Codie Sanchez & Pace Morby on Acquisitions & Real Estate | E14
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It's such a good point that you just made there too, that word vest. Because where I see like, where do deals go badly? It's that people do a deal with somebody and they bring on that kidnapped talent or they bring on that 24 year old and they say, okay, cool, we're 50-50 partners because I put up 50% of the cash or I put up all the cash and you're going to actually do all the sweat equity in the business.

Sweat is never equal ratio to cash up front, in my opinion. I think up front, cash is king. And then people get to earn their sweat equity up into the cash. So like if I was going to do the deal with a 24 year old, I'd be like, all right, dude, you're going to do 100% of the work. I'm going to fund 100% of the deal. You get to vest your equity over a five or seven year period. And in the first year, you might vest

I don't know, 3%. And then the next year, maybe we have accelerated vesting. So you invest 5%. And maybe you could get all the way up to 50, theoretically, but it's not going to be your one for sure. And I can't believe how often people do deals like that because they just, and then what happens, it's not that you want to take advantage of your operator. You just don't want your operator run and you'd have put up a bunch of cash and then you'd also have to buy a business. They do not have equal skin in the game.

Ladies and gentlemen, welcome to a special edition of the Money Mondays episode. We are here parked in my driveway at the ranch right now after running a long event. I convinced one of my favorite influencers and content creators to come here and make this video for you, make this podcast for you.

Because I selfishly have questions for her. I've been watching her content for years and last six months I've just been so impressed with everything that she's done The past career the current career and the trajectory that she's on it's very exciting for Myself and I think you're gonna hear that in my questions cuz I feel kind of excited I got some energy right now just thinking about the question I want to ask her because she's the perfect person to talk about money with the whole concept of money Mondays is

It's talking about how to make money, how to invest money, how to give it away to charity. So please welcome my special guest, Cody Sanchez. Thanks for having me. I'm stoked. And the crowd goes wild. All right, Cody. So the way it works is we're 40 minutes. We're going to do a quick two-minute bio so we can get straight to the money. So if you can, give us a quick story.

So, started off in finance, basically did all the things you don't want to do as a young kid, lots of Excel spreadsheets, did Goldman Sachs, State Street, Vanguard, etc. And eventually got to a place where I realized I was making a lot of money and doing big deals for a bunch of other people. Why couldn't I do some of those for myself?

And, um, I think the 80 hour weeks probably had something to do with that. And so I started buying what I now call boring businesses, but back then was just like what we did in private equity, reoccurring revenue, small mom and pop businesses. I ended up buying those bad boys, adding a few of them to a portfolio and eventually started making some good money on that. And then realized, wait a second, I think we should talk to more people about buying these boring businesses. Uh, because in fact, uh, it's not that difficult. It's,

It's simple but not easy. And so now we talk on the internet a lot about these, our three caveats or our three core elements, which is civilize the mind, make savage the body, and build the bank account. That's our core at Contrarian Thinking. And so now we have an audience of three and a half, four million people and get 60 to a million views a month, which is cool, all about how to become financially, philosophically, and physically free.

Why is it important for people to become financially, philosophically free? Well, I think our life is sort of, basically everyone's life, in my opinion, is a journey to figure out why you were placed here, to find those unique skills that are only innately yours, and then try to apply them to the world for the maximum leverage.

And I think freedom for a lot of us is the ability to lean in to those unique skills. And so it's hard for you to find your true passion and your true pursuit when you can't pay a rent and you can't take care of the kids and you can't, you know, maybe see how to

how to get out of debt. And so for most people, I think becoming financially free is the foundation to becoming any sort of free. So I don't talk about money because I want people to have get rich quick schemes. I talk about it because I don't think you can think freely until you can be financially free. And that's why it's so important.

The core root, like really like I get passionate talking about it. The whole idea behind the Money Mondays is we grew up thinking it's rude to talk about money. Yeah. I think it's rude to not talk about money. Yeah. I think the biggest reason we're in these financial crisis is the reason that people are in debt. People, the reason that they have credit card debt, they don't know how to get a loan, bank account, lease, FICO. They can't spell FICO score. What the heck's going on? Like we don't know anything because we just didn't learn in high school. We barely learned in college and we're not allowed to talk about it.

And I use examples. Let's say your 18 year old daughter, niece, nephew, friend, whatever is going to go get a job. And that job is supposed to pay $48,000 for the year. And they go get a job offer of $38,000 for the year because they didn't know. They say yes. They get excited. They come tell us, hey guys, Cody, Dan, we got a job for $38,000 a year. And we both look at each other like that's a $48,000 job.

And now they lost five years of their career because they're going to go from 38 to 39, 39 to 41 if they get a good raise, maybe 43.

And maybe, maybe, maybe after half a decade, they'll get to 48, which they should have gotten when they're 18, 19 or 20. And it's just because it's rude to bring up at the dinner table, salaries, rent, loans. Hey, my buddy wants to borrow 500 bucks. What should I do? We just don't talk about it. And so that's the whole message to me. And that's why I'm obsessed with your content because you talk about money and you make it so simple to discuss and it's easy for people to consume and understand. And that's why it gets shared so much.

Because lots of people make money content, right? But the way you do and the way you deliver it is why it's so important. All right. Thank you. Why did you decide that you were going to make so much content about money, business, and finances? Yeah. Well, I love to write. So I think it started from this idea of...

Um, it's one of the things I believe I'm pretty skilled at was just, I love writing and expressing myself. And it turned out that I was on this trajectory to know a lot about money. And so I think you start with what you know, and from what you know, you go to where your heart is. And so, um,

my heart wasn't really in money. I mean, my husband who's sitting here would tell you, like, I don't really, I mean, I have a nice watch. We have some nice houses and cars and stuff, but nothing that crazy, actually. There's really not much flashy about us. Jokingly, I always talk to my husband about the fact that he runs around in mandals and Hawaiian t-shirts and jorts on the regular. So like the opposite of flashy. But the reason that I started making content about money was because

Two reasons. One, when I started out in my very first, let's call it job, I was a journalist, human trafficking, drug smuggling across the U.S.-Mexico border, and I was covering it. And there was one story in particular that really made me realize the importance of this one universal language we all speak, which is currency, which is green. And that is, it was called Los Abandonados, the abandoned. And this story was about...

Two things. One, elderly citizens getting left along the U.S.-Mexico border because they couldn't make the trip. And these hovels and horrible institutions they were left behind in.

And their last names were Sanchez, like mine, Gutierrez, Juarez. And then I covered another story about Las Desaparecidas, The Disappeared, which is about the women who were brutally murdered in Juarez. And guess what their last names were? Like Sanchez, Juarez, Gutierrez, like mine. And so I started thinking, huh, is this like something that's happening to like Latinos, Latinas like me? And I realized, oh no, it's actually not about that at all. It's about

who socioeconomically has the cash to ensure that they are safe and or powerful. And so we're

I first got into finance because I didn't ever want to be one of those, you know, disappeared or abandoned. And then I started building businesses and hiring those people because I wanted to create more people that were not like that. And then finally I realized, oh wait, I can only hire so many people. I can only buy so many businesses. Like I literally can't do enough of it myself. But if I create content, there becomes a ripple effect. And

And one thing that I say, somebody may be much better at business and much better at buying things than I am. And they may be able to impact 4 million people. And that's just from one thing that I create on the internet. And so I thought it would be incredibly powerful to use your voice where you can't always use your hands. So I don't buy stuff either. I haven't had the same watch since 2008. Yeah.

I didn't have a car for the last seven years. I didn't have one car at all for the last seven years. And some of my friends forced that Hummer on me at my birthday party. I didn't want it. I barely drive it. I don't buy stuff. And people will think about from my world of social media that I would be flat. I literally don't buy anything. Yeah.

And I don't post about private jets. I don't post about travel. I don't post about those things because I want people to talk about money. I want people to talk about business and I want them to talk about charity. And so my content's literally like, here's how you can do charity. Here's how you can do business. How's your, how you can invest. It's never for me. It's never for patting on my back. I know the butterfly effect.

what you're just talking about, the ripple effect. The butterfly effect is if I invest into a company and that founder goes off and goes from a 500K business to 2 million to 10 million, that means they go from two employees to 10 employees to 100 employees. That's the butterfly effect to me. I've done 43 investments now. I'm going to keep doing them over and over and over and over because the butterfly effect to me is the passion part of it. It's almost like charity. Investing into companies, the reason I preach about angel investing is

And I know you like the other side of it, which I like to talk about from the private equity side of it. Angel investing isn't my gambling. The angel investing side, it creates thousands of jobs. And I think the best way for us to fix America is to become self-sufficient and not dependent on the government. And by funding these companies, funding the entrepreneurs that go create thousands of jobs, it's kind of like the teach to fish versus the giving them fish. And so that's why I'm so passionate about it. In the last year,

I created a syndicate called Elevator Syndicate. We invested $44 million, $3 to $6 million at a time, and I have 846 investors in my syndicate group. The thousands of jobs that happened from just last year is like more important to me than anything I'll ever do in my life. And so my job and what I've watched you do is by having these discussions about money and showing people how they can invest and how they can buy a boring business or how 11.2 million businesses are going to go for sale this year and you're going to explain that better than I am.

If those people go out and do those things and they go buy an HVAC company and go hire 40 people, that is more than any charity you could ever do. Cody Sanchez handing $100,000 to a charity versus creating 40 jobs, it's not close. Creating 40 jobs creates a community. And so I want to talk to you about

On the business side, how does someone decide or how do you decide what type of boring business should I buy? I live in Oklahoma or I live in LA or I live in New York and I've got a couple hundred grand saved up. How do I figure out what the heck Cody's talking about? Do I buy a dry cleaner? Do I buy a laundromat? Do I buy a HVAC business, a plumbing business, a pest control business? There's so many options. How the heck can someone think about or decide what they're interested or like or what they should do? Yeah.

Well, I call this deal clarity. So basically, the most important part, you're right, about doing a deal is there's no such thing as a good deal. There's just a good deal for you or a good business for you to buy. And the business that's good for you to buy is probably not the same one that's good for me to buy.

And there's a few things that you should ponder if you're going to buy a business. First and foremost, I think, are two types of proximity. First, proximity is geographic. So if you're going to buy your very first boring business that's mom and pop, that's a hard asset business like a store, you really want it to be close to you. I like to have a radius that's within one hour. So I can get to that business inside one hour if anything goes sideways. So that's number one for your very first deal.

Number two type of proximity is the proximity to the type of business, skill, industry, sector that you already are in. So it's just much easier if you're an accountant to buy an accounting firm or if you're a real estate agent to buy a –

brokerage firm or a mortgage firm or a property management firm, something that's kind of close to or is a thing that you already do. So those are two like quick hacks. And then the third one I would say is if you're not going to do, you know, things that are proximity close to you from a

from a talent or understanding perspective, then I like people to think about cash. The first business I think you should buy, you want to make sure that that deal doesn't ever bankrupt you. So it's really important that you protect the house for the first deal. And so I like to make sure that people are buying businesses, not jobs. So let's say that you go out and you want to buy a laundromat, right?

Well, you want to make sure that that laundromat has, I don't know, at least $100,000, $150,000 in profit. And that profit is real and you have validated it. Because then you could hire somebody to manage for your laundromat for $75,000, $80,000 a year. You could hire somebody to take care of most problems. And that extra $60,000 to $80,000, you could actually pocket. That's your upside. But for the first deal that you do, I like there to be some wiggle room in the total expenses so you can afford either an expert

who's already run it before or an operator so they can run it with you. And I think if you start with those things, then you can go to where people naturally go, which is like, oh, I want to buy this type of business or I think I should buy this type of business because I've heard Cody talk to about it first. But that's really not where I want people to go first. It's like, what is your natural proximity to your talent pool?

So I'm 24 years old. I'm studying everything about this HVAC business. I know I really want it. I just don't have the money. What the heck can I do? That's great. So I have something called the Get Rich Tripod. So the Get Rich Tripod is basically there's three legs of the stool that you can stand on. The first and easiest leg, meaning the least amount of work from you, is money, right? So if you have a bunch of cash...

you're going to use cash to do a deal because it's the highest leverage form that you have. The second is expertise or experience. So if you are an HVAC manager, you could use that experience to buy a business and get more of the business without having cash because somebody else would bring in the cash for you being an expert, right? And the third leg of the stool is time. And so this is just if I was a 24-year-old and I had no expertise and I had no cash, what would I be bargaining with? My

My time, my sweat equity. And so if I was 24, I'd probably...

put together a deal. I'd go and look at a bunch of these businesses. I'd learn how to analyze them. I'd pull together a list of them and I'd go find a group of investors, people like you and me. And I'd be like, Dan, I'm based in Temecula too. I know you care about the local community. I've done my homework. Here's financials and a deal on a laundromat that I think that I can buy. I can run for us. And if you help me fund this deal, then I will run it for you entirely. And I will cut you a big percentage of the check.

of the profits. That's what I said. Yeah, exactly. And what's amazing to me actually is how few people follow through on this. You know, a lot of people tell me, hey, I'd like to send you deals. And then they send me like a listing off of BizBuySell or something. It's like, that's not what I'm looking for. If you actually do the analysis for me and bring me a real deal and vet it thoroughly, then I think that's really unique.

I'm 65 years old. I do have money, but I don't want to run it. I just want to put up the money. What can I do? I got the money. I can buy it. I got 500 grand saved up. What do I do? Yeah. Two things. One, you partner with a 24 year old and you tell them to run it. I actually think that's not the best idea always. What I would rather do is I would rather buy a business and I would want to partner with somebody who had run said business, but wasn't the owner of it.

So typically what I like to do, if I'm just optimizing, not for helping somebody out or pulling the next generation along, but just for making cash, I'm going to say, okay, I want to do this million dollar transaction. In order to do this million dollar transaction and not have any of my time associated with it, I'm going to go look at the

competitors in my specific area who run these other businesses. And I'm going to find the top manager at one of these other businesses and I'm going to pull them over to mine because I bet they don't have equity in theirs or skin in the game. And I'm going to give them a better deal than they're going to run it. And I'm going to profit off of it. I call that kidnapping. Yeah.

When people ask me, well, how do you find people? Go kidnap them. It's exactly right though. Because if you find someone that's like the president or vice president or manager, et cetera, they typically are never going to be the CEO because the CEO has been there for four years or six years or 12 years, et cetera. So they're capped out and they have zero to one or 2% equity. And so they're also capped out there too. Cause if they can't get the bigger position,

They're not going to go to 4% or 5% equity. That's right. Definitely not 10% equity. And so if you can show them, hey, similar company or similar industry, you get to be the big dog. Here's your fancy business card. You get to be the CEO. They're in. That's exactly right. They're going to get equity. They're going to invest over three or four years. They're going to earn 4% or 5%.

They're going to make a similar... You don't necessarily have to give them a higher salary sometimes. They're like, oh, I'm going to get $120,000 a year, which is what I already make, but I'm also going to vest 5%. Yeah. And I get to have the fancy title. Cool. It's such a good point that you just made there too, that word vest.

Because where I see like, where do deals go badly? It's that people do a deal with somebody and they bring on that kidnapped talent or they bring on that 24 year old and they say, okay, cool. We're 50, 50 partners because I put up 50% of the cash or I put up all the cash and you're going to actually do all the sweat equity in the business.

Sweat is never equal ratio to cash up front, in my opinion. I think up front, cash is king. And then people get to earn their sweat equity up into the cash. So like if I was going to do the deal with a 24-year-old, I'd be like, all right, dude, you're going to do 100% of the work. I'm going to fund 100% of the deal. You get to vest your equity over a five or seven year period. And in the first year, you might vest

I don't know, 3%. And then the next year, maybe we have accelerated vesting. So you invest 5%. And maybe you could get all the way up to 50, theoretically, but it's not going to be your one for fuck's sure. And I can't believe how often people do deals like that because they just, and then what happens, it's not that you want to take advantage of your operator. You just don't want your operator run and you'd have put up a bunch of cash and then you'd also have to buy a business. They do not have equal skin in the game. Right.

So I get asked this question, I'm sure you do also. What would you tell your younger self? And I always answer the same way and it's going to lead into why I'm saying it. My answer always is sign contracts with everyone, including your mom. It's not that you're ever going to sue your mom. It's that if you have a scope of work or a memorandum of understanding, there'll be a lot of clarity. So I want to walk you guys through a fun scenario and let you guys debate about this. Dan Fleischman and Cody Sanchez, we're going to create a lemonade stand in Temecula, California.

And then we're going to go create a second one in Austin, Texas. So we have one in Temecula. It goes well. It's doing about $500 a day. Open up in Austin, Texas. Bam. $800 a day. We open up in New York City and Miami. We've got four locations. And it's actually called C&D Lemonade. Okay? Cody and Dan's Lemonade. Everything's going great. And then...

CNBC calls Cody Sanchez. We want to give you this multi-million dollar TV show deal. We're gonna travel you around the world. Cody's gonna become a superstar. It's a three-year contract. I obviously tell Cody congratulations. Great job. She gets this multi-million dollar contract, five million dollar signing bonus. Cody goes off and becomes the star of CNBC for the next three years. Dan opens up in Chicago, CND lemonade, in Dallas, Texas, in Las Vegas.

Boom. Three years goes by. There's 214 locations of C&D lemonade all over the country. Does Cody Sanchez own 50% of 214 locations or four locations? Whatever it says in the contract.

There's no contract. Oh, well, yeah, that's the problem. That's the problem for most of our society. Yeah, I think you're exactly right. That the lawyers are going to be able to fight on either side. I can argue, of course, Cody owns 50%. What do you mean? It's called C&D. C is the first letter. Cody, she owns 50%. She's a star. She's on CNBC, of course.

Dan's lawyers were like, "What are you talking about? I didn't even talk to her for three years. I put up the money for 210 other locations. Come on, what are you talking about?" I could argue both sides of it. All of that could have been simple with the reaction you had was, "What does the lawyer, what does the paperwork say?" Most people start their company with their buddy, their partner, their significant other, their girlfriend, their friend, their buddy, whatever, blah, blah, blah. And they don't make a simple either memorandum of understanding or scope of work. You don't need some big fancy contract.

And the reason I say sign contracts with everyone, including your mom, I'll give you one more quick example. Let's say that Cody and I both tell our mom we're going to clean the room. It's Monday. And on Friday, we're going to get paid. That's all we say. I go clean my room every single day for five days in a row. Cody cleans the room once on Monday really efficiently and keeps it spotless the whole week and doesn't ever do it again. And we both go to our moms on Friday with our handout. My mom gives me five bucks. Cody's mom gives her five bucks.

I thought I was gonna get 50 bucks. I thought I was gonna get 10 bucks a day, five days in a row. Cody thought she was gonna get 100 bucks. She crushed it, made her room sparkling, shining clean in the first day. She thought she was gonna get 20 bucks a day. And our parents, our moms gave us five bucks each. Is the mom wrong or are we wrong? We're resentful to our moms. We're like, what are you talking about? I thought I was gonna get 50 bucks. My mom's like, what are you talking about? Why would you get $50? And you thought you were gonna get 100 bucks because you made it shine and sparkle and there it looks like a unicorn.

and she gave you five bucks. All of that could be cleared with the scope of work, memorandum of understanding. Hey mom, if I clean my room for five days, I'll get 50 bucks. Yeah, right, I'll give you five bucks or 10 bucks or 20 bucks. We can have a negotiation. Most people in our country and around the world, they say things in their minds and not out loud. Oh, it's so true. And they don't have a basic agreement. It's so true. Well, and also the other thing that I've realized in our life is that most humans aren't good or bad.

except that we are incredible at confirming our own biases. So you will think that you are right. I will think that I am right. And we will have confirmation bias that says that whatever decisions we make are right. And the only thing that humans are really good at is digging our heels in. And so the worst part about not having contracts, and you realize this again and again, even if you look at the psychology of fighting,

So what happens to two humans when they get in elevated states? Well, actually, studies show that neither side typically remembers exactly what happened. And even in interrogations, that if we were having an argument right now and somebody had to come later,

a third party witness and say who was being the aggressor, who was being the victim in this situation. And they were sitting behind you and looking at me. And we were having one argument. And then we had the exact same argument, but they were sitting behind me and looking at you. They would have, they would take different sides. For sure. Which is wild because the only difference would be they would see my face, which means that they would self-associate with me more. And they would see your face, which means they would self-associate with you more. And so I think that's,

You know, humans, we know these things and yet we don't do them. And so I think it's really important, even with the people that you work with, the people that come work for me, they get a job description, obviously, they get a list of responsibilities and they get a 30, 60, 90 day plan.

And that 30, 60, 90 day plan has dates on it. So inside of the first 30 days, here's what you're supposed to do. And we check in on that weekly. We have weekly one-on-ones with everybody that reports into me individually and then the people underneath them. It's why I take very few direct reports because I cannot have this level of detail with everybody. And that second level of meeting during our weekly meetings, we check in. Did you, okay, by this week, we said you were going to do these three things. Are those done? Okay, great.

But if we see that things aren't being done a few times, then by the time we get to that 90 days, we're like, oh, okay. It's very clear that this isn't a fit because you're not executing on the stuff that we need to do. Or you get to negotiate and they get to say, this 30, 60, 90 day was actually way too aggressive and I couldn't hit this. And we can see if we agree on those things. But every time I don't do that, because I'm certainly not perfect and there's many situations where I don't, every time I don't do that, it ends up being a bad hire. And even the crazy part, I think is,

And most people don't actually care to talk about hiring, but I think it's one of the most important aspects of business of all time is that in your business, you know, every, depending on how fast the business grows, like my little boring businesses, they don't grow that fast. 3%, 5% per year, right? But contrarian thinking, for instance, grows 300, 500, 1000% per year. And when that happens, you outgrow your people every three to six months or they outgrow their role.

And so that means they have to try something else or try something new or you have to hire somebody above or below them. And so you have to renegotiate that constantly. And the only way you can do that is if you're having constant check-ins and 30, 60, 90 day plans and really clear communications. And if you don't do that, your business will fail and your business will fail just about every time it three X's. And so as soon as you realize that you realize, oh, okay, we're in a fail period and then you have to tweak and adjust it.

Most relationships break up, whether it's significant others, staff members, investors, business partners, friends, etc. over a lack of communication or a miscommunication. And so I often say, use your words. Because you might be thinking something like, hey, I want a water. And if that water wasn't there, or you were like, you know, I actually want an orange juice. How am I supposed to want orange juice? You didn't say anything, so I got you an arrowhead and you didn't...

too often people have in their minds what they think the other person should have known or they perceive what they said. Yeah.

All of that could be cleared up by using your words. And this is something I try to passionately explain on these podcasts is a closed mouth doesn't get fed. If you want to get a raise, talk about it. You want to get more sales, talk about it. You want to work more hours, talk about it. You're overwhelmed, talk about it. Like using your words is so critical and so important. And our society has gotten so soft and so nervous and I can't say that or I don't want to offend them or I don't want to do this or I don't want to do that, that people don't have open discussions.

I'm the nice guy that's really blunt. Yeah. I'm really blunt because if I'm blunt, it's to help you. If my friend is screwing up, I tell them. If there was something wrong with your hair right now, I would tell you. If there was something wrong with what you were, I would tell you. I think it's good. It's nine o'clock. Yes, it looks okay.

The point of it is too often we are nervous to talk with people that were around our coworkers, our friends, our staff, because we don't want to make it awkward, et cetera. You will actually build a closer relationship if you can be blunt with your friends. Yeah. And my friends, when I talked to Andy for seller, we tell each other like, do this, do that. I should do this. Why'd you say that? Like we have blunt discussions because I respect him and he's one of the legends and I want him to be the best of the best and vice versa. He looks at me as I'm growing in my career and he's like, I went through this. I just changed that or you shouldn't do this or don't work with that. Like you,

using your words is so critical. What are your thoughts about communication among staff, employees, friends, relationships, et cetera? Yeah. It changes often. I feel like I'm always learning about this and Chris and I talk about it often. It's so critical to be transparent, I've realized increasingly. And often the biggest mistakes in my career have been when I let things fester and when I don't

say the thing that I'm thinking, especially as a leader. And so, for instance, I will say to somebody who wants a promotion or wants to do something different,

You're not ready for that, and here's why. And I will be very blunt, which usually people don't. They're like, well, maybe at this time, if we hit here, they make it not about the other person. But since businesses are typically run as little dictatorships or fiefdoms of whoever is in charge with them, I'll typically be pretty straightforward and say, hey, for X, Y, Z reason, I don't think you're there. Now, you could be if you do these specific things, and at that point, the business is at these specific places.

If those two things meet, we can move forward. If not, probably not. And I didn't do that for so many years because it's so uncomfortable. When you are in a leadership position, and you know this too, you are getting asked all the time, all the time, all the time. And if you do not get comfortable with no's, your business will fail and you will fail because it's little tiny bites of the elephant every single day.

And so I get I've had to get much more comfortable saying I'll often almost listen to just about anything. But I'm very comfortable saying I understand that that's what you want and no knows the answer. Often I do think it's useful sometimes to just with your employees. I try to usually always give an explanation for why to a point.

I won't debate always. I'll give my explanation to a point. But I do also think it's okay to just say no. And God, that took me so long. I think men are actually much better at it. Men, you guys get used to having to get beat up by other dudes and you guys talk shit to each other all the time. And women, we're not really like that. We learn to like prancy foot around everything all the time. And so it's been a really tough skill for me. You know, even the way my husband sometimes speak, he's like, that's wrong. You know, do that. And I'm like, oh,

I didn't like the way you said that to me. And he's like, what? It's literally wrong. Like, you know, the chicken's burned or something, right? And so I've tried to learn to get more comfortable with that. And then I've also found that if I can teach my team to do that by saying all the things that I'm bad at first. So I'll be like, I am not great at X. And for that reason, I will never be our COO. I am not detail-oriented enough and I am not slow enough in my thinking. I want to move too fast. I want to move with a lot of...

with very little friction, I won't ever be our COO. I will always hire really good ones because that's not my strength. And then that's when I will say, and you, Dan, also could not be this leader for these reasons at this stage in time, at least at this company. I think that's the right way to do it.

Another message I think is important, and some people are not going to like to hear this, is that most people are not built to be the CEO. Most people are not supposed to be the entrepreneur. I don't think people realize that being the CEO or being the entrepreneur or being the owner, you're basically a firefighter. All day long, you're putting out problems like you just mentioned, and you're not supposed to be the entrepreneur.

Dealing with employees and drama and lawsuits and arguments and vendors and payments and late payments and banks and finances and emails and staff and vendors and people firing and competitors and everything between. And some people...

for the most part, should be employee number four and employee number nine. And you're going to make your salary, you're going to have some equity, and you're going to have a good life, and you're not going to stress out about payroll every single two weeks or four weeks. And you're going to go through life and enjoy yourself. And then at some point, after you've been through the ropes, you might want to make that jump. Or you might say, you know what, I definitely don't want to do that because I saw what my boss went through in the stress.

We've glamorized, not we, so a lot of people have glamorized the entrepreneur and CEO lifestyle as if it's sexy and cool and easy and everyone becomes a millionaire overnight. What are your thoughts about the topic and people deciding if they should become or how they could learn if they should become a CEO or founder or entrepreneur? Well,

I'll tell you what I've noticed when I go to a group of entrepreneurs like the room we were in today, extremely successful people, right? Some really big names. And I said, everybody who owns a business, raise your hand and they raise your hand. And I go, everybody that would sell their business for the right price and terms also raise your hand.

and everybody's hand stays up. And why is that? If being a CEO was so phenomenal, and it was just jets and bitches and Bentleys all day, and that's all you did, nobody would be selling their companies. But the truth of the matter is, is that being a CEO is really for like,

masochists. It's like people who somehow love pain. And thank God there are people that are like that because I think it makes the world go around for sure. And so there's a part of me that likes that we glamorize it because we need some people to step into the arena, not just be spectators. But there will always be a

in the game to spectator ratio. And that ratio will never be one to one. And the reason is because it sucks. There's a lot of fun parts about running a business, but you know, we were talking about it this morning. I can't tell you the amount of nights that I'm up at three in the morning thinking about stuff. I can't tell you the amount of nights and weekends. I mean, we've worked like maybe the past five weekends probably. And yeah,

Do we have to because we need the money or the business is failing? No, we do it because the business needs it at this stage and we need it for some reason. But I don't think you should glamorize it because then what I think it does is then you get a bunch of people that try to get in these positions and they try to tell themselves that they're a founder and they're a CEO because they think it sounds better and then they get in there and they're fucking miserable. Right.

And then they make everybody who works for them miserable and or they fail when they could have been exceptional at being a specialist in somebody else's business. So we talked a bit about making money and let's talk about investing side of things. When you have so many options of what you could be investing into, especially because you're getting so much deal flow, how do you decide what Cody yourself would invest into?

So a couple of things. I was at this event where only people who had $20 million or more were allowed to attend. So high net worth individuals. And I asked how many of them in the room had done a deal before, had made an investment. Every single hand goes up, right? Of course we've done deals. We've done so many deals. We're so rich. All the deals. And then I go, how many of you guys have an investment thesis that you stick to and criteria you use every time?

And they were like, crickets. Dan, there was not one. There were, I don't know, like 100 people in that room, 100 people in the room, and they didn't have investment criteria. And I just thought, that's crazy. Think about that. If you didn't have criteria for what a good hire was, if you didn't have criteria for why you dated somebody or you didn't, and you kept trying to do the same thing again and again, the definition of insanity is trying the same thing continuously and expecting different results.

And so I thought, this is so fascinating. When we date somebody or hire somebody, we have parameters. And yet when we make investments, we think that somehow every deal is so totally different that there's no learnings we could have from deal to deal. And so for me, I'm very particular. Every single deal that we do, you know,

you know, and a perfect example is in our venture capital fund goes into my investment memo. This investment memo every single time has categories based on the asset class. So in this case, it would be, we invest in infrastructure for small businesses. So technology that empowers small businesses.

So based on those criteria, each investment gets a ranking. Based on that ranking, we decide if we want to move forward. And also based on that ranking, we see historically how good are we. So we thought this company was a 48 out of 48. That would be the highest ranking. And it failed.

Okay, that's one. But if we have 10 of our 48 out of 48 fail and, you know, zero of our 12 out of 48 fail, then we know, oh, there's something wrong with our categorization. And so you don't have to be as meticulous as we are about it. But I do think you should have parameters. You had a good one today. It was like, if you're going to invest in a startup,

franchise, you want to make sure they have four locations because they're much more de-risked at four than they are at one. It's the same thing with like, if you invest in a business before it does a million dollars in revenue, that's incredibly risky. After a million, you've de-risked. And so having those parameters is really important and institutionalizing them.

So with Elevator Syndicate, our rule is we do $2 million to $20 million. They have to be doing $2 to $20 million because Dan will gamble on a company that's doing a couple hundred thousand or zero or a million bucks. But if I'm going to have other investors co-invest in a deal with me, I have a $2 million minimum because I don't want egg on my face. And it'll be a lot less risk if the company is doing $4 million, $8 million, $10 million, etc. My main investment strategy and what I always preach about is called 40-40-20. It's 40% low risk, 40% medium risk,

20% high risk. I also nicknamed the shot at glory. I'm hoping that my low risk and medium risk is going to cover my high risk in case it doesn't work out, which it's called high risk. So it's might not work out, probably won't work out. But if I'm right, it's going to be like a 5X, a 10X, a 20. Something life changing, something major is going to happen when I do it.

but I'm not going to have an ulcer over it because I'm going to put a small amount in on those things. Cryptocurrency, angel investing, et cetera. When I talk about throwing in 25K, 50K, 100K, whatever into a startup company, that has to be a small amount of your capital. Otherwise it's not time to angel invest yet.

The low risk, I want to be making 5% to 9% for the year. That's just to beat inflation. That's just to keep me going, to keep my dollar value up. It makes my mom happy that I have some boring investments. I need that 5% to 9%. That's just like the safe part. The medium risk is where most people live. This is three things. This is cash flow in businesses. Cody Sanchez's content. This is real estate.

And this is the stock market, but only long term, not day trading. Yeah, 100%. Over the last 100 years, the stock market wins, right? Over the course of time, raise your hand if you think Apple will be here in five years. Do you think Walmart will be here in five years? Do you think Google, Netflix, household name companies that you go shop at, you should consider buying stock in? For the long term, small amounts. Do I know what the stock's going to be in six months? Absolutely not. Anybody that says that they know what the price will be in six months of Tesla, Apple, Walmart, et cetera, is either lying or delusional.

Because you can't account for the media, woke situations where a stock plummets like Netflix and Disney overnight. You can't account for those types of Budweiser losing $6 billion in a week. That's wild. I still can't believe it. We got to check the numbers there. Is that true? Oh, I think it's more. And it's just what they lost for now.

Think about the masses that are just not going back to Budweiser. And now I want to go buy stock in Coors Light and Miller. I can't believe that head of marketing hasn't gotten fired. Like regardless of like what you think, like ideologically, if your job is to bring dollars in. And understand your audience. Yeah. So the point of it is finding things in the stock market that you believe in. If you own Apple phones and you spend $1,200 a year on Apple phones, maybe you should buy $1,200 in stock in Apple. Yeah.

Is it going to go up or down this year? I have no idea. But over the course of 5, 10, 20 years, pretty sure Apple is going to be a trillion dollar company, especially with their new 4.15% banking situation they just offered two days ago. Like I think they're going to be one of the biggest banks in history. Yeah, that's why. Because other banks offer like 0.1 to 0.3%. Apple is offering 4.15% savings account.

That's not 10 times more. That's like 30 or 40 or 50 times more than other banks. And so I think Apple is going to be a multi-trillion dollar company over the course of time. That seems like a safe investment over the course of time.

Cash flow in businesses is interesting. And that's why I say look at Cody's content because you can find things that someone has four, five, six, seven locations, or you can acquire something or invest in something that has cash flow and you're making two grand a month or five grand a month or 10 grand a month. It doesn't need to be six figures a month. It could be that two grand, three grand, 500 bucks, et cetera. That adds up, especially when you do it over the course of time.

And real estate, it's not about you going out there and flipping real estate. I don't flip real estate. I put up money with someone that's really good at flipping real estate. I don't buy fourplexes. I buy pieces of fourplexes with somebody that's really good at buying fourplexes. And so when you guys are out there thinking about investing in real estate and you've got your first five grand, 10 grand, 25 grand, 50K, 100K, 200K, et cetera, saved up, considering co-investing with an expert.

Not their first time. That's not an expert. Someone that's done it four times, 10 times, 20 times. And that will reduce your risk in all the things we're talking about. All right, last segment, charity. So the reason that we like to talk about giving away money to charity, it's not just about the money part.

A lot of times people can do really good charity work with their social media, with their phone, community, rallying the troops together, et cetera. When we do the toy drives or Thanksgiving food drives or backpacks for the homeless, we're showcasing it so people replicate not to donate money to us.

I'm constantly showing, here's how I do a toy drive. You got to get a location, get a date, go to local offices, invite them over. Here's how you can do a toy drive. Thanksgiving food drive, get a location, get a date, invite your friends, tell the businesses around, rally the troops. They'll bring turkeys and stuffing, et cetera. You don't need money to do these things. So my question for you is, why is it important for personal brands or for businesses or corporations to involve themselves in philanthropy and charity work?

I actually didn't know that's why you did that. I think that's brilliant because you're right. It's not necessary to have cash to give cash. It's not necessary at all. In fact, it's the same way that you talked about how you first started masterminds. You're like, you just, how could you do, you know, what's interesting about you is you seem to break things down by like,

What if this was easy? You know, what if I did this in a way that was easy? And what if I did this in a way that didn't take much cash? Which I think is just a good question for people to ask themselves just about whenever. I mean, you told me, and then we'll get to the charity portion. You're like, no, when you're first starting a mastermind, you should...

go to realtors who have really, really expensive listings on mansions and you should give them free, you know, free press by basically posting something with a bunch of big names. Bring a hundred people to a mansion. That's great marketing for them. A hundred percent. So I thought that was really clever. It's the same for charity. So I've always believed in a hand up as opposed to a hand out.

So the way that I like to do charity is multifold. One, I really like to make sure that the people inside of my businesses are...

One, I make sure they're really fairly compensated always. Two, pretty much everybody in all my businesses that's been there over three years, the first three years is always a trial period, but over three years gets skin in the game. That doesn't mean equity in my businesses. Like I don't give equity in contrarian thinking, but it might mean that they have, you know, if you get X KPI, you should make more money. If the business is doing better, you should do better every single year. I think there should be skill alignment or skin alignment. So I think the first part

and best way for us to do charity is just kind of like the guys were talking about today, help more people not be poor, as many people as possible as you can pull up. And that's why I feel a big push to make this company as big as possible. I could have a single person influencer business, like many people that we know do that does millions of dollars a year. And I don't really take any cash from this business right now. So like, you know,

I could be making millions of dollars more than I do from this business right now if I cut everything down and didn't employ a bunch of people. I'd also probably get rid of a ton of headache. But I actually think some of the best charity or philanthropy you can do is to build really big businesses, pay people well, and then teach them skin in the game. And that's if you do X, you should get Y. And if you're not happy with X and Y, then go get your own chips.

and everything I talk about teaches you how to go build your own business, how to go do your next thing. And oh, by the way, if you've been a great employee for me, when you go to do your next venture, I'm going to be the first person to say, awesome, let me invest in you. For sure. 100% every time. And so then I actually build this sort of charitable arm in a way that is me recognizing that every single human has some sort of purpose or value and I want to give to that. The only thing that I...

sometimes feel with charity, not a drive or things like you do, because that's a tangible need that's directly then given to someone in need. But often I found that these charities are like

an amalgamation of bureaucracies that then lead to victimization and often one, don't get enough cash to the actual use case and two, solve symptoms as opposed to problems. And so what I like to do instead is like what Tim Kennedy does, like him starting the school for kids in Texas. Is it a charity? No, it's a business with a really charitable pursuit, which I think is super important distinction. Yeah.

Can you walk us through your newsletter, your coaching, your weekly calls? Because I'm actually, there's very few things that I actually subscribe to because time-wise, but I've been a customer of yours for years. You don't even know this, but like walk us through what is the newsletter? What is the weekly calls? Like walk us through like how people can learn from Cody. I didn't know that. And I love that. So I, we have Contrarian Thinking, which is a free newsletter that is all about ways to become financially free.

and to do it in unconventional ways while doing the second thing, which is civilizing the mind. Usually there's like a contrarian rant or an asymmetric framework, something in there to make your mind stimulated while we make your bank account grow. It's contrarian thinking. Then we have something newly that's called the boring business brief. That is a newsletter focused exclusively on doing deals, buying businesses, which is kind of cool.

Then obviously we have all of our socials. Increasingly, YouTube's a huge focus. We have a whole team here sort of filming a bunch of stuff. And the idea is the youth of today, right?

They are not in school. They're not even on TikTok. They're not on Instagram. They're on YouTube. YouTube is the university of tomorrow. And we want to meet them where they are. And so we're spending a ton of money on YouTube and really focusing on that in a big way. And then we have our educational products. Okay.

So we have a course for buying small businesses. I started that candidly because I got a little tired of repeating myself. So people would ask like, can you get a phone call with me? Can you do this? Can you? Yeah. And I used to love that. And then I was like, oh my God, I'm so overwhelmed. I can barely like eat. I don't have any time for anything. And so I put it into a course and then I gave away that course for free. And then I found that people got the course and wouldn't finish it because there's no skin in the game and there is no value. So then I started charging for it and the completion rate, a

100x. So I was like, this is fascinating. Then I increased the price and the completion course, 100x. And so now it's still very inexpensive, but it's enough where somebody is going to actually do it. It's like 1500 bucks to take the how to buy a small business course. And then we have our business buying community, which is called unconventional acquisitions.

We call it a mastermind, but I'm not sure that's the right word. This is a very tactical group. The idea with this group is that for $8,000, that means you have enough skin in the game and you have enough cash that you probably could buy a business. You're not going to drop $8,000 if you should not buy a business right now, most likely.

But simultaneously, it's not so much like this group about the other people you're going to meet in the mastermind, although there's a big component of that. It is that you are on a mission. Inside of one year, which is the term of the community, you will buy a small business. That's what we want to have happen. And then so inside of 11 months, on average, somebody's bought a business inside of our group.

And the average business size that they've bought has replaced their W-2 income. So that's the goal. There's been something like $97 million in profit we've bought over the last two years. That's fun. Yeah, it's really cool. And we try to really technically follow that. And then I think eventually what we'll do, we just started inside of that group, a post-acquisition group.

So for every, so there's, let's say that there's, you know, 50 or a hundred people that have bought a business in that group in the last two years, they will get a separate group. That's only for post acquirers that can all learn how to grow. And then I think we'll do a higher level group, which would, will be our true mastermind that will sort of self select people that we think can be the next generation of Warren Buffett juniors and have holding companies with multiple companies and

And then the difference with this one, similar to your group in some ways, is that I want them to be ideologically aligned. I don't want just everybody to get rich buying businesses and to teach everybody that. I don't want people who are going to rape the companies, who are going to strip them, who are then going to sell them off to private equity. I want these people that want to buy businesses because they want to make their communities better and they want to hold these things for their life as legacy. And so that's going to be the higher level group we eventually build. Wow.

Wow. I like that a lot. Yeah. Me too, theoretically. The same thing when you mentioned about getting asked all the time, I wrote a book called How to Set Up Your Business for Under $1,000. Oh, I love it.

And I send it out for free or cheap to everybody I can because I want them to just read it because it's like a short 100 pages. I wrote How to Set Up Your Personal Brand for $100,000 because everyone said, how do I do my brand? Here, read this book. Read this book. And I made it short enough, 100 pages or less on both books so that they don't have to ask me and they can read in a couple hours. My third and final book is How to Set Up Your Events for Under $1,000.

That makes so much sense now. I'm going to send a three pack out so people can just have all the answers that they need and three 100 page short form books. And lose my number. Don't call me, read the book. Last question. We are in a world full of chaos. There's a lot of things that the media is saying. People are nervous. They're scared that a lot of people are selling their assets for cheap and their businesses for cheap and they want to hand it away. Like in a world full of chaos, what would you say to people to stay calm and to look for deals?

Bye.

And, you know, like we've talked about before, I want to steal as many people's 10,000 hours as possible. So I try to read the greats. And I've read about Warren Buffett, who says, be fearful when others are greedy and greedy when others are fearful. And I've read about the Rothschilds and how they built up an empire in industries that were in decline. And so I think what you should ponder right now is how can you get yourself in a position

Where either with your resources or with your sweat, you can take advantage of a world in a little bit of chaos because nothing ever goes down forever and nothing ever goes up forever. And so if you know that at some point the world will revert, how can you be ready for that moment? I think real wealth is made in downturns. We're about to experience one. Most people see that as a bad thing. It's really just a sale. Mm-hmm.

All right, guys, you're listening to the Money Mondays. We are the number four business show today. We could use your help to get to number three, number two, and eventually maybe the number one spot. It's going to be hard to kick Dave Ramsey out of there. He is there every single day. But the whole point of this is we want people to have more discussions about money. You've seen Cody's content. Make sure you go follow her at Cody Sanchez across all platforms on TikTok, Instagram, etc. And obviously on YouTube.

Have these discussion about money with your friends, your family, your staff, your coworkers. Be open about it. Share the podcast with people. Like, subscribe, all those things. And we will see you guys next Monday.

Ladies and gentlemen, welcome to the Money Mondays where we talk about three topics. How to make money, how to invest money, and how to give it away to charity. Today's guest is going to be one of my easiest interviews ever because I'm obsessed with his content. I'm obsessed with the community that he's built. Thousands and thousands and thousands and thousands of people will go live with him on social media. Sometimes he'll go live for 16 hours, 24 hours, and crazy things like that. Just teaching people for free because he wants them to learn more information about real estate,

creative financing and what's called sub two, which he's going to teach all that about. But more importantly is I care how much he cares. The amount he cares about his people and the amount of time energy puts into teaching people is heartwarming. I'm obsessed with it. Please welcome Mr. Pace Morby. Dan Fleischman. What's up brother? And the crowd goes wild. That's the greatest intro you could ever give me is telling me how much I care. Thank you so much. You do care. I do. Like I can feel it. I can see it and I watch it. You know, you can't, you can't fake 16 hours, right?

People can fake this and fake that. Like you can't fake 16 hours. You can't fake 24 hours. You can't fake driving around the country, throwing pop-up meetings. I mean, I've watched Pace throw pop-up meetings. He did one in Venice. 1100 people show up. People don't show up to meet someone in a parking lot unless they care also about what they're doing for them.

All right, Pace. So the way this works is we do exactly 40 minutes because the average commute is around 45 minutes. The average workout is around 45 minutes. So we do a 40 minute podcast to make it nice and easy. But first, we do a two minute bio so we can get straight to the money. Love it. Pace Morby. I am on A&E television. Yeah. That is where I end

ended up I started as a contractor I learned how to be a contractor for my dad family of 12 children so I learned how to work my guts out do chores do all the things when I got into my 20s I also became a contractor obviously because my that's what my dad taught me trade my time for money that's what I did and I had a lady that came to me her name is Bethany shout out Bethany she says why aren't you in real estate and that one conversation changed my life she actually uh

Changed me and forced me to get into real estate because that's what I needed. I couldn't watch a video I couldn't read another thing. I couldn't watch another anything. I just needed somebody to show me in person and so I started doing deals and when I got Successful enough at it. I said man I wonder how many other people are out there that need to learn in person like me, right? and so I started going around the country with my wife my kids and

and changing people's lives, buying deals with them, building houses, buying apartment complexes, RV parks, doing all the things. And we got a TV show because of all the attention that we got. And still to this day, my wife and I, in fact, tomorrow are going on a 15 day jaunt to 16 different cities to meet probably close to 10,000 people in person. - Oh my God. - Yeah. - Okay. - And my wife and kids are along for the ride, dude. - That is so fun. - Yeah, it's great. - That's amazing. Okay, so on the make money side of our three topics,

There's so many ways to make money in real estate. Too many ways. That's the reason why people are so, it's so hard for them to get in is they can't pick one. Right. Yeah. So when people have options, they have apartment complexes and flipping houses and fourplexes and you should live in one unit out of the fourplex and the house hack and all these, there's so many different things that they see online or they see a guru or they learn about or hear about.

how the heck do the people make decisions on what the heck they can do? Great question. So you got to break it down to the three ways to make money in real estate. There's only three. Those are umbrellas. Okay. So umbrella number one is you wholesale, which means you find a deal where you find a house, a real estate agent or another person that has a contract on a house. And as a wholesaler, you take that contract and you sell that contract to somebody else. Kind of like just trading cards. Interesting. Right. It's kind of like shoes. I know you love shoes. You know, there's people that wholesale shoes.

right you can buy a shoe at a discount let's say a nike 200 pair of shoes you can turn around and sell that con that shoe for 280 bucks for sure the same thing is true in real estate you can wholesale real estate it's very easy low barrier of entry no license needed it's really good for today money like i need money today so if you're a today money person you go to wholesale got it fixing and flipping is tomorrow money which means it takes about six to nine months to get a check

A lot more skills have to be obtained. Fixing and flipping is a big umbrella because you got development, you got ground up construction, you got let me add an addition on this house, whatever. I don't think most people want to be in fix and flip.

but it's the thing that most people think about because of the TV shows, including mine. Exactly. Okay. Including mine. So that's second category. Third category is where actually everybody really wants to be, which is buy and hold. The challenge with buy and hold is a lot of people think they need a lot of money to get into that. So they avoid getting in there. I don't have good credit.

I don't have cash. I don't have the credentials. I don't have the experience. I'm not going to get into that. So those are the three buckets. I know ultimately everybody wants to be in bucket three, which is I want to attain wealth. I want to have passive income. My tenants are paying down my debts. My tenants are giving me cash flow. My tenants are paying for my management. That is ultimately the Holy Grail.

I break it up like this. If you're brand new, you don't have a good job, you hate your job, wholesale is probably the way to go. If you love your job, which a lot of people do, I've got a student that she makes $300,000 a year as a developer. She works 10 hours a week. Am I going to tell her to quit her job? Absolutely not. No, do not quit your job. Please don't quit your job. Use your money to invest in real estate on the side and be a weekend investor. So it kind of depends on who you are, but choose those three categories first. And then on my YouTube channel, I have a thing called an avatar test.

It's free. It's like a four hour video I did where I break down all the different personalities. So type in Pace Morbid Avatar and it will break down your personality and give you the right path based on who you are, experiences you have and the resources you currently are holding. Just go to YouTube.com and type in Pace Morbid Avatar. I love this. This is really fun. Okay. I love these quizzes and tests. Dude, that's such a great question. All right.

So someone says, you know what? I don't have much money. I'm listening to Money Mondays. I want to learn about money. That's why we're here. How do I do a wholesale deal? Where do I learn? How do I understand the concept? Okay. So Bigger Pockets, which is like the big podcast in my space, they're like the Goliath of the real estate space. They come to me like six months ago and they go, I bet you couldn't do a deal with zero resources, zero cell phone, and a hundred dollars in your pocket in less than 30 days. I'm like,

30 days. Give me five hours. Oh my God. Like, so this is what I did. Okay. So I go to bigger pockets. I go, I'll film it. And you guys got to put it on your YouTube channel. So this is what I did. I went to a park bench, brought a videographer that tracked me and I acted like I was homeless and I'm just starting from scratch. And I go, you guys can keep your a hundred bucks cause I don't need the a hundred bucks. Okay. Okay. So this is what I did. I went to a title company, title companies are who does all the transactions in real estate.

And title companies are everywhere. There's as many title companies as there are Starbucks. So I go to a title company, walked about a mile and a half. First title company I go to, I walk in and I go, I need a list of homeowners who are in foreclosure. And I also need a list of people who tried selling their house on the market, but they couldn't because they couldn't get the number they needed or whatever. And those become what we call expired listings. So the title company goes, no problem. So they give me a list.

And I go, "Do you have an office I could use?" - Come on. - And they go, "Yeah, we do, right down here." So they have like a little marketing office. I go, "Can I use the phone?" So I made 180 phone calls in probably about two hours. And like the 181st, 182nd call, the seller says, "Yeah, I'll do the deal." I go, "Can you come pick me up?" - Come on. - I'm dead serious.

So the seller came and met me at the title company and the title company printed out my contracts. We did the deal right there. Okay. And I called up somebody I knew that would buy this deal. And I said, "Hey, I'm at a title company. Will you come and sign a contract with me?" So the seller came, did the documents, left.

I call a buyer who will actually want this contract. And I go, if you give me $5,000 today, I'll let you buy this contract from them. So they came to the title company, the title company, peeled out, uh, printed out the documents. I got $5,000 and I walked away and it took me about five and a half hours to do that whole thing. Oh my God. Please go watch this on YouTube. Cause I'm going to go watch this on YouTube. This is so good. Okay. So they researched the wholesaling side. They watched it. They checked out what type of avatar they are on your, on your YouTube, et cetera. They're like, you know what?

I'm going to go try to fix and flip a house. What's like a general concept? Let's just say they can afford to buy a $300,000 house, whether they have like 20 grand, 50 grand, 60 grand saved up. Walk us through like the general concept of how much should they be trying to make? What should they be looking out for? Oh, I love it. Okay. So how much you should try and make in a fix and flip is about 15% net profit

of the sales price. So let's say the sales price is 500,000. You should be trying to net in your pocket after everything's done, everybody's paid 60,000 bucks. That's like the great, a good target. Okay. Where do you find the deal? Where you can find deals from people who have already

them under contract. You don't have to go knock on a seller's door or call a seller. You could go to like Jamil, my buddy, you'll end up having him on the podcast as well. You could go to his website, kegley.com. They've got hundreds of houses already sitting there ready for a fix and flipper to just go, yeah, I want that house. Oh really? Yep. How do you spell that? Kegley, K E Y G L E E.com. Okay. So you go to kegley.com. You tell Kegley, I want that house.

I see that it could be worth $500,000 once it's fixed up. That's what Zillow says. Kegley's selling it to me for $220,000. Sounds decent. Sounds decent. But where am I going to get the money? So we go to a company called myinvestorloan.com. They'll give you the money for the purchase, and they'll also give you the money for the renovation.

Whoa, bro. This business is too easy. Come on. Okay. The challenge with a fix and flip is always a contractor. You got to find a good contractor. So you've got to ask for referrals. Okay. Typically I would ask Keeley, like, who do you refer? Who should I use to flip this house?

or find some uh if you go to my i have a free facebook group called creative finance with pace morby 90 000 free members in there that are all helping each other out with contractor resources lender resources etc yeah i need someone the city there you go so if you got a contractor my investor loan you and keighley

That's all you need. You're in the real estate game. You're in the real estate game. Tomorrow. Like you and I could pull up a phone, make a message to Q, they go, we want that house, send the address to my investor loan, get the money today, and then have a contractor by Monday to start doing the work. Like it's that simple. Okay. All right. The biggest thing is mindset. Like people are so afraid of things. So they just, you know, analysis paralysis.

So let's say we find a 220K house that could be worth $500,000 if we remodel it. How much money should we be thinking about putting into a 220 house and to try to make that 60 grand at the end of the day? Four years ago, I would have said 50 grand. But now with...

Supply costs and contractor costs have gone through the roof. I'd say a hundred thousand bucks. So you buy it for 220. You got closing costs with the title company. They do the paperwork. They charge you for that. Then a hundred thousand dollars of renovation. So you're into it. 320.

plus like some change, some change. So let's just say you're into it. 350. You sell it for 500. Okay. Sounds good. Yeah. But when you sell a house for 500, you got a real estate agent, a real estate agent, title company, again, all sorts of home appraisers, home warranties, all sorts of stuff. That's going to cost 50 grand to sell your house. Right. So you'll walk away with a 50 to $60,000 profit easy on that thing. Maybe upwards of a hundred thousand bucks.

Sounds like fun. I'm telling you, most people I know that are fixing flippers, you flip three houses a year, you're probably making anywhere between $150,000 to $250,000 a year just doing three to four houses a year. And the only concern there is that they're not that good at it, right? Or they do something wrong or they pay the general contractor wrong or they choose something wrong, right? 99% of the issues I see in fixing and flipping is that they hired a contractor that took

took advantage of them. And if you don't know how to manage a contractor, the best way to manage a contractor is get a referral from somebody who knows how to manage a contractor and ask them questions along the way. Like, hey, how should I pay him? When should I release some money? Well, you know, what kind of questions should I be asking? You need another human being to kind of walk you through this stuff. Tell me about the peace sign. What is the peace sign on your hat right now? The peace sign. So I do that. I have a strategy called creative finance, more specifically subject to

And the process of subject to is that I go to sellers that no longer can afford their payments or they want to move and they don't have a lot of equity. And I go to the seller, I go, can I just take over your existing payments? It's like taking over payments on somebody's car. You could go to lease trader dot com and take over somebody's lease on their car. Super easy.

Okay. Or there's a website called swapapayment.com for like, Hey, I, somebody doesn't want their car anymore. I'm just going to take over their payments. That's called subject to, so they can just go and take a Tesla, take a Tesla, a hundred bucks a month. Exactly. So I do that in real estate. I find people, um, that go hundreds of deals. Like I'll do 500 single family rentals in my portfolio this year, just by taking over somebody else's 500, 500. Okay. Okay. I've amplified. I mean, it's, it wasn't like that last year, the year before it's compounds.

So here's what happens. I had a seller five years ago. He was in a bad situation, couldn't sell with a real estate agent, couldn't sell with a wholesaler, couldn't sell because he didn't have equity in his house. And because like I said in the previous example, if you sell a house for 500 grand, you're not getting 500 grand. You're going to pay a realtor, realtor, closing, all that stuff. He was going to have to come out of his pocket to sell the house.

it was coming down to a timeline that he was going to lose a real it was going to be a bad situation i come on the scene throw a referral because people know what i do and i end up taking over this guy's payments 2.9 interest rate i take over a payment of 1900 bucks a month he walks away with no money happily the agent i pay her a 2500 fee for bringing the deal to me

And like two nights later, after the transactions all the way done, Dave, the seller, sends me a text message like one o'clock in the morning. And he says,

dude, thank you for saving my life when nobody else could solve this problem. Thank you for saving my life. That is awesome. And I reply back and I go, isn't it amazing what creative finance can do? And he replies back and says, sub two. And I go, that's my logo. That's my logo. And for me, if you understand where my first deal came from, it came from me helping a lady rehome her bunnies. Literally. Okay. I could tell that story if we had the time, but

And so I always think of reminding myself that when I'm doing a deal with a seller, I'm always trying to find their bunnies. What is your problem? What's your situation? How can I truly help you? Forget about the house. How can I help the human? And so I always say, look for the bunnies. And so I always told people like, look for the bunnies when you're doing a deal, look for a bunny, the bunnies. And then when Dave sent me that text message, he says, sub two, I go, that's my logo. That's so fun. So it has multiple meanings and, and all that, but it just also, it's a,

it's a great logo that just makes people feel comfortable, you know? And then on your hoodie, on your sweatshirt, it says community. Boom. Why is community so important to you? Why do you spend 16 hours, four hours, 24 hours, 16 cities in 15 days with the wife and kids? Like this is very intense, time intensive for you. Talk to us about community and why it's important. Well, you know, same thing that you do is you bring quality people together to share information. You are a guy that's leading the entire business industry.

At the time I got into real estate 10 years ago, YouTube wasn't really great in for a place to get information there. The seminars that you go to in real estate were just people trying to sell you a $60,000 product that weren't, that gave you no fulfillment, nothing. In fact, I had a lot of people in my world that were like, I'm not going to, if I pace, if I teach you real estate, who's going to do my construction work?

I was a contractor and I was doing work for Opendoor, Offerpad, Zillow, crushing it for them, but they all wanted to keep me as their contractor. Right, of course. And it wasn't until a lady came across, and I said this earlier in the podcast, that she's like, "Pace, why the hell are you not in real estate?" And she grabbed me by my right shoulder physically. I can still feel the talons from her fingers in my shoulder. And she says, "Why are you not in real estate?"

And she, I go, cause I don't have anybody to show me. Like I'm a,

blue collar contractor, dude, I need somebody to show me the blueprints of exactly how it works. Like monkey see monkey do that's how stupid I am. And so she did that for me. She's like, pull out your phone. I'll tell you the next step. And then the next step and the next step and the next step. So for me, I, I realized I learned that way and nobody else was doing it in the industry. And I was kind of, I had a little bit of a chip on my shoulder. Like nobody was, nobody wants to help me. Fine. I'll just help everybody else on the planet. Wow. And

And so I started doing, I told you've heard this story before, but I started posting on my Instagram stories and saying, whoever wants to come with me on an appointment, jump in my Prius. Let's go. Let's go. Do you want to meet my private money lenders? You want to go to my job sites? You want to see my office? You want to see, feel and smell what a real business looks like. Let's go. So how many people came the first time? Zero. Okay. Cause I didn't have a brand. Right. Right. And so a lot of people seeing us on a podcast or to forget that Dan Fleischman wasn't always Dan. Right.

Didn't always have freaking Tarzan living on his freaking property in Temecula, California.

They think that we just came out of the womb like this. Nobody showed up. Second week I did it. Three people showed up. Third week I did it. 63 people showed up. 63. And I did it at Circle K. 63 people showed up the third week and Circle K called the cops. They're like, what the hell is going on here? So I was like, all right, I wisened up. Then what I did is I started doing it every Friday. I would take my whole day Friday to just tell everybody all in Arizona, come to my office on Friday, 8 o'clock to 5 p.m.,

i'll order a taco truck at lunch we'll hang out we'll do deals with each other and i'll just whiteboard your answer because i'm a very visual learner and i assumed everybody else was and so i attracted hundreds of people to the point where my neighbors my the tenants to both my are the sides of our office then called the cops on us i was like all right really oh yeah

I knew nothing about events. I knew nothing about renting out a space. I knew nothing. I was just like, I want to help change people's lives. And I got the drip of dopamine of like when somebody says, you changed my life. Yeah. I mean, how many times you heard that? And it's just like, it's the best. It's I call it the emotional income. And what was great is all of a sudden these people started bringing me deals that I started buying with them and I started making money with them.

and not just changing their lives but it was improving my family and my wife and my children's life as well so I decided one day let's take this on the road so I bought an Airstream and for the first time we did it we did it for five months we were just on the road and I did like a hundred deals with people had never done a deal before well just by going into a parking lot and going all right guys I'm in this parking lot let's whiteboard for an hour I'm going to show you guys how to do a deal and we would go out into the city and go do deals

And we're doing that. We're starting to do that again starting tomorrow. That is so much fun. So for me, the human connection was everything for me. You could throw every book at me, every podcast, everything. But at some point, my dumb ass needed somebody to just grab me by the shoulder and go, dude, this is what you do.

And so I built a community and I have about 10,000 people in my community now nationwide, all 50 states and a lot of other countries helping each other do real estate. And the vision was, how can I not make this community about me, but create a vision and a culture that they all help each other, even if I passed away. And that's the community I built. Can you do the 60 second version? So I want to make a really fun highlight clip. The 60 second version of explaining Sub2. Okay. So Sub2.

Let's say you've got a cell phone and you don't have a cell phone. And I go, Dan, I'll sell this cell phone to you. What do you think my iPhone? It's an year old. It's the top of the line from last year. It was $1,200. Okay, great. So today it's probably worth $1,000. Seller finance is if I go, hey, Dan, I'll sell this $1,000 phone to you if you make me $50 payments for the next 20 months. That's seller finance. That sounds cool. That's pretty cool, right? Okay, so I buy houses this way too. I go to a seller. I go, I'll pay you.

$100,000, but I'll pay you 500 bucks a month for whatever, 20 months, whatever. So subject two means if the same cell phone, I had payments with AT&T from when I bought it, I go to you and I go, hey, Dan, do you want to just take over my payments with AT&T and this phone is now yours? Yeah, of course. Right.

that's subject to you're taking over existing payments on a phone, a car, a business. I bought businesses with creative finance, houses, apartment complexes, dirt. We bought a Kia and a Prius on creative finance. Okay. Yeah. Go on my YouTube channel type in Pace Morby Kia and you'll see me buy. I ran into a guy that had leukemia, couldn't afford his car payment anymore. He was going to just let the car go to, you know, get, get,

repoed. I go, let me just take over your payments, man. So I took the $600 payment over and I put it on Turo and it makes us four grand a month. What? Yeah. Well, it generates four grand a month. And it saves him his credit. Saves his credit, generates my little, my son, 15 years old, runs that business. And he took over somebody's payments with no credit check, no credentials, no money out of pocket, immediately put it on Turo. Turo starts generating money so that my son can make the $600 payment.

and then start investing his money into real estate. Okay. So I heard you say something about you could do subject to financing or creative deals on buying businesses. Yeah, but we got a Steve Harward, who, you know, as well, him and I are in contract right now on a CPA firm where, and this guys think about this, like Cody Sanchez and other really high level people out there in the influencer space are buying businesses as well. I buy businesses creatively. So I go to the seller and I go, look,

you didn't build a business that can be sold because you're too tied up in your business. And here's what I'll do. I'll go and put an operator in your position and I'll make a payment to you for the next 15, 20 years. So you can go retire and this will be like an annuity for you. Right? And so we come in, we take over the entire CPA firm. Now we've got a hundred thousand dollars a month in cashflow coming in. And now what's great is I take over that business with payments and

And now as a CPA firm, guess what? I get to see hundreds of other companies, books and financials. And then I get to identify which other companies I want to go buy based on all the insider secrets of actually running their books. Wow. We can see the problems and what, where their hiccups are, where their sales are dipping or going up. We see all of that stuff. So now it's a lead gen source for us to go and acquire other businesses. All right. So we talked a lot about the making money side. Now let's talk about the investing side. Yeah.

Why is it important for people to invest money, time and energy into themselves? So why should they be getting mentors or coaches or learning from you or learning from people that are in the space? Why should they spend the money, time and energy to get a coach or a mentor?

Everything comes down to mindset. Everything comes. If I could give people two, two pieces of advice, forget about the techniques, forget about the strategies. Those are just there to tell you that it's possible, but you won't believe it's possible for you unless you fix this. You'll constantly say, oh, that's for them. That's for them. Like I did. And they got lucky. Oh, they got lucky. Their parents are rich. Dude. My parents had 12 kids. We had to buy 12 dozen eggs, a dozen dozen eggs every week.

a dozen gallons of milk every week. You think my family was rich? Hell no. They were doggy peddling. My dad was struggling, dude, to survive. And guess what? I learned the mindset from my father, which was to work hard. And I looked at all these other people doing real estate and I thought, I'll never do that. So I might as well just be the person that works on the real estate. So when I started investing in myself and changing what's up here,

Then I walk into the same situation that I would have 10 years ago and I make a million dollars from it. Okay. So small example, I go to a meetup because I have the confidence to go talk to people. I walk up to the first guy on my right hand side and I say, what do you have? What do you need? He says, I have a 42 acre development and I need a million dollars. I go, great. If I could find you a million dollars,

First off, who even asked that question? Somebody that believes in themselves and is invested in skill sets. I go, if I could find you the million dollars, would you cut me in on the 42 acre development? He goes, hell yeah, I would. So literally, I turn to my left and I meet the next guy. And I go, what do you have? What do you need? He says, I have a million dollars and I have no idea what to do with it.

This is not a bullshit story. This is real. So I go, would you mind if I found a place to put your million dollars if I made money on the transaction? He goes, dude, that would be amazing. So his name is Jody Evans. Jody Evans puts a million dollars into Dave's project. Jody Evans getting a $4 million return on that investment. It's a couple of years later. Okay. It's still amazing. I'm getting $1.8 million on just the connection. Yeah. 1.8 million bucks.

It's a big development that they didn't have to find the deal, manage the deal, manage the money. You just said Jody meet Dave. Right. And so I believe in paying for myself to even see that that's possible for me, first and foremost. And then I believe in paying to get into the right room with the quality of people that are like, I have a 42 acre development and I have a million bucks.

Did I deserve those friends? No, I paid my way to get into a room that filters me as a quality human being. And then people want to do business with me. So buying yourself in the right room, getting around the right people and working on your mindset. I would say that's 99% of every little thing that's benefited me in my life.

So for the entrepreneurs that are listening or the networkers that are listening, I've seen this happen a lot with like nightclub promoters, et cetera. They like go through phases. They meet a lot of bottle service clients. They know the owners. They know all the girls. They know all the people that come in and out. They know the corporate clients that throw events at their nightclubs and they start to like level up in life and start to save a little money from all the cash they're making. But now they got a Rolodex ballers, like people wasting money, 10, 20 grand a night at nightclubs.

And I often see them introduce this baller to this real estate guy or this baller to this company that he's financing. How can the people that have the relationships, whether they're nightclub people, networking people, or people just in college, high school, whatever they're doing that know rich people or they know people that might want to invest in deals, how can they go out there and make commissions from some of these introductions? Easy, easy, easy. Okay. Write this down.

committed to memory it's called the fund of funds okay it's a technical term the securities and exchange commission the sec who governs all the investment stuff in the united states they have this amazing strategy called the fund of funds so let's say you go to grant cardone cody sperber kent clothier any of these people dave allred is some another person that you know really well and they've got big developments big real estate things going on you do not want to refer people to them

You want to go to those people like Kent Clow there, let's say for an example, or Grant Cardone, and say, would you be okay if I raised money for your fund through my fund?

And you create, you spend a couple thousand bucks and you create a fund of funds. And now you get your friends investing into you and 100% of that money goes into their fund. They found the deal, they run the deal, but it goes through you, you get paid on it, it's legal, and you get a portion of the deal and a portion of the equity. But run by an expert. But run by an expert. The fund of funds is the simplest way to be that person and get into real estate and actually have equity and ownership.

When you've got so many options, pace more be yourself to invest into things because you can buy apartment complex and RV parks. So let's talk about not the people that are just getting started, but now the people that are starting to make some real money, they're listening as they ascend through their career. How do they make the bigger boy decisions? Like I, now I got some real money and I got to,

Do I buy an RV park? Do I buy an apartment complex? Do I buy 20 units? Do I buy 100 units? What do I invest into? And how do you make the bigger decisions as you start to make more and more capital along the way? You always do it with other people that are more experienced than you. And I am a full, I'm 99% real estate that I control and found myself. That's my investment strategy. The other 1% of my investment strategy is investing in people, not in businesses. So for example, I invested in one of your businesses recently, but did I really?

I didn't in my mind, I invested in Dan. Still, somebody more experienced, has momentum, has a track history. I'm like, I don't care what Dan's actually building. I believe in Dan and the fact that he's the goose that lays the golden egg. I'm going to invest in Dan and whatever business he's doing. Great.

So for me, if you're still kind of coming up in the world, like I'm unsure of who I'm what I'm going to invest in. Forget about the what and think about the who. Who is the person I'm going to invest in that I believe in? And also investing in a project with you gets me to be in the business world. We become friends. Right. The way that business people want to be your friend is how are we making money together?

How am I, you don't want to take time away from your ranch and your wife and your awesome life unless you and I are collaborating and spending money, you know, making money together. Last subject, we talked about making money, we talked about investing money, let's talk about giving some money away to charity.

Why do you think it's important for individuals or corporations or real estate agents, real estate executives, apartment building owners, et cetera? Why do you think it's important for them either personally or for their business or brand to do some philanthropy or some charity work tied in? We were not put on this earth for ourselves. We were put on this earth to benefit other people. And so you've heard a thousand stories. You're friends with them. I'm friends with them too. A lot of people, men, women,

that make a lot of money, they hit the height, the pinnacle of making money, and they go, my life sucks. Maybe they self-sabotage their life because they lost purpose. They thought the money was the purpose, and when they realize it wasn't, then everything falls apart and they lose it all. Just to find out, they should have been saying, I'm making money so that my purpose can actually be financed. Yes.

And that's really what we're here for. It's what I love about, you know, your your backpack charity and other people's charities that are that are in, you know, 100 mil people that are understanding that it makes making money feel better. It makes it easier. And you focus on what you were actually put on this earth for.

for yourself personally, how do you decide what you put your personal brand on when it comes to the charity world? Because if you decide that you're going to promote a charity, well, thousands of other people are probably going to want to donate or replicate the charity, et cetera. How do you decide what charities you're personally going to be involved in? For me, it has to be on brand with real estate or solving affordability. So for me, it's like, if there's something with affordability or real estate, then for me, it's something that's easy to talk about and get people amplified. The other reason why I talk about

i'll talk about hey i invested in this i invested in that it's not to show off it's to inspire other people to invest in it as well sure it comes off weird when i start talking about oh yeah i invested in this you know ice company that does x y and z it's like has nothing to do with my brain so i invest in homeless causes um i invest in um sober living and people are going through transitions and those types of things because it makes it easier for me to talk about and more exciting and on brand and if i talk about it more then more people will donate

Ladies and gentlemen, you are watching the Money Mondays here with Pace Morby. You have to follow him on social media. It's so much fun. Go on Instagram specifically at Pace Morby. He's on all the platforms, but you'll enjoy him on Instagram. On YouTube, you can watch his medium and long form content to really see him show you the behind the scenes and all the action. Obviously, you can see him on TV. You can see a bunch of the old episodes over the last few seasons, and there's more seasons coming. But the whole concept of the Money Mondays, we're going to be talking about the Money Mondays.

is for us to get past this thing that it's rude to talk about money. I think it's rude to not talk about money. I agree. We need people to talk about it. We need to open discussions about salaries, rent, credit scores, apartments, leasing. Should I buy this? Should I do this? What should I get paid? How much should I invest? What if my friend wants to borrow money? Do I sign a contract? These are basic things that we just don't talk about because it's rude.

No, it's not rude. We thought it was rude. And this podcast is to prove that it's not rude. We need people like Pace that are out there teaching consistently. And so I want you guys to go learn from guys like Pace, consume their content, have these discussions with your friends, family, and followers. Go to themoneymondays.com. Like, comment, subscribe, share with your friends, and we'll see you guys next Monday.