Saving on FX for US Real Estate: Marc Racette's Tips for Canadians

Introduction

Welcome to the Wisdom Lifestyle Money Show. I'm your host, Scott Dillingham. The show is designed to help Canadians invest better in Canada and the United States. We are the North America-based mortgage financing lender and provide education to both countries.

Discover how you can become a better investor and access the financing you need. Welcome back to the Wisdom Lifestyle Money Show.

I'm your host, Scott Dillingham. Today I have Mark Reset.

Did I pronounce it right? Correct, yep.

The Core Idea

Perfect. So Mark is an expert in foreign exchange and he's going to show you through some of the tactics and tricks how he can help you to save thousands over going with the bank. But I guess before we get into that, Mark, I'm curious how you got started. Like how did this like come up that you just...

Yeah, no, it's a good question. I mean, I've actually been in this industry for just over a decade now. Funny enough, my career began internationally. I was helping Canadians expand business into Asia.

And so I was stationed in Shanghai for a couple of years. And then I came back and I had a good understanding of global economics and figured the best place to apply that would be in the foreign exchange realm. And I've been working with one company for over a decade. And as of last year, I decided to venture out on my own and get PulseFX up and running.

Good for you. That's awesome. No, I'm excited to hear because I know it's so easy, it's so convenient to just have your bank do the funds. Or there's other services and we even discussed them, you know, at a recent event.

Deep Dive

And you're like, yeah, but you know what? They're really, they're not giving you the best exchange. So yes, their fees might be low, but they've baked it into the exchange. So you're not, still not getting the same funds.

So I just want to hear from you how you do what you do and how it works. And I know you've prepared a presentation for us.

So I'd love to hear. Yeah, for sure. I can cover all that during the presentation. We can talk a little bit about the landscape.

At the end, even have a few kind of live comparisons versus what I was able to pull today in terms of data from what banks are offering. So yeah, I can get that going if you want to get that started now.

Practical Steps

Yeah, that's perfect. So what I'll do, I'll watch for hand. So everybody who's listening now, you can raise your hand if you have a question. And Mark, I know obviously you'll be focused on your presentation, but I'll let you know if there's a question and then we'll go from there.

Awesome. Okay. Let me share my screen here.

Now I get this going. Okay. Hopefully you can all see that.

Yes. Perfect. So yeah, like I said, my name is just starting off again.

Key Takeaways

I'm Mark Brissett with PulseFX. So I'll be going through this presentation. If you guys have any questions once more, please feel free just to raise your hand. As Scott indicated, I'll be able to stop and kind of answer as relevant.

And yeah, I'll get going from there on. But the point of this conversation or this presentation once more is how to ultimately save money when you are a, let's just say, a Canadian investor looking at buying property in the US. And there's a foreign exchange component to that. So I'll cover the basics of the presentation.

Right now we're going to dive into the general market overview, tips and tricks, things to look out for. Generally, if you are a Canadian investing in the US, it does definitely help to understand some basic economics, what ultimately might move the market and what to keep a lookout for. If you're closing, let's just say within a month, within a few months, within a year, we'll have a quick overview, a variety of factors there. I'll then go into some of the products and services that an FX firm can provide.

Some of these you might be able to get from the bank. Some of them you might not. So I'll kind of give you a heads up what might be possible. Some of them are also dependent on if you are an individual investor versus investing through, let's just say, a holding company, in this case, a business.

Resources

So I'll pinpoint those as well, too. I'll then kind of explain a little bit about the value of having an FX partner. So as Scott stated, there's a lot of options out there. Typically, many people have their bank.

There's a lot of online brokerages. Our firm in particular is what we would like to call a full service firm. It's not just about having an online portal, but also about having a partner that you can work with that understands your business. Very much like working with Scott, the partner is able to get more of an in-depth understanding of what your needs are and help you plan for the future.

I will end that presentation as well. Like I said, within a savings comparison, just from data I pulled earlier today, you can see exactly what the differential would be between a variety of banks, credit unions, as well as through pulse effects. Then ultimately, we have to follow up into more questions at the end of the presentation. So going into just a quick market overview.

So once more, quite a bit to look out for whenever you are doing business or investing outside of the country, let alone internal factors. I'm sure everyone's read this morning in particular with Trudeau resigning. A lot of news coming out over the next few months with also Trump coming into power on January 20th. So a lot is happening right now that certainly pays dividends to stay in the loop about.

Introduction

S. So as I indicated before, politics is a big one.

S. economy significantly reshaped. Once more, he has a strong focus on more protectionist and domestic industry, as well as through his use or his imposition, I guess, of universal tariffs on imports.

S. dollar in particular. Ideally, his goal is to bolster domestic manufacturing in the short term, but that also risks triggering inflation, which is another topic you need to look out for. Typically, if you talk about inflation in a nutshell, when it becomes more expensive to, let's just say, borrow versus it becomes cheaper to borrow.

This is going to impact not only the value of mortgages and through the imposition of interest rates, but it's also going to impact the value of a currency in particular as well, too. So once more, the more expensive it is to borrow, in other words, the higher interest rates are, the more that currency typically has a value and the lower interest rates are and vice versa. That typically means it's once more cheaper to borrow. So the value of that currency is a little bit lower.

The Core Idea

S. economy.

S. dollar just to once more promote domestic manufacturing.

S. S. So we could see quite a bit of news coming out in the next few months. I'll talk about some forecasts later in this presentation.

S. S.

Deep Dive

So something to keep on top of. It could impact once more the currency markets quite a bit, let alone in the last three months.

S. Just with all the speculation about what's going to be happening on the political front as well as ongoing global issues.

S. So obviously, other topics to look for are any changes once more or any commentary on interest rate changes.

Overall, oil prices, for example. This is one that hasn't been a huge market mover as of late, but typically the CAD, Canadian dollar, has been largely tied to the value of oil.

Practical Steps

S. dollar gaining value. So these are things that on a macro level you should look out for that could kind of indicate where markets are going in the long run. Ultimately, though, I'll talk about this as well at a later point.

But one of the values of having FX partners is we can once more pull these forecasts for you and help you decipher what might be happening or what the major banks are in particular are predicting over the next year, for example. So if you look at this quick graph, I just pulled this data as of, I believe this was November last year, but it's pretty much remained the same for most major banks.

S. dollar to fall.

S. dollar could go up to 145, which was actually very close.

Key Takeaways

S. dollar to taper off. So just keeping all that in mind, definitely a lot to look out for in terms of market movers over, you know, whether you're looking at investing over a week, a year, you know, we can kind of break that down into smaller events throughout the course. But I will now talk about one of the, I guess, the thing most people are here to learn about is more of the products and services and other ways you can save money.

So as we know, the most basic exchange is called a spot transfer. S. This is what it's going to cost in CAD and you exchange. Now, there's two other products that might be beneficial for you.

One of them being a limit order. So if you do have flexibility in terms of when you might be wanting to invest either in real estate or a real estate investment project that someone else is putting together, for example, a limit order might be beneficial to you. A limit order is essentially saying or creating a threshold where you can secure funds when it hits a certain rate. So let's just say the rate right now is $145,000.

If it makes sense only for you to contribute to a project when the rate hits that $143,000 mark, you can look at a limit order and say, I want to contribute $50,000 once this rate hits $143,000. And that allows you to now have that order in the system. You can go about looking for other projects. You can time that limit order to when that investment window might expire.

Resources

So if it doesn't hit, you know, you continue to move on. And if it does hit, then now you're in play and you're able to now invest in said project. Another product being forward contracts. So these are limited to holding companies or businesses, I should say.

But a forward contract is more like a buy now, pay later product. So if you, for instance, let's just say you want to buy a home, let's just say for half a million in the US. If you want to, you might not necessarily want to do this, but if you wanted to pay a large portion of that upfront, let's just say you wanted to put a larger deposit down. If you don't have enough money right away, but if you like where the rates are at, and if you want to base your calculations on how much your expenditures should be based off today's rate, you can get a forward contract.

So you can secure that deposit today's rate. And then with forward contracts, you have a window that you can set up. It could be anywhere up to a year in advance where you say, or then you fulfill that contract. So you lock in today's rates, let's just say at 145.

Let's just say in a month from now, the rates go up to 147. And you're protected in that sense because you've already based and secured the funds at that 145. Now the first could happen too, of course, where the rates could fall back down. So I would say the idea of a forward contract is not necessarily to be speculative on the market, but just to get a better idea of what your ultimate cost is going to be by the time you close or by the time you have to put a deposit down.

Introduction

So this is once more a very beneficial product for any sort of investment business that wants to protect cash flow, for example, or get a better projection of their pricing over the course of the next few months or two a year, for example. Another interesting product that we offer is a multi-currency account. So let's just say you are already investing in a US property or anywhere else in the world for that matter. Let's just say the UK as well.

Now, if you don't already have a US dollar account or like a British pound account in the UK, for example, through the use of multi-currency accounts, we can actually, or through the use of PulseFX, we can set up virtual accounts for the collection of funds. So if you're, let's just say you bought a property in the US, let's just say you're renting it out, you're making income off that property now, but you don't have an account in US dollars. We're able to create a virtual holding account that you can use to collect those funds.

And then whenever you would like, or through automatic conversion, we can have that, those funds held and then convert it back into CAD at a much more optimal rate. If you're currently doing all your investment in the US through a Canadian dollar account in Canada, you'll notice that any money going in and out, you're probably getting charged an arm and a leg for by the bank, especially on the incoming side of things. Simply because you go through their standard auto exchange fee, plus any incoming wire fees, for example.

So you kind of get hit with a couple of fees in that sense. So another interesting product, I should say, if you are ever looking to collect funds, not just pay, but once more on the inbound. Something else you'll know, if some of you might have encountered this already, sometimes sending funds to the US is not as easy as it seems, especially when you're sending funds to, let's just say a trust company or to any sort of investor or crowdfunded investment platform, for example. There's a lot that your bank might ask in terms of documentation for getting that wire through.

The Core Idea

So even if you have the money ready to go and you've had all the wire instructions, everything you need to send that money, sometimes you'll find the bank comes back and ask a lot of questions just to try to figure out what the purpose of that investment is. So that's another area where a firm such as Bulse, we can help put together a package up front and just give you a good indication of what ultimately is going to be required by banks. Another thing to look out for is payment options.

Now, depending on where you are sending funds in the world, you'll have the ability to either send funds internationally or through domestic banks. If you use a brokerage firm such as Balls FX, and that can save you quite a bit of money as well, too. Your average Canadian bank, for example, will charge anywhere between it's usually 30 to 80 or 90 dollars for a wire. So it's a bit all over the place depending on what kind of tier of account you have with the bank.

S. via a system called ACH, in Europe a system called SEP, typically those are free wires. So you're able to save quite a bit of money on top of getting better exchange rates. You're able to typically save quite a bit of money just on fees in general.

So you'll find a lot of online brokerages as well, too, will charge significant fees. And that usually is where they might make their money, even if they provide lower rates. So a thing just to look out for in general is just how much you're paying in terms of fees and looking at payment options as an example. So this is where I'm going to talk about once more the value of having an FX partner in particular.

Deep Dive

So once more, if you're using a bank versus an online brokerage firm, depending on once more, when it comes to the bank, for example, depending on what tier or how big of an account you are for them, you'll see a wide variety of rates they typically provide. I find generally any bit if you're a consumer, you're generally getting charged the same as most consumers. If you're a business, it's usually if you have been in business for less than five years, you get charged pretty much what consumers get charged.

I find anywhere between that five to 10 year mark, you get typically standard business pricing and then 10 year plus the banks provide what they call quote unquote preferred rates, which is not necessarily what it sounds like. Anyone that's been in the mortgage basis will too. You'll know it's typically not very hard to shop around the banks and get a better rate elsewhere. But yeah, I'll go through just a quick overview.

So once more, it helps to have some expertise when you are investing. I mean, if you're spending the money to invest in a property in the US, a one cent movement in the rates could be dramatic. I mean, if you're moving a hundred thousand dollars, you're talking about a thousand dollars difference. If you're moving half a million, you're talking about a five thousand dollar difference.

But generally, if you're a consumer, you're not saving, you're not looking at a one percent fluctuation. You might be looking at a one percent fluctuation on top of an additional three percent that the banks might be charging for an exchange rate. So having an understanding of the markets, having a partner in place to help you save, you could be saving significant amount of money. I mean, if you look at a half a million dollar transaction, I've seen sometimes individuals save anywhere between 15 to let's just say $17,000 compared to just using a standard bank.

Practical Steps

And that's not just better rates, but understanding what might be coming out, understanding if you don't have a need to make that payment right away, what is coming out within the next week, within the next two weeks, within the next month, how that might impact the rates, if that might be advantageous to you. We can look at that as well, too.

Competitive rates. So this one, I'll show you guys just at the end when I do the comparison of rates I pulled today. But generally, the rule of thumb is if you're a consumer, a firm like ours can typically save you about two to three percent on average. If you're a business, it's probably closer to that one to two percent savings.

But generally, if the banks aren't necessarily hard to beat, even other brokerage firms, online brokerage firms that matter, they have most of them when they first started out were charging a flat fee and they still have that. Sorry, a flat exchange rate and they still have that, but now they've started adding additional fees associated with those payments. So you might see that reflected over time in some of these online firms. So it helps to have once more transparency when it comes to rates as well, too.

So just understanding that and finding a partner once more that provides transparency, I find goes a long way. Then products and services to fit your needs. So once more forward contracts, for example, and limit orders. Most banks might not provide that if you're well, certainly if you're not, if you're a consumer, but even if you're an early stage holding company, they usually refer those or reserve those products for some of their what's going to call your preferred clientele, which is the businesses that typically have been in service, you know, five, 10 years plus.

Key Takeaways

So something to actually once more look for in a partner is whether or not you have those capabilities. And most banks, for instance, won't provide multi-currency accounts either. That's very much a service that a brokerage like Pulse would provide. And just a little bit more information on who we are.

And then I'll kind of jump into a little bit about how to save money. But or sorry, with the actual comparisons. But generally, depending on where you're investing, you know, we can pretty much work anywhere in the world. So the idea behind us is once more that full service approach.

So not just having an online portal, but having peace of mind to know that you'll have someone real to talk to at any point in time to help guide you through that process, to help you understand your needs and to help you ultimately make that payment if you require that assistance. And that's essentially where we or the impetus for why we started our company is once more transforming that experience and bringing that personalized touch back to the market. So to get into the fun part, just an average savings comparison.

Once more, this is data I'm going to go through. I believe I have three banks on here as well as a credit union. And then at the end, just where we're at. But it's pretty much night and day.

Resources

The potential for savings that we can provide versus going directly to a bank. As anyone at this call probably knows, I mean, once more, having a broker in the mix is typically your best bet for getting a good rate. And once more, our aim is to be a bit of a buying group, so to speak, you know, being able to, you know, take your needs, shop around the banks for you, and essentially work to get you the best rate. So for Pulse, for example, we use a couple of vendors and have, I think, roughly 68 banking partners across the world.

So again, to the fun aspect of this. So for example, if you look at TDs today, rate today, and this is, as you can see, I pulled this as of January 6th.

99. So that's, you know, let's just say 148.

80. So almost around that 147 mark once more.

Introduction

63. So once more, getting closer to that 147 realm. You look at credit unions, like Alternate, as an example, they're as high as 147 as well. And once more, looking into PulseFX, and this is where we can help most, it's just on that standard spot rate.

We are closer to that 143, 144 realm as of today. So as you can see, on average, the savings differential is usually around, I would say, that 2% to 3% ballpark versus what the major banks can provide. So that's really all there is to the presentation here and the service. I mean, we aim to once more be as simple as possible.

The real value once more that we provide is once more that personalized service compared to what a bank or an online brokerage would ultimately provide. Getting understanding of your needs, whether on personal or business level, is really what goes a long way. I find a lot of the online brokerage firms are really just going the scalability model where it's, you know, here's a rate, here's a platform, have fun. There's not a lot that goes into it past that.

But you'll find through that personalized touch that not only will you get good rates, but ultimately our goal is to help you get a good rate at a good time as well too. As well as by also looking at other products and services that might optimize that purchase for you. And yeah, that is the presentation.

The Core Idea

That's awesome. So I have a question for you, Mark. So I've got money on buying a property and I want to use it as my down payment in the States. How do I get my money?

Like, how does that process work? I know the bank method, right? Going into the bank and they take care of it. How does that work with you?

Yeah, so very straightforward with us. Depending on if you are a consumer or a business, it's a slightly different process. If you're a consumer, then it's pretty much a wire in, wire out. We have banking connections with almost every major bank in Canada.

So it would be a quick, almost domestic wire based off which bank you use. If you're a business, then we can actually connect to your bank via pre-authorized debit mechanism. Which is essentially allows you to, you know, forego the need for wiring us all together. And then when it comes to the outbound payments, we can help initiate those wires to the beneficiaries on your behalf.

Deep Dive

We can also verify that your banking details are correct. If you're paying, for instance, a Bank of America account in the US, those are typically a certain, those typically have certain routing codes associated with them. They certainly have a certain number of digits associated with account numbers. So we can help you, you know, make sure you have all the information required to at least get that wire out as well too.

Nice. That's awesome.

That makes sense. I just didn't know. Now there's a chat question from Chris.

43? We don't need to have the funds on hand. You just need to have them ready to go when the limit order hits it. Typically, we have about a three-day settlement window too.

Practical Steps

So let's just say the limit order hits today. You would have today plus two more days to just collect the funds needed to facilitate that order. So we wouldn't have to tie up any of your funds on our end. And then once that order hits, you have today plus two more days to settle it.

That's awesome. No, I appreciate it.

So awesome, Mark. Now, I know you put the details there, but for those that are listening and not watching, how do they contact you to get transfer started for the?

Yeah, for sure. So I can put my detail or so I can send once more my details either in the chat or to Scott. com, you can reach out to us there. You'll also find our email there.

Key Takeaways

Ultimately, if you want to contact me directly, it's going to be my name. com. And my direct number, which I will just share here, is going to be 416-848-1028.

So whatever works best for you. And I also welcome if anyone wants to add me on LinkedIn as well too, they can get, send me a connection and message me there as well too.

That's awesome. No, I appreciate it, Mark.

Thanks so much for coming on. Was there any questions from anybody who's watching today? If there is, put them in the chat. We'll give it a minute here, Mark.

Resources

And then if not, then we're all set. I know that's pretty cool how you guys are.

It makes a big difference. Like how much cheaper you are, especially when you're transferring large funds, but even small funds. Like I can see people using this for even vacation money, right?

They're going on vacation, right? Like, so do you have a minimum? So honestly, anyone doing a couple thousand or more on the corporate level is typically where we're able to help. On a personal level, it's typically anyone doing about 10,000 or more.

Okay. And yeah, we have a lot of clients that are doing smaller payments.

Introduction

S. to top it up because they want to avoid winter. Or, you know, the snowboard community for that matter.

That's awesome. Cool. Well, there's no other questions, so we'll let everybody go for now. But thanks so much for coming on, Mark.

This was very valuable. I can absolutely see how it could save money and I'm excited for it.

So thank you. Thank you for having me once more.

The Core Idea

No worries. Take care.

Take care. Thank you so much for tuning into the show today. If you found value, please follow the show and rate it five stars. It would mean the world to me.

And lastly, all the resources that we spoke about are at the bottom of the show notes. Looking forward to seeing you in the next episode.