Tom Force is a seasoned pilot who joined NoteSchool in 2021. His goal was to replace his pilot’s paycheck with the same amount of income from notes so he could retire comfortably and live stress-free. Two dozen notes later, he reached his goal. (Just six more and he can join the “Check-a-day Club!) Tom always believed in doing a thorough preflight checklist on his flights, and he has applied that same discipline to doing a pre-investment checklist before buying a note. In today’s episode, he describes how he kicks the tires on the property, checks the flaps on the pay history, trains on a simulator with deal labs, and puts his investments on auto pilot with a note servicer. You’ll love this pilot’s down-to-earth wisdom!
GUEST INTRO:
Tom Force was born and raised on Long Island, NY, but moved away when he left to attend the University of Notre Dame, majoring in electrical engineering. He was on an AFROTC scholarship, then entered the Air Force after graduation in 1981. He served as a pilot on active duty for eight years plus five in the reserves, including a year away for Desert Storm. He was hired by American Airlines in 1989, then moved the family to Southlake in 1994 and has called Texas home ever since.
Tom is planning to retire in five weeks. His retirement has been looming on the horizon for the last few years, which is what motivated him to research low-risk investments that produce reliable monthly cashflow—which led him to note investing after hearing Eddie Speed speak on a podcast in October, 2021.
He now owns a portfolio of two dozen notes, and he’s the founder of The Property Force and Note Club USA. He also loves teaching people about notes, and does a regular podcast on creating cashflow.
”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 April End-Of-Month Market Update
In today’s April Market Update, you’ll notice there are basically two categories of real estate investments: Notes; and everything else. You’ll also notice a stark contrast between the results for each of those two categories. Note investors will like what they see. As for everybody else, we encourage you to become a note investor!
In this end-of-the-month round-up of real estate numbers, Eddie Speed and Joe Varnadore take you through dozens of slides with up-to-the-moment information on multiple segments of the industry.
Some of the highlights you’ll be seeing include:
- Housing starts in March 2024 decreased 14.7% since last month. In the Northeast, housing starts are down 36%.
- 30-year fixed mortgages are rising (not falling as predicted by so many experts); and are now at 7.44%
- Mortgage rates could be edging back up to 8% because inflation is still high.
- The Fed’s interest rates are now at a 23-year high.
- Homebuyer housing payments are up 10.6% YoY, a higher increase than the overall inflation.
- The number of homes sold is down 10% YoY.
- Homebuilder stocks tumble as housing starts fall by 14.7%.
- Nearly 50 million Americans are now “subprime borrowers” forced to take higher interest loans and credit cards (if they can get them). The numbers of people with excellent credit are shrinking.
- Total number of delinquent home loans is almost 2 million. Average days delinquent is 1,014.
- Median rent is down 3.5% YoY, but expenses keep going up and up.
- Commercial real estate foreclosures jumped 117% in March.
- Multi-family starts are down 14% YoY.
Spend the next 45 minutes with Eddie and Joe, and you’ll realize why today’s math is clearly pointing to creative financing and note investing.
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:
1:45 Joe Varnadore introduces Eddie Speed. Eddie Speed says there’s now a huge inventory of notes hitting the market. When banking is good, note inventory goes down. When banking is hurting, inventory goes up.
3:30 Housing Market: U.S. housing market overview reveals median home price is $420K+, which is up 4.8% YoY, number of homes sold is down 10%. It’s all affected by price point and rates.
5:50 Top 10 metros in the U.S. with the fastest growing sales price: 1. Cleveland 2. Birmingham 3. Boca Raton.
6:15 U.S. housing supply shows 1.5+ million homes listed, up 3.8% YoY. (2 million is the norm.) There is a 2-month supply, with average 40 days on market. Supply never outruns affordability.
9:25 Homebuyer housing payments +10.6% YoY for median asking price.
10:45 Homebuilder stocks tumble as housing starts fall by 14.7%: “A poor time to buy a home” says economist. Housing starts in March 2024 decreased 14.7% MoM. Northeast down 36%, but in the West, housing starts are up 7.1%.
11:35 How are capital gains taxes affecting U.S. homeowners? In 2023, nearly 8% of homes sold exceeded the $500K capital gains tax threshold. These are perfect candidates for seller financing!
13:36 Banks: 30-year fixed mortgages are rising, now at 7.44%
15:10 Average rates show 30-year fixed APR is 7.609%. 15-year is 7.084%.
17:27 The Fed is poised to hold interest rates steady—here’s what that will do to mortgage rates. (They could be edging back up to 8% because inflation is still high.) The Fed’s rates are now at a 23-year high.
17:30 Nearly 50 million Americans are now “subprime borrowers” forced to take higher interest loans and credit cards (if they can get them). Number of people with excellent credit are shrinking.
19:55 Commercial & Multi-Family: Multi-family housing market will decline in 2024. Multi-family starts are down 14% YoY, and expected to reach -20% in 2024. This puts negative pressure on rent growth.
21:30 It’s another month of negative multi-family rent growth in March according to Apartment List’s newest rent report. Median rent is down 3.5% since peak in summer of 2023. But expenses have NOT gone down.
22:27 Capital constraints a “forced pause” on multi-family development. Traditional lenders are withdrawing from this market segment.
26:45 Commercial real estate foreclosures jumped 117% in March as trouble looms. Eddie says lots of loans are falling behind but not yet officially in default, so there’s a big train coming down the tracks.
28:05 Are the trees growing to the sky? A year ago, multi-family was doing well, but not now. “We sell generators, and there’s a hurricane coming.”
29:02 Non-Performing Loans: Fannie Mae announces sale of reperforming loans. They’ve offered appx. 6,507 loans (a drop of water in the desert).
29:37 Freddie Mac announces $120 million non-performing loan sale.
30:20 Is time the enemy of equity for chronically distressed homeowners?
30:57 Delinquent & in-foreclosure forbearance exits. Average today is about 1,000 days. The chart shows the period when lenders were not allowed to foreclose. Everything is now coming to a head. Lenders are going to be offloading lots and lots of bad loans.
34:50 Loan counts and average days delinquent. Total active count is 53,135,417. Average days delinquent is 1,014. Total loans delinquent is almost 2 million.
35:50 Different cycles, different opportunities. To summarize, today’s cycle offers more money for seller financing a rental property instead of renting it. Today’s math strongly favors seller financing for better monthly cash flow.
41:40 Creative financing fills the gap. Conventional lending doesn’t. There are huge numbers of penalty box buyers who can be helped by creative financing.
43:30 Joe closes with a reminder to watch next week’s episode with a great guest. To learn more about note investing, go to: NoteSchool.com/TV
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