[00:00:00] Speaker A: Welcome, listeners. You're listening to the deeds in the desert where real estate investors tune in for the latest news.
[00:00:08] Speaker B: This is Pat Vassar with deeds in the desert, bringing here to you and then this live studio, a new guest, Tyler Whitney with Sequoia Homes.
[00:00:17] Speaker C: Yeah, I'm Tyler Whitney, owner of Sequoia Homes. I'm glad to be here. Thanks, Pat.
[00:00:22] Speaker B: Yeah, absolutely. Let's just dive right in and kind of get, get the listeners acquainted with Tyler Whitney, who you are, how you got involved in this and when you got your start. Obviously, you look pretty young and.
[00:00:32] Speaker C: Yep.
[00:00:33] Speaker B: And. But we kind of want to go over how this is or is not your first rodeo.
[00:00:37] Speaker C: Yeah. Yeah. So I started working in land acquisition at KB Home. Worked over there for about a year and a half, kind of learned everything I could about land development and actual real estate development. And then from there, I kind of transferred over to Richmond, american homes, took a little bit bigger role, started doing land acquisition over there. And then from there, I kind of got really good at it and felt like I had hit my limit on where I could go with the traditional company. And I kind of broke off, started doing my own thing.
[00:01:06] Speaker B: Perfect. So. And when was that? When you broke off and started doing.
[00:01:09] Speaker C: Right about 2019 to 2020, like, right before the coronavirus stuff started happening, I made the decision that I was going to go off, start doing my own thing. At that point, real estate to me, was kind of like a 50 50 gamble whether we were going to get through that coronavirus in twelve months, 18 months, or whether this thing was going to be prolonged and kind really hurt the market. But at that point, there were some really good deals out there because there was also a lot of other sellers that also felt that way. Absolutely. Want to get stuck in property.
[00:01:34] Speaker B: Absolutely. When there's blood in the water, there's opportunity for new people to come in and you and Sequoia happen to be one person new entrant to the market. That's kind of the beauty of Las Vegas, though, isn't it? Although we have, we're dominated by a lot of public home builders, there still is the ability for new, smaller home builders to come in and kind of carve out that niche. What is your niche currently in the Las Vegas market?
[00:01:56] Speaker C: Yeah, I think there's, like, new opportunities all around, all throughout construction and development. My little niche is I kind of build one, one spec above what a production builder would build, like typically what a production builder would build in their model homes. That's typically what I'm building and selling primarily up in the northwest part of Las Vegas Valley, that's kind of where I live. So if the projects are a little bit closer to me, it makes it easier for me to manage. But as I grow and my company kind of grows, we're going to kind of spread out and start looking at other areas a little bit harder.
[00:02:24] Speaker B: When you say other areas, you talking about here locally in Las Vegas or outside of Nevada?
[00:02:28] Speaker C: No, my focus is here in Las Vegas. There's so much opportunity and potential that's untapped here. Until I kind of feel like we're even close to hitting that, I don't plan to go anywhere else.
[00:02:38] Speaker B: Gotcha. Given your role in land acquisition back at KB and then again at Richmond, you're doing the same thing here at Sequoia, but also incorporating the vertical build job, correct?
[00:02:48] Speaker C: Yeah.
[00:02:48] Speaker B: So on that vertical build, are you acting as your own GC? Are you hiring a third party GC on that?
[00:02:53] Speaker C: Yep. So my job now is almost very similar to kind of what I was doing at KB home in Richmond, american homes. The only difference is now I'm a project manager kind of out there in the field, and so I'm acting as a GC on all my projects. I'm technically a general contractor. I have it under a separate company, and I oversee all the construction on all those projects and make sure everything kind of goes according to plan. Most of that work, though, is really kind of coordinating subs and making sure existing work doesn't kind of get destroyed by new subs coming in and cost you more money.
[00:03:23] Speaker B: Absolutely. Those cost overruns can obviously be a huge factor when being an owner operator. How have you seen the cost overruns being affected after this or during and after the COVID incident we went through not too long ago?
[00:03:37] Speaker C: Oh, yeah. It's gotten significantly better during COVID It was a nightmare being a small home builder.
Everyone scaled up all at the same time, and the biggest guys kind of got the labor first, and so the smallest guys kind of got what was left over. So I was trying to fight to get people on the job site just through favors and relationships, tried to get my projects done. Now things have leveled out significantly and labor is still pretty tight, but it's gotten significantly better to where I can get subs on my site week after week and kind of keep the project moving. So it's actually significantly more fun to build now than it was two years ago, for sure.
[00:04:12] Speaker B: Absolutely, absolutely. And what are kind of the biggest slowdowns you're currently seeing right now? Is it on the labor side, is there certain materials that you're having a hard time with? Is it city, county officials, what is kind of the biggest driver right now on speed?
[00:04:27] Speaker C: Yeah, you know, actually, there's not too many slowdowns right now, I think. I mean, the city and the county are always difficult to kind of get your plans approved through, but they've always been that way. It's just the way the process has been for as long as I can remember. So I wouldn't say that that's anything new. It's just working through it. And I'd say my biggest challenge right now is finding qualified people, especially on the engineering side, to be able to get my plans through more efficiently. Being a smaller builder, you have to really work on relationships and try to work with subs that'll want to grow with you because a lot of the bigger guys already have kind of all their labor out there, working kind of with the big production builders. So that's always been my challenge, and that's kind of what I spend a lot of my time doing.
[00:05:09] Speaker B: Gotcha. So where we currently sit in today's environment here in Las Vegas. Las Vegas, where do you see some of the opportunities presenting itself for a small homebuilder here locally? Is it going to be in that same production slash semi custom arena? Are you going to have to drop down, go to more custom, or move up to more custom, or drop down and get some density? Or do you think you'll be able to find, keep this niche for the foreseeable future?
[00:05:36] Speaker C: So this niche is the easiest place to start when you're a small home builder.
Typically, everyone starts on higher end luxury.
I didn't go that high end luxury because I was always nervous that if we couldn't sell it, I would be stuck with a massive payment month after month to pay. With these types of houses, the payments aren't so large to where I could rent them, and I think I could get some money back, but I know I could always have a buyer there to buy them. If you kind of look at the history of some of the past small home builders that have kind of come into the market, you'll see that this is the area kind of where it starts. And there's a ton of opportunities here as far as infill pieces and stuff. That stuff's kind of getting bought up, but there's still a lot of opportunity. The next step for me, in my opinion, is to kind of go and start competing with production builders. And so it's starting to get more density. But what that requires for me to be successful is to get more efficiency, more efficiency in all my costs from vertical land development and engineering. But as I build more and more houses, I can get more scale, and I can kind of start to get those costs under control. But the way I look at it is every year I'm trying to build my infrastructure just to be a little bit better. That way, I can kind of start competing with the home builders, and right out the gate, it doesn't go. I don't start competing with Richmond, american homes and Lennar, but I start competing with people like Beezer, Woodside homes, some of the smaller, private, public home builders, at least here in Las Vegas Valley.
[00:06:58] Speaker B: Absolutely. And those costs that you were saying with scale, a lot of those costs also come with repetition. If you're building the same model over and over again, you can cut down costs. How do you utilize that within your business? Are you looking to build the same architectural floor plan you've used in the past with a new project?
[00:07:16] Speaker C: Yeah, when I get to a big enough project, I have some projects coming up here. In the next year, we'll start building models, and then we'll start reusing plans over and over again. I do that very rarely, kind of on the higher end stuff because people like to say they actually have custom homes that are unique floor plans. So I try to keep it that way for them. But, yeah, that is, you do end up paying a little bit more cost for having a unique plan. The more repetition the plan, the more comfortable the subs get and what they actually need to build it and get comfortable building it, it goes a lot faster. So that does help with efficiencies, for sure. Another big one as you get bigger. This is kind of a strategy a lot of production builders have been using. It's called even flow production. So when you have a 20 lot subdivision, if you start building four, if you guarantee your subs four houses every single month, they can rely on that and they can schedule their guys accordingly to work on your project, and that'll actually get you a lot better costs.
[00:08:08] Speaker B: Got it. You mentioned you have a few projects coming up. Are they all in the northwest, or is this the beginning of branching out?
[00:08:15] Speaker C: No, I think it might be the beginning of branching out. We took a swing at a piece in the southwest. We didn't get that. We've got another piece that's coming in northwest, but we are looking at stuff now kind of in the southwest and south part of Las Vegas and kind of moving out there.
[00:08:28] Speaker B: When you say you're looking at it, are these private owners that you're buying from, or are you going straight to the BLM at auctions? How are you typically getting your properties right now? And maybe more importantly, how do you see that evolution transitioning over the next twelve to 48 months?
[00:08:45] Speaker C: Yeah, so right now, most of the things I buy are from private owners. I'll go out there and source them myself. Sometimes I have brokers send them to me, but to be honest with you, I'm sourcing a lot of the stuff myself. And then also the BLM auction, the DOA auction, those are all potential areas where you're open to buying it. You could get some pretty good deals sometimes on those. So I'm really open to any of those in the next twelve to 48 months. I think you probably source deals from all the above, to be honest with you. I think probably though, in the next ten years, to be honest with you, I think the only deals are going to come from the DOA, the BLM and the master plans.
[00:09:18] Speaker B: Yeah, you'll have no choice. At that point, all the infill stuff will be, you know, gobbled up. You know, one of the unique parts about living here in Las Vegas is most of our land is owned by the Bureau of Land Management or the Department of Aviation that oversee that. And it's not actually held in private hands unlike virtually every other county in the United States, which leads itself to some artificial changes in pricing and artificial discrepancies of supply and demand. There's a lot of supply out there, but it's not actually on the market. Right. You can't actually go out and build on it. You have to wait until it goes up for auction. When it does go up for auction, what are some of the issues with buying it? And why doesn't everybody buy property from a BLM or DOA auction?
[00:10:00] Speaker C: Yeah, I think the hardest part for some of the production builders is you have to buy it technically unentitled, meaning you don't have a tendon map and a zone change in place. It's something you try to organize and get as much feedback on before you actually purchase the property.
But that is what holds back some of the large public home builders from doing it. So typically you'll get some land speculators that'll buy it and then go work with a private builder or a public builder to actually go get it zoned and mapped.
But to be honest with you, the county and the city do their best to try to give you honest feedback to where they don't catch you with any surprises, because they also want to make sure that the BLM and the county and the DOA is making money off these sales, because if they start burning people, no one's gonna buy those things or the price is gonna go significantly down. So they really do, they do a good job on trying to keep surprises to a minimum.
[00:10:48] Speaker B: So in an effort to keep a surprise at a minimum, how often are you at the county or at the city's official's office to try to figure out how much density you'll be able to get, what type of lots or some of the externalities that are associated with that piece?
[00:11:03] Speaker C: Yes, all the time.
And that's actually a good thing. So for me, my biggest job is try to minimize surprises.
If I can plan everything accordingly, then my project goes a lot smoother than coming into something, going through an actual entitlement schedule, and then figuring out I have a ton of stuff that I didn't plan for and additional costs that I have to incur. So I spend quite a bit of time talking to city council and also talking to public works and the actual people at the desk drainage to make sure that the site actually should work the way I think it should work, and that we don't have any surprises when we go to submit plans down the road. But that's a huge part that right there is probably a differentiator between a great developer and just an average developer.
[00:11:52] Speaker B: And in many of the cases, that is the differentiator, because everybody's buying lumber from the same people, they have the same suppliers, the same contractors, the same subs. For the most part, we're a fairly tight knit small market in the grand scheme of things. That if you were able to differentiate yourself through the city officials better than anybody else, is really how you can kind of carve out a niche, which one of the main reasons we started lending to you early on was because of that. Anytime we came to you and asked for any information on an unentitled parcel, unentitled piece of land, you already had that information in hand. Instead of what some borrowers or potential borrowers do, which is, I don't know, I'll get you that information. So it's one thing to lend on unentitled land, but it's another to lend on unentitled land that already has a handshake agreement as to what's going to be done, although it's not a guarantee for anything, because nothing in this world is. It's those surprises that you alluded to that are mitigated by doing so. Speaking of surprises, what has been one of your biggest, either best deal or worst deal that you've done here in the real estate market here in Las Vegas because of a surprise?
[00:13:05] Speaker C: I could tell you a lot more, worse ones than I can, better ones, because of surprises. To be honest with you, nothing comes to mind as far as a good thing from a surprise.
I've never had that work in my favor. Maybe one of these days it'll come around and actually work in my favor. I can tell you one of the worst things that's happened with surprises.
I can tell you a story happened to me as well, as pretty frequently happens to landowners all the time. I mean, I've had landowners bring me properties and asked me kind of what I thought it was worth, and they have major drainage going through it. And I just got to tell them, like, your lands worth nothing, like, you can't build anything on it. They may be in that deal. A million and a half, $2 million. That's a hard conversation to have. For me, the most difficult developments have always been hillside developments or developments where you have a lot of grade change, retaining walls on production homes or big site plans, even eat up a significant amount of cost. And trying to figure out the grades of each one of those pads can be pretty difficult, especially in the preliminary side when you're negotiating the price. So I've had deals kind of up in Summerlin where we purchased, where we tried to do a rough grading plan and estimate what the retaining walls end up being. And I've been off like half a million dollars on those, and that's over 150 lots or so. But half a million dollars is still a few thousand dollars a lot, and so it still ends up hurting the development budget quite a bit. So things like that happen. But those are usually the most challenging types of developments to do, and experienced developers know that going ahead, so they have contingency budgets laid out a little bit differently for projects like that, for sure.
[00:14:33] Speaker B: Absolutely. And so it's those kind of risk mitigating factors that you perform to try to eliminate the surprises, reduce the risk associated with your development. This is the same thing we do here at ignite funding, right? It's, we look at each individual borrower kind of the same way with the same, through the same glasses, and try to mitigate the risk where we possibly can. At the end of the day, it's not a risk free deal. Nothing here in real estate is. But you try to remove as much as you can with that vein.
Why do you come to ignite funding. Why did you come to us two, three years ago when we first did loan, or maybe more than that now when we first originated along with you? And why do you still come to us today?
[00:15:11] Speaker C: Yeah. So for me especially, I look at a lot of my key relationships as partners in a lot of my deals, to be honest with you. And so before I do any kind of deal with anybody, that is going to be pretty significant. I always ask around and kind of find out what the reputation is and make sure I'm not getting myself into a deal long term with someone that I'm not going to have a good time doing things with. And so I've asked around about ignite funding's reputation and I know a lot of people that have done business with you guys. Everyone said something that was really positive. And so I met you, Pat, and we kind of formed a relationship kind of when I was working at a production builder and everything was positive from there. I mean, you guys are really easy to work with.
You guys always ask me for the information. I never have any issue providing it for you on the front side of that. And if you ever have any questions, you call me personally. We get everything worked out. And most importantly from my side is you guys always close and you're responsible to close to that. That's the biggest issue for me is I don't want to get stuck in a deal, lose my earnest money because a hard money lender has trouble closing on a deal. If there's ever any problem, you give me a heads up with a lot of advance notice and we can kind of work around that stuff.
[00:16:25] Speaker B: Good. That's great. Before we let you go here, any parting words for our listeners out there?
[00:16:31] Speaker C: No, I enjoy working with ignite funding a lot. I've had a good relationship, hopefully many more years ahead for us.
[00:16:37] Speaker B: Absolutely. It's been fruitful for the past few years, three or four that we've been working together, but hopefully that turns into a few more decades in the very near future. Appreciate you for stopping by and definitely appreciate you from being a great borrower with ours for the past few years.
[00:16:50] Speaker C: Perfect. Thanks, Pat.
[00:16:51] Speaker B: Take care.
[00:16:53] Speaker A: Thanks for joining us this week on deeds in the desert, where short term investments meet long term investors. We hope you enjoyed the content so much that you share it with all your friends. Who doesn't like learning about passive fixed income, right? Still hungry for more education? Visit our
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