👇WATCH EPISODE 👇
Why Being the Bank Beats Being a Landlord in Today’s Market
If you’re a real estate investor right now, chances are you’re feeling the squeeze.
Maybe your rentals used to cash flow well, but now you’re dealing with higher interest rates, rising expenses, weaker rent growth, and properties that barely break even if they break even at all. You might even be wondering:
“Is there any way left to cash flow rentals in this market?”
Yes. There is.
But it’s probably not what you think.
In a recent conversation with my friend and note-investing legend Eddie Speed, we dug into a strategy most investors overlook one that can actually produce two to three times the cash flow of traditional rentals, without tenants, toilets, or ongoing headaches.
That strategy is seller financing.
And if there was ever a market where being the bank beats being the landlord, it’s this one.
Why Traditional Rentals Aren’t Cutting It Anymore
Let’s start with the reality.
Back in 2018, the average rental in most markets produced about an 8% cap rate. That meant you could buy a $200,000 rental and expect around $16,000 a year in net income before a mortgage.
Fast-forward to today, and that same rental might produce a 4% cap rate.
And it gets worse.
Why? Two big reasons:
- Property values shot up far faster than rents did.Yes, rents increased but they didn’t come close to keeping pace with property values.
- Expenses skyrocketed even faster.Taxes, insurance, utilities, repairs they all rose two and a half times faster than rents.
Meanwhile, lenders want to charge you 6–7% interest on DSCR loans… yet your rental is only netting 4%.
That’s backwards math.
That’s losing math.
And that’s exactly why so many investors today feel like their rental portfolio is supposed to be “passive,” but somehow keeps costing them money.
The Shift We’re In: A “Note Cycle,” Not a Rental Cycle
Eddie has been through six major market cycles since he started in 1980. And what he told me was simple:
“There are times when it’s a rental cycle, and times when it’s a note cycle. Right now, it’s a note cycle.”
When rentals don’t cash flow…
When interest rates are high…
When expenses eat profits…
The smarter play is to stop being the landlord and start being the bank.
What It Really Means to “Be the Bank”
If you’ve ever made a mortgage payment, you’ve been on the wrong side of that transaction.
When you owner-finance a property, you:
- Sell the home
- Collect a down payment
- Keep the interest
- Pay zero expenses
- Deal with zero tenants or repairs
- Hold a secured first-position note
- Build a cushion of equity to protect yourself
Banks don’t deal with late-night plumbing calls.
Banks don’t handle evictions.
Banks don’t worry about vacancies.
Banks just get paid.
And here’s the part that shocked many people when Eddie laid it out:
In over 200 markets they’ve tested, seller-financing produces about 2.5x the net income of a rental on the same house.
That means:
- If a rental nets you $1,000…
- A seller-financed note often nets you $2,500–$3,000.
Same property.
Different strategy.
Massively different outcome.
A Simple Example (This Will Blow Your Mind)
Take a $300,000 property.
As a rental, maybe you net $1,000 a month before a mortgage. As a seller-financed note, you might net $3,000 a month.
That’s:
- $2,000 more per month
- $24,000 more per year
- $120,000 more over five years
And here’s the kicker:
Even if you think, “Yeah, but the property will appreciate,” the present value of that future appreciation is massively discounted when you have to wait 10 years or more to receive it.
Eddie and I walked through the math:
$100,000 in 10 years is worth about $38,000 today.
So the question becomes:
Would you rather hope for appreciation ten years from now…
or
Would you rather collect significantly more income starting this month?
I’ll take today’s money every time and so will the bank.
What If You Already Have Rentals?
This strategy isn’t just for new purchases.
If you already own rental properties but:
- cash flow is thin
- appreciation has stalled
- maintenance is draining you
- vacancies are killing returns
- you’re tired of being a landlord…
You can convert existing properties into seller-financed notes and turn that stress into consistent cash flow without the headaches.
Even better…
If you still have a mortgage on it, Eddie’s team can show you how to sell part of the monthly note to pay off your underlying loan while you still keep part of the payment as cash flow.
It’s one of the smartest pivots I’ve seen in years.
Why This Matters Now More Than Ever
We are in a market where:
- appreciation has flattened
- interest rates may stay higher for longer
- rentals don’t cash flow like they used to
- expenses keep rising
- DSCR loans destroy margins
- investors are tired of being stuck
This is exactly the type of environment where note investing shines.
Being the bank is the smarter play.
And for many investors, it’s the only thing that actually makes rentals profitable again.
Want to See How the Math Works? Eddie Will Show You
Eddie and his team at NoteSchool are offering a session where they’ll whiteboard this out, run the numbers, show examples, and help you see exactly how this works.
If you’re:
- frustrated with your rentals
- curious about note investing
- ready for passive income without tenants
- or just want better cash flow on the properties you already have…
Then this is the next step.
The link is in the show notes of the episode, and I highly encourage you to jump in.
Final Thought
You can listen to this show all day long, but until you act, nothing changes. Maybe it’s time to stop fighting a broken rental model…
…and start doing what banks have been doing for centuries.
Make interest. Don’t pay it.
Here’s to your cash flow, your freedom, and your ripple effect.