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Building Wealth Through Real Estate and Life Insurance Strategies · 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. Strategy number four,
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rental repayment. We use the policy to purchase
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property and then we let the tenants pay the
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loan. We talked about this a little bit earlier,
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where we keep the policy growing, we don't give
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up the cash flow, we can continue to make other
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investments, but we get the tenants and the cash
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flow coming from the property to actually pay
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the loans back. This is an example that you're
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seeing of how that works out. And so the first
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example is where we're using the policy, we're
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paying the loan payment back. The second example
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is without the policy. And you can see that we
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end up with about $284 ,000. at the end by using
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the policy versus 252 ,000 plus we've got the
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whole thing backed up with a death benefit of
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355 ,000. So again, if something happens to you
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and you die, then the way I look at this is there's
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this death benefit that comes in and self completes
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that investment for your beneficiaries, for your
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family. So anytime we can use money and get someone
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else to pay the cost of that money, right? We're
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in a better position. So this would be a good
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example of that. Strategy number five is other
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people's money. So let's say we've got a real
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estate project and we need outside capital. If
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we can get the outside investors to use this
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strategy, imagine four or five investors all
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with policies, they're all mitigating opportunity
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costs, which can make things look pretty appealing
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to work with you. And so they're all flowing
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money through policies and into the investment
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and your profits from the venture fund your own
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policy, your own warehouse of wealth and continuing
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to expand this concept. Now, of course, the ultimate
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strategy, the sixth strategy is to just become
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the banker. you know, why bother with all of
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the leaky toilets and broken window screens and
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all of the things that go on when you can just
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be the banker and use a portfolio of policies
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to set yourself up as a private money lender.
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So this is the example I want to kind of share
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with you along those lines. I'm going to tell
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Tim's story. So Tim was presented with a rental
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property investment opportunity back in 2005
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and going into the great recession that I talked
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about earlier, where there were limits on the
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amount of properties that a bank would finance
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and limits on the amounts. But Tim had liquid
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dollars in a policy that he started in 1996.
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He started funding a policy in 1996 and he formed
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a partnership happens to be with his brother
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who ran the property management company. And
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he charged the company 10 % for the money that
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he lent them with loans paid back in four years.
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So Tim says his brother and I opened the property
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management company 50 -50. He loaned the money
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at 10 % over four years. His brother was happy
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to pay the 10 % because he couldn't get the money
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for less. And once the loans were paid off, they
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had 50 -50 equity in the real estate purchases.
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So if he had just given him the money and didn't
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have him pay him back, he'd be out the 10 % and
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the principal and would have just owned the 50
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% of the value of the company. Tim and his brother
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did this over the course of 10 years or so and
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they repeated that process 22 times. They bought
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22 properties. What Tim says is that the wealthy
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understand the cycle of real estate and one of
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the biggest lessons that Tim will tell you he
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learned is that it's so important to have a big
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pool of contingency capital so that when the
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next crisis strikes, you're in a position to
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capitalize on it. That's what led to their success
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is going into that 2008 through 2012 timeframe.
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Tim had access to liquid capital and they could
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buy properties at great deals. Tim's original
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policy, he had paid almost 200 ,000 in premiums
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into it. It had a cash value of 236 ,000 and
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a death benefit of 822 ,000. This was in 2005.
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When the smoke cleared 10 or so years later,
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his 50 percent of the real estate equity was
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722 ,000, but little over that. Now, he'd taken
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the cash flow from the properties over the years
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and started a second policy and has actually
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insured his brother, his business partner. This
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is another very smart thing to do is to take
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policies out on your business partners. so that
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if something happens to them, there's liquid
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cash there for their family to deal with your
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partnership and so forth, right? It's sometimes
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called a buy -sell agreement. But he also flowed
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cash into that second policy. And so he had the
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cash value of 236 ,000 in the original policy
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plus the cash value of 176 ,000 in the new policy
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plus the 50 % of the real estate equity at $722
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,000. So total premiums out of Tim's pocket,
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because remember the premiums that funded that
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second policy all came out of the investments.
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So out of Tim's pocket, the original money he
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put in premium into the policy starting in 1996.
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And then that grew to a death benefit of almost
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1 .5 and a net worth increase over this of $1
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.1 million. So this is an example of how you
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can leverage the equity in these properties to
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build up significant value. So Tim says, if he
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didn't start the policy in 96, could he have
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taken advantage of it? No, he wouldn't have been
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in the position. Could he have done it with a
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401k? No. Is it possible to put real estate in
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an IRA like self -directed IRA? Yeah, it is,
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but is it a pain in the butt? Totally. There's
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all kinds of things you got to deal with with
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that. Is the policy a lot easier? Yes, it is.
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Could you do this strategy with stock or classic
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cars or real estate or any other investment?
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The answer, of course, is yes. By the way, Tim
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likes to tell everybody he spends about two hours
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a year working on this investment. Super efficient.
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This concept can work for almost anyone, but
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it's certainly not for everyone, right? It is
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a nuance, it's custom design solution, it's for
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savers and investors who have that mentality
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and can understand how to use leverage this way.
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This isn't gonna create overnight wealth, so
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don't do it if that's what you're looking for,
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or if you're at a point in your life where you
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really can't rub two pennies together, this is
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probably also not a great fit. The best thing
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to do is talk to somebody that knows how to structure
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these policies and determine if it's the right
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fit for you. A response at my firm, Janes League
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Financial, is tremendous, but I have cleared
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some space in my calendar for attendees of today's
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summit to be able to get a free strategy session,
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20 minutes, jump on the phone with me, and we
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can find out pretty quickly whether this is the
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right fit or not. So there's a landing page I've
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created called jumponwithjohn .com. You can go
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there. You can jump right on my calendar, schedule
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a 20 -30 minute strategy session for free, and
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we can discuss it and find out what's a good
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fit or not. And also, anybody that signs up for
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a free strategy session, I'll make sure you get
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a report that I put together. You saw those 20
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books that I mentioned earlier. I put a report
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together with a little synopsis or my key takeaways
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from each one of those books, and I'll send that
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out to you. So I thank you so much for your time
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and attention. I hope you got a lot of value
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out of this today and I look forward to hearing
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from some of you and answering any of your questions.
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Wow, that was awesome. I really like the way
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you explain it. I do have a few questions. Okay,
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of course. I'm glad you put page numbers at the
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bottom of the slides because that's where the
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first question came from. So like on page 13.
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One of the things that you said was that, where
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did it go? You can still gain $35 ,635. Is that
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the gain from the dividends or the gain in the
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policy worth? It's the overall gain in the policy
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during that seven -year period. And it's one
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example, right? Every policy will be a little
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bit different. But yes, that represents both
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the dividends and the guaranteed growth component
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within the policy. Okay, no, and I should explain
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that a little bit too So the dividends are not
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guaranteed because they're based on the performance
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of the company year by year So they're not guaranteed
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but the other component of growth in the policy
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is guaranteed So it's a combination of those
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two the non guaranteed and the guaranteed values
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So the dividends are not guaranteed but the other
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piece because you're paying back to your policy
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That's where the growth is absolutely guaranteed
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because you're putting it there. So the growth
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is actually aside from the money you're putting
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in. So we can't really think about it like an
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interest growth like you would in a savings account
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or something because it doesn't quite work that
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way. It's actuarial. It's an actuarial calculation.
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So the insurance company actuaries have calculated
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how much cash value this policy will produce,
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and that is the guaranteed portion. So on a whole
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life illustration, you will see a guaranteed
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side of the illustration and a non -guaranteed
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side. The guaranteed side is exactly what it
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means as contractually guaranteed by the insurance
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company based on their claims paying ability.
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The non -guaranteed simply is that plus the dividends.
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Which are not guaranteed. Okay And then the next
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I think I have two more and the next one is when
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you're setting up the payment if you the repayment
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You set it up based on if it's a syndication
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on the projected distributions like when they're
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projected to start But what if like right now
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a lot of investments have paused distributions?
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Are you able to pause the payments? Yes, so you
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are 100 % in control of the repayment. So you
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can start, stop, increase, decrease whenever
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you want to. The only caution that I talk with
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clients about is we have to be what I call an
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honest banker. So if we're gonna use this strategy,
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we have to have a plan for repayment. We can
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be flexible. We're totally in control of that
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plan, but we do have to have a plan for repayment
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and replace that money. We have to treat our
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own bank with the same level of responsibility
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we would any other bank. And so if we take out
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a loan, we have to have some plan to repay it,
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but we have complete flexibility over that process.
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You know, I have clients who are flippers and
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they may not make a payment against that policy
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loan for a year as they rehab that property.
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But as soon as they sell it, they then pay that
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loan off in one lump sum and they can do that.
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But yes, you can pause and restart or change
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the amount completely at your will. OK, so I
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wrote down like it's kind of like loan modifications,
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but it's. Yeah, you can do your own loan modification,
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yes. That's cool. All right, and then my last
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question is, which amount is the loan taken out
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against? Because there's two amounts on every
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of the policies, right? Two amounts. So there's
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the, now are you referring to the death benefit
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and the cash value, or are you referring to the
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non -guaranteed cash value versus the guaranteed
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cash value? Either or all? Okay. There were lots
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of numbers. So the insurance company is going
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to use your current cash value, which will be
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the non -guaranteed cash value, when they determine
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how much money they can loan you. It varies a
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little bit from company to company, but around
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90 % of the cash value is the limit of what they'll
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loan. They're using the death benefit as collateral.
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So the loan amount is based on the cash value,
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but the death benefit is really the collateral
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for the loan. Found my notebook, by the way.
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Oh, good. Excellent. It was very frustrating
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that I couldn't find it. And it was just pushed
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back further on the shelf. So I just had to keep
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looking. But yeah, thank you so much for being
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here today. And guys, I take notes just like
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you do. And I really like the way that John explains
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how this whole process works. Um, we actually
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have a policy and honestly, I didn't understand
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how it worked. Um, I knew that it was supposed
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to make money and that we could borrow from ourselves,
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but other than those few little, um, cute phrases,
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I didn't actually understand how it worked. So,
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um, if you want to go back and watch this again,
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that's one of the beauties of it being prerecorded
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is that you can do that. Um, because Sometimes
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it takes a few times through this stuff to really
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understand what's going on with it. So there's
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nothing to be embarrassed about with that. It's
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a little bit of an outside the box concept. So
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sometimes it takes some repetition to really
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get your mind around exactly what's happening
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and how it works. So for sure. Now, just as an
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example, I've been hearing about this and the
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process and how it works for about three years.
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And it wasn't until a few months ago when I first
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heard it explained by John again that it clicked.
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And I've been hearing about it for several years.
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So again, nothing to be embarrassed about if
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this is a really complex idea for you. Just go
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back and watch it a few times. And then if it
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still doesn't really click, you can absolutely
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go and schedule a time with John or. anybody
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else that you know of that's doing this but just
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from personal experience I'm saying that the
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way that he explains it was really clear for
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me and it helped me really understand what's
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going on because I literally thought you were
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taking money from your own policy I didn't understand
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that you were borrowing against it and so that
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was kind of where the disconnect was for me so
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that's that's kind of an important part to really
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help you understand how it functions and how
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it works. And I still don't 100 % get it. I'll
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be 100 % honest on that. But I have a much better
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understanding of how it works than I did six
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months ago. So John, thank you very much for
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being here and for explaining this. I really
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think you do an amazing job at it. And just thank
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you. Thank you so much for having me. It's been
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a lot of fun. Absolutely and guys again, you
16:08
can hang out over here There's tons of free content
16:11
or you can come join us on the live side You
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can get the VIP subscription or the VIP upgrade
16:16
ticket and we'd love to have you join us But
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again tons of information over here. So whichever
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you choose until next time