According to the Housing Affordability Monitor report published by the National Bank of Canada, it now takes Canadians 9 years to save for the minimum down payment for a non-condo home. This is twice as long as the average (4 years) needed since 2000. As home prices grow faster than wages, many Canadians struggle to make dreams of home ownership a reality.
That’s why Requity Homes is creating a new path to home ownership for aspiring home buyers who aren’t mortgage-ready yet. Requity Homes work with families who have the cash flow to afford a home but cannot qualify for a mortgage due to credit history, lack of down payment and self-employment. Requity is here to help broaden the financing options available for families starting out on their home purchase journey. With the most recent fundraising round of $1.2 million, the company is looking to expand their product offering from Northern Ontario (Sudbury, Thunder Bay, North Bay, Sault Ste. Marie), to Western Canada later on in 2022.
We recently got to sit down with the Requity Homes’s Founder & CEO Amy Ding to learn more about Requity is helping making home ownership more accessible in Canada.
What was the inspiration behind Requity Homes?
Home ownership is something that’s close to my heart. I still remember having to move 7 times during my first two years in Canada. That experience just reinforced how important home ownership really is. Rising home prices, stagnating wages, and tightening mortgage requirements have left many unable to achieve their home ownership dreams. About two years ago I saw the opportunity in Canada to help families who could afford the cost of a mortgage, but for whatever reason found themselves unable to get one. That’s when I decided to quit my corporate job and started Requity Homes.
At Requity Homes, we offer a modernized rent-to-own program where we help qualified renters purchase the home of their choice upfront so that they can rent the home from us with the option to buy back the home at a guaranteed price down the line.
How does Requity Homes’ rent-to-own program work?
Our program is pretty straightforward: We help renters purchase the homes of their choice upfront and rent it to them for the duration of the lease term (typically 2-3 years). Each month, they pay the market rent plus a set monthly premium which goes towards their future down payment. By the end of the program, they’ll have their down payment saved and can buy back the home from us at a predetermined price.
Compared to other rent-to-own providers, we take a more holistic approach to home ownership that’s focused on helping families get mortgage-ready by the end of the program. We’ve structured our program so that in the event customers want or need to walk away, they can cash out their accumulated monthly savings. Regardless of the outcome, they still come out of the program having saved something.
We also provide a suite of personal finance resources to help our customers make more informed decisions with their money. Likewise, on the credit score side we provide credit coaching and report rental payments to credit score providers, which helps our clients improve their credit scores over time.
What was the biggest challenge you had to overcome?
While entrepreneurship has a lot of glitz and glam, one of the underappreciated challenges of it has been the occasional sense of isolation. At the end of the day, you’re really pushing to bring an idea to life. I knew it’s gonna be hard but I didn’t think it would be this hard – For instance when it comes to fundraising, obviously you will get lots of Nos. The consistency of Nos and certain remarks really grind you down.The whole process really tested my resolve. There are times I question whether I’m solving a real problem and whether we’re building something that people need. It really helps to have some mentors and advisors who previously went through the process and can help me navigate it.
There have been some creative, non-traditional models in residential real estate like rent to own that have emerged over the last decade in Canada. Can you talk about how some of these came to be? What do you think the future will look like?
I think it comes from a genuine need in the market. Our lives, both personally and professionally, are significantly more complex than how mortgage underwriting operates. You could argue that space hasn’t changed for over a century. Many families are finding themselves underserved because the home buying experience hasn’t kept up with the added complexity of their careers. If you’re a newcomer, a contractor, an entrepreneur, traditional lenders are increasingly inaccessible.
I always like to use the analogy of leasing a car. Nowadays you go to any car dealership. There are three ways to access a car – buy it all in cash, finance it through a loan, or lease to own a car. No one questions whether a lease to own a car is legitimate. However, when it comes to home ownership, you have two options– buy it in cash or finance it with mortgages. If you think about it, homes cost a lot more money and there should be more financing options available. Homes are an appreciating asset class. There are tangible benefits for the end-users to lock in the future buy back price. To us, we envision a world where rent-to-own a home is as common and easy as lease-to-own a car in the near future.
What are some of the things you’ve learned as the founder of a startup?
Startup is a marathon not a sprint. As founders, we have to take care of ourselves both physically and mentally.