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Fire Your Real Estate Banker!
by Mark Willis, CFP
Lake Growth Financial Services
know who are in debt up to their
eyeballs and working 60+ hours a
week, or stressing over non-pay-
ing tenants, or feverishly rushing
from property to property, hoping
they can sell a property before the
balloon payment comes due.
For many real estate investors,
the road to becoming a wealthy
landlord turned south toward the
highway of serfdom, with their
banker holding the upper hand.
Is there any other way? How
can someone who has skill and
passion for real estate or their
business keep control and a sense
of sanity amidst a world gone in-
sane? Is there a way to break free
of financial slavery to the banks?
Yes, it’s simple: Fire your banker!
Where is it written that you have to service your
debts and pay off a banker before you can enjoy the
fruits of your investment? Who says you have to pay
interest on your properties, effectively turning all your
real estate assets into liabilities? Where did we get the
idea that banks were the only ones who could provide
the function of banking in our society?
You can be your own source of financing - you can rid
your financial portfolio of your banker and provide the
function of banking yourself.
How? The answer may shock you. I’m talking
about a modernized form of dividend-paying whole life
insurance. It works like a source of capital, a bank, to
provide a guaranteed pool of money liquid and avail-
able for whatever you need. The funds you accumulate
in your life insurance grow safely and predictably every
year, guaranteed - no matter what’s happening in the
stock market. You can use the equity in your policy
like a line of credit to yourself - and you have complete
control over how, when and if you pay your money
back to your policy.
You are in complete control of the entire process.
When most people see the words: whole life insur-
ance, their mind turns off. Mine sure did! I was taught
to avoid whole life insurance even in my earliest days
as a financial planner.
“A banker is a fellow
who will lend you his
umbrella when the
sun is shining, but
wants it back the min-
ute it begins to rain.”
A
in’t that the truth? As
we look ten years back
on the Great Reces-
sion, we can see how
much has changed, and how much
more has stayed pretty much the
same. Home values are up again
to 2007 levels. Unemployment
is down to pre-crisis levels. The
stock market is hitting record
highs as I write these words. And
yet, not much has changed since
2008 or since Mr. Twain wrote those humorous words
- bankers control the money supply, and just when you
need the money most, they are there holding all the
umbrellas.
I have no problem with bankers, personally. Some
of my best friends are bankers!
In fact, as investors we’ve been taught to use “other
people’s money” (also known as OPM) as leverage to
help us gain traction in real estate or to get ahead in our
business. Other solutions include getting a business line
of credit to buy new equipment, or securing a mort-
gage on an investment property to renovate and flip a
property. These are the standby solutions used by many
Americans.
But ask yourself - who are the “other people” when
OPM is your strategy for leverage? (Remember, lever-
age can work both ways - for and against you!) And
what do other people want so badly that they’re willing
to part with their money and hand it to you? Were you
just handed an umbrella on a sunny day?
When banks control the environment where your
money lives, they win every time. When you control
the financial environment in which your money lives,
you win. Close to 34% of all American income goes to
servicing debt. If time is money, as the old saying goes,
that means a full one-third of the day is spent work-
ing as slaves to a bank! Think of how many folks you
-- Mark Twain
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