Invest Smarter: Alton Dawsey on Life Insurance & Real Estate Success

Dylan Silver (00:01.133)
Hey folks, welcome back to the show. I’m your host, Dylan Silver. And today on the show we have Alton Dawsey out of Virginia, real estate entrepreneur and independent life agent with a decade of experience as a real estate investor. We’re to be talking about how these two areas really intersect here today. Alton, welcome to the show.

Alton (00:23.938)
Thank you, glad to be here and hope that’s value to folks listening.

Dylan Silver (00:27.735)
You know, I always like to start off at the top by asking folks how they got into the real estate space.

Alton (00:34.582)
Sure. So for me, I got involved in real estate right at the thick of the crash, meaning the crash had happened, you know, we’re talking 2008. Everybody was running from the business. I start running into it. And I got involved with real estate and did everything that that’s, you know, some of your past episodes have been about from wholesaling to flipping to landlording.

and to seller note financing to syndicates. And then as time passed on, I had a friend introduced me to the life insurance business. I got in the life insurance business and I guess, you know, kind of how the Sagan goes where there’s opportunity where you see a problem and a solution. And that’s one of the things I saw is, a minute, you have these real estate investors who are working tirelessly to get these properties.

But then what happens when they acquire properties and unfortunately they pass on? What happens to that? And I saw a way that the life insurance business could work together with that.

Dylan Silver (01:39.554)
Yeah.

Dylan Silver (01:43.93)
I’ve actually been a registered life agent in Texas, licensed life agent in Texas, and now I am in real estate, right? I’m a wholesaler and now I’m a real estate agent. But I think about this and I think, you know, why don’t more people, of course, you know, you need to have this in place because this is a big asset, but most people don’t think about this until it’s too late.

Alton (02:11.884)
Sure, I mean, you I think one of the problems is, especially for real estate investors is, is their focus, right? And as it should be, they’re focused on growing their business. They’re focused on finding a property. They’re focused on being a good landlord for that property. And, you know, of course, hey, with folks who have a mortgage, the bank’s going to make them get insurance for the property. But when it comes to stuff like

what happens when I pass on. This is just one of the things that slips their mind. And also, let’s be honest, you’ve been in the businesses, nobody wants to talk about these type of things, right? Passing on that is. So I think that’s what it is, is they just get so focused and this is one thing they should pay attention to, because it is important.

Dylan Silver (02:52.205)
Yeah.

Dylan Silver (03:00.929)
It’s probably the most important thing about it. Of course you need to have this whether you’re involved in real estate or not. I think if you’ve got a family you need to have some type of life policy. But if you’ve got lots of property you have a portfolio. Number one you definitely have a plan in case something happens to you. But secondly you want to have these insured right. And in some some some course of action. I’m kind of on the outside looking in this since it’s been a couple of years since I’ve been in the life insurance.

space, maybe let’s get a little bit granular here Alton and talk about, know, if God forbid something does happen to somebody and they have a policy in place, what does this kind of look like? What is the steps looking like for, you know, how this is passed on, both the property as well as the policy that they have in place and the beneficiaries?

Alton (03:53.708)
Sure. you know, basically an easy way to think about this, because again, you know, the folks here are real estate investors. They, you can go down the rabbit hole of life insurance or different types of insur, life insurance, different forms of policies. But listen, I like to keep it simple and say, think of it this way. Get you a term life policy. That’s the same as your mortgage. If you’ve got 30 years on the mortgage, get a 30 year term.

policy that covers that mortgage. If the property is worth $500,000, get $500,000 coverage on it. Because as you ask, know, what essentially will happen is that will cover that property. In the event that something happens to them, when they pass, their family will get that asset. They’ll get tax-free life insurance money that they can go and pay off that asset. Because here’s the thing.

that folks in the real estate business know is when you’re looking for a property, what do they always teach you? Find that motivated seller, right? And my thing is don’t let your family become that motivated seller. Make sure they have this money in place. Make sure they can pay off that asset. Make sure they can keep that asset for their family for the rest of their life.

Dylan Silver (05:00.131)
Yeah.

Dylan Silver (05:12.313)
I’ll tell you that’s spot on because I’m working a probate list outside of this. I’m working a probate list right now. know, people who’ve been through this situation and there’s money owed. Now, you mentioned term life. So, you for folks, I’m semi-aware of this. But for folks who have no awareness of what this is, explain term life to people.

Alton (05:32.107)
Sure, essentially what you’re doing is you’re buying a life insurance policy for a certain time period, a certain term, which is where the name comes from. And as I mentioned, the simple way to do this is just look at how long your mortgage is. And let me just insert something here. This just doesn’t apply to a long-term landlord with a 30-year mortgage on a property.

Think of somebody who is acquiring a property and they want to hold it for five years and then sell it off. Okay, great, fine. Get a term five-year policy on that asset. You can play with the numbers and you can play with the amounts. And also something I wanted to point out, and it’s a good question you bring up is, I don’t want people to confuse term life insurance with mortgage insurance. Mortgage insurance is something that the bank or the lender

may offer to you and say, hey, if anything happens to you, if you can’t pay this mortgage, this is going to cover that. That covers the lender. Doesn’t cover you, doesn’t cover your family. The term like does.

Dylan Silver (06:43.191)
And so, how much do know about the mortgage insurance?

Alton (06:48.875)
I don’t personally sell it or use it, but just reading up on, looking at other sides of it.

Dylan Silver (07:00.141)
Because when I think about this, think about what is the purpose of that? So if you can’t pay it, is it going to come into effect? I I’m thinking about the use cases for that type of insurance. It’s like, can people just not pay? And I don’t know. This may be a separate question.

Alton (07:15.86)
Sure, again, it’s my position on it, it’s my understanding from it is that protects that lender because that lender wants to get paid, right? They wanna make sure that they get paid back. And essentially someone is buying a policy and they’re paying, it’s just the lender is later using that money, exactly.

Dylan Silver (07:33.721)
with like the lender. So you know if an investor has multiple properties maybe multiple different verticals you know short-term rental maybe they have some multifamily maybe they expand have some commercial or industrial you know storage facilities so on and so forth

Do they need an individual policy to, like a new term policy to protect each one? Are they going to expand their policy? I mean, if you have one that maybe has a 30 year note and another one that’s a five year note, but then you get the second one, you know, 10 years down the line, I’m thinking this is a lot of juggling. How does this work?

Alton (08:10.915)
And so to answer your question, you know, is it possible? Yes. But again, I like to keep it simple and treat each property individually separately. So if you have five properties, get five different term policies. And maybe some of your listeners are thinking about, great, sounds like a good idea. But how do I, you know, how do I look at this? How do I manage the cashflow part of this? And I would say when you’re

Dylan Silver (08:37.144)
Yeah.

Alton (08:39.87)
For those of you out there looking for a deal, equate that into your cash flow before you get that deal. Look at how much it would cost you per month. Put that into your property management fees, to your vacancy fees. That way you’re prepared. And for the folks who already have the property, look at it as, yes, it’s going to be an expense, but it’s a way for you to keep hold of that asset for your family afterwards.

Dylan Silver (09:08.993)
So, man, I think this is something that just is a no-brainer. It’s a no-brainer because otherwise you have, I’m shocked, I haven’t previously thought of this, otherwise you have a situation where something happens to you, money’s all on the property, other people have to now inherit what is to them maybe a problem because they’re like, well, we’ve got equity in this, but now we’ve got to sell it. We don’t know anything about this, right? So is there a way where maybe, you mentioned, you know,

bring it into the cost analysis of the property, are there policies where if they don’t end up passing away, right, that they’re able to recoup some of that, or would you not recommend that in this case?

Alton (09:49.821)
Well, when it comes down to expenses, the normal term policy, that’s going to be your, I’d say your cheapest and your best option. Now, there are term policies that if you don’t pass, then you can receive those premiums back, but it’s going to be a higher expense for you. It’s going to be an extra cost. So, I mean, I would argue, especially for real estate investors,

Keeping your expenses low, just look at a term policy and listen. If in 30 years you don’t pass away, hey, great thing you didn’t have to use it, right?

Dylan Silver (10:28.471)
Yeah. You know, and I know this is going to vary wildly, right? But if, is there a ballpark range that people should be looking at, you know, what would be considered reasonable for them to be spending on in terms of premiums monthly on a policy if they’re, let’s just call it, know, younger thirties, younger thirties. Is there a ballpark premium that they should be looking at for these types of policies?

Alton (10:55.848)
Yeah, I mean, you know, you know, from being in the business, a lot of this stuff depends on many factors. But let’s just take a hypothetical example. If you’ve got a person, as you mentioned, somewhere in their 30s, and they have a $500,000 property, they take out a life insurance policy that may cost them $500 to $800 a year. I don’t know how much that is off

offhand per month, but you know, $500 to $800 a year for a half a million dollars in coverage on a 30 year property.

Dylan Silver (11:26.755)
Okay.

Dylan Silver (11:33.049)
Now will other insurers see that someone potentially has lots of different policies out? Is this something that’s like available to the insurers to see? Is this gonna raise eyebrows in any way?

Alton (11:46.98)
It is something that insurers definitely can see because they don’t want to over insure anyone, right? However, you know, if you work this out and you show, here’s why I need this, you know, to the insurance company, the business uses, it’s an insurable interest. And when you explain it that way, hey, I have this property, I want my family to have it. Not an issue for most insurance companies. They get it, they understand.

Dylan Silver (12:17.129)
So, you know, when people are thinking about the calculus of kind of their investment plan, if you will, this is so new to me that I’m thinking like, wow, why aren’t people, it’s obvious, right? And if it’s only, you know, 500 to 800 a year, I’m sure that there’s some way where they can work that into the equation here. How common, Alton, have you seen this be with real estate investors? Because I mean, I feel like it’s very uncommon.

Alton (12:46.886)
Not common at all. Unfortunately, as I mentioned earlier, when I was in the real estate business, I didn’t think of it that way because as I mentioned earlier, you’re just so focused on the deal. You’re so focused on the now, what you’re gonna build now. So unfortunately, it is really uncommon, but hey, listen, for stuff like this, it’s a way to get the word out for something for real estate investors to start thinking about.

Dylan Silver (13:04.793)
you

Alton (13:16.143)
And listen, I do want to say this is if you’ve got an insurer that you deal with, if you’ve got an entrusted insurance person, talk to them, pick up the phone, hey, I heard this podcast, I saw this video, I wasn’t thinking of this, let’s talk about this.

Dylan Silver (13:36.045)
Now, for investors who do have property, let’s call it lots of property, right, and maybe they don’t have this worked into the calculus, right, but they have 50 rental properties, what do they do?

Alton (13:51.365)
Well, you know, it just goes back to, know, with anything, right? You just go, I’m aware of this issue. How do I work this out? How can, you know, how can I move around some other expenses to equate this end? How important is it to me, right? How important is to my family? And listen, if you analyze that and you look at it and go, listen, I’m just going to take the risk. I’m just going to continue doing business as usual. That is an option, right?

But I would say the best thing to do is to sit down, sharpen your pencil, look at the numbers, see how you can equate this in, understand why it matters. And like with everything in any business, especially a real estate business, figure it out, find a way, get it in there, get it done, right?

Dylan Silver (14:40.279)
Now you have a real estate portfolio. I’m curious, did you realize that, these assets, if something happens to me, these are going to be passed on to my family. That’s kind of a headache. And therefore, I should be insuring these. Is this a common thing that is talked about in insurance circles? Or did you come up with this on your own, realizing, hey, real estate investors need to be doing this?

Alton (15:06.288)
When I was in the real estate business, I didn’t think of this thing because again, I was so focused, right? Now, when I got into the life insurance business, same thing on this side is I would say a lot of insurers don’t look at it, look at real estate investors this way because, hey, maybe they don’t have the background. Maybe they’re trained a certain way. But thankfully I had my feet in both sides of that world.

And I could see a way to say, a minute, like these two worlds need to meet up. There’s a purpose for this. So that’s why I started getting the word out.

Dylan Silver (15:43.609)
Very interesting stuff we’re talking about here. I’m thinking about how this impacts me directly in my next couple of steps. I’m kind of glad that I had this conversation before getting some properties versus after. When you’re talking to potential or current investors about this idea, have you found them to be receptive to it? Are they like, I don’t need that, I’ve already got life insurance? What’s been the general reception?

Alton (16:11.977)
sometime, or I’d say this a lot of times is, listen, I hear you, get it, but I’m focused over here. That’s the attitude. The next would be, I get it. I understand it. I just don’t have room in the budget for it. and then, you know, on, on, on the other end, you do have some real estate investors like, know, like you had mentioned who just go, my gosh, I’ve never thought about.

Let me look into this. Let’s do this.

Dylan Silver (16:43.735)
I’m curious now, mean, I’m a newly licensed real estate agent. Got my license in April. There’s not a lot of, I would say, know, insurance people that show up to these real estate meetings. I’m talking, there’s tons of real estate meetups all the time, right? And you might have, you know, people that are fixin’ flippers, wholesalers, hard money lenders, you have people doing new builds, you know, people that do rehabs, all different types of avatars.

Maybe we need some insurance people in those rooms.

Alton (17:15.011)
Maybe you do. would definitely say, you know, I would welcome that because it is something that is important. And listen, you know, I would say to maybe some of the skeptics out there is, you know, don’t look at this as an expense. Don’t look at this as some type of, you know, another cell or anything.

Look at this as strategy. Look at this as building your empire. Look at this as a way as generational wealth, right? As I mean, that is one of the things people love about the real estate business is they talk about generational wealth. Well, you this is one reason to invite them in the room for that.

Dylan Silver (17:54.83)
Yeah.

Dylan Silver (17:59.255)
I’m also thinking about properties that are cash flow heavy. If you’ve got Airbnbs, specifically in some of these markets, I was talking to someone today in North Atlanta. You can cash flow even on long term pretty well up there, they were saying, and then even more so with short term. If you break it down on a month to month basis,

It really to me seems like a no-brainer. But Alton, we are coming up on time here. Where can folks go to get a hold of you?

Alton (18:34.628)
Sure, if folks want to learn more, again, they can go to termlifeforlandlords.com. And on there, listen, if you’re a do-it-yourselfer, which a lot of real estate investors are, there’s a place you can click on there and you get your own quote. Nobody’s going to call you. Nobody’s going to harass you. You just look at the numbers yourself and run the numbers. But if you’re a person who needs some special situation or something, set up a call with me. I’ll talk to you.

And again, as I mentioned earlier, if you’ve got a trusted insurer, talk to them. But if you don’t, look me up.

Dylan Silver (19:10.475)
Alton, thank you so much for coming on the show here today.

Alton (19:14.179)
You’re welcome. Glad I could help.