Real Estate Pros · September 22, 2025 · 16 min listen

Build Your Own Bank: Joseph Lombardi’s Guide to Tax-Free Real Estate Wealth

Show summary

In this episode of the Investor Fuel Podcast, host Leo Wehdeking speaks with Joseph Lombardi, a real estate expert focused on tax savings and wealth building strategies. Joseph shares his insights on navigating the complexities of the financial landscape, particularly for blue-collar business owners. He discusses the importance of ethical business practices, building strong relationships, and the pitfalls of traditional retirement plans like 401ks. Joseph emphasizes the need for financial education and the legacy one can leave for future generations.

Key takeaways

Use IRS code section 7702 cash-value life insurance policies to 'build your own bank': invest money first, let it grow a few years, then take tax-free loans against it to buy real estate while the original asset keeps growing.
Borrowing against an appreciating asset (like Elon Musk pledging Tesla stock) avoids capital gains taxes entirely versus selling the asset, since collateralized liens are legally tax-free.
Over 50% of 401k/IRA/SEP money can be lost during accumulation to fees (12B1 fees, Class A share fund fees, money manager fees, annual account fees) and then roughly half of what's left is taken in taxes (federal, state, FICA, Medicare) upon distribution, leaving less than a quarter of expected retirement funds.
The 'build your own bank' strategy can provide a tax-free pension if you live long, tax-free death benefit if you die early, up to $1.5 million in disability cash while alive, and up to $30,000/month tax-free for long-term care, avoiding forced real estate sales at bad times.
Vet business partners carefully for ethics and character before forming alliances; a bad partner cost Lombardi a deal when the partner lied to a client over a quarter-million-dollar commission.
Lombardi's 'Seven Plus Seven Equals Twenty' concept: pairing with a partner who has the three skills/strengths you lack (and vice versa) turns two 'sevens' into effective 'tens' through strategic alliance.
Build a client base by targeting a specific niche (blue-collar business owners like roofers, masons, plumbers) with a personal, relatable story and leading with value before asking for business.

In this episode

About the guest

Joseph Lombardi is a tax and financial strategist who has worked for 22 years helping blue-collar business owners (roofers, masons, landscapers, excavators, plumbers) build tax-free wealth using cash-value life insurance strategies under IRS code 7702. He is the author of three published books (including "There Is a Better Way Than a 401k") with a fourth in progress, has appeared in International Business Times, Market Insider, and two Forbes articles, hosts the radio show "Money Talk with Ironhawk," and works with Ironhawk Financial. He says he has thousands of clients and billions of dollars in protection rollovers with zero Better Business Bureau complaints.

Listen to the audio

“Leans are legally tax free, so he pays $0 in taxes. He collects the money, sold nothing, so he still has future profit on that said asset.”
Joseph Lombardi

“I believe that taxes are slavery because they're not used for what they were meant to be used for 100 years ago.”
Joseph Lombardi

“If let's say you're a seven, Leo, and there's three that you're missing, and I'm a seven, and there's three that I'm missing... a 7 plus a 7 equals 20.”
Joseph Lombardi

“You have to be a good judge of character because in real estate, insurance, investments, there's a lot of snakes.”
Joseph Lombardi

tax-free wealth buildingIRS code 7702infinite banking401k alternativesblue-collar business ownerslife insurance strategiesreal estate leveragenetworking and partnerships

Questions answered in this episode

What is IRS code section 7702 and how does Joseph Lombardi use it for real estate investing?

Section 7702 governs the tax treatment of cash-value life insurance policies used to 'build your own bank.' Lombardi's strategy is to invest money into these policies first, let it grow for a couple of years, then take a tax-free loan (lien) against the cash value to buy real estate, allowing an investor to earn two streams of income with one dollar.

Why does Joseph Lombardi call the 401k system 'a racket'?

He says over 50% of your money is lost during the accumulation phase to fees like 12B1 fees, Class A share fund fees, money manager fees, and annual account fees over 30 years. Then on distribution, roughly half of what remains is taken by federal tax, state tax, FICA, Medicare, and unemployment, leaving investors with less than a quarter of what they should have.

How is borrowing against an asset different from selling it, tax-wise, according to the Elon Musk example?

If Musk sold $200 million of Tesla stock to get $100 million, he'd pay $100 million in taxes and lose future growth on the sold shares. Instead, he takes a collateralized lien against $100 million of stock, which is legally tax-free, pays $0 in taxes, keeps the asset, and still benefits from future appreciation, often earning more on the asset than the loan's interest rate.

What protections does Lombardi's 'build your own bank' strategy offer compared to holding illiquid real estate for retirement needs?

He says the strategy covers all four guaranteed life outcomes: if you live long you get a legal tax-free pension, if you die early your beneficiaries get tax-free dollars, if you become disabled you can get a check for up to $1.5 million in cash while alive, and if you need long-term care you can get up to $30,000 a month tax-free, avoiding having to sell real estate at the wrong time and paying realtor fees and capital gains.

What does Lombardi say is the key to finding good business partners and avoiding being burned?

He emphasizes being a good judge of character and only partnering with people who are ethical, moral, and treat others the way they want to be treated. He shares a story where a licensed agent he brought into an Agway deal lied to his client over a quarter-million-dollar commission and got him kicked off his own deal, teaching him to vet partners carefully.

How does Lombardi describe his early networking and client-acquisition tactics?

Early in his career he literally chased trucks on the highway, looking for business names like 'ABC Electric' or '123 Plumbing' with phone numbers on the side, then called the owners, introduced his father's story (J.V. Lombardi Builders, the fall, losing a $27 million company), and offered to buy them coffee to talk about protecting their family and saving on taxes.

Resources and links

Joseph Lombardi’s Website
Joseph Lombardi on LinkedIn
Joseph Lombardi’s Email: info@ironhawkfinancial.com

Full transcript

Joseph Lombardi (00:00)

If you think of someone like Elon Musk, if he needs $100 million for a SpaceX rocket, well, he has two choices. He could sell.

$200 million of Tesla stock, pay $100 million in taxes, lose $200 million of future growth, net the $100 million, buy the rocket. Well, what he does, takes $100 million of Tesla stock, gets a collateralized lien against it. Leans are legally tax free, so he pays $0 in taxes. He collects the money, sold nothing, so he still has future profit on that said asset.

Leo Wehdeking (02:04)

Hello everyone, welcome to the Investor Fuel Podcast. I’m your host Leo Wehdeking and today I am joined by someone that I’ve been looking forward to chatting with, Joseph Lombardi, who’s been making serious moves in the real estate industry. Joseph, glad to have you here, man.

Joseph Lombardi (02:20)

Thanks for having me, Leo.

Leo Wehdeking (02:21)

Hey, that’s great. ⁓ Joseph, I think our listeners are really going to take something away from how you’ve been approaching ⁓ your business when it comes about compliance and ⁓ the financial planner. Let’s dive in and for people who may not be familiar with your world, can you give us the short version on what’s your main focus these days?

Joseph Lombardi (02:46)

My main focus is saving people money on taxes. ⁓ I believe that taxes are slavery because they’re not used for what they ⁓ were meant to be used for 100 years ago. So I have strategies that the ultra wealthy use, millionaires and billionaires use to basically build your own bank and then lean that money to buy real estate and earn two streams of income with one dollar.

Leo Wehdeking (03:11)

Alright, alright, that’s good man. And can I ask you something Josephine, what markets are you operating in?

Joseph Lombardi (03:17)

I’m national, so I work a lot with the blue collar business owners. Roofers, masons, landscapers, excavators, driveway guys, masons, plumbers. Those are untapped market in our society where a lot of financial planners don’t give them the respect they deserve. I come from that field. My father was JB Lombardi Builders.

and he built the company up to $27 million and he fell three stories off the ladder, had no disability and lost everything.

Leo Wehdeking (03:50)

something that actually caught my attention about you is the way that you’ve been able to integrate the different areas where you have experience and putting them into real estate. So can you give us like an extended version ⁓ on how you were able to achieve that ⁓ and also putting it in place to help people ⁓ into acquiring real estate?

Joseph Lombardi (04:18)

Yeah, so my father owned a big construction company. He had about 200 units. And like I said, he fell and lost them all. So I used a lot of his network. And he taught me that the best way to invest in real estate is not with your own dollars, but it’s to invest them and then lean the money out so you’re still owning that position.

If you think of someone like Elon Musk, if he needs $100 million for a SpaceX rocket, well, he has two choices. He could sell.

Leans are legally tax free, so he pays $0 in taxes. He collects the money, sold nothing, so he still has future profit on that said asset.

That asset historically earns more than the loan rate that the bank is charging.

So he makes a positive rate of return known as a negative interest rate on a loan and then he buys the rocket. That’s the strategy I’m teaching real estate investors to use your own bank. Leverage IRS code section 7702. Invest the money first, let it grow for a couple years, then lean the money out. By doing that, you longevity long term can build a bank that you can lean, put the profits back in.

and take the money out. It’s very similar to a HELOC, but all the gains are tax free and it provides protection with life, disability, long-term care. It’s sue proof, it’s divorce proof in some states. So it’s a better strategy, but it allows you to leverage assets similar to a home equity loan.

Leo Wehdeking (06:52)

Alright, love it, love it man. ⁓ And Joseph, what’s been the key to running your business smoothly?

Joseph Lombardi (07:01)

putting right people in right positions. ⁓ I’m very good at getting the message out there, speaking articulately, intelligently, confidently, but I’m not great at organization. So I have a COO that handles all my organization. I have a specialist that finds me podcasts. I’ve done hundreds of them with millions of views on Rumble and YouTube and StreamYard and so on. So it’s finding people that are skilled.

I’ve written and published three books. working on my fourth book. My fourth book is called Seven Plus Seven Equals Twenty. And most people, like, that’s not the right answer, but in business it is. If, let’s say you’re a seven, Leo, and there’s three that you’re missing, and I’m a seven, and there’s three that I’m missing. If you have the three that I need, and I have the three that you need, if we come together as a strategic partnership or alliance through businesses, you make me a ten, and I make you a ten.

Therefore, a 7 plus a 7 equals 20.

Leo Wehdeking (08:02)

Okay, alright, I get you. Now Joseph, I know that every operator I know has a moment where things got real, alright? Maybe a deal that went sideways or a time that you had to pivot real fast. Do you mind sharing one of those moments?

Joseph Lombardi (08:19)

where a business went south. So I was working with another licensed agent. We were going after a company called Agway up in New England. ⁓ I brought him in because I trusted him. In our business, it’s hard. ⁓ So I brought him in, and this gentleman ended up lying to the client I had because there was a quarter million dollars to commission at State.

Leo Wehdeking (08:21)

Exactly.

Joseph Lombardi (08:49)

So he basically got me kicked off of my own client’s deal and stole the deal. And that was something that I realized, you know, moving forward, you have to be a good judge of character because in real estate, you know, insurance investments, ⁓ there’s a lot of snakes. So you have to be a good judge of character and you have to make sure that the people you’re doing business with are ethical, moral, ⁓ you know, godly. So, you know.

You want to treat people the way you want to be treated. And it’s very important that if you go into business with somebody, you find out what type of person they are to make sure that they aren’t out there to take from you to put themselves ahead. And luckily, I’ve been doing this for 22 years. have thousands of clients, billions of dollars of protection rollovers, but I have zero complaints if you look me up on the Better Business Bureau. So you have to make sure that you come from a place of…

ethics, morals, you know, and do the right thing.

Leo Wehdeking (09:53)

Yeah, I totally agree with you. That’s actually ⁓ very important when it comes about doing business with someone.

How you feel, you know, when you get to know the person at 100%. ⁓ I believe that, you know, that’s what separates the folks who just dabble from the ones who’s paying the game long term like yourself. Joseph, let me ask you another question. What are you

most focused on solving or scaling next.

Joseph Lombardi (11:02)

So I’m focused on getting the word out there that the 401k system is a racket and Wall Street merged with the federal government and getting the information out there that when you think of a 401k which is very popular, it be an IRA, it’s SEP, it’s simple, a pension deferred cop. When you look at those type of investments, while you’re accumulating over 50 % of your money is being stolen from you.

through a 12B1 fee, Class A share fund fee, money manager fee, annual account fee over course of 30 years. And then when you take distributions out, half your money’s being stolen by federal tax, state tax, FICA, Medicare, unemployment. So you see less than a quarter of your dollars ⁓ that you should have had if you didn’t have two nefarious ⁓ partners in business for your retirement. So I’m just trying to get that information out there.

you know, to wake people up to say, hence the title of one of my three books on Amazon, there is a better way than a forum.

Leo Wehdeking (12:09)

Alright, that’s cool, that’s cool. So, I know actually that a lot of people that are listening to this, ⁓ they’re either early in their journey or they’re just looking to level up. So I think they will benefit from hearing this when it comes about building relationships and growing up your network.

what’s made the biggest difference for you.

Joseph Lombardi (12:40)

providing micro values, giving before receiving, treating people with respect, ⁓ trying to do the right thing. And so if someone is new, ⁓ I know when I was new, ⁓ they used to call me the dog. I used to chase trucks on the highway. I would drive fast in the left lane. And as soon as I saw ABC Electric 123 plumbing gets what was under there, there’d be a cell phone number.

So I’d call him up, be like, hey, my father was J.V. Lombardi Builders. He fell three stories off a ladder, lost a $27 million construction company. Can I buy you cup of coffee off the next exit? And have a conversation about protecting your family and saving money on taxes and building wealth. And ⁓ believe it or not, a lot of people said yes. So that really grew ⁓ with that because I had a niche and I had a passion. When you have dollars as your god,

There’s only so far you’re going to go and it may not even be. But you have to have a mission, a why. Why are you doing what you’re doing? My mission is because my dad fell, my mom died at 52 years old, so I was delivered from alcoholism, had no life insurance. My grandmother had a stroke, lost $4.2 million to a nursing home in Connecticut where I live. And I realized that my family’s not dumb, but they just weren’t educated on this foundational strategy.

I’ve made it my mission for 22 years to educate people, motivate people, and show people that you can protect your children, you can protect your spouse, you can protect your business, you can save money on taxes, but more importantly, you can still build wealth. Because there’s four things that are guaranteed to happen to you. One of them is you’re going to live long and die, you’re going to die early, you’re going to get disabled, or you’re going to need care.

And if any of those things happen, my strategy protects you. If you live long, you have a legal tax-free pension. If you die early, there’s tax-free dollars to the people you love. If you get disabled, you get a check for up to 1.5 million in cash while you’re still alive. And if you need long-term care, you get up to 30,000 a month tax-free dollars, so you’re not selling hard, illiquid real estate with, you know, who knows when you’re gonna need care. Is it top of the market? Is it bottom of the market? You gotta pay a realtor, you got capital gains. So every dollar costs you almost $2.

when you’re latter on your life and I think my biggest thing, have three children, is leaving a legacy to the people I love. That’s why I work 10, 14 hour days to make sure that when I’m gone I’m still remembered.

Leo Wehdeking (15:53)

All right, all right. Yeah, and that’s something that you cannot fake ⁓ All right, that’s cool. That’s cool Now Joseph before we wrap up if someone wanted to reach out to you Connect with you or maybe collaborate or learn more about what you’re doing. What’s the best way for them to reach out to you?

Joseph Lombardi (16:10)

Yeah, you just write an email to info, I-N-F-O, at iron, like the metal, hawk, like the bird, financial.com. So that’s info at ironhawkfinancial.com. Automatically, my three books will be sent to you for free. My articles that I’m featured in International Business Times with Sinsider, Market Insider. You’ll also get two Forbes articles on my strategy. ⁓ So you can review it. know, YouTube video, my radio show link, Money Talk with Ironhawk. So you’ll get everything.

And then if you want to meet, you can meet directly either with me or one of my COO or one of my other many ⁓ partners that I have that are licensed as well.

Leo Wehdeking (16:53)

Alright, alright, perfect. ⁓ Listen, Joseph, I really appreciate your time, your story and your perspective. Okay, we need more people in this space who are actually doing it the right way. So thanks again for being over here. And for those of you tuning in, if you got value from this, make sure you’re subscribed. Alright, we got more conversations coming up with operators just like Joseph, who are out there building real businesses. Until then, see you on the next episode, guys.