Real Estate Investing with Your Private Bank

Posted By: Jason K. Powers ICOR Blog & News ,

Of all the ways to get started in the real estate investment industry, the most classic approach is to begin with Wholesaling. As the logic goes, with the money you build up from Wholesaling, you can begin doing Fix-N-Flips. After you successfully complete some Fix-N-Flips, perhaps you can look into long-term Buy & Holds. And so on. Obviously, there is a wide variety of strategies, preferences, goals, and objectives when it comes to real estate investing. I am not here to tell which is right, wrong, better, or worse. My main objective is to show how you can add one extra component to any of these methods to create an even more advantageous system. First, let’s establish some key terms. We’ll call the number of things a dollar can do the multi-tasking dollar, and we’ll call the strategy the Infinite Banking Concept (IBC).

The Backstory - Fractional Reserve Banking & The Multi-Tasking Dollar

Here in the U.S., fractional-reserve banking is a system in which banks have to keep a certain amount of depositors’ cash on hand. Without getting into the weeds of it, that settles at around 10% for large banks. Most people who read this in passing regard this as a positive. We say, “Oh, that’s nice. They are required to keep a reserve. Great!” But let’s say the same thing, a different way:

For every dollar deposited, the bank is allowed to loan it out eleven times.

Stay with me. If you deposit $1,000 in the bank, they are required to keep a reserve of $100 (10%). The other $900 will get loaned out. Now, there is $1,900 in ‘the system.’ The bank actually has $100. Rinse and repeat. That $900 gets deposited into the banking system. A reserve of $90 is kept, while $810 is loaned out. Now the bank has $190 on hand, and $2,710 in the system. This goes on and on and on. When there is a run on the banks, this becomes a huge problem! For a quick reminder, see 2008.

For starters, a couple of observations can be drawn here:

  1. The banks are creating a multi-tasking dollar. One dollar is doing eleven different things at once.
  2. The banks do not have the reserves to cover what is actually deposited.

The Multi-Tasking Dollar in Real Estate

Here’s the appeal! One dollar in real estate investing can benefit you in a variety of ways, including:

  • Create Equity
  • Create Cash Flow
  • Create Tax Deductions
  • Create Profit

The Infinite Banking Concept

The Infinite Banking Concept is a process by which one becomes their own banker. The best method of achieving IBC is through properly structured, dividend-paying whole life insurance. Let me break that down so you understand what was just said:

Properly Structured – There are specific ways to structure a policy to create the maximum available cash value inside of a policy now, not just later.

Dividend-Paying – There are certain insurance carriers where your policy can grow to its highest potential.

Whole Life – It’s not term insurance, nor universal life, nor variable life. It’s whole life insurance.

We’re not going to spend a great deal of time discussing the details of IBC, but here you have a basic framework. Keeping in line with our conversation about the multi-tasking dollar, here are a few components of IBC:

  • Uninterrupted compound growth of cash value
  • Unstructured loans from a policy
  • Creditor protection
  • Guaranteed growth
  • Death benefit
  • Interest deductions for businesses
  • Disability benefits
  • Tax-free growth

…And the list goes on.

Infinite Banking & Real Estate Investing

What would change in your real estate investing business if you didn’t have to pay the 7-12% interest and points to a lender? What would change in your financial life if you never had to borrow from a bank again? What if you could borrow from yourself and pay yourself back with interest, and do it over and over and over again? What would change in your personal life if you were able to be your own bank? What if you could finance your own cars, vacations, child’s college, and even retirement? What would change in your family’s life if you were able to leave behind a substantial financial legacy that could literally last for generations? This is why we do what we do. This is why we teach people about the Infinite Banking Concept. We want to see your life change for the better. This is how we do it:

  • Build equity
  • Build cash flow
  • Create tax deductions
  • Generate profit
  • Build up retirement
  • Uninterrupted compound growth of cash value
  • Creditor protection
  • Guaranteed growth
  • Death benefit
  • Interest deductions for businesses
  • Disability benefits
  • Tax-free growth
  • Unstructured loans from a policy

And the benefits go on and on and on…