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Show Summary
In this episode of the Investor Fuel podcast, Olivia interviews Samuel Herschorn, founder of BIOSIS Real Estate, who shares insights into his journey from architect to real estate developer. He discusses the challenges of the current housing crisis, the importance of sustainable design, and the innovative approaches his company is taking to address these issues. Samuel emphasizes the need for collaboration and networking in the industry, as well as the potential of modular construction to revolutionize the building process. The conversation concludes with a focus on the future goals of BIOSIS and the importance of building relationships in real estate.
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Investor Fuel Show Transcript:
Samuel Herschorn (00:00)
we had a project that we were in our due diligence phase. We had it under contract, put a deposit down on it, andwe started doing our investigations into the soil and to the ground conditions. And the testing came back that there was groundwater contamination. And it’s something that you would have never guessed just looking at the site. But as you go through this project,
Samuel Herschorn (00:29)
process, ⁓ that’sSamuel Herschorn (00:32)
always a risk. So what does the plan be? Well, we kind of ran the scenarios. Do we take it through and remediation? It was going to cost hundreds of thousands of dollars. It was going to take two to three years just to get a ⁓ risk assessment and to get the ministry sign off on it. And we decided, you know, this is probably not worth the time and effort. We ended up pulling back from that project.Olivia (02:32)
Hello everyone and welcome to the Investor Fuel podcast. My name is Olivia and I’m here joined with Samuel Herschorn today representing BIOSIS Real Estate. Thank you for taking the time out of your day to speak with us Samuel.Samuel Herschorn (02:48)
Thank you for having me. It’s a real pleasure.Olivia (02:51)
I think our listeners are really going to take a lot away from what you’ve been approaching in the real estate world. Can you share with them a little bit about your company, BIOSIS, and where you’re located?Samuel Herschorn (03:06)
Sure, so I’m located in Toronto, Canada, a little town called Guelph, which is about an hour and a half southwest of the major city. ⁓So my background, I’m a licensed architect. I’ve been designing
Samuel Herschorn (03:21)
building real estate developments for clients for the past 13 plus years. ⁓ Got to a point where I was very frustrated dealing with my developer clients. They refused to take a lot of my advice.Samuel Herschorn (03:36)
Oftentimes they were obsessed with cutting corners, designing shoe boxes that ⁓ for me at least did not align with the long-term trends I was seeing in terms of rentabilitySamuel Herschorn (03:48)
⁓ and ⁓ just sustainable design and construction. So I decided, you know what, I’m doing 90 % of the work for my clients. Why don’t I just learn the other 10 % business side of things? So I hired a development coach, ⁓an
experienced developer based in Ottawa but doing most of his work in the United States. I joined my business partner and we did that for about two years, learned how to underwrite, learned how to evaluate sites, learned about the pitfalls on the business side of design and development. then in 2022, we formed Biosis Real Estate Development, our development company.
Samuel Herschorn (04:33)
Now, the thesis I had when starting this company is that it would be a vertically integrated structure. Because of my background in architecture and design, I wanted to be able to have more control over the upfront side, which was finding the deals, putting the land together, raising the capital, and then have my architecture firm take the lead on design, managing consultants, ⁓ and overseeing the construction.Samuel Herschorn (05:48)
So that’s when ISamuel Herschorn (05:50)
I added our secondcompany, which is Biosis Designs, and that’s my architecture firm, to fulfill that model. what it allows us to do is have a greater degree of accuracy when we do evaluate a site. So typically, a developer will do a back and neck analysis, quick math to see, a project work? So we do that as well, and then we try and quickly kill these projects so we don’t spend any more time.
Samuel Herschorn (06:20)
ones that pass that first hurdle, for a typical developer that’s when they start hiring their architects, their planners, their civil engineers just to go through that concept design work to see if you can actually get this project off the ground and that process costs thousands and thousands of dollars that you’re usually out of pocket if you hit ⁓ a red flagSamuel Herschorn (06:42)
or a roadblock. Well we do that all in house so my architecture firm will do the zoning bylaw review on buildingcode review, we will model
Samuel Herschorn (06:52)
the sites, we will model the step backs, the regulations, and what we can actually build, do our highest and best use analysis, all without paying a cent. It’s really just our time that we kind of build into our end cost once the project is actually off the ground, which is a big advantage, right? We’re able to validate a project early on. ⁓ We then take the actual square footages from our model, ⁓Samuel Herschorn (07:20)
plug it into our spreadsheet, our pro forma spreadsheet, to get a much higher degree of certainty that the project is going to be profitable before we even put an offer on the table. And we’ve gotten very good at doing this upfront analysis. It’s allowed us to really focus on projects that we think are winners.Samuel Herschorn (07:56)
Yeah, definitely. I mean, Canada has undergone a pretty dramatic economic shift, as has the United States. Run up of inflation stems mainly from the pandemic. It has causedSamuel Herschorn (08:11)
housing to become very expensive, right? You’re seeing, you know, single family homes being sold for 600, 800, a million, where these equivalent homes, you know, 15, 20 years ago,It would probably be about half of that. And it’s putting a huge stressor on our economy, on families, their ability to afford daily needs in life.
Samuel Herschorn (08:38)
⁓And on the flip side, know, the solution is actually to build more housing and create more supply. But we’ve been going through the opposite effect where ⁓ over government regulation, contracting economic output ⁓ and just a very difficult time in securing financing has caused developers to shelf projects. You know, the interest rate hike has basically put a stop on
Samuel Herschorn (09:08)
any kind of development in Canada that wasn’t already in the ground.Samuel Herschorn (09:15)
So the big question becomes, well, who’s actually going to be stepping in and filling the gaps in the supply? So that’s where we are kind of positioning ourselves. don’t like to do the smaller developments, so your duplex, triplex, fourplexes, although that’s how we got started. We want to take advantage of economies of scale.Samuel Herschorn (09:38)
larger unit counts so we can get professional property management in play. know,have less effects on, have vacancy be less of an effect on the building when we do our lease up. we tend to target between 50 to 100, 120 unit size developments.
Samuel Herschorn (10:35)
Anything larger than that, you’re getting into the big developer territory, higher upfront capital, longer timelines forSamuel Herschorn (10:42)
approvals, know, investors get their money locked up for longer periods.Samuel Herschorn (10:49)
When we were getting started, really the most value for time and for money we found was in those low to mid-rise projects, know, 50 to 100 units that we could get approved into the ground and built and our money, investor money back in two to three years.three years. Great, yeah, it must be really difficult running in this type of climate.
Samuel Herschorn (11:16)
Yeah, it’s a challenge, but that’s what real estate development is, it’s problem solving. And our experience is really figuring out what is the problem, how do we define it, and then how do we address that problem. ⁓ And, you know, after decades of working in the industry, we’ve gotten very good at figuring that out and executing, which is the biggest thing in development. A lot can go wrong. You have to be able to keep a level head. You have to know who toSamuel Herschorn (11:46)
of contactto figure out, you know, if you’ve got a water issue, know, pipe that you didn’t see on the initial plans that didn’t show up on city records, well, how do you adapt? How do you solve that problem in real time with a ticking clock and with a budget and a contingency that gets eaten into, right?
Olivia (11:47)
Yeah, it makes a lot of sense. Do you have any specific examples of maybe a deal that went sideways recently and how did you overcome this? What kept the machine running smoothly?Samuel Herschorn (12:26)
we had a project that we were in our due diligence phase. We had it under contract, put a deposit down on it, andwe started doing our investigations into the soil and to the ground conditions. And the testing came back that there was groundwater contamination. And it’s something that you would have never guessed just looking at the site. But as you go through this project,
Samuel Herschorn (12:55)
process, ⁓ that’syou know, that’s always a risk. what is the plan B? Well, we kind of ran the scenarios. Do we take it through and remediation? That was going to cost hundreds of thousands of dollars. It was going to take two to three years just to get a risk assessment and to get ministry sign off on it. And we decided, you know, this is probably not worth the time and effort. We ended up pulling back from that
Samuel Herschorn (12:58)
always a risk. So what does the plan be? Well, we kind of ran the scenarios. Do we take it through and remediation? It was going to cost hundreds of thousands of dollars. It was going to take two to three years just to get a ⁓ risk assessment and to get the ministry sign off on it. And we decided, you know, this is probably not worth the time and effort. We ended up pulling back from that project.In another example,
Samuel Herschorn (13:28)
we’ve got a 52 unit stacked townhouse development. This one we’re going to be breaking ground on.Samuel Herschorn (13:35)
in the spring. ⁓ We just ran into an issue where the design of our firewall was actually conflicting with the design of the roof at one particular location. We had a hip roof, but the firewallSamuel Herschorn (13:51)
has to extend about six inches above that hip roof. Meanwhile, the roof was coming down and the ease would be conflicting with that firewall. So that required us to do a very quick tweak of the design.a hip roof we did a flat roof with a parapet able to hide the firewall inside the parapet. It changes the aesthetic of the building a little bit but it kind of addresses the building code issue. It has a minimal impact on the budget
Samuel Herschorn (14:21)
and ultimately we don’t have to completely redesign the building. So there’s a couple examples. One where a big change actually means we have to walk away ⁓ versus a smaller change which you know a little bitof experience and being adaptable and knowing what to do in those situations kind of helped us resolve it.
Olivia (14:35)
That’s awesome.What’s the next real big goal for you?
Samuel Herschorn (14:52)
Yeah, we’re trying to scale up our operations. So while we’re not doing large like two, 300 unit projects, we would rather do more smallerSo with the end goal of getting a number of sites together and putting them into a fund so that we don’t have to be raising for each project individually. And that way we can take the designs and the specifications, standardize them across each of these projects.
Samuel Herschorn (16:03)
projects,have greater control over our supply chains, negotiate better ⁓ material costs and labour costs with our preferred contractors and suppliers and really be able to pump out these units at a faster rate. ⁓
suppliers and really be able to pump out these units at a faster rate. ⁓
Samuel Herschorn (16:23)
Our whole model is to try and build high quality, sustainable, ⁓ durable ⁓ living units for ⁓ local communities and to do that faster than any other developer can do it themselves. And that ties in with our ability to do both the development side andSamuel Herschorn (16:46)
the design work in-house and streamline that pathway to approvals and through construction.Olivia (16:52)
Yeah, beautiful. We need more of this for sure.Samuel Herschorn (16:59)
Yeah, so one strategy we’re also kind of leaning into heavily right now, ⁓Samuel Herschorn (17:05)
if you’re aware, there’s been a lot of movement towards a modular or prefab manufacturing process. So rather than building the building on site where you need lots of room for staging, you’ve got materials that you have to bring on, sub-trades working on top of each other. You’re subjected to weather delays, you know,Samuel Herschorn (17:29)
poor working conditions, you know, we’re taking that off the table, moving it all inside a factory. And this has the added benefit that, you know, each of the units comes pre-approved, which eliminates a big risk, ⁓ or time delay rather, for site inspections. Almost like you’re building a fridge, youSamuel Herschorn (17:51)
know, your Samsung plant is putting the fridge together and then stamping it that that fridge has been reviewed.Samuel Herschorn (17:59)
passes all inspections and good to go and then they manufacture those in bulk. We want to do the same thing with buildings. We want to manufacture them in bulk so that we can essentially cut time on site down by half, ⁓ whichSamuel Herschorn (18:14)
is a big savings on your carrying costs, big improvement on your quality of construction and investors get their money back in half the time, which is a huge win for the investors as well.Samuel Herschorn (18:29)
So that’s a technology we’re going to be implementing on a six-story apartment building that we’re constructing in Ottawa. That one’s going to be breaking ground in the fall. And we’reSamuel Herschorn (18:42)
working with a manufacturer. They’ll be able to produce two units per day and install them at roughly the same rate.Well, I know a lot of people that are listening are either earlier in their journey or looking to level up and I think they’d really benefit from hearing all of this. You have such expertise in what you’re actually doing. So when it comes to building relationships, peer groups, growing your network, what’s made the biggest difference for you? ⁓
Samuel Herschorn (19:23)
The biggest difference is working with like-minded people, going to where they’re going to meetups, mastermind events, giving presentations, various investor organizations and clubs. That’s where we’ve generated the most meaningful connections. ⁓ Another advantage that we have with the architecture firm is we do work with outside clients. So lot of other people trying to do what we do. We bring our expertise and ourSamuel Herschorn (19:53)
experience asSamuel Herschorn (19:53)
developersSamuel Herschorn (19:54)
and designers together to help advance their projects ⁓ and often in turn that results in them looking to collaborate, ⁓ know, work as a team to help build more housing. So that’s been really beneficial, certainly has advanced things ⁓ quite well for us. We’re also active on social media, LinkedIn, Facebook, Instagram. We do host like monthly webinarsSamuel Herschorn (20:23)
NRs ⁓ just looking to provide value to other investors, again imparting the wisdom of our development experience and design experience. So yeah, those efforts are a great way for us to grow our network and just meet more people.Samuel Herschorn (20:47)
Absolutely.Olivia (20:49)
Well, you started to touch on it a bit of how we can find you. So before we wrap up, ⁓ if someone wanted to reach out to you, connect with you, maybe collaborate or learn more about what you’re doing. What is the best way for them to reach out to you?Samuel Herschorn (21:07)
Sure, check out our website, biosisrealestate.com, B-I-O-S-I-SSamuel Herschorn (21:15)
realestate.com, or you can check out our architecture firm, biosisdesigns.com. ⁓ We’re primarily focused on Canadian markets, but design is pretty universal. ⁓ If you’ve got questions on construction, on approval process, ⁓ yeah, feel free to reach out.be a resource.
Olivia (21:37)
Is there anything that you’d like to add about BIOSIS real estate before wrapping up or did you feel like we covered a good portion of everything?
Samuel Herschorn (21:52)
I feel like we covered a good amount. Yeah, not sure what else I would add.Olivia (21:54)
Absolutely, definitely. Thank you for sharing all of your expertise and I appreciate your time and your story, your perspective. We definitely need more people in this space who are doing it the right way, helping out with the housing crisis and thanks again for being here. For those of you tuning in. Absolutely. For those of you turning in, if you have any value from this, make sure you subscribe.
Samuel Herschorn (22:18)
My pleasure. Thank you for having me.Olivia (22:26)
We’ve got more conversations coming with operators just like Samuel Herschorn who are out there building real businesses and we’ll see you on the next episode.
