06 - Using Cash Value Life Insurance to Buy Multi-Family Rentals - Infinite Banking by Adam Doran

Hello everybody and welcome to the Aim Hi podcast. I am here today with a close friend of mine and I am his client, Adam Dorin. He is from Prevail Wealth Strategies. Guys we're gonna go over today something that's really near and dear to my heart, Infinite Banking. This is part of my How Rich people think section of the podcast. Adam, how are you today buddy? Hey Bud. Thanks for inviting me on. I'm doing great. I'm excited to be on here and talk with you today. It's an absolute pleasure to have you as always, buddy. I know we talk a lot, you know, on and offline, different podcasts and different meetups. Adam, let's jump right into the questions if you don't mind. Well, first off, why don't you tell me, a little bit about Yourself. Sure. Well, I'm, I'm 41 now, which I was actually taking stock of my daughter just turned 15 the other day. I'm like, Man, I'm, I'm getting old. But, I grew up in the middle of the country, central Iowa. My dad was a college professor, mom was a office professional, and, always wanted to be a police officer, so I ended up being a police officer. That was really my first career. First thing I did, you know, as a grown up in life, had a 16 year career. and about 10 years into that 16 year career, I had been having a good time, but I realized like my priorities in life were changing. Got married, had a kid, was realizing I was giving up my best hours and I wasn't getting paid what I felt like I was worth. At least, I just felt like the trade off wasn't, wasn't balancing out anymore. Yeah. so that's what got me into my own personal journey of how does real wealth work and how do you build. And as a result of that journey, I ended up getting involved in what I do now as a wealth advisor and teaching this strategy we're gonna talk about. But also, you know, I got into real estate investing in 2011, and that was a game changer for me as well. Great. Let's go down that rabbit, hole then. How did you start in the real estate industry and what led you down this particular path of real estate? We all know that there's life insurance and car insurance and all that stuff. Here you are dealing with things that wealthy people use to create generational wealth and maintain their own assets. Well, how I got started was, is about 2011, as I remember. I was about 10 years into my, police career, and I was just tired of living check to check, feeling like I was broke all the time. And I kind of just took stock and said, I've been in this career for a decade. And my finance, my financial situation hasn't improved. And you know, the vision that I had and the impression I had was you get into a steady career, a real career, and you build your income, grow your income, and your life's gonna get better. I just didn't see that happening. My wage raises did not keep up with the cost of living, and. I just got tired of being broke all the time. So I got hungry and started looking. I started going to free seminars. I started doing searches on the internet and reading books about wealth and finance. That's what led me down the path. And I saw some things in common, like common themes I was reading and learning about, and that was that wealthy people owned businesses, they understood finances and the financial markets and they had involvement with real estate. So I dove a little further and kind of drilled down on those subjects. And as I was studying on finances, real estate, the markets, business ownership, I also came. This creative strategy of infinite banking, which basically just involves saving in a smarter way, doing the things you're already gonna do, but being able to do them to a greater impact, basically by maximizing every dollar that, that you use. Yeah. So let's go into specifically that infinite banking, cash value life insurance policies, and how do people use that for real estate? First of all, I think infinite banking is a term we use cuz it's, it's a term that everyone's familiar with. It's really just marketing language for the strategy, what you just said of, we're using a specific type of life insurance policy as an asset. As a capital asset. And there's other names I've heard too, you know, depending on whose book you're reading, I've heard it referred to as cash flow banking, Cash flow insurance, private reserve, private family financing. There's all sorts of marketing buzzwords, and they all refer to this strategy. We're using a dividend paying whole life insurance product that has contractual guarantees. So it has a predictable growth and value. We're using that as a capital account because when we take the dollars from the account and use them to purchase real estate or purchase other assets, The cool thing is if, if it's the right kind of policy with the right insurance carrier and it's built properly, when you take those policy, loans and you use the money from the policy, you actually continue to earn interest inside that. So your money continues to grow and compound in the policy. While at the same time you're putting it to work in the investment, buying the real estate and earning a return in the real estate. So now you're making money, do work in two places at the same time. And that's really the essence. And the most simple way I know how to, explain what can be a really complicated strategy that we can really add a lot of fluff. The reality is you're taking $1 and you're making it work in two places at the same time, and there's no other savings account. You can do that with. Right now, comparatively to a bank, the bank takes your money. They're able to lend 10 times on it. You're not making any money on it because you're now going into the bank and taking a loan. They're paying you pits for interest as opposed to you're making a deposit, into a cash value life insurance policy, and then you're pulling that money out and you're using that money and you're still making money on the money that's not there, but it's being utilized to get. In this case a hard asset. Tangible asset. Like, like real estate. Exactly. Yep. You've got it. That's fantastic, man. And listen, I, I love the conversations that we have had about this. I know it's very vibrant. I know we go into this very deeply. unfortunately we don't have that much time to go about it. Have you ever used this policy yourself? Yeah. So 2011 was, was the year I learned about that and I started my first policy then. If you dove into this and understand, about how the concept works, it is something that is long term. It builds over time. So you're not gonna, instantly have this capital account. Now you can go buy 10 properties. It's something you build over time. But the reality is this, and this is the way I looked at it when I first learned about it and started my first policy, you know, more than 11 years ago now. I'm gonna, you know, the time's gonna pass anyway. I'm gonna do the real estate investing anyway. I'm gonna build the business anyway while I'm doing those things. It makes sense to have this complimentary asset alongside because, and one thing I didn't mention yet, but this accumulates tax free and I can use it in retirement for tax-free income. So we're talking about essentially a tax-free savings account. That pays you better interest than the banks, as you just said, Bud. And at the same time, I'm doing these other things. I'm gonna do, build the real estate, build the business. I can have this tax free account continuing to grow for me as well. And so, yes, I do this with my own money. And furthermore, yes, I've leveraged policy loans out of my policy to do down payments on properties or to help fund the rehab. Or if the business did better than expected and we ended up having to pay more taxes than expected, I could take a policy loan, pay the taxes. And then I could just spread that cost out over the year by paying my policy back. However many hundred dollars a month at a time versus being on a payment plan to the irs. I can give the IRS their money, they go away. I can keep, earning interest on that money and pay it back to myself as I have the ability. So, I mean, there's just as many different ways as you can think of that you would use a cash account, you can use this. Awesome man. So, do you have any current projects going on right. I do. So my evolution in real estate, I started with wholesaling as many do, I didn't, didn't have a lot of capital, so I had to create capital with wholesaling. Then I got into single family, rentals and the birth strategy. Before that was a buzzword. I was doing the birth strategy, didn't know I was doing it. Then in 2019 was able to, as we sold properties off, liquidated those and collected the gains from those, I was able to then transition more to a passive role. So today I'm a limited partner in multiple real estate deals around the country. Started with a 52 unit deal here in Kansas City where I live. And then, after we sold that, was able to take and spread that money into three more deals. I'm in three different deals. We've got, 14 units in Denver, a 48 unit senior living facility that we're building out in Dallas and a 95 unit here in Kansas City. So that's what I'm involved in right now. But obviously the goal is just keep growing that portfolio. Absolutely, always, right? Generational wealth is created by the purchase and, and expansion of the amount of assets that you personally have, right? So what's on the horizon? So the, the investments that I'm in, I'm, waiting for returns in the form of, you know, dividends or whatnot. So those will create some additional cash flow. And then as we dispose of those assets, which probably we probably won't see a disposition for another 24 months or so, but once that comes around and we start seeing disposition of those assets, I just named. Then we'll be looking for the next deals. And I would say, you know, I'm pretty consistently interested in, in multifamily real estate. Love that. I like the Midwest markets cuz I feel like the, the values are more stable. But I, I do have some exposure in Texas just because it's such a fast growing market, Such a good market. There's good markets everywhere. Right. That's a whole other podcast. We could spend time on that. But, so what's next is probably more multifamily projects and. Anything that's a, that's a good cash flowing deal. I think senior living is gonna be a space probably for the next 20 years plus cuz you have all the boomers that are aging out of the, the workforce and just, I mean, that group is gonna need service and a place to live for a long time yet. So that's what I see as next. Great. And then as far as, PWS. Are you guys expanding? Everybody that I talk to, you know that I'm sending them right to you. Cuz you're like top notch in this field. I really appreciate you being such a, a strong supporter and advocate man. We, we love what we're doing at Prevail. Our motto is, we don't manage your wealth, we help you create it. And I just love that. I think that's so powerful versus all the other traditional financial firms out there, they're looking to, capture your assets under management and basically hope you forget about the money until you're, 65 and we're gonna manage your money and collect a fee. We don't like to take that approach. We like to be a lot more, it's active and collaborative. It's a conversation where we're being more of a consultant than. Yes, we do have, accounts where we can manage money in the markets for clients, but we have a lot of clients that are real estate investors, business owners. They're wanting to proactively be engaged in their finances. So we're doing unique strategies like what we just talked about, the infinite banking. We have a real estate opportunities division, so private real estate opportunities to be a limited partner, just like what I was ex describing that I do. We're also looking at, we have a private client group basically for the higher tier folks that need, they have a complicated or complex situation around taxes and estate planning. So we put a whole team around those folks and help them through those. So, you know, I don't know what the next business division launch will be, but I can tell you the real estate division has been growing really fast since we introduced it a year and a half ago. I look forward to us doing more of that, cuz obviously it's one of my favorite assets. Congratulations on the growth and the progress I'll talk to you anytime you ever want, Adam and I send all my clients to you anyway, really looking forward to helping you grow that business. Let's transition and we're gonna go on to the same four questions that we ask every guest, the soaring four. Aim High Properties, it's an Air Force thing. So here we go. What do you use to keep you motivated? Ever since going on that journey I mentioned that started in 2011, I realized personal growth is just such a key part of that. I commit to, and I do this faithfully every day, get into some personal growth material, whether that's reading a few pages in a book. Whether that's, you know, checking my email cause I'm on a couple email lists like Darren Hardy's, Darren Daily email, five minute video where he gives you some good in information or inspiration. I also was recently introduced by my 14 year old to this app called Deep Stash. And Deep Stash is literally an aggregator of whatever material you wanna get info on, and it's meant to be quotes, inspirational ideas, book summaries. So I just selected on their personal growth as my. And man, I get, I get good stuff all the time on that. So, like, here's one, five habits for Achieving Greatness that I'll probably check out later today. So personal growth every day, through online videos. Good emails, good apps like the one I just mentioned, or reading books. That's how, that's how I keep it. Now you know I'm gonna download that. It's a good one. Deep stash man journey. It's free. That's fantastic. What is one thing that you learned that completely changed your mindset? You were a cop. I was a cop. We both know that we get that, that soda straw mentality, but what's the one thing that really changed your. Yeah, I learned that, wealth is continually being transferred, throughout the economy. Wealth is continually being transferred and most people without, more of a, a wealth education or a financial education, they're gonna contribute to somebody else's wealth. Accumulating but not their own. It's being a consumer versus somebody who's more a business owner. Mindset, investor mindset. You kind of grab onto that wealth transfer concept and say, Okay, I wanna be on the receiving end of that. I don't wanna be building wealth for somebody else as much as I wanna be building wealth for me. And so you learn how to turn the tables and instead of paying the rent for someone else's asset, you buy your own asset, let somebody else pay you the rent. Changing that paradigm. The thing I learned that really changed everything for me is wealth is constantly transferring. So instead, Building wealth for others. How can, and not that there's anything wrong to help others build wealth, but how can I start building more wealth for myself? So, and this is a such a cliche example, and by the way, I'm not telling people don't get your coffee at Starbucks. But today, instead of going through the Starbucks drive through and putting $5 into Starbucks wealth building plan, can I take that $5 and put it towards my wealth building plan and maybe buy a dividend paying stock or $5 towards the down payment on my next property? Again, cliche example, but it gets to the point. There will be over $71 trillion transferred from the boomer generation. To the next generation. They're not gonna give it to me. I'm Gen X, it's gonna bypass me, it's gonna go to the millennials. But largest wealth transfer in, in human history. So are there any tools that you use Adam to keep you on track? Personally, like personal growth, what I explained a couple questions back, but as far as financially there, there is a tool I really like to use, and there's more than one software out there. I'm always looking for the next best thing in financial tracking software, but I use, some free software online called Personal Capital. I'm not endorsing it. I don't get anything for saying this, but I'll just tell you it's been beneficial to me because it aggregates all your, and mainly cuz it's free, I don't have to pay subscription for it, but it aggregates all your finances. You can plug in all your different accounts, have them feed live in there and then it keeps track of your income and expenses every month. And basically I can log in and with a snapshot I can. Where my net worth is at. My total assets and liabilities. And then I can look at summaries of my income versus expenses and know exactly on an average month, what do we make, what do we have for free cash flow? What's available to commit to investing? Is the net worth down? Is it up? Because it aggregates everything I can see on one page or one screen, everything that has to do with my finances. So if you use the metaphor of your finances being like a, board. You can open up the game board and see all the pieces and where they're arranged and what moves you need to make. And so that's what I really like about Personal Capital. There's other good software out there, but that's a tool that I think really helps me to stay on track financially. And the fact that it's free doesn't hurt. Yeah. There are other ones out there that will charge you $90 a hundred dollars a month just to do the exact same thing, so Great. Great advice. Last thing. If you had to start over today, what would you change. I would have got into business ownership sooner. Business ownership does so many good things for you, and it's, it's not even about, I mean, ultimately it's a way to scale your income, but before that, even by having a business, you open up a world of 400 plus tax breaks that you do not get if you only have a W2. So that right there, you can literally give yourself a pay raise without even making any money in the business yet. Give yourself a pay raise by paying less taxes because you open up all these new deductions. So I would've got into business ownership sooner. And then of course, business ownership forces you to grow as an individual. And once you begin to understand that you can create value, put it out there in the world and get something in exchange for that, you realize that your income potential is unlimit. And that could be anything. That could be offering rentals as a business. That could be wholesaling real estate. That could be something completely unrelated. You could be private labeling products on Amazon, or you could be being a wealth advisor like I do, or a hundred other things. But just business ownership I think is so critical and essential. So I would've got into that sooner. And you said, What's one thing? But I do wanna say one more thing cuz this relates to real estate. Go ahead. This is all about knowledge base. Right? All about One other thing I would've changed was in real estate. This goes back to personal development and how big you think. But I stayed in single family rentals for six, seven years. I could have got into multi-family sooner. Yeah. Which by the way, there's nothing wrong with single family. And if you love that world, do that because it's a good space to be. But if you're looking to scale and have larger investments. If you can do single family real estate, you can do multifamily real estate too. It's just about understanding how to work the numbers. Mm-hmm. the sets of numbers might become more detailed. There might be more variables, but I, it's the same game. And if you're concerned like mine was, is, well, I don't have enough capital. If you had enough capital to put a, a good down payment on a single family home, then you had enough capital to get involved in a a commercial deal as well. it's just about, you know, grouping, grouping together with others who know what they're doing and, and have the same mission. And, you know, you can do pretty much anything you want to do if you're able to pool your money with a bunch of people you trust who are competent. And if I'd have been able to figure that out sooner, it would've been in my best interest. So business ownership. Scale up the real estate sooner. Those are the two things that had done different. That's great advice. Thank you very much, Adam. Adam, if, somebody wanted to reach out to you, what's the website that they would go to or can they reach out to you on LinkedIn? Yeah, thanks bud. LinkedIn really is the best way to get me individually. Like that's almost as good as my phone cuz I'm on there and I'm active. So if on LinkedIn, if you just type in Adam Doran and the last name's D o r a N, I'm pretty sure I'm the only one that's gonna come up for sure. The only one in the United States that's gonna come up for you. But you can direct message me on there. That's the best way to reach. Our website, for prevail and, and there is certainly, profiles and, and bios on there for the advisors, myself included. Is prevailiws.com. LinkedIn's the best way to reach me individually. Adam, thank you again for your time. Thank you for dropping these nuggets of wisdom on people. I really do appreciate it. For everyone else, guys, Aim High! See you next time.