Real Life Monopoly
In the game of Monopoly, the players or investors buy 4 green houses and then upgrade to a red hotel. There is one winner and the rest of the players lose. In all of these transactions only the banker wins because investors play with one set of rule, while the bankers play with a different set of rules. There are two games being played here. The banker’s rules are about making money with the least amount of risk, while the investor’s rules are about making money, bearing the brunt of the risk. The banker’s rules were created by bankers for bankers, while the investor’s rules were created by bankers as well. So the fix is in, investors are playing a losing game because the rules were created in favour of the banks.
The Financing Game
The financing game is played by two players: the banks and the government. The odds are stacked against the investors to play a losing game.
The average North American pays 34% of interest after-tax dollars towards credit cards, mortgages, car loans and furniture loans. This does not include principal payments; just interest. Guess who receives these interest payments? The banks.
The average North American pays an additional 30% towards income taxes. Guess who receives these tax payments? The government.
The average North American pays more than 64% of their annual income to the banks and to the government. This mean that the average North American is working two-thirds of their annual labour to pay the banks and the government, with the remaining one-third to pay for their living expenses. This leaves less than 5% of their income towards savings.
Lending Your Money Multiple Times
This is known as Fractional Reserve Banking. It is a rule written by banks for banks. The rule allows a bank to take a Depositor’s money and then loan that amount up to ten times or more. If the banks receive a $10,000 deposit; they pay a miniscule amount of interest to the Depositor. The banks can then take that $10,000 amount and loan it out ten times at higher interest rates. That’s $100,000 in loans that the bank makes on your money. When you need a loan from the bank, you are basically paying higher interest to the bank for borrowing your own money.
There are some banks that have loaned out as much as 49 times the deposit amount. You can see why a bank will eventually end up in default by loaning out 49 times what they actually have on deposit. These banks end up applying for and receiving bail out funds for their irresponsible banking policies. Who funds these bail outs? The Average North American. Since the banks wrote these rules to benefit themselves; the Depositors are always playing a losing game.
Playing Their Game
There is a way to even out the playing field. This is by playing their game through Private Lending. This is not about applying for a banking license and setting up shop as a bank, but rather making money like a bank.
What is Private Lending? Going to private lenders for loans instead of the bank. The Private Commercial Mortgage market is undergoing significant changes in Canada. The industry is shifting to alternative money versus the traditional loan requirements of the big banks and big insurance. Private lenders are funded by wealthy individuals, hedge funds and venture capitalists who loan money. Private Lenders are equity based lenders, meaning their loans are based on the asset’s cash flow and not on the borrower’s credit.
Private Lenders are more flexible than traditional banks. They are by nature business owners and entrepreneurs who understand business and therefore, they are people who understand you and your unique needs.
Please feel free to contact our Customer Service Representatives to assist you with your lending needs.
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