“I’m the person who helps you realize your vision as a real estate investor, just like how I used to help artists realize their vision of what they wanted to do in music.”

-Tom Laune


Tom Laune is the Infinite Banking specialist at Stress Free Planning. He is the leader in guiding real estate investors to becoming their own banker. He solved the problem of low returns and increased taxes when storing money in a traditional bank by creating a line of credit using specially designed whole life insurance to help real estate investors across the country.


In this episode, Trevor and Tom discuss:

  • How Tom started his real estate career by accident.
  • How Tom helped real estate investors solve their problems.
  • How to build equity within the policy and how to use that money and invest.
  • How tax free distribution works at the end of the policy.
  • The strategies to become tax free and why most investors are not using these strategies.


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Full Transcription Of Today’s Episode

Trevor Oldham  00:43

Hey, everyone, welcome back to the real estate investing exposure podcast and today on the show, we have Tom Lonnie, Tom is the leader in guiding real estate investors to become their own banker. Tom, super excited to have you on the show today.


Tom Laune  00:59

I am excited to be here. Thank you so much for having me on Trevor.


Trevor Oldham  01:03

And Tom, for audience that is new to yourself. Do you mind telling them a little bit of your background and how you became the leader in guiding real estate investors to become their own banker?


Tom Laune  01:13

Absolutely not. That would be great. So I have a little bit of a unique background, Trevor, and that I was formally actually for 29 years in the music industry. So I was a mix engineer and producer. And I worked behind the scenes with artists to be the guy who brought their vision to life musically. So I did that for a long time, of course, I relied on my hearing for everything that I did. I don’t know if you’ve ever seen guys, Trevor that are kind of like, what looks like a spaceship, you know, with a zillion buttons and knobs and sliders in front of them. That’s what I did. It was the engineer. So I was mixing records and recording the artists behind the scenes. Not so much. I did some live recording. But that wasn’t my main thing. It was mostly in the studio. And what happened was 20 years plus ago, I bought a special policy that insured my hearing called a disability Protection Policy. And then towards the end of my career, I started to lose hearing in one ear and was unable to do that anymore. And because you have to have pretty much perfect hearing to do what I did. So I was like, Okay, I have this amazing window, I had a five year window to do whatever I wanted to do, because I had this passive income coming in every month, guaranteed tax free. And I decided I want to help people be protected in the way that I was protected. Because Trevor, I’m going to be honest with you, if I didn’t have that policy in place, then I probably would be like, you know, working like a cashier at Home Depot. I mean, I don’t know what I would be doing right now, to be honest with you. There’s nothing wrong with being a cashier at Home Depot, but I’m just saying my window of opportunity would have been so much lower. So what I did was I went back to school to learn everything I could about what it is that I was experiencing the benefits of. So I went back and got a degree, actually they’re called financial designations. So I got a Chartered Financial consultant designation, a chartered life underwriter designation and a chartered special needs consultant designation. So I spent four of those five years just intensively in school to try to learn everything about it. Now, how did I get into real estate? Okay, that was really by accident. And the reason that it was by accident is because I started out literally thinking that what I was going to do was work with families who had a loved one with special needs. So that was my original thing that I was going to do was work in that market, but I got it started in it. And I just did not get anywhere. I didn’t find any traction, my message was not resonating well in that market, and who was resonating with were people who wanted to be in control of their money. And that unique subgroup of people who generally want to be in control of their money versus having somebody else manage their money are real estate investors. Does that make sense? I definitely sense yeah, so the real estate investors, they love control. They want to be in the you know, they want to be picking the asset that they’re actually investing in. And as you know, to have real estate is hyper local. I mean, you could be having an amazing performing property and then two miles down the road. It’s just terrible, right? Because there’s just all these different variables and factors and that’s what really sides people about getting involved in real estate. And that’s what my message register resonated with the real estate investor crowd. And so I just moved into that. And it’s just been an unbelievable ride to work with real estate investors. Now, that being said, I still work with real estate investors who also have loved ones with special needs. So that is something that I do rarely, but it does happen more frequently than I would think. But that does happen. But that’s kind of how I got started in working with real estate investors.


Trevor Oldham  05:36

And for these real estate investors that are out there, would you mind sharing what you how you’re able to help them and just Sure, all the all the good things that potential real estate investor would want to do when hiring someone like yourself to help them.


Tom Laune  05:49

Alright, so real estate investors have a problem that I solve. And their problem is, where is the most efficient place to store capital, where is the most efficient place to store their dry powder while they’re waiting for a deal to come along? So the unique thing about real estate investors is they have to have money somewhere, everybody has to have money somewhere. But normal people who aren’t real estate investors just give it to their advisor to put it into the market. Okay. But real estate investors like to have some money saved somewhere, so that if a deal comes along, they can jump on it. Because half of the battle in real estate is being able to take advantage of an opportunity when it comes along. And you never know when that’s going to come along. So I help people with these real estate investors with where the most efficient place to store capital is. And it does have a bunch of advantages. But I call my strategy, the bulletproof wealth strategy, okay. And one leg of the bulletproof wealth strategy stool, the first thing that I talk about is making sure that your income is protected if you get sick or hurt and can’t work. So that’s protecting people like I was protected, right, because I got sick or hurt and couldn’t work. And so I had to take advantage of this thing called disability insurance, which very, very underserved people don’t have in general. And I tried to help people navigate getting that kind of a thing. The second thing I do for real estate investors is I set them up with an option strategy. These are people who may just be getting started. But they would like to have the option of creating a bank for themselves in the future. And so what I use as an asset is life insurance. And it actually is one of the most misunderstood vehicles out there in terms of being able to grow your wealth with and so I help people grow amazing amount of wealth by really turning life insurance upside down, and squeezing the most out of it from a tax benefit perspective, and a internal growth, compounding all of these amazing benefits. I help people get that out of life insurance. So the option strategy is the second thing that I do and that is just getting someone’s insurable interest captured. One of the miss things Miss understandings of life insurances is that you can just buy whatever you want, whenever you want it. But that is absolutely not true could not be farther from the truth. It’s a highly regulated industry, Trevor, and it’s they only allow you to purchase so much life insurance. And that amount you can purchase is only based on two variables. And those two variables are your age is number one, and your income is number two. So age and income determine how much life insurance you can qualify for. All right, and the cost of it is determined by your health. Okay, so the healthier you are, the lower the lower the amount of cost, so I help people really lock in what they can qualify for right now. And then later, over time, we’ve converted to a policy that builds equity. So that policy that builds the equity is a unique structure called a high early cash value whole life insurance only through a dividend paying company. So that is a really unique thing. So essentially, the difference in real estate terms. It’s the difference between renting and purchasing. So when you’re renting insurance, that’s just straight up term insurance. You’re using the least amount of money to purchase the most amount of insurance. And what I do when we switch to purchasing it is we try to cram in the most amount of money possible to purchase the least amount of insurance, and that gives us this huge benefit of having cash inside the policy that you can collateralize to purchase real estate. Okay, so the whole key to understanding why in the world you would ever want to do this forever is you have to know that the key to this whole concept is how banks make money. Because honestly, you want to put yourself into the position of a bank. All right. So that is the main thing I teach people is how banks make money.


Trevor Oldham  10:46

And from someone that is listening, and let’s say they’re starting to get interested in Do you mind, walk him through how you build that equity within that policy and how they can use that money to take from that policy and invest into let’s say, a real estate deal, whether that be you know, they have to pull out 100 200,000, whatever the number may be for them.


Tom Laune  11:05

Yes, I would love that. So basically, again, this is how banks make money, Trevor is they take depositors money, and then they take that money, and they lend it out at a higher rate than they’re paying the depositor. So this actually blows people’s mind when I use these analogies. But if I were to deposit $100,000, into a bank, and that bank paid me a quarter of a percent, for leaving $100,000 in the bank, and then somebody comes along and takes a loan from that bank, and let’s just say the person taking the loan has to pay the bank, five and a quarter percent interest, how much interest rate? Do you think the rate of return wise the bank is making? If they’re paying a quarter and making five and a quarter? What do you think, Trevor? What’s your first guess?


Trevor Oldham  12:01

Probably 3%.


Tom Laune  12:03

Okay, so if they’re paying out a quarter, and they’re making five and a quarter, normally, people are like, hey, they’re making the difference. They’re making 5%. All right, but the reality is, this, when the light bulb turns on here, Trevor, you’re gonna be like, Okay, this is this, I get it. So what happens is, in reality, when we put dollars to $100,000, deposit at a quarter percent deposit is only $250 of interest. $100,000 1% is $1,000, a quarter percent is $250. And that interest paid to you on a $100,000 deposit is taxed as ordinary income. So it’s got a terrible tax position as well, if a borrower comes along, and they pay the bank five and a quarter percent interest for a $100,000 loan, how much are they paying the bank that’s $5,250. So on one hand, they’re paying the guy who deposited the money, 250 bucks. And then on the other hand, they’re getting $5,250, from the person who is borrowing money from the bank. So the rate of return the bank is making is 2,000% 2,000%. So anytime that you can get that kind of return, now, you know why banks are so huge, and they have a bank on every corner, and the banks have the biggest buildings and the best fountains and kind of the most people sitting around doing very little in the bank. But the reality is, you can reposition your money to work like a bank. And the reason they’re making such a big return is because they’re not using their own money to lend out. They’re using that depositor’s money. That’s the secret to it, right? So with life insurance, we put as much money in as possible, let’s just say you put in $100,000, right, and you don’t have to start with that amount. But if you did, what you’re doing is you’re putting money, and we’re putting as much of it towards the cash value as possible. And then the rest of it goes towards paying for the insurance. So $100,000 you might be putting 70,000 for example, towards the cash value and 30,000 towards the insurance. So you take that 70,000 and in year one, you can collateralize that 90% loan to value on that. So you could collateralize $63,000. Alright, so you put in 100, you have 63 available, you take that money, put it into a real estate deal. And again, these numbers are all just I’m making them up because it’s based on age and all these other variables. Health determines what ratio you can get. But if you take that money, and just use it in a real estate deal, now you’re just paying interest on that money. You’re not actually using your own money, and then the real estate pays you a much higher return than you have to pay the insurance company for the use of their money. So now, believe it or not, I’ve just repositioned your capital to be using it like a bank does. And you can get Listen, every day of the week, I turn a 15% return into a 200% return by using my strategy. That’s as simple as that. And now over time, because that money still grows in the policy, even when it’s collateralized, because you’re getting dividends on it, over time, you end up with way more money in your policy than you ever put in in premiums. It’s just a long term strategy. So it takes a while to get to that point, usually, it’s around eight years, sometimes nine years, depending on how healthy you are that you have this complete collateralization where it’s, it’s capitalized, and it’s broke, even on your policy, how much you put in versus how much is available. And from that point on how much you put in goes way less than what is available. And then we do this amazing, tax free retirement distribution as well on it. So I know I kind of hit you with a lot of stuff. But that’s just the big, high level of some of the exciting things that are going on with positioning people’s money inside of this specially designed life insurance.


Trevor Oldham  16:29

It seems like there’s, there’s a lot going on to it. But the thing that caught my attention at the end, and probably my two favorite words are tax free. Yeah. Yeah, I’d love for you to hop into how that distribution works at the end of the policy or as it nears the end.


Tom Laune  16:45

Okay, so let’s just talk about this, if you bought $100,000 of Apple stock, and then it grew to $200,000, if you sold $100,000 of it, that would be all capital gains, okay, so you have your basis, which is 100,000. And then you have your $100,000 gain. Now you sell that 100,000. And you have all of that is taxed at your capital gains, right, and it depends on your holding period, it’s either going to be short, or long term holding period. And that’s what capital gains, right you pay. Life Insurance has a very unique tax structure that is very, very different than anything else. It’s called first in first out taxation. So in life insurance, if you put in $100,000, and it grows to 200,000, and you sell 100,000, or distribute 100,000, they consider that the basis or the original 100 that you put in, okay, so in retirement, we might have $1.5 million of basis, and $2.8 million of cash value. So there’s this big difference between how much we’ve put in and how much is available. So there’s, you know, like $1.3 million of gains. So the way that you distribute in retirement is you first take out your basis. So that comes out for the first seven or eight years. Usually in retirement, I usually designed my policies to allow people to put money in through age 67. It’s just, you know, we can structure it any way you want. But that’s usually how long the funding period is, is through your full retirement age. And then in retirement, you pull the basis out tax free. And once you hit the basis, and now all you have left is your capital gains. Now we switch to doing collateralized policy loans for the balance of retirement. So it could be to age 90 days 95 to age 100, whatever we decide is most appropriate for your longevity pattern in your family, then we will go through and take collateralized loans that never get paid back. All right. And the reason they never get paid back is because you’re building up this massive loan balance. And the life insurance pays it off at the end. So you might end up with a $10 million outstanding loan, but you might have $14 million that has now accrued life insurance that’s built up over time. So what happens is, when you pass away, that $10 million loan gets paid off, and your beneficiary gets the balance of $4 million. So it works just amazing. And there’s no tax consequences to that whatsoever. Because as you know, in life insurance, the other big tax benefit is that all of the proceeds from a life insurance policy pass to your heirs tax free. So that’s kind of high level how the tax free retirement element of this works. So all of the internal growth is tax advantaged, and I never ever pay taxes in retirement when I work with me. I struggle To be tax free for the entire distribution cycle. Does that make sense?


Trevor Oldham  20:05

Yeah, that definitely makes sense. I think one question that comes to mind is, why wouldn’t every investor be using the strategy or the majority of investors, I mean, it seems like a phenomenal strategy. And instead of just having the money sit on the sidelines, as you mentioned, you know, you put 100,000 away, and the bank’s giving you 2500, and they’re making five grand, five grand off of you.


Tom Laune  20:26

Given they’re given what they’re making, you’re giving you way less than that on $100,000, the bank might give you 250 bucks driver, I mean, it’s just that what they pay. Why isn’t everybody doing this? The main reason is, there’s a lot of misunderstanding in the mainstream, normal, traditional financial advisors, because I’ve gone through every class that they go through, they do not teach this, this is something that is just not common knowledge. And this is why I love talking to people about this and helping educate how it works. The other thing is, there’s a lot of misconceptions about whole life insurance. In general, it’s positioned as a ripoff. That’s how they, quote unquote, position it in the mainstream media, oh, Whole Life is a rip off, you can get term insurance for way cheaper, well, yes, you can rent a house for way cheaper than you can buy one for in most cases, as well. But at the end of the day, there’s no equity in a rental, right, the whole thing with whole life insurance is you’re purchasing it. So you’re building equity, and you have to do it the right way. It has to be designed for high equity. And that’s what I do. And it’s just that there’s 1,000,001 ways to do it wrong. And I think when somebody gets into it, they structure it totally wrong. And they’ve designed it for the like, even in whole life, if you design it for the least amount of money going in for the most amount of life insurance, it’s going to end up hating you in the end, because you’re not going to be able to do this banking strategy, you’re just going to be using it for life insurance. And you can’t take a traditional whole life policy that was not designed for banking, and turn it into a banking policy, it’s just going to be messed up. Basically, what we would do in that case, is a special thing called a 1035 exchange where we can take whatever accrued cash value is in your poorly designed policy, and move it into one of these policies that is aggressively designed for cash accumulation. So why isn’t everybody doing it because it’s misunderstood? People don’t know that it’s as good as it is. But let me just tell you, what I mean, my clients, I have hundreds and hundreds of clients all over the country, they rave about this. You know, you can go to my website and see all kinds of testimonials and customer, people are just so excited about this. But once you the light bulb goes off, people generally want to do it if they can qualify. So again, you have to be healthy enough to qualify, but most people think that’s not an issue. For most people. It’s just, you know, there’s some people that have adverse health consequences. And in that case, I try to see if we can structure it for a spouse or somebody who they have an insurable interest in a business partner, something like that.


Trevor Oldham  23:21

And for the real estate investors that are out there obviously within the real estate investing space itself there are tons of different niches. Is there a specific type of real estate investor, let’s say multifamily or fixin flip? Are you just open to all different types of asset classes that the real estate investors would be investing in?


Tom Laune  23:38

Okay, so I work with every type of real estate asset class, I work with mobile home park investors, self storage, investors, fix and flip note investors, multifamily investors, commercial investors, every single type of real estate niche, they all have one thing in common, and that is they would rather control their financial future than give that or cede that control to somebody who’s going to invest it for them. Right. So the investment for the crowd is where they just want to say, here’s my money, you go manage it, and then hopefully, I’m going to be okay in retirement because I have no idea what I’m doing. And I don’t want to mess with that. Right? That’s 97% of the American public. Is that Trevor? Only 3% of the people want to be real estate investors. So it’s a niche already. It’s just that once you get into the real estate world, all you know are real estate investors, and it seems like everybody is but in reality, that’s not the case. So for me, I work with anybody who has a desire even to be involved in real estate and once control of their money. That’s the one thing that you have to have is a desire to be in control of your financial future. And I try to help you figure out how to do that. That’s my whole job is I guide people, just like I did in music. I know that my two careers might seem Like they’re totally disparaging, like, What in the world went from music producing to this? Well, the commonality is that I’m the middleman. I’m the person who helps you realize your vision as a real estate investor, just like I used to help artists realize their vision of what they wanted to do in music.


Trevor Oldham  25:21

Tom, I had a great time interviewing you today. I just had a couple of quick questions that I wanted to ask you. Before Yeah, show today. And, and the first one I always ask is, do you ever have a favorite real estate investing or business book that you’d recommend for our audience to check out?


Tom Laune  25:36

I do. Why is it so funny? This is how I got from bigger pockets. And it is a note investing book by Dave Hsu, it is Hold on one second. It is by Hold on one sec cover. Dave Van Horn, I don’t know if you can see this. But this is called real estate note investing. And I have several of these, the copies of this is just it is a really good book that I have really enjoyed for real estate investing. And it’s not just about note investing, it goes through all different kinds of different investments that you can do. And one thing I love about it is at the very, very, very, very, very end of the book, they go through my strategy about using whole life insurance as a place to save money. So it’s kind of cool, because you rarely see it mentioned, but this guy has heard of it and put it in the end of his book. So I love that.


Trevor Oldham  26:42

Like, that’s excellent. I’ll make sure to include that in our show notes. And the last question I have for you today, Tom is working with our audience to find you and and learn more about you if they’re interested in working with you.


Tom Laune  26:51

Okay, so cold traffic, I have a super, super simple method. And it’s so low stress, I call my firm stress free planning. And the reason is, because once you get your money involved in this process, getting a loan, no one can tell you no, because you have guaranteed collateral access to that money. So that’s stress free about it. But I also try to make it stress free to work with me. And what I do is I have a free educational video series on my website, all you have to do is put your name and email in at stress free planning, calm, stress free planning.com, put your name olema name and email and that’ll get you access to my video series. And you watch that if you like what you see, and you want to learn more about how it would work for you, there’s a button to book a consultation. And again, that is free as well, where I go through and explain how this would work for you specifically in your life and what you’re qualified to be able to do in this specific area. So I came up with a plan to spend a lot of time on it before we get on the phone. And then when we get on the phone and talk through it. You know I show you what you’re able to do. So that’s super simple. I don’t bug you. If you don’t watch my videos, and you don’t like what you see then don’t contact me. But if you do like what you see I make it really simple.


Trevor Oldham  28:22

Perfect. I’ll make sure to include that in the show notes as well. And Tom, I just want to say thank you for your time today.


Tom Laune  28:28

Thank you, Trevor. I really enjoyed it.