[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.
[00:00:09] Speaker B: Welcome back to the next episode of Deeds in the Desert. Today I have Ryan Lance, one of the co owners of local homes out in Colorado. Thanks for flying in on such a beautiful day here in Las Vegas, Ryan.
[00:00:20] Speaker C: Sure, thanks for having me.
[00:00:21] Speaker B: Absolutely. Well, let's talk about local homes and the communities you guys have started to build and how we're involved in them. So if you wouldn't mind, I'll just go community by community in which we currently lend in and just have you give a kind of an overview of how things have gone and how they will continue to go. Let's start that off maybe down Colorado Springs and talk about Jackson Creek.
[00:00:40] Speaker C: That sounds good. So Jackson Creek was a community that we purchased last spring, I believe, and finish lots that we bought from a friend of mine, actually Jeff Mark, who when I worked for Richmond American Homes here in Las Vegas, Jeff worked for me as a land acquisition specialist.
[00:00:56] Speaker B: Oh, I didn't know that.
[00:00:57] Speaker C: Yeah, he runs a fairly good sized development shop in Colorado Springs now and so we purchased lots from him. Single family community that is our best community, both from a sales pace perspective as well as a margin perspective.
[00:01:11] Speaker B: Great.
[00:01:11] Speaker C: It's going really well. We're adding a new, a new plan there called the Gianna, which I think we're about 30 days away from breaking ground on, which is good. It's another ranch plant, single story plan which we've had good traction with the plants, the Reis and the Tinley that we've got there right now.
[00:01:29] Speaker B: Perfect. Two things I'd like to kind of touch on there. One is you said you bought finished lots. That's kind of outside of your typical norm. What made it so attractive to buy a finished product as opposed to land and go do the work yourself?
[00:01:40] Speaker C: Our preference is the buy finish lots. Pat. We haven't had an opportunity to really do that in a meaningful way since probably 2015. And that's really just a function of the market in Denver, the Colorado Front Range, including the Springs. We compete with all the public builders and those guys entitled their own ground, develop their own ground.
And so we, and so, and then they, you know, build homes on them. So there's not a lot of old school kind of land development like we see even here a little bit more in Vegas.
So, so we're forced to do the land development ourselves.
The market's a little softer now and so there's some opportunities to buy finished lots which is Our preference, you don't have to guess what the market's going to be like in four years, going through an entitlement process and the land development process. So we bought those lots and we're able to get going vertical pretty quickly. And so that's our preference. We're going to try to do more of here over the coming years.
[00:02:29] Speaker B: Great. And the second thing I'd like to kind of touch base on is you said you're going to have a new product out there, which is the Giana. What is the naming convention you typically use? And how does that kind of, kind of go back to local communities and the name behind it?
[00:02:44] Speaker C: Yeah. So when we started Local Homes, we came up with a name Right. For the. For actual company. And everyone was like, how are you guys going to compete against the big public builders? And for us, we feel like we can run circles around the big public builders being a smaller, nimble, nimble company, take advantage of market opportunities, just tell a different story to prospective home buyers.
So right from the jump, we named the company Local Homes, kind of embracing that what other people saw as a challenge. We kind of felt like it was going to be a strength for us. And then we had to come up with names to. Sorry, names for our floor plans.
And a lot of builders will have like, you know, the Plan 97 Plan 102B plan. You know, like, they're like very sterile names. And so from the beginning, we named. All of our floor plans are named after the kids of our employees.
And so we have all the different names, you know, and they're all meaningful for one reason or the other.
And the Gianna actually is my daughter's name. We had a false start with the gianna plan in 2015, maybe, and her plan that was named after her didn't actually fit on the lots in the community that we were planning on building it in. And so we got a resurrection of the Gianna plan here at Jackson Creek. So I got to take her down there and show it to her.
[00:03:57] Speaker B: Oh, I'm sure she'll be pretty stoked to hear that.
[00:03:59] Speaker C: Yeah, she definitely will be.
[00:04:00] Speaker B: Awesome. Well, let's keep it down in Colorado Springs and talk about the next big project that we've been involved with for quite a while now, which is Victory Ridge.
[00:04:09] Speaker C: Yeah.
[00:04:09] Speaker B: When did you get involved with that? How has it kind of evolved over the past few years?
[00:04:15] Speaker C: Yeah. So Victory Ridge is in a really, really great spot down in Colorado Springs on the north side of town.
The first.
We bought our first batch of lots In Victory south we called the project townhome product and it was just getting reboot down there. And what I mean by that is there's a developer down there that had a large mixed use project that ended up going belly up. A friend of mine, Andy Klein, went in there at Westside Properties about the entire project, including a dilapidated office building, some mothballed retail, a bunch of land around it. And Andy kind of brought some new, new energy to the project.
We had an opportunity to buy. I mean, I think we've hundreds of lots down there. I'm not sure the actual number, but townhome lots.
There was a success, successful community in Victory South. Now right now we're active with some, with some row towns, some back to back townhome product, some single family product, as well as some condos.
And it's been a really great, it's been a really great project for us. Just bumping, bumping, bumping along.
We changed some product. Part of being a smaller nimble company. As we listen to the feedback that we get from our home buyers. If we hear enough of it, we'll actually change the product midstream and try to meet the market a little bit better.
And so we did that with the townhome product, the back to back townhome product, as well as the, as well as the row towns.
And we kind of have a shotgun approach down there right now. It's a little bit confusing to be honest, when you drive into the community. We've got models over in the condos, models in the single family, models in both. The townhome product signage is a little bit mischievous.
The models look amazing, but it's kind of confusing for a homeowner to figure out what to. Or home buyer to figure out what to go look at. So we're in the process of launching a welcome center approach which is going to be a really nice for office welcome center. Bunch of landscaping around it. The views are awesome. You look straight out at the, at the rocky mountains at Pikes Peak, right out the, right out the front door there and make the signage a lot easier. Everyone, everyone that's interested in the community will come directly to the welcome center. Salespeople will invite them in, talk to them, qualify them, see what, what home product would be the best fit for them and then throw them in a golf cart and run them around and show them the actual model homes. And so I think that will really help our, our sales pace, which has already been pretty decent.
[00:06:29] Speaker B: Perfect. And you brought up a different product. You have out There and maybe brought up a name that maybe most of our investors haven't heard of, which is back to back homes and row homes. What's the difference between a back to back and a real home?
[00:06:40] Speaker C: Good question. So the, the back to back product is what we call. It's really a fourplex product and it's really a cool product. The footprint of it is a square and you have two garages that face.
The garage is kind of back to each other. So you got two units on each side configuration. And it's highly efficient from a planning perspective. Evans and Holly, a project that you guys are involved in that product or that project was exactly 10 acres and it was a square, like super, super rectangle, like really efficient. We were able to get 197 units on that project in the bulk of them are the back to back town. So I give about 20 units of the acre with it. Smaller Square footages are 12 to 1300 square feet.
And one of the really nice things about it is they have each, every unit is a corner unit because each is a corner unit. Every, every unit's got a bunch of light coming into it. So it sells really well and people really like it.
[00:07:33] Speaker B: So you don't have any of those middle units that the discount compared to the end units.
[00:07:37] Speaker C: We don't. Everything's an end unit. Everything's a quarter unit. So. So that's pretty good. And then the road towns are just what they sound like, right? They're just. It's just a townhome product.
You know, garages in the front, you know, real simple. Just. Just a straight up townhome product. More. More traditional townhome product.
[00:07:52] Speaker B: And those typically are a little bit deeper and usually a little taller as well.
[00:07:55] Speaker C: Right? Yeah. It's a three story product. Yep.
[00:07:58] Speaker B: Perfect. Yeah. Great. And so you said another community is that style as well, which is Victory. Excuse me, Virginia.
[00:08:08] Speaker C: Virginia Village.
[00:08:08] Speaker B: Virginia Village. Also known as the Hub.
[00:08:12] Speaker C: The Hub, Yeah.
[00:08:12] Speaker B: A few different names associated with it. And so we have a loan on that as well. Yeah. How's that project coming along and how long have you been in there?
[00:08:19] Speaker C: It's going good. So we bought that deal in the early innings of COVID So it was July of 2020 and when we closed on it it was a little. It was pretty nerve wracking time to be buying a big project like that.
And it has been, I think the best real estate deal of my life in terms of the way that we structured the land deal was really opportunistic and it worked out really well.
And then the margins that we had through the run up there after Covid, we were, you know, 30, 40% margins. It was. It's been pretty crazy.
[00:08:49] Speaker B: And you had nearly 200 units in there and how many have left to go? Roughly?
[00:08:53] Speaker C: We have around 20 units left to sell and close. Everything's under construction. The community is what we call started out, meaning everything in the community is under construction.
And we've got eight townhome product, eight townhome units left that are under construction. And then we've got, you know, I don't know, is that 14 or something like this of the back to back townhome product that's all under construction and ready to close. So first or second quarter of next year will be. We'll be out of there. And it's been. It's been a great project for. For us. Tough to. It's a tough one to rep. To replace.
[00:09:23] Speaker B: That's what I was gonna say. How do you replicate something like that? Obviously you don't want Covid to happen to get an opportunistic deal like that, but what was so special about that? Was it purely the basis? Was it the location? Was it the takedown strategy you had? What. What specifically enabled that to be such a home?
[00:09:38] Speaker C: Right. It kind of was. All of it, though. It was originally a deal.
Everything comes back to relationships in our business. You know, as you know, and I was coaching. That particular deal was a friend of mine whose son I was coaching in football, along with my son, who's the quarterback. We ended up buying a deal from these guys. It was a CDOT facility, a Colorado department of transportation facility that they didn't need anymore. And so our seller took it through the entitlement process and we partnered with them on it, but they got it rezoned and kind of worked the deal. And then we bought it just right at the perfect time, right before the big Covid run up in housing. And so really it was timing, it was location, it was a relationship deal. You know, going into it, you know, it was just. It was just kind of a, you know, the imagination of a bunch of things that came together for us.
[00:10:21] Speaker B: Kind of a perfect storm when it comes to.
[00:10:23] Speaker C: It was. I wish all the deals ended up like that, you know, perfect storm stories. But that was a good one.
[00:10:28] Speaker B: Absolutely.
[00:10:29] Speaker C: Yeah.
[00:10:29] Speaker B: So those are the projects that we're currently involved in. You've got a few others that you're currently working in with banks and other lending institutions. What do you have on the horizon? Is it going to be Local, no pun intended, to Colorado. Are you going to look outside of the borders or how does that. How do you see your operation filling out over the next few years?
[00:10:47] Speaker C: Yeah, so that's a great question. So we closed on a deal two days ago right by Park Meadows Mall. It's a 274 unit project.
It has some of the back to back product we've been talking about in there. It's got some townhomes and some paired homes and so we're excited about that one. The location is amazing. It's actually walkable to Park Meadows Mall and so we're excited about that. That's a bit more of what I'll call our legacy business model. Going forward. We are going to try to find more finish lot opportunities. Like I spoke about earlier, every builder, and literally every builder in our market has something for sale. So I mean something on the land side for sale. Of course they have houses for sale, but they're all selling lots. So we're going to focus on trying to buy 35 to 75 lot position finish lots like up and down the Front Range. We need to expand our footprint into northern Colorado.
It's been a good market up there and it really operates differently than the Denver metro and certainly differently than the Springs. So we're going to get some product diversification, a little bit more geographic diversification, but staying in the Denver Front Range.
[00:11:51] Speaker B: Gotcha. How do you see your price points changing and maybe your floor plans changing over the next two or three years?
[00:11:57] Speaker C: Yeah, so we're going to move our price point up.
We have really been focused on keeping our price point down.
It was a durable. Sorry. It was a durable strategy for a period of time. Now with interest rates creeping up, kind of settling in around six, it feels like, and then inflationary headwinds, it impacts that first time homebuyer quite a bit.
And so Jackson Creek as an example, we're selling four a month there and we have really good pace, really good margins and the average price point there is in the eights, 838, 50 kind of as an average price point. So what we're finding in our market is the people that have money, have money and want to buy houses the first time. Home buyers have been really impacted by the inflationary times that we're living in and the interest rates. So again we just want to diversify. We like that buyer segment. It will come back. We're still kind of clipping along, just not at the same pace that we were before.
And so we want to diversify and drive our price point up a little bit as an average price point.
[00:12:56] Speaker B: Gotcha. And so not only in Colorado Springs, in Denver, but you'll be doing the same thing up north when you get in there. When you say northern Colorado, are you talking Fort Collins or I don't know.
[00:13:07] Speaker C: If we'll go as north as Fort Collins, but we're looking at, we're actually looking at a deal in Berthoud, which is not too far from Fort Collins.
We got, we have a couple deals in Brighton that we're looking at, deal in Commerce City, a deal over in Fort Lupton, which kind of, kind of a quiet little town but clips along.
So we're just, you know, the Firestone, Frederick Dakono, the Tri Cities Market will probably look to get a foothold in those, those locations.
[00:13:31] Speaker B: Got it. Well, perfect. Sounds like some fun, exciting stuff coming up on the horizon. Y appreciate you being a borrower for what is it, maybe 10 years now? 15 years.
[00:13:41] Speaker C: One of our first or the first lender in our business.
[00:13:44] Speaker B: Right.
[00:13:44] Speaker C: So it's been, it's been 13 years.
[00:13:47] Speaker B: 13 years. Quite a while.
[00:13:49] Speaker C: Yeah. Yeah. We appreciate the partnership.
[00:13:51] Speaker B: Absolutely. Well, it's been a good run, a good time here on Deeds in the Desert as well as working with you, Ryan. So wouldn't mind like subscribe and follow to the link below and follow along so you don't miss the next episode of Deeds in the Desert where we bring you more episodes of real estate and insights like Ryan Lance. I appreciate it, Ryan.
[00:14:09] Speaker C: Thanks Matt.
[00:14:12] 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
[email protected] or if you're ready for to take the leap and start investing, give us a call at 702-761-0000 and Schedule A free investor.
