Flipping Properties Smarter

Circumstances

Real estate investors doing 3 flips a year average profit of $60k per deal. Typically using his own profit to fund future projects and sometimes borrowing from banks if more favorable depending on terms and rates. Currently sitting on $430,000 in cash.

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Actions

Place $150,000 in a WL plan

Place $150,000 in a WL plan and $150,000 in an IUL. Then $9,000 per year for 7 years in each policy totaling $430,000 from the cash now transitioned into the two policies.

Use $75,000 from the WL policy

Use $75,000 from the WL policy immediately this year for a new project. Earning 5.8% tax-free on the guaranteed cash value from the WL contract, and borrowing at 4% effectively “getting paid” to use his own cash rather than depleting any of the $430k as he was before. The project was completed in 4 months paying 4% interest on the policy loan. Let the IUL “cook” for a longer-term and be used on future projects.

Results

Circumstances:

  • Real estate investors doing 3 flips a year average profit of $60k per deal.  Typically using his own profit to fund future projects and sometimes borrowing from banks if more favorable depending on terms and rates.  Currently sitting on $430,000 in cash.

Actions:

  • Place $150,000 in a WL plan and $150,000 in an IUL.  Then $9,000 per year for 7 years in each policy totaling $430,000 from the cash now transitioned into the two policies.  
  • Use $75,000 from the WL policy immediately this year for a new project.  Earning 5.8% tax-free on the guaranteed cash value from the WL contract, and borrowing at 4% effectively “getting paid” to use his own cash rather than depleting any of the $430k as he was before.  The project was completed in 4 months paying 4% interest on the policy loan.  Let the IUL “cook” for a longer-term and be used on future projects. 

Results:

  • Increased ROI on safe, liquid assets 5X compared to cash and created arbitrage on cash value vs. policy loan.  
  • Increased total ROI by 6% on the entire project without taking unnecessary risks.  Maintained cash value in policies due to loan against WL contract.  
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