Housing Market 2018

Leveraging, renting vs owning, making an investment or buying a home?
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AltaRed
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Re: Housing Market 2018

Post by AltaRed »

You forget that in BC, the beneficial owner does not have to be disclosed with Land Titles. That allows a numbered company to be set up and funded by any number of shareholders to buy the property. No beneficial owner needs to be declared with Land Titles. The property can then be transferred through the sale of the shares of the numbered company, not triggering a land transfer title at all, to anyone else. This is just another Panama Papers ruse (if you have not read the book written by the 2 key German recipients of the law firm's files).
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Re: Housing Market 2018

Post by Flaccidsteele »

Mordko wrote: 17 Feb 2018 11:17 So, the prices are going down. Quite fast, apparently.

Question to people "with empathy" - are you happy now? How low do house prices have to fall to make you happy? Should "the government" take additional measures to impede foreign money from flowing into our housing market?

Any empathy for Canadians who bought last March in the GTA and lost hundreds of thousands - or do they deserve it?
Any empathy for landlords who are basically screwed because not only are they subjected to negative cash flow and rent controls, now their asset value is declining plus its now legal for their tenants to smoke and grow weed?
I think the empathy comes in when, just before the slowdown, there was allegedly a lot of foreign money paying over-inflated prices for Canadian real estate to the benefit of Canadian homeowners.

Canadian homeowners made out very well and we're happy for them.

Now that there's a downturn, these same former Canadian homeowners are sitting pretty with cash and the younger generation can now better afford to buy homes themselves. Or just enjoy the cash that their parents received from foreign sources.
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Re: Housing Market 2018

Post by AltaRed »

Flaccidsteele wrote: 17 Feb 2018 13:31 Or just enjoy the cash that their parents received from foreign sources.
For the privileged few....yes. Therein lies part of the problem. Wealth begets wealth and retained among the few while the majority of others have no choice but to remain on the sidelines.
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Re: Housing Market 2018

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AltaRed wrote: 17 Feb 2018 13:11 You forget that in BC, the beneficial owner does not have to be disclosed with Land Titles. That allows a numbered company to be set up and funded by any number of shareholders to buy the property. No beneficial owner needs to be declared with Land Titles. The property can then be transferred through the sale of the shares of the numbered company, not triggering a land transfer title at all, to anyone else. This is just another Panama Papers ruse (if you have not read the book written by the 2 key German recipients of the law firm's files).
It's not the ownership that is disclosed, its the cash transaction that is. A cash transaction would be flagged by the government and you'd have to produce proof of origin. The same as taking more than 10k across the border. You can, as long as you can provide a way to show its origin. If you can't, the cash is seized. They don't care about your name at the border for carrying too much cash either, they just take the money away.
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Re: Housing Market 2018

Post by twa2w »

Just a Guy wrote: 17 Feb 2018 20:44
AltaRed wrote: 17 Feb 2018 13:11 You forget that in BC, the beneficial owner does not have to be disclosed with Land Titles. That allows a numbered company to be set up and funded by any number of shareholders to buy the property. No beneficial owner needs to be declared with Land Titles. The property can then be transferred through the sale of the shares of the numbered company, not triggering a land transfer title at all, to anyone else. This is just another Panama Papers ruse (if you have not read the book written by the 2 key German recipients of the law firm's files).
It's not the ownership that is disclosed, its the cash transaction that is. A cash transaction would be flagged by the government and you'd have to produce proof of origin. The same as taking more than 10k across the border. You can, as long as you can provide a way to show its origin. If you can't, the cash is seized. They don't care about your name at the border for carrying too much cash either, they just take the money away.
But how does the government find the time and manpower to track this. Some 35-45% of homes are bought with no mortgage. Who pays for this tracking?
Remember, lawyers cannot accept cash. Pretty easy to move cash transactions around a little and show it as savings or sale of property out of country.
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Re: Housing Market 2018

Post by Just a Guy »

How do you get it into a bank? The bank won't accept the deposit, the lawyer won't accept the deposit, the seller can't accept the money because he can't put it in the bank either...

It's the same problem that the drug dealers started with, there's no way to get the money into the system to launder it in the first place. You're basically stuck with large sums of cash that you can't use.

That's why I don't think money laundering works with Canadian real estate anymore.
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Re: Housing Market 2018

Post by AltaRed »

You haven't heard of offshore banks then, nor the Panama Papers (the book is a bit heavy to read). It has not been difficult for dirty offshore money to find its way back into the system by those with means.
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Re: Housing Market 2018

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If it was so easy to get cash into an offshore bank then the drug dealers wouldn't have to lend the money to home buyers. It's not like you can take the money across the border easily. You can't wire transfer it, you need to smuggle it.
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Re: Housing Market 2018

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First of all, banks will not refuse cash deposits. You do have to declare source of funds over 10 k but easy to get around. Canada is known as one of the easiest countries to launder money and one of the laxest in policing of their policies.

Money deposited in foreign banks is wired into Canada all the time and routed through legit banks. A lot easier than you would expect.

You just dont have a devious enough mind. ;-)

Here are two simple ways drug dealers use to launder $ in Canada. Incorporate a small business using throw away names. Register a trade name that sounds gas station like. Open accounts at a number of different banks / credit unions. Deposit odd amount of cash daily to each branch. (under 5,000 k each daily) Write cheques to other legit sounding businesses you 'own' and money becomes clean in a few transactions. Can launder 40-50,000 in cash a day. And can run this scheme multiple times concurrently.
Or
Buy a lot with clean money. Buy materials to build the house using cash at a number of various lumber supply stores. Pay cash to tradesmen to build house. Have a relative live in house for a year. Sell tax free. Voilà clean money. No one checks on this stuff.


Yes those are two examples actually happened in Canada. No they did not get caught. Discovered after the fact. Millions laundered.

I could give you another dozen or so examples of ways to do it.

As far as Chinese money coming in. A lot goes through Indonesia, Malaysia etc then is simply wired in to Canada. If asked for source - sales of business, sale of property etc. Moving $ to Canada to buy house for child while going to school etc.

How do you know what is legit or not. Little or no cooperation with Chinese and often names change as it goes through varous channels.

Laundering money is a lot easier than most people think. You can smuggle cash in but then what do you do with it? Deposit a few thousand every few days? Yes this happens too but curreny is an issue.

Dealers do keep a lot in cash but there are reasons for that.
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Re: Housing Market 2018

Post by Just a Guy »

We were talking about the specific case described in the article, not how to launder money in general. The article says drug dealers from Canada lend cash to people who then buy the house with the dirty cash. It won't work in Canada, at least not the way they described in the article.

The drug dealers can't get in into foreign banks any more than the people borrowing it. They can't pay cash for the property because they can't establish a chain of origin any more than the drug dealer could. "Where'd you get the cash from?" "It was loaned to me." "Where did they get the cash?" "Ummm....".

BTW, drug dealers make so much money the idea of building a house from scratch would take to long to launder the money. The best idea is the cash retail places like dollar stores or pizza places, but that's again not part of the discussion.
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Re: Housing Market 2018

Post by Flaccidsteele »

Just a Guy wrote: 18 Feb 2018 15:42 We were talking about the specific case described in the article, not how to launder money in general. The article says drug dealers from Canada lend cash to people who then buy the house with the dirty cash. It won't work in Canada, at least not the way they described in the article.

The drug dealers can't get in into foreign banks any more than the people borrowing it. They can't pay cash for the property because they can't establish a chain of origin any more than the drug dealer could. "Where'd you get the cash from?" "It was loaned to me." "Where did they get the cash?" "Ummm....".

BTW, drug dealers make so much money the idea of building a house from scratch would take to long to launder the money. The best idea is the cash retail places like dollar stores or pizza places, but that's again not part of the discussion.
Lets keep the logic to a minimum here! This is a real estate thread after all! :wink:
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Re: Housing Market 2018

Post by twa2w »

Just a Guy wrote: 18 Feb 2018 15:42 We were talking about the specific case described in the article, not how to launder money in general. The article says drug dealers from Canada lend cash to people who then buy the house with the dirty cash. It won't work in Canada, at least not the way they described in the article.

The drug dealers can't get in into foreign banks any more than the people borrowing it. They can't pay cash for the property because they can't establish a chain of origin any more than the drug dealer could. "Where'd you get the cash from?" "It was loaned to me." "Where did they get the cash?" "Ummm....".

BTW, drug dealers make so much money the idea of building a house from scratch would take to long to launder the money. The best idea is the cash retail places like dollar stores or pizza places, but that's again not part of the discussion.
Well in the article it does not say they lend money to buy houses. They lend money as second mortgages to existing home owners. . I can register a second or third mortgage agsinst your property and give you cash. When you sell I get clean money.

As to building houses. That particular case is estimated to have netted the launderers about 15-20 million in clean funds over about 2 1/2 to 3 years. So pretty good dollars.

Re the example in the article - a similiar laundering situation involves small builders building on spec. They have trouble accessing funds through the bank. Easy to register against their property then provide them with cash to buy material. Get paid with clean money when house sells.
You would be surprised how much you could put through this. Get your cash cleaned and make 2% per month. And yes this has been done and is likely still being done in Canada.
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Re: Housing Market 2018

Post by Just a Guy »

You're missing the point again. Sure they lend the homeowner dirty cash, but what does the homeowner do with it? They are the ones now stuck wih dirty cash which they can't put in a bank, can't take overseas, can't use to buy expensive cars...

Getting back to the home building, these guys make millions every year, they need to launder it quickly or it builds up, they don't want to wait 3-5 years.
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Re: Housing Market 2018

Post by AltaRed »

JAG, you don't seem to accept how easy it is to launder dirty money in housing, casinos, etc. Do some reading of your own. Maybe even the book Panama Papers as I have mentioned at least a few times.

BC socialists just introduced their budget with a number of housing items. One of them will result (if they do it) with a requirement to disclose beneficial ownership on land titles. There are others such as satellite ownership by family members with minimal to no declared income on BC income tax returns. BC has been the wild west on a number of matters.
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Re: Housing Market 2018

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This is interesting. This information must be reported for every property to avoid the speculation tax:
B.C. would enforce the tax by directing homeowners to an electronic tax form on the Ministry of Finance website. There, they would be asked to provide the following:
Social Insurance Number (SIN)
Information on global income
Household information
Information on exemptions from the tax (you won’t have to pay it if your home is your principal residence, in most cases)
Any other information that the Ministry of Finance may find useful for enforcement and auditing purposes
This information would then be sent along to the Canada Revenue Agency.
https://globalnews.ca/news/4037313/bc-b ... es-prices/
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Re: Housing Market 2018

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I am both surprised and shocked that such things were gross loopholes in our tax system. And I am sure that lawyers and accountant are working on new "workarounds" to avoid these new rules.

It makes one want to become an avoider!
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Re: Housing Market 2018

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AltaRed wrote: 21 Feb 2018 10:33 JAG, you don't seem to accept how easy it is to launder dirty money in housing, casinos, etc. Do some reading of your own. Maybe even the book Panama Papers as I have mentioned at least a few times.

BC socialists just introduced their budget with a number of housing items. One of them will result (if they do it) with a requirement to disclose beneficial ownership on land titles. There are others such as satellite ownership by family members with minimal to no declared income on BC income tax returns. BC has been the wild west on a number of matters.
I think you underestimate how hard it is to spend say a million dollars in cash, let alone tens of millions. No one wants to touch it.
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Re: Housing Market 2018

Post by Mordko »

kcowan wrote: 21 Feb 2018 15:26 I am both surprised and shocked that such things were gross loopholes in our tax system.
Me too! Shocked! Shocked!

Although they do say that regulations in N Korea are rather strict but the black market is doing as well or better than elsewhere. On the positive side they don't have the problem of foreigners crowding out N Korean youngsters from the local housing market.
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Re: Housing Market 2018

Post by Flaccidsteele »

Most likely nobody on this forum has tried to acquire property with laundered money or by paying a million dollars in cash so we're all just talking in uneducated hypotheticals here
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Re: Housing Market 2018

Post by rapporteur »

Dear JAG,

I myself am a model of utmost probity and would never condone any criminal money laundering. In fact, I enjoy paying taxes, knowing that the Canadian government will spend my money far more effectively, efficiently, and productively than I ever could personally :D

But as for money laundering itself, it is laughably simple - only the hopelessly inept or the outrageously unlucky ever get caught. The US Treasury estimates the amount of 'dirty money' generated in the US alone at very roughly $300 billion annually! The total amount intercepted, confiscated, etc, however, is well under 1%. IOW for serious criminals their losses to anti-money-laundering programs pales in comparison even to their office coffee fund! Total cost to launder money is 1-5% (decidedly at the lower end for larger, more sophisticated operations).

To put this in perspective, cocaine is smuggled vast distances across many borders, yet its *wholesale* price is only about $30000/kg (USD) in major US and Canadian cities. The LEO intercept rate is well under 1% for this trade (despite the lurid TV coverage of the few intercepts that do happen). In fact, the wholesale price (in inflation-adjusted real dollars) has *dropped* over the last several decades - despite all the hoopla of the War on Drugs - an index of how good the smugglers have become.

Anyone who can physically move cocaine can more easily move the money (not itself contraband - yet!) - a million in $100 dollar bills only weighs about 10 kg (Even dirty street money in 20s only weighs 50kg/million - very roughly comparable to cocaine itself). And 'virtual money' is weightless!

As one laughable example of how easy it is to launder money, I once knew a fellow many years back who told of paying his Canadian corporate tax by handing over a brown paper bag of bundled 100s totaling over $50,000 at the RevCan office in a downtown building in a major Canadian city. RevCan didn't demur or say a word - just took the money to the counting machine in the back and returned with a receipt. Her Majesty didn't ask any embarrassing questions!

Regards,

PS That same fellow from many years ago referred to the RCMP as the Marijuana Marketing Board - their job was to keep triflers out and prices up :D
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Re: Housing Market 2018

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Money-laundering….

There is an old Alberta saying (you may appreciate this one, AltaRed), “There ain’t a horse that can’t be rode; there ain’t a cowboy who can’t be throwed.”

Yes, the authorities may be able to unravel some schemes, some of the time – but how many, and at what cost? It’s a game of whack-a-mole that the government is doomed to lose. …at the grand scale even if they chalk up a minor win now and then. If they spend their time, money and effort *here* then that that creates an opening *there*. And so, if you, the criminal, diversify across multiple independent schemes, your ‘value at risk’ can be minimized.

I remember well one case where the government eventually ‘won’, but it took them three years, several of their best forensic accountants’ time, and many millions of dollars to penetrate, understand, and unwind a series of money laundering transactions involving shell corporations, overseas jurisdictions, tax havens, and so on. ‘I say ‘won’ because in the end, although they won the case, they recovered next to no money, and all the principals involved slipped through the net.

And here’s the punchline: The original series of electronic transactions took *18 minutes* to perform! 18 minutes to do – 3 years to unwind! A shell game but with electronic peas and electronic shells – a virtual shell game if you will. (In government compliance circles the old guys are good at accountancy forensics, the young guys are good at computer stuff, but there is a nearly unbridgeable gulf between them. Nimble criminals capitalize [sic] on this. Surfing on the wave of institutional lag and rigidity.)

I could talk about trade-based money laundering and other sophisticated schemes. My favorites are ‘yellow iron’ games (bulldozers, backhoes, etc) into Venezuela (uses US dollar and is in turmoil) or almost-unauditable ‘soft’ services (like insurance, marketing, software, etc.). But I won’t – too complicated.

Instead I will explain an ‘old standby’ of low-level money laundering. Low level, well known, but still very doable! Buying and selling used cars!

Here’s how it works (simplest case, much obfuscatory embroidery can be added to the basic pattern once understood)…

The Launderer looks for used cars for sale (nothing exotic, probably under $10,000 asking). Let’s say he buys a car from ‘A’. He offers a good price (doesn’t haggle too hard) but is adamant about one aspect – a cash deal. ‘A’ doesn’t object – no chance of getting burned on a cash deal.
‘A’ signs the ‘sales contract’ part of the registration and asks who to put in the ‘Sold To’ field. The Launderer replies. “Just leave that blank; I’ll fill it in later.” Launderer pays A in cash - deal is concluded.

Next Launderer (perhaps on Kijiji, etc) offers the car for sale (perhaps slightly underpricing it to ensure quick turnover). Buyer B is interested – Launderer sells the car to him – for a certified cheque! Launderer enters B’s name in the ‘Sold To’ field on the registration.

End result: Launderer has converted ‘dirty’ cash to a ‘clean’ cheque – money well laundered. Moreover Launderer’s name NEVER APPEARS anywhere on the record of ownership!

Easily doable at a scale of, say, 1-5 cars per week. Call it $2 million laundered per year.

Launderer charges invisible principals behind the scenes, say, $50,000/year for his services – call it 2.5%

Regards,

PS The second mortgage scheme on houses depends on the vendor’s greed, fear, and self-interest.

Let’s say the vendor sold the house to Launderer (unknowing he was a Launderer) with a vendor-takeback second mortgage of $100,000. (Let’s also say, as would inevitably be the case, that there’s a ‘right to repay in full anytime’ clause in the 2nd mortgage.).

After a few months (typically) Launderer offers to repay the 2nd mortgage in full **with cash**. Vendor now has a quandary:

If he rats out Launderer (as possibly/probably a launderer) **he may never get repaid**. If the Launderer goes down, the money may get confiscated as ‘proceeds of crime’, etc!

On the other hand, he, the vendor, was counting on repayment of the 2nd mortgage over several years – in terms of cash flow he KNOWS he can easily dribble out $100,000 in cash over the next few years in ‘ordinary’ expenditures.

The vendor would have to be a fool (or *very* nobly civic-minded) not to cave in, take the money, and stay silent – even if the situation gave him very bad vibes!

In the immortal words of Ralph Klein: Shoot, shovel, and shut up!
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Re: Housing Market 2018

Post by Just a Guy »

People seem to miss the point, I’ve never said money laundering is hard, I said using real estate to launder money doesn’t pass the sniff test. There are many, easier, less monitored ways to do it. Ones that don’t involve lawyers, banks and heavy government oversight.
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Re: Housing Market 2018

Post by twa2w »

Actually real estate is one of the easier ways according to the RCMP, FINTRAC etc

Lawyers are exempt from AML regulations and there is very little to no government oversight in real estate.
You can move a surprising amount of cash through the banks, casinos etc.

You just have to pick and choose the right province, area and people etc.

Drug dealers are actually fairly patient when it comes to cleaning money because they often don't have any choice. And they pay well for laundered money.

The people that do get caught are usually the small timers who make mistakes and don't know the system.
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Re: Housing Market 2018

Post by squid »

https://betterdwelling.com/chinese-gove ... al-estate/

China has taken over a Chinese insurer that was taking in cash at 8% short-term to buy RE around the world and in Canada in order to avert a crash.
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Re: Housing Market 2018

Post by patriot1 »

squid wrote: 23 Feb 2018 15:31 to buy RE around the world and in Canada in order to avert a crash.
Article doesn't say that. Anyone can figure out that a single player buying in a huge market can't stop prices from going down, I sure they could.
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