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Senior Housing Investors
What We Owe Our Future Self: A Wealth Building Journey with Chris Larson
What happens when life's most devastating moments become the catalyst for financial transformation? Chris Larson's journey from competitive cyclist to multifamily real estate mogul began with unimaginable loss. After his best friend died suddenly at 18, Chris experienced a profound shift in perspective that would forever change his approach to life and money.
"If I die tomorrow, will I be satisfied with my life?" This question pushed him to abandon his cycling career and pursue what truly mattered – living fully and creating financial freedom. At just 21, while studying engineering at Virginia Tech, Chris purchased his first rental property, laying the groundwork for what would become a half-billion-dollar real estate portfolio.
Throughout our conversation, Chris reveals the hidden advantages of multifamily investing that most overlook. Beyond simple cash flow, he explains how forced appreciation through operational improvements creates wealth regardless of market conditions. His strategic pivot from single-family to multifamily investments came after discovering his single-family portfolio was yielding a disappointing 4% return on equity – an embarrassing realization for someone with an MBA in finance.
Perhaps most fascinating is Chris's unconventional incorporation of cash value life insurance as a cornerstone investment strategy. Unlike traditional financing methods, these specially structured policies provide tax-advantaged liquidity that can be deployed into real estate deals. "My guaranteed minimum this year is 4%, but I'm getting 6% with dividends – completely tax-free," he explains, demonstrating how this approach creates both protection and opportunity.
For those concerned about today's volatile market conditions, Chris offers practical insights on navigating higher interest rates and increasing supply pressures. His team has found creative solutions like partnering with housing authorities to incorporate affordable units, boosting cap rates by 200 basis points in some markets. He's also eyeing emerging secondary markets that follow migration patterns – places like Columbus, Indianapolis, and Myrtle Beach that combine quality of life with affordability.
Ready to transform your financial future? Visit nextlevelincome.com to download Chris's multifamily playbook or explore his approach to building a personal banking system through life insurance. The path to financial freedom may not be what you expect – but as Chris proves, sometimes our greatest setbacks become our most powerful catalysts for change.
I said you know what this is silly, riding my bike around in circles. You know what if I die, you know, am I going to be happy? Am I going to be satisfied with my life? I said there's way more to live, you know. And I was like I'm not going to. You know, I'm not going to let any opportunities go by. I'm going to ask the girl out if I want to go out with her, if my friends invite me to something. I'm not going to let any opportunities go by. I'm going to ask the girl out if I want to go out with her, if my friends invite me to something, I'm going to do it Like I'm going to really live life to the fullest.
Chris Larson:And you know, through a lot of introspection, I've realized that, hey, if you want to live life on your own terms, you have to have money. That's just a reality. You know, money helps you achieve things. You know I, like Dan Sullivan of Strategic Coach says, if you can write a check for it, if you have the money, you can write a check for it, it's not a problem. So it's a great thing if you're listening to remember.
John Hauber:Welcome to the Senior Housing Investors Podcast. If you are an owner operator, investor, developer or buyer of senior housing, you've come to the right place. The best way to stay connected with us is to sign up for our weekly newsletter at havenseniorinvestmentscom. This podcast doesn't exist without you, our community. Thank you for listening and reach out to us anytime. And reach out to us anytime.
Kelsie Heermans:Welcome back everyone. Today, our host, John Hauber, is joined by Chris Larson, founder of Next Level Income, a company on a mission to help people achieve financial independence through education and smart investing in income-producing real estate. Chris brings years of personal investing experience and has made it his purpose to guide others on how to make, keep and grow their money. From helping those just starting out to supporting high earning professionals with tax strategy, insurance and long-term planning, chris and his team provide both the tools and the roadmap to build true passive income. He's also the author of the book Next Level Income, host of a popular financial podcast and a passionate educator who believes that once you gain financial freedom, you gain freedom in life. Chris, we're excited to have you with us, john.
John Hauber:Thanks, kelsey. Hello everyone, welcome back to the Senior Housing Investors Podcast, where we dive deep into the investment strategies powering today's most successful real estate and wealth building investors. I'm your host, jon Halber, today. I'm honored to welcome Chris Larson, founder and managing partner of Next Level Income. Over the past two decades, chris has mastered the holy grail of real estate multifamily specification and pioneered using whole life insurance as a private bank for investors In 2025,. His team has deployed well over a half a billion dollars into apartment communities across the Southeast and beyond. Chris, welcome to the show.
Chris Larson:John, it's great to be here, great to see you.
John Hauber:Yeah, no problem, let's just jump right into it. And Kelsey went over your background and such, but so we won't go into that. I really want to get into the core of who you are and what your philosophy is in terms of investing. So you bought your first rental property at 21 while studying engineering. Walk us back to that moment when. What drove you to buy instead of rent, and how did that first deal reshape your worldview?
Chris Larson:Yeah, john. Well, thank you, Thank you for the opportunity and I know you got a son that was about the same age when I bought that first property and up to that point, kind of right right before that point, all I wanted to do is be a professional cyclist and I started racing when I was 14 and 15, I won the state championships, went, started going to national championships, um was on the junior Olympic team. Ultimately it was an all American cyclist in college and you know, top five in the country and my, my team, like two years after that, went pro. But I quit that year and the reason is my and you know. Long, very long story short, but my best friend. His name was also Chris. I met him just like a couple months into when I started racing. We became best friends. He was a year younger. We started training together every day. So he lived 10 miles away from me and we'd we'd ride down the BNA trail between Baltimore and Annapolis and we'd meet up every day after school and we trained for two to four hours a day after school and we just became really tight like brothers and then we started traveling together to races. We went up and down the East coast.
Chris Larson:I went to Virginia tech it's hard, hard to hard to read here on the wall but went to Virginia tech, got an undergrad degree in biomechanical engineering and Chris was was set to come and be my roommate the following year, since he was a year behind. But on June 21st 1997, he had a massive brain hemorrhage and and passed away at 18. He had just turned 18. I just turned 19. And it was devastating. I was probably depressed when I look back, but I leaned into cycling and I hit. It was very successful.
Chris Larson:That following year. But I'll never forget, I was doing his memorial race that fall, that September, for the second year and I'd won the first year that they had his memorial race and I actually won the second year too and I was, I mean, I was in such great shape. I had, uh, that somebody had thrown tax into the road and I I had lapped the field on the two and a half mile course um with a small group and I actually got a flat from the tax and my whole team dropped back to help me back into the field and I dropped them, went through the field, went back off the front and won the race. I mean I was just in fantastic shape and you'd think like I was at my peak and I would have been thrilled. And I just remember that I had no emotion when I won the race and it wasn't, you know, it wasn't that I was sad, it wasn't that I was happy, it was like it was like I was empty emotionally. And I think anybody that really thinks about it like the opposite of love isn't hate, it's it's indifference and that's that's what I felt.
Chris Larson:I went back to school. Um, I did one more race and my, my mother was there and I dropped out of the race and she's, like you, never dropped out of the race. I said, yeah, I'm done. I don't think she realized it at the time, but I was. I was actually done with racing.
Chris Larson:I went back to school that fall and it was my junior year and I sold all my bikes. I was president of the cycling team. I still kind of helped them out, but I quit. I quit the sport effectively and I said you know what this is silly, riding my bike around in circles. You know what? If, what, if I die? You know, am I going to be happy? Am I going to be satisfied with my life? I said there's way more to live, you know, and I was like I'm not going to. You know, I'm not going to let any opportunities go by. I'm going to ask the girl out if I want to go out with her. If my friends invite me to something, I'm going to do it Like I'm going to really live life to the fullest.
Chris Larson:And you know, through a lot of introspection, I realized that hey, if you want to live life on your own terms, you have to have money. That's just a reality. You know, money helps you achieve things. You know, I, like Dan Sullivan of Strategic Coach, says, if you can write a check for it, if you have the money, you can write a check for it. It's not a problem. So it's a great. It's a great thing, you know, if you're listening to remember.
Chris Larson:But in that process I started day trading. I was making like $5,000 a month day trading, you know, as a junior in college, at 20 years old. But it was like I mean I just remember like not sleeping and being stressed out and I was like this is not investing. You know, I ended up getting master's degree in portfolio management, like institutional finance, and as I learned more, I'm like no, no, day trading is not investing. Even the stock market to a large degree isn't really investing in a lot of ways.
Chris Larson:So I read 250 books on everything money, business, investing, real estate related and I said you know what I really like real estate At 21,. I can buy a property with $3, investing, real estate related. And I said you know what I really like real estate I can. You know, at 21, I can buy a property with $3,000, got an FHA loan, I think it was at the time and it can cashflow it. You have all these benefits. And I said this is going to be my path. So that's.
Chris Larson:That was ultimately why I bought that first property. And then I bought the property next door so I had two, three bedroom townhouses, so I had like my own little six, you know, unit multifamily deal effectively. And I continued to buy about a property a year and I said you know what, if I can just pay these properties off, I have 10 grand a month coming in. You know, and I'll be. I'll be done by the time I'm like 35 or 40. But the challenge was I ran out of capital pretty quick so I ended up entering a career in medical device sales. So that was how I created capital to buy my properties. But, as Robert Kiyosaki said, I had in my head you know that I was going to be an investor. I saw everything through that investor's lens. That's how it all started, john at 21.
John Hauber:And that's that's so cool for us. And, and you know you talk about books and as you can see behind me how many books I have, I used to have like three cases of you know bookshelves behind me and I just finally had to get rid of them. But I've read that or more, and I'm really enjoying also the you know the Founders Podcast where someone reads autobiographies before me and then talks about them. So that's Founders Podcast. Oh, yes, yeah, you will check that out. It's really very, very popular, yeah. Anyway, you talk about you know books, so share one early mistake yeah, at Apache, more than any other book and mentor ever could. How did you recover and pivot?
Chris Larson:Yeah. So I bought several properties and you know I stopped buying properties in 2005. So I was like, okay, you know, 2005,. I ended up starting to sell properties at the end of 07, december 20, 2007. And I literally watched the comps fall like off a cliff, you know, from 300,000 to 290 to 280 to 270. And what happened was the banks called, started to call, like home equity lines of credit and all those things.
Chris Larson:So one of the early lessons I learned, john, was that you know, credit can come and credit can go and you have to be very conscious of that. And so I started following the credit markets, you know, which really kind of led me to investigate the real estate cycle and learn. You know, you mentioned, you know, life insurance, specifically cash value life insurance. It's like, okay, liquidity is very important. So I got into some, you know some, some small trouble, but some early trouble where I didn't have enough liquidity because I was banking on those lines of credit, on my properties as as a portion of my liquidity, and when those went away, I lost, you know, the majority of the quote unquote liquidity that I had. So what I learned was equity is good but cash is better, so you have to balance out the equity in your properties and the cash that you have on hand. I see a lot of people say I'm going to pay down my mortgage. It's like, well, what if you need that money back? Oh, I'll get a line of credit. Well, what if the bank takes away your line of credit? Oh, that wouldn't happen. Oh, yes, it could. Yeah, so I've learned and I'll add one more layer to that.
Chris Larson:My parents, so my father, passed away when I was five, when I was quite young, but my stepfather was a contractor. My stepfather and my mother ended up working for Jimmy Dean Jimmy Dean Sausage, which, if you're older, if you're all right, you're older, you know Jimmy Dean, or even you know who he is, but he had a construction company and when the savings and loan crisis happened in the early 90s, they both lost their jobs. So I saw all these different things happening in the real estate market. So in 2008 hit and I started to look back through history. I always liked economics and banking and history and different things. You can see that these cycles, they repeat themselves and these credit expansions and credit contractions happen and they largely affect disproportionately affect the real estate markets.
John Hauber:Well and that's what's so great about your podcast is that you keep everyone informed on what's going on in the marketplace as it relates to real estate investing, and so love your podcast. That's why I'm having you on today. I want to make sure that others know about it and such so Next Level Income correct.
Chris Larson:Yeah, Next Level Income show. You can check us out at nextlevelincomecom. And yeah, we're closing in on seven. Like we're getting in. We're closing in on the end of our seventh year, so almost eight years in.
John Hauber:Yeah, offline. He said that and I said we're four and a half years in and you're doing awesome, so let's you know, okay, so from that first bold step that you made in your 20s and then subsequently selling in 2008.
Chris Larson:I ended up not selling because, as the properties went down in value, I ended up holding the properties. So you held the property. Yeah, fortunately we had long-term debt and they were cash flow positive, so it was an okay position. But it would have been great if I sold them six months or a year earlier.
John Hauber:Oh, believe me, I lived through 2008 to 2012. So I could tell why. I don't think it's about that time, but we won't get into those. But you went all in to multifamily and let's transition and explore why you did that. Okay, so you call multifamily the holy grail of real estate and, beyond cash flow and scale, what unique structural advantages set it light, years apart from single family or commercial real estate? And I just want to make a point here, because this is the Senior Housing Investors Podcast Senior housing is a subset of multifamily, so let's just start with that.
Chris Larson:Yeah, it is, and I think we can kind of transition into why I'm a big fan of senior housing, kind of going forward and some of the demographic changes that have shifted. But, if I may, john, if you're listening today and I'm holding this up, you're probably listening on the show, but if you want a free copy of my book, you can also get that nextlevelincomecom and I kind of walk through. You know all these things that I'm going to describe with multifamily. But, as you know, I had a couple momentous points in my life. I mentioned the first when you have, in my adult life, when my best friend passed away, my mother passed away at the end of 2011. And we had, just a week later, we had my second son and I had been been working and been very successful in the medical device space, you know. But it was one of those points where my wife and I kind of took inventory of everything in our lives and said, ok, like you know, what are we doing? It was a consequential election year in 2012. And so what are we doing? You know, what does our portfolio look like?
Chris Larson:And I went and looked at my portfolio and my single family rentals were doing well, but they were kicking off like 7% cash and I was making, you know, a few hundred thousand dollars a year at the time, you know, plus my wife's income. You know I was paying a lot of tax because I'd lost all the tax benefits from single family and I was ending up with a 4% return on my equity. So I looked at my equity, not my original investment. I think if you're a real estate investor, I think that's a really good way to evaluate your portfolio is return on equity, not return on your original investment as it grows, and I was like I was embarrassed with somebody with a MBA in finance getting 4% return. I was like this is Now. The returns were great from my original investment but looking forward, I was like this isn't okay.
Chris Larson:And my wife had started her own architecture practice and we were at a business meeting out on the West Coast, you know kind of for her and I was talking to somebody at that meeting and I was, you know, lamenting, you know, the performance of my portfolio and he goes well, have you looked into investing in multifamily? I said yeah, you know, and I said I've looked into it. It's you know, I see the benefits but and he goes, you should talk to my friend. They syndicate multifamily deals. So I I reached out and I've I got into the medical device space because of demographics.
Chris Larson:Um, I followed a author by the name of, uh, harry Dent, and then kind of some other stuff. So I started following demographic trends and the millionaire next door was another, was another author. I forget his name off the top of my head, but he's talking about hey, if you want to, if you want to make a lot of money, just follow the baby boomers, you know, get into finance or the medical field. And you know real estate, you know for in these ways, in these ways. And I was like wow, I was like I'm talking to this guy and he's talking about you know, the coming, you know, demographic wave of millennials that are going to be renting. And I said like you sound exactly like all this stuff that I've read. And he didn't, he didn't know about these authors, but that he was saying the same thing.
Chris Larson:And I was like no-transcript, john, because you know, forced depreciation comes from increasing the operating income in a property, which boils down to operations and you know, as you get into, you know more operationally heavy type investments like car washes that we're in, or senior housing, as you and your audience is familiar with. If your operations aren't good, then your income can go the other way too. So you can force appreciation, but you can also go the wrong way with that. So all those factors led me to ultimately sell off my single family portfolio and we invested in multifamily. And then I introduced my first partner to the space and we syndicated our first deal in 2016. August, I think, second 2016,. We closed on our first deal. Going on, you know it's been nine years at this point.
John Hauber:Awesome. So today, as you know, many investors chase niche strategies my friends in self-storage, others that we know are mobile home parks even crypto is being talked about quite a bit and senior housing. I don't consider senior housing to be niche because it has both the demographics and a really supply demand issue going on right now. So it's best investments in commercial real estate at this point, and so has multifamily syndication stood the test of time, even through 2024 and 2025?.
Chris Larson:So the answer is yes. The short answer is yes. Now has it been a, you know, a smooth road, smooth sailing the whole time? No, there's been a lot of challenges. And that goes back to so one.
Chris Larson:You know, when I got into the space in 2012, 2013, originally, you know we're going on 13, 14 years on at that point, you know, the demographic trends still stand like we're still 6 million housing units roundabout short in this country, you know. So we've got to fill that gap somehow. And you know the majority of the household formation. You know they're going out and renting. They're either renting homes, they're renting townhouses, they're renting apartments with those. So, yes, the demographics has stood the test of time.
Chris Larson:What we've seen the past couple years, as a lot of people know, is that when rents were going up double digits, you know, in 2001, 2002, and rates were rock bottom, you had a lot of supply. You know starts I'm sorry, you had a lot of starts. And today you're seeing that supply peaking. So we've had a record supply over the past year, hit the market. So that's actually put a lot of downward pressure on rents.
Chris Larson:So you think about it like if I own a property and you have a property across the road or across town. You have a new builder. They need to sell that property, to get it off their books, because that's what they do they build and sell, they develop and sell. They don't develop and operate typically. So what are you going to do? You're going to do everything in your power to get your occupancy up to the point where you can sell that property, and typically you need it to be 50 to 70% to sell it. So what do you do in that case? You do the same thing I did when I bought an office downtown and I needed to fill it up before I closed. I gave away two, three months free on the front end so that I could get the rents where they needed to be, so that the bank would then say oh, you know, your income is here. What did I care if I was giving rent away when I initially bought the property, because I bought it from foreclosure right. All I wanted was the show in six months and a year that was going to have that positive trend. So that has a lot of immediate downward pressure on that.
Chris Larson:The other thing that we face, john, is interest rates have come up. So as interest rates have come up. Cap rates have come down. I just read that cap rates reversed last month, so about 75 basis points annualized. So that's a nice reversal in trend.
Chris Larson:But we've had a lot of headwinds. So what's happened is you have a lot of supply hitting the market, you have rents that have been flat, in some markets even downward, and cap rates have decreased as well. So if you have a multifamily portfolio and you're selling some of those properties, it's been an inopportune time to sell this year and last year. But we're seeing those trends kind, you know, kind of reverse. But I think you know investors got spoiled by seeing, you know, just outrageous returns, you know for a decade, and now they're coming back to kind of, you know, coming back from the stratosphere, you know, back down to normal, and I think that's going to, you know we're going to have kind of a normal market going forward, you know, for multifamily. But I think multifamily is still going to be a solid space to be invested in over the next decade.
John Hauber:Yes, supply and demand again right and affordability right. Individuals yes, very difficult to get into homes today, and so multifamily is where individuals are going. So this brings up a great point and a great question is that day in 2025 and going into 2026, because I don't see the 10-year doing anything much over the next year. Fairly flat yeah, how do you stress, test your acquisitions and protect investor capital through this cycle?
Chris Larson:Yes, through this cycle, yes. So if you're an operator your owner that is forced to refinance a property right now, you're in a challenging place the bottom line so that's a challenging spot to be in. Over the past five years there were a lot of bridge loans that were out there that are coming due. So we're hundreds of billions of dollars that are bridge loans that are coming out. That provides an opportunity today to buy these properties at a discount. We have one currently in Houston that's under contract 20% below what the seller bought it for. So that's a great opportunity.
Chris Larson:We typically have long-term debt on our current acquisitions that we bought in the past couple of years. So we're saying, okay, is there a long-term debt? What is the forecast for those? You mentioned affordability We've been creative with some programs, specifically in the Houston market. We made six acquisitions and partnered with the Houston Housing Authority to provide affordable housing as a portion of those units. So that's increased our cap rates about 200 basis points in those properties, you know. So we say okay, we want to make sure that we have reasonable rental expectation or reasonable rent expectations in terms of increases. You want fixed rate debt. You also want to make sure you have ample reserves.
Chris Larson:You know for these investors as well, and I think you know it's easier now. You know to say, hey, we expect to sell at the same or a higher cap rate, whereas you know if you bought a property five years ago, you know you could easily say, hey, we'll probably sell this at 100 basis points lower cap rate and do that. So I think a lot of operators, ourselves included, have learned over the past. You know few years. You know that you need to be much more conservative. You know some blind spots. You know if you look at inflation, you know expenses up to I mean senior housing is facing the same thing in terms of expenses going up. You know across the board.
Chris Larson:You know supplies, renovations, staff. You know these new units that are coming onto the market. You know one of the things that people don't think about is well, what happens if, if somebody comes to hire your staff because now they need to staff their new building up as well and they say, hey, john, we'll hire you at a 25% you know bonus. You know over what what Chris is paying you. So we're vertically integrated in in most of our markets with our, with our current acquisitions, and that also helps us control that control. You know. You know our staffing as well as our costs, and you know we're able to source at a lower rate as well.
John Hauber:You know, with those Awesome, chris, thank you Appreciate that, and so let's shift gears. This would be very interesting because no one on our podcast has ever spoken about this, and I personally, 22 years old, incorporated this investment vehicle into my portfolio, and that is full life insurance, a topic few real estate pros understand. In simple terms, how does building cash value inside a policy compared to a 1031 exchange or even a bank line of credit?
Chris Larson:Yes, yeah, and I like the way you kind of changed what you said there. You said investment and then you said vehicle. The way I think about life insurance is more like a vehicle, like a strategy, because the challenge I've seen in the industry is that people compare it to an investment. And I'll give you a quick story. So I mentioned my father passed away at five. My friend passed away very young you see people pass away and my best friend asked me one day he said, chris, what do you do, what's the cornerstone of your strategy? I said life insurance, asked me one day. He said, chris, what do you do Like, what's the cornerstone of your strategy? I said life insurance. And if we go back a hundred plus years, this was what the majority of Americans used for their savings in retirement. And then you had pensions come into play, and then you had mutual funds and term insurance, et cetera, and the country has largely gotten away from this. You know. So we don't. We don't look at it the same way we did. I look at it as a personal pension fund, because what you and I can't say about our investments, john, is that insurance provides guarantees. It provides guaranteed rate of return, it provides a guaranteed payment upon death.
Chris Larson:Well, my best friend, three years after he set up his life insurance policies, his wife passed away at the age of 40. She was in the military. She came back from the Middle East and had an aggressive form of cancer, likely from the toxic exposure that she had over there, and he got a $3 million payout that allowed him to step away from the job that he was working in, relocate his family back closer to his family and spend more time with his daughters. And I was talking to an insurance I'm sorry, a financial advisor. And he was like, oh, I'm, you know I hate whole life insurance. You know it's got. You know rates, returns aren't great. And I said, well, my friend got a policy on on his wife and she passed away three years later. I said he got $3 million. I said do you want to know what the rate of return was on that? And he's like, well, and I said here's the thing. I said if you're going to say it's a bad investment, you also have to acknowledge when it's a good investment. But I wouldn't say, hey, look at the great investment my friend made in buying life insurance.
Chris Larson:It's a vehicle, it's a protection, it has all these benefits. So the way we look at it, john, is like a vehicle, you know. We use it and incorporate it into our investment strategy, but we look at it and we maximize the cash. And I actually got licensed, you know, during COVID, because I realized that a lot of people didn't have a good knowledge of this. So my partners, you know, specialize in structuring these policies to maximize the cash value but minimize the costs.
Chris Larson:And the challenge is, if you talk to, you know, your average advisor, they're going to give you, you know, basically an out of the box insurance policy, because if they structure it the way we do, they cut their commission by like two thirds. So they're not really incentivized to do it and it's more complicated to do. It, takes a lot more understanding to do that. But I think the first thing is you know you say okay, if you value the predictability and the guarantees. You know if you're a business owner, if you're saving for college, you know if you're in, you know an entrepreneur and you know you have a lot of variability in terms of other things, it's really nice to know that that money is growing, you know, predictably every year. So, like this year, my guaranteed minimum is 4%, but I'm going to get 6% with our dividends this year in our policy and that's tax-free, you know. So I know 6% tax-free isn't an amazing rate of return but it's a really nice, safe place to put my cash. And that means I evaluate everything by looking at that first and doing that. And it saved us during Helene, which hit us here in Asheville. It saved us during COVID to have access to that.
Chris Larson:I know a lot of investors that they use their life insurance policies to finance their purchases and what they do, kind of setting up their own family bank. But the big thing, you know, for those of us that have children is, you know we look at our financial picture not just through our eyes. Which an advisor would say, oh, you don't need insurance anymore when you're 65, you know your portfolio is worth this much. Well, I say well, wait a minute. I want to leave a legacy to my family, you know so. I know my insurance is set up to create generational wealth, not just for my children but also their children through the structures that we set up.
Chris Larson:And you know Nelson Nash, who kind of pioneered, you know everything around infinite banking and really the way that we structure our policies. You know he had a very holistic view of things as well. So I, I think, um, you know again if, if it's, uh, it's something that you know, the ultra wealthy use it. There's more. There's more than just the rate of return, john is as you talked about inside the policy. There's all the other benefits that come with it.
John Hauber:Okay, so let's let's just take a real world example and walk us through for a scenario scenario. I'm going to fund a policy with, let's say, $50,000 a year by year three. How would you deploy a policy loan back into the deal and what are the pros and pitfalls?
Chris Larson:Yeah, I'll try to simplify it and this is kind of complex and three years is a decent timeline, but you can look at it through different things. So when you structure a policy the way we do, typically all the expenses are going to be front loaded in the first couple of years. So in that third year if you put $50,000 into the policy this might be surprising for somebody here but you can actually take 50,000 out in the form of a policy loan as you borrow. At today's rates it's about 5%. Now that same individual is going to have much more than $50,000. They put $150,000 in that. So year three you're going to typically get dollar for dollar. You've probably had a portion of that in expenses in the first couple of years. So it's going to vary. You might have $130,000, maybe a little less, maybe a little bit more than that in total cash value in that policy.
Chris Larson:But the nice thing is I'll give you a real world example. I had one of my partners come to me and says hey, chris, actually somebody you know is selling a car wash in town and he'll sell it to us if we can close this month at the same price. He paid for it, which was like a 15% discount, so we're getting a $200,000 discount on this. So I took $250,000 as a policy loan paid 5%. I'm making 20% on that money. So instead of borrowing that money from the bank or using cash, I was able to take a loan out.
Chris Larson:Now one might say well, chris, why would you take that money out and have to pay the interest rate? Well, the nice thing is, if you structure the policies well, I'm paying 5%. But remember I mentioned I'm getting 6% on the money I have in that policy. The insurance company actually recognizes the money that I have in there, whether it's in there or whether I've taken it as a loan. And even though I'm paying 5%, I'm still getting 6% inside the policy. So let's just assume it's a wash in terms of that. I can now pay that money back because I'm making 20% on my money over a period of time and I can repeat this strategy over and over again.
Chris Larson:And my wife and I used to do this when we built spec homes. So we would take a 50 or $100,000 loan, buy a lot, build a house, sell it in 12 years, double our money, pay the loan off, go and do it all over again, all the while not having to rely on banks as well as being able to allow our money to continue to compound inside the policy being able to allow our money to continue to compound inside the policy and we still had the benefit of the actual death benefit, you know, from the money that we had in there. So it's some people call it like the and strategy. You know, you get to, you know, have the insurance and you get to use the cash at the same time.
John Hauber:So are these policies guaranteeing 5% or 6%, or is it based on what the market is doing?
Chris Larson:Great question. So there's a guaranteed minimum rate. So typically you're looking at a guaranteed minimum rate. It depends on when you structure the policy. Like, ours are about 4%. That can vary from, you know, 2, 3, 4, 5%, depending on when you structure that policy. And then you have to make sure it's with the right company. You know, we work with a stable of companies, but the ones I have my policies with are mutual insurance companies and what that means is if the company turns a profit and these companies have to turn a profit so that they can stay viable, if you think about it. So I say if they turn a profit, but when they turn a profit, they return that profit back in the form of a dividend, you know. So this year the company that I'm with, penn Mutual, informed us that hey, this year your guaranteed minimum plus your dividend is going to be 6%. So this year I know that we're going to get a 6%. You know, not not guaranteed, but I know this year it's going to be that much.
John Hauber:Awesome. Thanks, chris, appreciate that input. Now we talked about demographics. Okay, we know what the demographics is doing. When we, when we look at whether or not we're going to acquire a property, or we're consulting with owners and operators and investors and buyers and sellers, you know that population migration continues. To rewrite the maps, for example, like go to one of these you know, u-haul, or or one of the other sites, and say, okay, what's going on in terms of migration? So what's popping up in our grouping of the highest migration states are Florida and Texas and the Carolinas, and even Boise, idaho. Which emerging second tier markets are flying under the radar right now, and why?
Chris Larson:Yeah, oh, that's a great question because we focus on those larger markets as well. Houston's one of our favorites, dallas is another one. I moved to the Carolinas because I knew that the demographics were going to push in that way, if we get, you know, a lot of the secondary markets are in those states, but they're smaller markets, right. So you're seeing, you know, like the Asheville, north Carolinas. You know of the world, you're also seeing some that people aren't thinking about is the Midwest, you know. So you're seeing, like Columbus, ohio, indianapolis. I would consider Boise a secondary market as well, and you can kind of see this. These are like echoes of the mass migration trends. And when I say echoes, you know if you're, if you're moving out of California, you know it's close to move to Boise, you know, for instance. So you see people moving, you know, to that area, like Texas, you know, maybe, maybe not Austin, but you have. You have markets that are in between, like Austin and San Antonio. I'm trying to remember the exact market that I'm thinking of Waco. Yeah, there's Waco, and there's another one in that corridor that I'm blanking on at the moment, but this is. You can say, oh well, where is close to these bigger markets where people would prefer to live. You're seeing, like Myrtle Beaches, savannah, georgia. You know these are markets and I think it's easy to overlay. You know the demographic, you know the mass migration trends, john, and then you layer on quality of life on top of that and that's where you can identify some of these markets. And I have a whole algorithm that I went through and a methodology that I have on my blog that you got. You can go to nextlevelincomecom and just search for, like demigration trends or how to find you know, the next big markets. But you know, if you look at the quality of life scores and you look at the best places to live and then you check the proximity, you can figure out a lot of these things yourself.
Chris Larson:If you're, if you're, a smaller investor, you're like, hey, I just want to move to an area where I could buy a house and do well. This is a great way to do that and take advantage of some of these things. Like Cary, north Carolina, for instance, is another one Outside of Raleigh, but terrific market. Greensboro, north Carolina, winston-salem, north Carolina.
Chris Larson:These are some other secondary markets that have done really, really well. And what do those markets, and like Columbus, ohio have in common they have a better quality of life than you know, some of these bigger cities, but they also have a lower cost of living, so they're more family friendly and if you're a millennial trying to start a household, you may be almost forced into those markets, you know, versus getting into. You know, the main market and even on a micro scale like you can take Asheville, north Carolina and Brevard, which is just south of us has popped up and been just an amazing, you know, growth story from a smaller town that's there as well. So if you're, if you're looking at from a smaller perspective, if you're looking at you know, hey, how do I figure out if this is a good market? You can layer on, you know, some of these quality of life scores as well as the cost of living, and go just outside of some of these big migration areas.
John Hauber:That's a great point and there's. You know, I use a spreadsheet and the spreadsheet was you know, we track the baby books right and we track the baby books right and we track absolutely health and wellness. So I put in a spreadsheet the best regional hospitals in the united states that have, yes, all of the services, all of the you know like brain surgeons and spine surgeons and everything, and said, okay, you know, they don't want to move away from their community to a city where maybe their kids live, they want to stay in their farming or their beautiful county community. And, boy, that county has one great markets for the senior housing space. We also, in the senior housing space, we look at where the 55 and 64-year-olds are moving, because those are the ones that are making the decisions for their parents. But they also have kids that have potential grandkids and the parents are coming in and wanting to be near their kids, their grandkids parents are coming in and wanting to be near their, their kids or grandkids.
Chris Larson:I'll give you a quick antidote. So my, my stepfather has dementia and he was. He was not living here, but we moved him here in Asheville, north Carolina, and he's in. He's in a senior living facility just North of Asheville for that same reason, you know. So I think that's another, that's another great way If you follow the decision makers, those that are paying the bills, I think that's a really great point that you made there.
John Hauber:Thank you. So we've got probably another five minutes or so, but we want to get into some really core questions, because we have a lot of new investors out there that are, you know, w-2 employees or they're you know millennials, and they're making good money. They want to invest. So if someone's listening and has 50,000 of investable capital and zero prior syndication experience, what three steps would you have them take this week to get started?
Chris Larson:Yes. So I think the first thing is, if you've got that money at $50,000, quote unquote burning a hole in your pocket, the first thing you want to do is just pause and listen to shows like yours, John. Go to the Next Level Income show. Go to nextlevelincomecom. Start to educate yourself. And if you were, when I was trading in the stock market, one of the things you would do is you'd set up like a dummy portfolio and you would trade without real money. So I would start to educate yourself and then find operators that you want to contact and start looking at deals. So before I invested in my first multifamily deal, I spent a year talking to operators and looking at deals that came across. So then, when I had that money to invest at 100K, I split between two $50,000 investments. At the time I was comfortable making those investments.
Chris Larson:One of the things that we have set up is a debt fund, so it's liquid. So if you said, hey, I want to earn something while I'm evaluating, but I want to be able to get my money back, like I want to earn something, you know, while I'm evaluating, but I want to be able to get my money back when I want to place it long-term. We have a debt fund right now. It pays up to 10% and you can get your money back within 90 days. So typically 30 to 90 days is when we're getting that money back. So that's another option if investors say, hey, like I want to get something you know for my money, but I ultimately want to put this in a longer term, higher earning investment.
John Hauber:All right, we're going to do something differently that we haven't done on the Senior Housing Podcast. We're going to kind of copy what you've done and others have done by listening to you and we're going to go into a lightning round. Okay, let's do it. Are you ready? All right? So best single book you've gifted investors other than your own book.
Chris Larson:All right, this is a big one, but it's called the Secret Life of Real Estate and Banking by Philip Anderson, and it goes through. It's really thick. His partner, akhil Patel, a-k-h-i-l Patel, wrote a shorter version. I can't remember the name off the top of my head, but I would read that in lieu of this. But this is a great book that talks about the real estate cycles, the secret life of real estate and banking.
John Hauber:Excellent One KPI. Every syndicator must track religiously.
Chris Larson:You've got to know your expenses, your expense ratio, and you've got to know your inflation on expenses, absolutely.
John Hauber:If you could roll back time, one piece of advice you would give your 30 year old self.
Chris Larson:Put it all in Bitcoin.
John Hauber:Yeah, I agree.
Chris Larson:I love real estate, but 15 years ago I would have put it all in Bitcoin.
John Hauber:Oh, yeah, yeah, so can we one day go back in time? And anyway, we'll let that one go. Right, we'll let that one go, yeah, yeah, all right, so you hit your original 2025 AUM goal, I believe. Okay, tell me. If that's not correct, what's the next mountain to climb? New asset classes, such as senior housing, driven due diligence, or maybe international syndications, such as senior housing driven due diligence or maybe international syndications.
Chris Larson:So actually, john, you know, one of the reasons that we were brought together is I started looking into the senior housing space in 2019 because of the demographics, yeah. So we came really close to making our first investment then, and then COVID hit. So, yeah, we're heavily focused on senior housing, as you mentioned. It's kind of an offshoot of multifamily and I think if you're, if you follow demographics and you're in multifamily, it's just, it's a natural, you know.
John Hauber:Next, step in those terms. Awesome, so we're going to finish with this one. This is a fun one. Outside of real estate and insurance, what passion project fires you up right now? Family sports, or perhaps something totally offbeat?
Chris Larson:Yeah, so uh, both my boys they're 15 and 13 play lacrosse. I just bought a sprinter van recently and I just got back from a four day trip with my older son going to a lacrosse tournament. So I'm I'm learning everything I can about lacrosse. I was a cyclist but I'm learning everything I can about lacrosse recruiting, how to help him train you know, nutrition, all these things. It's a fun journey. It's very different. He's very talented, so it's fun to learn along with him and help me support his passion.
John Hauber:Awesome, chris. This has been phenomenal man and thank you for your candor and your tactical wisdom. Listeners, if you want to dive deeper, grab Chris's book Next Level Income or visit nextlevelincomecom to download his multifamily playbook and, eventually, senior housing playbook. I'll teach you everything you need to know, chris and his policy design guide, chris. Any other way individuals can reach out to you.
Chris Larson:No, that's great, One of the corners of our website that you know would pertain to listeners of this specific episode. You go to nextlevelincomecom forward slash banking. You can also get a copy of our book that talks about our specific life insurance strategy, and you can learn more about that. So if you say, hey, this that sounded interesting, Chris, that's something that I'd like to incorporate into into my strategy, you can learn more there as well. Nextlevelincomecom forward slash banking.
John Hauber:Excellent. Thank you, chris, and thank you for our audience, for tuning in once again and until next time.
