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Xstar_Lumini

join:2008-12-14
Canada
kudos:2
reply to elwoodblues

Re: LOL Investors Of Trump Tower In Toronto Got Swindled!

said by elwoodblues:

Greed aside, the developers were warned by the OSC not to market it as an "investment", and banks took a pass on the mortgages , seeing they were "commercial" hotel rooms , not condos .

I've been following this and there is enough greed to go around

So what I was told by a friend is true then? That banks won't give mortgages or lend money for commercial projects? Is this because commercial properties are too much of a risk?


Ian
Premium
join:2002-06-18
ON
kudos:2

said by Xstar_Lumini:

So what I was told by a friend is true then? That banks won't give mortgages or lend money for commercial projects? Is this because commercial properties are too much of a risk?

Sure they will. However, when the business plan for that commercial venture is "I want to buy a hotel room. I'll be paying the lending costs from the people that shell out $600 a night to stay in the room."......the banks aren't going to be lining up to do so.
--
“Any claim that the root of a problem is simple should be treated the same as a claim that the root of a problem is Bigfoot. Simplicity and Bigfoot are found in the real world with about the same frequency.” – David Wong


Gone
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join:2011-01-24
Fort Erie, ON
kudos:4
Reviews:
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said by Ian:

Sure they will. However, when the business plan for that commercial venture is "I want to buy a hotel room. I'll be paying the lending costs from the people that shell out $600 a night to stay in the room."......the banks aren't going to be lining up to do so.

You'd be surprised. If you walked in off the street with no history what you said would probably be correct. On the other hand, if you have a long-standing relationship with a bank and have a history of turning a profit on your business ventures and asked them for a mortgage to invest in something like this, they probably approve it the very same day.


agtle

@teksavvy.com

said by Gone:

said by Ian:

Sure they will. However, when the business plan for that commercial venture is "I want to buy a hotel room. I'll be paying the lending costs from the people that shell out $600 a night to stay in the room."......the banks aren't going to be lining up to do so.

You'd be surprised. If you walked in off the street with no history what you said would probably be correct. On the other hand, if you have a long-standing relationship with a bank and have a history of turning a profit on your business ventures and asked them for a mortgage to invest in something like this, they probably approve it the very same day.

I'm not sure relationship or past business profits would have made a difference. The fact is, the commercial banks, unlike the "investors" in this project, actually examined the numbers and read (and understood) the prospectus, and saw that they were not realistic. Regardless of your relationship with the financial institution, there has to be *some* potential for profits, and the banks saw that the numbers being floated by Talon (gotta love that name!) were ridiculous.


Ian
Premium
join:2002-06-18
ON
kudos:2
reply to Gone

said by Gone:

said by Ian:

Sure they will. However, when the business plan for that commercial venture is "I want to buy a hotel room. I'll be paying the lending costs from the people that shell out $600 a night to stay in the room."......the banks aren't going to be lining up to do so.

You'd be surprised. If you walked in off the street with no history what you said would probably be correct. On the other hand, if you have a long-standing relationship with a bank and have a history of turning a profit on your business ventures and asked them for a mortgage to invest in something like this, they probably approve it the very same day.

Spiffy. Is that what we're talking about here in this thread? Nope.
--
“Any claim that the root of a problem is simple should be treated the same as a claim that the root of a problem is Bigfoot. Simplicity and Bigfoot are found in the real world with about the same frequency.” – David Wong


Gone
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join:2011-01-24
Fort Erie, ON
kudos:4
Reviews:
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said by Ian:

Spiffy. Is that what we're talking about here in this thread? Nope.

said by Ian:
when the business plan for that commercial venture is "I want to buy a hotel room. I'll be paying the lending costs from the people that shell out $600 a night to stay in the room."......the banks aren't going to be lining up to do so.
Did you demonstrate any knowledge about what is involved in getting a commercial mortgage before you made a blanket generalization about what a bank would look for before approving something like this? Nope.


Ian
Premium
join:2002-06-18
ON
kudos:2

said by Gone:

said by Ian:

Spiffy. Is that what we're talking about here in this thread? Nope.

said by Ian:
when the business plan for that commercial venture is "I want to buy a hotel room. I'll be paying the lending costs from the people that shell out $600 a night to stay in the room."......the banks aren't going to be lining up to do so.
Did you demonstrate any knowledge about what is involved in getting a commercial mortgage before you made a blanket generalization about what a bank would look for before approving something like this? Nope.

No. But I did read the thread and related links well enough to know that the issue here isn't people with long-standing commercial relationships with banks and hotel operations. People who assumed that they could finance the ridiculous deal with pie-in-the-sky room rates that never materialized. It's about people wanting a loan that can't be repaid.
quote:
“One mortgage company asked me, ‘How could I give you a mortgage on a property that is losing money every single day?” said one devastated buyer, a blue-collar worker who borrowed the $175,000 down payment from his immigrant parents and owes $750,000 at month’s end."
How indeed? Reading. Not just for squares. Most of the rooms in the hotel, are, I suspect, well-financed (or paid for outright). This topic is about the exceptions.
--
“Any claim that the root of a problem is simple should be treated the same as a claim that the root of a problem is Bigfoot. Simplicity and Bigfoot are found in the real world with about the same frequency.” – David Wong


Gone
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join:2011-01-24
Fort Erie, ON
kudos:4
Reviews:
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Dude, I was just pointing out that your assessment of what a bank would do when presented with a commercial mortgage was one-sided not as cut and dry as your comment made it out to be. That's why exceptions exactly like this occur. If a bank thinks they'll make money on a commercial endevour, they'll give out the money - end of story. Relationships and gut feelings from loan officers are a big part of the process in getting a commercial mortgage. The same logic one would use when thinking about how a mortgage is granted for a house doesn't apply in the commercial world.

No need to get pissy, Ian. The world isn't out to get you.



Gone
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join:2011-01-24
Fort Erie, ON
kudos:4
Reviews:
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reply to agtle

said by agtle :

I'm not sure relationship or past business profits would have made a difference. The fact is, the commercial banks, unlike the "investors" in this project, actually examined the numbers and read (and understood) the prospectus, and saw that they were not realistic. Regardless of your relationship with the financial institution, there has to be *some* potential for profits, and the banks saw that the numbers being floated by Talon (gotta love that name!) were ridiculous.

I'd go so far as to say that payola at the local (read: branch) level of the bank might have been involved, but of course there's no proof, nor most likely will there ever be.


Ian
Premium
join:2002-06-18
ON
kudos:2
reply to Gone

said by Gone:

No need to get pissy, Ian. The world isn't out to get you.

The world? No, but you seem to be trolling me at each and every opportunity, for whatever reason.
--
“Any claim that the root of a problem is simple should be treated the same as a claim that the root of a problem is Bigfoot. Simplicity and Bigfoot are found in the real world with about the same frequency.” – David Wong


TLS2000
Crazy Canuck
Premium
join:2004-02-24
Mississauga, ON

1 recommendation

I don't see him trolling you here. He's correctly engaging in debate about how banks will provide business loans, which you started.
--
Tom



Ian
Premium
join:2002-06-18
ON
kudos:2

said by TLS2000:

I don't see him trolling you here. He's correctly engaging in debate about how banks will provide business loans, which you started.

I take exception to being called being pissy, when all I was doing was replying in that vein. Tomato/To-mah-to.

But fair enough. Possible that I'm carrying annoyance from behaviour in numerous other threads here in an unwarranted fashion.

I for one, wasn't engaging in a giant debate over commercial financing. I was talking about the people (i.e. the topic of the thread) with little collateral trying to get a loan to finance a room when the numbers are based off of hotel room rates from an alternate reality. It should be no surprise to anyone that a bank isn't going to give a person a commercial loan with only the property itself as collateral when the income from that property can't even cover the interest on the loan, and that the value of the property itself is likely way over-priced. A bank is going to say... "OK, so this guy defaults, and I have to sell this room. Can I get the $750,000 back in a timely fashion by selling it?" No? OK then, loan denied. Hence here we are.
--
“Any claim that the root of a problem is simple should be treated the same as a claim that the root of a problem is Bigfoot. Simplicity and Bigfoot are found in the real world with about the same frequency.” – David Wong


elwoodblues
Elwood Blues
Premium
join:2006-08-30
Somewhere in
kudos:2
reply to Gone

Its not a generalization, it's been noted in the paper that these "investors" can't get a mortgage.



Gone
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join:2011-01-24
Fort Erie, ON
kudos:4
Reviews:
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reply to Ian

said by Ian:

The world? No, but you seem to be trolling me at each and every opportunity, for whatever reason.

Oh brother. Paranoid much?

It may come as a shock to you Ian, but you're really not that important to me.
Expand your moderator at work


Dustyn
Premium
join:2003-02-26
Ontario, CAN
kudos:10
reply to Gone

Re: LOL Investors Of Trump Tower In Toronto Got Swindled!

whoops...wrong thread...



WallyThacker
The Central Scrutinizer

join:2002-02-12
Canada
Reviews:
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reply to Gone

said by Gone:

said by Ian:

Sure they will. However, when the business plan for that commercial venture is "I want to buy a hotel room. I'll be paying the lending costs from the people that shell out $600 a night to stay in the room."......the banks aren't going to be lining up to do so.

You'd be surprised. If you walked in off the street with no history what you said would probably be correct. On the other hand, if you have a long-standing relationship with a bank and have a history of turning a profit on your business ventures and asked them for a mortgage to invest in something like this, they probably approve it the very same day.

Here's the truth.

The banks will loan you anything if the loan is secured by tangible property outside of the loan itself.

If you want to teach gay midgets in Kenya how to ice skate down Mt. Everest and have, say, a lien free house, most banks will happily loan you money.

So, every day banks make loans to people who are guaranteed to fail but the bank is guaranteed to recover their loan.

That's how it works.
--
"Our criminal institutions are full of little creeps like you who do wrong things, and many of them were driven to these crimes by a horrible force, called MUSIC" Frank Zappa, Joe's Garage

booj

join:2011-02-07
Richmond, ON

said by WallyThacker:

Here's the truth.

The banks will loan you anything if the loan is secured by tangible property outside of the loan itself.

If you want to teach gay midgets in Kenya how to ice skate down Mt. Everest and have, say, a lien free house, most banks will happily loan you money.

So, every day banks make loans to people who are guaranteed to fail but the bank is guaranteed to recover their loan.

That's how it works.

It goes even further. The banks will loan you anything if it's insured by the CMHC. I wouldn't be surprised if the taxpayer is left holding the bag for some of the defunct mortgages on these condos.