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August Biniaz is the Co-founder and COO of CPI Capital. CPI Capital is a Real Estate Private Equity firm with its mandate to acquire Multifamily and BTR-SFR assets while partnering with passive investors as Limited Partners.
August was instrumental in the closing of over $208 million of multifamily assets since inception. August educates real estate investors through Webinars, YouTube shows, Weekly Newsletter and one-on-one coaching. He is the host of Real Estate Investing Demystified PodCast.
August, a seasoned real estate investor, has successfully navigated various areas of the industry while branching out into other business ventures. In his pursuit of financial prosperity, he discovered the key to wealth building and became enamored with the art of investing.
Get ready to rent, because August has a game-changing concept: ‘build to rent’. These portfolios of single family homes are designed and run specifically for renting, and perform just like multifamily buildings. This innovative asset class is on the rise, and definitely worth keeping an eye on.
Catch the must-see episode featuring August – you won’t want to miss it!
In This Episode
- August’s background and how he got into space.
- The structure of investing in the U.S. from an international country.
- August’s journey into real estate and building wealth.
- Insights on the ‘Build to Rent’ asset class.
- August’s advice on personal performance that yielded the biggest results.
Welcome to today’s show on Wealth Strategy Secrets. We’ve got an exciting episode lined up for you! Today, we’re joined by August Biniaz, the co-founder and COO of CPI Capital. CPI Capital is a real estate private equity firm focused on acquiring multifamily, build-to-rent, and single-family rental assets, partnering with passive investors as limited partners.
August has been instrumental in the closing of over $208 million in multifamily assets since CPI Capital’s inception. He also educates real estate investors through webinars, YouTube shows, a weekly newsletter, and one-on-one coaching. August is the host of the Real Estate Investing Demystified podcast. August, my friend, it’s great to see you. Welcome!
Great to see you as always, Dave.
Absolutely! I’ve been looking forward to this conversation for a while. There’s so much happening in the marketplace, with changes coming seemingly every month. I’m eager to get your insights on how you’re responding and what you’re focusing on.
But first, for our listeners who may not be familiar with your background, could you share a bit about your journey and how you got into this space? I know you bring a unique perspective, coming from a development background.
I’m a real estate guy through and through. I started as a real estate agent close to 17 years ago, though I quickly realized that my strength wasn’t in sales—it was in finding deals. So, I began doing small fix-and-flip projects and eventually started my own general contracting company. I then moved on to building single-family homes, both spec and custom.
Spec homes are built to sell on the market, while custom homes are built for specific clients. I was doing both, but I always wanted to scale up. Then, a project came my way—a land assembly of five single-family homes, which could be developed into 20 townhomes. The acquisition price was $8.7 million, and I didn’t have the equity to close on it. So, I approached a few friends and business associates and managed to raise over $5 million for the project.
At that time, I wasn’t familiar with syndications or real estate private equity structures like the GP/LP model. We simply created a company and put shareholder agreements in place, and I received a share of the profits based on the project’s performance. I fell in love with this model—finding deals, bringing in investors, and assembling a team of professionals.
Since I was focused on single-family projects, I needed help developing this one, so I brought in an architect and a general contractor. The project went very well, and that marked my start in private equity. I began educating myself on raising capital and structuring deals in a syndication format, though most of the content was from the U.S., while I’m based in Vancouver.
Eventually, I discovered multifamily as a new asset class and was drawn to the value-added business model. I partnered with a few others, and together we cofounded CPI Capital, initially a Canadian private equity firm aimed at giving Canadians exposure to U.S. multifamily properties. But then, we saw a lot of interest from U.S. investors as well. And actually, our U.S. investor numbers are growing even faster than our Canadian investors. That’s where we are today.
Wow, that’s fantastic. Super interesting background. And I know we have some international listeners, so maybe we could dive into that for a moment. If someone from Canada or another country wants to invest in the U.S., what does that structure look like? Is it straightforward, or are there specific steps to facilitate that?
Most countries, including the U.S., try to make it as straightforward as possible for foreign investors to invest because they want that foreign investment. The U.S. and Canada, in particular, have a tax treaty that allows Canadians to invest in the U.S. while providing relief from double taxation or other related concerns.
However, on the private equity side, bringing on passive investors as limited partners (LPs) can be a bit more complex. Canadians, for example, may need to file U.S. taxes, deal with the IRS, and get an ITIN if investing as an individual, or an EIN if investing as a corporation. This adds some complexity, but there are ways to streamline the process.
One tip I’d offer is that while using LLCs for U.S. deals has become popular, limited partnerships are generally a better structure for foreign investors. In Canada, we have corporations, similar to C-Corps in the U.S., and we have limited partnerships, but we don’t have LLCs. Canada’s CRA (Canada Revenue Agency) treats returns from LLCs as dividends, which can lead to taxation on both sides of the border. Using a limited partnership, which is a flow-through entity, makes the process much simpler for Canadian investors.
Great advice, August. Now, let’s shift gears a bit. Tell us about your journey into real estate and wealth-building. We like to discuss different wealth strategies, insights, and lessons that help people accelerate their financial journey. You got into real estate at an early age, saw the benefits, and have scaled impressively. Could you share some insights from that journey?
As a real estate investor and professional, I’ve been involved in many areas of real estate and even other businesses. But when I discovered real estate private equity, I felt like I had found the “holy grail” of wealth building. In this field, everything revolves around investor success, and the general partner (GP) is compensated based on the project’s performance, which I love.
As a builder or real estate agent, you earn a fee regardless of a project’s success. But as a GP, most profits come at the end, and it’s a share of the total profit the deal generates. If a deal fails, the GP doesn’t make any profits. Plus, if a GP loses investor money, that reputation sticks for life, so it’s high stakes but with significant rewards for success.
What excites me about this business is that it offers “infinite returns” for the GP. A general partner can find a deal, secure investors, and earn a share of profits without necessarily putting up a large amount of capital themselves. While there are costs and efforts involved in sourcing deals and managing investors, the potential for infinite returns by orchestrating the deal and bringing everyone together is incredibly compelling to me.
Another aspect that drew me to real estate private equity was the scalability. As a single-family home builder, I saw my peers, many of whom were from multi-generational families in the business—grandfathers, fathers, and now their grandchildren—working to scale, but it took a long time to grow into larger projects. In contrast, in real estate private equity, as long as you’re skilled at sourcing deals, executing the business plan, and partnering with investors, the ceiling is incredibly high.
It’s limitless. You can see that with companies like Blackstone, managing over $2 trillion in assets, and BlackRock, with over $10 trillion. This scalability is a huge part of what excites me about this business.
In real estate private equity, as long as you’re great at sourcing deals, as long as you’re great at executing business plan and partnering with investors, the ceiling is just so high, it’s limitless really.
I also love the performance-driven model. Many people have mainly dealt with Wall Street and financial planners who earn fees whether the market goes up or down. In this space, however, it’s true entrepreneurial risk and reward. As a GP, you take on that extra risk—you’re rewarded if it goes well, and if it doesn’t, you don’t make anything. But, as you pointed out, keeping investors whole and building a solid reputation and credibility is crucial.
Absolutely.
I know you do a lot of coaching, you have multiple shows, and you’re constantly sharing insights. Are there key pieces of advice you find yourself repeatedly giving people in the investing and wealth-building space?
I’ll go one step further and share the advice I remind myself of daily: focus. Master your craft, and become a specialist. You can see this in many successful fields, from medicine to construction. Specialists are highly valued.
I was reading Atul Gawande’s The Checklist Manifesto, where he talks about how he structured his checklist inspired by high-rise construction developers. Back in the day, a “master builder” would oversee every aspect of a project. But as construction evolved, the process became more specialized, with contractors and tradespeople each bringing expertise to create a better final product. You see this in medicine too—you start with a general practitioner and are referred to a specialist for focused care.
Focus on mastering one area. Then you can scale and grow from there. The real estate ecosystem is vast, with business models like short-term rentals, fix-and-flips, ground-up development, and syndication. Mastering one area before expanding is key.
For younger listeners, if you’re still in college or just starting, apply the same principle. Get your degree, specialize, and build from there. I know a lot of lawyers who don’t practice law anymore. They’re doing other businesses—many even become sports agents after starting with a law background. Mastering something initially and then scaling from there would be my advice. It’s straightforward but powerful.
That focus is one of the top traits of billionaires—they usually concentrate on only one to three areas. The higher you go in terms of net worth, the fewer things you focus on. Many top billionaires are doing just one thing, and they go deeper into it. But there’s a push-pull here too. As entrepreneurs, we’re often drawn to new opportunities and “shiny objects” that seem exciting. So staying focused does take real discipline.
What are your thoughts, August, on getting into this space as an active investor versus a passive investor? I think it’s an important distinction because people often start as LPs have success, and then consider becoming more active. What are your thoughts on that dichotomy?
With real estate’s success over the last 10-12 years, many LPs have seen significant returns, which has led some to explore the space more actively. We’re even seeing physicians leaving their practices, whether cardiologists or neurosurgeons, to become syndicators. It’s almost ironic for me because my mom always wanted me to be a physician, and now I’m telling her, “Hey, look, all these doctors are coming into real estate!”
Yes, there’s a big influx of people who started as LPs, saw the potential and are now exploring the space as active investors. There’s also a lot of interest from people who see content about real estate online and want to be involved.
If you’re looking to start a real estate business—whether a syndication business or a joint venture—it’s essential to find a mentor or coach. This business can get complex. You’re handling substantial amounts of money, dealing with institutions for debt, and navigating other high-stakes elements. Having a coach and immersing yourself in the space is crucial.
Listening to podcasts like this one, watching YouTube shows, and reading relevant books are great ways to learn. Real estate isn’t just a side gig; it’s a full-time business, and you’re competing with people who’ve dedicated their lives to it. There’s also a survival bias to be aware of—people often see a successful example, like a chiropractor managing a billion dollars in assets, but they don’t see those who tried and didn’t make it.
A quick story: when I was building single-family homes, I focused a lot on being a custom home builder. I wanted to be the top builder in Richmond, taking on as many contracts as possible. This focus led me to spend most of my time on custom homes instead of spec homes as a developer.
I was watching my clients make millions of dollars over those few years, while I, as a general contractor (GC), was making a nominal amount on my cost-plus contracts compared to what they were doing. Looking back, I could have done much better. I could have avoided building for others and partnered with a few people to build spec homes instead.
In some cases, LPs (Limited Partners) make more in the long term than a GP (General Partner) who might not be as successful and only makes a small amount. So, it’s important to assess the space, learn about it, and see if it makes sense for you. At times, being an LP gives you the advantage of cherry-picking the best GPs to work with, as well as the best business models. You could partner with someone in industrial real estate, multifamily, or build-to-rent single-family homes. As an LP, the world is at your fingertips. So, that’s my long answer to that question.
Interesting story. I think there’s one aspect of that that people underestimate, and that’s the fact that you are your greatest asset. Understanding this is key because you need to account for the opportunity cost. If you’re a great surgeon, for example, and you’re compensated well for what you do, but then you start dabbling in single-family rentals for tax reasons, you’re pulling yourself away from what you do best. That’s inefficient and you’re not respecting your time.
In this space, there’s a great opportunity to collaborate with people who have dedicated their careers to specific markets and asset types. They have the relationships and expertise, and you’d be competing with them if you tried to go it alone. But by collaborating, you can leverage their time and relationships, making your time more efficient and leading to exponential growth.
Absolutely.
August, tell us a bit about the market right now. It’s April 2023 as we’re recording this. A lot is going on this year, for sure—things that really can’t be underestimated. What’s your view of the market, particularly in multifamily? Where are you seeing opportunities, and where are the risks? How are you advising your clients?
To say the market is “choppy” is an understatement. The capital markets are in turmoil. The Fed has this elephant in the room—inflation—that they need to deal with. One of their main tools to fight inflation is raising interest rates. We’ve all seen the Fed’s rate hikes all over the news, and we were all trying to guess whether it would be 75 basis points or 25. But the cracks in the infrastructure caused by these rate hikes are genuinely concerning, and we’re already seeing the results with bank failures. When banks in the richest country in the world start failing, it’s a scary sign.
We’re also seeing the ripple effect hitting commercial real estate. A lot of syndicators didn’t anticipate how quickly rates would rise, or they were not prudent enough to purchase interest rate caps—an insurance policy to protect against rising rates and potential losses for investors. You’ve got major institutions like Blackstone pulling out of office space deals. But, as always, there are still opportunities. As the saying goes, “When there’s blood on the streets, there are always opportunities.”
At the same time that Blackstone is losing investors’ capital, they also raised the largest real estate fund in history—a $30 billion fund—and they’re just sitting on the sidelines, ready to come back into the market and be opportunistic. Overall, I feel bullish about U.S. real estate. The rent-to-value ratios in the U.S. are unmatched anywhere else in the world. I see similar trends happening here in Canada, where I keep my finger on the pulse of the market.
Over the last 20 years, cap rates in Canada have compressed significantly, and people are still buying deals at 2% cap rates, which in most cases results in negative cash flow. If you put down 30% and borrow 70% from the bank, you’re in negative cash flow. You’re essentially putting in more money each month just to service your debt. But people are still buying, and institutions like REITs are still buying deals here in Canada.
I feel that the margins are still there in U.S. real estate. The U.S. is still the richest country in the world, and there’s significant interstate migration happening—something you don’t see in other countries. For example, in Canada, you don’t see half a million people moving in or out of different cities. But in the U.S., there’s constant migration, which creates opportunity.
However, I think that eventually, long term, the U.S. will mirror Canada, especially in places like California and New York. Cap rates will compress to the point that smaller groups won’t be able to buy institutional assets. Institutional assets will be reserved for institutions, as historically, only REITs can buy large assets like a $50 million apartment community at a 2% cap rate.
This only makes sense if they’re playing the appreciation game. I believe we’re still in this “Goldilocks” period where syndicators can still get good margins, but that window may close. Overall, I’m bullish on the market. I think the Fed will probably raise interest rates by another 25 basis points. The rate hikes will affect different sectors differently, but I believe they will plateau soon, and the Fed will see how inflation develops.
I think that by Q1 or Q2 of 2024, they might even start decreasing interest rates, because a significant portion of the Consumer Price Index (CPI)—which reflects inflation—is lagging, and it’s based on rents, which haven’t fully come into the numbers yet. I expect inflation numbers to drop considerably in the coming quarters, hopefully reaching the 2.5% target. So, overall, I’m still very bullish about U.S. real estate. We’re moving to the U.S., and all our investments are there. So, two thumbs up for U.S. real estate in the long term.
I completely agree. People tend to underestimate the fundamentals of the sector. It’s easy to react to noise or media coverage about interest rates, but when you focus on the bullish trends, such as the massive immigrant demographic coming into the U.S., the picture becomes clearer. Immigration is at an all-time high, and it’s only growing. Immigrants typically don’t buy a single-family home when they first arrive; they rent.
This creates a strong demand for rental properties. Florida is a prime example of this. It’s now the 4th largest state in terms of GDP in the U.S., with a massive budget surplus. Florida’s economy alone is larger than that of Canada. It has more international airports than the entire country of Canada.
When you think about these things from an investment perspective—investing in markets with high job and population growth—it makes these markets more resilient to recession. The fundamentals are on your side. Regarding Build-to-Rent (BTR), it is a relatively new asset class, and many investors may not be familiar with it. But it’s an interesting space.
Yes, Build-to-Rent Single Family Rentals (BTR SFR) is an emerging asset class. These are portfolios or communities of single-family homes built specifically for renting. They behave much like multifamily properties—essentially, horizontal multifamily projects. The origin of this asset class traces back to the aftermath of the Global Financial Crisis (GFC) when there were a lot of foreclosed homes. Wall Street started buying tens of thousands of single-family homes, both scattered across sites and in portfolios or communities. This shift helped establish BTR as a viable asset class.
The plan was really to sell these homes when the market turned around because, as we all know, real estate is cyclical. They were buying in a down market, pennies on the dollar, to resell when the market rebounded. Blackstone was involved in these projects as well. However, instead of just holding these assets, they began managing them and renting them out. They quickly realized that single-family homes in a portfolio, within a community, behave just like multifamily properties. Their Net Operating Incomes (NOIs) were very high, and this was the beginning of a new asset class.
As the economy recovered and the price of single-family homes returned to market value, Wall Street could no longer buy them for pennies on the dollar. This is when they started building these single-family rental (SFR) communities, known as Build-to-Rent (BTR) communities, from the ground up. They partnered with developers to create these communities. So, that’s the origin of BTR SFR. These communities are particularly prevalent in the Sun Belt because the business model makes sense in those areas.
We are very bullish on this asset class because if you have the option to live in an apartment, with neighbors above, below, and beside you, or in a community of single-family homes, the choice seems obvious. Furthermore, unlike renting a single-family home in a neighborhood where most people own their homes, in a BTR community, everyone is renting. This increases the comfort level for renters. Some of these communities even offer amenities.
As for syndicating these deals, we looked at a project where we got involved with a property that wasn’t built yet. It’s pretty difficult to get investors on board for something that isn’t tangible, something they can’t touch or feel, or a property that isn’t stabilized. So, our focus within the BTR SFR space is on stabilized, already-performing assets, typically communities with at least 50 to 100 single-family homes. These are considered the sweet spot for this asset class. It’s a new and up-and-coming sector, and over the next few years, we’ll likely hear more about it. Having exposure to this asset class would be a smart move.
It’s an interesting asset class, especially when you look at markets where people are moving, particularly in the Sun Belt – the Southeast and Southwest. These regions are seeing a growing number of these BTR communities, and it will be interesting to see how the market expands. As a top performer yourself, what would you say is the single biggest insight you can provide to our listeners regarding personal performance that has yielded the biggest results?
For me, the biggest insight is something my grandfather always said: a healthy mind and a healthy body. I’m learning more about my body and my brain every day. I’ve always been clever, I’ve always made money, and I’ve always been smart in business. But when my brain performs better and when I’m in a better mood and feel healthier, I always perform better.
Investing in yourself and in your health is crucial. You need to understand what foods make you perform better, surround yourself with positive people, and embrace that “good vibes only” mentality. It’s about longevity. The way our parents lived – smoking a pack of cigarettes and living a hard life – doesn’t apply anymore. We’re seeing billionaires looking younger as we see them on social media, and that’s because they focus on their health and well-being.
My best advice is to invest in yourself, focus on your health, and cultivate positive relationships. Work on your mind through a great diet and the relationships you have with friends. That’s probably the best advice I can offer for being a high performer.
I love that. Speaking my language! Now, from a wealth perspective, what would be the single most powerful insight you could offer to listeners in terms of accelerating their wealth journey?
It would be diversification. Over the years, I’ve seen many people in real estate get hyper-focused on their own space. A lot of developers go bankrupt because they are too focused on their next project, rolling their gains into the next deal. They never diversify. Diversification is critical when building generational wealth.
However, focus is important, too. You should concentrate on what you’re great at, but a portion of your surplus should be diversified into different asset classes. Don’t be emotional with your investments. For example, look at the S&P 500 – many of these investments have performed well over the years, but due to liquidity, people tend to get emotional and exit their positions prematurely.
And that’s the great thing about the GPLP and LP structures. Because of the illiquidity, people can’t get emotional about what’s happening in the market and try to exit. The general partner makes those decisions on behalf of the LPs. So, diversification, partnering with the right people, and finding good friends and partners are difficult. When you do find the right partner, it’s important to cherish that partnership.
Awesome. August, thanks so much for coming on the show today. If people want to learn more about you or connect with CPI, what’s the best way?
The best way to connect with me is on LinkedIn. Just search for August Biniaz, send me a message, and I’d love to book a call and chat more. You can also visit our website at cpicapital.ca for a lot of information. We have our blog there, and our podcast Real Estate Investing Demystified. But yeah, feel free to reach out to me. Send me a message, and I’d love to book a call and have a chat.
Awesome. Thanks so much for coming on the show today and providing so much value to the listeners. We appreciate it.
It’s my honor and pleasure to be here.