Year-1 Cash Flow, 9% Preferred Returns, and a 75% Profit Share – Welcome to SubTo Fund II.
Invest in multifamily properties with creative financing and start earning the moment you come on board.
High Interest Rates Are Pressuring Traditional Syndications—But SubTo Fund II is Structured Differently.
The multifamily market is in upheaval. Operators relying on 7-9% bank financing are seeing reduced cash flow due to elevated interest expenses. Some have paused distributions – or in more severe cases, faced default risks.
Experts predict up to 20% of all apartment loans could be at risk if interest rates remain elevated – leaving many investors and waiting for a potential Fed rate cut. But waiting may not be the only option.
Our advantage: SubTo Fund II leverages creative financing strategies to acquire properties at fixed rates around 4-5% without relying on traditional bank loans – helping preserve cash flow by minimizing interest burdens. While some investors wait for a potential Fed rate cut, our deals are structured to begin generating cash flow early in the investment cycle, targeting a 9% Preferred Return, which begins accruing upon subscription.
The Problem
Interest Rates Kill Deals
High interest rates can significantly impact deal viability and investor returns – posing challenges for traditionally financed real estate strategies.
The Solution
MF Is The Way To Preserve Wealth
Multifamily real estate may offer a more resilient approach to wealth preservation in inflationary or recessionary environments, due to its potential for consistent demand and income generation
Experts Say Investing In Real Estate Can Hedge Against Inflation. Here’s What You Should Know To Get Started.
How We Target 4-5% Financing, Minimize Bank Reliance, and Aim for a 9% Preferred Return.
SubTo Fund II focuses on acquiring properties that are structured to cash flow from the outset – without relying on future bank rate cuts or conventional financing. Here’s our playbook:
Creative Financing
Direct-to-owner negotiations at rates typically 4–5%—well below the 7–9% norm.
Minimal closing costs and no lengthy bank process = potentially higher returns for you.
Cash Flow from Day One
By minimizing reliance on expensive debt, each deal is structured to begin generating net income in Year 1.
That income supports our targeted 9% Preferred Return, which begins accruing upon subscription – subject to fund performance and market conditions.
Clawback Clause
WWhile the preferred return accrues, its distribution is subject to fund performance and available cash. If and when available cash is sufficient, investors receive 100% of their accrued preferred return before the sponsor shares in any upside.
Network Advantage
Our leadership – Pace Morby and Josiah Grimes – brings decades of combined experience and access to a robust nationwide off-market deal flow.
Through established networks and creative sourcing strategies, we regularly evaluate opportunities that may never reach the MLS or traditional broker channels—a key advantage in identifying properties with strong cash flow potential.
The Creative Finance Masters Behind SubTo Fund II
We’re not your typical syndication. Our leadership—Pace Morby and Josiah Grimes—brings decades of experience and a nationwide off-market deal flow that others can’t match.
Pace Morby – Managing Partner
- Author of “Wealth Without Cash,” star of Triple Digit Flip
- Creative finance educator with a community of thousands
- Started as a contractor; now owns a multi-million-dollar real estate portfolio
Josiah Grimes – Co-Founder & CEO of KeyGlee
- Runs the largest real estate wholesaler in the U.S. (100+ locations)
- Taps a massive nationwide pipeline of off-market deals
- Entrepreneur and philanthropist, building communities that thrive
Supporting Team
Adam Schaller (Investor Relations)
Your direct contact.
Phillip Raetz (Asset Manager):
Oversees capital improvements & day-to-day operations.
Ryan Wagner (Head of Acquisitions):
Sources undervalued properties across multiple markets.
La Primera: 44% NOI Increase in Year 1 Thanks to Creative Financing
Case Study Highlights
- Interest Rate: Locked in at 5% (while others secured debt at 7-9%).
- Rent Upside: Initial rents increased from $600 to $900, then to $1,100 by year-end.
- Result: A 44% jump in Net Operating Income within 12 months, generating stable, early cash flow for investors.
While competitors waited on the Fed to cut rates or struggled under huge debt expenses, we leveraged creative finance to acquire below-market, implement value-add strategies, and structure for early cash flow.
Targeted 9% Preferred Return, Beginning Day 1
We've structured SubTo Fund II to offer a 9% Preferred Return that begins accruing the day you invest.
75% Investor Profit Share
After the preferred return is paid, 75% of distributable profits are allocated to investors, targeting a 15-17% IRR.
Clawback Clause
Helps prioritize investor returns. If one asset underperforms, manager profit participation is deferred until investors achieve their preferred return across the fund.
Creative Financing: Skip Traditional Bank Debt
We pursue creative financing strategies designed to avoid traditional 1-2% origination fees and long bank approval timelines
Tax-Advantaged Income
We target assets eligible for accelerated depreciation, which may help offset some or all of your taxable distributions.
Hands-Off Approach
We handle acquisition, underwriting, and asset management. Investors receive quarterly updates and distributions, with no operational responsibilities.
Start Accruing 9% the Moment You Invest—Here’s How.
Schedule a Call
We’ll confirm you’re accredited, discuss your goals, and see if SubTo Fund II is a fit.
Review & Sign
Dive into our Private Placement Memorandum and Subscription Documents. Ask questions—transparency is key.
Fund & Earn
Once your investment is accepted by the Fund, your 9% Preferred Return begins accruing. Investors can expect quarterly distribution targets (subject to performance) and regular property updates.
Who can invest in SubTo Fund II?
Accredited investors only, per our 506(c) offering.
What’s the minimum investment?
$100,000. Larger checks may receive additional benefits.
When do I get paid?
We distribute quarterly, starting in the first quarter after you invest. Your 9% preferred return begins accruing the day your funds arrive.
How long is the investment hold?
Typically 5–7 years in a closed-end fund structure, with possible earlier exits if certain assets sell or refinance.
What if a deal underperforms?
Our Clawback Clause is designed to help prioritize investor returns by deferring manager profit participation on overperforming assets until investors receive their 9% Preferred Return across the fund.
Do I get tax advantages?
It’s Time to Invest in Multifamily on Your Terms—Not the Bank’s.
Stop waiting for interest rates to drop. SubTo Fund leverages creative financing strategies to pursue 4-5% fixed-rate deals – often without relying on traditional bank loans. The fund is structured to offer a 9% Preferred Return, which begins accruing upon investment acceptance. Join us in pursuing cash-flow-focused multifamily opportunities – the kind that many traditional syndicators overlook.
Disclaimer: This information is for accredited investors only and does not constitute an offer to sell or a solicitation of an offer to buy securities. Offers are made solely through the Private Placement Memorandum (PPM). Past performance is not indicative of future results. All investments involve risk, and you should review the PPM and consult your financial, tax, and legal advisors before investing.
