In this presentation, the speaker explains the "velocity of money" concept by walking through three detailed five‑year financial scenarios that combine rental real‑estate, indexed universal life (IUL) cash‑value policies, hard‑money lending, and a 1031 exchange. Example 1 starts with a $50,000 cash purchase of a single rental that generates $12,000 annual rent. Each year the rental cash flow is deposited into an IUL that is assumed to earn 10 % (≈$100/month). The growing cash value is later borrowed and used for a short‑term hard‑money loan (2.5 % per month for six months), adding $5,400 of interest. By year 5 the accumulated cash enables the purchase of a second rental, doubling annual rent to $24,000. The total cash generated over five years is $82,200, yielding a 64 % ROI on the original $50,000. Example 2 uses the same rental but finances the purchase with a 20 % down‑payment loan, requiring $9,420 of personal cash. The same IUL and hard‑money loan steps are repeated, and an additional $8,000 of personal cash is added to acquire a second rental in year 5. Over five years the strategy returns $67,000 on $18,081 of personal cash, a 271 % ROI. Example 3 assumes the investor has $50,000 cash and is willing to borrow, allowing the purchase of five rentals in year 1. The cash flow is repeatedly funneled into an IUL, leveraged for larger hard‑money loans, and ultimately a 1031 exchange is used to swap two rentals for a $2 million commercial property. Over five years the model produces $522,090 on $52,900 of personal cash, an 887 % ROI. The speaker emphasizes that all gains beyond the initial capital are the result of money moving quickly through these vehicles—hence the term "velocity of money"—and presents the ROI percentages as proof of the strategy’s power.
Chapters
So, I wanted to put together this PowerPoint presentation to show you this example that I created to illustrate what the velocity of money means and how powerful it can become. So, I like to think of velocity of money when I focus on myself as how fast is my money traveling? Like, how fast is it traveling through my own system? So I have 3 examples for you. And let me first start with this one. So in example 1, we're just going to use your cash. And let's say you have $50,000 and you buy a $50,000 rental. And just so you know, I have clients who have $50,000 rentals, which is why I'm using this example, because it's a low amount. It's a, it's a small dollar amount, but they are getting $1,000 a month. In rent. So this isn't too far harebrained. This is a legit asset that I've seen a client have. So you buy $50,000 on this rental. It's going to earn you $1,000 a month, which is $12,000 a year. So in year 2, I'm going to take that $12,000 from my first year of income and I'm going to sock that into a Universal life, an indexed universal life insurance policy. Now, my IUL is going to average about 10% a year based on the rules. So that's the number I'm going off of. So if I have $12,000 in my IUL policy, that is not my income, or that's not my cash that it's requiring. That's $12,000 from a previous investment. That's why I put it in this velocity column. That you see here. And at 10%, that's $100 a month, which gives me $1,200 increase. Now I also put that in red because this $1,200 isn't— it's not as liquid as having the $1,200 in my bank account. But the income is there, the cash is there available for me to take. But I just wanted to put it in red because it is sitting in this IUL policy. So what happens in year 3? Well, in year 3, my rental still earned another $12,000 in the previous year. So right now, based on that income, only having $24,000 of rental income from year 1 and year 2, there's not anything in my mind that maybe I'm going to do. And again, maybe you have some other investment opportunities and you would do that. I can't cover everything in this scenario. For me, in this example, I'm going to take the 12 grand and I'm going to put it into my IUL policy again. And that's going to earn me another $100 a month for another $1,200. So by the end of year 3, I'm going to have $27,600 in my cash value balance in my indexed universal life policy. So let's say year 4. Okay. Now I have year 3's rental income of $12,000. And the reason I like IULs is because I can borrow against my cash value and not affect my insurance policy. Now, in this example, I am not giving credit that that balance in your indexed universal life policy will continue to earn interest if you pull the money out. There are policies that allow you to do that. But for the sake of this example, I'm not taking that into consideration. So let's say I borrow basically the $27,600 from my cash balance and I have the $12,000 of rental income from the previous year. That gives me $39,600 that we're pretending a hard money loan opportunity came about. A hard money loan is basically anything, any money that's switching hands that a financial institution isn't involved with. And generally, hard money indicates that there's an asset that can be collateralized against this velocity— or sorry, against this, the money, the loan amount. In this example, I'm only using 2.5%, and that's per month, by the way. So you take your Rental income from the previous year plus the $27,600 that was previously in your cash balance. And we do a hard money loan for 6 months. And that's going to earn you $5,400. You're then going to put back the $27,600 into your cash balance. So now you do earn interest on that for the last half of the year. And that's where this $600 comes from. Which means by the end of the year, we added another $1,200 of income into that balance at $28,800. Okay. So what do we do in year 5? Well, I'm still getting the $12,000 a month for my first rental. And I now have $28,000, right? We have $28,800 in my cash balance. Plus the $12,000 from year 4 and from year 3 that I hadn't done anything with, and I earned $5,400 on that hard money loan. Well, guess what? Now I have enough cash to go and buy another rental property that's going to probably be pretty identical to the one that I currently have. And that's what we're showing in this example. So you do that with $53,400 and you can see how I break that down. How we came up with the $53,400. And remember, it's still in the velocity column, which means other than the initial $50,000 that I put in, all this money that I'm playing with is the return on my previous investments. And now I'm going to get $24,000 a year in rental income from 2 rental properties. That's as far as I'm taking each example as to 5 years. So let me just show you a summary. In this first example, we used $50,000 of our own cash. That earned us $82,200 over the course of 5 years. This is how that breaks out. $60,000 from our first rental, $4,800 from interest earned in my cash value policy over 5 years, the $5,400 from my hard money loan. And then $12,000 in my year 5 from the second rental. And now if I look at what is my return on investment, I earned $82,000. It cost me $50,000 to earn that. So the gain is $32,200. I divide that by the cash that I did use, and that gets me a return on my investment of 64%. Let's look at a second example. In this case, let's look at the same rental property, but instead of using $50,000 of cash, we're going to do a loan. And 20% down on a rental property is super common. So it's different than the first example where you earned $12,000 because you did not have any sort of financial obligation on borrowed money. But now we have borrowed money, and of course people want their money back. Okay. So we take that $9,420. Same scenario. We're going to stick that into a cash balance into our IUL policy. That's going to earn us $942 that year. In the 3rd year, exact same. In year 4, when we do our hard money loan, I'll have $28,260 to play with in a hard money loan. Same scenario. We do that for 6 months. We'd earn $4,239 on that. In year 5, I'm going to do the same thing. I'm going to buy— I'm going to buy another rental. In this case, I am going to need to put another $8,000 of my own cash in because I only have $41,919 that I've earned off of my initial 4 years, off of the initial $10,000 I put in and the $40,000 borrowed. So I do need to put in an additional $8,000 here. But in this case, because I'm using my own money, whether it's from the investments, whether it's from the income I get from the investments or my own personal cash, I'm not going to have debt on the second rental, which means my monthly income is $1,000 and I'm going to get $12,000 a year off of that one. Let's break this down. So total personal cash used was $18,081 in cash. Over the course of 5 years, we earned $67,000 on that. And that's how that— so I used $18,000 on my cash, I got $67,000 back, which means I have a gain of $49,000. Divide that by the $18,000 of cash that I initially used, and now I'm looking at a 271% return on my money. Okay, last example is going to be a little bit different because we're going to say You had the $50,000 of cash available and you're willing to borrow money. What that means is that you can buy 5 rental properties in year 1 instead of 1 rental property. In year 2, I just earned $47,000 in my year 1. Well, if I'm comfortable borrowing money, I'm probably going to be comfortable buying another 5 rental properties. In year 3, in this example, I'm going to say let's actually just take the $94,000, put it into an IUL. So what I do in year 4, well, let's still do a hard money loan, but now I can do a much larger hard money loan. Now year 5, I think the scenario would look a little bit different than what we've gone over. How about I do a 1031 exchange on my 2 rental properties? So with freeing up the cash that I initially put into those, and I'm not even taking into consideration any market gain you'd have on those 2 rental properties, I'm just assuming you sell it for what you bought it for. So I get that money back. I have $357,000 that those 2 properties have earned me that I can also play with. You know, I'm going to buy a commercial property. Now given I just 1031 exchanged my rental properties and I borrowed the money from my Cash value, which means those investments aren't going to earn me income. But I do now have a $2 million commercial property going forward. So as a summary of this last example, total personal cash used $52,900, and that was done by year 2. Over the course of the 5 years, you would have earned $522,090. So if I use 52 and I earned 522, that means I had a $469,000 gain. On my cash, divide that by the cash I used, my rate of return, my ROI on this scenario is 887%. And that's where Velocity Bunny comes into play. Time.
