Immigrant Investors and the $120,000 Myth

I’m quoted in today’s Globe and Mail in an article about whether there is a real estate bubble in Vancouver.  My contribution to the article was a description of the old Federal Immigrant Investor Program. The article states:

A common scenario for an investor immigrant from mainland China unfolds like this, explains immigration lawyer Steven Meurrens: One member of the household qualifies under a category of the Business Immigration Program and posts a $120,000 bond in lieu of making the $400,000 investment stipulated under the program. (Some qualify instead as “provincial nominees,” and follow a somewhat different scenario involving an actual investment.) Portions of the money are divvied out to various immigration advisers and service providers, while the interest accrues to the federal government, which in turn spreads it around to provincial governments—about a half billion dollars annually of late. Essentially, the money is treated as the cost of Canadian entry—although in a further wrinkle, many breadwinners never move to Canada, instead retaining their offshore jobs or businesses as well as Chinese citizenship, to maintain their income stream and taxpayer status in China, which helps shelter income from higher Canadian taxes.

As I stated in the article, the “common scenario” under the old immigrant investor program was that investors would pay financial intermediaries $120,000 to finance their loans to the Canadian government. At least 90% of immigrant investors paid this amount.

However, those immigrant investors that paid $120,000 to the financial institution paid too much.

At Larlee Rosenberg, we have successfully worked with numerous banks to obtain lower financing rates for our clients.  Indeed, some investors working with us have paid $60,000 – 80,000.

As noted by Ryan Rosenberg, a partner at Larlee Rosenberg, the $120,000 deposit was based on the bank and the consultant / lawyer keeping 100% of the commissions involved with the program.  As Ryan wrote in his blog:

It should be known that a variety of financing options are available. Some Banks will offer financing at $200,000 where at the end of the 5 year term the investor receives $100,000 back and others have varying options within the $400,000 lending range. It should also be known that financing is completely optional and does not have to be established through an investment facilitating bank. There is nothing stopping an investor from borrowing $400,000 from a bank in the investor’s home country, paying monthly interest to that bank and then using that money to fund an investment under the Federal Investor Program, receiving the full $400,000 back after five years. Based on my estimates and today’s interest rates, an investor can easily bring down his cost under the program to about $60,000 plus application fees and if required, legal or consulting fees, a fraction the $120,000 option that saturates the market.

The same will be true for the new immigrant investor program.

If you are an immigrant investor, ask your consultant/lawyer whether he or she will be receiving a commission, and see if you can get the best financing arrangement possible.


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