Brian Lauchner:
Do you want to know how to make true legacy wealth with notes? Stay tuned.
Brian Lauchner:
Well, welcome back to NoteSchool TV. We are here once again live, like we are every single Wednesday at 11:00 AM central time. We're so glad that you're here. We've got a great show planned for you today. Some really hot topics and a really amazing guest. If you're brand new and this content is valuable to you, I'd love for you to like the video we'd really like for you to subscribe to the channel so that you're getting even more of the content that we're pushing out and to get the most up-to-date content, make sure you're clicking that bell notification. So that, you're getting the notifications turned on and you're going to be notified when we go live so that you'll get the notification and you can jump on like right now and engage with us. Bring your questions, say hello. And just and kind of participate a little bit in the show.
Brian Lauchner:
We'd love to hear from you. We'd love to kind of just chat a little bit, as we stick around at the end, we're going to have an after party and dive into some of the questions that you're bringing to the table and just kind of relaxed a little bit to have a little bit more fun, right? If you're brand new to notes, you're brand new to NoteSchool TV, and you're trying to figure out what's this whole thing about, and really what are you guys talking about? And you want to know a little bit more go to www.Noteschool.com/TV to learn a little bit more about who we are, what we do, and kind of even how you can take your next step on your notes journey. We've got a fantastic show. Like I said, we're going to have an after party at the end, but before we do that, let's kick off the day with some of the hottest news articles that are out right now.
Brian Lauchner:
All right. So this is our first, Fannie Mae Is Getting Stricter with Investment Property Loans. So here's what you really got to know. There's two things. First of all, they're tightening the lending restrictions on second home and investment back loans. This means that there's going to be fewer and fewer loans available, obviously to fewer and fewer people, right? They're also cutting back purchases on these mortgages as well. And so what we're seeing is a continued crunching, a to continue credit crunch and the number of buyers that are going to be qualified are going to continue to fall and fall and fall. Basically, what's happening is there's two major changes coming down the pike. First, Fannie Mae is cutting back on the purchases of these loans, limiting it's investment and second back, I'm sorry, and second home backed loan acquisitions to just 7% of its total portfolio.
Brian Lauchner:
The company is also focusing on lenders who have excessive delivery volume of these type of loans and move that will undoubtedly decrease the number of conventional loans available for investors. We've talked about this for the last, well, basically a year now, where we're seeing less and less loans available to less and less people, and what kind of opportunity that's going to create for investors, right? A lot of people think there's gotten the opportunity is going away. What we want to show you is there's an opportunity kind of on the other side. And other news also on CNBC they put it on an article here this week that says, The housing market stands at a tipping point after a stunningly successful year during the pandemic, one year after COVID-19 crisis, shut down and warped so much of the American life. Things are still unpredictable, but the outlook isn't bright for housing.
Brian Lauchner:
In fact, it looks like a perfect storm for a correction. You see here that home prices are overheated. Mortgage rates are rising. The supply of home sales is anemic and consumer confidence in the housing market is failing. Right? Anytime we see an uptick in interest rates, what we're going to see is a buyers affordability go down. So, less and less people are going to be able to afford less and less properties. The Fitch Rating says that home prices are 5.5% overvalued, right? That's never great. And then half, as many homes are for sale today. This, February, March, as they were last February, March, obviously we have a pretty big inventory. And from our new construction site, builders are really struggling to find lots. But they're also struggling because material costs are up. Things like lumber, things like appliances. There's a shortage.
Brian Lauchner:
And so, it's obviously continuing to clog the bottleneck and create and further exacerbate the problem. Interestingly enough, if you go and you read this article, it says in quotes, no one could have predicted it, not the economist, not the real estate agents, and especially not the nation's home builders, but a pandemic cause an emotional run on housing, unlike any other. Now, I'm not saying that anybody at NoteSchool predicted the pandemic, but what I am saying is, for about a year now, we've been having this conversation and talking about, look, this is what's coming. We are in the middle of a mortgage crisis in slow motion. You need to pay attention. You need to see the opportunity that's available for you. And you don't want to get caught in a bunch of rental properties or in a bunch of flips that could turn on you. Right? And so that's kind of some of the news today. It's really fascinating to stay on top of this stuff. So make sure, you're tuning in with us each week. Today we have an unbelievably, a special NoteSchool guest here, that I want to bring on here today. We've got the one and only Martha Speed. And of course we got Eddie Speed as well.
Eddie Speed:
Hey, how are you?
Brian Lauchner:
I'm doing so good. Now, like I said, I didn't say you predicted it Eddie, but I did say you've been saying this thing for about a year now.
Eddie Speed:
Well, you know, it's funny. Yeah. You know, I've kind of had a role for about a year where I've kind of felt a little bit like a crazy man, you know, I'm predicting something in the market seems to be reacting so differently. And listen, we don't know, we've never seen a market like this. Right? We don't know the end result, what we want people to do is make informed decisions.
Brian Lauchner:
Sure.
Eddie Speed:
Yeah. So, guess who I've got today.
Brian Lauchner:
Who's that?
Eddie Speed:
Well, 38 years ago working on 39 in July, I married this pretty girl and she, you've heard the story. Her dad introduced me to the business, but I don't think that people really realize how Martha has really applied on a part-time basis, a strategy that is probably the most impactful thing that helps, has helped, you know, our whole livelihood, our wealth, our retirement. And so, I want to go back down the history lane for a minute.
Martha Speed:
Okay.
Eddie Speed:
And let's talk about your growing up in the business. What was that like?
Martha Speed:
Well, for me initially, you know, I grew up with my dad owning a lot of rentals. And then, when I was in high school, he got into the note business. And so, right out of high school, when I was 17 years old, I went to work in his office. And basically, I worked for, you know, his office manager and I learned the documentation process. You know, how to process alone as far as what you want to look at when you're buying. And then documentation-wise, how to prepare closing documents and you know, how to close on the loans and things like that, how to actually acquire the loans and everything, you know, that it takes to get that done. As far as due diligence and all the things that you go through. Right?
Martha Speed:
That, you know, all of you are learning. So, I learned that really early. And so it's just kind of been second nature to me, to be able to look at a file and look at those things quickly and analyze it. And then, you know, as far as documentation, you know, we've just done a lot of that over the years. I mean, so the other thing though that I feel like my dad really instilled in me at that time. And in regard to the business itself, the note business is, you know, the different ways to use the cashflow that comes in from notes. You know, so, initially of course, just like Eddie and I, you know, we needed the income, we just need an income today. And so we bought, and we sold notes for just income to live on.
Martha Speed:
But you know, then as you bought, excuse me, more and more notes, and you start preparing for retirement, you realize that you need to apply note strategies and the cashflow that's coming in on those notes to grow your wealth. And in growing wealth, you know, and increasing that cash flow, that's what allows you to build a legacy and to leave cash flow for future generations, cause there's going to become a time, even for Eddie and I there that we're going to have, you know, potentially more cash flow coming in from notes than what might pay out in our lifetime.
Eddie Speed:
Oh, we're going to spend on all that.
Martha Speed:
You keeps saying that. I'm like, no we're not.
Eddie Speed:
We're going to spend it all. I want my last take of gas, my last dollar, but no, I'm just kidding.
Martha Speed:
Well, and you know, of course now, you know, our kids are coming into the business in different areas of real estate because, you know, we've both been a lot of different areas of real estate. I mean, I was a landlord, I had a lot of rentals, I've done a fix and flip model. So, we've done a lot of different things in real estate. And you know, so now our kids are getting involved and, you know, so they're learning the business and they're learning the concepts of keeping it going, keeping the legacy, you know, keep building on the legacy that you have.
Eddie Speed:
Okay. So you've developed a strategy, you and I learned this concept from your dad and we've perfected it. Cause we did like thousands of days where we would buy or sell part of a note. Right? And so then you started looking at that strategy and saying, well, I could do that with retirement accounts and I could get then like really bill. So you, you always have had a concept though, of building a legacy, right?
Martha Speed:
Well, yeah, I have. And I think the concept about building legacy came from my dad. He was just an extraordinary visionary. I mean, he could just see and plan for 30, 40, 50 years out. I mean, most people just don't have that concept and he was just a master at doing that. And so, you know, what he was preparing for at the time, like we need to be period important. You need to be preparing for is, when the day comes that, you know, you don't want to work anymore and you want to retire, but you've got to have enough cash flow down the road over these different time periods to, you know, to pay all the expense that you I have. And so he was just, you know, a master, you know, calculating that and knowing exactly how much cash flow he was going to have when he was a certain age and, you know, what he needed at that age to take care of him and my mom and you know, he was, you know, the same concept as and I know you've heard other people say, this is, you know, you always want to make money while you sleep, you know, be in a business where you can make money while you sleep.
Martha Speed:
And how, what better business could there be than being the bank and actually just, you know, that, that pay monthly payments coming into your account every month. And, you know, when you multiply that times, you know, let's say hundreds of loans, if you want to, you can imagine how that grows. I mean, it doesn't start out that way. You got to build it, but you can get there.
Eddie Speed:
Yeah. I wanted to make a statement about Martha's dad and Mister Shoemake, right? Martha's maiden name was Shoemake. And he really was just for me as a young guy 20 years old to meet him and have all the business conversations that we had, and him just have such clarity. I, you know Martha's dad sadly passed away almost 24 years ago. And it'll be about a month and it'll will be 24 years. So it's, so we've had, I feel like what we've done is help move your family forward, pull things that your dad had in mind. And then, I think we've moved that, you know, tradition down the line. I wanted to make one statement about Martha's dad, and I think this kind of defines him. So Martha's dad would have a lot of wise thoughts and sayings.
Eddie Speed:
He left me a letter that was in his will. It was a private envelope addressed to me in his will. And it was a paragraph of a few paragraphs to say in about different direction or ideas or thoughts. And I don't remember every word of that letter. It's been a long time ago now. Right? But I don't remember it a little bit, but I remember the first sentence in that letter. And it said this, Eddie always remember this, money spent on fond memories is never wasted. That was Mr. Shoemake, that defined him. As good as conservative as he was. And as good of a steward of money as he was. And he was, he was saying, don't be scared to spend some money on things that are gonna be a fond memory for life. And I just think that defined him.
Martha Speed:
Right. Yeah. And, you know, we've looked back and we do, we still laugh about these trips that we took that kind of, you know, were just crazy in some ways. And, you know, it was still you know, it's the most fun part of it is the unexpected sometimes. And but he was a master at teaching us how to grow well and you know, that our wealth should be growing faster than our income. And so, we've tried to use our platform to teach others how to do that and help others that don't want to be active in the business. So you know, and we still use all the basic structures that my dad did. We just have different types of accounts than they had back then, you know? So, I mean, back then they had a profit sharing plan for their company today. We use IRA's and HSA and Coverdell's and so many different types of accounts. When you, of course, you can do it in your LLC or corporation, but, you know, there's just a lot of different opportunities today that weren't available back then.
Eddie Speed:
So, you use a leveraging strategy. You buy a note in one of the multiple different taxed advantaged accounts, they call it right. IRA's, 401k's, Coverdell's education, whatever that is for us, and our family.
Martha Speed:
We still bought in LLC's. I mean, you know,
Eddie Speed:
You buy a loan and then you turn around and you sell a cash flow of that note, or you buy the whole stream of payments. If I can use my hands, right? Then you sell part, you sell the first, say half of that note. And it's pretty good Math. Martha, if you buy a hundred thousand dollar note for 80,000 bucks, and that's a 20 year note, you'll probably sell about 10 years of that note, first 10 years, not the back 10 years, first, 10 years. You'll sell that for about 80,000 bucks.
Martha Speed:
Yeah. So you come back into the numbers and see how it works. But yeah. So, you're selling the front end of the loan and you just want to sell the you know, the number of payments that allows you to recoup your investment. You know, you need to have a course, you know, in the IRA world, you know, they say you have to have, you know, some money invested in this. You've got to look at each transaction and say, well, you know, about how much do I need to have invested? And that is based on, well, what's the acquisition cost. I mean, what's, you know, what's the dollar amount on this, on this asset? So, it can be different on every single asset. I mean, that's one of the things that's nice about it is it's not like your, everything you do is cookie cutter.
Martha Speed:
And is that is exactly the same. Like if you were doing a fix and flip model you're doing exactly the same thing, which is, you know, that's, you know, you need to be careful about, you know, that it's not, you know, something that the IRA would not be, you know, would not be acceptable in an IRA account. And I think that's one of the things that makes it so nice about the note business. And so I work with private investors and I'll have a private investor that will buy, you know, the front end of the loan. So, they're basically in first position on that loan. I mean, they're going to get all of their money up front before I get a DOM, I'm not going to get anything until it reverts back to me. And so it is a great situation for the passive investor, as well as myself, because we are building basically, building wealth and leaving a legacy together. Because you know, many of my investors may be 60 to 80 years old. And so, they know they're leaving a lot of this, you know, cashflow, that's in a retirement account for their children. And so, you know, they're leaving a legacy at the same time that I'm leaving a legacy. They just don't want to be active in the business. And so that's you know,
Eddie Speed:
You allow them to be passive in there. They know that you have skin in the game. They know you have a lot of money. That's owed you on the backside of that note. And you're really clear about that. So here's a big mystery, Martha you know, 20 years of NoteSchool and speaking in front of tens of thousands of people. Right? And how does Martha find the investor? It's a common question.
Martha Speed:
It is. And I mean, they're just so many different areas that you're going to find, that you would find investors, that I find investors. It's just, you know, somebody, sometimes that you sit next to on the plane. Then, sometimes, you know, somebody that you meet in a business situation that you start talking about, you know, what you do. And they're like, Oh my goodness! I might have investors that would be interested. The reality is that people that like real estate and that have been in some form of real estate maybe they've owned rentals, I've owned rentals myself. I know personally how tired you get at being a landlord. They don't want to do the work anymore. We just bond them and we call them burnout landlords. They are excellent customers for us.
Martha Speed:
If they're, you know, to that point that they're ready to, you know, stop being an active landlord. You know, and many times, depending on the cycle of where they are and, and rentals, you know, maybe it's time that they're going to have to go put up a lot of money into these rentals to bring them back up to market where they can get full market rent. And they're just willing to sell instead of doing that. Because they don't want to manage that and they don't want to put the money back into them anymore. So it just varies. But that's a good part of my business is people that have either been in real estate or owned rentals and,
Eddie Speed:
They like real estate. They just don't like the job.
Martha Speed:
They just don't want a job anymore. They're ready to be retired. And they love the fact that, you know, I help oversee the loan for them. And then of course, you know, when things arise on the loans, you know, we work it out together. And I have to say the majority of them you know, they might buy 10 to 12 loans from me. They're repeat customers, and I will say that when you have a person that's a repeat customer, you know, they're talking about what they're investing in with their friends and family. And so, the next customer is going to be their friends and family.
Eddie Speed:
Yeah. Let me tell you, I've been to meetings many times where Martha is dealing with one of her partial investors and they love Martha. I mean, they love Martha because they have a lot of confidence in Martha's. You know, Martha has learned how to evaluate a deal. She has a good sense about quality and a deal that'll pay and just give them a check every month. And you've allowed them a lot of freedom.
Martha Speed:
Yeah. you know, I mean, because I help to monitor the loan. It's just, you know, it just takes the burden off of them of having to make sure every account is paying every month and, you know, and we, twice a year, we reconcile their accounts, make sure, you know, we're all in agreement. You know, and so, it's you know, it makes it a really simple process for them, and it's easy for them. And I mean, making investments easy for somebody that wants to be passive is what they're looking for. That's what they're looking for.
Eddie Speed:
So, if you took an $80,000 investment and you sold a partial and you got the 80,000 back, you could like do this over and over.
Martha Speed:
Yeah. I Mean, that's the whole concept of the partial model is to make it a model. And actually, just every loan that not every single one that you bought, that every loan, you know, just think about selling the partial. And, you know, sometimes I'll collect a loan for a year before I sell the partial, other times I might sell it, you know, I might have somebody sitting out there that's waiting on, you know, the right loan and it's a bit, and we almost close together, right at the same time that I buy it, they can buy it. It just varies. I mean, I, you know, at this point in time, I buy loans that I just keep and collect the monthly payment, but when I started out, I had a very low balance, like under $40,000, low balance IRA that I was working with, it just had a couple of assets in it that we were just collecting the monthly payments.
Martha Speed:
And I remember the first little pool of notes that I bought. I might've spent about 30 something thousand. That was all I had, right? I mean, cause I, you know, have you have to have a little money for expense. So, I jumped up there and bought it. It was three loans. They were very small balanced. I sold partials on them. I think that was, you know, probably about, I don't know, you know, 10 to $10,000 a piece that I, you know, kind of average, you know, depending on which loan it was that I was, trying to recoup that money. And so it was, you know, just small transactions, but it got the ball rolling. And one of the things that you know Jeff Watson always says, and you know, we're friends with Jeff and he calls it the snowball effect.
Martha Speed:
And so you have to get started somewhere and then it just snowballs. The more you do, just more and more things happen, more and more things, you know, you get more and more done. You know, you find that you can make it systematized and, you know, just go for it. And so and it is, it's just like that snowball rolling down the Hill and getting bigger and bigger. And so then you're, you know, you're going to have more investors and then you're going to be able to do more deals and then you're going to have more cashflow down the road and your residual income. And so yeah, that's, it's just such a good model.
Eddie Speed:
So Martha, you originally learned legacy from your dad. You learned disciplines, right? You have now developed quite a discipline. You have quite a reputation.
Eddie Speed:
Martha's probably the only recipient of the note industry, Lifetime Achievement Award that's in her desk drawer.
Martha Speed:
It's not. It's on the desk.
Eddie Speed:
She hasn't even hung it on the wall. That's a true story about it.
Martha Speed:
I have to get an interior decorator over here. I don't have time. I'm sorry.
Eddie Speed:
That's the true story. Lifetime Achievement Award in The Note Business. And she hasn't even hung it on the wall. That's,
Martha Speed:
I am trying to juggle this almost, you know, I know he says part-time, but really I'm here almost every day. And then, you know, three children, two grandchildren, and, you know, household that, you know, like we're, I take care of everything at the house. So, it's a lot on my plate.
Eddie Speed:
But now you've taught, Now you're teaching legacy to our kids.
Martha Speed:
Yeah.
Eddie Speed:
You're teaching them their strategies. That just doesn't, it's the creativity that allows you to have a legacy.
Eddie Speed:
It's not a huge pile of money you start with. It's understanding creative strategies.
Martha Speed:
Yeah. It is. It's just understanding the different strategies and how they work. And what can you can do. And like which ones, you know, might be the best strategy for current income. And, you know, what's a better strategy for wealth building and legacy. And so, really not just me, it's not me, but Eddie and I together because, you know, we have a lot of different investment opportunities and, you know, different things that we do other than notes. And so, you know, even though this is primary, you know, our kids are learning a lot of different types of things related to real estate. Cause like I still have rental properties. Right? So, they're learning all the different strategies and just how it all fits in and comes together. So,
Eddie Speed:
Let's ask Brian to come home. Maybe, he's got something that he would like to do, you know, Brian, I was going to think of one thing that I did forget. I think that's probably the ultimate most important question and that is, okay Martha, what does this mean? What does this mean to you and your family?
Martha Speed:
Well, to me and my family, it is a situation that it's been able to also be a generational situation where we can be go-givers you know, my dad was very benevolent and Eddie and I have tried to follow that path. We want our kids to follow that path. And so, you know, if you start out the year asking how, you know, how much of your time and money can you give and help others? Then, it changes your whole philosophy on what you're doing.
Martha Speed:
And I, it's just like the partial model, it's a win-win. It is a win-win for me, it's a, win-win for my passive investor. It really is. And then, you know, for people that are out there and just saying, how do I even get started? What do I do? It's like, you know, just find, you know, just start looking at notes, don't wait, find something that fits your budget or an the investor's budget. And you know, the model is simple. It's just a matter of running the numbers, make sure you've got the right asset and you know, be strategic and stay focused. And, the same thing, you know, you'll just be able to just do one after another. And so, you know, it's not just, this is not all about me or you it's about helping others too.
Martha Speed:
And, you know, I really end up befriending and many of the investors become friends with me. And you know, but I, you know, I do a lot and I spent a lot of time with them, before they even buy an asset. You know, just really teach them how we, you know, how we do due diligence and all those types of things and, you know, what type of properties we're looking at and what the borrowers are like. And you know, it's just a waterfall and it just keeps growing. And, you know, until we get down to them buying an asset and actually funding and closing. So, there's a process to it. But I think, you know, the most important thing is, you know, just look at all the different ways that, you know, it benefits both parties.
Eddie Speed:
Yeah. Right.
Brian Lauchner:
I think to one of the things that you were talking about that really stands out to me, that I feel like is kind of the thing that it always sinks to the bottom. It is not just, that it provides your passive investors, this cashflow, or that you're simplifying the investing, the process. But, I think something that isn't talked about enough, especially in this market condition is the reduction in risk. That you're taking so much of the risk off of the table for that investor, right? If they took that capital and they put it into a rental property, and now they're having to deal with tenants and toilets and putting more capital into a property that needs fixed up or tenants that can't even afford to pay right now, you're taking a lot of the risk off the table.
Brian Lauchner:
And that's really one of the things that I think that you do such a great job of this partial model is one of the best ways you serve your passive investors is simply by saying, look, you're in your sixties, you're in your seventies, you're in your eighties. You're not at a spot to where you should be going out and taking these massive risks necessarily. This is a great way to build legacy wealth without having to take some unnecessary risks. And I think that's not really talked about enough and really a lot of this market condition, highlights how important that is. And so, it's really cool to see how you've kind of made it been able to help a lot of people, not just make more money, but also reduce their risk. And I think that's really big from a legacy perspective.
Martha Speed:
Oh, absolutely. I mean, you know, you've got to, like I said, I mean, I get to know all my investors personally, so I really learn about their risk tolerances, you know, the different types of loans that they would be willing to buy. And so, and you're right. I mean, it's like, there is a point in time where when they need to be, they need a conservative investment, they need something that is going to have some cashflow there. And be paying every month. And, you know, you got to go through the waterfall also, you know, the other side of it, you know, what, if you did have something that became non-performing but you know, the upside is, you know, you're going to end up with a piece of real estate. That's going to have value to read and you can resell. So there's a safety net, you know, there's a safety net in that.
Brian Lauchner:
Absolutely. Well, Martha, we've got several questions we're going to talk about in the after party. If you don't mind sticking around, that'd be great. We really are. I really appreciate you taking some time to come and hang out on NoteSchool TV today. Next week, we've got Mr. Richard Thorton, he's going to talk about Funding Your Business. And so as always, it's going to be another great show, but before we get too far down the road, before we get to the after party, I want to hear from just our sponsors really quick. And the Feeding Frenzy Friday.
Brian Lauchner:
Yeah. NoteSchool TV is sponsored by NotesDirect.com And the Feeding Frenzy Friday, each week, we have a playlist that you can go and watch where me and a veteran of the note business, Scot Tyler break down some individual notes that are on NotesDirect helping you better understand what they are, how they work, master your due diligence so that you too can start taking action and go out and buy that note, whether it's your first note or your 100th note it's a great way to check it out. And you can always check things out by going to www.NoteSchool.com/FFF for Feeding Frenzy Friday to see all the past shows and learn a little bit more all at once. As always, we appreciate you being here. It is live. And so it's a great way to pop on and engage with us. Make sure you're liking the video.
Brian Lauchner:
If you love what Martha said, like the video, subscribe to the channel, make sure that you're getting some of the latest content that we're putting out. And like I said earlier on, turn those bell notifications on, so that you're notified when we go live. So that you can jump on and you can ask questions like a lot of these people did that. We're going to talk about in the after party here in just a moment. If you're somebody who is just, you're in a spot to where you, Brian, I get this, what Martha just said, spoke to me. I need some help right now. I've got a burning desire to succeed in real estate or whatever it is. And you need some quick assistance go to www.NotesSchool.com/TV ,click on the tab that says, contact us. There's a phone number. There's an email reach out. We'll try to help you the absolute best we can. That's going to do it for today with NoteSchool TV. We really appreciate having Martha on, for those of you who can stick around, we're going to chat a little bit and say hi to some of you all who are on the show here in the after party. For those who can't stick around, we'll see you next week and we'll see you on the other side.
Brian Lauchner:
All right. Well, thanks again, Martha. We really do appreciate it. We had a lot of people on, engaging with us and one of the things that I thought would be great, Glamour Property actually asks a question about differentiating between wealth and income. And so, I wanted to see if you could speak a little bit about, maybe even using the money today, money tomorrow analogy you used at the beginning.
Martha Speed:
Yeah. So, income to us is what we live on, right? You know, we get a salary and we really truly try to budget and live within that salary. I mean, just like anyone would have to. Other moneys that we may have, or acquire from, you know, then we take that money and, you know, we segment it and use it only for investments and we just keep reinvesting that money. Right? So, if I buy a note and I sell a partial, I get that money back. I take that money and I buy another note. And so, I don't ever mix it or actually move any of that money into money that we would need for income to live on. And so, if you can separate the two, you know, in your mind too, and, you know, separate them into different accounts, then it helps just to grow, you know, the wealth portion.
Martha Speed:
That's really what happens there with that cashflow coming in every month, if you buy notes, if you can just hold onto them, or if you need to sell part of the cashflow and then buy another note and, you know, then just do the same thing over and over again.
Eddie Speed:
It's focus. Any discipline in life, great musicians, great athletes you know, anybody that's had any success, business owners, you know, business leaders who, whatever that is, if you look at their one single trait, they're probably unbelievably good at focus. And so this is Brian, I think the thing that we just feel like is a key is Martha focuses on this. I mean, she's not unclear. And she knows where, you know, in, as she sits, she's even got like separate checking accounts, so that all of a sudden you don't wake up and figure out you're spending your wealth money on eating,
Brian Lauchner:
Man, that's so true. And, what's beautiful is this, isn't something in theory, this is literally something Martha has proven works, right? Even from starting, just flipping notes. Cause maybe you're somebody who you're saying, look, I'm brand new to this. I need that money today. Well, seems like this daunting task. What's amazing is Martha is sharing with you in her story that not only was she flipping notes to make that income today, but she's saying with a smaller amount of money, you can just start with that and use that capital over and over. It's not about coming up with massive amounts of extra money every single year. That's, what's so impressive about this model that she's put together and why they've been able to create such a legacy. You know, without just saying, yeah, I fell into $10 million, it just fell into my lap and I used that to build my wealth. Right? So, it's really, really great. Another question that came up from Deb and Kev was talking just about the tools, you know, if you want to share a little bit about, what are some things that kind of help you you know, in the business, but also help really succeed in the business from the tool side?
Martha Speed:
Well, one of the things that you have to do initially is, you know, of course we use Excel of course, right? But, is, you know, you've got to look at it on an Excel sheet or somewhere where you can say, okay, if I acquire this loan for $80,000, how many months do I have to sell to recoup $80,000? So you've got to look at the loan itself, how long is it supposed to, will it pay out? And then how much do you need to sell to recoup your investment? And so make sure the numbers work right. And then, you know, the other thing is just, you know, having a process to that, to where, you know at the end when the loan reverts back to you, well, how many months am I going to collect and how is that going to pay out?
Martha Speed:
So, you know, how many years will it pay out? Like when does it revert back? So just kind of keeping track of those type of things. So, you can see the big picture and know, well, there's going to be some loans that just won't work, right? You really can't acquire it and sell the partial and make it work because you have to sell almost the whole loan. So that doesn't work. The other thing that is a really good tool with passive investors is, so if you have a loan and it appraises for significantly more than what it sold for, that brings their investment to value way down, right? It brings my loan to value down. And then for the passive investor, it brings their investment to value down. And so, you know, they have the lower the investment to value. Well, that gives them a big cushion between what they're investing and what the property is worth. You know, so if they're investing 50,000, but the property is worth 150, for example well that gives them a big cushions and it makes them feel really comfortable about, you know, investing their money and that particular asset.
Brian Lauchner:
Yeah. And I think that one of the beautiful parts about the Excel spreadsheet is that it's just, it's so malleable, right? Like you're just plugging and playing. You're coming up with numbers that work for you, but does this also work for my investors? Okay. We need to change it around and not get bogged down to where you're looking for. I need a software that does this for me. So much of this is just using the creativity that you've been taught to say, all right, this is what I need to make this note work. How can I use this spreadsheet to make the numbers also work for my investors? Right? You've got to be able to justify the whole picture. Kind of like Martha said, you've got to make sure this is a win-win. And when you do, it's really beautiful.
Martha Speed:
Yeah. And so like with, you know, with my passive investors, when we start out, I'll do like an executive summary for them that, you know, just to kind of lay it out a little easier for them. But then, as we go down the road, you know, I can copy what I need, the information, I need them to see on a spread and put it onto a spreadsheet and send them a spreadsheet. But it's just the educational part upfront, you know?
Brian Lauchner:
Right.
Eddie Speed:
And, just so this isn't all a mystery. People say, what is NoteSchool? NotesSchool, teaches all of those things that Martha just mentioned like how. What does an executive summary look like? How much information is on it? What is this magic Excel spreadsheet you're on at? It is hardly to used. I mean, like, of course we've learned if you can show people these steps, it kind of gets the fog away, removes the mystery and it's down to it. But you know, it's funny, like, I can't tell you how much money and partials Martha has sold with having a trusted relationship with a passive investor and literally just sending them a poop sheet, right? A little information sheet or whatever you call it. Right? It's an executive summary that just has literally, you could look at the whole thing, Brian in four minutes, the whole thing in four minutes. And you're like, okay, I know enough.
Brian Lauchner:
Yeah, Absolutely. And, when you're raising money, that's what you got to start with. You can't just say, Hey, I got a note, they'll get you 6%. You interested. Right? You got to give them a little something else to make it happen. Well, I know, we're wrapping up the show here, but I wanted to go ahead and ask a couple more questions. We can fit it into time here. Kevin asks, when you broke her notes for cash today, do you use a personal name or an LLC for the transaction, that kind of stuff? Let me just start before we even dig into it and say, nothing we say is going to be legal advice. I'm not an attorney, Eddie and Martha, aren't going to claim to be attorneys. But you know, Eddie, if you want to speak to this I think that every investor knows you really don't want to ever do anything in your personal name, if you can get away from it.
Brian Lauchner:
But in any insight you'd like to have for Kevin.
Eddie Speed:
Yeah. Probably if you could operate in an LLC, that would be best. You could probably have a, if you just had your first deal or two, and you just wanted to do a DBA you're doing business as, you could start there and then you probably could morph into an LLC. Once you make a little money, you think that's fair?
Brian Lauchner:
I love it. Peter asks, how to protect the notes from wealth taxes, right? This is actually Peter, this is something that Martha was referring to. If you missed the beginning of the show, she's doing a lot of these deals in tax advantaged accounts. There's some really creative ways that the law allows you to build this wealth in a tax advantaged environment. And and so, I'd encourage you to continue to look into that as well.
Eddie Speed:
I'm a big fan of a Roth IRA.
Brian Lauchner:
Absolutely. And if you've been following Eddie for any amount of time, man, a lot of what he talks about is make sure you're doing this in a way to where you can legally not have to pay taxes on this stuff. Right? And so, I know there's a lot of questions coming in, but we're running out of time for the show today. I really appreciate everybody for jumping on and engaging. I love seeing all these questions coming in right here at the end. It's great. Thanks for sticking around for the after party. We'll plan on seeing everybody next Wednesday, make sure you tune in live, jump in early and bring your questions as early as you can, so we can engage with you again. Thanks, Eddie and Martha really appreciate y'all for coming on. We'll see everybody next week. We'll see you on the other side.
Eddie Speed:
Bye. Bye.
Martha Speed:
Bye
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