Real Estate Investing Strategies In Canada

Listen, nobody is telling you not to invest in investment real estate, rental real estate. Look, I get it. You want to put your money to work, you want to create cash flow, you want to be financially free, you want to have more money flowing in than what your lifestyle calls for, and you want to have that money flowing in while you sleep. I completely understand that. But you're missing a super, super important key to the process of becoming financially free. You cannot be financially free and be financially dependent on someone else's banking system at the same time. Stay tuned to the end of this video and my client Esther and I are going to have an excellent conversation about real estate investing and about how the process of becoming your own banker can enhance everything that you're doing financially today.

Any thoughts, questions? What are you hoping to accomplish today?

Yeah, well, I want to get some more ideas of since, you know, my situation with I have a small.

Account, right. So I want to know how I can best utilize what I have to my benefit.

I appreciate you bringing that up. So for me, Aster, it always comes down to, you know, what are the objectives, what is it that you want to accomplish, or what are some things that you're working on financially today? I remember when we first set up the system, I believe that there was some credit card debt that you were working on eliminating, is that correct?

Yeah, those. I got rid of those like the credit card thing that I had. But.

Now I did some extra things because I didn't mention this, that I was really interested in real estate. So. So before I retired, I make sure I got my last big loan so that now put me in a higher mortgage payment bracket, but at least I was able to purchase two property. However, for income, however, there's been some situation where.

It was difficult to get tenants because of the pandemic because the ones who are in houses now, they don't want to pay rent and the government is not doing nothing so that the owners can get their money from these people. So it was within a rush to get tenants into the place. And then again it's in the states that I got those properties. So it's kind of hard when you don't have money coming in. You gotta pay because I gotta pay the mortgage. Right.

Did you happen to reach out when you were going through all that stuff? Because.

It would have been great to connect you, you, me and Sorrel and just to have a good conversation about how just, just to, you know, maybe provide some guidance around, you know, some of the things that you could do or what Your objectives were so that you, you know, could have money working for you and make sure you have cash flow and rather than having to deal with what I like to call tenants, toilets and 2am phone calls.

That's the rental market, man. It's a tough game, you know. So right now, are the properties rented or no?

No, because the people, we also hire people to manage the property. Right. And.

I don't know if why they, they didn't operate like wise people because now the situations are a little different in the States. But however, they should have given me information saying, okay, to rent the place, we're gonna need this or that in order to, to rent it. They wait till when they got potential tenants, then that's when they're gonna tell me, oh, we need this document from you, and all that. So now they have to wait on the backlog that they have in the title office and all that kind of thing to get my place rented.

Are you carrying two mortgages or did you buy those places outright? It's all rolled into your mortgage?

No, I'm carrying two mortgages, one here because I took the equity out of this one that I have in Canada and I was able to purchase one over there, but I had to get.

A mortgage over there to take that one.

When you said that you had two places, is there two rentals or is it just two units in one place?

No, no, it's two different houses. But one I bought cash and the other one I had to take a small mortgage. Yeah.

Oh, man. Oh, when I hear that, you know, we take cash and we buy a piece of rental property. There's nothing wrong with doing that. It's just the problem is now all the cash is tied up in the house. If we could have connected, had that cash, we might have been able to actually build a larger program and then use the program to help you achieve some of the cash flow objectives that you had. But hey, you know what? We do the best we can moving forward. We can't change the past. Right? Is it your main objective right now, at least with those properties to get them rented, or are you it all offloading?

If, if I'm gonna wait a couple more months and if, if it's not rented, I probably gonna sell the one, try to sell that one with the mortgage.

I mean, if you sell the one that's got the mortgage, I mean, I guess you wouldn't know at this point, but do you think, would you break even? Would you put any money in your pocket or would you take a loss.

No, I think I wasn't gonna. If I'm not getting.

Something out of it, I would hold on to it because I don't want to take a loss after I pay a couple months of the mortgage payments already, you know.

So did you do all that on your own or is your kids or anyone involved with you, or is it just you?

Yeah, one of my. My daughter. My daughter is on the ones in the States.

So for you, Asher, obviously the rental income would. Would help. So that's on the sidelines for now, is it? RSPS is a pension.

Like, what are you drawing for income pension? I get a small pension from my work and I'm supposed to get my pension from the government.

There's many, many things that we can do with the policy system. Right. It's just, you know, it's access to capital. Right. We're using our own cash to achieve objectives anyway. The money's just coming in and then it goes away because we have to spend it on the light bill and the mortgage and the gas and the groceries and all the things. Right. That's why, you know, the whole objective of becoming your own banker is to build that system so that you can access capital to do more things, so that when the income comes in, we can flow it back through our own system and replace what we use and just keep that recycling process going, just like we're already doing with the commercial bank.

Right? Yeah.

So do you have any. I mean, I know just more income is good is something that you want, but is there any. Anything looming over your head? Is there any large expenses coming up? Is there anything that you're. Any specific objectives that you have currently that you're trying to achieve?

No, it's only like the mortgage that I have that I would want to bring down, but at the same time.

It'S not gonna happen so far because the plan was get these place rented and then I would have more income. I can just dump on the mortgage and bring it down fast. But I just have to wait now and see how things pick up after they get it in order to rent it.

You know, I'm glad you brought that up to us because again, keep in mind, I don't know, have you been consuming content? Have you been reading books? Have you been learning more about the process since we started?

Yeah, I've been read. I'm reading stuff and listening to the videos that you guys are good and is that.

Do you find that there's good. Valuable? It's valuable, yeah.

Very valuable.

I'm really glad we're connecting because part of our, you know, our job is just to give you some good guidance and come up with ideas. Right. To help you enhance what you're already doing. So, for example, one simple thing, that we can't do anything right now because there's no rental income.

Yeah.

If we think about the rental income as an example, I don't know what it looks like. You have any idea, assume the places were rented out. Do you have a ballpark idea, like what you might actually be putting in your pocket after the expenses and everything that you have to do each month or what have you?

We'll be able to maybe put away.

Possibly a thousand dollars in.

Extra money with the two of them.

Yeah. And that's fine. I just was curious. Now, the whole idea behind becoming your own banker, or what we're trying to achieve here is we're trying to find a way to get more money working for the Gayle family.

Or bank instead of someone else's bank while still achieving the objectives that you want to accomplish. All we would do, and this is just a simple idea, all I would do is I would. Let's assume that rental income is coming in as an example. Now you take that money and you deposited against your mortgage, because your objective is to eliminate your mortgage faster. So you took all that money and you gave it to someone else's bank, and now it's trapped in the home, bringing your mortgage balance down, but it's not actually giving you more access to capital to acquire more assets, to create more wealth.

That is true. And that's why I need the ideas now, because I'm like, I'm trying to actually get away from the bank totally. But because I only have this small account, that's where I have an issue. Because I'm like, I can only borrow so much, so it's not going to be really feasible. That's.

I completely agree. And so having said that, thanks for. Thanks for pointing that out. So what I do. This is just what I do when. When I acquire an asset that brings in income. Let me take you back to January of 2019. I needed a vehicle, and I'm not a vehicle guy. I'm not good with engines, and I don't have time for that stuff. I was in a much different financial situation at that time. I didn't have enough capital in my policy system to be able to buy the car outright.

Okay.

I did was I kept putting money in my policy. And then I went to the dealership and I said, hey, I need to get A vehicle. So I got a. In the beginning of 2019, I got a brand new 2018 Ford F150. So I saved a little money there because it was. They're just trying to get rid of those old vehicles. But it was brand new. Somebody, I think somebody ordered it and didn't pick it up. So it had a couple of upgrades. So I kind of won in that deal as far as I was concerned. So I was like, great. So I took this vehicle, I stretched the loan out for eight years to keep my payment low. Normally people say, why would you stretch the loan out for eight years? You're, you know, you have to pay forever. I got that. So stay with me for a moment. So what I did, I wanted to keep the payment low because I don't care about the interest rate or any of that stuff. I care how much money is leaving. I want that money to come back. So what I knew that they didn't know is that I keep my payment low, keep building up my policies. My income was increasing, so I kept building more policies. Fast forward two and a half years later, August of 2021, I had enough cash in my policy system to access a loan and pay off my vehicle. So now I own the vehicle outright. My cash value keeps growing, going up, but now I don't have a $600 monthly payment that I have to make or 300 bucks bi weekly. The idea is I'm not going to go out and just spend that money now. I'm going to now recapture those payments because I was already planning to make that payment for another five and a half years. So I'm just retaining it in my system so that I'm collecting it and I can take advantage of more opportunities. So what I would do, because now I have more income available and more capital available, I now start more policies because I want to get that system working for me. So what I would recommend to you, we can't do it now, of course, but I'm just saying, let's assume rental income was coming in. Asser wants to accelerate the mortgage paid on his primary residence. But we also want to have access to capital and have the money working for you. So what I would do is if $1,000 a month as an example was coming in, I wouldn't take all of it, but I would take maybe 5, 6, 700 bucks and I would put a policy on Britannia, on her life so that you own it now, God forbid, worst case scenario, if something happens to her, you have a death benefit that's going to show up. That will wipe out the debt on the rental properties. That's piece number one. So we're just building some security there.

Now.

The other thing is, is we're building a legacy, just like you're doing with Siobhan. You're systematically transferring money over to Britannia while you maintain control. You own the policy it's building. Now. We can start accessing policy loans from both policies to accelerate the mortgage pay down or any other thing that shows up, like for example, property taxes, the furnace goes, expenses show up and then we have to use cash or a credit card to solve the problem. Well, if we're retaining money in the policy and it's not trapped in the home when those problems show up or opportunities, you might find a really good investment or something. But you have access to capital now. It's not trapped in the home, but you keep paying the regular mortgage. And then what's it renew every five years?

Yeah.

So imagine this. We're using the policy system to achieve other objectives while it's creating momentum. And then instead of you taking out big policy loans and chunking down your mortgage, that would shrink your amortization, but it wouldn't change your payment, would it? We want to affect the payment. In my mind, that's how I think. I just think about what's leaving. So in other words, I would build up the policy for the five years while you're making the regular mortgage payment and the balance is coming down. And now renewal time comes when. Well, we've built up five years worth of momentum. Six or seven years in the first policy, five years in second policy. There's going to be a lot more cash in the policy at that time. Might not be enough to buy out the entire mortgage, but it certainly would do some serious damage, wouldn't it? Now we take out a maximum loan, chunk it onto the principal of the mortgage, because you're at renewal time, there's no penalty. Now you can refinance the mortgage at a much lower balance and you have a lower payment and then we just repeat the process. We pay the mortgage off in 10 years maybe instead of, I don't know what that was a 20 year. 25 year amortization.

25 year amortization.25 years.

So now fast forward 5 or 10 years into the future. Instead of you sending the same payment away, now you're able to recapture that same payment that you're already making and put it back in the system and then use the policy for more things like supplementing your income or whatever it is, and then upon your passing, you can have the kids take over those policies and by then they would have a ton of momentum inside the policy.

Right? Yeah.

So that's just a high level, just an idea that, you know, it's just future planning, I would say, you know, just keep doing what you're doing. We'll come up with some ideas that we can use the existing policy for. But keep doing what you're doing for now and just keep us posted on, hey, Vern, we got the place rented or, you know, and you don't have to do anything right away. Just make sure the renter is reliable. I would just stick that money like in a side account or something and build it up for a while and then we can come together and create some ideas and determine if we want to start more policies or what have you. But yeah, those are just some ideas for now. Does that all kind of make sense?

Yeah, it does.

Does that sound like a good idea?

Yeah.

Oh, great. I'm just looking for compliments, by the way.

Is there any expenses coming up or objectives that you have that you might need access to capital for or anything that you're currently spending money on that you might need to.

Well, like I said, I'm really interested in real estate and what I don't know if the insurance company, because I don't have that big amount of money, I'm looking to get a line of credit for like $100,000. So that should I see a deal and want to make a deposit, I can do do that without any headache. So that's what I'm looking at for the near future.

Right. So one of the ways that you would now correct me if I'm wrong, I don't know how much your home is worth today. You have 250 approximately owing on the home. Could you.

They said, well, the last time they appraised it, it was 435,000 before I got the loan.

Okay. Back in.

September or whenever that was.

Yeah.

I don't know if the income, like because of the retirement stuff, like would you maybe need one of your kids to like co sign or something like that to get approved? That would be the way that you'd access a line of credit, at least right now, until like you said, until the system grows more. Because to your point, we can only access what's available there. And we want to be smart. Right. We want to be strategic about, you know, we could add more policies, but money's tight right now, so it might not. It wouldn't make sense to make to do that because it wouldn't be necessarily sustainable. The only thing that I would caution you around, Esther, is, you know, have you been doing sort of, I guess, research? How did you learn, I guess, about the rental real estate game? Is it just sort of winging it for lack of better terms, or do you have some.

No, I've been looking at it for years, but I was doing it the way that everybody does it when there are better ways to do it. So I'm learning about those ways right now. So I'm looking for shorter ways to get income, which like you can buy and flip and all that kind of thing. I was always thinking of buying and holding, but then that is good too. But you need to flip to get some money in your hand so you have cash available, you know, so I'm looking into that portion of it.

Absolutely. Esther, I want to offer you something here, and I'm just planting a seed. This is certainly not advice because it is not my area of expertise. But you're already looking at buying real estate.

Yeah.

The intention of that is obviously growth of the property, but it's rental income, it's cash flow as your objective, right?

Yeah.

Now there's, as you've already experienced, I'm not beating you up here, but as you experience, there's. There's a little bit. There's a lot of risk involved. When I buy a piece of real estate, Right. You're putting all the money in, you got the property, you have potentially a mortgage. You have to find renters and maybe a property manager. All of those things. Right?

Yeah.

And if it works out really well, it's a great deal. But if it doesn't go so well, we're trying to find, you know, we have to carry the expenses, maybe we have to do a fire sale, all those things. There's nothing wrong with investing in real estate, but those are just the realities of it. Now, one thing that I would invite you to just. Just do some research and if. And again, I'm not the expert, but I have connections around this area, I would invite you to look at something called private lending. I don't know if you're familiar with it, but from a very high level, private lending's, you know, very. It's real. It's a banking, it's. It's real estate investing. It's very similar to investing in real estate, except you're not going to actually own a property and you're not left with as, in my opinion, just an opinion. You don't have as much risk. So basically there's, you know, it's a legal process. There's a, there's a credit check, income verification, there's legal contracts that need to be signed. But basically what's going to, what would happen is you're acting like the bank. So, you know, I'm, I'm a hardworking guy, I earn a good income, but, you know, I made some financial mistakes and I have some debts and some things I need to clear up and I have equity in my home and I have other assets. But because I'm not a perfect credit score and my credit is maybe a little bit too extended, the bank won't lend me money. So I need to go to somebody who might be able to be what they call a secondary or like a B lender. I need to find somebody who's willing to take on, quote, a bit more risk and lend me some money so that I can pay off some debts and free up some cash. And then I would pay my mortgage and I would pay the second mortgage. Does that make sense?

Yeah.

So you could potentially be that B lender. You could lend a guy. And I'm just using me as an example. But all of a sudden, again, there's a legal process. You actually would put a lien against my property or multiple properties so that if I don't pay you, this is the worst case scenario. If I don't pay you, you can force me to, you can, what is it? You can force me to foreclose just like a bank would. That's the worst case scenario. And from what I understand, in my experience, it's rare that that happens. So now all of a sudden you've lent this person the money, you have a promissory note saying that when they sell the house or when they, when they refinance or whatever, they must pay you out first. Your principal. Yeah, but usually it's a one year term and now they're paying you 8, 10, 12, 14% on the money that you gave them and you're just getting a cash flow every month. Okay, so that's high level how it works. I have connections of people that do it and I'm actually collecting, I'm building up some cash flow or cash right now for myself because that's going to be the. Now that I'm controlling the banking function, that's the most important thing to me is how do I expand my system so that I can control the banking function so that all of the payments that I'm already making are not flowing away, they're coming back. That's my main objective because I'm already somebody other bank's really good customer. I want to find a way to be my own good customer. And now that I've done that and I've paid off most of my third party debts, I'm collecting and accumulating capital so that I can wait for an opportunity to track me down and what makes most sense to me to create cash flow rather than owning the real estate. At least right now I'm not comfortable with that amount of risk and I don't have time to deal with tenants, toilets to AM phone calls or even property managers. I just want to be able to be the money guy. I want to provide the money and create a cash flow. Okay, that's me. That might not be you. So think about it, look into it, do some research. If you have questions, you know, let me know and worst case scenario, I could connect you with a friend of mine and we could have a good conversation about it. I know you enjoyed that conversation. You got a ton of value out of the chat that Esther and I had. Make sure you check out the playlist beside me here. Go to watchibc.com that's watchibc.com so that you can learn how to implement the process of becoming your own banker in Canada. It will give you access to a 90 minute webinar that will walk you through the beginning stages of how to get set up and then that's the first step to get started in the process. WatchIBC.com There's a link in the post description below.