Creative Investing in Real Estate with Pace Morby & Grant Cardone

Hey guys welcome back to Power Player been following this guy for years real estate investor and entrepreneur Pace morby he's known for his Innovative strategies in the real estate industry basically buying deals with no money down we're going to be showing you how to do creative financing in this episode pace is going to be sharing his experiences insights some trademark Secrets some little hacks on what it Takes to be successful in real estate welcome to the show ladies and gentlemen boys and girls Real Estate Investors from around the world peace Martin thank you [Music] how

many years have y'all shot the show now three years three we're in a six year contractor this is our third year that's awesome and your guy Brad is it Brad Brad yeah he's been talking to you yeah I just saw him yesterday yeah he Kind of got it like seemed like it got a little complicated I thought he just wanted to buy the show then they start talking about it being a different way I said that's why I don't want to do anything with you guys they complicate everything yeah dude like yeah just take the

goddamn thing the way it is you know yeah see how it does I mean if either you believe in it or you don't what's the what's going on over there right now are you guys still I think we're probably dead Roku made me an offer and then who else uh Warner Brothers did one yeah Warner Brothers made us a great offer damn Warner Brothers made such a good offer for which one of the show I don't even believe this for Real Estate King for for level for money and what was the other show we have

two more shows uh how to get rich in America documentary They won all of them they'll take everything I got and I don't know if they'll take the the the family show what's the downfall with going to Warner Brothers versus uh Roku more red tape yeah I mean I I don't know if I trust the deal so I don't know that's the problem with us is that you get locked in in season one they go yeah we'll let you do what you want and then they get you get in and get a contract and they

start Getting their claws in you and they change everything the way they want yeah but we would just give them the product though okay so you deliver the product it's done I paid for it you produce it and they just gotta check yeah so you're your own production company yeah I I wish that's the I wish I knew enough that that's the route then we went from shooting a show that took we were rolling right now right guys we went from shooting a show that Took I want all that okay uh from shooting a show

that would normally take them three weeks to two and a half days and I'm trying to shut I'm trying to get it shot in a day and a half I think I can our show took 10 months season two took 10 months since the same bro yeah it's it's insane so we shot 10 segments yeah ten cities went to 10 different places uh and did them in 28 days what's your Favorite show to film right now um the ones that are easy like I don't wanna love her money no for love for money won't even

be me I'll produce it and there'll be another another guy another guy that does it and we can do for lover for money in every city so it'd be for lover for money in Atlanta for you know uh Boston so where it's it's where Johnny finds a house he likes but the girlfriend you know the story yeah yeah Then we pitch it to you uh no you yeah you guys picture to us we were out of town so you ended up having sperber on them yeah yeah yeah so they like that one I I don't

think they really care I think they just need content that's affordable to them that doesn't put them out the other thing too is there's a writer strike right now that's happening and anything that's you guys will handle and they don't have to go through a Writer they don't have to go through any of that kind of stuff man you guys will get paid well yeah yeah I hope so all right well look I'm really excited about having you here uh uh you know my the way for me to find out about other markets is to

have the the guys that know the market right with me so um I know you're focused on what right now well in addition to being a movie star TV star yeah we so when I first started I was in single family primarily A lot of what jamilia Jamil damned you on the show as well started in wholesale great way to get into the game and then I started jumping into actually holding property because I was like man I'm getting taxed at 40 freaking percent right I might go get a 20 000 wholesale deal but I'm

gonna pay eight thousand dollars in taxes it's really 12. it's really 12 right so um I started buying and buying and buying yeah and but on what single family okay and I primarily Focused on what people know me for is I acquire existing debt so I'm not using my credit I'm not using any credentials I'm not leveraging Banks I'm not doing that stuff and then I started getting really heavy into seller finance and then realizing that b-class C-Class multi-family is like the sweet spot for that and so the last two years I've been focusing primarily

on that yeah so let's talk about that because that's a sector that I don't do anything up never have I've known it was there this is going to be probably what an older older seller yep older seller they're retiring so what we'll do is we'll go on a company called prop stream okay with Upstream go to prop stream it's a website that just has a really great data go filter somebody says they've owned the property for over 30 years right so it's obviously not a class which is what you focus on right and I'm looking

for a tired landlord yeah somebody who's Mismanaged the property um sometimes or or he's Managed IT based on his price point because he entered it he could have paid nothing for this thing exactly one of my best deals I did was it was a 43 unit deal seller bought it for a million yeah held on to it for whatever many years want to get out of it at four million he's like but I want to pay Capital Gains all at one time right so that's the cool thing about seller financing you seller Finance finances it

to me at 4 million no agent fees I paid the closing costs he seller financed four million zero dollars down because he knew I had to put some money in the run into renovation right right that was the money down in his mind well he says you got to put money down I said well Mario I'll put money down but I'm gonna put in escrow that's going to go into construction yeah beautiful and he goes all right I'm cool with that yeah yeah He's going to see the commitment but he gave me four year four

percent interest fixed 50-year no 50 50 or no well here's here's the craziest thing wow dude well this is what's great about seller finances because who doesn't want he wants the income he doesn't want the income Grant he wants his son to have the income got it got it so let's just back this up so everybody understands what he just did okay because this is the formula right here this is a seller That that wants out that you call him a tired tired landlord tired he's done he's done with picking up the checks and handling

the toilet calls Etc right and his cost basis is virtually zero he bought it 20 to 30 years ago right um so because it can't be a guy that bought it 10 years ago and then three the guy doesn't really want the score he wants the income either for himself for a family member right and he's worried about if I sell It right now on the market and I get a chunk of cash I'm gonna have a tax implication right and I'm gonna have or eight I have to ten thirty one right and if I

10 31 let's be in another dude I'm not I'm not retired anymore right right right so he's like I'll be the bank and so and on the tax implications so the when you're approaching a a seller you're you're looking at a four million dollar if he bought it 30 years ago he's paying Taxes on the entire 4 million he's paying taxes on the entire 4 million because he's also got depreciation recapture and some other things yeah he could he be paying taxes on more than four million no no it gets to zero right it doesn't

go below that no okay so here's here's how I structured that deal so the seller had the how the property on the market couldn't sell it through a real estate agent because the seller says look I don't need the money I just Want to get out of the deal right right and so if I'm going to go put on the market I want to get this specific number typically it's going to be a little unreasonable on price he's going to be unreasonable right but not 50 years from now right and so he says I I

want this price broker takes the deal puts it on the market gets lowballed half a million dollars seven hundred thousand yeah seller says no to every single offer yeah he's tired now he's a Tired seller seller now is a tired seller and a tired landlord right so it goes expired listing which is public data we call somebody on my team calls and says hey looks like you couldn't get the number you wanted on the market what were you looking for yeah he says I'm looking for three million dollars let's say yeah yeah he said we

go okay well we can get you that number but you got to give us terms yeah and mark the seller's name is Mario Mario goes okay I'll give you terms I want 20 down and eight percent interest with a five-year balloon and we go dude you can't have your cake and eat it too yeah if you want us to give you the number you want you got to get but it'd be cool if you did yeah yeah yeah so he says um well come meet me at the property you've never seen the asset so actually

travel out there it's in Texas I travel out there I meet him and this is how I structure the deal He pulls up to the property has a 12 year old son in the back of his truck with him son doesn't want to get out I'm like where do you guys live here in Texas he goes over three hour drive away I'm like your son didn't want to get out of the car and like stretch his legs like he hates this property he hates it your 12 year old son hates the property uh which means

he hates it he says to me he says for his well let me put it this way my 11 year old son when he was 11 he Asked for on his birthday told his mom mom will could you just tell Dad to love me as much as he loves his tenants oh my gosh okay then he turns 12. wow and on his 12 year old on his 12th 12th birthday he says can you tell Dad just to spend time with me like he spends time with his tenants so the seller's like all right I'm repairing

the toilets switching out the ceiling fans I'm doing all the stuff myself right right I got to sell this Damn asset yeah so one more time over my kid right I want to spend time with my kid so I go to Mario and I go I'll give you a monthly payment and he goes okay but I want a five year balloon I said Mario here's the thing man you got your 12 year old son he hates this property he has resentment towards you how about we turn this deal into the greatest thing for your son

wow wow and I said imagine how what will Happen where will you be when your son's 62 years old he says I'll be dead yeah I go yeah but you'll be in his mind every month when he gets an eleven thousand dollar check from Pace when he's 62 years old and we can turn this property into a memory that you set up every single month and I was like done and so it wasn't about the numbers it was about the emotions it was about all the other things so 50 years he gets he Gets 11

Grand a month 11 600 months that asset so he's gonna get 6.6 million not yeah four million or three million yeah because he got the four percent interest on it yeah so I don't know if you guys broke that down what he did but he basically took a guy that wanted too much money for his property that's why I didn't sell right I would expect and then figured out how to give him more money just over time right without give you giving him any money I gave him no Money up front yeah yeah I paid

closing costs which were five grand we'll do the return on that's better than Bitcoin well here's what's great I mean I write it off my first year so four four million dollars last year I do a cost tag on the deal I got well how did you do that you don't own it yes I do how do you own it he's the he he right we write a promissory note he's the seller he owns it free he turns into the bank I write a Promissory right now because he didn't you only paid taxes on stuff

you receive he didn't he hasn't received the money yet he receives the money over a long period of time Oh I thought no no in a seller finance situation you can set it up where he only gets paid every time he actually receives he only pays taxes yeah on the portions he received money on right let's imagine this let's say that I thought so why wouldn't Yeah I didn't know that dude yeah yeah think about this if he sold it to me on seller finance at four million bucks okay and he got taxed the four

million dollars he he don't you know at least a million right and he hasn't received anything he hasn't received any money and what if I default in six months yeah so so we gotta go back to the IRS and say hey this we gotta unravel this deal yeah yeah so why uh-huh so why do a Master Lease then everything would be owner finance I don't do Master releases I wouldn't touch a mass release I own I own or Finance everything people that do Mass releases doesn't make sense for me why does it make sense for

anybody they just don't know how to negotiate seller finance that's it people that are doing lease options they're acquiring on lease options or mass releases just don't understand how to negotiate uh yeah that's interesting because I was just Talking about a master at least literally three days ago yeah and I didn't know I thought I thought and shame on me I didn't look into it that if I didn't own or Finance I was having to pay taxes the day you sell it yeah no you pay taxes on money you receive not money that is on

a on fake paper yeah interesting so he's so if I he said but but if I finance externally well I received all my funds right yeah So he so he sell their finances to me yeah this is here's the economics of the deal there's a three million dollar not four million yeah so he bought it for a million sold it to me for three I have no money out of pocket on the deal he already has the tenants in the property and um the property brings in about 37 38 000 a month currently I have

a payment to him he's the bank principal and interest for 11 Grand a month oh Okay I have taxes and uh Insurance on top of that right and then I've got on site management I got blah blah blah blah my net on that deal is about 12 Grand a month Jesus man 144 000 a year no money no dough okay property you guys can go pull that up on my YouTube channel it's a great deal I actually interviewed the sellers named Mario and it gives me 19 reasons why it was better for him to sell

in seller finance than it was to sell on on cash and he's a Marketing one for you so that's oh he's phenomenal I mean that's why I bring Eric everywhere I go because it's like hey yeah the seller's giving us a great testimony let's do this yeah so that was a good deal so how many times can you do that infinite yeah and a while so so this would be good this would be good to do this in this market where price right now where you have this sellers waiting for buyers and buyers are waiting

for sellers to make adjustments this would Be a good time but again you got to go back to that older product you got to go to older product I haven't seen a class stuff doing this yeah right and so that's where I'm focusing is on B and C and my biggest deal that I've done seller finances 256 units in Illinois that's huge great deal a 20 20 million dollar deal on seller finance was great another deal very similar same similar terms no money out of pocket that deal Nets me 45 50 000 a month net

net I need To start doing your deals man they're great deals they're great that's insane some of them are too small for you at your at where you're at no 250 Well because most of them are what 20 units and most of them are 50 to 100 units you know because you're these are unrepresented buyers or sellers Brokers are not going to really waste their time with these guys that are wanting a little bit they're unreasonable unreasonable yeah but the sellers are Willing to go I'll give you four percent interest as a bank I'll give

I'll be a bank I'll give you four percent interest three percent interest with a hundred thousand dollars down that's a typical deal okay very very typical deal man one of these visitors we got in here so here's the other thing we do uh Grant as well is we on the seller finance on the single family side think about all the people that acquired Their houses back in 2018 1920 and 21 they've got three percent interest two percent interest I'm just taking over those existing loans yeah is that legal with the bank yeah all 50 states

it's Fannie Mae let's say it's a Fannie Mae all Fannie Mae no loans I can assume it it's they're not assumptions an assumption would require me to go and reply for the bank right all I'm doing is I'm going to the seller and I'm saying hey that payment that you're Falling behind on you're in foreclosure whatever else I'll catch up your arrears get you back into good standing we'll go to a title company title company is going to transfer the deed into my name but the mortgage stays in your name I never applied for anything

it's called subject two why would the bank let me do that the bank doesn't have any involvement at all 100 years I know but but who owns that I do the deal the bank owns that deal no They don't there's a mortgage and there's a deed they have nothing to do with each other think about this when you go into a grocery store and you go buy a bag of groceries and you used your credit card to buy those bag of groceries yeah that's not your money right you use a credit card it's a promise

to pay same is the same as a mortgage okay but when I check out and I get those groceries if I use a credit card's money to buy those Groceries who owns the groceries yeah you do why I have a promise to pay which is a mortgage you have credit cards yet yeah I have the receipt which is the deed so the person who has the receipt of real estate which is the deed is the person who owns the real estate yeah who has the debt yeah God damn dude I've already learned two things man

the debt the debt has nothing to do with ownership yeah it's like your mom could go and co-sign For a car for you but you're the owner right yeah yeah it doesn't mean she's the owner she agreed to co-sign for me in this case the seller the Wells Fargo the seller has to know about you the seller has cosigned yeah it's called the do on sale Clause the what the do on sale Club do do an on sale Clause it means every mortgage that's written in the United States has a clause inside of it that

says if the bank finds out that I have Taken this debt and we've transferred we've transferred the deed and the debt was not paid off in the transfer the bank can doesn't mean they're obligated to the bank can call it due and say oh hey we saw you guys transferred so the bank could step in the bank could step in yeah they have to go through a Judicial forklore and that could be what 23 24 months two couple years yeah a couple years settle out a couple years yeah they don't really want to do that

Because the other guy is gone what department you haven't done anything illegal is what you're saying every sink here here have you ever had one called have you ever had five calls do just do for sale what's it called do on sale do on sale I've had five five calls yeah what do they say How does it go so here's oh great question so thank you man I'm setting you up this is great we are new TV show yeah we should do a TV show so I had a deal on Lost Dutchman is The name

of the the street sellers in foreclosure so that's already late it's a pain point for us right so our team knows pain point we're going to call that seller call the seller hey you're behind on your payments what's going on he goes I just I got divorced my wife moved out blah that's my there's my pain point right yeah yeah and we go well we can catch up your payments get you a couple thousand bucks and you know get you on your way we'll Just take over the payments and deed the property over to us

it's called subject to you down for that he goes yeah let's do it so we captured so so now you're gonna make up the three payments yeah you don't need approval from the bank nope you're gonna give them a couple Grand in his hand and he's walking away because he's like yeah I'm good yeah I'm just walking through this the Bank's probably like yeah that was a good solution don't even tell us it happened the bank doesn't know it happens but this I'll tell you how they found out on this one yeah so this is

Thursday the guy we catch up his three payments on Thursday close escrow on Friday so D transfers on Friday and the bank doesn't have to be involved in this escort no why not Grant this is happening how can the bank not be involved it they're they're not involved In the slightest not in the slightest there there's no physical involvement from the bank those are two separate documents okay Mortgage in the and the deed I can transfer deed all I want all day long and the bank doesn't have to know about it see it do anything

with it uh okay is it illegal no go to the irs's website there's 12 pages on how to handle if you're the seller selling on subject two and if you're the buyer Buying on subject two the IRS tells you how to do it properly Fannie Mae's guidelines tells you how to do it properly amazing bro yes the VA uh handbook shows you how to do it all properly it's insured by title so there's a way that means there's a way to do to mess it up yeah there's a way to mess up every transaction yeah

okay so the when the bank called you what did they say so uh Bank calls it it's amazing man by the way I didn't know we Were going to undo this I mean we we might want to unpack this one and yeah this is great so bank they don't call you they send a letter right it's a whole long process send you a letter and they go hey we noticed you sold the house or the seller sold the house to you yeah and you didn't pay off the loan yeah so we're calling the loan due

and the law they can't call the loan do and go give us the money they got to take us to foreclosure okay And so we called the bank up and go hey dude we caught up this guy's payments what do you guys want us to do we end up calling and getting a hold of somebody who's a decision maker at the bank and they go oh yeah no problem a lot of our we have a lot of people that buy houses subject to why are you calling the loan do then what if you have a

pro you don't have a problem goes oh it's just Bank policy but here's what you should have done in In the process you should have just acquired it and this is going to get in the weeds a little bit you should have acquired it on a lease option uh yeah okay that's what I was referring to earlier with the you should have purchased it on a lease option yeah the option price is the existing mortgage balance the day you close or you decide to execute your option does that make sense so let's say I buy

it today you do a lease option and The option day you close is the mortgage amount 104 000 whatever the mortgage right let's say that I buy the property today on a lease option yeah 200 000 yeah okay every payment I make towards that lease option is actually paying down the mortgage I don't decide to execute my lease option for 10 years that means the mortgage balance has gone down for 10 years I get to execute at the existing Mortgage Balance uh-huh it's the same price the same thing it Just we didn't transfer the deed

and so I go to the bank yeah so why didn't you why wouldn't you do it like that because I can't get tax benefits when I do it that way right that's that's that's because there hasn't been a sale right if you want you want to build a right that and that's how we got in this conversation how are you taking depreciation if you don't own the asset I want the deed in my name and if I buy on a lease option I don't get the deed Amount got it got it with the IRS the

IRS will not let you uh claim depreciation if you don't have what's called fee title fee title means how did you get the title on a lease option you don't get the title No but but do you own the transfer of the deed no in a lease option you don't no no on the purchase the other way yeah the other way yeah you get the I thought the bank would have title no man there's something I missed it man you know the Bank doesn't have titles there's something I've been assuming that's been wrong for 35

years yeah so if let's say you go to a a home you're more convinced than I am that you're right so I'm gonna well I own a title company surrender I watch this happen all the time okay okay multi-family single family whatever it whatever it is even what you're thinking about is a car okay you're in the car business in the car business when you go and give a buyer a loan the bank holds The title right right not in real estate in real estate the owner of the property that lives in the property the

deed is in their name the day they close escrow on it even if the debt is being held by the bank the D and the deed and the title explain the difference how little I know about real estate oh this is great okay so indeed the deed is who owns the real estate the title is how they hold that real estate okay so title would be like uh my full name or An LLC tenants in common LLC that's title deed is who that is so when when people say oh I have title it's like well

it's the same thing they're using the words kind of synonymous yeah deed is really the word that you want to use yeah now so the bank I can transfer this deed or title the deed probably is better word yeah without permission to the bank why would I need the bank's permission oh dude man that's crazy bro that's a Better way to ask it why do I need the bank's permission because there's a mortgage on it because the mortgage could very well be more than the value of the so now this opens you up to all

kind of stuff like this this is why right now in 2023 and 2024 yeah all those two and a half percent money you want to go grab as much as you can we just closed I got a buddy who's got a 30-year loan 2.8 let me give you let me show you I just bought a Beachfront property in in Hawaii yeah took over a two percent mortgage my here's the here's the thing we'll buy well I'll probably touch between three and 500 deals on single family that I put in the portfolio this year no credit

check no credentials nobody asked for my tax returns nobody looks for my bank statements nothing literally nothing is being asked of me nothing okay all I'm doing is I'm and there's two sweet spots to get these deals Foreclosures and expired listings okay how many expired listings are happening right now where sellers are going to agents and going to sell my house yeah and the buyer can't buy it yeah because they're getting eight percent interest yeah so what happens is after six months of the agent not being able to sell we my team calls and goes

hey can we just take over the payments on this house yeah then why wait why wait why wait until then why wait till it's It's I mean you got plenty of room to keep the broker in okay so I'm not I'm not a well we call the broker that's the problem we call the agent we go hey man we could talk about this for hours it's great yeah so uh I'm gonna figure out how to do three or four hundred of these things I'll show you how to do this this is easy I can do

these deals endless imagine never imagine never having to get a credit check imagine never having to go to a bank imagine Never having to worry about credentials or any of that stuff bro and and then when they do the to call what's the two call to do on sale plus the due on sale do on sale yeah they do on sale they're gonna be like we good with you man yeah well when they're going to be happier with me than they were with Alaska there's well it's not even that there's there's a technical way to

overcome the due on Cell Clause I've never lost a home to the due on Cell Clause we just overcome it you've never had to pay one off no nobody's ever pressed I've never heard one person in my life ever having to pay one off uh I've heard I've heard 10 of them called do in my total existence in this game people really really experience My Title Company in Texas has done 10 000 of these transactions in one building uh 35 years 10 000 transactions they've seen 10 called do zero had to get paid off wow

ten thousand Okay so it's it's incredibly incredibly rare yeah um so here here's the two places the deals come from sellers that are in foreclosures okay this is happening all the time good Market bad Market sure whatever 100 sellers that are unable to sell their house through a real estate agent yeah okay so why wouldn't I just call the agent direct right let's say the agent throws it on the market most agents don't know even know how to Comp a property right that's right if I call the agent I go hey if I can get

your commission paid in the process would your seller be want to let me take over the payments agent goes that's illegal no it's not it's actually taught in your continued education classes there's forms in all 50 states how to do these transactions Grant this is not just legal this is taught nobody really knows this I mean I'm sitting here I didn't know it I Thought I knew a little something no no it's it's the most powerful tool in real estate yeah so um and I went to a point about a year and a half ago

I said I will not even look at a cash deal if you come to me and say I got to bring cash to the table I'm not going to look at it to me it's poisonous now I'll bring money for cap-backs and and other things but I'm not going to bring money to the to the table of clothes I don't want to go and acquire debt you've already Here's a better question why would I get a loan oh bro look look I don't need to go get a loan I don't need to pay fees to

the bank I don't need to go through the time and the energy right like bank loans take forever now we got this Regional Bank problem it's going to be like it's gonna just I think we lose I think we lose somewhere between two and two hundred and a thousand Banks how do you think that affects the total economy Well it's going to be terrible for the small business owner but it would be great for this opportunity because now you got fewer guys like these bank loans are going to be traded to other Banks right uh

JP Morgan just adopted a bunch of Republic loans like this is gonna there's never in the history of banking have only three Banks fell uh in the mid 90s it was six seven hundred Banks you know what's interesting about that I know this is getting the weeds but yeah They're transferring loans yeah to another bank right yeah yeah that's what I was seeing when I said that I'm like yeah that okay those are they do that they're more those are called mortgage servicing rights they're not owners of the property right that's right they just have

the servicing rights to the debt yeah right and then the owner whoever is living in the right they're the ones that have the deed yeah yeah all this stuff they don't even know What's going on yeah no don't they need their permission I get it no you're right dude it's happening mind blow bro crazy how many of these you think we could do 100 of these a month 100 a month is challenging because destroying them not finding them the transaction coordination and and onboarding and all kind of stuff you you agree with this and I

agree you've said this under time single family requires a little bit more Work on the front end yeah versus I go to a 50 unit multi-famil bro why couldn't I do this in multifamil you could do it now because if you can do it single here's the challenge of the multi-family okay challenge with multi-family when you get into acquiring other people's debt is that a lot of people in the multi-family space have toxic debt okay in single family it's 30-year fixed three percent four percent wait a minute Okay so let's take a deal let's say

let's say the deals they got 40 million dollars worth of debt yep and most of them don't have fixed debt I don't want to acquire something I don't have fixed debt they have short-term loans right yeah that's expiring it might be in your face right now yeah it's a it's a ticking Time Bomb I don't want that yeah so this is why and then and then why would they walk Away because they they didn't put no money down that's right they got a bunch of equity in this deal they probably got a partner with 10

million so if you want to go after multi-family what you do is you go after 50 or 50 unit to 250 units because it was built back in a the size of the properties right dates the property back to a time where they used to build 50 units almost nobody builds 50 units right in the 21st century so you go after 50 to 150 units Somewhere in there and you go to owners that have owned the property for 20 years what does that mean that means they paid the debt down yeah you go to the

seller directly and you go hey we use seller financing yeah but I mean that's not that old uh properties no we're talking about 2 000 2002. my oldest property that we have is 90s no I'm sorry my oldest property is in the 70s my youngest property is early Yeah so 1992 000 all that would be a Target right something that was traded back then though you got one owner or two owners over that period of time yep and they've sat on it most of like a typical story it probably paid off again we're not talking

about uh the mortgage issue here you go so the difference between seller finance and subject two yeah okay they're both creative Finance I don't need credit checks I don't need any that For either one of them subject two means that I'm taking over an existing debt okay it's like I go to somebody has a car payment and I go hey I'll just take over your car payment right that's subject too yeah is that legal yeah it's legal okay yeah go to leestrader.com damn they're everywhere man yeah ticking little bombs these guys there's a there's a

website called like vorlex Motors you can just take over somebody's yeah Rolls Royce yeah I think you can Take over somebody's payments right now yeah think about all the things Johnny can you take over my payments this is [ __ ] awesome like think about all the crypto people yeah that got their asses handed to them the last 18 months that went out and bought cars oh yeah and now they're like what do I do with my payment I can't afford this payment exactly somebody like me could come along go let me just take over

the payment have the title and the rights Come to me yeah and the 30 000 they put Downs go well it's gone you can do this this is what's great about everything I all the assets that we own so is this you're saying I got to go 20 or 30 year old product yep at least probably limit the size yep I'm probably going to lose some location and stuff yeah I'm not going to be getting the best stuff right but I'm not putting any money down You'll be into the deal with with like repairs closing

costs all that kind of stuff less than five percent so let's say it's a 10 million dollar asset you're putting maybe 50 000 to 150 000 into the deal dude yeah I must stay up tonight man yeah this is all I talk so why don't we build a business out of this man that's I mean that's what I did but I'd love to do More with you let's do more together we've got between all of our stuff we've got about 1800 doors 1800 1800 doors and I'm a small operator yeah and we've got a great

team we operate this stuff got traveling asset managers and we do it we do a good job and all I'm doing is we'll continue to acquire single family because we've perfected that model and now we're just going to start amplifying on the multi-family site yeah and so Um your audience goes wait hold on I don't have to go raise money for this I don't have to go Syndicate I'd have to go put a fun together well but why not you can because yeah your daughter no this is one big real estate player you probably know

recognize oh yeah yeah you know that name um see here's a guy he's trying to build 500 units next to me I got a deal with about 400 units in Boca he he took a Home Depot apart you're going to see more and more of this Home Depots storage buildings huh is he doing converting into stores he's converting into multi-family in retail he's going to take a third of the Home Depot out there he's going to tear it out he's going to tear part of it out I think for the parking he's going to build

a 500 unit deal there I'm next door to him so I have to approve it wow so he's like hey man would you you know Would you give us the he's a big player I mean this is big as he gets right and I said yeah man you know I'm always I mean I'm easy you got to deal with you know I said you've heard of me right I'm Mr Easy Mr 10x I'm easy you know I'm making 10x easier for everybody and then he sends me a bunch of paperwork and I didn't read it

of course and he's like did you get to I said no man I'm busy I'm slammed I said but look you know in the second call I said you Know why would I do this you know like how my team's starting to be worried about this might negatively impact our property so we're thinking there's a score here and the reason I'm bringing that up is the value of owning a piece of real estate dude I don't even care if it's great real estate any piece of real estate as an asset at some point in time

could potentially have some kind of future value that we have it right we haven't figured on is There anywhere else that anybody should be investing their money uh you know unless you know how to do what Warren to us I don't you know or your your elon's you're in elon's pocket you know you know but I don't have any of that I mean that's the beauty you just want to talk about insider trading on Wall Street as opposed to being legal in real estate it's not it's not illegal and you you Get Martha Stewart if

you if you uh if you do it on the Wall Street um but in real estate you and I can trade as much information about a deal as we want right is that right yeah without any no issues call each other trade deals hey this is what's going on with this guy that's what I paid here's this fun this guy's funding's coming from here what's the problem with the deal there's a problem with Management in fact it's all public Data too yeah a lot of it's public data they're getting ready to build next door to

you like all that [ __ ] is legal and I never thought about that it's not there's no insider trading in real estate no bro everybody's collaborating and doing deals with each other exactly wow Wall Street you can't do that how do we go do a thousand of these a month well dude that's it where first thing I think about is where okay what what markets do I want to focus on Belt man yeah same same place you're focused on but I mean but where's the pain the pain is foreclosure expired listings yeah so like

to me this opens me up to the Midwest one one market okay yeah it does open you yeah yeah because now I'm like [ __ ] dude I'm gonna go from putting you know how much money I put down in deals I put a billion dollars in cash down crazy this this this now takes me down to maybe I'm only putting if you if you Follow 100 million if you follow the people that that do deals with me and you see them post and they're like YouTube videos and they're all the things you're seeing Zero

Down deals zero percent interest I got you know how many zero percent interest deals I got directly to sellers going directly to a seller okay I got a deal they just want a payment every month they don't care if it's zero or five or ten nope I just want a payment here's the first deal I Ever did uh zero down zero percent interest I go to I had a wholesaler kind of like Jamil come to me and he goes hey I got a seller who wants to sell their property for a hundred thousand bucks and

I go all right gives me the address I go do this things retail is a hundred thousand dollars I can't do [ __ ] with this thing at 100 Grand but but let me meet with the seller and let's structure a deal and he goes okay so I go over and meet with the seller Susan and Dale And I'm in their carport in this little house and I go all right so you're getting you want 100 Grand because Zillow says 100 Grand right yeah Susan's like yeah that's exactly why yeah I go okay well um

now you already know they owe nothing yeah so you already know this is a okay this is I already know this is a seller finance dude got it got it so I go you're probably getting offers like 40 50 Grand right she's like how yeah how Would you know how'd you know and I go because if I was going to buy it cash that's what I would buy it for too she's like what do you mean you're not gonna buy you won't give me a cash offer I go I'm giving you a terms offer Susan

she goes I don't know what terms are yeah so I told her this story with the term store I well she no no seller knows what terms are and what seller finance means right it just goes over their head so I have to tell these sellers a story About an F-150 and that's what I tell them I go look I used to have an F-150 this is what terms are so you tell the same story every day my whole team you don't even change the model nope never it's always the same because it's a real

story yeah okay so here's the story it's 45 seconds what is the guys German you don't change that now no everybody knows what an F-150 is [ __ ] it's the number one selling truck asked Jared you just got one yeah so Um I I go all right Susan so here's what happens I used to be a contractor I had an F-150 hit 320 000 miles it was time to get rid of the truck so I go to I go to the Zillow of cars which is what Kelly Blue Book yeah and Kelly Blue Book

says this truck's worth five grand I'm like hell I'm not going to sell this truck for five grand it makes more money in my construction company than than that five grand is ever going to give me So I go on Craigslist Susan and I list this thing for 10 000 bucks you think I got ten thousand dollars she's like hell no you didn't get ten thousand I go this is what you're doing right right your house is worth 40. yeah and you want a hundred yeah and she goes so what'd you do and I go

after a three months of not selling that the truck it's holding for payments I changed my listing on Craigslist and I said we'll take payments yeah and she goes home with a Price or without a price uh without a price without I ended up selling that truck how much do you think I sold for collected I don't know 12 Grand 15. I sold it for twelve thousand five hundred dollars a thousand dollars down yeah I got 350 monthly payments from a little Hispanic family that we needed to put into his own painting company and after

my interest payments over three years I collected like fifteen thousand bucks Yeah yeah you became the bank I became the bank yeah so Susan goes damn I'll do that you'll pay me a hot I go yeah beautiful story dude I like the way you told your own person was it true it's very true yeah yeah very true so you figured out basically what I think you did was you figured out what you wanted and then how to get that right so as opposed to or how to buy something yeah and how to give them what

they want you you know I mean you really you're Really describing a practical sense how time is money right you're offering you're offering them the money they want right as long as they give you the time you need that is exactly it the payment that I need to cash flow immediately right cash flows King as you your house says so I go I go to Susan I go so will you give me terms she says yeah I'll give you terms yeah I end up doing I give her a hundred and ten thousand dollars on paper

a premium okay 110 000. No money down zero percent interest okay you can pull this up public record you should go see my promise another beautiful thing about real estate yeah you can see it Paul this is a public record yeah okay and um she says so what was like 110 months for a thousand bucks or something 20 years 20 years okay no interest 375 monthly payment she had tenants already in the property paying 1650 bucks oh my God bro wow okay why but why did you do it yeah because she Wanted she's done she's

done she wanted to go travel the country with her husband and and travel around the country and not worry not worry about the toilets right and the termites and so this is how I figured out the 375 dollar payment with her I didn't pull out a spreadsheet I said how much does it cost you and your husband to travel around the country in the RV she says like 375 a month is what it costs us to rent an RV spot I go why not just give You a 375 payment every month she's like where do

I sign zero percentage zero dollar dealer man this is all I do this is all I do is create a financing how much free cash flow you got coming in right now uh 300 Grand a month yeah yeah it's good how do we get that to 3 million hang out with Grant Cardone in 10 hours I mean seriously yeah how do we get to 3 million a month I've changed your life it would change your life huh You change your life well if you change your life you're getting three million doesn't change my life it

makes me feel good for you but I'd get to hang out with you I'd get maybe have a chat next to yours yeah three million a month will that do it yeah probably would I mean you're gonna spend three you're going to spend one month on the jet just maintenance yeah so you know so that's before fuel So two pilots hanger taxes maintenance you know this is this is why I have a door a door a door cost replace the door costs like 150 Grand microwave oven 45 000 bucks insane dude ship a [ __

] door 300 Grand scratch a leather seat you know 20 20 000 bucks fix the seat it's ridiculous Everything you've ever complained about you'll complain about 50 times more but you know guy asked me he's like hey man what's your fuel cost I said it don't cost nothing he's like what do you mean I said the plane's no good but not the fuel you know what I'm saying yeah yeah can't you can't you can't price everything yeah Um and last thing on that is doing covid we only flew it like 16 hours because you know

you probably looked at it right how to do the math on it if you don't fly 250 hours it's [ __ ] yeah the calculation how much time it's either worth it or it's not worth it we flew it 16 hours the first year of covid couldn't go any place right couldn't land any place they wouldn't let you land on the tarmac and get hey what's up nothing so somebody said well how can You justify three million dollars a year for 16 hours I'm like I still have my money right if I wanted to you

know go someplace so there is a different level yeah totally so okay so how do we do this dude how would we do this where you know and we could do it for us and for our investors right you so other people benefit you put a fund you put a funnel why do we we don't need investors dude If we don't need money you need you need capital for let's say you buy a single family home okay yeah this does happen you'll buy a single-family home house hasn't been touched in 10 years yeah yeah you

need to spend our average cost of acquisition renovation and getting it stabilized is 35 Grand at single so bro why don't we create a fund we can do that we create a fund for this specific I already have all the fun papers I'm already approved we create a fund for This maybe it's just a maybe it's just the um our last fund's 150 million maybe we just make this a 50 million dollar fund you make it a smaller fund you go after a single family stuff and you go you could buy these assets are everywhere

everywhere and then but why raise money again because it helps other people well you get more people involved more and you also um you can't go buy a home I need a Management company I need a management company I'm I need maintenance we need you know right yeah simple does Ryan know about this psycho no yeah Jared does so we got to get a meeting on this dude this is real let's do it I mean I'll pop one of these out tomorrow yeah let's do it you know and and it gives me the ability to

go buy stuff I can't right now man I can't like I got I'm sitting on my hands right now in the Market stalemate talk about what do you see as a stalemate all the multi-family stuff right now it's like I I know based on dinners that we've had and the intelligence and that your team has there's a Avalanche of [ __ ] coming down the hill massive but it's almost like nobody's talking about it there is that big Houston deal where he would he lose 3 200 years that's the harbor yeah that was the beginning

yeah there's how many people you think thousands of people Well and that happened only because the seller just tapped out and said hey look at the cash well he didn't just run out he's looking at saying there's no way out for me he didn't have any money so he did it early he just looked at and said guys there's no way I ever make money on this deal I pay too much yeah I bought it at the wrong time I can't get my rehab done it's the wrong location it's a [ __ ] product everything

about it was [ __ ] Yeah so um I think somebody else picked that up though didn't they yeah they did yeah like 70 cents on the dollar yeah well on the other dollars yes so but there's the thing is there's expiring debt coming yeah right everybody's debts everybody's debts maturing and coming due you got people that got to buy down their cap you gotta you got a whole bunch of crap coming up yeah Insurance costs are Rising yeah right that's pressure people have cap rates are below adjustable rates yeah adjustables are popping so people's

cash flows is dying yeah and so they're sitting there going man I can't take care of my investors yeah this is gonna be a massive it's all headaches every week I gotta go and say bye I can't pay I can't pay you are the you think these people are just gonna go here no here you go no what do you think's gonna happen no because there's Going to be too much money rush in from the sidelines I'm sitting there dying like so you think they're going to trade to you before they ever go to foreclosure

I think they're going to trade this people like me I don't think they go to foreclosure they're too valuable it's the cash flow there's no place to get cash flow today and I don't think the well I mean there's a number of problems first you Know you know the one problem we didn't predict was I can go get a treasury bill right now for five five percent right so I'm like [ __ ] man I'm gonna put my money I can earn five percent without the risk now it all comes with with the tax consequence

no depreciation no upside so if the banks start falling off and they already are I mean it's gonna you'll see more Banks fail then people are going to be thinking like okay I Don't know if I want my money at any Bank our CFO immediately called us up like I think we got to spread our money around yeah then you're going to go to JP or Bank of America all these the top five banks they're not paying anything on their deposits unless you have a bunch of money I've had meetings with these guys I know

how much money you need there to get their attention like you need a big big wedge um So what where does the money go but there's still a lot of people sitting with a bunch of cash waiting to get into these cash flow so you don't you don't think these multi-family deals are going to go to foreclosure you think these you think people like you are going to see them before it ever gets to that point or yeah people like me but but there's so much of it man because I'm not I'm not in that

game I'm Not in the I'm not in the a class game the big the big stuff that's not my that's not my game yeah right so well it's not going to affect your game either because those guys are all paid for they're paid for and they're entry level right they're affordable rents um no the big boys are not competing on any of those assets yeah right you'd have to put a smaller fund together and focus on those smaller assets even make it worth your time so Those big boys are not competing with me I'm going

I'm talking to these sellers and it's almost like I'm the only one talking to these sellers there's thousands well you're the only one saying I can get you your number right there everybody is saying I can't pay that you're crazy you're out of your mind interest rates going up too much and you're like yeah let's just do the deal the way it sits I mean yeah why don't you and I just name the interest Rate ourselves you're the seller let's just give you why don't we give you set up an annuity for you get a

monthly payment from me every single month dude that would open my market tax Ryan Seco and tell them we need to get a meeting together that's that's that's the deal call Ryan Secco call Ryan I'm serious bro like I just want to add more assets like if I can't add three or four hundred at a time then I might have to go add what I can have right like when you start talking about stuff in Hawaii like What markets do you like right now Arizona Texas Florida yeah the North Carolina South Carolina yeah I love

Atlanta Love Atlanta uh so when you go when you go into a new market which one of those would be new for you North Carolina is my newest Market yeah so you go in there what how do you do due diligence to say good location rent You're supposed to be at uh migration number one yeah I want to see we want to see growth of of people coming into the state people having babies all that kind of stuff who then the second thing we want to do is we want to make sure first off we

choose the state based on landlord laws like I'm not going to Oregon always tenant friendly I'm not going to waste my time anywhere else I'm sorry guys you're not going to fight it Doesn't make it California New York New Jersey no no won't touch it uh Portland Oregon never never why would I yeah you know and um Illinois I own in Illinois but I own down in Springfield where the tenant laws are different than Colorado yeah I love Chicago Maryland nope uh Colorado's changing big time I'm actually it's going to become unfriendly it's going to

become unfriendly there's there's big groups coming together spending a lot of Money trying to lobby for for tenant rights uh I've got 40 doors there that I'm like um all right we might need to sell these doors and deploy that Capital somewhere else right so I just want to go when you sell something yeah sorry to interrupt you but yeah would you ever offer somebody seller financing oh man we could talk about this so long the answer is no in that situation if I'm trying to redeploy if I'm trying to deploy my Capital like take

yeah because You want to score you want yourself I want my score and I want a 1031 into the next deal the answer is no yeah but if let's say I buy a deal oh man I bought some I bought some amazing deals Grant where I've taken over somebody else's existing debt at like 50 Grand yeah and I've sold it on seller finance at 200 and I keep the existing debt of 50 in place so think about that I took over somebody else's house uh subject to so they had a bank loan with let's say

Zions Bank 50 Grand cannot tell me what you're about to tell me yes and I then create a second note for a hundred and fifty thousand dollars with who the new the new borrower the buyer and I'm the bank oh my God so you just I told the 50. held the 50 in first position just a sad note for 150. I created the site the second note it's in my company's name you become the banker there and I become the bank and I sell or Finance it to Somebody who I call them penalty box buyers

okay so who's a penalty box buyer entrepreneurs how many entrepreneurs you know can't get a loan come to me I'll give you a loan yeah I'll give you a loan I'm Bank of pace I control the debt yeah yeah that's all I do I'm I'm in the business of controlling debt bro we call that selling on a wrap so it happens in Texas a lot bro we did it we just drove through your hometown I feel Like I'm doing something in Louisiana but I really feel like I'm committing a crime or a witness to one

right now oh yeah it's criminal it's criminal not to know how to do yeah look look I've done I've had people talk to me about Airbnb we finished the interview and I'm like that's some [ __ ] right there bro I'm not a big Airbnb fan no I never was I mean I even had a guy in here I'm like man I'm telling you there's something wrong with this [ __ ] okay Um what else have we heard here I mean a lot of [ __ ] in here okay but I mean just a lot

right now I always walk around I'm like I don't get that I don't know I don't know about that a lot of e-commerce stuff online uh Drop Shipping stuff you know all the stuff I'm talking about yeah wasted time and I'm like I don't know the Bitcoin the cryptos the nfts like and I'm like yeah it might happen but this what you're saying you should get Me Ryan and you on a zoom yeah and I'll show you addresses where I've taken first lean tell me about that deal in Hawaii uh there was a seller who's

going through a divorce she has two acres right on the beach she has a main house and a guest house guest house has already rented out and she actually came uh we saw her on the divorce list there's I mean it's public data yeah right you guys are going after a different list we're going after a list Of like divorce bankruptcy probate foreclosure your people are easier to deal with than mine right so we call we call her she's going through divorce she says I can't keep up the payments she wasn't behind she goes if

you can just give me 30 grand I'll walk away from the the you could take over my debt uh two percent Sub 2. sub 2 just means I took over her existing debt the loan was at two for how long 30 years 30 years now I just Closed on it three days ago and you want the property you like the property yeah I like the property I ironically that'll end up being an Airbnb right but I don't probably fly I don't mind Airbnb in something I mind look Top the top yeah top of email in

my inbox right there yeah closing closing docs that's the title company there's the address right there that's crazy bro Yeah two percent if you pull up the closing docks you if there's a document in there yeah Shelley's my transaction coordinator okay uh okay there you go oh damn man two percent so so you're on that deal you're gonna Airbnb rent it you're not the Arbitrage on the Airbnb I don't believe in Arbitrage what the hell are you arbitraging for just be a better negotiator the people that are Arbitraging are going to to landlords and saying

hey can I landlord your landlord yeah exactly I go to the landlord I go you be the bank seller finance it to me yeah give me the deed yeah and I want you want to own the property I want the appreciation the depreciation the cash flow I want the upside I want the mortgage pay down I want all the things yeah Arbitrage people don't get any of that [ __ ] bro you're making me sick right now yeah I'm having to spend hundreds of millions of dollars to buy real estate let's go get me me

you and Ryan on a zoom next week can we scale though yeah think about this in Maricopa County where I live and you guys just got a new office you like that location it's phenomenal how good it's so is it better than where Brandon's uh Brandon's little Brandon's little pocket right there is really magical yeah where you guys are on your New building yeah is it's Prime yeah it's a plus plus yeah yeah so um it's dude you're right there by Scottsdale or Park like that's all the jets flying right is that where you're flying

too yeah so the um the Maricopa County last 30 days a thousand houses were not able to sell on the traditional market and they went expired so there's a thousand homeowners that are like I tried to sell my house uh those thousand that's every 30 days there's a thousand deals that went off Market that the sellers are like I couldn't sell the house yeah agent couldn't sell the house we call it the seller direct and we go how we want fifteen thousand bucks I'll just take over your payments you want five thousand bucks I'll take

over your payments 4101 and what is your biggest response to that can you do that is that legal is that a big question no you think about this if a seller tried to Sell a house for six months yeah I'll give you a really good no no but when you call them and say hey how much money you need and I'll take over I don't even I don't even say how much money you need so how do you we should I say hey uh the the script for our team is hey we noticed your house

went off Market what was your agent not able to get you that you were looking for opened up the floodgates all my effing agent this man yeah they're all terrible Right we've now created a common enemy right right right sell strategy right and we go well would you be open to us just taking over the payments and maybe putting a little money in your pocket and the seller's responses you would do that yeah they don't ask can you do that no they say you would do that some of them ask can you do that what

how does that work and then I go here's a YouTube video I made that shows on a whiteboard exactly how it works my closing attorney Is in there yeah from Texas my closing attorney from Arizona's in there a guy who helped Rod write the Dodd-Frank Act is in one of my videos and he's like this is how it technically mechanically works and it's all legal in all 50 states man if you guys like this what's your biggest takeaway down below give it a thumbs up you know that helps give it a thumbs down you know

I love those they inspire me you guys that hate on me but hate on me don't hate on him okay he's Sensitive okay he's sensitive he's he's what other people call a noodle okay me I'm not a noodle I'm like this I'm like this hard leftover piece of rice probably dirty Brown too got that four to five on the outside okay so if you like the show today let me know thank you guys for watching be great hey man love that amazing it's awesome [Music] [Applause]