RG 276 – How Canadians Can Access The US Real Estate Market with Ava Benesocky and August Biniaz
We have not one—but two guests for you guys this week. Let’s listen to the story of Ava Benesocky and August Biniaz of the Canada-based real estate investment firm, CPI Capital.
Ava Benesocky and August Biniaz are the founders and CEOs of CPI Capital, a real estate investment company that focuses on helping both US and Canada-based investors find opportunities in the US multifamily market. With both having started as real estate agents, Ava and August put their skills, knowledge, and experience together to turn CPI Capital into what it is today.
In this episode, we get the low-down on how Ava and August built CPI Capital, as well as how they gained interest in the US market in the first place. They also talk about how they chose the right corporate structure in Canada vs. the US, with each having its unique pros and cons.
Ava and August also talk about the challenges that they have encountered in the business, including—surprisingly—having too-high returns. And since CPI Capital is a young company, the two CEOs also let us in on their future plans to scale.
If you are in Canada or in another part of the world and are interested in investing in the US market, this episode can give you valuable insights on what it’s like being a foreign investor.
Some Canadian investors can qualify for certain US tax benefits, depending on their investment plans.
In the private equity space, the general partner’s compensation is relative to their performance and the asset’s performance.
When the real estate industry is not ideal in your country, it may be time to invest in a foreign land.
- Currently, the US can be regarded as the country with the highest yield in the West.
Be Bold, Be Brave and Go Give Life a Crack!
Listen to Podcast
August Biniaz (00:00):
First time. I heard about the deals being done in the US they’re doing a 70, 30 LTV in some cases, 80 20 LTV from the rents they collected. They were able to pay their mortgage payment taxes and fees, third-party property manager, and still pay their investors 8 to 12% per, per annum. And that was so shocking to me that I’m like, Hey, this can be because I’m so used to, you know, Canadian to Vancouver,
Ava Benesocky (00:29):
Literally in pure, utter shock. And when I heard cashflow and appreciation cashflow appreciation and forced appreciation. So, you know,
August Biniaz (00:39):
You got cashflow from day one, you got the natural appreciation of the market, and then you go in there and force appreciate it. Uh, it was, it was a, it was a no-brainer for us.
To investing in the US a podcast for real estate investors, business owners, and aspiring entrepreneurs looking to break into the US market join Reed, as he interviews go getters risk takers and the best in the business about their journey towards financial freedom and the sheer joy of creating something
Reed Goossens (01:18):
Good day, ladies and gentlemen, and welcome to another cracking edition of investing in the US podcast from Los Angeles. I’m your host Reed. Goossens good as always every with us on the show. Now, I’m glad that you’ve all tuned into learn from my incredible guests and each and every one of them are the cream of the crop here in the United States. When it comes to real estate, investing, business, investing, and entrepreneurship, each show, I try and tease out their incredible stories of how they have successfully created the businesses here in the US how they’ve created financial freedom, massive amounts of cashflow, and ultimately create extraordinary lives for themselves and their families life by design. As I like to say, hopefully these guests will inspire all of my cracking listeners, which are you guys to get off the couch and go and take massive amounts of action.
Reed Goossens (02:05):
If these guys can do it. So can you now, as you know, I’m all about sharing the knowledge with my loyal listeners, which is you guys, and there’s absolutely no BS on this show, just straight into the nuts and bolts. Now, if you do like this show, the easiest way to give back is to give us a review on iTunes, and you can follow me on Facebook and Twitter by searching at Reed Goossens. You can find the show, every podcast on iTunes, SoundCloud, Stitcher, and Google play, but can also find these episodes up on my YouTube channel. So head over to Reed goossens.com, click on the video link, and it’ll take you to the video recordings of these podcasts. You can see my ugly mug or the beautiful faces of my guests each and every week. All right, enough of me let’s get cracking and into today’s show.
Reed Goossens (02:51):
Can I get a guys number four, dive into today’s show. I want to ask you a few quick questions. Are any of you actively looking for passive opportunities right now? Are you looking for great risk adjusted returns with fantastic cash flow? Are you looking for trusted sponsor with a proven track record? Well, look no further for those of you who are not aware, I’ve actually built a portfolio of over $450 million worth of us. Multi-family real estate over the last eight years. I’ve a proven track record of producing fantastic double digit returns to my investors. And I’m excited to announce that I’m now allowing listeners of the podcast and opportunity to invest directly into my portfolio. For those of you who are interested head over to Reed goossens.com, sign up for the monthly newsletter and then click on the invest with read button. And this will be able to schedule a one-on-one call with me to talk about my up-and-coming investment opportunities.
Reed Goossens (03:46):
So what are you waiting for? Start getting your money working for you today and build financial freedom for the future. Remember, head over to Reed goossens.com and click on the invest it’s green button. Now back into the show, I have the pleasure of speaking with Ava Benesocky and August Biniaz, as they have joined forces in 2019 to form CPI capital group, a Canadian based real estate investment firm. And they’re both extremely passionate about helping average Canadian investor successfully invest directly into us. Multi-family syndications with trusted syndicators across high growth markets in the US so Canadian investors can also reap the benefits of cashflow and appreciation. I’m really pumped and excited to have them on the show today to share their incredible insight in their journey, but nothing may let’s get him out of here. Get I gang, welcome to the show, how you today. Good day.
Ava Benesocky (04:41):
We’re doing great. Great. Thanks for having us.
Reed Goossens (04:44):
My pleasure. And for those people who don’t know, you don’t have a strong Canadian accent, you know, like a ruffle don’t, you know, Hey, where are you guys dialing in from today? Vancouver, Canada. Nice, nice. How’s the weather up there right now? It’s a beautiful time of year. I could imagine. Yeah,
Ava Benesocky (05:01):
It is so beautiful. It’s so, but if the sun is actually shining bright today, so we’re feeling our shell and happy 0n our end. Awesome. Awesome. Well,
Reed Goossens (05:08):
We’ll get diving into the show. I asked the first question for all my guests and because it’s two of you, we’ll go ladies first one at a time, rewind the clock and tell me how you made your first ever dollar.
Ava Benesocky (05:20):
My first ever dollar as a kid was doing gardening, gardening experience. They gave me money to, uh, to do some gardening for them.
August Biniaz (05:29):
And that’s my first kind of, yeah. And for me it was, um, working at a pizza shop. I think I was 12 years old and I remember I had to, um, uh, see the olives always would come in with, uh, with them with a seed and I had to use this mish hand machine to press the seed out of them. So that’s a funny memory.
Reed Goossens (05:50):
Nice, awesome stuff. And tell me about bringing, growing up in Canada. Was it, is it different, have you ever lived anywhere else so you can compare it to what was the sort of Canadian, uh, childhood like?
Ava Benesocky (06:02):
Yes, I’m third generation Canadian. And, you know, I grew up in a small city, so a very, very tight knit community that I grew up in. Um, we were all about sports and, and school and, and just having that really tight knit community. Um, I moved out to the big city Vancouver, um, I about three years ago now, which was definitely a huge step for me. I didn’t know anybody out here. Um, and then I started my journey in Vancouver, which was obviously meant to be because I Co-founder CPI capital with August just a few, couple of years ago now.
August Biniaz (06:37):
Yeah. For myself. Go
Reed Goossens (06:38):
Ahead. Go ahead for yourself.
August Biniaz (06:41):
Yeah. For myself. Um, yeah, I grew up here in Vancouver as well. Um, and, um, yeah, that’s about it.
Reed Goossens (06:51):
So, so walk us through the backstory of both of you. You clearly, didn’t just stumble into real estate and them we’ll get into CPI in a minute, but where did you both come from? What did you have careers prior to forming CPI capital?
Ava Benesocky (07:03):
Yeah, so I was the real estate agent for a decade. Um, and I, I dealt with a lot of savvy real estate investors. Um, you know, I’m from Alberta and then I of course transitioned to Vancouver here. Um, and yeah, my, my main objective was to find the best deals for my investors and for them to invest their money into real estate because everybody wants to put their money into real estate. So I was super passionate about the real estate, uh, since, as far as I can remember. Awesome.
August Biniaz (07:31):
Yeah. For, for myself, I’ve I started my journey in real estate 16 years ago as a licensed agent. Um, I wasn’t really good at being a real estate agent, but I was good at finding deals. Um, so I, um, started doing small fix and flips. I eventually started my own general contracting company, uh, still doing fix and flips. Uh, then eventually we started building luxury single family homes, and I always wanted to scale my business. So I eventually syndicated, I didn’t even know what syndicated was at that time. Uh, but syndicated multifamily, ground up development projects where I would oversee the project, bring on the investors, find the deal, uh, bring on the GC, um, bring on the design marketing team and, um, get a portion of the profits of the project. So I fell in love with that business model. Um, and, um, yeah, I guess it kind of segues into the pain points that existed in that business and how CPI all came about. Yeah.
Reed Goossens (08:30):
Well, it’s interesting you bring that up. So as you actively, and I sound like you’re still doing it, uh, fixing and flipping and then just was morphing into larger and larger projects.
August Biniaz (08:40):
He’s definitely the transition I’m no longer involved on in real estate. On the development side, there are projects that I’m still part of, which are still in some, in rezoning, some in development currently. Uh, but when I started out in real estate, uh, the, the plan and the goal was to scale, uh, into large development projects, but the more and more I was involved in a divot into development space, I realized that, um, it’s not as glamorous as it as, as it is made to seem, especially here in Canada because, um, uh, real estate is very cyclical. You could start a project out initially having certain performance in place and then realizing fears down the road, uh, that all the numbers have changed because the Canadian real estate market is particularly in Vancouver and Toronto are so, um, you know, uh, foreign investment, uh, you know, they’re, they’re, they’re so related to foreign foreign investment and something would happen in China and would affect the market here.
August Biniaz (09:39):
Also, it’s not very business friendly environment, uh, you know, uh, human ankle around Toronto, uh, their, their mortgage laws are very rigid. Um, then, uh, there’s also different levels of government. Uh, you know, just, uh, the system is in place to make it more difficult for developers trying to scale. Um, we’ve got public hearings when the whole project is at the hands of neighbors in the area and they could vote certain thing in or, uh, or out. And when the margins are just so, so thin, uh, you know, if something small could happen or a delay could happen with either way at, uh, at, at a project. And it was also the time horizon was a very long time horizon to get a development project done, not like the US uh, and it’s unbelievable that as far as the construction costs from Canada compared to the us, how much more costly it is to build and development projects here in Canada compared to the us. So, uh, yeah, so I, you know, and also know on the investor side. So if you’re bringing on investors to do development projects, there is no element of cashflow. So nobody’s getting paid any, uh, returns until the project is built and every single unit is sold. Um, uh, you know, if that matches certain investors investment thesis, then it makes sense. But most people, especially with, you know, uh, social media in this day and age, they want that cash flow. They want that passive income and ground up development projects. Unfortunately, don’t provide that.
Reed Goossens (11:06):
It’s interesting. You bring that up. Um, I develop, I’m a structural engineer and I’ve developed a lot of projects here in LA and in New York for developers. And I worked for a developer for many, many years before starting my own company. So I’m interested. What is the approval process time in Vancouver today? Like roughly, is it two years from no entitlements to permits or is it longer than that?
August Biniaz (11:27):
Yeah, around that two years, mark, with certain delays, again, there were public hearings involved. There’s also construction is not only the issues as far as, um, you know, uh, rezoning and the zoning issues with the city, but you also got environmental issues. You could start digging and, and, and, you know, find things that, uh, delayed a project, even in the structure itself. Any, any structure built before 1991, it has a high chances of having or other hazardous materials in it. And then also through the course of construction, there’s material changes as we saw with the price of lumber and price of drywall a while ago here in Canada, um, and, um, you know, issues with contractors. So it is the development definitely is not as glamorous as is made to seem, but there is a lot of money to be made, but that money is mainly for big groups and big corporations that continue scale and have bought land a long time ago. It’s a very difficult for a newer, smaller company trying to scale in the space.
Reed Goossens (12:27):
No, I completely agree with those sentiments in terms of the risk involved and the hence why the certain type of capital that you attract for development deals is completely different from that stable, stabilized value add sort of process that we all sort of talk about on this, on this program. But it is interesting to hear because two years, you know, I developed in long beach LA county and New York and it’s, and even in Austin today where I, where I’m actively investing, it’s about two years to get, get sell through, to, through, through permits, from go to whoa, that’s even with buy, right? So the approval process in the United States isn’t as free flowing as people think it is, uh, it is still cumbersome, but I think, and correct me if I’m wrong, Canada, I’ve always looked at Canada as being a hybrid between Australia and the United States.
Reed Goossens (13:11):
And it sounds like you guys have multi-family in the, in Canada, uh, but in Australia we don’t have, as multi-family like you do here in the U S and maybe not as much as even you do in Canada. And that’s because of our lack of financing vehicles that you mentioned it just before the selling of the condos off the plan before construction loans get involved. And that the, the, the sophisti, I wanna, I don’t wanna say sophistication, but the lack of sophistication, the lack of lenders in Australia makes you make it all build to sell model, not a build to rent model. And I, and I correct me if I’m wrong, but I feel like Canada is that hybrid between the us and Australia and has probably those similar issues with the financing and condos coupled with the cost of construction condos are really the only way forward would that, would that be a correct statement? Exactly.
August Biniaz (13:59):
And, and it all goes back to the two to cap rates, cap rates being so compressed here in Canada, especially in Vancouver and Toronto at around 2%, uh, really makes sense to, um, own, um, you know, multi-family. And then when I, when I see brokers advertising larger multi-family deals, uh, you know, um, that, that are similar to the deals we look at in the US and I asked them to question, why would somebody buy this at a 2% cap rate or, or below that? And then I could do it for capital preservation. This is, this is a appreciation game. They just need to park a park, their money on this project. This is not in any way, in most cases, they can’t even pay their mortgage payment on the rent. So, um, and then, yeah, and then also another main difference that I see between Canada and the us is that a lot of multi-family projects in the US are garden style built with a pool and the amenities center in the middle here in Canada.
August Biniaz (14:53):
We, we build upwards at that, that kind of, uh, you know, the resort style development projects are not really here in existence, I believe is also for, because of the cold, just doesn’t make sense. Um, uh, so those those are the major differences. It was even a point where in Vancouver few years ago, and even in Toronto, that it’s very common to do something called condo conversion, taking apartments and turning it into condos and then selling them. So, yeah, I mean, with the, with the, you know, tremendous rise of real estate values for developers and active real estate investors, it makes a lot of sense to, you know, to, to sell condos rather than, uh, you know, going into the business of, and it’s also the rent to value ratios. I mean, our rent to value ratios are so low that, uh, there’s just no margins. There’s just no profit, you’re negative cashflow, uh, that it economically makes no sense. It makes a lot more sense to turn the apartments into condos and sell them. And that’s why we have one of the worst housing crisis here, um, in Vancouver and Toronto. Exactly. Because of that. Yeah,
Reed Goossens (15:58):
No, you, you, you’re saying everything that is exactly what’s happening in Australia costs the rent to value the cost of construction. The, the lack of sophistication in terms of the, and again, sophistication right word, but the lack of financing options, we don’t have a Freddie or Fannie that can just give you two, 3% interest only for 10 years on, on a project that they can value the NOI at the end of the development, they have to say, no, I can’t see that in a why, and I’m just going to, you need to sell off the plan, but it boils back into your rent to value ratio would use mentors to completely agree with, and also the cost of construction, uh, you know, Australia and Canada associated, because they’re still part of the Commonwealth. It’s, it’s just a different structure. And we don’t have garden style apartments in Australia, and we’re in a warmer climate.
Reed Goossens (16:41):
So again, it goes back to when you comparing the colder climate of Canada versus Australia versus America, I think it boils down to that, that, that, uh, that a financing arm as well, coupled with the cost of construction is only means penciling for condos is the only way I know there’s a big push in Australia to try and do the build to rent, but it’s just trying to find those financing vehicles that, that, that do that. And for everyone who is listening, did you just hear a 2% cap rates in Vancouver? The reason, part of the reason we’ll talk about this, the run-up in the rundown and cap rates here in the United States is because in my opinion, the US is the most, um, has the highest deal in commercial real estate, in any Western country in the world. And when you’re coming from Sydney, 2% Vancouver, 2% Hong Kong, 2%, a 4% cap rate, it’s pretty fricking attractive.
Reed Goossens (17:28):
So, uh, so I, and I bang on that a lot on this show, but that is part of the reason we’re seeing so much liquidity in the market is the fact, you know, and this is my 2 cents then in my soap box, you know, the, the privacy laws here in the United States are really quite strong for international money. Um, and secondly, is cap rate, you know, comparison when you comparing to other major, um, first-world countries around the world, London, Paris, Hong Kong, Australia, Vancouver, that you just, it’s still so much more, um, it’s so much more attractive. So anyway, none of that, but, uh, Willie wanted to touch on that because you guys have such an, you know, a similar perspective to our, to being boots on the ground in Canada, seeing that disconnect between what you can find available here in the United States versus what you can find on the ground there. So let’s pivot into CPI and how that forms, tell us the story about how you two got together, because I’m sure there’s a, there’s a pretty good story behind that.
August Biniaz (18:25):
Okay. And as being real estate professionals and being in this space, uh, what started CPI was the pain points we realized that investors had, and many of the subjects we spoke about and, you know, medium home price at $1.3 million. It’s not really a business model that you could, uh, you know, it’s not like it’s not like Florida or Texas where you can buy a home for 300 K and rent it out for 2,500 bucks a month. Uh, you know, again, it goes back to those rent to value ratios, but Amy can see how everything started and there’s
Ava Benesocky (18:58):
This fine line that existed for real estate investors, you know, to be an active or passive investor, um, with the home home prices being such at a high, high level of entry, you can really only scale your portfolio. So, so large. So, um, you know, we realized these massive pain points that existed, and, uh, we were introduced to this syndication concept and we actually fell in love like some day one. And I’m, I, I, I’ll never forget. I’m like, listen, we gotta we to dive deep into this and figure out how we can bring these alternative investments to our fellow Canadians, because there is so much opportunity that exists right across the border. And that’s where we started our journey and
August Biniaz (19:42):
The pain points. I mean, we realize we’re the rigid, rigid mortgage laws here in Canada. Did you know the thin line that exists between being an active and a passive investor? Uh, the high point of entry in getting into, uh, properties that existed medium condo pricing, Vancouver is $700,000. And also you’d be, you’re being negative cashflow for, for a long time. So, and, and, and Canadian investors consistently get lots of information online, obviously content coming at them invest in real estate invest in real estate. But when they, you know, they have it in sometimes, you know, it might have a difficult time getting approved for their own primary resident, let alone to not try to become real estate investors and continuously buy. And that was, that was an issue that Ava noticed in her profession as a re as a real estate agent, focusing on investors and also in my business as a developer who was sponsoring deals, but they didn’t want to have my investors on my own equity locked up for five years at times.
August Biniaz (20:42):
Um, and when we realized, you know, um, the such investments that existed on the us side, not only on the private equity concept, but also on the investment itself, on the asset itself, where it was, you know, you’re, you’re able to, uh, you know, I was watching first time, I, I heard about the deals being done in the US they’re doing a 70, 30 LTV in some cases, 80 20 LTV from the rents they collected, they were able to pay their mortgage payment taxes and fees, third party, property manager, and still pay their investors 8 to 12% per, per annum. And that was so shocking to me that I’m like, Hey, this can be because I’m so used to, you know, Canadian Vancouver,
Ava Benesocky (21:26):
Literally in pure utter shock. And when I heard cash flow and appreciation and forced appreciation. So, you know, you’ve
August Biniaz (21:36):
Got cashflow from day one, you got the, you know, natural appreciation of the market, and then you go in there and force appreciate it. Uh, it, it was, it was a, it was a no brainer for us. And then now on the private equity side of it, to be able to, you know, being, uh, uh, Ava and I both being the facilitators and being the middleman me as a contractor, I get paid to build a home for a client or be involved in a multi-family project. I get paid no matter what happens with the market, same thing as a real estate agent, they get, they get their commission no matter what happens, but in the private equity space, the general partner is compensated relative to the performance of their asset and their performance. So we, we fell in love, not only with the asset, but also with the business model, with this, with, in this space where, you know, you’re, their feet of the GP is held at a fire to make sure that they, they, they, they, you know, they’re form. And so, so it, it was just beautiful on both sides, looking at it from the view of an investor or from an active real estate investor.
Ava Benesocky (22:35):
I realize, you know, there’s billions of dollars, uh, of Canadian capital being deployed into the US every year. Um, so we started looking around Canada and seeing if there’s other companies out there that are partnering with retail investors to focus on deploying retail capital to the U S and we looked around and read, and there’s not a lot going on on the side of the border, but we knew it was possible. So we’ve partnered up with the best lawyers and accountants. And we built up our corporate structure, um, to, to obviously, uh, you know, tax efficient, corporate structure for our fellow Canadians. And that’s where it all began, but we put our feet to the fire was the word. And we, uh, we
August Biniaz (23:16):
Put our foot on the gas
Ava Benesocky (23:18):
On the gas hill and we, uh, we had to both leave our careers and fully focus on building this company from the ground up because we didn’t have, we didn’t have, um, uh, what’s, what’s the word I’m looking for? We didn’t have, um, any, we, we didn’t have anything to look up to. So we had to build it from the ground up, uh, put our own systems in place. We don’t have a blueprint
August Biniaz (23:39):
In the us. There’s so many other groups and companies doing these business models. And when we came to copy that, but I go, hold on a second. There’s no 506D, there’s no 506D,
Ava Benesocky (23:50):
Let’s start an LLC. There is no LLC in Canada, we got, we got a
August Biniaz (23:54):
Corporation, the C Corp that you guys call in the US and we have a limited partnership, but there’s no hybrid as they have it in the US so
Ava Benesocky (24:01):
We started putting in our 12, 16 hour days, and we still are putting in our 12, 16 hour days, and we’re really seeing traction. Um, and then, yeah, just getting Canadians familiarized. Awesome.
Reed Goossens (24:12):
A little bit about on this show, the steps, and I’ve spoken on other shows about the steps that international investors need to take in order to, for me, as an operator, for me to accept them money, there’s just a bunch of stuff they need to do. I’m sure it’s very similar. I don’t need to repeat it, but I would like you guys to repeat what it is that Canadians have to do in order to be set up correctly here in the U S because I think that is very key to understanding the process before you can go start investing in a deal in say, Texas or Tampa or Orlando or Jackson.
August Biniaz (24:44):
Yeah, no, exactly. And again, it goes back to the information coming at Canadian and international investors about, uh, you know, creating an LLC and investing through an LLC. A lot of operators in the us will, that’s the requirement they have for their international investors. Sure. You can invest with us, you’re from Canada, or are you from Hong Kong or, uh, you know, great Britain. You want to invest with us. Sure. It create a us LLC, and you can invest through that LLC, but there is also issues there because in particular with Canada, um, the CRA Canadian revenue agency C is an LLC as a corporation, any kind of returns that come back from an LLC back to Canada will be double taxed. They’re seen as dividends from a corporation. Now it does make sense for a, uh, an investor who’s looking to keep their, um, uh, their, their capital in the U S as possibly possibly planning to move to the US in some, in, in the future, or has other plans or businesses in the US and it makes them sure you can, they can invest through an LLC.
August Biniaz (25:45):
But if the plan is to have that cash flow and, and repatriate their funds, um, the, the LLC one work, um, uh, now what makes it even more complicated in our case, we, we, um, we, we needed to have a control and, uh, we need to have control over our investors. And so it couldn’t be that investors would come to us and we just forward them to our fund in the US there had to be a fund here in Canada. So that’s why we created a, a tax efficient fund, a fund structure where all our Canadian investors invest into a Canadian fund managed by us. And that Canadian fund invest into a us fund, which is managed by the general partnership, which is us and our US partners.
Reed Goossens (26:39):
JJ, guys, I quickly want to tell you about some exciting things happening right now, for those of you who are interested in staying up to date with all the latest happenings in my business, or to learn more about passively investing directly into my multi-family value-add deals, then head over to reedgoossens.com and sign up for my monthly newsletter. By signing up, you will automatically be notified about my new up-and-coming investment opportunities. You’ll be able to stay up to date with all the latest real estate news here in the United States, and much, much more. So head over to Reed goossens.com and sign up today. Now, back into the show
Speaker 3 (27:21):
Reed Goossens (27:21):
And talk to me about what is the alternate, because you bring up a good point of the LLC versus it was what entity structure do you have to set up in the us in order to not avoid that double taxation for Canadian investors, it gets
August Biniaz (27:33):
A bit more complicated, but it’s a web of corporations, limited partnerships and other entities. Uh, it, uh, you know, we have an org chart, that’s like a web, um, and, and, and the cost does make sense that goes into building this when it’s a fund, when we have a multi tens of investors, and what have you, because the cost for creating the fund, I guess, divided between the investors that is a non, non nominal amount. But if a single investor is looking to use this, uh, process, it doesn’t really economically make sense. And you also got, um, uh, you know, on, on, on the us side, you know, that asset, uh, the operator eventually provides a K1 today investors, uh, but in our case, CRA doesn’t accept a K1. Uh, we need to convert that K1 on the fund level to a T 5013, uh, and, and then convert that [inaudible] to sub T 5013 for individual investors who then they can take that T 5013 tutor to tutor Canadian accountant and say, Hey, I’ve paid my us taxes on the income I’ve made over here. So, uh, I don’t want to be double taxed, and here’s the proof
Ava Benesocky (28:42):
That I’ve paid for it. And then a foreign tax credit is,
August Biniaz (28:46):
And what we realize is, you know, there, there are large institutions, for example, um, Canadian pension fund partner with Greystar on the US side to buy multifamily. So there is, like Ava said, there are billions of dollars annually going into the us from Canada in particular into the multi-family space. And there are other companies will also facilitate, but the educational component was non-existent. And so when Avon and I started CPI, we also started Canadian passive investing academy alongside CPI. Where’s our YouTube show, our newsletter. We send out an all also, uh, one-on-one, uh, uh, you know, uh, not non monetized, uh, coaching calls that we have with, uh, investors and partners about, about to, you know, to make, um, you know, to, to, to shed light on many of these, uh, items that exist when it comes to taxation. So our process, when we talk to, we talk about taxation from day one, we try to put a, uh, if, if they’re, they don’t have a cross-border accountant, we put a cross-border accountant in place for them, and, and, um, referred them to a cross-border taxation group. So it’s not a situation where now, um, the tax comes up and they’re rushing, trying to file their taxes. Um, so it’s, it’s a very hands-on. And also because we’re newer in the space, we want to be in this space for a long time. It is important to have happy investors, so they can continue to invest with us and spread the word a hundred
Reed Goossens (30:12):
Percent. I completely agree with all that stuff. And it’s great that you’ve gone through the agonizing process to learn what the big boys are doing in terms of Canadian pension funds, partnering with the superpowers of gray star. It clearly can be done, right. It just, you’re trying to get that access of information to the average investor in Canada and replicated just on a smaller level. So it’s a well done well done for, for doing that. What do you, how do you deal with the exchange rate? Because there’s obviously exchange rate risk that comes involved with that. And a lot of my dealings with international investors has been that they’re concerned about a particularly come from Australia where the Australian dollar might not be as strong as the Canadian dollar versus the us that has a risk that could also eat away at your cashflow. So how are you mitigating your against that if at all?
Ava Benesocky (30:54):
Yeah, so our Canadian investors, they actually open up a us bank account. They invest in USD and all returns come back in USD.
August Biniaz (31:02):
Yeah. The advice I give to our Canadian investors is see this as a us investment sort of moment that you, you know, you could, if you already have us funds and you’re investing with your us funds, or you’re converting it, the moment that conversion takes place, don’t look at this investment as, uh, as, as, as a convertible kind of what it is in, in, in, in the original funded was in, it just, it’s a us investment and the returns are in us. And, you know, your, your final repayment is in us. So, so US investment all the way through,
Reed Goossens (31:32):
But, but that does, but you’re talking about how you try and get at cross collateral back to the cashflow back to the United States to Canada. So that that has to play an issue at some point, right?
August Biniaz (31:42):
Um, uh, yes, so, so, so the original investment is in, is in us dollars that the cashflow that comes back comes back in us dollars into their EDD and USD account. But it’s more of a mental thing rather than an economic thing is, is this is I’m making this investment in us dollars. This is my us investment. I’m not going to go on to, uh, go onto a website and check the difference every day and see how it affects just looking at it as a US investment and potentially long-term where you can reinvest or the gains you’ve made into other US investments. But it’s a us investment. Got it,
Reed Goossens (32:19):
Got it. That makes sense in the same, same analogies that I was telling, telling to my other Australian and European investors, it is a us investment. You can bring it in here for a period of time, and then you may take your, your, your, your lumps back at some point in 5, 6, 7 years time. And at that point, you may have to deal with them. Some of it’s an exchange risk, which we all have to do, um, please,
August Biniaz (32:42):
Right? So it, and if, if it, if it’s a situation where your, your original, uh, uh, you know, a currency has as a depreciated at that time, you can reinvest with other operators or with the same operator you were with. So you’re not stuck into that, but it’s, it’s a mindset thing rather than
Reed Goossens (33:01):
Complete. And there was a little bit of differences between someone who’s in Australia and Europe versus Canada, where, you know, pre COVID you come across the border and happily spend dollars on a USB vacation, right. It’s very easy to come across the border where a lot of Australians and international, you know, they’d have to get on a flight. It’s a little bit different. So I know when I talked to a handful of miles, these investors, they, they are, um, they’re, they’re aware of that as was sort of more like the slush fund when they come to holiday in the United States. So, uh, that’s awesome. What has been the biggest challenge that you guys have faced in education, educating, educating the average Canadian investor about the benefits of investing here in the United States?
Ava Benesocky (33:43):
This is a funny one. Uh, one of the biggest challenges that we’ve had is that the returns are too high. So our advisors, um, and people actually think it’s too good to be true. Um, it could be,
August Biniaz (33:56):
It could work in your negative when you’re talking about, uh, you know, 18, 20, 20, 2% annual returns, and the Canadian investors are,
Ava Benesocky (34:03):
I agree with the five, 6% annualized return. So we, we were told from our advisors, you know, maybe kinda bring those returns down a little bit because then people won’t think it’s too good.
August Biniaz (34:13):
Hold on. This is our performance. We’ve already been conservative on every single number that we’ve used here. Like, that’s fine. Just bring it lower, you know, as soon
Ava Benesocky (34:23):
As you earlier, when I talked to investors and, you know, there’s a lot of scam things that happened too in this world and this, in this space. Um, but you know, you always point out who, who are the partners that we’ve partnered with, who are the lawyer lawyers, what accounting firm, you know, we’ve partnered with the top lawyers of accounting firms in this space. The
August Biniaz (34:41):
Great thing about real estate and real estate, private equity is your investment is, is, is backed up by actual, tangible asset, right? Obviously there are a lot of investments, like Ava mentioned, like cryptocurrencies and, uh, you know, um, uh, and, and other types of venture capital companies and startups that there are a lot of risks, but in real estate, I mean, uh, you know, in my opinion, personal opinion, I think real estate has much less risk, especially real estate, private equity, or this exempt market that we’re in has much less risk than the stock market people. You know, the stock market is seen as, uh, as, as the market. And it seems like, Hey, it’s not a risky investment where in my opinion, stock market is more risky. Um, especially if you’re not an expert at that than real estate, you know, real estate is there’s, there is cash flowing from day one. You’ve got the richest country in the world. You, you know, when people may making, you know, the median income being the highest in the, uh, you know, so can you tell her,
Reed Goossens (35:42):
Well, one thing I wanted to ask is, do you get the CA do you get the tax benefits in Canada? Like I like you in Australia and in the states, do you get tax benefits of owning a physical asset in the US yeah. So high level, I’m not asking for the details.
August Biniaz (35:57):
Not really. So, I mean, obviously on the us side, you’ve got depreciation and many other tax benefits that exist also, you’ve got a 10 31 exchange. So as some tax benefits can be, um, uh, you know, uh, sent down to the investors, but, but not all and against again, it’s, it goes back to what’s the plan of the investor is the investor planning to eventually move to the US or are they planning to keep their investment in the U S but if the plan is to repatriate their investment, then a lot of tax benefits that exist on us side, don’t follow through to the investor. Got
Reed Goossens (36:29):
It. Got it. Very, very interesting. Um, well, look, I want to thank you both for coming on the show, as we start to wrap up here, what, what does the future hold for you guys now that CPI is so young, uh, but it’s looking to, to expand where you guys got in store for the next five to 10 years, both personally, but also professionally.
August Biniaz (36:45):
Yeah, absolutely. I mean, we have our targets to have, um, uh, a billion dollars assets under management, uh, with the coast indication business model that we have, we already have $92 million of assets under management. So the billion dollar mark doesn’t look that far away. Um, but, but initially, I mean, it goes back to the CPS inception. The plan was to be the operator, but when re realizing that other companies who were the operator and who had 40, 50, a hundred employees, those paychecks painted employees are coming out of the investors gains. You know, those are the money that just doesn’t get created in thin air, um, bullying some cases. It does a $4 trillion that the us government just printed. It gets created in everybody. I’m just being facetious, but now going back, you know, it’s for, so for, um, for, for these investment groups, you know, they have a lot of employees.
August Biniaz (37:38):
And, um, so for us starting out, we realized that this coast indication model makes a lot of sense. It makes a lot of sense and brings them the costs significantly down and to beat the operator. But the essential plan is also be to operator. And now to be the operator, we have to have the infrastructure in the region we want to be in, we have to have our asset manager. We have to have the connections with the brokers. We have to have the property managers in place and employees in place. So the essential plan is to come up with a region that we feel comfortable enough to have that infrastructure in. And we’re on the west coast of Canada. A lot of west coast investors do invest in Arizona and also Nevada. So the plan is to create some form of answer infrastructure possibly in Arizona. But what we’re realizing is a lot of our majority of our investors are from east coast or different Toronto Ontario. So it’s like, we’re, we’re still, we’re still figuring things out, but currently we want to have that deal flow. We want to find the right, the best operators with the best track record to have happy investors, and then eventually, uh, diversify and grow from there to do our own in-house deals. Awesome.
Reed Goossens (38:49):
Awesome stuff. Well, guys, I wish you all the best. Um, at the end of every show, we’d like to dive into the top five investing tips. You ready to get into it? All right. Uh, so Ava for you, you can go first. Uh, what is a daily habit you practice to keep on track towards your goals,
Ava Benesocky (39:05):
It’s business or personal, sorry. Oh,
Reed Goossens (39:07):
Either or, you know what? You could be personal. It could be business. A
Ava Benesocky (39:11):
Daily habit that I have is to take care of yourself first. So I go to the gym in the morning.
August Biniaz (39:20):
Yeah. My daily is, is, is called triaged today. Um, uh, trying to put out fires, but it’s, it’s just, um, knowing what the day is supposed to all, all the plans and all the schedules, but also what, what are those, uh, most important goals that he could get done in the day that, um, you know, uh, it goes back to your, uh, you know, uh, your goal, if it’s a monthly goal or as a company goal, what can I do today to solve this problem or to get to my goal sooner aside from, so it’s a daily triaging of, of tasks. Awesome.
Reed Goossens (39:55):
I love both those answers. I’m also a gym person, maybe not necessarily the morning, but more meditation and be calm before I go and get into the fire. Because sometimes if you don’t take that time for yourself, you see if you feel like you’ve been sabotage for the day. So awesome stuff. Question number two is what is, who is the most influential person in your career to date Ava? You first August? That’s the true really influential person. Yeah. I’d have to say an August, the most influential
August Biniaz (40:31):
Person in my business today, the
Reed Goossens (40:33):
People in general, you know, it could, it could be someone else that you had as growing up
August Biniaz (40:37):
Most influential in my current business today has gotta be Dan Hanford. Um, uh, I, I, um, he was, uh, when I said the word syndication, he was the first YouTube show that I watch. I’m like, what, what is, what is this guy named Dan Hanford doing? So I, I, I’ve always got to give them the accolades. It deserves. Uh, but personally, and in life as my mom, uh, is the most influential person for me in business, uh, there, her frugality and her viewpoint and her sharpness, uh, and her love of real estate. So, um, those are my two, um, influential peoples, love it.
Reed Goossens (41:10):
I love it. Uh, question number three is what is the most influential tool in your business? And when I say tool, it could be a physical tool, like a, like a day, uh, a journal or a phone, or it could be a piece of software that you just can’t run your business without. What is it
Ava Benesocky (41:23):
That’s going to be my CRM HubSpot. Got it. Love it.
August Biniaz (41:30):
August. It’s gotta be the, my university YouTube. Uh,
Reed Goossens (41:34):
You guys have a university as well. No, no, no. Like actual university. All right, right. Got it.
August Biniaz (41:40):
No, it’s incredible. He says, people don’t realize how lucky they are these days about the amount of information and content that exists on YouTube is truly unbelievable is it could come up with this subject that you want to educate yourself in, and you can get so many different perspectives and content available on YouTube hammering and hammering it in to a point that even if you wanted it for you yet, he couldn’t forget it. I
Reed Goossens (42:04):
Love it. No, and that’s, you’re exactly correct. The access to information, particularly in the US around real estate investing, since I’ve been here for the last 10 years is just it’s blown up. And it was so much bigger when I, when I came from Australia and probably even the same as you guys coming from Canada. So I completely agree with that 100%. Um, the second last question is in one sentence, what has been the biggest failure in your career or lesson, and what’d you learn from that failure or lesson, um, in the growth of this company?
Ava Benesocky (42:33):
Yes, for sure. Um, my biggest failure was probably trying to do it all by myself without having a blueprint. Um, going back, I would have tried to, um, really find that boot print, uh, to save myself a lot of headache and a lot of lost sleep
August Biniaz (42:51):
For me. It’s, uh, goes back to Dan Sullivan’s book, um, uh, who not, how, and, uh, it’s, it’s, uh, hiring or retaining they’re the wrong person for the job. And then trying to, uh, trying to, uh, turn them into what I was hoping for them to achieve, trying to morph them into something that they really weren’t, where we were. In fact, I could have just gone and found the right person for the job, right. Yep.
Reed Goossens (43:18):
Outsourcing for sure. Love it. And last question is where can people reach you to, can you continue the conversation they want to be in your sphere? Where do they go?
Ava Benesocky (43:26):
So you can find me, I’m very active on LinkedIn, Ava, better Saki. Um, and I’ll, I’ll be
August Biniaz (43:31):
There. Yeah. So yeah, you can reach us. Um, CPIcapitol.ca is our website CPI capital on LinkedIn. And, um, uh, we’re easy to find just a phone call away. Just a message away and myself, August Biniaz, as on LinkedIn as well. Awesome stuff,
Reed Goossens (43:49):
Guys. Well, look, I want to thank you so much for jumping on the show today. Some of the key takeaway points that I took away, we’re writing down a bunch of notes here. I think it’s very similar sentiments that I’ve had, you know, bringing Australian investors to the United States. It’s it’s through the education understanding what else is out there. It’s interesting to hear that you have got to water down those returns to make it seem like it’s too good to be true for your Canadian investors, but also then going through the rigmarole of the taxation, the double taxation, the, the, the, all the red tape that you need to be really well versed on because you’re trying to raise capital from Canadian investors to place in the United States. And if you guys aren’t, well versed in it, which you guys are now, you wouldn’t be seen as an authority in the space, but you’ve gone out and you spent the hours, you spent the time getting the right people in right advice to go off and be successful. So I think that is a real kudos to you guys, but in general, I think just eat your hustle and Nick, I can clearly feel it through the camera about what you’re trying to achieve here with CPI. So, so really, really well done. Did I leave anything out? No,
Ava Benesocky (44:47):
That’s that’s great. Reed. Thank you so much. Awesome
Reed Goossens (44:50):
Guys, look, I want to thank you again for taking some time out of your day, enjoy the rest of your week. And we will catch up very, very soon. Well, they have another cracking episode jam pack with some incredible advice from Ava and August and river, they are both active on LinkedIn. So please jump over to LinkedIn and hit them up. Also go to CPIcapital.ca, which obviously stands for Canadian Canada to check them out. And if you want to reach out to them, please do so on their website. I want to thank you all again for taking some time date of tune into, continue to grow your financial IQ. If you want to reach out to me, reach out to me and reduces.com, or you can find me on Instagram or social medias, and we’re going to do this all again next week. Remember be bold, be brave, and go give life.