The Bank You Control: Infinite Banking Explained for Real Estate Investors

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Show Summary

In this conversation, Harper Jones discusses the infinite banking concept and its application in real estate investment. He explains how life insurance can serve as a savings vehicle, allowing individuals to borrow against their policies to finance real estate projects. Harper also emphasizes the importance of education and coaching in understanding the infinite banking concept and how it can complement real estate investments. He shares insights into his diverse real estate portfolio, including storage facilities, mobile home parks, and industrial properties, and highlights the significance of creative financing and relationship building in the real estate industry.

Resources and Links from this show:

• • • Investor Fuel Real Estate Mastermind
    • Investor Machine Real Estate Lead Generation
    • Mike on Facebook
    • Mike on Instagram
    • Mike on LinkedIn
    • Life with Leverage Website
    • Life With Leverage Youtube
    • Harper Jones’ Email Address: [email protected]

  Listen to the Audio Version of this Episode

  Investor Fuel Show Transcript:

  Harper Jones (00:00)
  Yes, it works well for anyone in the business world to like borrow against their policy and bank their business or bank some of the down payment or finance an entire real estate project. So for example, a lot of people take hard money, private money, bank money. And of course, over time, you’ve got to capitalize a policy or your system of policies. But let’s say you had a couple hundred thousand there, Dylan,

  Well, you could actually start financing your own projects, right, by borrowing some policy.

  Dylan Silver (02:01)
  Hey, folks, welcome back to the show. Today’s guest, Harper Jones, is an advocate for the infinite banking concept and uses his system to invest in real estate. He invests across several asset classes, including storage facilities, mobile home parks and industrial real estate. He also coaches people on infinite banking and makes it smooth for them to get started on their journey or expand their system. Harper, welcome to the show.

  Harper Jones (02:28)
  Hey Dylan, thanks for having me. I’m looking forward to having a short conversation, but making sure we can add some value.

  Dylan Silver (02:35)
  Yeah, absolutely. And I was mentioning to you before hopping on here, I don’t know about the infinite banking concept. And so I’m excited to learn about it. How did you get started in developing the IBC as you?

  Harper Jones (02:50)
  Yes, for sure. Originally, I had started investing in real estate about nine years ago, fall 2016. Typically, we’re more in the southeast. I live in Knoxville, Tennessee. After a couple of years of doing some more residential investment, wholesaling, flipping some residential properties, having some rentals, I was introduced to a concept called the infinite banking concept by Nelson Nash.

  Been around for a few decades. Everyone puts their own spin on it. And I like to give credit where credit’s due to Nelson Nash. I saw that life insurance was a great place to sit your money. Like you make money in real estate, you invest it. But when you have liquidity or before you pay your taxes or insurance premiums, where do you sit it? Usually someone else’s bank, right? They’re going to take that money, loan it out, not give you much interest and profit off of it. So what we’re attempting to do is replace

  a savings vehicle, say like at a money market or a bank with a life insurance contract because the cash within those contracts over time can actually outperform a high yield savings account or money market. And we can easily borrow or access that cash within that policy to then go invest or escrow our expenses throughout our real estate or things of that nature. Does that make sense?

  Dylan Silver (04:09)
  It does. Did you? Where did you get into life insurance sales yourself only as an investment?

  Harper Jones (04:16)
  Currently, I do have my own company called Life of Leverage and we help people set stuff up as in their policies, making sure it makes sense for them. But I originally started just getting it for myself. So I have numerous policies myself. Over time, my buddies, other people I knew within the real estate world were like, hey, I like what you’re doing. Could you set me up policy? Enough people were asking me where I’m like, hey, maybe I should naturally get into this.

  And then organically it’s grown. work with people, I think 34, 35 states now, and I’ll have Zoom calls, meet people in person, have phone calls, go over what makes sense, and then get them established with policies and set up their system.

  Dylan Silver (04:58)
  Now, you mentioned multiple policies for yourself and I’m so new to this. I’m thinking life insurance. You’ve got one life, but you had multiple policies. Walk me through that.

  Harper Jones (05:54)
  sure. So when you’re getting in to life insurance, the underwriters are like, hey, you can get X amount of coverage based off your net worth or your income. So if you were to get a policy and you’re like, hey, I want to get a bigger policy, I want to get more cash in these policies because it makes a lot of sense, which a lot of people expand over time, then you can have more than one on yourself, right? You also could have a policy on a spouse or anyone with insurable interests like kids.

  grandkids, which could be a great alternative to a 529 savings plan, if you’ve heard of that. And then in business, let’s say Dylan, you and me own the business together. Well, most people don’t have this, but they should have a buy-sell agreement. What happens in the event of death, disability, or retirement? And one way you could fund the buy-sell agreement is with the life insurance. And so me and you could own policies on each other.

  Right. Then when we own them on each other, it still acts like a great savings vehicle. Right. And the cash accumulates in a tax defer, but really tax free manner. You can borrow against it and practice him in a banking. But the death benefit we own on each other in the event, say, I was to pass away, that death benefit would pay out to you income tax free. You would then buy my portion of the company out or real estate out. Their family’s cashed out within 60, 90 days. You’re not partners with the spouse.

  Dylan Silver (06:54)
  Hmm.

  Harper Jones (07:23)
  makes it simple, get the liquidity immediately. And then you now have a step up in tax basis if you handle it properly.

  Dylan Silver (07:30)
  Now, at what point in time from the time you take out the policy to the end of the policy, can you start borrowing from it? I’m imagining once you’ve put in a significant portion of money, you can’t just start borrowing immediately, can you?

  Harper Jones (07:45)
  Yeah, so, and that’s a fantastic question. And on my YouTube channel, I have five to 10 minute videos that go through, say like life insurance policy design or mechanics of it, or even my whole presentation. And people can check that out and we can link that later. Cause I get those questions so much. made some videos with visuals. When you start funding in the beginning, you’re not going to be able to access every dollar that you’re contributing, say in the first year or second year.

  but you will over time be able to access more and more of that cash. You can still borrow and access the cash right away within the first year of starting the policy. You’re just not able to access 100 % of what you’re contributing right away. It takes some time to compound and grow. Now keep in mind, we are actually owning the life insurance contract not only as a customer, but if you get a policy with what’s called a mutual insurance company, you actually mutually own the company with all the other policy holders.

  There’s no third party stockholders, which means you get to participate in the ownership or the potential profits and dividends, which is just like you investing in real estate or a business or in your own education. Money, time, resources go out as the investment, and then you get paid back in dividends over time. Same thing here. It’s going to take a couple of years to start compounding and for the snowball to start occurring, but then it starts outpacing and outperforming, say, a savings account at a bank. Why? Because you’re the customer at a bank, not

  Dylan Silver (09:11)
  Yeah.

  Harper Jones (09:12)
  ⁓ that makes sense.

  Dylan Silver (09:17)
  Correct me if I’m wrong on this. This is just a thought that I had kind of at a left field. But when you mentioned this mutual ownership, the bank gets the interest. But in this case, you would be getting the interest, right?

  Harper Jones (09:28)
  Yeah, sure. So in a insurance company, all the policyholders have to pay in premiums, right? So that they can get their benefit, which would be say the death benefit. They also are gonna get something in those permanent products called cash value or equity or cash that you can then access and borrow against to give the death benefit and the cash value. But that insurance company as a whole has to put that money to work to pay those benefits and to grow, because they need to still profit like any company.

  Now, when they do profit, the only difference with a mutual insurance company versus stock insurance company, which most insurance companies are stock insurance companies, the mutual companies, all the dividends and profits get allocated on a pro rata basis to us as policyholders, right? A bank operates same way, right? Dillon, me and you put deposits to the bank, they take those deposits and if they don’t loan it out in profit, they’re not in business. That’s how they grow.

  Right? But they give us interest on our deposits or some interest, and then they go profit and the difference. And that’s how they make the whole business grow. And the profits go to the stockholders, which usually is not the customers at the bank. So they operate very similarly. So what we’re doing is we’re in essence creating our own bank and becoming our own banker over

  Dylan Silver (11:02)
  Right.

  Now, I find that interesting as well that you not only offer ⁓ the ability for people to become their own bank, but also ⁓ offer them coaching ⁓ to help them expand this beyond, you know, using it as a bank, some strategy as well. Is that accurate as far as helping them get into investing in real estate?

  Harper Jones (11:47)
  Yes, Dylan. So with anything in life, you need to be educated and understand it. Maybe you don’t need 100 % because then you would never take action, but have a substantial amount where you’re comfortable. And so what we do is we’ll coach people on the concept, say, hey, this is how and why, especially design life insurance contract with a mutual company, a whole life policy works, how it can outperform other savings vehicles over time. If you can delay some gratification.

  And then we’ll coach you on what’s really most important is getting the policy working for you to complement what you’re doing. So it’s an and asset. As the cash gets in there, you still can borrow against it and have that real estate or you can invest in the stock market or so on and so forth. So we will coach, make sure you’re educated. If it’s something you wanna pursue, great. We can get you set up. I’m a licensed life insurance agent. Can help you get set up.

  and then we continue to coach you and service you after the fact. Does that answer your question?

  Dylan Silver (12:50)
  Yeah, it does. you know, I’ve had other folks in the life insurance space talk about, I don’t know if they referenced it as the infinite banking concept, but they talked about becoming your own bank, which I’m imagining maybe a similar type of idea, but they themselves were not investors. So then, you know, when they’re talking about, you could parlay that into real estate. My thought was, well, who do I go to to figure out how to do that? Because you’re the

  the life insurance person and I’m the real estate guy, but I don’t know how these two worlds intersect. Since you’ve got experience across multiple segments of real estate that really does mesh well.

  Harper Jones (13:30)
  Yes, it works well for anyone in the business world to like borrow against their policy and bank their business or bank some of the down payment or finance an entire real estate project. So for example, a lot of people take hard money, private money, bank money. And of course, over time, you’ve got to capitalize a policy or your system of policies. But let’s say you had a couple hundred thousand there, Dylan, and we were just talking before we started the podcast. You go find a flip for 200,000.

  and you want to wholesale it, whole tail it, or you want to fix it up and sell it, or then refinance it to a bank and cash yourself back out. Well, you could actually start financing your own projects, right, by borrowing some policy.

  When you borrow against it, we’re borrowing from the mutual insurance company and there’s no middleman marking up the interest. So right now we could borrow about 5 % interest and this is December of 2025. And the

  cash within the policy still earns interest and dividends tax deferred early tax free the whole time you’re borrowing. So your dollar is working for you in two different places, hence the life of leverage.

  Dylan Silver (14:39)
  Do you, do they check credit when you’re borrowing against your own policy?

  Harper Jones (14:43)
  No, they don’t. And there’s part of the reason why, or the main reason why, is your cash within the contract is really the collateral or a lien. And so they’re getting paid back in one, if you were to graduate this world and pass away, the death benefit would be paying off the outstanding loan plus interest, and the rest would go to your beneficiaries income tax free. And if you were to walk away from the policy, then they know that cash is sitting within the policy to offset the loan they loaned.

  Does that make sense? So it’s really the safest investment.

  Dylan Silver (15:56)
  Now, I’ve heard some other investment vehicles that people are using outside of insurance. I’ve heard one like real estate IRA, self-directed, if I’m not mistaken. And so when folks are trying to determine, you know, which vehicle to use, they may be trying multiple, right? ⁓ Is there one reason why you would go with, you know, insurance, infinite banking versus maybe a self-directed IRA?

  Harper Jones (16:25)
  Yeah, sure. Great question. A self-directed IRA or any type of qualified plan is qualified. It’s government sponsored. You’re to have more restrictions. There won’t be a death benefit. You’re to have penalties accessing the cash. I’m not saying don’t utilize that or don’t keep it if you already have it. But what’s important in using your money today and putting it to work today and having the freedom of that use of capital.

  Right. So if you have a self-directed IRA, you could still utilize it, typically arm’s length per se, but you can’t just grab all that cash and use it in whatever you want as easy as you should be able to. There’s also no death benefit. Depending on how it’s set up, it could still be taxed later and so on and so forth. But at the end of the day, before you make any investment, before you can spend any money, before you could go

  finance anything in life, you got to have at least some sort of savings or capital. And what we’re doing is seeing, hey, where’s the best place to store that before we invest it? Right? So from my perspective, keeping it in a place that has a reasonable competitive rate of return can be tax favored, potentially creditor protected if you were to get into a lawsuit or to get sued, has a death benefit.

  could be guaranteed, you could leverage against it in a conservative way that’s beneficial to you, and overall it’s liquid. Now you’re like, okay, what vehicles offer that that could still be a savings vehicle? A money market’s gonna check some of that, right? Gold or silver could check some of that, right? Cash could check some of that, but a life insurance contract checks all that, but it does take a handful of years to get that compounding going and delay the gratification.

  If it’s in a qualified plan, you can still get a good returns, but that’s more of an investment. It’s more tied up and you don’t have as much control and freedom. Does that help Dylan?

  Dylan Silver (18:30)
  Yeah,

  absolutely. I’ve got to reach out to you. I’ve got to take a look at this for myself. When when we talk about the areas of real estate that you’ve invested in storage, mobile home, industrial, I’m seeing a theme here, which is, you know, different type of tenant, right? We’re not talking as much about the typical, you know, single family, multi family. So the the the interactions are different. And I’m also looking at, you know, land plays.

  storage facilities require a lot of land, industrial, mobile home parks. What made you get into that realm of real estate versus single family or multifamily?

  Harper Jones (19:08)
  Sure, so starting out about nine years ago, we did start out residential. Over time, started buying rentals, then sold out of those, which I mean single family rentals and some apartments, then got into storage facilities, okay, which kind of fell in our lap. I had a residential broker bring a small storage facility and we bought it, me and my brother. And now we have seven of those. I’m minority owner in two mobile home parks. And then I have 50-50 ownership in an industrial building.

  All various different type of tenants, you’re right, but at end of the day, real estate, just like anything, is a business and you need to run it to where it’s the most efficient business you can to scale it, to velocitize the money, and to velocitize the time. So I am somewhat agnostic to the tenant and the exact asset within real estate, but I do have some preferences depending on where I perceive the supply-demand curve going in the future and how easy or uneasy it is to

  build those properties in a given area depending on zoning and things of that nature. that help?

  Dylan Silver (20:14)
  Yeah, absolutely. And I think mobile home parks, facilities and industrial as I mean, these are areas that right now I’ve seen tremendous interest in. And I think a lot of this is coming from folks who are seeing it may be more challenging to be a fix and flipper. Right. And just the general ⁓ stressors of being a landlord in the single family space and realizing, you know,

  storage facilities, mobile home parks and industrial just totally different avenue. And also to it’s almost I don’t want to say uncharted territory because there’s a lot of people in it right now and already. But it doesn’t have the type of buzz that you know, everyone who’s trying to get into real estate, maybe looking at HGTV and fix and flip and so forth. And so storage facilities as well, you can get an SBA loan, right. So it’s very interesting. And I would say ⁓

  a lot going on in those spaces and you’re seeing a lot of great new operators in those spaces as well.

  Harper Jones (21:17)
  Yeah, for sure. And with any asset class, there’s always going to be competition. I try to always have an abundance mindset. There’s always deals. You can always get creative. Sometimes you got to be patient. I’m a big relationship guy. So most of the deals I’ve bought, it’s been over an extended period of time. I’ve built the relationship with those individuals or people that own those properties before we purchased it. And sometimes I do seller financial creative finance where the sellers have financed almost 100 % of the deal.

  they hold a second, or we’ve had debt that we moved around to different properties after we sold it and we didn’t pay the sellers off. So like, I like to get really creative in my mind, which also parlays into the infinite banking and how real estate and that they really go hand

  Dylan Silver (22:06)
  Well, we are coming up on time here Harper. I’d love to continue talking with you about the mobile home parks, about infinite banking and I’ve got questions I’ll have to reach out to you after the show. But where can our audience go if they’re interested in reaching out to you? Maybe they would like to explore the infinite bank concept for themselves.

  Harper Jones (22:26)
  Sure, they could go to lifewithleverage.com. All my contact details are there, lots of resources. I also have a YouTube channel that you can see under the resources or about us. And you could also email me at harper at lifewithleverage.com.

  Dylan Silver (22:46)
  Harper, thank you so much for coming on the show today.