\n
Dave:
Hey, everyone. Welcome to On the Market. I\u2019m your host, Dave Meyer, joined by Jamil Damji, for a very special episode today. Do you want to tell everyone who\u2019s coming on today, Jamil?<\/p>\n
Jamil:
It\u2019s my best friend, my best buddy in the whole world, Pace Morby. I am thrilled to have him here. He\u2019s a real estate genius, and he\u2019s going to school us all in the world of creative finance. Your minds are going to be blown.<\/p>\n
Dave:
Honestly, mine was. It was so cool, and just so you know, we obviously\u2026 Pace has so much information, but we brought him on today because what he\u2019s really known for and what he\u2019s a specialist in is creative finance. We\u2019re going to talk about two specific strategies, seller financing and sub-to, and both of those, given the interest rate environment that we\u2019re in right now are becoming, at least in my opinion, you\u2019ll hear all about this, more and more attractive options for everyday real estate investors. It gives you options to pay less in interest basically, and so-<\/p>\n
Jamil:
Absolutely.<\/p>\n
Dave:
\u2026 if you are running into 6% interest rates and you\u2019re worried about that and it\u2019s causing you to shy away from deals, you\u2019re definitely, definitely going to want to listen to this episode. All right, we ran way too long in talking to Pace because it was fun and he has such a great story, so we\u2019ll keep this introduction short, and let\u2019s welcome Pace Morby onto On the Market.
Pace Morby, welcome to On the Market. Thank you so much for being here.<\/p>\n
Pace:
My favorite show in real estate, brother. Thank you for having me, both of you.<\/p>\n
Dave:
Oh, you\u2019re just saying that. You say that to all of the shows.<\/p>\n
Pace:
I don\u2019t. This show is unbelievable. I\u2019ve been waiting for BiggerPockets to do something this epic. You guys are the best.<\/p>\n
Dave:
Awesome. Well thank you. I want to start because if our audience doesn\u2019t know, we are in the presence right now of one of the great bromances in real estate investing right now, I think, right? I mean-<\/p>\n
Jamil:
A hundred percent.<\/p>\n
Dave:
\u2026 Pace and-<\/p>\n
Jamil:
That\u2019s a-<\/p>\n
Dave:
\u2026 Jamil, if you don\u2019t know, are on a show on A&E called Triple Digit Flip. They work together, and I\u2019m just curious, I don\u2019t even know the backstory. How did you guys meet and start running these businesses together?<\/p>\n
Pace:
Oh, can I tell this story?<\/p>\n
Dave:
Please do, Pace.<\/p>\n
Pace:
Okay, so this is an interesting story, maybe to us, but I was a contractor for a long time. I was working for Opendoor, Offerpad, Zillow. I was their main contractor doing all their turns here in Phoenix, Arizona. I would do their work, bill them, send them an invoice, and that\u2019s how I was making money on their fix and flips. Well, Opendoor changed their business model. They went from spending a lot of money on renovations to very little. They threw in an algorithm where they go, \u201cLook, hey, Pace, we\u2019ve got some news for you.\u201d I go into the office. I have 180 employees at the time just dedicated only to Opendoor. We were doing like a million a month in revenue with them.
They come in. I talk to a lady named Megan. She goes, \u201cWell, we\u2019ve got some good news and some bad news. The good news is, here\u2019s a bonus check for a hundred thousand dollars. Thanks for all the hard work.\u201d I\u2019m like, \u201cYes.\u201d \u201cThen, the bad news is we\u2019re going to change our entire business model, so we\u2019re going to go from spending an average of $50,000 per house to spending closer to $3,000 per house.\u201d<\/p>\n
Dave:
Whoa.<\/p>\n
Pace:
You imagine having 180 employees dedicated to that business model, and then all of a sudden you need maybe one-tenth of them?<\/p>\n
Dave:
Wow.<\/p>\n
Pace:
What I did is I deviated my business to focus on local fix and flippers and I said, \u201cOkay, I\u2019m not going to let go of my guys. I love my guys. I love my business. I\u2019m going to deviate my clientele to find local fix and flippers that are doing also turns and that kind of stuff, quick fix and flips.\u201d I find a guy, I\u2019m not proud of this, but I found a guy that essentially was running a Ponzi scheme. I got into him a million dollars, so Dave, I\u2019ve always been really creative.
How I built my business as a construction contractor is I would go to guys like this gentleman, let\u2019s just say his name is John. It\u2019s not John, but let\u2019s just say it is John, and I\u2019d go, \u201cHey, I see you\u2019re fixing and flipping. I see public record. You\u2019re doing 20, 30 deals a year. How about I come in and be your contractor? I will fund, I will be a line of credit to you, and I will fund your renovations and you can pay me at the end of your project when you sell the house.\u201d
It was the fastest way to grow a business because essentially, all of these people that are fixing and flipping, they\u2019re going, \u201cOkay, well, I can get hard money to purchase the house, but how am I going to pay for the renovation?\u201d I essentially was their private money lender and their contractor. Blew up my business like crazy. I was so well-known in town as the contractor to go to because of the creative way that I would go in and build my business. Well, this worked until it didn\u2019t, and there was a guy that was buying really bad deals and he was borrowing money from friends, family. Finally, he hears about me and he calls me up, starts courting me.
Very long story short, four years later, I\u2019m into this guy well over a million dollars in cash, and he comes to me and he goes, \u201cI\u2019ll get you all your money back. I know you\u2019ve got these rentals, these sub-to and seller finance and these private house you have. If you can sell all of those and get me the cash I need to wrap up these next 20 projects, I can get you flush. I just need to finish these next 20 projects.\u201d
The problem, Dave, is I was just so deep into this hole at this point, I couldn\u2019t see way out except for I\u2019m going to dig\u2026 Here\u2019s what I\u2019m going to do. I\u2019m going to dig myself out and like get a tunnel to go upwards. That\u2019s what I was thinking, so I go and sell 40 rentals, I sell my personal house just to save my bacon. Essentially, in the midst of all of this, I go, \u201cI need a confidant. I need somebody that I can trust and I can get some advice from because everybody\u2019s telling me I\u2019m crazy.\u201d
I was almost looking for somebody to justify my position. I was looking for\u2026 Whatever truth you seek, you will find it, like whatever\u2026 If you go out and you want to believe your own lies, I wanted to believe the lie that this guy was ever going to pay me back. I wanted to believe it so desperately, so I was going around town finding people that had done business with him trying to find somebody that was like, \u201cNo, the guy\u2019s credible.\u201d Well, I run into Jamil\u2019s name and I\u2019m like trying to find this guy Jamil. People talked about Jamil. He was like a ghost in town. He was doing 10, 15\u2026 Literally, this guy was a ghost. He was like a night owl. Nobody even knew where he was or anything, but people were doing deals with him, a lot of deals, like 15, 20 deals every single month.
His name was on the lips of like some of the most prolific investors here in Phoenix, so his name would come up everywhere I\u2019d go, restaurants, eating with people, going to RIAs. I\u2019d hear people on YouTube podcasting about, \u201cThis guy Jamil, this guy Jamil, but don\u2019t talk about his name.\u201d I don\u2019t know what this\u2026 He was like Machiavelli. It was the craziest thing ever.<\/p>\n
Dave:
Don\u2019t look him in the eyes, whatever you do.<\/p>\n
Pace:
Basically, it was just like that, and I go on Instagram. I find this guy with a user name of @jdamji, and it has no photos, no posts, and his profile photo is an owl.<\/p>\n
Dave:
So mysterious.<\/p>\n
Pace:
Seriously, this is it. I DM him and I go, \u201cHey, man, I\u2019m in trouble with this guy named John, and I heard you\u2019ve done a lot of deals with this guy. I\u2019m kind of looking for somebody to help me through this with some advice.\u201d Jamil takes two weeks to reply to me. This would be before Jamil was on social media. This was years ago, roughly six, seven years ago. Jamil goes, \u201cWe need to meet for lunch. We need to have a conversation.\u201d This is a much longer story, but I\u2019m going to wrap it up in 30 seconds.
Jamil sits me down and shows me through public record that this guy was running a Ponzi scheme. He was paying over retail value for houses with other wholesalers because what he was trying to do, this was his business model, he would tell all the wholesalers in town, \u201cGo find me deals. Bring them all to me and I\u2019ll do dispo or sell those to you to end buyers.\u201d The way to beat out all his competition, from other people that were doing disposition, is he would overpay for these houses. Eight out of 10 times it would work, and the other 20% of the time he would overpay and he couldn\u2019t sell the deal, but he didn\u2019t want to go back to that wholesaler and say, \u201cI\u2019m going to bail on that deal,\u201d and ruin that relationship. What he would do is he would bring the house to me and go, \u201cDig me out of this hole. Fund the construction. Hopefully we can rehab ourselves out of this bad decision I made.\u201d
Jamil sits me down, shows me all through public record, \u201cPace, this guy\u2019s leveraging 18% hard money. He\u2019s got second position and third position loans from friends and families. This guy is running a Ponzi scheme to like the highest level.\u201d<\/p>\n
Dave:
Wow.<\/p>\n
Pace:
Dave, I still didn\u2019t believe Jamil. I sold my personal house.<\/p>\n
Dave:
Oh, no.<\/p>\n
Pace:
I sold 40 rentals and I got enough cash to give this guy. Right as I gave this guy the rest of my cash, I went through this six-month thing of liquidating all my assets to dig myself out, I get a bankruptcy letter. Hits me right on my doorstep, and the guy, he ends up filing bankruptcy on nearly $16 million of debt.<\/p>\n
Dave:
Oh my God.<\/p>\n
Jamil:
Yeah.<\/p>\n
Dave:
Wow.<\/p>\n
Pace:
Bonkers.<\/p>\n
Dave:
I\u2019m sorry to hear that. That\u2019s horrible.<\/p>\n
Pace:
It was one of the greatest things that ever happened to me, to be honest, okay.<\/p>\n
Jamil:
It was.<\/p>\n
Pace:
One of the reasons why is because I learned to never doubt a single thing that Jamil Damji has to say.<\/p>\n
Dave:
It\u2019s\u2026 Yeah, we all have to just\u2026 Whatever Jamil says, we have to follow from now on.<\/p>\n
Pace:
Basically. This is what started a wonderful relationship. Jamil and I were actually competitors. We\u2019ve always been competitors. We chase after the same cash deals here locally, and we go into a meetup, let\u2019s say there\u2019s a 200-person meetup here in Phoenix. Him and I are working the room with the same goal to get deals from people in that room. I\u2019ll run up to people and I\u2019ll go, \u201cHey, you got a deal for me?\u201d They go, \u201cI already sold it to Jamil.\u201d I\u2019m like, \u201cGosh, dang it.\u201d
That\u2019s how our relationship started. We started hanging out with each other a lot, and we realized that we were like the yin to each other\u2019s yang. We started having so much fun that one day Jamil comes to me and he says, this is like three years into our relationship, he says, \u201cI think we should take this buddy comedy on the road.\u201d I think what we do is we just fly around and we go to local RIAs and we talk to people about how collaborating with your competition is one of the greatest things you could ever do.
I\u2019m almost done with this story. This is how we ended up getting a TV show, too. We go and we spend money and time and energy going to these RIAs and people would say stuff like, \u201cMan, do you have a coaching product?\u201d We\u2019re like, \u201cNo, we\u2019re here to help you. We don\u2019t have a product. We\u2019re not coaches. We\u2019re just here to show you what collaboration\u2019s like.\u201d People were dumbfounded and we created this amazing cult-like following of people that were like, \u201cWow, these guys are like genuinely here to just lay down the truth and teach us.\u201d We\u2019d go on appointments with people. We would go door-knocking. We would fly all over the country and do this with people.
Well, one day, Jamil and I are like, \u201cLet\u2019s take a two-week break.\u201d At this time, I was just starting my YouTube channel and I go, \u201cCool. I\u2019m going to go film YouTube. You go home, you take a break.\u201d We\u2019ve been on the road for like 60 days straight and just helping people. The day we get home, I get a text message from a guy named Ryan and he says, \u201cPace, I\u2019ve got this deal. Cash deal, $165,000.\u201d I go, \u201cLove it. I want it. Send it to me. I\u2019ll fix and flip that.\u201d Five minutes later, Dave, he goes, \u201cI\u2019m sorry. The price is now $175,000.\u201d I\u2019m like, \u201cWhat? Why? Why didn\u2019t you just send it to me at 175? Why are we playing this game?\u201d He says, \u201cWell, because I have another guy bidding. He said he\u2019d pay 175.\u201d I go, \u201cGosh, dang it. Fine, I\u2019ll pay 176.\u201d
He comes back and he goes, \u201cOkay, it\u2019s 185 now.\u201d This other guy just keeps hiking it up, and so I text Jamil and I go, \u201cBro, am I crazy to think that there\u2019s no way to make money on this deal? Would you comp this for me? Some idiot is bidding me up on the other side of this wholesaler and I\u2019m about to pay 186 for this thing I was about to pay 165 for.\u201d Jamil goes, \u201cI\u2019m the other idiot.\u201d<\/p>\n
Dave:
That\u2019s amazing. Did either of you buy it?<\/p>\n
Pace:
We bought it together. It was one of those-<\/p>\n
Dave:
Okay, yeah.<\/p>\n
Pace:
\u2026 first deals we did together, and so I said, \u201cLet\u2019s just buy the deal together. Let\u2019s stop bidding each other up. Dave, what we did is we went on Instagram and we told people, \u201cHey, we\u2019ve never seen the house. We bought it sight unseen like you do fixing and flipping a lot of times. We go, \u201cMeet us at the property. We\u2019re going to do a walk-through.\u201d We bring our YouTube crew and we ended up having like 40, 50 people go to this walk-through just randomly within like two hours of us posting this Instagram Story.
People show up. We film the YouTube video with all these people walking through the property with us, and Jamil\u2019s just being hilarious, like he\u2019s picking up the seller\u2019s, the previous homeowner\u2019s clothes and putting them on and using different voices and stuff. Well, dude, this is the craziest thing. Somebody sends this YouTube video to A&E-<\/p>\n
Dave:
Whoa.<\/p>\n
Pace:
\u2026 and they go, \u201cThere\u2019s nothing like these two on TV. They\u2019re competitors, but they\u2019re collaborating, and they\u2019re bringing the audience to the actual house.\u201d Think about that. All these videos people do about like, \u201cHey, look at my house,\u201d it\u2019s like we started doing videos where we brought the audience as a live audience to our YouTube videos. A&E just fell in love with the strategy and what we loved, and so we got a TV show out of all of this stuff, so when\u2026 People are like, \u201cI feel so bad that this guy filed bankruptcy on you,\u201d I\u2019m like, \u201cIt was the beginning of the greatest path of my life.\u201d<\/p>\n
Dave:
It\u2019s so funny how that works out. It seems to always be the time you\u2019re in the depths of despair that some glimmer of hope or something changes that leads to that best thing. I think that\u2019s a really good lesson for people just investing in general, and appreciate you sharing your losses. Jamil did this on one of our previous episodes, too, but in this age of social media, you see people just presenting these front where everything is so great and there\u2019s no losses and you\u2019re always winning and making millions. There are hard times and it\u2019s really cool to see how you turned what must have been really difficult, I\u2019m sure it was really difficult at the time, into something that has been so fruitful and enjoyable for both of you.<\/p>\n
Pace:
Yeah, it\u2019s interesting. Looking at like the people who have a victim mentality versus, \u201cHow do I win the situation?\u201d How do I\u2026 What\u2019s that martial arts where you take the momentum being thrown at you and you throw it a different direction?<\/p>\n
Dave:
That\u2019s Jiu-Jitsu.<\/p>\n
Pace:
Okay, cool, so it\u2019s like Jiu-Jitsu. It\u2019s like, \u201cOkay, whatever energy\u2019s being thrown at me, I\u2019m going to use that momentum versus absorbing it and becoming the victim of that energy.\u201d These are the things I\u2019ve learned from Jamil is like how to use that energy properly, and it\u2019s the same thing in this market right now. I see a lot of people complaining about interest rates and this and all these other things, and I\u2019m like, \u201cGuys, use these things to your advantage. You can either be a victim, or you can dominate in this exact market.\u201d Jamil\u2019s story about the 50\u2026 It was the 53-unit deal that you were talking about?<\/p>\n
Jamil:
Yeah, yeah.<\/p>\n
Pace:
Great story, and when it was going\u2026 I was watching this happen to Jamil, I was like, \u201cI already know what you\u2019re going to do, man. You\u2019re going to use this as a learning lesson for hundreds of thousands of people to hear this story.\u201d I think that video\u2019s doing really, really well. People are loving it in the comments and stuff. Was that just recently released?<\/p>\n
Jamil:
Yeah, it was just a released podcast we did here-<\/p>\n
Pace:
[inaudible 00:16:29].<\/p>\n
Jamil:
\u2026 on BiggerPockets.<\/p>\n
Pace:
Anyway, the market, it\u2019s changed a lot and I see a lot of people complaining about it and I\u2019m over here thriving in this environment, excited about when these types of things happen, interest rate hikes, economic turmoil, those types of things. You just got to use it to your advantage. That\u2019s all there is to it.<\/p>\n
Jamil:
You know, to add to that, Pace, the interesting thing is for me, I\u2019m a single-family guy. I\u2019m a wholesaler. That\u2019s my niche and I et it. I can wholesale and comp and do all these things in my sleep because it\u2019s in my DNA, but I really want to get involved in other things. Pace and I, we both have an extremely lucrative life and I\u2019m here, he watched me write a huge check to the IRS last year, and then he showed me his $3500 refund. I know how much money he makes, and so I\u2019m like dumbfounded. I\u2019m like, \u201cBro, what are you doing? How are you mitigating your tax situation? How are you accomplishing this?\u201d This is the hardest thing that is in my life right now is, how do I keep the money I\u2019m earning?
Had I done\u2026 Had I listened to Pace more, I would have been in this deal in a different structure. I would have been in this deal creatively and it would have saved my bacon, it would have saved the earnest money. The deal would have worked if I had put the deal together the way that he does. I\u2019m watching this guy travel around the country, still right now, buying deals in Texas, buying deals in North Carolina, buying deals everywhere across the country using creative methods, minimizing his tax situation by depreciation, creating massive cash flow. While everybody is screaming about lending terms, he\u2019s creating his own.<\/p>\n
Dave:
Well, that is a perfect segue, and totally agree because we wanted to have yo on here, Pace, because you\u2019ve become known in the real estate investing community for being one of the most creative people when it comes to financing deals. There is this challenge now, and I\u2019m sure you\u2019ll teach us how to make the best of it, but interest rates have nearly doubled over the last couple of months. For people who are just approaching their real estate investing with conventional mortgages, that makes cash flow more difficult to find. It makes everything less affordable, and so I\u2019d love for you to just help our audience understand what alternative options are out there and how you, like you said, are thriving in this type of environment.<\/p>\n
Pace:
Okay, cool, so last year, I did 40 BRRRRR deals, single-family BRRRRR deals. I don\u2019t talk a lot about BRRRRR because it\u2019s not on-brand for me. It confuses like what I\u2019m talking about, but I love the BRRRRR strategy. I did 40 last year. This year, I\u2019ll do less than 20.<\/p>\n
Jamil:
Yes. I don\u2019t know that you necessarily love it, Pace.<\/p>\n
Pace:
Right. Okay. What it is is I guess I feel like I\u2019m in a different lane. That\u2019s all there is to it. I\u2019ll do 20 deals this year that are BRRRRR and they\u2019re way compressed, way, way, way compressed. A lot of the deals we had in our pipeline back in January that we were planning on buying and\u2026 You know, a lot of times, the BRRRRR strategy will take three to nine months, sometimes upwards of 12 depending on the size of the deal. We had to cancel a lot of deals or go back and renegotiate with the sellers and say, \u201cI can\u2019t do this on cash. We need to do this on terms instead.\u201d Some of those sellers were like, \u201cYou\u2019re renegotiating. This is not good business practice, and I\u2019d rather just cancel the contract with you.\u201d Some of those sellers were amenable to a seller finance situation, which was great.
Here\u2019s the thing. Last year, dong 40 BRRRRR deals, this year doing 20, you can see that somebody doing BRRRRR, me actively, my business cut in half. However, last year, I acquired about a hundred rentals through seller finance. This year, I will buy 900 doors with seller finance and subject-to, 900, so my business has more than 9Xed through this economic situation. It\u2019s because\u2026 I don\u2019t know if you guys have ever heard of the analogy of fishing, where people will think that you fishing\u2026 Fishing works all day long. You could go out to a river or a lake and you can fish all day long and you will catch fish. No matter what time of day, you will catch fish.
However, there are certain conditions during the day where the kelp comes up off the floor and things are happening in the water based on the moon and all sorts of things that when your lure is in the water at those times, the fish are way more active. They\u2019re taking the same bait that they weren\u2019t taking two hours prior. That\u2019s very similar to creative finance, so the creative finance strategies that we\u2019re seeing dominate right now are seller finance, subject to novation agreements. Arbitrage right now is crazy, like Airbnb Arbitrage is crazy right now. Then, finally, lease options.
The two that I love more than anything is subject-to and seller finance, so I\u2019ll give you a really good example. I\u2019ve got a deal in San Angelo, Texas. 43-unit multifamily, zero dollars down, 4% interest, and the seller\u2019s giving me 50-year terms with no balloon.<\/p>\n
Dave:
Whoa.<\/p>\n
Pace:
Whoa, right?<\/p>\n
Dave:
Can you explain a little bit about why? Like what-<\/p>\n
Pace:
Yes.<\/p>\n
Dave:
\u2026 is the psychology of a seller that-<\/p>\n
Jamil:
[inaudible 00:21:59].<\/p>\n
Dave:
\u2026 motivates them to do that?<\/p>\n
Pace:
Bro, I can tell you, this is one of the biggest barriers to entering into creative finance is that you\u2026 Rule number one of creative finance is never lose money. Okay, always cash flow. That\u2019s rule number one. Rule number two is never put your brain in the seller\u2019s head because so many times we\u2019re like, \u201cWhy would they do this?\u201d Oftentimes, the answer is because they have a lot more money than you do. They\u2019re way older than you. They\u2019re way more experienced than you are, and most people entering into real estate that are brand new that don\u2019t understand creative finance are like, \u201cWhy would somebody give up a property that I\u2019m desperately trying to get my hands on? Why would they do it in a way that makes so much sense for me?\u201d
I\u2019ll give you this story. Gentleman\u2019s name is Mario. I actually was so excited about this guy because I flew out to San Angelo and I spent a whole day with him recording. I got 19 reasons why he did this deal this way, and I recorded the whole thing so that people could have it, and it\u2019s on YouTube. You guys can hear Mario with his own words. He moves to America. He\u2019s Romanian. He moves to America 35 years ago. The first deal he ever did was a subject-to deal. Why? He couldn\u2019t get bank financing. He was a foreigner. He didn\u2019t have the money, and so he\u2019s like, \u201cI want to get into real estate. What\u2019s the only way I can do that?\u201d Well, seller finance or subject-to.
He does a subject-to 35 years ago, and then he purchases an entire real estate portfolio and nearly $300 million of real estate over about 10 years all using creative finance because that was the only thing he knew. What you learn through all of this is a lot of times, people, what you focus on expands. People focus on BRRRRR, they focus on cash deals, and that\u2019s what expands in their universe. Meanwhile, I say no to cash deals. People send me a deal on my Instagram. \u201cPace, I got a great deal.\u201d Perfect, send it to somebody else. Send it to Jamil. I don\u2019t want cash deals. I only want creative, and because of that, I\u2019m overwhelmed. I turn down a hundred deals for every one that I buy.
Why did Mario do this? Number one, he\u2019s 55 years old. He wants to truly retire. How does a seller sell a $3 million asset, not pay taxes, and truly retire? Well, some people will say, \u201cWell, he should 1031 it. He should roll his gains to the next deal.\u201d Okay, well, two things have to happen for that. One, he has to have another deal, and if he\u2019s trying to retire, does that sound like something he wants? No, he doesn\u2019t.<\/p>\n
Dave:
Not retiring.<\/p>\n
Pace:
He wants to retire, so, one, he doesn\u2019t want another deal to roll into. Two, he says, \u201cI don\u2019t have another deal,\u201d and so it makes sense for me if I take my money in interest payments from you, 4% interest, maybe I die tomorrow. Maybe I die in 20 years. Maybe I die in 30 years, but either way, I don\u2019t need the money today. I just don\u2019t want to give it to the IRS. I want those payments to go to my children. That\u2019s another reason. The payments will bear interest. One of the things I ask in my interview, I go, \u201cSo Mario, will you make more money on this real estate transaction than you would going through a cash deal?\u201d He goes, \u201cOh my gosh, literally three times more money. I will make three times more money on this deal.\u201d
Here\u2019s a couple of reasons why. One, no agents involved. Two, no appraisals are involved. Three, we\u2019re not going through months and months and months of inspections and all that kind of stuff. You get a deal under contract with seller finance on multifamily or anything, and I can close three days later. Go through a title company. Takes almost no time. He can sell at the price that makes sense for him, so if you run this deal, this deal is only worth about 2.85 million. I bought it for 3 million. I overpaid on paper for this deal, but the difference is I didn\u2019t give him a down payment. I immediately inherit a multifamily property that\u2019s bringing in $30,000 a month after my payment to him because he\u2019s been upgraded from landlord to lender. He\u2019s now the lender. He receives payments from me. After all my CapEx, after my property management, after everything, I net $11,000 net net, in my pocket every month on day one.<\/p>\n
Dave:
That\u2019s with \u201coverpaying\u201d for that property?<\/p>\n
Pace:
That\u2019s overpaying for the property.<\/p>\n
Jamil:
The landlord\u2019s going to make, well, the owner\u2019s going to make tremendously more money because even at 4% interest, that\u2019s him. He\u2019s the bank now. You paid him more money from the property than he would have gotten, and now he\u2019s actually getting that. You guys ever look at an amortization schedule? It\u2019ll make you sick.<\/p>\n
Pace:
It\u2019ll make you sick. If you go to\u2026 BiggerPockets has a bunch of amazing calculators. You guys should go look at those, but so, one, he did the calculation and when we were talking to him, it was a cold call. We cold call multifamily deals that are over 30 units and under 150 units. That\u2019s where we get the deals from. People have a lot of equity. We\u2019ll call them and say, \u201cHey, are you interested in selling?\u201d That\u2019s where this lead came from. Mario does the calculation.
He says, \u201cIf I put this on the market, I can sell this for 2.85 million probably. I\u2019m going to have to go through a broker, and they\u2019re going to have a broker, and we\u2019re going to pay all of these commissions and all of these things and it\u2019s going to take six months for me to get out of the deal. How about I just sell it for 2.85 million on seller finance and I put 4% interest on it so by the time I sold it for cash,\u201d he says, \u201cI would have walked away with about $2.45 million out of the 2.85?\u201d
$450,000 went in his pocket, at least on paper, and the great thing is he\u2019ll bear interest on that additional $450,000, not only the 2.4. Those are a couple of big reasons. The biggest reason I find with sellers on seller finance is they want to mitigate their tax liability. You only get paid on what you receive. I\u2019m sorry, you only get taxed on what you receive. He\u2019s not going to get taxed on that full $2.85 million today. He\u2019ll get taxed only as he receives the money, and if he stretches that out over 50 years, he\u2019s going to have other write-offs next year that will actually mitigate the gain that he gets next year. He essentially can set up a zero taxable event on this deal by stretching this deal out.
Those are like five of the 19 reasons he gave. His biggest thing is he like, \u201cHonestly, I just make a decision, I go with it.\u201d The other thing is, he now still has control of that asset. I own it, but he\u2019s my bank. We set up a clause in the seller finance situation where if I default, it immediately reverts back to him. He keeps any payments I\u2019ve made along the way. He keeps any improvements, any rent raises I have. He\u2019s like, \u201cThis is the safest investment I could ever make. Where else am I going to put my $2.85 million right now? The stock market\u2019s crashing, crypto\u2019s crashing, everything\u2019s crashing. Where else am I going to put my money that\u2019s safe, secure, and I know the asset better than the person who bought it from me?\u201d<\/p>\n
Jamil:
Pace, what\u2019s the instrument that you\u2019re using called that reverts the property right back to the seller in case of a default?<\/p>\n
Pace:
It\u2019s called a performance deed. It\u2019s something me an attorney created about six years ago where you get sellers that go, \u201cWell, what if you default?\u201d I go, \u201cThat\u2019s a really great question. How do I create an instrument, a document that protects the seller and myself in the event that I default? Let\u2019s say I get abducted by aliens. I\u2019m not around to make the payment. I\u2019m not around to manage the property anymore.
How does that seller get it in a traditional sense as they go foreclose on you? Who wants to foreclose on you? Nobody, and so what you do is you have a clause in your deed, or I\u2019m sorry, in your deed of trust that\u2019s called a performance clause. It says that on the 31st day of me being late, the property will revert back to them. The way we do that is we have a deed in lieu document that is pre-signed, notarized that the seller can go and file in the event that I default.<\/p>\n
Dave:
That\u2019s super cool. I mean, you have to\u2026 At first, when you say 4%, it\u2019s kind of like, \u201cOh, 4% is not a great interest rate,\u201d but you have to understand the seller\u2019s mentality, like you said, and the context of what else is available for someone who wants to retire. Normally, someone might take that money. They might sell it to you just for cash or whatever, put it in a savings account because back in the day, you could earn 5% on a savings account. Now, it\u2019s, what, 0.5% or something like that. Or, if you\u2019re approaching retirement, a lot of times a financial advisor will advise you to put money in bonds. Bonds now are yielding far less than 4%, for example.
It really depends on where you are in your career. If you\u2019re 22 years old and you\u2019re trying to get wealthy as quickly as possible, 4% probably doesn\u2019t sound that attractive to you, but if you\u2019re 55 years old and you\u2019re trying to retire and you can have, as Pace said, an extremely safe investment that yields you more than the other safe investments out there like a savings account or a bond right now, then, that is an incredibly attractive offer. I\u2019m curious, Pace, if these like market conditions that we\u2019re seeing right now are helping you generate leads. Are you seeing a bigger influx of people who are interested in this given what else is going on in the economy?<\/p>\n
Pace:
Yeah, the word I would use is overwhelming, and if you don\u2019t mind, I want to put a button on that 4%. If people understand amortization calculators, most of the interest you receive is in the first 10, 15 years. Effectively, that investor or that lender, Mario in this example, he\u2019s not making 4% for the first 10 years. Then, if you do the research, what\u2019s the average amount of time that an investor will keep a property before they refinance and pull the cash out of the deal to roll into another deal? It\u2019s about seven to 12 years.
He\u2019s looking at this like, \u201cI\u2019m going to give you a 50-year note, but you\u2019re going to get greedy to the point where this is going to go up in value. You\u2019re going to see a million dollars sitting on the table in equity and you\u2019re going to go get a refinance at 5% with your bank, and I\u2019m going to get paid all the way off.\u201d I will have borne or bore 4% interest, which probably is more effective, is probably more at like a 12 to 14% rate considering that most of the payments I\u2019m making are interest. It\u2019s like 85% interest.<\/p>\n
Dave:
That\u2019s such a good point. Yeah, that\u2019s such a good point that\u2026 If anyone doesn\u2019t understand this, quick, as you said, you pay most of your interest in the first couple of years, but I appreciate this because it allows me to shamelessly plug my book that\u2019s coming out-<\/p>\n
Pace:
Yes, please.<\/p>\n
Dave:
\u2026 which explains all of this. It\u2019s called Real Estate by the Numbers. It\u2019s available for preorder now on BiggerPockets, but it talks all about amortization and how loans work. That\u2019s a really great point, Pace. Thank you for bringing that up, is that both as a buyer, it\u2019s not great because you\u2019re paying more money to the bank for the first couple of years. That\u2019s why if you only hold the rental property for the first couple of years, you actually don\u2019t do that well and it\u2019s better to hold it for a long period of time, but if you are the seller, it\u2019s completely different. If you\u2019re seller financing, you\u2019re making so much interest up front and that, I hadn\u2019t even thought about that. That\u2019s such an attractive option.<\/p>\n
Pace:
Yeah, it really is, and if you really think about most investors strategies is that I go buy even a BRRRRR deal. I do a BRRRRR strategy. I\u2019d take over a deal, sub-to. I\u2019d buy something on seller finance. It\u2019s going to appreciate, and you\u2019re going to have some loan paydown, so what ends up happening is you go, \u201cWhere can I get some tax-free chunks of money?\u201d You go refinance for four years, eight years, 12 years. We currently have close to\u2026. We\u2019re a little over a thousand doors right now in our portfolio, and I don\u2019t have a single loan in my portfolio that\u2019s older than seven years.<\/p>\n
Dave:
Oh, wow.<\/p>\n
Pace:
It just goes to tell you that we\u2019re refinancing a lot. Like in December, we refinanced seven properties. We pulled a million and a half dollars out. We took that million and a half dollars, rolled it into new deals, and so most sellers that are savvy in seller finance, especially the multifamily world, most of those sellers, they bought their deals on seller finance. That\u2019s how common this is. They are like, \u201cOh, of course, I\u2019ll give you a 30-year note or a 50-year note because I know you\u2019re not going to last 10 years.\u201d<\/p>\n
Jamil:
Pace, do you find that sellers in multifamily are more open to this seller finance are subject to structure than in single family? Or do you think it\u2019s fairly even?<\/p>\n
Pace:
It\u2019s not even remotely close to even. It is so dramatically different. Sellers in the single-family realm, they\u2019ve only bought one, maybe two properties their whole life, and so they don\u2019t even remember what the word \u201cescrow\u201d means, let alone anything else. I\u2019d say in the single-family realm, the first 300 deals I got in single-family, I surpassed that. That took me years to get that. In multifamily, I did that in a quarter because multifamily sellers, typically multifamily sellers used to be multifamily buyers. Going out and getting a commercial loan in multifamily requires a net worth requirement and it requires liquidity.
It is so challenging to go out and get a multifamily loan, and so most multifamily purchasers also use seller finance in order to get into the assets they hold today. It\u2019s very common, and so when you say terms to a single-family seller, they go, \u201cWait, what? What are terms?\u201d I tell the infamous F-150 story probably 50 times a week because it dumbs down what creative finance is to a single-family op or homeowner. When I talk to sellers on storage units, like A.J. Osborne, a lot of everybody knows A.J. Osborne. I was helping one of his acquisition guys the other day talk to a storage unit operator. I brought up terms and the guy\u2019s like, \u201cOh yeah, I\u2019m down for terms. You give me 20% down, I\u2019ll carry the rest of the deal, all day long.\u201d
A.J. Osborne\u2019s team is like, \u201cOh my gosh, it was that easy?\u201d I go, \u201cYeah, this guy probably bought it\u2026 I put the guy on mute, I go, \u201cHe probably bought this on seller finance.\u201d I take him off mute and I go, \u201cBy chance, did you buy this asset with seller finance?\u201d He goes, \u201cOh yeah, I buy all of my stuff with seller finance.\u201d It so overwhelmingly common in the multifamily and commercial space because of the challenge of getting loans in that space.<\/p>\n
Dave:
That\u2019s really, yeah, I had never really thought about that, but yeah, I\u2019m sure it\u2019s so much easier for you to talk to people who have done this before. For those of us, myself included, who really just buy smaller things, it feels like no one would want to do this and that it would be a lot of education for single-family homes, but if you focus on multifamily, it sounds like there\u2019s maybe just less resistance and there\u2019s more comfort with it right off the bat.<\/p>\n
Pace:
Yeah, I would say that 20% of what I\u2019ve learned about creative finance has actually come from my sellers and a hundred percent of those sellers were multifamily sellers because these guys have owned, guys and gals, they\u2019ve owned these assets for 20, 30, 40 years. They\u2019ve taken the tax depreciation, they\u2019ve done all the things, and now they\u2019re at a point where like, \u201cWhere else can I put my money that\u2019s safe? I can\u2019t, and I don\u2019t want to manage these anymore.\u201d
This is what\u2019s great about multifamily, too, and seller finance is that most of the operators in multifamily are Ma and Pa operators, which means they don\u2019t have an operations manager, they don\u2019t have an asset manager. They don\u2019t even have property managers. Most of these people are going and physically knocking on the doors of their tenants and collecting rents on their 20-unit, 30-unit, 50-unit deals. When you ask for a P&L, some of them are like, \u201cHuh, how about I just show you my bank account? I\u2019ll show you my deposits.\u201d That is very, very common in the 30- to 150-unit range.<\/p>\n
Jamil:
Those sellers, because they don\u2019t have a P&L, they can\u2019t even\u2026 their buyer couldn\u2019t even get a loan.<\/p>\n
Pace:
No, and it is so common, so here\u2019s what happens. A lot of them will go\u2026 Okay, like I\u2019ve got a seller named Moe in Corpus Christi. He\u2019s got 25 million in multifamily real estate. We just closed on 3 million of it and I\u2019m slated to buy the next 25 million over the next two years from this guy. I\u2019m going to like own 1% of Corpus Christi in two years. It\u2019ll be great.\u201d Moe, he started in life, a lot of these sellers started in life as business operators and they go, \u201cAll right.\u201d Moe owned convenience stores. He goes, \u201cOkay, I\u2019m making money as a convenience store operator. I need to put my money somewhere I can get tax benefits.\u201d They go to strip malls, they go to what they know. He\u2019s already in a commercial building, so he buys the strip mall that he was renting in.
He then goes and buys multifamily, multifamily, multifamily. Gets to a point and goes, \u201cOkay, I\u2019ve got enough cash coming in. I really don\u2019t want to operate this. This has become a nightmare for me.\u201d Who do they hire? They hire their wife or their kids. They\u2019re not going to Masterminds. They\u2019re not learning how to scale their business. They\u2019re not doing what we\u2019re doing. These are old school people that have been doing this like with pencil and paper. Microsoft Excel is advanced for them legitimately.
You go to them and say, \u201cHey, I can take over this asset. I\u2019ll pay you close to what you\u2019re currently making now. You just got to let me get into this deal with very little money down, low interest, and give me a good runway that I can go and raise the rents and do something else with it.\u201d Moe could not even\u2026 Moe goes, \u201cOh my gosh, you would take these off my,\u201d this was a big paradigm shift for me. Everybody says, \u201cWhy do sellers do this? It doesn\u2019t make sense.\u201d
Then, Moe, my seller currently, is like, \u201cWait, you would take these off my hands and you would make a payment to me? Oh my gosh, this is like a dream come true. I have been sitting there dealing with tenants.\u201d I go, \u201cWell, Moe, the problem is you didn\u2019t hire a property manager.\u201d He goes, \u201cYeah, I don\u2019t do well with people. I love my tenants, but I don\u2019t like employees.\u201d They don\u2019t scale a business that is functional, and so you come in and you\u2019re essentially taking over their business. It is so\u2026 It is like taking candy from a baby because we know how to scale and operate businesses.<\/p>\n
Dave:
Yeah, but you\u2019re not like stealing from them, you know? It\u2019s not taking-<\/p>\n
Pace:
No, I\u2019m giving them more money-<\/p>\n
Dave:
\u2026 from a baby.<\/p>\n
Pace:
\u2026 than anywhere else.<\/p>\n
Dave:
Yeah, exactly. Yeah. There\u2019s just candy for everyone. You\u2019re just helping them. You\u2019re giving them almost it sounds like the same amount of capital that they need to live their lives, and you\u2019re just taking over the asset, which is pretty incredible.<\/p>\n
Jamil:
You think about that too, right? Because of the amortization schedule, they\u2019re really getting all of that income right out the front, but guess what> They\u2019re doing it without having to work now.<\/p>\n
Pace:
The thing with like a cash deal that I\u2026 You know, we\u2019ve done a lot of wholesale, a lot of wholesale, a lot of fix and flip. We still are very active in that business. I just don\u2019t talk about it as much because it\u2019s not my passion, it\u2019s not where my heart lies. I love being ultra creative and figuring things out, and I could go on and tell you a whole bunch of stories about recent deals that we\u2019re working on if we have the time. I look at a cash deal, and really when I\u2019m going and buying, let\u2019s say, a house that the ARV is $300,000. I could sell it on the market after I renovate it for $300,000. In order to make a good amount of money, I got to buy that for like 160, 170 because I know I\u2019m going to have to go put 50 grand into it.
A seller has to sell a property to me for 50 cents on the dollar in order for me to make money, and so they\u2019re getting something. Obviously, the house isn\u2019t worth 300 grand in the condition I\u2019m buying it in, but I\u2019m basically buying all of that potential, and I have to really get my number as far down as possible for me to make as much money as possible. In creative finance, it is the only thing that I can make the seller win at a very high level, mitigate tax, have large amounts of money coming into them over time. Then, on my side, I can pay them more, but it actually becomes easier for me to acquire that asset because of the way I enter that deal. Zero dollars down or\u2026 I have not done a deal where I\u2019ve put more than 7% down in, I don\u2019t know, probably six, seven years.<\/p>\n
Dave:
That\u2019s crazy.<\/p>\n
Pace:
It\u2019s crazy. This deal with Moe, let me break this down really quickly. The deal with Moe, Corpus Christi, it\u2019s the 30-unit, buying it for $3 million, so a hundred thousand dollars a unit. I go do\u2026 We get it under contract seller finance He wants 10% down. I go, \u201cNo, I\u2019m not going to do 10% down, Moe. That\u2019s crazy. All my other sellers are giving me 5% down.\u201d He goes, \u201cOkay, great.\u201d \u201cWell, I\u2019ll give you 5% down.\u201d
That\u2019s $150,000. For most people that are new to this business, that seems incredibly daunting, and it is, but when I was brand new to this, that money wouldn\u2019t come from me. I would just go to other people and go, \u201cHey, I\u2019ve got a deal under contract. Who wants to be my financial partner? You bring the money, I bring the deal. We go 50-50.\u201d Now, I\u2019m 50% owner of a $3 million asset with no money out of my pocket, so 5% down. With Moe, it\u2019s 3% interest, 50 years with him on the mortgage.
We go do the inspection and I go, \u201cMan, in order for me to raise rents and take this asset over, I\u2019m going to have to put a hundred thousand dollars into this $3 million deal.\u201d I go to Moe and I go, \u201cHey, Moe, I\u2019m still okay with putting a $150,000 down, but I want that $150,000 to actually go into the renovation.\u201d Moe goes, \u201cOkay, I\u2019m cool with that.\u201d I just want to make sure you\u2019re going to operate this properly. My down payment is actually going into the renovation directly.<\/p>\n
Dave:
Yeah. I mean, that\u2019s why you call it seller or creative finance. It\u2019s an incredibly creative way to use your money to mutually benefit both you and the seller. I\u2019m curious, for Moe, this deal or the deal you were talking about before, have you done the analysis? Or do you think they would pencil if you were just using rates like-<\/p>\n
Pace:
No.<\/p>\n
Dave:
\u2026 if you just went to a bank and go\u2026 Just there\u2019s no way, right?<\/p>\n
Pace:
They won\u2019t pencil unless you are okay with losing money for three years.<\/p>\n
Dave:
No, that\u2019s not pencil, right?<\/p>\n
Pace:
No.<\/p>\n
Dave:
I mean, I guess maybe for some people.<\/p>\n
Pace:
I see some people\u2026 I saw a guy teaching creative finance. That\u2019s why my first rule of creative finance is never lose money, even on day one. It\u2019s never okay to buy a deal in the hopes that you\u2019re going to raise the rents at some point to make the deal work. It needs to work-<\/p>\n
Jamil:
Cash flow from day one.<\/p>\n
Pace:
\u2026 day one, like maybe within 60 days because sometimes you got to improve it and get it filled up and whatever else, but definitely within the first 60 days. If I went down, for example, let\u2019s look at the Mario deal. If I went down and I went to get a loan for that multifamily deal, my lender is going to give me\u2026 Right now, a commercial loan is about 6%. It\u2019s double, it\u2019s double what I\u2019m paying, or it\u2019s 50% higher than what I\u2019m paying Mario.
Then, the lender is going to ask me to put about 30% down. That\u2019s $900,000, and this is why people have to go and do syndications and funds is because they\u2019re like, \u201cHey, guys, I got to go put 30% down on this deal. Let\u2019s go pool our money together and I\u2019ll give the lender 70% of the deal.\u201d Guys, I didn\u2019t have to raise any money for that Mario deal, and I\u2019m a hundred percent the owner, no syndication, no fund because of the way that the terms allowed me to get into the deal.<\/p>\n
Dave:
Do you think this is\u2026 I mean, sort of we asked this before, but is this just giving you more deal flow? Other people who aren\u2019t considering seller finance just can\u2019t make these deals work. Are you just finding that you can\u2026 You basically have a broader pool of deals to pull from because you have the ability to make deals work that people who aren\u2019t thinking this creatively can\u2019t make them work.<\/p>\n
Pace:
Yeah. I\u2019m like the guy in Santa\u2019s shop that like I take all the broken toys that people screw up on and I make them better than what anybody else can. I\u2019m in this little room by myself and I\u2019m just tinkering around and making things work and people are like, \u201cHow did you do that?\u201d<\/p>\n
Jamil:
My community is cash buyer wholesale, and so a lot of the people we\u2019re talking to that\u2019s\u2026. If we\u2019re working agents, we tend to find if we can\u2019t make a deal work based off of a cash price because maybe the house is too nice and it doesn\u2019t need all these repairs or maybe the seller just doesn\u2019t want to come off their number. What\u2019ll happen a lot is people from my community will connect from people from Pace\u2019s Subto community and they will create an opportunity there where normally there wouldn\u2019t have been.
Even people in wholesale take note that this strategy adds a tremendous amount of tools to your tool belt because now when you\u2019re\u2026 Say, for instance, you\u2019re cold calling and you\u2019re going direct to homeowners. They want a number that just doesn\u2019t make sense for you. You can now monetize that because people are wholesaling these creative deals. My student body, they\u2019re not all that interested in collecting property. They\u2019re not super worried about depreciation or wanting to property manage or do the things that Pace is trying to do, but Pace is at a different season of his life and he wants to collect and have assets. There\u2019s people that\u2019ll pay assignment fees for these opportunities.<\/p>\n
Pace:
I just paid a $210,000 assignment fee on a massive seller finance deal that I just bought, $210,000. People learn how to lock up the contract or at least get the seller interested, and then me or somebody on my team gets on the phone and actually works out all of the details. Then, I\u2019ll pay somebody a massive assignment fee. That was 0% seller finance, so for me it made a lot of sense for me to pay a big assignment fee. They asked for 500,000. I\u2019m like, \u201cNo,\u201d but I ended up paying $210,000 to somebody for an assignment on a creative finance deal, so-<\/p>\n
Jamil:
I think that was\u2026. Was that an Astro student that you did that with?<\/p>\n
Pace:
It was an Astro student, yeah.<\/p>\n
Jamil:
Yeah, because I heard about that. It was a big win that we had on one of our support calls. They were like, \u201cI just made $200,000 selling a deal to your best friend.\u201d<\/p>\n
Pace:
You know, it\u2019s funny as I\u2019ve got a text message right now from Ryan Larue, and if you remember at the-<\/p>\n
Jamil:
He\u2019s awesome.<\/p>\n
Pace:
\u2026 very beginning of the show-<\/p>\n
Jamil:
Yep.<\/p>\n
Pace:
\u2026 Ryan is the guy that was between Jamil and I, that he was the guy pitting us against each other that ended up getting us a TV show. Ryan\u2019s got a deal right now in Phoenix, 49 units, seller wants full retail for the multifamily. The challenge is he was in contract with somebody else buying it. What do you think happened to that contract?<\/p>\n
Jamil:
Ooh, they walked away from their earnest money and had to tuck their tail between their legs because they couldn\u2019t get lending.<\/p>\n
Pace:
That\u2019s exactly it. They locked the deal up. They put hard earnest money down. They were going to buy the multifamily with 30% down, get their lender to come to the table, and the deal had fell apart because interest rates came up. Ryan watches me. He\u2019s not one of my students, but he watches me all the time. He goes, \u201cThis is the greatest thing.\u201d He\u2019s like, \u201cI get one wholesaler that will bring me four or five deals a year that they\u2019re like, \u2018I don\u2019t know what to do with this, but the guy says he is open to terms.\u2019 I go, \u2018Great. Let me get on the phone, and I work out terms.’\u201d
It\u2019s a 49-unit deal in Phoenix. Seller just wants his number. Here\u2019s the thing thing for you to understand if you\u2019re in the audience. Why do sellers like seller finance? They want to win at one thing. They want to win at their number. These guys are real estate investors at the end of the day. They look at things on spreadsheets. People don\u2019t realize this. Wealthy people don\u2019t have billions of dollars sitting in their bank account. They have assets that they add up and they go, \u201cThat\u2019s my net worth.\u201d When a seller is willing to sell something to you on seller finance, their number one priority is selling it at top dollar so they can say, \u201cI won the game.\u201d<\/p>\n
Dave:
Yeah. They want that top line number. That\u2019s what they care about because they\u2019re like, \u201cI bought it for X and I want it to double or I want to sell it for Y.\u201d They\u2019re willing to negotiate with you to make sure that that top line number is what they want it to be.<\/p>\n
Pace:
I\u2019ve got a really great single-family deal. I\u2019d love to show it to you guys if we\u2019ve got the time. Here\u2019s the deal, so this is my document. You can see the seller who sold this house to me. By the way, I have their permission. They\u2019re great, that we\u2019ve done videos with them. We just closed on this deal, what was this? What was the date? July 15th, so roughly a month ago I closed on this deal. Single-family property, but it has two houses on it, literally two three-bed, two-bath houses on the same property. Look at what my monthly installments say, principal only. This lead came from a failed wholesaler locking this up at too high of a price and then trying to sell it to a hedge fund. The hedge funds, because of interest rates, they slowed down their buying, and in a lot of ways, just stopped buying altogether.
All these wholesalers are going around town canceling deals on sellers, and I come in and I\u2019m just gobbling deals up. That was a zero down, zero percent interest seller finance deal with a seller. The same exact day, I bought a subject-to deal, same exact situation. The seller refinanced last year. I get a lot of sellers that have refinanced in the last two, three years, pulled out their equity, and now they\u2019re in a situation where marketing softening, days on market have gone from three days on market to 90 days on market type of thing. Now, they\u2019re like, \u201cI can\u2019t sell my house. I have very little equity, and now I\u2019m getting low-ball offers.\u201d We\u2019re coming in and picking up houses left and right on sub-to because people are just saying, \u201cTake over my house and give me 2,000 bucks for moving expenses and here\u2019s my house. We\u2019re just getting free houses with subject-to right now.<\/p>\n
Dave:
That\u2019s unbelievable and a good segue because I want to talk about subject-to, and I\u2019m going to do a terrible job explaining what it is. You\u2019ll do it better, but basically what it means if, correct me if I\u2019m wrong here, is that rather than buying a house by taking out a loan in your own name or even using something like a death service coverage ratio loan, you\u2019re basically just taking over the existing owner\u2019s loan. To me, one of the main reasons I was so excited to have you on here today is that something like 50% of homeowners right now have a mortgage under 4%, right?<\/p>\n
Jamil:
Yeah, wow.<\/p>\n
Dave:
If you are trying to buy a home and 6% isn\u2019t working for you, it just seems like a no-brainer for sub-to because you could assume you have a 50-50 chance that if you approach someone and they\u2019re interested that that loan is going to be under 4%, which just seems incredibly attractive right now.<\/p>\n
Pace:
Our average sub-to interest rate on all of our real estate-owned sheet is 3.2%.<\/p>\n
Dave:
That\u2019s crazy. That\u2019s so good.<\/p>\n
Pace:
That\u2019s our average. We have deals, we have VA loans that are like 2.6%. We have so many, like my personal\u2026 the personal house I live in right now, it\u2019s a\u2026 I bought this house for $3.3 million. Interest rate on it is 2.8% on a $3 million sub-to deal.<\/p>\n
Dave:
Unreal, and if they\u2019re similarly to seller finance, are you seeing a lot of willingness and deal flow right now? One thing-<\/p>\n
Pace:
Yeah.<\/p>\n
Dave:
\u2026 we talked about in the show is that there is this theory right now. Have you heard like the lock-in effect?<\/p>\n
Pace:
Mm-hmm.<\/p>\n
Dave:
Where people aren\u2019t going to sell-<\/p>\n
Pace:
Stuck in their houses.<\/p>\n
Dave:
\u2026 because they don\u2019t want to sell and pick up a new mortgage at 6% or whatever. I\u2019m just curious if like sub-to deals are slowing down for you because people know that they\u2019ve got something valuable at 3% and they don\u2019t want to give it up?<\/p>\n
Pace:
No, not at all, so here\u2019s an interesting thing. I differentiate seller finance and sub-to in this way. Sub-to means the seller\u2019s typically going through a painful situation. No matter what the economy\u2019s doing, no matter what is going on, somebody\u2019s always going through a divorce, somebody\u2019s always going to lose their job. Something\u2019s going to happen all the time. No matter what\u2019s going on, the best of markets, the worst of markets, you\u2019re not going to stop people from fighting with each other and getting divorced. These things happen.<\/p>\n
Jamil:
Are you saying sub-to is great for like distress?<\/p>\n
Pace:
Yep. Sub-to is pain. Distressful situation typically, and seller finance, so I call it pain and gain. Sub-to, it\u2019s all about pain. Seller finance, it\u2019s all about gain. That seller wants that gain. They want that top line number. That\u2019s the most important thing to them. In sub-to, people are saying, \u201cI can\u2019t sell my house. It\u2019s not selling. I need to get out of it.\u201d Expired listings, if you guys want to go get a sub-to deal today, look at expired listings, thousands and thousands. I could pull up right now online public record. I could pull up thousands of expired listings just in the last 60 days in just Maricopa County alone.<\/p>\n
Jamil:
You could just\u2026 Even easier than that, if you go\u2026 I mean, right now, I have a student who\u2019s been cold calling real estate agents live and anything that\u2019s sitting on the market even over 90 days, this doesn\u2019t require you to go and do any research, guys. You can go right on to any of these platforms and look at days on market, 90 days or more, and you can call any of those real estate agents and ask them if their sellers would be open to terms. They are, \u201cReally? Really? You want to do a deal? Oh my God, yes. Let me get my seller on the phone and let\u2019s see if we can put this together.\u201d It\u2019s literally that easy right now.<\/p>\n
Pace:
I\u2019ve got a deal with an agent we just closed on last week. It was her first sub-to deal, and she said, \u201cI had this property listed for 60 days. The homeowner had a job opportunity in New Zealand. He left thinking, \u2018Hey, market\u2019s hot. It\u2019s going to sell in like a couple of days.\u2019 He leaves, leaves the house vacant. Now, he\u2019s got a mortgage payment he\u2019s paying.\u201d I come along. Somebody on my team calls. It was 60-day-old listing. We call the agent and we go, \u201cHey, what if we just take over the payments on that? Would the seller be open?\u201d She goes, \u201cWait, that\u2019s not possible. I\u2019ve never heard of that before.\u201d We go, \u201cWell, if you talk to either our escrow officer or maybe our attorney, they can explain it to you that we do this all of the time, a few times a week just here in Phoenix, Arizona. She\u2019s like, \u201cLet me throw it by my seller.\u201d
She calls the seller and the seller goes, \u201cOh yeah, subject-to? Yeah, I\u2019ll do that all day long.\u201d Seller knew what subject-to was and he was like, \u201cI just don\u2019t want to make the payment anymore. Take the house over.\u201d It\u2019s a five-bed, three-bath house. We\u2019re turning it into an Airbnb. I took over payments. We paid the agent in that situation, so people always have that question. \u201cWell, if you\u2019re working a sub-to deal where you\u2019re taking over payments and the seller\u2019s getting basically no money, how do you pay the agent? Do you pay the agent?\u201d Absolutely. Think about how most people buy houses. That\u2019s a $700,000 house we\u2019re taking over, by the way, a $700,000 house. If I\u2019m a traditional buyer, how much money am I bringing in cash to the table to buy that deal? 150 to 200,000.<\/p>\n
Jamil:
Yeah, 20%.<\/p>\n
Pace:
I come to the table by paying this lady 20 grand in commissions. I\u2019m $120,000 less to get into that deal than anybody else.<\/p>\n
Dave:
You\u2019re making the agent whole basically. You\u2019re paying that 2.8-<\/p>\n
Pace:
Yeah.<\/p>\n
Dave:
\u2026 3% commission or whatever.<\/p>\n
Pace:
Basically the way I looked at it, too, is I bought the greatest testimonial from an agent you could ever ask for because she goes and she\u2019s doing a video with us this week. She\u2019s just like, \u201cThis is crazy that this solved my problem as an agent and my broker didn\u2019t teach this to me. Nobody taught this to me. I thought that there\u2019s no way that this is possible, and here you go.\u201d She\u2019s like, \u201cI get listings that people come to me and they go, \u2018I have no equity in this deal. Can you sell it?\u2019 The agent says, \u2018I can\u2019t help you.’\u201d<\/p>\n
Dave:
Right.<\/p>\n
Jamil:
Mm-hmm.<\/p>\n
Pace:
This helps agents, it helps brokers, it helps the sellers. It is absolutely amazing. Going back to like what\u2019s going on in the market right now, what I love about\u2026 The exit strategies are amplified as well because now, all of these buyers being told, \u201cInterest rates are at 6%. You\u2019re going to have to bring more money to the table,\u201d all of this. If you\u2019re a buyer, my sister McLaren, here\u2019s a great example. My sister McLaren, she wants to move back to Phoenix, Arizona, and she\u2019s like, Pace, everything\u2019s 6%.\u201d I\u2019m like, \u201cMcLaren, just have your husband call on expired listings.\u201d She calls an expired listings. Fourth phone call she gets ahold of is an agent who couldn\u2019t even sell their own house. She\u2019s moving into the house in two weeks, taking over payments, no money to the seller, expired listings.<\/p>\n
Dave:
How does it work? Can you just explain quickly how it works with no money to the seller?<\/p>\n
Pace:
The seller just says, \u201cI don\u2019t have enough, I don\u2019t have any equity in the deal,\u201d so why\u2026 If I-<\/p>\n
Dave:
Oh, because they don\u2019t have any equity, so they don\u2019t even care. They wouldn\u2019t make money even if they did sell it outright.<\/p>\n
Jamil:
They\u2019d actually have to come to the table with money if they were going to sell a traditional.<\/p>\n
Pace:
Yeah, I\u2019ve got a great\u2026 One of my favorite stories I ever had is a guy named Dave Byarsky. Listing was five and a half months old. The agent calls me up. She goes, \u201cMy listing\u2019s going to expire in two weeks. I don\u2019t know what to do. I didn\u2019t know this guy didn\u2019t have equity. He had just pulled cash out, refi six months prior. He has no money, and every time we get an offer, I have to deliver bad news that he\u2019s going to have to cut a check for $40,000 to get rid of this house.\u201d I go, \u201cOkay, well, I can take over his payments,\u201d and she\u2019s like, \u201cWould you? Would you?\u201d I go, \u201cYeah, sure.\u201d
Dave Byarsky, who\u2019s now still a friend of mine, I go in and I say, \u201cHey, I can take over the payments.\u201d He goes, \u201cAmazing, so you\u2019re telling me I don\u2019t have to write?\u201d It goes\u2026 Your mindset needs to go from, \u201cWait, why am I not paying the seller?\u201d, to understanding that the seller\u2019s going to say, \u201cWait, I don\u2019t have to pay you anything?\u201d Dave was so skeptical. He was like, \u201cYou\u2019re going to send me an invoice or something. You\u2019re going to send\u2026 There\u2019s no way that\u2026 This is the seller says, \u2018This is too good to be true.’\u201d I am putting money in their pocket. I\u2019m holding them back from having to deploy $40,000 to get rid of something they no longer want.<\/p>\n
Dave:
Yeah.<\/p>\n
Pace:
This is why we have to remind ourselves, \u201cDon\u2019t put your brain in the seller\u2019s head.\u201d<\/p>\n
Jamil:
That\u2019s so real though, guys, and I think a lot of people in the real estate investing space, the barrier to entry for them is always that.<\/p>\n
Pace:
Mindset.<\/p>\n
Jamil:
It\u2019s your mindset. You\u2019re not thinking the way that the other people are thinking. You have to step out of your shoes and you have to look at deals from the perspective of the different parties.<\/p>\n
Pace:
Here\u2019s a good action step for people that are wanting to know, \u201cHow do I go get a sub-to deal today?\u201d Okay, go find expired listings. Google \u201cexpired listings\u201d if you have to. There\u2019s a hundred websites that sell expired listings, or if you have an agent in your local market, just call your agent and go, \u201cHey, can you pull all expired listings from the MLS?\u201d Very, very simple. All you do is you call these people and you say, \u201cHey, I noticed your listing expired. Was there something you were looking for on the market that you were not able to receive?\u201d That\u2019s the question.
You let them talk and they tell you, \u201cMy agent this, they didn\u2019t do open houses.\u201d You\u2019re going to hear them complain about somebody is now the common enemy is what I call it. You now have rapport you\u2019re building. \u201cOh man, I\u2019m sorry to hear that. I\u2019m so sorry to hear that, I\u2019m so sorry to hear that.\u201d \u201cWell, you know, me and my team, we\u2019re buying properties. I\u2019m wondering, would you be open to an offer of us making payments to you on that house instead of giving you a lump sum up front?\u201d
It\u2019s very simple. That is it. You\u2019ve got people that were just beat up by the market and they obviously wanted to sell. They\u2019re telling you on public record they want to sell their property. They\u2019re also telling you on public record they weren\u2019t able to, so you calling them, you\u2019re going to be their savior. This is not hard sales. This is not, \u201cPace, how do I negotiate? Pace, how do I say the magical words?\u201d Guys, they want to sell their properties and they were not able to do so.<\/p>\n
Dave:
This is incredible advice, Pace. Thank you, and unfortunately, we have to go. You have incredible stories. I could listen to this all day, but we can\u2019t. I got to ask you before we get out of here, you\u2019re obviously very in tune with what\u2019s happening in the market and the economy. What do you think\u2019s going to happen just on a large scale in the housing market over the next couple of months? You think we\u2019re going to see some declines? Or how do you see things playing out over the next year or two?<\/p>\n
Pace:
You know, it\u2019s interesting because there\u2019s people on YouTube that are creating salacious material so that they can get clicks.<\/p>\n
Dave:
It pisses me off.<\/p>\n
Pace:
It\u2019s really tough because like the only person I really watch is Dave, you, Dave, because you go through-<\/p>\n
Dave:
[inaudible 01:02:35].<\/p>\n
Pace:
\u2026 and it\u2019s based on numbers. You actually go through. You analyze software. You look at what\u2019s going on. There\u2019s a couple of other people I really respect as well. Kenny McElroy, you guys have had him on your show. He\u2019s epic. Outside of that, everybody else is just on YouTube trying to get YouTube to pay them Google AdSense, whatever it is.
Here\u2019s what I look at. Interest rates change things dramatically. Jamil said something to me the other day. He says, \u201cPace, if I walk over to a thermostat and I turn that thermostat from 75 down to 68 degrees, wouldn\u2019t I be crazy to think that that room was not going to cool off?\u201d Like, \u201cWell, yeah, of course, unless the air conditioning unit\u2019s broken.\u201d He\u2019s like, \u201cThat\u2019s the thing. The market is going to cool off because of interest rates.\u201d It\u2019s going to happen and it has happened. It\u2019s slowed down our fix and flips. It\u2019s slowed down a lot of things, but that\u2019s a great thing. It resettles the sellers because really, where do deals come from? They come from sellers. The seller is the beginning of a real estate transaction.
When you settle down what their expectations are like, \u201cI\u2019m going to go sell the house on the market in 14 minutes,\u201d then that gives us an opportunity to jump in and buy these types of deals. I\u2019m happy about it. I know that the Fed is meeting again on I believe September 20th or September 21st. They\u2019re 100% without a doubt raising rates again.<\/p>\n
Dave:
Of course, yeah.<\/p>\n
Pace:
Right. We saw what a rate hike did or a couple of rate hikes did to us this year. It doubled and tripled the days on the market, and I think that right now because lenders, they\u2019ve basically hedged against that and they raised their rates a little bit higher than the Fed did. We\u2019ve been actually seeing the lenders shrink down a little bit to accommodate that overexaggeration essentially. Right now, I think for like a month and a half, I think activity\u2019s going to come back up a little bit, but on September 20th and 21st, we\u2019re going to see another rate hike. It\u2019s going to slow down. The last quarter of this year, if you\u2019re in traditional real estate, strap in for a fun ride, but you\u2019re not going to be priced out of the market. Your people are still going to be buying, it\u2019s just that you got to be reasonable on your sales price.
For us in the fix and flip game, forget about creative finance, forget about wholesale. In the fix and flip game, what all of us have done is we have all been aggressive for the last two or three years. We know the ARV\u2019s 300 grand and we still list the property for $350,000 because we now the market was hot the last couple of years. When we say, \u201cOh my gosh, our listing only sold for $310,000. We had to take a $40,000 price haircut.\u201d It\u2019s like, \u201cNo you didn\u2019t, knucklehead. You sold it for 10 grand still over what it was worth.<\/p>\n
Jamil:
Yeah. People are always like, \u201cI\u2019m losing money.\u201d It\u2019s like, \u201cNo, you\u2019re not. You just made all this money. You just made slightly less than your dream pie in the sky amount that you were going to ask for was going to make you.<\/p>\n
Pace:
I just think the rocket boosters are just slowing down. I still think that we\u2019ve got a lot of growth. I think this is the greatest time to get into real estate personally, not just creative finance, but other stuff. I love the market. Somebody comes to me the other day, Dave, and they give me this alternative real estate investment, or not real estate investment, a different type of investment. I go, \u201cDude, all day long, the only thing I will ever invest my money in is real estate,\u201d and I\u2019m not wasting my time and energy anywhere else. It\u2019s the safest, best, and this market, I\u2019m excited about it.<\/p>\n
Dave:
All right. I love it, and just to continue your analogy there, it\u2019s like you turn it down from 75 to 68, 68\u2019s still pretty warm, you know? It\u2019s like it\u2019s not-<\/p>\n
Pace:
Yeah.<\/p>\n
Dave:
\u2026 like it\u2019s crashing. It\u2019s not like it\u2019s going to 32 degrees, and I completely agree with you. I think cooling is good. It\u2019s good for everyone. It\u2019s good for home buyers, it\u2019s good for home sellers, it\u2019s good for investors. I know there\u2019s a lot of headlines out there, people are freaking out, but take it from Pace, Jamil. These guys are doing just dozens of deals every single week or every single month, and if they\u2019re investing, it should give the rest of us who aren\u2019t as active a lot of confidence and perspective about how to take advantage of this market.<\/p>\n
Pace:
Love it.<\/p>\n
Dave:
Pace, thank you so much for being here. I know you have so many different social medias and things, but if people want to learn more from you or connect with you, where should they do that?<\/p>\n
Pace:
Go to YouTube and type in \u201cBiggerPockets Pace Morby.\u201d Go watch my BiggerPockets episode that I was interviewed last November. It\u2019s a very, very popular episode.<\/p>\n
Dave:
I listen to it. It was extremely good, and you really get into like the details of how to pull these strategies off, so that definitely\u2026 listen to that. I should have asked you this off the air, but you\u2019re writing a book for BiggerPockets?<\/p>\n
Pace:
Yeah, we are. We\u2019re currently in the first round of editing right now. They\u2019re cleaning up all my foul language and making it nice.<\/p>\n
Dave:
Nice. We got two shameless book plugs into this podcast episode, which is great. Jamil, we\u2019re going to have to get you to write one next.<\/p>\n
Jamil:
I\u2019m in the process.<\/p>\n
Dave:
Oh, really? Excellent.<\/p>\n
Jamil:
Yeah, The BiggerPockets First Wholesaling Book.<\/p>\n
Dave:
Ooh, yeah.<\/p>\n
Pace:
All right.<\/p>\n
Jamil:
Yes, yes.<\/p>\n
Dave:
We should start a little book club here. We\u2019re all BiggerPockets authors now. All right. Well, Pace, Jamil, thank you guys both for being here. We really appreciate it.
Man, Jamil, that was awesome. Man, you get to listen to Pace talk every day, I guess, but, man, he\u2019s-<\/p>\n
Jamil:
All the time, man.<\/p>\n
Dave:
\u2026 got incredible stories and he\u2019s such a good storyteller. It is so fascinating to listen to him, and just one of the most unique approaches to real estate that I\u2019ve ever heard.<\/p>\n
Jamil:
Honest to God, and really guys, if you did not pick up a million dollars worth of game in this episode, listen again.<\/p>\n
Dave:
Dude, I was just sitting here the whole time thinking like, \u201cHow do I get a sub-to deal? I got to start thinking about-<\/p>\n
Jamil:
That\u2019s it.<\/p>\n
Dave:
\u2026 \u201cseller financing.\u201d It\u2019s inspiring, honestly.<\/p>\n
Jamil:
The best. He\u2019s the best. Love him.<\/p>\n
Dave:
It\u2019s great, and I loved hearing the story of how you guys met. You know, you guys are such a duo. I was envisioning you had this like meet cute one time where you\u2019re competing over a wholesale deal and your eyes locked and it was love-<\/p>\n
Jamil:
Oh, it was-<\/p>\n
Dave:
\u2026 at first sight, but-<\/p>\n
Jamil:
\u2026 hearts and all the things.<\/p>\n
Dave:
Yeah, yeah, exactly. The romantic music started playing in the background, but-<\/p>\n
Jamil:
It\u2019s truly one of those friendships that\u2019s so easy for me. I love traveling around the country with him. I\u2019m godfather to his two daughters. You know, like-<\/p>\n
Dave:
Wow.<\/p>\n
Jamil:
\u2026 it\u2019s\u2026 This is a real friendship, and it\u2019s a friendship of my life. There\u2019s nobody in the world that I\u2019d rather be doing this with.<\/p>\n
Dave:
Dude, I love hearing that because we talk, obviously, about economics and making money and all of this stuff here, but you want to have fun with your life. You want real estate investing not to be stressful or to this thing that you\u2019re always worried about. You want us to have a good time, and I think you and Pace are such a good model of what a good business partnership\/friendship can be and something we all-<\/p>\n
Jamil:
Or-<\/p>\n
Dave:
\u2026 probably aspire to.<\/p>\n
Jamil:
\u2026 business competition because-<\/p>\n
Dave:
I know, it\u2019s so crazy.<\/p>\n
Jamil:
\u2026 we compete so much. You know, we\u2019re really not partners. We really compete. It\u2019s just like, how do you love the guy you deck?<\/p>\n
Dave:
Yeah, yeah. It is great, and I think it\u2019s a good lesson for people because there\u2019s you and Pace are such a good example of people who share so much information and you\u2019re not afraid of competition. You\u2019re not-<\/p>\n
Jamil:
No.<\/p>\n
Dave:
\u2026 withholding information or talking about your failures or successes because you\u2019re worried someone\u2019s going to compete with you. You can obviously\u2026 You gain more, you learn more by engaging with your competition and just engaging with the community in general, just like being a part of the larger real estate investment community has so much to offer. Thank you, everyone, for listening. We\u2019ll see you all next time.
On the Market is created by me, Dave Meyer, and Kailyn Bennett. Produced by Kailyn Bennett, editing by Joel Esparza and Onyx Media, copywriting by Nate Weintraub, and a very special thanks to the entire BiggerPockets team. The content on the show On the Market are opinions only. All listeners should independently verify data points, opinions, and investment strategies.<\/p>\n
Speaker 4:
Come on.<\/p>\n
\u00a0<\/p>\n<\/div>\n
Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n
\n
Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Subject to is a strategy that most real estate investors aren\u2019t aware of. It\u2019s often done to buy deals with no money down, surprisingly low interest rates, and without closing costs or any other upfront fees. It sounds almost too good to be true until you understand how subject to works. For the past two […]<\/p>\n","protected":false},"author":5,"featured_media":3589,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"fifu_image_url":"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/OTM_29_YT_.jpg","fifu_image_alt":"","footnotes":""},"categories":[9],"tags":[],"class_list":["post-3588","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"_links":{"self":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/3588","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/comments?post=3588"}],"version-history":[{"count":1,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/3588\/revisions"}],"predecessor-version":[{"id":3590,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/3588\/revisions\/3590"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/media\/3589"}],"wp:attachment":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/media?parent=3588"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/categories?post=3588"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/tags?post=3588"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}