Getting the Best Mortgage with Alyssa Richard of Ratehub.ca
Alyssa Richard, Founder of RateHub.ca, talks to Andrew la Fleur about finding the best mortgage rate, and how condo investors can use her tool to increase profits. Alyssa also discusses a new tool coming to RateHub.ca
Alyssa Richard Interview Highlights
00:15 Who is Alyssa Richard & What is RateHub.ca?
6:15 How & Why Alyssa Richard Created RateHub.ca
6:55 What Triggered RateHub.ca?
8:15 What Were Some of the Challenges?
9:15 The Best Part About Being an Entrepreneur
10:52 What Makes RateHub.ca Unique?
12:55 How Can Condo Investors Benefit from RateHub.ca?
14:35 Current Mortgage Trends
16:05 Upcoming Mortgage Rates
18:15 Alyssa’s Experience Purchasing Her First House
22:23 What’s Next for RateHub.ca?
24:40 How to Reach Alyssa Richard
How to Leave a Review for The True Condos Podcast on iTunes
Alyssa Richard Interview Transcript
Andrew la Fleur: Hello and welcome back to the show. Today in the show I’m excited to interview Alyssa Richard. Alyssa is a friend of mine and she’s the founder of ratehub.ca. Rate Hub is a great website that I use quite frequently for looking at their great mortgage calculators, looking at when I’m evaluating different investment opportunities and investment properties. They have some great calculators there on ratehub.ca. It’s also a great place of course to see what’s happening in the mortgage market in Canada and to shop around for the best possible rates if you are looking for a mortgage.
We’ll get to that interview in a minute here, but before we do that just to touch on a couple of things that are in the news lately. I’ll include links to these in the show notes for this episode. The show notes for this episode can be found at truecondos.com/Alyssa, A-L-Y-S-S-A, and there you can find the links to these articles. The first headline article is in the National Post recently and the article is “Vancouver being transformed by new wave of brash, rich Asians looking for a safe place to park their cash.” Interesting title in itself.
Obviously this article is about Vancouver but it could potentially be similar article written about Toronto perhaps.
The article is actually referring to few different things, one of it is apparently there’s some new TV show which is called “Ultra Rich Asian Girls” which has just a ridiculous title but some kind of reality Desperate Housewives of Atlanta or whatever type of a show. I haven’t seen the show but interesting article about Chinese money coming into Vancouver. Obviously a similar story, a similar pattern we’re seeing in Toronto, and just another reason why the future of the real estate market in big Canadian cities will continue to go up.
There’s just a lot of money coming into our cities from around the world so you basically have two choices, you can throw your hands up in the air and say this is a bad thing and it’s a type of xenophobia, these people from other countries are running our country or real estate market or whatever. Or you can get off your butt and you can participate in the market and you can take advantage of the prices that we do have today so that looking back 10, 20 years from now you can say, “Well, I’m glad I jumped in and I didn’t stick my head in the sand like some other people did.” We’ll leave a link to that article there in the show notes, interesting enough there the title says it all, “Ultra Rich Asian Girls.”
The second article I wanted to include a link to is actually also from the National Post and it’s called about the South Core neighborhood in Toronto which is the area around the Air Canada Centre, it’s south of the rail tracks between the rail tracks more or less and the lake. There’s a mini financial district that’s come up there over the past few years, a very happy neighborhood. You have Ice Condominiums. Those are coming up for completion now. Of course you have Harbor Plaza, you have the Infinity Towers, you have Maple Leaf Square. You could probably extend it a little bit out towards the Pinnacle Towers there.
Anyways the headline of this article is “Meet SoCo, Toronto’s mini-Manhattan, the neighborhood that condos built.” It’s very interesting to look at how this neighborhood has really sprung from nothing over the past decade into a major high rise neighborhood, serve a new financial district, many major employers are moving their headquarters there, most notably and most recently RBC, Delta Hotels opened up a massive like 50 storey hotel there which is getting a lot of attention right now. Apparently it’s completely full all the time.
Coming up this year if you’re interested in the South Core neighborhood a little bit east of there but part of that area Daniels Waterfront, that’s a very interesting project that I’ll be certainly talking more about in episodes to come. Daniel’s Waterfront is coming out in 2015. That’s a project to watch. It’s located at Jarvis in Queens Quay right across the street from the large Loblaws there on the site of the Guvernment nightclub which will be torn down and there will be a mixed-use community built on that site from what I’m told. Details are scarce at this point but I’m very excited about that. Obviously I have a lot of history with working with Daniels and a big fan of what Daniels does, especially in Regent Park as many people know. I’ve been talking about that and investing there and helping people invest there for many years.
Anyways, this article just talks about the South Core neighborhood and it’s a great little piece if you don’t know too much about the area to learn a little bit more about it and how it’s come along in the past few years. I will include a link to that also in the show notes, truecondos.com/Alyssa, you can find the show notes for this episode.
All right, so without further ado let’s get to my interview with Alyssa Richard of ratehub.ca.
Andrew la Fleur: It’s my pleasure to welcome to the show Alyssa Richard. Alyssa is the founder of ratehub.ca. Alyssa thanks for joining us.
Alyssa Richard: Thanks so much for having me Andrew.
Andrew la Fleur: Why don’t we start by telling us a little bit about yourself and how and why you created the website ratehub.ca?
Alyssa Richard: I founded Rate Hub five years ago, January 2010. That was about two years after I graduated university. I was in a very corporate role learning a ton but just wasn’t passionate and enjoying it, which was a weird thing for me. I knew I wanted to do something entrepreneurial and this idea came along and I just went for it.
Andrew la Fleur: That was the genesis of the idea. I was curious to hear other entrepreneurs like what was that trigger point that started the whole thing?
Alyssa Richard: I had some friends that were in the space so they were selling mortgages and had seen other websites like this. There was one in the market at the time. They were using the site and saw firsthand how successful it was and how much they were spending on it each month. They were talking about the idea, and then I started looking into it and there were about three publicly traded companies in the state doing it but only one fairly small company in Canada. So it seemed like there was an established successful marketplace and not a ton of competition in Canada at the time and a nice business model in place and I could see a pathway to launching and earning revenue from the beginning, which is very exciting in web based businesses.
At the time it seemed like … I’ve never built a website before so I naively thought that it was something really easy you could whip together in a couple of months and then put the site up, buy some Google AdWords and the rest would be history. It turned out that it’s gone very well but it was a lot longer and harder journey than I could’ve predicted.
Andrew la Fleur: What were some of the challenges you faced along the way, especially in your first year or two?
Alyssa Richard: I think when you start out you always think it’s about the website and the features and so you spend … It took me, I think I launched in July of 2010 so I’d spent six or seven months getting the site already tinkering on features. I remember the day before we launched I was calling my developers and saying, “Get ready to increase the bandwidth on our servers. So many people are going to come,” and then you launch and no one comes. Like you saw the milestone, you’re hitting the milestone, and you realize that oh …
Andrew la Fleur: It’s just the first step.
Alyssa Richard: Exactly. I think acquiring customers, right, it’s the same in any business, whether you’re looking at real estate or mortgages or a website focused on mortgages, it was all about how are we going to get customers to the website.
Andrew la Fleur: What’s the best part about being an entrepreneur for you?
Alyssa Richard: That’s a good question. For me I think it’s a couple of things. I do love creating and building, and so I find it amazing to have a tangible product like a website and comparison tools and calculators. I love bringing up my notepad and sketching and building what I think is missing in the marketplace. That’s very rewarding. Working in a cross functional team and building that team, so we’ve got developers who are brilliant coders, a totally different skill set than our marketing and writing team which is different than our product development team and our sales team.
So working in a cross functional team it’s incredibly challenging because sometimes personalities clash or you don’t necessarily understand why it’s taking the developers two months to launch something, and the developers don’t understand why the sales people just promise our clients everything without asking them first. But when you get all of these experts in one room and working on a team what you can build is so much more beyond what you could have ever done on your own. I find that incredibly rewarding.
Then I guess finally just control over my schedule and my life. I think I probably work the same hours as I would if I was in a corporate job but it’s a little more flexible. So if I wanted to go away for two weeks I can and if things are crazy I don’t mind working really long hours.
Andrew la Fleur: That’s great. What are some of the features that make Rate Hub unique, because as you said there’s a few other competitors and similar sites in the market? What makes Rate Hub unique?
Alyssa Richard: Good question. I think it’s interesting because we make all of our revenue is driven by people using our comparison tools finding a rate and then connecting with a broker. But a lot of the reason that people come to our site and find those comparison charts in the first place are our tools and education.
We often find that we have a customer that was recommended by a friend because they thought our video is about Land Transfer Tax and CMHC Insurance were super helpful, or people that continue to come back because our calculator is one of the only ones I’ve seen that includes CMHC Insurance, shows Land Transfer Tax and shows different options for down payment.
I think we’ve done a really good job at education based marketing. We’re very transparent. We try to inform the user and give them as much as possible. That builds trust and keeps them coming back.
One of the things that we do to test our brand is I’ll actually use the Google keyword tool. I’ll type in ratehub.ca or Rate Hub to see how many people are searching it, and by far when I compare that to our competitors there’s the most searchers in Google for our brand which I think is really awesome.
Andrew la Fleur: Great, yeah, so you certainly see the fruits of your labor in the sense that your brand has become known in the market. It’s not just a place to like you said just to look at numbers, but it’s actually a place to get education and information about all the things surrounding purchasing a home from the financial side.
Alyssa Richard: Yeah, and I brought up the keyword tool because I think it’s a great way for people to test their brand. You can type in searches for your name versus some of your competitors or other real estate agents that operate in the preconstruction space.
Andrew la Fleur: That’s great, definitely a tool that I’ve used as well. Specifically how can condo investors benefit from Rate Hub?
Alyssa Richard: I think a couple of different ways. So in our education center we have a section focused on condos. That’s always a great place to start. Through our blog searching condos or preconstruction condos you can find out more information. And then obviously a number of people purchasing preconstruction are choosing to do so as an investment so I think running their numbers with the most accurate market rates is probably the most valuable section of Rate Hub.
Andrew la Fleur: Absolutely, yeah, I mean one of the reasons why I wanted to talk to you other than the fact that we’re friends is that I use your calculators on your site all the time. They’re really simple, quick, easy to use calculators for quickly finding out what are your monthly costs going to be on different properties as an investor.
Alyssa Richard: Yeah, no that’s awesome. I think it is interesting. I think the calculators are really simple. Sometimes we get feedback that upon first glance they’re too complex because I think if you visit TD’s calculators it’s literally just you enter in mortgage amount and it spits out payment. Ours are in between. We’ve tried to make them super intuitive but then jam pack a lot of information in. But once you start to become familiar with CMHC Insurance and Land Transfer Tax I can’t imagine not having those things as part of the calculator.
Andrew la Fleur: Absolutely, yeah. I mean you got to have the full picture, right?
Alyssa Richard: Yeah, definitely.
Andrew la Fleur: I know you’re not a mortgage broker obviously, you don’t sell mortgages yourself, but in the space that you’re in what are some of the mortgage trends that you’re seeing this year in 2014 and the market in general?
Alyssa Richard: One of the most interesting ones has been the move to more local rates. So what we’ve been seeing is our brokers … So we have about 45 brokers that list on the website, and they started to ask us to be able to list different rates in different cities. It used to be the case that they would come on post a rate Ontario wide and not need to discriminate at all. But I think two things are happening, first, some smaller credit unions are coming out with very competitive rates. Credit unions have different restrictions, so they can only lend within certain regions based on the presence of branches. Then secondly, because property prices are different in the various cities and obviously Toronto and Ontario are one of, if not the highest, brokers can offer lower rates and get a smaller commission percentage because the home prices are so high.
We’re seeing that some brokers while they could offer a rating cut their commission lower in Toronto, they may not be able to do that in Ottawa. I think for people I mean most of the preconstruction purchases are going to be happening in Toronto and so the takeaway there is that I think rates are getting even more competitive in Toronto, which is great for the buyer.
Andrew la Fleur: Absolutely. What do you see in terms of rates themselves, up and down, fix versus variable, what trends are you guys noticing this year?
Alyssa Richard: Pretty steady. We have a very competitive rate in the five-year fixed so rates have been sub 3% for a long time in five-year fixed, and now it’s for a while been as low as 2.69.
Andrew la Fleur: Wow, 2.69, yeah. A lot of people are, a lot of my clients are always shocked at when they see some of the interest rates I’m putting in investment models for different condos, and they’re shocked to find out when I tell them they’re actually conservative rates. You can get lower in the market. So 2.69 is a fairly easy five-year fixed rate to get right now?
Alyssa Richard: Yeah, and again, starting to see more and more specialization depending on the circumstance so 2.69 I know is available if you’re putting less than 20% down, and it may be available as well if you’re putting 20% or more because lenders are finding it less expensive if the client has to ensure the mortgage. Because sometimes that’s a little counterintuitive because you think, “Wait, I’m putting down more and my risk of default is less,” but putting down less than 20% in Canada means you’re forced to buy CMHC Insurance.
Andrew la Fleur: Right, interesting.
Alyssa Richard: And five-year variable to comment on that is still lower than the five-year fixed at 2.1% but the spread is not, not as large as it has been in the past.
Andrew la Fleur: Right, so when you have a narrow spread between fixed and variable a lot of people will obviously tend to go fixed?
Alyssa Richard: Yeah. I mean I bought in the spring and I decided to go five-year fixed. I read all of the research on variable beat fixed 90% of the time. I think based on the small premium and my risk tolerance and the size of my mortgage at this stage of my life I was okay paying more to not think for five years.
Andrew la Fleur: Right. Why don’t you tell us a little bit about that? Because you’re saying that you just went through your first buy experience and bought your first house in Toronto. Why don’t you tell us about that and how was that experience for you?
Alyssa Richard: It was an intense experience. I was very excited. I kept pushing my husband to buy and then when we finally found ourselves in bidding wars I think I was the one that was a little more stressed out. But we bought a house on the east side of the city and it was our second bidding war. Our first one we lost by quite a bit. The second one it was fully gutted housed, which worked well for us because my father-in-law was going to help us with a major renovation and is a professional in the industry.
Andrew la Fleur: When you say fully gutted you mean it was literally a gutted like somebody had ripped everything out and it was just an empty blank slate for you to come in?
Alyssa Richard: Yes, and for us an interesting insight that I took away was that ended up being cheaper for us because there were a lot of houses that were finished that we’d look at and my father-in-law would say, “Okay, this has not been as soon as we wanted to take down any walls or start to do a reno we’re just going to have to gut it all and do it all anyway. But other buyers would look at that with maybe less experience and just think, “Oh, we’ll move in, maybe we’ll tackle the kitchen slowly and we’ll do other things.” They were underestimating the amount of work that would be required and so they would bid a lot higher than we were willing to.
The unique thing in our case was there was no question about the amount of work that had to be done, and so we found that other buyers appropriately assessed that as well and we were able to get a more reasonable price.
Andrew la Fleur: Nice, and I guess if the house is gutted you could see exactly what you’re getting in, no surprises there. Were there any surprises once you started the renos?
Alyssa Richard: No surprises once we started renos. Something I mean we’d waived financing when we made our offer and I didn’t give enough thought to appraisal risk. When you’re getting into big amounts, big house prices and you want to put as much down as a percentage because it has implications on CMHC Insurance et cetera and you’re up against all these bidders and so you think like well obviously this is the market price, you forget that an independent appraiser has to come in and also confirm that they think that you didn’t overpay for the house. That one was stressful thing that I was probably underprepared for.
And I don’t … I mean obviously with mortgages you can get preapproved and you can understand what you’ll be able to afford when you’re waving financing, but it’s almost, it would almost, I wonder if there’ll be some changes to legislation if this waiving financing happens, if you’ll actually be able to get an appraisal beforehand. Now we’re doing home inspections beforehand so you can waive home inspection but I don’t know how to get around the home appraisal risk.
Andrew la Fleur: Right, right, absolutely. Did you look at buying a condo at all? Did you just jump right into looking for a home?
Alyssa Richard: We jumped right into a home, but I think that’s just a personal decision. I grew up in Kingston, a smaller community, bigger houses, and I’ve got sports equipments and a lot of stuff so for us it was just house right away.
Andrew la Fleur: Nice. Did you picture yourself ever living in a condo?
Alyssa Richard: The odd time I see a stunning condo, and yes, I was at a party recently in the Toy Factory Lofts in a gorgeous two and half to three bedroom, super high ceilings, open concept. I love walking into places like that where I’m like, “Wow, I could love my life here,” but I probably could never afford it.
One of the things I think I’d like best I’m not into yard work and maintenance so I think that’s definitely appealing with the condo.
Andrew la Fleur: Absolutely, yeah. You also have a new site that you’re working on, a new business. Why don’t you tell us a little bit about that and what’s coming for fans of Rate Hub, what’s coming down the pipe, what do you have next?
Alyssa Richard: One of the next things we’re launching is a credit card comparison feature. It will actually live on ratehub.ca, so the same domain but it will be at a different url so /creditcards. We actually purchased a credit card comparison site last November and have been worked with that team to bring it to life on Rate Hub. I think the biggest thing there is there’s so many different credit cards, they all have different point systems, the points are worth different amounts, you can earn them at different rates. So we’ve attempted to compare credit cards, apples to apples.
We’re really excited about it. We think that the same principles that made us successful on the mortgage side making valuable tools for users, empowering them to make good decisions, educating them, we’ve carried those through on the credit card side. We’re really excited to see how the market takes to it.
Andrew la Fleur: Absolutely, it’s a very confusing space, isn’t it, with credit cards and I think you said a million different points systems and calculations. Yeah, I’m looking forward to seeing what you guys come up with because I’m wondering what credit card I should get, and there’s just so many options, everybody’s got different opinion, “Oh get this one. Get that. This is the best deal,” or, “Get air miles,” or, “Don’t get airplane miles,” and so on.
Alyssa Richard: Yeah, and then for everybody is a little bit different depending on who you travel with and how you earn points and what you want to use them for. One of the individuals on our team who founded the site, that credit card comparison site originally, he has several different cards and depending on if he’s buying gas or groceries he uses one card because it earns quadruple the points, if he’s travelling he’ll use a different one. That level of optimization isn’t for everybody, but I think you can definitely take one card, make sure it’s the best, and then go for it.
Andrew la Fleur: That’s great. Alyssa, I want to thank you again so much for your time today for chatting with us. If people want to find you, get a hold of you, what’s the best way for them to do that?
Alyssa Richard: Ratehub.ca, I think on our website if you visit the About Us section, my email address is there. I have a Twitter profile but I’m not incredibly active on it so email is probably the best.
Andrew la Fleur: Great, okay, we’ll be sure to include a link to that on the show notes for this episode. Alyssa thanks again for being on the show.
Alyssa Richard: Thanks for having me.
Andrew la Fleur: Okay, there you have it. That was my interview with Alyssa Richard. I hope you enjoyed that. For all the links to everything we talked about on this episode including of course Rate Hub, well, it’s pretty simple ratehub.ca, but if you want to get a link to that just head on over to the show notes which is truecondos.com/Alyssa and you can find everything there.
Once again thank you very much for listening. I do appreciate it. If you enjoyed this episode or any episode that you listen to on this podcast I would appreciate a review. If you want to head on over to iTunes and leave a review for the show it would be greatly appreciated. Okay, that’s it for now and we will talk to you next time. Bye.
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