All Forum Posts by: Justin Holley

@Josh Calcanis When structured correctly this can be a great tool.  Please read this complete post as I will eventually answer your inquiry on how to use cash value life insurance to invest in real estate.  First, it is important to know many life insurance agents do not know how to properly build a cash value life insurance policy or do know but build the policies to pay them rather than you.  Therefore Life Insurance gets a bad name in the marketplace.  Lie Insurance is not meant to be a replacement for the stock market and the ROR should not be comparedf.  @Brian Mathews That said, this is the first place people compare when they say it is a bad investment.... Yep, life insurance is horrible.. my Whole Life insurance's IRR is 6.15%, but hey the market has returned closer to 9%.. obviously it is a poor choice to buy in Life Insurance. Let's take a look at the data. I encourage everyone to research some thing called the DALBAR. Basically, it measures investors returns when accounting for investor behavior over 10, 15, 20 year periods. The data shows that investors in equities have a ROI of 3.17% during the period of 1990-2010. Inflation over that same period of time was 2.8%. I will let you do the math on the true ROI. In the meantime, many whole life contracts had/have 4% guarantee. Whats-more is that in the good & great years in the market during that 1990-2010 an investor in a non tax qualified account was probably paying taxes on phantom returns from their mutual funds, etc... Hmmm let's add in the additional opportunity cost of the taxes paid out of pocket and subtract that out of the 3.17% return as well. Point made....

Now on to your question.  @Thomas Rutkowski was correct on many of the items he wote about, except I believe that he may be using a slightly different type cash value life insurance policy called Indexed Universal Life (IUL).  IUL can be used, but I would prefer to use Whole Life Insurance from the likes of one of the big mutual life companies.  I would NOT take a loan from the life insurance against the policy, but I would take what is called a (collateralized or secured) cash value line of credit at approx 3.75-4.25% from the bank with the cash values of the life insurance policy as collateral.  Again, if my guarantee is 4% on the values in the life policy and when dividends are added I likely get more than 4%.  Then, and ask your tax advisor about this one, when structured like this one potentially can deduct the interest when the money is used for your real estate business.  @Josh Calcanis I would enjoy speaking with your friend as I do this for my clients when appropriate here in Seattle too.

@Mike Landry a properly structured policy should be blended to maximize cash growth and keep insurance expense to a minimum.

@Jerry W I would be happy to show you how this works mathematically via web-meeting.

(Disclosure: NONE of the above should be considered, legal, tax or investment advice please seek out the counsel of a qualified professional for guidance) 

@Anthony Russel You can accomplish what you are trying to do in a much more effective way using PROPERLY structured cash value life insurance.  I know everyone is now poo pooing this post, but hear me out.  First, very few insurance agents know how to structure this because they build the policies to pay them a large commissions, rather than max the benefits to you.  When done correctly this method can provide liquidity, guaranteed returns, security from creditors, disability protection, and finally a death benefit.  Policy loans against the death benefit can be very advantageous for purchases of properties outright, supply a down payment, or use as collateral so those greedy banks cant be so greedy, etc. If you are curious how I use this PM me.  Thanks

Hello, My name is Justin Holley.  I moved to Washington from the Northeast (Vermont) in September 2014.  I am just now (Nov 2015) finally settling in and am anxious to get started investing in Washington.  I have lots of education on the topic and have had success with the deals I have done.  However, I feel that I have not done as many deals as I would like.  My goal is to build a diverse portfolio of rental properties for all the reasons we investors love to talk about.  I feel that often my day job gets in the way of having enough time to find my next deal, as I am constantly working 60-70 hours a week building my financial planning business, which is also a huge passion of mine although the amount of scrutiny and regulations we honest advisors are under is tremendously draining.

I look forward to attending meet ups when possible and building friendships along the way.

Thank you,

Justin Holley

Did anyone get back with you on this?