If you missed Part I of the interview that Alex and I conducted with Jimmy Vreeland and Bob Scott, you will definitely want to catch that one (#166) before listening to this episode. These two guys are partners in the real estate investing world and hail from right here in my hometown of St. Louis.
In Part I, we got to know Jimmy and Bob and learn how they operate their business. In a few short years, they’ve expanded their portfolio to more than 100 homes in the St. Louis area, using mainly the lease option strategy.
In this episode, however, we switch subjects to life insurance. What in the world does life insurance have to do with real estate investing? That’s what Alex and I were asking. As you will notice as you listen, I have very little input in the conversation, because all this is new to me. I found it both fascinating and compelling.
Jimmy and Bob explain how an investor can use a whole life policy as a source of liquid cash to fund deals. In doing so, the investor is able to see interest from the policy, and profit from the deal, earned simultaneously. They discovered this when the banks no longer wanted to work with them unless they had X-amount of cash in reserve. They then used the cash available in their life insurance policies, because banks viewed it as a liquid asset.
However, the more attractive aspect is to educate private lenders on how they can use their whole life policies as a vehicle to become your lender. Then they, too, can increase their earnings on investments. Jimmy and Bob have raised a great deal of capital using this strategy.
This is a power-packed episode. Bring pen and paper!