Banks make the most money in real estate—what if you could, too? Discover how to ‘be the bank’ and build lasting wealth through note investing with industry expert Eddie Speed.
Eddie Speed is the founder of NoteSchool, an education platform that teaches investors how to leverage seller financing and mortgage notes for long-term financial success. With 40 years of experience, Eddie has helped thousands of investors build wealth using creative financing strategies and has closed over 50,000 discounted note deals,
Eddie speaks about the advantages of note investing over rental properties, including better cash flow, time efficiency, and reduced headaches. He also highlights his educational program, Note School, which aims to teach investors how to successfully buy and manage notes, and provide solutions for those unable to secure traditional financing.
Don’t miss out on this opportunity to learn from an expert who has been mastering this space for over four decades.
Key Takeaways:
- 02:15 – How seller financing creates opportunities in today’s market
- 08:42 – The advantages of investing in real estate notes versus traditional property ownership
- 22:46 – Why current mortgage lending standards leave many qualified buyers behind
- 25:01 – The power of compounding cash flow through note investing
- 26:10 – How you can learn note investing strategies for free through NoteSchool’s masterclass
- 27:26 – Eddie’s biggest lessons learned over 40+ years in the industry
💡Exclusive Offer:
FREE Masterclass: Eddie is giving away exclusive access to his NoteSchool training! Learn real-world strategies to start investing in notes today.
Register here 👉 NoteSchool.com/exitEddie is offering our listeners FREE access to his NoteSchool masterclass, where he walks you through real deals and demonstrates how to succeed in note investing. Register now at NoteSchool.com/exit.
Connect with Eddie Speed @:
- Website: NoteSchool.com/exit
- Email: max@noteschool.com
- Contact Number: +1 817-410-4103
- YouTube: https://www.youtube.com/c/noteschool
Connect with Corwyn @:
- Contact Number: 843-619-3005
- Linkedin: https://www.linkedin.com/in/cmelette/
Shoutout to our Sponsor: EXIT Realty Lowcountry Group
Do you want something more? More Meaningful Moments opportunities, deeper relationships and memorable experiences? Do you want to make a difference? If you say YES, a career and real estate could be the opportunity you’re looking for guiding people to one of the most important decisions they ever made, the purchase or sale of their home can be both rewarding and lucrative.
EXIT Realty has a revolutionary compensation model training and technology that provides you with the tools you need to start and build your successful real estate career. Call EXIT Realty Lowcountry group today at 843-619-3005 that is 843-619-3005 or visit https://exitlowcountry.com/joinexit and make your Exit today.
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CORWYN:
Do you want something more? More meaningful moments, opportunities, deeper relationships, and memorable experiences? Do you want to make a difference? If you said yes to any of that, a career in real estate could be the opportunity you’re looking for. Guiding people through one of the most important decisions they ever made. The purchase or sale of their home can be both rewarding and lucrative. Exit Realty’s revolutionary compensation model, training, and technology provides you with the tools you need to start and build your successful real estate career. Call Exit Realty Lowcountry Group today at 843-619-3005, that’s 843-619-3005 or visit join.exitlowcountry.com and make your exit today.
Good morning, good morning, guys, and great morning to you. Welcome to another fabulous episode of Exit Strategies Radio show. Hey, I’m your host, Corwyn J. Melette, broker and owner of Exit Realty Low Country Group in beautiful North Charleston, South Carolina. If this is your first time listening to this show, you are sir or ma’am or in for a treat because our mission here is very simple. That is to empower our community, our listeners with financial literacy and real estate education. That’s what we do. We legacy build over here. That is our mantra. That is our charge. That is our endeavor. That is everything that we do here on this show. So, guys, look, today, we got a good one. I see many of you like to have these conversations about note buying and all this other stuff. We talk about real estate investing. So we got a guru on with us today. But before we introduce him, I want to give a quick shout out to those who listen to us faithfully, those who tune in on the radio, those who listen to us on podcast platforms. Look, I’m super duper excited. But most importantly, I am forever in your debt and owe you a tremendous favor for all the favor and the love that you’ve shown us here on this show. So, again, thank you. Please continue to do what you guys have been doing, which is tune in. But do this as well. Take this information and engage with it. Use it. Take it to the next level. Let us know about it and tell a friend so they can tune in and do the same thing. Guys, I love you. You know that. So, hey, hello today. Look, you know, sometimes when you go and you go to see Oz, right, you go see the guy or the gal or whoever it is that has this thing here all together. And essentially it’s just making all this thing just work the way that it’s supposed to work and can tell you how you can build your own Oz as well. So, guys, look here, we ain’t got to necessarily take it down the yellow brick road. Let’s walk on some green grass. And you know what that green is about. We have with us none other than Eddie Speed. Let me tell you about it. And I want you to catch that name to Eddie Speed, Eddie Fast. I love that because Eddie be going. But Eddie is the founder of Note School. So we’re going to talk a little bit about that today. And he has trained countless investors on diversifying their portfolios with discounted mortgage notes. He is also the owner of Colonial Funding Group. And it serves as a principal in private equity funds that acquire both Polk, a lot of mortgages and mortgage notes. Eddie, how are you doing today? I’m great. How are you?
EDDIE:
I am incredible. Thank you so much for taking time out your busy schedule to be on with us today.
CORWYN:
And if you don’t mind, give our listeners like that 50,000 foot view of who you are, what you do and how you got started.
EDDIE:
I got started buying notes in 1980. So this is my 44th year in the business. And so I started at 20 years old, young guy doing the business. And, you know, now 44 years later, I’ve closed over 50,000 discounted note deals. It’s been a thing, you know, that we’ve done for a long time. 25 years ago, we figured out we could do a lot of business with people, but only if they had some background and knowledge and understanding. There’s a lot of people that knew about rent houses and flipping houses and all that stuff, all of which I have a lot of friends and people that I know well in your market. Very well that know me. And it really just grew to the fact that I formed a school and that school has helped literally now thousands of people go do this. And so fast forward. I’ve done it a really long time. We have a very active note business. I’m not a guru. Let me correct you. OK, I am a guru. And that is very different than a guru. Right. And so we have a very active note buying operation. We specialize in seller finance notes because really at the moment that is the most opportunistic market out there. And I believe that as this story evolves, we’re going to show you that we have entered a note cycle, which is different than a rent cycle. And so right now that we believe we’re definitely in a note cycle, meaning essentially it’s more advantageous to buy notes at the moment than it probably is to go buy a brand new rental. So that will either prove that or not prove it. Right. But I think we can. And so with that being said, that’s how I got to where I am. Forty four years later.
CORWYN:
So let’s get back to and break down like a couple of basics for our listeners here today, Eddie. So if you don’t mind, break this thing apart because people think real estate, they think mortgage. You don’t think no, but they think more in real estate. But we know there is at least one, if not additional, whatever attached to a property. But kind of give that breakdown as to what that is.
EDDIE:
Yeah. So we buy first mortgages on houses and land. So notes are bought and sold every day. A note is an asset. A note is like a car or a mobile home or any other asset. It has a principal amount. It has interest. It’s payable over time. And so a real estate secured first mortgage are bought and sold. I’ll bet you virtually all of your listeners have had a lot. If they’ve owned a property, they’ve had a note that has been sold because they’ve gotten a notice. Hey, we sold your note. You don’t now pay the First National Bank. You’re going to go pay the mortgage servicer of so-and-so, XXX, whatever that may be. Notes are bought and sold every day. I’m a specialist. I’m a discount note buyer, meaning that I buy a note for less than what’s owed. So if there’s $100,000 owed on the note, I might not pay $100,000. I might pay $90,000 or $85,000. Now, that doesn’t legally mean that I don’t have the full right to collect all that is owed because just because I bought the asset as a discount still means that I get the full benefit of whatever is owed on the note. And so that’s basically what I do. And there’s two or three reasons that notes are really good that real estate investors like. And first of all is time. It takes less time to own a note than it does to own a rent house. Way less time. I say you can own 55 rentals or 1,000 notes. Same thing. It’s a lot less time.
CORWYN:
Very true. Very true. So what you’ve done, and so for clarity for our listeners, guys, buying a note is buying essentially the balance that’s owed with interest. It’s probably the easiest way. So when you’re making a mortgage payment, you’re making a note.
It’s a note payment. You’re paying on the note. The mortgage is what ties the note, what is the money that you owe and that promise to pay to the real estate collateral or to whatever. It’s got to be real estate for it to be a mortgage. So that’s what it is. So you’re not making a mortgage payment. You’re paying a note. But once the note is fully paid off, then there’s a satisfaction piece given and the mortgage is then released because once you paid all the payments or whatever the balance due on that note is, that’s where you are. So Eddie, you’re buying these notes at a discount most times or what have you. And clarity, the amount that you buy at isn’t the balance you’re buying. Essentially, you’re buying 5, 10, maybe percent more. So that automatically to you, if realized, is profit, let alone the interest that is due on whatever the balance is as well. Correct?
EDDIE:
Yeah, we’re buying a loan at a discount because basically that’s what the market is. The seller finance market is typically a market where loans are traded at a discount, not a huge discount. You know, I bought 50,000 seller finance notes. So what I’ve done is I have established across the country basically how to make the best notes. So real estate investors would then come to us and say, OK, Eddie, what’s the recipe? What’s the formula? How do I make the best note? And so if they follow that formula, then we’ll pay them a superior price. I originally set up the note system for home investors around 1990. Oh, wow. OK. I’ve done this model a long time. And most of the loans that I buy today are from real estate investors who create seller financing on a recurring basis. And like I said, Charleston is really, there’s a lot of real estate investors that live around Charleston that may do business elsewhere, but they actually live in your neighborhood. That’s why I know so many people like my Rolodex would be fairly long of people I know around Charleston. They do this and people that I’ve helped within the industry. And so that’s what we’re known to be on the note buying side. We’re known to help people with like what structure of a note? How much down payment? What’s the underwriting standards? Like what interest rate and how long is it payable? How do you paper it up? Was there a specialty closing that I want to do to how to paper it? And how do I have the loan serviced by a loan servicer? All of those things really matter when you’re trying to make the most valuable notes. Something I’ve been dealing with my whole career. I’ve dealt with it every day of my life, essentially. So it’s second nature to me, but it’s not necessarily second nature to every real estate investor. But the people that note school helps are the people that are going to buy those notes. And they’re going to buy that note. Now we said that time is the number one reason people like notes. What’s number two? The income. Cash flow. Cash flow. I live here in Dallas-Fort Worth. And Charleston is not going to be way off of this number. It might be a little more extreme even than Dallas-Fort Worth. But what we know today is the thing that people don’t like about buying brand new rentals is because the cost of the property and the income, the expenses on rentals, far have outpaced the rent increase. So we had $250,000. And I like real estate. So I have $250,000. I’m going to go to Dallas. I’m going to buy something. I’m going to buy a house or a note. So I buy a house. I’m going to get $1,800 in income from my $250,000 investment. And pretty much the gold standard is 50% of the payment that I receive in rent is going to go out the door to expenses. That’s an acceptable gold standard in single-family rental houses. So that means I’m going to net $900. I buy a note. And today, this year, our students are earning an average income on $250,000 of $2,700. With essentially no expenses. They’re the bank. They’re not a landlord. Now, $2,700 versus $900, I’m thinking notes sound pretty good.
CORWYN:
Yeah, three times. And that’s interesting. So you guys are buying notes. Like one of the things I remember you saying here a moment ago is that you have coached people who make these type of acquisitions on how to set these notes up so that they are marketable and attractive for you and investors that you not only coach but also work with. So a question I would have for you is outside of that, what do you guys look for? Obviously, it’s always about cash flow, so the amount of money, interest rate, et cetera. But do you look for shorter terms, longer terms? What are you looking for?
EDDIE:
Most of the notes I buy are longer terms. I’m buying a first mortgage on somebody’s property. And so it’s probably a 20- or a 30-year note. Now, some of the loans have a long pay history, and so they pay down. So maybe the remaining term is 10 years. Occasionally, it’s less. But I’m not a hard money lender. I’m not buying a loan that is going to mature in a year. I’m buying a loan that’s a longer-term note. Now, one of the things that we teach in note school are what are the odds. These loans actually pay off early. So the odds are very high, like almost 99.9%. You’re going to buy a 20-year note, but you’re not going to really wait 20 years to get all your money. Statistically, those loans are going to pay off in about eight years. So people are buying and making. One of the things that people find about notes is if they’re doing short-term loans, as you would know a hard money lender, right? They get paid off in six months, and now what? Now they’ve got to go find the next perfect deal. And then that deal pays off, and they’ve got to go find the next perfect deal. Our types of notes are very suitable with people that want to spend less time and energy and just get a check and not have to go out and chase everything. Find a good note, and it lasts for a long time. They’re getting a good income. They’re getting mailbox money, and they’re not having to go do a lot for it. It’s most of the time third-party service. So actually a servicing company is literally just literally wiring you the money, and you’re not having to go. You never even have any engagement with the borrower. And so that’s the reasons that people like it. And the third reason is if I name three reasons, first of all is time. Time is actually the most important. Second of all is cash flow because people are not happy with their cash flow on rentals right now. Now listen, if you acquired a rental portfolio 10 or 15 years ago, and so your cost basis in the property is really low, you may say my income has really changed because expenses went up far higher than rents. Expenses went up about 60% since the virus. Rents went up about 20%. It’s not exactly an even thing. So the last thing is let’s just say that I buy this brand new rent house today. I got $250,000. If I buy the rent house, it’s going to cost me $250,000. I’ve got no cushion if something goes wrong. But if I buy that note, I funded $250,000 on the notes. But guess what? The collateral is worth more than what I paid for the notes. I have a cushion factor. So the collateral might be worth $350,000. I’m not warning anything bad to happen to my good borrower. God forbid if it did, I have a cushion in notes that I don’t in rentals.
CORWYN:
True. Makes sense. Makes perfect sense. And that’s interesting because you made me, I’m literally over here in my mind thinking about a few things because, you know, we’re in this season now, Eddie, of the legacy. What is that going to look like and putting things in place? And typically, you know, we talk to a lot of and have a lot of conversations here on this show. But many are thinking about acquiring real property, real estate to turn into rentals. But you just changed the game on that. You secured the cash flow without none of the headache.
That’s probably one of the things in there. You’re talking about time, but it’s a headache factor. With toilets, you get stuff.
EDDIE:
Legacy, I’ll be honest with you. Like, I’ve been in this space. I’m in three real estate masterminds at probably 85% of the top 500 house buyers are in one of those three masterminds. I know all the people that do this at a very high level. And I can tell you that as people get, their hair gets more gray like ours, what happens is they start thinking about legacy. And then they say, do my kids want, does my wife or my husband, do they want to inherit this if something happens to me? By the way, bad health is far more likely than just death. And then do my kids want to inherit it? And the answer is, I can tell you the answer to that. That’s not what people tell me every day. They say, I want to switch to a note portfolio because all they do is get a check in the mailbox and they don’t have to go do the same work level or management skills or problem solving they have to do with owning rentals. So it’s a good alternative. And don’t get me wrong. I’ve been around the space a long time. I’ve had rentals. My father-in-law, who originally taught me the business, was a landlord. He was a landlord that turned into a note guy because of the economy in 1980. That’s when I started. I started with him when interest rates were 18%. So I’ve seen the cycles and stuff. I would say this. It’s a great alternative if you want to blend some assets. And it’s a great alternative if you want to shift and say, I’m looking for something that’s easier with better cash flow. And let’s be honest about it. They’re avoiding headaches.
CORWYN:
Yes, definitely avoiding headaches. That one right there. Let me ask you this, Eddie. The notes and stuff that you buy, are there particular asset classes that you lean towards, others that you lean away from as far as an asset types as well, classes and types that you try to stay away from or that you embrace? And what are those?
EDDIE:
Well, I’m experienced. And we know what experience is, right? Experience is what you get when you were expecting something else.
Right? I don’t buy notes on good properties. I do not buy notes on undesirable properties. I don’t care where it’s land, because sometimes it’s land. It’s just swamp land. You couldn’t do anything with it. Or sometimes it’s a house and it’s not in good condition. Let me just say this. I want to buy a note where the guy that is living in the house and making a payment to me is going to live, fulfill, and live his dreams out on that property. Okay. That makes perfect sense. And that means he doesn’t get a bad experience, so I don’t get a bad experience.
CORWYN:
Very fair. So, particular types of properties. You may mention, obviously, vacant land is always that bearable because you never know.
Nothing’s there, so nothing may go there. Something happens, and that’s the first thing that people stop paying. But what about manufacturing? Do you stay away from that?
EDDIE:
No. I bought a million notes on mobile home and land. Mobile home and land is affordable housing in today’s market, so I love that.
I get to help working-class people. By the fact that I buy their note, I get to help working-class people be homeowners and not renters. That’s a good thing, right? Now, there’s junk in any of these asset classes. We’ve all seen unsafe neighborhoods. We’ve seen the single wide mobile home that looks like it ought to be in a movie somewhere because it’s so redneck, terrible looking, right? That’s not good collateral, right? So, we pick good properties, whether it’s a house or whether it’s land, and we try to deal with real estate investors that deal in that type of property. So, I have a reputation. If you’re dealing in junk, don’t call Eddie, right? I love it. And I want that reputation, right? Because I don’t want to waste their time, and they don’t want to waste my time, or at least I hope they don’t. So, I find a group of people doing the business where I can have a big influence on how they do it, hopefully make them do it better, and then all of a sudden they make good notes. And the reason they sell their notes is because they run out of money. They want to go seller finance the next deal or the next five deals. They run out of money, and they need to recapitalize, and so I create a secondary market where they can go do that, and let’s just be honest about they can live to fight another day. You’re not losing money because they bought a piece of property and sold it and got the down payment and sold it for more than they paid for it and all that good stuff. But I do the things that help the real estate investors that are creating good paper. I want to be helpful to them, and then all of a sudden the students over on the note school side, I’m creating a secondary market that the average person would have no idea how to go find a note or how to evaluate it. True? True. Very true. Well, let me keep doing that because we’ve done it a lot, and then I have a school where I help people lower the barrier because I help them find notes and I help them evaluate notes. That’s what I do for the people that stay with me long term in note school.
CORWYN:
So let’s talk about note school, but let me ask you one other question as we lead into that. So my imagination tells me that you want a seasoned note before you purchase it, meaning not necessarily. Not necessarily? Okay.
EDDIE:
Listen, if they make the note, they’ve sold to somebody with good credit, and they got a good down payment. The only reason seasoning matters is because you got to overcome credit and the pay history with seasoning overrides some unredeeming factors up front. Well, if you create notes with good redeeming factors, you don’t need to season it for six months or three years. So that’s another thing is that I help people. Underwriting standards for mortgage lending at the moment are like insanely tight. Do you realize that? Yes. Like underwriting standards at the moment, according to mortgage bankers, are a twin sister to what they were in 2011. Very true. That means a lot of good people are left behind.
CORWYN:
That’s true. Yeah. You’d be surprised. High credit scores, great assets for whatever reason. Underwriter gets a hearing like, eh, nah, that’s okay. Nah, we’re going to pass on that. So the turn downs are impressive. I remember a stat from a few years ago that the average credit score of a loan that was turned down was like 735 or something like that. It was over 700.
EDDIE:
Right now, according to mortgage bankers, and they have a scale, we are exactly where we were in 2011. That’s how extreme underwriting has become. And so for that reason, it’s a good day to sell our finance.
CORWYN:
Yeah, definitely a different day. Oh, Eddie, let’s talk about NoteSchool. NoteSchool is your education platform to teach people about note buying and investing in this particular market.
EDDIE:
Yes, sir.
CORWYN:
First, where can people find the information to get connected? And then secondly, what do you guys work with people to accomplish through education?
EDDIE:
The best thing that I know, the most compression of time that I can give somebody is we have a master class. And in that master class, we’re going to whiteboard out real deals. I’m going to show people what the property looked like, what the note looked like, how it was bought, how you can even use leveraging techniques to not have to go spend all of your money every time you buy a note. So we’re going to show people in a couple of hours a really condensed version of what the world of buying notes looks like. And that is for most everybody I know. That is the fastest, quickest thing they can do to have a sense of, hey, I really like this. Maybe it’s not for me. Now, usually people don’t say it’s not for me, but at least you’re pretty quick and then you get it. So that’s what we do. And I’m going to offer this to your listeners. This is a class that we sell, but I’m going to offer this to your listeners today as a gift. And just because it’s a gift doesn’t mean because it’s free does not mean it’s valuable or not valuable. And that from there, that process is how people get the quickest way to really understand it. Everything is a story. Can we relate? There are things about a business or our financial model or whatever it is. There’s a story around that. And when you understand the story, then the components all start tying together. So that’s what we’ve done. And we found out that we can actually teach faster, even physically whiteboarding out deals and teaching you, even then we can just giving you a book. Although guess what you’re going to get when you come to the master class, I’m going to give you also some written materials. So I’m going to give you like a whole package of things that are going to make sense and help you. So it’s going to be pretty simple to register noteschool.com/exit.
CORWYN:
Awesome. Awesome. Awesome guys. Look here, I’m going to it. I’m checking it out right now. Woo. That’s what I’m talking about. Yeah. So you guys make sure you read. So our listeners guys register Eddie one more time. That’s noteschool.com/exit. Love it. Love it. So look, we have quickly gotten quote unquote to the tail end of our show. And you look at, you’ve had me mesmerized since the beginning. So I appreciate it because this is an arena in a space that some people know exists. I’ve known about it for a very long time and have explored quote unquote, got the pinky toe in. If you will, people don’t gravitate towards it, but it’s really an environment people look at. Well, I don’t own the asset. Well, if you own the note, you own where the money goes. And if you want the money, which most of them do, you want the cash flow for whatever reason. Why do you want the headache when you can just have the cash flow? It’s like you can separate, if you will, the baby from the bath water, so to speak. Tallest building in town is not the landlord’s building. Boom. It’s the bank. Yeah, there you go. That’s a good one right there. So Eddie, I always like to ask this question is that it’s a hindsight question. Everybody, when they look back, they can see so many opportunities they may have missed or things they could have done differently for you. What is that? So as you look back over these 44 years and change of doing this and operating within this space, what if you knew back then that you have learned over the course of these years, would you have done differently that would have you at a much higher level than where you currently are now?
EDDIE:
I think you can tell that I’m fairly disciplined in this process. So I know the kind of assets that I’m willing to buy. I know the kind of real people that I’m willing to go work with that are making these notes. So what I would say is if I’d have had those disciplines quicker, then I wouldn’t have taken all the detours. So I believe that I deal with top grade real estate investors that are creating notes that want me to help them. And then I’m buying good notes and with people that I think are very deserving. And just cause you can’t get a Fannie Mae loan today in my mind, doesn’t mean you’re bad.
CORWYN:
That’s real. Sometimes, you know that in this interesting use, you should even, you know, make mention of that. Consumers have been in Mirandized or otherwise indoctrinated that a bad credit score is an indictment upon them versus just a part of who they are. If that makes sense. People think my credit score is enough for me to, like you said, get a Freddie or Fannie loan, then I’m not worthy of home ownership. And that’s not true. There’s options and things that are available, which you guys are part of the solution in that. So thank you so much for being in that arena in that space. But you are part of the solution to help people still achieve home ownership, whatever that looks like, if you will, for them. So again, thank you for being in that space. So Eddie, I want to thank you for taking time out today to be on the show. Look, you have provided a wealth of information and knowledge. I’m over here, back of my head, basically just blown out as I’ve been trying to catch and keep this stuff. But I really want to thank you from the bottom of my heart again for taking time out to be on the show with us today. So I really appreciate it. Appreciate it. So for our listeners, guys, look now, one, we got to get Eddie back. So Eddie, I’m going to ask you now on air. Hey, we got to get you back on because we got to break some of this stuff down in the future. But for our listeners, I want you to reach out. I want you to know school.com. I want you to engage, take a look at the free webinar. So you can get acclimated to what that space looks like and consider beyond that. What do you want your legacy to be? How do you want that to play out for you, for your family for your children’s children and so forth and so on as we have been endeavored and in task with doing. So with that being said, my final round, again, Eddie, thank you for our listeners. Y’all know, y’all know how I feel. Y’all know what I say. Y’all know I always put the two of them things together and I deliver it to you this way, which is to tell you that I love you. I love you. I love you. And we gonna see you guys out there in those streets.
