The Untold Story Behind a $300 Million Real Estate Empire
Pace Morby stands as a towering figure when it comes to creative real estate investing. Despite having no money or experience, he managed to amass a $300 million portfolio in just a few short years.
So how did he do it?
Pace reveals his strategies in a tell-all YouTube video. Through unconventional financing methods and leveraging other people’s money, he built an empire starting from nothing.
His story serves as inspiration for anyone wanting to succeed in real estate without rich parents or perfect credit. Although Pace made it look easy, his journey involved huge risks, setbacks, and lessons learned.
Let’s dive into the key insights from Pace’s experience when it comes to:
- His Early Challenges
- The Real Estate Conditions When He Started
- Creative Financing Strategies
- Building a Real Estate Portfolio
- Managing Risks
- The Importance of Mentorship and Education
The Early Obstacles Facing Pace
Pace Morby grew up without wealth or connections. He reveals the difficulties of his upbringing, grounded by his parents and even robbed as a teenager.
Lacking support or stability at home, Pace looked for opportunities to better his situation. He recognized the need to develop business skills and emotional intelligence from an early age.
When Pace entered the real estate arena in the early 2000s, the market posed major hurdles for new investors:
- Median Home Prices Increased Over 50% From 2000-2005
- Interest Rates on Mortgages Hit 8% By 2006
- Approval Rates for Loans Tightened Following 2008 Financial Crisis
Pace lacked the credit record or financial resources to buy properties in this environment. He realized he would need to pave his own path.
Let‘s examine the creative strategies he used to overcome these obstacles.
Creative Financing Strategies
When Pace first started, he didn’t have access to traditional bank loans or mortgages. He realized quickly that to buy real estate, he would need to get creative.
Some of his go-to strategies included:
Taking Over Existing Mortgages
Instead of applying for financing, Pace would find homeowners already with a mortgage. He offered to take over their remaining payments and buy the property. This allowed him to skip lengthy loan applications.
According to Pace: “Buyers can take over existing mortgages without having to apply or meet traditional loan requirements, bypassing the need for bank balances, tax returns, and job history.”
Seller Financing
With seller financing, the existing homeowner carries the mortgage instead of a bank. Pace simply needed to put down a percentage of the purchase price. He then repaid the seller in installments with interest.
By using seller financing, he states: “I bought 300 single-family homes and 1500 multi-family doors using creative finance strategies, proving that unconventional methods can lead to massive success in real estate.”
Avoiding Financial Requirements
Pace reveals that through over 700 creative finance deals, not once has he supplied a credit check, job history or tax returns. He focuses solely on the numbers and performance of the property itself.
As Pace puts it: “I care about the debt that comes with it and the tax benefits that I need to pay zero dollars in tax.”
Let‘s break down the math behind a real example:
- Purchase Price: $150,000
- Down Payment: $15,000 (10%)
- Financed Amount: $135,000 @ 8% interest
- Monthly Mortgage Payment: $970
- Monthly Rent Collected: $1500
- Cash Flow = $530/month
In this deal, Pace leveraged 90% financing requiring just 10% down. Even with no cash reserves on hand, he could partner with private lenders seeking fixed returns.
By maintaining a positive cash flow, Pace could pay down the debt and accumulate equity over time. Within two years, he would raise rents to enhance his margins further.
Rinse and repeat across 300 homes financed creatively, and Pace built himself quite the portfolio!
Let’s examine how those small deals eventually compounded into something massive.
Building a Real Estate Empire
Armed with creative strategies, Pace set about building his portfolio. He started small, acquiring single family homes. But he quickly shifted to much larger apartment complexes and commercial buildings.
Let’s look at some mind-blowing numbers from Pace’s journey:
Within a few years, he bought:
- 300 single family homes
- 1500 multi-family units
- A 43 unit apartment complex
- A 30 unit apartment complex
- A 50 unit apartment complex
- A 109 unit apartment complex
- A 138 unit apartment complex
- A 256 unit apartment complex
The common theme? Not a penny came out of Pace’s own pocket. By mastering the art of leverage, he controlled over $300 million in real estate without any personal loans or mortgages.
Now that’s creative financing at work!
According to Pace: “Everybody I know that‘s worth a lot of money…they have to use leverage. Leverage is powerful and everybody wealthy uses leverage.”
He focused relentlessly on cash flow, debt paydown and tax optimization. Instead of getting caught up in home prices or appreciation, he cared only about the numbers.
Pace reveals that: “What‘s cool about a mortgage is that two years later you‘re going to raise your rents…so you‘re going to continue to cash flow more and more and more and it compounds.”
Managing Risks
However, Pace‘s rapid growth did not come without risks. He had to overcome issues like:
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Non-Performing Properties – Pace mitigated these through strategies like wholesaling to fix-and-flip investors or offering cash-for-keys to problematic tenants.
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Avoiding Due on Sale Clauses – He navigated this by using lease options, subject to, and wrapped financing structures. Pace also transferred deeds and negotiated with banks.
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Ensuring Stable Occupancy – By screening tenants thoroughly upfront, Pace optimized tenant quality and retention. He also favored long-term 1-2 year rental agreements.
By being proactive, Pace managed risks while fueling growth. His business intelligence software and property management systems enabled data-driven decisions too.
The Power of Education and Mentorship
Pace gives tremendous credit to his mentors for his success. But he also pays it forward, educating new investors on unconventional strategies.
In fact, 70% of Pace’s deals come directly from people he previously taught. He will often wholesale or assign multi-million dollar properties to his former students.
Let‘s look at a real example:
- Purchase Price: $3.2 million
- Pace Fee: $25,000
- Total Profit: $25,000
Despite minimal work required, Pace can make $25,000 on a single wholesale deal by leveraging his network. This transaction benefited both the seller and buyer enormously as well.
Here‘s what one student had to say:
“Pace’s refusal to manipulate the seller into a lower price demonstrated his integrity and genuine desire to help…By passing on his knowledge, he enabled me to acquire a portfolio of over 50 rental units.” – John S.
And John is just one of many success stories. Pace believes in raising up other investors rather than hoarding secrets. This abundance and service mentality fuels his continued impact.
Despite his enormous success, Pace remains grounded: “I have nine businesses and each one has an operator partner who balances out my aggressive approach with a more cautious mindset.”
His goal is to empower others through education. Pace aims for his partners to each be worth $20 million someday thanks to the opportunities he provides.
As Pace says: "I bought a house for $150,000 and made $25,000 for basically three hours worth of work."
By mentoring hundreds of students on creative finance strategies, Pace has transformed fortunes and revitalized communities. His passion for service continues driving positive change.
Key Takeaways
If we step back, what are the key lessons from Pace Morby’s story when it comes to real estate success?
Here are the core principles:
- Creative finance strategies bypass cash and credit barriers to entry
- Prioritize cash flow, debt reduction, and tax optimization
- Leverage other people’s money via seller financing and assumption of existing mortgages
- Wholesale or assign deals to students you’ve mentored
- Mitigate risks proactively
- Uphold integrity and win-win collaborative deals
- Pass on knowledge to empower others
Pace Morby proves that with perseverance and unconventional thinking, anyone can amass a real estate fortune. Despite humble beginnings, he carved out an inspiring wealth-creation and service legacy.
Now it’s your turn. Will you stick to traditional methods? Or forge your own creative path to financial freedom? The choice is yours.
Over to you!