BOC Hits 5%

[Mad Mike]

Every politician wants control. Tons of money and influence being thrown around when you can convert a field at $20K per acre into development land at >$1M per acre.

The really crazy thing is that the less you put down, the better your rate. The mortgage insurance you buy is backed by the government of canada. If they crash house prices too hard, the feds are on the hook for a number so big it would make your head spin. Something like 35% of the mortgages in Canada are backed by the feds and their unlimited pool of money/self-balancing budget.

Canada has 3 providers of mortgage insurance: Sagen(Genworth), Canada Guaranty and CMHC. They are insurance companies and based on their premiums and payouts might be the most lucrative lines of insurance in Canada. They collect an upfront premium of 2.8% to 4% of the borrowed amount of almost every mortgage in Canada with a LTV of 80% or greater -- that's a lot of mortgages, it's a lucrative business.

in 2022, a typical year, CMHC alone collected $1.7Billion in premiums, they paid out $64million - that's about 4% of what they collected. Compare that to an auto insurer who pays out more that 60%.

Now, the last 2 decades have been pretty good real estate-wise, a homeowner could dump property in most of Canada at a profit so the likelihood of an insurance payout was low.

That will change however it's very likely their payouts will remain low as payouts will likely be limited to a small window of time, and will not generally include investors and speculators.

 

[crankcall]

I dabbled briefly in private mortgage lending as part of a group of guys , we had an investor club. The pool allowed some latitude, we did end up owning a house in Kitchener and another in Cambridge which are now owned by one of the group and are rentals .
If you want to be in that business , you need to remember why your in it . To make money, at a better rate than available in other investment. Mom that can’t get Dad money, lost the sitter, kids bike was trashed , not your problem. It’s a business.


Sent from my iPhone using GTAMotorcycle.com

 

[Scuba Steve]

I hold a private mortgage now but as a first for a friend if this goes south we probably won't be friends I gave him 2 years

Sent from the future

 

[Mad Mike]

I hold a private mortgage now but as a first for a friend if this goes south we probably won't be friends I gave him 2 years

Sent from the future

I learned very young that lending and friendships often end badly.

If a friend or family needs help with money, I won’t be the lender, I’ll help him straighten out his affairs and find a lender if needed.

 

[Scuba Steve]

I learned very young that lending and friendships often end badly.

If a friend or family needs help with money, I won’t be the lender, I’ll help him straighten out his affairs and find a lender if needed.

Not too worried about the money I have a first mortgage for less than half of what the property is worth he is trying to sell it but if he doesn't get it sold in the next year I will have to force it

Sent from the future

 

[mimico_polak]

Not too worried about the money I have a first mortgage for less than half of what the property is worth he is trying to sell it but if he doesn't get it sold in the next year I will have to force it

Sent from the future

And that’s when the friendship will end. I’ve lost friends for less than $500.

I’d say it’s $500 well spent to get those leeches out of my life. My buddy regularly lends his co workers a thousand here or there to help them out…I couldn’t.

 

[GreyGhost]

And that’s when the friendship will end. I’ve lost friends for less than $500.

I’d say it’s $500 well spent to get those leeches out of my life. My buddy regularly lends his co workers a thousand here or there to help them out…I couldn’t.

I rarely lend to friends and if I do, it is money I can afford to lose and friends that have some ability to pay over time. Although the official plan is money is to be paid back, even it it wasn't that doesn't affect the friendship (but no more loans). Thankfully, it's all come back. Haven't done it in a long time as it made more sense when I and my friends were younger and numbers were smaller (solving temporary cashflow issues not fundamental economic whirlpools).

 

[woot]

What's everyone's thoughts on opening a Money Mart franchise? Beyond the morality reasons. Some googling shows it's pretty cheep to open a payday loan franchise but also I see some articles that are nearly 10 years old saying government regulations has made the industry a lot riskier from a lender perspective.

 

[GreyGhost]

What's everyone's thoughts on opening a Money Mart franchise? Beyond the morality reasons. Some googling shows it's pretty cheep to open a payday loan franchise but also I see some articles that are nearly 10 years old saying government regulations has made the industry a lot riskier from a lender perspective.

I'd work in one for a bit first. Gives you an idea of how they function, cashflow, etc. Sure, you will be making minimum wage but the experience will be very valuable.

Location, location, location. Figure out where your target market gets their cheques and where they spend their money. Be close to one of those places.

 

[nobbie48]

I rarely lend to friends and if I do, it is money I can afford to lose and friends that have some ability to pay over time. Although the official plan is money is to be paid back, even it it wasn't that doesn't affect the friendship (but no more loans). Thankfully, it's all come back. Haven't done it in a long time as it made more sense when I and my friends were younger and numbers were smaller (solving temporary cashflow issues not fundamental economic whirlpools).

If it's a true friend and I can help I give them the money. If they give it back it goes into my benevolence fund to help others. If they don't my ability to help others is hampered.

However one must think like a bank. It is a gift or loan, not a weekly subsidy. If constant injections are needed the person needs to adjust their life. If they're going bankrupt anyways you just delay it and your money ends up with the creditor. It's better to hold onto it until after the bankruptcy and then give them a leg up.

 

[backmarkerducati]

I'd work in one for a bit first. Gives you an idea of how they function, cashflow, etc. Sure, you will be making minimum wage but the experience will be very valuable.

Location, location, location. Figure out where your target market gets their cheques and where they spend their money. Be close to one of those places.

The experience is probably also a good idea to see if one can stomach the business before fully jumping in. Can always be a part time gig.

 

[GreyGhost]

The experience is probably also a good idea to see if one can stomach the business before fully jumping in. Can always be a part time gig.

Almost by definition you are sitting on a pile of cash in a shady part of town. It may be profitable but there is a high exposure to risk. Hiring someone else to be team human shield somewhat mitigates the life-safety risk but you still have the financial risk (both in losing money and feeling bad for your employees family if the employee was on the losing end).

 

[backmarkerducati]

As for lending to family/friends.... It also comes with the complication of how they spend afterwards, lend your buddy or family member money to help them pay the mortgage in a tough time and they go out for dinner every night and/or buy a new to them motorcycle before paying you back... One of many complications in that mine field that the lender needs to consider before hand. It can be done, but the ground rules need to be clear and you need to know they will stick to them.

Some family can also have a sense of entitlement that you have "wealth" and they don't, how dare you not give them a hand-out. Well that wealth for most is also partly debt (mortgage, car loan, credit cards, drug dealers, etc.) so lending out money is lending out personal debt. I am Elmer J. Fudd, millionaire. I own a mansion and a yacht...or the bank does.

Lending to strangers it should all just be "pay up sucker."

 

[backmarkerducati]

Almost by definition you are sitting on a pile of cash in a shady part of town. It may be profitable but there is a high exposure to risk. Hiring someone else to be team human shield somewhat mitigates the life-safety risk but you still have the financial risk (both in losing money and feeling bad for your employees family if the employee was on the losing end).

That is a very good point! I was leaning more to stomaching shacking down poor people as my initial thought.

 

[GreyGhost]

That is a very good point! I was leaning more to stomaching shacking down poor people as my initial thought.

Even more concerning to me is what you don't know. This seems like a business that would be very very popular with organized crime. They may not appreciate the competition. I don't know how you learn if that is a concern before you get visits from Vinnie, Serge, Wan, etc that suggest either "security" upgrades or straight up reimagining your business.

Organized crime is deep into fields that you may not consider (like lunch trucks that visit workplaces). You may think you can be successful but you won't be. Hopefully you come out alive.

 

[mimico_polak]

Even more concerning to me is what you don't know. This seems like a business that would be very very popular with organized crime. They may not appreciate the competition. I don't know how you learn if that is a concern before you get visits from Vinnie, Serge, Wan, etc that suggest either "security" upgrades or straight up reimagining your business.

Organized crime is deep into fields that you may not consider (like lunch trucks that visit workplaces). You may think you can be successful but you won't be. Hopefully you come out alive.

There you go again ruining my fun….

But coffee trucks!? What!?

There’s gotta be something I can read to learn more about this mafia infiltration.

 

[GreyGhost]

There you go again ruining my fun….

But coffee trucks!? What!?

Check out the account book sometime if your truck driver is friendly. I have seen people deep into five digits. That's a lot of coffee. Not sure if it is drugs/gambling/loans or what but the trucks have a very successful business model that has little to do with coffee. Drivers aren't concerned about bad debt. Everybody always pays.

 

[woot]

Almost by definition you are sitting on a pile of cash in a shady part of town. It may be profitable but there is a high exposure to risk. Hiring someone else to be team human shield somewhat mitigates the life-safety risk but you still have the financial risk (both in losing money and feeling bad for your employees family if the employee was on the losing end).

When I was looking it up yesterday the initial investment includes a bullet proof room and I think some kind of safe as well as security system (and signage, office furnature,etc)

Realistically I'll sit here at my desk on gtamotorcycle for the next 10-15 years but it seemed like a good time to get into the business due to inflation etc.

 

[nobbie48]

What's everyone's thoughts on opening a Money Mart franchise? Beyond the morality reasons. Some googling shows it's pretty cheep to open a payday loan franchise but also I see some articles that are nearly 10 years old saying government regulations has made the industry a lot riskier from a lender perspective.

Taking money from people and using it for good things isn't necessarily evil. Many of the places exist because of the bank policies.

I recall my first regular job, getting my first paycheck, going to the bank and branch the company used and being told I had to open an account and they had to hold the entire amount until the cheque cleared. That was before computerized banking. It's still the same. A low income person without family support needs their money NOW. I fortunately was living at home.

The cheque cashing places used to keep too large a percent of the cheque and that is where the government applied limits. I don't know if straight loans are legislated but seeing 10% for two weeks makes me think they aren't too limited.

I don't know the difference in how loans and credit cards are handled. I recall being told that above a certain value the limits are lifted. Under $5K might have more restrictions than over. A minimum wage earner would have trouble getting a credit card so in an emergency they have to borrow at 10% for two weeks instead at 19% a year. With a good credit rating the rate could be well under 10%. It doesn't pay to be poor.

The morality issue to me is over whether the money the loaner takes from the borrower means whether it's food or beer not being on the table.

The other side of the morality issue is whether the borrower has morals about repayment. I envision a lot of chasing after money and write-offs.

If morals came into it a credit resolution company could be a side gig for clients that didn't know how to work themselves out of the hole. Teach them and you lose a good customer. Unfortunately too many people are their own worst enemies.

 

[Mikedezo44]

Think long and hard about opening any type of retail storefront with business hours. From what I've seen with a few friends and associates over the years it is absolute **** being glued to the store having to be there every single day and staying until 9pm on a Friday when nobody's been in since 5 because those are the hours you chose. Most of them can barely afford, or almost impossible to find employees these days with half a brain, so you will be stuck there. A LOT. Especially trusting them handling your money? No thanks.
Talking to someone who's wife owns a couple Pita Pits a few weeks ago, can't find workers, wife going back and forth between stores to fill shifts (and save money) not getting rich by any means.