19 Building Transparency: Affordable Housing and Empowering Homebuyers with Doug Carlton

In this insightful episode, Drew Homola and Doug Carlton delve into the world of home construction with a focus on transparency, affordability, and community development. They discuss the impact of transparency in construction, the pitfalls of surprise change orders, and the rising costs in the industry. The conversation spotlights the need for affordable housing initiatives, like the groundbreaking Sheridan Hills, which is set to offer attainable homes in a market plagued by rising prices. Discover how a unique financing approach is helping first-time buyers take the first step onto the property ladder, and how negotiating with suppliers contributes to keeping construction costs down. With a commitment to delivering valuable insights to consumers, the episode highlights the importance of clarity, communication, and local adaptability in the ever-changing landscape of home construction.

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Transcript

All right, so welcome aboard, Doug. We have a guest today. Doug Carlton.

From Carlton Construction? I appreciate your time and willingness to come visit with us today. Awesome. Drew, thanks for having me.

So excited to come in here. We're going to talk about real estate and such. There's nothing more exciting to me than Sheridan, and there's nothing more challenging right now than our real estate market.

So thanks for having me. Absolutely. So I'd like to give brief or hear from you a brief background of where'd you come from, what did you do to get here and what are you currently doing? Sure.

Well, Drew, I honestly cannot remember a time in my life that our family was not in the construction industry in some capacity. Growing up five years old, my grandfather would dragged me out to job sites. So for the last 80 years, this is literally what our family has done.

So I started out I was born in California. The reason I was there is my grandfather was building an air force base, lamore Naval Air Base. So anyway, my folks obviously decided it was time to have children.

So I have an older brother and of course, myself. And I was just intrigued by the enjoyment of something so tangible, of watching a structure go up. I mean, it all starts with bare ground.

Very rarely do we in new development start with anything but just a clean slate, right. And then just to see that happen. So I gravitated to that.

And then my grandparents, when I was about 15 or 16 years old, said, Doug, guess what? We've always wanted a doctor in our family, so if you decide not to follow into the construction trade, we'll pay for medical school. And then my grandfather said, well, that is if they'll have you. So I thought, well, let's do this.

I'm going to go to a junior college for a couple of years. It was a college my family had built. My grandfather built the college.

It's where my wife and I met. So it's just amazing. Oh, nice.

Very precious. As I was sitting in college, I was also you know how it is when you're in construction. You always have side gigs going, no matter what.

That's the fun part. And you're young, so working Saturdays, what else are you going to do, right? You'll be getting in trouble if you're not out making money. So I'm sitting in college, and I remember it was a music appreciation class, and all as I could think of is I was looking out the window thinking, I could be out right now making something, building something, making something happen good for myself and my family.

And so I went to my school counselor and I said, I don't like my curriculum. And he said, well, Doug, it doesn't matter. You have to get your general ed out of the way.

And then if you do decide you want to move on with your education and this is part of it. And I said, that's not working for me. He said, well, what do you want to do? And I said, I want to take classes that are going to enhance and educate my ability to be a businessman.

And he got this paper out, kind of like the one that's sitting in front of me, and he put down business, law, accounting, business classes. He said, Well Doug, if that's what you want and that's what I did. I just honed in on classes I saw value in as a young person.

I thought to myself, if there's not a return on my time, why would I do that? Well, now we live in an age, you guys, where information's out there everywhere, and there's certainly a need for education. YouTube university or what? YouTube University, baby. I've been known to even dip into TikTok.

It's whatever it takes, you guys. There is content out there that is literally useless, Drew. You know that.

But there's content out there that is so happening right now. That is so enjoyable for me as a business person, as a human being, I embraced it. So one day I'm talking to I'm back in college, I'm talking to my I want to say it was some type of a business law or economy class, if I remember right.

And after class I was leaving and the professor pulled me aside and he said, Doug, what's your story? And I said, well, I'm just wanting to learn. He said, but you have business going now. And I said, I do.

And he said, what did you make this last year? And I said, probably around 60,000. Now, this is the mid eighty s or so. And you're doing side jobs or what? Yeah, just doing side jobs.

It was pretty easy, though, to be honest with you guys, because our family had a reputation and so it wasn't hard for me to go out and generate income. Okay. And I did get my license, I was 18.

So I went and took the contractor's license exam. At that time, I think I was the youngest licensed contractor in California. And I said, I made about 60,000.

He said, well, that's more than I make as a professor. Why are you here? You know, I walked out of that door and I never went back. Really? No.

Because I understood right then and I trusted that human being. And that was so unlike a college professor. I mean, I would think his whole livelihood depends on young people.

But at that time there was a lot of reentry students. There was a lot of people like in their late twenty s and such that were also on campus. And I found them still trying to find their way, certainly not bashing education.

There's lots of professions that are credential qualifications to do it, engineer, doctor, things like that. And the thing is, if that's what a person wants to do, then he should absolutely do that. Like if somebody wants to be a doctor, you have to have the education to get there, right.

And you should. Yeah, and you should. But school is not for everybody.

Well, if you know what you want to do, do it. And if you have faith in yourself and you're surrounded by people that are positive, why wouldn't you? School's always going to be there, right. But then after that, we built a company and we felt like our margins were best.

After I sat down with our CPA and we sat down with some mentors, I would say, that were very business savvy, financially set and smart, we decided to redirect a concrete company into a decorative concrete company. Now, that was pretty unique at that time because there was probably only a handful of companies specializing in just decorative concrete. And it was a real leap of faith because whenever you say yes to something in business, what people don't realize, you also have to say no on the other side because you can't be all things to everyone in business.

So what we had to do is literally fire some really good contractors that we were working in, working with as subcontractors, doing structural concrete. And I had to have a heart to heart talk and say we're making a leap of faith here. We're going to go all in on decorative concrete.

Our margins are better and it's really cool to do. Yeah, it's probably really satisfying when you're done. It is.

And one day we found ourselves established to where I would say we were probably the second or third largest decorative concrete company in the world. Really. And my phone rang one afternoon.

I'll never forget, I was in Pasarobles, California. Now, Pasarobles, California, guys, is a lot like Sheridan cowboys and great vineyards. Well, there's no great vineyards here, but there's a lot of cowboys.

And I pulled up side of the road and it was a television producer. And he said, is this Doug Carlton? I said yes, it is. And he goes, hey, I want to speak for five minutes.

I don't want you to say anything because if you're still on the phone after five minutes, I know you're in. He said, I'm a television producer. We're going to do this television show.

It's going to be called Extreme Makeover Home Edition. And I just did. I go, what's the premise? I guess there's all kinds of home improvement shows that were kind of getting off the ground at that point.

This is probably around 2004, 2005. And he said, no, this is different. We're going to take a needy family, a family that has been dealt a terrible deck and hand of cards, and we are going to go into a family that we select and we're going to completely rebuild them a new home.

And I was just quiet. That sounds fine. That sounds very sweet.

And then he said something so quickly, almost didn't catch it, and goes, oh, by the way, we're going to do it in a week. And then you almost tipped over, I'm guessing. You know, at first I almost tipped over.

And then I was so intrigued because, Drew, you built these beautiful homes. Nothing happens in a week. It's the coordination that goes into it.

And after five minutes he said, Doug, are you still there? And I said, I'm taking notes, man. I'm in. What he wanted me to do was he wanted me to handle all the things on the exterior of the home, also.

Not just concrete. No, he didn't even want me to do the structural concrete. He wanted me to facilitate a way that not only would we do an amazing home, I think most of these homes are around 3000 sqft.

Very similar to what you and I build. But he wanted the backyards to be oasis. He wanted them to have swimming pools, putting greens.

We would bring in 60 foot tall trees. It was incredible. Can you guys imagine building a swim pool and putting the deck on? Why a homes building built 10ft away in all in seven days? No, it actually blows my mind.

It blows my mind, too. The first family that we worked with was a family of eight children, and both their parents were killed. I can't remember if it was a tragic situation.

Let's just say that, well, the only way that the family could stay together is if there was a house that was built big enough that all eight kids could live in the home together. And the oldest sibling was 19 years old, so an adult. Okay.

We went in as livermore California. As I remember, we went in and tore a house down and rebuilt them. A 3000 square foot house with a swimming pool with a putting green.

The bathroom had eight sinks. It was just the craziest thing you've ever seen. And we did it in five and a half days.

Well, after the first or second episode, we had 19 million viewers watching this television show. Well, at that point, my name was attached to it as, I don't know, a designer of some kind. I wouldn't spend a lot of time in the camera, but I was doing enormous amount of work, traveling with our executive producer and making sure things are aligned.

Now you guys can only imagine the chaos of building a home in a week. It sounds like a nightmare almost. It was the most exciting and terrifying time of my life.

But that's how I ended up then being able to go in and work with some amazing people. I was asked to go to China, to Beijing, China, and be part of a group that represent the United States and talk about exciting things we were doing in construction. And my specialty was concrete.

So I went and I featured Disneyland everybody knows Disneyland, and people across the world loved Disneyland. So I went and I had free reign at Disneyland to take pictures of incredible cool things that were done with concrete, with coloring and walls and just you name it, they had it. And then the other one we featured was Wynn corporation, which built these giant hotel and casinos in Las Vegas.

We went and featured them as well and had free access to roam around and get to know those folks there. And then we presented it to Beijing, China. The purpose of that was they were getting ready to host the Olympics, and they wanted to really do some really cool things around.

I mean, when you host a big event like the Olympics, there's a lot of hardscape, necessary, big, vast areas, and they just didn't want it to look like gray concrete. So we would come in and we would work with their engineers and architects to create some really cool things. That's amazing.

So about 15 years ago, we decided to expand into Wyoming. I had always been in love with Wyoming, and to be honest with you, I couldn't wait to get out of California. I felt like California was, at that point, really, I would say stifling, and even handcuffing in some points, entrepreneurs.

Like, just I could tell that if there was a future for my boys, if they decided to come into the family business, which they have drew both of them, I'm very proud of them. Casey and Jordan both handle the construction side of our industry, one as a financial officer and one as a senior project manager. That would not have happened if I'd have stayed in California, not branched out.

But I had family here. My aunt was a tennis coach at Sheridan, and my uncle was a pharmacist. And then I had some cousins that also were in the appraisal business, so it just made sense.

But the first year I came here was in 2009. You guys probably remember 2008 was ugly in our industry. I moved here in 2008, so we're only a year apart.

We're a year apart. I came in June. I want to say it's late June of 2009.

Okay? It took me a year, drew to figure out where the market was and how I would enter it. Would I be a concrete contractor? Would I build custom homes? Would I develop land? So for a year, I did nothing but drive around Sheridan and see what the need was. It was the most paralyzing time in my life because I wanted to get out and run, but I had no track.

Interesting. But that year, now that I look back on it, was the best education. I wanted to understand how money worked, how banks work.

I learned the difference between money and currency, fractional reserve banking. I didn't really know all these things. If I learned them in college, I must have been looking at the cute girl next to me, because I don't recall being educated on these things.

I wanted to know why we were in the mess we were in 2008. And then after I figured that out, I said, well, what can we do as a developer to make sure nothing like that happens again? We implement things that I was able to learn in that one year today, every day. That's awesome.

So that's how I wound up here. That's cool. And so that's super interesting.

So my approach to starting a business was a lot different. Obviously you had been in business for a long time, but I started my business in 2008. But it was more like the, hey, let's just go find some work and start doing it approach.

And I didn't do any market studies or anything like that. I was 23 years old. It never really crossed my mind that a person should be studying the economy and how things work and how money flows and all that.

So I can see you're a very thoughtful type person, like think things through and figure them out and figure out the best place you can be inserted and make the best of that situation. That's very admirable in person, because I'm like a very high quick start, which I'll start something, and then I need to rely on people who work for me to figure out the details of those things. So I can see that we may be a little bit different in that way, but I think that's admirable.

But I think the end result is the same. And that's what I love about human nature, is I'll tell you a funny story. Since I've been in Sheridan, we have no time cards for our employees.

Right now, we run anywhere between eight and ten full time employees. You know how the market is right now, keeping employment. I never thought human labor would be such a hot commodity, but I'm glad it is, because there's true value in people that want to work hard and think hard.

We have no time cards and we're surrounded by these young, energetic employees. And when we hire them, we say there's two criteria. One, it's mandatory.

You take one week paid, one month sorry, one month paid vacation, because it clears your head. Get up on the mountain, go for a walk, get into yourself. Ask yourself if this is where you want to be.

Because we want people that spend the whole careers with us. And I said, oh, there's another thing. You just turn in your value every two weeks.

You don't keep a time card. Oh, yeah. You don't show up at the job at a certain time and leave at a certain time.

I don't care when you work, because what you're going to do let's just say, for instance, a project manager for us, they have accountability when they start a home because they enter the schedule and the progression of the home into software that we use called Builder Trend. Very simple. I review it.

My son Casey reviews it. Our senior project manager reviews it. Now, whether or not they are on the job from 07:00 A.m.

To 07:00 P.m. Makes no difference to me. If they can make sure they're hitting their schedule and they take off Thursday to go hunting or go spend time with their family and take a four day weekend.

Fantastic. You're going to come back Monday fresh? As long as you're hitting that criteria. Yeah.

It's a concept the younger generation is embracing because the nine to five is over. These kids understand value and they understand the value of their own time. They will get it done if you embrace them.

So here's a question. When you do that and somebody is not meeting their deadlines but still wants to take off for the next two weeks, then what? Drew, we've never had that happen. Now, to get to that point where we put that trust in you, there's a series of interviews and we're going to really check out to see if it's a person that's going to fit that criteria.

Because what you're saying, Drew, that could easily be taken advantage of, and it could not one time has it. That's awesome. It is.

It's a concept that's just fantastic. I think Google may have or maybe they still do, do something like that. Very similar.

Yeah, that's super interesting. See, it's not about the time they put in, it's the value they bring. And that's what we tell them.

You know, what is interesting about this is I have a confession to make. I've never thought, as an employee, being able to determine his own true value. Now, that's really small minded of me.

I can see that. But it's just honest. It's never really crossed my mind.

Well, because the protocol has been opposite all this time, right? Yeah, it has been. I mean, you do your 40 hours and you call it a week or whatever, and then you leave and you don't think about it. When we do it this way, these folks, when their minds free and you can only really focus on one thing at a time when their minds free.

And it may be a Saturday. Sometimes I'll just pop in the office and there's somebody working there on a Saturday or weekend. Hey, what are you doing here? Well, I had an hour of free and there's no interruptions.

I can come here and I can literally do 4 hours of productivity in 1 hour. So they get it. That's awesome.

I think that one is you hit the nail on the head with trusting your employees to do the right thing. I believe firmly in doing that. And when you're doing that, you automatically give them freedom to do certain things.

Now, we do have a start time at our business, but we don't have a finish time. So we say everyone starts at eight and we have like, scheduled meetings and stuff like that throughout the week. But it's not a free for all or hey, whenever you want to work, just make sure your work is done.

It doesn't really matter, but I don't know, I might have to think about that a little bit. You've given me some food to think. Well, Drew, there is something to think about there because the key to keeping, let's say retaining let's say retaining better word, incredible employees is for them to feel like they have ownership in what's being accomplished.

Yeah, that's for sure. And ownership comes from pride, but it also comes from knowing that whoever your boss is, that they trust that you're going to make a decision and that you will accept the decision they made. Now, I don't always make good decisions, and neither do our employees, but at the end of the day, we get from A to Z, our customers are happy.

And in the construction industry, that's lacking. We did a study many years ago and we found out the two highest stresses for our clients that we're building homes for. Guess what? Where are we at with the budget and what the heck is happening on the job site? So I made a commitment to always have transparency with a software program where at any given time, 24 hours a day, seven days a week, our clients can go on to log in to the builder trend app and they can see exactly where we're at.

Because, you know, Drew, for every task that's happening on the job, there's at least nine or ten things happening outside of the job. Front end, work, prep. Well, the consumer can't see that, right? So you have to make sure that they can some form of transparency where they know what the next task is.

The monetary part's simple. If we're going over budget on something, we talk to them and give them the option. Okay, well, can we rob Peter to pay Paul? Do we have money left over in excavation that might can supplement those countertops being more if not the only option is for you to compromise as a consumer to find a countertop that fits within your allowance or to bring more money to the table.

When you run that type of transparency, I think you end up with customers that are more likely to be happy at the end and enjoy the home more. Yeah. When you do this process, how we do it is we do a cost plus open book.

I hate the word Cost Plus because it feels like it's unlimited. Yeah. And it's broad.

But we do an open book process where we show all of our direct invoices and then we have our markup on top of that. And that's all actually exposed to our customers so they understand exactly where the money is at and if they choose to go below budget on certain things, then great. They get that savings.

How does that work for you guys? Do you guys do something similar? Very much so. We start out, though, with a lump sum. Yeah.

Like your original bid. Yes. And then we work from there.

Yeah. Now, we have done projects with the cost plus, but most people, especially people of high wealth, really get nervous when that word is brought up because they think, wow, here we go. I'm going to be a million dollars over what our target, monetary target is, because a lot of builders will take advantage of that.

Yeah. And we do the same thing. We'll bid it and we send everything out to all the subs.

We'll get all the material prices and everything. And so for that day, that price is very accurate. But then we do the open book model once we actually start and allows more transparency.

Yeah, transparency, basically. So the reason we came about this is because we didn't want to be actually, I was doing a similar study. What makes people anxious or upset in a building process, and one of them, I found, is not understanding where they're at.

Another thing was, as far as financials, another thing is a different builder and I were talking and he told me, don't you hate the dreaded change order day? And I'm like, what do you mean, the change order day? He's like, you know at the end of the job when you've gone through the whole job and you've added up all these things and now you have to give them the change order? And I said, Well, I've never done that. I don't know what you're talking about. I can't imagine that.

Yeah, sometimes it can be 50 or 100 grand. And I said surprise. No, I couldn't imagine having to do that.

No. Drew could you imagine taking your family out to a nice dinner, you've read the menu and you've picked out what you want, and then all of a sudden they bring the bill and it's 30% higher than what was on. And they just said, well, there was some market fluctuation between the time you looked at the menu and time we served it.

Yeah. That would ruin an evening, you guys. Why would you ruin the ability for a family to hire us to build a custom home is such an awesome award for their hard efforts and discipline.

Why would we just dump hot coals on that whole process? Yeah. Change order at the end, man. No way.

I couldn't run like, no, that doesn't make any sense. That was a big thing. It's like, if somebody's doing this now, I need to and maybe there's more than that person, I don't know.

But if somebody's doing that, then that's giving the builders overall who hear about that a bad name. And so what am I going to do to help counteract what this other person is doing? And my thought was, I'll do the exact opposite. I'm going to be as transparent as possible.

Wow, that's cool. I love that. I love what you said there because the other way is, I don't know, it just breeds complacency because some builders, and I'm sure you're one, are very organized and they know where their projects are at at any given time.

But there are a lot of people because getting into the construction industry isn't difficult to do. Right, and that's not a bad thing, but it can be kind of a negative for the consumer because if we get in a position where we can just flash a change order for a lack of efficiency during the build process to compensate for that, wow, that's a slippery slope. And in a day and age now where people are so mindful, especially if they're using construction loans, the interest rate for a new construction on a construction loan now is over 8%.

Man, that's a recipe for disaster. Well, and one thing too, is a business owner is looking at this as a business transaction, but a homeowner, this is their livelihood, and there's an entire different mindset. And I think it's important for builders to remember that, hey, look, I live in my house with my family, and what would happen if I was in this person's shoes? I can't have this only as a business transaction.

It has to be about this person who's going to grow their family there and they've moved here from somewhere, or maybe they've even upgraded from a different house. And they're dumping more than likely they're dumping everything they have into it. Many times.

They are. And now this builder comes along and says, oh, by the way, here's these things that I never talked about, all these change orders. And I couldn't imagine being in that homeowner's position, trying to stomach that, trying to figure out how to pay for that.

I don't know. That's how I feel about that. And I really like how you do the same open book concept.

I think it really makes sense and honestly. So when I was talking to you on the phone, you said something that I firmly believe in and a rising tide raises all ships. Right? I don't know if you remember even saying that or not, but we were talking on the phone maybe a week ago or something, and you said that.

And in my opinion, this kind of relates to that, because if I can make my build process as good as possible and I know that somebody other builders are out there doing it, then that helps build our name as builders. If there's people who are doing shoddy things and cutting corners and ripping people off, then that pulls away from us as builders as a whole. Absolutely.

Yeah. I couldn't agree more. Yeah.

And the new trend, and definitely it's a good one, is for the transparency, because I think the building industry as a whole, especially custom. Homes, we've earned this bad reputation. I can remember many years ago driving through the Powderhorn, and two things popped in my mind.

Wow, this place is really undervalued. And when we ran the numbers, price per square foot on lots in town, mostly cloud peak. At that time, I think Morrison ranch was kind of trying to find its legs.

We realized that the land here in the powderhorn was really undervalued. We felt like the lot should be closer to a quarter of a million to 300,000 for the value and amenities. But anyway, I remember having conversation with a handful of builders that were building out here, and they didn't come out and say, but they kind of insinuated that it was almost like they were working together and say, well, you take this one and just charge an extra 100,000 because I'm going to charge this price.

Well, and that's not uncommon. It's not just a paddlehorn. And it's certainly at one point, it was everywhere.

But then you realize, wow, that's not the way things are done. If I were a consumer and if there's someone listening that's thinking about having a house built, the process should look like this. Interview a few people that build homes, find someone you're compatible with, and then start designing the home within a criteria.

Timing, for instance. Drew, okay, I want to be in here by the summer of 2025. That gives you as a builder, a chance to say, okay, let's meet with our project managers and see how that can fit in.

Because what a lot of people don't realize when they move here in Sheridan, we have a very limited number of quality subcontractors. As a general contractor, we're all sharing a lot of the same subs. Well, we kind of have to communicate and say to a subcontractor, not so much a supplier, but a subcontractor.

Will another home fit in this time period? Then the other thing that the consumer should realize is, or the person having a home build, set a monetary target and then design the home within the target. The home must fit the lot, the house must fit the budget. It's a very simple concept design build.

We had at one time, you guys, a pile of, like, 17 plans. And it was kind of weird. They just kept getting they were homes that were never built, but they were beautiful plans.

They kind of kept getting shuffled from one corner of the office to the other. No one really knew what to do with them, and I would not let anybody put them out of sight. I said, this right here, these are failures.

These are folks that came to us after they went to an architect. An architect usually is really good at what they do. They're really bad about knowing exact up to date cost to build.

Oh, you're telling me. And all of a sudden you get a person come in and they say, oh, I've already got the plans. They roll out this house that you know is going to cost 1.7

million, but their budget is 900,000. So there's $30,000 that goes in a roll and we would keep them there just as a reminder of what not to do. Golly, isn't that terrible? Like you're telling my story literally.

You're doing a great job of this interview. Literally. I mean, I am not kidding.

That's the story of my life. When that happens, you want to adjust. Right.

And so we've done certain things and we actually take the exact same approach, like, hey, we'd like to see your idea of a plan. Get your budget. Even if they find a plan online that is not designed specifically for them, try to get their style and the size they're going for.

Yeah. What budget do you have to spend on this and what's your time frame? Now if those things meet up, I can give you a rough price and we want you to base your decision off of how we serve you and how we correspond with each other. At that point we can go through and do a full design build.

What we found is when we send say somebody comes in, says, oh, we want to spend 900,000 on a house and whatever, it's 2200 sqft. Well, that should be a reasonable budget. Sure should.

But then they'll take it to the architect. Architects are very creative. Creativity can sometimes add a lot of costs.

Sometimes we've had it just like you said. We've had people completely fall out of the market because they got way over designed for their budget, which then led to our new process of what you're talking about. Yeah, it's the safest route.

It's always discouraging to see people that could have invested money in a kitchen, for instance, or something like that, wasted on a set of plans of a home that won't be built. Right. Hey, can we talk about something pretty exciting? Yeah.

I want to share with you guys something. We have a couple of developments going and one of them, I can't tell you how excited. Let's hear what andrew, no one knows this more than you do.

Sheridan is like so many communities we're gridlocked in the real estate market. The people that have these interest rates at 3%, they're in no hurry to put their house on the market. Why would they? Then you've got a rising cost to build or just a rising cost in housing.

The trifecta is now obviously low inventory too. The only way to bring inventory onto our market right now is new construction. And I believe that's pretty much the case all across the country.

The problem is our new buyers, the missing middle, as they say. They can't afford the homes that you and I typically build. That's why we came up with Sheridan Hills Attainable housing subdivision.

The goal is simple and it's singular to provide homes. Wyoming families can afford. Now, Drew, I'm not going to present anything other than as it is.

These are modest homes, but it's their home. Folks need to know, especially those that are out renting. The only rent control you will ever have in your life is home ownership, because rents are going to continue to go up because people that rent homes out are in it for a margin and profit.

That's the only reason. They're not just nice landlords. They're going to supply you a three bedroom, two bath house.

So the only way you can control it is to own. Well, if you can't afford to buy, then you're stuck in that rental cycle. Sheridan Hills is meant to break that trend that we have going in Sheridan.

We are going to supply new homes, single family homes, starting in the high 200s, low 300s. I'm praying that we won't have anything go into the 400s. Everything will be oh, really? In the high 200s.

That's impressive. That's very difficult to do. Now, the only way that that could be accomplished, and it's something that we are talking to numerous communities around Wyoming in public works and community development director positions is they have to understand the zoning is the only way to accomplish that.

See, right now, when a developer goes out and he buys land, a lot of people don't realize this. And I guess when I finally realized it, I was fascinated by it. Let's take Cloud Peak, for instance.

A very nice master plan Don Roberts put together with the help of Stan Everett. The criteria is, because of the zoning, the lots are dictated to be a certain size. The homes, because of architectural guidelines, have to have a certain percentage, let's say 30% stone on the exterior, front elevation.

Well, those things are cost drivers, right. And they're okay. If someone's in that $600,000 market, that's perfect.

But the problem is the young professionals. Now, there's no way they're going to start out with a $600,000 home, right? Especially making $20 an hour or whatever. It's just impossible.

Yeah, well, even if their combined household income was 80,000, with interest rates the way they are, they're not going to do it. No way. So we went and we evaluated, okay, well, what would it take to create a subdivision like Sheridan Hills? Well, it's got to be zoned, right? Sheridan is very undersupplied in property that's zoned for density and for flexibility.

It's not their fault. City entities are great at what they do, but there's always a big lag. It's just part of the process.

So we found mixed use property. Now, what mixed use property allows us to do is we go in as a developer and we have flexibility. We could build things high density in one part of the mixed use property, and then we could build a coffee shop next door.

Well, this type of lifestyle is really great for young first time buyers. They love the connectivity they love to be able to take the kids and walk down and have a cup of coffee or whatever type of commercial thing could be inside that mixed zone. When we found that property in Sheridan Hills and were able to buy 44 acres of it, we knew right then we were going to accomplish exactly what Sheridan needed because we were going to be able to downsize everything accordingly.

Now there are some guidelines that we have to keep. Obviously for safety services, our streets need to be a certain width in order for the fire trucks to safely get in there in case there's an emergency and it's imminent. Eventually they need to come into a community.

But it allows us to shrink the lot size, therefore shrink the homes. We can control the architectural guidelines because as a developer we're writing those. So everything inside Sheridan Hills is purposely designed to create attainability to where.

If we were to go in the powderhorn and say, well, great, let's go in here and figure out how we're going to buy a lot here and build a home that someone could afford a first time home buyer, it'd be virtually impossible because our guidelines and lot sizing wouldn't allow for it. So do you do this through a pod or is there any abnormal zoning? What would you say? Pud allows you to have different changes other than the standard city code. So have you done that route? When we shared in ranches, which is called the ranches different demographic, we felt like there was a need for people that were in homes that were because of their age.

The homes were maybe not safe for them, a lot of basement stairs and such. So we developed Sheridan Ranch for more of the baby boomers that needed to get in an age friendly home. But that was a pud because that was commercial property.

We went through a pud process with the mixed use. You do not have to go through the pud process. The pud process is more time consuming.

It requires three separate readings and approval from the city council. Mixed use and a subdivision only requires one. So the mixed use is by far the most friendly because remember, Drew and I'm pretty sure you know this, but maybe not all your listeners do.

Every cost and expense that a developer goes through is passed through to the consumer. So if we have to pay our engineers and our survey team and our team within Carlton for another three months to get a project through, that service has to be passed and that time and that cost has to be passed to consumer. Well, that could easily be another 2000 $3,000 to the consumer.

Well, for first time home buyers, that could be the difference between them qualifying for it or not. Yeah. And then with this, what do you think about your regular city regulation? Does that generally drive costs up? In my experience, when a person is required to put more and more into a building to meet the standard of the city, it drives the cost up.

How has that affected your low pricier targeting the city? Sheridan City and actually Sheridan County too, are both very impressive to work with. We were recently running numbers of a very like kind of development with another developer, and I want to say it was somewhere back east. And we looked at the steps that this developer back east had to go through to get to subdivision approval, and there was eight additional steps.

And these steps, you guys are costly steps, not cheap at all. And Sheridan doesn't require that. I think Sheridan's at a sweet spot.

In fact, if you're talking about that, I think our costs have went down. What they recently did with the plant investment fees, fees, or piff fees, as we call them. And for those who don't know that's, like your sewer tap, water tap, things like that, they've just put that onto a sliding scale, which is phenomenal for someone that's thinking about attainable housing.

Because what might have cost $6,000 in a cost to build now might be $1,400. So that's a substantial when you see at the city government, them making that type of a change and that type of effort, that's a very positive thing for our community. Yeah.

Another thing the city is doing is their processes have been kind of clunky with the builders, and now they've opened up these roundtable sessions where we can go talk to them and ask questions and stuff. That's pretty cool. I've gone to one so far, and so far the other ones have not been able to fit into my schedule.

But, yeah, I hope I can make to more of those. And that only come true from a breaking point. Yeah, right.

There was things happening, there wasn't consistency, and I think a lot of that came from I think it's a direct result of how expensive our housing is here. I just think they had a high turnover and then all of a sudden, one person's doing three people's job, that came to a breaking point. And I take my hat off to the city to opening that transparency and communication to people like you and I to where we could come in and say, hey, this is what we're facing from our standpoint, these are the challenges.

Because, Drew, at the end of the day, you and I just want to do it right. Give us the playbook, we'll do it right as long as we know what we're expected to do. I don't think anybody's out there trying to I don't know of any builders that are out there necessarily trying to take advantage of the situation, because if they were, they would just go build out in the county where you just pull literally a zoning permit and then it's a free for all at that point.

So we're almost out of time, but I want to ask you a couple more questions about Sheridan Hills. Sure. One is obviously you've been able to get your prices way down.

And if I remember, I believe I've seen one of your ads. Are you offering financing as well? We are. We're carrying the financing.

Thank you for bringing that up. True, we are. Thankfully, First Fed here in town has committed they are committed to our vision of Sheridan Hills.

They will backstop all the construction financing on these homes. What that means to the consumer is this if they want a home, they come in and they put $2,000 earnest money down. Basically the money's escrowed.

Then at that point they don't pay anything else until they move into the home. We're carrying the construction financing. I don't know how it'd be possible any other way, Drew, because these young families, first of all, they're having to pay wherever they're living now, most likely renting.

They're probably absorbing a lot of their household budget in housing. So for me to go to them and say, oh, by the way, you're going to have to carry the interest on a construction loan, they probably wouldn't be able to do it, most of them at least. So for us to be able to do that and to have the faith of First Federal to back us is huge for the consumer.

For $2,000 they will sit there and watch their home built and they will not make a payment until they move in. So the $2,000 is basically locking them into any interest rate. Obviously you're carrying the construction financing and then they're essentially buying the house when you're done.

Although they've been given some freedom through the way to help pick selections and stuff like that. Very little interaction. And I don't want this to be taken wrong, but the home building process, it's a little bit clumsy in this aspect.

When you and I go and build a custom home, we take and we empower a consumer that really doesn't know much about the process and easily they become overwhelmed with all the emotions and the decision making that has to take place. You guys see it all the time. It was really bad during COVID when you had to preorder everything and all of a sudden people would sign a contract and say, oh wait, before you walk out, I need these twelve things determined right now.

And they're like, wait a second, I just wanted to live in the moment and celebrate that we're going to have a home built. But nevertheless, with Sheridan Hills it's a little bit different. When they sign that $2,000, when they put the $2,000 earnest that assures them that they will get a lot and a home that they pick on that lot.

There's no competition of maybe like an investor coming in that's all cash and beating them out like you see in the marketplace today, especially under 300,000 at that point, there's no connectivity to the home. The way we are going to be able to build those homes at that price is as bad as this sounds, is to keep the communication and the participation from the consumer out. They've made the decision that's the home they're going to get and then they can drive by and see it being built.

But there won't be like what you probably have as weekly walkthroughs with your customer and you look and you talk about switch placements and things like that. The customization of a home that can't happen in that price range. The way we are getting to that price point is the economy of scale.

When Casey, our financial officer, when he goes out and he starts to acquire bids from suppliers, he's not just shopping for one kitchen package or appliance package, he's shopping for 80. Well, those returns to the consumer and we have committed to take that savings and pass it directly to our consumer, our buyer. There's 30%.

When we go to a siding company now and they give us a price, we say, okay, now if we're going to commit to you, you have to come off 20 or 30% because we're going to be buying a truckload of it. So when you do this, are you finding new suppliers and new subcontractors or do you just go through the same avenues you've always used? The same avenues don't necessarily work and I really didn't think they would. There are a lot of subcontractors that will be participating on this development, sheridan Hills, that also work on our custom homes.

But we've hired a consultant. It's a guy I've known for 30 years that has been in 84 lumber, one of the biggest lumber suppliers in the country maybe in the world. He's corporate guy and we've hired him to come in and now he negotiates what we pay.

Well, when he calls the larger companies, suppliers, they pick up the phone because of who he is and the power he has. I mean, he handles accounts like Lennar Homes, large, large corporate builders that build thousands of units a year. So when we hired Lauren, it gave us the opportunity to have that third person that would come in and negotiate and then that would dictate what materials that we can use.

Now Sheridan can't take all the materials. Obviously, they have to work for our climate. So we are handcuffed a little bit in that capacity while we can use what we can.

Yeah, that's awesome. So we're going to wrap up. I would like to ask you one final thing and when is this breaking ground? I see you already broken ground, but when are you going vertical and how does that work as far as somebody being able to buy a house? Sure.

We will transition into what we call the reservation agreement probably next month. Or wait, we're in November 1 into this month. Okay, now what that will allow people to do it's kind of the step before you go to earnest money, if you will.

The reservation agreement is a document that we will use that will allow you to pick a lot and a home. Now, obviously, we're not ready to go vertical until depending on what kind of winter we have. If we have three winters like we had last winter, then it might be a little bit longer.

We're not going to go vertical until late spring, early summer of 24. The reservation agreement will allow you to hold that lot at a target price because commodities change and they could change in the buyer's favor. Lumber has kind of Gone up and Come down, but it's staying relatively low.

What that'll allow us to do in the meantime? As we get closer to going vertical, we will be Able to, I guess, lock down what the pricing is going to be. At that point, we will be able to go to a build contract or a purchase contract with our consumer. There is a lot of interest in Sheridan Hills.

We've had two different open houses sorry, three different open houses presentations, and I think the interest list is well over 50. Folks, that's encouraging for you. It validates your feasibility studies that you and I know that are part of.

Feasibility is great. You go into and you talk to these experts about what Sheridan needs or what a community needs. But Sheridan is such a regional market.

I mean, what's working in Denver or not working in Denver may work here or may not. Right. So it validates your feasibility.

Is there a need? Yes, there's a need, and so we know that, but that's the process. We will be reaching out to people on the interest list. For those interested to get on the interest list, just go on the website sheridanhillswy.com,

you can easily just add your name to the interest there's. Once you go into a reservation agreement, it empowers you. I have no power at any given time.

The people can say, hey, I found a house. Drew found me a house. I don't need the new home anymore.

Great. That's exciting for you. Then the next person moves up onto the reservation agreement.

That's awesome. Yep. Well, hey, Doug, I really appreciate you Coming by, and maybe someday I'll be able to yank your arm hard enough to come back.

I would love to come back. This has been fun, guys. Hey, thanks for what you guys Are Doing here.

I love it. You're supplying good content, good information. Keep up the good work.

Thanks, Doug.