Episode 4 - Brian Kuzdas, CEO of S2A Modular

The Prefab Pod

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Transcript

- Prefab Review

Hi my name is Michael Frank and this is the prefab pod presented by prefab review where we interview leading people and companies in the prefab housing industry to learn more about them and make it easier to make the best decision about your prefab project. Today we're speaking with Brian Kuzdas of S2A modular. Welcome Brian.

- S2A Modular

Well thank you Michael. Thanks for having me.

- Prefab Review

Thanks for being here. It'd be great to just hear a little about your background and what led you to start a new modular home company.

- S2A Modular

While I don't know how detailed I should get on this but well I'm fifty five years of age today so happy right. Well not today, today I'm taking you know I'm fifty five soon to be 56 and a few months but I've had a storied career that's led me up to this moment so maybe I should give you the first two minutes of a little of my background. I got involved in real estate in nineteen eighty five I got involved in commercial real estate as a broker so I did brokerage for about 12 years on the commercial side of the fence and by the way, I was born and raised in Chicago although as you and I are talking, I sit here in Palo Alto ,California now. So I'm a Chicago guy born and raised there nineteen eighty five I get my real estate license and I did commercial real estate for about 12 years and then in nineteen ninety seven I started buying apartment buildings to convert to condos so I don't know if your audience knows anything about condo conversions but after the success of our first one in nineteen ninety seven I started buying more and more apartments and so by two thousand seven, ten years later, I had purchased a total of about 4000 apartments and converted them all to condos. At peak we had our name on the right field wall of the Chicago White Sox we had our name at Wrigley Field home of the Cubs, we had billboards all over Chicago, two hundred employees and just kicking it out and just really taking over that part of the industry. And then two thousand seven hit - it was the crash for all of us in Chicago was pretty brutal and we went quickly from two hundred employees down to twelve in the course of about 30 months. So by two thousand seven, eight, nine in that era we were scrambling, you couldn't buy a building fix it up and say it and sell it retail the wholesale market had come into play and so it just it was a crazy time. So we shifted into auctions believe it or not. We started to help banks liquidate their properties that they had taken over through the auction process so fell in love with auctions I bought the domain realestateauctions.com which we still own today and we started doing auctions not only in Chicago but we started expanding outside of the Chicago area. Florida was the first state and then California. And by 2010 we decided that it was time to really seriously look at doing expansion across the United States. So by 2012 we had moved the corporate office from Chicago to Palo Alto California. So in August of 2012 that's gonna be my seven year anniversary next month. Basically been here in California for about seven years now. So we continued doing the auctions we built up to about 15 states and then by 2017 I started, though we were cash flowing and making some some sizable money in the auction game it really wasn't the same kind of money that we made when we were doing acquisitions. So we shifted and started building acquisitions again in 2017 putting the auction process somewhat on hold. We bought a couple properties in L.A. County fixed them up bought a property in Tucson Arizona RV park that we're working on bought a home in Palo Alto knock that down and now we're building a traditional stick built home. And then about a year ago I got a call from a lady, her name was Daniela she was one of our directors in our company and she said Hey I found a home in La Jolla California. For your listeners that don't know La Jolla is right above San Diego. And she said we can knock this down and put up a traditional stick built home and make about 20 percent return on it or we can knock it down and build a modular home and make a 30 percent return. And I said well my first gut reaction was kind of negative. I thought wait a minute you know we're building it in La Jolla it's an upscale area it's on the ocean and it's just kind of high end and you know modular is cheap it's boxy it's not customizable and she goes , "No no no no no no no you're you're thinking a manufactured," it's modular - modular it goes into a foundation it's permanent. It's stronger construction than regular traditional stick built. So I was clueless literally a year and let's call it 15-18 months ago I didn't really understand the differences. I'd never been in in the business to build modular or manufactured homes. So that was the beginning. I ended up, I flew down to San Diego I bought the lot and then after I she had me go to a place in Southern California to meet with the guy that was proposing building a modular home and I sat in his office for about two hours and I was spellbound. I was just amazed that all the advantages of modular construction and I got it. I mean 15-20 minutes into the conversation I pretty much got it. And then at the very end what changed my My Direction My life is he said to me how many homes are you building this year. And I said Well you know we've done five projects over the last five quarters. I think we're going to do maybe one a month now and we're scaling it just like I scaled the condo conversion business and I said I think we're going to do about five hundred homes within the next five years and he goes you know what you're going to have to meet a friend of mine John Roland - John Roland who is now my partner. John Roland is just entitled permitted seventy two homes to build in Southern California. And he can not find a factory. He wants to build a modular. And he wants to integrate it with. With the Tesla power wall battery and a bunch of renewable energy smart home components that make up net-zero real estate. We can talk a little bit about what those terms are in a second. But he said he can't find a factory anywhere in California that would build with the components that he needs. So he's looking to build a factory. So I said OK I'll meet with him from my side of the fence I've always had construction challenges whenever you scale when you build a lot your first guy you start working with works out great. But then the second contractor sometimes they don't do as well sometimes they go dark on you sometimes their prices go up it's just too if you're going to scale and build a lot of homes. You're so smart to really control that side of the fence So I met with John and it was a match made in heaven. I'm fifty five. He's forty eight. He's been in construction for his whole life. I've been doing the same thing. We're both all in and he said Hey. I need to get a factory up and I want to do this modular and I'm looking for a partner. And I said Well I'd love to to do this I get what what this whole thing is about and and then that's how it all started. We shook hands. Agreed. And now we're building a factory. So it was it was amazing how branches of life go but that's how it all started. Sorry um I got a little winded there but yeah that's that's how it all started.

- Prefab Review

That's really interesting. I want to come back to what you said about not being able to and find a factory. I mean off the top of my head know a few in that area of the world. So I'm interested in what you were looking for that wasn't available. But before we get to that let's let's jump into what is an S2A modular.

- S2A Modular

It's squared and so S2A sort of stands for a sustainability advance to a higher power to a higher level it's really we're integrating not only the modular concept the building and all the advantages to that but all the renewable energy smart home technology that's in the marketplace today and building homes that are sustainable. Net zero real estate got so so.

- Prefab Review

So where are you on this train now?

- S2A Modular

Wow. So where are we at. Can you define that a little better?

- Prefab Review

So is the factory close to being built?. When do you plan to ship houses? Is it just what's the product line that you're actually more specifically offering to potential clients et cetera?

- S2A Modular

Sure. So when John and I shook hands back in June of 2018 it's been a full year now. It's been a just a whirlwind of of of progression. It started out. We locked up some land that we had to title and permit. That process took us a good solid year. The factory the land is in Hemet California for all of you that don't know where that is that Hemet, H E M E T. It's just west of Palm Springs which is a real good anchor a lot of people know where Palm Springs is. So it's about I'd say 50 minutes west of Palm Springs so that land is now permitted to build a factory we've broken ground we basically should have the factory actually producing modules by November 15th in that range. November 1st to December 1st. So that's where the factories at and in terms of that from the time that we start it June. Till today we've taken on about three hundred and fifty five units to build homes slash units whether they're apartments commercial mix use hospitality we're doing it all we're doing commercial and residential simultaneously. So right now we've got there's two things. There's contracts which are signed contracts with money and you're in the bank you know real contracts and then there's pipeline of people that we're negotiating with. "Hey Brian I've got twenty two homes I want to build in in Berkeley California" or whatever that's called Pipeline. So we've got three hundred and fifty five homes under contract and about three thousand units in the pipeline that we're in negotiations with. So it's it's going nuts right now. Cities from developers to all mom and pops people that are looking to buy their first modular home all the way to companies that are building for their employees to entities that want to build subdivisions. It's all all over the place.

- Prefab Review

Got it cool. So one question I have from what you're saying before is so just off the top of my head right,Like plant prefab has a factory pretty close to where you guys are talking about. I think Dvele has a factory pretty close to where you're talking about. Wh? Why build another factory. Yeah. What were you looking for from either price or control or whatever standpoint that said you know I want to own this part of the process.

- S2A Modular

Well some of the factories that you've just mentioned I don't really know a lot about. I don't know those CEOs and I know you hear of them I know Amazon invested in plant prefab and stuff like that. You read these articles but you don't really really know unless you're face to face with the CEO and even then you don't have the you don't know if they're telling you the truth so you don't really really know. I just focus in on our own our own stuff. You know from my perspective being age 55 and doing 4,000 condo conversions it's great when you can control the vertical integrated piece of construction and you got to go out buy the land you've got to title you've got to do all this stuff you eventually have to build it. And when you build it after that you have to sell it. So we've got all the pieces of the puzzle inside our company - what we lacked was the construction side. So from my perspective I like the idea of the control, you said that word control. What what can you control when you own your own factory and you're building a product out of it you can control the quality, you can control the time that it takes, you control the pricing. So all of these things are really important if you want to scale if you want to do two, three, four homes a year and you're you're one of those developers and I sort of like a mom and pop style developer that's fine to use a plant prefab or some of these other factories. But if you're looking to take on the world and build sustainable houses where you know you want to change the housing crisis in California make a dent it's good to get going you know get your own stuff going. So John is the same way. John John Roland he and I been partners on this deal. He had a company just like I did that wanted to do you know I told you seventy two homes. That's not that's not his only development. He's got a number of them. So for him the need to do it inside and in a modular setting where he can move faster build it less expensive and control the quality was really important for him as well. So again hopefully that answers your question. We just wanted more control and evidence.

- Prefab Review

So now talking about offering a little bit. So just in terms of, I'm not sure if you know anything about our site but basically prefab review we get tens of thousands of buyers to our site every month who are basically interested in building modular prefab homes typically single family residential stuff. But there's some variance on that. And one of the things we try to provide for that which is part of why we're talking is just kind of education about the price lines where you where you sit in the market. So just with that lens if I want to build a home on a lot what is what is that process like with you. I see there are some really sort of images of kind of renderings of homes on your site. Do you have sort of pre-designed plans or will it mostly be custom, or both. And then also when you were talking about control, Are you really taking control of the entire process or is it your sort of the manufacturer and then there's a local contractor who will also be hired to kind of finish in the home do the Foundation et cetera.

- S2A Modular

Sure. Well it really depends on where it's being built. Can I ask you, and my apologies for maybe asking this without prior asking the question before we got online here but where are you located?

- Prefab Review

Well so I personally am located in San Francisco. But we have employees kind of across the country.

Nice so San Francisco Bay.So we're neighbors. So Palo Alto is for all of you listening. Palo Alto is literally about 45 minutes to 60 Minutes just south of San Francisco. So you and I are pretty much neighbors. Exactly. So back to your question. If someone called and wanted to build a home in California then we take care of everything A through Z. If someone wants to build a home outside of California then we would integrate part of this process with maybe a local contractor. We would build and ship and so on. But so let let me take the listeners through route through the steps. There's basically seven and they're pretty easy. The first is someone calls them so they are looking to build a home on this lot. You really want to get a feasibility study done. A feasibility study especially before you close on the lot. Because while it's in a deal pending stage where you've locked the land up with a contract and you haven't closed on it yet that's when you get the feasibility study done. It takes about two weeks and it allows the builder to go in and assess the land, the setbacks, height restrictions, permitting process so that the fees that are included with all of this stuff it costs about thirty five hundred dollars for a feasibility study for residential. And then after that's done, after this two weeks you get a big thick report and it says yeah we can build a twenty eight hundred square foot home on this land. So. So you know you have the confidence before you close that this actually can be done. So. So that's step one. If you go forward that thirty five hundred dollars goes into the construction budget and gets taken off so you can always feel comfortable that you're just not getting charged that kind of money. Now if you don't go forward then of course you paid thirty five hundred bucks for a feasibility study. That's how it goes. Next is design. So now we we now know we can build a modular home. Right. So the second is we design it. We've got an internal department that does modular design. Some of the people out there in the industry don't. I mean the guys that are building a modular home for the first time they have never. They don't know that really from an architectural standpoint it's smarter to just start the design process with a modular architect opposed to a traditional one. You can go to a traditional guy but eventually after the plans are done they have to go into modular architects hands to get finished off to kind of put it in boxes so to speak. So that's step two is you want to have a design done. Now people out there if they had gone to a lot of modular sites and they see all these pretty designs and they want to plop one of those designs down there on their piece of land that certainly can be done but if you're thinking can a modular home be customized the answer is absolutely. Absolutely. I bought a small little box of a piece of land in La Jolla thirty six hundred square feet ridiculously small for anybody that understands that number and you know the report came back that we could build a twenty eight hundred square foot home on that 3600 square foot lot so you know. So that's feasibility. Then it goes into design it could be completely custom. Third is we then go into a construction contract. Once we know what the design is gonna be for those engineering that's where you have to go through a permitting process and get all the civil engineering drawings together the electrical those structural all that all those. Those drawings then get put together and we go into it and you'll take care of that. Absolutely. Yep. Now most companies have bits and pieces of it. I don't know any company that does that a through z but after we get the permits that's when we break ground or simultaneous we call it onsite work while we're doing the modules onsite Work is foundations and your utility hookups and all of that while you're doing the modules in the factory. And then last is the site completion. The last the modules get shipped they get put into a foundation locked in and then the last 10 percent is typically your building materials around the modules and you're done. So that process a through z. We do all of it if it's in California. We get calls every third hour from people all over the country and then we hook up with either factories that you know friends of ours partnerships that we've got across the country and work with local contractors as well.

- Prefab Review

But so if you're doing it in California that means you have general contractors on staff and then they're hiring subs like how to just I'm interested in how the dynamics of that work.

- S2A Modular

Yes. There's really two companies under a parent company is kind of how we perceive it. Is you have the factory which builds 90 percent of the home they build the modules and then you've got the construction side. What's the construction side do. Well they they do the foundation work as I mentioned they do the utilities and then they get the land prepped. So then when the modules get shipped and would that now the modules are on site that construction company is making sure that it gets craned in place the right way and then bolted and then all the last of the 10 percent of the building materials and that's the construction piece so as to a modular has both we have a construction company and we have the factory which is kind of a rare rare combination in this industry.

- S2A Modular

I find that ninety five percent and I may be wrong on this statistic. So don't hold me to this but I find that ninety five percent of the modular companies you go to the Web site and you research them out they don't own a factory so they don't have that 90 percent of control and then the guys that have a factory I don't know how many of those actually have the construction piece in play.

- Prefab Review

So I mean we've I think we had 200 reviews on our site of different module and prefab companies. We've talked to pretty much all of them. I would say there's a lot of modular architects as you said there's a lot of modular factories. There's almost nobody who like you guys, very frequently people will cover and do construction on areas that are very close to their factory, If you guys are in fact coming off California I don't know of any companies that do all that and cover an area that that wide. So that's awesome.

- S2A Modular

Yes. And and we don't. So today where it sits today is we go A through Z unless there is scenarios where people want bits and pieces. So what I mean by that is we may get a call from Maria today and they'll say hey Brian we and we want you to build five thousand hotel units for us but we have the construction piece. We just want you to put out the modules that's it or developers or maybe developers online listening right now let's say you know we've got a crew to do the foundations and stuff but we'd love to be able to get these modules quick and cheaper and be able to scale and build more because we've got that piece in place which so we work and integrate with those guys. So there's guys sometimes in the development process. We don't have to do a through z because we actually partner with people that are already doing parts of this already but you know we can do both.

- Prefab Review

That's awesome. So let's talk about pricing. Yeah it looked like on your site you said the pricing. Yeah. Why don't you just tell me. Just because it struck me as incredibly low compared to at least when I see for like sort of other high end Bay area prefab imagine our companies. So yeah. Can you just let me know sort of what typical pricing might be for let's say let's let's call that you can tell me for wherever but let's start with saying you know 2000 3000 square foot residence in Palo Alto or the Bay Area or you know an expensive area in the country.

- S2A Modular

Sure. Now I get this question every third hour as well every day in my life

- Prefab Review

And it's a lot of flat lot if that makes this easier.

- S2A Modular

Sure. Sure and what I was going to say to the audience is this is such a case by case you know you just threw out there flat flat on you know so. So there's all different lots that you build on there's all different zoning regulations and there's so many permitting fees from Palo Alto to San Francisco to Tucson Arizona that there's just there's a lot of differences from one lot to the next. But let's, With all of that's all but with all the caveats and understanding this isn't a guarantee or anything. Yeah let's just go with what's an average. OK. So there's really two companies there. There's the construction side that I just talked about and there's the the factory side. So when we build let's call it on average a 2,200 square foot home we are going to charge about two hundred and fifty to two hundred and sixty dollars a square foot all inclusive. Other than the land. In other words that takes care of the foundation it takes care of now. Now this would include high end materials. So it's your cherry wood kitchen cabinets that have the little glass doors high end not your Ikea cabinets. You know that this is the high end materials that you would put in Palo Alto.

- Prefab Review

You basically have to as of next year.

- S2A Modular

Yes. Right. Exactly so and so. So what that means is that we are spending some some really quality money to make that happen. And that stock in our homes and it goes for about 250 to 260 dollars a square total. Now it doesn't have to be that number. No. There are sometimes contractors will say Hey Bri we just want to do the modules. We don't want you to do any other stuff just get them to the site. And and then then I would say that that number would probably be more like one hundred and forty five to a hundred and sixty five dollars a square foot because we're not doing all the other stuff. So it's kind of about one sixty five for the module and maybe ninety dollars a square for the construction up to one hundred dollars a square for the construction. So put them together. We do a through z and do all the permitting and stuff for you the design the architectural work all of that's lumped together the exact costs here, like 250 - 260

- S2A Modular

Have we ever done it for one eighty to two hundred. Of course. Yeah. I mean we're taking all of that those pretty bells and whistles out and all we can do that strip it down make it me I'm pretty. Instead of high end average and you're going to you can bring that down. So it really depends on the customer as we end in the town that they're building and we went into Fremont and all of a sudden we found the Fremont. Fremont California at East Bay for those. Yeah. I don't know. Yeah. You know all of a sudden we were you know this gets hit with this number and this number a little different than the town right next to it called Union City. So you it's really a case by case guys but it's about 250 to 260 total.

- Prefab Review

Got it. That's I mean quite honestly that's like almost shockingly low to me. So typically I would say in most high income because again we deal with whenever you have a couple hundred projects a month we typically see like high end building in the Bay Area at 450 plus. And we typically see the cost of a lot of modules that like two hundred but then we see much higher site costs to me. So if you guys are in fact able to do with that price that's awesome particularly because a lot of these areas we're talking about you know about like eight hundred to eight hundred plus idea. You know after building your after repair value of these homes.

- S2A Modular

And I'll just kind of add a little bit to it as you know the philosophy of s to a isn't to make a million dollars on every build it's just to build a lot to really you know our mission is is at the end of this is You know to have things that do something that books are written about you know let's let's resolve the California housing crisis. There was some some oddball thing that came on the radio about a week ago that just stopped me in my tracks and I wish I remembered the university that they were doing this but they were voting. They were voting on. Could the students that were homeless that were living in cars stay in the parking lot of this university. I don't know if was Cal Berkeley. It was a very big school here in Northern Cal.. I thought it was Northern California schools on the radio here and I just I stopped it might just sort of shockingly there are so many people living in cars you know cars these 22 year old kids and it's the housing crisis the crisis is so crazy and you know from our perspective as to what we're really looking to do here is to get people into homes that they can afford you know low down payments that they can at least get into home ownership. The houses don't have to be mansions they could be eight hundred to eleven hundred square feet but sustainable net zero real estate low down payments and something that they can afford that they can own they can live in and do thousands if not tens of thousands of these homes. We're not looking to make a killing on every home. Just do it where you can do it where it's affordable. Affordable and good quality stuff. So yeah we're. And we can do it for the price we just talked about 250 260.

- Prefab Review

That's awesome. OK. Last couple questions about us two. One is how many homes are you expecting to build. Let's just let's just call it 2020 at like a year like let's say in your first year.

- S2A Modular

My guess if I was to have a meeting with you Christmas at 2020 I'd put a bet that we will have built a thousand homes in 2020 if not fifteen hundred to two thousand. So my guess is it would range between a thousand to two thousand with the orders that we've got now. I expect that by Christmas we'll have two thousand homes the bill which is about the capacity of our first factory to be able to do two thousand homes a year. We are right now in negotiations for a second factory as we speak today for Northern California. So I don't know when that's going to get up and might my guess is that we're going to be building out of that second factory in the middle of 2020 maybe June July August of next year. So I don't know but I would I would I would say that range.

- Prefab Review

One last question - It sounded like you sort of got into this from being a developer and now you should have more of a right now you're sort of a different part of the ecosystem. Are you still developing stuff for yourself or are you completely focused on you know whatever the manufacturing and construction and design piece.

- S2A Modular

You know it's a great question and very insightful. My answer is both John and I have not only recognized what's in front of us is this multi billion dollar company on its own you know just from the orders from the general public. But John and I have also stepped up and started to your listening audience might have heard but there's something called Opportunity Zones where you can buy in on land and the government gives you great tax incentives. We put together very large funds to build property on those opportunity zones. So as a sort of a side note John and I are able to build thousands of homes as well through our own development companies that all run through S2A simultaneously in addition to the general public. So we're doing both Michael.

- Prefab Review

Well what typically those are I don't know what the politically correct is let's say emerging or traditionally disenfranchised areas. What geography

- S2A Modular

Opportunity Zones are all over the place in California there's eight hundred and sixty five opportunity zones and a lot of people think you know they are in areas that are less sought after so that it gives the incentive to build in these areas and develop them but you would be amazed at really where they are there. They're also in Fremont and San Jose and parts of Redwood City and they're all over the place. So. So we're building a northern California southern California all over.

- Prefab Review

Just so now. Want to quickly move to a section we sort of say that's a fire round. So these are more general questions not per say about S2A. You know if you can try to answer that in one minute or less. All right. So what should buyers keep in mind when they're evaluating a site?

- S2A Modular

I would say that depending on what their dreams and wishes are for their family the biggest thing is to get a feasibility study done so that a lot of people have moved forward with buying land first and then ask us to do a feasibility study and when we come back and say we can't build a modular home on it for whatever reasons they're screwed. They already own the land. So the biggest thing for me is always get the feasibility done first.

- Prefab Review

Is that typically because it's like slope or because you can't get a crane in now.

- S2A Modular

Well for many reasons but I'll give you the first one that happened about a week ago. Some lady wanted to build an ADU accessory dwelling unit behind her home. She had bought a piece of land and it was zoned residential but the city of Fremont. I shouldn't have said that but the city changed the zoning over time and she. She's on a main street and she expected to be able to build an ADU. We came in there and it turned out that the zoning has changed. They don't they won't allow it. Now she was upset because she couldn't build an ADU. But what saved her is at least by having the feasibility study done and knowing this she didn't go out and get an architect and start building you know get spending money on an architectural designs and permits and all that and then find out at the end that she couldn't do it. So get the insurance policy first get the feasibility study done first.

- Prefab Review

Got it. One of the things that we see as sort of interesting and challenging is what's the best way to finance a modular home? And I sort of see that two ways. What's the best way to finance and to have you seen ways of being able to finance both the land and the construction.

- S2A Modular

Yes absolutely. And of course it all depends on the credit worthiness of the buyer you know. Right. So it all starts there but yeah there's there's you know I will say this it when when you think of the modular industry versus the traditional it's faster we move faster we can get a home done in three months opposed to 12-15 months. Right. So when you get a traditional lender that's not really used to modular they they do a construction loan for a year because that's how long it takes. You know you got it and you get these little draws these 12 draws over twelve months first for your foundation then a little bit for your framing all the way down till you've used the 12 months in the million box but a modular you have to go in and boom you need a half a million right now because we're going to build it in six weeks and we're going to set it and get it done in another six. We're done in three months opposed the 12 to 15 months. There's not a lot of lenders that have quite caught up to that. So they're out there there's a you know certainly a handful that we use and we can get the job done but for anybody that's frustrated that's having a hard time just contact S2A modular and we'll see what we can do to set you up with some lenders that we we have in our pockets that we use consistently that can get the job done.

- Prefab Review

Okay. Two questions. One if you don't mind mentioning who those are. I mean again we see a gazillion

- S2A Modular

Well if you have a gazillion we should talk offline.

- Prefab Review

But it is very regionals right. So we see like local credit unions do a really good job in Pennsylvania to serve but like

- S2A Modular

For example in Northern California for example U.S. bank is a good one Prime Lending is a good one to use.

- Prefab Review

Got it. And then are you are you seeing people. So this is the most challenging. One of the most challenging questions we get all the time which is how do you. So most lenders we see will not give you a loan on the land and the home before it's permanent. So what we frequently see is we see people either buying land in cash or we see that doing land loans and then doing the double close with a second construction loan at the top. Have you seen people who figured out ways to avoid that problem for you.

- S2A Modular

No we haven't that's really the typical when you say to buy something before it's permanent. It's pretty tough. You know you don't finance before it's permanent. Yeah exactly. That's kind of tough to do. And again it's all based on the credit your credit worthiness of the buyer if they're strong candidates and they've got money and others other places you know certainly the bank feels protected. So but know that that's always going to be a challenge.

- Prefab Review

And then the last two questions are I guess when come up one of the things it sounds like you're specializing in California. You have to be pretty aware is the high fire risk in many of these areas. What do you do specifically to mitigate that as much as possible.

- S2A Modular

Well we're using materials that are fireproof. So we're building homes that are now basically fireproof homes.

- Prefab Review

That's awesome. This is really helpful. Final question we ask this to everyone. What are you most excited about for your company or for the industry for the future.

- S2A Modular

Well you know what would I immediately comes to my my front of my thoughts are the housing crisis. I've said it two or three times now and I've got a 26 year old son that there's no way that I could ever possibly get him to to see how he could have ownership in California. It's tough. The prices are just too wacky. There's a book that I read recently that said that the population of California is growing. One hundred and eighty thousand units a year are needed to handle the population growth. And over the last 10 years there hasn't been more than one hundred thousand units built in any given year over the last 10 years. And we need one hundred eighty thousand every year. So it's getting worse and worse every year. I think what John and I are probably most excited about is helping that cause getting people to be able to own and not rent own have their own space and met and make sure that not only is it a quality home but it's a sustainable home where they don't have any electric bill attached to it. So yeah. That that's it in a nutshell. I could go on and on with that answer but I'd say that that's probably it.

- Prefab Review

All right Brian thank you so much. It's been great to learn more about what you're doing and I really look forward to seeing it all develop. For those listening if you want to learn more about S2A modular S2Amodular.com is probably the best place to find out. And again I'm Michael from prefabreview.com as well. Thanks again.

- S2A Modular

Thank you Michael. Appreciate it.