WEBVTT 00:00:00.000 --> 00:00:03.060 Ever wonder what really happens behind the scenes 00:00:03.060 --> 00:00:05.400 in construction, real estate, and development? 00:00:06.000 --> 00:00:08.220 We pull back the curtain on the new home construction 00:00:08.220 --> 00:00:11.060 industry, the real estate market, and the trends 00:00:11.060 --> 00:00:14.080 shaping it all. Discover the stories, insights, 00:00:14.259 --> 00:00:16.239 and expertise behind the process of building 00:00:16.239 --> 00:00:19.640 a new home. Join us for Trust the Process podcast, 00:00:19.739 --> 00:00:22.480 and let's build something great together. Welcome 00:00:22.480 --> 00:00:25.239 back to Trust the Process, the podcast where 00:00:25.239 --> 00:00:28.399 we talk about real estate, new home construction, 00:00:28.600 --> 00:00:31.960 the housing industry, and everything in between. 00:00:32.359 --> 00:00:35.060 Glad you joined us today. We are going to talk 00:00:35.060 --> 00:00:38.859 about disruptors to the housing industry, an 00:00:38.859 --> 00:00:41.280 industry that is somewhat stable and has been 00:00:41.280 --> 00:00:43.460 for obviously many years and kind of how we got 00:00:43.460 --> 00:00:45.619 here and some of the things that could disrupt 00:00:45.619 --> 00:00:49.140 that or have disrupted that over time. That it's, 00:00:49.259 --> 00:00:52.619 it is a difficult industry to disrupt. So go 00:00:52.619 --> 00:00:55.960 ahead and take it from here. I know you've, you've 00:00:55.960 --> 00:00:57.539 thought about some of the things that have over 00:00:57.539 --> 00:00:59.600 time. You felt them, the impact of those as a 00:00:59.600 --> 00:01:01.759 broker. Certainly you recognize sure, sure. I 00:01:01.759 --> 00:01:04.060 mean, now as the builder developer, you're able 00:01:04.060 --> 00:01:06.260 to really feel the impact of those disruptors 00:01:06.260 --> 00:01:08.620 or, or not feel them, right? They aren't able 00:01:08.620 --> 00:01:11.079 to make it. Something should be disrupted, right? 00:01:11.180 --> 00:01:14.319 There's, there is. So I wanted to talk about 00:01:14.319 --> 00:01:17.150 this topic because it feels like. in the last 00:01:17.150 --> 00:01:20.849 decade or even five years, almost every industry 00:01:20.849 --> 00:01:24.650 has been disrupted in some way with new entrance. 00:01:24.670 --> 00:01:27.109 I mean, you don't get a taxi cab anymore. You 00:01:27.109 --> 00:01:30.670 get an Uber. You don't buy your own groceries. 00:01:30.730 --> 00:01:35.390 Sometimes people go to Instacart. Insurance is 00:01:35.390 --> 00:01:38.629 all on the phone and even self with mobile. There's 00:01:38.629 --> 00:01:41.750 just all these kind of new entrants that have 00:01:41.750 --> 00:01:45.120 been kind of clawing at the old guard. of not 00:01:45.120 --> 00:01:47.140 only the old guard of companies, but also the 00:01:47.140 --> 00:01:50.060 way that we used to do things. And there was 00:01:50.060 --> 00:01:52.180 this big push. I feel like COVID kind of was 00:01:52.180 --> 00:01:55.579 a great reshuffling and a lot of things were 00:01:55.579 --> 00:01:58.299 attempted to be disrupted. And I think there 00:01:58.299 --> 00:02:00.519 was a lot of appetite for investment and risk 00:02:00.519 --> 00:02:05.000 at that time. And people loved, investors and 00:02:05.000 --> 00:02:07.819 venture capitalists loved the idea of disrupting. 00:02:07.900 --> 00:02:10.780 They just want to disrupt everything. Facebook 00:02:10.780 --> 00:02:13.599 disrupted the friendships in more ways than one, 00:02:13.620 --> 00:02:15.819 but it just kind of rethought everything. And 00:02:15.819 --> 00:02:18.120 Google disrupted search engines. I mean, if you 00:02:18.120 --> 00:02:20.460 think about the original angels of Wall Street 00:02:20.460 --> 00:02:22.620 and the tech sector, they were disruptors, right? 00:02:22.680 --> 00:02:28.300 They did an old thing and reimagined it. So I 00:02:28.300 --> 00:02:30.560 think that for a while, I remember even before 00:02:30.560 --> 00:02:34.310 COVID. As a broker i saw a lot of attempted disruptions 00:02:34.310 --> 00:02:36.449 in the real estate industry and real estate market 00:02:36.449 --> 00:02:40.569 kind of sales market and it was to almost a more 00:02:40.569 --> 00:02:43.610 remote everything in that period seems like it 00:02:43.610 --> 00:02:46.689 went from being very connected right into a more 00:02:46.689 --> 00:02:49.229 to click to sell your home yes right sell your 00:02:49.229 --> 00:02:51.770 home and for virtual tours. available, you know, 00:02:51.770 --> 00:02:54.250 you were doing, you know, walk throughs with 00:02:54.250 --> 00:02:56.490 people on their and many times not even selling 00:02:56.490 --> 00:02:58.569 the home on the open market, you would go to 00:02:58.569 --> 00:03:01.469 open doors portal signings that would come to 00:03:01.469 --> 00:03:03.469 you. I mean, a lot of stuff just or even just 00:03:03.469 --> 00:03:05.490 sell your home directly to one of these guys. 00:03:05.490 --> 00:03:07.569 Yes, that had all this private equity and all 00:03:07.569 --> 00:03:10.490 this venture capital behind them. And these companies 00:03:10.490 --> 00:03:12.909 were losing 10s of 1000s of dollars per house. 00:03:13.069 --> 00:03:15.409 If you factored in their admin costs or holding 00:03:15.409 --> 00:03:19.900 costs, the debt carry Um, it was a really money 00:03:19.900 --> 00:03:23.039 losing venture. And I, I, we knew when the industry 00:03:23.039 --> 00:03:26.199 and Vegas was a, was a target for that as a growing 00:03:26.199 --> 00:03:29.439 city that has a pretty. Consolidated housing 00:03:29.439 --> 00:03:31.020 market. We don't have a lot of suburbs, right? 00:03:31.099 --> 00:03:33.500 We're just kind of one giant suburb. So was it 00:03:33.500 --> 00:03:37.199 easy for a hedge fund to. to kind of get in there 00:03:37.199 --> 00:03:40.139 and brand it as, oh, we're, we're open door. 00:03:40.139 --> 00:03:41.659 No, I'm gonna get in trouble for saying company. 00:03:43.360 --> 00:03:46.900 I'm going to say all of them. So then, you know, 00:03:47.020 --> 00:03:48.979 they can't get a lot of one off guys just with 00:03:48.979 --> 00:03:51.240 some money in their pocket that we're doing that. 00:03:51.360 --> 00:03:52.840 Well, I'll buy your home. I don't care the condition. 00:03:52.979 --> 00:03:55.000 I'll buy exactly. And again, talk about disruption. 00:03:55.319 --> 00:03:57.479 That model has been around forever. Oh, direct 00:03:57.479 --> 00:03:59.259 wholesale. People have been wholesaling property 00:03:59.259 --> 00:04:02.370 forever. but it was kind of taken to another 00:04:02.370 --> 00:04:04.550 level and they tried to bring in automation. 00:04:04.550 --> 00:04:07.050 I remember Zillow was really proud of having 00:04:07.050 --> 00:04:09.550 AI software that could detect from photos you 00:04:09.550 --> 00:04:11.870 sent in what kind of kind of upgrades you had. 00:04:11.889 --> 00:04:14.569 And if your color palette was on par with, they 00:04:14.569 --> 00:04:17.910 were trying to automatically, you know, trying 00:04:17.910 --> 00:04:20.589 to automate the valuation of homes, but they 00:04:20.589 --> 00:04:23.189 were making good on that number because they 00:04:23.189 --> 00:04:25.689 were buying them directly. They had an instant 00:04:25.689 --> 00:04:27.790 offers portal that you would put in your home, 00:04:28.430 --> 00:04:31.180 photos of every room. descriptions and they would 00:04:31.180 --> 00:04:33.779 pull everything else from the tax record and 00:04:33.779 --> 00:04:37.180 many times they wouldn't even have a person a 00:04:37.180 --> 00:04:39.899 human being representing that company until the 00:04:39.899 --> 00:04:41.500 very end they'd walk through and say is the house 00:04:41.500 --> 00:04:44.439 still here okay there we're giving you five ten 00:04:44.439 --> 00:04:46.560 for it it says here do you want to your worst 00:04:46.560 --> 00:04:49.639 he's still good with this and they buy it and 00:04:49.639 --> 00:04:53.389 of course The biggest surprise of the century 00:04:53.389 --> 00:04:56.310 is that that didn't work out. And it turns out 00:04:56.310 --> 00:04:59.269 you can have artificial intelligence value homes. 00:04:59.470 --> 00:05:01.610 There's too many other factors. I remember they 00:05:01.610 --> 00:05:04.230 would even say, well, we can detect if where 00:05:04.230 --> 00:05:06.350 it's at, if it's close to a street or we're going 00:05:06.350 --> 00:05:09.769 to give, okay, well, can your AI detect overhead 00:05:09.769 --> 00:05:13.610 power lines? Can your AI detect that that school 00:05:13.610 --> 00:05:16.050 is about to rezone next year? Maybe that affects 00:05:16.050 --> 00:05:18.649 its value. Can your AI detect that? It might 00:05:18.649 --> 00:05:21.310 look good in photos, but it's not really, you 00:05:21.310 --> 00:05:23.050 know. Or even the dynamic of the family. You're 00:05:23.050 --> 00:05:24.670 getting too old for the stairs now. Can your 00:05:24.670 --> 00:05:26.910 AI detect that? Right. AI detect that, you know, 00:05:27.009 --> 00:05:28.649 mom's expecting a new baby and the family's growing. 00:05:28.730 --> 00:05:30.569 They will need another bedroom. So some of those 00:05:30.569 --> 00:05:32.550 things that are... You can't. Right. You just 00:05:32.550 --> 00:05:34.370 can't. Yeah, reflective of an actual person, 00:05:34.889 --> 00:05:36.629 human. That can kind of have that dynamic. That 00:05:36.629 --> 00:05:39.089 can happen in the human context. To me, it was 00:05:39.089 --> 00:05:42.050 an answer to a question I know one asked. Right. 00:05:42.310 --> 00:05:45.670 I want to sell my biggest asset. With no work, 00:05:45.670 --> 00:05:49.170 you really don't want to do anything and did 00:05:49.170 --> 00:05:51.069 sell your biggest asset. You don't want to talk 00:05:51.069 --> 00:05:52.550 to multiple people. You don't want to get multiple 00:05:52.550 --> 00:05:54.769 opinions. You don't want to do a little bit of 00:05:54.769 --> 00:05:57.389 rolling up your sleeves and do some things to 00:05:57.389 --> 00:06:00.009 get more out of the house. I mean, okay. There's 00:06:00.009 --> 00:06:02.170 a subset of people that want to be early adapters 00:06:02.170 --> 00:06:04.209 and they love seeing an industry is disrupted. 00:06:04.310 --> 00:06:08.670 And that was their audience and it costs them 00:06:08.670 --> 00:06:12.720 handsomely. And of course we saw that. Prop up 00:06:12.720 --> 00:06:14.680 and add fuel to the fire of the real estate market. 00:06:14.680 --> 00:06:17.139 It was a speculator that came into the marketplace 00:06:17.139 --> 00:06:21.220 effectively and acted as a backstop because you 00:06:21.220 --> 00:06:22.879 always had a Zillow offer. You always had an 00:06:22.879 --> 00:06:24.959 open door offer. So if you knew, you know, you 00:06:24.959 --> 00:06:26.379 knew that, okay, I'm going to put the house on 00:06:26.379 --> 00:06:29.060 the market, but I always have this, I could, 00:06:29.139 --> 00:06:32.740 I always have this other exit if I have to. So 00:06:32.740 --> 00:06:34.639 not only does it create scarcity because it took 00:06:34.639 --> 00:06:36.879 a lot of homes off the market and took them out 00:06:36.879 --> 00:06:39.879 of the general circulation and it would take 00:06:39.879 --> 00:06:42.439 them. sixty ninety hundred days to turn them 00:06:42.439 --> 00:06:46.259 back over depending on how much they did. And 00:06:46.259 --> 00:06:48.420 that time kept those doors out of the circulation 00:06:48.420 --> 00:06:52.379 and caused even a tight market even get tighter. 00:06:53.139 --> 00:06:56.139 But moral story with the disruption to the brokerage 00:06:56.139 --> 00:06:59.000 business we've seen that try to disrupt and with 00:06:59.000 --> 00:07:01.839 varying degrees of success I feel that to give 00:07:01.839 --> 00:07:05.060 them credit Zillow has wildly disrupted the real 00:07:05.060 --> 00:07:07.759 estate market and I think in almost. every good 00:07:07.759 --> 00:07:11.579 way possible. It gave buyers a lot more authority, 00:07:11.819 --> 00:07:15.100 gave buyers a lot more knowledge of the market. 00:07:15.300 --> 00:07:18.699 Buyers can watch kind of how everything's trending, 00:07:18.759 --> 00:07:22.600 but more than that, sellers also know. Many times 00:07:22.600 --> 00:07:25.699 a broker's going to walk into a house and a seller's 00:07:25.699 --> 00:07:27.680 already going to know within 5 % of what the 00:07:27.680 --> 00:07:29.439 home's probably truly. That's how sales prices 00:07:29.439 --> 00:07:31.000 are set, right? You're looking at the comps. 00:07:31.379 --> 00:07:32.860 That's right. And the sellers are well aware. 00:07:32.860 --> 00:07:35.790 Those resources online look really great. That's 00:07:35.790 --> 00:07:39.230 right. Right. So it really democratized the whole 00:07:39.230 --> 00:07:42.230 housing market to where brokers did not hold 00:07:42.230 --> 00:07:47.389 all the info and the amount of data just in photos 00:07:47.389 --> 00:07:49.389 of homes. I mean, you, you don't even need to 00:07:49.389 --> 00:07:51.389 go bring your neighbor a jello mold anymore because 00:07:51.389 --> 00:07:53.589 you've already seen 55 photos of their house 00:07:53.589 --> 00:07:55.870 before they bought it. So, you know, your neighbors 00:07:55.870 --> 00:07:58.709 know your house as well as you do in many ways. 00:07:58.709 --> 00:08:01.970 Right. So it just kind of was a, was in my opinion, 00:08:02.009 --> 00:08:04.850 a great positive disruptor. made a great, a wonderful 00:08:04.850 --> 00:08:08.209 database. It's, it's great as a builder to advertise 00:08:08.209 --> 00:08:10.470 on those kinds of platforms. And it was great 00:08:10.470 --> 00:08:13.610 as an, as a broker to leverage those and see 00:08:13.610 --> 00:08:15.790 a lot more. I felt like it created a lot more 00:08:15.790 --> 00:08:18.769 liquidity in the market. But what I wanted to 00:08:18.769 --> 00:08:21.009 talk about more than any of that was the disruption 00:08:21.009 --> 00:08:24.930 in construction and how that has our disruption 00:08:24.930 --> 00:08:29.069 in housing supply, but more or less. So not just 00:08:29.069 --> 00:08:31.529 disruption and construction, but disruption in 00:08:31.529 --> 00:08:34.120 just the kind of homes we have. how they're built 00:08:34.120 --> 00:08:35.960 and how they're delivered to us, right? How do 00:08:35.960 --> 00:08:39.159 we, how do we add rooftops to a city? How can 00:08:39.159 --> 00:08:43.419 we disrupt that? And there's a lot of chatter 00:08:43.419 --> 00:08:47.100 about tiny homes and prefab, manufactured homes. 00:08:47.519 --> 00:08:50.899 And again, that's taking an old science. So if 00:08:50.899 --> 00:08:53.179 you look at it, I'm not going to say a name because 00:08:53.179 --> 00:08:55.139 they're a Las Vegas company, but they've kind 00:08:55.139 --> 00:08:58.720 of made that a sexy thing, a prefabricated home 00:08:58.720 --> 00:09:03.419 and it unfolds and it's, I mean, Looks like a 00:09:03.419 --> 00:09:06.360 construction trailer. But that's just my opinion. 00:09:06.600 --> 00:09:09.860 It's not opinion. It's not my taste. But I see 00:09:09.860 --> 00:09:11.539 where their vision of their company is going. 00:09:11.539 --> 00:09:15.259 And I come in and admire them for it. And again, 00:09:15.259 --> 00:09:16.960 I think it you know, spawned out of that kind 00:09:16.960 --> 00:09:19.860 of COVID disruption type attitude. And I think 00:09:19.860 --> 00:09:22.940 a lot of the funding behind it, I feel was probably, 00:09:22.940 --> 00:09:26.220 you know, the result of all that. And I think 00:09:26.220 --> 00:09:30.279 that you look at how challenging construction 00:09:30.279 --> 00:09:33.899 has been to disrupt. And almost every other industry 00:09:33.899 --> 00:09:37.539 has been disrupted in some way. And even being 00:09:37.539 --> 00:09:41.000 a player in this industry, I cannot picture how 00:09:41.000 --> 00:09:43.700 it could be adequately disrupted. How do you 00:09:43.700 --> 00:09:48.059 disrupt adding rooftops to cities? How? One would 00:09:48.059 --> 00:09:51.299 argue, build them in factories. Okay, well now 00:09:51.299 --> 00:09:53.600 you have freight costs, shipping costs. What 00:09:53.600 --> 00:09:55.840 about onsite inspections? What about permitting? 00:09:56.360 --> 00:09:58.919 How does that look? Are those homes built in 00:09:58.919 --> 00:10:02.429 a factory three states over? economical to ship 00:10:02.429 --> 00:10:05.470 three states? Or do they meet local billing codes? 00:10:05.629 --> 00:10:07.909 Do they meet local tastes? Do they meet, do they 00:10:07.909 --> 00:10:11.470 fit law and site specific issues? And all we've 00:10:11.470 --> 00:10:13.409 done is recreated the mobile home. After all 00:10:13.409 --> 00:10:16.049 that, after all that mental, after all that intellectual 00:10:16.049 --> 00:10:19.269 horsepowers expended. Oh wait, all we did is 00:10:19.269 --> 00:10:22.610 recreate a mobile home. So you think, okay, well, 00:10:22.649 --> 00:10:25.070 factory built homes aren't the way to go. Uh, 00:10:25.070 --> 00:10:27.690 not to cure, you know, housing supply crunch. 00:10:28.269 --> 00:10:31.470 Um, okay. What about prefabrication? What about, 00:10:32.049 --> 00:10:34.950 okay, we just fabricate homes and sections. Well, 00:10:34.950 --> 00:10:36.570 then you're kind of getting the worst of both 00:10:36.570 --> 00:10:39.409 worlds. You have all the issues and tribulations 00:10:39.409 --> 00:10:42.509 and trials that come with a full factory bomb 00:10:42.509 --> 00:10:46.370 that's shipped on site. Now you have homes being 00:10:46.370 --> 00:10:49.950 transported with the wall missing, right? It's 00:10:49.950 --> 00:10:53.289 wrapped. And then the onset crew is dealing with 00:10:53.289 --> 00:10:58.070 a several ton, thousand ton, special equipment, 00:10:58.350 --> 00:10:59.830 special equipment, and then everything has to 00:10:59.830 --> 00:11:02.549 be such precision because the house was built, 00:11:02.549 --> 00:11:05.169 you know, to that exact foundation that you're 00:11:05.169 --> 00:11:07.529 going to plop it on. And now it has to be perfect, 00:11:07.529 --> 00:11:09.169 because you didn't just go from the ground up 00:11:09.169 --> 00:11:12.490 and site specific conditions that maybe, okay, 00:11:12.490 --> 00:11:15.090 the foundation was an inch over, it's okay, we 00:11:15.090 --> 00:11:16.629 just frame the house and then show it's fine. 00:11:16.830 --> 00:11:19.659 It's, it's Plus or minus is two inches in either 00:11:19.659 --> 00:11:21.779 direction is completely fine. It's built on site. 00:11:23.620 --> 00:11:27.299 And the problems that you solve, whether staffing, 00:11:27.460 --> 00:11:29.279 because people are just reporting to a factory 00:11:29.279 --> 00:11:31.539 and they're working 40 hours a week, building 00:11:31.539 --> 00:11:34.080 that home and you have multiple crews and they're 00:11:34.080 --> 00:11:36.639 not tripping over each other because it's framed 00:11:36.639 --> 00:11:38.480 on one day and it's just, it goes, there's no 00:11:38.480 --> 00:11:40.759 weather delays or nothing. Sick calls, you can 00:11:40.759 --> 00:11:42.840 staff it more appropriately. It's a lot safer 00:11:42.840 --> 00:11:45.620 most likely in that scenario than building on 00:11:45.620 --> 00:11:48.159 site. Uh, you don't have travel to the site, 00:11:48.159 --> 00:11:49.919 right? Some of these sites are hard to get to 00:11:49.919 --> 00:11:52.440 depending on where you're building. So it solves 00:11:52.440 --> 00:11:56.279 so many of those problems, but then it's, it's, 00:11:56.279 --> 00:11:59.100 it's such a blessing and a curse because you're 00:11:59.100 --> 00:12:00.539 okay. Well, now how are you going to get this 00:12:00.539 --> 00:12:03.879 stuff there? Is the city okay with it? For instance, 00:12:03.879 --> 00:12:06.740 uh, the city of Las Vegas, it's that we have 00:12:06.740 --> 00:12:10.460 a separate zoning overlay for manufacturers and 00:12:10.460 --> 00:12:13.059 the end is the zoning code. manufactured. So 00:12:13.059 --> 00:12:15.220 you can only go in certain manufactured homes 00:12:15.220 --> 00:12:18.399 in certain areas. And it's a little bit of an 00:12:18.399 --> 00:12:20.419 imbi as I'm not in my backyard, they say, Well, 00:12:20.659 --> 00:12:22.399 I don't care how nice there I don't want them 00:12:22.399 --> 00:12:24.519 here, right in my backyard, because they're all 00:12:24.519 --> 00:12:26.519 going to look, you know, the same and there's 00:12:26.519 --> 00:12:28.820 a negative connotation. Exactly. Some of those 00:12:28.820 --> 00:12:30.600 things that you have an element that I didn't 00:12:30.600 --> 00:12:33.100 want to live near. Exactly. Right. Long term. 00:12:33.120 --> 00:12:37.159 How does that look? And then there's just a there's 00:12:37.159 --> 00:12:39.840 a stigma attached to them. Okay, so we've covered 00:12:39.840 --> 00:12:42.419 that. Can't disrupt it by building homes in a 00:12:42.419 --> 00:12:45.379 factory, right? Then you get into it. I don't 00:12:45.379 --> 00:12:47.919 go more than a week without getting this question. 00:12:48.200 --> 00:12:51.220 What about tiny homes? People love tiny homes. 00:12:51.379 --> 00:12:54.080 I think there's some sort of a, almost a romantic 00:12:54.080 --> 00:12:55.919 novelty to them, right? They're so cute and they're 00:12:55.919 --> 00:12:58.000 so easy. And it's a, you know, it's a more sustainable 00:12:58.000 --> 00:13:01.080 lifestyle and size and minimalistic. And it's, 00:13:01.179 --> 00:13:02.720 you know, it's, there is, there is definitely 00:13:02.720 --> 00:13:06.100 a novelty about the tiny home right now. Oh, 00:13:06.100 --> 00:13:09.259 for sure. I think it's probably maybe generational, 00:13:09.299 --> 00:13:12.629 maybe Millennials that feel priced out of the 00:13:12.629 --> 00:13:14.629 housing market see a tiny home as their little 00:13:14.629 --> 00:13:16.830 slice of spend all of our time outside anyway. 00:13:17.490 --> 00:13:19.149 Right, right, right, right. Kitchens aren't as 00:13:19.149 --> 00:13:22.649 important to us. And I feel that it's a question 00:13:22.649 --> 00:13:27.110 that is it's so it's a romantic notion. It has 00:13:27.110 --> 00:13:30.590 cultural cache. And people maybe for all those 00:13:30.590 --> 00:13:32.909 reasons, people ask me about all the time. And 00:13:32.909 --> 00:13:35.509 when I go on a rant about how I wish I could 00:13:35.509 --> 00:13:37.210 build more affordable homes about, you know, 00:13:37.210 --> 00:13:40.019 I go through Which god bless our listeners to 00:13:40.019 --> 00:13:41.940 have had to listen to that many times because 00:13:41.940 --> 00:13:44.200 it creeps its way into every episode it feels 00:13:44.200 --> 00:13:46.259 like but then people say well, why don't you 00:13:46.259 --> 00:13:48.759 build tiny homes as if I can just buy a parcel 00:13:48.759 --> 00:13:51.440 and plop a bunch of tiny homes on it and Move 00:13:51.440 --> 00:13:53.320 on with my life and sell them to a bunch of happy 00:13:53.320 --> 00:13:56.980 buyers and it's not realistic So I wanted to 00:13:56.980 --> 00:13:59.120 talk about a disruption episode, but I also wanted 00:13:59.120 --> 00:14:02.519 to dedicate a good portion of it to tiny homes 00:14:02.519 --> 00:14:04.379 and a lot of times there's a lot of overlap with 00:14:04.379 --> 00:14:06.259 that too because a lot of tiny homes are factory 00:14:06.259 --> 00:14:08.639 built they're not site built many things there's 00:14:08.639 --> 00:14:10.799 also a stability question right i mean there's 00:14:10.799 --> 00:14:14.519 here in vegas we don't have major weather conditions 00:14:14.519 --> 00:14:17.799 but when you're building a structure that's been 00:14:17.799 --> 00:14:19.799 transported from elsewhere and even if you put 00:14:19.799 --> 00:14:22.419 it on its own foundation you're now more susceptible 00:14:22.419 --> 00:14:25.259 to hurricanes and tornadoes and floods and i 00:14:25.259 --> 00:14:28.080 mean some of those Natural disasters that come 00:14:28.080 --> 00:14:29.620 across other parts in the country. It's actually 00:14:29.620 --> 00:14:31.580 a good sec. It's actually a good little tangent 00:14:31.580 --> 00:14:34.220 There are things that when we pour a slab where 00:14:34.220 --> 00:14:36.120 we have straps that go all the way down basically 00:14:36.120 --> 00:14:39.700 to the footer and then those big metal straps 00:14:39.700 --> 00:14:43.720 get fastened to studs and the house the house 00:14:43.720 --> 00:14:47.019 kind of becomes As one with the earth as it possibly 00:14:47.019 --> 00:14:48.820 can but when you're building things separately, 00:14:48.820 --> 00:14:51.259 it's basically a monolith right a monolithic 00:14:51.259 --> 00:14:55.240 slab and then all these straps and rebar and 00:14:55.240 --> 00:14:58.379 tie downs and Bolts and things that keep the 00:14:58.379 --> 00:15:01.299 house together Aren't there in that setting and 00:15:01.299 --> 00:15:03.299 you're putting it on a crawlspace or putting 00:15:03.299 --> 00:15:05.080 it on a basement or something along those lines 00:15:05.080 --> 00:15:07.279 That you just you'll never be able to replicate 00:15:07.279 --> 00:15:10.720 that that that kind of sturdiness Yeah, there's 00:15:10.720 --> 00:15:13.000 just a durability that comes right building it 00:15:13.000 --> 00:15:16.080 ratcheting it right there in the ground. Yeah, 00:15:16.259 --> 00:15:19.700 so back to the concept of tiny homes when you 00:15:19.700 --> 00:15:22.399 think about I Have to explain this so many times. 00:15:22.399 --> 00:15:26.039 That's why I wanted to make an episode so Number 00:15:26.039 --> 00:15:28.980 one zoning though the zoning is you would have 00:15:28.980 --> 00:15:31.720 to have a lot of political will to change that 00:15:31.720 --> 00:15:34.320 zoning because Not only do we have minimum lot 00:15:34.320 --> 00:15:36.759 sizes. We have minimum setbacks many times We 00:15:36.759 --> 00:15:40.299 have minimum structure sizes to see you It would 00:15:40.299 --> 00:15:43.279 be illegal to build a 400 square foot home on 00:15:43.279 --> 00:15:45.440 that lot. There are certain size requirements 00:15:45.440 --> 00:15:48.139 Maybe it's 1 ,500 maybe it's a thousand and that's 00:15:48.139 --> 00:15:50.299 saying the lands not in any kind of HOA or kind 00:15:50.299 --> 00:15:52.299 of has any kind of special conditions that way 00:15:52.299 --> 00:15:56.980 so That's strike number one, right? You can't 00:15:56.980 --> 00:15:58.980 put it in somebody's backyard. That's the name 00:15:58.980 --> 00:16:01.080 is a lot of other people think too They think 00:16:01.080 --> 00:16:03.899 well, I have a truly we're not gonna get a pool, 00:16:03.940 --> 00:16:06.620 but we're gonna put it. That's right Yes, now 00:16:06.620 --> 00:16:09.519 you become from single -family zoning. Yes. Now 00:16:09.519 --> 00:16:12.820 you have two domiciles on that parcel and the 00:16:12.820 --> 00:16:15.059 city does not like that again back to this In 00:16:15.059 --> 00:16:17.299 congruent with the zoning. So yes, you can have 00:16:17.299 --> 00:16:19.159 it. So a little hack will do here if we do build 00:16:19.159 --> 00:16:23.100 homes with casitas is that you can't have a stove 00:16:23.100 --> 00:16:25.440 which is strange to me that for whatever reason 00:16:25.440 --> 00:16:27.860 the county dictates you can have a bed a shower 00:16:27.860 --> 00:16:29.960 as now it's a separate dwelling but now it's 00:16:29.960 --> 00:16:32.200 a separate dwelling and you can put a two burner 00:16:32.200 --> 00:16:34.860 plug in or you know yeah it just can't be permanently 00:16:34.860 --> 00:16:38.580 attached it just cannot be a stove that can very 00:16:38.580 --> 00:16:40.960 odd it is but you know what it has to be a line 00:16:40.960 --> 00:16:43.200 somewhere and i think that was just the line 00:16:43.200 --> 00:16:45.460 in the sand and i've even seen it come up on 00:16:45.460 --> 00:16:47.539 appraisals because maybe let's say a homeowner 00:16:47.539 --> 00:16:50.200 later put a stove in after Every city inspector 00:16:50.200 --> 00:16:51.860 has been out of there and the certificate of 00:16:51.860 --> 00:16:55.700 occupancy has been issued. And they ran a gas 00:16:55.700 --> 00:16:58.120 line behind the wall and before anyone knew and 00:16:58.120 --> 00:17:00.220 buried it in there and then pulled it out later 00:17:00.220 --> 00:17:03.139 and put a stove in. I've seen that disrupt loans 00:17:03.139 --> 00:17:06.079 at the town years later. Oh, there's a stove 00:17:06.079 --> 00:17:08.519 in the successory dwelling unit. Is this a two 00:17:08.519 --> 00:17:11.279 -family zoning or single -family zoning? Well, 00:17:11.779 --> 00:17:13.539 that's it. As soon as that stove goes in, it's 00:17:13.539 --> 00:17:16.839 got to be two -family. It is a two -family parcel. 00:17:17.079 --> 00:17:19.740 Right. So there's now two. families that can 00:17:19.740 --> 00:17:22.079 live there apparently. So interesting though. 00:17:22.279 --> 00:17:25.039 So we have, so let's pretend there's a neighborhood 00:17:25.039 --> 00:17:28.380 of tiny homes and why can't we do that? For all 00:17:28.380 --> 00:17:31.480 the list reasons listed above, they, how are 00:17:31.480 --> 00:17:32.960 you going to get loans on those? How does the 00:17:32.960 --> 00:17:34.960 bank value those? Can you get a mortgage on that? 00:17:35.480 --> 00:17:37.920 Right. How do you get individual utility connections? 00:17:37.980 --> 00:17:40.079 Can you get individual water meters out there? 00:17:40.099 --> 00:17:41.940 You know, individual gas meters is every single 00:17:41.940 --> 00:17:43.759 house going to have an individual gas meter, 00:17:43.900 --> 00:17:46.539 water meter, electric meter, all these little 00:17:46.539 --> 00:17:48.960 concerns that come up. And then that little tiny 00:17:48.960 --> 00:17:51.640 home ended up costing you as much as just an 00:17:51.640 --> 00:17:55.059 average. There's some, there's a certain threshold 00:17:55.059 --> 00:17:57.220 that anytime you build anything, you're just 00:17:57.220 --> 00:17:59.079 going to have, you're going to have the cost 00:17:59.079 --> 00:18:02.059 of all the utilities. You're going to have all 00:18:02.059 --> 00:18:03.500 the site work, which whether you're building 00:18:03.500 --> 00:18:06.000 a 600 square foot home or 1600 square foot home, 00:18:06.619 --> 00:18:09.799 it's just not that much more. And when you're 00:18:09.799 --> 00:18:13.529 mobilizing crews and when you're buying Appliances, 00:18:13.650 --> 00:18:15.910 now they're 24 inch stoves instead of 30, which 00:18:15.910 --> 00:18:19.309 are oddly more expensive than their counterparts. 00:18:19.750 --> 00:18:22.329 Smaller fridge, everything is just now specialty. 00:18:22.910 --> 00:18:26.490 So then that tiny home ended up costing you $280 00:18:26.490 --> 00:18:29.930 ,000 in utilities and construction and material 00:18:29.930 --> 00:18:31.349 and all the other things that go along with it. 00:18:31.849 --> 00:18:34.990 So they just don't pencil out. Even if in a fantasy, 00:18:35.130 --> 00:18:37.230 the city said, you know what, put a tiny home 00:18:37.230 --> 00:18:39.710 community there. And on tiny little micro parcels, 00:18:40.069 --> 00:18:43.759 well, yeah. You can, good luck. There's going 00:18:43.759 --> 00:18:45.380 to be, they're not going to pencil out. It just 00:18:45.380 --> 00:18:47.420 doesn't make any sense unless you don't want 00:18:47.420 --> 00:18:49.680 running water in your house. Unless you want 00:18:49.680 --> 00:18:50.880 to drink out of a cistern. Some people do want 00:18:50.880 --> 00:18:52.079 to take their tiny home and pump it off the grid. 00:18:52.079 --> 00:18:54.619 Oh, for sure. Yeah, if you want it, yeah, absolutely. 00:18:54.619 --> 00:18:57.160 That's a different lifestyle altogether. As a 00:18:57.160 --> 00:18:59.900 one -off curiosity, totally. But to solve anything 00:18:59.900 --> 00:19:03.900 or to kind of answer an unmet demand in the market, 00:19:04.180 --> 00:19:07.240 then it's not tiny homes. Unfortunately, it's 00:19:07.240 --> 00:19:09.319 just not. It's not there. None of it makes any 00:19:09.319 --> 00:19:12.299 sense. So it's a great fantasy. It's fun to think 00:19:12.299 --> 00:19:15.380 about. It's a question I get asked every, I'm 00:19:15.380 --> 00:19:18.259 telling you every week. Yes. Why don't you build 00:19:18.259 --> 00:19:19.700 tiny homes? If you want to go to Florida homes. 00:19:20.700 --> 00:19:24.500 It's odd. Yeah. It just doesn't make, it doesn't 00:19:24.500 --> 00:19:26.960 make sense on paper, even if you could get all 00:19:26.960 --> 00:19:29.579 the other factors in place and get the stars 00:19:29.579 --> 00:19:32.460 to align. So you look at those as disruptors, 00:19:32.599 --> 00:19:34.359 right? So you've, you've seen, you've seen these 00:19:34.359 --> 00:19:36.839 videos of, okay, we're going to be able to deploy. 00:19:37.160 --> 00:19:39.619 All these houses look look what we could do we 00:19:39.619 --> 00:19:42.460 can get this approved disaster relief disaster 00:19:42.460 --> 00:19:45.140 relief and things like that and it's great if 00:19:45.140 --> 00:19:47.000 you can ship them there and it can all pencil 00:19:47.000 --> 00:19:49.400 out amazing but again that's disaster that's 00:19:49.400 --> 00:19:53.440 a one off what about how do we truly do that 00:19:53.440 --> 00:19:58.039 for sure exactly we can't. It's not going to 00:19:58.039 --> 00:20:01.059 revolutionize the construction industry oddly 00:20:01.059 --> 00:20:03.140 enough what revolutionize the construction industry 00:20:03.140 --> 00:20:07.650 was probably the air nailer. Right? The air nailer. 00:20:07.670 --> 00:20:11.109 Thank goodness for the air nailer. The joist 00:20:11.109 --> 00:20:13.670 plate, because it could have greater spans. The 00:20:13.670 --> 00:20:16.849 engineered truss, which allowed for open floor 00:20:16.849 --> 00:20:19.049 plans and just easier, you know, you could hide 00:20:19.049 --> 00:20:21.490 your duct work in there and everything. Taller 00:20:21.490 --> 00:20:25.869 ceilings, things like that. And probably factory 00:20:25.869 --> 00:20:28.769 goods, you know, factory -made windows versus 00:20:28.769 --> 00:20:31.150 windows made by craftsmen locally. That type 00:20:31.150 --> 00:20:33.609 of stuff. Factory -made building materials. All 00:20:33.609 --> 00:20:36.230 of those innovations probably happened pre 1950. 00:20:36.329 --> 00:20:38.509 So we haven't really innovated in this industry 00:20:38.509 --> 00:20:43.950 in 75 years. Yeah. The track tone was 1945 after 00:20:43.950 --> 00:20:46.730 World War II. Love it. I got history and you 00:20:46.730 --> 00:20:48.289 didn't think I was going to do it. You would 00:20:48.289 --> 00:20:49.769 do it somewhere. I'm going to add that as a fourth 00:20:49.769 --> 00:20:53.809 one. Real estate market history. So that's kind 00:20:53.809 --> 00:20:57.950 of what keeps me curious about disruption. Why 00:20:57.950 --> 00:21:01.069 can we not disrupt it? I'm not even anti disruption. 00:21:01.130 --> 00:21:03.630 I'm just Interested in the fact that it's an 00:21:03.630 --> 00:21:07.170 industry that has not been disrupted and an industry 00:21:07.170 --> 00:21:10.309 that really hasn't materially changed in 75 years 00:21:10.309 --> 00:21:12.170 Mm -hmm. Like we said in one episode actually 00:21:12.170 --> 00:21:15.069 80 years even the cul -de -sac even the way neighborhoods 00:21:15.069 --> 00:21:19.470 are laid out has been an Existence since the 00:21:19.470 --> 00:21:23.109 40s really since FHA so which is like 30s. Mm 00:21:23.109 --> 00:21:26.170 -hmm. So my disruption you're you're not necessarily 00:21:26.170 --> 00:21:28.519 even talking about A negative thing. I think 00:21:28.519 --> 00:21:30.759 often as a negative, you know, you disrupted 00:21:30.759 --> 00:21:32.680 something and now it can't continue as it was. 00:21:32.720 --> 00:21:34.519 Right. In this case, you're really kind of reflecting 00:21:34.519 --> 00:21:37.259 on the idea that disruption would better the 00:21:37.259 --> 00:21:39.099 industry. The growth industry would get into 00:21:39.099 --> 00:21:40.599 something even, you know, I don't want to take 00:21:40.599 --> 00:21:44.079 a cap. If I forgot a sweet potato, I want to 00:21:44.079 --> 00:21:46.640 go on Instacart and order it. I like it. I like 00:21:46.640 --> 00:21:48.640 disruption. It's okay. I don't like disruption 00:21:48.640 --> 00:21:50.500 for disruption sake. And I feel like when there's 00:21:50.500 --> 00:21:52.799 a lot of money in venture capital, I think a 00:21:52.799 --> 00:21:55.180 lot of times you'll see that, oh, we're an insurance 00:21:55.180 --> 00:21:58.880 company that instead of doing this, you're just 00:21:58.880 --> 00:22:00.960 disrupting for the sake of disrupting. You're 00:22:00.960 --> 00:22:04.819 answering a question that nobody asked. Nobody 00:22:04.819 --> 00:22:07.619 cares. I would love to see it disrupted to be 00:22:07.619 --> 00:22:10.319 interesting, but I just think that I don't see 00:22:10.319 --> 00:22:13.569 a path forward. There's some of that, um, whatever 00:22:13.569 --> 00:22:16.390 it is, the 3d printing models that come together 00:22:16.390 --> 00:22:17.890 and that kind of thing. I mean, there's some 00:22:17.890 --> 00:22:19.650 of that happening. They look like the hives, 00:22:19.650 --> 00:22:22.589 you know, that in fact, a big publicly traded 00:22:22.589 --> 00:22:24.789 company did a whole neighborhood in Texas of 00:22:24.789 --> 00:22:27.630 3d printed homes. And it's great. And that's 00:22:27.630 --> 00:22:29.549 another thing people will ask me tiny homes and 00:22:29.549 --> 00:22:33.230 then somewhat less frequently 3d printed homes. 00:22:33.730 --> 00:22:37.130 But the funny thing is what, okay, what problem 00:22:37.130 --> 00:22:42.420 did that solve or the framing? Oh, so 5 % of 00:22:42.420 --> 00:22:46.000 the whole thing you solved by lugging this. Framing 00:22:46.000 --> 00:22:47.799 is a problem. Framing is not even a problem. 00:22:47.980 --> 00:22:50.380 Yeah. Well, then where do you put your electrical 00:22:50.380 --> 00:22:53.279 line? Everything's now solid. The whole mass 00:22:53.279 --> 00:22:55.740 of the house is solid. So you have to obviously 00:22:55.740 --> 00:22:58.500 plan for your windows. You can't run any duct 00:22:58.500 --> 00:23:01.640 work. You can't run your AC line that goes up 00:23:01.640 --> 00:23:03.519 to the air handler. You can't obviously run any 00:23:03.519 --> 00:23:07.000 power. You have your framing. It's all exposed 00:23:07.000 --> 00:23:08.859 on the front and you have to build a facade anyway. 00:23:09.259 --> 00:23:12.390 And you're still framing. So what is the what 00:23:12.390 --> 00:23:15.170 answer what you know, what what what what problem 00:23:15.170 --> 00:23:20.950 are you solving? Yeah, hey this this one trade 00:23:20.950 --> 00:23:24.369 that's five percent of the industry We want to 00:23:24.369 --> 00:23:27.250 solve that problem That's not gonna do anything. 00:23:27.250 --> 00:23:29.069 So that's why I didn't take off. But I remember 00:23:29.069 --> 00:23:31.430 seeing that was it's funny. It's not cheaper. 00:23:31.589 --> 00:23:34.059 No, it isn't So it isn't even a, you know, it's 00:23:34.059 --> 00:23:35.880 not even like where you were using plastic. I 00:23:35.880 --> 00:23:38.619 mean, there's, there are a lot of things about 00:23:38.619 --> 00:23:40.859 it. No, you're not. Yeah. You're not solving 00:23:40.859 --> 00:23:42.460 a problem. It's just a different way of doing 00:23:42.460 --> 00:23:45.319 it. Right. There was a time in the nineties where 00:23:45.319 --> 00:23:49.240 concrete, I'm sorry, styrofoam blocks were really 00:23:49.240 --> 00:23:51.640 kind of thought to be the new technology that, 00:23:51.880 --> 00:23:54.380 Oh, we're going to build homes out of styrofoam 00:23:54.380 --> 00:23:56.759 blocks instead of framing them. And I think in 00:23:56.759 --> 00:23:58.920 some climates, maybe it is a good answer. And 00:23:58.920 --> 00:24:00.420 then they usually fill them with concrete every 00:24:00.420 --> 00:24:02.259 few holes or maybe every hole. I'm not exactly 00:24:02.259 --> 00:24:06.140 sure. Um, I've never worked with them, but, um, 00:24:06.440 --> 00:24:08.559 the thought is that they're more sturdy and they're 00:24:08.559 --> 00:24:10.200 sturdier and they can withstand a lot more climate, 00:24:11.039 --> 00:24:13.960 but turns out they're really challenging to work 00:24:13.960 --> 00:24:16.160 with. So now it becomes a specialty trade instead 00:24:16.160 --> 00:24:20.339 of finding a framer who can bring on Couple journeymen 00:24:20.339 --> 00:24:22.619 with them and kind of teach him, but he's still 00:24:22.619 --> 00:24:24.559 getting a lot of work out of them and they're 00:24:24.559 --> 00:24:27.859 framing and he's over seeing it. It's a challenging 00:24:27.859 --> 00:24:32.259 trade and specialty, but it's easy to learn, 00:24:32.660 --> 00:24:35.240 but it's teachable versus dealing with the 3D 00:24:35.240 --> 00:24:37.180 printer or dealing with our phone box or dealing 00:24:37.180 --> 00:24:40.380 with these kind of novel concepts that are even 00:24:40.380 --> 00:24:44.359 wall panels. And there was a builder in town 00:24:44.359 --> 00:24:46.920 about 10 years ago. that's still in town but 00:24:46.920 --> 00:24:49.200 they were working with prefabricated wall sections 00:24:49.200 --> 00:24:53.819 and so now you're building them off site and 00:24:53.819 --> 00:24:56.799 you're building all these walls you have to number 00:24:56.799 --> 00:25:00.880 them track them transport them um highway 95 00:25:00.880 --> 00:25:04.839 with 215 beltway and what So instead of having 00:25:04.839 --> 00:25:07.039 all these neatly stacked bunks of lumber, we're 00:25:07.039 --> 00:25:08.660 going to go ahead and make that as bulky and 00:25:08.660 --> 00:25:11.140 as difficult to transport as possible. And then 00:25:11.140 --> 00:25:12.680 we're going to lift them in with a crane. You 00:25:12.680 --> 00:25:14.359 shared your labor field because you've got the 00:25:14.359 --> 00:25:16.259 person who builds it, but somebody has to install 00:25:16.259 --> 00:25:18.039 it there. So now you're dividing the labor. It's 00:25:18.039 --> 00:25:19.740 just newer for the sake of new. It's, oh, instead 00:25:19.740 --> 00:25:21.680 of building everything on site, you know, that 00:25:21.680 --> 00:25:25.000 wall that we saved about 18 minutes worth of 00:25:25.000 --> 00:25:27.799 labor, okay, took you an hour and a half with 00:25:27.799 --> 00:25:31.359 a wide load. Tractor trailer with cars in front 00:25:31.359 --> 00:25:32.779 of it, leaders and trailers. And the expense 00:25:32.779 --> 00:25:35.160 of transport, logistics. Yeah. Shutting down 00:25:35.160 --> 00:25:37.880 two lanes. So it's hard. I don't know. It's very 00:25:37.880 --> 00:25:40.279 challenging. I just wondered, did all of our 00:25:40.279 --> 00:25:44.539 innovation happen? Is this what we're in for 00:25:44.539 --> 00:25:46.500 now? Is this just kind of what we're doing? A 00:25:46.500 --> 00:25:48.759 lot of our stuff is factory built. The components 00:25:48.759 --> 00:25:51.640 are going to a home, but the home itself. I always 00:25:51.640 --> 00:25:54.279 tell people this is one of the last things, at 00:25:54.279 --> 00:25:56.609 least in the US, that's still hand -built. And 00:25:56.609 --> 00:25:58.670 I like that. It's one of the things I like about 00:25:58.670 --> 00:26:00.730 construction. Exactly. A new home construction 00:26:00.730 --> 00:26:04.390 specifically because it is, it is unique in that 00:26:04.390 --> 00:26:07.230 regard. Yeah. And it's something that keeps real 00:26:07.230 --> 00:26:09.849 estate probably as a good asset and homes are 00:26:09.849 --> 00:26:12.349 not fungible, right? You just can't, yes, maybe 00:26:12.349 --> 00:26:14.410 the same model was built three doors down, but 00:26:14.410 --> 00:26:16.430 this exact home, you can't just plop another 00:26:16.430 --> 00:26:18.210 one. You can, they don't just come off the factory 00:26:18.210 --> 00:26:22.150 line. So maybe we should be careful what we wish 00:26:22.150 --> 00:26:24.029 for. Maybe this is a great thing that it can't 00:26:24.029 --> 00:26:26.519 be disrupted. yeah makes it for a much more stable 00:26:26.519 --> 00:26:29.440 business environment for a builder and how nice 00:26:29.440 --> 00:26:31.220 would it be if they could be you know you fall 00:26:31.220 --> 00:26:33.180 in love with your home but now you've been relocated 00:26:33.180 --> 00:26:35.619 and yeah can i just take my whole house that's 00:26:35.619 --> 00:26:37.640 right a truck transported across the country 00:26:37.640 --> 00:26:41.440 can't do it you gotta sell it yeah so yeah anyway 00:26:41.440 --> 00:26:44.339 great information and a great topic really interesting 00:26:44.339 --> 00:26:47.799 yeah thank you appreciate your insight appreciate 00:26:47.799 --> 00:26:50.319 you guys joining us and we will look forward 00:26:50.319 --> 00:26:53.279 to seeing you again next time on trust the process 00:26:53.519 --> 00:26:57.039 See you then. Bye bye. Thanks for tuning into 00:26:57.039 --> 00:26:59.539 the Trust the Process podcast. Make sure to follow 00:26:59.539 --> 00:27:02.059 us on Spotify to stay in the loop with the latest 00:27:02.059 --> 00:27:04.700 insights, project updates, and everything in 00:27:04.700 --> 00:27:06.259 between. See you next time.