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Show Summary
In this episode of the Real Estate Pros podcast, host Michelle Kesil speaks with Rob Cheszes, a mortgage broker and real estate investor specializing in multifamily conversions. Rob shares his journey into real estate, the importance of understanding market needs, and the systems that have helped his business grow. He discusses the challenges of construction, the significance of investor partnerships, and the lessons learned from navigating zoning changes and market trends. The conversation highlights the critical role of underwriting in real estate investments and concludes with Rob’s insights on connecting with the community through his projects.
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Rob Cheszes (00:00)
So our company is a brilliant investor and we focus on multi-family conversions anywhere up from six units and up depending on the site.So I’m up here in Canada, in cold Canada now. that’s our major market as far as, so province of Ontario, where I’m based out of is probably, know, the most important market for us. We also, you know, look at…
We also look at stuff that’s out west, so out that would be out in Alberta as well, where it’s also growing market from a population standpoint, and there’s great opportunity.
Michelle Kesil (02:19)
Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil, and today I’m joined by someone I’m looking forward to chat with, Rob Cheszes, who is a mortgage broker and real estate investor focusing on multifamily conversions. So excited to have you here today, Rob.Rob Cheszes (02:39)
Thank you, Michelle. Great to be here.Michelle Kesil (02:42)
Yeah, absolutely, I think our listeners are going to take a lot away from how you approach underwriting the right deals and the multifamily conversions that you’re up to. So let’s dive in.Rob Cheszes (02:53)
Sure.Michelle Kesil (02:54)
First off, for those not familiar with you and your work yet, can you share what your main focus is these days?Rob Cheszes (03:00)
So our company is a brilliant investor and we focus on multi-family conversions anywhere up from six units and up ⁓ depending on the site. So we do that for partners and other investors.Michelle Kesil (03:19)
Awesome. And what markets do you operate in?Rob Cheszes (03:23)
So I’m up here in Canada, in cold Canada now. ⁓ So that’s our major market as far as, so province of Ontario, where I’m based out of is probably, know, the most important market for us. We also, you know, look at…We also look at stuff that’s out west, so out that would be out in ⁓ Alberta as well, ⁓ where it’s also growing market from ⁓ a population standpoint, and there’s great opportunity.
Michelle Kesil (04:04)
Awesome. And so how did you get started in your investing journey?Rob Cheszes (04:09)
wow. I would say I was a landlord first before I was.a homeowner. Well, I was a homeowner. I was a renter. And then I became a landlord right off right off the bat living in one of these multifamily converted units myself, actually. So that’s how it started for me. I was living in one of the units and I was a landlord. I was managing the unit. And I decided, you know, as I was building out my mortgage career, that this was a great way for me to build a bigger portfolio.
portfolio in real estate by continuing this process. And what’s happened now is that ⁓ because there is a shortage of housing in certain areas of where I live, they have changed the zoning to allow even more density on site. And that just makes the numbers work a whole lot better for what we’re doing.
Michelle Kesil (06:02)
Yeah, absolutely, that makes sense. And so how did you get into like the niche of the multifamily specifically like with converting them?Rob Cheszes (06:12)
yeah, so I, again, so yes, it’s, it’s, I was, almost, I was living in one of them. I was, I was, said, I was like a tenant and then I became a land, landlord like that. and you know, it’s, it’s how I, it’s how I got started. I understood the process and then, you know, looking at different sites, of course, you know, with,With other people and what you know, it was a big part of it. Also, I would say from getting started was also Educating myself. So, you know learning from podcasts like this Going, know with joining different investor groups or investor clubs You know my local realtor too. That was investor focused would take us on property tours and Explain to us, you know, you know how the numbers work or how how the units are laid out?
and really got to learn what people wanted as far as layout goes, what worked, what didn’t work. And that way, you know learning how you can build out these units in a way that is competitive and what the customer wants.
Michelle Kesil (07:18)
Yeah, absolutely, that’s important to know your market and know what is needed from the customers in that market.Rob Cheszes (07:27)
for sure.Michelle Kesil (07:28)
So what do you feel are some main keys that made the biggest difference in allowing your business to be able to grow and run smoothly?Rob Cheszes (07:37)
I would say investing in systems. So investing in systems that allow you not to react, but to be, you know, proactive and having, you know, the right people in place when, things go wrong or when there’s, you know, issues or maintenance issues at the properties, you know, having, you know, a system in place for, for what to, for, for what to do is really, I think the, the difference maker.Michelle Kesil (08:03)
Yeah, absolutely. Can you expand on what some of those systems look like for you?Rob Cheszes (08:07)
For sure. mean, so, you know, we invest in, you know, we have… ⁓Sorry, we invest in certain software for communicating with tenants for maintenance issues. We have also a team that would look after those types of things that would also be logged into that. So there’s a way to disseminate the information and deal with tenants you know that sort of allow you to scale while not being bogged down all the time by calls that can be handled
in many cases through other communication tool or directly with the service provider that you sort of adding friction by just being in the middle of that. And it’s not, I would say it’s not your best use of time. So that’s one of the ways that we would help that. And then again, then it’s just also using other tools to source our
our properties. So if we are working with Realtor at the same time or we’re looking ourselves at different markets, we’re going to you know use some other tools as far as zone maps and so forth. We’re going to look at different software that we can to help us understand what can be built on those sites.
Michelle Kesil (10:02)
Yeah, absolutely. And what do you feel has been like the biggest hurdle or challenge that you’ve experienced them as you’re in this process and creating new structures?Rob Cheszes (10:15)
so getting getting the right trades, you know working together has been a challenge sometimes. I mean, it’s you know material costs, you know have been steadily going up over time So making sure that your your budget affords that but I would say, know Some the some of the challenges have been you know, getting the trades to work there on time. There’s been obviously a lot of competition in the market. and that you know makes makes things harder forfinding the right trades to work on your projects. So you really have to have from a construction point of view a very good running plan that people are not waiting around where there’s gaps in the timelines of getting things done.
Michelle Kesil (11:03)
Yeah, absolutely. That makes sense. So what are you most focused on solving or scaling to next in your business?Rob Cheszes (11:12)
I would say probably scaling up into, you know, it’s just, I would say it’s scaling up maybe in slightly larger sites that are building between, you know, 10 and 20 units would be ideal. But then again, then you’re getting into a different, you know, category of construction build.and then also the, the numbers are just a lot higher. So you have to, you know, you have to have, deeper pockets or, you know, a better investor pool in order to, to, to pull that off.
Michelle Kesil (11:46)
Yeah, absolutely. So what are you kind of like hoping for? As far as like business growth, is there any like goals that you have that you would like to hit for the coming year?Rob Cheszes (12:00)
so I think so right now, you know, I think we would like to, for the coming year, we would like to probably, you know, raise our count of, you know, if we, if we can of, finding, you know, decent sites that, that, are going to work out from a, from a point of view. So, you know, one of our goals, I think is to, you know, add.probably say another 20 units to the market over let’s say right now we have about three projects in the pipeline so if we doubled that that would get us there so yeah you know always looking to you know look for different sites or talk to different investors that may want to come along with us on that that journey.
Michelle Kesil (12:47)
Definitely. So when you mention like working with investors, what is that partnership look like?Rob Cheszes (12:54)
Ultimately, ⁓ the investors are generally passive partners for us.You know, we obviously, you know, they’re there. think they’re interested. They’re, you know, attracted by diversifying their portfolio, finding something that’s very stable, that has a clear, you know, exit to to profit to profit to profitability. And I think that’s, you know, we demonstrate that through through the projects that we’ve that we’ve done. So, you know, working with investors, you know, has been has been very
good. you know, again, it really comes down to the communication. You know, as long as they’re, you know, feeling like that the reporting is there, that they’re getting the communication, that things are moving along, they’re satisfied.
Michelle Kesil (14:31)
Yeah, absolutely. Can you share maybe an example of a moment in your business where you had to pivot or make a big change and now looking back you can kind of see the lesson on why that happened.Rob Cheszes (14:44)
where I had to pivot or make a big change.Yeah, I don’t know that there, there, I don’t really know that there was a time, you know, when I was saying when I was making a big, a big change or a pivot, you know, ultimately I think, ultimately I think that, you know, there were certain,
certain projects that we looked at, that we started initial consultations going down the road, that we felt were going to be tied up with the city or so forth, where they required some zoning changes or so forth. And we thought that we could get through them in a short amount of time and realize that a few months in that it was really not going to take that long. so I think
think, you know, it’s sort of learning along the way that…
You have to find the right people that you can trust as far as people working with you that you find that are not going to sugarcoat it. And then you’re kind of relying on these assumptions. I would say, yeah, I would say if anything, the only real difference that I’ve learned is that try to look for sites that are already clear.
that have clear zoning that we can actually make an impact hitting the ground running.
Michelle Kesil (16:14)
Yeah, absolutely, that makes sense. You mentioned that underwriting is something that’s really important for your business. Can you expand on what that looks like for you and your journey?Rob Cheszes (16:25)
so…What so so yeah, so of course so so we you know, for our underwriting you know, we definitely we obviously have to start with you know What what we what we expect the market to actually bear as far as rents go because we are in the you know constructing rental units for this type of market and so, you know, we’re we’re looking at that from a you know, We do we we start there from the research, you know from the neighborhood and so forth where we feel that the rents are actually going to be
We also then determine how to structure then the units, how many bedrooms and so forth that would make it worthwhile. And then from there, our underwriting is going to be basically looking at…
what sort of projections that we’re going to have from a cost basis and then look at ultimately what the value is that we can determine and decide if it’s going to
if it’s going to be a clear exit and what kind of return we can offer our investors. So if it’s not clear cut, if it’s not, you know, looking that attractive, then we’re not going to go forward. So we definitely do a lot more analysis ⁓ than just get, you know, then then building.
Michelle Kesil (17:47)
Yeah, absolutely. Are you finding that there’s certain like market trends in your area right now?Rob Cheszes (17:55)
just that, you know, that the, the, the high rise segment, you know, is not successful today. It’s not very, you know, active from an investor point of view. Most people, you know, where the attractive, where, where, the attractive, investments are taking places in this sort of missing middle,category here and I think the cities have caught on to that and are now upzoning the areas on major streets, transit oriented areas as well where they’re upzoning it, allowing for greater density along these main streets and that’s where we see the biggest changes.
Michelle Kesil (18:38)
Yeah, definitely that makes sense. so what kind of, because you mentioned that there’s a lot of like zoning changes allowed, like how does that kind of like shift the market and the landscape?Rob Cheszes (18:50)
Well, it just adds a lot more value to the actual sites because now that you can build more on that site, you can essentially increase the value of that land, of that property. So that’s one of the biggest changes there. it’s allowing the…it’s allowing people to stay in the area in many cases where if they’re downsizing or moving out, they wouldn’t have many options of staying in the same area that they actually have been living and working in. So we’re creating units that are in their neighborhoods, we’re just adding more density to these vibrant neighborhoods.
Michelle Kesil (19:41)
Yeah, absolutely. That’s exciting for the community.Rob Cheszes (19:48)
For sure.Michelle Kesil (19:49)
Awesome. So before we wrap up here, if someone wants to reach out, connect, learn more about what you’re up to, where can people find you and connect with you?Rob Cheszes (19:53)
Yes.Yes, so they can reach us. You can reach me on LinkedIn. You share my bio as well. You can see me on Instagram as my handle is robcmortgagebroker. You can see my content there, of course. And we post also what projects we have under name, under brilliant investor.
score.
Michelle Kesil (20:26)
Perfect. Well, I appreciate your time, your story, and your perspective. Thank you so much for being here.Rob Cheszes (20:33)
Thanks a lot. Appreciate it, Michelle.Michelle Kesil (20:35)
course and for the listeners tuning in, if you got value, make sure you have subscribed. We have more conversations with operators like Rob who are building real businesses and we will see you on the next episode.
