Common question I get all the time. Pace, what happens if I default or the buyer defaults on a subject to loan? Well, one of my favorite things in the world to do is actually do zooms with people to actually understand the question. But this question came from somebody in our YouTube comments. So I'm going to do my best to answer it, okay? Question is Pace, what happens if you default on a subject to loan? Well, not much different than if you default on any loan. First and foremost, your piece of shit, okay? Because you're not paying your bill. So let's just get that straight out of the gate. The reality is, number one, if I'm buying any property as a real estate investor and I'm not Dave Ramsey because Dave Ramsey is going to tell you to save your entire life until you're 81 years

old to make your first million dollars. If I'm Dave Ramsey, I'm buying houses with cash. And that's stupid. I'm telling you it's incredibly dumb to pay houses with cash. It's dumb. It's dumb. If you're not utilizing leverage, you're not getting to where you need to be. So if you are smart and you're not listening to Dave Ramsey, then you've probably gone out

and gotten multiple loans to buy multiple rental properties.

Okay, so let's ask the question.

Even if I go down to Chase, Bank of America, Wells Fargo, Quicken Loans, whatever the big box

store lender is, and I get a loan from them, what happens if I default on those loans?

Basically, you'll get foreclosed on.

The bank will have to hire a trustee or an attorney to go and legally take the property back through a judicial proceeding called a foreclosure or a trustee sale. And that happens all the time.

In Arizona, there's currently 1,800 active foreclosure. So that has nothing to do with sub two, has nothing to

a seller finance. That's just regular people getting regular loans on regular houses, losing their

home because they lost their regular job. Or they just decided I'm not going to make these payments.

Or they died. Or they got a divorce and now they only have one income. Whatever the reason is,

there's 1,800 current people in foreclosure right now in Phoenix, Arizona alone. Think about

nationwide. It's a lot of people. So those people are going to lose their house to foreclosure

when the bank decides we want that house back. Okay, first thing that happens. Second thing that

happens a lot of times is those banks because they don't want to go through the full legal proceeding of hiring a trustee, going to the auction, seeing who the highest bidder is,

and selling that property, they will actually do something called cash for keys or deed in lieu. In lieu means instead of.

So deed means I'm going to give the property back to you through a document called a deed or proof of ownership. I'm going to transfer the proof of ownership from me, the borrower, to you the bank in lieu of you foreclosing on me. That's why we call it a deed in lieu. Okay. Does that make sense? Eric says that makes sense. So that definitely is the right description. So the bank can come

to me and go, hey, Pace, you're a deadbeat piece of shit. You're not making your payments. We're

going to go hire an attorney. I go, no, no, no. Hey, how about you give me $3,500 or $5,000? Sometimes cash for keys is $500. It just depends on the house and where you live. If you're in Mississippi or Louisiana. I'm sure it's like $17 they'll give you. If you're in Los Angeles,

who knows? Maybe give you a couple thousand bucks, okay? Just depends on where you're at.

Bank gives you money and or Louisiana. I'm sure it's like $17 they'll give you. If you're in Los Angeles, who knows?

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