NoteSchool - January 2022

NoteSchool - January 2022

NoteSchool News JANUARY 2022

Opportunity No. 2: Burned-Out Landlords Right now, thousands of avid HGTV watchers who got the bright idea to flip houses are feeling depressed, burned out, and ready to get out of the business. They’re sellers ripe for the picking! Most of these people were eager for cash flow but didn’t count on the fact that their project homes would suck up their weekends and every repair would go wrong. Pointing out that you can pay capital gains over many years with the IRS provision of installment sales is the perfect set up to engage someone to do seller financing. This is a lucrative opportunity just waiting for smart investors like you. Now that you know what you should resolve (in my humble opinion), let’s talk about sticking to those resolutions. Over my 40-plus years of making business decisions, coaching other investors, and setting my own goals, I’ve learned a thing or two about achieving them.

2 INVESTMENT OPPORTUNITIES TO SEIZE IN 2022

Don’t Let Getting Rich Pass You By!

“Right now, thousands of avid HGTV watchers

When I sit down with students this time of year, the No. 1 question they ask me is, “Eddie, what should my New Year’s resolutions be for my portfolio?” Now that’s a tough one. On the one hand, everyone knows New Year’s resolutions are a bad bet most of the time. Only about 20% of them are still in motion by February, which means 80% of people fail, fast.

To successfully take advantage of these opportunities, the first thing you need to ask yourself is: Am I prepared for

who got the bright idea to flip houses are feeling depressed, burned out, and ready to get out of the business. They’re sellers ripe for the picking!”

my resolutions? A good friend of mine likes to say, “You can’t do what you’ve never done if you don’t go where you’ve never been,” and he’s exactly right. As you’re setting your goals, remember to be realistic about how prepared you are. If you’ve never bought a single note, don’t set a goal to buy 200!

On the other hand, I’ve gotten pretty good at setting goals

Instead, break your big goals into smaller, achievable steps appropriate for where you

over the years. I learned from my elders’ mistakes and made plenty of errors of my own. I know that success is possible if you learn from my mistakes! So right now, I’m offering up these two opportunities to students who ask. If you’re wise, you’ll make these the basis of your New Year’s resolutions for 2022. Opportunity No. 1: Easy Non-Performing Notes There is a gigantic window of opportunity in non-performing notes right now! They’re easier to invest in than they have been in years. The “we pay cash for houses” type businesses are 10 times more crowded right now than ever before. The best way to achieve wealth and success is to get creative with your financing and swim against that current.

are in your investment journey. It’s one thing to say, “I’ll buy 100 notes this year!” and quite another to say, “I’ll buy eight notes this month, which means buying two this week.” A year is a long time, but a week is short. It’s immediate. By breaking your goal down into increments, you’ll actually take action. Thinking big, and only big, will lead you to disaster.

Remember this: If you can’t make it through a string of small successes, you’ll never make it to the big success.

Want more tips like this one? Turn to Pg. 3. With a lot of planning and a little bit of luck, you can beat those abysmal resolution odds.

–Eddie Speed

Happy new year, and happy investing!

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Neuroplasticity is the brain’s ability to change and adapt throughout your life, forming new connections that can have a direct impact on your energy, productivity, focus, creativity, motivation, and much more. Your brain can expand and grow even after an injury. That’s why many entrepreneurs are saying the same thing: One of the smartest ways to invest in your business is to devote resources to your most important asset — your brain. But how do you keep your brain active, healthy, and functioning at a high level? Param Dedhia, MD, says six key areas are involved: sleep, exercise, joy, nutrition, internal medicine, and inflammation. All of these factors work independently, but together, they can promote neuroplasticity, which is why they all require equal attention. Everyone wants to stay engaged with the world around them, but you can’t do that without sleep. In fact, research published by the journal PLOS One discovered that getting six or fewer hours of sleep was associated with memory and executive function problems, i.e. problem-solving, planning, and execution. So, make sure you get enough sleep before tackling your day. Exercise is crucial because, according to brain plasticity researchers at IOS Press, exercise “alters the synaptic structure and function in various brain regions,” promoting brain growth and even delaying the onset of Alzheimer’s disease. Promoting growth can also be as simple (or as difficult) as focusing our attention on thoughts that bring us joy. Gratitude promotes very different brain activity than negativity, anger, or bitterness, and studies on gratitude show that the positive effects can be lifelong. Nutrition can’t be understated either, since it can assist your body in maintaining health and fighting inflammation. The brain uses about 20% of the body’s calories, and eating plenty of omega-3 fatty acids can strengthen brain cells, while antioxidants reduce cellular stress and inflammation, which are linked to brain aging and neurodegenerative disorders like Alzheimer’s disease. With the right habits, you can keep your brain healthy for many decades to come. You might even grow in entirely new and unexpected ways. Is Neuroplasticity the Secret to Success? 6 Scientifically Proven Ways to Boost Your Brain Power

Real estate news is always being made, but it’s not always reported. That’s where we come in. We’ve gathered today’s most impactful stories so you’ll know what to expect tomorrow. Inflation Highest in 39 Years • Inflation hits 6.8%, the highest since 1982. (By the way, the average mortgage interest at that time was 16%, but today it’s 3.6%.) • The big driver behind higher prices is the cost of oil. To boost supply and lower prices, the Biden administration will release 50 million barrels from the Strategic Petroleum Reserve (which is about a two-and-a-half-day supply for U.S. demand). Experts Disagree on Forecasts of Home Prices • Several forecast models for home prices over the next year have been released by leading sources — and it’s a wide range. • The highest predicted increase is from Zillow (which has an inventory of 18,000 properties that they’re hoping to sell). They predict an overall increase of 13.6%.

• In the middle of the range are Fannie and Freddie, predicting an increase of around 7%.

• The lowest prediction is from the Mortgage Bankers Association, which forecasts a decrease of 2.5%.

Mortgage Lenders Struggling Here and in China • A Chinese company, Evergrande Group, is a teetering real estate giant with more than $300 billion in obligations. They failed to meet their recent payment to global investors and have been declared in default by Fitch Ratings. • China has a real estate bubble. Home prices are dropping, and the wave could spread to the U.S. Chinese real estate developers have fallen $5 trillion in debt, with assets worth $200 billion. Real estate is 25% of China’s wealth. They owe $2 billion per month for debt service, and $6 billion is due in January 2022. Some 70% to 80% of most households’ wealth is tied up in real estate. A huge crash is expected.

• The Federal Reserve says some of the top shocks to our economy will be from China’s instability.

• U.S. mortgage lending experiences the largest quarterly decline in a year.

• Digital mortgage company Better.com laid off 900 employees (9% of its total workforce) over a Zoom call in early December. The move spooked investors, and a week later, the board replaced CEO Vishal Garg with CFO Kevin Ryan to serve as interim. Delinquency Rates Fall but Are Still Higher Than Pre‑Pandemic Levels • The national delinquency rate has fallen below 4%, which is still about four times the rate prior to the virus.

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On Pg. 1, Eddie talked you through one of his favorite ways to make New Year’s resolutions manageable: breaking them down into small, achievable steps that start from where you are, not where you want to be! It’s a great piece of advice, but it’s not the only way to make achieving your goals easier. Below, we’ve outlined three more smart steps to take to keep your confidence up and help you crush 2022. 1. Make success a habit. A famous social scientist, BJ Fogg, once said, “There are only three things we can do that will create lasting change: Have an epiphany, change our environment, or change our habits in tiny ways.” The third strategy is by far the easiest, and it can help you keep your head in the resolution game! The more habits you create as building blocks toward your goals, the easier it will be to get there. If you want to make more money in notes, for example, pick a time each day to go over your portfolio and search for opportunities — or choose a day each week to buy. Here at NoteSchool, our team meets about our company goals for 15 minutes every single day. That meeting is a good habit that keeps us on track. 2. Factor in your growth. Remember Eddie’s suggestion to base your goals on where you are? It’s also important to remember that “where you are” will change. As you introduce new activities, you’ll get more efficient at achieving them. It may be a struggle to buy your first-ever note in January, but by June, it will be easy! When you set your goals, factor in reality that your performance will build each month throughout the year. 3. Abandon hope — choose planning. When most people set New Year’s resolutions, what they’re really doing is laying out their hopes for the year. “Losing weight would be nice.” “I’d love to be a millionaire.” But hopes will die as the year goes on. To keep your head in the game, you need a specific, actionable, written plan of attack. Factor in Eddie’s advice from Pg. 1 and our first two tips here, then write out your 12-month investment plan. That map will lead you to success! How to Stick to Your Investment Goals? Try These 3 Strategies

• Mortgages that are more than 90 days delinquent continue to drop since the high-water mark at the start of 2010. This rate measures more severe economic distress. • Loans in forbearance in September were also very high, particularly for FHA and VA mortgages. Cash-out refinance loans have been down a bit, with people owing around $200K getting cash out (which has been dropping), while people owing around $300K are refinancing to lower their payments. Traditional lenders continue requiring higher credit scores, freezing out many buyers. Building permit applications have boomed, reaching 1.69 million, which might help bring relief from inventory shortages, high prices, and panic buying. • Dallas, Texas, has the nation’s biggest shortfall of homes needed, followed by Miami (Florida), Phoenix (Arizona), and Seattle (Washington). Building Permits on the Rise • Pricier Home Insurance Is Another Headache for Landlords • Due to rising costs for materials and labor, the Home Insurance Forecast reveals costs have risen 13% on average.

• More expensive insurance for rental properties puts pressure on landlords and squeezes their slim profit margins.

Chicken With Lemon Herb Sauce

Inspired by FoodNetwork.com

INGREDIENTS

• 1/3 cup and 2 tbsp olive oil, divided • 4 boneless chicken breasts • 1 clove of garlic, minced

• 1/4 tsp salt • 1/2 cup parsley, chopped • 1/3 cup mint, chopped • 1 1/2 tsp pepper • 1 lemon, for juice and zest

DIRECTIONS

1. Preheat oven to 450 F. 2. In a large ovenproof skillet, heat 2 tbsp olive oil.

3. Season chicken with salt and pepper if desired and sear it in the skillet for 3 minutes on each side. Bake chicken until its internal temperature is 165 F. 4. In a blender, add 1/3 cup olive oil, garlic, salt, parsley, mint, pepper, and lemon zest and juice and blend ingredients until coarsely mixed. 5. Top chicken with sauce and serve!

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3 FACTS MOST PEOPLE DON’T KNOW ABOUT 401(k)S WE’RE NOT AT WORK ANYMORE, TOTO 1 2 Steps for a Wealthier, Wiser 2022 2 Make Neuroplasticity Your Secret to Success 2 News in a Nutshell 3 Chicken With Lemon Herb Sauce 3 3 Tips to Make Your Goals Happen 4 Contributions, Value Plans, and Withdrawals, Oh My! Inside this issue

When the tornado of a busy career finally slows down, and you’re on the yellow brick road heading toward retirement, the last thing you want to feel is lost — and that’s where 401(k)s come in. You must begin withdrawing from your 401(k) when you hit the age of 72, with some exceptions. Here are a few important facts about 401(k)s to keep in mind as you start preparing for your retirement. Roth Options Like traditional 401(k)s, Roth 401(k)s also take contributions. But Roth contributions are made with after-tax dollars instead of pre-tax dollars. Since you are using after-tax dollars for your contribution, you can withdraw money in retirement tax-free. Unfortunately, only half of employers offer Roth 401(k)s. Even if you opt in for the Roth 401(k), your company match will be made pre-tax. In addition to a regular ROTH IRA or traditional 401(k), anybody can go do a ROTH IRA. You don’t need to have one or the other, you can have both. Stable Value Funds When you are close to retiring, you may want your retirement money to be in a safe

investment option. Many 401(k)s offer stable value plans you can choose from. Stable value plans are beneficial because they pay higher interest rates than bank savings. They won’t fluctuate like stocks, and they shouldn’t go down in value if interest rates rise. How much you keep in a safe investment depends on how close you are to retirement and how much you will withdraw. Ages 55–59 Penalty Exemption Most people think there will be a 10% early withdrawal penalty tax if you withdraw from your retirement account before the age of 59.5. But there are some exceptions to the rule. Provisions in 401(k) plans exist for those who leave their employer after they reach the age of 55 but before the age of 59.5. This allows you to take withdrawals that are exempt from penalty taxes. Keep these facts in mind as you prepare for retirement, and if you are beginning your career at a new business, see what types of 401(k) plans your company or preferred investment fund offer.

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