Eddie Speed (00:06):
So, guess who I got today.
Brian Lauchner (00:10):
Who's that?
Eddie Speed (00:10):
We'll, 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 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 (00:47):
Okay.
Eddie Speed (00:48):
And let's talk about your growing up in the business. What was that like?
Martha Speed (00:54):
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.
Martha Speed (01:19):
You know, how to process a loan as far as what you want to look at when you're buying. And then documentation was, 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? 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 yeah, as far as documentation, you know, we've just done a lot of that over the years.
Martha Speed (02:03):
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, 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. But you know, then as you buy, 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 cashflow for future generations, you know, 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 (03:18):
Oh, we're going to spend it all.
Martha Speed (03:20):
He keeps saying, I'm like no, we're not.
Eddie Speed (03:22):
We're going to spend it all. I want my last take of gas to buy last dollar, but no, I'm just kidding.
Martha Speed (03:30):
Well, and you know, we, 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 (04:01):
Okay. So you've developed a strategy, you and I learned this concept from your dad and we 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, always have had a concept though, of building a legacy, right?
Martha Speed (04:29):
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 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 might have. And so he was just, you know, a master, you know, calculating that and knowing exactly how much cashflow 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 (05:47):
And how, what better business could there be than being the bank and actually just, you know, 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've got to build it, but you can get there.
Eddie Speed (06:12):
Yeah. I wanted to make a statement about Martha's dad and Mr. 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 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 (07:06):
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 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 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 (07:56):
Right. Yeah. And, you know, we'd look back and we do, we still laugh about these trips that we took that kind of, you know, we're 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 wealth 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, to 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 back then.
Eddie Speed (08:58):
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 Education, whatever that is for us and our family.
Martha Speed (09:15):
We still bought in LLC's. I mean, you know,
Eddie Speed (09:19):
You buy a loan and then you turn around and you sell a cashflow of that note, or you buy the whole stream of payments. If I can use my hands, right? Then you sell part of the, you sell the first, say half of that note. And it's pretty good math. Martha, if you buy a hundred thousand 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.
Martha Speed (09:51):
Right.
Eddie Speed (09:51):
You'll sell that for about 80,000 bucks. Yeah. So you can back into the numbers and see how it works.
Martha Speed (09:58):
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 of course, you know, and 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 costs. I mean, what's, you know, what's the dollar amount 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. And is that, it's exactly the same.
Martha Speed (10:43):
Like if you were doing a fix and flip model where 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
Eddie Speed (12:02):
You allowed 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 (12:31):
It is, and I mean, they're just so many different areas that you're gonna 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 at 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. If they're, you know, to that point that they're ready to, you know, stop being an active landlord.
Martha Speed (13:27):
You know, and many times, depending on the cycle of where they are and rentals, you know, maybe it's time that they're going to have to go put 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 (13:57):
They like real estate. They just don't like the job.
Martha Speed (13:59):
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 (14:36):
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 (15:08):
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 (15:42):
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 (15:55):
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 loan 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'll 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 (16:48):
And I remember the first little pool of notes that I bought. I might've spent about 30 something thousand that was all had right. I mean, cause I, you know, 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, 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's he calls it the snowball effect.
Martha Speed (17:36):
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 systematized and, you know, just go for it. And so and it is like, 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 cash flow down the road and your residual income. And so you know, that's, it's just such a good model.
Eddie Speed (18:17):
So, Martha, you originally learned legacy from your dad. You learn disciplines, right? You have now developed quite a discipline. You have quite a reputation.
Eddie Speed (18:33):
Martha's probably the only recipient of The Note Industry, Lifetime Achievement Award that's in her desk drawer.
Martha Speed (18:39):
It's not, it's on the desk.
Eddie Speed (18:42):
She hasn't even hung it on the wall. That's a true story about it.
Martha Speed (18:45):
I don't have anything hanging on the wall. I'm have to get an interior decorator over here. I don't have time. I'm sorry.
Eddie Speed (18:52):
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 (18:57):
You know, 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 (19:15):
But now you've taught, now you're teaching legacy to our kids.
Martha Speed (19:19):
Yeah.
Eddie Speed (19:20):
You're teaching them their strategies. That just doesn't, it's the creativity that allows you to have a legacy. It's not a huge pile of money you start with. It's understanding creative strategies.
Martha Speed (19:33):
Yeah. It is. It's just understanding the different strategies and how they work and what 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, and just how it all fits in and comes together.
Martha Speed (20:20):
So
Eddie Speed (20:22):
Let's ask Brian to come home. Maybe he's got something that he would like to, you know, Brian, I was going to think of one thing that I did forget. It'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 (20:46):
Well I, 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 much of your time and money can you give and help others then it changes your whole philosophy on what you're doing. And I, it's just like you know, it's just like the partial model, it's a win-win. It is a win-win for me, it's a, win-win from 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?
Martha Speed (21:42):
What do I do? It's like, you know, just find this, you know, just start looking at notes, don't wait, find something that fits your budget or 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. And, you know, I really ended up friending and many of the investors become friends with me and you know, but I, you know, I do a lot and I spend a lot of time with them. Before they even buy an asset you know, just really teach them 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.
Brian Lauchner (23:09):
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 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 (23:49):
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, we can, 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 risk. 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 been able to help a lot of people not just make more money, but also reduce their risks. And I think that's really big, from a legacy perspective.
Martha Speed (24:29):
Absolutely. I mean, you know, you've got to, like I said, I mean, I get to know them, all my investors personally, so I really learn about their risk tolerances, you know, and, 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 when they need to be, if 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 gotta 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 (25:19):
Absolutely.
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