Episode 15 - Prefab Pod Live Chat - Toby Long, Clever Homes
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Prefab Review
Toby, are you there?
Toby Long
I'm here. Can you hear me?
Prefab Review
We can. Everyone, meet Toby Long who's coming to you, are you in Oakland or Berkeley? I always forget.
Toby Long
I'm in Oakland. I'm up in the hills.
Prefab Review
Who's coming to you from Northern California, though he also does some work in Southern California and Northern California as well. Give me one second to share your visuals. So, first of all, Toby is an architect who I have had a bunch of experience with in different ways. He's been a really great resource for learning about the industry. And unlike Proto, where they own a factory, and Toby, please correct me if I'm wrong, Toby works with a variety of factories, but is, primarily sort of architect project management, stuff like that. And I probably undersold you on that. All right. Let me pull up your slides quickly. All right, cool. All right, so Toby, like with the Proto presentation, what we'll try to do is we'll just spend a few minutes learning about you and your practice and then we can potentially go through one or a couple of your projects, I have the Oakland one up right now. You can see my screen, right? OK, so we can walk through that one or one of the other presentations or one of the other projects you sent along. But to start, it would be great, to, I mean, by the way, Toby's already done a podcast on Prefab Review, so you have an opportunity to definitely learn even more about him via that. If you want to listen to that, it's on The Prefab Pod which is on our website. But to start, can you just give a minute or two, sort of brief on your practice, the kind of work you do and how you got into this?
Toby Long
Yeah, totally. Thanks, Michael, it's great to sort of see everybody. I hope everyone is safe and well and hunkered down, I guess. This is my home studio. I've got a lower part of my office here in my house that we practice out of. And then I've got another physical office I'm using a little bit less these days. So, yeah, it's great to be here. Thanks. I'm a licensed architect. I hold licenses in a few states and it drives from early, I don't know, maybe obsession, maybe just interest in design and architecture. That kind of emerged for me as a kid. I grew up on the East Coast and had early exposure to design and construction actually through a pretty unique program in a public school kind of pining for this these days in other areas and kind of stayed with it. After graduating from the Rhode Island School of Design where I did my undergraduate, I moved to California and kind of started a practice right away. I ended up kind of with a good exposure to two sides of the industry, doing some design work and architecture work as a teenager and then working in construction as a summer job taught me a lot about the execution of building projects and getting from paper to the dirt. And so I kind of carried with me, I don't know, maybe a little bit of an ego at the moment. I think I've lost that a bit. But I started a practice right away when I moved to California. This was in the mid-nineties and I did a few years of traditional kinds of building projects and maybe was never satisfied. So fortuitously, around the kind of dot-com movement, I rubbed up against some entrepreneur types that wanted to get into a business model that involved Prefabricated construction and kind of hooked up my effort as the design arm of what we were building as Clever Homes. And so, you know, over the last 20 years, I've been in this industry working kind of from both sides of the table, doing a little bit of what the Proto guys have done and trying to systemize and bring together kind of a platform and an opportunity for material acquisition and kind of building a business around that to our current carnation, which is much more about design and project management execution. I've been working specifically in Prefab for 20 years and have had exposure to a great number of the systems and technologies that are more prolific across the country. We've done a lot of panelized stuff similar to what the Proto guys have done and have found some really great opportunities there. We've done some steel buildings. Of course, some of the folks that you've been interviewing, Michael, are getting into that space. We've done some ICF concrete style construction projects and then we started getting into modular building, volumetric modular construction, probably around 2007 - 2008. That's really what sort of persisted for me over the last 10, 12 years has been working almost specifically in the volumetric modular space. And we work on all kinds of projects. Most of the work we do is residential in nature. We've had great opportunities to work with clients, building fairly modest homes, in fact, doing some affordable housing projects. We've now gotten into some much, much larger mixed use multi-tenant projects. Our bread and butter of the practice, if you will, is still primarily single family home construction. And really what ties together everything in my practice is off-site construction methods. So it's always been great to meet Michael and the great program that Prefab Review has put together. We're certainly evangelized and contributing to it in any way we can. It's been exciting for my team and I. So really most of the work I do with clients, as I mentioned, is a volumetric modular and kind of wanders all over the place in terms of scale and scope. But we also bring a certain attitude towards our projects, which is a real bias for architecture and a design process. I learned to be a professional architect here in the Bay Area. We don't have any flat lots. There's no easy jurisdiction. There's nothing simple about a lot of the work that I've been exposed to. And so I think my attitude towards Prefab has kind of resonated with solutions that seek to look at these challenging sites. This Oakland project in particular was on a very steep hill, and I kind of sent it to Michael just as an example of doing modular projects in places where we've got tight conditions. You can kind of see the power lines in one of those photos of steep sites where we did a lot of site work, a lot of excavation work and very narrow constraints while still really trying to put an emphasis on architecture and design in an industry that I think often tries to move the design process into books and catalogs. It's really great to be here with the Proto guys because I think we share a similar sentiment about the importance of design and flexibility in building construction, particularly here in California, particularly in our urban areas where we just don't have a lot of easy sites where the repeatability of design is a certain process. So in my practice, we've built more of a template-like experience while trying to balance out the best of the repeatable experiences of modular building and tooling where we can from structures to interiors, but also recognizing that it's important that architecture responds contextually. And that's given us a great opportunity to work on a lot of challenging sites, all kinds of locations, HOAs and other tonier groups that try to get involved in this stuff, too. So that's a little bit of kind of how I got started and what it looks like for the future of the practice.
Prefab Review
Cool. All right. So everyone, I know you have questions, and so please send them as you get them. Toby, f it's all right, I'll fire like five to ten minutes worth of questions at you that are a combination of stuff from people here and what I would say are like greatest hits from our site.
Toby Long
Sure.
Prefab Review
And whatever, answer them or pass, and then we'll get to know one or two of your projects. All right. So just to start, Toby, correct me if I'm wrong, but like the stuff that Toby does mostly and not that he does not do this, but I would qualify it as like high end custom homes, a lot of which are in the Bay Area, some of which are in other places like wine country, Southern California, and as you said, some multi-family. But so for projects like that, what are we looking at on a typical time line assuming the client you're working with is not holding you back, right, is not spending six months being finicky on floor plans, but is pretty responsive. What does the timeline look like for a project from start to finish?
Toby Long
So you know, just reflecting on experiences, particularly those over the last five years, covid included, I don't think I had a major change on this. In fact, there's probably been some improvements in a few different categories. But generally, Michael, what I would tell people is that projects we work on take somewhere between a year to two years from concept to move in. I tend to see that mostly split down the middle between the amount of time we spend in design, engineering, permitting and team building, and then about a similar amount of time on the site. And I think there's some reciprocation there. And if it takes longer to permit and the more townier groups get involved in the design process, generally it's some reflection on the complexity of the Construction stage or vice versa, so most projects we work on probably have about six to nine months of an overall planning and permitting period. What I call, act one and then more or less, probably about six to nine months for the majority of the construction stage. And final utility connections being the one that drives everybody crazy these days. But more or less, that's a pretty fair time frame.
Prefab Review
So if we had to break that down into, you can decide the best ways to break that down. I think of it as sort of design just to get to plans that are well designed and engineered, then permitting, then foundation and whatever fabrication, which can theoretically happen at the same time. And then the setting of the modules and finishing. Do you think you can break down kind of a range of time frames on some of those different areas? And also, if I missed any, I think about it pretty simply.
Toby Long
So the very first thing we do with clients is a conceptual study. We usually design a building. We look at the economics. We understand the regulatory issues. We start to build a little bit of a basis for specification and we produce some schedules that drives our process. That's about a month or so. Then we launch from there into the project. If it looks feasible and we're progressing, we would expect probably about a month to maybe two of design and visualization modeling. We do a lot of walkthroughs and renderings and this kind of thing we would expect probably about a month to maybe a little bit longer in the technical stage of doing engineering. Most permitting in our area takes about three months, similar to as the Proto guys explained, in L.A., we're seeing about two to three months, but I think it's closer to three. Most jurisdictions are taking about 30 days, at least in California, of their obligatory just review period. And I don't see people moving a lot faster than that. And then usually by the time we're through that final permit moment, usually the state has already issued the permit, of course and understanding the volumetric modular construction across the US is regulated at the state level and we'll often put the modules into fabrication, sometimes even before we have local permits issued, this gives us a little bit of a jump on the overall timeline. So maybe a month of conceptual, about two months of design, probably about two months engineering and then two to three months of permit work. It's really in that six to nine month window. Different urgencies will drive us. We came all into a code crash at the end of last year that got things moving a little faster. And then we're seeing planning commissions and stuff taking longer. We have to go through design review processes.
Prefab Review
Are you doing many ADUs on the back of finished homes?
Toby Long
We've done ADUs in combination with larger building projects. I find the ADU market to be tough, particularly sort of in the work that we do. I love the ADU market. A little bit more prescribed, a little bit more specialized. Steve Vallejos, for example, being a great guy you recently interviewed who's just really built a solid book of business, specifically with the specialty of backyard structures. So I'm not seeing a lot of that right now as individual projects, but as part of our larger efforts, we do this.
Prefab Review
From a timeline, we've seen this move a little faster. It sounds like you're not really doing.
Toby Long
Oh, yeah, no, definitely. Most of the jurisdictions around us have opened up the opportunities for us to be a very streamlined experience. And you don't get into the same kind of regulatory complexity that we do in a lot of our projects.
Prefab Review
Got it. Going on. Cost comes up a lot. We've already had like two or three questions about it. Do you think you can break down similarly, modular costs, site costs, and soft costs. And if you want, we can even do it in the context of like a project or some of these projects that have crazier sites just so people can understand that.
Toby Long
Yeah. I mean, so most of the work that we're doing is pretty consistent economically. Now, I do think that the categorization of those investments shifts, obviously, if you've got to build big retaining walls, maybe you don't have a hot tub or something because you've got to figure out how to balance out budgets. A lot of the projects we work on are pretty consistent economically. What I'm seeing in the market, a little bit of a mention that as an aside, what we do in our work is we try to help our clients access the larger prefab industry. I work for my client side of the table. We love to go out into the larger market to talk to several factories. I do believe that the construction transactions historically have involved a little competition. We like to try to have a bit of that competition in our work so that we're able to talk to a number of different resources to evaluate cost. That becomes a key ingredient for partnership. Nonetheless, the specifications we're using and just the nature of the work that we seem to be engaged in is pretty consistent. What we're seeing right now in the marketplace on the modular modular side, with basically completed structures, on the interior, you kind of get a little glimpse down there in the corner of what it looks like on the outside. They're mostly weather wrapped. We do all the siding on site. That's stucco, there's a good image of the last module being set for that project at the end of the day. So those modules we're seeing right now, right around $200 - $225 a square foot for modules and then on total project budgets, which is really how I prefer to look at a lot of this stuff, sort of top to bottom investments, we're seeing project budgets right now that are somewhere in a for $400 - $500 a square foot range, kind of on average for most single family homes. Some of these are getting a little higher. We're getting a little higher specification on some of the projects these days. The way I see that breaking out in the work I'm doing is about 50-50 in the construction stage. About 50 percent of the investment being made towards the prefabricated modules. About a similar investment being made in things I would associate with hard construction on site. And then we would dose that with the soft costs, which do range from jurisdiction to jurisdiction. Just as an example for people out of the Bay Area, this might sound a little shocking, but the water meter for that house right there was probably about $70,000. And so unfortunately, that's unaffected by prefabrication. That's just buying into the East Bay water grid. But all said, we're trying to balance out budgets in those zones.
Prefab Review
And in terms of when you're talking about the greater prefab market, are you mostly just talking about shopping around the different factories or are you talking about other parts of the industry? Are you mainly talking about the kind of manufacturing or are you talking about other parts of the industry as well?
Toby Long
No, I think more specifically, fabricators, right. These shops and companies that build off-site construction. My rough rule of thumb for most clients is probably around a thousand to maybe fifteen hundred miles. We start to hit the bleeding edge where transportation really gets too expensive. So obviously our projects range, if we're in SoCal that looks a little different group than if we're working up in the north. The Bay Area here, obviously, Colorado's got a slightly different set of conditions and then East Coast projects, it's a whole different set. So it's really the factories that are around the sites that we're working with and trying to align the vision of the project at our end with what the fabricators do. You know, we work in a process that is very much about contextual design. These buildings are constructed once. We wouldn't build this house anywhere else, wouldn't fit on the hill anywhere else. And so really, that's a sort of subset of fabricators that do one off fabrication.
Prefab Review
Right. We've interviewed a ton of these people. Right. Like the map of the plant prefabs in the world.
Toby Long
They're all our favorites. We love everybody on your site. Yeah.
Prefab Review
So what I want to ask is like one of the things I have a hard time with, and by the way, everyone, we're sort of starting these events out of our home. And that's just because of the world we live in. But the hope in terms of where these events go long term, is that we start doing like factory tours and sort of using our platform to give you more kind of one-on-one experience with the stuff. I've done a lot of them at this point. How do you, and I'm sure you've done 20 times as many as I have, how do you, when you're trying to figure out diligence for these people, who do you want to work with beyond them? What are the criteria you're looking for? Because, I mean, that continues to be beyond people's personal experience, and is sort of challenging to understand. Like there's some technologies that it seems like people or some of the factors are starting to adopt to stay more organized. But beyond that, I'm still sort of curious about the best way to kind of figure out who's good and who's not good.
Toby Long
It's a tough question, Michael, especially as we all maintain some hope, optimism and expectation that there's going to be new entities coming into the space. I mean, the world is busy in the prefab sector. And I think there's a lot of entrepreneurial opportunities and a lot of entrepreneurial types that find this market potentially a home for innovation. So I think it's a really good question. I mean, I tend to be pretty simple with it. I hate to say, but I think personality goes a really long way. You've got. Obviously, that doesn't get you across the finish line, but I do think that the cast of characters that's associated with a company and certainly someone as intimate as your fabricator or builder, we've really got to like who we're working with. I think that's a first step. I do think you can look at availability. Not everybody is going to have a spot. And I don't think people wait six months to save six months. And so I think that there's a certain time issue. Obviously, economics become an important part of this. Part of the reason I like to go out and to solicit initial feedback from a variety of factories is because I do think having worked with homeowners for 20 years, people do better after they've seen a few bids. They feel like they've done their homework and have discovered the economics of a few companies. We definitely encourage factory tours, which are easy to do, and are fun for some folks and not for others. And we'll even get into deeper conversations about company capitalization, whether or not there's been money raised, knowing what's on the pipeline, that kind of thing. For better or for worse that's the industry that I'm part of, the industry I'm in. You know, there's not a ton of fabricators that do these kinds of projects. And so there is some reliability in that small community. But I do think that the ambition to bring on new folks is going to continue to make this a pretty significant question for people.
Prefab Review
Yeah. Last question on this and then we can cover your projects. And this is sort of a funny one. I've interviewed 30 different fabricators and almost everyone says some version of "well, other people don't build like we build." And they like to say how few millimeters their cuts are and like our values and stuff like that. And many of these manufacturers are pretty high quality and do have different LEED rated projects and stuff. To what extent is that marketing spiel and to what extent are there good ways of trying to tell the difference? Because, I mean, again, that's challenging for me to understand.
Toby Long
I think not so dissimilar to how Proto operates mostly. I've come at this expecting that our kit of parts are more or less a conventional kit parts. That bringing in a new this or a new that I think exacerbates this question you're asking, "how do I know that this new technology is as good as you say it is going to be?" I think that's a different issue than building a set of standards and expectations, not only from our end. I think our work reflects our expectation of how factories and builders perform. But we also author fairly tight specifications in our projects that do control for a lot of this. There's everything from the contractual expectations to just simply the process in which we're engaged with the factory partners. There's oversight we're providing vis a vis our factory tours client's factory tours, people watching things happen in motion. The inspection process is rigorous. A lot of the companies that we're working with are all also providing a weekly quality review, where it's at least in covid land, it's been a lot of face time and videos that have allowed people a chance to see things. So, you know, on the hype side, I don't know. I mean, I think I can be critical of the prefab space at large that we get people pretty revved up about things that may or may not be true. I think there's different motivations for different companies and how people engage their marketing platforms definitely wanders all over the place in the prefab world. I tend to try to see it a little bit more as a straight building project with some very somewhat conventional expectations around the delivery of a quality product and then applying a more or less somewhat expected follow through from inspections to photography to getting our clients to go to the factory, usually several times at least to perform kind of their own review process. So I guess I'm not so sold on the emerging technologies, but I do believe that the prefab world does have some really great folks that are committed to building quality homes and with a more or less conventional palette of materials. I don't know if that answers your question.
Prefab Review
That's helpful. So let's let's walk through one of your projects. We can do the Oakland or the Palo Alto one. So you can maybe sort of walk us through some of the design work you do, sort of things to look at, how it came about. And then we'll do some listener questions.
Toby Long
Yeah, that sounds great. I mean, all of these are on my website. People can spend a little bit more time as they want, but mostly I just wanted to kind of pull out three of them that I thought photographed well, but that also kind of represented a little diversity in terms of things that I often get asked or sometimes mythology about the prefab space. I think that there's an expectation that design is too old and engineering is too old and that this is some sort of system where we're taking A and a B and adding it together. And I get a lot of questions along these lines. Can you build on hills? Can you work in snow country? Can you do these other things? I think I sort of pulled these projects out. If you want to open up any of them, I'll just share a couple of thoughts about what was something interesting to look at. For these kinds of projects or the Oakland house, you know, very personalized. This is a savvy client. They had a lot of design input. They kind of knew a lot about what they wanted when they saw it. So there was an opportunity to really capture a lot of that personalization in the design. I think more importantly for this one, it kind of reflects on just difficult topography and a difficult site. This also uses, and you can just kind of spin through these, this also uses I mean, it's sort of a nice palette of materials it uses. So this was a custom built staircase by a local metalsmith. It actually worked out being very, very affordable. It's a twenty eight thousand dollars staircase. Could have been a lot more, but it happened through a local fabricator. So this was just a little shot of something that does show up in all of our projects, which was built on site.
Prefab Review
I was trying to figure out how to do that in pieces. It would have been interesting.
Toby Long
Yeah, it's a combination. It was actually brought to the site in three pieces, so it was difficult to get in the door. But that low door you see down there on the lower left is actually into the garage. So that's actually a site built section which exists below the modules that's effectively below grade at the rear of the building, the upper section or the upper two sections are modules which had this volume built in the modules. And so as they were set, the temporary framing was removed that created the double height space. And then after the bulk of the sheetrock was finished, the stair fabricator brought in the staircase that they were fabricating on the side. And so that was just kind of a nice example of a way of integrating a site built element. This wasn't something that we wanted to try to force into modules. It was too important of a moment in this house living on the hill. The staircase is such an important part of your life. These clients were pretty dedicated to that. So you can flip to the next one. So just a kind of representation of diversity of kitchens. You know, this is sort of a fun moment. We had a lot of views out of these windows across the bay. And so we thought the kitchen needed this sort of window set up. And so this is just a very personalized kitchen, high quality cabinetry produced basically by the factory, really open ended specifications to that degree. We also manage a kind of canned solution on the interior so we can serve up the bathroom if we need to. But I do find these are places that people really enjoy investing themselves. I kind of think the design is sort of the fun part of this experience of building sort of something to celebrate.
Prefab Review
Because your projects are custom in nature, does that mean you're spending a significant portion of time with clients figuring out materials, fixtures, appliances, stuff like that?
Toby Long
Some, yes. I mean, this was a spot where the client basically wanted to really invest themselves. I think we probably had some bathrooms in this that were just off the shelf. We've got a million bathrooms at this point. So it's pretty easy for me to say, here's the tile, here's the faucet, here's the tap, here's the toilet. But we also try to work with our clients and not to belabor it, but to have the experience of finding the inspiration from photography from all of our great websites in the world and aggregating them into things that really reflect on their personal experiences. I work with developers too, Michael and they don't want to deal with any of this garbage. They just want it done, so it sort of depends upon what our clients are looking for. We've really tried to tune our process so that if people are interested in geeking out on the kitchen, there's every opportunity to do that. And if people would rather have it go off the shelf and snap your fingers, we can do that, too. So usually it's somewhere in between and it is a collaboration. You know, we came up with some parts of the design, but the cabinet makers are pretty deep into this stuff to really help outline the bells and whistles of all the cabinetry. So go ahead and flip it. And then there's a few site photos. So here's like a nice pocket door that all folds into that wall where that painting is. So that all goes away. You can kind of see some of those retaining walls that are on a steep hillside. Again, sort of a bathroom image sort of tuned to those folks. Here is setting it on the site. Go to the next one. This one, I think is a little bit telling. So this is hauling in amongst power lines. Power lines are one of the biggest sorts of challenges in modular construction. And so this project just threads the needle, with those lines.Where that truck is coming in and they go back across the street right in front of this house, and so we had a small window where we were able to do this, but you can work in and around power lines. So it's not out of the question to be able to accommodate challenging sites.
Prefab Review
We've done a few projects where people actually ended up rolling stuff on...
Toby Long
Yeah, it works well for a single story. It's really tough for multi-story buildings. We've tried to do some shoring systems, but at the end of the day, projects pivot on economics and the more expensive you make the stuff, the less likely it is to happen. So just the last slide of the day so we can bounce off these other two pretty quick. If you want to just go back to those. I know we're going to be pressed on time.
Prefab Review
Let's do one more and then and then we'll cover any questions.
Toby Long
So why don't you just go to the Truckee House. So that's just kind of a cool moment. Or if you go back to that, I'm just going to show something sort of interesting. So look at that PA4 image, which is kind of a cool one. We could be inventive with this stuff. You know, modular building isn't just a stodgy old thing. This is an exciting experience of collaboration and design and working within the framework of a predictable and affordable building process. So this is actually two mods that join but without a corner. And so we were able to open up the whole thing. It involves some steel. There was some complexity there, but it gets a really great result for that indoor outdoor relationship that people are always looking for. People can see the rest of it somewhere else. And then I think the Truckee House is just a great indication that we can build in tough zones. I mean, as you know, Michael, from your experiences, you can still do this stuff up in Snow Country. This was a project that shows well, it's in a Tony community up in Truckee. But this is Martis camp. And this is a module project that has a lot of site-bilt elements as well. This sort of larger form you see in the center as you flip through these photos, I think there's one that shows even in the construction photographs that
Prefab Review
Martis camp, sorry to interrupt, is a fancy community next to North Star just just for
Toby Long
It's a high end resort community, I think a pretty successful one. And it spun off a lot of expectation in the area for kind of a mountain modernism. And we work with clients that are building houses that are a lot less appointed at much lower budgets. But I think people find inspiration in a lot of what Martis camp has been able to demonstrate using a mountain modern language. But if you just jump through that for a second, you can see especially one of the construction photos I just put in because it's a nice representation of some elements. So this whole section here, you know, this was built on site. This is a very open span, clear, volume with a lot of glass and some steel and a big giant door that folds away. And we also look at this process very pragmatically and places where I think we have design challenges that we can't solve using modular construction. We use panelized systems or site build. This was a prefabricated steel frame that was basically infilled with glass.
Prefab Review
Very pretty.
Toby Long
And it's good space makes for a nice room. Just kind of quick there, there's a bunch of these in here. You know, this was in the module looking kind of adjacent. This is like the kitchen in the mod. You can kind of see those spaces. So this building, if you jump to sort of some of the images towards the end, you can see some of these construction photos. This is at a distance. Go one more. This is one of the mods being placed adjacent to what you see, whether wrapped in white. So here's a good image. So you can see thats the field built section and white. That was weather wrapped while it was waiting for the mods to show up. And then we set them adjacent to the modules. And if you go one more, you can see just kind of a nice image of the site built sections which are in steel, which were prefabricated and installed ahead of time. And then the sections, which are the mods, which sort of sit in and around that building. And then there's just a few photos, I think, from the year after this was built where they had 10 feet of snow, I'd say. So they're robust. You can design them to fit in any climate or environment.
Prefab Review
When it comes to designing for heavy snow loads, how much is that adding from a cost standpoint, typically?
Toby Long
Well I think if you took the same house that was on the coast and you brought it to Truckee, you'd probably add, I don't know, 20 percent in your overall structural cost, if not more. The work that I'm doing, my sort of pitch to clients is that I don't know that your budget has to change persay. It's just that we may have to spend more on steel or framing or weatherization and winterization. And so it may mean that we have to find other places where we're going to offset costs. It's really an experience of balancing out the amount of work on the site, which, as I said, is about half the effort with the stuff that we do off site. In the projects we work on, there's always an equal investment of time and energy, and I don't believe you can buy a prefab house until you know how much your driveway costs. It just goes together. So, yeah, I mean, I'm not sure it's easy to relate that. Obviously, there's also the rising expectation challenge. Right. So you go into some of these communities and house values increase and you've got to add things that really measure up to those investments.
Prefab Review
Last question for me and then maybe one or two more. What do you typically see from people who do not go all-cash as sort of a financing plan?
Toby Long
Yeah, it's a tough one. I mean, I love the strategy of saying that if there's an easy path through financing, it definitely opens up a lot of gates. We found that there's a few lenders that we've been able to work with that like the modular space and have some programs for modular construction financing. At the end of the process, per state law, it is a permanent building. It doesn't have any legal distinctions. Whether or not, again, it's part of a sales process or not, but at the end of the day, under California law, it's the same structure. That said, as you mentioned, Michael, the draw schedule on the factory side tends to be a little bit wonky because the factories are working ahead of the site installation. So we've got a few lenders. So that's one issue. We've also found a couple of options where we've connected bridge financing, where essentially it allowed for the factory to be funded through another financing source, and that is because the building was on the foundation. Going down into the construction loan is a little bit more accessible. That works well for Wells Fargo, Bank of America, the other folks that are doing more conventional financing. So, yeah, I think that's just a question. We've also found maybe at the end of it all, and regardless of the solution, factories have strong motivations to figure this out, too. They want to make the sale. So we've been able to get the factories involved and they've been able to connect the dots on a couple of different project opportunities. But there's a few ways that we've seen this come together. It's definitely a little different experience than just going and getting straight construction financing for a conventional project.
Prefab Review
You can look at our website, we have some guidance on some of the lenders, a lot of the high end manufacturers tend to like Umpqua, US bank, tends to play in some of these places, like there's a handful of them, at least in California that we see a lot. A it's somewhat regional. So some of these people, if you want to build a house in the Hamptons, will work with you. And a lot of the time it's like a different set of lenders based on region. OK, so what's the highest performing building you've built, this from the audience, in terms of, I guess what they're most interested in is net-zero and passive housing? I assume almost everything you're building in California is net zero these days. I think you're going to say the same thing. It doesn't necessarily connote high performance as much as just having an expensive solar panel system. But it'd be good to hear about what you think about high performance buildings.
Toby Long
Yeah, I mean, it's a great question because you know, it's sort of a different question now than it was, gosh, 15 years ago when I first started in this industry or even 20 years ago and just getting out of the gates, green building had a very different sort of place in our process collectively than it does now being baked into Cal Green as of 2010. And so from our end, we've built several LEED Platinum projects as a sort of rating system goes. We have two living building challenge projects that we're working on. We built a lot of firsts. One of the first that we did with some pride was we built the very first off the grid building in downtown San Francisco, which was great, which is completely off the grid except for its water line, which was required by the fire department. So that's kind of the way I see it as a volume knob. We can add in the specifications and standards to our clients goals and motivations. Obviously, code compliance is your baseline, but from there these things can go pretty far, as you say, just beyond solar panels into thinking about sustainability and all of its requisite categories. There's no limitation on how much performance can be built into one of these projects. And we've gone pretty far down that road. I find it to be very related to cost and investment.
Prefab Review
Yeah. So if I want to do that and by the way you're very ahead of your time with the San Francisco off the grid system with the blackouts in the last few weeks, unfortunately. But what's the best way to get expertise? Is that something you as an architect end up advising on. Do you end up bringing in outside people who are experts in this stuff?
Toby Long
So we'll do a lot of the single family stuff in-house. Several architects that work for us, we have a team, about 15 architects. Several of them are quite well versed in sustainability practices, LEED standards, rating systems, et cetera. For some of the larger mixed use, multi-tenant projects we're working on, we have a big four hundred unit project we're working on down in the Palm Desert. We've brought in some outside assistance to help us with certification and sustainability standards, sort of our green building consultant, which gets a little deeper if the technologies are more complex. But most of the stuff that we're working on, that's at least just a conventional high standard we'll try to do in-house. But we've been able to aggregate a pretty progressive team of folks that advise us when I hit the wall in my knowledge base.
Prefab Review
And then I guess the final question, unless someone asks another one is what are the expectations around warranties on these types of builds?
Toby Long
So warranties follow state law. The state law for construction is that the fabricators are licensed builders under state law, as are, of course, the site contractors. They're beholden to state contractor law, which requires a 12 month performance guarantee. So essentially anything in the building which has issues for the first 12 months is covered under the contract with the builder and the factory. They all maintain 10 year structural defect liability. And then, of course, all of the products built into the house, none of which are novel or unique, all carry individual warranty. So whether or not that's roofing products or appliances, they're easy to source. So sometimes it does influence a little bit with the conversation about financing, how the contract works so that our clients will contract directly with factories, which is a different warranty claim than if you contract directly with a general contractor who essentially acts as prime GC and brings in the factory underneath them. That's a different chain. But there's no uniqueness to the warranty outside of the state laws and or just the requirements or opportunities that a factory would provide for the system that they're building.
Prefab Review
Got it. I think we got through all the questions, Toby. Thank you so much
Viewer 1
Can I ask a question? I'm wondering how over an existing single story structure, how far can you crane a module back?
Toby Long
So it depends on how big of a crane you rent, mostly rule of thumb is one hundred feet is going to really start to push the limit on a more or less conventional rig. So we try to stay at that hundred feet. As you go out, it's straight physics. So as the crane gets further and further horizontally
Viewer 1
I understand that. Can I get farther than a hundred feet. Is that possible?
Toby Long
100 feet can do it. More than a hundred feet? You have to check the crane diagrams. It depends on what you're lifting. And I mean, I, I would call Maxim Crane. We put a lot of people to Maxim. They're a huge company. They've got equipment all over the place and they could probably answer that question pretty quickly.
Prefab Review
Any other questions, Sharon, you got around my meeting of the audience. All right, thanks everyone else. This has been awesome. First of all, Toby, thank you for the time. And, yeah, expect another announcement about an event in the next couple of weeks. So thanks again, everyone, and have a good night.