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Creative Real Estate Financing Post Covid - Mortgage Notes and Real Estate

Why Creative Financing so Important in Today’s World

What is Creative Financing Black Swan Events Why Creative Financing has Always Come to the Rescue

Landlords are burning out. Tenants are behind on rent payments. Toilets are backing up.

Is there an alternative?

Uncover Why Savvy Investors Use Proven Mortgage Note Strategies for Massive Monthly Profits In Today’s Ever-Changing Market… Risk-Free!

Discover more about Note School and profiting without Tenants, Toilets and by taking our FREE one day class:

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#NoteSchool #EddieSpeed #RealEstate #MortgageNotes

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Brian Lauchner (00:00): All right. Welcome back everybody to NoteSchool TV. My name is Brian Lauchner. I'm on the teaching team here at NoteSchool, and today we have a very special episode, just like we do every single Wednesday when we go live at 11:00 AM central time. So make sure if you're wanting to get the latest and greatest content that's coming out, be sure to like, and subscribe this channel as well as turn on the notifications by hitting that bell notification. And it will tell you on your device, Hey, we're going live. And then you can jump in with your comments and we'd love to interact with you here while we're live on the show. So today here at NoteSchool TV, we've got a lot of great content. If you're wanting to learn more about the Note Business or NoteSchool in general, you could go to www.NoteSchool.com/TV to learn more, or you could actually attend an upcoming industry event called Note Expo.

Brian Lauchner (01:05): And you can learn more about that at www.NoteExpo.com. So today on our live show, we have some incredible content about the Creative Financing Space and really why is it so important that investors really know this information? And we've got the latest and greatest of people to talk about this as well. We've got Joe Varnadore and we've got the one and only Eddie Speed as well. Tons of experience to kind of bring the content into our homes and learn a little bit more. So joining me right now are going to be, and we're going to dig into, Hey Eddie, Hey Joe, why is creative financing so important in today's marketplace?

Joe Varnadore (01:44): You know, Eddie and I were talking back in March early March, when this whole thing started, right? The whole pandemic and Eddie says, Joe, he says, you know, I don't think there's ever been a better time for a couple of, you know, older, gray hair guys, to talk about the way to, you know, build your business, double your net worth during a period of time then right now. And that's because of Creative Financing. Eddie, why don't you share with us, you know, some of your experience from the past, right.

Eddie Speed (02:22): Well, you know, I started in the business. I started in the business in a market that was a black Swan Market. I started in 1980. And what's interesting guys is that when I started in 1980, I was calling on realtors, that their clients had created Seller Financing or Home Builders. They were creating Seller Financing for their clients to sell a house, a new house to them, right. A new home builder. And the truth of matter is I was calling on them. I was a rookie in the business, young didn't anything, you know, just, here I was walking into their office and they're like, it was like a morgue, right? I mean, they were just, Oh my God, we don't know what to do. And it's scary and stuff. And in this business, because I came into it from a different kind of a knowledge base, a different perspective, it was a Bonanza for me.

Eddie Speed (03:23): And I thought that through the years they'd been doing it for decades and I've been doing it for months yet, I was killing it and they thought they were getting killed. Right. They're the ones that should have been telling me how to solve the problem, not me telling them how to solve the problem. Right. So sometimes because somebody has been doing something a long time, doesn't mean they're thinking in a progressive way. So Joe and I spent a lot of time about, yeah, this gray hair does mean something, but this gray hair doesn't mean anything. If we're not looking on the market horizon and saying, what would be the most relevant changes we could make to our business that would affect our net worth and our income the most.

Joe Varnadore (04:08): And, you know.

Brian Lauchner (04:09): being that, Oh, go ahead Joe.

Joe Varnadore (04:12): No, I'm just going to say, and that, and you know that, so Eddie is, you know, he is our fearless leader, right? He's a, but he is our visionary as well. And you know, one of the sayings that, we say it NoteSchool, and Eddie nailed it is, don't have a crystal ball, but I do have a rear view mirror. And all of these events, these Black Swan events really has prepared us, right. For what's going on today in the marketplace, you know, you don't know what you don't know. So yeah.

Brian Lauchner (04:46): And before we dive into some of these things, like these terms, Black Swan events, Eddie, why don't you start off start us off by really getting everybody on the same page, because we really need to understand what is Creative Financing before we dive into it. Because kind of like you said, you know, you're going into your spot speaking to these realtors and they're supposed to be the ones with the solutions, but the solutions for what? and what that's supposed to look like. So tell us a little bit about what is Creative Financing. And then we'll dive into a little bit about the opportunity.

Eddie Speed (05:17): Well, let's define Creative Financing is some kind of financial structure that's different than just to normal traditional bank financing, right? Or traditionally how people generally focus on doing something. Now I started out in the Note Buying Business, meaning that people would sell or finance a property. They would not only be the seller of the property, but they would be the bank and they would carry payments over time. Right. They would collect payments and then they'd wake up one day and decide they wanted to cash in early. Right? Now we've come up with Creative Financing structures even to buy their notes. Right. So, Creative Financing could be a Note Buying Strategy, right. Because there's more than just one way to buy note. Right. But we also want to make sure that people don't see us as just, we teach people how to buy notes because I've taught thousands of real estate investors, how to creatively structure buying a property and reselling a property, Creative Financing when they buy it Creative Financing when they sell it.

Eddie Speed (06:28): Right. So, that's kind of, that's , when we say Creative Financing is like, what does that apply to? Anything related to what NoteSchool does it could be buying a note. It could be buying a property and getting the seller to carry terms, maybe using a private lender for part of the terms, all these different ways. And then the other side is Creative Financing. When we sell it, I like seller financing property in this market, right. Now, people say, well, don't you ever believe in rentals? Well, I mean, you'd be crazy not to believe in rentals when you could buy a rental property, Brian, in 2013 and 14 at the discounted price you could buy that, right? Because you had a high potential of its lift in value. But if you've reached a market condition that says that you pretty much have peaked out the top of the market, we can argue that debate. But wait a minute right now, if I could sell it and get a giant down payment, I could put some money in my pocket, reduce my investment costs in the property. And then I could carry owner finance paper over time, a wrap note. And and so those are all things that would relate to Creative Financing. It's not just to buy, It's not just the sale, It's not just notes, and it's not just property. It's, this is why it's so valuable is because you learn to intertwine these ideas. I call them puzzle pieces. If you understand the concept of this puzzle piece, you can apply it to the story.

Joe Varnadore (08:09): And, you know, Eddie, we know that sellers will agree to terms that banks would never, ever, ever agree to. Right. We know that there are things like, the ability to be able to buy the note that we created, we're the borrower on, but being able to buy our own note at sometime in the future to discount and things like that. So we've got, you know, we teach 50 plus deal points that you can add into that. So it's that whole process of knowing and how to structure a deal, right?

Eddie Speed (08:43): Yeah. The concept is this, we're in a hype at the moment. We're in a hyper competitive real estate market, whatever happens next year. Okay. We can argue about shadow inventory and why there's going to be a lot of distress properties on the market. We can do all that, but at the moment, Brian, as you well know a real estate investor at the moment, he feels like he's having to essentially overpay. So he's buying a property at what he thinks is, man, this ain't much of a discount, but on the other hand, there's all these people wanting to buy the property from him. And so he can, it's hard to buy, easy to sell, but the problem is the hard to buy, how many people does he make a discounted price to a cash offer? And now all of a sudden they won't accept it now, what's he going to do with that deal? If they won't accept his price, what does he end up doing with that lead? It's in the garbage?

Joe Varnadore (09:46): That's right.

Eddie Speed (09:46): How do you dig that deal out of the garbage and go make an offer? That is a higher price, but it's how you pay them back.

Joe Varnadore (09:55): We lovingly refer to paying somebody in the future, structuring a seller finance deal, or buying with Creative Financing is buying with monopoly money. And everybody kind of looks at us like we have four heads, right? It's not really buying monopoly money. What we're doing is we're paying the seller, their equity over time. And the reason we can do that, you know, people, you know, you could buy it at a discount being a wholesale deal, or if we can pay them almost, you know, full price for it. And because we are structuring the deal and paying them over time, we can pay them more money. Therefore, if it falls out of the deal hopper, because we can't buy it for for a discount, then obviously it we can buy it with terms and give them closure to what they're asking for.

Eddie Speed (10:47): Yeah. It's another option. It's another option that lets us close a piece of business that we couldn't close. If a guy is training at NoteSchool and he's a high volume real estate investor, or maybe Brian he's as low volume guy, right? Maybe he only buys five deals a year, whether he does five or 500, the issue is, he may, he spends X amount of money on marketing and energy and effort. And he closes X amount of deals essentially to put it under contract and flip it to somebody else. Right. That's a, that's a wholesale deal. Right? Brian.

Brian Lauchner (11:23): Yeah. That's it. And the other piece of this too, is that it's not just people who have it doesn't matter what your marketing budget is, right? If you were talking to sellers, the thing that you almost always have in common is the fact that there's going to be competition as well. So there's also this variable of if the seller always wants retail or some high price and all the wholesalers are kind of in this lower price, how do I start to separate myself so that the seller just talks to me? So then I can kind of transition, you know, how do I, if everyone's at a a hundred thousand price point or in that range, how do I start to say, Hey, I'll give you 135,000 or 125,000 to where now I'm just in such a completely different ball game that they're willing to have the conversation.

Brian Lauchner (12:05): And then I get the opportunity since they've given me some time now to hear me out, and now I have the opportunity to say, look, I can give you that money over time. And here's even why some, you know, here's some reasons why would be in your best financial interest. So from an acquisition standpoint, now I'm monetizing more leads, right? Because that one was going to go in the trash can if I didn't get it, but I'm also separating myself from the competition. And especially in times like this, where the seller sentiment in the market, which is what the seller believes, right? Whether it's true or not, doesn't really matter. It's when they believe. And when they believe that their house is worth this much, you know, it's my house. I will only sell it for a million dollars, Brian, because that helps down there.

Brian Lauchner (12:48): So for a million dollars and it's like, you try to use logic, you tried to explain to them, but that house is 7,000 square feet and your house is 2000 square feet. They're not the same thing. Right. They're stuck on that. And so how do we start to get closer to the fact that, okay, if you have to have that price, I can give you that price, but here's how it's going to look. Right? And so, again, it just, it gives me more opportunity. And as we know, when we start to bring creative solutions to complicated problems, that's where we start to, to make a lot of money.

Eddie Speed (13:23): Brian, and just the audience make sure that you know this, you were right down in where the rubber meets the road, right? You did this every day for a living. This was your full-time gig. You made your mortgage payment, your car payment, you've sent your kids to school based on your success of buying these houses at a discount. Now you weren't the note NoteSchool a few years ago. Right. And you heard these other concepts, but you said, I don't know. It's, I'm not sure this really applies. And then all of a sudden, as it progressed, the market got tighter and tighter. What did you have to go do?

Brian Lauchner (13:58): Yeah, I needed some sort of new result, right? I can't keep doing the same thing over and over again expecting a different result because the market shifted. Right. And when we look at you know, a lot of wholesalers and people who are talking to sellers, whether you're wholesale or not, maybe you're talking to sellers to acquire your own rental properties. The bottom line is the market has shifted. And chances are, especially since March of 2020, you've seen that maybe your marketing isn't performing, or maybe the sellers are demanding something different. And at the end of the day, nobody's telling you to stop making cash offers. That's not what Eddie's saying. Just to be very clear, definitely go make your cash offer. There's nothing wrong with that. That's going to help you get to your goal. But what do you do with those leads that you make your cash offer?

Brian Lauchner (14:40): And they say, Hmm, can't really do anything about it. Right? And so, you've got to be able to have another tool in the tool bag. And what Eddie's referring to is in 2016, when I met Eddie, he was like, you really need to add Creative Financing to your acquisitions. It will change your entire business in 2016. I didn't need a change. Like things were fine. I could go make a cash offer to a seller and they'd be like, okay. Yeah, it's probably worth that. You're right. You know what I mean? There wasn't any, there wasn't that hesitancy, there wasn't that resistance to get the deal done. But by 2018, at least in my market, things did start to shift and I did have to make a change and call up uncle Eddie and say, I need help. What am I doing wrong? And he lovingly of course said, look, it's what I told you two years ago, we just let's get to work. Right.

Brian Lauchner (15:30): So it's just about implementing it into what I was already doing. And because of that too, it was a very smooth and quick transition, which again, kind of bringing it back to why it's so important. You know it today, is look, the market has shifted. Everybody's aware of that. Well, I say everyone is aware of this. Some people think that it's just going to keep going like this for the next couple of years. Right. But the reality is if you're in a spot where maybe I need a little something different, I need a little something new. I need to start monetizing some of these leads that I used to, but I don't anymore. This creative financing element and the words of Eddie speed in 2016, if you'll add creative financing to your acquisitions model, it can start to get you a lot of leads and a lot of deals, which ultimately lead to money in your pocket, even in a market like this after what Eddie calls a Black Swan event.

Joe Varnadore (16:22): And, you know, we see that over and over people that were, you know, they were listening like you were in 2016, but they weren't forced to take that next step. Right. They weren't forced to say, okay, something isn't working. So now I've got a look at what else I can do to keep my business growing. And that's what it was. Eddie. Why don't you talk just a minute about, you know, for the folks that are wholesales about the three reasons that a wholesale deal or that cash offer deal just doesn't or can't work well all the time.

Joe Varnadore (17:08): All right. We can't so Eddie, let me jump in there. You've got a little sound problem there. So maybe we can get that worked out.

Eddie Speed (17:17): I don't know. How about a little.

Joe Varnadore (17:21): There you go. perfect!

Eddie Speed (17:21): A little munchkin jumped up there on my computer, Joe, and muted me. One of those gremlins,

Joe Varnadore (17:28): We know about those gremlins. Every time we would go do a live event, we would have everything set up perfectly, And.

Brian Lauchner (17:33): That's the beauty of live TV.

Joe Varnadore (17:37): Amen.

Eddie Speed (17:39): A real estate investor. The other thing that they can do is you, if you're not a giant operator, right? You're just a small guy doing the business. What you have to remember is there so many people doing the business today in the trashcan is getting full, fuller and fuller of people that just won't accept the discounted price, make a go, make a deal with them. And we can show you how to do this, by the way, very clearly go make a deal with them to go dig through their trashcan leads and go work the leads that they, that the cash price ended up in the trash. And there's, you know, there's some filtering to that, you can't go work every lead, but here's some simple filtering processes that could be put together. And then all of a sudden, Joe, I might go work part of my business or maybe all of my business and just going and working my competition's leads and letting them make something if I'm able to close it.

Joe Varnadore (18:40): That's. Right. Yeah.

Eddie Speed (18:43): That's an example of you know, we call it getting the juice out of the lemon, right guys.

Brian Lauchner (18:50): Yeah. But there's three main reasons that they even had that bucket of leads to begin with. Right? And every wholesaler, every rehab or anybody who's ever talked to a seller ever understands that the reason you're not getting the deal is number one, it's too far. You're too far apart on price. Right? You're here, and they just won't accept that price because they're way up here. And you're way down here, they just won't accept the price. So the second reason is just they can't accept it, right? They owe $87,000 on the mortgage and you're offering them 65,000. They'd have to write a huge check to do that and that's not an option. Another, the third reason is just you don't have the right buyer. Right? And that could be because you don't have a buyers list yet. And that could be because it's a really obscure property out in the middle of nowhere, or it's just a really weird house that nobody really wants, you know, to kind of mess with.

Brian Lauchner (19:40): There are those. But when you look at those, you could either talk to another investor and work a deal with them. Or if you're already in a situation where you're talking to sellers, kind of, like I said, before, you now have a secondary option, Hey, we can't make it work because you can't accept the price or you won't accept the price. What if we go about doing this a little bit differently? And and we buy it on terms, which is you taking the same equity, but you taking it over time, right? You want this much money. I'll give you this much money in chunks over time. And if that's a solution for you, because it's going to allow you to accomplish whatever that goal is. Well, now we can start heading down the path of how do we make that happen? What do those terms need to look like for this to be kind of a win-win solution.

Joe Varnadore (20:22): And you know, it's not only what you say, it's how you say it. You know, Eddie calls it the talk off, right? It's knowing how to present this terms offer this creative finance offer. Eddie. You can talk about that for just a minute.

Eddie Speed (20:40): Yeah. I think that's one of the key things that I've learned in whether I'm coaching somebody, that's a Ninja real investor and did 300 deals last year, or I'm helping somebody that did three deals last year. There's an interview process that we try to teach, not we try to teach, we definitely teach. There's an interview process of asking them the right questions. So let me give you one simple example to kind of wrap it up as we do this today. So Brian, let's pretend that you have a property and that you have, you've demanded a price that my cash offer won't meet. And so I've said, Brian, I can pay you your price if you take your equity over time. Right? And Brian goes, okay, that might work. And we can work around that. And then the second thing is, you're saying, well, because essentially what I'm saying to you is you're going to sell or finance it to me. Right. Brian, I'm not exactly saying it that way, but that's what the end result is going to equal.

Brian Lauchner (21:48): Right. And the interest to me is that I'm okay with taking my payments over time. I'm not okay with taking a discount or maybe it's paying real estate fees or something like that. That's why this would be a potential solution to continue talking about it from the seller's perspective.

Eddie Speed (22:02): So real estate investors regularly set this up. They regularly say that, but here's a mistake. I believe they make, they say, well, Brian, if I were talking to you, Brian, I would say, well, Brian, how much down payment do you want? You see, I'm inviting a conversation that is not going to be good for me. Right? Instead, Brian, here's what I must say. What are your immediate cash needs? Right. So now all of a sudden, if you say, well, I need 20% of the price of the property as my immediate cash need. Then I'm just going to go get a private money first and get you to carry a second lien for the 80%. There's the hundred 20 private money, 80% second. So wait a minute, I bought the property for nothing down, but it's because I ask it in the right manner.

Brian Lauchner (23:03): And the thing about this, what Eddie calls the talk off is there is such a logical rational way to have this conversation. And I think one of the reasons people fail with pitching terms or pitching Creative Financing solutions is they use a slick salesy type of approach. Like they're trying to just kind of work around the, you know, work around the problem to kind of get them to agree to these little weird things when it's like, you can just be direct and it's a more logical approach. And Eddie has just nailed this. And it's something I think NoteSchool teaches really well, is that when you come in from a standpoint of look, let me show you the most logical rational way to do this. And then on top of that, Mr. Seller, I'm going to explain why this is in your best interest. Look, what the money is going to turn into. If I'm, especially if I'm paying interest, like that's the most common way. And if not look how you can get the money that you're wanting, right. To be able to meet your immediate needs.

Joe Varnadore (23:55): So we have a question there, So, does it guys, can we do this? We can do this on a hundred thousand dollar house, or we can do it on a $800,000 house, right?

Eddie Speed (24:09): Yeah. You can do it on luxury properties. You know, I would say that you're going to need a really tighten up some things to go do it on luxury properties, but financing for luxury properties has been very drastically affected by this mortgage credit availability. So it can work. This is probably a deeper conversation of things to tighten up. But, yes, I think it can work even on luxury properties.

Brian Lauchner (24:42): And I think when you, if you looked at a hundred different assets that were seller finance or a thousand, you would see they're all over the price point, right? There's a common misconception that seller financing, Creative Financing is for these cheap crappy houses that you can't sell anyway, so you might as well play the role of the bank so you can potentially get rid of it. Right? Whereas so many small businesses are sold with Creative Financing, so many apartments, so many, you know, whatever, small commercial tthey are sold with seller financing and any price point it applies to. And I think that if you were to go and look at a lot of these I have a great story of a motel that I teach in a one day class that, you know, motels are not commonly known for getting bank financing the old fashioned way, right?

Brian Lauchner (25:30): It's going to have a little bit more creativity to it, because that motel owner was exercising their full legal right to write off all the things they need to write off. So they pay less taxes, but a bank looks at the valuation of that and they say, wait a minute, you want to sell this for a million bucks, your books, don't say it's worth a million dollars, but me as an investor can be like, don't worry. I see the valuation and I can play the same game. So I'm interested. I just need you to sell me the property with seller financing. So every price point would definitely work. It's just a matter of the nuances of that specific deal.

Joe Varnadore (26:03): That's correct.

Eddie Speed (26:05): That's it.

Joe Varnadore (26:05): Yep. Absolutely.

Brian Lauchner (26:08): What about sellers who want cash to buy their next home? Would that that's kind of to Eddie's point, right? Is how much cash are they really needed in the immediate term? So the conversation will be something along the lines of, you need a new house, you're getting are you getting a mortgage? Okay, what kind of money are you meaning to put down in that property? And then starting to have that conversation, even if it's $50,000 to Eddie's point, I can borrow that 50,000. And if you have to have that 50,000, I can do that, but you're going to have to give up some other things in order to get that 50,000, if it's truly what's most important to you, I can make it happen. I just need these other things over here to be in my favor, to make those things work.

Eddie Speed (26:50): Remember this, the guy that was paying cash for the house, solved a problem one out of 20 times, 19 times, he did not solve the problem. They did not, the seller did not get their problem solved. Are we saying that we can solve all 19 problems? Of course not. Let me tell you what would be amazing. Brian, if I could solve one out of 19 problems, right? Just one in 19 where the seller was accepted in my terms, and I could structure the way that was really good for me. I just doubled my conversion rate. Now I close two out of 20 instead of one out of 20. So this is part of the filtering process, right? And by the way, I will tell you this, this interview process and going through the deal with the customer is under start understanding that when people say they need cash, you start investigating why they actually say they need cash. So some people say they need cash, they don't need cash. They just cash relates to the price to them. Right?

Joe Varnadore (27:56): That's right.

Eddie Speed (27:56): So kind of the customer that that's where we, that's a part of a filtering process that we develop. Excellent question. But the answer is no, I can't solve everybody's problem, but I can solve a lot.

Brian Lauchner (28:07): Yeah. And on those 19 examples, right? If you're getting one out of every 20, those 19 leads, you're chasing down, you already made a cash offer. You weren't going to get the deal anyway. So what, if you could add something to your acquisitions model, the way you buy houses in order to convert another deal and ultimately double the number of deals you're doing, which would basically be free money because you've already made your marketing money back on that first deal. So a lot of really, really great stuff today. Unfortunately, it's not a show we could talk for two days on. And so I want to just, I'm so glad we can at least talk about what Creative Financing is. These Black Swan events, these cyclical events that happen. They just happen over time because real estate has cycles. When the market shifts Creative Financing will always fill the gap in the marketplace where the conventional traditional money does it. Right.

Brian Lauchner (28:58): And that's really what we're seeing right now is there's a huge need for creative financing in the marketplace right now, in my opinion, if you are an active real estate investor, you can't afford to not know this stuff. And as you learn more about it, you're going to start to find out this actually is the more profitable way to do a lot of different types of strategies. And so, again, thanks for joining us today. On NoteSchool TV, it is a live every Wednesday at 11:00 AM central time. I'm so glad you came again. Make sure you're liking it, subscribing to this channel, turn on the notifications so that you know, when we're live so you can engage like some of these others did and bring your questions to the table. If you're wanting more information, definitely go to NoteSchool.TV, I'm sorry. www.NoteSchool.com/TV to get engaged with us there and be sure to attend the upcoming industry event. Note Expo, go to www.NoteExpo.com to register. It's going to be an absolute killer event. Thanks so much for joining us this week. And we will see you next week on NoteSchool TV.

#NoteSchool #EddieSpeed #RealEstate #MortgageNotes #notes

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"The reason I keep attending NoteExpo year after year is the quality of attendees, and lack of sales pitches. There is a genuine atmosphere of shared success and continuing education at these events. It is great that NoteSchool continues to add value for its students, and the public, without asking for additional money while leaving the "gurus" and salesman at home."

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Distressed debt is the hottest niche in real estate investing. And NoteExpo has one goal…to help you capitalize on it now while the opportunity is at its peak.

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https://noteschool.libsyn.com/03-noteexpo-2020-building-a-successful-mortgage-note-business

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Brian Lauchner (00:01): Welcome, Welcome, welcome! Wherever you are in the world. Welcome back to NoteSchool TV. We are once again, as always, we are live here on Wednesday. We will planning on being live every Wednesday at 11:00 AM central time. And so I want to first just simply say, thanks for coming in today. Secondly, I'd like to go ahead and just encourage you. If this is quality content that we're trying to bring to you every single week, I really would love to ask you to simply like our YouTube channel, subscribe to the channel. And probably most importantly, because this is a live show. I want you to click the bell notification to actually get the notification so that, you know, when we're coming live, you'll get the notification. You'll be able to jump in and, and get the content. And that's important because this is a little bit of an interactive show.

Brian Lauchner (00:58): We have the opportunity to where if you have questions, man, comments say hi, and if you've got some questions about what you're talking about, we could pop it up on the screen and be talking about it as we go through the show. So it's a really great opportunity to get some engagement and that kind of stuff. For those of you who are brand new to NoteSchool, the NoteSchool world, I'd love to encourage you to learn more at NoteSchool.com/TV. And you can discover a little bit more about the Note Business there, and we'll talk about that. But today we got to get into the show. We have a very full house today. I've got lots of friends with me. The first guy I want to introduce is Joe Varnadore a 30 year veteran in the Note Business.

Brian Lauchner (01:38): And we've got a special treat because it's not just Joe. Joe has brought some other friends. We've got the one in the only Eddie Speed himself. And we also have Bob Repass who we're going to introduce. And so Joe, if you want to come up here on the screen, I'd love for you to just take it away. Tell us about who we got today and really what are we talking about today, Joe?

Joe Varnadore (01:58): Very good. Thanks so much, Brian. So today we are going to be talking about our annual event, which is Note Expo, and we're going to go through, you know, all the different reasons that you know, what we're going to do with Note Expo, what you can expect, why you should be there, who should be there. And all of those things. We're going to answer all your questions about Note Expo. So Eddie, Bob, why don't we all kind of jump on here and let's just jump right into it, right? Hey Eddie, hey Bob.

Eddie Speed (02:30): Hey Joe, how are you?

Bob Repass (02:32): Good to see you, Joe.

Joe Varnadore (02:34): You too guys. So, you know we probably should keep Brian on here with us because he's like a little younger version of the three of us, right?

Bob Repass (02:46): I was thinking Joe, and when Brian said here's Joe with 30 years experience, and then I sort of admire Eddie's, let's just say we have over a hundred years on the screen here.

Brian Lauchner (02:56): Yeah. Which is really, really great because what event that we've got coming up, it's going to take this kind of seasoning this kind of experience to bring some value to really the industry. And so why don't we just go ahead and jump in and Bob, why don't you kind of start by telling us a little bit about what Note Expo is, what people can expect and really why they should be joining us?

Bob Repass (03:17): Sounds good, Brian. So this would be our seventh annual Note Expo and Eddie and I got together about seven years ago. And you know, we were talking about various events in the industry and we were like, we really need a marquee event. That will be the event of the year for the Note Industry. And we've been working hard over the last seven years, getting better and better each year with Note Expo. And for the past six years, the first weekend in November has been Note Expo live onstage.

Bob Repass (03:47): And we've all been there with industry experts, tons of vendors and networking opportunities. This year, we're gonna have the exact same thing, except we're going to be virtual due to the 2020 pandemic that we've all been facing. So, Eddie and I have been working hard to put a quality schedule of speakers and lineup. We've got some great content provided. We're also are going to use some of this technology to have some interactiveness and some networking opportunities like a Virtual Happy Hour. So we're excited about that too. And we've got virtual exhibit booths for our sponsors and vendors where the audience will be able to go in and, and watch little videos and chat with them and download all the materials. So we're excited about the way that we've been able to leverage technology. And Eddie, why don't we kind of talk a little bit about the background of Note Expo and why we thought the industry really needed a meeting place at least once a year, we were the industry leaders, whether they're new to the business seasoned veterans, like we are but why we wanted to create an atmosphere for everybody to congregate once a year in November.

Eddie Speed (04:59): Well, I think that was a great point Bob, you know one of the things that I realized is that along the way in that process, our industry needed to bring old dogs together. Like Bob and Joe and I, right? Who I met at an Industry Note Trade Show, 25 or 30 years ago. That's how we met.

Bob Repass (05:21): Yep.

Eddie Speed (05:21): And now all of a sudden, we've all been working together for years, but how that all kind of initially came together was exactly because of the fact that there was a networking opportunity to really get to know people and get to know what that was like. And I just felt like that there was a gap in the business to do that, and secondly, I felt like with our experience, we could have an influence with a lot of what I think were the most critical speakers. And so there's no one focus of Note Expo.

Eddie Speed (05:52): We'll talk about how our real estate investor can utilize creative financing. We're going to talk about how you can buy defaulted loans. We're going to talk about how you can buy first liens and second liens. We're going to talk about how you can work with passive investors towards all of the things that I really believe are cogs in our wheel, we're bringing together people to really talk about their expertise and talk about their experiences. So I think Bob and I've always taken a lot of pride in Note Expo as far as the quality of the speakers and the range of the speakers level of experience and kind of their view of things. And we just feel the diversity is just something the industry really needed. So you know, that was a, this is a lot of work.

Eddie Speed (06:39): I mean, Bob and his team they're really cool. They make me look good, but the truth of battery is behind the scenes. They work at this excessively for a long period of time. So you know, it's very enjoyable. It's a homecoming for all of us. And Joe and Bob and I, who have been in the industry obviously for years it's so fun to do it. And even this year with the virtual, I mean, we're, we hired a special vendor that's going to be able to do it in a way that's making it as engaging as it possibly can be. And I think you're going to be very excited about the way it's set up and how it's going to be able to be conveyed in a way that you're going to feel like you're, you have the opportunity to network and engage with vendors and, and other participants and stuff, and just a way that it's going to be very effective in doing it, and doing it virtually. So

Eddie Speed (07:35): Go ahead Joe

Joe Varnadore (07:35): Bob you I'll, let's talk about, who's going to be there in just a minute, but Eddie let's break this down a little more. You had said that, you know, we're going to talk about buying on terms and for our audience that, you know, is new to Notes here, you know, so what does that really mean? We'll talk about buying long terms.

Eddie Speed (07:54): Well, buying on terms Joe, is where you would buy a piece of property yet get the seller to offer some seller financing to you. Now I didn't mean that they have to sell or finance the entire price of the property. Maybe you use some private money, maybe you take over an existing mortgage. And we're, I think we're really going to draw it down to a point of the real estate investing strategy that I think most real estate investors are leaving behind, which is, you know, the opportunity to really pay more for the property. And that didn't sound like a good deal, right? I'm going to pay more for it. Well, let's talk about how you're paying more for it. You're paying a higher price for the property, but you're also negotiating when you're paying for that property, right? You're paying for a property on today's price, but with tomorrow's dollars.

Eddie Speed (08:42): And so there's a lot of opportunity in that. And that's obviously something that I have grown to have a real passion for. But we're going to have a wide variety of people. I was looking at our speaker layout and just all the crazy level of experience and vendors that do different things. I know Joe, you're interviewing a lot of people for Note Expo that are that really just really allow you to scale your business. Right? People say, how did Bob and Eddie run a shop and have thousands of assets under management and do it all in South Lake Texas, yet we have less assets in Texas, Bob than we do in the state of Ohio. How do we do that?

Bob Repass (09:31): Yeah. Eddie I think that was an excellent point, and I wanted to piggyback on the comments you made a minute ago about the diversification that we're going to have in our lineup this year. About two years ago, we made a little tweak in our agenda where we added what we refer to as Note Talks, which is a take on the Ted Talk. And we would have folks from all across the industry, come on and take 10 to 12 minutes and tell their stories, motivational, inspirational, and educational. I mean, they covered all the topics and they would really get the the audience fired up. This year we've tweaked that a little bit as you kind of alluded to the four of us, Brian, Joe, Eddie and myself are interviewing one-on-one conversations with industry leaders for about 20 to 30 minutes. So we got about 15 of those that we are going to do.

Bob Repass (10:21): So we've got folks from all parts. Folks that have their own capital funds, or accounting firm, some vendor services companies, people that are in different spaces. Like we talked about non-performing seconds, we talked about re-performing loans. So we've got a wide variety of folks that we are going to sit down and talk to, going to have conversations about regulations and regulatory relief. So we are going to cover the whole gamut through these interviews. So I, these one-on-one fireside chat type things are just going to be engaging where we sit down and just tell our story. And we're really looking forward to that. Eddie, We also have some main stage general presentations and one of your good friends, Matt Andrews is going to join us. And one thing we've always tried to do over the last six years at Note Expo, it's also bringing the, a entrepreneurial mindset and how we can always get the note investors, the real estate investors to think beyond just the day-to-day grind and how they can be motivated. So why don't you give us a little background on why you invited Matt to read with our keynote speakers this year?

Eddie Speed (11:33): Matt is a friend of mine. He and I were in a Mastermind together for years and years and have been in other Masterminds together. And I so respect Matt because first of all, he just, it's just his outlook on life. And just the spirit of Matt and I've gotten to, he and I have actually had some products that we developed together, some training products and stuff, and just, I just really enjoy him. And so I was recently with Matt and we were talking about just kind of, I got a chance to kind of hear his heart. I know his heart, but I got to hear it again about you know, just really the camaraderie and working with other people in the business and what that really means. And to the point where I call him after we left and I said, Matt, I was really resonating on really what you were talking about as far as not looking at each other as competition, but looking at each other as opportunity because my whole life has been around networking with other people in the business.

Eddie Speed (12:37): Bob and I were, Bob and I sat across the desk from each other for years and years, meaning he was an institutional investor and I was selling loans to him. Bob ran the biggest investment shops in the country that bought these notes. And so I was selling loans to him and Joe was my competition for years, right. Joe was, I was trading notes and he was trading notes, but yet we were buddies and we figured out a ways to do things together. So I, Matt is going to have a, just, I think, a killer presentation, that is really going to talk about the mindset and what that means. And I just think it was a good reminder for all of us and thought it would be something that our audience are really, really get a thrill out off. So you guys are going to enjoy my friend, Matt Andrews.

Joe Varnadore (13:22): Yeah. And you know, he's a sharp young man. And then, you know, see another picture there on the screen that we've that's been in the business a long time and that's Melissa you know, she's one of the runs one of the biggest servicing shop, right? So not only are we going to have the insight, but the how to, right? How do you scale this business? You know, what does Bob do on a daily basis to manage, you know, a couple thousand notes? Right. So that's really, the depth of that is not just, you know, we want to get your mindset in the game. Right. And then, you know, understand the semantics of how it works, but then how do you make this something that you're not just buying another job, right?

Bob Repass (14:07): Yeah, absolutely. And, you know, I think pointing out some of these speakers and the vendors and sponsors that are going to be there, that you can get plugged into to help you scale that business, to get you the boots on the ground. So you don't have to be the one, like you said, Joe, having a job all the time, you're able to outsource that. Whether it's an accounting piece, whether it's asset management, whether it's default management, whether it's due diligence, we've got folks that have been in this business a short period of time, and we've got folks that have been in this business as long as we have. So and as Eddie mentioned earlier you know, we've all known each other from various events in the past.

Bob Repass (14:48): And we've either worked together as counter parties or sometimes as friendly competition. Cause you've mentioned Melissa from Allied. Well, I used to work with Melissa back in the nineties while we were all at Metropolitan Mortgage, along with Fred and Tracey Ruby, who will also be there. So we were all co-workers at one point in time. So this industry is a small network in some regards. But where our efforts at Note Expo is to give people access to that network and to expand that network. So I'm super excited and Eddie, we've got some great sponsors this year again, and you know, I just a real quick shout out to, to some of them and I may not get all of them, but Eddie mentioned how hard our team works behind the scenes to get things going and even doing it virtually, it takes the whole industry coming together.

Bob Repass (15:43): And we really appreciate the support of some of these sponsors and vendors. We have obviously NoteSchool and NotesDirect are the host sponsors again this year, but the Mile Marker Club, FCI Lender Services, Allied Servicing, and Essence Servicing, they have been huge. Quest Trust Company is back on board with us again this year. First National Acceptance Corporation Jeff Spiegel and Spiegel Accountancy. They are been huge for us year in, year out. We do appreciate that. We've got Paper Stack back again this year, along with Follow Financial and Revolve Capital. So we've got a great lineup. And as I mentioned earlier, each one of these will have a virtual exhibit booths, where you'll be able to go in and chat live with the members of their team, ask questions, get information from them, set up appointments, so you're able to visit with them and see how their services may be able to help you in the future. One of the presentations, Eddie that I'm excited about is our friend, Jeff Watson is going to come on a main stage and he's going to talk about he's really a whiz in how to invest with your self-directed IRA. So that's going to be a little bit of a twist there. And I think Jeff will, he always has the audience in his hands when he's up on stage

Eddie Speed (17:13): He's a very seasoned investor anybody's imagined or measure. And that'll be a great presentation. You know, I was looking in just sort of preparing for our meeting today. I was just looking back through our list of speakers and just like we've scrolled here on the screen. And you know, if experience matters, if like being out there and doing this business and being relevant to the components of the business, I don't think we could've done a better job at picking a group of speakers. And I love this new format that we have this sort of interview style format. So as the guys, the four guys here that'll be doing a lot of the interviewing, we'll try to draw out and think of special questions and circumstances that I think will help you as the attendee get their best expertise and what that's gonna look like. So that's really going to be fun.

Joe Varnadore (18:15): And, you know, Eddie, one of the things that, you know, we talk about, you know, the four of us when we're talking and trying to understand who our audience is, right? So you mentioned this before, right? There's folks that are brand new in the business, right? The newbies and there's the, you know, the old dog's gotta kind of speaking. So three of the things that a lot of people have when they are looking to start out in the Note Business is like, okay, inventory capital and scaling the business. And those are three of the things that we're going to be focusing on as well at this at Note Expo, the two days that we're going to be inside of Note Expo. Right?

Eddie Speed (18:56): Well, I think you know, scaling the business and really being able to do it virtually is, the magic of the Note Business.

Joe Varnadore (19:05): Right.

Eddie Speed (19:05): You know, I mean, the one single thing I would say is that we, I think live this in our fund every day. And the fact that we own a lot more assets that are farther than 800 miles away from us that are closer than 800 miles to us, right? And 800 miles a long way. But I mean, we do this every day and we're, I think the vendors and how the business really works, I think it will be enlightening for a newer person coming to the business. Like, can you really do this remote and can get in Bob and Eddie, sit there in an office in South Lake, Texas, and yet own assets and what Bob 36 States.

Bob Repass (19:48): It is the business that you can do pretty much from anywhere. And just to give our audience just a little idea, Eddie, I wanted to kind of tie this in, before we wrap up here is one thing that year in year out, folks always come back and say that they really enjoyed hearing where some of the personal stories. And I know we're going to get into some of the personal stuffs during our, our interviews, but once again, this year Eddie, your wife, Martha is going to come on and she's going to do a presentation to kickoff day two. And she's going to go through and tell her story and her legacy and the family and stuff. And you know, I just, I think that really resonates with the audience. I know there'll be some good education and things that we dive deep into. But sometimes these stories about when you see somebody on stage that, Hey, that could be me. You know, I can do that too. And I just think sharing those stories. And I don't know if you can give us just a little bit of a tease on what Martha's going to cover, but I know the audience always loves to hear from her.

Eddie Speed (20:54): So what Martha's going to do is really relate to how to speak to private money, because when Martha buys a deal in one of our retirement accounts, and she sells a partial, she buys the whole note, sells running cash flow, which recapitalize is our retirement account. Right? So when she does that, she does that exclusively with passive investors pretty much Burnt Out Landlords, right? That's pretty much the audience. And so she's gonna like show the audience exactly how you would speak to the passive investor, what they want, what it, why it matters to them. And I will tell you that every time somebody becomes exposed to the note opportunities, inevitably, they all say the same thing almost every time, where do I find this long-term low cost capital, right? Anybody can go, you can go to the real estate investment club and go find the expensive money.

Eddie Speed (21:59): Right. Joe? anybody can.

Joe Varnadore (22:01): That's exactly right.

Eddie Speed (22:02): But the real money, the real deal is to find inexpensive money. And so Martha is going to like, right? She has really worked at this presentation to like, show the audience exactly how she presents to inexpensive private capital, what do they want? What's important to them. And so I'm excited about it as you can tell because that's something that I see her living and doing the side of the business every day, she doesn't work in operationally in the business that Bob and I do every day, or that Joe and Brian are involved in, she works more than just her own little business over there, just investing with, you know, retirement, various retirement accounts because we're of that age, but people forget, you can be, you know, I've done 20,000 partials before I ever did it in a retirement account. So you can certainly do it in your company or business. So there's going to be a number of speakers that are going to talk about what money wants, right? What does private capital uninvested funds, what are they looking for today? And Bob, you are one of our guys that is just always got great statistics. And I know that you monitor like how much cash America is sitting on. And you might talk about that for a minute because that's clearly going to be while we're trying to message the audience.

Bob Repass (23:24): Well, let's just say it's a ton. Okay. It all starts with a T, That means it's trillions of dollars. People exited the stock market and they're sitting on the cash and they're waiting to see what opportunities come up, especially as we wrap up Q4 and then we enter into 2021. So private, passive investors are sitting on a ton of cash. And you know, one of their main goals is number one, preserving that capital and then their risk factor in how they can earn, you know, Hey yield, which as we've talked about in the past, Eddie now, I mean, the cost of capital is not what it used to be. Say two, three, five years ago. As a matter of fact, one of our main speakers, Ryan Parson he deals, he raises capital for our capital fund. And he deals with accredited passive investors.

Bob Repass (24:20): And he's one of our large sponsors this year, his Mile Marker Club. And they're going to have a VIP happy hour for accredited investors at the end of the day on Friday. So if you're accredited investors, if you click that, when you register and fill out your profile, you'll be invited to a private reception with Ryan and his team. And Eddie, we've known Ryan for years. He started with you back probably 10 plus years ago and developed himself into a fund manager and a wealth of knowledge for the high net worth individuals.

Eddie Speed (25:01): Well, I was just going to say one thing about Ryan, and I think the perspective that I think he brings to the audience, it's so cool that Ryan really you know, he was a fix and flip guy. He was a full-time financial planner kind of in the wealth management space. And then he came and got involved in notes with us at NoteSchool. And just really has taken it to a different level, his, I think his average net worth of his high end member of mile marker club, the average net worth is over like 7 million bucks. So he definitely deals with people with a lot of money and are trying to figure out how they're going to do the business the most effective way. So I think there's his perspective and kind of understanding what private capital wants, like what makes them comfortable, right. And by the way, hint, hint, it's not yield right, Bob, it's not yield.

Bob Repass (25:57): No, it's not, it's not, that's a great point. So I just want to, before we wrap up here and I know Brian's going to wrap us up. Yeah, Note Expo is November 6th and seventh, right? It's that NoteExpo.com. It starts at 9:00 AM central time. It runs about five 30, six o'clock each night. So if you guys would go to NoteExpo.com and register, that would be awesome. And you can use the promo code virtual and get a little discount on that registration. So we appreciate that. And Joe, thank you for having me on NoteSchool TV this week.

Joe Varnadore (26:33): And just one thing here is, as we do we're going to flip it over to you Brian here in just a second, but so we're not only going to talk about how did we end up 2020, but Eddie, you're going to bring kind of the vision in as to what your, you know, what you're not a crystal ball, but what your vision is of what's going to happen for 20, 21 as we start getting into that, right?

Eddie Speed (26:59): I'm going to talk a lot about market conditions in a state of the industry. And I think we're going to tie together to first show people a clear business model that how they can apply the business slightly different maybe than they've done it in the past.

Joe Varnadore (27:12): Very good.

Brian Lauchner (27:13): That's great. So let me kind of wrap this up by saying this. It's obviously going to be an incredible event, amazing speakers, but let me say this, who is this event for? I want you to understand if you're brand new to the investing space, you're brand new to the NoteSpace. Maybe you're a seasoned investor. What I want you to know is this, this event is for everybody, whether you're active or you're passive, or you've got an existing business and you're working on scaling, or you're looking to raise capital, whatever it is, this event has something for you. And this is a very unique way to do an event. It's probably nothing you've ever seen before. This is not your standard go-to webinars, zoom type of event. This is absolutely going to be incredible. So I appreciate everybody for kind of joining me today.

Brian Lauchner (27:56): And I will say this, there are two options before I tell you these two options. Again, I want to remind you to go ahead and subscribe to our YouTube channel, turn on the notifications. So you can participate in these live events every single week, every single Wednesday at 11:00 AM. And again, there are two options that you can go to a www.NoteSchool.com/TV, to learn a little bit more about what is NoteSchool? How do I get involved? How do I learn this stuff? How do I start taking action on some of these strategies, putting money in my pocket and really building my wealth. And then the other option, as Bob says, is go to NoteExpo.com and register for this event. It's going to be an absolutely incredible event that I think you're really, really going to like it's just going to be fantastic. So thank you once again for joining us here, live on NoteSchoolTV. I really appreciate you joining us today. I plan on seeing you next week as well, and so have a great week and we'll catch up next week.

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Burnt Out Landlords - Real Estate Investing the Easy Way With Mortgage Notes

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Brian Lauchner (00:12): All right. Welcome, My name is Brian Lauchner. Welcome to NoteSchool TV. I'm glad you're joining us. You're joining us live for the greatest content in the market right now, specifically in the NoteSpace. And today we've got a very special guest, very near and dear to my heart. We've got the one and the only Eddie Speed. And so what I want to do is just a couple of things. First, I would like to tell you that if you would like more up-to-date content on a weekly basis, you want to know what's really going on in the market, you want to know what's going on in the Note Business, then join us every single week. Join us on Facebook Live, YouTube Live at 11:00 AM central time. Every single week you want to go and like, and subscribe these channels and turn on these notifications so that you're always in the loop. When we're going to go live.

Brian Lauchner (01:09): If you are not familiar with NoteSchool, you can learn more by simply going to www.NoteSchool.com/VirtualGold. And you'll learn a little bit more about that, moving forward. You can also go to www.NoteSchool.com/TV. If you're not catching this live, if you're watching this in the future. But as we kind of dig in today, I want you to really engage bring your questions, write your comments, share this with your friends that you think it might be valuable for them it's going to provide some value to them and their business. Today, we are going to be talking about something that is really unique. We're going to be talking about what is a BOL? And the person who's actually going to be telling us about what a BOL is, is Eddie Speed himself. And if you're not familiar with who Eddie Speed is I'll sum it up like this.

Brian Lauchner (02:00): Eddie speed has been in business for over 40 years and he's done over 40,000 deals. And so he is not a flash in the pan. He is the real deal. I look up to him, he's my mentor, and he's taught me so much. And so I'm excited to introduce to you today, Eddie Speed. Who's going to be joining us. And the question I have for Eddie as he comes on the screen here is Eddie, tell us a little bit about what is a BOL? And I got you. You're still muted here, Eddie. Let me, let's get you unmuted and then and then go for it. One second. There we go.

Eddie Speed (02:44): How about if I unmute myself?

Brian Lauchner (02:45): Go.

Eddie Speed (02:45): How are you, Brian?

Brian Lauchner (02:49): I'm doing great, Eddie. And I am just, I know that everybody that's watching this right now is confused on what this new term is. And so we're trying to figure out a little bit more of what it is, and you're the guy to teach it to us. So share a little bit about what's going on in the brain of Eddie Speed.

Eddie Speed (03:10): A BOL right?

Brian Lauchner (03:14): Yeah.

Eddie Speed (03:15): Stands for Burnt Out Landlord.

Brian Lauchner (03:19): Not burned out, burnt out.

Eddie Speed (03:21): Like it'd be burned out too. Burned out, burned up, but Burnt Out Landlord. Right? And people say where in the world, is that written in the NoteSchool dictionary?

Brian Lauchner (03:33): Yeah.

Eddie Speed (03:36): Because we made it up, but it's a thing. It's a real thing. It's a big thing.

Brian Lauchner (03:42): So tell us a little bit about where did this term come from? And why is it that it's so timely and important right now with all that's happening in the market?

Eddie Speed (03:53): You know, we, our executive team is very, very, very seasoned in the mortgage and real estate investor space. Literally our executive team has come from significant mortgage banking operation, significant hard money lending operations, significant, I mean, all of those variables. And so the guys behind us that support Brian, you and I, right? They're data guys. And they research and do a lot of work all the time. And I, you and I would be out doing training events and we would come back in and we say, man, it's really funny, somebody like I had, like half the class came up to me and said, Oh my God, I got a bunch of rentals and they're driving me crazy. And after hundreds of trips and thousands of times this happened, we started realizing that this was a customer that showed up at NoteSchool over and over and over.

Eddie Speed (04:54): And so we started doing a lot of research, right? Who is this Burnt Out Landlord? Why are they burnt out? And there's a lot of information that will go into this and we can't possibly cover it all in one show, but we will clearly talk about this along the way to the point, Brian, I'm going to say this, if you're in a real estate investor and you're trying to utilize any form of creative financing, which I think you, every real estate investors should be doing that, right? If you're in the NoteSpace and you're using any form of private, passive capital, right. Which I think everybody in the NoteSpace and everybody doing creative financing should be doing, if you're in one of those two categories, which is what Brian you call what are active and our passive group.

Brian Lauchner (05:48): Right?

Eddie Speed (05:48): Right. So if you're in either one of those categories and you're not dealing with a Burnt Out Landlord, I would say you are probably missing a gigantic part of the equation. Because the Burnt Out Landlord drives the NoteSchool business. It drives how we fund our business, It drives how all of our students fund their business. We're solving a problem for Burnt Out Landlords. And also we're doing business with Burnt Out Landlords because they're selling their Burnt Out Landlord property to us with creative terms. So that whole customer base is big.

Brian Lauchner (06:28): Yeah.

Eddie Speed (06:29): So you want some stats?

Brian Lauchner (06:31): I do, Yeah. Lay them on me, what do you got?

Eddie Speed (06:34): Well, I got a brand new report and I mean, brand new as of this morning.

Brian Lauchner (06:40): Okay.

Eddie Speed (06:41): Alright. 22 million residential doors. One to four family are rentals. 88% and this is all source data. Okay, So I'm not going to all the sources, but I'll promise you, It's all. We didn't makeup any stat here and they're all verifiable good sources. So 22 million, 88% of those 22 million rental properties are owned by investors that own one to five units.

Brian Lauchner (07:16): The average Mom and Pop investor.

Eddie Speed (07:18): The average Mom and Pop, right? 55% of those investors, the Mom and Pops, manage their own units.

Brian Lauchner (07:33): Wow.

Eddie Speed (07:34): So they're not corporately managed. They're not using a rental property management company. They're managing themselves.

Brian Lauchner (07:40): Right. And just to jump in here on that, because when you say that, what really stands out to me is, you know, I've both managed my own rental properties as well as hired a management company to actually manage them. And there is a very big difference between dealing with your own tenants and toilets and turnover versus outsourcing it. And I think the important thing to focus on, and what I really heard was obviously, if you were managing, when you have that many people, self managing their own properties, the level of headache, right. Is going to be substantially higher with anybody who's self managing, right? And the likelihood that they're going to become burned out is going to be obviously greater than those who are, you know, not self managing.

Eddie Speed (08:24): So I'm very good friends with a lot of people that own turnkey rental property management companies, right? Some of the biggest turnkey real property management companies in the country. In fact, I'm fortunate enough that I get to do some consulting and training for them, right? So I know a lot of these guys and their stats are not the same as far as problems of the stats of the small guy. And I look at and think it's pretty simple. They have a vetting process for tenants. They have an approval process, They have everything proceduralized, they're running it like a real business, right? I think small landlords realize that they bought an investment, but found out they bought a small business. And that is managing property was a business, not just an investment.

Brian Lauchner (09:17): Yeah. And I think to that point as well is we're giving a lot of credit to the average landlord that their original intent was to become a landlord. When, in my experience, as an active investor, over the past several years, what I have found is that there's a lot of people, especially in the last 10 years, as we've talked about you know, over the last several months, is all these people who got involved in real estate during this last big boom. They wanted to flip houses, right? Just like Chip and Joanna Gaines or the property brothers whoever. And so by getting involved, they flip their house and their $20,000 rehab budget magically becomes 30,000 or 40,000. And now all of a sudden flipping the house, doesn't sound like a good idea. And they become what I've been, I've always called it an accidental landlord, right. Until you've told me this, Right? And so by accidentally having a tenant now you're gonna, they think what's going to happen is they're going to be able to make all this money, right.

Eddie Speed (10:12): Because rental properties, that's how that's how wealth is built. Right. But they're ignoring the reality that comes with obviously tenants, toilets, and turnover. And so a lot of these people you're even talking about, it was never even their goal. And a lot of times they're only self-managing because they need every penny they can in their cash flow to justify to themselves and to their spouse that see, this is still good. We're still making money.

Eddie Speed (10:38): Yeah. I mean, there's no, we want to be clear. We're not making fun of anybody.

Brian Lauchner (10:44): No, of course not.

Eddie Speed (10:44): We're simply saying that this is a market condition and our job, every entrepreneur, every real estate entrepreneur, I really people say Eddie, you're a note guy. You bought all these notes, and then all this Note Business, but how did I do all this business? I help real estate investors utilize notes and creative financing. That's how I bought so many deals. I didn't do it just one Mom and Pop at a time. I did it because I streamlined business models that real estate investors could use. So whether you're a small real estate investor in you've done two deals or you're, I got two deals yesterday didn't make any difference, Right. We figured out real estate investors need this process. And we've figured out that the Burnt Out Landlord is the target customer that has the biggest problem to be solved, right? We didn't wake up one day and just make up some catchy term. We woke up day after day after day, these people showing up at our doorstep, or they're showing up at a NoteSchool train person's doorstep. And they all were, they led back to this frustrated person who found out that in reality as you said, Brian, they are running a business they never intended to run.

Brian Lauchner (12:08): And I think to kind of back up, I'd like to hear a little bit more about, you know, every investor who's watching this right now live is asking, it's always the same two questions. How does this help me get more deals? And how am I going to be able to find money to do these deals? So tell us a little bit about why the BOL is such an important topic when it comes to finding deals and funding deals.

Eddie Speed (12:32): All right. So this report, and I haven't even released it yet. I mean, I'm serious. Like this is all fresh as it gets. And for this is a software company that is called Rentec Direct. So they have software with about 200,000 landlords, small landlords. And they are reporting a decline in the money they've collected every month. And so as of September 20th, it's now saying 35% of landlords did not collect a rent check in September.

Eddie Speed (13:09): It was 17% in April. So 17% of people didn't collect rent in April. And I know that professional landlords stats are not going to be that bad, Right. I know all the guys that Sir, that have turnkey properties and manage thousands of properties. And they're like, well, our stats aren't that bad. I get that. But you got to remember the small landlord did not have the vetting process. They didn't have the business processes to go vet the tenants the way your system did. Mr. Big landlord, property manager. And so understand this is just this is what I think the small guys experiencing that the big guys are going, but we're not quite seeing it this way. And, let me just tell you something, Brian, that is pain.

Brian Lauchner (13:57): Uh-huh.

Eddie Speed (14:01): When I met you originally and you came to a NoteSchool class years ago, right? You and your dad.

Brian Lauchner (14:06): Yeah, 2016.

Eddie Speed (14:07): Right? And you came to a NoteSchool class when I met you, you were out there basically wholesaling houses, full time wholesaler. And you were good operator in the business and stuff. And you were like zeroed in on who to go chase. But today, if you were a house buyer, particularly if you wanted to go buy houses with wholesale financing terms like that, you could, there's two ways to buy. You can buy with price or you can buy with terms, right? I would go chase this guy that has, has a pain problem that would love to get rid of it and still not lose his shirt because you could structure financing around this and show how somebody not to lose your shirt, but to go get rid of your immediate problem.

Eddie Speed (15:00): So if you're a real estate investor and you're saying, why does the Burnt Out Landlord matter to me? It is because there is to me, a glowing fire around this problem. That means a real estate investor could come in and solve the problem.

Brian Lauchner (15:17): Yeah. So for everybody, who's listening in case you missed that, right? If you were an active real estate investor, and you're trying to find that next deal, what he just said is we're targeting as active investors. We're targeting motivated sellers. And what Eddie had just said, in case you missed it is the most motivated seller right now is this Burnt Out Landlord, someone who has a lot of the headaches, but more importantly now they're not even receiving income, but most of them have leveraged properties as well. So now they're getting pain from both sides. I'm not receiving income and I've always got money going out.

Brian Lauchner (15:48): And so this target avatar, if that's what you want to call it, is a very crucial target, and more importantly, what I'd like for you to talk about next is this Burnt Out Landlord. Why is it that they're going to say yes to my offer versus every other wholesaler who's sending the mail.

Eddie Speed (16:07): Well, the other wholesaler, that's sending a mail or messaging them some way and trying to get them to sell their house. He's trying to buy a house at a discount.

Brian Lauchner (16:16): Yep.

Eddie Speed (16:16): You're going to say, I don't have to buy your house at a discount. I just can't pay you. I can't pay you for the house today. I'll pay you for the house over time. Right? So you can structure financing around it and increase the price because you're going to structure the terms and let's be fair about it. The terms are going to be to your advantage, the real estate investor, not the Burnt Out Landlord.

Brian Lauchner (16:39): Of course.

Eddie Speed (16:41): And he can decide whether we wants all cash today or he wants to take, you know, the value of his property and accept it over time. So that's a strategy that's very, very useful. And I was teaching for a extremely advanced group of real estate investors the other day, extremely advanced, right. All a hundred houses a year plus guys, right. And and so at the end of it, they said, okay, Eddie, give us the big takeaway of the market. You think we ought to chase?

Eddie Speed (17:13): I just told you what. I just told you the same thing that I told these guys. I don't have a different answer. If you're asking me today, if you're a real estate investor and you're not chasing that market, I think you are ignoring the biggest pain in real estate today. And you can buy properties in a manner where you can structure, how you pay them over time to really create what we, what you and I referred to. Brian as wholesale terms of the financing, not wholesale price.

Brian Lauchner (17:45): Got it. So that addresses really our first piece, which is, The question every investor wants to know is where do I find the deal we just talked about? And why are they going to sell you the house over someone else? Cause the price. Cause you're going to give them this higher price. Now the second piece of this, and this is where creative financing and your brain can just go crazy is how do I find the money to do this? Right? Where does the funding piece come from? So tell us a little bit about the funding aspect and why it's so scalable with creative financing.

Eddie Speed (18:15): So the other side is the Burnt Out Landlord is not looking to go buy another rental. He's already figured out he can't manage this business. So the Burnt Out Landlord though, is not out of money. And we have a lot of statistical data, they show they're sitting on a huge pile of money. They're just don't have a tolerance to go buy another job. Right? So they, so then we can take their capital and use them to fund our note business. Or you can fund your real estate investing business, right? And there's various ways that you can do that. But we have learned that the Burnt Out Landlord is, he is dying. He's not dying to go jump in the stock market, right?

Brian Lauchner (19:03): Right.

Eddie Speed (19:03): He's not dying to go buy another rental, but he's sitting on what we call dry cash. He's looking for something to go do with his money. He's just not looking for a job attached with it. So he can be truly become the bank and not a landlord, and that solves his problem. Now it funds your business. That's a pretty big problem solver for us.

Brian Lauchner (19:27): Uh-huh.

Eddie Speed (19:27): But it's big problem solver for him too. It's a win, win, Brian.

Brian Lauchner (19:32): Yeah, absolutely. I think that the way that my brain understands that really well is specifically with the fact that they're burned out. We know that they're tired. We know that they've got headaches is just imagine having a conversation with one of these Burnt Out Landlords. And essentially what you're saying is, look, I get it. You like the fact that you got into real estate because you like the good pieces with you're going to get cashflow. When the tenant pays, it's going to be protected by a real asset. You could drive by it everyday. Right? But what you've learned is there's the headache piece, the bad piece of tenants and toilets and turnover, and putting more capital into a property that you originally didn't maybe anticipate putting that much money into. And so the conversation becomes, look, what if there's a way for me to show you how to keep the good cashflow and a hard asset, but I could take away the bat.

Brian Lauchner (20:17): If I could show you a way to keep the good and take away the bad, would you be open to talking about that? And it becomes a very smooth conversation for them to say, yeah, actually I do want to play the bank. The bank just gets their money and they're left alone. Oh, that's why I got into real estate. Right? And so it is a very logical way. Eddie calls the talk off, it is a very logical rational conversation. Excuse me, it's not this slick salesy approach that you see I think you know, over the last several years from people, these new things, like there's so much reason in this because there's so much there's pain and Eddie's in my opinion, crack the code on how to go out and facilitate this conversation so that when now we have not just the properties we want to buy, but the funding that we want to come with it. And I think that no matter how many investors I talked to over the years, it's always those two questions in one way or the other. It's always, you know, where's the deal or where's the money,

Eddie Speed (21:16): You know, Brian, it's why we decided, and this is our inaugural first, you know, TV show, right? It's our,

Brian Lauchner (21:24): Live.

Eddie Speed (21:24): This is our first one. And we can pick a thousand subjects. I mean, I've, we could go, we can teach all day every day for months, literally, and talk about something that's not, it ties together, but it's not the repetitive saying the same thing over and over and over. And we pick the single biggest topic today to address, which was the Burnt Out Landlord, because he such a factor in the market. Let's look at real estate investing overall. Okay, So you've been a full time real estate investor for a number of years.

Brian Lauchner (22:06): Uh-huh.

Eddie Speed (22:06): Okay. So why didn't the person that sold you a house just go list it and sell it through a realtor? Did they not know about realtors?

Brian Lauchner (22:19): They were willing to give up certain things, but not willing to do other things.

Eddie Speed (22:24): Yeah. So, they didn't want to go list it with a realtor, cause they had to go stage the house,.

Brian Lauchner (22:30): Uh-huh, or put money into it.

Eddie Speed (22:30): Or they needed to fix the bathroom up or, you know, they had it, they needed to close it quicker than the realtor would or all the above. Right?

Brian Lauchner (22:41): Yeah.

Eddie Speed (22:42): So what you're saying is, you still acknowledge that the traditional real estate brokerage is the biggest piece of real estate, right? You were a real estate investor and you represented a ring around it, but you weren't the whole market.

Brian Lauchner (22:59): Correct.

Eddie Speed (22:59): You weren't even the biggest piece of the market.

Brian Lauchner (23:01): Correct.

Eddie Speed (23:02): What you found out though is as a real estate investor, you are a problem solver, that traditional real estate brokerage wasn't solving.

Brian Lauchner (23:13): Yep.

Brian Lauchner (23:14): So that's how I see what we do, Right. You were trying to buy every house at a discount and you found out that you could buy a piece of the business you'd make about 20 offers in one person would sell to you right? Ain't that, about your stats?

Brian Lauchner (23:30): Yeah.

Eddie Speed (23:30): Okay. And that's pretty much that story we hear over and over, but, remember 19 people said no. Okay. So you're just solving a problem that in those 19 transactions, if you got somebody willing to carry term for you and we'll all agree, it's how you say it. It's not just how you whiteboard it. Although knowing how to whiteboard it is cool. Right?

Brian Lauchner (23:59): Yeah.

Eddie Speed (24:00): And we like teaching that it's fun. But the truth of the matter is it's also fun to talk about the talk off, how do you get them to do it? So if I were looking for a customer that's a most likely today to listen to terms, it's going to be that Burnt Out Landlord. And by the way, it's cool because you know, that's a definable customer out there. That's a definable motivated seller, Brian, and you know a lot about chasing motivated sellers and how to do it. We're just trying to make sure that all of you are dialed in. This should not be a secret. Brian, I'm going to go back to some stats.

Brian Lauchner (24:38): Okay.

Eddie Speed (24:40): My dad grew up in the country, Right. And so, as you know, I love country expressions because they're, they resonate, they tell a story, Right.

Brian Lauchner (24:50): Yeah.

Eddie Speed (24:50): My dad used to say, that's big as a wagon wheel, you know, and you just always had this picture in your mind, like how big is a wagon wheel, right.

Brian Lauchner (24:57): Yeah.

Eddie Speed (24:58): It's a big wheel. Right? So my dad used to say, that's as big as a wagon wheel. This market is big as a wagon wheel. You're talking about 22 million houses, right? 88% of them are owned by small time investors. And about half of them just bigger half easy number, about half of them manage their own properties. We have data that the small time, real estate investor, 35% of them didn't get a rent check in September. Just do the simple math. I mean, you're talking about millions.

Brian Lauchner (25:38): Yeah. And I think that, and this is kind of be, I just, I gotta brag on you for a second because this is, I think a lot of people hear this conversation and they say to themselves, well, I've marketed to landlords are absentee, you know, owners before, and here's the reality is Eddie, as you heard a second ago, I met him in 2016. He actually told me to add creative financing at that time. And I didn't, but here's what you got to understand. I didn't, because I didn't have a problem in my business. Right. In 2016 the market was perfect for wholesalers, buyers were everywhere, marketing was working. And really what you got to understand is the market shifted. And so if the market shifted, what new action do I have to take in order to get the result that I'm expecting? And what Eddie's saying right now is you have to take out your previous experience, if you've talked to landlords before, maybe you're a landlord and things are going great for you, but the reality is, as he just told you, the market shifted, things changed, and so therefore you need to adapt to that. And this is why it's so important that you tune in live to these these streams,

Brian Lauchner (26:44): Because we're going to be coming with the most relevant, the most timely content on a weekly basis so that you can be as competitive as you possibly can in the marketplace. And so I think that kind of, as we go forward, obviously Eddie has all this information and in his head and we're going to do everything we can to kind of extract that. And he's very willing to share with us, he's a great teacher. And so join us every single week. And we're going to go out and put book in on this first episode. And I just want to invite those of you who are saying, look, what's NoteSchool? How do I learn more about the creative financing world? The Note Business? Here's what you want to do. If you're wanting to learn a little bit more, if you're wanting to even hear more Eddieisms, right?

Brian Lauchner (27:29): If you want to know what it means to be as big as a wagon wheel, want to do is you want to go to www.NoteSchool.com/VirtualGold. This is a one day class that we're going to be teaching to really equip you with the knowledge of creative financing and notes, and really what's going on in the marketplace. This class is a deeper dive using case studies real world by NoteSchool students, real world case studies that will show you and really equip you better to go out and be competitive in your marketplace. It's a full day of content, right? This entire day is meant to equip you and get you up to speed with real market conditions and actionable Intel to go out and take that next step in your business, whatever that looks like for you. And so as always, I just want to encourage you, make sure that you are subscribing and turning on the notification so that you get this live and ahead of your competition, but also make sure if you're wanting to learn more about NoteSchool, go to that link, get involved and we will see you there.

Brian Lauchner (28:30): It's going to be fun. I will catch all of you next Wednesday at 11:00 AM central time. Do not miss it for more content. And we're going to be bringing on more of the NoteSchool teaching team and more subject matter experts to help equip you and help you become more competitive in your marketplace. You guys have a great day and we'll see you next week.

#NoteInvesting #EddieSpeed #MortgageNotes #RealEstate #RealEstateInvesting #NoteSchool #Note School #Eddie Speed #Mortgage

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Non-Performing Notes: Are They Back? Eddie’s Theory - Real Estate NoteSchool

Non-Performing Notes: Are They Back? Eddie’s Theory

The “Shadow Inventory”

The “Piper” Will Have to be Paid

When Will We See This Inventory

Uncover Why Savvy Investors Use Proven Mortgage Note Strategies for Massive Monthly Profits In Today’s Ever-Changing Market… Risk-Free!

Discover more about NoteSchool and profiting without Tenants, Toilets and by taking our FREE one day class:

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Download a Brand-New eBook by Eddie Speed It’s A Whole New Ball Game With Creative Financing

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#NoteSchool #EddieSpeed #RealEstate #MortgageNotes

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Brian Lauchner (00:06): All right. Welcome! Welcome! Welcome! So glad you joined us today for another great, absolutely live in the flesh, virtually NoteSchool TV. We're going to be digging into some of the hotter topics. Some of the content that really is applicable in today's marketplace and why you need to know this information today. We've got some really cool stuff that we want to dig into, but first, if this is something that you find valuable, this is something that you want to know, the latest and greatest information, and you want to hear it first ahead of your competition. Make sure that you're liking this video, make sure you're going and subscribing to the channel, but more importantly, probably than anything else is actually clicking that bell notification so that you're getting the notifications so that when we go live, you know about it first, you're getting this information before anybody else.

Brian Lauchner (00:57): That's a huge benefit to you and we're going to get into it. Feel free to, as we're going through this slide, man, leave your questions, leave a comment. If it's something that we can tie into what we're talking about today, we'd love to address those here, live on the show. And so every single Wednesday, you're going to see us. I'm going live at 11:00 AM central time. Absolutely every Wednesday, so make sure you mark it on your calendars or watch for that notification to come across your screen. Here is the gist today, what are we going to be talking about today? We are going to be talking about the Non-Performing Loan Side of the Business. Is it back? What does it look like? Where is the opportunity? And probably most importantly, why it is probably the absolute game changer for your business moving forward.

Brian Lauchner (01:41): And today we have a very special guest, the one and the only Joe Varnadore, who's going to pop up on the screen well he's a veteran of over 30 years in the Note Business and absolute pro. And we've brought him on to really talk a little bit more about the Non-Performing Note Side of the Business, where the inventory is, you know, is it coming back? What does that look like? Moving forward to Joe, if you'll join us on the screen, how you doing?

Joe Varnadore (02:07): I'm doing great, man. How are you this morning?

Brian Lauchner (02:09): Is living The Dream as always living, living The Dream as always. And so tell us a little bit about what are your thoughts about this Non-Performing Note Piece and just share a little bit about what your thoughts are, where you think it's going, where the opportunity is?

Joe Varnadore (02:24): So great, Brian. So here's the, here's what I wanted to do and how I wanted to start this. Right? So I wanted to give you a little history lesson, right? We're going to go all the way back, well, from 1980 to 2006 delinquencies on single family, residential first mortgages was less than 1%, right? So for a period of 26 years, even through, you know, the crazy things that happened such as mortgage interest rates in 1980, and by way, I started in the business

Joe Varnadore (03:00): Back in 1990. So but anyway, when the rates were, you know, 20% on mortgage interest rates, so all of this, but delinquencies were very, very low. So then we have the Boom that starts in what, 2004 and Eddie and I, Eddie Speed, founder of NoteSchool. We talk about this and we call what happened in this great recession. We call that kind of a Crash in Slow Motion cause it really started in 2004. And then it just kind of built up until the housing market crashed in 2007 and then the the banking debacle in 2008. And then this led all the way through really until about 2014. So what did that look like? So after 2006, moving forward, we know that somewhere between 11 and 12 million non-performing first residential mortgages were in the United States in the system in the banking system in the United States.

Joe Varnadore (04:04): Right? That's a lot. So that looks like somewhere around 20% of the loans that were out and we know why, right. We remember the great recession and, you know, anybody could get a loan. It was the whole pulse thing. And if you could fog a mirror, right, all of that stuff. So over the past, what seven, five or six years we've seen that start to clean up? Well, what happens unbeknownst to everyone, even at the end of February of this year you know, we had this pandemic that kind of slapped us around a little bit. So, you know, we know that unemployment went from virtually very little, all the way up to where there was almost 40 million people that were unemployed. And so it started this whole ball rolling again, of people not being able to pay their rent number one, and most importantly, people not being able to pay their loans on their house, their mortgages on their property. Right? So it has become a thing again now, hopefully, and I certainly don't believe in, it's not the consensus, that NoteSchool that we're going to have, you know, 20%, you know, 11 million loans that are non-performing again, but it's somewhere around half of that. Right?

Brian Lauchner (05:28): Okay. So, when you're looking at, then the opportunity you're saying there's still a massive opportunity was clearly triggered by this pandemic, this Black Swan type of event.

Joe Varnadore (05:41): Right.

Brian Lauchner (05:41): Why is either this market cycle shift different or what inventory is different today than it was maybe for example, in 2008, like why does this one look a little bit different?

Joe Varnadore (05:54): Great question. So here's what all of that look like. Housingwire put out a great article here about three weeks ago, and it was talking about this very thing. So, I'm not saying there's going to be a massive number. There's a massive number of Non-Performing Loans that you can buy today, but it's on the horizon. We'll talk about that. And we'll kind of wrap that up at the end of the podcast today. But so here's the way this article starts. So by the end of January, by the end of December of this year, when the forbearances run out and the moratoriums on foreclosure and all of those things happen, then there's going to be this pile of stuff out there. And the way the article was titled as the Piper is going to have to be paid, Right?

Brian Lauchner (06:48): Okay

Joe Varnadore (06:48): So what does all of this look like as far as numbers, right? So what is the different government sponsored entities like Fannie and Freddie and HUD and FHA and VA. These are those GSEs, right? So those folks that are, that have done that, or they've gone into what is called a forbearance, Brian. So that means that they get a break on making payments. Now, oddly enough, Brian those folks that are in a forbearance situation, and it's a GSE, a government sponsored loan, a government insured. Those really don't show up as being in the delinquent pile, right. Because they're saying, well, we're giving them, you know, we're giving these folks a break. And so with those loans, they don't have to pay the Piper because what's going to happen is those payments will be just stacked on the back end of that.

Joe Varnadore (07:55): So if you had 340 payments left and give your 10 months, well, it's going to be 350 payments left at the end of that. Right?

Brian Lauchner (08:03): Okay.

Joe Varnadore (08:05): And by the way, just some quick numbers here, FHA HUD reported last week, that FHA alone as 1,000,300 and 60,000 of those of those loans. Right? And then you've got a Fannie Mae to $194 billion in delinquent loans. So it, depending on who you read and what you read, what we can ascertain from all of this is that inventory is somewhere in the 5 to 7 million loan range. Okay.

Brian Lauchner (08:44): Wow.

Joe Varnadore (08:45): Yes. So here's the difference in the GSE loans and then the Commercial Bank Loans, like you're working with Bank of America or PNC or Wells Fargo. Those, and I had a friend of mine, Brian. He we went to school together. I live in a little small town in South Florida called Okeechobee. Right? And everybody knows everybody. And so he calls me and he says, you know, my lender and it was a commercial bank. And he says, they, you know, they've offered me this. I don't have to make a payment for three months. And I go, so it's not like a Fannie or Freddie loan he's no, It's and he gave me the name of the lender. Right. And I said, Hmm, we need to find out something because he was all excited. So I get on the phone with him and we call the lender, Right. And so they said, Oh yes, Mr. Jones, you know, you don't have to make a payment for the next three months. And I kind of look at him and I go, and they go but, he goes, but what? And he goes, well they said, but you got to pay $4,500 in three months. So yeah. He could not make a $1,500 payment for the next three months, but the fourth month he's got to make a $4,500 payment.

Brian Lauchner (10:01): So let me just jump in here, because this is where I think a lot of people, especially when they're newer, if this is a newer market cycle for them, that they may not grasp is a lot of times people don't understand that forbearance is not forgiveness. And I'm not just talking about the investors. I'm literally talking about the homeowners who somebody talked to him and said, yeah, you don't have to make a payment. Like this example that Joe's talking about, it sounds so good. But the problem is when you look at just the math here, like if you can't afford, let's just use easy math, a thousand dollars a month today, if you can't afford it because of your situation, there's this forbearance program that'll allow you to forego that. But it's a three month a forbearance or a six month forbearance, well, at the end of that six months, you haven't been paying on that seventh month.

Brian Lauchner (10:48): And now you have to have all $6,000 plus the thousand for the seven months. So the psychology here is if you don't have a thousand dollars today, why do you think you're going to be signing up for something to where you'll magically have $7,000 in the future? And this is especially important seeing that the majority of Americans don't have a thousand dollars in savings. They're not setting aside large payments on a monthly basis. And so you can start to see when Joe talks about these troubled loans, right? Some of them aren't even reported in some of the numbers because of the programs that they're in, but it really shows you this group of, of loans that are sitting there, that they're not really, they're not in trouble as far as like, Oh, look, they're being foreclosed on right now. They're just sitting in this gray area.

Brian Lauchner (11:33): Right? And I think that's really, what's really important is first of all, understanding the difference between forbearance and understanding that it's just a delayed you know, program. It's not actually forgiveness. You can imagine how many Americans think they're not ever going to have to make this payment again. Right?

Joe Varnadore (11:48): Right.

Brian Lauchner (11:49): And so it just kind of adds to the numbers. And I just want to make sure I clear that up just in case anybody's brand new or they're not grasping that it's really important to understand there's this massive inventory sitting there and, and Joe's going to kind of talk a little bit more about that. Go ahead, Joe.

Joe Varnadore (12:01): Yeah. So with the forbearance pile, we know there's somewhere around three and a half to 3.7 million loans in forbearance. Right. That's got it, but that's got to change. That's, you know, that's going to have to, it's going to have to come out of forbearance at some point in time. And we're looking at the end of the year. For the ones that are with commercial banks. Well, again, that's that number is somewhere in the 3 million ish range. So those are the ones that at some point in time, it's going to have to go from being, you know, they're not paying right. They're in a kind of a forbearance situation. What happens, you know, in three months when, you know, the Piper has to be paid and they owe $9,000 in past due payments, what happens at that point? And so the banks, and here's the other thing, that most people don't realize is that the banks, the big three, right?

Joe Varnadore (13:00): I think it's Wells Fargo and JP Morgan Chase, and maybe I think it's City Bank, right? So they have gone in a position to where they are raising their loan loss reserves from like five and a half billion trillion, billion trillion dollars, right. In a billion dollars in January to where they have re increased those reserves up to about $32 billion. Now, Brian, here's the significance of that, when you're a commercial bank the Fed gives you some leveraging techniques, right? So when you've got to take money out of your lending category on this side, and you've got to move that over here to cover bad loans, non-performing loans. That means you can't loan this money out. You can't count that in your pile over here that you can make loans against. So that basically is money that has to sit over here in dry cash, unless there's, they're thinking of a significant event then it's they wouldn't be doing that.

Joe Varnadore (14:12): Let me share something else with you guys. We've got one of our students out in in California and he does, you know, his name is Seth and he does a lot of he's a great NoteSchool student. And he brought a deal to us here the other day and he and I were talking about it. So here's a person that I'm looking at the deal sheet right here. So here's a person that buys a house in February, 1st payment is due in March. The house, he buys it for 395. He's, he has, he gets a VA as a VA entitlement. So he gets a VA loan. And so he gets a zero money down VA loan, which is really about 1% Ryan. So he's got about $4,000 in it. So he gets the loan and he has not, he still hasn't made a payment, his first payment on that.

Joe Varnadore (15:03): So he takes it into a forbearance. So he's lived in the house for what, nine months now. And I'm looking at his forbearance amount here and it's $9,691 now, principal and interest. So that will be thrown on to the back end of the loan, and what we're seeing and what Seth is seeing specifically, is he seen eight deals like this in the last, I don't know, in the last 30 days, where he's seeing more situations like this, where someone, you know, bought a house and, and by the way, the Fed put out a a message here about three weeks ago that says, when originating a loan, if it's a G if it's a government sponsored any loan, a VA and FHA or Fannie or Freddie whatever it is, in a GSE realm that you have to, the borrower has to sign a document saying that you will not take that in to forbearance within the first 90 days. So Brian, if that were not happening over and over and over again, like Seth's experience here, it would not, that message or that bulletin would not have been put out there to people that are originating GSE loans. Right? So it is a hopefully it's not as tsunami coming, right? Hopefully it's just kind of a little bit of a way that's kind of pushing forward there, but that's the kind of thing that you don't see on the nightly news, right?

Brian Lauchner (16:37): Yeah. And I think that I've heard you use this phrase before, you keep talking about these different kind of chunks of inventory, right? You've got like Seth's example where you have all these assets sitting out there on a zero down VA loan. So you can imagine that this, person's not going to go list this with a real estate agent to play water, right? Like they're underwater, they're in trouble. The real estate agents can't help them. The majority of investors across the country who think like a wholesaler, we think, Oh, I need this thing at 70 cents on the dollar. They can't help them. It's going to take a very unique skill set. Well, we call becoming a Deal Architect. It's going to take a Deal Architect to go out and actually be able to buy this thing at retail or over retail and turn it into a solution for the seller, but profit for the investor, the Deal Architect.

Brian Lauchner (17:24): But you've got that group of people. Then you also have this entire group of people over here. That's like, you know, it's all these landlords that have tenants that aren't paying that now, maybe they can't afford their mortgages. And so I want you to talk about this term and I want you guys to listen carefully cause, this took me a minute to get, but they call it the Shadow Inventory. And the Shadow Inventory is something that we need to discuss because a lot of people have this mindset that things are going really good right now, Brian, like, what do you mean? There's going to be this big wave of problems. Like there can't be, the market's going up and up and it's probably going to go up forever. Right? But the reality is, there's this looming inventory sitting there. And so I want Joe to talk a little bit about what he calls Shadow Inventory and go a little bit more into detail into that so that you know, what you should be focusing on in the marketplace right now.

Joe Varnadore (18:13): Couple of things here and starting out with this Seth deal, right? That is, can we do something with that deal with Creative Financing? And the answer to that is absolutely, because Seth can sell this house for, he can take it over something we call Subject To, and he can then resell that what we call a Penalty Box Buyer. Brian, that's going to be another episode, right?

Brian Lauchner (18:38): Yeah.

Joe Varnadore (18:38): But, we can work with this person because the house, he could probably resell it for around 420, and then wrap the underlying and do all of that. But here's the other piece of this, before I get into this other Shadow Inventory here, but here's the other piece of what I wanted to share with you guys. And I'm going to read this here for you. It says that, and I took this, wrote this yesterday sellers in major Metro areas like San Francisco, Chicago, Philadelphia, New York, Seattle, Tampa, have had to reduce their asking prices to sell their properties.

Joe Varnadore (19:15): Highest drop is in red hot Denver. I mean, Denver has been hot, 41% of sellers had to reduce their asking prices in Denver. Okay. So we think that it's up, right? But the challenge there's challenges out there. The market is speaking, it's speaking in many different languages, right? That's the way it looks right now. So the other part of this and the Shadow Inventory that Brian was referring to, refers to all of these pile of landlords. And we kind of talked about this in last week's episodes. We call them Burnt Out Landlords, right? BOLs. So these are the folks we know that there is about, I don't know, it's around 20 million landlords out there that own from one unit up to four, right? So single family, they own one house, a single family house they use as a rental and maybe a duplex, which is two units.

Joe Varnadore (20:17): So they own three units. So that's what they own. We know that about 35% of the folks didn't landlords out there that were surveyed did not receive a rent check in September. That's the snowball effect when you're not getting paid as the landlord, then how do you continue month after month? Remember, this has been going on since March. So we're well into this. So we've got these, these landlords out there that are not receiving their rent checks. So those guys, when the, we call them Burnt Out Landlords, they're folks that they're in trouble as well, and they need to sell, they need to do something with that asset. And what, you know, we teach it at NoteSchool is the fact that yes, you can work with somebody like that. Even if they have very little equity, because we do we teach buying on terms or is that he would say buying on terms, right?

Joe Varnadore (21:17): We teach how to buy on terms, and then how to sell on terms. And we'll get that in an episode in the next week, or so, maybe the next week's episode they're talk more about that and what that looks like. But there is a pile of inventory. Brian, the thing that shocked me about these landlords that are, you know, there's about 20 million doors out there representing about 15 million new landlords over the last 10 years. And you know, most of them, 70%, self-manage their properties. And I'm just like, you know, why? why would you want to end what they've done really is they've bought themselves a business, and that was never their intent to do so. Their intent was to have a have passive, true passive income. And that's the beauty of the NoteSpace. That's the beauty of doing what we know and that's the performing side of the business. So guys, as we start to, you know, kind of draw the conclusions here, it's the simple fact is, is there is plenty of inventory out there. A lot of folks say, well, you know, there's no inventory, there's inventory. If, you know where to look for that inventory, you've got to, you know, kind of look through the gaps.

Brian Lauchner (22:36): Yeah, absolutely. And I think that we're painting two pictures here. We've got the whole side of, there's a bunch of failing loans because either tenants aren't paying or they bought a house and they couldn't pay, think about all the commercial buildings that are sitting out there that people aren't paying rent on. So you've got all these that yes, we could be acquiring on terms. There is a huge opportunity there, but the other benefit of the Non-Performing Side are Notes that, Hey, once they go delinquent, the banks use a process to lower the value on their books so that eventually they will sell these off for pennies on the dollar. And this is why it's so important that you learn this skillset specifically in the fourth quarter of 2020, because Joe is going to talk a little bit about when the wave is coming, but specifically this quarter it's important because Non-Performing Notes is going to be your lowest barrier to entry into whatever your strategy is. So if you could acquire a Note at a deep, deep discount, because it's not paying, you could rehab it so to speak or add value to it, to make it performing again. Or you were to take that asset back. Well, now you have a rental property or a flip that you acquired at a substantially cheaper price than you would have at a wholesale price. Right? So Joe, talk to us a little bit about maybe the charge off process and more importantly, when are we going to see this inventory hit the marketplace.

Joe Varnadore (23:55): Yeah. Great topic here guys. So back in, you know, so after the great recession, right? And we saw for those of you that were in the business back, you know, from 08, 09, 10, 11, 12, you saw REO inventory, right? Real Estate Own banks had foreclosed on properties and they were selling them. And Hey, as investors, we were buying those that, you know, 30, 40 cents on the dollar, 50 cents on the dollar. That kind of went away and then banks decided that, well, it wasn't we really, and there's a, there's a specific category of properties where the properties are worth less than $125,000 in as is value that they really don't want to to foreclose on. And there was a pile of those and we were buying those at a substantial discount sometimes as little as 15 to 20% of the, as is value of the property. So that's the background. So let's move forward to today.

Brian Lauchner (24:54): Hold on, Joe, I gotta jump in here because as a full-time wholesaler for many years, flipping houses, getting the rentals done on these strategies, I'm happy to buy something at 50 or 60% of the value happy to. Right? In almost any situation. And you are saying with Non-Performing Notes, I have an opportunity to get in at 15%, 20%, 30%, like.

Joe Varnadore (25:18): Probably not today, right? Get in it, it's somewhere between 30 and 60%, does that sound okay?

Brian Lauchner (25:27): You know what? I think I can work that into our leads here. So tell us more about tell us more about this.

Joe Varnadore (25:33): Yeah. So understand, that when this thing started back in, you know, back in March, so most people, Brian, made their March payment, right? It was not a big deal. And so now you've gone from March to April, May, June, July, August, you know, you've moved forward. So as this thing has gotten deeper people have not been able to make their payments. So here's the way that it generally works with the way of bank charges off loans over time, so that they can eventually sell those at 30, 40, 50% of value. So typically a lender, a bank is not going to start the charge off process until the loan, the borrower is 90 days past due. So you've got from 0 to 90 days, and then it hits that 90th day in the 91st day, the lender starts saying, okay, this is serious.

Joe Varnadore (26:36): And in their accounting processes, through the Fed and the way that the, you know, the, all that works, they are then allowed to start charging that off. So, Brian let's just typically say that you had Joe home buyer or home owner who they made their March payment. They didn't make their April, May or June. Right? So in July that became Delinko officially delinquent. And then the lender started charging that loan off. So they start in July, they charge, it may be down 8%. So they maybe they're charging it down 10% a month. So you go July, August, September, October, November, December, right? That's six months. So after about six months, they have charged the value of that long down on their books, through their accounting system, to where now, that loan is worth about 50% of value, actually, it's worth 50% of the as-is value of the property, not the unpaid principal balance.

Joe Varnadore (27:42): So you've got a $200,000 house, right? The borrower's delinquent, then it starts to be charged off. So the bottom line is, is when can we buy that Non-Performing Loan for a hundred thousand dollars, 50% of as is value. That's going to be somewhere in the January range, right? So if you're looking to buy at a 50% discount, then that's on the horizon. That's coming up. And guys, it's already mid October, you know, two and a half months, we're going to see this dam, you know, the breach in the dam. And that's going to start opening up and we're going to see these loans, these houses, these loans on there, that we're buying now understand, again, Brian, we're buying the Non-Performing Loan, but here's the good news NoteSchool. We've done tens of thousands of Non-Performing Loans back in the day, we know a thing or two about Non-Performing Loans.

Joe Varnadore (28:46): We know how to buy them, right. We know how to price them. We know how to work them out. There's only three things that can happen when you buy a Non-Performing Loan, right? You're either going to modify the loan. If you think the borrower can start paying again, they just need a little bit of help. We can get a deed in lieu, which means the borrower is just throwing their hands up. And they're saying, we just want out no more. Right? And we get the deed in lieu of foreclosure, meaning we get the house. Or in some cases we're going to have to literally go in and foreclose, but that's okay too. Right. It's just part of the process. You know, we, we teach you how to build you know, build a budget, understand that it's just like buying an ugly house.

Joe Varnadore (29:30): Like Christina and Tarek bought an ugly house on Flipper Flop. We buy an ugly house, we fix it, and then we resell it, and we make a profit. You buy an ugly note, a note that is delinquents, severely delinquent non-performing. And then we go through the process. If we modify the loan, Brian, we get a shiny new re-performing loan, which we can enjoy the cashflow on. If we get a deed in lieu or we get at the foreclose, then we're getting the house. And then because we're buying that at anywhere from 30 to 60% of value, we have multiple exit strategies, right? We can, you know, do what we need to do, and we can resell it with seller financing. If you just love being a landlord, you can become a landlord again. You can do all of those things, right? That's the whole process. But the key is, is we're buying it at a tremendous discount.

Brian Lauchner (30:29): Man. That is that's huge, Joe. And I really appreciate you kind of filling us in on this side of things and really what I really take away from this. And what I would encourage most of you to look at is that if there is an opportunity coming, like I said into the year, beginning in the new year, why I said a minute ago, it's most important that you're hearing this in the fourth quarter of 2020, because you literally have we're about two and a half months from the end of the year, that gives you about two and a half months to get the education you need, get the resources to line up your capital. All of this stuff really get prepared so that when the opportunity presents itself, you can actually strike, right. Obviously the better the deal. It is the faster it's going to go.

Brian Lauchner (31:10): And so you're going to want to be prepared. And so I will say this first of all, just say, thank you, Joe, for spending some time with us today, talking about Non-Performing Notes, we're going to spend more and more time talking about these topics, as you would imagine, over the next couple of weeks coming months, we're going to dig into this more and more and more. But this is a huge opportunity that I think literally every investor can relate to. They can see the opportunity and they're going to be able to go out. And those who have that knowledge, they're going to be able to jump on that. And so I'm going to wrap up this this episode of NoteSchool TV and just kind of say, thank you so much for joining make sure again, to like, and subscribe and definitely go out and click that notification button so that when we go live, you know about it, for those of you who are like, I want to know more about NoteSchool.

Brian Lauchner (31:54): I want to get involved a little bit more, get a little bit more education from you. If you'll go to www.NoteSchool.com/TV, I'm doing a one day class that is really a deeper dive into all of these topics. We're going to help get you equipped and get you educated so that you can actually go out and take action. Just go to www.NoteSchool.com/TV and sign up for the class that we've got coming up is going to be an absolute blast. Yeah. David just said, Non-Performing Notes is going to be absolutely huge, and it is. So thank you guys for spending some time with us. We will catch you next Wednesday because every Wednesday we go live at 11:00 AM central time here on NoteSchool TV to bring you the latest and the greatest news in the investing space specifically in the Creative Financing and the NoteSpace. We'll catch you guys next Wednesday, have a great week.

David (32:43): Thanks everyone.

#NoteSchool #EddieSpeed #Eddie Speed #RealEstate #MortgageNotes

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How to Invest Profitably Tax Free

Can you really use the special COVID rule to invest right now with your IRA, tax-free?

This question will be answered in this episode of Noteschool with Eddie Speed, Brian Lauchner, and Joe Varnadore, with their special guest, Kevin Stokes.

Kevin is an Apache pilot for Idaho Air National Guard. Joe and Eddie met Kevin and his wife Susan almost two years ago in a three-day class of Noteschool.

According to Joe, Kevin and his wife are what they call in Noteschool a “ninja” meaning they are buying or flipping a lot of houses.

For Kevin, at first, their goal is Buy and Hold properties. This is what they have learned but then he realized that he did not like the business of buy and hold. For this reason, he looked for a better way and this is why he landed at Noteschool.

Ever since Kevin and his wife met Eddie in Noteschool they started learning and analyzing notes because they are interested in investing. For so long they are trying to move out of the buy and hold mentality.

Learning and usings notes have become Kevin’s way of leveling up and thinking bigger. And now they have a business in nine states.

Kevin took advantage of a program that started as part of the “Cares Act Distribution” that was launched last March 2020 by using his IRA.

If you are interested in learning how Kevin was able to invest in notes by taking a chance in using this program continue watching this video.

Take advantage of a Special Covid Rule – “Cares Act Distribution” that allowed one of our students to take a $153,000 Distribution from a Corporate 401K.

Landlords are burning out. Tenants are behind on rent payments. Toilets are backing up.

Uncover Why Savvy Investors Use Proven Mortgage Note Strategies for Massive Monthly Profits In Today’s Ever-Changing Market… Risk-Free!

Discover more about Note School and profiting without Tenants, Toilets and by taking our FREE one day class:

https://new.noteschool.com/TV

Latest Class Information:

https://noteschool.com/3-day-classes/...

Download a Brand-New eBook by Eddie Speed It’s A Whole New Ball Game With Creative Financing

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#NoteSchool

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#MortgageNotes

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Brian Lauchner (00:01):

Can you really use the special COVID rules to invest right now with your IRA tax free, stay tuned.

Brian Lauchner (00:19):

Alright. Well, welcome back to NoteSchool TV, I'm Brian Lauchner and I'm a part of the GC team here. And I'm exited to be the one to bring you back in for the rest of the week and we kind of dive back into NoteSchool TV, if you are new to these videos and you get a lot of value out of it man, we would really love it if you would just like the videos as we produce them and definitely subscribe to the channel so that you're getting kind of, some of the content as it's coming out. And if you really want the most timely information, make sure you are like, clicking that notification bell so that you're getting notified when we go live. So you can jump on YouTube and engage with us with your questions. Bring some questions to the table. Today, we've got some interesting information about notes, but if you are newer to notes or you're newer to NoteSchool and you're just wanting to learn a little bit more, go to www.NoteSchool.com/TV, And you can learn a whole lot more about kind of what we do and how you can get engaged. But for day today, let's start by jumping into the news.

Brian Lauchner (01:18):

Alright, Mr. Joe Varnadore, take it away.

Joe Varnadore (01:38):

Good morning, everyone. Good morning, Brian. And we do have some breaking news this morning, hot off the presses yesterday. So starts off with we basically, as we wrap up this interesting year, right, we have three trains wedding or speeding towards the distress loan intersection, forbearance request, or up since the first week of December unemployment numbers are stagnating and increasing, and then the Cares Act expires in a couple of weeks. So with that, we have a few more, a couple of more items. One is reported by bank reg data, which says that aggregate the NPO Volume Non-Performing on Volume is up to $127.55 billion, which is basically $32 billion higher than the end of 2019. So, also this year Brian, which is just crazy, is that the four largest banks, and this is just the four largest banks reporting, which is Bank of America, JP Morgan Chase, Citibank and Wells Fargo have increased their loan loss reserves from 5.2 billion, the end of 2019 to almost $33 billion today.

Brian Lauchner (03:12):

Let me just clarify for people who don't understand what Loan Loss Reserves are, Joe, help me say this. This is literally their reaction to the market to protect themselves, right?

Joe Varnadore (03:23):

Right. So they have, so banks have a, they have a performing kind of portfolio. They have a Non-Performing Portfolio and they have to keep a certain percentage of those funds in a reserve account against a battle out non-performing loans. The, and the crazy part of that, Brian, is that as these banks hold that money there, they can't do anything with that. So they lose all of that leveraging effect. It's basically, we talk about dry cash at NoteSchool. This is dry cash for banks, so they are holding that and it is, it is just, it's kind of all coming together. And last week I did report that the moratorium on foreclosures and so on, did extend out to January 31st of 2021. So let's bring Eddie on real quick to kind of get his take on that. And then we're going to move on with our special guest today, Mr. Kevin Stokes, Hey, Eddie.

Eddie Speed (04:24):

Well, there's nothing going on in the market, right?

Joe Varnadore (04:29):

Absolutely nothing.

Eddie Speed (04:30):

Yeah. you know, guys, we are keeping our ear to the ground hard. I will tell you that. I just spoke to a group of high volume real estate investors last week. All guys that are what I call the Ninjas, the hundred house a year plus guys. And and I basically did a little waterfall, Joe, of some of these market details and some of the ones that you've been covering over the last few weeks. And what I find interesting is, is they didn't know this information and it's helping them form their decisions about how to progress the business. People say, Eddie, why are you so optimistic about the next five years in the business? It is because all of these variables just keep stacking up and those variables are going to produce some terrific opportunities. If we know how to take advantage of the opportunities, when those banks, when those banks gather up loan loss, reserve money, that means they can sell loans at a discount. That's essentially what it means.

Joe Varnadore (05:33):

Yeah. And you know, Eddie, we are going to be on top. We got a lot of experience in non-performing loan from the great recession as it flowed forward. And I can tell you that we are going to be on top of this as it continues to unfold in the first quarter of 2021,

Eddie Speed (05:52):

That's it we'll keep watching it. We'll keep telling you.

Joe Varnadore (05:55):

So stay tuned, guys. We have a special guest today and this gentleman, I'm a big fan of, of Kevin Stokes and his wife, Susan, Susan can be on today, but Kevin, come on and bring Kevin on. And Kevin one of the things I most like about Kevin, is that he is an Apache pilot for the Idaho Air National Guard. And man, as Eddie would say, I think that's being a pilot myself. I think that's as cool as the backside of your pillow.

Kevin Stokes (06:31):

You're too kind Eddie, or Joe.

Joe Varnadore (06:35):

So Kevin you guys were kind of in the corporate world and you know, you were, you know, doing flying Apaches and you guys became what we call in NoteSchool, a Ninja Real Estate Investor. You and Susan did. And I know Susan has a photography business as well, but you guys became what we call a Ninja, which means you were buying a lot of houses, right? Or flip.

Kevin Stokes (07:00):

Our goal is buying, buy and hold. That's what we'd always learned. And in I found that I didn't really like it a whole lot and it was seeking out a better way to do it that I ended up at NoteSchool.

Joe Varnadore (07:12):

Yeah, absolutely. So you have you guys have been, you know, buying and holding and you've done all of that. You've done the rehab and you know, you now you're buying on buying on terms and you're also selling on terms and they're in the Boise area. And really, you're kind of nationwide at this point as well. Aren't you?

Kevin Stokes (07:33):

Yeah. Notes was the way we were able to lever up and, and move from just the treasure Valley, which we could drive to and think bigger. And now we're in nine States, I think.

Joe Varnadore (07:47):

Yeah. So you're nationwide, right? That's.

Kevin Stokes (07:49):

Pretty much.

Joe Varnadore (07:49):

That's pretty impressive. Yet Ediie, we met Kevin and Susan in a three-day class here. Gosh, about a year, almost two years ago, wasn't it?

Eddie Speed (08:01):

Year and a half, I would say.

Joe Varnadore (08:02):

Yeah in Indianapolis, I believe.

Eddie Speed (08:06):

I remember that well, I remember.

Joe Varnadore (08:06):

I remember they sat right there on the, in the middle of the room on the back row. I don't know Kevin well, Eddie, why Eddie and I remember crazy things like that, but we do, you know, I mean, it's just yeah. They sat right. Third seat over from the beginning there. So you you took advantage of a program that was started as part of the cares act, which you know, came into play back in March of this year. I mean, we've all talked about that. So tell us a little bit about what you and Susan did. I know you had some money in you guys had some money in a corporate 401k and tell us a little bit what the, how that happened. Unpack that story for us.

Kevin Stokes (08:49):

Well, you know, we met you guys when we started investing in looking to invest in notes. So we, a lot of time analyzing it. It's just analysis by paralysis is something I've had to overcome my whole life. And we spent a bunch of time trying to understand how to move out of our buy and hold mentality. I still have a corporate gig that we've been looking to exit for quite a while, but all the money we had saved up that wasn't tied up in other properties already was tied up primarily in my corporate 401k. Then I had a traditional IRA and Susan had a traditional IRA from her previous employment plus for business. And so we started a self-directed retirement account under her business. And we were looking to fund it. We were gonna use notes to kind of start that a hundred dollar plan with that retirement plan and then find a way to roll over.

Kevin Stokes (09:42):

But we hadn't really decided in about the time. We had figured out a plan, the Cares Act kind of changed everything, provided the Cares COVID related distribution. And because of the lockdown in Idaho Susan's business tanked, as far as photography goes and she didn't do any sets for nearly five months. Well that qualified us under the Cares Act Distribution Plan to take out the amounts that we had available to us. Every individual is kept a hundred thousand. I was able to split that between my corporate 401k and my traditional IRA. Susan was able to take hers out of her traditional IRA completely. And so between the three of us, between the three accounts, we got 153,000 that we were able to pull out roughly, I think a little bit less. And we use that money to go set up funding of our note purchases.

Kevin Stokes (10:44):

We knew we wanted a high-income, hi cashflow, because our goal is to get me out of my corporate gig. So we got, we concentrated on the monthly income potential for payoff and a lot of equity in each one of the properties, because I'm not full-time in this, she's not full time in this. We wanted the least amount of trouble that we can get. We did a number of calls with NoteSchool on our weekly calls looking at some of the calls. And in fact, one of the, I knew I was on the right track. Cause one of the assets we were buying, we're looking at buying came up as one of the spotlight.

Joe Varnadore (11:26):

One of the Assets Of The Week, right?

Kevin Stokes (11:29):

Like the Assets Of The Week, it popped right up. And then that was the moment for me that I went, okay, I know what I'm doing. Like, like I've reached it to where this is, this is the right place for us.

Joe Varnadore (11:40):

Gotcha. So let's talk a little bit about, so this Cares Act Distribution allowed you guys, you had like a hundred thousand in one account and 53,000 and another, and you got to move that over into your into your account. And so that allowed you then to use that money and you basically went to NotesDirect and you started, you didn't use all of the money. You used a hundred thousand dollars on buying some notes and we'll look at those in just a few minutes, but that allowed you to go in and you know, to create income in this COVID distribution. It allowed you or Cares Act Distribution. It allows you to pull that money out of there. And really you're going to have to pay the taxes on this, but at the end of three years, you'll get all of any taxes that you had to pay back. And then you keep the total income off of that, right?

Kevin Stokes (12:36):

Yeah. So the, the, the big key to this is that the, your tax burden is just like regular earned income, like a normal distribution, but the Cares Act allows you to split that up into three equal payments over the next three years, then the additional bonus. And this is the big kicker and why this is so powerful is that if you put the money back into a qualified retirement fund, then you can file amended taxes for the three previous years and get all that money back.

Joe Varnadore (13:06):

Right.

Kevin Stokes (13:06):

So what this is allowing us to do is I'm using the cashflow to pay the taxes this first year, so that we can leverage the remaining assets we've got for levering up our business to get us some private investors and to move forward with that, and then pay the taxes this year, pay the taxes next year, and then all that money that we've got. I can just, I don't know any number of options. I can just put that money, that full 153 back into the retirement account. And we get to keep the taxes they'll come back to us.

Joe Varnadore (13:41):

So Eddie, so what Kevin did was he, you know, he went into NotesDirect, right? And they started looking at notes and they picked the four notes. And that we're going to look at here in just a second. So they found four good notes and they took a hundred thousand dollars of that money and it allow them to go do this. And if we'll pop that up there on the screen, there let's look at those. So Kevin purchase you guys so on NotesDirect our notes platform, There's your four notes and the UPB guys is Unpaid Principal Balance. So the Unpaid Principal Balance on loan 1 was 26,245. The monthly cashflow was 558.60. And you purchased note , you purchased notes at a discount. So the purchase was 24,875. And you can see that for note two, note three and note four, right? So these four notes had $112,933 in unpaid principal balance. You bought those four notes for $99,485. Right. And because of that, you now have a monthly cashflow, right. Of 1500 and basically $50 per month, right?

Kevin Stokes (15:05):

Yep. Yeah. It's actually so far, it's been a little bit higher than that because number four, there he's been paying double payments.

Eddie Speed (15:12):

Wow.

Kevin Stokes (15:12):

And he's been asking three times he's asked the servicers what the payoff balance is. So I think he's getting ready to pay it off.

Joe Varnadore (15:21):

You mean, even during the pandemic, you've got a guy just saying, Hey, you know, I'm just going to pay double payments.

Kevin Stokes (15:27):

I, it's, we're blessed. A lot of people are scared of this last year, but this has been a good year for us.

Joe Varnadore (15:34):

Yeah. You know what, it has. And so, Eddie, you want to chime in here and talk about this a minute.

Eddie Speed (15:40):

Yeah. I want to congratulate you, Kevin. You know, we NoteSchool tries to put out a lot of information and one of our preferred vendors who has, which was Quest Trust they are the ones that essentially told you guys about this opportunity, but it's not just knowing about it. It's doing something about it.

Kevin Stokes (15:59):

That's right.

Eddie Speed (15:59):

That's what I love. It's the action. And so you took that information and ran with it and bought four notes. And then you have another, essentially $50,000 that you have a very active investment business where you're soliciting capital investors. You're trying to pursue by buying properties, own terms, creative terms, along with you know, buying these existing notes. It doesn't take a lot of budget to buy these marketing budget by these existing notes. Cause you just went to NotesDirect and click the button and bought them. Right.

Kevin Stokes (16:36):

Yeah.

Eddie Speed (16:37):

And I do remember, you know, you're bringing some of these deals on our little special, what we call our deal lab every week and, you know, and just kind of breaking it down us, just kind of beating it up and talk through it. I teach you guys all the time. You're a more tactical personality than me, Kevin, but you're also really good at due diligence. Right. And it makes a good mix because it doesn't take me long to make a decision, but I like having good facts and you're good at gathering up the facts and position them to where I could say, yeah, I could live with that. Or I wouldn't, or you know, it was just sort of talking through it at the end of the day, obviously it's your decision, but you're leveraging some experience. So let me tell you something, you take a hundred grand and turn it into $18,000, annual cashflow. It doesn't none of us on this show today need a much of a calculator to know that the math's gonna work in your favor.

Kevin Stokes (17:38):

Yeah. That's the kind of Excel spreadsheet that really gets me excited.

Joe Varnadore (17:43):

Yeah. That's that math, that 18% return math. Right. And well, you know, Kevin, you know, Eddie with Kevin, you as an Apache pilot you are an engineer and you have a lot going on in that cockpit at one time, there is not, you're using both feet, both hands. And one of those eyes to look ahead and one to look below you, right?

Kevin Stokes (18:05):

Yeah. Those were good days.

Joe Varnadore (18:07):

Yup. Yep. So tell us a little bit about, so again, this is, if you roll this into a qualified account within three years, then those taxes you'll follow amended return, and there'll be, they'll come back to you. So any taxes you have to pay on this, you'll get all of that tax money back, right?

Kevin Stokes (18:28):

Yeah. Like, so for instance, the not to get into the specific numbers, but I'll use easy ones. The tax burden is about 45,000, but rather than spend that it's 15 a year. And the cashflow is going to cover the first year. And then I'm assuming that at least one of these is going to pay off and we can pay the others and then just continue to collect that money outside of it. And then as long as we pay the 153 back into the retirement account and in the beauty of it is it doesn't have to be in the one that originated. So we're done with the traditional IRAs and we'll be able to put that into our self-directed account. And in the self-directed account, we've got two other NotesDirect assets in there now that are performing as well. We use the same criteria for those as we did the others just to get started. And once we pay it, then the amended returns get filed and then we'll, we'll get that money back. As if we choose to do it.

Joe Varnadore (19:31):

So that really means is that all of the profits on this, cause you were doing this out of a retirement account anyway, so this really wasn't today money, right?

Kevin Stokes (19:39):

Yeah.

Joe Varnadore (19:39):

So it'll all go back in. You'll have all of the taxes you paid in back, and it will have been a great move because that allows you to get that money out of that corporate 401k into a self-directed and then never have to pay, and then having the taxes come back in the back door So that's an amazing thing by the way, folks that is still around, you've got until the end of the year until the 1st of January, the December 31st to do this, or look into it yourself. And I don't know, it may get extended. We don't know. I talked to the folks at quest yesterday to check on that and they don't know as yet, but we will stay on top of that for sure.

Eddie Speed (20:22):

Yeah. One thing I wanted to say to you guys, and I know we want to bring Brian on here and, and make sure he's got any questions, but one thing, one point I wanted to make to you guys is, one of the things that we do at, with our students at NoteSchool a lot is we show them ways to recapitalize their business. So right now, Brian and Susan have a hundred thousand dollars invested in these notes, and you're doing the math in your head go in and well, the cash flows great. But in three years, Brian and Susan are going to need to do something to put that $153,000 back in their retirement accounts so that they can get their income tax. They had to pay on the money when they took it out, that they can get it back.

Eddie Speed (21:08):

Well, instantly in our head, we're going, no problem. You take those notes and you could sell a cashflow with those notes or, and not ever, not really have to sell the whole note. You don't have to sell all the payments in order to do that. Or the other thing is those notes are good performing notes. Kevin, you could just, you could go find a passive, I call it wouldn't really be a passive investor. It would be a passive lender and you could just borrow money and pled those notes as collateral. So, Kevin already knows how he can get the money back, even though he's enjoying the cashflow right now, but to get that money put back in the retirement account so that he can get his get it placed back in there. Again, he already knows how he can recapitalize and do that. And to me, when you start being able to think down the road of how you structure financing around, he's bought a note, but you could do the same thing. If you, if you did sell financing on a piece of property. Now, all of a sudden you don't do one deal. Now you built a business where you can do many, many, many deals.

Joe Varnadore (22:14):

That's right.

Eddie Speed (22:18):

Let's bring Brian on, and let's see what else Brian would ask Kevin. This is a great session today, guys.

Brian Lauchner (22:25):

Yeah. Well, first things first, very impressive. I think some of the things that stand out to me were not even questions, just things that stand out as far as there are so many investors right now who they feel like they're in this rut because they they're struggling in their say their wholesale business. They feel like they're struggling because they can't find houses to buy whatever it is. And this is where I try to encourage people as much as I can to say, you got to get involved, you got to start learning some of the stuff, a guy like Eddie Speed has been doing it, you know, for 40 years he might know a thing or two. Right. And and I think Kevin has kind of taken this information. He's really run with it. Now I will say this just as a quick disclaimer definitely may seek some accounting professionals to get you the information you need.

Brian Lauchner (23:10):

Nobody on here is trying to give you legal or accounting advice or tax advice. But to see that it's possible, I think is what most investors really need right now is to just know like, Oh, there's an opportunity here. And I just got to figure out those steps, right? And I would say that for some of you who are brand new to NoteSchool, the first step is going to be going to www.NoteSchool.com/Tv. Just to learn a little bit more about how does this whole note world work? What is this Eddie Speed ecosystem kind of thing that he's developed. to really get engaged, start getting this information in your head and going out and plug it in. And for those of you who wanting to do what Kevin did and just start buying notes right away whether it's in a tax advantage account or not, you can do that and we can actually teach you a little bit more on our YouTube playlist.

Brian Lauchner (23:56):

There's a Feeding Frenzy Friday where we break down the NotesDirect Friday Featured Asset. If you caught all of that.

Joe Varnadore (24:03):

Wow.

Brian Lauchner (24:03):

Who's rewind it to rehear it. Right. But we break down a note and we talk about those details to give you the confidence that Kevin had, which is, I'm on the right track. I feel like I'm absorbing the information and I'm really getting it. It's now just time to go out and take action, click that buy button, and you can obviously buy something as easy as buying something on Amazon. So, that's kinda how I would say we can go ahead and wrap up the day here. We've been going for a little bit, so thank you to Kevin for coming on. Really appreciate your time and you know, sharing your story. I think it's encouraging to a lot of people who want to get involved.

Joe Varnadore (24:41):

Very good. Kevin, thanks so much, you know, we appreciate you guys and and what you guys do and your family that you have there in Boise and you know, the creativity guys, we are going to have to get even more creative than we had to earlier this year as we move into 2021. So, Eddie final thoughts?

Eddie Speed (25:05):

Kevin, Congratulations. I would say that in light of the fact that you guys, that your wife had an interruption of business this year. You took some smart action and you made a significant adjustment. By the way, I was thinking about this also, if you had to pay taxes in a year, your income was down a little bit.

Kevin Stokes (25:24):

Yeah.

Eddie Speed (25:24):

Right. So that was the smart time to pay taxes when your income was down a little bit and glad that you guys are back going. And I, it's fun to hear you guys every week talking about buying properties on creative terms as well. So just keep doing what you do, man.

Joe Varnadore (25:39):

Absolutely. And guys, as we roll it, as we want to wind up the end of the year as well Eddie, we're going to start into 2021 talking about more and more and more about buying on with Creative Financing, buying and selling on terms. So just gotta keep that in mind. And we do have a show next week and the week after Christmas as well. So we look forward to that. Brian, tell us how, if people can get involved or find out more about NoteSchool, man.

Brian Lauchner (26:09):

Yeah. So first of all, obviously you, you can definitely like it, subscribe to the channel, make sure you're clicking the bell notifications. I see several people chimed in here, Stanley, man, thanks for engaging. How do you get started? You go to www.NoteSchool.com/Tv. It's probably a great starting point to get signed up for some of the training that we have. Some classes that we teach. Shelley mentioned she aspires to be a Ninja. I think that's really cool. Like if that's what you're trying to build your business around, man, let's get engaged. Let's get you on your way. Let's get you some support and some education to help you reach those goals. Right? So for the rest of you, we will see you next week, every Wednesday at 11:00 AM central time, click that notification bell. So you are in the know we're going to have another great guest and we will see you all next week.

#Real Estate #Real Estate Investing #Notes #Mortgage #Mortgage Notes #Eddie Speed #NoteSchool #NoteSchoolTV #Note School

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notespeed · 3 years

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Buying Lucrative Performing Notes The Note School Way

Can you buy a note as easy as buying a new case for your phone?

This question will be answered in this episode of Noteschool with Joe Varnadore and his special guest, Dave Storton.

Dave is a retired police detective and he was the commander of the financial crimes unit. Before he went to Noteschol, Dave did a lot of things such as teaching special driving courses that included off-road driving and search and rescue personnel, fire department, and some civilian classes as well.

For Dave, he entered the world of Noteschool because he was looking for something that will help him continue building wealth for himself and his family. Coincidentally, he lives in an area where there are a lot of private investors who want to become passive earners.

His peer group is retired law enforcement who are also involved in the real estate business. They have cash on hand that they want to invest but at the same time, they don’t want to undergo the ups and downs of the stock market. They are at the time of their lives where they just want to experience a stable cash flow. And Dave was able to offer this stable cash flow to them.

In this episode, Dave is going to talk about the deal that he made where he used only private investor money.

Watch this episode and learn from Dave how easy it is to buy performing notes and be successful with them the Noteschool way.

Landlords are burning out. Tenants are behind on rent payments. Toilets are backing up.

Uncover Why Savvy Investors Use Proven Mortgage Note Strategies for Massive Monthly Profits In Today’s Ever-Changing Market… Risk-Free!

Discover more about Note School and profiting without Tenants, Toilets and by taking our FREE one day class:

https://new.noteschool.com/TV

Latest Class Information:

https://noteschool.com/3-day-classes/pop/

Download a Brand-New eBook by Eddie Speed

It’s A Whole New Ball Game With Creative Financing

https://lp.noteschooltraining.com/moneyball-getstarted

https://youtube.com/c/noteschool

https://www.noteschool.com/

https://www.facebook.com/thenoteschool

https://www.linkedin.com/company/noteschool/

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https://twitter.com/thenoteschool

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#NoteSchool #EddieSpeed #RealEstate #MortgageNotes

-----------------------------------------------

Joe Varnadore (00:01):

Can you buy a note as easily as you can buy a case for your new iPhone 12 from Amazon stay tuned.

Joe Varnadore (00:20):

Everyone. Joe Varnadore here from NoteSchool. And I want to welcome you to this week's episode of NoteSchool TV. We have a special guest today and we'll bring him on in just a minute, but we go live every Wednesday at 11:05 central time. And make sure that if you love the show right, that you like share and subscribe and make sure you hit that bell notification so that you will have a reminder as to when we are going live. Make sure also, and send any share your questions and comments as we're going through this also. And you can always contact us at www.NoteSchool.com/TV. So, as I said, there is a lot of things happening in the world today. We all know that the old Chinese philosopher said, may we, may you live in interesting times? Well, it is certainly interesting times, right? So big news story for this week.

Joe Varnadore (01:43):

So the big news story for this week, the government sponsored entities, which are GSEs, we call them, which are, which is Fannie, Freddie, Ginnie, Fannie Mae, Freddie Mac and Ginnie Mae have decided to extend the foreclosure moratorium from December 31st of 2020. They've extended it out to January 31st of 2020. And the story goes on to say that will affect about 28 million homeowners in the United States. Not that there's 28 million people in a forbearance situation, but they're that many Fannie Mae, Freddie Mac and Ginnie Mae government insured or guaranteed loans. So Ginnie Mae includes VA and FHA. So that is a breath of fresh air for some of those guys as well. We know there's a lot of things going on, right? So with that now understand that only applies to the Fannie Freddie and Ginnie loans.

Joe Varnadore (02:59):

It does not apply to the other loans that are through regular conventional lenders and so on. So just a big piece of news there. And again, that is good news for a lot of folks there, alright. And stay tuned for more of that. We'll have our news flash every week as we go through this. So as I said, we do have a special guest today, and this gentleman, his name is Mr. Dave Storton and Dave comes to us. He is from the San Francisco Bay area. Why don't you bring on Dave? And let's talk just a few minutes.

Dave Storton (03:43):

Hey , Joe how are you doing?

Joe Varnadore (03:43):

So. Dave is a retired police detective from the Bay area, right?

Dave Storton (03:50):

Correct. Yep.

Joe Varnadore (03:51):

And if my memory serves me, correct you when you, I guess when you retired, you did you were doing, you were doing financial fraud and things like that, right?

Dave Storton (04:03):

Yeah. That was in financial crimes unit. I was actually the commander of Financial Crimes Unit.

Joe Varnadore (04:08):

Wow. That's a big job, dude. I didn't know you were the big wheel.

Dave Storton (04:12):

It was a handful. Yeah. It was a handful.

Joe Varnadore (04:15):

Yeah. I'm sure a lot of things, I'm you've got a lot of great stories to tell. Right?

Dave Storton (04:20):

Oh yeah.

Joe Varnadore (04:20):

One of these days we'll get to sit back down live in person again and share more of those stories. Right.

Dave Storton (04:29):

Looking forward to next year in Dallas, to sit down and have breakfast with you or something.

Joe Varnadore (04:33):

Absolutely. So they've you when you, when you came into note school, you were, you, you, you do a lot of other things, right? You have, you know, I think you and I have talked about this and you do defensive driving courses all over the United States, right?

Dave Storton (04:50):

Yeah. I do specialized driving courses. Actually. I teach off-road driving to search and rescue personnel, fire departments, and some civilian classes as well. That's my fun business.

Dave Storton (05:00):

That's you fun?

Dave Storton (05:00):

Not that Notes aren't fun. but that's my fun business.

Dave Storton (05:06):

Well, one of these days I live in a little town in South Florida, as you, some of you guys have heard me say a little town called Okeechobee. And the Sebring Raceway is about less than, about 45 minutes from where I live. So one day Dave's going to do something over there and I'm going to go over and and help him out.

Dave Storton (05:23):

Yeah. We'll have some video of that cause there I teach protection driving. So how to protect dignitaries and also some motion pictures done driving school there as well.

Joe Varnadore (05:34):

Well, even after being married 28 years and my wife riding around with me for a long time, to put back in with all the help I can get. So, but you were looking for something that was going to be passive for you, little bit active, but you were really, this was kind of a means to an end, right? You wanted to continue to build wealth. You live in an area that has a lot of great investors out there that, that what private investors, I should say, right?

Dave Storton (06:04):

Right.

Joe Varnadore (06:04):

They would want to invest. And they totally want to do nothing. Right. They totally want to be passive.

Dave Storton (06:10):

Yeah. It's really interesting in that because my peer group is now retiring from law enforcement and they are bailing out of California for reasons we won't get into here, but because they're selling real estate, they're buying in other places out of state and they have cash on hand that they want to invest, but they don't like the roller coaster of the stock market. And because of just the, this time in their life, they want cashflow. They don't want to, they're not trying to grow an IRA to retire later. They're retired now. They want cashflow now. And so I'm able to offer that to them

Joe Varnadore (06:45):

Well, and you know, it we were looking at some stats the other day, Dave, and the last time, you know, back during the great recession, which sounds like know a hundred years ago, but it was 10 years ago, right. Or 12 years ago that there was a record set back then of about $3.8 trillion that at one time was sitting just in money market accounts. Right. Which means it was doing nothing, you know, well, you know what i mean, but less than a percent in return. And so that was like at 3.8 trillion today, there is almost 5 trillion, like three or five, 4.8 or $9 trillion sitting dry inside of money market accounts. And then all of the pile of cash that is sitting over in self-directed IRAs that is sitting in dry cash. Right? They say that number is somewhere between 55 and $75 billion sitting in dry cash in IRAs. So we talk about, you know, working with burnout landlords, we call them BOLS. Right?

Dave Storton (07:55):

Yeah.

Joe Varnadore (07:55):

And, and so on, and that private capital that's out there it's a thing. Right. We had a you had a deal last year where your first deal, right. That I think you used a hundred percent private investment money. Didn't you? The non-performing note you did in New Jersey?

Dave Storton (08:13):

Yeah, my first I kind of challenged myself on it, Joe, and that, you know, you keep hearing people say, well, you can use other people's money. You don't need to use any of my, any of your own. So I had some of my own to invest, but I thought, okay, let's see if I can actually do that. So I jumped into the deep end with a non-performing note with not a dime of my own money in it. And I had set a goal for myself after going to NoteExpo to get into the deal contest, and at least be a finalist. And and I was a finalist that year. I didn't win the whole thing, but, you know, just to be a finalist was pretty cool.

Joe Varnadore (08:43):

Yeah. Three out of out of many is pretty darn impressive. So yes, Dave his story goes that he attended well, he became a NoteSchool student late in the summer of 2018.

Dave Storton (08:58):

Right.

Joe Varnadore (08:58):

He was getting his feet wet with the business and doing, you know, kind of studying up. And then he jumps in and goes to NoteExpo in the fall of, in November 2018. And he saw all these folks getting up on stage, getting their awards and so on. And Dave, what did you decide you were going to do at that point?

Speaker 3 (09:17):

Well, I set that as a goal for myself. So what I tell my kids who are now in college or graduated college now is, if you do not write down your goals, it's a wish. So I created a mouse pad and on the mouse pad, in fact, I have my mouse pad right here. So on my mouse pad, I wrote on the top of it, NoteExpo. And I put on deal finalist. And I remember I showed that to you that day.

Joe Varnadore (09:48):

You did, you absolutely did.

Dave Storton (09:49):

And I gave you goosebumps, I think, but that, you know, I didn't know I'd make it, but I was going to give it my best shot.

Joe Varnadore (09:54):

Yeah. So that would end up, what? 2018, November, 2018, Dave says, I'm going to be up on stage with a deal, not done his first deal at that point.

Dave Storton (10:03):

Right.

Joe Varnadore (10:03):

November of 2019, boom, you were there. And we had to go virtual with with NoteExpo this year, the appreciation event NoteExpo but.

Dave Storton (10:13):

I still enjoyed it. It was good. I like in person better, but yeah.

Joe Varnadore (10:19):

Darn good. Yeah, and your on the list again, Right.

Dave Storton (10:23):

I was. To be honest, my expectations were low for the virtual event, but man, I really had a good time and enjoyed it.

Joe Varnadore (10:28):

Well, you know what it's what is, what is the old thing? Always a bridesmaid never a bride. Right? Anyway. So let's talk a little bit and we go back to the teaser that I gave at the beginning of this. So can you really buy a great performing note from NotesDirect, which is our note platform, right. As easily as you can buy a case for your cellphone from Amazon, and really the answer to that, Dave is, you know, yes. Right?

Dave Storton (11:02):

Correct. Yep. It's just like, if you're going to buy a product on Amazon, you go look at all the reviews and then you talk to your friends and you know, you Google it. And it's kind of the same thing with a note, you're just doing underwriting and you're doing all the background work for it. And you actually, even this year I learned, and I don't have his name in front of me, but there are people out there that'll help you with the underwriting if you need that.

Joe Varnadore (11:27):

Right.

Dave Storton (11:27):

And you just do your research on it. And, you know, I guess that's a little different, especially on my first one. Cause I'm hovering over a button that, you know, is $47,000, you know, with sweaty fingers. Do I click it? That's kind of what I like about NotesDirect is, okay, I click it. If there's something just agregiously wrong in the, in underwriting. Well, the NotesDirect people are there and you know, they'll help you work through it.

Joe Varnadore (12:00):

That's right. Well, and we'll talk a little bit more at the end of this, about how to, you know, how to get to NotesDirect and so on. So let's we've got a picture of the house here and some details. So let's just talk about what that looks like, right? So here's the house now, by the way folks, we said Dave lives in the San Francisco Bay area, right. Is that anywhere close to Ridgely, Tennessee?

Dave Storton (12:27):

It is not for if anyone's geographically challenged, it is not close. And just to be clear this is not, this is not the non performer.

Joe Varnadore (12:35):

Did you ever go to Ridgley, and look at this house, Dave.

Dave Storton (12:37):

Yeah. Well, this is not the non-performer I bought the first one. This was,

Joe Varnadore (12:40):

Right Exactly.

Dave Storton (12:40):

Actually the performing, a performing note that I bought that had started having issues. So.

Joe Varnadore (12:46):

Right. You know, the great thing about the NoteSpace is that you're the bank, right? So you bought a note that on a house in Ridgely, Tennessee, you know, three bedroom, one bath house, It's got a current value of $55,000. Now it's a nice looking little house guys. And I know, you know, if for those of you that live in California or live in some of those higher price areas, you go, Oh my God, I can't get a parking space for that much. Right. But that's kind of the way it is.

Dave Storton (13:22):

That's true.

Joe Varnadore (13:22):

So let's talk a little bit about Dave, a little bit about the details of this note. Right? What did it look like then? When you bought this? Okay. So the note the house is worth 55,000, right?

Dave Storton (13:38):

Right.

Joe Varnadore (13:39):

And the balance on the loan was $43,250. The interest rate on this is 10%. Now, some folks will go, Oh 10%, that's a little bit high, God, this is a lower price band asset. And that is appropriate for a note of this size. Right. And so it says, the term is 250 months. So Dave, this was what was the original term on this one?

Dave Storton (14:10):

This actually was the original term before I modified it.

Joe Varnadore (14:14):

Right. But what I'm saying is this lady had owned this house a long time, right. This was a 360 month loan.

Dave Storton (14:21):

Right. And there's yeah, 250 months left on it when I bought it.

Joe Varnadore (14:25):

So let me make sure everybody gets that. So guys, this loan, the the borrower owes 250 payments after having made 110 payments. So she's owned this house for what nine years. Right. So nine years. So, and she's got a bit of equity in it. She's got about 10, little over $10,000 in equity in cash equity, but here's the thing, she's got nine years of emotional equity in this house. Right?

Dave Storton (14:56):

Yeah. if you look at the picture, Joe, the picture on the first slide that you brought up.

Joe Varnadore (15:01):

Yep.

Dave Storton (15:02):

That's one of the things that told me she's got emotional equity in it, because if you look at that yard, it's nice. There's flowers on the mailbox. That's somebody that cares about their house.

Joe Varnadore (15:12):

And that's, you know, I bought a note once in Memphis and I didn't even go in, it was a, it was a performing note and they, it was, the yard was, and it was an older house. Right. But the yard was immaculate. The hedge was totally trimmed. The sidewalks were totally edge, man. I'm a little anal about, you know, my yard and stuff like that. And I go look at that, that's I don't need to see anything else. Right.

Dave Storton (15:38):

Yeah.

Joe Varnadore (15:38):

Emotional equity there. So you go through this and we'll go back to the next screen there. And so, the monthly payment is $412. So basically, Dave, what you're buying is you were buying the rights to receive the note, right. You're buying the rights to receive for 250 payments at $412.

Dave Storton (16:01):

Right.

Joe Varnadore (16:02):

And so that means, and you bought this note right?from NotesDirect note was traded at a discount folks. So Dave buys this note for 34,250 bucks. Right. So he buys it at an $8,000 discount. So that makes your, I didn't figure what your yield on that is, but it's somewhere in the 12, 13% range I would assume.

Dave Storton (16:24):

Yeah, I don't have that in front of me, but yeah.

Joe Varnadore (16:27):

So it's up there. So then you let's kind of look at some redeeming factors on this. So you buy this for 30 for $34,000. The balance is 43,250. So again, the borrower had paid 110 payments of 412, right. So there's 250 payments remaining. So you buy this and did you buy this in your IRA or did you just buy it outside of your IRA?

Dave Storton (16:57):

Bought it outside of the, my IRA with none of my own money.

Joe Varnadore (17:01):

That was my next question. So you actually used all investor money on this, so you bought some inexpensive and I'm going to guess that you paid somewhere your private lender was paying you. So you were paying somewhere between 6 and 7%.

Dave Storton (17:19):

Yeah. Around a little over seven actually, because these are the guys I use are friends of mine. I've known them for a long time. So I was, I was a little bit generous.

Joe Varnadore (17:27):

So you're giving them a little extra juice out of the lemon, Right?

Dave Storton (17:29):

Right.

Joe Varnadore (17:32):

Okay. So, you're buying this cashflow, right. And so you buy it and let's look at the deal points on this. So you bought it back in December of two night of 2019, and everything is all good.

Dave Storton (17:50):

Yeah. There wasn't had a good payment history. And so everything was fine for three months.

Joe Varnadore (17:56):

And so then well, we had a challenge didn't we? I, some of you have heard of it was a pandemic. I think it's, you know, it's called COVID and this lady's life kind of, after living in that house and owning that house for nine years, she had a lot of things happen to her. Right. I think said we had the COVID thing. That was a divorce. There was a challenge with her daughter. So there was some really, she, it was kind of just dumped on her all at once, right there.

Dave Storton (18:24):

Right. You actually spoke to her directly and heard her story, and she just had some horrific stuff going on in her life.

Dave Storton (18:31):

Right.

Joe Varnadore (18:32):

And guys, here's the thing. And Dave, you, you chose to speak to her, which is a good thing. Cause you wanted to find out what was going on. But just to understand that, guys you don't have to do that. There are default servicers out there that can work with you, or it can work with your client, your borrower for you. And, and I'm sure you went through the process with that as well. Yeah.

Dave Storton (18:53):

I had a servicing company and they said they would, they could work through it. But you know, without giving them too much information on my bar, we had something in common in our backgrounds.

Dave Storton (19:04):

Right.

Dave Storton (19:04):

So I told the servicer, like, I'd like to talk to this lady directly.

Joe Varnadore (19:07):

Very good.

Dave Storton (19:08):

Because you know, we have something in common. So I spoke to her directly and that actually worked out very well.

Joe Varnadore (19:15):

So she missed three three payments and you. You know, one of the things I love about this business is that folks like, you know, you, myself and all these other pile of NotesSchool students that are out there, we can affect people's lives in a positive way in that you were able to not have to go through a bunch of red tape, right. Because you're the, you're the bank, right? You're the DS national bank, the Dave Storton National Bank, you were able to make a decision and very quickly decide that I really want to help this lady. And that's what it's all about. You didn't want that lady's house, you wanted to help her, and she was willing to go along with that as well.

Dave Storton (19:59):

Yeah. She developed some trust with me, just, you know, cause we spoke and, you know, I told her a little bit about me and you know, what our commonality was and why I wanted to talk to her directly. And so she trusted me and we actually went over in detail, her budget and what she could afford. And that was my starting point on how I could modify this thing.

Joe Varnadore (20:22):

Right.

Joe Varnadore (20:23):

So here's what the modification look like. Right? You her balance before was, I'm looking at my notes here, 43,250.

Dave Storton (20:32):

Right.

Joe Varnadore (20:32):

So you dropped the balance down to $40,000.

Dave Storton (20:35):

Right.

Joe Varnadore (20:37):

You dropped the interest rate from 10% down to 9%. You extended the term a little bit, right? She owed 2, she had 250 payments remaining. You just extended the term by 50 months, so it was $300 or 300 months. And then that dropped the payment, the monthly payment. What about 56 about $68 a month, which may not sound like a lot to a lot of folks, but you know, it is. Right?

Dave Storton (21:05):

Yeah. It was significant to her. The way I came up with those numbers is we backed into it as Eddie says, as I went from, okay, what's your budget? You know, she needed something under 350, for sure.

Joe Varnadore (21:18):

Right.

Dave Storton (21:18):

And so I just backed into those numbers, trying to get it under 350 and it worked out.

Joe Varnadore (21:25):

And again, it just, you know, that's the thing I love about this. So Dave, once you did that, right? You used some of that NoteSchool magic that you learned. Right. That and so let's look at what you decided to do after you modified this loan. So you went in, and you decided that, and there's some things that you can buy alone guys. And in this case, there's 300 payments left. So, Dave decided that he was going to sell the front end piece of those payments. And you decided to sell 180 of that 300 payment payment stream. Right.

Dave Storton (22:10):

Right. I had a, I already had a partial buyer that he was already looking to buy a partial from me. So I was, already on the hunt for a note I could partial when this occurred. And I thought, Hey, I could partial this one.

Joe Varnadore (22:23):

Right. So it was perfect. Right? So you present this to your partial buyer, your partial bought, you said, look, you invest $39,000, you get 180 payments of $344 a month. Your your investor's rate of return is 6.7%, which I'm sure that he or she was just totally ecstatic with. Right.

Dave Storton (22:48):

Yeah. He was completely happy with that because even said, I'm getting 2%, the money's getting there 2%, if that sitting in a bank account.

Joe Varnadore (22:57):

Exactly. So, and he's, you know, the house is worth 55, so there's plenty of equity in the thing, you know, between what it is. So Dave, you sell a partial, right? Those 180 payments. And guys, we say at NotesSchool all the time that your workshop your chalkboard. Right. And so Dave just decided how much he wanted to sell. Right. So we figured up a rate of return for his investor, and then he just carved off a piece of those payments to sell. And so what that did is that allowed you to bring $39,000 back into your business,

Dave Storton (23:31):

Right.

Joe Varnadore (23:34):

Excuse me, guys, allergies this morning so that you, so we call that also the Capital Recruitment Plan, right. So all you're doing is recouping some investment into your bank, and then you owe, or you own 120 payments on the back end of that? A 300, $344 a month. So your, we always joke around, right. So what's his rate of return guys. It's very high. Right? So, let's look at the numbers here, Dave, as we wrap this up. So you had all in, right? You had the note cost of 34,230 I believe is what it was 34,250, right? And then when you modified it, you had some cost in that. So you're all in cost on, this was 34,895.

Dave Storton (24:27):

Right.

Joe Varnadore (24:27):

So you received three payments from your borrower December, January, February, and those payments total $1,236. And then it must've been, what about April or may that you modified this.

Dave Storton (24:42):

Right.

Joe Varnadore (24:42):

And you sold 180 payments for 39,000 bucks. And when you sold those payments for 39,000 bucks, now, if we go back and look at those numbers, you've gotten every dime of your money back, right. You've gotten 39,000 plus the 1200. So you've gotten back a little over $40,000 in monthly payments are in cash.

Dave Storton (25:09):

That's right.

Joe Varnadore (25:09):

But Dave, you still own what?

Dave Storton (25:13):

I still own have on the back end of the note, with zero money in it. And you know, what's funny, Joe is I just hired a new bookkeeper, cause my last bookkeeper couldn't figure out what the heck I was doing. And I just, I just talked to the new bookkeeper yesterday and she said, I've never seen anything like this. You're going to have to teach me how to do it.

Joe Varnadore (25:33):

Well, guess what? You've got another, you've got another passive investor right, Dave?

Dave Storton (25:37):

Yeah.

Joe Varnadore (25:38):

Oh my gosh. That is so that's just. Just so that everybody gets that right. So Dave has his original purchase, then he has to modify it. So he receives those three payments. He modifies the loan, he sells a partial. So Dave, you've got, you've collected about 40, over $40,000. So you've made $5,000 in today money, kind of over a few months, right?

Dave Storton (26:02):

Correct. Yeah.

Joe Varnadore (26:03):

And then, you have the back end, you've sold 15 years of payments. So once your partial investor has received their 180 payments, it automatically reverts back to you and you're going to receive the remaining 120 payments. Now it could pay off early. Right. And that's okay. It could or they could continue to pay it and she could continue to get it to be in at 300 more months. So anyway, so your total profit is $46,000 on a $35,000 investment, right?

Dave Storton (26:36):

Yeah. That's not bad.

Joe Varnadore (26:37):

But you have nothing invested in those 120 payments.

Dave Storton (26:41):

Yeah. That's what got the bookkeeper's attention. She, I'm trying to do the numbers on this. You don't have any money in this, and you're going to start collecting payments? I said, yeah. She said, well, I want to do that.

Joe Varnadore (26:54):

Actually, $5,000 ahead of the game. And then anyway, Hey guys, that's the NoteSpace. And that's why we that's why we absolutely love this business. It's just an amazing thing to go in and do that. So you, not only, it's something where you can profit and prosper and you can help folks. And I love to say we can help people. One house at a time in the US we can go out and do that without getting all corny and all that on that. Right. I just, I have a real strong opinion about us being able to do that. Today, we, I appreciate who you are. I appreciate, you know, your integrity in the business and helping folks in the business and just, you know, a lot of folks go, so what, let me just foreclose on this thing. Right. But that, wasn't the game on this, right? This, the game on this was the long play. Right. So, money today and money tomorrow, and we teach that over and over and over.

Dave Storton (27:52):

Yeah. And I told you about this one, just in passing, when you said you got to put this in the contest and I hadn't considered that because I hadn't written, I hadn't really thought about the contest for this year. Sure. Okay, so.

Joe Varnadore (28:09):

Alright. So, Dave, I appreciate you being on. And again, thanks so much happy holidays.

Dave Storton (28:14):

You too, Joe.

Joe Varnadore (28:14):

And stick around. We'll talk after the show. So guys, if you want to learn more about the, about buying a note, you can certainly go to www.NotesDirect.com, or you can check us out on the checkout Feeding Frenzy Friday every week. Brian Lauchner and Scott Tyler have a five minute quick show go to the NoteScoolTV channel at YouTube, and check out NoteSchoolTV on the Feeding Frenzy Friday. Great notes, notes just like this that you can find on there. And you can make those your own. So guys again, thanks so much. Do checkout Feeding Frenzy Friday, remember to subscribe to our YouTube channel. We go live every Wednesday at 11:00 AM central time. Remember to learn more about NoteSchool and the NoteSpace go to www.NoteSchool.com/TV, and guys have a great afternoon and we will see you next week. Live at 11:00 AM on NoteSchoolTV, have a great week.

#Real Estate #Real Estate Investing #Note Mortgage #Mortgage Notes #Eddie Speed #NoteSchool #NoteSchoolTV #Note School

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notespeed · 3 years

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Flipping Notes for Stable Cashflow

What is better, to flip a house for $5000 or to use creative financing and make over $200K?

This question will be answered in today’s episode of Noteschool with Eddie Speed, Brian Lauchner, and Joe Varnadore, with their special guest, Jay Redding.

They will discuss an incredible case study with their student. A story that you could probably relate to.

Jay is a seasoned real estate investor. He is from Fort Wayne Indiana.

Together with his son-in-law, they have 45 rentals and they are doing three to five retail flips per year. They also buy tax liens and they plan to incorporate seller financing as a long-term game in real estate.

In this particular deal, they purchased a property using their own capital amounting to $37,000 plus $70,000 rehab. They decided to land at a selling price of $129,900.

Now, their total profit for this particular deal is $206,000 (less $9K).

How did they do it? What strategies did they use to come up with a buyer and gain this profit?

Watch this video, listen to this powerful group to find out.

Landlords are burning out. Tenants are behind on rent payments. Toilets are backing up.

Uncover Why Savvy Investors Use Proven Mortgage Note Strategies for Massive Monthly Profits In Today’s Ever-Changing Market… Risk-Free!

Discover more about Note School and profiting without Tenants, Toilets and by taking our FREE one day class:

https://new.noteschool.com/TV

Latest Class Information:

https://noteschool.com/3-day-classes/pop/

Download a Brand-New eBook by Eddie Speed It’s A Whole New Ball Game With Creative Financing

https://lp.noteschooltraining.com/moneyball-getstarted

Listen to our Podcast:

https://noteschool.libsyn.com/08-flipping-notes-for-stable-cashflow

#NoteSchool #EddieSpeed #RealEstate #MortgageNotes ----------------------------------------------- Brian Lauchner (00:09): So here's the question. What's better to flip a house for five grand? or to use Creative Financing and make over $200,000. Here's what we're going to dig in today, for those of you who are brand new, I want to welcome you to NoteSchoolTV. My name is Brian Lauchner. I'm on the teaching team here at NoteSchool. And I want to just first say if today it's something that you get a chuckle out of, or you learn something, or this is valuable content to you. Make sure you are liking this video, we would love for you to subscribe to this channel. And if you want to participate in these live shows, or you want to comment on these videos, make sure you're pressing the notification bell to actually alert you when we go live so that you can always jump on the stream and pop in your questions.

Brian Lauchner (00:55): Today we're going to be digging into some really great content that I think is going to be kind of mind opening. And for those of you who are kind of like, I am still unsure even what a note is or what NoteSchool is or what this stuff is you're talking about. And if you're wanting to learn a little bit more about what NoteSchool does, you can go to www.NoteSchool.com/TV. And it'll tell you a little bit more about kind of what we do, what we teach and how you can learn even more. And so today we have an incredible case study with a student who's going to kind of walk us through a really unique story that I think you could probably relate to. If you're, especially, if you're talking to sellers, if you're talking to sellers right now, this is going to sound kind of familiar.

Brian Lauchner (01:38): And this might be an opportunity that you might say, wait a minute, I've walked away from a deal just like that. And so we've got some awesome guests with us, but I also have the the power team as I call them. I've got Eddie Speed and Joe Varnadore here who are going to jump on and we're going to dig into some of this stuff so that we can get straight to the meat of it. How are you guys doing?

Eddie Speed (01:59): We are awesome.

Joe Varnadore (02:01): Are you ready? We are ready for Thanksgiving, Brian.

Eddie Speed (02:06): I wore my Thanksgiving shirt today, kinda my, you know, Fall's shirt, I'm in the spirit, and I'm excited for it.

Brian Lauchner (02:16): Yeah.

Joe Varnadore (02:16): I'd love to pick that out for him.

Eddie Speed (02:18): Martha picks out a lot for me. Yeah, for sure.

Joe Varnadore (02:22): Martha being Mrs. Speed.

Brian Lauchner (02:23): Yeah. So Eddie, tell us a little bit about, you know, you're gonna kind of tell us about the creative financing element and kind of, what's so special about what we're talking about today.

Eddie Speed (02:33): You know, this story that we're going to have today is a weekly story. It's a daily story with us. And that is the guy that we have on is now last week we had Seth and he's a Ninja, right? He buys hundreds of houses a year and Jay this week he's not that big of an operator now he's a Ninja operator. He just doesn't try to go do Ninja volume.

Eddie Speed (02:57): But he's a smart guy, very seasoned real estate investor. And I remember very well the first time he came to a class and he says, I'm doing this really well, but I feel like I'm leaving a lot of money on the table and I'm not sure which times I am leaving money on the table, in which times I'm not. And I think this was a great example of a deal that he sort of positioned it and said, you guys show me, give me some light here of how we could do this. And it's a great story, good guy. And you know, I always want NoteSchool to be an impact for it's students. And I believe that NoteSchool has been an impact for Jay.

Brian Lauchner (03:40): I love it.

Joe Varnadore (03:41): Yes, absolutely.

Brian Lauchner (03:42): Well, I think it's something that a lot of us can resonate with. I mean, it reminds me of in 2016, when I first met you Eddie, and you said Brian, you're wholesaling houses. If you just consider adding Creative Financing to your business, it could really change your business. Now I was a little we'll just say hardheaded and didn't quite get it, but I have seen the light now. Right? And I've seen the light now, Scott, I mean, clearly we've got some smarter people on the call today. And so I'll kind of hand it over to Joe and you can kind of walk us through what we're going to be talking about.

Joe Varnadore (04:15): Alright. So I want to introduce you guys to Jay Redding from Fort Wayne, Indiana. How are you, Jay?

Jay Redding (04:24): Doing fantastic Joe. Great to see you Eddie, thanks Brian.

Joe Varnadore (04:27): You look very official today with your headsets and so on, on man. I mean.

Jay Redding (04:33): It's called old ears, that's what it's called.

Joe Varnadore (04:34): Well, we've got, you know, the three older guys, then we've got our, you know, our good luck and talent up there in the top left corner right. So Jay, tell us a little bit about your deal here and just a little bit about your background as well. You came to NoteSchool, and again, Eddie said he remembered you being in class. And we did, we were in Indianapolis.

Jay Redding (05:03): Indy, Indianapolis that's right.

Joe Varnadore (05:03): You sit right on the, there was actually the class we set up in like four different sections. We had a big class and you were right there on the front row all three days, man.

Jay Redding (05:11): Yep.

Joe Varnadore (05:11): And I remember it like it was yesterday. So you were doing some rentals and you were doing some fix and flips along with your son-in-law right?

Jay Redding (05:19): That is correct. Actually we have a 45 rentals. We do about three to five retail flips a year. We buy some tax liens and we were wanting to incorporate some Seller Financing into this, looking playing more of the long-term game in gradually reducing the number of rentals over time. That's been our game plan.

Joe Varnadore (05:39): Right.

Joe Varnadore (05:40): You've been moving in that direction with the rentals as well, right?

Jay Redding (05:44): Yes we are. And so in this particular deal we purchased this property with our own capital at 37,000. All right. We scheduled about a 50,000 rehab for it.

Joe Varnadore (05:58): Right.

Jay Redding (05:59): And we're not inexperienced in doing rehabs and retail flips that type of thing. But every once in a while, and anyone that has retail or rehabbed a property, we'll find that every once in a while, you're running into a situation where the more you dig into it, the worse it gets. And that was kind of the situation on this home. So we ended up blowing our budget for 20 grand. Okay, which put us in, but we fixed everything's going to be a great, it's a great home for the new buyers, but now we're into it at about 107, a 108,000 and the retail markets are at 125, 129. And by the time you take in the realtor fees or whatever, if you're selling it on the open market, there just wasn't much juice in that strategy. There was only about five to seven on a good day, So.

Joe Varnadore (06:48): So it is a flip, the squeeze, the juice wasn't worth the squeeze was it.

Jay Redding (06:54): No. Really, it was not. Now in my previous years, I would have just took it on the chin and okay, live another day, and here we go. And we were far enough into the training here with you guys. And it's like, well, there's no better time than this to try it.

Joe Varnadore (07:10): Right.

Jay Redding (07:10): So that's what we basically did. We marketed at what we marketed at 129,900. We put the signs in the yard. We started to do the marketing on Facebook marketing marketplace, excuse me. And my tree trimmer who I've worked with for years actually contacted me. I actually asked him to do a bid for me on one of our other places. And he just asked me, do you have any houses? Cause he knows what we do.

Joe Varnadore (07:44): Right.

Jay Redding (07:44): And I said, well, yeah, we've got this one right now where we'd be willing to Seller Finance it with you so, but you got to go through underwriting. You're going to have to go through all of this, that type of stuff. And we talked good guy. But he will never qualify for a bank mortgage because his business is, he works really hard for about 10 months, 10 to 10 and a half 11 months out of the year and January and February. You just don't do too much when there's snow on the ground and snow up on the trees and everything else.

Joe Varnadore (08:16): So Jay, let me stop you right there. So this gentleman is the gentleman that we talk about at NotesSchool all the time, right.

Jay Redding (08:25): Yep, that's exactly.

Joe Varnadore (08:25): That just misbuyer, he's self-employed, he's a contractor and he's just, you know, he was just one of these guys that just couldn't go out and couldn't qualify for bank financing.

Jay Redding (08:37): Correct.

Joe Varnadore (08:37): Actually, you know, since the whole COVID thing back, you know, started several months ago. So yeah, this is our buyer. This is what we talk about. This is what we talked about with Seth last week. It's just that just misbuyer. So you talk to this guy and he says in, you went through an RML all with this guy, residential mortgage loan originator, and he was your guy, right?

Jay Redding (08:59): He really was. I mean, he had a credit score of 714 even.

Joe Varnadore (09:04): Wow.

Jay Redding (09:04): Okay. All that. So it's like and he was willing to put 18 plus down as the down payment. And so it was about 14 is down payments, about 14% of the purchase price. And it's like, okay, this is all lining up really well. And we did the full underwriting with him. It helped our renewing all right for a number of years. So he's a good professional business person and what he does. All right, good hard worker, good character. And it's like, this is perfect. So what we did, we actually went then and got a private lender. We do a lot of our business with private lenders and brought a private lender on board to be able to pull our money out of the deal.

Joe Varnadore (09:47): Right.

Jay Redding (09:47): At 80,000, All right. For 240 months for 20 years at 6%. And then we did a wrap note over top of this, to our buyer at a 30 year, 360 month at nine and a half percent. And that nets out then at 366 a month on monthly cashflow.

Joe Varnadore (10:09): For 240 months.

Jay Redding (10:10): For 240 months, and then 939 a month for the last 120 months.

Joe Varnadore (10:16): Right. So let's, let's talk about that just a second. So you had an underlying lien with with a private lender. This is the, these are those guys that we talk about every week, you know, in NoteSchool just a private lender. Who's got some capital, they could be a burnout landlord, right. We call them a BOL. Right? And you borrowed $80,000 at 6% for 240 months. And then you sold the property subject to that underlying you did, what's called a wrap around. And so you had a 240 month loan with your private lender, right. You were netting 366 a month. Right. And then after that 240th payment, the underlying lien is paid off. And then you've got that full 939 a month in cash flow for another 120 months. Plus you had the defer, you have the down payment, right?

Jay Redding (11:11): That's correct, yeah. It is $18,000 down payment. Now I applied the 18,000 directly to our debt service to be able to get out. So we would not have to borrow as much with the private lenders what we did. But I mean the cash flow is great on this. I fully anticipate this particular bar cause I just understand how he works. He'll probably pay it off early in chunks and that's fine. Okay. That's no problem at all with that. But yeah, I have essentially turned what would have probably been in my younger years, only about a five grand to seven grand profit. Now, something that's really given us long-term development of wealth over time with some of our other properties.

Joe Varnadore (11:55): To go to term, you have made over $200,000, right?

Jay Redding (11:58): That is correct. Yeah. And the other great thing is now we still had $9,000 into the deal of our own money.

Joe Varnadore (12:05): Right.

Jay Redding (12:05): Okay. In the first year, our returns at 49% alright. On the money we got into the deal. We have all of our money back in two years and it's, we got no money in the deal after that point. And so it's a, win-win, it's a win for the private lender, a win for the end buyer and it's a win for us. So it's a, it's the great way to do business.

Joe Varnadore (12:26): Well, and this is exactly the type of thing that we, you know, we teach at NoteSchool, right.

Jay Redding (12:32): Uh-huh.

Joe Varnadore (12:32): On a weekly basis. This is the type of thing that we see our students. Right. And you've, and Jay, here's one of the things that, you know, Eddie and I, and Brian talk about all the time. You're one of those guys that, you know, you, came to the class, right? You learn what we taught and then you went out and you applied it. Right.

Jay Redding (12:51): Exactly. Right. You know what, I remember Eddie talking in the first, well that's our first meeting. Okay. Was that about showing up for practice? He was making the analogy, you know, you got to show up for practice. Well, that resonated with me because I was a former division one track and field coach, you know, I get that. I understand. So that's why I show up for practice every day, right?

Joe Varnadore (13:14): Jay you didn't say it quite, right?

Jay Redding (13:15): Okay.

Joe Varnadore (13:15): Jay, Jay you gotta show up for practice.

Jay Redding (13:20): You gotta show up for practice, there you go.

Joe Varnadore (13:20): Let's put in Eddie on right now that we've kind of poked him a little bit. So let's bring Eddie on and let's talk to Eddie a minute about this deal.

Eddie Speed (13:33): Oh yes. So Joe and those guys, Jay, you know, they never missed an opportunity, but apparently they think I have a Southern accent.

Jay Redding (13:39): Some type of an accent.

Joe Varnadore (13:41): I have one too. So.

Eddie Speed (13:46): Jay, I would say that there were a couple of puzzle pieces here that I just wanted to point out that you utilized, okay. I say this all the time and a lot of people around the real estate investing business, I don't think really get this, but you now really get this.

Jay Redding (14:04): Yes, very much. So.

Eddie Speed (14:05): You borrowed $80,000 from what would have been a prior landlord. They have money. They just don't want to be a landlord. They don't want that second job. They want to be just the bank. And so you positioned this deal very well and showed a private lender, how they could loan you $80,000 and Get a 6% true interest on their investment every year or interest on their loan. And by the way, if I'm listening correctly, you immediately gave him 18,000 from the down payment money. And so now they only, they only had 60,000 out, not 80,000 out.

Jay Redding (14:44): That's not true. Cause I used the 18,000 to only borrow, cause we were into this at 107.

Eddie Speed (14:50): Okay, I got it.

Jay Redding (14:50): Okay.

Eddie Speed (14:52): So they loaned you 80,000. And so that puzzle piece was you used long term, low rate money. People talk about private capital all the time. And I sort of think that they are not talking about the same private capital that we talk about.

Jay Redding (15:06): Right.

Eddie Speed (15:06): Right. Some people think going to the real estate investor meeting and getting 10% money is getting private capital. That's what I that's pawn shop money. What you borrowed was not pawn shop money. Right? That was one significant puzzle piece. This all can be done, but people have to have develop a mindset of understanding. There is that guy that needs to get his money out. Right? So you did a great job of finding that private capital. Once you structured the financing with the low cost money in place, then reselling, it really wasn't automatic. Now you happen to sell it to a guy that you knew.

Eddie Speed (15:47): And definitely, I agree with Joe, he was that penalty box buyer. I have a high volume real estate investor that I was talking to yesterday, guy that you hear on the deal labs, Jay. And he said that he just finished a Refi, he's got perfect credit. He had perfect income. And he said, he just finished a Refi on a rent house. And he said, it took him over three months. And he said, I went through the most hoops I've ever gone through in my career. And I said, and understand that this is the direction the market is going. Real estate is on fire right now, but mortgage lending has tightened their criteria drastically. But Jay, think about this. That guy is a perfect buyer. The mortgage industry is not going to make him a loan and left him behind. You got to provide, you provided home ownership to a guy and now he owns a home because you had the vision of offering Creative Financing to him.

Jay Redding (16:46): Uh-huh. very much.

Joe Varnadore (16:47): And Jay, here's the cool thing about it. You know we talk about this all the time. You became the bank.

Jay Redding (16:57): I did.

Joe Varnadore (16:57): You're the bank. You put cashflow, you borrowed at one, right. When you deposit your money in the bank and then they reloan it up and they're happy with that spread. Right. They call it arbitrage, right?

Jay Redding (17:07): Arbitrage Yes. I'm happy with that arbitrage. Well then the other thing, the other thing is, you know, from the private lenders aspect, all right. He's really well secured in this. I mean, his loan to value is only 62%.

Eddie Speed (17:22): Yeah.

Jay Redding (17:22): Okay. And the end loan, the end buyer loan is at 84% and it's like, yeah, those are good all the way around, So.

Eddie Speed (17:31): You know, people Jay all times will think that that kind of a down payment is kind of a fluke. You can't do that.

Jay Redding (17:39): Well, we've done it multiple times now.

Eddie Speed (17:42): You know, statistically last month, according there's a software that tracks all conventional mortgages that are made called Ellie Mae. They did a statistic. And the average down payment for a Fannie Mae Freddie Mac loan last month was 19% cash down. So it just starts showing us that when we believe it, then all of a sudden we can live it, right. The market is what the market is, but sometimes we don't believe the market, you know, and I was listening to the, of course, we got the firm joy of living your case study, you know, as you were developing it. And then of course you presented that to an internal audience here, not too long ago with NoteSchool. And we were excited to bring you on NoteSchoolTV today, because let me tell you something you, and I know that you may not do the most volume real estate investing or in your region of the country.

Jay Redding (18:44): True.

Eddie Speed (18:46): But I don't believe there's a lot of real estate investors knocking down $200,000 profit on a deal in your region very often, right?

Jay Redding (18:56): Not at our price points. That's correct. We're not in the, you know, 250, $300,000 price points that are in other parts of the country,

Eddie Speed (19:07): You made 200 grand on $120,000 house.

Jay Redding (19:12): Yeah.

Eddie Speed (19:12): Here's what I think's important. That we, I hear the people always like to say, he's a house buyer and he does so many deals a year. That's kind of like your intro, right? This guy's a house buyer and it does so many deals a year. And you can just smile and look back and say, I'm a house buyer. And I don't focus on volume. I focus on profit.

Jay Redding (19:34): Exactly.

Joe Varnadore (19:36): Amen.

Jay Redding (19:37): I like to set it up and be done for the next 20 years.

Eddie Speed (19:41): What, you heard of my father-in-law, you know, he was old southern gentleman from Hattiesburg, Mississippi. And when I first started with him this is 40 years ago, when he first started teaching me the business, he leaned over there and he had a pair of reading glasses on the end of his nose, there's like a million miles from the top of his head to those reading glasses. He looked down those reading glasses and he's talk in this real Southern accent. And he'd say, you'll get a check for forever.

Jay Redding (20:08): And you know, the great thing is on this. You know, it fits right into what we're already doing. You know, we're doing three to five retail flips a year. We create three to five of these. I mean, it's not long too. That's a very sizable chunk that's passing through on a monthly basis. So yeah, it's pretty much our new model for our retail flips. Now let's put it that way.

Eddie Speed (20:29): That's great. Jay, we are thrilled to have you thank you for coming on and sharing your story. You know, I tell our students all the time and I really do mean this. The power of your story helps somebody else get the vision that they can do this too.

Joe Varnadore (20:45): Right.

Jay Redding (20:47): Yeah. So, my pleasure. Thank you.

Joe Varnadore (20:49): Good to see you, Jay.

Joe Varnadore (20:50): Good to see you Jay, happy Thanksgiving to you and the family. Let your son-in-law know, we asked about him.

Joe Varnadore (20:56): All right. Sounds good, certainly will.

Joe Varnadore (20:58): Thank you,

Eddie Speed (20:58): Thank you buddy.

Eddie Speed (21:00): Well, let's bring Brian on. And what do you think of that, Brian?

Brian Lauchner (21:05): You know, there was a couple of things that stood out to me that I think are kind of interesting. The first one is there's a lot of people out there in their market right now who feel like man, I'm in this competitive market. There's not a lot of deals. The deals that I see, there's just not much meat on the bone. And that was essentially the exact same situation. He was left in where man, I got this flip. There's not much meat on the bone. Am I stuck? Do I become, what's called what I call an accidental landlord where I just like, I guess I'm going to own it forever as a rental property, but by having this additional play, he now had access to more inventory. There's more, you know, marginal deals out there.

Brian Lauchner (21:42): He could always go get if you wanted to, I guess, but it shows that inventory really may not be the problem just because you're in this super competitive marketplace. And there's these deals that seem marginal that by adding Creative Financing to it and buying something on terms or being able to resell it on terms, you create your own margin, you create your own profit. And so it just, it's a really eye-opening thing for me. And I think for a lot of other investors as well, it'd be like, well actually, maybe I do see deals like this. Right? And the other piece that I thought was really fascinating was, you know, the raising capital piece, I talked to so many investors, especially, especially when they're new, they say, well, man, I, where do you find private money? Who's going to loan me private money.

Brian Lauchner (22:25): And the reality is money goes to good deals, of course. But what was really fascinating is he thought in terms of, what would, what would make the bank, the bank, the private lender, the burn-out landlord, give me his money. Well, I'm going to give him something that he gets a return on investment, right? In this case, it was, you know, under 8%, which is great. But more importantly, he said, how do I get it down? How do I get that number down to the 6%? Well, I'm going to lower his risk. The lower, his risk goes the lower my chance of getting a lower interest rate. Right? And so by moving the loan to value from 80% loan to value to 70% to 62%, I think he said it really started to incentivize the lender to say, okay, I know I'm going to get my money back. I feel pretty good about this. I'm okay with taking that 6% because you're not asking me to put it into a hard money deal to where yeah. I can get 10%, but who knows if this house is ever going to get flipped or ever gets sold. Right?

Joe Varnadore (23:20): You know, you gotta go out and find somebody to reinvest to borrow money again from you in three months or six months or nine months, whatever it is.

Brian Lauchner (23:28): Yeah, exactly.

Eddie Speed (23:28): Well, and once again, he gave a burnout landlord, a chance to get their money deployed and earn an interest rate and, No, they're not going to get an invoice for the air conditioner or whatever. They already, they don't have a tolerance for that kind of investment anymore. Just making a loan Was great. I'm going to remind you guys, this case study, there was no Seller Financing when he bought it involved. A lot of our case studies will be involved where the seller carried all of the financing when you buy it. And in this case, the seller walked away with cash and it was a big rehab project. So there was a lot of things about this deal that are different than some other case studies where the seller carried a lot of the financing when he bought it. In this case, the seller got all cash and didn't carry any financing. Other thing about this is, is Jay had been investing in properties for years. And I think a lot of times, you know, Brian, you look at yourself, you were a full-time wholesaler for years and really were just sort of resisting. I'm going to this Creative Financing is not really what I need to do. And it's just funny. So I would, as an encouragement, I would say, if you've been doing this for years, and you're not where you want to be, then, then consider what Brian has figured out and consider what Jay has now figured out. And if you're young and you haven't been through all the pain and aggravation that Brian has, or Jay has, then why don't you figure out earlier than they did, how to add this to your business.

Brian Lauchner (25:03): Yeah. And some of us don't, even when Eddie speed himself says, you shouldn't really be doing this, but it is kind of interesting because my fear and maybe your fear is that you have to give up your money today. Like, Oh, well, you know, Jay's going to make all this money in the long term, but I got bills to pay. I got, you know, and that was one of my fears. And if you'll go back and watch last week's episode of NoteSchoolTV, you'll see that you can make some money today and it's not a problem. Right. And so if you're interested in kind of what was created today by Jay, if you're trying to learn a little bit more about notes, or maybe you just want to understand the note piece of it. Right? and just understand, I don't really talk to sellers.

Brian Lauchner (25:44): I just want to understand the note piece. Well, I would encourage you while you're on the YouTube channel, go to the playlist called Feeding Frenzy Friday, where we break down a note asset from Notes Direct each week, talking about the pros and the cons and some of the due diligence with that note to find out, Hey, is this a great note or is this a bad note? And what's kind of my exit strategy. As always, we'll be here every single Wednesday at 11:00 AM live central time to kind of talk a little bit more and try to bring some value to you and to your investment business and encourage you to, again, please like the video we'd really love for you to subscribe to the channel. It means a lot to us. We love to get the engagement, so make sure you're clicking that bell notification to get involved. And again, if you're like, this is cool. How do I learn more than just watching one video? Well, again, subscribe to the channel, but also you could go to www.NoteSchool.com/TV, and learn a little bit more about some of the content that we have and some other videos that we'll try to point you in the right direction. So we really appreciate you coming on this week. We will plan on seeing you next week. And again, we'll see you on NoteSchoolTV. See you next week.

#Real Estate #Real Estate Investing #Notes #Mortgage #Mortgage Notes #Eddie Speed #NoteSchool #NoteSchoolTV #Note School #Brian Lauchner

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Why Buying Performing Loans Are a License to Print Money

Do you want to know how to make 6 figures on a deal with no money down and pay retail when you do it?

This question will be answered in today’s episode of Noteschool with Eddie Speed, Brian Lauchner, and Joe Varnadore. In addition, they have a special guest named Seth Choate to further give his thoughts on today’s topic.

Seth is a student of Noteschool, a highly recognized training company, specialized in the teaching of buying both performing and non-performing discounted mortgage notes that were founded by Eddie Speed.

Seth is a high-volume real estate investor that focuses his business on wholesale. About a year and a half ago, he decided to join Noteschool, realizing that this is the next step in the growth of his business. He is not only making money now but money overtime as well.

To learn more on how to be successful in the notes business watch this video to pick up some inputs with Seth and Eddie.

Landlords are burning out. Tenants are behind on rent payments. Toilets are backing up.

Uncover Why Savvy Investors Use Proven Mortgage Note Strategies for Massive Monthly Profits In Today’s Ever-Changing Market… Risk-Free!

Discover more about Note School and profiting without Tenants, Toilets and by taking our FREE one day class: https://new.noteschool.com/TV

Latest Class Information: https://noteschool.com/3-day-classes/pop/

Download a Brand-New eBook by Eddie Speed It’s A Whole New Ball Game With Creative Financing https://lp.noteschooltraining.com/moneyball-getstarted

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#NoteSchool #EddieSpeed #RealEstate #MortgageNotes -------------------------------------------------- Brian Lauchner (00:02): Do you want to know how to make six figures on a deal with no money down and pay retail when you do it, stick around here on NoteSchool TV as we dig into that today.

Brian Lauchner (00:25): We're back NoteSchool TV, every single Wednesday, make sure that you are joining us. We've got some of the greatest content, we've got some really cool people joining us today, but here's the first thing I want to ask. If this is good content for you, if this is relevant content for you, you're liking what we're doing, man. Please like these videos share them with your friends. But more importantly, subscribe to this channel so that you are able to consistently get this coming through your feed, right? And make sure you're clicking that notification bell so that when we do go live, like we are right now, you're getting notified you can jump on and you can start to communicate with us, bring your thoughts, bring your questions, bring your virtual high fives, so to speak, and we'll go from there.

Brian Lauchner (01:09): If you are new to kind of our channel or new to what we're talking about. And you just want to learn a little bit more about what is NoteSchool? What is this thing? and what are Notes? You can go to www.NoteSchool.com/Tv, and you can learn a little bit more about what NoteSchool is and kind of what we're teaching and to see if it's something you need to be adding into your business and really considering. Today we have some really cool stuff. We have a very special guest on actually we got a full house today. And so I'm going to bring on some people that I think are going to be pretty, pretty fascinating for you and including one of our students. And so Joe Varnadore with us today, somewhere out there in the virtual world. Joe, you want to pop on and we have Eddie Speed as well. So we got some pretty serious veterans with us. And then you'll see this handsome man up in the corner. The bearded wonder Seth Choate. He is a NoteSchool student, and we're going to dig into a deal that just a NoteSchool student did that you could be replicating in your business. And so, Joe, why don't you I'll kind of hand it over to you for a second you kind of kick us off.

Joe Varnadore (02:15): Sounds good. So I like the way it's got it arranged that old guy, young guy, young guy, old guy there. Right? So Hey everybody, thanks for being here today with us on NoteSchool TV. And we do, we have a very special guest, one of our students from California, Mr.Seth Choate, and Seth is a he's a high volume real estate investor, right? That focused his business for many years on the wholesale part of the business. And about a year and a half ago he decided that NoteSchool was the next step in the growth of his business and his wealth building capabilities. So he joined us and it has been nothing but just taking it straight up and not only making money now, but money over time and your money tomorrow. So Seth, how are you today?

Seth Choate (03:10): Doing great, Joe, doing great. Thanks for having me. How are you doing?

Joe Varnadore (03:13): I'm doing very well. Hey Eddie.

Eddie Speed (03:15): Hey, Hey how's about you guys?

Joe Varnadore (03:18): We are wonderful. So Seth, so a little bit about, you know, your background there, you know, you were for many years just you know, you did wholesale deals, right?

Seth Choate (03:31): Yeah. That was the primary focus was just buy low sell high to investors. And we built a pretty successful business doing that. We still do that today about a year and a half ago when we ran into you guys and found the opportunity, we decided to add Creative Finance and Notes to our business and buying on terms.

Joe Varnadore (03:55): Well, and that just made sense because what you were really focused on, I mean, you're getting older now, right? So you decided building wealth along with making an income today, but then building wealth into the future and your business was changing as well, right? You have a lot of leads. You have maybe 20 leads come in and you're popping one of those or two of those, but you're leaving 18 or 19 of those behind. And that was one of the challenges you were facing, right?

Seth Choate (04:25): That's exactly right. I mean we, one of the frustrations that I had was we had a very successful business, but we're still striking out 95% of the time. And it's, I'm sitting there going, how can we make money on these leads? These are opportunities. These are sellers who have raised their hands wanting to sell. We've got to improve our skill set to want to help them get out of the deal and then make more opportunities for us. So that's the main reason.

Joe Varnadore (04:55): Right? So Seth, let's talk about the deal there, Eddie, any objection you want to make? Just jump right in of course. So Seth, you found a deal there and it was in Modesto, correct?

Seth Choate (05:07): Close to Modesto they're form Oakdale

Joe Varnadore (05:09): Oakdale. Very good. Well, I was going to get it right eventually. Right? So you found the deal there and it was one that you had marketed too and this one was one you really needed to do. And you realize you can do it as a creative finance deal. So you paid, you negotiated with the seller and you paid $265,000 for this place, right?

Seth Choate (05:32): Yes. And you know, this was a long several conversations with this seller. We had talked for a long amount of time, and initially we went at her with the cash offer, but I was about 180,000 is where I was. So we were way off, but there was motivation, she wanted to sell and so over time we came back to the table and the purchase price was 265, but there's a lot of layers to this with the terms and everything that make it attractive.

Joe Varnadore (06:05): Right. Well, and you were right cause you were able to pay her. And the reason you were able to pay her more than the 180 that you would have paid as a wholesale deal is because you were going to pay her equity over time. Right?

Seth Choate (06:17): Correct. There's no way we could have done this from a cash standpoint at 260 that's full market pretty much.

Joe Varnadore (06:23): Right.

Brian Lauchner (06:24): So this is something that I think I see a lot of in the marketplace is obviously the seller is either stuck on price cause they need that price or they just want that price, right? Like they're up here and this is that retail range. Right. And you know that there's not much you can do with that as a wholesaler. And we're as a wholesaler, we're down here because we have to have the margin in the deal. And so I think this is something that everybody can relate to if you're talking to sellers because you're not going to close every single deal. And what you do with all these leads, like Seth was saying, he's spending hard earned money on leads, getting them, and then basically putting them in his trash can.

Seth Choate (07:01): That's exactly right. And you know, you get these folks that their neighbor told them it's worth this, or they saw it on Zillow or something. So they're just stuck on that number. And, but you can hear the motivation and you hear their whine, you understand these things. So there's, as you start to understand, all right, I'll give you this price, but you've got to cut it up a few different ways on the terms. You can make it work where you give them their number and make them happy and give them what they want. But there's some advantages for you along the way and on the backend.

Brian Lauchner (07:33): So Joe, why don't you walk us through here then the kind of the points of this deal, because one of the most powerful statements I've ever heard Eddie say, and I might've even said it on this show is it's not about the price you pay. It's when you pay the price. And so with Seth paying this higher price, walk us through some of the deal points so we can kind of start to better understand.

Joe Varnadore (07:52): Yeah. So Seth, you got it for 265. That was her number. And she was stuck on that number. And she was also stuck on, she wanted $1,500 a month as far as a payment, right? She was okay with seller financing, she was okay with you paying it over time, but she wanted the 265 and she wanted the 1500. And basically, you know, we talked about this on a deal lab and figured out, you know, Hey, I can you can do exactly that, right?

Seth Choate (08:23): Yeah. That's. So actually we came, those were her initial terms. And I was fighting back with her for weeks wanting 1300 and 3%.

Joe Varnadore (08:35): Right,

Seth Choate (08:35): And I'm just fight and fight and I'm like, I didn't want to pay 1500. And then I brought it onto the call with you guys. And you're like, Seth, give her 1500 go principal only. And I'm like, bingo went off in my head and so she was just stuck on payment. And so instead of 1300, 3%, we went 1500, 0%. And I think saved about 200 grand.

Joe Varnadore (08:57): Yes, you did then interests.

Eddie Speed (09:00): That's a great point, Seth. And we see that a lot, right? We know that you're when you buy, you know, you're going to resell it and sell it on a wraparound mortgage. And you're going to collect a bigger payment from who's paying you than the payment you're making, right? So you were worried about cashflow and the seller was worried about cashflow, but here's what we've seen over and over and over. They give up everything if they get the one little thing they want, she gave up her interest. If she could just get $200 more a monthly payment, ain't that great?

Seth Choate (09:36): Yes. And one of the things after we signed all this and got all this done, she's older, she goes, Seth, I'm not gonna, I don't care about the back half of this, she was cause I needed 1500 a month now. And then a light bulb went off in my head. The interest was irrelevant to her. It was what she needed for the next five, six, seven years of her life that were important.

Joe Varnadore (09:58): Right. And you know, that's the way it often is. And Seth, you know, we call that the talk off, right? I mean you said it right? You talked to her over several conversations it wasn't, well, I can't, you know, you won't sell it to me for 180 well, it's pivot, right? That's you know, one of the buzz word for 2020, right? So you pivoted and you bought it. And then once you had that, she got what she wanted. Then you used you know, you used basically Facebook marketplace and said, Hey, private loan available to a well qualified buyer with a large down payment. And you found your buyer, right?

Seth Choate (10:34): Yep. We ended up selling this place for 295 and got a 25,000 down,

Joe Varnadore (10:42): Right.

Seth Choate (10:42): As a down payment and believe it's 2100 a month, we're netting about 7,200 a year right now.

Joe Varnadore (10:48): Right. So Seth, let's talk about that a second. So she was she didn't care about the down payment. She cared about the 1500 a month, so you sell it for 295.

Seth Choate (10:58): Yep.

Joe Varnadore (10:58): You have $25,000 down. So you had $25,000 in today money, right?

Seth Choate (11:05): Yep.

Joe Varnadore (11:05): And then you had a cashflow of about $600 a month for 15 years.

Seth Choate (11:13): Yes,

Eddie Speed (11:13): Right? So that's $7,200 a year. And then at the end of 15 years you know, you did it with you set your terms up when you bought it at a 15 years, it had to all pay off at the end of 15 years. And actually the loan paid off in less, about 13 years your underlying loan, but then you, at the end of 15 years you then receive a lump sum of cash because your buyer's loan ballooned, it all came due and you made another $211,000.

Seth Choate (11:50): Yup. It's awesome. I'm very excited for that.

Joe Varnadore (11:58): You know, that I do, it's 25 today, $600 a month for 15 years. And boom, I get 211,000, right?

Seth Choate (12:05): Yeah.

Brian Lauchner (12:06): All on a deal that you paid retail for.

Seth Choate (12:08): Full market.

Eddie Speed (12:09): You would have offered 80,000 less on a wholesale deal and you would have probably made a $25,000 flip.

Seth Choate (12:19): Maybe, probably less than that. And that's the crazy thing, pay full market and get and make way more.

Eddie Speed (12:24): Profit today. You made more profit today when you resold it from the down payment money.

Seth Choate (12:31): Correct.

Eddie Speed (12:31): And you would've made wholesaling the deal. well how come they don't do a TV show called buy this house for retail? Call the duck school TVs show.

Joe Varnadore (12:51): Oh, that's right. Yeah. So Seth, You know, at the end of the day, and you know, this is over time but you're making what $344,644 on a deal that again, it would have never been made as a wholesale deal.

Seth Choate (13:09): Yeah, No. Cash loan.

Eddie Speed (13:16): Seth and I have a lot of mutual friends, I tell people, I said, Seth thinks like an old man, right? I said, because he came into this, you know, thinking like a young man, like he came, he and I met about two years ago and he came in, he came to a class and, but he said look, I understand.

Eddie Speed (13:33): I need to be building well, I don't need to just make transactional money and stuff. It's cool that you bought 200 houses a year and he did, and he still does, but he just realized that he could make, I have seen a number of case studies Seth, that you make North of total money on the deal North of 250,000 bucks, not one deal, a number of case studies. I know because I've taught some of those case studies, and this is another one where you just went in there and I remember you bringing it to the table. And you said look, you know I'm paying retail the half in this case, people ask these questions Seth, have you ever had to fix up a house that you bought on terms?

Seth Choate (14:19): Yes.

Eddie Speed (14:19): Didn't have to fix this one.

Seth Choate (14:23): This one I sold. Here's the best part about this one that got me so excited. The last few months, 2100 just keeps hitting my bank account and they're putting a roof on it right now. If that was a rental property, I would not be getting 2100 a month in my bank account. But they have to pay me because I'm the bank.

Eddie Speed (14:43): And then you pay the underlying mortgage of the 1500.

Seth Choate (14:47): Uh-huh.

Eddie Speed (14:47): So you're making $600 net income every month.

Seth Choate (14:49): A true net number.

Eddie Speed (14:51): So you bought it with nothing down, you sold it with 25,000 down, which means that you took home the 25 grand because you didn't have any money invested when you bought it.

Seth Choate (15:05): Correct.

Eddie Speed (15:05): And you sold it on this wraparound transaction. It's kind of like a lease a master lease on Airbnb, right? You're at, you're collecting more money every month than you owe on your underlying, right?

Seth Choate (15:20): Yeah.

Eddie Speed (15:20): So it's a wrap around and so I wanted to talk about like, who is this buyer Seth? Like, what makes you comfortable that they're going to pay you?

Seth Choate (15:31): Sure. So when we put this out for marketing, we actually had a very significant amount of interest. And these folks, this was a very nice family. This guy has a contracting business he's in construction and he's crushing it. The one problem he has is that he doesn't have a social security number. He has, he's an ITIN borrower. And in traditional lending, he can't get traditional lending. So the only way he could buy a home was go get a awful hard money loan from somebody that's just terrible, or I have financing for him. And that was where he came and played. The guy makes excellent income. He's been doing this for quite some time, literally a great borrower, but just because he doesn't have a social security number, he can't buy a home from traditional lending institutions,

Eddie Speed (16:32): You know and Seth, right now with this mortgage credit availability right down so much, even if he had a social security number, that being self-employed this is exactly one of the targets they've gone after that. They're not making loans in terms of this Seth, if you gave home ownership to a deserving family because of your ability to structure Creative Financing.

Seth Choate (16:59): Yes. And I, we text back and forth, I ask them how the house is going. Like it's created a relationship. That's one of the things I've realized is like, I create a relationship with, I still talk to the lender on the phone all the time, her and I chat. And then now I talk with my, the people I'm lending to. So there's, I've helped two different people two different groups through this process and it's pretty cool.

Joe Varnadore (17:23): Well you know, Seth, the other thing that really strikes me about this is that, this gentleman that you've sold it to that is your just missed buyer. He has a circle of friends, he's a contractor, right? So he has a circle of friends that are going to be just, that are just missed buyers as well.

Seth Choate (17:44): I have a line of buyers, like I didn't own have enough houses yet. I gotta go get some more cause they're ready. Like I, they were mad he got the deal and not them, so.

Joe Varnadore (17:54): And, you know, it just reminds me of something. And Eddie I'll share this with the young guys here is that, you know, the guy told me that was the bearded professor when I started back in early 1990. He said, Joe, just remember money has an end, but cashflow is continuous. So that's been, always been my mantra with the Note Business.

Eddie Speed (18:16): All right. So you do another crazy deal where you make some upfront money. You make $600 a month cashflow, and nobody gets wealthy on $600 a month cashflow, but they get wealthy on 50 deals times 600 bucks, right? And all this future money cause the underlying mortgage, because you're only paying, you're paying no interest. The $1,500 is going straight to the principal. So it pays out like 13 years. The wrap mortgage you're receiving payments sum, it's a 30 year amortization, but it has a balloon due in 15 years. And by the way, that is compliant with Dodd-Frank.

Joe Varnadore (19:02): Right.

Eddie Speed (19:04): So at the end of 15 years after you've gotten all this 600 bucks a month for 13 years and then it gets 2100 a month for another couple of years. Then all of a sudden Bonanza, you get a $200, $200,000 balloon payment due, you know, Seth, I was doing the math, I'm going to be 61 years old at the end of this month. And I was thinking in 15 years, I'm going to be about 75. And I was wondering where you're going to send me on vacation when you get that balloon. Would you mark that in your calendar?

Seth Choate (19:40): You got it. I, the goal with these is like you said, get 50 of them. Cause if you can get three, four pay offs a year, this is 200 grand, 200 grand, 200. I mean, that's pretty awesome. And it's that delayed gratification, but you get upfront money now too, It's cool.

Brian Lauchner (20:03): Yeah.

Eddie Speed (20:03): All right. I want to go back down memory lane with you. Okay so, we have introduced this concept on NoteSchool TV, Brian teaches about it all the time to people at real estate investor groups and real estate audiences. Obviously Joe and I get real involved in teaching advanced classes that you've done all that with us. But here's the idea. The idea is how did you start and what was going through your head when you started, like you saw me speak at an event, right? And you said, okay, I'm going to buy a NoteSchool training. It's a class, and it's got some home study stuff and you went and came to that class. I remember it was in Sacramento, California.

Seth Choate (20:46): Uh huh

Eddie Speed (20:49): And you sat on the front row on the left side.

Seth Choate (20:52): Yes.

Eddie Speed (20:53): Speaker left they call it.

Seth Choate (20:54): Yep.

Eddie Speed (20:54): Right? And so all that's really cool, but the reality is you had to go home and say, how am I gonna, how am I gonna work this into my business? Right? So what, like, what were those steps? What was your mindset? You, you stick. I'm not giving up anything in my wholesaling business. If I can buy low sell high and make profit, I'm going to do it, right?

Seth Choate (21:21): Yeah.

Eddie Speed (21:21): So you were just walking your trash can lead. So how did you, what was your mindset when you started that?

Seth Choate (21:27): When we sat through that class. There was the upside is tremendous in this. Now, it takes a minute to learn it. So, but putting this into your business, not having to spend any more money on marketing, I knew if I could immerse myself in the three courses a week and then take some, I, there's so many online tutorials through the program that you can go through. I think I spend about in the beginning, it was about six hours a week inside of the NoteSchool platform through all the different things that are offered. And I started immersing myself in this every week showing up on the calls and then I bring something onto the call because to me, I learn best by doing. And when you're invested in it, you're going to learn a lot more. And so, but I had to immerse because I saw the upside and I can't find another opportunity where I could just pay full price for something to make 200 grand, like 300 grand. I just, the wealth that it builds along the way was too good to pass up. So I had to figure this out and it's about six hours a week.

Eddie Speed (22:44): Seth, if you could take a timeline of somebody from 30 years ago and show them an iPhone 12 today, they couldn't wrap their mind around it. Right?

Seth Choate (22:59): No.

Eddie Speed (22:59): Because 30 years ago I was in business 30 years ago. I don't know where you were, but you weren't in business. Right?

Seth Choate (23:06): One year old.

Eddie Speed (23:08): Okay. That's about what I was thinking. So the point is, is now you have all of these things on an iPhone that would have been in a computer as big as this room. Okay. So we don't know what we don't know until we see it. And once we see it, it makes sense. So we figured this out long time ago, right? The only way you really can teach this ultimately is with case studies. But the, but here's the thing about it. You were frustrated with the success of your marketing, right? When you, when I met you, you said my marketing dollars are becoming less effective. I'm making less profit for the dollar. I'm having to spend marketing. And that's because apparently everybody in the whole United States found out about flipping houses and they all tried it.

Seth Choate (23:58): The competition got crazy.

Eddie Speed (24:03): And so this just became a way to dig through the trash can and go do it. And once again, once people start doing it you know, and that's why I laughed and said, you think like an old man Seth, because the truth of the matter is you really, really, really have adopted this as to understand what wealth is. We're not robbing you from transactional income. You're just allowing us to show you some paths. So that you're a young smart guy, 31 years old. Okay. But let me just tell you something, this will be good to you for the rest of your life.

Seth Choate (24:45): Absolutely.

Brian Lauchner (24:46): I love that. And I think something that's really important to point out here too, is Seth's giving up his transactional income from his wholesale business, right? He's still wholesaling deals. And if you want to wholesale deals, you can continue to do that, but there's going to be 10, 15, 20, 30 people that don't agree with you on price. And the whole point is Seth has figured out how to take all of those leads and turn them into bigger profit today, as well as bonus income over the future. And he's figured out how to start creating his own Notes, really making his own bank. And that's, I think what's so powerful about this. So I'll kind of put a bow on this by saying, if you're kind of in that spot, you're wanting to learn a little bit more about how can I do this?

Brian Lauchner (25:27): Like Seth, how can I start paying retail for houses, putting no money down, making six figures all on a deal that I wasn't going to get anyway as a wholesaler man, go to www.NoteSchool.com/Tv, get engaged, start subscribing to some of the contents are creating your own Notes. And if you want to learn more about the Note Business, we've got a whole other channel here on the NoteSchool YouTube channel that you could check out called Feeding Frenzy Friday. In fact, just last Friday, we put out a Note that the bar has been there from 2011. It's got a 10% interest rate it's got, I mean, so many good things, 20 years left to pay off a 40% investment to value which is going to lower your risk. My point is this, come check out those videos, come check out that part of the channel.

Brian Lauchner (26:12): You'll start to see what it looks like to be in the Note Business and kind of figure out, man, there's a huge opportunity for building wealth here as well. And so there's a lot of ways to get involved. I really want to encourage you to do it. And if nothing else, just like the video subscribe to the channel, it means a lot to us turn on the notifications, especially so that you can start to engage with us here on the channel during these live streams. I don't know if there's any questions that have come in. I saw some things pop up a second ago. But I want to just encourage guys to come in and get involved. And if there's no other question, man, we'll always see you next week.

Eddie Speed (26:50): Seth, you're awesome.

Brian Lauchner (26:50): Thanks so much.

Joe Varnadore (26:50): Take care of the family man! keep safe.

Seth Choate (26:50): Thank you.

Brian Lauchner (26:51): All right. We'll see you all next week on NoteSchool TV.

#Real Estate #Real Estate Investing #Notes #Mortgage #Mortgage Notes #Eddie Speed #NoteSchool #NoteSchoolTV #Note School #Brian Lauchner

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Today in Noteschool, Brian Lauchner, Eddie Speed, and Joe Varnadore talk about the Selling Property with Seller Finance.

According to Eddie, there are two strategies. One strategy is to acquire a property with some form of Seller Financing or Creative Financing and the other one is to resell it.

If you own a property with Seller Financing then you can just rent it. You can also flip the property with financing in place.

“You make your money when you buy it” - It’s an old saying in real estate that says you make your money when you buy and you get paid when you sell it.

Watch this video to learn more with Eddie of Noteschool.

Landlords are burning out. Tenants are behind on rent payments. Toilets are backing up.

Uncover Why Savvy Investors Use Proven Mortgage Note Strategies for Massive Monthly Profits In Today’s Ever-Changing Market… Risk-Free!

Discover more about Note School and profiting without Tenants, Toilets and by taking our FREE one day class:

https://new.noteschool.com/TV

Latest Class Information:

https://noteschool.com/3-day-classes/pop/

Download a Brand-New eBook by Eddie Speed It’s A Whole New Ball Game With Creative Financing

https://lp.noteschooltraining.com/moneyball-getstarted

Listen to our Podcast:

https://noteschool.libsyn.com/selling-property-with-seller-finance

#NoteSchool #EddieSpeed #RealEstate #MortgageNotes ------------------------------------------------------------ Brian Lauchner (00:02): Welcome back everybody to NoteSchool TV, we are live as we are every single Wednesday at 11:00 AM central time. My name is Brian. I am on the teaching team here at NoteSchool. And today we've got some really incredible content. We want to kind of dive straight into that I think is going to be very relevant due to the market conditions and something I think you can implement into your business quite quickly. And that's really going to be a kind of adding this layer of Creative Financing and Seller Financing into your business. And so, if you're new with us, man, make sure that you are liking this channel that you're subscribing to this channel and make sure you're turning on the notifications because every single Wednesday we go live and the notifications will tell you, you'll actually get an alert saying, Hey, we're live.

Brian Lauchner (00:55): And that's going to allow you to interact with us, bring your questions to the table into the live stream. Other than that, if you're brand new to NoteSchool, you're brand new to notes even, and you're just trying to figure out, Hey, I want to learn more. You can go to www.NotesSchool.com/TV, and that's going to allow you to dig a little bit deeper into some of the content. And so today we are joined by some heavy hitters and we are going to be diving into this incredible topic that I think can really start to impact some of your business. And that is this Seller Financing, the Creative Financing realm. And so I'm going to pop up on the screen here two of the greatest teachers I know that's going to be Eddie Speed and Joe Varnadore, and welcome guys.

Joe Varnadore (01:38): Well, you've got one Brian, that you know, great teacher and one, that's an amazing teacher, right?

Brian Lauchner (01:44): Yeah, of course.

Joe Varnadore (01:47): It's like Apollo Creed told Rocky. Right? Are you a great fighter? Do you fight great or are you a great fighter, right?

Brian Lauchner (01:53): That's right.

Joe Varnadore (01:55): Hey Eddie.

Brian Lauchner (01:56): Awesome.

Eddie Speed (01:56): How are you guys?

Joe Varnadore (01:58): Wonderful.

Brian Lauchner (01:59): Doing well. So Eddie, why don't you kind of get us kicked off a little bit and kind of walk us through, you know, we're talking about Seller Financing, right. And really what that is obviously we're talking to sellers and we want to buy their house, but we're specifically want them to play. We want them to sell us the house and provide the financing. We want them to play the role of the bank. So kind of talk to us a little bit about with your experience of 40 years, what are we looking for?

Eddie Speed (02:26): Yeah. So there's two strategies, right? One strategy is to acquire the property with some form of Seller Financing or Creative Financing. And the other side is to then resell it. Now, if you own the property with Seller Financing, you could just rent it, right. Brian, or you could just flip the property with financing in place. So we're not talking about exiting today. We'll certainly get to that, you know, but today we're going to talk about the goodbye. You know, there's an old saying in real estate, Brian, you make your money when you buy it. You know, the saying is you make your money when you buy, you get paid when you sell it.

Brian Lauchner (03:08): Correct.

Joe Varnadore (03:08): That's exactly right.

Eddie Speed (03:10): All right. But this is a little different mindset. Okay. So the common term for real estate investors and I am at a Real Estate Mastermind. So I'm actually doing this from a hotel. I'm at a Real Estate Mastermind right now. And this is fairly typical. I go to several of these masterminds and all of these guys are making a living, buying houses. And the general feeling right now is you have to be a superior marketer to survive, right? I mean, a superior marketer to survive.

Joe Varnadore (03:48): Right.

Eddie Speed (03:49): The reason is we're in such a competitive market, right? So real estate investors find themselves in a situation where they are, the lead they get with somebody that's willing to sell a house is so precious. It's like they're holding an egg and climbing up a mountain with it. Right?

Joe Varnadore (04:11): Yep.

Eddie Speed (04:11): And they don't want to break the egg. Right. And yet the climate, the mountain is rough. And so they face this scenario where, because the typical real estate investor only has one way to approach buying a house. And that is buying it at less than the retail amount.

Joe Varnadore (04:34): That's right.

Eddie Speed (04:34): That's tough. That's a tough gig. So this strategy that we're going to talk about today, so listen up guys. Let's just say that you're like, well, Eddie, I'm not one of these Ninja real estate investors. And I don't buy a hundred houses a year or 50 houses a year. And so this doesn't really relate to me. It a hundred percent relates to you because these high volume real estate investors do not have this strategy implemented. For the most part, they don't do it. And that is because they don't have anybody, a specialist on their team that can go do it. And therein lies an opportunity for you to come in and help them with taking their leads that are in the trash can and digging them out and going and work in them, own not wholesale price. Right? Brian, but wholesale term.

Brian Lauchner (05:29): Yeah, that's right. And let me kind of just jump in here, because what Eddie just said, is he's referring to the fact, because if you've ever talked to a seller, you can relate to this, you've talked to a seller or this Ninja real estate investor that talked to a seller you've made your cash offer. And the seller says, no, I can't accept that offer. It's too low. I won't accept that offer whatever it is, right. The next step is that lead typically goes in their trash can or their follow-up file. And what Eddie's saying is you can basically approach your own leads this way. Or you could go approach a Ninja real estate investor, somebody doing high volume and say, look, I can work these leads and start to monetize these marketing dollars that you've thrown into the trash. And that's a huge advantage because they're sitting there thinking, look, it's not like it's making me money anyway, how are you going to do this? And really, that's kind of the whole approach that Eddie's talking about is, well, if they won't accept your low price, would they be willing to accept the price that they want, which they will, but be willing to take their payments over time. And so Eddie, tell us a little bit about I mean, I'm sorry, Joe, tell us a little bit about from an equity standpoint, are we talking about leads that are only free and clear houses? Does this work on houses that are free and clear only?

Joe Varnadore (06:45): So here's the great thing about this, It doesn't matter if the borrower has a hundred percent equity, meaning it's a $250,000 house they owe what, not one dime. Of course it works, right. They could owe $200,000 on the $250,000 house, or they could own $238,000 on the $250,000 house. So it doesn't really matter what kind of we'd like for them to have a little bit of equity, right? Probably 10% in equity. But the great thing is that we can help anybody in that gamut. Now, obviously, if the house is, you know, if they owe 260 on a $250,000 house, probably not going to be a play, but again, so it doesn't matter as long as there's a little bit of equity in there, Eddie, anything you want to add to that?

Eddie Speed (07:33): Yeah. So it's a wide range of targets that would fit inside your filter. So think in terms of the typical house buyer is making 20 offers, and one out of 20 times they will take his discounted cash offer, right? So he closes one, right? That's his closing ratio, 1 out of 20, right? Here's the problem. He's got 19 deals in the trashcan and we're not, when we're saying they make a cash offer, they make a cash offer. And they work that offer. We're not saying that they just run out of the living room. Oh my God, the guy said he wouldn't sell. Now thay worked that lead and with all the work and the lead is still doesn't matter at the end of the day, it doesn't convert. I mean, these are the best closer to the closing table. I'm sitting at the table yesterday with the guy that revolutionized wholesaling houses because he taught all these guys how to negotiate the kitchen table.

Eddie Speed (08:28): His name is John Martinez, right. And John Martinez can only be so good. Right? And he's the best of the best at training. These guys had negotiated the kitchen table, there's no argument of that, right? But beyond that, this seller is not motivated enough, Brian, to take your discounted price, right? Whether he can afford to take it because he owes so much money. You may, you may offer 200,000. He may offer to, you may owe 220. Well he can't even take your offer unless you wrote a check at the closing table. So that's a hot, that's a low equity deal. And then we're going to take advantage of their existing mortgage. And we have some very unique strategies and how we go about that. I know people go, Oh, I know what a Sub2 is, there's Sub 2s. And there's our way of doing Sub2. And it's not the same, right? So there are some elements of risk with taking over an existing mortgage. And we've really calculated those risks. And we believe our approach is by far the best way to go do that. That's everybody thinks they're great at something. Right. But we've studied this and we have a lot of experience in the mortgage industry. And so we work with specialized attorneys and we just have a diploma. What we feel like is a different approach. Right?

Brian Lauchner (09:45): Yep. So let's kind of talk about that a little bit, because I want to talk about this Sub2 type of approach. And then I want to talk about, you know, the conversation, what you call the talk off and we'll get to that. But we're talking specifically about a seller who says, yeah, I'll sell you the house. But here's the problem. I've got a mortgage on this property. I owe $86,000 on this a hundred thousand dollar house. How would that work? Talk to us a little bit about, you know, how do we buy Sub2 or subject to the existing mortgage, which is basically we're going to be taking over their responsibility on the mortgage.

Eddie Speed (10:21): Well, without getting too overly involved, there's the general way that real estate investors do Sub2 is they take the property and they file a deed and then they take ownership of it. And the risk in that is that the mortgage company goes, wait a minute, there was a provision in our loan that said you can't sell the property without our permission, or otherwise the loan can be called due, right. It has a due on sale clause, right. So the first thing you have to do Brian is really make sure that you understand how that works. That's why it's called a Sub2 it's sub you're buying it subject to the existing mortgage, but not assuming the mortgage. And so there's some unique ways we do it actually, the way that we like to do it is that, that seller actually seller finances, the property and, and does what we call a wrap note to me.

Eddie Speed (11:27): And then I transfer that to another buyer, right? And then if I create cashflow every month, then I buy this seller finance note from the original seller. And I don't want to get too complex or too wrapped around the axle. And all the mechanics is morning, because Brian we're in a pain market situation, right? The reason people make money in this business, either just buying house for cash at a discount or buying a house on terms and paying for the house over a long period of time, the reason any of that happens is that the customer, then they have to check one giant check in the blank and that is, they solve my problem. Right? And so this one way it can be, they have an existing mortgage and it just doesn't make sense to pay it off. Now, once again, there's levels of conversation of how you take over an existing property with an existing mortgage, a Sub2 transaction.

Eddie Speed (12:30): Then the second way is maybe they don't owe a huge amount of money. Maybe they owe 40% of what the house is worth, Brian. And is it really makes sense to do a Sub2 or maybe you just go find a burn out landlord and loan you the money and pay off the mortgage. Right. So that's another way to structure it. So depending on we always say how you structure the creative financing is in direct correlation to the needs of the seller and the situation of the transaction itself. Meaning how much do they owe or what's the property, or does it need repairs and stuff like that? You can't generically make one creative finance offer that will fit every kind of property. Just wouldn't. It wouldn't make sense.

Brian Lauchner (13:17): Yeah. And I think to that point also, it's those detailed pieces that we really need to understand for the conversation of making sure we're getting away from all the fears. Like there's somebody watching this saying, you know, Eddie, I, you know, I heard about this in my state and, you know, it'll trigger the due on sale clause. Like learning those details are going to be what, not just protects you in the deal, but also to your point allows you to figure out really what that exit strategy is. And so go ahead.

Joe Varnadore (13:48): No, I was gonna say, and we've spent a lot of time over the last little while perfecting that, you know, Eddie has sat down with you know, one of the best attorneys in the industry. We think he's the best to, to create this paperwork that makes this a seamless as possible. Right. And that's what, you know, that's where we wanted to be with this. And so that's, we've created the time and are committed the time and the assets to make sure that, that happens.

Brian Lauchner (14:16): Yeah. And obviously we can't cover all of this in, in 20 minutes, but again, the goal is to get you thinking that as an investor, right? Whether you're active or you're passive, you're talking to sellers, you have your way of doing it. You've got your tool and you're going to work and you're going to solve this seller's problem. And maybe that's what the cash offer, but in the event that they cannot take that. What do we do? What Eddie's really, you know, kind of pointing out is that you're bringing more tools to the table now, right. To the problem so that you can bring more creative solutions to the real estate problem that's complicated, right? Because like Eddie said, you've got to solve that problem. And the more tools you can bring to the table, the more likely that we're going to be able to solve that problem and monetize that lead. Eddie, did you want to add anything?

Eddie Speed (15:04): Yeah, I think that, you know, anytime we bring up an idea, there are clearly going to be mechanics behind that idea. Right. I went to a hotel to go to this thing. It's actually in the Dallas area. So I drove, but I'd never been to the hotel before. Right. So I had to follow a process of going on Waze, my little app, and putting all this into Waze. And all of a sudden it told me, and it drove me right to the front door. What would happen if I would've just said why? I don't know. I don't know how to use Waze, while I'd have been driving in a big circle. Right? Hey, we all live this everyday.

Joe Varnadore (15:45): It's something in Dallas, you know, right there with the stacks up.

Brian Lauchner (15:48): So you're saying I can't use a MAPSCO anymore. Is that not an option?

Eddie Speed (15:52): You can, You know, it's a funny, I heard a guy make a presentation at this event, it was funny. He said, we an old, the old guys always use maps. And when we got to the parking lot, we always paid attention to every little sign or every little, you know, marker. So we could find our way out. And he said, now we're so accustomed to an app that we have to turn our app on to figure out which direction to have a parking lot. We drive out.

Eddie Speed (16:21): So let me go ahead, Joe.

Joe Varnadore (16:23): What I was going to say, so guys, and, you know, as we start wrapping up 2020 and getting into 2021, these are the types of things, you know, learning to buy. I mean, times are going to be interesting guys. So, you know, we need to have that, you know, that extra tool in our tool belt, right. We need to have more than one way to buy, you know, it's not just a cash offer, but it's a cash offer. And then sometime some type of terms offer. And you know, one of the things that we talk about in the talk off in talking with the property seller in this is you know, we know that they will agree to terms that a bank would never agree to. And that's part of the talk off as to how we, how we do that. That makes sense, guys.

Brian Lauchner (17:07): Yeah. So tell me more about that. Eddie or Joe, the talk off is that logical rational conversation we're going to have with the seller to get them to the, yes, I will. I'm willing to seller finance my house. So Eddie, tell us a little bit about the what you called the talk off.

Eddie Speed (17:24): All right. So let's mock call the situation, Brian. So you come on and you're the seller and I'm the buyer.

Brian Lauchner (17:30): Okay.

Eddie Speed (17:30): Okay. And I've gone to you and I've made you a cash offer, and you're going to sell your house for 75 cents on the dollar. And you might have pretty starkly said ***l, no. Or you might have said, I don't think I can do that. Or you might've been polite and let me get out the door and then you locked it. Okay. But the factor might not have all been disclosed as to what they were.

Brian Lauchner (18:03): Yeah.

Eddie Speed (18:03): Right?

Brian Lauchner (18:04): Okay.

Eddie Speed (18:05): And so you're at a point where you've made an offer, you've worked the offer, you've followed up, you've done all of the best techniques. And you just have to realize at some point, they're not selling to you at that price, right. You've been there, you've been a full-time house buyer. You understand exactly what I'm saying. And so now all of a sudden here, Joe Varnadore comes in, okay.

Brian Lauchner (18:27): Okay.

Eddie Speed (18:27): Now, Joe is what we call a designated hitter, right? So Joe is making a deal with you. He says, I know how to work offers where they're going to sell to me on terms. And there's a myriad of ways we can make money. If I'm successful, I could just pay you a fee, or we could do some kind of JV and do it together. I mean, there's different ways to do it. And do you and Joe could figure out like how to split your money up. Okay. You may say, Joe, if somehow some crazy way you pull this off. If you paid me 5,000 bucks, they dig a deal out of my garbage can. I'm a happy man.

Eddie Speed (19:00): Absolutely.

Eddie Speed (19:00): Or whatever. Maybe you agreed to 3000, or maybe you agreed to, you know, take some percentage of the deal down the road. Maybe you keep 20% of it. If he's successful doing you guys are entrepreneurs, you can figure that out. Right.

Brian Lauchner (19:15): Yeah.

Eddie Speed (19:15): So, Joe then comes in and he says, okay, Eddie, I'm gonna buy this house from you. And I understand Brian's already told me that you made an offer and you didn't like the offer. Right. And I've completely understand that. In fact, I think it's kind of smart of you, because you deserve more of the price for your property than these other investors we're offering you.

Joe Varnadore (19:41): Right.

Eddie Speed (19:42): Right? So let me say this. You have a, you'll have to explain what equity is, but you have a certain amount of equity in this property. And if, Brian. If Eddie, I can pay you for this house, right. I'm the seller. If I can pay Joseph, if I can pay you for this house, the price you want, I can do that. If you take your equity, the amount of your equity, and instead of taking it in all cash, which would be discounted, I think you'd be like a furniture company and not have to discount it. You take your equity over time and you don't have to discount it. Okay. Now, all of a sudden Eddie's thinking, well, dang, I'm pretty dang smart. I'm like a furniture company. I'm a, I'm Warren Buffett. I'm in the finance business. Now you see what I'm saying? Because understand, what I had was a real estate problem, not a money problem. I wasn't desperate to sell , but I, but if nobody bought my property, I still had my same real estate problem. Right?

Brian Lauchner (20:46): Right.

Eddie Speed (20:46): So Joe comes in now and offers a solution that's not a wholesale price, but the way he structures the offer is wholesale terms.

Brian Lauchner (20:59): Yeah. And I think, you know, to all the investors watching this, the key takeaway in this conversation is it's not the price that you pay. It's not about the price that you pay. It's about when you pay that price. That's one of the most profound things I've ever heard Eddie say, is that you can't get hung up on the price. The seller is hung up on the price and we're going to let them stay hung up on the price. I don't care what the number is. What I do care about is when I give you that number. And so, that's, I think a little bit of the talk off, and at least gets you kind of going in the right direction. And like I said, this is, this is really, you know, supposed to be a great place to kind of bring your questions, bring your content.

Brian Lauchner (21:41): And so I want to thank everybody for for kind of joining us you know, this Wednesday, just like every Wednesday as we do NoteSchool TV here, if you, again, aren't subscribed already, please subscribe to the channel. It helps us a lot. And plus then we get to engage with you. We get to interact with you make sure you're clicking the little bell notification so that you're getting alerted when we go live so that, you know, you can bring your questions on while we're here alive on the air. So to speak, if you're wanting to learn a little bit more about kind of what we're talking about and how do I actually go out and do more of this, or I need more details. Go to www.NoteSchool.com/TV. And it's a great place to go, to learn a little bit more about what we do and how to kind of get this implemented in your business. We are, you know, we're planning on seeing you guys next Wednesday at 11:00 AM central time. As we go live, please engage with us, bring your questions. And we will see you on the other side.

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