"The Checkmate of Real Estate Investing"
"The Checkmate of Real Estate Investing"
"The Checkmate of Real Estate Investing"
"Creating the Official Checkmate Move of Real Estate Investing"
By:QMS Financial___________________________________________________________________________Some of you may be wondering what the Infinite Banking System is, while on the other hand, others may wondering how to leverage it with their real estate career. As a real estate investor or broker, you are likely aware about how hard it is in the current economy to help clients obtain financing as well as, see it all the way through to closing. The idea behind the Infinite Banking Concept is to be able to leverage your own money to finance your own purchases while not losing the ability to earn interest on that borrowed money. As an added benefit, you enjoy the luxury of paying yourself back the principal and interest that you would have otherwise paid to a lending institution and, more importantly, you still have ownership of your newly acquired property. Just think of what your financial situation would look if you could have the principal, interest, AND the property of all your real estate acquisitions. Yes, many of you may be thinking, well if I had the money I would consider that strategy, but finding this capital to begin with is often the challenge at hand.One source of capital for you to consider is money that has been stocked away dormant, waiting to be used. For example, some of us may have a personal, Self-Directed IRA, or some other retirement account. Ideally, as a real estate investor you would like to leverage the property yourself and eliminate the burden of time and paperwork the banks place on you. In today's market, quick timing is of the essence and in order to get the deal done it is crucial to have your own cash readily available for your real estate acquisitions.You hear many people say that today is the greatest time to be investing in real estate. While I cannot disagree completely, I would do so on some level. Real Estate itself is not necessarily seasonal. Though it does fluctuate with the market conditions, anytime is a great time to invest in real estate given the proper timing for the right property! So get out there and start investing! Throughout the remaining portion of this article, we will explain why the Infinite Banking System is a great tool to be used as a way to finance your own real estate purchases. We will also look at how both can be used conjunctively to accomplish your real estate goals.As a precursor to writing this article it is important to briefly explain how the economy affects real estate investors. Most of us know that the real estate market, like all types of investment markets, operates in cycles. We know this. We also know that the issuance of sub-prime loans in the past has caused mortgage lenders and brokers alike to become stricter on their loaning practices. During the sub-prime mortgage crisis we noticed a lot of individuals who over-leveraged themselves. The simple effects of supply and demand were the roots of this lending crisis. When lenders became more lenient on lending practices (i.e. sub-prime mortgage lending), financing could be taken, and in some instances, with 110% LTV (loan-to-value). This opened the door for many people, who were not necessarily experienced, or financially qualified, to come rushing in blindly and purchase homes way above their means. As we now know, this created an influx of demand, which caused prices to skyrocket, sometimes above their assessed value. As time went on individuals realized that they could not afford these investments (maybe due to some sort of balloon payment, or simply because their income could not afford the extra burden). Either way, individuals started selling or walking away from their homes because they were unable to afford the payment on their mortgages This increase in the supply of real estate inventory started a time period where there was a great opportunity for investors looking to get property to start buying it up. Due to this excess of bank-owned and foreclosed properties, prices of homes were pushed down to extreme lows where soon thereafter, a "Buyers Market" emerged.So as the mortgage industry started to become a lot stricter, many investors became unable to qualify for financing even though their track record might prove otherwise. So now I will get to the bottom of this article. Using the Infinite Banking System you can become your own bank. No lenders, no pre-approvals, no underwriters, nothing! You simply get to agree to the terms that are fit for you and let the Infinite Banking System do the rest. You will have to have a similar interest rate that a conventional bank would charge you, but just remember, you are paying yourself back so the higher the interest the better. You can structure to pay yourself off when you close and take your money and principle back at closing, or you could pay yourself back in monthly installments. Using this concept the terms are decided by you, not the bank. As you pay yourself back, you now begin to realize the profits the banks normally make in addition to your return on the real estate investment!So at this point you might be asking yourself, "Well where am I going to get this money from?" There are many different places to get your money from and we will explain the 401(k) plan in a little more in detail to help you better understand the benefits of the Infinite Banking System. We will also list a few other sources as well.(1) 401(k) retirement plan- Most, if not all, of us have some sort of retirement savings plan. It has been drilled into our mind that if we want to not work our whole life, then we should start investing in a 401(k) retirement plan. As you might already know, there is a penalty for taking money out of your retirement account before the age of 59 years old. One benefit of the Infinite Banking System is that you have absolute freedom to utilize your account for whatever purposes you want with no withdraw fees. For example, lets say that you find house for sale for $55,000.You could either take a loan out against your 401(k) or just pull the money out and pay the penalties the taxes. If you decide to take a loan out, you are limited to the lesser of 50% or $50,000. You also lose the opportunity to earn interest and gains on that money within the 401(k) and may not be able to make further contributions to your 401(k) until that money is paid back.If you decide to just pull the money out of your 401(k) and pay the penalty and taxes, you will need to pull more than the $55,000 out to compensate for the immediate loss and, like in the first example, you give up the right to share in the interest and gains that could be realized if that money were left in the 401(k).Now, lets say you use your own bank instead through the Infinite Banking Concept. You withdraw about $75,000 (sufficient amount to cover closing costs, repairs, etc.). Lets say you charge yourself 12% with a payback in 30 years for loaning yourself the money. If you were to make monthly payments, you would be looking at around a $880 payment, but for this example lets say you are a creative real estate investor and you plan on flipping the house in 6-9 months with the plan of paying yourself back at closing. Six and a half months go by and finally you have sold the property for $95,000 dollars! What would be your cash back to you as an investor? So after you look into it, you calculate that 12% return on the initial $75,000 would be $84,000 (1.12 *$75,000). That whole $84,000 goes back into your own bank now, not the 401k, and can be used again, and again, and again, The capital gains on the house minus the payment of principle and interest to your Infinite Bank account would be $11,000. Your total cash out is $95,000! Minus the taxes on capital gains and the cost to take money out of your 401(k) you are looking at coming out with a good chunk of cash with additional money to re-invest. Now how good would that feel to recapture all your money back like that! Now you are free to start the investing back up and start building that Infinite Bank Account. Remember, that the Infinite Banking account is like your 401(k) plans in that you are going to be making payments into it monthly, and at your terms. This is just one option to consider. Other investment vehicles can be used to generate money from to help rocket your real estate career to the next level!Here are a couple more:(2) Personal Trust Fund(3) Re-finance your mortgage on your house(4) Insurance Policy(5) Self-Directed IRA(6) And More!The real reason why the Infinite Banking Concept is so great is that it gives you full control of your money and allows you the ease of setting your own terms as your own bank. For real estate investing purposes it can be a great way to ease the burden of the banks off of your back and let you be the bank! So understanding that the economy is going to change is something that we should all be aware of but, like we said, there will always be great deals out there. The financing you need though, will not always be there at the drop of a hat, so utilizing the Infinite Banking System to help leverage your real estate career might just be the best move you make. And like the game of chess, move yourself into a position to checkmate anything that stands in your way.___________________________________________________________________________For more info on the Infinite banking Concept please visit www.qmsfinancial.com or send an email to Justin.howard08@hotmail.com. Start your real estate career at the next level today!Thank you for your time and may greatness be on the road ahead of you in your journey to success! http://www.articlesbase.com/business-ideas-articles/the-checkmate-of-real-estate-investing-2740651.html
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