The Mello Millionaire with Tommy Mello - Making Millions in Real Estate, No Money Down with Pace Morby

Episode Date: June 6, 2025

Pace Morby is a real estate investor, educator, and media personality known for pioneering creative finance strategies like Subject-To and seller financing. Starting as a general contractor, he transitioned into real estate investing, amassing a portfolio valued at over $450 million and acquiring thousands of properties nationwide without relying on traditional bank financing. He co-founded SubTo, a real estate education community that teaches investors how to leverage creative financing techniques to build wealth. Timestamps:00:00 Creative Finance02:57 The Journey from Contractor to Investor05:50 Non-traditional Real Estate Deals08:47 The Future of Real Estate11:59 Advice for New Investors15:08 Teaching Financial Responsibility to the Next Generation18:06 Final ThoughtsMeet me at Home Service Freedom 2025 ⟶ https://homeservicefreedom.com/Check Out My Social Media:Tiktok  ⟶ https://www.tiktok.com/@officialtommymelloInstagram ⟶ https://www.instagram.com/officialtommymello/Facebook ⟶https://www.facebook.com/thomasmello/My other podcast:The Home Service Expert ⟶ https://open.spotify.com/show/4WHQ3ldGThHsP1cfzNF33GLearn more about Pace:Website ⟶ http://pacemorby.com/TopicsCreative Finance, Real Estate, Seller Financing, Investing, Business Strategy, Building Wealth, Capitals Gains Tax, Home Services, Mentorship, Success, Growth, Transactions, Lucrative Opportunities, Diversification

So I'm in a very interesting niche in real estate, a niche that makes a tremendous amount of money, doesn't require banks, doesn't require credit, literally none of that. I'm like, let me stay in my lane because not only do I want to be good at it, I want to kick everybody's ass at my one thing. Relentless, resourceful, revolutionary. Our guest today is changing the entire game of real estate. Hey guys, how can you get started in real estate? From contractor to multimillionaire investor.

It's like the golden age of, creative finance. Pace Moore be mastered the art of buying properties with little to no money down. We're going to play a game. How many different ways can we find a deal? He's the creative finance king, structuring deals that most people don't even know exist. He hosts a top A&E show. Triple digit flip. He's back. He's changing the way people think about wealth. I don't have to look for deals when I teach people how to do this. As the founder of Sub 2 Star Virtual and Kigley, He's built a network that empowers investors worldwide. With over 1,800 properties in his portfolio,

a community of 10,000 students, and a digital following of over a million. And I have with me in the studio the great and powerful, Pace Morby. He's proven that traditional barriers to real estate are just old rules waiting to be broken. I've never made a dollar in my life without another human being. Not only has he completed over 7,000 home renovations, but he's also built over 300 new homes.

Case Morby. He is an author, investor, founder of the Subtube community. This conversation will change the way you see money, real estate, and what kinds of deals you can close all on your own. Your real estate story is really defined by people who went out of their way to help you succeed. What were the key things to help you create this mega wealth? One person I was paying $500 an hour or two for mentorship, and at the time as a blue-collar guy, I thought that was a waste of my money. But I had somebody who was like, if you don't go hire this guy, I'm going to leave you, I'm going to get out of your life. And he's now the head mindset coach for the Arizona Cardinals. His name is John Bome.

And when I pulled up to Starbucks, which is what his office was, I was like, you've got to be freaking joking me. Somebody's charged me $500 an hour to meet him at Starbucks. Best $500 an hour ever spent in my entire life. I would have paid $20,000 an hour how good this guy was. He shifted my mind. He beat me up, did all these things. He forced me to hire my first people.

Because of that, I built a team. That team allowed me to get hired by Zillow, Open Door, OfferPad. And I built a company who were doing $25 million. a year in business. And then the second person was a lady named Bethany. So 12 years ago, I had a client that hired me. What I was doing as a contractor is these big hedge funds like Black Rock, invitation homes would call me.

And they would say, Pace, you're the flipper. Like, you're the hedge fund flipper guy. We want you to do 50 houses for us every single month. And I said, no problem. I scaled my business. And then one day this lady, what does that mean? You're just going in there doing the toilet, doing the carpet, changing the stuff out.

Yeah, like our average ticket was $50,000 a house. It was like a really quick turn. They'd buy the house. They'd turn it, put a renter into it. And we just had to go as fast as possible, mostly builder grade type of stuff. Okay. So I got into some custom things. I built 700 homes.

I decided that wasn't my lane. My lane was going for the hedge funds and the big companies. I'd have tremendous amount of volume. And then this lady Bethany calls me. She says, hey, you got a great reputation. I'm a we buy ugly houses person. I fix and flip houses. You want to come work for me?

And I go, sure, I'll come to do some mess. for you. I did three houses for her. And on the third house, she comes to me and says, you're not a contractor. I said, why? She goes, because you show up on time, you do your job, and you communicate. You're not a contractor. On my third house, she goes, I want to teach you how to get into real estate. I'm like, why, I am in real estate. She goes, no, you're not. You're a slave to my real estate business. You don't own anything. I own it all. She turned me into her bird dog. Oh, gangster. I made more money than I could even imagine not licensed, no education.

I still don't have a license to this day. And I just found deals for her. And I'd make an average of $25,000 per deal. And then she's like, all right, it's time for you to start doing your own deals. It's time for you to start buying your own stuff. I'm like, but what about me finding deals for you? She goes, I'm retiring. And she retired.

And then she sold me her We Buy Ugly Houses business on seller finance. So I'm in a very interesting niche in real estate, a niche that makes a tremendous amount of money, doesn't require banks, doesn't require credit, literally none of that. Yes, exactly. I've been talking, Robert Chedini, you know, the book influence. We were just talking with his top student that coaches us. We were talking about, like, you get to make the calls when you're the one. And you can pay a lot more, but you can call the terms.

Yeah, at the end of the day, like, think about this. If somebody comes to me and says, hey, hey, Pace, this house is worth $100,000. Would you pay a million dollars for it? I'd say, absolutely, if you give me a $1 down payment and a $1 dollar payment every single month for a million months, like all day long. Yeah. Like we bought a $20 million apartment complex down in Tucson for $20 million, no money down, 4% interest. That thing cash flow is $53,000 a month. I don't show up.

I don't manage it. I don't have to do anything with it. So to that effect, I control it. Why? Here's the beautiful thing about seller finance. When a seller sells something, right? They have, let's go to my, the RV park. Sellers name is Eric.

Eric wants $5 million. Why does he want $5 million? Because he wants to be done. In his money, he's like, that's my retirement. If I could take that money, I'm going to pay a capital gain on it, 35%. After that, whatever's left. Here's what's great about seller finance. When I buy it on terms, he doesn't have to pay the capital gains tax.

So not only do you get your full $5 million, I pay you 4% on top of the $5 million, and we get the agents out of the way and I give you an annuity every single freaking month. Hey guys, hopping in here to give a quick definition of seller finance for those of you who aren't familiar with it. Cellar financing. A real estate transaction in form of creative finance where the seller acts as the lender,

allowing the buyer to pay the seller in installments instead of securing a mortgage from the bank. Let's hear a bit more from Pace about this. Good example. I've just been buying a ton of RV parks lately because Blackstone and all these other companies are going after RV parks because it's going to triple over the next 15 years. Affordability is the biggest problem in real estate, right? And it will get way, way, way worse over the next 15 years. The average rent, somebody can rent an

entire space for me. Utilities included, power, water, sewer, everything, rent a space for me for a thousand bucks a month. It's going to be like that for the rest of like five, seven years, right? So I look at those things, those cash flow of 25 grand a month right out of the gate. Right out of the gate. You don't have to do value add to those. You buy them from somebody who's retiring. Why wouldn't I just go buy 100 of them? Yeah.

Why do you need 100? Here's the problem with RV parks. Single family homes, a lot of management. I have 300 of them. Tremendous amount of management. So you don't want to scale this stuff unless you just have massive, massive pockets. Because you have one thing go wrong on a single family home. even if I'm into it no money, no cash, no credit, no nothing, the pool goes bad, it's 30 grand, right?

RV parks are not like that. The problem with RV parks is there's only 15,000 of them in the United States. There's freaking six million of them in single family homes in Phoenix, Arizona. So the opportunity for RV parks is, I can't go buy 5,000 of them. I can't go buy a thousand of them. I can buy maybe one a month. That's about as fast as you can scale in that space. So you've got to diversify. You've got to go mobile home park, RV park, small multifamily if you're going after seller finance. I do an orientation for three and a half hours every single month for the new classes.

And the most thing I talk about is how to use money and how to like perceive money and how you could use money to make more money and how compound interest works and how wealthy people think about money. And like how there's this book, it's Michael McHellow, it's called Profit First. Yeah, great book. So Michael called me up and he's like, I want to do Profit First. first for employees. Yeah. Oh, interesting.

So here's the deal. I was like, I'll be your guinea pig. Bam, send them a big check, six figures. And the concept is it hits your check. Your check hits the bank account. How much you want for your first house? How much you want for that yearly vacation? How much do you want for your kids to wish, whatever that is? And I'm like, but here's the, you got to delete that from your brain that's there.

Yeah. Like so many people use that as a backup. Yeah. But if I can teach them how this works, and then I'm going to start a fund on this next turn that I do, that I'm going to say, guys, continue to give you ownership, but the more you invest, I'm going to be able to buy back equity into this business. And because this business should be worth $20 billion. It's a challenging thing.

I mean, you look at people flooding into the home service businesses like what you were talking about a little bit earlier. I think a lot of that comes from the fact that the baby boomers are all retiring. So you've got about five or six really big influencers that are talking about this. Cody Sanchez, good friend of mine, is doing it. So she's lighting everybody on fire to go buy home services. I don't think most people are equipped to buy home service businesses. I'm like, let me stay in my lane because not only do I want to be good at it,

I want to kick everybody's ass at my one thing. Well, the Ray Kroc once said, when your enemies are drowning, you're hos in their mouth. And people always say, are you greedy? If making the people, my competitors, have to partner with me, and everybody in my family, including this company, who's my family, win big, then yeah, I'll consider myself greedy. Hell yeah.

You have a responsibility to not only do yourself, but also the people that come and make a decision to come work at your company, you better be greedy. So what was it like growing up with 12 kids? My dad grew up with 12 kids. Yeah, so 12 kids, I'm number three. There's things that were instilled in you from your parents.

And for me, my parents taught me how to work my ass off. And if I wanted 20 bucks, I had to work for it. Meanwhile, all my friends were getting cell phones and debit cards. And my parents were like, yeah, we can't afford any of that shit. So you're going to have to go back grocery. So I, you know, got out of early school release and bagged groceries and did donut packing and did everything you could imagine to make sure that I had money to put gas in my car. And that's how I came up.

And that's how I thought it was all normal. Trading my time for money. Trading time for money. Trading time for money. For someone who has zero experience in real estate, three best tips to get them started. Join a team. Get on somebody else's team that's buying real estate. Find somebody that's doing exactly what you want.

If you want to get into RV parks, mobile home parks, apartments, go find somebody like a Brandon Turner, who's doing what he's doing or what I'm doing, just come join the team for three or four months. Within three months, you're like, I got it. I understand it. You can go do your own thing. The cool thing about real estate, it is such low-hanging fruit. Anybody can go do it. You don't have to be licensed to do it. You don't have to have money. And it takes about 90 days for you to truly be trained. That's crazy. It is crazy. I mean, real estate agent. I'm not an agent. Neither is Brandon Turner and some of the people you're friends with. I don't think Ryan Panetta is really an agent or Carlos is an agent. None of them operate that way. They all operate.

I love Sal. I love those guys. But none of them are operating as an agent. So I'm not talking how do I learn how to sell other people's houses on the retail market. I'm learning how do I find an already existing cash flowing asset that the seller wants to retire? The good thing about real estate versus home services. Like you look at like Kyle or Cody, I own home services businesses and I feel like not everybody should own one. I feel the opposite about real estate. I feel like everybody can own real estate because. my real estate does manage itself. They're isolated. My real estate is not, in 15 years, is real estate going to be around? Yes. Home services will be impacted. Not tremendously, but everything else will. I feel like real estate, you buy an RV park. In 30 days, it's managing itself, it's running itself, and you're making 25 or 30,000 bucks a month. So Grant Cardone says he's $4 billion under management. Yeah. That's sound right. Yep. I've, I've spent A lot of time with Grant, his net worth is about $1.4 billion. I think their assets under management is closer to $5 billion.

So here's what happens, though. Correct me if I'm wrong, but he takes a deal fee. A significant deal fee. Not only does he take a deal fee, takes a management fee. Uh-huh. That's normal. Isn't there like a lot of fees that- Here's what Grant does that other syndicators don't do.

Okay, like Brandon Turner would not do this. So he goes and buys something $100 million cash. I don't do that. That's not my model. But this is what he does. He pays it $100 million with his own cash. Turns around, sells it to his investors 30 days later for $130 million. And so he makes $30 million on the rip right out of the gate. So you go do that six times a year. You're making $180 million a year. It's pretty quick. You can become a billionaire doing that. But I go buy an RV park tomorrow. I'm buying one for $1.7 million in Kermit, Texas. It's 100% occupied for the next five years. An oil company

rented it out for the next five years. That thing, that's a lot. $26,000 a month, net, net, net, net, net, net, net, in my pocket after everything, $26,000 a month, I'm not using anybody's money. I don't need investors. So I- What about this crexie thing would stop anybody else? And I'm not looking to do it, but what's stopping someone? A lot.

The first thing that's stopping them is educating them on what the hell capital gains is in the first place. Yeah. Right? So where my big opportunity is, usually, is I go on CREXI, I see RV parks or mobile home parks or whatever, the asset may be commercial, whatever, flex space. And I see a broker not able to sell the property. That's the property I'm going after. I called the seller after they fire the agent, right?

Number one, I'm tracking the lifespan. So it doesn't sell. No, I got it. Most people are not willing to put in any amount of work. I'm tracking the lifespan. We then call the seller, and I have to educate them on capital gains. I educate them on paying them an annuity. seller finance monthly, and I have to then understand their problem.

And I then have to convince them and get my CPA on with their CPA. So a beginner can't go buy an RV park on seller finance. So yeah, so 23% capital gains general. Like if I sold my business today, there's ways to get that number down. There's some cool things that I know about. But ultimately, like if I left it in A1, I'm not paying capital gains. So that comes out. Correct.

So on this property, it sells for $5 million. Let's just say they're going to owe about 1.25. Correct. to Uncle Sam, yeah. So my question for you is, you tell them what? Tell me, explain to me this capital gains. So you're looking for a seller that is in the retirement years.

And they go, what am I going to do with $5 million? I'm in my 70s, I'm in my 80s, whatever. Their kids didn't want the asset. And so what you do is you go, hey, how about I just pay you monthly for the rest of your life? And here's how it works. My CPA, myself, them and their CPA get on a call. My CPA shows them the IRS ruling that shows.

if you take payments instead of taking a lump sum, you, seller, can take other tax write-offs over those years to essentially write off all those gains. So instead of taking a 1.2 million... So give me a good... What's a tax write-off I could use each year? Equipment. A lot of these guys are like farmers

or they own other businesses. They have other depreciable assets. So you're just... You're going against the capital gains over time. Correct. Okay. Yep. So you're...

But how can you do that if you take a $5 million check or for you? you'd have to have a lot of money rolled up in year one however if you do it over 10 years right which is our average i can get rid of their capital gain by showing them where they can do the depreciation it's kind of like if you invest in solar into like a solar farm correct they'll give you a tax credit yep and like that goes all you're doing is with that tax credit is like capital gains let's talk about home services for a second so for me should i go and buy an hvac company a plumbing company or electrical company in my personal opinion i'm a i was a contract for 10 years licensed here, did thousands of homes. I still think that I'm ill-equipped to go and run

one else. I wouldn't do that. You know, I would say this. You might want to be diversified, but I think you're diversified enough in real estate. And quite honestly, like the way I look at it is it's going to take me a lot of work. I got to find operators. It's not said it and forget it. Like, you just said it like the mobile homes. Oh, I have operators. Yeah, but the deal is, dude, it's. But not to your extent. So I have a company in Mesa and we buy companies. Yeah. Okay, and we've been doing this for five years. We just bought a cleaning company last year called The Perfect Clean.

We want to go out and franchise it. You don't just go franchise, by the way. You better have the best SEO. Like, people want a trinky business. People franchise because they don't know how to run the business. Well, this is what happened. So they sold, before we came in and bought half the company, these guys went out and sold the franchise. That franchise said, I want my money back.

These guys came to us and go, we need help. And I'm like, well, we're not a home service business, but let's jump in it. Let's do it. So we clean 800 houses a month here locally and just Mesa, Chandler, Gilbert, etc. And we are just getting to a point. I'm not involved in that business. My operator, Cody runs it. But I'm like, you need somebody that's going to like coach you through this.

You need like a badass program. You need to go hire somebody. He's like, where do you suggest I go? Brandon Dawson? I was like, well, no, but we'll find somebody else. But now that I know that you've got to kick-ass coaching. You know, there is. And we've trained a lot.

We trained the Molly Maids and all these different things. and the deal is with those businesses, it's hard. That's what, you know, we have a dream manager program that we help people, like, build their dreams. That happened that dream manager was built off of a cleaning company. The whole book, the dream manager. Yeah, yeah. And most companies really, really, really got to work hard to get past a couple million bucks. Yeah, we're already on, we'll do $3 million this year.

So, and you could franchise that, but it's the hardest franchise. It's kind of like window washing, power washing. You can make some money until you start doing the high rise. and stuff, it's very, very hard. Like, I was going to go by all the hard washing companies in the United States. Like, I had a whole program. I looked at about 100 people's P&L balance sheet income statement. I'm like, wait a minute, you've got 40 employees, and you're paying yourself 60 grand,

and your company's making 200 grand. I'm like, is it really worth to squeeze? No. If something goes wrong. Yeah. Like, why do we do this? But here's what's cool. You're already in their house.

You could simply add on something else. Like, the way you make money in a clear. First of all, there's a lot of ways. You've got to figure out a way to add something on to the cleaning. What would be a good thing to add? You want to know the best business in home service by far. Pest control. Say, look, we come here.

We're in your house. We're already in here. You're inviting us in. You trust us. We're going to come spray the inside and the outside while we're here. Now that company's worth 23 times EBITA. Okay, so a lot of entrepreneurs look up to you. Obviously, you've done great.

You're confident. You got a success record. you turned your life into something family of 12 and now you're killing it. Who do you look up to? A lot of people. I look up to the people I look at right now, usually, I mean, I've looked up to you for a long time. Cody Spurber introduced me to you years ago. I spoke on the same stage with you three years ago, shook your hand.

I was like, bro, this guy's going to be the next coolest thing on the planet. And I think you were just getting on stages. I look up to a lot of guys that were cutting down the jungle in front of me, like the dean Grasio C's Cody Spurbers. Even Carlos Ray has helped me get my start in a lot of ways. So I look up to a lot of those guys. But right now, I'd say the main guy I'm learning from is Dan Martel. I've hired him as a coach.

He's become a good friend. So what advice, this is an interesting one because I've been trying to train my niece and my nephews. What advice do you give your kids about finance? I mean, what's the goal when you're teaching kids as a father? For my son, for example, I got him his first rental. He had to earn his first rental. We took over somebody else's payments.

He takes the cash flow and he puts money in savings for his sisters. And so I'm training him to take care of other people from a very young age. And so his job, profit first. The way it gets divided out is he has, at his age, he has to learn as a man that your job for the rest of your life is to take care of other people. And so in his accounts, he's got one of his sisters, one of his sisters, his upcoming sister. and he's learning to take care of people other than himself. How old is he? He's now 17, but I started teaching him that at 13.

Oh, I love that. Yeah, yeah. And you got a baby on the way? Yep. We've got more on the way. And my daughters, because of my son's rental, my daughters have already got their college paid for if they want to from my son's one rental.

That's amazing. Insane. Well, that's what they say is if you put $7,000 away by the time, $7,000 when you're born at just 10%. I mean, the money doubles every seven years. You guys have serious scrella right there, the law of doubles. Well, listen, we've talked about a lot of stuff here. This was awesome.

Yeah, this was fun. Why don't you close us out and tell us something we didn't talk about? Last thing I would tell anybody is that the only thing is certain in life, in my opinion, is that real estate will be around in 30, 40 years. And all of the businesses I look at right now, I'm selling one of my businesses because AI is just taking over. One of my business is cold calling. 300 employees were selling that business right now for half of the business.

of a multiple because I'm like, this company's getting dismantled. AI is taking everything over. And so if I were you guys, I would be focusing your time, energy, and effort in either real estate or in home services, those are the only two things that I can find that will actually be around in 15, 20 years.

AI, as you know, with your executive co-pilot, it's taking over. Yeah. It's taking over. So real estate, home services, that's my advice to everybody out there. That's the only place that's gonna be safe. Love it.

Well, Pace, this was amazing. Thank you for doing this, appreciate you. Fantastic. All right, guys, thanks so much for listening to this episode. Like always, we're going to close it out with the Tommy Truth, which is a little slice of wisdom from me to you that can help guide you in whatever you're striving towards right now.

So do you want to be the first billionaire in your group? I'm going to give you guys three simple steps to start making more money than you ever thought possible. Number one, live way below your means. I want you guys to put most your money into investments. Not buy Rolexes, not by boats, not by your Harley. Go rent those for a weekend. the money away and let the money work. Step two is going to be investing in yourself, seminars, podcasts, books. This is going to help you go back into the time machine and travel forward in

time so fast because you learn a new skill and you master it. The last step is own assets, not just income. When you buy real estate, when you buy things that appreciate over time, it's making money when you're sleeping. This is how millionaires get richer. I gave you the three steps. Now go do them. And that's it, guys. We'll talk to you next week. Thank you.