Creative Finance Mastery: Pace Morby's Journey, SubTo, and Stories of Life-Changing Deals

0:01Boom! Shake the room, Fire Nation. JLD here and welcome to Entrepreneurs on Fire. brought to you by High Level, the all-in-one sales and marketing platform. Today, we'll be breaking down creative finance mastery, Pace Morby's journey, sub two, and stories of life-changing deals. To drop these value bombs, I am brought to Pace Morby and EO Fire Studios. He's an author, investor, and community builder, and co-host of A &E's top performing show, Triple Digit Flip. Pace has acquired over$500 million in assets without cash, credit, or previous credentials of his own through creative financing, and now teaches and inspires entrepreneurs all over the world to make an impact on their lives and the lives of those around him.

0:43Today, we'll talk about why creative finance matters. We'll talk about mindsets and overcoming challenges. We'll also talk about actionable advice for those who are building wealth today and owe so much more. And a big thank you for sponsoring today's episode goes to Pace and our sponsors. Are you ready for the ultimate all-in-one platform for entrepreneurs, marketers, coaches, and agencies. Build funnels, automate follow-ups, manage clients, and even white label your own software. Say hello to our featured partner, HighLevel, and visit highlevelfire.com to start your free trial today. Over 43 ,000 businesses have future-proofed their business with NetSuite by Oracle, the number one AI cloud ERP, bringing accounting, financial management, inventory and HR into one fluid platform.

1:32Download the CFO's Guide to AI and Machine Learning today at netsuite.com slash fire. Pace, say what's up to Fire Nation and share something that you believe about becoming successful that most people disagree with. What's up, guys? Pace Morby here. Thank you for having me. Number one thing I would say that people disagree with and they fight against is in order for me to have grown to where I currently am, I had to eliminate a lot of people from my life, including very close family members, immediate brothers and sisters. And I don't mean remove as in like, I'm never going to talk to you again, but I just stopped spending time with them, stopped going to football, viewing parties, you know, those types of things.

2:16The second I stopped spending time with my family and other people I grew up with, the income and the impact in my life went up 20x. I mean, that's one thing that I really try to hammer into Fire Nation Pace. I end literally every single episode of Entrepreneurs on Fire by saying, you are the average of the five people you spend the most time with. It's a Jim Rohn quote, and I love it for that exact reason that you're talking about. It's not about just completely cutting people out of your life forever, but really being intentional with who you're spending most of your time with is so key. And I mean, it kind of shows pace.

2:55You went from literally swinging hammers to structuring these million dollar deals. What was the turning point that launched you into the world of creative finance? Turning point was that during my 20s, I was swinging a hammer, built a big business. I was working for companies like Zillow, Offerpad, Open Door, big, big iBuyers, we call them. They're buying tens of thousands of houses all over the country. And I was their number one contractor. So I was making money, but I wasn't making an impact. And I just felt like the only answer to my growth was working harder. And I was already working seven days a week.

3:31I called my father one day and I said, hey, dad, who was also a contractor, which is why I fell into being a contractor. Dad, what advice do you have for me? I'm wanting to make more money. I'm wanting to do more. What did you do when you're in my situation. And he said, well, Pace, sometimes you just got to work a weekend or two to catch up. And I said, dad, I'm already working six days a week. And he said, well, you know, my solution was skipping out on church or skipping out on this and spending half day Sunday working as well. And I knew right there at age of 30 that I had taken my dad's advice as far as it could go.

4:07And I asked the universe through prayer. I said, universe, please give me a new mentor. Give me somebody that I can listen to. And I wish this happened at 21, but I was so stuck in, you know, paying attention to my parents and other people I was hanging out with that I thought I was winning. And the reality was I was the smartest guy in the room. I was the guy making the most money in the rooms that I was in. And I didn't really realize until the universe delivered a lady to me. Her name was Bethany. I was 30 years old. She hires me at her, as her client. She, I'm sorry, as her contractor, she was my client and she was flipping houses, about a hundred houses a year.

4:39And I went and flipped a house for her as her contractor with my crews, did one house. She hired me for a second. And then she hired me for a third. And on the third house, she says, Pace, you are anything but a contractor. I'm like, what do you mean, Bethany? And she says, well, you show up on time, you communicate, and you hit budget. You are not a contractor. And I said, okay, well, what should I be doing instead? And she says, well, to be honest with you, I'm going to hit you with some really hard facts. You are a slave to my business. You think you own your business, but if my business doesn't buy houses and I'm not flipping, you don't have work.

5:17That's not really good security. And she said, you are a simple Google search away from being replaced. You own nothing. And it hurt. It was like a punch to the gut. And right there, in just immediate, amazing fashion, just like Bethany always did for me for the first year I worked with her, she pulled out my phone and she said, I'm going to show you how to become a real estate investor. I'm going to show you right here and now how to find deals for people like me. And that was the big turning point because I think real estate scared me. I thought I had to get a license. I had to have good credit.

5:48I had to have a ton of cash and I had to have a ton of time. And the reality is she shifted my paradigm. She says, just find deals for people like me. So then you don't have to have the money. You don't have to have the license. You don't have to have the experience. You don't have to have any risk. and within two weeks, I made$25 ,000 finding her a deal. And in my first year of working with Bethany, I made about$700 ,000, literally just bird dogging deals for her. Bird dogging. Yeah. I was just bird dogging deals for her. And it was so great because I watched her do all of these houses. Now, the sad thing is when I got my first deal, which that's a story in and of itself, but we probably don't have time for that today.

6:26I was so excited when I got this deal for Bethany because I just made$25 ,000 for about three hours worth of work. And she fires me as a contractor right there on the spot. Because I said, she goes, what was the best part about this deal for you? And I said, oh my gosh, I'm so excited you bought another house so I can do the renovation. And she said, isn't that amazing that your mindset is you just learned how to find real estate transactions, make 25 grand in three hours worth of work with no license, and you're excited to swing a hammer again? Like, what the heck is wrong with you? You're fired.

7:04You are fired from being my contractor from here on out. And that was the love I really needed and the environment that I needed to be in was being around somebody that really called me out on my crap and what I call my BS, my belief systems. And again, at that time, even though I just made 25 grand for bringing value to a homeowner that nobody else could, I still thought the value I had in my life was exchanging my time for money. And so at that point, that's where everything changed. And I got into real estate investing. Well, and I want to change into creative finance and really focus on that topic, because I think it's something that Fire Nation could really sink its teeth into.

7:42So break it down for us, Pace. What exactly is creative finance? And why should every entrepreneur have it in their wealth building toolbox? This is so great. So today I am actually meeting with a seller of a motor coach. It has nothing to do with real estate, but this will help you guys understand the story. So I'm going on 122 day road trip across the country to help a hundred families get into house housing through creative finance. I'm going on this amazing road trip starting October, going for about four months. And I'm looking at buying this big motor coach. And the way I buy everything is with creative finance.

8:21And I'll tell you what that means here in just a second. So we go on Craigslist and we look at all these motor coaches. I'm a little bit bougie now. I want something nice. So I buy, I'm looking at price ranges around 350 to$500 ,000 price ranges of these 40 foot like tour buses. Think like ACDC Metallica's driving down the road in one of these tour buses. That's what I want to buy. So we reach out. I get ahold of a guy named Eric yesterday. And I see this Griffin 40 foot massive motor coach, 2024, just kick-ass unbelievable vehicle. And he says, yeah, it's for sale still. I go, great. How much do you owe?

9:03And he says, what does that have to do with anything? I said, well, I'd like to just take over your payments if that's okay with you. And instead of me coming in with$350 ,000 for this RV, B, I'd like to just take over your payments because if I go get a loan for this, that bank makes a bunch of money and then that bank charges me fees and it takes three months and it does all this stuff or even 30 days. I'd rather just give you the money or give your existing bank loan the money. And he says, well, actually, I bought it for$500 ,000 a year ago. I got sick. This is where pain comes in. I got sick.

9:40My wife and I can't travel anymore. and I realized I put all these features and upgrades into this thing that made it worth $500 ,000 when I bought it, but it's really closer to worth like$370 ,000. The problem is it's not travel season anymore. The summer's kind of ending and I can't get any buyers. And I said, what do you owe? He says, I owe$350 ,000. I go, oh, that's exactly what you are selling it for. He goes, exactly. I just want to get out of the deal. I want to just not have the payment anymore. And I said, Eric, let me come down and meet with you. I will take over those payments and I will avoid you having to even reduce the price of that motor coach any further.

10:17And he says, you can take over the payments on this thing. Is that really that simple? I go, oh my gosh, it's so simple. Let me walk you through it today. So today at three o 'clock, I'm meeting this guy, Eric, to take over a$350 ,000 motor coach. Now what's beautiful is just like I can take over the payments on a vehicle. I can take over the payments on a house. I can take over the payments on an RV park or a mobile home park, or even a business. We bought a machine shop last year where I literally just took over the SBA loan, no credit check, no bank approvals, no money out of my pocket. And so whatever it is that you want to buy, car washes, businesses, apartment buildings, you can buy by taking over people's payments.

10:56That process is called buying properties or assets using subject to, or what I call sub two. In Fire Nation, actually sub two is something we're going to be diving even deeper into when And you're kind of wrapping your head around what exactly is creative financing. And is it creative to just take over somebody's payments? Well, yes. When nobody's thinking that that's even possible, of course it is for all the reasons that Pace was talking about. So we have a lot more to talk about around this topic when we get back from thanking our sponsors. Okay, let's talk about a platform that's completely changing how entrepreneurs are running their business.

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13:56Pace, we're back. And you mentioned sub two before the break. And I want to dive a little bit deeper into this because sub two has exploded into one of the most passionate real estate communities out there. What were the key moves that took it from just idea to a literal empire? Great question. So I was the first person ever thought about building a community. This is back 2019. In fact, Russell Brunson, shout out to him. He just made an Instagram post about me yesterday saying. Oh, cool. Yeah, really, really cool. And we've been friends for about four years. But the way we became friends is he calls me up and he says, I don't know what the heck you're doing, but you are killing everybody else in this like coaching mentorship space.

14:38And I said, well, I don't think I'm a coach and I don't think I'm a mentor. And he goes, well, what are you doing? And I said, I built a community where I actually hang out with and do deals with these people. And he says, can you come speak at Funnel Hacking Live and tell me what the heck that even means? And so I said, yes. And I told him the story of in 2000 and basically with Bethany, right? Bethany helped me by holding my hand. So I said, in 2018, my Instagram following had gotten so significant here locally in Arizona that I started doing these little ride-alongs. I would tell people, hey, guys, Saturday morning, come jump in my car, and I will literally just show you what the business looks like.

15:14And I saw the people that were watching my YouTube, my Instagram, my TikTok, whatever it was, their success rate was 0.01%. Like almost nobody succeeds by just watching content. And I then started comparing the people that went on ride-alongs with me. They were physically in my car. They went to the appointments with me. They saw the houses. They watched me raise money. They watched me go do the nitty gritty. And the success rate was like 100%, Like quite literally 100 % of people go, oh my gosh, I got it now. You showed me how to do the thing. I now know how to do the thing. And so I said, okay, well, if that's going to guarantee people's success is actually showing them how to do it, why don't I build a community where everybody has a diverse set of skills, diverse set of assets, and a diverse set of buy boxes all over the country.

16:03And I started traveling the country. I literally just got in a minivan with my best friend and we started going from city to city to city, shaking hands, kissing babies, walking in appointments, showing people how to do this. Heck, I learned a lot because I would go to cities like Harrisburg, Pennsylvania, which I've never been to before, where most of the houses are 200 years old and real estate was different there. And so I went out and I actually showed people how to do the business in person. And I memorized people's names, their spouses' names, their kids met my kids. And we built a real community.

16:35And that has taken seven years to build a community of 31 ,000 people in my paid community. And when I go to meetups now, I just put something on my Instagram and I go, Hey guys, meet up tomorrow in whatever city. And the average amount of people that show up now are 512 people is the average amount of people show up in 24 hours. It's insane. And so I just learned and I got really lucky. I honestly did not know that the puck was moving towards community five, six, seven, eight years ago. Now with AI and all of the things that are happening in the world, people are craving actual human connection and saying, man, ChatGPT is not going to get this real estate deal done for me.

17:14ChatGPT is not going to structure this deal and call this seller for me. ChatGPT is not going to actually manage the property and deal with the tenants for me. I got to figure this out with real life people. And so what I did luckily is I built a community well before people knew they needed community. And I think I just had the timing accidentally wrong. Fire Nation, I hope you're taking notes here because this is how you build a community the right way. And Pace, I want to talk about mindset. I want to talk about overcoming challenges. Let's get concise here because we still have a few more things I want to get to as well.

17:47But every single journey has its lows. How the heck did you push through those tough moments to build the mindset that you now have that just thrives under pressure? Oh, great question. So I came from a family of 12 kids. And so I didn't have coddling. I don't think my mom and my dad had coddling time when you have 12 kids, you know? And so I constantly tell my wife who grew up in a family of two kids, don't, when our kids fall down, do not pick them up. Tell them to stand up. There's a big difference and you're training them from a young age. Do not just pick them up every time they fall. Tell them to stand up.

18:23And I had this client of mine when I was a contractor in 2018, this client of mine owed me about$1.2 million. And he files bankruptcy and I lose all the money he owed me. What I was doing is I really believed in what he was doing. Turns out he was running a Ponzi scheme and I would go and do his renovations and then he would sell the house and I would get paid when he sold the house. So I was basically his banker and his contractor. Well, I got really far ahead of him. 1.2,$1.3 million to the point where it's like, why wouldn't you file bankruptcy on me? So he did. He filed bankruptcy on me. And the day I got that letter was the day that my daughter, my first biological daughter was born, Corbin.

19:10And my wife calls me. I'm literally opening the letter, reading this bankruptcy letter. This guy's making me lose every dollar I had. Basically, I had all of it tied up in him. And I'm reading this letter. My wife sends me a text. She goes, Hey, my water just broke. Can you meet me at the hospital? Should have been the happiest day of your life. And it ended up being the happiest day of my life. John, what I ended up doing is I said, on the drive to the hospital, I looked at this letter that's in the passenger seat and I could feel the weight of it. Like an elephant was sitting in my, my car with me.

19:42Great visual. And I just said, what has to be true for this to be the best day of my life? Wow. Wow. And I wrote down as my wife was going through, you know, she was sleeping at night and nursing the baby. I was writing down what had to be true in order for that bankruptcy letter to be the best thing ever. And here's what happened. I wrote down at the top of that, I was doing creative finance at the time and I was doing real estate deals also. And I said, I have to be known as the guy that can come back from the hardest, like the hardest hit ever only using creative finance. I can go build a half a billion dollar portfolio, not using a bank, not using cash.

20:24Cause guess what? All my cash is gone. Right. And I just wrote down all of these things and I said, all right, this is what has to be true. Let's get to work. And it kind of helped that my back was up against the wall. As we walked out of the hospital two days later and I had to pay for my daughter, I had to put her on a credit card because I had no cash. That's where I was. That's how I started. And now today, since then, seven years later, I have 2000 doors in my portfolio and half a billion dollars in real estate, not using my credit or my own money one time. Well, I'm taking notes over here as a, as a new father of one, I have a 21 month old son and it's awesome.

21:01I gotta be honest. It's great. Um, but the reality is my wife's a stay at home mom. Now I work from home. So we essentially are 2v1 on this 21-month-old, and we've got to work hard not to do those magic words that you talked about and not coddle. You know, I want this kid to be getting up on his own. I want him, if you've ever read the book Anti-Fragile, I think it's a fantastic book, and I really want my son, Beau, to grow up anti-fragile. So I'm really looking to instill some of those things and hearing your stories, one of 12, insane. I love that. Now, I want to end with a bane because you have a book coming up.

21:39It's releasing, you know, we're looking at the December timeframe right now. And man, that story of the woman who went from homeless to closing her first deal, let's just say that's powerful. So a little teaser, Fire Nation. What do you hope readers take away from the transformation that you share within this book? This is such a great question because the number one thing I'm getting as I'm sharing the story of this lady, her name is Maddie, is that people go, oh, well, she's homeless. I'm not homeless. so this doesn't apply to me. And I'm like, no, no, no. The reason why this story applies to you is because she is homeless.

22:13She has all the excuses in the book, just like you are using. And so I, at the very beginning of this book, this is January of this year, I wrote down all of the top eight reasons why people fail, right? Mindset, lack of money, lack of, anyway, I have eight of them. I call them the hateful eight. And people really struggle with these eight items, right? Injury, setbacks, what have you. And I decided that I was going to write a book by only allowing my characters to write the chapters for me, meaning I'm going to give you the education, Miss Homeless Lady, her name's Maddie. You are going to fill out the rest of the chapters of this book because your activity and your action is going to fill out this book.

22:58And if you fail, the book goes away. And if you stop, the book also stops. I'm not going to write this book, your activities are. And I got really lucky in January of this year, I was working with the attorney general of Utah. His name is Sean Reyes. And he says, come up to Utah. I want you to help us out with this homeless issue that we have downtown. I go, no problem. And it just didn't work out. He was, you know, thinking about rerunning and all sorts of things. We just had strife in this situation. I said, all right, well, I guess I'm going to wait for the universe to just give me this sign to go find these forgotten people that I can write a book about.

23:34And then I get an email from a lady named Maddie in April of this year. So just a matter of like three, four, five months ago. And she says, I live a mile away from you in a homeless shelter. My husband died at 55 years old. I, when I was 55 years old and I've been on the streets ever since. And I said, how old are you? She says, I'm 59. Like, wow, you've been on the streets for four years. She says, yes, I come from a socioeconomic background that has no support system. I grew up in a city where it's just the slums and I grew up in the ghetto. My husband was our sole provider. I raised three kids.

24:07I never learned how to make any money. I never got a license or any sort of certification that I can go out and get a good job. And the only thing I can do now is drive Uber and it just doesn't pay the rent. And what happened is at age 55, her husband dies. She moves to Arizona, which is where I live. And a couple of bad things happened to her. She has to sell her car, sell some things. And she says, you know what? Maybe I'll just sleep on a park bench tonight and I'll figure it out tomorrow. Well, that tomorrow turns into four years until she sends me an email. And guys, she has every reason to not be successful.

24:41Every reason you can imagine to not be successful. And so I used her story as the first couple of chapters in the book. And all I did was show her how to fish. I did not do the work for her. I said, let me show you how to do this and let's document your journey. And so this book is documenting a journey of somebody who has every excuse in the book to not get into real estate, to not get, you know, making money within a couple of days. And it took her 20 days to get her first check, sleeping on a cot in an all-woman shelter with a broken phone that you could barely even see the screen. And she gets her first check.