AVOID Real Estate Deal Chaos By Using IBC

You know me as one of the newest team member at Ascendant Financial. And knowing what I know now, I always wanted to have a better way to flow my cash in terms of purchasing properties. So I have that in mind. If I know what I know today, I would flow my money differently in terms of the down payment or in terms of the funds, how I transfer.

Knowing what you now know today versus when you started in your foray down in the real estate track, you had, you had this information then you would have done things differently and now you have an opportunity to kind of almost hit the reset button and start implementing, you know, the things that you've learned in the last number of years. Now as an authorized Infinite Banking practitioner.

I'm excited, joined today by my wonderful friend Jin Jin, who's an authorized Infinite Banking practitioner based in the Vancouver, that area. And we're, we're the closest thing to neighbors on the Ascended financial team. And so I'm excited because we had a really interesting conversation about some, some recent adjustments, recent things that have been going on in Jinjin's life and how that intersects and interacts with infinite banking concept and some things that she's doing personally. And you know, we have a lot of real estate investors, people that are a member of our community group, people that tune into our, our podcast etc and you know, there's a lot of talk, a lot of things going on with real estate right now. There's been a lot of popularity, people looking to get into real estate investment. There's been a lot of areas of the country that have been rapidly rising, you know, and now as the bank of Canada looks to cool things down, cool inflation, what have you, that they themselves created there, there's rate adjustments, there's a lot of things taking place and we're starting to see that impact, that marketplace and, and the, in the, the fervor of activity that's been happening there. So Jinjin, thanks for being with us today. And you know what, let's just jump in, tell everybody a little bit about this, this recent experience you had. It starts, it starts with a property in Chillak, which is where I reside presently. So what, what happened with Chilliwack? Maybe go back to the beginning of when you acquired this property, you know, about five years ago, and then walk us through some of the, call them challenges that you've had on this, on this unit and maybe some of the other ones you've dealt with in your, in your real estate investing career.

Sounds good. Thank you so much, Richard. And hi everybody. It's great to meet with you. So great to be here and thank you for inviting me here, Richard. Yeah. So as some of you may know, I have been a real estate investor before I jump into the career of IBC or Infinite Banking concept. So five years ago I've been looking at deals around Vancouver local area. For those who live in the lower mainland of B.C. knows that it's very, very hard to find income generating properties in the city. Therefore I guess about five, six years ago I start to look at the backyard of the Lower mainland which is the Mission Absford Chilliwack area. That is a boat within, I guess within one hour's drive from you know, greater Vancouver area that you can just be an hour on a highway is, is accessible but, but the price was not as crazy at that time and the rent on the other side is not that much lower than greater Vancouver. So I've been actively looking for positive cash flow properties in the area. So this particular property that we talk about in Chilliwack was one of my star property because it has two legal suites, so it's up and down. And also the garage the previous owner has converted into a bachelor. It's not authorized, which I don't know in your country, but in this side of the country, in greater Vancouver area is, you know, it's okay. Some people, even the freezers are okay with it, some are unauthorized suite. So for that property I do have three rental suites and therefore is a very good cash positive property at that time. So I'm quite happy to find something like that. So that's what I did five years ago, looking for positive cash flow. So money out of my pocket, money coming into my pocket instead of out of my pocket. So that's how I find that deal.

And it sounds like it was, it was a great deal. And you know, five years, a lot of times, you know, when people are looking at, doing deals, especially when they're doing joint venture deals with others, often the five year time horizon is, is set and that coincides, you know, commonly with a five year mortgage renewal date. And, and so five years seems to be a good outlook where people, you know, so there's some enough things that can happen where you can look at either maybe resetting the financing on that property, maybe you're going to, you're going to sell it into the market. There's enough time for some cycle of the real estate market to happen to be able to make a decision. Five years from now are you going to exit the deal? Are you Going to move on to the next deal? Are you going to reset the deal? Are you going to keep the deal status quo? And so these are common conversations that happen I think with a lot of real estate investors and certainly with partnerships, especially in like, you know, your typical, like 50, 50 JV split partnership that we see being very common. So you not having it, you believe you have a JV partner other than your husband with this, what transpired for you at that five year kind of mark and decision to jettison that property and move on. There's a few things for that decision. But maybe walk us through what prompted it and why you made the decision to put that property up for sale recently.

Right. As all we know that exactly what you shared. Richard, real estate is not very liquid. And that's also one of the reason that jaw to me when I try to find some other vehicles of, you know, where you can have a liquid access of your money. Because as real estate investors you constantly looking at opportunities. Even though I know I have asset lying in that property, I have equity lying in there, but it's not liquid. So this five years, I know that when, whenever I invest in something, I know that I have to keep it for, I have a benchmark in my mind that I have to keep it for five years just because all those transfer, tax, all those, you know, realtor fees and all that. So you know that it's not, it's not, it's not something that you can just move around very easily. So I knew that I have to keep it for at least a certain period of time. So five years was something I had it original in mind. I would either refinance or I will sell so then I can get my down payment, my initial investment money comes out so I can move on to other opportunities. So that's one of the things I have in mind. And five years was a long time. There's many things happened between those five years. And you know that when you are investing something that is, I mean out of town or out of your area, you have to have a power team, which means that you need to have a good realtor, you have have to have a good property manager, you have to have a trades people that are willing to travel that far or you have to get some connections locally. You know, the trades people that works in Chilliwacks are quite different from the trades people working Burnaby. So.

And they don't really want to travel back and forth all that frequently.

Exactly, exactly. And if there is something happening, I know even though I say it's within one hour travel but literally that goes almost the whole day. Right. If you have to deal with something, you have to go over there and come back. It's a very time consuming. So you need to have a good power team. So within the five years when I purchase this property, I have my great power team that can help me with. But within this five years, you know, things change, people come, people go. So in the transit, within the five years I have to change my power team which is very important. My property manager. So that gave me a lot of stress because I have to re interview a different, you know, team to help me to manage this property. And it does have issues when you have multiple tenants leaving you on property. Right. You will have the garage share issue, the parking issue, who's parking at where and the noise issue. Right. And, and unfortunately in, you know I encounter with the drug dealing issue which is very, very challenging. So I also develop a power team. I can shout out to this. They may not hear it is Canadian tenancy inspection team. So I got that from landlord bc so they are very expert. They're a group of retired policemen. So they have been my power team in terms of dealing with drug issue. Because for me as a Chinese lady to encounter someone dealing with that is very intimidating to me but maybe not to them.

I love that you didn't need or think that you needed a power team in that particular area. But the problems arose, you looked for the solution, you found a great solution and you added to your team which is great. Good to know that a service like that exists again. Shadow. Absolutely. I would love to have some ex police officers come and help me out with tenant issues from time to time. Granted I don't have to deal with a lot of those too much anymore. But I've certainly had a few of my stories from the, from my past days of yore. I'll call them and so it's really interesting and now that what that, what comes up with that is you get a complaint from a neighbor or from another tenant that's in the property, it creates animosity. People want to leave, they want to break leases, there's all number of different things that happen and you're. You end up taking those phone calls or getting those messages and whatever else you're doing. You know, you've got kids, you've got a life, you've got other properties, you're trying to run a business. It really takes you out of mentally out of the game because there's this problem that you kind of need to tackle and solve. And so what, what happens with that is there's a level of chaos that's created and there's some, there's some feelings. So maybe just share for our listeners. What, what some of the feelings that come up for you when you, you know, in the past when you would receive that text message or that phone call or that email that's like, oh yeah, there's a drug problem or there's, you know, or just, just some of that stuff that keeps happening. How does it, how does it show up for you in your life and like, what is the conversation you and your husband have when these things transpire? I'm curious just to hear your experience.

Oh yeah. So I know that when I first hear Jason talking about the infinite banking concept, one thing that stood out to me is called stress free. And then that resonated with me because as much as this property is very passive, it generates a lot of passive income. And passive appreciation to me is still very active saying that you do have to pick up that call, you do have to receive that unfortunate news from your power team, even though someone else may be picking up that midnight call for you, which you pay money for them, you share your profit with them, which I think they deserve it. But, but at the end of the day, you are still having the liability, right? You are still the one that have to make the judgment call. You're the one have to say, do I sign that check to make that, you know, that issue to be solved.

So. So as much as to make the problem go away. I like that.

Yeah, so. But it's active because it is in your mind. You just cannot get out of your mind. So sometimes I say the best property I have is a property that I can forget about. And at the tax season, I just need to search for that property manager's email and then I'll pull out that statement. That's the best property. But how many properties do you have like that, right? I wouldn't say out of all my portfolios, I don't have that many are like that. Maybe it is for this year, but definitely not, not next year. It will eventually come back. Yeah, so. So I would say it's not passive at you have to active. You have to put part of your brain actively taking care of it, actively thinking about it.

Makes makes sense now when you, you know. So okay, lead us up to most recently you made the decision to put the property up for sale. And some of that was some of these challenges you've been dealing with and the buildup of those things over that five year period. But there was other aspects to it. You mentioned liquidity was an issue. There was, there's a lot of equity tied up in that property now. So you're liberate that equity. Only two ways to liberate equity in a piece of real estate. You got to sell the real estate or you got to refinance it. So those are the only two options you have. Now in this, in this option you chose to go the sailor route. And I'm curious.

How much of that was relevant to the way the market was moving and that, you know, there's been a, it's been a huge rise. I mean Chilliwack's been one of the fastest growing communities in the, in the country for the last, you know, kind of two, three years. So there's been roughly a, you know, a doubling of home values in this area over that five year time frame. So from the point that you purchased to kind of where we're at, roughly speaking today in Q2 of 2022 and there's been, there's been about a doubling overall in this market. So you know, I'm sure that had a relevance to your decision to exit. And were you concerned about where the market was going? Did you think that you were going to start to see a backslide in values and that that's what prompted the sale? So maybe speak to who's listening about that a little.

Yeah, that's, that's relevant. So that's within my consideration. You know me as one of the newest team member at Ascendant Financial and knowing what I know now, I always wanted to have a better way to flow my cash in terms of purchasing properties. So I have that in mind. If I know what I know today, I would flow my money differently in terms of the down payment or in terms of the funds and how I translate. So I always have that idea that I wanted to liquidate some cash so that I can allocate into my IBC policies. So that's what. What at the back of my. That's main idea of that. Now the other thing is which property should I tackle in terms of the to liquidate. So Chilliwack pop in mind, just like what you shared, we see a big jump into equity in the last couple years just because one of the factors is because Covid people start moving out of the country. So we see a big increase percentage wise and volume wise in Freezer Valley, which is about two hours away from the local Greater Vancouver area compared with downtown Vancouver. Right. So downtown Vancouver see a slight dip during the COVID time. But then the outskirts like Maple Ridge Mission expert Kiddiwag has been a great increase. Exactly. Compared with the rest of the lower mainland. So I do want to capture that. And as the COVID restrictions start to ease, we see that the price is already kind of slowly, slowly to, you know, set out a bit. Not consider the recent interest rate factors. But um, I feel like that might be a good property for me to tackle. Is also one of the furthest away property from my house. Um, and yeah, in terms of how I plan for my own family. Um, so I, I, I, I decide to choose the chill at property to, to be the one that liquidate and to shuffle that equity that I already have and already gained into my IBC policy.

Nice. Nice. So the deal is on the table and is it officially closed now or are you approach date?

I already closed as of last week.

Closed as a last week. Now you were telling me something before we went live about another challenge that showed up for you on closing date. Walk me through that because anyone who's a real estate investor will appreciate what you share with me. And I gave me a good laugh because I'm like, yep, that sounds about right. Just when you think it's all said and over, you know, it's all sunshine and rainbows and then it starts pouring rain. In this case, not rain, but pouring something else. So what transpired?

So on the, on the completion day we receive an email from the property manager. Now the property manager, he was my property manager. And when the other investor purchased this property, they inherited my my current property manager. So, so we received this email mutual to both parties. So the seller's party and the buyer's party informing that there is a water blowout on the completion date that you think that I'm about to pick up the check. There's something else you need to tackle with telling about real estate chaos.

Was it where the water, the main water comes in or is it just at one of the taps, one of the faucets or something in the property?

So we're still in the stage of investigation. But it's a water line within the wall, so there's no way that the tenant would notice. And then the leak has been a slow leak, so, so for a couple of days and the tenant did not realize until that day of completion. So apparently it was my side of responsibility to take care of it. But it's right on the completion date, right when I was about to receive that check for my IBC policies. So that gave me a lot of nervous. Right. So. And then as you know that Vancouver has been raining a lot. So we couldn't really tell, you know, because some leak might be going inside of the house, some leak goes outside, but because it's all wet. So, you know, nobody noticed that until it's a little bit late. So I'm still dealing with that. But the good part is that the deal has closed. We're just dealing with insurance company and then the buyer and the property manager. But it's just another stress that I have to put down everything and then start to pick up those calls and make those arrangements.

Awesome. Well, I'm, I'm excited for you and that you've made this step and that you were able to, you know, again, one of the really positive takeaways is, and this is not the case for everyone, many people have experienced this in the last five years, especially in the, you know, Greater Toronto area, in the Fraser Valley area. I think less so where I'm from in Alberta. Have we seen that? Although right now, you know, all the talk is that the, you know, Alberta is going to lead gdp, you know, in the foreseeable future here. In fact, I did see a little graph and I don't know how accurate the graph was but it's, it indicated that the, the GDP of Alberta was expected to be greater than most countries over the, over the upcoming, you know, year or two. So you know, who knows, maybe we'll see some, some positivity in the real estate space there. I know I, I have a property or two I wouldn't mind exiting out of once the values start to climb back up again. But you know, you were able to get that, that really accelerated growth in a short time frame which is not normal. You know, a typical long term buying hold. Yeah, we have that long term trend of appreciation that happens over a 40 year period and there's dips and cycles but you know, there's ideally this, this linear line that progresses forward over time. But you were able to get one of those, those spikes and so you kind of had a big win there despite all the challenges you had to deal with. And now you're in, you mentioned you're in underwriting, you've got another policy that you're, you've put forward in underwriting. And so you've already got earmarked to funnel some of this new money through a new policy which is very exciting. And we're seeing more and more of that with, especially with real estate investors, there's a lot of people who are, have been able to harvest and take profits from a very successful real estate season again in two or you know, two primary areas of the country and certainly in other little bubbles around the country. And so that's really exciting. So you get to now shift from some of the stresses and the problems and the challenges of that piece of real estate and you get to move it into now stable, slow, steady, stable, accessible cash values of a new insurance contract that you own and control and you're able to access and accumulate your opportunity fund in a place where now it's always working for you so that when the next deal shows up, you can liberate capital with no questions asked and go and tackle that deal as you see fit. So I'm pretty excited about that. And you know, knowing, I like what you said is that knowing what you now know today versus when you started in your foray down in the real estate track, you had, you had this information, then you would have done things differently and now you have an opportunity to kind of almost hit the reset button and start implementing, you know, the things that you've learned in the last number of years now as an authorized infinite banking practitioner. So I, I congratulate you. I think it's fantastic. I too would do many things differently with the information I know today. And I suspect anyone that's, that's watching, you know, if you could go back, you know, 10 or 20 years ago and you could take this knowledge that you've accumulated over that time, the life experience, the hard knocks, the, the face smashing feeling against the brick wall that comes up of over a couple of decades of life and you could insert that into younger, younger you, you would probably have a few edges on the decisions that you would make, you know, on a go forward basis. So we can't go back in time. As our friend Vern says, you can't hop in the DeLorean and, and go back in time. But what you can do is you can, you can take in as much information as you can, you can make good decisions moving forward. And you know, I'm really proud of you for making this decision. I think it's fantastic. And you, you, you, you always is great to take a win. And interestingly enough, the timing that you put this property up and got your sale price, you really were able to capture the, the largest component of that market because, you know, here we are, we're in, we're in the end, near the end of May and we're already starting to see a shift in values, especially on the single family home side in this marketplace of Chilliwack. In fact, I was chatting with a realtor here just the other day. He's actually been having to go back to a number of his clients and they're looking at, you know, pulling down properties and relisting them at lower prices. And in some of those properties, you know, he said that we're seeing a 10, even 15, 20% drop in values. You know, there's a couple that he's had to relist now, you know, with $200,000 less home price. You know, and I actually had an appraiser I spoke with recently as well, who had indicated the same since about kind of the beginning of March, right, right after your, your property, you know, you're able to get your deal locked up. They have been seeing, you know, in the single family home, detached home side, give or take about it, about a 10 to 15% drop overall. Townhouses is kind of hovering in a 4 to 5% range in, in a drop. And then in the apartment style, it seems to be fairly consistent level at this point. So the interest rate adjustment is a big part of that. And, and so people, people are having a little bit of fear in the marketplace. But the other thing that's happening is more people are taking that similar idea that you did. It's like, look, I've been in town here for five years or I've owned my property for five to 10 years. I'm gonna make out like a bandit. I'm just gonna exit and I'm gonna go take my money and go buy a place. And I don't know, wherever some small town, you know, where, wherever, where I can, I can make my dollar stretch, I can have a property that's paid for, I can live a good life and I'll just harvest my profits and I'll move on. They're going to give up the joy of living in a beautiful place like Chilliwack, which is why I moved here, because it's absolutely breathtaking and loving and love it, love it here. But, but they're, they're, they're able to take that exit. And so we're also starting to see more properties show up on the market. So when now you have more properties available, there's more competition between buyers. The buyers that were in the market are starting to shift out because the pricing has gone up so high. They're being priced out in the market. And then additionally with the interest rate rise that's going to also impact their buying power and decisions and the, and the, the final price point of, of buying potential. So, you know, we're seeing a bit of a, you know, the market demand is, is kind of coming down to more of a stabilized level and, you know, who knows where that trend's going to be. I don't want to make a prediction about the real estate market. Not, not really our role. But I'm, I'm just, it's just interesting. We're talking about this deal of yours and all the timing that's happening. Me, me living here, you know, I'm seeing some of that myself. So, I mean, even on the property that I purchased here in Chilliwack, which, you know, really was not that long ago, I mean, seven, eight months ago, we've seen a huge rise in values just in that short time. And, and really to an unsustainable degree. You know, I, I know when I was looking at buying here, I was, I was concerned about what direction the market was going to go. And I'm kind of like, well, really, how much more can it go? I mean. Yeah, how much more does it have to give? So, but that's just personal opinion, personal perspective. And I think it's important that as you're, you're thinking about again, a lot of our community group, a lot of people who watch our content. There's a wide contingent of real estate investors, and I know people out in the Ontario space that are also facing similar challenges. Had a great conversation with a lady who is a real estate coach, real estate investor. She has lots of properties. She's exiting out of a whole portfolio that she has in another province. And she's also trimming down her portfolio. She's cleaning house a little bit, hitting the reset button so that she can be well capitalized and then wait for the next market opportunity. She's kind of thinking, yeah, it's time for me to exit, pull out some of my profits, reduce. You know, I used to be a member of the RAIN group and they would say, you want to, you want to chop out some of the dogs in your portfolio a little bit. Right. You want to cut the lease those. And, and so there's people that are doing that right now that'll create opportunity for new people to have access to some properties.

Yeah.

But you know, for, for a lot of them, you know, you're going to now sit and wait and try to figure out, okay, where's the next place, next market that I want to jump into and I love the fact that you're going to be well capitalized and you're going to be well capitalized where you can multitask money, you can have money working in a policy that you design that's going to be well structured, a lot of flexibility and you're going to be able to, you know, make, make a jump on something new. Here's something that's really interesting. We were talking about your capital gain that you're going to have in a little bit. We won't get a huge amount of detail there, but it's, it's going to be heavy because it's, you know, property virtually doubled in a five year period, give or take. So the capital gain is going to be, you know, hefty on that. Now your corporation is going to be dealing with that. But because you're setting up the policy, you may be, you'll be able to take kind of some of the equivalent value of what before you have to pay the capital gain that the tax on that, which won't be until, you know, about a year from now really. So you're able to work with some of that capital, harness some of that potential inside of a policy so that that money is always growing. And because that policy is now going to be accumulating for the rest of your life and there's also a death benefit attached to it, you're going to effectively, you know, it's not like you're directly getting back, you know, the tax on that capital gain, but because you're able to harness the potential of the money and that will continue to grow over time, you'll have the equivalent value if not more than what that capital gain is going to be basically returned to your family either through policy loans or through the eventual death of some member of the family, which we, we can all agree will happen. And the fact that you have the ability to control that and, and, and that's kind of like a little stick it to the government a little bit thing kind of just like, just to a degree, you know, and I don't know, that makes me kind of happy. You know, I think that's pretty good because I'm all about the, the individual creating the success that they deserve and keeping as much of their money in their own hard earned pockets as they can, much like you are. So any, any additional thoughts that you have about this deal that we talked about that you'd like to share or in your decision making process as you went about making this transition happen in the, in the recent months?

Yeah, the other thing that I wanted to share is with the capital gain in place and with the idea of I'm, you know, I can't frontload all my, you know, gain from this property sale into a policy within one year, within one lump sum. So I also have this creative idea of, you know, for some real estate investors who's starting, they might need a little bit help with their down payment. So it's nice to do some other creative ways of selling your property if you wanted to get a bigger sale price. But you can give something like you know, seller financing or something about. You can give me one big chunk of money this year and then a, one big chunk of money the next year or two years later. So he helps the buyer because they don't have to come up with a huge amount of money. It will help them with a down payment or some renovation, you know, fund ahead of time. But for me is really a delay in my capital gain capture and also because I know what I know I'm going to use that as different stage of the lump sum, that shuffle in my IBC policies. So it's a win win situation. So I mean for advanced real estate investors out there or IBC practitioners or IBC policyholders, that's also something that you.

Can consider the old vendor take back mortgage and seller financing. A lot of people hear that terminology. We, we certainly know a lot of people who are very familiar with it. It's, it can be tricky to get the buyer's lender to agree to the deal sometimes of course that, you know, for some odd reason lenders like to kill deals but really powerful strategy. So thank you for sharing that because again your, your ability to spread, you know, potentially spread that capital gain over a number of years can have a big shift in your tax consequence. And for a lot of times when it, when it's successful, when you can put a deal together like that, it can also increase your, your sale price because there's again it's, there's an advantage to both individuals, both parties. That's the beauty of free people coming to agreement with one another through, through the power of contracts, which I'm a big fan of, mostly a big fan of in mutual insurance because that is voluntary free people entering into contract with a well designed, well managed pool for the benefit of all parties. And you know, they, they pay dividends to those people and as a share of their surplus and they do it really well and they've done it for a long period of time. So that's also really good Anyway, this, this was awesome. Gingen, I really appreciate you taking the time to walk us through this recent real estate deal of yours, share a little bit about your experience in real estate, also share some of the challenges that you've experienced and that'll resonate with a lot of our listeners. And additionally, I think it'll also be very beneficial for people to understand how, how what we knew at a, at a past point in life to what we know today can change and adjust. And it should change and adjust how we think about the things that we're going to do going forward. And you've been, you know, you've made a very directive decision that your focus is to get as much capital or equity as you have and choose where you want to store it. Where's the location of the equity? So you're shifting location of equity from being in a property in Chilliwack to location of the equity being an insurance contract that was guaranteed to grow and accumulate daily cash values while giving you access to capital and nice big giant tax free wrapper of protection around the whole deal. So that's pretty powerful.

Absolutely. Thank you so much. And I also think that, you know, as a real estate investor, IBC policies does not take away any of your options or any of your future purchases. You can still do real estate is a great combination that's just like what you just shared rich that we have this big fat, ever growing capital that within stored within our banking system. I can still take that to do other real estate investing if I want. So never saying that, you know, I'm choosing IBC or real estate but it's a great combination because really is where we store our money and where we flow our money with any kind of investment that we're doing.

Love it. Awesome. Well, thanks for joining me today, Jingen. This was great. And for you watching, thank you for tuning in. And when you're watching the YouTube video that will come live eventually, make sure you check out the next video because there's some more great content that's boom just popped up on the screen. All right, have a great rest of your day.

Bye.