00:00:00:06 - 00:00:17:05

Unknown

Hey everyone. David here. This week we're bringing back one of my favorite conversations with my good friend Eddie Speed. If you're feeling like a bird out landlord or your rental just aren't cash flowing like they used to. This one is more relevant now than when it even first aired. Eddie breaks down why notes can pay you more with a lot less headache with than rentals.

00:00:17:06 - 00:00:38:02

Unknown

So whether you're hearing it for the first time or the second, grab a notebook. Let's get into it. Got Eddie Speed, the note keen on today. He is the owner of Node School, and he talks about if you're feeling like a burnt out landlord or if you're, like, working for a different way to be in real estate other than just having tenants and toilets like this is a great way for you.

00:00:38:04 - 00:00:58:10

Unknown

I think this is a very timely episode, so please listen, enjoy and take something away from here. And warning from someone who has done over 5000 notes and been teaching this for over 25 years and still actively buying 752 000 notes a year, was daddy speed and gain that knowledge and take action. Welcome back to the first hour.

00:00:58:11 - 00:01:15:08

Unknown

I can't we have Eddie Speed back on here today. A good friend of mine excited to have him on. And he's he is the note king. He's gone out there and made himself a name in that industry for years and years now. And he's going to give us good information on that. And Eddie, thanks for being on the podcast again.

00:01:15:11 - 00:01:39:00

Unknown

I am so glad to be here. How are you? Yeah, I'm doing well, doing very well. And I want to ask you now, how are you doing? Because, you know, you know, when we're recording this, elections are still like a month away. And like, we've had crazy stuff going on. So I just want to get an update on you and how the business is going and everything and like, you know, then we can dive into some of the questions that'll help the listeners here.

00:01:39:02 - 00:02:07:12

Unknown

Well, David, our business is up a most quite honestly, most real estate training business is not up because people are training, you know, people how to flip houses. Yeah. And somebody that's somewhat aware knows that there's an issue in that. Rent houses are not good. You're you're the math man. I may be the note king, but you're the math man.

00:02:07:13 - 00:02:37:22

Unknown

Most people show up at school today are people that are that are frustrated with their rentals because they're not making any cash flow, and they're very nervous. Either what they hear about Syndications or they're what they're experiencing in Syndications. Right? Okay, so we had a over promoted business, seemingly. Yeah. And, now all of a sudden the the effects of that are kind of over, all over the place.

00:02:37:22 - 00:03:05:22

Unknown

That's it's arguable most people are that are investing in Syndications. No, there's an issue. Right. Yeah. And so that's that's who shows up at notes. Cool. They're saying, look, can I do something that takes a lot less time but has a lot better reward than my rental property investing? And usually I say absolutely.

00:03:06:00 - 00:03:29:17

Unknown

That's awesome. So do you want to give the actual steps there? The actual insights of note investing versus traditional real estate investing, just so people don't know, this is the first time they're getting an introduction to you don't have to give the so I teach I teach people how to buy real estate, secured mortgages first mortgages. And so you're the bank.

00:03:29:19 - 00:03:50:13

Unknown

You're receiving payments every month, principal and interest secured by a piece of property. So so the people say, well is that a lot. Is that easier than than dealing in rentals? And the answer is I have I've kind of had a saying and I've said it to a lot of really seasoned investors, many of which are mutual friends of yours and ours, and nobody ever corrects me.

00:03:50:13 - 00:03:58:21

Unknown

This is an accurate. I can own 1000 notes or 55 rentals.

00:03:58:23 - 00:04:26:20

Unknown

So there's a lot less aggravation involved in owning a note. And right now I can get a lot higher reward than I can in rentals. Reward as in cash flow or percentage, you know. Yeah. So so let's just do some simple math. Yeah. Okay. I have $250,000. Okay. I like real estate. I can go to my town. Dallas, Texas.

00:04:26:22 - 00:04:34:05

Unknown

Turn 5000, buys me a house that will rent for $1,800 a month.

00:04:34:07 - 00:05:05:06

Unknown

900 of that 50% is going to go out. And expenses, it may not go at the end of every month, but it will. And you and I know that. So for a $250,000 investment, I'm going to net $900, 20 $250,000 investment in notes today is averaging a monthly cash flow of $2,700 a month in note payments. Wow. Okay, that may be two notes.

00:05:05:06 - 00:05:40:18

Unknown

Maybe it's not one. Maybe it's two. Okay, I figure 65 bucks towards loan servicer. That nets me 2635 bucks. So I got 900 or 2635. That is real math that we run literally every day for folks on real examples of real deals. And people say, wow. And all the arguments that go along with rental properties, right? Well, I'm going to I'm going to I'm going to get appreciation and I'm going to get this and I'm gonna get that.

00:05:40:18 - 00:06:08:00

Unknown

And I'm like, you are getting appreciation. You're just getting it now. You're not having to wait. That's really good. You to cash in today where a lot of people are waiting for the the some day I have had more students. I have had more students. Yeah. In the past 18 months that have converted their rentals to seller financing than I've ever seen.

00:06:08:02 - 00:06:45:12

Unknown

I started doing this in 1980. Right? Yeah. I've had more students in the last 18 months convert their rentals to seller financing. And I mean, and I think, you know, this, David, like people that are like operators, like not little guys with three houses necessarily. I've had that too. But I mean, guys with 250 houses that have converted their whole portfolio to cellophane AMC and they kind of got down the road with me on this and they started realizing and, and and I've said this to you before, David, there are there are rental cycles and there are no cycles.

00:06:45:12 - 00:07:06:01

Unknown

And the only thing that I think we have to remember, no market is going to be absolutely the same for ten straight years, right? There's going to be a disruptive time. There's going to be this there's going to be that. And I'm not saying it's never happened in notes. Of course it has. But I'm saying to you. We're in a note cycle.

00:07:06:03 - 00:07:24:15

Unknown

And as long as we have inflation that is impacted, the the income of rentals, which is about 60% increase in expenses, right, compared to about 20% increase increase in rents. Right. Well, that's not good math. No.

00:07:24:17 - 00:07:57:03

Unknown

And so for that reason it it's the in on the same $250,000 house people's mortgage payment will be excessively more than their gross rent payment. And gross rent means if you're the landlord, you're netting half of that. Right. So all of a sudden easily the cat the number are two and a half, three times net income of rent versus owning a note two and a half to three times more income from notes.

00:07:57:05 - 00:08:00:11

Unknown

And so.

00:08:00:13 - 00:08:23:16

Unknown

It's easy to be the note king when things are like this. Right? Right. Yeah. And I and I've been doing it a long time and I've seen it. But but you know, you and I discussed this. I could see this cycle coming. Experience does matter when you're trying to read a market. So we weren't shocked when we got here.

00:08:23:18 - 00:08:48:12

Unknown

Now all of a sudden you've got bigger pockets and John Burns and all these people essentially saying the same thing that I'm saying. But we knew it before they wrote it, and I'm not disrespecting them or their knowledge or their vision. I'm just saying, this is what we've done for a long time. And we're at we're kind of we're in the middle of these deals and we see what the results are.

00:08:48:14 - 00:09:14:21

Unknown

How have you stayed in note so long when there are different time periods, like rental time periods and no time periods, but you've you've stuck with notes. I feel like the entire time. Well, I have, but once again, I've used real estate and creative finance in certain cycles. And right now I don't want you couldn't pour a rental on me right now, right?

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Unknown

For the reasons that I just said. Yep. And, you know, there is a there's a there's kind of a funny saying, you may have heard this real estate investor says, I want to be a note guy when I grow up.

00:09:31:04 - 00:10:00:20

Unknown

It's I didn't make up to say. And it's been said back to me many times. And, you know, look at look at what most hard money lenders background is. What were they before? They were hard money lender. Usually a real estate investor. Exactly. Yeah. But I like my business better because my notes get better in six months. If you're a hard money lender, you get paid off in six months and now you got to go find the next perfect deal, right?

00:10:00:23 - 00:10:22:02

Unknown

My bill lasts for a long time, so once I make a good decision and find a good note, I just put it to bed. Yeah. So, so I, I like I like that matter. Yeah. No, that's that's good. So you say when you find a good note, what makes a good note to you?

00:10:22:04 - 00:10:52:16

Unknown

Here's, here's the, here's definitely the pattern. Good properties create attract good buyers which create good notes good properties to good buyers. These equals sticky payments. You cannot sell a crappy piece of property somebody and expect to have a good note. Yeah, right. Oh believe me there's there's there's lots of them that tried. Right. And the land gurus haven't necessarily helped us in that regard in this industry.

00:10:52:20 - 00:11:31:22

Unknown

Right, right. Because not all land that they're dealing is and is really useful, valuable and. Right. Yeah. But but but I start out with good properties and land in houses, and I bought tens of thousands of notes on both. And then that lets me attract a good buyer. And when I sell them that property, David or I or whoever, I've kind of helped configure and make a note to sell them that land, that property, their dreams are going to become true on that property where they have their family there, whether it's their weekend places, land, whatever that may be.

00:11:32:04 - 00:12:13:02

Unknown

There's a use, there's a value to that land, and then I can attract people with a good track record and the ability to pay a loan back. Right. So, you know, I have helped a lot of real estate investors manufacture notes, right. How to the formula of how to make good notes. Right. And then from there, then now of a sudden, once they've kind of followed, you know, an underwriting box, then all of a sudden they can bring that note to, to someone like me, and I can buy the note and buy it away, lesser discount than a loan that they may have tried to configure on their own without any guidance.

00:12:13:08 - 00:12:44:06

Unknown

Right. Yeah. Kind of like your book, right. It's kind of a formula, right? Yeah. It's a formula I like. Yeah. And so that's how I, that's how I find inventory. That's how I find the nuts. Then I go help somebody that doesn't want to be in that grind every day. And then I say, I can help you find notes, because I've built a marketplace of people manufacturing notes to my specifications.

00:12:44:11 - 00:13:10:02

Unknown

That's kind of my ultimate desire. Yeah. So that's how you get a beginner into it. It's you've built a marketplace and you're teaching them the first steps, especially if they have a portfolio already. Because like you said, it doesn't matter. You've got three deals. If you've got 250 houses in your portfolio, it's like you can start taking those first steps and you've built a community even, you know, to help people on that route and to help with the whole process.

00:13:10:07 - 00:13:17:18

Unknown

Node school I've kind of figured out, note school is a home for burnout landlords,

00:13:17:20 - 00:13:41:23

Unknown

They come to you and they they're able to convert a lot of their rentals into these, into the notes. Or they've had rentals and they now they have some cash and they're saying, I don't want to go do that again. And so they're investing in notes because it's lot less aggravation. They have a lot better cash flow. And oh, by the way, in note in investing in notes has a cushion that rental properties don't have.

00:13:42:01 - 00:14:13:15

Unknown

Yeah. You say a cushion. Yeah. So if you invested that $250,000 in a rent house, the rent house is worth 250,000 and you invested 250,000. That's not a cushion. No there's not. You're straight on the concrete. Right, right. Yeah. Okay. But when I invest $250,000 in notes, my collateral is worth far more than 250,000. What I paid for the notes.

00:14:13:21 - 00:14:44:10

Unknown

Yeah. So I have a baked in cushion that maybe the collateral is worth 350. Right? I have a cushion on top of what I paid for the notes. God forbid something goes wrong, you know, then I'm not likely to go lose my principal. So aggravation. You know, of rentals, not good cash flow on rentals and no cushion of rentals compared to what I like, which are better cash flow, way less work.

00:14:44:13 - 00:15:02:21

Unknown

And by the way, catastrophically there's cushion. Yeah. And then you've created that marketplace where you can also bring people that are looking to sell the notes too. So if you've got a burnt out landlord, then they've got that cash then, because I feel like that would be one of the biggest questions is where do I find these people?

00:15:02:21 - 00:15:26:06

Unknown

Or where do I, you know, find a good note. Yeah, we we know in having this look, we've, we've had a school for 25 years. We know what people want. They want, they want us to tell them what we've learned, a compression of time. They want us to give them a risk management blueprint. Like. Like what decisions do I make?

00:15:26:06 - 00:15:57:01

Unknown

That's the most likely chance not to cause a problem they want to do. They want their time back. And then then they're like, oh, Eddie, what if you helped us find those? What if you helped to survive weight notes? Like, that's what people want and that's what we've morphed into. We didn't always have that. I didn't I wasn't always, I thought forever if I'd been doing something for 20 or 30 years, surely if I just told you what I knew in a condensed version of explained it to you, you'd say, that's great, and go run off and go do it.

00:15:57:03 - 00:16:21:12

Unknown

But let's be honest about it. That's that's not that's not what most people want. And you'd be shocked, David, at some people that you and I mutually know that have come into our cycle. And it's not that they're not experienced. They're crazy experienced. Yeah. They just want their time back.

00:16:21:14 - 00:16:26:12

Unknown

So then this helps them get their time back.

00:16:26:13 - 00:16:38:12

Unknown

That's what people want. Yeah I mean listen where's the sunset in the landlord.

00:16:38:13 - 00:17:01:13

Unknown

Right. The never ends. Well I mean you've been around it much as I have in that regard. You you and I know all these hotshot folks and and and and so when the, so when the market was going up in 2020 and 21, quite honestly, people would just put up with anything because the real estate was going up so much in value.

00:17:01:14 - 00:17:41:12

Unknown

Yeah. Now our markets flat essentially, and they're not going up and they're not cash flowing. And the tenants didn't stop calling them because they weren't making the landlord wasn't making any money. So those are the reasons that, you know, what becomes the best thing to do in the market changes, probably. Right? No. And I like that that you've built this community and especially how you've identified, you know, it's the usually the burnout landlords that we're working with because they've got either the problems with the market dips and they're looking for a different place to either put their money or to convert their portfolio or do things like that.

00:17:41:12 - 00:17:58:06

Unknown

So it sounds like you've really honed in on who you're able to help and really help you know, and help them in their in their investing journey. And like you said, grow up in their investing journey. Go from real estate investor. When I grow up, I want to be a note, you know, no investor in a note holder.

00:17:58:06 - 00:18:17:03

Unknown

So I like that you've kind of helped them on their journey and you know exactly what they're going through. And you've been doing this a long time, 25 years at Node School and helping people. Like you said, you know exactly what's going on on not just both sides, but like, you know, like a 21 sided dice, you know, like you've you've seen everything.

00:18:17:05 - 00:18:37:18

Unknown

You know, they even we've we train all the time. Yeah. Live virtual all kind of stuff. Right. The people that are on here today, if they want to come to a master class, which we do charge for masterclasses, but we're we're going to give them a ticket to a masterclass, you know, and we'll talk about that at the end.

00:18:37:18 - 00:18:59:01

Unknown

But yeah, we'll give them a ticket to the master class. And then on their guess what we're going to ask them, we're going to ask them some questions. Yeah. In the master class to give us a sense of what life looks like for them. We're not just sitting in the ivory towers thinking about how life affects us. We want to know how life affects them.

00:18:59:01 - 00:19:17:07

Unknown

That's how we figured this stuff out. If you have a class or if you're if you're working with people, trying to help them, you know, David, you got to ask them all the time, what's your world look like? Right. That's how we that's how we figured out we know what the market is. We know what notes, notes can do.

00:19:17:09 - 00:19:40:06

Unknown

But we needed to know what was, because let's be honest about it. When do people change? When the pain is greater of not changing, you know. So that's. Yeah. Well that's good. And I like how you do that. You set them up for success for themselves and not the ivory tower. And just here, let's force feed you. You know everything.

00:19:40:06 - 00:20:00:12

Unknown

I know it's more of like, collaborative. Where are you now and what's going on? And how can this help you get to where you want to go? That's so. Yeah. No, I like that a lot. What else about notes did I not ask you that we should know about before we go into the masterclass and how people can, you know, take those next steps of learning this, especially in this market?

00:20:00:12 - 00:20:17:00

Unknown

I feel like anyone who's on this podcast would probably be a great candidate. You're listening to this to at least get into Eddie Speeds world and know about notes and go to a masterclass and figure this out. So you've got a great tool in your tool belt that could maybe overshadow every other tool you've got. But first, what have I not asked you?

00:20:17:01 - 00:20:42:08

Unknown

What would you like to get across that I haven't asked? What we're really good at at a second level is showing people how to use leveraging techniques with mortgages so that when you run out of money and you will when you run out of money. How do you how do you go stretch your dollar out? How do you go be able to continue to buy when you are going to do some leveraging techniques.

00:20:42:08 - 00:21:08:20

Unknown

And so we're really we've gotten really good at that is something that we've practiced a lot. And we show people techniques with pretty amazing leveraging strategies with what that that bill wealth and and that can also build cash flow. And so, you know, the thing is, you know, that's also because that's what's going through their head. Well, I mean, if it is going to teach me at about 1000 mortgages, I'm going to run out of money.

00:21:08:21 - 00:21:28:06

Unknown

The answer is, yep, you likely are, but we've already figured that out, too. You know, I bought 5000 notes, right? Right. Yes, that's what I figured out. Buying 50,000 owner finance notes. What have you figured out? Everybody runs out of money. That's a good one.

00:21:28:08 - 00:21:48:06

Unknown

So? So then you help them with that. So then what are the what are the best strategies once you run out of money to not just go give up my future? Like, I mean, okay, I create a cash flow of notes and now I'm just going to go sell it at a discount. Right. Well, is there another way to do it that you don't get clobbered?

00:21:48:08 - 00:22:15:21

Unknown

And the answer is there are some of those techniques. And the reason I bought 5000 notes is I became really good at helping real estate investors with those type things. Right. That's why I created environment where people would come back to us over and over because we became good at financial modeling, showing them how to go, not how to go recapitalize their portfolio without getting clobbered.

00:22:15:23 - 00:22:38:20

Unknown

Okay, now I love that because you've thought of all the different things are going to run into. And here here's how you combat this. Or here's the workaround, or here's the next step, you know, to get to where you want to be. That's why someone if you're listening to this, someone like Eddie, someone who need to fall because he's not only teaching this, but he's got the experience of 50,000 notes teaching for, you know, several decades here.

00:22:38:20 - 00:22:55:14

Unknown

It's like, that's where the real education comes in from someone who's been in the trenches who is actually doing this, and you still do this. This isn't like you've stopped doing this, and now you just teach it full time. You're still buying notes and you're still out there in the game yourself. Correct? Oh, we have a very active note buying business.

00:22:55:14 - 00:23:15:22

Unknown

If you're creating notes, then we would love to connect with you and see if we can work with you and buy your notes. So our goal is to buy, you know, 750 to 1000 notes. You know, this year and yeah, you know, so we're we're very active in the business. We're not, what do they call me, a deux Rue.

00:23:16:02 - 00:23:34:13

Unknown

A dude versus a guru, right? Yeah. You're right. You're doing the thing, not just teaching the thing. So I love that. That's really good. So then talk about the masterclass. How could someone get signed up if they want to at least learn and understand if they're a burnt out landlord? How do they how do they get in there so they can understand what the next steps are?

00:23:34:15 - 00:23:59:05

Unknown

So yeah, we I want to give them I'm going to give them a special lane to go down. So that your, your audience can, can just join the master class with us. I'm going to give it to to them. Oh wow. Note school.com/profit first. Right. Yep. So that's that's the uniqueness. And it's going to take you to a landing page and you're going to register.

00:23:59:07 - 00:24:26:11

Unknown

And for that and it's about two hours. And I teach it along with the guy that runs my marketing who you know very well, Max. Yep. And he is a very inquisitive soul. And he has really, really helped us develop training that answers the pain that our customers feel. Yeah, he has a real heart for that really good guy.

00:24:26:12 - 00:24:49:13

Unknown

And, so it's fun teaching it with him because yes, I'm a note guy and whatever and stuff, but he knows like he has a real connection with the emotional side, like how they're feeling. Yeah. Like, you know, like and there's some spooky stuff out there, man. Yeah. We're kind of in the spooky time. Yeah, 100%. And,

00:24:49:18 - 00:25:13:17

Unknown

So I think it's really good. It's about two hours. It's it is like really informative masterclass. Like, it's, it's it's very packed for two hours. Like, I, I'm not sure we could literally pack much more into it. Nice. Yeah. And so there they learn the foundation of nodes. They've learn. You know how to get into this. And next step from there we show them examples of different things.

00:25:13:17 - 00:25:38:01

Unknown

We show them the financial modeling and notes we apply it to, you know, you know, different areas in the business. And then we really talk about, you know, because what we want to do help somebody figure out is our notes are fit for you. Yeah. Right. And if they're not a fit for you, it's not good for us to go try to train you into doing something that's not that's not suitable for you.

00:25:38:02 - 00:25:59:17

Unknown

Right. And then but we talk about if it is a good fit for you, like how would you do it? And would you give up all your real estate investing business, which is no right or right? Do you do you not want to do real estate investing? Do you do you not want to grind as much? Do you want a more passive thing like so lets us kind of catch different people in different life situations?

00:25:59:19 - 00:26:19:15

Unknown

You know, it's not just one door to go through, so to speak. Right? Yeah, that's really good. And that was note school.com/profit first. That's yeah. If you want to go there you can get into that masterclass and see what it's all about. See if it's for you especially if you're a burnt out landlord. If that resonates with you go there and at least see what.

00:26:19:17 - 00:26:38:18

Unknown

See if he can help you, get you to that next level and become a note investor. And learning about that from the master himself and Max. I highly recommend Max to. I know Max very well personally, and he's a good human being, just like you said. So highly endorse both those guys teaching you about that. Now, Eddie has a last question.

00:26:38:20 - 00:27:01:16

Unknown

What's just best advice that you give a real estate investor, someone listening to this that you'd want to get out there in this, you know, this time? David, if I when I answer this, I did not know you were going to ask me this question. When I answer this, I answer this every time I'm asked. And that has nothing to do with the guy that's a fractional CFO.

00:27:01:18 - 00:27:16:01

Unknown

Like nothing. The biggest, the biggest stress to my business and the biggest loss to my business has been poor accounting.

00:27:16:03 - 00:27:40:12

Unknown

And I am a gigantic fan, as you well know, of what you do today, because I now feel like I'm squared away with my numbers and I, I would I think most real estate investors start out not squared away and note guys included. And then all of a sudden we get a bunch of accounting stuff. It messes us up and we can finally dig our way through it.

00:27:40:14 - 00:28:00:20

Unknown

But man, get your accounting straight. There's nothing more important than that as you start making money. Well, there we go. That was I definitely endorse that message. So that was good stuff. Get your numbers in order. You don't know your business if you don't know your numbers. So I really like that. It's good stuff. Eddie, this has been awesome.

00:28:00:20 - 00:28:19:18

Unknown

Thank you for sharing your wisdom. And if you're listening to this, number one, go to school.com/profit first to see if go to note school. I go and learn from the master and then see if that's right for you. I think for a lot of you, if you're in this turbulent time, it is right for you. We're in the note period, you know, not the rental period.

00:28:19:18 - 00:28:42:21

Unknown

So really like that. Number two, if you're just if you resonate with what Eddie just said about what the heck are my numbers doing, I have no idea what's going on on my finances, the accounting. That's all messed up. We can help you with that at simple cfo.com. We'd love to help you get all that squared away and have you just going out there and buying the deals and buying the notes, and we'd love to make sure that you're actually making money on the back end and then keeping it as well too.

00:28:42:23 - 00:29:00:13

Unknown

Eddie, thank you again for sharing your wisdom, your knowledge, and for coming on and being a great guest. Great to see you. This episode of The Profit First for Ray podcast is over, but there are plenty more where that came from. Are you ready to learn how David and his team can help implement the profit first system in your business?

00:29:00:15 - 00:29:09:05

Unknown

Schedule a discovery call at simplecfo.com right now. We'll see you next time on the Profit First for Rea podcast with David Richter.