How Can Real Estate Investors Use Infinite Banking to Fund Deals and Build Wealth?
Real estate investors constantly seek smarter ways to finance deals without depleting cash reserves or relying solely on traditional lenders. But what if you could fund your investments while simultaneously building tax-free wealth? That’s the promise of infinite banking—a strategy that’s been used by wealthy families for over 250 years but remains largely unknown to most investors.
In a recent episode of The Real Estate Investing Club podcast, host Gabe Petersen sat down with Brent Kessler, founder of The Money Multiplier and former chiropractor turned real estate investor, to explore how infinite banking works and why it might be the missing piece in your wealth-building strategy.
Quick Answer: What Is Infinite Banking?
Infinite banking is a wealth-building strategy where investors fund specially designed whole life insurance policies, then borrow against the cash value to finance real estate deals. Your money continues earning guaranteed tax-free growth inside the policy (typically 4-6.5% annually) while simultaneously funding your investments, allowing you to “double dip” on the same capital and recycle money for multiple deals.
What Exactly Is the Infinite Banking Concept?
The infinite banking concept, also known as “becoming your own banker,” was popularized by Nelson Nash in his book Becoming Your Own Banker. According to Brent Kessler, who studied directly under Nash before his passing in 2019, the strategy has been used by wealthy families like the Rockefellers, Rothschilds, and others for over 250 years.
“It’s not a new concept. It’s not on trial,” Kessler explains. “Robert Kiyosaki talks about it in his book Second Chance. Tony Robbins talks about it in Money Master of the Game. But most people don’t understand how it works because everybody makes it way, way, way too complicated.”
The fundamental premise is simple: Instead of paying cash directly for investments or borrowing from traditional banks, you add one step to your financial life. You fund a specially designed whole life insurance policy, then borrow from the insurance company’s general fund to finance your deals.
How It Differs From Regular Life Insurance
Not all life insurance policies work for infinite banking. Kessler emphasizes that this strategy requires “a specifically designed, specially engineered whole life policy that’s designed for high immediate cash value.”
Key differences from other insurance products:
- Not term insurance – Term policies have no cash value component
- Not variable or universal life – These policies have increasing costs as you age
- Not indexed universal life (IUL) – Growth depends on stock market performance with caps and fees
- Whole life at a mutual company – Provides guaranteed growth plus dividends, with consistent costs
“In a whole life policy at a mutual company, it stays consistent or you can lower it, but there is a guarantee,” Kessler notes. “There’s a contractually guaranteed obligation that the insurance company pays.”
For more on structuring real estate deals creatively, check out our guide on seller financing and creative deal structures.
How Does Infinite Banking Actually Work for Real Estate Investors?
The mechanics of infinite banking can seem counterintuitive at first. Here’s the step-by-step process Kessler and his 17,000+ clients use:
Step 1: Fund the Specially Designed Policy
You put money into a whole life insurance policy (or system of policies) designed for high immediate cash value. “When I say immediately, within 30 days,” Kessler clarifies. This isn’t a standard insurance product you can buy anywhere—it requires working with a specialist who understands how to structure these policies correctly.
Step 2: Access the Cash Value Through Policy Loans
When you need capital for a real estate deal, you take a loan from the insurance company’s general fund—not a withdrawal. This distinction is critical. “Your cash is still in your account. It’s still in your account growing and earning interest,” Kessler explains.
The loan you’re taking is technically “a prepayment of the death benefit. So in very simple terms, you’re essentially using a portion of your death benefit proceeds, future proceeds… using a portion of that money now instead of waiting till you die.”
Step 3: Use the Borrowed Funds for Your Investment
You deploy the borrowed capital into your real estate deal—whether that’s a short-term rental, mobile home park, or commercial property. The investment performs just as it would if you’d paid cash directly.
Step 4: Earn Returns on Both Sides
Here’s where the “double dipping” occurs. Your real estate investment generates its normal returns (cash flow, appreciation, tax benefits). Meanwhile, your full balance in the policy continues earning guaranteed growth plus dividends—typically 4% guaranteed plus 1.2-2.5% in dividends, for a total of 5.2-6.5% tax-free.
“If you pay cash or bank finance, what you would have to do is replace that cash or pay back the loan,” Kessler explains. “Well, the same thing happens in the policy, but there’s no requirements ever to pay back the policy loan.”
Step 5: Recycle the Capital
As your investment generates cash flow or you sell the property, you can choose to repay the policy loan. When you do, “you pay it back, and it’s like you’re paying it back, but you have access to it all right again away,” Kessler notes. This allows you to recycle the same capital for multiple deals.
Why Would You Borrow at 6% While Earning Only 4%?
This is the question that trips up most people when they first encounter infinite banking. On the surface, borrowing at 6% while your policy earns 4% seems like losing 2% arbitrage. But as Kessler discovered after being skeptical for two years himself, the math actually works in your favor.
“You would think if I borrow at six and I earn four, that doesn’t make sense. I’m losing two, right? I get it,” Kessler acknowledges. “But you got to remember how it plays out because the loan is on a decreasing balance… The growth in the policy is on an increasing balance.”
Several factors make this counterintuitive math work:
Decreasing loan balance vs. increasing policy balance – As you make payments, the loan balance decreases while your policy cash value continues growing on the full amount.
Simple interest vs. compound interest – Policy loans charge simple interest, while your cash value earns compound growth and dividends.
Tax-free growth multiplier – The 4-6.5% policy growth is tax-free, equivalent to significantly higher taxable returns. “What is our biggest eroder of wealth? Taxes,” Kessler emphasizes. “When you’re getting 5% tax-free growth, that’s equivalent to way more than 5% if it was a taxable growth.”
No requirement to repay – Unlike a bank loan, there’s no mandatory repayment schedule, giving you complete control over cash flow.
Kessler even demonstrates in his presentations how “you can borrow at 20% and earn 10% and make money all day long” when you understand how the mechanics work over time.
Real-World Example: How Brent Uses Infinite Banking for Real Estate
Kessler doesn’t just teach this concept—he actively uses it for his own real estate portfolio. “Currently, as we speak today, I have $10,266,000 loaned out on real estate deals as lending deals,” he shares.
Here’s how his strategy works in practice:
Private Lending Portfolio
Kessler operates as a private lender, making first-position loans on real estate deals. “I’m the bank. I have my money. I make the loan. Let’s just say I get 10% return,” he explains.
On $10 million at 10%, he receives approximately $100,000 monthly in interest income. But because the $10 million went through his policy system first, it’s simultaneously:
- Earning 10% from the borrowers
- Growing at 4%+ guaranteed plus dividends inside the policies
- Remaining accessible for future use
“Not only do I get the $100,000 that I’m getting from you as the borrower, that’s coming back to me, that $10 million is inside of the policies growing and compounding, and I’m getting that growth as well,” Kessler notes.
Short-Term Rental Properties
Beyond lending, Kessler owns multiple short-term rentals funded through this strategy, including:
- A $3.5 million property on Captiva Island, Florida (captivabeachsunset.com)
- Properties in Island Park, Idaho (near Yellowstone and prime snowmobiling trails)
- A property under contract in Gatlinburg, Tennessee
- Additional properties in the Panama City Beach/Destin, Florida area
“I look at buying no less than a half a dozen new properties” in the coming year, he shares, all funded by recycling capital through his policy system.
For more insights on short-term rental investing strategies, explore our comprehensive podcast collection.
The Hurricane Ian Example
When Kessler’s Captiva Island property was damaged by Hurricane Ian, he received approximately $1 million in insurance proceeds. Because the original purchase was funded through policy loans, he could use the insurance money to repay those loans—immediately making that capital available again for new investments.
“Any money that I pay back to the policy loan, I’m able to use that money right again immediately,” he explains. “If I just had it financed with the bank and I decided to pay off principal… you can’t call the bank back and say, hey, I paid back $200,000 principal, I want to get some of it back.”
What Are the Tax Advantages of Infinite Banking?
Tax efficiency is one of the most compelling aspects of infinite banking for real estate investors. While real estate already offers substantial tax benefits through depreciation and cost segregation, infinite banking adds another layer of tax-advantaged wealth building.
Tax-Free Growth and Withdrawals
Policy cash value grows tax-free, and when structured correctly, you can access funds tax-free through policy loans rather than taxable withdrawals. “The growth gets bigger each and every year because as the policy gets older, it gives you more growth,” Kessler notes. “It’s in the contract of the policy.”
Compounding Tax-Free Returns
The guaranteed 4% plus dividends compounds tax-free year after year. On a taxable equivalent basis, this can outperform seemingly higher-return investments that face annual taxation.
Estate Planning Benefits
Unlike taxable investment accounts, the death benefit passes to beneficiaries income-tax-free. Even if you’ve borrowed against the policy throughout your life, your beneficiaries receive the remaining death benefit without tax consequences.
Coordination with Real Estate Tax Strategies
Kessler specifically looks for deals that provide both cash flow and tax advantages: “The thing I’m looking for is the cash flow and also more important, I’m looking for the depreciation to offset my taxes, my tax liability, and I’m also looking at cost segregation stuff as well.”
For more on legal structures and tax optimization for real estate, check out our syndication guide.
How Did Brent Pay Off $1 Million in Debt in 39 Months?
Before becoming a real estate investor and infinite banking educator, Kessler was a chiropractor with five clinics in the Kansas City area—and nearly $1 million in debt. His transformation began when he discovered Nelson Nash’s concept.
“I implemented that strategy in my life, paid off almost a million dollars of debt in 39 months, all by adding one step to my financial life,” he shares.
The key wasn’t earning dramatically more income or cutting expenses to the bone. Instead, by routing his existing cash flow through properly structured whole life policies, he:
- Created a pool of capital that earned guaranteed growth
- Used policy loans to systematically pay off high-interest debt
- Repaid the policy loans with the cash flow previously going to debt payments
- Recycled that capital to eliminate the next debt, then the next
“I became really passionate about this, and so I decided to start teaching it,” Kessler explains. Since 2012, he’s taught this concept to over 17,000 people nationwide through his company, The Money Multiplier.
What Are Common Mistakes When Implementing Infinite Banking?
While infinite banking can be powerful, implementation mistakes can undermine the strategy. Based on Kessler’s experience with thousands of clients, here are the most common pitfalls:
Buying the Wrong Type of Policy
“It’s not a term, variable, IUL, or UL policy,” Kessler emphasizes. Many insurance agents aren’t familiar with properly structuring policies for infinite banking and may recommend products that don’t work for this purpose.
The policy must be:
- Whole life (not term or universal)
- From a mutual company (not a stock company)
- Designed specifically for high immediate cash value
- Structured to minimize insurance costs and maximize cash accumulation
Taking Withdrawals Instead of Loans
“The reason we take it out as a policy loan is there’s lots of advantages for doing that because if you take it out as a withdrawal, now you have to surrender part of your death benefit and the value of the policy, and you don’t want to do that,” Kessler explains.
Withdrawals are taxable, reduce the policy’s cash value, and eliminate the compounding benefits. Policy loans preserve all these advantages.
Not Working with a Specialist
This isn’t a DIY strategy. Kessler works with six different insurance companies and has spent years understanding the nuances of policy design. “I work with over 17,000 people in every state of the country,” he notes, emphasizing the importance of working with someone who specializes in this approach.
Viewing It as “Either/Or” Instead of “And”
“This is not an either/or. It’s an and. It’s an addition to continue to do what you’re doing and add this piece to it,” Kessler stresses. Infinite banking shouldn’t replace your real estate investments or other wealth-building strategies—it should enhance them.
Having Unrealistic Expectations
“If you ever have a deal or see a deal that’s like, man, that just looks way too good to be true, unless you’ve done massive research, you probably don’t want to get into it,” Kessler warns. This applies to infinite banking as well—it’s not a get-rich-quick scheme but a marathon strategy for building generational wealth.
How Does Infinite Banking Compare to Other Financing Options?
Real estate investors have numerous financing options available. Here’s how infinite banking stacks up against common alternatives:
vs. Paying Cash
Paying cash:
- Pros: No interest payments, full ownership, simpler transactions
- Cons: Cash is gone forever, loses opportunity cost of that capital, no liquidity
Infinite banking:
- Pros: Cash stays in your policy earning growth, maintains liquidity, enables recycling capital
- Cons: Policy loan interest (though offset by ongoing policy growth)
“If you pay cash for something, yes, you’re not quote paying interest, but you give up the interest that that cash could have been earning,” Kessler points out.
vs. Traditional Bank Financing
Bank financing:
- Pros: Leverage, preserves capital, established process
- Cons: Qualification requirements, rigid repayment terms, money paid to the bank is gone
Infinite banking:
- Pros: No qualification required, flexible repayment, repayments go back to your own system
- Cons: Requires building policy cash value first, loan limits based on policy size
“If I just had it financed with the bank and I decided to pay off principal and I said, crap, I wish I wouldn’t have paid that principal… you can’t call the bank back,” Kessler explains.
vs. Index Funds for Idle Capital
When Gabe challenged Kessler on whether idle capital waiting for deployment should be in index funds rather than insurance policies, Kessler acknowledged: “An index fund, there’s no guarantees and you can lose money. You can never ever lose money in a policy.”
Index funds:
- Pros: Potentially higher returns, highly liquid, simple
- Cons: Market risk, taxable gains, no guaranteed floor
Infinite banking:
- Pros: Guaranteed growth, tax-free, can access without selling, continues earning during deployment
- Cons: Lower guaranteed returns (though tax-free and with dividends)
The key distinction: “This is guaranteed growth. And also what’s key is this is not to replace that. I mean, I have clients, I have over 17,000 people that I work with in every state of the country and a lot of them love the stock market. They love index… This is not an either or. It’s an and.”
For investors interested in passive income strategies, infinite banking can complement other approaches.
What Should Investors Know About Second-Position Lending?
During the conversation, Kessler shared a hard-earned lesson about lending position that applies whether you’re using infinite banking or any other capital source.
“I have a shirt that says if you’re not first, you’re last,” he notes. “I don’t want to be in second position. Why? Because I’m 58 years old and I’ve done second position deals before and I don’t do them anymore.”
Why First Position Matters
When lending on real estate deals, your position determines priority if the borrower defaults:
- First position – You get paid first from any foreclosure proceeds
- Second position – You only get paid after the first-position lender is made whole
“If you come to me, Gabe, I want to borrow money. I’m like what’s the collateral? I don’t care about your background your history. I want to know if something goes bad what do I foreclose on,” Kessler explains.
The Risk Premium Isn’t Worth It
While second-position lenders typically demand higher interest rates to compensate for additional risk, Kessler’s experience suggests the premium isn’t worth the exposure. “People will offer you, I’m going to give you more interest if you’re in second position. I don’t care.”
This conservative approach aligns with the infinite banking philosophy: building wealth through guaranteed, sustainable returns rather than chasing higher-risk opportunities.
How Can You Get Started with Infinite Banking?
If infinite banking sounds like a strategy you’d like to explore, Kessler offers several resources to learn more:
Educational Resources
Free e-book: Kessler co-authored Mapping Out the Millionaire Mystery with real estate investor Chris Noggle (who’s been featured on House Hunters and HGTV’s Risky Builders). Send an email to brent@themoneymultiplier.com to receive the free e-book.
90-minute video presentation: Visit themoneymultiplier.com and click “Watch Brent Now” for a comprehensive explanation with downloadable materials.
Podcast: Kessler’s daughter Hannah hosts The Money Multiplier Podcast with over 150 episodes covering the concept and related strategies.
Working with Specialists
Kessler emphasizes that proper implementation requires working with someone who specializes in infinite banking policy design. “Don’t take what I tell you. Go to the hundreds and hundreds of success stories, testimonials, planned designs that you will see, case studies, if you Google my name Brent Kessler or Google the Money Multiplier. Don’t take my word for it.”
He works with six different insurance companies and structures policies based on individual circumstances, goals, and cash flow capacity.
Real-World Examples to Study
Kessler recommends following Devon Burr (Mr. BRRR on social media), a Phoenix-area real estate investor who shares how he buys properties using infinite banking. “He shows you how he buys all of his real estate using this method and he’s using the same money over and over and over again to buy multiple pieces of property.”
For more on building wealth while working full-time, explore our comprehensive guide.
What Other Real Estate Lessons Did Brent Share?
Beyond infinite banking, Kessler shared valuable insights from his years investing in real estate:
The Importance of Communication
“Always try to work it out amongst yourselves and the main way you’re gonna do that is having good proper communication. If any of the sides quit communication, that shit can go down the tube in a hurry,” Kessler warns.
He shared a painful example: A dispute over $7,000 with a former pilot ended up costing him $20,000 in attorney fees plus six months of aggravation to settle for $2,000. “I could have wrote him a check for seven and been done, but instead I pay 22 and I go through six months of aggravation and crap.”
The lesson: “Your time, your time, how valuable is your time? What is your time worth? You gotta put a value on time because they’re not making any more of it.”
The Value of Networking
“Your net work is equal to your net worth,” Kessler emphasizes. “The bigger your network is, the bigger your net worth will be or will become.”
He recommends attending local real estate investor associations (REIAs), even when they don’t seem immediately valuable: “You never know who that person is that’s going to connect you with maybe the next person… It may not be you coming up to that person and meeting that person. They may know somebody that you don’t know that they’re going to turn you on to.”
Focus on Tax Strategy, Not Just Cash Flow
“I don’t look about how much money I’m going to make necessarily off of the deal. The thing I’m looking for is the cash flow and also more important, I’m looking for the depreciation to offset my taxes, my tax liability, and I’m also looking at cost segregation stuff as well.”
This holistic view—considering cash flow, appreciation, and tax benefits together—aligns perfectly with the infinite banking approach of building wealth through multiple, compounding advantages.
For more on maximizing cash flow strategies, check out our detailed guide.
Markets Kessler Is Excited About
When asked about promising markets for short-term rentals, Kessler highlighted:
- Gatlinburg/Pigeon Forge, Tennessee – “I’m real excited about this deal I’m about to go into in Gatlinburg, Tennessee, in the Pigeon Forge area”
- Beach communities – Particularly Panama City Beach and Destin, Florida (though he cautions that remote islands like Captiva have higher maintenance and insurance costs)
- Island Park, Idaho – On the Montana/Idaho/Wyoming border, popular for snowmobiling and Yellowstone tourism
For insights on finding profitable short-term rental markets, explore our market analysis guide.
What’s the Bottom Line on Infinite Banking?
Infinite banking isn’t a magic bullet or get-rich-quick scheme. As Kessler repeatedly emphasizes, “It’s not a sprint. It’s not a get rich quick thing. It’s a marathon.”
But for real estate investors willing to think long-term and add one strategic step to their financial system, infinite banking offers compelling advantages:
✓ Keep capital working in two places simultaneously ✓ Earn guaranteed, tax-free growth on invested capital ✓ Maintain liquidity and control over repayment ✓ Recycle the same money for multiple deals ✓ Build generational wealth that stays in the family ✓ Create your own banking system independent of traditional lenders
“All the money now stays in a closed system. Money is not being leaked out to other people. It stays in your family forever,” Kessler explains.
Whether you’re looking to fund your first wholesale deal, build a commercial portfolio, or create passive income through turnkey properties, infinite banking provides a foundational financial strategy that complements—rather than replaces—your real estate investing approach.
As Kessler learned from his mentor Nelson Nash and now teaches to over 17,000 clients: When you control the banking function in your life, you build wealth the same way the Rockefellers, Rothschilds, and other wealthy families have for generations.
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