hi folks i have no idea what i'm going to say that's what wendy was asking me while we were waiting here to go live tiny house what are you going to say so i i know folks out there have seen the tiny home craze and would it actually work to help with affordable housing well we've got that answer yes with our great guest that's coming up right after this [Applause] [Music] hi folks thank you so much for joining us i am bill fairman this is wendy sweet we are carolina capital management and welcome to the passive wealth show don't forget to subscribe share like and hit the bell we have comment section by the way on the right side of the screen or underneath depending on the platform that you are viewing us from so if you have any questions don't hesitate to put that in there what else oh we are a lender by the way we lend money in the southeast to real estate investors so if you're looking to borrow money go to carolinaheartmoney.com and click on the apply now tab if you're a passive investor looking for passive returns click on the accredited investor tab by the way we just released a longer term long-term uh residential and even multi-family buy and hold permanent loans yeah yeah for up to what 30 units i think that's what it is uh and you're we're talking rates that are starting in the you know mid upper fourth yeah yeah not bad all right that said uh make sure that uh you you comment nicely and if you have any questions some of you are just so mean all right let's get this train wreck started uh we we have a a great guest uh jesse russell he's has he and a friend of ours uh ryan andrews have started this group uh to build tiny homes and and not just individuals but apartments as well yeah that's a awesome idea and municipalities love this too especially on the apartment side of things because they are trying to push us to be more clustered because the closer uh they can push us all the more the less expenses that they have oh no look our brother is watching oh yeah our brother mark famous there hang on he's obviously not fishing he's at work finally it's supposed to be working that's right but anyway we're talking about tiny houses yeah so anyway um clustering putting people closer together it saves money for the municipalities because all the services are in closer proximity they don't want to spread out with all that that's right so they like a little more closeness so we can all get along which will be a nice change from what we've had over the past year this is true so without further ado let's bring let's bring jesse on jesse thank you so much yes for joining us bill wendy how are you guys excellent thank you so much thank you for having me on the show most people don't ask us how we're doing they just figure we're nuts [Laughter] you seem pretty sane so far we'll see how it goes yeah you've just met us jury's still out it's true that's true so i have to ask you how did you come up with the name hyenas homes well it's interesting um you know i grew up i'm from bend oregon that's where we have our business uh which is uh in the cascade mountains here in central oregon i grew up here i went to school for journalism uh long story short ended up in los angeles california working as a reality tv producer i did it for about 10 years and was really just a little bit fed up with my career and really wanted to get back to to my roots get back to bend it's a beautiful town here we have a lot of uh you know beautiful camping and snowboarding and fly fishing and what have you and i was just at a i was at a crossroads really and i had done pretty well in my career as a reality tv producer but feeling like i needed to you know figure something else else out in my life so i was pitching one of my jobs as a producer was to pitch to networks uh different show ideas and get uh ideas from them that they were looking for um and i went to a network and they were going to launch their network with a show called a tiny house nation i had never heard of tiny houses before i went back to my office and um these were the tiny houses on wheels and i looked at it and i thought this is this is my key back to ben so um i sold all my stuff i took a hiatus long story short on the word but i took a hiatus from from my career and went home uh to build that first tiny house and um yeah and the name just stuck you know that was the the first house we built was called the hiatus and then the first development development we did was uh the hiatus and now we have hiatus homes and we also have a construction fund uh called the hiatus fund so capital fund um so yeah i don't know the name just kind of kept rolling with me i guess uh and um it's it's also the name applies to kind of what we try to do with our communities you know we we want people to feel at ease and and on a hiatus while they're living in our homes what amazes me i think the most i was reading one of the articles written about what you've been doing is the price point is it's crazy so i'm doing some tiny home stuff for airbnb and we are picking up that we're picking up homes at you know fifteen twenty thousand dollars i uh twenty yeah yeah that's the right place these have wheels on yeah but i cannot believe the price not only the price point that you're in but how luxurious they are and oh thank you the thing that jumped out the most as the six foot ceiling in a loft is that's incredible it they're just beautiful you do a beautiful job with what you're doing well thank you it's a it's been a it's been an interesting journey because uh we did start with tiny houses on wheels and i naively thought that uh the state and the city would really embrace that type of housing because we are in a crazy affordable housing crisis in bend and i think naturally we're in that too um people can't afford homes anymore especially entry-level homes which as you know the kind of the sooner you start your membership in your life the better off you are as you move towards retirement and i think it's a really essential thing that that um you know people with their first second jobs are able to afford houses here in bend although i think the bartenders and the liftoffs and those type people uh they make bend what bend it is and so to drive them out because of cost of housing um that was really you know where we started at um in 2015 the city adopted the cottage code which basically allowed to do any size we wanted any size lot and any size house i just had to be on a foundation and all these problems that we had struggled with while we were on trailers went away we could now get mortgages we could now get insurance and they just essentially became um you know uh a house uh in all respects just a small house and so um that was a real game changer for us and i i was never really uh hooked you know i was never really uh so concerned about being on a trailer really to me it was the efficiency of space and just seeing that people were willing to live in that that space so um yeah it's been a really interesting journey and we we don't just do 600 square foot houses we have a 900 square foot house we're doing we also do micro apartments which is a new project that is coming up next year so it's been it's been quite a ride well i know that one of the items that the municipalities didn't care about with the being on wheels part is that they like to get tax revenue and right if it's on wheels it's going to be taxed as uh you know a titled vehicle and they go down in value that up yeah and they were going to have a hard time taxing that that's one of the reasons most municipalities hate mobile home parks because they've got right you know they got school buses picking up 60 kids and they're getting like 2 500 in tax revenue out of the place so so tell me how did you get your financing put into place in your first deal that had to be the hardest thing to overcome that that was absolutely the hardest thing i was completely naive to two things when i started this one was financing and the other was building code um and uh ryan andrews who you mentioned as my partner uh basically um i had a friend that he was really a boss of mine in my 20s and we were trying to figure out how we could do tiny houses on wheels on a lot four houses that's all we wanted to do and we got written up in the paper um and i get a call from uh from my old boss and he's a he's a big developer out here now and he called me said hey i think i have this piece of land that would be perfect for what you're trying to do and i want to look at three acres and i was like no way that's i'm gonna do four houses you know this is this is a 22 unit huge development i can't do this and um he said hey listen i'll help you but i think you can do it i think there's a market for this and so i started on that road um quickly got to the point where it was like oh how do you pay for all this um i'm a new developer i had some personal money but i sure as hell didn't have enough to you know to pay for the lots or do any of that and i met ryan ryan was working at uh um was working at truline capital which is a lender here in town um and uh i met his boss at the time and he said hey i can't lend you money for the dirt uh it's too risky that's not what we do but i have two guys that i work with that are really smart and i bet they can help you out and so i bought ryan and uh and jeff we worked with lunch and every two weeks we hit the white board um and at the end of kind of seeing the performa i used to call them pro formas i was that ignorant and then um they basically spit out a number and ryan said no big deal you're gonna have to do this with equity because you're not gonna get debt on this and you need to go raise a million bucks and i was just like holy there's no way i you know i'm my mom's a single bartender right you know i didn't didn't have access to that kind of capital at all but um luckily i just hit the ground and just called people and people just came out of the woodwork really liking the idea and um you know we were offering a huge return because it was so risky and you know one of the proudest moments of my life really was doing whole development and then uh you know being able to send those checks to the the people that believed in in the project and you know they got 20 plus returns irr on the on the project so um it was it was an amazing financial success and you know that's what led us to our our next two developments and then to create the the hiatus capital fund um after having struggled to try to raise the money for the dirt um you know uh and talking to ryan i said to ryan you know i know you're doing this other stuff what do you think about teaming up with me and um i've got two projects coming up and i think we should start a fund um so we're able to mitigate some of the risk because the real risk for the developer is you find this land and you take you take debt on it um and you're not able to do the project and your or the city is you know taking two months to improve your your project or whatever and you're burning all this interest um so the fund really became this thing where we wanted to be able to buy dirt we wanted to be able to develop the lots and then we'd get construction loans for the houses and um you know we really tell all of our investors that are in that fund you know we we really want to have the ability if something happens and uh things dip that we can pause and we still own the land and we can come back when and when things uh things come back and it's it's really just trying to mitigate risk right now we're in a crazy real estate situation in in bend and i you know the first hiatus home the 600 square foot house we sold it for 230 000 and then a year and a half later the last house got resold for 380 000.
Um wow i'd hate for you to do the calculation on the square footage uh cost on that so i think you're you're you know you you talked about this as affordable housing and we're trying to do affordable housing by design um and i don't think we've hit that yet but it's because of what's going on in the market and that's why we started the micro apartments because we think that'll be a bit of a silver bullet for workforce housing that's awesome you've got something you can share with us uh i know people to see what the pictures look like sure if we can just uh take that back to the first page where do i do that uh let's see does that work if i go backwards yeah yeah you have to do that you control your pdf there you go there we go can you guys see that yeah it looks awesome okay so so that's our first development that's the hiatus venom um this was 22 units 22 lots this is a really different type of housing too and the reason that cities have started to approve this is because they're looking for density you know as you guys were mentioning earlier all and the reason they do that is because all the utilities are within the city the city boundary um so one of the one of the theories to um you know to to deal with these this difficulty in housing is to make our our cities more dense so this is um this is a cottage code that came down from an architect in portland called ross chape and what you do is the the houses face inward um so if you see behind those houses that's where the street is that's where the parking is so when you come home you walk into your back door and you walk out and your deck faces these common areas and this is one of the common areas we have a um we also have a community garden and a pond in this particular one and how many homes are there 22.
gotcha now are they set up and so this is yeah they're called clusters so there's four clusters they're kind of half circles um uh that all face into a common area and that's actually written into the code that's part of the code you have to have common area um and it's really meant to bring people together as a community as well you know we've designed three bedroom two baths forever because it used to be that you know the buyers of houses were a couple and some kids and now over 50 of the buyers are single people so um there just isn't the there isn't the the um the houses for for that demographic so i think that's why this did so well and sold out so quickly um right but this is our so we have three different models and that's another part of our our business um uh plan is we only do three models we do this the loft uh which is the the one that the 600 square foot um model that we did in the the original hiatus uh then we have the bauer that's the two-bedroom one that we're doing in another development and then we have what's called the flat which is the the micro apartment so i'll show you um we're also really into um trying to be as efficient as possible as far as reducing our carbon footprint um and we do this without trying to drive the cost of the houses up it's really simple to add a little bit more insulation concentrate on your windows and your building envelope um and that just doing that and then just reducing the footprint of the house in general really really does wonders for for making these houses more green a lot of our houses are net zero uh meaning that the solar that's on top of them supplies enough um energy for the house itself we've won some awards which is awesome um and then you can kind of see the uh the community garden there um in the back idea too having the raised community garden like that awesome yeah and people people use it and they they get to know each other and it's really been neat to see that that community kind of come together and have these you know mostly single people uh you know getting to know each other actually there's been two couples that have come out of that that development yeah i thought that was pretty interesting yeah it started with an argument that hot pepper is too close to my tomato yeah exactly right stop looking in my windows oh wait maybe i want you to yeah so um so yeah that was hiatus bingham that's the 22 uh 22 homes we're in the middle of hiatus roanoke which is our new uh two bedroom two bath um and so that's about 900 square feet we just kept hearing from people people that you know had kids or a partner and they just said god if i had one more bedroom and one more bathroom in a garage i'd really be into what you guys are doing so we basically took that 600 square foot house and we added uh two bedrooms and a garage and a bathroom to it and that's hiatus roanoke um we're halfway through that we have uh five of the houses are sold or in contract um you know just to you know we started our price point i think at 778 and uh the last house went into contract it was a it was a um bidding war um and it's in contract at 832 500.
Um so we've just it's been unbelievable it's been unbelievable to see that you know i i think i got into this more altruistically and then really discovered um how important being successful financially it is for the business because it just really means that we can do more um and so um and i really believe in the free market so you know we don't we don't do affordable housing where we get grants at this point um we just make the houses smaller and then and then you know by by design they're a little bit cheaper than what's out there um hiatus rosa go ahead sorry i've i'm talking so much no that's all right i was just going to mention that that model will work in all parts of the country and while you're getting really high dollar in oregon for them you might get half of that amount in other places but they're still smaller and affordable to build so you're still going to have decent margin just depending on you know what part of the country are you thinking of taking this to other areas absolutely i mean that's our we've really built i feel like the company has grown really organic organically and i think that's something that ryan and i really believe in is that we're not going to get over our fees as we say out here in oregon um by by you know pressing and trying to get too many projects going uh we we've you know the hiatus the first one i i was a three three years of my life of blood sweat and tears to get that thing going um now i have you know now i have uh ryan with me we have a construction manager we we've really grown um but you know our plan is to continue to do this and bend uh and then get into what we call the mountain west which is um which is you know like washington oregon idaho and then we believe that this if we keep doing this right it's just going to get more efficient for building and our marketing we have a really great marketing guy too so i feel like we're um we're hoping that to really spread this around because this is a national problem you know um but we're not gonna i don't think that we want to grow in a in a way where all of a sudden we have 50 developments going we want to grow really naturally and and so far that's really worked for us um so i can still uh spend some time with my my family as well so work so what's the roosevelt yes roosevelt um this one we are just about to start pushing dirt on this we actually took the two bedroom and the and the cottage and we put them together so are you guys familiar with adus or accessory dwelling units out there yes like well the grant is i think they call it a mother-in-law sometimes so if you look at this there's seven lots here and most of them five of them have the two-bedroom as a main house and then they have uh the cottage as a as an adu and then two of the lots because of the way it was configured just have two beds on it um so yeah so that one we're going to start moving dirt we've already started um getting our building plans in um so that's basically just a new project in the sense that we combined kind of the other two that we did in the other two developments um and that's a you know that that's a way for someone to get a bit of a because they're getting rental income from from either of the houses so that's really worked really well out here so i'm excited to get this thing going too awesome and then the micro apartment yeah so this is a really interesting thing and you know my job in the last years has been working with the city council and working with groups and really trying to press the code trying to make sure that we can need to do the types of building that we're doing um one of the big issues is while they allow us to get more density um the permitting is still uh the building permit's still really expensive so our little 600 square foot house we have to pay the city system development charges of thirty thousand dollars if you're building a ten thousand per house um it's the same same thirty thousand dollars so you the percentage of our costs for the building per minute it's really high so i've been working with the city and um they're looking at reducing the um the secs for us buildings are so small so much smaller and the impact is so low but for instance on the micro apartment um if we're assessed as a regular building uh it's about a million dollars in in sdcs but um the city looks like they're going to reduce that by half so you know it's a 500 000 savings which is a huge deal on these wow wow that's amazing so i don't want to run out of time i want to make sure that you can talk a little bit about your fund and how people learn more about it yeah so let me just show you um the best way to get this information too is to go to our website highesthomes.com and uh you can sign up and you'll get sent um you'll get sent this deck so you can look through it and then we'll do webinars every quarter a couple couple webinars every quarter where we really go into the details of it ryan and i get on there and uh describe it and ask questions and uh and i'm always up for a phone call too you know we're we're small enough that um that i you know i like i like to to connect with people but the best way to really do it is to go onto our website and then you'll get sent the deck but basically what we're doing as i explained earlier is using the fun to purchase land and then get the infrastructure done and really have the lots ready so if something does happen we're able to sell the lots but mostly what we do is we go from the dirt to the to the house and sell the house so if you come into our capital fund you um all of our the all the projects that are in the fund two of them that are in there now are roosevelt and the micro apartment um the fund owns that property and owns that land so it's kind of like stocks like if you come into the fund we have a minimum of fifty thousand dollar investment you have to be an accredited investor you come into that the nice thing is is you can look up on our county website and see that the fund owns that property um so as a as a fund uh as you know if you're in our fund you you're with us on owning the property and the basic split is you know we we develop the land uh when we sell the the houses um the profit that comes back we split it into 50 50 50 goes to uh all of our fund holders and 50 comes back into our company um and the nice thing about the fund is uh you know as we liquidate um these projects yeah you know money goes the distribution goes back to uh to the investors and then we keep the principles in there i mean you after uh two years you can get your principal out if you wanna you know do that that's no problem but if you keep your principal in the ideas we'll be able to expand and and really build on the growth of of both uh of both the investment dollars that have come in as was the the developments we and we're targeting a pretty high percentage you know we we're not greedy and we want to be in in line with our investors and so that's why we did the 50 50 um and you know we're anywhere 16 we're targeting anywhere from 16 to 24 uh return um on investment obviously i forget what you're supposed to say when this hap pass games yes thank you for doing that for me i'm pretty new that ryan will be the i hope you have ryan on because he can go much deeper into this but we think it's a really great fun we're about a million five right now we wanna uh we need to get up to about 3.5 million um in the next uh in the next year or so um and then from there we'll just continue to add investors the fun and expand our development so awesome there it is thank you thank you so much for sharing so to be clear yeah this is not an offer to buy or sell any security that uh this is educational purposes only you must read the ppm before investing consult your financial advisor and like wendy said your mileage may vary i'm gonna i'm gonna go back and transcribe that so i have the right language you're doing that's an awesome model it really is cool really i know you initially started it off to you know kind of help with the affordable uh side of things and then it turned into uh i i would call it it is a niche but it's it's more of a boutique type of a home and yeah it's really cool looking and it's something people want to get into they don't mind not having the big giant yard to have to deal with and you still have that community so you hit the people downsizing as well and i think that's really cool that that you're you're really hitting two two separate markets on that and you're smart with going to the municipalities and trying to get a lot of those fees reduced because they're the ones that are always pushing we need more affordable housing well you don't allow us to have affordable housing if you're charging us the same that you're going to charge for a much larger time okay if anybody wants any uh information you're considering investing or maybe you want to buy one of the houses but would you mind pulling up uh hyatt's homes again there you go just go to that website we'll also leave it in the show notes as well and should be there on the um thanks everybody for joining the show this is the passive wealth show uh bill fairman here wendy sweet we are carolina capital management we are lenders in the southeast for real estate investors only go to our website carolinahardmoney.com if you're a borrower click on the apply now tab if you're a passive investor click on the accredited investor tab don't forget to share like subscribe hit the button and we will see you guys on the next show have a great week [Music] you