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Mortgage Note Case Study With Eddie Speed - Real Estate Investing

PROPERTY overview: - Class D- property that was neglected and very distressed - termites, bad roof, no heat or AC, bad wiring and plumbing

- Original plan was to remodel for a rental (would have lowered the rehab costs by perhaps $5k) but a visit in Jan '19 changed our plans

- Upon joining NoteSchool in Jan '20 we flipped to selling this house and holding the note

- We did the demo and gutted it and used our contractors to add a new roof, added HVAC, repair termite damage, new electrical, new plumbing) and remodeled the entire interior

- Highly stable workforce neighborhood with long term home ownership and few rentals

- Low crime, excellent elementary and middle school within the community

- Purchased the property in 2017 using money out of pocket and a small 2 year note and which we paid off prior to closing

- At the time of sale (July '20) we were at $88,770 (in the property) = $58,250 (purchase) + $30,500 (rehab)

NOTE TERMS overview:

- Sales price of $145,000

- PBB Buyer, D-F Qualified, $4000 down, escrowed T&I

- Note Price $141,000 which we papered using a Title company as $98,750 (sales price to lower tax basis) + $46,250 (repair cost) @ 6.5% for 360 months

- PI of $891.22 - Secured a PLEDGE at the time of closing for $40,000 for 4 years at 6% to recoup the rehab costs and 10k above that

- We plan to secure additional Pledges when this one expires as well as consider Partials

FINANCING overview:

-$88770

- funds in the house+$4000

- down payment+$40000

- Pledge+$141,000

- 30 year Principal over time+$179,838

- 30 year Interest over time-$45091

- Pledge payments over time

========================

+$226,977 Profit

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

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Brian Lauchner (00:01):

Can you really be the bank versus being the landlord stay tuned.

Brian Lauchner (00:16):

That is the question, ever noticed that banks happen to own the tallest buildings in the cities? And sometimes being a landlord can come with some unique challenges I would say. And so we're going to talk about what that looks like to maybe make a shift from being a landlord over to being the bank and taking advantage of some of those things. Welcome to NoteSchoolTV. My name is Brian Lauchner I'm on the teaching team here. We're going to be here every single Wednesday. And if you're brand new to NoteSchoolTV, we are here Wednesdays at 11:00 AM, central time, every single Wednesday live where you can engage with us as we kind of dive into some of these topics and kind of go after some of the questions that I think a lot of people have in their heads, there's trying to figure out what those answers are.

Brian Lauchner (01:01):

If you're wanting to learn a little bit more about NoteSchool or NoteSchoolTV, even you can go to www.NoteSchool.com/TV, to learn a little bit more about what we do, what we're about, and even how you can get engaged moving forward from here. We would really love for you. If this video is of value to you, please like the video, subscribe to the channel. And probably most importantly for this show specifically, if you are someone who is wanting to get engaged and ask some questions, make sure you are clicking that notification bell. Down next to the subscribe button, that's going to alert you when we go live so that you can jump on with us, listen to what we're talking about, texting your questions, typing your questions there. And we're going to try and do our best to get those answers. We are actually going to have an after party at the end of NoteSchoolTV each week, where we take a look at all the things that have been posted on all the social channels and try to answer these, these questions almost like a Q and A but we're going to call it an after party because let's be honest, that's way more fun. And so we're going to get into the meat of today. It's going to be fun, and we're going to start by jumping straight into the news

Brian Lauchner (02:20):

And I am joined here by Mr. Joe Varnadore. And as he gets un-muted here, we will get him going. And how are you, Joe?

Joe Varnadore (02:29):

You know what? I am great, Brian, how are you?

Brian Lauchner (02:32):

Doing great, my man, what's going on in the market, man, fill us in. What's going on in the news?

Joe Varnadore (02:37):

Well, hot off of the wire service man. So we talked last week about Fannie, Freddie, Genie. They extended the moratorium on foreclosures from the end of December from the 31st of December out to January 31st, well hot off the presses here, FHA, HUD and the federal housing finance agency has just granted another extension. And they're extending that out to February 28th. So now we've gone from December 31st to January 31st, and now we're out at the end of February. So that is.

Brian Lauchner (03:20):

What does it mean? What does that mean for the average landlord? Well, for the average homeowner, what that means is the foreclosures cannot be started, right? If it is a loan that is insured or guaranteed by one of the GSE's, the government sponsored enterprises. And it, if it is a loan on a rental property, that is not that is in that there's a loan from one of those agencies that, that extends that moratorium as far as being able to evict as well. Right? So it literally is more pressure on the landlords out there.

Brian Lauchner (03:58):

Uh-huh.

Joe Varnadore (03:58):

So you also know that the big stimulus package is kind of popped out and there's some things going on with that. But the CDC, the center for disease control has also extended their moratorium out on evictions. And that's just basically CDC did that because of the, you know, the COVID thing. And so, and in that package, there is another $25 billion to help those folks there. And then the big news as well is that Zillow is predicting Brian a 21.9% annual growth in housing in 2021, which is the biggest since 1983.

Brian Lauchner (04:48):

Man.

Joe Varnadore (04:48):

Now that's just a prediction by Zillow in the National Association of Realtors is kind of jumping on board that as well, but that is the news for this week.

Brian Lauchner (05:02):

I love it. I love it. So tell us, what are we going to be talking about today? I already kind of gave a little bit of a teaser here, jumping straight into it. What do you got for us today, Joe?

Joe Varnadore (05:11):

Well, I'll tell you what, we have two very special guests today. They are from Houston, Texas, Lois Meyer and Cynthia Sterling. They are two of our rockstar NoteSchool members, and they well, Brian, they were very big on the landlording thing, right.

Brian Lauchner (05:31):

Okay.

Joe Varnadore (05:31):

And you know, your teaser was can you really be the Bay versus being, you know, versus being a landlord. And so Cynthia and Lois, Cindy and Lois joined us joined NoteSchool back in January of this year before the lockdown. Right. And so we've got a great case study, where they do what we've been teaching them, right? They were landlords, they were interested real passive income. So they had bought a property that was pretty trashed out that they were going to use fix it and use it as a rental. But after, and that was the last fall. But after joining NoteSchool in January of this year, they decided we really would start like to being the bank. Right. So we're going to talk about that as we, as we move forward, let's bring Cynthia and Lois on and maybe we'll bring on Mr. Eddie as well. Well, good morning, Cynthia and Lois. Thanks for being here.

Cynthia (06:35):

Hi.

Joe Varnadore (06:35):

Good morning, Eddie, How are you?

Eddie Speed (06:37):

I'm great. How are you ladies? By the way. Welcome.

Lois (06:41):

Excellent.

Joe Varnadore (06:42):

So you guys, you know, we love you. We love what you've done. We love the spirit, everything that you guys bring to NoteSchool, Lois, you're a retired recruiter for a big national company. I think you retired last year, right?

Lois (06:56):

Yes. About that. Uh-huh.

Joe Varnadore (06:57):

And you're trying to get Ms.Cindy here to retire as well. Right?

Lois (07:04):

That is our plan for sure.

Cynthia (07:08):

The last couple of weeks.

Joe Varnadore (07:08):

Good job with the company called Solar Winds as well.

Cynthia (07:16):

Yeah.

Joe Varnadore (07:16):

So very good. So let's talk a minute about the, you know, you guys, what you were doing prior to NoteSchool and learning how to be the bank, so tell us about yourselves.

Cynthia (07:30):

Oh, we started in rentals and land ownership about five to eight years ago. I don't remember the exact timeframe. And we had collected about what 12 rental properties and about five or six land properties. And we were pretty well going down that path when we were introduced to notes and NoteSchool about two and a half years ago, we bought our first note just to try it out and see how it works.

Cynthia (07:58):

And then when we'd set off on a course of a lot of due diligence to make sure that everything was a good investment for us to kind of switch our plans. And we sort of made a decision to do that last fall. And especially with this one property, we thought we'd try one property off. And we started going down that path instead of remodeling it for rental were remodeling it for resale, but we wanted to be the bank. So in January of this year, we joined NoteSchool with a commitment that that was how we were redirecting all of our real estate investments.

Lois (08:35):

And our retirement plans.

Cynthia (08:37):

Yes.

Joe Varnadore (08:37):

Yeah. That's very important today. Is it not?

Lois (08:41):

Yes.

Joe Varnadore (08:44):

So you did your due diligence on notes, right? I heard you say that you did your due diligence on NoteSchool and you found out we were good. Right. So.

Lois (08:51):

Yes, we were very impressed.

Cynthia (08:53):

Yes. We had some access to some of your titanium members, so that helped a lot too, but we wanted to do our own due diligence, not on buying a specific note, but on the process, the, just how would it work? Long-Term, so not a short term gain, but something long-term for us.

Joe Varnadore (09:13):

Right.

Cynthia (09:15):

We have found out that you a pretty trustworthy guy.

Eddie Speed (09:16):

Look at that face. How could you not say that? Right.

Lois (09:21):

That was our first thought.

Joe Varnadore (09:21):

I don't have a comment here.

Eddie Speed (09:27):

It's funny. They do do a great job. You know, we get to spend time with them because they come on these labs with us on a regular basis. And great bring great questions. And the particular case study they did today. I really appreciate it because you know, a lot of people look at seller financing and it's like, I'm going to take a house that is sort of in a substandard condition and I'm going to sell it to some buyer and I'm going to cross my fingers. They're going to go fix it up. And you wake up and realize that you really can't attract the right, the buyer you're looking for, or you can't attract you don't really own a bank. You own like more of a pawn shop when you're doing that. Is that a fair statement? And so I really appreciate the fact that you ladies really listened to us and listened to the direction. So I'm interested in kind of like how you went through that process and what you needed to do to fix the house up and what that sell that property with seller financing look like?

Lois (10:32):

We purchased the house for a 58,250.

Joe Varnadore (10:35):

Let's do this. And let's I'm gonna have let's, I've got a PowerPoint here, so let's go.

Lois (10:42):

Alright, sure.

Joe Varnadore (10:42):

Real quick. And so the first shot here really is you guys bought bluntly when you sold it and closed it to your penalty box buyer. Right. We'll talk a little more about that in just a second. That's your penalty box buyer, right. And she had had an a crazy you know, worked for the United States postal service. And she just had, she had some bad, bad medical issues, didn't she guys?

Lois (11:11):

Very much so. And it really put her in a position where she felt she would never be able to own a house on her own.

Cynthia (11:19):

And it was a, it was a goal she'd had for all of her life. And I she's in her fifties, but couldn't, isn't bankable. Wasn't at all. And yet she after all the medical issues and three years of not working and all of that, she was able to get us feedback underneath her. But by that time, the damage is done.

Joe Varnadore (11:39):

Right.

Cynthia (11:40):

Credit score. And we were able to help her achieve her dream and have us begin to achieve ours, quite frankly.

Lois (11:50):

Sure.

Joe Varnadore (11:50):

You know what I like to say, ladies, that you know, we can kind of help folks achieve the dream of home ownership, one person at a time, right.

Lois (12:00):

Exactly.

Joe Varnadore (12:00):

As we move forward. And just for our viewers out there this lady was, you know, she was just, she was unbankable, right? Because of a situation, it wasn't that she had, you know, bad credit or ugly credit or Eddie was saying we're selling an ugly house. And that kind of thing, as a matter of fact, this house has a current market value of $150,000. Right?

Lois (12:23):

Now It does. Yes.

Joe Varnadore (12:28):

Earlier, you said, well, you know, it was pretty nasty, so, let's talk just a little bit about this, right. As we kind of go through it. So you're the kind of the deal points, right? You guys tell us a little bit about that you had purchased this house and you were just going to rehab and fix it. And then that was kind of last fall, wasn't it?

Cynthia (12:47):

Yeah, it was last fall and we started to work on it and it's like, I mean, Eddie can tell more horror stories than we have, but every house we've ever bought in neighborhoods that are what we call working class neighborhoods, right? So they're more of the blue collar working class people, one to two, home, one to two jobs per, per adult living in the household. So these are, these are hardworking people, but their houses are not always in the best of neighborhoods. But one of the things we've always tried to do is take a house in a neighborhood like that and make it the best house in the neighborhood, and then get people into those homes. And this is historically one of the of the most, it's the highest voting percentage neighborhood in the state of Texas. Oh my gosh. And you've tried to find a house for sale or for lease in this neighborhood is difficult at best. And so when we found this opportunity, we jumped on it, but the house had been in some disrepair because of the age of welders. So.

Joe Varnadore (13:57):

So you found it, you totally gutted it. And again, you're going to rehab and flip it. So you purchased it for 58,250, and I think you use your own funds for that.

Lois (14:09):

Uh huh.

Joe Varnadore (14:09):

And then you rehab the property. And again, you had some funds and I think these were some funds that were in retirement account or something like that.

Cynthia (14:19):

No, not really. They were just funds that we had set aside actually to buy another property. And we just pulled them back from that to go into this property.

Joe Varnadore (14:27):

Got it. So you get it rehabbed and you would look like the picture before, right. So total out of pocket, you guys had in this was 88,750.

Lois (14:36):

Correct.

Joe Varnadore (14:39):

So once you did that and I, you know, when we were talking yesterday, you were saying that you guys had actually started advertising for a penalty box buyer prior to actually finishing the house, right?

Lois (14:57):

Yes.

Cynthia (14:58):

We had a couple of people that had already approached us initially about, did we have any rental rentals?

Lois (15:07):

Rentals right.

Cynthia (15:07):

And we just flat out said to them, have you ever thought about owning? And because the cost of a monthly lease versus an owning the house, there's not that much difference. And we've had several people go, well, I can't qualify to buy a house. And we said, well, put that aside for a moment. If you did qualify, would you be interested? Right. And they said, yes. And we pursued them. And this particular buyer went through all of the process, which we'll probably talk about, but we put them through a Dodd-Frank process because we wanted to make sure that they in fact were legitimate people to own the home.

Joe Varnadore (15:49):

So just for everybody that's out there. So you advertise this and you actually had people as you were redoing it or contacting you from the neighborhood as it was a real desirable working class neighborhood.

Lois (15:59):

Right.

Joe Varnadore (16:01):

You found the right buyer, and then one of the things you said there, I want to make sure everybody understands is you made sure that the borrower on this lady that was buying it you had her qualified under the safe act, which is Safe Act compliant, right. Safe Act compliant by using a vendor that checked her out and made sure that, you know, she could afford, she had the ability to repay on this.Right?

Cynthia (16:28):

Absolutely.

Lois (16:29):

And that came from, from NoteSchool and Eddie talking about, you know, you have to qualify them. And so we used a vendor from NoteSchool CTU and then they did the whole processing for us. And then we closed through a title company and we explained to her at the very beginning, you know, this, the everything was going to be done legally. And you know, cause she'd never bought a house before. And so every one thing was going to be done according to law and regulations so that she didn't have to worry that she was being taken advantage of either, which I think is important. And I think that's something we don't talk about is they need to know that this is legitimate as well as we need to know that they're the right people.

Joe Varnadore (17:15):

Right. Well, you know, it's like Eddie Speed says, right. He says, Joe you know, the loan that you don't make is not the one that'll keep you up at night. Make sure that everybody's good. Right?

Lois (17:27):

Yes. Right.

Joe Varnadore (17:27):

So you sold it. So you had, you guys had 88,750 and you were good with that, guys. You could have borrowed the money from you know, a private lender, but you guys were good. You had some money that you wanted to deploy, so you were good with that. So your buyer had a small down payment, but that was okay. Right. That was okay with you guys. That was your decision.

Cynthia (17:52):

We are, we feel confident that we could have gone and gotten a more traditional penalty box buyer that we could have asked for a higher down payment and all of that. But we there's a, there's an element of not only this being a financially solid thing for us, but we also wanted to do a community and, and a best work. We're blessed enough to be in the jobs and the careers that we've had. And if we can help people one house at a time, you know, we have this thing about having, helping one house on wall street on one block, in one neighborhood at a time, then we're good with probably not making as much as maybe somebody else might be making, but we're also, it's a business and we absolutely want to run our business smart, but we also want to feel good about what we do.

Joe Varnadore (18:46):

Well. and just for our viewers out there, typically when we're selling to a penalty box buyer, we're going to get somewhere between 10 and 20% down. That will show that, you know, over the last several months, the average penalty, the average buyer has a 750 plus credit score. Plus has, have been putting at least 19% down on their on the price here. So let's talk about this. So 145, $4,000 down. So you get seller financing of the 141.

Lois (19:17):

Uh huh.

Cynthia (19:17):

Uh huh.

Joe Varnadore (19:17):

At six and a half percent, which is a very good rate for this penalty box buyer, which made the payment $891 a month for principal interest. Now you did, she is escrowing the taxes.

Lois (19:32):

Absolutely.

Cynthia (19:32):

That's kind of our requirement we have for our properties, even the notes we're buying. And it's probably because we're fairly new. I mean, we're literally only coming up on our one year membership, but in the 20 plus notes that we own, that's the criteria that we kind of put in place.

Joe Varnadore (19:53):

So you guys have bought 20 notes this year.

Cynthia (19:55):

yeah a little, 20, 21, something like that, we could have.

Lois (19:59):

Right. Since May

Cynthia (19:59):

Since May, this year actually.

Joe Varnadore (20:02):

Because you said, I'm going to join in January, but we can't do anything until May. So.

Lois (20:07):

Correct.

Joe Varnadore (20:10):

Seven months. Very interesting.

Cynthia (20:11):

Yeah. Uh huh.

Eddie Speed (20:14):

Yeah. Well, one point I wanted to make is, you basically in your business called an Audible. I mean, you know that we say that you can get 10 to 20% down on a consistent basis.

Lois (20:24):

Uh huh.

Eddie Speed (20:24):

But the story of the customer and the stability of the customer said, I, as a business owner and the bank.

Lois (20:34):

Uh huh.

Eddie Speed (20:34):

I can call an audible, say, I'll take less than that down. And by the way, her payment, including taxes and insurance is less than a rent payment or it's is as equal to.

Lois (20:48):

Yes. Uh huh.

Eddie Speed (20:48):

It"s a win-win deal. You got 88,000 in this deal.

Lois (20:51):

Yep.

Eddie Speed (20:51):

You got 4,000 cash. And, now all of a sudden, here's the difference. If you would have owned a rental property, would you really be netting 900 bucks a month?

Lois (21:03):

No.

Eddie Speed (21:08):

Oh, So this makes more money than a rental?

Cynthia (21:12):

Quite a bit.

Eddie Speed (21:17):

Okay. Now.

Lois (21:17):

We're believers Eddie, No worries.

Cynthia (21:19):

We've been converted.

Joe Varnadore (21:25):

Hallelujah. So this is what the note looks like. You've got a payment track of 360. So let's talk about, let's tally up some of the money. Eddie. I've been talking a lot here. Why don't you talk about this a little bit.

Eddie Speed (21:38):

Well, I mean, the thing that we like about the first year, you make $14,000. Now you can take that off your cost basis of 88 right? Now you're in the low seventies, right? below 75,000. And then for 75,000 our investment, you have an in thing that throws off true income, not income minus expenses, but real income.

Lois (22:04):

Yes.

Eddie Speed (22:04):

Growing off of cash flow of 10,000, almost $700 a month. A year.

Lois (22:13):

Yeah.

Eddie Speed (22:15):

Probably economics says seven years, you get your money back in for the next, you know, 23 years after that is profit.

Lois (22:21):

Yep.

Eddie Speed (22:21):

Now, that's kind of pile boy economics, but it's pretty good economics.

Lois (22:27):

It is. And we can put pledges against it and everything. So I mean.

Cynthia (22:31):

Partials, we can do whatever we want. And that really works well for us given, building this retirement plan and what we need, because right now I'm still working. So that still works well. But in that, after that seven years, that's when we're really wanting these notes to kick in for us.

Eddie Speed (22:52):

So let me clarify what they're saying, because that's really important. Like you're like, you're looking at your current deal, but you're also strategizing about what could be done. What they're saying is they have a good first mortgage on a good piece of property and a good payer. They could take that note and just go borrow money against it. Just like you'd borrow money rent. I was thinking about your money against note. They said they can pledge the note, right? Teach this strategy a lot and how to do it. The other thing is they could just go sell a stream of payments so they could sell not the whole note, but they could sell a stream of payments. And what that would allow them to do is to recapitalize. So you heard them say something, a lot of you caught and they're like, Oh my God, these ladies have bought 20 over 20 notes this year already. And you're like, how do they do that? Because they understand when they run out of capital, whatever is, and have strategies that they can go recapitalize other private investors, money to go to go recapitalize the notes that they have. So they have more money to spend. And now they're walking themselves up the ladder. And that's what I love.

Lois (24:00):

Uh huh.

Joe Varnadore (24:02):

That's where you build your bank. Right guys?

Lois (24:03):

Absolutely.

Cynthia (24:03):

Absolutely we love it.

Joe Varnadore (24:08):

We call that a NoteSchool, Eddie, coined that the Capital Recoupment Plan, let's do some quick math. And then I'm going to jump off the PowerPoint here. So you guys had 88,750 out, right? You received a $4,000 down payment, yearly income over the period of the loan, you know, for a long time is 320,760. So literally your total profit on this over time is 232 and a half thousand dollars basically.

Lois (24:37):

Uh huh.

Eddie Speed (24:39):

Yeah. That's well, you know what I like to say at that don't light your fire, your wood's wet. Right?

Joe Varnadore (24:48):

Alright, Scott, pull that down and let's, I'll go back on screen here.

Eddie Speed (24:52):

Listen, you ladies that I want to compliment you are you, for Joe and I and Brian who are on the training team and working at training people here's, there's, you're smart. You brought some real estate experience to it, and you applied that real estate experience that let you get going with your note strategy.

Lois (25:18):

Uh huh.

Eddie Speed (25:18):

But the most important thing that you did is you took action. You put massive action. And we talk, and you know, we talk about this a lot. Like we can be so smart, we can almost talk ourselves out of a deal. Right. We can just analyze it to death and you ladies are good. You're smart ladies. You you're really good at analyzing, but you have a good balance. And you've been highly coachable for us because you've not just done it, but you've taken action. And I salute you for that, really.

Lois (25:51):

Thank you.

Cynthia (25:53):

We should rightfully salute you. I think that's you have to take the credit for some, a lot of this is because we just to remind you of what we said was we bought our first note two and a half years. We studied you and note school, and that's correct for two years. And, but once we made the commitment, because we had done that due diligence up front, we were all in, but that comes to you. I mean, you're, we didn't just invest in any notes. We had invested in NoteSchool and NotesDirect.

Eddie Speed (26:22):

Yes. Well, thank you for doing that. And I think you probably would tell people you could have pulled the trigger a lot quicker.

Cynthia (26:29):

We could. Yeah. I don't mean to discourage. We could have done it faster. It just happened to be where our careers were.

Lois (26:36):

Yeah. Our lives were far too stacked for that, but because we wanted to be able to concentrate on it and do it right. And so we told you when we joined that May was our time.

Cynthia (26:46):

Retirement.

Eddie Speed (26:46):

I completely remember that conversation.

Lois (26:51):

And I know that you say sometimes, well, you know, people tell me, Oh, I'm going to join and I'm going to do all of this. And you know, some of them do some of them don't. And so I thought, yeah, he doesn't really know what we're going to do.

Joe Varnadore (27:07):

22 notes in. We think you're doing okay.

Eddie Speed (27:13):

Let's just say the coach is happy.

Cynthia (27:15):

Good, cause we did our job too.

Lois (27:18):

Yes.The players are happy.

Joe Varnadore (27:23):

Stick around with us guys.

Lois (27:24):

We will.

Joe Varnadore (27:24):

Cause we're going to have a little after party here,

Joe Varnadore (27:26):

After this thing.

Lois (27:28):

Okay.

Joe Varnadore (27:28):

So guys Brian, why don't you jump on and let's talk about Feeding Frenzy Friday.

Brian Lauchner (27:38):

I like it.Thank you so much, ladies. Yeah, I think this is this is a great time transition. One of the cool things is that I think everybody needs to know is NoteSchoolTV is sponsored by NotesDirect and Feeding Frenzy Friday.

Brian Lauchner (28:02):

So each week we put together a little video kind of breaking down a note from NotesDirect on Feeding Frenzy Friday, you can go to NoteSchool YouTube channel. There's a playlist called Feeding Frenzy Friday. And if you're wanting to just learn more of the details and really learn how to master notes, that's a great place to get started. Just last week, we broke down a Michigan home that has a season note since 2002, the person has been living there for 18 years. What do you think the chances are? They're going to keep paying if they've been there for 18 years, right? It had a $19,000 balance with a loan value under 60%. So with a double digit interest rates. So just really, really great stuff. And we got to talk about the ins and out and the pros and the cons of these notes to again, to help equip you better, to learn how to buy something from notes direct and get a note in your portfolio.

Brian Lauchner (28:52):

As always, we're going to be here on Wednesdays live at 11:00 AM central time, so that we can dive into some of this content and get you more value for your business in this you know, in these market conditions make sure you are liking these videos, subscribe to the channel. And again, like I said, at the beginning, click that notification bell, because what that does is that alert you, that Hey, we're live. And that allows you then to jump on and putting your questions and things like that and engage with us. Cause we're going to have a little bit of a shindig here in a minute where we kind of go through some of those questions for those of you who, Hey, you're brand new, you're wanting to know how to get started. Here's two things I'll tell you, first of all, go to www.NoteSchool.com/TV. That is a great place to kind of take a next step. If you're trying to figure out what that next step is. The second thing is I want to invite you to join us next Wednesday

Brian Lauchner (29:42):

For a special new year's NoteSchoolTV of it, where Eddie speed himself is going to give a state of the industry type of an address. And so that kind of wraps us up for today. We're running a little bit out of time, but I tell you what, you know, what time it is, Joe, it's time for the after party. So bring it.

Brian Lauchner (30:15):

I love it. All right. Well, one of the things that I saw come up in the comment you, as you post in your comments on Facebook or YouTube or wherever it is, you are you're joining us from, we had several come in. One of the things that I saw, Eddie, that popped up right away was just talking about the best rentals to sell via seller financing. Why don't you kind of walk us through that a little bit?

Eddie Speed (30:40):

Well, one of the things that I see all the time, a lot of landlords end up at NoteSchool and the reason they end up at NoteSchool and Lois and Cynthia were great examples of this was that, how do you scale your business, right? I mean, could you really have bought 20 rentals?

Lois (31:02):

No, I don't even want to think about that.

Eddie Speed (31:05):

And so the avail, the scalability being the bank is much different than the scalability of being the landlord. And we really, it means a lot to us because it means that, because you heard Lois and Cynthia talk about retirement, and what they want to be able to do is be the bank and be on the beach, not at Home Depot.

Joe Varnadore (31:31):

Well. Eddie, You didn't, want to, since you're the one that's already retired, You didn't want to be retired as a full time property manager. Right?

Lois (31:40):

Right. But the other thing to think about is that this allows us to diversify our holdings. So instead of just having rentals basically in Houston, and we actually have one in another state as well, but this allows us to have diversification nationwide, urban and rural. So it, that I think is important in building a portfolio of any kind for retirement as well.

Eddie Speed (32:08):

Yeah. And we, one of the things that we talk about is like, what house is, it makes a good note house. So I tell landlords like Lois and Cynthia, when they get involved with us and they kind of get to know us. There's some, there's some training, there's some preparation for this that makes the answer make sense. Right, Brian? You can't just, you can't always understand a punchline answer if you have no base of knowledge to run. So we'll go lay out some math and we'll say, what house doesn't really, it was a good house, but it doesn't really throw off the income you're looking for. Right. And so we'll take that house and say, okay, then what if you noted it like this house that you just showed us, you're getting 900 bucks a month net income. That's impressive. And by the way, you probably could have, you could have probably carried it a little higher interest rate. You probably could've gotten a good bit better down payment. You made a, you made a social choice.

Lois (33:11):

Yes.

Eddie Speed (33:11):

Help somebody. You're still going to make really good money. And I just cannot tell you enough that, you know, I've probably spoken literally through the Seller Finance course. Listen, I've probably spoken to, gosh, no. I mean to over 200 Congress people in Congress, and we talk about the physical responsibility that people seller financing, do you provide home ownership to somebody that otherwise wouldn't have experienced it.

Lois (33:37):

Absolutely.

Eddie Speed (33:39):

And you got to make really good profit helping them experience affordable home ownership.That's a win win.

Lois (33:48):

Yeah. She would have never, ever gotten a loan from a bank or a traditional lender ever. Yeah.

Joe Varnadore (33:52):

Yeah.

Brian Lauchner (33:54):

I think too, when we're talking about the best kind of properties to seller finance, one of the things that Eddie said that it thinks is important to understand is that, there is a specific criteria that we're really looking for, but there are more of those houses than there are of the distressed homes that you might be thinking about as a wholesaler or a flipper or even a landlord. There is more opportunity in this space to find the deals than in the other space. And that's something that I think we take for granted because of how we've been trained to focus on these distress, torn up houses. Right?

Lois (34:24):

Right.

Eddie Speed (34:26):

Yeah.

Lois (34:26):

How did you, M asked how did you find this house in the first place? What was the source of this, this deal?

Lois (34:34):

I think we just, we do a lot of driving in neighborhoods that we think have a lot of potential. So we have been buying properties and working class neighborhoods now for, as Cindy said, six to eight years and we drive the neighborhoods, we start on one street and we go up and down the grid pattern. And then when we find houses that we feel are you know, meet our criteria. So they have to be able to be standing, you know, they have good bones to them, but still in the distress price. And then we're able to go in and get it. So we've done that on in quite a few neighborhoods here in Houston. And like you've said Eddie, you don't make money on rentals from the rent, but you can make money on the rentals from than selling them if you've bought in the right neighborhoods. So we have purchased distressed properties in a lot of neighborhoods and lots, and we will be doubling and tripling our income on them just from the sale because of those locations.

Eddie Speed (35:36):

Yeah. So if somebody is listening and they're wondering, that's called a farming technique, right? Like it could be a highway or major streets and you say within that zone, that's my area. And you're just cruising for, you know, yuck houses, right. And or something that needs fixing and that's all a farming technique. So it's an kind of an old school tech, I don't know who you learn that from. I know some old guys and Houston has a long time, but that you don't hear many modern day new guys in the business talking about that, but that is, that's an old, effective technique.

Brian Lauchner (36:16):

And kind of to the other side of the coin, there was a question about how did you find the buyer? How did you pick the buyer? I saw a theme there and I will say, this is really the other side of the coin. There's not a farming technique necessarily here because of the people we're targeting. We call them penalty box buyers. We teach them all about who they are, but this is the underserved part of the community. And here's a little fun fact for you. I did the math on this. This is a trillion dollar marketplace of buyers, a trillion dollar marketplace. There are more penalty box buyers, especially today than there were this time, last year.

Lois (36:51):

Absolutely.

Brian Lauchner (36:51):

And so finding the buyer is not the hard part. You just need to kind of learn how to tailorin that criteria and then the marketing piece that Eddie teaches so well.

Lois (37:00):

Uh huh. Yes.

Brian Lauchner (37:00):

Let me see, we got time for one more question here. Oh, this is about Eddie, you had mentioned talking about some of the the difference between the Rental Cycle versus the Qwner Finance Cycle or the Seller Financing Cycle, Note Cycle. Tell us a little bit about that before we wrap up here.

Eddie Speed (37:21):

Well, I think it's relevant to a couple of things. So the one thing I would that one thing that I say is that from 2015, to around 2019 or 20, we were in a market where you couldn't really go wrong buying property cause it was going to have an escalation in value. And Joe, I totally got your headline while I go about Zillow. And I've heard a lot of other forecast and stuff, but let me just tell you this, I believe the next five years is going to be a lot more of a Note Cycle than a property is going to grow to the sky cycle. Right? And the reason that I say that when a Note Cycle is really good is when buyers, when there's a lot of people that otherwise could get a conventional mortgage that can't, they have a super big down payment and they're super qualified.

Eddie Speed (38:19):

And so we talk about this a lot, you know, as far as the mortgage banking calls it, the Mortgage Credit Availability. And right now that is about 35% of the people that can get a mortgage in February. Can't get one today. So, Lois and Cynthia can take a house and find a buyer with an inordinately high down payment. I know that their case study had where the, because of the variables we discussed that particular case that it wasn't as big a down payment. I can get 10 to 20% down if they can owner finance, that buyer who otherwise were probably just gotten a regular mortgage back in January of 2020, January, 2021. They can't do that.

Lois (39:02):

Right.

Eddie Speed (39:02):

Now. All of a sudden you got a win win. You put, you made home ownership that big down payment has let either let you get some money at closing, or it's reduced your cost base that you can apply, however you want to. So you didn't, you, you could even make theoretically some transactional money upfront running over time, just depending on what somebody's particular model is. So that's why I say that we've entered a Note Cycle is the market is so rich today to do seller financing. And then once again, Brian, you, the next piece of that puzzle is teaching people. Once you end up with a bunch of notes, somebody says, Oh, well, my money's tied up. How do you go recapitalize it? And boom, boom, boom. You just keep climbing that Hill and building your own bank. Hey, let me ask you a question. Would you rather be a landlord or the bank?

Brian Lauchner (39:58):

That is, well, thank you so much. Lois and Cynthia, thanks to Joe and Eddie. Another great NoteSchoolTV. We will see you all next week, again, stick around. We're going to be having these after parties. So join us, hit that notification bell so that you know, to join us and bring your questions so that we can engage with you and have you on the show. We'll see you next week.

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

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michael-hearteyes-wheeler · 6 years

Text

December 31st, 1984.

As Hopper pulled up to Joyce's house on New Years Eve, he was already regretting every having agreed to this. El practically threw open her passenger side door before even he shut the engine off.

“Whoa whoah whoa, kid slow down! Your friends are going to be in there no matter how quickly you get inside now hold on. We need to go over the rules.”

El groaned and reluctantly closed the door again, crossed her arms over her chest.

“Now remember what I said-” Hopper started, secretly procrastinating going inside for as long as he could.

“Yeah I remember! Be good, no powers.” She huffed.

“And?” Hopper raised an eyebrow at her, she had cleverly forgotten the most important part.

“No kissing at midnight.” She grumbled under her breath with an eye roll. Hopper felt the corners of his mouth tug up, she had really gotten the whole ‘bratty teenager’ thing down.

“That right. Now you go on ahead.” He shut the engine off and before he could even pull his keys out, she was running towards the Byers front door.

Hopper chuckles to himself, lighting a cigarette and following slowly behind his adoptive daughter. When Joyce had suggested throwing a small new years eve party, El nearly jumped out of her skin from excitement. Hopper didn't think it was a good idea, but she was already so over the moon about it that he couldn't say no. So here he was, avoiding going inside and preferring the bitter cold. The holidays were always odd and confusing for him, it made him miss Sarah more than he would like to admit, but watching El get to enjoy them for the first time had softened him. This was her first new years party and despite Hopper hating parties, and crowds, and festive normalcies, she deserved every second of it.

El was greeted at the door by an already red faced Mike. She pulled him into a big hug and together they went inside. All of the boys welcomed her warmly, as well as Max who gave her an awkward half wave and a smile. Joyce ran out from the kitchen, holding two glasses of wine and hugged the small girl.

“Where is Jim?” Joyce asked puzzled.

El rolled her eyes and pointed a thumb out onto the porch. “He is being weird.”

Joyce fished a cigarette from her purse and walked outside, wine in hand.

El looked around the house and marveled at how beautiful the decorations looked. While Hopper had put up a small tree in their living room so El could have the ‘authentic experience’; The Byers tree was huge, and had enough lights to illuminate a small town. El ran her fingers through the silvery tinsel that glinted in the multicolored lights, and smiled at the ‘Happy New Years!’ banner that Will had undoubtedly drawn and hung above the couch.

The boys, El, and Max all sat around the living room, catching up and joking. El was only allowed to see them on special occasions, and she loved hearing all of their stories each time they met up. To the boys it was just school, and chores, and annoying siblings, but to El it was a magical world that she had never been a part of.

El and Mikes hands found each others on the couch, and they tangled together making both kids blush. Hopper said no kissing, but not ‘no hand holding’. Mike told El all about the D&D campaign he was working on, and how excited he was for her to be able to play with them when she was allowed out more. El felt a twinge of pain in her heart, she had waited so long to be able to see them, but she had to wait even longer to be able to spend real time with them.

The hours tickled by and before anyone knew it, it was almost midnight. Joyce turned down the music and ran into the dining room, coming back seconds later with noise makers, and party blowers, and handed them out to everyone. She turned the TV to the station broadcasting the Times Square Ball Drop, and everyone gathered around the living room to watch. They were only about an hour away and anticipation was killing them.

“So what are everyone new year's resolutions?” Max asked now that they were only 15 min from the ball dropping.

“Resolutions?” El asked.

“Yeah it means something new you are going to start doing in the new year. Like a promise you make to yourself.” Mike answered beaming at her.

“Well I want to get a real job this year.” Lucas said proudly.

“Im gonna get my top score in DigDug back!” Dustin said sternly, eyeing Max.

“In your dreams!” She teased, tossing a pillow at him. “I'm gonna finally master the Switch Kickflip. I almost have it down and this year i'm gonna nail it.”

“I think I want to actually finish drawing a comic book this year. I have so many that I started but never finished, and my mom just got me a bunch of new colored pencils for Christmas.” Will said smiling over at his sprawled utensils and drawings that covered the coffee table. “What about you Mike?”

Mike had actually given this a lot of thought over the past few weeks. Knowing that El was back, and that she was okay had pulled him from his nearly year long funk in her absence. He wanted to see her as often as he could, but that wasn't exactly resolution he was willing to share. He wanted to make sure she had the best year of her life, but that wasn't really a personal goal. Ultimately he just wanted everything to be okay, and for El to finally live the life she deserved, but that wasn't really something he could just tell everyone.

“Uh... I guess It would be cool to win the science fair this year.” He said, obviously bluffing.

“That's it?” Lucas asked clearly not buying this excuse for a resolution. Mike just shrugged.

“Well what about you El? Is there anything you want to do in the upcoming year?” He asked changing the subject.

El thought about the question for a moment. There were a lot of things she wanted to do in the new year. She wanted to see her friends, to be able to go outside, to meet new people, to experience new things. She wanted to memorize every word in her dictionary, she wanted to watch all of the movies the boys had told her about, she wanted to finally play D&D with them. She wanted to do anything and everything because it was all so new and exciting, and part of her worried an entire year wouldn't be enough time for her to achieve all of her goals. She looked at Mike, and at her friends who all waited patiently for her answer, and it suddenly became clear to her what she wanted most of all.

“I want everyone to be safe and happy.” She said earnestly, feeling slightly embarrassed. She looked into the expectant eyes of her friends and they all met her gaze with warm adoration.

Mike beamed at her, feeling his heart do flip flops in his chest. After everything she had gone through she just wanted everyone else to be happy? He opened his mouth to say something but was interrupted by Joyce yelling at the TV.

“It's almost time! Everyone get ready!” She grabbed Hoppers hand, pulling him into the living room. Jonathan and Nancy joined too, holding their noise makers at the ready. The party stood up, crowding together and staring at the small TV screen as the shimmering sphere began its descent.

5!.... 4!... 3!... 2!... 1!

The room erupted with the sounds of whistling, cheering, clapping and loud rattling. The crowd on the TV cheered too, sounding like a sea of excitement. Jonathan and Nancy shared a sweet kiss, still spinning their noise makers and breaking away in a fit of excited laughter.

Joyce turned to Hopper and grabbed his face firmly in her hands, planting a kiss halfway between his cheek and his lips. He laughed and pulled her into a warm hug.

Dustin and Will pulled the strings of a confetti cannon, sending colorful paper swirling throughout the room. They cheered loudly, batting at the shimmering paper and hugging each other.

In the commotion, Max turned to Lucas, pulling the party blower from his lips and kissing him firmly through a smile. They broke apart and blushed, and for the first time, Lucas leaned forward and kissed her. Her eyes widened and she punched him arm playfully.

All of the noise had startled El at first, but she quickly gave in to the excitement. She stood mouth agape, staring at the floating confetti, it looked like a snowy rainbow. She turned to watch a particular piece of glitter fall and land in Mikes wavy hair. She giggled to see he had pieces of paper sticking this way and that all over his messy locks. He stepped towards her, closing the little space between them and hugged her tightly, still staring into her eyes. She felt a warmth rush over her cheeks, and it matched the redness growing across Mikes face as well. He smiled crookedly at her and lowered his face to hers.

She knew she wasn't supposed to kiss Mike at midnight, but it was worth getting in trouble over. She closed the gap between them and met him in the middle with a soft kiss. It was the longest one they had shared yet, and after they pulled apart they stayed close together, hugging each other tightly as their friends continued cheering around them.

“Happy New Years, El.” Mike said, smiling warmly at her.

“Happy New Years, Mike.” She whispered. El felt her heart twist at the sight of his grin, freckles back-lit in red blush, and loving gaze. He was so pretty, and she relished the moments like this, when she felt truly safe and happy with him.

Now that she got to feel what it was like to be with him again, she knew she could never let that feeling go. No one was going to stop her from being with her friends, not the goons from the lab, not Papa, not even Hopper; Because no matter how stupid it might be, no matter how dangerous it might get, she never felt more safe than she did now; Standing cheek to cheek with Mike, and laughing along with the people she loved most.

1985 was going to be a good year, El would make sure of it.

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