All right, welcome back guys. We're doing another video in this Creative Financing series. We've got Pace Morby here giving away so much knowledge, sharing stories, breaking it down, showing exactly how to dominate today's market with these creative financing strategies. So again, we put together an entire playlist.
We've gone through all these different strategies. Be sure to kind of watch that if you can from start to finish. It'll really give you the full picture, which is what Pace is doing. Pace actually is not allowed to go to the bathroom. We've blocked the doors, he can't leave.
Till we get all of this out of his head and here on these videos. So thank you, Pace. You're amazing for all the value that you're sharing, guys. And no one gives more.
In fact, no one understands and can explain creative financing better than Pace Morby. You are the master at this, Pace. Maybe Jerry Norton. No, you're so good. And I love it because you take some of these ideas that tend to be complex.
You say people overcomplicate them. I agree with you. And you break it down into a way where even if you're a newbie and you haven't done your first deal, you can understand this and go do it. Yeah, it was interesting.
What's cool is I hear a lot of people go, start with cash wholesale deals. And I'm like, okay, yeah, you definitely can do that. That's kind of where everybody goes.
But I get a lot of people, when we're at meetups and stuff, people come up to me and they go, Pace, I got my first deal. It was a sub two deal. I'm like, we get a lot of people get their first deal as a creative finance deal, guys. Don't let creative finance scare you.
It's actually in a lot of ways easier than lowballing people at 50 cents. Lowballing is not a negative thing, by the way. I'm not knocking lowballing because we lowball too.
It's just a phrase. That's it. Yeah, totally. So in this video, we've done a number of different strategies. And this video specifically is a master lease is kind of like the old school term that's very common in like commercial multifamily.
Interesting that not a lot of people are using the word master lease right now. Yeah. That's how I learned it years and years ago was a master lease.
Me too. I learned it as a master lease, but I think what people will be way more understanding about as you hear this all the time is rental arbitrage or arbitrage, Airbnb arbitrage. Right. And so. If you guys have heard those phrases, it's been around a long time.
But what happens a lot of times is people, like supermodels, they have to change their style every three months. So you guys buy their new stuff. Yeah, we got to keep it sexy.
And yeah, so the master lease is no longer cool and sexy because it's been talked about. Now it's rental arbitrage and Airbnb arbitrage, but it's a master lease. Yeah. And the basic idea here is when you can't take over seller financing, When you can't do a subject to and take over existing debt, when you can't do a quasi between the two of them or even a lease option, this might be a great strategy, which is just do a rental, a long-term rental, long-term lease with that seller. And now that you've got that locked in 12 months or 24 months, whatever that lease is at long-term rental rates, now you take that property and you can then do overnight or other strategies.
That will then create more cash flow. The big thing is you have to understand the bunnies, right? So sellers in this situation don't want to be sellers, right?
And you have to understand that their bunnies are, I don't want to be a seller. I want to own the property for the rest of my life because I want to give these properties to my kids or whatever it is. And you're not going to convince some people to seller finance their properties.
That's just it. But they're okay with you making money as long as they have lower maintenance. And they have maybe even a little more inflated rent.
OK, so here's arbitrage for you. I taught my son, Asher, this just a couple of months ago. So we've got a dump trailer.
Yeah. And I go and buy the dump trailer for $12,500 cash. Put it on my Amex. I'm like, what did I just do? Why did I do that?
Now I own a dump trailer. Now I own a dump trailer. That you can't park at your house. That I can't park at the house.
I park it down in my office on Velvet. So I have an office on Dana Park, Val Vista and Southern. And I park in the back. So we rent this trailer on Craigslist and Facebook Marketplace.
My son manages it all from his phone. Rents it for $125 a day. We did a whole YouTube video about it and how he's making a couple grand a month as a 14-year-old using a trailer.
But I'm like, what kind of creative finance person am I that I taught my son to buy a trailer cash and to rent it for cash? That's not very creative. It's a cool business, but it's not very creative.
So I did a video recently. We haven't posted it yet, but the video was, I go, Asher, here's what we're going to do. We could go and take the proceeds, the cash from our trailer rental business that he's doing all virtual, by the way, doesn't meet anybody, doesn't collect money cash wise.
It's all through Venmo. It's really cool. We could go do take the money and buy a second trailer and double down.
Or what we could do is teach the audience that they could just go drive around driving for trailers. Okay. And go drive around and look for people to have trailers or other things in their property, just parked in their yard.
Right. So we go find a guy that has a dump trailer similar to ours. And we go knock on the door. That he uses once a year.
Yep. He says, hell no, is what he says. I go, okay, no problem.
We leave. We, about an hour later, we find another guy and he goes, yeah, I would do that. What's the split?
So what we told him is we said, we'll take your trailer and we'll rent it out. The same thing. We showed him our little like trailer rental website.
We showed him our Venmo, like, hey, we're collecting money. And I go, well, we're making about $2,300 a month right now from one trailer. And he goes, so you'll pay me like $1,100, $1,200 a month.
And I don't have to do anything. I go, yeah. And he goes. Okay, but I'm not selling my trailer because sometimes I use it. I go, yeah, it's your trailer.
Whenever you want it. Whenever you want it, just tell us. We'll take it off the calendar. He goes, this seems too good to be true.
Literally what he says is, this seems too good to be true. And I go, I actually tried to pitch him seller finance. I go, would you let us just buy it from you and I'll make a $500 monthly payment?
He goes, no. I screwed up. So pay attention to this.
If I brought up seller finance before I brought up arbitrage, I would have gotten the deal on seller finance. Totally. Because you would have thought that was a great deal because you're not using it enough. No.
And here's what I could have done on the seller finance deal in the trailer. I could have said, I'll buy the trailer from you. Anytime you want to use it in the future, you come over here as my address.
You pull the trailer anytime and I'll give you $500 a month. So can Asher do this out of state? Like he doesn't have to be there, does he?
No, he doesn't have to be there. It's all virtual. Well, I have a trailer in Montana, a cover trailer.
Yeah, you should be using that to rent out. Just sitting there. Yeah, people, you can go on Neighborhood.
There's another website that just came out like a year ago. It's called myneighborstrailer.com. And it is everybody putting their trailers on the website.
You guys could be renting this out right now. My kids could do like what Asher's doing. It's easy to do. So we have a landing page.
There's a video and it's me and Asher. And I go, hey, I'm the owner of the trailer. We're going to ask you for a Venmo. Here's my driver's license.
This is really my trailer. And we overcome all their objections in a video. Asher never has to meet them in person ever.
So the point though is you're doing a long-term rental agreement or a lower rental agreement with someone who doesn't want to do the work of like daily rental. They're happy to take a payment and the agreement is I can sublease. That's really what it is, a sublease agreement. I'm going to lease from you, but I'm going to go lease it out at a higher amount.
Right. So it doesn't really work in a rental to rental situation. Where it really works is where you take a traditional rental and you have an amplified rental rate.
So where you get that from is you have sober living is really good. Because sober living, an operator-Explain what that is. So somebody goes through a drug rehab, the state typically pays for them to go live in a sober living facility, $600, not per room, $600 per bed.
So the people in Sober Living that own Sober Living, they have nine people in a three-bed, two-bath house, and they're receiving $5,400 on a three-bed, two-bath house from the state. So they can pay you an inflated rent when you're leasing it to them. It's kind of like college areas will do the same idea. Just like that, like student housing and all that stuff.
Student housing. Just rack them up, right? Yeah.
So, and you can't just... pack them in there. You have to have less than 10 people.
In Phoenix, the law-In bathrooms, they got to be right. Bathroom combo, right? Yeah, bathrooms with a certain amount of thing, but you can't have 10 people or else it requires fire sprinklers and a certain type of insurance. If it's under 10 people, nine people or less, you can rent these beds out for $600 to $1,000 per month. You don't want to operate sober living.
I promise you that. You do not want to operate sober living. Do not go and Google sober living right now. What you do is you rent your property. So you go to a landlord and you go, can I rent your property?
I'm going to go and do a master lease or an arbitrage lease. I'm going to go and do a sublease to these people. And you charge them double what you're paying this guy. So it's the same thing with the trailer. And why we did these videos in this order was start with seller finance, start with sub two, go down the line.
If they don't want to sell the trailer, they don't want to sell the house, tell them you'll rent the property as long as you can make monthly income. Now, what's good about this is it's a total zero down strategy. Total zero down.
What's bad about it is you're not taking titles. You're not getting any of the other benefits of depreciation write-off, appreciation, right? You don't really own that asset.
You're just leveraging that spread. And so, like, for example, in Puerto Rico, this is a really good strategy because Airbnb is such high demand that you can do a long-term lease for, you know, $1,000 a month and then rent it out for... 100 bucks a night and at 60% of occupancy, you're bringing in six grand on your $1,000 long-term or whatever the numbers are, right?
So you can do Airbnb on the exit. You can do sober living on the exit. I've got a student named Tanisha Epps out of Virginia.
Amazing. She started doing arbitrage on the acquisition, right? She's acquiring a lease is what she acquired. Not the house.
You're not acquiring the house. You're acquiring a lease. and the lease gives you the agreement to lease it out to somebody else, she goes and does corporate rental. So what the company does is the corporate rental company, like airline pilots, stewardesses, all that kind of stuff, the airline company pays for the furniture, and then they rent it from her.
So she's $0 out of pocket. She's making $1,000 per house net. She's like, are you kidding me?
Like, this pays for my marketing, pays for my travel, pays for all my expenses building my real estate business, pays for my cold callers. Just get to four or five of these things and you're like, you could quit your job. Yeah.
You know what I'm saying? Like a lot of people, make a comment down below. I'm curious, what would it take for you to quit your job right now? Monthly income. If you could arbitrage a deal, rent it out, net $1,000 per month, how many of those deals would you have to have in order to quit your job?
Most people are going to say five to 12. You know, it's interesting, Pace. I tell my kids this that are teenagers. I say, guys, when you learn some of these very basic strategies and you just start to implement them, there is no reason why anybody listening right now should not be making 10 grand a month very easily doing just these strategies we're talking about. 10 grand net to you a month should be a very basic goal that everyone can achieve.
Can I tell you, this is hopefully not a long story. I lived on Cross Streets Higley and Baseline. Okay. And it was when Laura and I first got together like 14 years ago. So I'm like 25 years old, right?
I'm young. I'm a young buck. And I remember saying, I just need to make $5,000 a month because the market had just crashed and I lost everything.
And I go, if I could just make $5,000 a month. Okay. And I remember throwing a baseball to and from my son in this little park area outside of our apartment complex.
And I remember him, my son, Asher, who you know Asher really well. He holds up his baseball mitt, and I start crying like a little baby. And my son goes, what's wrong? What's wrong? And I just go, man, I wish I was making more money.
I wish I was making more money. So fast forward, I learned these strategies. I learned so many of these strategies that instead of me just opening escrow at title companies, I actually go and buy a title company.
That's the difference, right? The difference was like, I need to make $5,000 a month, and now I own a title company. And here's the culmination of the story. Here's where it became magical for me. These little strategies, guys, are so powerful.
I then, the opening day of my title company, I go in on the cross streets of Higley and Baseline. I pass the park where I used to throw the baseball to my son, and I roll right into the driveway of the title company I own. That you now own.
That I now own. And I look over at the grassy little area that we're playing baseball, and I start crying again. I was like, man, I'm making hundreds and hundreds of thousands of dollars.
The only difference. wasn't my location. I literally, I'm in the same place as I was physically, but mentally I was different. I learned skills.
I learned traits that took me from the guy crying about playing baseball with his son because I couldn't afford to take my kids on vacation to the guy buying a title company a hundred yards away. Literally the only difference is the details in these videos. I mean, Pace, everybody watching this should be able to make $10,000 a month if you just implemented these strategies and you did.
five, six of these deals or whatever it is, you could be doing $10,000 a month. And that's, for most people, that's a game changer. And that's a, now build on that, right?
Now build on that and really take your life and your business to a whole new level. And I'm so glad you shared that story because same thing with me. I was 27 when I got into real estate, minimum wage, barely scraping by. Was this in Detroit?
Yeah. Three kids, you know, married three kids and working in construction. There's a lot of people in the same situation right now. And I remember thinking. five grand a month would completely change my life.
That would be transformational. Like I would be so thrilled if I could provide that for my family. And yet now that looks like such an easy thing to do because when you learn these things and you gain some confidence and you go out there and you just build on yourself, then it will be that the 5,000 a month will be a no brainer. You'll do one deal making that. doing these strategies.
It seems daunting. It's like with my daughter and I watch you with your kids. It's like here you are wiping their butts and putting on their pants and doing all this kind of stuff. And then one day you're not holding them anymore.
They're putting on their own pants or putting on their own shoes and all this kind of stuff. And you're like, what changed? It's like, well, they learned skills along the way. Yeah. Pour their own cereal.
That's a big day when they pour their own cereal. Right. And here's something too.
So I heard somebody say this a couple of months ago. They said, we're so hard on ourselves of like, why don't I know this? And why don't I know that?
And I'm so stupid and blah, blah, blah, blah, right? All this negative self-talk. If you've got a little kid that's learning how to ride a bike and they fall over, right? First time on the bike.
Are you going to be like, man, you're so stupid. What the heck is wrong with you? What were you thinking? Yeah.
What were you thinking? No, you're not going to do that. You're going, hey, that's all right. Get back up on the bike and let's go. So we're so hard on ourselves and we don't realize it.
Guys, it just takes a little bit of time and some effort and you're going to be putting on your pants, riding a bike and freaking next thing you know, you're going to own a title company and live in Puerto Rico and own a hotel. Yeah. Pace, we met someone last night and he came up and he said, Jerry. Because of you, I did a deal and made $53,000.
And Pace, because of you, I did a sub-two deal and made $200,000. What was it? $200,000 and something thousand dollars in those two deals because he learned these strategies. He took action.
You changed my effing life is what he said. Yeah. And we go, no, you took action. Yeah, that's right. You took action.
So guys, this is it. Apply these strategies and your life will change. And that's our promise to you.
Pace, thank you again. Guys, check out the rest of the videos in this series. It's going to help you bring it all together. Again, the idea here is that you're going to take whatever unique situation you're in.
You're going to find the right strategy. We're giving you all of those in this series. Which one makes the most sense for you, for the seller? Put that deal together and start to really build on this business. And thanks, Pace, again.
We'll see you guys on the next video.