All Forum Posts by: Mike S.

Like phone robocall, these are illegal. Why would I ever want to work with a business using illegal methods?

I now even receive spam calls at 5 am... Ridiculous.

Use the search function of that forum, and you will find some very informative threads on it.

You would need first to set up a maximum overfunded permanent life insurance policy (Whole Life or Index Universal Life). Then you can obtain a loan from a bank, using the cash value as collateral. Your cash value continues to grow tax free while you can use the loan proceed in other investments, and deduct the loan interest as investment expense. So your money works at two places at the same time. Check @Thomas Rutkowski website. You'll get a good overview of the process.

If you are taking a loan from your cash value from the insurance company, it may not be deductible, even if the proceeds are used for investment.

On the other hand, if you use a third party lender issuing a loan using the cash value as collateral, it appears that you can deduct the interest as investment expense. Look for banks or lenders offering CVLOC (cash value line of credit). Their lending rates are also often more advantageous than the ones you can get from your insurance company.

Start investing in real estate sooner.

Start overfunding a permanent life insurance as soon as I had steady income.

Buy more Bitcoin when I read about it in the early 2010s, and not loose my original wallet...

Originally posted by @Luka Milicevic:

@Lieren Schuette

I think the best way to save is to get a first position heloc on a property (primary or rental) and keep money in the heloc paying down debt, until you are ready to buy. 

Trying to save in a regular savings account is a death sentence in my opinion. You can't keep up with inflation. 

HELOC are great products to have on your properties. However, do not count on it to be available when you need it.

Banks have frozen line of credit in the past and will do it again. It does often happen at the most inopportune time (like when you attempt to withdraw to put your down payment at closing time). So I would advise to take all the money out of your HELOC while you can and store it somewhere safe where your bank can't access it, but also where you can get an interest rate covering at least the HELOC interest.

Maximum overfunded permanent life insurance (properly set up Whole Life or Index Universal Life policies) are excellent products to put your cashflow in. You can use the cash value as a collateral for a bank loan at very low interest rate, while the full value continues to grow in the life insurance. They are complex products, but when used properly are great wealth multipliers, safe, liquid and tax free.

Yes it does work, but it is a complex product that need a proper execution to realize its full potential. Most of the horror stories are from people who did not understand it and did not use it properly.

Also don't get limited to the IBC products. The IBC brand is one subset of overfunded permanent life insurance. They are limited to some specific Whole Life products and are not always maximum overfunded.

There are other brands in the field that are slightly different in their application but also limited in the products.

You should seek an agent who has access to all products as some may be more appropriate than other depending on your goals.

Look at @Thomas Rutkowski website. He has a more broader approach. While he recommends mainly the Index Universal Life products, he also offers the other Whole Life products and will explain the pro and cons of each, giving you the choice to take what will be the best in your specific situation.

Is there a comprehensive list of state tax filing requirement for passive real estate income? Which states require filing, is there some level of income under which you are not required to file, etc...

Also, in the same token, what about state filing for tax advantaged accounts (SDIRA or solo 401k)? I am aware of the federal filing requirements for both (UDFI taxes on SDIRA, UBIT on both, and form 5500 for solo 401k above $250k, ...). If you don't trigger any federal filing requirement, are states following the same guidelines. If my solo 401 has passive income from properties in multiple states, which one does require a state filing when no federal filing is required?

Originally posted by @Bruce Woodruff:

Originally posted by @Ray Martinez:

Yes, the purpose would be to shield from liability. 

But it doesn't do any more than a good insurance policy.....

Not true.

A liability insurance is a must but will not cover you against all risks.

For inside liability risks, a liability insurance may cover you up to their limit, but your personal assets are at risk if your insurance is refusing to cover you (read the many, many pages of exclusions of your policy) or if the claim exceed your policy limit.

For outside liability risks, if you don't have coverage from your personal liability and/or umbrella you may not be covered either.

An LLC put your assets in different boxes and insulate each box from each others. So you are limiting the total risks to one box at a time.

Insurances, asset striping and entities are all complementary but not similar asset protection tools. All of them need to be used in conjunction for a comprehensive structure giving you asset protection.

Now some people will tell you they are not using insurance nor any asset protection at all and have done well for years, some other will tell you horror stories about losing their shirt on a devastating lawsuit. At the end of the day, it is your own decision on what risk you want to assume and that will keep you sleep at night.

Originally posted by @Ben Zimmerman:

Please quote me which insurer that allows for a loan at cheaper interest rates than the guaranteed growth rate from the funds inside the insurance policy.  Any policy I have ever seen that allows the cash value to continue to grow usually charges between 5-10% interest.  The only accounts I've ever seen with loans under 5%, there are very serious side effects of how the cash value in those accounts grows.

I have never said that it was a loan from the insurance company. I have mentioned third party lenders. They offer sub prime loans up to 90% of the cash value of your policy. Also you specifically don't want to use a policy loan but a third party lender if you want to deduct the interest.

Most insurance companies will offer policy loan at the same rate than the growth after 10 or 20 years. These wash out loans are useful in LIRP setup when you are using loans during retirement for income.
With IUL you also have many companies offering variable loan rate that most of the years will have lower interest than the gain in the policy.