Land Acquisition Log

Tue Sep 20, 2022

Hi Clint,

Thank you, great to meet you today.

The lot you show, donated for affordable housing is definitely interesting and we would like to pursue this avenue full steam ahead. Developing a model for working with city governments to address affordable housing is a high priority for us in addition to the open market. We are interested in 3 lots total for November - the donated lot could be one of them. As you mentioned, the timing may be tight for November - but we could definitely consider this as long as we can build through December. Can you please pursue this with the city? Are there other lots that are available as well? We could do a pilot, and if it works out, we could do more. What would you estimate is the likelihood of actually securing the lot by mid-November?

I forgot to explain why we call our house the Seed Eco-Home. One of its core features is that it has several design features that allow for expansion - as 'incremental housing' - where the home can grow with a family as the family and its resources grow. The 1000 sf version is a small home that can be expanded as needed. We pre-frame 2 door apertures - for ready expansion to the back. All the windows are framed so they can turn into doors if additional rooms are built. And the flat roof can easily be taken off to expand vertically. We think that is a huge value proposition - because as I mentioned - our sale price for a turnkey build that includes our service fee at 1000 sf is $149k - and at 2000 sf it is $192k or only about 30% more cost for 100% more size.

One more thing - we are actually an education organization - so we combine work-force training and solving pressing world issues. Please take a look at my 4 minute TED Talk on the Global Village Construction Set for the greater framework of what we are about if you haven't seen it already. The way we think about it - we would like to bootstrap fund our work with product sales so we can cross-subsidize further R&D - while making our revenue model replicable for anyone else wanting to collaborate in further development. For example, on the house, our goal is taking the $60k materials cost down to $30k by using compressed earth blocks and 3D printed parts. The wall modules are to be 3D printed using waste plastic turned into 3D printing filament. That's the kind of R&D that we are pursuing, to lower costs and improve quality. We make all of our technology, and business models, patent free and available for replication as a mission-driven enterprise.

Thanks, Marcin

Mon Sep 19, 2022

PDF of $140k average sale price of 100 year old 1000 sf homes. File:Stjoseph sold.pdf

Steve,

I reworked the model after doing a final budget (current prices) and other insights.
The realtor provided 'comps' - but told me that nobody builds houses like ours so they appear to have no clue to the selling price in St. Joseph. The data points are: 8 houses sold over the last year in the 1000-1200 sf range at an average sale price of $140k. Average age of the house was 100 years. See attached PDF.
Conclusions: nobody builds 1000 sf homes. It appears that the market for them is 1/6 of the market - only those families without children. The feedback from the realtors was that the market is simply smaller. Practical consideration: a longer time to sell if 1/6 the customers are available?
2000 sf is more attractive to people. See attachment for a picture of the 2000 SF Rosebud with expansion in back - cost of $85k in materials.
Now look at materials costs: 

1. 1000 sf - $58k with carport and PV, $54k without carport and with 5 kW PV. Estimated labor - $24.6k
2. 2000 sf - $85k as in picture- with 6 kW PV. Estimated labor - $35.3k

It looks like we should consider both a 1000 and 2000 sf version for our build. The resulting sale price still works on paper for both 1000 and 2000 SF in these scenarios:
For a $20k lot and 25% profit for a scalable business model (spreadsheet):

1.  1000 SF - $139k sale price at 25% profit. With PV. No carport. No sales commission included.
2.  2000 SF - $192k sale price at 25% profit. With PV. No sales commission included

With the $139k price - we match the 'comps' of 100 year old houses in St. Joe almost exactly! So it is probably true that we provide 2x the value - given we have a high quality new eco-house that saves $1k in utility bills per year.
Note that I included our 'most likely labor cost' but for once we have a trained crew - for now the labor cost may be higher.
The major revision since last time is updated contractor and labor costs - read below for my rationale.
Marcin

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First, prior to this analysis I had the General Contractor at $17k. I think the realistic estimate is $4k. This would be for an in-house construction manager who gets paid $100/hr or an equivalent to $192k annual salary, which is a very competitive rate for filling this role. The no-shit insight of seeing the forest through the trees was that each build takes 5 days and is well-defined - completely unlike the much longer build times in the industry where GCs get paid about 10-20%. Therefore, extrapolating from the industry standard based on percentage appears to be baseless in our case, and we should use $4k instead. What do you think?
Labor should shift from $50k to $24.6k if we are talking about the stable business model. The first one was 1000 hrs at $50, the latter is 750 hrs at $32.80. I am very confident that we can do 750 hours. And can we justify the lower pay? Zip Recuiter shows the top 2% pay (considered 'outlier range') as $63-67k for carpenters in the USA - or $32.80. This would appear to make us a preferred place to work - implying we can scale from the labor side. We are still promising a larger skill set, so we can't call it a plain carpenter - more like 'Integrated Builder' as opposed to Carpenter+Plumber+Electrician+Roofer+Foundation Guy etc which are all specialists. This would want to position ourselves confidently as generalists. So we can say that - 'after only 6 months of immersion training, we start at the highest outlier pay in the industry'. Exciting! Realistic and still very attractive.

Initially I had $50 here thinking about the grand skill sets required - but that does not work that well for our affordability. I think we could make as-compelling a case, that is also free from expectation management issues - if we start at the $32.80. And this would make an even better case for our 'you determine your own pay scale' because we have continuing learning for roles of higher responsibility - core in our program. Therefore, $32.80 appears very much valid, not pulled out of ass like the $50. What do you think?
That helps us gain clarity on what building lot would work for us as we now make the better lot decision with Julia and her Berkshire Hathaway Housing Services (BHHS) team. In order to make a proper assessment, we need to keep a clear distinction between November build financial analysis, and the stable operation version of it - reflected in my numbers above. What is the pertinent point for assessing what success looks like on Dec 1, 2022? 

I would say that if we build and sell quickly a 1000 and 2000 sf at $139k and $192k respectively - then we can claim major success.

By that, we mean that we know that if we build a team of 24 - we can pay them and make about $1.3M net for either 50 of the 1000 sf or 35 of the 2000 sf houses.
Thanks,Marcin

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Hi Mark,

Tomorrow I am meeting with Clint Thompson of the St. Joseph building department at 9 AM. I will be asking him all kinds of questions on build detail for meeting inspection workflows regarding our Seed Eco-Home. We would still like you to be our inspector to facilitate the inspection schedule on a 5-day build timeline. This is a pre-plan check meeting. The engineer should be finished with our set of plans by this week, so it's time to move forward.

We are meeting at the First Floor Conference Room at City Hall tomorrow (Tue) at 9 AM. Would you like to join us?

Thanks, Marcin

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I will say, coincidentally, we got to talking with some good friends of ours yesterday before church who have shown lots of interest in what you’re working on in the project. They’re about our age with 3 girls similar to our kids age.

The wife said she already did the math on selling their larger homes, buying Real Estate near Maysville and themselves building two Rosebuds in some configuration. And she said with the equity and even with buying the land they’d still come out without a mortgage loan on the project.

So yes, families like ours wanting to get out of debt, selling their highly marketable but very expensive to pay for homes, and jump ship to a home they can build quickly and affordably is attractive.

So … not to throw a wrench in all I said this morning (see I said it was wet concrete)…the 4bd 2bath is attractive for nearly every family we know and are friends with. And like I said, especially if it costs half what the typical market value is $300k+ for a newly constructed 4bd/2ba.

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Hi Brent,

Thank you for your emails. This is really helpful feedback!

I agree that there is some tension between the goals and the business model. Most organizations that provide affordable housing (or any other social service organizations) are financed by fundraising, government subsidies, or venture capital. The problem is that none of those funding models is compatible with what we really want to do, which is distributed and collaborative development/enterprise. So we need to find a financial model that others can replicate. At the same time, we have the same financial challenges as other non-profit organizations. We need to "raise funds" to hire team members (organizers, developers, designers, instructors, site maintenance staff, community service providers, etc), to research and develop affordable and sustainable construction materials and methods, to build, run and maintain a campus (so we can train entrepreneurs and builders), to cover overhead costs, and so on so forth. Without a significant investment in people and infrastructure, we'll just keep plodding along at a snail's pace for many more years :)

So the solution we landed on is to start by selling houses at market value with a good margin of profit. That profit is our "fund raising" and what will allow us to then develop and offer affordable solutions for those who are priced out of the market. In short: the idea is to sell houses to those who can afford them and then use the profit from those sales to fund the non-profit side of the project. It's not a perfect model, but it's the best we could come up with so far :) We're totally open to new ideas though!

However, we still want to make these initial houses as affordable as possible! The difficulty is that the more affordable house (the smaller model) does not seem to meet the size criteria for most young families in this area. While the bigger size comes with a bigger price tag. The ideal, as you noted, would be a bigger house at a small price. We've been crunching numbers and discussing your feedback and arrived at a compromise that we think might work: build the larger house (2000 sq ft), but keep it really simple (and therefore lower cost). This is based on the concept of incremental housing: to lower the initial investment (mortgage), we can start with a "seed home" that has the potential to grow with families' needs and budget. Initially, we thought of this as starting with a smaller home that was designed to be expanded over time. The new idea today is to approach incremental housing from a different angle: start with a higher square footage but remove anything non essential (or anything that can be easily upgraded later). Marcin detailed the general idea here: https://wiki.opensourceecology.org/wiki/Land_Acquisition_Log#Mon_Sep_19.2C_2022

What do you think?

Catarina

Thu Sep 15, 2022

building department, St. Joseph - cthompson at stjoemo.org

Hi Clint,

We are interested in building a 1000 square foot, 2-story Colonial style modern home, with 5kW of PV panels, in St. Joseph. You can see the image, floor plans, etc - we call it the Seed Eco-Home (and also attached). We will have the set of building plans from Norton & Schmidt next week, and we are planning to build in mid-November. You can also find out the greater context of our work in my 4-minute TED talk on the Global Village Construction Set.

I have met with Renee and Julie, cc'd, from Berkshire Hathaway Housing Services - and we are looking at 2 lots, one at 28th St and another on Mason Rd. We would like to know if there are any restrictions that would prevent us from building the Seed Eco-Home at both locations. Can we set up an appointment to talk to you about this building project? This would be a pre-plan check meeting. I wanted to go over some of the build details, as our build is not conventional, to verify that our process will comply with inspections and other requirements. We are also in contact with Mark Manville from IBTS whom we have contacted regarding facilitating the inspection process during the build, whom I have also cc'd for reference. Our home is site-built, but we are also pursuing the possibility of becoming certified as a "manufactured home" builder.

Thank you, Marcin

Fri Sep 9, 2022

Lots - [1]

Thu Sep 8, 2022

Ready for some offers.

Wed Sep 7, 2022

Just connected you to Raquel Hopper, who can be reached at (816) 406-3725 and roc.sells@kw.com.

Hi Raquel,

I just talked to you - here is the land requirement - more information about the house that we are building. It is 1000 sf, colonial style with attached carport. We are looking for 3 lots, and would like to close as soon as possible to break ground in November. Please see the attached.

Marcin

Tue Sep 6, 2022

Offers

I am interested in 2931 S 28th St, Saint Joseph, MO 64503 and would like to make an offer - pending suitability for building a 1000 sf colonial style 2 story home with attached carport. Is the lot buildable and are there utilities available? Are there any restrictions for building a single family home?

I am interested in 2713 Meadow Ridge Dr, Saint Joseph, MO 64504, and one of the other 3 lots around the corner. I would like to make an offer - pending suitability for building a 1000 sf colonial style 2 story home with attached carport. Is the lot build-ready and are there utilities available right on the lots? Are there any restrictions for building a single family home?

I am interested in 3106 N 39th Ter, Saint Joseph, MO 64506 and would like to make an offer - pending suitability for building a 1000 sf colonial style 2 story home with attached carport. Is the lot buildable and are there utilities available? Are there any restrictions for building a single family home?

I am interested in 1032 Mason Rd, Saint Joseph, MO 64504. Pending suitability for building a 1000 sf colonial style 2 story home with attached carport. Is the lot buildable and are there utilities available? Are there any restrictions for building a single family home?

Comms

Thank you for the information. The 2-3 months for the rezoning would not work for our intended November build - is there any way that the 2-3 month schedule could be accelerated or otherwise addressed so that we could begin construction November 14?

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Evergy said that they would put in a temporary meter during construction costing anywhere from $250-300 and then you would have to put in a request for the permanent meter. Missouri American said that they would not be able to give the price for the water meter until the appointment to put it in. As for the construction, Brandon with planning and zoning said that it would require rezoning for the new single family homes and that would cost $1,400 and could take 2-3 months. I wasn't able to get ahold of the sewer department but Brandon did say that there is a sewer line located in the alley behind the lots. Ok, correction, I got a hold of the sewer department but they transferred me to the permit department and I left a message for Kim Hurt to get back with me about what would need done for the sewer. Kim Hurt got back in touch with me and said that there is a sewer line in the alley but you would need to hire a plumber to find the existing sewer lines in the lots, if they are unable to be found then it would be $500 dollars to connect to the line in the alley.

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Hi Steve,

I went to visit 8 land parcels today. I liked most of the lots. Lots 2, 3, 4 are the best, possibly 8, from the comps perspective. 1 may work, as the area is good (not ghetto) and it seems that our new house would bring up property values. In most of the old construction areas, there are old houses, but none of the areas appear particularly run down, so I was pleased to see all locations. I am surprised to find around zero new construction in any old area - consistent with our expectations that other builders won't touch these areas. Thus I am inclined to think that even if the comps are not great like in 1, we could still sell a house at a much higher price than typical for the area - because the area itself is not bad - it's just missing new housing stock.

Each left hand image is hyperlinked to a video of my quick walk-through if you want to see:

https://docs.google.com/presentation/d/1puVqe7kIY3F39c89jdXu7NVouoxb_CM8Jj69VI9dw-4/edit#slide=id.g133e72099cc_0_56

Marcin

Mon Sep 5, 2022

Good

• $13k&18k next to each other - 719 S 10th - https://www.zillow.com/homedetails/717-S-10th-St-Saint-Joseph-MO-64501/215118708_zpid/]. Maps - [2]
• $20k 1 acre, house 5 houses south 1300 sf sold for $250k. South of Belt, going to Menards. [3]. Location - 2931 S 28th St, Saint Joseph, MO 64503 - [2931 S 28th St, Saint Joseph, MO 64503] across from rec center.
  • There is a $6k ghetto lot nearby at 1314 Atchison St, Saint Joseph, MO 64503 zillow at [4]
• $20k with $300k homes around corner is small development - while rest is ghetto, 1/2 acre [5]. 5810 Diagonal Rd, Saint Joseph, MO 64504 - map - [6]
• $35k with 250+ comps [7]. After Frederick Ave on way to Home Depot - 3106 N 39th Terrace - [8]
• $39.9k 1/3 acre, subdiv, 250+ comps with 2 more lots close [9]. By Menards - 2713 Meadow Ridge Dr
• 1.1acre $40k. A 1929 home, 1100 sf sold for $140k around corner. By Menards area - 1032 Mason Rd - [10]
• $36k-40k lots. 775 sf sold for $270k in subdivision. [11]. Also by Menards area - 6309 Oakridge Ct
• HOA with builder approval - $40k new subdivision [12]

Exploration

• Nice area from before - 'developer has to approve plans' - [13]
• 30 acres for $600k st. joseph- all zoned for development. That's a steal for a village. [14]
• $42k, 1/2 acre - st. joseph. Nice urban sprawl land. [15]
• What not to get? $20k 1/3 acre lot with homes the same value as the land, but across the highway is $630k. [16]

Fri Sep 2, 2022

Hi Tiffany,

I just called you regarding the lot at 717 S. 10th street in St. Joseph. We train builders, and we are planning on building 3 homes in November of this year. We are looking for 3 buildable lots. Our needs for land are described more in the attached document - the Land Requirement. You can find out more about our work in my 4 minute Global Village Construction Set TED Talk.

We are looking for 2 lots close to each other, and a third one elsewhere. Our home base is Maysville, MO, so we are looking within a 1 hour driving radius of our location. We are interested in lots in St. Joseph as our first preference.

Please let me know if the lot above meets our requirements, and let me know if you have other suitable properties.

Thanks, Marcin

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719 S 10th measures 44.44 and 717 measures 88.88 X 140. As for the zoning it is zoned C-2 for our downtown business district. The soil has not been tested and there are no surveys. As far as I know there can be utilities. If I remember correctly the utility companies take them and then replace them when needed but I can definitely check on that and I believe that it would be overhead. The utility companies are Evergy for electricity, Missouri American Water, Optimum for television and internet, sewer through the city and Spire for gas. There isn't a homeowners associations that we are aware of and just on the outskirts of one of our biggest historic districts "Museum Hill". The title should be clear as my seller just purchased the properties back in February. As for the comps how close or far would you like them? Theres some on my street on S 13th, 619 S 13th Street that closed 08/20/2021 for $247,500, 601 S 13th Street $144,001 closed on 01/07/2022, 624 S 13th Street closed on 03/04/2022 for $104,300, 1010 Messanie closed on 05/09/2022 for $93,000, 720 S 10th, right across the street closed on 03/29/2022 for $159,900 & 706 S 14th Street closed on 03/28/2022 for $91,300. Those are the highest selling homes that have sold withing the year I have comps for that are within .29 miles radius. Some don't meet the $166+ and the one right across the street falls a bit shy. Please let me know if you'd like me to find out about the utilities or if you have anyother questions I can help with. Sorry for the late reply. Thank you!

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• 720 S 10th across street just sold for $159k 4/22 - 1869 home 2600 sf, [17]
• 624 S 13th St - 1940 home, 1226 sf, sold for $104k [18] - but across the street is a B&B for $247k closed on 8/20/21.
• 601 S 13th St - 1887 brick - sold for $144k 1/22 [19]. Maps [20]

Hi Tiffany, Thank you for the information. If it is C-2 - does C-2 allow for residential construction? Does the bigger lot allow for 2 homes, and the smaller for one? Is it C-2 for both lots, or just the larger one? Can you please find out from Evergy what the utility hookup cost would be for the 2 lots? And what the city charges to connect to water/sewer? We don't require gas. How would we get a definite answer for whether the Rosebud home model would be allowed in the neighborhood? Does that require talking to the city? Do you have a contact for whom we would reach out to at the city - or can you find that out for us if Museum Hill has any home style restrictions? For the comps, yes, going out to 0.29 miles out seems like a similar kind of neighborhood - can you get some more sale prices - especially in last 6 months? New homes would probably be a closer comparison, but it may be tough to find new homes in the area. Do you have a feel for what our 1000 square foot 2 bed/2 bath home would sell for if we built on the 717 S 10th lots? Thanks, Marcin