GI211: Elevate Your Business and Life with Tyler Chesser

GI211: Elevate Your Business and Life with Tyler Chesser

Tyler Chesser is the Co-Founder and Managing Partner of CF Capital, a private equity real estate investment firm that focuses on acquiring and operating multifamily assets in; Kentucky, Indiana, Tennessee, and Ohio. Tyler was previously a commercial real estate broker, and holds nearly a decade of professional real estate experience.

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Announcer:
Welcome to the Global Investor Podcast, a show that focuses on helping foreign investors enter the lucrative US real estate market. Host Charles Carillo combines decades of real estate investing experience with a professional background in international banking to interview experts in all areas of US real estate investing. Now, here’s your host, Charles Carillo.

Charles:
Do you have money sitting in the stock market? And you’re worried about it or worse. You have money sitting at the bank, not keeping up with inflation. My name is Charles Carillo, founder and managing partner of Harborside Partners. And since 2006, I’ve been investing my money and my family’s money into income producing properties. These are real assets, real properties with real addresses that produce real cash flow. At Harborside Partners, we provide passive investors who love real estate with a turnkey investing solution. If you want to put your money to work in real estate, but can’t find deals, don’t have the time to get funding in. The last thing that productive people want to do is manage real estate. We find the deals. We fund the deals and we manage the tenants, the termites and the properties. Partner with us at investwithharborside.com. That’s investwithharborside.com. Go to investwithharborside.com. If you love real estate, you like the idea of passive income and believe that income producing properties will appreciate over time. Go to investwithharborside.com. That’s investwithharborside.com.

Charles:
Welcome to another episode of the Global Investors Podcast; I’m your host Charles Carillo. Today we have Tyler Chesser. He is the Co-Founder and Managing Partner of CF Capital, a private equity real estate investment firm that focuses on acquiring and operating multifamily assets in; Kentucky, Indiana, Tennessee, and Ohio. Tyler was previously a commercial real estate broker, and holds nearly a decade of professional real estate experience. So thank you so much for being on the show. Tyler,

Tyler:
Charles, it’s great to be with you. And it, it is crazy to reflect back that now it has been 10 years in this business because it’s gone by very fast. Um, but I’m excited to share with you some of my perspective and excited to learn from you as well today.

Charles:
Yeah, that’s great. It’s, it’s a much different climate in commercial real estate or real estate in general from 2013. I can tell you that.

Tyler:
Oh my, no doubt about it. I mean, totally different world. I mean, totally different world outside of real estate, but within real estate as well. I mean, obviously we’ve gone through what is probably described as the longest expansion in history in terms of the business cycle there in terms of real estate. Uh, and perhaps we’re going through a little bit of a correction right now. Maybe a lot of, bit of a correction depending on the side of the market that you’re participating in. So it is interesting now, you know, because ever since I got started in the business, which was five years post, great, great financial crisis, that’s all I heard about. And, you know, things were still really on sale in 2013, and of course they became, you know, tremendously, uh, overpriced in many respects. And now we’re seeing sort of a, a little bit of a change, uh, of the, of the tide, so to speak.

Charles:
Yeah, and it’s amazing because if we did have anything, uh, even, uh, even something a little bit resembling what happened for the, in 2008, I mean, it takes so many years for it to come back. Yes, you bought ’em out like that in the 2009 or whatever they did for property prices in 2010, but it’s, it’s just something that you just, it just takes many years to come back from it. Um, it’s like when we were coming back from Covid and you had to like turn jobs on and turn things on and hire people and, uh, you know, people were starting to spend money again. It’s, it’s, it’s crazy how long it takes. It’s not, not soft landing and then you’re back up, you know what I mean?

Tyler:
<laugh> tell, we were on a call with, with one of our property managers yesterday and, and one of our regional managers, and we were talking about, you know, any asset, you know, it’s like a cruise liner, and the same as the case for the economy at a much larger scale in the, in the marketplace. It’s a cruise liner. It does not turn on a dime. And so you’ve gotta turn the, the dials before the ship actually starts to move in a different direction. And so, you know, some of that stuff is in our control, some of it is out of our control. But it is interesting to to note that, you know, the business moves slowly, but if you’re not aware of where it’s going, you know, it can be moving in one direction without any sort of, uh, control from your end to say, well, where is it going to, where’s it going to move? But of course, there are many things in our control, and I’m sure we’ll talk about that today as well.

Charles:
So Tyler, give us a little bit, uh, of a background both personally and professionally prior to becoming a real estate broker and, uh, eventually an investor.

Tyler:
Absolutely. So I grew up middle class. Um, you know, I was always taught, go to school, get good grades, you know, get a good job and, you know, at some point right off into the sunset with your 401k and all those things, which I think most of us sort of middle class background are really taught. And you know, I think that it’s all, it all comes from a good place because that’s the information that was given to us, and that was the information that we had. And I followed that path when I got started as a professional. Uh, I started the corporate world and I was kind of climbing the corporate ladder as a marketing professional. I was actually doing international marketing for a, a Fortune 500 organization, uh, restaurant company. We were opening up the brand across many different markets across the world. I, I found it to be fascinating.

Tyler:
I really enjoyed, um, you know, that endeavor. And I was always fascinated with the psychology of business and perception of branding and positioning and really what that does in the marketplace, how you can create value there. And as I was climbing the corporate ladder, I started to recognize that the corporate America is extremely political and, you know, in, in more respects than, you know, how can I drive value? It’s how long have you been in that seat and what sort of, what sort of positioning do you have from a political standpoint within the organization and otherwise to be able to get to that next level. And that didn’t really resonate with me. And so it took me a few years to kind of wallow in that dissatisfaction, so to speak, to then make a transition ultimately. Long story short, I got into real estate. I actually started as a residential agent and was selling houses on the side.

Tyler:
And I didn’t really know anything about real estate other than I had purchased a home myself. But when I started to learn about real estate, I then sort of put this one foot in the door and I looked around and said, wait a minute, real estate is not just single family homes, it’s all of these other things. And as I started to learn about that, that’s when I started to get really fascinated with the possibility of investment real estate and commercial real estate in particular. So I quickly transitioned to commercial real estate as a broker and, you know, built my business and built my understanding of the marketplace through that, through serving other clients and other investors. And I learned so much in that experience, but I then also learned that, you know what, there was so much that I didn’t know. So I needed to go out there and get educated, uh, to be able to serve my clients at the highest degree.

Tyler:
Went out and got my C C I M designation, which is kind of the PhD of commercial real estate, and learned all about the ins and the outs of evaluating and mitigating risk, um, and implementing a business plan to achieve a certain outcome through an asset. And as I started to learn this stuff, I had then started to learn about, well, wait a minute, I’m selling these assets, but you know, I’m not utilizing these assets for really what they can be for me personally and for the people that I care about. You know, of course I was still working for money, I was still selling deals and creating commissions, and of course I had, you know, expanded my income significantly since I exited the corporate world. But I was still sort of working in the rat race. And I, you know, I learned a lot about just personal financial intelligence throughout this time, you know, reading books and surrounding myself with other great people like yourself and listening to great podcasts and, you know, surrounding myself with mentors.

Tyler:
And ultimately, I decided to make my first investment in real estate about seven years ago. And it was an eight unit, uh, apartment building. And it was a, what I thought was a value add. It was actually much more of a distressed type of asset. You know, it was, uh, made a lot of mistakes in that deal. And ultimately, I think in many regards, if I were to look back, I’d say the, the market probably bailed me out about three years later. I exited for significant profit. Um, but you know, along the way I, I experienced negative cash flow. I experienced, you know, challenges with management. I experienced challenges with renovations and the tenant base and all of those different things. Um, so that was my first foray. And it was challenging, but it was also successful, thankfully.

Charles:
What, um, you know, you had those issues, what would you attribute to ’em? I mean, did you just not, were they not in a great area? What were the major problems with it? Did you just, I mean, if you, from now you’re looking back, you made money, um, and obviously the market helped everybody do that over the last few years, but like how, you know, what would you pinpoint as the mistakes you made with that property from say, purchasing it to ultimately selling it and managing it?

Tyler:
So I knew exactly how to transact commercial real estate. I had done it hundreds of times to that point. And, you know, I was, my business was extremely successful, and on paper, I understood the mechanisms of the investments, right? And I could advise and I could negotiate and I could, you know, transact these deals and put together great deals. But what I didn’t understand was some of the reality behind these investments and, you know, in, in a book versus reality, it’s vastly different, right? And, and you need both, right? You need street smarts, you need book smarts to be successful as a commercial real estate investor. As a real estate investor in general. And I think that I was just naive to many aspects of the business. I was naive to the fact that, you know, what is on paper in terms of a rent role is certainly, you know, it’s possible that that is, uh, reflective in reality, but it’s also possible that it’s completely not So doing your due diligence to understand what’s the viability and the risk within the tenant base or the rent role of the asset that you’re investing in.

Tyler:
You know, like as an example, when I bought this asset, I was surprised to recognize, you know, very quickly that about 50% of the 100% occupied tenant base was not paying rent. And that was shocking to me. You know, I grew up in a middle class background and you know, we didn’t have tremendous resources, but we always had this thought process of, you know, you, you do what you say you’re gonna do, and, uh, if you sign a lease or if you, you know, you, you have a credit card, you’re gonna pay that bill. And that’s just kind of how the world was when I, I grew up. And, you know, I was just surprised to recognize that that was not the case for everyone. And identifying, you know, that, all right, well, if you’re gonna have that, you’ve gotta plan for, you know, the contingency plan of significantly increasing your renovation costs much sooner in the investment.

Tyler:
And you’ve gotta plan for that. You’ve gotta put your reserves in place, you’ve gotta have your team in place, you’ve gotta have your management team in place so that you can lease those units very quickly. My team was, you know, hodge pods at best. And, you know, I learned kind of building the plane on the way down, so to speak here. Um, and thankfully I was able to put the wings on before it hit the ground and, you know, I was able to kind of hover above the ground and, and ultimately get out of the deal very successfully. But that first foray, I mean, it taught me a lot of lessons.

Charles:
Yeah, it’s crazy. I mean, you bought an eight unit property and you were having issues with it cash flowing, and you talk to new investors and they’re buying like a duplex or a triplex, and they’re telling me how much they’re gonna make every month. And it’s a completely different story from what you’re actually doing now. It’s very difficult to cash flow in smaller complexes. I mean, unless you’re buying it fully in cash, that’s a whole different investment strategy. But the thing though is that, um, I, it’s just, it’s interesting to hear that, cause I know exactly what you’re saying, especially with tenants. And when I used to own, uh, c class properties and my dad owned D class, I would always say like, you know, um, in those classes, uh, a lot of the tenant base likes to negotiate as they go. And the, you know, they tell you what you want, they get inside, and then once they’re in there and then it’s like, you know, we can change this like due date on rent. And like, it’s, at that point it’s, it’s a very difficult thing cause it costs you several thousand dollars to switch ’em. So it’s just, um, it’s a very interesting, you know, getting into asset classes like that, um, in a tenant basis like that.

Tyler:
I agree. Yeah, this, this deal was c maybe C minus, it was in a good area, but it was in nearby some other kind of pretty seedy areas. And I think it had just been mismanaged for so long. And, and you know, I looked at the deal and said, wow, you know, these rents are 35% below market, you know, this is a great opportunity. And ultimately it was, and I was able to reposition it to that. But I think to recognize now, with the wisdom that you gain in that type of experience, you can then say, okay, yes, there may be significant upside, but to get there, there’s also significant challenge that you’ve gotta overcome and you’ve gotta prepare for, you’ve gotta be aware of those sort of short-term downsides. And I, you know, since I’ve done several different distressed sort of investments, and with the recognition of, all right, well, here’s what we’re going to have to encounter to get to the other side, you know, as long as you understand that fully and you have a plan for that, I think it’s, it can be a great plan and it can be a great investment, but otherwise, if you’re not prepared for it, it can really be challenging financially and otherwise.

Charles:
Yeah, for sure. So tell us about kind of what you’re doing now, Tyler. What’s your company’s current investment strategy?

Tyler:
Yeah, so, uh, CF Capital, we invest in large multifamily communities across our region. We’re located in Louisville, Kentucky, and we invest, uh, north up to Indianapolis, uh, east over to Cincinnati and throughout our state and the major MSAs, and of course across Tennessee as well, Nashville, Knoxville, Chattanooga. So we invest in large multi-family communities, think 200 plus unit, uh, properties that have, you know, a leasing office, swimming pool, fitness center, dog park, you know, all those type of amenities, playgrounds, and so forth, but also has a full-time staff on site, uh, that, you know, from a leasing manager, property manager, maintenance technicians, you know, the gamut. And so, you know, what I’ve learned, what I did learn from those smaller assets and even kind of stair stepping up to larger assets, is that no matter the size of the deal, it requires a certain amount of attention.

Tyler:
And of course, larger assets require much more attention, and it helps to have full-time staff, professional individuals who are paid a salary plus benefits and bonuses and all those kind of things to attend to those, uh, type of, uh, issues on a daily basis and, and help us have eyes on those assets on a daily basis. So what we do is we look for b, B minus type of assets in A or B locations, uh, and we look for an opportunity to add value to those assets, whether it’s repositioning from a, uh, marketing or perceptual positioning perspective or physically through renovations, uh, or, and or operations. So we look for underperforming assets so that we can go in and add value to increase the noi, increase the cash flow, and increase the value of those assets. Generally, we look at deals that we can, you know, invest in for, you know, five to seven years or so, and then we do generally 10 31 exchanges into the next opportunity where we have the opportunity to add value to those assets.

Tyler:
So that’s generally our approach. And we’re, we’re pretty hyper focused on multifamily for many of the reasons that I’m sure your listeners are aware of. But in terms of the fundamentals, you know, we have an affordability housing crisis across the United States, and what we’re doing is we’re providing shelter for many individuals, you know, in a, in, in a generally affordable capacity. Generally, our properties that we invest in are on the lower end in terms of the affordability or the rent comp scale. And so because of that, when we look at, you know, let’s say we are entering into a recession, folks that are living in luxury, a class properties, perhaps if they wanna save money, they’re gonna say, all right, well, where are options that are still in, you know, safe neighborhoods with quality access to schools and jobs and things like that? And generally they move to our properties.

Tyler:
And when times are going, well, perhaps the folks are saying, you know what, I’m living in a C unit, but maybe I just got a promotion and things are going well in my career, you know, maybe I’m gonna move to one of those B assets. And so that’s really what we focus on. And as a result, we like that risk profile of the asset and we think that it makes sense in good times and bad. And you know, at the end of the day, this is a long game and we’re in the business for the long haul, and as we invest in these assets, uh, we think it’s a winning strategy for, for many decades to come.

Charles:
Yeah, just a side note there, you had what I call the natural progression of the real estate investor where you’re starting in like a C class and you’ve, you’ve, we’ve done that brain damage and now we’ve moved on to, into, into bees. And bees is a very interesting class, just to kind of explain, cuz it’s just you have people that are moving into it, as you just said, or down into it through it, uh, all different parts of the market cycle. People, you know, someone had like got laid off or hours reduced, they’re going back to it. Someone that, like you said, got a promotion, wants better schools, they’re going into it. So there’s, it’s, it’s an easier asset to keep a very high occupancy and collections on. And, um, and you’re dealing with people that will like to buy, or most likely will buy a house at some point. So you have people that are actually worried about their credit score and everything else that goes with it. Um, so, but uh, yeah, it’s great. It’s a great plan and I love those markets that you guys are working on, very landlord friendly. Um, one, one thing I wanna say is, you know, you are a real estate broker, and we touched on that, uh, in the beginning, but how did being a real estate broker assist you when you made the switch into an investor? I, I imagine it was like three years afterwards or so,

Tyler:
You know, it assisted me in a big way. I mean, I think just having sort of being surrounded by people who are doing great things as investors themselves and really learning from them, you know, obviously adding value in the, in the capacity that I was able to, in terms of helping them put toge together deals, access deals, because I became known as kinda the apartment guy that was really my niche. Um, and because of that, I saw a lot of transaction volume and I was able to stay in touch with my clients to help add value during their business plans and, you know, really learn alongside them. And so there was a lot of experience that I gained through that time in my career since I’ve really transitioned to being full-time investor, uh, over the past three or four years and really focusing on what I just described.

Tyler:
But I think that experience was tremendously valuable because it was almost like an apprenticeship program while I was able to get paid during the apprenticeship program. And I did not think that when I transitioned from corporate America into brokerage, that then that was my, my step into then becoming an investor because it just wasn’t in my purview. And I just took one step into real estate, and then I noticed all of these other possibilities. And as I noticed more possibilities, I started to say, all right, well what’s the best way for me to utilize this vehicle to create the outcome that I wanted in my life? And, you know, I was looking for more freedom, for more, uh, options, uh, for, uh, designing a better lifestyle. And ultimately I almost, you know, to a certain degree in brokerage almost became a little bit trapped by the success because I was just constantly in demand and it was all running through me.

Tyler:
And yeah, I built a little bit of a team and there were some processes that we designed and, you know, that was working well, but it was also extremely demanding. And the investments that I had placed in terms of active investments, uh, in real estate were doing well, and they were generating cash flow. And, you know, that, that taste kind of gave me the, the courage to continue to go a little bit bigger. And as I continue to go bigger, I started recognize the economies of scale, uh, in real estate, in particular multifamily real estate. And obviously that can be a double-edged sword if you’re not careful. So I’m glad that I learned on a smaller scale and I learned a little bit on a next, a little bit larger scale. And then of course, we continue to grow.

Charles:
So what can investors do to be taken more seriously by brokers? And I know we talk a lot about multifamily and apartments here, and that’s what you, you, uh, you specialized in. Um, so what do they do to get that call back from that broker or for someone to actually send them a listing that has been sitting on their desk for 15 months <laugh>?

Tyler:
Well, I think the first like, kind of basic thing is you’ve gotta speak the language. If you’re not speaking the language, it’s gonna be challenging for a broker to take you seriously. Because if you think about it from a broker’s perspective, in most regards, in most markets, you know, there are 20% of the brokers who are doing 80% or more of the transaction volume. So these people are very highly in demand. They hold the keys to a lot of opportunity for investors, and because of that, they’re not really, they’re not gonna waste their time with people who don’t know what they’re doing. So if you can’t speak the language, if you don’t have the terminology, if you don’t understand the dynamics of the marketplace, it’s gonna be challenging to get the attention of a broker. Um, and so that’s kind of basic, you know, sort of base level knowledge and you know, obviously listening to a podcast like this can help you with that.

Tyler:
But, you know, reading books and surrounding yourself with other mentors, you know, attaching yourself to other investors who have been doing this for a long time and asking questions, and really just surrounding yourself with people like that can help. But beyond that, it’s about truly understanding, alright, if I’m, if I’m going to make a proposal, I’ve gotta deliver on this proposal. And at the end of the day, if you understand the market dynamics, generally that’s gonna put you in a position to secure a deal, right? Because a broker is intimately involved in the market dynamics, which by the way, especially today, is changing on a daily basis. It’s changing on, you know, especially a weekly, monthly basis. And so the market dynamics of one month ago, two months, three months ago, are no longer relevant to today. And so if you are in tune with that, and by the way many respects, it’s like, Hey, Mr.

Tyler:
Broker, Mrs Broker, tell me what needs to happen to get this deal done? Give me a sense of what’s actually, what are you seeing that really needs to drive this transaction? And, you know, that can help you in terms of really understanding the market dynamics so that you can respond with your best foot forward to be able to transact. But ultimately, if you secure an opportunity you’ve gotta deliver. I mean, because at the end of the day, like I said, it’s a long game. And if you deliver on your promises, those promises start to compound and the word gets out. And because it’s a small community, as I mentioned, 20% of the brokers are doing 80% or more of the volume people talk and it’s like, you know what? We’ve got a pocket listing. I got three or four groups I’m gonna go to because I have three or four days before, you know, this opportunity is evaporated or someone else transacts on it. And so at that point, it’s just the promises compound. So I think it’s just investing in those relationships, speaking the language, and understanding the market dynamics.

Charles:
Yeah, no, that’s great. It’s, it’s interesting how that 80 20 works in so many different fields, but it’s also, um, if you’re getting, say you get on the mailing list of a broker who had deals with smaller multifamily, let’s say, and then a larger one, like you’re talking about in that 80% or 20% doing 80% of deals, um, completely different emails that they’re sending out. They’re like, you know, smaller ones telling you, Hey, we know we’re having a Zoom call and learning to buy this and all this kind of stuff. Then the other one’s like, oh, you know, here’s 275 units, you know, class A, that’s, you know, you’re, you’re getting just deal emails that come out and they’re like, specific to what they work on, and it’s a completely different, uh, audience that they are focusing on. And, um, yeah, many different things like that. But I, I found that when I, when I get these emails and I see what they’re really, who their clientele is and who their avatar is that they’re really going after,

Tyler:
And I’ll just add one thing to that, because there are times where you’ve got these folks who are maybe in the 20% who are, you know, or maybe they’re in the 80% who are doing 20% of the deals, but if you identify somebody that you’re like, you know what, this guy has upside, or this gal has upside, and, you know, it feels like they’ve got the ambition and the grit and the willingness, the relentlessness to get to where they are, where they want to be in terms of being the top 20% who are doing 80% of the deals. You know, you can attach yourself to someone like that. It’s almost like a value add type of relationship, uh, or, you know, an upside type of relationship. So I think it’s important to recognize those opportunities in the marketplace as well through brokers.

Charles:
One thing, Tyler, that I just wanna touch on before we leave with, uh, go to the next topic from brokers is that, um, many real estate agents that I meet or I know don’t have investment real estate. And I, I, I can’t believe it, it’s just, I tell people that and it just goes in one ear out the other, uh, especially with all taxes. And most of the people don’t have the 401k cuz they’re, you know, independent contractors and stuff. And I was wondering, you know, why did you make that decision, um, or how important it is for other agents, brokers to make that decision to actually get onto the equity side and get away from, you know, the whole transactional,

Tyler:
Okay, so why I made the decision was I read Rich Dad, poor Dad, and I was, you know, I was trying to grow as an individual while I was growing my business. And I read Rich Dad Poor Dad, and I’m like, wait a minute, I’m selling these assets that he’s talking about the wealthier utilizing to generate multiple streams of income and, and, you know, expand their wealth. And to me it just like all clicked, it was a very, obviously any of the listeners who have read risk that poor a know, it’s an extremely basic book, but it’s a concept that, you know, it, it causes you to start to unlearn perhaps some of the things that, you know, maybe people like me grew up with that were very ingrained and, you know, you never questioned. So that was the reason why I made that move was like, it, I was, I had access to all of these deals and it made no sense for me to do anything other than take action in, in investment direction in terms of, uh, why others don’t.

Tyler:
I, I think it’s really interesting and perplexing to be honest with you, why anybody in this business would not be investing at, at minimum as a limited partner in some of these opportunities because you have access. And, you know, I think it it a little bit of a red flag if a broker is not investing because maybe they don’t fully believe in the asset. Um, and if you’re selling something that you don’t believe in, to me, there’s a misalignment. Uh, either that or there’s a bit of, uh, you know, incompetence to recognize the opportunity that they’re missing out on because just, you know, working for money I think is shortsighted. And, you know, I I I would value an individual who also invest, who puts their money where their mouth is, because to me, that shows me that, you know, this person really believes what they’re selling, and I think that’s important.

Charles:
Yeah, no, that’s, that’s a fantastic answer. Um, so you did something else other than investing as an agent, but something that I think a lot of people would want to do is your transition you made from corporate America to full-time real estate investing. So tell us a little bit about it and then tell us kind of what you’ve done differently if you were gonna do it again today.

Tyler:
So it was, it was kind of a process. Um, as I mentioned, you know, the first step was, you know, becoming a broker and really learning and immersing myself kind of in the deep end, so to speak of that. And building a business by referral and meeting the real players in my market and learning from them and, you know, capturing new opportunities through those relationships and generating my business. And then the step from there was, you know, really putting my money where my mouth was and, and going and failing and learning. And you know, by the way, being really stressed out about all the challenges that I was going through and feeling like, man, I gotta feed the mortgage. I gotta do all this stuff. It’s like, why did I do this? You know, this, this doesn’t feel, you know, like, it, it should feel, uh, at least at that time, I didn’t feel like, man, they never said anything about this in the books that I read.

Tyler:
They never said anything about this in the C C C I M courses and those kind of things. And, you know, I, I kind of learned the hard way, but also I, I found that problems are gifts through that experience, and that allowed me to get stronger, allowed me to pivot, it allowed me to make adjustments for the next deal. And the next deal was 36 units. And I went in and we, you know, we had the right plan and we did really well on that deal, and the next deal was 72 units. And, you know, from there it was like, all right, now I’ve built a little bit of a, a, a foundation in terms of just financial flexibility, so to speak, where I’ve got reserves, I’ve got flexibility, I’ve got dry powder, so to speak, that I can look at the marketplace and make other decisions and assemble a team, invest in my team, and invest in building a brand, invest in expanding our network and our investor base.

Tyler:
And I started to learn about, you know, the opportunity to go bigger because ag as, again, as I went bigger with my own money, I recognized the benefits of the economies of scale. And when I recognize that, you know, there’s this beautiful thing called syndication where other people can come alongside us and we can go bigger and we can put a phenomenal team on the field, like staff at the assets like a regional, uh, manager, like, you know, an accounting team, like a legal team, you know, all of these beautiful things, which by the way, this is a team sport. And once I recognized that to build a great team, you can invite other people to invest alongside you and everyone can win, you know, that really started to change the game for me. And so, um, you know, in 2019, I met my business partner, uh, actually I met him probably about a year or so before that, uh, via C C I M or or maybe a couple years before that via C C I M.

Tyler:
And we built a relationship and we were just kind of loosely talking about, you know, what the possibilities could be if we were to join forces and create a businesses. You know, many, many of your listeners are probably, you know, have had these type of conversations just to explore business opportunities. And, you know, ultimately, long story short, it became an opportunity for us to leverage each other’s skillset sets, which were complimentary. You know, they were different but complimentary, but we had a similar value set. And ultimately as we recognize the opportunity via syndication, that’s when we created our organization, CF Capital. So, you know, that was when I decided, look, you know, it doesn’t make sense for me to continue to broker because we don’t want to be competitors with the individuals who are really sourcing most of our opportunities. Uh, we don’t want them to think, Hey, we’re here to take your commissions, because that’s not really what we’re after, we’re after long-term investment success. So that’s really the, the pathway that I took.

Charles:
Yeah, I imagine you’d have some investors that are wondering if you are cherry picking deals that they are now getting, um, the ones that you haven’t. Yeah, so that’s definitely that, that’s the 22.

Tyler:
Yeah, that’s a catch 22 with some brokers, it’s like, okay, I, I want you to be an investor, but I also don’t want you to just, you know, just be cherry picking and only sell me the deals that you’ve picked over. Right,

Charles:
Right. Interesting. So as a passive investor and an active investor, I mean, what have you learned by being on both sides of the table? Investor operator?

Tyler:
Ooh, I’ve learned a lot. I mean, you know, you learn from best practices from some of the individuals and, and teams who are doing great things. I’m an LP and, and a handful of different projects I’ve learned, you know, great communication practices. I’ve learned very poor communication practices, which, you know, at the end of the day, I, the golden rule will treat others the way you would like to be treated. And ultimately, I think that’s how we try to apply our investor relations, uh, approach. Because, you know, if anybody’s gonna entrust us with their investment, to us, that’s a massive responsibility. Whether it’s 50 grand, $75,000, a hundred grand, mm-hmm. <affirmative>, or millions of dollars. By the way, we’ve had the gamut of all of those different spectrums of, of individuals investing with us. And I’ve learned as a, as an lp, you know, uh, some folks share that perspective and others don’t.

Tyler:
And, you know, I think it, it makes a big difference. And I believe in transformational relationships and not transactional. And I think it says a lot when you take the time to be fully transparent and robust in your communications, but you know, you also learn about other systems and you know, uh, how to handle certain challenges. Because, you know, that’s the other thing too, is like, even, even as you grow and get more sophisticated as an investor, you’re still gonna run into challenges. You’re still going to run into unforeseen circumstances. So how are you handling those things? How are you navigating, you know, what sort of contingency plans are you executing and how, you know, what, what, what, uh, what’s your behavior when your back is against the wall? Because I think that shares, uh, that really shows a lot about your character. So, you know, I’ve learned a lot about, you know, different types of individuals and you know, the type of people you wanna invest with.

Tyler:
And as a general partner, I mean, you know, there’s a huge responsibility for us to, uh, invest alongside anyone, like I said, you know, whether they’re a small investor, a large investor, and across the gamut, I mean, we have hundreds of individuals who invest with us, and every single day it’s up to us to make sure that we are a good steward of their capital, we’re protecting their capital, and we’re putting it in the best position to grow and compound and generate cashflow. And there’s a lot of responsibility with that. But we don’t let it crush us. We just know that we have a north star of doing the right thing. And ultimately we’re gonna continue to pivot. We’re gonna continue to make adjustments where needed. And I think every day is an opportunity to learn. And you know, I always say that, you know, problems are gifts, but also every problem has a solution.

Tyler:
But by the way, the other thing is problems are the basic, the, the basis towards creating progress and towards creating, um, growth within your organization and growth for your investors. So, you know, there’s some people who run away from problems and, you know, they just don’t face them or they crumble under those problems. And I think that in the long run, if that’s what you’re doing, I think you’re, you’re gonna miss really the opportunities within this business. So there’s been a lot that I’ve learned, but hopefully that’s been helpful in terms of the way that I answered your question there.

Charles:
No, very helpful. I had a couple questions together in one. So, um, so as we’re kind of, uh, closing up here, what is some of the worst investing advice you’ve ever heard there, Tyler? Ooh,

Tyler:
Man. Uh, you know, there’s times where you kind of cringe, uh, about some stuff you hear. I mean, I think that, in my opinion, I think that single family investing is a waste of time. And the reason why is because, and maybe not completely a waste of time. And that could be a, a very generalized statement that could be picked apart. Um, I think it’s good to get people in the game, but I also think that it’s not gonna get people where they want to go. It’s not a scalable business. Um, it’s not going to replace your income. It’s not going to do these, it’s a, it’s more speculative than investment, you know, because a lot of times I think people don’t recognize that in some cases investing can be, um, mistaken as, or, or gambling can be mistaken as investing. And in many aspects, I think single family investing is a bit of a gamble in terms of where you think the price per square foot is going to go in the future market. No one can bet on the future of the market. So in my opinion, I think it’s a little bit of a waste of time. I would, I would much more, you know, suggest folks start on a different asset class or a more scalable asset class. Um, so that, that, I don’t know if that’s advice per se that I’ve heard, but I think that, uh, that could help save some people some time and some headache.

Charles:
Yeah, I think out of all the years I’ve been involved with real estate investing since 2006, I’ve met only one single family investor that had a scalable business model, that had like a team on the ground, had like logistic that worked out that he’s been doing for many, many years. So it’s a very, and

Tyler:
How many, how many houses, how many houses does he have?

Charles:
Close to a hundred, but that’s the scalability. Okay. So he has this bottom and he has like a team that handles ’em and everything, like you would, we’d have for property management, obviously it’s very difficult if you had third party for that. So you has to build that up from the ground up. Um, and, you know, a hundred different insurance policies, a hundred different contracts here, a hundred different water bills, um, you know, everything that goes with it. But it’s just, it’s one of those things that only one, I mean, it’s just, it’s a very difficult model to scale versus you can get involved with a deal, um, whether you do it yourself with partners, you do it, um, or if you get into a syndication, you now have that scale that’s already there, you know what I mean? And there’s not like a problem where somebody has an issue and you’re like calling someone, Hey, come to my unit, you know, this is an issue with something like this. And if you have the onsite staff, it’s already taken care of. I mean, you don’t even know about it as the owner. You might get some sort of, uh, learn about it later on from on your weekly call with the property manager, but it’s not something that it’s gonna be bothered with you. And you have someone that’s sitting in the office walks over there, doesn’t what has to be done and come back. And that keeps your cost down dramatically as well.

Tyler:
Right. Yeah, I totally agree. I just think that, I think that there’s a better way to start. There’s, you know, you should start small and learn, um, but I think there’s a better way. Yeah. But, you know, everybody has their own goals and I think at the end of the day, think about your goals. That’s one thing that I think a lot of people get mixed up with as well, is they forget about their goals. They’re just like, I’m just gonna invest in real estate because that’s what I hear. Everyone says, that’s great, now let me go do it. And then, you know, 10 years later they’re doing that. But did they get to where they want to go or have they even thought about where they want to go as a result of those investments?

Charles:
Yeah, for sure. So as we finish up here at Teller, what do you think are the main factors that have contributed to your success?

Tyler:
I think a growth mindset is, uh, is a key. And, you know, that comes down to some of the stuff I was talking about, like when we have challenges, it’s looking at it as an opportunity to grow, because you do find that, and there’s no question that that is the case. It doesn’t feel like it in the moment, you know, that is a, that is a key thing to recognize. It doesn’t feel good to go through challenges or, you know, problems or whatever. But the growth mindset has been a huge key to me expanding through this. Um, because again, if you, as you’re growing as an investor, you’re just going to encounter problems. So are you going to look at them as woe is me and overwhelming, or are you going to utilize them to propel you forward? And to me, that’s been a huge piece.

Tyler:
The other piece has just been investing in myself. Um, and that’s through reading, that’s through en engaging in conversations like this, um, and investing in my own education, surrounding myself with other great people, whether it’s coaches, mentors, uh, masterminds, surrounding myself with peers or people that are slightly or even far ahead of me, and creating relationships with those individuals. So investing in myself in those ways, but also investing in, you know, my own health and, you know, my own mindset, my own mindfulness, my own, uh, you know, fitness and those kind of things. Like those are things that I’ve, uh, I would attribute a lot of my success to. Because when you go through a stressful period or an uncertain period, which by the way as investors, you know, you, you’re gonna continue to bump up on your levels of competency and to expand your competency, it’s gonna feel stressful at times. It’s going to feel uncomfortable. And I think investing in your own health and your own mindfulness and and perspective to say, you know what, this is, this is a good opportunity for me to grow, has been huge. So, uh, you know, I think understanding the, the emotional side of the investing journey is important and some of those, uh, things that I just described have, have really helped me along the way.

Charles:
That’s great, Tyler. So how can our listeners learn more about you and your business? CF Capital?

Tyler:
So they can just go to cf cap llc.com. Uh, we have a free ebook, it’s called The Bottom Line. And these are the 10 ways to increase cashflow in an apartment complex. So it’s instructive for folks, if they want to take a look at that, all they have to do is go to cf cap llc.com. Charles, I’d also mentioned that, um, I have a podcast. It’s called Elevate, and it’s all about mindset, mind expansion, and personal development for high performing real estate investors. A lot of the stuff that we’ve talked about today, uh, is interwoven in those conversations with world-class investors and other experts to help folks elevate their performance, because ultimately your performance is the foundation of your success in, uh, real estate investing. So I look forward to having you as a guest here soon. I know we’ve got that scheduled and, um, so you know, a couple ways for folks to find us, but you can find the podcasts on anywhere that you know, folks listen to podcasts.

Charles:
Well, thanks so much for coming on, Tyler. I will put links to your company and then also to the podcast into the show notes. And I wanna thank you so much for coming on today.

Tyler:
Absolutely, Charles, thank you so much for having me. Have a great

Charles:
Rest of your day.

Tyler:
You too.

Charles:
Hi guys! It’s Charles from the Global Investors Podcast. I hope you enjoyed the show. If you’re interested in get involved with real estate, but you don’t know where to begin, set up a free 30 minute strategy call with me at schedulecharles.com. That’s schedulecharles.com. Thank you.

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About Tyler Chesser

Tyler Chesser is the Co-Founder and Managing Partner of CF Capital, a private equity real estate investment firm that focuses on acquiring and operating multifamily assets that provide stable cash flow, capital appreciation, and a margin of safety. Tyler is also the creator and host of the popular top-200 podcast Elevate, where he hosts discussions with world-class investors and other experts decoding mindset, mind expansion and personal development for high-performing real estate investing.

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