August Biniaz is the co-founder of CPI Capital, an investment firm focused on multifamily value-add assets. In this episode, he shares his business approach from a marketing standpoint, how he approaches building and nurturing relationships with investors, and which tactics have worked best for him.
August Biniaz | Real Estate Background
- Co-founder of CPI Capital, an investment firm focused on multifamily value-add assets. CPI Capital is a Canadian-based real estate investment firm with a mandate to acquire U.S. multifamily properties.
- $208M AUM
- Based in: Vancouver, BC, Canada
- Say hi to him at:
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Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I'm Joe Fairless. This is the world's longest-running daily real estate investing podcast. We only talk about the best advice ever, we don't get into any fluffy stuff. With us today, August Biniaz. How are you doing, August?
August Biniaz: Great. Absolute honor and pleasure to be here. I'm sure you hear this all the time, but I feel like you've been part of my life for so long now, I feel like I know you, I talk about you, I follow your school of thought... So it's very interesting to be here. It's a surreal feeling.
Joe Fairless: Well, it's my pleasure to have you on the show, and I appreciate those thoughts, and that's awesome to hear. I'm looking forward to our conversation... Because August is the co-founder of CPI Capital, which is an investment firm focused on multifamily value-add assets. Sounds familiar, right, Best Ever listeners? And he is a Canadian-based real estate firm. If you didn't pick up on that in August's accent, he is Canadian, and they are a Canadian-based, with a mandate to acquire US multifamily property. So they buy multifamily properties in the US. He's based in Vancouver, and they have a little over $200 million worth of assets under management currently. They're the lead sponsor in their deals, that's their focus. So we're gonna dig into that. So first off, August, do you want to get the Best Ever listeners a little bit more about your background and your current focus?
August Biniaz: Absolutely. My background connects with you at some point in my journey, so it's an interesting background. My background really started in real estate 17 years ago approximately as a licensed agent, real estate agent. I wasn't really good at being a real estate agent, but I was good at finding deals, sourcing deals, so I started doing small fix and flips, i eventually started a general contracting company, moved on to build single-family homes from the ground-up, both spec and custom homes; I always wanted to scale. There was an opportunity that came across my desk, which was this five single-family home - we call it land assembly - that we could build 20 townhomes on it, and this was a built for sale project. Didn't know anything about raising capital, didn't even know what syndication was, didn't understand the GP/LP structure, just went through my network, was able to raise $5 million on this $8.7 million acquisition... We incorporated a company, put shareholder agreements in place, and I was to get a portion of the profits if the deal was profitable.
So I fell in love with that model, and this idea of finding the deal, finding the investors, bringing on all the professionals. On this particular deal I couldn't be the builder, I couldn't be the GC, so I had to bring on the GC, I had to bring on an architect... So I fell in love with that idea of what I've just described, and I went on a journey to try to bring the two worlds of private equity, where these private equity firms were raising large amounts of capital for mergers and acquisitions, for leveraged buyouts, and then I wanted to connect those two worlds of real estate development and private equity.
I read a bunch of books, "King of capital", "Barbarians at the gates" and what have you... But as I dug more and more, I realized this already exists, it's called syndication, also known as real estate private equity, and then I stumbled on Joe Fairless, and your books, and your school of thought, and I realized in the US -- now, my idea was ground-up development, but in the US the groups were buying already built apartment buildings; they were doing some small renovations, increasing the rents, increasing the asset's value, and giving great returns to the investors, but they were cash-flowing from day one as well. That's something that wasn't available here in Canada, because on a 70/30 LTV, a standard conventional mortgage, you're negative cashflows. So then I look across the border at the opportunities that existed, and I realize that I had a competitive advantage. In my province, British Columbia, there's 23,000 real estate agents, 8,500 licensed builders, and as far as real estate investment firms investing in US multifamily while partnering with Canadian investors, there were less than a handful. So that was kind of my start in my journey, but I'll let you go ahead if you have any questions.
Joe Fairless: Yes, that's smart. I love how you walked us through that thought process, and how seeking a competitive advantage you arrived at that point. I think it's something that Americans, myself included, a lot of times take for granted. We have such amazing opportunities with value-add deals at cash flow day one, versus, as you mentioned, in Canada, you did that on ground-up development, but it didn't cash flow right out of the gate. So on that first deal, the 20 townhomes, you said you raised 5 million. How many investors approximately did you raise from?
August Biniaz: Five.
Joe Fairless: Five, okay. And was it a million apiece?
August Biniaz: No, it was not exact. It was an aggregated amount between us.
Joe Fairless: What was the smallest and what was the largest investment amount?
August Biniaz: Well, the smallest was me, and the largest was just over 2 million.
Joe Fairless: Okay, and how much did you invest?
August Biniaz: I invested a very small amount, a couple hundred thousand.
Joe Fairless: That's still a lot of money. I wouldn't dismiss a couple hundred thousand. Okay, so a couple hundred thousand, and the largest is 2 million... So there were five investors, one of them was you, correct?
August Biniaz: Yes.
Joe Fairless: How did you know the other four? I'm not asking for names, I just would like to know how you knew them, so that for others listening, who are putting together their first deal, they can follow the breadcrumbs for how you did it, and then perhaps apply it to what they're doing.
August Biniaz: Absolutely. It was on my capacity as a home builder here locally and in Vancouver, there's people that I built homes for in the past, people that I had connected with, a lot of them were in the real estate space. One of them was an agent, and then he had a network of people that he brought on. But yeah, I'm more than happy to talk about doing my first deal, a co-syndication deal in the US, which I think your listeners will take much more advantage of, rather than a ground-up development deal in Canada, where you have to go to your inner circle. But co-syndication is a process that -- it's that superhighway that you could expedite the process to become a GP through that co-syndication model, so I'd love to chat about that at some point as well.
Joe Fairless: So just so I'm clear, so you had five total investors; you, and an agent who had a network of people. So that agent that you had a connection with brought on the other three investors?
August Biniaz: That's right.
Joe Fairless: Got it. Okay, cool. So you partnered with the agent, and together you all bought that property. Okay. So let's approach it this way - you have about $208 million worth of assets under management, correct?
August Biniaz: Yes.
Joe Fairless: And they're all in the US?
August Biniaz: They're all in the US.
Joe Fairless: Okay. How many properties does that consist of?
August Biniaz: That's three properties.
Joe Fairless: Three properties. Nice. Congrats on that. And where are they, and what can you tell us about them?
August Biniaz: They're in Florida, South Carolina, Texas. What I can tell you guys about it is the experience that I gained as being a builder and developer and not understanding what private equity was, not understanding capital raising and going on that journey that I mentioned, when I realized the potential that existed with US multifamily, with US investing, and co-founding my company CPI Capital, my suggestion to the partner was that we need to put a tremendous focus on the brand around us, on raising capital on the equity side of the business... Because as a boots on the ground developer, I had deals that always came across my desk, but the issue was always equity. And it wasn't a case that the problem was equity; I didn't even see it feasible, it wasn't even attainable to be able to even do a deal. It was automatically a no, because I didn't have the equity.
When I learned that there is a process and an ecosystem for capital raising and what have you, and obviously courses and mentorship programs and all that other great stuff, I realized that for our real estate investment firm, CPI Capital, we need to have initially our focus on raising capital, on building a brand around the company, building a brand around ourselves, and the deals will come.
A [unintelligible 00:09:14.05] is that "Find the deal, and the money will come." I don't subscribe to that idea. Actually, I don't agree with it. I believe you've got to focus on your brand, you've got to focus on marketing, you've got to focus on raising capital, and you can always connect with others to get deals and deal flow. With us, because we had put such an emphasis on raising capital and building a brand around ourselves and our company, connecting with many investors, both in Canada and in the US, we were overextending ourselves to not be involved also in the acquisitions and asset management. So we creatively came up this idea of co-syndicating or co-GPing with sponsors who would carry those parts of the business, while we came on and assisted them in the day to day operations, but also brought in a portion of the equity for the deals. And that's how we were able to close on such a large deal, and like I mentioned earlier, expedite that process of being involved as a general partner in these large deals.
Joe Fairless: Yeah. So you did that for those three deals, correct?
August Biniaz: That's right.
Joe Fairless: Okay. And now, correct me if I'm putting words your mouth - now you're not focused on those partnerships with other GPs, you're focused exclusively on doing your own deals. Is that correct?
August Biniaz: Exactly. The plan from day one wasn't to be a capital raiser or an equity partner; the plan was to build a fully functioning real estate investment firm. So it was just the means to get to our goal. And yes, at this stage, we are a lead sponsor, we have our first deal under contract here in Tucson, a build to rent project, interestingly enough... And we're also utilizing the co-GP model to allow other general partners who want to get involved in the space and scale to come and partner with us now on our deals.
Joe Fairless: So let's talk about building a brand, because you mentioned "Don't find the deal first. Instead, find the money first, build your brand, and then go look for deals", which I agree with; I think you've got to have your ducks in a row first with the equity, and then go look for deals. Otherwise, if the broker says, "Hey, here's a deal", and we don't have the money lined up, we get eggs on our face, because we aren't able to pull the trigger, and then we don't get more deals from that broker. I agree - you build the brand, you find the money first, and then you go look for deals. Are most, if not all of your investors, in Canada?
August Biniaz: The majority of our investors are in Canada; our company's name was Canadian Passive Investing, but we soon realized that so many investors were coming from the US with us doing zero marketing in the US and really our brand being around Canadians. We were like, "Hey, listen, we haven't even tried, and all these investors are coming from the US", so we changed the company name to CPI Capital to cater to American investors. So yeah, we're partnering with Canadian LPs and US LPs, and our US LPs are growing faster than the Canadian LPs.
But yeah, going back onto the kind of marketing talk, I want to touch on this briefly - in all transparency, a lot of my education came from your thesis, your school of thought, so on. I wanna appreciate that and give you the accolades you deserve... But yeah, I'm taking a step back before a deal is even in place, or there's equity in place. Every person has a brand around them; it doesn't matter if they have social media or they don't. There's a brand around you, even if it's your circle of influence, or it's your family and friends; there's a brand associated with you - the type of person you are, if you're a cool person to go hiking with, or you're a cool person go skiing with, or go drinking with... So there's a brand that's associated with you. Initially, before taking any steps, you need to build that brand. And frankly, the easiest way to do that is LinkedIn. LinkedIn SEOs are so powerful, that as long as you don't have a super-generic name, by creating your LinkedIn page, that will act as your website.
So if you're looking to deal with brokers, sourcing deals, and at the same time building your own brand, you need to have the minimum; it doesn't mean to have a huge marketing team behind you and creating a bunch of content on different platforms. And we'll go over that as well, I'm more than happy to talk about. But the basic minimum is to have a LinkedIn page, to have presence on multiple platforms, to be active. Only 1% of LinkedIn users post regularly. It's very easy to be noticed on LinkedIn.
So it's starting the process on building a brand, and then stalking it. I call it stalking. So to be noticed, you want to be everywhere, but it's difficult and cumbersome and costly to be everywhere, but you can stack it. You can start LinkedIn and regularly posting, you can start a podcast, you can start a YouTube show, you can start a blog, you can start speaking on other people's YouTube shows and podcasts... There's so many different things you can do, and you can stack those on top of each other and build a thought leadership platform, like Joe Fairless says.
Joe Fairless: So let's talk about that. I'd love to know what you've built, and from what you've built, what's been tough, and what's been a learning experience that you then decided to discontinue?
August Biniaz: Great question. So I see it this way - I see it as you have all of these different ways to build a brand around yourself, but also connect with investors. The goal is to connect with investors, and also connect with deals as well. A lot of times deals come across my desk. For example, I'll name some of the stuff that we do. So LinkedIn is huge for our company and for each of the leadership members. Each of you is his own entity, and you can leverage each of your profiles. So we have our LinkedIn, we regularly post, we also connect with a lot of investors. We have LinkedIn outreach, that's a process. So that's up here. I call it the top of the funnel.
Then we have our podcast. Again, we bring on expert guests, we interview them about different topics... That creates us some leads. We have our YouTube show; again, the same process. It's just our video version of our podcast. So that's on top of the funnel. And then we have our blog. So we have a blog that we send out on LinkedIn and online; again, some leads come through there. We go and speak on other people's podcasts and YouTube shows, and that creates leads as well... We have meetup groups, we rent booths at conferences at times... So that's your lead generating on top, and as people come in - and this is diverse as well, because a certain type of people watch YouTube shows, a certain type will love reading blogs... So you get all of them coming into your funnel. But now it's the next step, and I believe it is the most important step - it's nurture. Somebody comes into your funnel, you meet somebody, a high income earner, and you have a great conversation with them, but you call them three months down the road or six months down the road, you have a deal, they're not going to remember who you are. So that nurture process is very important, because you're on top of their mind, you're in their inbox; they're receiving information about you. If you're featured in the news, they'll be updated about that. So then when you do have a deal, the "know, like and trust" is there, and the chances of them investing with you is a lot higher.
And there's really two ways to structure our deals as syndicators. We can either syndicate them or we can create a fund. But for syndicators, which is the better way to start, in my opinion, we don't have a deal at all times, especially when you first start out. So you need to be on top of those investors' minds while you're working on your next deal and your next project.
Joe Fairless: I completely agree, the nurturing process or the building relationship process is a lot of times overlooked. And unfortunately for everyone who overlooks it, because it is the most important process in the marketing funnel. And [unintelligible 00:16:12.25] Ninja Selling is the name of the book. It's a book for real estate agents, actually, and I'm not a real estate agent, never have been, but I was recommended the book, so I read it... And the author talks about how if you have a real estate agent, and the real estate agent helps a family buy a home - and it's everything the family can ever want; it's a perfect purchase, exactly what they were looking for... And then the family lives in the home for five to seven years, which I think is the average amount of time families live in homes... And then they go to sell. Well, if that real estate agent who helped them find that perfect home did not stay in touch with the family over the course of those five to seven years, then the family very well could find another agent, maybe they got a postcard from a different agent talking about the home values in their area, and they could share the home value for their house, and they should sell it with this agent... Or maybe there's a family friend who recently became an agent that they go with...
So we've got to stay in touch in a thoughtful, relevant way throughout the whole process, so that when we do have a deal, like you mentioned, three, six months later, if we're not doing a fund, then we are top of mind. And I'd like to learn more about that, how you stay in touch and how you nurture that process. Can you give us some specifics for what you and your team do to stay top of mind in a relevant way?
August Biniaz: Absolutely. So just very briefly here, it's very important to kind of touch on this as well... When somebody does end up coming into your funnel, so somebody sees you on a YouTube show and one of these lead generating steps that we talked about, podcasts, YouTube show, blog, and they found you interesting enough to actually subscribe to you, so either subscribe to your newsletter, or subscribe to invest with you... So we have like "Invest with us" or "Subscribe to our newsletter" button - that's a big step somebody has taken. So what we do is we have a certain series of onboarding emails.
So John Smith presses Invest With Us, either on our website, or somewhere they've seen us; now they get a series of emails. So it's usually three emails. "Hey, nice to connect. Great that you found us interesting." And then the second email talks about who we are, and what we have done so far, and the third email adds value as far as like a recent blog we have written... So that's the first three emails they get the next three consecutive days. And then they at that time become part of our investor community, which is that they receive our email every Sunday, like Joe Fairless's email that goes out every Sunday... And within that email - now, in my opinion, and I have to toot our own horn over here, but I think it's one of the most comprehensive emails that goes out, because we have our newsletter, which is our weekly blog that we write about an educational topic, or something that's recently in the news, so it's a comprehensive article that's written... And then we have market updates, so what we write about is where is the interest rates at, where is the oil at, we give them a quick, brief update on all the numbers; where is gold at, so investors know it hasn't come down since last week, it hasn't gone up... So they're updated, so again, adding value. Next week, we update them on reports and news articles about the multifamily and investing space, mainly related to commercial real estate, and then we talk about our podcast. So this is a comprehensive email, as you see; and if you were featured in the news... Again, getting featured in the news is a huge, huge way of creating leads, and it also creates lots of trust. So if we were recently featured in the news, we add that. And we end the newsletter at the bottom with an image of us and our investors at a recent dinner we had. So again, it's all about building that trust.
A lot of times I talk about the business we're in, I talk to marketing people - we're not selling a product or selling a service. We're offering a partnership. And in most cases, we're telling someone that we might not have known for a long time, "Hey, come and invest $100,000 with me. Sign this 200-page document that says if I lose your money, you can't do anything about it. I'm going to take your money and buy a property somewhere probably out of state or in a different country, I'm going to manage it the way I see fit, I'm going to sell it when I want to sell it, you have no say, and whatever profits there are, if there is any profits, we will divide it 70/30; you take 70, I take 30." For someone to go through that and trust you enough with that, there needs to be such immense amount of trust for them to take that.
So if your marketing is on point, if you've been adding value to this person through the whole journey, it does most of the work that allows the person to come over... Now, if you're also can featured in the news, that builds on that as well. As soon as somebody gets featured in the news, the trust level automatically goes up. So we end the newsletter with a picture of us and our investors, again, building that trust. That's our newsletter.
Joe Fairless: I love the statement that "We're not selling product or service. We're offering a partnership." And I also love how you're ending the newsletter with a picture of you with investors. Thank you for sharing that, and your process. That's gonna be beneficial for a lot of us our listeners.
August Biniaz: Of course.
Joe Fairless: Let's step back... The best real estate investing advice ever?
August Biniaz: Ooh, best real estate investing advice ever... Look for cash flow and don't be highly leveraged.
Joe Fairless: Best ever book you've recently read?
August Biniaz: A Steve Schwarzman book, "What it takes."
Joe Fairless: Best ever way you like to give back to the community?
August Biniaz: Teach.
Joe Fairless: How can the best ever listeners learn more about what you're doing?
August Biniaz: Visit our website, CPIcapital.ca, or check me out on LinkedIn, August Biniaz.
Joe Fairless: August, thanks for being on the show. Thanks for talking about your business approach from a marketing standpoint, how you approach building relationships, nurturing relationships with investors, getting into the tactics, so that we can learn from what works for you, what hasn't worked for you. What's been the worst approach or worst tactic that you've done, that was like, "Um, that didn't work. Let me move on"?
August Biniaz: Overextending myself, trying to do too many things at the same time, and not being able to get back to the leads that were coming in.
Joe Fairless: Yeah, I agree. That's why you won't find much engagement on my Facebook, or any engagement on Twitter, and I don't even think I have an Instagram. So I hear you. I tried to do all, and then I was like "This isn't working." So I'm narrowly focused on stuff; so I get that. I hope you have a best ever day, and we'll talk to you again soon.
August Biniaz: Thank you.
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