essentially shorting the U.S. dollar that is being paid to hold this property as its value rises faster than the rate needed to finance it. And don’t forget, the ever-increasing demand in Florida for rentals is pushing rents upward. This situation has continued to ensure that even with rising rates, you realize positive cash flow on new construction properties. And this discussion is simply the starting point. Many investors and others who are building in desirable coastal areas are using the properties as short-term rentals, not annual rentals, driving the revenue to multiples for an already positively cash-flowing asset. You likely have often heard the term OPM, or other people’s money. Prudently using other people’s money to fund your investment real estate in the right location will dramatically increase the property’s performance. Leverage allows you to expand the use of every dollar. By using the bank’s money to purchase property, you can buy more properties, creating more long-term wealth potential. The only funding that still comes out of your pocket is the down payment and closing costs. When that goes into the property, it creates something known as “dead equity.” Dead equity in properties is expensive. What is it earning for you? Nothing! It is dead capital that cannot do a thing for you while it sits in your property. Imagine if your best friend lent you their money at 0% interest for the down payment. In that case, you could use your funds in another investment to make money. Similarly, your down payment earns you 0%—it is dead equity. What if you could also fund the down payment using OPM? You can! A private (personal) banking approach has been in use for more than 150 years in the U.S. by wealthy investors. You may know it as “infinite banking.” By using uniquely designed whole life insurance, infinite banking essentially allows you to become your own family bank. Your dollars earn uninterrupted compound interest in a private, tax- advantaged account achieving several times current bank
rates while serving as collateral for a line of credit like HELOCs—but it’s safer and more efficient. You’re able to use a life insurance company’s or a traditional bank’s money as a loan with terms and payback schedules you dictate. Infinite banking is simply storing cash in a life insurance policy rather than in a bank or the rental property so that it earns at a high rate while not being taxed. It is an approach that provides historically proven protection, growth, and tax benefits for your dollars. Once your money is stored there, you can borrow against your savings bucket to fund your down payments on high- performing properties in southwest Florida—or anything else for that matter! This means you are funding your properties using 100% OPM. Southwest Florida is poised to provide substantial returns for rental property owners for years to come, especially for those using 100% OPM. Moving here in 2020 and refocusing my portfolio to the region has been incredible. In my assessment, this trend is only getting started. I’m excited to share more with you at the Tampa Think Realty conference and expo in July. Whether you’re operating short-term rentals or with annual leases, this region has a very bright future. The compelling product in the 2022 seller’s market with very tight inventory and a national housing shortage is build to rent. New construction properties in Florida incorporate the latest hurricane standards and reduced maintenance costs that boost net returns. Do your independent research and due diligence. Reach out to me if you’d like for more detail on where I’m building. I’ll see you in Tampa! • Gary Pinkerton is a wealth strategist, veteran, best-selling author and real estate investor. He’s passionate about freedom, small business, building wealth, legacy, and reducing taxes. He’s a graduate of the US Naval Academy, commanded the nuclear attack submarine USS TUCSON, was a Pentagon division director for the Joint Chiefs, and a senior ethics professor before retiring as a captain. Pinkerton owns and helps others couple high cash value life insurance with real estate and alternative investments.
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