Whole Life Ins
PART II
“The Nuts and the Bolts of Investing in Real Estate with Whole Life Insurance.” Once the cash value builds up you can start borrowing against this cash value you have created.
When you borrow from it, you realize just how customizable it can be. In the example below we’ll have 80K pulled out from our policy in four separate Investment properties. These are all reasonable investment home prices in my area and in multiple areas throughout the country.
Ok we’ve now borrowed 80 K out of our 100 k “CASH VALUE” portion of the Whole Life policy. We are able to pay it back or not… Our choice as you’ll see below… With this 80 k there are monthly payments back into the policy or NOT. You choose. You can even delay monthly payments for a couple of months so the more rents come in, in the event of vacancy’s.
You can choose the re-payment amount and duration then change them back and fourth every month as you go along. Not that this would be financial beneficial I’m just making the point that it’s highly customizable.
You can NOT pay back your policy
You can pay it back over 2 years, 10 years or 20 years. One month you can choose to pay it on a 20 year timeline (smaller payments) then the very next month change it to pay it over 2 years when CASH FLOW improves.
So…. It’s literally that customizable, pay it back, or don’t or pay it back literally however you like… One of my biggest hurtles with this was paying an interest rate to borrow my own money. It’s difficult to picture but say you pull out 80 k cash value when there is 100 k cash value in there. You do pay a % to borrow your money which seemed weird to me. But the more I looked into the more I saw how wealth was created using this vehicle. Ok before we go any further, insurance products are not the same and there are literally thousands of different products sold. All can not do what I explain in this article. I only know of four or five insurance companied who know how to do this and many insurance providers and sales people do not even know any of this exists.
HERE’S WHERE THE FUN BEGINS Y’ALL..
Let’s say you have saved 100 k in the policy. Then…. Borrow 80 k from it. 5% interest rate is still payed on the 100 k as if you hadn’t pulled out a penny To buy our rental houses. I am going to write that in a different way too just because of how AMAZING this really is. I pull 80 k out of the 100 k and you still pay me my 5% interest as if the 80 K is still in there and it’s the full 100 k cash value amount. OK…..
That’s how it works and the reason it works like that is because you are an actually owner of the policy rather than just a policy holder, Hey it’s complicated so we’ll continue to push on to the good stuff.
Property #1
20 k down pay
80 k montage
PITI (Tax, Mortgage and Insurance) $450/Month
Investment property rents $1050/month
CASH FLOW = $600/month
Property #2
20 k down pay
80 k montage
PITI (Tax, Mortgage and Insurance) $450/Month
Investment property rents $1050/month
CASH FLOW = $600/month
Property #3
20 k down pay
80 k montage
PITI (Tax, Mortgage and Insurance) $450/Month
Investment property rents $1050/month CASH FLOW = $600/month Property #4 20 k down pay 80 k montage PITI (Tax, Mortgage and Insurance) $450/Month Investment property rents $1050/month CASH FLOW = $600/month TOTAL CASH FLOW FROM FOUR PROPERTIES = $2400/month So… I may be paying 6% to borrow $80 k but Return On Investment (ROI) of $2400/month is way over 20 %. Make sense? You can also pull your money at any time, it could be a job loss, medial problem or other emergency. It doesn’t have to be for investments. NOW HERES THE BIGGEST SECRET IN THE FINANCIAL WORLD!!! It is a “tax deferred savings account with guaranteed dividends and a 5 % appreciation rate. This Is better than any savings account on the planet and is how the very wealthy use it. That’s right a savings account on STEROIDS! A savings account guaranteed to: -5% interest rate the entire time the money is in there growing and accumulating wealth. -Unable to sue under any circumstances -GROWS TAX FREE -Premiums always stay the same. -Owner can borrow against the policy at any time -ITS NOT TAXED AT ALL WHEN PASSED TO FAMILY AFTER DEATH -You are able to will it to your family after death.
-THERE IS ALSO A MARKET TO SELL THIS PRODUCT ONCE THE CASH VALUE in the account. You can literally sell it like a house. This has been a short two part series by our group and as we go along we will continue to write, post with our successes and struggles in regards to how we leverage investment real estate with Whole Life products.