Hosts: Ronn Ruiz and Martin Canchola, Co-Founders of ApartmentSEO.com 

Guest: Dan Norville, Founder and CEO of Vivo Investment Group/Vivo Living

Martin: Welcome to The Multifamily Podcast with Ronn and Martin, brought to you by ApartmentSEO.com. Now, today we’re exploring some innovative transformations in the multifamily industry. We are thrilled to have Dan Norville, founder and CEO of Vivo Investment Group and Vivo Living, joining us to discuss the revolutionary concept behind Vivo Living, everything they’ve been up to and how they’ve been turning heads with their unique approach to creating a high standard in luxury living, by converting hotels into vibrant residential communities. Welcome to the Multifamily Podcast, Dan.  

Dan: Thanks, Martin, Ronn, great to be here.  

Ronn: Absolutely. So it’s truly a pleasure, Dan. I’m grateful that we were able to finally schedule this. Thanks for taking the time and I’m truly excited for our listeners to hear about your inspiring journey. So welcome. 

Martin: Yeah. And before we really kind of, you know, dive into the first question, I had like a preliminary question just to kind of give our audience a little bit of a background. What would you say when it comes to Vivo investments versus Vivo living, what’s kind of the purpose and mission for each company? 

Dan: Sure. It’s a great question. Vivo investments is the investing arm, the capital markets arm, the development company arm of the platform. And then Vivo Living specializes in the operations and day to day management of the properties, creating the communities, the training, the taking care of the people, if you will. So the money and the people. 

Martin: Perfect. Perfect. So let’s start from the beginning. Can you share the inspiration behind Vivo Living and how the, even the idea of converting hotels into luxury apartments came to be?  

Dan: Sure if I go all the way back, I guess my story is I grew up in lower end apartments with my, mom working for the state of Arizona and bouncing from one to the next playing the special deal of the month kind of deal of the year leasing specials. So you know, kind of grew up in that space, in the workforce housing space. Always thought that it could be better. There was more opportunity to improve that. So that goes all the way back. But most recently starting the company 2018, 2019, was really the impetus of converting hotels into apartments. I was doing a lot of hotel investing 2013 to 2018. One of those hotels in Ogden, Utah was prime, a prime candidate for converting the use to apartments. The market was really strong for blue collar housing, very high occupancy, large units. So got that idea and went in and put in the kitchens, converted the use. It took about six to nine months to do the construction and then only about a six month lease up period. And we realized there’s a lot of demand for this and it’s not hugely difficult if you have the right team to convert these projects into housing.  So from there, we jumped on it and went, really went for the gusto and 35 projects later here we are. 

Ronn: That’s amazing. So obviously you said 2018, 2019. I’m sure a lot of it was during the global pandemic too, right? So that’s no small feat. What challenges did you face when launching Viva Living and how did you navigate those obstacles?  

Dan: Yeah, I think we’re getting into another tough time right now. We’re kind of similar to 2020 with commercial real estate and the bid ask spreads were tough, right? Values were careening downhill in 2020, especially for hotels, but it was also hard to make a deal because you had to have these hotel owners understand that the value wasn’t where it was. And that was the value to us in getting a cheap raw material, right? If you look at us that way. So the hotels are the raw material, the apartments come out on the other end when we’re done with them, right? That was tough. Building the team and growing was also difficult. Obviously, at the time, the remote work, all of the things that any typical company would go through. We had had those challenges and those growth pains during that time period. But it created the huge opportunity for what we are today in terms of the buying opportunity. 

Martin: Yeah, no, totally. So Viva Living strikes a balance between offering top notch affordable housing and at the same time creating luxury living spaces. How do you actually maintain this balance while fostering a community driven environment?  

Dan: Yeah, I would say it’s class A and luxury amenities at an attainable rent price point is really our pitch. We can come in there, and because of the cheap raw materials, we can put a lot of money into them, make them nice. Get in and touch pretty much every square inch of the project. Enhancing the kit, putting in kitchens with solid surface, stone countertops, you know, stainless steel appliances, all the fun accoutrements that you’d expect in a really nice environment. We get in there and we do that. And because of our methodology, we’re able to deliver that at a price point that fits the renter profile that we go after. And then on top of that really training our team what our mission is, the team understanding what our mission is and successfully carrying that out to enhance the lives of those in and part of our communities is really at the forefront people first approach. So we’ve got, we want to take care of our team members and we want to take care of our residents and community members in the same regard. So giving them a great deal in a great place to live while also providing great benefits and great opportunities for advancement within our team really is the way to pull it all together in our mind and make it work.  

Ronn: That’s amazing. I love that people first mindset as well. We try to stick with that. It makes for a win, win, right? For the client and the employee alike. So what, obviously you’ve spoken a little bit about it, but I’m really excited more to dive a little deeper about what makes a Viva Living property stand out in your opinion. Obviously you are the architects of it. Could you describe maybe some of the design features, amenities, you know, to distinguish your properties from what we know to be traditional multi family. 

Dan: Yeah. From a design standpoint, we infuse local art into every project. We hire local artists to do murals at the projects, 1, 2, 3, 4, 5 murals. It just depends on where it is and what the canvas looks like for the artists. But we infuse that into everything we do. And it really provides the vibrancy for the community that we want, a vibrant community. We have furnished units.  We also have operationally, the really interesting is the ability to walk right in. You don’t have to set up anything, your utilities, your cable and internet, everything’s there. You walk right in, you can move in same day and have everything set up for you. You don’t have to worry about it. You pay one bill at the end of the month, very simple, very accessible for everyone that wants to come in. So feel like living, you know, you get the hotel environment of the ease and the nice, relaxing environment of a hotel, but we set it up so that it’s actually a residential environment as well. 

Ronn: That’s awesome.  

Martin: So, you know, thinking about this, you know, I know like when it comes to taking a piece of raw land, putting up an apartment building, especially like such a large one, I would imagine it’s, it’s a lot cheaper and a lot more efficient to find a hotel that might be struggling and kind of go through that whole transformation process. I mean, I’m totally, I’m so interested to kind of hear more about that. Can you walk us through how a hotel is converted into a VIVO living apartment community from a hotel?  

Dan: Yeah, it’s quite the process, but we’ve gotten better and better at it over the years in terms of the experience that the amount of turns that we’ve done of this and, no project is alike, but our process is as alike as we can get it, to make it efficient to make it a process that everyone knows what the marching orders are can move towards that drumbeat. But it’s case by case and depends on the municipalities that you’re in. It depends on the layout of the property, the existing infrastructure of the property, all those things that we have to identify and look at up front with our teams with our construction teams to understand what we’re getting into. But at the end of the day, we really take this assembly line approach. We’re vertically integrated. We’ve got a highly skilled and trained team that go to every property. We can self perform the construction on these things, have actually our teams live on site because they are hotels, live in the hotel rooms while we’re swinging hammers and doing all the work. And that’s been a huge moat and benefit for us, because we go to markets that we don’t have relationships, right? And when you don’t have those relationships with subcontractors and general contractors, it’s very difficult to get good pricing. It’s very difficult to leverage any relationship because you don’t have one. But we bring our people along and keep those costs down, so we can pass those savings along to the ultimate end user, which is our residents and their communities. But it’s, you know, it starts with identification and part of that identification process is making sure you’ve got the zoning and the right things with the city and the municipality. And that’s where a lot of people get tripped up. And it’s an area that we’ve had to learn and become experts in land use internally over the years, because you just never know that x factor of what the city might require, what an inspector might require when you go through this process. And that’s generally, the most difficult areas that we experience in the procedure. 

Martin: Do you have like an average conversion time, like how long it takes to go from hotel to apartment. I know it can vary widely probably. 

Dan: So there’s really two main product types right an extended stay hotel already has kitchens in it, and it’s a cleanup. So, that is, we did 600 units in less than 60 days in North Carolina, in an extended stay portfolio January and February this year. That goes quick, but we are swapping out flooring paint, cleaning up the appliances, putting in the amenities, but it does go much faster. When we have to put in a kitchen, we have to add a new mechanical electrical plumbing runs that does take time, but our teams are really good. And when they get onto the site, we actually have a permit. We have the material sitting there. They can knock out 150 unit hotel conversion in about 90 to 120 days.  

Ronn: Wow. That’s amazing. So what about the, I was going to ask you about zoning, when you were talking about like the repurposing and stuff, but zoning also. Does that going from a hotel to a multifamily, does that change the zoning?  

Dan: Hopefully not. That’s our pitch is that we get into a project that’s already a hotel, that has the land that is zoned by right for multifamily and meet our density of units, meets our parking requirements that we’ve got no issues. But that’s a needle in a haystack, so we’ll look at over 2000 hotels a year. And basically close a very small, less than 1 percent of those will actually work all the way through, price zoning other factors. So you have to really search farm wide to find that and try and get that risk dealt with.  We have done rezonings. It’s not our favorite thing to do. You’re talking 9 to 18 months, but you know, sometimes it justifies it because you’re getting a really good deal and that sellers willing to give you the time. But that is something that we look at intently. We don’t like to take or choose to take zoning risk when we buy a property, we close on a property. Now, you already have enough risk with the use risk, the code risk, the construction risk, the permit risk, right? That’s enough. So we choose to not give ourselves extra. 

Ronn: So with all that being said, I mean, obviously there’s a lot of thought put into it before and a lot of excitement, but how are the residents and more importantly, not more important, but how are the local communities reacting to this repurpose of these hotels? 

Dan: Well, I would say the communities are extremely happy, especially the neighbors in the communities. We had a one example as great as we had a project that had previous, in the previous year over 180 police calls at the hotel. We came in and within the first six months of our ownership that went to zero police calls and a drug ring around the hotel prostitution, all kinds of, you know, fun extracurriculars going on that should not have been happening there, obviously, but it was just terrible to see. And we felt really good about this location. It was more family oriented location. So obviously when we came in there and took that out of the equation, sort of doing background checks. And we went to monthly rentals because we weren’t fully converted yet to apartments. So we started providing flexible housing solution with 30 day rentals, but we would do background checks and, you know, all of that. So it made it a very safe and clean environment immediately when we got in there. And so obviously the community loved that, you know, didn’t have to worry about driving down that street anymore. Didn’t have to worry about the helicopters flying overhead and all the other fun things that were associated with that. So, the residents from their perspective, the resounding thing is the team, the community, the community, the community, right? And us training our teams on site and that people first approach they love what they do. The property manager loves what they do. The staff, the leasing staff also really enjoys it. We have fun with it. We pay well, we give good benefits. So they like to be part of this atmosphere and environment and that trickles down to the entire community and part of the residential base as well, planning fun events and games and workouts and all of those. So anyone can kind of say that, but I’d say that, right, if you’re a class A ground up apartment manager, you can say that you that we create great communities, but you don’t have the altruistic mission that that we do. And that really changes people’s Ethos environment, right? We’re picking up people that want to be in the mission of providing attainable housing that never existed to a market. We’ve provided over 5000 units of attainable housing that never existed before. There’s no other way to do it in the private markets that we’ve identified in such efficiency or scale that we’re doing this year. So the team understands that and understands that mission and what they’re part of. And that really, I think, imbues us to a certain caliber of person coming on to our team working for us and then also living with us. And again, we provide a really great value. We’re 10, 20 percent cheaper than anything in the market when we deliver. So it’s up and down the board, you know, a really good result for the entire group of stakeholders.

 Ronn: That’s a great win, win.

Martin: I love just your background, your mission, you know, it all stems together so you know there’s a big need for just more affordable housing across the board, so being able to do that is a big shift for our industry. So sustainability, right. It’s a significant concern in today’s world. What role does it play for Vivo living in regards to development and operational practices?  

Oh man, this is near and dear to my heart. I was out surfing this morning and saw some dolphins breaching and, you know, I want to keep seeing those dolphins for the rest of my life and their, my kids and their kids and grandkids, et cetera. So, yeah, very important to what we do. And when I first started the company, one of the first podcast interviews I did, I mentioned that we’re a building recycling company and that’s really simply what we are. We take this old building and we recycle it and we don’t throw it in a landfill. If we did throw it in the landfill, we’ve done the studies. It’s about 4, 100 tons of waste property that would be going into the landfill for this functionally obsolete hotel. That’s atrocious, right? And not to mention the embedded carbon, the cement, the other things that are in that project from when it was built 90s, whenever it was built. It also polluted the environment at that time. Then we throw it in a landfill. Then we go build a new ground up on top of it with even more carbon emissions. So it’s really a very efficient way in terms of the green aspect of it. We also, you know, there are certain complaints about the size of our kitchens or what the kitchens are. I wouldn’t say they’re complaints, but people say, why are the, so, you know, small and, you know, not as equipped as you’d see in a fully built out kitchen in a larger new build apartment complex. Well, number one, most of our units are studio apartments and our renter base is young and are out working at their bar job or driving their uber. They’re not cooking Thanksgiving dinner for 12 and their little 350 square foot apartment. So it fits for what it is. And we don’t get a lot of complaints from the residents at all. They get it and we do have a convection oven microwave. They can cook in it. We have a two burner induction cooktop. So it’s everything you need as a single or maybe double occupant, you know, project, but the big thing for that is that we’ve engineered a very efficient kitchen setup that is highly green too. So we keep it that way for a reason. We don’t put it in a garbage disposal. We don’t put in a dishwasher and we don’t put in a full range because any one of those things would tip us over to a point to where we have in most of our projects, we would have had to redo the entire electrical infrastructure of the building, which would have added huge costs, huge time delays, all kinds of things that come with that, that our competitors do it all the time. And they can tell you all about how painful it was for them. But because of how we engineered it and because of the loads that we’re putting on the system, the existing system can handle those loads without having to reinvent the wheel. Therefore, we keep our costs down, keep our rents down, deliver a more in a more streamlined and fast approach to market. And it’s again, that win win for everyone we think.

Ronn: That’s definitely amazing. When you were talking about the property type, I was thinking in the back of my head. Some random question is like, do you guys ever combine the units to make like a two bedroom or even a three bedroom or have you found some hotels, motels that had that already? Like a suite? 

Dan: Sure. The extended stay hotels do have a mix of studios, one bedrooms and two bedrooms. There’s still preponderance of the units are studios. However, when we look at the math on it, it doesn’t work for us. And it doesn’t work for the renter to combine a unit. Because let’s say you combine two units to get a one bedroom. That one bedroom is going to be more expensive. You’re not going to get a lot more occupancy in it. You can still do one or two people within that one bedroom, most likely. But you’re going to be paying 40, 50 percent higher in rent for the one bedroom. Sure. You get more, but it’s more expensive. And for us even we’re not going to get double the rent for that one bedroom. So it actually becomes less efficient for us as an ownership group. And doing the efficiency studio units actually is the most cost effective, highest return on investment from our investment standpoint. And to be able to provide the lowest rent possible to the resident base. 

Ronn: Yeah, it definitely, I mean, it leans into like the efficiency. I mean, that’s the term that we use, right? But the efficiency of just living, right? We don’t need these big spaces, right? The more we aspire to have like a bigger home, it’s like we literally, how many rooms do we use in bigger home, right? 

Dan: Exactly. And there’s a huge trend towards that. Obviously, the adoption of these efficiency units, the efficiency housing, the smaller living and we’re fully part of it. 

Ronn: Yeah, I see Martin shaking his head. 

Martin: Tiny living is in, man.  

Ronn: Martin’s all about that. Like I aspire for the bigger and he’s like, dude, I can’t wait to get my container.

Martin: Just give me a tiny cabin in the woods. I’m good.  

Dan: I like it. 

Ronn: Yeah. But with that being said, I mean, this kind of leans into the next question, which we had was, what about with the increase in remote work obviously, how is Vivo living adapted to the spaces to meet the renters need, obviously in a studio, could be a little bit smaller. Do you have that work home office environment? But what are your thoughts on that?

Dan: Yeah, I mean, obviously we were a, you know, the company is a pandemic baby. So we came right into the heavy remote working environment. And we thought about that as we were engineering our communities and how we wanted to set up these projects. So we partnered with a large national provider on WiFi cable Internet services. Every deal we do, they come in there, they upgrade the Wi Fi throughput, you get huge, you know, capacity older, hotels didn’t have that, right? So every one of them, we have to spend a good amount of money up front recabling the internet infrastructure, make sure it’s top notch for our resident base. And then also providing these co working spaces, lobby living rooms, I like to call them. So spaces to get out of your small apartment, your efficiency apartment, and go work by the pool, go work by the barbecue patio area. Go work in the co working space in the law in the former hotel lobby that’s now the co working and lobby living room. So, we’ve thought we’ve been thoughtful about it, made sure that there’s those breakout spaces for that remote work environment and indoor outdoor spaces. And again, if you think about a hotel, they’re laid out for leisure and luxury, and we use all of those spaces in that regard. 

Ronn: Yeah, that’s definitely smart. 

Martin: So looking at the markets, what are some key areas Vivo living is targeting and how do you choose which hotels to convert? 

Dan: So I think the biggest part of where we’re looking, in terms of our investment strategy has to do with demographics. We’ve been big in the Carolinas because of the population growth dynamics that are happening there, the supply and demand imbalances.  But we also have to keep in mind where are there a lot of functionally obsolete hotels or where the hotel market is suffering, it’s not great. But yet the residential population is growing and people are coming to those areas, not for necessarily hotel purposes, but for living purposes, right? So it’s balancing those two factors. And we’ve studied where that is and where it makes sense. The Carolinas being a big one, Florida somewhat not so much, Texas as well. But each one has their own nuances of Kind of issues that we have to go through and it changes year by year. The carolinas were very development friendly and they’ve kind of swung a little bit more the other way recently and they’re starting to grow their building departments and their overviews and everything that they look at, so it just, it changes and we have to roll with the punches and where it goes and where the need is but at the end of the day, they have to have the right, they have to have the right price and they have to have the right zoning. And so we’re looking all over the U.S. to fit that needle in a stack approach. 

Martin: And ideally, you want to get there before your competitors do right? nd have that, you know, have that advantage there. 

Dan: Absolutely. 

Ronn: What competitors? They are doing the best. 

Dan: We don’t have any competition as my head of construction likes to always say.

Ronn: Exactly. What. Yeah, no. And I mean, my next question is more about like your plans for expansion and growth and where you see the company heading. But I mean, the way I’m truly inspired, actually, when I was going through your website, I was like, Vivo Investment Group, sign me up,  because I truly believe in the concept. I think this is amazing. I’m just, I’m picturing some of the hotels and motels I’ve driven by, to your point earlier about, you know, some of the things that I used to have a house in Palm Springs, and there was some really cool little old school, you know, probably, you know, brat pack type motels that existed back in the day. And I’m like, that’d be so cool to repurpose. And I was thinking this before I even knew a vivo, this was like, you know, eight years ago and I just, I would love for you to come into those markets. So my question is what’s your plans for expansion in the coming years and where’s the company headed? Like are we doing short term rentals also like disrupting the Airbnb space? Anything like that?

Dan: Yeah, no, it’s a great question. And Ronn, let’s get out to Palm Springs. I love getting out there and I agree with you. Like that market needs it and it’s getting beat up enough to where maybe we can buy. We’ve tried before, but the hotel market was doing too well, but there’s a huge worker population there for all those resorts that have to live far away from where they work. And that’s a big part of our pitches.  Live where you work, right? Because these hotels are well located and it’d be really fun. We could do some mid century, you know, tricking out of these old rat pack deals. I love it. 

Ronn: Yeah, totally.

Dan: Yeah, but yeah, we do need scale. That’s another issue, right? So being over 100 units is generally are kind of our threshold. And so that is tough in some of those markets as well because we need the efficiency of the scale and operations management and construction, but growth plans for the coming years is, we’re just really trying to get our message out to the masses. And I think where we’re headed and where we’ve been recently is. Some of these projects where a group was trying to convert a hotel to apartments, didn’t have the background and experience that we did failed and in some regards, lenders maybe took back the properties were helping those lenders out with converting those finishing the process, other developers to finish the process. So I said also early on, we’d like it to be the, called the Hilton of residential right and have a brand and a presence. And I think in terms of franchising or growth or joint ventures, our experience and know how with having done over 5000 units of this 35 projects, is triple or quadruple anybody in the industry. So, you know, let us help you. You know, if you have a project, a hotel, let us help you convert that into housing and lend our expertise, right? Of course, we’re still going to be an investment company, first and foremost. But we think there’s a lot of opportunity to do this as a third party offering as well. And bringing our expertise and the management, the construction. And grow it that way, even franchising joint ventures, things of that nature, but lend our brand name and our experience in a bigger way to do 50, 000 units, not five. 

Ronn: For sure. Are there any tax benefits to our incentives that you’re getting out there, for some of these conversions because of your rental rates?

Dan: There are, and they’re coming in more fully. We just got a check in South Carolina, a refund of previously paid property taxes for 200 grand. That was a nice deal. 

Ronn: Don’t make the opposite, right? 

Dan: Yeah, we have an 80 percent property tax abatement on that property for years to come now, because we’re naturally occurring affordable. We don’t have to even worry about restricting the rents. We’re already by design cheaper than what they, the max rate that they said we had to be. So all we had to do is submit an application, work with a local nonprofit, submit the application. We were automatically approved and we got, you know, our previous year’s property taxes back. And this year we don’t have to pay, we only have to pay 20% of what we paid last year. So there are those incentives and we know how to work them and California, the Carolinas, Texas, there’s certain states and hopefully more to come that are adopting this. 

Martin: Yeah.  Man, this was a really fun podcast. Yeah. I love the whole concept. I love your story. So thank you again for joining us and, you know, giving us your time today. 

Dan: Of course.

Martin: Yeah. We’re getting close. We’re pretty much at the end now. So, Dan, any final thoughts before we wrap it up?  

Dan: No, it was really great, you know, catching up with you guys and going through this and trying to, trying to spread the Vivo word for the evolution.

Martin: Vivo brand is going to be key in this environment. And I think you guys are on our way to some major success and even more in the future, so kudos to that.  

Ronn: I think I’ve had a goosebumps half this call because I’m truly inspired. And again, I’m going to be poking around and maybe we can talk on a different call about the VIG; Vivo investment group. 

Dan: Absolutely. 

Martin: Oh, yeah. No, we’re definitely gonna want to talk on the side. So Dan, again, thank you so much for joining us today and giving us an inside look at Vivo Investments and Vivo Living. Please audience check them out at vivoliving.com and to our listeners, be sure to just, you know, subscribe to the podcast. You can check us out at MultifamilyPodcast.com and get your free marketing analysis from ApartmentSEO.com. Until next time, keep innovating and keep thriving in the multifamily industry. Bye y’all.  

Dan: Later. Thank you.  

Ronn: That’s awesome.