If You Have a Solution, You’ll Have No Fear

ICOR Blog & News,

by Eddie Speed

Normal news channels are missing the big story. But they’re not the only ones.

We held a training session last weekend, and it was a real eye-opener — not just for our students, but also for me and all our instructors.

Just to explain the situation, this was a virtual class that we held online, and most of the attendees described themselves as real estate investors. Like all our classes, we took them through case study after case study that showed how creative financing was pivotal to making the deals close and earning profits. We also taught them about partials and how to borrow new investment money by using an existing note as collateral (hypothecation). I also described how I first learned the art of creative financing from my father-in-law, and how my wife Martha is a whiz at using money from self-directed retirement accounts to invest in notes for tax-free income.

About two-thirds of the way through the training, we took a simple poll from the students. The results were jaw-dropping to me and our entire teaching staff.

One of the questions on the poll asked if they expected creative financing would play an important role in their future deals. A grand total of 0% of the students answered “yes.” All my instructors were dumbfounded just like me. Obviously, our students were confused and something wasn’t getting through. The urgency of the current market situation had not sunk in. They were either uninformed or living happily in denial.

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Apparently we hadn’t fully communicated that if the people who buy your properties can’t get financing, it’s a giant problem not just for them but also for you. With all the turmoil in the market right now, there’s an 18-wheel Mack truck headed right towards every real estate investor. The only way to not get flattened is by knowing how to architect deals to locate financing apart from traditional lenders.


COVID-19 is a 7-headed black swan that has changed life as we know it. I don’t just mean the nuisance of wearing a mask to the grocery store, but huge changes all up and down the stream of how money flows from lenders to homebuyers:

  • The Mortgage Bankers Association reports that mortgage availability plunged about 25% in April due to the weakening of the economy and job market.
  • Since mid-May over 41 million Americans have filed for unemployment (which is about 20% of the total workforce) making lenders averse to risks. Some experts are saying 50% of these unemployed workers won’t get their jobs back any time soon.
  • As of May 24th, about  4.2 million mortgages are in forbearance, which is about 8.46% of all federally backed mortgages.
  • The government designated 80% of the recent stimulus money to buy bonds invested in mortgages to help prop up the industry and avoid a serious crash.
  • Warehouse lenders (who loan money to banks and mortgage companies) have made huge cutbacks on loaning money until the logjam clears up downstream.
  • Loan originators (like banks and mortgage companies who borrow money from warehouse lenders) have tightened their credit standards for borrowers. They’re now requiring bigger down payments of at least 20%, compared to 3 to 5% a few months ago. Plus they require credit scores of over 700 instead of the previous 640. This will keep thousands of potential borrowers in the penalty box and out of the homeownership market.
  • Government entities like Fannie Mae, Freddie Mac, and FHA who ultimately buy the mortgages from loan originators have tightened their restrictions on loans they will accept.
  • Scratch & dent loans and agency buybacks have caused a logjam in the money lending industry because loan originators have to buy their loans back from Fannie Mae, Freddie Mac, and FHA if something goes wrong with the borrower (like missed payments from a layoff.)
  • Many private hard money lenders who normally make passive investments to wholesalers and rehabbers have decided to invest their money elsewhere, leaving many investors high and dry for investment capital.

Obviously, deals that used to close easily will fall by the wayside. But have you heard any of those points discussed on the evening news? I doubt it! (If you ask me, most of the news people are distracted by other agendas that keep them from reporting real news.) This kind of information won’t come to you; you have to go looking for it. That’s why most real estate investors are so out of the loop.

If you were a real estate investor back in 2008 when the Lehman Brothers debacle made other top financial institutions fall like dominoes, you remember what a mess it was. Brace yourself, because today’s situation is looking just as serious, if not worse.


Right now I’m seeing three categories of Investors:

  • Investors who are clueless about the market situation aren’t feeling any fear.
  • Investors who understand the situation are feeling absolute fear.
  • Investors who understand the situations AND creative financing are feeling NO FEAR!

This third group of investors understand the potential of creative financing and are confident in using the toolbox of techniques that we teach at NoteSchool. That’s why they’re feeling more optimistic right now than in a typical strong market. They know they’ll have a huge advantage over other investors who haven’t learned creative financing.

I’m super excited about today’s market! I don’t have any fear of the unknown because I’ve seen how creative techniques have worked to solve problems in previous black swan markets.

I tell people that I may not have a crystal ball, but I do have a rearview mirror. I started my note career during the terrible market of 1980 when mortgage rates were 20%. Because I had a basic understanding of creative financing, I thrived while other investors shriveled like dead buttercups. Only a trained investor will see the opportunities that others miss. I’ve always boosted my net worth more in down markets than in boom markets; but not because I took advantage of people who were hurting, it’s because I knew how to help the people no one else could.

When times are good, homebuyers can simply go through traditional lenders. When times are tough, they go through YOU!


A couple of days ago, I spoke with my good friend Pat Precourt. He’s a real estate investor who truly understands the importance of getting your head wired like an entrepreneur. (He’ll be speaking at Summer Summit in June!) He advises other investors not to get lost in the details that keep you from seizing great opportunities. Too many investors think they must have the answer to every possible question that might possibly arise before they take the first step into entrepreneurship. To succeed, you have to rewire your mind to not let roadblocks keep you from moving forward. If it’s hard for you to think like an entrepreneur, the best way to do that is to be around successful entrepreneurs in masterminds, classes, online meet-ups, etc.

In the next few months, we’ll see lots of ill-equipped, untrained real estate investors dropping out of the business. Some will even lose their shirts. But opportunities are hidden inside problems the same way pearls are hidden inside oysters.