NoteSchool - August 2022

NoteSchool - August 2022

NoteSchool News AUGUST 2022

WISE WORDS FROM MY RIGHT-HAND MAN Don’t Miss Bob’s Best Investment Tip!

Hey there, it’s Eddie again — but not for long this time! I have something special for you this month. I’ve asked my buddy and longtime business partner Bob Repass to step in and share a note investing tip with you. Bob is the real deal. He cut his teeth as a senior executive at some of the country’s largest institutional investors: Metropolitan Mortgage & Securities, Associates Financial Services, and Bayview Financial. During his time in the business, he has bought more than 45,000 performing and non-performing notes, totaling over $2.5 billion! There’s a reason I chose him to be managing director of both Colonial Funding Group and NoteSchool. The man knows his stuff. I could go on and on about Bob, but I’ll let him take the reins. You don’t want to miss this advice!

to seller. But if you make the relationship your priority, you can get repeat business from the same note seller time and time again. Take my relationship with Eddie, for example. We’ve known each other since the early 1990s and did business together from 1997 through 2012. In the early days, Eddie would aggregate notes and bring them to me, and the company I worked for would purchase those notes from him as an institutional investor. We had a great working relationship — in part because I put in the time and effort to keep it that way! I reached out to Eddie regularly, and when I moved to a different institutional investment company, we stayed in touch. Then, in 2012, the relationship we built really paid off: Eddie brought me on board. We started Colonial Capital Management’s Colonial Impact Fund II together, and I took over managing operations at both Colonial Funding Group and NoteSchool. This is a dream job for me, but I probably wouldn’t have come on board 10 years ago if I didn’t have that strong relationship with Eddie built on years of doing trades together. I knew I could count on him to be honest and transparent, and he knew he could count on me to be the same. If you can build that kind of bond with your sellers, you’ll be amazed by how much it pays off. Of course, these days Eddie isn’t just my business partner. He’s a friend, too! He knows all about my wife, Angie, with whom I’m celebrating 40 years of marriage this month. He has heard stories about my son Robbie and daughter Kristin since they were small — and now they’re

Bob, his wife Angie, son Robbie, daughter-in-law Emma, daughter Kristin, and fiancé Michael

Bob and his family celebrating Bob’s 60th birthday in Tuscany, September 2021

–Eddie Speed

all grown up. Robbie is the managing director of Santander Bank, and he and his wife Emma have a pup named Draco whom Angie and I call our “granddog.” Meanwhile, Kristin is getting married to her fiancé, Michael, this month — just one day before our anniversary! It’s amazing how fast the years go by, but I’m sure my bond with Eddie will last for many more. He’s the visionary leading NoteSchool forward, and I’m part of the engine powering it. If you take my advice, you may just find a seller you can still call a friend 30 years down the line. I look forward to watching you succeed.

Dear Fellow Investor,

Like you, I think buying and managing non- performing notes is one of the most exciting opportunities on the market right now. I love making deals, and I’m never happier than when I’m negotiating a trade! Every day in this job is different and challenging, and after more than 30 years in the industry, it still thrills me. The best piece of note investing advice I’ve learned in those 30 years is this: Always concentrate on the relationship, not the transaction. I’ve seen this done many times and it always pays off. When you focus on the transaction, you waste time bouncing from seller

Cheers,

–Bob Repass

NOTESCHOOL.COM

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NEWS IN A

Should You Use Video-Based Marketing?

With homes and mortgages costing more, the affordability problem is roaring. Mortgage companies continue raising rates and tightening credit requirements for borrowers — leaving out about a third of eager homebuyers. But creative financing thrives when filling the gaps left by traditional lenders. AFFORDABILITY TAKES CENTER STAGE • The U.S. housing market shows the current median home price is $430,000, which is up from $320,000 in early 2021. • According to Black Knight, with home prices up and 30-year rates hovering close to 6%, home affordability is at its worst point since the mid-1980s. • Monthly principal and interest payments (with a 30-year mortgage) to purchase an average-priced home (not including taxes and insurance) is $2,103, up from about $1,200 two years ago. • The salary required to buy a home varies by market. The most expensive cities include San Jose ($254K), but more affordable cities include Atlanta ($49.8K), Oklahoma City ($41.3K), and Pittsburgh ($37.7K). • According to the American Enterprise Institute’s Housing Center, home price appreciation (HPA) was about 7% just before COVID-19. After a pause in the spring of 2020, prices rose 13.5% in January 2021, then peaked at 17.3% in both March and April 2022. The increase dipped slightly to 17.0% in May. But Director Ed Pinto predicts 12.2% for July and only 6% by December. • Rents are skyrocketing. According to DSNews, the cities with the highest YoY increase are Austin (+48%), Nashville (+32%), Seattle (+32%), Cincinnati (+32%), and Miami (+29%). WITH HOME VALUES UP, HOMEOWNERS NOW HAVE MORE EQUITY • Homeowners now have more equity (totaling $12 trillion) to tap into. Now that people (especially landlords) have more equity, they are more open to the idea of offering seller financing to buyers. • With higher equity due to appreciated property values, burned-out landlords can seller finance their properties to replace monthly rent checks and spread out their income to avoid capital gains taxes. TRADITIONAL LENDERS ARE TAKING A BEATING • Since the Fed has raised interest rates in their effort to lower inflation, refinance loans have all but gone extinct. Thousands of workers are being laid off by traditional mortgage companies. Fewer refis also means less work for downstream workers like home inspectors and surveyors. • According to RESI, the U.S. mortgage industry did $4.3 trillion in loans in 2021, and that is expected to drop to $2.7 trillion for 2022, and $2.1 trillion in 2023. (Some pessimistic predictions are saying it may not pass $2 trillion in 2022.) • Redfin, the real estate brokerage firm based in Seattle, has seen its stock plunge from $97 a share to $8. • The mortgage credit availability index, month by month, shows a slight decline after a huge decline months ago. • Mortgage demand has fallen to the lowest level in 22 years due to rising rates and slowing home sales, which is very unusual since summer tends to be the biggest season for home sales.

People spend most of their time at home now more than ever. This is one of the reasons why video-based marketing is becoming so popular. It allows your audience to engage with you and influencers and learn about your products, and it will enable customers to shop while watching your videos. Here are ways you can incorporate video-based marketing into your business. 1. Use Your Resources. Before you go live or create a video, you want to ensure that you have proper lighting, good equipment like lights and cameras, and editing software. Even though this may seem like it wouldn’t make that much difference, your video’s quality will influence your customers more than you think. 2. Take Advantage of Social Media. Facebook, Instagram, YouTube, and TikTok have options where you can share both pre-recorded and live videos. More and more people spend their time on social media, so meet your customers where they’re at. Create something engaging that complements what you’re trying to sell. Your videos don’t need to be long. However, by making longer live-stream videos, your clientele can post comments while you’re live. You can answer questions and engage more with your audience this way. 3. Tell Stories. Storytelling is one of the key strategies business owners are using to engage and relate to their customers. It helps you build a stronger and more meaningful relationship with your audience and makes them feel valued. So begin brainstorming what stories you would want to tell. Is there a specific reason you created, or are advertising, a particular product? Share these experiences with your clients. If you’re not selling an item, you can create videos to simply build a connection with your market. This will keep your business at the forefront of your viewers’ minds. These are only a few of the many ways you can begin using video-based marketing within your business plan. It will help you boost your retention rates and allow you to connect with your customers in a way that is the most convenient for them. So, smile for the camera; you’re about to go live! Yes! Here Are 3 Tips to Get Started

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NUTSHELL

If we had our way, every kid in America would start learning money basics as a toddler — so it’s no surprise we encourage teaching your kids how to invest! If you’re a parent to teens or 20-somethings, you’ve probably already taught them how to save, hold down a job, and stick to a budget. So, why stop there? Knowledge is power, and this is just another opportunity to empower the people you love. That said, it’s not easy to know where to start, especially if you’re still learning about investing yourself! Here are three tips to make the process easier. 1. Sell the benefits. Your kids might not be thrilled about learning investment 101, but they will be if you explain why you’re excited about it! Are you investing to create wealth you can pass on to them and their children? To fund your retirement? To buy a second home? To travel more? Explain these perks to your kids. Once you open their eyes to what smart investing can do for them and how it can improve their lives, they’ll be all-in to learn more. 2. Start with the basics. Sure, you know what notes are, how a mortgage works, and what it means to be in default on a loan. But do your kids? If not, start with explaining those basic terms and ideas before you dive deeper into the how-tos of investing. 3. Learn together. If you’re just starting out in the notes business, you have a great opportunity to learn alongside your kids. This will bring you closer, give you something to talk about, and give you all a financial leg up. We recommend starting with one of our courses or classes on NoteSchool.com. You can read up on your options under the “Education” tab and enroll together. 3 TIPS FOR SAVVY PARENTS Should You Talk to Your Kids About Investing?

• Before the pandemic, “conforming” Fannie and Freddie loans were about 70% of market share but are now below 60%. Nonconforming loans (FHA and VA) are gaining share. • Seller repurchases of GSE loans spiked in the first quarter of 2022. These are loans that get kicked back to the loan originator because of various problems. These loans are then sold on the secondary market as “scratch & dent” loans and often are great bargains for investors. DELINQUENCIES AND FORECLOSURES RISING • The U.S. recorded 19,000 foreclosure starts in May 2022. About 1.5 million loans are delinquent. • The current status of COVID-19-related forbearances shows 8.1 million loans in forbearance. Only about half of these loans are making payments, and many will be hitting the nonperforming loan market soon. HOME INVENTORY STILL LOW • Homes listed for sale are down 67% since mid-2019, causing a huge shortage that keeps prices high. • Hedge funds, which often buy homes from wholesalers, are backing off on home purchases. This might help boost available inventory and lower prices in the months ahead.

RESTAURANT-STYLE CHICKEN MARSALA Inspired by FoodNetwork.com

Ingredients

• 1 cup flour, for dredging • Salt and pepper, to taste • 4 boneless, skinless chicken breasts, pounded to 1/4‑inch thick

• 1/4 cup extra-virgin olive oil • 4 oz prosciutto, thinly sliced • 8 oz mushrooms

As you go through this process, remember this: It’s never too late for you to start investing, and it’s never too early for your kids.

• 1/2 cup Marsala wine • 1/2 cup chicken stock • 2 tbsp butter

Directions

1. In a bowl, mix flour, salt, and pepper until evenly distributed. 2. Add chicken to flour mixture and coat all sides. Shake off any excess. 3. In a large skillet over medium-high heat, add olive oil. Once hot, add chicken to the skillet. Work in batches if pieces don’t all fit in the pan. Cook each side for 5 minutes until golden brown. 4. Remove chicken to a platter. 5. Lower heat to medium. Add prosciutto to pan and sauté for 1 minute. Add mushrooms and sauté until browned, about 5 minutes. 6. Add Marsala to skillet. Let it come to a boil, then add the chicken stock and simmer for 1 minute. 7. Stir in the butter and add chicken back into the skillet. Let simmer gently for an additional minute, then serve.

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AND HOW CAN YOU IMPLEMENT IT IN YOUR BUSINESS? What Is Social Selling Marketing? 1 Meet Eddie’s Right-Hand Man 2 Meet Your Customers Where They Are 2 News in a Nutshell 3 Restaurant-Style Chicken Marsala 3 Should You Talk to Your Kids About Investing? 4 This Marketing Strategy Helps Build Stronger Relationships Inside this issue

are interacting with products that are similar to yours. Find people who bought from your competitors but didn’t have a great experience. This gives you a chance to offer them a better alternative. One of the most effective ways to sell your brand in social marketing is by answering questions and responding to users. For example, if someone were to complain on Twitter about an item from a company, that business could create a team that checks social media for these types of issues. Then, the business can respond to the user and help resolve the problem. This shows customers that you care about them and their experience, which will influence them to continue to buy from you. Excellent customer service and problem-solving skills can do wonders for your brand. Sales have always been about building relationships and establishing credibility. Social selling is just like that, except you’re using the power of social media as leverage. So take advantage of it! Meet your customers and potential customers where they are, and watch your relationships and profits soar.

Today, more and more people search for products online and use social media to find new trends and products. Now is the time to meet your customers where they are — with social selling marketing. What is social selling marketing? Social selling is the art of forming relationships with current and future customers to generate sales. Building these relationships makes people more likely to use your products. Instead of telling them to buy right now, you’re ingraining in their minds that you’re always there. This method can help boost sales, give you a competitive edge, strengthen your brand’s reputation, and is more effective than cold-calling. How do you sell socially? First, you must know your audience. What do they need, and what do they want? Next, find out which social media platforms they are most likely to use. Do they use Facebook, Twitter, Instagram, or TikTok? This will allow you to reach your audience easier if you use the platforms they are most frequently on. If you’re trying to find prospects, research people who

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