[BIGINJAPAN]

So I wanted to write a little bit about how to get ahead in life and screw banks at the sametime. All my friends know how much I hate banks, I believe they are the cause of all evil on this planet and responsible for almost all social disparities in everyone's countries. If a bank was blown up in my city, it is almost certain I would get a visit from the police, as almost any person who has had contact with me knows how I feel about them.

But the one good thing about them is they are greedy as fuck and you can use this to your advantage. Most people have probably heard the bank wants to loan you money, but most people fuck this up because they talk to much. It really isn't the bank declining you, its you sticking your foot in your mouth.

If you have a problem with bending the rules then this post is not for you. I know a lot of techniques to get around any conditions a bank might ask you in order to get a loan or mortgage. I prefer to go the mortgage route as the liability isn't as risky as compared to a personal line of credit. Some of things I will talk about are pretty much outright fraud, but because of the Canadian legal system and banking laws, you will be left untouched if shit ever hit the fan. Alot of these tricks I have learned come from billionaires and multi millionaires. Although they do outright fraud and should be prosecuted because they are harming innocent people and not just gigantic banks.

I should mention this is geared towards Canada. Although I have no doubt the same techniques can be applied to the US, UK, Austrailia and so on. What makes it works is the privacy laws, banks cannot communicate with each other about a persons account information.

I have also mentioned in other threads about how it is possible to not only get a bank to finance a 100% of the mortgage but they will also finance even higher and that will leave you with cash in your pocket.

So where to start. First you need a property. So you go out and find yourself a great deal. One that is under market value, although some banks are so dumb you could get one at market value and inflate the value higher. Always best to look in booming neighborhoods that have a wide value of homes. So for example there are plenty of neighborhoods in Canada where a price range can be between $300k-900k. A lot of banks use an internal system based on postal codes, so they just type the code in and look for the average value. If you are good at this you can send properties in and they will never trigger an actual appraisal if you don't push the envelope too far. The big mortgage insurer in Canada called CMHC uses a similar system called EMILI. That one is even worse for skewing the property values. Unless of course you get a smoking deal on a property and then an actual appraiser coming out to look at the property is not big deal.

So let's say you find a house for $200k but it is worth 300k. Well you and the owner sign a contract up for you to purchase the house for 200k. You then sign a second contract that states you are buying the property for 300k, this contract is the one the bank sees. Now you can go about it 2 ways in Canada, you can get a high ratio loan where the bank will finance you 95% of the purchase price and the loan is insured by CMHC or you can get what is called a conventional loan where the bank will provide you with 80% of the purchase price. Both have + and -. I will get into that a little later on as it has a major impact on what you do with the property, your FICO score and liability if there was a foreclosure. Lets just say you go the high ratio route and get 95% financing. So that means the bank will give you 95% of 300k which works out to $285k. With the bank funding 285k and you actually purchasing the property for 200k, you just made yourself 85k in cash. If you go the conventional route you get 80% of 300k which works out to 240k so you would net 40k.

Now there is still plenty of other things I need to post about this, such as the +s and -s of high ratio vs conventional, how to deal with the lawyers and making sure you get your cash. Also qualifying for the loan. Some of you might not have high enough paying jobs or money in your account to qualify for a mortgage. But that can all be changed with a little know how. Also I will talk about what to do with the properties after and how to do this with more than one place with different banks and the different mortgage insurers. I will also talk about how to get 100% return back on GST paid on new properties. I am sure plenty of you paid GST on a new house and didn't even think of filing with the Canada Revenue Agency to get it all back. That can be a lot of money. If you bought a $500k house that would be a 25k cheque back to you.

I will try and add a new segment everyday for the next 5 days or so to map this all out. It is a great way to get ahead and fund other ventures, build businesses and of course have some fun as well. Best part is it is at the expense of the big evil banks.

[vinman]

That's been done. Here in Chicago there was a street gang that was doing something similar (Gangster Disciples). It's mortgage fraud in some places, and if it's fa ederally backed loan you could end up in federal prison.

[BIGINJAPAN]

Not in Canada. Even the insured mortgages.

[worldwidetraveler]

I am having a hard time believing a Canadian bank will allow the buyer to walk away with a 80k check at closing.

[Kdog]

Does this have to be a private sale? Or do the Realtor's really give a shit?

[BIGINJAPAN]

(10-27-2012 04:11 PM)worldwidetraveler Wrote:  

I am having a hard time believing a Canadian bank will allow the buyer to walk away with a 80k check at closing.

First off they don't know. Secondly what does the bank care if you make the payment on it ? Not to mention they just make it up out of thin air. There is no capital requirement on Canadian banks when it comes to what is called chequebook money.

Bankers performance is evaluated on loans produced. In the mid 90's the Iranian jewish twins that owned West Edmonton mall did this exact same thing to the Alberta Treasury Branch. At the end of the refinance they walked away with $200,000,000 in their pocket on top of refinancing the mall.

[BIGINJAPAN]

(10-27-2012 04:44 PM)Kdog Wrote:  

Does this have to be a private sale? Or do the Realtor's really give a shit?

Now a days to make things fly under the radar and not trigger an actual appraisal it is best to have the property listed on the MLS. I usually pay realtors a 500-1000 bucks for their time.

[worldwidetraveler]

(10-27-2012 05:02 PM)BIGINJAPAN Wrote:  

(10-27-2012 04:11 PM)worldwidetraveler Wrote:  

I am having a hard time believing a Canadian bank will allow the buyer to walk away with a 80k check at closing.

First off they don't know. Secondly what does the bank care if you make the payment on it ? Not to mention they just make it up out of thin air. There is no capital requirement on Canadian banks when it comes to what is called chequebook money.

Bankers performance is evaluated on loans produced. In the mid 90's the Iranian jewish twins that owned West Edmonton mall did this exact same thing to the Alberta Treasury Branch. At the end of the refinance they walked away with $200,000,000 in their pocket on top of refinancing the mall.

The Canadian banks don't get a closing statement as to whom was paid?

[BIGINJAPAN]

(10-27-2012 05:21 PM)worldwidetraveler Wrote:  

(10-27-2012 05:02 PM)BIGINJAPAN Wrote:  

(10-27-2012 04:11 PM)worldwidetraveler Wrote:  

I am having a hard time believing a Canadian bank will allow the buyer to walk away with a 80k check at closing.

First off they don't know. Secondly what does the bank care if you make the payment on it ? Not to mention they just make it up out of thin air. There is no capital requirement on Canadian banks when it comes to what is called chequebook money.

Bankers performance is evaluated on loans produced. In the mid 90's the Iranian jewish twins that owned West Edmonton mall did this exact same thing to the Alberta Treasury Branch. At the end of the refinance they walked away with $200,000,000 in their pocket on top of refinancing the mall.

The Canadian banks don't get a closing statement as to whom was paid?

The buyers lawyer works on behalf of the lending institution and the buyer. But not the seller. So when the bank sends the mortgage proceeds to the lawyer he then funnels the whole amount to the sellers lawyer. You have a second agreement with the seller that is called a direction to pay. Basically that contract stipulates anything over and above the sale price of 200k goes back to the buyer. So the buyers lawyer has performed his fiduciary duty to both the buyer and bank. The sellers lawyer has no legal obligation what so ever to the bank and they can pay out proceeds as agreed upon. There are also 2 other ways to accomplish this and I will cover them in a later post. They all protect lawyers, buyers and sellers from any recourse.

[worldwidetraveler]

(10-27-2012 05:40 PM)BIGINJAPAN Wrote:  

(10-27-2012 05:21 PM)worldwidetraveler Wrote:  

(10-27-2012 05:02 PM)BIGINJAPAN Wrote:  

(10-27-2012 04:11 PM)worldwidetraveler Wrote:  

I am having a hard time believing a Canadian bank will allow the buyer to walk away with a 80k check at closing.

First off they don't know. Secondly what does the bank care if you make the payment on it ? Not to mention they just make it up out of thin air. There is no capital requirement on Canadian banks when it comes to what is called chequebook money.

Bankers performance is evaluated on loans produced. In the mid 90's the Iranian jewish twins that owned West Edmonton mall did this exact same thing to the Alberta Treasury Branch. At the end of the refinance they walked away with $200,000,000 in their pocket on top of refinancing the mall.

The Canadian banks don't get a closing statement as to whom was paid?

The buyers lawyer works on behalf of the lending institution and the buyer. But not the seller. So when the bank sends the mortgage proceeds to the lawyer he then funnels the whole amount to the sellers lawyer. You have a second agreement with the seller that is called a direction to pay. Basically that contract stipulates anything over and above the sale price of 200k goes back to the buyer. So the buyers lawyer has performed his fiduciary duty to both the buyer and bank. The sellers lawyer has no legal obligation what so ever to the bank and they can pay out proceeds as agreed upon. There are also 2 other ways to accomplish this and I will cover them in a later post. They all protect lawyers, buyers and sellers from any recourse.

I got you. Yeah, that is a big no-no in the states. You can pull out modest amounts for repairs but that is very little.

I knew this one guy who would get other people to purchase properties from him and he would sit on them. He would pay the buyers 5k for every property they purchased and make the monthly payments on the loan. We are talking some major high priced properties with a lot of equity. He just sat on them after he cashed out. I am not sure how he ended up when the market crashed but he was swimming in cash when I knew him.

What he did could come back to bite him if he didn't continue paying all those buyer's loans.

[BIGINJAPAN]

(10-27-2012 05:56 PM)worldwidetraveler Wrote:  

(10-27-2012 05:40 PM)BIGINJAPAN Wrote:  

(10-27-2012 05:21 PM)worldwidetraveler Wrote:  

(10-27-2012 05:02 PM)BIGINJAPAN Wrote:  

(10-27-2012 04:11 PM)worldwidetraveler Wrote:  

I am having a hard time believing a Canadian bank will allow the buyer to walk away with a 80k check at closing.

First off they don't know. Secondly what does the bank care if you make the payment on it ? Not to mention they just make it up out of thin air. There is no capital requirement on Canadian banks when it comes to what is called chequebook money.

Bankers performance is evaluated on loans produced. In the mid 90's the Iranian jewish twins that owned West Edmonton mall did this exact same thing to the Alberta Treasury Branch. At the end of the refinance they walked away with $200,000,000 in their pocket on top of refinancing the mall.

The Canadian banks don't get a closing statement as to whom was paid?

The buyers lawyer works on behalf of the lending institution and the buyer. But not the seller. So when the bank sends the mortgage proceeds to the lawyer he then funnels the whole amount to the sellers lawyer. You have a second agreement with the seller that is called a direction to pay. Basically that contract stipulates anything over and above the sale price of 200k goes back to the buyer. So the buyers lawyer has performed his fiduciary duty to both the buyer and bank. The sellers lawyer has no legal obligation what so ever to the bank and they can pay out proceeds as agreed upon. There are also 2 other ways to accomplish this and I will cover them in a later post. They all protect lawyers, buyers and sellers from any recourse.

I got you. Yeah, that is a big no-no in the states. You can pull out modest amounts for repairs but that is very little.

I knew this one guy who would get other people to purchase properties from him and he would sit on them. He would pay the buyers 5k for every property they purchased and make the monthly payments on the loan. We are talking some major high priced properties with a lot of equity. He just sat on them after he cashed out. I am not sure how he ended up when the market crashed but he was swimming in cash when I knew him.

What he did could come back to bite him if he didn't continue paying all those buyer's loans.

I know guys who did that and fucked 20 - 30 people and defaulted on everything. Nothing happened to them. The banks brought civil suits and lost and the police couldn't charge them with anything as it is pretty hard to prove fraud.

But if done right like I have done and a few of my friends and you have an exit strategy and not just think a month ahead you can make huge money and invest elsewhere. I only use myself and my companies, but I do help a lot of people who want to try it.

[worldwidetraveler]

(10-27-2012 06:05 PM)BIGINJAPAN Wrote:  

But if done right like I have done and a few of my friends and you have an exit strategy and not just think a month ahead you can make huge money and invest elsewhere. I only use myself and my companies, but I do help a lot of people who want to try it.

He was in Atlanta and I think there was so much fraud there the FBI came in to investigate. I haven't head anything from him so hopefully he is good.

I got out of real estate before the bubble popped. I really loved it just for the deal making. I worked a lot of foreclosures back then which was a lot tougher since the houses were selling like hotcakes. It was a lot of fun. I am hoping to get back into it when time permits.

[Black Quixote]

What's the minimum startup capital you would need to begin running and making money with something like this?
And how many can you reasonably do in a three to six month span? Or what's the average workload if you were to focus on this?
Can you do this from the U.S. or U.K. in Canada?

Thanks, this was informative.

[mikeymike]

I'm interested but want to understand the details a little bit better...

you still own these properties at the end of the day when all the contract work is done. So you're only making that profit above the asking price if you can sell it for what the banks believe it went at. IE you negotiate it for 200k, you sit on it for 2-3 years trying to unload the thing and when you do lets say you dump it for 225k , u return the other 60k you thought would be profit which leaves you with a 25k paper profit, on a high interest min down loan you could end up giving more than you set to make or am I getting it wrong?

I'm a business owner but when I started my business I had invested my own money initially and had built it up to a point to which I had real equity and shown real profits before I ever borrowed to expand...if I did something like this i'd imagine id have to go a route that kept my assets (house biz) seperate from this venture...can you make this work with a newly established biz that isn't bringing anything to the table but a downpayment and no real way to show how they'd continue to make payments?

if this is stuff you'll be touching on later, cool but just wanted to ask. Have a bunch more but I'll start there.

[playa_with_a_passport]

This will not work in the US. 5 years ago the above was standard operating procedure with the banks condoning straight out Mortage fraud. Now with Core Logic and Lexis Nexis searches, I would not be surprised if the banks know what color underwear you have on while you doing your bank app. Plus, 0 down mortgages are almost unheard off.

Keep doing the posting thou. They are entertaining.

[Dr. Howard]

Yep, keep posting, some of us do live in Canada where the rules are different. No housing implosion, a few gigantic banks and regulatory agencies that can't keep up with new ideas.

[BIGINJAPAN]

(10-27-2012 06:46 PM)Black Quixote Wrote:  

What's the minimum startup capital you would need to begin running and making money with something like this?
And how many can you reasonably do in a three to six month span? Or what's the average workload if you were to focus on this?
Can you do this from the U.S. or U.K. in Canada?

Thanks, this was informative.

It can be done with very little start up capital. If you have a lawyer buddy who will defer payment until after the close you won't really need any money. If you have to pay the lawyer up front, closing costs usually range from 1000-1600 where I live.

Sometimes different paperwork is required and I have to pay some photoshop experts. Because I am basically retired and don't have traditional income from a job or commission cheques I have my own made up. I will go so far to recreate job letter, paycheques, bank statements, notice of assessments, basically whatever the bank wants to see. That can cost me another 2000 or up to 5000 if I am financing the purchase of a company or a big project.

[BIGINJAPAN]

(10-28-2012 09:58 AM)playa_with_a_passport Wrote:  

This will not work in the US. 5 years ago the above was standard operating procedure with the banks condoning straight out Mortage fraud. Now with Core Logic and Lexis Nexis searches, I would not be surprised if the banks know what color underwear you have on while you doing your bank app. Plus, 0 down mortgages are almost unheard off.

Keep doing the posting thou. They are entertaining.

I don't know for sure if it can be done in the US, but i am almost sure it can be. You guys traditionally have way easier laws and qualifications. I am pretty sure the subprime debacle hasn't taught anyone. Not to mention I have read about illegal aliens getting numerous fake tax ID's and reclaiming millions of dollars in tax returns and even having them all shipped to the same address. Once I add more to this post you will see how easily it can be done and how to do it smartly.

[BIGINJAPAN]

(10-28-2012 02:32 AM)mikeymike Wrote:  

I'm interested but want to understand the details a little bit better...

you still own these properties at the end of the day when all the contract work is done. So you're only making that profit above the asking price if you can sell it for what the banks believe it went at. IE you negotiate it for 200k, you sit on it for 2-3 years trying to unload the thing and when you do lets say you dump it for 225k , u return the other 60k you thought would be profit which leaves you with a 25k paper profit, on a high interest min down loan you could end up giving more than you set to make or am I getting it wrong?

I'm a business owner but when I started my business I had invested my own money initially and had built it up to a point to which I had real equity and shown real profits before I ever borrowed to expand...if I did something like this i'd imagine id have to go a route that kept my assets (house biz) seperate from this venture...can you make this work with a newly established biz that isn't bringing anything to the table but a downpayment and no real way to show how they'd continue to make payments?

if this is stuff you'll be touching on later, cool but just wanted to ask. Have a bunch more but I'll start there.

So if I buy a condo this way I instantly rent it out. I buy places where the rent will cover even the inflated mortgage price. So you don't eat into your profit. I also actively market rent to own. Where I take a small downpayment from someone and then they pay the whole mortgage amount plus a bit extra that goes towards their downpayment. Most of the time they never work out but you get to keep their deposit and then I just go look for a new buyer. Sometimes I sell them outright to new buyers as well. Otherwise I will hold onto until I get rid of it. Unless it generates a lot of income. For example I bought one earlier this where my mortgage is only $1800 a month, but it has 3 suites and a triple car garage. I have the whole thing rented for $3500 a month and they pay all the utilites. So after property taxes and insurance I still net about $1200 a month on one property. Those are normally the ones I look for. I don't just go and buy a place for the sake of pulling extra money out. I define a clear exit strategy before hand.

In my next post I will explain in better detail what to look for and how to get rid of the property.

[worldwidetraveler]

(10-29-2012 05:21 PM)BIGINJAPAN Wrote:  

I don't know for sure if it can be done in the US, but i am almost sure it can be. You guys traditionally have way easier laws and qualifications. I am pretty sure the subprime debacle hasn't taught anyone. Not to mention I have read about illegal aliens getting numerous fake tax ID's and reclaiming millions of dollars in tax returns and even having them all shipped to the same address. Once I add more to this post you will see how easily it can be done and how to do it smartly.

Just because you can get away with something doesn't mean it is legal. You could do the same things in the US and probably get away with it as long as you pay those loan payments. If you have a lot of properties defaulting it wouldn't take a genius to follow the trail back to you as the original seller.

Also, there are seasoning issues when a buyer gets a loan. That means many lenders won't loan on a property that the seller has owned for a couple of months.

Many loan and lawyers wouldn't touch this type of transactions for a reason.

[BIGINJAPAN]

So part 2:

A very important part of this whole process is you should only do this with the right property. We all live in different areas and have different ideas of what to do with the money. But in order to maximize profits you need to be able to have the property producing income or at the very least not costing you money and putting you in a negative cash flow situation.

So you have to run the numbers and have a mortgage calculator handy or just google one or download a mortgage calc app to your smartphone. I look for properties that I know will cash flow when doing a deal like this. It doesn't just have to be a house or condo. This type of financing will work on just about anything. I have financed multi-family, businesses, offices and even big building projects. If you want to leverage up a property you want to live in, I suggest you just have the bank cover 100% of the purchase price and don't take out any money on top. It will keep your monthly payments down. But the smart thing to do it is pull money out, have a renter cover your costs and use the cash to generate other sources of income.

When buying a property you need to take into account all monthly expenses. Which can include mortgage, taxes, insurance, condo fees, utilities(I usually have the tenant cover those) or operting costs( those are for if you buy a business). Add all those up on your mortgage calculator and you will get the total monthly expense. Now you need to research market rent value for that given location and type of dwelling you are purchasing. For extra income for condos and houses I will do fully furnished, including things like towels, forks, knives etc. a condo that rents for 1500 will now rent for 2500 a month where I am from if furnished. I have it down to a science that I can furnish a 2 bedroom condo for 5k. I just use some of the cash I pulled out on the deal to buy everything. Another great thing about furnished condos is companies are willing to sign mutli year leases for their employees. I have gotten up to 3 year leases before. Usually they end up breaking them as well and just pay off the full lease. There is a lot of benefits to leasing to companies, especially the fact that their rent cheques never bounce. Plus you always get great tenants that are respectful of your property.

I would recommend though that people look to multi family dwellings. Banks will do high ratio financing in canada on 4 units or less. More than 4 units and you have to get conventional financing. A lot of times on conventional financing you can't really pull a lot of money out or if at all. But you can get 100% of the purchase price covered and end up with a cashflowing property. Another thing to look for is up and down suites in houses. When buying these you want to get them in neighborhoods that are full of them. That way you know people won't be calling the city and getting them to come inspect the suites to see if they are legal. Another thing you want to look for is make sure the lot is subdividable. Meaning you can in the future tear the houe down and build a 4plex or condo building. Ideally you would like to buy a few houses side by side to do a future development. Always check the zoning before buying a property. If you are buying investment properties not only get one that brings in cash, but find the ones that have higher density zoning. They will go up in value more and you just expanded the potential buyers to not only home owners, but investors, builders, developers. Some people have no interest in development so you may want to sell in the future to someone who does.

Especially when buying multi family you want to really inspect all potential capital expenditures. So that includes things like the roof, furnance or other heating system. Water tanks as well but they aren't that expensive. Make sure electrical is updated and can handle multiply units. Alot of places built before the 70's will have 60 amp or less electrical panels. If running more than one suite you need that upgraded to 100 amp. That can run anywhere from 2k-5k, but really needs to be done.

If you decide you want to buy a condo or 2 as a rental there are a couple things to look out for. Some buildings have age restrictions. So make sure it is at least 18+. Also some condo boards believe or not will stop you from renting your place out. Even though you own it. So again talk to the board and find out if it is ok to rent out your unit.

Buying a house is pretty much the same as multi family dwellings. Go over everything that has the potential to cost a lot of money to repair. Old houses make the best rentals, so be sure to check the electrical. Go over the zoning laws with the city. I think #311 and a simple 20 minute conversation will cover everything you need to know about zoning. Be sure to ask what the current zoning allows, if the city is planning on upping the density in the area. Talk to utilies companies as well. If you do decide to build a higher density unit you will need to know the extra costs to run more lines onto the property. They charge around 25k to put in another main power supply, gas lines and water lines where I am from if you were to build 2 houses on the land. When talking to the city don't forget to ask what it will cost for the development permits.

Basically the property you are looking for is either under valued, or one that can be skewed higher to cover downpayment and cash out. They are not readily available but they can be found. Talk to other investors and realtors and search the local websites with the for sale by owners. Don't be afraid to throw down low ball offers. It is just like gaming bitches. You will get a lot of rejections but in the end it is worth it to find a place at the right price. There is a lot of people out there looking to offload properties. Especially retired people who don't have any another income except equity in their properties.

Upcoming posts I will explain the difference between high ratio and conventional financing. I will also explain how to deal with the lawyers and set everything up properly to make sure you get paid. For the guys that need help with actually qualifying I will go over what kind of paperwork you can create to help get financing.

[mikeymike]

really interesting stuff Big, looking forward to the other installments.

You mention in another thread that you were semi retired, are you still doing this here and there or have you moved on from it?

[BIGINJAPAN]

Yeah I still do it here and there. Whenever I find something I want to buy this is usually how I finance it. I would rather keep my cash in my trading account and grow it that way. I also help a lot of people do it as well. I usually take a consulting fee on the side.

[malc]

It's because of Canada's weaker money laundering / real estate laws compared to the USA vancouver is a big unaffordable mess. It's a favorite spot for mainland chinese to launder their money with real estate.

[reaper23]

i've worked in the real estate business for more than a decade.

post settlement statements or GTFO


I'm surprised the mods are allowing a discussion of outright criminal activity on this board.