Moving across the world for the right investment with Francois Braine-Bonnaire

Select the team more than select the product. If you are wise, you are going to be able to differentiate a good or a bad product, you know, but first select the team because ultimately the team is going to deliver. It's not the product.

You've heard that timing is everything. Well, François Brambonaire, He is a smart investor with impeccable timing. He's the kind of guy who spots an investment opportunity from across the world and up and moves his entire life to make it a reality. And it's paid off. He's been a client of ours since 2020 when he was getting off the roller coaster of being a landlord at scale to become a passive investor with a lot less headache for him. And in this conversation, we get a chance to explore the highs and the lows of his journey in real estate investing, but also learn from some of his missteps that he's made and all the learnings that he's made along the way. Check it out. Well, very excited to kick off this interview. This is with actually a returning guest to the podcast, François-Brayden Bonner. We obviously know each other, if not sure, for a few years and really excited to bring you back on. So François, thanks for coming back on the show.

Thank you so much, Ben. It's always a, a pleasure to be with the dream team of Aspen. I'm very happy to be back with you.

Awesome. Well, for those that haven't heard the last podcast that we did, give us a little sense of your story. I hear a little accent maybe in your, in your voice here. So tell us how you ended up in the US and what got you started on your investing journey back in the day.

Yeah, so I was living in Paris, France up to 2010, and then I moved to the US with a very clear project and also some savings. Which was to invest into distressed assets. And those assets were single-family homes to be purchased as much as possible directly from the banks after the big mess of the subprimes and the foreclosures. And so it was definitely a huge mess, but also those were amazing opportunities. So I started to buy single-family homes that I was going to convert into rentals after buying them from the banks, after renovating them. In 4 different states, and that was an amazing journey.

So how many did you end up with at the peak, single-family rentals?

So I bought for myself about 50. I did not keep them all, so I was always trying to keep about 30, 30+. But I thought it was such an amazing opportunity that quickly, actually, I started a consulting activity as early as 2011, thinking that I could find some cash buyers. Especially French-speaking cash buyers in France or expats around the world, for me to actually, you know, guide them from A to Z to do exactly what I was doing. So I was providing them with a turnkey solution, which was to buy, renovate, and do the property management for those rentals. And so I've helped about 250 families located in about 15 countries and between 2011, and in the past year they have purchased about 750+ rental properties.

Wow.

Yeah.

So you saw such an opportunity in the market. You're like, hey, I got to, I got to share the good news and started consulting and helping people do turnkey rentals. You know, it's so interesting to me because, you know, looking backward, hindsight's 20/20 and it's— I think it'd be easy to gloss over and say, oh, François, Bought rentals, but at that point in time, were you nervous at all?

Right?

Because you're kind of coming in right after one of the biggest meltdowns we'd ever seen in single-family. And, you know, looking back, it's like, oh, that was a great decision. Great move. Great timing. But it had to feel a little bit, at least early on, you know, is this the right move? Is this— am I making the right decision here? What kind of led up to that point? Because it sounds like you said you moved here in 2010. With the express purpose of taking advantage of the opportunity, what up to that point had given you confidence to say, this is a good opportunity, I'm going to go all in on it? Or was it a progressive kind of decision?

Well, so I didn't invest all my savings right away because I was very picky. So I was purchasing property one after another, and then I was doing the renovation. So by the time A was potentially rented, I was maybe in the process of buying B or something like that. So I was able to confirm that the model was working, but mostly to answer your question, yes. Was it sometimes feeling risky and I was nervous? 100%. Because I mean, let's call a spade a spade. I was buying in a lower middle class neighborhood and back in 2011 and 12 in the different cities that I was involved with, which were in Florida, in Georgia, in Alabama, and in Arizona. I mean, sometimes it was not neighborhood that I would have been comfortable to spend the night in, you know, it was a little bit dangerous because of the meltdown. I mean, they have turned into kind of sketchy neighborhood, excuse my French. And so I was not very comfortable with that, but then at the same time, it was possible to buy a 3-bedroom, 2-bath, do its renovation, like new roof, new flooring, new painting, fix the plumbing, fix the electricity. And have a 1,300 square feet renovated house for all in $60,000, $70,000. Wow. So, I mean, it was like the risk was significant because it was my savings, but I mean, it was poised to go up very significantly. And in the meantime, somebody was going to give me $1,100 every month for the rent. So I was super confident.

You were cash flowing right away really, really well.

Yes, but don't take me wrong. Of course, there are some interesting and scary stories that happened to me in the meantime, because when you have a large portfolio, of course you are facing a problem with tenants. And that's why when I discovered Aspen and I heard about, hey, become a leanlord, stop being a landlord, but that really, really, really resonated with me. Big time.

Yeah. So let's talk about that transition. So obviously you, you saw an opportunity, you took action, and looking back, I was like, wow, François, your timing was impeccable. I mean, that was like the bottom of the market. If you can get all in with renovations, purchase price, you know, $60,000 per rental and you're getting $1,100, you know, that's nearly a 2% on value rental income, whereas like the 1% rule is like the golden rule. You can't even get that now. So timing was great. You took advantage of it. You scaled up your portfolio. You built a whole consulting practice. This is incredible. So talk about before this kind of transition, give us a story if you could have maybe, you know, one of the more unique things that happened as a landlord. Obviously it's a great opportunity, but it came with some trade-offs that over time began to wear on you.

Okay. So a couple of stories. 2011, one of my first houses in Tampa, nice neighborhood. Amazing tenant, paying rent the first of the month, never, never calling for a repair. What else? And then one day my property manager called me and said, hey François, your property is actually has a SDI yellow belt all around. It's not wrapped as a gift. It's because your tenant has transformed the inside of a house into a grow house. For marijuana. Well, in 2011, of course, medical marijuana is not allowed. And my house is full of light and marijuana inside.

Wow.

That's a good story. Well, I mean, insurance has considered that as vandalism. They pay me back the repairs. Obviously, everything was seized by the FBI. And a few months after, yeah, I was able to bounce back. In the meantime, I was well insured, so they pay for the loss of rent. Compensate me. So kind of a zero consequences cash flow-wise, but I would say that was like, wow, that's fun.

Yeah. Not what you expected. Like, oh, this is a great tenant. They're not bothering me, taking good care of the house. And then, yeah.

So that's one. If you want a second one, uh, unfortunately, at some point I had to evict a tenant who was no longer paying. At some point after many months of patience, and then she came back and she put the house on fire.

Oh my gosh.

So that was not fun. That was a $150,000 insurance claim. So again, aside from being like kind of fun story after they happen, not on the moment, it was not funny at all. But after that, I think it really explained why I really wanted to transition towards passive alternative real estate investment.

Yeah, no, I think that's some wise words, right? So talk a little bit about the transition, right, from building a very active portfolio where you're very involved, you're a landlord, you're dealing with these issues, to becoming aware of passive investments. Was that like a big realization moment? Was that kind of a progressive process again, or what was kind of that transition?

Well, it was kind of a perfect storm with two main components. The first one is that along with the COVID-19 period, there has been a humongous increase of value specifically for single family homes.

Right.

So on top of the yearly appreciation that I was benefiting from, from 2010 to 2020, on top of that, after the COVID pretty much my whole portfolio got a 40% appreciation jump after the COVID Wow. So I say, okay, François, you have been able to take risk, but also lucky with your timing to enter the market. I think it's a great time to exit the market. And then I realized that in order to sell well my portfolio, I needed to sell them one house after one house, because if I was selling it as a portfolio, I would have taken a big discount and I didn't want that. So that was time consuming again. And that was also treasury consuming because you need to reinvest money into each house to make it pretty. And so there was motivation to, okay, let's grab the capital gains. For some of the houses that I mentioned in Tampa, I purchased for $60,000. I was able after the COVID to resell for $300,000. Wow. So I mean, that was totally beneficial.

And that was over about a 10-year timeframe or plus or minus?

Yeah, 11, 12, let's say 12.

11, 12.

12 years. And so that really motivated me to start reselling. And at the same time, yes, I really wanted to free time. I was a little bit worn out. Even though I have great property managers in the different cities, ultimately the headache comes back to you. So I really wanted to free time in order to give time to my passion, which is life coaching. I'm a certified life coach. I've been practicing since 2019, and that's something very important for me. This is not a money-making activity. This is something that I do with passion because I really love to help others. And I do it very well, but it's of course time consuming. So I needed to free my mind from the rentals and to be able to give more time to something to me more important when money is not in the picture, which is life coaching.

Got it. So you saw the opportunity and I think what's interesting too, where a lot of people are seeing, you know, well, things are just going to keep going up, you know, cause it's already gone up so much. So I'm just going to double down and go even further, but you actually had a little bit of objective awareness to realize, hey, I'm going to take some of my chips off the table and reduce some of the risk. Let's start to diversify. Let's start to take some chips off the table because it can go the other way. Right. It's not always a perfectly linear up into the right approach on things. So I think that's really interesting just to point out that you were able to do that. You saw great time on the front end, great timing on the back end. And yeah, I'm still a believer single-family home values are likely going to go up over the next few years, but also being able to assess risk, but also what's my time worth. And here's something I'm really passionate about that I've achieved a certain level of financial security that a little bit more is not going to do a whole lot more for me. So now I can use that to benefit something that really brings me a lot of joy, excitement, and passion. And I think that's something that's always good to weigh it, you know, balance these things with, right? Because at the end of the day, what's the point, right? And what are your goals? And are you, you know, serving those goals versus just trying to get to a bigger number?

I totally agree. And as a life coach, I have one of my favorite sentences that I share with my coaches is like learning to be able to say, hey, I have enough. What was your goal? And if you have reached it, say I have enough, because if you compare yourself There will be always someone that has a bigger car. There will be always someone who has, I don't know, a bigger home. And it's not needed. I read a book recently saying that the average size of a home in the '50s for a US household was like just below 1,000 square feet. Now the average size of a house for a US household nowadays is about 2,500 square feet. But do you really need To another space. I mean, I don't think the family size has grown.

No, it's likely got smaller, right?

Exactly. So it's like, yeah, being able to say I have enough is so wise to me.

Yeah. So you, you decided to make this transition, wanted to go passive. What was the kind of first investment that you made in alternatives and how has your portfolio evolved really over the past 5 years at this point since kind of 2020?

So first of all, it was interesting to know is that the way I started with passive alternative real estate investment is through Aspen. You are the first company that I met and I met you through a podcast, which is always interesting. It's that podcasts, they do work because maybe without it, I would not have met you and maybe I would have met another company and I would have been less satisfied with them. So that, that's super interesting. Nowadays. My portfolio is made about 20% personal homes. So I've got one condo in Florida, one condo in Paris. That's 20% of my total assets. So that's personal use. It's not money-making. It could be money-making if I was listening to rent some of them, but so far it's not. 55 to 60% is alternative real estate investments. So that's definitely higher than average people. So that's of course a big chunk of my total assets and the biggest asset among my alternative real estate investment is Aspen Income, which I've been incredibly satisfied with. And I've been a growing client with you since 2010, growing because I didn't start with all my chips, of course. So very, very happy with that. I do different kind of alternatives, but you are the big chunk. About 10 to 50% are my retired accounts. And 2 and a half years ago, I have switched everything from tax-deferred to Roth. Everything is Roth. I think it was a good, a good move. I do believe whatever, despite what's going on currently with the goal to cost cut the federal spending, I do believe that we are going to keep on spending more money than we have. And then the taxes are poised to go up. And so I changed everything to Roth kind. Versus tax-deferred. In that, I've got some kind of, not real estate, but alternative, I would say. I've been buying a good amount of annuities, the modern kind of annuities, the one with buffer, the one with boosted participation, with low cost, low fees. So I really like those annuities products. And I'm adding some notes from the bank, some private equity. So all that is in my retirement accounts. And the last component, about 10%, are my most secure assets, which are my, what we call the wealth accumulation life insurance, or also nicknamed the bank on yourself. So those are extremely secure assets, less risky, but at the same time with the opportunity to borrow your money that you have put in and keep on growing. So I think it's a great, great tool to have in your portfolio of different assets. This is something I discovered about 6 years ago, and I put about 10% of my total assets into those as the really the security component of my portfolio.

Got it. Well, thanks for breaking that down. That's super cool to hear. Do you use those life insurance policies as your liquidity, or do you keep, you know, other cash set aside?

I have not used it for liquidity, but I think I'm going to use it soon. Now that the cash value has grown quite significantly, I think I'm going to use it. So far, I was always keeping a little bit of cash for my business needs, but I think it would be wise to use the one from the back end yourself.

Awesome. So one question that's interesting, I'd love to hear is, I mean, you're pretty well diversified. I don't think I heard any public equities or other than annuities and maybe some treasuries or bonds, but have you always kind of been somewhat diversified in this approach or has this kind of shifted over time? Maybe your goals have changed.

It has shifted enormously because before that move that I've initiated, let's say in 2019 with life insurance, I would say that I was 80% single-family homes before and 20% regular stock market investment. So I have totally switched because I don't have the same goals. I value a lot the steady incomes, for example, with Aspen Income. I have the other kind of investment in my alternative real estate component of my portfolio in order to produce appreciation. Versus income. So I do a mix of that, but yeah, I don't have at all the same goals. I'm a little bit above the threshold of 50 years old and now I value income stability and durability of my income for the next decades.

Awesome. So talk about your best investments, whatever the things over the past, I mean, even 20, 30 years that have, you know, paid off the best. I think we all know that the single family was a good one for you, but Talk about what's some things that worked for you with your goals.

Outside, obviously, of the success and luck, unfortunate timing with a single-family home, of course. When it comes to steadiness of income, reliability, security, again, I'm biased, but I'm going to say that Aspen Income has been incredibly satisfying to me. When it comes to potentially creating also some appreciation aside of the income, something a little bit hybrid, I've started to invest a little bit in mobile home parks. Through a sponsor, and I think it's a very interesting concept. It's a little bit hybrid again between appreciation and incomes and storage as a way to produce more, I would say, appreciation than income is quite interesting for me too. So that's everything I would say real estate related. When it comes to indirectly more connected to the stock market, I think looking into that through annuity with the comfort of having buffer. Plus boosted participation has been a very successful product for me so far.

That's awesome. Well, let's kind of shift to takeaways, lessons, things that you've learned as an investor, you know, over the past several decades that you would view as kind of the, the real keys to the success that you've had making that transition to more of a passive investor and maybe just wealth building in, in general.

So I would say my recipe, well, let's say I've got two recipes. The first one is select the team more than select the product. If you are wise, you are going to be able to differentiate a good or a bad product. But first select the team because ultimately the team is going to deliver. It's not the product. For example, when I started to invest in Phoenix, Arizona, back in 2011, amazing, amazing destination of investment, amazing product, but I started with the wrong team. And they make me lose a year before I fire them. And during this year, I lost so many opportunities. So the team is first. Well, of course, I'm extremely satisfied by the dream team of Aspen, and that's been extremely important in my decision-making to keep on growing this year. And then I would say my second recipe or experience to share is that, of course, do understand what you buy. Okay. If you don't understand what you're buying, I think it's poised to be a disaster. For example, I'm not a big fan of crypto for many reasons, because I don't understand their value and what they bring to our daily life. So I don't support crypto. Think about the liquidity in the future. That's very important. I would say even when you do single family homes, some markets will be much easier to resell than other ones. And that's quite important. So. As much as you like a product, at some point it will be interesting, you will be willing to resell it. So think about the liquidity in the future. And then the last one is of course a given, but diversification.

Yeah.

And even though, as I said, my portfolio is almost 60% of passive alternative real estate, the rest is pretty diversified and more than it was in the past. And in, in among this component, this bucket of 60% of passive real estate investment, I've got Different timeframes, of course. So diversify, diversify.

Awesome. I love those lessons and I would agree with all of them as well. I think, yeah, from my experience, knowing who you're working with and knowing the people behind the product, as you said, is absolutely so important, right? You can have really great product, really great investment that can be very easily ruined by a bad team, right? And vice versa. A good team can make a, you know, not as great investment or some challenges in investment into something that's good, right? Totally agree there. I think it makes a lot of sense. So as we wrap it up here, let me share a little bit. What are you spending your time with now? You said life coaching. What's on the plate for the next several decades for François?

Well, I would say professionally speaking, or what makes my soul happy. Yeah. So life coaching through, I've got a website I can share. It's called tobeoptimized.com if people want to check it. And I also have on it something quite interesting, which is a method to detox from social media. And I think that's something that everybody needs. So that's something that I keep on enjoying doing a lot. And yet, now that I can rely on the steady income of Aspen Income, I'm going to share my time between Paris and South Florida and enjoy the company of my plus one and our dog. So that's going to be very fortunate and amazing. I've worked extremely hard. I moved 15 years ago to the US with this real estate project. I've worked incredibly hard to make it happen. And now life is short, you know, bad experience happen in life to recall you often that life is short and it's time to start enjoying more while still being very wise and realistic and following everything, but enjoying more than what I've been doing for the last 15 years.

I love it. Well, François, thank you so much for joining again. And I always get so much out of these conversations. So thank you for sharing with all of our listeners here. We'll definitely put a link in the show notes to your life coach website so people can, can check that out. And, uh, we love that you're doing that. So thank you so much, and this has been really fun.

Thank you so much, Ben. As always, it's great to be together, so I really enjoy this moment.

Thanks so much for listening to my conversation with François. I feel like his portfolio is almost like a history lesson of the past several decades of the US real estate market. You know, he jumped in just when the market was at its lowest and he got out when the market got hot, just in time to enjoy the next chapter of his life. He's had some amazing timing, you know, when he made these moves. But along the way, he shared so many lessons that I really want to underscore for all of you. First, it's putting the team first and the product second. It doesn't matter how good a product looks, an investment or a deal looks. If you don't trust the team, then it should be a pass. Second is diversification, but diversification smartly. You know, a lot of investors just kind of spray and pray, hope they get diversification, but François was very intentional. He made sure that the investments that he was doing aligned with his goals and his expertise. And then third, I think this is a lesson for a lot of us, is knowing you have enough. I love that François worked so hard to accumulate and build what he had done, but once he hit his goals, he realized that he had, and he decided to take a lot of chips off the table. He didn't have to keep pushing, right? And he wanted to get the full enjoyment out of what he's worked so hard for. I think that's a great lesson that a lot of us can glean from. Well, I hope you got as much out of the conversation as I did. Be sure to subscribe subscribe to the show, leave us a review, and stay tuned. We have a lot more interviews like this coming to you with wisdom, hard-won lessons, and tips. So I'll see you there.