Passive Investor Spotlight #3 - An International Investor's Perspective w/ François Braine-Bonnaire

This is the Invest Like a Billionaire podcast, where we uncover the alternative investments and strategies that billionaires use to grow wealth. The tools and tactics you'll learn from this podcast will make you a better investor and help you build legacy wealth. Join us as we dive into the world of alternative investments, uncover strategies of the ultra-wealthy, discuss economics, and and interview successful investors. Welcome to the Invest Like a Billionaire podcast. I am your co-host Ben Fraser, joined by fellow co-host Bob Fraser. And today we're joined by François Brunbonnaire, and we're very excited to have him on. This is a continuation of our passive investor spotlight series. So François, welcome to the podcast.

Thank you so much, guys, for having me today. Very happy to be here with you.

Yes, we're glad to have you here. And if you can't tell, François has an amazing accent. He's actually from France.

That is true.

And is a dual citizen, uh, now France and the US. And, uh, the reason we want to bring François on— so François is an investor of Aspen Funds and has been for about a year or so. He's got a really cool story and we want to kind of highlight that. And in this series, what we like to do is interview successful passive investors and just hear about how they got to where they're at now and kind of the story and the journey. And then just kind of pull back the curtains a little bit of what are you doing? How are you thinking about your investments? What's kind of your strategy? Are you looking more for yield, more for growth? And what spaces do you like? And so really excited to dive into this. These are kind of more candid conversations and just really fun for our listeners to be able to hear from another fellow investor, uh, like we're all investors here, and, and kind of what's worked well for you and where you're thinking about going forward. So really excited to dive in.

Thank you so much. I just want to disclose that even though we are at Invest Like a Billionaire, I'm not one of those, but I've been investing, uh, as successfully as I could, and you've done very well so far.

So excited to get into that. And just a real quick background on François. So he moved into the US in 2010, I believe, and before that had co-founded advertising agency, but then moved to the US and very quickly saw the opportunity in the residential real estate space and started acquiring rental properties, so single-family rentals, in his own portfolio, as well as being kind of an intermediary for some international investors who are looking to get good cash-flowing properties in the US. And so really became kind of that go-to resource for a lot of your international clients. In advising and consulting there and has built up a pretty great rental portfolio and purchased over 700 homes yourself and with, with others, helping others.

So it's going to be good to kind of dive into the SFR space, which a lot of people are thinking about.

Single-family.

Exactly.

So now also currently, I think you still do kind of life coaching as well on the side from that as well. So François, tell us a little bit about your story and how you kind of got to where you are now and Yeah, love to hear it.

Thank you so much. Yes, indeed. After being an entrepreneur in Paris, I was really excited about moving to the US. I knew the country after my business school in France. I had the opportunity to be an intern in different setup in fun cities, which were LA and New York. And, you know, in France, we heard about the subprime and the big mess of this wave of massive foreclosure.

The great financial crisis.

It did. And there was definitely an opportunity there. I was fortunate enough not myself to lose any of my savings during this crisis, being invested in very secure assets at that time. And so yeah, I moved to the US, studied the market. I have to say that I knew absolutely nothing about real estate investing back when I did that. So that was a bet. But it went very well.

What did you— why did you pick single-family rentals at the time?

Because the prices were so, so cheap.

They were.

And I was a cash buyer thanks to my saving and the fact that indeed I had a company, I was able to sell my shares. And yeah, the opportunity was amazing, especially coming from Paris where the price of real estate is just like terribly high. There is no yield. And on top of that, you know, the legal system in France is like the, the landlord is really the bad guy and the tenant is super protected. So I was like, well, I mean, um, very easy to, very easy to create a portfolio because the price per property was extremely cheap. We are speaking about 2011 and '12 and an incredible yield. So I started for myself and it's true that I was I was able in, at that time, in Florida or in Arizona or in Alabama and Georgia, which are the 4 states I'm the most invested in, I was able to buy 3-bedroom, 2-bath and put a new roof on them and be all in for $60,000.

Wow.

And rent them for more than $1,000 a month. So, I mean—

So, you did the math and realized this is incredible opportunity. And I remember actually in 2008 looking at Miami beachfront condos you could buy for $35,000 and thinking, oh my God, this is— they're not making any more of these. And, you know, now they're, you know, you'd be a 10xer. And but at the time, so when you landed in 2010, the market hadn't even bottomed yet. And right there, the prices were still dropping. They didn't finish dropping until early 2013. And so you actually bought, which, which I love this, you bought even in a declining market, but you were a fundamental buyer. You bought based on economic fundamentals, like, right, if the price continued to drop from $60,000 to $50,000, what do you care? Because you're earning $1,000 a month.

Exactly.

So, so I love that. That's actually the right way to be looking at this. And in fact, you know, in these declines, it's the time you can make outsized gains when you're not, your fear is not dictating your actions, right? As investors, you know, we gotta be, we gotta just get rid of that. So.

And timing the market, I mean, is like the dream of everybody. So it's like, did I buy it at the perfect time? I don't know. I'm starting to sell some of my rentals. We'll discuss that. Am I selling at the perfect time? I don't know, future will tell. But what I do know is that the experience has been amazing. And indeed, my motivation was mostly income related and getting $1,000 or more of rent per property was just amazing.

Yeah.

So had you been traveling to the US kind of before that and kind of familiar with it, or is it kind of just a big jump of, you know, I'm going to take a risk and just move to the US and see, knowing that you wanted to go do this. But to me, that's It takes a lot of guts, and especially in an opportunity that you just kind of saw, kind of take advantage of that.

Well, I mean, the waves of foreclosure were massive in well-known states like Florida, Nevada, Georgia. I have to say that, for example, I was not interested in Nevada because it's based on the tourism industry, and I think it was too risky. Detroit is is a city I've always neglected. And I'm happy with that because I think it's lost too much of its population. But so, yeah, I've been traveling in the States. I was interested in Florida. I was looking all around. The city of Tampa got my attention more than Miami because Miami, as you said, Bob Fraser, was more like condo related. And I don't want to pay HOA because I think they are not good for your yield. And then I did other cities like Atlanta, Georgia, and I traveled Birmingham, Alabama, not very well known, incredible city. And yeah, I was able to pick and choose and find after really studying all the players for like between 6 months and a year, I find people I wanted to rely on because I did some of the stuff by myself, which is buying directly from the bank. Managing the renovation, it's, it's very time-consuming. So sometimes when you can find turnkey providers who are going to do that for you against a small margin, well, when you make the math, it's definitely worth buying through them because, because they have a lot of value and you can invest your time in something else.

What drew you to kind of the, the southern and southern southeastern states in particular? Because now those are the states that everyone wants wants to be investing in, right? And you kind of heard the smile states, right? The kind of South and Southeast and Southwest as well. But, you know, 10 years ago, what were you thinking? Were you thinking about these markets in particular that you saw that was attractive about them?

Well, Florida was a big magnet for foreclosure. So it was interesting. After that was like a component of easiness to travel. So, I mean, Georgia is the unofficial capital of the South. Atlanta is. So I was interested. It was next door. Same for Alabama, where I was able to go. So yes, I mean, it was easier also for me to be working on states that are touching each other, neighbors on the map. I did work a little bit with Phoenix, Arizona, but it was like a 6 hours or 5 hours flight away. And I have to say that because of that, I was not able to go as much as I could. So I was able to invest a little bit. If it was closer to me, I think I would have invested more. But yes, I mean, ultimately there's only 24 hours in a day and I've got just two hands and one brain and I did the best I could with that.

Yeah.

Yeah.

The South is becoming kind of an industrial powerhouse because of the affordable wages. And so a lot of car companies and others are moving down there. The real estate is inexpensive, the wages are inexpensive, and generally they're business-friendly climates, right?

Politically.

So, so that's definitely a plus. But it's interesting because when you got into the single-family rentals, that really was not a very popular thing, right? So generally investors have favored multifamily because you get, you know, hundreds of units and they're very easy and cost-effective to manage, whereas the single-family rentals are very costly to manage. Right. It's— there's not a lot of efficiency. In managing an SFR. So, um, talk, let's talk about the SFR space. What, what do you absolutely love about the SFR space and what do you not love about the SFR space? And to be clear, SFR is single-family rentals, which is a home that somebody rents. Yeah.

Um, what I love about those is that you're able to diversify your portfolio and at that time with a limited amount of cash per property.

So I definitely prefer to have, I don't know, 20 houses spread over multiple cities, multiple geographies. So you're not—

exactly.

I see.

Because, because for example, a small multifamily with like 10 units, what is— it's more efficient in a way because you got only one roof, right? And, and maybe 2 or 3 HVAC versus 10. So this is, this is more efficient in a way. But if someone is building one next door to you is like a mile away, half a mile away, that is looking better, everybody's going to move out. And then you put so much money in one single property, 10 doors, but actually a single property. So I, I didn't like that from the diversification standpoint. That's why I focus on the single-family rentals for, for diversification. And, uh, but it's true that, I mean, it's, it's more, it's more, it's more work. I mean, more management, more maintenance, more work. That's for sure. I've always been helped by property manager.

So you hire a property manager, which makes sense. Is it one property manager for all of it, or do you have different property managers?

Very good question. I really believe that a good property manager is local and not nationwide, that it's really an expertise to know your tenants, to know also your different neighborhoods. So I've got different property managers. Per city.

Yeah. Is it really passive? I mean, this is our, you know, we're focused on passive investors. And actually, I actually had a condo that I bought and I rented out and it was a nightmare experience. It was— I, you know, a lot of people, I'm sure, loved, you know, rentals, you know, and made a lot of money on them. I lost money. I lost money and I hated the experience and it was not passive. But I had a manager. You know, but I spent money on roof and termites and, you know, plumbing and electrical. And I think I had, I mean, 2, 2 doors, right? And I had, I had 3 evictions in like 7 years, you know, and 2 freaking doors, you know. So it's just, it was a horrible experience. You know, I'm sure I did everything wrong and I'm sure I'm a single family idiot, but, but, you know, really, is it really passive? Is it really passive?

I mean, yes, it can be. Is it as much passive as alternative real estate investment with Aspen Funds? No. But is it, is it passive? Yes. But I would say, you know, when I've been helping those 200+ families around the world to invest into single-family rentals in the US in those past years, I told pretty much every single one of them, you know, the recipe, the cocktail recipe of a good single-family rental investment is like 40% the property. Just don't make a mistake, and I'm going to help you not to make a mistake about the property selection.

To buy the right place.

Not too big, not too large. And then 60% of the recipe is the property management. I mean, it's like, it's more important than the property itself.

So you need to manage the manager pretty much.

Yeah.

And just make sure they're doing their job.

Exactly. But as long as they are good, and I'm working with the best, because I mean, I made some mistakes. I mean, but I've been working with the best for years and yeah, I mean, you can rely on them and ultimately the proper one, they are making a commission of your net income, which is not the case of all of them. So for example, in Vegas, some people of some property management company are going to take a flat fee, which means they have no motivation to keep your property.

No incentive to.

It's ridiculous. It's not the case of the people I'm working with. So yeah, we are on the same boat. And I'm sorry, Bob, that you had a bad experience. I mean, I got good stories and I've got stories. Is it stressful sometimes despite the efficiency of the property management? Yes, it is stressful. Do you find yourself in crazy situations? Yes. I mean, if you have a large portfolio and you're holding your rental for several years, you find yourself in crazy situations. But ultimately, I mean, the returns are Already amazing.

Part of it's probably like anything, there's a learning curve to it. If you just start with—

I made every mistake in the book, I'm sure, you know. But, but, you know, the frustration was on paper I should have made a lot of money, but I never— there was always deferred maintenance or there was something that happened, you know, that, that ate into my returns. And so even on a cash flow basis, I never made money. And then when I sold it, I didn't make money even though the price was high. But I put so much money into the place.

Yeah.

And so I did it wrong. But, but I just— it never— the paper was always great, but the experience never matched what I thought it should have earned. You know what I'm saying? And, and so I think you just got to be so good at really thinking through the costs and, and when you underwrite, right, to look at deferred maintenance issues and really plan on your maintenance. Maintenance and those kind of things. I mean, I don't know, what, what are the, what are the keys to, to running a successful operation? So getting the manager, 60%.

Yeah, manager is— property management is a key, good one. Not being cheap on the renovation. It's better to put maybe a new roof and a new HVAC and doing the depreciation when you start versus having bad surprises.

Pay for it up front rather than pay later as you go.

Especially if you're financed, because in that case you want your cash flow to be steady. Buying the right location. Insurance is a big topic. I mean, I spend a lot of money on insurance. Um, to— in my opinion, you always get what you paid for, but specifically in insurance, I mean, in case of a big claim, you don't want to be cheap on the insurance. You want to have the replacement cost, not the actual cash value. You want to have enough liability because a tenant might sue you for a crazy reason, or try to you. So I mean, you really want to work on that. And that's my expertise. And I've been doing it for many years. And after, the people I've helped have benefited from my expertise. And I've done, of course, some mistakes, and I corrected them. And that's the way to do it.

So when you started doing these, you were buying kind of more foreclosed properties, more dilapidated properties, and would fix them up.

Yeah.

And then put renters in there. So That strategy is obviously a little more work on the front end.

The value-add strategy. So you build in equity, basically.

Yeah.

Yeah.

And yeah, that's brilliant.

But then later on, it sounds like you kind of moved more towards just buying turnkey properties.

I did because of the time. I'm really interested in the fact that I had the opportunity to do it myself because I was able to understand the nuts and bolts of everything. But it's extremely time-consuming. So ultimately, the money you are saving is not necessarily there versus the time you're spending on that. So turnkey properties has been my go-to after learning it by myself. And that's why I advise to my clients, those people are abroad. So anyway, most of them are not going to be from Paris. They are not going to say, well, have you assured that the new HVAC has been properly installed and properly caged for potential theft of the— of course they are on the table. So you need to rely on people.

Yeah.

Yeah.

What's been your experience with the turnkey providers? Because not being super involved in it, you hear kind of mixed things where it probably matters who you're buying from and the types of properties because essentially they've kind of built in their profit and they've already kind of captured that when they're selling it. And there's things to be aware of and it's maybe not as passive as it could be sold as. But to your point, it sounds like you've had success with buying buying some that are kind of pre-renovated and already have a tenant in place and those kind of things. Has that been a generally positive experience buying from—?

Yep. I mean, for the most part, yes, absolutely. And I've always forced myself to buy properties for myself before offering that to the client I've been helping to make sure that the process was going to be smooth, that the experience was good. So I've always been the guinea pig for the clients I've helped. And yeah, it has been, it has been successful. And I mean, after a few years, you know what question to ask and it went well. Yeah.

So, so what are the, what are the things that are not to love about single-family rentals? I mean, obviously you're still doing it and it's, it's good business, but what is the reason not to do it? If you're, when would you advise someone not to get into single-family rentals?

Well, I would say look at the market and where we are right now. I mean, for example, as I said, they're a good deal. Yeah. I mean, I mean, and all the markets are not the same. For example, I would think that buying currently a single-family rental in Florida would be just a terrible idea because the price is so high. Yeah, the market is so high. There are some niches that are still very, very exciting, and Alabama is definitely one of them. Because it has been a little bit under the radar of the big operator. For example, when Warren Buffett said, and I think it was in 2011, he said, well, if I could purchase myself— I remember that— 200 feet on MSNBC— if I could purchase myself 250,000 single-family rentals, I would do it tomorrow. And then Blackstone started. Then everybody did it. And Blackstone started. Yeah. Their company about that, Invitation Homes. So I mean, yeah, I mean, you have to look for the good market, for the right people. Don't invest in the market just because you think Florida is going to keep going up. And yeah, if you are not ready for some headache, if you really want something totally passive, totally passive with no decision making and no good year and bad years, if you want to think extremely steady, it might not be for you. I mean, ultimately on the long term, like several years, going to be really, really good. But if you want something super, uh, steady with nothing in your mind, well, go to Aspen Funds.

Yeah, there you go, there you go. So, so one of the interesting things We've done some research on the single-family rental market in America and particularly the public companies. So there is a handful of public companies. So I'm sure someone listening to this podcast is going to go, man, I love François. That's smart stuff. I'm going to do single-family rentals, but I don't want to do the work of it. I'm going to buy this company that's a public company that does single-family rentals. Well, we looked at this company a couple of them actually, and it's insane, the book value. I don't know how much you're familiar with accounting, but, but so here's what's happened. These guys basically buy, you know, let's just round the numbers, we'll say $100 million in real estate. So they'll buy a couple thousand homes, you know, or whatever, and, uh, put in $100 million in real estate. They buy this real estate and renting it out. The market value of these companies is $300 million. So in other words, if, if instead of them owning, instead of you owning a part of $150,000 house, you're owning a part of a $450,000 house that's actually valued at $150,000, but you paid $450,000 for it as an investor. Do you understand? You paid $450,000. It's insane. The public markets are just absolutely brain dead right now and overvaluing the properties. And it's because it's public, it's easy to invest, it's liquid. But what, you know, someone on the show recently said, REITs, real estate investment trusts, aren't— they are not real estate, they're stocks. In fact, they are. And things like that prove it. It's more like investing in Elon Musk or whatever, or some technology than it is actually buying real estate. If you want to, if you want to own real estate, buy real estate or buy alternative investments in real estate. So that's more of a rant, you know, but what are your thoughts on that, Ben? Yeah.

I mean, I think a lot of it is just the market as a whole and there's so much demand for yield. And one thing that's so interesting to me is, is you said, you know, you've represented over 200 international families from, from 15 different countries, and you've purchased over 700 properties. And so to me, I mean, that, that says that there is really a unique opportunity in the US, um, for, for yield, right, where you can't find maybe in European countries and other places. And I think at a, at a, you know, the, the public market level, we're seeing a lot of this appreciation where wherever there's yield, you're seeing it being driven down, the cap rate compression, it drives up price. And, you know, whether it's overvalued or not, you know, it's, it's still, there's demand and people are willing to take more risk for less yield than they ever have in a moment.

And then the next day they're not, and the whole thing sells off by 60%, you know, in this volatility. And that's what you have because of this crazy, it's all driven by emotion and not by math. Right. And so you were math driven. You're a math investor. You invested based on mathematics, right, versus emotion, you know. And so this— the public markets are just— it's just, I mean, all the more reason why we need to be heavily invested in alternatives, you know, and why billionaires are doing this and why everyone else should.

But yeah, yeah, absolutely.

Well, when it comes to REITs, I'm with you. I definitely prefer the private REITs, which are much less liquid but also much less volatile. So that's definitely what I do when it comes to listed REITs. I'm much more cautious.

Yeah. Let's, let's kind of talk about the international angle for a moment. So I actually, I actually spent some time in Europe. I've traveled quite a bit in Europe. And one of the things that's astonishing to me as an American to go over there and, and the real estate is tiny. Like they would put me in a room that was no bigger than a bed and they think it was normal. I, I feel like I got to get outside to have some air to breathe, you know, and it's super dense and super expensive. And, you know, so, you know, to me, one of the funny things about, you know, it gives you perspective. Well, you know, right now in America, everybody, because the prices have risen for single-family homes, they're saying, oh, they can't go up anymore. And, you know, affordability. And, but if you actually travel to Europe or to Asia, you see property values are far higher than they are in America. And the rents are higher too, but the density is way higher. So very much smaller square footage and much higher prices. And this is where America is going. And, you know, if more people, you have to put them someplace, it's going to go smaller. But give a perspective. Perspective of, you know, you fell in love with American real estate for the numbers reasons, you know. So talk about European real estate and the contrast.

Well, just to give you an idea, the size of France is smaller than the state of Texas. So that's interesting to know. And we still have close to 70 million inhabitants. So when it comes to the density, it's pretty dense. So nobody in Paris, for example, live in a single family pretty much nobody, maybe 0.1%. But even a single-family house, everybody's in condo because we don't have much space.

So what might a condo sell for right now in France and what might it rent for? Just pick a typical scenario.

Okay, so let's say, so, you know, it's in square meters. So let's say that—

You got to translate for us.

I'm going to do that, guys. I'm used to it. I would say that a 1500 square feet condo in Paris, which would, because it's small, I mean, it would still fit like a 3-bedroom, 2-bath, would sell for like 2.3 million.

What? Yeah. And what does it rent for?

I mean, it would rent for like maybe 5,000. Wow. So your price-to-rent ratio is terrible.

What are the yields?

The yields are like— Well, I mean, that's why I got my clients, because the the price ratio, the rent ratio is awful. And I would say most of my clients from Europe, they did real estate investment and some were very successful based on appreciation. Because one of the perks of France, of Europe, is that the interest rate, you can leverage big time and you can borrow at 1 to 2%. So it's more than free money with the inflation. It's like, it's below free. Yeah.

So what kind of leverage rates will they or leverage ratios?

I mean, it's more than— it's approximately the same. You can put 20% down or 15% down. But so that's interesting.

But the rates are way lower because in Europe it's very common right now to have negative interest rates, which again, in America, people can't even get their heads around that. What does that mean? Do you have any experience with negative interest rates?

No, I'm too Americanized. I cannot understand that.

You can't? Me either. Can you have a story? Can you tell us? How does that actually work in France? Do you have any, do you know?

No, I wouldn't be able to describe that. But indeed, I mean, it's like the interest rates are super low. And my clients, I mean, most of them, they bought rental properties and they leverage. And then you've got the system that is, first of all, the taxation is extremely heavy. So even if you are a French fiscal resident, It's better for you to invest in the US than France. You're kidding me. No, it's really, really more favorable. On top of that, the legal system is against you. The tenant is the good guy. So if you have a tenant in France and he's not paying, in a good case, it's going to take you 18 months to get him out of the door. And of course, in the meantime, of course, you will not have cash 18 months of rent, and he's going to trash your place. So I mean, that's because there is so much system to protect the tenant so that it's totally against the landlord. So a lot of my clients, you know, they burnt their wings doing real estate investment in France. They say, okay, well, I'm done. And they liquidate their real estate, sometimes with appreciation. And then say, well, I'm going to go in a more friendly country for landlord, and that's called the US. Even though, of course, the US from one state to another has very different regulation. It is. It's better to be a landlord in Alabama or Florida than California or New York.

But yeah, I think it's a really interesting point that you're making because it really plays into a lot of the macroeconomic picture that we talk about a lot. And we're seeing in real estate, especially in residential real estate, where some people look at the past 10 years of run-up in value and get really uncomfortable and say, oh, well, we're going to see another crash. You know, prices are getting too frothy.

And all you got to do is go to Tokyo or go to Seoul, Korea, or go to Paris, France, and realize that, wait a minute, this could go a whole lot higher.

Yeah. And a lot of that will be driven by what the interest rate climate is going forward with the Fed. And, you know, do they do raise interest rates if we hit it, you know, higher inflation? But, you know, we can see both sides of it. We can actually see US following the trend of European countries going negative. if that's the case— Negative rates. Negative rates. And if that's the case, I think that's only a boon to real estate prices.

If there's negative rates, you will see all investment classes skyrocket. Yeah. You know, because when money is cheap or free or even getting paid to do it, you know, to borrow, then, then, you know, you're going to see people do it, you know. So, yeah, you know, and the other thing here, you know, so there's this whole subculture in America that's kind of anti-America and America is a terrible country, you know, and got a terrible history and has terrible sins. And we've got plenty of sins, but, you know, in our past, but, but, um, and a lot of people are talking about the dollar collapse, you know, the dollar collapse and gold going. And it's, it's a, it's almost laughable to me that people believe this stuff. And, you know, you know, you look at the money, for example, of all these 200 families that you've helped. They're selling euros, they're buying dollars to put it into American investments, which are far superior. This is still the world's top investment destination for literally all the reasons that you've said, and the top industrial destination too. There's plenty of reason to invest in America, and America is not going to collapse tomorrow in spite of a polarized political climate, you know. So, you know, that's— we still have an economic power powerhouse of a country that is actually undervalued still in an international sense. Yeah.

I'd love to shift a little bit towards kind of some personal portfolio questions, but from your standpoint, when you're looking at opportunities, obviously you have a pretty nice portfolio of these single-family rentals. You've sold some of them and have placed them in kind of more other alternative investments, Aspen Funds included. What are you looking for when you're allocating and across these different opportunities? You more kind of income-oriented, you more growth-oriented, kind of a hybrid?

What's kind of your main goal? My main goal has been income. And so I've been very fortunate because on top of the income, and I'm sorry, Bob, to disclose that to you, but I would say since for the last 10 years I've been in single-family rental.

No, that's great. I'm glad it worked for somebody.

My net income ratio before personal taxation, but after paying everything, was about 9% cash on cash. It's fantastic. And but, but, um, on top of that, because I was lucky enough to indeed buy at the very low of the cycle, so 2011-12 for the most part, even though I kept on buying every year. Yeah, I mean, the, the, the appreciation has been amazing. And I would say every year, even before the current surge that I could call the COVID-19 surge and appreciation. Yeah. So yeah, so nowadays on top of the yield, I mean, my portfolio of single-family rentals has tripled in value. So which means it's awesome. But at the same time, when I'm looking at the cap rate of not based on how much I pay for the property, but the cap rate of today, Of course, the yield is much, much lower versus the value of the portfolio today. So that has been kind of what triggered my decision to start selling some of my single-family rentals. Because at some point you need to realize the capital gains, that with or without 1031, like an exchange. But it is important to do so. And my opinion is that because we are printing so much money, that the taxation in the US is poised to go up. I mean, it's pretty clear it's going to happen. So I think I prefer at some point to pay capital gains now and sell the rentals and move steadily towards a totally passive and not half passive real estate alternative investment like with Aspen. And when it comes to the global allocation, Ben, I would say that I'm still very, very AV on purpose on real estate, any kind of real estate, maybe 60 to 65. Stock market, 30. And different kind of assets like whole life, dividend-paying life insurance, or private equity, maybe 5 to 10%. I don't have anything in hedge fund. I know that's one of the topics you covered with the podcast, but I don't. Yeah, that's what I do.

What other real estate do you like besides SFR?

Aspen. Now, yeah, I like Aspen funds for sure. I like private REITs versus the listed REITs. I want exposure to property that are too expensive for myself. So like big multifamily, not like the 10 doors, but like the big skyrise, or even REITs in industrial properties. Of course, like everybody, currently away from office space. But, um, yeah, this is a— this is what I enjoy.

So, so who do you kind of have in your inner circle? You know, you've done an amazing job building kind of your net worth and have, you know, hit some amazing luck and fortuitous timing in the, in the single-family space. But, um, also, you know, you saw the opportunity and you're, and you're very educated and you, you, uh, you take, you know, cautious risks. And so who do you kind of have that's in your circle? Where do you get the information when you're making these decisions, and how do you network? And, you know, I know you work with some advisors, but what's kind of, you know, the decision process and kind of your inner circle of resources that you use in protecting and growing your wealth?

Yeah, definitely. I've got different financial advisors, but I say I would use those guys mostly for the stock markets. I do read, I do research, I do I do have my network. I've got real estate mentors. I mean, let's keep in mind that I had back in 2010 zero experience with real estate, especially in the US. So I really wanted to surround myself with successful people, which I did in every single city I was invested in. Local, super successful investors, not necessarily public figures, but people who have been super successful in the cities. I was. So I've built and strengthened my knowledge on that. I always consult with my CPA too. Yeah. I mean, it's a great resource and I'm always putting into perspective the taxation when I'm making a decision like to go from owning single-family rentals to passive real estate, which are non-qualified dividends. Yeah. Those are the main people. Of course, as I say, insurance. I mean, I I spend so much money on insurance on the professional and personal basis. I mean, that's important. Attorneys too. That's the people I like to consult with.

Hey, listen to podcasts. I think we met you through a podcast, right?

Originally? Absolutely. Now you're back on our podcast. That's a good story. I love to listen to podcasts and I did a couple of times the one with Monica Sawyer called Real Estate Investing for Women. And I've written one of the chapters of our latest book, which was about real estate investing in the US when you are actually a foreign resident. So that was interesting. And so I listened to the podcast. And last year, I'm listening to the podcast. And then here you are, Bob Fraser Fraser Fraser, doing the podcast about a topic that I didn't know much about, which was mortgage funds. So I was super, super interested in this episode. And then I contacted Ben and then I became your client and I've become since then your growing client. Our favorite client. One of your growing clients. And so yeah, definitely research, networking and surround yourself with good people, get good mentors. And yeah. That's awesome.

So kind of the last few questions here where we always like to ask are, You know, what have been your most successful investment, your best investment, and then what have been your worst? So if you feel comfortable sharing any of those, but that's always kind of fun just to hear the— well, challenges.

Definitely single-family rentals. Yeah. And the fact that—

you said the values have tripled.

Yes, tripled in average. So I mean, some have doubled and some have been multiplied by 5. Since purchase in 2011 or later. But triple, keep in mind that you're not keeping multiply by 3 in your pockets. You need to pay capital gains tax, depreciation. You need to pay stuff. And it costs a lot of money to sell too. The seller is paying the cost, not the buyer. So that has been very good. Sorry, the worst. The worst. The worst. The worst. Well, hopefully it won't stay the worst for an infinite, indefinite period of time, but I've invested quite a bit in a real estate project, A-class building in San Juan, Puerto Rico, so US territory. And I've done that.

What type of? What type of A-class office?

No, it's a mixed-use. It's very interesting. It's going to be a— it's an historical building. It's going to be short-term rentals like hotel or Airbnb, plus a food hall, plus a rooftop bar. Amazing location in the old city. And in Sarwan, 97% of Sarwan was declared opportunity zone. So that was interesting because it was actually a huge tax advantage. Huge tax advantage. And then COVID hit. And so the property is still not open. It's so far 2 years late. The equity part of the investment has been invested in renovation. And then now the debt component is very difficult to secure because lenders are not very excited about lending to hospitality industry. So it has been difficult, but it's a good team. It's a good location. I think Puerto Rico being a US territory is going to be super successful tourism-wise in the coming years.

And so, I mean, long term, it's probably fine.

Long term, it's fine. Short term, it's, it's not good.

Awesome. Well, François, it's awesome to have you on. Thank you so much for sharing kind of your story, and it's really fun to hear and just cool, cool perspective. I love kind of having that really broad perspective of—

yeah, it's awesome—

where you're from, just bringing, bringing a lot of, uh, yeah, enlightenment to our listeners who maybe just haven't invested or seen, you know, other places outside of the US. So appreciate that. Thanks so much, and, uh, really had fun having you on.

Thank you so much, both of you, for having me today. And, uh, congratulations again for what you do with your team, uh, with Aspen Funds.

Thank you. Thank