May 10, 2023

JF3170: How to Become the Bank and Self-Finance Deals ft. Mark Willis



Mark Willis is a certified financial planner with Lake Growth Financial Services, which works with individuals, couples, and business owners who want to grow their wealth in a safe and predictable manner and create tax-free income for life. In this episode, Mark discusses the concept of becoming your own source of financing through a whole life insurance policy, which provides guaranteed growth and accessible cash that other investment options cannot.


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Mark Willis | Real Estate Background

  • Certified financial planner at Lake Growth Financial Services
  • Portfolio:
    • LP in three multifamily syndications
  • Based in: Chicago, IL
  • Say hi to him at: 


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BAM Capital


Slocomb Reed: Best Ever listeners, welcome to the best real estate investing advice ever show. I'm Slocomb Reed, and I'm here with Mark Willis. Mark is joining us from Chicago, Illinois. His company is Lake Growth Financial Services. He's a certified financial planner, and a bank-on-yourself professional who works with real estate investors to help them become their own source of financing. This is his fourth time on the show. He was most recently interviewed in May of 2021. Mark, can you tell us a little bit more about your background and what you're currently focused on?

Mark Willis: Sure. Yes, thanks again, Slocomb, for having me back on. And I can't believe it's been four times now. I feel like an honored guest in your living room. So thanks so much. Yeah, we've had the great privilege of working with folks over these last few years, real estate investors, business owners, even some NFL Super Bowl champions. Honestly, most people I work with are looking at where we're at today in the inflation cycle, the real estate cycle, the market cycle, and they just want some more certainty, they want some more agency, control over their finances; they feel like they're just a tennis ball floating down the gutter of life, and they want something that can help them move upstream... And we believe we've been able to find that in helping folks to take back control of the banking function in their life, even amidst a lot of the high inflation that we're experiencing today.

Slocomb Reed: I have an idea of where this conversation is headed. I'm actually really looking forward to it. This is a topic that I've looked into a little bit... I do want to ask though, as our longtime listeners will know how long you've been working with real estate investors, do you have any real estate investments yourself currently?

Mark Willis: I do.

Slocomb Reed: What is it you invest in?

Mark Willis: I'm lazy, so I like the syndications that bring passive income, and allow me to take advantage of some of the tax advantages of being an LP on a syndication deal. And to me, that is where I need to be right now, as I'm running a very profitable and busy business. But man, all of our clients have all things you can imagine. Everything from flips, to long term holds, to Airbnb and short term rentals, to wholesaling, to everything else... And even creative real estate on terms only... Lots of creative strategies for how the real estate game can be played.

Slocomb Reed: Mark, I want to talk about you and your investments personally here for just a couple of minutes. And I'm not going to let you call yourself lazy. You can call yourself focused if you want to, and say that you don't want to branch out into another active career... But lazy is certainly not the case. I used to call myself ambitiously lazy, doing more hard work now to create a simpler, softer, easier lifestyle for myself in the future... But I'm not sure that I consider myself that anymore either. As a limited partner, how do you choose the investments that you make?

Slocomb Reed: I look at, obviously, the offering. And I want to make sure that me personally, and my wife personally - it makes sense with our objectives, our timelines, our liquidity needs, and the upside potential. I look at the overlooked asset classes, things like mobile home parks, and other not-so-average assets; car washes, ATMs, that sort of thing. Things that give us maybe a bit of an edge against maybe what could otherwise be an overcrowded space, or spaces that require a lot of financing, which is getting harder to do with inflation and interest rates rising right now.

So we typically look at what the opportunity is, and we also look at "Do we trust the person that we're working with?" Because at the end of the day, it comes down to trust. Because you only get so many spins around the sun; you want to make sure that you're working with someone that you enjoy being around, and these guys are going to be partners with you for years, and you want to make sure that they're the kind of folks that you don't cringe when you see them calling you. So candidly, that's a part of the conversation as well with my wife and I, when we're looking at what syndication deals to put our money in. And we've had the great privilege of being flooded with a lot of our clients actually being in real estate they will send me their syndication funds, their opportunities. And I have to really get good at how to say no in a graceful way whenever someone brings me something that is wonderful, but just doesn't fit our matrix.

It's like Tim Ferriss likes to say - when you have a really clear sense of what you're going to do, you can make one decision that eliminates 1,000 more decisions. So if you know exactly what your target is -- and you're right, man, I'm not lazy. I won't claim that after all. I think targeted, focused, ambitious - I like your word. If you know exactly what you're trying to accomplish, then 1,000 other decisions are really unnecessary, if you know exactly what you're trying to accomplish.

Slocomb Reed: What is your target?

Mark Willis: Well, in life in general, or in real estate specific, or both?

Mark Willis: Let's talk specific to your commercial real estate investing for now.

Slocomb Reed: Sure. Mine is really just I want to have a solid place where I can, one, see growth, two, not have to mess with it too much, which is where the syndication comes in... Third, I really want to be able to pour a large lump sum into something coming from my bank-on-yourself policies, which we can talk about if you'd like. So I need investments that offer large deposits, that aren't limited in that regard. And I want to be able to know that I'm making a difference in the lives of the people that we're dealing with.

So again, when it's C class housing, or syndication deals wrapped around mobile home parks, and so forth, I love seeing the dramatic difference that comes with simple things, like putting in lighting, or paving the streets, or putting in a little playground in a mobile home park. Giving the people dignity, and working with them to help them have a better life. It helps me know that I'm doing something more than just chasing that ROI.

Slocomb Reed: One last question here. A lead-in first - as a limited partner, how many positions do you have right now, roughly? Well, it's changing this year; I think we're exiting some. I think the fund that we're about to leave is going to re-up, so we're evaluating which ones we're going to get into. Candidly, I don't want to be too spread out. I think you really don't need to have 14 different syndication deals .I think if you have more than six, unless you're doing it full-time, watching these things, it's going to be tough to keep up with how many you're going to be doing, or how much you're going to be involved in. So get yourself three to six.

We try to keep ourselves pretty focused, my wife and I, and our clients, most of them, I'd say are in that zone as well. You want to give yourself enough to where you can spread your risk around, but where you're not going to be dipping your toe into 15 different syndication deals and have no clue where your money's going at the same time.

Slocomb Reed: That advice makes sense. How many positions do you have right now?

Mark Willis: Well, we have three, and if we want to go deeper into that, we can. We're going to exit one; they have asked us to go back into it again. We'll see if that works out for them or not.

Slocomb Reed: Gotcha. So your advice leads into the real question I want to ask here... As a limited partner, you just touched on this - you personally, with each of your capital placements, after it's done, what is it that you're doing to keep tabs on your money? What does your system or your process look like for making sure that your placement is performing as expected? We call it passive investing. That doesn't mean you go take a nap, wake up five years later, and your money doubled. There was something that you were doing along the way to follow along to track; what does your system for that look like?

Mark Willis: I just use a simple spreadsheet, to be honest. This is where I think the set it and forget it, after you've had a good, hard look at the prospectus, you give yourself the freedom to let the thing run. And candidly, with interest rates rising as they have, we've seen some changes in some of the funds that we've been a part of. And it's one more reason to remember not to invest in anything when you cannot afford to lose the cash. So we typically have a spreadsheet, I'll update it once a quarter, I'll see what kind of cash inflows came from those syndications, what kind of income did we receive, distributions, whatever, and I'll lay that against our original expectations, what the proposal was claiming it was going to do for us... And then I just move on with my life. I have other things I'm focused on. I wait until the exit date, and if they're on target, great.

I think the most attention we have to give it is those pesky K-1s that seem to come in later and later each tax year. So we've just gotten really good at filing extensions right now. It's a small part of my attention span, because I'm not the manager of the syndication, and that was the whole point. For me, the real estate piece is the diversification and it's a chance to get some upside potential. And alongside our business, which is our primary asset, along with some other investments that we do, and of course, our bank-on-yourself policies, which is where we use the funds to invest in the real estate deals, it becomes sort of a diversified portfolio in that way.

Slocomb Reed: That makes a lot of sense. Speaking to inflation, Mark, I'm trying to segue into the conversation that I'm feeling that you want to have... And I want to come from personal experience. We're recording early in the second quarter of 2023. Our listeners don't really need a primer on what's happening in the market, inflation, and interest rates, because it's a fairly sophisticated audience. I have found myself recently looking for loan products, and just not wanting to -- I think particularly about a single-family deal in this case in the cash-out refinance, I've found myself not wanting to go with the loan products that were available to me, due in large part to what's happening with interest rates. Not only how volatile they are, but how much higher they are than where they were two, three years ago. So you could ask me for follow-up details on this particular deal if you want to, or we can lead into a more general conversation.

I know you have some things to say about alternative sources of funding. And you're saying bank on yourself, and I imagine what you're talking about is something that I could set up for myself, that I could borrow against. Can we go into that conversation?

Mark Willis: Sure. Where do we start?

Slocomb Reed: I'll let you decide where we start.

Mark Willis: Okay. Well, Slocomb, you're exactly right. There is essentially no getting around it. We are in the banking industry, we are part of the banking business. The question is who's sitting on the right side of the bankers desk in your real estate operations, for your real estate deal that you're considering. If you walk in and sit on the wrong side of the bankers desk, then they have the control. Bottom line.

I have a fish in our kitchen, a little aquarium; my daughter and I feed it every day. We keep the temperature at the right temperature. We can dial the heat up or bring it down to freezing point and kill that little fish, if we had to. We don't want to. But the bank is the one that dials up and dials down our environment, where our money lives, much like we can control the environment that that fish lives in. We don't even realize how much banks are influencing the experience of our financial, and really more broadly, our overall life. And there's a reason why; the banks love to keep that sort of in their back pocket. That's their business; they are in the business of controlling the financial outcomes of our real estate projects, our business, and more.

So for me, it's been a wonderful experience, helping clients across the country take back control of their finances, helping them make better choices with their investing strategies, their syndication deals, like I do, like your real estate deal you mentioned, where they come to the bank for their own convenience, rather than the banks using us for their convenience, if that makes any sense. We want to give our clients the capacity to fire their banker, and become their own source of financing, using little-known strategies that have been around for generations, but that's just now sort of waking back up to something that a lot of clients are using for their financial success today.

Slocomb Reed: Let's talk about some of those tools now. Mark, when you say bank-on-yourself account, what do you mean? What kind of account is that?

Mark Willis: Yeah, that's first and foremost a mindset; learning to bank on yourself means you're not banking on the bank. So it's a mindset. It's also a strategy and a tool. And that tool is represented by, of all things, dividend-paying whole life insurance, which has been modernized for maximum cash accumulation, rather than a big fat commission to the insurance agent... Which I'm just fine to see our clients pumping tons of money into policies and getting very little commissions as a result; it ends up working out for everybody. The client wins, they get a lot more cash, 8 to 40 times more cash than old-fashioned whole life insurance would have. And because they're pumping in so much, our business works out just fine. And we get to see stories like a good client that recently just dumped in a large lump sum and immediately pulled out; it was actually a little over $400,000 that they dumped in. And they were immediately able to access the cash in the policy, and borrowed against that $360,000, and went to go put it into a multifamily deal, and watched that grow over the next several years. Our plan is to have that paid back in eight years.

And I guess I'll back up and say bank-on-yourself is a dividend-paying whole life insurance policy, but it does some things really well. And I'll go over this really quick, and then Slocomb, I'll let you take it wherever you want to go. Talk about how this is impacted by inflation, or whatever else you want to talk about. For those that have never heard of this before - yeah, dividend-paying whole life insurance, if it's designed this specific way. And I can't emphasize that enough. There's plenty of poorly-designed policies out there; we've seen them, unfortunately. But if it's designed properly, first, the cash value grows on a guaranteed basis, no matter what's going on in the stock market, no matter what's going on in the real estate market, it just grows. And there's really nothing we can do to stop it.

Second, it's liquid and accessible money, meaning we can access that cash for any purpose. There's no prohibited transactions. You can use it to fix up your kitchen, or you can do a couple of rental rehabs, or you can send your kid to college, or whatever else you want to do with the money. It's your cash, liquid cash. And if we've designed it properly, it's even accessible without taxes due. So it's like an unlimited Roth IRA in this regard, if we've designed it the right way.

Third, it is life insurance. So we can always be sure to leave our families more than we've ever saved for them in the policy, just by the nature of it being an insurance contract. And then lastly, the fourth one, when we access the policy, cash value, there's two ways to do it - one is a traditional withdrawal; no big surprise there, you just take the money out. Second though, is a policy loan. And this is where things get really interesting. When you borrow against these policies - again, if they're designed this specific way - they will continue to grow and compound as if you had not touched the money. This means if you've got a cash value in your policy of 100 grand, and let's say you borrowed out 70 grand to go do a real estate deal, your policy that year continues to earn interest and dividends on the entire $100,000, as if you hadn't touched a dime of the money.

Now, as a certified financial planner, I can't find anything else in the financial universe that does anything close to that; it gives us our chance to do two things at once with our cash.

Slocomb Reed: Mark, I have a couple of smaller detail-oriented questions I want to ask, to get clarity on a couple of things for myself before I dive into anything major here. The first one is, you said there's a cash value to these policies that grows on a guaranteed basis. Can you explain how that growth is guaranteed, and what kind of yield we're looking at on a guaranteed basis?

Mark Willis: Yeah, I can do it. And we'll have a little fun doing it. How about that? We'll have fun with contracts. So let's say that you are the insurance company here; we'll do this because I'm gonna end up dying in this story. So you're the insurance company, I've got a policy with you, Mr. Insurance Company Slocomb. Let's say that you promise you'll pay my family $500,000 if I croak today. And let's say if I don't pass away, and instead I cash out this policy, let's say you promise to pay me $50,000 right now to surrender the contract. Basically, that's a deal, right? 50 grand to walk away today, or wait around for decades, hopefully, and give my family 500k. That's the arrangement of a whole life insurance contract.

Now, next year, I'm a year older. And keep in mind, you as the insurance company had to have ready to go that 500,000 bucks; not just my 50 grand is on your books. The death benefit is available and accessible to you, in order to pay my family $500,000 right now, should I decide to slip on life's banana peel, if you know what I mean. So in this case, I don't pass away, you don't have to pay my family the money that was sitting in money market accounts and cash accounts there on your balance sheet as the Slocomb Life Insurance Company, but now I have another birthday, and now I'm a year older, and I'm now a little more likely to croak, to graduate, this year. I'm a year older. So now instead of 50k, maybe you'll promise to give me 60k of cash. Where's that money coming from? How did it grow on a guaranteed basis? Well, you already had my death benefit sitting in cash on your books. You're simply using actuarial science to pay me a larger portion of my death benefit to go away. It's like a game of chicken between you and me. Who's going to win? Am I going to stick around? Or are you going to convince me to walk away from my policy, take my cash value and walk? That's how they give us a guaranteed increase of our cash. They've already got the death benefit set aside. It's just a matter of who's going to pass away this year. Is it going to be me or some other guy my age? That's how the guarantee works. There's no magic there. It's just actuarial science. It's using the law of large numbers.

Slocomb Reed: And this 50,000, and then 60-something thousand in the future, that's the cash value of the policy. That's what you're calling it. So how does that amount of money -- let's say I started one of these policies today. How does that amount of money compare to the amount of money required to establish the policy in the first place?

Mark Willis: It's hard to say from our numbers that we're using right now. You could have been putting in money at 500 bucks a month, you could have dumped in 50k, or 40k, or 60k. It's hard to say from our conversation. It's like those old math questions, not enough information to answer the question...

Slocomb Reed: Sure.

Mark Willis: So it could be that you're in the early stages of your policy, and you're still overcoming the cost of insurance. Maybe you dumped in 60k, and you have 50k available for you, for example. It could also be that you're a few more years into your contract, maybe you've put in a whopping 40 grand, but it's grown to 50 grand. Or maybe you're past year 10, or 15, and now you've only put in 25 grand altogether over those many years, and you've got 50 grand available to you. It's just hard to say from our conversation.

The point of the question though is - this policy does have upfront expenses; even efficient whole Life policies cost something to set up. So I encourage folks don't just jump into this because you heard about it on a podcast. Make sure it's designed properly, and make sure you're patient enough to see this thing begin to build and grow over a number of years. You'll be happy you did. And it gets more and more efficient every year, but it's not a get rich overnight kind of strategy.

Break: [00:21:03.29]

Slocomb Reed: I was originally fishing for a sort of percentage yield on the growth of the cash value of the policy... And it sounds like you're gonna tell me it's too complicated to just give me a number.

Mark Willis: No, we can go there. So over the last 50 years, most policies designed properly for maximum cash accumulation have done about five, five and a half percent. And that's an after-tax yield. So could yours be a little less? Maybe. But - and this gets to our topic of the day, inflation actually is benefiting the yield on cash value life insurance policies. As we go into higher and higher interest rates, as mortgages rise, as bond rates rise, this is positive news for policyholders, because over time, they'll benefit from a general account of the insurance company that's kicking off higher dividends, because of these higher interest rates that the general account of the insurance company is invested in.

Bottom line is, you can expect somewhere in the middle single digits over time, but there are some initial upfronts that we need to be concerned about, which means you're getting more than 5% or 6% in the later years if we're covering cost of insurance in the first few years.

And one more thing I'll add to this, and I'll actually get your feedback on it... This is not meant to be an investment replacer. A lot of folks look at this as a savings alternative. It's a place to park your liquid money in between your real estate deals. So I've never really seen this as trying to keep up with an S&P 500. It's not that. Since this growth is guaranteed, it's more like a cash savings or an alternative to a savings strategy. Of course, it is life insurance, so it's got that benefit as well. But it's more of a garage for my money in between my opportunities. My car lives in my garage, but it doesn't stay there all the time. I'm constantly taking it out of the garage to go on a business trip, or a personal trip, but it's always coming back to my garage when I'm done with the car. Similarly, my money always

comes back. In between these syndication deals, as we talked about earlier, when I get that money back from one of the syndications, guess where it's going? Is it going into my bank account, where it sits there. Definitely not. It's going into my policy; it's much safer there. Just keep an eye on the news, with Silicon Valley Bank, and more of those nightmare scenarios out there.

Slocomb Reed: Mark, hypothetically speaking - let's use me as the example. I'm going to start a policy; I'm planning to start that policy with $100,000. Hypothetical world. I understand this is whole life insurance; there is a death benefit. Setting the amount of the death benefit aside, I establish an account right now with $100,000. Can you give me an estimate of what those upfront fees will look like, and what the resulting cash value of the policy will be for me day one?

Mark Willis: Just like a good CFP, I've gotta answer with "It depends." But I will answer your question; your age and your health will matter here. But if we do a single-premium policy, which we can talk further about another time, you'd have a cash value in the ballpark of 92,000 to 94,000 bucks.

Slocomb Reed: The other $6,000 to $8,000 being the fees.

Mark Willis: Yeah. You bought a death benefit worth 200 grand, for example.

Slocomb Reed: Got it. So I've paid those $6,000 to $8,000 in fees, I have 92 to 96 grand in the account that I can withdraw or borrow against... What's the maximum amount of that money that I can borrow against? Is it 80% or 90%?

Mark Willis: Yeah, it's usually closer to 90%, or even upwards of 95% that you can borrow against, loan to value. And as you do that, the policy continues to compound and grow, even on the capital you borrowed, giving us an advantage, certainly over-paying cash for something like a piece of real estate.

Slocomb Reed: What are the restrictions on borrowing as a policy like this? Am I required to pay myself interest? Is there a required repayment period or balloon, like I have to pay myself back within the year, five years?

Mark Willis: Well, you are, in essence your own source of financing here, so you get to set your terms. The repayment plan is up to you. You could pay nothing on it, you could pay a little bit every month... It's up to you. The insurance company charges a interest rate. Generally speaking, over four years, just to give you some idea - I've seen the APR, the annual percentage rate on these loans, in the ballpark of about 2% over a four-year period. And we can go into further detail on that if you want to. But as you do that, your policy is growing by much more than that 2%. Again, compounding in the middle single digits. And it gives you a compound growth arbitrage, because your policy is growing by more than the interest you paid.

Slocomb Reed: What are those API's look like right now?

Mark Willis: That's about where I said, about 1.5% to 2%, depending, over a four-year period, six-year period to borrow against the cash value. You're gonna see those APRs in that one and a half to two and a half percent range. It sure beats the mortgages I'm finding on the market, and the HELOCs, for sure.

Slocomb Reed: Mark, let's see if I can summarize this product and how it would advantage me as a real estate investor and a person who needs ready access to my capital. Please correct me where I'm wrong, fill in the critical details that you think that I'm missing. Again, hypothetical scenario where I have $100,000 liquid, sitting in a bank account, waiting to be deployed. I can set up one of these, call it a single premium whole life insurance policies, death benefit 2x-ish the amount that I'm putting down in the premium. My $100,000 goes in; my resulting cash value after fees is between 92k and 94k. Of that 92k to 94k sitting in the cash value, because it's a single-premium policy, I don't have to make monthly or annual payments to contribute over time, I have access to 90% of my money, I get to dictate the terms, the insurance company is going to charge me roughly one and a half to 2% on the money that I borrow from myself. If I borrow - let's call it the $92,000 - if I borrow 90% of that, a little over nine grand will be left. However, the nine grand that's left in there will continue to compound as if it weren't $92,000, meaning that roughly 5% growth if you're just looking at the nine grand still in the policy as more like 50% growth, because I have access to the other 90% of my capital, that I can do it as I wish, as a real estate investor. That 5% growth is the result of the insurance company looking at how likely I am to die, and that likelihood increasing each year, meaning that it is not dependent on any sort of market; it's not going to be impacted, or at least directly impacted, by any sort of recession, depression, economic boom or bust, whether or not it impacts real estate. I have access to most of my money for what I want to do with it, and I've created something that can grow at a fairly large rate, while paying some fees upfront, and then having to pay interest, though relatively very low interest on my money when I borrow it back from myself. Is that a fair summary?

Mark Willis: You've done a great job. I would even just say you would pay interest should you want to pay back the loan. However, should you never pay off the loan, it will simply be deducted from your death benefit when you pass away, decades from now. As long as that policy is enforced when you pass away, you get to keep the remaining death benefit to your family, and the netted out loan is no longer needed to be repaid after you pass.

Slocomb Reed: The amount I borrowed from my cash value is just deducted from the death benefit.

Mark Willis: Plus loan interest. Yep. So your death benefit would be smaller, but you get to keep your rental property you bought with the policy loan you did all those years ago.

Slocomb Reed: Mark, there are several moving parts to this, including upfront costs, which I always weigh fairly heavily when looking at a financing product. This is obviously not a financing product, but if the idea is that I can get this money back from myself, how much am I going to have to pay to set all of this up? There are several moving parts, in those upfront fees, the amount of interest that we get charged by the insurance company, the rate at which the cash value of the policy would grow... I don't think those are all things that can be covered in a shorter-form podcast episode like this, but I at least personally feel like I'm getting a grasp of what this is. That said, as many moving parts as there are, fees in order to set this thing up, can you give us some examples of circumstances people can find themselves in, both good and bad, where it does and does not make sense to set up a policy like this?

Mark Willis: Absolutely. The best way I can describe this is you may not want to do a bank-on-yourself policy, even if it was designed properly, if you are looking only at your purchasing power in the first year. So if you can't get past the initial insurance expenses to set this up, just pay cash for your real estate deal. The unfortunate reality is you'll lose opportunity costs to see that money grow for you ever again, except for what you have in that real estate deal.

So for those that must keep every last penny, and not lose a penny to purchasing power risk, this won't be a good fit. However, for those that want to see their money grow on a guaranteed basis in two places at once, n essence - the policy grows, and the real estate grows, hopefully; there's no guarantee on the real estate. So in a case where someone wants to see their money grow more efficiently every year, and let their money do two things at once, this is a great fit.

If you're familiar with how HELOCs work, this is very much like a HELOC. The house grows, whether we borrow against that HELOC or not; even on the capital we borrowed, the house continues to grow. So if you like HELOCs, I think you'll enjoy a bank-on-yourself design policy loan, because the asset growth is guaranteed, houses don't. And you're in control of the repayment process of a policy loan. You're not in control of a HELOC repayment process; the bank can freeze or limit or term out that loan.

So for those that are able to save, this is a great strategy. For those that can't rub two pennies together, cannot save money, I'd encourage you to start budgeting, start saving first. By the way, you don't need to do a giant lump sum to do one of these policies. As I mentioned earlier, you can do a couple hundred bucks a month. Or, as we've talked about today, Slocomb, we can do a large lump sum, 100 grand, 400 grand, even over a million can go into these policies... So it really just depends on your particular circumstance.

Slocomb Reed: Mark, do you have an example of a time when you told a prospective client not to get a policy like this?

Mark Willis: Yeah. If they'd lost their job and they had nothing in savings, definitely not the right time to start a savings strategy. So that's a great example of when not to do it.

Slocomb Reed: Mark, I think I'm getting at someone who has the capacity to start a large lump sum policy, has the money liquid ready to do something like this. Give us an example of a time when you advise that they not set up a policy like this.

Mark Willis: Well tell me, if you had a large bucket of money and you had a great investment opportunity, like a real estate deal, and you could put that money in and get 15% ROI - and that's all you'd get, but that'd be a pretty cool deal. Or you could put it into the policy, and then borrow against it, get middle single digit returns on the policy guaranteed, and you'd get the 15% over here in the apartment deal, or whatever. Tell me when would it make sense not to do that. What we did was we just increased our yield without any additional real estate risk.

Slocomb Reed: We are bending the limitations of a hypothetical scenario here... The first thing that comes to mind for me is the fees required to set up the policy. In our hypothetical previously, I had $100,000 of investing power. And even when you consider that I'm getting a return on the cash value of the policy, I'm paying 6% to 8% in fees upfront. So I would want a spreadsheet and a little more than a podcast conversation and my laptop calculator function that I can get to while the editor edits out my thinking time, to have that conversation. It's the fees involved that would give me pause; there would have to be some sort of delta between when it makes sense to set up a policy like this.

Mark Willis: Yeah, like I said, I totally agree with that. If you can't get past the closing costs on a real estate deal, don't do the real estate deal. If you can't get past the insurance cost on the insurance policy, don't do the insurance policy. Most people get past the closing costs on real estate because they see the outcome on the other end. Most people who buy a business understand that there are costs of buying that business, but they see the benefit on the other end. I agree with you, I think having a longer conversation, a more complex conversation is valuable here. But like the old saying, a cynic is someone who sees the price of everything and the value of nothing. Don't let the value be diminished just because of an initial upfront cost. I've never seen a policy be so lean on the expenses for all the benefit you get over a long period of time. This policy has $200,000 of cash value, $300,000 of cash value over the prevailing decades, and it's a liquid bucket of money that you can get access to when banks stop lending, and they're already starting to do that. So which one of us would have the better real estate opportunities if one of us is relying on a banker, and the other person has their own source of financing? You can get a better deal whenever you have a liquid pool of contingency cash for anything you need.

Now, that said, don't do it if there's upfront expenses we can't get past. There's certainly other opportunities; you can just keep it in a savings account. But again, using cash means you're losing the opportunity to grow that money when you spend it on that ice cream cone, or on that real estate deal.

Slocomb Reed: Certainly a conversation to put into practice requires a depth of understanding in detail that unfortunately we can't get into in one short-form podcast episode, but a conversation worth having, absolutely.

Mark, thank you. Best Ever listeners, thank you as well for tuning in. If you've gained value from this episode, please do subscribe to our show. Leave us a five star review and share this episode with a friend you know we can add value to through our conversation today about banking on yourself. Thank you, and have a Best Ever day.

Mark Willis: And thank you, Slocomb, for having me on. And if it's okay, I'll just mention if folks want to dive deeper into this, go to, and you can find my podcast where we've got over 300 episodes with spreadsheets galore, for those that like to learn more about how this works. Especially Episode 91, where we go into what is the single premium policy to show you what this looks like with real numbers. Thanks so much, Slocomb, for having me on.

Slocomb Reed: That link is in the show notes. Thank you again, Mark.

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