You NEED These Creative Strategies In 2023

Steve Trang: Trains. Jump on the steep train. We real estate disruptors.

Steve: Hey, everybody. Thank you for joining us for today's episode of real estate disruptors. So we've got Eddie Speed with no school, a mentor of mine, and Eddie did fly in from Southlake, Texas to talk about the creative strategies you must know in 2023. Now as you guys are aware, I am on a mission to create 100 millionaires. The information on this show alone is enough to help you become a millionaire in the next five to seven years.

If you will take consistent action, you will become one. And the show is brought to you by our sister company, InvestorLift. Get access to 2,000,000 cash buyers across the country. Go to investor.com, put in disruptors to get 10% off. And if you get value today, please tag it from below.

Share this episode right now. That way we can all grow together. And this is a live show, so please ask your questions for Eddie to answer. You ready?

Eddie Speed: I'm ready.

Steve: Alright. So I'm gonna come straight at it because you had a very important conversation this morning. Yeah. Right? So you texted me a day or two ago.

I was like, hey, Steve. Might be a little late arriving to the to your office. I got this important important meeting that I gotta have. What was this important meeting?

Eddie: Well, for eight years now, we've been, at the, foot of the table Mhmm. Of Congress and lawmakers in Washington DC because of Dodd Frank. And so, congressman Andy Barr, who is from Lexington, Kentucky, and he is chairman of the financial services committee in congress, and he was at my office at 09:00 this morning.

Steve: Chairman of the financial services committee.

Eddie: He is. And a great guy. Really, really, really respect him. Mhmm. And, yeah, he was at our office this morning, and the seller finance coalition bill is is they're putting it in motion.

And and, this bill that there's revisions to the bill. So there's revisions that we think are probably the best this time that we're have ever gonna had. Gotcha. And, and and it relates to people offering seller financing and not having to be under the, let's be honest about it, the thumb of Dodd Frank.

Steve: Right. Well, first of all, thank you for for doing this. You know? This is something that I brought it before on a different show, pardon the disruption, but, like, we can all talk about creative finance and advanced seller strategies, this and that. But, like, Eddie is genuinely representing us in congress, right, to talk about these important topics.

Now, we're also in a different, supergroup, a different, mastermind some time ago, supergroup. Right? Scott Utz runs it, and, I I'm in there, and you were there. And I was talking about, like, compliance. Right?

It's a word that Eddie preaches. Yep. It's a word that Steve doesn't really understand. Right? But it's really important to you.

And so let's talk about the effect that Dodd Frank had on the industry and then what changes we're potentially seeing with this new bill.

Eddie: So, when when Dodd Frank was adopted, then seller financing fell into Dodd Frank. Mhmm. And and I'll tell you, absolutely, I believe that the reason that we were there is because our industry did was not we didn't collaborate well together, and we had we didn't have a seat at the table. We had no lobby effort, and we didn't have a seat at the table. So guess what?

We were on the table. We were on the menu. Right?

Steve: Yeah. Well, we got a bunch of cowboys out there.

Eddie: Yeah. And, so so seller financing, more than three transactions in a year, you are essentially treated like a bank, which means that you have to be compliant with Dodd Frank.

Steve: Yeah. Which meant you had to have an in house underwriting or some sort of

Eddie: You you you normally can get an in in most every situation, you can outsource the underwriter. Mhmm. But it has to be done. And there's a lot of provisions in Dodd Frank, that that are very restrictive in what you can do as a lender and then later as an owner of the notes. So, this revision will allow 24 transactions in a year Yeah.

That without Dodd Frank. Now let me specify this. It still means that you have to verify income. Mhmm. And verifying income is just smart.

Right? It's good for the borrower, and it's good for you as

Steve: the lender. It's good for business.

Eddie: Exactly. So because you're gonna

Steve: sell a crappy note.

Eddie: So you yeah. And so, you know, I I've been teased, as you know, in masterminds and stuff. You know, Eddie said if you don't do your seller financing right, you're gonna go to jail. Well, I'm not saying you're gonna go to jail, but I'm saying that you might be highly disappointed in finding out what the fines are. Mhmm.

Steve: Highly disappointed. Because there's, like, a per infraction situation. Right?

Eddie: Normally, there is.

Steve: Yeah. Like, off the top of your head, you know what it is, like, for every violation of Dodd Frank?

Eddie: I I I believe I'm saying this correct. Now this this doesn't mean that every scenario that you're maximized, but it could be literally up to $20,000 per transaction. I mean, it would be so oppressive you wouldn't wanna think about it.

Steve: Yeah. That could that could put you out

Eddie: of business pretty quick. Exactly.

Steve: Yeah. Yeah. And and it was because Jimmy Vreeland, he's been in the show, and he's a consistent member or or panelist on on part in the disruption. Love the guy. Love his high energy.

And he came on to CG. He's like, hey, guys. I've got this great strategy. Here's what we do, and it doesn't really matter what the situation is. As long as they're willing to make those payments, we're good.

And you are the one, if I if I recall correctly in the story, like, hang on, Jimmy. What you're talking about here can get you in a lot of serious trouble.

Eddie: Yeah. And specifically, I gay I I said Google these stories. Mhmm. Of course, when when you Google the stories, it's like, oh my goodness. Mhmm.

Know, there was it was all over the press, but he didn't know. I've been in the industry for years, and I so I hope we've it's not solely me. Right? The Seller Finance Coalition and so we're sellerfinancecoalition.org. Right?

And that's the that's the grassroots effort that we have in doing this. And, you know, but I think we have a trusted that they that they believe that we are good guys, and they believe we're trying to do the right thing. Yeah. And, hopefully, we'll I think we'll get this law done. I really do.

But we need a lot of help. We need a lot of support. We don't just it just doesn't need to be Eddie and a handful of guys. Right?

Steve: Yeah. What kind of help and support?

Eddie: What would you guys do? We really need two things. Obviously, we have a lobby effort, and so we need people to help us with the lobby effort. Yeah. And then the other thing is, Steve, is that we, whenever we go on these lobby campaigns and and go on the hill, right, in DC, That we go in a congressman's office or we go in a senator's office, guess what they ask?

Well, is there anybody in in my area? There is anybody that's in our district that that does this. And so we need people that are all across the country that actively do this Mhmm. That they can because they realize they're helping their constituents as they see.

Steve: Gotcha.

Eddie: That's a huge thing.

Steve: So if you guys are listening, you guys gotta raise your hands. Is there, like, a registration on the website?

Eddie: You can go there and you can register. And, so right now, we're really trying to gather up. In fact, congressman Barr this morning had a had a little group of us there, and he was specifically talking about that. We need examples. We need we need to hear from people.

Every congressman needs to hear from people in their district.

Steve: Yeah.

Eddie: Every senator needs to hear from people in their state. Like, this is something that affects our livelihood. And and, you know, if you think about it, seller financing is what provides homeownership when likely these people wouldn't have homeownership

Steve: Yeah.

Eddie: On the buyer side.

Steve: And it wasn't in grand scheme of things. It wasn't too long ago where this is just the way homes are sold. Right?

Eddie: Like That's it.

Steve: Forty years ago, seller financing was totally normal. It was sometime in the last forty, fifty years where Fannie Mae, Freddie Mac, and all these institutions were created for bankers to benefit.

Eddie: Creative financing didn't just start.

Steve: Right.

Eddie: You know, sometimes we see Facebook and, you know, the other social media platforms, and we act like creative financing just started. They definitely didn't.

Steve: Right. No. It's been around longer than conventional financing.

Eddie: Yeah.

Steve: And then, I heard somewhere along the way, that you are a roping champion. Yeah. So Chip asked me to to see if you could, show us your rope or or do give us a little demonstration. What's that story about?

Eddie: You know, I grew up as a kid, as a cowboy. Grew up in a cattle auction barn, and I grew up In a what? In a in a cattle auction barn, you know, where they sell livestock.

Steve: Okay. Got it.

Eddie: Got it. Right? And, I I would have sworn at 18 years old, that would be my life. I wouldn't have dreamed of being anything else Mhmm. But in the cattle business or the horse business.

In fact, I have an associate's degree in ranch management

Steve: Interesting.

Eddie: And from TCU. And, and that's an interesting program. It's only one year, but it's fifty four college hours in one year. Yeah. So, I thought that was where my life was gonna go.

And, you know, it was really because of a disruptive market that really changed gears. When I graduated in 1979 or 1980 from that program, interest rates were 20%.

Steve: Wow.

Eddie: So, you know, like, to go borrow money and have a ranching operation or whatever and stuff, it was it wasn't very practical.

Steve: Yeah.

Eddie: And so that's what led me into, you know, eventually, you know, finding my father-in-law who introduced me to the note business. Yeah. And, so I get to go play cowboy a little bit right now, but I'm just I'm not trying to make a living doing it. And, and so, you know, many years ago back in the late eighties, I got lucky enough to win the world in the horse show deal a couple of times as a amateur team roper. So

Steve: That's pretty cool.

Eddie: I'm a I'm a has been, though.

Steve: I mean, it's cool, though, to win a champion of anything. Right? Even though it was the amateur level, like, no one ever, like, knocks off someone that's, like, got got a Golden Gloves champion. Like, yeah. It was just an amateur fight.

Like, no. It's still pretty good. I've got Golden Gloves. So the seller finance coalition

Eddie: Mhmm.

Steve: Who's in

Eddie: that org.

Steve: .Org. Who who's in that coalition?

Eddie: So, we there's there's a group of us that originally founded it. I'm you you know Jeff Watson. Mhmm. So Jeff's deeply involved in it. National RIA has been in in involved in helping support us because they have 40,000 members.

Right?

Steve: Right.

Eddie: Then, Bob Repass that works in our operation has been really involved in it. My father in law's ex partner, my father in law's passed away twenty five years ago, but his partner, is Glenn Lee in Houston, and he's been deeply involved in it. Mitch Steven and his partner, Mike Powell, you know, they do about 300 seller finance transactions a year down in San Antonio.

Steve: Yeah. Mitch is a big name.

Eddie: Yep. And, so, my my friends up in the country, David Fanelio and Paula Dwire, and that's the guys I do the land business with. And so they've been really the the it's it's we're we're all really involved. Lou Brown has helped us, brought a big group to DC for lobby efforts a couple of times. So we're we're a growing contingency, and I think, you know, if people think, okay.

If if this law passes, you're saying that I could go from three transactions a year to 24 transactions a year without having Dodd Frank. Is that a big deal?

Steve: It's a significant deal.

Eddie: I think it is. Yeah.

Steve: There's not a lot of people doing more than 24 Yeah. Deals a year.

Eddie: About a 100,000 seller finance transactions a year, and, obviously, it's growing now. But in but in history, about a 100 and but only 16% of those are people that do four 16% of those 100,000 transactions do, for that the seller does more than four a year. Mhmm. So what you see is is the professional guy that would do a lot more of these, they sorta they sorta curve away from it. And I think that if you can fix that, you fix a lot.

Steve: Gotcha. And then there's something that you and I have talked about, where we gotta be careful as far as, again, going back to compliance and the law. And it's pretty serious stuff that you might want to investigate whether these tools make sense in your particular state. Yeah. Can you elaborate on that, please?

Eddie: Well, specifically, sub two. Mhmm. And so in after 2008, the the big thing, as you well know, became short sales. Mhmm. And a lot of people were delinquent on their mortgage, and there became a lot of consultants that are gonna help people get a short sale.

Steve: Yeah.

Eddie: Well, they took their money, but they didn't do any they didn't do any good for them.

Steve: Mhmm.

Eddie: Whether they totally tricked them or they just weren't successful or whatever, then

Steve: Incompetent or malice, either way. Exactly.

Eddie: So about half of the states have, basically, laws that are consumer protection laws for delinquent people specifically delinquent on their mortgage. So about half the states. Mhmm. And so if you're doing a sub two and the guy's delinquent and you're unaware in your state, if your state has one of these laws, then you probably would wanna know that. Right.

Here's why. That borrower is this was copycat legislation, so a lot of the legislation is very similar state to state. Right? Yeah. That borrower is a protected class.

So think in terms of dealing with a minor or dealing with somebody that's elderly and doesn't have good mental faculties. Mhmm. You can't just go do things with them. You can't go contract and do business with them like you can somebody else. Well, that delinquent borrower falls into a protected class.

Yeah. And so you are now held to a fiduciary standard.

Steve: It's a very different standard.

Eddie: It's it's quite different. And so the it's not that I'm not for sub two. In fact, I made a phone call in your office a little bit ago with a guy trying to figure out sub two, and I was trying to connect him with the right, you know, get him down the right lanes and stuff. And I said, don't be scared of it. Just be aware of it.

Yeah. I said, think in terms of it's the difference between driving through a town and being unaware there's a speed limit and driving through town clearly aware there's a speed limit.

Steve: Mhmm.

Eddie: One one makes you observant, and one makes you kinda dangerous.

Steve: Right. That makes total sense. So if someone wanted some more information on that, what are some things they could do to ensure they're, compliant? Well, one of the

Eddie: things one of the things that we like to do, we've got when somebody progresses with NoteSchool, we have a specific video that Jeff Watson has produced.

Steve: Mhmm.

Eddie: And he talks about this specific thing. It gives them the whole kind of blueprint, kind of a risk management blueprint, and exactly how you Google the state's laws and what that looks like. And and then that that way you'd know if you're in California, if you're in Florida. And I'll I'll give you an example. Florida has this law.

Florida says that if you are you have been you've had foreclosure initiated, now that could be as as much as just a notice of default.

Steve: Mhmm.

Eddie: Colorado has this law, and Colorado says if you're thirty days delinquent. So not it's not we can't, like, generically just say every state is exactly the same level of what defined delinquent.

Steve: Right. So I think either way, everyone that's doing creative finance, they should get involved, find an attorney, have them sit down, make sure they understand what they're doing, and, you know, be aware of the the law so that they can keep themselves out of trouble.

Eddie: Definitely, if you're doing sub two Mhmm. And you and you let's be honest about it. If you're getting your information off of Facebook, you might wanna dig a little deeper before you get yourself in a spot.

Steve: Sure. Is

Eddie: that fair?

Steve: Definitely fair. So what is the difference then? Because we're talking about the the laws in the in the books here because I was definitely around during the short sell time. Right? Like, short sell became a common term shortly after I got into the business.

Yep. So what is the difference between sub two and marketing to a pre foreclosure to just purchase their house cash?

Eddie: Well, I'm a be honest with you. I I think I think there are some states, as I'm told, you need to be even cautious marketing to a pre foreclosure.

Steve: Mhmm. Well, because I know, like, in Washington, it was, they call it, equity stripping. Yeah. Right? Like, equity they have specifically equity stripping laws in Washington.

So I have people that I have mentored. They're like, yep. If it's preforeclosure, we don't even go talk to them because they're

Eddie: That's correct.

Steve: They they we have all these laws in place that we don't wanna even deal with the consequences of buying a pre foreclosure in Washington.

Eddie: Steve, one of the things that's happened you know, we were talking, you know, in kind of my pre interview with your team.

Steve: Yeah.

Eddie: And they were saying, Eddie, what's different now than was years ago? And, you know, like, one thing that's really cool is information and and and training and and and how much easier it is for somebody to get started. Mhmm. But there is a culture, particularly in the house flipping world or in the wholesale world. Like, when I ask a guy, even a big operator, you and I are friends with some people, and I ask them who their attorney is, and they look at me like I'm crazy.

Mhmm. Like, you don't have an attorney in your state, like a real estate attorney, that you call and ask questions?

Steve: Mhmm.

Eddie: So that's a little bit of, you know, I'm I just feel like sort of the old man in me says, guys, if you have a business, treat it like a business. Mhmm. You probably need an attorney that you can ask good questions to. Sure.

Steve: Oh, Alright. I think that's always great advice. Right?

Eddie: Yeah.

Steve: So, let's see what else I wanna make sure we talked about. You know, we talked about this before because I wanna get into what's things we've learned in the last year. Before we but before we get into the things we've learned in the last year, I wanna make sure we're we've we got a good foundation. Right? So I wanna talk about first the installment sale.

Yep. So the installment sale is obviously a wonderful tool. For those that are for the uninitiated, what is the install what is what is an installment sale, and how is it beneficial for our business?

Eddie: Well, if we're trying to buy a property from someone and then we're trying to get them to owner finances Mhmm. It is it has been my observation they're very unaware of how the IRS tax code relates to their offering on their financing. So let's just say that you got this as an example, let's say that you have the burnout landlord.

Steve: Yeah.

Eddie: Right? And and they have a property. We know they're sick of the property. We're certain of that. Mhmm.

Right? But now let's say that they're they're now sick of the property, but they would like to keep cash flow. They and so you're like, well, did you know there's a there's a couple of tax loopholes that are really good for you? And they're like, what? Like, yeah.

Like, when you sell a property let's just say, I'll use a kind of a visual analogy here because I think it'll make sense. If you sell a property, this represents what you would literally do the day you sell your property. My hand my hand here represents capital gains would all be due that year. But if you did an installment sale, you lay that down, and what do you have? Well, you have those installments that are due over time, and the IRS allows you to claim the gain the year you get the money versus the year you sell it.

Steve: Right.

Eddie: Okay. That's one tax advantage.

Steve: Mhmm.

Eddie: But there's also a sister tax advantage. If you if you limit the amount of capital gains that you get in any given year. Now, Steve, I'm gonna do you a disclaimer. Not every person's tax situation is the same, so you can't generically always say every person. But it is possible.

In fact, I'm gonna even stretch it and say it's probable that

Steve: one

Eddie: of these landlords could sell a property and collect a low amount of capital gains over time Mhmm. And literally never hit the threshold of when the capital gains is taxed.

Steve: Right.

Eddie: So there you what? You could sell your property with owner financing and and basically not be taxed on capital gains because you took the money and stretched it out over time and low and and limited the amount of capital gains on any given year. And the answer is that's true.

Steve: That's absolutely true. So why is it because we're talking about why you need to know this in 2023. Right? Or things you need to know today. Why is it that in our world, this was not discussed until very, very recently?

Eddie: Well, you know, I like creative financing. I understand it. I think we we know how to we know how to bring the subject up with a customer. We're comfortable talking about it. I think we were in an environment, Steve, for a while where, let's be honest about it, the hedge funds were out there buying deals from wholesalers, Or there was aggregators that were buying from wholesalers and then reselling the hedge funds.

And Sure. And they were paying market value and even market value plus.

Steve: Mhmm.

Eddie: People weren't forced to figure much out.

Steve: Right. But, I mean, you've been doing this, like, you've done 50,000 of these. Right? I guess where I'm going with this is that there are things that is really important. We have a professional behind you.

So we just spend a good amount of time talking about the attorneys. Yep. It's also really important that we have the right accountants behind us.

Eddie: That's correct.

Steve: Right? Yep. Because a landlord probably isn't reading the IRS tax code. Most flippers, wholesalers are not reading the IRS tax code. And so you had recently connected with somebody who was like, Eddie, what you're doing is genius.

They don't have to pay any taxes.

Eddie: That's it. So you

Steve: wanna talk about that conversation?

Eddie: Yeah. So this was a guy actually, one of my coaching students, a very successful guy. He has a a a specialist accountant. He he he's a CPA by by education. Mhmm.

But he doesn't do tax returns. What he does is show people tax strategies. And so he was involved in a training I was doing, and I was explaining installment sales and which I was had verified with a a tax accountant as well as a CPA, and I was very confident I was saying it in an accurate way. Mhmm. And then he goes, woah.

Woah. Woah. Woah. Woah. It it could get better.

It could get really better. And I'm like, what? And then he started make talking about these thresholds Mhmm.

Steve: Of

Eddie: when you could earn so much money in capital gains before you hit a taxable number.

Steve: Sure.

Eddie: And if you kept that number down on any given deal year, you're like, really? You really could sell the house and not trigger capital gains because you didn't hit the the amount of money you took in any given dear year didn't hit the threshold. And and so that was a game changer. So, you know, that's collaboration, Steve. You and I believe so much.

I mean, we're masterminds. You and I Mhmm. Have all these friends that are in the business, and this is how we figure stuff out.

Steve: Right.

Eddie: We don't live in a bubble. You know? We gotta go communicate with other people and stuff. And so I I would say that when when we're talking about this, I don't want the audience to feel like, well, oh my god. I've gotta be an IRS expert.

So let me give you let me give you an analogy I think is true. K? Don't you figure that every car salesman in the world understands that if you do a lease on a car and you and you're buying it for your business, that those payments are a 100% deductible? Don't you pretty much know every car salesman has to know that?

Steve: If they're professional, I hope they know it.

Eddie: So so if that's the truth, they just are pointing out something, doing the disclaimer that I'm not a CPA. I'm not giving you tax advice, but you might check into this because I think you're gonna find this out. And I think that's how we say it. Yeah. I don't wanna get people in trouble offering tax advice when that's because I'm not a CPA.

Right. Right? And I don't wanna get anybody else in trouble. But if you are aware of a loophole and I have verified this with a lot of competent professionals that can give tax advice. Mhmm.

And they're like, yeah. That's how it works.

Steve: Right.

Eddie: And so now all of a sudden, you're just pointing out something to your customer that they would have never thought of.

Steve: Yeah. So, again, just to be clear, neither Eddie nor I are attorneys or accountants.

Eddie: That's it. Right?

Steve: We're just sharing what we've learned from other attorneys and other accountants.

Eddie: That's it. Yeah. I don't I don't play one on TV either. Right?

Steve: Yeah. No. Definitely not. I mean, we might say suggest things as friends on the phone, but we will never ever, get compensated as accountants or attorneys.

Eddie: That's it.

Steve: Yeah. So alright. So, basically, we're talking to a tired landlord. So, hey. You know, if we could reduce your taxable consequence or taxable liabilities, how, you know, how interesting would that be to you?

And, like, oh, generally speaking. Right? Demographic wise, I'm gonna make a lot of generalizations here. Generally speaking, if you're a landlord, you probably lean conservative, and you probably or at least fiscally conservative. Yep.

And you probably hate paying taxes. That's it. Right? So just say, hey. What if there's a way we can help you avoid or at least reduce your tax liability?

What's that? Right? And then we kinda share these things. And then after that, it's like, and what if there's a way you can avoid altogether? How interesting would that mean to you?

Right?

Eddie: Well, if they're gonna owner finance you, what they end up with is is collecting payments. And the reason, Steve, that's so important is because collecting payments now means that you're getting, a check every month. Mhmm.

Steve: I

Eddie: had a I had a student, on my podcast this week. Okay? And she's an eye doctor, and her husband is a full time real estate investor predominantly dealing with a rental portfolio. They're in Oklahoma City.

Steve: Mhmm.

Eddie: And she was describing a deal where they went from a rental to a note portfolio, and she said we were netting 2 to $300 a month. But now that we owner financed it, we're netting $1,200 a month. Now it's not always that extreme, but it's almost always double.

Steve: Yeah. Why is it typically Because

Eddie: you because you don't you're not paying the expenses on the house. Mhmm. You're not paying maintenance. You're not paying taxes. You're not paying insurance.

You're just the bank. Right. Right? So you're getting the income off the mortgage without the liability of, you know, having to take care of all those things.

Steve: And this is real mailbox money.

Eddie: It's real cash.

Steve: Yeah. Like, because we we read Rich Dad Poor Dad, and it's a great book because it opens our eyes.

Eddie: Yeah.

Steve: And we're like, oh, mailbox money. Of course. Let me go buy some rental properties, and I'm just gonna get checks in the mail. Yeah. And it is not that easy.

You got broken toilets, difficult tenants, and all these other things. But if you can get into the no side, it is real mailbox money Well or more real.

Eddie: I have said this, you know, for twenty years now. I've been speaking across the country, and I've had other, you know, team members that speak for notes school around the country. So I would say easily we've crisscrossed the country coast to coast, right, speaking to a room full of landlords. And we ask the question, if all things were equal, would you rather be a landlord or the bank? Now what do you figure the answer is always?

Bank. You got it. Mhmm. And so so the people like that idea. I think I think that's why we built NoteSchool is we're really peep showing people practical ways to go do this.

And so that if you like the paper side of the business and right now, obviously, with the market, it's it's very there's a lot more conversation about it. Mhmm. But, the thing I really like about it, Steve, is you can buy a house and get the seller to carry terms for you. Right? And you and and when you learn what you're negotiating for, right, you're always a better negotiator when you're clear what you're negotiating for.

Right.

Steve: If you know the target.

Eddie: Exactly. And then on the other side, then you can turn around and do a wrap note and resell it, and you get a good down payment, and you get a check for a long time in the future. Yeah.

Steve: It sounds really great when you hear about it and obvious. Right? This is the funny thing about common sense. It makes so much sense when you first hear it. For whatever reason, it wasn't so common until you heard it.

Eddie: That's true.

Steve: So one thing I I really enjoyed in your presentation was the furniture store.

Eddie: Yeah.

Steve: Right? And now that every time I go to a furniture store, I can't help but have you in my ear. Uh-huh. So can you can you share the furniture, story?

Eddie: So you're being a master in negotiations training. Right? And that master in sales training, then you can fully understand that a lot of people don't ask the right questions

Steve: or

Eddie: they don't, like, they don't frame the customer in the right way. So this is where I really learned this from. Okay? So first of all, in order to figure out if the customer is a candidate for to offer terms, if you're gonna buy and they're gonna carry payments in the future Mhmm. Then you're gonna have to do a a filter analysis and figure out how much money they could potentially carry, you know, in future payments versus cash today.

We call it the wolf at the door. Right? How big is the wolf at the door? Right? So in order to do that and I've had people say, Eddie, I've tried seller financing and people just won't do it.

And while I'm not saying this to them, I'm kinda thinking in my head, you might be saying it the wrong way. Absolutely. You might be positioning it in the so this is where I came up with the analogy of the furniture store. So let me ask you a question. Are you familiar with the furniture store carrying installments in the future?

Of course.

Steve: Carrying installments, not in that term. Yeah. But, yes, carrying payments.

Eddie: Carrying payments? Yes. Okay. So so you you know this. Let's just be honest with you.

Most everybody with a driver's license knows this. Right? It's Yeah. It is it is super common that furniture companies do that. Right.

So let me ask you a couple of questions. These are qualifying questions because this is what is in their head.

Steve: Mhmm.

Eddie: Right? Is the furniture company smart? Of course. Are they making money? Of course.

Okay. So now all of a sudden, you start you have something to anchor them making a decision to carry payments because they're you're you've used an analogy of a company that they respect, they think are smart, and they know they're making money.

Steve: Right.

Eddie: So it doesn't seem like a bad decision for them. Mhmm. Right? That's really that's super important. The other thing is that the furniture company frequently carries loans with deferrals, meaning it has a interest no interest now, maybe interest later, and it may have no payments now.

Mhmm. Payments start later. Well, if you were borrowing money, wouldn't you like to borrow that money?

Steve: I would love nothing better than 0% interest paid later.

Eddie: Yeah. Yeah. And so so so without having to say that, you're now using the furniture company analogy, and they have now set kind of the industry standard that this is okay. Right. You see so you're having to explain less or talk them into less Mhmm.

Because you're just pointing to somebody that is successful. They're seller financing furniture. That's really what they're doing.

Steve: Absolutely.

Eddie: So you're just pointing to someone someone that does it well in your customer's eyes. You know, the guy trying to sell the house to you.

Steve: Yeah.

Eddie: Right? They they looked at furniture company, and they say, well, those guys are smart. Those guys are making money, and they're making a deal work. And so the last thing that this analogy does is solves the biggest objection that most people have that don't sell a piece of property to somebody on your team. And, normally, Steve, that's price.

Mhmm. So can you pay more if you pay later?

Steve: Absolutely.

Eddie: Okay. Well, see, we know why it's a good deal for you. Mhmm. And now all of a sudden, it becomes a good deal for the seller because he gets his price. Obviously, you're gonna get your terms.

We just found a way better way to say it.

Steve: Yeah.

Eddie: Then, hey, Steve. Your price, my terms.

Steve: Mhmm.

Eddie: Because that's kinda like

Steve: That doesn't mean much. Well and the reason why I like this so much because the other way we've done in the past, like, you know, you understand how a bank works. Right? And then, you know, you know, you know, the bank's making money, this and that. But although true, like, that's nothing inaccurate there.

It's hard for a a regular person to understand how they're being a bank and selling a property. Right? Like, you can explain in this. It just takes a lot more work. The furniture, they're selling sofa or selling a table on seller financing.

That is such a simple transition.

Eddie: It's easy for you to call your relatives Mhmm. And say, I sold my house and part or all of the money, depending on their situation, part or all of their money. I did it kinda like the furniture company. I got a better price, and they're paying me later. Mhmm.

Steve: Yeah. Another thing too, the reason why I like this story, because generally speaking, we're talking about sales here, is, you know, we say things like, terms. We say things and there's nothing inherently wrong with this thing. Right? We say terms, seller carry, owner finance, whatever, and it it creates a little bit of resistance.

Like, what are you talking about here? Mhmm. And anytime someone feels stupid or dumb Yep. We're creating a ton of sales resistance. It's making it harder to to accomplish where I'm helping you and helping myself at the same time.

So, you know, I I was at an event, this a week ago today. It was Rafael Cortez's event. We're talking about, like, hey. You know, I can't get people to accept terms. So what are some of the words you're using?

Right? And one of the one of the terms is creative. Right? And it's a common term. If you're in our industry, you hear the word creative all the time.

Eddie: Mhmm.

Steve: But if you're not in our industry, creative is not generally a great word to help a person have a basket.

Eddie: It almost sounds scary.

Steve: It sounds scary. Hey, Eddie. You know, I'm a contractor. I'm come over. I'm gonna help you remodel your house.

By the way, we're gonna do this creatively. How are you feeling about this? Mhmm. Right? Or if you were to go into buy, if you were to go get a haircut today I just got a haircut today.

Right? And if right before the they start cutting hair, like, hey, Steve. Again, I do we're gonna do this creatively.

Eddie: You're you're thinking, no. No. Let's do it just like we did

Steve: it last time.

Steve: Yeah. Let's not let's not any any creativity here. Let's just so creative. So there's a lot of words that we can say that can add some concerns to a homeowner, and there's something I learned from another mentor of mine, which which is if they have to Google the words you said during the sell, you definitely are not getting the sale. That's interesting.

That's a

Eddie: great statement. Yeah. So so this I think this was a breakthrough that we you know, all of the things that you've discussed in years past, we've made all these mistakes. Right? We've said the wrong thing.

Steve: Right.

Eddie: We just have stumbled over ourself and seen the blank stares and the resistance and the this and that. And so the furniture company scenario becomes very easy.

Steve: Mhmm.

Eddie: Steve Steve, it's it's like this. I don't think that your house is gonna qualify for the all cash program.

Steve: Mhmm.

Eddie: Right? The price you need and the price that that we're able to come up with, we're just not on the same page. But there is another program that if you that it wouldn't if it made sense for you, then then I I think it could really I think it could really solve both of our issues. And and, you know, if you're interested, we could talk about it. Yeah.

And then, obviously, what are you gonna say?

Steve: Yeah. What's that other program?

Eddie: What is it? Mhmm. Well, basically basically, it enables us to pay a different price because you're doing what I think is a smart decision, Steve. You're basically acting like the furniture company.

Steve: What's the furniture company doing?

Eddie: Well, you know, you know, if you go buy furniture, have you ever seen these furniture companies and they'll take they'll they'll take payments in the future? Yeah. Okay. Let me ask you a question. That furniture that you're paying for in the future, let's be honest about it.

You're not you're you're not getting that a super big discount. Right? You're paying retail?

Steve: Absolutely.

Eddie: Okay. And that's what you're wanting for your property. Yeah. If it makes sense for them, it may make sense for you.

Steve: Okay.

Eddie: And and, see, we've gotten this far in the conversation, and we never talked about price or rate or anything. Mhmm. But we move them psychologically into we're like, oh, yeah. Well, yeah. Let's see.

In other words, that's what you're looking for

Steve: Mhmm.

Eddie: Is what you're describing. Right? I'm not introducing ideas that are confusing to them, and I'm not introducing ideas to them that there's no no in it yet because they don't we haven't gotten to raider term. Mhmm. I have discovered over the years that that people that sell or finance will give let's just be honest.

They'll give the farm away if they get their price.

Steve: Right.

Eddie: Now what my challenge is and what I want to accomplish as a trainer in this business is to teach the guy who's the negotiator. I wanna teach them what they're negotiating for. Where's the money at? Mhmm. And that's where we get to the kinda like the car analogy.

Steve: So before you get into the car analogy Okay. Right? So a couple different things. First, if you guys find a bunch of value here, Eddie has a a program. He goes over this, I think, over three days.

Right?

Eddie: No. This is just a master class.

Steve: Oh, master class.

Eddie: Yeah. It's just it's a couple hour master class, but it yeah.

Steve: So we got a master class. If you guys are interested in checking that out, go to noteschool.com/trang. So noteschool.com/trang. The other thing, before we get to the car situation is I've heard people pitch creative. And some of the people that pitch creative, I don't know exactly where they're going with this.

Right? And the way I compare this is, Eddie, did anyone try to convince you to buy an NFC last year? Anybody?

Eddie: Yeah.

Steve: Okay. So when they were talking to you about NFTs, you're like, what in tarnation did this guy just say?

Eddie: Exactly.

Steve: Right? Like, I have to buy what? I have to go buy something off the blockchain. Yeah. And I gotta get Ethereum, and I gotta get a MetaMask, and I gotta go over here.

I gotta move money. And there's this whole thing. Yeah. How about the metaverse and this and that? And this whole time, I'm like, what?

My fear because I've listened to salespeople, right, talking to homeowners about creative terms. It's like, everything you just did to that poor homeowner is exactly what I did to you guys last year when I was talking about NFTs.

Eddie: Yeah. Yeah. Yeah.

Steve: Like and their eyes are open like, okay. I don't know what planet Steve is on right now, but it's not the same planet that I am on. Yeah. So if you guys are saying pitching creative terms the wrong way, just imagine all those conversations you had last year with your friends that were buying NFTs that are trying to explain it to you. If you're doing it the wrong way, that's what you're doing.

That that experience you had with your friends is exactly what you're doing to those poor homeowners.

Eddie: Yeah. I think just, you know, the the they say the most thing the most important thing in business is keeping it simple. Yeah. Right? And we that's that's kind of our little phrase, making simple creative offers to all qualified leads.

Now filtering to determine if they can carry seller financing at all is another big emphasis. This master class you mentioned

Steve: Mhmm.

Eddie: We break that down pretty simple and show you different ways. There's paths that you take a deal down. Some people can only finance just a sliver of the deal, say, 20%. Some people could finance 50% of the deal. Mhmm.

Some landlord may own it free and clear, and he literally could finance all of it and have a tax strategy and a cash flow that he never dreamed of. So there are not every customer doesn't fit exactly in the same box.

Steve: Right.

Eddie: Alright. I wanna talk about learning what you're negotiating for.

Steve: Sure.

Eddie: Because this is this is where the rubber meets the road. Mhmm. K? So you and I have been down the road with this, and and I I know and I consider you, like, a crazy astute real estate investor. You know, like, you you're you're good with numbers.

You're great. You're you're the king when negotiations. You have all of these components. Great combination. A complete investor, I would say.

Right? So you caught this maybe quicker than somebody that didn't have all of that background, but when I started talking about how to structure terms

Steve: Mhmm. And all

Eddie: of a sudden you're like, oh, yeah. I can see that because I'm teaching you where the money's at.

Steve: Right.

Eddie: Right? So let's use the car analogy. K? Pretty much every big new car dealership model in America is all the same way. Okay?

They have enterprises within the business. They have new say new car sales. They have the finance department. They have used car sales. So of those three, what's the most profitable?

Steve: Finance department. Why? I don't know.

Eddie: Well, so so so first of all

Steve: I only know that the best salespeople move into finance.

Eddie: They they do.

Steve: They take the car guy, the new and the used guy.

Eddie: A 100%.

Steve: Really good, go to the finance department.

Eddie: That that is a 100% true. So here's here's how I generally believe it works. Today with modern day technology, I'll bet you, Steve, as good as you are at research, that when you get ready to go buy a car, you're gonna pretty much know what that car cost the dealership A 100%. Before you drive up.

Steve: Oh, yeah.

Eddie: Okay. Well, now you now you've the the sales guy the new car sales guy didn't have any unique advantage with you. Mhmm. Right? Right.

Okay. Do you know where the money's at in the finance department?

Steve: I know it's financing me something.

Eddie: See, that's but you're right. But but let's let's talk about what really I'm

Steve: not trying to make your job difficult here. I just know that you you generally say no to everything. Right? Like, I you say no to, like, you know, the paint protection, rust protection, and all these other

Eddie: things. I know that. But people don't say

Steve: no to it. But even when you do say no to all those things, they're still making money from it on the, like, I remember when I leased my BMW a few years ago. Hey. You know that you're gonna have to replace the brakes. Right?

And after you replace the brakes, you're gonna have to do an alignment. Yep. Because you can't replace the brakes without realigning your car.

Eddie: Right.

Steve: I believe. I don't know. That's what they told me. Right? And so, like, would you rather pay at the time it's due or just finance it?

And I look at it. It's like, well, they're breaking up the payments into exact payments at what appears to be 0% interest. Yeah. So I'm looking at this. Really, the only thing I can say for sure is they're just making sure I don't go get my brakes replaced somewhere else.

But, anyway, going back to

Eddie: So so think in terms of this. Right? The a GM store, a Ford store, not not a BMW store

Steve: Yeah.

Eddie: But a GM store or Ford store, their the industry standard profit in new car sales is about $1,500. Finance department, $3,400. Wow. So the the deal is if if if you were Steve, if you were if if somebody took you in and trained you at all the profit centers

Steve: Mhmm.

Eddie: In the finance department, then you would know it.

Steve: Right.

Eddie: And and you would be great at it because you're smart and you would know this, but you're not trained.

Steve: Mhmm.

Eddie: Let's be honest with you. You're a smart guy, but you don't necessarily know where the money's at in the in the finance department at a car dealership.

Steve: Correct.

Eddie: It would be unique for somebody to know that unless they had a friend or unless they had been in the industry. Like, there's reasons that you could figure it out, but most people, the general public don't know it. And that's why they can make so much money in the finance department. Yeah. It's because people don't know what they're negotiating for.

Steve: Mhmm.

Eddie: So I have closed 50,000 note deals. God knows I must have looked at three or 400,000. Right?

Steve: Right.

Eddie: I know where the money's at. My job is to teach people where the money's at. So I'm gonna give you a simple analogy just to give you a sense of how this works. Yep. Okay?

Most mom and pops that will seller finance you, if you ask them what is your interest income for the next thirty months, they could not tell you that number to go save their life.

Steve: Not only most homeowners, most real estate professionals as

Eddie: well. Yeah. Literally. Okay? So that tells me they don't know where the money's at.

Mhmm. Right? I know where the money's at.

Steve: Right.

Eddie: I can teach you where the money's at. Yeah. And then all of a sudden, I teach you what you're negotiating for. That's why this is important. Mhmm.

So so I'm gonna give you an an example. I tend to teach people to structure adjustable rate mortgages.

Steve: Right.

Eddie: Okay? Why? Because I'm gonna start out at the low rate on the highest principal Mhmm. And then I'm gonna go to a higher rate when the principal when the principal has been sawed down, when they owe way when you owe way less principal.

Steve: Right.

Eddie: Because most people in their mind, if they hear the rate goes from one percent to six percent, they just sort of do some math in their head, and that's, well, that's about average about three and a half percent interest. Mhmm. Right? Yeah. Well, that's true, but the effective interest rate is less than 2%.

Right. Now it depends on the term. It's not all the same. So, you know, there's some there there's I'm just giving making a general statement. I can consistently show people how to structure financing that the effective interest rate is less than 2%.

Yeah. And it doesn't appear that it is because of the way we structure when you pay the interest and what amount of interest you pay depending on how much principal you're paying interest on.

Steve: Right. And it it it's just simple math

Eddie: It is.

Steve: With amortization schedules.

Eddie: I I'll I'll bet you almost anything that anybody that would come hang out with us like in the master class for a couple hours, we're gonna show them, like, slides and real examples, and they'll be like, oh my god. I can totally see that.

Steve: Yeah.

Eddie: It was a story I told you about. I I did an event last week. Right? Mhmm. And I shut and and I asked the class before we started.

I said, how many of you think you're good at math? And, you know, you that figure about 20% of people raise their hand, 80% of people because, you know, they're thinking they're talking to me and, you know, I've done this for a really long time. So they're thinking good or or or skilled at something. It's all relative to who's kinda asking the question. Right?

Steve: Right.

Eddie: When I got done and I showed them how the how I did it and how the effective interest rate was so much lower than they were thinking, then literally I said, okay. How many of you can see how this works now? And I'm not kidding. As far as I can remember, a 100% of the audience says, oh, man. I got this.

Mhmm. You're just showing them something they didn't know to negotiate for.

Steve: Right. Well and I think that's absolutely key. And I think the other thing too, right, you've talked about this. There's two things you brought up in the past, I think, are are are on point. First, they what number do they brag about at the party?

Eddie: The last interest rate because it's the high one.

Steve: Right. And they that. And then if they brought this to their engineering cousin, like, here's what I negotiated. Can they reverse engineer this?

Eddie: Yeah. The re the one thing one little trick you do you're gonna do, Steve, is every time you change the rate, change the payment a little bit.

Steve: Mhmm.

Eddie: If you if you if you have one payment and variable rates, that smart engineering cousin can back into it and probably figure figure the effective rate much easier.

Steve: Mhmm.

Eddie: I mean, assuming the guy the guy's really smart. Right? But if you make those payments different every time you change the rate, I they don't ever call nobody ever calls me back and says, I had my cousin figure this out, Eddie, and the interest rate's 1.7%. They don't I'd never hear that.

Steve: Right.

Eddie: So I'm just saying that extra thing to know what you're negotiating for is different. So guess what, Steve? The payment starts out lower and goes to higher. The rate starts out lower and goes to higher. Mhmm.

There's a pattern to this.

Steve: There is a pattern to it. And, again, going back to, like, knowing what you're negotiating, you gotta know what you're negotiating for in in order to succeed Yeah. In negotiation. And it sounds so simple, but most of us don't really know what

Eddie: we're doing. What you do?

Steve: Absolutely what we do.

Eddie: You teach people what they're negotiating for.

Steve: Absolutely. Absolutely. I mean, that's kind of the biggest thing. It's like, again, in that training we did last week was explaining people, yeah, if you just negotiate how much you're looking to walk away with versus the value of the house, it's a completely different negotiations.

Eddie: Yeah.

Steve: But if you don't frame it the right way

Eddie: Yeah.

Steve: Then you're negotiating the wrong thing, and now you're just hurting yourself or or doing a lot more work than you really need to Right. To have an acceptable outcome.

Eddie: The other thing is we have tried to create a very high awareness of that people don't have to sell or finance all of their equity in order to be effective at seller financing. You know, there's difference there's different structures, and that's kinda how we've we've put these into the different paths. You ask questions to customers, including, you know, not what just what they owe or this and that, but you you gotta also address what their immediate cash needs are. Mhmm. You know?

Yeah. And it may not be just a lender that's, you you know, on a on a house. It may be that they've got some they got some life circumstances, so you need to be able to address that. The the the the smaller amount they sell or finance, the more extreme we're gonna make the note. Mhmm.

The larger amount they sell or finance, we're gonna make we're we're likely gonna pay more interest sooner and start making payments sooner. Mhmm.

Steve: But

Eddie: if they just carry 20% of the deal, we're probably gonna just make that money that's due out in the future Yeah. With no payments in between.

Steve: Yeah. So let's talk about that. Alright? Because if someone had three kinds of notes, I did the three different paths. Like, I had, my my sales team go through your training, not too long ago.

I wanna say, two, three months ago. Yep. And the piggyback loan, like, blew their mind. Yep. Right?

And by the way, just to I shared the piggyback note because I learned it from you. And they're like, yeah. I see. Whatever. But when the expert comes in and explains, like, wow.

That's an amazing tool. So let's talk about the piggyback loan and the three different options.

Eddie: Well, I think the idea that I see is that I think, you know, creative financing is not faddish to me. Mhmm.

Steve: It's

Eddie: not a fad. If you've been doing it for forty three years, it can't be a fad. Right. Right? But creative financing is a little bit fatty at the moment.

Mhmm. Right? People are you know, the market's changed, and people are, you know, trying to look at new strategies and stuff. And so it's probably the most increased talked about thing in the real estate investor world. And a little bit of that is you you've heard me use this analogy before.

It's like, oh, so you play football, What kind of football do you play? Well, Eddie, I play I'm on the b team and the junior high team. Mhmm. Okay. Well, that's you still play football, but let's be honest about it.

It's not the NFL.

Steve: Right.

Eddie: So what I'm trying to take are some things that if I'm an NFL player, and hopefully I am in creative financing, I kinda think maybe I am, then how do I teach you filters so that you can apply creative financing to some customer that otherwise you would have never thought about it? Because, Steve, you may be buying a house, and you're you're close to the money, but you're just far enough away you're not gonna make the deal. Does this sound like the normal deal you walk away from all

Steve: the time? Happens quite often.

Eddie: What if I could show you how to increase the price, but not pay for it until a long time in the future? The additional price is a piggyback second. So it's maybe 20% of the price of the house, and you don't pay interest on it, and you just start making principal payments. And it could be five years from now or ten years from now. Right?

Mhmm. All of a sudden, that deal probably is a closing that otherwise would just flat end up in the trash can.

Steve: Yeah.

Eddie: That's an example of how that's what your team sees. Mhmm. Like, oh my god. We're saving a deal here.

Steve: Yep. Yeah. That's absolutely on point. And, again, guys, if you guys think this might be valuable, right, Eddie's got a a a master class. Go to noschool.com/train, to get access to that master class.

Now I want to answer the audience's questions, but right before we do that, we just wanna share a quick message with you guys, and then we'll go into the audience's questions. Before I got into real estate, I always wanted to become a teacher. The main reason I actually have a sales training platform is to actually fulfill my passion and teach you guys more about real estate and sales. Something I've learned along the way, though, is that learning from my teaching alone is not enough. It's also helpful if you learn from others.

That's why on May 17, I'm launching something that will allow you to learn from others that are also doing sales. It's all a part of my mission of creating a 100 millionaires. So the best ways to become a millionaire is to become excellent at sales and learn how to connect with others. So if you want to improve your sales and learn alongside other sales assassins, make sure you tune into my podcast on May 17. And as an added bonus, if you purchase my sales master class, you will get lifetime access to what we're launching.

So to entice you, we are offering 50% off, but this offer does expire on 05/10/2023. If you want to become our next millionaire, DM me the word master class now. On behalf of the media team and everyone at Trinh Podings, we wanna congratulate you for five years of your podcast.

Eddie: How about that?

Steve: Thank you for this.

Eddie: That is awesome. And I got to be here for it. Yeah. I got to be here

Steve: for that. Thank you. So this is right there. So I'm still struggling with technology here. So Chill out.

Chill out. Alright. And there we go.

Eddie: There we go.

Steve: Very kind message from the team. Wow.

Eddie: That's really nice. And a cake.

Steve: And a cake, which we'll have to celebrate later on with. But thank you, team. Appreciate

Eddie: that. Great.

Steve: You guys are you. Alright. So let's go ahead and, let's get into the questions here from the audience. We got, Derek Fuller on YouTube. Does lease ice does lease option and rent to own count as seller financing?

Those are

Eddie: No. It it, it is it is not the same as seller financing, although my attorney advisor expert says that you are subject to Dodd Frank with a lease option just like you are with with, seller financing. So if you're doing a lease option, it does not sidestep your sides you're going past Dodd Frank. Yeah. And so I don't think I don't think that's commonly known, but, you know, you know the attorney that I work with a lot, and I think he's the pro on this.

And he's dealt specifically with CFPB on this. Right? Yeah. The regulatory arm in in DC.

Steve: Yeah. The sue Consumer Finance Protection,

Eddie: Bureau.

Steve: Bureau. Yeah. Yeah. So if you're gonna questions on this, talk to the guy who's dealing with this with other clients

Eddie: Exactly. And has represented the industry in dealing with them all. Yeah. So it's not the same. I I I'm not I am a fan of lease options in some scenarios.

I particularly love a lease option converted to seller financing. So I'm not anti lease options in some scenarios. So but, yeah, it's it it really works well if they there's some reason they don't have all their down payment, for example. Maybe maybe they're paying 20% down. They only have 10% today, but they're gonna have another 10% with a bonus in a year.

Mhmm. That's a beautiful scenario to go structure a lease option.

Steve: Right. Yeah. Yep. And then, Ingrid Hernandez. So she says that's literally how they pitched up to you and tell their financial they love it.

So thank you, Ingrid.

Eddie: Yeah.

Steve: Pointing that out. Pixel dust tech on Instagram says, Eddie Speed, the OG. So the original. YouTube, Chase wants to know, is subject to going too much into the gray area?

Eddie: We teach we teach sub two. Mhmm. And, as I told you, I I collaborate with an attorney, Jeff Watson, who I think has really studied it and studied the problems with it. I I believe that if you're if sub two is not good for a newbie. Mhmm.

If you don't have some deals under your belt, sub two is like learning to drive by learning to drive a race car. It's probably not the right tool to start with.

Steve: Yeah.

Eddie: But I think it's a great tool. You know, there's about a million and a half loans in The United States that are ninety plus days delinquent. And, so there's a lot of sub two potential out there. So it's too big of a market to ignore, and I think it can be done correctly and safely. And so there there's a caution flag, but there's not a there's not a red flag.

Steve: Yeah. And I think that, ultimately, what it comes down to, Chase, is with sub two, just know what you're doing. Surround yourself with professionals, people that know what they're doing. And in that way, you can keep yourself out of trouble. I personally love the gray area.

I think gray area is how we're able to, make more than if we're to just do everything in black and white. Right? But at the same time, I will never knowingly cross the line, and you can't knowingly know whether you cross the line or not until you firmly know where the line is. You know, we're firmly where the line is by surrounding yourself with the right people.

Eddie: And I think you and I have had a good collaboration in that regard.

Steve: Yeah.

Eddie: You know, we we want the same things for people in the business. We don't wanna stop people from doing business. We just wanna we do wanna make them aware that there are towns with speed limits.

Steve: Right.

Eddie: Right? And you need and you just so we try to give them the right direction so they know how to do it. It's a great tool. I I I'll I'll definitely like sub two.

Steve: Mhmm. Right. On YouTube, Steven Collier, has any banks stopped taking payments? So has any, you might have to clarify the question. Do you understand where he's going with this?

Have you

Eddie: ever Have you ever seen a bank call a note?

Steve: Yeah.

Eddie: Well, first of all, let's talk about the note that is most likely to have a problem getting called and a loan that is the least likely to getting called. Mhmm. Okay? So if a loan is a Fannie Mae, Freddie Mac, FHA, VA, that loan is in a mortgage backed security. Okay?

Steve: Mhmm.

Eddie: So the servicer gets penalized for going and having a defaulted loan in that portfolio. So they're not very motivated. And I'm not saying you can go wave it in front of them and kinda be foolish. Mhmm. But I'm saying to you, that's the least likely note to get called.

Steve: Gotcha.

Eddie: The most likely note to get called is a portfolio loan or a loan from a private lender.

Steve: Sure. Right. Like, if you if it's a genuine bank's money, not one that they repackage to the secondary market.

Eddie: If if the funding of the deal went through a mortgage backed security, it's less likely to have a problem Mhmm. Versus what we refer to as a portfolio loan, as you said. The bank lent the money, and it was they they didn't go sell it to Wall Street.

Steve: Right. Right. I mean, I saw in the short sell days, the most difficult banks to work with were the credit unions.

Eddie: That's it.

Steve: Right? Because it was their money.

Eddie: Yeah.

Steve: Right? It wasn't like uncle Sam wasn't bailing them out. It was legitimately their money that Yeah. They lent, and they were impossible to deal with in the short sell days, understandably so, because it wasn't insured by the government.

Eddie: So then it's a matter of really understanding how to structure it in a way that is, not flaring it up in the lender's flat face. Mhmm. That's how you take title and how you handle insurance. Right? That's the quick and dirty you know, those at the end of the day, the things that we try to make sure somebody fully understands how to do is taking title in a proper way and then handle insurance in a proper way.

Mhmm. And then other than that, the risk variables are proper disclosures to the sellers. And and if you're gonna sell on a wrap note, then proper disclosures to the buyers. Right? And if you think about it, that's the that's kind of the trail that, you know, that keeps you out of trouble.

Steve: Right. And it's how it should be done.

Eddie: It should be.

Steve: So talking about this. So you talk about, proper title, proper insurance. So what is a proper way to take title?

Eddie: In a trust.

Steve: In a trust? Yeah. And a proper way to insure.

Eddie: Well, you're not gonna be you're not gonna the only way you're gonna move that original borrower off of the insurance policy is that the borrower has transferred the property into a trust. Mhmm. And that goes back to Garn Saint Germain. Right? So if you transfer it into a trust, which is allowable

Steve: Mhmm.

Eddie: Then all of a sudden, now you're insuring the trust. You're not insuring Steve Trang individually.

Steve: Right.

Eddie: Right? And and so that's a key element. And then if you sell it on a wrap note, then you're gonna have to leave the trust as insured and then further have the subsequent new buyers Mhmm. As additionally insured.

Steve: Got it. Chase, Anthony, perhaps we should stick to coloring inside the lines. I mean, we should always color inside the lines, which just go all the way up to the line. You know, I was talking to we do the Whale Club. Right?

Something they do with Paul Sparks, and part of that is, you know, playing your game, knowing yourself, and the way one of the tests we use to knowing yourself is going back to your favorite sport and how you play the sport.

Eddie: Yeah.

Steve: Right? So we talk about basketball and how I how I like to play it. One of the things that I kinda was thinking about earlier today was my I was never athletically gifted. Right? I've been playing old man basketball since I was 18.

Hand checking, holding the hip, whatever. Right? My superpower on the basketball court was I'd always foul you enough where it was irritating, but not enough for the ref to call it. I was all the way up to the line Mhmm. To have the player the guy I'm guarding complain to the ref that I'm following him, and the ref looking at it and just like, whatever.

So I find the line, and I put all the way up to the line. So, yeah, color inside the lines don't cross it, but all the way up to the line.

Eddie: I like it.

Steve: Yeah. Dean McCall says they make their money off extended warranty and maintenance, and that's exactly it.

Eddie: That's it.

Steve: That's it. Right? She's right. I I know she's right, but I still don't get it. Like, I remember I was helping my my wife, buy I was helping my my in laws purchase a a Camry.

So I'm there with my wife to to do it. Right? And I buy the Camry. Right? It's a used car.

We deal with it. We negotiate, do all our research. Right? That's what we're saying. Like, a poor guy, when we go in, like, we're getting him all the way down Mhmm.

To as little as possible. And we go to the finance department, and I hold her hand. I I talk to her. I was like, look. No matter what they say, the answer is no.

It's gonna feel good. It's gonna feel smart. It's gonna feel intelligent to say yes, whatever they're gonna say because they're the best. The answer is no. Right?

As I'm going through, it's like, besides the stupid add ons, I don't understand how they're making money.

Eddie: Well, the other thing is is that people spend three hours at a car dealership negotiating the price

Steve: Yeah. Their willpower is gone.

Eddie: And and then they go to the finance department, and they think the negotiation's over.

Steve: Their guard's down.

Eddie: Their guard's down. And so one of the strategies I teach in buying houses is we get them committed to the concept of being the furniture company, and we don't get into any specifics yet.

Steve: Right.

Eddie: And see, for an operation like yours, it's a bigger shop. Then you all of your salespeople can start the first process.

Steve: Right.

Eddie: And then it funnels to more of an of an expert that becomes the creative finance person within the shop Yeah. To to negotiate the specific terms. It's the exact same concept as a car dealership.

Steve: Yeah. Yeah. I think it's great. Let's see here. Pixel dust.

Can you do a seller finance rep for land if you aren't yet current on payment to the seller?

Eddie: Well, I'm I'm a land guy as you know. I've I've I've dealt in the land business for over thirty years and actively do seller financing on land today. Let me say this. If you're not current, you need to get that loan current before you sell it to somebody else. Otherwise, I think you have a significant disclosure problem and a and a ethical problem.

Steve: Absolutely. Yeah. So, yeah, so Steven clarify subject to payments when the bank's being paid to subject to. Yeah. So he actually said here his experience.

Like I said, we got some seasoned veterans in here. Steven Calder is is very seasoned. Yeah. Small community credit union stopped taking payments, took several stopped took several payments then said no, which is exactly what we're talking about. Right?

If it's their money, they're gonna be sensitive to the due on sale clause.

Eddie: It's it's a lot more likely I'm gonna pass the sub two if it's a portfolio loan.

Steve: Yeah. Yeah. Yeah. Spot on. You got tested.

You knew what you were talking about.

Eddie: Yeah.

Steve: Yeah. So, Ingrid, it's so interesting to hear different perspectives having a deed of trust. We have expert experts say only people who have got in trouble over deed over deed, fraud was those in a trust. So you wanna speak on that. I've heard similar stories.

I don't know the details, but those that were putting properties in trust were accused of being potentially misleading.

Eddie: Yeah. They they're there are there are bad applications to a trust. Mhmm. And so I was on a conversation recently, and I asked this person, what kind of trust did you have? Now I'm not an attorney.

Okay? I have a decent working knowledge of trust. The attorneys I work with have a high knowledge of trust. But I'm a fan of operating with a trust and, for sure. And, but, you know, you know, there's there's sort of the lawyer in the box thing.

Right? You know?

Steve: Lawyer in the box thing.

Eddie: You know, it's these you know, it's like the same thing as these real estate investor law firms that are all gonna form your corporation. Now would you go build a $100,000,000 business on the corporation they formed?

Steve: No.

Eddie: Okay. So that's a lawyer in a box. Mhmm. Yeah. So, yeah, if you have a lawyer in a box thing on the trust, you're probably gonna have a little bit of that.

Right. Right? The I I think we I think that we take it to a different level, and it's a very intentional trust.

Steve: Okay. Keep the questions coming, guys. So, you know, something else that, is unique is because of your experience and your relationships, you get to have these conversations Yeah. About the things that are coming down the pike. And, you know, I kinda made this, comment back when we were in supergroup, something along the lines of, like, you know, I'm feeling fairly optimistic, but every day that goes by, I feel less optimistic.

Yeah. I'm pretty darn near pessimistic.

Eddie: Yeah. And I

Steve: was saying, Eddie over here has been calling this is gonna be a bad scenario for quite some time now. And on the, on the ultimate end of the spectrum, we've got mister, you know, Stuart Denyer at New Western who thinks, like, we're gonna have a massive crisis in 2028. So I'm not asking you to predict the future, but what you've got your pulse on the thumb. Oh, you got your pulse. You got your thumb on the pulse on the secondary markets and what they're seeing.

Yep. So what are you seeing today that gives you cause for hope or cause for concern?

Eddie: Well, one thing that I I do feel fortunate about is because I've been in the industry a long time. I have friends that make billion dollar bets. Mhmm. Billion dollar bets.

Steve: Yeah.

Eddie: Right? And so they have analytics firms that they hire to give them predicting rates and predicting property trends and values. So, fortunately, I don't have to go to Facebook, you know, or some other social media platform because I play I think there's a lot of well intending people that I see post stuff all the time, and I'm like, that cat doesn't have a clue.

Steve: Mhmm.

Eddie: Right? I was at a we did a charity mastermind a couple of weeks ago with a friend. He has $60,000,000,000 under management.

Steve: Yeah.

Eddie: K? I would rather know what he thinks is gonna happen Mhmm. Than somebody that just thinks they're, you know, well read and rates are gonna flatten.

Steve: Yeah.

Eddie: And they're and they are gonna go down. Right? Real estate is going to go down. Right? Mhmm.

The the billion dollar bet guys are betting that we're gonna have a slide in value between 515%. Yeah. Now that's that may not be the same in Phoenix because, obviously, you've already seen a slide Oh, yeah. Than it is in Atlanta. But I asked the people in Atlanta, why do you think you're so different than the people in Phoenix?

Like, Steve Trang, my buddy over there in Phoenix, they've already experienced a slide. Mhmm. Why do people in Atlanta think they're immune to it? That's interesting.

Steve: Right.

Eddie: There is a shortage of inventory for sure, but there is but buyer sentiment for property is about a at a forty year low. So we have a shortage of inventory and a a even greater shortage of people wanting to buy. Mhmm. Right?

Steve: Right.

Eddie: Affordability has changed everything, but the bigger thing now is we have a credit crunch. Mhmm. The credit crunch looking forward is worse than the rate crunch. What does that mean? Okay.

So let me give let me give you an example. Mortgage Bankers Association has the mortgage credit availability index. So that's an index that they have established to a number before the virus, say February before the virus essentially kinda started in March. Mhmm. K?

The number was at one eighty five. Today, it's at a 100. Yeah. So that means, Steve, that about forty five percent of the people that could qualify for a mortgage before the virus with the same underwriting standards today, forty five percent of those people can't get a mortgage. So that's a credit crunch.

Steve: Mhmm.

Eddie: And this this bank thing, I I believe, is really ugly. I think it's really ugly.

Steve: Yeah.

Eddie: And so I think that this the the bank closings we've seen to date are no reflection of where we're going. And people say, well, why aren't you being pessimistic about that? Well, first of all, do we all agree we've had an incredible run on deposits? Everybody agree with that?

Steve: I think a lot of people would agree with that. Yes.

Steve: Well, I

Eddie: mean, you couldn't look at any stats and agree with anything other than that. Yeah. Not not not the big banks,

Steve: Mhmm. But

Eddie: but but Regional. Regional and community banks Mhmm. Are definitely have had a big run on deposits.

Steve: Yeah.

Eddie: I mean, the the graph is like look. It looks like the Grand Canyon. Wow. Right?

Steve: Mhmm.

Eddie: And I know this because I've we we scraped this for our little TV show, note NoteSchool TV.

Steve: Mhmm.

Eddie: And I did it, like, last week.

Steve: Right.

Eddie: And I had the graph. I'm like, here it is. It's this it's crazy. Secondly, 68% of commercial mortgages were done by regional and community banks.

Steve: Well, those are the ones you typically go to

Eddie: Correct.

Steve: Lending.

Eddie: But what what so what's the state of commercial lending?

Steve: Not very good.

Eddie: The train has already left the station, and it is headed not to a good place.

Steve: No. It's a dumpster fire.

Eddie: And so for those reasons, I think that that's gonna put a lot of pressure on operationally the profits and stability of the banking system. Yeah. Right? So so let me say this, Steve. We could have said, you know, eight months ago that rates were the only reason people sell or finance.

I never believed that. I'm just saying people may have said that. Mhmm. People sell or finance either buying or selling when there's a disruptive market. And I would say that my net worth has become crazy better in disruptive markets than it ever was in great markets.

Steve: Right.

Eddie: We the house buyers, guys trying to go buy distressed real estate Mhmm. Or buy out land or whatever it is their their target is, any kind of commercial or whatever that looks like, you should think in terms of we should be the most active in disruptive markets.

Steve: Absolutely.

Eddie: We sort of got we sort of became a little confused about that, I feel like, because we all the house buyers made a whole lot of money in, like, a FOMO market. Mhmm. The fear of missing out market. Right?

Steve: Yeah.

Eddie: But the truth of the matter is if you go back through history, the guys that tend to have done the best and built the best net worth and the best financial modeling have made it when everybody else if Warren Buffett, buy when everybody else is scared.

Steve: Yeah. I mean, I saw myself personally from 2008 to 2011. Yeah. So much wealth was created by the people that bought in that time. Right?

Like, it was at that time where I first learned about wholesaling, and I thought wholesaling was

Eddie: a fad.

Steve: There's no way this will continue. Here we are sixteen years later.

Eddie: And and so here's what I would say. Yeah. I am saying that we are going to do really well because we have a disruptive market. I'm not trying to be pessimistic because I'm actually being optimistic.

Steve: Right.

Eddie: I'm saying this market is going to produce opportunities if if if we are clear about what we're negotiating for.

Steve: Yeah. And very few people do. So it's gonna be a massive competitive advantage if we understand what to negotiate for, find out where the money actually is in the deal. That's it. Yep.

And, again, guys, if you're finding valuable, go finding all this valuable, go to noteschool.com/train. Go check out, that master class. Now, before we we wrap up here, was there anything you wanted to make sure we hit on today that we haven't touched, that we haven't talked about?

Eddie: I think one thing, Steve, that some people sort of get in their mind is I had a guy say this to me, a pretty big operator say this to me less than a day ago. He said, I don't necessarily I'm he said, I know I need to trend to do creative. The reason I haven't done it is is I need, you know, I need transactional income. And I said, so you're thinking if you do creative, you don't make any transactional income upfront. I said, because that's not true at all.

And he goes, well, I I I was that's exactly what I was kinda thinking. He said, I was thinking I'd make future income, but not today income. And I said, that is I said, you need to come hang out with us and let us show you some case studies and show you how people are making pretty solid transactional income today plus a long term cash flow. Yep. It's not just money in the future.

Steve: Absolutely. So that's really powerful. Again, guys, you guys have the URL, definitely check it out. I want you to think about some last thoughts I wanna leave everybody with.

Eddie: K.

Steve: Guys, I personally am seeing a win of opportunity in this market. Again, disruptive market. I'm excited to see at the moment. You guys have heard some things I've been talking about. Maybe starting a hedge fund, we will see.

So if you have capital and don't know where to get started, you can invest with us. If you have killer deals, you need to close on, but you can't. Pardon with us. Go to teamwithsteve.com, and let's do business together. And, guys, if you, again, if you've solved value today, please subscribe.

Right? We gotta send as many positive signals to YouTube as possible to let people know that we're adding value and we can reach more people. So please subscribe right now. Hit that bell so you can always find out when we are alive. And we do have my good friend, Jack Bosch, next week, the land king, I think the original land king from what I can tell.

And he's gonna be talking about the state of his business and what you need to know as far as land today. So, Eddie, last thoughts you'd like to leave everybody with.

Eddie: I think, I think don't be scared to reinvent yourself. You know? Even if you've been really successful in one method of real estate investing, the market changes, then, you know, this is my sixth real estate cycle. I've had to readjust a few times

Steve: Yeah.

Eddie: And just, encouraging, like, it's okay. The water's okay. Just jump in. It's it's it's not gonna burn you.

Steve: And there's no perfect time.

Eddie: There's no the the the I heard a guy say last week, have you ever heard anybody that's old say, I wish I'd have started owning property or owning notes later? We all say we wish we'd have done it when.

Steve: Earlier. Yeah. Or never sold the property. Exactly. Yeah.

Perfect. If someone wants to get ahold of you, what's the best way for them to to do that?

Eddie: We we we're gonna do really well if they come to the master class. We're gonna we're gonna have a team. We're gonna connect with them. We're gonna be able to actually talk to them Mhmm. Understand their story, and so we'll do really well with that.

Steve: Yeah.

Eddie: And so we've built that lane. It's it there's high customer service around hanging out with us at that master class.

Steve: Yeah. And, I I mean, definitely, I appreciate having you as a mentor, as a friend, learning a lot from you. So you guys definitely check out that master class. Thank you very much.

Eddie: Thank you, my friend. Yeah.

Steve: Appreciate it.

Eddie: Thank you for having me.

Steve: Thank you

Steve: guys for watching. Make sure you guys tune in tomorrow for PTD. We'll be talking about Dillon Brooks. Right? That, that mess of a situation over there.

See you guys tomorrow.

Steve: Shout out to Steve Trane. Jump on the Steve Trane. We real estate disrupt