Ep #612 – How to invest as a Canadian in Multifamily properties in the U.S.
August Biniaz and Ava Benesocky are co owners of CPI Capital, a Canadian investment firm. With a background as successful real estate agents, Ava and August saw an opportunity to bring multifamily opportunities in the U.S. to Canadian investors.
Here’s some of the topics we covered:
- Hurdles for Canadians
- Emulate successful people
- Importance of being coachable
- The value of mentors
- Learners are Earners
For more information on our guest, please visit:
https://www.cpicapital.ca/
Full Transcript Below:
Rod
Welcome to another edition of “How to Build Lifetime Cash Flow Through Real Estate Investing”. I’m Rod Khleif, and I am thrilled you’re here, and I know you’re going to get tremendous value from the two people we’re interviewing today, and they’re probably the best-looking couple I’ve ever had on my show. We have August Biniaz and Ava Benesocky, and here I am in my black V-neck, and I think August has about a $2000 jacket on. But anyway, welcome to the show my– well, let me say this. Let me introduce you a little better than that. They are CEOs and co-founders of CPI Capital. CPI Capital– is it ca, cpicapital.ca. And they are in Canada, but they invest in the United States, and so I’m going to leave it at that and let them tell you their story. Welcome to the show guys.
Ava
Thanks for having us, Rod. Were really excited to be here.
Rod
Let’s have some fun.
August
You’re a thought leader we’ve seen you in the space for a long time, so it’s an honor and privilege to be here with you, and hope to add value to your viewers and listeners.
Rod
Very kind of you to say that. Thank you. So why don’t you, Ava, you start and talk about your journey into this business, and then now you guys, however, you guys want to take this on in August, obviously want to hear from you as well. So if you speak together, however you want to answer that, tell us your story.
Ava
Right on. Right on. Yeah, a little bit about my background. I was a real estate agent for about ten years, and I dealt with many, many investors looking to invest in residential real estate if you will. And there’s a lot of pain points that exist here in Canada when it comes to you know where to put your money and so forth. So I kind of– I pivoted my focus to real estate private equity about a year and a half ago, probably no, and co-founded CPI Capital with August.
Rod
Nice. Very nice. Very nice. And you, August.
August
My background is I was actually a licensed agent as well 16 years ago. I wasn’t really good at being a real estate agent, but I was good at finding deals, so I started doing small fixes and flips, eventually started my own general contracting company, start building single-family homes more on the luxury side. I like this home that I’ve built right behind us and eventually moved on to multifamily ground-up development, similar to Ava, I realized pain points that existed for people looking to invest in real estate. There’s a lot of content that comes to Canadians from the US in regards to investing in real estate, you always hear hey, invest in real estate, build your portfolio. Unfortunately, the entry-level into real estate investing you know is very high, especially in the large cities here in Vancouver and Toronto. The median home price being approximately 1.3 million and the median income at $90,000. So it’s very difficult for people to buy properties. I mean, you hear about people buying properties in Texas you know at 100,000 income, $300,000 property. The property rent for $3,000 a month. You know, that’s great to kind of start in real estate investing. Here the rent yields are also very low. The rental value ratio is very low where there is no surplus left after you do a conventional mortgage from the bank, from the rents collected. That’s what I realized. And a lot of my partners who would partner with me in my ground-up development projects. Again, the issue is there’s no cash flow in ground-up development. So I was always looking for a different asset class to invest in. And when I realized about US multifamily value add, fell in love with the concept. The first six months were educational, watching many videos, many podcasts such as yourselves as well, and educating ourselves about Canadians looking to invest in the US. You know, how does that work? As far as taxes and other issues? The length of it Ava started CPI Capital and the rest is history.
Rod
Fantastic. So let’s speak to the nuances of you know let’s enhance what you just described as you know the hurdles for Canadians because you know I have students in Canada and they want to invest in the United States, and they typically align with a domestic you know US-based warrior in my coaching program and work it out that way. But you know, besides the pricing in the big cities being so incredibly expensive, I do assume it’s not that way in the whole country. Are there any other hurdles to investing in Canada? We have the incredible financing options that we have here through government you know sponsored agencies like Fannie Mae and Freddie Mac. Do you have things like that in Canada or can you speak to the Canadian nuances of finance? Maybe start with financing, for example.
August
Sure. Yeah. There are similar financing items such as Fannie Mae and Freddie Mac. Its CMHC is what we called here. So insured mortgages you can get a mortgage for you know as low as 5% and down. But mortgage laws are much more rigid. And that’s why in the 2008 financial crisis, Canada did much better than the US because of those mortgage laws that exist. Now, unfortunately, is beneficial when there is a financial crisis. But it’s difficult when trying to scale a real estate investing business.
Rod
Now, the CMHC, I’m assuming is for homeowners move-ins, correct? Not commercial real estate. My question was more geared towards commercials.
August
Yes, it is for commercials well as long as you’re doing for example, if you’re doing a ground-up development and it’s for rental, so that goes on the title, that property can never be sold as condos so is rental. So CMHC does get involved and give preferred rates as far as development. But again, it’s a different world here. A lot more difficult to scale. It’s not as business-friendly, with much higher taxes. No1031 exchange in Canada.
Ava
There’s really strict rent controls here.
Rod
Oh, wow. Okay, that scraps it for me. Okay. I didn’t know that. Wow, the whole country, or is it regional?
August
The whole country mostly.
Rod
Okay. All right. Say no more. I won’t waste any more time talking about that. I did not know that you just educated me. I appreciate that. So you know, you guys left successful careers to get into this. You as a successful realtor, Ava, and August, you as you know a successful developer. Talk about you know how did you deal with that? The fear around that? I don’t know. Maybe it wasn’t there. Maybe it was but just speak to the drivers that cause you to make these shifts and how you push through any fears that you might have had to you know take that plunge because it’s a big plunge.
Ava
Yeah, for sure. Well, first it started with a problem that we’ve seen existed, and we wanted to come up with a solution for that problem. And it really Rod started with this excitement that we had for this opportunity that we’ve seen across borders. The thing that really blew my mind and this is where I was like, you know what? I want to take a step back from everything and dedicate my life to this was with multi-family in the US from the rent you collect, you’re able to pay your mortgage, you’re able to pay your taxes, all expenses, you’re able to pay a third party property manager and still be left with the surplus. With cap rates here in Vancouver being one to 2%, I was going to blow your mind. I’ve never seen anything like it. So I fell in love with the business model and the excitement. And then that’s where I wanted to pivot my focus, even though I loved what I did for many, many years. And that’s kind of started with this excitement and seeing a problem and wanting to have a solution for that problem.
August
It was a bit of a roller coaster, started with excitement and then there was anxiety because our family and friends were shocked that were leaving our careers. You know Ava, myself as a builder for 15 years. Ava as an agent for ten years. So definitely there was some anxiety, and I hear a consistent story for many who do have in the US you guys call it W2 jobs who pivot and focus on becoming a full-time active investor. It was similar to us, even though we were involved in real estate you know as real estate professionals, but it was still you know–
Rod
It’s completely new. It’s completely different you know, from what you shifted to, right? Yeah. Okay.
Ava
It’s all about putting, of course, a lot of fear that exists. But putting that fear aside and jumping into something that you believe in and that’s how we did.
Rod
Love it. What hurdles did you guys face if any, and how did you overcome them on this transition? And maybe on this deal that you guys were telling me about before we started recording, what sort of hurdles did you encounter? And I know I didn’t prepare you for any of these so just do the best you can. Sorry.
Ava
No, that’s totally fine. Just a fun fact I wanted to share as a real estate agent. I was in competition with 23,000 other Realtors in Greater Vancouver. Believe it or not, there’s only one other company here in Vancouver that does what we do. Yeah, that’s just a fun fact that I wanted to share. So the hurdles that we faced was educating ourselves because the laws are much different in Canada than they are in the US. We have the Canadian Securities Commission. You guys have the SEC. Well, there are different rules of every single province across Canada. Also, taxation is a little bit different here.
August
A lot different here.
A lot different here. So we’re buying properties in the US, but we also need to educate ourselves about Canada, too, on both sides of the border. So hurdles that we faced were really diving in deep, deep speaking to lawyers all across Canada, crossborder tax accountants, and really educating ourselves.
August
Absolutely. And for me, I mean, frankly, the hurdles facing was to–I mean you know I call it the poor man mentality is when you know you are so reliant on your income that the fear exists to then try to not only not have that income coming in, but also you know have the potential of spending all your life savings into a new venture. But the belief has to be so strong, the mindset has to be tunnel vision into the goal. And what the goal is, that everything else just stays as high and allows you to be laser-focused.
Rod
That’s great. That’s huge. Now, you know what suggestions would you have for someone starting out in this business based on you know with what you know about this business? What would you tell them?
Ava
Well, building this– August, and I built this company from the ground up. Did we ever learn a lot along the way and what we could have done differently when we first started? My suggestion would be, I’m head of investor relations here, and my suggestion would be, get your sales funnels and your sales funnels in your pipeline in place. But you’ll learn along the way. So things come up and you want to rechange out some systems, we’ll get that in place first, and you don’t have to reinvent the wheel. You know you can look at somebody very successful like yourself. That’s doing what you do and you cannot be–
Rod
Emulate. Emulate is the word you’re looking for. You don’t steal, you just emulate. Some of the best ideas are emulated.
Ava
There you go yeah. So be okay with that and learn from the people who are super successful like yourself and just kind of don’t reinvent the wheel.
August
Yeah, for sure. Getting a mentor is very important, I mean, for somebody like myself who’s self-made and who got to where I got through blood, sweat, and tears. It takes a lot of humility to go to a mentor. Hey, I’ve been in real estate for 15 years. What does this person know more than me or you know having that pride is having the humility to get a mentor and be open-minded just because you bring on a mentor, it doesn’t mean that you’re going to take the information they’re giving you. You have to have an open mind and go with their advice. It’s very important.
Rod
You have to be coachable. I mean, I show this picture of me with hundreds of lanyards around my neck and around my arms from all the different mentors I’ve had in masterminds and events that I’ve gone to, and you know where learners are earners. So I completely agree. You know I’m really proud. You know I’ve just a little mention. I’ve been teaching for less than four years and my students are now on over 45,000 units and I’m really, really proud of that. My warrior mentorship, prudent students, and you know I didn’t have mentors when I started, so I made every possible freaking mistake. I used to have in fact– I have this thing in my boot camps where I say, ask me how I know. And one of my students got me a shirt that says Pound, ask me how I know, because I say, don’t do that. Ask me how I know. You know I was kinda–anyway, I digress.
Ava
I love that you’re helping others now because you’ve made all the mistakes you’re like don’t–
Rod
Every possible mistake. Yeah. So when you guys were starting out you know, were there any epiphanies, any aha moments that come to mind? I mean, obviously, the shift from your core jobs or professions to multi-family was one. But anything else comes to mind when I ask that question.
August
Yeah, for sure. I think it is really, especially with commercial real estate. With these large, multifamily institutional assets is the dollar amount, is the fear that exists for that dollar amount and being involved in you know $50 million deal or tens of gazillion million-dollar deals.
Rod
Right.
August
Fear that exists. And right, away again, I go back to this poor man mentality where you’re like, hey, I can’t be involved in such a deal, but this real estate, commercial real estate game, this multifamily game is a team sport, and there are ways to be involved and participate. So that would be an aha moment where I realized that the mentality of, hey, I can only get involved in deals that I can afford is not real. Where you surround yourself with the right team, you surround yourself with the right people. You know the possibilities are endless.
Rod
Yeah. No, I couldn’t agree more. You guys have heard me say that nauseam on the show, is this is a team sport. And you know one of the things you know like, for example, those 45,000 plus doors, were all done between warriors. Almost 95% of them because you know people shore up each other’s strengths. Like, I know in your case, you guys are very personable and you raise equity and further involve yourselves in deals. And you know communication is one of your superpowers where you know someone that’s super analytical, that’s not a great communicator would pair up with someone like you and, man, that’s a match made in heaven. You know, it’s the same for me. I have a partner that’s super analytical, and I’m the mouthpiece you know. So let me ask you this, you know actually, let me think through this for a second. You talked about mentors. Did you seek out mentors in your journey August or you were just making that as a suggestion?
August
Unsolicited mentors. Really? There were mentors who became our mentors without actually the process of going through mentors. But believe it or not, now that we’ve been in the space for two years and myself now, I’ve been in the real estate game for well over 16 years. We’re are still in the process of bringing on– hiring mentors and bringing on actual mentors to look at it. In many different aspects, not only overall, as far as building a better company, but also on the system side of it that Ava mentioned earlier to have systems because it’s a world of technology these days. Somebody connects with you if you don’t have the right CRM if you don’t have the right task management software. So it’s not only bringing mentors as far as you know building a better company and having the right mindset and having the right connections, but also bringing on the right people to help you grow your you know portions of the company, for example, right. Yes.
Rod
Yeah. No, that’s absolutely accurate. Is there a resource that you guys have utilized, like, maybe a book that you’ve gifted more than other books to people that are interested in this business? You know, when people say you’re in that business, you know what could help me learn the business? Are there any resources that you’ve gifted to people or suggested to people?
Ava
I have two different books that I’d like to suggest. Learning about the syndication business is the best ever from Joe Ferlise.
Rod
His book is fantastic. Yeah, that’s a great–
Ava
And then there’s another book that I would highly recommend, and this would be a game changer for anybody. But it’s “Who Not How” by Dan Sullivan?
Rod
Yeah, he’s fantastic.
Ava
“Who Not How” everybody because–
Rod
He’s fantastic.
Ava
Something that you have to delegate. It’s kind of an art of delegation that will really help you succeed.
August
Yes, for sure. And for me, I mean, it wouldn’t necessarily be a book. There’s a lot of great books out there and a lot of content when it comes to books in the space of real estate, you can just do a simple Google search, and tens and tens of books come up, but it shouldn’t be analysis paralysis and too much information coming in is you have to be strategic in the information you’re bringing in. But you have to be students of the game. You have to be consistently hungry to gain more information. But you know getting the right information. Listening to the right podcast. I mean, there is a podcast as you know, self-building podcast that I’ve over listened to is a 40-minute podcast that I’ve over listened to. Probably, I would say well over ten times. So it’s finding what works with you and what works with your mindset as well and consistently growing there as well. So not just a particular book, but being the student of the game.
Rod
Yeah, that’s– couldn’t agree more. I remember my nine-year-old, this is 20 years ago. I was telling him I was going to a real estate boot camp at that time I owned 2000 houses, multiple apartment conflicts. He’s like, dad, why are you going to learn about real estate? You should teach it. And I had that very conversation with him that you know learners are earners and you just keep learning and growing. So let me ask you this. Have you had any early failures that you feel may have contributed to your future success? Anything come to mind when I asked that question?
August
Ah, you want to go first?
Ava
Go ahead.
August
I mean, for me when you’re building a company, you’re so eager, you’re so vulnerable as well because you’re building something new. You’re trying to build something great and at times bringing in the wrong man for the job. It could be a disaster or mistake, especially when there is equity play where a portion of the company is being paid out. So I would recommend to you know, to your viewers and listeners to be very careful of who they partner with, especially when there goes pen to paper and that you’re giving up equity in the company to bring on a partner. So definitely you know there’s nothing wrong with bringing someone on as an advisor, as a subcontractor to help you and then have it in place that they could become part of the company eventually. But to bring someone on right away. And that was a difficulty I had with a contractor, and I’m still paying for it until today. Bringing out the wrong man for the job.
Ava
And for me, I’m trying to think of any failures that I can share.
Rod
Hey, Ava let me understand and reject something that ties into what August just said. And I want to hear yours. But you know partnerships are like a marriage they’re easy to get into and hard to get out of. So I created a resource called “Questions To Ask When Forming A Partnership”. And guys, you listening and you’re about to get into a new apartment, it’s got all sorts of every up– you know need to ask the hard questions upfront before you get in– sorry using that expression, get into bed with them or get married to them. And so, you know, I just use this with my new partner, Scott. I mean, we went through this line by line and make sure we were aligned. And what would happen in every eventuality? And so if you want this, text the word “partnership” to “72345” guys, that’s “partnership” to “72345”. So then you ask all those questions because you know, you may know I host a– I’m pretty sure it’s the largest multifamily mastermind in the country here. It’s called the multifamily boardroom is like 13,14 billion in assets in there. And there are a couple of big players in there, like 5000 doors, a piece that just broke up. A male and a female just broke up very large partnerships. So you know really important to ask those questions upfront. So now, sorry, Ava. I interrupted you. I just want to flag that on August’s comment.
Ava
No, that’s great. I texted the number.
Rod
Oh, you did already. Good. Good. Good
Ava
Because that’s really important and that’s really great.
August
Right. Great meeting you missed.
Ava
Yeah. Yeah. I was going to say for failures for me it was you know, I hate telling the story, but I had a meeting scheduled with the superpower of a person, and I had a really bad allergic reaction to the point where I broke out and rash on my face. It was, like, the most horrific thing.
Rod
Anxiety or something.
Ava
I canceled the meeting. Like the night before or something like that, and I canceled it, and I still was not able to get back on a call with this person. So anybody listening if you have–and plus you know, I didn’t want to show up. It was a Zoom meeting. I was in a complete mess.
August
It wasn’t that bad.
Ava
Yeah, I really wanted to show up you know with my strong– with strength and anyways, I ended up doing that. And I still am not able to get on a call with this person. So that was probably a failure that I learned. But other than failures along the way, just continuous educating. I’ve just been continuously educating myself so that failures don’t occur. Learning is earning, as you say, Rod.
Rod
No question. And we call failure seminars in my environment, okay. Because that’s what they are. They’re only failures if you don’t get back up or you don’t get the lesson. You know. So let me ask you this. What do you think are your individual unique skill sets or superpowers that have helped you on this success that you’re enjoying?
Ava
For me, my superpower is creating relationships with people. Genuine, strong relationships. It’s a relationship business. It’s really all about relationships. People are investing in you as a person. And it’s just nice to– that’s kind of my superpower I guess, is taking care of people that way.
August
For me would be resilience. I’m a boxing aficionado, I box for a long time as an amateur fighter. I had many fights. And the world of business is very similar to boxing. You know you don’t play boxing. And also in the business world, you don’t play business. It is a tough world out there and you know, and you’re in it alone. So it’s just like stepping into a boxing ring. So having that resilience, doing your homework, practicing, or however you want to call it is very important before getting into any deal, especially when it relates to you know investors or other people that are partnering and relying on you. And depending on you is very important to be ready for the match you’re about to walk into it project you’re about to get in.
Rod
Oh Yeah. Great analogy. Great analogy. So a couple more questions. You know, what did you have to give up on this journey to success? What sacrifices did you make? I don’t know if either of you has children or just speak to that for a moment. Any sacrifices you may have had.
August
The child is a great point. We haven’t had children because of our business, so that’s–you know with our family coming to us and everybody expecting us to have children a while ago. So that’s definitely–
Ava
I’m going to be having a baby on my hip soon. When I’m doing podcasts like this. Probably.
August
They might not have you on.
Ava
We really had to give up time. You know, we’ve dedicated our lives to this, which result you know kind of made it so that we couldn’t do a lot. We still do our activities, but a lot of it’s like this go, go, go mentality right now as we’re building our company.
August
Yeah, for sure. I mean, It’s the dedication, right. Is dedicating your life to your craft and feeling very strongly about it especially, you know in the business we’re in. We have partners. So it’s very important to know everything. People rely on like as I mentioned earlier.
Ava
So that’s what we probably had to give up to start a family right away.
August
Exactly.
Rod
Got it. All right. Last question. We have a lot of listeners that have not taken action in this business that know they should be doing this. They, you know, should do this. They should do that. They end up shooting all over themselves. So that person that just kept saying, I should get into this business. I’m not happy being in the rat race. I’m not happy you know that person that ends up a year from now and you know hasn’t made a change that doesn’t love where they are right now. What would you say to that person?
Ava
I would say, just go for it, partner up with somebody who’s smarter than you, who can really kind of guide you along the way. But just go for it because life goes by way too quickly and another year is going to go by and another year is going to go by and just go for it. You’ll feel so good about yourself?
August
Absolutely. Yeah, Ava said it so perfectly, I couldn’t even add any more, but, yeah, it’s definitely going for it and surrounding yourself with people that are smarter than you. Getting a mentor, getting on a call with someone like Rod, I mean you’re accessible, someone like you who’s been in through a few cycles. I mean, I listen to your story, and your biography is truly incredible of what you’ve been through. So getting on a call with someone like you, and unlike other businesses, the incredible thing in the space we’re in. A lot of people are accessible. A lot of thought leaders are somewhat accessible, such as yourself, so that’s my advice would be to get in touch with thought leaders such as Rod Khleif.
Rod
It’s kind of you to say that. Thank you.
Ava
If I could add one more thing to that. Tell your anxiety and fear to F off. Okay.
Rod
I love it. Love it.
Speaker 1
Just tell it to go away because you’d be surprised with the superpowers you have within you when you actually jump right into something.
Rod
Love it. You know it’s funny when you take action, all that fear mitigates too you know fear of action mitigates fear. Great answers, guys, it’s been such a delight to meet you, you’re a beautiful couple. Hopefully, we’ll get to meet in person one day, and I appreciate you coming on and adding value. So thank you so much.
August
Absolutely. We’ll take you out for dinner next time we’re in Florida.
Rod
Yeah, I love that. And I actually plan to come up to Vancouver as well. I need to take my bride up there because I know she’d love it as I did. So thanks again, guys.
Ava
We’d love to entertain.
Rod
All right.
Ava
So feel friends here in Vancouver.
Rod
Love it. Thanks, guys. Take care.
Ava
Thank you.
