Introducer [00:00:02]:
Welcome to the Untold Stories of Real Estate Investing, hosted by Wayne Courageous II. A place where active and passive investors come to hear the good, bad, and ugly of real estate investing. Our guests consist of experienced operators and investors who want others to succeed by sharing their stories. If you're looking to syndicate deals or grow your wealth passively in real estate, you've come to the right show. It's now time to sit back, take mental notes, and enjoy our next episode of The Untold Stories of Real Estate Investing.
Wayne Courreges [00:00:38]:
Hey. Welcome to the untold stories of real estate investing. I'm your host. Wayne courageous. Today we have the pleasure to speak with Dr. Rob Scranton. Dr. Scranton teaches people how to use their current debts and expenses to grow their wealth outside of the traditional approaches like scrimping, saving, and denying themselves the lifestyle that they want.
Wayne Courreges [00:00:58]:
He leverages his extensive background in accounting finance, and his experience as the former chief financial architect of a cutting edge financial firm to offer a unique perspective on a highly effective financial strategy known as the Infinite Banking Concept, or IBC. With over two decades as a serial entrepreneur, dr. Rob combines his expertise to showcase the power of a little known approach. How are you doing, Dr. Scranton?
Dr. Rob Scranton [00:01:24]:
Great, Wayne. Thanks for having me on your show.
Wayne Courreges [00:01:27]:
Hey, man, I am so excited. Listeners that listen and know that I always like to spend the first 15 minutes before recording just to get to know the person and all. And you've got a great background, interesting story. Go ahead and share to the listeners a little bit more about yourself and how you got into the platforms.
Dr. Rob Scranton [00:01:46]:
Yeah, so well, Wayne, make sure it is an interesting circuitous path. Please cut me off if I go longer than your show, than your listeners want. Well, I got my first degree in accounting and finance. I went to college. Like all of us feel like we have to right after high school because you don't want to be labeled in the nerd or slacker category, I guess. And I didn't have any idea what I wanted to do. And my dad's like, well, the world always needs bean counters. And so I decided to get my accounting degree, and I went to work in that in public accounting, preparing tax returns, doing audits.
Dr. Rob Scranton [00:02:31]:
I was a financial analyst for the Florsheim Shoe company. I had an injury that took me in a different direction for a while, and I actually went to Chiropractor, fixed my frozen shoulder. I couldn't move for like two and a half years. And so I went to school to become a chiropractor and do that myself. And I was realizing that I probably should be saving for retirement and doing that stuff. So I did kind of the traditional route most people do, putting money into 401 IRAs. And then 2008, 2009 hit and half of that got wiped out. I'm like, wow, why am I working so hard? This is awful.
Dr. Rob Scranton [00:03:13]:
I mean, the feeling was just sickening, just a complete lack of control over any of that that was going on. And I saw the same thing happen to my parents because that was right about the time that they were retiring and most of their friends group were retiring. And I was like, oh, man, what bad timing to have something like that happen right at the point where you're no longer earning an income or able to replenish or replace what had just been wiped out almost seemingly overnight. I mean, those things, when they start rolling, they happen really fast because they're thinking, oh, it's just a blip, or it'll bounce back, and then it just keeps going down. And now they're like, well, now what do you know? I'd see him in Lowe's or Home Depot, and I'm like, oh, hey, you know Mr. Sandoval. How's it? They kind of embarrassedly. Explain.
Dr. Rob Scranton [00:04:05]:
Oh, yeah, well, you know me. I retired, but I just couldn't stand sitting at home. I'm too much of a busy body. I had to get out and do something. And I'm like, no, I'm pretty sure you need the extra income. You're back here. Wow. And I was like, man, I did not wanted to see that happen to me.
Dr. Rob Scranton [00:04:23]:
So I started looking around at what other things I could be doing or gosh, this didn't work for me. Didn't work for my parents or their friends. Like, what else is out there? What other options are? So I started looking at investing in real estate, but even before that, I heard of this concept called the infinite banking concept. And when I first had it explained to me, I was like, wow, there's no way this is too good to be true. So I kind of took my analytical brain from my accounting and finance background and tried to poke holes in it and kind of turn it inside out, and I couldn't. I mean, the more I examined it, the more I realized, like, no, this is absolutely 100% true. This is totally accurate. Sometimes things that seem too good to be true actually are true.
Dr. Rob Scranton [00:05:14]:
And so I started focusing most of my extra money or what kind of we talked about you're going to warehouse your money somewhere. And I just started moving away from traditional banks and Wells Fargo, where I had been warehousing my money and moving it into my own banking system where I had more control and I had all these features and benefits. Where I could borrow the money out and still earn all the income and never stopped the cash growth and accumulation and compounding inside my bank, even while I was out making a loan somewhere else. As I started doing stuff in real estate. So I was kind of getting an opportunity to double dip or earn a rate in two different places, and I just kind of quietly kept doing that as my primary avenue for warehousing my money and storing my money. But it wasn't. After a few years, five or six, seven years, and then ten years, I realized like, holy cow, I've got a huge amount of cash built up inside my own banking system. And it's funny how sometimes the universe, if you want to call that I know that could sound a little woo woo, but it just seems like opportunities come to you when you have the ability to take advantage of opportunities.
Dr. Rob Scranton [00:06:31]:
And so I bought my first commercial real estate property. I was able to use the cash values inside my bank and make the down payment on that. Actually, every piece of real estate that I've bought, I've been able to utilize my own banking system as part of that. So it helps a lot when you don't have to meet as high restrictions from traditional banks and sometimes not even have to go through their application process and that long drown know. I'm sure you've done that, Wayne, and sometimes you're just like, oh my gosh, are they going to like me enough to allow me to have a loan?
Wayne Courreges [00:07:12]:
Especially in this environment? It's tough.
Dr. Rob Scranton [00:07:15]:
Yeah. Interest rates. If I have my own bank, I just have to ask myself, hey, will you let me have a loan? Sure, I'll let you have a loan. I like you and I trust you and I know you, so I don't have to go to the bank to do a lot of that stuff. So you're right. More tight, I guess. Is that what we would call the current environment and tighter lending markets? That's a huge advantage. My dad is a real estate investment investor to a much higher degree than I ever have been.
Dr. Rob Scranton [00:07:51]:
He had 39 units at one time when I was a kid growing up, and he learned about this infinite banking concept, he's like, wow. He said, I wish I would have known about this 25, 30 years ago, because he said some of the best real estate deals I ever had the opportunity to I left on the table because I couldn't move quickly. I didn't have cash on hand. I had to go ask permission from the banks and they got taken out from underneath me. Anyways, that's kind of a little bit of my background and story and it's really been kind of the foundation of every investment and every financial move that we've done over the last 14 years for myself and my family.
Wayne Courreges [00:08:41]:
So let's go to basics on the infinite banking. What exactly is it? How much do you need to have to get started and how do you then structure? Because what I'm hearing from you and I'm learning along with the listeners, because this is not something that I'm too familiar with. So you're not housing your money at a traditional bank, it doesn't sound like so where are you housing it and how does that work? So maybe start with the basic level of what is the infinite banking system and then sort of how does one get started in that?
Dr. Rob Scranton [00:09:18]:
Yeah. Great questions, Wayne. So the infinite banking system kind of revolves around something that's actually been around for over 200 years. But about 25, 30 years ago, there was a gentleman named R. Nelson Nash who wrote a book called Becoming Your Own Banker. So if your listeners don't have that book, I would go on Amazon and get that. I think they have a CD set. If you're more an auditorial, learner, like, to consume information that way.
Dr. Rob Scranton [00:09:49]:
That's the way I am. I have those two CDs. I still have a car that has ACD player, and I'll periodically relisten to that because the lessons are true and accurate and kind of timeless. And it's one of those where I go back to and I pick up new things. Even though I've heard it multiple times, I still pick up things that I heard before and forgot or just didn't catch the first time around listening to them. And he saw that there's these very unique aspects before your listeners turn off the podcast, there's these very unique aspects of a certain type of overfunded, cash heavy, whole life insurance policy through a mutual company that pays dividends, which really is interesting. Most people don't realize that there's different types of life insurance companies. There's ones that are traded on the stock market, and usually their goal is to maximize profits for the stockholders.
Dr. Rob Scranton [00:10:51]:
But there's also mutual companies that are owned by the policyholders. And so as a policyholder, you really participate in the company's profits. And when the company pays fewer death benefits than what the actuaries predict, they actually return some of the premium to the policyholders as well. And so these particular types of policies grow cash inside. The policies to the tune of some of my older policies now are 1415 years old. When I stuff money in there, it's almost like a forced savings account. And that's one of my happiest days of the whole year. Now, when I walk down my alley to my mailbox and I open up the envelope with the annual statement on one of my policies, and it shows.
Dr. Rob Scranton [00:11:45]:
Oh, sure enough. There last year. There's my $10,000 deposit and the cash value inside that policy that I have access to at any amount that I want, up to the full value of the cash value inside there at any time I want, without any questions, without having to ask permission, without having to go through an application process like with a bank. And I put that $10,000 deposit, and then it shows, sure enough, that grew by $17,900 this year, I went down and opened up that statement. I showed my $10,000 deposit, and that cash value had grown by $18,500. So I mean, that's 185% return on the money I'm depositing into that bank, and it's guaranteed because it's in a contract with an insurance company, so it's not subject to the ups and downs the market or the real estate market or interest rates or inflation or any of that sort of stuff. It's guaranteed to never do anything but go up, and it just keeps getting better year after year after year after year. It also has a lot of protections that people don't realize.
Dr. Rob Scranton [00:12:49]:
Where the money? In Wells Fargo. If there was ever a situation where there was a judgment or a lien know placed or a wage garnishment or an IRS decision or a lawsuit against me, potentially that money that's sitting in Wells Fargo could be taken or frozen or I would lose the ability to access it. Whereas in almost every state in the country borrowing one or two. And there's workarounds around that, too. All the cash that I'm storing inside my banks are not subject to any of those. Because legally, because these policies, like you said, the way they were designed and put in place 200 years ago, they predate the IRS, they predate the income tax system so the government couldn't come in and screw them up, basically, because they pre existed, all that stuff. And legally, all that cash inside there legally is considered part of the death benefit of the policy. So that's why it's not subject to any of those things.
Dr. Rob Scranton [00:13:51]:
IRS decisions, judgments, liens, lawsuits, any of that sort of stuff, because it's not considered part of your assets. It's considered part of the death benefit of the policy, even though practically, with just a phone call to the insurance company, I can have those funds delivered to me in a couple of business days at any time. I want in any amount I want up to the full value of the cash value inside there without any questions or me having to explain myself or tell them what the purposes are for these. If you go to Wells Fargo today, if you try to take out more than $10,000, you have to fill out a form and describe and explain what you're using the money for. I mean, it's your own money, for goodness sakes. That's the same problem I have with 401 KS and IRAs. You're putting money in there? Yes. But you lock it up, you can't access it.
Dr. Rob Scranton [00:14:42]:
You still going to have to pay taxes on it someday, and they're going to penalize you if you take out your own money to access your own money, they make you pay a 10% penalty. I just think that's crazy.
Wayne Courreges [00:14:54]:
Yeah. One thing that stood out to me, you mentioned your $10,000. Is that the max that you can put into the whole life insurance policy, or does it differ by policy?
Dr. Rob Scranton [00:15:05]:
Good question, Wayne. So there is some limitations to really make these banking policies work if you're under the age of 40, because you got time on your side, obviously, usually about the minimum to start, because you asked about that earlier, and I just wanted to circle back to that. It's usually going to be about ten times people's age of what they deposit in their bank on a monthly basis. So they can do the quick math on that. Over the age of 40, we're usually going to multiply their age times 15 as far as what the minimum amount that we can be putting into depositing that bank on a monthly basis? As far as the maximum, that really has to do with every from the life insurance company perspective, everybody has what they call maximum human value to their life, and it's usually about 20% to 25% of their annual income, whatever that is. So insurance company doesn't want to over insure you and give your wife too much incentive to not want you around, if that makes sense.
Wayne Courreges [00:16:09]:
I'm not 40, but let's use the 40 times 15. So that's about 600, if I'm calculating correctly, 600 a month that you could put in. So say that's what, 7200 a year? Okay, so I was trying to figure those. So $7,200, you put that in whole life insurance and then how does that grow? Is it growing because the life insurance is paying the interest.
Dr. Rob Scranton [00:16:42]:
They'Re paying the incredible return? That's a super good question, Wayne. So they have a guaranteed interest rate, so they're putting that money in deposit when they know that there's a certain amount they typically don't have to use because you at your age are not likely to die for quite a while still. So they're going to put it in very secure bonds, us, Treasuries, those sorts of things. Obviously they're trying to buy more. Like now when the bond rates are a bit higher, they're probably going more heavily into that than when they were down really low. So you're getting paid that guaranteed interest rate in a mutual company when the company does well and they show a profit. You also participate in the form of dividends because you're also one of the owners.
Wayne Courreges [00:17:29]:
You got the guaranteed income plus any.
Dr. Rob Scranton [00:17:31]:
Upside, plus you get that return of premium. So every year the actuaries calculate the number of people that are expecting to die. And they're inherently overly conservative to make sure they have plenty of reserves on hand. If everybody was to die, they still want to be able to pay everybody off, but typically fewer people die every year than what they're predicting, so they give that back to the policy holders as well in the form of what's called a return of premium. So really kind of getting paid in three different ways. And then the thing is, each year that goes by the way, that gets bigger and bigger and bigger, is that compounding that staying inside there. Even though I have loans out for my cabin, for my commercial real estate property, for other things, that's the real secret sauce of this that, as far as I can tell, just doesn't really exist in any financial product anywhere in the world that I've ever seen. And if you know of something, please let me know because I've been looking for it for about 14 or 15 years, and I haven't found it yet.
Dr. Rob Scranton [00:18:37]:
So I ask sometimes, like in my presentation on our website, we have an hour long master class, and we kind of talk about this, how I have $100,000 in cash value inside my personal bank, say, for instance, and I make a $75,000 loan for a piece of property to make a down payment. And I make a $25,000 hard money loan to somebody, they're going to pay me 6% interest for a bridge loan or something so they can flip a property or something like that. And I ask people, okay, so I've got those two loans out. I've got the whole $100,000 out. How much money am I still earning interest on inside my bank? And people are like, well, none, because you took all the money out. I'm like, well, that is the secret sauce. I'm still earning all the dividends, the return of premium and the interest rate on that full $100,000 inside my bank, even while I have that money loaned out at 6% for 30 days on a hard money loan somewhere else. And I can keep dipping back in my bank and making those loans, and I never stop the compounding and the growth inside my own bank inside that policy.
Dr. Rob Scranton [00:19:47]:
And the other thing is when you think about someday you're going to retire and want to have money. Remember my story about that kind of failing, feeling like that was failing me. I hadn't got to retirement age yet. But seeing that fail my parents, my parents friends, and it's important not just where you get your income from in retirement and how much you've saved, but it's important how you take your income in retirement. Because say, for instance, somebody that saved up a million dollars in their 401. And the kind of traditional thing we always hear is, okay, well, you don't take out more than 4% a year so that you don't bleed out the whole pile of money and run out or whatever, right? Although, actually, I've seen revisions. I don't know if you've seen that. Now they're saying you should never take out more than about 1.9%.
Dr. Rob Scranton [00:20:36]:
Have you seen that? That's like $19,000 a year. Who's going to live on that? Yeah. And if you had a lot more saved up and say, person A was pulling money out of their 401K every year in retirement, $100,000, well, they're going to only end up with about $65,000 because they're going to have to pay taxes on it. And their Social Security benefits are going to be reduced because they're going to have to pay taxes on that, too, because they're showing a higher income. So their Social Security income is going to be reduced. However, if I am using as part of my retirement strategy, stuffing money into my own banking system in this protected way where it's growing tax free and I can take that money out to live off of in the form of loans. The IRS doesn't recognize loans. Think of all the loans you've taken in your life.
Dr. Rob Scranton [00:21:24]:
Did they ever tax you on any of the money that you got for any of the loans that you took out?
Wayne Courreges [00:21:28]:
This is incredible. So like we're in October now. If I were to do the 7200 now and then in January do another 7200, or is it a twelve month period?
Dr. Rob Scranton [00:21:38]:
Yeah, it's a twelve month. So whatever amount you based on calendar month.
Wayne Courreges [00:21:42]:
One question I have too is like when I transitioned from my W two to going all in on my real estate investments in the company, I think I was transferred my prior term life insurance into what I have now. I have life insurance because it was portable from my company that I left. But I looked at doing whole life insurance but it was like 3000 a quarter or something. Is it a lot of money because it was a high life insurance? Why are those so expensive and I'm not able to pull money out of those? Or am I?
Dr. Rob Scranton [00:22:23]:
In a term policy, there is no cash that grows or accumulates and those policies are purposely designed. That's why you hear people say, oh, buy term and invest the difference. Or you'll hear people say, well that whole life insurance, that's so expensive. I was like, but compared to what? I mean, if you're just comparing the first year of what you're paying, if you didn't die, if you died, the term insurance was way cheaper. But usually they're issuing you term insurance during the portion of your life where you're very unlikely to die. From an actuary standpoint, individual cases, yes, people die when they're young, but when they look at the aggregate, it's a very good product for the life insurance company because they're usually issuing those policies when people are very unlikely to die. So they usually just collect premiums for 10, 20, 30 years and they never have to pay out. So it's just pure cash machine.
Dr. Rob Scranton [00:23:18]:
And then when you reach the age, say you reach 60 or 65, and that $300 a year premium all of a sudden jumps to $4,000 a year for the same coverage. Most people are going to be like, whoa, wait a minute, no way, I don't want that anymore. And they drop it and they don't have any insurance anymore. Whereas whole life insurance or permanent renting.
Wayne Courreges [00:23:37]:
In a way you're spending money for, you're not getting any equity or any long term growth. Which I knew because it's just so cheap for me. It's like I've got young kids and so if something were to happen to me, what is it going to take to ensure that they get out of college comfortably? That my wife is comfortable so that she can do her thing. That's how I looked at term life, whole life. I just looked at the price tag like, holy cow, this is expensive. I didn't have this conversation before I was looking at it.
Dr. Rob Scranton [00:24:13]:
Sure, I mean, you have the conversation 95% of the rest of the world is. That's why? I didn't I didn't think this could be true or accurate because I have an accounting degree, a finance degree. I'd worked for public accounting firms. I'm like, Why have I never heard of this? This can't be true. I should have known about this stuff. And you're no different than the way most of the public is educated out there. But when I really started looking at it, I'm like, you know, yes, maybe it's price wise, more short term to have whole, but think of even the terminology they're using. Whole life insurance, permanent life insurance.
Dr. Rob Scranton [00:24:50]:
It's different, right? It's meant to last your whole life. It's meant to be permanent insurance that you have forever or at least until you die, whereas term is purposely meant to expire before it ever actually pays off. And so whole life insurance is one of the few insurance products that you'll ever buy that you're guaranteed to collect on because you're going to die at some point. And once you get to about year ten and having a whole life insurance policy, you've actually got back every single dollar that you've ever put into that policy in the form of cash values. And from that point on, it's like a free ride. It's a free policy after ten years, whereas your term, year 20, year 30, you're still paying in it, getting no benefit from it. If you don't die, you'll end up getting nothing. But after only about ten years with the whole life policy, you're actually winning.
Dr. Rob Scranton [00:25:47]:
Whether you live or whether you die, you're still way ahead. So then you ask yourself, okay, which one is cheaper? Yeah, at that point, the whole life insurance is actually cheaper. So it depends on the time frame when you're looking at it. And I think that's something that when people are looking at life insurance, they're like, oh, I got to have some coverage. I got to have some know what's the cheapest they're thinking in that short term thinking. But if we think of life as more like a marathon, this actually makes a whole lot more sense when you look at the broad scope of your life.
Wayne Courreges [00:26:19]:
Hey, listeners. It's Wayne courageous. I just want to pause real quick to say thank you for listening to our show. I hope that you're getting a lot of value out of it. If I could ask you to go ahead and, like, subscribe and share this podcast, that would mean a lot. It will get a lot of other investors like yourself learning about the process and the steps to successfully invest in real estate, either as a passive or an active investor. I also wanted to do a quick introduction of CREI Partners. I'm the managing principal for CREI Partners and we started it back in 2019 with one goal to grow your wealth passively in real estate.
Wayne Courreges [00:26:52]:
We do so by buying assets in multifamily build to rent communities and RV boat storage facilities. And we do so in areas that have strong market fundamentals and also have strong partnerships with other real estate investors such as ourselves. We personally discovered that passively investing in real estate was a really great blend for people that are busy like yourself, and that you can invest passively in real estate and still reap the rewards of the returns, the tax benefits, et cetera. If you're interested in learning more about passively investing, check out our website. We do a lot of content through our Passive Investor Coaching Program, through our podcast, our blogs, and just other information that we do on a daily basis. Check out Creipartners.com. Again, creipartners.com. If you're interested in building the relationship and joining our Investor Club, there's a link there to join.
Wayne Courreges [00:27:42]:
We'll set up a call and continue building the relationship with you. We're super excited to have that opportunity and I wanted us to get back to the show and hopefully again, you're enjoying the conversation and look forward to connecting soon. Thank you. So how did you analyze different life insurance companies to not invest, but open up account and I guess sort of invest in yourself? Starting your own banking system through whole life insurance is what I'm gathering here. So how does somebody go and determine which one is the best company to open that account with?
Dr. Rob Scranton [00:28:20]:
Yeah, that is hard for the novice, and I would say Wayne probably even more important than that, because we see this with people all the time where they heard about the infinite banking concept, they went down to their brother in law who sells life insurance, and he sold them a whole life insurance policy. And unfortunately, it wasn't structured correctly. So they didn't have almost any cash value growing for sometimes not any for a year, two or three, and very little even after four or five. Whereas ours, by the way, we design them after three or four years, you're seeing the cash value grow by more than what you're depositing already in the third or fourth year. And so it really has a lot to do with how it's designed. And you're right picking the right company, obviously the highest rated companies, and we only ever use mutual companies. But even with that, there's some mutual companies that won't let you take loans in the first year for the banking aspects and they really discourage that. They don't like it.
Dr. Rob Scranton [00:29:21]:
There's other companies that our company, they've even designed policies because they love what we're doing and how we're helping the consumer that are specifically designed for infinite banking. And we only pick companies that have a really good track. Record with those dividends we talk about those those aren't guaranteed, but all the companies that we use with our clients have been paying dividends every single year for over 120 years. So that's through the Great Depression, two world wars, ever recession, and every economic downturn that our country's ever had in that time. So, yes, the past is no guarantee of the future, but that's a pretty darn good track record. We can feel comfortable that these policies are going to work as projected. And the neat thing is, if you're actually using them for the loans, they work even better. The cash growth and accumulation and compounding happens even quicker.
Dr. Rob Scranton [00:30:14]:
So it's that velocity of money just like anything else in your life. If you let your food just sit in your fridge, it doesn't do as good as it does. If you eat it and then replace it with fresh stuff all the time, it's a lot better tasting and a lot more enjoyable for everybody.
Wayne Courreges [00:30:30]:
Well, I love about it too. It's like you can invest in real estate. You can invest or take a loan out to do a down payment on. Now, it's not a do this quick because if you're only doing $7,200 a year, I mean, this is a ten year, this is a long term game. But at some point, with the guaranteed interest and potentially the upside of these companies making money, having the benefit of that, over time, that should grow a lot faster, if what I'm hearing is correct. And then you start loaning. Once the egg is big enough to start loaning yourself, you can start buying real estate. You can also share your balance sheet with other people who need that net worth.
Wayne Courreges [00:31:16]:
Maybe they are going to do the active side, but they need a key principal who can sign on the loan who shows that net worth. We did that with one of our close key principal partners and most of his net worth is tied up in whole life insurance.
Dr. Rob Scranton [00:31:35]:
There you go. It's not foreign to you.
Wayne Courreges [00:31:38]:
It's not foreign to me. It just amazes me. Like he's probably my age in that whole life and it's like, how did you get that? Only just with such little deposits. That has always confused me a little bit.
Dr. Rob Scranton [00:31:54]:
Well, as my wealth has grown and my real estate has grown and my income has grown, I've added more policies over time. So the ones I started out with weren't adequate. So I got a second one on myself and a third one. Then I got one on my wife, then I got one on all my kids. My son doesn't even know it yet, but when he goes to college next year, there's enough cash value inside of his whole life policy to pay for his college. So instead of having to fill out the FAFSA forms and do all that stuff and get the student loans, he'll just be able to borrow from his own policy that we started for him and then pay himself back over time and have recoup all the principal and blood for himself.
Wayne Courreges [00:32:40]:
You could do these whole life insurance for the and it's the same thing. You take their age times 15 or so, and then you're saying so by the time like year two, year three, you're saying that the returns are higher than what people are having to put into these. Do I hear that correct?
Dr. Rob Scranton [00:33:03]:
Yeah, the way we structure them, and that's the most critical thing. Like I said, it's unfortunate. People hear about this infinite banking concept sometimes and they go run out to their brother in law who sells insurance, because anybody can sell you an insurance policy, but what do they know to structure them properly so they'll actually work in this for this infinite banking concept. And we run into that people all the time and they're like oh, well, I got this from like yeah, unfortunately that's and people don't realize to set them up properly like this as an agent, we have to take about a two thirds commission hit in order to set these up properly for the banking concept, to make sure that they're advantageous for the client and not advantageous for the agent. But that's the right thing to do. That's the only way that these banking policies will actually work and produce for themselves. And we feel like people love these so much that that's just like me, they'll start doing it. And I would say 70% of our clients will end up getting a second or third policy, and probably 90% of those do that within the first six months after they start seeing how this actually works when they have their own policy.
Dr. Rob Scranton [00:34:10]:
It's like you got into real estate, you're excited about it, but you really didn't totally understand real estate until you had your first property. Right? Right.
Wayne Courreges [00:34:18]:
I love it. You're bringing it back to the real estate. So it's sort of like buying multiple properties, but yet you're buying multiple policies. And based on that, you're able to grow. Now are there preexisting condition? My wife has a heart condition as an example that she was born with no issues for all these years. But I can't get her life insurance through local term. Do they go through even though it's your cash that you're growing in the whole life? Does it change anything like that?
Dr. Rob Scranton [00:34:53]:
Well, certainly everybody's going to go through underwriting. So that's what a lot of people don't realize, that getting life insurance is not like going to Wendy's and saying, I want a hamburger. If you hand them the money, they're just going to give you the hamburger. You can request from the insurance company that you would like to have a contract for life insurance with them. And you'll go through the whole process in writing and underwriting and then we always hope they will offer a contract for life insurance after they've gone through that and vetted all that. And there are times yes. I mean, I had a guy the other day that he's a real estate investor and he really wanted to start doing this infinite banking and just cycling his money, his rents through his own policy and then paying the expenses for the properties and just cycling everything through that policy. But turned out, I asked those awkward questions that we have to ask and turn out, yes, he had a felony conviction, and the insurance company flat out refused to issue him one.
Dr. Rob Scranton [00:35:57]:
But we said, well, why don't we just start one? He's like, Well, I really want to do these bank start this banking thing. So we just started one on his wife. And so now their family's got a banking policy for themselves.
Wayne Courreges [00:36:10]:
Nice. We talked a lot about the upside, and earlier you said when things are too good to be true, you try to find what risk or what downsides are there with whole life insurance and this infinite banking system.
Dr. Rob Scranton [00:36:28]:
Well, one downside is that you may never be able to utilize the effects over the course of your lifetime because somebody could do something stupid and die, and then their banking policy would cease to exist. But your family would get this really nice bonus because there is this thing we rarely even talk about, that thing called the death benefit that is attached to these policies. And the reason we don't talk about it is because we really are focused on the cash growth and accumulation and all the other aspects of these banking policies we talked about. But the interesting thing is, when we set them up properly for the banking, usually most people, that death benefit will just continue to keep growing. So it's not like your term policy where it's set and flat and it may be super adequate at your age, but when you're 60, it may be just like a little pittance small amount because of inflation and everything else that goes on over that time or your lifestyle growth, et cetera. But the death benefit continues to keep growing. I've still got a copy on my computer of one of my dad's policies that's still active that he hadn't got in 1951 when he was ten years old, his dad got for him, and he pays that $46 a year premium and the cash value grows $684 a year. That's a 1300% return on the money that he puts into that policy every year.
Dr. Rob Scranton [00:37:51]:
And the death benefit has grown eight times since that policy was issued. And it sounds you asked what downsides are there? I'd say the only complaints that I really ever hear from people and that's why I love doing this, because I don't like complaints or grumpy upset people or the only complaint I ever hear is people are like, Rob, you should have told me to start this sooner, and you should have told me to do a larger amount when I started. And that was the same complaint that I had for myself. That's why I've now got eight policies total with everybody in my family. So I probably put about 60,000 a year in deposits into my policies. But I have no problem doing that when I see the cash value of all those policies grow by over 100,000 every year. And you're right, it started out slow. When I was maybe that first policy, I was doing $7,200 a year.
Dr. Rob Scranton [00:38:38]:
But as I saw how this worked, I kept adding to my banking system and getting more banking policies. And all of a sudden there's hundreds and hundreds and hundreds of thousands of dollars in cash value inside those policies that I have available to use now or in retirement or both. And nobody puts any stipulations. I'm not going to pay any taxes on that. I'm not going to pay any penalty to use my own money. Nobody's going to restrict me or tell me when or when I can't use it or limit the amounts of doing any of that stuff. I guess that's the two downsides is people would generally end up regretting that they didn't start earlier and that they didn't put enough in when they did start.
Wayne Courreges [00:39:20]:
There was tons of information in a short amount of time. And for those listeners like myself, when I get that link to do that master class, I'm personally going to take it. This is so much information and it's fantastic. So as we close up here, what are your proudest moments in real estate in particular? And then how can people reach out to you? And if there's anything you want to share as well to our listeners, feel free to do so.
Dr. Rob Scranton [00:39:51]:
Yeah, proudest moments in real estate? Well, I share a couple of those stories at greater length if you're okay if I share with that. Wayne, if your listeners want to hear those stories more in depth, they can go to yourfinancialiq.org yourfinancialiq.org and I have a 1 hour master class, a free master class they can sign up to and listen to it. It explains everything. Infinite banking on there. But I'd say as far as real estate, it was probably getting the cabin that our family now owns up in the mountains here in Utah. We'd been looking for a year for a property. And the problem in Utah? Well, there's a lot of problems with real estate at the moment, but one of the things we face is a lot of people exiting California at the moment and coming to Utah and with the prices of their homes there, they come to Utah and they're like, what a house only costs how much? Oh, my goodness. Well, give me two and I'll pay cash for both.
Dr. Rob Scranton [00:40:55]:
So we're running into that and the prices are inflated for what you're getting. So we really knew what we were looking for. And we found this property and, like, oh, my gosh. The people had owned it for 30 years, and I think they had no idea what the real value of what they had was. But they were selling it in kind of distress because of a cancer diagnosis and kids that didn't want to take over the property and so forth. But we had to move fast and we were able to shove out. So I was able to ask my insurance company in about two days. I got the money and I said, hey, I'll give you this down payment, we'll figure the rest out with the bank.
Dr. Rob Scranton [00:41:31]:
And they said yes to an even lower offer that we made, even though they had other people knocking on their door because we were able to make that huge cash down payment right away and sign paperwork to buy us time to go get the rest and the financing and so forth figured out. And I feel like a legacy property for our family and our kids, and I hope they'll bring their kids there someday as just a retreat and a getaway. And I just don't feel like we would have got that property or it would have lasted more than a few days if we didn't have the ability to move really fast because we had liquid funds available without having to ask anybody's permission, what we did with it and so forth. So it sounds like it's not an investment property or a super sexy, exciting.
Wayne Courreges [00:42:22]:
R1 estate is real estate and you did it for the family and your future generations. So I think it's very proud moment and they're going to be very grateful. Grandkids and such.
Dr. Rob Scranton [00:42:35]:
Oh, man, I tell you, I can send you some pictures, Wayne. Sometimes it's up at 7900ft on about 68 acres and wow, I mean, you can see forever and the sunsets are indescribable, not describable. I'm not sure what the word is there.
Wayne Courreges [00:42:53]:
Well, how can people reach out to you?
Dr. Rob Scranton [00:42:55]:
Yeah, I would say that's probably the best way. They can reach our whole team. Go to our
[email protected] and they can connect with me directly there on my calendar link. They can watch that free Master class, and we've got a lot of other resources and information on there as well, but I would say that's probably the best way for people to reach us.
Wayne Courreges [00:43:18]:
Sounds great, and I'll include that in the show notes as well. But Dr. Scranton, thank you so much for your time and sharing your expertise and hopefully with the listeners, they'll reach out to you if they need more information on this infinite banking system. So thank you for your time again today.
Dr. Rob Scranton [00:43:36]:
Thank you so much for having me, wayne, it's been a real pleasure talking to you and being on your podcast.
Wayne Courreges [00:43:42]:
I enjoyed it as well. Thank you so much.
Introducer [00:43:45]:
That's all for this episode. We hope you subscribe, share and leave a review of the show for more information about passively investing in multifamily apartments, check out Wayne's free ebook by going to creipartners.com forward slash ebook. Also, follow us on Facebook by searching CREI. Partners. This was the untold stories of real estate investing.
