Are you interested in buying a house, but not sure where to start? Or do you own a home and are looking to leverage your existing assets to build wealth for the long-term?
In this episode, Alex Leduc talks about his company perch, where they're helping people take back control of their life and of their finances by simplifying the pathway to home owner.
He also shares incredible advice on how to leverage your existing real estate assets, where if done effectively, you could earn three times or more the amount as somebody who's not using these strategies.
regardless of where you are at on your home ownership journey. This episode is full of juicy lessons and insights. I hope you enjoy.
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Thanks Alex, for taking the time to come on and chat. I really appreciated it. And I've been checking out some of the things you're doing. And in our last conversation, talking with you, you're really occupying an [00:01:00] innovative space in, in the housing world and, you know, real estate and housing is something that is definitely on everybody's minds right now for varying reasons.
And so I think this is quite a timely conversation that we're having and really look forward to diving in. And before we go deeper into perch and what you've been up to there to, to help people on their journey with home ownership. You mentioned that you were in the financial space for over nine years prior to
quitting your job and going through a major shift.
So what were you doing originally in the financial space?
Alex Leduc: Yeah, well, thanks again. Also for, for having me on here is too, uh, and yeah, pleasure to be here. So really I guess before starting purge, which is a little over four years ago. So time plus when you're having fun, uh, I was working for some of the financial institutions in Canada, so my specific, uh, skill set was around corporate finance, corporate strategy, uh, financial planning and analysis, really risk management things like how [00:02:00] do you help, uh, make money in a good way?
Like as a financial institution. And then, uh, I guess I always joke that it, it it's helping the lenders make as much as they can from the individual. And now it's really Perch is about helping the individual save as much as they can from the lender. Uh, so it's the same skillset, just, I guess another side of the table.
Stu Murray: Cool. I like that as a flip side, it's definitely a, a world where. We can get, uh, taken advantage of quite easily in, in some of these things, especially if you're not too sure of what's going on and kind of going at it blind, which so many of us are. So yeah, absolutely. Four years ago, something shifted like what was going on prior to this big change. What was going on in, in the mind of Alex ?
Alex Leduc: I think it was, uh, it was a mixture of like, the idea was kind of burning at you for a little bit where you just kind of see the, the disconnect. Uh, so being on the lender side, you can really see just how, [00:03:00] uh, like from a product innovation standpoint and also from a distribution standpoint, like some lenders, just how they get to the customer is typically through intermediaries.
And then you just look at how everybody is really disconnected in a way. So you have, you know, the there's so many parts to a real estate transaction. So you've got the lender, the broker, the lawyer, the realtor, the appraiser, the inspector. So there's so many pieces that you need to have working at the same cadence to have a successful transaction.
Uh, but a lot of the times, uh, there's a lot of disconnects, but what I had noticed the most, especially with housing affordability, as it continues to get harder to get into the housing market, Is that you can't just wake up and be like, I wanna buy a house. Sometimes you need to plan one, two. Even we have clients on a two or three year home buying plan.
I compare it to wealth advisory when someone's looking to retire. Uh, so you can't walk into your wealth advisors office when you're 62 and go, I wanna start saving cause I wanna retire soon. They're gonna go, well, there's not much I can do for you. And that's kind of the same reality in real estate where people are like, I wanna buy a house.
Uh, and then they start the process. It's like, well, you don't qualify for what you want. [00:04:00] And then they get, you know, a bit upset, but it's fine, but there's a plan. So there really is a path to home ownership for a lot of people. Uh, I couldn't see anybody that was really handling that side of things. Not only are you, is, are, is there a system to get people into their first home, but also what do you do with them after the fact?
So I just kind of kept seeing either misinformation or bad advice kind of being pervasive in the market. So I figured, you know what, let's create a center point where we're gonna be the ecosystem that clients can gravitate around and we're gonna help people make better decisions and build wealth with real estate.
Stu Murray: Interesting. So you, you had really seen a pain point for, for a lot of individuals and a gap within that economic sector. And, that's really how it is. You wanna go buy a house, I just go to the bank and see what I'm approved for and, you know, hope for the best. And that's still, that's still what I've been used to.
And you really opened my mind to some different possibilities and pathways to what is possible, because I [00:05:00] think the vast majority of us are just under the impression. Well, in order to buy a house, I need to get, go in and get the right setup with the bank and, and hope that all shakes down. So. You started to see these pain points started to see an opportunity, obviously, and four years ago you quit your job.
Did you just start to transition prior to, did you set up some plans? Like what, what did that hitting the eject button look like?
Alex Leduc: yeah, I know exactly. It's always like it's you're when you're doing it, you're like, I'm either gonna be proven right. Or proven to be like crazy. So, or both. Uh, so yeah. I mean, there's obviously like that transition was massive in the, like you typically like, like in a corporate job, especially like your day is defined, you know what you're working on for the next couple weeks, if not months. And there's really like, no, there's no consequence necessarily of like, if you, like, there's only so many things you could blow up. Right. Um, as you're working, but then in this element, like when you become an entrepreneur, like everything is you determine everything you're working on. And then [00:06:00] if you make bad decisions, they can be like catastrophic.
But the biggest thing is also just the sense of, I guess, responsibility. So you, you know, it's like you have no one delaying when things go wrong and every problem that the business has is your problem. Uh, so that shift was definitely kind of a diff a huge, uh, change in mindset. Uh, and then in regards to going, like, to actually quitting, I remember it was maybe about four months.
I was kind of just playing around with the idea. So play, like, build a couple things as like a, like a minimum viable product. And then I would just hound people in, in food courts that are sitting alone, having lunch. And I go, Hey, can I show you something and spend five minutes showing them a quick overview, a demo call it of sorts of here's what I'm thinking of doing.
Would you use this? I guess like for me, the first thing was like, is this actually a good idea? Or is this just something that I think is cool? Mm-hmm um, and then like, you know, you can ask your friends and, and like your family. Hey, do you think this, like, they're not gonna tell you no. Uh, so the only way to get it is you go to strangers.
They'll give you an honest opinion. And then yeah, like after getting enough validation, [00:07:00] then I applied for, so there's an incubator here called Mars. So it was, um, I didn't, I had never run a venture before, so there was a lot of parts of like that there were gaps in knowledge. So I signed up for their, uh, in an incubator to essentially get learning and get started on how to launch a business.
Which was great, actually. So through Mars, we got coaching on like accounting, legal services, like, like really everything about go to market, like product market fit. A lot of the things that you wouldn't really be exposed to in, in, in depending on what your background is, And then once I got accepted to the incubator and I had the market validation, that's really where I'm like, okay, well, to be successful, you need to really commit a hundred percent of your time to this.
So then I, I, I left my job then. Um, yeah, I guess it was different cuz like I actually, I liked my job. like the work itself was really like, I, I enjoyed what I did, but this was just kind of, I couldn't ignore it. And I figured if I'm gonna do it, now's a good time. Uh, not a lot of responsibilities at the time. So I was like, you know, what's the worst that could happen.
Seize the opportunity.
Stu Murray: Right. And that's cool [00:08:00] that you went out and actually tested it beyond the family and the friends, which obviously can give you that distorted perspective. And like, did you, you actually went around walking through the mall, uh, spots and just approaching people with these ideas.
Alex Leduc: It wasn't the mall. It was actually like the, um, so, and it's like the financial district. So in Toronto, there's like an underground where it's like, there's tons of food courts and it's, it's actually working people. So it was even better. Cause then I catch the odd person here and there that worked at Google or something like that.
So they had more of a, like a product perspective. But yeah, just complete strangers eating lunch alone. Like, you'd be surprised how many of them are open to five, 10 minute conversation.
Stu Murray: Brilliant, man. I love that. I think that's a really great way to elicit feedback and really throw something at the wall and see what sticks.
And, that, that in and of itself could allow itself to offer some, some new directions, some different changes, drop certain aspects of it. And to go to through this incubator, how long was that process to dive in?
Alex Leduc: [00:09:00] The incubator was a six week program. So essentially every week you'd have a new topic. So they went over things like financing, fundraising, product market fit, marketing, the legal entity of how to set up a corporation, like all those things. So it was really well structured. Actually. I, I found, and it was free for the most part. Like most of these incubators don't cost anything.
Stu Murray: Cool. So you've got, I mean, when we talked last, you went from one person from yourself to now you're at over 20 people on your team. Eh,
Alex Leduc: yeah. So it was when I started, I, I actually, I had taught myself enough of, so when I started essentially, it was just my own savings, so I don't have a lot of resources to, to hire.
So I learned Google analytics, HubSpot CRM, social media, like, uh, even backend development and software, like, uh, like, uh, cloud architecture, like obviously not at an expert level, just enough to kind of get things going. Uh, I don't do any of it today cuz I've got people that are way better at it than, than I am.
But at the beginning, like that was just [00:10:00] kind of, it enabled me to get things moving in a really lean way. So I only ended up having one offshore contractor that was able to do the front end development. Cause that was really the only part, I didn't know. So yeah, that was a minimal budget kind of way to get it going and then prove it out.
Stu Murray: That's brilliant. And I think that's, that's the entrepreneurial spirit. I'm, I'm kind of there right now, as I'm figuring out with the, this podcast and this different work I'm, I've got going on like. I'm not active on social media. So I'm, you know, some trying to get somebody to help explain what in how Instagram works.
It's like, and then you gotta all these things you sign up for when you're getting into running your own business that people don't necessarily think about. But it's, it's the opportunity cost of, of doing something where yeah. You wanna take that and actually get it to a point where it can get off the ground.
Alex Leduc: And, and like you said, hire people who are better than you. Yeah, well, actually I find there's two there's one way around it. So what actually really helps is I'm sure you probably have people in your network that are good at a lot of the things, you [00:11:00] know, you're not good at. So you can bring those people, especially if they're friends of yours, like most will do it either for free or for sweat equity where they, you don't pay them.
But then they'll start building up a position in the company early on. A lot of them will do it as a side hustle. They already have a full-time job and they were just looking for something else that kind of is interesting, but they're not really looking to quit their job and go into it full time. So I was able to build up an advisor base pretty early on that costs nothing like from a cashflow standpoint, that helped plug a lot of those gaps that I had.
And then over time, It also helps you become acutely aware of the things you're worst at and what's most required for the business. So I remember like my first hires were like on the marketing side, cause that's definitely not where, uh, I'm strongest and man, it was just such a relief. like when you hire, like when you take off the things off your list that you don't like doing the most, it's like by far the best feeling and then you see the most results I find
Stu Murray: that's a wonderful tip and I'll, I'll be taking that one with me as I go forward.
Cuz I'm like I said, as I'm starting to figure these pieces out, [00:12:00] I'm developing some anxiety just around the thought, oh, I need to figure out all of these different things. And I know that's a, a requisite, a required next step to, to take this thing to another level. Is that at the same time, it's really, it's really not that big.
What I've been calling. Following the fuck yeses. and it's really, it's really not that, you know, it's really not, but at the same time, it's one of those steps that you need to take. So I love that bringing an advisory board, bringing in these people in our networks that we already have, that we can tap into be that sweat equity be that some pro bono work, you know, I, I believe in the spirit of the gift and that these things do all come back around in, in so many different ways, but I really, really, really like that.
And, and it's a good reminder that we're not alone in these processes and, and that people do care about us and, uh, we can, we can lean on those and in some of these moments, but it's not always easy also asking for help and, and tapping into [00:13:00] some of these.
Alex Leduc: Yeah, but I honestly, the biggest thing is especially early on is, or actually even later on, like at any point in the company's life cycle, you will find people that are equally passionate about the problem you're trying to solve. So it's not really like it's not purely a monetary driven reason that they'd want to get involved. It'll just be because they like what you're doing and they want to have like, be part of that impact. so you'll yeah, I think you'd be surprised just by asking how many people would actually be interested.
And then I actually even ended up hiring one of my advisors later on as we grew, cuz then I had the capital for it.
Stu Murray: Is that right?
Alex Leduc: Yeah, I guess you just never know how it'll end up.
Stu Murray: That's cool. How'd you go about doing that Alex? Like how'd you, did you just, was it in sharing your idea with people?
Like how how'd you go about kind of building that network?
Alex Leduc: Yeah. So the first thing for, for the advisory board anyways, was like, just listing down, like, what are the things I know I need for this business to be a assault and that I'm not good at like at all, or, or I know nothing about, then you take that list and you essentially go into your network to see, do I know anybody that [00:14:00] can do this?
And that would potentially be a good fit. So when I started, I had, I think, close to five advisors, uh, out of those five, two or three were in my immediate network. So I reached out and they were interested. So that worked the other two. I didn't really, so I guess, like for example, the one that I didn't really have any connections in was, uh, like demand generation and SEO.
So I know I needed to like have some element of that, but I didn't really know anything about it. So being in corporate finance, like I guess the one thing I also was became very aware of is that people, that network tend to only network in their industry, which to me is probably the biggest mistake that you can make.
Because when I, when it came time to it, I knew somebody in every single bank, but that wasn't very useful if you need developers, designers, product people. So it's, it, it, like, I started actively trying to expand my network. So I'd go to meetups where, and it's also like a very different co like, I remember going to like a start.
It was like a coffee and code. You just show up with your laptop and then there's just a bunch of people coding in a room, but like, no one's talking to each other. So it's kind of [00:15:00] funny, cuz if you go to like a banking networking event, everyone has a beer, regardless of what time it is and everyone's talking to each other.
So like those kind of events and then same thing. Uh, going to Toronto, like tech, Toronto, FinTech, Toronto, like a lot of these webinars, meetups events, things like that to go meet other people in the industry. Um, and then also posting about it and like asking your network, like, does anyone know anyone in demand, generation and SEO that would be open to chatting about?
Then I ended up getting a lot of introductions, met a lot of people and then finally ended up finding those people. Um, so it's like one of those things of don't be. Dism made if you don't find them immediately, uh, but just keep talking about it and eventually someone will come along. It's just a matter of, you just don't know where or how let it happen.
Stu Murray: I love that, man. That's you really did put it out into the universe and, and did the work that way. Sowed the seeds, I guess, so to speak, you know, tapping into the direct networks, going out to social events, that's a really innovative one. Um, probably harder to network at a silent cafe, but [00:16:00]
Alex Leduc: it's also just interesting, like it just, cuz yeah, once you get outside of like your typical like network, uh, you'll see just how different like other industry events or even like departments can be. So yeah, just branching out of not knowing like every other person that does the same job as you, cuz it's not really gonna help you in the long run
Stu Murray: mm-hmm and I, I think that's true with entrepreneurship.
Like networking has gotta be one of the most fundamental skills to be able to build something up. Like the, I think what comes, what comes up, it might be an African saying, but it's. If you want to go, uh, if you want to go fast, go alone. But if you want to go far go together. And I think that's,
Alex Leduc: yeah, I've heard that.
Stu Murray: It's gotta be that the case. If you want to build something that's lasting in that's sustainable. We can't just be the Jack of all trades. Particularly if you're looking to scale something up at, at the level that you are doing, which is quite massive, we're gonna need a team of people to make that. [00:17:00] Yeah.
Alex Leduc: And then you also can't get, um, cause I think another big adjustment is when you're in a corporate setting, you'll typically have large budgets, huge teams, like all these people that can do everything. So you have to be very realistic on like, what is actually doable, but never losing sight of what do you want to do in the long run?
Cuz eventually you will get the budget, you will get the resources and those things become possible. You just have to be kind of pragmatic about it.
Stu Murray: Yeah. And what, and what you can actually take on at, at a certain time and what you can build up and when you're ready for those steps. And I guess along that line, I've been toying with the idea and listening to conversations with Tim Ferris and others, the where they're, what's your take on taking on contracts like contracting people versus actually hiring people within the company.
Alex Leduc: So we do both. I mean, predominantly like our staff today are mainly full time. Early on contracts are especially useful because like, especially if you can't commit to some degree of stability, like you're gonna end up working with freelancers because you need to be able to turn it on and off. Uh, cuz you might be pivoting your business model dramatically, like very early on.
Um, so I think it's [00:18:00] yeah, so it's more like from a legal standpoint that I think contracts make sense early on because you just don't have, unless you have like, you know, ton of runway and you've raised all these funds then like go nuts. Um, but if you're looking for people like to build long term companies, you need staff.
Like I don't believe that contractors are in it for the long run mm-hmm um, To a certain degree. Like I think if you have a part-time person, like it can make sense so they can go work somebody else at the same time. Uh, but honestly we just find that like, people who are in like full-time, um, are just extremely, there's like an ownership mentality over time cuz you're part of the company.
And then also having, like, I think the biggest motivator is like, if you have equity in the company or not, uh, otherwise like if you're salaried versus contractor on its own, like I think to me it's not a massive difference. It's just less of a commitment if they're contracted. Yeah, so I'd actually maybe say it's so both are equally useful, but I think if you're gonna want to build something for the long term, you need equity and salaried employees to stick around, especially when they're senior.
Stu Murray: Totally makes sense. Yeah. Ultimately it's that team [00:19:00] dynamic and I mean, every time you get a contractor turnover, you gotta go through this, the retraining and all of these things that come along with it, which is not something to overlook that's for sure.
Alex Leduc: Well, I mean, you'll have the same retraining and all these other expenses with salary people.
But actually I think where it's worse is with salaried, like the legal system, there's a lot of recourse that a lot of people don't really think about. So if you fire someone after probation, hypothetically, and they, you know, there's all these wrongful termination, like all these things that can happen, that wouldn't happen as a contractor where you can essentially give two weeks and be done with it.
Uh, I mean, obviously, like that's not how you wanna run your business anyways. Especially like, you know, at the end of the day, the contractor's still probably someone you care about. Like, I mean, all every contractor, like we, we actually have our contractors come out to like the company event cuz to me, like I don't really treat them differently as I would like employees.
Um, but, but yeah, like for me, the biggest thing is really just like, if you have equity in the company to build long term, um, states, or you, you know, you have skin in the game.
Stu Murray: When you're talking about equity, is that something that you actually [00:20:00] provide like a percentage to the employees, like a percentage of the company to them.
Alex Leduc: Yeah. So especially early on, like you have like, like employee share option pools. So like you have the ability you typically vest it. So you'll have, like, let's say three years where this like gets tranched over, uh, very big motivator, obviously, especially as your company's growing, that becomes a significant portion of the wealth creation.
And you also like, at the same time, just if you're building this company, like it's not gonna be successful just cuz I was there, uh, it's gonna be successful cause everybody else helped build it up. So like to me it just makes sense that like we all benefit in the upside. Uh, so it's, and it's extremely motivating when you start seeing like the value appreciation.
Like, you know, if you've got employee shares, you're pretty excited about it too. Cuz you like, you're seeing how much your stake in the company's growing. Uh, so that, yeah, that's what I mean by that. Actually I'll add one caveat. If you're going to, this is purely based on your hiring strategy. If you're gonna be hiring remotely, like on an international level, then you almost have no choice, [00:21:00] but to do contractors cuz you can't really hire them as employees.
So we hire within, so all our employees are within Canada. But essentially we did have contractors in the past that were international and then they would all only be contractors cuz you can't even hire them a salary if you wanted to.
Stu Murray: Right. For just legality reasons.
Alex Leduc: Yeah. You'd have to open up like a foreign headquarters. You have to start factoring in payroll in a different country. Like there's so much like complications, so you're better off just doing it as a country.
Stu Murray: Yeah. I'd pass on that one. Very interesting stuff. Very interesting stuff. So you built this up and now you've created the, this uh, business perch and what, what is it that you're doing for people? What kind of services are you offer?
Alex Leduc: So we really solve two problems. The first one is we help first time home buyers get into the market more effectively. So we are that planning solution where not only can we help you understand what, like where the gaps are and what you need to do to be able to qualify for the home that you want.
Since we have access to over 30 lenders [00:22:00] across different spectrums, like including banks at credit unions, model lines, pretty much anything across the board. We're also able to utilize, we have optimization algorithms, so we can see where your best placed based on your situation. We also have a lending arm that we can do to compliment those available listing solutions to increase, what you qualify for.
And third, we actually can do the entire deal through our lending arm if you don't qualify anywhere else. So really what we're trying to help you do is figure out the most effective path to home ownership with a much broader, optionality than you'd get anywhere else. Um, and the second element is once we help you get into your home, we're then helping you build wealth as a homeowner.
So really what that means is helping you leverage your home equity strategically to earn compounded wealth until you retire. And then when you retire, the most important thing is having you with a diversified and liquid asset portfolio. So the biggest use case I can give you of where there's a huge failure today in that is a lot of people retire and then their only home is their asset. But they're only asset is their home.[00:23:00] So then the issue with. Is that you can't buy your house or your groceries with your home. So you end up having to get reverse mortgages, private mortgages. You might even have to sell your home to fund your retirement where it could have been prevented. If you had like used the leverage that you could get when you still qualified for it.
So we're really just trying to help people understand how they can really use home equity strategically and then get in to build wealth.
Stu Murray: Very interesting. I, I think some of those terms like assets and leveraging equity in these different things might, might be foreign for a lot of people because we don't really get much for economics courses in our school.
Maybe you can electively take an 11 zero or a 12 zero. Economics course, maybe you're fortunate to take some macro or micro in, in university, but for so many of us, we're, we're really going at it blind. And this, the only step I know to do is go find a realtor and talk to the bank to see if I qualify it.
And so I, I actually wanna get deeper into [00:24:00] how, uh, an examples and, and unpacking that ability to leverage asset. I found that really interesting in our last conversation. But before we do, just to go back to that first part of the service you guys offer, you said you have access to over 30 plus lenders.
Like what, what are different examples beyond a bank that you are able to tap into to be able to support home buyers?
Alex Leduc: Yeah. So really where it comes down is you have banks, uh, which are one of the largest pro I mean, in Canada, especially they like, they have the vast majority of the market share. Uh, so 60% of people actually just go straight to their bank.
They'll get even maybe just one quote and then they won't chop it around and they'll just take whatever the bank gives them as face value. Like this is what I can do. So the issue with that is there's always, there's almost always more options. So on top of banks, there's also credit union. Uh, there's also what are called mono lines or mortgage financing institutions.
So these include people like MCAP first national, uh, RMG. These actually. So funny enough, these might be names that you've [00:25:00] probably never even heard of, but MCAP, for example, has 150 billion in assets, under management. So they're, they're massive. They're just not. As big as let's say RBC. So that's also a byproduct of in Canada.
The, the big banks have a massive concentration of the mortgage market. So a lot of people just don't even know that there's other options out there. So a big component of what we have to do like, and this is just for the general mortgage broker market is educating the customer that there are other options.
And some of the use cases that we see is that just because you don't fit the bank's credit box doesn't mean that there's not another lender that will do your deal. So the ones we see the most often is with anyone who's self-employed. So for example, banks will typically require a two plus year history of someone who's, self-employed where we have some lenders that will take a year or even less, uh, depending on what your change was and the, the specific circum.
The most important part is really just helping under, and then that's on the, if you stay on the prime, let's call it or the, a side. Uh, there are alternative lending options where you can lever yourself much more than the banks [00:26:00] will allow. Um, you typically pay a rate premium for it. It's about maybe half a percent to 1% more expensive than what you'd get at the bank.
But at the end of the day, like if it means buying versus renting at a really elevated price, it's still worth it. And then the last option, but not least is there are private lending options. Typically those aren't suggested in the sense that it's a permanent solution. It's meant to be a band-aids when you have a deal fall apart at the last minute, or you need a second mortgage to access your home equity.
Cause you don't wanna get your, you don't wanna break your low rate first mortgage that you currently have. Those are where the use cases come in. But I guess the key thing to keep in mind is from those 30 lenders across the spectrum. If you think about it, that's over 2000 mortgage options that we can do.
Versus when you go to your bank, you have access to maybe like five or six. Uh, so it's really like that's where the power of optionality comes in because there's so many things you might not be aware of that you could qualify for. So, and then that's just in regards to access. The other component is pricing.
So then since we have all these lenders, they're competing against each other to win [00:27:00] business. So we can typically save you money. So on average, we're about half a percent lower than the bank. Which, which can be a couple hundred bucks a month on your mortgage payment. So even if you were gonna get exactly the same product, let's say you wanted a five year fixed rate with like minimum, uh, pre payment options.
And then like, uh, 20% down, we'd probably be able to give you better pricing anyways. So it's either savings or access or both that you're really kind of getting to if the option
Stu Murray: that's incredible, man. That's a, that's a significant amount when you start to extrapolate that over any period of time at all, I mean hundred, a couple hundred bucks.
Yeah. Per month I can think of a lot of things that I could be doing with that. I, you can, you can confuse me a little bit there. When you said you could go from 30 plus different lenders to 2000 or more different options. What do you mean by.
Alex Leduc: Yeah. So one lender let's just say has an option for one year fix two year fix three year variable, three year fix five year, five year variable fix.
So you'll have 1, 2, 3, 4, 5, 7, 10 [00:28:00] year terms. And then within that, you've got different, uh, rate options at different down payment increments. So you can put down less than 20%. You can put 20% down, you can put down cetera, you can also put a 25 year amortization, a 30 year amortization. So once you start kind of iterating on all the possible combinations, you end up getting a tremendous amount of options that you can get up with.
Stu Murray: I see. That makes a lot of sense. And when you were explaining this to me last time, the analogy that came up or the, the one that I'm used to, and I think I mentioned this on our, on our last call was if I, I use hopper these different apps on my phone to look. Flights. And so traditionally we would go onto air Canada or west jet and or call the, you know, call the company themselves and say, I want a flight at this time to go and figure it out.
And I have just been blown away because now I can go online and I can say, I want it for this date, but they'll give me a flexible booking [00:29:00] window with the price variability from each day, from all kinds of any, any potential airliner that is arriving going in and out, that would be able to take me from said, uh, starting point to that destination.
And, and that's a parallel that my mind draws that I've never seen in, in the housing market.
Alex Leduc: Yeah. So actually, funny enough, we took a lot of inspiration from, uh, flights, uh, in, in regards to
but yeah, we, we've tried to essentially do the same thing with mortgages where we tell you out of everything, which one is the best for you? You parameterize it based similarly, do you know like where it airport, do you wanna leave from?
Like how long do you want to go? Are you flexible on when you can. Similarly on the mortgage side, are you open to the type of rate? Do you care who the lender is? Like, things like that to like help increase your options. Uh, and then you can pick from that pre-selection, uh, through perch.
Stu Murray: Wow. I love that. I really, really love that.
And just bringing it into a way that I [00:30:00] can. I mean, I've the word that comes to mind is empowered. When I start to use even those aggregator apps for, for that, I start to see my options. And when I start to see my options and what's available beyond, I, I would've been that person. Maybe I'd go shop around for two or three different pricing options at, at different banks, but that's it.
And so this just empowerment is really the word that comes through for me as a, as a buyer, that what you're being able to provide for these people is, is this broader set of options. And it's like, I'm, I'm stepping into a world of possibility here.
Alex Leduc: A hundred percent. And then it's also because like, to me, the, the opportunity for not misleading, but like being, um, I guess making the wrong choice is so much higher just because mortgages are so complex.
So, you know, like when you go get your, uh, the mortgage, what are the, like, you can't say what certainty, what variable rates will be for the next five years. No one really knows [00:31:00] for sure. So it's, there's still, and then the biggest thing is also the fine print. So not every mortgage is created equal where some have extremely punitive terms and some don't.
So we actually factor those things too, just so you can kind of go in with like, you know, like eyes wide open of going this rate, this slightly lower, but like, look at how. Big, this penalty is gonna be, if you break into your three versus this mortgage. Wow. So we're really helping you kind of get in a sense of, okay, this is a good rate.
This has a good parameters, but like, what are these terms look like for me? Like, am I allowed to break my mortgage? If I do, what does that look like? Just so you're not caught off guard. Um, that's really, the unfortunate part is a lot of times people don't know how bad the bad, like the terms are until you need to do something.
You know what I mean? Yeah. Uh, so it's yeah. Preventing against,
Stu Murray: that's amazing. You don't have, you don't have to think too much about it that way. It's I mean, I, I just went through that myself. I just sold two properties and one didn't one was fine. You know, the, the penalty was not so bad, but I sold one in less than five years prior to.
I was blown away [00:32:00] the, uh, the mortgage broker's like, are you sure you want, before he even told me, he's like, you sure you wanna do this? I don't, I don't even feel good telling you the penalization of . I'm like, well, it's, it's what it is. And so I'll, I'll pay for my own ignorance here and not, not doing that because it wasn't something that I, there was so much already that I was trying to look out for and, and think of, and keep in mind that just it's anybody going through these things for their first time in particular, let alone their third or fourth or however, however many there's so much that it would be easy to overlook.
And only in retrospect, can you actually go back and see, damn, I should have, I should have looked at that a little bit more closely.
Alex Leduc: Yeah, I guess they say hindsight is always 2020.
Stu Murray: Yeah, it sure is. And do you have a thought, like as far as fixed mortgage variable, I mean, where do you land? Is it really, truly like case to case [00:33:00] basis? Where like, do you have a take on that in general?
Alex Leduc: So I'm actually, so personally, like how I always look at fixture variable is that it's always just based on like where's the market mispricing one other or the other. Cause the one thing to always remember is think of mortgage companies like inefficient gas stations.
So when prices of oil change the next day, you go to fill up your tank, gas prices changed, but there are always a lot of use cases where rates or the market outlook shifts pretty significantly and banks can take a week or two to adjust their rates to reflect it. So to me, when there's an opportunity that's been mispriced, I would go for that one all day long, whether it's fixed or variable, I don't really care.
Because it's implying the, like the, what is my expected return on variable will take into consideration expected prime rate increases. So from a purely economic standpoint, if you were to make, let's call it a rational decision, it would be based on what's the best value, uh, assuming all else is equal.
So the terms and et cetera. [00:34:00] But what I've seen. So as a, so I, I'm also a mortgage broker. Uh, so essentially what I've seen though is that there is a psychological element. So this is where sometimes it's not the rational decision, but it is in a sense cuz it's qualitative and quantitative. I have some clients that would be deeply uncomfortable with any possibility of moving like mortgage payments on a fluctuating basis.
So for them, even if they're leaving, let's say $3,000 on the table, $5,000 on the table, just the thought of like being able to not have to stress out about the mortgage is worth it. So sometimes you have to take those, like that's where the human part comes in of like you have to factor that in for like what's a good fit for them.
So it might not necessarily be the best decision, but it is the best decision for them.
Stu Murray: Yeah, totally makes sense. And so if, once you guys would run what these people are looking for through the algorithms, which you've. Actually have a team that's developed, uh, this algorithm and this software to be able to do that and support the people.
Would you then actually sit down with the clients and, and kind of unpack what that means? [00:35:00]
Alex Leduc: Yeah. So this is where there's the combination of automating with the parts that are let's call it. Non-value add. Um, so when you have somebody who wants to see if rates have changed, what their payments would look like, things like that.
Like, to me, that's the perfect use case for a calculator, cuz that's changing every day. Uh, and no broker wants to be updating that for you every single day. Uh, and you also don't want to be relying on the broker to do it for you every day. So everybody kinda wins and that's scenario. So really for us, how it works with perch is we have two, I call them inter let's call it interjection points.
So the first one is when you're getting your preapproval, that is where the broker. So we have a team of mortgage advisors that will actually review and make sure that all the documents check out to issue your preapproval letter. The second is then when you're applying for the mortgage. So typically that'll be when you've either, if you're refinancing.
Or renewing, it'll be almost immediate. If you purchase, when you find the property, we will then, uh, you run the simulation. We'll tell you which mortgages that are recommended, you'll apply for it. And then the mortgage, uh, advisor will review what you've submitted. Compare it to what was [00:36:00] discussed during the preapproval to see if there's any mismatches, reach out.
If there's any questions or you can book your advisor before selecting, if you don't feel comfortable or if you had additional questions. So I'd. About 70% of people will pick what our top three or one of our top three options from the recommended options, we'll review it and then submit it. Cuz most of the time it is the best option. And then if not, some people will run it, they're not a hundred percent sure. So they book us, we'll have it a conversation and then they'll submit it.
Stu Murray: That's really, really cool. I love that. And so say that goes through and we book it. I'm part of that 70% we go in and, and do. So the, the second part of this service here, leverage being able to leverage, is that something that could kick in right away or is that something that I would potentially revisit down the road?
Alex Leduc: Yeah. So leveraging your home equity, I guess the first part of that I'll maybe break down just, you know what, home equity yeah, let's doing to your point. It might be a good place. So [00:37:00] I'll use really simple numbers. So let's just say you bought a $5,500,000 home and you put a hundred. Thousand dollars down.
So you had a 20% down payment. So that means you bought $500,000 home. A hundred thousand dollars in is how much you put in for down payment. And then you have a $400,000 mortgage, right? So your home equity in this case is a hundred thousand dollars. So you can refinance a property. Meaning if you wanna pull the equity out, extend the amortization to reduce your cash flow, your monthly payment.
Um, but to refinance, you can only go up to 80% of your property value typically. So when you bought a house with 20% down, you technically have zero equity in the home that you can take out. So you have a hundred K equity, but you don't have any excess equity in that sense. So typically what'll happen is as you pay your mortgage down on average, you'll be paying about 2% of your mortgage every year.
Uh, just through normal payments cuz your monthly mortgage payment is principle and interest. Um, so let's just say after a five year term, you'll have paid down 10% of your mortgage balance, but then you also have property appreciation. So let's just [00:38:00] say conservatively, your property appreciated 10%. Uh, in five years, um, so then you've got your $500,000.
Home is now worth an extra 10%. So 550, you've paid down 10% of your mortgage balance, which is 400, which is 40,000. So now you've got a $550,000 home and a $360,000 mortgage. You can borrow up to 80% of five 50, which is 440,000. So 440,000 minus your mortgage of 360 means you can take out up to 80 grand.
So then this is where the leveraging of home equity comes into play. Cuz with that 80,000, you could reinvest it, make a spread, earn compounded gains, and then start. Or you could even use it to buy rental properties, whatever it is, you can use it to essentially generate someone else.
Stu Murray: So when I would be doing that, would that be essentially creating like a line of credit that's backed like leveraged against my house.
Alex Leduc: So there's multiple options. So, so what you're describing is like a home equity line of credit. [00:39:00] So that would be one option. We could refinance it where we essentially get rid of your $360,000 mortgage and just put a whole, like a, a full $440,000, like a new one on your property. Um, you could get a second mortgage if you wanted to do it before it backs up.
So you could just get an $80,000 mortgage and keep your existing 360. So the net is the same. Um, so the good thing is you don't have to worry too much about like the, how, or like the, how much do I call. So for example, in perch, when you add your properties, we'll actually update your property values every month and your mortgage balance as well.
So we actually literally just tell you here's how much home access, equity access home equity you have. And then we then te like the mortgage advisor is the one that's gonna help you determine through the system. What's the most effective way for you to access it? Is it a second mortgage? Is it a first mortgage?
Is it a refinance? What should you do? Is it a HeLOCK? So we, we walk through those options and help you compare the effective cost.
Stu Murray: And so. Once we would figure out, I mean, I, I'd probably be a few years in, based on the home value and, and for anyone listening as well, when you're building up that equity, your, the [00:40:00] interest isn't adding that you're paying, you're paying back the interest on that.
So only a smaller portion, which would increase over time, right? The, the portion that you're actually paying down on the primary on the, uh, equity of the house increases as the interest. It, you can probably help the layman over here. Who's stumbling his way through this
Alex Leduc: no, no. Yeah. So basically, um, yeah, what you're referring to is like the, um, like the pay down of the principles.
So if your mortgage, like you essentially have, what's called an amortization period, which is, let's say 25 years. So that means that you will pay your mortgage to zero over 25 years. Um, so then every mortgage payment you make, as you pay down the principle. So the interest is, you know, you pay that to the bank that doesn't go towards you at all.
The principle is essentially your money. So it's going back into the home and you're building equity. As every principle payment you make reduces the mortgage balance, which means that the next mortgage payment you make has more of the PR like less interest per payment, because you're paying less [00:41:00] interest as you pay down more.
Stu Murray: Thank you all, always there and forgetting a few of the words I'm like time to out and get Alex here.
So say, we're say we're a few years into that and I've started to pay down some of the principle, uh, things are rolling along well, the value of the home starting to go up. And I, and I'm interested in this. I reach out, we look at the different options. We figure out how, or what is the best pathway forward.
And then. Do you guys also help with figuring out what to do with that? Because now I think now's a perfect opportunity to explain like an example, uh, on the ground example of what it could actually look like to leverage your, your house.
Alex Leduc: Yeah. Uh, no great question. So, uh, I'll give you some use cases of how we've helped existing clients.
So one client, uh, had always wanted, like wanted to generate passive income and was [00:42:00] really interested in rental properties. So we helped them take money out of their home, through a refinance. So then use as a down payment to purchase a rental property. So then they found a good cash flowing property. We connected them with a realtor that could help them find that property.
Um, so we're not experts at everything we're really like the mortgage is our core piece that we're the experts on, but we'll refer it out to the right professionals to help them out. So in this case, um, we helped them find a realtor that could help them find that rental and then they closed on it. Another use case is, uh, wealth advisors.
So let's just say, uh, cause I'll give you like a very common use case. Actually you'll have somebody who's been saving for a long time to get the down payment on their home, which typically means they have nothing in their RSSP or TFSA cuz they've been, or like they've depleted all of their funds to use it for down payment.
So there's typically gonna be a lot of unused contribution room in a lot of tax shelters. So there is a huge benefit if you were able to withdraw, like let's just say even a year ago, um, your five year fixed rate was about 1.8. Um, so you can write off interest that you use to, [00:43:00] in to invest, but I won't go too deep into the weeds there, but so let's just say even at 1.8.
You're able to put the money into TFSA or an RSP to actually get some tax sheltering as well. And then if you're earning five, six, 7%, even on a balanced portfolio, you're earning a spread way above your 1.8% cost of financing. So that's key because you're now divert. Like not only are you earning compound wealth, cause like let's just use some simple.
So let's just round the 1.8 up to two, and let's say you're earning 6%. You're earning a 4% spread over your cost of financing without including the tax benefits and without including the interest write off, uh, for taxes. So let's just say if you had a hundred thousand dollars mortgage, 4% is essentially $4,000 for every a hundred K in mortgage principal that you're earning has additional income.
Now imagine that compounding for 30 years. Uh, so that's a tremendous amount of money that you're generating, but the most important thing is that when you retire, you now have a liquid portfolio of assets that you can [00:44:00] use to fund your retirement without, and then you've leveraged your home strategically while you still qualified for it.
So that's really kind of where you're able to create a lot of value. We refer people out to wealth advisor or, or if you have your own, you know, it's one of those things of, if you have your own realtor, if you have your own wealth advisor, we're not gonna force you to work with anybody. Uh, so, you know, bring 'em in.
We're just gonna give you the details you need to give them to help you.
Stu Murray: That's brilliant. That's, that's quite a big gap there in terms of that. I mean, I'm sure there's still a risk that's involved, particularly like, you know, in this last year it would be a, a challenging example for that. Somebody kind of doing this and, and leveraging that out, but maybe now is a perfect time.
Alex Leduc: Yeah. So that's always like the big, and we never kind of like, that's where we have a little bit of a, like, call it a guardrail. So if someone is going to take out a ton of money and they're like, yeah, like I don't have a wealth advisor, but I'm gonna put it into Bitcoin or something like that. We're like might wanna reconsider
So, yeah, cuz what we're looking at is we're not trying to help you make like [00:45:00] a 60% spread over your cost of financing. Like cuz leverage investing is risky. Uh, like, you know, it amplifies gains and losses, but at the end of the day, when you do it strategically, it's over, especially over a longer time horizon.
Cause I'm talking, you know, 10, 20, 30 year time horizons. Then it has a lot more like if you're doing it with the right professional, it is a bit more of a managed solution. Um, and just to give you an idea, we've run the simulations on somebody who pays down their mortgage to before they start saving versus someone who reinvest their home equity consecutively, uh, for 30 years leading up to retire.
On average, the person who reinvested their home equity will be worth three times as, as much as the person who didn't when they retire. Yeah. So like, just so we like the number we used was like the average use case, but basically that means you're making $91,000 a year in today's dollars versus $41,000 from your pensionable assets.
Uh, so that's a material point or sorry, 120 versus 40.
Stu Murray: Could you explain a little bit about how, how that would actually come to be. [00:46:00]
Alex Leduc: Yeah. So basically if you're earning, we assumed you earn a 3% spread over your cost of financing. So you're able to write off the interest. You're earning a compounded, uh, return of 3% over your investible assets.
And every five years you're reinvesting your home equity, uh, up until retirement. So the reason why that becomes is cuz one you're compounding wealth, but two it's just you're compounding wealth for 30 years. Uh, so that materially changes how much wealth you're actually able to generate over the long term.
Uh, and then the kicker is that like, we've actually just to keep it simple, cuz everyone's situation is different. We've excluded the benefits of tax like tax reha, like shelters or RSP tax refunds that you would get from that contribution. So it could actually be much more than three times depending on who
Stu Murray: yeah.
Depending on their income and how much they're able to pull off with the taxation and whatnot. Wow. That's three times, three times alone is a base, uh, is a base metric is insane.
Alex Leduc: Yeah. It, it [00:47:00] is, and it's, it's super material, but it's like, again, that's also an area where we're super passionate about because we find it's one that has the most misinformation.
So it's an area where a lot of people don't even think about it. Uh, but it's, yeah, it's just a missed opportunity for, for a lot of people. So we're trying to kind of reverse the title.
Stu Murray: That's brilliant, man. That's that's really do, you know, like I haven't heard of really any other groups doing much work around this, unless you're in the know and you've got somebody who's in that world doing it, but you guys are really innovating in this space.
Alex Leduc: Honestly, I'll, I'll be honest. Yeah. So we are innovating the sense of like the automation. We're able to give people to get those insights, but leveraging your home equity to invest has been around for, for generations. I mean, there's like, especially if you look at any like high value real estate investor, every single one of them leverage the heck out other portfolios.
Cause they know that that's, you know, why tied up in the property when I can get two more rentals, four more rentals, six more rentals. Um, so it's really like leverage [00:48:00] is key because there's not an asset in this world. That'll lever, like, let you leverage five to one at the rate that they're charging you.
And what I mean by that is that every a hundred dollars a property value, I own, I only need to put $20 of equity in, right. For the down payment. Yeah. Like you will never get that kind of leverage on anything that rate.
Stu Murray: And it's true. Like you're, you're right there in saying that anybody in that space is doing so, but I think it's more, I'm thinking about me and my neighbors are just wanting to pay down our mortgage.
Yeah. You know, that's, that's more the goal that I've kind of saw it is well, be debt free and pay down the mortgage. If, if you have more throw it on it.
Alex Leduc: Yeah. And, and honestly there's always, it there's always a, like a dependent on people's circumstances, but especially when people are earlier in their career, like, I've see tons of people aggressively paying down, like their 1.8% mortgage rate. [00:49:00] Meanwhile, they have nothing in their RSP or their TFSA. So then the question is always, do you not think you can earn more than 1.8% in the market?
And if the answer is no, you should find a new advisor, but it's really kind of comes down to, if you have a long time horizon, you're able to use leverage strategically. But I think a lot of people avoid like, like, yeah, I guess the debt is bad kind of mentality, but just think of any corporation, like major corporation, almost every single one of them use debt as much as humanly possible because leverage at cost effective financing rates is basically free money.
So it's really just a change in, cause once you explain it to people and show like how effective it can be, then it's kind of okay. Yeah. Uh, like, like how I explain it is always, would you rather make seven or save 1.8 is. Always.
Stu Murray: Yeah, well, it's a lot easier that way. And you're, you're speaking, speaking more of that language and I've, I've listened to Ray Dalio.
Talk on this a lot too, where, where he was offering some advice. It's like, I don't think debt is good if you're gonna use it to consume, like, if you're gonna go and buy that Porsche, or if you're gonna do these things, like you [00:50:00] tapping into debt in that way is, is going to screw you over at some point, uh, unless you have that the means to pay for it.
But if you're using it to further your investment and to leverage that that's a big, that's a big difference. And that's where, you know, anybody with a enough of a bank account or, or financial advisors is doing that.
Alex Leduc: Yeah, that's a really good point. Like it's yeah. People taking money out to renovate and improve the value or the saleability of their home.
People taking money out to buy assets that are gonna increase or earn an in an incremental return above what they're paying. Those are like the good uses of, or, or I guess consolidating debts even like, if you have credit card debts better to put it on your mortgage, so pay those out. So like, those are all good uses of debt, but yeah, like we, I guess we wouldn't be, uh, I guess partnering PORs dealership, like here's how you use your home to buy a luxury.
It's like, well, no, that's probably not the best.
Stu Murray: That's pretty unhappy customers coming.[00:51:00]
Alex Leduc: I mean, not initially they'd be happy for like, at least the first couple years, but like,
Stu Murray: yeah, eventually they were like, man, what an idea right up on their bicycle and be like, I just, I just lost my porch repossessed.
Alex Leduc: Yeah. So, yeah, and again, there's always like, that's part of the conversation of knowing which clients totally it works for and which, yeah.
Stu Murray: And like you said, at the end of the day, too, there's, there's so much humanness in this. Like it's easy to run scenarios and do these different things, um, when you're working with the numbers alone, but then you start to add emotions in there and these things just, it's hard to calculate.
You can't do so on a spreadsheet necessarily. And so I think that's a lot of the value that you guys are bringing too, is really helping bring a personalized approach to each individual, to help them navigate a very likely, stressful and challenging situation.
Alex Leduc: [00:52:00] Absolutely. And that's really where any service professional I think is worth their weight in gold is like helping you navigate. Cause because it's easy to be like, no one knows if you're good or bad when everything's going. Well, it really is like, when things aren't going well, then that's where you like, you'll really see the true value of your, the people that are in your professional network of like your service providers.
Stu Murray: So it, somebody right now in this current day and age housing prices are going up like crazy where perhaps sitting on, on a bubble in different areas, different parts of Canada, different parts of north America, there's, you know, really tumultuous times interest rates are going up. Inflation is through the roof.
Like it's, it's a really fiscally, challenging time for, for many of us. And what would you say to a first time a potential. First time, home buyer at this point. So it's like looking at the landscape that we're we're facing right now. [00:53:00] Any, any thoughts? Any advice, any, obviously everybody's in a different situation, but uh, what's your general take on that?
Alex Leduc: Yeah. On, yeah. So my general take on the market right now is I think for the most part rates peaked probably in July. Uh, so we've actually already seen like fixed rates start coming back down, uh, by at least let's call it maybe half a percent, uh, in, in the last little bit. And I think actually inflation data came out today.
It's still a high, but it's starting to decelerate. So you're seeing lower probabilities of rate hikes coming out, which I think is kind of putting a bit of, um, of a. On the anticipated pace of rain change. So I think as rates start to decelerate and come back down, that's going to trigger. Cause, cause I think right now there's a bit of the doom mental.
Like it reminds me a lot of 2020 when COVID first started. Like everybody was saying, house prices are gonna crash. Um, you shouldn't buy real estate sell now if you can. And then a ton of people just kind [00:54:00] of went on the sidelines. They're like, all right, I'll wait this out. Um, it, it really just like, is it in any volatile market?
A lot of people will just wait to see what happens, but that's also to me a huge opportunity for those that are willing to double down. So I ended up buying my house, for example, in may of 2020. Cause I was like, eh, I don't think this is the end of the world. So in re retrospect, obviously it's come up significantly since then.
But I mean, I didn't, I, I was hoping it would stay flat. That was my, like my base case scenario. I think today is another one of those scenarios because rate like house prices across the country have been hit, like, especially in the, some of the major urban areas, like you're talking like 15%, 20% price decreases in some regions.
Um, that is a massive buying opportunity to me. Uh, and why I say that is because as fixed rates start to come down, um, and there's still the fundamentals that I think are gonna shift because once the momentum changes to price appreciation versus depreciation. So I think this was the last month in July that we'll see any major declines.
And I think we're gonna start kind of [00:55:00] flat lining and then increasing in the first quarter of next year. Um, just look at supply and demand. So on the supply side, we're seeing increasing costs to housing development. We're seeing still high material costs, we're seeing shortages of labor. Uh, but then there's also the biggest element is that these rising rates have helped or not helped.
They've created a bit of a dilemma where anybody wanting to sell their house probably wouldn't even qualify for the house that they currently live in. Um, so they can only basically downsize. Which isn't typically why most people sell their house. They're looking to get something bigger, something more space, maybe a nicer home.
So they're either renovating their place and staying put, because they realize they can't do that. Or they're just delisting, cuz they're like, I don't need to sell like in this market. So I'll just stay put, and you're already seeing record amounts of de listings everywhere. So. What happens when you have less new construction, because of all the areas that I covered, and then you have less resales.
That means you have a serious shortage of inventory. so on the supply side, you have less homes. Then on the demand side, you have a ton of people that haven't bought [00:56:00] because transaction volumes, cuz they're waiting on the sidelines. So there's a kind of a buildup of demand or let's call it side. I call it bench demand where it's like waiting to get in.
And then you also have increasing numbers of immigration. We still expect to bring a ton of people in, you also have declining interest rates, let's say in the next year, which will increase demand. So when you kind of combine all of those elements, like to me, it's the perfect like, like, you know, if supplies going down and demands going up, like naturally how the prices have to go up as well.
Um, and I think that is gonna be the case. So I think right now as a first time home buyer, this is a good little dip that people. I mean, obviously, you know, you can't time the market perfectly, but I think this is a good opportunity where prices have come down. Arguably, I would say this is where I don't think they're gonna go much lower so you can get in while there's less competition and it's just a better buying experience.
So I think it's really just getting the plan together and figuring out how you're gonna make it work. Obviously I'm biased. I'd say perch can help you do that, but like whether it's perch or any other mortgage professional, chatting [00:57:00] with them to see like what your options are really kind of preparing.
Stu Murray: I like your perspective, Alex. I've not had anybody offer that take, uh, for me in the last bit, I've definitely been in the more doom and gloom scenarios myself. Uh, and I'm, I'm in Atlantic Canada. We actually haven't really seen a 20% drop. Um, but I, I would also say that our area has been undervalued for a long time and it's just starting to get on par.
Like our, our average house cost in 2020 was like 180,000 or something like that. I don't know. It was really, really low. So I have a feeling we probably won't see such a substantial dip here as we have in some of the bigger city centers. What would you agree.
Alex Leduc: I think well, and that's why like, you're, you're totally right. Like most areas haven't seen 15, 20 it's more, the pronounced depreciation is in higher price cities like Vancouver and Toronto, actually not even Vancouver, Toronto mainly is, I guess, [00:58:00] was probably one of the hardest hit regions, um, or parts of the GTA anyways.
So, so yeah, I really just think it's a fundamental, like, like sure there's gonna be like ups and downs in any market. But I think right now, as things start to kind of reverse, I think we're gonna see it come back pretty quickly. So yeah, I think now's a good time. If people were sitting on the sidelines, I'd say it's a good
Stu Murray: same, same, even with starting to leverage our assets again, you know, it's like, wow, we just went through a major correction.
Uh, I'm thinking personally, it's a great time for me to be, uh, tapping into that and, and taking advantage. I guess that's what they say, uh, by when there's blood on the streets.
Alex Leduc: Something like that. Yeah. Or yeah, something along line, like buy when nobody else. Yeah. That's less, less grr how he said. Yeah,
yeah, no, exactly. Right. Cause even today let's just say, arguably mortgage rates are high today by [00:59:00] historical standards. So you're looking at like, you know, for a refi, probably anywhere in the four and a quarter to four and three quarter range. But then if you're in a high tax bracket, you're writing off half of that, you're looking at two and a quarter to two and three quarters after tax cost of interest.
And if you think you can make 5, 10, 15, 20% with like the, the trough of the market then yeah. Like there's massive spread there. Um, and the caker with mortgages is that if, you know, if you don't like the rate, like you can always pay down the mortgage or paid out, right. Uh, if you have the assets to offset it, um, you can always just decrease it right.
Or liquid or discharge it there's. Cool. Any other, any other things you would mention or offer or, you know, even about what, uh, PCH could do for, for somebody or just any general thoughts as we start to wrap things up?
Yeah. I, I think the biggest thing is that there, [01:00:00] like, along with the doom and gloom of, uh, what seems to be most headlines is the general impression that I get from a lot of people that are first time home buyers is that I'll never be able to buy. I think there was a survey that was like over 60 or 50, 60% of renters, or like I'm gonna rent forever.
I've seen so many extreme cases of people that like on paper, you'd be like, there's no way this person got a house, but like, there are so many options that people just don't understand are out there. So I guess my advice would always just be like, get like a real assessment, like, and don't just get one, get two, get maybe three, if you don't like any of them is that if somebody can't tell you how it'll work within two years, then you don't have the right advisor.
It really is something that everybody can be putting on their radar. And it's not just a matter of like, where are you today? It's where do you need to be? And then what other things can you leverage? Um, you know, is there gifted equity? Is there like accessory properties is there co-applicant guarantor, like there's so many things you can do to strengthen your application to make it work.
Cause a lot of the times the most important thing is getting in because what I've noticed is that. People who get into a condo, build enough equity to be able to put the down [01:01:00] payment on a house. So this is maybe more of like a Toronto specific component where every time somebody's looking at these houses, they're like, who's buying this $2 million house, like who has that much down payment?
Well, no one's ever like typically putting 20% down on it. They're putting like 50% down on it. Cuz the first I buying a $2 million house is the one that bought a million dollar house 10 years ago. So it's really just leveraging your gains cuz as a homeowner, that's what you're doing. You're buying an investment that's leveraged.
So the amount of equity you're building in these homes is really what enables you to keep going up as you, as your lifestyles change and you want to increase, but the longer you're out, the harder it is to get in, cuz the deeper you go into your life cycle, the bigger of a house you typically need. So if you're in your early twenties, you could have done with a condo.
Then maybe you have a family, well, you need at least like a two, three bedroom condo or a semi or a town home. Um, and then as things keep going, you're essentially just getting further and further behind where you want to get. And that becomes harder to keep up with. So it's really just, I think people who are waiting for that 70% price decrease are never gonna stop [01:02:00] waiting cuz it's not gonna happen.
So it's like just be realistic and then get a plan to get to your goals is really gonna,
Stu Murray: that makes it makes total sense. Uh, I mean we, and like you said earlier, hindsight's 2020. And so if we're sitting here wondering, waiting, we're gonna have more resentment and, and like. Frustrations about sitting out, watching on the sidelines at some point, you know?
And so at some point, if, if owning a house is that thing we wanna do, then we need to just put all those other stories aside and, and seek that right advice and right. Help. And I tell you, like, I've, I've actually purchased three houses in my lifetime. I I've had one for myself. Um, and then two, two rental properties.
And in each time I know I didn't get the best deal and I didn't really shop around. And I, I really did feel more on my own in, in a lot of that, like working with the lenders and going through all of these processes. So I know even with all of that, even with my experience, buying multiple houses, [01:03:00] selling, uh, a couple of them already.
I would, I would turn to perch. I would turn to you guys for, for the services, because like I said, even with the, the aggregator, I just loved how much more options and how more, how much more empowered I felt with the different opportunities that were available to me. And to know that that could also be paired with excellent customer service by people who have a real strong why as to, as to what they're doing and why they're doing that and being, bringing high value to the services.
Like, and to me, that's, that's an invaluable, uh, service beyond the financial, uh, gains that I could have. Like you mentioned earlier that half percentage, just the emotional, uh, relief that I would feel from working with a, a group like perch would be just incredible.
Well, appreciate it. And, uh, look forward to, well, that's it, [01:04:00] man. Stay tuned. Alex. I really appreciate you taking the time to come on. Awesome. I've I've learned a lot. I've had some, some different perspective shifts, uh, in the, the couple conversations we've had and I look forward to continuing our conversations as we move forward.
Alex Leduc: Absolutely. Thanks for having me on here and again, uh, appreciate all the great questions, you know, not being afraid to challenge, like what are common assumptions and just looking for, you know, what makes sense and totally how can you build? And if anybody is looking, I guess we, we should throw this in.
Stu Murray: I'll make sure to include everything you say here in the show notes so they can access it too. But if anybody is looking to get in touch to get support, just has some questions or is curious, uh, what's the best way to go about doing that, Alex.
Alex Leduc: Yeah. Uh, so if you go to my perch.io, uh, so it's spelled exactly like, it sounds, we essentially have all these tools before you even create a profile. You can immediately get value. So the Pathfinder tool [01:05:00] will sh help show you rates. We have closing cost calculators, all these things that you can leverage when you create a profile, you're immediately assigned a mortgage advisor.
You can reach out to them through chat, email, phone, whatever your preference is. So yeah, the minute you start making a profile, you're empowered to basically figure out what is it that you can do without having to talk to anyone or upload any documents. The minute you wanna lock something in is when you have to start uploading documents and then chatting with the mortgage advisor to
Stu Murray: alright, well, we'll make sure to get people there.
And, uh, once again, man, thank you. I really appreciate this.