Transcript
Prefab Review:
All right. Hello everyone. Welcome to Prefab Review Podcast, slash video screen, slash whatever mediums this is on. I'm Michael Frank from Prefab Review and today we are lucky to be talking with Toby Long of Clever Homes. Toby, I think this is his third or fourth time doing video and audio stuff on our platform, but he's been one of the most helpful people in the industry to us. (Prefab Pod 2 w/ Toby Long & Prefab Pod 15 w/ Toby Long) He's an architect based out of the Bay Area. And I guess Toby, you can speak more to what you do, but I'd say doing a combination of high-end single-family homes as well as multifamily and commercial stuff. And the motivation behind having Toby on today beyond just his general wealth of knowledge on prefab stuff is to talk about evaluating land and lots. So we in general get lots of questions of people sending us Redfin links, sending links to Zillow and saying, "Hey, should I buy this?
Can I just buy this piece of land that's $7,000 and throw a prefab box on it, and have I just figured it out a cheaper way to build housing? Typically speaking, that's not true, but there are cases where that arbitrage is real or where it makes a ton of sense to build. So what we're going to do during this video is we're going to talk through four or five examples that are pretty indicative of the kinds of land that we discuss with people every day and basically go back and forth and chat live. So we've each looked at these a tiny bit, but not that much. But right off the bat, one. Toby, how are you?
Clever Homes:
I'm doing good, Michael. Thank you. Thanks for having me today.
Prefab Review:
Okay. So before we do this, the other motivation behind this is for our newsletter and our site, we're actually revising our typical land diligence checklist because we think it has some areas that could be improved. So Toby, I was going to show you what we have at first and feel free to rip it apart and then we can use that as context of other stuff you'd look for and then we'll dive into land. All right, so everyone should be able to see my screen right now. So basically, the number one things just running through these points are site access, and this is really particularly with modular homes in mind. Can you get a crane and a truck back there? Because a lot of the projects we work on, we're talking about modules that are, what? 40, 50 feet long. Sometimes maybe 20 feet long.
So you basically need to be able to get them back there, and then you need to be able to get a crane back there. Then, the power lines thing, I don't know your thoughts on this. I consider this not typically a deal breaker, but something that can make life more complicated. And then, there's just a bunch of stuff. Most of these aren't things that are necessarily deal breakers outside of, can you access it with a truck and a crane, but it can make things a lot more expensive. So is there a reasonable building pad? Is there a driveway, if that's required? Sometimes you get these lots that really aren't buildable because of setback issues or other weird stuff.
Then, the survey and geotech. Again, especially the geotech stuff, a lot of times that's more of a determinant of cost in terms of more expensive, complicated foundations. Are there floor area ratio max coverage issues? Again, that's largely permitting stuff. Can we actually build what we want to build on the site? The design review process, HOA stuff we have all the time in certain more Tony areas, making sure that what you want to build is consistent with that.
One of those things since we've been doing this whole company and modular stuff over the last five years or so that I've been really pleasantly surprised with has been how helpful local planning departments frequently are when you just call them in terms of educating on a lot of these issues. So we typically recommend that everyone calls the local planning department at least before, even if it is sometimes after the lands under contract, but at least before completing a transaction. And then, there's a bunch of other stuff. If it's a high risk area, again, you can typically figure out insurance and stuff like that, but it can make things a lot more complicated, a lot more expensive.
And then, I think the other areas that typically get really expensive though you can typically deal with them that I think we'll talk more about in the remote land situation, are how close are utilities in a working road. Just because, if you're going to be paving a one-mile driveway or extending power from somewhere, it seems like that can get complicated. So just off the bat, I know you haven't looked at this list, are there other checklist items that you look for right away when evaluating lots?
Clever Homes:
Yeah, I think this is great, Michael. I think that you're doing a real service for people and trying to get ahead of a lot of these questions that I think most folks don't necessarily think about right away. Obviously this is a really hard part of projects for so many reasons. It's easy to get really excited about land, I think people see opportunity in certain land's values certainly where that starts to look really inexpensive. As you reflected, that's often an indication of complexity. I do think that this is such an important aspect of building any kind of project for sure. You've got to connect with the land, there's a visceral element here that's hard to quantify. We have to want to be in certain areas, and of course it's additionally challenged by the fact that certainly here in California there's just not a lot of land.
There's a lot of land, but land for sale that's buildable is getting harder and harder to find. The good news I think, is that construction technology and techniques are continuing to advance and improve so we can build on topography or in areas that were previously really challenging, I think, for building projects. And I would apply some of this to offsite construction and modular building in particular. I do like that you start this process with the assumption of modular construction as we're all in promotion of factory partnership and prefabricated building methods in all of their various forms. My pitch to clients is often to start with modular. It is maybe the most profound change to the way that we build, but it's also the most rigorous. And if you can start to navigate through a modular scheme on a particular building site, I think all of the other techniques within the industry are of course applicable, assuming that Modular construction starts to become too challenging or difficult.
So I think that your summary here is a really good one. The things that I look at are two buckets, one is just, what is immediately observable? When people call us, I think about what can I do online? How do you leverage Google Maps, consistently reflect on what did we do before this? What happened before Google Maps?
Prefab Review:
Google Earth is amazing.
Clever Homes:
Can we look at the property? Can we see things from a different online perspective that can get us a quick reaction. And there's that bucket and you capture a bunch of these. And then, I think there's the more detailed observations that come from really looking more closely at disclosure packages, talking to jurisdictions, trying to in other ways, dig a little deeper, literally and figuratively into what might the property require to be successfully developed. The one thing that might be interesting to point out here that has definitely been an evolution over the last five, 10 years or so is that most communities have a geographic information system online available to people.
This is the GIS systems, and usually if you Google your local town or county, there's some way to identify parcels within their GIS mapping program. And that's usually tied back into, at the highest level, planning law and codes, development standards, things that you can read into the zoning of the site. I think there's valuable information there. And some GIS systems are as sophisticated as to map back to water and sewer and power and other kinds of infrastructure. So it's a really helpful tool that I use, I certainly promote other people become familiar to a degree with these kinds of systems. They don't answer all your questions, but I think it's a good way of just starting to understand what kind of information a local jurisdiction has about your property. And usually, in combination with mapping software or Google or Apple or whatever maps, I think you can start to have a high level overview that you can start to look at pretty quickly.
And my list is very similar. I think these issues of slope and topography are really critical, access and power lines are for sure. I'm with you Michael, I think power lines aren't unto themselves a showstopper. We've had some success in working around power lines. Not surprising to hear. They tend to be end of the road, not in the middle of the grid power lines situations. But they definitely can be rigorous, it puts yet another hurdle for offsite construction to climb over as people are trying to make a case for these techniques. So I think power lines are really important to understand. Things that I also look at just at a high level are surrounding homes, not that that's a hard thing to identify or conclusive, but obviously a property surrounded by existing homes is a little bit easier to contemplate, building a new one than being in a rural location as I know one of the lots you're going to show will indicate.
I also think that there's observations that can be made around fire infrastructure that you can also get ahead of, just identifying hydrants, looking at even manholes in the street and stuff that you can see in that mapping software. And then, the more detailed stuff that I think is on your list often comes from either further investigations, like talking to the planning department, as you mentioned, is invaluable. I also find planning agencies to be extremely friendly, very consumer oriented in a way. And so, getting in front of planning departments, sitting down at the counter, heaven forbid, having a face-to-face meeting can be super valuable. Most planning agencies are able to return phone calls pretty quickly in our experience, so I think you can get good information there.
And we do find that a lot of properties that I come across do have reasonable disclosure packages. Maybe it's from an attempted project and there's existing reports and data. Sometimes it's just from due diligence that owners have had on properties. So I always encourage clients to go chase those disclosure packages down really quickly so we can start to understand the details that might be inside of that. But I think your list is great here and I think it's a great way to start and to begin to literally check some boxes that I think open up the opportunity for these kinds of conversations.
Prefab Review:
So just as I said, we're going to revise this in an email we'll hopefully send out to everyone in the next couple weeks. But the two or three areas that I'd say we're going to certainly add to this, and we might even figure out some other ones during this discussion. And I don't consider them the first order diligence things, but things that we've just found through experience are really important for people to be comfortable with is, one, just the economics cost benefit of... And me and Toby we were talking about this a little bit before in terms of the existing macro conditions of, okay, when you pencil this out, is modular and prefab really the right way to go? Then secondly, this is a general construction thing but also a prefab modular thing. Are you comfortable with the timing?
Meaning, if you're in doing a process that might take 18 or 24, God forbid, it may be even a little longer than that, does that basically work with you? And again, it's not as much of a, is this land doable as much as is this happily doable for you? And then the third thing, which we have here but not as explicit that we've actually found out to be pretty helpful is actually trying to call an insurance agent early in the process and getting quotes from them. And again, we can talk about ways of doing that typically to the extent that you're able to build relations with any neighbors or the existing people who have the land and just find out who insures them, especially in California and some other areas that are a little more close to the coast or wild fiery, et cetera. That's been an unfortunate surprise at times.
All right. So with that being said, as you guys can probably see, there's four or five lots representing different types of projects that are hopefully indicative that me and Toby are going to dive into. And one of the things that is interesting is we were actually planning to do this conversation maybe two or three months ago, and then, I don't know, skiing for Toby and having kids for me got in the way. So what you'll see is some of the lots that we actually highlighted that I thought were easier have not sold, whereas some of the ones that actually seemed more complex have sold. So that's just an interesting thing in the process. So anyway, we're going to dive into it first. And again, a lot of these are going to be in California because it's where Toby and me are both located, so we know the areas reasonably well. But this is the same process you'd go through anywhere, it's just the costs might be two or three times as high here.
All right, so Montara. Hopefully you can see this now. This is 825 Montara. Hopefully I don't do this too quickly. This is basically, to your point, this is a pretty flat lot located near the coast, 825 Edison. And you can see it's actually, doesn't look too crazy. It has a bunch of houses literally next door to it. We can look at the specific stats on it in one second. But yeah, it's 6,000 square feet. But you can see, I think it's been on market for about 926 days, which is two or three years, which is a very long period of time. And let's see if there's been any price reductions or anything.
Yeah, you can see there actually have been recent price reductions. So generally, once in a while you'll see these dead listings that are on the same price for years and years and that's like, someone listed this and they didn't really care about this. This person is actively cutting the price, so it appears they actually do want to sell it. So what are the things that you you look at here that you'd want to dive into when looking at this slide?
Clever Homes:
Well, I think you hit the first one, which is why is this not sold? Actually it's not on your checklist, but it's actually a really good thing to look at. Is this a property that hit the market five days ago? Is this three years now? And with price productions, to some extent, there's a behavioral note here. If a property hits the market and it's been five days, the way that you behave and the way that you need to act with regard to that lot might be very different than something that's been sitting there for three years.
Property's going to move pretty quickly in a lot of areas, certainly there where you and I are working, property's valuable and people are looking to build new homes. I think partly people are frustrated with existing houses and the cost to renovate and modernize are so high that a lot of folks that call us I know are interested in trying to just make it for themselves, which makes complete sense. So I think that's number one, this would be a disclosure question for me. Hey, let's see what the sellers know. Is there a failed project here or not? So there are some subtleties about this area, Michael, that I may actually have had something to do with-
Prefab Review:
Can I ask a question on that before we jump into that? So we see land generally being on the market longer, if for anything for, just because doing diligence takes a long time. In my experience, if something's on the market for 31 days in San Francisco or Marin or whatever, you usually assume it's mispriced or something, because it shouldn't be on the market for that long. Obviously, 900 days or whatever this property's been on is a long time. Is there a certain time threshold where you start to raise red flags? Is it 90 days, 180 days, et cetera for you?
Clever Homes:
Yeah, I don't know. It's arbitrary, but I would put around a hundred for some reason. That sounds right for me.
Prefab Review:
That sounds right, a couple months, yeah.
Clever Homes:
A couple months is not tied to market cycles. This thing's seen a couple market, this is seen at least a market cycle. The properties around-
Prefab Review:
2021, everyone was buying everything.
Clever Homes:
Well, right. And Montara's probably seen some up, and then maybe a little bit over the last year or so, so there may something going on there. As we know, and as it really spelled out in your checklist, and maybe this is something valuable for people to understand. It's obvious, but I think you have to talk about it too, which is land is proportioned. The value of land is proportional to the value of the property that you're developing at the end. So property value is going to drive land value. So if you can build a million dollar home, land is valued appropriately. If you could build a $5 million home on the lot, land is valued appropriately, and that obviously scales quite a bit. I tend to mostly argue that I think land is 20, 25, maybe 30% tops of the final value of finished real estate. So I think therein lies a certain projection that you could make. This property is listed for, what? Close to 300 something thousand dollars. It would not be out of the question that a final value of a property or home on this.
Clever Homes:
Yep, not be out of the question that a final value of a property or home on this site would be in 1.2, 1.3, 1.5 kind of range. And so that can create a little bit of this. And it may have been that originally, three years ago when the land was valued at $600,000, somebody thought you could build a 2.5, 3 million house here. And actually, that's proven to be wrong. And so the land value has had to fall in order to meet the value of real estate in this part of San Mateo County. So I think that's a great observation. I think that 100 days sort of feels like a gate to me. Beyond that, it might be that there's more technical issues.
I do think there's another part of this, Michael, which is that a lot of land that sells quickly probably being purchased by developers, by spec builders, people that are building for profit are looking actively for land constantly. And I think it's that next group that's a little bit harder to build on, that a lot of clients find, or a lot of homeowners find. It has been out there for a while because it maybe doesn't have the same opportunity for margin that a developer would be looking for. It has some complexities in some category or another. So my guess is, there's a little bit of that going on this site that probably could be revealed through disclosure. We're just trying to understand some of the nuance of this particular area because there are some unique characteristics of this part of San Mateo County.
Prefab Review:
So, is your perspective on this, so is your best guess, basically, so if I was coming up with a thesis on why hasn't this sold and what are the things to look for, I have sort of two theses, and again, you probably will be able to debunk one of them. One is there's something like horrific from a regulatory standpoint here or permitting standpoint. So, just so we're clear on location, everyone, this is very close to the coast. I would this be Coastal Commission stuff, this close to the coast?
Clever Homes:
It could be, it's going to be handled by the Planning Department. So I don't know if the Coastal Commission gets involved there with the process
Prefab Review:
I don't think so.
Clever Homes:
Planning, I don't think so either. But even if it was, it wouldn't-
Prefab Review:
If you got close that, and I've heard fun things, and by, "Fun things," I mean painful things about dealing with that kind of planning. And then, the other thing that I think is pretty likely, and I think you were getting this is, Montara is quite nice, but it's not one of the highest end parts of the Bay Area, but it is a little more remote than certain areas. So you may be dealing with it potentially in narrow work, but still costly construction, group of subcontractors, et cetera. So it might just not pencil, honestly. You might say, "Oh, in this area it's going to cost like $500 plus to build a house." And I don't know, maybe the after build values, once you get in all the soft costs, are essentially the same cost or less than the actual land plus house. So those are some theses on this.
Clever Homes:
Yeah, I mean I think Michael, so I would just kind of like you have in your checklist, which is super valuable and we can use it too, but just going through the basic stuff, like the slope of the property doesn't seem wildly challenging. Access is good. There are no visible power lines that seem to be particularly problematic. There are some trees on the site. Trees-
Prefab Review:
I was going to ask-
Clever Homes:
areas-
Prefab Review:
Would you be concerned about heritage trees and stuff like that?
Clever Homes:
Yeah, they look like they're eucalyptus, so even though they may require a permit, they're probably not protected, although there might be some cypress here. So there might be some other things that get sort of folded into that. I don't think that's a deal breaker, but-
Prefab Review:
Just so everyone's clear, if you have, essentially, old trees that are of certain species, I guess is the right term-
Clever Homes:
Well, the way I would look at it is, yeah, most municipalities have protections around trees that are large enough to be considered community asset. They're part of the environment. And so, usually what happens is that trees over a certain size, in most communities, require a permit for removal, and then that usually gates around trees that require permits that are non-heritage trees, like in this instance, the eucalyptus would not be a heritage tree, so you could just receive a permit. Trees of certain species in this area, coastal redwoods, oaks, cypress, other kinds of trees that maybe categorized as heritage trees require a different permit process, and often require discretionary approvals that go with design review, or they require mitigation, so when you take it out, you have to plant new ones. These kinds of things. My instinct on this property is that, while there are valuable trees around it, I don't think someone would cut all of them down, and surely any that are impacted by construction activity get removed anyway, or that are hazardous. So part of the-
Prefab Review:
Right. And certainly people did that on the adjacent lots because you don't see the same trees.
Clever Homes:
I think the team checklists as you go through stuff is kind of like, "Do you need an arborist?" In this instance, there would be an arborist on the site that would produce a tree report that goes with the permit application. But I think, going back to the basics, you can probably check all the boxes on access, infrastructure, delivery, setting up cranes, taking mods. My suspicion, having worked in the area is that the soils aren't deeply problematic. There are houses around the site, which I think goes back to buildability. There may be some technical stuff that has to be resolved through the foundation design. We see that pretty frequently, certainly in seismic areas with a lot of sand and water, you can get different characteristics that kind of emerge as engineering functions. And so, I think you can get through all that.
My gut is, like yours, on this particular site is that there are maybe two things that I would start to really understand. First one is just the value. I think the recent cost reduction was April of this past year. So they're about a month from when we're doing this. Maybe that's going to be part of the key because at $600,000, it doesn't make sense. At 300,000 in change, it starts to look a lot more interesting for the value of the home that would be created here, or for the potential buyer in the current market that might be looking to build this particular kind of home.
But the thing that concerns me a little bit more about this lot that I would want to look at more closely could pertain to infrastructure and utilities. Historically, the coastal towns and San Mateo County have had challenges with water distribution and there have been water moratoriums that have protected development for years, including out in this part of Montara. And so it may be that there's a water issue, or there's an upgrade that's required if you have to improve infrastructure to build the house. I think a lot of people don't necessarily understand that local municipalities don't have big coffers where they can invest into infrastructure upgrades in communities. So a lot of that work falls to developers doing proposed projects. And homeowners building homes for themselves in the eyes of local communities are developers. And so a water main upgrade, a sewer main upgrade, a fire service upgrade, obviously can get very expensive, as we all might anticipate, and could easily start to affect the economics of construction on a site.
Now in my book, I don't know that that's a reason to not explore property. It could be that if there's, let's just be arbitrary, say there's $100,000 sewer line upgrade that would be required in order to plug in the new house to the existing infrastructure. Well, in one way or another that might need to reflect in land value. And that may be happening as this property is falling in value or they're reducing costs. And it could certainly present an opportunity for a prospective buyer to approach a seller with an offer. And so, rather than offering what might be stated online as the proposed value of the property, we would come in and offer something less, the basis being that we have to do an infrastructure upgrade, or we have added foundation costs, or there's a road extension or some of the other things that can get people tripped up might reflect on the reduction of the value of land.
So I'd probably look at infrastructure on this one. I think a lot of the boxes, otherwise, get checked pretty cleanly. I think this is a good lot. I think this is a buildable lot, barring outside of what we don't know here, but I think this is a good example of a property that could work well for modular construction techniques
Prefab Review:
Mm-hmm, yeah. And the neighbors would probably appreciate it. Cool, that's awesome. Thanks for running through that. All right, let's keeping this moving. We're now going to, and we get this request multiple times a week is, I forgot, do you live in Oakland or Berkeley? I always forget.
Clever Homes:
Oh yeah. My headquarters is in the Oakland Hills, so that's-
Prefab Review:
Okay. Oakland Hills. So this is Toby-
Clever Homes:
It's down the street-
Prefab Review:
Like ghost cycling, or walking by this lot. But we get this specifically, we get constant requests of, "Hey, there's this fairly affordable, $400,000 piece of land in the Oakland Hills or the Berkeley Hills or whatever can I build on it?" And sometimes, and then so I'm sure you get the same request a lot, and usually they're on, it's sort of hard to tell on these photos how steep this slope actually is, but I'm pretty certain that there's probably at least a two story drop from the building. So there's at least a 20 or 30 foot drop, probably on the building pad alone. But yeah. So how would you think about evaluating this piece of land?
Clever Homes:
Yeah, I think this is a great one. Interesting, Michael, maybe part two of this should be like we should find some lots that are exactly like you say, like, "I found a $10,000 lot, it's surrounded by million dollar homes." It's a real indication there that probably something is super challenging about that lot. Cause otherwise its value would be that 20, 25, 30% of the million dollars. So how come this lot is so different than other lots around me? So I think this lot's value is already an indication of buildability, or at least the sellers believe the property is eminently buildable.
So I think this lot, like you said, has the obvious observable stuff that primarily pertains to slope. I think the carry on to that, even though it's a little technical, is that there may be some relationships to the technical condition, and the soils conditions that could drive reasonably complicated or found costly foundation systems. A lot of times in the Bay Area hills, we use foundations that are called, and grade beam foundations essentially drilling big tubes of concrete into the sort of bedrock around, in order to get away from these fill, and sometimes softer soil conditions that exist on these slopes that are often historical in nature. A lot of times when they built these old roads, they just dump the soil onto one side of the road, and you get this sort of engineered fill condition, which is not adequate for the construction of new homes.
So in this one, I think this is a little bit of the slope condition. I think there's a little bit of understanding the geotechnical part. There's definitely some elements of understanding the jurisdictional controls because there are some unique conditions that are associated with building in the Oakland Hills and the Berkeley Hills zoning controls, on the one hand are rigid because of various envelope requirements for heights, setbacks, et cetera. On the other hand, as slopes get steeper, there's a relief from some of those requirements, particularly about how far off the road you need to go, because if it's deep, you don't want to be close to the road.
I think the issue on this particular property probably goes back to construction methodologies. So this one probably starts to look like an initial exploration that could be related to access and staging. Getting to this particular site up in the hills is not that easy. There's a lot of tight, windy roads that lead us up to the site. There are multiple ways to get to this property, so this would be something where we might start a haul route investigation. And in the work that you and I do, we know there's different ways to do that, from crane people, to transport folks to pilot car companies that actually do route haul observations, to just general contractors that are associated with the staging and delivery of the building.
But that would be step one for me, is just looking at the various turns getting up to the site. Generally, I advocate for folks that, two lane, windy roads are usually pretty easy to navigate. There's specialized trailers and such that allow for the delivery of modules. Of course, they can be sized accordingly as well, but I think that the road is also very narrow on this property, so looking at how we would set up the crane, how you might take delivery, which is a question of trucks coming in and trucks getting out, you got to be able to get out of the site. So what does that look like? How would that influence our sense of construction methodology? I think that's probably where this site needs an initial investigation. Of course, that could open up the opportunity that modular construction as a prefab method may not be the right version of the project for this site. Therefore panel systems, other kinds of technologies, I know that are friendly to you guys, and that are part of your site are also applicable in these types of instances as well.
So I'd probably start there. And then, probably the additional information related to the geotechnical condition would be the next piece. We can see over here on the left that the seller, or at least the real estate agent, has already identified the utility connections, and given the fact that there are homes on either side, I would not expect a big infrastructure question on this property. And I think the property is potentially valued as such. It would not be out of the question that a new home on this property that likely has Bay views and such would be, yeah, the 1.5 to 2 million range pretty easily.
Prefab Review:
Yeah. Okay. So that's all awesome. Diligent. So when we were talking about evaluating the site, I can tell you what we do a lot of times; a lot of times there's a handful of crane companies, so Hadden is one good one, right? So literally call them, call a few of the crane companies and basically just check in on, "Will you deliver a bunch of mods to this site?" Yeah, what would be your, I don't know, diligence waterfalls or anything? What would be the sort of step-by-step that you would go... And again, I know you do this all the time, so can you just eyeball it and know, or would you end up going to a specific vendor and asking them, "Can you do this?"
Clever Homes:
Yeah, I think it's sort of depends on where people are in their process. If you've identified a solution, or you like a fabricator's product that is a specific size and shape, I think that presents one avenue of exploration. "Can I get so-and-so house up to this site," because it's a product of sorts, that might be more rigid in its design. It might be a clear answer of yes or no. I do find that a lot of companies that fabricate do have some resources to explore these kinds of questions. And so if you called up so and so prefab house, that they would be able to help provide a little bit more resource if you are-
Prefab Review:
I kind of assume that they end up just doing exactly what I just described, which is that they call their crane company.
Clever Homes:
Yeah, they call crane company. I mean, if you're sort of working more on the architect side, kind of where I live, we do some of this work too. There's local people, we might drive to the site. Again, I do a lot of Google Maps, and just sort of drive the route myself from that point where you get off the highway and try to eyeball it there. And then, there's a few companies that we work with, that actually do for a small fee, they'll do a report on the entire route, and so we can hire them. Sometimes they're the crane guys. Sometimes I find that the pilot car companies are actually, a lot of the folks that offer these types of services. They tend to be a little bit more regional, so they might also be easy to access. And usually pilot car companies do this for all kinds of transportation, buildings, and equipment and infrastructure and big pipes and whatever. And so, usually they've got some resources to figure out if you could haul a giant excavator up to a particular property, a pilot car company might be able to help with a little bit of that reconnaissance.
And then I ultimately find, Michael, usually somebody on the set crew side, or from the factory is going to bring a representative at some point before the project gets too far along, to not necessarily confirm if you can do it, obviously, our hope collectively is that we can confirm that prior to a project really starting out, but more to the specifics of the kind of equipment that might be used to deliver. As we know, and maybe another moment here to educate folks down the road would be to just do a quick intro on what kinds of trailers there are, how different techniques work for getting around tight turns. There's a kind of cool stuff in the marketplace.
So I want people to not necessarily be discouraged by tight access, obviously, it could be a limitation, but there's a lot of cool innovation in the Modular space on the delivery side and some cool stuff that we've seen people do that can make sometimes the tighter parts of access actually a lot more navigable. So for this one, I'd probably start there, look at the route, set the crane up. Once you get those boxes checked, I think getting back to the other parts of your checklist that get to development standards and other zoning controls would be a good next step.
Prefab Review:
Got it. That's all really helpful. All right, let's keep moving. All right, so now we're doing something that's big raw land. Okay, so what is this? Okay, so this is a place that actually just sold, and this is in Forestville, so that's just north of me. Forestville is essentially Sonoma County, parts of it are sort of ruralish Sonoma County, I think near the Russian River. And just so you can see, this is, looks like there's some kind of small mobile home on this. So I would kind of ignore that for the... See if we can get to some better photos of this. But yeah, you can see, there's definitely a road of some kind on this, and there's some cool trees, and there's a lot of land and yeah, it's-
Prefab Review:
... trees and there's a lot of land, and yeah, it's pretty remote. But yeah, but it's 25 acres, which is cool. Yeah, this is very standard of, "Hey, I just learned about this other modular thing. I really like the way it looks. Can I drop it here?" Maybe you can talk a little bit about the considerations for doing diligence on a piece of land like this.
Clever Homes:
Yeah. Obviously, the first part, a little bit, is what we just went through, it's just looking at the access issues. When you've got rural property, what is the condition of the road? Is there a road at all? Is that something that we could bring a crane down? Could we bring trailers with modules down? Again, lots of different techniques come to play. Single-story homes don't even need to use cranes in some instances, so there's a question there. Obviously, there's different ways of bringing mods down dirt paths. We've used excavators in the past to pull modules, so I think navigating across an improved property is actually not that challenging.
I think the place to start with rural property is really about infrastructure. The two things that are most obvious to me, although in a lot of properties these are already developed, are well and septic systems. The intersection with environmental health departments, which are the agencies that regulate septic systems and wells, are really challenging agencies to work with. Not unto themselves, but the laws and codes are rigorous and effectively immovable. There's setback requirements from where we put wells. Obviously, there's a lot of setback issues as it pertains to septic systems. Both of these relatively simple systems can be deceptively costly. Wells can get very deep. There can sometimes be impurities and other toxins in well water that have to be filtered out that can generate complex filter systems. Septic systems require percolation tests, different soil has different characteristics. These kinds of things are really where I would start.
If there's existing property development or development on the property, that's a great sign. If there are well systems in place, a lot of properties are sold with wells. That's great news. You can understand about the flow rates, how that affects your water system, fire sprinklers and such. Septic systems can be perked and not built, so that can at least give an indication of, for example, in Sonoma, how many bedrooms you could have in your house. This is where I'd probably start there. How much do we know about the infrastructure on well and septic. The next thing that for me-
Prefab Review:
Oh, sorry. So that's ...
Clever Homes:
... Go ahead.
Prefab Review:
This one, for example, one of the interesting things you see, and perhaps one of the reasons it recently sold, is you can see there it says, "New floor bedroom septic system installed."
Clever Homes:
Exactly.
Prefab Review:
You can actually also see that ... again, we can't see every turn on these roads, and they're a little bit narrow, but it's probably, 12 feet wide and not too crazy. There's probably some kind of infrastructure, at least minimally-
Clever Homes:
Oh, yeah.
Clever Homes:
Well, the next piece that I was going to go to was just the fire department. Fire departments are actually pretty friendly agencies to work with a lot of shared interests about defending property from fire. But I think being able to have a fire marshal speak to you about your property that's in a rural location can be super-valuable. A lot of people don't know that your fire infrastructure road access and such actually needs to be in place and inspected before you can take delivery of modules or start framing with a panel system on site. You can see some of the older photographs on this listing show the dirt road. Here you can see the gravel, which was improved. So the fire department required the access road to meet their standard, and then likely they also were required to provide a turnaround.
Prefab Review:
I was going to say that. We've had some costly turnarounds that we've had to add to properties because-
Clever Homes:
Oh yeah, they're huge. You're turning around a firetruck in a three point turn.
Prefab Review:
... It's a pretty big radius. Exactly. Yeah.
Clever Homes:
Yeah. So they have different shapes and such, but they are required, and I think you can see on this image
Prefab Review:
This one would be fine. Yeah.
Clever Homes:
Yeah, probably that's why you had this little spur that comes up past the house. That's probably all a turnaround shape and all of that was improved in order to set this mobile home on the property. Most of that infrastructure work, wells, septic, fire roads, et cetera, happens regardless of the size, shape, or complexity of your home. These are all basic conditions that need to be in place prior to any construction activities. This is where I start on the rural side, and then you can work your way backwards towards these questions of access and setting and such, or the more detailed investigations of soils.
A lot of times the condition for some technical documentation is also different in rural locations. Some places we aren't required to do detailed topographic surveys or geotechnical work. We can often work off of more simple documents. That's project by project, but there's definitely a different condition working on rural properties than I think properties in an urban or suburban area. This looks like a great lot. Somebody's going to have a wonderful opportunity to either build something new here or to enjoy this little retreat. But yeah, I think you can see some of those unimproved conditions that looks like they were probably dealt with when they set the mobile home and were able to make this property compliant.
Prefab Review:
Yeah. This is definitely one of the ones where I think Toby alluded to it on the fire marshal person. This is also, just to be clear, this may be an area that's quite high fire risk. I actually haven't dove deep on it. Just in terms of insurance, again, let's just assume that on whatever the rule was, four or five X the price is the after-build value. So, we're talking about two and a half million dollars. Yeah, you could easily see insurance for something like this I think in the $10,000 plus annually. At least in California, there are state associated insurance programs, so it's rare that lots are completely uninsurable, but frequently they're very expensive.
Clever Homes:
Well, the California Fair Plan will take on any property, it's part of our new state requirements for insurance. It's inherently insurable whether or not it's a good policy or questions I think people are asking. I think you make a really good point though about just observations of being in these kinds of environments. These are high fire risk zones. There's good technology and code requirements for the building itself. There's best practices and requirements for managing defensible space and the trees and vegetation, but clearly something that has an influence on the project from its conception to its ownership in one form or another.
Prefab Review:
Mm-hmm. The other thing on projects like this that are, as we mentioned, are just the soft costs. Things other than money going directly to contractors on something like this could be pretty high in terms of impact fees and stuff like that.
Clever Homes:
Yeah, Sonoma County's an expensive place to build, all but for your next slides, which I think are the burned lots, which do have some other opportunities that other properties don't and can actually be pretty good value in a lot of Sonoma County and parts of Napa.
Prefab Review:
Sorry, quickly speaking, Toby, I know we're going to do the top of the hour. Do you have time to keep going through these last two slides or? All right, we're going to keep rolling. Well, thank you for your generosity through your time.
Clever Homes:
Sure.
Prefab Review:
All right. Yeah. Again, these are fire rebuild lots in Sonoma County, but generally speaking, we've dealt with a lot of things related to natural disasters, fortunately or unfortunately, over the last few years. Unfortunate obviously because people lose their homes. I think we're fortunate to be able to help. One of the things that's really nice about prefab and modular technology is it gives you an opportunity to extend the number of people who can build a house. There's this cycle that happens in these areas of, "Okay, there's a huge disaster," and then, "Oh wow," if you need to build hundreds or thousands of homes in a place where they might build 50 a year before, there's a total mismatch of demand and supply of contractors. So the cost of build goes up. It ends up creating a lot of chaos.
I think one of the reasons that you've seen modular be a really appealing solution in a lot of these areas is because it's like, okay, a lot of times you have good infrastructure in place, but you can actually have a lot of the work that would be hard to get contractors do, do them elsewhere.
Okay, now that you heard my TED Talk on that, we'll go to this lot in Santa Rosa County, which is ... I'm sorry, Santa Rosa, which is a city also in Sonoma County. You can see there was a fire, but you can see a lot of the foundation, and the building pad is still there. Yeah. What would you consider here? It looks like the power lines are still there as well.
Clever Homes:
Yeah, I think you got your standard stuff, so we can do the access and we can do the crane set-up and we can do maybe a little power line. Although a lot of projects we've done in this area haven't been
Prefab Review:
I would assume this is probably the prior house, just
Clever Homes:
Right. Yeah. I'm with you, I think our heart is out, obviously, for everybody who's lost homes, hopefully have been at least safe in their evacuation. But, it's definitely a heartbreak. But it is an opportunity for any new buyer in Sonoma County in particular. I think there's a lot of opportunity to accelerate a process and limit some of those fees that you just talked about. For some of the burn lots, the first things we look at are largely infrastructure. A lot of these properties in this area are on well and septic systems. There is a process for receiving a report of sorts that demonstrates that the wellhead was not damaged by fire or there were no toxins which leached into the well, which was a problem for a while up in these areas. That the septic system was in a similar condition. The lids are fine, or the septic system wasn't irreparably damaged during the fire. Fire does actually get into the ground a little bit when it burns this hot. As long as those systems are in place, that's usually really good news because they're permitted to be reutilized for the new construction.
One of the things that I talk to clients about for these kinds of build projects is that, building in the modern moment requires everything new and modern. We unfortunately have not had any success in recycling or repurposing old construction on a property. In this instance, we would probably be somewhat skeptical that the foundation could be reused. There may be firm engineering principles, reasons that you could, but the process to demonstrate that it can meet current laws and codes has been pretty rigorous and costly, as compared to demolishing it or removing it, which was done in a lot of properties after FEMA cleaned up. They removed a lot of concrete. Concrete spalls when it's hot. It gets kind of dry, it kind of crumbles. So a lot of the top parts of this concrete are probably not acceptable under current codes.
Of course, the geometry for prefab buildings in particular, it's very precise, so we would probably advocate for removing the concrete or at least finding ways of getting in and through it so that we could keep parts of it, which is not out of the question. I've told clients in the past, they look at old foundations on burn lots a little bit like their rock outcroppings. So what would you do with rocks? Well, you remove them, you build around them, you try to tie to it if you can. But more or less, a lot of this stuff gets removed.
I think it's also important to understand that new building projects in this area require new surveys. When the cleanup happens after fire, often 12 to 24 inches of soil is removed from the site. When you burn a house to the ground, all the stuff that was toxic in your house is now in the soil. So a lot of that soil's removed for obvious reasons. That creates effectively new topography. It's not often refilled, it just creates a new ground plane that we work against that can have some impacts to driveways and roads and access.
I think it's also important to understand that building a modern foundation requires a geotechnical analysis in most of these locations. So we do new surveys, we do new geotech reports, they're required for reconstruction projects. That's not one of the things that we get a pass on. As you go forward, it's nice to know that Sonoma, and to a degree Napa, have resiliency agencies that have been set up to allow reconstruction, as you say, to happen a little bit faster than the general law of supply and demand affords. Permitting in these areas is particularly fast. We've seen permits for some of our projects in days, not weeks or months, but it's been pretty fast. It's also without fees. So, the communities are, of course, very eager to see new homes on all of these properties, and so they're really trying to facilitate that.
Maybe the last note that I think has been relevant to projects that we've worked on that is important for people to understand is that, generally we have seen that the fire departments are not requiring upgrades to roads or driveways or turnarounds, things that we just talked about, for properties that are being rebuilt, unless some function of the existing condition prevented the fire department from reasonably defending the site. Now in the Tubbs Fire and some of the other, Glass Fire and the property fires up there were really ferocious. I don't think the fire department was impeded anywhere. They almost couldn't keep up with the fires. So we have not seen fire related upgrades required for the site themselves.
Now, new buildings in California require fire sprinklers. So you do need to account for water storage and such for a lot of these rural sites. But often the good news is that you don't have to build the driveway to a new standard. You don't have to build a turnaround to a new standard. These are fairly impactful design and engineering conditions for any property, let alone one which was already previously developed. So that's a little bit of good news that goes with the accelerated permit and reduced fee aspect of fire reconstruction. For these reasons, I really think there's good value in a lot of these burned properties, if people can psychologically get back onto the site and understand the risk of fire, it's real, it will remain. I do think there's a lot of opportunity to find well valued sites with existing infrastructure that are in these locations, as compared to building new.
Now, if you build a new house on an adjoining lot that has not been previously developed, even though it's in a fire zone, that lot still requires all of the rigorous campaigns for engineering, permitting, impact fees, et cetera. They don't have any additional pass, if you will, for new buildings on undeveloped lots. But yeah, I think this is a great lot. Looks like a wonderful opportunity. Great views off this property, and I think the real estate values in a lot of these locations are continuing to climb pretty quickly.
Prefab Review:
One of the things you'll notice about this, and again we won't belabor this because we talked about this on the Monterra property, is this property went contingent in 2020, which basically means they agreed to an offer, and then it probably fell out for whatever reason. Probably because there was some kind of inspection process where the buyer backed out. That could be all sorts of reasons. It could be because the buyer wasn't that serious, who knows, that was 2020, all sorts of weird stuff were going on. Most likely my guess on a property like this is, when they got down to it, they found that all the infrastructure costs involved with doing this lot were probably more expensive than they had imagined.
Yeah, again, you can see there's consistent drops in price here. Again, we could run comps later, and this gets to the economic questions around this. But, this is a really big piece of land with really amazing views that's really private. If you built, just totally, this is back of the envelope math here. Let's just say you built a really pretty high-end home here that was modular. Let's just say you might be able to do it in the $600 per square foot range. If you did a 3,000 square foot house, I think the math, unless there were major infrastructure costs, would check out for a property like this because this is, again, a pretty epic view in a pretty reasonably cool place. Again, there are a lot of reasons, so I'm really getting into speculation here, but my guess about why this hasn't sold despite all the price drops is, a lot of the of the site-related costs might be pretty considerable.
Clever Homes:
Yeah. I think that you state the obvious. But I think it's super-important for people to understand is that looking at that price history can teach you something. If nothing, it raises some flags on, "Well, why did this contingent offer fall apart?" If it was contingent upon buying another property or selling another property or something in the infrastructure and the deal fell apart, that makes sense. But then somebody worked for about two years with this lot before it was re-listed. Maybe that was a campaign to develop a new proposal for the site.
I just had a campaign to develop a new proposal for the site. That's where the disclosure packages can really come to be valuable and next steps for people as they find lots they're interested in. Then clearly over the last six, seven months, there's been a pretty steady reduction to try
to get this thing sold.
Prefab Review:
To move it, yeah.
Clever Homes:
But maybe again, these things that we're speaking to, maybe the well system was damaged or that the septic wasn't... I don't know if that's been in the listings at all or not. Or if the access condition was such that the fire department has required an upgrade to the driveway and now it looks like a much more expensive project than it was previously. It may be that sometimes people just have different ideas. This was an old whatever, 2,000-2,500 square foot home that burned down. Somebody wants to build a new 5,000 square foot home and now you've got this mismatch between what was and what is. The county does have a different process when you start to build in a different location or a much larger home.
These opportunities to move through the accelerated process do change depending upon what the project proposal was. I think I'm with you. This looks like an interesting lot. It certainly has the right characteristics. The land is valuable, the opportunities for the view seem like they're pretty sweet. It might just be trying to figure out, well why is this thing not moving quickly? Maybe it's just also a saturated market. There are a lot of lots for sale up here, some that might be a little easier to develop. May also be that this is way up the road and maybe people are looking for something a little bit closer to town.
Prefab Review:
Just if you look at the directions, it's basically two and a half miles from the road, which again, could be
Clever Homes:
Not huge but grabbing groceries. Yeah, exactly. So this is where I think just to go through your list, I think some of these things like access is clearly something to look at because we can't really see all of the conditions of the roadway. I think setting up cranes and such, probably not a massive problem, but something to look at there. I think it really goes back to infrastructure and then potentially some disclosure on whether or not there's details that have been developed previously that might help qualify the value of the property.
Prefab Review:
Okay. That's awesome. Okay, so the last one on here. This is I think a project Toby's actively involved in. I'd say, I don't know, constructive or general criticisms we get sometimes on this site to Toby, we really try to service people across the country and we work with people across the country, but California is where I live and we've done probably as many projects in California and New York as anywhere. So we get this, "Hey, you speak too much to California issues where the houses are crazy expensive and that's not specific to me." So just big warning, this is going to be that to the enth degree. This is a project called AB9. Toby can probably better explain it to me, but just the quick summary is AB9 allows you to essentially split any single family residential property with a few caveats into two single family residential properties, which can then also have ADUs on them I believe.
So essentially, you might even be able to have junior ADUs on them. So you could basically split a decent size single family lot that might have one house on it into four to six residents. This specific unit that we're going to talk through, as you can see, it's a very expensive lot. It's in a sorry excuse, whatever the site is, it's stately. It was originally a $5 million lot. It's in Atherton, California, which is probably one of the five or six most affluent areas of the country. But it's an example that we had some insight on so we can dive into. So Toby, given that you know this project pretty well, do you think it's better to start here or start on the graphics or do you just want to talk a little bit about AB9 and the project?
Clever Homes:
Yeah, so I think it's generally referred to as SB9.
Prefab Review:
Oh, SB9, I'm sorry.
Clever Homes:
I think it's SB9. Yeah, so SB9 was passed in 2021. I'm not a full expert on SB9 but there are people that are, and we can help direct clients to folks that ultimately can get into the details of how SB9 actually works. But effectively, this was a law passed in 2021. I believe it became active on January 1st in 2022. It's part of California's overall campaign to increase housing inventory and to I suppose at a deep level question, single family zoning. Atherton is an interesting town because there's a lot of big lots. Clearly this has created a sense of politics because people enjoy their big properties, but there is a lot of land and housing demand in all areas, certainly in this part of Silicon Valley is very high. So SB9 really intends to offer owners of single family property two basic functions and they can come together.
One basic function is to allow two dwellings on all single family properties. So every property that's single family zoned that meets a certain criteria, it's not every property, you have to be more or less a standard type of property. Can't have unique conditions, but all properties can have two primary dwellings. They do need to meet development standards for things like setbacks and such. But if you have the space, you could build a duplex or you could build two primary dwellings on every lot. The other thing that SB9 affords is the opportunity to subdivide a single family home or a single family lot into two properties. Again, there's standards and requirements that go with this. There are also technical issues that go with that subdivision, but the minimum lot sizes are very small. So it is almost permissible on all single family, more conventional single family zoned lots.
I think the zoning part is really important. If your property is zoned for multifamily dwellings or if your property is zoned for commercial uses, these laws don't apply. These are for single family zoning throughout the state. So the lot split can also be combined with the multiple dwellings. So in principle, every single family lot is permitted to be subdivided and each lot can have two dwellings. So it offers you four dwellings on one property. There are a host of measures that are required. They require affidavits, you have to live in one of the homes, you have
Prefab Review:
Yeah, you'd have to be owner-occupied, right?
Clever Homes:
Yeah, for a certain number of years. There's some elements of that, how it gets rented out if you rent, that's part of it. But there are lots of opportunities as well. You can sell some of these properties. You can sell newly created lots. Because they are newly created lots in this particular instance, this is something that has to be sorted through. This has an existing home, it's pushed towards the rear of the property. The SB9 proposal tries to put a lot line in between. But one of the things that this homeowner's going to have to do is ultimately reorganize all of the infrastructure that serves this existing home to allow for a legal parcel to be created. In other words, legal parcels don't have neighbors sewer lines running through them or electrical lines or water lines or trees or other things that impact your property, all have to be addressed.
So this property in particular is served with utilities that come right through this view through the driveway. Assuming that that lot line runs horizontally across the screen, we've got to effectively move all those utilities to a different location so that the lot itself is not encumbered by easements or other kinds of things that would be required in order to bring utilities across one person's property to serve the other. So this property is going through a variety of technical issues that pertains to utilities. There's also some historical elements to this property that have to be reconciled as part of that lot split as well. But there's a great opportunity on all properties in California to enact these kinds of proposals, to increase density, to provide revenue, to offer multiple properties to sell or lots to sell that hopefully just improves the condition for housing.
I think unfortunately, the adoption of SB9 has not really spurred a movement yet. The number of applications is surprisingly low in the state of California over the last two years. There's only been a handful of these things that have been done, but I think architects, developers, planners, people are trying to really push this out further into the public so that people are aware of these opportunities for the chance that somebody is capable of or interested in trying to improve the density in the neighborhood or for these kinds of lots. Now interestingly, and I think this touches on something that you said, when you enact SB9, you also lose your buy right ADU opportunities. So you can have two dwellings. One could be an ADU, but you can't have two dwellings and an ADU. That would get then get back to development standards for the number of dwellings that could be on a given property or setbacks and height restrictions and coverage requirements and those kinds of things can be sometimes challenging.
So you kind of get one or the other in California. The ADU movement I think is pushing across the country. We're seeing this now state by state, a lot of opportunities to build accessory dwellings and hopefully similar SB9 kinds of movements will be taking place. I think Portland just outlawed single family zoning, or at least that's
Prefab Review:
Portland and Minnesota in Minneapolis.
Clever Homes:
Minnesota too, yeah. So that's kind of cool. I think we're starting to see finally a push towards higher densities in our communities. I know there's going to be some heartburn to this, particularly in a town like Atherton where people really enjoy these large parcels, but they're also opportunities to just add more housing to our communities.
Prefab Review:
So maybe if it's okay, you want to just describe, I think these are some of the parcel maps about how you're actually dividing this.
Clever Homes:
Yeah, essentially. So you can sort of see the house up there on the top part of that site where your cursor is. There's a lot that's being created called parcel B, which is below it. There's a sort of buildable envelope, you can see that little square there. But you can see this is a draft copy. There's some things that have come back that we need to address now. But if you just move your mouse a little bit over to the right, you'll see some vertical lines on the scene that are these utilities that are coming across parcel A, right? So in order to serve utilities across a parcel, you either need an easement so that I've got access to your lot for my utilities, or you have to clean up this parcel and relocate those utilities. That work needs to take place effectively before a final map can be issued. So the way a lot of these lot splits happen in SB9 is very similar to creating any lot. It has to go through a tracked map process, it is ministerial.
That's really what SB9 opened up was that it removed the discretionary actions from these proposals and pushed this to a ministerial process that can be approved at staff level. So that said, it still requires a clean parcel. So as an example, those utility lines have to be relocated. Once the preliminary map is approved, then you can relocate the utilities and do all the work. Then once that's done, the final map can be issued, which creates the legal parcel that gets recorded. So this one has some issues with utilities. It's got a couple big trees that have to be sorted through and then just reorganizing the driveway. Right now the driveway for this property comes in, you can see off of Glenwood right at the bottom of the lot has this big turnaround and parking area. Obviously that gets abandoned when you build a new property.
So this is actually a flag lot condition and the access is going to be way over on that left-hand side of the lot where you can actually see a bunch of those new utilities and that 20 foot driveway, which is going to come back and serve parcel A. Now interestingly, because the driveway access is now going to exceed 150 feet, which is a fire department requirement for trucks and being able to turn them around, the new driveway is also going to require a turnaround that has to be accounted for within the geometry of the site so that it effectively can be a legal access to the newly created parcels. Both for the parcel B, but also the sort of retroactive repair work or renovation work that's required for parcel A in order to make it compliant. So sort of an interesting opportunity.
One of the other things that I think is just interesting to know about SB9 is that it does require a proportional relationship that can't exceed 60/40. So any lot that you create has to be a minimum of 40% of the original lot. So they are looking for parcels to be created, which are more or less co-equal rather than just carving out a little corner of your property and calling that little postage stamp a new lot.
Prefab Review:
I forgot, is there a design review? We have not done many SB9 projects with Prefab Review. We've looked at quite a few. Is there a design review for the second unit here or not?
Clever Homes:
Well, that's going to be town by town. So Atherton does not have a specific design review process. It requires a commission approval. It's all just coordinated by the planning department at staff level.
Prefab Review:
One of the things, again, as I said, I generally really like planning departments. California has a lot of new housing legislation and sometimes the bias towards, again, not speaking about Atherton specifically, some of these suburban housing planning groups is to be a little conservative on stuff. They're not always 100% informed on every nuance of these new laws, at least I found. So what I find is sometimes, unfortunately, you'll go to planning, you'll ask for guidance on stuff, and the really nice thing about most of the new laws is they're very transparent. You'll get feedback that is actually not exactly the lot, it's some kind of jumbled interpretation by somebody. So what we end up doing, I'm not sure if you do this as well, is I believe it's called HCD, which is the state housing regulators.
They're actually quite responsive to individuals and quite aggressive about trying to make it clear to local planning departments, this is what the law is. So again, in my personal experience, you get some weird email chains of people aggressively CCing local people, but can actually be very clarifying and helpful. So particularly for these, again, 80 is the area that we've seen this most frequently. It can be really helpful. So on anything new and legislative I would, especially if it's at a state level, definitely check with the state if you're getting answers that are weird as part of the diligence process.
Clever Homes:
There are some quirky things about the ADU laws and how they get executed. Some of them in order to happen, have to happen post occupancy of projects so there's some explaining -
Prefab Review:
The state technically still enforces the permitting even though... Yeah, it's supposed to be pretty ministerial.
Clever Homes:
Yeah, I have found that a lot of communities now have handouts or they've done workshops where they've worked through what their response is going to be to some of these requirements. But I think it's true that you do get different questions that emerge case by case where there's interpretation. Can we take this part of my house and turn it into an ADU even though it has a non-conformity? I don't know if that's a question, so then how the planning departments respond to some of these things is definitely not always clear. So I think you're right. HCD is a great resource, certainly here in California, that's housing and community development that regulates a lot of these laws and codes within the state.
They've got some specific information about how that law is being accounted for within municipalities. As we said at the beginning of this session, getting down and talking to a planning department representative or a planner is just invaluable in any lot investigation. I think that's imperative for anyone. As I tell my clients, I don't think that anybody needs to become an expert, but you should feel well-informed. I think that being able to get down and just hear firsthand how some of these laws impact the potential development of a property that someone owns or is looking at owning can be a really great part of the due diligence process for sure.
Prefab Review:
Yeah. Well, I think this is the last lot. So Toby, thank you for being so generous with your time.
Yeah, thank you.
Prefab Review:
This has been awesome and thanks everyone for watching. If you made it to the end of this and you are interested in learning more about Toby, he's at Clever Homes, which I believe is CleverHomes.net. He's very responsive if you send emails. Again, we're at PrefabReview.com. So thanks again and we'll see you soon.
Clever Homes:
Thanks, Michael.
Prefab Review:
Yep.
