Turning Multifamily Properties Into Short Term Rental Cash Cows with Nico Ortega

My guest today is Nico Ortega. Nico is the co-founder and CEO at NUOVO. He has over eight years of experience in real estate development and more than five years of experience in real estate short-term rental multifamily properties. He’s knowledgeable in all aspects of the hospitality industry, from sourcing, management, operations, CXP, and sales. He has proven management and leadership skills demonstrated by increasing property owners’ rental income with a margin of 20-30 % from what they earned before.

We begin the episode with Nico sharing his background story and how he got into real estate. After graduating from college, he started working with his brother, who was in the industry but needed help with commercial real estate brokerages for a shopping mall. Two to three years later, they sold their project and went over to Miami, partnered, and did more projects in the real estate. They started their operations with five units of multifamily properties.

We then talk about Nico’s focus and the strategies they employed to identify properties that met their criteria. He says that their focus from the beginning was multifamily houses that were in top shape. They went after class A properties in downtown locations, so there was no need to negotiate renovation costs. To identify the suitable properties, they used a filter to select the best multifamily units available. For Nico, If he was to go back to 2015, he would take the same steps, but he would choose a different route in today’s real estate environment. Between 2015 and today, there have been a lot of new entrants in the market that are doing it on scale, and the competition for the same properties is growing. Initially, Nico said that their personalized approach was the reason for their growth and success. He personally went to the owners and regional managers to find the right fit.

Next, we talk about Nico units determining criteria. Nico and his partner took into consideration a variety of factors, and the most important were management and ownership. They had experiences where they had an owner who didn’t understand the business 100%, and property managers were very skeptical, making it difficult to maintain long-lasting business relations. You need to find an owner who understands that it’s more about the consistency and safety of rental units and maintaining a margin. The second factor is the quality of the property. The property needs to be in tip-top shape and well taken care of. Thirdly, Nico says that hotels and motels have a strong influence on real estate. Lastly, Nico explains the importance of clarity in rules. Before you try to do real estate at scale or individual property management, you have to understand the area’s regulations.

We then discuss how Nico finances their real estate properties and his business strategy. According to Nico, they usually have a benchmark between 1.7x and 2x for the rent. They had a very organic approach towards their growth, and they would send follow-up emails to clients explaining the advantages of security, consistency, a professional manager, and strong communication to remove skepticism in any contract Their occupancy is usually 80-85% depending on the season. They scale it using their revenue management system developed by a professor from his brother’s data analysis and machine learning MBA class. The revenue management system takes into account every internal and external including review, competition, and budget to produce a recommended rate.

Lastly, we talk about Nico’s market. According to Nico, his ideal property is a 25 unit property, with studios, one-bedroom, kitchen, in-unit laundry, no pools, and no front desk. If you’re such an owner, if you put your property in their program they will take care of everything from managing the customers to managing the units and payments. This is a passive income opportunity, and you will be generating 20-30% more for short-term rent than you were generating before.

Make sure you don’t miss this amazing episode of the Just Start Real Estate Podcast with Nico Ortega. Tune in! Get valuable information on creative ways of financing and growing your real estate projects!

Notable Quotes:

“If you see a property that is damaged, not well taken care of, the management is being super lenient with the upkeep of the property. That will come back and bite you.”

Nico Ortega

“Hotels and motels have a strong influence on the real estate industry.”

Nico Ortega

“Opportunities come when you least expect them to.”

Nico Ortega

We don’t shy away from opportunities. We are going to look at it what people have available and try to help in whatever way we can if it fits whatever we’re looking for.”