Building Wealth Outside of Wall St

John Harcar (00:00.814)
All right, guys. Hey, welcome back to the show. I’m your host, John Harcar. I’m here today with Eric Patterson. And what we’re going to be talking about is building wealth outside of Wall Street. Guys, remember at Investor Fuel, we help real estate investors, service providers, mean, all real estate, real estate entrepreneurs, 2 to 5x their business by providing tools and resources to build the business they want to build and live the life they want to live. So Eric, welcome to our show.

Eric (00:26.643)
Thank you, glad to be here.

John Harcar (00:28.59)
Yeah, man, I’m excited. I’m excited to talk about our topic today, building wealth outside of Wall Street. There’s a lot of folks that aren’t liking the market the way it’s been going lately. And this would be a killer topic for them. But before we get into all that, get in the weeds, tell our audience about you, where you came from, how you got here, how you got into real estate, et cetera.

Eric (00:47.487)
Sure, sure, sure. like a lot of folks, when I was growing up, I didn’t say I wanted to get into real estate. It kind of took a circuitous route. My dad was in the military, so I followed his footsteps.

John Harcar (00:58.124)
Hmm?

John Harcar (01:03.01)
Thank you for your service.

Eric (01:04.061)
Yep, yep, thank you, you’re welcome. Went into the Air Force right out of college and thought maybe that was my path, know, do 30 years like he did and just, you know, would hang it up at that point. But shortly after I got in, I read a little book called Rich Dad Poor Dad, maybe you might have heard of it. So.

John Harcar (01:21.235)
that little purple book. I talk about it every day at least once. Because everybody’s read it.

Eric (01:25.52)
That book,

change everything. It’s the reason why it’s the number one personal finance book in the country. And so up until that point, I never even exposed the passive income, real estate, use of that matter, residual income, things like that. So needless to say, it threw me off completely. And I realized maybe this whole engineering in the military is not something I want to do long term. I started moonlighting back in real estate back in 2005.

John Harcar (01:32.227)
Yep.

John Harcar (01:56.642)
Mm-hmm.

Eric (01:57.265)
to jump out of the military full-time and do reserves and so it went into the real estate industry full-time. Things were going well until they weren’t. If you know your history you know the great recession that big real estate bubble burst and I was found myself

on my butt, right? So I could ran home or I could just make it work and so I dusted myself off and figured I’d get my masters and try to right some wrongs, right? 2010, I was getting my masters, gonna become a certified financial planner, but I couldn’t shake the fact that everything I was learning was, it wouldn’t have kept me from becoming a statistic. After all, when I had lost some properties, when…

John Harcar (02:31.522)
Mm-hmm.

John Harcar (02:40.931)
Yeah.

Eric (02:44.675)
When the bubble burst, I’d done everything by the book. If I do ABC, XYZ, what happened? The loans gave me, the bank gave me loans only to have them call them due, but you know, for no reason other than they were bad loans in the books.

John Harcar (02:59.278)
Right.

Eric (03:00.157)
So I was doing my part, the tenants were doing their part and those properties got taken. And so it was a really, really rough time for me, rough time in my life. And particularly I felt really bad for those tenants. But I know from all the room, you know, I, I brooded a family, you know? And so, I had, yeah, it was. And so I had to figure out how can I, I vowed to be more control next time around, and to, and to not, if I could help it put myself in that situation. I knew one thing, Rich, that poor dad,

John Harcar (03:16.216)
Yeah, it’s tough.

Eric (03:30.121)
taught me was that lot of things aren’t in the textbooks. And so I went searching online. That’s when I stumbled across Infinite Banking, which was something else that you think you’ve heard it all, you think you’ve seen it all. I realized there’s so much more out there, right? And so that floored me, especially the fact that I wasn’t taught any of this in my curriculum of that life insurance could potentially be a wealth building tool.

John Harcar (03:44.003)
Ha

Eric (03:56.743)
Typically was something you know, buy term invest the rest, you know Everything that I learned in the program my curriculum was about taking clients money me being the expert and controlling that money in the market and Whether the market went up or down or sideways. I got paid right so That didn’t sit right with me. And so infinite banking can’t you know, what I the more I looked into it the more I realized It allowed wanting to be in control to be more self-reliant to we

John Harcar (04:13.537)
Yep.

Eric (04:26.657)
yourself off of the system. so that’s when I decided to go in, you know, with everything I had into specializing in that area and particularly working with landlords because landlords, know, let’s face it, as a real estate investor, we’re one of the most litigated career fields out there in those, know, litigious societies, you know, in the world. And so we have a

mark on our back, you know, we have a huge bullseye on our back. And so being more in control, being able to protect it in lot of ways is what infinite making can provide.

John Harcar (05:05.997)
Okay, so let me just kind of recap this. You read Rich Dad Poor Dad, just like everybody that I talked to seems like, got the bug, started investing, 08 came around. Is that what you’re talking about back then? You lost property, you gave it up, right? And then you went back to the corporate world or went to go learn or study.

Eric (05:20.797)
Mm-hmm. Yep. Yep.

Eric (05:32.112)
I gave it up, went back to go study trying to be a traditional financial planner. Yeah.

John Harcar (05:37.249)
Got it. And then you decided that, this sucks. In a sense. And you decided that you wanted to kind of restart things up. So what were some of the bigger challenges that you might have faced, whether it was before that burst or after that, you know, when you got back into it? You what are some mistakes maybe you made? Those type of things.

Eric (05:57.935)
so.

Eric (06:02.877)
One of the mistakes that I made prior to that was being over leveraged, not having enough liquidity on hand. And I learned the hard way when…

you know, market, the economy goes in cycles. And, you know, I’m early thirties at the time and I hadn’t really gone through anything like that before. And so I didn’t realize the importance of having enough liquidity stored someplace safe that you get access to in case you’re in a bind to save a deal to in the case of an emergency. And so that would have really have helped me, although I wouldn’t be where I am today.

John Harcar (06:20.843)
Mm.

John Harcar (06:40.417)
Yeah.

Eric (06:46.753)
and have someone across I feel, and for the banking as early as I did, had that not happened to me.

John Harcar (06:53.525)
Yeah, and things happen for a reason, right? And it maybe led you to it. because a lot of some of our audience might not know, explain to them what infinite banking is.

Eric (06:55.421)
Yeah.

Eric (07:07.871)
So, and I’ve done this now for 11 years and I’ve toyed with different ways of explaining it. So I’ll try my best. Here’s another shot at it. Infinite banking is a way of managing cash flow, storing cash flow in a whole life insurance policy, dividend paying whole life insurance policy that’s maximized and designed to maximize cash.

John Harcar (07:16.685)
Yep, alright.

Eric (07:35.921)
Right, but it’s more than just a vehicle. mean, life insurance, let’s face it, life insurance, you you hear it, you’re falling asleep, you’re walking the other direction. This isn’t your daddy’s, your granddaddy’s life insurance type policy. This is using whole life, but it’s structured in a very different way with certain riders to maximize the cash. And the reason why is because life insurance is treated with kid gloves by the insurance, by the IRS. Okay. So if we structure it in a certain way,

John Harcar (07:51.853)
Hmm.

John Harcar (07:56.374)
Okay.

Eric (08:06.225)
And we can maximize that cash and get those guaranteed returns, get the growth tax free, tax deferred, and access to the money tax free, there’s no better place. Everybody wants what life insurance can give them, but nobody wants life insurance. And that’s what I always say.

John Harcar (08:18.461)
Mm-hmm. Right. Nobody wants the payment of life insurance.

Eric (08:25.055)
Right, nobody wants the payment. You hit on a good point. Payment kind of comes from a place of expense, a commitment. And don’t get me wrong, there is a commitment here. However, there’s a lot of flexibility that a lot of people don’t realize. There’s a lot of flexibility with commitment, that payment. But at the end of the day, you have to look at it as a long-term play. You’re paying yourself, and you are building up your own bank.

John Harcar (08:34.284)
Hmm?

John Harcar (08:52.103)
Okay, so if I want to do something like that I can just probably call up my insurance guy and then just get a quick policy, right?

Eric (09:00.639)
Sure, yeah, call me Uncle Ned and see how it works out.

John Harcar (09:04.749)
What are the specific things that someone needs to look into or need to be included to make policy have the ability to do this?

Eric (09:17.085)
Yeah, so it’s a great question.

And as you asked the question, and I’m just joking with you about the whole Uncle Ned thing, because people will try to go to their family member or friend who does life insurance thinking that they’ll be able to get something created when in actuality it’s nine times out of ten. It’s very much the wrong move and they don’t find out until it’s too late. So first and foremost, you really need to seek out someone who is qualified, right? There’s a couple ways to do that.

John Harcar (09:38.667)
Yeah.

Eric (09:51.165)
So Nelson Nash is rightly regarded as the father of this concept, this strategy. He passed away a few years ago, but he started a…

John Harcar (09:56.429)
Okay.

Eric (10:01.311)
wanna say it’s Nelson Nash Institute, right? Which certifies people to speak on this and to service and to be practitioners of this strategy. So I would look for that. And then look at what they’ve done in their track rate. Everything is online. So see if they’ve been specializing in this type of strategy in the past. But more importantly than that, in my mind, especially if you’re a real estate investor, seek out someone who also knows how to apply this strategy to real estate.

John Harcar (10:10.561)
Okay.

Eric (10:31.295)
There’s nothing worse than getting somebody who’s an infinite banking guy or gal and they don’t know the real estate investing world. And so they won’t know how to apply and utilize the properly the most efficient and most powerful way, optimized way with real estate. And that’s the piece there that I feel like I bring to the table, especially for landlords.

John Harcar (10:41.452)
bright.

John Harcar (10:57.133)
And you had mentioned targeting landlords. Why are you specifically targeting landlords?

Eric (11:03.519)
you know, I have a soft spot for landlords. One, because I was one for many years. I still am one, but right. But, I feel like, again, we live in a, we get, we get a lot of the, huh, a lot of ways we get a lot of the,

society’s ill will in many regards, could be some bad apples, like any industry or like any career thing or whatever. But we serve a huge, we do a huge service to the community in terms of housing, right? Providing housing for people. And so I feel like landlords in a lot of ways, especially when working with the banks are vulnerable.

John Harcar (11:23.469)
Mm-hmm.

Sure.

Eric (11:48.12)
and they don’t know. You don’t know what you don’t know. And I feel like…

John Harcar (11:50.765)
Yeah, I was gonna say, it vulnerability more or is it uneducated about it?

Eric (11:54.399)
Potentially, potentially little bit of both, I think. I think that banks, and I don’t say this lightly, but banks lie in some respects, right?

John Harcar (12:06.413)
No.

Eric (12:11.155)
Banks lie, and I talk about this a lot with landlords, and there’s three lies that I often talk about when it comes to landlords. One of the biggest ones is that, first of all, your cash reserves are the safest. Your cash reserves should be sitting in a bank, and nothing could be further from the truth, right? And what we lose, well, I mean.

John Harcar (12:27.735)
Hmm.

John Harcar (12:32.801)
Why is that?

Eric (12:36.401)
All you have to do is look at, first of what are banks paying us these days, right? For most banks, most big banks, it’s less than 1%.

And that comes at a cost, right? Because we want access to the money, because we want that money to be safe, that comes at a cost of what we’re not earning inside the bank. Now, you might be out there and saying, you know, I got a high-yield savings account, right? I got 4 % in high-yield savings. Well, what are all the terms that come along with that? And how long will that last, right? And so these are some of the things we have to consider. So that’s the first one is that, know, banks may not be the best place to put your reserve.

John Harcar (13:06.88)
Yeah.

Eric (13:15.585)
your cash flows. And really all you have to do is look no further than where banks are putting their cash flow. And see this is where people get the aha once they realize that banks put…

a good portion of their reserve capital into life insurance contracts, investment-grade insurance contracts. At last, looked up, Bank of America had 24 billion. More liquid capital in life insurance than in real estate holdings. So do what they do, not what they say, is what I say. Yeah.

John Harcar (13:44.269)
Wow.

Yeah, yeah. I’m sorry, did you say something?

Eric (13:54.591)
No, no, no, I was just, I was done with that point, yeah.

John Harcar (13:57.197)
Okay, alright, I forgot kind of where I left off. So you’re focusing on landlords optimizing the cash flow. So how do I see it? If someone had their policy, it a bit, do you have the ability to change policy, like adjust your policy or do they have to go out and get a whole new one or how does someone go out and get something that they can like who specifically they look for to get a policy?

Eric (14:26.634)
As I was saying earlier, you gotta look for somebody who’s, first of all, who’s a life insurance agent, but that’s kind of the bare minimum. You’re for someone who, I would say, your best bet is to try to find someone, and I’ll say this, but also at the same time, I’m not in this group, but someone who’s qualified from…

John Harcar (14:33.665)
Yeah.

Eric (14:48.659)
the Nelson Nash Institute, right? If you’re working with someone like me, then you don’t know where to go. I would say go there first. So just Google Nelson Nash Institute, and there’s a rigorous program you have to go through in order to get qualified in the infinite banking strategy. And so I’ve just been doing this such a long time that I don’t feel the need to go to get that. So I am a certified financial planner as well, yeah.

John Harcar (14:50.889)
Okay.

John Harcar (15:03.351)
Mm.

John Harcar (15:11.915)
Yeah, yeah, yeah, of course. Okay, very cool. Okay, so you’re awesome. Now let’s talk a little bit more and kind of focus on our theme here, which was building wealth outside of Wall Street. I know we talked about infinite banking. Kind of go, you know, expand a little bit more on that.

Eric (15:28.349)
Okay, well first and foremost, would say that…

If often times I get people who are seeking ways to build wealth, right? That’s what we do. Wealth strategist is what my official title is. And nine times out of 10, they’re looking outside themselves, right? Where can I put my money? Where can I put it to work? How can I grow this money? And one of the first things I’ll ask is, it just depends on what are you comfortable with? What do you understand? What have you studied?

John Harcar (16:01.505)
Mm-mm.

Eric (16:04.295)
Let’s start there. What are you passionate about? Let’s start there. And if nothing else, let’s reinvest that back into yourself to get to that level of understanding to where you can mitigate the risk based on your level of education. Okay? And so that’s going to allow you to have higher returns outside of yourself. But the number one investment you could ever make, the number one investment is you. You are the highest valued asset by far.

John Harcar (16:19.052)
Yeah.

Eric (16:32.989)
By far, the house that you have, the car that you have, the businesses that you own, the real estate that you have, it’s all because of you. And with that becomes a need to protect that.

John Harcar (16:33.005)
100%.

Eric (16:43.903)
And so I know we talk about the idea of these great policies and building this cash value and this equity inside the policies and the real estate, but at the end of the day, it really comes back to you in ensuring that your ability to your ability to go out there in the marketplace is protected. So that’s why that death benefit also has an importance as well with that. I’m not sure if I answered your question, but.

John Harcar (17:06.125)
OK. No, you did. You did. Outside of infinite banking, is there any other type of techniques, methods, however, to build wealth outside of Wall Street that you teach or that you?

Eric (17:18.558)
That’s a very, very timely question, and it’s one that I am just eager to answer, although I don’t think I’m going to do it with the best justice in terms of my explanation of what it is. so one of the strategies that I felt, first of all, I’ll just say I thought I had arrived when it comes to real estate investing, seen it all, done it all, that sort of thing.

John Harcar (17:21.357)
Ha ha ha ha ha

John Harcar (17:40.535)
Mm-hmm.

Eric (17:41.535)
A year ago I was on reserve duty and I was talking to a contractor next to me and we both had an infinite banking policy, both real estate investors.

He shared with me a concept, a strategy that he was using called slow flips. And he told me about it and I said, okay, what is slow flips, right? I’m not into flipping and I don’t want to do rehabs and nor do I want it to be slow. And so he passed me this book called The Art of the Slow Flip by Scott Jelinick. it was, I read it over a weekend. It just blew my mind. Essentially the strategy is you’re buying homes.

using short-term financing like a car, five-year notes, and you’re selling those homes on long-term financing like you would a mortgage. Okay? There’s a lot more to it, but number one, there’s no rehabs. You’re not doing any rehabs. All this is essentially remote. You’re buying properties at a $30,000, $40,000 price point, which you might be saying, well, I live in California, I live in New York. It’s not possible. Well, guess what?

John Harcar (18:22.209)
Mm-hmm.

John Harcar (18:34.925)
Okay.

John Harcar (18:39.212)
Hmm.

Eric (18:43.239)
There are lot of areas in the country where it is possible and these houses are very much livable and they’re not in the hood. So you can do it, you just have to get the right community and the right, you know.

comfort level with investing virtually. yeah, this is a play where you are truly the bank because you’re buying these properties using private money and you’re paying that debt off over five years. So you’re making the private money lender happy with a 12, I give them 12%, right? With $30,000 loan, right? And then I’m selling that property at a higher price point because we’re selling the financing over 30,000.

John Harcar (18:59.437)
Mm-hmm.

John Harcar (19:17.887)
Okay.

John Harcar (19:26.199)
Mm-hmm. Mm-hmm.

Eric (19:26.537)
year loan and so once that five-year note is completely done I get to reap the benefits of a free and clear property getting all the cash flow for another 25 years okay on a cash for need note right so I am the bank the lenders the bank and so it’s a win-win-win for everyone

John Harcar (19:38.413)
Right.

John Harcar (19:45.991)
Are you having, do you find it difficult finding private lenders that’ll hold for five years or do you have like a good database or a good connection for it?

Eric (19:53.267)
I have a pretty good database. again, I’m at the beginning stages. I know a lot of people with the work that I do. And so it’s just a matter of reaching out to them and seeing if it’s something that is of interest. A lot of folks have expressed an interest in getting into real estate, but not necessarily having the headaches of direct involvement like a landlord. And so I think what I can provide is very much going to be something that welcomed discussion.

John Harcar (19:57.325)
Sure.

John Harcar (20:14.701)
Yeah. Yeah.

John Harcar (20:23.647)
What are some of the pros or cons of doing that type of investing?

Eric (20:30.483)
one of the biggest pros is the idea that you don’t have to swing a hammer. You don’t have to replace a toilet. You don’t have to place light. I mean, none of that. You’re not dealing with your, your, your bringing in people who are wanting to own a home, but for one reason or another cannot do so the traditional way. Right. And so you’re giving people a pathway to homeownership.

John Harcar (20:41.389)
Mmm.

John Harcar (20:53.078)
Great.

Eric (20:57.535)
And you’re doing so so so yeah, I like the long-term Cash flow aspect of it people who have a homeownership mentality and not these not not tenants who are potentially You know here one day gone the next sort of thing One of the drawbacks I found is that in that first five years you are really sucking it up because There’s very little cash flow because you’re paying off your lender so aggressively and so you

John Harcar (21:12.567)
bright.

John Harcar (21:25.015)
Mm-hmm. Mm-hmm.

Eric (21:27.709)
Typically you’re breaking even, maybe there’s a little cash flow there, but you are buying your time for the first five years essentially to pay off that private money lender to have a clean, clear property. So, yeah.

John Harcar (21:37.995)
Yep. Okay. So you buy it, you’re buying the property, you’re finding the lender, then you’re fine. How are you finding your, your buyers for this?

Eric (21:47.881)
How are you finding your buyers? That’s a question. One or two ways, you’re either running an ad on Facebook Marketplace and you’re building up a list because believe it not, you put out there three, $4,000 down, X amount a month, no credit checks, you will get a flood.

John Harcar (22:05.685)
You’ll have everybody knocking down your door.

Eric (22:07.729)
A flood of people, right? So that’s a way to do it. And then also there are people out there who are in the community who sold out on life is to fill homes like these for us. So it’s really easy. Yeah, it’s really easy to find someone for the home. And yeah.

John Harcar (22:20.597)
Yeah. Okay.

John Harcar (22:28.065)
Well, that’s awesome. And it’s a great way, like you said, you know, not having to swing the hammer, not having to deal with tenants, not having to deal. mean, because you and I both know that it’s not always the funnest thing to do in the world. But that’s such an awesome strategy. mean, I think it’s really easy for you. And I would be really easy for anybody to get into it. What kind of advice or, know, what kind of resources would you suggest if, let’s say, someone listening to this is like, man, that sounds freaking cool. How do they, you know, how do they get started?

Eric (22:58.815)
There are a couple few communities out there I think for slow flips.

affiliated with the one. know there’s a couple others though. So just Google slow flips. I would say start with the book. I think Scott’s book. I may be wrong on this, but I think he is the actual creator of this idea. think others who are out there potentially may be, you know, just using that same name and, you know, teaching it as well, which is fine. But yeah, I’ve gotten a lot of great knowledge and

John Harcar (23:11.873)
Okay.

John Harcar (23:31.403)
Right. Okay.

Eric (23:37.213)
made some great networking connections from like anything signing up for the course and making the investment. correct. Yeah.

John Harcar (23:44.235)
Yeah, of course. Okay. so that guy had a course that you bought into as well. Nice. So our folks that are on your listing, if they want to get in touch with you, right? They want to pick your brain on slow flipping, on infinite banking. You know, what’s the best way for them to get in touch with you?

Eric (24:03.175)
Yeah, so I am in the midst of setting up all the content, all the social media platforms for Infinite Banking for landlords. So I’m going to have to defer to my personal email, which I don’t mind. It’s just, it’s not as, it’s not where I want it to be quite yet in terms of getting that.

John Harcar (24:14.636)
Okay.

John Harcar (24:20.3)
Okay.

John Harcar (24:25.527)
Sure.

Eric (24:25.563)
Offset to get set up, but you’ll want to go to Eric Patterson er IC P a T T er so in 7a at gmail

John Harcar (24:33.453)
Perfect.

And then I’ll put that in the show notes. So anybody that’s out there that’s listening wants to get in touch, you’ll have that in there. Eric, thank you so much for coming on here, man. mean, it’s really been a very educational thing. I I might have to call you after air and talk to you a little bit about this more, but I hope everybody that’s listening really got some good notes, took some good, picked up some good nuggets and really apply these. So Eric, thank you again for coming on the show today and I hope everybody else enjoyed it. We’ll see you on the next one. Cheers.

Eric (25:00.372)
Welcome.

All right, thank you.

John Harcar (25:04.207)
Thank