Factory Built Homes: How to Profit from Modular Housing

The Real Estate Investing Club

Join an active community of RE investors here: https://linktr.ee/gabepetersen  0:00 Introduction to Boxabl Modular Housing 2:15 Why Factory Built Homes Are the Future 4:02 Transportation and Highway Logistics 5:23 Regulatory Pushback and Zoning Challenges 7:30 Installation Process and Foundation Setup 10:08 Cost Breakdown: Total Investment Required 12:53 Real World Applications and Success Stories 15:17 Investment Philosophy and Quick Questions 18:00 Arizona Copper Mine Disaster and Legal Battle 20:18 AI Implementation in Manufacturing 21:53 Where to Connect and Tour the Factory  REVOLUTIONIZING AFFORDABLE HOUSING 🏠  In this eye-opening episode of The Real Estate Investing Club, I sit down with Galiano Tiramani from Boxabl to explore how modular housing is transforming the real estate landscape. If you've ever wondered how to address the housing shortage while creating profitable investment opportunities, this conversation reveals game-changing insights about factory-built homes that could reshape your investment strategy.  THE TESLA APPROACH TO HOMEBUILDING 🚗  Galiano shares how Boxabl is applying automotive manufacturing principles to residential construction. Their Las Vegas facility spans 400,000 square feet with 150 employees, producing homes that fold up for transport and unfold on-site. The vision? Building houses as efficiently as Tesla produces cars, with one unit every 60 seconds. This manufacturing revolution could dramatically reduce housing costs and create unprecedented opportunities for investors looking to scale their portfolios with affordable housing solutions.  NAVIGATING THE REGULATORY NIGHTMARE ⚖️  The conversation takes a serious turn as we discuss the massive regulatory challenges facing modular housing. Despite California surprisingly becoming one of the most accessible markets for ADUs (with 20% of new construction now being backyard units), some states continue blocking innovation. Galiano reveals the shocking story of losing millions on a copper mine project in Arizona when the state government shut down operations without legitimate justification, highlighting the political barriers preventing affordable housing solutions from reaching those who need them most.  Want to learn more about our guest? Connect here: PassiveInvestingWithWhitney.com  Want to learn more about the REI Club Podcast, how to invest with Gabe at Kaizen, or join our community of active real estate investors on Skool? Visit the podcast website at https://www.therealestateinvestingclub.com or click here: https://linktr.ee/gabepetersen  #ModularHomes #AffordableHousing #RealEstateInvesting #ADU #PassiveIncome

Transcript

00:00all right we are back with another episode of the real estate investing club i hope you guys

00:12are having a great day wherever you are and whatever day it is for you as always it is

00:18friday here on the podcast so we're bringing that good friday energy to you and i do have

00:23to apologize before we get into it my two-year-old daughter has been bringing home the bug that's

00:28been passed around recently and so i'm just getting over a cough so i'll try to keep the

00:32cost to minimum but they might sneak out here and there um this should be a good show though

00:35because we this it's a bit of a different show we got uh galliano um tiramani with us on the show

00:41from boxable if you guys are not familiar with boxable it is a modular housing company they

00:47create those uh those cool videos that you see where the house just kind of pops out of nowhere

00:50and uh and is ready to live on so um we'll be going into that today galliano i'm excited to

00:57jump into this uh thanks for hopping on yeah thanks for having me so uh we're over in las

01:02vegas we've got a large manufacturing facility and our goal is to build houses kind of the same

01:07way they build automobiles because in a tesla factory they put out one car every 60 seconds

01:14and we think that's totally possible with housing and really the only way to bring down the cost of

01:19housing dramatically so that's our mission we're well on our way and our first product is called the

01:24casita so it's a little small kind of backyard guest cottage 360 square feet it's built with

01:30the kitchen bathroom bed couch plumbing windows everything built at our factory folds up ships

01:36to site unfolds and it's ready to go a lot of people are using them as rental properties or to

01:41put in-laws in stuff like that yeah yeah and i mentioned before the show like i've um we own mobile

01:47home parks and we've we've looked at your product to put them into into our parks um and so you know i'm

01:53familiar i'm familiar with the concept and i love what you guys are doing i do agree that uh housing

01:58you would think that there'd be a a more streamlined way to to create it versus you know doing a stick

02:05built house with a frame and everything so um yeah there's a lot of a lot of ways we can take this and

02:10i just kind of i guess we'll start with why why did you create boxable in in the beginning like what

02:17kind of started the idea for you you know we just saw a lot of uh trends and a big opportunity um of

02:24course there's a lot of action to fix housing on the regulatory side uh i just spent you know uh

02:30some time in washington dc lobbying for housing law reform to make it easier to actually build houses

02:36and then of course there's a huge shortage housing prices are going up and up it's a big problem for

02:41people especially the average person spending a huge percentage of their income on housing and by

02:46applying these assembly line mass production principles we believe the price can come down

02:50so dramatically that we can just have a huge impact and a huge upside for the company yeah yeah and um

02:57i i feel like yeah there is a ton of opportunity there i'm curious what your take on um on the size

03:04the the the maximum size that you can do in that conveyor belt type you know the the manufacturing style

03:10of house because uh you know the boxable houses they look amazing um you can't fit like you know a six a

03:16six person family in that house is my assumption do you guys have plans to continue to expand is there

03:22a limit on how they can do in this kind of modular fashion you know we can pretty much do anything you

03:28need on the residential side because what we're building is a series of room modules in different

03:32sizes like let's say 20 by 20 20 by 40 20 by 60 um so quite quite large rooms uh which would then be

03:41subdivided into bedrooms and things and then you can take those rooms and stack and connect them to

03:46build all kind of stuff so we can build a house that looks just like the one you live in now we can

03:50build a large multi-family apartment building we can pretty much do anything and the trick that we

03:55figured out was how do we make it fit on the highway because that's really what's held factory production

03:59back is houses are really big you can't fit them on the road so our room modules actually fold up so

04:05they can ship at the lowest possible cost yeah yeah and that's that's actually extremely expensive

04:10to get things onto the highway um uh you know we buy mobile home manufactured homes and we bring them

04:16into our parks and uh you know getting the permits getting them getting them shipped it can be really

04:20really costly um so i guess let's let's go into that kind of realm what is the difference between

04:27modular homes manufactured homes now they're doing 3d printed homes um like what are the the practical

04:33differences between these three well with the um shipping thing most of the traditional modular or

04:40manufactured hud home guys are shipping the wide load when you ship the wide load you have an escort

04:45vehicle so that explodes the cost because then you don't just have one truck and driver you have two

04:50drivers and so they can't ship far from their factory without it being cost prohibitive then they have a

04:56small factory and they can't do mass production and then when you're talking mobile homes

05:01manufactured manufactured mobile homes versus modular it's a different code so uh what we build is

05:07modular which is regular residential building code that you would see with any house on the block and

05:12then the uh manufactured uh mobile homes remain on wheels on a trailer chassis and those are built to a

05:20different code the problem there is they're limited by zoning in most places you can't put them

05:25anywhere you have to put them in a mobile home park right um on that note what kind of pushback do you

05:31guys get for boxable i mean are there municipalities out there who don't want modular homes um in on a

05:38single family lot in a mobile home park or is it generally accepted by uh by most municipalities out

05:44there we get a massive regulatory pushback it's been a huge problem for the company very damaging

05:50we're fighting our way through it but we do have markets where we can't operate in successfully very

05:54large markets like california or new york so we have plenty of places that need our houses and want

06:01our houses i would expect california to be the first one to push back on uh i did i did i did too but

06:07they've gone so hard to try and fix it that they've passed all these laws so their system actually works

06:12some states are totally blocking us and just saying no and it's a it's a mixture of special interests they

06:18don't want money and jobs going out of states some places just don't want new housing they don't want

06:23low income housing so it's kind of a very nasty thing where they're not looking out for the best

06:28interests of the people and they're not respecting people's rights and people's property rights

06:32yeah that is uh it's sad especially when there's such a need for affordable housing um in most major

06:39metros out there there just isn't enough housing there's not enough affordable housing and something

06:43like this uh could could definitely help at least start addressing that issue and if um you know the

06:50the government is the local government is trying to push back on that it's um it's just sad to see

06:54yeah and we want to be really building cities you know massive cities that's the vision here

06:59and the scale that we need to achieve in order to bring the cost down so dramatically is is massive

07:06and it's back to what i said is they put out a car every 60 seconds in this hustle factory there is no

07:12reason we can't do that with housing the manufacturing technology that's the easy part the regulatory is what's

07:17slowing us down yeah makes sense um so let's talk a bit about setup so i mean you buy that you buy a

07:24boxable you buy a modular house you bring it to the lot it can't can't just move into it like it is

07:30what do you have to do once you get the unit to to your property you would set up some type of

07:36foundation or supports and you would bring utilities up and then you would drop our unit down unfold it

07:41and you're pretty much done you connect it and it's good to go we get everything possibly

07:45that we can done in the factory where the costs are low nice and so it's already i mean you got

07:51the piping running through the electrical um water lines they're already piped through the i don't know

07:57how you do it but pipe through the walls and every every everything that needs to be there is currently

08:01there you don't have to bring you know plumber and electrician in to finish the job

08:05yeah pretty much um really simple quick install and that's so important because when you do that stuff

08:15on site the costs just explode but when you do it in the factory we can use you know trained

08:20technicians we don't have a plumber or an electrician in our factory we have someone that's trained to do

08:24a repeatable job and uh super efficient yeah makes sense um i i've actually been seeing and having

08:32people reach out to me about uh um i guess they they're called modular homes but these they're built

08:38in china and they're like ten thousand dollars for these units but i look at them and they just the

08:43quality it just does not seem like the quality is there how how long um are these supposed to last

08:49like a boxable unit what is the the lifetime of those the boxable units would certainly last as

08:56long or longer than a traditional home the chinese units have a lot of issues because a the pricing

09:02isn't necessarily accurate that's kind of a bait and switch you have to add in shipping and other things

09:06like that and then the uh other issue is they don't have the certifications so if you try to build

09:13one of those the local government's going to end up saying this is illegal it's not certified

09:17so it's very very small market where you can put those chinese houses down yeah it makes sense so

09:22you said the boxable units they last you know 20 40 years yeah we're building them to the residential

09:29building code so really no difference there than a regular house that's pretty cool and what is um this

09:35is just going to speak to my own ignorance about modular housing but what is the roof is it you know is it

09:40like uh your standard um shingle roof or what do you guys make it out of we have a flat roof that has

09:48a tpo membrane on it but in a lot of cases they'll add a different roof on site to make it fit the local

09:54aesthetic that makes sense so it can be it can be anything but we're getting the bulk of the work

10:00done we're creating these kind of architecturally neutral universal building boxes where the the builder

10:07that's deploying it can kind of customize it add cladding add a deck add a roof yeah makes sense

10:13um cool so yeah let's talk a little bit about costs uh i mean obviously this is a cost efficient

10:19way to get housing onto your property a lot of people they live in like for instance where i live

10:25in tacoma um they've just passed laws where they're really trying to get people to build daddies they

10:29want these you know uh additional dwelling units to be on the house because they want to fix the

10:34the problem we have with a lack of supply um so what is the cost all in and take it from the the unit cost

10:43to delivery to set up everything like that what do people generally what do you see people spending

10:48um setting up a boxable unit and then you know being ready to live in so our units cost 60 000

10:55and studio apartment but then the install costs can be anywhere from you know 40 to 100 more depending

11:04on the jurisdiction if it's in san francisco versus west virginia so that part ranges dramatically but

11:10at the end of the day our product still comes in under the cost of what most others can build at

11:16yeah that makes sense 40 40 to 60 i actually i expected there to be a lot lower than that oh because

11:21you are you're putting you're requiring a like a true foundation like a concrete poured foundation

11:27actually no it can be it can be peers um you know it really depends and over time we'll get better and

11:34better at it and the price will come down it's still early days for us yeah yeah well i know and that's

11:39that's one of the reasons why you know i love what you guys are doing is you're really pioneering

11:42this specific type of housing um and it's something that's definitely needed it's it allows for

11:48flexibility um in in housing when there is a huge shortage like a lot of cities have out there

11:54today uh this can address it in a very quick manner and so yeah i love i love to see what you guys are

11:59doing um how does the horizon look for you you know you've been at this for for a while now what do

12:04you guys see in the next three five years uh for this this i guess we'll say the industry not

12:09specifically boxable but uh manufactured housing uh um yeah i think it's gonna i think it's gonna grow and

12:17grow um i think regulations are going to relax i think our sales are going to go up and up my goal

12:23is to sell more than our factory can produce and then go back to the capital markets and say

12:27give me more money to scale and just keep doing that and keep pushing the cost down very cool and

12:33you guys are you guys are in one factory right now everything comes out we've got uh we've got three

12:37buildings next to each other in las vegas totaling 400 000 feet with about 150 employees

12:43very cool very cool um so do you generally see these being put up in in parks or are people

12:51buying these and putting them in on like just you know pieces of land where they bring in the

12:56utilities and and call our first order was um a military base housing then we did uh workforce

13:03housing for a mine then we did backyard adus we've put them in rv parks as well we've got them all over

13:10the country yeah yeah actually i went to um there was an rv park that we were yeah rv park we were

13:17going to buy out in uh big springs texas out uh you know in that area the kind of where the um i can't

13:23remember what they call that area anyways big springs texas and we went to a park near the one that we

13:27were going to buy and it was completely filled with boxable units and it looked really clean um and

13:32evidently they'd been doing really well like they they uh were their occupancy was really high and so

13:38it sounds like it was a pretty pretty good success um yeah so it looks like you guys are are doing

13:43well uh let's talk about your own individual investing you know this is the real estate

13:48investing club we talk about um investing in real estate what do you personally look to invest in

13:53uh only real estate i've really ever bought was personal residences um but all my investing was

14:01bitcoin so i got into that in 2013 keep buying to this day and it served me well

14:08yeah yeah bitcoin is a is a good buy my uh my cousin and i back in the day when when it was

14:15shoot i don't remember the year but it was like at the very beginning we started mining ethereum

14:20and uh we did it for a while and uh and then we lost the hash for the account and we just we i don't

14:28know how many ethereum and they are in there but we haven't gone back find that right i bought the ethereum

14:35ico oh nice day one and i still have it yep that's great yeah i don't invest in in uh in

14:44crypto anymore i did for a bit and i just you know i made a bunch of money but then i lost a bunch of

14:48money and i was like all right we're sticking with real estate we're going to stick to the thing that we

14:51know all right it looks like i just lost the picture you still there oh i'm still here sorry

14:58no worries all right we are running down the clock we're nearing the 20 minute mark so it is

15:05time to jump into the quick question round you ready let's go all right starts with education could

15:11be any form could be a mentorship program you've been a part of a book you've read a concert

15:14conference you've gone to anything i just need two recommendations one for general life wisdom and

15:19then one for real estate grok and youtube pretty much can give you everything you need

15:25let me learn everything i need to learn to start this business nice i love it all right uh next

15:31question is for your younger self let's go back to the galliano who was just thinking about starting

15:36boxable hadn't done anything hadn't even signed a paper yet go back to him look him in the eye give

15:40him one piece of advice moving forward honestly i've fucked up a lot in my life but it got me here so

15:49i wouldn't change a damn thing there you go just keep moving forward we all get punched in the

15:55face that's gonna happen and you're gonna and uh that's just part of business and you know you got to

16:01just keep making keep making mistakes and keep learning from them and uh moving forward and 10 years

16:06down the road you're gonna be happy you did because uh yeah they just happen it's all happening

16:11for a reason it's all being pre-written i'm pretty sure there you go all right next question is

16:17about the u.s it's it is a big place there is a lot of opportunity out there i'm going to change

16:22this question a little bit for you you're talking specifically about boxable so what metros do you

16:28see uh benefiting the most from you know modular modular investing modular housing i think la has a

16:36huge need and they've really opened it up for the backyard adus so you can go there and you can grab a

16:42house and you can drop an adu in the backyard and you can rent it for more than your mortgage payment

16:47and that's a pretty good deal uh and that's happening a lot i think 20 of new construction

16:52in california is backyard adus now wow that's crazy wow that's really crazy um what is the by the way

16:59what's the footprint of this this unit the casita that you mentioned what is the um about 20 by 20

17:0420 by 20 okay cool yeah that that makes sense yeah and we've got bigger ones too like we can stick

17:09multiple boxes together so you can get like a thousand square foot house with our product

17:14yeah nice can you put them on top of each other or we've done it we've got projects on uh instagram

17:20where you can see that we stacked them up huh that's cool man that's a cool concept i mean you

17:25talked about multifamily earlier uh building multifamily nobody's doing it right now because

17:30construction costs are just way too high and so if you can throw us yeah throw a bunch of these

17:34together that would uh that'd make a big difference yep all right um we're gonna skip

17:40that question let's talk about lessons learned uh not everything that we get into goes the way we

17:46expect it in fact pretty much every project is uh is gonna something's gonna go wrong you're gonna

17:51get hit in the face so um tell us about usually we're talking about specific deals but just tell us

17:56about an uh a moment in the creation of boxable where something went wrong and then what was the

18:02lesson that you pulled from it we had a very big order from a one of the largest employers a copper

18:10mine in arizona we started a project with them the government came in and shut it down completely

18:16destroyed it uh cost us millions of dollars and to this day they will not let us operate in the state

18:23for no legitimate reason i filed suit against them i'll continue to fight against them until uh we win

18:31because what they're doing is not right it's not right for their citizens and it's very unfortunate

18:36and i'm really hoping that the federal government can come in and overhaul some of the outrageous

18:41behavior we're seeing and it's not just for modular anyone who's ever tried to build anything

18:45has bumped into ridiculous behavior from building departments etc what um i'm i'm really curious about

18:52this because i you know we dealt with ridiculous uh you know we own a couple mobile home parks and

18:57we're only taking half of the space and there's there's an additional acreage over here that we

19:01can expand into and the city needs it like they need this they need this additional units but they

19:07won't let us do it for they come up with stupid reasons so what what are the reasons that are that

19:13you are being fed specifically for this copper mine for that that project um the copper mine owned the

19:19town they owned the building department and they said our building department can approve these

19:24buildings but then the state came in and said no because they're factory built we have to approve

19:29them and we're not going to approve them oh interesting so they're they're kind of using the

19:35dmv model like i i went to their department of housing headquarters and they had a homeless

19:42encampment of people living on tents on the front steps of the department of housing but those same

19:48people were blocking new housing it was absolutely disgusting and they continue to act outrageously

19:56towards us yeah yeah well hopefully i mean the only thing that hopefully that changes there's a

20:04i don't have the solution obviously you need to get the people in power to change their mind or

20:09maybe just change the people in power um and so hopefully one of those two happen eventually and uh and

20:15you guys you guys are having a little bit easier time putting your units out there because they're

20:19definitely needed it'll call all right next question uh this is a new one that we've been asking but i

20:25like to ask it uh because ai is a relatively new thing i'm huge into it i i love implementing it

20:31in as many places i can responsibly do so so how are you using ai today if you are and if and if you

20:38are using it how are you um what's the best ways that you've seen it implemented in your business

20:42it's uh dramatically short-cutting my research and education it's taking what would have been

20:49hours and hours of research down to 10 seconds um we're also planning to use it with chatbots

20:56customer service things in the factory any area we can we're jumping all over it because it's just

21:01going to accelerate the humanity yeah absolutely in fact that is one of the best use cases that i've

21:07found for businesses um i've done this for some people and getting a an ai and llm powered chatbot

21:13where you feed it you give it a knowledge base you feed it all the information about your company

21:17and then people can just go and talk to that chatbot and it will have the answers that you

21:21because it's it's read everything you know all the documents that you can feed it from your company

21:25it's read them and knows them and it can have a human conversation with somebody um so yeah i love

21:30that you guys are doing it and any business out there if you guys own a business or any real estate

21:34out there you can do this for your your business um relatively easily it's not that difficult and

21:39it's a it's a huge win for customer service sure thing all right man that wraps it up actually it

21:46leads us to the last question this is for the listeners um you've given us a lot to think about

21:51i'm sure people want to reach out get in contact with you this is a two-parter where can they find

21:55you and then what can they expect when they reach out hit us up anytime contact information on the

22:00website check up our youtube instagram we post constant contact content on our updates of what

22:06we're working on and we'll welcome everyone to vegas to to our factory right on i'll put his links in

22:13the show notes so if you guys want to reach out all you got to do is click a little more in the

22:16description it'll pull down that full description and in there you can find the links all right man

22:22that wraps it up yeah thank you very much have a good day buddy all right for every who's everybody

22:29who's with us thank you guys for showing up you are the reason we do this so if you guys have any

22:33questions reach out to me gabe at the real estate investing club.com if you want to support the show

22:37just leave us a review other than that i hope you guys have a great week keep rocking real estate

22:41and i look forward to seeing you on the next episode thank you

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