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How to Scale Commercial Real Estate


Apr 5, 2022

Is it possible for Canadians to invest in US real estate?

It is, and Ava Benesocky is here to tell us how. Ava was once a small city girl who moved to the big city to follow her dreams and built a real estate private equity firm from the ground up. Currently, her firm, CPI Capital, is helping aspiring investors to be empowered in making financial decisions by educating them about real estate. 

She gives a ton of helpful information for anyone interested in investing in real estate in the United States, particularly Canadian citizens. She also talks about her journey from investing in single family for 10 years to transitioning to multifamily. 

 

[00:01 - 03:06] Opening Segment

  • Ava Benesocky was investing in residential real estate for a decade
    • She jumped to multifamily for this reason
  • How to transition from single family to multifamily?

[03:07 - 08:45] How Canadians Can Invest in US Real Estate 

  • Ava’s team helps investors from Canada and the US
    • These are the unique challenges between the two kinds of investors
  • This is the equivalent of a US LLC in Canada
  • She talks about her experience closing her very first deal

[08:46 - 13:50] How to Overcome Limiting Beliefs

  • They had no portfolio in the US to show to their investors
    • This is what they did instead
  • How to keep in touch with your investors?
    • Ava reveals her secret
  • Aspiring investors have limiting beliefs that they can overcome
    • Ava gives some tips

[13:51 - 15:02] Closing Segment

  • A real estate mistake you want the listeners to avoid
    • Trying to reinvent the wheel
    • Find someone who’s been there already and learn from them
  • Your way to making the world a better place
    • Educating people
  • Reach out to Ava
    • Links below
  • Final words



Tweetable Quotes

“We have our track record here [in Canada], but we didn't have the track record that we needed in the US. So the next best thing was to find and partner with…the boots on the ground who've actually been through a full cycle in order to piggyback off their track record.” - Ava Benesocky

“A lot of people that want to get started in real estate… limit themselves because of [the] really large numbers [in deals]. Don't allow that to scare you because this is a team sport...” - Ava Benesocky

“That's what makes our business go round…really taking those relationships and growing them and strengthening them as they invest in more and more deals with you.” - Ava Benesocky



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Email ava@cpicapital.ca to connect with Ava or follow her on LinkedIn. Do you want to be an empowered investor who earns passive income from real estate? Visit CPI Capital now!

  • Download CPI Capital’s media kit here.




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Email me → sam@brickeninvestmentgroup.com




Want to read the full show notes of the episode? Check it out below:



Ava Benesocky  00:00

We did not raise all that money on our own, but we did was we partnered with our US operating partners. They raised a significant amount of the capital, and then we brought in our Canadian fund. And again, some of our US investors invested as well. So that's how we did our first deal. So a lot of people that want to get started in real estate, they're really like they limit themselves because of these really large numbers. Don't allow that to scare you, right? Because this is a team sport and you can really take action and be part of these great assets if you structure it the right way.

 

Intro  00:29

Welcome to the How to Scale Commercial Real Estate Show. Whether you are an active or passive investor, we will teach you how to scale your real estate investing business into something big.

 

Sam Wilson  00:41

Ava Benesocky is a small city girl who moved to the big city to follow her dreams and built a real estate private equity firm from the ground up. Live in Canada. Ava, welcome to the show.

 

Ava Benesocky  00:52

Thank you for having me, Sam.

 

Sam Wilson  00:54

Pleasure’s mine. Same three questions I asked every guest to come on the show. In 90 seconds or less, you told me where'd you start, where are you now, and how'd you get there?

 

Ava Benesocky  01:01

Started in a small town. I'm now in Vancouver, Canada, and a big city and I got there by starting a residential real estate and scaling up to multifamily. 

 

Sam Wilson  01:11

You were in residential for how long? 

 

Ava Benesocky  01:13

For a decade. 

 

Sam Wilson  01:14

A decade. That's a long time. What did you do in residential?

 

Ava Benesocky  01:17

I was helping people buy and sell residential real estate.

 

Sam Wilson  01:20

Got it. Was there ever a lightbulb moment? Or what was the lightbulb moment? Cuz clearly you're out of it, where you said, “Hey, there's got to be a better way.”

 

Ava Benesocky  01:27

You know, a couple light bulb moments for me was I was helping person by person, kind of invest in real estate. I dealt with lots and lots of investors. Everybody wants to invest in real estate, a lot of people don't really know where to begin, and so forth. So I was I was kind of guiding people along the way. And my kind of vision for my life was to help people by the masses. So essentially, now what I do now, I co-founded my company, CPI Capital, and that's where I kind of shifted pivoted my focus to real estate private equity, where I could help hundreds of investors at a time invest in real estate, but on a passive side.

 

Sam Wilson  01:58

What was that transition like for you? I mean, there's a lot of steps between, hey, I'm a residential realtor, and I teach people how to invest in real estate, too. Now we're doing large commercial projects. What was that process like?

 

Ava Benesocky  02:10

The process was really exciting and educational and didn't come overnight. It took a lot of grinding and again, education, I went through this massive educational journey, you know what, I co-founded my company from a fundamental problem that I, I’ve seen existed for real estate investors. And again, that goes back to you, everybody wants to put their money in real estate. But a lot of busy professionals don't really have the time knowledge or experience on where to begin, right. A lot of people don't want to be landlords, a lot of people don't want to have to deal with the calls at night. And hey, my toilet, you know, toilets and tenants, if you will. So when I kind of shifted, again, I went from me kind of realizing this problem that existed and I really wanted to find a solution to that problem. And that was me building my real estate private equity firm, really figuring out the legalities of it cross border because I'm dealing with helping, partnering with Canadians to acquire US multifamily assets. And again, partnering with US investors as well. So I can go on and on about kind of the trials and tribulations I went through and how I did it. But oh…

 

Sam Wilson  03:07

No, no, that's good. You're answering really the questions on that, since you brought it up, the legalities of you know, developing or having investors on both sides, you know, in the US in Canada, what was your solution to that?

 

Ava Benesocky  03:20

Yeah, well, you're dealing with cross-border, right. So two different taxations, two different governing bodies, two different securities compliance. So trust me when I say I spoke to 40, 50 cross border tax accountants, and cross border lawyers and really got my corporate structure aligned, to be able to serve both US and Canadian investors. Canadians, really exciting, kind of pain point that I relief from them as they have access to US multifamily assets, to US real estate because there's incredible opportunity for all those US people who live in, you haven't written your own backyard. And what I did essentially was relieve them from pain points, like double taxation and worrying about, you know, where do I invest in the US and how do I access these great investment opportunities?

 

Sam Wilson  04:04

Right. So what was the solution? Is there a legal, I'm asking more specific here? Is there was there a legal solution such as you know, the way you created the LLC, is was there a certain fund model? What does that look like for a finished product?

 

Ava Benesocky  04:17

Yeah, so we use a fundable fund structure where we pull together Canadian capital and we deploy it as one investor and to the entity that owns the asset on the US side. Now, there's a treaty that exists between Canada and the US, okay. So if you put your fund, if you incorporate your fund of funds structure properly, what happens is the CRA on this side of the border sees it as a flow-through entity and Canadians are relieved dollar for dollar on double taxation. Now, if a Canadian was to go and invest into a, you know, project in the US that was formed under an LLC, will then trigger double taxation. So there's not a lot of education that exists here on this side of the border when it comes to investing in the US. So my company when we first started building our Real Estate private equity firm it was all about the education, educating investors how everything works and really making it streamline in their minds on how the legalities and the taxation works to really simplify the process.

 

Sam Wilson  05:12

Right. So let me get this right. So your Canadian investors invest in what did you call it a CRA?

 

Ava Benesocky  05:17

No, no, the Canadian investors in a single-purpose vehicle.

 

Sam Wilson  05:20

Got it. SPV. Okay, so they invest in an SPV, whatever that your equivalent of an LLC is they invest in that SPV. And that SPV, then, of course, you know, invest across the border in the US. What do your investors on this side of the line? What do they invest in? In that same entity?

 

Ava Benesocky  05:34

Either? Actually, no, they're actually investing into the single-purpose vehicle that actually owns the asset.

 

Sam Wilson  05:39

Right. So that's that SPV was formed in Canada was formed the United States?

 

Ava Benesocky  05:42

Formed in Canada. 

 

Sam Wilson  05:43

Okay, so what happens to the American investor, that you're both American, but the United States investor that invests in the Canadian SPV? What's their taxation like?

 

Ava Benesocky  05:51

So they don't even touch Canada. It's super, super streamlined process for them, they just did US investor invest exactly into the entity that owns the asset, nothing to do with the Canadian side, two separate entities.

 

Sam Wilson  06:03

Got it. Okay. With a US investor, you're going to steer them directly into the LLC that owns the asset. And then so you can bring two sets of investors and then your other set of investors from the Canadian side is going to be in their own separate SPV that also invest as a single investor in that same LLC that owns the asset.  

 

Ava Benesocky  06:21

Yes, correct. 

 

Sam Wilson  06:23

You have two separate pools of limited partners. Okay. Thank you. All right, that clarifies how that works. I appreciate you taking the time to educate me on that because I wouldn't have known obviously.

 

Ava Benesocky  06:32

Yeah, Sam, one thing I want to highlight is you kept using the word LLC, the LLC doesn't really work with our, we cannot use LLCs for Canadians to be relieved of that double taxation. So we do have to be very careful how we set up the entity, the single-vehicle here in the US.

 

Sam Wilson  06:48

So what is the SPV? What is your equivalent of an SPV then? 

 

Ava Benesocky  06:52

We don't even have LLC is actually in Canada. We call it a limited partnership.

 

Sam Wilson  06:56

Okay. Very interesting. Cool. All right. I love that I love you taking the time to figure that nuance out because that's confusing. I mean, I'm a guy that knows enough to be dangerous in this space. And even that's still just a little bit nuanced. Like, wait, why are you doing this again? Just because I haven't had to learn that yet. So that's absolutely intriguing. Tell me about your first deal you got done. It's one thing to have an idea. It's one thing to educate investors, how did you convince your investors especially in like, not convinced, but how did you approach your investors on the Canadian side to say, hey, look, I'm onto something, and you should be part of this.

 

Ava Benesocky  07:30

Yeah, that's a great question. And that was quite an experience. Because when I went back to all my investors, and I started talking about, hey, give me your money, I'm going to take your money, I'm going to go to the US, and I'm going to purchase multifamily in the US across, you know, literally across the border, you're thinking like, What are you talking about? This is, what the heck are you talking about? So trust me when I say it was difficult to convert. And that's where we started building our educational platform. So people could really grasp okay, what are they talking about here? And why are they going to the US? So essentially, the same business model, I'm just gonna highly, I just would like to touchpoint on the same business model here in Canada doesn't work, you cannot achieve cash flow and depreciation at the same time. There's very strict landlord laws here, and so forth. So education to try to convert people. And then essentially, our first deal that we did was in Orlando, Florida was a really exciting class, a asset, actually. And we ended up bringing our investors on to that. But what we did was, we went large, our first deal, we went really big. Okay, so we actually started our company, not by doing their original way of doing things where people usually start off with like, you know, a duplex and then a four-plex. And then they go to, you know, a 10-unit. We're not even talking about institutional multifamily assets that are 100+ units. We wanted to bring an institutional asset to our investor community from day one. Yeah. So essentially, that's what we did. We brought them a class A, it was a 350 unit asset in Orlando, Florida, and presented it on a platter to our investor community.

 

Sam Wilson  09:00

Talk to me through that size of acquisition, amount of capital you had to raise, give me all the nitty-gritty, if you don't mind.

 

Ava Benesocky  09:06

Yeah, for sure. So when you go to investors, and you say, hey, I want you to invest with me, what's the first question that they usually ask? Okay, show me your track record, right? Like, show me some numbers that have actually been achieved before. You know, people are forecasting all these great returns, keeping in mind Canadian investors, their use, they're really excited about a five to 6% annualized return, that's a great investment for them. That's an amazing investment for them. So when you start talking 20 or 15, 20%, annualized returns, most cases, they're like, this is too good to be true. What are you talking about? So essentially, on our first deal, what we did strategically was we figured out what regions do we want to be in, right? We've been doing real estate in Canada, we had about $100 million worth of transactions done here on this side of the border. We have our track record here, but we didn't have the track record that we needed in the US. So the next best thing was to find and partner with our operating partners, people who are the asset managers, the boots on the ground who've actually been through a full cycle in order to piggyback off their track record and show our investor community, hey, guys, look at the returns that of actual returns that have been achieved. And check out the actual numbers. So it was a $92 million asset in Orlando, Florida, as I mentioned, it was large institutional 350-unit, the capital raise was 32 million, we did not raise all of that money on our own. But what we did was we partnered with our US operating partners, they raised a significant amount of the capital. And then we brought in our Canadian fund. And again, some of our US investors invested as well. So that's how we did our first deal. So a lot of people that want to get started in real estate, they're really like they limit themselves because of these really large numbers. Don't allow that to scare you, right? Because this is a team sport, and you can really take action and be part of these great assets if you structure it the right way.

 

Sam Wilson  10:49

Right. That's absolutely, one more question. And I should have asked this earlier, but you hit on again. It reminded me that I didn't ask it. For the US-based investors that invest directly in to the which here, it will probably be an LLC that owns the asset, how does that work for you staying in control, and in front of your investor base, I know a lot of us do fund to funds, I participated both myself in a fund to funds model and being the fund sponsor. We want to stay in front of our investors. How do you do that?

 

Ava Benesocky  11:15

When you say, stay in front of our investors? As far as?

 

Sam Wilson  11:19

Yeah, I mean, a lot of times, you know, if we come in as a fund of funds, the operator won't even know who the members of that fund are necessarily, right? Because we're all investing in our own fund. And this fund comes with a single investor in that entity. Whereas if you have a pool of other investors in the outside, also investing in that entity, now you've got your sponsor indirect contact, or knows who your other investors are. Is that correct? Or am I missing something? 

 

Ava Benesocky  11:43

Yeah, you know what? Yeah, exactly. They wouldn't know who your investors are, in most cases. But I do all the communications with my investors. Okay. So to stay in front. Yeah. So I'm the one sending them their monthly distributions. I'm the one sending them their monthly updates, you know what I mean? So I still take over the full communication. And that's how I stay in front of my investors. Good question. Okay. Very, very, do not hand them off. Because we have a very tight-knit investor community, right. So we are this educational, like every week sending emails out, we're very hands on all my investors have my personal cell phone number, to be honest with you is so when it comes to that, yeah, I totally dig over the communication and hands on every step of the way.

 

Sam Wilson  12:21

Which is what we want that you want. When you because a pool of investors, that's a hard earned network, and you don't want to turn loose of that.

 

Ava Benesocky  12:29

That's what makes our business go round, right is really taking those relationships and growing them and strengthening them as they invest in more and more deals with you.

 

Sam Wilson  12:38

For sure. Talk to me about resilience and the belief that you could actually do this because I see enough people in the residential real estate space, especially in the realtor world that are just like, you know, completely, you know, narrow, like they got the blinders on like, well, it's just residential, I could never do that they have no idea that this great big world of commercial real estate even exists or that they can even participate in it. How did you overcome that?

 

Ava Benesocky  13:02

How did I overcome that? You know, what, I've always been a big dreamer, I guess I've always had kind of an entrepreneurial like spirit that was, I think, born within me, but essentially what, it comes down to surrounding yourself with the right people, you know, figure out what you want to do, who do you want to help? What problem do you want to solve, and then take it step by step and learn the process. But for people have limiting beliefs, right, as I was kind of mentioning, when they limit that belief on themselves, and they're kind of stuck in this, the same lane their whole life, it's really about having big dreams. And every time you're fearful, letting that fear kind of empower you to take the next step and take the next step for not just something bigger and better, where you can help more people or you can kind of scale yourself on an active level because it's really exciting when it begins. And it's only your fear that's really stopping you and being that's the only thing that's in your way.

 

Sam Wilson  13:51

I love it. I absolutely love it. Ava, thank you for taking the time to come on today. This has been a blast. I certainly appreciate it. Let's jump into a final few questions. When it comes to real investing in real estate. What's one mistake you can help our listeners avoid and how would you avoid it?

 

Ava Benesocky  14:04

 Okay, do not try to reinvent the wheel by yourself. Reach out to somebody who's already been there, done that, and follow their guidance.

 

Sam Wilson  14:10

Right. That's great. Next question. When it comes to investing in the world, what's one thing you're doing right now to make the world a better place?

 

Ava Benesocky  14:15

Educating. 

 

Sam Wilson  14:17

Love it. Last question for you. If our listeners want to get in touch with you or learn more about you, what is the best way to do that?

 

Ava Benesocky  14:21

So I am super active on LinkedIn, Ava Benesocky, or you can check out my website, it's www.CPACapital.ca or my email is Ava@CPIcapital.ca

 

Sam Wilson  14:33

Awesome. Thank you Ava for your time today. I do appreciate it.

 

Ava Benesocky  14:36

Thank you so much for having me.

 

Sam Wilson  14:37

Hey, thanks for listening to the How to Scale Commercial Real Estate Podcast. If you can do me a favor and subscribe and leave us a review on Apple Podcasts, Spotify, Google Podcasts, whatever platform it is you use to listen, if you can do that for us, that would be a fantastic help to the show. It helps us both attract new listeners as well as rank higher on those directories so appreciate you listening. Thanks so much and hope to catch you on the next episode.