1 Welcome to the First Choice Podcast

The First Choice Podcast is a new podcast that focuses on custom home building and real estate investments. In this episode, Drew Homola introduces himself and explains the purpose of the podcast.

He shares his personal story of being a builder and how he wants to share his knowledge and expertise with listeners. He emphasizes the importance of making informed decisions in these areas and how they can impact your financial future.

The host also gives a sneak peek into the upcoming episodes and the topics that will be covered, such as the benefits of custom home building, tips for real estate investing, and the latest trends in the industry. He promises to bring in expert guests who will share their experiences and insights to help listeners make better choices.

The episode concludes with a call-to-action for listeners to subscribe to the podcast and share it with their friends and family who are interested in custom home building and real estate investments. The host encourages feedback and suggestions for future episodes and promises to make The First Choice Podcast a valuable resource for all listeners in these fields.

If you enjoyed this episode check us out on Instagram @firstchoicebuilders_ig
Facebook: @fcbwyo
YouTube: @firstchoiceplus
LinkedIn: @first-choice-builders
and our website: www.fcbwyo.com

Chapters

• 0:20 Drew's Beginning in Construction
• 5:17 Moving towards Real Estate
• 8:06 Starting First Choice Real Estate
• 10:40 Drew's expertise on house value
• 14:30 First Choice Capital

Transcript

Hey guys, welcome to the first choice podcast. I'm Landon Johnston. And I'm drew Homala.

So we're going to be talking about all things real estate building and real estate investments. Hopefully we can gain a little insight to our listeners about what's going on in our market. So as you guys know, my name is Drew Homala and I started in 2008.

1st Choice Builders was 23 years old. Probably more ambition than knowledge, I would say, but that's how you got to start sometimes I got my general contractor's license and in Sheridan, in order to do framing and stuff like that, you have to have a general contractor's license and got that, got my insurance and everything set up. And my goal was actually to be a framer.

That's what I did before and I love doing framing. The thing is, I realized after a while, having my license, well, why am I not building houses? Why am I not doing all these things that my license allows me to do? And so I started taking on remodel jobs and odds and ends type things that are not framing. I did roofing and siding and did some decks and remodels and just all kinds of things.

I built a fence, whatever it took to get my feet off the ground. Anyways, I realized there's no sense in just doing this when I can be building houses. And that's what I wanted to do anyway.

So I took on a partner, built my first spec house. And believe it or not, the house back then sold for $215,000. This is in 2010.

Is that high or is that low? Well, for today's standard, that same house would sell for probably about 480. So from 2010 to 2023 is 13 years with over double the cost increase. Wow.

Yeah, it's pretty funny how fast things go up when you look back on things. But the thing is, I built that house with the partner, partner provided the money, we split the profits. And foolish me, I spent my profits on life.

Right. For some reason, I didn't have the wisdom to save that money and apply it towards another house. So then what happened is my new construction, my new house build career had to be put on hold to save more money because I used my down payment money.

I should have saved it and started another house right away. But foolish me, you only live once, right. And you can't know it all right out the gate.

And you're young, you're experiencing things. Yeah, I mean, that's a good way of looking at it. And I'm probably harder on myself than I should be because I think about that.

It's like, man, if I would have started another house right away, I could have been at this point. But none of that matters anymore, right? It's just one of those it's more like a thought more than anything. And so when I finally had the chance to build a house again.

It wasn't until two years later and started building some houses, and I actually honestly did quite poorly on them. I ended up losing money that year, and this is in 2012, but a really good lesson came out of it, and that was one I need to work on my organization. I need to understand my cost in a business.

All kinds of things that every business owner eventually has to go through. Yeah, experience is definitely the best teacher. Right.

Especially when it hurts. Yeah, especially. I got through that year, and I rebounded.

It took quite a while to make up my lost money and had to pinch pennies and do whatever it takes to keep moving forward. Right. But I never went out of business, luckily.

And it wasn't that dire. But was it kind of nerve wracking? It was stressful. But another lesson, lesson I learned from that was I can't have all my eggs in one basket.

And so I realized that I kind of was starting to understand real estate a little bit. Not enough, but not enough to be confident, but enough to at least dive in head first. Because that's kind of how my mentality is.

It's like, oh, I think I kind of understand this, and let's explore it a little bit and jump in and try it out. And if it's only me that it affects, then no big deal. I'm not a big fan of jumping in head first when it comes to affecting other people, but if I can put myself and only myself at some risk, then it's pretty exciting to jump in and try something new.

So what I did is I bought a piece of property. It was two lots, commercial lots, and they had been on the market for quite a while, and for some reason, nobody else seen the beauty in them. And I drove past, and I was like, I actually really like those lots, and they're a reasonable price.

And so I put in an offer, and I got the lots, and it was two lots. What I did is I did a minor subdivision and turned them into five lots. And so I don't know if I can remember my cost at that time.

I think I bought it for 108, if I remember right. And then I ended up selling each lot for 35,000 apiece. And so I did pretty good, and I was like, hey, that wasn't so bad.

How big were we talking on those lots? Were those like, after you split them up? Were they like, quarter acre size? Like town lots? Actually, they're smaller and a quarter acre, they're pretty small. Okay. And so you could basically fit a small building and then some parking on the side.

Even back then, this is, I think around 2014 ish. Even back then, it was a pretty good deal. I probably could have sold them for more, but I was thinking, sell them quick and get my money back.

So what was the turnaround time frame on that? It was less than a year. Really? Yeah, it was really fast. Yeah.

So I subdivided. It was a minor subdivision, five lots or less, so I didn't have to do any sewer work. Basically all I had to do is administrative work through the city and have a survey done and resold the lots.

And they sold basically right away. One guy bought two out of the gate. A couple of months later, another guy bought one, and then they just moved right away.

Nice. So needless to say, you're hooked at this point on real estate, or is that really what kind of got the ball rolling? Yeah, exactly. I was like, wow, how come everybody's not doing that was easy, right? And it really opened my eyes, honestly, I didn't think of this as a possibility.

I just knew that I had to do something other than building houses. I needed an additional income stream. Okay, so now here you are finding your second basket to put your eggs in.

And once again, it was just more like a wing it. I knew I had to do something, but I didn't know what. And that's something I stumbled across.

I had interest in real estate, and that's why I was looking, but I didn't really know anything about it or how good it could be or anything like that. So it clearly just was kind of meant to be. Like, it worked out well enough and funny that you were already interested in real estate, so naturally you're leaning that way, and then this happens, and oh, well, here you are now.

So in that same vein, moving forward with First Choice Builders and now First Choice Real Estate, kind of what's that whole vision looking like. What's the plan moving forward? Okay, so from there, what I did is I rolled that money from those lots into a bigger building. It was an eightplex.

And in that meantime, I was thinking, I wonder if I could do this, actually buy and sell property for money. I went and tested and got my real estate license, and the first broker I worked for was okay with me doing my own marketing with my own branding. So I started First Choice Real Estate.

I was under another broker, but my agency, I guess you could call it, was First Choice Real Estate. And my goal was I was thinking that I would buy property for my clients who want to build houses and sell their existing houses so they could build or anything else that I wanted to do on the more like a side deal like I did with the lots and the APlex and stuff like that. Okay.

Now, that was in 2016, seven years ago, and I was just kind of buying and selling property as time went. All of them, to be honest with you, none of them have lost any money. They've all been good investments and because of the continued success in those, it has turned me into it like a firm believer in real estate investing.

Yeah. Well, whatever iron is the hop, right. Is what you're going to strike on.

But you've been doing the first choice builders in the meantime. Yeah. So first choice builders is moving along and we're building our systems and getting our things in place and buying and selling real estate and helping other people buy and sell real estate.

The thing is, when you finally get see, not everybody's going to like real estate. Right. One person's good at, say, technology, one guy is good at, say, stocks, crypto, there's all these different things that people are good at.

And honestly, I don't focus on any of those things. I'm not even interested in them. But I love real estate and so I'm happy that it turned out that I've learned how to do it and I've been successful doing it, but it's definitely not for everybody.

That's what I'm trying to get at. Right. So really it comes down to does it fit your goal or your lifestyle or whatever? I'd imagine that this is pretty handy and gives you a lot of valuable insight that other people don't have.

Maybe gives you a leg up advantage in the real estate world when it comes to building homes as well. Yeah. So one of the things that we focus on when we're working with a customer for building a home is where are they building at and are they going to build a million dollar house in a $300,000 subdivision? Right.

Something that people probably wouldn't even consider or really understand. Yeah. Sometimes I've been surprised where people are like, we really like this house plan and we found this awesome piece of property and then it's in this neighborhood.

And when you start looking into the neighborhood and you realize the values of the houses around it, then you can be like, you know what? I need to be frank in this instance, all these neighbors houses are worth 300,000 and yours is worth 700,000. And if you're absolutely in love with this lot, that's one thing. But I need you to know that this, in my opinion, is not a good investment.

If you're married to this house and you're married to this lot, everything like that, you do what you want to do. But from my perspective as somebody experienced in real estate, I can't advise you to build this house in this neighborhood. I would recommend tuning it down or finding a different lot where this plan will work.

Right. Another important thing with that is the materials that the house is made out of, or maybe it's an apartment building. This all goes into an investment.

Or you could call it like a return on your investment. If you have maintenance free items on your house, siding, roofing, whatever your investment is, actually giving you a better return because you're not spending money to maintain these things. Right.

But the thing is with that is a lot of styles have a high maintenance material, and that high maintenance material costs a lot of money. But it's a specific look that somebody wants, and they're okay not getting an awesome return on that investment. Get kind of a trade off.

I imagine, too, that the more you're spending on the maintenance free product, it's going to be more expensive upfront as well, right? It can be, for sure. Yeah. So moving forward with the real estate company, moving forward with First Choice Builders, can you talk a little bit about First Choice Capital? What's kind of the idea behind that? And how does that tie into the other two? Yeah, so, I mean, that brings us right up to speed.

Actually. We have a real estate investment fund. Like I was mentioning earlier, I 100% believe in real estate investing.

The worst thing that can happen in my mind is the market totally tanks and you have nobody leasing your buildings. But out of that, you at least have a physical asset that's worth money. When you look at other investments, say stocks or crypto or any of these other things, if the market totally tanks, you have nothing.

Right. It's gone. It's vanished into thin air.

And you're relying on other people to ensure that that investment is solid. You invest in a obviously you're going to do your research on the company. But let's just pretend Apple went bankrupt.

Right. I mean, it's very unlikely to happen. I'm just using this as an extreme example.

Apple goes bankrupt, every person who invested in that where's their right. Yeah, valid point. Whereas if you have real estate, your money's tied into real estate.

You're standing on the real estate. It's here. It's a tangible so.

So because I'm such a firm believer in real estate, and I would love to get as many people into it as I possibly can and help them with that. I actually started a real estate investment fund, and it's called First Choice Capital. We're essentially going to be raising money through investors and paying a return out.

Our thesis on the fund is helping businesses get from one level to the next through real estate. So what that means is, let's say a franchise owner has the capital to operate an additional franchise into what they currently are operating. Let's just use the example of, I don't know any franchise, right? McDonald's well, the franchise owner wants to add additional buildings and locations, doesn't have the money to build the buildings, but can run the business really well.

So what we would do is we'd go buy the land, build the building, and lease it back to them for one, maybe forever or two until they're able to actually buy the building from us. Another way that we can help people through our fund is a business is looking to hire people and they need to somehow get people from out of state to move because there's really not enough employees in a lot of towns. Right.

So the business convinces people to move to the town where the business is at. And then what happens is they're like, well, there's no housing, there's nowhere for my future employees to live. There's a few examples around here in Sheridan area that that has happened.

I know there's a school system that lost out on a few people. They literally don't have anywhere to live, so they got to move. Yeah, good example.

And so what we do is we go to these businesses and say, hey, do you need housing for employees? And the ones that say yes, we'd say, okay, we're building these apartments and we're leasing them out. But if you need employees to move into them, we can actually rent a few units to you and you just sublease them back to your future employees or whatever. And so now it helps their business, which then helps our city and keeps the economy going and all that.

So when it comes to the investment side of it, walk me through sort of the steps, the timelines. If I'm an investor and I want to invest in First Choice Capital, I want to invest in something like housing for a guy who's got a franchise and like you mentioned, kind of give me the bullet points on what that's going to look like. Hello, my name is and I'd like to invest X amount of money in real estate.

What are you going to do with that? Okay, so we have a ten year fund, and what we're doing is we're getting money from accredited investors. What that means is gross revenue of $250,000 or more per year or a net worth of million dollars, plus not including their personal residence. So if the investor is value or net worth or income is lower than those right there, then they're actually not qualified to invest in the fund.

So what we do is the reason we do that is because we don't want to have somebody come into our fund and then something go awry, and then that person get harmed by that. Right. So what we want to do is we want to target these higher net worth people, and they're not going to people who've made a lot of money.

They're generally more money savvy, and that's why they've made a lot of money. And so they say, okay, well, I have 20 million to invest. I'll put 1 million in your fund.

If they lose that 1 million, they still have 19 million left. Right, right. It's not going to break them.

Yeah. They're not going to be happy. But if we target people who are under that threshold, then what's going to happen is let's say somebody has $60,000 in their bank and they're like, oh, we want two shares which is $60,000, they lose that, it's going to cause a real hardship for them.

And I don't want to be in that position. Right. We are extremely confident in our investments and we don't expect that to ever happen.

The bottom line is sometimes stuff just happens and we just don't want to be the person causing extreme hardship on somebody. So with this accreditation, with these quote unquote qualified or however that's deemed investors, you're essentially creating a low risk battlefield here where you really don't need to worry about someone getting harmed in that way or the risk is extremely low. Yeah, I mean, if you look at historics on what I've done in the past, everything has always made money.

I'm not going to sit here and tell somebody that every investment is always going to make money. It just has not happened in the past where I've lost money in a real estate investment. Right? So yeah, low risk and plus there's a tangible asset.

What we're doing for returns on that is we're actually paying. We kind of have like a stepped return program depending on how much you invest. And so that's kind of a subject for a different time, like a one on one, depending on how much the person wants to invest.

But it's between six and 8% preferred return with a varied split at the end. It could be a little bit cumbersome to visit as a general conversation. Okay, some more situational.

Or with that it's more situational depending on what the person's investing and whatever. Yeah, depending on how much the person invests and stuff like that. And it's just probably a little bit more of a detailed type conversation that's more of a one on one type of so that's essentially what you're going to be getting with the investment.

What's a time frame look like with that? How long would an investor, say, have to wait before they get a return on that or whatever? So interesting thing is returns are based off of profit. So let's just pretend that the fund here's a good example. On a new construction project, somebody invests X amount of dollars and we haven't even broke ground yet.

They're not going to get a return until that building is built and occupied. And then once it's occupied, the returns start coming in. So on a new construction project, the returns will be pretty slow to get going, but then they have a higher appreciation.

And so say five years down the road, all these buildings are full and leased out. Now this project is worth way more than when it first was done, right? And then you get a big return at that point versus you buy an apartment that's already filled, you're paying a premium because the rent is already producing income. So you pay a premium for this, say a building built in 1980, you're going to pay more for that as far as you're not going to pay more for it, but you're going to pay in comparison to what the building is, you're going to pay more because it's leased out.

Right. The dollar might not be higher because the building is just old. Right.

But for what that building is, you're going to pay more compared to a new construction. Yes. It's not apples to apples.

Yeah. Right. So can you kind of describe how first choice builders, first choice capital, and first choice real estate are all going to work together? How are they going to harmonize? Yeah, that's a good question.

So what we do is we call that First Choice Plus. Right? First Choice Plus is you could call it like an umbrella or whatever, a parent company or whatever you want to call it. But the name of it is First Choice Plus, which includes all three segments.

It's a vertically integrated model. We're raising money through investors. We're hiring First Choice Builders to build the building, and then we're using First Choice Real Estate to manage the rentals and maintain the rentals.

So we'll manage and maintain in house. And what this does is it gives us control over the project. So if you're investing in one of our projects and you know that we're handling everything from picking out the products, maintenance free products, we're ensuring the building is built correctly because we are actually an owner in the building and we're maintaining it, and we're vetting our tenants.

You truly have skin in the game. There's every incentive to do everything right and make sure it's going to be successful. Yeah.

So that's how all three companies work, and they can be on the same project. Or it could be something as simple as First Choice Builders building somebody a house and then ensuring that it's a good investment. Just because we have experience in investing and knowing what pays, some people will say, oh, well, we're not really planning on selling our house.

Well, at some point it's going to be sold. Right? Yeah. Maybe it'll be somebody's their kids after they pass or something like that.

And we ultimately want to watch out for the clients, whether they're a custom home, an investor, real estate client, and we want to watch out for what's best for them. It seems like the investment portion is just up there on the top of the list right. For level of importance.

Right. And probably the one that a lot of people well, I would say most people even are ignorant to, they don't fully understand the ins and outs and long term vision versus short term vision. That example you used about the neighborhood having a lower quality build or whatever, it's not going to have that return to finalize the what do we have for time here? We're good.

Okay, keep going. I'm trying to think of what my question was already. Sorry, continue.

That was a well placed or well timed yeah, go ahead. Sorry, I derailed you. I derailed myself.

One of the projects we actually have coming up is I'm kind of bouncing around a little bit, but coming back to First Choice Builders, we're doing this cabin job in the middle of nowhere. Takes a ton of creativity. Literally, the closest town is, like, 2 hours away.

It's an exciting project. We're stoked to do it, but we do have a challenge on our hands with getting materials in and out. The reason I bring this up specifically right now, is because this is an area that we excel in as far as planning and preparing and building systems and getting the right people in the right places and ensuring that when we take something on, we have our bases covered.

To tie that back to our triage of businesses is we're planning, we're preparing, we're doing all this delegation or not delegation, synchronizing managing, because that's essentially what it is, managing. You're getting creative and working together with other people to make X, Y or Z happen. Fill in the blank.

Yes. And the more you do that up front, the better off it's going to be. Like, this cabin example is we do a ton of legwork, and in the end, it's awesome because we spent so much time before we ever even started, it pays off.

And it's a hefty investment, too, especially because it's strictly overhead when you're delving into weeks and months of building these systems and trying this and scrapping that and starting over with this. So I imagine it can be really satisfying to finally start seeing the fruits of that as a business owner. Yeah, that's why we have good employees.

Damn right. Well, you want to wrap this up then, Drew? And until next time. Yeah, I think it's good.

Okay, awesome. Anyway, so that's a wrap for today, guys. I hope you enjoyed and got some value out of what we were talking about and we're going to do again next week, so stay tuned.

Take care.