How Real Estate Investors Are Stacking Leverage Using Infinite Banking
In this presentation Ron and Neil walk real‑estate investors through a detailed case study that contrasts two identical 40‑year‑old investors—Carl, who follows the conventional path of saving cash, depositing it in a traditional bank, and using those savings as down‑payment capital, and Jamal, who uses a dividend‑paying whole‑life insurance policy (the Infinite Banking Concept, IBC) as a personal banking system. The speakers argue that traditional investors lose wealth through taxes, mortgage interest, fees, and the opportunity cost of capital that stops compounding once it is paid to a seller. By contrast, Jamal’s policy builds cash value tax‑free, allows policy loans up to 90 % of the cash value, and lets him purchase real‑estate without withdrawing his own money, preserving uninterrupted compounding. Over a 20‑year horizon the model shows Jamal ending with roughly $1.5 M cash value, a $2 M death benefit, and the ability to draw $85 k of tax‑free retirement income while still growing the policy. Carl, despite similar real‑estate holdings, ends with about $1.2 M sitting in a bank, exposed to inflation and lacking the tax‑free growth and protection. The talk emphasizes that IBC is not a replacement for real‑estate investing but an enhancer that mitigates the “leaky path” of capital loss, provides a personal warehouse for windfalls, and offers flexible, tax‑free financing for future investments and retirement. The presenters conclude with practical advice for investors to consider IBC as a lever to stack wealth, protect family, and improve cash‑flow flexibility.
Chapters
It's not about making money, it's about keeping it. The faster way to building wealth isn't higher returns. As real estate investors, we always look at ROARs, ROIs, which is great, but we forget about the capital that's leaving us due to taxes and interest that we pay to others. So when we look at the leaky path, the money that's leaving us permanently forever, taxes, interest to banks, fees and expenses, lost opportunities, that's leaving us.
So tonight I want you guys to meet Carl and Jamal and these guys, you know, we want to make sure everything is identical about these guys. These guys are buddies. They profile as the identical investor profile, same goals, same focuses. They're looking into the same types of area to invest. And both Ron and I came to this concept through being real estate investors, and we realized, what have we been missing? This, this could have been supercharging our portfolio for years. Capital is a choke point. But as you're trying to build out your portfolio, it is a constant drag on your ability to scale, right? It's not choosing an IBC system over investing in real estate. That's not what we're talking about. You know, the IBC system, the concept of implementing becoming your own banker, is an enhancer. It's an elixir to the portfolio.
So the problem in America is that people are paying too much interest to other people, right? Think about that. The number one liability we enter in our lives is a mortgage on our home, and the interest that we pay the banks to get a mortgage on a principal residence, right, is exorbitantly more than we expected. We're going to go on to the case study that Neil's going to present to us. I want you to keep in mind, you know, As we move forward, we want you to look at the two different paths, two different choices, and two very different outcomes, right? The system can be built on what you do as an infinite banking practitioner, or you could be relying on someone else's banking system. So Neil, why don't you take us into this case study that we discussed?
Awesome. Thanks so much, Ron. Effectively, we've got 2 investors and it's how are they financing their down payments? Okay. So tonight I want you guys to meet Carl and Jamal. So 2 40-year-olds, both male. And really what they want to do is they want to build that long-term wealth. But Ron, the interesting thing is that people can love real estate and that's great. And I'm one of them and I know you're one of them too. But at the end of the day, it's a tool. It's a tool for an objective, right? And the objective is for a lot of people, you know, I mean, I know what mine is. It's security. It's to make sure that I'm building out a financial future that's stable for my family, right? It's going to give me options, right? So I don't have all my bad eggs in one basket, say a career basket or anything like that. And so it's a means to an end ultimately. Right? And, and hey, if, if I'm pretty flexible, if I could find something that is, uh, that provides me that long-term stability, it might not be real estate, it might be something else. But just kind of keeping that in mind, that it's a means to an end, because, you know, 20, 30 years from now, I want to know what does that look like. And so when we're thinking long range, I want you guys to, uh, go on this journey with Jamal and Carl. They think long range too, and they want to build a system for their family. So we're at the starting place. It's, it's this— everything is the same here in terms of their age and their objectives. Okay. So if we can go to the same— go to the next slide. Perfect, Ron. So let's talk a little bit about their investing strategy. Again, these guys, they're talking on the phone to one another. They're figuring out deals. They have a very linear plan in mind that they're going to execute on. Okay. And so what their plan is, is they're 40, they're going to start there. They're like, hey, we got to start working our way towards buying properties. Okay? And so they, they figure, okay, what we're going to do is want to acquire maybe 4 properties over, say, a 16-year period. So one kind of every 4 years. Okay. That's their timeline. They're going to be investing in the same property, not together, mind you. They're two different paths. But we're just trying to— what we're trying to do is we're trying to control here tonight. Okay. Carl is not using Carl is using the traditional banking system to do this. Okay, Jamal, on the other hand, he's using dividend-paying whole life insurance to store his capital. So let's unpack Carl's approach. Okay, so what Carl's going to do is he— his plan is he figures that he can save up between some of his assets that he already has. He can save up about $40,000 a year, okay, for a down payment on a home. He's targeting homes that are around $600,000 a year, okay, whatever sort of property it is. And, and his plan is after 4 years. So you can see that he's saving up $40,000 a year. And then for in year 4, he makes his first purchase. Okay. He makes it. He makes a down payment of $140,000. Now, for those of you who are getting the calculators out right now, I get— I understand that $40,000 a year for 4 years is not $140,000. It's $160,000. I get that. But both Carl and Jamal are prudent investors. They know they want to have a bit of a cushion, right? So he's got a bit of a $20,000 cushion. Heaven forbid he gets— buys the property and there's a bad roof on it or, you know, he's got to replace the furnace. We all know if we've got experience as real estate investors, there's always something that's going to pop up, an unexpected expense. So he's planning for that. Okay. And so what he's doing is he's building out this capital and he's controlling it inside a traditional banking system. Okay. And so he's just rinsing and repeating this process every, every 4 years, build up the $160, subtract $140, build, subtract, build, subtract. And by doing that, he's obtaining his assets that he wants to obtain, which is great. But what he's not realizing he's doing is the money that he's putting on the down payment every 4 years. That money is permanently transferred away from him. It's his money going to the seller. Okay. And that money can now no longer compound for him ever again. So he's using a compound killing system. So again, think back to those leaky drains that Ron had on the earlier slide. He's missing out on all this compounding. And the sad part is, is that he doesn't even realize it. Okay, so this is his strategy, and this is what I would say, Ron. I don't know about you, but what do you think? Do you think this is kind of like the typical traditional strategy?
I mean, that's how I started off first. I started investing in real estate about 12, 14 years ago, and that's what I did. I saved up for a down payment, I put it on a house, and then I refinanced saved a little bit more, rinse and repeat. So I was very much in Carl's approach until I saw a better way to do it.
Oh, I was a Carl. I mean, you can probably see the resemblance, right? So, but I was a complete Carl, right? So, but now let's go and let's see what Jamal's doing. Jamal, same plan, right? He's going to invest the same way. He's going to be building up these $40,000 contributions. But instead of just sort of putting them in a banking system that he knows it's going to be there, what he's done is he has built an infinite— he's built a banking system using a dividend-paying whole life insurance policy. This is the key distinction between Jamal and Carl. Okay? What he's doing is his money is residing inside his dividend-paying whole life insurance policy. Now that's doing a number of things, and Ron alluded to them, to these earlier. It's building cash value guaranteed, okay? It's building it on a tax-free basis, okay? Now Jamal has access to his cash value up to 90% on his terms, on demand. And so after a 4-year period, he knows he's put $160,000 into his policy, he's got access $140,000 at that point in time. He does the same thing, but he's not withdrawing the money. He's not interrupting the compounding. What he's doing is he's leveraging his system and he's using the life insurance company's money to go and buy the home, to go and buy the real estate asset. Okay, and then you can see what happens to his cash value. It doesn't interrupt the growth in his cash value. Okay, so now he's leveraging. Now, who— I don't know about you, Ron, but was— is that what you were taught? Like, hey, if I'm investing in real estate, OPM, other people's money, right? Leverage. Is that— is that ringing bells?
Absolutely. I think when you look at how people built their wealth from a traditional standpoint, you use other people's money, right? You can only save so much to pay for something. And if you can get the rest, to purchase an asset like real estate, why not?
Absolutely. Absolutely. So, so what we're doing here is we're just saying, okay, you know, like Jamal and Carl are both using mortgages, like in this case study, okay? Because they're just starting out, right? They're both using mortgages, but we're talking about the down payments. Carl is using OPM. He's using a life insurance company's money. The big difference is, is that his money is compounding uninterrupted. Okay, and so he's able to make the same purchases along the way just like Carl, except by year 16 he's got almost, um, just shy of $1,000,000 of cash value. Now, Ron, maybe my math's wrong here, but so he's got $945,000 in cash value, but he's only borrowed out from the policy, let's call it, $560,000 if my math's right. I'm not trying to pull the wool over anybody's eyes because it's a life insurance company's money. There is some interest to that, of course, right? So that's not to be forgotten here. But his capital is growing uninterrupted.
Neil, correct me if I'm wrong, are you building an asset on top of the real estate that you're owning as well?
I would like to frame it somewhat differently, Ron. I'd like to say I'm building it underneath it because this is where I'm starting. This is the foundation Jamal is pouring. Okay? And so many people miss this because what they do is they look at infinite banking and they go, oh, that's an investment, and I'm going to line it up and I'm going to compare it to real estate and I'm going to compare it to Bitcoin. Why would I put my money in dividend-paying whole life? Because Bitcoin's going to the moon, you know, and, and, you know, the fiat's melting. That's, that's not what we're talking about. This is a This is a leverage stacking system that we're talking about, folks. Okay? This is not about replacing an investment. This is about enhancing any investment that you are going to make. And so when people, you know, Nelson says this concept is more caught than taught, people who are lining it up and comparing it to an investment, tell me you haven't caught IBC without telling me you haven't caught IBC. That's how I picture it. So let's see how this is gonna work out then. For Jamal. Okay, now, so let's fast forward into the future. These guys are 20 years older, and you know what, they're 60, and aging is living, right? So hey, it's time to see how did it work out, right? Where do they go? Maybe they're sick after 20 years of dealing with some toilets or swapping out tenants, or I don't know about you, Ron, but every January I'm looking for some new students for the student rentals. So they're like, you know what, maybe we slow down a little bit. Just, just a touch. Not— we're not blowing everything up, but let's just slow down a little bit. Okay, let's see how this is working out as they, as they hit, hit their, their, their 60s. Okay, so both of them, they've invested in very similar properties, similar growth. Their mortgages were the exact same. The whole bit. Okay. Was just where they were storing their capital when it came to their down payments. Now they decide, hey, you know what, let's take a little bit of these investments off the table, right? Maybe they're going to redeploy their capital, right? They get rid of 2 properties. So, so they end up, they end up selling the properties that are the one they bought at year 4 and the one that they bought at year 8. So there's been some growth, there's been some good mortgage paydown. Okay. They're doing this the exact same way. They've divested a little bit as they head into their 60s. Okay. Now, let's see what that looks like for them. It's been pretty good. It's been pretty good. 20, you know, 16 years on the one property, 12 years on the other. By the time they're done paying any sort of taxes on the gain, they're finished, clear off the mortgage. They're both left with just under $1.2 million off after the growth of these properties and the mortgage paydown. So, so now the question is, Ron, when you have a windfall, what do you do with it?
You have to store it in your own warehouse, right? So for some people, it's the traditional banking system. For some, it could be under the, under the mattress, in a safe, in a home, behind the toilet. It could be anywhere, right? But you have to warehouse it somewhere. For me, I— any windfalls, it's going back into my banking system.
Yeah, and I think there's a key distinction here too, right? So it's not that, oh, we're not going to— if we want to go reinvest it, that's not what we're talking about. We're talking about the lawyer has just— you've closed the deal, you're picking up that trust check from the lawyer's office. Where are you putting it? Where are you storing it first? Okay, I'm not saying you're rushing off to reinvest it right away. I'm saying, where are you warehousing it to begin with? Okay, so in this case, Carl does what Carl knows, which is I get the check from the lawyer's office and I go back to my traditional bank and I stick it in the bank to begin with. Okay. All right. Whereas if we just quick go back for a second here, Jamal, what he does is he takes it, that money, and he wipes out any of the policy loans that he has inside his banking system. So his banking system is now completely replenished. And he's— and as we'll see in a bit, we'll get into Jamal in a bit. But let's see what Carl does now. So Carl's got this $1.2 million. It's in the bank account. Okay. You can't leave it there because of the invisible tax, which is inflation, right? Because every day it's in there and it's not working right. It's working against you, right? You're, you know, I'm not going to go all into, you know, the Fed and the Bank of Canada or anything like that, but we all know about inflation, right? And so if you're just keeping it stagnant, just like if you have a stagnant body of water, right, and that money's not flowing, right? I mean, that's why as a real estate investor you get into hard assets, right? Because you insulate them, you insulate your money and all your hard work from inflation. Well, now Carl, he's 60 and he's got to figure this out. He's like, okay, this was great. I want to get out of this asset class now. And he didn't do bad. Like, Carl did well, right? $1.2 million at age 60. That's great. But if he wants it to last longer, he's now got to think, okay, what do I do with it? Where do I park it? What do I do? Where do I go? Right? And so he's got another problem on his hands and he's got to figure it out. And, you know, does Carl look like he's having a peaceful, easy, you know, way of thinking right now?
He's unsettled, that's for sure.
Yeah, he's got, he's got another problem because he's got to make this last. You know, he's still got 2 properties, don't get me wrong, but he's got to figure out how do I make this work for the rest of my life, right?
Well, how is he gonna, how's he gonna make it work to fight inflation and rising taxes?
Well, exactly, exactly, exactly, right? So because any, anything he's getting on this, like if he gets some sort of return, you know, IRS, CRA, the government showing up again, right? Let's just do like a little comparison here. So, so Carl, he's got, you know, they're both 60, they've got the same amount of capital. Okay. They still have 2 properties going for them. So that's great. Right. And, and, and they're going to see, you know, they're going to see those through. Okay. But the key distinction here now is Jamal has been growing a banking system now for 2 decades. Okay. And, and what you're going to see shortly is, In addition to a growing capital base that Jamal has, one thing we haven't talked about is that Jamal has been protecting his family for the past 2 decades too. Heaven forbid something happened to Jamal. Jamal has acquired millions of dollars, not in temporary, not in term, not in term and invest the difference, none of that nonsense, okay? In true permanent protection for his family as he's heading into his 60s. See, what was happening is this, this is, this is Carl. If he's not doing something with that 1.17%, he's going to, he's going to get sucked in through the inflation if he doesn't do something about it. Right. So luckily, Jamal doesn't have to worry about that. See, by age 60, simply by warehousing his wealth in a different location, Jamal has built a banking system that at age 60 is now growing by $51,000 a year in this set of facts, in these circumstances. That's tax-free. Okay. And he has also acquired almost $2.5 million in a tax-free permanent death benefit. Right. So for the Canadians on here, think about you got real estate, something happens to you, there's capital gains that are owing. Is your family going to liquidate? All of those properties or some of those properties now? I mean, if you're in a Toronto market, you really want to be liquidating assets right now? I would think you wouldn't. If you're in a market that's down, do you want to liquidate assets or do you want to have the life insurance company's dollars show up for you? Okay. And that's just a safety net. Jamal now is heading into age 60 and into his 60s, knowing that his banking system is growing by $51,000 just at age 60. And guess what, folks? Every year that number climbs. The growth climbs. Now, I'm not talking about the cumulative. I'm talking about the speed. His— think of it like if you think about when you have a mortgage, right, Ron? So you're familiar with this, right? When do you pay the most interest?
In the beginning, right?
And so that mortgage that you're paying off, when do you— when does it get more and more efficient?
Well, it gets more efficient as you pay down, as you get into the amortization of the contract, right?
The longer it goes, you're paying less and less interest in absolute dollars, right? So this is kind of like the— this is somewhat similar for Jamal in the sense that the longer he has his banking system, the better and better it gets for him, right? $51,000 is just at age 60. Let's fast forward about 5 years and Jamal says, you know, he just stored that 1.2 $2,000,000 back in his banking system. He just left it alone. Okay, maybe there were some deals that came across his plate he wanted to invest in. He had access to capital. But here he is at 5 years later, he's at age 65, and he says, you know what, I just want a peaceful, stress-free way of living. So now what he does is he leverages his banking system, okay, his dividend-paying whole life insurance policy, okay? He leverages it. This is passive income time. And what he's got at age 65 is he's got just over, just under $1,500,000 in cash value. Okay. His death benefit is $2,000,000 and over $3,250,000. Okay. Which is going to, that's going to help him as he heads into retirement. He can now implement this strategy of tax-free. And this is key, folks, tax-free retirement income, passive income, when executed right under the watchful eye of a good coach, okay, he's able to receive $85,000 after-tax for the next 20 years. Okay. And so at some point we had to say, hey, Jamal's got to check out. This is life after all. We said Jamal went to a higher power at age 85. And even when he did that, Ron, He still left his family almost half the money he made in the— just from selling those two homes. $571,000 tax-free. Not bad, eh?
Yeah, you know what, it reminds me of page 85 in Nelson's book, Becoming Your Own Banker. If you could put, uh, if you can get back every dollar you put into your system at passive income time, which is retirement, what would stop you from putting more?
Absolutely. And here's the other thing, folks, is I haven't factored in those other 2 houses that both Jamal and Carl have. They're still clicking along, right? So we're just talking about those 2 houses. Now, here's the thing, because, you know, Ron, I'm an investor. You're an investor as well, right? We like— it's hard to step away from that investor mentality, right? You know, well, but what about this? Or what if I could do this when I'm 65? What about this money? Here's the thing with Jamal, right? Jamal's not sacrificing anything because even as Jamal is taking out this $85,000 a year, he still has access to a lot of capital because he— recall, what he's not doing is withdrawing from his policy, he's leveraging it. Okay, so all of that financial energy is still building, the capital's still growing. It was growing at $51,000 a year at age at age 60. I think by about age 70, it's now growing by about $70,000 a year. So it's still growing, which means that from age 65 to age 78, so 13-year period, Jamal still has access to well over $1 million of capital. So if he wants to get into private money lending, he can do that. If he wants to get into some, some other investment that he sees fit in, in, in his 60s and into the better part of his 70s, he still has access to this capital and he's still able to leverage or use that $85,000 in his retirement. Okay, he has a choice here. These are options. Okay, it's all about choice. Okay, so he's not sacrificing, oh, I can't invest anymore, I got to leave everything in my banking system. He's got some serious choice as he heads into his 60s and 70s. So But let's see, you know, Carl's now— but Carl's got to keep hunting. He's got to keep hunting for returns, remember? So I just, I just hope the returns don't do this to him, Ron. You know, you never know what can happen when you're out there hunting for returns.
Absolutely.
So this is Carl now. So he's got— he's acquired quite a bit of assets, right? And, and you know what, he could— he's now in like a protection peace. Like, he's trying to protect this, but he's also worried about inflation too, right? So he's here in his, in his 70s, and he's wondering, okay, like, what's the next best move? Should I, should I just leave the money in the bank? Well, he knows that there's going to be inflation. Um, you know, does he put it in private lending? Well, you know, if I had a, if I had a nickel for every person, investor I've heard about private lending and whether or not they got their money back in, in certain markets these days, You know, is the stock market right? Yeah, it's hitting all-time highs right now. But what if, what if an oil tanker gets through a certain part of the world now? And, you know, like, he doesn't know what the next best move is. And, you know, Ron, does it look like he's enjoying his retirement much?
Not really, especially when he's trying to fight everything that we've talked about, you know, taxes, inflation, financing things. He's just interrupting that growth that he's— that it's storing in someone else's bank.
Yeah. And so his, his bank, his traditional bank is really like just let him out to— left him out to dry. It's not growing for him at all, is it? Absolutely not. No. So, so he's still like— he has this question about, you know, does— where does, where does his money reside? Right. Because we know the traditional banking system is not going to help him. In his retirement, right? And here's Jamal, right? So Jamal, Jamal has a choice, right? He's in his mid-70s now. He is in control. Okay. And that comes back to what you were saying, Ron. You know, it's all about control. If he wants to do some of these deals, if he sees something in the stock market, great. If he wants to do private lending, fine. But he's not boxed in and he doesn't absolutely have to do these deals because he knows he's built a banking system that's growing for him. And that's his hedge against all of this stuff, okay? So we're not saying don't do this stuff, folks. We're not licensed to say go into crypto or stock market or anything like that. We're not licensed to give advice on that. We're just simply saying build a system. Don't build your investment portfolio on quicksand, on a leaky banking system. That's all. If there's one thing you take away, I think that's, That's our main thing here. Money flows. Once you begin to observe the pattern of flow, you start seeing something that most people miss. Money is always being stored somewhere and borrowed from somewhere. You've got car payments, credit card payments, loan payments. You're paying cash for things.
