Updated 1.2.26

do you understand the reason why you order things so far in advance? One you can have track what you can control.

 

A little bit of the the pricing. I mean, if you you sell the house for 380,002 weeks later, lumber packs go up, you’re cutting into your bottom line. Yep. That’s part of it for sure. Also, if you’re out here in the middle of nowhere, Wyoming, we probably have longer lead times on that stuff. You do. That’s true. If they’re have smaller lumber yards, they don’t carry as much supplies, things like that.

 

Yep. And if they get discontinued, we have less subs to use. So we have to train getting them schedules more difficult. Yep.

 

How many people are in your town, Ty? The whole county is about 20,000. The town’s about 17 ish. I think.

 

Yeah. So another thing is, remember what home builder coach told you about time? If it takes four months to build the amount of interest the builders paying, if it takes six months to build, it’s a larger amount of interest that comes out in the bottom line. So if you.

 

So the thing is, is if I don’t order all those things way in advance, I may be sitting at a stage of construction at a standstill. I’m waiting on the drywall. The house is framed, the roof inspection has been done. The house has been cleaned out. We are ready to install drywall and the drywall hasn’t shown up. That causes us to pay interest on everything we’ve spent so far.

 

So that the moment we close on the construction loan, the interest clock starts ticking. Think of it as like, you guys remember the old days when people would get into a taxicab and the meter starts spinning, right? The meter starts spinning as soon as that builder closes on that construction. Little mini interest meter. Right. So you don’t want the interest meter to be gone.

 

And we’re sitting still because we’re waiting on drywall. That’s why you order all these things way, way in advance. So that makes sense. Yeah. Okay. Sorry. Home builder coach is reading an email. I just just realized I got screwed a little bit. I’ve never seen a seller offer 2.7 and take 3.3 for themselves. Assholes.

 

Sorry about that, nerds. Sorry. Anyways, I’ve gone up to excavation of the home. Is there more that you’re wondering about, or does that kind of answer your question there? No, I mean, that really the the main thing in there that I was kind of wondering about is like the time from the bank and. Yeah, and the like basically that was kind of what I was wondering.

 

And that was the right time. I had been giving people, just not I don’t obviously give them that information and I don’t think I would anyway. But like I said, I told my clients, guys, the first 30 days you are going to think, what are they doing? Why are they not building my house? Yep, a 45. You’re going to be impressed.

 

So home builder coach always tells them that at contract I say you’re you’re literally going to think we forgot all about you for the next 30 days. Yep. You’re going to be like, why have they not called me or talked to me? And why are they not doing anything? You’re going to feel like that for about 30 to 45 days, depending on the city.

 

There’s and I always tell them there’s two things I don’t have control over. One is how fast the bank will close on the construction loan, and two, how fast the city will process the building permit. Those two things are the things out of my control. We won’t be able to start right away as soon as the building permit and construction loan is ready.

 

But I can’t start until those two things happen and we get a limit under the bus we’re driving, right? Right. I mean, because it’s controlling, you know, they want. They’d be like, kick rocks. Exactly. So what I do is I explain to them, you know, I explain that to them, and then I go, guys, here’s the thing. We all know that cities and government municipalities are not efficient, right?

 

So that’s probably the biggest outlier. I’ll give you a story of what really happened to us. So, we had, during Covid, housing exploded like nothing I’ve ever seen in my entire lifetime. Just skyrocketed. Like. And what happened was all of the builders were busy at the same time, like, record pace. The cities didn’t didn’t hire anybody else to handle permits, but the permits went up like eight x.

 

So all of a sudden, the same person who’s 68 years old, who’s holding on the way to retire, is stamping those, has to review them and stamp them. He’s done it. He gets paid by the hour. He doesn’t care how many permits he processes in the day he gets paid, whether he puts a stamp on it or doesn’t, he doesn’t care if there’s eight times as many.

 

He gets the same paycheck. They ain’t giving him a raise if he processes all of them. So he just slowly stamp next one stamp, you know, whatever pace he’s going to go at. So we’re waiting to start homes for like months because we don’t have permits like three four months. The customers are like ticked. And in the meantime, because there’s so much demand, material prices are going up.

 

But we already locked our price back here. That’s when it gets crazy. So, but that’s kind of that process in a nutshell. Is there anything that I’m leaving you guys with questions about as to what that timeline looks like from contract to beginning of construction? Any of the details you want home builder coach to fill in on any of that?

 

Now, feel good about it. It’s all clear. Okay, cool. The biggest thing I think for you to understand is the reason why we order those materials so far in advance. Because, you know, customers can be frustrated at that sometimes. It’s that we want to get you the lowest price on the materials we possibly can. And that means we have to preorder everything way ahead of time.

 

That’s how we get you good pricing. That removes some of their frustration about the fact that they can’t keep changing things. Does that make sense? Yep. But from the builder side, the reason we want to do it is to save him those costs too. Right. The builder wants to have the lowest price he can because then he sells more homes.

 

Okay. Going to Ty’s question of what is the process for choosing what plans we’re going to build in the new community? So let’s talk about I’ll just use,

 

We’ll do it this way.

 

Other developer. And we are the developer. Okay. So, you know, yours is Steel Springs, right? Ty. So Tail Springs is the other developer. Let’s use that example first. But if you, you know, there’s a lot of people that I’ve been coaching over the years that are like, they already have a development they’re in the middle of, but then they’re going to do a new development like Ashley’s builder is in the middle of that right now.

 

You know, Flint Rock, we’ve added a bunch of developments that are all coming on. Ty, this is kind of one of your first ones, right? That we’re doing that you’ve been involved with. So if somebody else is the developer, then their HOA guidelines will drive a lot. You know, often it’ll be square footage, right? It’ll be, you know, one and two story sizes because a lot of times they’ll divide it.

 

It’s like if it’s a one story, it has to be this size. If it’s a two story, it has to be this size. Materials sometimes, like Ashley has a community that you know, you have to do wood siding as opposed to, you know, vinyl siding. Vinyl siding is much more cost effective than wood siding. It’s a massive price difference.

 

But that was determined by the developer before we ever got to the neighborhood. The other thing is some builders will put restrictions on, for some developers will put restrictions on front entry garage versus side entry, which is a massive price difference. So those those are some of the main things that will get impacted by them.

 

And then for us, home builder coach can just tell you in most communities, we are going to look at what has sold in similar communities surrounding, if we have that to pick on, right. Also, home values.

 

Are typically, dictated.

 

By the lot price. So for example, if the lot price harmony is really round numbers, if the lot prices $100,000, I can just tell you that the average price home in that neighborhood is going to be 500,000, because the lot price is going to be 20%.

 

Of what the home price is going to be. So if home builder coach has whatever the lot price is, I’m going to go times five. So that’s what your average priced home is going to be in the neighborhood.