Whole Life Insurance for Real Estate Investing

Wednesday, July 25

 This post is inspired from a great blog post from @Loc R. http://www.biggerpockets.com/blogs/519/blog_posts/22980-why-havent-you-started-your-roth-ira-yetOne of the most common challenges most real estate investors run into is having enough money to do the number of deals they want to do, and hence we search for private money, or tap into IRA’s to get our next deal. There is one area that is often overlooked for investment capital that I think bears some discuss: Whole Life Insurance policies with cash value. Yes, that mouthful of words could be your ticket to an untapped resource of funds for your next deal. You see, whole life insurance policies are one of the most expensive policies to buy because you essentially are building a personal cash bank for yourself that you can borrow against at all most anytime. As you pay premiums towards your whole life policy, your cash value increases. In the first few years of your policy the cash value is small, but as time goes on, your cash value increases to the point where its worth considering borrowing against that cash to buy more assets for yourself. This is where real estate comes into mind.As you have enough cash value in your whole life insurance policy, why not consider borrowing from yourself, to buy that next income producing asset? You pay your life insurance policy back with the income produced from the tenant, and in turn your cost basis for your investment property essentially is zero. This is barely scratching the surface of all the things you can do with a whole life insurance policy and real estate, but I wanted to at least open the thinking process to this powerful yet under-utilized asset accumulation strategy


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