Real Estate Investing Expert
Episode 56: "Bad Beats"
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James is a part-time real estate investor and a full-time corporate supply chain manager with experience working for several big name companies. He joins Scott today to talk about his “Bad Beat’ and the risks involved with the investing game. He also talks about what he learned from the experience and what he does differently now.
James starts by talking about how he got his start in real estate and his current employment as a corporate supply chain manager:
[1:56] James talks about how he got involved in his “Bad Beat”.
[3:10] James shares some things that he now does differently because of this deal:
- Investigating deferred maintenance
- Emphasizing thoroughness on due diligence
[5:10] When James realized the deal may be going wrong:
- Over budget
- Fuse box replacement
- Foundation issues
[6:45] James discusses some issues they had with property management and his regret on not acting faster.
[9:00] Scott asks James if there is anything he would have done differently in his approach to this sneaky expensive property.
- Plan for a higher percentage on rehab and unexpected costs (due to older age of houses he works with)
- Have your eyes a little more “wide open” when looking into a deal
- Being more conservative on appraisal estimates
[15:08] James talks about a flip he did to recoup some losses on another property and the risk involved with investing.
[16:55] Scott talks with James about why he invests in older homes.
[18:06] Lesson James learned
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Hosted by Scott Smith, Lead Attorney and Founder of Royal Legal Solutions
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About James Masotti
James Masotti has been investing in real estate since 2010 when he converted his primary residence in Wilmington to a rental. James’ full-time occupation is as a supply chain professional. He currently works for a $1.8B Belgian food company as the US Demand Planning Manager.
James has also previously worked in logistics, warehouse operations, supply and demand planning, procurement, and the implementation of software systems for Amazon.com, Campbell Soup Company, Perry Videx, and CSB-System International. James is recognized leader in the supply chain profession having presented at conferences in the United States and South Africa. James has been an active volunteer in the supply chain profession since 2011 and has greatly enjoyed being a regular guest lecturer at several universities on supply chain topics. A former Big Brother for Big Brothers Big Sister, James is looking forward to continuing as an active volunteer for the organization now that his Little Brother has graduated high school. James currently lives in Washington Township, New Jersey with his wife Kaitlyn and their dog CJ.
Connect with James via his email:
When making business decisions that affect your long-term goals, like what types of investments to make with your retirement dollars and which vehicles to use, it really is best to be aware of all of your options. We frequently talk about the Solo 401(k) and Self-Directed IRA as tools for funding your retirement. But what about life insurance? And what about the stock market? What if we told you there is a tool that allows to to reap some benefits of both? It’s called Indexed Universal Life Insurance–and some investors have found it a useful addition to their retirement plans.
What Is Indexed Universal Life Insurance?
Indexed Universal Life Insurance (IUL) plans are a variety of permanent life insurance plan that features a cash-building element. One primary benefit of these plans is that the policy holder gets some of the gains of being associated with the stock market without all of the risk Wall Street is famous for. This is in no small part because of how these policies are designed. IULs earn in part because they are directly linked to a market index, such as the Dow or the S&P 500. Any gains remain within the policy, albeit a cap rate will limit how much you can make. However, you are protected during a particularly bad year for your index with an IUL. The worst case scenario with these plans is that you make nothing, but you never actually lose money no matter how poorly your index performs. The protection of your principal is actually derived in part from the same cap rate that limits your gains.
How much money do policyholders stand to make? Historically, returns run between 5-9%. The S&P Index has actually returned at 9-11%, but the upside limit on UILs stems from the account’s cap rate. For this reason, many advisors argue that the UIL can make a wise addition to a retirement or estate plan once more traditional and self-directed accounts are maxed out.
Tax Benefits of Indexed Universal Life Insurance (IUL) Plans
There are three key tax benefits of IULs. First, you may pay into the policy with pre-tax or after-tax funds. Withdrawals from the policy may be made tax-free if you are under 59 1/2. Such withdrawals are regarded as loans, with your death benefit serving as collateral. Any funds paid out to the beneficiary are also tax-free, including normal benefits upon your passing. This is true regardless of their value.
Ask the Experts at Royal Legal Solutions About Your Retirement Planning Options
Regardless of where you are in the retirement planning process, Royal Legal Solutions an assist you. We have extensive experience educating investors about self-directed investment options. Many of our investor-clients love our Solo 401k information, product, and compliance services. Our Self-Directed IRA services can also be helpful for retirement planning, as the SDIRA is yet another vehicle that allows you to diversify and take total control of your investments. To determine which of the available retirement planning strategies are best for you, consult with one of our experts at Royal Legal Solutions. You may also contact us with any questions you may have about your options.