Notes vs. Landlords: Which Strategy Wins? – NoteSchool TV Episode 230
In this eye-opening episode of NoteSchool TV, Eddie Speed and Bob reveal the stark contrast between being a landlord and being the bank through note investing. They walk through a detailed real-world comparison showing how note investing can generate significantly higher returns with far less hassle than traditional rental properties.
Using a practical example of a $230,000 property, they demonstrate how being the bank consistently outperforms being a landlord, delivering an additional $1,140 per month in passive income without the headaches of property management, maintenance, or tenant issues.
Key insights from this episode:
- How a $185,100 note investment can yield 12.25% returns versus the diminished returns of rental property
- The true cost of rental property ownership when accounting for taxes, insurance, and maintenance
- Four powerful strategies to leverage your note investments for maximum returns
- How to use partials and hypothecation to create extraordinary leverage with minimal capital
- A step-by-step breakdown of creating 38% returns through institutional partnerships
Whether you’re a busy professional with a successful career looking to diversify your income streams, or you’re tired of managing rental properties and want truly passive income, this episode demonstrates why note investing should be your next wealth-building strategy.
Don’t miss this comparison of what it really means to be the landlord versus being the bank – and discover which path leads to greater financial freedom with less time invested.
For more information about NoteSchool’s programs and upcoming two-day classes, visit noteschool.com/tv.
”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 December End-Of-Month Industry Update
Eddie Speed and Joe Varnadore deliver a comprehensive 2025 market forecast, breaking down crucial trends that will shape real estate and note investing opportunities in the coming year. In this episode (#219), you’ll discover:
- Why commercial real estate, especially multifamily, faces significant challenges with $1 trillion in loans coming due
- How affordability issues are driving changes in both new construction and existing home sales
- The truth about mortgage rates and why the Fed’s actions may not have the impact many expect
- Why special servicing rates in multifamily have more than doubled in the last 12 months
- The hidden opportunity in 800,000 “lost” loans that could create massive possibilities for note investors
Get an insider’s perspective on why 2025 could be a breakthrough year for note investing as traditional real estate faces headwinds. Eddie shares candid insights about market timing and why note investors are uniquely positioned to capitalize on upcoming market shifts.
Watch more episodes at noteschool.com/tv
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:
1:50 Joe Varnadore introduces Eddie Speed. He says he’s “a little bit in limbo” based on what the market is doing.
3:50 Housing Market: Housing market predictions 2024: What homebuyers should know. Predictions on price increases for 2024. Eddie is skeptical prices will go up as much as some predictions (from +4.8% to +2%).
5:54 Easing housing’s “Lock-in” effect. More than half of homeowners say rates would need to be lower than 6% to buy this year. Eddie does not expect rates to drop to that level this year.
7:54 One-year change in active housing inventory for sale: Shift between June 2023 and June 2024. Map shows inventory change by state. Florida is up 71% while Nevada is down 21%.
11:00 Cash crash: All-cash offers tumble as housing market shifts. Investor cash purchases dropped to 64% in Q1 2024. Lowest share of cash buyers since 2008. People are switching from investing in houses to notes.
12:34 Median sales price for homes, now at $412,300, which is slightly down from peaking a while back at $435,000.
13:35 U.S. existing home sales. Chart shows sales are trending down in June which normally trends up. Has the market hit a wall? Eddie says it’s too early to call. But seller financing us up!
16:10 Banks & Lending: Current mortgage rates for July 29, 2024. 30-year fixed now at 7.23%, down from 7.3% last week.
16:57 Mortgage credit availability index level by month. Only about half as many today can get a mortgage as before the pandemic. That’s why seller financing is so strong right now.
17:45 30-year fixed rate mortgage average from the 1980s to today. Rates above 6% are normal. Average rate over the years has been around 7.5%.
19:48 Housing market predictions 2024: What homebuyers should know. Experts generally predict mortgage rates will go down a little bit this year, possibly into the 6.5% to 7% range. (That’s not the APR, so actual rate will be almost 1% higher than that.)
21:26 Citi shutters unused credit card accounts with losses soaring.
23:04 Banks are in limbo without a crucial lifeline. Cracks may appear next. Eddie has seen a 5-fold increase in delinquent notes currently being sold off by banks.
25:06 Commercial/Multi-family/Investor Update: U.S. apartment transactions slump to lowest level since pandemic. Eddie called the decline back in mid-2022. Lenders are cutting off about 50% of loans.
26:38 High supply submarkets log deepest rent cuts in Class B and C stock. New buildings will get rented but the older ones will have higher vacancies.
27:50 National condo and apartment units completed and underway. Chart shows there has been too much inventory built and new building starts are declining quickly.
29:22 Apartment markets scheduled to see deliveries decrease in the coming year. Houston is #1. Minneapolis is #2. Building projects started when things were looking good are finally being completed and hitting the market, which is now saturated.
31:22 The factors weighing down multifamily rents and profit margins. Rent growth in the -1% range. There’s a 40.2% unit increase YoY.
33:22 Multifamily property values fall as insurance premiums climb. Insurance costs have jumped from 8% of total expenses to 17%. Due to rising insurance costs, multifamily property values have dropped 3.6% since 2019 nationwide.
34:52 Multifamily delinquencies increased again.
36:05 Non-Performing Loans: June sees calendar-driven spike in delinquencies; foreclosures remain historically high. Many loans are over 3-years delinquent and have to be foreclosed on, so a wave is expected.
38:05 States with the most foreclosed homes. New York is #1, Ohio #2, Michigan #3, Florida #4, Texas #5. Most are old loans.
39:35 States with the fewest foreclosed homes. Led by Alaska, Rhode Island, Utah.
20:26 July 2024 mortgage monitor report. June had 1,825,000 delinquent loans that are not in foreclosure. About 650,000 are close to foreclosure. Eddie expects a surge in foreclosure after the election.
42:30 Loan counts and average days delinquent. Average days delinquent is 1,014.
43:36 Different cycles, different opportunities. What works in one cycle may not work in the next. We’re now in a note cycle!
44:42 Eddie says: “It’s better to do the right thing at the perfect time than to do the perfect thing at the wrong time.” Things that were perfect a couple of years ago aren’t working now. Notes are now clearly better than multifamily and rentals.
45:50 Money market funds, total financial assets level. Now at $6.5 trillion. Investors are showing up at NoteSchool in crazy numbers.
47:56 Eddie’s closing thoughts: Do the right thing at the perfect time! Learn more about note investing at our FREE 2-hour Master Class. Just visit: NoteSchool.com/TV
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