121. Real Life Canada Market Crash Stories 2022 – Protect Your Wealth

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. We're here to talk about loss and just how much of it is happening right now in the marketplace. But we're also going to share some stories of experience of loss. At least I've got a couple doozies, Dan. I'm going to share, and I think that'll be good for people. You know, everyone's all good talking about, you know, when everything's good and the market's good and things are going up and it's high five and people are bumping chests and it's easy to talk about when things are going well, but you don't hear enough of, I think, the horror stories. The thing when things, you know, don't go well, where you fall flat on your face, everything you expected would happen doesn't happen. You know, big ticket costs and expenses that kind of ruin things for you. And in fact, you were sharing a story with me earlier, before we even hit the go button here today on, on a recent, you know, prospective client that you're working with that's, that's, that's undergoing some challenges and how they might have to think creatively about dealing with those challenges. So maybe we'll even get to that a little bit. Now, today's session is brought to you by, in my opinion, the movie Walk Hard, the Dewey Cox story, because, you know, Jason, our colleague Jason Lowe, the CEO of Ascended Financial, of course, and my, my, my partner in crime at the Wells Podcast, you know, we, one of our favorite things is to talk about the, the Elvis scene in that where you, he comes up and he goes, look out, man. And he's got that karate chop kind of coming at you. And, you know, I think about it when the market turns and I feel like that's what's happening to people right now in their stock portfolios and whatever, and even in a lot of places right now where in the real estate market because of rising interest rates and the, the attempts by the bank of Canada and the federal powers that be to curb the inflation that they themselves have created because they have to do something about it. But yet they're the ones that created the problem. And no one really talks about that part. And so I just kind of, it's kind of like one part warning, but one part like you know, like, holy crap, you're about to get chopped. You know, you get karate chopped in the neck or whatever by the market. Right? So look out, man, basically is the, is the story here. So, you know, one of the reasons I'm really glad that we're doing this together, Dan, specifically, is I really appreciate what, what you get to bring to the table for our viewers, and that is a level of life experience. You've lived through some stuff. Okay, now, I, I think I've lived through some, through some stuff. But, you know, you've, you've got just a year or two on me, and it gives you a unique perspective that I think you, you just bring such a value to the table in a conversation like this, having lived through the roller coaster events of the marketplace. So, all that being said, where do we want to kind of kick this off in you talking about what's happening in the markets a little bit? I mean, we're not going to get into details on what stocks are up and down. That's not what our purpose here. It's about the fact that the market in general, broad scope, is going through a flux of change that we knew was coming. In fact, we've been saying it was coming for a while, as have, you know, experts all over the world, but yet people are looking at their account balances on their telephone and their, you know, it used to be the statement that you'd get in the mail once a quarter. Now you're just looking on your telephone, you're like, oh, my God, I'm down another 20% today. So what's happening for people? What's the feeling that's going up for them and, and what can they start to do about it?

No, that's a question, Richard, because I just, you know, some of the people I've met with in just the last week alone talked about, you know, things they have that they're counting on, you know, for the future and the value changes that they've seen. Like, people that have, like, well, you know, I have this, you know, $200,000 kind of lira, and I just noticed it's gone. It's gone down by $16,000. Like, I don't want that to keep happening. And, you know, that's the reality. And I think, you know, as you said, you know, we've all seen the ebbs and flows of the market. And it's, you know, it. Markets go up, markets go down, and it's really great when you're on that, you know, upward swing and everything. You do is, you know, pretty. It gives you a nice little return. And, you know, I always coach people this way because what I find, and, you know, you can build off this too, Richard, if you like, is that the people that do really well in the stock market are not the, you know, the common investor. It's the ones that are the, you know, those that do it for a business. You know, they have these, you know, tools that help them, you know, buy and sell. And it's really quick and reaction. And if you're playing the game against those, you know, institutional players, I can tell you who's going to win more often than not. And the other thing that always comes to mind is, you know, Warren Buffett, you know, and he has two rules, right? And that first rule is, you know, don't lose money. And the second rule is, you know, don't forget rule number one. And if you think about what he does, and which is so much different than a lot of people that, you know, play in the market, is he spends huge amount of time invested in understanding that company and how solid it's, you know, and is it a good place to put your money? And then when he puts it there, he leaves it there. Like he's not one of those, you know, try to get in at the right time, get out at the right time, because that's, you know, I think that's what we're going to find now as people watch what's happening as the markets are correcting, you know, there's that urge, that emotional urge to, you know, how much more is it going to go down? Should I get out now? Should I get out now? And anybody that tries to time the market, well, you may get lucky, but that's what it's going to take. And as a rule, you know, the market's built off in a lot, in a large degree, off emotion. That's what most people don't realize about the market. It's like emotion that's really driving the value of a lot of those stocks. Somebody feels good about it, they buy that stock. They, you know, and it's so. And it goes up and then they start to lose some of that good feeling about it, and they'll sell. So too much emotion in those markets. And then, you know, then we deal with things like, you know, inflation and what's happening and, you know, as soon as the bank of Canada raises interest rates, what does that do to the market? And, you know, I was just thinking back as you were speaking earlier, Richard, about, you know, 1980 and I was, you know, nicely into business. I was young and chipper and starting my old farming career and.

As opposed to now where you're young at heart and still chipper.

Yeah, exactly. And all of a sudden, you know, interest rates are up to 21 plus percent. And you know, if that doesn't cripple, you know, things in your economy, you know, really changes things. Well, you know, it does and it really puts a lot of pressure on people. So, yeah, lots to talk about. I, you know, as we were mentioning earlier about ebbs and flows of stock markets, I can remember being in Hawaii and, you know, blessed to be able to go to Hawaii for, you know, three weeks. And it was like 2008, 2009 winter. And most of us remember the little stock correction that happened back in, in.

That window and just a little blip there.

Yeah, exactly.

I don't even know if it shows up on the charts.

Yeah, exactly. It's just a small little blip. And I remember I ran into, you know, you get to meet people while you're there. And I ran into this one gentleman from the US and there was a group of six of us, and we were all Canadians and I was still, you know, employed and I had a good job. So things were going well for me in spite of that stock correction. And I remember him saying, yeah, normally, you know, I have a lot of friends that are over here, but this winter a lot of them couldn't come because of how the, their portfolio, value of their portfolio changed in a moment. And that's one thing that, you know, when it comes to the stock market, you know, always want people to understand is it's, it's a, it's a market, it goes up, it goes down, and you really have to be careful because your value can change just like we're seeing now can change a lot in a short order of time. So, yeah, I, I prefer to invest in the stock market in a way that, you know, when I do it, I'm pretty conservative and I pick stocks that, you know, are gonna, gonna be there and matter over time if I'm doing it at all. And I'm also gonna take it and I'm gonna invest in that market out of my own banking system, which changes the risk for me.

Well, that's good. And there's a couple of key things that I wanna unpack there, Dan. First thing you said is, of course, you know, you kind of made a reference to the, to the, to the heart and really the heartbeat. Well, the market can change in A heartbeat. And when it does, you might skip a heartbeat. In fact, your, your heart might stop sometimes the way it drops. And neither one of those is good in, in that situation. So I think. And the other thing is you talked a little bit about, you know, Warren Buffett. Obviously everyone knows who that is. And I mean, what an incredible life that he's led. And I mean, he's world renowned for his ability to focus on good companies. And he also is not a huge proponent of the general concept of diversification. Instead, he's, his focus is on getting really clear and understanding, getting really, really exceptionally good at one thing. And he's really good at one thing and that's picking amazing companies by doing good research and getting really clear on the fundamentals of what he wants. And so he sticks to those fundamentals. And he also buys a lot of companies that have cash, so he has cash float that he can tap into when he needs to for good times and bad times. So that's why one of the reasons why he buys insurance companies like Geico and things, they're well capitalized, well capitalized so that you can take advantage of opportunities with the capital that's available. And one thing that I think is interesting when we look at this market condition and the changes is, you know, we're talking about a present loss that people are experiencing. But what you're experiencing now, if that's you, this is not new and it's not unique to you. There's hundreds of thousands of people experiencing the same thing you are to different levels. Some a little bit less, some a whole lot more. And that's not just isolated to the market condition. I mean, there's other factors that happen in our life that, that create those experiences. But this thing is, you know, again, it's a, it's a cycle. It's going to happen again whenever this blows over and if it does and it gets better again, okay, cool. Well, then we're back on that treadmill and we're running and we're running and we're running and we're running and then the inclines going up. Okay, we're getting a good workout, we're getting a good workout. Things are going well and then all of a sudden, you know, you fall off the treadmill and smash your face. Well, that's the market, you know, flipping on its head and you don't get to control when that sort of thing happens. So I think the difference fundamentally between, again, market based in investing, which it's good to you, you know, good to do that. You need to do different kinds of investing. However, are you investing, are you speculating? You know, Nelson Nash, our mentor, he would say that investment is only in something that you know a great deal about, something that you have a level of high level of knowledge or expertise or experience in or a combination of those three factors. That's something you know a great deal about. Where now you, you can, you can make a quality decision about the investment versus I got a stock tip from my buddy or I'm, I got my wealthsimple account and I'm just out there, you know, picking things, you know, willy nilly or whatever. That is not investing. That's speculation. You have no earthly idea what's happening. Cause you don't know what underpins the potential of those things. And you, you're not, you're not really tied in or connected to maybe the news and the upcoming things that are shifting, changing in that little unique space. So that's speculation, that's not investing. But the world around us, the financial entertainers and the financial industry and the banking industry, which is largely to my part from the marketing that they do. My, my opinion, just an opinion, okay, is that they are to partly to blame for pushing this concept of what investments are to us and, and changing our brain to recognize and just think that. And any product, buying a stock, buying a mutual fund, doing this, this is what investments are. No, it's, it's really not. These are products, these are things you can access or they're, they're markets you can tap into. But in actual investing is getting really crystal clear on a plan, understanding how to execute that plan, understanding how to mitigate the risk of that plan and having a high level of advanced knowledge around it. Like as an example, if I've never bought a property before, I haven't bought, even bought my first home ever. And now I want to go and buy a bunch of investment. I want to go buy a 12 flex, you know, apartment building first. I don't know where the money's coming from if I have never bought the first property. But so let's just say that that's what I want to do. I've never done that before. And I'm just going to go blindly out and start throwing offers out. I'm not going to go talk to a couple realtors, I'm not going to go maybe take a, spend a little bit of money on a course with someone else or find a coach that's actually done that before that knows how to manage purchase, acquire finance, understand Cap rates, like all the associated information you would need to know before you jump into a venture like that. Like it's, it would be absolutely ludicrous. It's asinine to think that you could go and do that without having any even remote prior knowledge or expertise or time vested into gaining that knowledge. And so I want to reference the, again, general markets, real estate market, you know, crypto market, whatever the market is, I don't care when you. There's a difference between markets and the market dictating the terms of what happens to you versus a contract in a contract that the terms are dictated to benefit you. So when you have as an example, a unilaterally binding contract with the life insurance company for what we, we talk about, which is Nelson's concept of becoming your own banker, we utilize insurance as a tool, as a vehicle well designed where we're binding the insurance company by contract to fulfill contractual obligations to us as the policy owner. They must perform to that contract. They have no choice in the matter. They're contractually obligated. So the market ups and downs and risks and all that clap trap that people are experiencing and worrying about. I don't know about you, Dan. I mean, I didn't have a great sleep last night because my kids got up in the middle of the night. So that part wasn't awesome. But I do know this when I woke up this morning, despite the few hours of sleep I had, I have more cash value today.

Hey.

Than when I put my head on my pillow last night. So regardless of the quality of my sleep, by, by other factors financially, cash values went up. I can borrow more capital out of my system of multiple policies I own on my life, my wife, my two children and in my corporation than I could yesterday. That's pretty empowering because everyone else, it's like Chicken Little and the sky is falling and crashing down around you. And of course the media and the news are out there, you know, bitching and moaning about all the problems of the world, scaring the crap out of you to make it so you don't even want to like, you know, the ostrich with the head in the sand. You don't even want to pull your head out of the sand. You just want to have blinders on. And just like, I hope it all blows over. Oh my God, I hope it all gets better one day. How about stop putting yourself in that stupid ass position in the first. Like start changing the way you do things so that you don't. The next time this happens, it Will flipping happen again the next time it happens? Like you're in a better position. You don't have to be trying to like, reorganize your life and whatever to try to sort through the mess that's created. It's absolutely ludicrous.

Oh, yeah, that's, that's so true. And I was just thinking as you're speaking there, Richard, so, you know, the one thing that, you know, I already had some anniversaries on some of those dividend paying whole life insurance policies that I own this year. And I know the dividend party. Yeah, dividend party. When I looked at that dividend, you know, that dividend was better than the one I got for that, you know, contract a year before. And I got it. I got some more that are coming up in September. And even though the market, you know, markets have been kind of, you know, here's what I feel pretty confident about, Richard, is that my dividends are going to be better for those contracts than they were the year before. Even though, you know, we're going through, you know, uncertainty in markets, I feel pretty confident that, you know, that's going to happen. The other thing I, you know, I was thinking as you're speaking, you know, so look around. That's what I always tell people. Look at what other people who are in industries that are very successful at how they do things. You know, do they take the risk that we quite often take when we invest? And I love, and I love banks because they, they got a great business model. And I just thought of them as, as you're speaking, it's just like, well, when the bank goes out, what do they do? Well, every time I've worked with the bank, they write a contract between them and me and they're going to give me money based on all these conditions. And they are very conservative, right? They take collateral. They, they, you know, basically they don't take risks. They invest with no risk. They make an investment in Dan, but they take collateral. And it just like they're very, you know, thoughtful about how they do that. And that's something we could learn from. They're successful. Just look at how they return, you know, what kind of profits they return to their shareholders every year. Why is that? Well, it's because they're very good and making sure they have covered off those bases. They haven't put themselves out there where there's a big risk that someone's going to default. Even if they do. And we know they don't want whatever they hold you on us collateral but they'll take it if they have to. That's how they protect themselves. So they have a contract in place that really enables them to make a difference for their business and their shareholders. And I think you can learn from a lot of different entities that are successful like that. How do they do it? What are they doing? What are they doing different than what we're doing when we're out there investing. So lots of opportunities for learning. And I thought too, I, I'd share a story because, you know, I was talking about back in the old 2008 window and I, and I took a bit of a hit myself and I just thought, well, maybe I'll share that with people because here I had, you know, I was working for a multinational oil and gas company and you know, I was blessed to have stock options with that company and they had done very well for me. Like, I had exercised lots of auctions over the years and I knew that company really well because I was at a point where, you know, I, I got to meet with the executive of that company and I got to know how we were doing as a company and a corporation. So long comes 2007, right. And it's a good, things are going along really nice and, and one of my, you know, group of options becomes, you know, vested where I could exercise them. And I'm looking at the stock price and I'm in a, I'm in a good position on this stock and I go, well, I'm going to wait. And you know, and I did, you know, how much, you know, what happened to those options, Richard?

I'm guessing the price didn't work out as good at a later date, did it, Dan?

Yeah, well, they actually, yeah. After the bit of correction in 2008 and you know, and the time that it took because I had, you know, X amount of years to exercise those options and all those piece, I never did get those options. Like, I never chose to sell them because I would have been selling them at a loss. And yeah, I could have ended up with stock, but I just knew enough at that point. I didn't ever, I never exercised. And so, you know, just when I reflected on that little minute time like that was like probably. And again, going back in memory, I think that was like a eighty to a hundred thousand dollars hit I took by not exercising them when I could have. And so, you know, just an insight is that even though I knew this company extremely well, been working for it for years and years, and I knew, you know, what the risks were, that company I knew what the upside with that company. It still. I still got caught because of, you know, something outside of the control of that company and other people, which was, you know, that big correction that we had at that time. Those things impact businesses. And even if you're in a very solid business, it takes years before you get back to where you were. And, and that's just something I thought, you know, lesson learned for Dan. I always said this and I didn't practice it then. You know, pigs get fat and hogs get slaughtered.

So that should be the lead. That should be the lead into this video.

Your farmer showing Dan. So you got to tell a great, great story. I think that's a really, really helpful for people to, to. To hear and reflect on. I've got a couple doozies I'd like to share. I got. I got three in mind and they're all in the real estate area. So the reason I want to give some real estate stories. First of all, that's where most of my background is. I've been far more connected and involved in the real estate investment, either personally or extended arena. I was a realtor for nine and a half years in the. In the city of Edmonton, and I was on title to my first piece of property as a suite rental property with my family when I was 13 years old in 1994. And that was. I was a beneficial interest. You couldn't actually be on title, but you could be titled as a beneficial interest. So I had a share in that property just like my siblings did. And so I'm gonna. I'm gonna talk about three specific instances. So the first one is a piece of a rental property that I still currently have today. Now, this is a rental property that we. I've. I've actually had it now for 20, 20 years. I think this is my 20 or 21st year, which is kind of strange thinking back on it, because over that timeframe, well, once you hear the rest of the story, you might kind of think, well, what the hell happened? So this property is. It's in Fort McMurray. You know, great community, Fort McMurray. Unfortunately, they've been really, you know, they've taken it on the chin. Big fat fire, big fat flood, massive oil drop, you know, a lot of pressures on that community and growth, like expansion and contraction. Like, like huge pressures, unfortunately for the people from, you know, great people, beautiful town, two wonderful rivers coming in there, great fishing and stuff. But, you know, they've really been kicked in the teeth quite a few times now. I've got this property. It was purchased in a rental pool situation. So for, for 18 or 17 of those 20 years, I never saw this property. I, I never once saw it. In fact, I didn't really have a photo of my unit. I knew I had a photo of the outside of the building, but that was it. I'd never seen it. And I even worked in Fort McMurray. I, you know, as an electrician in my former days I had a, I called it my two year penance. But I worked out at one of the major oil firms out there and of course I, you know, we would bus back and forth and all that sort of thing. So you know, I went into town a couple times and I actually drove by where the building was, but I still didn't know which building was ours. So even when I worked there, I never went and saw the building. Now overall, like that, that part worked out pretty well. The problem is this. We paid originally if we purchased that property. I think it was around 68, $69,000. And at the time you didn't, you, you couldn't put 20% down, you had to put 25% down. So the rules for rental property was 25% down at that time. And you couldn't get a 30 year amortization or a 35 or a 40 year. You could only get a 25 year. Okay. So cash flow really wasn't very, but the idea of this property was that you'd have it for, you know, 20 years and it would be paid for and you know, you're done and done. It's a real long term plan. And the rental pool would kind of take care of a lot of that stuff. So you know, shoot forward. You know, the, the big boom that Alberta had, we had a great oil boom. A couple of good years, Dan. You'll, you'll know them through and through. Anyone that's listening this from the Alberta quadrant or people who are living all over Canada that are watching this that are like, oh yeah, I, I, I flew out and lived in Alberta and got some of that oil money for a bit. Right. That was some, it was some good times. And of course, well, shooting forward and looking at, you know, the peak of that market, that Property, it's a one bedroom condo and it's only like 650 square feet. Like it's tiny. It's in a three story or four story walk up building. It's in the basement level, like it's half underground. This is not a, like, you know, this is not the promised land. Type of a property. If you're picking up and I'm laying down. You're reading my mail, right, Dan?

Yeah.

So at the peak of that market, that property was appraised at 225,000. That's pretty good. You know, under 74, it's now worth 225. Would have been great if we sold the property. We didn't do that. We did however, do a refinance and we actually pulled out more than the original purchase price. So we got all of our down payment money back, plus more. So we did get a good chunk out. Now shoot forward a number of years later, the market in because oil coming down, everything and projects getting finished, the market starts to tank in that community and, and so values are coming down. We had a big massive special assessment on that particular property of $27,000. That's a pretty good chunk of money. Of course, harder to find fill vacancies, vacancy rates going up, rental pool profits are being squeezed and going down, you know, et cetera, et cetera. So shoot forward to today and now today at this time, I couldn't sell that property for 30 grand if I tried to today.

So it's half, it's, it's less than half of what the original purchase price was 20 years ago.

Yep.

It's almost 10 times lower, roughly speaking, than what it's. Its peak price was over that time frame. The property presently negative cash flows around between 300 and 350 bucks a month. So that's awesome. But in order for me to, you know, like if I wanted to stroke a check to just get rid of the property or whatever and like, I'd have to come up with, I don't know, somewhere between 40 and 45 grand to do that. Well, at the negative cash flow presently, like that would take, you know, 10 years. But it's also an inflation adjusted negative cash flow. So it wouldn't be sensible in my opinion to do that. Now adding to that equation is the management of this particular complex. We're kind of running the thing into the ground. So that was awesome. It wasn't getting any better. So what did I do? I, I went and pulled 100 land titles and I paid a virtual assistant to go and track people down and go and get proxies so we could do a hostile takeover of the board. And then we did a hostile takeover of the rental pool board and we inserted new management. And the end result was two and a half years of endlessly long 4, 5, 6, 7 hour meetings, multiple meetings a month. Constant chaos, you know, dealing with all these problems. And so now if I were to add in all the time that I vested in loss that I could have been profitable otherwise, you're starting to see like a stacking effect of things that just haven't gone so well. Okay. Now technically, have I really lost anything on this property? I would say no, I haven't because I pulled out all of my original money and I pulled out. We did have profits along the way. A lot of those was what paid for most of the special assessment. So. And then resulted over 20 years. All the cash flow got obliterated by the costs. Right. And I would say at this point in time, if I were to equalize things today, I'm probably at about a break even. But if things don't start turning around and, and if that negative cash flow continues and the values don't progress forward, well, I'm, I'm. I'm actually going to start being at a loss. But I'll never be at a loss until I actually sell. Right. I still own it. So. So there's a lesson in there and that's basically in 20 years I basically didn't make a dime on this piece of real estate, but I had all the headaches still. Even though the rental pool management and all that stuff was there for, for 15 years, I didn't have too many headaches other than the special stuff, but I, I'm certainly getting them now. Okay. And now. So that's, that's just one property. Okay. Now the next one I want to talk about is I'm going to talk about a mortgage deal and I want to talk about a land development deal. So talking about 2008, I want to go there. We, you know, the Alberta market was really on fire from, you know, about 2000, you know, really from nineteen nine onward to about 2007, the peak in 2007. And then things kind of, you know, they, they, they, they had a big recap and I'm only going to talk about one of these deals. So a land development deal. So I got involved in a land development company that was, had some really great projects. Some very strategic land. Was one in Cold Lake. There was, I can't remember where the other ones are. There was one that was a couple in the general Edmonton area or whatever. So they had some very good projects and they were doing development deals and very high quality land right in the path development, getting approvals. Things were, you know, looking really good and these would have been outstanding projects. Even when the market came down. Because the quality of the land purchase that was made, the strategic type of land, like all the, it checked all the boxes that even in a crappy down trending market because it would have taken, you know, two to three, three or four years to, to go through the pools, get this thing ready, build some units and sell things to developers. It would have been still very profitable. Not as profitable, but still very profitable. The problem was the management team. The, the, the, the guy at the head of the company, what his niche was, what the thing that he was really good at was finding and negotiating smoking deals on the, on the land. He just had an absolute knack for that. All the other stuff, not so much. And so they had to fundraise for these projects, but he would kept adding a new project and adding a new project and a new project. So then what happened is you couldn't fundraise to meet the certain like, like milestones that were necessary in each individual project. So then you started to have a capital under capitalization problem, right? So the end result is their whole program went into receivership. Whole bunch of people lost all their money. None of the projects got completed, all the money was gone. And guess who's some, some of that money, guess who it was? Mine and a bunch of people that I know. And now that was a good learning lesson. The, the, the problem wasn't the deal or the investments. The problem was the management. And I couldn't control that and neither can you. So recognize you might have the right, you might have the right deal, the right piece of property, you might have got the specific, whatever, right timing. But if there's still an ancillary factors that you can't control, man, that thing can go sideways real fast. Now story three, also a real estate story. A lot of people don't know this, Dan. You can, you can be a private lender in real estate, you can, you can lend money as a mortgage, you can become the mortgage owner, the bank and lend money on first, second and third mortgages in Canada. And in fact you can do that with registered accounts. So if you have, you know, LIRAs, RSP, TFSA, those kind of things, you can do a self directed account and you can actually be the lender on an arm's length transaction. You know, Dan, you and I aren't related by blood or marriage. If you needed a loan on your property, I could go and take, you know, collateral on that and I could have a registered instrument to protect my interest on title. Now I've done this a number of times a Lot of my clients have done, done it as well. There's one particular deal is actually a property I owned. Now I sold this property to some investor friends of mine. We were, we. We had done a few deals together. They were good friends. I was at one of the guys weddings they'd had. They, they were well known. They'd. They'd built up over a hundred properties in the Edmonton General marketplace. They were doing some big things. They owned a property management company even. And so I sold this property to them. I needed to get the, the property off the, off of my books for debt service so I could go get the next deal at the time. Now the way I did that is I basically took some of my equity and I actually kept it with the property and it became a second mortgage, a vendor take back mortgage and I made a contribution in kind to a registered account at that time long before I knew anything about Infinite Bank. Now shoot forward about five years later that was. So that was sold you know like in maybe 06. Roughly in mid 06. Now shoot for about five years later the, the market peaked and now it's down, trending downward for the next three to four or five years. Now this company because of all their properties that were all over leveraged and rental market rates were coming down. Now they're bleeding cash flow on all these hundred somewhat properties. They ended up, they ended up going into also some bankruptcy situations and foreclosures on a whole bunch of those properties. Turns out one of those properties was the one that I sold them that my mortgage was on. Yeah, guess what? I didn't get a phone call. Could you believe it?

That's really surprising, you know. How's that wedding? That's fun. Amazing how that happens. So now luckily at that time I had, now I was now a licensed realtor. So I had some familiarity with what I might be able to do and I always understood that okay, I have some security on this property. My security is this second mortgage loan. And, and the way I actually found out is because, because I was on title, Dan the first mortgage holder was going into foreclosure. They have to notify anyone that's on title. So I got a package in the mail, the registered mail that says hey guess what, you're about to lose all your money because we're going to foreclose on this house. Like oh awesome. I should probably do something about that, right? Trying to figure out what's going on. And the end result is because the market value had declined to a point. I actually it Was squeezing very heavily, squeezing my, my, my value. The market first mortgage was in a position they would get their money no problem. But because they initiated the proceedings first, it was in a situation now where I had to figure out, how do we get this deal sold? How do I, you know, can I make up the payments to the first mortgage? Well, there, the legal fees and everything were actually pretty high. And I thought, okay, I can, I can figure out how to solve this. Then there was another problem. Would you believe that they had some investors buying these houses with them? Dan?

I can believe that.

Okay, so one particular guy, nice guy, and he, he got hosed pretty good way more than I did. He probably had maybe 20 or so properties with these guys. And it was in three different companies. He went and paid a good chunk of money to put what's called a blanket. A blanket, like it was a writ or something on all the properties. So every single property that they own in three companies had this registered instrument on there. And because it was on there now, including the property where my mortgage was, that property couldn't be sold properly without every person on title being able to like kind of sign off on the deal. The end result is I had to figure out, find this guy. I had to do some hardcore like one on one conversation negotiating. And then, and then I ended up actually getting the listing for the, for the thing as the realtor to try and solve selling the property, which at that time was winterized. It's winter, you can't turn the heat on. People are going and looking at the product like it's not a good situation. Property selling for a discount, the whole thing sucked. The end result is we were able to preserve most of the principal on that second mortgage loan. But it was, it was a ton of effort. It was not an easy save. That money was secure. It was secured against the title of the property. And despite all the information I knew about real estate, which I think was pretty good at that point, I mean, I'd been realtor for a while. I'd been around real estate for 20 some odd years at that point in my life. I'd done some deals, been involved in lots of coaching programs and all that stuff. Nobody told me the information how that deal could like, I had some ideas how it could go sideways, but some of the curve balls I just could have never seen coming. I wouldn't have known that it was so stressful and so difficult to go through the experience of trying to reclaim my own capital that I, you know, word to the wise, people like These are things that happen. So I, I thought I had control. I had secure, I had security registered on the title of the equity of the property. It still wasn't enough. I could have lost everything. The only thing that saved it was my knowledge. And it only barely saved it at that. So the takeaway here is that here's, here's three examples for me. Great example from Dan. Different markets, similar timeframes. Okay. And this, this, these are the real stories of people being in the trenches of the financial world. And I can tell you flat out, Dan, now I haven't done the math and I, but I might, I might do it one day if I can find some time. I'm, I'm quite confident, I would say extremely confident, if I would take in all of the money that I put into renovations, down payments, real estate coaching and classes, spent a lot of money on those, you know, legal fees, pale penalties on mortgages and all these associated things that I had to go through in order to acquire the real estate that I still own today and all the ones that I've had and sold and transacted in the past. If I had known Nelson's book becoming your own banker, and I had gone ahead and I had learned this at an early age or my parents had taught me and I had plugged all that same capital into there, I would be sitting on a very, very healthy equity base, that it would be vastly greater than any equity I still have in any piece of real estate or what I've generated on any of the real estate over that whole 20, 25 year period of time.

Yep. But it would have been pretty boring, Richard.

To watch that money grow, like uninterrupted. And you know what, it's really boring. And you know, so I think if you think back about all the experiences you've had and you know, the headaches you went through and you know, and to do it somewhere else where, you know, you had stability, kind of like, you know, it keeps on going. Not even, even while you're sleeping, the value keeps on, on going up, you know, even on a day when your.

Sleep isn't very good. Right, Dan? Exactly.

It's not that good. What a change thing for you. But yeah, that's an interesting point because so often, you know, when we get into doing these things, we all have good intentions. Like we, you know, this is what we're trying to do. We're trying to make a difference. And, you know, I think what you brought up was so valid, Richard, is that a lot of times you Know, because we, we don't know what we don't know. And at that time, you know, both of us talked about stories where we didn't know about how we could actually control and build this pool of capital, that we have control over how we use it and that even when we're sleeping, our value's going up. We didn't know about that. And you know, if we did, it would make such a difference. You know, I go back to my stock options, you know, I would, I would exercise those, you know, suckers as soon, you know, as soon as they got to my target number. And I can tell you where I'd been putting that just so it would keep on growing uninterrupted after that. And that's the thing that, you know, we've been blessed now to learn about. And that's what, you know, our late mentor, Arnelson Ash, he discovered it and through, you know, it's a concept, through a thought process. He's, you know, he, he, he figured it out because he had access to, you know, dividend paying, whole life insurance policies that he could actually use. And it's just amazing what that man did for us. And again, you know, wind o' clock back. I wish I didn't heard about it 20 years before I did, but man, am I blessed that I heard about it now and I've started to do something about it. And if I do an investment now, I change the risk that I'm taking. Because first I agree. Do your homework. You know, there's some great books I like. The, you know, the, the book called the Lifestyle Investor by what's his name now I can't think of off top. Do you remember Richard?

No. I know the guy you're talking about though. He's got a coaching program.

Yeah, got a great coaching program, but he just has about 10 principles that when you're investing that you should, you know, make part of your plan and so you can get better at doing investing. You can cut through a lot of the risk by doing your homework. But at the same time, if you have a foundation where you're, you know, you have that pool capital, you're accessing that pool capital that you're in control of to do this, you know, it puts you in a different position. And that's where that peace of mind comes from. Even when you start to, you know, invest it somewhere where there's some risk. Because every investment that I've looked at, there's always some risk. And yeah, you try to mitigate that, but you know, how do you predict where the real estate market is going to be five years from now? How do you predict, you know, how.

Your joint venture partners are going to go bankrupt because they over leveraged a hundred properties and didn't tell you and, and all these kind of things that happen. And a couple things come up for me thinking about Nelson in certain quotes that he used regularly. There's one by Bill Linderman and it's, does having money ready and available take away any of your options? Right. And then the second one is, is a quote around, you know, capital that when you have readily available access to capital, opportunities will track you down. Nelson would say, in fact, they'll hunt you down. And so the difference between, in my past, I was the one that hunted for the opportunities. I went and chased down deals and chased down deals and made them and found them and did all that stuff. And I had to either find a capital or I'd build up some. And I think, okay, I have, I have enough that I can figure out how to go make a deal happen with this. That was my thought process at that time in my youth because I was young and I was still learning things and you know, going through the electrical apprenticeship and then becoming a journeyman and like trying to build up savings and whatever. And then now what I recognize in Nelson's lessons is like, look, when you build up and create that reservoir of capital, you don't need to go hunt down deals. Deals just show up for you, they start crossing your desk. And now, because there's enough of them, you have what's called deal flow. As that deal flow is happening, your eyeballs can start to cherry pick the ones that make sense to you. And typically the ones that make sense to you or that you're gravitating towards are things that you already have some kind of existing knowledge or understanding of where your brain automatically thinks, oh, I can start to recognize and understand how to mitigate risk in this deal. I immediately can see that this deal has a lower level of risk relative to my knowledge of understanding. So that's, that's one of these, like, underlying principles. That's, that's kind of sitting, it's like, you know, we've got the foundation of the insurance, you know, policy. Well, in the foundation of the infinite banking concept, the, the advantage of growing a pile of capital, there's these, these things that begin to show up and happen in your life that are, they're kind of like, it's like gravity. It's like a principle that Just starts to happen. You, you don't see gravity. But I tell you, if you jump off something, you're going to feel it. So the same premise is what's happening when you start to build that capital reservoir, that peaceful feeling, that knowledge that you have a little bit more empowerment and control and the types of deals that you seek. So this is just like, it's an intangible thing that you can't quantify. Is it going to happen for absolutely every person? No, probably not. But bar and wide, we hear stories about this all the fricking time. And so there's so much more to this than just an insurance contract, bar none. Then there's so much more to this than just having safety and protection on your money. But if all you did was had really good safety and protection on your money and you knew it was going to grow every day and it wasn't going to be impacted by the whims of whatever market. I don't give a flying rats behind what the market is. I, I made a quote on one of our, one of our colleagues pages the other day. He made a comment, Ryan Griggs and I, I mentioned flying rats butt. And he, he responded like, I didn't realize that rats flew in Canada. I had, I had to send him a link to the Alberta Rat patrol. I'm like, well, actually they don't. It doesn't happen in Alberta. Yeah. Anyway, there's a little rat rat comedy for everyone. So the key takeaway here is like, you can be empowered, you can take more control. You have to take some steps to do that. Education is one. You got to get Nelson's book. Listen to good content like Dan and I are providing. I think we provide a lot of value because we're not sugarcoating anything here. We're not manufacturing someone else's story. We've lived this. This is our experience. And if you're watching this, go ahead and leave a comment. That what your experience has been, have you been impacted? Have you been kicked in the proverbial financial nuts through something, some market condition? And how did that feel? And holy crap, what would you want to do about it moving forward? If you knew you could do something about it, wouldn't you do something about it? And I think that Nelson's concept is the perfect solution. I'm happy to admit I have a bias there, Dan. I obviously have a bias because I love this concept. I'm an authorized practitioner. I teach this. And you know what? Hey, if someone decides to do business with me, you're darn right. I'm a greedy capitalist and I will make some money for it. But I don't care if you do business with me. Do business with Dan. Do business with someone else on our team. Do business with somebody else that's an authorized practitioner.

I don't care.

Recognize that you can implement this in your life and make the decision to do it or don't. But at least if you know what's there, if you know that you have the information, you can make a logical decision that you believe is right for you. And I think that's part of what we're trying to empower people to do, you know, with the kind of content that we put out.

Totally agree. Well said, Richard.

Dan, this was a lot of fun. I hope people get a ton of value out of this episode. The the Lookout man conversation and thank you for spending this time with me and also just being being gracious enough to share your personal story and help people vicariously live through your experience to some degree, recognizing that, you know, we've all experienced some kind of loss and I don't think you can go very far. You can't, you know, probably walk into a crowd of people and, you know, ask the question, have you ever experienced loss? And like no one's going to put their hand up like it going to happen. You're not going to go very far. So we're all experiencing in some way how you can control and mitigate that moving forward in your life is a decision that's up to you. And we would encourage you to take the necessary steps to make that decision and start having more peace of mind, more control over your financial outcomes. Thanks again for tuning in and have yourself an incredible rest of your day. Thanks for listening to the Wealth Without Bay Street Podcast where your wealth matters. Be sure to check out our social media channels for more great content. Hit, hit, subscribe on your favorite podcast player and be sure to rate the show. We definitely appreciate it. And don't forget to share this episode with someone you care about. Join us on the next episode where we continue to uncover the financial tools, strategies and the mindsets that maximize your wealth.