Why Co-living is About to Explode in Toronto

Andrew La Fleur:
Co-living is about to explode in Toronto, and here is why. Find out on today’s episode.

Speaker 1:
Welcome to the True Condos Podcast with Andrew La Fleur, the place to get the truth on the Toronto condo market, and condo investing in Toronto.

Andrew La Fleur:
Hi, and welcome back to the show. Andrew La Fleur here. Very excited to bring you today an interview, an update of sorts with Roman Bodnarchuk. Roman was on the podcast previously, about a year ago or so when he was getting things started on his new venture.

Andrew La Fleur:
Roman is a veteran in the Toronto real estate world. If you’re in the sales and marketing world of Toronto real estate, you probably know Roman. But he does a lot of different interesting things, and his latest venture is into co-living.

Andrew La Fleur:
Co-living is obviously a massive trend. If you’re not aware, maybe you’ve been living under a rock, real estate world rock. You’ve been living under a rock in the real estate world, I should say, and you’re not familiar with it, but probably you are. You’ve heard of it, at least. Similar to the co-working phenomena, co-living is now taking off like crazy around the world.

Andrew La Fleur:
It’s here in the Toronto, and Roman is one of the key players who’s bringing co-living here in Toronto, and he’s been very successful with it so far. It’s very interesting to hear his passion, and where he’s coming from, and how excited he is about the potential of this business for him, but just the potential in general of this business across Canada, and specifically here in Toronto.

Andrew La Fleur:
Yeah, so that’s about it. Looking forward to sharing this with you. Without further delay, here is my interview with Roman Bodnarchuk.

Andrew La Fleur:
Roman, welcome back.

Roman:
Thank you, Andrew.

Andrew La Fleur:
Good to have you again here on the show. When we talked last time, we heard a little bit about your story, in real estate, in different things. But I think the focus of our talk was around co-living, was it last year, I think? It must have been. Maybe less than a year ago, we spoke, but a lot has changed in the landscape of co-living in the real estate world, and a lot has changed with you, obviously, personally and your business.

Andrew La Fleur:
I thought it would be great to have you back on the show again, get an update from somebody who’s in the business, on the ground, doing this thing known as co-living, which again, you’re living and breathing it. For most people, I think it’s a new concept. Let’s maybe start there, refresher. What is co-living, why is it a big deal? Is this a flash in the pan thing, or is this actually a major new trend? What is co-living exactly?

Roman:
Co-living is the way we lived for the last 1,000 years, families lived together. What we’ve done successfully over the last number of decades is convinced people to live alone, so we separated parents and grandparents, and we had everyone buy their own condo. We did that really successfully, so now people buy another refrigerator, another car, another toaster. Economically, it made a lot of sense.

Roman:
The downside of what we did was we made people unhappy, and we have the epidemic of loneliness and really unhappy people. For those that haven’t really researched this, loneliness is a bigger killer than, for example cigarettes. It’s healthier if you just smoke 15 cigarettes a day than be lonely. It’s a major issue. It’s one of those things that people don’t talk about.

Roman:
But one thing that you might relate to, Andrew, when I talk to people that lived in a condo for many years, I’ll say to them, “Hey have you made any friends on your floor?” They’ll look at me funny. I’ll say, “Can you give me three names of people you know on your floor?” They’re like, “I know bill.” “Oh great, what’s Bill’s last name?” “I don’t know.” “Have you ever been to Bill’s condo?” “No.” “Has Bill ever been to your condo?” “No.” “If there’s an emergency, could you reach Bill? Do you have his cell number?” “No.” These are people there for five years.

Andrew La Fleur:
They’re living like six feet away from them.

Roman:
Yeah. I’ve had this discussion.

Andrew La Fleur:
Interesting.

Roman:
We’ve done 150 projects, 20 years, around the world, it’s the same conversation. No one knows their neighbour. It’s really sad. I spend 20 years …

Andrew La Fleur:
That’s one of the reasons why people are attracted to condominium living especially. That’s one of the reasons people give is, “I want to be in community,” is the buzz word. But when people actually lived it, like you say, you ask anybody who lives in a condo, 95% of them, “How’s your community experience?”

Roman:
It’s brutal.

Andrew La Fleur:
Like you said the answer is, “There is no community experience. I don’t know anybody in the building.”

Roman:
There is no community experience. It’s weird.

Roman:
I spent 20 years working with the best developers in the world, designing the best common areas, the best party rooms, and they’re all empty. No one uses them.

Andrew La Fleur:
Yeah. The community is always the buzz word in every brochure.

Roman:
But it doesn’t work. What we’ve learned is even if you have a beautiful community amenity down the hall, they won’t even leave their unit and walk down the hall and use it. It’s really, really weird.

Roman:
But here’s what we do know though, here’s the good news. The good news is if you think about how families have evolved for thousands of years, when you put a family … Now a family could be a modern family, like now it could be three strangers living together. If they’re in the same, they’re sharing kitchen they’re sharing some common areas, they call this collision. They start colliding into each other, they start having conversations, they start having a community.

Roman:
Let me tell you what’s happened since we last talked. We spent a year designing something that no one thought was going to work. We designed this really cools space, four bedrooms, four strangers living in one unit on two levels. Well, no one believed that they would pay us $2,000 a month to live in a room in a shared space. People thought we were crazy.

Andrew La Fleur:
Yeah, that’s obviously one of the big questions is that I have, I’m going to be skeptic of co-living here today on behalf of the listeners, not aware of this and just you ask you, yeah like, how are you … What kind of rents are you getting, and how are you getting … Why are people paying you this amount of money to live there when they can just fill in the blank, live somewhere else for this price?

Roman:
What we learned, and we opened April 23rd, by the 29th, we had 39 people pay us deposits to live in four rooms. Obviously that was a little bit excessive demand, so we realized needed to get another property very quickly.

Roman:
Very quickly, we learned there is a tremendous need for a lease that’s under 12 months. The vast majority of people don’t actually have salary jobs. The majority of all of the jobs that you hear about, these are all contract. Most people have contract, six months, eight months, nine months. Whatever, it’s a contract.

Roman:
Number two, these stats about the 100,000 people coming here every year, it’s actually happening. When they hire these people, they are getting contracts. Imagine you came in from any country. It could be U.S., or anywhere else. Now are you really going to look for a 12 month unfurnished lease? Do you really want to go furnish that place? You don’t even know if you’re going to be here next year.

Roman:
There’s a massive need for furnished rentals with flexible leases. When I mean flexible, a six moth minimum. I’m not talking about weekly. This is not Airbnb, but even a six, this does not exist. The inventory of furnished places with leases under a year does not exist.

Roman:
If we did nothing else, Andrew, we would be incredibly successful. When we’re able to bring the price point under $2,000, like ours start at 1750, oh my gosh, because at 1750, you’re basically living in a basement apartment somewhere really gross, far, far away, maybe in Scarborough. It’s not beside transit, it’s not eight minutes from Union Station, it’s not in a cool trendy neighborhood.

Andrew La Fleur:
It’s not furnished.

Roman:
It’s not furnished, and you’re paying utilities, and your Netflix, and you got to find a cleaner. If you find a cleaner, you better speak Ukrainian or Portuguese fluently, and you better leave cash at the table or they’ll never come back. It’s really hard. What people don’t realize is how much work it is, even if you’re from Toronto to go furnish a place.

Roman:
My favourite example is the blinds. They go, “Oh, that’s easy.” Well, no. You go to Blinds To Go, you got to go there, and there’s 60 different ones to choose from, and then it takes a day for them send someone to go measure, and you got to spend a whole day waiting for them, and they don’t speak English. Then you got to go back to Blinds To Go, and you got to go figure out which ones to buy. Then after that, you got to wait two weeks, and then you’re going to spend a whole day waiting. That wastes days.

Andrew La Fleur:
Just for one thing.

Roman:
That’s one of the 20 items.

Roman:
We’ve calculated, it takes about 14 to outfit a place. Who has that time? If you just got hired on a job, you’re not going to go tell your employer, “Sorry the next couple weeks, I’m out of commissions. I’m going to sit around [crosstalk 00:08:42] waiting for a delivery.”

Andrew La Fleur:
Set up my apartment, yeah.

Roman:
Then I don’t if you’ve actually assembled anything of things from Structube or Ikea, oh my gosh, Andrew. First of all, you have to have an engineering degree, and you have to have enormous amount of time just to put your furniture together. None of this is fun. Our demographic doesn’t want to do it.

Roman:
What we give them is a beautiful furnished place designed by an interior designer. It looks completely Instagrammable, they’re super happy, and they don’t have to spend two hours on the phone with Rogers, they don’t have to spend two hours a day with Ontario Hydro, and Enridge, and all these fun utilities to deal with, because they’re a nightmare.

Roman:
What we found is A) people are wiling to give up privacy, and they’re willing to live with other people that are cool and fun. As long as we’ve done our right screening, and what we’ve learned is they’re super happy. Yesterday, Yahoo Finance did a story about us, and they interviewed. They did a video of one of our members. Mark is 51 years old, he’s very successful, he has a big budget Netflix show. Mark can live wherever he wants. He’s lived in Toronto for two years. His quote was he’s met more people in two weeks at Sociably Living than he did in two years living in Toronto.

Roman:
One of our tenants is Tanya. She’s an eye surgeon from Australia. She’s incredible. This is a very beautiful, attractive woman that really would have no problem meeting people. She met no one her first year. She lives in her beautiful condo at Charlotte and King, but was here for a year, met nobody.

Roman:
This is the reality of living in Toronto is tough. It’s hard enough if you’re from here, but if you come here from another place, it’s hard to meet people. Mark says on his quote on Yahoo Finance yesterday, “This place changed my life. Not only did I meet more people in two weeks than I did in two years,” but from a social perspective, he made a best friend, he’s got this girl friend, he’s got this new career opportunities. He said literally, “It’s changed my life.”

Roman:
The interviewer is trying to ask negative questions like, “Well what are the cons of co-living?” He’s like, “Well, if you have kids, it might be a challenge.” He goes, “But I would live here forever. I would never go back.”

Roman:
What’s happening is when you live in a small community of tight, really like-minded people, it’s amazing. When you come home, you’re looking forward to coming home, and you’ve got some interesting conversations. Like last night, we had a little dinner party. We do them every week. When you’ve got five or different people from different countries, you have the most interesting conversations.

Andrew La Fleur:
I bet, yeah.

Roman:
When I have conversations with my friends, we all have the same perspective.

Andrew La Fleur:
It’s people who are motivated, are there because they want to meet people. Like your name, Sociable Living is your name. Obviously it’s for people who want to meet people.

Roman:
Absolutely.

Andrew La Fleur:
That’s who it’s attracting. You might say, “Well who want to live there? Who wants to live with somebody else?” Well it might not be attractive for you, but it’s very attractive for some people. It works because they want it to work.

Roman:
They want it to work.

Andrew La Fleur:
Does that make sense?

Roman:
The sense of community is missing. People used to go to churches, they used to belong to bowling leagues. All that’s ended. Now you see this huge movement to things like yoga, and Pilates. Really what happens, we’ve replaced churches with yoga classes, where somebody preaches at you, they put some candles, they talk to you for an hour.

Roman:
This is why WeWork is $100 billion company. People don’t want to work from home. It sounds really glamorous, until you do it for two days and you’re like, “I’m lonely. I want to meet somebody.” This is why WeWork is so successful. Any time we can create a real sense of community, this is what’s missing.

Roman:
Look, our sheets are hotel style sheets, we got granite counters, we have beautiful furniture, but that’s now why they love Sociable Living. It’s about the people. You’re right, we’re attracting like-minded people, and they’re meeting their partners, they’re meeting their co-founder in their next company.

Roman:
For example, Mark from the Netflix guy, his roommate owns eight restaurants. He has a really successful restaurant brand that he just started. Their roommate is from Francois. Francois moved from France, two weeks later we have a birthday party for Francois. Now Francois came, he knew nobody. He’s an app developer. Two weeks later he has 25 of the coolest people you’ve ever seen at his rooftop birthday party. For any of us that are from here, we don’t have 25 cool people at our birthday parties. This is what Sociable Living is.

Roman:
The reason I want to talk to you, Andrew, is we are in desperate need of three bedroom and four bedroom town homes. We really like townhomes because it feels like a natural home. You don’t here about people pulling fire alarms all the time, you don’t hear about all these crazy stories, elevators aren’t breaking. We love the idea of a real home, and we’re creating these modern families.

Roman:
Literally, within weeks, this is what’s happening. It takes 90 hours to make a friend, it takes 200 hours to make a best friend. That’s why most of our friends are from we were kids. As an adult, it’s really, really …

Andrew La Fleur:
Right, you have less and less time.

Roman:
Less time. It takes 67 interactions to make a friend. Who has 67? Unless you’re a golfer every week, who has that time?

Roman:
What’s happening in our community is we’re creating real friendships. This is not about oh we got a gym, we have a cool pool. No, every condo in the city has that. You end up with incredible relationships, and that’s what life’s about, that’s what you … Ask people about happiness, it’s about the core of their relationships, that’s what were giving to people.

Roman:
The rent at 1750, it’s cheaper than living on your own because we cover everything from the cleaning, to the utilities, to your Netflix account, to Amazon. Everything is included, so it’s cheaper, but that’s not why they’re with us. They’re with us because it’s way more fun to live at Sociable Living.

Andrew La Fleur:
You just have a little bit of passion about this subject. I can tell.

Roman:
Andrew, I had no idea [crosstalk 00:14:12] that we were going to impact people lives.

Andrew La Fleur:
That’s what I want to ask you.

Roman:
I had no idea this is going to happen.

Andrew La Fleur:
When we talked last year, I feel like the conversation was more around more the numbers side of it, and just this is a response to the affordability crisis. It’s more of a pragmatic approach to an interesting take on real estate investing, and an interesting business. But now, obviously I can really tell it’s really driven by the human side of it, the social side of it, and just …

Roman:
The stories, Andrew, that we hear every day, you come to one of our events …

Andrew La Fleur:
What has surprised you the most …

Roman:
Two things.

Andrew La Fleur:
… about this whole adventure…

Roman:
The caliber of our tenants. We have I think five or six doctors, we have surgeons, we have WestJet pilots.

Andrew La Fleur:
That would be the main, and we would think, “Okay 1700, 1800, 1900 a room to live in these places. It must be all students.”

Roman:
Right.

Andrew La Fleur:
It must be all 22 year olds.

Roman:
Our youngest is I think 24. Mike came from Philadelphia. He’s a tech guy. He’s our youngest, and it goes up to 50, 51. But we have really incredibly successful, really smart people. What they’re looking for is convenience. They have …

Roman:
Some of these doctors are working 16-hour days. The reason we now have dry cleaning in our room, like a hotel does, is one of the doctors said, “I haven’t been to the dry cleaners in six months.” I said, “What do you mean?” “Well, I leave before 7:00, I come after 9:00. I can’t get to a dry cleaners.” I was like, “Okay, we got dry cleaning. For the same price as you going to the store, we now do it in you residence.”

Roman:
It’s a convenience that they’re looking for, but it’s the sense of community because again, moving to Toronto, this is not the most friendly city in the world. It’s hard to make friends, it’s hard to meet people, so we give them an instant fun lifestyle. I think that’s what’s working.

Roman:
What surprised me most is the demand is insatiable. Number two, the quality of the tenants. The kind of professionals we’re meeting everyday blows my mind. It’s really amazing. For the skeptics, I would say you have to come see one of these places to understand how powerful it is.

Andrew La Fleur:
Relatively small sample size I guess so far, but what percentage of your tenants are coning to you from an affordability side? I’m coming to you to find a place because you’re cheaper than any alternative, versus how many are coming to you because of the social side? I actually can afford something much more expensive, but I actually just want to meet people and live with people.

Roman:
I think most people are coming for an affordability. They’re looking at there’s something under $2,000 a month, and the pictures look beautiful. Then they discover, what’s co-living? Oh, we have events every week? How does this work?

Roman:
I think that we’re drawing …

Andrew La Fleur:
The price is the initial draw …

Roman:
It’s the initial draw.

Andrew La Fleur:
… for most people.

Roman:
But the reason they’re staying and virtually all of our tenants now have referred new members, which is incredible.

Roman:
I’ve been renting places, [crosstalk 00:17:15] buying it since I was 14.

Andrew La Fleur:
So they want their friends live there too.

Roman:
But Andrew, I’ve never seen this. I’ve never seen tenants actual refer other … This is a new phenomenon. Virtually all of our new members are coming from our existing members. It’s extraordinary because they want like-minded people, they really want … They become evangelists. I’m telling you, Andrew, if we offered tattoos, people would tattoo Sociable Living on themselves. The brand that we built so quickly, it’s amazing. It’s because we’re doing something that no one else is doing.

Roman:
Most landlord, a tenant things, they hate each other. You email your landlord and it’s like they don’t want to hear from you.

Andrew La Fleur:
It’s adversarial …

Roman:
It’s adversarial.

Andrew La Fleur:
… by nature.

Roman:
This is like running a Four Seasons. When you go to a Four Seasons/Ritz-Carlton, they never say no to you. That’s our culture. We’re running a hospitality brand in a residential real estate space. It’s a very different atmosphere than a typical landlord-tenant experience.

Andrew La Fleur:
Talk to me about the demand. You said your initial thing was you leased out everything in six days. How does it work? You have a massive waiting list? Because there’s turnover too. People are staying. We’re early days, but I assume people, you will start to get turnover after six months, I’m guessing.

Roman:
Correct. It hasn’t happened yet. So far, everybody’s extended, but we have 60 members already. My initial forecast I thought we would support 100 townhomes. Right now, we feel very confident that over the next 12 months we could support 500 just in one area, just in the Junction Triangle.

Roman:
The reason is, we have this perfect transit situation where you walk out of our townhome, and in 30 seconds you hit with your Presto pass, and you walk onto a GO train. In eight minutes, you’re at Union. Once people have done that they’re like, “Why would I travel any other away.” Or if you missed the GO, you cross the tracks and you get on the UP Express. You pay an extra $2, so instead of $3.70, you pay $5.40, but you’re at Union in eight minutes.

Roman:
It’s the ultimate … This is the biggest secret in Toronto. Once you’ve done it, you’ll never go back. Why would I want to go through half an hour of traffic or 40 minutes of traffic if I can do it eight minutes?

Roman:
Just in the Junction Triangle, we believe we can have 500. The challenge is we need help, we need inventory. We’re looking for people that have three bedroom, four bedroom homes, and really want a hassle free relationship where for the next five, 10, 15 years, we will do all the work. They’re going to get above market rents, and they’ll be very proud of what they’re doing.

Andrew La Fleur:
We were talking about this before we hit Record, but what is your offer exactly to the investor who has a three bedroom place? It’s a very attractive offer, actually.

Roman:
Whatever the market rent is, we are paying a premium to the market. Typically, it’s up to 5%. We make sure that we’re always paying you a premium to what market rents is, which I think is pretty amazing. Because we’re in the units every week, we’re maintaining it, we have our cleaners. Your property will never look better. It will never be taken care of better than we are.

Roman:
What damages properties is the moving in, moving out. Because we own all the furniture, we do all the upgrades ourselves, the humans might move in or out, but the stuff isn’t. That’s where all the damage is. Your property will maintain better than you could probably do it yourself because we got professional people. This is their job, to maintain your property. The tenants, we do not just the credit checks, but the criminal checks. We use AI to do the all the personality stuff. It’s harder to get into Sociable Living now.

Andrew La Fleur:
You put people through personality tests and stuff? You profile people?

Roman:
Yes. How do it …

Andrew La Fleur:
How do you match? Do you try to match people up who are similar ages, similar professions? How do you do it?

Roman:
We use AI. So AI reads every social media post that you have ever done in your entire life on every platform, and it reads it literally within minutes. It gives us the most accurate view of your personality of any survey we’ve ever seen. We overlay that with your two potential roommates to see if you guys are going to get along.

Roman:
We found that tool to be unbelievably successful. Only so far in one case, we’ve had to move somebody. But literally, if you say, “Hey I don’t really like that person,” great, within 24 hours because of where we are, we can make that move. Then they’re super happy. Between …

Andrew La Fleur:
That’s a good point too because that’s another major point of friction for the traditional rental model is you sign a lease, and [crosstalk 00:21:34] you really don’t know if you’re going to like it.

Roman:
You’re stuck.

Andrew La Fleur:
You don’t know who’s living above you and stuff until you move in, right?

Roman:
Right.

Andrew La Fleur:
How many stories have you heard of people move into a place, they thought it was amazing on paper, and it just for whatever reason it’s like living hell for them, but they’re locked into a 12-month lease.

Roman:
They’re lock in.

Andrew La Fleur:
With your service, it’s like, “Well sure, sign me. I’ll go in there. Worst-case I leave in six months. Best-case, if I don’t like … You can just move me,” like you said, to another room in another unit next week, or whatever.

Roman:
Within 24 hours, we’re able to do it, and it’s worked out great.

Andrew La Fleur:
That’s a very great attractive proposition [crosstalk 00:22:08] for the tenant.

Roman:
I think it’s huge. It gives people freedom.

Andrew La Fleur:
They’re willing to pay a little bit for that piece of mind.

Roman:
It gives you piece of mind, freedom, and then our next community will be in Miami. In the winter, we’re doing another townhome community in Miami. Imagine the flexibility of saying, “Hmm maybe I want to spend three moths, or six months at the Miami townhomes.” Try that with an existing landlord in Toronto.

Roman:
Even REITs that have 10,000 or 20,000 units, you can’t even switch in their building, never mind to another one of their buildings.

Andrew La Fleur:
That’s what I mean. Yeah.

Roman:
This gives you …

Andrew La Fleur:
Switching is very difficult. Moving is very difficult.

Roman:
Imagine moving when you’re moving your two cases. Again, because we’re running everything, all you need to do is bring your clothes with you. Moving is really, really easy.

Roman:
Our job is to make our member’s lives easier. It’s from a social perspective, and we’re looking at new innovations. We’re excited about we’re testing these new bedside tables from Ikea, where it has a built in Sonos speaker into it’s a bed light, it has Alexa. Our job is to make sure we are thinking about every possible thing to make your life more fun, better.

Roman:
A lot of landlords aren’t thinking every day about how do I make my tenant’s life more fun. That’s all we think about.

Andrew La Fleur:
And to make you not want to leave. It’s obviously in your best interest to get people to stay longer, [crosstalk 00:23:27] and longer.

Roman:
That’s right. That’s right.

Roman:
When we think about the housing issue in Toronto, what we have is an issue with zoning bylaws, and that’s really our issue. We have enough beds for everybody, we have enough housing for everybody. It’s our zoning doesn’t allow it.

Roman:
What we’re looking for and what’s great about the three bed scenario, [crosstalk 00:23:45] there’s no zoning issues at three beds.

Andrew La Fleur:
Yeah, do you have any …

Andrew La Fleur:
I was going to … Yeah. That’s just … Yeah.

Roman:
Once you get past three, there’s rooming house issues, [crosstalk 00:23:50] but anyone that has a three bed townhouse, a three bed home, we have absolutely no issues with.

Andrew La Fleur:
I see.

Roman:
We’ve integrated really well. In a townhome community we’re in there’s 78 townhomes. We’re only 20, but we have made friends with the other people. They love us. There could be a great young family right next door, and we’ll invite them out to our wine and cheese events. It’s a great integration of a community.

Andrew La Fleur:
Where do you have these? I see it on the social media you’re posting these pictures of these fun looking parties and stuff. Are they held in one person’s unit that day? Or do you have a common area? How does that work?

Roman:
Every week, we switch up. We have number of townhomes and they all have rooftop patios. Every week, we’re switching it up.

Roman:
But in addition to our own events, we take part in a lot of community events. Down the street from us, every Wednesday [inaudible 00:24:39] this outdoor movie theatre, but it’s really cool. They got these food trucks, you have these drinks.

Andrew La Fleur:
Just invite everybody to go.

Roman:
Everyone comes.

Andrew La Fleur:
Then 10 peoples shows up or whatever.

Roman:
We’re heavily investing in the community events because it’s all about the community.

Roman:
Now our own private events are done every week at our … We have the number one Pilates instructor now just moved into Sociable Living. She’ll be doing Pilates. We have an incredible yogi from India that does yoga classes for us every Saturday at 7:00 a.m.

Roman:
Even within our own little network, we’re bringing the most amazing things. This month, we’re introducing all kinds of cool cooking things. We’ve got some great guys from France that are just passionate about cook. Everyone has their skillset. We got some people that are really good at guitar, and they’re teaching other members. This stuff’s actually happening naturally.

Roman:
So 70% of our events are happening organically. We have a neat chat platform that we use. Yes, we organize events, and we work, but 70% of the events are actually organic, they’re just happening. It’s really, really cool.

Andrew La Fleur:
What would you say to the investor, obviously mostly investors listening to this right now? Your message to the investor who has three bedroom units is, especially townhomes as you said, you want those units. But what would you say to the investor who is looking at his trend in general of co-living, and they’re believing in it, and seeing the momentum here, seeing the business opportunity?

Andrew La Fleur:
What would you say to somebody who is maybe debating either between giving their unit to somebody like you, and you manage it, and you do the co-living thing in their unit, and they just collect the rent every month? Or doing it themselves if you know what I mean, saying, “Well why can’t I just take my three bedroom unit and rent it by the room, and I become Socialize Living?” Or whatever they call themselves. What would you say to the individual investor from that mindset?

Roman:
First of all, I’ve learned you need about 50 beds to make this profitable. In our case, so the 20 townhomes, about 60 beds, so 50 is your breakeven. We have full-time cleaning staff, we have full-time repair people, we have full-time staff. Unless you’re going to scale it to a certain size, you’re going to lose money. That’s step one.

Roman:
Step two, think about all the people that own hotels. The people that own all the hotels, they don’t actually operate the hotels. Your Four Seasons doesn’t actually own any real estate, and either does the Hyatt and Marriott. They are operators.

Roman:
Really smart developers who have been doing this for 50 years, they’ve realized that they can own the asset, and they can let world class operators create that experience. It’s a very different business. Being a real estate investor and being a hospitality person, it’s a very different skillset.

Roman:
Now if you’ve got both abilities and it’s a full-time gig for you, great, go for it. They’ll be lots of different brands in co-living, but right now we’re the biggest, and I think we will be the … When you think about the luxury co-living, we’re going to be a global brand, and that’s what we’re aspiring to do right now.

Andrew La Fleur:
No big deal.

Roman:
No big deal. Yeah.

Andrew La Fleur:
I love it. Big goals. I’m sure you’re going to get there knowing who you are.

Andrew La Fleur:
It sounds like you would really caution the investor who’s just looking at a back of a napkin and saying, “Well, Roman. I could rent you my three bedroom for 4,000, but then you’re going to go out and rent it by the room, and you’re going to get 5,000 or whatever. Why don’t I just rent it by the room myself for 5,000?”

Andrew La Fleur:
You’re saying, “Well, there’s a lot of stuff going on behind the scenes.”

Roman:
Yeah. Look, you can do that with Airbnb. If you want to maximize that, I’d say go on Airbnb and do it yourself.

Andrew La Fleur:
Right, good point.

Roman:
Even with Airbnb, there’s great companies like Airsorted that we’ve used in properties before, where they actually change the sheets, and the towels, and they handle that, and they take an extra 15%. There’s a layer of management that has to exist because you’re going to get phone calls 24/7 about, “Hey, where my toaster? Where is the iron? Where my hair dryer?”

Andrew La Fleur:
My wi-fi is not working, or whatever.

Roman:
That’s probably the biggest one. Unless you’re ready to do that 24/7 maintenance, people don’t realize this isn’t … I guess that’s why most landlords like the 12-month unfurnished don’t think about it. This is a very different business. This is like running a hotel.

Roman:
Again, maybe if your last name is Patel and your family has run lots of hotels, great, good for you. But unless you’ve got that experience, or you grow up in that business, good luck. It’s a whole new world.

Andrew La Fleur:
You’ve designed your company from the start, obviously for scale.

Roman:
We built it for scale.

Andrew La Fleur:
How is your vision for this thing and your company that you’re building here evolved from a year ago, say to now?

Roman:
A year …

Andrew La Fleur:
It sounds like [crosstalk 00:29:27] your vision is way bigger. I don’t know, tell me.

Roman:
A year ago we thought we would have 100 units, and I believe that if we do this talk a year from now, we’ll have 1,000 units. We thought we had to own everything ourselves, and build it ourselves. We realized that’s a nightmare. When you hear about these co-living projects being announced, there’s some great ones in Canada being announced, but they’re all coming in five years. Well in five years, we’ll have 10,000 members already. By the time …

Andrew La Fleur:
Who’s the biggest player in the U.S. right now in this space? How big are they?

Roman:
There’s a great company that we like a lot called Common out of New York. They have about 800 members.

Andrew La Fleur:
Eight hundred?

Roman:
They have 800. It’s only 800 rooms.

Andrew La Fleur:
I thought you were going to say 8,000.

Roman:
Yeah, that’s the biggest one in the U.S., but there are groups coming from Europe that have just raised a billion dollars. Yesterday there was a company, just raised 10 million on $100 million evaluation.

Roman:
There is billions flowing into co-living. The smart money is betting on it. This will be bigger than co-working. Everyone that missed the WeWork, and they missed that opportunity, they’re starting to realize, “Oh, this co-living is way bigger,” so the money is coming.

Andrew La Fleur:
Why do you think it’s bigger? Why are you so confident in that statement?

Roman:
I’m so confident because everybody wants to live in the city.

Andrew La Fleur:
The WeWork think is …

Roman:
Yeah, it’s 10% of office spaces right now.

Andrew La Fleur:
Multi-billion.

Roman:
Ten percent of office spaces. The reason it’s bigger is because everyone wants to move into the urban . Not just Toronto, in every major city. Well you’ve got everybody moving from the suburbs, and all these rural areas, into the city.

Andrew La Fleur:
Massive urbanization. Not just in Canada, across the world.

Roman:
The prices are going to go completely insane. You see those videos of what’s happening in Hong Kong. They’re living in these tiny 200 square foot places. This is going to happen in Toronto. It’s already …

Roman:
I had a nanny, and she lived in a 400 square foot unit. She’s paying an insane amount of money and she had roommates in a 400 … This is not [inaudible 00:31:11]. Our units, for under 2,000 a month, you live on four levels, 1700 square feet. It’s like the Taj Mahal. It’s spectacular. At the same price as you living in some cramped little place with some roommates, this is a better way to live.

Roman:
I would say to you, co-living will probably be 20% to 25% of the urban rental market. Much, much bigger than the co-living. This is a …

Andrew La Fleur:
One out of every four or five people in cities.

Roman:
On the rental. Yeah, in cities.

Andrew La Fleur:
Renters.

Roman:
Renters [inaudible 00:31:43]. Because what I didn’t realize a year ago as I thought this was a young, this is a 25 to 30 [crosstalk 00:31:48] year … Oh my gosh, I am so wrong.

Andrew La Fleur:
Yeah, you said that before. Yeah.

Roman:
The amount of demand … We have equal demand at the 40 plus, as we do as the 20 to 30. This is not limited to the Gen Zed, this is going from millennials, up to baby boomers. It’s really, really exciting.

Andrew La Fleur:
Wow. Location is everything in real estate. What locations does this make the most sense for and what locations does it not make as much sense for? Or could it work anywhere?

Roman:
Andrew, it’s all about transit.

Roman:
Well no, I think it’s all about transit. This city is a nightmare to get around. It will always be that way.

Roman:
If you can be beside a transit stop, I think this is huge. That’s why we love the Junction Triangle. We think it’s the secret of Toronto right now. But anytime we can get beside a subway station, beside a new train station, with all of these new things being proposed, I think that my number one criteria would be on transit. That’s number one.

Roman:
Number two, we really love this townhome, this walk up model. Not forcing people to live in an apartment or a condo. All I hear are stories is …

Andrew La Fleur:
Can it work in a condo because there is a lot of three bedroom units coming.

Roman:
Coming, there’s a lot coming.

Andrew La Fleur:
Yeah, in the pipeline.

Roman:
I think it’s an option B. All I hear, Andrew, is people telling me about, “Oh my gosh, my elevator’s not working. I’m at Shangri-La, I’m on the 55th floor, and for a day, we had to walk down the floor.” These are luxury buildings that I’m hearing how they’re pulling the alarms all the time. I’m hearing these crazy stories in luxury buildings. We don’t have that in a walkup, we don’t have that in a townhome.

Roman:
Also, there is a lot of condos you know, but there’s a very few townhomes in this city. I think it’s a rare breed. I think if I was …

Andrew La Fleur:
That’s what I’m wondering, how do you scale this? You have such big vision to scale it, but there’s so few townhomes out there, and we’re building more high-rise, and less low-rise, so how do you approach that?

Roman:
The good news is, every development in the city is being approved needs at least 10% of the development is three beds. The good news is there’s a lot of inventory coming. We have a lot of three beds coming. Honestly, investors aren’t really buying three beds because they don’t how to monetize it.

Roman:
I do think there’s opportunities for really smart investors to buy 10, 20 of these three beds and do long-term deals with us. That’s the smart play.

Andrew La Fleur:
That’s something you, for the investor if they’re listening, that’s an important piece, is you don’t want to sign a one-year, two-year, three-year. You want to sign 15-year leases with these people.

Roman:
Absolutely. You want long-term. That’s why [crosstalk 00:34:22]…

Andrew La Fleur:
You’re willing to sign a 15-year lease with somebody who’s got the right unit, …

Roman:
The right property.

Andrew La Fleur:
… in the right location. The rent will go up every year, I think you said too.

Roman:
Yeah, we’ll pay above market. We’ll pay above market.

Andrew La Fleur:
Yeah, you said you’re evaluating every year.

Roman:
We evaluate every year.

Andrew La Fleur:
You will always pay them a little bit above whatever the market rate is.

Roman:
We’ll pay above market. Doesn’t matter what rent control does. We want our landlords to be super happy.

Andrew La Fleur:
Nobody’s getting locked in at today’s rates for 15 years.

Roman:
We’re not locking people in.

Andrew La Fleur:
Which is another concern.

Roman:
We’re looking for landlords that are going to grow with us, that will be multiple deals with us. We’re all finding that. We’re finding that they give us one unit, they give us another unit, they’re giving us multiple units, but I would say to you that there’s something magic about these townhomes.

Roman:
You’re right, it’s a setting of a dinosaur setting or something. It’s a very rare occurrence that you have this, but I think that if investors buy townhomes on great transportation routes, we would love to be your partner on that, we would love to work with you. We think there’s an unlimited opportunity right now in Toronto.

Andrew La Fleur:
If somebody calls you and says, “Yeah, I have this three-bedroom townhome on a transit location. I want you to rent it from me,” does it work for your business if it’s just one or two of these things in a complex? You know what I mean?

Roman:
No, we have to figure it out.

Andrew La Fleur:
You need a bunch of them in each complex.

Roman:
We do. Yeah. We’re finding these investor groups that somehow end up with 10 or …

Andrew La Fleur:
Because you got to send the cleaners, and the fixer guys in there. You don’t want them running around the whole city.

Roman:
We actually have people full-time on-site, and we have staff living in our units. We’re committing to these projects, so somehow we have to very quickly figure out how to assemble 20 units.

Roman:
Again, if an investor has a couple units, but then maybe we’ll find some other investors, but essential for us to make this work, we’re looking for about 50 beds. That’s about our breakeven for this to work.

Roman:
You have some projects, I noticed in your website, like Riverside. You have some perfect projects. If you’ve got investors that are looking for that long-term hold, and want to do a five, 10, 15-year deal, we would love to work with them on that.

Andrew La Fleur:
But a lot of this stuff is obviously pre-construction. It sounds like you need inventory now.

Roman:
We do. We do. But we’re going to be in business for a long time.

Andrew La Fleur:
You want to start building your future pipeline of inventory.

Roman:
We do. We have some purpose-built rentals, we have entire floors coming on 40-story towers. Again, we’re not completely …

Andrew La Fleur:
I guess that might be a way to make it work best in a high-rise is taking a whole floor.

Roman:
Yeah. If you have a whole floor and you can design it, input it. If you can input on how that floor functions, because we don’t need that many kitchens, we don’t need as many bathrooms, which are the most expensive parts of construction, so we are working with some purpose-built rental companies, and we’re helping design some floors. I think that’s going to be really exciting. It’ll be really fun.

Andrew La Fleur:
These people that are in your townhomes right now paying … What’s the range that people are paying?

Roman:
1750 is our least expensive, 1995 is our most expensive.

Andrew La Fleur:
Okay, does everybody have their own bathroom? Or some people do, some people don’t?

Roman:
No. So at 1995, you get your own bathroom. At 1750, you’re just sharing with one other person. The bathrooms are down the hall, so you don’t even hear them. It’s not like at a condo where you can hear the person having a shower, and their waking you up in the middle of the night.

Roman:
Again, back to the whole townhome, you’ve got more space. It’s easier to live, and I think that’s why our members are so happy. If we cram those same three people in a tiny little condo, I don’t think they’d be as happy.

Andrew La Fleur:
Even just stairs, and separation.

Roman:
Stairs, floors, all of these things add to the experience.

Andrew La Fleur:
Places to go. Yeah, so you’re not …

Roman:
Exactly, you’re not on top of each other.

Andrew La Fleur:
… on top of each other as much.

Roman:
Exactly.

Andrew La Fleur:
Interesting.

Andrew La Fleur:
Three bedrooms works. I think you were saying two bedrooms, the model doesn’t really work.

Roman:
No. We see other companies doing that too.

Andrew La Fleur:
Four bedrooms you said you’re [crosstalk 00:38:01] running into a zoning issue? Rooming house issues or something?

Roman:
Four would be ideal.

Roman:
Well in Toronto, we have these three bed plus den. In some parts of the city, we have to review the rules because some say if you have more than four beds, now you get into these rooming house … These laws are from 1921.

Roman:
We’d have to look at each particular area, but I think a four bedroom probably safe. Once you get beyond beds, now there’s all kinds of structural things you’d have to do that could be extra staircases. There could be all kinds of other things that we might have to look at. But we know for sure, three beds we don’t have any issues anywhere in this city.

Andrew La Fleur:
You’re always looking at the future, and trends and stuff, so I’m just curious whether it’s inside the co-living world or other aspects of real estate. Are there any other trends, future trend that you’ve got your eye on that you think are big things that [crosstalk 00:38:54] real estate investors need to know about?

Roman:
I think co-working is going to keep growing, and I think there’s a merger happening of co-working and co-living because all of us are working from home. We’re all doing a certain amount of work at home.

Andrew La Fleur:
Is WeWork in the co-living space as well?

Roman:
Yeah, they are. They have buildings called WeLive. There are some big players, but what they’re doing, Andrew, is they’re literally doing … There’s one being announced this week in London. They’re gonna have 720 units in a building. There’s another one called The Collective with 500 units. There’s nothing wrong with those, but we don’t think you’re building this family structure, and we really like this three people, four people living in a home. We think it’s sustainable, and we think those people are going to want to be there for a long time.

Roman:
If it’s just another building with 700 people in it …

Andrew La Fleur:
It almost turns into, back to the problem. Yeah.

Roman:
It’s back to … It looks like student housing or it looks like back to the condo thing, “Oh, we got a rooftop pool.” Well that’s great, so does every condo.

Roman:
We are not super enamored by those co-living companies that are making these big announcement because I don’t that’s a sustainable model. What we’re doing, is it’s proven for thousands of years for human history of how we like to live, this is organic.

Roman:
Maybe it’s not your spouse, or not your cousin, but in the modern family environment, you can feel just as close to somebody that was a stranger a few months ago. Again, if we take all the hassles of roommating away, like because we provide the toilet paper, and the Windex, and we clean your place. There’s nothing to fight about. When you do that, it’s amazing how strong the bonds are with people, even if they’re not related.

Andrew La Fleur:
Have there been any marriage proposals yet in the four [crosstalk 00:40:28] months [crosstalk 00:40:28]?

Roman:
Not yet. But I do predict …

Andrew La Fleur:
Any couples come together?

Roman:
I predict, Andrew, that Sociable Living will create more marriages, and create more companies than any other company.

Roman:
In my 20 years at N5R, what I’m most proud of it’s not that we sold-out 150 projects, or we sold 10,000 units, I’m most proud of the relationships that came as a result. I think about one of our project managers named Tammy, and she met a guy name Paul Tashima, and they’re now my neighbors at our Blue Mountain property, but it’s the relationships. Most of them are best friends together.

Roman:
I’m more proud of the relationship that came out of my company than actually what we built. At Sociable Living, it’s a very clear mantra. We are creating amazing relationships, and I think it’s something that’s missing in society, because spending 49 days a year staring on Instagram and Facebook, this is not helping us. But I do …

Andrew La Fleur:
Is that the 49 days?

Roman:
That’s a stat.

Andrew La Fleur:
Is that when you add up the hours spent?

Roman:
Average person, Andrew. Not some 12 year old. Average person now spends 49 days per year in total just scrolling through Facebook and Instagram. Think about how sad that is.

Andrew La Fleur:
That’s depressing, man. That’s depressing.

Roman:
Then you wonder why we have this epidemic of loneliness.

Andrew La Fleur:
That’s a nasty stat to hear.

Roman:
It’s really sad, and it’s getting worse.

Roman:
We’ve actually found a way to solve this loneliness issue. It’s a win-win for landlords, it’s a win-win for our members. It’s an exciting business to be in where everyone’s happy.

Roman:
I couldn’t be prouder of what we’ve done so far. I’d love to work with you and your investors to help us grow because we’re changing people’s lives. When you put the right people in somebody’s life, there’s no greater impact on their life.

Roman:
If you want to be health conscious, we fit you in with some health conscious people. You want to work with some startup guys, great, we’ll put you with start … We can put with the right like-minded people, and there’s nothing more powerful than that.

Andrew La Fleur:
Incredible, and you’re only four months into this thing.

Roman:
That’s right. That’s right.

Andrew La Fleur:
Imagine a few years from now.

Andrew La Fleur:
Well that’s great, Roman. If people want to contact you, reach out to you, learning more about you, what’s the best way for people to do that?

Roman:
Sociableliving.com. I’m hoping they contact you and say, “Hey, let’s go buy 10 or 20 of those units at Riverside,” or some other projects you represent.

Andrew La Fleur:
Absolutely, yeah. We’ll certainly have those conversations as well, as this thing evolves. Maybe yeah, we can start building up your pipeline for you.

Roman:
Awesome. Thank you so much. Hey, enjoy the rest of the summer.

Andrew La Fleur:
Thanks, Roman.

Roman:
Thank you, Andrew. Appreciate it.

Speaker 1:
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