76: Conquering FOMO: The Cost of Sidestepping The Infinite Banking Concept

[00:00:00] Hello, everyone. This is John Montoya. And this is John Perrings. We are Infinite Banking Authorized Practitioners and hosts of The Fifth Edition.

[00:00:12] John Perrings: Episode number 76, IBC and the fear of missing out, A.K.A: "FOMO". In this episode, we'll get into some a little bit about FOMO, if you've ever heard that term, the fear of missing out and how to deal with that when implementing IBC. We'll talk about. First of all, why are you even doing IBC? Number two, we'll talk about two crucial points of the capitalization period when we're setting up when we're initially funding a whole life insurance policy.

[00:00:39] And number three, the effects of putting the cart before the horse. In this episode, you can go back and reference episodes 51, IBC Amnesia, and episode 71, your IBC Why, and get some more context around what we're talking about today. John Montoya, good to be back on the podcast with you. We're going to talk about some FOMO [00:01:00] today.

[00:01:00] John Montoya: Let's do it.

[00:01:02] John Perrings: So this episode came up because of a recent situation with a couple of clients, where had some conversations with some great people who, in my opinion, lost track a little bit of really what we're trying to do with IBC. There was a situation that came up where it was really just a similar situation.

[00:01:22] So I'll just talk about it as if it's one person. It came up, this person had some situation going on. They had to reduce their cash flow. They had a cash flow crunch. And so they decided to eliminate the PUA portion of their premium until they could get out of that cashflow crunch.

[00:01:39] And, we talk a lot about the flexibility of whole life and they needed to reduce their premium. And the good thing is they were able to do right? So if you just bought a straight whole life insurance policy, which by the way. I own one, it's not bad, but you don't have a lot of flexibility and or you don't have as much flexibility in how that, how you can pay that [00:02:00] premium.

[00:02:01] When you set up a policy in the kind of IBC style, so to speak you've got the base premium and you have your PUA premium. And so the PUA portion is always optional. And so the It does give you some flexibility when you need it. I've had to do it in the past where I've had to stop paying the PUA portion for a period of time when I started in this business.

[00:02:19] In fact, I, wasn't making much money in the first couple of years of doing this doing this. So not a bad thing, as long as we understand what the trade offs are. Right? And that, especially in the early years, if you don't fund that PUA portion of your premium, the PUA is doing most of the heavy lifting in the first few years of the policy.

[00:02:39] And if you don't pay that, it's going to significantly affect, what that, the trajectory of what you originally thought it would do. Meaning it'll look different than what was illustrated when you first bought it. It's going to look different anyway, but it'll look a lot different if you don't pay that PUA for a long period of time in the early years.

[00:02:56] So he was able to do that, which is good, that way he [00:03:00] didn't have to surrender the policy. Having that flexibility is great. As long as you understand, we need to try to get back to paying that PUA as quickly as possible.

[00:03:07] He didn't pay it for a year. And, I got a call. He was looking to reduce the overall size of the policy so that he could pay a lower total scheduled premium, including the PUA, because he understood that if he didn't pay that PUA, it wasn't going to perform like he thought or like we originally illustrated.

[00:03:27] And so he wanted to reduce the overall policy. So We had a discussion about that and over that discussion, it was determined that he actually did have the cash flow to pay that PUA but he was just putting it in a bank because he had plans to use that cash to buy an investment property. And this is what's spurring the whole talk on our, on this episode today is basically he was getting some FOMO.

[00:03:55] He was like, man, I really want to, get back to my real estate investing. [00:04:00] And he got IBC amnesia and forgot what it was. What the original purpose of setting up the IBC structure was for. The IBC structure, so now we'll get into item one. Why are we doing IBC, right? What's the whole point of it?

[00:04:17] And just going back to the scenario, he was, again he stopped funding the PUA with a Because of a cashflow crunch, his cashflow came back to the point where he could fund his PUA again, but he decided not to, and instead put that money in a regular bank for the purpose of then potentially buying a real estate asset.

[00:04:35] And so what's happening here is we're I call that putting the cart before the horse, and we're not actually doing IBC any longer. Now you're just doing, regular savings, right? So what are we doing with IBC? What we're doing is we're strategically accumulating capital, right? And if we are changing We're basically changing the place [00:05:00] where money enters our system.

[00:05:01] So instead of money going into a bank first, it's just going into whole life insurance. That's all we're doing is changing the origination point of where that money is coming, where the money is coming from to then be further used. So remember. It's not a decision between this or that. It's an and decision.

[00:05:18] I can buy and I can fund whole life insurance to the maximum that I can do. And I can do all the other things that I want to do, right? I can go out and I can buy that the real estate asset. I can buy whatever, a car. I can pay for college. I can pay medical bills. I can start a new business.

[00:05:36] I have the capital I need to do that. And I'm getting safe leverage on that capital through the use of the policy loan provision. And I can use that. I can make every dollar in my system do more than one job at the same time. That's the strategic part of it. The, when we look at like, why would we if that's why we set it up, [00:06:00] why would we stop doing that?

[00:06:01] And the reason is, there's some FOMO going on and I find real estate investors have some of the strongest FOMO that I've ever seen. And it's very difficult to have the conversation with them. It's very difficult for them to get over that first few years of the capitalization period of a whole life insurance policy.

[00:06:20] The whole thing is if you're going to, if you're going to, put money somewhere and we want it to compound, there are three phases to compounding. There's the accumulation phase, the growth phase, and the acceleration phase. So we have to, we need some time for compounding to start.

[00:06:39] Hitting that acceleration phase. What happens is every time you, if you put your money into a regular bank and you then pull it out to invest you've now interrupted that compound curve and you're starting back over again at the accumulation phase, you're never even getting to the growth phase on that particular asset.

[00:06:58] And. For the last [00:07:00] 10 years, people haven't cared about that because you don't earn any interest in a bank anyway. So they're just like, it's not doing anything for me anyway. But that's because they don't know about IBC in whole life. You now have an asset that earns a very respectable return and has all the same liquidity as a as a bank.

[00:07:15] And. So that's the whole point is we never have to interrupt that compound curve when we go out in it and then deploy that capital to buy other assets like real estate or whatever it is you're going to, you're going to buy. And so this is why we always talk about designing whole life policies for as long term as possible.

[00:07:35] They get better every single day, which John Montoya was talking about in the last episode. They just keep getting better and better. But you have to fund them. You have to have the patience and the discipline to capitalize. So Nelson talked, don't be afraid to capitalize. Don't be afraid to pay a premium.

[00:07:52] And when you push off the PUA portion so we talk about strategic capital accumulation if you don't. If you [00:08:00] don't fund it, you're removing the strategic part of capital accumulation. You're just going back to regular old, putting money in a bank. It's, you're not doing anything strategic at that point, at least from your capital perspective.

[00:08:11] I don't know, Montoya, if you've got anything you'd like to add to that. I see you've got some notes here,

[00:08:17] John Montoya: Yeah. Actually just something kind of top of mind with what you're sharing. If a person is choosing to Allocate money in a bank, someone else's bank versus your own banking system via these whole life policies. It got me thinking, that's a very high time preference sort of mindset versus a low time preference, which is ultimately where you want to be.

[00:08:43] And to quickly define what that means. A high time preference means that you're making decisions. Here and now, and you're in a rushed mode because perhaps, FOMO, right? You fear of missing out and you got to get that money in your traditional bank [00:09:00] account so you can go do something else with it.

[00:09:02] And you're in such a rush that it leads to poor decision making versus someone with a low time preference. They are going to be thinking years out, maybe decades, hopefully generations out. If you're really being strategic. And where's the best place to capitalize? The answer, if you're listening to this show.

[00:09:25] So remember, cash is for today. Capital is for tomorrow. You want to be strategic about where you're going to position capital. If you've got a FOMO mindset, you've got that high time preference you're not really thinking of your time and energy, and that's what money is. You're not thinking with a proper perspective.

[00:09:50] So you need to develop this mindset where you're thinking decades out. Generations out because you want to [00:10:00] allocate and park wealth in the best possible place that allows you to really, like you said, allow your money to do multiple jobs at the same time. That's how the wealthiest people continue to compound their wealth over time.

[00:10:18] It's having that low time preference.

[00:10:22] John Perrings: Yeah. And the really wealthy real estate people, they're not just going out and buying individual assets. They're letting the value of their assets grow and grow. They're never letting that value decrease. And that value allows them to go out and it's the value of all their assets that let them go out and acquire more and more real estate.

[00:10:41] So it's not necessarily, if you want to do everybody talks about what the rich people do or whatever. I don't know that a lot of times people really know what that is when I get on, but they're basically creating a system where they're never having to spend anything, right?

[00:10:57] So that's what we're doing with IBC. [00:11:00] So let's talk about the capitalization period a little bit, because this is really where a lot of the FOMO comes from. And I deal with this with a lot of real estate people and, let's be honest, the first few years of paying premiums on a life insurance policy can be a little tough, you you pay a premium, you pay all this premium and you've got, only a fraction of it available in cash value, depending on how the policy is structured, maybe you've got If it's a straight whole life policy, you got zero cash value in year one.

[00:11:29] So that's why we designed it a little bit differently. So maybe you got half available. Maybe you got 60, 70 percent available, whatever it is. Everyone looks at that initial kind of cost. And they just like, man, why would I do that? I could be buying a property. And we'll get into. What's happening right now out there, John's got some good notes about the Airbnb people.

[00:11:52] We'll talk a little bit about what's happening out there in the real estate market. Is it always the best thing to always have to be buying a property? Like the whole,[00:12:00] the classic advice of investing is buy low, sell high. Right now, everyone's just buying buying, and it's like the highest market we've ever experienced in all areas and everyone just wants to buy.

[00:12:11] No one wants to, be patient and wait for the right deal to come along where that, where they can't lose, that's the, that's what a real investor does going back to the capitalization period. It's tough you're looking at that and you see this, maybe depending on your age and health, you see this, I don't know, seven, eight, 10 year window before you break even with the cash value. Like I have a whole other, training on this, but it's like, when you look at it that way, it feels in your mind, like you're just dumping money into this black hole and that's not actually what's happening.

[00:12:47] There is a, like a cumulative breakeven point that does take a while to get there, but within the first few years, like three, four or five years, again, depending on your age and health, you'll be. This, the policy will become [00:13:00] cashflow positive, which means every dollar you pay in premium creates more than one new dollar in cash value.

[00:13:06] And then it just keeps getting better and better from there. So if you look at this from a cash perspective the window is actually not really that long. It's not 10 years long. It's only a few years long and the more PUA you pay. If you have a policy that has some additional room to pay additional PUA, if you can, if you have a windfall or a bonus or, whatever it is, and you could pay some additional PUA, it's over and above what was already scheduled.

[00:13:32] It just makes it better and better from there. It improves all those metrics. The capitalization period is what it is like, When you buy a property, do you have all of your all of your capital available to you on day one? You know what I mean? It's it's this weird mindset where you can't do anything and have your liquidity and cash available, like your investment back to you on day one.

[00:13:55] It's Nothing works that way. So why should it work that way with life insurance? It just [00:14:00] so happens when you do it with life insurance, those costs. So you might have a little bit of a, you might have a cashflow loss in year one, but guess what you bought with it? You bought a huge death benefit. Like how do people not see the value and having a death benefit to replace their income for the rest of their life?

[00:14:16] It's it's not always about the cash value. Anyway, that the death benefits, sometimes a hard conversation to have with a 20 or 30 year old, they, a lot of times don't see the value because they just haven't had the life experience yet to understand the things that can happen, but if you're just going out and investing and you don't have any of the protection set up in your life, if anything goes wrong, all of those investments go away anyway, or they're consumed or best case scenario, your family actually will have to adjust or someone will have to adjust to a different standard of living because now everything that you did is now gone.

[00:14:54] A little bit of, I guess I went on a little rant there, but it's just think about the, it's the longterm [00:15:00] thinking that you're setting up the foundation for everything else that you're going to do in your life. And you can't put the cart before the horse, which is the third point we're talking about.

[00:15:08] I don't know if you, John, you got anything on the capitalization period?

[00:15:14] John Montoya: One point in particular, because I know people will look at the capitalization period to see, when that breakeven period is going to happen. And I do think, it's interesting to look at, but it's so short sighted. And the number one takeaway that I'd share here is that the bigger picture in this, the mental race to, to break even faster, the thing that people really have to take away, if you step back, at a 30, 000 foot view, you have to realize that whatever premium you're putting into this policy, It's not going to go to waste.

[00:15:51] John Perrings: Yeah,

[00:15:52] John Montoya: It's not going to go to waste because it has this future value. And if you really take the time to understand how a [00:16:00] whole life policy is engineered, you'll understand that the cash value has to increase every single year to ultimately endow it. That means the cash value must grow every single year in order to ultimately equal the death benefit.

[00:16:17] And should you pass away prematurely? Not too many of us are actually going to live out to age 121, right? So technically from that end, we're all going to pass away prematurely, not reaching age 121. What we want to have happen is guaranteed to happen. Meaning our cash value is going to grow every single year, but should we pass away prematurely, that cash value is going to blossom and become the death benefit and our family is taken care of.

[00:16:46] No premium ever goes to waste, but if you've got that, again, high time preference, and you're so concerned about the breakeven, and I understand why people are thinking that way, but you've got to take a deep breath. You [00:17:00] got to start thinking decades out, generations out. No premium that you put in is ever going to go to waste.

[00:17:07] John Perrings: That's right. That's

[00:17:08] John Montoya: but yeah, and one more thing that, that I would add there is the opportunity cost perspective. So people who are thinking, Oh, I got to put this money in the bank and I got to invest it. And it there, there's a long term opportunity cost. Because that money that you put away for a future investment goes into a bank.

[00:17:29] You got to withdraw it, then you put it into your investment. It's, again, it's working in one place for you versus building a foundation for wealth, a warehouse for capital that you can use and reuse. Over and over again, and you're multiplying your wealth.

[00:17:48] John Perrings: That's it. Reusing over and over again is the. That's the key is using money, recycling money over and over again to just continue to buy assets and create income. [00:18:00] That's it. And you can't reuse money over and over again when you spend money the first time the money is spent, you can't reuse it.

[00:18:08] So it's you gotta think a banker rather than an investor, investing is investing is risk with banking. We know the terms of the deal upfront. We know what's going to happen up front. That's banking by the way, that's insurance too. That's why banking and insurance goes so well together. Putting the cart before the horse, you're like, why does this happen? You have people I see people deprioritize funding a policy to buy something or invest in something or, whatever it is. And a lot of times it gets down to that that problem of comparing this or that, I talk to people all the time and they talk about life insurance portfolios or, they call it, they make it part of their investment portfolio, so to speak.

[00:18:55] And, again, we talk about this all the time that, life insurance is not an investment. It doesn't, [00:19:00] belong in your portfolio, so to speak. It does belong in your, big financial picture. But it's not an either or decision. We already talked about this. It's, you're doing this first and then you're doing something else.

[00:19:11] It's not, it's just the place where money goes first to then be deployed in a strategic manner. And so when you deprioritize funding a policy, and so meaning you're not paying the PUA portion of your policy. Again, we talked about the early years. This is again, the main thing. That is driving cash value growth in the early years. I, believe me, things happen and it's good to be able to roll with the punches, but if you're just not funding the PUA so you can store your cash somewhere else and then go buy something, all you're doing is delaying the capitalization period. And so the, again, the whole re like, when we talk about the strategic manner of where we store our capital and life insurance, once we get past this [00:20:00] capitalization period, every dollar you pay in premium creates more than one new dollar of cash value, but the longer you delay capitalizing the policy, the longer you put off making it as powerful as it could be.

[00:20:15] You, you should be doing everything in your power to fund this policy as aggressively as possible. Obviously responsibly and sustainably. We don't want to get into a situation where, we're not talking about designing a policy that's beyond your capability from a cashflow perspective.

[00:20:31] I'm just talking about within your capabilities, don't then. Retract your abilities to, to capitalize and then, and slow that down, all you're doing is putting off the compound curve, you're putting off the ability to use that capital and you're putting off making that whole life insurance policy become.

[00:20:51] Literally a liquidity rocket ship. Imagine a place where you could put cash, where you pay a dollar in premium, and [00:21:00] then it creates $3 of cash value for that dollar. Every dollar creates $3. Every dollar creates $4. It gets, the longer you have this, it just gets better and better. So we, we want to be able to, Drive this cart not put it before us.

[00:21:15] It's not about, it's not about how quickly you can start deploying the capital. It's about how quickly you can start creating your foundation of capital. The other thing is there's no question. I have the numbers. I've run the numbers. Like I, I get into Excel and do all that stuff.

[00:21:33] And, I know for a fact that if you fund a whole life insurance policy first, and then start doing your real estate investing, you will come out millions of dollars ahead in 30 years, right? There's absolutely no question that's true. And the people that can't get Their head around that are just the ones that only see that first few years.

[00:21:57] And it's like, how long are you planning on living? Are you going to die in [00:22:00] three years? If you are like you've you're protected at least with the death benefit, but most of us are going to be living for a while. It's you can't make plans just for. I'm only capitalizing for a few years.

[00:22:11] So it's anyway, I'm just saying if you can think long term, there's absolutely no question that IBC blows investing directly out of the water. No question.

[00:22:22] John Montoya: I'll add something there too, for, especially for real estate investors, because they will buy a property and then with appreciation, what are they going to do with that equity in the property? They're going to leverage it, potentially get a line of credit and then do what? Get into their next property.

[00:22:46] And it sets up. Potentially a lot of risk. And if you think about the capital that if you would have reallocated and directed [00:23:00] capital to your whole life policies instead, what you are doing is essentially setting up the safest collateral. That you can access anywhere.

[00:23:13] John Perrings: That's right.

[00:23:15] John Montoya: Think about real estate. We know because of the inflation problem in this country with currencies.

[00:23:22] That our money gets devalued every single year. And by the way, that's the main reason why property values go up because it becomes a monetary premium. It's where people even though they don't frame it this way they think I gotta buy a property to stay ahead of inflation. And so as property prices go up they leverage it.

[00:23:40] They finance it with a traditional bank, they get the loan proceeds, and they proceed to buy another property, and then rinse and repeat, and then all of a sudden you've got, potentially millions of dollars worth of debt and equity, on paper, but then what happens? We get to the end of a business cycle [00:24:00] and all that comes crashing down.

[00:24:03] And if you have a portfolio of whole life policies, where instead of leveraging and taking on a supreme amount of risk and betting on the business cycle, that it's going to keep going up forever, which it doesn't, instead you're leveraging safely through your whole life policies. It's a completely different, but superior, way to finance your next purchase, your next investment.

[00:24:34] John Perrings: Yeah, and you bring up a, such a good point because no one blinks at eye, no one blinks at eye at buying a property and then using taking out a home equity line of credit. Everyone's yeah that's awesome. That's one of the reasons I buy, I want to buy my house. Meanwhile, like nothing about that is, has any guarantees on it.

[00:24:56] Like we saw during COVID, Wells Fargo shut down lines of credit. [00:25:00] People were calling their lines of credit, so you've got this situation where all your equity is taught, all your value in your house is tied up and subject to the whims of a bank. You have to get approval to use that equity.

[00:25:16] Meanwhile, with whole life insurance, it's the same thing. It's just a different product, but in our format, it's We have control over everything. We have guarantees on the use of everything. We have guarantees on the payback terms of everything. So it's the people that have no problems with home equity line, a home equity line of credit, it's I really have trouble seeing why they can't get their head around using whole life insurance for the exact same purpose, but just on better terms.

[00:25:44] So I don't know. It's a weird, mindset thing that I, I've definitely had a couple go arounds with people and you just gotta let them go on their way.

[00:25:53] John Montoya: Yeah, I think to that end, what I'm hopeful of is that those real estate investors that [00:26:00] we're talking about, they just don't know how this banking with whole life works because when you compare the financing options through your whole life policy compared to a traditional bank, there's no competition because you can never be turned down for a loan.

[00:26:16] You're never going to have your, a freeze on your line of credit. And I'm using that loosely here. When you take a policy loan, I, sometimes I'll talk about accessing the cash value and it's like your own personal line of credit with a life insurance company instead of at a bank.

[00:26:31] That's essentially what it is. When you look at it and if you have something happens where you've got tight cashflow and you can't come up with with a policy loan repayment. The life insurance companies, they honestly, they don't care. It's simple accounting.

[00:26:46] If some, if something happens, you pass away prematurely, you got that loan outstanding. They're gonna they're gonna use the death benefit. They'll pay off the loan and the remainder will transfer to your beneficiaries tax free.

[00:26:58] John Perrings: Peasy. yeah,

[00:26:59] John Montoya: yeah, [00:27:00] simple accounting. But in, in the meanwhile.

[00:27:02] You're, it's completely up to you. You want to repay a loan over two months, 10 years, or treat it like a 30 year mortgage what have you, it's completely up to you. But you have none of the concerns. You can sleep at night knowing that you are sovereign. You have the ability to determine your cash flow every single month.

[00:27:22] And

[00:27:24] John Perrings: Yeah. It's it's one of those things that it's interesting because you get the people that just won't even acknowledge it. So there was like, that's a dumb idea, whole life insurance, infinite banking, whatever. But then on the flip side, you'll get people that were totally bought into it.

[00:27:41] They buy a whole life insurance policy and then they forget what they were doing with it. One of the things we try to do with this podcast is just bring that back to the forefront so that, we don't forget why we're doing it and, it's easy to forget. We're in the business.

[00:27:56] We're talking like we're lecturing people and [00:28:00] I guess, don't really mean to come off that way, but, we're in the business, so we live and breathe this. Every single day, and we're having to explain it every single day. And so it's easy for us to say, don't forget, but like for, someone who just had, who started this, they've got a totally different career, totally different way of, using money, totally different circumstances.

[00:28:22] And the mainstream financial advice is always in your face, right? What we do is not something that anyone else really talks about because they just it doesn't really serve them. The finance, this doesn't serve the financial industry for you to be able to have control over your capital and have control over your financial life, have control over your, over the banking function that of course they don't.

[00:28:47] They're not going to talk about that. It's easy to forget. It really is. Because of all the noise out there, that's constantly in your face. And you're like, it, it's all designed to breed FOMO. Everything out there is designed to give you [00:29:00] FOMO.

[00:29:00] And it didn't always used to be that way we used to have principles of saving that used to be the main principle. And by the way, I can also show you the numbers that you don't need a high rate of return to get ahead in life. It's not about rates of return. It's about saving. And if you guys ever want to schedule an appointment. I'll show you the numbers and how it works. You can do really well with a 2%, money market account. Like I've done the numbers on it. You don't have to go out there and take a bunch of risk. Get yourself over leveraged, get over your skis and do all this stuff.

[00:29:33] If you have a way to control your savings and have a strategy to do that so that it doesn't affect your lifestyle, it'll blow anything else you do out of the water and whole life insurance just happens to be an incredible asset for you to save.

[00:29:51] John Montoya: it's incredibly boring.

[00:29:54] John Perrings: It is boring, especially in those early years.

[00:29:56] John Montoya: Yeah, I totally want to [00:30:00] oversell how boring it is because it's guaranteed to work.

[00:30:04] John Perrings: That's it. And, so people, people will contact us and they are like gung ho about using policy loans and doing all this stuff. And, so John and I are constantly talking to people about, the order of operations, which is: capitalize first. Like you don't need to just go out and immediately start borrowing against your policy to buy this investment or that investment, people are missing the fact that.

[00:30:29] When you're, when you have money, when you have cash, when you're capitalized, opportunity tends to find you. This is, Nelson talks about this in the book. Opportunity will find you. You don't have to just go out and try to, be in the group that, talks about all the real estate investments and buy whatever real estate investment they have available.

[00:30:48] That's not something you have to do when you're well capitalized. You don't have to just jump on anything that's available. Have cash, sit on it, like. All the biggest investors, Warren Buffett, all the guys [00:31:00] out there, they're sitting on billions and billions of dollars of cash right now because they know there's no deals out there right now.

[00:31:06] So you gotta find, you gotta have some patience. That's the real quality of a good steward of their money and their wealth.

[00:31:17] John Montoya: Yeah, it's really all the mom and pop investors that tend to go all-in on things and guess who gets wiped out? You had mentioned to start the show, I was going to talk a little bit about what's going on with Airbnbs and just some of the stuff that, that I'm reading, I know getting into COVID that time, that timeframe few years back on social media, there was a big push because people were buying these properties to turn into Airbnb and.

[00:31:47] When I'm on Zillow, I see it in the ads for Realtors marketing these properties, that this property could be a great Airbnb, or, it's got an extra bedroom and this and that. And, a couple of years back, you have these social media gurus who are [00:32:00] really promoting this and flaunting almost that, their cash flowing just obscene, obscene amounts because, that, that's where the market was. And we're going to have a shakedown here. Probably in the next year or so because interest rates have gone up so high and everyone's hurting right now with regards to their cashflow.

[00:32:22] And so what's happening is that all the people who rushed in, they got FOMO thinking that they could buy these properties, that's going to go up in value forever. And they can Airbnb, short term rentals and cash flow $10,000-$12, 000 a month on a $4,000, $7, 000, w ho knows what the mortgage payments are.

[00:32:41] Then, but what it is now, if they're trying to do it it's, you can't even do it anymore, but now the revenues are completely down. So people aren't staying at Airbnbs like they used to. And what's going to happen? You've got a ton of people. That have purchased these properties who can't cashflow and [00:33:00] they don't want to put those properties on the market right now.

[00:33:02] They're scared to do it because interest rates are so high. The amount of buyers out there, if you're not paying cash the mortgage payments are obscene. These, we're probably going to see real estate properties values drop here in the next year. At some point, I would think, I have no crystal ball, but if you read in between the lines and you hear, you, you read the Reddit sub posts and there are people hurting out there that can't make their payments.

[00:33:28] And we almost have a setup that's eerily similar to what happened during the great financial crisis, where in that case it was people buying adjustable rate mortgages. But now we have the situation Today, where people rushed out and bought properties and Airbnb them and how they may be, Airbnb broke in the next couple of years because they aren't cash flowing.

[00:33:51] And so we talk about the value of having access to capital. You want to be a real estate investor. You don't want to be buying right now. [00:34:00] You want to wait until, unfortunately the, for these people that aren't going to be able to make it through this tough time that's coming.

[00:34:07] You want to be buying on the low end. How do you do that? You have the capital to do it and the capital to go out and negotiate great deals. But if you're rushing into everything, because you believe what the social media gurus are telling you, you're taking a lot of risk and you don't have to.

[00:34:27] John Perrings: I was just chuckling cause I've never, I hadn't heard the Airbnb broke term. That's pretty good. Yeah, it just gets into the it's patience. There, there's so much FOMO out there. You don't have to do all the fancy stuff. Like you don't have to join the real estate groups who like to bring you that the deals that they're in on that they have terms, by the way, that are much better than your terms usually.

[00:34:51] So just be aware out there. Like it's not. It's not as easy as it looks. And so you got to, get into it, get some experience [00:35:00] and have some patience, like capitalizing a whole life insurance policy. And just, if you didn't even do anything with the cash value. You're going to come out pretty well even if you don't do anything with it and you just save it will be pretty good, like we wanted, we want to eventually do some stuff, but we don't have to feel like we're constantly under pressure to always invest.

[00:35:23] Alright hey guys, this has been a great talk. John Montoya, thank you very much. If any of this is resonating with you and you want to learn more about how IBC could be implemented in your life with your specific situation, head over to our website, TheFifthEdition.com. You can book a free 30 minute Initial consultation with us right there. No obligation. And we can talk about you and your situation. If if you happen to be one of those people that just likes to do all their research before they talk to anyone, we also have an online course available right at the top of our website there at TheFifthEdition.com. All [00:36:00] right. Thanks, John.

[00:36:01] John Montoya: Yeah. Thank you. All right, everyone. Take care.

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