Why Studio Apartments Outperform Bigger Units (Real Estate Strategy)

Antonio de la Torre (00:00)
Yes, so well well why why do we focus on on studios, loft apartments, like really, really, really small apartments. We notice and this is I think actually is gonna be something really cool for for for future investors in real estate. If you start thinking about a big apartment or a big house, if you see the price per square feet is usually much lower. And when you have a small unit like a studio apartment, you see that the price per square feet is much higher.

you can compare both apartments in the same area. It also depends on other things, you know, like if it’s a luxury apartment, not a luxury apartment, etc. Amenities as well. But if you start saying the size, as the apartment gets smaller, you start seeing that the price per square meter is usually higher, right?

Cody Crabb (02:15)
Welcome back to the Real Estate Pros podcast by Investor Fuel. I’m your host, Cody Crabb, and today I’ve got Antonio de la Torre with me. Antonio is a real estate developer based between Miami and Guatemala City, where he builds and operates boutique multifamily projects using US style systems in a fast growing market. Today we’re going to talk about how he got started, what makes Guatemala City unique, and how he’s creating value through smart development and long-term ownership. Antonio, thanks for popping on the show. I really appreciate it.

Antonio de la Torre (02:43)
Well thank you so much. Thank you for having me here.

Cody Crabb (02:45)
So just to start out, can you give us a little bit of background around, you know, your history? You you just mentioned before we started recording, you’re a busy guy and it’s all awesome, very impressive stuff. So give us a little of of your history and how you kind of became how you came to be in the in the real estate industry.

Antonio de la Torre (03:05)
Yeah, for sure. So basically I was I started reading books. I think that this is the most important thing that got me intrigued. Today we got a lot of podcasts just like this one to to learn about real estate. but I started reading books and I started seeing that how you can create a lot of capital with little capital, starting with real estate. you can build a lot of equity, you can sell a unit and make some equity. So basically I started with one apartment.

I spoke basically with my dad at the beginning and I was like, Hey, I really want to jump into real estate, like help me out here. I wanna buy this apartment, I wanna fix it, and then I wanna sell it or rent it. that was my first project. It was in a key location. I did all the analysis to like have a zero-miss investment. I bought the apartment, I fixed it, then I rented and then I sold it. And I made it from that from that project I made like around 30k profit wise. And that’s when I decided, okay, I’m jumping into real estate. Like this is where I want to go and now I want to develop. That’s how everything started.

Cody Crabb (04:13)
Yeah, I think that’s cool. Well, yeah, I love that. You kinda you proved the model, you started to kind of dig in and do this. so talk to me about your strategy. So you know, you it’s it you’ve you’ve kind of been focusing on smaller studios and lofts. why does that work so well in your market? What makes that unique there?

Antonio de la Torre (05:22)
Yes, so well well why why do we focus on on studios, loft apartments, like really, really, really small apartments. We notice and this is I think actually is gonna be something really cool for for for future investors in real estate. If you start thinking about a big apartment or a big house, if you see the price per square feet is usually much lower. And when you have a small unit like a studio apartment, you see that the price per square feet is much higher.

you can compare both apartments in the same area. It also depends on other things, you know, like if it’s a luxury apartment, not a luxury apartment, etc. Amenities as well. But if you start saying the size, as the apartment gets smaller, you start seeing that the price per square meter is usually higher, right?

So that’s why a lot of devel developers start in big cities, they start developing the old apartments, they are usually really big.

And then the modern new ones, they’re usually really small. New York is a perfect example of this. A lot of people live in studio apartments because the price per square meter starts getting like so condensed in these cities, right? Yeah. So that’s when you start getting a a good target. So basically, what we say is we we saw the opportunity in Guatemala City, we saw a lot of developers doing large apartments still because of a developing city. And we said, okay, we want to tackle that prime location with a small apartments.

So it’s gonna be a small development, a boutique building, that’s what we do with a small apartment. So we’re gonna have a lot of equity. And we see it in the appraisals all the time. Like we we do the appraisal of the of the buildings and the apartments, and we see that their price per square meter is really valuable. Like it’s more valuable than a big apartment. And we also see that mirrors with the rents as well. Like your rent per square meter is much higher.

So if I can give you a comparison, there’s a luxury apartment right now in Guatemala, I will say the top one, a really small apartment. And we we compare both rents of one studio apartment and this luxury apartment right now in Guatemala City, and we rent almost twice higher as higher our studio apartment than this apartment. This is a two bedroom of apartment, the one that I’m comparing with my studio apartment. But when you start seeing these numbers and you present this to the bank.

Then the bank becomes intrigued as well and they say, Okay, you you’re you’re into something, you know.

Cody Crabb (07:37)
Yeah, and so did so is that mainly like location? Is it the size of the unit? Is it the design? Like what what is it that allows you to do that?

Antonio de la Torre (07:46)
I you’re actually you’re you’re asking the the perfect question. The but the first one I will say location, location, location. Like sure you will say of course you you need a great location. We try to aim for locations. We we also do short-term rentals, so we try to aim for locations that tourists can come, rent the apartment, and they can walk around, right? Not everyone has a car, not everyone wants to ride the public transportation in a third world country. So that’s one of the things. I’ll say location is a is a big thing.

Then we go to the size of the apartment like we just talk about right now. A small apartment is key for these high rents. And then in the other hand, we go with modern luxury vibe. we try to aim for a really nice vibe, really modern apartment so it can attract people. And they say maybe it’s not the biggest apartment that I that that I really wanted, but this is more modern. So people sometimes they prefer a really modern studio apartment.

Than a big old three-bedroom apartment, for example. There’s people that prefer the other one. There’s people that prefer space. There’s people that prefer this location, a modern apartment. So that’s why we go for this niche, right? So a small apartment, modern apartment in an amazing location. That’s what we try to aim. Those three big things are the ones that we look for.

Cody Crabb (09:34)
Mm. So I’d be curious to know, you I mean, you’re you said you’re kind of you’re moving to Miami, you’re gonna be in Miami, and and you’ve been before and you’re familiar with the states. I’d be curious to know kind of what you see as I’m sure there’s massive differences in the real estate industry, but what are some things that you kind of you think people don’t really understand or don’t know about investing somewhere like Guatemala?

Antonio de la Torre (10:00)
Something like Guatemala, what what would you say? What what what can you repeat the question?

Cody Crabb (10:04)
Yeah, so what is what’s something that people in the United States may not know about the real estate industry abroad or specifically in Guatemala?

Antonio de la Torre (10:13)
Yeah, well something that you will not know probably is first, if I can like summarize to three things, three major things. First is that Guatemala is a growing economy. it’s growing much higher than than the states. GDP is growing for the last 10 years at four percent. the city infrastructure, if you come here, you you’ll notice it. I encourage anyone to travel here and and check it out.

Second of all, something that you might not know, all the rents and all the sales in Guatemala from real estate are in dollar currency. So it’s a really stable economy. I will say really stable sector. They decided to do these developers a long time ago. So all the projects in Guatemala you will see like they’re for sale in US dollars. Also rents as well, which is something that protects the asset, right?

Cody Crabb (10:46)
interesting.

Antonio de la Torre (11:03)
Because we see these currencies a lot along in in Latin America, they they devaluate, you have so much inflation, you say, like, I don’t want to put my money here. But then you come to Guatemala and you see the US dollar and you say, like, okay, I pay my rent in dollar, I do my projects in dollar, like I buy my apartments in dollars. That’s when you say, okay, it’s it’s it’s got some background. There’s actually a lot of people from the states that do invest in Guatemala in real estate. But that’s that’s another thing. And then another major thing is that

If you develop or if you buy and you rent to the international market, and we have a big international market, that’s why I will say 60% of my buildings are rented for short-term rentals. And that’s all the international market. We got people from Japan, we got people from Norway staying in our studio apartments. They love it. They they come back, they stay for a month. Sometimes it’s expensive to be in their countries than working from home here. And they travel around. We got digital nomads as well coming so.

That’s the industry that I’m also trying to to attract here in a great location, of course, in a modern modern apartment.

Cody Crabb (12:06)
Hmm. So if somebody from the US hears this and they’re like, I that’s this sounds interesting to me, what would you maybe tell them what what would make them a a not good fit to invest in Guatemala or maybe just even outside the United States?

Antonio de la Torre (12:23)
I will say it depends what you’re looking for. Like I will say you gotta run your numbers as well. Like if you’re gonna invest in Guatemala in any project, I will say, even in the States. the good thing here is that you use the US dollar, so you can really run numbers pretty smoothly. you can calculate the return, you can calculate the the investment. But I will say if you want to invest in someplace, get familiar with the market. Like get familiar with the tourist data.

get familiar with the rents, with the stability, with the currencies, et cetera. What you said something that will not will not be a good fit for a US investor, you said, right? I will say if you’re not familiar with the market, I will never invest in a market that I’m not familiar with. Like if I don’t know Guatemala, if I don’t know someone from Guatemala like me, that is in the business that can really get you started and like clarify every single question that you have, I will definitely not touch that market.

Cody Crabb (13:18)
Hmm. Yeah, I mean I I think that’s I think that’s wise. Obviously that’s good advice anywhere, but especially somewhere like that where, you know, people hear like cheap land and they wanna go do anything they can to get it, but it’s more complicated than that. so another thing I wanted to ask you. So for younger investors that are listening or people that are less experienced, you started pretty early and kind of went from one apartment to kind of full development.

s really quickly, what do you think you did right early on?

Antonio de la Torre (14:30)
Well that’s that’s a fantastic question. And thank you for asking that question. I think I think a big one was I was with my girlfriend a long time ago. We started ten years ago. And when I was twenty five years old, I graduated from my from the university in the UK. I came back to Guatemala and I saw all this potential to do. I live in a studio apartment in the UK, by the way, for four years. That’s when when the entire inspiration started with

With investing in this. I said, like, I can really live in a small space, you know? I don’t necessarily live a big space. I’d rather have a small modern space than a large one. That’s when I started saying, like, I prefer my studio in the UK than my house in Guatemala. That’s when I started saying, I’d rather have a small, modern place than a than a big one. And I think at some point I decided to, I said, like, I had nothing to lose. Like

The bank is gonna borrow me money. I have to make the whole finance to make this work. Let’s see the worst case scenario, let’s see the best case scenario. Let’s run it with my dad. My dad was my my mentor at the point. And he told me there’s like zero risk with this one. So that’s why I decided to go with the with the first apartment. But for the development, there was more risk there because you’re developing. Like, but I think I just said it’s now or never.

And that’s why I jumped in. I I just said it’s now or never. There’s nothing to lose. I’m not gonna do it when I have kids. I’m not gonna start this when I have kids because it’s gonna be more risk. But right now I have nothing to lose. I live in my parents’ house right now. So let’s just go.

Cody Crabb (15:58)
Why not? Yeah. Yeah. Why not? Yeah. I love that. I always something I always hear is you know, you could fail at something you don’t want to do. So why wouldn’t you try to just do the thing you do want to do? Because you could fail either way. So, you know, might as well fail trying to do something that that is exciting to you and is kind of reaching for your dreams and goals. this has been really interesting. Yeah, seriously, yeah. I think people

Antonio de la Torre (16:21)
Fail, right?

Cody Crabb (16:25)
People put so much on well, I was just talking to someone yesterday actually and they were talking about education and they said, you know, if you go to a a university, you’re gonna spend tens of thousands of dollars, sometimes even hundreds of thousands of dollars, depending what you’re doing, for an education. And so in real estate, like they they actually said, like, just think of that first jump as your education. You’re gonna you’re gonna you might lose tens of thousands of dollars, but it’s the same as

if you were going to school, you’re not gonna get a return on your investment when you go to school. and so y you even have a chance is less risky than that because you actually have a chance of getting some of that back. So yeah, I think that especially for the people that are on the less experienced side or the younger side, like, y you know, do your homework and and f figure out what you need to do, but then just go for it. I mean, I there’s no there’s no reason to to hold off. There’s there’s always a better time.

You know, the t the right now is always there’s always a reason not to do something right now.

Antonio de la Torre (17:26)
Absolutely. And and I will add to that that you’re saying that such a really that’s really a really good point. I will say like if you’re gonna you’re thinking about jumping at some point, let’s say you’re 25 years old and you’re thinking about like buying maybe a duplex or a two-bedroom apartment and you think it’s a good opportunity because it’s under market value, you can also jump in with someone, you know, you can dilute your your risk as well. You can take a calculator risk, you can hop in with a few friends and say, Okay, you know what, let’s give it a try. Let’s try this, like let’s

run the numbers it sounds like it works let’s go for it let’s buy this apartment let’s fix it and maybe let’s sell it maybe the upside is not gonna be as big but like you’re saying the learning experience like how do you value that and when you have a big learning experience then you’re gonna say like in the next one maybe I’ll go by myself and then you start there right it’s like a little snowball like what you’re saying you’re gonna learn so much from one project what you’re not gonna learn from is if you never jump

Well you can jump with a few of your peers, you know?

Cody Crabb (18:23)
Yeah, true. And and if you find someone that can kind of guide you and help you through it at the same time, all the better. well this has been really interesting. Thank you so much for for coming on the podcast today. if people want to connect with you, find out more about what you do, work with you, how can they find you online?

Antonio de la Torre (18:41)
Absolutely, Cody. I’m opening my my my company, my my my my digital marketing company. It’s called The Compound Club Official. I think that’s where you guys reached out. we share information as well about real estate and also other investment fields, but they can contact me there. I run that company and that’s basically my my social media. That’s where I can get access to.

to anyone and I’m happy to help.

Cody Crabb (19:11)
Awesome.

Well, it it sounds like this sounds like you’d be a great resource for our audience. So I really appreciate that. thanks so much for for coming on today. it’s really interesting to look at a market that we you know you don’t really know a lot about that’s and I think something like that small unit strategy is a really useful takeaway. I could see people using that here in the US as well. so th so thank you for for sharing all that. And thank you, listeners as well. If you got value from this, make sure you’re subscribed so that you don’t miss the next conversation like this one. we’ll see you next time.

And Antonio, have a good one. We’ll see you later.

Antonio de la Torre (19:43)
Thank you, Cody. Thank you so much.