E48 | From Flips to Hotels While Working a Full-Time Job | Lorenzo Mercado

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In this episode, we sit down with Lorenzo Mercado—a pediatric nurse turned real estate investor and podcast host—who shares the real side of building wealth while still working a full-time job.

From losing money on flips… to pivoting into boutique hotels… to raising capital and building in public—this episode breaks down what it actually takes to level up in real estate.

If you’ve ever felt like you’re doing everything right but nothing is working yet… this one will hit.

What We Cover

•  What beginners completely misunderstand about real estate 
•  Lorenzo’s first deal (and how he lost ~$30K) 
•  Costly mistakes: permits, timelines, title issues, and bad assumptions 
•  Why flipping can be riskier than people think 
•  Why Lorenzo walked away from flipping entirely 
•  How hotels create value differently than single family homes 
•  The power of NOI vs. comps in commercial real estate 
•  Raising capital and building deals through relationships 
•  Why consistency beats everything (especially early on) 
•  When to stay focused vs. when to pivot 
•  Hiring, leverage, and buying back your time 
•  Building wealth while working a W2 job 
•  Using your network (even your day job) to unlock opportunities 

Key Takeaways

•  “Safe” thinking (no debt, pay everything off) keeps you stuck 
•  Most people don’t fail—they just wait too long to start 
•  Real estate isn’t easier or harder now—it’s just different 
•  Flipping margins are thin unless you control the deal flow 
•  Commercial real estate = controllable value (not comps) 
•  Consistency for 3–5 years is non-negotiable 
•  You don’t need to quit your job to build wealth 
•  The fastest growth comes from taking imperfect action 

Real Talk Moments

•  Losing money on deals doesn’t mean you’re failing—it means you’re learning 
•  “Building in public” comes with pressure—but also opportunity 
•  Waiting is the most expensive mistake in real estate 
•  You can’t learn your way into success—you have to act 

 Books Mentioned

• Rich Dad Poor Dad
• Set for Life – Scott Trench 
• The Surrender Experiment

🔗 Connect with Lorenzo

•  Instagram: @lorenzo.mercado_ 
•  Podcast: The Lo-down

Final Message

If you’re stuck consuming content and waiting for the “right time”…
 this is your sign:

Just start.

You’ll learn more from one deal than 100 podcasts.

Join our FREE Broke Millionaires Skool community for weekly Office Hours where we break down episodes and apply them to real life.

Instagram: @thebrokemillionaires_

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Legacy Wealth Builder: bmlegacywealthbuilder.com
(Info + schedule a call)

Transcript

SPEAKER_01 0:00

Yeah, I think flipping is still great. I just think I I've come to realize like I don't want to build a business that's built on just so much uncertainty. I think with flipping, there's so much variables out of your control. Like even just like the value of the house itself, right, is dictated by the house next door, like the comps. And so you can put a million dollars into a $200,000 house. If the house next door only sells for $300,000, your house is capped at $300,000. It's not like it's gonna be like a million dollar house. And so the one thing I like about commercial real estate and hotels in general is you can increase the value so many different ways, whether it's by increasing the net operating income, decreasing expenses, increasing revenue. Um you can also have like pet fees or amenity fees to increase the revenue. Like there's so many different levers you can pull to increase the value of it. It's not capped by just like the hotel next door.

SPEAKER_00 0:44

Welcome back to the broke billionaires, where we document our daily struggles and building wealth while raising a young family. Join us as we talk creative wealth building for everyday people and couples that are struggling in a down economy. I'm Lauren.

SPEAKER_02 0:56

And I'm Joshua Masari, and we'll be your host.

SPEAKER_00 1:00

Welcome back to The Broke Millionaires. We are so excited we have Lorenzo Mercado in the house today. And uh welcome. We're excited to have you.

SPEAKER_03 1:09

Thanks for having me on. I love being here. Yeah, Lorenzo, we met in uh we've talked about uh mastermind that we're in, and he's part of that group, and uh he's got a podcast as well. So we'll talk a little bit about that later. But uh it's called the lowdown, right? Yep, the lowdown. Um, I was actually on that just recently, so I can catch that episode as well. Um, and we are not in the studio today. Today we are in Lake Arrowhead. It's snowing outside right now. It was a last-minute family trip, and uh so we've got a virtual studio, right? Uh on the go studio, I guess. So we'll see how this goes.

SPEAKER_00 1:43

We'll see. Well, let's just get right into it. Lorenzo, what was the moment you realized that you were doing all the right things, but nothing was working?

SPEAKER_01 1:53

All the right things. That's a great question. Um I think just hearing, honestly, that from feedback from other people. I mean, I think a lot of this this journey feels very lonesome sometimes, especially when you're doing it by yourself, and a lot of my friends and family aren't really doing this. None of my coworkers, I work in the hospital, I'm a nurse, none of them are doing this, also. And so just periodically you get feedback from sometimes, um, just from someone who's like, you know, everything that you're doing from an outside perspective, your podcasts, the clips that you're doing, uh, it's really resonating with me. And as someone who um is just looking from the outside view, like I would totally see you kind of as someone who is um, I don't want to say an expert, but you know, you're you're definitely committed to everything that you're doing. And I think a lot of times I I mean, I just go through my own head, I'm like, is the things that I'm doing right now, like the podcast or the hotels, like, is this the right decision of what I'm doing like right now? Like, is this actually where my focus should be doing, like working? Um, and so I think, yeah, just hearing the feedback from people periodically is probably like the best um yeah, the best feedback that I've gotten.

SPEAKER_00 3:03

Um and so I don't know if that answered your question, but yeah, one of the things I mean, you hit it the nail on the head, I think, where this can feel so lonely sometimes, where there's not a lot of people doing the doing what we're doing, right? I mean, we feel the same way all the time. And you know, if your friends and family don't understand it, it can be really challenging and kind of hard to explain. And I think that it's really important to have a group and a network of people that are in kind of a similar boat, which is what we've found through this mastermind, which I think has been amazing. But I don't know, I'll let you kind of speak to that too.

SPEAKER_03 3:36

I mean, it can it can get lonely at times. You know, friends, family, like, what are you doing? Why you you know, why are you going through this? And you know, we're we're the broke millionaires. We we are struggling, you know, cash flow-wise at times, but we've got assets on paper, but we keep pushing through and we keep building wealth. And we know that, you know, after another, you know, five, six years from now, we are gonna be set up very well and never gonna have to worry about anything. But in the meantime, people don't understand why we're going through this now. Why are you making those sacrifices?

SPEAKER_00 4:04

It's a lot of questioning. Yeah.

SPEAKER_03 4:05

Why don't you just sell all your houses and like not have any worries and like just you know, forget about it? So yeah, we get that. We eat that a lot. So I totally, totally relate to you there. Um, what do you think is a a lie that you believed about money that kept you stuck the longest?

SPEAKER_01 4:22

Lie about money that kept me stuck the longest. Um I mean, I think just kind of goes back to Dave Ramsey, right? Just like not having any kind of debt, I think, is and just paying everything off with cash and really having no leverage, I think, is just a mindset that many people get stuck in. Um even my mom, she has a property that she sold another rental property and put all this money into um her primary home. And even now, like after everything I've gone through and uh this journey, and I'm kind of teaching her myself. She's like kicking herself in the butt for putting all this equity into this house versus using it to buy more properties or using it to have her money work more for her. And so I think just really paying off everything and having no debt is kind of just like the mindset that I had growing up, and a lot of people I know for sure have growing up. Um, and so just knowing that good leverage and good debt is really how you grow and scale. Absolutely.

SPEAKER_03 5:16

I think there's a misconception that a lot of people have, you know, the American dream, buy a house, pay it off, live in it forever, uh, and have no debt is like the American dream, right? But it's hard to get ahead that way. You know, you can own your own house and have your wealth in that house, but you're not leveraging it, you're not exponentially growing. That's it. And inflation is going to eat that up, eat that up, eat that up. So if you want to outrun inflation and have an abundant life, you got to use leverage. It's the only way to get there. Yeah.

SPEAKER_00 5:44

What fear do you think is silently kind of holding people back and keeping them broke?

SPEAKER_01 5:51

I think just the fear of the unknown. I think that's just really what cripples people. Because I mean, it's it's hard to just keep doing actions every single day and just staying consistent, not knowing what the payoff is, right? Especially like this podcast that we're doing. Like, we really don't know what the ROI is. I know we're investing a lot of time and money um investing into this editors, into these episodes ourselves doing the time, and like not really knowing like what kind of business it can bring us, what kind of opportunities it can bring us. And so I think just the fear of the unknown is really what keeps people stuck in their mindset and just like f like in their comfortable jobs or lifestyles that they may have.

SPEAKER_00 6:26

I couldn't agree more. Yeah, yeah.

SPEAKER_03 6:29

Um, we we have a lot of uh beginners that that reach out to us and then and listen to the podcast and people that maybe they've gotten their first real estate deal or they're looking for that first one and they or they're just trying to to figure it out. Um what do you what do you think that most beginners misunderstand about real estate?

SPEAKER_01 6:48

What do most beginners misunderstand about real estate? Um I think just really understanding the risks and numbers and all that, I think I mean having done a couple flips now, I kind of just dove into it headfirst. And thankfully, I mean, I had other partners and so like risks were split, the costs of everything were split, and I ended up losing probably like 60,000 between a couple flips. And had I not gone into other masterminds or um been in these partnerships and just gone full into it by myself, um, I think it could have put me out a lot. And so I think really just surrounding yourself with other people um is probably like the best thing that you can do who are doing the things you want to do, even just one or two steps ahead of you. It doesn't have to be 10 steps ahead of you, and just really bouncing ideas off uh you know those couple people that are in front of you.

SPEAKER_03 7:41

Yeah, experience in real estate can be really expensive and you're learning your own. We've all made those mistakes, but yeah, leveraging other people's knowledge is definitely a step up. Um take us, take us through that that first deal that you did. You know, what going into it, how what did it look like, what were the expectations and you know what what happened, what went wrong.

SPEAKER_01 7:58

Yeah, so the very first deal I got, um, this was on the MLS. So it was publicly listed on Zillow and Redfin. It had been on the market for I think six months, and I think it was listed for um around like 950 or something, and we were able to negotiate it down to 780, and so we got pretty decent uh discount on it, and it was definitely a full gut here in the Bay Area in El Sarrito, so it's probably like right next to Berkeley. Um it's a three two-bedroom house, and yeah, we we gutted it completely, went down to the studs, did new plumbing, new electrical, new roof. It was pretty much a new house besides the foundation, and um of course, as uh as it always goes with the first project, everything went over budget, everything went over um the timeline like we expected it to be done in six months, ended up being a year. Um, we tried to do it without permits, got red tagged, so we got stopped by the city for three and a half months. Um and then when we tried to sell the property, um, we used like a different title company to close. And when we first bought the property, they said everything was fine. And then when we tried to sell the property, they told us that uh the property sat on two parcels, and one of the parcels was not ever conveyed to us because the person who sold it to us didn't have the rights to convey it themselves because it was like uh a woman who was given it to her by her mom, um, but the mom never went through all the right paperwork and the mom passed away, and so it was gonna have to go through probate and all this stuff. And so this this one seller that we had, or the one buyer that we had um initially backed out, and then they said they would buy it from us for a much lower price. Um, and that was probably like the best of the worst the worst worlds because our hard money loan was due. Um, all the 0% interest credit cards that I put for the renovation were due, and so yeah, it was just like the worst case scenario and a very unlucky one, but it it gave me a lot of confidence um and just ability to in my my own just like processing power and ability to just like get overcome strong crazy situations. Um and so yeah, ended up losing probably like 30,000 on that first one.

SPEAKER_03 10:04

That's that's rough to lose money, but that's actually not as bad as a lot of other people that we we've talked to or that we know. So it's you know, it could have been a lot worse. I I feel like you said that your first one always goes, you know, over budget, takes longer. I don't think that's just the first one. I think it's always that way. I think as an investor, an experienced investor, you just learn to compensate for that. So you start adding more padding to your budget, more padding to your budget, more time because you know it's not going to get done in time. You know there's things that come up. So I think that's that's an ongoing thing, but you just learn to adjust for it and and kind of you know, you know, make up for it. Um, the title issue you're talking about. So did these people buy this property with this whole title issue in place? Yeah.

SPEAKER_01 10:42

So they bought it with the title issues in place. The the the title company said that they would help them overcome this issue however long it took, and they were willing to take on that risk. Um, yeah.

SPEAKER_03 10:52

Did you ever follow up or just do you know what ever happened with that?

SPEAKER_01 10:55

No, I never did. I was just like, I cut the cords, I was like, I don't want to deal with it anymore.

SPEAKER_00 11:00

Run. You're done.

SPEAKER_03 11:02

We just had, I mean, that we had a similar situation on a property that we own, and we just cleared title two weeks ago. And it was from back in the 80s, it was a the family had split it up the title using fractional ownership and gave all the kids a percentage. And when it got put back together, when somebody had passed away, there was an issue with the rest of the family absorbing all the shares, and it was supposed to go to their heirs, and it was just it had been changed so many times that I don't think they knew which way was up and which way was down. And so when they sold the property and put it back together, three owners before we bought it, um, there was a an error in the way the paperwork is done, and and it didn't come out. We own this property for 15 years, and this just came out two and a half years ago. And the county sent us a letter oh, by the way, somebody owns 25% of your property that's been, you know, they passed away 30 years ago. So it took us over two years, and we just I just uh um had a hearing in front of a judge a couple weeks ago and finally got the ruling on that. We got you know titled back. And it didn't cost us anything because title insurance covered all the attorney fees, but it was a long process and we couldn't do anything. We couldn't sell it, we couldn't refinance it. There was nothing we could do because it was a clouded title, and so it's definitely a pain, regardless of the situation.

SPEAKER_01 12:12

So yeah, it's something you can't control.

SPEAKER_00 12:15

Yeah, absolutely. Lorenzo, what do you feel like is the most overrated strategy that you see online right now?

SPEAKER_01 12:25

That's a good question. Um I don't know. I mean, I can't speak to everything because I haven't done it all myself, but I know there's definitely a million different strategies for sure. Um I think everyone can be successful as long as you stick with it and and just really kind of tunnel vision at least for a little bit. Um yeah, I think maybe I don't know, honestly.

SPEAKER_00 12:47

Do you feel like when you did your first flip, did you feel like because of everything you see like on TV shows and everything like out there that it was gonna be easier than it actually was?

SPEAKER_01 12:59

Uh no, I mean I I definitely thought it was still gonna be challenging. I think social media in general just kind of makes everything seem all magical and perfect, which it's definitely not. And HGTV does a really good job of doing that as well. Um I think flipping still works. I think the the most successful flippers though are the ones who control the the contractors or they have their own contracting company or they're able to get it like at 100% or a 50% discount like at an auction or they're getting it like true wholesaling. But I think if you're really buying it off the MLS and getting something that's on market is the margins are really, really thin. And so the room for air is really small. And so I think flipping still really works. I just think you have to um be really effective at buying at a discount because that's when you make the most money.

SPEAKER_03 13:42

And you gotta have thick skin because I know it's stressful. Everyone we've talked to has done well. We don't, we don't flip. We'll we'll buy, renovate, rent, and then maybe exit if it makes sense, but we just we don't ever just turn around and flip. It's just it's not our game. It's harder to hide, it's harder to to to uh defer or negate that tax liability. And what we do is stressful enough. I think flipping would be even more stressful. We're not adding flipping to the Yeah, I don't it's just not, it's just not in our wheelhouse. Um, but I you can definitely make good money doing it. Um there's a lot of people that do really well at it. Uh let me ask you this. Do you think that real estate's actually harder today, or do you think people are less prepared, you know, looking back to like maybe 10, 15 years ago when a lot of people were getting in the game?

SPEAKER_01 14:25

Um I think real estate is more challenging today in the sense that you know information is so readily available to everyone now. I think with social media and podcasts and like people can learn so much very quickly, whereas before, I don't think that access to information was as easy. And so I think just in the competition aspect alone, of just like, you know, the next next person next to you can have just as much information, much more easier. I think that just makes it more challenging. But as far as like the landscape itself, I mean, political climate climbing, all that interest rates, yes. I mean, it definitely they definitely think it's challenging right now. Um, but yeah, I think it's always challenging. So for anyone who's listening who's maybe just like saying, you know, now's a hard time. It's always gonna be hard. You just gotta get into it.

SPEAKER_03 15:10

You just gotta, yeah, just gotta get into it. It doesn't matter when when you start just, or it doesn't matter what period we're in, you just gotta go. I would say it's it's changed. It's it's got the old model's gotten harder. You don't see the 2% rule. Everybody's buying out of state and buying the 2% rule 10, 15 years ago. That does not exist now. So now you gotta get more creative. Um, you know, whether you're doing midterm or or short-term rentals to cash flow better, or you're flipping, or you know, maybe your strategy is more uh an equity-based. So you're buying higher appreciating markets and you're just trying to cash flow or you know, break even on your on your asset itself and covering the expenses and and then capturing that that uh appreciation. But I think it's changed. It's just the the game has definitely changed, but you can still do really well at it. But that's yeah, that's some some good points that you bring up.

SPEAKER_00 15:54

What would you say is the most expensive way that people procrastinate in real estate?

SPEAKER_01 16:01

I think the most expensive way people procrastinate is just by not getting into it. I mean, the opportunity cost and time of it and loss of it is is the worst thing, right? So if you wait five years versus getting in now, having a property appreciate five times, or just like that we learn about like the velocity of money from Cass Deep or you know, money loves speed and how you can multiply money quickly over time. It's just like if you don't get into real estate now, you're losing out on so much potential money. You know? Yeah, it's so good.

SPEAKER_00 16:30

I think one of the things we always say is we wish we would have started this more heavily before kids. It's a lot harder with four kids. It's a lot harder with four kids.

SPEAKER_01 16:39

Well, you guys are freaking superheroes. I've said that before before, and yeah, people always complain and just say they can't do it, and you guys clearly can do it with four children. So yeah, if you guys can do it, anyone can do it.

SPEAKER_03 16:51

Yeah, that's that's actually appreciate you saying that makes us makes me feel a little bit better about everything I'm gonna do. Yeah, 100%. You guys need to give yourself more slides. Yeah, no, I appreciate it. Um Do you think that people like that are looking to get in into real estate but haven't taken that step and haven't taken the action that you're talking about? Do you think it's because they're afraid of losing money, or maybe they're embarrassed of having a deal go sideways?

SPEAKER_01 17:15

I think it's a combination of both. I mean, there's fear of feel fear of losing money is definitely a huge piece, just going back to that that fear of the unknown, right? But also I think for me, issues that I've had or just just just barriers, I guess, is just right now we're all building in public, right? And so that fear of just kind of being thought of as a failure for a deal that doesn't go right and all that, I think is just another big fear that people have, just fear of going back to just judgment of others. Um, because when you're building public like this, it's it's it can feel a lot more scary if when things go wrong. Yeah, for sure.

SPEAKER_03 17:49

What now you talked about your first deal. Have you have you done other flips after that one?

SPEAKER_01 17:54

Yeah, so I did one flip in 2023, um, and then two flips that closed um late last year. So I had three total before deciding to move on.

SPEAKER_03 18:05

Okay. And how did those ones work out?

SPEAKER_01 18:09

Um, also things, many things that could have gone wrong went wrong. Like the second one that I bought was a fire damage property. Uh, this one I got off market from a wholesaler. Um someone had thrown a Maltov cocktail through the w kitchen window. Um, and then yeah, the house uh was just completely smoke damaged in inside. Thankfully there wasn't too much actually damage to the structure, just had to replace a couple trusses on the roof. Um But yeah, that one went probably six months over over timeline because of um issues with the local electrical company. Um I like I thought I had to wait until everything was done before the the PG ⁇ E company would turn the power back on because the power was not on the entire time. And so my contractors were working with generators the whole time um because when there's a fire, they they cut the wires from the pole to the house. And so after everything was pretty much done, I I thought I could just be like, you know, everything's done. We got the sticker from the city that say they approved the panel. Can you just turn the power back on? And they're like, no, absolutely not. That's not that easy. And so they said they had to go through several months of um estimating, um, several months of like permitting with the city. Long story short, when they did their estimating, they said that the the new upgraded panel would put the power pole like over capacity because when people typically upgrade their panels, they don't go through this process that you're supposed to go through with the city where you're actually supposed to form like put a formal application where they do this estimating to make sure that the power pole isn't oversupplied. And so they pretty much told me they have to replace the whole power pole, and so that was gonna be delayed. Like they said it could take up to 12 months, so I was like, well, that would screw me. So thankfully it ended up being only six months, but still, like that completely changed like the environment of the house when I sold it. Um comps were lower, everything was lower, and so ended up losing 30k on that one. And then um the other property that I had was in Berkeley. Everything actually pretty went pretty well, just also kind of went over budget. So yeah.

SPEAKER_03 20:11

See, so it's not always the first one that the only the first one that goes over budget.

SPEAKER_00 20:16

And did you say that you have exited flipping now, or are you still flipping?

SPEAKER_01 20:20

I'm done flipping. So now I'm now I'm going into hotels.

SPEAKER_00 20:24

Okay.

SPEAKER_03 20:24

Why why do you say you're done with flipping just because it hasn't worked out for you, or you just move on to something else? Like, because flipping's still a viable, obviously a viable strategy.

SPEAKER_02 20:32

Just a quick disclaimer: the information shared on this podcast is for informational purposes only and should not be considered as financial, tax, or legal advice. Always consult with a qualified professional before making any financial decisions. Your individual circumstances may differ and require specific strategies not discussed here. Now, let's get back to the show.

SPEAKER_01 20:52

Yeah, I think flipping is still great. I just think I I've come to realize like I don't want to build a business that's built on just so much uncertainty. I think with flipping, there's so much variables out of your control, like even just like the value of the house itself, right, is dictated by the house next door, like the comps. And so you can put a million dollars into a $200,000 house. If the house next door only sells for $300,000, your house is capped at $300,000. It's not like it's gonna be like a million dollar house. And so the one thing I like about commercial real estate and hotels in general is you can increase the value so many different ways, whether it's by increasing the net operating income, decreasing expenses, um, increasing revenue. Um you can also have like pet fees or amenity fees to increase the revenue. Like there's so many different levers you can pull to increase the value of it, and it's not capped by just like the hotel next door.

SPEAKER_03 21:42

Right. So you're the because the value is not why don't let's break this down for our listeners. The value of a commercial building is not like an appraisal like you would see in a residential home. Yeah. And you kind of go into how that how that breaks down and how that's valued.

SPEAKER_01 21:55

Yeah. So um, as I was saying, for single family homes, the houses are based on. On comps, ARV after repair value, and it's typically like six, three to six months within like say a half mile radius. And it's like for like so you can't compare two-story house to one story house. Um, but anyways, it's single-family homes are are compared to one another just based on like the neighbor next door. For commercial real estate, it's valued based on the net operating income, which is the income that a property brings in minus the expenses that it takes to run it. Um, this is the net operating income, and that is divided by the cap rate. And the cap rate is just a percentage that is a representation of like a market's um uh representation kind of like of risk. And so typically here in California, cap rates will be a lot lower. Like in San Diego, a cap rate might be in the three or fours, whereas somewhere more rural, say like in the um in the mountains or somewhere on like the Midwest, cap rates might be a nine or ten. So if you could NOI divide by the cap rate, that's kind of how they evaluate the property of a uh commercial property.

SPEAKER_03 23:01

Yeah, we did it, we did a video, like a three-minute video on on how you evaluate these and how you push appreciation. And you can, I mean, you can take a property and adjust the rents up a little bit, maybe do some light renovations, and you can increase that value way faster than you'll ever be able to do with the market appreciation. Uh it's just it's just not, yeah, it's a totally different animal. So I totally get there. What's your what's your current um like projection on you? You said you are getting the hotels. Have you bought a hotel? Are you looking to buy it? What's your current strategy?

SPEAKER_01 23:32

Yeah, no hotels yet. It's much slower processed than single-family homes. Um, I've gone and toured probably five different hotels at this point. I looked at two in North Carolina, looked at one in San Diego, um, looking at one in Mendocino. So uh the buy box is definitely multiple multiple places. Um we're looking for like 10 to 20 rooms, I'd say. Um definitely value add, just being able to force appreciation, kind of like single-family homes. And we're trying to make it more unique experiential stays, uh, not trying to just do a branded hotel like a Marriott or um anything like that. It's definitely gonna be an independent boutique hotel. Um, and I'm going in with a couple partners that we've met through the mastermind as well. And yeah, we're we're we've gone close on a couple deals. We're actually getting close to getting one under contract. So we sent an LOI, they agreed to it, and we've been going back and forth with the sellers for a few months now, trying to get uh an agreement on the purchase and sale agreement, the PSA. Um, but yeah, we're we're getting close. It just yeah, it takes a lot longer to do this than than single family residential.

SPEAKER_03 24:36

Yeah, for sure. No, it's exciting. Um, are you how are you funding this? Are you raising money for this? Is it just your own cash and bank? How are you how you bring that deal together?

SPEAKER_01 24:46

Uh yeah, so this one's a combination of putting in some of our own capital, but also raising uh a majority of it.

SPEAKER_03 24:52

Okay, nice.

SPEAKER_01 24:54

Yeah.

SPEAKER_00 24:55

I'm curious too. So I mean, I know that obviously we're both in California. Real estate is so much more expensive here. Do you see that in commercial as well while looking at these hotels? Or is it kind of a little, I mean, a little more even playing field with the hotels?

SPEAKER_01 25:11

Yeah, they're definitely more expensive here in California. Um, the one that we're looking at is in a little city or county called Mendocino, which is like three hours north of San Francisco. And so that's a tertiary market. And so things in tertiary markets in general are a lot cheaper. And so, for instance, this one is listed for 1.95 for 11 rooms, and so it's not awful considering a house here in Palo Alto is probably like three million. Um but yeah, it just depends on where you're at.

SPEAKER_03 25:38

That's very cool. So um, you know, we we haven't done uh a hotel. It's on Lauren's bucket list. It is. I do want to do a hotel at some point. Um let's do one together.

SPEAKER_00 25:48

Yeah. I'm open.

SPEAKER_03 25:50

I think that that might be the next thing we venture into. Right now, we've got an apartment building in outside of Dallas that we we acquired about two years ago, and we didn't we don't have partners. Um, we didn't raise money and just doing all of our own cash, and it's tough. Everything that you talked about on all these flips is just like, you know, coming at us, you know, things are costing more, the over budget, uh holding, you know, longer, taking longer to turn over. Um, this was kind of a problem, I'd call it a problem property. There was a lot of tenants in there that were not the greatest tenants. Um, so once we acquired it, we kind of had to let ever cut everybody loose, basically, or kind of weed everybody out. Uh, it had a bad reputation, you know, like drugs and just like cops were always there. And so we got a good deal on the building, but there was a lot of problems that came with that. And so it's taken us about two years to like turn around a reputation. And now people actually want to live there. Now, when we have open units, it's like we get all these applications, and so now they're getting filled because they were just sitting for a long time. It was a combination of having the wrong property management company in place and you know, just kind of get rid of this bad reputation that the the building had before. But we've got a really good property manager net right now, and the reputation's kind of gone from before. So now things are turning around and we're starting to, you know, cash flow positive on it, and we've got a few more units to finish up, but then we'll be starting to eye that exit. But it's been a learning process. That was our first commercial deal. So it's definitely been a learning process. Um, but like all the things you say, like everything that can go wrong usually goes wrong, especially these older buildings like plumbing, electrical, and just all kinds of things that need to be taken care of. But we'll we'll get there on the the boutique hotel. I think that'll be in the the works at some point soon. So we'll see.

SPEAKER_00 27:33

I want to jump back to your podcast from the people that you have interviewed. Do you see any sort of like common theme of people with wins that they've had?

SPEAKER_01 27:45

Yeah, I think the biggest thing is just consistency, honestly. I mean, I think a lot of people I've seen, like, you just gotta be okay with not really making it at least like not even not even big, but just not even really seeing returns until at least like year three or year four. And so if you don't have like the grit or just um just like a drive to get through the first couple years, like I think it'd be really challenging, but you just gotta go in knowing that it's gonna take a long time to do it and just be okay with delayed gratification because a lot of these people, yeah, just go through so many different things in the beginning, but as you as we all know, just so many things go wrong. And so I think you just gotta have that grit and ability to just navigate through uncomfortable situations and conflict.

SPEAKER_03 28:29

Yeah, that's really good. Um brings up another question. Uh, what are you doing this full-time? Is this your full-time gig with real estate? Or what do you, what is your your background?

SPEAKER_01 28:39

Nope. So I say that this is now I say this is my main hustle. This is like what I'm identifying as a real estate investor and podcasters, social media brand builder. Um, but my my background is actually nursing. And so I've been a nurse for almost 11 years now. I'm a pediatric nurse at Stanford in the operating room. And so I usually work 24 to 36 hours a week. My commitment's only 12-hour shifts, 24 hours 24 hours a week. Um, but I always try and pick up whenever I can. And so I'm grateful because I have a lot of flexibility. And so I'm if I'm only able to work two or three days a week, I'm able to allocate the other two, three days a week to real estate and podcasting.

SPEAKER_00 29:20

That's awesome. And you're married, right? I am married. Does your wife, does she have any involvement with the real estate? Do you guys do this together, or is this just kind of your thing?

SPEAKER_01 29:31

Uh it's just my thing for now. She's in school right now to be a nurse practitioner. And so she's doing that while also still working full-time. So she's pretty busy with everything. But I I have uh all the support from her in the world, which I am very appreciative of. She said that any given time when she's done with school, I can quit and go full-time into this if I want. And so I think although she's not involved directly in the business, I think just having her support is just like the most the best thing in the world. Absolutely.

SPEAKER_03 29:57

That's huge. We talk about alignment a lot, just having our goals aligned. If you don't have that and and aren't like on the same page, it it's it makes it a lot tougher, I think. Um because it's, you know, you go through tough times, but having somebody you can lean on that's that sees that end goal makes it a lot easier and strengthens that relationship for sure. Um, so what's your plan? Are you do you plan to keep the like keep your nursing job? Is that something you're looking to exit? What is your what is your long-term goal there?

SPEAKER_01 30:26

It honestly changes every single day. Um, I think last year I put a lot of pressure on myself saying, like when I was doing the flipping, I was like, flipping will be a very easy way to replace my income. And so I was kind of just telling myself by the end of this year I was gonna quit. And so I was just putting a lot of pressure on myself and I found myself being very unhappy. And so this year I'm trying to give myself a lot more grace and just being okay with it. Like, you know, everyone kind of has their own lane and your own own journey, and it's okay to just like be whatever your pace, own pace is, just compare yourself to yourself. And I think that eventually would like to leave nursing. I think when it becomes like really an issue of and like conflict of time, I think that's when I'll realize that I'll I'll need to quit nursing. But as of right now, I'll probably stay in it for a little bit. I think it's such an untapped network too of like obviously high-income earners. Like I work with a lot of anesthesiologists, a lot of doctors, a lot of other nurses who I I think would really benefit from like say when I start to raise capital and give them access to other opportunities that I know that they probably don't know about. And so I think if I just get one or two references or one uh investor who's a doctor, I think I'd be in. And so I think even if I just stay, it's called per diem where I work maybe like one shift a month, I think that would probably be like ideal setup. So I'm able to keep that network. Yeah, that's great.

SPEAKER_03 31:42

I mean that's a huge network to have, so that's that's really smart taking that that approach. Um let me ask you, what uh not not your podcast or our podcast necessarily, but just podcasts in general. There's so many podcasts out there, uh you know, and a lot of real estate podcasts. Uh what advice would you say sounds good on a podcast, but it fails in real life?

SPEAKER_01 32:07

Um I think besides being on podcasts, just other um advice that I've heard from other real estate investors and just going to conferences in general is that you have to stay head down, focus on one um investment strategy for five years and just like put your blinders on. I think that holds true to a certain degree, but I also think for me, like my experience, knowing that it's okay to pivot after three years is is totally okay. Like, yes, shiny object syndrome is a real thing, but it's also important to like realize like if you go five years here and realize at the end of five years you hate it, it's like that's two years that you wasted or three years that you could have gone and perfecting another investment opportunity. So I think it's important just to just try new things. That that's kind of just life in general. That's how you figure out what you do and don't like. Like, I think it's impossible to just commit to one thing and just know that that's what you're gonna like for five years or 10 years or however long it takes.

SPEAKER_00 33:02

I love that. I think I say this all the time, but I think, you know, our our parents' generation, this is a lot of people, but you know, they have that dream of like buying their forever home, right? And we talk about this all the time. Like we don't think we'll ever have a forever home, mostly because I think we like doing projects, we like changing things, we like being able to kind of move around. We'll probably have a longer term home at some point, but um, it's okay to pivot. And it's okay to not go and, you know, we talk about this in so many aspects of our life, like even what we're doing right now. The the plan that we had set and you know, the plan that we had in place is not necessarily the direction we're going with. And sometimes that can be hard to realize that you're not on the plan or on the path, but it's okay to pivot and take those kind of turns as they come.

SPEAKER_03 33:54

Yeah, absolutely. I mean, we've pivoted, I've pivoted a lot of times in my life and getting up there in age, and I've had a lot of businesses that I've started and failed and pivoted, and it's, you know, yeah. So it's uh that's okay. But uh you learn a lot on the way along the way too. So even though something doesn't work, you learn a lot and you take that exp expertise into the next strategy. So you can leverage that as well.

SPEAKER_00 34:15

That kind of brings me to my next question. What is something that you've changed your mind on about in business?

SPEAKER_01 34:25

Um just something that I think we all learn from is just the ability and need to hire and help and just really focusing on the tasks that drive the most amount of like revenue and put the most progress forward for you. Um so instead of just doing everything yourself, just really trying to hire someone else who can a be really good at something that you suck at or hate doing, and then you can just focus, like for me, maybe it's just capital raising. That could be a really important task. Whereas someone else could totally handle all the bookkeeping or back-end admin stuff that I don't like doing. I think that's really how you grow and scale.

SPEAKER_03 35:04

No, that's something I'm like taking to heart with my businesses and not just the real estate, but we have a printing company as well. And in just hiring, you know, whether it's, you know, a virtual person or an in-person assistant, or just implementing AI and leveraging AI to handle a lot of these tasks that are like doesn't make me money doing this task. I shouldn't be focusing my time on this task, but the tasks need to be done. So just learning to kind of let go and realize these little things I don't need to do, uh, even if they're not done. I'm kind of a perfectionist. So even if they're not done 100% perfect, having somebody else do it so I free up my time to do something that's actually bringing in revenue is a much smarter play. So I'm I'm pivoting my businesses to that model right now.

SPEAKER_00 35:48

You're not kind of a perfectionist. You are that's it's a problem. I had offered many times to come on and like help him, and we quickly realized that would not be a good, a good partnership in that sense with the business. But um I think something you've learned though is because you had hired people in the past, but it's high you were not hiring for the right role.

SPEAKER_03 36:11

Yeah, I was I was still doing like, you know, my email and all the stuff that I thought that I had to handle and just hiring people to do shipping and delivery, just things that were added stuff I didn't have time for. But now I'm hiring to do like the core of the stuff that's like closer to me, like handling my email and calendar. And I don't even check my emails anymore because I have somebody else do that for me, and they just relay the important information to me that I need to actually handle. So that's freed up a lot of time uh for me to really focus on the business and other things like podcasts and the real estate stuff that we have going on.

SPEAKER_01 36:39

So and you guys have four kids. I'm sure you guys want to just be the amazing parents that you guys are, right? I know when I have kids, I don't want to be doing a lot of this stuff myself. So I think it kind of just forces you to, you know, build the life you want. Yeah.

SPEAKER_00 36:51

You're so smart to start this before having kids. Like that would be my advice to you is like go as hard as you can right now, stay up as late as you can, do all of that right now while you can because it is it really is so much harder.

SPEAKER_03 37:04

Get your systems in place now and hire and delegate and get those systems to run without you before that, because you throw kids into the mix, it's just a whole nother animal.

SPEAKER_01 37:16

Can I ask you guys a question about the kids? And so I know it's your guys' podcast, you asked me the questions, but I'm just kind of curious. I mean, Lauren, you weren't on the podcast last time. So everyone always I talk to who has kids, they kind of feel like there's a fire under their butt now now that they have these kids and more responsibility, not even responsibility, but just like the desire to provide more for your family, right? Do you guys feel like this has put a fire under your butt after having kids? Oh my gosh.

SPEAKER_00 37:42

Absolutely. I think that that's probably the hardest thing about this position we're in right now is wishing, like I said, that we had done it before, you know, started earlier, so we were further ahead at this point. Um because kids are expensive. Kids are like as much as you think they're gonna be, like double that at least. Um, but I think too, it's just you want to be there physically with them. You want to have the time with them. And so you want to just not have to spend your days working. Like that's been the thing that I have I'll get emotional with. Um, it goes so fast, right? I mean, and granted, we've had our kids back to back. Like we our oldest just turned six and we have four, you know, so our youngest is nine months. So knowing that our we we six years has already gone by and like a blink of an eye is crazy.

SPEAKER_03 38:39

Um yeah, and I think definitely like everything that we do is for the family, for the kids. It's not like me, like, oh, I want to have this, all this wealth and be able to live this awesome free, you know, life of freedom. It now it's like, okay, now we got a family. This is the what we want for the family. We want to be able to do this. We want them to be able to go to this school. And and everything kind of comes back to the family. It's like it changes your perspective and what your goals are. You may still have the same goal, but that goal is being allocated, like those resources are being allocated to different things now. Cause now you've got this whole different perspective on who you're providing for and what you're trying to build for your family. So definitely now it's like, now it has to work. Before it was just me, it's like I could just throw stuff at the wall. If it didn't work, it didn't matter. Now it's like, okay, that we have to make this work. This has to work because now there's a family that's like relying on this to work out. So yeah, it definitely lights a fire for sure.

SPEAKER_00 39:30

And I think too, like I never thought I would not work. I worked until our second was a few seven months old and I got laid off from I was in the mortgage industry. And that was the biggest blessing, honestly, because I realized how important it is to be home with them right now because this time does go by so fast. And so creating something that while we're putting so much into this right now, the goal is that, you know, it's it's not something we will have to be spending all our time doing as they get older. And we can still be present parents and you know, be able to just pick up on a whim and come to Arrowhead and do our podcast on the road and kind of do these things. That's that's my hope at least from from a mom's perspective. I know that's probably a little different for you, but yeah.

SPEAKER_03 40:17

So I mean, definitely get everything in in in as far ahead as you can before you have kids. But uh, you know, it's it's right around the corner for you, I'm sure. And once you start having kids, it like it goes fast.

SPEAKER_01 40:27

So yeah, we're hoping to start a family this later this year. And so that there's definitely a level of pressure for that I put on myself for sure, but I I know that it's just gonna exponentially increase my my fire once.

SPEAKER_03 40:41

But then like you don't have to have it, like again, like you you can do this with a family. That's one thing that we talk about a lot, is like people think that you have to put it off, like you either have to do it and get there before you have kids, or you end up waiting until they're out of, you know, in high school or whatever. Like we're doing this while we have young kids. So even when you have young kids, you can still make it work. It might be a little tougher, but you can still make it work for for sure.

SPEAKER_00 41:02

I think that's where the mindset and the alignment with your partner come into place because you have to be on the same page with that and know that there's gonna be sacrifices and things in the beginning. But if you have that common goal, that's what kind of keeps you going and keeps that fire lit. And that's huge. Staying, staying aligned for sure.

SPEAKER_03 41:23

Um all right, I got one more question for you. Um we talked a lot about you know, just taking action and and getting going and getting started and in your investing uh, you know, journey. Um if someone feels stuck uh but they keep consuming content, what do you think it is that they need to hear?

SPEAKER_01 41:42

That's a good question. Just do it. It sounds as cheesy as it sounds, just you gotta get into it, honestly. Like you can read as many books as you want, listen to as many podcasts as you want, but nothing will prepare you for the actions and learning lessons that actually come from your experience and your own journey. And so yeah, just take as much action as you can and just be okay with making mistakes because the faster you get kicked in the nuts from by life, the more lessons you'll learn.

SPEAKER_03 42:10

So yeah, that's really good.

SPEAKER_00 42:13

I love that. Is there this is something I like to ask everyone, but is there one specific book that you've read that has kind of like been a game changer for you or changed your mindset or really impacted you?

SPEAKER_01 42:25

Yeah, I think I've I've had many different books that have impacted me depending on where I was at in life, right? And so I think kind of just like the one that everyone kind of talks about that was very opening, which is Rich Dad, Poor Dad, just learning the differences between liabilities and assets. Uh, that was a really big one for me. Um, when I was still in the very early stages of this before real estate, just trying to learn how to be better with money, um, Set for Life by Scott Trench. Uh that's another really good book. He's from Bigger Pockets. Um but one that I read recently that I really liked was the um the surrender experiment experiment. And so that's more so just being okay with just surrender surrendering to life and just being okay with where you're at in life and just knowing that everything's gonna fall into place how it's supposed to. I think we we always try and just control so many different things, right? And as we know, there's everything's out of our control. And so just being okay with just where you're at in life and with your own journey, just trying to have a much better mindset has just been the most powerful thing to me.

SPEAKER_03 43:26

I think my wife needs to read that book.

SPEAKER_00 43:27

I was gonna say, um I'm gonna take note of that one because I could definitely use that read.

SPEAKER_03 43:33

Uh awesome. Well, Lorenzo, I really appreciate you coming on today. Uh, where can the folks get a hold of you? I know you got your podcast, so we'll drop that in the in the notes. Um, but what's the best way for them to reach out to you?

SPEAKER_01 43:43

Yeah, Instagram's definitely the best place. Lorenzo period Mercado underscore. I'm also on YouTube, Spotify, and Apple. If you could check out my podcast called The Lowdown. So yeah.

unknown 43:53

Cool.

SPEAKER_03 43:54

We'll definitely put those both in the show notes. All right, man. I really appreciate you coming on today. Thanks again for coming on. Yeah, of course. Thanks, guys.

SPEAKER_00 44:01

Thank you. Thanks for listening. This has been a production of Rebuilding the Dream Studios.