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Not long ago, I was part of a webinar panel discussing the state of the land industry. On that panel, one of the other panelists was Eddie Speed.

I hadn’t heard much about Eddie Speed before this webinar, but as soon as his name came up, it seemed everyone else knew the guy and respected him.

As we got more into this panel conversation, it was apparent to me that Eddie was very, VERY knowledgeable about the subject of notes, buying and selling notes, and seller financing (especially as it pertains to vacant land, which is a rare thing indeed).

Over the past 40 years, Eddie has closed over 50,000 private mortgage note deals totaling over $500 million, and through his company, Note School, he has trained over 10,000 real estate investors.

Eddie knows a lot about creative ways to get deals done, and he loves seller financing, which is a highly relevant topic to land investors.

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Episode Transcription

Seth: Hey, everybody, how's it going? This is Seth and Jaren, and you're listening to the REtipster podcast.

Today we're talking with Eddie Speed. Not long ago I was part of a webinar panel discussing the state of the land industry, and one of the other panelists on the webinar was Eddie. I hadn't heard much about Eddie before this webinar, but as soon as his name came up, it seemed like everybody else knew who the guy was and had a lot of respect for him. And as we got more into this panel conversation, it was pretty apparent to me that Eddie was very, very knowledgeable about the subject of notes, buying and selling notes and seller financing, and creative financing in general, especially as it pertains to vacant land, which is kind of a rare thing.

Over the past 40 years, Eddie has closed over 50,000 private mortgage note deals totaling over $500 million. And through his company, Note School, he has trained over 10,000 real estate investors. Eddie knows a lot about creative ways to get deals done and he loves seller financing, which is a very relevant topic to us land investors.

So, Eddie, welcome to the show. How are you doing?

Eddie Speed: How are you, Seth? Thank you.

Seth: Yeah, absolutely.

Jaren: Talking about knowing Eddie. You might not recall this, sir, but I think I've interviewed you at a different podcast with Simple Wholesaling at Brett Snodgrass.

Eddie Speed: Yes, absolutely. How are you? Yeah. I know Brett very well. Yeah.

Jaren: Yeah. It's good to see you again, Eddie.

Eddie Speed: Yes. I've been in a mastermind with Brett for many years.

Jaren: Yeah. Brett is a great guy. Brett Snodgrass. We've had him on the podcast. Do you remember the episode for the show notes, Seth? For Brett.

Seth: For when Brett was on the podcast? I don't think he was on the podcast.

Jaren: He was never on the podcast?

Seth: No, you interviewed once, but wasn't for the podcast.

Jaren: Oh. We should make that happen. We should get Brett on the podcast.

Seth: We should, we should.

Eddie Speed: Yeah. He's a good guy.

Seth: Yeah. Totally.

Jaren: I didn't mean to interrupt. Do you want to kick us off with kind of your backstory and how you got started in real estate and all that?

Eddie Speed: Yeah. I started in the note-buying business and I started in 1980. So, I started when rates were really high. Traditionally seller financing becomes a lot more of a factor when traditional financing is either not available or not affordable. And so, obviously we look at the market ahead and think there's a lot of opportunity with seller financing in various ways because it basically fills the gap conventional lending doesn't fill. First 10 years in the business I just was really targeting buying more one-off notes, bought a few portfolios of notes, primarily on land, but didn't do a huge amount.

By 1990, I had sort of decided there was a specialty out there that people could chase portfolios. Not just single notes, but portfolios. I had a partner, and we had two ends of our shop. We had just a kind of direct-to-seller operation drop, direct mail, kind of perfected that technique really before any house buyers ever perfected it. And just doing courthouse research and mailing people, solicitation, you can sell your note. I'm sure everybody on the podcast has carried a lot of notes, have already been seeing those solicitations. And I kind of started that fire, literally the first guy to ever do it.

But then I started specializing in portfolios and there were two kinds of people that were most likely to carry a portfolio of seller finance notes. One of them was a real estate investor doing houses, buy, fix, flip, sell, owner finance. And then there were land guys. And so, I bought a lot of paper from land guys made, gosh, I don't know, more field trips than would be accountable, in the thousands probably. I got to see a lot of guys that sold land in various ways. From really pretty resort stuff to what I call workless land and everything in between.

Along the way, I started partnering with guys because a lot of the guys that were land guys, they weren't really good at financial modeling and that was what I was good at. And so, I would partner with them and I've partnered with guys in various parts of the country. That's how I ended up in the “land business.” And the other thing I figured out was, I had seen so many seller finance transactions. Call it hundreds of thousands. Like literally hundreds of thousands. We didn't buy hundreds of thousands of notes, but we saw hundreds of thousands of notes.

And it was kind of funny. I think Seth, this is kind of where you saw the other day. I pretty quickly decided when I looked at a seller finance transaction, I've got to figure out really quickly who was the most innovative, the buyer or the seller? And that was because of how the deal was structured. And so, that's what led me to what has become a big part of what the training business is now. And how do you help real estate investors do seller financing both on the buy and on the sell?

One time you use very innovative techniques because you're the borrower, you owe the money. And the other way is you're the lender. It's pretty different in how you would structure the deal and what's possible.

Seth: What would be some examples of innovative techniques?

Eddie Speed: It's funny. To complete your answer, I'm going to have to take us down a little trail a little bit. You got to remember, if you've closed 50,000 deals, you have sort of a Rubik's cube in your head. But the problem with a Rubik's cube in your head is nobody else can follow it. It's hard to replace the level of understanding you eventually develop when you've done that many deals and you wake up thinking about it all day, every day.

There are really three categories of sellers that would carry terms for you. Somebody that needs most of the money upfront, some of the money upfront, or none of the money upfront. And so, instantly you start structuring a deal around what I call their immediate cash needs. Are they a candidate to carry terms for you? Or would you need them or want them to carry terms for you?

And so, here's the most innovative idea you can do. Seth, there are two ways I can buy that land from you. I can buy that land from you and I can make you a cash offer, which means that you get all the money upfront, probably selling at a discount, or I can make you a tax strategy offer.

Seth: What does that mean?

Eddie Speed: Exactly, 100% of the time. It leads to the next question, right? Which is a psychological sales process. Seth, you may not qualify, but the odds are that you do, and I'm not giving you tax advice but what I am saying to you is that I've paid for a lot of accountants and tax lawyers and people helping me and clients close deals and understanding the tax consequences of selling a property.

If you sell a property today, you're probably going to trigger a pretty good profit and you're going to pay tax on it. But the IRS allows you a couple of provisions. You could call them tax loopholes. You're not cheating. You're not not following the law. It's just what's allowed. You just didn't know that. One of them is if you carry payments over time, the IRS calls those installment sales. You pay taxes as you collect the payments.

Now, Seth, another thing is the way capital gains works. It's kind of like ordinary income. It doesn't start taxing you on dollar one earned. There's a threshold that you have to earn before it becomes taxable. So, if you're stretching out your capital gains over a period of time, guess what? It's probably doing to your capital gains tax. It's not meeting the threshold because you're getting it in increments and you're not reaching that level that gets taxed. Does that mean that you could possibly sell your land on carrying payments for me and allow you to essentially not have to pay capital gains? That's what that could mean.

Jaren: What do you do in terms of underwriting borrowers, though? I don't do any terms deals whatsoever because I don't know if this is true or not, but I've heard somebody say that the rule of thumb is like 40% default rate in land. So as somebody who buys notes, obviously, you don't want that kind of default rate. So, what do you do to prevent that?

Seth: That's 40% default rate if you're doing no underwriting, right? Which is what many people do, it’s zero. I don't care. Just whoever, let's get started.

Eddie Speed: Let me say this, Jaren. I am an advocate for seller financing. I'm an advocate for good seller financing. There are some people that I don't believe are good actors in the business that sell property on seller financing and they're creating a pile of junk. I don't think they're good operators. And that's what you're describing. Somebody that sells land and says I have a 40% default rate. Well, you suck as a banker.

Seth: Yeah, I would agree.

Eddie Speed: I don't think that's good for our business and I think it invites trouble and I just wish heck, it didn't exist. First of all, here's my litmus test. Are you selling a good property? If you're selling an acre lot with no water or sewer and it takes two acres for the county to allow you to put water and sewer on it, what are you going to do with that land?

Seth: And I know we're kind of switching gears here. Originally, Eddie was talking about buying land where the seller is financing it for him. Now we're switching gears and talking about selling land, where we are financing it, where in the land flipping space that we're in, that's usually the situation. And I don't want to say it never happens, but it's pretty rare for a person to make a 30% offer and request seller financing from the seller or even do that at all. Not never, but it's not common per se.

Eddie Speed: But here's what happens, Seth. Let's go back to the buying on terms. What about the good land that they wouldn't sell because they wouldn't take 30 cents on the dollar?

Seth: Yeah. Another way to do that would be to structure it as an option or like a lease purchase or something like that. But you're right.

Eddie Speed: I don't want to do a lease purchase. I want to buy the land and have the title in my name. I don't want to get a promise I'm going to get a deed somewhere in the future. If they got a good title on it today, let's close. And what I would say to you is in the land business, I totally believe that you can double your conversion rate if you work a term strategy correctly.

Seth: You're talking about terms, acquiring with terms?

Eddie Speed: Yes, sir.

Seth: Okay. Got you.

Eddie Speed: Absolutely. And here's why. You're making a pennies-on-the-dollar offer and certain people they're in a situation where they would accept that, but let's be fair about it. Most people wouldn't accept it. A higher percent wouldn't accept it than would accept it. Correct?

Seth: Correct.

Eddie Speed: Okay. Well, then what about the people that would sell that have a price stuck in their head? Then all of a sudden, you're showing them a tax strategy they've never considered. Then all of a sudden, you're saying instead of getting a tax bill every deal, what if we repositioned it and got you a check every year? And I would say to you that my life experience with land guys that I've worked with is the better quality land that they deal in, the people are carrying terms because they're more sensitive to get the price they want. They're not so worried about getting cash today. Here's the thing about the tax strategy offer is you don't have to sell seller financing. The IRS sells it for you.

Jaren: Can we dive into how that deal would be structured?

Seth: I think I know where you're going, Jaren. I think maybe a different way to structure the question would be under what circumstances does it make sense for a land flipper to offer to buy it with terms? Because I know if you're planning to just flip the thing and not do anything to it or if you're going to subdivide it or improve it or rezone it or just something like that, why do that? Why not just pay cash?

Eddie Speed: That's exactly right. There's a decision tree. The first question is when you're buying the land, how might I sell it? If I'm going to buy a piece of land either I don't want to owner finance because it's not of the quality that I'm willing to hold as my collateral. I can't find somebody that's likely to pay me or maybe I find something that's so good when I resell it, they're not going to be willing to let me seller finance it. Maybe they're fixing to go put a 5,000-square-foot house on it.

So, there are reasons where I do a decision tree and I say, “Is that land something I'm likely to successfully seller finance when I sell it?” That's the first part of the decision tree. “What would I do with the land?” If I can sell it and seller finance it, then I'm going to make terms offer and try to buy it on terms. I'm just going to buy it on way better terms than I sell it.

The second decision tree would be “How much money do they need?” And that gets into some of the money, all the money, part of the money. Land is really cool because let's just say they need 50% of the money upfront. They had an immediate cash need. They had to have 50%, but 50% of the money they don't need. Okay, well, this will be pretty simple. Then split the tract into two pieces, one with a mortgage and one paying cash. So that's one, that's an easy fix. But land has it always. Sometimes buying houses, you can't do half the house, right? A lot of times, not 100%, but a lot of times with the land, you can structure something kind of like that. Now, that may not be true on a two-acre lot, but it could be very true on more acreage. Something that’s a little more.

So that's an example. There's a decision tree. What we've done is built out a decision tree that leads you through I would say in our coaching program, we have what's called a “deal lab.” So, students bring real deals to the deal lab and how for years, it’s once a week, it's pretty organized, pretty structured, and we are bringing lots of students. Some of them are top 500 house buyers in the business. Some of them are land guys. Some of them are little operators. Some of them are big operators.

And so, what we've then gone back, we went through a lot of effort and we've broken down what are the most likely decisions that needed to be made. And we broke it into three decisions. Basically, how much money do they need compared to what it's worth? Then once you do that, then how do you make an offer? And so, we've developed some things to take it out of what I would say of an art form just to a system.

When I developed it, it was an art. I knew all of these things. I know the most likely things that a customer will do. I know how to structure a deal. And so, I developed things that are like, “Okay, just assume you're going to do it this way.” You're saying, “What is that?”

I'll give you an example. Let's say you're buying a piece of land for $100,000. We're going to structure $70,000 of this deal is going to have some interest and start making payments, probably annual payments, but they're going to start making payments. And 30% of the deal is just going to be payments that are going to be made at a future date.

Seth: Like a balloon payment?

Eddie Speed: No, it doesn't have to be a balloon. It could amortize. It could make it a balloon, but you don't have to make it a balloon. Now, you say, “Eddie, why would you do that?” Because I'm going to pay less interest on $70,000 of the mortgage-paying interest than $100,000 of the mortgage-paying interest. And I have discovered that most people will let you split those debts into two payment structures. I've also discovered that people will let you do an increasing interest. So, I might go from 1% interest to 5% interest. And you say, “Why would you agree to 5% interest?” Because the 5% is on very low amount of principal compared to the original amount.

There are things that I've learned that I would say I've developed the art. Think in terms of I teach somebody how to do it. I've already drawn in the lines. They just have to color it in. I've done certain things that I know that 80% of the time, the best deals I've ever seen were structured in this framework. Not 100%, but 80% of the time. If I draw the framework, then I just allow somebody and then there are certain little variables how much interest do you start with and how much interest you end up with, you are going to have to pick those numbers. What do you want your payment to be? Now, if you're using Excel, you just plug in those numbers and see the result or you change a number and see that result.

I built the framework in where there are certain structures that I would say try it this way. You don't need to figure it out. I've already probably done that enough times to know that the seller will be willing to do this if you position it the way I say. And then you can pick certain numbers and then Excel does the work. So, Excel does the calculations. We built models and Excel does it. Or if you change the number, if you make it instead of 1%, you start out with 2%, you can see what the difference is. Or if you say, “Eddie, why do you do a high-interest rate on the backside of the note?” Because sellers want to go to tell their brother-in-law that they owner-financed that property at 5% interest. That's just a truth I have found.

And we've taken the idea of buying on terms and how do you structure it and we've created mechanization out of it. Because otherwise it just takes too much experience to get started. And so, that's what I had to do as a training company is to take things that we had run of lots of experiments, hundreds and hundreds of experiments, and then melt it down into the most likely chance that somebody would do it. And then once you do that, they're just following a decision tree. Then the customer takes you down that tree. So that's how you go from Star Wars to a Highway.

Seth: Yeah, I think maybe it would help to understand a hypothetical or even maybe a real example, say if you're going to buy on terms and then sell on terms, let's say we've got a property that is worth $100,000. That's the market value. What would be a sensible agreement for you to buy on and then sell on? What should that margin be so that you know “Okay, this is a good deal versus this is not a good deal? I'm not going to do this.”

Eddie Speed: Well, one thing about it is when you're buying on terms, you're making money two ways. You're making money on buying it at one price and selling it at another, but you're also paying one cost of interest. And then you're re-renting the money if you sell it on a rap note at another cost of interest.

Seth, I can take a million-dollar deal and pay 2% interest and sell it at 7% interest. And I'm making 5% on a million bucks. And I never made a profit selling the land. I sold the land for even money. The other way I can do it is, and this is how I do my land business. A lot of the time, we buy land and we reaggregate it. I wouldn't say we're developers, I would say we're land reaggregators.

Seth: And what does that mean exactly?

Eddie Speed: Well, when you're a developer, you don't have all the tax benefits you do if you're just selling land for long-term purposes. So, in order to do that, I may buy a piece of land and I've got the financing structure to where I'm not under pressure to sell it quickly. Maybe I can keep it for a year. And then I just break up the land and sell it in smaller tracts. I may not have to go put in roads and septics and that kind of thing because I may be dealing with county property where I can just carve it up. In that case, I can buy a hundred acres of land and then resell that land in 10-acre tracks and make a very good profit just because 10-acre tracts per acre cost are far different than what a hundred acres cost.

Seth: This sounds pretty similar to what Doug Smith does, who we interviewed in episode 135. Would you agree? Is that kind of the same approach?

Eddie Speed: Yeah, I know Doug. Yes.

Seth: Okay. And I know that's something you can do pretty easily in Texas if you stay over that 10-acre limit. It's not necessarily that easy in other places. So, you'd have to make sure that's actually feasible.

Eddie Speed: It definitely depends on where you're operating. Doug is in the Houston area and I'm in Dallas-Fort Worth. Doug is doing exactly what we're doing as he goes out and gets out in the country where people are wanting to buy weekend places. They want to go have some acreage and go shoot a beer can with a pistol and ride the kids with the four-wheelers. And it's that kind of thing. That is really a very viable model in a lot of parts of the country. Now, some counties or some areas won't allow it, it may not be viable in New York City Metro area, but you might be surprised what would be two hours to New York City that believe it or not, you could do it there.

Seth: I guess going back to that original question, say we've got $100,000 property, what would you offer on that and then what would you expect to sell it at in order to make it a good deal?

Eddie Speed: Well, once again, I'm always looking at what my exit is. If the $100,000 property I thought I could sell for $150,000 because I could break them into smaller tracts, then all of a sudden just because I repositioned what someone might buy, instead of just buying one tract and selling one tract, I might buy one tract and turn it into three tracts. Then all of a sudden, I could change my profit structure. And then the other thing is the terms that I structured might lead me in that direction as well.

So, the answer you're looking for, if you say, well, I make cash offers at 30 cents on the dollar. Well, somebody just picked that number. That's not a rule. That's not in a rule book somewhere. Obviously, I've helped a lot of land guys, so it's not like a number that I'm unfamiliar with, but we don't buy land at 30 cents on the dollar. I don't ever buy something that cheap.

Seth: Huh? Okay. What do you do?

Eddie Speed: I buy land closer to market value. I just know I can change its market value.

Seth: Do you always offer on terms when you buy? Do you ever just buy cash?

Eddie Speed: No. Here's an example. I have a contract we're going to do this week on 14 acres of land. There's a 6,000-square-foot house that the guy owns. He's a pilot, and he owns a 6,000-square-foot house that's next to this property that he also owns this tract as well. So, he's not broke. He's got a number in his head he wants to sell it. He's listed with a realtor that doesn't know how to break up land. The advantage is he's listed it with a Realtor because all they know how to do is put it on the market and sell it.

Well, we can sell that land between $420,000 and $440,000 if we sell them in two seven-acre tracts. Well, the people that we're going to owner finance to are going to go put a 5,000- or 6,000-square-foot house on it. They don't need seller financing. They're not going to carry seller financing. So that's a deal where buying on terms wouldn't do any good. Now, I might get him to temporarily carry it. I might get him to carry terms for me for say a year or something like that. But I don't try to make a terms offer on every deal because the way that I sell it has a lot to do with the way that I buy it.

Seth: Just to recap what you said. You said you’re going to split it up into two parcels. One would be, was it $420,000 and $440,000? Is that what you said?

Eddie Speed: So, it’s 14 acres, right? I'm going to break them into two seven-acre tracts. We've already checked it out. We can do that. And because I'm selling a seven-acre tract, I can sell it for more per acre than I can sell a 14-acre tract for. I'm just reaggregating that property. And this is very high-end property. Carrying seller financing is probably not an avenue, but now one of your listeners go, “Well, Eddie, I couldn't come up with the $300,000 cash it takes plus pay a Realtor commission.” Okay, well then that's where you would carry terms. You might get the seller to carry terms for you just so that you didn't have to go find financing for that kind of deal. So that's what I would call temporary seller financing.

Seth: So, in this case, you said $300,000, so you'd be buying it $300,000 cash and then selling it for $800,000 or $900,000 altogether when you sell both properties?

Eddie Speed: I'm going to sell it for $440,000.

Seth: Altogether or per parcel?

Eddie Speed: For the two tracts combined are $440,000.

Seth: Okay. Got you.

Eddie Speed: I'm not really buying the property at that much of a discount. I'm just changing what the property's worth because of the size of the tract that I'm selling. That's just an example of how you deal in land where if I made him the 30 cents on the offer thing, I know he's going to laugh at me. And even though he's listed it with a Realtor that is not sophisticated in how to break the land up, the Realtor's smart enough to know that they can do anything and probably go get 85 cents on the dollar for it, 80 cents on the dollar. So, I'm paying that at a small discount, but I'm still making it work.

That's an example of the only way I could use seller financing in a terms offer to buy there. It would just be temporary, so I don't have to go find the money at a bank or come out of my money with cash. So, I can just temporarily use seller financing there, not really a permanent long-term situation or seller financing is not making it a lot more profitable to me, it's making it a lot more convenient for me.

Seth: And when you say temporary, you say that because your plan is to sell it quickly, not because you're going to refinance?

Eddie Speed: Yeah. I can resell it. That's not the long-term thing that we place the most emphasis on, but when you're out there finding land, do you walk away from that deal? I say, no, you probably do that deal.

Jaren: I want to jump in there. I've been a little bit quiet on this episode. I just want to actually circle back to my question that I was going to ask earlier, what are the gotchas? Let's say you implement this strategy where you buy on seller financing and then turn around and sell it on seller financing and you just make up the difference in the middle. Are you using any kind of special contract? What are the things that you have to be aware of and what are the underwriting qualifications that you have borrowers go through? What are the ways you structure the deals?

Eddie Speed: We're jumping the fence again. I just want to make sure everybody's clear about this. Now we're not talking about buying on terms. We're talking about selling on terms.

Seth: Thanks for spelling that idea.

Eddie Speed: I want to answer the question, but I want to make sure people know that when I buy on terms, I'm going to write the terms to the benefit of the borrower because I'm the guy that owes the money.

Jaren: Sorry, to just clarify, my question actually is on the side when you are buying on terms. What I'm asking is for you to have the ability to turn around and sell on terms, the majority of the time contracts don't have that language in there intentionally.

Eddie Speed: All right, Jaren. Let me tell you this. A land contract is simply a lease option on steroids. It says that I'm going to buy the property and I'm going to owe the money. But the seller of the property is not going to give me the title to the property until I buy it, until I pay for it in full. Never buy a piece of property on a land contract. That didn't make any sense. What if he goes and gets an IRS lien against him or a judgment against him in the next five years? He's now got a property that I'm paying for and he's screwed up the title to it. So, there's no advantage whatsoever in buying on the land contract. I couldn't think of a story that would make sense to do that.

Jaren: How do you structure on the buy side? Because most lending instruments don't allow the borrower to turn around and resell the property until it's paid in full.

Eddie Speed: Jaren, let me just tell you something. There's no standard. It's your chalk and your chalkboard. When you say most, most what? And first of all, just because somebody says, “Well, that's how a lot of people do it,” doesn't mean that's how I do it. When I'm doing terms, I'm dictating the terms of the deal and I'm not copying anybody else that doesn't make sense.

Jaren: Yeah. I'm assuming your structure is superior to what standard. But I just wanted to know, I’m just trying to wrap my head around it.

Eddie Speed: Okay. Let me go back and say this. If I'm buying on terms, I'm going to sign a note and a mortgage or a deed of trust depending on what state it's in. And they're going to give me the title to the property. The provisions of that note or mortgage are not going to look normal. I'm going to write a lot of provisions in there that a banker or mortgage company would never agree to and a seller will agree to every time. Now, I'm not going to go into the 20 things that can be, because that's going to be a Pandora's box.

Seth: What would be the top three, out of curiosity?

Eddie Speed: Top three would be, I would have the ability to exchange the property for other property. They call that “Walk the mortgage.” So, if they gave me 0% interest or 2% interest, if I ever wanted to sell the property, I just moved the mortgage to another property of like value or better.

Seth: Interesting.

Eddie Speed: Well, number two, I would do a release of collateral. As I pay down the loan, they release part of the property. I don't let them get ahead of me where I have 100 acres tied up and I owe $20,000 and as I start paying off the mortgage, they start releasing part of the property.

Seth: How does that work? Is it like they're changing the legal description or something?

Eddie Speed: It's just your chalk and your chalkboard. You write it up. You're an old banker, Seth. You understand how lot lease provisions work for a developer.

Seth: I've never heard of that where you say “Okay, now I own this 20% eastern corner of the property because I paid this.” Is that what you're saying?

Eddie Speed: Land developer pays down the loan. He has a lot release provision. Otherwise, he'd have to go sell every lot all in one day, or otherwise, he couldn't walk himself off his debt.

Seth: Oh, I see. So, you're saying when it's split up 20 lots and he's paid it down by 20%, he owns four of the lots now paid off and the other 16 are still collateralized? Is that what you're saying?

Eddie Speed: As I pay off a loan, I have them start releasing part of the collateral. Once again, I know a banker or mortgage company may not agree to this, but an individual will every time. The third thing I would say to you is I secure a right to buy my own debt. So, they're going to wake up one day and they're going to want to sell the note early. Everybody's in disbelief of this, except you're talking to a guy that's bought 50,000 seller finance notes. I know that people will want money early. Well, I don't want some other note buyer buying my note. If somebody's going to buy the note, I want this guy to get it.

And so those are the top three things. Be able to exchange the mortgage and move it to another property. Be able to get a release of collateral as the loan pays down, either at closing or after, meaning that if I pay a big down payment, they're going to release part of that property at the closing or as I'm paying down the mortgage, they're releasing part of it. And the third thing would be a first right of refusal to buy their note.

And so, that's an example of things that as you really see case studies and as you really see it more, if you're like, “Oh my gosh, there is so much profit in knowing how to structure terms.” And there is. Not just buy low, sell high, and not just pay a low interest and resell on a higher interest rate, which is very profitable too, but there are other things about it.

And the idea, Seth, is this. This is why this matters. This matters for one reason. You are taking land and building your own bank. They say that Warren Buffet owns Nebraska furniture to be in the finance business. I can tell you this, the most profitable entity in every big car dealership out there, the most profitable part of the car dealership is the finance department.

Seth: Yeah. I believe that.

Eddie Speed: How about these crazy furniture stores that carry selling furniture and let you pay them later? You think they're losing money? The idea is, your land is just a vehicle to be in the finance business. And once again, on the surface, when I taught this for years, it was a little too complex. And then all of a sudden, we started building out these decision trees. And then all of a sudden, we could take somebody and say, “Okay, this would be good land for me to owner finance so I'm going to try to buy it and get them to owner finance me. They're a candidate.” How much money do they need as a percentage of the sales price? Do they need half of the money, or can they owner-finance 100% of the property? What's that look like? And then how do you structure it?

Well then, because I've structured so many deals, I build templates and say, “This is how you're going to offer it,” versus you're trying to sit down and take a yellow pad and a calculator and run all these numbers and stuff. We built templates and you literally can just take an Excel spreadsheet and start loading those numbers in there. And boom, okay, well, that's how it's going to work.

It's just using experience to say I'm not going to show you every possible way under the sun, but I'm going to show you some really cool ways that a very high percentage of the time, this is a very lucrative structure for you to be the borrower and pay that guy back. That's how we figured out how to create a lot more out of the system than making it just a pure art.

Seth: I'm curious. Say if you were to buy land with owner financing from that seller, your plan is to break it up and resell it with seller financing, all this stuff. But then all of a sudden, something like 2008 hits and land values tank, and you agree to a seller financing arrangement. I'm sure you've probably been through that given how long you've been doing this. Is there any way to safeguard against that since you're not buying at a discount, you're buying at maybe full market value. How would you deal with that?

Eddie Speed: Well, at some point it's kind of difficult to write into the agreement “I'll pay you if I can. If I can't, I'll just pay you later.” You certainly could write in some provisions that a banker or mortgage company wouldn't agree to, but you could bake in some provisions that would be like an automatic forbearance.

Seth: What is that?

Eddie Speed: Well, here's how I could do an automatic forbearance on a house. If I'm buying a house from you and the tenant is living in the house, and he's not paying, I'm going to put in an automatic forbearance that I don't have to start making payments to you until I get the house back in possession and can re-rent it. Now, would a lender agree to that? No, but is it legal and can you document that and can you structure that correctly? The answer is yes. So, this landlord, he's not having success getting the tenant out because he probably didn't know how to do it. So, he'd rather me go do it and he's willing to agree to something like that because he figures I'm better at it than he is, probably I am.

That's an example of how you can write things in there that are necessarily completely enforceable compliant terms. They're just not standard that a bank or mortgage company would agree to. And I don't want to get too Star Warsy with it because obviously if you've been doing it a long time, I can think of 50 things like that that I've seen done. I'm not saying it's practical for one of your listeners to go try that on their very first deal. But certainly, there are times that I've seen that work.

Here's what I would say to you. The decision tree process, basically, how we've learned to teach people to make offers, they have to make fewer decisions. We've already helped them with things that draw it down to a point that asked them a question, “Okay, now I can see it's a candidate. Now that Eddie has structured these terms and told me how to make these two debts that turn into one, I don't need to figure all that out. Eddie has already done that.”

Then all of a sudden I'm like, “Well, okay, what is the starting interest rate?” Well, Seth, you may say the starting interest rate is 1%. Jaren, you may say the starting interest rate is 2%. Well, I give you the flexibility of your chalk and you write in what you want. But you don't have to calculate all this stuff. I'm going to give you a spreadsheet and it's going to calculate it.

See, that's the difference. I'm taking things away that make it more complex, that people, that's what scares them. Well, I bet you $100 that both of you guys can take an Excel template and type in those numbers that are needed. All of a sudden, I've made it a heck of a lot easier to go make terms offers and feel pretty confident, “Man, I'm doing something that's pretty cool.”

Seth: Yeah. I've put together a spreadsheet. There's no decision matrix or anything like that in it, but it's five different scenarios of how to make an offer being cash, partial seller financing, 0%, all these different stuff. But it basically just gives you a bunch of different scenarios to present to a seller in that case.

But I think one of the issues that I think people will come across when they do this enough, say if you just reach out to a random person who owns land that don't know anything about financing and you try to get all fancy with them on this. They're just going to think “I don't get it. This is confusing. No, just give me cash or go away.”

How do you deal with sellers who are resistant to selling with owner financing? It seems like there's some salesmanship involved in convincing them to go along with this. How do you do that?

Eddie Speed: The most important thing that I believe we teach is how to crush objections. I bet you, everybody on this podcast that has bought land, says, “Oh yeah, I've tried seller financing. They just won't do it.” Well, what tells me that you did it the right way? You got to be able to crush objections. We use the most sophisticated thing in the market that's the most relatable, which is Seth, you know, I probably know most of the top 500 house buyers. I'm very connected with people that are the top negotiation trainers in the house-buying world.

So, we steal some pages out of their playbook because we understand how they do it. They use insurance sales techniques. Most people who aren't trained in how to negotiate and buy property, use numbers as their negotiation tool. “You want this, I want this, and here's our burden.” That's a terrible strategy.

The reason that all these guys, Seth, that now you see, or Jaren, you see them, look at Brett Snodgrass. They buy almost 500 houses a year. You think they use the old math techniques in buying houses? No, they use psychology. They use a decision tree and find out people's pain points. And then from there, that's how they end up working the deal.

So, the first thing I would say is that yes, crushing objections is everything. Let me give you a classic example of how I get somebody to want to carry seller financing. I use the tax angle. Like without saying it, I said, I can make a tax strategy offer or a cash offer. Now, I already know that you're going to say “A tax strategy offer? Tell me more.” That's psychology. That has nothing to do with how I'm going to structure the terms. It just says I'm pretty sure most people don't want to pay tax if they can avoid it.

That's a difference between a psychology offer and just a math offer. A sling of cash number offer. I'm not saying that's not effective in some cases, it's very effective. You guys do it well, but sometimes there's more to it. And I end up buying better properties, better grade of properties, better quality of properties overall because I can make a tax strategy offer. Because they inherited the land 20 years ago and they have a lot of profit from when they inherited the land, what it was worth then to what it's worth now. They're smart enough to know they're going to get clobbered in taxes. And so, boom, I use that strategy.

And I always try to avoid having to say this, “I'll pay your price but you have to take my terms.” The IRS is the one that says that if you want these tax benefits, this is the way you have to do it. I didn't write the IRS law. I am just familiar with it. So now all of a sudden when I get them in that mode, of course, they're going to agree to all kinds of stuff that's on my terms.

Now, how do I know that? Because I've seen several hundred thousand seller-financed transactions. I know what is normal to a person using seller financing in their head. It's what you said a while ago, Jaren, “This is normal. This is customary.” Customary for what? Customary to who? What rule book were they reading?

But I've seen so many transactions now, I've patterned it. I've asked people, “Why would you carry payments and not collect a payment for the first two years?” And I've heard their logic. So now I take the logic that was in their head, why they were okay with it, and I can play that logic to them and say, “A lot of people think of it this way.” And they're like, “Oh, yeah. Oh, well, yeah, that makes sense.”

Seth: And what is that way? How do they think of it?

Eddie Speed: Well, it depends on the scenario. When you start out asking people for terms, I already know what they're going to say. They want 25% down and 5% interest. I already know that. How do I know that? Just enough ups? I've tried it enough times. So that's how I developed the way that I structure the note, the two notes, and the step rate on one of the notes that has interest. You said, “Eddie, how'd you figure that out?” Just like anything else when you try something so many times and you finally fall into a pattern.

And so, what I started realizing was when people are negotiating you about the interest rate, let me ask you a question. What if you handed them a financial calculator and say, “Calculate, tell me what the payment is.” You think they could do it?

Seth: The average person, probably not. No.

Eddie Speed: They're fighting about something that they don't even know what the answer is. I had to understand that what they wanted to do was tell their brother-in-law they sold the land and got 5% interest. And that's exactly what they're going to be able to tell him.

Jaren: In terms of conversion rate, you mentioned earlier at the beginning of our conversation today that you mastered the art of direct mail before everybody else did. And I was just curious, when you do a direct mail campaign specifically for seller finance deals, from the buying perspective, what's your conversion rate look like as opposed to…?

Eddie Speed: When we're buying land, we just say that we want to buy your land. Then when we get them on the phone, then we have the decision tree. We don't lose the ability to make a cash offer. We still use direct mail and we buy land. We do a lot more of a better grade of direct mail piece.

And the reason we do that is that we believe that probably the quality of the land has a lot to do with the quality of the mail piece you're sending. So, if you send kind of a cheapo thing, you kind of figure you can't be shocked that somebody calls you with a cheapo lot. And if you mail a better grade of a mail piece, then the customer that tends to respond to us overall is a little better quality, but I don't try to distinguish.

In other words, I let the decision tree do the work. Here's the customer, here's what he owns. Here's his situation. You start picking down the decision tree and the deal starts sorting itself into various categories. Does that make sense?

Seth: So, you were asking about conversion rate, Jaren, in terms of how many deals that close per mail piece you sent out? Is that what you were getting at?

Jaren: Well, yeah, and I was looking at more in relation to cash deals versus term deals. What percentage overall from your marketing efforts?

Eddie Speed: We're probably 50/50. And that's pretty high, I think, to get your terms.

Seth: You mean you close 50% of the mail pieces you send out?

Eddie Speed: No, we're 50% cash and 50% terms.

Seth: Okay.

Eddie Speed: Yeah.

Seth: That's kind of insane.

Eddie Speed: But we close way higher percentage than normal. And I think the terms really help us with that.

Seth: It sounds like you're pretty successful at finding ways to make deals work because you're willing to go down this road of seller financing when you're buying and when you're selling. In what circumstances can you just not do the deal? What is the problem? Is it because they're not willing to do seller financing or it's not enough money? I don't know, what is the thing that makes it fall apart?

Eddie Speed: This is a personal preference. Land that really has no value I just don't want to fool with. I'm not willing to seller finance it because they won't pay. Jaren already said that. They won't pay. I can have the best underwriting box in the world and I know what a good underwriting box looks like. But if I'm selling a piece of junk property out in the middle of nowhere, I can't find that qualified buyer wanting to buy it from me. I'm just like everybody else. I kind of got the fog the mirror plan, right? If they're breathing, I'm going to let them in. Well, that's not going to work. I already know that. I've already seen that experiment run for 40 years, so I don't need to test it anymore. I don't like that kind of property for that reason.

Now, if I can flip it for cash, and there are occasions where I just know I can flip it for cash. So, if I'm buying a piece of property that's not mine, I would not care for it personally, but I know that there's a market and I can sell it. It's okay. The first thing I would say is what causes me not to be successful? Probably the property itself. Sometimes I just don't care for the property. It's just not something that I can see a good future for.

The second thing that causes us not to be successful is we all see this all the time. You've got heirs, and there are six kids. And the story is almost the same every time. Three of them need the money and are desperate for the money. And three of them don't need the money at all. Now, you can sometimes use creative financing to make some of that work, but land is heavier with heirs than other asset classes.So, you have a lot of that situation. Those are patterns that make work. And a certain percentage of people that get a letter and say they want to sell their land are just calling you because they're looking to see if you're a fool. So, they are literally trying to sell it for more than the realtor can sell it for. And that call today, this month, that call is way less than it was six months ago. Six months ago, we were getting way too many of those calls. And I bet you, every one of your people in this podcast that are in the business would say, heck yeah, they were just looking for a bigger fool to go buy the property. So, there's some of that.

And so, I think if you just accept the fact that marketing is all about trying to calculate your best odds before you start, which means your marketing strategy is correct. You're targeting to the right property, the right customer, the right situation, whatever you think that is for you. And then once you get there, then once your customer shows up, if you have an interview process that starts allowing you to go down a decision tree, I'm only going to make a cash offer because I think I'm only going to sell this for cash.

In that scenario, the decision tree says, “I'm not even going to discuss a tax strategy offer.” But there's another scenario that goes, “Oh, man, tax strategy offer could really be cool on this one.” And then once again, you go down that decision tree and do it.

What we feel like we had to do was remove a lot of noise, so it took a lot fewer complications than it used to. Look at so many things in life. The way that a product becomes the most successful is it's user-friendly.The number one thing that people are like, “I like it because it's easy to use.” Whatever that is. It could be driving a car. It could be your computer. It could be whatever. It could be your workout equipment. Whatever it is, something that's functional and user-friendly is number one. So, we tried to design a little bit of what we do in our school. It's got to be user-friendly. It can't be so complicated. You got to be Seth to be able to operate it. Seth's an ex-banker. He is a pretty savvy guy. You see what I'm saying?

In other words, all of a sudden, I don't want my customer to just be Seth. Although I'd love Seth to be in note school. But I'm just saying that I can't make something. I had to help people with things that we had already kind of run the test and we could kind of help them sort through it for them. That's where a lot more people can apply the same concept.

Seth: When you talk about targeting the right people, so who are you targeting? Is there a certain way you filter your list for direct mail or however else you're contacting people? Who are the people that you're like, "Nope, they're a landowner, but they're not the right person?” How do you determine that?

Eddie Speed: I'm mailing counties around Dallas-Fort Worth. I don't mail to people that own too small of a value. In other words, if you have a value that's on the tax rolls for $15,000, then I can tell you right now that I just don't want to fool with it. Our business model is not designed around buying a lot for $500 and selling it for $1,500 or $3,000. It's just not. I would rather go work on a bigger deal that's a better grade of business and has more profit. We look at the tax value, and we say, “We don't want to chase land that's not worth a certain amount.” Now, I know a lot of people that are doing lists or they're doing the opposite and that's okay. I'm just saying that's not what we do.

Seth: What is the minimum threshold for you? At what point is it not worth it?

Eddie Speed: It depends on the county. The closer in Dallas-Fort Worth, we go up in value. If it's a county out where land tends to be a little less valuable, then we'll lower that threshold down a little bit. So, we might take a minimum land of $25,000 closer to Dallas-Fort Worth. And as it gets further out, we might be okay with $15,000.

Seth: And that's for seller financing or just for getting involved at all?

Eddie Speed: For just working the land, period.

Seth: At what point would seller financing not be worth the trouble you think?

Eddie Speed: I think in those same numbers. I think if you're looking at those numbers, we've tried it. We tried not filtering to do it.

My son is a fireman. Now the fire department is crazy. They work two days and they're all four days. That's what his fire department is. And he's in a great fire department. He's a really committed guy and he gives it all when he is there. But this is a great part-time business for him. And so, he runs our acquisition side and it works well. And he has a call center that takes the call and schedules sent him to call back. But initially, when he would call, people would call us with stuff and we really kept a good log of what the calls were.And then we worked backwards and said, “Okay, how do we filter? Because 80% of the time when this guy calls us is just something we're not willing to fool with.”

Let me give you a classic example. Let's go a county or two out from Dallas-Fort Worth. There's a lot of people that sold recreational property 50 years ago. And you got this infield lot where some guy had a third of an acre. And it's an infield lot. It's not fancy. When you look at it, it looks like a pasture. You wouldn't know it's a lot except right in the middle of it, that little posted stamp plate that lot, that's that guys. It's a third of an acre. It's a half-acre. You go to the county to put a well in and to put a septic in, it takes two acres. I don't want to fool with that lot.

Seth: It's not going to work.

Eddie Speed: And I can go buy it for $500 and sell it for $1,200. I already know who I can sell it to. That's not very interesting for me to get into that business. Maybe for some of your listeners, that's awesome.

Seth: Yeah. You mentioned earlier how you have a really clear underwriting box. So, what is your underwriting box? And are you doing that yourself or do you have like a mortgage loan underwriter who's doing that for you?

Eddie Speed: Yeah. Let me say this just so you understand hiring an RMLO, which makes you compliant with Dodd–Frank. That is the legal process that somebody with a proper license underwrites the loan. Let me be clear about this. It is not their underwriting box. You're the lender. It's your underwriting box. They're just following your guidelines.

And so, people get confused about it. “Well, I hired an RMLO.” Well, I don't know if the RMLO's got any sense or not. I mean, I don't know whether their underwriting box is a good underwriting box or not. I'm the guy that's done all the deals. I want to set the underwriting box and then hire the third party, RMLO, to go legally make me compliant.

Seth: So, what is yours? What are your rules that you're looking for generally?

Eddie Speed: Well, it's a little bit more complex than just an answer or two. You understand the concept, basically that in banking school, there's five Cs of credit. Number one is character. Then it's your ability to pay. They call it capacity. And then you go right down the line of all these things that start with a C that really drive your underwriting thought.

I will tell you this, and being in the business for a very long time, character probably is truly number one. You start out with somebody with good intentions. If you pull a credit report on somebody and they got 12 chargors in their credit report, you're a fool to think you're going to be Mr. Lucky, and he's going to pay you perfect. Probably not.

Seth: That's interesting though, because character is the one, because I agree with you. It is probably the most important one, but that's the one that you can't really quantify.

Eddie Speed: You can base this on their track record of paying another. You should be able to look into a credit report and get some sense of that. So, the other thing is this, and that is you start out with somebody's ability to pay. And then also we look at what are they going to do with the property? What makes that land sacred to them? Our land paper pays better than residential paper. Why? Because we are selling land, that land is sacred to the buyer. Now, yes, we've checked their credit. Yes, we've checked into their character. Yes, we've checked into their ability to repay, capacity. We've done all of those things too, yes. But the answer is we don't have a bunch of delinquency in land paper. So, when a guy says, “Well, I sell land, I have a 40% default rate,” I can almost tell you what the problem is. Poor collateral, poor underwriting.

Seth: Actually, that's a really valuable insight that the land is sacred to the buyer because you're right. If they need it, it's a big deal to them, they're going to find a way to make that payment. So, one obvious way would be if that's their home, they are primary residents.

Are there other things that would make it sacred? What would be identifiers to be like, “Yes, this person is not going to default because this means a lot to them?”

Eddie Speed: Well, here's how I would easily define that. You ever meet somebody and just in conversation with them, "What'd y'all do this last weekend?” “Oh, we went to the farm." And you hear that passion in their voice. We went to the property, we went to the land, we went to the ranch, we went to the farm. You got that? That land is sacred to them. And that's different than somebody buying a piece of land out in the middle of nowhere they'll never go see and they have poor credit underwriting when they bought it. And you carried terms and then all of a sudden, Jaren, they're that statistic that you just said a while ago. Well, I already know that statistic. I'm a note guy for 40 years. I've seen well over 5,000 portfolios of land deals. That's a lot.And so, I've already figured out, I've already run that decision tree. You see what I'm saying? I've already figured out if I'm going to do this, this kind of paper works, this kind of paper doesn't work. In my mind, I've already mapped out that decision tree. And part of what I'm trying to do in note school is kind of show people, “Okay, if you had a guy that had that many field trips and saw that many deals, what is it he learned that would save you a lot of time in figuring out?”

And Seth, I'm going to be honest with you. I'm not in agreement with a lot of the land gurus out there and you kind of figured that out. I don't think they have more experience than I do either.

Seth: Yeah. That was the thing that stuck out to me about you is just your acknowledgment of that. I've always thought that was just flawed logic of, “Yeah, you just take the land back and sell it again, make more money.” It's not really that simple. And it depends a lot on what is the value? Is it good land or bad land? There's so much more to it and I didn't feel like anybody was ever acknowledging that. So, I put together stuff about how to do credit checks and background checks, but this idea of getting RMLO and teaching them what you're looking for seems like a really important step.

Eddie Speed: Well, let me say this. This is why I built a school. We're not smarter than anyone. We have a lot of miles. And so, we had to figure out a lot of things and we figured out a lot of things that we liked and we've also figured out a whole lot of things we didn't like. We have a school to take to people through that process to learn how this works. There's nothing magic about it.

And once again, the guru business has been around a long time. So, people have been teaching things just because somebody has a training business and says, “I'm teaching you how to do it,” then that doesn't mean necessarily that from our perspective, being the guy that bought all these portfolios, then we've got to go look way behind the scenes in somebody's business, like way behind the scenes. We got to be like their lawyer or their accountant. We actually knew the real numbers.

And so, we started teaching concepts where the guys had really impressive, good numbers, not name it and claim it. You know what I'm saying? And so, those are the things to me. That's just part of the integrity of the business. I am an advocate for this business. I'm an advocate for seller financing. I believe seller financing is a very good tool. I think it's good for the sellers to carry terms. They really do get a tax benefit. I'm not making that up. It's a truth. I think it's very good to offer seller financing to a buyer. That may mean they own a piece of property that otherwise they couldn't own. They get to own that sacred land. So, I believe that there's a lot of good in these things. And obviously, within that, there's some judgment. And I think we can move people's thought process to judgment of “If I want to have a really good honest business,” like Jaren, I'm going to say this to you. When you tell me that your default rate on land is 40%, you kind of have an integrity problem with your business because you think some of those people that are losing their land, you think they're staying up at night threatened about it? You think they're making payments to you that really aren't a good investment in their life. You see what I'm saying?

So, there's a lot of things that you can do to really tighten up what's possible all within the framework of you having a very profitable business.

Jaren: Yeah. That makes a lot of sense.

Eddie Speed: Anyway, that's just sort of my theory on why you do it. Other than just making good business sense for you, how do you get to help others?

Seth: Yeah. So, in this note school, what exactly should a person expect if they want to check that out? Do they get templates or a spreadsheet?

Eddie Speed: We have classes and we teach these concepts. We have enough time to unfold it, unpack a story, show you how it works, show you how the decision process works. Show you different examples of structuring deals on real deals. And then all of a sudden people go, “Oh, I can see that. I can see how it works.”

I'm very big on teaching with case studies because you tend to remember those examples better. It's just showing people the same thing. I don't care what asset you're dealing in. You come to note school, we're going to teach you how to buy houses. We're going to teach you how to buy office buildings. We're going to teach you how to buy warehouses. We're going to teach you how to buy land. We're going to teach you how to structure terms on all those things and those terms so that it doesn't matter what the asset class is.If you learn how to do it and buy on terms, then some guys in the warehouse business, then another guy's buying an office building and another guy buys houses and you buy land, it doesn't matter. I am a land guy. Trust me, I use the same strategies in buying land. So, we teach ideas. And then we also teach you, “Wait a minute, this really matters a lot. And in some other scenario, no, this probably doesn't matter. Well, am I learning a technique that only house buyers use?” No, that's not true. Like anything else, if you have a good sequential process of building blocks of knowledge and all of a sudden people start learning to see more clearly as to what's possible. When you get what's possible then you really change your business.

Seth: Well, Eddie, I appreciate you coming on the show and answering some of our questions. It was super helpful. For the listeners out there, if you want to check out the show notes for the episode, it's because this is episode 141. You can find links and resources to the stuff we talked about in this conversation. Yeah. Thanks again, Eddie. Appreciate it.

Eddie Speed: I'll make sure in your show notes, I'm going to give these guys free training if they're interested and if it's appropriate for them. I'll put that in the show notes, it'll be I'll make sure that we get that information to you and put it in the show notes. It'll be a workshop. It'll be a little something where we can take these ideas to a little deeper level.

Seth: Awesome. I appreciate that. Yeah, I'll include that in the show notes as well and you guys can check it out. All right. Thanks again, Eddie.

Eddie Speed: Good to see you.

Seth: So, there we have it. That was an interview with Eddie Speed. Thanks again, Eddie. What'd you think about it?

Jaren: It's a very interesting strategy to buy on terms and then turn around and sell on terms. But I don't know. I just feel like there's maybe more to the story than we see because that just reminds me a lot of where you buy on assignment.

Seth: Sandwich lease or something?

Jaren: Yeah, like a sandwich lease type kind of stack.

Seth: There's been more money coming in than is going out kind of thing.

Jaren: Yeah. I don't know. I think I would rather just go find a partner and just find a money guy to just put up the capital to do deals and just be off to the race. The one thing that is interesting about this strategy is that it does give you a way to capitalize on deals that you otherwise would not be able to because they want closer to market value.

Seth: Yeah. I think that's the biggest thing for me. It's like another tool in your tool belt to grasp more opportunities, kind of like back when I interviewed Jesse Marchand in episode 119 and he was using options. A lot of times that's not going to work for you either, that doesn't make sense, but sometimes it does. And to be able to draw on that knowledge when the time comes up and just know, “Hey, here's another avenue we could go.” That's a big deal just to understand that there's still opportunity there. And sometimes that's a huge opportunity if you're just willing to not be so rigid in only buying for cash at a huge discount.

But again, the thing with seller financing, a lot of people don't realize, sometimes ever, or at least until they get into it, is that there's a lot to know about it. Like state-specific law and collecting payments and underwriting, all of this stuff. These are all barriers to entry. It's complications that you don't have to think about if you're just doing it in cash. I think if you're going to be a serious land professional, it's worth learning this stuff because it's your livelihood. Getting every possible opportunity. It's worth understanding it. I think maybe the trick is just understanding, “Yeah, I could go there, but I don't have to and I don't want to.” So just because you know how to do it doesn't mean you should do it.

Jaren: Yeah. Or that the circumstances speak to doing it. I loved your knowledge. I think that's the best way to walk away from this. It’s that this is just a tool in the tool belt.

Seth: And also realizing this goes way beyond land. Literally any kind of real estate.

Jaren: Anything.

Seth: Yeah. A lot of land investors aren't really thinking that way. But just realizing this works for anything. Another question I wanted to ask is if you use some kind of platform like Paper Stack or something to find these note opportunities and just the whole business of buying notes, we didn't really talk about that.

Jaren: I think he does direct mail as what he says. And then the deals that don't turn into cash, he just uses it as an alternative strategy is what I got.

Seth: No. I mean like buying notes from other land investors who have already sold on seller financing. I'm not sure where he finds those. Maybe it's just relationships with other land investors out there.

But there are definitely some key takeaways here. It'd be interesting to see more of those clauses that he includes in contracts. I know he talked about the three, but it sounds like there are 20 of them. Just understanding what else is there? What should I be doing that I'm not aware of?

Jaren: Yeah. I like the idea though of doing terms with higher down payments and having them go through some kind of… I don't know if we got into the specifics of what he actually has them go through, but I do like that as a general idea. I think that's what distinguishes terms actually being semi-passive as opposed to just being kind of a logistical nightmare.

Seth: Yeah. Yeah, exactly. But we still got some good nuggets out of that.

Jaren: Yeah.

Seth: So, people out there who listened, if you want to stay up to date with what's going on with REtipster, go ahead and text the word “FREE” to the number 33777. You can stay up to date on all the stuff going on in our world. And again, if you want to see the show notes for this episode, it's Thanks again to Eddie for coming on the show. And we'll talk to you guys again next time.

Jaren: Later.


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Seth Williams is the Founder of - an online community that offers real-world guidance for real estate investors.

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