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The Infinite Banking Strategy: A Smarter Way to Finance Real Estate · The Academy Presents podcast

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  Did you know that 90 % of the world's millionaires
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  invest in real estate? Well, I'm Angel with the
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  Academy Presents Real Estate Investing Rocks,
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  and I'm here to help you if you want to go for
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  your piece of that pie. Are you new? Are you
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  new to this and you just don't know where to
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  start? It's okay. Are you someone that has invested,
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  but you feel stuck, you feel like you've lost
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  momentum, you don't know where to really head
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  from here? Are you a seasoned real estate investor
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  who is doing great, but maybe you just want to
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  hone a few skills here and there? This is the
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  place for you. The Academy Presents Real Estate
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  Investing Rocks podcast will connect you with
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  industry experts so that you can save time, avoid
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  costly mistakes, and begin living the life you've
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  dreamed of all through real estate investing.
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  You're already taking the first step. just by
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  joining us here today. Hey guys it's Angel and
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  you are here at the REI Rock Summit and I've
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  said it a bazillion times but these are absolutely
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  my six favorite days of the year because we do
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  this twice a year. So every March and every September
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  you should join us for the REI Rock Summit. We
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  have 50 to 60 speakers, panelists, roundtable
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  participants, master class instructors and live
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  networking Q &A. of ton of stuff and there's
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  an entire free tier that you can peruse at your
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  leisure or if you want to hop over to the live
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  side there's really two ways to do that you can
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  upgrade to a VIP ticket or you can do a VIP subscription
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  which gains you access to all of the summit content
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  we've ever done and this is number eight so there
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  is a ton of content out there for you okay so
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  we're gonna hop into this presentation this is
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  my friend John and he has got some really cool
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  ways for you to basically fund your own stuff
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  without having to find places to get money and
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  doing all these crazy things to try and make
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  these deals happen. So John, I'm going to turn
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  it over to you and just let you take over. Thanks,
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  Angel. So excited to be here and participate
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  in your summit. And I hope everybody out there
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  will find this valuable information and maybe
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  something new that they may not have run across
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  before. So my presentation today is buyer your
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  real estate banker, how to cut out the bank's
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  mortgage or finance companies and become your
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  own source of financing using high cash value,
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  dividend paying, whole life insurance. So who
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  can benefit from today's session? Basically anybody
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  involved in the world of real estate investing,
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  whether you're a wholesaler, flipper, rehabber,
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  syndicators, whatever your thing is, if it's
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  real estate related, then there's probably an
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  application here. So I'll start out with a little
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  quote. and see if you can guess who said it.
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  Just throw it in the chat there if you think
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  you know it. A banker is a fellow who will lend
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  you his umbrella when the sun is shining, but
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  wants it back the minute it begins to rain. Something's
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  making me think Mark Twain. Ah, there you go.
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  Mark Twain it is. Good job. Yeah, exactly. And
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  isn't that true, right? It's pretty easy to get
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  lending when you don't necessarily need it, a
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  lot harder to get it when you do. Everybody,
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  I'm sure, is familiar with that. My name is John
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  Ensley. I am a president of Jay Ensley Financial,
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  my firm, which was launched in 2012. I hold a
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  chartered financial consultant designation from
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  the American College of Financial Services. I
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  am a fiduciary financial planner. And today's
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  agenda, I'm going to cover a little bit of my
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  story and my experience with real estate. We're
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  going to talk about something called bank on
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  yourself and how we can use bank on yourself
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  combined with real estate investing. And it's
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  like adding nitro and glycerin together with
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  your investment activities. We'll cover six specific
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  real estate investing techniques that you can
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  use the strategy with. And then, of course, real
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  life examples of how it might work. So sometimes
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  the journey of 1 ,000 miles begins with falling
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  flat on your face. So briefly, I'll just give
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  you my story a little bit. Way back in the late
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  90s, I was with a company, had an employee stock
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  ownership plan. If you remember the late 90s,
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  it was pretty exciting time. We were going to
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  do an IPO and we were all going to be just amazingly
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  rich at the end. And of course, the tech bubble
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  burst in the early 2000 and all of that went
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  away. No IPO, it all fizzled away. I left that
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  company, I had a little bit of money left in
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  that ESOP plan and I did some calculations and
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  decided that I was going to be exposed to too
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  much tax later on to leave it where it was. I
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  pulled that money out and I decided to develop
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  a little five lot subdivision in Southwest Washington
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  State. And my plan was to build spec homes on
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  each of these lots. And of course, if you remember
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  the early 2000s, the mid 2000s, it was an exciting
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  time if you were in the real estate world. And
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  so I had appraisals that these properties were
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  gonna be worth a small fortune as I built them.
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  And this grainy photo that you see here in this
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  slide is the first of those spec homes. And this
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  is about the point I had that home built in 2008.
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  As the market collapsed, I made some really bad
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  decisions and borrowed money and tried to save
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  the project, but in the end, it wasn't saved.
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  In the end, it turned out to be a disaster, so
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  to speak. When the smoke cleared, I'm actually
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  grateful for the experience. Those were some
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  dark times for me, but when the smoke cleared,
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  I had a wake -up call. And I went on this journey
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  of self discovery is what I call it. And I started
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  reading everything I could get my hands on. I
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  often joke with clients that if I could get everyone
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  to read and understand the 20 or so books on
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  the screen, all they'd really need me for is
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  to push some paperwork around. But I went on
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  this journey of self discovery and I learned
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  a few things. And one of the first things I learned
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  is I had to change the way I thought. about money,
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  economics, the financial system. The other thing
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  I discovered was what I now call the banking
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  function, and the reality is we are all in the
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  banking business, whether we like it or not,
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  because we all are involved with saving, borrowing,
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  and investing, and essentially that is the banking
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  function. I learned that there's some silent
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  forces killing our wealth. Things like taxes,
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  fees, crises, crashes, inflation, debt interest.
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  I call these money monsters. And controlling
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  the money monsters is really the key to a financial
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  plan because if we don't control the money monsters,
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  we're really just relying on luck. So the question
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  I was asking myself back then was how can I protect
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  myself? from these things. Is there a system?
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  Is there some way of kind of creating a barrier
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  between me and this chaotic experience that I
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  had had so far? And I discovered something called
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  bank on yourself. I was on a webinar late one
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  night and this advisor was walking through an
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  example that had a home equity and a couple and
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  they had this insurance policy. And it was the
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  first time I had really been exposed to the idea
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  that life insurance could be something other
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  than a death benefit. that there could be some
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  other uses for it. At the time, I really hated
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  life insurance. I hated the idea of being worth
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  more dead than alive, which was a terrible attitude
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  to have, but that was my mentality at the time.
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  So I really paid attention because this was something
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  brand new for me. And somewhere along the way,
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  he uttered the words infinite banking or bank
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  on yourself. And that led me down that path.
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  And I discovered that basically it's a system
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  for saving, borrowing and investing. And the
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  machines that power that system are properly
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  designed life insurance products. So the other
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  thing I learned is there's another asset class
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  that combined with bank on yourself can be very
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  powerful. And I'm guessing everyone watching
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  this is very familiar with that one, right? real
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  estate investing. So that's what we're gonna
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  focus on today. So as I mentioned, what is bank
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  on yourself? Bank on yourself is first and foremost
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  a financial philosophy. It's a mindset and it
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  centers around the concept of safety, staying
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  in control and creating passive income. Bank
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  on yourself is also a system for saving, borrowing
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  and investing and it happens to be a better system
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  compared to the conventional banking system we're
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  all familiar with. So the machine that powers
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  that system is high cash value, low commission,
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  dividend paying, whole life insurance. The other
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  unique thing is that this bank on yourself system
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  can integrate and enhance other forms of investments
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  like real estate investing. So one of the common
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  misconceptions or the things that happen is that
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  we'll compare using a whole life insurance policy
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  or banking on yourself or infinite banking. There's
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  lots of names that it's been called, but that's
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  the concept to real estate investing or to a
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  stock market investment or to something else.
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  But the reality is these policies act as a platform
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  that facilitates. or is a catalyst for other
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  types of investing. So it's not a matter of this
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  or that. It's a matter of both and. We can use
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  these policies and bank on ourselves both and
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  for in real estate investing. And when you combine
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  the two together, they catalyze like nitroglycerin
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  and can really explode your investing results.
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  So let's focus on the cost of financing. Right
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  now, bank financing on investment properties
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  rates are up 8 plus percent is what I'm seeing,
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  maybe a little above, a little below that. requires
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  larger down payments. The monthly payments you
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  don't control, the banks dictating you're going
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  to pay this much over this many years at this
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  rate of interest, and a lot of the profits are
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  going to the banks even though you're maintaining
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  all the risks. So the true cost is more than
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  just what we can capture in interest rate numbers
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  or things like that. But from a pure cost standpoint,
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  we can look at an example. So I pulled a online
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  amortization calculator, $100 ,000 loan over
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  a 30 -year term at 8%. This is how that works
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  out. The payment is about $7 .33 per month. And
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  what I did as I calculated is let's say we took
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  this 30 -year loan and we paid it off in the
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  seventh year. At seven years, we would have paid
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  $54 ,110 of interest. Now, if you look at the
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  total interest over 30 years, it's 164 ,000,
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  but even in the first 10 years, we're obviously
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  paying a significant chunk of that. The cost
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  of financing is significant, and yet for real
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  estate investing, we tend to use leverage quite
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  a bit. We're going to use this as a comparison
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  going forward. What if there was this place where
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  you could park your cash, where it would grow
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  by a larger amount every single year for the
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  rest of your life, no matter what was happening
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  in the stock or real estate markets? What if
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  you could borrow that same 100 ,000 that we just
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  looked at in the loan calculator and repay it
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  at the same level, $733 a month over the same
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  seven -year period? But instead of $54 ,000 of
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  interest, you could cut that almost in half to
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  $23 ,000 of interest. That would be pretty appealing,
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  I think. Plus, while you were paying it back
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  over that seven years, that policy would grow
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  an additional $35 ,000 in the background on the
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  same money, even though you had borrowed it out.
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  You can see that the arbitrage there is the difference
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  between $23 ,000 and $35 ,000, and the opportunity
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  cost is the difference between the $54 ,000 and
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  the $23 ,000. There are lots of opportunities
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  here for advantages. over a lifetime is gonna
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  grow five to six times, depending on your age
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  and so forth. It could be a little more than
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  that. It could be a little less than that. But
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  regardless of whatever's happening in the markets,
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  if you do absolutely nothing, the 100 ,000 that
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  you have in this special place can grow to five
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  to 600 ,000 plus whatever profit you made on
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  the real estate deal at the same time. So you're
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  getting both the effect of the growth in the
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  policy and the real estate deal. Plus, guess
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  what? There's a contract that if you die, your
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  family will get to pay out two to three times
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  your investment. It'll essentially self -complete
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  your investment activity if something happens
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  to you. Plus, we get these other benefits. We
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  have asset protection from creditors if you get
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  sued. We have a whole myriad, a whole list of
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  tax advantages that could come into play. It's
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  private. It's a private contract between you
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  and an insurance company. There's no credit reporting,
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  for instance. There's nothing like that, so it's
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  very private. And it comes with some healthcare
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  advantages, chronic critical and terminal illness
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  coverage and things like that. So we're getting,
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  if there was this special place, we're getting
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  a whole lot of different jobs for our money to
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  do by putting it there. So you probably know
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  where I'm going with this. Does something like
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  this actually exist? Yes, it does. In my view,
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  there's no vehicle that works better for real
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  estate than a properly designed, modernized,
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  high cash value, low commission, dividend paying,
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  whole life insurance policy.