All Forum Posts by: Paul Beets

Investment Info:

Single-family residence buy & hold investment in Indianapolis.

Purchase price: $27,000
Cash invested: $11,910

Purchased using cash from Simple Wholesaling in Indianapolis
PMI Midwest property manager who referred me to a great rehab crew
Funded it with a combination of 401k cash-out, Infinite Banking life insurance loan, and Fund&Grow business credit.
Cash-out refi with Huntington Bank

What made you interested in investing in this type of deal?

Honestly you have to start somewhere. Clayton Morris always talked about 3 bed / 1 bath 1000 sq ft so that is what I started looking for. I needed the cash price to be reasonable because I knew I didn't have a lot of cash. I had no idea how I was going to fund the rehab. Based on conversations from other investors - the area seemed to be a good appreciating area.

How did you find this deal and how did you negotiate it?

I got hooked up with AS MANY wholesalers as I could find in Indianapolis. They were super awesome to work with. Their website was like going shopping on Amazon. I picked one out which fit my criteria (location, price, property configuration) and pitched a price to the contact. He gave me his lowest and we called it a deal.

How did you finance this deal?

Not easily or the best... To get started I cashed out my 401k from a previous employer. This gave me enough cash to make the initial purchase. I then went to work to try and figure out how to finance the rehab.

I did a 1035 exchange on an existing whole life insurance policy over to an "Infinite Banking Concept" practioner and then took a loan from it.

I also got setup with Fund&Grow to utilize business credit cards with 0% interest for up to 18 months.

How did you add value to the deal?

Yes - Purchase for $27K and rehabbed it for $40K

What was the outcome?

The rehab turned out great! Beautiful little property ready for rent.

Lessons learned? Challenges?

Have your funding for rehab lined up before you purchase. Even in a "BRRRR" you don't want to sit on that property without rehab.
David Green does a great job explaining how to work with contractors. I didn't do any of that. So the rehab was more expensive than what I planned on and it went longer than I expected. Listen to David Green...

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Huntington Bank did my cash-out refi. 75% LTV @ 5% interest is a STEAL. I would encourage you to look into them.

CASH ACQUISITION STRATEGY

One initial note about cash acquisition fees: Don't worry about them. All the cards that Fund&Grow were able to get me had GREAT rewards benefits that nearly completely offset the cost of cash acquisition. Or ... you could take a free vacation. Up to you. Don't forget to follow up and take advantage of these rewards after you have made your cash acquisition using the strategies mentioned below.

Plastiq

I wasn't that impressed with Plastiq at first. My wife and I operate several Airbnbs in our local area and so rather than paying rent on our properties with cash - we just paid rent through plastiq using our 0% interest business credit cards. Just make sure you have all your ducks in a row on documentation who you are paying. They do check and if everything doesn't line up it will delay payment.

I heard during a Fund&Grow podcast with Clayton Morris that you could WIRE money directly to a closing title company escrow rather than trying to pull money off the card into a bank account and then pay to wire the money. So I just did this on 1/17/19 to buy a duplex!. I wired several thousand dollars into an escrow account and purchased a rental property! WARNING: Won't work with AMEX. Which sucks.

Gold Money

I did use go the Gold Money route. Real pain to get an account setup. Be persistent. Call them e-mail them follow up. It takes a few weeks but you'll eventually get there. I had a few issues with some of the cards not working with Gold Money. I honestly don't remember which were which. Just figure out how much you can/want to pull off the cards and try all of the cards you get. The ones that don't work go ahead and try some of the other strategies. I want to say I was able to use my AMEX with Gold Money. This also takes a little more time than the other strategies. Purchasing the gold may take a day or two. And then selling the gold takes maybe a day or two. Again... don't worry about the fees or the gold devalue if it happens to you. The rewards pretty close to offset these impacts.

Paypal (I am not a CPA or Attorney. This worked for me. May not for you. Beware)

So I may get flogged by the internet for this. But I will put it out there. Please be nice.

I have a personal paypal account. I already have an LLC with an EIN number. So I created a Business paypal account. I then paid my business paypal account using my personal paypal account using the business credit cards. Yes there are fees. Again ... don't worry about those. I want to say I read somewhere that if you earn beyond $20K in your paypal business account they have to report that income to the IRS. It is still too early to tell if I'll run into that issue. In the future - this will be used as a last resort. I don't recommend it now that I know I can wire money into an escrow account through plastiq. AMEX you might have to use Gold Money. And then use this as a very last resort.

Swipe it at a register or online purchase

This one is obvious. I've paid my property taxes online with these cards. My wife and I have furnished Airbnbs with crap bought at Sam's club, Amazon, Target, etc. using these business credit cards. They are great and easy to use this way and I encourage it.

Good luck!

Paul B.

@Thomas Rutkowski

Thank you for your input. This completely makes sense. Only recently did I come to find out that loans could be taken against the policy as collateral. Now that I am where I'm at for now - I was planning to do the BRRR strategy and repay the loan entirely anyways. That new 30 year will be a better situation

Any additional advice how best to handle the funds paying the loan off to myself that will avoid any alarm bells?    Should I just transfer a fixed amount out of business checking to my personal checking until the loan is paid?

Thanks!

Paul

Greetings BP:

I'm looking for a tax expert that is extremely familiar with the tax implications of using the infinite banking concept (Nelson Nash). Specifically how to take a loan from a policy to loan to my LLC and then pay the loan back tax free.

Some specifics:

I took a $17,000 loan from my IBC policy. I then loaned that money to my LLC which is using it to rehab my rental property in Indianapolis. I'm considering creating a promissory note with terms and conditions for the LLC to pay me back using the cash flow from the property once it is rented.

My tax adviser has some concerns about that payback money becoming income and therefore offsetting the whole plan to contribute to my IBC policy tax free so that it can continue to grow tax free.

Has anyone done this?   

Thanks!

Paul

Fund&Grow have been amazing to work with. They exceeded my expectations how much they were able to get me approved for and their customer service and responsiveness has been top notch.

Jason was wonderful to work with. He was able to get me $68,000 in business credit with the first round which by far exceeded my expectations.

No doubt about it - it isn't easy getting the funds in cash off these cards. But it is funding I did not have and if you are starting out and needing a "creative" way to fund your real estate aspirations.

Hey Gabriel,

Great to hear some success with the BRRRR strategy especially in Indianapolis. I'm also doing the same thing (just not nearly as remote as you are!). I'm operating from Michigan and am able to take occasional trips down to Indy to keep an eye on progress. But I have also built a small team.

One thing I'm struggling with on the BRRRR strategy for me is the refinance piece. I'm finding that the loan amounts at 75% LTV are too low. My property will probably only appraise for $50K. A lot of these lenders are only offering $75K minimum which means the ARV has to be in the $100K range.

Any advice you could share?   

Thanks!

Paul

Hey Jeff - looking for a rehab loan ~$30K for a buy and hold rental property in Indianapolis.   Good credit score.    

I just got off the phone with Kelly down in Florida. She seemed like a very nice lady but like everyone has said - seems too good to be true these ROI numbers!!!

@Cheryl Graham please give us an update when you return from Johnstown!    

I'm all for investing in a depressed area and providing affordable housing!   

Thanks everyone!

Paul

Hey Dylan,

I'm interested in this property.    Any chance it is still available?

Thanks!

Paul Beets

248-705-8640

[email protected]

I have received a "pre-approval" and loan contract from Alpha Capital Loans based on Portland, Oregon.    Has anyone had any experience with this company and their loans?     The terms are very good (almost too good).

Thanks!