All Forum Posts by: Zachary Paschke

@Svetlana Kleinhenz, I’m a licensed life insurance broker for the state of Georgia (I work remotely so you never have to see my face). If you can email me the policies you have. I can help you look at your available options. @Richard Sherman is right. Call the insurance company and ask for an up to date illustration of your policies. This is usually for whole or universal life, but can be helpful for term life  sometimes people get wrapped up into policies that will increase in cost over time  

You don’t have to buy anything from me, but I can give you some insight into your options since I work with over 20 different insurance companies. I’ve saved a lot of people money. 

Life insurance is a necessary evil, but sometimes people are convinced to buy more coverage than they need. There’s often room to save. 

Life insurance is good. I’ve got Indexed Universal Life policies that mimic growth in the S&P500. When you take the money out it’s a loan with the insurance company so your money can continue to grow. People often do that with participating Whole Life to keep the dividend. The IRS does limit how much you can put in while keeping the tax free status of the growth (the percentage of the account that can be overfunded), but that doesn’t mean you can’t start a sizable account. 

Borrowing your money from the life insurance company is way easier than trying to access money from a retirement  account. You do pay interest, but it’s rarely significant considering the continued growth. 

Jason, 

Life insurance can be tax deductible if it’s a qualified business expense. But, you forfeit the tax free status of the death benefit. It’s usually not worth trying to get the write off. 

The tax savings on life insurance are like the tax savings on an IRA. You either get to pay in with tax free money (if you write it off as a qualified business expense) and your beneficiaries owe taxes on the growth or you pay with post tax money (most common) and the death benefit is income tax free.

Death benefits may be subject to state estate taxes (as will be any money you leave). 

The protection afforded to life insurance varies based on state law and are fully dependent upon your beneficiaries ability to manage the money. What this means is the death benefit money is protected, but the second that money is commingled with a family/ individual account they’re may no longer be any legal protection. Your beneficiaries should always be told to consult a lawyer if there’s any pending legal or financial obligations on either side (owed by you or them). Until consulting with a lawyer, they should leave the money with the insurance company. If they must take the money, they should put it in its own account until instructed by a lawyer on what to do. Keep in mind the lawyer is really only needed if you or you’re family isn’t looking to protect that money from creditors (assuming there are creditors) or pending legal action. 

There are no companies offering a guaranteed 6% return on your money right now. @Thomas Rutkowski is right. That sounds like an Indexed Universal Life policy. That is a policy where the cash value is indeed to a fund like the S&P500. What the company will do is use your guaranteed interest on the account to buy options on the fund you’re indexed against. If the fund goes down you don’t loose any money (you just don’t get any growth - or little growth, there’s a lot of available options) if the fund goes up they exercise the option and you’re money grows within the cap allowed by the policy (usually as high as 6-7%). 

Some policies can be set up to borrow from. There are certain companies that offer products designed to borrow money from (interest rates designed to zero out against your income from the policy). 

All this said, the average person has little to gain from trying to dodge federal income tax on the growth of a savings account. Life insurance policies usually just work best as life insurance (not investment accounts). I can even now sell term policies up to age 121 almost kills 1/2 the use cases for cash value policies. 

Feel free to reach out if you have any other questions. Not I’m not an account or lawyer, just a life insurance agent. 

I’m in! 

My first purchase I was convinced I would get an FHA loan, but the fees seemed high. I simply went to my bank and asked for a quote on a traditional mortgage with 5% down. Both offers ended up being the same out of pocket (mind you this was a $50k loan) and I paid less in interest. Lesson of the story: sometimes cheap and less expensive are not the same thing. There is always a catch. You might pay more with a conventional loan, but you might be able to apply more of it to the loan than simply fees.

@Trevor Deeter The city of Scranton requires a property manager if the owner (or an owner) does not live within 20 miles of city limits. There’s a huge problem with out of state landlords trying to manage properties long distance without a PM. It’s just not fair to tenants. That’s the law. When you pay your yearly rental fee to the city you have to disclose a local owner or a PM. You call @Marc Winter he places a tenant quickly  and garners a reasonable rent wich is worth the extra money. 

Welcome to the area! Sounds like you have a great plan. My wife and I are trying to do about the same kind of thing. 

Either hard money till you can fix and BRRR or alternative personal loans. You just have to make sure you have a solid ARV. A lot of lenders won't do less than $50k.

@Jesus Ramirez, I’m originally  from Detroit so I guess I’m not as phased by any violence in Scranton. There are tough areas, but @Chris K. is right. You need to know the area you’re buying no matter how safe it is. My experience is that Scranton is incredibly safe, but I guess consider my history. If you’re looking in Scranton for under $100k I would consider staying away from single family. Do a nice multi family.  I would interview some good PMs in Scranton if that’s where you’d like to look into. You’ll be required by city ordinance to have one anyway unless you have a local partner.