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We’re bringing back one of David’s favorite conversations, this one with his good friend Eddie Speed, the Note King and founder of NoteSchool. If you’re feeling like a burnt-out landlord or your rentals just aren’t cash flowing like they used to, this episode is even more relevant now than when it first aired.
Eddie has done over 5,000 notes, taught this for more than 25 years, and still actively buys hundreds of notes a year. He makes the case that in today’s market, notes can pay you more with far less headache than rentals, breaking down the real math on a $250,000 investment, why he says he can own 1,000 notes or 55 rentals, and the built-in collateral cushion that rentals simply don’t have. He and David also dig into why burnt-out landlords are converting whole portfolios to seller financing, and how NoteSchool helps investors manufacture and buy good notes. If you want a new tool in your belt for this market, grab a notebook.
Timeline Summary
[0:00] – David’s intro on why he’s resurfacing this Eddie Speed conversation
[1:39] – Why most real estate training is down but NoteSchool is up in this market
[2:37] – Who shows up at NoteSchool: investors frustrated with rentals and nervous about syndications
[3:29] – What note investing actually is: being the bank on secured first mortgages
[3:50] – Eddie’s line that he can own 1,000 notes or 55 rentals
[4:26] – The real math: $250K in a Dallas rental nets about $900 a month
[5:05] – That same $250K in notes averaging around $2,700 a month in payments
[5:40] – The appreciation argument and getting paid now instead of someday
[6:08] – Why more students than ever are converting rentals to seller financing
[6:45] – Rental cycles versus note cycles and why we’re in a note cycle
[7:24] – The inflation math: expenses up 60% while rents only up 20%
[8:48] – How Eddie reads market cycles and uses creative finance at the right times
[9:31] – Why a note gets better in six months while a hard money loan just pays off
[10:22] – What makes a good note: good properties attract good buyers and sticky payments
[12:13] – How Eddie helps investors manufacture notes to his specifications
[13:10] – NoteSchool as a home for burnt-out landlords
[13:42] – The built-in collateral cushion notes have that rentals don’t
[15:02] – The marketplace connecting note sellers and buyers
[16:21] – Why even crazy experienced investors come to NoteSchool to get their time back
[20:17] – The second-level skill: leveraging techniques for when you run out of money
[22:38] – Why Eddie is a doer, not just a guru, still buying 750 to 1,000 notes a year
[23:34] – The free masterclass offer at noteschool.com/profitfirst
[26:38] – Eddie’s best advice: get your accounting straight, because poor accounting cost him most
5 Key Takeaways
- Notes Beat Rentals On The Math Right Now — The same $250,000 that nets around $900 a month in a rental averages roughly $2,700 a month in note payments. That’s two to three times the net cash flow with far less aggravation.
- We’re In A Note Cycle — Rental expenses have climbed about 60% while rents only rose about 20%. That broken math is why experienced operators are converting entire portfolios to seller financing.
- Notes Have A Built-In Cushion — Put $250K into a rental and you’re straight on the concrete at $250K. Put it into notes and your collateral may be worth $350K, giving you a safety margin if something goes wrong.
- Good Properties Make Good Notes — The pattern is simple: good properties attract good buyers, which create sticky payments. You can’t sell someone a bad property and expect a good note.
- Get Your Accounting Straight — Eddie’s unprompted best advice, with nothing to do with David being a CFO, is that poor accounting was the biggest stress and biggest loss in his business. Nothing matters more as you start making money.
Links & Resources
- NoteSchool Free Masterclass (for PFREI listeners) — https://noteschool.com/profitfirst
- Simple CFO — https://simplecfo.com
- Profit First for Real Estate Investing by David Richter — https://profitfirstrei.com
Enjoyed This Episode?
If Eddie’s math on notes versus rentals made you rethink your whole portfolio, that’s exactly why we brought this one back. Share this episode with a burnt-out landlord who’s tired of tenants and toilets, and follow the show and leave a rating and review so more real estate investors can discover the note side of the business.
