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.
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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.
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