There are various ways of investing passively besides real estate multifamily syndication investing. Loaning your capital to real estate investors, flippers, and developers for quick cash turnarounds is appealing to some investors. Invest your capital as a private lender and become the bank. There are also whole life insurance tools that you can use to leverage this “be your own bank” concept. John has leveraged policies to help fund his investments with Premier Trust Advisors.
The strategic approach with a whole life insurance policy allows you to have your dollars working in two places simultaneously (inside the life insurance policy AND real estate investment). It also provides the natural protections against death and disability. This allows your dollars inside to grow tax-free with no disruptions. It also provides some added flexibility for financing as the terms of the loan you take from the life insurance company are open other than the interest rates from bank loans. Lastly, as the loan from the life insurance company starts to get paid back, the cash value opens up again to borrow as needed.
Here are the different ways you can use your policy to invest in real estate.
- Private lending
- Hard money lending
- Potential returns: 10-15% IRR (Internal Rate of Return)
- Can roll your investment over 2 to 3 times a year, sometimes more.
- Holding a first position note, deed, and/or trust on the real estate so you are secured and insured on your investment.
- Lend to people that can’t get a mortgage and they pay you back.
- Find qualified operators or a borrower that you can trust and knows what they are doing.
- Invest in real estate syndications
There are various ways to seek returns in real estate. The concept of leveraging a whole life insurance policy is simple. Fund your policy, borrow against it tax free, fund your investment of choice and enjoy the proceeds. You do have to keep in mind that you are borrowing against your policy in its infancy but you are using it to invest. Also remember that you are receiving dividends with your plan so remember that when you are making other investments, the effect is what I like to call a compound explosion.
If you have the time, go ahead and become the landlord and perform the daily task, you can also lend your capital to trusted investors that fix and flip but like everything else, vet them thoroughly. The returns might be higher in some instances but if you are looking for a hands-off approach to real estate investing, seek a trusted operator that focuses on being a fiduciary to the investors capital as they invest in real estate multifamily and benefit from the 5 ways you are paid from one investment.
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