The profitability gap: bank vs. landlord

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Are you a real estate investor who's frustrated with rentals right now? Tired of tenants, vacancies, repairs, and rising expenses eating your cash flow? Wondering how in the world you're supposed to make rentals work in a market with higher interest rates and squeezed margins? In this episode, I break down a powerful alternative with my friend and note investing legend, Eddie Speed, that can help you cash flow better without being chained to traditional landlording.

I start by calling out what many of you are feeling: rentals that used to work just a few years ago now barely break even. Eddie and I talk about how cap rates have compressed from around 8% in 2018 to closer to 4% today in many markets, even while expenses like taxes, insurance, and maintenance have climbed two and a half times faster than rents. On top of that, DSCR loans might charge you 6–7% interest while your rental only nets 4%. That math doesn't lie, and it's not in your favor.

That's where seller financing and note investing come in. Eddie explains, in simple terms, what it really means to "be the bank" instead of the landlord. Instead of collecting rent and paying all the expenses, you sell the property with owner financing, collect a down payment, and receive monthly payments as the bank. No toilets, no tenants, no mid-night repair calls. You keep the interest, not pay it. In many cases, the net income from a seller-financed note can be more than double what you'd make as a landlord on the same property.

We also dig into today's market cycle. Eddie's been through six different real estate cycles since starting in 1980, and he explains why we're currently in a "note cycle," not a rental cycle. This isn't about chasing appreciation and hoping the market saves you in ten years. It's about increasing cash flow now, using present value and real numbers. You'll hear a simple example of how converting a rental that nets $1,000 a month into a seller-financed deal that nets $3,000 a month can create a six-figure difference over a few years.

If you already own rentals and you're frustrated with thin cash flow, this episode will give you a new way to look at those properties. If you've been wanting passive income without the headaches of tenants and property management, you'll see why being the bank can be a better fit than being a landlord. Eddie also shares how his team at NoteSchool has built done-for-you systems to handle underwriting, paperwork, loan servicing, and even strategies to sell part of your note for liquidity while keeping the cash flow.

Most investors are still stuck in the old "buy, rehab, rent, refi" mindset, even when the numbers no longer work. My goal with this conversation is to show you that there is a smarter way to create passive income in this market without depending on appreciation, and without locking yourself into low-margin rental deals. If you've ever looked at your rental spreadsheet and thought, "There has to be a better way," this episode is for you. Eddie Speed's links: - Instagram: https://www.instagram.com/thenoteauthority?igsh=MWFlOGxkZWt1OGt4Zg== - Website: https://noteschool.com/ - YouTube Channel: https://www.youtube.com/@NoteSchool - LinkedIn: https://www.linkedin.com/in/eddiespeed/