Once you get in this, it changes you. There’s just no way you cannot change once you understand the impact and the

need out there. This isn’t just doing something that’s a feel-good, which it absolutely does feel good. It’s also

solving like a big problem. We’re trying to elevate the level of care, pay better wages, better

treatment, and so how do you make it work to where it’s a win-win for everyone in the home? The bar that we

have to clear to stand out and distinguish ourselves is not that high. To me, this feels like an inevitable

march towards success over the long run.

Welcome back to the Hybrid Real Estate Professional Podcast, the show where we arm you with the tools, tips, and mindset to engineer your own upside in

life through real estate and small business investing without compromising what matters most. Today, I’m joined by

my friend Pedro Luna. Pedro spent over 20 years in the aerospace industry as a primary structure design engineer and

supply chain leader while also gaining experience as a real estate investor and private lender on the side. But Pedro is

now focused on a niche of investing that is very near and dear to my heart, senior living. He and his wife are

currently developing two 16 bed assisted living and memory care homes in Oklahoma, providing a homelike

environment with top-notch care to allow seniors in their community to age with dignity. We’re going to get into why he

pivoted into senior care. the details behind his current deal he’s working on and much more. Pedro, welcome to the

show. Uh, thank you. Glad to be here. Awesome. Well, so this show, the hybrid

real estate professional, kind of the underlying theme is, you know, interviewing people who have taken

skills, knowledge, income from a primary occupation and used it to launch a real

estate career. So, you fit that mold very very cleanly. uh you got you got a lot of um experience it sounds like yeah

from your your occupation and then you also have been building on the side. So before we jump into the senior care

would love to hear just a little bit of how it started and how you got into investing in general. Yeah, actually uh that happened uh about

2019 that I just started uh we originally were thinking of paying off our home in five years. Um just because

of course everybody wants to pay off the mortgage not thinking as an investor I was going to work all my life going to

retire go back continue working um and then we were on that pathways there is

like wait this is actually going to happen then what right it’s not like we can eat bricks or

anything like that right so then what were we going to do there so I went and looked at my 401k and that was the shocker it’s like wait uh this is not

going to work I thought the 401k was going to be there to uh help was right later on in life and realizing that was

not the reality that’s when I started thinking okay I need to think of more passive investments so that led us down

the path of uh single family home rentals and like everyone most people I guess I could say uh I read the rich dad

poor dad and that just blew my mind I was like oh man I got to do something now instead of trading my time for money

so that was the original uh how I started looking into real estate investing and uh so now yeah this asset

class that we’re in of my my previous experience have really set me up for

this moment which I am very grateful for that it wasn’t a detour detour or anything it’s just setting me up for

this time yeah totally agree if anybody is listening to this show for the first

time I am also working on a similar project with my wife and same feel very much the same that our time investing in

single family and learning the fundamentals of real estate investing financing how to manage uh cash flow,

how to budget for capex, like all these things set us up very well to pursue

larger projects like the one you’re doing now. And um I’m interested though, so you started single family in 2019.

You also mentioned in your um in your preview that you did some private money lending. Is that something that you

learned about around the same time or how did you get into that? Yeah, actually that was a little bit uh later. started single family and then

again trying to uh actually stop contributing to my 401k when I when I started looking at how it was not going

to work. But then of course thinking of wait a minute I need to take advantage of that free money right that we give we

get but at the end I wanted control I didn’t want to be locked in I didn’t want that money just sitting there in

the 401k so luckily I went and did a little bit bit of research and I was able to find uh the alternative of just

putting the money into the 401k and so I put it into the after tax and then roll

it out into a self-directed IRA which is then that’s where I lend it out as a private lender.

to investors. Very cool. Yes, self-directed retirement accounts. Um, it’s something that I

hadn’t actually spent a whole lot of time on until pretty recently, but this year, Andrea and I opened a open solo

401ks and are getting into that game as well. It’s very, very interesting. And once you do the math and especially you

educate yourself on how to invest and how to understand um, you know, what it’s like to be a lender, it can be a

great opportunity, especially for something like a retirement fund. So, good on you. So, how did you get the

initial spark to look into senior care? Yeah. So, actually my wife and I had

been looking for a while uh for to pivot for a bigger deal, right? We’re

thinking, okay, uh if we’re going I don’t want to acquire all these 100 properties to then go level up. And so,

if we’re going to do this, uh we need something that’s commercial. We’re also looking for a business, something that

my wife was willing to jump in. And then the fourth one, the key thing is something that had a purpose, not just

more income, right? Like if we’re doing this, it’s got to be something that that meets a need that has a purpose. And so

that’s where I came across at a friend’s barbecue. Uh I heard her speaking about

this asset class, right? Uh senior care is like, “Wait a minute, you own the

operations and you own the real estate and this is a commercial deal and it’s right up the alley.” So he checked all

of our boxes for us. Being that my wife was a CNA uh private caregiver previously in the years, she also worked

at a psych unit. And so when I came home, I told her, she’s like, “Yes.” Because before it was all no, no, no.

All these ideas I had, but this would actually align for both of us. It was like, “Okay, this is the path.” Of

course, as an investor, uh I was thinking high level. Do the numbers make sense? How does all this work? But once

you get in this, uh it it changes you. There’s just no way you cannot change once you understand the impact. the need

out there. Yeah, I think it’s the perfect combination of there’s such a crippling

shortage already of beds com and that’s now and it’s projected to get much much

worse over the next 10 to 15 years. So you just see even those stats at a high level and you and you realize like okay

this isn’t just doing something that’s a feel-good which it absolutely does feel good. It’s also solving like a big

problem that’s already a problem and it’s soon going to be a crisis is kind of how I I think of it. And you’re right, once you

see it, you can’t unsee it. And uh it really does bring all four of those things together like you said. And and

one of my favorite things you said is, you know, your wife being really bought in and um interested in p pouring into a

business like this, which may or may not have been the case if you did something like a self- storage or um you know, a

big multif family building, right? It just feels different to work on a project like this where you can really measure the impact by the quality of

people’s lives and you can see that on their on their face when when you’re delivering good care. So I love that.

What kind of roles are the two of you planning to take in this business? So as

far as the operations, uh we are going to work we’re going to work in the business. I mean sorry we’re going to

work on the business, not in the business, right? So we’re going to manage the managers. We’re setting up

all the policies and procedures making sure that we hire correct from the top

down. When I say correct or hire right is again as we all know here this is a

different uh type of care. It’s not just somebody that needs a job. We need someone that has a heart first of all

and then from there you can train them. And so that’s our our main goal. Make sure that we lead from the top down that

compassion why we’re doing this. At the end, we want to make sure that I am

proud to have my mom there, my father-in-law, mother-in-law, right? This is why we’re doing this. And so,

with that in mind, uh we are continue to educate ourselves and learning more

every day. We do want to get the through the uh classes of the state of Oklahoma,

but at the end, we do want to hire administrator, a professional that understands this uh to hang their

license in the home. But yes, lead from the top down. Very nice. and tell us a little more

just about the project in general. Uh whatever numbers you’re kind of willing to share is like the size and the kind

of the scale. Uh and then we’ll get into the deal side too. But just at a high level, you know, what are we looking at

with this with this project? Yes. So these are 216 bed. They’re about 9200 ft

uh on 3 acres. And so uh we’re dividing those into two lots. Uh these will be

24-hour care. uh two caregivers 24 hours a day. Uh we will have a private chef

and administrator uh to oversee uh the homes. Um so yeah, according to the area

here in Oklahoma, these are the first 16bedroom homes uh because we do have a

no more than five unrelated adults for and to stay residential. Then from there

you just see bigger homes or the example uh one of my LPS she owns two of these

homes uh that are licensed tan beds but they are zone commercial. So if we’re

going to go beyond the five then we have to go commercial. So that was the original okay if we’re going to go

commercial then how do we make this work? And so finding the sweet spot, understanding the rules or regulations

and all the ordinance of the city, that’s where we decided that the 16 bed model is the right place, the right

model for us. It’s a bit of a math problem, isn’t it? Right. When we were trying to figure out

what’s the right size home to still capture the the feeling of of being at home, but also that makes financial

sense because like you mentioned, it’s a 24/7 business and 24/7 365. you have

payroll that entire time. That’s easily the biggest and probably most um

significant expense as far as if that goes, you know, super overbudget, then

all of a sudden it really impacts the rest of your business and and the way that you can run it. So, um you know,

that’s the 16 bed makes sense because that’s how much revenue you can use to support the business. Uh you might if

you have a couple less beds, you still probably need the same amount of staff. So, I don’t know. Correct me if I’m

wrong, but I I viewed it almost as like a math problem you have to solve in order to be able to provide the level of

quality that you’re looking for. Would you agree? Definitely. And so that’s why when I found out cuz originally when we took

the training uh uh from the raw academy, we came back home thinking, okay, we’re

going to do a 10. That was our original. We didn’t know how. We didn’t know exactly what we needed to do. But then

looking understanding of what we could do here is five beds. Five bets will not work. You literally need to work in the

business to make that uh work. But then we’re trying to elevate the the level of

care, pay better wages, right? Better treatment. And so how do you make it work to where it’s a win-win for

everyone in the home is yes, it’s a math problem there. And so the 16 bed is the

great uh break even part point because if you go 17, then it’s also different

building codes, right? different requirements that you’re now having to address where the 16 is still a home

field residential model. Yeah, absolutely. And a lot of this stuff varies significantly state by

state, too. So, that’s another thing. Um, you know, as we’ve launched our project and people reach out to us and

ask about the idea of doing this in their own home state, a lot of it is so specific that of course, you know, we

you can provide the generalized framework, but I think what you’ve done and is been able to go and really dig

into your local market and figure out what’s the best situation. Like you said, you’re even bringing something new

to the market there. There’s no homes of that size. There’s probably no homes of that quality. Well, now you get to bring

something new to the market that you already know there’s a demand for and it’s going to meet with your local um

not only regulations, but also just built for the community that you’re in. Have you already been spending a lot of

time um building relationships locally with other either operators or

professionals that you know you view as good long-term partners for for this business? Yes, actually a little uh some

of the operators mainly right now it’s more of the operators because uh understanding how the homes are running.

I we’re part of a local uh it’s called Oklahoma Senior Living Association and

through them is where I’m doing more of my education as well and understanding like going to the boot camp and how the

other assisted living are being uh ran here in the state. But yes, like definitely every state is different,

every city is different. So when I had to go looking for uh what was the demographics or where is the place that

I was going to select my homes it yes had to go read all the different ordinance of every city and it’s ah

interesting so it was a very uh sharp learning curve but luckily uh having the

engineering mindset that to me is just give me requirements and I’ll get it done right. Uh the one thing I had to be

learn is to be patient cuz I’m used to giving requirements. You give me a tight schedule cuz typically you don’t give an

engineer long schedule cuz you never stop overdesigning, right? So getting into the city’s uh meetings of zoning.

Uh now we already went through plan commissioning. Uh just the process of the review cycle, how long it takes to

me it was like wow that was a learn how to be patient because I thought it was going to go a lot faster than I was

expecting. Yeah. That is absolutely true that you know pretty much it’s already a long

timeline even if things go well and then um inevitably there’s always going to be

curve balls along the way. So there’s a there’s a level of emotional resilience and patience that you have to build and

some of it you can only build once you’re going through it. Have you enjoyed the journey so far? Have there

been like is it mostly uh been a positive because you got such a strong vision and dream or have you felt any

kind of challenges as you weather the the choppiness of such a long path? I’ve actually enjoying it. This is the

why I feel more passionate about it because when I was doing the passive investment the uh single family I just

saw myself as an investor. Right now that I’m doing this, I actually have this drive and passion for it that

honestly it’s my exit strategy for my full-time job because I now see the possibilities of being able to do more,

learning how to become a developer, learning how to become an operator. And now also, of course, the third side to

the opering of the equation is learning how to raise capital, right? I wasn’t envisioning

originally to do that because like we were thinking just a small tamb we’ll do that ourselves but then as you start

learning and growing and understand the opportunity there and bringing others involved others to take advantage of the

opportunity then that’s when you start to see hey why don’t we this share this with others as well but yeah I wasn’t

envisioning myself having to raise capital yeah absolutely well I mean it’s a big it’s a big bold vision but there’s

so much upside and so much opportunity and more more importantly Certainly like we’re saying impact as well. So why

don’t you tell us a little bit about the uh the deal? So what what is the opportunity kind of where are you at in

that process and um you know what would you want an investor to know if they were considering it?

Yeah, definitely. So uh what we’re doing is uh we’re raising capital for both homes. So we’re doing them as two

separate asset class. I mean uh sorry we’re doing them as two separate classes. Uh so class A is one of the

homes, class B is the other home. is the exact same opportunity for both classes. It’s just two separate uh homes and so

it is open to accredited investors and so at this moment what we are looking for is limited partners. So any

accredited investors that are looking for a pretty good return uh we do have a landing page we can uh send uh um our

investors go look at that information but yeah very very uh competitive returns because I understand is a

different asset class for a lot of investors. this is new uh senior living and also of course because we’re ground

up um so it’s a very uh good opportunity to take advantage because uh a lot of

times uh when investors come into this space um you feel like we can do this we

want to go do this and a lot of people have the passion at the beginning but as you heard here at the beginning there’s

a lot to it there’s a lot of moving pieces and reality it does take um a

passion and the time invest to make this work. And so some of us are out there

actually in the day-to-day making it work where my full-time job now feels like a side hustle, right? Because I’m

totally invested in this opportunity here where this is where I’m excited to give the passive investors or if someone

that feels overwhelmed. There’s a lot to this. Well, you can still join us. Come be a part of this. Then you can start to

see how we can make it work to where now you to feel more comfortable to go do your own opportunity as well.

Yeah, absolutely. I’ve always loved that dual benefit, right? One is that people who are passionate about contributing to

the solution to this big problem. This is a way they can do that, right? They their their capital will go directly

into financing a project that will go help fill that shortage of beds that we

were talking about earlier. And of course, they have the opportunity to get a healthy return as well. So it kind of

they are also getting a front row seat to watch you and your wife build this business and how all the the journey of

doing that the different phases you know development is a uh challenging road

again not only just from an execution standpoint but emotionally it’s a lot of ups and downs and as a passive investor

you get to benefit from the returns that come with a project like that without having to go through all the potential

anguish and ups and downs right Pedro will go through that for you definitely and then excited because I

mean the appraisal on these homes uh wow they they really outperform um so that

that’s a good thing about it that the NOI is very uh good that gives more value to these uh this asset class. So

if someone is interested uh they should really consider it look into it and partner with those that are doing this.

Today’s episode is brought to you by the Remote Real Estate Academy, the community I launched last year where I personally coach investors and empower

them to buy rental properties anywhere in the United States. My business partner Nathan and I have a collective

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starting today. Go to remoterealestateacademy.com for more info or better yet shoot me an

email at aaronaramine.com with subject line ra and I’ll throw in a

special bonus for podcast listeners who join the academy. Now let’s get to the show. Can you share a little bit about

so it’s a development project and I think most investors when they hear that they think well great I’m not going to

get paid for a couple years. What are the different ways in which you structured the return profile? So, some

people look to refi after a few years and do a lump sum payment. Some people focus on heavier cash flow. What’s your

kind of approach and and um desired outcome for your investors? Good question. Because uh investors

sometimes are looking at the cash on cash, right? Is if I’m going to put the money in the deal, how much cash on cash

will I see? Because it is a new development. We are projecting a 15-month construction and then 9 months

to stabilize. So that’s two-year uh period that you can see little to no cash flow but we we make up that at the

uh later side we make that up at years 3 four and five by giving higher cash on

cash returns there. So, for example, if we’re projecting an 18% 18.5, then when

you divide that by the five years, you’re talking about 11.7, right? Cash on cash, which is uh pretty good uh for

a a project that started from the ground up. Uh also, uh the it is a 5-year

commitment. So there is also uh the upside like I was mentioning the equity that we do go and refinance the property

in uh 5 years at that point and uh the investors get a percentage of that

equity as well. So you’re getting the benefit of a double digit plus projected cash on cash

after the development peri actually averaged across the entire hold period. If it once stabilized, it’s a healthy

double digit, right? It’s closer to 20%. And uh it’s all backed by equity. I think that’s the part that a lot of

people don’t necessarily have they have a harder time visualizing that hey, you’re getting these really healthy cash

distributions, but you’re also you’ve engineered all this equity from developing, right? Like, yes, it’s

expensive to develop, but you probably are creating uh quite a bit of additional forced appreciation just from

day one. And then of course the better you run the business, the higher the returns, the more uh value that that

cash out refi will get you. So there’s just so much opportunity for upside in a

deal like this. I know we always project and um try and be conservative and cautious with the bed rates we choose,

but the the tailwinds in this industry are just enormous. And um I imagine

you’ve got more than one way to probably hopefully beat your beat your projections that you’re talking about.

Oh, definitely. And so yeah, I base my perform uh $500 less than the market bid

rate for uh RALS around here, the residential still living. And so that’s

that they’re not uh memory care. We will be memory care. So that again it’s an upside there uh on on the bed rates.

Reality the market will drive that. But yeah, it’s it’s a higher it’s projected,

right, that we will see higher than what the performer is actually conservatively said to. Yeah, absolutely. What else

would you think people would be interested in knowing about um you know, so in my mind the some of the bigger

risks that I love to get out to the open so that people can consider it are construction uh and then you mentioned

the lease up period and then of course stabilization. So like what are some of the bigger challenges that you see

happening in each of those phases and then uh you know what’s kind of your plan? Yes, from the ground up of course having

the right uh bank uh the right general contractor and having the correct oversight uh to make sure that the

project is going to be a success. Uh so that’s the the construction side. As far

as the uh lease up, we are going to start doing tours during construction once it’s safe. get those professionals

that are involved on the day-to-day that can bring us uh refer us to the residents, get them involved and then uh

our goal is to be 40% uh occupied. Of course, we have to be careful how we

start to move in our families into the our residents to the home because we don’t just want to open up and then the

house is full day one, right? We need to be because of our culture, our model is we want to personally know everyone and

have understand what they like, don’t like, how they uh see their day-to-day. So, it’s going to be a gradual uh

filling of the home for that reason as well. And so, that’s the intent uh to be

able to partner with the local uh professionals to make sure that they can

uh refer us to their uh our potential residents. Yeah, it is a multi-phase process,

right? There seems like your reward for getting to the end of one challenging phase is to enter another one. And uh

with each phase comes a whole new set of of challenges. But one thing I’ve loved,

you know, I’ I’ve only known you for a brief period of time, Pedro, but the entire time I’ve seen you, you’re you work very hard. you’re at everywhere you

can be to learn and take in the information and meet new people and operators and get all this different

perspective so that when it’s time for you to open your doors, you’re going to be pulling from a range of people who

have done this successfully before. But what would you say is kind of the the number one thing that you’ve done so far

that is going to prepare you for this moment when you guys are finally ready to open?

I think that is that’s that’s the key there. I’ve been networking a lot intentionally

uh to understand uh how I envision our home and so I literally can envision it

now. it’s I know it’s going to be years down the road but ever since day one when I was fully committed once I

realized that the need is there. That’s when I I I decide you know what uh I don’t know what I don’t know and I do

not expect others to know it for me even though there are professionals out there I cannot expect that they uh how can I

hold somebody accountable if I don’t even know how to hold them accountable for something right and so that’s why I took upon myself to go learn it uh again

I’m not going to be working in the home but I want to learn and know understand how our home is ran run from the top

down Right. Understanding all that has really been been a very good opportunity and that’s the the driver just seeing

the multiple avenues of how to make this different uh is really what’s given me

the drive hearing a lot of people’s different perspective and putting it into okay uh now I see how this is going

to be different how we’re going to make sure uh or how we implement what somebody else is doing because it works

and things like that. It’s why it’s exciting. Yeah. You know, one unfortunate outcome

of of doing a lot of research on this industry is that the bar is very low. Uh there’s, you know, there’s a lot of

facilities and homes out there that don’t do very good marketing. They don’t have personalized sales motions, right?

They’re not actually they’re they’re trying to show off their home. They’re not really talking about the care or they’re not really talking about the

person. the the bar that we have to clear to stand out and distinguish ourselves is um is not that high. And so

just being as hardworking and diligent and like committed as you are uh you

know to me this feels like an inevitable march towards success over the long run,

right? Like there will always be bumps along the way but this industry is so there’s so much tailwind behind it.

There’s so much demand. the bar is low from competitors. Uh for those who can

walk this path, the multi-year development, which is no easy walk, uh

the reward should be commensurate with that with that risk. So definitely I do

want to add on to that because when you’re saying the low bar is unfortunately the assisted living out

there right now are the alternative is the big box, right? And so they themselves understand that they have to

pivot. What was working for the uh silent generation is not going to work for the baby boomer, the most educated,

the wealthier, the wealthier, right? They want choices. And so they’re going to the assisted living, the big

facilities. They’re going to have to find a niche. They’re going to have to find better care. They’re going to have to change their model. And that’s why

we’re able to run our homes where our managers or ministers are actually in the home, not corporate office across

the street or across the state. They’re actually in the home dayto-day. So yeah, uh we do provide the alternative op uh

niche that uh it’s very easy like you said to stand out on that side on it’s

all about the resident. How do we provide the level of care that we want for our loved ones? And again, if we’re

changing society here, the way uh assisted living is, how do we want it for us when we get there, right? Making

that culture change to where we want better when it’s then our turn as well.

Absolutely, ma’am. Well, the world needs more operators who are willing to do some of this hard work to really

acknowledge this problem and meet the moment head on. And I’m grateful that you and your wife have chosen to take

this path. And I hope that you find all the success and prosperity and impact that you’re looking for. If people want

to learn more about the investment opportunity or just learn more about your business in general, what’s the best way for them to reach out and find

you? Yeah, so just a quick guide I have is uh they can text uh the word guide to

4052469921. That’s guide 4052469921.

And I’m also on Facebook and LinkedIn. So that’s way great way to connect with me.

Very cool. And I’ll just say it again. I’ I’ve uh I’ve watched Pedro just go relentlessly uh while you know he’s got

kids, he’s got a job, he’s got all sorts of stuff going on, but he is putting in the work. I will tell you that. And I’ve

been really impressed and happy to get to know you and uh excited to see this project come to life.

Great. Thank you. Appreciate it. You bet, man. And we’ll put all that stuff in the show notes. Everyone, please reach out to Pedro if you’re

interested and we will catch you next time. Great. Take care. Thanks. Thank you for making it to the end of

today’s episode. As you may know, podcasts are very difficult to grow organically. If you’re getting value

from today’s episode, I’d deeply appreciate if you can take 30 seconds to leave my show five-star rating and

review. This will go a long way to helping me reach more listeners just like you. Thank you so much in advance.