Nico Ortega (02:00):
We did middle-income housing, high-income housing. We did use commercial projects. It was a big project with hotel, parking buildings, apartments, offices, and then my primary responsibility there was the development of a shopping mall. It was around 7,000 square meters of GLA shopping mall: first in the company, so it was a big, big task, a big project. That’s how I got into real estate and… Yeah.

Robert Leonard (02:27):
Today, you’re doing things much different than that. You’re more focused on short-term rentals. A lot of people probably know what short-term rentals are, but just for those who don’t, give us a quick overview of what they are and a little bit about how they work.

Nico Ortega (02:39):
How I started in short-term rentals, it really was in… Our country, Ecuador, was going through a rough phase back in 2014/2015 and that’s when my brother and I decided to exit those projects. We sold both of them, the shopping mall near completion at around 90% being built, and the mixed-use project. It was a land flip in a sense. We bought the land, developed a project, and sold it to another developer so that they continued.

Nico Ortega (03:02):
That’s when we moved to Miami. For us, moving to Miami was the natural move. We had lived here before; we have family here, and so forth. We started getting into looking at what we knew, which was real estate. When we got here and started looking into it, we recognized it was a little bit harder than what we had been doing back home. So, in order to start making money relatively quickly, we decided to… as we started to see how Airbnb and all of these things were growing, we decided to rent furnish and then sublease an apartment in the Brickell area. Obviously, we couldn’t do it with one. The building owner told us that we needed a minimum of five to do it. We went to my other brother who lent us the money to make it happen and we started with five units. Long story short, things started to grow, grow, grow, and that’s how NUOVO started.

Nico Ortega (03:44):
What are short-term rentals? Short-term rentals are anything that can be considered a stay of 30 days or less, so we specialized in everything from one-night stays to 30 night stays. Obviously, since the pandemic, 30-plus night stays have been growing. During those first couple of months, first four or six months of the pandemic, we barely had any less than 30 day stays just because people were not traveling; and most cities, most locations, were prohibiting less than 30 night stays because they wanted to stop the spread. So, we can service anything from one night stays to one year stays at one of our properties. All of our units are fully furnished and fully equipped, so basically, it’s a hotel-like stay in an apartment-type property.

Robert Leonard (04:29):
How does traditional short-term property management work? And how is it different from traditional rental property management?

Nico Ortega (04:38):
Traditional short-term property management, it’s been an industry that has been active forever. You look at places like Gatlinburg and the Smoky Mountains; you look at the Pi Resorts and all of these houses over there; you have the Keys down here in Florida: that’s a traditional property, short-term property management where you have a local operator that just takes care of everything. You’ll run through them; you get the insurance and it’ll be a less stay.

Nico Ortega (05:00):
What we’ve done is we’ve decided to target short-term rentals in the urban areas in cities, and that’s where things have been different because we have to deal with the homeowners association, different types of legislation and zoning requirements, and all of that fun stuff, apart from competing with a bunch of different urban-type hotels, which can find a lot more than in most rural areas for short-term rentals have been historically present in.

Robert Leonard (05:26):
What exactly are you doing differently for short-term property management with your company?

Nico Ortega (05:33):
That’s actually one of the questions that we asked ourselves right at the beginning of our company. So when we started NUVO and we started working, started growing, we quickly noticed that there were other people doing the same thing as us, and really there wasn’t anything different about our model. They would have different furniture, different units, probably different decor and so forth, but the product was the same and the only thing we could compete on was the price.

Nico Ortega (05:56):
We quickly noticed that we didn’t want to get into that because whenever you start competing in prices, everything goes south, so we decided that we wanted to become a network of properties. That’s when we started growing into other markets. As we started growing into other markets, we quickly realized as well that we couldn’t be experts in every single market that we went into, that is a value add in knowing the market and understanding how the market works, and understanding how the travelers that go into these markets work as well.

Nico Ortega (06:23):
That’s when we came up with our differentiator. We noticed that if we have technology backing us up and being able to set the right rooms at the right price, and selling them to the right guests at the right time, then that would be our best option, and we would become the best alternative for the travelers, for the renters, and for the landlords as well because it was a way to offer our travelers and renters the best possible price out there. That doesn’t necessarily mean the cheapest one. It means the best possible price for the type of property that they’re getting and getting our owners the best revenue, or the best return, out of their investment considering seasonality in most markets.

Nico Ortega (06:58):
And the other thing is that… and this is a recent shift that we’ve done… as we started growing, we were always focused in Class A multifamily. So, top-of-the-line properties, great properties, great locations, brand new, and so forth. We quickly noticed that that was where we had most of our competition. Everybody wanted to focus on that. And even us, or my train thought on this was, “We want to have units or we want to expand our portfolio in units where I would…” My family on my wife’s side lives in Ecuador and it was always my train of thought was, “We need to have units where I would love to send my mother-in-law to,” so where a place where she would feel comfortable, a place where my political family or in-laws would feel right.

Nico Ortega (07:39):
But there’s a bunch of competition there. Everybody wants to keep their brands under their tie and so forth. And there’s this underserved market, which is Class B and Class C, where [there] are people on a budget travel too or people, students, or groups of students, or group of friends come with a tight budget that they want to travel, too. They want to experience these markets as well, but they can’t go to and pay 150/180 bucks a night at one of these fancy location and have a front desk and 24/7 concierge, and so forth. They don’t need all that. They just need a place to sleep, be comfortable, and have a nice day.

Nico Ortega (08:12):
So, we employed Blue Ocean Strategy in that sense and decided, “You know what? Let all of these other guys kill themselves up there in the Class A. Let’s take advantage of these properties where nobody’s targeting them when there are smaller properties, they are smaller owners as well, smaller real estate investors that have more flexibility, and we can provide much more value to them, in a sense.” It’s a lot harder to deal with the Greystars and the Lincolns and all of these property management companies with all these standard restrictions, and so forth, up there and where we can deal in a more flexible and personal way, in a sense, with smaller owners of smaller properties.

Robert Leonard (08:52):
An interesting concept that you’re working on is utilizing a subscription model for short-term rentals for renters. Where did you come up with this idea and how will it work?

Nico Ortega (09:02):
How did we come up with this? Well, basically, we started seeing… The first inspiration came really long before COVID. This was 2016. Our accountant at NUOVO, she’s a Mexican girl that lives in New York. Her parents live in California and she spends all of her time in Miami. She was basically living out of friends’ place, her parents’ place, her own apartment, and then her boyfriend’s apartment here in Miami. So, we were like, “How do you do this? How do you keep this up? I wouldn’t be comfortable doing it this all the time.” She tells me, “It’s horrible, but I have clients everywhere. I need to visit them and I like to travel as well.”

Nico Ortega (09:35):
So initially, we came up with this idea because we saw her and we said we could come up with a product for her if we had units in the cities where she travels to, and that’s how it all started. Then, obviously, COVID came. This digital nomad movement started going crazy and working from home quickly started becoming working from anywhere, and it all became mainstream. Doors opened up and the light was shed on this entire industry of people that could live from wherever and continue doing their jobs. That’s where this product caters to– people that are living from anywhere and want to have a good place to sleep at night at an affordable price and with quality service; but most importantly, trust in the host or the company managing these units.

Nico Ortega (10:18):
Because if you would live out of an Airbnb… and I have friends that do this. This past week, I was just in New York with three friends that are living as digital nomads. One was, I think, Mexico, Madrid, and New York. The other one was New York and Ecuador. The other one was Miami, New York, and Denver. And they were saying, “Sometimes it’s an issue for me to find an Airbnb. I have great options some of the times, but some of the times I just get horrible places, nothing like the pictures, zero responsiveness, and that’s a big, big issue.” In order to get a place where they can feel comfortable, they usually have to overpay. So we want to provide…

Nico Ortega (10:55):
How this system, it’s basically your normal one-year lease, but you only lock in the unit type that you want, so a one-bedroom and the price, and that’s it. And then, you can move around from the network of selected units in the cities that that price caters. So it’s going to be a tiered system in which, obviously, if you pay 1,000 bucks a month, you won’t necessarily have access to the top locations in New York City or San Francisco, but it’s going to be tiered in a sense where you go as you pay a little bit more, you get access to more and more cities, and more and more properties.

Nico Ortega (11:25):
So it’s super, super interesting. Every day, it’s becoming more, more mainstream. You can reach it a little bit more. You start seeing more of these people, people that usually a job that would be considered, you have to go to an office at 9:00 in the morning from Monday to Friday. Now, it’s a job that you can do from anywhere.

Robert Leonard (11:45):
So if somebody’s staying in, let’s just say, San Francisco, Cleveland, and maybe another city that’s expensive, do they just get a nicer place in Cleveland than they do in San Francisco, or does their price go up? Like, how does that piece work?

Nico Ortega (12:00):
It’s still a work in progress: the pricing model for this. We’re trying to find what best fits this demographic and for that, we have to continue building our portfolio. But what we’ve seen is that we want to tier it in a sense where you have… Let’s say the platinum, gold, and silver, and silver tier. Silver tier is 2,000 bucks a month. Gold is 2,500. Platinum is 3,000.

Nico Ortega (12:22):
In the silver one. You get the base properties. If you want to do gold, you might add a couple of extra cities or a couple of extra properties within those other cities that are priced a little bit higher, and the same with the platinum. Also, we want to have an option where it’s customizable for the renter, in a sense that they can pick and choose and we’ll set the price for that. Usually, how that price is set, it’s going to be set on the price, on the market rent of that particular property. That’s where the profit comes from for us and for the owner.

Robert Leonard (12:53):
One of the reasons that a lot of owners get drawn into Airbnb is that there’s typically a lot more cash flow because they can rent them at a much higher nightly rate. So how are you going to be able to satisfy this return need of owners, but also still keep the price affordable for somebody who’s looking to do this for a 30 day stay?

Nico Ortega (13:15):
That’s where a revenue management system comes in. That’s a technology that we built where we are able to get the best return for our landlords or for our property owners, and for the renters. Basically, what this system takes into account is what the market rent is looking like, what other competitors are selling for, how many people are coming in, and what demand overall is like on an external point of view.

Nico Ortega (13:36):
And then, from the internal point of view, it takes into account what the occupancy of the property is, the average nightly rate is, what the sales pace is, what our review scores are, and so forth. We take all of these things into account and we’re able to sell the room at the right price to the right person and at the right time. That’s what’s ideal for us in that sense.

Nico Ortega (13:54):
But yes, in a 30-plus night stay where you have everything included and you have the flexibility to move around from one place to the other and not get locked in, there is going to be a premium for renters, as opposed to locking yourself to Unit 105 at 123 Main Street in Miami. You are going to have a premium, but that premium is going to be offset with the flexibility of you being able to move around from one place to the other, just with a suitcase, not having to play any electricity, any internet, and so forth; just plug and play. Your property will be plug and play in a sense.

Nico Ortega (14:24):
And then, on the owner’s side, we are able to generate almost two times the revenue by using short-term rentals than your regular market rent. Obviously, after all, the fixed and indirect costs associated with the short-term rental operator, the net income is around 20% higher than it would be on your average rent, but it’s definitely a great option for the renter and for the property owner.

Robert Leonard (14:45):
I’m sure it’s going to vary, and it sounds like you’re still trying to nail this down, but what is the pricing looking like? Is it going to be $1,000? Is it going to be $3,000? Is it going to be $10,000 a month? What is the range that somebody’s looking at?

Nico Ortega (14:58):
Well, that’s going to depend 100% on the tier and on the properties that people are choosing. We’ve had properties that are the cheapest or are a less expensive option in the Miami area, has been in around almost $3,000 a month, and their most expensive has been around 7,000. It depends on a variety of things, but that would be the range. Like I said, our goal is not to go all the way up high. We want to remain within that Class B/Class C multifamily type property where, usually, we could even get some properties that are around slightly under 3,000 bucks a month

Robert Leonard (15:33):
Is the digital nomad movement really big enough to sustain this kind of business model? I know there’s a lot of people that are getting into it and probably more coming, but is it really enough people that are interested in this kind of idea to really make an entire business model around?

Nico Ortega (15:47):
Well, if you look at it this way, there’s around 60% of millennials currently work came from home, and around 40% of Gen Zs currently working from home; they make up around 50% of the total US workforce. That’s around 50 million potential renters that we have right there.

Nico Ortega (16:03):
Yes, all of them are not digital nomads, but a good percentage of that. We start seeing a huge increase in web-based or digital businesses getting started or digital entrepreneurs in a sense, so I currently think that right now, it’s not enough to withstand huge things. That’s why we combine it with the short-term rentals, which is our traditional model. So it’s going to be getting into it step by step and an easy transition into it, but as we start getting more mainstream on this, and more and more of the big companies start adopting this work from home or work from anywhere policies, which we’ve seen with Twitter, with Dropbox, I think Facebook even adopted it as well, I think it’s going to become a huge industry in the near future.

Robert Leonard (16:49):
How does your company make money in this arrangement? Is it like a normal management company where you just take a percentage of the monthly income?

Nico Ortega (16:57):
Yes. Our model is a revenue share or a profit-share model. We can adapt to both, so we take a percentage of the income that each unit generates.

Robert Leonard (17:05):
How are you planning to expand? Are you going out to property owners who are currently doing Airbnb and asking them to join this network and be part of this program? Or are you looking to buy properties yourself as a company?

Nico Ortega (17:18):
No. In the short- to medium-term, we’re looking to manage properties, not necessarily going after hosts that are currently are managing their own properties, but going after hosts that are not doing this and are having them on normal long-term rents. Why? Because it’s where we can add the most value. It’s not that we cannot add value to the people that are currently managing their own properties, but our model is to come in and manage these properties instead of just having them onboarded into our platform.

Nico Ortega (17:45):
So we come in and we manage; we operate the properties. Those are the people that we are targeting where we can add the most value, where we can tell them, “Hey, come join our network, let us manage your property. You start gaining passive income and we’ll generate around 20% or more using our formula of short-term rentals and digital nomads.” Those are the properties we’re targeting.

Robert Leonard (18:03):
Where are you looking to expand to?

Nico Ortega (18:07):
We’ve had experience in six US markets, all of them completely different. We started in Miami. We grew into Orlando, Atlanta, Philadelphia, Houston, and Portland, so we’ve had experience in completely different markets and every market is 100% different.

Nico Ortega (18:22):
When COVID hit, we decided to downsize our operations and focused on the South Florida market in Miami, which is where we are, and we can manage everything more closely in a sense. So right now, as we start to grow back up again, we are focusing obviously on South Florida and the Florida markets, which with COVID still being largely present… I don’t want to say it’s disappeared because it hasn’t… there’s still the risk of new regulations, new lockdowns, new things like this coming about. We feel very confident that in Florida that won’t happen, at least in the near future, just because of how our politicians and our representatives have been tackling the issue.

Nico Ortega (19:00):
So, for now, the focus is on Florida and the Southeast of the United States, and later continue expanding throughout the East Coast, potentially after that, as we start seeing things more, move better, and start to normalize in other markets, we would try for the East Coast or the Middle America type states.

Robert Leonard (19:18):
We have a part of the show called The Action Plan where we learn three different things from you that the listeners can take away from this episode and take action on. The first one is, what is a habit principle that you all in your life that has had a big impact on your success that not enough people do, but should?

Nico Ortega (19:36):
Well, so I think the first habit that I think a lot of people do, but I think is my go-to and just sets my day because the days that I don’t do it, it just completely messes up my dynamics, is I get an early morning workout. This is something that I started doing recently in a very strict sense in a way like I wouldn’t miss it. It just has completely changed because my days are day and night when I do it and when I don’t.

Nico Ortega (19:58):
But things that not enough people do but should, I would say planning out your day from either first thing you do in the morning when you set foot in the office, just plan out the day; or if you’re able to do it the night before, then the night before. I started doing it first the night before, but it would just leave my head going in circles and not being able to sleep, so I do it first thing as I walk into the office. I open my notebook. I start writing down what I need to get done, any ideas that have come to my mind, and get going. So I think those are the things. Start your day with a plan and tackle that plan for the rest of the day because if not, it’s very easy to get lost in the ins and out of a day.

Robert Leonard (20:36):
What has been the most influential book in your life?

Nico Ortega (20:41):
There’s two. There’s Think and Grow Rich by Napoleon Hill that I’ve read. I’m currently reading it right now, but it’s the third or fourth time that I’ve read it. It’s always a great reminder. It’s the Bible of the entrepreneur and the business person. It just reminds me of very basic principles that I need to tie in my day-to-day and overall life planning and business planning.

Nico Ortega (21:02):
And then, I would say the other book is Tony Robbins, Unshakeable. It’s great. I’m a fan of Tony Robbins. I heard the podcast. I’ve seen the documentary. I’ve read the books. I’ve done everything, but that’s a great book. I have it on my to-do list to go to one of the in-person seminars that he does because those are just… I’ve heard amazing things about him. I was planning to do one right when COVID hit and I did one of the online ones, but it’s not the same, so I’m dying to do one of those. So yeah, those I would say are the best books I’ve read.

Robert Leonard (21:34):
If someone listening to the show’s looking to improve their life, their career, or their business, what is one action they should take as soon as they’re done listening to this podcast episode?

Nico Ortega (21:44):
Write down the dreams that you have. Write down what to do and take tiny steps in order to get them done. I think sometimes one of the things that prevented me the most from achieving some things is that they were always ideas. They never got out of the idea phase because I always had them up in my head. I tried to find the perfect model to make it a reality. I noticed that if I would write it down and take tiny steps into making that idea a reality, yes, it wouldn’t come out perfect, but there are steps taken. Little by little, I would start getting to the version that I wanted the most.

Nico Ortega (22:19):
The reality is that chasing perfection is a utopia, right? Nothing is what of what you thought was perfect ten days ago or seven days ago, or a month or a year ago, 10 years ago, or whatever, right now, when you get it done, it’s still not going to be perfect because you have other ideas how to continuously make it perfect. I don’t know if that makes sense. But just getting stuff done, making it happen, and make taking tiny steps in order to do that. Don’t wait for it: the grand gesture; don’t. Actually, if you want to start a company, don’t expect to get a $10 million investor to invest in your company and make it a reality. Just make tiny steps in order to get it done and it’ll start happening.

Robert Leonard (22:52):
Before we give a hand-off to where people can find you, I like to wrap up the show by turning the tables and letting the guests ask me a question. So Nico, what question do you have for me?

Nico Ortega (23:03):
Well, I would say my question is… everybody that’s into real estate I ask this question… if you were a multifamily owner if you had a property with 25/30/40/50 units, would you be interested in having NUOVO as an operator? If yes, why? If not, why not? And what would you like to see from us as a short-term rental operator that gives you peace of mind, that gives you that balance that you need as an owner to make sure that your property’s in the right hands?

Robert Leonard (23:33):
The first thing that I would want to see is a proven track record, and I know that’s hard. It’s like this chicken and egg type thing: does the chicken come first to the egg? You’re not going to be able to give proven results to your first few customers, so that’s going to be tough to get over. And from there, I would just try and give the best plan that I could and try and give them as much confidence in me as I could.

Robert Leonard (23:55):
But as the owner, I would want to see a proven track record. So as soon as you can, I’d start to put together some sort of package or display or a present on how you’ve actually done what you say you’re going to do for other property owners, and how that’s going to be the same for me. Nico, where can the audience go to connect with you?

Nico Ortega (24:15):
Sure. Best way to connect with me, if you’re a real estate owner, if you want to have or learn more about NUOVO and what we can offer, you send me an email, shoot me a text, find me on LinkedIn. That’s the best way.

Nico Ortega (24:26):
My full name is Nicolas Ortega – N-I-C-O-L-A-S. No H, no K in the name, Nicolas Ortega. You can find me on LinkedIn. You can also send me an email at Nico… N-I-C-O… @staynuovo.com or my cell phone. It’s (305) 215-9761. That thing is always stuck to my hand, so best way to reach me is through there via text or call, whatever you want. So yeah, those are the best ways to reach me. It’s been amazing to be on the show to tell you a little bit about NUVO and to hear your thoughts on what you’d like.

Robert Leonard (24:56):
I’ll be sure to put a link to Nico’s various different resources in the show notes below for anybody that’s interested in checking those out. Nico, thanks so much for your time.

Nico Ortega (25:04):
Awesome. Thank you, Robert. Appreciate it.

Robert Leonard (25:06):
All right, guys. That’s all I had for this week’s episode of Real Estate Investing. I’ll see you again next week.

Outro (25:12):
Thank you for listening to TIP. Make sure to subscribe to We Study Billionaires by The Investor’s Podcast Network. Every Wednesday we teach you about Bitcoin, and every Saturday we study billionaires and the financial markets. To access our show notes, transcripts, or courses, go to theinvestorspodcaster.com. This show is for entertainment purposes only. Before making any decision, consult a professional. This show is copyrighted by The Investor’s Podcast Network. Written permission must be granted before syndication or rebroadcasting.