Creative Real Estate Deals Still Work in 2026 | Subject-To, Wraps & Expired Listings Explained

Felix Gafner (00:00)

Subject two just means that the mortgage stays in the name of the former owner. But he transfers the ⁓ securing property that secures the loan, he transfers to the buyer.

Now there’s quite a few ⁓ stumbles, stones there that could be dangerous, right? One, for example, the, ⁓ yeah, the owner or the former owner gets somewhat greedy, right? Or envy like this one. ⁓ The, obviously the lender could accelerate the loan or, you just say, hey, former owner.

you don’t have that property anymore, you gotta pay now, you gotta pay the mortgage off,

Micah Johnson (02:27)

Hey everyone, welcome to the Real Estate Pros Podcast. I’m your host, Micah Johnson. And today I’m joined by Felix, who’s been making some serious moves in real estate for over 20 years now. Felix, welcome in man, glad to have you.

Felix Gafner (02:40)

Thank you so much to have me. I really appreciate that. very, I feel very good about it. Thank you.

Micah Johnson (02:47)

Awesome, man. I’m glad to have you. I’m excited for our talk today. Just to, think folks are to take value away from the deals that you’re doing, how you’re going about it. And I’m excited to dig in there. So for folks who may not know you yet, what’s your main focus right now and what markets you operate in?

Felix Gafner (03:03)

So my main focus is actually, it’s real estate and property management. And that brings me a lot of ⁓ ideals that I can attend myself then for myself.

Micah Johnson (03:17)

Okay. Tell me about your journey through real estate. What led to that property management company opening up? How’d you get from where you were to where you are today?

Felix Gafner (03:27)

Well, I started in 2002 as a real estate agent and then about 2006 I started my own company and 2014 we started with property management and it was a little bit but the thought of having kind of like counterbalance property management I imagined was going to be a little bit anti-cyclical.

Micah Johnson (03:42)

Okay.

Gotcha. Gotcha. So just creating some verticals there to keep the business nice and even. I heard that man. That’s what leads a lot of folks to it. Now, do you manage ⁓ your own properties and other people’s right? How many doors do you work with?

Felix Gafner (04:09)

So on my side, my own are about 20 and ⁓ total is about 150.

Micah Johnson (04:17)

Awesome, man. Yeah, no, it’s it is one of the balanced industries for sure and if you’re the right kind of fit for it It’s a good one to be in

So tell me about some deals that you’ve been doing. You mentioned it pre-recording. You had a few that were really exciting for you. Take us through them. What’s that first one that you’re working on?

Felix Gafner (04:37)

Well, one was

an elderly lady and she hadn’t paid her mortgage in a ⁓ long time. ⁓ so she actually, I called her, I think it was an expired listing if I remember right. And so I called her and then I didn’t hear from her I think a month or two.

And then suddenly she calls me out of the blue and says, hey, Felix, what can we do here, So ⁓ I assessed the situation, and we ended up coming up with a deal. Let’s see. So I gave her a little money, and then ⁓ I paid off her or brought her mortgages current. And

Micah Johnson (05:56)

Mm.

Okay.

Felix Gafner (06:18)

basically took over the house, the object too. But most of the money, she, well, I paid her by having her live there for free for like 40 or 45 months. And the lady loves me. She thinks I rescued her.

Micah Johnson (06:33)

Okay.

Right.

⁓ man, those are the best deals, man. When you do them right, the person that you’re working with, they feel taken care of. They’ll actually be excited for you at how much money you’re making. If it’s done well, like the part about how much you make doesn’t matter. It matters on did you solve their problem. And the problems that they’re typically going through, not many people know how to fix them. So getting paid really well to fix them is a lifesaver.

for these people when it’s done really, really well. So that’s awesome. So what’s going on with that property now?

Felix Gafner (07:14)

She still lives there. She’s now paying rent and Yeah, it’s a nice little property. I’ll let her live there as long as she wants and she actually I was a little worried about it, you know since she hadn’t paid ⁓ the ⁓ Mortgage in a long time, but she pays, you know, like two weeks before and it’s It’s awesome. It’s really really great

Micah Johnson (07:38)

Interesting.

And you’ve got that one cash flowing now. And that’s your main goal, right? You’re a buy and hold guy trying to make things cash flow. What’s been what’s been your secret to get properties here in these past couple of years? Because that’s been the that’s been the harder part is finding that cash flow.

Felix Gafner (07:50)

Yeah

So, ⁓ well, another one, another deal that I did, that’s the trailer park. I mentioned it to you at the pre-recording session. ⁓ It didn’t sell. Nobody saw the potential for some reason and I stumbled over it. I actually offered it to someone else and he said, well, no, they’re not cash flowing enough and whatnot. And I was like.

Micah Johnson (08:15)

It’s. ⁓

Felix Gafner (08:29)

Well, okay. And then I was able to negotiate a fantastic deal. mean, I was just, yeah, great deal. I’m very happy with it.

Micah Johnson (08:40)

Yeah.

Well, it’s one of the beauties of being a realtor in the business. So that’s how I got started in real estate. And whenever you can get your quote unquote full-time job to be active doing the thing that you’re already looking for, it’s super handy. It’s a great way to do it, man. And that’s one thing about real estate. You get to build your business however you want it to look, right? You’ve designed it exactly how you want it. And it’s a whole goal is in the end to feed the machine that you’re building. You want cashflow indoors.

So being able to be in the industry helping others and being exposed to expired listings, like a lot of top folks know about them, that they exist and how powerful they are, but expired listings, if you don’t know about it, it’s a heck of a resource to find deals, because you have somebody who’s already agreed to sell, right? We already know for sure they want to sell a property and they’ve had a problem doing it. So the right amount of motivation might be there, the right things might already exist that you typically have to

dig into in previous phone calls with people that aren’t quite ready there. So yeah, man, I love it. Getting a deal off an expired listing is really handy.

Felix Gafner (09:48)

Maybe one quick or slight correction. I didn’t imagine to be in property management when I started this, honestly. So when you say I could build my business exactly how I imagined it,

sometimes you also gotta recognize the opportunity, right? And go in that direction, so.

Micah Johnson (10:48)

Right?

And that’s one of the reasons I love real estate. It’s a huge umbrella. You get to pull the different parts into it that you want. whether that’s you see the opportunity, because property management, I tell you, that’s not for everybody. It’s unique personalities. It’s unique personalities that excel at that business. It’s a way that you are. And that’s something I recognized a long time ago, that the folks that do that part well, it’s a skill set.

Felix Gafner (11:06)

No.

Micah Johnson (11:19)

You’re very service oriented. You’re very much, you’re really, really good with people, like really good with people typically. And you got systems set up that just help you keep moving things along. Cause it’s, it’s a business we all need. Not everybody’s set up to be that, right? I know a lot of investors are trying to get to that eight or nine door mark until it makes sense to be with a property manager. Cause they don’t want to talk about, what is it? Toilets, trash and.

There’s three T’s I usually hear. Those are only two I remember right now. I can’t remember. Yeah, now, yeah, it’s, it’s a tollless trash, else, doesn’t matter. It’s the things that property management typically deals with that folks that don’t want to be landlords don’t want to. Okay, so you got a trailer park deal that you enjoyed. Got another one with a…

Felix Gafner (11:51)

Not familiar with it.

Micah Johnson (12:12)

Lady getting her out of her pre foreclosure issue she was dealing with. What was that third one? What else is, what else you got going on?

Felix Gafner (12:20)

well, I also own a Triplex, which I wrapped, ⁓ which, you know, yeah, that one, you know, people, when you wrap or subject to it, it was actually subject to, you know, I made it profitable and the guy before me wasn’t able to do that. then, and we kicked in and ⁓ so he started to, ⁓

Micah Johnson (12:24)

Okay?

Felix Gafner (12:50)

He actually said he was going to go file bankruptcy and I really wasn’t sure what was going to happen there. So I decided to pay it off, but I didn’t have the money. So I ⁓ had to convince my wife to put a HELOC on our home and was able to pay it off. And I still got a good rate and everything. but yeah, careful out there.

Micah Johnson (13:17)

Well, let’s go into that. Tell us, for someone that may not know what a subject two is, take us into what it is and then what to watch out for.

Felix Gafner (13:27)

So the subject two is basically very similar to a wrap, right? ⁓ Subject two just means that the mortgage stays in the name of the former owner. But he transfers the ⁓ securing property that secures the loan, he transfers to the buyer.

Now there’s quite a few ⁓ stumbles, stones there that could be dangerous, right? One, for example, the, ⁓ yeah, the owner or the former owner gets somewhat greedy, right? Or envy like this one. ⁓ The, obviously the lender could accelerate the loan or, you just say, hey, former owner.

you don’t have that property anymore, you gotta pay now, you gotta pay the mortgage off,

And then it will get foreclosed on. there, yeah, it’s… Every deal has its, whatchamacallit, synchroses almost and what not.

Micah Johnson (14:49)

Well, it’s a powerful tool and you can use it, protecting yourself for sure with it. I’ve heard quite a bit lately about different loans getting called, like you’re describing where lender found out, accelerated the mortgage. Now you got to take care of it,

typically requires, I mean, depending on your position, if you can get it or not, right? Like, you set yourself up. it is valuable to know all these different tools because they can get you into amazing deals, just knowing, hey, there’s a few things that could go.

Know what could go sideways, mitigate risk as early on as possible. If you’re not familiar with those kinds of deals, talk to somebody like Felix who does them, talk with people who do them. I always say this, education is the first step in real estate. It’s not making the offer. That’s like step 10. I know that’s the part we all like to do, but it’s educate yourself first, knowing what’s going on. And by doing that,

It only helps with the conversation with the owner. The more rules of the game you know and understand, the better you can communicate them and really show, hey, this is the service I’m providing. This is what this is versus getting stuck in phone calls that you don’t know what to say next.

So how long have you been doing the sub two technique?

Felix Gafner (16:51)

man.

Yeah, I think that was the first one and that was in about 2014 maybe or something like that 2015 something like that.

Micah Johnson (17:04)

Okay.

Okay. So you’ve been doing it for it was cool. It’s pretty mainstream now that you hear folks talk. Yeah, it’s pretty mainstream. Now there’s a guy out there named pace Morby who’s he’s got a whole brand built off the sub to concept. Actually watched a video this the other day he sub to the car, which is funny and he uses it for his customers. It’s wild. It’s a really interesting product if you know how to use it if you can leverage it into your business.

Felix Gafner (17:09)

⁓ really?

wow.

Micah Johnson (17:32)

Cause his whole story, his background, like nine brothers and sisters, his dad was an accountant and, but they lived in a $2 million house growing up. And he’s like, there was no way, absolutely no way my dad could afford that house on a salary. So he asked him how he did it and watched him growing up doing it. And that’s how his dad bought everything creative financing. He went and found ways into houses for his family. And then he turned it into a businessman. He uses it all the time. And it’s really.

It’s really a powerful product. look for it. And when I’m looking at deals, if I can get creative, amen. If you can use the option, use it.

Felix Gafner (18:10)

Absolutely.

Micah Johnson (18:10)

So what’s

coming up for you this year? What are you excited about?

Felix Gafner (18:15)

Well, we’re gonna buy a property in ⁓ Austin, Texas, because we wanna be closer to the kids. And ⁓ with the idea to be there every once in a while and then Airbnb it. So that’s the idea. That’s the exciting stuff right now.

Micah Johnson (18:21)

Okay. Gotcha.

Okay.

Right,

right man, that’s beautiful. That’s beautiful. So where are you, you’re gonna get one in Austin. Where are you based out of?

Felix Gafner (18:41)

Tucson, Tucson, Arizona.

Micah Johnson (18:44)

Okay, and so you do real your realtor in Tucson, Arizona and is that how you find most of your deals is just through working with different buyers and sellers?

Felix Gafner (18:53)

Yeah, I know when you’re a flipper or anything like that, a lot of them send out a gazillion letters and postcards and whatnot. I don’t do that.

All the properties I ⁓ bought through deals that I suddenly looked at, expired listings or other listings, and ⁓ just thought, well, maybe this could be a good investment. And I’ve also not seen ⁓ the opportunity, and I sold one property to a client of mine where we’re ⁓ managing it.

And I didn’t see it, right? He did. So, you know, sometimes you get them, sometimes you miss it.

Micah Johnson (19:48)

Yeah. Well, again, it’s a benefit of being a realtor and an investor. you’re, when I call it, it’s real estate is one of the only ⁓ industries where they encourage insider trading, where if you, the deeper you can get into it and see what’s coming, like you only get, it only benefits you. You only get more access. And that’s where, as in, if you’re an active agent that invests, you’re out there looking for it, right? You’re, you’re, you have a way to get paid on deals in multiple ways that other folks don’t. If they’re only

have one exit strategy if there’s only one thing they can do. So it keeps you positioned as that expert.

Well, Felix, man, I really appreciate your time today, your story, your perspective. Thanks for hopping on with us. For folks that are listening in and want to learn more about you, possibly may have a property to buy or sell there in Tucson, what’s the best way for them to find you?

Felix Gafner (20:40)

Well, they can reach me through my website at realtyfelix.com or mean phone pretty much. I don’t do a whole lot of social media. And the phone is 520-390-6920. Feel free. I’d love to help you.

Micah Johnson (20:55)

OK.

Excellent, excellent.

Well, if you’re listening or watching, please check the show notes. We’ll make sure that Felix’s website link and his phone number are there. If you’re doing anything in that area, reach out to him, give him a call. If you got questions about creative, he’s the one doing it quite a bit. So give him a call about that too. Again, thanks for being here, Felix. We appreciate everybody that comes on and shares value. For those that are listening and watching, if you got value out of today’s episode, please like it, share it with someone else you think could benefit.

As always, don’t forget to subscribe to our podcast. We appreciate every single one of you that follows along with us. We’ve got more conversations coming up with operators just like Felix out there building a real business in the industry. Thanks for joining us. We’ll see you on the next episode.