The Real Estate Industry Could Change Forever With Infinite Banking

Nelson mentioned this in his page 85. He said real estate is great, but the problem with real estate is that it's not liquid. It's pretty much a frozen asset. And I cannot agree with more. When the market is down, I see a lot of opportunities. But I also wish that I have readily accessible liquid available cash available to capture those opportunities. But if I have all my money stocked in real estate deals, that means that it's very hard for me to liquidate my asset as well. Very hard for that as well. Today's topic is uncover blind spots for real estate investors. But I know everyone's situation is different and everyone's real estate investment journey is different. What I see is a blind spot may not be your blind spot and I may not be able to uncover all the blind spots. So I had a little add on for some blind spots. Knowledge is a key for real estate investing. We all know time, knowledge and money are the three important parts for real estate. And it's very similar for the process called becoming your own banker as well. We have this picture of the book becoming your own banker by R. Nelson Nash. For those who has not read about Nelson's book, you have a great opportunity. So as a real estate investor versus your home as seen by you and as seen by your neighbor or your buyer and this is your home seen by your lender to it. Worst, this is your home seen by your appraiser. Maybe your lender sent the appraiser or maybe your house insurance agent sent the appraiser. But this is your house view as your appraiser. However, your house is also viewed as this seen by the municipality, property tax collectors and all the fees and rules. It's not easy to be a real estate investor, especially for hard times like this. There is a saying that it's not about timing the market, it's about timing the market is tough to just stick on and carry on your real estate endeavors. And as real estate investors you probably understand delayed gratification. You understand that you have to save money first in order to get into the deals. And you also understand that you have to think long term because anything that worthwhile take time. We cannot build room in one day. We cannot build real estate portfolio in one day and we cannot build wealth in one day. And as real estate investors you value coaching and you would like to be with like minded people. And these are very similar with infinite banking concept. You know Nelson Nash, he's the author, the discover and our mentor for this concept. And he used to teach this concept for a 10 hour seminar. And this book Becoming youg Own Banker is just a text of his 10 hour seminar. And all the advisors here at Ascendant Financial, we are all authorized infinite banking practitioners by Nelson Nash Institute. We value Nelson's coaching, we value Nelson's book and in fact this book is a foundation of our coaching. And I understand this book may not be an easy read for some people. By now you probably can notice that I have some accent as well. English is not my first language. So when I first read this book it's tough but maybe give it a second read because the second time when I read this book I had a lot of aha moments. And even till this day we read this book many times. And for Senate Financial Audit advisors meet once a year at least we're going to listen through the whole 10 hour seminar that Nelson did. I wanted to share a couple common frequent asked questions by real estate investors. And through those questions we can see what are some of the blind spots that real estate investors. It's harder for us to see. We also going to spend some time to talk about the tool and how does this tool work. So when Nelson, if Nelson's here today, if he is going to give today's webinar, the first thing he will say is it's all about how you think. You know, many people believe that they are thinking but when actually what they are doing is only rearranging their prejudice. And I'm not talking about anyone, I'm actually talking about myself because my own prejudice, my own arrogance delayed myself in finding this concept for 10 years. You know, as a real estate investor I pay attention to a lot of different things, but I totally neglect this concept. And I also really like this quote from author Schopenhauer. He said all truth passes through three stages. First it is ridiculed, second it is violently opposed and third, it is accepted as self evidence. What we want you to do is to have an open mindset and have a learning mind. And just every process begins with speaking the truth. Most common question that asked by the real estate investor is what is the rate of return? What is the yield of your program? Does that sound good? Yes. Because savvy real estate investors are very good with math and pro forma and they pay attention to the average rate of return, annual rate of return, cash on cash, rate of return. But what I see is you have a blind spot. Number one is there is a difference between a what versus a how. Now when we talk about investment, it is a what. So it could be A real estate deal, it could be a property, it could be a private lending deal, it could be even stock or gic. You know, we have to reinvest in real estate is because we want to fight inflation. I would say we want a hard asset to grow our wealth. And we do not always have a five and a half percent gic. And in fact saving may not be the most effective way for us to grow wealth. So as savvy real estate investors or investors in general, we are constantly looking at the different deals that are available for us to grow our wealth. But that is what, that's the objective, that's the target, that's the asset, that's the what. But when we talk about the process of becoming your own banker, it is how is it action? Is this a transaction about how you go about financing the deal? So the difference, the confusion sometimes come from real estate investors is because we actually do a lot of how the actions to add value to the investment which commingles it and make people feel like, ah, that's just one of the way that, you know, you can make my investment a little bit better. You know, there's a lot of confusings in that. You know, when we look at a investment, for instance, I'll just use regular or single family rental property as example. There's many ways that this investment itself will earn us a return. There will be might be positive cash flow that you will get. There will be mortgage pay down or principal pay down. There will be active appreciation. For instance, you will do a lot of rental or value added. A lot of real estate investors put a lot of time expertise in the deals that they might put in a lot of things called sweat equity to the deals. And then that hopefully will give you appreciation for your investment. And also there's passive appreciation. Over the long haul, the market will go up. In general, real estate values will go up. That's what we hope. And the fifth one I just added in there is also there are some situations, for example, in big cities like Toronto or Vancouver, the cities are growing very rapidly. They might change the land use of your property and you might have a rezone. And that's a jackpot for me. Like I never count on that. But sometime that happens, then your real estate, your land value increase quite dramatically. But having said, this is just a rough estimation about how you can get different returns and gains, capital gains and appreciations from your investment. But what I want to distinguish is there are part of this effort that you can control. For example, maybe you have a lot of experience, you can self managing your property, you gain a little bit more positive cash flow. Maybe you are the very handy. You can do a lot of, you know, you can do a lot of renovations yourself and then that will add in a lot of positive cash flow as well. But what I wanted to say is there's also a huge part of the growth of your investment are out of the control, which is depend on the market condition. Real estate value goes up, real estate value goes down. And also interest rate goes up, interest rate goes down. You know, two years ago, if we have this conversation, nobody's paying attention to this because we are having a 1 1/2% interest rate. Nobody's thinking about what if the interest rate goes to the other way. So a lot of the returns, the investment returns are not in our hands. But it is what it is. What I wanted to say is when we talk about the process of becoming your own banker, I want extract the investment itself. Regardless of what you put efforts in or regardless of it is based on the market, investment grows into what it is. We have to put that aside. If let's say this deal that you have this property for five years, maybe it grow by 20% a year, maybe it grow by 10% a year. That is what the investment can do. But when we talk about the process of becoming your own banker, we have nothing to do with the investment return. Putting that aside, what we are looking at is how this process is a how is about how you go about funding the deal or go about getting the deal. Is it through your own cash? Is it from an institution lender, is it from private lending? How do you raise capital? But what we wanted to say is by adding a process with whatever you were already doing, the process of becoming your own banker can help you. Well, it's almost like on a third dimension. You know, we always look at where do we allocate our money, do we put our money in this deal or that deal. But becoming your own banker, the infinite banking concept is like a third dimension is about how you go about putting your money in that deal. And when Nelson teaches about this concept, which is one of my biggest aha moments, Nelson uses airplane as example. So Nelson said we all familiar and this is in his book page 18. He said we all care about the speed of an airplane is going for 100 mile per hour. Or if everybody's chasing that, can I make this airplane go a little bit faster? Can I get a better rate of return on this investment that I already have? But nobody cared about is which environment your airplane is flying, which is in our case is which environment your finances are. And Nelson says nobody got a better rate of return without first controlling the banking function, which is environment. So we also talk about there are a lot of headwinds. If you are having your airplane flying from A to B from your departure to your destination going 100 miles per hour and you have a headwind for 345 miles per hour, I don't think it's very easy for you to get to your destination. You're probably going to the other way. So what the process called becoming your own banker is to give you a tailwind so that you know even maybe you don't have to speed up your investment. You automatically can go so much faster than to your destination. So Nelson says there's no way that a person can get a higher rate of return by ignoring the banking process, creating a perpetual tailwind to everything you do in the financial world by controlling the banking function. And that is what we are here talking about. This process is about controlling the banking function. And this is one of my biggest aha moments. The most talked about topic for real estate investors is about the interest rate. A lot of people are thinking their interest rate might be going down, the market will be catching up, will be getting better, which is great. This is not blind spot. Everyone knows the problem when you borrow someone else money. And Nelson said the golden rule is those who have the gold make the rules. So when we use leverage borrow someone else money, we have to follow their rules. There's no control for us in terms of what is interest rate is. We're very reactive in that situation as real estate investors. And we also know that in real estate there is a saying that you either run out of money or you will run out of money. We all know that funding the deals is a big deal. It's almost inevitable that we need to use other people's money to do real estate investment. However, we also know many of our coaches here and many of our clients and many people out there, maybe they are doing real estate very passive and they may really enjoy this environment when the interest rate is high because they are on the other side, they are the lender and they are quite enjoying getting a higher rate of return. Pitching in those deals with this is something that really hit me very hard. I want to ask you this question. Let's say for a real estate investor, he run out of his own money, run out of his borrowing power. He needs to raise money for a multi residential property he needs to raise money, he has $500,000 left. He really need to raise that fund. There's two choices. There's one person can give you all $500,000, or you're going to raise $50,000 for 10 people. Which way do you want to use? There's no right or wrong answers because congratulations, you got your money. That's what I want to say. But yeah, actually this is a real case. I have participated in a deal and then there is option for this person who is a general partner. He can get someone for all the money, the remaining money he need to raise. But he choose a 10 person for $50,000 each. Because I think real estate investors see the problem of using other people's money. Because he said, if this one person that gave me all $500,000, but one day he calls me, he said, hello, sorry, I need to use the money, I need to call my loan back, I want to get my money back. He said, I'm in a very desperate situation because I cannot raise $500,000 very easily. However, if I have 10 person who each gave me $50,000, if one person want to be out of the deal, it's much easier for me to replace that or find a solution for that. This is part of a blind spot or a bright spot that real estate investors. We know that there is a problem of using other people's money. But the blind spot that people do not see is there is also a problem when you are using your own money. So for those who are $50,000 or who are doing the private lending, $500,000. I really want to ask you, where is your money coming from? If you're using your cash to the deal, you have a great opportunity to learn about this concept which can enhance what you are already doing. But for those of us that we may not have a lot of money to do only passive real estate investing, what you can do is you can look at the down payment. So maybe the question is, how do you find about your down payment when you want to go for a deal? A lot of people uses save their money for down payment. And maybe there are people using your HELOC or using borrowed money for your down payment. Those are the two common areas when you put your skin in the game or use it on to present your offer to the commercial banks. And then we see there is a problem when you put up your own money for the down payment or when you borrow someone else money for down payment. Because we see that your positive cash flow comes directly from how much your down payment you're putting in. I used to hear a mortgage broker, he has this great conversation, he said that, you know, positive cash flow is a false proposition. Is that if you put large enough down payment or if you put all your money in, you would always have impulsive cash flow on your rental property. And I think that's right. And what we are facing here is your down payment percent versus the leverage. We all know that a lot of real estate investors, we want to put as little money as possible because we get the biggest leverage on the rate of return from your investment. But leverage is a double edged sword. If you put too little down payment, you use other people's money for the down payment. You have less control, you have more influence by the interest rate. You have to pay more interest payment. But if you put too much down payment in this deal, you have less leverage, your money is more tied up. It's very hard for you to build a real estate empire. So this is a dilemma that I think real estate investors, you all know there is a problem using other people's money. There's also a problem to use your own money. The question is, is there a better way? And that's what we are going to talk about today. Another common question that I get to be asked a lot by the real estate investor is what is the minimum amount that I can put in my money is tied up with deals. The other way of asking is that does this needs me to put a lot of money. I don't want to put my money there because my money is all tied up with deals. So this shows the blind spot number three that in my presentation today is not about location, location, location, is about the location of equity. The location of equity. The location of equity. Imagine this if a savvy real estate investor have all their money put into different areas. So he has equities in this house, have equities in this apartment building deal. He has some equities goes into maybe some like stock drip, other paper assets as well. Is your money resides with you or is your money resides between the walls in your real estate investment problems? And that's a blind spot that a lot of real estate investors do not want to see. Savvy real estate investors do a great job diversify their portfolio. But when you have your money tied up with a deal, your equity is not earning you any money. How much percent is equity earning for you? The deal that you have is earning you X, y, z percent of rate of return. But your equity is stuck in the walls. It brings you 0% of interest, rate of return. You know, if you have a business opportunity and this business opportunity requires you to put down a large sum of money in the deal and they are paying you zero percent for this deal. Are you going to participate in this business opportunity? Of course not. Because all capital has a cost and your own equity that stuck in the deal are not earning you any money. And that is a problem, that is a blind spot. But however, whenever we sell this property or we get this funds back, real estate investors are so savvy, we always looking for the next deal. With all this money back to my pocket long enough, I'm putting this money deployed it to another deal. So here is a problem that you are working hard to save your money and you accumulate enough money to move this amount of money for a real estate deal.

So the money goes to the deal, your money, your bank account goes to zero. What you need to do now is you're going to start to save your money again or you're going to wait for all this time for you to get your deal refinanced or sell or complete the project. Get this funds back. But when you get your funds back, you are only at where your money was before. In case, if we just look at your money flow, you're going backward. You are only at where you were before. Your money is not growing for you. The deal is bring you extra money, but your money is gone from your system. So this is the blind spot that I see a lot of real estate investors have a hard time understanding because Nelson said we are all using borrowed money. Even if you use your own cash, it is has capitals in it. You still have to pay interest. You lost the opportunity that this money can grow for you. It is the case when you save money, you spend and save again and spend it. It looks very similar when you borrow someone else money and you pay back that money and and then you're going to borrow money again, pay back that money that you deployed and do that both ways, we are ending around zero. Both methods are permanent transfers of money away from you. As real estate investors, every payment that you make is a deposit into someone else bank, not in your bank. This money is gone. Nelson Nash says the very first principle that you must be understood is that you finance everything that you buy. You either pay interest to someone else. When you borrow someone else money, you have to pay interest or you gave up interest that you could have earned otherwise. So when you use your own money, you also gave up interest. There's no exceptions. And the whole idea of the process called becoming your own banker is to recapture the interest that one is paying to the banks, other financial institutions, other people for the major items that we need during our lifetime. The whole objective is to keep the capital growing within your family. And that I'm going to bring up the blind spot. Number five is real estate investors. We are constantly, constantly interrupt the compound growth of your money. In fact, that you may not realize this because you never had this money within your system for long enough to see the growth. You wanted to grow your capital uninterrupted, constantly, compoundly. So I'm going to use this calendar for 31 days. And we're going for a very extreme example. We see that you're going to have ascent from day one and your money going to double every day. So the problem is that you cannot spend the money and still have the money. You cannot eat the cake and have the cake at the same time. So that's what the constant compounding that we want to talk about. So let's say the first day, day number one, you have $0.01. You're going to double every day. The second day become $0.02 $0.04. And versus so goes down at day 31, you will end up with $10,737,000. By the day 30s used to only have 5 millions and change. But at 31 you got over $10,000,000 by just the double your penny every day for 31 days. Now here comes the problem. Real estate investors. We need to put the money in a deal. Now. We need $20,000 to do a deal. So what do we do? We gonna withdraw your Money for the $20,000 you can add a zero and two zeros. I'm just demonstrating a point. Now you're gonna take all the $20,000 and put this money on the deal. Does this sound for media? So what happened on the day 23 when you do that? Now you only have $1. You start from scratch again. And by the end of this 31 day this month, now what shows in your bank account is 2 and 50 cents $2.56. So here comes the question. When I use the money, I cannot keep the money continue to grow. But if I have money continue to grow, I cannot access the money. So the question is at day 22, if someone can learn to do $20,000 so your $20,000 can continue to grow for the rest of the month. Would you like to borrow the $20,000 for your deal? Yes, you want? Here is the teaching Point anything that when you withdraw the money, which we all do in our life, any interrupt of your compound growth is permanent. You can never get to that point. That's why you wanted to become the banker and the bank owner. You don't want just be getting this money. You wanted to have this money continue to grow where you can borrow the money and still do the same. Is it possible become a wealth creator by using the infinite banking concept? What you want to do is grow your own pool of capital uninterrupted, compoundly for all the deal that you may have for the rest of your life. But while you wanted to use the money, you are going to become the bank and the bank owner at this time. You're going to borrow against from your system and achieve whatever you are already achieving in life. So this is what Nelson teaches. You need to become all four characters in the financial play. In fact, many of us don't even know there's four characters for the financial play. You work very hard. You put this money in someone else bank and remember it's all borrowed money. Whatever type of real estate deals you're doing, you are borrowing your money. You are permanently interrupt the growth of your money because you're going to borrow this money out of it. But when you are number three and number four, you become the banker and the bank owner. You secure that financial energy you get to gain from this financial transaction. How can it be done? Nelson said in his book, he said find a way to get the warehouse of wealth starting as soon as possible. It cannot be done overnight. It must be down incrementally. The earlier one starts a policy, the longer it is enforced, the more efficient it gets. I want you to imagine if you have a huge pool of capital today, where do you want that money to be? What do you want to use that money for? I just want you to think about it. Let's assume that today you have a large amount of money coming in. I would assume you probably do not want to put that money sitting as cash. You probably do not want to put that money all into real estate. You probably don't want all the money to pay off all your debt because now your debt gets to zero and what happened to your money? So I want to think about that. You probably also wanted to put your money to work as well. So I want you to do this exercise. I want you to imagine a perfect investment.

Just a perfect investment that you put your money there. What are some of the attributes or the characteristic that you would love this perfect investment to have you want your money to grow and you also want to access your money. So let's look at some of the attributes of the perfect investment. You need to have a high and constant rate of return. You want it to be safe. You want it to be liquid. You want it to have some guarantees in it. You also want to have some tax efficiencies on it and no market volatilities. You wanted to maybe protect it if the tenant sues you. You don't want all your money goes to the tenant going to the lawsuit and inflation protected. We also know that that's very important and you wanted to have control. And many of the real estate investors, we build our real estate portfolios for a bigger and better financial future. Some of us wants to build this for our next generations. We want it to be transferable, right? We want it to be private and no hidden fees and all that. And think about any of the investment that you are currently doing. Simply identify which of the feature that we mentioned here from the list that they do well on and which of the features that they fail to satisfy. And Nelson mentioned this in his page 85. He said realist is great, but the problem with real estate is that it's not liquid. It's pretty much a frozen asset. And I cannot agree with more. When the market is down, I see a lot of opportunities. But I also wish that I have readily accessible liquid available cash available to capture those opportunities. But if I have all my money stocked in real estate deals, that means that is very hard for me to liquidate my asset as well. Because very hard for that as well. So that's fantastic. So does this perfect investment even exist? The answer is yes. It has been around for 176 years in Canada. What it is. Well, don't be shocked. I know I struggle with this. Remember the three stages versus ridiculed. It is a participating dividend paying whole life insurance policy, hopefully with a mutually owned life insurance company. Now what does whole life means? Whole life means that you are life insured for the whole of your life till age 100 and by contractual guarantee that the total cash value of the policy must equal to the total death benefit by age 100 every day. When you age, your total cash value has to rise and whatever is being wrong, it cannot lose value. So this is a tool and these are some of the attributes and have this contractual guarantee that your cash value has to grow to be the same as your death benefit. May I ask who bears the risk? Is that you or is it life insurance? Company. If your answer is life insurance company, then congratulations. And life insurance company has been around for a long time and they have a great track record of growing profit. Think about if you have a large amount of money, where would you like to put that money? You probably want to put some money in bonds that are nice and stable. You might want to put some inequities that generate great guaranteed engineered payment for you. And you might also want to invest in real estate that brings you great positive cash flow. And this is just one of a snapshot of one of the life insurance companies and when you put premiums into the policy, into the participating account, how they are growing the money for you to fulfill their contractual guarantee. Isn't it wonderful? So another blind spot, sometimes people ask, is that okay, so this is just about life insurance. This is just about life insurance that you're just going to borrow from it? Well, actually not really. It is a different kind of life insurance. It's not the traditional life insurance that you usually get. And this speak as all our advisor here, as a trained infinite banking practitioner at the beginning I really struggle with this question, especially for some of the real estate investors. Yeah, I already have whole life. What is this? Can I use what I have? Well, you need to have an open mind. So this is a life insurance but the objective is different because we remember we talk about all the problems. If you don't understand the problem, then the solution will not matter to you. And the solution is not to solve for the death benefit for this policy. The solution is to become the entity for you to grow your own capital in it, become your own banking system. This is the objective of this tool that we wanted to have is for you to have your excess of cash and then the compound growth of your cash until the end of time, hopefully age 100. So when you have a whole life insurance policy has to attach to an insurable body called life insured and it will give you a death benefit. Usually when we look at a life insurance product we're looking for the protection. So we see, okay, this is my mortgage, this is how much death benefit I need, tell me how much I need to pay. That's usually what people view as a life insurance policy. And who decide that premium is the life insurance company going to say oh, what kind of, you know, depends on the product the they're going to find that for you. But when we talk about the tool for practice becoming your own banker, we're looking at for this policy, what is the maximum amount of money that we can Put it in. Because this is where we are storing our capital. And when something is so good, usually the maximum is set up by. Not by us, is by the government. They have the rules on how much you can put into a particular policy. And what we wanted is to put the maximum amount of money and the minimum amount of death benefit. That's like in a nutshell how you design this policy. Again, if you have further question, book a call and have an expanded conversation. And why this tool works. Well, it's kind of like real estate. If you think about if you own a property, no matter it's a rental property or your private residence, you're going to put mortgage into this property. And when you put mortgage pay mortgage every month diligently, hopefully you're going to build up equity. And with equity that you have in this property, what you could do is you can collateralize this equity with someone else bank. You could probably get something called a home equity line of credit or heloc. You can access money from it. A lot of people probably are using this as real estate investors to use money. So it's very similar with that. If you have a whole life insurance contract that is guaranteed to pay out of a death benefit by age 100, well hopefully you live a long life. But if you say I pass away by age 90s, the death benefit is guaranteed to pay it out. So you going to pay premiums into this policy. And there is something that I just mentioned, a cash value going to grow within the policy. So here is your death benefit and you will have a cash value. Your cash value has to grow every single day to be the same as death benefit by age 100 because of the contractual guarantee. So your cash value is kind of like equity within your policy. Because life insurance company has to have that cash value available because they can be saying that if this person passed away this day, I have to come up with all this money out. They kind of have to put a reserve fund to start accumulate to pay out this money that will guarantee to pay out. So this cash value is always growing. Remember the key that it has to be the same as death benefit. So when we design this policy, your death benefit going to continue to grow. If you have a moving target and you have to reach the moving target by age 100, that's how we can achieve this compound growth of this green dotted line that going to grow until the rest of your time. So when you wanted to access money is very similar with access equities in your house. Anytime you can access up to 90% of your cash value, which is 90% of the dotted green line by using your cash value as a collateral. But the lien, what is the lien? Now the lien is your death benefit. Because life insurance company going to outlive us. They've been around for 176 years. If something happened to you, the death benefit will pay out. And the death benefit can wipe out what outstanding loan and interest that you pay. So life insurance companies willing to lend you up to 90% of the cash value. However, if you have a house, if you want to collateralize your house equity to learn money out, what does that mean? Well, we all know that if you wanted to borrow money out of your equities in your house, you're going to go over a lot of lenders documentations. Remember how your house is viewed as the lender, the lender is going to ask you a lot of questions. You probably cannot get away from all that lengthy documentation to apply for qualification to access the equities in your house. Because the underlying lien when you borrow money from your house is your income or your other assets. But when you borrow money from your life insurance policy, you use cash value as a collateral. Your lien is very safe. Your lien only go up one direction and whatever being grow will be locked out. But with a house as a collateral, your equity might go up, maybe go down. We all experience that, right? So who is a banker in your life and who has a control and who makes a rule when you use a whole life insurance policy as a tool that you can Access up to 90% of your cash value with no question asked as a policy loan, that's how you can have your money growing, but you can still access money from that. So Nelson said this actually should not be called a life insurance policy. He said this is a misclassification and I totally agree with this. He said this should not be called the life insurance policy, should be called a personal whale house of wealth system but with a bonus death benefit. And I love that. So what we wanted to create is your money that always growing uninterrupted and compounding within your system with your wealth system. And at the same time you become the banker and the co owner of the bank and you can collateralize and you can borrow money from it. You become all four characters of the financial play. It's very similar with line of credit. You can access money and pay it back, but your policy is always growing. Remember the financial tailwind, remember the financial environment that you are in. When you use a home equity line of credit, your line is flat unless you requalify. And when you use a home equity line of credit, we pay the interest. Who gets the interest? Someone else bank. Right. But when you use this system, you borrow against it using a policy loan. The interest goes to the life insurance company that is mutually owned between all the participating policy owners. And you can have your money always growing and you can still access to it. And you also have bonus as a retention on that. So wealth has got to reside somewhere. Where would you prefer to have it reside? And on page 85, Nelson says a free contract with other free persons, life insurance companies as well. From this basis of financial operations, you can do any of the other things in life that you desire, which certainly includes real estate investment as well. And we're going to dive into two case studies. And so the first case study that I am going to walk you through is my client that just call her Tina. Tina is very young. She's in her early 30s. She works in a film industry. She works very hard. And she's a very savvy real estate investor. She wants to build wealth. She doesn't want to do what everyone else telling her to do. So even though as a young age she already acquired three real estate properties. Now one of them is with his family as well. So he's kind of the first person in the family that encouraged the family to do real estate. So I met her at a real estate event. She immediately bought the book Becoming youg Own Banker. And we just booked a call in two weeks. She finished reading the book. She's blown away. She said, jianjin, this is something I want to do and I want to build my capital within the system for my future. Real estate endures. So we actually started policy less than two years ago. But you know, with the policy, some policy, we can backdate the policy. So she already paid the premium for two years. So when we started the policy, she looked at her finances. She said, okay, I feel very comfortable to put in $6,000 a year into a policy. So $500 a month. That's her comfort zone. But knowing going through all this INC implementations and the coaching sessions, she said, because we have an enhanced design that can bump up. She said, you know what, I really wanted to try harder to prioritize my spendings. I wanted to really achieve this $10,000 a year. So very good. She has been putting policies for 10,000 the first year and 10,000 the second year. Now lately I received a call with her. So I Did a policy review meeting with her and. And her situation is that because she's in the real estate investment world pretty recently, she hit pretty hard with the rising interest rate and she faced a very, very tight cash flow situation. And she just be very honest with me. She said, jingjin, I know this is something I want to do, but to be honest, I'm not able to put in $10,000 this year. I might look at what is a minimum. So for those of you know that when we design this premiums into the policy, there's a lot of flexibilities that you can put in. There is something called minimum required premium. There's also a portion called paid up addition premium, which is a flexible part. So when I look at her situation and I just asked her this question and I said, Tina, are you comfortable with $220 a month? And she said, yes, absolutely. Jinjin, I can even put that money from my own saving. In fact, my car insurance is paying similar money for months. I can definitely do that. So I said, all right, let's switch your annual payment of your policy into $220 per month. Is that okay? She said, absolutely. Because the thing is, her base premium on an annual basis is around $2,500. So you can pay the base premium annually or monthly. So we're going to take care of that by the life insurance company, automatically withdraw $220 from her bank account. That is okay. Now the other portion, which is called paid up addition premium or PUA premium, she has around 3,500 to $7,500. So Tina has already successfully putting in two years premiums. So she has a base premium. She put in the $75,000 paid up addition for the first year. She also put in a paid up addition for the second year. She has increased her death benefit. And remember, what has the cash value be by age 100? Your cash value has to be the same as your death benefit by age 100. So she already built a pretty good foundation of her policy. And now what she need only need the base premiums, $2,500. What we need to find is see if we can find additional money that can fund her paid up addition. So the question that I asked Tina to have this exercise is I said, can you think about the recurring expenses that happens every year no matter are you personally or you're related with your real estate? So Tina said, Yes, I have three properties, so I'm paying property tax more than $7,500 a year for all three properties. And I also have house insurance which is going up as well. So approximately with my house insurance, my auto insurance, that would be more than $7,000 a year as well. And besides that, the list that goes on, I have property management fees and maintenance fees. I also have contingencies. I said, great, Tina, now let me show you how even with $220 a month minimum premium, you can still build a bigger and better financial future by maxing out $10,000 a year. So let's use annual property tax expenses as example. So normally what Tina does is she's going to saving money from all three properties, save this money to be $7,500. And then what she's going to do, she's going to flow this money to the commercial bank. Money's gone, paid off for the property tax. And what she will do the next year is that she's going to save, save, save again for different properties, of course, throughout the year for another $7,500 and then throw it to the commercial banks to pay it out. And time goes on, she always end up with zero line just for the property expenses. Does that make sense so far? So what I suggest is that Tina, let's redirect the $7,500 that flows away from you every year just by paying property tax. Let's use that $7,500 to put Ian as your third year paid up addition premium. So what this does is it buys you a block of permanent death benefit which is the guaranteed money to your family. If you live a long life, your cash value will grow to be the death benefit by age 100. But if something happened to you early, prematurely, your family is protected by this additional block of guaranteed death benefit growth in your policy. So she said, okay, so if we put $7,500 into the third year premium immediately, she can draw out a policy loan. She can use that money to pay for her property tax, all three property tax for this year and the next year. When she start to save this property tax money again from her positive cash flow from all her rental properties, instead of saving that money in a commercial bank, she's going to save that money back to her policy in the form of policy loan repayment. When she paid off this policy loan, can she now draw $7,500 for the next year to pay for the property tax? Problem solved. And think about that. The good thing is Tina does not have to come up with all $7,500 all at once. She can do that throughout the year if she has a Property tax due in April. For this property, she can do $2,500 first and she can do $2,500 for the next property later on. She has total absolute to do that. And this is just the third year. The fourth years come along, Tina can pick up another recurring expenses that happens every year that the property insurance or auto insurance that she started build up in someone else bank. And she's going to throw away that money to someone else bank again. Those money just never flew flow through her hand. It just flows through her hand. It just comes in and go. So instead of doing that, can she use that money for the fourth year's paid up addition premium? So the question is, does Tina has total absolute control in the situation? Is Tina able to flow the max of $10,000 to her system for the next few years and build a bigger and better financial future?

And also if Tina's cash flow situation gets better, can she continue to expand her warehouse to grow more capital? So hopefully this short little case study that we did with our client will shine some ideas for you. Because Nelson says the only limitation is your imagination. So even for someone who has a very tight budget, even with a commitment of only a little bit over $200 a month, you can still do this. So when talking about a personal real estate investor with a tight budget, I also want to invite my teammate Henry to walk us through with a real estate corporation case as well.

We're going to talk about harnessing and maximizing your real estate portfolio that's inside of a corporation. And we're going to talk about a client of ours. His name's Kevin and he's age 40. He owns a real estate corporation with properties in that corporation. And his approach to building wealth is to rebuild properties to fix and flip. Now obviously this case study you're going to see is for educational purposes and is specifically to his situation. So most recently, he completed a sole and sold a flip deal that gave him capital of $600,000. Now, one of the things related to all of this is Kevin was extremely frustrated. He grew tired of depending on commercial banks, especially when it came to constantly needing to pay even professionals just to put, you know, pay money to them just to put his financial information together. And all of that is because the banks are requesting it if he needs financing on those deals. And that takes a lot of time. So ends up losing out on deals because getting financing usually just takes such a long time. Now he decided to do what was best for him instead of doing what everyone else was doing.

And so here's the process everyone else follows. You see, he has a real estate corporation and on the right side he has his next deal in line. And yet he has a pool of money which is $600,000 from that deal that he's closed. And that's his liquidity that he has available to use.

Now with that cash, most people will send it to the commercial bank. And when it goes to the commercial bank, maybe you don't have enough for that next deal because it's just so exciting. So what ends up happening is. Or most people would end up getting additional debt to finance enough or bring enough financing to fund that next deal. So that's the sources of money that goes into funding the next deal. This is what everyone else does. So he just decided he didn't want to do this anymore. He realized that there was such a pain point because of the commercial banks. What everyone else was doing was frustrating him. So he decided to do what was best for him instead. He still wanted to invest in real estate and do what he was already doing.

The only thing is this time he chose to take control of the banking function. He wanted no part of outsourcing his money. He brought managing his money in house instead of outsourcing it. He doesn't want to count on the bank anymore. So this is where becoming your own banker comes into play. And as you know, over 500,000 copies have been sold. It's really worth your time to go through and read it. Now let's talk about what this process looks like. If he decided to take control of the banking function himself, he still has the real estate corporation. He still wants to fund the next deal. This is not going to compromise what he's going to do. He's still going to be able to do what he wants to do. The only thing that's changed is he's becoming his own banker. He's building his corporate banking system. He's cut out the middleman or the commercial bank, let's say. And instead that is what is being. The funds from his corporate bank is being used to fund that next deal. This is the anti bank and this is why it's so powerful. So what did Kevin's anti banking plan look like? First, the $600,000 in proceeds that he got. He decided to put the $100,000 per year for six years. So he's melting that $100,000 over six years into his system.

And by putting that $100,000 into his corporate banking system, instead of reciting it in the commercial Bank. Let's talk about the comparison between where he is reciting his money. He has two choices now and let's show that choice. Where do I want to have my annual $100,000 reciting? Well, in the Commercial bank on the right side you see here. Daily increase or interest earned Mr. Commercial Bank, I'm sure all of you know or can experience, it's probably not as much as what you can count on your hand. It's quite low, basically zero. Whereas the same $100,000 that is residing in his home corporate banking system is increasing on a daily basis at $32.84. That's his quote unquote interest earned. Now if he uses the money, which is what most people are used to seeing, if I go to the Commercial bank and I withdraw the money that I'm using, how much do you have to pay on that interest? Most of you will be thinking, yeah, I don't have to pay interest on using cash, it's zero. So the net change in capital is $0. Well, what does that look like in his corporate bank when he's put in the $100,000 in the first year he can access while his funds is growing on a daily basis continuing at $32.84, he's getting charged $14.39. So the boogie interest that you have to pay to use on in terms of the money is 14.30, which is less than the 3,284 that he's earning. His net change in capital is $18.45 and not even changing anything other than relocating his next year's deposit of $100,000. That daily increase has gone from 3,284 to 4,268. And if he borrows the same amount of money for using it, it's $14.39. If we do some really simple math, that's approximately now $28. And what's the difference between the Commercial bank? Is the commercial bank offering him the same thing for depositing his $100,000?

No, it can't even compete. Now let's even look at the this standpoint. By funding his deposits into his family, his corporate banking system, the dividend in that first year is 4413. I'm not sure if there's any commercial bank. When you send them, your deposit is paying you a dividend. So that's why it's $0. And by virtue of setting up your all corporate banking system, there's a death benefit of 2.3, 8, 9. Well, for him, million. And when you deposit money and you've withdrawn the money in the commercial bank, there's $0. So we're not even talking about what's my rate of return or my investment. We're talking about the choice that you now have available to place your money in your own family banking system.

So here's the immediate tax benefit for him.

First of all, for those of you that don't know if you have excess cash that is sitting in your corporation and you put it towards investments like a bond or interest or GIC, the CRA has set up rules that taxes passive income at 50%. So if that's the case, when Kevin decides to put his money with the commercial bank and product like a gic, his money that he's going to get on that interest is 50 going to be taxed at 50%. Let's take a little bit of a difference when he puts it in his corporate banking system. While this daily increase that you see is not taxable, it's growing on a daily basis that you have free access to use and it's not taxable.

Well, what about at death? Well, without his corporate bank, the government is ready to pounce on taxing his gains, that he's built his wealth inside of his corporation, including his portfolio and what he paid for it and what the fair market value is. The government's just salivating, waiting for their payday. They're very, very patient. Now, what's the difference if you had money located in this corporate banking system, while that death benefit is also not taxable? Now, after six years of putting capital in his banking system, it's strong, it's powerful. And most of the concerns that people have is like, well, I have to fund premiums forever. Well, you can see, especially from what Jingen talked about today, you have a lot of choice and options. If you decide to stick to the minimum and take advantage of the minimum, then your banking system is going to give you the minimum. Whereas if you take the maximum, you're going to open up much more choices for yourself in the future. And in this case, Kevin decides to do it on and take the advantage of it. And so his banking system is strong. And what happens when his banking system is strong? Let's take a look at after he's put in $600,000, and let's compare. If he decides to put no money in versus he continues finding a way to put his maximum, that he puts in $100,000, and that's going to be in year seven, which you can see at the bottom. So by putting nothing in anymore after 600,000, his cash value still goes up $34,000. Now let's take a look at this difference over here. By putting in $100,000 in his capital, he gets an additional increase of that 33,000. So ultimately when he's putting more money in, he's getting more access to it, he's not losing any of his options. But if he decides to, for whatever reason, to not put any more money in, I think by year seven, I'll still try to have a conversation with him and tell him that he might need a psychiatric evaluation to realize if he's putting money into his banking system and he doesn't want this extra 33,000. You know, I'm not sure, I might need to go over to his home to twist his arm and get something going here. So what happens now when Kevin decides to take passive cash flow at 65? And again, it's still important to really set this up with the right professional. And we're walking with the assumption here that let's assume he dies at 90. Now, in statistics Canada, the standard age for many males is 85. The only amount of money he's taken away from the commercial bank to move to his corporate banking system is $600,000. Remember he was always sitting in the commercial bank. He's just moved it to his policy system, which is $600,000. He didn't have to find new money to put in, he just transferred it. He took it away from the commercial banks because they were not giving him the same benefits that he was going to get by leaving it there. So he can tap into his corporate banking system at 65. And just from the calculations that we can perform together here, he is able to receive an annual tax free cash flow. It's not like cpp, it's not like guaranteed income supplement. It has no implications on your old age security. It's not declared for tax purposes because it's not income. So it's tax free, 41,000 per year. And if he lives until 90 years old, then this totals the amount of money that he's able to extract out while alive. To spend it tax free is $1,071,000. There's more on top of that, when he's finished extracting the money and spending it while he's alive, because of how we've designed the system for him, there's still a remaining death benefit of 1.3 million that can be used to bless his family. Pay the taxes that he can't get out of and donated for charity reasons. It doesn't matter. He has a choice in leaving extra money behind instead of putting his family in a position to pay for his debts or the challenges that he has gone through. So let's show that benefit. $600,000 went in.

2.4 million goes to him and his family or his collective. So doesn't it come to this point where isn't becoming your own banker logically obvious? And there's more. I know this sounds too good to be true, but is just why this is so powerful, this tool that we use. There's a very special tax code exemption for Canadians.

Now unfortunately, very few tax professionals really have the knowledge, training and experience around this special exemption. Now, tax professionals are very skilled and experienced around the government's tax code. However, most of the time they haven't looked outside of the tax code. And that's where we come in to bring in that value. You see, there are two standard ways to get money out of a company. The first way is a salary. And I'm sure if anyone who has a corporation, when you take money out of in the form of a salary, you've got CPP. And just so you know, there's CPP1 and then newly introduced from the government, there's CPP2, now there's EI, there's income taxes. And that's what's going to happen when you pull money out in the form of a salary or a corporation. The second option to avoid paying those type of additional I'll call taxes, options include doing what's called an ineligible dividend and that's going to attract its particular dividend income taxes. Now with the right professionals who actually embrace this concept and truly understand the importance of keeping wealth in the family.

They can harness special tax exemption. And it's called the capital dividend account. So what is this capital dividend account? Well, let's use the example to walk through. At Kevin's age, at age 90, there will be a special exemption created in the amount of $6,050,000. And with that right professional, including the component of tax planning and implementing the concept of becoming your own banker, this allows him, his family to extract 6 million. Option one is to come out immediately from the corporation tax free. It's not stuck in the corporation where the family has to take a salary or the family has to take a dividend and pay taxes to get that money out. So it gets to come out tax free. I mean, alternatively, another choice can be Made where? His family, his children, his grandchildren, his shareholders, if they're structured properly from a tax standpoint, they can decide maybe to draw an even amount of money to come out like $500,000 for 12 years. How many of you would love to set up for your family something like $500,000 to come out tax free every year? So wouldn't you want to have $500,000 of tax free money to spend personally, not even corporately?

So when you build and fund your corporate banking system properly for the long term, you can kick the banks out of your lives. If you're focused on instant gratification, this process isn't for you. If you want to be able to tap into all of your money today, this process isn't for you. The reason why you want to do this today is because you know in the future and what I've just shared with you is so vitally strong to building the legacy for your family. This is why it's so important. So you have to want better financial control for you and your family now and into to the future. You have to believe you deserve to be in a better financial position.

I mean if you don't.

Someone else is going to take control of your hard earned money for you. For a lot of you, you've probably realized this now when you've seen randomly the government decides to introduce new bills and laws that you've never even voted for just to introduce and take more money away from you. Or when the bank of Canada decides to increase interest rates or keep it simple and not increase it at all like they did yesterday, you're at the whims of their control. Someone else is controlling all of the way that your money is leaving you. And this is why you want to make sure you take the next step to become your own banker.

So what I want you to say is, you know, successful real estate investors all have a great coach and please don't try to do this alone. You know, household and business owners who do this right all have a good coach like Henry and the rest of our team. I recommend to getting a coach and when you choose who you are going to work with, here are some things to think about. Number one, you've got to be careful about the life carrier to put your policies with and ensure that your policies are designed properly. Next, most people who are selling you life insurance do not have expertise in this area. So make sure that you work with somebody who specializes in becoming your own banker. And we strongly recommend you to choose someone who's authorizing the banking practitioner with the Nelson Nash Institute. Now the question is what is the cost of doing nothing? What is the cost of just one more year of all your money leaving your family or business permanently? What's the cost of giving up all the interest that your money could have earned otherwise? So schedule your call with us and if this process looks awesome but how will I know if this works for me? If this is one of your question I would encourage you to to schedule your discovery call and with our coaches you are going to get lifelong mentoring. We have quarterly group client coaching sessions. We have a lot of resources like I mentioned. We have the podcast with the book, we have the YouTube channel and we also have a unique client education portal that is on your fingertips 247 once you become a client and don't take the worst from us. We have 926 Google reviews and if all this process did was keep more money, keep more capital in your family or your real estate business, would it be worth it? If create a peaceful stress free financial life Would it be worth it If Nelson is here he will say the infinite banking concept must become a way of life. You must use it or lose it.