Brian Lauchner (00:01):
What do Eddie speed and Brad Pitt have in common stick around and find out.
Brian Lauchner (00:17):
Well, other than being incredibly good looking, as they say in the movie Zoolander, there are some other differences in some other similarities that we really want to talk about today. And I think you're going to find quite interesting. But before we even jump into that, let's cover a couple of different items. First of all, welcome to NoteSchoolTV. We're back again on Wednesday at 11:00 AM central. If you are somebody who's wanting to engage with NoteSchool and learn more about creative financing and notes, man, join us every single Wednesday here online at 11:00 AM central, we're going to be shooting this live. And so this is not a recorded thing we're actually live so that we can actively engage with you. Leave comments as the live stream is going. And we're going to be able to pull those comments up when we can actually respond to a few of those things.
Brian Lauchner (01:04):
If you're brand new to notes, brand new, even NoteSchool and you're just trying to figure out how do I really take that next step and learn a little bit more. You can go to www.NoteSchool.com/TV to get engaged a little bit further and kind of take that next step on this journey. If this video is of value to you. If you're getting some good content out of the stuff that we're putting out, please like these videos, it does a lot for us. We'd love for you to subscribe to the channel so that you're getting more and more content coming your way. And probably more importantly for this show NoteSchoolTV. If you will click the bell notification, it will actually notify you when we go live so that you can jump on, bring your questions to the table, engage with us while we're live here on this show. And so it's going to be a great show today. We're going to kick things off, but before we do, let's get into the news.
Joe Varnadore (02:05):
Brian, how are you?
Brian Lauchner (02:06):
I'm good. We've got our Florida correspondent, Joe Varnadore here. How are you doing?
Joe Varnadore (02:11):
You know what I'm doing? Great. And man, it has been in the low forties here over the last couple of days. So we've been freezing down here, man.
Brian Lauchner (02:22):
That's freezing for Florida huh?
Joe Varnadore (02:22):
Well, it's been pretty nice, not a cloud in the sky and about 50 degrees during the day. So we we have some, a couple of great breaking news stories here, Brian. So I guess we can jump right into that. Right?
Brian Lauchner (02:37):
Let's do it.
Joe Varnadore (02:39):
All right. So the first story this morning is from DS news. So DS news says how foreclosure wave could impact the housing shortage? So, you know, guys, we've talked about the foreclosure moratoriums here, how it was moved from the, of December to the end of January and then to the end of February. So eventually these moratoriums will go away, right? So what's going to happen? Once that does, is there going to be this wave or this surge of workload your activity in the industry. And the article here in DS news also quotes research on Redfin talks about that very thing. Yes, there will be a wave of foreclosures going through. And actually as far as the numbers, it says the Redfin study shows that 3.8% of homeowners are in have a fear of a foreclosure. Whereas, and this is the big number, Brian, right? 13.5% are actually delinquent, right? And the crazy thing about this is most people that are in forbearance don't really know whether they are going to just be able to throw their payments that they missed onto the end of their loan.
Joe Varnadore (04:13):
And, or they're going to have to write a check at one time for the payments that they've missed. So depending on if you have a loan that is guaranteed by one of the GSEs government sponsored entities like Fannie Freddie, Ginnie which is the FHA and HUD. So there's a lot of confusion out there, but there's going to be a surge. And again, I think we told you back in December that we would we're going to be on top of it. And yes, a lot of interesting things that are going to come to be. And then, excuse me, secondly pending home sales, and this is from MarketWatch pending home sales fall for a third straight month as buyers struggle to gain traction. And you know, there's only, and this is a, this is from December 30th, which was about a week ago, and this is the report for December.
Joe Varnadore (05:08):
We have our, for November, we haven't received the December report at this point, but the report just basically says contract signings for home sales fell for the third month in November, another indicator of challenges for prospective home buyers. And basically the index for pending home sales dropped 2.6 in November after declining in both October and September. And this is from the NAR National Association of Realtor. The index is a measure of real estate transactions, which the contract is signed, but the deal has not yet closed. And again, it's just, it's that shortage of inventory that of saleable properties that are for sale that are out there. And that just continues to make it more difficult for home buyers to go out and find a home. So those are the two big stories for today. So what do we have up next, Brian?
Brian Lauchner (06:08):
Man, we are going to bring on our fearless leader, Mr. Eddie Speed.
Joe Varnadore (06:15):
Yeah.
Eddie Speed (06:16):
Well, good morning everybody.
Joe Varnadore (06:19):
Good morning.
Eddie Speed (06:23):
How are ya?
Brian Lauchner (06:23):
I'm doing great. I know Brian is, Brian's always great, man.
Brian Lauchner (06:27):
That's right. And what we're going to do is we're going to go ahead and jump into kind of a special thing that we've got going, and Joe's going to share a little bit more with us about kind of some similarities. What does Eddie Speed have in common with Brad Pitt? So I'll kind of hand it over to you guys and let's see where it goes.
Joe Varnadore (06:45):
Well, so gosh, it was a little over about a year and a half ago. Eddie pinned a new book and it's, what's called a whole new ball game with creative financing, right? And this really came from the book called Moneyball and it was written by Brad Pitt and Jonah Hill. And it became a great movie. So let's look at the difference there, Brian, between between Brad and and Eddie. And we'll get that comparison. They're both, you know, just great looking guys, but they both had, they both had a vision of what it really took to survive in an industry with the Billy Bean, being the coach of the Oakland athletics and looking at the metrics, right. Looking at the metrics to improve the Oakland athletics, winning record, and then what it was going to take for people to survive with creative financing in the real estate world. So Eddie, why don't you tell us a little bit about about what that inspiration was after seeing the Moneyball movie?
Eddie Speed (08:07):
Well first of all, I am no Brad Pitt, but I will say Brad Pitt doesn't know as much about creative financing as I do.
Joe Varnadore (08:13):
I would agree.
Eddie Speed (08:14):
And that's just a wild guess, but I'm just saying, All right. So I had been, I had made this a real like a number one focus of mine for the last couple of years. And one night I was, it was kind of late and I had all this on my mind. My mind was racing, which happens sometimes at night. And my mind was racing and I was thinking about, and I was thinking about like a conversation I'd had earlier that day. And it says, Eddie, what is it that you're teaching real estate investors? This was a real estate investor, pretty sophisticated group. And they said, give us a distinction. What is it you're teaching? And I went through and I gave some analogies and stuff and they nodded their head. Okay, we get it, that's cool and stuff. And now all of a sudden I was kind of channel surfing that night. And I was thinking that really, I didn't really describe, I didn't really distinctively describe exactly what it is that I teach. So I was channel surfing on the cable. I'm looking at all these things. I hear channel surfing now being on YouTube all the time.
Eddie Speed (09:30):
I still just have a regular TV and stuff too. And I was clicking on there and stuff. And all of a sudden, boom, I looked at and there was this movie going when it was called Moneyball. And I've seen it many times and I really like it. And I just was sitting there just kind of watching the movie. And I don't know, it was maybe into it, 30 minutes or something. And it was right in the middle of where he was really, people thought he was a nut, right? Because he was looking at baseball and firing the highest paid players and looking at statistically how he could take a much lower paid player. I have been misquoted or I have misquoted, no, no, no. I have misquoted in the past and said they won the world series. That's not actually true. They did not win the world series, but he took the worst team in baseball and took them to the playoffs.
Eddie Speed (10:22):
And anyway, long story short, the world series champion that year, which was the Boston Red Sox, did try to hire him by the way. And that he changed baseball. So what does that have to do with real estate? It has everything to do with real estate, because what I realized that what I do and what we do at NoteSchool is we just take a different set of eyes to look at how to look at a real estate deal. Most of us look at a real estate deal under at least one or two sets of eyes. First one is buy low, sell high. How many times have we been to a closing at a title company? Or been to a real estate event? And you're sitting around having coffee or sitting at the bar or having dinner, or just in a conversation. And you're telling your best real estate story that's just happened to you.
Eddie Speed (11:17):
And what happens is in your best real estate story is you say, I bought a property for X and I sold it for Y. And that's the punchline that says how much you made. And I'm going well, what if you couldn't buy it at a bargain X and sell it for a maximum of Y and words? What if the Buy low sale was not, wasn't a big margin? Well, that wouldn't make a great story, right? So I said, well, what we're teaching people to do is the way you configure financing has to do with the opportunity. Now, let me just tell you something. This market is weird. Joe talked about a book we wrote a year and a half ago, and we rewrote the book. Now look at the baseball player with a mask here, Joe, you see?
Joe Varnadore (12:14):
Yeah.
Eddie Speed (12:15):
We did it post COVID because all of a sudden it, I didn't want it to seem irrelevant. Some of the same concept of the same, some of the same concepts are different. In the first chapter, I talk about this ain't my first Black Swan rodeo. And what that means is pretty much this. You may look at where we're at right now and say, Eddie, you're confused. It's not a black Swan, real estate is escalating in value. There's a shortage of listings. There's not anywhere a smell of a problem in residential real estate. Why are you saying Black Swan? And I'm saying black Swan, because, that's why we come out on a regular, regular, regular basis, including my end of the year state of the industry. And you know, talk about where the market is? The question is what's a Black Swan, a Black Swan is the unexpected element that enters the market, right? You can look at, you can look at the virus as being the ultimate Black Swan in entering the, the economy in the United States or in really in a lot of parts of the country. And so it's the unexpected it's like who could have predicted that? Well, most everything I've seen in the 40 years I've been doing this has been nobody really predicted all the things that would happen.
Eddie Speed (13:48):
I've called this market we're in a crash in slow motion, right? Meaning that while everything on the surface, it really looks good. There's a lot of underlying variables and I've tried to define things. And in the book, I talk about what to search for, where is the underserved market? Where is the pain in the market and how do you fix the pain in the market? Right? So this, the introduction kind of lays out like what I've seen in the past. And we're there because it's a good search mechanism so that you know, what you're searching for.
Joe Varnadore (14:26):
And, you know, Eddie, it's one of our big mantras this year, since the, since March of this year has been.
Eddie Speed (14:33):
Of last year.
Brian Lauchner (14:36):
Oh Yeah. Has been, I don't have a crystal ball, but I do have a rear view mirror. Right. And that's where this Black Swan thing comes in. Right. And then, you know, so what we, you know, we just have to learn from what we did in the past, and we move forward.
Eddie Speed (14:54):
Listen. And the reason I develop the Creative Financing Training that I developed was to show real estate investors, how to buy in hyper competitive markets and have a market advantage. So if you're looking at creative financing and you say, well, this is going to be a great tool when, and if the market crashes maybe Eddie's right. No. This is the, this creative financing, think in terms of it is just simply showing you how to dig into the trashcan as a real estate investor and find the leads that they would not accept your deep discounted offer and go make another offer, but offer to pay for their property at their price on your terms. Right? And so that's really critical. It's like, people don't wait for it maybe Eddie's right. Maybe the market does have an adjustment because of, you know, the forbearance and delinquent loans and burnt out landlords and all that price.
Eddie Speed (15:55):
But the key is you can go apply this right now because I developed this strategy because real estate investors only had one strategy buy low, sell high. And I said, Oh my God, we've gotta you know, a pitcher needs one more than one pitch, right? We got to have another way to approach our customers. And by the way, if you're listening to this and you're thinking, well, Eddie's talking to all these big time real estate investors that he hangs out with in these Masterminds. Let me just tell you something. I can take somebody guarantee you, I can take somebody that is not a big time house buyer, but we can teach them this strategy and they can go partner with a big time house buyer. They can be his outsourced, his outsourced acquisition. When the buy low, sell high offer didn't work, then they can go work a terms offer. And you're saying, well, the big time real estate investor doesn't need me wrong, Kemosabe. They do. And we've discovered that they do. And we have, we now have put a big emphasis in showing NoteSchool , train people of how to go find and work with those real estate investors because they need you, right, Joe.
Joe Varnadore (17:13):
Exactly right. Well, and everybody needs, and you know what, you're talking about the pitcher with the different pitches, but we also have, you know, the catcher who is right there at the base guiding the pitcher as to what to do. And that's kind of, you know, you may be the pitcher, but with the catcher calling the calling the pitch, right. So that's the piece of that really gets, that makes sense to the real estate investors for sure.
Eddie Speed (17:37):
The second part of it is in the second chapter of the book, I kind of address what I felt like has not been addressed. You can go to any market in the country, it could be a market of a hundred thousand people, or it could be a market of 6 million people. Right? You can go to any market in the country, you can find a percentage. Usually it's the most seasoned real estate investors. And you can find a percentage of them that go like, Oh yeah, yeah. I know what that Eddie Speed talking about terms, I make my own terms offers. And so what we really had to go figure out was what was a generic way of doing it and what was a real creative way of doing it, Right? And I can tell you from experience that I've now coached a lot of real high volume, old seasoned real estate investors into these terms things, and those terms just tend to get better.
Eddie Speed (18:35):
They just tend to get better and better and better. So the other thing is when I look at the, when I look at it like people say, well, does that mean that the seller always has to own the property free and clear? And he has to seller finance a hundred percent of the price of the property. And the odds are almost never, almost never. In fact, we are going to use seller financing and private lending and maybe an existing mortgage and more oftentimes than we're going to use, just use just the seller care. We do have case studies like that, but that is not always the case. And so the idea is, is it what if creative financing is just on a sliver of the deal? What if these, what if you just didn't creative financing, 20% of the deal instead of a hundred percent of the deal, can you make that work chapter two digs off into those concepts?
Eddie Speed (19:38):
So the first coup, we're talking about the first couple of chapters today and I'm just trying to give you a sense of it's more opportunistic than a lot of people think on the surface. No rich people think, well, that's a really cool idea, but I'm not sure I could apply that. Joe, I'll tell you this. If I were buying a house from you this afternoon,
Joe Varnadore (20:02):
Right.
Brian Lauchner (20:02):
And we were stuck on price and you wanted a hundred and I wanted to pay 85, okay. I could get you to carry a $20,000 second lien.
Joe Varnadore (20:17):
Right.
Brian Lauchner (20:17):
We paid him 80,000 in cash, which gets you to your price. And you're going to carry a second. You're not carrying a first mortgage. I could then go get even a hard money loan for the first lien, right? The hard money loan would be temporary. It would only be a six month loan, but the seller finance note that I got you to carry, it could be a 20 year note, Joe. In fact we had your note and I don't even make a payment to you or interest for the first 10 years.
Joe Varnadore (20:48):
That's right.
Brian Lauchner (20:50):
Oh, that's how he can overpay.
Joe Varnadore (20:53):
That's it? It's your chalk and your chalkboard, as we love to say. Right? So it's really, it's understanding these terms, Eddie, it's understanding, you know, not to point a phrase there from our president there, but it's the art of the deal, right? It's the art of deal making and putting that together. Yeah.
Eddie Speed (21:14):
So this has really been a fun project for us. We have Joe and I have had so much fun learning this with our students and really then getting to go play full out and go do this with them every week. So we modified the book and I know you've got the link there, Joe, that they can do it, but we modified the book and it is a post COVID book. And I know that we'll put up the screen there and they can show how to get it. www.NoteSchool.com/Moneyball. And that's you just go download the book, go read it.
Joe Varnadore (21:53):
It's a great read. And so Eddie, what we're doing is, so we've, and you guys will have this as some context for next week. So we've covered the first couple of chapters next week. We're going to go over chapters three and four, be a healthier investing by bridging the gap with seller financing, and then chapter four, be a healthier investor by negotiating the terms. And, you know, that's like, we, you know, we tell every one of our folks that, you know, there's more than 50 terms that we can teach or 50 different ways to do a deal, probably more than that, but we have to be realistic right? As to what we can do and how we structure the deal. And it's just, it's, you've just got to open your mind and accept the fact that yes, sellers are willing to do seller financing on their deal. Right. We know that.
Eddie Speed (22:42):
Moneyball.
Joe Varnadore (22:43):
Moneyball.
Eddie Speed (22:46):
All right. Well, that's Brian, I know that we want to make sure that we left time for you and anything that you would add to what we've said?
Brian Lauchner (22:58):
Yeah. I think what's really important. And someone had even made a comment about this. Andrew had that typed in on Facebook while you were typing. I thought this is a really great thing to build up because he says, how do you build credibility with banks in order to approach them to buy notes? And I think this is actually the perfect thing to bring up right now, because this is the traditional way of thinking, right? Eddie was just talking about with looking at the problem through a different lens, instead of using the banks, excuse me, where we always have to agree to their terms, right. They dictate the payment, they dictate when it's due, they dictate what the interest rate is, all these different things. What if we didn't use the banks, but instead we use the actual sellers besides how many appointments are you having a bank on a weekly basis anyway, right. Compared to how many sellers are you talking to in a week, if you're a full-time real estate investor, especially. So there's actually more opportunity if you'll look through a different lens and that's really what Eddie's hitting on.
Eddie Speed (23:57):
Well, and once again, Andrew's asking about buying a note and we're talking about buying a property in getting the seller to carry a note. It's kind of like the difference between the pizza and the salad. It's just not the same dish. Right? But the answer is Andrew. I have had a lot of experience doing that, and we're not covering that today, but it is something that we cover a lot over time.
Brian Lauchner (24:21):
And I'll say this, Andrew, you're not alone. I think it was sometime last summer that I literally was talking to Eddie about this same thing. So it's a, I'm telling you, it is such a common question. Stick with us, get engaged and start to just, you just got to hear it over and over again. It'll start to sink in and you'll start to see things through a little bit different of a lens. And I think that that'll really help your business quite a bit. So and Cindy just commented here on Facebook. She said, Eddie has a platform where you can buy notes. And that's a perfect segue because NoteSchoolTV is sponsored by NotesDirect and the Feeding Frenzy Friday.
Brian Lauchner (25:16):
That's right. The Feeding Frenzy Friday is a playlist we have here on the NoteSchool channel that you can simply go to and kind of check up, check out different videos that we've done each week. We break down a note from NotesDirect, which is a platform you can buy a note as easy as you would buy something on Amazon, right off the internet. By clicking a button? But you, what you want to do is you want to be able to develop that skill set, learn to master the due diligence and build your confidence in what kind of notes look great for you. In fact, this week, we've got a really special one coming up. I think that is a perfect example. One that a lot of people look at and at first glimpse they say, Hmm, I don't think that's a note for me, but if you'll just look at the whole picture, you start to say, this is an unbelievable deal.
Brian Lauchner (26:00):
Here's a perfect example. It's a house that's worth $192,000. They've lived in it for over 30 years. And the loan to value is under 25%. So if somebody has 75% equity in their house, what are the chances they're going to keep paying? Pretty good. So go check that out. It's a great way to get engaged. Another way to get engaged at, like I said at the beginning is to simply go to www.NoteSchool.com/TV, to learn a little bit more about who we are, what we do, and really how notes can start to change your business as always, if this video was beneficial, man, please like these videos, subscribe to the channel. And if you're wanting to engage like Cindy and Chris, and some others have kind of engaged during the show, click that bell notification so that you're getting notified each time we go live. So you can jump on real quick, listen to the conversation, engage with us, bring your questions and continue to develop yourself as a note investor. It's been fun. I think I covered pretty much everything. This week, we're going to have another great NoteSchoolTV episode next week on Wednesday at 11:00 AM central, just like we are every single week. So have a great week and we will see you on the other side.
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