Poke holes in my leverage strategy

[BeTheChange]

Take out a personal loan for $100,000 from Bank A

Inject this into my consultancy business (Corp A) alongside equity of $100,000

Total cash added to this business is $100,000

Corp A then borrows $100,000 from Bank B

Total cash added to the business is now $200,000

Inject this cash of $200,000 into a new Corp B, A Special Purpose Vehicle

Use Corp B to purchase real estate of $1,000,000 using 30% "deposit"

Is this possible or will I be caught out given I am a Director of both these companies

I figured that if I did them in this order and in the space of a few weeks it would be very difficult for them to know the actual substance of the transactions between myself and my businesses.

Open to comments and strategy revisions

Interest on the personal and business loans would be around $1750 per month

Interest on the commercial mortgage would be $3,500 per month

Total Interest Expense of $5,250

I would have an additional $50,000 left over to cover any disaster scenario - so i could float for 10 months without defaulting with zero tenants in - and I would still be working so this timeframe would actually be longer.

Thoughts?

 

[guru1000]

A little unclear.

Corp A is a corp with no or little credit history? If so, the lender would be ultimately lending you money using your personal credit report for reference and a personal guarantee, correct?

Let's put the corps aside because corp loans without established credit history would fall upon you personally. So if I understand what you are trying to get at, it goes something like this:

6/1/16: Go to Bank A for a $100,000 personal loan.
6/2/16: Go to Bank B for a $100,000 personal loan.

Will Bank A and Bank B find out about each other?

Bank B will know about Bank A's inquiry on your credit report, but not about the loan, at least initially. However, I am confident Bank B has a rider in their lending contract stating you have taken out no other loans within a specified time frame around origination. So ultimately you are lying, and thus the Bank B loan would be fraudulently derived.

Many people do this with credit cards. Google "App-o-rama." You are not likely to get into trouble, nor likely for Bank B to try to rescind their loan or sue you as long as you are making payments. But the question is, as I understand that you are solvent and have a clean record and a promising future, is this a chance you need to take?

 

[BeTheChange]

Yes. Wouldn't work as I would need to act as a guarantor. Not worth the risk with such high interest costs.