Joe Varnadore:
There has never been a time to learn Creative Financing, there's never been a time better than today. And today, stick around and find out why.
Joe Varnadore:
Thanks so much with today on NoteSchoolTV. My name is Joe Varnadore. We have an amazing state of the union by Mr. Eddie Speed today. And guys, this is going to be one of the best we've ever done I believe. So just stay tuned for that. So again, thank you for being there. Make sure that you like and you subscribe to the NoteSchool channel and most of all, so that you will know live every Wednesday at 11 central time, make sure and click that bell. So and also to learn more about NoteSchool, make sure that you go to www.NoteSchool.com /TV. So today I've got a couple of news blurbs for you before I bring on Mr. Speed with the state of the union. So let's go to the news.
Joe Varnadore:
President Biden has been busy in his seven days in office having signed more than 17 new executive orders, including working on the $1.9 trillion, additional stimulus package new mandates for FHA, VA, HUD affordable housing initiatives and so on. And we've appointed a new secretary of the treasury in Ms. Janet Yellen. And she is the first female secretary of the treasury in the FED 230 year history. So there is a lot going on in the world today. And to talk more about the other side of the world here, let's bring on our founder of NoteSchool, Mr. Eddie Speed.
Eddie Speed:
Hello, Joe.
Joe Varnadore:
Good morning.
Eddie Speed:
How are you?
Joe Varnadore:
I am doing five by five, man.
Eddie Speed:
I like that.
Joe Varnadore:
I like to hear the state of the union today.
Eddie Speed:
Well I sent a message to our staff this morning. Okay. And I said, NoteSchoolTV today is going to have some data slides and some information that literally everybody in our company has to know. That Joe, this involves people in NoteSchool. This is people in colonial, which just bind service and collect loans and make trades on assets. Right? So this isn't just people in the NoteSchool messaging side of the business. This literally is everybody in my company that has anything to do with the industry. That's how important I think what we're going to say today is
Joe Varnadore:
Very good. So Eddie, I'm going to kind of a drop off here, and you're going to start with your slides there. So, and you want some feedback from me? I'll pop up when you when you need me there. So it'll be all you brother.
Eddie Speed:
Okay, So. First of all, if you have a friend in real estate and they're going, Oh my goodness, residential real estate is on fire. They're telling the truth, and specifically what the issue is. And I'm going to use my pen a lot today because I'm going to try to draw some important relevance to some things that we are going to talk about in the market and why it matters to us. So listings have dropped 33% year over year. Folks, if you're wondering why there seems to be a rage in the market to buy properties, there's a shortage of real estate listed. It's just, it's a market it's supply and demand, right? By the way, I'm going to draw something else to your attention. If you're watching us today, I'm going to give you a lotta data slides. I really would expect most of you are going to want this. And so right in the bottom, I have an email address and you can just email us the information and we will be happy to send you this slide deck. So make sure that you know how to get this slide deck today. And because there are some, our team has done a really good job of pulling up some data and some facts.
Eddie Speed:
Okay. well, Joe, we got a little situation here.
Joe Varnadore:
We do.
Eddie Speed:
And that situation is this. We have bidding Wars on properties.
Joe Varnadore:
Yes, we do.
Eddie Speed:
They're predicting, basically, or they're saying according to Redfin.
Joe Varnadore:
Right.
Eddie Speed:
And about half Joe, of all of the real estate are ending up in a bidding war
Joe Varnadore:
And, you know, Eddie that it, that's not just for that. Those are properties in that next paragraph there that really from $200,000 properties up to $3 million properties, it's everything. So it's not just the higher end. It's everything out there simply because of of the properties available being so scarce.
Eddie Speed:
Yeah. So basically they're saying the higher end properties are the most likely to be in the bidding war, but it also affects it as you say it, every real estate class out there, Joe, we have a shortage of listings.
Joe Varnadore:
Yes, we do. Serious shorty.
Eddie Speed:
All right. So, if you're a real estate investor or you are a real estate related person, like, you know, finance, like we are, And we're, and I'm both Joe's both.
Joe Varnadore:
Yes.
Eddie Speed:
You're looking at the market right now and you say, this is unbelievable. And I watch other podcasts and other information on a consistent basis. And the projection is 2021. The best thing you could do with your money is invest in real estate, right? Is this being publicized on a hourly basis? Somewhere in the market, real estate baby is on fire. Okay.
Joe Varnadore:
You know, Eddie, I think we've heard that before.
Eddie Speed:
Now, listen, I want, we are at a market condition where I want everybody to be clear about this. We're at a market condition where I want everybody to be clear that I don't know what's going to happen. My job is to show you data and facts and information so that you are aware of it, and you're not looking at a slanted story. If all I did was show you the last two slides and I just left NoteSchoolTV along then you don't, you're not aware of what's behind the curtain. Our job is to show you what's in front of the curtain and what's behind the curtain. And then all of a sudden you can make good decisions about your business. I spend a significant amount of time, as I say, up on top of the mountain with the binoculars looking across the next Valley, right. I said, when the virus started and all through the summer, 2020, I said, we were in a crash in slow motion right now, Joe, that kind of makes me look a little crazy.
Joe Varnadore:
Yes it does.
Eddie Speed:
So understand, that I was looking at the same data in the same trending that we're going to look at here in a minute. This is like, if you are not, if you don't know these next things that we're going to say, and you're making real estate decisions, you do not need to hang up. It's just not a good time to hang up because I think everybody knows what I just said. I just want to make sure that I, recognized it and I called it, but we're going to talk about an elephant that's in the room that is also going to affect the market. Now, we saw a crazy real estate market in revise, Joe. Crazy market highest, in fact, about 70% of every mortgage loan that was made for the last several months was a refi.
Joe Varnadore:
Right.
Eddie Speed:
Right. But guess what? Right now those refi applications are down. Why is that Joe?
Joe Varnadore:
Well, in my opinion, it's because that the guys that have refied have done so, right. So that market, it's not going to go back up again in the near future, because I think everybody that could qualify for those lower rates have gotten them
Eddie Speed:
72% decline in applications. All Joe, all the perfect people have gotten refied.
Joe Varnadore:
There you go.
Eddie Speed:
All the perfect people. Right. And if you're not perfect, you're probably not going to get a refi right now.
Joe Varnadore:
That's true. And we know those statistics of what that perfect person looks like. Right. And they are perfect.
Eddie Speed:
That's correct. Okay. So report shows biggest housing market gains. In 15 years, Joe, the trees are gonna grow to the sky.
Joe Varnadore:
Yes they are, never stopped.
Eddie Speed:
The trees are going to grow straight to the sky.
Joe Varnadore:
Just like Jack and The Beanstalk man.
Eddie Speed:
It is! And so you you've pulled together some great data slides here. And you're one of the team by the way, I want to make sure everybody knows this. Joe is one of the team that helps me pull data together and give you these awesome reports. So Joe, thank you for doing that. Thank Bob repass for doing that guys that are like paying attention to this on a daily, hourly basis. And and we are fully aware of it. Residential real estate is on fire. We are fully aware of it. And if you're making a lot of money out of that, we're going to say, God speed to you.
Eddie Speed:
We're not wanting bad things to happen. We just need to be aware that you can be driving 90 miles an hour down the interstate. And at the bridges out, you probably are going to have to change your speed, right. Or at least be aware, right? So Joe, let's talk about forbearance. Everybody understand what forbearance is? It's basically a stop in place agreement with your lender. It's an agreement you signed with your lender that says you stop. And you're not legally in default. You just have an agreement with them that you can stop making payments. Average loan balance in forbearance is just about 200 grand. Okay. So this isn't the little cheapo houses necessarily. Okay. Joe, what does GSE mean?
Joe Varnadore:
Government Sponsored Enterprise, like Fannie and Freddie and VA and HUD and all of those guys. Yeah.
Eddie Speed:
So when you talk, when you hear people talk about GSE's, they're just talking about the government sponsored enterprises that originate loans, FHA VA, Fannie Freddie, all of those things. That's all that, that means, right? So units in forbearance, Joe, we, if we take the GSE's and the, and the government loans that are not GSE's plus private label, we have just under 3 million loans currently in forbearance.
Joe Varnadore:
And, you know, interestingly enough, Eddie that had started that had tipped down a little bit, but now it's tipping back up again.
Eddie Speed:
It was down a little bit at the end of the year. We, this report was January 19th.
Joe Varnadore:
Last week.
Eddie Speed:
And it was back up. This is a, this is a lot of money, Joe. We're talking about almost $550 billion in loan balances.
Joe Varnadore:
Well, over half of that T word, right? That trillion dollar Mark,
Eddie Speed:
This is a 5% of the mortgages in the market. And this is 53 million mortgages outstanding in the total market condition. Okay. So this is a big deal, like there's 53 million mortgages. Joe, 5% of them are in forbearance, Okay.
Joe Varnadore:
And Eddie. You know, the other piece of that you noticed there that the majority of those are either GSE, government sponsored loans and GSE or government insured or guaranteed loans is a huge percentage of that.
Eddie Speed:
Well, in FHA, particularly.
Joe Varnadore:
Yeah.
Eddie Speed:
It is about 10% of all FHA loans are delinquent. So FHA has been hit a lot harder than Fannie and Freddie. All right. So, Joe, this is one of these slides that talk about something that the world is not talking about. Okay. And this says who services these loans and what has happened to them. Now, we know that, they are getting a certain percent of their customers that are not making payments right. In two areas, Joe, they're either not making payments because their customer is delinquent and not in forbearance. And their customer is legally in forbearance. Okay.
Eddie Speed:
These are just normal people in normal loans, Joe the Fannie Mae front loan, the average payment, average principal and interest payment is 1,115 bucks. The average FHA loan is 903. These are just regular people living in regular houses.
Joe Varnadore:
Correct.
Eddie Speed:
And then the other loans, which are going to be a little higher balance loans, a little higher payment. So the average payment overall is about 1,200 bucks. Okay.
Eddie Speed:
And that's principal and interest now, including in that, Joe are escrow impounds, which are generally taxes and insurance. Okay. And once again, you can look at that line there 440, 384, 557. So average taxes and insurance is about 450 bucks. So this just gives you a framework of what we're talking about now, you know, in the billions, you can see the next line there that the average payment is 31. The industry collects $64 billion in principal and interest payments every month.
Joe Varnadore:
Right.
Eddie Speed:
Right. Loan servicing wide and another 23 billion. That's with a B in escrow impounds every month taxes and insurance, okay. Active in forbearance, Joe active in forbearance lenders are making payments that they're not getting payments of $3.3 billion a month.
Joe Varnadore:
So Eddie expand on that a little bit what that means?
Eddie Speed:
Hello. They have a contract to pay the bond holders of those, of all of their, where they sold the loans. They are obligated to pay them payments that they're not collecting, right? Principal and interest is 3.3 billion. And guess what else they have to do, Joe?
Joe Varnadore:
Got to keep the taxes paid and the insurance up to date.
Eddie Speed:
Even though the customer isn't making a payment to them, an additional $1.2 billion a month. Now, Joe, I'm not necessarily the smartest math Wiz in the world, but that's, that's about $4.5 billion a month that loan servicers are making payments that aren't getting paid. We call it advances, advances on active forbearance plan.
Joe Varnadore:
That's a big number, dude.
Eddie Speed:
So, do you think I'm just asking, do you think that mortgage servicers industry is looking a little weird right now?
Joe Varnadore:
Yes.
Eddie Speed:
Now in the last bill, there was some money provided to mortgage servicers that they could borrow money to continue to do this, in the last cares act. Okay. And there is, but Joe, you're talking about four and a half billion dollars a month, Okay. Let me ask you something. How long does that continue?
Joe Varnadore:
That continues as long as they're in forbearance.
Eddie Speed:
Exactly. But these got these guys even if they can borrow some government money, it's not going to cover anywhere near where they stand. So the mortgage servicing industry has really got a situation.
Joe Varnadore:
They've got to tie with all tail right now.
Eddie Speed:
Joe, does this kind of sound like 2008?
Joe Varnadore:
Yes.
Eddie Speed:
Yeah. That's what I was thinking. Alright. So, Joe president Biden has one of the first things he did when he got his pen. And by the way, hadn't, he signed more executive orders that any president in the last many presidents.
Joe Varnadore:
Yes
Eddie Speed:
Right. So he's supposed he signed a lot, but what's the, one of the first things he signed
Joe Varnadore:
Standing that eviction and foreclosure moratorium pushing it out.
Eddie Speed:
All right. Who does that affect? It affects properties where there is a GSE loan.
Joe Varnadore:
Yes.
Eddie Speed:
Okay. So people say foreclosure evictions is for every mortgage out there. That's not true. People say like evictions for tenants. That's they say that people think that's for every loan out there, that's not true. But let me tell you what could be true, Joe, if a municipality, meaning a County or a state has done an overlay, then it could affect.
Joe Varnadore:
Yes.
Eddie Speed:
But when the president signs his bill, that is specifically where properties are involved in a government sponsored enterprise loan. Okay. That's, that's important to know Joe you, we do know that apartment complexes are very, very, very commonly finance with GSE loans.
Joe Varnadore:
Absolutely.
Eddie Speed:
So, these are the ones where they keep me foreclosed down and they can't evict. They're stuck, right?
Joe Varnadore:
It's a bad place to be.
Eddie Speed:
We're in a weird time. Joe, let me move. Let me look quick here, Joe. This is, I've mentioned this on NoteSchoolTV before, but it's worth mentioning again. This is what everybody, I hear nobody in real estate investing talking about.These are delinquent loans. These are delinquent loans that are not in forbearance, Joe, that number is up 1.7 million In 2020. So, The Foreclosure is not the issue. So I'm going to take my little red pen here, Joe. And I'm going to get down to where I think the meat of the story is. Okay.
Eddie Speed:
Loans at loans that are delinquent 30 days or more is a pretty shocking number, Joe. Okay.
Joe Varnadore:
Yes, it is.
Eddie Speed:
But those aren't considered seriously delinquent. Let's drill down into that pie and figure out where is the real meat of the issue. And Joe, these are loans that are 90 days or more past due. And Joe, there are 2.1 million of them, and I'll tell you this right now. The odds of these loans being saved down the roads is a low percentage shot.
Joe Varnadore:
Yes it is.
Eddie Speed:
Even if you're saying, well, they're going to come up with a government program and they're going to modify these lines and everybody's going to be all good again. Joe, they're going to do a modification. Isn't it true in Dodd-Frank you have to qualify for a mod, of your income.
Joe Varnadore:
That's right.
Eddie Speed:
Alright, So understand these are the issues that are really critical. This is a really, this is some good data. This is why I told you guys, if you were interested in us providing the slide deck to you, we'd be happy to do that. Because there's some really good slides that my team has pulled together to pull this into what I would call to a point, right. Now, we've talked about some crazy facts today.
Eddie Speed:
Real estate is highest as being the, the escalation and real estate values, highest growth we've seen in 15 years. Okay. Before 2008, Joe.
Joe Varnadore:
Yeah.
Eddie Speed:
Okay. Now all of a sudden we've got a situation where, you know, tenants and mortgages can't be foreclosed on. And then we've got loans that are in a legal, you know, freeze position called a forbearance agreement. Now we've got loans that aren't in that position, but the foreclosure rates are not really the issue. This is what the mortgage industry is worried about. They're worried about these loans here and this is my little symbol for foreclosure. They're worried about these loans here being in foreclosure, in addition to loans in forbearance.
Joe Varnadore:
And you know, Eddie, when you total the forbearance and the delinquent loans up, that's pretty close to 5 million.
Eddie Speed:
Yes. That didn't count tenants landlords not collecting money on other properties. All right. So Joe, this is another side. This is somewhat of the same thing, but it does have a little different angle on it. And you threw that in today. And I thought that was really good. And pretty much boys, this is, this represents our hot real estate market.
Eddie Speed:
That we've seen essentially 100% no effect of right now, none. We've seen no effect of it. I mean, like we have like frozen a market condition, but Joe, I been doing this 40 years.
Joe Varnadore:
Right.
Eddie Speed:
Right. I'm pretty sure there's going to be a day of dealing with this. It, there's, there's going to be a day of reckoning. One more thing. And by the way, this source here is from Avail. And so their slides are a little behind. We're not behind in getting their data. They're just behind and giving the data. But Joe, if you look here, this was October, and by the way, this number has gotten worse, it has not gotten better. Basically when you're looking at it, 42% of people that renters who say they can't make a full rent payment, Joe, what? 42% of tenants can't make a rent payment. Does that make a burn out landlord feel?
Joe Varnadore:
That makes a burnout landlord feel burned out.
Eddie Speed:
If you hang out with notes, go lot. I teach you how to go chase these burnout out landlords and go find deals like this and go figure a way to paper it where you don't have to make payments until you're able to start collecting money again, there's a way that there's a way to do it, right, Joe?
Joe Varnadore:
That's right.
Eddie Speed:
Joe, this is the most important slide. Okay.
Eddie Speed:
There of 17 million, not current on their rent or mortgage payments, nearly 33% face foreclosure or eviction in the next two months. This is assuming they don't extend the moratorium. Okay. So Joe, I live in the state of Texas and everybody pokes their chest out. They said, man, real estate is on fire baby. And look at the number one state that is expected to have the biggest loss, by the way, my pals out in California, you'd be number two, pretty cool chart here, by the way the census Bureau does a lot of we scrape a lot of data from them. They actually have some really good data.
Joe Varnadore:
They do, yes.
Eddie Speed:
So this is a data chart by state. Joe, let me show you two numbers that should be well there's numbers all over this graph that are shocking.
Joe Varnadore:
Right.
Eddie Speed:
Look at Louisiana, 56% of people in Louisiana have made a rent payment or mortgage payment in the house they're in.
Joe Varnadore:
Yeah.
Eddie Speed:
New Mexico trails a little bit. And there are North of 50%. And my good old state of Texas who everybody thinks everything is just the best it could ever be in life 42 and a half percent there. Let me tell you something. If you're in real estate or the finance business, and you're unaware of this, let me just say, I believe you possibly are just unaware. What am I saying? This will happen in real estate. What's the percent decline I, 40 years in trying to follow this stuff everyday, I'd be a fool to tell you. I can tell you what, that I can give you a percentage. What I can say to you if you own real estate or you're buying real estate or your wealth plan is this or that or whatever. And you're unaware of this market condition that at the moment, which figuratively speaking is frozen.
Joe Varnadore:
Yes.
Eddie Speed:
It's, you would, you would certainly want to know this. And we put a lot of effort in trying to make sure to pull it together. So Joe, the mortgage banking industry is not in agreement with traditional real estate sales. This is called the mortgage credit availability. And Joe, if you look at March of 2019, and you're looking at it today, Joe, you're going to see a pretty good decline in mortgage credit availability.
Joe Varnadore:
Yes.
Eddie Speed:
In fact, if you kind of, if I just kind of go over here, we're somewhere very close to where we were in about 2014.
Joe Varnadore:
So Eddie, what does that mean for borrowers?
Eddie Speed:
It means essentially is about a 35% decline. And it means that of a thousand people that could have got a mortgage January of 2020 and January, 2021, 650 of them can get a mortgage. That's why Joe and I said, we've cycled through the people that can refi because the mortgage industry has tightened up so much. They're not refi-ing people that normally they would have refied, right? Once again, you're saying, well, that's crazy Qualcomm real estate. So high because there's enough people with good credit wanting to buy a house in a shortage of houses that all of a sudden the shortage of real estate overcomes a problem that's working behind the scenes, which is the mortgage credit availability.
Joe Varnadore:
Right.
Eddie Speed:
Right? This is the biggest opportunity for seller financing I've seen certainly in the last 10 years,
Joe Varnadore:
Eddie is just, like I said, in the teaser, there has never been in a better time to learn creative financing.
Eddie Speed:
All right one more thing, we're running a little long, but this is good stuff. Right?
Joe Varnadore:
Excellent stuff.
Eddie Speed:
I agree with this, this is good stuff.
Joe Varnadore:
And by the way, I know some of those numbers are a little small on there. So again, we're going to go to www.info@NoteSchool.com, and we will send you these slides.
Eddie Speed:
Happy to do it. this stands for commercial mortgage backed securities. Okay. So they ran evaluation at the end of the year, Joe, on lodging properties, they saw a decline of 36%. Hello? So lodging properties have already declined in value. So what's not happened in residential has happened in segments of commercial. Second thing is these were retail lines. So these are retail related facilities and they have seen a decline of 41 and a half percent.
Eddie Speed:
Also multifamily and Joe, I'm on Facebook, just like everybody else. And I see these multi-family guys going, Oh my God. Things are on fire, baby, It's unbelievable. Well, let me just tell you something. I ain't exactly going for that. And let me tell you why, because I've been in this space 40 years and I know how you value an income producing property and you value it by the net operating income. And if your income is off and your expenses haven't changed your net operating income drops.
Joe Varnadore:
Yes.
Eddie Speed:
And that is considerably dropped in 2020.
Joe Varnadore:
Right.
Eddie Speed:
So understand, we're not, we're saying make informed decisions and make factual data decisions about where you go in your business because you know where you're going. I want to thank a number of folks in my staff that have allowed me to put together what I think was a really good presentation today. Not good because I did it, but good because I think it just paints a solid picture of the market. Right? That's how you can get the slides If we do it, Joe.
Joe Varnadore:
I'm going to take us out, and so to use one of your Eddieisms, right, as you move forward with NoteSchool, you know, you'll learn these Eddieisms, but with this one, I would have to say that if this doesn't light your fire, Eddie, what is it?
Eddie Speed:
Your Wood's wet.
Joe Varnadore:
Your Wood's wet. All right, Eddie. Thanks so much, man. This is eye-opening. Don't forget to grab those slides. So real quick I want to talk about Feeding Frenzy Friday.
Joe Varnadore:
Oh, I love that the Joel's music, right? Feeding Frenzy Friday NoteSchoolTV is sponsored by NotesDirect. And every week on Fridays, we have Feeding Frenzy Friday, which is hosted by Brian Lauchner and and Scott Tyler. And so you won't want to miss that every week. Scott and Brian go over a note from NotesDirect looking at what you can buy it for doing the, looking at the investment to value ratio, all of the big things that matter when your buying a performing note from NotesDirect. So make sure and catch that. And I've heard through the grapevine that Brian and Scott are going to have a guest this Friday. So make sure that you stick around on Friday and you check with NoteSchool with Feeding Frenzy Friday. So guys that is all we have today for you.
Joe Varnadore:
It has been an amazing, amazing day. I think all of you see why creative financing is the way to go and folks, I, you know, I always, I love the Chinese philosopher that said may you live in interesting times? And we certainly are living in interesting times, stay tuned. We will see you next week, same place, same time, like, subscribe and hit that bell. So you will know who we are going live next Wednesday, 11:05 central time. On behalf of Eddie and myself and all of us at NoteSchool, we'll see you next week.
Joe Varnadore:
So Eddie, welcome to the after party. And I know that we had we have a few questions and to just kind of talk about those for just a minute for those of you that want to stick around and hang out with a couple of gray hair guys and, you know, Eddie, you said last March, right? Joe, there's never been a better time for a couple of gray hair guys to kind of lead folks the in the maze. And you know what, one of my other favorite sayings, Eddie, I think is, is you, we don't have a crystal ball, but we do have a real premier.
Eddie Speed:
Yeah. Funny to be perfectly honest with you. I didn't make that saying up, I had some friends that reached out to me that are very sophisticated, real estate investors. And you know, we've been in a market where the young, aggressive, super smart cats are, you know, doing whatever, but they haven't lifted a lot of cycles. And so, you know, our whole messaging is just to provide the truth of the business. It's not to go make it better than it is or worse than it is. It's how do you enter a market and recognize opportunities, Joe, if I were a real estate investor right now, I would go chase landlords.
Joe Varnadore:
Yes.
Eddie Speed:
I mean, I'm just telling you that a lot of them would love to get rid of their property are aren't able to list it because they can't list it.
Joe Varnadore:
Right.
Eddie Speed:
Right. Because they can't show people the house. And there's just kind of a crazy problem there. And I would say to you that there is a gigantic opportunity with that. And I would get them to carry terms for me, but 60% of them originally bought the houses with cash the small time landlords. So they have a lot of equity, whereas they're not highly leveraged. This is people ask me about what is exactly this market going to be compared to 2008.
Joe Varnadore:
Right.
Eddie Speed:
And first of all, let me just tell you this, anybody that says they can nail it a hundred percent. I'm going to question whether I don't think that's true. When you're in unchartered waters. Right. What I will say to you is this, that I believe that my messaging and my beliefs is very consistent with mortgage banking. Right. I believe the mortgage banking industry is going, they didn't drop the credit availability that low because they think everything's all good. Just beyond the fact that at the very moment that you, that, you know, when you put a house in the market,
Eddie Speed:
You know, 30, 40, 50% chance that you're going to have a bidding war. Right. But let's think about the mortgage industry, Joe, the mortgage industry makes a 30 year commitment to your real estate.
Joe Varnadore:
That's all right.
Eddie Speed:
You got what I'm Saying?
Joe Varnadore:
That's a long.
Eddie Speed:
Lot of different commitment than the realtor that listed your property.
Joe Varnadore:
And you know, one of the biggest, I guess, phenomenon, not really when you look at in total is the fact that that trend, you know, people were staying in their houses five to seven to eight years and this year, right. Because of everything we've gone through that has jumped up considerably.
Eddie Speed:
Yeah. The average length of people stay in and the turnover periods. I, Joe, I was thinking about this. You've heard the old expression expression about commitment, Right?
Joe Varnadore:
Yes, Alright.
Eddie Speed:
About cooking breakfast.
Joe Varnadore:
Yes.
Eddie Speed:
Well the real estate brokerage industry sort of has a chicken level of commitment. Right. But the mortgage lender Joe, he has a pig level of commitment.
Joe Varnadore:
The chicken is involved, the pig is committed. Yeah. So Eddie, if we're buying on, you know, on terms from our burnout, landlords who really, and when we, you know, but the question was basically. So, what do we do when we buy? And so we know that when most people bought their rentals, you know, rentals were on fire, right. They were just crazy. And they bought them because they were really looking, they were really looking for a check every month, right. They were looking for passive income and they didn't know about Notes.
Eddie Speed:
And the obvious question is somebody goes well, okay. But Eddie says, you're going to buy a property and in it. And he says, there, there could be a decline in real estate. Let me just say that you are buying property with financing that is not normal.
Joe Varnadore:
Right.
Eddie Speed:
With very abnormal financing and the techniques that we teach in how to do this are not, they're not in the same frame, frame of mind, of how people normally look at buying property today, which is buying for cash or buying with and getting a mortgage.
Joe Varnadore:
Right.
Eddie Speed:
I can tell you this with a thousand percent integrity right now, Joe, and this is probably going to fly in the face of what somebody believes, but if you're busting out there right now, buying rental properties and getting a highly leveraged long-term loan, you'd need to really think about that. You'd need to, you really need to study these data slides before you just bailed off there and did that. Okay. But you're saying, but Eddie you're saying do it.
Eddie Speed:
I know, But I'm not agreeing to conditions that a mortgage company, the guy that is carrying financing for me is agreeing to lender conditions that the mortgage industry is not going to agree to. There's a lot of difference.
Joe Varnadore:
Yeah. 50, you know, and we talked about that on the show. We were a couple of weeks ago with the Dan Walter from Boise, right? He lives in one of the absolute hottest markets in the US and still had four accepts on creative financing, even in a hot cash market. Right?
Eddie Speed:
Listen, buying them terms is a way for a real estate investor to buy a property and pay a higher price than anybody else, because you're not paying with today's dollars. You're paying with tomorrow's dollars, but it's not just the dollars you pay. It's all the other stuff you can bake into the agreement. And we know this from spending 40, I've spent 40 years in seller financing. Joe, you spent 30 years, that's combined 70. Forget the rest of our staff. We'd be in the 500 year range seriously. But the point would be that this is rare, very critical in understanding, you know, how to go recognize a niche in the middle of what seems like the biggest on fire market you've ever seen. And yet you can go pull out a sliver of the market and go find terrific opportunities in it. And this is what we have guys do in every day. So anyway, Ireally, really believe that every real estate investor needs to know the kindof things that we're talking about. And then I feel like, okay, let them go make their own decision, but at least make your own decision with facts, right? Not fake news.
Joe Varnadore:
Fake news and too much emotion.
Eddie Speed:
Yeah. And I'm not going fake news.
Joe Varnadore:
Right.
Eddie Speed:
There's a lot of fake news out there. Okay. So in our industry, there is a lot of people that are looking at like one, like the first two data slides, Joe, if that's all I watch, I just say, real estate, you can't go wrong, it couldn't be better. By the way, the only cycle Joe, that I didn't make, at least half of my profit in net worth. In the commercial side of the business was the 2008 cycle.
Joe Varnadore:
Exactly.
Eddie Speed:
So guess what? we're saddling up the horses going to ride up the mountain on the commercial side. Right.
Joe Varnadore:
That is true. So guys more to come on that in the future episode, we'll do an episode on commercial here. So Eddie, thanks so much for kind of clearing up these questions. And again, guys, thanks for the comments, you know, and, and we you're welcome as far as the slide deck today. Guys, make sure and grab those and we'll see you guys next week NoteSchoolTV, Bye now
Eddie Speed:
Bye-Bye.
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