Latest / Beyond Fulfillment Podcast / The Arbitrage Advantage: How August Biniaz Took Canadian Capital into US Multifamily

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The Arbitrage Advantage: How August Biniaz Took Canadian Capital into US Multifamily · Beyond Fulfillment Podcast

• 0:04
  So you're kind of handcuffed and you have to keep the tenant in there.
• 0:07
  It's somewhat similar to New York in some areas of New York.
• 0:11
  August Biniad didn't come from Wall Street.
• 0:14
  He came from Canada with a vision, a gap in the market and the willingness to figure it out.
• 0:20
  In this episode we sit down with the co founder of CPI Capital on building a cross border real estate syndication business.
• 0:29
  From raising the first dollar to closing independent deals and expanding into bill to rent.
• 0:35
  Real Talk on imposter syndrome, investor education and what fulfillment actually means when you're building something from nothing.
• 0:43
  As always, if you found value from this content, please like and subscribe.
• 0:49
  All right, August Biniaz, welcome to Beyond Fulfillment.
• 0:53
  Thanks for having me.
• 0:55
  Yes, thank you for being here.
• 0:57
  So August, you are a very successful entrepreneur in the real estate space and you've been in that industry the past 15 years or so.
• 1:08
  You actually got your start in Canada and your start looked a lot different from where you ended up.
• 1:14
  And you've got quite an interesting entrepreneurial journey.
• 1:18
  So if you could just to set the stage for our listeners, can you talk about how you became an entrepreneur and give us your backstory?
• 1:26
  I think really being an entrepreneur is something that you have in your heart.
• 1:29
  Some people are just driven and they just enjoy what entrepreneurship really brings with it.
• 1:36
  And I think I always had that spirit from a young age.
• 1:41
  The journey into real estate and for real estate to be the catalyst for me to pursue my entrepreneurial journey was as a result of my mother was somewhat of a real estate investor.
• 1:53
  She was investing in real estate, dabbled in it.
• 1:56
  But my maternal grandfather, he was a real estate broker.
• 2:00
  So I come from somewhat of a real estate family.
• 2:02
  So it just made sense for me to pursue real estate entrepreneurship.
• 2:08
  And I got my real estate license in my early 20s, soon realized that that wasn't the industry I wanted to be in as far as being in the brokerage side.
• 2:18
  But I really enjoyed the sale, particularly on the value add side where you could buy something, fix and flip it.
• 2:27
  So I started doing that, doing small fix and flips and it was very profitable.
• 2:32
  Soon after I started my own general contracting company and started building actually homes from the ground up.
• 2:39
  So ground up development single family homes, both spec and custom.
• 2:43
  So in the single family development space, spec home is when you build a home either with your own funds or you raise some money from investors and you build a home and you put it on the market and
• 2:54
  you sell it and you share those profits with your partners or keep it for yourself and custom home is when somebody hires you to build them a house for their specification.
• 3:03
  So I did both of that for close to a decade.
• 3:06
  Again, the entrepreneurial spirit kicked in and always wanted to scale, do bigger projects.
• 3:11
  And Vancouver, where I'm originally from, west coast of Canada, had gone through a real estate boom.
• 3:17
  Real estate prices, you know, in the, in the 2000s, the first, you know, 15, you know, up to, from year 2000 to 2015 or so, real estate prices had gone up 500%.
• 3:31
  So both in Vancouver and Toronto there was a huge immigration population that had come to Vancouver mostly from China, from Asia and Asia had become super wealthy.
• 3:42
  And I call them really the dollar store of the world.
• 3:46
  First thing they would do, they would come to Vancouver and they would buy, buy a home there.
• 3:51
  So the real estate markets had gone on a bull run in that 15, 20 years.
• 3:56
  Definitely wrote that wave.
• 3:57
  But I always wanted to do bigger projects, always wanted to scale.
• 4:00
  I saw the growth of also high rises and skyscrapers going up in Vancouver and I always wondered how those deals are structured.
• 4:09
  You usually see a brand on a building, but that brand doesn't even go to who the partners are.
• 4:15
  How is the capital stack put together, who's funding the deal.
• 4:20
  Usually you just see a brand like Ritz Carlton, but Ritz Carlton is just giving up, putting up their name is the actual developer and their capital partners that are coming in and funding the project and managing the project.
• 4:32
  So realized that early on and I was wondering how can I get to that stage?
• 4:38
  And when I looked around MySpace and who were the people building these mega projects?
• 4:42
  It was always usually multi generational.
• 4:45
  It was never somebody who, you know, woke up one day and was building high rises.
• 4:49
  It took a few generations.
• 4:51
  Vancouver is a very multicultural city.
• 4:53
  So and I wanted to expedite that process.
• 4:56
  I wanted to get there without my grandkids being the ones building high rises.
• 5:01
  So started researching how deals are structured.
• 5:05
  Soon realized, found out about this term called syndication, where people can go to the members of the public and raise capital through a fund model or project specific model and so on.
• 5:16
  But most of the information I was learning and I was gaining was coming from the US There weren't, there wasn't a lot of platforms in Canada which, which allowed, you know, which, which created a lot of content about
• 5:33
  capital raising syndications and funds.
• 5:35
  Most of that information was coming from US platforms.
• 5:38
  And another thing I realized is this new business model that wasn't really possible in Canada, which was multifamily value add.
• 5:45
  And to define what Multifamily value add is basically apartment communities mainly in the Sun Belt.
• 5:52
  Their garden style and groups would buy somewhat older apartment communities built in the 70s, 80s, 90s, they would do some small renovation.
• 5:59
  They wouldn't even go down to the studs.
• 6:01
  They would just upgrade the countertops, change the lighting fixtures, plumbing fixtures, change the flooring, put paint on and do some upgrades to the exterior.
• 6:11
  And they were able to force appreciate the property value and in a very short period of time, three to five years, and they were able to be able to get great returns for their investors.
• 6:23
  So I really fell in love with that model.
• 6:25
  And when I looked around Canada, I felt that by bringing these US multifamily deals to Canadian investors, myself and my firm would have a competitive advantage because number one, the multifamily value add model doesn't work in Canada because
• 6:41
  the yields are much lower in Canada, the cap rates are higher and the fact that regulation doesn't allow for the value add model because the value add model is where you go in, you buy a property, let's say
• 6:56
  100 unit property is currently sitting, let's say at 90% occupancy.
• 7:01
  So the 10 empty units, you go and renovate those units, bring them online and rent them for a higher premium than your classic units that you have.
• 7:10
  And as leases expire for your other 90 units, you don't renew those leases.
• 7:14
  You, you just again do the renovation, bring them back up to higher standards and you know, bring up the rents to market rents on those units.
• 7:23
  This wasn't available possible in Canada because in Canada when the tenant rents an apartment from you, you cannot terminate the lease as a result of upgrades or renovations.
• 7:37
  So you're kind of handcuffed and you have to keep the tenant in there.
• 7:40
  It's somewhat similar to New York in some areas of New York.
• 7:43
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• 7:48
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• 8:21
  So if you're ready to partner with a 3PL that actually gets your brand,.
• 8:25
  Visit easydc3pl.com so realizing that a few years back co founded CPI Capital a couple of great Partners.
• 8:35
  And we've been on this journey of being able to bring in U.S.
• 8:40
  deals to Canadian investors.
• 8:41
  But I'll stop there because I think the hard work really starts after all of this.
• 8:45
  Okay, yeah, no, I appreciate the backstory.
• 8:48
  So you had this kind of family history in real estate.
• 8:51
  You got into it early 20s, you realize you're not, you don't want to be a broker, you start doing the fix and flips, you start your, your building company, you realize some early success, you really learn the, in
• 9:03
  the, the industry itself and you're becoming an expert.
• 9:06
  And then you, you're natural, naturally curious because you, you really love this industry and then you want to do bigger deals.
• 9:14
  So you, you look into syndication and you realize that the US is where you could really do this.
• 9:19
  And you know, you talked about the, the multifamily value add model was really attractive to you.
• 9:25
  It didn't work in Canada.
• 9:26
  And then it, of course it's, it's very prominent in the US and then you realize you could have this arbitrage to where you could bring these types of opportunities to the Canadian investors that you knew in Vancouver and
• 9:38
  the other areas.
• 9:39
  So great idea.
• 9:41
  You clearly had the background that you, like you said, you found some partners and you, you start CPI Capital.
• 9:48
  So what happens next?
• 9:50
  Yeah, so what happens Next is in 2019, that's when we, we, we founded the company and started kind of the process.
• 9:57
  Early on we had to understand that a real estate investment firm, particularly a real estate private equity firm, no matter what asset class they're focused on or what the business model is, it could be, you know, different asset
• 10:11
  classes under the commercial real estate umbrella.
• 10:13
  It could be multifamily, it could be industrial, it could be office, it could be hospitality.
• 10:18
  So it doesn't really matter what you're, you could even be a portfolio of short term rentals.
• 10:24
  But if you are managing an investment firm which deals with investors, you have these different divisions within the company.
• 10:30
  You have your acquisition department which goes out there, finds the deals, makes a connection with brokers, has the underwriting skills to be able to analyze deals and underwrite deals.
• 10:41
  And then you have your ASS management division which after you've acquired a property, it executes the business plan, it does need a renovations, deals with third party service providers or property managers and so on.
• 10:54
  And then you have your investor relations, which is dealing with debt and equity in most cases.
• 10:59
  Investor relations, deals with equity basically going out there, creating leads, potential leads with investors, nurturing those leads, qualifying those leads.
• 11:08
  And hopefully when you do Have a live deal.
• 11:10
  Those investors will invest with you.
• 11:13
  So early on we were wondering, how are we going to manage all of these divisions and build them from the ground up?
• 11:18
  And it wasn't like we had a huge exit and had made tens of millions of dollars and we could just come and throw cash at it and hire the top acquisition guy and pay him 150 to 200k a
• 11:29
  year just to sit there and try to find US deals and bring on an asset manager again, same type of salary, and then have multiple team members for the investor relations.
• 11:40
  Now the operations, There's a component there as well.
• 11:42
  You need a controller, a bookkeeper, somebody who manages the internal aspects of the company outside of those three divisions.
• 11:48
  So we didn't have the funding to be able to bring those individuals on.
• 11:52
  So early on, the three of us are us three partners.
• 11:54
  We became partners within the firm and shared within the profit, kind of a profit share model of the firm.
• 12:03
  But early on, the other issue was that we had never done a deal before in the US So US Deals were very alien for Canadian investors.
• 12:12
  There was also a fact that they didn't really understand that the private equity side of it, the syndication model, where they're passive investors, they're limited partners, you know, we are the general partner.
• 12:24
  So they don't really have any say in the deal.
• 12:27
  So there was a lot of education that needed to go and bring these investors on.
• 12:32
  So we made a decision early on that we had to partner with another group who had the track record, who had done deals in the past, and we could piggyback them to do our first couple deals.
• 12:43
  And that's exactly what we did.
• 12:45
  We partnered with another group for our first few deals.
• 12:48
  The other difficulty was, and in that case, the asset management was nominal as well.
• 12:52
  We're just overseeing them, making sure they meet us on a monthly basis.
• 12:55
  We're hitting those metrics that we were hoping to hit.
• 12:58
  We see where the occupancy is at.
• 13:01
  If the occupancy is dropping, we'll have these discussions with them.
• 13:03
  But things went somewhat fine, but we learned a lot in that process.
• 13:07
  But the other aspect that was happening in parallel was about raising capital.
• 13:12
  How are we going to.
• 13:14
  And also keep in mind, on these first couple of deals, it was also this lead sponsor, as it's known in the space, who was also getting the debt as well.
• 13:22
  So we didn't have to sign on the debt and secure the debt.
• 13:26
  They had already secured the debt, so they were getting the bigger portion of the general partnership stake in the deal.
• 13:32
  But one aspect was the investors.
• 13:34
  How are we going to be able to raise money?
• 13:36
  So the first thing we did between the three partners is we say, hey, listen, let's contact and get in touch with our circle of influence, people who've done business with us in the past, people that, that, that basically
• 13:49
  know us.
• 13:49
  If it's friends, families, business associates, let's get in touch with them and let them know what is this new business we've got into and if they'd be interested in investing with us.
• 13:57
  So that's exactly what it did, what we did.
• 14:00
  And for myself, being a builder for close to a decade, almost 10 years, I reached out to a lot of my clients.
• 14:07
  These are people were high net worth.
• 14:09
  They had trusted me with millions of dollars for construction costs and their project.
• 14:13
  So I felt early on that converting those types of individuals was going to be a very easy process.
• 14:20
  But it didn't work the same way because the education was lacking.
• 14:24
  They knew me as a Vancouver builder, they knew me as somebody who was an expert in MySpace, building homes and what have you.
• 14:31
  When I brought them this private equity type of deal in Orlando, which was our first deal, which, and it was a limited partnership structure where they were just limited partners, we're getting these units within this syndication I had
• 14:46
  failed to take.
• 14:48
  The first step is educating those investors about what it is that we.
• 14:51
  That it is that we do.
• 14:52
  So the conversion wasn't there as easy as I thought.
• 14:55
  Now, we did raise the capital we needed for that deal between us, the three partners.
• 14:59
  But we went on this pursuit that there needs to be an educational component in what we do.
• 15:05
  So we launched our podcast soon after real estate investing demystified.
• 15:10
  We started writing newsletters, blogs online.
• 15:12
  We started becoming very active on social media, creating content.
• 15:15
  So not only there is a brand being built around the company, but there's a brand being built around each one of our executive team members.
• 15:22
  And as investors would come in to the funnel in some way, either through our past connections, even either through a networking event, either through conventional marketing strategies like paid ads and SEOs, either through lead magnets on our website
• 15:36
  or through there would be a nurture process.
• 15:38
  So that nurture process is that they get an email every Sunday at 6am Eastern.
• 15:44
  They get an email about a recap of what has happened in the past week in the economy, in real estate and so on.
• 15:50
  We host monthly webinars, educational webinars again.
• 15:54
  So there's a nurture process that these investors.
• 15:56
  Because at the end of the day, the proposition we're making sure we have a great deal.
• 16:00
  There's great economics for them.
• 16:01
  They're making above market returns, hopefully if everything goes well.
• 16:05
  But they're signing an agreement which is 150 page document that says if we happen to lose all their money, they can't do anything about it.
• 16:11
  It's a big proposition to ask somebody to invest 50k.
• 16:15
  Our minimum is 50k USD.
• 16:17
  Our average check size today is 125 to $130,000.
• 16:21
  But that is a big proposition to ask someone who's seen you on social media.
• 16:25
  So that nurture process, that trust process is extremely important and then our onboarding process as well.
• 16:31
  So if a lead comes in initially they go through a qualifying process to see first of all if they're accredited or not.
• 16:37
  If they're not accredited, they go down a different journey.
• 16:39
  If they're accredited, they go down a separate journey.
• 16:42
  And then our qualifying team members get on a call with them to qualify them.
• 16:46
  It's just answering some brief questions.
• 16:48
  Are they accredited?
• 16:49
  Do they have liquidity?
• 16:50
  Have they ever invested as a limited partner in the past?
• 16:52
  Do they understand the asset classes that were involved in multifamily and btr, which Bill Turin, which I'm happy to get into in a moment.
• 16:59
  After that, the investor gets on a call with what we call closer within our firm.
• 17:03
  So as an executive team member who gets on a call with them, makes a personal connection with them, takes detailed notes in their discussion.
• 17:10
  So if the person says, my son is graduating, you know, this year, that'll be in the notes.
• 17:14
  Next time they chat, they'll pull up the notes and discuss and see how their son is doing if it's gone to college or not.
• 17:20
  So it's very, it's a very intimate process with investors.
• 17:24
  And then you hope those investors you do well, you perform and they're going to do referrals.
• 17:28
  But that's how really the company came about.
• 17:30
  And we built a different structure, different branches of the company.
• 17:35
  Okay, all right, appreciate all that and a lot of questions there.
• 17:38
  So we talked about your background.
• 17:41
  You want to do bigger deals, you start this syndication company for deals in the US and like you said, there's three different divisions which all are, I guess, very intensive in terms of what's required to run them.
• 17:54
  You talked about the capital change challenges early on and there's just three of you, right?
• 18:00
  Was there a point like early on?
• 18:02
  Because it sounds like maybe you didn't really know exactly what you're getting getting into as far as like how much it was going to require and you had to really kind of, I don't want to say, maybe you
• 18:15
  had to do more with less early on because of how much was required to make a company like this work.
• 18:23
  Yeah, no, absolutely.
• 18:24
  I mean, that's an excellent question and excellent point.
• 18:26
  And our CEO Ava Benasaki says it the best.
• 18:30
  And she says that if you're looking to get into the space and you're not coming from an Ivy League school and you don't, you're not coming from a finance background and you haven't worked for a private equity firm,
• 18:40
  you have to be a bit illogical.
• 18:42
  You cannot go to logical route because a logical route says that you need all of those prerequisites.
• 18:48
  You need to come from an Ivy League school, you need to have worked in finance for at least a decade, you need to have worked for a real estate private equity firm.
• 18:54
  And now you're branching out.
• 18:55
  So for us, three partners, not one of our partners did have experience in real estate private equity, but other two, myself and my other partner, Ava, we didn't.
• 19:07
  So there was this imposter syndrome early on and that we felt so subpar to people we were having conversations with.
• 19:15
  In most cases, most of our investors were more educated than us, wealthier than us, because we could see when somebody has to get a third party accreditation, we know how much they're worth.
• 19:24
  So it was definitely, it seemed like an unattainable goal, but what really gave the wind under our wings was our performance after we did a few deals and we were able to preserve our investor capital even through a
• 19:39
  difficult.
• 19:40
  And there was a lot of distress in the market because the first few deals we bought were in 2021 and 2022, which was the worst time to buy deals.
• 19:48
  We were able to still salvage our deals.
• 19:52
  So it gave us that a bit of confidence.
• 19:54
  And then there we really ate.
• 19:57
  We ate, slept, lived real estate private equity.
• 20:01
  So all of us kind of really immersed ourselves in the space.
• 20:06
  So if it's on LinkedIn, all the connections that I have are mostly in real estate private equity.
• 20:10
  All the content that I absorb is real estate private equity.
• 20:13
  So I understand the market really well in this space really well.
• 20:17
  Eventually I got a chance to be accepted into Harvard for their private equity and venture capital program.
• 20:23
  So I went there and spent a week on campus and was with 70 other great minds from all around the world that came and took that program.
• 20:31
  So one of my partners ended up authoring a book.
• 20:34
  My other partner ended up becoming a thought leader in the underwriting and analysis of multifamily.
• 20:41
  So we really grew through this process.
• 20:44
  When I look back the last six and a half, seven years, it's, it's, it's been a difficult time.
• 20:49
  And yeah, early on, as you said, it was, if we weren't a bit illogical, this would have, this, we should have never gone into the space.
• 20:59
  Yeah, I love that because so many people can relate to that having to be illogical and just sticking to it and not giving up before they really made something happen.
• 21:10
  So, and that's interesting too because like you said, there's three of you partners, you're in this tough time and kind of facing what looks like something you shouldn't have even done on the surface, but yet you stuck to
• 21:21
  it, you gritted through it.
• 21:23
  And even the first couple deals, it sounds like where you had to partner with another firm, there wasn't much profit in there for you.
• 21:29
  But you're preserving the investor capital, you're learning, you're making a name for the company.
• 21:35
  But through all that, was there ever a point in time where you thought about giving up?
• 21:40
  Well, I was a successful builder.
• 21:43
  I have a very close relationship with my family, particularly my mom, so she wanted me to pursue that career.
• 21:49
  My other business partner, Eva Benasaki, was a top performing real estate agent for a decade with ReMax.
• 21:58
  My other partner was a civil engineer building bridges.
• 22:01
  And all of our family knew what it is that we do and we're living a pretty comfortable and successful life.
• 22:06
  So when we, we came to them and we said, hey, we're going to be doing this business.
• 22:10
  Most of the profits for the GPs are made on the back end as long as the deal performs.
• 22:15
  Because you know, we put the structure for GPS are to get some fees up front, nominal fees that just keeps the lights on, but their performance fees are in the back end.
• 22:24
  A portion of the upside, a portion of the profits.
• 22:26
  And our families didn't really understand that process.
• 22:29
  They understood that you put in the work and you get paid for it.
• 22:31
  So and the fact that we were living our careers, so and being a home builder and being a real estate agent and being an engineer, it's not a case where you can just shut down the business and then
• 22:42
  restart at any time you wish.
• 22:44
  You've built those contacts, you have those crews, you have those relationships.
• 22:48
  So as we basically all three of us, we really burnt the bridges behind us when we started cpi knowing that this is, we were going to give it, give it our all.
• 22:57
  And that was one of the bigger motivating factors was the embarrassment of going back to our families with our heads down.
• 23:04
  Saying that, hey, we failed was a fear of failure.
• 23:07
  But we also knew that this business, the upside and the potential was so great.
• 23:11
  So it wasn't just becoming the top agent in the city or becoming a builder in Vancouver.
• 23:16
  Real estate, private equity, for example, Blackstone is one of the largest private equity, I think it is the largest private equity firm in the world.
• 23:23
  It's got over a trillion dollars of assets under management.
• 23:26
  And when they started out in the 80s, Blackstone was a leverage buyout shop.
• 23:32
  They would buy companies, make them perform better, and then they would exit them.
• 23:36
  They were classic private equity shop, but at some point they start having a larger allocation to real estate than they did to private equity.
• 23:45
  And same thing with a lot of other private equity firms, Apollos of the world and so on.
• 23:52
  So, so we knew that the ceiling was unlimited, where we can scale this company, where we can grow it.
• 24:02
  So we were very excited and we knew that industry we're in is not an industry that technology is going to affect in any way.
• 24:08
  For example, technology could eliminate jobs or businesses in a very easy way.
• 24:13
  And we've seen that with AI today.
• 24:15
  But when it comes to somebody actually having a physical place to sleep in the US which is a population over 340 million people, over one third of Americans rent are renters.
• 24:28
  And approximately between 10 and 15% of Americans actually live in apartment communities, some form of apartment communities.
• 24:35
  Now townhomes also fall under that umbrella and also build to rent falls under that umbrella as well.
• 24:42
  So it was a big market and that market continued.
• 24:45
  It was continuing to grow from post World War II.
• 24:49
  So America was becoming more and more of a nation.
• 24:51
  So we knew that the industry we were in has a really high or invisible ceiling.
• 24:57
  We knew that it was an industry that technology couldn't change it and the demand was going to continue to grow.
• 25:02
  And another aspect of it was market share.
• 25:04
  We also knew that when we looked at other industries like for example, AI, Nvidia has, I believe it's a 60% market share.
• 25:12
  When you look at smartphones, Apple has a 40% market share.
• 25:16
  When you look at banking, JP Morgan has a 17% market share.
• 25:20
  But when you look at multifamily and the largest market share, which is greystar, greystar has less than a half a percent, less than a quarter percent market share in the multifamily space.
• 25:31
  So you know that it's a space that there is not one group that controls everything, is very difficult to Break in.
• 25:38
  Like, imagine if we decided to build a smartphone tomorrow.
• 25:43
  Like, it would be such a leviathan of a task.
• 25:48
  Whereas in a multifamily space is a lot easier to enter space and grow.
• 25:54
  And we've seen that with us ourselves.
• 25:55
  So, yeah, part of it was family, part of it was us believing in ourselves, part of it was learning on the job, but part of it was also really believing in the asset class and the business model that
• 26:05
  we were utilizing.
• 26:07
  One of the things I was.
• 26:08
  Last point on this, one of the things I was struggling with is as a, as a man, as a, you know, somewhat of a confident man, this idea of ever asking anybody for money was against my, my beliefs.
• 26:21
  I, you know, you never ask for money from somebody, you know, it's just not a right thing to do.
• 26:26
  So I saw asking for investors to invest with us as me asking them for money.
• 26:31
  Until I talked to one of my advisors when I was having difficulties is that, hey, let's.
• 26:35
  He told me that you're not asking for money, you're actually offering them something that alternative they wouldn't have access to.
• 26:41
  So he built that confidence in me that it wasn't as if I was asking for people to money and for them to, to, to.
• 26:47
  To give us money, but it was rather a partnership and we were actually providing them with a service which was them having access to these deals that alternative they couldn't have access to.
• 26:55
  So, yeah, a lot there.
• 26:57
  Wow.
• 26:57
  Wow.
• 26:58
  No.
• 26:58
  And then on that last point, that's great self awareness too.
• 27:01
  To, to realize that was like a block.
• 27:03
  And then having a mentor of yours going to help you reframe that so you could, you could successfully get money from investors.
• 27:12
  And like you said, right, you're not just asking them for money, you're.
• 27:15
  You're offering them an opportunity.
• 27:18
  Okay, so you survive these early challenges, all three of you are all in.
• 27:24
  You burnt the boats behind you.
• 27:27
  You're not giving up.
• 27:28
  Right?
• 27:29
  Like you said, you all had success previously, so you certainly know what, what you're all capable.
• 27:33
  It sounds like the synergy of all three of you together really was a big factor in the company's success.
• 27:39
  So what was the inflection point where things really started to take off?
• 27:44
  The inflection point was that the first two deals we did with one sponsor, things were okay.
• 27:50
  We learned lots on the job.
• 27:51
  Then we did another subsequent deal with another general partner sponsor, as it's known in the space.
• 27:57
  But at that point we were like, hey, we're done being supplementary to another group.
• 28:02
  We need to do our own deals.
• 28:04
  So we went out there and we were at the same time we were building our acquisitions and asset management divisions within the company as well, bringing team members and so on, creating standard operating procedures internally.
• 28:16
  So we went under pursuit of getting our own deal under contract.
• 28:20
  So In June of 2024, there was a deal that came across our desk in the St.
• 28:27
  Petersburg submarket of Tampa Bay.
• 28:29
  We fell in love with the deal.
• 28:30
  136 units, value add deal.
• 28:33
  We put it under contract and we were able to be awarded a deal, raised close to $10.5 million, which in Canadian dollars that's close to 15 million Canadian dollars, and were able to take that deal down.
• 28:48
  So it was a huge monumental moment for the firm because we were able to not only acquire our first deal, but do it as a lead sponsor to make all the decisions, sign on the loan.
• 28:59
  It was a Freddie Mac loan, so it was an agency loan.
• 29:02
  I remember that they did.
• 29:05
  Because it's a government agency, they do background checks on all the team members for any lawsuits or any issues they've had.
• 29:11
  So I had some parking tickets in Vancouver when I was in my early 20s and they even had a record of that when they sent an email seeing that information from a different country.
• 29:22
  So it was just mind blowing of what we went through to get approved for an agency loan.
• 29:28
  But yeah, that was the biggest, I would say, moment for us, closing our first deal and then from there.
• 29:35
  The other big milestone was when we had looked internally at cpi, realizing that our mandate and our vision initially was focusing on multifamily, but asking ourselves, do we want to limit ourselves just to multifamily value add or is
• 29:52
  there any other business models that we want to utilize?
• 29:55
  As I mentioned earlier, my background was in home building.
• 29:58
  Myself, my other partner's background is a civil engineer.
• 30:01
  And we looked at this new asset class called built to rent BTR where it's basically an investment firm, buys a piece of land, builds a community of single family homes or duplexes, stabilizes it means gets it occupied to
• 30:16
  90% or more and then either refis or it sells it to an institution and exits that deal.
• 30:23
  So we saw the growth of BTR in the US and we were very bullish on that asset class.
• 30:29
  And we were able to close on a.
• 30:32
  Last year we were able to close on a build to rent 30 duplex, 60 unit project in the helotes market of San Antonio.
• 30:41
  So it was our entrance into a new asset class.
• 30:43
  It was our entrance into a new market.
• 30:45
  We were now In Florida and Texas.
• 30:47
  So that was the other very big milestone with CPI again as the lead sponsor.
• 30:52
  So yeah, those were some major, major milestones.
• 30:57
  Okay.
• 30:57
  All right.
• 30:58
  And again it took five years from, from the inception of the company and you guys going all in and with withstanding these early setbacks and just kind of flatline growth to you, really closing a deal with your own
• 31:11
  funds without supplementary partner kind of piggybacking on someone else.
• 31:17
  So that had to, that had to feel good.
• 31:19
  Right.
• 31:20
  After kind of gridding through all those toug.
• 31:23
  Really like you said, closing a successful deal on your own.
• 31:26
  Yeah.
• 31:27
  Being our advocate after 2019 when we founded a company, 2020 Covid hit.
• 31:32
  So real estate market completely stopped, completely shut down for a few months.
• 31:37
  And then the Fed had to.
• 31:40
  The central banks around the world had to print a lot of money to keep people from going to work.
• 31:44
  People had a lot of money in their bank accounts so they started jumping online and doing shopping and buying a lot of stuff.
• 31:50
  And that resulted in massive inflation, near.
• 31:59
  Extreme inflation in some cases.
• 32:01
  Inflation went up to 9.5% in the US central banks particularly the Fed has only one lever to pull if they want to battle inflation and that's increasing rates.
• 32:12
  We were in the market when everything shut down for a few months, then the rates were dropped.
• 32:16
  So the market went on a bull run.
• 32:18
  And us trying to get into the market was near imposs because other groups were coming in because of cheap debt.
• 32:23
  They were putting nonrefundable deposits day one.
• 32:25
  People were asking prices that didn't make any sense.
• 32:28
  So it was very difficult to try to do deals as well in that time.
• 32:31
  But then after, when the Fed and central banks around the world realized that inflation is out of control.
• 32:37
  Hyperinflation, that's the term I was looking for earlier.
• 32:40
  They had to start increasing rates.
• 32:42
  So they went on a tightening cycle and raised the Fed's funds rate 11 consecutive times.
• 32:47
  Commercial real estate loans are indexed off the treasury bonds.
• 32:52
  So if the Fed increases rates that has a correlation to the treasury bonds.
• 32:56
  Usually the 10 year treasury and the Treasuries went up from a couple hundred basis points all the way up to 500 basis points.
• 33:05
  And it would make deals, not pencil anymore and didn't make deals make sense.
• 33:10
  Additionally, a lot of people had refinanced properties they already had.
• 33:15
  So there wasn't a lot of deal volume because they already had to refinance to a better debt.
• 33:19
  There were cash flowing on those properties.
• 33:20
  So they didn't.
• 33:21
  The motivation wasn't there for them.
• 33:22
  To start selling deals.
• 33:24
  So the difficulty was Covid, what happened with the economy, what happened with central banks.
• 33:30
  It wasn't as if that we, we.
• 33:33
  The motivation wasn't there or the infrastructure wasn't there.
• 33:36
  It was the, the market was really a market from 2022 to 2024.
• 33:40
  When the Fed went on that tightening cycle, we somewhat sat on the sideline because it didn't make sense to do deals.
• 33:47
  So I just had to mention that, that it wasn't just five years of stagnation.
• 33:51
  It was five years of making smart decision of not getting involved in some deals as well.
• 33:57
  Okay.
• 33:58
  All right.
• 33:59
  One other question too.
• 34:00
  You mentioned the podcast and the newsletter early on, right?
• 34:03
  In terms of building trust and really nurturing those investor relationships, how important has that personal branding aspect been to the success of your company?
• 34:16
  Yeah, I'll answer that in two ways.
• 34:18
  I mean, when it comes to investors and investor relations and that relationship you're building, it shows investors that you are there.
• 34:24
  There's a level of authority there that you're out there, you're having a voice, you're interviewing expert guests, you're being interviewed by others.
• 34:30
  So you exist out there.
• 34:32
  So if they see your information somewhere, come into the funnel, they do a research on the executive team members.
• 34:40
  There's of content online that showcases at least these guys must know what they're doing, right?
• 34:45
  I mean, even if they didn't, after spending six years of doing this every week, they must have learned something by now, right?
• 34:51
  So that was one aspect of when it comes to investors.
• 34:54
  So content lead gen proving that trust.
• 34:57
  But for us ourselves, the fact of having a weekly podcast, it also allows us to understand the real estate space much better.
• 35:05
  Six years ago, over six years ago, when I co founder cpi, I thought I knew everything about real estate.
• 35:11
  I thought I knew it all.
• 35:12
  But when I started having our podcast and bringing different expert guests on that spoke about different ideas within the real estate space and finance and the economy, I realized how much I didn't know.
• 35:21
  So every week when we have a guest, we have to do an hour, an hour and a half research on our guests and prep for our show.
• 35:27
  Then the guest comes on, we do an hour interview of the guest, then we take that material and send it to our team.
• 35:32
  So all of that is that that concept of immersion within real estate.
• 35:35
  So it's not doing his job to create Legion and to trust with our investors and creating other content.
• 35:41
  It's also the educational side for us and my co host to be in the space.
• 35:47
  The other aspect of it is having a podcast.
• 35:50
  It opens a lot of doors.
• 35:51
  If there is somebody you want to get into a room with, there's a chance just to invite them on your podcast.
• 35:56
  It's like having them for an hour and you can ask any questions you want and get a crash course on whatever the expertise is, but also to break the ice with that potential individual, whoever it is, providing you
• 36:06
  potential services, potentially investing with you, or other aspects.
• 36:10
  So it's been great.
• 36:11
  And the other lastly, I would say is that this is more of a selfish idea.
• 36:17
  People don't want to mess around with somebody who's got an audience, who's got a voice online.
• 36:21
  Right.
• 36:21
  You don't want to rip that guy off or do something wrong to him because he can jump on his podcast and tell people what happened, what you did to him.
• 36:29
  So.
• 36:29
  So I take that as another thing that usually doesn't come up, but it gives you a bit of, you know, it gives you a buffer of protection because people might not want to, you know, take steps against you
• 36:44
  because they know that you're a voice of authority and you have an audience.
• 36:47
  So that's another way I look at it as well.
• 36:49
  Love that.
• 36:50
  Okay.
• 36:50
  And August, looking back at the whole journey right from when you started as an entrepreneur, everything you went through, and then of course the CPI and the run you've had here, looking back on all this, what's been the
• 37:00
  best part of it for you?
• 37:03
  Ooh, the best part of it is really growing myself as a businessman, as a.
• 37:07
  As a man.
• 37:09
  Those two parts.
• 37:10
  Understanding that a lot of unattainable goals that I never thought I could achieve, I've achieved them.
• 37:16
  It's been an incredible journey, partnering with my partners, making that decision to partner with them.
• 37:23
  Yeah.
• 37:23
  When I look back at it and also building something that possibly my children have to two sons, one of them is 14 months, a one year old and a two year old pretty much.
• 37:33
  And I'm excited that CPI might be a company that they work for one day and they add value to this company and our investors and our tenants that live in our communities.
• 37:43
  So it could be a multi generational situation as well.
• 37:46
  The same way I was looking at multi generational people in Vancouver.
• 37:50
  So, yeah, it's been an incredible journey and learned lots along the way and excited to continue this journey.
• 37:56
  Journey.
• 37:57
  Okay.
• 37:58
  All right.
• 37:58
  In August, if people want to find you online, learn more about CPI or the, the potential opportunities you have or just reach out for any other reason, what's the best way people can find you online.
• 38:09
  Yeah, our website, cpicapital.com it's, you know, great place to go.
• 38:15
  You have lots of information there.
• 38:16
  A lot of great information you can download.
• 38:18
  We have our back of the envelope underwriting model that you can just download there.
• 38:21
  We have our educational webinars there you can access just through our website and so lots of great content there.
• 38:29
  If you want to reach me directly, I'm very active on LinkedIn.
• 38:32
  AugustBiniaz I'm the only August Biniaz on LinkedIn.
• 38:35
  So send me a message.
• 38:37
  Say you see me on the show.
• 38:37
  I love to book a time and learn more about you and add value to you and your journey as well from what I've learned.
• 38:44
  Okay.
• 38:45
  All right, August, we will link all that in the show.
• 38:47
  Notes for everyone and thank you so much for being here and taking the time to share all this valuable wisdom from your journey with our listeners.
• 38:54
  Be greatly appreciated.
• 38:55
  Thank you and thank you for asking great questions.