SFR + Innovation with Chris Finlay, Middleburg Communities

Chris Finlay, Founder and Managing Partner of Middleburg Communities talks about Single Family Build for Rent, how they're thinking differently and the importance of industrialized technology, alternative materials and green tech . 

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Transcript

Speaker 1: (00:06)
You're listening to the housing innovation Alliance podcast in partnership with the university of Denver's Franklin L burns school of real estate and construction management. The housing innovation Alliance is a nationwide community of game changers. Driving the future of home delivery through crowd accelerated innovation. We represent thought leaders from dirt to dwell it with a focus on the production builders business environment. We are smart people. Cool companies get energized by our collective intelligence.

Speaker 2: (00:40)
Hi, this is Dennis , president of housing innovation Alliance, and I'm here with CEO of Middleburg communities, Chris Bentley. How you doing Chris? Oh, great. So it's great to be here in your office in Vienna, Virginia. Want to learn a little bit more about your perspective on the built for rent market opportunity that's out there today. Great. Great. What do you want to know? Yeah. So tell us a little bit about your company and what your place is in the market and how you're viewing the built for rent segment. Sure, sure. So a Middleburg community is a fully integrated rental housing company. Um, meaning that we do both, uh, kind of the single family rentals, if you will, uh, and multifamily and affordable housing, everything, including new development construction, as well as acquisitions and improvements. Um, so we are a kind of a fully integrated company.

Speaker 2: (01:24)
We do, uh, where we do development construction, uh, or licensed general contractor or property management all in house. Uh, we, uh, a big part of our business, uh, looking forward for the next three to five years is this built a rent, uh, product concept that is becoming quite popular. So, uh, so we're excited about it. Okay, great. So what markets are you going to serve with your girlfriend product? So our company, uh, we, we have a footprint that spans from Richmond, Virginia down into Florida and over to Texas. So we're staying within that footprint generally, uh, focused on the larger high growth markets in the Southeast in particular places like Richmond Raleigh, Charlotte, Atlanta, Nashville, Tampa, Orlando, Jacksonville, some of those bigger high-growth markets. Okay. So you're in all the right places. You've decided that this is where you're going to go over the next few years.

Speaker 2: (02:17)
What kind of talent did you have to bring into your organization to capture this opportunity? Or was it already here as a result of the other infrastructure you've built out for your other seconds? Yeah, so it's interesting. So when you talk about SFR build, build for rent, um, you know, obviously there's a spectrum there, right? So everything from what is really a more traditional for sale single family product, whether it was a personal on a one-off basis or acquired in bulk, um, all the way through to what is more of a horizontal apartment product, right? And, and these things range from, you know, a, a horizontal apartment like, uh, Christopher Todd, next, Metro capstone, those guys were all doing, you know, 800 square foot average unit size, mostly duplexes, 12, 14 plus units to the acre. It's kind of a dense, uh, unit mix. That is what I call to be more of a horizontal apartment product, all the way to, uh, what is really the most traditional SFR, which is 1500 plus square foot average, 3, 4, 5 bedrooms, two and a half bathrooms.

Speaker 2: (03:22)
And what is traditionally a sale marketplace bought individually, right? I mean, that's, so it's a, it's a huge spectrum of what constitutes the, um, this kind of built for rent or single family rental product. We've really kind of innovated a product that is what I call a tweener, you know, it kind of, uh, and, and it's, it's a function of research. So, so take a step back, you know, our businesses really, um, you know, the, the, the base of our business is really research, whether it's a multifamily project, what markets we're in sub markets, it's all based on, on really taking a research approach to defining and refining investment strategy. So, um, you know, for the last 20 years we've been operating in these high growth markets in the Southeast and Sunbelt, uh, of the United States. And, and really when you look at what's driving incremental demand for rental housing as a whole, it's important to know where that, you know, what's driving incremental demand for rental housing, where is it occurring?

Speaker 2: (04:20)
You know, what are the real drivers for that, so that you know where to locate your properties? And so the build for rent space is really just a growth of what resident preferences already are and what, you know, what's driving, you know, this move into more of the single family rental preference. So if you look at, and, and, and without dwelling on this, but if you think about rental housing as a whole, um, you know, if I would say about 75 to 80% of renters would prefer to be in lower density, single family rental housing yet only about 35% actually are. And there's a couple of different reasons for that. If you think about why somebody rents an apartment, they rent an apartment for location, price, um, uh, community amenities, um, and, uh, and kind of 24 7 maintenance and kind of ease of renting, you know, that kind of professional rental experience.

Speaker 2: (05:23)
Somebody rents a, uh, a single-family home because they want privacy. They want more space. They want a different commute, uh, kind of, uh, amenity set, IE, being able to walk in and out of their front door, uh, or, or they have a pet, right? Those are the four things that drive, why somebody rents a single family. Yes, the, uh, over 80% of single family rental product is over 20 years old and is managed by, uh, you know, uh, basically mom and pops are kind of non-professional managers. In fact, they say that the estimate is about two to 3% of the entire, uh, single family rental space is institutionally owned and managed. And I think that might even be a stretch, right? I mean, you think about it and invitation homes is the largest at 80,000, 80,000 homes across the United States. You put that into perspective.

Speaker 2: (06:13)
There's 3.2 million single family rental homes in the Southeastern United States, which is by the way, bigger than the 2.2 million multifamily apartments that are in the Southeastern United States. So, so here you have a market that is largely a fractional, uh, mom and pop owned non-institutional. Um, so, so anyway, as we look at where resident preferences are, what we've tried to do is, is figure out where the biggest bulk of demand is coming from. And that tends to be a product that is more like 12 to 1300 square foot average unit sizes versus the 1500 plus, uh, average of the traditional SFR or the 800 of the horizontal multifamily we have. Um, we've tried to capture the best of single family living with the best of apartment living. So 24 7, uh, maintenance and, and, uh, professional leasing online, bill payment, um, you know, community amenities, so fitness centers, swimming pool, um, and really trying to embrace the idea of community. So in other words, creating pocket parks, creating a, an opportunity for people to interact neighbors, to meet each other, but without forcing it right. So kind of trying to create the best of both worlds and then within a, an affordability framework so that, you know, it's, it's affordable to where the bulk of renters are that want to be moving into these suburban locations and have these amenities. So there's the monologue, so we can do it.

Speaker 3: (07:51)
It was a great, but it's a great overview

Speaker 2: (07:54)
Of how you're looking at this opportunity. And I think it's, it's interesting. I kind of carved out where your niche is going to be with the product offering of leading it's, the animal handling communities, right. We branded as Hamlet is kind of where we're branding it. We, we actually have a tagline, we call it home rentership, which is the idea of combining the best of home ownership and, uh, and a rental experience. It's kind as home rentership concept, easy, uh, streamlined, uh, best of the community's best of housing, um, you know, with all of the, you know, everything that kind of goes along with the best of both worlds within an office affordable framework. Okay, great. So I can see how a lot of the skillsets from your organization and the work that you've done in the past would transfer into this. So going back to my original question.

Speaker 2: (08:38)
So as you build this platform out with your business, have you had to source outside talent, or have you been able to kind of build capacity within your existing organization? Yeah, so, so we've really started within the framework of our existing organization. We still view the multifamily, uh, platform is best suited this product type. So if we are going in and we're building individual communities that are going to be for rent, um, and they all range from about 200 to 300 homes in one location. So it really mirrors more of a multifamily application rather than the single family space. So we haven't gone out and brought in single family builders or land development guys, because I think it's a different model. So if you think about, you know, in large single family, uh, company they're, they are focused on, um, well, I'll take a step back.

Speaker 2: (09:31)
First of all, my understanding of that space is you have a land development group they're responsible for getting the, getting a piece of land through entitlement, getting all the horizontal development done in utilities, in delivering paths. Then you have a construction team or development team that is coming in and building customized homes. Even if you're a, uh, R uh, somebody who's doing more, a commodity type product, you're still customizing the individual homes. You're delivering 4, 6, 8 a month in a particular neighborhood. That's not the scale that we're trying to accomplish. We want to build two to 300 house and we want to do it in a year. So we have to bring in a, a scale concept that is not really evident in the single family, uh, for sale market today. Not that they can't migrate to that, but we've, we've actually gone back and said, look, we think the best way to accomplish this is to leverage kind of that multifamily, uh, construction and development and management, um, footprint.

Speaker 2: (10:31)
And then let's enable them to be better at this, by implementing technology on the operation side to help facilitate that. Let's kind of bring in the best of both single-family and multi-family subcontractors to build a sufficiently let's leverage technology that the single family space has utilized like panelization to be more efficient, but let's do it within a multifamily cost. Okay. That's great. There's something I want to pick up on there now, because you are vertically integrated and you just mentioned panelization, are you looking at other advanced building systems or modern methods of construction to deploy these projects? Yeah, so the answer is yes. Um, you know, it's a little bit, um, it's, it's a little bit tough to do that, uh, in some ways like, so panelization is something we are very much embracing. Um, we have not internalized panelization within our construction, but we are working with third party vendors that do panelization.

Speaker 2: (11:25)
And I think that'll be a big part of the, uh, of, uh, of how we build it at scale, uh, going forward. But even then, you know, we want to build at each property, you know, 20 to 30 houses a month in terms of deliveries. So it takes quite a significant panel shop to be able to, to supply that many, uh, panels on an ongoing basis. So right now we're using third parties, you know, we're also looking at internalizing some of those capabilities in the future. Okay. Have you considered volumetric modular solutions for this, given the repetition and the speed at which you're looking at it? Yeah. So, um, we're looking at all these different technologies, but we have not implemented that at this point. So look, you know, the idea is to start simple and, and, and add as we go and, and try to become more efficient and better at what we do over time by employing some of those technical strategies.

Speaker 2: (12:16)
But we're, we're, we're trying to keep it simple to start with. So, um, but yeah, no, look, I think there's, there's certainly, um, more opportunity for those types of strategies within this framework because we're building the same house over and over and over again. Um, I mean we have six basic foot, you know, six basic houses that we continue to build and then, uh, four townhouses. So it's, you know, they're all the same, you know, the colors may change, but you know, the houses themselves are the same over and over and over again. So it's certainly favors and more industrialized solution for construction techniques. Yeah, no, certainly. And I think, you know, with an art community, one of the things we've been emphasizing is the fact that this has this moment in time and this particular product segment could be the traction. The industry needs to kind of see it at a higher level of adoption of offsite construction technologies, and just advanced building methods in general, and kind of revisiting the entire process, taking some of that multifamily mentality, bringing the general contractors, contractors in internalizing that labor and then being able to roll it out and seeing the spill over into the single family for sale market down the road.

Speaker 2: (13:20)
Well, I mean, that's, it's, uh, it's great in theory, right? I mean, we all see the advantages of kind of this modular construction technology, uh, alternative materials, other than wood, particularly with lumber, it's 1600 bucks today on the futures market. Um, you, you know, it's, it's nice to look at that. You still have to get the local municipalities and the inspectors to buy in. You've got to get the banks to buy in. You've got, so there's, you know, when you're doing a draw to, to, to your construction lender to, uh, say, Hey, I need to, to make this draw. And there's like, well, where's all the houses. Well, they're in a factory in Ohio, they're getting ready to get shipped down here to Virginia. It's a little tough to make that leap. And what percentage complete are we, if you've got a certain amount of product in inventory at the, at the factory, but it hasn't been delivered yet.

Speaker 2: (14:06)
And, you know, and then the inspectors have to look at it, right? I mean, it's a, uh, you know, can you get your local inspector electrical inspector to go to the plant and actually look at the wiring? I mean, these, so it's, it's not as seamless. I think, I think you would, if you talk to most developer builders, we're all about it, right? In theory, you get your, you've got less waste. You have more efficient construction. Uh, you know, you're, you're doing it in a, in a, uh, labor friendly, uh, model there. I mean, there's, there's so many reasons why it makes sense, but there are definitely still some, some hurdles to, uh, to get kind of mass adoption. So, um, that not coming from, yeah, fair enough. Well, we need to see a more mature ecosystem around it, right? It's such a small percentage of overall starts.

Speaker 2: (14:50)
It has such, I mean, if we could just five X that over the next 10 years, we'd be in great shape. And I think as we look at introducing products like the, and communities, like the ones that you're talking about, they need to add to the existing starts not take away from the existing industries capacity. And I think by doing that, we can continue to introduce, uh, you know, more, more technology to that technology solution mix. No question. So one of the, as you look at your, your site acquisition strategy, and you kind of, as you're spreading yourself along the, you know, where you're in your existing markets along the east coast here, um, you're obviously going up against for sale builders that are also looking for similar sites, I'd imagine in many cases. So how are you, how are you staying ahead and able to acquire the locations you're looking for?

Speaker 2: (15:30)
Yeah. So, so look, I mean, we are a, we're a rental housing company, right? We're, we're used to building apartments and operating them on a long-term basis. So how we evaluate a site is probably different than your typical for sale builder turn SFR operator. So, um, you know, we do, um, you know, there are sites that we kind of go head to head with some of the, for sale, uh, builders and other SFR operators. But, um, we have a pretty robust GIS model that we utilize for site selection. We have criteria that we utilize again, you know, we're very researched dependent. And so what we've looked at is we, we aggregate, um, information to try to identify what's really driving the rental decision process. And then we identify locations and characteristics of locations that we have to have for a site to work for us.

Speaker 2: (16:23)
So in other words, we have, you know, we want to be within a certain, uh, we have to be within a 20 minute drive time of a certain number of jobs. So if you look at rental housing in general, people drive down, people don't drive to rent. So, you know, we need to be within 20 minutes of large employment nodes, we need to be certain distance from, uh, good transportation thoroughfares. We have to be close to, uh, uh, you know, essential services, grocery store, uh, pharmacy, um, some sort of, uh, healthcare provider. We want to have our schools with a certain school rating. We feed all this data into a GIS system, which then, um, you know, maps all of our target markets and sub-markets and identifies locations that are prime locations. And then we have all the, you know, ownership data for every parcel and all the zoning maps.

Speaker 2: (17:12)
And we use this and try to take it very much a rifle shot approach to the sites that we're looking for, which allows us to be more efficient. We actually catalog every potential site within every market that we're looking at. And then we go through and we look at wetlands maps. We look at Topo maps. We look at, and we try to try to narrow down what sites work. And then from there, we, uh, we go out and contact owners, virtually nothing we buy is on the market. So everything is kind of direct, uh, discussion between us and the, uh, uh, an a landowner. And I think that makes us way more efficient. And this is why we've been successful and locking up 16 plus sites in the last year, uh, for the strategy and furthermore, another 20 plus sites in our pipeline. So it's, it's taking that rifle shot approach and letting data do a lot of in data analysis.

Speaker 2: (18:01)
Do the work in this, in the GIS system, do a lot of the work for us. Um, and I think what also happens is our, our strike rate by overlaying a rental rate information, employment, data incomes, and allows us to be way more efficient. We know if deals are going to work earlier on in the process, rather than trying to find a site that's for sale and try to figure out if that work can be in reactive and responsive. I just don't think that's again, you know, to, to, to build a business that scales and is efficient. I mean, you have to leverage technology and data in a, in a thoughtful way to be, uh, to be able to find the site. So anyway, that's really been a big secret to our success, I think has been leveraging that data. And, um, and I don't find that we really go head to head with the big home builders that often, because what we're looking for just is different.

Speaker 2: (18:51)
If you look at what a lot of the home builders are doing, you know, they're doing the larger master plan communities, they're taking the, you know, the back 40, and that has 200 lots that they don't think are going to be prime for sale. And they're turning them into four rent communities. That's not what our businesses, so we're the other big differentiator is we're doing single planet sites. We're not doing into Fe individually planted home sites. And so we're a single family guy wants to go in and plat, you know, 200 quarter acre sites to our 200 quarter acre. Lots. That's not what we're looking for. We're going in, we're doing a single planted, uh, site with 200 single family homes on that one on that one line, it's kind of like the old patio homes of the eighties, right? I mean, it's like a condo regime almost, but, um, but in this case it's really just one plat 200 houses or 300 houses and, and all for rent.

Speaker 2: (19:47)
So in many ways it's a, you know, your, your typical multifamily tower tipped on its side and spread it out, spread out a little bit. Right. So I'm wondering from a, from a plan review perspective, do you get more, do you find that you get more pushback, um, when you're going through the process for the many of your typical multifamily towers or this, this horizontal apartment kind of concept? Well, look, I mean, the good thing with multi-family is there is kind of divine defined zoning ordinance for multifamily, and there is defined zoning ordinances for single family, uh, communities at different densities, this zoning ordinance for what we're doing doesn't really exist, which is both a challenge and an opportunity, right? It's, it's hard to go in and, and, and execute on the strategy, just, you know, with an existing zoning code. So we oftentimes have to go into a municipality and work with the local, uh, uh, planners to, um, to really define what it is we're trying to do and, and fit it within either a, an existing, you know, something that's close, try to get a, an amendment to what's close, or we, you know, we, uh, we have an in-house, uh, land use attorney who manages our entitlement process.

Speaker 2: (20:56)
And sometimes he has to bring in kind of, you know, a document or kind of a zoning ordinance that we've developed say, Hey, if you want to adopt this, maybe this is the path of least resistance to get this new zoning ordinance, uh, approved for this, this product type. And because look, frankly, it's that, we're not the first ones I don't think to do this. We're not going to be the last, I think it's going to become more popular. Um, so, you know, but, but it is, uh, it is a process and that is, that's a big part of why these take these take a little bit longer than your more traditional SFR products to execute. Yeah. So early on in the conversation, you, you started to talk about kind of the spectrum of solutions that are out there for serving this segment, kind of the sub segments, and, you know, one of the things you you met, you had mentioned that 16 existing sites, 20 in the pipeline.

Speaker 2: (21:45)
I mean, that's incredibly impressive. We keep hearing big numbers around bill for rent out in the market, billions of dollars sitting on the sideline waiting to be deployed, noun cements left, and right. And what's your take on what's really going on. So, um, yeah, no, it's interesting. I think it's a, it's a battle of press releases right now. Um, I think there is a lot of capital, uh, that wants to deploy into the space. I mean, look, if you take a step back, the fundamentals are very strong. Uh, the product makes a lot of sense. There's a lot of interest in it. It's been institutionalized from an operational standpoint. I think the invitation homes America's home for rent Tricon, uh, these guys have kind of started off with the traditional SFR, had become operationally very efficient and that's led the framework for being able to do this better.

Speaker 2: (22:33)
So, um, so, so you have the combination of quality fundamentals. Operations has caught up. Technology has been implemented that that facilitates managing these properties more efficiently. Um, there is a ton of capital chasing this space. I think there, the reality is, uh, and there was a Forbes article that came out that really highlighted this. There is a bit of a land rush going on right now. So, you know, everybody and their grandmother has come out with a press release saying, oh yeah, we're going to build 10,000 houses over the next two years. We don't have a site yet. And, you know, we don't have a capital partner either, but you know, but we're going to build 10,000 house. So this is why I call it the battle of the press releases because there's been a lot of talk, but we're still seeing, um, pretty slow adoption of condo, brand new purpose, built rental housing communities in a meaningful way.

Speaker 2: (23:26)
Like it's still not a huge number of units in that space relative to the total amount of, of, of discussion that's going on. I was saying earlier that, you know, I think we are the, um, the, the, the largest player in this market. That's never been heard of know that nobody's heard of it. And I, and I do believe that because look, it's, you know, frankly, we probably shouldn't even be having this conversation. Right. But it's, uh, you know, it, it is competitive to find sites. Um, and it's, uh, and, and I think that that process is, um, you know, is only gonna, it's only going to get tougher. Uh, I think that people are starting to get more educated on this space. They see the opportunity, uh, you know, I would say real estate tracks capital pretty directly. So, you know, as capital is more interested in getting involved, they're also aggregating information.

Speaker 2: (24:20)
They're aggregating strategies. They're starting to direct what strategies make more sense research is getting better. Uh, we had a third party research provider three years ago, give us, uh, a report on single family rentals and, and what the reasonable premium is relative to same size multifamily. And there was virtually no data. Like we had more data than the third party, third party research provider did. Um, and we were just trying to use a third party to, to, to, to, to make sure we weren't looking at things incorrectly. And we found that we had more data than they did, and that's somebody who's big in the space. I think that's changed dramatically now. And so, you know, so there's more data, there's more quality research on this more capital. I think we're going to see this driving. Um, you know, what PR what re, uh, investor preferences are.

Speaker 2: (25:14)
So I think there's just going to be more competition, but there's only so much land, right? I mean, if you really use, you know, quality, uh, metrics to, to derive where you need to be, there's just so much land on these kinds of inner suburbs and high growth markets and Orlando, Tampa, Charlotte Raleigh, Nashville. Richmond's, I mean, Atlanta, I mean, how far out are you willing to go, I guess, is going to be the question for this product, because it's, it's tough to find Lance, so, so while there's a ton of capital chasing it, I think it's going to become increasingly competitive to get the land actually. Yeah, I think big difference between interest and action on this one, right. I mean, that's, that's kind of what we've been, we've been hearing. So within our community, um, as we, we, we have an idea of where you're at today and what your plans are in the short term.

Speaker 2: (26:03)
You know, we, we both discussed it. If this is still in its infancy, it's a bit of the wild west out there. The rules are still being laid out. Um, as we play out this game, what, what does it look like in five to 10 years? You know, how does, how does this market start to mature? Do we, you know, do you start to see, you know, a significant number of growth, significant growth, and number of annual starts, you know, for, let's say we're at 50,000 a year now, did we start to see in five years where at a hundred, a hundred, 10,000, because of the capital that's chasing it, we see the higher level of adoption of some of these offsite technologies, um, who is your, you know, do we see a changing demographic that's focused on this, you're focusing in, on for this market.

Speaker 2: (26:37)
Just kinda curious to get some thoughts there, solar, I mean, it's a complex question because, you know, there are a variety of different factors, right? So, um, I think we're already budding up on affordability issues with respect to rental rates. So if you think about, um, there, there's no question there's kind of a demographic search that's pushing towards the suburbs and, um, and, and, and resident preferences are driving this product type, but, um, you know, with increased materials costs, increased land costs, uh, you know, municipalities are getting wise on the fact that there's a lot of growth in what have been, you know, kind of ex-urban areas. And so now they're, it's stressing their utilities, infrastructure, stressing your school systems. So they're starting to add, you know, more tapping impact fees, more school fees, you know, more parks and rec fees. So that cost of producing this product is going up, which is gonna, is gonna stress affordability levels of my opinion.

Speaker 2: (27:32)
Um, so, you know, if you say, look, we're, you know, doing 50,000 of these single family for rent products relative to 350,000 multifamily units, is that going to stay at a reasonable level, or is it going to start to eat away at what would have been multifamily starts? I think there's a lot of, I don't know, it's, it's a hard one to prognosticate on simply because look, I think that if we could get better in terms of industrialized construction and the municipalities became more fluent in that type of technology, I think that we could bring the cost down, which would allow us to do more of this, which I think is frankly in many respects, a better product than multi-family, uh, for these municipalities, it would allow it to be more affordable, which would make it a better solution. But in the near term, I think it's going to become increasingly unaffordable, which will limit the adoption of this product.

Speaker 2: (28:26)
I think we're just going to, we're going to tap out. I don't know, um, you know, the true purpose built communities, uh, purpose-built rental communities. I, I would be surprised if we really hit 50,000 purpose-built rental units per year. I think that's a big number, so. Okay. Interesting. Yeah, no, you're absolutely right. I mean, if we're going to continue to fight for land and continue to pay these premiums at a certain point, you can only afford me. You can afford as a consumer, the median household income in the Southeast is like 55,000 a unit or 55,000 a year. So, you know, at what point does it become unaffordable? If you look at the, um, if the existing single family renters right about that. So the, the median, uh, income for a household that is a single family renter today is right about the, the median at around $55,000 a year.

Speaker 2: (29:20)
So, you know, what can somebody that's making $55,000 a year, uh, Ford in rent, and how far up the income spectrum do you need to go? So if you're renting for $3,000 a month, which is where a lot of the assessment bar product is going, I mean, that person has options. That's somebody who's making a hundred thousand dollars a year, right? So all of a sudden you start competing with, you know, with, with preferences rather than necessities, right. It gets into the needs versus wants discussion. And I think that the, the renter by choice, um, while I think that is a growing segment is a more fickle segment of the overall renter market. Whereas the retro by necessity, somebody who is renting because, you know, they just can't get the down payment, which is by the way, 60 to 65% of why people don't buy today is the down payment.

Speaker 2: (30:11)
Um, you know, that becomes an increasing problem, right? So I don't know. It's a, uh, it's a tough, it's a tough question. I do think this is going to become an increasingly meaningful part of the rental housing spectrum. It's already more than 50% of all rental housing is single family. Anyway, I do think that the purpose-built is going to start to take away from the multi-family starts, but I don't know how much, I don't think it's going to be as significant as people like to think it is. Okay. Yeah. A very interesting perspective. So as we kind of wrap things up, I heard a couple of areas that our community can help the focus as a call to action, you know, focusing on this design for manufacturing assembly. So looking at opportunities on the industrialization industrialized construction approach to focus on vertical integration, um, can create the more land piece. So we're going to have to step back,

Speaker 3: (30:59)
But I'm just curious, what other,

Speaker 2: (31:01)
Is there any other call to action you have for our network and say, you know, what's the one pain point. We can, another pain point that we can reach into our pockets and try and help to relief for you? Yeah. Look, I mean, I think industrialized technology, I think alternative materials, you know, getting away from, um, look, I, I don't know where lumber pricing is going. I wish I knew that one, but, um, obviously it's, it's kind of quadrupled in the past year, um, at least based on future pricing, but, um, you know, if you, uh, you know, I think alternative materials, more green technology, um, you know, I think there's an increased focus on ESG throughout, you know, corporate America. So, you know, I think most builders developers want to embrace more green technology, which I think is going to result in, you know, again, more industrial type industrialized technology, but also the actual materials being used.

Speaker 2: (31:51)
Right. I think there is, there is real interest in being more free and more energy efficient. Um, and so I think it will be interesting to see how that plays into, uh, you know, kind of into building technology as well. So, but, you know, for this rental product, you know, unlike the traditional single family product, we're trying to build it fast and efficient, right. It's, it's kinda like, you know, if we could just deliver 200 houses in a month, we do it, you know, it's, once you get through through the, the site infrastructure, I mean your, your point slabs and you're going vertical, the faster you do that, the better off we are. So, um, so I think it be interesting to see where technology goes. Um, I think there is certainly an education component for somebody that like us, it's more of a multifamily oriented, uh, developer builder.

Speaker 2: (32:37)
Um, and so I think the, the of more traditional single family subcontractors, uh, and their influence and creating more efficiencies in this type of product will be really interesting to see. Um, I think that looking at an improved technology from the single family space and how it will, uh, play into this, this market. And then lastly, I think there's, you know, really interesting technology that is coming around now that is, uh, directly applicable. So, you know, the, the, the Bluetooth, uh, you know, Bluetooth locks and the smart home technology is going to be really interesting, uh, really a requirement to efficiently operate these products. Right. But things like, um, you know, the, uh, our, our national director of maintenance. So talking about now have sensors on your HPAC systems that can tell you when you're, you know, when your, uh, your, your air filter is getting full, or if, uh, you know, if you need to service your compressor unit, or, you know, those types of technologies are going to become increasingly beneficial as well.

Speaker 2: (33:39)
And so I'm kind of excited to see where the tech technology side of this is going to lead us, because I think that will increase operating margins. I think it will make, you know, building more efficient. And, uh, and I think it'll just make a better product and better, better resident experience as well. So we really interesting, no, we completely agree. We would have this focus on home as a service, and a lot of that ties back into what you're doing, and then being able to offer a high quality rental product, but a high quality lifestyle experience for that dollar. And I think that all comes back to you as a single end user, being able to test out and pilot some of these products in different communities and solutions, seeing the response rates, and then being able to roll them out just as you wouldn't want your multi-family projects.

Speaker 2: (34:17)
Yeah. I know. Absolutely. Look, I think the, um, you know, one of the things that we are really excited about is the fact that, um, this is an experienced product, right? It is. You're going to have people that read there because they need to rent. There can also have residents that are renting because they are making a lifestyle choice. Um, you know, we're seeing more and more baby boomers that are renting, not owning this kind of the, uh, 1950s, uh, uh, theory that, that, that housing is the path to a wealth creation and a better retirement, I think, is a, a fallacy that has been proven in the last 20 years. Certainly the last 15, um, you know, when you see the financial crisis and the number of foreclosures and the fact that people need to have maintain mobility. Uh, and so I, I think there's a, um, I think what we will continue to see is, is home ownership rates will decline, uh, I think slowly, um, but we will see people definitely migrating to more of a single family, uh, rental product, uh, you know, just by necessity.

Speaker 2: (35:22)
I think that you're seeing the 30 somethings now that are, um, that are all moving to the suburbs or want to move to the suburbs. They want the single family home, they want the good school district. They just don't want to buy it because their next job may be not in Richmond. It might be in Raleigh, it might be in Austin. And as you see tech companies that are growing and, you know, it's no longer just HQ one and HQ two anymore, you know, they're going to four or five, six cities. And, you know, and I think so, we're going to see more migration and, and, uh, people want flexibility. So anyway, it'll be, it'll be a very interesting, uh, look, I think rental housing and housing in general is going to be very interesting over the next 10 to 15 years is these preferences and trends continue to emerge and, uh, become more solidified. So I think it'd be very different than 1950. I'll put it that way. It's so fantastic. Well not, no, Chris, we're going to wrap this

Speaker 3: (36:13)
Up. I don't think we can do any better than that, but I appreciate

Speaker 2: (36:16)
You taking time out of your day, joining our community, bringing them up to speed on what you're working on as a team. And we look forward to coming back and visiting one of your projects that's up and running. I'll say, and look forward to that. Thanks so much. Thank you.

Speaker 1: (36:30)
On behalf of the housing innovation lions and the university of Denver, this is Dr. Eric Cole. Thank you for being part of her journey. This is where innovation calls home.