Orange County Real Estate Investor Network | TOPIC : What YOU Need To Know About ADUs | 7.13.21

Okay, perfect. Okay, let me quickly share my screen here. Uh, for those of you who have, uh, no idea what this website is, it's, uh, a brokerage website. It's called Pelago, and I just want to run real quickly before we start the presentation on what it does and how we use this property to look for— I mean, how we use this website to look for properties. So here's an example. This is an address to a property that I acquired a couple of months ago. I'm waiting for the owner to move out. And once, once you put the address in, it'll load up whatever details it has. If it was on the MLS, it'll load up that details. If not, then it won't load up too much. This one This one was an off-market, so it's not going to load up that much information. The first little tab it's going to go through is the comps. And so the orange bubble is where the property is right here in the middle. And you want to try to keep your comps as close to that orange bubble as possible. So there's number 1. Number 2 is on the other side, so I'm really not going to use that one. So I'm going to say no to that. Number 3, again, this is off of a major road here. on the other side, so really not going to use that one either. Number 4 is close, and you can start comparing, you know, the bedrooms and the square footage, and this one looks like it's almost a model match. Last— it just recently closed in May for $1 million. Number 5, same thing, more bedrooms but a little smaller square footage, so We'll go ahead and keep that one. Number 6 on the other side, I don't want to use that one. Number 7 close by. Number 8 again close by. Number 9 close by. 10 we're not going to use. Number 11 we're not going to use, a little bit farther away. Number 12, it's almost a model match, so I'm going to click yes. It's not that far away. Okay, so now we're back to this one. As you can see in the middle here, it says this was a flip. Okay, bought in 2020 for $510,000, sold January '21 for $900,000. Somebody got a really good buy on that one. Amazing buy. Okay. So now you've determined what the after-repair value— you can see that there's 2 values up here. The first one is what the website gives you, Pella Go, and then as you customize it, it goes either up or down. In this case, it actually went up a little. Then you go into the rehab and you have, you know, maintenance rehab, which is hardly any money, all the way up to a full rehab. I've seen the property. This is, this is really going to be just a maintenance rehab. So, if I spend $15,000, then I've overspent. But the next tab, and again, you can put, you know, $80,000, $90,000, $100,000 depending on what it's going to do. So, that's going to bring it over here to all the numbers that have interest for me. I actually bought this property at $725,000.

You can see if I hold this for 6 months and I did get a hard money loan on the left-hand side, It goes in through the purchase, and I actually only paid 1 point on the hard money side. So it goes into how much it cost me to acquire this property, how much I had to put down. They will actually loan you rehab. I don't need that, so I didn't, I didn't opt to get that, so I'm gonna uncheck that. So cash invested is $203,000. Um, the after repair value, $1,015,500. Uh, purchase price, rehab costs $15,000. Uh, buying costs are listed there for you. You can, you know, see what the heck those are— title and escrow. Origination fee is that 1% that I paid for the privilege of borrowing the money. Carrying costs is what it's going to take You know, and I put down here 6 months. You can change that to less or more. Um, so if I, if I do this property in 6 months, it's going to cost me about $35,000 in carrying costs— insurance, taxes, utilities, uh, and an interest payment to the hard money people. Um, the last little tab here is selling costs, and I'm not going to change anything right now because I want to kind of show you the bottom line. So It looks like my profit potential is around $175,000 on this deal. I bought it about 3 months ago. The guy, I gave him a month to move out. He's been in there 2, so I need to start lighting a fire underneath him to get him out of the property. But, and as you can see with this profit and stuff, if you're a real estate agent, then you're going to go in here to the selling commission. And in my case, I don't charge myself any selling commission, so that would be zero. So that brings up my profit to close to $200,000. So as you can see, that's what I use this website for. And if you're investors, please go on the website, do the same thing, put addresses in there and run your numbers here, and you'll be able to tell quickly whether you're going to make a profit on whatever deal you're looking at. Well, Whether you get them from a wholesaler, another real estate agent, or whatever, these are, these are pretty good numbers at the end of the day. If you haven't purchased a property yet, then definitely run the numbers. I usually look for at least a 10% return on my investment. Obviously, I'm getting 25% here, so that's way more. But I look for a 10% return, and if the numbers work out from the deals that they're sending you, That's when you can get up and go look at the property and then make sure that all these numbers are correct. So like rehab, $15,000, you know, let's say it's a normal deal and I would pay like $50,000 for the rehab. So that would bring my profit down, but I'm still not crying yet. Uh, if I make $166,000, I think I'm gonna go on vacation the rest of the year. So that's what I use this website for. Please, when you get a chance, just take a look at it and go from there. So let me go over here and I'm going to introduce the speaker and I'm going to read from his bio here. This month's speaker is Jake Pulio. Is that how you say it?

Puleo, but I've been called worse.

So how do you say it again? I couldn't hear you.

Puleo.

Puleo.

Yeah, it's Italian, but I mean—

Okay.

Yeah, exactly.

He was born in Sonoma County and moved down to Southern California in 2011 as he transferred to Cal State Fullerton. My daughter graduated from there. My passion is working with people. I've spent 4 years as a landscape designer 2 years with Andersen Corporation, Andersen Corporation, selling customer windows and doors for their replacement division. I need a new, uh, good window guy, by the way, so if you have one, send them my way. My current role as an account executive with Villa allows me to do what I love with a huge benefit of helping people. Villa specializes manufacturing and installing detached Prefab— prefabricated— prefab ADUs ranging from 450 square feet, 1 bedroom, 1 bath, all the way up to 1,200 square feet. We are an all-in-one project management platform responsible for design, permitting, manufacturing, and installing ADUs. Our mission as a company is to help put a dent in California's housing crisis. Where we are persistent, professional, efficient, and put the best interest of our clients first. Without further ado, Jake's gonna take over. And Jake, take over.

Yes, thank you, Joe. I appreciate that. And thank you to all who are on this call. If you're baseball fans especially, for, uh, taking a break from the All-Star Game here. Um, I promise this will make you more money than the All-Star Game, unless you put a bunch of money on the All-Star Game, that is. Uh, but what we're going to talk about today is accessory dwelling units, ADUs. Uh, they have many different names, um, but the, uh, the actual name for it is accessory dwelling unit. I'm also accompanied today by one of my colleagues, Theo, he's gonna be in the background. If you have questions while I'm talking about ADUs, feel free to drop them in the chat box. He is gonna be monitoring that and responding accordingly. Everybody, I mean, can you see my screen? Somebody, can you reply, make sure you can see my screen?

Looking good, Jake, we can see it.

Okay, wonderful, thank you. So yeah, just to kind of go over Today's agenda. I do want to talk about what it is, you know, what an ADU is. As far as why we started our company, it is in response to the new regulations that went into effect in 2020, assembly bills that were actually passed in 2019. So we're going to cover those as to why it's easier now to do ADUs. And of course, who's building them and why is very important to cover. To cover. I know that Everybody on here is an investor or an aspiring investor, so I definitely want to go over, you know, just some case studies that I've done and running some numbers as far as the return on investments with cap rates and stuff. So one that I recently did actually in Los Angeles, I'll talk a little bit about that one. Part 2, I will skip over— I shouldn't say entirely, but we'll look a little bit at the floor plans and talk about the pricing for sure. As far as what Villa offers, and really our process is great to mention. That's more for my webinar people, you know, to really build the excitement. But I think that everybody on here is pretty like-minded. We're interested in the money part of it. But if you are interested, my information is going to be posted in the chat box as well as Theo's. And so we can, you know, you can call me offline. We can talk about your prop. Properties, you know, specifically because I'm going to cover some things pretty high level today. So I appreciate the fantastic introduction. Yes, I am originally from Northern California, and I moved down here to go to school actually as a transfer from Santa Rosa Junior College. So I've been down here since 2011, and really just love Southern California. I've built a great network down here. And when I, when I graduated, obviously missing my family and friends at home in Northern California, I did have a decision to make. But staying here was probably one of the best ones because this is where I met my wife, you know, where we're starting our family down here as well. Theo on the call, he's actually up in the Bay Area, and that's where our company was founded. That's where our headquarters is at. But he is a lifetime California resident and actually from Sacramento. And Theo does a lot, wears a lot of hats within the company, and just a pleasure to work with. So very brilliant. And if you do have the questions, like I said throughout the presentation, please feel free to drop them in. If you have a question that I can answer live as well, I'm going to leave some time for that. So this shouldn't take me more than 30 minutes to get through. But it's a lot of information, so strap in. So what is an accessory dwelling unit? It can be a detached unit up to 1,200 square feet or attached up to 1,200 square feet. And this is going to depend on the municipality. For example, I had one that came through today in La Habra Heights where they wanted 1,200 square feet. We discovered that they can actually only have 1,000. So it is going to be more specific to your area, but generally speaking, 1,200 square feet is passable. There is also the opportunity for people to do JADUs or junior ADUs that go up to 500 square feet. They can be garage conversions. If you have a detached garage, let's say that's 20 by 20, you want to either convert that garage or build on top of it. A pretty reasonable way to generate more income if you have a property in which you are renting. As far as what we do and specialize in, it is detached only. And I'm going to talk about some of the specifications for what we need in order to build an ADU. And, you know, really the sizing, the setbacks for sure. But the accessory part of it, it's meaning that it's an accessory to the primary. So if you have an empty lot and you're looking to use our services for a unit, unfortunately we don't deal with primary residence. Although we could possibly help you out with, you know, building the unit and delivering and installing it, we would not be the ones responsible for permitting for that particular thing. And the reason why ADUs have become more popular is because of that permitting thing. Now, with an ADU, it must have its own entrance, points of egress, cooking, sanitation, and sleeping space. Typically connected to the main dwelling are the utilities. So you have, you know, power sources in which we'll have to upgrade panels on. If we can connect into the main sewer, that's fantastic. Some cities may require us to go to the street. And we're gonna talk a little bit more about that here in a little bit. But as far as the options for a separate address or utility connections meters, that is a fantastic option, especially for rentals. If you live in the primary home and you're looking to add an ADU for rental income, that's fantastic. And you don't wanna go through the hassle with separate meters and stuff. You can rent your unit, utilities included or what have you. But say you have a spot that's already being rented and you wanted to add a detached ADU, that's definitely a great option as well. As far as why we began our business back in 2019 was because of the assembly bills. There were 5 of them that passed in 2019 that went into effect in 2020. ADUs were not in the conversation in a lot of cities across the state. Now it is a requirement for its— I should say, the citizens of California to be allowed to build ADUs. So you have the ability to build one ADU and one JADU per parcel. Now, one thing I want to mention is that if you are doing both of those, you would have to be the owner-occupier of the primary dwelling. So if you are not, you have a decision whether you want to do an ADU or JADU. As for the permits, We were seeing extensive timeframes for the cities to, to approve the permits. Now they are required to get back to us with notes and comments within 60 days, sometimes a lot sooner, which is fantastic. Also reducing the permit fees. In Northern California, we had a customer up in Windsor who I believe tried to do this project back in 2016 or '17. Was looking at about $40,000 in permitting fees. Fast forward to 2020, we're doing his project. Currently in the works of getting that installed, and his all-in permit fees were less than $20,000. So definitely a help to the citizens here who are trying to build ADUs, making it much more affordable. No more parking requirements, whereas before we might have had to build a garage or a carport or just add a parking space. If you're within a half mile of a transit stop, there are no parking requirements to provide for your tenants. And then the owner occupancy laws. So as I mentioned before, unless you're building a JADU, As well as an ADU. You do not have to be in that primary dwelling in order to build an ADU. So if you're getting good rental income for that area, it could definitely be something you want to look into to add to that property and really maximize your rental income stream. I would say one of the biggest ones for us down here in Southern California are the setbacks. We were talking about 20 feet, 15 feet setbacks, you know, No more than 2 years ago. Now it is a consistent guideline across the state where they have to allow us 4 feet from the rear and side setbacks and 10 feet from the primary residence. So with the little bit of space that we have in a lot of these lots here in Southern California, this one was definitely big. But if you have more questions about those, please feel free to ask them. But that just kind of is a nice little overview of them. As far as multifamily, Parcels. This is where, you know, as far as having units on a parcel to rent out, if you can add more than one unit, if you have the space for it, this is where you start to see the cap rates really soar. And so if you are somebody that owns multifamily parcels, this is definitely something you want to look into if you're doing it for, you know, for rental income. But yeah, we can dive a little bit more into that. I won't spend too much time on this slide here. So why people are doing it now, obviously because it's easier than ever, it's more affordable than ever in the sense of the permits, the timeframe is cut down. But honestly, people are thinking differently about their living spaces. In particular, you have people that were not savvy investors before, they just simply had a home where they, you know, had a backyard. Well, now the kids are gone and they want this more for their retirement. And they have the space to do it. No one's there to run around the backyard anymore. And so they're adding these to their property to generate income. And then maybe when they do retire and want to move away from here, they keep their parcel and then they have a primary dwelling and an ADU both generating income for them. As far as the, you know, the people that are doing it also, we obviously with the pandemic you know, a lot of families have moved closer together. This has definitely provided people a way where they can be closer to their parents with also kind of being separate and/or, you know, not having to buy another piece of property, build a new home, or build an— or buy an existing home where the market right now is pretty much insane. And so this definitely is a much more affordable way to do that. Also, with people working from home, We have actually had quite a few people contact us to build them office space, and we have some units that definitely have accommodated their needs there. And they just know, hey, we're not going to go back to an office ever again. If they're business owners, let's generate— or let's, let's create some space that I can have my separate office. They have plenty of write-offs and things like that that they can do through their business. So definitely another option for people to build an ADU. Also, the historically low interest rates. If you are somebody that uses lenders, I'm sure you've noticed this over the last couple of years, just how blessed we've been with low interest rates. And so definitely making it more affordable. And then, of course, the assembly bills, as I mentioned already. So another slide that just kind of shows this, you know, these people that are doing the actual ADU, but obviously most of you guys are here. And, and ultimately, we want to talk a little bit more about that return on investment that you will get. So if you currently own a place in Southern California, you are in one of the wealthier places in the country, right? Regardless, I mean, our costs of living are high. You have, of course, the housing market that's pretty darn high right now. And this is where you want your property to work for you. And many of you, or I should say probably most of you on this call, have property or are aspiring to purchase property. And whether you're doing it to flip it or whether you're doing it for rental, you're obviously smart people with your money. But I definitely do want to talk more to the people that are looking to rent it. Now, flipping, obviously, as Joe just showed us, it can be a way in which you generate some, some income pretty quickly. But if you're somebody that's holding on to a property for the next 5 years or so, and maybe let's move it more to like 7 to 10, this is something that you could probably do 100 times over and win every single time. And talking about the cap rates, I did mention I wanted to pull up a study that I did just recently. This is for a customer in Los Angeles looking to do one of our, our 2-bedroom, 1-bathroom options. Which is our Villa 750. So that's closely correlated to the size of the unit, 750 square feet. Our estimated cost all in on this project was going to be about $275,000. The retail on that unit goes for about $250,000. Usually what we're going to run into is some site work and things that could bump that price up, but we'll talk a little bit more about that in a second. But for the sake of this exercise, We plugged in, so I looked at really the area around and what the rental, what the rents were going for on 2-bedroom units. And a lot of them that I was finding were for apartments. So ultimately, with a brand new basically home or style of home, you're looking at potentially increasing rent over an apartment complex. But we settled on about $1,500 per room, so generating $3,000 in potential rent. Obviously, this can fluctuate and I can plug these numbers into your, you know, into your situation if you have, uh, if you're interested, I should say, in getting some sort of analysis on your property. But that would generate, of course, an annual gross rent of $36,000. Now, what we want to look at here for cap rate is, you know, what kind of expenses are we dealing with here? Uh, and to, you know, be safe, I always tell people let's put away $200 per month, uh, to deal with maintenance. Let's look at the property tax that may increase. We'll take 1.2% of the total cost of the project, right? And then we look at the insurance premium that could— I should say, increase by $1,000. So all in, you're looking at about $6,700 per year in operating expenses. So if we subtract that From the gross rent of $36,000, you're looking at a net of $29,300, obviously divided back into that $275,000. That generates a cap rate of 10.65%, which all of you will know is pretty darn good. Now, obviously, this can fluctuate based on the cost of the project versus how much rent you're actually getting, but this is a very realistic situation that's happening here in Southern California. in Los Angeles, to be precise, uh, in which it's generating a pretty realistic cap rate there. So, uh, really something that you should consider if you're somebody that has a property you're currently renting out, um, and looking to obviously maximize that space and your rental income. Now, as far as who is building ADUs, I do want to mention to you all that the mission of the company is to help California's housing crisis by helping people install ADUs. This doesn't mean that we do every single project that we present. There are other ways to do this project. There are other prefab companies. Uh, there's obviously garage conversions, which ultimately could be cheaper than what we're talking about with a detached unit. Uh, and then of course there's a traditional stick builder. So I'm sure everybody has contractors that they've worked with. Uh, I'm not here to badmouth any of them. We do know that the good ones can be few and far between though. And if you have good experienced contractors, hold on to them, right? They, they're, they're hard to come by. They're in high demand. And ultimately, you know, if you let them go, who knows when you'll see them again. So with the traditional stick build that we are going up against, we do run into contractors that can be slow. And it may not even be something that's their, their fault. It could be just unforeseen things, right? They could have ordered the material. That has, you know, takes much longer to get there. Maybe they don't order enough. There's some changes that happen during. Those changes could obviously create more expense and ultimately create some complications. So that's why with Villa and prefab companies in general, we try to simplify things. We want to make it easier for the customer. We want to make it way less of a hassle. We want to make it more accurate and transparent as we move through pricing and ultimately just delivering a better experience. So that's why we We have faster timelines by far than stick builders. We typically will cost less depending on the project. Let's just say in the unlikely event we have to rent a crane that stretches, you know, over 200 feet. Okay, that might be more expensive than just doing a stick build. But ultimately, we see a much more smooth process. And this is where you have to outweigh, or I should say weigh your options in whether you want to deal With potential risk and more headache, or if, you know, you want to kind of deal with a company that has all of the, you know, the steps in line for you in order to deliver a successful and nice clean experience for you. Now, once again, I want to say that there are other companies out there that we do encourage our customers to look at. They may be a better fit for your situation, whether they have a smaller unit that they provide You know, with, with less, maybe less of the amenities, just a cheaper product overall. That's definitely something that we encourage. But obviously I'm going to be a little bit biased. I work for this company. I do love what we do as far as a company. We, we're very transparent. We really look out for the customer's best interests. I meant it in my bio, the one that Joe read off to you guys. But we do take care of everything from design To installation. So that includes making sure that the unit is what you need it to be. And if this is for rental, you know, we might take some of the upgrades that are included in our standard price and remove them, right, to lower that price for you. It just really depends on what the situation is. But if you want some durable materials, right, things that are not going to break under a renter's watch, that's also a conversation that we want to have with you. We create a site plan calling out the utilities, finding out you know, really the ins and outs of this project and what it's going to take. As far as financing goes, we do not have any in-house financing. We do have lenders that are our partners. And we, you know, if you don't have anybody to talk to, which I can imagine is unlikely, but if you want maybe a separate pair of eyes on it and maybe some more options, we do have partners in that space as well. We take care of the permitting. And what a lot of people don't understand is that this can be the most stressful and annoying and time-consuming part of the process. And that's why we have a team— multiple teams, I should say— that are dedicated to pushing these projects through permitting and getting them started sooner than later, which of course leads us to the installation. And that is included with the build of the unit off-site in a factory and also the site work, the preparation, the foundation, the utilities, all of that as well. And we're going to talk about timeline here a little bit later and as to why we will be quicker in that regard. Areas that we are working currently, currently building would be Northern California, the Bay Area. That is where we started. We have about 30 units that we have successfully installed up there. Los Angeles, we got started at the very end of last year. We are in the process right now of installing our first unit down here in Southern California. which is pretty darn exciting, uh, with many more going through the cities. Uh, Los Angeles, I believe I have 30 or so projects right now in the works, uh, which is fantastic. And so soon we'll be having quite a few more units installed as well. I will mention also, and I think there's a slide for it, but I'll mention it now, we do have a model home in Burbank. So if anybody is curious about that, uh, we can chat offline about that as well. Uh, the other thing I wanted to say, if you have any, um, Investment properties in Austin, Texas area. We are going live in Austin, Texas. They have a pretty hot market for what we do and what we sell. And so we are opening that market at the end of this month. So be on the lookout for that. Requirements to build with us. So lot size. This is one thing that surprised me when I got started with my— with this company was exactly how much room we needed. And as you can see in this backyard here where that foundation is prepared, those are 4-foot setbacks right here. Now they have a little bit more space in between, probably about 20 or 25 feet here, but you are only required to have about 10 feet from there. So our smallest unit's about 15 by 30. It's a 1-bedroom, 1-bath, and ultimately we only need about a 25 by 45 area in order to get that done. So you'd be very surprised, you know, to see if something would work for you. But if you have any questions or if you're You know, interested in seeing, we're happy to set up an assessment where we can view your property and ultimately tell you what might work there. As far as delivery goes, can we drive a semi back there? Obviously, in this situation, we could not. Therefore, we have to use a crane. Then we have to check, do we have power lines running across it? Is there going to be any complications with the city on that, and/or is it even feasible? So those are more things if you're curious if your properties do qualify. Once again, we're happy to set up a free assessment and really check it out to give you your options there. As far as the design, you know, portion goes, I'm going to kind of skip through this. This is something that we do go into detail with. And, and this is really part of our process is once again getting a unit design that works for you. So this means the size, the layout of the kitchen, you know, do you want sliding glass doors, so on and so forth. So I'm just going to kind of skim through this, but show you, and these are all on our website, by the way, with the prices listed, that these are our 1-bedroom options. You have the 450, 550, and 650A. With the 2 bedrooms, you have the 650B, the 750, as well as the 800 and 1000A. The 750, this is our most popular model. We actually just got this pre-approved with the City of Los Angeles. That means that Once— if somebody signs a project services agreement and goes into contract with us, they are instantly approved with the city. So they do not have to wait that 60-day period or 90-day period to get that approval. They're instantly approved, which is fantastic. We can still make adjustments to the floor plan, but overall there's no structural changes to it. Therefore, the city has to approve it right away. I do want to talk about really the price points here. So as listed on our website, these, uh, the prices, and as I said to you earlier, the 750 retails at $249,000. We include a pro— uh, the budget for building the unit. We know exactly how much that's going to be because we build it in the factory. And this includes the floors, the walls, the insulation, exterior siding, your roofing. Uh, this includes your cabinets, your appliances, your bathroom, all the fixtures and finishes is Stuff like that. So that budget is included in there as well as a budget for permitting, a budget for site preparation and foundation work, a budget for the utilities, for the delivery, so on and so forth. So we try to encompass everything into this into this price point. What we will run into are site-specific things, right? Do we need a crane for the project? Do we need to take down a fence? Do we need to take down a shed or a garage? Do we need to remove trees? These are things that wouldn't be in the standard preparation, but this is why we're happy. To take a look at your project and give you some sort of idea. And this would be prior to any sort of commitment with us. The permitting fees, believe it or not, cost us about $15,000 with the city. We have a $10,000 service charge with preparing everything. But ultimately, it is expensive to get these things approved with the city. As you jump up above 750 square feet, which is why this unit is specifically designed to be under 750. It's actually 747 square feet. Once you jump over that 750 threshold, you incur what are called impact fees. Most cities are going to charge for them, except for the City of Fullerton thus far, are going to charge you for impact fees, which are basically a flat tax that goes to the city's infrastructure. So I don't know why they break at 750, but ultimately you'd be incurring those costs, but they are built into That baseline cost of the unit. And so we don't hit you with anything on the back end for those. Of course, 3-bedroom options, if you have the space for it. The 1000 is fantastic for rental, as is the 1200A. Really just well-thought-out floor plans and trying to maximize the space, eliminating hallways, things of that nature. So, but they do come fully equipped with your dishwasher. Your stovetop, refrigerator, your sink, your microwave, your washer and dryer. All those things are in there and even have some nice amenities like double vanities, walk-in closets, so on and so forth. So we would love to look at your property and see which one would work for you. But like I said, we do dive a lot deeper into this in our process of figuring out what unit works best for you. As far as the design options, said style, gable style roof, these are things that are not any sort of difference in cost. You can pick different colors for the in or for the exterior as well as the interior. And we've worked with some very well-known designers in the Bay Area who have come up with a great— I should say, great plan for delivering people a nice standard package. Because in building a home, this can be one of the most complicated parts of the process, time-consuming as well. They can't figure out what they want. And so we've laid it out pretty simply. Now, for my investors, I will mention that these— many of these upgrades are standard. So a farmhouse sink, shaker-style cabinets, the stainless steel appliances, your, your backsplash, all that stuff is standard in that price. If you're looking to save some money, we can downgrade things. We can go to a stainless steel sink. We can do, you know, black or white finish on your appliances. We can change these to wood grain painted cabinets instead. And we're talking about, you know, maybe $10,000 or $11,000. Maybe a little bit more that you can save by going with an investor package. You don't have to do it all, you can do some of it, but just giving you an idea of some of the flexibility that we have. Because with the prefabricated units, there is definitely, uh, you know, this thought behind a prefab being one built very cheaply. Uh, we all think of like grandma's trailer, 2x3 framing, aluminum siding, that sort of thing. These are built very, very well. This is 2x6 exterior framing. You have more insulation in the walls because of it. We use a high-quality insulation, which is also insulated in the attic space, which is not very much, but we blow it in there. It's insulated in the floors. We're using high-quality materials for the exterior, composite materials that you do not have to deal with as far as getting them replaced because they last so long. Warranties, like on your roof, you have a 30-year warranty. On your siding, you have a 50-year warranty. Villa covers the whole entire unit for 7 7 years, and then also gives a 10-year warranty on the structural foundation site work. So we really try to do a great job with handing the keys over to a quality unit. And so hopefully, if this is something that you're renting out, isn't going to be destroyed right away, you're not going to have to deal with, with, you know, anything breaking on it. But if it does, we obviously cover it. So definitely something that's a selling point for us versus some of our competitors. But I definitely wanted to clear up that this unit is built well. And the other thing about it is that it's built in a climate-controlled environment, right, where they're able to get this done in a very timely manner. And we're not talking about 4 guys trying to build a house. You're talking about multiple teams of maybe 3 or 4 or 5 guys building this home. And that's why it only takes them a couple of weeks to complete it from start to finish. Some of them will come Fully completed, like one single unit, what they call modular, where it's delivered on the foundation and we might have to touch up the casings and stuff like that. Or some of them are 2-mod, where we have to do the stitching and seaming, finish off the floors and stuff like that. But regardless, we're talking about a lot of construction that happens in a very short amount of time. Now the other benefit on the— I'll go over to timeline here. The other benefit as far as using prefab is that That work is being completed in a factory offsite while we are doing our onsite preparation and our foundation work, preparing the utilities and all that stuff. So you're talking about an expedited timeline as far as building it and completing it in order to hand over the keys. So we do break our timeline into a couple of— I should say a couple of phases here. Phase 1 is a design and permit process. This first part right here, what I will mention, can be a lot shorter than 1 to 2 months. And for most of my investors, it is very quick because you don't really care what the unit looks like in a sense. You know, you want maybe it done the least expensive, you know, let's take out the upgrades type of thing. You're pretty certain on not needing to change anything structurally to that degree. But ultimately, this could be a lot less time. But The part where we need to hurry up and wait on the city, unless you're doing that 750 in the state or the city of Los Angeles, is really this next 2 to 4 months. 60 days is the required time in which they need to respond to us with notes and comments. Once they do respond to us, we're able to turn around, make any sort of adjustments to it, and resubmit. So the 4 months is a very generous timeline. We have seen permits approved within a 30-day timeline of the customer signing the actual contract, so we can move this process a lot sooner. But where we're seeing a little bit of delay as well is in the actual factory. So we do want to be very transparent with our clients that we will aim for 7 months to complete a process— a project. Where we might have some holdup is when we get it submitted to the factory, just depending on what the volume is looking like. But 3 months is very doable, 5 is very generous. But So really, it's, it's worked in a way that we want to make sure that you are updated on where your progress is, right? And that is with the factory, that is with the city, that is with every bit and piece of this unit. But like I mentioned, we are building the unit in the factory simultaneously doing the site preparation and foundation work. And so the installation of one of these units actually only takes one day, whether we're driving it in or craning it in. Both very exciting to watch, crane especially. But the delivery is done, and then we're doing about 3 to 4 more weeks of hooking up utilities, adding landings to the, the points of egress, stitching, seaming the unit up. So ultimately, though, we're looking at hopefully a 7-month timeframe of getting a project completed. The other beauty— beautiful thing about the prefab way to go, prefab route, is When you are, you know, borrowing money from a lender, yes, the interest rates are great, but any interest kind of sucks. And so if you are— if you're doing with a stick build, let's say contractor, for example, you know, they might require $60,000 upfront where you're maybe borrowing that amount, right? And then as they go along, you're paying them and they stretch the project out for a year and a half or what have you. You're having all kinds of interest accrued during that time before you can even get that first check from your tenant. In our situation, we only require one draw at the beginning of this that's not for the full amount, but really that 3 to 5, 4 months, whatever it is that we can complete this, you're looking at, you know, getting the keys to the unit, uh, in a time of 3 or 4 or 5 months where you're not actually, uh, getting hurt by that much, uh, interest. So definitely getting those checks in a lot sooner and, and obviously generating that income. Um, as far as process goes, and one thing I don't want to skip over, is we take a look at people's properties and, and ultimately determine the feasibility. And that happens in a few steps in order for us to deliver our proposals for our customers. What we do in this, this process is first a kickoff where we want to purchase a site plan, we want to call out your utilities, we want to know where everything is on this property and create this roadmap for our construction managers. We will send one out on site during this process to really get eyes on it and take the measurements and the pictures and check the feasibility of delivery. Where do we need a trench for the sewer and the water and all that stuff? That design session, as I mentioned, we, we do take some time if you want us to take some time on it. If you really don't care, we can skip over that. Ultimately, we're going to play, you know, by your rules on this. To deliver a proposal. Now, this is really also where Villa is going to differ from either Stick Builders or some of our competitors as well, is we want to deliver a project proposal, a number in which we know we can get this project done for. And this is what actually kind of makes my job hard, is that I am delivering a number that's very conservative that says, hey, we guarantee we can get the project done for this amount. And if our actual bids from our subcontractors exceed this proposal, you would have the right to cancel this project, and any money that you've given us, we would return to you. So we really try to bring a lot of transparency to really an industry that lacks it, and that is construction, where you sometimes may not be as savvy with construction. They kind of remind me of like when I take my vehicle to the shop, I don't know really much about cars and I trust the guy that's telling me that I need to replace my, you know, windshield wiper fluid or something like that, right? The same thing with contractors. They can end up taking, you know, advantage of people and we want to really just change that whole stigma that contractors have around them and really delivering a good experience, making it transparent, and then of course, Delivering a price in which we can stand behind. Once again, we do have a model home down here in Burbank. You know, if you are interested in taking a look at it, it's a smaller unit. It is a 650 square foot unit. It is a two bedroom unit though, and it really gives you a good sense of what we're able to do in maximizing the space there. At this time, I do want to open it up some questions. I know I just threw a lot of information at you all. So thank you for bearing with me there. But if you have been sending them in to Theo, that's great. But if not, I want to hear if anybody has any questions. I am open to answer. And thank you again, Jeff, for having me on. No questions at this time.

I had a question. Do you like— do you recommend putting like solar on top of these?

That is a great question. So they are solar ready, which means that they can withstand the weight of it as long as you don't put like tile roof on and then solar wouldn't be able to really withstand that. But with the standard roofing that we put on it, it can withstand solar. It is not required. So these are built to what's called a HUD code regulation. They're— with a lot of new construction being stick-built or what have you, it is at a state level or local level that requires the solar panels to be added. With the HUD code, it is actually a federal-level standard of building that does not require solar panels. So definitely not necessary, but it is something that could be added. Great question. Any other questions? Oh, just want to confirm, as you said, the— they were attached, they could be attached or detached, meaning a totally separate building? Yes, so ADUs have— there's many ways in which you can do them, but, uh, we specialize in detached. But if you want to build an attachment to your home. You can get permission to do that from your local municipality. It would still have to, you know, have the same amenities with, you know, kitchen, bathroom, living space, right? But if that's better for your situation, you can definitely do that. What people like about the detached is that really you're now offering— I mean, you can typically get more rental income from it because it's really a separate unit, a separate home, if you will. And then another reason why people are doing it with like their family members is because it gives them their separate space, their independence, but still being close to, you know, the primary dwelling there. But then the other option was like with a junior ADU, you can convert the garage, you know, an existing garage that's there, or you can convert, or you can like maybe build on top of that garage. Another option to do it there. And the JADUs, are going to be probably timeframe about the same as a prefabricated one. So it's definitely something worth looking into if you have a garage on a current property that you're renting. And then as far as the cost goes, they're going to be pretty, you know, less expensive usually than most of the detached options as well. But good question there.

Next one.

Can it be done on a— where there's already 2 units on the property? It depends if it is zoned as multifamily. If it is zoned as single-family, the primary dwelling and the ADU are all you can do if you are not the owner-occupier. If it's not owner-occupied, I should say. However, if it is owner-occupied, you can build another unit that would be a JADU. So that would be attached to the primary. And so you'd have basically your primary, your detached unit, and then you could do an attached unit there. But if it's multifamily, then I would be able to add another ADU to the parcel.

Okay.

Thanks. Good question though. Anybody else?

Jake, I sent a couple over to your chat if you want to look there.

Oh, sure. Sorry, one second here. Okay. Let me see here. If the lot is not zoned for residential, will the law still allow you to build an ADU? That is a great question and not something that I've ever attempted. Theo, have you ever had that question? Or has that—

Yeah. So, so typically we are restricted to single and multifamily homes. Sometimes on an agricultural lot, uh, they'll make an exception, but, you know, usually on commercial or industrial or anything like that, there's a limited, limited slim chance of an ADU. These laws were mostly passed for single and multifamily lots.

Very good.

Got another one about utility hookups.

Oh yeah. So, Um, it depends, uh, once again on the local municipality. So if they allow us to plug into, let's say, a sewer cleanout that's on the back of the home, uh, that's definitely the route that we're going to take. We're going to try and take the most efficient, cost-effective way, uh, to build the unit. Um, with the power, this is something that comes up on every job pretty much. You've got homes that were built in the '50s with You know, 100 amp power panels on them, 200 at best, right? We would definitely— our units are all electric. We can do gas to the unit as well, but what we would be required to do in that circumstance is upgrade the panel and create a dual panel. So you'd have one that's for the primary dwelling, and then you'd have one that's designated to the ADU. But then we would be pulling from that directly to the ADU with another panel on the ADU. So you have the whole breaker system there, but that's also how you can create a separate meter and stuff like that. As far as like the water, that depends on the water pressure. Sometimes we can pull it from something off of the back of the home. We may have to tie into the main, but everything is just underground through and through. So you don't really see your utilities at all. Am I missing any utilities? Water, power. If you have a gas, you know, gas on the home currently, we can pull from that as well to hook up to the ADU. and once again provide a separate meter there. Um, good question here. You have the— as far as our company, so we actually began in, uh, 2019 is where really where our concept started, um, knowing that these, uh, accessory— or I should say these assembly bills, thank you— are being, um, introduced in 2020. So that's really when we started selling ADUs was in 2020, um, and With the, the folks that we have currently there, a lot of them actually came from a company called Blue Homes, who was a prefabrication company that did very high-end units. The— so this former CEO of Blue Homes now is one of the co-founders of Villa. We were previously Habitat ADU. That changed this year. Due to the fact that we were getting a lot of confusion with Habitat for Humanity, which of course we know is the largest, uh, nonprofit organization for home builders. So, uh, we changed. We ended up making the executive decision to change to Villa, uh, which we're very happy about. But, um, as far as the, um, you know, that kind of how it started is the former CEO of Blue Homes, that very expensive prefab. We had a great concept there. But it was just way too expensive. There wasn't enough demand for it. With the ADUs, you know, having it, you know, these, these assembly builds that, that just made it so much easier and more affordable to do. We took basically the same concept, shrunk it down, uh, you know, made it much more affordable for people to install these. So, um, it's— you'll find a lot more information about, you know, how the company started on the website, which I do recommend you, uh, you visiting. And let me Yeah, I don't know if you put the website up here. I'll type it in here so you guys can have it in your— oops, that's direct to Joe. Send to everyone. Here we go.

Just sent it over.

Okay, there you have it. Yeah, so I recommend you guys checking out there. It'll have our floor plans and everything on there, um, and how many units we've installed so far. All in Northern California. As I mentioned, we're— I think our first delivery day down here in Southern California is next week. It's up in Santa Barbara. But we have 30 units installed up in Northern California. Some of them are still— don't have the certificate of occupancy. You know, still working on finishing off that project. But then we have, like I said before, I think 25 or 30 that are going through the permitting process here in Los Angeles. Probably, I think we've sold a total of 300. 300, I think, was the number that I heard today. It was actually one of my customers that signed a project services agreement on Sunday. They were the 300th customer. Some of those have not made it all the way through, whether the, you know, they couldn't get funding for the project, whether we couldn't get it through the city. That doesn't really happen very often, but usually it's more around financing a project, but A majority of those are in the works to get installed, or if they're not already underway. Do you have pre-approved plans with the City of Los Angeles? Yes, we do. So thank you for the question, Sunit. So we do have our 750 unit that is pre-approved with the City of Los Angeles. So that one does cut down on the timeframe. Now one thing I want to mention about that timeframe up on the top, or So let me just share my screen here real quick. So this showed really where it gets— the timeframe gets cut out, right, for waiting on the city, because it's 60 days that they're required to get back to us with the notes and comments. We make any sort of revisions they require and then resubmit. This essentially would go away. So you'd have maybe a couple of weeks of finalizing your design, submit to the city, Get the instant stamp on it. This is where we might see the hangup here is more on the production of the unit. There's a very high demand for these, these ADUs. And so ultimately the factory could be backed up by the time that you start. But that's why we give ourselves that 5-month buffer. Usually it's about 3 months before we're delivering your unit. But in that meantime of, you know, Waiting on the unit to be built. That's also when we're doing that site work, and so ultimately those are being being done at the same exact time. But great question there. Let's see, as far as how much over the baseline cost do we typically end up? That's a good question there. So we it really really varies. We would love to check out you know any property that you have. In mind, you know, I'm going to put my phone number up here. I don't know if you created or included yours as well, but I would love to take a look at the property that you're, you know, thinking about doing. So I would say that if we have to use a crane, we would budget, you know, say around $20,000 extra for that, which can sometimes be a killer of the whole entire deal. But that's why we want to bring that up to you ahead of time. And not waste your time or hours. If we have to trench to the front of the house to connect with utilities, we might see an increase of $5,000 or $10,000 there. If we have to remove some large trees or there's a garage or something like that, you might tack on another few thousand dollars there. So really it could increase by $20,000, $30,000, $40,000, right? We've seen that. We've seen some site work where we're dealing with a huge slope on a hill. where the foundation requires, you know, some extra attention, say in the tune of like $30,000 worth of attention. So those types of projects, you definitely have to dig in and see, hey, is this really worth it? Am I going to get my return on investment? And that's why I said, if you're somebody that's holding onto a property and generating income and you want to just maximize that, the ADU could be a good answer to that. Because it's doing 2 things. One, generating obviously the rental stream from, from, you know, your tenants that you're renting it to. And if you're able to do a 2 or 3 bedroom, that can be a significant amount every month, definitely paying for the mortgage and then some, right? We want some positive cash flow. The other thing is it's building value in the property itself. You purchase, you know, say you have a property that's worth $700,000 right now and you put a $300,000 literally a piece of real estate on that existing parcel. I'm not saying it's going to build $300,000 in value in the property, but over time, as the ADUs are becoming more desired, this is where within 5, maybe 7 years, you're going to start to see some major returns on, on your investment. So, you know, really, it's going to be case by case as far as You know what that site work extra is going to be, but it's definitely worth something looking into, even if it is a complex project. Okay, so if you have, let's see, is a good question here. What is the best step if I need to confirm feasibility for one of the investment properties? I would say reach out to Theo. He can pull up your property on you know. Google Earth is fine. He can just basically check and look at the street view and say, okay, this is doable. He will also kind of set you up with this is what you can expect. And then if you're interested in moving into the process where we deliver the proposal, we do require a fee for that. However, if the project doesn't end up going through, if you don't like the price of it, you don't like the product at the end, you don't like, you know, number of reasons, whatever, for whatever it is, We would refund that deposit. So it's about a 2-week process for us to, you know, get that kickoff call scheduled, get the site visit scheduled, design session, get the proposal. But over that 2-week timeframe, you'll definitely learn a lot about ADUs. And then of course, in your property specifically, really learn what it's going to take in order to have one of these installed. But great questions. There for the small bunch that we have. You guys asked some good questions, so thank you for those direct ones.

Okay.

So what qualifies as a transit stop? This is actually something that can be— you can Google your property and say, am I within, you know, how far am I within from a transit stop? And it will actually pull up a map Of that, but if you don't end up doing that, it's something that we'll look up prior to because we want to make sure we're going to get this thing through the city. But they're everywhere in Southern California, so you typically don't have to concern yourself with that. So we would be happy to take a look. But we're talking about bus stops. There's some other weird one that's like it has to do with like ride sharing, and I'm not sure if it's ride sharing services with like Lyft or Uber or whatever, but. Those are not sometimes visible but are recorded with the city that we'd have to look into, and that would be obviously case by case. But another great question there. Any other questions? And you can ask them over the mic if you'd like to as well. But that was a lot of, a lot of good ones, so I appreciate all the questions, everybody.

Thank you.

Yeah, Joe, do you have any questions?

No, I don't.

I asked the solar one. I was kind of interested in that one, and thank you for answering. I appreciate it.

Absolutely.

No, I don't have any more questions, and thank you for giving this presentation. I appreciate it.

Absolutely.

I know there's only about 12 or 13 people on it at one point. But I'll send this out to everybody in my group that couldn't make it, and then they can take a look at the, uh, the replay.

Yeah, absolutely. And then if you want to include, you know, my phone number and email, so if they want to get— and also Theo's as well, uh, his email and phone number— if anybody wants to explore, you know, further with their specific property, I'm happy to, you know, address that So, okay, but, um, yeah, we, we thank you so much for letting us jump on here and talk about what we do.

Okay, great. Yeah, again, thank you both. I appreciate it. And I'll go ahead and, um, if no other questions, I'll go ahead and end it at this point.

Beautiful. Thanks, Joe. Appreciate it. Have a great night, everybody.