time, baby. Here we go. We’re making money. I then can go resell that for 100 grand higher than I bought it for to a buyer who’s a mattress buyer, and I qualify their ability.

Let’s say it’s a landscape where I go. All right, show me your last three months of income. I want to make sure that you can, you know, make these payments. I really don’t care about their credit. I care about their ability to pay. Right. And if that person defaults in my agreement with them, I take the house back, and I kept the down payment. I kept the payments they made to me along the way.

And I can then just go back out and refine another mattress buyer. It’s pretty rare, the way that we buy. We find our buyers. It’s pretty rare for them to default, but we have. It probably happens once a year to all my wrap buyers, but I’d say less than 10% of the time, I’m wrapping a house. I have so many questions. I want to get into some of the risks, but before we do that, because I’m a turn optimist, because I’m an entrepreneur, let’s talk about how we get into this.

As I already told you outside, before we started recording, I was talking to my good friend Jason Hartman about maybe we should partner up and, like, let’s dive into this thing. I told you, I’ve. I got a couple extra desks here. Maybe I can get some of the boys, some of my daughter’s friends from high school. Like, they’re, like, they’re talkers. I’m like, man, I get these guys here on the phone, so let’s talk about how do we get into this? You’ve already kind of said there’s, like, different levels to play in this game, right.

So the first thing, if I have no money, I like it. I want to get into real estate. I could just start to go find deals. So I could just basically just burn the phones down, find deals and pass those off. That’s like, stage one, I guess. Yeah. So stage one depends on your personality type. Like, a guy like you and a guy like me, we’re going to be great on the phone.

Right. There’s other people here that are listening right now. They’re like, I work on my nine to five. I don’t have time for that. Okay, well, you could buy deals from me or Mark. We would just sell those deals to you so that there’s multiple ways to make money from this and not all of them have to deal with the phone. So let’s say it’s me and you and Mark want.

You want to start this tomorrow? Based on your personality and your ability to put a team of people together? What I would do is I would only call expired listings in a market you’re excited about. I, like, get a couple of guys on the phone dialing down. Yeah, I would do. There’s a dialer we use called vulcan seven. Vulcan seven. Like, makes it super easy to do stuff.

I don’t have an affiliate with them. That’s just who we use. Vulcan seven. You don’t have it yet? Yeah, I don’t have it yet. Maybe I’ll get one. So, vulcan seven gives you all the data of the people who are expired listings. They just fired their real estate agent. They give you a new list every single morning. It’s usually in your market. Let’s say my market is Maricopa County, Phoenix area.

About 40 new leads a day. That’s it. 40? And those people just fired their agent. They’ve been trying to sell their house for six months, half of a freaking year. Yeah, that’s who I’m calling. I’m not just calling randos, right? I’m calling people that I know are trying to sell their house. A real estate agent couldn’t solve their problem. There’s 40 of those a day in my market.

40 a day. So I’m calling them up and going, I’m not an agent. I’m a buyer. I’d like to meet with you or have somebody on our team come and meet with you. We want to look at taking a swing at buying the house. We’d like to give you an offer today. And either, a, we can give them a cash offer, which I don’t do a lot of cash deals, or b, I go to them and go, we’d like to just take over the payments.

If you have existing payments, give you a little bit of money, or if you own the property outright, I’d like to just make payments to you. Let’s say the seller says no. What do I do? I call the other 39 leads. Sure. If the seller says yes, what I do is I send them over a docusign. I don’t have to meet the seller in person. I don’t have to go that route.

If you choose not to, I get the house under contract. Now, I have a couple choices. There’s three ways I can make money. One, I can keep it put in my portfolio, which is 90% of what I do now. Right. I’m at a phase. Same thing with, you know, you and your life. You’re at a phase where you’re like, I want to accumulate assets and build wealth. Yeah, that’s easy for me.

Somebody else watching this right now is like, wait, hold on. I don’t want that. I don’t want the responsibility of tenants and management and all that kind of stuff. I don’t want to deal with payments and renovations. Cool. Don’t worry about that. A lot of people that are out there finding deals, they make an entire business. Like Andrew, I just referenced, Andrew will get a property under contract.

Seller says yes, you then sell the rights to that contract. You assign it, you make 20, $30,000. Just assigning it. Somebody like me. So I’d say 80% of my deal flow today as a buyer actually comes from teams that are out there calling expired listings and then just selling their deals to me and making a fee for doing so. So there’s two ways to do that. Or you could flip it, you could put on the market and sell it back on the market.

Whatever else. There’s a. We talked about wrapping it. Yeah. You can talk about turning Airbnb options, executory contracts. There’s so many things you could do. But if you want to make money today, you’re selling the contract. Right? You’re making money less than a week. $20,000. Yeah. Like, Andrew McGuire thinks since October, he’s made like $300,000 just in a matter of a couple of months. And he was, he went from going, I’m looking for a job to, I made $61,000 my first month doing this type of thing.

Right. So, so let me just, so if you’re listening to this and you like dialing down on real estate and you want to find some deals, hit me up. Maybe what I would do is I would. I would have two people on your team. Yeah. And I would, you know, know you’ve done so many real estate transactions. So I would have two people on my team here. And all they’re doing is calling expired listings.

That’s it. They don’t do anything else except for call expired listings. It’s not really cold calling. These people are already trying to sell their house. You’re just calling with the solution. What about moving down, like you said, at six months? So, like, what about, like, five months or four months? So those are active on market deals. And I will call them, but I’m not calling the seller. I’m calling the agent.

Right. So we. We have a larger team. They’re not gonna like that. No. Agents love it. Oh, they do? Yeah. I have a lot of, like, if you go on my YouTube channel, you’ll see me working with agents all the time. They love it. What happens is I’m not gonna bother the agent for the first hundred days. Right. So if they’re listing, their typical listing agreement for an agent and a seller is six months, 180 days.

My team has a trigger point at 100 days. So we start calling the agent directly and saying, hey, looks like you’re having a hard time selling the house. We might not be the best buyer for you, but we buy houses by taking over payments. It looks like your seller doesn’t have enough equity, or maybe they’re looking for too much money. If we can work out some sort of creative terms, you can get paid your commissions, and we can get the seller what you need.

So you still give them commission? Of course. Yeah, they still get paid because on the expired one, then they’re cut out. Yeah. But here’s what ends up happening. I’ll give you a quick story on this. This happens. This is a very typical type of flow. So my team calls a property on 4101 West Flower street. Okay. Phoenix, Arizona. This is an address I own today. This is like 80% of the time.

We call an agent. This is what ends up happening. House is listed. We can see that the house has a 2% interest rate. He bought it with a VA loan. Super low rate. We want that. House hits 100 days, who do we call? We call the agent. Hey, agent. Looks like the house has been listed for over 100 days. Want to tell you we are open to taking over the payments.

Getting your commissions paid. The agent says, no, my seller’s not interested in that. Okay, no problem. We call back 120 days. Same thing. 100. 4160. Same thing. 179th day. The day before they get fired. Say the same thing. Okay. Agent says, my seller’s not interested in that. No problem. Appreciate you. Thank you so much. What do we do? Two days later, we call the seller directly. Hey, Bob, we’ve been trying to buy your house.

We worked with your real estate agent. We submitted an offer that would include us taking over your existing payments on your VA loan. Are you open to something like that? My agent never said anything to me about this stuff. This is very typical. Happens all the time with real estate agents. What they don’t understand or they didn’t learn in school, in their two week school. A lot of us think real estate agents know a lot about real estate.

They really don’t. It’s a couple months. Come on. Yeah. Well, if you look at. Like you look at it, the average agent is going to school for 60 hours. Yeah. A barber goes to school for 1200. Yeah. What the hell? What are we talking about? Yeah, you’re. You’re giving people a license to be called a licensed real estate agent. They. That didn’t even go to school. One 20th of somebody who cuts hair.

Yeah. That’s crazy. Okay, so I’m not saying that to bash on agents. I’m trying to give that the audience an understanding that agents don’t know creative finance. They don’t even learn traditional real estate in real estate school, let alone creative finance, which is legal in all 50 states. It’s been done for hundreds of years. So, of course, I’m gonna run into agents that say my seller’s not interested.

What they’re really saying is, I don’t know how to pitch that to my seller. And I don’t want to admit to you that I don’t know what I’m doing. So I’m just going to let the. They’re more willing to let the listing go and get fired and lose six months of their life than admit that a licensed professional knows less than a non licensed professional. Right. So what we do on that house on 4101 west flower, I took that.

I turned that into a co living house. I think co living pad split is what we call it. I think that is the number one exit strategy for the next ten years. Why? Affordability in the cities. Oh, yeah, the cities, like, think about, like, San Francisco. They’re, like, doing pods. There you go. Like, those types of things. What are ways that the migrant. Like the migrant situation that’s going on right now.

10,000 new people are coming into our country every single day. Where are they living? Yeah. What’s going to happen is the government’s spending money on letting people shack up with each other. You see what they just did in New York? They said they’re offering New York. Yeah, to host them. To host. Dollar 125 a day, bro. Wow. Three or $4,000 a month to let them rent one room from you.

So it’s called co living. Three grand or three grand a bedroom. Three grand a bedroom. Not a house. Living numbers. There you go. That is assisted living numbers. It’s massive numbers. So you look at that model and you go, I’ll take over Bob’s house on 4101 West Flower street. We already did. We own it, and it’s already a co living property. The payment I took over from him is $2,000 a month property, principal, interest, taxes, insurance, management, everything.

I’m $2,000 a month in that property. I broke. Broke it up into eight bedrooms. It brings in like, $7,000 a month. And I’m no money out of pocket on the deal, and I’m cash flowing 7000. I’m bringing in 7000. I’m netting probably four to $5,000 a month on that. Okay, cool. What did I really do after that? I then called the agent who got fired, and I said, hey, this is pace.

I want to meet up with you for lunch. I got a $2,500 check for you. And, like, for what? And I go, well, remember I offered creative finance to you, and you never present it to your seller. Well, we just waited until you got let go of. We called the seller. We worked out the deal directly, and I want to pay you $2,500. And the agents like, why would you do that? And I’m like, why would you? Because I want to do more deals with you.

Yeah, I want to do more deals with you as an agent. I wanted to sit down with you and show you. Here’s the paperwork we went through. Fidelity, title. We got title insurance. We did this all legally, and you missed out on $13,000. And I want to give you $2,500 as an investment to go out and go get me more of these opportunities. And so that agent and I on the flower house, we’ve done, I think, twelve deals in the last year together since they failed to present to the seller.

Yeah. Now, that sounds like a lot of information. Somebody watching right now is like, I can’t do this. And you’re probably right. You can’t do what I do, but you can buy deals from people like me, that it’s locking up these types of transactions all the time. It’s really simple. Yeah. So that’s what I want to talk about. So success leaves clues. Tony Robbins, you said you’re gonna go see him.

That’s what he says. Right? Success leaves clues. But you can’t do what pace does. You have to kind of do what pace did. Correct. And so there’s different levels. So one level. One is anyone can get on the phone and start dialing down. I would work from a mark. I would. I would not even try and close the deal. What I would do is I would work for Mark or pace and say, how do I work for you for 90 days? And all I’m doing is setting appointments for Mark to talk to the seller.

Right, right. Hey, I work for a company. They’d like to buy your house. Can I get you on an appointment with. With Mark, the owner of the company? He’d love to chat with you about buying your house, taking over existing payments. There’s a script there. You can follow a script, and then they get paid a commission when you go buy by the house three months later, like, oh, my gosh, this is so simple.

I understand this. Go do your own thing or. Or start doing it on the side. Yeah. So you can. You could just get the person on the phone, like a setter, if you will. Then you could be the closer that then hands the deal off. Yeah. You could be the person that actually takes the deal and buys it. Those are like, a couple. You could be the transaction coordinator.

Transaction coordinator. A lot of, like, we call them top tier transaction coordinators. They understand creative finance. So if you’re from the mortgage industry, you work at title escrow, something like that. You crush it as a transaction coordinator. Right. And then the other people that make money in it, you’re on somebody’s team. The other thing is, when I do need money and a seller wants a down payment, I bring private money lenders in and they figure out how to.

For the longest time, I brought in private money partners. So I would go find the deals, and I didn’t have money to get started, and I had to pay for renovations or let’s say, furniture for an Airbnb, let’s say. And I’m like, yeah, I got the house. No money down, but I still had closing costs and furniture. So I go get 30 grand from a private money lender, and I go, I don’t want to make payments to you on the 30 grand.

Just become my partner, and we’ll split the cash flow. Yeah. So there’s a lot of the private money people. If you guys are private money lenders, there’s ways to get involved in these deals, too. Yeah. And in your network that you have, which is massive. We talked about that. Network for life. Network for life. Do you have all those different roles that are within there? So, like, for example, avatars.

Okay, so, like, I could join your network, and then I have people that are willing to take those deals off of me if I find them. Yep. Or maybe I could find people that would find deals for me in. Yeah. So, like, we have a girl named Elena Tang. She’s in our community. She’s right down the road from here. She’s a licensed therapist. She’s like, I don’t want to look for deals.

I don’t want to cold call, I don’t want to negotiate, and more importantly, I don’t want to learn how to negotiate, but I know that people inside of the community are learning how to do that, and they want to make a fee. All I want to do is build a portfolio without using banks, without using massive down payments and all my credentials and all that kind of stuff.

So she’s been in our community for 26 months. She’s bought 24 rentals just from other people in the community. She’s never called a seller one time. She’s never had to worry about paperwork. She’s never. She’s even borrowed money for down payments and stuff like that from other people in the community. So she has found her avatar, as I call it. She’s a buyer, is what we call her avatar.

There’s 25 other avatars. And what I teach people, go, come into the community, take an avatar test, and I’ll help you allocate your time and energy to where you should be based on who you are, your risk tolerance. Like, you and I, we got all the risk tolerance in the world. Yeah. Like, if I lost everything tomorrow, I’d be fine. Yeah, same thing with you. I’ve done it.

Yeah, me too. I’ve been there. I’ve had people file bankruptcy on me, and next day I wake up, and I’m just right back to work. Other people devastated by that. So you gotta, you know, weigh that risk tolerance and find out which avatar you should be focusing on. Yeah. So let’s talk about some of that risk. Yeah. So what do you think? I mean, your goal is, I mean, I think 2000 properties or something.

Yeah. 2000 doors yeah, 2000 doors, that’s a lot. I had up to 200 at one point. It’s a lot. I mean, 200 is a lot. Yeah. But the macroeconomic factors weighed heavy on me. I was really good at making money. I just had my head down. Did really well in real estate. I started a couple different businesses, had big exits on a couple different businesses. But I wasn’t paying attention to what was going on in the macroeconomic environment.

I didn’t understand what the Fed was doing, inflation, interest rates, any of that. And I learned, unfortunately very, very quickly that even though I wasn’t paying attention to it, it still had massive power and control over my life. Right. So like you’re building up this massive portfolio, 2000 properties. We have a lot of potential turmoil going on in the financial markets. Is the Fed going to pivot? Are we going to go into a recession, war, you name it.

Right? Plenty of black swans out there. So one, how much do you pay attention to that? And two, what do you think about that as far as like the risk in the near and long term? Okay, so number one, I pay attention to it a lot. Not because I care about it, but because I also have a YouTube channel like you do. You’re way better at your YouTube channel than we are.

But I pay attention for that. So I can talk to my audience about it. But I’m buying, like, here’s what’s crazy. Interest rates today are 7%, right? The interest rates actually just went up. People are talking about all their interest rates are gonna go down. They actually just went up in the last 30 days. Right? So rates are over 7% right now. My average deal that I’m doing is under 3%.

What do I care what the fed is doing? I don’t care if I’m acquiring because I’m using sub two and seller finance. None of that touches me. I am disrupting an entire market and I’m doing something that hundreds of other people have done. Robert G. Allen, Ron Legrand, Carlton sheets. Like, I’m not the first person, I’m just Carlton sheets. You remember Carlton sheets, right? Yeah. So this has been around for a long time and people have been doing it.

I’m buying deals at 3%. What do I care what the fed is doing now? It does affect me on the macro side of things in the sense of my equity will go up and down, left and right. But what do I care about my equity? I’m not going down to the grocery store and buying my groceries with my. No, you just care if you can continue making your payments, because there you go.

Thousand properties. Like, that’s what. That’s back to this building I got caught because I couldn’t carry. Correct. And even if you could probably rent it out at the time, I bet you your tenants wouldn’t have covered the mortgage. No, no, we’re close. There you go. Fraction. So, like, you look at Ken McElroy on a previous episode. I think you did something with him like three months ago. Yeah, phenomenal episode.

I actually watched it like three times. I love Ken. He’s a friend of yours. Friend of mine, yeah. One of the smartest human beings on the planet and nicest. Yeah. He bought your guys a screen right there. Your little vibe board right there. Ken’s awesome. So Ken talked about on your show, and he’s talked to me about this as well. An asset he had in Austin that he bought in 2007, market crashes.

Basically, he loses 30, 40% of value on this. He’s like, I just kept it because my tenants paid the payment. What did I care about the equity? I knew the equity was going to come back. Right. So it’s kind of the same thing with bitcoin. Right? Like, idiots are the ones that are selling their bitcoin, right? Bitcoin goes down. Oh, my gosh. I mean, I’m worried I should sell.

It’s like, hold on a second. Do you understand the underlying value of this asset? Yeah. And you’re absolutely right. And that was unfortunately, the very painful lesson I learned going through 2008 here in southern California. All the real estate I own could not even come close to covering on rent. So when I started rebuilding my portfolio, I told you, I first started doing hard money loans, and I would only loan money on a property that I would want to own if I had to, which I did have to own a few of them.

And basically, would the rent cover the payment? And was I okay with the cash on cash return I was going to get? You had to learn the hard way. Right? And I’ve learned the hard way, too. I’ve had assets that don’t cash flow, and we don’t buy things now that don’t cash flow. So there’s times like, I’ve got a. I’ve got an asset in Hawaii. It’s my lowest interest rate.

I mean, I have a lot of 0% interest rates from sellers on seller finance. But the ones where I’ve taken over payments, my lowest one is 1. 9% in Hawaii. Wow. And I looked at Hawaii, I’m like, I know nothing about Hawaii. What the heck am I doing this is stupid. This is like a year and a half ago. And I’m like, nah, I’m gonna turn it down.

I don’t understand the market well enough. And then my team, Molly, she’s my head of operations, she’s like, just find somebody in Hawaii that knows what the hell they’re doing. This is a great assets right on the ocean, right on the thing. And so I got educated and I found a tenant that will, that signed a three year lease. And I said, all right, I can cash flow on this thing.

I can understand that. I can understand that. Somebody who’s willing to give me a cash flowing lease, something that’s gonna make money and cover the payments. But I, for the most part, I stayed to very specific markets for me that I understand really well. And I know that they’re going to cash flow or they’re not going to cash flow. And I also know that markets might be renting too high.

Like Phoenix, Arizona last year. The rents went above where they are going to be, in my opinion. Twelve months. I think rents are going to come down a little bit. So I understand that about my market. That’s where the macro comes in, is that I go, yep, rents went up. I need to be smart enough that when my lease or my tenants renew their leases, they’re gonna renew it.

Leases $200 lower because I understand the macro. So yeah, there, there’s tough things involved in this business. But again, it’s why a lot of people like an Andrew McGuire go, I’m not ready to own, I’m not ready to understand the macro. I’m not, I’m not freaking, Mark. Yeah, well, you have to make sure that, one, I say risk is in the investor, not the investment. If I took somebody from Kansas, I don’t know about you, but if I took, maybe if I took you to Hawaii and I took you to the North Shore to pipeline and the waves are 30ft, I’m like, pace, let’s go out there.

Like, you might drown. I wouldn’t have made the flight, but yet there’s people, there’s 100 people in the water every day that are just playing out there, having fun. There you go. It’s because they’ve built up the skill, they built up the ability to be able to do that. That’s what I mean. The risk is in the investor. Like you said, you have to build that up. A couple things.

One, experience, obviously, but two, you also have to make sure you have the capital finances to kind of weather those storms. Because back to the point here I couldn’t carry. So I don’t want to end up with 50 homes, and all of a sudden we get a downturn in the market, and now I got to cover the rent of 30% of my portfolio. Some of that comes down to skill, like Ken McElroy, going back to him, he’s very good.

Like, during even the 2020 pandemic and 2008, like, he kept his rent rolls very high, high percentage. So a lot of that’s property management. Yeah, he’s one of the best in the industry. And then, you know, you had. You have a background in construction. Construction. And, man, some of the big dangers are getting into properties that you didn’t see they had. Having contractors screw you over, take money from you, miss allocation of resources.

Or a contractor says something’s not wrong when it is wrong. Or a contractor you give a deposit to, and they walk away. I’m sure you’ve had that a bunch of times. Oh, yeah. Like, all those things I understand. You know, just like you, you’re really good at reading people. I can meet a contractor just like you could with all your experience. I go, this guy’s gonna screw me.

Yeah, he’s the wrong guy. Some of this brand new. That property I was telling you about in Indianapolis, I had to take back. I’ll take the responsibility. I didn’t manage the construction draws properly. I had a. I had a person on the ground managing the construction draws, and we gave out too much money and not enough work was done. Yep. Oh, man, that was a slippery slope to come back from.

Yeah. You give that your. You’ve incentivized them to not do any work, and they’ll. There’s like, I’m walking away. And what’s your recourse in that situation? Right. So I took the property back, but I. Yeah, but I was out the money. The interesting thing about your analogy with, like, the Hawaii, you know, 100 foot waves. Right. Or 30 foot waves. What I love about that is that. Yeah.

The experienced people are out there. Like, they’ve done the thing. They’ve got out on the board. They’ve compounded compound and compound, and they got better at the thing. Meanwhile, somebody that’s brand new walks on that beach and goes, there’s no way I can do this thing. However, you can sell the surfboards, you can wax people’s boards, you can help sell lunch and sodas and whatever else. There’s other ways to make money on that beach than being the person that’s surfing the wave.

Yeah. And that’s what I’m talking about is that in order to be the person serving the wave, which is what I’m doing and Ken McElroy is doing, and what you’ve done your whole career. I started out by just finding the deal and selling it to somebody else that was more equipped to ride that wave than I was, which is managing the asset. Yeah. When I first started, I did not want to own any of these assets.

I was too afraid of it. But there’s still ways to make significant money, millions of dollars. There’s ways to make millions of dollars without actually having to surf that wave directly. Yeah. The risks are high, though. Like, if you look at, let’s say that the market, let’s go through, like, a doomsday situation, market crashes, what do I do? I look at my assets and I go, they’re all cash flowing today.

Why would they not be cash flowing even if the markets plummet? Well, there’s a, there’s a problem. The problem is when markets plummet, people are out of work. So it’s not just the equity in the asset that I may or may not care about. Let’s say. Let’s say I don’t care about my equity, because I know I always tell people, I go, equity comes, equity goes, but the cash will always flow.

Well, that’s not always entirely accurate. What happens in 2008 when a lot of people lost their jobs and they’re the landlords? Like, dude, I’ve got seven of my houses, seven of my ten houses. People aren’t making their fricking. Well, it depends. I mean, here in Southern California, rents actually went up. Yeah. Because more people turn into renters. Now, if you’re talking about Vegas or Phoenix, where you built go cities, that was a different story.

Yeah, we. And I was a. I was in Phoenix, right? And I was a contractor at the time. So I watched this. This happened to a lot of my landlord friends, is, for about six month duration, they were struggling to make their payments. So if that happens, I’ve got six months of reserves. Right? We’ve. The cash flow has built up six months of reserves. So I’ve got six months reserves on all my assets.

Worst case scenario in that regard, I don’t want to ever sell the asset anyway. Right. Like what you and I were talking about, like, you bought bitcoin. Are you ever gonna sell your bitcoin? Yeah, never. Why? So, same thing with my real estate. Would I ever actually sell my real estate, no matter what happens with that? How if bitcoin goes down to $15,000 tomorrow. Are you gonna sell? It was just at 15.

No. And the same was with my real estate. I was showing you the house I’m building on the beach in freaking Mexico right now. Like my goal is my grandkids are gonna be playing at that house. Like. Right. My great grandkids. I’ll be gone and I still want my family to be enjoying that house. Right. So um. That’s the idea on that? Yeah. I guess. I guess the last question or a couple more questions.

But in regards to that specifically I think about my real estate in terms of supply and demand. Right. Prices are always supply and demand. And so like you think about like trends of migration trends if you will. Right. So like Florida. The Sunbelt states have North Carolina, Florida, Texas, Atlanta. Georgia. Like you get crazy. They’ve continued to do very well. I mean places like Oklahoma where they’re building Amazon facilities.

Right. But then you have places in the rust Belt or the Pacific Northwest that are. Yeah. Like Appalachia and stuff like that. People are just leaving. Yeah. So do you think about it like that? I mean are you pretty strategic in which markets? You are very strategic. I don’t know. I had this whole thing this last week mark where I’m like researching what’s going on with the migration patterns.

Not just the migration pattern. Like I’ll go in the Census Bureau and you’ll look where all the zip codes. You’ll see if there’s a 0. 8% growth year over year. I will go and invest in those areas. But they also have to be republican. Republican states. Why? Because I care about landlord tenant laws. Yeah. Significantly. Like one of the reasons why you won’t invest in LA or I won’t invest in LA is because they’re very tenant friendly.

And basically if I owned a sandwich shop in LA and somebody walks in, orders a sandwich they get to check out and then they just grab the sandwich and walk out. That would be illegal. Right? Not here. Not here. Yeah. It’s okay here. It’s okay for somebody to live in your property that you own and that’s your product that you’re selling and for them to just rob and steal from you.

So I’m not okay investing in those states. It’s very, very specific areas like Illinois trash. Washington’s trash. Oregon’s trash, Denver. Colorado’s trash. La’s trash. And what I mean trash. I love these states. Like I walk here and where you live it’s paradise. But from a landlord perspective there’s no protection business standpoint. So I avoid those areas also, I look at the Census Bureau and the Census Bureau shows me where people are moving and what’s happening.

And they also, I look at permit data. Permit data. Like, how do you know that Amazon is building a thing in this place or that thing? Permit data. People follow that. Right. You pull a permit three years before you actually start building. And so, you know, the plans that are happening in that area, like Fayetteville, North Carolina, really slept on market for people that are trying to work in Fayetteville.

Amazing state, smaller town, kind of by Winston Salem, Charlotte. Kind of wedged in between there. They’ve got a military base and Amazon is now building something there. Yeah, I saw that three years ago. Yeah. So I started long term demand. Right. So I started buying three years ago and now my rents have doubled. Right. So there’s all sorts of really smart things that you can do to do all that kind of stuff.

But I’m now rethinking not deploying capital into states like California or Denver. Why? Because I look at what’s happening with this immigration situation. 10,000 people coming into our country. I can’t stop that. You can’t stop that? No. None of your friends or my friends are powerful enough to stop any of this bullshit. Nope. I agree. I love immigration. I think we’re all immigrants. I love that. But the bullshit is they’re just bringing people in.

We don’t have anywhere for them. I’m pro immigration, pro legal immigration. But where are they gonna stay? That’s the bullshit I’m talking about. Like, you don’t even know where they’re gonna go. So I look at that and go, the government is going to have to print money and they’re gonna have to reward investors to divide up their houses or do something. There’s. That’s the only solution. Yeah, right.

They’re. They’re displacing school kids and elementaries right now to find places for these people live. I don’t know if you saw this, but they. New York City just deployed $53 million. Just giving these people $10. Bro, we got $1200 in stimming. Well, I didn’t get it, but some people got 1200. Now they’re getting 10,000. And then state of California, they just put, I think it was like 3 million people in the state of California that are all illegal immigrants are now on your guys’s Cali care or whatever it’s called, your Medicare, all approved.

Meanwhile, there’s somebody that’s making $60,000 a year, a year here. That’s been here their whole life and they can get approved for government assistance. So meanwhile, my family of four is $28,000 a year. Yeah, it’s ridiculous. And look, we can complain about all that, but what I look at is I go, where can I make money? Could I make a ton of money by going into San Diego or LA and going, and buying a piece of dirt, throwing tiny homes on it, and letting the government subsidize those payments for illegal immigrants? The government’s already willing to do it.

Well, and California’s big plan of making more affordable housing is allowing you to build more homes on your property. That’s the whole idea. All the adus that you guys are seeing, like the ADU situation in your guys’s state is crazy right now. You’re going to double the amount of dwelling units here in the next five to seven years and you’ll still have a problem. Yeah, you’ll still have a problem.

I think most of the problem will be solved. But I look at that and go, I know that I don’t love landlord laws, but if they’re going to do government programs where they guarantee the rents, I’m cool with that. And I think that that’s what’s going to happen. I think that those main states you’ve got where, like Texas, I don’t know if you saw this, but Senator Abbott is busing people away from Texas and he’s going to all these other liberal areas and he’s, I’m like, those are the areas where I think the government’s going to just subsidize and give investors money.

Like, we’ll guarantee you this rent payment for these illegal immigrants. I think that there’s something to look at there. And I think that my team’s going to start deploying some time and energy. I mean, section eight in Detroit, it’s been a good investment for two decades now. Exactly. I put a quote on my instagram, I think, on Friday, and I said, unsuccessful people think the game is rigged against them.

Successful people realize the game is rigged and just learn how to play it. Yeah, I was arguing on my, I love that. I’m arguing on my DM’s this morning. Somebody’s like, you brought up an immigration thing. And I’m like, you’re not going to stop what’s happening. No matter how die hard you are about pro or not pro immigration, the government’s going to continue to do what the government’s going to do.

I don’t know anybody in my circle of influence that can tell the waves how high to go or when to crash. But I do know friends that are like, I’m going to figure out how to surf that wave that I have no control over. And that’s essentially what you and I do as business people of, like, how do I ride the wave that is being created by somebody else? Yeah.

You know? Yeah. All right, final thoughts. Any piece of advice? I mean, you got the community that they can get into. You’ve laid out all the different ways we can get into it. You know, I have this thing where, you know, we brought up Carlton sheets, we brought up, like, all these gangsters from the old days, just badasses in the business. And you’re friends with a lot of the existing just badasses.

Like Ken Macro has been in the business 22 years. All this kind of stuff. We’ve had these conversations. It’s really cool when we talk about deals that we can do, but I, when I’m talking to an audience, I’m stressed out thinking about, there’s a single mom watching us. There’s a, you know, a person that’s at their nine to five job is like, I need to make a change.

This all sounds great, but how do I make a change? What I’ve done multiple times on my YouTube channel is I’ve taken somebody who’s never done a deal before and done a deal with them in less than 12 hours and shown them, let me show you how to make 20 grand today. Not like next year. Not, hey, let’s learn a bunch of stuff for a year to then learn how to do 20.

Just go to my YouTube channel, forget about my community, forget about any of that stuff. Go to my YouTube channel and go watch the times where I just grab somebody by the hand, has no experience. Robert G. Allen did this in 1980. He went to St. Louis, took five people out of the unemployment line, and turned them into full time real estate investors in like, 90 days. And so that’s always been my inspiration to go, who cares that I can do deals? I’m a talker, I’m charismatic.

You can put me in any situation. I can figure out how to make money. A true test is, can I show somebody else how to make money that has none of those traits? And the answer is yes. So go check out my YouTube channel. We do that stuff all the time for people and try to change people’s lives if you’re motivated. One of my favorite personal development gurus, Brian Chasey, I’ve gone through so many of his courses.

He wrote a book the Psychology of selling. And my wife and I, we still go back and laugh at this line. He said, if you have no motivation, I’m sorry. There’s no hope for you. Just blunt. Well, because you can learn anything. You can do anything if you have motivation. So certainly, if you’re a go getter, you can get in and make some money. Man, Pace, what a masterclass I have been.

Like I said, I’ve been watching your stuff for a while, talking about getting into it, maybe hiring some people. You should. So. What an honor to be able to sit down and pick your brain about this stuff. So I appreciate it, bro. Hanging out with you has been a treat. And you’re a legend. And all of our friends, the Cody Sanchez of the world. And all these people I get to hang out with on a daily basis they all just rant and rave about how cool you are.

And so it’s cool to hang out with you today. Yeah. Thanks. And you’re changing lives. It’s a skill everybody can learn. That’s why I started. I didn’t have any formal degree. I just got right into real 19 years old. I didn’t know what I was doing in Compton, California, getting guns pulled on you. It was crazy. If Mark can do it, guys, he’s unemployable. You can do it too.

That’s right. All right, Face. Thanks. Thanks. .

See more of Mark Moss on their Public Channel and the MPN Mark Moss channel.