Ep792: Ava Benesocky – Commit and Take Action on Your Investment

Andrew Stotz 00:02
Music. Hello fellow risk takers, and welcome to my worst investment ever, stories of loss. To keep you winning in our community, we know that to win in investing, you must take risk, but to win big, you've got to reduce it. Ladies and gentlemen, I'm on a mission to help 1 million people reduce risk in their lives. And I want to thank my listeners in Vancouver, British Columbia, for listening in today, fellow risk takers, this is your worst podcast host, Andrew Stotz from AE Stotz Academy, and I'm here with featured guest, Ava benasaki. Ava, are you ready to join the mission?

Ava Benesocky 00:42
I can't wait. Let's get into it. Andrew,

Andrew Stotz 00:46
let's have some fun. So let me introduce you to the audience. Ava is an author, public speaker, educator, and the CEO and co founder of CPI capital, a uniquely innovative real estate private equity firm helping investors to invest in multi family assets. She's also the host of real estate investing, demystified with her, with her esteemed colleague and guest, and not guest, but esteem host, co host and named August. And August was on our show on episode 784, so let me welcome you on Ava and take a minute and tell us about the unique value that you are bringing to this wonderful world.

Ava Benesocky 01:35
Well, thank you so much for having me on the show, Andrew. I really appreciate it. Looking forward to our conversation. That is an amazing, incredible question. I think my unique value that I'm bringing to this world, you know, I think everybody always wants to know and find what their true purpose is in this life. What are they? What are they waking up for every day? And, you know, having this driving force to jump out of bed and conquer the world that day and what excites them and to kind of conquer whatever we're passionate about. So having a purpose is paramount. And I think for myself, I'm a fund manager. I'm a mom to a nine month old boy, Atlas. I'm actually we're expecting our next baby boy, Aria, in January 1, 2025 I'm a wife to an incredible husband, so I have a lot of different purposes, and I try to bring a unique blend of skills and perspectives to the world. But I think with my professional life, I truly found my purpose, and I can talk about my unique value is, is when I started my real estate career, when I was in my early 20s, and I was really passionate. I was on the brokerage side, helping real estate investors invest in real estate, trying to build wealth. And I was really, really passionate about helping people trying to build wealth in real estate. And I was doing it one person at a time. And it wasn't until about five years ago, when I co founded CPI capital, and I pivoted to the real estate private equity world, where I realized that I can actually help the masses invest in real estate, and that's when I could bring my unique value something that I'm really good at, and that is really creating relationships with people, being a good listener, understanding what they're trying to achieve, but really kind of forming that that that strong relationship, and I think that's one of my my talents as as being CEO of the company. I'm, you know, wear many hats, but I'm, I am more focused on the equity side of the business, and that is building trust with investors and so forth. So

Andrew Stotz 03:35
maybe you can explain for some, you know, some people, even myself, I'm, I'm not sure if I totally understand real estate. I don't understand real estate very much. I must admit, I understand the stock market a lot better but then this concept of private equity, maybe you can explain a little bit more about what you're doing, so that we understand your business.

Ava Benesocky 03:54
Yeah, absolutely, I would love to. So we're a real estate private equity firm. Look at us as an investment management firm. We actually bring alternative investments to the public for them to be able to invest in. We call it real estate private equity, because we're not on the stock market. You can't invest with us. We're private option. So you really would have to know somebody, I guess, to or hear about us, or, you know, come across us on, on somewhere over the internet to find out about our investments. But what we do really were, we're like, fix and flippers, but on a large scale. So we buy apartment communities in the sunbelt states with a hyper focus on the state of Florida right now. And we buy institutional multifamily assets that's anything that's 100 plus doors. We always look for. These are already built, already stabilized, cash flowing properties. And when my team is really good at is finding properties that need have some sort of a value add component, and that they're not being operated to their full potential. So. So it's, it's, it's a very simple business model for investors to understand. We go in there, we renovate lipstick renovations, nothing crazy, and we actually sell the property in three to five years. We find out where, how the current seller is managing the property, and they're maybe they're spending too much on operations. So we'll improve the operational aspect of it as well, increase the noi, increase the value of the asset. And investors are able to invest with us passively. We take care of all the operations, and it's really kind of a very streamlined investment process for passive investors to invest in real estate passively, without having to worry about all the headaches that come along with investing in real estate.

Andrew Stotz 05:45
Okay, so let me ask a few questions about that. So, so, so if somebody's investing with you, ultimately the underlying asset they're getting is the ownership in a series of properties that are also producing income. So they're getting access to the ownership of those properties, because they're getting the land and the building that you're buying, and then they're getting the income generated from that, and then they're getting exposure to the capital gain when you sell it five years from now, or something. Those are the main sources of return for the investor in the private equity, right?

Ava Benesocky 06:23
Yeah, that is correct. And also, cash flow is a big component of our investments. Cash is king. We're cash flow investors. So it's really cool, because if you look at it on 150 unit building, everybody's tenants there from the rents we collect, we pay all of our the mortgage, all the expenses, and there's enough surplus left over to pay the investors cash flow. On a monthly basis, they receive cash flow distributions for the term of the project, and then when we sell in three to five years, they also receive a large portion of the profit on the back end. So unlike when I was in brokerage and I was trying to I seen the frustration that existed within investors. Everybody wants to invest in real estate, but they're like, Okay, where do I begin? Where do I buy? Now I gotta, you know, do renovation. Now I gotta be a landlord. Now I gotta deal with tenants. It can be quite complicated and frustrating for a lot of people. This is an option where investors can still invest in real estate, get the cash flow, make incredible returns, but be completely hands off with the operational aspect of it. So it really simplifies the process for them. And

Andrew Stotz 07:30
what is the actual instrument or method that they're like? As you said, it's not something listed in the stock market. So it's not like they're buying a share in the stock market. Are they buying a share in an overall fund, or are there specific investment vehicles related to specific products? Or how does it work? Or properties? How does that work?

Ava Benesocky 07:50
Yeah, that's a great question. So we're called, so we syndicate our deals, so we're not like a fund. So for example, if you looked at like a REIT, you're investing into a fund that owns several different properties within that one investment. So you're diversified throughout that one investment with our group at CPI capital, we syndicate each project so it's project specific, so the investor is actually investing into that specific project, and they're going to receive Limited Partnership shares. We call them units. So yeah. So it's, it's, we value each unit in the property, and not that, not the physical unit, right, not the actual unit that the tenant lives in. But let's call them shares, and that's really how they're subscribing to this partnership. And they sign off on something called private placement memorandum. It's a legal doc, or for Canadian investors, if you have Canadian listeners, it's called subscription agreement. But that's really how it works. And

Andrew Stotz 08:47
then the benefit for that investor is that they don't have to go out themselves and find those properties and try to, you know, invest directly. Instead, they let you go out and find them, and then you bring an offering to them and say, Well, you're in our community. We've got a new building, and you've got an there's an opportunity for you to invest in it. Here's the minimum amount that you would invest, here's what we expect the returns would be. And then the person can either invest in it or pass and wait for the next one that you bring along. And the benefit for them is that they don't have to do anything as far as finding the units. They don't have to do anything about upgrading them, managing them, eventually selling them. All of that is done by you. So is that, is that correct? That is

Ava Benesocky 09:30
totally right. And the best part of it, the best part, I would say, is the monthly communication that we send out to ambassadors. They absolutely love this. So they're passive. They're completely hands off. But every single month, we send it out on the exact same day, every single month, single month, they get a total report of everything that's happening, down to videos and pictures of renovations that have been done and what's happening on site. And so it's exciting for them there. It's kind of like we're taking them on a journey, almost. So they get to see that. And then, most importantly, they get. They get deposited right into their bank account, that beautiful cash flow that they can do whatever they want with. So, that's really and

Andrew Stotz 10:08
What do you tell them when you talk to them about the potential return? How do you, how do you frame that for them within, obviously, the legal limits of what you can and can't say about what future returns could be. But how do you help them think about why they should invest in it? Is it the return? Is it the that it's an uncorrelated asset with their other investments in the stock market? Or what is your pitch?

Ava Benesocky 10:34
Yeah, I love that. So just for anybody listening, just a little bit of advice, if anybody who ever uses the word guaranteed, that's a red flag. So that's one thing, but our pitch really is this, we're data driven. So we're data driven, it's, you know, we follow certain growth metrics, and that's really how we pick the markets that we want to be acquiring assets in, job growth, population growth, income growth, rent growth. You know, where are people moving particularly, first, first of all, where is it business friendly? Where is it tax friendly? And where is it landlord friendly to buy? We purchase in the state of Florida, very landlord friendly. You know, a tenant, the lease expires. There's no fight. The tenant just has to move out. That's just the rules. And a lot of other states there's, there's a lot of landlord restrictions, but we're very data driven, so we actually show the investors a lot of data. We put together a very comprehensive investor presentation that we will actually go through with them on a live investment offering pitch when we have a deal, and we really break down the numbers and then show them, show them how we're going to force appreciate the value of the asset by doing small lipstick renovations. And it just blows investors minds. They're like, This is crazy. Just if you take a 200 unit, you increase the rents by $150 per unit by doing these little renovations, it's going to increase the value of the asset by ten million in a couple years. That's amazing. So we get them really excited about that. And then we really, you know, the numbers really speak for themselves. And one thing we do at CPI capital that I would say is unique to us, is we don't just throw numbers out there. We actually even for people who aren't numbers people and numbers confuse them. And underwriting is very comprehensive. And a lot of people are like, well, they shy away from that because they don't really understand it. But I get my team, my acquisition director, to actually record a video going through the underwriting to show how we conservatively, conservatively underwrote each deal, or the deal that we're presenting. And investors can build a lot of trust through us that way, because we're not just throwing, you know, hey, we're gonna achieve 20% average annualized returns, and can try to get them excited that way. We actually open the curtains to the backstage and say, Hey, come along with us. We're gonna break down how we're gonna achieve those numbers, those forecasts and assumptions, and we're gonna show you guys how we came up with everything on a conservative approach. So that's, that's how, that's our pitch. There's really a lot to it. But I think once investors follow us and really understand our business model, really they get excited about these institutional assets. They all, they all have a value I can put in. They all have a pool, they have a leasing office, they have a fitness center. And it's like, okay, what renovations are you guys going to be doing? Show me. Show me the numbers. You know, that's what's really exciting when we pitch investors.

Andrew Stotz 13:25
I was just typing while you were talking, and I was asking chat, GPT, what's the average long term return in the US, S, p5, 100 versus the average real estate investment trust? And what it says is the US return from 1972 to present for s and p, what was 8% 8% Well, for the US, s, p, it was about nine to 10% they say nine to 10. And then, for reads, it was 10 to 12 for that period. Okay, nice. Yeah, that was a particularly good period for REITs. Then I asked it, what's the correlation between these two asset classes? And it says the correlation ranges between point five and point seven. So the benefit from that is that when stock market goes down, REITs hopefully don't go down as much. And so there's some diversification benefit. So, yeah, that's that. That's interesting.

Ava Benesocky 14:26
Yeah, absolutely. And stock market, it can be very emotional. Obviously, you know, my parents, their accountants, love them so much. They when I was about 14 years old, they told me the most horrific story, that they lost $40,000 that year in the stock market, and they was like, Oh, my God, the stock market is evil. Investing is not good. Like, save cash money in the bank, right? But with real estate, yeah, the stock market definitely goes up and down, and it can be quite emotional. I think real estate, it's a tangible asset that you can invest in. I. And where was I going with this? I was going to say that, Oh yeah, where I was going with this is it's much more predictable. I think even when we hit, when covid hit, this kind of proves my case. When covid hit, all of our asses were performing very well, because everybody needs a place to live. So even the government steps in and does help people with shelter, particularly when there's crazy things that happen in the world, but that's always one thing that I enjoy telling investors about. That's particularly why I love real estate. But it is very good to have a diversified financial portfolio and do both. Yep, diversification is key.

Andrew Stotz 15:41
One last question about your business. When you propose a new project, let's say you found a great building in a great location, you see the opportunity to upgrade it. You go out to your investors, you say, we have this opportunity. Here's the minimum amount you would need to invest in this. Do you have a lock up period? Are they investing until that is sold? Or how do you manage it. When they say, I need cash for something else, how do I get out of this? How do you handle that? That's

Ava Benesocky 16:06
a really great question. I always communicate with investors from day one that they're in there. They're committed for the term of the project. We have our own capital right next to the investors in the deal. I mean, we invest 10% of the equity, so our money is in there too, but it's really in the discretion of the general partners, the operators, to when is the best time to sell. But we do say it's three to five years now. We're not going to go and hold on to the property for 10 years. We're going to lose our reputation, and people are going to say, don't invest at this guys. They're going to hold your money for much longer than they promised. But we always do it. We always communicate in real time with investors. Hey, maybe year three comes around. Maybe it's a great time to sell. We're very excited. We've made the returns that are great, and we're going to sell at that point. And maybe it's year four, maybe it's year five, but this, this all happens in real time in real estate. I mean, you, as you know real estate does is cyclical and things can happen. So we monitor this and communicate that with investors, but they are committed for the term of the project, so we call it an illiquid investment. It's not like they can cash out any time take their money and go. They wouldn't want to do that anyways, because the majority of the profit is made on the back end. So if you do, yeah, so that's, this is what we communicate. Okay,

Andrew Stotz 17:23
well, that's a great discussion about what you're doing. I think I understand it more clearly, and I'm sure the audience does too. So that's great. Well, now it's time to share your worst investment ever. And since no one goes into their worst investment thinking it will be, tell us a bit about the circumstances leading up to it and tell us your story.

Ava Benesocky 17:43
So mine's kind of a unique situation. It's kind of a funny story. I'm going to go back way when, when I got really passionate about real estate, when I was young, I invested in a course. The gentleman's name was Scott McGillivray, and I invested. I actually talked my parents when I was 15 years old to invest $13,000 into a course on how to renovate and sell homes, like buy a home, renovate it and rent it out, and we never did anything with it. And it was the worst investment ever. But what it taught me at a very young age is that if you're going to make an investment into, you know, a coach or a mentor or platform or mastermind or or whatever it is, you have to take action. It is so easy to get excited about something and make the payment. And it's kind of a, it's kind of a really good life lesson that I learned at a young age, because even to this day, I still regret I talked my parents into I said, I'll pay half, half. I was so young. I wasn't obviously, I just started working at 14, but I wasn't making that much money, right? So I said, I'll pay half, half. I never ended up paying the pack the other half. They let me loose on that one. But what it taught me was, hey, if you're ever going to invest in something, you really got to take it. You really got to take it, take action on it, or else it's a total waste of time, total waste of money. And what's the point?

Andrew Stotz 19:15
Well, we're all looking at courses all the time, right? And luckily, courses aren't that expensive anymore, because you got access to a global market. But I'm just curious, was it? Was it a case that it was just unrealistic that you could take action on it, given your age and your access, lack of access to capital to implement it? Or could you have implemented it if you had, you know, in other words, did you just pick the right course at the wrong time, and therefore it just didn't make sense? Or was it that, you know what was in the course? You know, you just, you just procrastinated and didn't work on it,

Ava Benesocky 19:53
you know what? I think it goes back to everybody wanting to invest in real estate, and it's like when you. Talk about it. Hey, buy a property, renovate it, rent it out. It sounds pretty simple, but when it comes to executing that, it ain't simple, and it's very, very stressful. And you know what, I think what we did was we sat down and we tried to get it started. And there's so many moving components, finding general contractors and doing everything like that. It was so convoluted that you almost get, I don't know, you just, kind of, you get scared almost of the process, and you just kind of, it fell through the cracks. Honestly, we never even ended up taking action on it. So that is just something that, you know, realizing that there's a lot of work that goes into this once we once we did that so and just busy lifestyle and everything else. But I guess that course is probably meant for people who are, are, you know, have the time and a little bit more knowledge, you know, they, you know, sometimes courses, they make it sound really exciting, but they don't really get into actually, what needs to be done to get there. You were, you or you don't understand it completely.

Andrew Stotz 21:02
So how would you summarize the lessons that you learned? Lesson

Ava Benesocky 21:07
that I would summarize it by, if you're going to invest in absolutely anything, make sure that you're ready to be committed. Take action and put your full focus on it. Put your full focus. And focus is probably the key word having. Having pure focus on something is really how you're going to be able to I know, August, I think, talked about the shiny object syndrome, which is something that we talk about within the firm all the time, because we're getting all these incredible deals sent our way and self storage and other commercial real estate. You know, I say no shiny objects. We're fully focused on multifamily. We're fully that is our focus, and that's all we're going to focus on until we succeed in that. So just have the time and be all in on something.

Andrew Stotz 21:51
So some of the things I would take away, the first thing you made me think about when I was in the university at Cal State Long Beach. I was pretty serious student at the time because it was my way out of having no money and, you know, just trying to figure out where I fit in this world. And I sat down in this one particular class on a regular basis next to this beautiful woman. And we kind of joked around over the semester. We never really, you know, went out or anything, but she said, I wouldn't go out with you. And I said, why? And she said, Because you're boring. Oh, and I said, I looked at her being the smart ass that I am. I said, Honey, one day you're gonna want boring. And as I imagine, she's probably, you know, gone through her second divorce now, and all the excitement that those men can bring. And here I am just plodding away, no dining objects, you know, just stay focused on what we're doing. So I love it, you know, listening, my first takeaway from this is, you know, embrace, boring, embrace dull, embrace consistency and regular, you know, assets. So that's the first thing. The second thing I singing about is that, you know, I get approached, as everybody does these days, by coaches and by courses and all that. And in most cases, my reaction is, unfortunately, I don't have time to learn that. Yeah, and I like that topic, and I would like to learn it, but I don't have time. So if you have a service that you can do that for me, you know, like, let's say Facebook ads. I do not want to learn Facebook ads. I don't I mean, I want to know them, and I want to be able to generate from them, but I don't want to learn it. And so I think it's important, when you look at a course, you can get excited that you want the output of this course, but think about, Do I have the time to commit to it, and is it better just to get someone as I have many different great people that helped me achieve what I could achieve if I went and studied it myself. And that brings me to my last thing. You know, one of my online courses is valuation masterclass boot camp, and it's a six week intense course on how you evaluate company. And I set up an accountability sheet a few boot camps ago. So I do it every 10 weeks or so, and I asked the students every day to mark down the hours that they did. And I let's add 100 students in each one, and they mark down, on average, between 102 50 hours in six weeks that they spent. And so after looking at it, kind of getting rid of some outliers. Some of these men and women were just obsessed, but let's just say that it's 150 hours in six weeks. It's like I can't deliver the content of this course any more efficiently than that, and you've got to be ready to spend 150 hours. Hours in the next six weeks. And if you're not, don't do it. So those are, those are the things that I take away. Is there anything you would add to that?

Ava Benesocky 25:09
I think you said it perfectly. Yeah, I love that. So, so

Andrew Stotz 25:14
let's think now about our listeners, viewers out there who are, hey, they've got some interesting courses that have come up, right? And they're exciting, and they're excited by the outcome, you know, that they could achieve. And let's say the course is good. I've had some other people come on talk about courses, and they ended up signing up for bad courses. But let's say the course is good, the outcome is exciting, and all of that, what I want you to do is kind of take yourself back and talk to them, to that person right now, and say, you know, what's one action that you'd recommend that they take to avoid suffering this same fate?

Ava Benesocky 25:49
Yeah, don't be so definitely. Do not be impulsive. Really take your time and ask yourself, Do I have time for this? Can I block in my calendar? We live by our calendars. Can I, is there a slot in my calendar that I can, that I can physically block out, where I can not be interrupted by anything else in my life? And if there is then, then, then it could work out for you, I would not go there, because we all want to do everything. I mean, it's exciting and we want to achieve the world. But is it realistic, and do you actually have some time to commit? Yeah,

Andrew Stotz 26:25
that's a great way to look at it, because I talked to my incoming students, and say it's going to be about three to five hours a day. So look at your calendars, ladies and gentlemen, and see where do I have three and a half? Three to five hours a day? I don't have it. In fact, my commitment right there that she's a big commitment, but yeah. And ultimately, my commitment to them is that if you can devote that, I can deliver you a transformation. And that decision means going from zero to being able to value a company and present it and write a report and do the financial model and everything, and I'm able to deliver that, but, but, yeah, it takes time. It reminds me of a Wall Street Journal ad that my best or not ad, but comic, okay, that I remember from years ago, and my best friend and I always joke about it, and that is, it's, you know, a businessman dressed up in a suit, and he's standing up and he's got the phone to his ear, and he's talking on the phone, and he's looking down at his calendar, and he's got his finger on the calendar book, yeah? And obviously he's talking to someone about setting up an appointment, and the big businessman says, How about never? That works for me. So consider it as an option.

Ava Benesocky 27:41
Yeah, consider never as an option. That's awesome. Andrew, yeah,

Andrew Stotz 27:45
so let's, let's, let's wrap up. One of the questions I wanted to ask is, like, what's a resource? Maybe you can talk to us about your podcast, and what people anybody going to that? What are they going to get from

Ava Benesocky 27:56
him? Awesome? Yeah? Real Estate Investing, demystified. I think we've done over 300 episodes at this point, and we've, we've really, we interview experts. Our guest speakers are experts. It was, we focus a lot on real estate, but we do bring in the odd guests that's not real estate related, and they talk about all kinds of things about, you know, we brought on different investment opportunities that that are out there, whole life insurance, like people have really learned a lot about watching our show and different ways that they can invest their money and so forth. So we try to bring free content that people can really learn a lot and really learn it in a you know, we were talking before they 40 minutes. You know what? I do a little trick of the trade. Put it on 2x and you can get through them a little bit faster, but you can learn a lot by listening to these podcasts. Fantastic.

Andrew Stotz 28:49
All right. Last question, what's your number one goal for the next 12 months? Oh,

Ava Benesocky 28:55
nice. My number one goal for the next 12 months on a personal level, or or business? Well,

Andrew Stotz 29:01
it sounds like you got your hands full on a personal level coming in 12 months.

Ava Benesocky 29:05
Yeah, that's true. It's all about time management, right? Being super organized and time management. I know, I know for all the moms out there is, yeah, being a being a mom to a nine month old, and having a baby on the way, and being a CEO of real estate private equity firm, it does sound like I have my hands quite full, but it's all about building a really superstar team around you and just being very organized. But I'd say the goal for the next 12 months is really to build out certain continue to build out certain departments in the company we are growing, and to close on a couple more assets would be great. And on a personal level, honestly, we're just really into taking care of our mind and our and our bodies and our family, so that's really what we're all about. So just health happiness, and we call it cheers to wealth, health and happiness,

Andrew Stotz 29:57
beautiful. Well, listeners, there you have it. In. The story of loss to keep you winning. Remember, I'm on a mission to help 1 million people reduce risk in their lives. As we conclude, Ava, I want to thank you again for joining our mission. And on behalf of a Stotz Academy, I hereby award you alumni status for turning your worst investment ever into your best teaching moment. Do you have any parting words for the audience,

Ava Benesocky 30:22
yeah, just thank you so much for for letting me be on your podcast, and good luck to everybody out there and whatever venture they decide to take

Andrew Stotz 30:30
wonderful that's a wrap on another great story to help us create, grow and protect our wealth, fellow risk takers, let's celebrate that. Today, we added one more person to our mission to help 1 million people reduce risk in their lives. This is your worst podcast host Andrew Stotz saying, I'll see you on the upside. You.