Cheaper, Faster, and Better for Investors: Modular Homes Make a Comeback

Dave:
Hi, everyone. Welcome to On The Market. I’m your host, Dave Meyer, joined today by Kathy Fettke. Kathy, how are you?

Kathy:
I’m great. This is going to be a great interview. I can’t wait.

Dave:
I know. I love talking about these future technologies in the housing industry. It’s so much fun to imagine what might come of all of this.

Kathy:
A lot of people, fear technology thinking it will take away jobs and oftentimes it does, but oftentimes it brings on new jobs that people like even more. All I can say is the next 10 years are going to be really exciting, big technological advances, and I think this is going to be one of them.

Dave:
Absolutely. I think for our audience it’s especially important to pay attention to just some of the trends that Chris is talking about and how efficiency and productivity are huge barriers to progress in the housing market and to developers and to investors who are frustrated by the high cost of building new homes or just existing homes have gotten really expensive because there is a lack of supply. Chris presents a really interesting idea about how we might be able to add more housing supply at a cheaper cost, and there’s some other really interesting benefits to this method of construction that you’re probably going to be very interested in.

Kathy:
Absolutely.

Dave:
All right. Let’s jump into it. Let’s bring on Chris Anderson, but first we’re going to take a quick break. Chris Anderson, CEO of Vantem, thank you so much for joining us here On The Market. It’s a pleasure to have you.

Chris:
Well, Dave, thank you so much. Hi, Kathy. Good to see you too. I really appreciate you having me on.

Dave:
Could you just start by giving our audience a little bit of background on how you’re involved in the real estate industry?

Chris:
Sure. So Vantem, we have a proprietary technology that allows us to build affordable energy-efficient homes and the way that we do that is through volumetric modular construction. It means that we’re building homes in factories, doing it in a unique way and working with developers to deliver products that are more affordable and have a higher energy efficiency than traditional construction.

Dave:
I know Kathy and I are both chomping at the bit to ask questions about that, but we’d just love to know about you personally. Did you found Vantem, were you in real estate or how did you come to be the CEO of this company?

Chris:
Yeah, the long and winding road. This is my second entrepreneurial endeavor. I was the co-founder of another company, woo, about 30 years ago now, and we were in the business of manufacturing, construction products made from sustainably harvested hardwood. So we were making things like doors and windows, flooring with factories around the world and shipping them to places like Home Depot and Lowe’s and into Europe and so forth. The idea of what is now Vantem came out of that company because we’d travel around and we’d look and see these job sites where our windows and doors were being installed, and here we had this really modern factory making product within a thousandth of an inch tolerance. You derived to the construction site and the window opening would be three inches off. Everything was being done in a really old school way like it had been done 100 years ago and all this stuff that we saw in terms of productivity and tight tolerances that were so prevalent in other industries just were not present in construction.
So we figured there had to be a better way of doing it, put together a really talented team to try to figure out, “How can we rethink this system, the whole construction system and address the issues, productivity, later also, energy efficiency?” That’s how we came up with what is the core of the proprietary technology that Vantem now is deploying. After we had a good exit from our first company, I started what is today Vantem and came together with just a great private equity fund by the name of TIM Capital, who has been along with us since, and we’ve been deploying this technology into the space.

Dave:
Well, congratulations on your success of your first company. That’s incredible. I’m curious, when I hear modular homes, I know they’re more modern, but I think a lot of people associate it with Sears track homes and this old school and a certain type of product. Can you tell us a little bit about what your mission is and how you’re trying to evolve the idea of modular homes?

Chris:
Sure. Yeah. Unfortunately, a lot of people do think of modular as something that’s really boxy and simple and that’s absolutely not the case. When we started out along this road, one of the key things that we set out as a goal for ourselves was that whatever technology we developed would be one that when you were done, the home that we would deliver would look and feel like a traditional home that people are used to living in and used to seeing. So a Vantem home, even though it’s been made in a factory, when you see it finalized it would not be one that you would recognize as anything different than a traditional home. I think that’s just really an important difference, because just because you’re building something more efficiently doesn’t necessarily mean people are going to really want to live in the home and aesthetics are important. So we’re really proud that what we’re able to do meets all the different architectural demands that creative architects might have.

Kathy:
Chris, I’ve been covering stories on modular homes and new techniques for building more sustainably and more affordably, and yet, it just doesn’t seem to be getting traction. It’s not catching on. If anything, it’s got a bad rap. I’m in California where you’d think that we’d be all over this, sustainable, affordable, we need it. You probably heard the story in LA that we’re trying to build affordable housing and it was what, $837,000 per house for the homeless-

Chris:
My God.

Kathy:
So is modular getting more acceptable now?

Chris:
Well, let me step back a little bit. I think that the biggest problem, my critique would be that as people have tried to address how to do modular construction or be more efficient by automating construction, they didn’t step back and rethink the entire system. What I mean by that, it’s like people have said, “All right, let’s automate agriculture,” and they set out to design a mechanical four-legged horse instead of designing something completely different with a tractor with wheels and that’s just a much more efficient way of doing things. Most of the modular manufacturing or factory built manufacturing still is trying to build using wood framing or steel framing. These are complex systems, and so you bring them into a factory and yes, you have the efficiencies of building in a factory, but you have so many parts that you’ve got to put together that automating all that is extremely complex and extremely expensive.
The equipment to automate all that suddenly is a tremendous ticket, and that starts to filter its way into the cost structure. There’ve been examples of companies, I won’t name names, but that have not made it because they just absolutely over-automated these traditional systems instead of stepping back. So the way that we have approached it is to really rethink that system, and we don’t use frames. We don’t use wood framing. We don’t use steel framing. We don’t use bricks. We don’t use cement. We replace all of that with a very simple structural panel that replaces absolutely all of that. So suddenly, you have a product that is much simpler to build.
It has a lot less parts. We build these big panels. I imagine they’re four foot by 10 foot panels that are the walls, they’re the floor, they’re the roof of the modules that we make, and they’re the final surfaces. They don’t require more cladding because they’re fireproof and they’re moisture proof and weatherproof, so you don’t have all these extra layers, all this complex system to deal with. When you bring that into a factory automating that suddenly is also simple. The equipment that we have is so much less expensive and faster than what you would see in a traditional volumetric modular factory. I think that’s at the core of the difference between what Vantem is doing and what some of the other folks in the field that maybe are experiencing some problems have been doing.

Kathy:
What seems even more outdated than today’s construction is the whole process, the planning departments, the elected officials who know absolutely nothing about construction. How are you going to be able to get this through the system so that it’s accepted with the cities and with lenders? Let’s start with the planning departments.

Chris:
All right. Well, so we have been facing those exact challenges for years and other markets. We started our rollout in 2008 and because of what was going on in our home market of the U.S. in 2008, which we all remember, not a great time to be building in the U.S. We started our rollout overseas. So we started in south America and all the same issues that we have in the States are present there and to a certain extent, even more so. They’re even more complicated to get your approvals and whatnot. Now, the way that we have gotten across those hurdles is number one. The product that we designed from day one had code approvals in mind, so when we designed these panels and we designed the way that we were going to do this system, we were thinking, “How are we going to meet the fire code, the specific testing for the fire code? How are we going to meet the acoustical codes? How are we going to do all these things?” That’s baked into the way that the product was designed.
As we’ve rolled this out in other countries, we’ve been really successful in being able to get the code approvals and get the code officials to understand how all of these systems work. Now that we’re rolling out in the U.S., I expect it to be quite similar. Now, the other advantage when you do volumetric module and you’re doing about 80% of the whole job in a factory, rather than on-site, the inspections are happening in the factory. So if you do have a new product and a new system, one of the advantages is that you are working usually with one code official that comes into your factory and is looking at the product while it’s in process.
You’re not dealing with every little town’s code officials, which is really where you run into the problems, because those folks are usually less informed, particularly as you’re looking at new innovative systems. So volumetric modular gets inspected inside the factory, and when it relieves the factory, it leaves with this approval tag that already shows that it’s code approved, that it meets the codes. When it arrives to the job site, the only thing that the local code officials really are having to deal with is inspecting things like the foundations and the more normal part of the job site. It actually is not as complicated as it would be if we were site building all this product.

Kathy:
What about lenders, getting them on board? Have you seen any momentum there?

Chris:
We’re not seeing any pushback. I think the main reason is we’ve got more than three million square feet of product that’s been built in all kinds of places. We have homes that we’ve built in the driest desert in the world. We have structures we’ve built on the South Pole. We have structures that have survived the strongest hurricane on record, Hurricane Dorian in The Bahamas and structures that have survived 8.2 magnitude earthquakes in Northern Chile.

Kathy:
Wow. That’s amazing.

Dave:
Pretty good record.

Chris:
Well, and I think that’s what people want to see. That’s what banks want to see. Right?

Kathy:
Yeah.

Chris:
They want to see that resiliency. They want to understand that these are structures that’ll be around, and so we have structures that have been around many, many years and a lot of testing. We’re not getting any push back from lenders on that front because of that positive track record.

Kathy:
And fireproof, I think I read?

Chris:
Well, very. If we want to get back to the wonky side of this, we build using these structural panels, again, four foot by say 10 foot size panels and those panels are made by with three parts. They have a special skin on each side of the panel. It’s a special cementitious skin, and then the whole middle layer of these panels is insulation. So those two outer layers, the cementitious outer layers, they’re actually a type of ceramic and they’re in the family of ceramics that was used on the nose of the space shuttle. This is some very, very, to use a technical term, very refractory products, very fire-resistant products. We were able to hit extremely demanding fire codes because that outer layer that protects our panels has been designed to do so.

Dave:
I just learned several new words during that answer. I don’t think I’ve ever heard the word cementitious before. It’s a cool word. I like that. So Chris, that’s super impressive and you keep alluding to efficiency here and it does make sense. Could you share some numbers with us? How much more efficient is a modular home than a traditionally built, let’s say, single-family home.

Chris:
Yeah. Let’s start with talking about a pet peeve of mine in construction, which is productivity growth, kind of another economists’ wonky terms. But so when you look at construction overall, of the major industries it is the one that has had the less productivity growth of all. It’s almost zero over the last 30 years. When you look at the average productivity growth of all the other industries like car industry, et cetera, they’ve experienced up to 30% productivity growth. What does that mean? That means that for every man hour spent making something other industries today are making 30% more of that something with the same number of people; whereas construction is not. It’s taking the same number of people to do the same thing as it has over the last 30 years.
So to your question of efficiencies, well, the main thing to focus on is productivity. How do you achieve productivity? Well, you achieve it by simplifying the system, what I preach constantly in hammer at. So you make it simpler, so you have less man hours to accomplish the same job. Then the other thing you typically would do is automate it to make that same workforce produce more units. That’s what you’re doing in a factory setting. You are employing the same number of people that you would be employing in construction. It’s not that you’re reducing the number of jobs. What you’re doing is you’re increasing the number of square feet of living space that that same number of people are able to produce.

Dave:
So what kind of output increases it, so you’re saying you have the same, let’s say, 100 people, are you going from building whatever, five houses a year to six or five to 10? What is the increase in productivity that modular provides?

Chris:
So yeah, so let me put it this way. A typical Vantem factory has about 150 people and we are able to produce a million square feet a year of apartments or houses. All right. So that’s, let’s say, 1000 houses or 1000 apartments of 1000 square feet a piece with about 150 people. You would need approximately 10 times that roughly, depending on what you’re doing, the number of people to accomplish the same task. You would have all the other headaches involved of moving those people from job site to job site and all the other costs that are involved in site construction. So the productivity gains by doing offsite construction well are really enormous.

Dave:
Wow. That’s incredible.

Kathy:
That is incredible. What about the material shortages that we’re facing in the construction industry? Do you have those same challenges?

Chris:
Well, so the main product that we build with is our own, it’s our own panel, which we produce. Fortunately, the materials that we use to produce that cementitious skin, that Dave liked the term for, those are readily available materials. That those are not materials that have these big fluctuations and costs or availabilities. So we, in the core manufacturing of our modules, have not experienced things like the huge spike in wood prices, for example, that I think that other people have. Now, that said, we’re all subject to other constraints like, we all use windows, we all use doors, those kind of things. We have had to plan out a little bit more than we have in the past, but on our core business, we haven’t had the same pressures.

Kathy:
Where are you starting in the U.S.? Where are you getting traction? Which cities are allowing this?

Chris:
Well, yeah. Our business model is to partner with strong developers in key markets, so what we do is come in and put a factory in a local market along with a developer who has a strong pipeline to build affordable housing. We originally expected to maybe close two deals this year to put factories in next year and we’ve already closed on four. I think that by the time we’re done this year, we might be somewhere in the neighborhood of six to eight, so the interest level from the developers has really exceeded our expectations. The first factories, the first deals “that we have,” the first partnerships we have are for the Dakotas and Minnesota, Arizona, Texas, particularly in the Austin and Houston areas, Alabama, Florida Panhandle, mid to Southern Florida. Those are already on the board and we’re working through how we’re going to stage all that. There’s a lot of work to be done there, and we’ve had a lot of interest also in other areas like California and in the Northeast, but we’ll be addressing those as the next steps.

Dave:
I imagine all the developers are interested because it provides significant cost savings to them. With all that increased efficiency you were talking about, can you share any numbers about the cost per square foot to develop, let’s say, an apartment or a single-family home and how that compares to a traditional home?

Chris:
Yeah. On average, our solution is about 20% lower than traditional costs. That varies a lot depending on the markets. So Kathy talking about California, in California, our difference is much higher just because the local costs are so much higher. Other areas like the Southeast of the United States where costs of construction aren’t quite as high, we’re close to that 15 to 20%. So overall average, it’s at least 20%, with a big, big, big difference though, because there’s an apples to oranges comparison here. The Vantem product, even though it’s 20% less in cost than traditional, it is much more energy-efficient and is a net zero ready product, meaning it is so energy-efficient that we can turn it into net zero by just adding solar panels to the structure. Again, net zero, meaning that with a fairly modest solar array, you will generate as much electricity as the home uses, so at the end of the day, you are using no net energy from the grid. So despite that huge benefit, we are about 20% less expensive than traditional construction. For developers, that’s a huge draw, but there are others.
Another important draw is that offsite construction greatly accelerates your time to complete a project. It’s around 50% of the time that it would take to do a regular project. So for developers that typically measure return on investment, when you reduce time, it increases your return on investment tremendously, and so it really increases that ROI for them a lot. Then the third part, which I think is as important and sometimes more so is that it reduces the risk profile for developers. Where do developers have the biggest risk? It’s the site construction, it’s the cost overrun. It’s the time overrun, right? That’s where they get hammered. By taking those risks offsite and putting them into a factory setting, they’re controlled. Now, you don’t have rain, you don’t have issues with labor having to show up on the job site or not. It’s all really controlled in the factory, and so for the developer, it’s not only a cost savings issue and a time savings issue, but it’s also a risk mitigation measure that makes it really attractive for them.

Kathy:
A 10 to 20% reduction is huge because many builders, their profit is maybe 10%. Are you seeing any national builders showing interest?

Chris:
Yes, we are in conversations, although our first partners are mostly very strong, very large, but regional players, but yeah, we’ve entered into some conversation with some of the national players here recently as well.

Dave:
Are most of what you’re building single-family homes or are you also building retail, multi-family across different asset classes?

Chris:
We have built it, in our initial rollout in South America, a lot of different things. We’ve built single-family homes, multi-family homes. We’ve actually built over 200 schools. We’ve built university, we’ve built commercial, we’ve built a lot of things, but one of the things one needs to do in business is focus to be maximally successful. In the U.S., our focus is very much affordable housing. We’re focused very much on housing, and within that it’s single-family homes, multi-family townhome configurations and multi-family apartment buildings up to three floors. That’s our real focus currently.

Dave:
Why’d you choose that focus?

Chris:
Another important goal, business goal, especially when you have a factory is repetition. Factories, love repetition, that’s why originally Henry Ford said, “You can have any color you want as long as it’s black.” He took it to the extreme, and so repetition is really important. In home building, single-family homes and especially in multi-family, you have that repetition. You have multiple units that you can produce that are the same, and that’s where you really achieve the largest effect in terms of decreasing costs and leading to a final product that is more affordable for everybody.

Kathy:
Plus there’s nobody out there doing it. It’s very, very difficult, if not impossible, to build affordable housing today. A lot of people don’t realize that developers are required to provide generally some affordable housing. In our projects, it’s usually 30% and that’s usually a loss to the developer. We had to build the affordable housing first and you’ve got to come up with a funding for that and you don’t make your profit to the very, very end. So I would just think that every developer would want to at least have that portion of their development at least break even. Wouldn’t that be amazing?

Chris:
Right. Right. Well, I think that what we’re seeing is that the goal our partners have, and I think it’s a realistic goal, is that it will definitely not be just break even. They’ll be making money on them.

Kathy:
Again, oh man, that’s a game changer for developers, because more and more city councils will vote for your project if you’re able to bring on that affordable housing.

Chris:
Right, but let’s not forget it’s not just the affordable side of it, but that energy efficiency, that’s the other thing that city councils are really excited about. So the effect of energy efficiency, it’s so multifaceted. We have the macro part in terms of the benefit that it has to carbon reduction and climate change, which is really a critical and important goal, I think, for everybody. But there’s also the aspect that if you have a net zero home, that’s doesn’t have a light bill, suddenly the family has more disposable income that can go towards paying for a mortgage, paying for a slightly bigger house perhaps, or just being able to buy the house period because maybe they didn’t have enough of an income otherwise to be able to purchase that house.
Then to the local communities, the other thing that it helps with in and that city councils and state governments like is that you’re not adding a draw to the energy grid, so they’re not having to add more power plants. They’re not having to add to the infrastructure, which is really, really expensive. When you’re looking at adding thousands of housing units to meet that housing need, that housing deficit that we have, the one thing that I think that Vantem allows is that we don’t put additional pressure on the local governments to have to raise more money to put infrastructure in, electrical infrastructure in particular. That’s just a massive benefit also for that community.

Kathy:
How are insurance companies responding to this? Because I would think if these homes are more resistant to earthquakes fires, wind storms, I would think insurance companies would be all over it. What’s been their support for this?

Chris:
That’s been really interesting. We’ve actually been approached by an insurance company to develop a specific product for disaster-prone areas in the Gulf area, or the Gulf area of the United States for Louisiana in particular. That’s been a real challenge for a lot of insurance companies. Many of them is, I think we all know they’ve tried to exit or have exited a lot of these markets where climate change is starting to change the risk profile so much that it’s just not economical for them to be involved anymore. In this case, we’re working on a program to offer a turnkey solution, which is Vantem apartment complexes that have an insurance already baked in pre-approved by the insurance company for areas where otherwise, currently building is uninsurable.

Kathy:
That’s amazing.

Dave:
That is incredible. Chris, I had a question. You were talking about net zero and as someone who lives in Europe and our energy costs just keep going up like crazy right now, would love a net zero home right now, another component of climate change and housing and construction’s contribution to that is the construction process itself, not just once the homeowner is in the home. How does your construction process compare to traditional building in terms of emissions during the construction process?

Chris:
Right. Yeah. That’s a great question. Vantem, we brought onboard a really important investor several months ago, a fund by the name of Breakthrough Energy and it’s Bill Gates’ fund for CO2 reduction, climate change issues. The reason that they invested in Vantem is that they clearly see the potential impact that we can have on carbon reduction, and that comes from two areas, like you said. One of them is the energy savings that Vantem allows over the lifetime of the home. But the other point that they really loved about what we’re doing is what they call the embodied carbon of a Vantem house is much, much lower than traditional construction. What does that mean?
Well, it means that the total amount of energy it takes to make all the materials that go into a Vantem house and to build that house is translated into how much carbon emission does that mean. Well, in our case, it’s about 80% less than the traditional construction methods being used globally, internationally, not only the United States, but everywhere else in the world. Now, in the U.S. where we use materials, we’re not building with as much concrete, for example, which and concrete is a very, very energy- intensive carbon emitter. Our carbon reduction is a bit less than 80%, but on average globally, we’re about 80% more efficient than how homes are being built elsewhere.

Dave:
Wow. That’s incredible. Chris, I think I would love to spend here more time here learning about your process, but we do have to start wrapping up and our audience is primarily real estate investors. Everyone from people who are aspiring to get their first deal to people like Kathy, who are professionals and doing development, if anyone in our audience wants to get involved with modular homes, is that possible right now, or is it only for people, developers and large scale builders at this point?

Chris:
I think there are certainly opportunities in modular homes in general, available to everybody. I think the demands on modular home builders are high right now. There’s a demand outstrips supply pretty much, so it might be a little bit difficult honestly, to go out there and buy a modular home right now off the shelf, if you will, from other manufacturers. From a Vantem standpoint, our first factories will be coming online at the end of next year. As I mentioned before South Dakota, Arizona, Texas, and Alabama, Florida, keep your eyes peeled. We’ll be letting everybody know as those come on board and we’ll be generating quite a bit of capacity. Some of that capacity is, in fact, reserved for about 30% of the capacity of each one of these factories is reserved for third parties, including individuals that might be interested in buying Vantem modular homes.

Dave:
Great. Thank you, Chris. Is there anything you think our audience of real estate investors should know about modular homes and how it might be changing the future of the housing market or the way Americans find housing, find and build housing, I guess I should say?

Chris:
Yeah. Listen, as an investor, I really urge people to think about the energy efficiency and the impact that has on their returns, and there are many angles to that. The appreciation of your asset is greater the more energy efficient it is. Also, with time, what we’re going to start seeing as investors in real estate is that there’s really a great appetite by banks for lending to projects that have a very high energy efficiency. We’re already seeing it perhaps on a developer scale, maybe not so much individual yet, but we’re seeing it at a developer scale where banks are lending at rates that are lower than market for projects that are more energy-efficient than others. I foresee, because we are talking to banks that are trying to figure out how to offer mortgages to individuals that are lower than market rate because of the energy efficiency. So as an investor, I really would urge everybody to focus on that as a really interesting opportunity in the future as we’re looking to build our portfolio.

Dave:
Great. Well, Chris, thank you so much for joining us. If people want to learn more about you or connect with Vantem, where can they do that?

Chris:
Best place to look would be on our website, vantem.com. That’s V as in Victor, A, N as in Nancy, T as in Tom, E, M as in Mike, vantem.com. Dave, thank you so much for your interest and Kathy, really a pleasure talking to you both, okay?

Kathy:
Likewise, I can’t wait to see where this all is, say, 10 years from now. I think it’s going to be a different world.

Chris:
Thanks again. Appreciate that.

Dave:
All right, Kathy, what did you think about our conversation with Chris?

Kathy:
I have mixed feelings because I just know how much change is needed in the construction industry and in the whole process of bringing on affordable housing. We need support in this country. We need the governments to get on board, and so I’m mixed because I want it to happen. I hope this is the company that can do it, because many have failed, like you said.

Dave:
Yeah. The technology sounds really interesting, but you’re more concerned the bureaucracy, red tape, not as concerned about the technology or are you concerned about both?

Kathy:
I’m not been concerned about the technology. To me, it’s always made sense that if you can build a house in a factory, how much easier is it than, like our Utah project? We can’t build during half of the year. If that could be just done in a factory and you can control it and it’s the same thing every time, you’ve dealt with construction workers, sometimes they don’t show up or with COVID, the site would be shut down for two weeks if one person tested positive. So the efficiencies have always made sense to me, and I couldn’t understand why it wasn’t catching on. Just even locally, I’m in one of the most liberal places on earth, and you would think they would be adopting this idea, and I’ve tried to build modular housing. In California, it’s really hard. Even after the fires when thousands of houses are gone, you’d think they’d all come back modular, but it’s just not been the case.

Dave:
That’s why you were so interested in the fireproofing.

Kathy:
Yes, I am. Well, again, California’s always burning. It’s just either people have to stop living here or we need fireproof housing, because insurance companies aren’t going to keep insuring and they’re starting not to. We’re only half insured on our house. We’d only-

Dave:
Really?

Kathy:
Yeah, they won’t do it. Wow. How many times are they going to rebuild? Most of California or a lot of California’s in a fire zone. So then you’ve got lots of Texas, and like you said, Louisiana and Florida in a flood zone, flood zone or in a hurricane zone? So these solutions are coming. I get really excited about the technologies that are coming and I just think, “Wow, what’s this world going to be 10 years from now?” I know some people want us to be more negative, but it’s like all I can see is that technology is going to change things. It’s going to be a different world and it’s exciting. Look at just 10 years ago, we didn’t have Uber.

Dave:
Right. Right.

Kathy:
It was brand new. We didn’t have Airbnb and now we just take it for granted like it, “Of course, of course, you’re going to just let a stranger in your car or in your home.” This weren’t thoughts we had 10 years ago.

Dave:
Yeah. It’s just inevitable, it has to happen. We had Chris on today, when we had the 3D printing company, Alquist, on recently, it’s these ideas that make so much sense logically. But unfortunately, you know that the technology and intent is only half the battle with development and bureaucracy, logistics. Some of the boring stuff really can get in the way of some of these exciting things, but I have to believe it’s just a matter of time and hopefully it’ll be sooner rather than later.

Kathy:
Yes, absolutely. Yep. Housing just happens to be one of the last dinosaurs. We’re still doing it the way we’ve done it forever, so I think that that brings investors in when they say, “Oh, here’s some opportunity.” It does sound like he’s really well-funded, I hope that’s the case. That’s what it’s going to take.

Dave:
Maybe one of the silver linings to the really difficult affordability challenges we’re seeing across the U.S. is hopefully, governmental and policy support for building more affordable homes like this, because like you’ve said everyone wants the price of housing to go down, but you’re a developer and you’re trying to build affordable homes right now and you can’t even do it, so something has to change. Whether it’s the technology or a policy, it’s not like you’re out there trying to price gouge people, you’re literally trying to build affordable homes and the policy and economy doesn’t support it right now.

Kathy:
No, it doesn’t. Is it the developer’s responsibility? That’s always been the question. On our Park City, the only way we could even get the project through was by offering affordable housing, which I was thrilled to do. The way we explained it is, “Wouldn’t you like to have teachers and firefighters and police officers be here and not an hour away?” So that’s how we got the project through, but those homes, they cost us twice as much to build than what we sold them for because they wouldn’t let us go over 375,000. It costs 750 to build them, so that hurts. That’s hard to do, but if there was an option for us to be able to build it cheaper, wouldn’t that be amazing, and fireproof and earthquake-proof? All these things is wonderful. I hope it works.

Dave:
All right. Cool. Well, we’ll keep an eye on it. Hopefully, we’ll see some progress over the next couple of years and if we do, we will definitely update you on a future episode of the podcast. Kathy, thank you so much for joining me. I’m looking forward to seeing you in a couple of weeks at BP Con.

Kathy:
Can’t wait, it’s going to be so fun. You have to get a larger space. You got to look at a larger space, because it’s sold out and people are now trading these tickets.

Dave:
I know. We sold out and I think the team here at BiggerPockets who’s responsible for it is getting a lot of desperate emails, but we can’t. They have fire codes and a certain amount of tickets we can sell, so I guess next year we’re going to have to go even bigger.

Kathy:
It’s going to have to be Las Vegas Convention Center.

Dave:
Yeah. Yeah. 100,000 people there.

Kathy:
Yeah, 100,000.

Dave:
All right. Well, Kathy, it’s always a pleasure. You always ask such great questions. It’s a lot of fun having you here and we’ll see you again real soon.

Kathy:
Thank you so much.

Dave:
All right. Thanks, everyone, for listening. We’ll see you on the next episode of On The Market. On The Market is created by me, Dave Meyer and Kaitlin Bennett; produced by Kaitlin Bennett; editing by Joel Esparza and Onyx Media; copywriting by Nate Weintraub, and a very special thanks to the entire BiggerPockets team. The content on the show On The Market are opinions. Only all listeners should independently verify data points, opinions, and investment strategies.