BiggerPockets Founder · HI · Member since 2008 · 16k+ posts · 5k+ votes
On the BiggerPockets Blog, our contributor, Clint Coons - an attorney focused on asset protection - wrote an important post that anyone raising capital for their real estate investments needs to read.
I'm going to start by apologizing if I have posted my question in the wrong spot. I have entered into a partnership with a local investor in my hometown. He advises me against financing deals that can't be paid off within 10-15 years. I found a 12 unit apartment that could feasibly cash flow 1k-1.2k per month with a 20 year note and 20% down. I came to this conclusion using the BP analysis tool. I have to do more research on the deal but I think it's defiantly worth looking into. If someone could please point me to some insight on what would make a good or bad deal based on amortization periods I would appreciate it thank you.
You can also become your own bank and finance yourself to a wealthy retirement, with a properly structured , asset-based life insurance policy with living benefits. Covers all bases.
Rental Property Investor · Montgomery, AL · Member since 2017 · 277 posts · 221 votes
7y
@Joshua D. Thanks for the good read. We recently went through a small capital raising round for a larger apartment complex we purchased. Definitely going to make sure we do things by the book in the future.
Can you give any pointers about properly-structured, asset-based life insurance policy with living benefits ?
If the living benefits are important to you, you should consider using a Guaranteed Universal Life or Whole Life, not an over-funded policy. The living benefits are an accelerated death benefit... i.e. you receiving your death benefit early. In high cash value policies, the death benefit is held to the absolute minimum. The cash value of a policy is literally you saving up your own death benefit over your lifetime. The insurance company is responsible for the difference. The death benefit includes the cash value that you've already saved up, plus the extra risk covered by the insurance company.
In an over-funded policy, the cash value is very close to the death benefit. By utilizing the living benefits riders, you are ruining your "personal bank". Your cash value would be tapped to pay the benefit.
The cash value of the policy can be accessed for any reason... retirement income, to purchase real estate, etc. You can also use it to pay for medical care, so it's really not necessary to have the additional rider. In a Guaranteed UL, the cash value is no more than the absolute minimum necessary. On this chassis, there will be much more bang for the buck if you value the living benefits.