Build Wealth With Multifamily Secrets with August Binianz

The Real Estate Investing Club

Join an active community of RE investors here: https://linktr.ee/gabepetersen  0:00 Introduction and market outlook 2:14 August Biniaz’s real estate journey 6:48 Why Canadian investors target U.S. multifamily 11:32 Building wealth through syndications and funds 16:05 Choosing Florida and Tampa for investing 21:07 Off-market deals vs broker relationships 25:18 Multifamily value-add investing explained 31:02 Interest rates, inflation, and market cycles 37:10 Best real estate markets for future growth 42:26 Lessons from failed deals and partnerships 46:08 Build-to-rent communities in Texas 48:54 AI tools changing real estate investing  MARKET CYCLES, MULTIFAMILY INVESTING, AND BUILDING LONG-TERM WEALTH 🏘️💰  In this episode of the The Real Estate Investing Club Podcast, host Gabriel Petersen sits down with August Biniaz to break down what is really happening in today’s real estate market and how investors can position themselves for long-term financial freedom through multifamily investing, syndications, build-to-rent developments, and strategic market selection. 🚀  August shares his journey from growing up in a real estate-focused family in Canada to becoming deeply involved in U.S. multifamily real estate investing. The conversation dives into how Canadian real estate regulations, strict rent controls, taxation, and economic policies pushed him to seek larger opportunities in the United States. This episode is packed with insights for anyone interested in passive income, apartment investing, cash flow, private equity real estate, and wealth building through commercial real estate. 📈  MULTIFAMILY REAL ESTATE AND VALUE-ADD STRATEGIES 🔑  One of the biggest themes in this episode is multifamily value-add investing. August explains how investors can increase apartment property value through renovations, operational improvements, and strategic rent growth. Gabe and August discuss why certain markets support rent increases while others become overbuilt and difficult to operate profitably. They also explore how inflation, rising interest rates, and supply-demand imbalances are reshaping opportunities for real estate investors across the U.S.  If you want to learn about apartment syndication, multifamily investing for beginners, real estate private equity, or how institutional investors analyze deals, this episode delivers actionable knowledge from real operators actively investing in today’s market. 🏢  #RealEstateInvesting #MultifamilyInvesting #PassiveIncome #CommercialRealEstate #FinancialFreedom  Want to learn more about our guest? Connect here: CPI Capital  Want to learn more about the REI Club Podcast, how to invest with Gabe at Kaizen, or join our community of active real estate investors on Skool? Visit the podcast website at https://www.therealestateinvestingclub.com , or  click here: https://linktr.ee/gabepetersen

Transcript

00:06all right we are back with another episode of the real estate investing club i hope you guys are

00:12having a great day great week wherever you are and whatever day it is for you this is uh we're

00:18actually coming to you on a friday i know we've been switching those days around but we are

00:22bringing that friday energy back to you and i've had to apologize for the past couple of episodes

00:27and it's true for this one as well i am getting over a little bit of a sickness for anybody

00:32out

00:32there who has small children in their life i got a two and a half year old daughter and she

00:37just

00:37keeps getting me sick this fall i've just been getting sick one after the other so i might cough

00:42a little bit during the episode but i'm going to try to keep it to a minimum but with that

00:46said i'm

00:46going to bring in our guest august viniaz from cpi capital august has tons of experience in multifamily

00:53and built to rent so this should be a good episode for all you guys out there who are interested

00:57in those topics august thanks for hopping on gabe thanks for having me and talking about two and a

01:03half year old i got a two-year-old myself and but one of the great things about living in

01:07florida is

01:08you know they don't get sick that often so i haven't had the same experience yet man it's been uh

01:14it has

01:14been rough so we uh i mean she stays with us um my wife and i we both work from

01:19home and so she stays

01:20with us most of the days but we've been wanting to get her out there talking with other kids and

01:24so

01:24every friday she goes to uh kind of like a daycare kind of thing and every single friday this during

01:29this fall i swear she has come back with a with a flu or a sickness or something and then

01:34she gives

01:34it to us and it's just this cycle so i'm i'm looking forward to when the spring starts coming

01:39around i hear you um all right man well hey i told you before we get on here we always

01:44like starting

01:45with stories we like to hear how people got to where they are um so why don't you take us

01:48to the

01:49beginning of your story in real estate and just tell us how you got here yeah i come from uh

01:54somewhat

01:55of a real estate family my um maternal grandfather was in real estate um and uh i learned lots about

02:02real estate kind of in my household my dad wasn't really in real estate but my mom was as an

02:06as an

02:07investor so if real estate was a language i really understood it uh in my early 20s i got uh

02:13involved in

02:14real estate as a real estate agent got my license uh soon after i got into more fix and flip

02:20more on

02:20the active real estate investing side rather than being a broker uh from there i started my own home

02:25building company white rhino developments which no longer in business for a while now but i built

02:30homes for close to a decade i built both custom and spec homes uh custom is when a client hires

02:36you

02:36as a builder to build them a home usually for them to use and and move into and spec home

02:41is when you

02:41build a home and you put it on the market to try to sell for profit so i built both

02:46of those both

02:46those types of uh projects but i always wanted to scale i always wanted to uh you know build high

02:52rises these large projects uh but i always felt limited about limited on the amount of capital i had

02:59access to if it was myself maybe my immediate family maybe some business associates but i saw all

03:04these huge projects going up and i wondered how how the capital formation came about and i really went

03:10uh done this journey of realizing how capital was formed right private equity is the uh the foundation

03:17of capital how capital is formed outside of the wall street right you could go through the ipo route

03:21raise capital for a venture that you have uh and so on so that's a more standard conventional way but

03:28outside of that how is capital formed and it's done through a syndication model or funds or when it

03:35comes to real estate REITs um so i started educating myself in that space and uh this time i was

03:41in

03:41canada in vancouver west coast of canada and uh vancouver had gone through a boom uh over you know

03:48the approximately 20 years maybe this ended probably a few years ago but it went on a bull run for

03:5320

03:54years because so many immigrant population were coming into vancouver and vancouver is somewhat

03:58landlocked you got the u.s border on the south pacific ocean on the west you got mountains on the

04:04east and the

04:04north and uh there's agricultural land reserve in vancouver where uh if you look at the alr map

04:11the overview of vancouver you can see majority of vancouver is alr you can't build on it and then

04:16that coupled with uh with the fact that there's so much bureaucracy in vancouver in different

04:22municipalities and and cities which the process of construction and rezoning and entitlement takes so

04:28long um it had created such a strain on supply uh so all these immigrants are coming in uh and

04:35there's just not enough housing so vancouver went on this 20-year bull run uh compounded eight percent

04:41a year so real surprises went up 500 over that 20-year period ending around a few years ago but

04:47um so it was difficult to get into this larger projects i always want to do these larger projects

04:52and i realized how this was done and uh when i was educating myself most of that education was

04:57coming from the u.s these groups doing this thing called multi-family value add which is a business

05:02model that doesn't really work in canada because in canada there's strict rent control laws across

05:06most provinces so uh you can't do value add because of the rent if they're you know if your

05:12lease term expires you can't just increase rents uh the tenant is basically grandfathered in there

05:19it's not even like california or new york where in some cases you can increase rents at the tune

05:23of inflation uh in vancouver the maximum we can increase rents is one one and a half percent so

05:28same thing in toronto uh so business model didn't work and i felt uh that we we might have a

05:34competitive advantage to allow canadians to have exposure to u.s multi-family a great performing

05:39asset class at the time that i did this research uh five six years ago multi-family had beaten the

05:45s&p 500 and under the commercial real estate umbrella multi-family had beaten every other

05:50asset class except industrial and it's probably it was because um you know amazons of the world and

05:56um and that e-commerce space that resulted in industrial doing so well so that was the initial

06:02mandate of the company co-founded the company with a couple of great partners to allow canadians to

06:07have exposure to u.s multi-family value add deals in a syndication model now they could have exposure

06:13through public reeds uh uh but uh this syndication model was far in between so uh yeah that was kind

06:19of the background and spawn of cpi and how everything really started nice man that is uh that is crazy

06:25and

06:25i actually live in tacoma which is just south of seattle so yeah we we were right there with you

06:31guys

06:31when uh canada and seattle and you know the whole west this area of the west coast just prices just

06:36went

06:37through the roof it was crazy um from like 2000 2016 2017 to 2021 22 it's just just kept going

06:44i did

06:45not know that pretty much all of canada is is uh held to a one to one and a half

06:50percent in um rent

06:51increase rate that is uh that's below inflation that's that's crazy yep yeah except alberta alberta

06:57has its own like our you know the texas of canada is the province of alberta's it's kind of oil

07:02rich

07:02lands and what have you but they're very business friendly uh but you still have other issues right

07:08i mean canada's uh uh model is economic and its political model is a a social democracy is a

07:16welfare state so it's basically tax the rich and uh and so on like in theory sounds good to have

07:22universal health care and uh you know families like new parents like myself and your yourself you

07:28know they get a year off and what have you and but in practice it doesn't really work you know

07:34it's it's punitive to uh you know efficient individuals and and businesses so it's hard to

07:41scale in a place like canada people always say in new york if you make it in new york you

07:45can make it

07:45anywhere in the world in my opinion if you can make it in vancouver or in canada where cab drivers

07:50are taxi drivers i'm sorry cab drivers are engineers coming from other countries it's um

07:55it's really uh it's very very competitive very difficult to make it there just because of the

08:01immigrant population that's come in because of the market because everybody's trying to uh take

08:06a piece right via the government or people you compete with interesting and so this is my own um

08:11kind of ignorance when it comes to canadian politics but you guys i don't want to get too

08:16derailed here but i am just curious does canada have kind of the two-party system you know here in

08:20the u.s we have the democrats and republicans and states kind of swing swing on that pendulum

08:25do you guys have that or because you guys are the social you know social democratic country

08:30you don't really you're at least economically you guys can't swing on the republican quote-unquote side

08:37there's three i mean you got you got municipal provincial federal governments and on the federal

08:43and provincial which matters we have three main parties so we have the right-leaning party that falls

08:49on the left of the democrats in the u.s which is conservative then we got the centrist which is

08:54liberal and

08:55then we got new new democratic part ndp new democratic party which is far far left and uh

09:02just completely bizarre world uh and uh yes but all three of them lay to the left of the democrats

09:09now on the provincial level is same thing sometimes it swings back and forth between uh liberals

09:14conservatives and democrats uh but uh but yeah it's it's a difficult place to make money uh it's a

09:21difficult place to build wealth uh but some people do it but some people like myself leave and there's

09:27a in my opinion there's a brain drain happening in canada like you talk to um uh chamet palapathia who

09:34was one of the initial founders of facebook he's canadian elon musk lived in canada for a long

09:39he's a key's key's canadian background so you have a lot of great minds who have left canada for the

09:43u.s

09:44um so uh you know just 10x bigger market business friendly i mean it's got so many initiatives in

09:51the u.s and in canada it seems like uh you know that health care is free but uh you

09:58pay for it

09:58some way or other right you pay it through taxes so um you know if you're a high income earner

10:03or if

10:04you uh you know if you have a certain skill set it makes sense to pay you know uh seven

10:10or eight

10:10hundred bucks a thousand bucks a month and have insurance for your whole family and way better

10:14insurance than canadian insurance where people are not dying waiting to see a doctor yeah well let's

10:19hover on this topic just a little bit longer um you've piqued my interest and i always just kind

10:24of like going down these rabbit holes um so on the on the tax side for canada do you guys

10:29have i mean

10:30you have capital gains and what is your like federal income tax rate federal income tax rate is uh

10:37approximately i think 20 20 approximately i believe uh or or actually it's it's in stages

10:44right it goes in um uh in your income 200 000 exactly per your income so it goes yeah it

10:51goes

10:51all the way from 20 to all the way to 35 percent so but then you got the provincial taxes

10:55as well so

10:56brings up over 50 percent if you're making over 250k a year wow 50 that is insane and you guys

11:04um

11:04you guys have capital gains tax

11:07capital gains yeah as far as on on real estate capital gains i mean the biggest tax gambit that

11:12exists in canada is the primary residence um uh you know uh the capital gains uh tax that if if

11:20a

11:20home is your primary resident and you haven't had any intent to sell it and and you can prove that

11:25uh all the gains are 100 tax-free where the u.s has certain caps on it if you're an

11:30individual or

11:31married so that's probably the greatest tax gambit in the u.s but uh as far as 1031 exchange

11:36deferred tax programs we don't have that when it comes to depreciation we're tapped max out at

11:41four percent per year two percent of the first year and four percent uh so on so um okay so

11:48yeah

11:49i mean given what you've said so far it makes a lot of sense why you'd want to um you

11:54know venture

11:54into the u.s so usually we like to talk about the first deal you've done and then kind of

11:58how it

11:58scaled from there let's uh let's talk instead about the first deal you you set up in the united

12:04states so you've been you're running deals in canada you're a broker you're doing building um

12:09and at some point you switched and you decided to focus on the u.s and you got that first

12:13deal done

12:13tell us about that deal and then kind of what your realizations that you're you know your aha moments

12:20that you had when you were going through it between the difference between canada and the u.s

12:25yeah it was very interesting so i mean it gets pretty complicated because we're in the syndication

12:30space and creating these project specific funds and raising capital from members of the public so

12:35we're we're overseen by the u.s securities commission and the canadian security commissions

12:40the provincial security commissions in canada for every in every province every raised capital so

12:44there is a certain level of complexity there to adhere on both sides and then you got taxation as

12:49well like i was talking about depreciation so you're raising capital in you're raising capital

12:55from canadians you're you're deploying in the u.s you guys you guys have to be you know you have

13:00to

13:01adhere to both standards both the canadian exactly it's right so yeah so we every time we have a deal

13:07we create our u.s master fund which is a just a spv a single purpose vehicle really and uh

13:13so that

13:14entity owns the property and all our u.s investors u.s based investors invest directly into that

13:20entity and then we create a project specific fund in canada which our canadian investors invest into

13:26now each of those entities when you say fund are you do you mean fund or you mean syndication are

13:31you

13:31doing no syndication project specific fund the term fund is just any any vehicle that holds money in

13:36it that has a business strategy uh no in in in the real estate uh investing lexicon you differentiate

13:42between syndications that are project specific and funds that are basket of deals but yeah overall

13:46is just any entity you raise money into is like a college fund or sovereign wealth fund all these

13:51these are all funds right because they hold money in it and they have a mandate uh but yeah so

13:55we we for

13:56each deal we create his own uh syndication uh it's its own entity uh and its own offering documents its

14:03own exemption and then in canada we do the same thing so the u.s for that entity is is

14:08that entity's

14:09u.s master fund and then we create a canadian feeder fund for that specific entity for that

14:15specific project and then canadian investors invest into the canadian entity and then the canadian

14:20entity as a whole invest into the u.s entity kind of somewhat like a like a feeder fund like

14:26a fund

14:26a fund style um so uh that's how that's how we've done it but yeah i mean as far as

14:32trying to do the

14:32first deal now imagine all that complexity i discussed imagine starting the company in 2019 covet hits not

14:38soon after after that so it's very difficult to start a private equity firm because you have these

14:45three very important divisions within the company you've got acquisitions your team going out there

14:49and trying to find the right deal underwriting the deals and making it you know the deals make sense

14:54and you've got investor relations the equity side of the business you know really the the whole

14:59capital formation equity and debt and and then you have operations which is making sure the asset

15:05management making sure the deal is executed and so on and marketing falls there as well investor

15:10relations really falls under that category as well but uh to start that right off the bat if you're not

15:16coming from an institutional background and you don't have institutional backing that is a

15:20leviathan of a task to accomplish so uh it it's initially we felt that we didn't have the internal

15:28infrastructure to do the acquisitions and asset management and we still have to have to create a

15:32proof of concept so initially we decided to partner with other groups who had the track record who'd

15:37done deals before they had to be in this sweet spot they couldn't have been super large firms and had

15:42you know gain velocity somewhat newer firms but had the track record so we partnered with a couple of

15:47groups and did a few deals and came in as a feeder fund to their master fund or their syndication

15:53came

15:53in as our own syndication into their syndication and kind of learned the ropes and created a proof of

15:59concept and but that wasn't the goal right the goal wasn't to be this boutique firm that cherry

16:05picks the best sponsors and partners with them behaving more like a like a like a private equity

16:11firm is more this idea of building a real estate investment firm and fully functioning but that was

16:17kind of uh the the steps we had to take to get to where we wanted to be able to

16:21sponsor our own

16:22deal sign on the loans and so on and real quick um so coming from canada you know most people

16:30when

16:30they get started in real estate they start where they live uh i'm you know we're talking about people

16:34here in the u.s if you live in seattle you invest in seattle and then you break out uh

16:38you know fort

16:39lauderdale whatever wherever you live that's usually where you start investing you came from canada

16:43looking to the u.s i'm curious what were you how did you decide uh the metro that you were

16:49going to initially invest in um and well that's really it what was your process to decide uh where

16:54you're going to start to invest yeah we were looking around the space as well what we noticed

16:59is a lot of uh people in canada in the west coast they were there was a lot of investment

17:04a lot of

17:04capital flow going into arizona places like phoenix and tucson so that was one of the markets we were

17:10looking at just because canadians were looking there and then on the east coast a lot of east coast

17:14uh canadian investors were investing in florida uh but initially we were agnostic it just mattered

17:20about a market that shows the growth it shows rent growth population growth uh medium income and

17:26growth and other kind of growth metrics we were looking at so uh we weren't hyper focused on any

17:32market but when we eventually started building our own infrastructure in-house and started you know

17:37acquiring deals ourselves we had to focus on the market because it's it's extremely difficult to

17:43you know connect with brokers in a certain region as you know real estate is very localized so you

17:48have to understand you have to have your finger on the pulse of a certain market and you have to

17:51really believe in that market and you have as gps we tell a story to our investors so it's hard

17:56to go

17:56in and say hey come and invest in tampa bay is the best market we really believe in it and

18:00that

18:01few months later say hey come and invest in this other market it's hard to be nationwide type of

18:05investment especially early on so you have to have the insight on what markets you want to be in

18:11and uh your investors need to have to believe in you that why that market works and the conviction

18:17you need to have in the market so we when we made that decision made that transition not to work

18:22with

18:22any other groups and do our own deals we we really went and looked at across the u.s what's

18:26the market

18:27we believe in and uh time and time we felt stronger about florida um just because it has a larger

18:36economy

18:36than the whole country of canada the state of florida alone has a larger gdp than the whole country of

18:40canada some insane stats right uh within like five and a half six hours you can get anywhere in the

18:45state from any location um you know you know almost 30 million population almost has the population of

18:52canada canada's population is much more than that now but a huge population you know i think it's got

18:57more international airports than the whole country of canada or more airports than the whole country of

19:01canada some airport stats so the work-life balance was there and within florida itself we uh we really

19:08like tampa bay so that became our primary market so we went into that market the first thing was

19:12myself chief investment officer and our vp of investments paul opkins and this is three years

19:17ago we we flew into tampa and we spent a couple weeks met all the top brokers i met all

19:22all the top

19:23property managers did a bunch of tours got a good sense of the city because uh the tampa msa has

19:30all

19:30these different cities like you know saint petersburg clearwater tampa what was happening with the

19:35the stadium there in tampa bay just got a really good feel and pulse of the city and went back

19:40and

19:40did more research and uh wanted to kind of because the brokers are probably the most important part of

19:46deal flow right when it comes to deal flow uh you guys um on that note do you guys do

19:50any off-market

19:51acquisition i mean do you do you do any off-market you know lead generation yourself or is was it

19:57all

19:57in full transparency i was doing a bit of research on your show before coming on here so i i

20:02did hear you

20:02asking a similar question somebody else i'm very well prepared on this question but when it comes

20:08to this idea of off-market i'm not a big believer on it um i i think it's a bit

20:13of smoke and mirrors i

20:15think there are people out there who maybe have a certain agenda they talk about off-market deals a

20:21good friend of the cpi uh bo berry who is a broker in northern florida has done uh extensive research

20:28on deals that are traded in northern florida uh on on market or off market and he comes up with

20:35the

20:35stats that 92 and a half percent of deals being traded multifamily value add deals being traded in

20:40northern part of florida uh are done through a broker and even that other seven and a half percent

20:46off-market deals quote on off-market deals brokers are involved in some sort of way yeah so to try

20:52to

20:52think you got to come into the space as a newer firm and somehow find this unicorn of off-market

20:57deal

20:57uh it's um i i don't think it's very realistic i said the same thing about another research i did

21:04on your show as well about a guess you had about family offices about newer firm trying to go get

21:08a

21:08family office to invest with you they literally have an investment committee that's their job to

21:13make sure they vet out any new people coming in and don't have enough track record so to try to

21:17raise my family offices near impossibility try to get off-market deals in a space that we're sitting

21:23around for two years trying to get deals to pencil uh you know uh it's going to be an impossibility

21:28so

21:29does it exist does it happen sure there's a survival fallacy there but is it realistic for you to put

21:33all your chips uh into this strategy to get off-market deals i don't think so i'm going to put

21:39i like that

21:40you said that i'm going to put a caveat on it um and i feel like that is very specific

21:45to multifamily

21:46um because brokers and you know multifamily and brokers they are they are intertwined they are all

21:52out there you know multifamily large industrial that kind of stuff uh my best deals that i found

21:57i buy mobile home parks rv parks self-storage facilities the best deals i found have all been

22:01on off-market you know my team calling the owner finding this mom and pop and uh and getting them

22:07to

22:07sign the contract and so i don't think i i think you're right because i you know i'm not in

22:11multifamily

22:12and but i've talked to a number of guys that are in the space and it sounds like for multifamily

22:17especially if you're trying to get something larger i mean even over 50 units it is uh it's

22:22really difficult to find something that has not been touched by a broker already um so i feel like

22:27that that's kind of the the clarification that that um when it comes to off-market but it does make

22:31sense if you're looking for something big you guys you guys started with brokers and you that's

22:35that is the way that you go yeah no no you're you're hunter but you're spot on there but keep

22:40in mind

22:40multifamily became much more institutional earlier on than mobile home parks or what have you there's

22:46still lots of mom and pops uh running those those those jobs but yeah multifamily especially 100 plus

22:52units or 50 plus units it's mainly owned by institutions so yeah and they deal with brokers

22:58and what have you so and the first thing you do when you get a job as a broker is

23:01they put you know

23:01their lead broker puts you on the calls to start calling so they're going to be working way harder

23:05than you trying to find out yeah and that's that's the other thing like you know i like doing

23:10off-market stuff but um there is a case to be made like why would you even do it because

23:15there

23:15are brokers out there who literally do this all day long and you might as well just connect with

23:19them because it's one more fun to have a conversation with a broker versus you know 100 100 sellers who

23:25just don't want to be called and then two they're they already got it they already got the lead flow

23:29so

23:29you might as well just step into it and uh and have conversations so um yeah i like that so

23:34when you

23:35when you started getting into the space you started looking at multifamily you chose uh florida just

23:41because of the numbers what um you were looking at multi or value add originally like that was your

23:47that was your bread and butter that's what you were trying to trying to find what was the components of

23:51the value add that you were looking for were you looking for you know a certain vintage that you knew

23:55was going to need some love um were you looking for certain areas uh what were you looking for

24:00yeah multifamily you really have uh you have core core plus value add right so value add is where

24:07the property is in need of certain upgrades it's not in serious distress or what have you but it

24:11needs upgrade exterior upgrade interior upgrade and there is a strategy where you can come in and

24:18force appreciate the asset you can come in and push rents uh by doing certain upgrades right

24:23exterior upgrades you're not really getting a an roi return on investment for it but on interior

24:29upgrades you definitely are so when you put in better appliances when you put in washer dryers in

24:34a unit when you upgrade a unit you can uh you know demand higher rents really it also depends if

24:40the

24:40market can support it or not right if the market is already being pushed in medium income uh for the

24:46tenants uh they're already paying over 30 percent 40 percent of their income for rent in that in that

24:51market and your strategies come in and push rents by 200 bucks you're like the neighborhood can't

24:56afford it anymore what your strategy is not going to work so you got to see a market that

24:59it makes sense to do so and you got to be in a certain real estate cycle that it makes

25:04sense as

25:04well because rents were pushed so much over the last few years particularly post-covid um you know

25:09historically multifamily rents grow by three percent a year um and through covid um their rents went up

25:15up to 20 percent in some markets phoenix that was for work they went up close to 20 percent in

25:20one

25:20year so uh that's not going to continue on right and some people made a lot of money but

25:24similar people got in a lot of trouble as well so um it's a very sensitive game to play and

25:32analysis

25:32to do to see how to does it really make sense to do value add now we're seeing that in

25:37san antonio

25:38we've entered the san antonio market for multifamily and we're noticing that san antonio is going through

25:44a bus cycle is going through a perfect storm you have um you have oversupply a lot of developers in

25:50san antonio they got their hand on cheap debt and they started building a lot of product so there's

25:57oversupply in the market as a result of oversupply that that is having a downward effect on rents so

26:03rents are compressing across across the city uh you also have high vacancies most markets so

26:09affordability is still there tenants are not being pushed to the limit that in tampa they are in our

26:15research when we look at tampa uh because of the work-life balance it has and because a lot of

26:20other things the city has tenants are being pushed they're they're paying over 30 percent of their

26:24income to shelter close to 40 percent but in san antonio is actually less than 30 percent when we

26:30look at the medium income and look at the data on on the properties we're looking to acquire they're

26:34actually paying less than 30 percent of their income to rent um so but but does the strategy make

26:40sense if we're going in and uh the current occupancy of the property is sitting at 80 85 percent the

26:47prevailing um uh you know vacancy is around 15 percent uh so you're in your business strategy

26:54you can't come and say oh we're going to stabilize this at 95 it's not going to work the market

26:57is not

26:58there or your rents as well they're right yeah the rents seem low uh the the market can't afford a

27:04higher rent but you can't you can't push rents um so there's this new i never even heard this term

27:12but

27:12it's called um inverted rent rule and the idea is that uh the property is uh tenanted let's say

27:20sitting at 80 85 percent um occupancy but they just can't bring the occupancy up so they're giving

27:27concessions and they're dropping rents so when it when a certain tenant who's paying a thousand bucks in

27:32rent their term is expiring and they come to renew they go online and they see that the landlord the

27:39property is renting at 900 950 so they're like hey renew at a thousand like sorry i'm just going to

27:44leave and come back in here i'm not going to pay you a thousand when you're advertising 900 bucks so

27:49that creates this idea of inverted uh rent roll so uh san antonio is currently going through that

27:56market uh that that market cycle so i think it's a great time to get into san antonio i think

28:01fundamentals are there uh but uh and also constructions have fallen off the cliff now

28:06because that you don't want to build in a market that's as hard to supply so you're going to have

28:09a bottleneck coming up soon in the next few years so if you can get a find a property there

28:13and put

28:14good debt on it uh i think in a few years you're golden nice yeah we've actually we bought two

28:19um

28:19mobile home rv parks out in that area in san antonio uh in the last last year and i really

28:25like that

28:25area it's uh i feel like a lot of the fundamentals are good um i didn't know that about multifamily

28:30is

28:30that that multifamily was over built but uh it's yeah yeah i like that area um so speaking of market

28:37cycles uh you know we're we're kind of at an interesting time right now when you guys are

28:42looking at the next two to three years what what are you guys projecting what are you trying to focus

28:46on yeah it's very interesting times i mean it's uh it's a bit scary right you see price of gold

28:52going to where it goes breaks all-time highs uh you see that flight to safety uh you see that

28:58the trump administration is trying to pressure the fed to drop the fed's funds rate but the fed's

29:03fund rate has uh doesn't really have a direct um consequence to the 10-year treasury which most

29:10commercial loans are uh pinged off of right they're they're really um uh that's that's hopefully

29:17that's that's the basis that you borrow against is the 10-year treasury and 10-year treasury is

29:20organic the market decides what what is going to be trading at so um it's hard to talk about where

29:26you know where we are today if you don't talk about uh what got us here right so you had

29:30gfc

29:31great financial crisis uh subprime mortgage crisis in 08 but the bottom of the market didn't come till

29:362011 so uh because the liquidation didn't come till then so the bottom of the market was actually in

29:422011 not in 08 so but the market started picking up from there and it went on a bull run

29:47from 2011 to

29:482019 multi-family other asset classes just absolutely crushed it and a lot of groups got

29:55really comfortable in buying deals got complacent so but in 2019 you already felt that market was

30:02in mania it was you're still at felt like it felt like the top of the market yeah felt crazy

30:06yeah

30:07soon after covid hits and just throws a wrench in everything but it's important to note where we

30:13were prior to that anyway so everything shut down for a few months when covid hit everybody thought that

30:18every real estate investor is going to go bankrupt because nobody's paying rent never nobody thought

30:21the u.s government alone was going to print almost six trillion dollars and inject it into the economy

30:28to keep people from going to work people keep people from getting sick and keep people from going on the

30:33streets and burning the whole cities down right so and that resulted in people having a lot of money

30:38in their hand and it resulted in exuberance and resulted in overspending and what do suppliers do when

30:43people keep buying they increase prices and people keep buying and that create created inflation near

30:49hyperinflation u.s inflation went up to nine percent and one of the levers that the u.s government the

30:55federal reserve has is to combat inflation is to increase feds funds rate which in turn increases

31:01interest rates so they went on this tightening cycle and started increasing rates in 11 consecutive

31:06times went from zero to 0.25 all the way up to five five point two five the feds funds

31:11rate did so

31:13that in itself created a lot of stress as well on on the on the real estate itself and a

31:19lot of debt out

31:20there so commercial loans that were secured in 2020 2021 even 2022 you know commercial loans unlike

31:29residential loans they have a much shorter term so it's usually commercial loans are three years plus one

31:35plus one or five years uh not 30 years uh like residential loans so um a lot of lenders require

31:42uh borrowers to get something called a rate cap interest rate cap so uh it's an insurance policy

31:48that if your interest rate goes over a certain number that uh this insurance policy kicks in and

31:54saves the day so you got to purchase it so um those prices were nominal when it came to uh

32:00at that time

32:00in 2020 2021 uh but now in 2024 2025 those prices have gone astronomically higher uh so when that

32:09three-year mortgage term finishes even though you got the plus one plus one you can renew but you still

32:14have to get a new rate now you got to buy a new rate cap rents have compressed um oversupplies

32:20in

32:21some markets um there's higher cost of renovation and and material in some cases uh even labor um

32:28you know that's with uh trump administration's uh immigration policy when it comes to uh illegals

32:36and what have you who are in some cases a lot of the workforce in in some built regions um

32:42um you you you get the perfect storm all right and um and then the u.s debt itself where

32:49is it at today

32:49and and uh how much of that 37 trillion dollars the the the the u.s government is spending just

32:56to pay

32:56for the debt service of his loan uh so it's a very uh it's a very interesting part of the

33:02cycle i would

33:03really say that if if multi-family or real estate uh market cycles were a clock and 12 o'clock

33:09was top of

33:10the market and six o'clock was bought on the market i would really say today we're we're either right

33:16before six o'clock or are just about to pass six but um that's where i believe we are in

33:22the market

33:23cycle but overall i still i'm a big believer of u.s particularly u.s uh multi-family u.s

33:30real estate

33:30because our u.s has the highest rent-to-value ratios in the world i haven't found any country that

33:35has

33:35higher rent-to-value ratios uh so the yields are still there um you know close to over 40 million

33:43americans live in apartment communities one-third of americans over 100 million americans rent and

33:49around 40 million americans live in apartment communities now some of that some of that is

33:54renters by choice but a majority of that is renters by necessity so people who live in these apartment

33:59communities are living there they are you know the workforce of america and they live there so they

34:05need a home to live in um uh you know so i don't want to go back to this cliche

34:09that you know everybody

34:10needs a roof over their head but it's an important concept right with the technology especially with

34:14ai so many things change but people still need a place to live right and a certain demographic is

34:20going to need that no matter what uh so uh you know i think that's going to stay there that

34:26need

34:26for multi-family that type of shelter is going to stay there for for long term and i mean

34:30result of affected is mobile home parks right is right next there to that that's another demographic

34:35that's going to need it no matter what yeah yeah i'm you know i'm a huge believer obviously i made

34:40the

34:40podcast huge believer in real estate i i don't feel like there's a better way a better place to put

34:45your

34:45money out there but um that is interesting you think that you're at we're at the six six o'clock

34:49position using your metaphor um and so you think from here forward it should be looking a little bit

34:55more rosy than what we've been seeing um coming up at this point so hey real estate goes through these

35:01very quickly real estate goes through these cycles recession recovery expansion hyper supply

35:05continuously goes through these cycles and it's done that for over 100 years this is u.s real estate so

35:10we're definitely in a recession uh phase of the cycle in my opinion now next next phase after that is

35:17usually recovery so um yeah that's the hence the six o'clock uh metaphor yeah well we're we're hoping that

35:23uh

35:23that cycle keeps up um all right man well hey i just took a peek through the clock it looks

35:28like

35:28we have run it down so it's time to jump into the quick question round are you ready absolutely thank

35:33you let's do it um starts with education it could be any form could be a book you've read a

35:39movie bit

35:39i've seen a conference you've gone to a mentorship program you've been a part of anything like that

35:44but i need two recommendations one for general life wisdom and then one for real estate

35:48oh general general life wisdom i would say check out uh rumble uh people are used to

35:55getting on youtube and other platforms to get information but interesting rumble is like the

35:59wild wild west you go on there and you see things people that have been canceled so many things and

36:04it gives you a new perspective about life history politics where we are today some things that you

36:09wouldn't really hear other places like you mentioned that because we uh my um the team that does this

36:13podcast they were just they just started they were thinking you know we need to put this on other

36:18platforms and they just started releasing a rumble and i had never heard a rumble or daily daily motion

36:23any of those before and so uh yeah that's that's new to me it is really interesting it's like youtube

36:28but

36:28just you can post whatever you want on there they got they got no reason nerd they don't don't have

36:32any policies that prevent uh prevent videos from coming out yeah and quickly the other one is is

36:37really x or twitter i've learned half of the stuff i know in life is from there is uh you

36:42know just

36:43following some of the great minds of the world and their perspective of current events or uh you know

36:49historical events and that has made me go down certain rabbit holes of like a tweet oh this is an

36:54this is an orwellian action by this person i'm like orwellian what is that you go down the rabbit hole

37:00and you learn about uh george orwell in 1984 the book and you just you just learn so much more

37:05about

37:06life so uh and then there's retweet as well so if you're a real estate guy retweet hashtag retweet

37:10you can follow all the um stuff about tweets about real estate so that's on yeah so kind of

37:17educating yourself uh being autodidactic and learning about life and history and other things so rumble

37:22and x are the best places and you had a follow-up there as well i believe uh you know

37:27that that'll

37:27cover both or everything that we i asked uh rumble and x those are good recommendations um i like that

37:33you said rumble nobody's i haven't even met heard that in conversation prior to this uh our meeting here

37:38and so it's cool that you brought that up all right next question is for your younger self let's go

37:43back to the august who was just getting started he was still in canada doing those uh um the custom

37:50built homes go back to him look him in the eye give him one piece of advice moving forward

37:55i mean it depends can i sit down with him have dinner with him and slap him a couple times

37:59or am i just

37:59yelling from top of a mountain top and saying something to him so i mean i would just say if

38:04i could

38:04yell at them i would definitely just say hey become a specialist just focus on one thing and

38:09dedicate your life and brain power to if i could sit down with them i would really say hey real

38:14estate

38:15is the game you want to be in but but real estate private equity is where you want to be

38:18build a

38:18brand on yourself build a company get some great partners and start buying real estate through the

38:23fund and syndication model and raise capital i would say just dedicate your life to that um

38:28yeah that would be my yeah that is that is great advice and that's probably what i would tell

38:33myself to is just focus on one thing because especially at the beginning i was i was doing

38:37everything i had an e-commerce store i had a you know consulting or a digital marketing company and

38:43i was doing doing it all but uh when you focus in when you just choose one route and within

38:48that

38:48route choose the smallest route you can if you choose real estate choose multifamily choose self

38:53storage choose one asset class get good at it and that will bring you the results you're looking for

38:58because uh trying to be a jack of all trades is is not the way to go i've learned that

39:02from uh from

39:03my own own life experience there all right next question is about the u.s it is a big place

39:10there

39:10is a lot of opportunity out there and actually i'm going to open this up to the entire world since

39:14you

39:14are from canada you can choose a place in canada as well um but the question is there's a lot

39:19of

39:19opportunity give me the single metro you're most excited about investing in today

39:25oh single metro right so i live in southwest florida and naples i believe in naples i'm

39:30investing here obviously i've been investing in tampa bay and just recently invested in san antonio so

39:37i'm i'm parted there all over the place um if there is one place to invest currently uh that i've

39:45been looking at recently it's got to be san antonio i mean it's uh almost you know 2.8 2

39:50.9

39:51million population is a sleeper city most people think about texas they think about the austins

39:56dallas fort worth the houston's you know the you know it's just an hour and 15 minutes just

40:01close to an hour away from austin um a lot of great things happening there um so yeah i love

40:07every time i've gone there i really enjoyed it i think there's a lot of great opportunities

40:10particularly with the distress cycle is going through uh so i gotta say and it's hard to say

40:14this is forever right it's where you are currently so i would say san antonio nice yeah you're

40:19actually the first person to say that and i i'm a huge believer in san antonio as well so

40:23that's awesome um all right next question is about lessons learned not every deal that we get into

40:28goes the way we expect it in fact pretty much every time something's going to go wrong and that's when

40:33we get to learn a lesson so bring us back to a deal that went a little bit sideways for

40:37you

40:37and then uh what was the lesson you pulled from it yeah i mean um being in real estate for

40:44last 20

40:45years and being in real estate private equity there's definitely a lot of lessons i've learned

40:49in real estate um uh i would i would kind of answer it in a couple ways one of the

40:54big lessons i've

40:54learned is sometimes the best deal you ever do is a deal you walked away from and i learned that

40:59lesson

40:59from a deal we got involved with it was a 71 single family homes we were purchasing from a merchant

41:04builder

41:04in tucson arizona and it was a great deal but but the fed went on a tightening cycle and there

41:11were increasing rates uh every meeting so the deal just didn't make sense i had put up a lot

41:16of money opportunity costs basically a general partner gets all the money they put into a deal

41:21when it comes to due diligence and travel costs and everything else back from the partnership when

41:25the partnership gets lost but if the deal is lost prior to that that's out of the pocket of

41:29the gp now i don't want to make gps seem like uh oh you know anybody to cry for them

41:34they make a lot

41:35of money and they have a huge compensations when these deals go through but there's a lot of deals

41:40i don't go through either so yeah i mean that was a huge lesson learned there was um um was

41:46from a

41:46deal walking away from the other part is is partnerships it's near impossible to do large

41:52real estate deals without the right partnership and right talent right like look at a blackstone

41:56blackstones of the world largest private equity firm in the world has a larger allocation to real

42:01estate than it does to private equity what it started out first buying companies now it buys more real

42:05said that it does buying companies but on their last round of hiring one of their recent rounds

42:10they had over 90 000 applicants and they hired less than 0.2 percent of the bill less than a

42:17percent

42:170.2 of a percent of those 90 000 people were hired so talent is so important bearing in on

42:23the right

42:23partner who is uh who has a synergy with you who who is they ying to your yank who understands

42:29you

42:29imagine starting a partnership with somebody who takes off the boxes that are needed but uh they

42:36you know there is there is a conflict there is a uh there's a conflict personality conflict with

42:42yourself and that individual is finding the right partners you it is absolutely necessary to have the

42:47right partners to do well in business and particularly real estate but having a contact

42:51compatibility with those partners as well is very important so those are two two advice i could give

42:56yeah that is uh um that is something that is very very difficult to i mean i don't feel like

43:04you

43:05know a lot of people say they like to go it alone they like to just invest in deals on

43:08their

43:08by themselves which is fine but i feel like like you said if you really want to go far you

43:13need

43:13partnerships and it's just more enjoyable to go through the process with a partner but um finding

43:18the right partner and making sure you guys have both uh a synergy in in your values like you guys

43:24share the same values and your personalities mesh well it's a really difficult task um but it's

43:30something that's definitely worth it once you actually get that uh get that that you know

43:34partnership to work out um all right next question is about that was lessons learned let's talk about

43:41the uh the highlight reel sometimes you know things just go right and it's a deal that kind of stands

43:47out in your mind is one of your favorites take us back to that deal for you what was it

43:51and how'd it go

43:53oh a great deal let me think um i guess um i guess my in my capacity uh with cpi

44:03as a chief investment

44:04officer it was two years ago we were at a conference in toronto the multifamily conference and we were at

44:10our ceo was speaking on stage so we got tickets to the breakfast uh special breakfast kind of event

44:16uh jordan belford was speaking at the breakfast and we were sitting at our table and there was this

44:21other table next to us and all these guys were wearing cowboy hats sitting next to us so um you

44:27know i just looked over and i said hey guys how you doing where are you from they're like yeah

44:29we're

44:30from texas we're in toronto right so no cowboy hats there so uh we started a conversation with uh this

44:36group that was sitting and they're builders out of san antonio they've been there building over 20-25

44:40years in san antonio they've been building um purpose-built rental communities and it started

44:46you know somewhat of a friendship somewhat of a partnership and we stayed in touch for you know

44:52close to two years every time i went to texas we would go and visit them and started looking at

44:56a

44:56way that we could partner with this group uh because at cpi we really believed in build to rent we

45:01are

45:01multifamily value-add investors but we also believed in build to rent i come from a construction

45:06background my partner paul hopkins comes from he's a civil engineer comes from the construction

45:10background as well so um yeah that started ended up being a friendship and a partnership and now we've

45:16partnered with uh that group and we're building a 30 duplex project in the helotes market of san antonio

45:24named apollo oaks after my second born son so super excited about that deal and where it's going and the

45:30housing is going to create for people in that area and we had to name the roads and what have

45:34you as

45:35well so it's been a super fun uh process we went there for the groundbreaking a few weeks ago last

45:40month and really enjoyed again with our partner so yeah that was like um it wasn't only just doing

45:46deals making money it was really a fun process creating a friendship and and building something

45:50great and i i i got my whole full-on cowboy uh outfit i got my cowboy hat my cup

45:56my belt my boots

45:58and uh yeah i'm with this beard and the cowboy hat like when i go on a flight everybody's like

46:02a lot

46:03of respect so i wore it all the way so i i'm i make a joke that if you invest

46:08in texas more than 10

46:09million dollars they make you an honorary cowboy so that's what's happened to me that's awesome

46:15uh real quick on that point why did you guys choose duplexes that's just their business model

46:20they've built for over 20 years uh they they pre-sell these duplexes to investor types that come

46:26into san antonio come into texas to buy these duplexes for cash flow they manage it for them uh

46:31it's turnkey uh it creates higher yield when you have the duplexes the model is rinse and repeat

46:36we didn't want to go create something new we see what's worked for them look at their

46:39performance look at their uh track record look at what they've done do the research and it just

46:45made sense so why do we try to change it um you know they had the skills to build a

46:49community of

46:49single family but if that's what their buyer profile is buying we're going to just go with that

46:54yeah makes sense all right second to last question and this is actually a new question that we've been

47:00adding to the mix here um i am a huge proponent of ai i like to implement it in my

47:05business in as

47:06many places as i can responsibly do so so i like to ask the guests um how are you using

47:11ai in your

47:12business uh and just kind of give us an overview of that yeah personally i'm learning learning putting

47:18time allocating time to learn about ai because if you don't learn it you're going to be uh left behind

47:23like people who didn't have a website for the company at some point i'm not going to have a website

47:26for my company like you're going to stay behind uh so i'm learning it on daily basis putting time

47:30onto it and using it for everything right there's a new ai thing coming out every day when it comes

47:34to cpi capital we are extensively using it aside from marketing and the fun stuff we're extensively

47:39losing using it for acquisitions and analysis our vp of investments paul hopkins has a chat gpt

47:50you know prompt that he just uploads the broker's om and it breaks it down in the exact data that

47:56he needs and that gets uh populated uh on one of the project management softwares we use asana so

48:02everything is there everything can take a quick look do it back in the napkin from that data

48:07um and that's been a hugely helpful for us but other other things as well i mean the contracts are

48:13huge

48:13sometimes in hundreds of pages so we upload and get extract some important parts of the contract

48:17uh writing some you know short agreements for certain service providers that come in

48:22uh but yeah we're we're excited to see what ai is going to do is going to revolutionize the world

48:29in many different ways uh but super excited to use it more and more i mean it's just you're insane

48:34if

48:34you don't i mean you'll get left behind if you don't use ai yeah now ai is is fantastic and

48:40that's a

48:40that's a good use there the uploading the om and then kind of i can send it to you out

48:45the information

48:45you want because i broker om's they just have way too much garbage in there and i just do not

48:50like it

48:51and so yeah if you can get a prompt that you know gets the data you want in a way

48:56that you want to

48:56look at it that is uh that's pretty useful yeah i'll send it to you after a call nice all

49:01right last

49:02question this is for the listeners you've given us a lot to think about i'm sure people want to reach

49:06out get in contact with you this is a two-parter where can they find you and then what can

49:09they expect

49:10when they reach out yeah i'm very active on linkedin august biniaz i believe i'm the only

49:15august biniaz on linkedin i'm a linkedin top voice kind of bragging a bit but it's invitation only so

49:20um yeah i mean if you if you saw me on the show reach out to me tell me you

49:24saw me on the show happy

49:25to get 30 minutes of my time to you because you've seen me on this show and ask me any

49:29questions about

49:29my experience when it comes to putting these funds and syndications together and so on happy to be

49:34uh you know uh i could be a resource um and uh our website as well our website is uh

49:42very

49:42comprehensive we have these master classes with expert guests on uh on cpi's master class series

49:49and we host those master classes on our website in the knowledge center so if you're ever checking

49:54out cpicapital.com go to the knowledge center and you can uh get a chance to watch these unpublished

50:01um master classes with experts discussing many broad array of topics perfect i will put that

50:07link in the show notes so if y'all want to reach out to august all you got to do

50:10is click the little

50:11more in the description it'll pull down that full description and in there you can find his links

50:17all right man that wraps it up thank you very much for up on the show thank you so much

50:21man great

50:22questions i really enjoyed it absolutely for everybody who's with us today thank you guys for

50:26showing up you are the reason we do this so if you guys have any questions whatsoever

50:30reach out to me gabe at the real estate investing club.com if you guys want to support the show

50:34just leave us a review or a comment or any of that stuff other than that i hope you guys

50:38have a great

50:39week keep rocking real estate and i look forward to seeing you on the next episode

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