In the cashflow battle of Notes vs. Rentals, there’s a clear winner—especially now that we’re in a strong note cycle. Today, Eddie shows you the numbers that explain why a note investment can pay you double or triple the monthly cashflow from a rental bought for the same price. He shows how a $250K note can bring in $2,750 monthly, while a $250K rental only nets $900. He also goes through several quick case histories of actual notes bought recently by NoteSchool students. Eddie deliberately chose typical notes with typical returns, and they’re pretty amazing.
If you’re currently landlording, this is the episode that could change your life, your retirement, and your legacy.
GUEST INTRO:
Since 1980, Eddie Speed has dedicated his life to the note industry and to expanding the benefits of creative seller financing for both sellers and buyers. Throughout his career he has introduced innovative ideas and strategies that have revolutionized the industry. He teaches these techniques through NoteSchool, the training school he founded in the early 2000s. His training has helped thousands of real estate professionals, both realtors and investors, expand their business model; showing them how to close more deals, increase their earnings, build long term wealth, and think like entrepreneurs. A substantial number of “A” list real estate professionals rely on Eddie’s for guidance on their creative financing strategies. Eddie has personally closed around 50,000 creative finance transactions, and his unique industry vantage point has allowed him to review close to half a million note deals. When it comes to creative financing and notes, it’s safe to say he’s seen it all but remains committed to lifelong learning.
Joe Varnadore invested in his first property at the age of 19, and knows the importance of using creative financing to make deals work. He has created and brokered more than $30 million in note transactions on residential and commercial properties. As an author, speaker, and trainer for the past 25 years, he believes that there has never been a greater opportunity for real estate investors to use non-performing notes to acquire properties.
”I look at Eddie and the NoteSchool team as my board of directors. Having them there to answer your questions is invaluable and expedient to have that type of knowledge at my fingertips”
– Joe LaCount
Eddie Speed’s August End-Of-Month Industry Update
The only thing certain is change. At no time is that more certain than in today’s economy. Where are things headed? Even the top brains in real estate and finance are scratching their heads. For example, Warre Buffet is sitting on $277 billion in cash because he doesn’t know what to invest in.
Eddie Speed often talks to leading decision makers in real estate, finance, Wall Street, etc. He says they’re all studying the data and struggling to get a good read on this market. It’s not easy, ‘cause we’re in a flux!
In today’s highly anticipated end-of-the-month news roundup, Joe Varnadore and Eddie have gathered the latest findings and statistics in all the major segments of real estate: Residential, Commercial/multi-family, Banking, plus lots more.
Some of the findings they reveal won’t shock you, but some will. For example:
- A couple of years ago, Austin, TX had some of the fastest increases in rent. Today, it leads the nation in fastest rent declines.
- The average days behind on delinquent home loans is 1,148 days behind—that’s over three years without a payment. These nonperforming loans will be hitting the market soon.
- The most distressed loans are in in apartments and office.
- 46% of commercial loans aren’t generating the income expected when the loan was created.
- The Sahm Rule that economists trust to predict recessions based on unemployment numbers indicates we have officially entered a recession.
- 7,000 new apartment completions are expected in 2024, but steep declines are predicted for 2025 and 2026 due to recent overbuilding.
- Days on market for newly built homes is about 10 months. Builder sentiment is down due to large unsold supply
We’re definitely in a note cycle, and the note space is attracting new investors from all the other segments. As Eddie says, “It’s better to do the right thing at the perfect time than to do the perfect thing at the wrong time.” Timing is critical!
BTW, NoteExpo 2024 is scheduled for November 8 and 9. Now’s the perfect time so scoop up your tickets: NoteExpo.com
Since 1980, Eddie Speed has dedicated his life to the note industry and to expanding the benefits of creative seller financing for both sellers and buyers. Throughout his career he has introduced innovative ideas and strategies that have revolutionized the industry. He teaches these techniques through NoteSchool, the training school he founded in the early 2000s. His training has helped thousands of real estate professionals, both realtors and investors, expand their business model; showing them how to close more deals, increase their earnings, build long term wealth, and think like entrepreneurs. A substantial number of “A” list real estate
professionals rely on Eddie’s for guidance on their creative financing strategies. Eddie has personally closed around 50,000 creative finance transactions, and his unique industry vantage point has allowed him to review close to half a million note deals. When it comes to creative financing and notes, it’s safe to say he’s seen it all but remains committed to lifelong learning.
Joe Varnadore invested in his first property at the age of 19, and knows the importance of using creative financing to make deals work. He has created and brokered more than $30 million in note transactions on residential and commercial properties. As an author, speaker, and trainer for the past 25 years, he believes that there has never been a greater opportunity for real estate investors to use non-performing notes to acquire properties.
TIME STAMPS
for Monthly Update:
1:40 Joe Varnadore introduces Eddie Speed. He says the top people in the industry are trying to get a good read on this market, and it’s not easy. We’re in a flux!
4:12 Housing Market: Existing-home sales housing snapshot. National Association of Realtors says sales MoM home sales are up 1.3%, but down 2.5% YoY. Inventory is up to a 4-month supply. Median selling price for existing homes is $422, 600.
5:36 New residential sales for July 2024. New home sales up 10% YoY. New houses sold: 739,000, with 462,000 new homes for sale. Median price is $429,800 (high-end home sales have fallen out).
6:38 New residential sales. Home builder sales aren’t surging. Days on market for new homes is about 10 months. Builder sentiment is down due to large unsold supply.
8:30 One-year change in active housing inventory for sale: Shift between June 2023 and June 2024.
9:40 Active listing count from Realtor.com. Listings have increased, up almost a third since January.
11:08 Inventory of newly completed houses surges to highest since 2009, triple from 2 years ago.
13:10 Banks: Current mortgage rates for down slightly. August 27, 2024 30-year APR 6.92%, 15-year 6.19%.
13:56 Even if Fed cuts rates, homes will still be just as expensive. The tipping point is 5.25%.
15:45 Mortgage applications to buy a house are down 13% YoY.
17:45 U.S. single-family mortgage refinance originations are way down due to high rates.
18:35 Mortgage credit availability index level by month. It’s still very tight which creates opportunity for seller financing.
19:35 “The time has come” to lower rates: Fed Chair Jerome Powell.
20:35 Market expectations for Fed funds rate shows declines expected through August 2026.
21:54 Buffet’s cash pile hits $277B. He’s sitting on cash because he doesn’t know what to invest in.
22:52 Money market funds, total financial assets, level. Investors don’t know what to do, so they’re coming to the note space.
23:55 Sahm Rule gets triggered. We’re already in a recession.
25:12 YoY % changes (June 2022 vs July 2024 CPI reports).
26:10 Commercial/Multi Family/Investor Update: Potentially troubled multifamily loans (LTV over 80%).
28:00 Change in effective asking rents on new leases on U.S. multifamily (apartments) (YoY). Chart shows a steep decline followed by flatness.
28:26 Rents are falling—here are the cities with the biggest drops: Austin -16.9%, Jacksonville -14.3%, San Diego -12.7%.
30:00 U.S. apartment completions and forecast (2024-2026) Huge number (7,000 this year) but steep declines predicted.
31:46 CRE industry conditions & sentiment survey—Q2 2024 results. Office has dropped, multi-family still dropping further.
34:00 Office loans are toxic, but apartment loans are in bad shape, too. 46% of commercial loans aren’t generating the income expected when the loan was created.
36:02 Distress by property type. Highest drops are expected in apartments and office.
37:35 Non-Performing Loans: Why can’t Americans pay their mortgage? People are strapped due to inflation and high consumer debt.
38:54 Delinquency rate of first lien mortgages by product.
40:05 Transition into delinquency by loan type. Mortgage delinquencies are lower than other types of delinquencies (like auto loans and credit cards).
42:02 Loan counts and average days delinquent. Average for home loans is 1,148 days behind. These loans will soon be hitting the market for note investors.
44:20 Different cycles, different opportunities. We’re in a note cycle and other segments are declining.
45:40 Eddie: “It’s better to do the right thing at the perfect time than to do the perfect thing at the wrong time.” Timing is critical!
46:02 Why does all this matter? Creative financing fills the gap left by conventional lending. Note investing is clearly on the rise.
48:48 November 8 and 9 is NoteExpo! See the info on your screen to sign up. To learn more about note investing, take our FREE 2-hour Master Class. Just visit: NoteSchool.com/TV
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