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Inland Empire Business News by IE Business Daily.003
Inland Empire Business News by IE Business Daily.003

Investing with Other People’s Money

By Kraig Strom

In my business, I coach quite a few property owners – people who, understandably, are always in need of real estate loans. But no matter what your business is, there’s a good chance you may need to take out a real estate loan at some point; or, perhaps you may need to take out another home loan. Whatever the case may be, getting the best terms possible with a real estate loan is crucial in order to make a profitable investment. Not only should you aim for a good interest rate, but also a low down payment. Of course, no down payment is even better – but that’s just not possible. Or is it? Let me explain.

As you may know, most lenders will require you to put 20% down if you are getting a conventional loan. If you do this on a property and you wisely rent it out, your return on investment will be around 20%. That’s good, I suppose. But what if you had access to a lender that would give you 100% financing – in other words, a loan with zero money out of pocket?

Furthermore, what if it was an unsecured loan? That would mean not putting up the property as collateral. Now, let’s up the ante even more: What if the lender allowed you to create your own payment schedule on this loan? And here’s the big one: What if you chose not to make any payments at all for the next five years – and the lender actually allowed it?

If that were to happen, your return on investment would closer to 90%. Essentially, you more than quadrupled your investment – and, you did it using other people’s money. At this point, I’m sure you’re asking, “Where would I ever get a loan like that?!” Two places.

Here’s the first one: At certain financial firms, you can open an investment account that will give you guaranteed access to loans just like the loan we described – provided that you park $2 million in that account. But what if, like most people, you don’t have $2 million to invest? In that case, there’s option two: guaranteed life insurance assets. It’s a little known fact that if you use the right life insurance companies to hold your money in guaranteed life insurance assets, they will lend you money in the same fashion I described above. Unlike a large investment firm, these life insurance companies don’t require your $2 million contribution in order to write you the loan. What they offer is a lending opportunity for average investors like you.

In this difficult lending climate, there is still access to the kind of loan you need to invest in that next big property; you just have to know where to look. Guaranteed life insurance assets offer investors the opportunity to get the loans they need, at the terms they want.

Kraig Strom, CFP®, ChFC® is a Certified Financial Planner® at Team Financial Partners in Corona. He can be reached at 877-297-5851, or at www.PersonalPensionFormulation.com.

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