The Science of Flipping - Episode 132: Interview with Eddie Speed – Get More Real Estate Deals | Creative Financing 101

Episode Date: September 28, 2018

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Welcome to the Science of Flipping Podcast. I'm your host, Justin Colby. Yo, yo, welcome back to another Science of Flipping podcast. I am your host, Justin Colby. And if you are watching this on YouTube, if you're seeing on Facebook or social media or any of the other streams or simply listening to this on iTunes, you see I have a good friend here, Mr. Eddie Speed, who has been an incredible mentor to me and thousands of others, quite frankly, over his career. And so I finally was able to lock him down. I put him in a headlock. We were in San Diego together. And I said, dude, you got to get in front of my tribe, the Science of Living tribe, and educate them on what you do because I'm a firm believer most people can make

more money with the leads they're already bringing in and they just don't know how to do it. So Eddie Speed, what's up brother? How you doing? Man, I am wonderful. I am wonderful. And for those of you who are a loyal listener to me, very quickly you're going to realize my man's got an accent. My man's got an accent. So I want you guys to figure out where he's from. What's up dude? What's going on? I'm from New York City man. Oh yeah especially with the horses and the buffalo behind you and

everything. Yeah all right well listen so let's just kind of jump into it just for the sake of time because truthfully speaking I you know have mentored well over a thousand people myself and I mean how many people have you coached mentored over your years thousand people myself. And I mean, how many people have you coached and mentored over your years? It's a pretty good number. I'm sure. Yeah. It's a pretty significant number, I think. And you've been in this space as far as real estate investing and very specifically creative financing for how long now? I started in 1980. All right. I was born in 81. So there is that. So obviously the man knows what he's talking about. This is all about creative financing.

And the reason why that's so important is because as wholesalers, as investors, our whole role, our whole model is to drive leads in. Well, if we're not able to monetize each and every lead that comes into place, then we're missing out on a ton of money. My man, Eddie, not only has been doing this since 1980, but he's created a note school that is really teaching people how to structure each and every creative financing deal. So let's jump into that as I know this is a very, very hot topic. I know the markets are shifting a little bit right now. So let's just start out. Give everyone a little bit of your background and what you've been up to for the last couple years.

Well, for my whole career, I've really worked with real estate investors showing them creative financing techniques. Started that back around 1990, showing real estate investors how to utilize seller financing so that they could in turn sell those notes in the secondary market. And then we've done some version of that and a lot of other note strategies, obviously, since then. But you and I have hung out in masterminds together and some of your partners and I have hung out in masterminds together. And it your partners and I have hung out in masterminds together. And it became obvious to me really probably about a year and a half ago.

And they said, Eddie, we need a creative financing strategy because we need to be able to pay closer to retail for a house. And the only thing that's stopping us from paying more money for a house is interest and fees and how the lender makes us structure the deal. Right. I mean, what if you could buy a house at no interest? Could you pay more for it? Right. Because I mean, especially in the flipping world, and I've rehabbed 350 plus homes. When you're paying 10, 12, 15, 18% interest, that eats away at your profit margins fast. On top of which, you know,

which you can go into, you're only looking at a property as a buy-in rehab. Well, why not create some wealth? Why not buy and hold that sucker? And if you can't go get a loan and your FICA sucks and all the other reasons why people say, oh, I can't create my wealth yet. I don't have a great FICA score. I don't have the money. Well, guess who I'm going to point you to? My man, Eddie, because that's a huge caveat that a lot of people are missing. Well, once again, if you ask somebody the question, would you like to sell a piece of property and make a big fee at the closing, say 10, 15, 20 percent of the value of the house and still collect payments on the house for the next 30 years? Would you be OK with that? They'd be like, yeah. Right.

Or could you make up? Could you do both? Could you make a flipping fee and earn basically long-term income as if you were a landlord? Right. And so let's jump in there. You know, I want to jump in very specifically. I want everyone to realize this is all about creative financing, seller carrybacks, and so many, he teaches so many different great options. But if someone was, let's just use myself. If I said, Eddie, I want to really focus on, you know, no money down or very little buy and hold properties. How would you really start suggest I go after and structure those deals?

Well, I think the biggest thing you would do, first of all, is you got to go find the right lender. Okay. Okay. And the right lender is the seller. It's not a hard money lender and it's not a bank. It's not a mortgage company. That's wrong lender. Okay. So, so finding the right lender, let's just say that you're making cash offers on houses every day, which I know you do. Right. And I'm just saying, okay, you're making 20 offers. You get one, say yes. Let's just go take some of those 19 that said no, unless we'll reverse engineer and come up with a plan B way to buy it. And the plan B way to buy it is get the seller to owner finance you. But listen,

you're going to dictate the terms. Right. So I'll give you your price, Mr. Seller, but it has to be my terms and what's a I don't want to use the word common or eddy because I know you I mean there's a bajillion ways to skin the cat but where would you want to start what's like a good starting point for someone who I mean I'm very experienced so I'm probably a little higher level but I want to talk to the people who are like I love doing seller carry I want to try this I think this is great to have no money down, no credit, no nothing. Where would you start that person? What type of offer would you want them to be offering? Well, you know, there's a second leg to what we're doing here, right? We're baiting the hook today and then

we're going to tell guys about something special we're going to be able to offer them in a few weeks. 100%. That is exactly what we're doing. So the most important thing to start with is a calculator and really an efficient way to use a calculator because the truth be told, most real estate investors, in all due respect, really don't know how to be creative with a calculator. I mean, and I'm saying that because you know I hang out with guys that are ninja real estate investors all the time. They have too many buttons, Eddie. The calculators have too many buttons. They do. They do. And I know that. And so the first thing I would say is I understand the need.

I don't know what my financial options are. They don't know how to do it. And so it's important that we can help them with that. Okay. And then secondly, and along with that, and I know you just heard me do a presentation where I was talking about this to some pretty savvy guys. And I said, we don't know what we're negotiating for. Right. And so I think there's more to it than just the math. I think the math is important, but there is more to it than the math. And for that reason, so let me ask you a question. Yeah. Just let me ask you like a what if question. Okay.

What if you could go find the money you need to control real estate long term, make profit up front, make long term income. And you could just take a red pen and start out with the interest rate and the payment and whatever, right? And the personal guarantee. And we could go through that loan and cross out about 30 or 40 or 50 things you don't like and fill in the blank with what you like. I would love that. Okay. Well, that's where we're going to start. I love that. I mean, that's, and again, Eddie just mentioned it. Him and I are working on

something to help you guys really, really understand that we can't teach you this whole, not even a chance we could teach this in 20 or 30 minutes on this podcast, but you actually run bootcamps, right? Where people can come in and spend a couple of days with you. Okay. And we can help you guys find that and those locations and dates and all that. But the reality is that what you just said and what you were able to outline is to be able to take away someone or take away the hurdles people are having right now with not being able to find enough deals, get enough deals, is simply because you don't understand the strategy of how to work with the

seller so that they can get what they want and you can get you what you want and how that all gets structured. A, with the math, of course, the math, but then also how do you not have to go find the money? I mean, I think there's a lot of real estate investors and I've actually reframed a lot of the message I'm bringing in is very synonymous with what you're doing right now, which is simply the reformation of real estate, like real estate reforms. You do not ever, I don't care the rehab, buy and hold, wholetailing, whatever. You never need your own money ever. Okay. And, and so what, why I have you on now is very timely. It's along with my message, but the reality is

if you can go and just leverage a seller and figure out their, what they want, what their value is and learn from Eddie on, well, what if I can do it with no money and nothing down and never have to make an interest payment again and all of these other things. I mean, there's a massive value because again, to your point, if you got one more out of the 20 leads that came in, you doubled your business, right? Well, think of it like this. People are so price sensitive in the market today, right? In 2010, most real estate investors weren't complaining about price. They were just trying to find capital, right? Today, there is plenty of people to loan you money or fund your deal.

The problem is, is the market's so tight, there's not a lot of discount in it. Yep. And what I find, and you're really more of the expert than me, but I think we're going to agree on this, is at least half the people that are trying to sell a property, they don't have really a financial problem. They have a real estate problem. Okay. They need to get rid of a piece of property. Correct. You know, like something like an inherited property or a rent property. That's the real estate problem. That's not a money problem.

Yep. Right. I know that everybody thinks they have a money problem when they're trying to sell something for cash. And then we're always measuring how much of a money problem they have, which tells us how big of a discount they're willing to take. Yeah. But the reality is, is there's so many ways to do this and give the seller exactly what they want.

Because when you and I are sitting around there telling real estate stories to each other, at least a few years ago, the story always starts out like this. Hey, Eddie, I found a property. It's worth 100. I got it bought for 62, blah, blah, blah. And right. We all, every real estate story that we tell is, is starts out with a price story. And there's more to real estate than price. If I could buy it on ridiculous terms, I can out trade the heck out of somebody that thinks they're buying it at a discount for cash. No doubt. A hundred percent. I mean, that's just the reality is if I go in with a cash offer and you say, I can pay you 80 grand on the $100,000 house and you come in 10 minutes later and say, I'll pay you a hundred

grand for the $100,000 house. What do you think the seller is going to say? They won't object to it. And what we do then is show you how to work the talk off. I'm not saying everybody will take it, but there are so many ways to carve it up and there's so many ways to position it that they're like, you know what, I'll take that. Because once again, everybody's litmus test is showing up at the title company with the number at the top of the closing statement. That's the sales price. And that's the whole, in the seller's mind, that's their success in selling their property. If you can, can you structure one piece of this pie? And we're going to go way more in depth on a future training that everyone will have access to. But how are you able to get away without

giving them a down payment? I understand the concept of you're paying their mortgage note, right? The loan stays in place. You're going to pay that, potentially get the arbitrage between that and the rent that the property has. I got all that. How do you get away with negotiating? Hey, Mr. Seller, I'll give you a hundred grand, which you want, but you're not going to get any money right now from me. Okay. Well then one of the ways you can do it is instead of doing a large first, like an 80% first and a 20% second, right? Which you probably did a lot of those back in the days, right? Well, instead of doing it that way, do an inverse and do a 20% second and an 80%, excuse me, a 20% first and an 80% second, sell the first lien at the closing,

there's their money at the closing. It's just not the buyer's money. It's the note buyer's money. Yep. That's exactly right. And again, you have a whole note school that talks all about this, correct? It's what I've done a long time'm I've showed more real estate investors how to create seller financing than anybody in the market I mean it's what just what I've been doing for a long time and I've done 40,000 deals so you know I mean 80,000 deals I hope everyone just said what the fuck like that amount of deals Eddie right I mean again you've been in this game and you're a mentor to myself and other I mean Sean, Sean and Kent and I mean, so many others, right? And so it's just impressive. And I really want to say thank you for bringing your time and knowledge here. But yeah, 40,000 deals, that's a couple more

than 850 or so that I've done. Well, I've been doing it a long time and I've run a pretty high volume shop. And the reason I ran reason I was able to run a high volume shop is because I could help real estate investors solve problems. And then the guys that did 50 deals a year or 20 deals a year or 200 deals a year, they would do business with me because I created efficiencies and a process that was a duplicatable system. And so I love doing it. We are, you know, we are very amped up about solving this math problem. And I know, I'm not saying that's the only thing you want to negotiate in these deals because it's not. But if I can show people like 10 different ways they can structure the deal and they can do it really fast, that's good. Yeah, I think anytime you can bring options to the seller's

table, right? You have a way higher chance. I mean, I don't know percentage basis, but you have a 50, 60, 70% better chance of getting the deal, right? Because you're not just the cash offer. I'm going to give you the cash offer. This is as high as I can go. Here are three other options. Mr. Seller, which option would you want? I've talked to you and Sean and Kent and 300 other people that you and I mutually know, all of which would definitely qualify as A player's real estate investors. They've all pretty much confirmed to me that their conversion rate is about half of what it was. Conversion rate meaning how many offers you make versus how many properties you buy. Yep. The conversion rates are up close to

about half of what they were in 2014. Oh yeah. There's a hundred percent. I need to drive in more leads. So now when I used to need to drive in, you know, let's just say a hundred leads a month. Now I need to drive in 200 just to get the same number. And that means spend more money. So the bottom line is what I'm saying to you, and that's why you have me on here today, I've been saying it to you guys for a little while, is dude, you are burning leads. Yep. Because you're not, you need a plan A, which is cash, the same strategy you already have. Yep. Cash price, close quick, all, you know, at a discount. And then all of a sudden, if they don't take that bait, right, that fish doesn't bite on that worm,

then you got a totally different strategy that you do and it's buying on terms, getting the seller to carry financing for you. So, it's not brain surgery. It's something I've actually been doing since literally I can say since the early 80s. But I wasn't forced to really become an A player at this and help you guys be an A player at it until so many guys says, Eddie, we need this. And so I've woke up every day this year, Justin, every day this year, I've woke up with a focus in my head. How can I show these guys how to be an A player in every nook and cranny of buying properties on terms to make the best trade? Amen. I mean, it almost, I mean, even what you're saying kind of gives me shivers because it's so

bad. Like I wish, and I sure you get the same thing. Like you want to strangle people's necks, like guys, you're not getting it, right? You already, like you can make more money with what you're already doing if you just know this little tweak. And again, to your point, none of us are rocket science, right? Like I have a degree, fine, but I'm not the sharpest tool in the shed. I'm self, I self-admitted, but to be able to make this little tweak and all of a sudden I go and I increase my revenue by 25% or I increase my wealth because I have a massive portfolio now where I basically let those leads go because they didn't fit in this ridiculous box that is completely self-imposed. I created the box.

There's no need for the box, right? So, dude, I'm so… Not every seller needs you to solve their problem exactly the same way. And so when you're a cash buyer, whether you're going to flip it or you're going to be a fix and flip guy and you're going to get this hard money and you're going to close it. Either way, you're expecting every seller to want all that cash up front and be willing to take a discount. And the reality is there's no other thing in our world of negotiating that we see everybody wants exactly the same thing. So, it's just a natural progression. Roderick Yep. Eddie, I think you and I are both excited. We were talking even this morning. We have something special for everybody that will be coming out in the next coming weeks that we're

going to really let them, you know, ask you a bunch of questions, really learn from you. I mean, you really are the master. I give you all the credit. I know everyone in this space, any of the experts that really know what they're doing, they give you the credit is the guy that taught them how to do it. So I'm excited to let you really dive deep with my tribe, let them know how to do it, how to structure, and then ask you questions, man. So, I think. I'll come back, I'll come back with a really cool gift, like a really cool gift. I love that. And then, but I want them to think on this. You and I talked about it. It's like, I know you've got a couple things coming up, and I want them to bake on this a little bit. But I want to think about what that could look like, because when we get back together, I think it'd be really cool for like us to like pop up some software.

Yeah. They like what could it be and start making up numbers and then them go, well, Eddie, what about this? So we're letting you guys prepare for kind of a seat at the table with us, and we think that'll be really fun. It'll be trick Eddie day. It'll be trick it, and by the way, I'm telling you all now, it's not that easy. It's not that easy. It's easier than you think, but I've been working on this one a while. Maybe I'll keep my head above water. Well, and this is why I'm excited to have you back because you've really found something that people don't have to overthink it. They literally have something, a software where they can say,

okay, does this fit? And they get to just dump it in and does all the math and voila, it doesn't fit. Okay, no big deal. And then dump it in. It does fit. Okay, now I know how to go attack it. I mean, you've really made this so people don't have to overthink because as someone who's an entrepreneur, I run seven different companies. I know you have several. I mean, the last thing I want to do is

have to think about every deal that comes across our table. Right. But fuck, can I throw some numbers in a spreadsheet and a calculator and just say yes or no? Yeah, that I can do. Well, it starts letting you play with how you can make different offers. So anyway, we've got that done. We're finishing a couple of things on it and I didn't want to do that absolutely today for two reasons. First of all, I think they'll be better and they'll be better mentally prepared if they sort of start thinking on this. No doubt. And then secondly, because I bet you there's guys right now that are sitting there going,

you know what? I got a customer that didn't take my cash price, but I know they need to sell because they're moving on with their life. Yeah. And they're stuck on price and I'm stuck on not knowing how to give them the price they want and still structure it right.

Yeah. Yeah. You said it earlier. What did you say? I say it like align your values with the seller's values and it's not always price. Yeah. Yeah. You said it earlier. What did you say? I say it like align your values with the seller's values and it's not always price. You said something and it was, darn it. How do you say it? I don't know that I said it today, but I know in a conversation you and I've had in prior conversations, I said, you're simply buying a property on today's price,

but you're buying it with tomorrow's dollars. Yeah, absolutely. And let that sink into everybody for a little bit. Yeah. What if I told you, you know, what if I told you with that nice painting on the back of your wall back there, you know, I'll, you know, you said, dude, I love that thing. I want, I want like 500 bucks for it. And I'd be like, 500 bucks? And you're like, yeah. And I'm like, I'll do it. And then as I'm walking away, I'm like, I'll pay you in 20 years. Oh, I love it. I would go, okay. I love it. Guys, I'm so excited for you guys to hear more from Eddie. Thank you very much for coming in here, man. I know your time is precious. So I appreciate you talking to my tribe. Do you want them to hang in there and wait or do you want to have them find you prior to that

or are we waiting? What do you want to do? You know, let's wait because I'm going to give your guys some lanes to go down. I mean, if you're burned up to go to note school and you want something, it's fine. It's not a gigantic secret. Right, right. Google me. But I'm going to give your guys some special things. Okay. That if they just come to note school, I won't really quite know who they are.

Sure. And I have some special gifts that I want to give them for your guys. And so if they don't mind doing that and just kind of – it won't be that long. We'll be back on this pretty quick. And then let's let them think on this a little bit and then let them prepare. In a week or two, we'll drop back in, and we're going to make a pretty big splash in giving them a gift. Love it. You got it, brother.

Well, thank you again for all you loyal listeners. Appreciate you. Make sure to stay tuned to all my social medias. You'll see Eddie on there as well. So that's all we got for today. See you, brother.