I had a random conversation with one of the other dog moms the other day at the dog park .
She shared how she was planning on buying her first house, which was going to be an investment property that she wanted to flip.
If you are not familiar, a flip means she is going to buy a house that is in bad condition, fix it up, and then quickly sell it for a profit.
I shared my perspective on how she could buy that very same house as her actual residence instead, and still flip it.
Buying it as her own vs as an investment, would mean that she could finance both the purchase and the renovation using a traditional bank which would save her money in multiple ways.
But, I’m going to save that part of our conversation for next week, so this doesn’t get too long.
The bulk of our conversation was me sharing with her that she is going to lose a ton of money because of the way that she is saving for this house – regardless of if she decides to do a traditional investor flip, or a live in flip.
She was planning to get funding from a private lender (non bank) to purchase the house. And then pay for the renovation with money that she has saved.
She currently has $150,000 saved up for that first flip, and all that money is sitting inside a bank.
Now, if you had asked me five years ago if anything was wrong with that money being in a bank, I would have said nothing was wrong at all.
How else would she save her money and not risk losing it, if not in bank? 🧐
However, three years ago, in the process of getting my life insurance license, I learned that Banks put their money into life insurance policies.
Which, honestly…
Didn’t make sense to me at all at first.
Cause isn’t life insurance to leave money behind after someone dies?
Well… like many things when it comes to personal finance, common beliefs and practices does not necessarily equal factual or beneficial.
I learned during my licensing that that there are specially designed cash value life insurance policies that allow you to save cash in the policy, earn a higher interest rate than in banks, and you can access the cash from your policy while you are alive.
So how is saving it in life insurance any different from saving it in the bank?
This is exactly what the dog mom asked at the park, which I am sure you are asking as well.
If she continues with her current strategy and keeps her money in the bank, when she takes that $150,000 and uses it to fix that first house, all that money is going to be out of the bank and will be earning $0 because nothing is in the bank.
However, if she took that same $150,000 and first opened a custom designed cash value life insurance policy with that money, she would be able to take out that same $150,000 whenever she is ready to purchase the house.
And while that $150,000 is out in the world making her money on the house flip, it will still also be earning interest in her life insurance policy as if it never left.
So essentially, she gets to get to have her money working double time, simply because she chose to save in a life insurance policy instead of in a bank.
We ended up spending way more time in the park than we both planned for, and I eventually had her a book a call with me so I could break down how to set up the policy so she could double dip just like the banks do and still come out profitable despite paying for the insurance coverage.
If you want to know the full deets on what we talked about and how to set this up for yourself, I’m hosting a webclass soon to break it all down and show you how you too can use your life insurance policy to buy your first or next house so your savings don’t drop to $0 each time you buy a house.
Add your name to the webclass waitlist here.
I will be breaking down how the cash access works, as well as three other benefits for using life insurance to buy real estate.
I swear…
Ten years ago, if someone told me that I could use life insurance while I was alive to buy a house, I would have laughed in their face.
Now, I wish I knew about this sooner. 😩
How about you? Do you know someone that has used their own life insurance policy to buy a house?
Dm me and let me know.
