Real Estate Investing With Infinite Banking | Wealth Without Bay Street Podcast

You are listening to the wealth without Bay street podcast, a Canadian guide to building dependable wealth. Join your host, Richard Canfield and Jason Lowe as they unlock the secrets to creating financial peace of mind in an uncertain world. Discover the strategies and mindsets to a financial future that you can bank on. We love to provide education here. That's the purpose of our podcast. We even put together an incredible masterclass that you can access where you can learn all about how to implement this process of becoming your own banker in your household and in your business. There's a bunch of great content there. Head over to wealthwithoutbaystreet.com masterclass. Part of the package you're going to get is going to include the bestselling book, becoming your own banker. This book is a game changer. You got to have it. It's one of the best books on the planet. And I'm so happy for you for taking action to make sure you get a copy in your hands. All right, everybody, we are here. It's Richard Canfield and my amazing co host, Jason Lo. We are doing a. A quick little podcast, a little thing we like to call wealth without Bay Street.

Yes. And it's day 647,222 of the COVID Covid crisis. The COVID 19 pandemic.

And so, out of. Out of all that, what we've decided we wanted to do is have a nice little conversation about something that keeps coming up for us in conversations with many people, and that is, how can I improve my real estate investing business or real estate investments in general, by implementing the process of becoming your own banker?

Well, you know, I would. I would start by saying that, you know, anything that you're doing financially is dramatically improved by implementing the process of becoming your own banker. That is, when you're dealing with all things financial.

Unless you're gambling, we can't help you with improvements.

Right. Yes. Thank you.

Gambling. Not everything that you do financially gambling. That doesn't count if you're a shylock. Yeah.

No, this will not help you.

To be fair, we don't really get a lot of people who are like, yeah, I'm a professional gambler, or versus, like, I'm a, you know, like a recovering gambling addict and I'd like to become your own banker. No, that doesn't happen a whole heck of a lot.

Can I borrow money to gamble?

This process is not for you.

It's not gonna work well for you. So you can see that. Day 646,228. I think I got. No, it's not the same number, but let's say. So we've been having like incredible discussion all day long and the topic of real estate investing, it just keeps coming up in people who are connecting with us. We want to give a special shout out to our friends at the Breakthrough Real Estate podcast.

Yeah, kudos to them.

And, and we really were very grateful to be interviewed. We'll put a link to the, to that particular episode. We encourage you to check them out as well. But we just had such an incredible response from that interview that we wanted to expand this conversation because we talk about this all the time with clients.

Yeah. And you know, both Jason and I, and I think most people who are in the practitioner space have clients that are real estate investors. There seems to be a natural connection and I think I recognize where that connection is. It was something that I started to see very early on after I read Nelson's book. As a real estate investor myself and just someone who appreciated and likes what real estate could do for you, what I recognize is that you're building and creating controlling equity and all the same advantages and things that you. The reasons, the primary fundamental reasons why someone wants to go in and buy investment or a piece of real estate. Let's, we'll use a long term buy and hold type of property because there's many kinds of ways you can go about doing it. Well, you want to have, you want to build equity. You know, you can get it paid for, you can have more control and you can create cash flow. These are all common things. You might, you can get appreciation assuming the market's going up. COVID 19 might change that for some areas. But. Yeah, but those are the primary fund, you know, kind of fundamental baseline reasons why someone often wants to go and do that. Right. And so the same reasons apply for why you would want to start becoming your own banker, why you would want to have a high, high quality, high cash value, well designed, participating, whole life policies because they create, it creates very much the same environment. The only one of the biggest differences though is the real estate market can go up and down and that happens with things that are outside of our control. Global pandemics being one of those things, you know, political changes, et cetera, will, you know, the price of oil. These things can all adjust and tweak the value of your real estate with outside of your control. But the park contract, that's got forced appreciation. It's a guaranteed growth. It's going to happen no matter what. You literally couldn't Stop it. And so that's one of the fundamental differences between the two different types of categories of asset class.

Well, you need, you need access to capital.

Got to have it, right? And so real estate investors, more than many other people do.

Have you ever had a migraine before?

Yeah.

Okay, so you can relate to this, sitting down with a lender and having to provide all of the financial details about every property that you own. The variety of ratios that get calculated. Okay, so you see where I'm going with this? Migraines. The migraine is already starting.

It took me right back to one of those moments where I'm like, look, I know I can make this property work. Like, just look. What? No, that's going to rent for this much. Right.

So the key is that you, you have to go through a gatekeeper to get access to capital.

Right?

And you need capital to achieve your objective of either, either starting or expanding your real estate investment portfolio. In order to get access to capital, what do you require? You require good credit.

Good credit. You got to prove to them that you don't need their money.

Okay. You need, you've got to go through a process, right?

Verifiable income sources.

There you go. You have got to complete a large number of steps before you get to either an approval or a decline. Well, if you know that you can store capital, grow a pool of financial value that only goes in one direction, up every single day, contractually, every single day. And you know that you have access to that growing pool of financial value to be able to leverage it, to utilize it as collateral. Now, real estate investors understand that word because to grow their portfolio, quite often what we experience is we experience, especially with, you know what I would say a more mature real estate investor, they're tapping into to equity, which is just digits. What is that really? It's just the bank shuffling digits around. So we, we get access to equity and we go and purchase more of the very same asset that we're accessing the equity from. Makes sense.

Yeah, we're just transitioning the equity from this place over to a new place. So then a new place and then a new place. And so you're aggregately spreading the equity across multiple locations. Right.

And, and what can happen is real estate investors can find themselves in a position where one problem creates a big migraine in their portfolio. So look, I've maxed out my access to capital. I've got a bunch of doors, property, and I had a vacancy. I had a toilet blow up, like with Mel Gibson in Lethal Weapon. When he went into his partner.

He's strapped down.

Yeah, he's strapped down.

Riggs. Riggs. Yeah.

And then, you know, big explosion occurs. So now that. Right, right. If you have a tenant.

I'm gonna watch that movie.

This really likes burritos with massive amounts of jalapenos on them. You could have a problem. So one, One problem can create.

Somebody's listening to this that's had that tenant experience.

You're laughing. You're like, these guys are talking to me. So think about how that can create a migraine in your portfolio because you've created a disruption to cash flow that's maybe already pretty tight. Well, first of all, if you can eliminate that from happening, if you know that you have ready access capital, if you can eliminate the steps of having to go through a gatekeeper to gain access to the capital, and you completely control the repayment schedule. So imagine real estate investor, you sit down at the commercial bank and you say, hey, I want to buy this fourplex. And the commercial banker says, not only are we super happy to lend you the money, you repay it on your own schedule. And we're going to contractually guarantee that the property value is going to rise every day whether you want it to or not.

All with a smile on their face.

Now, first of all, that would be.

It would be a Twilight Zone moment. Where's our Twilight Zone one?

So that would definitely be a shock to the borrower.

Yeah.

And an immediate termination for the banker.

So he would be the. He would be Jim Carrey from yes man, where he's just handing out loans to everybody.

Loan approved. Loan approved. Now, if you take. If you take all that away.

Okay, so now you have the money. Now take the money away. Same story. No, you can't. You cannot buy things with money you don't have.

The book is free.

Great.

I can put it on my credit card. Okay, so we digress.

Awesome Saturday Night Live skit with Steve Martin. One of the best ever, in case you haven't watched that before.

So you eliminate having to go through the gatekeeper. You have ready access capital. You get to, you know, work closer toward the achievement of your objective with fewer obstacles. And you're not only accumulating, you know, net realizable equity inside of your property, but you're also simultaneously growing a pool of financial value called cash value on a daily basis inside of your program.

And here's what's really cool about that. You have many different streams of flow of money that are happening in a real estate oriented, you know, you have to build up the amount of money you need for the down payment. It's got to come from a reservoir, whether that's a joint venture partner or whatever that is. But let's assume just as a circumstance, it's you, you've built it up over a period of time. Yeah. If you've been able to house that money inside of an insurance contract or contracts prior to using it for buying the next property, you've maintained the compound potential of that money inside of the park contracts for the rest of your natural life and you can pass it on to the next generation. So you have a multi generational effect just by the fact that you made that one fundamental change in your real estate practice. Yeah, that one thing. Then think about the cash flow from the piece of real estate. Well, you need, when you're doing your numbers and you're looking at analyzing the deal, you always have to set aside some budgetary items for things like a vacancy allowance, things like a maintenance schedule. Like, you know, you have to a lot for maintenance. Properties require regular maintenance. Right. Sometimes they have high ticket items that happen like replacing the furnace, replacing the roof, replacement, replacing the septic system, which I just signed a deal on to do for my acreage. So these are really costly items. And that capital has to come out of that reserve that you've been building over time because you never know when the expense is going to be there. Well, what happens for a lot of people is they, they plug that away into the property account. That account gets a little bit big enough and it's, it's not really very efficient. It's not doing anything. They need to have liquidity so that if the furnace goes, they can pull the trigger right away. But that money's not really having a lot of good growth effect to it. More importantly, you build up enough of a reserve, it's like, well, boy, I got enough in here. I can go get another property. But as soon as you go put in the other property, that's when the furnace goes. Now the money's now tied up in the other property. You got to go backwards by stroking a credit card to go get the furnace replaced. Right. So by being able to take those kind of capital, you know, cash flow amounts and being able to house them appropriately inside of a park contract, you're now creating a double duty effect on that over time. And you're still maintaining a high level of control. You have a good, great deal of efficiency. When the repair needs to happen, you can access it from your reservoir. That reservoir instead of Being the property account is now coming from the policy account. Yeah.

And what we're describing here is, we're describing a process. It's the process of becoming your own banker, the infinite banking concept. And you know, Richard, both Richard and I have extensive experience in, in real estate investing. You know, being members of the Real Estate Investors Network for several years and embarking on that journey. I had 13 properties at one point. You still have properties?

Got a couple I'd like to get rid of. Anybody's interested.

So we're coming from this with some experience, but there are so many real estate investors who, when they connect with us and they understand the process and how they can become their own banker, they immediately go to, wow, where were you 10 years ago, 20 years ago? Well, you can't say that 10 years or 20 years from now because you're, you're here today and you're learning about.

This process which comes to something you like to talk about. You actually reference this in the Breakthrough Real Estate podcast. And that's the cost of inaction completely.

Like if you, if you're continually abdicating the function of banking to someone else and transferring that money away from you. Because, look, when you, you've got money that comes in from rental receipts, right. And where does the money go?

Into a bank. Right.

And what we think is there isn't really there. It's just an illusion. And we don't believe for a moment that the commercial banks are letting money sit still. They can't.

No, they have to put it back to work in order to appease their shareholders.

When, when I talk to real estate investors and I ask about how much, you know, money their, their properties are making, and they tell me so. Well, they're not really making that. You're just handling it. The money comes in, it goes into the banking system, the money sits there. You believe it does, which it doesn't, waiting for you to take care of, expanding your portfolio, paying for toilet replacements, dealing with maintenance issues, property damage, property taxes, so on and so on and so on. Well, the person who controls the function, the process of banking, I'm not involved in real estate by way of owning it, with the exception of our previous principal residence, which we decided not to sell because of market condition. But I don't rely on a commercial bank for anything other than the convenience of debit. I'm not in a position where I have to.

If in that particular property the tenant, you know, during the COVID crisis, got laid off, wasn't able to pay their rent and you and you weren't in receipt of that rent and you, you were able to completely dictate the terms of how that payment was made on the loan that you structured because you control the loan.

You got it.

You could take a payment holiday during the crisis, wait until that tenant is back to work, give them a break, or however you need to sort that out or replace them as required, be able to have income coming back in again and you could just restart your loan schedule at your discretion and no one could stop you.

No one can stop me. So here, that's good. Here's where, here's where the big sell comes in. The big sell. Is everybody ready? So we have put together.

Oh, you've brought it. I didn't realize you brought the vault.

Yes, I brought the suite. Now this is the banker's vault.

If you're watching, if you're listening to this online, picture a cool looking amazing box that has a super awesome cool design on it. And inside of it you're going to find all kinds of amazing education resources which includes the book becoming your own banker, the book the case for ibc, how to secede from our current monetary regime, one household at a time and the and asset which will be the Canadian version when it's just released shortly.

Picture a day where financial control is in your hands. Not a bank, not a loan officer, not a temperamental risky stock market.

I'm there.

Wasn't that good? That's part of the big sell.

That's the big sell.

Now what's interesting is that so we also include the IBC masterclass as part of the vault and complete access to all audio podcasts, like everything that a person can go and access on their own. But the, the IBC masterclass, the whole package. Right. You choose your, your path of learning. Do I want to do I want to watch, listen, read. Combination of all three.

What I'm finding for a lot of people. On that note, glad you said that. The path of learning, most people have like a primary mode but we really absorb from all those environments. I know, I know a little bit of all of it was really helpful for me. I'm a very visual person. So I like, I like the video format to me yeah. But you know in video you get audio and so like that's one of the reasons why we chose to do the podcast through Also on the YouTube channel is to be able to provide that extra engagement so you can see what the banker's fault looks like on the video.

Totally. And you know this, this is a Like, this is a $300 package. So you could send us $300. We would really appreciate you sending us $300.

We'll get a policy, but we're going.

To provide it to you for $98, which is smoking. That's the big sell, right? We are. We are selling to you right now. That's what we're doing. We want you to buy something.

Yeah. Oh, my God. Oh, my God. It's the end of the world.

So here's. Here's.

You want me to buy something of value that could impact my life in a positive and dramatic way?

I sure do. And I want you to buy not only one for yourself, but I want you to buy one for the person that you're looking at right now.

Who is that? Who is that 80s real estate guy again? Tom? Tommy Vu.

Oh, Tommy Vu. Oh, this gu. Okay, you gotta Google this guy.

Yeah, he's got some YouTube videos. You can find old YouTube clips of Tommy Vu on. Come to my seminar. Yes.

You want big boat, pretty girl? Come to my seminar. Now. That guy, that guy.

That guy that was selling for sure. Oh, definitely. This is a little. This is a little. This big sell is very, very different than the Tommy Vu style.

Well, so here's the difference. This is all about teaching you to have money come back, not flow away. And when you think about the feedback that we've gotten from the Banker's Vault, from people who have purchased it primarily through the Breakthrough Real Estate podcast, which was a huge success, which kind of predicated us kind of putting this offer together and saying, hey, we'd like to offer it to wealth without Bay street listeners, is that if you look at the feed, just the feedback, hey, we, you know, we want to know how this process can work for us. We've read Nelson's book, we've read the Case for ibc, we've read the End Asset. We've watched all the masterclass. We've consumed every podcast. We'd like more podcasts. Keep them coming. What's next? They're. They're excited because they understand the problem, which is banking. They understand that they can control the function of banking as it relates to their needs, and that their existing real estate investment activity is dramatically improved by embracing this process.

Yep.

And so the longer you wait to learn about this, or. And I would go so far as to say as to implement it, the longer you penalize yourself. I'll give you a personal.

It's not. It's not just limited to you, though. If you have family or People that you care about, you're, you're technically penalizing them too because by not having something like this in place, you're losing out on a ripple effect that will happen, that will take place when sooner or later somebody's going to die. Sorry, fact. Get over it. Yeah. And when it happens, there's a choice to have a big fat chunk of money show up tax free or not. When you incorporate this process, guess what.

You get that too. Totally.

So you either want it or you don't want it. It's that simple.

It's not simple, complicated. But we really like, we, we did the, the Big Sell. Like this is.

Yeah, yeah, yeah, that's. Whatever. Yeah, we should, we should, we should make sure the title of this episode.

Is the Big Sell Big Cell get the Vault. I mean you'll be, you'll be glad you did because.

And so I, we're the link for that. We'll put in the show notes, but it's wealth without bay street.com forward/vault.

That's a really catchy link.

That's pretty good.

How long did it take you to.

Come up with that? About four seconds.

Okay, so let me give you this.

About as long as I could take to type it.

Now, Rich, if we, if we walk through this logically. So In April of 2008, you could still get 40 year amortizations on your mortgage.

Correct. In Canada. Yeah. And, and you could do like basically zero down. If you could qualify to do it, you could do zero down financing, which mean you, with once you paid the CMHC fee.

Yeah.

And the 40 year loan, you basically were the equivalent of 110% leveraged on that property or very close to it.

Okay.

Which is crazy ludicrous at the peak of the real estate market.

Okay. And you know the, the interest rate at that time, it was like 2.68. Like it was really strange rate. It was initially citizens and then it TD bought Citizens portfolio of mortgages. And so we thought, okay, this is pretty good. And you know, you could pay monthly, biweekly, weekly, three times a day, bi.

Weekly, accelerated like whatever that was.

So we thought, okay, this was prior to me gaining an understanding, being introduced to what we now know to be the process of becoming your own banker. So my wife Rebecca and I sat down, we said, hey, this sounds really good. The amortization works, the rate's good, the payment's low. Let's send an extra couple hundred bucks a month so we can pat each other on the back and say we're accelerating the prepayment to the mortgage. Now we'll probably take it from 40 years down to 38 and this would be fantastic.

Probably more like 30, but yeah.

And so we thought this is great. And so 1892 bucks a month was leaving the family, right.

Never to be seen again.

Person saying, well yeah, I mean, but you're building equity for who?

So every time that you hit the policy, you make a principal payment. In theory that equity is yours, but it's only yours if you sell. What you're doing is you're protecting the bank's risk, you're reducing the ranks risk.

You're not only increasing the bank's margin of safety, but you're strengthening them financially as well.

Because they got the whole eighteen hundred and ninety two dollars.

Well they also have a mortgage on the whole house. Doesn't matter, right. How little you still owe.

And you got to pay the fire insurance to protect the bank in the event that the house burns down or like the recent floods in Fort McMurray, Precise bank gets paid first.

So fast forward seven years later and we wave goodbye to TD Bank. Okay, so 33 years ahead of schedule. TD bank is out of the picture. We had a significant policy loan balance in our program of north of 200,000 plus. But we control the debt, we control the repayment schedule of it. We still own the asset that we used the money to buy, which you.

Now are receiving a rental income on.

Precisely the 1,892 bucks a month that we were contractually still obligated to send away from the family is now coming back. And we get instant re access to everything we put back in without having to go through a gatekeeper. So this becomes. You think of real estate, you think of location, location, location. We say location of the equity. Location of the equity. Location of the equity. Because all of my cash value in my policies are growing daily uninterrupted by the loan balance. So let's compare that to. Well, let me say this was my situation dramatically improved by implementing the process.

I would absolutely say that hands down, especially if you, if you look at in relevance to time. So this is something we learned from Todd Lankford. Everything is in relevance to time. We are in a current whatever 5 million days of COVID or whatever. You just.

Well now it's. We're 622,448 days.

Yeah, we're, we're well into the pandemic land. Like things are just starting to open up in Alberta again here. But here we have literally some Unprecedented epic shifts in overall economic state across the globe. Right. And, and you've got a property in a geographic location in Alberta that will be, that is heavily impacted by, generally by what happens with oil prices, etc. Right. And so you've been able to dictate and control the terms of that entire loan and you're not forced into a position to do anything with it because no one can force you to do anything. Right.

And God forbid, if the unthinkable had happened to Rebecca or myself, we would leave no indebtedness behind to the family.

They don't have to worry about selling the house to be able to clear it all off or ruin, you know, whatever. They, they can deal with everything appropriately because it's been set properly in advance.

You got it. And we have a tax free windfall that comes walking in when it's needed the most. And so, you know, for, for people who, who are watching, listening, combination of both. If you found this helpful and you find yourself thinking, I really want to understand this process even more, then maybe.

You need a vault.

Maybe you need the banker's vault.

The banker's vault.

And again in the vault, what do they get, Richard?

They get a copy of my personal favorite, becoming your own banker. And we recommend, by the way, that when you receive the vault, once you place your order, that that is the first book that you read. And there will be, you know, a little bit of material in there that identifies some recommendations on the best, some best practices on reading the book to get some, some of the best value out of it. You're going to get the case for IBC and then the, and asset, which, the Canadian version to be released here.

Shortly and access to the IBC master and the Master class, which in and of itself is normally a couple hundred bucks. And so you get the whole deal.

There's lots of resources inside of that, that, that segment there definitely.

And you know, you, you can send us 300 bucks if you'd like. We'll take 300.

Yeah.

But if you want to pay the show stopper special, we're kind of like, we're kind of like the Shopping Channel, the show.

I like how you're just coming, you're coming up with new terms for what to call it.

And it's 98 bucks less than a nice dinner out.

Yeah. And, and it's, that's basically less than if you wanted to just buy all these books retail on Amazon and get them shipped to your house.

Oh yeah.

It's like, it's literally, it's a, it's a smoke. It's a smoking.

I wish we should put. Can we get.

I remember when I bought Nelson's book the first time and the exchange rate was pretty, pretty crappy in Canada.

Yeah.

At that time and by the time it landed in my door, it was, it was pretty close to 50 bucks Canadian. Cost me.

Well, you know, we will ship this whole vault rate to whatever address you want it to go to within Canada. We'll ship it to the US too. We'll send it to the US but we'll just charge you $400 shipping and handling.

I love it when some of your administration team is going to listen to this podcast. Like, oh my God, we're going to be doing what?

So kind of like the shopping channel. We should have the, like the ticker that you know where it starts at like, in our case, it starts at like a hundred and then you start to see the number going down and a person's like, oh my God, what do I do? I need to click the link. I need to get my vault. So that, that's the big sell. You'll, you'll be glad you did. Take Take action. Because the longer that you let someone else control the function of banking in your life, the more you're penalizing yourself because money's leaving the family. You can't save it again, you can't spend it again, you can't earn interest on it again. Let's take action. That puts you in a position where you can begin to take control of this process. And anything that you're doing financially, with the exception of gambling, is dramatically improved by implementing the process of becoming your own banker.

Yep. For sure. Well, we appreciate everyone tuning in and listening and especially for any of the real estate investors out there, hopefully you enjoyed some of our chitchat about the exploding toilets, etc. With that, we're going to close off this show and we look forward to hearing you on the next episode. Make sure to hit subscribe and please rate and review the show. We appreciate that that's how we get some more rankings so that people can hear this message a little bit more. And we appreciate you as listeners and we appreciate everyone who has given us such positive feedback for the shows thus far. Thank you so much. Keeping coming. Thanks for listening to the Wealth Without Bay street podcast where your wealth matters. Be sure to check out our social media channels for more great content. Content. Hit subscribe on your favorite podcast player and be sure to rate the show. We definitely appreciate it. And don't forget to share this episode with someone you care about. Join us on the next episode, where we continue to uncover the financial tools, strategies and the mindsets that maximize your wealth.