All Forum Posts by: Sean Winchell

Awesome thanks guys just trying to see how I can carry a bit less with expensive interest rates since the seller was agreeable. Oh well lol

Hi BP!

   I am looking to purchase a property that is a tear down and build a duplex or triplex on it. I wanted to live in one of the units. My question is if i purchase the property as seller finance and there is a promissory note what are my options for loans on the new construction? Thanks any pointers or where to look would be helpful.

Thanks guys, I thought it sounded a little gimmicky but have not established an LLC in the past so didn't if there was something I was missing.

Sean 

Hey BP,   

I used PCS recently to open my holding company and LLC last week. They had pitched the "Corporate Financial Program" to help build the paydex up and move all my debt into the LLC and build corp credit. Anyone have any experience with using this program, trying to decide if its worth my $2000 or if its something I can easily do on my own. No idea what it takes to build this if its opening accounts? cards? balance transfers to the LLC? Dont know what it takes to build this sort of thing.

Thanks,

    Sean

 Keep me in mind if you like someone's work! Im an investor in the area as well, trying to build out a team.

 Thanks Tony! Ill check it out. Appreciate the tip. Would love to connect in the future. I am just starting out in the Charlotte area, let me know if there is something I should know that I dont know, because I know I dont know much, you know?

Sean

 I didnt actually look to see what the rate was. I took the dividend payout for the year when I got my statement which was "Your 2023 total dividend is $1,743.54" then just used my 2022 ending cash balance of 50,203.23. I rounded up to 3.5% for ease of use. This was from MassMutual WL policy. The had a set fixed rate loan for the policy of 6% written into the loan, not sure if I can change that, I could email the advisor that set it up for me. Any reason you could see for me having a lower dividend yield on that cash? (like do i need to call someone lol)

I love the idea but was having trouble seeing the numbers in action in this illustration I gave. If my loan was at 5% I would come out ahead even with the 3.5% dividend payout as long as I took into account my tax deduction (which you helped me with seeing thank you I didnt think of that!).

@Matt Ruttenberg

Thanks for responding Matt. Yeah definitely makes a lot more sense now. I did use the loan actually this last december instead of taking out a HELOC to secure a property.(saving me the fees and % on the HELOC) With the idea that when we move this spring/early summer to pay the loan back.

Are some of the policies set up with where the loan is always going to be net 0% no matter what the market is doing? That would be attractive in the future once I am earning more to set up in addition to my current policy. Or do they roll over an older policy like this one into a new one that is set up that way?

You guys have been great and helpful thank you

Sean

@Thomas Rutkowski

The policy is currently with Mass mutual. The 6% loan rate is fixed for the policy, and I just based the dividend amount by taking what my cash value was previously in 2022 (for this example) then the dividend payout amount in 2023. Maybe ill see the dividend payout higher this year since interest rates have been high. I didnt think about tax savings. So after I did some simple math as long as the difference between my loan% was closer to like 1.5% this year(not the 2.5% I saw in 2022 to 2023) from my dividend yield(assuming the yield is still the smaller of the two) I will see an increase in my overall yield after deducting for taxes, even at a 24% bracket. I could see how at 37% it would be even better. But if market changes occur in the future and that spread in my dividend yield widens, I should hold off on taking the loan unless I emergently needed the $$.

Thanks again for taking the time to explain everything I appreciate it. I see the numbers now lol.

Sean

@Thomas Rutkowski @Matt Ruttenberg

Awesome thanks for responding Thomas. I am on the same page with you on the structure, how the premium adds to cash value (in my case in the beginning not a lot at all but now everything except what looked like $150ish did) and what is happening as far as the loan backed by my cash value.

What I am having trouble with is if the return on my cash value (56K at 3.5%) is less than the cost of the loan at 6% (if you took the entire cash value) where is the benefit? Sorry if this sounds stupid but I can't find in the numbers what I'm missing. Trying for that aha moment if you guys don't mind helping! (using real numbers so its easier to see) 

Lets say I take the 56K of cash value and invest it in RE. Im still making my 3.5% and now I also make say 10% on that money by investing it in real estate. I have to deduct the 6% of the loan cost so my 10%(on its own) turned into 7.5%. I am really interested in understanding this concept and you are helping me, so thanks for your time guys!

Only thing I see is that my dividend will eventually be large enough to pay for the policy itself, and continue to compound the way any investment would. 

Thanks,

Sean