Ridiculous Real Estate Liquidity Problems

And I said, by the way, who put the money in? Because I did. And I said, okay, who's taking all the risk? He goes, I am. I said, well, who has all the control? It was the bank. I go, how much is the rent? It was 2,000amonth. I go, who's getting all the money? He goes, the bank. I go, are you seeing the problem here?

Holy. The interest rates just went up again and now I've got a real estate liquidity problem and my cash flow is being squeezed. Oh, my God, what do I do? Well, I have no earthly idea what you're going to do, but we're going to talk about it anyway. I'm joined together with my friend Vern, and we're going to talk a little bit about, you know, rising interest rates and how we're hearing from real estate investors how that's starting to squeeze them a little bit on not only existing deals that they have, but deals that are on the table, ones that they're negotiating presently and, you know, how it's starting to shift and change their outlook and their thinking process on future buying decisions. So I'm going to talk a little bit about a recent client, a conversation that I had, Vern, and, and where some of this is stemming from. And so, you know, maybe we'll use that as a kickoff point. So I had a conversation with this young gentleman and he's, he just finished buying basically his first rental property, but he's been knowing he's wanted to get into the real estate game for a while. He's been building up capital to try and get down payment and making that happen. And he also did a deal about four and a half years ago on a pre construction condo project. Now this is in the Ontario marketplace, it's kind of in the Ottawa region. And you know, anybody who's got, you know, two feet in a heartbeat and has read a news headline in the last, you know, three years in Canada would understand that the Ontario real estate market's been basically just, you know, going up like a, like a rocket ship for the last number of years. And I have conversations with people every once in a while and I ask them, hey, how sustainable do you think that's going to be? And resoundingly, the answer is generally the same. Yeah, geez, I guess eventually it's probably going to have to stop going up, right? And so, you know, that's, you know, right now we're dealing with inflation and all stuff. And so the rising interest rates is the bank of Canada's way of Trying to combat the inflation that they themselves helped create.

Kind of a chicken and an egg situation right there. Right. You know, but here's this, this fella, he's got, you know, what appears to be he's going to have some pretty good timing assuming the project that he purchased, this pre construction condo in, you know, gets completed. It sounds like everything's, you know, on, on par to get completed. And so in about six months time he's going to have to take possession of this condo that's now completed this big project. Right. And, and so the good news is he, when he signed the contract to get it built, the value at that time was a specified value. He locked in that contract, he put in a, you know, a deposit to get that done. And because that, he's been able to ride that wave over approximately a five year period of time, a good, a good chunk of that growing wave of real estate values which wasn't within his control or any of our control. By the way, when he takes possession of this unit, it's going to have a substantial increase in capital appreciation. Right. How however, when he did that deal, when he signed the deposit and put the initial capital in, interest rates were very different than they are today. They're starting to rise. We've had several increases and there's talk of more increases of course, to combat that inflation that the bank of Canada helped manipulate into our lives, among other things that have happened. And so when he goes to take possession, he's going to have to go get a new mortgage on that deal. And of course it'll be at a different rate than when he did his numbers and predicted previously. Right. And so that's going to squeeze down the potential cash flow of this property. And, and it wasn't really going to have like a, you know, it's not like it's the, you know, it's not like a penthouse suite or something where he's going to be charging 10, 10 grand a month for someone to live there. I mean he's going to have a modest amount of normalized rent in the, that the market will bear that he can charge. And plus in Ontario there's some, you know, rent control situations around like how much you can increase the given rent on a yearly basis and that sort of thing. So, so, you know, the end result is he won't have the same cash flow and he actually will have very moderate to very little cash flow on that property, but he's going to have a whole bunch of equity that's been created because of what the market's done. So why is this important? Well, it's great to be looking at a whole bunch of equity. Net worth is going to be looking much better than he expected, except he's going to have virtually no cash flow or very little cash flow. And in a changing environment that, you know, if the, if he gets a variable rate or whatever, the interest rate goes up again, it's going to squeeze that cash flow. It could almost flip it into a negative position. And there's many other factors he can't control. But if he needed capital, he can't access it. The only way he can access capital is to refi that property, which he's getting a brand new mortgage, so it wouldn't be sensible to do that or to sell the property. And so his capital is very frozen. That equity that he has, which the market created for him, is totally frozen. So have you seen this kind of stuff happening for people in the conversations you've been having?

Absolutely. Particularly the part that you were mentioning about those variable interest rates. I'm not saying that that's good, bad, right or wrong. I get it, you got to play the game. But I've been talking to a lot of people who are experiencing, you know, they had maybe, you know, a few hundred bucks a door, right? They had good, decent cash flow on the deal, and then all of a sudden their interest rate is rising. And now to your point that that cash flow is coming down. And in some cases, I had one fellow that I spoke to where overall, he still got positive cash flow, but he had five properties, two of which are now negative cash flow and three are still positive. So the overall cash flow is less, but it's still, overall, it's positive. But he's got two properties now that are negative. So it's like if those were the only two we had, that's not good. I spoke to a guy a few weeks ago and he showed me his rental property. I said, oh, so are you cash flowing on that or do you have some carrying costs to it? He goes, oh yeah, it cost me about 300 bucks a month for the rental. And I said, oh, interesting. I said, how many of those do you need before you retire?

It was just, I didn't mean to, you know, I was just having a little fun. And he goes, oh, yeah, I don't know. A different conversation. But yeah. So people are feeling that, that squeeze because to your point, things that are outside of our control. And then that's the other thing is it's not necessarily super easy to go borrow money today. So they got equity in their houses and they're trying to find ways to get access to that equity so that they can put it to work to create even more cash flow. And this is me personally rich. Like I'm looking at expanding and getting into real estate investing. But when I think about it for myself, maybe I just need to change my thinking about it. But I think, okay, most times, from my experience, you correct me if I'm wrong, people want to put the least amount they can into the deal to get the property and get the cash flow. Or if they put a certain amount into the deal, maybe they do that. What is it, the brrrr thing where they buy it, renovate it, refinance it like that. They get their money out of the deal. Well, that's becoming more and more difficult as well to make the numbers actually work, to make a positive cash flow, to make it a good deal. So when I think about it, I'm like, well, I don't want to go and know, leverage a bunch of money from the bank because I just want it to work and I want to get all the money. I said that to one of my clients today that I was talking to. I said, you got some rental properties? He said, yeah. And I said, by the way, who put the money in? He goes, I did. I said, okay, who's taking all the risk? He goes, I am. I said, well, who has all the control? It was the bank. I go, how much is the rent? It was 2,000amonth. I go, who's getting all the money? He goes, the bank. I go, are you seeing the problem here? Like.

So I don't know if that helps answer your question at all or if I'm just a talking head, but that's the kind of things I think about is like, how do I make it a win? Not a win win, not for me and the bank. I just want to win. Forget about the bank, right? If I'm doing a deal with somebody, obviously I want that to be a win win. But if I'm putting money into a property, I want to be able to be the one who's collecting and accumulating most, if not all the cash. And I want to have the control of the repayment and re accessing that money. I don't want to have to go through some toll taker or gatekeeper. So of course we're talking about the process of becoming neural banker, the infinite banking concept. That's why we want to become the banker, because it's really simple. Where is all the money flowing? Well, to the bank. If you're the banker, the money's flowing to you. It's not rocket science.

Yeah, we want to interrupt that flow, the way it's currently working and insert you into the middle of the process. And it doesn't happen overnight. Just like going and accumulating a real estate portfolio doesn't happen overnight. You know, you'd only be able to do that overnight if you were a really good negotiator or you have access to boatloads of capital, yours or someone else that they're willing to give it to you, whether that's a bank or a joint venture partner or investor or what have you. So you don't plan to go and build a real estate portfolio and do it for short term reasons together, some short term ways. Lots of people, there's lots of strategies where you can have huge short term wins. But most people who are fundamentally the real estate investors, they are looking at a long term outlook and they know that the payoff is really on the back end. Over time you get that property paid for or you do this or like there's, there's this, you know, it's, it's the game of Monopoly. You're going to trade, you know, this, this thing for that, that green hotel, you know, the red houses for the green hotel. Sort of a situation. And so that's kind of where this conversation went with this gentleman. Again, everyone's circumstance is totally different. But you know, here we have a situation where the, the timing worked out perfect. But you know, this, this guy, he, you know, five years ago he signed this deal for a pre construction condo. If it took longer to build that project or the project ran into some, some pitfalls or whatever and they had to add another year onto that project. Well, a year from now in the, in the real estate market based on the rising interest rates and some other and other things that are happening, it could be maybe the worst situation, right. Or you know like there could have been a number of things that interfere with that deal. And there's people right now in the, probably in the last 12 to 18 months because of the fervor energy of like in the excitement and that, you know, that kind of like that fear, greed cycle that happens, right? They've gone and they've pumped down deposits on a pre construction condos in a given marketplace that's kind of reaching a peak level. And now there's ancillary factors putting pressure on that marketplace that's already starting to cause the, you know, the values to decline. The values aren't actually declining. See, there's a perception of where they were, and because they're now lower, it's a decline. Well, not really. Yeah, because where they were wasn't a mathematically sustainable level. Right. They were risen to some false ideal of what the value of that, you know, what a reasonable buyer and seller would, would pay for in that crazy marketplace. Well, I would submit that those weren't reasonable buyers and sellers. Right. They were caught up in a certain need or the desire to get a part of that market shift. And a lot of people have done really well with it, and a lot of people are going to end up getting really hurt. And that's the same with every real estate cycle. It's the same idea with every stock market cycle. There's an up and there's a down, there's an up and there's a down. And so you just are trying to make sure that you hit more ups than downs. And it's not always easy to do that, especially if you're new. So here's this gentleman, he's got this huge win, but he's just chunked in a bunch of his money into a new rental property that's negative cash flowing about 100 bucks a month. He's about to go and close, and he's got to chunk in more money to complete, you know, the remainder of his down payment and then get financing on this new deal, which six months out. We don't know what the interest rate is going to look like just yet. We can predict, but we don't know. So he's going to finance that at an unknown rate, moving forward at a very minimal cash flow. So he's kind of break even on his portfolio, but he's going to have about his original down payment capital, plus, you know, about another call, 200 grand in equity. So he's got maybe like 250, 275 grand tied up now in the walls of this condo. And meanwhile, if the market is shifting and changing, one of the positions you might want to be in, and I say might, it really depends on your overall objectives. If you now have all your resources are tapped out, you have no capital available, you are completely illiquid on money. If the interest rate climbed up a little bit, you wouldn't be able to handle it because you don't have enough cash flow to deal with the problem and you're going to be forced to sell. Well, he's going to be in a position where he might Be able to exit that property, come out with a huge windfall of capital, then be in a position where, just like the game of Monopoly, he can trade his little red house for a big hotel. So. But he can now watch the market. He can be in an armored position. He's been learning and learning and learning for five years. His knowledge base is much higher. He's got a little bit of experience now. He's well capitalized. Nelson Nash, who taught us that when you have readily available access to capital, opportunities of high caliber will track you down. He says, in fact, they will hunt you down. And it brings me to Nelson's book, and I'm going to go to page 85, you know, real quick. One of my favorite pages of the book. Yeah. And over on the far side, you know, point number five, Nelson says wealth has got to reside somewhere. Where would you prefer to have it reside? Real estate. Well, take a look around and see what happened. When one needs liquidity, real estate is very much a frozen asset. What he's referencing is, is when markets shift and change and you want to go access money, but the lending rules shift to the interest rate up or you, you, you no longer fit the bubble of the debt service ratio because the debt service ratio has adjusted based on the interest rate or these other factors, you might not be the right lending or borrowing risk. Through all points of time, the lending criteria changes and how you look to a bank who's going to lend you the money changes as well. And so it may not be easy to get the money out. And if the market has shifted and now it's, you know, it's swung from a, you know, from a buyer's market to a seller's market or whatever. You know, if it's a buyer's market you're trying to sell, well, you're not going to get the best deal for that property anymore. So these, these things are stuff that you can't, you know, isolate on necessarily, and the timing doesn't always work in your favor. In fact, I was talking to another gentleman today who's done a bunch of real estate flips that about 10 or 12 real estate flips in the last four years. He's done pretty well with them. However, he let me know today that he's being sued by a contractor who, they had a written agreement in place and they were supposed to have this deal wrapped up and done in five months. The contractor was late, he wasn't showing up. He was giving him the Sally Saab story about why he can't show up and all these things he ended up having. He had holdbacks built into his contract. He had to go find someone else to complete the job. And he used that holdback to pay the new contractor. The project that should have been five months ended up taking a full year. Now he was still able to exit the deal and have a little bit of money in his pocket, but it squeezed all of his profits down, and now he's got a countersuit. So the guy's suing him, and he's suing him back for all of his losses and holding costs because he had borrowed private money at 12%, private lending at 12% interest on his flip deal. So that adds up with a pretty high holding cost. And the whole situation here is this is an area where there was things that are outside of his control, and he was a frozen asset. He didn't have a house that he could sell and be profitable in that market. It was in disarray. There was drywall and things that weren't complete. So there's lots of things that can cause real estate to be a frozen asset. And so Nelson goes on to mention about the stock market here again, nothing wrong with it. It's all fine. He says, read my recommended reading list on the stock market in the book and make an intelligent decision about if you want to have your money warehouse. We're not talking about investing capital. We're talking about warehousing capital. Where do you want to warehouse your wealth? Or free contract? Free contract with other free persons, which is the basis of mutual whole life insurance. And from this base of financial operation, you could do any of the other things in life that you desire. And that includes private lending and includes buying investment real estate, includes funding flip projects and includes investing in the next stock tip that you get from your neighbor, probably your neighbor's uncle's dog or whoever it is that's giving you that tip. So there's lots of things that you can do, but you need a warehouse. You know, like, here's the thing. I moved to a place where I never need to park my garage anymore, which I love. But I remember, like, buying houses growing up. And like, okay, I had the townhouse and then this kind of. Then I bought the house that didn't have a garage. And then I moved from that to the house with a detached garage. Then I moved from the house to the one with the attached garage. I'm like, finally, you know, I've. I've. I've made my way out of winter, right? I've got this Heated, heated garage. And I don't have to worry about scraping snow off my windshield anymore. And, you know, and now I moved to a place where I get a lot less snow and I don't even need to park my garage. So it's kind of nice, but I still have it when, you know, if you think about this, you have your car, you back out of your garage and you go about your day, you go to work, you go to the grocery store, you go take the kids to soccer and hockey practice and all the stuff you got to do. When you come back at the end of the day, you're returning home, you park your car back in the garage. So your garage is a storage facility. It's a warehouse for your car. And you, you take the car out and you go do stuff. And then when you're done, you bring it back. You need a warehouse for your money. You take the money out, you go do a bunch of stuff, and when you're done with that stuff, you bring the money back to your warehouse. That's what we're talking about in the process of becoming your own banker is where the warehouse lives. And we want that warehouse to be efficient. We want it to be functional. We want to have high liquidity and control. You're in the driver's seat of control. All those kind of things is what we're looking for with the right, you know, the tool that supports that objective. And nothing wrong with real estate. Real estate's fantastic. However, you don't control the real estate market and you certainly don't control what the bank of Canada does. Nobody seems to be able to do that. And you, you can't control the rising cost of lumber, which over the COVID you know, as you know, remember these ludicrous increases and because of the supply chain issues that we've been having. So there's a lot of these things that are just outside of your purview of control. And we want to help people get to more control so that when they're making these big, large financial decisions, financing decisions, they're doing it with real autonomy in their financial life.

Yeah, Rich, that was really good. So we're talking about the process of becoming your own banker. The infinite bank concept in Canada. Make sure you click the link in the post description below. Go to watchibc.com that's watchibc.com you'll get access to a 90 minute webinar that'll give you a real good overview of exactly what Rich and I are talking about and continue to consume Content here on the Bankers Vault because we'll get a ton of value. You're talking about that gentleman who was doing the flip deals, Rich, I think we have a really good case study on flips and the options to how to go about doing that flip. Hey, do I want to use my own money? Do I want to borrow from the bank? Do I want to use the process of becoming their own banker? So this. This video here will blow your mind, but you're talking about some warehousing your wealth. See, sometimes people confuse warehousing capital with saving money, because we all know that. What do they call it? What's Robert Kiyosaki say? Savers are losers, right? Because people save money. Generally, they'll save money in someone else's bank. It's not doing anything. It's just stored there. It's not growing. And we know that the bank is putting that money to work not for our benefit, but for theirs. So to your point about your client there or. I don't know if it's a client or a prospect, but let's say he did sell that house. He gets the big windfall. He's watching what's going on with the market, and he gets to choose when he wants to go and deploy that capital again. But to your point, right now, he's likely using someone else's warehouse when that windfall comes in. Wouldn't that be weird if you drove up to your neighbor's house and parked your car in their garage? Like, what does that even mean? Do you give them the keys? Do they. Like, how does that work?

Right?

So I'm taking my cash or I'm taking all that profit from this sale, and I'm gonna go and I'm literally gonna go and give it to someone else called. Called the commercial Bank. Once I give it to them, I'm playing by their rules. It's no longer my money. They're gonna do with it what they choose. Right? And then I might have to go and just to get access to my own money, I might have to go and knock down some doors or go through toll takers or gatekeepers. I don't know if I know. You probably have Rich, tried to take a large amount of money out of a commercial bank before. It's tricky. It's not that easy because people don't actually really. The bank doesn't want you to know this. People don't actually realize that you're playing by their rules. They'll give it back to you. But on whose terms? On their terms.

Right.

So that's what we're talking about.

We're not.

I mean, obviously saving money is good. Sure, you put some money aside, you can do some stuff with it. But we're talking about warehousing your capital because again, to Richard's point, opportunities are going to track you down. But where do you put that cash between now and then? And what is that cash actually doing for you? Is it just sitting there and you're all antsy pantsy because you want to get it put to work, because you want it to grow. But when we store it inside of, like on page 85 of Nelson's book, Rich and I store our capital not in someone else's bank. We store it in our own banking system that we've built up over time, built it up over a number of years. And what was that sixth golden rule that David Stearns shared with us a few weeks back or a few months back when he was on that webinar? Right, the new sixth golden rule. You have to have a place to store windfalls. So that's why we're always building and expanding our system. I can deposit capital in my policy system in the form of premium because I have flexible premium. I have additional premium that can go in. And I always have loans outstanding within my banking system because banks like loans.

Why?

Because they attract a stream of payments. I don't just let the money sit in my policy system, Rich. I'm accessing loans. Of course I have reserves built up, but I'm accessing loans to achieve objectives. I'm either eliminating liabilities that exist or I'm. I'm lending that money out or I'm putting the money to work somewhere in my real life. And to your point, the money can come back in chunks, can it? It can come back in windfalls like that because I sold the property or I can lend the money to somebody and it can come back in chunks. It can come back at 500,000 bucks at a time in the form of cash flow. Well, I might not need that cash flow per se to live because I'm not at passive income time yet. I'm still earning an income. So where am I going to put that money back in someone else's bank? No, I'm going to send it right back to where it came from, right back to my own private banking system where it's growing and expanding daily. I have more and more access to cash every single day that I take air into my lungs. So to me, it's an absolute no brainer to store capital there. But you wouldn't believe that. Not everybody agrees with me, Rich.

And a lot of times it's because it's just they're still learning, they're still trying to, I mean, when you get exposed to something brand new, often there's, you know, there's, sometimes there's a resistance and we have to, you know, you're going through a process of learning and that's, you know, that's why we have watchibc.com that's why we have the, this channel, that's why we have this content and so that people can learn at their own pace and no one's breathing down their neck. You know, there's not like a four year degree you're trying to smash out here and, and get done, so you get some kind of certificate. At the end of the day, you're just, you're just taking it upon yourself to invest in your own time, your own knowledge. No, no different than a real estate investor would because, you know, you could take all the courses you want in the world and you can learn an awful lot about real estate investment. There's lots of ways to do it. You can learn about sandwich leases, lease option this and rent to, and you can do rehabs and flips and wholesaling and, you know, you can flip contracts. I mean, there's, there's a lot, there's a lot of different things you could do. You can get into the Airbnb world. A lot of people are doing that to try and improve their cash flow because they're finding their cash flow's been squeezed, so they're looking for other ways to make new, new revenue dollars out of the same asset that they couldn't before. Like, these are a lot of the strategies that people are promoting and working on. And there's, you can go get courses on all that stuff, a lot of it for free and a lot of it at a pretty good price point to get a coach. However, if you don't ever make an offer on a piece of real estate, if you don't go out and get your feet to the door and maybe meet a couple of realtors and go walk through some properties in a given marketplace, how on earth are you going to know what's a good deal? You can look at a spreadsheet and it might, it might show you the best numbers, the best performer on planet Earth. Yeah, but if you've never looked at a property and you don't even know what town or community it's talking about, you don't know what's driving jobs in there, like, what's actually bringing people, like, where's the, where's the tenant profile coming from? What neighborhood is it in? It might be the nicest house in the war zone. You don't want to own the nicest house in the war zone. Yeah, like, yeah, maybe it's a great price and it looks good on the pictures. But if there's all kinds of like horrendous stuff happening right around that property, you probably don't want to own that one. You're not going to attract a very good tenant profile. So these are things that you start to learn, you might intuitively know or be aware of. But until you get boots on the ground and you actually start practicing and doing the activities, all of your real learning is going to come through that. Now. I've been kicked in the face several times on some real estate stuff. Big old dogs, tenants that shouldn't have had pets, having tenants out that weren't paying rent, having to go through in Edmonton, they have the residential tenancy dispute resolution service. Had to go through that. Had to. You know, I've had to do a number of different things. I'm dealing with a rental pool problem on a property that I've got in Fort McMurray, which I don't know if anyone's aware Fort McMurray, Alberta has been hit by, oh, you know, giant fire, giant floods, you know, oil based economy. That's been pretty cyclical and you know, you know, basically there's like vacancy rates like 25 up there right now. I mean it's, it's getting better, but there's some crazy stuff. So you, you know, these are challenges that I've experienced over a 20 some odd year period of time and I've seen these ups and downs and ups and downs. Doesn't mean that I'm not still excited, interested in owning a rental real estate. It just means that I'm very aware of it. Definitely does not always go your way and the best laid plans have a way of turning around on you when you least expect it. And sometimes there's ancillary factors in your own life that are a part of that situation. Because you know, when the property needs money to replace the roof, it just needs the money and you're the source of the money or the property is the source of the money. And if you can't get the money from the property, that's coming from you. Right. And so that means you're getting it from some other aspect or mechanism and that's why you have like a repair and maintenance front and you're setting money aside. A lot of real estate investors, they set aside, you know, say 10 of the gross rent and they put that towards a vacancy, you know, allotment and repair, maintenance and these kinds of things. But what happens in practice for a lot of people is they don't actually set it aside. It's in their calculation, it's on the spreadsheet, but all that money just piles up and piles up and piles up and it's sitting inside of a rental account or, or multiple rental accounts. And then what ends up happening is they take a look, it's like, oh geez, you know, hey, we've built up a pretty good amount of capital in all these accounts. We have enough money for a down payment on another property. They go and acquire another deal and now they have zero cash at all. And that's when the problems start showing up. That's when the furnace and the roof needs to be replaced in the hot water tank and the tenant moves out and you got a vacancy. And it's like these things happen in like, like a hurricane, like a torrent around you. Often you unintentionally position yourself that way because you didn't do it on purpose, but it happens because of the actions we take. You know, you build up this account over time. So a great place to store those, those incremental components of capital is in the system that we're talking about. And we're finding a lot of real estate investors are doing that because they want to make their money more efficient, just like they want to make their real estate more efficient. They want to get the legal basement suite so they can increase revenue. They're going to rent out the garage separately to increase revenue. They're going to rent out attic space so people could store skis. Like whatever it is that they're going to do. They're trying to find ways to squeeze another couple of dollars piece of property. You want to be able to find ways to squeeze more dollars out of all of the dollars that are flowing through your life. And if you can do that in an optimized fashion so that it's happening aggregately over time and it's, and it's accumulating on a non stop basis. That's part of the advantage of becoming your own banker.

Yeah, Rich, you, you raised some really good points there. To your point about, obviously you need to put some study if you're going to do something new, you should, if you're going to go and start real estate. Investing in real estate, maybe you get a mentor, link up with a coach, maybe join a real estate group. You know, you got to do some learning and you get to decide where do you want to start? Do I want to do the buy and hold, Do I want to do some flips or, you know, I don't know all the fancy terms, right? There's a lot of stuff. But to your point, a lot of people get stuck in that. They're reading books for years and years and years because they want to be the expert before they actually get on the field. You know, you can go and read books and learn how it works. But what happens, Rich, when you start, you're here because you got some knowledge base. The minute you even apply for a mortgage or you engage with a contractor, like when you commit to going to get that property immediately, your knowledge goes from here like, it just expands dramatically immediately, even though you're still a rookie. So that's what I say to clients. I had a guy say that to me the other day. Of course, I walk personally, I walk people through my own process, walk them through my own policy system. I show them how I make my own loan repayments and make sure they're clear on how it works. And they've read the book and they've consumed content, and they're like, yeah, I get. I understand the problem. I want to get started. So I put together the solution for a fella. And he goes, oh, yeah, Vern, this looks really great. We're excited, really, like the flexibility and can access cash right away and all that. He goes, you know, I'd really like to see some, you know, see this example of what it would look like if we started to flow some of our own personal expenses through it. And you know what that would look like and what that would do. I said, okay, great, I'd like to see that, too. Let's get started. I'm not sure what you're asking me to do here. You're going to see how that works. That's the act practice. And I'm sure we could put together a case study or whatever. But like I said, I even showed him my own stuff. But he understands it, he gets it, he's excited, he's ready to go. But there's a little bit of apprehension there because it's new. Not a bad thing. But it might be a little uncomfortable to get started, whether you're talking about real estate investing, doing private lending, starting to implement the process of becoming a banker at Some point you got to pull the trigger and you have an understanding of how it works. But the minute you even apply for that life insurance application, the policy gets approved, you deposit premium and then you can log in and actually see, oh, there's my death benefit, there's the paid up additions, oh, there's my cash value and here's my loan availability. Immediately you're like, oh, I immediately understand the tool a bit better. Now I access a loan and go do something with it. You're like 47,000 miles ahead of anybody who wrote read 150 books because you've took some kind of an action. Right? So go to watchibc.com and let's get after it.

Well, and one more thing I'm going to add to that too, Burns. You know, we've had people that, they got started this process years ago and they've been using capital, but they don't recognize that they should or could be accessing capital from the policy. They're not, they're not implementing it because they, you know, they're just happy seeing it grow in the policy. They like that, they're happy with that and they, they just want to see that build up. But meanwhile, they're still using money in other areas of their life. Right. And it's like, you know, if you go long period of time, you know, a year, two years, three years, you haven't taken up a loan. If you're, if you're practicing this process, how good at taking the loans and the repayment of them are you going to be? Right? And so start with something small. Pick the first domino. You know, and a good example of that is, you know, a lot of people will pay their, you got home and auto insurance.

Perfect.

Okay, well, why don't we just start with that? Let's take a policy loan and pay that out annually and take the exact same payment that you were giving those guys every month of $200 a month. Make it 210 bucks a month and repay that back to your policy loan and, and set up that automated transaction. The simple act of doing that, that's being tactile. You're at your computer, you're logging into your online banking, you're doing automated bill payment. This is how much. You're sending one email to the life company explaining what you want to see happen. You know, it's not a huge amount of work.

Yep.

But it is, it is. The activity of doing it is what's going to help you embrace and understand. Okay. Oh, right. That was pretty Easy. That was simple. Well, where else can I do that in my life? And yeah, and you make those loan repayments for five or six months, and you look back, it's like, oh, geez. Like, the loan's going down and my cash is going up and cool. Like, oh, and okay, what's the next thing that I can do? And so Nelson used to say, this is more caught than it is taught. And part of what he means by that is your brain fills gaps naturally. And so if there's a gap there that's not quite clear to you, when you actively start doing stuff, all of a sudden you'll see things that you didn't see before, and then you'll know what to do. Your brain will just be like, oh, well, the rational thing for me to do is to find something else to duplicate this process with in my life. And. And then you gobble up some more content and you're sparked by an idea from a great video. Maybe it's this video, I don't know, maybe it's because you went to watch IBC.com and you watch that, you re watch that session and you're sparked with a new idea and it's like, oh, cool. This is how I want to implement things now. So, so your system looks like what, how you interact with it and what you do on a daily or monthly or semi, you know, monthly or quarterly basis, it's going to be totally different than what I do and what Vern does, you know, and for me personally, like, I, yeah, I have a lot of monthly loan repayments going in, but there's a lot of things I don't do in that way. I do a lot of windfall events where I build up a little bit in an account, you know, and then I say, okay, cool, I'm going to now do a quarterly chunk of this money and I'm going to put it back on a policy loan, and that's earmarked for paying my annual taxes. Like, so there's things that I do at different times of the year versus things that I do on a monthly basis. And that's what works for me. And I try to keep it as simple as possible. Some days it doesn't feel like it is because I get wrapped up in my own head sometimes I'm like, man, I wish I made this simpler. But the reality is, because I'm an idiot sometimes. And I just, you know, I've created extra steps unnecessarily. And then you're, oh, geez, you know what? Next Time. Here's what I'm going to do differently. And you just make a tweak and you modify it. It's not that hard. It's like anything else you do in your life. The more you do it, the better you get at it.

Yeah, that you raise a really good point, Rich. I do that exact same thing. People have an objective in mind. Hey, I need to save up for a down payment. In a couple of years, I'm going to put this much money in. We can kind of reverse engineer the system to look at approximately what the values are going to be at a certain point in time. And then they go, oh, yeah, I don't want to touch it. I literally heard people say, verna, I don't want to touch it. I just want to let it grow. I go, well, it's growing anyway, whether you touch it or not. So let's start to practice and achieve some objectives and try to revert in home and auto insurance. By the way, that's a low hanging fruit. I always suggest that one for people who are paying monthly or property taxes, they pay them monthly, Stuff like that. You got to kick out of that. But that's a really good point. Just start reversing the flow of the money now. And to your point, like what Nelson said, it's more caught than taught. It's an exercise in imagination. Right. So once you actually see that happen, paid off my home and auto insurance, we're just using that in this example. Now I'm sending the money back to the policy and exactly. You said, oh, it's going up, my loan balance is going down. The imagination is going to kick in and you're going to start the creative process of where else can you deploy the system? Right.

Yeah. So unlike an injury that you received, like you've had surgery and you've got a big scar and the doctor's giving you very clear instructions, don't touch it. This is an area where it's okay, you can touch it, it's fine.

Hey. Well, this was awesome, rich. Go to watchibc.com get access to that webinar and don't be afraid to leave a comment. We look forward to hearing your thoughts. Okay, Rich, have a great rest of your day.

Cheers.