Gator Method

Last updated: March 11, 2025

The Gator Method is a real estate investing strategy popularized by Pace Morby, designed to help investors -- particularly wholesalers -- secure and profit from deals with minimal upfront capital.

Unlike traditional house flipping, which involves buying a property, renovating it, and selling it for a profit, the Gator Method focuses on speed, efficiency, and creative financing, often involving short-term ownership or no ownership at all. It’s particularly appealing to those who lack the funds or desire for the lengthy renovation process typical of traditional flips.

The gator method and creative financing concepts more broadly have a tendency to be vague or confusing, so this article is intended to be educational and actionable and you incorporate this concept into your real estate investing journey.

What is the Gator Method?

At its core, the Gator Method leverages transactional funding and partnerships between wholesalers (herein "investors" and "wholesalers" will be used interchangeably) and private money lenders to facilitate quick real estate transactions.

Here’s how the gator method typically works:

Transactional Funding

A Gator Lender provides you with short-term loans, often to cover earnest money deposit (EMD), down payment, or even full cash to close so you can place properties under contract or even purchase them outright without using your own funds.

Gator funding is repaid quickly -- sometimes within days -- once you assign, double-close or take over the property using the subto method. The method emphasizes no renovations, rapid turnarounds and rapid gator loan repayment, distinguishing it from the slower, capital-intensive process of traditional flipping.

Deal Structure

The gator lender earns a return through a predetermined deal structure based on agreement between the gator lender and the investor. This may be a fixed fee, an interest rate fee, a % of the profit, a % of the equity, or some combination.

How is it Used for Flipping Houses?

While the Gator Method isn’t "flipping" in the classic sense (buy, renovate, sell), it can be adapted for flipping scenarios or used as a stepping stone. Here’s how it applies:

Securing Deals with Little Capital

A wholesaler identifies a distressed property (e.g., a fixer-upper worth $200,000 after repairs (ARV), available for $120,000). They lack the $5,000 EMD, so they partner with a gator lender who provides the the EMD to the title company as soon as the wholesaler places the property under contract. The wholesaler then assigns the contract to a fix and flip investor for an assignment fee of $10,000 and the purchase transaction closes in less than weeks.

The wholesaler's profit is $9,000. Here's the math: $10,000 assignment fee from the fix and flip investor + $5,000 EMD repaid by the fix and flip investor - $5,000 EMD funds repaid to gator lender - $1,000 fixed fee to the gator lender.

Quick Profit Without Renovation

Unlike traditional flipping, the Gator Method skips the renovation phase. The goal is to move the property fast, often to a flipper who will handle repairs, allowing the investor to profit from the spread (e.g., $130,000 effective sale price (contract price + assignment fee) - $120,000 purchase price - $1,000 gator lender fee).

Scaling to Traditional Flips

Profits from Gator Method deals can fund traditional flips. For example, an investor might use $30,000 earned from a quick Gator deal to buy, renovate, and flip a property for an additional $50,000 profit.

Risk and Speed Focus

The method reduces holding costs and market exposure by closing deals fast. Traditional flipping might take 3-6 months, while a Gator deal can wrap up in 1-2 weeks, minimizing risk if the market shifts.

Key Differences from Traditional Flipping

Practical Example: Gator Method

Let's say a property listed at $100,000, with an after-repair value of $200,000. A wholesaler secures it under contract but needs $5,000 for the EMD. A gator lender provides the $5,000, and the wholesaler quickly assigns for $115,000 ($100,000 contract price + $15,000 assignment fee) within 72 hours. The wholesaler pays back the $5,000 to the lender when the assignee reimburses the EMD via the title company and a $1,000 fee once the transaction closes. The wholesaler earns $14,000 and moves on to his next deal. The flipper then renovates and sells for $200,000, earning their own profit. The gator method fuels the initial transaction, enabling the wholesale transaction without the wholesaler’s own cash.

Why use the Gator Method?

The Gator Method is ideal for beginners or investors with limited capital who want to enter real estate without the overhead of renovations. It’s about leveraging networks, speed, and other people’s money to generate quick returns, which can then be reinvested into larger projects like traditional flips. However, success hinges on finding reliable wholesalers, lining up buyers, and managing the risks of short-term loans, which can carry high fees or interest if deals fall through. This is a creative, low barrier to entry strategy that complements fix and flip investors, fix and rent investors, and turnkey rental investors by providing fast capital and deal flow, even if it doesn’t involve the hands-on rehab and management of properties that defines traditional house flipping and rental investing.

Who Should Consider This Strategy

• Wholesalers that do not have enough funds to cover earnest money deposits for one or multiple deals they are working simultaneously
• Investors who want to conserve cash (i.e. for other fix and flip or, BRRR Method transactions) and minimize upfront costs

Who is Pace Morby?

Pace Morby is a prominent real estate investor, entrepreneur, and educator known for his expertise in creative financing strategies, particularly gator method, "subject-to" ("subto"), and seller financing. These strategies allow investors to acquire properties with little to no personal capital by taking over existing mortgages or negotiating terms directly with sellers.

Morby’s career in real estate began after a varied entrepreneurial journey. He studied business management at Utah State University and initially ventured into businesses like Dixon Golf (where he served as chairman from 2009-2011) and oil and gas through Arcadia Energy and Arcadia Holdings. His shift to real estate came after purchasing a HomeVestors franchise ("We Buy Ugly Houses"), which sparked his interest in flipping and investing. Over the years, he claims to have completed over thousands of renovations, built hundreds of new homes, and grown a large portfolio of buy-and-hold properties largely through creative financing rather than traditional bank loans.

He’s also a media personality, hosting the A&E TV show Triple Digit Flip, where he and co-host Jamil Damji aim to flip distressed properties for six-figure profits. Beyond his hands-on investing, Morby is the founder of Subto, a real estate education program and community that teaches creative financing strategies. His mentorship includes weekly coaching calls, and he’s known for an energetic, no-nonsense approach that’s earned him a large following on platforms like YouTube, Instagram, and Facebook. His book, Wealth Without Cash, further outlines his methods for building wealth in real estate without significant upfront money.

Morby’s public persona is polarizing. Supporters praise his transparency, community-building, and actionable advice, often citing his willingness to share free resources like contracts and scripts. Critics, however, question the scalability of his methods for beginners and the high cost of his Subto program, with some labeling him a "guru" more focused on selling courses than investing. Despite this, his influence and the practical application and merit of his techniques is undeniable, with a strong online presence.

Related concept: Subto

The Subto program, created by Pace Morby, is an educational platform teaching real estate investors the "subject-to" (subto) financing strategy. This method lets investors acquire properties by taking over a seller’s existing mortgage, bypassing traditional bank loans and minimizing upfront costs.

Why would a seller agree to a subto deal structure

Subto is a creative financing solution catered to sellers that are struggling to sell their property due to a decline in the market value of their home or struggling to make mortgage payments and facing foreclosure. Sellers that otherwise would have to bring cash to close the sale of their property (because their sale proceeds would not cover closing costs and mortgage payoff) can instead receive a one-time cash payment and have the investor take over their mortgage payments. The investor can then resolve any past-due payments, accrued interest and fees to bring the mortgage into good standing.

Why would an investor want to do a subto deal?

Subto deals have low upfront costs (especially in partnership with a gator lender) and allow the investor to take over a property with minimal deferred maintenance and a low mortgage interest rate that can generate a modest amount of cash flow once rented at market rate.

How does subto work?

In a Subto deal, the seller transfers property ownership into a trust to the buyer via a deed, but the mortgage remains in the seller’s name. The buyer takes over monthly payments without assuming the loan formally, keeping the original terms (e.g., a low interest rate). This requires little cash—sometimes just a small payment for the seller’s equity—and allows investors to profit by renting or selling the property.

Example subto deal

Bob bought a property for $200,000 in 2021 with a 3% mortgage but the property is only worth $165,000 in today's market. He has a $150,000 mortgage balance -- an $850 monthly payment including taxes and insurance.

Bob wants to sell and move closer to his grandchildren but he'd need to bring nearly $10,000 to the closing table to pay off the mortgage and cover closing costs.

Jim, a subto investor offers Bob a one-time $10,000 cash payment in exchange for Bob transferring title of the property into a land trust and transferring control of the trust to Jim who will then be responsible for the monthly mortgage payment.

Bob was skeptical at first so he reviewed this with a real estate attorney who advised on structuring a purchase agreement with subto addendum to ensure robust recourse if Jim ever failed to make the monthly mortgage payment. Instead of -$10,000 cash flow and a prolonged traditional home sale closing, Bob was +$10,000 cash flow and out of his mortgage in under a week.

Jim partnered with Nancy, his go-to gator lender, for $5,000 of the cash payment to Bob. Jim funded the remaining $5,000 with his own cash. Jim then rents the property to a carefully vetted market tenant for $1,500/month. Out of the $650 monthly cash flow, Jim repays Nancy $600 for 12 months per their gator agreement -- a 44% return on Nancy's capital.

Risks of subto

Subto is not without its risks. Most mortgages have a due-on-sale clause, allowing lenders to demand full repayment if ownership changes—though enforcement is rare. If the investor misses payments, the seller’s credit suffers, posing ethical and legal issues. Critics also question the costs of guru courses which are generally not required to implement the strategy into practice.

Combining Gator Method and Subto

Using the Gator Method and Subto together creates a hybrid approach: the Gator Method funds the initial acquisition, while Subto structures the long-term ownership.

Here’s how it works step-by-step:

Step 1: Finding the Deal

An investor identifies a motivated seller (e.g., in pre-foreclosure) willing to sell "subject to" their mortgage—say, a $150,000 loan with a $700 monthly payment on a $200,000 property. The seller may want $5,000 for their equity, but the investor lacks cash for this or the EMD.

Step 2: Gator Funding

The investor partners with a Gator Lender who provides a short-term loan—$5,000 for the equity payment and, say, $1,000 for the EMD. This transactional funding closes the deal fast, securing the property under the Subto agreement.

Step 3: Subto Execution

The investor takes the deed, assumes responsibility for the $700/month mortgage payments, and now owns the property. No bank loan is needed, and the low interest rate (e.g., 4%) is preserved, unlike new financing at 7-8% in 2025.

Step 4: Exit Strategy

• Short-Term Flip: The investor sells the property "as-is" to a flipper for $180,000 within days. They repay the Gator Lender (e.g., $6,000 principal + $500 fee), pay off the $150,000 mortgage, and pocket $23,500 profit.
• Long-Term Hold: The investor rents it for $1,500/month, netting $800/month after the mortgage. The Gator loan is repaid from early rent or a small personal fund, and the property generates cash flow indefinitely.

**Step 5: Recycling Capital

Profits from either strategy can fund more Gator loans or Subto deals, creating a self-sustaining cycle.

Synergy Benefits

• Low Capital Entry: The Gator Method covers upfront costs (EMD, equity payments), while Subto avoids big down payments, making deals possible with little personal money.
• Speed Meets Stability: Gator’s quick funding secures the property; Subto’s structure provides flexible exit options (flip or hold).
• Risk Mitigation: Gator loans are short-term and repaid fast, while Subto leverages existing low-rate mortgages, reducing exposure to high-interest debt.
• Network Leverage: Both rely on relationships—wholesalers for Gator deals, sellers for Subto—amplifying deal flow through community ties.

Example of Gator + Subto

A wholesaler finds a $120,000 Subto deal (mortgage: $100,000, 3.5%, $500/month; seller wants $5,000). They borrow $6,000 via the Gator Method ($1,000 EMD + $5,000 equity). The investor closes, rents it for $1,200/month ($700 profit), and repays the Gator Lender $7,500 within 3 months. The property cash-flows long-term, and the investor repeats the process.

Risk Management

• Due-on-Sale Clause: Subto’s mortgage could be called, though rare. Gator lender should ensure a pivot from subto to flip will cover repayment obligation and preferred timeline.
• Repayment Timing: Gator loans need quick repayment, so the Subto deal must generate funds fast (via sale or rent).
• Trust: Successful execution requires trust between investor/wholesaler, gator lender and seller.

If you're an investor, you need to optimize your creditworthiness and conservatively underwrite your deals with careful due diligence. If you're a gator lender, you need to carefully underwrite the investor and the deal to ensure your capital is protected and not tied up for a prolonged period of time in a poorly structured deal. You also need to implement contractual and process safeguards to protect your capital.

The Gator Method and Subto complement each other by blending short-term agility with long-term ownership. Gator funding kickstarts the Subto acquisition, enabling investors to control properties cheaply and profit flexibly—whether flipping quickly or holding for cash flow. It’s a dynamic duo for real estate investors aiming to scale with minimal capital, provided they master networking, negotiation, and risk management.

Essential Steps For Implementation

Apply these steps to implement the Gator Method flipping approach. Use creative financing tools and supportive partners to finalize transactions efficiently.

Step 1: Source The Right Properties

Finding undervalued properties is the most fundamental step for successful real estate investing. As a real estate investor, this is where your profit opportunity starts. Evaluate each home's potential based on location and condition. Use comp tools and sales comp best practices to gauge projected equity. Include subto deals if you want flexible terms. Set aside an earnest money deposit or EMD if the seller requests immediate funds. Gator lending covers short-term needs until you secure transactional or gap funding.

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Step 2: Build A Reliable Team

Recruit specialized professionals for each part of the flipping process. Hire a contractor for renovations. They confirm structural integrity and estimate expenses. Collaborate with a transaction coordinator who manages deadlines and documentation. Consult a creative financing expert who uses Pace Morby's frameworks to structure deals. Wholesale real estate partners or wholesalers supply off-market properties that expedite acquisitions.

Step 3: Implement Proper Risk Management

Here are the things highly successful creative finance investors do to manage risk:

• Build and grow cash buffer -- you many not have it now but as you earn profit, keep a buffer in place to avoid unnecessary blow-ups.
• Cultivate relationships with lenders -- build a rolodex of reliable gator lenders and private lenders and go the extra mile to ensure your terms are honored and they are repaid exactly to plan plus their fees.
• Work with an expert real estate attorney -- implement contracts, agreements and deal structures that protect your interests and liability.
• Do business as an LLC -- implement errors and ommissions professional liability insurance, homeowners insurance to protect against the risk of loss from damage, liability claims.
• Be solutions-oriented -- work hard to genuinely help solve problems for people. Align yourself with people and treat them with respect. Take a long-term view and protect your reputation by upholding a high standard of honesty and trustworthiness.

Summary

The gator method is a powerful technique to grow your real estate investing business without common capital constraints that prevent many investors from achieving scale. Before implementing the gator method, it's important to fully understand best practices and risks and use discipline in translating this education into practice.

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