114. Canadian Real Estate Coach Embraces Infinite Banking Concept

You are listening to the Wealth Without Bay street podcast, a Canadian guide to building dependable wealth. Join your hosts Richard Canfield and Jason Lowe as they unlock the secrets to creating financial peace of mind in an uncertain world. Discover the strategies and mindsets to a financial future that you can bank on. Achieve your financial dreams through the purchase of investment real estate properties. How do you do it? Well, we've got someone joining us today with 15 years experience in that same objective and coaching people all across Canada on how to implement that, specializing in rent to own properties and multi unit residential properties. Elizabeth Kelly is with us here today. She's a coach, a strategist, a real estate investor and she is someone that's going to share some wonderful wisdom with the listeners on wealth without Bay Street. Thank you for joining us today. Elizabeth.

Thank you so much for the opportunity to join and for the great resources that you directed me to before our meeting. It's, it's been a pleasure to, to welcome you into my world. It's been great.

Yeah. Awesome. Well, thank you for that. Now, you know, I thought would be good way to kick us off today is just talk a little bit about your, your journey and what inspired you initially to get into the real estate investment journey yourself and then how has that transition now for you coaching others into that journey as well?

Well, it was I guess sort of a, a happy accident. I want to say my husband, when I met him, he was interested in, in real estate investing. So for the first little bit it was me kind of, you know, tagging along, going with him to visit properties and helping out with renos and then I guess we've been together about a year. So this would have been 2006 when I bought my first property all on my own. And once we started doing that, we, we realized we were doing the right thing. But we're like this feels really challenging like how do you build this? How do you become a professional investor? So this was our retirement plan at that point and we just figured we'd both keep working in our jobs. My husband was an engineer for an insurance company and I worked for at the time, estate farm agent. So I sold life, home and auto insurance and, and we attended a, a three day rich dad seminar and we were like, oh, there is a bigger, better world out there on, on how to do this. So right away we signed up for the courses and we completely immersed ourselves and we spent, you know, two years figuring out how to build a better mousetrap and within a couple of years we had become really successful we built a portfolio in Saint John, New Brunswick. We were building a second portfolio in Kirkland Lake, Ontario. And the, the company, rich dad asked if we'd come back and do some guest speaking. And then from there it led into being a trainer for them for eight years and being a coach for the last four or five.

Wow, what a journey. And Kirkland Lake, Ontario. I was born and raised in Timmins.

Oh my goodness. You're like one of the few people who knows where Kirkland Lake is without having to get a map out.

Well, you know, it's a beautiful part of the country in Northern Ontario and it was a great place to, to grow up and so many great friends there to this day and great memories. And you know, what I often share with people is that especially folks, even folks who are so interested in the real estate arena is that in and around that whole part of Northern Ontario, if you enjoy the outdoors, if you want to, if you want to go fishing, if you just want to spend some time in nature, it's lit. You could literally walk out your front door and five minutes later you're immersed in nature, you know, versus when I first moved out west and I, I, I was taking the drive, it was a three day drive from Timmons to Edmonton and there were parts of the prairies where like you would see a rock and a tree like every six hours. Like it was, it was, you know, really foreign to me. But yeah, it's, that's interesting to hear that you built a portfolio in the Kirkland Lake area. That's awesome.

Yeah, we, we've been really fortunate. We moved here full time. Well, my husband was here full time, probably since 2014. I moved here full time and I honestly can't think of a better place to have come through a worldwide pandemic. You know, when you're feeling cooped up and you're feeling, you know, frustrated or some of the other emotions that we've all been through in the last couple of years. It's like you said, you know, you open the door and you put on your, your snowshoes and you're gone and you're in the bush and there's no people and there's just, you know, there's just wildlife and it's beautiful. So we have about, probably about 4 or 5ft of snow right now that we need to melt our way through before we see grass.

Yeah, it'll be here in June, so we're looking forward to that for sure.

And you know, when you think about your reflecting back on all of your experience in real estate up to this point, what do you see in your coach platform? What do you see the. The most common, whether it's myths or mistakes maybe people are making in how they. They get started on their journey. Like, what are some of the most common things that you're running across in. In your coaching?

I love that you asked that question. So people typically fall into one of two kind of areas. And I include myself in this because I made these exact same mistakes too. So what happens is people either want to take action before they invest in their education, or they're afraid to take action because they don't feel that they know enough to be confident about their decisions. And either way, what I've discovered in my 17 years investing now is the more we know, the better the decisions we make. And it's very common, especially now. Like, when I started investing 17 years ago, there were no podcasts. There was no go online and look at these websites. There was, you know, there was, you could order books from or you could go to, you know, Indigo Chapters, whatever it was. You could go to a bookstore and get a book, or you could pick up the phone and call people. Like, I was still putting offers in using, like going to my Realtor's office and signing the paperwork and then faxing everything off, Remember them coming and there'd be like 50 million changes. They are completely illegible by the time. Like, this is old school real estate investing, right? And now what I find investors are suffering from, it's not so much a lack of information, it's an overwhelm of information. It's literally, you know, amazing podcasts. Like, you guys, you do such a great job of putting so much valuable information out there and people kind of go, well, I listened to you and I read this book and I attended a couple of webinars and then I went to this event and, and they're like, but I don't know how to take all that information and distill it down into what I need to know to create my vision for the future and then to figure out what my journey looks like to achieving that vision.

Such a good point. And we, we encountered that too, Richard, with, you know, the process of becoming your own banker, the infinite banking concept, where a person may just consume a little bit of information and they want to move a little bit too quickly and we have to help them along on their journey to say, hey, there's, there's a lot more to learn before even determining whether or not this is something that you really want to be doing. And we need to get crystal clear on what your objectives are and what exactly it is that you truly want. And I was mentioning this to Rich before hopping on to, to record our episode today that we encounter people often who they want to do something so they may say, you know what, I want to build wealth through real estate. Well, what exactly is it that you want?

Is it. Do you want your passive income to match or exceed your earned income? Do you have a timeframe in mind? Do you like what exactly it is that you want? Because it's probably not the real estate, it's what the real estate provides.

Yes.

And would that be a fair statement in terms of what you run into as well?

I think it absolutely is. And I think the other challenge that people have in addition to lacking clarity, is not understanding what the decisions they're making right now are going to create for them in the future. So when I started buying multifamily properties in 2009, 2010, I had this full intention that I was always going to have a property manager and this was going to be long term wealth building. And then I bought in a community where I couldn't find the right fit for property management. It was like I was always putting, you know, a square peg in a round hole. And I couldn't find someone who had the same vision that I did for management. So we ended up opening our own property management company. And we didn't anticipate that. We didn't anticipate, you know, being the ones who caught the calls in the middle of the night. We didn't anticipate being the ones who were doing the showings and screening the tenants and dealing with the burst pipes and the sewage. Backup said we didn't understand that the decisions we were making then could potentially create this life that we are living at that point in time. And I think one of the things that's the biggest gift with real estate is as long as we've bought right? And it doesn't have to be like the right market or the right time, but as long as we're in a position where we can hold real estate until the right time to sell, we can recover, we can recoup, we can pivot and we can go back and actually redo the life that we wanted. But I think people are either so afraid of making a mistake or they're so afraid of, afraid of investing money with, you know, the wrong coach or the wrong trainer that they try and do everything on their own or they.

Do nothing at All I love three important words that you said there. You said recover, recoup and pivot. So that's, you know, for our listeners. You're listening to someone who's gone through market cycles because you, you built portfolios in two different geographic locations. So each geographic primary location had its own cycle differential, which I'm sure you could speak to. Not, not everyone can get that experience through and through. And then additionally the economic cycles you talked about buying multifamily in 2009. Well, that's right after probably some great buying opportunities because it's right after the, the overall market crash. So that's probably how you were able to launch into the multifamily space. But then now, the decade later, 12 years later, you've still seen some ups and downs in there and there's been things like, oh, I don't know, a few changing mortgage rules, you know, you know, so there's been a variety of adjustments and challenges. There's been economic issues around employment and employment really matters in your geographic location because without solid core employment, you don't have very good tenant base to pull from and that affects market rents. So speak a little bit about some of those challenges that you've experienced and then you know, and how that ties to that, the importance of that long term vision. You already talked about having to be unintentionally forced down the road of property management. And, but as much as that was maybe not the intention, it also created a whole new business opportunity though. But it, it, what I'm hearing is that it wasn't really very passive at this point.

No, it wasn't. And it's funny because my husband has always been the multifamily guy and for me, my love was actually right to own. So, so with rent to owns, I invested in most of the provinces in the country. So not only did I see, okay, what was what's gone on in New Brunswick for the last 12 years and what's gone on in Northern Ontario, but I was still buying in, you know, the Greater Toronto area. I bought in Alberta, I bought in, in Newfoundland and I did a bunch of rent to owns in New Brunswick and all of those came with lessons and learnings. So for example, multifamily in New Brunswick was something that, it was challenging for us and that what created the challenges in the multifamily space with not appreciating that Saint John New Brunswick was a plateau for years and years and years. And we did six rent to owns out there and guess what? I lost money because I didn't fully understand the importance of choosing the right market and matching that with the correct investment strategy there. And that's, I see that a lot with investors now, too, is that, you know, they say, well, I want to invest close to my house, and this is the strategy I want, and there's no checking. And then they get frustrated and they're like, I can't find an apartment building that produces, you know, $200 per door in cash flow per month. And I'm looking in, you know, a major metropolitan area. Well, you can't find that because you haven't matched your strategy with the market. And you either choose your, your, your market and find the strategy that makes sense, or you fall in love with the strategy and then you go find a market that works. But you can't assume that the two are finite and always connected, because they're not.

And, you know, from a coaching perspective, so if, if a, a prospective student, you know, says, hey, I'd love to enroll in your coaching. And can an objective be defined in that way where a person says, you know, my, my objective in real estate investment is positive cash flow, passive income, I guess, if you will. So part of the strategy is, you know, I want to be hands off. I want to put up the capital, and I want to get a good return on capital in the form of passive income. And I want that passive income to amount to $10,000 a month. How do we reverse engineer this and figure out the best way to get that achieved? Is that, is that part of the coaching framework that you lead people through?

Yeah, absolutely. One of the very important first steps we do is we take a look at their financing options with traditional lenders. Because, you know, for people who say, I want to be passive, if they don't have the ability to qualify for mortgages or they don't have a down payment and they still want to be passive, then they're going down a different path. You know, they're looking more at the joint venture route. And, and we need to make sure we're building their credibility and building their experience and building their networks versus someone who, you know, you take them to a mortgage broker and they're like, yeah, you can do three properties, you know, up to $2 million worth of mortg mortgages. And we say, okay, so the next question is, where are we going to generate the best return for you while we deploy those funds? And while we're doing that, we're going to help you build experience, we're going to help you build your Credibility so that when you're done that then people will be saying, I have money. Can you help me place it too? Those are different journeys when you're starting from, you know, having financial resources versus when you're starting from a place of, you know, maybe you're younger, maybe you're, you know, you don't have the greatest credit, maybe you're, you know, you're looking at this as a side hustle because you want to generate more income for a better future. Those are different places and they, they definitely need to be recognized and treated differently.

Very good points. Very good points.

Well, and it's interesting because I'm sure you work with people who they're acquiring or they're getting into the habit of acquiring a couple of doors every year or maybe, maybe many doors a year. And then there's people who maybe they get one every one or two years. So the volume and speed at which they're attempting acquisition is going to be relevant to their circumstances, what they have to work with in their network, their experience, and in their existing capital resources. Right. And so I'm curious, you mentioned creative financing strategies and you know, okay, well, let's figure out what the main five banks will do for us, et cetera, and then we'll start exploring beyond that. And over your period of time in this world, I'm going to venture to guess there's been a period where bank tried to kill a deal that you are putting together. Has that ever happened?

No. Never? No.

Never had those stressful closings where you're pulling your hair out at night? I've never had an appraisal that came in so far under, for absolutely ridiculous reasons. And I appealed it and I was told, too bad. Nope, never happened to me.

And then, and then you've lived that experience and now you're, now you're seeing your, your coaching students go through that experience. And, and I've shared this with people like, like, you know, depending on which direction the winds change, what you talk to a bank or a broker about one day a week later, there's been a subtle shift that maybe doesn't impact everybody, but it impacts you. And you didn't know about it. So there's always these, these changing tides of the mortgage industry and the banking industry. And they might be subtle, but they're enough to kill the deal. And so how do you address those kinds of things now and help, help your students and your coaching, your, the people you're mentoring, weather the storm and get through those, those roadblock experiences where all Of a sudden, they've got a great deal on the table. They know that this deal is going to meet their objective, what they're trying to set up, and someone's actively trying to kill the deal that they've put together and put hours and hours and hours of effort in.

Yeah, I love that question. Nobody's asked that before.

I believe that part of my job as a coach is to consume as much information and knowledge as I can so that I can help people plan and prepare. And I'm a big proponent of we've got to have multiple plans here. We've got to have not just multiple exit strategies, like, how am I going to get out of this property? But how am I going to fund this property? There needs to be a plan A, B and C. So if plan A is the banks, plan B is the alternative, or private lenders. And plan C, or, sorry, Plan B is the alternative lenders. And plan. Good grief, Plan B, we have a third for private lenders and plan C is the private lenders. So we're not just approaching this from one perspective because I've literally seen too many deals go sideways and it doesn't happen, you know, well before closing. So you've got lots of time. It happens 48 hours before closing where, you know, stuff just doesn't go according to plan. Where, you know, it's like. It's like in becoming your own banker, like, the person with the gold makes the rules. And I've seen banks do all kinds of things. Like, I've signed up paperwork for refinancing with a bank. I've done the appraisal, I've gotten everything. And then three days before closing, the bank's like, no. And I'm like, hard, like, no, we change our mind. I'm like, what do you even mean? I've signed all the paperwork. Like, everything is ready to go. We. We've, you know, we've got the refi figured out, We've got the money spent. Like, we know where we're going. Like, we don't really feel like it. I'm like, why we don't add. We don't have to tell you that. Like, you don't even owe me an explanation. Like, in what universe is that normal business practice? But the person with the gold makes the rules.

Yeah, no kidding.

Wow.

And in your real estate, you know, network, so to speak, like, you know, with the folks that you do business with and that you've built relationships with over the years, there's always a need for capital and there's no shortage of opportunity. And so on the private lending side, which is something, of course, that Rich and I are very, very familiar with and activated in, opportunities like that are coming up for you on a regular basis where you can connect a lender with a prospective borrower or, you know, a group of borrowers. Is that something that's part of your business model as well?

Absolutely. I mean, it's not an intentional thing, and I'm certainly not looking to, you know, get on the wrong side of the government organizations that oversee this, but I definitely would say there are clients in my business who have capital to invest and are looking for partners or private lending opportunities. And then I have clients on the other side. You know, they're active flippers, they're actively doing land development or they're, you know, they're doing burrs or whatever it is, and, and they're looking for capital. So I think the opportunities are out there. I know people have been feeling a little discouraged about trying to buy properties right now in the real estate market, but like you said, I mean, you know, a coup weeks makes a big difference. The last four weeks, like everyone I talked to, the market's gotten quiet. The market's gotten quiet. The bidding wars aren't happening right now. The bigger question is what's going to happen in the next four weeks and then the four weeks after that? Is this trend going to continue or is this just a lull before the spring boom?

Right. Yeah.

And capital is mobile. It wants to go to where the opportunities exist, where opportunities are best, and it finds a way. You know, our mentor Nelson, who wrote the book the Communal Banker, he would say that when you have a readily available access to capital, opportunities of high caliber will track you down. In fact, they will hunt you down, he would say. And so we experience that and we find that our clients who are embracing the process of becoming your own banker, and they're capitalizing, they're building up a reservoir of readily available access to capital. As that continues and grows and expands. We're hearing stories, we're hearing this in reality taking place. Many of these things are finding their path in the real estate quadrant and of course, working for people all over the country. It's happening in different formats. We have many real estate investors who do their own management, their own properties. Then we have people who are simply looking to be on the private lending side or be on the deal funding side because they're a professional and they don't have time to be dealing with all the hassles that You've described that people have to go through to understand how to be successful in real estate. So it's interesting to hear that. And I think, you know, when we think about creative financing strategies, there's, there's understanding how to put a deal together so that a bank will say yes, that's part, that's part of the process and that your education comes in to help coach somebody on. But then there's what's something that we haven't considered or thought of before. And I find that, and maybe you can speak to this. Most people are unaware there may be another resource they can tap into that they didn't even know existed. And that is something called cash value insurance. This is often a, the unsung hero of many deals being closed that people don't even realize is a potential for them. They might be sitting on that or have a friend or a neighbor or family member that has access to this resource that could help close that deal for them and help everyone prosper.

Yeah, and I think it was, I mean, I can't thank you guys enough for, for connecting with me and for, you know, encouraging me to look at this because literally as I was listening to the audiobook, I'm like, how, how did we, how do we not know that this is an available resource when so many of us as investors are, are struggling at times with the financing to close a deal. And so it's, it's literally on my to do list to reach out to, to my insurance providers and be like, I think it's time we did a review of my insurance policies that cut. I want to start putting more in so I can start taking more out.

Yeah, that, there you go.

And you know, one of the things that we talk about in just coaching, educating the general public about this process, especially in the real estate investment community, which I would say rich, in the last two years, the, the frequency of connection and people who are reaching out to us in the real estate investment space has 10x literally. And you know, hey, we want you guys to talk to our group and educate our group and talk to our members about this process because if you look at it from this perspective, you've got a commercial bank that will look at a dividend paying, participating whole life insurance contract and lend in the form of a collateral assignment will allow the borrower to access a minimum of 90% of the ever increasing cash value of the policy. And you take. So if you have a policy that has a million dollars of total cash value accumulation and you've got a Property that's totally unencumbered and it's valued at a million dollars. You go to the very same lender and you have two different conversations. One is to get a first position secured line of credit on the property and you're looking at a percentage that's going to be lower than 90. And you talk about the insurance policy and the lender says, listen, we can go as high as 100%.

Wow.

So what does that tell you about the strength of the asset in the eyes of the lender who has all the gold?

Yeah.

So the bank says, listen, the reason that we're entertaining this collateral assignment to begin with is because we know that the insurance company itself is guaranteeing the collateral for the loan and the insurance company itself is contractually guaranteeing that the policy values will only go up every day. The banks know this. The banks buy dividend paying contracts, these whole life insurance policies by the truckload. It's called bank owned life insurance. It's a tier one asset on their balance sheet. So.

That should be a bright, bright beacon of light to the real estate investor who says, look, my objective is to get that property because it's going to produce money and I need a reliable, certain source of financing. So I may choose to work with the life insurance company directly through the policy loan provision or I may choose to collaterally assign a policy to a commercial bank who's willing to, to lend to me in the form of an operating line of credit or an advanced loan or combination of both. At prime, by the way.

Nice.

So what a great, great way to radically improve anything that you're already doing in the real estate investment space or to, to, or that you're contemplating doing. And so that's just to give you some insight into the conversations that are coming up with us. The real estate investor is saying exactly what you just described. Like why hasn't anybody told me this? How did I not know this wasn't an option? Like, why am I only hearing about this now?

Absolutely. And, and do you guys mind, is it okay if I ask you a question? Because I had a thought, so I wanted to better understand with everybody talking about inflation and the value of the dollar and everything else, how does that wrap in? Or how does this financing strategy, how can we better protect ourselves against inflation by utilizing our life insurance?

That's a really good question. And in fact, Nelson, so Nelson Nash, who, you know, created the concept, he, he does an exceptional job speaking to this point and he used a real life circumstance of a policy that he got in 1959 it was a state farm policy, coincidentally. And he, he, he, there's a, there's a great video on, on the Nelson Nash Institute YouTube channel and it's a, it's from a Freedom Advisors event and it was recorded I think in 2015. But Nelson, it's about an hour and 15 minutes Nelson walks through that state farm policy that he got. And it was 3-3388 a year premium, right Jay? Yeah, for the first 15 years he used the, the dividends that he received to reduce the premium because that's what he was told, that's what people were told at that time frame. So he stunted the growth of the policy substantially in the first 15 years.

And didn't even realize it.

Had no idea he was doing that because that no one told him, he didn't know. And then he woke up eventually one day when he started to learn more, get more information as we do over time and he, he notified the life company he wanted to change the dividend election. I wanted to go buy paid up insurance instead. So he started the process of increasing that capital pool over time. And that policy starting original, starting Death benefit was 20,000. Well, when Nelson passed away, I think the check I'm trying to remember here offhand, what did David tell us J was like 145 or 150, 156, something like that. The check was well in excess of five times. It was, it was about, I don't know, seven or eight times the size of the original death benefit. And he stunted the growth for the first 15 years. Wow. Now out of that one contract, three of the most profitable deals. One, one of the most profitable real estate deal he ever did was, was purchase a timberland. Now he had a guy that owned some timberland, he was in the Alabama National Guard. The guy, he worked out a deal, he was going to make it, make payments on this, this guy. The guy underestimated his need of capital. He came to Nelson two years later, said look, if you just pay me out in cash right now, discount everything 25 cents on the dollar, boom. See? Nelson said, stand still boy, I'll be right back. You know, went, went, went to the local state farm agent, got a check right there. Because in that, at that time frame, that's how you would go do it. And he came back and he met the guy, gave him a, gave him a good check in his hands from a policy loan and he took over, I think it was 500 acres of timberland. That's Right. Now he sat on that land for a while, but about 10 or 15 years later he sold it and he financed that land to the next buyer on payments at 15% interest for 10 years. What did he do with the stream of payments? He took the payments and he got more insurance to increase his capital base.

Here's how he addressed the inflation aspect of it. So the premium in the policy can never go up. It can go down, but it can never go up. And so in starting in 2006, 2007, Nelson said, you know.

People just aren't believing me when I say that I put $388 into the policy. And the dividend alone, the annual dividend is 10 times more than the premium that I paid that year. Nobody's believing me. So I'm going to call the life insurance company. So he called State Farm and he said, I want you to change the dividend election again. I want you to start sending it to me in cash. So they would mail him a check because the insurance company declares a dividend one time annually.

Right.

And the policy owner decides what the election is for the dividend. So he starts getting these checks.

And the fourth check that he received, he got a phone call from State Farm. And State Farm said, Mr. Nash, we need you to provide us with your Social Security number again. And he said, well, what do you need that for? And they said, well, we're going to have to file with the irs, the Internal Revenue Service, because your next dividend is going to be taxable. And he said, whoa, wait a second, I don't want you to do that. I want you to change the dividend election back to paid up additions. And what Nelson realized in that moment is that the four dividend checks that he received was the equivalent of every dollar of premium that he ever put into the policy. So he fully recovered all of his capital outlay in premium. And that's why the next dividend check was going to be tax, create a taxable event. And so here's the inflationary key. If he put $388 and.

Just the dividend alone was 10 times greater than the premium, that's a first round knockout for inflation.

Absolutely. And I like the fact that the money, it's the insurance companies that until you draw down the money, the insurance companies are doing the heavy lifting in terms of where are we putting this money to preserve our capital and continue to grow.

And you know, over the past 176 years they've gotten pretty good at it. You think, eh, they're the most financially solvent institutions on the planet. And you know, in your real estate investment journey, just in that window of time, you experienced, think about what you experienced. You experienced the financial crisis you experienced. COVID 19.

Yep.

You experienced just in that timeframe two significant financial events that had for, for many people a devastating impact.

Absolutely. And it was amazing how many investors exited when the government went, okay, you can't buy investment properties with 5% down anymore. Now you're putting 20% down. Oh, and by the way, forget those 40 year amortizations, now we're down to 25 or 30. And the number of investors that were like, I'm out, I'm out, I'm done. This doesn't make sense. The numbers don't work. I'm out.

Think about this. If you went to whomever, it takes care of your financing. So you sit down with a banker and the banker says, Elizabeth, here's what we're going to do.

We're going to provide you with, with the capital to finance this piece of real estate. And we're also going to contractually guarantee that that real estate is going to increase in value every single day for the remainder of your lifetime. And we're also going to guarantee that you can come back to the bank as that value increases and you can borrow against it. Now this is a guaranteed loan provision. So Elizabeth, don't bring any income verification, don't bring any financial details, we don't need them. And when you access the capital, you get to repay it on your own terms. And there are no better terms than your own terms.

Absolutely.

You would not be talking to Richard and I right now.

I would.

No. But you know, Good humor, it's just. So if you think about it.

Not only when you have a policy in place, you become a co owner of the life insurance company, so you co own the lender. So think about this. If you're building a system of properties.

Build a system of policies so that you can build a bigger system of properties so that you can build a bigger system of policies. Isn't that good?

That's wild. So how often do people tell you this sounds too good to be true?

All the time.

Pretty regularly?

Yeah, all the time.

And how do you help them feel better about that?

We let them know, don't take our word for it. You know, you can contact the life insurance company directly, you can ask them to trust, but verify that, hey, you know, I'm considering purchasing one of these insurance contracts and I understand that some of the attributes of this Contract include contractually guaranteed daily growth policy loan provision. If I request a loan, I get to repay it on my own terms. The premium can never go up, it can go down, et cetera, while the insurance carrier is going to verify and validate all of those attributes. And then what better place to get confirmation of that than from the very company that you're considering co owning? So that's how we address that.

To take that one step further, I think, I guess the analogy I would use is it's kind of like when you're looking at a, at, at a, at a deal. So let's, maybe you're sitting with one of your coaching clients and a deal's on the table and you're kind of analyzing the deal. Well, you're looking at the strategy that you want to implement and if it's a ma, the deal's a match for the strategy, then you're looking at the customized situation or the financial stuff going on in that person's life. So if you had two, you had two individual coaching clients looking at the same deal, the deal is the same, the math on the deal is basically the same. But how they go about acquiring and financing that deal will be different for both parties. Does that make sense?

Absolutely.

So, so, so there's, there's, there's a way of looking at that that's going to be unique and different and so customization of how you would coach and mentor that person goes into the equation and look at the deal is going to be from a different set of eyeballs, different vantage point in the same concept with the insurance realm. You can custom design things in such a way where they're a match for the individual and what's going on in their life. And, and, and just because we're talking about dividend paying whole life insurance, well, it doesn't mean that every single policy of dividend paying whole life insurance is perfectly suited for this. In fact, it's actually very little the case. Most of the stuff that's out there, that's sold is not particularly as functional for maybe the real estate investor's financing needs, if that makes sense. Because there needs to be some autonomy, flexibility and control in that situation and there needs to be again a long term vision. You're not going to go into the real estate marketplace, you're not going to go spend a whole bunch of capital on courses, you know, rich dad courses and things which, which come at a, at a price tag for the privilege of learning how to do something. What you did in that, that decision early on for you and your husband is that you guys decided to capitalize on your education first and you vested capital in you, which that meant that capital wasn't available for your first couple of deals, was it?

Well, it's interesting because the amount that we invested in our education, by the time we took our eight courses and did our mentorship, we saved more than we invested in ourselves on the first deal that we did because we put together a package deal and bought five properties at once.

Wow. So the education paid for itself, but you, you had to go through the experience at the time because it took you a while to get through all those courses. Right? So that's, that's capitalization. So the same premise of what you did there is the same mindset that goes into creating a policy. It's a business that didn't exist until you got it approved by the life company and made the first premium payment. But if you had a business, or I'll look at it this way, we could use a real estate analogy similar to what Jason did. You're looking at a buy a long term buy and hold piece of real estate. And in that environment, you know, you have to still put up the capital. It's gotta come from somewhere. Maybe it's another investor or the bank or whatever. But there's an original down payment that's necessary to complete this deal. Well, realistically, you don't have access to that original capital that you put in for quite a number of years down the road. There's some appreciation, there's some mortgage pay down. There's, there's a trajectory of a typical long term buy and hold piece of real estate before you're able to access that original capital again. The same premise exists in an insurance contract. But once you're at that stage, every single time that an injection of capital goes into that, that, that piece of real estate too, because now you gotta, you gotta do the shingles, you gotta replace the furnace. There's a capital outlay that continues to happen in that real estate. Same idea. You pay a premium in the insurance contract, but every time you do it, you put 10 grand in or 20 grand in. It now gives you, it now gives you, you put in 20, it gives you 25, then you put in 20, gives you 26, you put in 20, it gives you 27. In fact, Jason, we were talking about one of yours recently in another example. It's a $20,000 policy. You're in year, I think you're in year 10 or something. And this year you put the premium in and at the end of the year there's going to be 28 grand there.

Yeah.

How's that for beating inflation?

Yeah, I love it.

That's pretty good cash flow.

There's so many investors right now who are so anxious because they've got this cash and they're told, you know, inflation is happening and don't have cash. Don't have cash. But at the same time people are really hesitant to lock their money away because there's so much uncertainty in the real estate markets right now too, when.

You talk about uncertainty. And the uncertainty goes well beyond just the real estate market because, you know, as of the time of this recording, we've had some, oh, I don't know, an emergency that caused a seizure of some Canadians bank accounts. Now that's got people a little on edge. So if you're listening to this, I would venture to guess you're probably someone who's already on edge about that. I know I am. And when you have capital residing where the custodian of that capital because as soon as you make the deposit into your regular bank, it's not your money anymore. You've handed over control of that money to the bank. You're now a creditor of the bank. That's an iou. They owe you what's in your, what's in your bank account balance. It's not really your money anymore. That's why they can come after it. Versus putting that into a private contract. Private contract that doesn't have a national database. You can't go to the land titles office and find out who owns the insurance contract. Does that make sense?

Yeah.

We can go pull a land title on any property in the country to figure out who the owner of that, that property is. But you can't do that in the insurance. Well, so private contract is a very critical thing to be aware of in this day and age.

You got my wheels turning completely.

You know, it's, it's so amazing to see when folks, when they catch it, you know, Nelson told us all the time that until you understand the problem, the solution just won't matter to you.

Yes. But I think that as a, as a society, as a culture, up until what's happened in the last little while, very few people have had their eyes opened. You know, most people have followed the, the, you know, grow up, get a good education, get a job, you know, it's, it's okay. Well, no longer, we're no longer anticipating being in the same job for our entire careers, but have a Few different job, work for some different companies, get a pension, you know, buy a house, have kids, you know, get married, have kids, retire. Like we're so programmed in this, and this is the way it's gone for decades now that the, that everything that's happened in the last two years and the culmination of, you know, the last few months has been completely eye opening. And some people want to see it and other people are afraid to see it.

We can't tell you the number of phone calls, emails, text messages, zoom meeting interactions that we've had with clients who said, we've heard you guys talk about this, we've heard you guys talk about the storm, whatever, whatever form that storm would take, whether it was the economy, the economy receding, some unplanned event, and we have the resources we need to weather this storm and we're not worried about it. And going back to what we described earlier, if you were to take this back a century and think about all the recessions, the Spanish flu, the Great Depression, the tech bubble bursting, stock market crashing, H1N1 SARS, Covid, to name a few, and there's not a single instance that's ever been brought to our attention, and we've examined this with the carriers that we work with, not a single instance that's ever been brought to our attention of a participating policy owner losing money. Because the policy is not an investment.

It'S a unilateral, binding contract. And the insurance company itself assumes 100% of the risk to fulfill those legally binding guarantees and they've never failed to fulfill them.

That's huge.

So recognizing that your money must reside somewhere and recognizing that from that place you can go about your investing activities and building your system of properties and creating passive income and doing all that great, great stuff. Nelson said in his book, as you may have read already, this is not this concept, this process is not about addressing the yield of an investment. It's all about how you go about investing the things that in the things that you want. It's all about how you go about financing those things that you need throughout your life, which can certainly include real estate investment. Yeah, someone must perform that banking function as it relates to your needs and you cannot get a better rate of return doing anything if you are not the one controlling the banking function as it relates to that thing that you want to be doing. So if you can get the real estate investment achieved and control the banking function as it relates to that investment.

Then you are at an advantage that is far greater than Anyone who's not financing it that way.

Yeah. Is this something that in your experience can replace RRSPs?

That's a great question. And so I think what dovetails to that is the three magic words in real estate. A lot of people will say is location, location, location. And, and as Jason likes to say, well, with the process of becoming a banker, it's location of the equity, location of the equity, location of the equity. You could build equity in a, in a, in an insurance contract just as you can in a, a piece of real estate. In fact, actually probably much easier. My, my opinion, but that's an opinion. And as far as replacing the, the quote unquote traditional or the common method that the everyday Canadian is out there being, being told what to do, walking down that primstone path that you identified of what everyone else is doing, and they're plugging their money away into a registered retirement plan. Well, who makes and controls the rules on that plan? Yeah, it's not Jason, it's not me, and it's not you. Right?

No, that's exactly where my brain went. No, if our, if our friends and our family want to invest with us, then, you know, there's so many rules. And I'm thinking right now, I'm sure you are both aware that Olympia Trust, in response to a number of the private lending fiascos that have happened in the last few months, Olympia Trust has now come out with some more restrictions and some more examinations and some more control. And I'm like, see, it's funny, the older I get, the less I want to do what everybody else is doing. Because. But when I was a teenager, like, I just wanted to fit in and be like everybody else. And now I'm like, nope.

Here and do something different.

That's a good point. And you know, look, look at it from this perspective, too. If you don't, an RSP registered retirement Savings plan just is. It's not that. It's not that it's good or bad or otherwise. It just has its own set of characteristics in terms of tax consequences, liquidity, access control.

And so on. But if you, if you were to think of this, this analogy, if, if Richard wanted to propose going into business with you, and Richard said, elizabeth, I've got a business proposition for you. Now, here's how this proposition is going to work, Elizabeth. You're going to put up all the capital, you're going to take all the risk. Now you can, you can sell some or all of this investment.

But whenever you decide to sell, you need to contact me first, and I'll let you know how much of the investment I own. How much capital do you want to put into that deal, Elizabeth?

Right.

And so that's what people are doing, maybe knowingly that might be. Hey, I'm okay with that. If, if that's. If I'm. If I'm under the impression that I'm getting a tax break.

Yeah.

I just really want you to think about that for a second. If the government creates a situation where people feel like they're being taxed too much and they sense that there may be a bit of a pushback or revolt in some cases, then they go about creating something that grants you an exception to that. And so they go about creating this registered retirement. Operative word being registered retirement savings plan. You're now on the government's radar. The taxes exist right from the moment the account's created. The larger the account gets, the larger the tax problem gets. And you don't know what the tax calculation's going to be when you need the money, and you have no idea how much money is going to be in the account when you need the money. What a great place to have to have money reside.

At that point, it no longer feels like a gift. It feels like a placation to, like, buy my silence.

Yeah. Aren't you just a little bit suspicious that you're being manipulated?

And I've been using RRSPs as an alternative funding method for 12 years, ever since they said, you know, no more with 5% down. And, you know, you say, okay, and. And that was when you start to get a little more creative. And you say, okay, you know, I'll do, you know, 80 loan to value with the bank. And then a little while later, after I've done some repairs and renovations, maybe I'll put an RSP second on and, you know, recoup, grab some of my capital back out and, you know, I'll help my. My friends and my family members, you know, save for their retirement.

We ask people.

This question is still, still valid. It's just a matter of whether people are continuing to inject new capital into their program. Because a lot of people have them. They come to you, they find out about, first of all, what you just stated. The percentage of the Canadian population that even knows what you just stated is possible is so minimal.

Yeah.

That they should be aware. It's an option that's available to them, however. So you brought that awareness. Now they have these accounts in place, they can actually do something. They can take a little bit More control over their decision making process, the self directed decision making process. But they're still out there happily injecting new capital into a, into that plan or into a registered plan because they still don't understand the underlying characteristics of the plan. And so there's another education potential that exists there with individuals at this stage.

Of the game and to.

Right.

In addition to what Richard said, you know, registered retirement savings plans are an option that people are going to exercise and they're going to take advantage of that. And yeah, we're not here to say that they're good, bad or otherwise. It's just once you understand the characteristics, if those characteristics don't match up with what your actual objectives are, when you're really crystal clear about what exactly it is that you truly want, then you may rethink that. You may say, gosh, you know what, maybe this isn't the path that I.

Want to go down.

Maybe I do want to take control of the banking function as it relates to my needs and I want to get some coaching on growing my wealth through investment real estate. They're two just completely different things. It's, it's never an either or. Hey, I'm going to purchase a dividend paying, participating whole life insurance contract or I'm going to get some great coaching from Elizabeth and then go buy some real estate. It's as well as I'm going to take control of the banking function as it relates to my needs as well as get some great coaching from Elizabeth and go and invest in building a system of properties to create wealth.

Yeah, that's the key. They're so diplomatic. You say things so nicely, but I'm literally like, I want to be my own boss. I thought I was my own boss as an entrepreneur. I'm like, I want to be more available.

Well, I, I think something really important for people to take away. When we started this call, we talked about how Your journey began 17 years ago. Something fundamentally pulled you and your husband in the direction of taking a different track than the. So you've already, you, you, you ejected yourself from the regular system 17 years ago and you, you just found there's, you know, it's like you're driving the Batmobile and you hit the eject button. It's like, no, I don't want to be on this ride anymore. And you went and decided you wanted to build your wealth in, in, in one of the most well known areas where people hold wealth. Real estate has always been a foundational aspect of that. Now then the strategies of how you do it is how you implement that, that component. And, and so you've always been different in that state. And I think there's a lot of people that you coach who are of the same mindset. They come to you because they recognize that's something, the path that you've gone, and they, they themselves want something different for us. When we have people reach out to us, people that listen to our podcast and they, they want to enter, they're starting to learn and embrace this idea. It's the same idea in that they recognize there's something fundamentally wrong in the financial world that they've, they've been born into the things that they've learned and they've been told throughout their, Their, their life, whatever stage of life that they're in. And they're looking for an alternative. They're looking for control. In this case, they're looking for an alternate bank, an alternate bank that they can utilize that gives them more control and autonomy over their decisions, Especially any real estate investor listening to this, you've all bumped into the one deal where all the additional. You thought the deal was done. You already signed off on conditions. You're, you're, you're moving forward on that deal one way or another, because you were, you, you told that the, your conditioning was there. Hey, everything's good to go. You've got the loan. And then three days before the loan's supposed to be funded, you get a bunch of bump. You bump into the wall. The stress level that puts in the pressure. It's like a pressure cooker of stress to try to get the deal done, all because we're beholden to some other banking institution. And it does. Just doesn't have to be that way. Control can exist in your hands, and it's through education that we get there.

I love that, and I firmly believe in that. In that absolutely, too. And the more, the more knowledge we have, the more empowered we can become, the more decisive we can be and the more opportunities we can seize.

Love it.

That is.

And on that note, Rich, take us home.

Well, that's a good statement that we're gonna have to carve that one out. I really like that one, Elizabeth. Now, with, with, with the world that we live in today, your journey that you've been on and now embracing this coaching method that you go and you take people through. You may not be walking through the four feet of snow that you have in your backyard in snowshoes with a cape on, but when you show up for the students that you coach and mentor. You have, you have the cape on and that you're a superhero for them. You're helping them navigate landmines and deals, and there's landmines everywhere in these real estate deals. So the fact that you're able to help them diffuse those landmines as they go through their investing, you know, their, their, their track, and they're actually more successful with their deals when you solve problems for them in this method to the coaching, you're really showing up as a hero. Now, our question for you, though, is who do you most want to be a hero to?

Wow.

My primary concern always is my friends, my family, my loved ones. I, I want to. They have what they need to be comfortable when they need it. So my, my sister has some medical challenges. My mom is, you know, in her 70s. I've already lost my dad and my grandfather. So I want to make sure that I can provide what they need. And by extension of that, I want to make sure that my clients are able to care for themselves and their families and the lifestyle that they are looking for as well. I believe it's, you know, for those of us who are financially free now, it's, it's important that we give back and that we support the growth and the development of other people so that they can achieve the same goals that been blessed enough to be able to achieve over the last however many years.

That's awesome.

Yeah.

Thank you, Elizabeth. Sincerely, it was just a pleasure. And for our viewers and for our listeners, we're going to provide links where you can connect with Elizabeth on the, the Instagram, the, the Facebooks, emails, and Internets. And we want to wish all of you an amazing rest of your week. Now you're going to see a playlist that shows up. See, it just showed up. Our editing team are amazing so that you can continue your journey of learning because much like Elizabeth, we share the same values around education first. And that's why we created this podcast, that's why we created this YouTube channel, is to continue to provide you with the resources that are going to help you along your journey. And so, Elizabeth, thank you again. Sincerely, it was an important. Just a pleasure. We're going to have you back and we can continue this jam session. It was really a lot of fun. So thanks again for joining us on wealth without Bay Street.

Thank you so much for having me.

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