Becoming Your Own Banker | Real Estate Resilience

In this video you're going to see.

An incredible presentation I did for a.

Real estate conference, the Real Estate Resilience Summit.

It was held for Canadians.

There's people attending from all over the country and an unbelievable lineup of speakers.

Now, you'll see my session coming up, but you can check out all of.

The other incredible sessions by going and getting your ticket and accessing all the recordings.

So you can head on over to the link in the description down below and you can go ahead and feel free to get a ticket if you.

Want to learn more about how to invest in real estate and the many.

Different ways that you can do that.

Joining us from Chilliwack, British Columbia, we have Richard Canfield. So he's an infinite banking practitioner, coach, author, podcast business owner, super nice guy, lives in Chillwack, British Columbia. He's the best selling author of Canadian Guide to Wealth Building Without Risk. He became a landlord at age 12, was a licensed realtor in Edmonton, Alberta for 10 years. He now teaches Canadians how to protect and preserve wealth while building an opportunity fund for deals. Very glad to have him with us today. So Richard, welcome to the show.

I'm excited to be here. Corey, thanks for putting on an amazing event. I only got chunk of Irwin's presentation and although it was maybe doom and gloomish, it was pragmatic to help us understand what's going on and really speaks to the format of the conference about.

Resilience and the types of things that people are going to be learning here today. And hopefully with this session they'll learn some things as well around how you can become more resilient in your real estate business. So whether you're new or your senior and advanced level entrepreneur around your real estate business, then I think that we'll add a lot of value today with this. And all the other sessions that are coming are really going to be fantastic. I love the theme of the event and I think it's going to be great. So I'm excited to be here with everyone today and with that in mind, I got a lot to cover so I'm just going to go ahead and jump right in if that's cool. I want to begin right here, just talking about an overview of what we're going to talk about today to give everyone an idea. There's two primary things I think you'll take away from the session today. So number one, you'll walk away with an understanding to some degree at least. What is Infinite Banking or IBC as referred? What is the Infinite Banking concept? And number Two, as a real estate investor, why should you be doing this? Or how can this add a complement to everything that you're already doing in your real estate practice? This is really the key takeaway I'm hoping for everyone to get from this session.

Here's a picture of this book. Becoming your own banker from one of my clients actually at the Great Wall of China. It's been around the world. And we're going to talk a little bit about the popularity of the book and how it's really starting to take hold in this day and age. I'm going to share how this concept changed my life personally and how I believe it can change yours. We're going to talk about how IBC started and we're in a rising interest rate environment right now. The same thing that caused IBC to be born, the idea to really take hold is a similar environment that we're facing today. I'm going to talk about real estate and IBC is really two sides of the same coin and how that can work as a long term buy and hold asset that pays you. In order to do that, we need to be reading from the same sheet of music, in other words, understanding the tool. So I'm going to have a little bit of a video that we'll play to give everyone an understanding as what is the tool that we use for implementing this process in your life. And then I'm going to do a bit of a case study. We're going to walk through some recent individuals. I'm working with a couple of gentlemen, they're business partners and they're actively acquiring real estate, in fact, 22 doors in the last eight months. And we're going to talk about how they're implementing this strategy in their life as part of everything else that they're doing with their real estate practice. And then hopefully we'll have a little bit of time for questions. Developing a resilience mindset. I mean, again, the theme of this program is fantastic. So I wrote down a few things that come up for me when I think about resilience. And specifically I attended a Facebook live that Elizabeth and Corey did and they talked about advancing despite adversity. I really love the way that they specified that. And that's really going to be one of the takeaways I believe people will get from this conference. Having protection on your assets and your and the things that you're building and growing. So stability. You know, Irwin mentioned a lot of.

Things that are happening.

Changes in the markets, changes with interest rates. There's A lot of upheaval going on right now that could rock your stability on what you're building. So recognizing that you want to build, you know, you can't build a skyscraper on a weak foundation. You shouldn't be building your real estate investment career on that either. So you want to make sure you have a solid footing and a solid foundation on everything that you're trying to build on top of it for your financial life. This is one of the things that IBC will come in and help augment for you. Adaptability, to me is very important, being able to make changes and pivot quickly. One of the ways that you do that is by having access to capital, access to liquidity on the things that you need to do, the use and liquidity of your own money, use and liquidity of money that you can tap into when it comes to funding and hunting deals. So I think these are really important things that will help you be more resilient as you go and acquire real estate. I'm with Ascendant Financial course, amazing company. We're all over Canada. We operate in pretty much every province and we've been helping people do this for the last basically 15 years. And we have a ton of fun doing it. So here's my partner Jason and I, we have a podcast, Wealth Without Bay Street. Feel free to check us out. We're on every major podcast platform, of course, and we do have a great gift for you guys. So you can, you know, make sure to stop by our booth or you can go to wealthwithoutbaystreet.com.

And you can.

Go ahead and claim your bonuses right there. We have a copy of our book, recently launched best selling book, Canadians Guide to Wealth Building Without Risk. We're getting a lot of great feedback about that and we certainly recommend that you check out our YouTube channel. We do put our podcast on YouTube. As you can tell, I'm a bit of a hand talker, so you might get a little bit more engagement checking us out there. And we have a lot of fun client interviews. We have a client series. So if you go to wealthbaystreet.com clientseries, you can hear people who have stories maybe similar to yours, many of which are real estate investors themselves. Whether they've got, you know, two doors, three doors, or they have 50 doors. We've had some really amazing people on the program. Why you decided to get into real estate. What, what were some of the things that spoke up to you and what made you decide this was the path you wanted to go about? Building your wealth.

Honestly, I mean I was blessed. I was a tradesman like yourself. I mean I had a lot of money in the oil sands. I was an instrumentation tech. I was blowing it faster than I could spend it and thankfully someone handed me the dreaded purple book, you know, rich dad, poor dad. And that kind of got the wheels, wheels flowing from there. Before that I didn't really think about it. But you know, I have to thank you especially for this and for the book, for the gift of the book to me because this whole concept, up until I saw your interview a couple months ago, I had no idea.

Here are some of the things that I hear from people, things that myself included and from the clients that we work with and real estate investors all over. They wanted to create cash flow. They want to be able to build equity. Passive income supporting your retirement. I personally think retirement is a swear word. I like passive income. I think retirement's, you know, that's to me is just the big sleep and you know, you want to retire for the evening. It means you're going to go to bed. Well, if you're going to retirement to me means you're going to retire from life a little bit. And some of the statistics around retirement aren't very positive because people tend to die a little bit quicker. So we want people to live a long time, enjoy their life and be able to do the things they want to do. And that's really the focus here. Having more control is a big piece of it. And the capacity for leverage, that's one of the benefits of real estate. Of course, it's a great long term wealth tool. Everyone's aware of that. They want to have proven stable and consistent things. Now we're stepping into uncertain times so there may, you may not get as much of that over the next period of time, similar to what Irwin was sharing in his presentation. But if you create stability or you can create consistency by having good education, you know, picking the right kind of deals and then understanding how to protect yourself, the market changes, that'll have a lot of power for you. A lot of people also want to be able to create a legacy with, for their family by building a real estate portfolio. Well, the infinite banking concept and all the things we just mentioned about real estate, pretty much the same. It's kind of like, you know, you got a pair of gloves, the pair of gloves look the same, they're not two different mismatched gloves and you put them both on and of course you've got a, you've got a Good pair of gloves there. Well, matching IBC and the real estate game together is really like having a pair of gloves that are designed to fit you for what your specific needs are. I want to talk a little bit about this incredible man who changed my life. Now think for a moment to yourself about someone who's been an incredible mentor to you, someone that's inspired you at this point in time in your life. Maybe it was a school teacher, a pastor, a friend. Maybe it's an actual coach that you've, you've engaged with. Maybe it was Tony Robbins, whatever that is. Think of someone who's made a huge impact on your life, an unshakable impact. That's what Nelson Nash did for me. So Nelson Nash, he was the creator of this amazing book, Becoming youg Own Banker. And this book came into my life in the spring of 2009. Now this book has sold over 500,000 copies worldwide. It's been translated in a few other languages. In fact, one of my teammates right now is translating it into Mandarin. So we're really excited about that. I had the opportunity that when this book came into my life, I was actively involved as a realtor in the Edmonton marketplace. And it really shocked me because I really realized this was the thing I'd been looking for my whole life. You know, many years ago, I got a book, an amortization book. And the amortization book, it just had charts. You flip and you could pick a number and you could basically see the payment and the interest and you could basically calculate the amortization of a. Of any given number. In this book, there was no words in it. It was just charts and numbers. So, yeah, I'm a little bit weird, I get it. But the key thing, I was fascinated about mortgages. And I remember the very first mortgages I got, it was 1999. And I remember looking at the deal, interest rates had just dropped. There was a huge drop. And we had got a rate on this mortgage in 1999 for 6.97%. And my parents and I, we did this deal together. We were high fiving and bumping chest. It's like, wow, look at this amazing deal. Shoot forward to today. We're starting to see our interest rates, you know, circle back to this level. So it's kind of interesting to see things come a bit full circle. But I was fascinating by the banking process and how much money banks made and what they were making off of us. And if only there was a way I could turn the tables around. And I didn't really know how. I learned later about things like private lending, using registered accounts and so on. Lending on mortgages, that was one way.

That you can do it.

But when I read Nelson's book it really shook me. It changed everything and I realized this was the thing I'd been looking for in my whole life. So I met Nelson officially in February of 2012. Amazing individual. He just, he really, he poured into me as he's done with so many people. His book has really changed the lives of hundreds of thousands of people. And of course I feel blessed to have known him and to have him as a mentor of mine. He was one of the most inspiring individuals that I've ever. I've ever. I hear about that constantly. Now we have a documentary film that we commissioned on Nelson. It's had over 235,000 views at this time.

It's available on YouTube but you can.

Go to Nelson Nash film.com and you can watch it. It's only one hour long.

It's.

And I hear constantly about how that film is starting to change people's mindset and really give them a new way of thinking about life and their financial life. It's an incredible thing. Now Nelson, unfortunately he left us. He graduated in March 27th of 2019. He would have said he was 88 revolutions around the sun and I remember receiving one of my last phone call with Nelson. He was about to go in for an operation and he was pretty sure he wasn't going to come out. He knew that what was coming so he was making his peace with all of that. But he was working right up until the very last day calling people, connecting people from the hospital bed. When Nelson passed away he had built up over 49 life insurance policies or indestructible assets. Kind of like having 49 properties that kept paying you. In his life. When he graduated there were 17 tax free death benefit checks paid out to family members and other people. There was a couple of organizations that own policies on Nelson. 17 tax free death benefit checks. Just think about that for a moment. He had 49 assets and 17 tax free checks showed up which means and at the time he had given a few of those away already. But there are still 28 assets in force that are in place today even though Nelson's been gone for three years that his family owns and controls. Some of those assets, kind of like a piece of real estate are actually even on ex business partners. People that Nelson didn't even see socially for, for well over two decades before he passed away. Those assets. Those 28 assets would be like 28 pieces of real estate that have guaranteed appreciation to them in an uncertain market. And they're constantly accumulating. And whatever is accumulating is liquid for Nelson's family to access to go do all the things in life that they are already doing. That's part of the power of putting this to work in your life. I want to talk to you about what happened. How did this whole idea come about? Well, we talk about leverage in real estate all the time, but nobody talks about what happens when the lever goes the opposite direction. That happened for Nelson. Nelson was big in the real estate business. He was big in development. He was a forester by trade. He understood land, land development, timberland, that sort of thing. And so he was involved in a couple large development projects. And in 1981, 41 years ago, people may remember, interest rates took a bit of a spike. Typically rates were hovering around 10% at that time. And they jumped up for Nelson overnight to 21 and a half percent. And that was prime rate. Now Nelson, he had several projects going on. He had five hundred thousand dollar line of credit, open line of credit. When the interest rate spiked, he wasn't prime. He was, he was prime and a half. So he was paying 23 interest on $500,000 open line of credit. Just put yourself in that position for a moment today. How would that make you feel? Pretty sure it wouldn't. It would kind of suck. Not a little bit, like probably a lot. Then what happened additionally is Nelson had a partner in one of their land development projects. It was a big name lawyer in the town of Birmingham, Alabama. And that guy went bankrupt on him from some other deals. While Nelson and his other partners in the land development project, they had to eat that guy's share of the deal. Nelson's share of the deal was 300 grand. So now you got 500,000 plus 300, you got $800,000 in 1981 at 23% interest. Not a very good recipe. That's what we mean when the lever goes their direction. So in today's dollars, if we, you know, I put this into an inflation calculator based on historical inflation in the US that would be the equivalent of $2.6 million in today's dollars in, in the United States dollar, not Canadian dollars. So add it, make it 3 million in Canadian dollars if you really want. That's how much money he owed effectively. And to put it into perspective now, if that was you, I would imagine that would have a pretty big impact on your financial life. So Nelson had his back up against the wall. There were several other things that happened right at that time. A granddaughter was born. She was born with a cancer they didn't think she would survive. Silver prices went up and people were robbing houses, breaking into houses and stealing all the silverware. Nelson's house got broken into and they trashed the place. Then one of his brothers died of a heart attack much earlier than expected. That's usually how it happens. So he was just getting beat up, beat up, beat up, beat up by a whole bunch of things in 1981 over an 18 month period of time. And it really, really was the kind of thing that would cripple most people. Nelson, through a lot of prayer and a lot of perseverance, he realized he had the solution to his problem. He could get access to money from three different life insurance companies at 6%, 8% and 9% at that time. The problem was Nelson hadn't put enough capital in there to build up the reservoir. He needed to access money and fire his snake, the snakes and dragons, as he called them, the bankers in his life. So he knew he had to reevaluate how money was flowing through his life and make dramatic changes so that he could increase his own capital warehouse so that he could control the function of banking as it related to his personal needs. That is what I think real estate resilience is all about, being adaptable so you can make a change when the market shifts and you could do it quick, fast, and be in a position where you can weather the storm effectively much better than other people.

Nelson took 13 years to get rid of those bankers. And from that point on, he never saw another bank for him and his wife Mary, for almost 30 years. His entire family, if they choose to, are perpetually outside of the banking system as you and I know it today. They finance cars, they finance airplanes, they finance houses and mortgages, all within the confines of the family system. And the money is kept in the family. Nelson said it's a peaceful, stress free way of life when you get the banks out of it. What is the infinite banking concept? It's really not about investing, it's about how one finances the things of life, which can include investments. I want to read a little piece out of Nelson's book from page 11 of Nelson's book. One of the things that Nelson says here is that banking is the most important business in the world. Without it all, business comes to a screeching halt Whenever a business transaction takes place. Money must flow from one party to another in a relatively short period of time. Otherwise nothing happens. That flow of money must come from a supply source or a reservoir. This is the essence of what the banking business is all about. Someone or some organization has control over a pool of money. And that money can and must flow at a cost to meet some need. There is only one pool of money in the world. The fact that this pool is managed by a number of institutions, such as banks, insurance companies and corporations and individuals in various countries and denominations is incidental pool through our hands to meet our needs. But somewhere in the process, it all ends up back into the bank. It's all a matter of how much of the banking function as it relates to your needs do you control. So very powerful statement in Nelson's book and we want to enhance the level of control that you have over it. Another important thing to understand is that you finance everything that you buy. You're either using someone else's pile of money and you're going to pay the piper to do that, or you're using your pile of money and you give up the power of what your pile of money could have earned. There are no exceptions. The whole idea is to recapture the interest in the money that we're paying to third party banks over a lifetime. And additionally, we want to optimize efficiency so that your capital can do more things for you, for your lifespan and for the people you love and care about. Friend of mine, Ryan Griggs is tall fellow over here. He's an Austrian economist and he says, simply put, it's the best way to systematically accumulate and optimally deploy capital over your lifetime. So I want you to think about this. How many properties would you want if you were able to have immediate access to a large amount of the down payment you used to acquire the property? So think of every down payment you've done. Imagine you could access a huge chunk of that down payment immediately after you acquired the property. How powerful would that be? What if you had an open line of credit with no fixed or required payments and you choose when and how you make the repayments? What if you had a property where you had access to every single dollar you put into the real estate within a few years, regardless of the market condition? Whether the market was going up or down didn't matter. You didn't have to deal with tenants, toilets, termites, property managers or hurricanes. All the things that we're seeing people having to deal with these days. You didn't have a whole bunch of government overreach. So in these Days. You've got rent controls, you've got a lot of things that are putting pressures on your ability to be profitable in your real estate business. Condo board, special assessments. You didn't have to pay property taxes on it. This sounds like a pretty good piece of real estate. And what if the moment you sold that real estate, as soon as you sold it, you sold or you died, it automatically was sold for the highest appraised value in the life of you owning the real estate? That would be pretty cool. You don't even have to pay any realtor fees. This is the essence of the contract that we use to help build this infinite banking system. All these things are possible with this type of real estate. It's not a piece of real estate, it's property by way of contract. So we're using the law of contracts to create property and that's an equity that we're going to build using it. So what we're talking about is a specially designed participating whole life contract where you have ownership very similar to how you have ownership in a piece of property. It has daily uninterrupted accumulation in it. This is something that we see all the time. I experience all the time. In fact, I just look a look at some of my policies the other day and turns out I went to bed last night, this morning, there's more cash in there than when I went to sleep. It's pretty fun actually. It has contractual access to capital on demand, a whole bunch of tax free benefits. And unlike a piece of real estate that we own, where we're getting into uncertain times right now, it has forced appreciation. It will go up each and every day and each and every year. I'm going to use a video to help explain that. One of the most important things to me who I believe in the power of the individual is that you make the rules, you control the circumstances of this. That's really important. And of course it can have some passive income to it, which is great too. And if you own a corporation, there are some other additional benefits for you there that I'll try to talk about, one of which is passive income tax rules. If you own your corporation, there's a real problem with passive income tax rules. As you're growing a larger and larger portfolio, the amount of tax you're going to pay on that, on that rental income and that passive income gets exceptionally high. This is an area where if you're plugging capital into this warehouse, it's exempt from those, those issues and it doesn't require any of Your time, your talent, or your energy to create it. I'm going to play a little video for you guys here in Canada.

By age 100, the cash value must equal the death benefit. Very important to understand. So at age 100, as we age and we grow, regardless of where we start, the cash value must equal the death benefit. The insurance company, who we're a co owner of is contractually obligated to make that happen. That means every single day that you age and you, you go to bed and you wake up the next day, there's more cash value than the day that you before it. It's a very, very smooth, simple and easy way to have constant growth on your money. So let's take a look at one of these contracts here. You'll see we have a very basic horizontal and vertical axis. We're going to start with a foundation on our policy. We'll call this the base policy. And just to keep our example simple, let's assume that we have a $100,000 whole life insurance contract. That's the starting death benefit. The next thing that happens is of course we need to have a premium that goes with this. So for the purpose of our example, we're going to assume that the owner of this contract said, hey, I want to contribute $10,000 a year into my personal banking system using a whole life insurance insurance policy. So that is the premium that the owner decided they wanted to contribute and based on their age, they get a hundred thousand dollars a whole life for that amount. Just to keep our numbers very simple. Now the key thing is that that premium is broken down with two components. The first component is what's called the base premium or the minimum that's required to keep that policy in force. The second component is what we refer to as the paid up additions rider or the PUA for short. This part is flexible. It's an optional top up payment that allows you to turbocharge the accumulation of your whole life insurance values. So for the sake of our little example, let's assume that the minimum premium in our example is $4,000 and the flexible premium is $6,000. Now, everyone's circumstance will be different. Every policy design will have unique features to it.

We're just trying to keep it very.

Simple for the purpose of our example. Now, when the policy owner pays that very First Premium, the $4,000 is the required amount to service that very first foundational level of insurance. The flexible part does something really cool. It comes all the way up here. And what it does is it purchases what's referred to as a paid up additional block of insurance. So let's assume our $6,000. To keep our math simple, it buys us $25,000 worth of new paid up additional death benefit on our contract. So it's increased the total death benefit.

We started with 100,000.

Now right after that policy is issued and we funded that full premium that we want wanted to put in, we've accumulated new death benefit of 25,000. The new total death benefit is 125,000. Here's the wonderful thing. Because we've increased the death benefit, we've also increased the requirement for the insurance company to increase our cash value. Because the cash value must equal the death benefit by age 100. So they are required to continually growing the cash value, which is our asset each and every day that we age closer to age 100. Now, another really cool thing happens after this. At the end of the first year, the insurance company get together and they gather around and they find out, hey.

How did we do on all of.

Our policies this year? And then they distribute their divisible surplus or their profits with all the owners. That's what's called a dividend. Now that dividend that you receive, and for the sake of our example, we'll keep it nice and simple, let's just say it was $1,000. Well, it goes in and it also buys one of these paid up addition blocks and that adds to the contract as well. So let's say that it was 10,000. So now in the very first year, partly because of what we did and a little bit because of what the insurance company did, we have now accumulated death benefit of an extra 35,000 thousand dollars. So we have a new death benefit of 135,000 and the cash must grow to equal that new number. Now this process repeats and repeats and repeats year after year and the dividends begin to increase and the paid up addition blocks increase and the cash value has to follow along with it. It's literally chasing after it. It's like the game follow the leader. The, the death benefit is a leader and the cash value is, is chasing after it. Now, as this process begins to continue over time, these events continue to stack on top of one another. And the end result is we have a wonderful growth line that is a constantly accumulating curve of cash value. So everything that's underneath this cash value line is equity. Now this is equity you own and control. It's an asset. Just like asset or value, you would have equity in a home that you, you Own. The difference is you don't have to go and ask permission to, to get access to the equity in this contract. It's as simple as filling in one piece of paper and that money can be direct deposited into your bank account. That is total and absolute control over the use and liquidity of your, your money. The beautiful thing is you're not actually using your capital, you're using the insurance company's capital that you co own. So they're lending you the money and you co own the lender. Meanwhile, your money continues to grow uninterrupted because it never leaves this wonderful system.

In my example you can see that we've got a couple of colored bars, this orangey bar in the background. This is the death benefit of a contract. You can see it's kind of going up in this first example. It kind of tapers off and then it rises up to the back. The green bar is the cash value or the equity. Now if I spin this around, you can see at age 100 those two numbers are the same. Exactly what I just said in the previous video. So we've got 1.5 million here of cash value and the death benefit, they're the same. This front bar is how much deposits we put in. So here I have a 50 year old individual, they're putting $50,000 a year. They decide how much they want to do. That's up to them. I'm showing them putting it in only for seven years. We would always recommend more than that. But just to keep our example again at a high level. What if they just contributed for seven years? Well from age 50 to age 55, that would be five years of deposits. 50,000 over five years is 250,000 deposits. And they have an asset value, value or equity of 245,000. So they have almost every single dollar that they've contributed. If I were to take that out all the way to say age 90, well they put in money for seven years, so that's 50,000 times seven years. Which means they fully put in all the money in that first seven year period. They only put in 350,000. At age 90 they have an asset value of 1.1 million. So they made $350,000 of inputs and they have 1.1 million of outputs. That's if they're alive. But if they died early or they died at that stage, it's 1.3 million. So again you have control over the use of the capital when you're alive. We're taught over our lifespan that Life insurance is about death. That's an incorrect when you do it the right way and you understand how to use the tool. Life insurance is life insurance. It's for using while you're alive. It's not for everyone else, it's for you. So that's one of the important things and the distinctions that we help people understand. By using an asset like this that you own and control, you're going to have access to all the capital you put into it on your terms. Now watch what happens if we decided to just put three more deposits in and go from year seven to year ten. If we do that, we added three deposits of 50 grand, we had a huge increase in the total cash value and death benefit of the asset. You can see how things rise dramatically here. And if we did it for 15 years and 20 years, et cetera, you can see just how much these things rise over time. So every time that you're putting financial energy into the machine, the machine is giving you back more than you put into it. It also is another way that you can help combat some of the problems that we experience with inflation. It's just another hot topic these days.

So just to give you a visual.

Understanding of how this works, the more you put in, the more you get out. You get a machine, a business that every time you inject a dollar into it, pretty soon it gives you a dollar 10, then it gives you a dollar 20, then it gives you a dollar 30. And that constantly accumulating efficiency begins to build on itself because it has a contractual element to it. So just like the diagram I showed you before, where you're buying these paid up blocks by age 100, the cash value must equal the death benefit. We're forcing the insurance company that we co own, we're a co owner of that company contractually to increase our equity, our cash value. Every single day that we take air into our lungs, it cannot be stopped. The only thing that stops it is somebody dies early. And if that happens, well, then you get the big orange bar and a tax free amount of money shows up and it solves an awful lot of problems. So we're going to talk about that in the case study that I have coming up. Here's kind of the way that everyone's doing things now for the most part knows the odd person that may be a little bit different, but I think for the most part people are doing things this way. We go and have our money, our capital, it flows into a bank, some bank that you don't own, maybe you own Stock in the bank a little bit, but for the most part you don't really own and control a whole lot of what happens there. Then we want to go and do deals, we want to fund deals, we need to fund renos, flips, we're going to buy, rental, rent, refinance and repeat. We're going to do these types of things. We need down payments constantly for the.

Things we want to acquire.

So you're always looking at dealing with someone else's money. OPM and we've been taught a lot in real estate that that's how you.

Can create a lot of obviously leverage.

That's how you can do more because you can access other people's money. But you always have to demonstrate that you have reasonable ability to pay for that borrowed money. Result of that is you're jumping through a whole bunch of hoops. Whether it's an A lenders hoops, a B lenders hoops or a private lender soups, you got to jump through something in order to access their big pile of money. Because your pile of money isn't big enough. So this is a common problem. So what we want to focus on is helping to augment by controlling the flow of your, your capital, augment the flow of your own warehouse of money so that you can reduce your reliance on everyone else's. So when a deal shows up and a bank doesn't want to lend you the capital, you already are ready to go and rock and roll and get the deal that matters. Because you've done your numbers, you got your Performa and you know that this deal is going to be smoking awesome. The cash flow, the capital gains, the things that you're going to acquire. This is the hope that you get using the old way of doing things. The new way of doing things is that you're going to start moving slowly adjusting how your capital flow is taking place.

You're going to go and get a.

Well structured, custom designed participating whole life contract, a safe warehouse where you can build capital. Because you are now a co owner. You are participating co owner in the life company. You co own the lender and they as the lender, you know what you can save money over in an insurance company just like you can in a bank. And you could borrow money over an insurance company just like a Canada bank. The difference is if you're borrowing from the insurance company and you co own them, there's no restrictions on it. It's money on demand at your discretion and you have complete and total control and access over getting the Capital and the repayment stream of the capital, which is very important for the types of deals that you might do. And I'm going to walk you through an example of that in a moment. The same cash flow and capital gains is the same. If we bought the exact same properties the old way and we bought the exact same properties the new way, you still get all the same benefits, but now you get additional benefits. One of those is a tax free windfall. At some point in time, I think we can all agree we're not going to be here anymore. And when that happens, you know, there's two things that are known. There's death and there's taxes. But if you know that death is going to happen, why aren't you planning for it? If you plan for it using this method, you can optimize more capital under your control and you can keep more of that lifelong earned capital out of the hands of the Canadian government and give it to the people you love and care about most. It's a way to multitask money in a very efficient format.

The reality is you're going to do a combination of these things. You're going to have opm, the other piles of money, and you're going to have OPM from the insurance company. If you do this, the goal is to transition slowly over time. So what we're really doing, it's not that we don't need to use these other lending institutions or private money. It's that we're reducing our dependency on it. And by reducing dependency, we increase resilience. And that's part of the focus of the summit. Now I'm going to walk through a bit of a case study. There's a couple of real estate partners, call them Alvin and Fred. Alvin's 42 and Fred is 55. They both have kids. Alvin's kids are much younger and still wearing diapers, whereas Fred's kids are pretty much out of the house. Okay, now these are two gentlemen. They actually met on a real estate call. They were involved in a real estate networking group. They got on a zoom, you know, coffee.

They met.

They found out that they actually, they're both immigrants from Canada. They actually found out they grew up, they're from Africa. They grew up in two different villages away from each other. And they have a lot of common things, which is interesting. Now they've got 22 doors in about six months. They acquired and all this happened in the last year. What's interesting is they had quite a few goals. Well, their goals were they wanted to Harness the cash flow of this real estate portfolio to do multiple things, including future passive income. But they want to be able to use it to do some other things as well. They really were focused on generational wealth. Making sure that their families or spouses and their kids were looked after was, was something they both agreed on. Very important to how they wanted to grow their partnership. They wanted to maximize tax savings over their lifespan. The capital dividend account with their corporation is going to be a part of that.

And they want to be able to.

Protect one another's families by making sure they had a buy sell relationship. So if one partner passed away, they there was money that would show up tax free to buy out the other partner's share so the spouse and the kids can carry on and it didn't interfere or mess up the real estate that they didn't have to sell any real estate in a down market.

Okay.

They wanted to reduce their need for qualifying with third party lenders, et cetera. They're very growth focused. They don't need this cash flow. Now they're plugging all the cash flow back into the business to accelerate growth. They've agreed that that's what they want to do. Now they've got 22 doors presently. They're cash flowing after a couple of renovations are done. About $8,300 a month or just shy of $100,000 a year. And they have their repair and maintenance fund, you know, and their vacancy fund. They were already going to commit 10% of the gross rent anyway. That was going to stockpile in someone else's bank. They're adding that in and they're just going to plug that into the machine that we're building for them instead of, okay, so what does the infinite banking system look like that they're setting up? They're both agreed they're going to commit sixteen hundred dollars each from the partnership's capital, the cash flow into solving their buy sell relationship problem. That's going to be the minimum that they're going to fund into the program. And they have flexible additional amount of $2,800 a month each or 33 grand each that they can shove into their policy system to augment and increase the system and get it growing really, really well. So that goes to those paid up addition blocks that I walked through in the video. So the total plan deposits that they want to contribute, they have to do the 1600amonth each. But what they want to put in is 105,000, which is basically all the positive cash flow. And they're going to be growing and increasing that cash flow. Now in the first year they actually have one of these properties here for the rental units. And as soon as those are done, they're about 30 day turnaround. Each income is going to go up. And they used a private lender who lent them 60 grand to go and get that done. Now the bank that they were working with already said as soon as that's done and you've got a new rent, roll 60 grand back, no problem, and you can pay out your private lender. Here's what they're going to do differently though. Now that they have their power whole life contracts, they're going to take that flow of money instead of giving it directly back to the private lender in an instant. They're going to run that money through their new system of policies, dramatically increase the paid up death benefit on each partner. And they're going to have now constant motion on that $60,000 for the rest of their natural life. They're going to be able to borrow from a policy loan right away and they're going to be able to pay out pretty much all of that private lender. Then it'll take them another maybe two months of some positive cash flow to finish the balance off. But they've optimized and harnessed the control of that money that the bank was going to give them anyway. So they're using someone else's bank to optimize the growth of their own banking system. That's a pretty cool situation. So they're going to have access to about 56,000 right away by doing this.

That they're going to put right back.

Into paying off the private lender. A couple of months of positive cash flow and they finished off the private lender and he's happy. So here's our partners. They have a 5050 relationship. They own a real estate corp and.

They each have a holding company. So each one has their own Holdco. Holdco owns the, the real estate corp that they have that has the 22 doors in it. Again, $8,300 a month of positive cash flow. Now they expect to have profits. They're already generating profits. The problem is they didn't have a way to protect those profits, protect them from market risk, down environment, something happened to one of the partners, et cetera. So this package that we put together is the partner profit protection package. If you know you're going to be profitable over the long term in your real estate business, wouldn't you want to protect those profits for you and your family. That's ultimately what they've done here. The flow of money is very simple. The real estate Corp. Which has the properties, is going to flow money to the holding company. Holding company is going to own the insurance contract. So each partner has a contract on their own life owned at the Holdco level. They're going to be able to access money from the insurance company back to Holdco. Holdco can lend the money to the real estate partnership. So they're going to be flowing the cash flow through. In fact, they're going to actually flow some of the income, the gross income through and then they're going to be able to borrow back out to pay their regular mortgages. So it's going to be a really interesting situation. They'll make repayments back to the holding company to repay the policy loans and they get to control the flow of all this capital. Tons of flexibility, tons of control. Really the only thing that limits it is their own imagination. I want to walk through a little bit about the insurance aspect. So Alvin, he's a little bit younger, he's 42. To kick the program off, he's going to start with about $1.6 billion of death benefit. So if something happens to him, there's 1.6 that pays out right away in the very first year. By flowing that flip money, that Renovation Capital, the $60,000 that they're going to use to repay the hard money lender, they're going to automatically boost his death benefit by $110,000 just like that. Similarly with Fred, Fred's a bit older and Fred actually had some health issues. So he had a rated policy. He has a little less death benefit still pretty good. And he doesn't get as much of the paid up insurance, but that's because he's a bit older, etc. Still gets a huge boost overall. Now as part of this, there is some term insurance added on here. There's a little note you guys can't see there, but there's some term insurance and that's part of making sure we're solving their buy sell arrangement to make sure the partnership is protected. Now looking at this 10 years later, the total death benefit is accumulated from 1.6 to 2.8. So there's a pretty big increase there for Alvin. Now if we look over at Fred, he started with a million and he's now at 1,700,000 again. Huge increase. Their partnership real estate values are going up, the partnership need is going up and so the insurance is going up with it they have cash value. This one's about 585,000, this one's 525,000. Combined together that's $1.1 million of asset value that's accumulated in their system of policies. We're not even factoring in the real estate, we're just talking about the accumulation on the, on the policies that they own and control. This policy is growing at about $70,000 a year and this one at 64. So combined it's 134 grand a year. Now they're putting in 105,000 and they're getting $134,000 back. That's a pretty good increase in positive cash flow. Fred being 55, he's got some term insurance in there. When he reaches 65, the 10 year limit on that term is up. He can renew it, but because he's older it's going to get more expensive. Well, we're actually going to cut it loose and get rid of it and he's still going to be left with a very healthy amount of whole life insurance that is constantly growing each and every year of 1.2 million. So strategically their partnership is still protected even when that happens. Further to our summary, they're putting in $105,000 of deposits. That's that rent, that positive cash flow running through the system. They have access to money and liquidity. Every time that they put 105,000 in the policies.

Increases 134,000. Well, 134 minus 105 is 28 grand a year. That's the equivalent to $2,300 a month. Well, that's positive cash flow. That's exactly what we're looking for in a piece of rental real estate. The problem here though, we didn't need to deal with tenants, property managers, market rents, property taxes, any of those other things and hassles in the way that'll increase every year, of course, and so does the tax free death benefit. They have an asset value of 1.1 million and they made deposits over that 10 year time frame of 1 million 56. So in other words, they have access to all the capital they've put in, plus they have all the protection. And now they have a machine that's growing.

Every time that they put a dollar.

In, they're getting, you know, a dollar, you know, they're getting a dollar 30 back essentially every single time. Pretty, pretty powerful. Now over that 10 year period as the money was accumulating, they're also using the money.

So what if they're and they didn't put any more money in. So that's a possibility. Obviously the plan would grow better if they did. But just imagine for a minute they did this for 10 years. They made that commitment and they said, you know what, we're not putting any more money into the insurance contract. Well, each partner, because the corporation owns it, the corporation is able to go and get the equivalent of a home equity line of credit against the policy. They can borrow that at the corporation level, tax free from the, from, from the, bring money into the corporation and then they can take a dividend out of their corporation. They each have a holdco. Money comes out of the holdco. There's going to be some tax on that. At that point, whatever their tax rate is, it's going to be different for each person. But approximately $14,500 after tax will show up to each partner. Well that's $1,200 a month in tax free income. And if they did that for 25.

Years, starting in the 15th year.

Hey, you know Alvin, Alvin's only 57 years old.

He might want to wait. Maybe he doesn't need the money yet.

Turns out he's actually a lawyer, so he makes pretty good money anyway. He probably won't need that capital. Fred, however, he's getting a little bit up there. He's going to ready to start taking some more passive income. He might be looking for a buyout from the business. He does that from 70 to 95. The corporation funded the money, they get to spend the money. The end result is they pull out 362 grand after taxes paid of dividends from the from each respective corporation their holding co funded 528. That's what the corporation put in. They as after tax, as a shareholder level outside of the corporation got to spend 362 plus there's still a whole bunch of death benefit in there. Now what we're not talking about is technically the corporation borrowing that amount.

If they don't want to dividend the.

Money out, what if they got all that capital and they actually just wanted to pay off mortgages? If they did that with their real estate holdings, they might actually increase the total cash flow much more. So they're empowered as business partners to make the right decision for them. They're not pigeonholed into going down one track. They have autonomy over the decision making process. Really, really important. The biggest thing is all they had.

To do was change their behavior about.

How money was flowing through their life.

And how much control they had over it.

Another possibility of course, how many mortgages could they pay off using this system and control the flow of capital that was going out the door to third parties and make the same mortgage payment they were giving one of the big banks, but make that mortgage payment back to their own system. So every dollar they put back in was a dollar they can access again for reutilization. How many more doors could they build? Well, one of the opportunities they have, they bought an Aplex and they have the neighboring land next to it, which was already zoned for an Aplex. That's a development opportunity that they're planning to do. They want to self fund that, that's part of their goals. That's what they decided. How much more positive cash flow will.

That create for them?

And then again, we have the CDA account I've alluded to this will allow a tax free extraction of their assets later on when each of the partner passes. It's an amazing, amazing advantage. Again, not to take up too much time on that, but really incredible what can be done. So let's assume Fred wants to get out. He says, you know what, I don't want to be in the partnership anymore. I'm ready to get my buyout. So they have to value all the real estate in the corporation. They have a valuation method that they've determined. Well, if the second partner, Alvin, he wants to keep all the real estate for his family, he just needs to.

Stroke a check to get rid of Fred.

And their partnership is over at that point in time. So once he knows what the number is, if they have access to all the money inside of his insurance contract, he doesn't have to sell the real estate or refinance the real estate. In order to raise the money to buy out his business partner, he could simply take a policy loan with no questions asked from the insurance company because he's the part owner. And he could use that to fund, if not all, a large portion of the buyout amount, saying, here you go Fred, thanks for the partnership, we did a great job. Still love you, buddy. Here's all your money. You and your family can ride off into the sunset. It didn't interfere with any of the real estate they'd already accumulated, which means all the assets can be maintained and the control of them can be maintained. Again, really, really important power that's available there. And each one of these guys, when they get their buyout, whichever partner decides to go, they still own and control the whole life asset that they've built that is separate from their partnership other than their agreement on how to fund and use it. So again, there's tons of ways that this can be done in life system becomes self sustaining and it's really not dependent on the real estate market growth. Having something that's growing outside of market control is really beneficial. A lot of people are attracting joint venture partners or people who want. You want to invest with your real estate business. Think about asking the question for people who has access to cash surrender value insurance. You might be surprised. A lot of Canadians have this and don't realize it's money that they can tap into, do other things. They can multitask capital. So if you're looking to bring in joint venture money, find out other sources where they may have money stockpiled and see if you can use that to enhance your deals as a funding. It's untapped capital to help fund your next deal that's a possibility for you could be used for private lending. If you just need someone to do, you know, short term money, that's a.

Great way to do it.

And then you lather, rinse and repeat.

You do your refi boom, you pay.

The money back to the investor, they go and put it on their insurance contract. You've got another deal. 12 months later you go back and say, hey, that deal is pretty good. Let's lather, rinse and repeat that deal. And another thing is protecting people. So if you're taking on joint venture money, think about who, who do people want to invest with? They want to invest where they feel safe and comfortable, where their money is protected. If you have a whole bunch of insurance on you and you can use that as a leverage tool to explain to potential joint venture partners how they're looked after if something happens to you. As the real estate expert, that's a powerful way to start thinking differently about how to attract capital into your world. Kiyosaki said it's not how much money you make, but how much money you keep. How hard is it working for you and how many generations you keep it for. These are my kids, Nathan and Nora. I have policies on them. They understand that we have a family banking system. We go and access capital from the family bank and we have to put the money back in the family bank. I'm teaching them at an early age how important this is and they're already getting it. Kids get this thing much quicker than adults do really quickly. About our process, one thing I want to highlight is you're looking to have more success, more achievement in your life in your real estate business. I would ask you and encourage you to think about significance. What is it that you're doing? What is it that you're building all the energy and the effort and the time that you're putting in to grow your real estate business? How is that going to lead a life of significance for you? What does that really, truly mean? Is it about being successful or is it about leading a life of significance? And how are you showing up to do that? Most likely it has to do with your family. I know. For me it does. Our process at Ascendant Financial is very simple. We have our infinite wealth path.

We focus on education and empowerment. We have a call with one of initial coaches to see if you get some of your questions answered, to see if it's the right fit for you. It may not be the right time, in which case they'll recommend some more education for you. You're going to get a chance to meet a coach who's going to be with you along the path. They will custom design a plan that's suited for your needs. Because we are all different people. It's like a thumbprint. Everyone's got a different thumbprint and your financial life is no different. Then you'll meet our client success team to get your application up and running. They walk you through that whole process. It's very simple. And once you're up and running, you have a kickoff meeting with your coach and we talk about our ongoing coaching in our community and how you can participate in events and education moving forward. Real simple, closing things off. What are your next steps? Go to our booth, get in there, grab your bonus. We've got a copy of our best selling book, Canadian's Guide to Wealth Building Without Risk. You can go over to, you know, grab it here. Wealthwithoutbaystreet.com summit. Subscribe to the podcast and of course check out those client interviews. Find out other people, other real estate investors that are using this in their life and how it's working for them. There's a ton of great opportunities out there. We have this powerful squishy mass in between our ears and it controls the outcomes of our life. It's all about how you think. It's all about how you think. And that's something I learned from Nelson and thankfully he imparted it on me so I can impart it on you. And hopefully that's something you can take out of our session today.

I love this book because the very first thing it says is the infinite banking concept is a major paradigm shift for most folks. It will require several thorough readings for a full understanding of its message. Its concept is not complicated. It is just different from the way the majority thinks and behaves. In fact, it is the ultimate in simplicity. You know, it's just beautifully written. And then there's a, you know, a section here where you can write your takeaways every time you, every time you read the book.

My book's got a few notes, few notes in it, you know, along the path. And this is the workbook for everything that we do. Everything centers around the book. It's basically the, you know, the bible of the infinite banking concept. And one final point I'll make here, Corey, thank you for sharing everything. On page 85, which is one of my favorite pages of the book, Nelson says on point number two, if you knew at passive income time that you.

Would be getting back every single dollar.

That you put into a system potentially tax free, would you ever object to putting any more money into it? It's a rhetorical question. The obvious answer is no. But that's what we do. That's what this process allows people to accomplish. It's not about an insurance contract. It's about how you think about money flowing through your life. How much of it is going to walk out and never to be seen again versus how much can you insert something into the middle, contain and harness that capital before it's gone? And how many times can you use it for? That's really what this process allows for us.