All Forum Posts by: Ben Zimmerman

An investment that takes 3-4 years as you put it to, just to finally BREAK EVEN based on initial startup fees is already a fairly poor option right off the bat. From there it earns a safe rate of return, usually in the 5-6% range annually. This makes it a sub par investment account in the long run, as an initial 20k investment will grow to only 205k after 40 years, while if you had invested in a more growth focused account that money would have grown into over 900k at a 10% yield.  Had you invested your money for an additional 4 years to 44 years (because you no longer need 3-4 years just to break even with insurance) that money would instead grow to 1.3million.  And while there is a time and a place for safe, low yield products, for the majority of people it's not a great strategy for large sums of money unless the person is super adverse to risk.  But either way this 5-6% yield is a function of the whole life insurance, and has nothing whatsoever to do with IB.

In IB, it is always touted (including by you) as a way to use the velocity of money to double dip investments.  And while it's true that you continue to earn 5-6% on your funds while you take out a loan against your life insurance, the problem is that you are earning 5-6% in interest, but usually PAYING 7-9% in interest to access what otherwise was your own money had you just not put it into the insurance product in the first place.  

So anyone who is consistently taking out loans to 'double dip' as you put it, is starting their investment career 3-4 years behind schedule because they need to catch up on fees, and then they are paying interest to access money that was theirs all along.  If you are earning 5-6% and paying 7-9%, then net total you are paying 2-3% to access your own money.  Just cut out the middle man and save yourself 2-3% interest by not putting your money into the insurance product in the first place.

If you are going to invest in whole life insurance that's fine, there is a reason and a time and place to do so.  But that money should generally be left alone.  And certainly it should never be your primary goal to put money into the account, just so you can immediately turn around and take money out of the account via a loan and pay interest on it.  Any year you utilize IB, is a year you are guaranteed to lose 2-3% of your money for no good reason.

Those IB YouTube videos are almost as bad as the videos showing a super secret hack to repay a mortgage in only 5 years using a HELOC.

You can get flat rates of between 10-14% annually with stablecoins on various platforms like Celsius, Nexo, or Crypto.com.  Some of the platforms you have instant access to your funds whenever you want, and some of them require locking it up for 1 or 3 months at a time.  Or 5-6% interest on gold if you're super worried about inflation.

Alternatives include an empty Heloc, or an M1 Borrow account with M1 Finance. M1 Finance is a stock brokerage platform similar to Robinhood, but the difference is I can get a loan of up to 35% of my stock portfolio balance, with no credit check, no application process, and the money is in my account within seconds at an interest rate of 2% annually. So hypothetically if you had a 100k stock portfolio, and you assume a worst case scenario where the market suddenly drops 50%, now you have a 50k portfolio and can access $17,500 within seconds at a stupidly low 2% APR with no set repayment schedule. Or conversely you have access to 35k in funds if the market isn't tanking at the same time you need to replace that roof.

 Finders fees for bird dogs are not allowed in most, if not all states unless that person is a certified real estate agent.  But then again the tactics that the vast majority of wholesalers use aren't legal either such as marketing the found property instead of marketing the contract.  

Most people ignore the law entirely since in general enforcement of these types of laws is a complaint driven system.  Generally nobody cares what you do until someone gets burned and files an official complaint with the proper agencies.  So unless you plan on screwing over your bird dog, its highly unlikely that anyone will care.  As long as nobody complains, or you don't pay your bird dog as a blatantly obvious part of the escrow closing procedures, how would the state even know what you are doing? (not legal advice, always be a good boy and follow the law)

 They don't settle with me because they don't know any better, they settle because the law is very clear about harassing people on the do not call list.  I've had numerous people try to yell at me or say they didn't call, or didn't call as many times as I claimed, or say they didn't know, or claim that's not how the law works, or claim they hired an outside marketing company and therefor can't be held liable for their actions.  

In the end they all pay.  

There is no formal definition of who can/can not perform a cost segregation study. I have done it myself for each of the SFR that I have bought recently. I have been audited and as long as you can reasonably justify your numbers, you should be fine. (no tax or financial advice given)

Do I get every last ounce of deductions squeezed out of the property? -Not even close. But I get plenty enough to make a significant difference when it comes time to file taxes. The 100% bonus depreciation from TCJA is insane, even factoring in just a few items into my segregation study can easily amount to tens of thousands in year 1 taxes. For larger commercial properties it's probably worth getting a professional to get you every last drop you're entitled to, but for a regular SFR I would rather get some deductions, than pay a specialist a bunch of money to save me a fraction of a percent extra.

I get called about 3-4 times daily from various 'investors' wanting to buy my house, so yes, people are still doing it.  

Over the last two years I've actually made more money settling Do Not Call lawsuits with these jokers than I have earned from my actual real estate portfolio.  At $1500 per call it adds up pretty quick.  The funny part is the same company keeps on calling, and I keep on collecting.

It all comes down to risk tolerance and your individual situation.

It should go without saying, but insurance companies are profitable, which means in the long run they pay out less than they collect, which means that essentially you are paying them a lot of money, for only a little bit of repairs.

The caveat of course is you need enough cash on hand to cover deductibles.  I think I have something like a 10k or 20k deductible on my properties, but my insurance is dirt cheap on a monthly basis and I have enough cash on hand to easily cover those deductibles if I ever actually had to.  I don't need/want my insurance company to be involved in every minor defect the house goes through, I just need the insurance to cover catastrophic loss like a fire taking the entire building.

Of course I also don't live in areas that are prone to hail, flooding, tornados, or any other dramatic weather conditions.

Personally I would hire a competent attorney and file eviction immediately.  Sue for any potential damages, including court costs, hotel stays, and psychological damage that your attorney recommends suing for.  If someone tried to make my life miserable like that, the first thing I would do is return the favor and make them equally miserable.  Having an eviction and possible civil damages pending is going to make it difficult for them to do much of anything for the next few years.

I would assume that there is verbiage in your lease concerning peaceable enjoyment for you and the surrounding neighbors.  I would discretely record a few conversations and provide the judge with the email traffic as well as the police reports and hotel receipts.

I don't have any duplex's, so my verbiage probably wouldn't be as specific as what you have/should have, but this is the clause from my lease and a violation is grounds for eviction.

"Resident shall not use the premises or permit it to be used for any disorderly, boisterous or unlawful purpose in any manner, and Resident's actions and the actions of Resident's occupant, guests and invitees shall not interfere with any neighbor's right to peace and quiet enjoyment."

If you're serious about wholesaling and aren't going to just give up quickly when the first deal doesn't magically fall in your lap within the first week, then I would talk to a real estate lawyer and have them draft a template letter for you.  Chances are they already have a template letter that they will sell you for a few hundred bucks that you can use for all of your deals going forward.

Real estate laws vary greatly depending on what state you live in.  As such a contract that works well in one state, might be completely illegal in another state.  To me it's worth spending a bit of money to ensure that the contract has all of the state specific verbiage to adequately protect you during the closing process.

I recently used PenFed to take out a HELOC on 2 different rental properties for a combined total of 188k @4.75% interest with a max of 75% LTV. It was a super clean and easy closing process and didn't need an appraisal or anything like that.