What can negative cash flow get you? #realestate #realestateinvesting #realestateagent #money #tips

12 Aug 2023 · 1 min

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Steve D Valentine (speaker) discusses real-estate investing strategies, arguing that accepting small negative cash flow on leveraged rental properties can enable extracting equity tax-free and redeploying proceeds (he cites pulling $2.5M equity) into multiple whole-life insurance policies that function as a personal bank and produce ~5–7% tax-free annualized returns. He contrasts this with low-return 401(k) savings.

Chapters

It's amazing if you talk to your clients about real estate and they will tell you they're putting $500 a month in a 401k that gives them no cash flow, gives them some tax benefits, and it's probably got a really shitty return, especially over the last couple of years. My father in law's 401k last year lost like 25%. But they won't take a little bit of negative cash flow on a $400,000 asset that somebody else is paying off. Right. That they got to borrow. So last year we pulled $2.5 million in equity out of our rental portfolio, tax free. The portfolio is negative a little bit right now, but what you don't see is that we put two and a half million dollars multiple whole life insurance policies that just created my own bank that is also creating a 5 to 7% annualized return that is tax free going forward.