Episode 248: The Interest Rate Hangover: Surviving the End of Cheap Debt in Real Estate with August Biniaz
Summary
In this episode of My Life As A Landlord, Dr. Jen sits down with August Biniaz, the Co-Founder and Chief Investment Officer of CPI Capital, to explore the shift from active property management to passive real estate investing. August shares his journey from building custom and spec homes in British Columbia to acquiring over $225 million in US multifamily assets. The conversation demystifies the world of real estate syndication, explaining how Canadian investors can seamlessly invest in the US market using RRSP-eligible structures. August also breaks down the booming "Build-to-Rent" (BTR) strategy and why it is reshaping the housing market with forecasted above-market returns. Whether you are a tired landlord looking to go passive or an investor wanting to cross borders, this episode provides a strategic roadmap to generational wealth.
Listen to the full episode :
This Week’s Blog Post:
Welcome to My Life as a Landlord, where we educate US and Canadian landlords, answer rental questions and clear up confusion about all things housing. In this episode, I’m joined by August Biniaz, co-founder and chief investment officer of CPI Capital, a real estate private equity firm. August started as a real estate agent and spent a decade as a spec builder and custom home builder in British Columbia before realizing that true scalability meant going bigger. Today, his team has closed over $225 million in US multifamily assets and specializes in helping Canadian and US investors access passive real estate syndications. We talk about private equity, cross-border investing, the end of cheap debt, market selection and the growing build-to-rent asset class.
From Building Homes to Private Equity
August watched Vancouver real estate prices grow while high rises and major infrastructure projects transformed the landscape. As a builder, he wondered how people could possibly have enough capital to take on $200 million projects, and those projects felt unattainable without multiple generations of wealth. As more educational podcasts, books and content became available, he learned about private equity and the ability to legally raise capital from members of the public through funds, REITs, syndications and joint ventures. That became a way to expedite the timeline from a few generations to potentially a few years. We also talk about the sunk cost fallacy and how being so invested in an idea, venture or plan can make it difficult to walk away even when the plan is no longer working.
Cross-Border Investing and the Interest Rate Hangover
Because CPI began with a mandate to help Canadians invest in US real estate, August and his team had to figure out the taxation and securities compliance involved in cross-border investing. They created a structure where the partnership files US taxes on behalf of Canadian investors, while investors file with the CRA for the profits made on the US side. We then get into the interest rate hangover and what happened after investment groups became comfortable and complacent with cheap debt. Interest rates were fairly low from 2008 through 2019, and many groups used short-term floating debt to financially engineer higher returns. When rates increased, those assumptions created problems. I always say to check your assumptions, and this is exactly why. When underwriting a deal, we need to know whether our assumptions are actually conservative or more aggressive than we think they are.
Choosing Markets and Understanding Build-to-Rent
We talk about how August and his team select markets, with Tampa Bay in Florida and San Antonio in Texas currently being two of their primary markets. They look at population growth, infrastructure, migration, supply, yield, market appreciation and forced appreciation. Oversupply is an important concern, particularly in Sunbelt markets where there is plenty of land available for new development. August also explains why CPI believes in build-to-rent. These communities serve renters by choice who may be able to afford a home or an A-class apartment but want the flexibility of renting while living in a single-family home or duplex with garages, no one living above them and the ability to move when they want. With baby boomers downsizing and millennials wanting mobility, August sees continued demand for this type of community.
Stay Focused and Believe in Yourself
Looking back at his own journey, August says he would have gotten involved in real estate private equity sooner, found mentors, joined educational and mastermind groups, built a brand around himself and educated himself in the space. We also talk about shiny object syndrome and how easy it is, especially for young people, to become distracted by all the information coming through social media and digital channels. His advice is to become a specialist, focus on something and dedicate your time and your life to it. Real estate private equity brings the finance world and the real estate world together, and the ceiling can be extremely high or even nonexistent. As we wrap up, August’s parting thought is to stay focused. We’re going through the recession phase of the cycle, and he believes it’s a great time to get involved in the market, believe in yourself and know that you can achieve it.