Real Estate as an Investment
We’ve all been told that real estate is a safe, incredibly lucrative investment. 
Real estate gives the owner financial leverage, in the form of second mortgages, reverse mortgages, home equity loans and personal loans. Tax write-offs related to real estate also are lucrative: Homeowners can write off up to $1 million in mortgage debt on primary and secondary dwellings, and landlords can write off depreciation, repairs and insurance.
But what do most of us do when we invest in real estate? We take out mortgage loans, and then we spend decades working to repay those loans. In the process, the average family will fork over hundreds of thousands of dollars, and sometimes millions of dollars, over their lifetime.
It’s not that real estate is a bad investment – it absolutely is one of the most strategic investments we can make – but real estate would be a far better investment if there were a way to avoid having to get a mortgage loan in the first place.
The good news is that there is an alternative; most people simply don’t know about it. The secret is permanent life insurance. When you purchase life insurance, it is possible to convert the full cash value of your life insurance premium into an asset that can be reinvested. What this means is that if you buy life insurance and properly convert it to cash value via this little-known technique, you can use this asset to purchase and maintain more real estate. It’s the gift that keeps on giving! Let’s explore the advantages of this strategy in more depth:
- Life insurance can build your real estate portfolio: When the money you’ve invested in your life insurance can be reinvested into real estate, you have exponentially increased your buying power without needing to take out mortgage loans. You can use the cash value of your life insurance premium to buy more real estate, or simply maintain the real estate holdings you already own.
- Life insurance secures your real estate: The stock market and other such investments are highly volatile to market forces, which makes real estate secured by the cash value of your life insurance policy a comparatively secure, stable investment. This is because the insurance industry is stringent about regulation and self-regulation – more so than even the banking industry.
- Life insurance turns you into your own bank: In real estate transactions, your purchasing power is typically dependent on the bank’s opinions about your financial prowess and limitations. If the bank says you’re approved to purchase a piece of real estate, you can acquire it. If the bank says you’re not approved, you can’t acquire it. Thus, by investing in life insurance, you can tip the scale back into your favor – because you essentially become your own bank.
- Life insurance diversifies your real estate portfolio: As any investor will tell you, diversification is the key for any investment portfolio. The real estate market lives and dies by mortgage interest rates, shifting community dynamics, and the general health of the economy – all forces beyond the control of an individual real estate investor. Thus, life insurance offers real estate investors a safe, highly effective way to diversify their portfolios, and also typically comes with the added benefit of a predictable, ongoing cash dividend payment.
Real estate investors tend to rely heavily on mortgage loans and market forces to dictate their return on investment – or lack thereof. But by purchasing permanent life insurance and using its cash value to invest in real estate, you can eliminate mortgage loans completely and buffer yourself from market forces. The keys are to recognize that life insurance can be effectively integrated into a real estate portfolio, and to use life insurance to secure real estate, become your own bank, and diversify your real estate portfolio.
What are other uses of life insurance? Check out this Webinar for some Practical Uses of Life Insurance.
