Affordable housing

Cut My Timber.

January 25, 2023

In 2010, Greg Howes co-founded CutMyTimber, a prefab mass timber company based out of Portland, Oregon, and he remains a partner at the company. CutMyTimber works with architects, structural engineers, builders and other fabricators, to supply custom mass timber products for a variety of building types, ranging from small cabins to 500,000 sf commercial buildings.

CutMyTimber has created products now used in hundreds of buildings in Europe, Canada and the U.S. They also fabricate green wooden buildings to the “passive house” and net zero energy standard and are currently developing their own line of mass timber ‘tiny houses’ as well as a new building system for both multi-family and commercial buildings. The company collaborates with the College of the Rockies, in British Columbia, to teach modern building systems, digital manufacturing, Cadwork (a virtual design software), and green building techniques to students in their Timber Framing program.

Greg is also a co-founder and board member of the AEC (Architecture, Engineering, Construction) Hackathon for developers and designers to collaborate and work with new automation, AI, robotics, etc. to look for solutions to daily problems in the built environment. Greg and his team have organized over 48 events globally to date. An AEC Hackathon will take place in Hangzhou, China, this coming December, and events scheduled for 2023 in Austin, Copenhagen, Dublin, San Francisco and Stavanger. He also organized “Mass Timber March Madness 2021,” a series of webinars that spanned a month, featuring speakers from around the world discussing mass timber production, general contracting, architecture, government, sustainable finance, and tech.

Read the podcast transcript here

Eve Picker: [00:00:07] Hi there. Thanks for joining me on Rethink Real Estate for Good. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad, rich or poor, beautiful or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo in order to build better for everyone. And speaking of building better, I’m very excited to share that my company, Small Change, is now raising capital through a community round that is open to the public. Small Change is a leading equity crowdfunding platform for impact investment in real estate. For as little as $250, anyone 18 and over can invest in Small Change, helping to fuel our growth as we disrupt the old boys club of capital that routinely ignores so many qualified people and projects. Please visit Wefunder.com/smallchange to review the full details of our raise and to make an investment if you can. And remember, investing is risky. Don’t invest more than you can afford to lose.

Eve: [00:01:46] My guest today is Greg Howes, co-founder of Cut My Timber. Cut My Timber is a fabricator of timber and steel components for the entire building industry. Their projects are spread as far as Alaska, Quebec and Australia, with production based in Portland, Oregon, and an office in Vancouver. They are able to make highly complex and efficient building systems available to both large and small companies, as well as to individual independent builders. Cut My timber uses state of the art computer software to optimize projects. This optimization results in less waste and offcuts, so they can build greener at lower cost. And now they are pushing their technology even further, building to passive house and net zero energy standards. Finally, let’s not forget the mass timber tiny homes they are developing. Listen in to hear more. If you’d like to join me in my quest to rethink real estate, there are two simple things you can do, share this podcast and go to rethinkrealestateforgood.co, where you can subscribe to be the first to hear about my podcasts, blog posts and other goodies.

Eve: [00:03:13] Hi Greg, Thanks so much for joining me today.

Greg Howes: [00:03:16] Good morning.

Eve: [00:03:16] So, you’re really heavily involved in the mass timber industry. Can we just back up a little bit and you tell me what mass timber is for people who don’t know?

Greg: [00:03:29] Yeah, I think it’s not really come on the radar in the US, except over the last ten years. And then very slowly, it’s been a real niche market. Essentially, I think a different way to think about it as heavy timber as opposed to two by fours and two by sixes. It involves glulam beams and also now increasingly what’s called cross laminated timber or nail laminated timber. And a simple way to think of that as really thick plywood. But you’re essentially making it out of often two by sixes and you’re stacking them, a layer of them, and then you make another perpendicular layer and glue those together, then typically do a third or more layers. So, you have it almost like a very thick sandwich of lumber and it comes in very, very big panels. I mean, you know, even larger than like ten by 30 or 40 feet. And that’s a single panel. It’s very strong. It’s obviously very thick. And that is used in many ways for walls, typically, floors, roofs, ceilings with it in buildings and mass timber in my research was actually, I mean, cross laminated timber itself was invented almost a hundred years ago actually in Tacoma, Washington.

Greg: [00:04:48] But it really took off in Switzerland and Austria in the nineties and they’ve been doing a lot of buildings with it. Initially, it started as a way to use less strong wood, not even almost waste wood, but it was a way to take wood that wasn’t structurally as strong and essentially through engineering and making this bigger, gluing it together and using automation to manufacture it has more engineering strength. And what’s happening now is that has come into the US market where again, following the Switzerland, Germany and Austria in doing this, and it’s really booming. And when I think of its most attractive properties are, one that it quite literally it’s very difficult, it doesn’t burn. It does burn, but it’s like having a campfire and trying to start the campfire. Not with twigs, but big logs. The outer layer, when it does burn, it’s really hard.

Eve: [00:05:43] I do that all the time.

Greg: [00:05:45] Yeah.

Eve: [00:05:47] A lot of smoke. Goes out quickly.

Greg: [00:05:50] Well, it does. And then it creates that char layer on the outside. So, even if you have that big log and you throw it on the fire and you leave it on all night, even on a big raging fire, it generally won’t burn through because it will have that char layer on the outside. So, it has some really good properties for fire and again, it can be very, very strong. And another big advantage is you can construct the buildings very rapidly, because essentially you’re building digitally before you build on site and you’re essentially manufacturing and custom cutting all of the pieces. So, let’s say the cross laminated timber and all the beams and all the connectors, you’re essentially doing that work before the trucks go to the job site and assemble the building. And when you do that, well, it can be really, really efficient. I give it many examples where buildings are literally going up in a matter of days, and this includes buildings of many stories, including ones we’ve been involved in. You’re doing a five-story building. The foundation is in all of the concrete and then you come in with the trucks and essentially you have a crane, and everything gets assembled extremely rapidly. And then the building continues with all of the things that go inside the building afterward. I think it’s a big advantage.

Eve: [00:07:04] So, what’s the primary problem that we’re trying to solve with mass timber?

Greg: [00:07:08] Well, big not only with mass timber, but in construction in general. We don’t have enough buildings where we’re short of builders and also, we want to build more sustainably. I think there’s a growing interest internationally. I’m obviously in my niche market, so I view the world from the mass timber perspective, but we need a lot more buildings and we need to figure out how to build them more sustainably. As we know, concrete is responsible I think for 8% of the global carbon production, just through making concrete. And so, we need to use more environmentally friendly materials. We need to figure out how to build faster, smarter, less expensive. And we have to do that in a world where we don’t have enough to be blunt builders. And so, how are we going to do that? So, I think creating building systems is one of the best answers. And specifically with cross laminated timber, you can build much higher. There are buildings, I think the biggest one in the world now is in Milwaukee, The Ascent building.

Eve: [00:08:15] Yeah, I just read about that. Yeah, yeah.

Greg: [00:08:18] I think it’s 26 stories, and there are buildings much, much taller that will be made primarily from mass timber. So, there’s a boom in, let’s call it timber skyscrapers. But I think every building is actually a hybrid of materials, so it does have concrete in it and wood and metals, just to different ratios. The big problem I think we’re trying to solve also as well. How do we take Woods and make them stronger through engineering processes or through the factory? How do we do more with wood? And use it more efficiently. And what I think the mass timber boom has created is a way to build taller with wood. And because when you build this way, unlike conventional building, and I’ve been a builder for 25 years, you can go to Home Depot and order a lot of two by fours and then try to figure out how to build your house on the job site. With mass timber, that’s not really realistic, simply because the beams and the laminated timber products are too big. You can’t really cut them precisely on the job site. So, you have to do that work in a factory. Yeah.

Eve: [00:09:33] Yeah. So, basically, it’s like ordering a steel member or a cross line beam ahead of time and making sure it’s sized correctly. Like we’ve been actually doing that for years, right? But now it’s shifting to it sounds like many more elements in the building.

Greg: [00:09:49] Yeah, we’ve been doing it for years. If you drive by and you see a steel building, generally all of those parts or the majority of them are pre-cut and predrilled and the builders job is essentially to assemble those and figure out how to do that efficiently. And we’re applying the same thinking to mass timber specifically.

Eve: [00:10:09] How does this help forests? How are we going to save our forests if everyone’s going to be using timber buildings?

Greg: [00:10:15] I am not a forestry expert. There are many people who are. I defer to them. We do use wood. Here’s my question, the wood we do use, we should do more with it. We should use it efficiently and we should use lumber that comes from forests that are well managed. They’re sustainably managed. In the US, there are a lot of statistics, we’re actually adding to our supply of forestry. We’re having more forests that we can harvest. And the US is the biggest country in the world to build with wood. About 93% of Americans lived in a wood framed home. So, my answer to that is like, well, let’s use the resource that is sustainable and renewable. Let’s use specifically wood that is from a sustainably managed forest. If we use good building systems, we can reduce the amount of wasted wood, a lot. We can quite literally have only a couple percentage points of waste as opposed to conventional construction. That, as you know, creates a lot of the waste.

Eve: [00:11:23] A lot of waste, yeah.

Greg: [00:11:24] Well, I think we can build buildings that use wood, use it more efficiently. We can do more with that wood because we’re creating things like glulam beams and cross laminated timber, and we’re figuring out how to do that efficiently. And we can use the forest the same way we build better and more sustainably with them.

Eve: [00:11:46] What percentage of buildings being built today use mass timber, and how do you think that might change over the next five or ten years?

Greg: [00:11:54] Oh, of all the wood buildings in the US, the percentage that use mass timber is far less than 1%.

Eve: [00:12:01] Oh, it’s tiny.

Greg: [00:12:02] It is a tiny niche market, it is growing. There’s quite a few people in the industry that think the US will become the largest market in the world for mass timber buildings in a short number of years. The same way the US already is the world’s largest market for wood frame buildings in general. But because mass timber is very good for specific kinds of buildings, it’s highly likely that we’re going to become the biggest market of all.

Eve: [00:12:30] And how quickly is that going to happen, do you think?

Greg: [00:12:32] It’s not a demand problem. I think you read the same things I do. We’re short of houses at every price point in many parts of the country. So, we don’t have enough buildings. We have people who need them. It’s difficult to build. I think the growth of building systems where you’re essentially already, call it prefab, buildings is going to grow because it’s really one of the only solutions. We’re suddenly not going to have a lot more carpenters. And it’s the same reason I got into this. It’s like, how do I build more buildings? How do I deliver more complexity? And I think the answer is through building systems. Mass timber is booming, where our factories based in Oregon, Oregon produces the most softwood lumber of any state. There’s a lot of demand out here. Most buildings are, in fact, wooden buildings, and where mass timber is the best product for that type of building, there’s a lot of demand. It’s actually growing faster than the supply. And I would argue that the shortage is of factories that do create the kit of parts for mass timber buildings. There’s not enough of those, and it takes years to build them. And they’re expensive. They’re full of very expensive machines.

Eve: [00:13:53] The actual factory, yeah.

Greg: [00:13:56] There’s interest in mass timber and I think it’s growing, and there’s more interest than there are available supply, and the supply comes through those factories and there aren’t very many of them. That’s the constraint to its growth.

Eve: [00:14:10] So, are you seeing people investing in factories like that? Like are people beginning to understand that issue?

Greg: [00:14:19] Well, there are investors coming in. I’ll give an example. In Europe, Stora ENSO is a Swedish Finnish company. They keep building factories, they’re one of the biggest producers of cross laminated timber in the world. They continue to build more factories and demand exceeds supply in Europe as well. We are having some factories come into the Canadian and US market. One of the biggest suppliers in the world that’s new is a company called Sterling, based in Chicago. Their product just became certified as a cross laminated timber panel, and it’s certified in that it’s legal to use for buildings. So, they’re one of the world’s biggest producers now. So, we’re seeing more companies invest in Canada and in the US. I know them, it’s still a niche market. But the constraint, the bottleneck right now is, well, we’re going to have we have a lot of lumber, we’re going to have more mass timber product, but we need those factories that create those custom kit of parts. That’s what we’re short of. That’s the big bottleneck.

Eve: [00:15:26] That’s interesting. And other than that, is there any specific work that needs to be done to advance mass timber? I mean, you talked about the fire resistance of these really heavy pieces of engineered lumber, right?

Greg: [00:15:39] Correct.

Eve: [00:15:40] Does the building code recognize that? What needs to be done to advance the idea?

Greg: [00:15:45] A lot of work needs to be done on many fronts. And I want to clarify, I am not a forestry expert. I am not a fire expert. I’m not a structural engineer. There are lots of great organizations, people doing the research and also the building codes are being changed and updated to allow for these tall buildings in more municipalities. A big challenge we have in the US, as you know, building codes vary a lot.

Eve: [00:16:17] They do.

Greg: [00:16:18] Based on the municipalities. And not only do the building codes vary, the fear among the local building code officials, but also among the builders. You have a lot of builders, architects and structural engineers, and they hear about this mass timber thing, but they haven’t worked with it before. And there’s a lot of perceived risk in using a new product or a new process. And so, the good thing is there’s a lot of research being done for those interested in fire and structural engineering. I would point people often to research that’s being supported by the US Forest Service and others. It’s happening at a lot of universities.

Eve: [00:16:57] Yeah, it’s really interesting. So, it’s really early days. It’s pioneering efforts still. But you know, I’ve also heard people say that there’s a mass timber boom on the way. Is that, do you think that’s true? Is that going to take a while to ramp up? It sounds like there’s a number of issues to resolve first.

Greg: [00:17:13] Again, since I’m in the industry and have been for decades, my perspective is very biased. I think a lot more people are hearing about it if they’re paying attention at all to what’s happening in the world of construction and specifically with wood, I would say there’s definitely a boom happening, certainly across Europe, Australia, New Zealand and in Canada and the US. When I speak to people in the industry, it’s very much boom times. And the biggest conference that happens in the US is the Mass timber conference in Portland, Oregon. About every March a few thousand people attend and when we were there last year, everyone’s like talking about how it’s extreme boom times. There’s essentially too much work and not enough supply.

Eve: [00:17:59] Interesting. And who’s at the forefront of the mass timber movement in the US?

Greg: [00:18:03] Oh, that question is similar to asking who’s at the forefront of construction in the US. It needs to be much more nuanced.

Eve: [00:18:13] Well, nuance it for me. Okay.

Greg: [00:18:19] I think what it is, when working with mass timber and to be able to do it well literally requires some experience. Because it’s a different process. It’s not designing a building and here’s a ten-story building, should we build it out of concrete, steel or mass timber? And then say, well, who’s the lowest bidder? We’ll build it that way. That literally doesn’t work. The architects are learning how to work design for mass timber. How does it work well, and when is it the right product? The same goes for the structural engineers. If you haven’t worked with mass timber buildings before, there’s a tendency to over engineer. And over engineering makes buildings more expensive and take longer.

Greg: [00:19:04] And builders, as a builder myself, and I’ve been one for 25 years, if you haven’t worked with mass timber before, the question becomes, well, how do I price that out? What is it going to cost me? And too often in construction, your big cost are your materials and your labor. But if you do mass timber efficiently, much of the labor is moved into the factory for the mass timber frame because you’re figuring that out, you’re shipping it to the project. It’s hard to know how to price that if you’re a general contractor who’s never worked with mass timber or prefab before. There are quite a number of people in each of those categories, architects, structural engineers, builders, subcontractors. And these factories that produce the kit of parts. There’s a small number of each of those who have experience, but there’s nearly exponential growth on the total number of mass timber buildings. We’re lucky that we’re out in Oregon. Oregon produces so much wood. The state’s been very supportive of mass timber and the US West Coast, California, Oregon and Washington. That makes up about 50% of the total market for mass timber currently. Canada is doing a lot as well.

Eve: [00:20:16] That makes sense. You know, I can understand why it’s been ahead in places like Finland and Sweden, the very northern Europe, where it’s very long, cold winters. So, this manufacturing system would permit you to be building, you know, when you really can’t work outside, right?

Greg: [00:20:32] Correct.

Eve: [00:20:32] Or not very comfortably. So, is that true too? Do you think northern states are taking onto this idea faster than southern states in the US? Or don’t you see that differential?

Greg: [00:20:43] I’ll touch on the Nordic Scandinavian countries. Europe is so different than the US because let’s say this, over 80% of the buildings in Europe as a general rule of thumb, are made from concrete. That’s essentially the primary building material. The more you go north, let’s say, to Sweden, the more wood there is, the more it’s used in construction. And even in Sweden, I like to tell people prefab, single family housing is the norm. Prefab for your housing, that reached 50% market share in the 1950s. So, this whole idea of prefab and prefab using wood is quite common in Germany, Switzerland and Austria. But it’s still like 10% of the buildings in Scandinavia, it’s much more. How will that come into the US? I think it will, not only here on the West Coast, will it be very common. It will become more common in Georgia and Alabama. They have a lot of loblolly pine there and there’s a lot of it. Some would argue there’s almost too much of it. And so, there are some new factories coming in to the southeast of the United States that will begin to produce more and more mass timber, very cost effectively. So, that supply will ramp up a lot. But again, the bottleneck will still be those factories that take those commodity wood products and make them into buildings.

Eve: [00:22:06] So just changing gears a little bit, I’m just wondering a little bit about your background. How did you get involved in mass timber?

Greg: [00:22:13] I’ve been a builder of homes for most of my life. I’ve also worked in tech, and had startups, and worked in other countries and other industries for short periods of time. But the majority of my work has been in building. Over 20 years ago after I had a startup in Silicon Valley, and we had the whole crash in Silicon Valley, again around that was exactly when we started our company. So, our timing was bad. So, we had a company not related to housing, that shut down. And I said, look, I’m going to go back to building, but if I’m going to go back to construction, I want to do it efficiently. I want to figure out the best way to build. And so, I toured many factories in Canada, the US and Europe, and said, I want to build with wood on the West Coast. How do I do that efficiently? Because life is too short to become an architect, engineer, builder and everything else all at once. I need to use a system and I want to use the best system for building with wood. So, I did tour all of those factories and I recognize it’s a question of software and it’s a question of systems. And that’s when I encountered mass timber. And so, I specifically focused in on that and ask, well, who’s doing that really, really well? And 20 years ago in the US, almost no one was.

Greg: [00:23:44] So, the leaders were in Europe. So, then my research led to, well, what are we learning from the Europeans and how do we apply that here? And then I found the person who’s now my business partner, Stefan Schneider. He was a Swiss immigrant. He’s been here for 20 years, and his job for six years was setting up factories. He was the person you called when he wanted to enter the industry.

Eve: [00:24:07] Interesting.

Greg: [00:24:08] And I said, well, look, I really want to build with wood. You’re the person who’s the most knowledgeable in my experience. Why don’t you start your own factory? For the last six years, you’ve been setting up other people’s factories across Canada and the US. Why don’t you come to Oregon and start your own factory, which he did. So, we’ve been, since 2010, we’ve had a factory in Oregon and we’ve been fabricating mass timber components, kit of parts, on literally hundreds of buildings. And then I want to emphasize, in doing so, we are one of a team of companies that do mass timber buildings. So, we have a pretty big network of architects, engineers, subcontractors, assemblers, many other people. Right?

Eve: [00:24:54] Your company’s got a great name. Cut my timber. I really like that. So, what sort of projects have you built and what does it look like? Do architects come to you or clients or all of the above or engineers? Like, how do you work?

Greg: [00:25:08] All of the above. There is no single mass timber marketplace. Let’s use an example. Let’s say Eve Picker wanted to do either a ten-story mass timber building or you wanted to do ten single family homes using mass timber. And you ask yourself, well, where do I go to do this? Who does this? Who does it well? There isn’t a single place on the web where you can go to find that information. And many of the companies that actually do it are booked out for years, or at least for a very long time. So, they’re like, well, look, it’s great you’re interested in a project, but we don’t have capacity. That’s kind of a problem that may change because more stuff’s coming on the web. But again, there’s no central hub. What happens to us?

Greg: [00:25:51] We’ve been in the industry long enough that we get approached generally through company and people we already know, and they are architects, general contractors, general engineers, some real estate developers. They’re interested in mass timber, and they ask around and find out, well, who does this, who has experience doing this? And they come to us and sometimes we play a big role in the project and other times we’re a subcontractor supplying a small part. I’ll give you an example. There’s an extension of the Portland Airport in Portland, Oregon. That project is over $1,000,000,000. We are one of hundreds of companies supplying that project, so we do some wood fabrication. On other projects, we’ll do a single-family home, let’s say a timber frame or glulam home, we’re the major supplier. We do commercial buildings. We supplied big beams to the new Adidas headquarters in Portland, Oregon. That’s over 400,000 square feet. And then we’ll do event structures like the one in the background behind me.

Eve: [00:26:58] Which is amazing.

Greg: [00:26:59] If you’ve ever watched a TEDx talk, we created the stage for the TEDx talk. That’s 12,000 individual pieces of wood specifically, mostly glulam. And that was all modeled and then fabricated and shipped up as a kit of parts. And that’s a good example of another mass timber project.

Eve: [00:27:18] That’s a really big range. Yeah. So, how do everyday people get into this market. If I just wanted an affordable home, but I really care about the environment and I want to find someone to help me build a timber home, the entire home.

Greg: [00:27:36] There are multiple ways to go about that. There are some for a single-family home. And again, with mass timber, let’s use some examples of a… There’s the homes constructed with essentially two by fours, two by six is in small beams. On the heavy or mass timber side of things, there are homes that are, let’s say, using a lot of glulam beams. Um, there are timber frames. Those are solid wood not engineered wood, it’s just solid pieces of wood. And then there are many homes that are a hybrid. They may be heavy beams and CYP panels, structural insulated panels. So, there are a growing number of suppliers who try to be a one stop shop. That you’ll go to them, and you can buy the home you want from their kit of parts, from their catalogue, or you can have a custom home designed and manufactured and built for you. In this big country, there are many options.

Eve: [00:28:35] There are many, many options. Yeah.

Greg: [00:28:38] And the price points are very varied as well, too. Some companies will focus on accessory dwelling units for your backyard. Other companies are doing big custom homes in ski resorts. It’s very varied.

Eve: [00:28:51] Right. So, I’ve heard whispers from you that you also want to manufacture houses. You want to talk about that, as a way to really produce housing quickly?

Greg: [00:29:03] Yeah. Our company and others, we think a way we can scale and become more efficient and make the whole system better is essentially through developing a catalog of buildings and a building system. Right now, everything, as you said, is bespoke. We have one project like the one behind us and then the next one we’re doing, working on an airport, or we’re working on a large commercial building. That works, we’re very busy doing that, but it requires very different skill sets. And we work with billion-dollar construction companies and the next time we’re working with a general contractor with five employees. So, we have a good business doing that. But we think the way forward, we want to use some of our capacity and we’re developing a line of single-family homes. And so, we’ll sell those as a kit of parts to other builders and to, let’s call it the do-it-yourself crowd, that they do want a mass timber, or a heavy timber home and they want it as a kit of parts. So, we are developing that. We don’t have it ready yet, but we are developing that, and we are building a new factory. Our current one is in Portland, Oregon. We’re building another one that will open up in the first half of next year outside of Portland, and we want to use some of our capacity to do that, that catalog of single-family homes. And we will, and we’ll have that ready in late spring.

Eve: [00:30:39] It feels a little retro, like going back to build your own log cabin, right?

Greg: [00:30:43] It is, But the housing demand is so extreme. So, I think the solution to creating more housing is there are millions of solutions. There have to be many ways. Some people want a big house, some people want a small house. Some people want a net zero home. So, we want to be one of the many providers of solutions.

Eve: [00:31:02] Well, it’s really interesting. So, final question for you. Are there any other current trends in mass timber that we should keep an eye on, like new products emerging?

Greg: [00:31:11] Here’s what I think you should look, when you look at mass timber. Think of, there’s cross laminated timber that’s glued together. There’s also nail laminated timber where the layers are connected with nails and then there’s double laminated timber. So, go into the whole category, understand that there are many kinds of heavy or mass timber. An exciting trend, there’s growing interest in net zero building. There’s growing interest in Passive House. So, the combination of mass timber being fabricated in a factory and they’re addressing the market of green building and specifically net zero and sustainability, where those trends are converging. Is there a way to build in a factory smarter, greener, more sustainable homes for the people who want them? And will these building systems make them more affordable? That’s what excites us, and I think those are all growing trends.

Eve: [00:32:08] Yeah, I agree with you. They’re definitely growing. Well, this is really exciting. I hope you stay in touch and let us know when your factory opens. I want you to send me the catalog.

Greg: [00:32:18] I will. And here’s a real convergence that I think aligns with all the innovative work you’re doing in crowdfunding. I do want to see crowdfunding merge with mass timber and prefab. So, people who want a home or they want a community are finding one another through crowdfunding and they’re working with the factories that can actually produce the buildings either as an investment or for the home they want. That excites me as well.

Eve: [00:32:50] Yes. It would be a lovely world, wouldn’t it?

Greg: [00:32:54] Well, we’ve got to make it happen.

Greg: [00:32:56] Yeah. Well, thank you very much for joining me. And I do expect to get that catalogue when it’s ready.

Greg: [00:33:02] You will.

Eve: [00:33:02] I can’t wait to see it. It sounds like a lot of fun.

Greg: [00:33:05] In late spring next year. I’ll share that with you.

Eve: [00:33:09] Thank you.

Greg: [00:33:09] Thank you.

Eve: [00:33:17] I hope you enjoyed today’s guest and our deep dive. You can find out more about this episode or others you might have missed on the show notes page at RethinkRealEstateforGood.co. There’s lots to listen to there. You can support this podcast by sharing it with others, posting about it on social media or leaving a rating and review. To catch all the latest from me you can follow me on LinkedIn. Even better, if you’re ready to dabble in some impact investing yourself head on over to wefunder.com/smallchange, where you can invest directly in Small Change and our mission to democratize capital formation to create impact in commercial real estate development. A special thanks to David Allardice for his excellent editing of this podcast and original music, and a big thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Greg Howes

Starter Home. Where are you?

January 24, 2023

“The economics of the housing market, and the local rules that shape it, have squeezed out entry-level homes.” writes Emily Badger for The New York Times. “The disappearance of such affordable homes is central to the American housing crisis. The nation has a deepening shortage of housing. But, more specifically, there isn’t enough of this housing: small, no-frills homes that would give a family new to the country or a young couple with student debt a foothold to build equity.”

Starter homes were once ubiquitous in the US. They included shotgun homes, bungalows, mill worker’s cottages, split-levels, two-bedroom tract homes, ramblers, brick rowhouses, duplexes and triple-deckers. Today those houses have all but vanished from new construction. According to CoreLogic, almost 70 percent of houses were 1,400 square feet or less in the 1940s. Now they number only about 8 percent.

Some of those smaller homes were still being built as recently as the 1990s but since then the rising costs of land, construction materials and government fees, along with single-family zoning, have led to larger homes being built. This despite the dwindling size of the typical American household over the last few decades. And those entry-level homes of the past are now selling for half a million dollars or more.

Builders and communities may need to rethink what a Starter Home might be. The easiest way to produce more entry-level housing on increasingly expensive land is to build more of it on less land. Maybe duplexes, rowhouses or condos? This makes sense for everyone. Builders will reap the same profit margins for entry-level housing – that they are smaller is offset by the fact that demand is high. For homeowners a small starter home provides an opportunity to gain a foothold in the housing market and a path to building wealth.

Daniel Parolek, author of the book Missing Middle Housing says: “We need to shift our culture away from this dependency on single-family detached housing and thinking it’s the only solution.” Listen to my interview with Daniel here. … and read the original article here.

Mid Century Starter homes Hammond Indiana by Eric Allix Rogers, CC BY-NC-ND 2.0

Our client is the planet.

January 18, 2023

Jeremy, the founding Director of Breathe, has built a team of dedicated architects with a reputation for delivering high quality, sustainable design for all scale projects. In particular, Breathe has been focused on sustainable urbanization and exploring ways to deliver more affordable urban housing to Melburnians.

As the instigator of The Commons housing project in Brunswick, Jeremy was the driving force behind the prototype for what is now Nightingale Housing, a not-for-profit organization dedicated to providing sustainable and affordable housing. Jeremy believes that through collaboration, architects can make a real and positive impact in their community.

This belief is exemplified by Breathe’s work with other Melbourne architects to deliver the Nightingale Model, which is intended to be an open source housing model led by architects. According to Jeremy, “if you want to build something that is affordable and sustainable simultaneously, every project manager in Melbourne will tell you you can’t do that.” Instead, Breathe has defined sustainability through reductionism, identifying that what people really want in housing is good, meaningful spaces with light, outlook, and plants, rather than luxurious but unnecessary features.

As Melbourne experiences rapid growth and housing becomes an increasingly expensive commodity, Jeremy’s movement towards affordable and sustainable urban housing through stunning, thoughtfully executed projects is vital for the city’s future.

Read the podcast transcript here

Eve Picker: [00:00:08] Hi there. Thanks for joining me on Rethink Real Estate for Good. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad, rich or poor, beautiful or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo in order to build better for everyone. And speaking of building better, I’m very excited to share that my company, Small Change, is now raising capital through a community round that is open to the public. Small Change is a leading equity crowdfunding platform for impact investment in real estate. For as little as $250, anyone 18 and over can invest in Small Change, helping to fuel our growth as we disrupt the old boys club of capital that routinely ignores so many qualified people and projects. Please visit Wefunder.com/smallchange to review the full details of our raise and to make an investment if you can. And remember, investing is risky. Don’t invest more than you can afford to lose.

Eve: [00:01:44] Three years ago, I interviewed the delightful Jeremy McCleod of Breathe Architecture, and today I’m lucky enough to interview him again. Jeremy founded Breathe, an architecture studio in Melbourne, Australia. There he delivers gorgeous and sustainable buildings to his clients. But Jeremy was unhappy with the ever-widening gap between those who have wealth and those who do not. So, he embarked on a second journey to deliver sustainable and affordable housing to everyone. Many told him that this was an impossible goal. But he completed his first project, The Commons, with accolades, three years ago. With a waiting list of over 8000 buyers, Jeremy and his team set about building lots more. This is what a great architect does. Listen in to learn more.

Eve: [00:02:43] If you’d like to join me in my quest to rethink real estate, there are two simple things you can do. Share this podcast and go to rethinkrealestateforgood.co where you can subscribe to be the first to hear about my podcasts, blog posts and other goodies.

Eve: [00:03:14] Hi, Jeremy. Thanks for joining me. And I just want to say, whoa, what a difference three years in a pandemic made for your business.

Jeremy McLeod: [00:03:23] Yeah, it’s been pretty wild times. Thanks for having me back on, Eve. It’s good to see you on the other side.

Eve: [00:03:31] It is. It’s the other side. So, since we last talked, your architecture studio Breathe and your brainchild Nightingale seem to have both exploded. And I wanted to give a little background to listeners who hadn’t heard the first podcast, or maybe tell them to go listen to it. But let’s talk about Nightingale first. So, for those listeners who missed our first chat, tell us about Nightingale. What is it and where did it all begin?

Jeremy: [00:04:03] Okay, so. Yeah, Melbourne, where our practice is, is a lot like any capitalist society. Unlike the beautiful Scandinavian countries where they decide to house their people through high taxes and good kind of support networks in a good neo liberal society, our government has been underspending in housing for decades. And so, as an architect, you know, we work, historically, our choice is to do private homes for wealthy Australians or do apartments for property developers where, you know, they’re really following a profit in a complex kind of environment. So, both of those things aren’t very rewarding. And Breathe architecture, our architecture firm, you know, we believe strongly in this idea that our first client is the planet, you know, our second client is the broader community that live on that planet. And then lastly, we have the client that pays us, and we felt like doing property development apartments wasn’t achieving the first two of those three criteria. So, we built a prototype project. We finished that in 2013 and it was called The Commons, and it was an idea to kind of prove to developers that you can make a profit by building sustainable homes and building community. And so, we built this building called the Commons. And the idea was that it would be car free, carbon free, that it would be affordable and that it would be incredible. And a lot of those things came true. I mean, we shot for the stars. We kind of landed on the moon.

Eve: [00:05:50] It is incredible. It’s a beautiful building.

Jeremy: [00:05:52] Yes, Eve you’ve been here. Right. So, you’ve been to it. You’ve been to Australia, you’ve been to Melbourne, you’ve seen it. We couldn’t get the carbon free piece right. So, there was still, we couldn’t afford the non-gas infrastructure back then. But apart from that it’s a very good building. And what was interesting about that was that we then opened it up for tours, brought every developer in the city through and said, look, this is what you can do. And they all saw it as a kind of an aberration rather than a trend and said, oh, well, that’s a nice idea, but thanks very much, we won’t worry about it. But, interestingly for us at Breathe is that people just, you know, every regular day Melburnians that are writing to us saying, if you’re going to do that again, can you please let us know? Because we would like to live in a building like that.

Eve: [00:06:36] But the really important thing is that these units were also affordable, right? They were affordable to civil servants who were really being pushed out into the far nether land.

Jeremy: [00:06:51] Yeah. I mean, the whole premise of building something that was sustainable and affordable simultaneously and still profitable for a developer was really about this idea of, you know, analyzing everything. And it was about a sustainability of reductionism. So, developers view historically has been that sustainability is expensive and it’s hard to get a return on your investment. And so, we just questioned everything. So, the big thing about taking out the cars was that we saved 10% of the build cost by taking out the basement. We reduced every apartment by $40,000. We took out every second bathroom. So, every two-bedroom apartment only has one bathroom. So, we saved $9,000 per apartment. We even took out all of the individual laundries, reduce the price of every apartment by about $6,000. And when you take a second bathroom and a laundry out of an apartment, the living room suddenly gets, you know, nine square meters bigger. You know, in your space, 90 square feet, about 90 square feet bigger, right. So, the living rooms start to be these really great, you know, spaces to be in. The cost comes down in all these apartments and then we start to build really great shared spaces, like a really incredible bike park, a really great rooftop laundry, you know. And rooftop laundry sounds weird, but it’s beautiful, right?

Eve: [00:08:12] It’s absolutely beautiful, yeah.

Jeremy: [00:08:13] Opens up onto the big garden and views to the city. And these become these, kind of, social hubs where people in the building meet each other doing something really ordinary, but it actually works in a kind of safe, nice space where people actually get to break down those barriers to talk to each other. So, anyway, when we finished the Commons, we won the national award for housing with this thing, and it was quite a small building. You know, it was 24 apartments, and we won the National Award for Sustainability, which was incredible because it wasn’t a $100 million university building that was funded by some philanthropic fund. It was, you know, it was actually. Yeah, it was just a market rate apartment. So, then we wanted to get other developers to employ us as architects to do that after two years of bringing them through the building. We couldn’t find anyone that would want us to do that. They wanted to do the same as business as usual. So, we decided that I took four days off work, and I wrote a manifesto and called it the Nightingale model, and we established Nightingale housing. So, the idea was that we would share all of our IP. That we would bring architects together, that architects would lead a housing revolution, that we would democratize capital.

Jeremy: [00:09:31] It’s interesting, Eve, that you and I met and, you know, when I saw Small Change, I was like, oh, this is what I really needed back in 2015. But basically, it was peer to peer funding. Small mom and dad investors putting in like about $100,000 each to kind of crowdfund these projects, equity fund these projects. And we built the first project, Nightingale One, which finished in 2017. And then, you know, by that stage our waiting list, people who had been writing to us had grown from 11 to 57. And so, we balloted those apartments. So, we didn’t sell them through a real estate agent. We took all of the agents out, all of the marketing, all of the display suites, which all reduced the cost of the building. We took out all the gas to make sure it was 100% electric. We shared a lot of the infrastructure inside the building, like the hot water for the hydroponic heating, like the hot water for the showers. So, we got one set of plant that does all of that. It makes it really cheap for everyone living in there. These are all built to sell like market owned apartments. And 57 people entered a ballot and we balloted. We sold all the apartments in one day. And people hadn’t seen that in Melbourne, you know.

Jeremy: [00:10:46] So anyway, you know. So, that was kind of the start of Nightingale. And what’s happened since then is that a couple of projects kind of took that Nightingale model and delivered it. So, we shared that IP with other architects. You know, I actively worked with those other architects to help them deliver those projects. So, Nightingale 2 is a great example of that. And then it kind of faltered, Eve. And the challenge, I think, was that to go and source equity, to go and buy a piece of land, you know, someone needs to sign the directors guarantee on the purchase of the land. To go and secure a debt, someone has to put a director’s guarantee down, you know, to secure whatever it is, $10 Million from the bank. And the bank wants to know that the person delivering the building has done it before and that they’re good at it and that they have a big balance sheet behind them. So, this revolutionary idea for Nightingale housing, like it kind of went bananas, right? So, after Nightingale 1, we balloted Nightingale 2. And you know, we started doing all of these projects, but, you know, our demand grew so that there’s 15,000 people, over 15,000 people on a database now to buy housing.

Eve: [00:12:02] Wow, my heavens.

Jeremy: [00:12:03] But we couldn’t keep up with supply because, you know, there’s fundamental issues around, in a good neoliberal society, around risk, who’s prepared to take the risk and put their home on the line. And, you know, again, I guess risk from a debt point of view and an equity point of view, who’s going to put money into these projects because you know, who’s going to take risk on that? And so, look, the good news is that, you know, we’ve just completed like our 500th apartment and we’ve got another 500 in the pipeline. Last year we balloted $80 million worth of housing where we’ve rolled in a social housing portion so that, you know, trying to really kind of nail the affordable housing piece now means we have 20%, that the first 20% gets balloted to an affordable housing provider. So, that’ll be a charitable organization like Women’s Property Initiatives. The next 20% goes in a priority ballot. So, to you know, key service workers, nurses, teachers or to First Nations Australians or to people with a disability or carers for people with a disability. And the last 60% is balloted to, you know, to the broader waiting list. Everything sold. Now we’ve got a, you know, the new model is kind of evolved into, you know, it’s a Nightingale not for profit, so, there’s no profit in there anymore.

Jeremy: [00:13:33] And we’re now getting institutional funding from what are our superannuation funds, which might be called pension funds in the US. And we’re getting senior debt now from our major banks really through their kind of social impact arm rather than just their commercial finance arm. So, we’re getting good rates and really good engagement like we’ve had the CEO of one of Australia’s biggest banks, you know, come and meet with us, walk through the buildings, ask us what he can do to help personally and like task you know team of six of his heavy hitters to help, you know, build a specific loan product for people who want to buy into Nightingale. So, I think the interesting thing about Nightingale is this idea that it’s got a very clear narrative around it, which is that it’s a triple bottom line housing model. So, it’s about being carbon neutral. It’s about building community, not only in the community within the building, but kind of engaging with the broader community through that whole process. And then lastly, it’s about affordability and how do we get a broader cross-section of the community living there. So, it sounds it sounds pretty easy, but, you know,

Eve: [00:14:43] Well, it’s not easy.

Jeremy: [00:14:46] As you know, Eve. So, you know, and when I started there, it was, you know. Yeah, it was just an idea, right? You know, in a manifesto. And I recently handed over the reins, so I was the founder for a while. I put together a not-for-profit board. Or actually, I got some help to put together a not-for-profit board, which was really great. We put someone on to kind of run the show for a couple of years and then it just didn’t take off. And then I step back in as managing director to try and say, If we’re going to go, let’s do it. I stayed in that acting managing director for over five years, you know, and we saw massive growth and I’ve just stepped down in that role as managing director. So, you know, I’m back on the board now. So, you know, I attend six weekly board meetings. But, you know, as I stepped away, there’s now 17 staff, you know, and 500 apartments in the pipeline. And yeah, so.

Eve: [00:15:44] Is it satisfying to have built that?

Jeremy: [00:15:46] Yeah it is and you know, I was sad to step away. But, you know, I’m also the design director at Breathe Architecture and you know, it’s time that I actually give some love back to Breathe. You know, the organization that founded Nightingale. Now, you know, I feel like I need to spend some time there to go and, you know, see what’s next on the horizon, right?

Eve: [00:16:07] Yes, yeah.

Jeremy: [00:16:08] Building up to do the next thing.

Eve: [00:16:10] So, are other architects involved now? You said you have built 500 units.

Jeremy: [00:16:16] Yes. So, I mean initially it was meant to be this architect led kind of revolution and we got lots of engagement from architects to do that. Lots of challenges around funding and equity raising. And just not.

Eve: [00:16:32] It’s all about money, isn’t it?

Jeremy: [00:16:34] It’s all about money. It’s all about money. Unfortunately. This idealist has become, I’ve become much less, I’m much more pragmatic over time, which is really interesting. I was also quite scathing at the development industry when I started Nightingale, thinking that they were all evil. And now I’m. Yeah, and now, you know, I’m really embarrassed about the things that I said early on, the disparaging things I said about developers, because I just realized how hard it is and how much risk is involved. And you know that the profit margins that developers put in, while they might seem horrifically high from the outside, you know, it only takes one project to go.

Eve: [00:17:17] It’s a huge amount of work.

Jeremy: [00:17:17] Well also, they need a balance sheet to be able to fund the projects and in the event that one project fails, they need to, they need a balance sheet behind them to be able to.

Eve: [00:17:26] Especially in Australia where I really don’t understand how the financing works at all, we’ll have to talk about that. But it seems even harder than here.

Jeremy: [00:17:35] It is.

Eve: [00:17:36] It’s very difficult.

Jeremy: [00:17:37] Yeah, it is very complex. And the banks here, you know, I guess like anywhere are not interested in taking, you know, risk so.

Eve: [00:17:44] Very conservative, yeah.

Jeremy: [00:17:46] Yeah, yeah, yeah. So, you need lots and lots and lots of debt coverage, but it’s really great to be able to get to the point now where I can step away from that. I do worry for the sanity of my replacement, given, you know, it’s probably the same thing that’s happened in the States. You know, we’ve got high inflation here. We’ve got, we have had supply chain issues through COVID. So, we’ve seen massive increases in construction costs in the last two years. In one of the states here, we’ve seen like a 23% increase in construction. So, in the last year, that’s put a lot of projects under pressure. And then we’ve seen, to try and control inflation. The banks have put the interest rates up, so lending is tightening. So, first tome buyers who are our cohort are struggling to get loans. So, you know, it’ll be interesting to see, you know, out of those 15,000 people, how many can actually secure a loan to buy a property. We will see how much demand there still is out of that 15,000 for the next project, when we take the ballot.

Eve: [00:18:48] So then, yeah, I think you’ve answered this question. My question was going to be what did you have to give up on? Like your idealism was thinking, this is going to be like this, but what did you have to give up on to really make this work? Was there anything or have you.

Jeremy: [00:19:02] Yeah, well, I mean, that’s a that’s a really good question. Look, I did think that, you know, that when we first established Nightingale that it was going to be this really light touch thing, right? That there would be a couple of people with a repository of all of the information and they would share it with a Nightingale license to another architect. And that other architect would read through everything diligently. They would understand the risks involved. They would establish a company, go and raise equity, go and secure a debt, and go and buy the site and build the projects. And that it would grow, and it would just go viral. I think that was the that was the dream, right? That the whole thing would kind of happen because it was such light and demand for it. So, the thing that I’ve had to give up on is actually, you know, from being a revolutionary organization, you know, to actually have the impact that we need, we’ve become, yeah, much more mainstream. So, you know, now Nightingale, you know, has a fund it raises, you know, seed fund and equity and debt. Nightingale goes and buys the sites; it engages the architects. So, you know, we still employ.

Eve: [00:20:05] So, you’re really, that nightingale is really making it all happen.

Jeremy: [00:20:11] Yeah. So, Nightingale does everything now takes all the risks. So, as a director on the board, I still take the risk. So, we’re basically taking the risk out of the hands of the architects and centralized it at Nightingale. But we’ve also centralized the expertise. So, you know, we’ve got a finance director at Nightingale, we’ve got, you know, delivery team of development managers and project managers and that obviously gives the banks and the superannuation funds lots of confidence that this team has done it before, and they can do it again and all that expertise is in-house.

Eve: [00:20:45] That’s a lot, that’s huge.

Jeremy: [00:20:49] Yeah. But you know, yeah. So, it’s much less grassroots and it’s much more boring. Yeah. Hey, I mean, still doing incredible things, right? It’s still setting the agenda like, you know, we build.

Eve: [00:21:05] You’re a starter. You don’t like the maintenance, the maintenance stages.

Jeremy: [00:21:08] 100%. I’m a starter, not a finisher. There are other people that are better at finishing than me. That’s absolutely right. Well, it’s got an incredible inertia.

Eve: [00:21:20] I think we have that in common. I like things, but maintenance can be really boring.

Jeremy: [00:21:25] Yeah, And look, it’s got its own inertia behind it now, so it doesn’t need me, you know, anymore.

Eve: [00:21:31] Pretty fabulous. So, what else about the model has shifted over time? This just.

Jeremy: [00:21:35] Well, look, under the interesting thing for us was that we were delivering housing that was carbon neutral and that was meant to be affordable. But I was actually frustrated by delivering not for profit housing that, you know, the first project was 19% under market. In one of the projects we balloted last year was only 13% under market and it’s not for profit. Right? And so, I think the challenge for us was that when we pushed the environmental credentials and the build quality and the design quality and all of those things, it still wasn’t as cost effective as what we were hoping. You know, we were hoping to kind of shave 25% out of the price of housing and we thought that we would get better at that over time and that as we built bigger projects, and we had an economy of scale that we could keep on reducing prices. Yeah, I guess for us it just, it didn’t get cheaper. Even with big projects like Nightingale Village where there’s six buildings all together and we’re sharing infrastructure, you know, the project got more complex and they got better, but they didn’t get cheaper.

Jeremy: [00:22:43] And so, for us, we had to kind of start to think about how do we have impact on affordability, which is when we kind of wrote our own affordable housing policy, you know, a little bit like, you know, the UK where we just allocate 20% of housing kind of salt and pepper through each of the developments now and then those 20% are held by the community housing provider and cross subsidized by everything else in the project, which actually makes everything else in the project slightly more expensive, right. So, we’ve actually made the other 80% slightly more expensive, but we now have 20% that is truly affordable, you know. And so, and it’s complex and it shouldn’t be up to a small not for profit to be delivering affordable housing. But in a city where there has been so much underspending on housing, then I think that everyone’s got to take some responsibility to try and solve for that.

Eve: [00:23:39] So, has any of this rubbed off on the Australian Government?

Jeremy: [00:23:43] Yeah, I mean it’s been incredible. The impact that Nightingale has had is unbelievable. So, you know, so Nightingale now has, there are a number of other companies doing things that look and smell like Nightingale, but they kind of got their own, you know, their own approach to it. You know, there’s a company here called Assemble, and if you talk to Assemble, you know, they say that they developed all of their all of their things, all of their ideas, all their policies at the same time as us, which may well be the case. And maybe everyone was kind of we just all arrived here at the same time. They kind of came a couple of years after us. But the great thing about assemble is their scale. So, they are funded, you know, they’re 25% owned by a superannuation company, all of their sustainability credentials, they match all of our sustainability credentials. So, we’ve got seven and a half stars, not five stars.

Jeremy: [00:24:44] That’s one of our, you know, energy rating requirements. They’re also 100% electric. They also buy 100% certified green power, so no black power. They also have a car share system in that they also have an embedded network that shares the benefit for the residents. And they also have a 20% affordable housing criteria. You know, the difference is that while we’ve got 500 apartments under development, they’ve got 3000. So, I mean, and also, yeah, it’s incredible. And also, they’ve got some really smart people working with them around tax structuring and finance. And they’ve been able to work really well with government on getting government backed finance, you know. So, yeah, I think that they’ve approached it in a kind of more intelligent and strategic way. But it’s really great, right? So, it’s not just Nightingale now. It’s also a company that has to generate returns for a pension fund which is doing this and showing that this model can be replicated at scale and profitably and still everyone wins on it and most of their model is build-to-rent, but they’re building buildings that are largely…

Eve: [00:25:55] Which is unusual in Australia.

Jeremy: [00:25:58] Yeah, I mean Australia is weird, right? So, most of the apartments here are kind of built to sell. Most of the rental apartments are owned by mum and dad investors, you know. And so, the build to rent market here, you know, the rental market is only just recently turning to kind of, you know, whole buildings being owned by a property companies. So, we’re seeing like Heinz coming out here, Greystar coming out here, so, internationals coming here to build, you know, buildings that will be rented out. So, it’s good to have Assemble here as an Australian, you know, version of that.

Jeremy: [00:26:35] But we’re also seeing boutique developers, Milieu here, who sell beautifully designed. Their whole schtick is beautifully designed buildings, relatively small buildings. There may be only 50 apartments in each building. But what we’ve seen from them is that they engage Breathe architecture to work on a project with them. And basically, they said we want to build all of the sustainability outcomes of Nightingale. We want to add some optionality. So, if our purchasers want to buy a car park or buy an individual laundry, they can. And so, we’ll just offer those as optional extras and then we’ll sell it at a different price point. And we’ll make sure that it’s designed really well and that it’s, you know, that the specification is slightly better. And so, we’ve seen Milieu now become a B Corp certified company delivering buildings that are carbon neutral in operations, meeting all of the Nightingale kind of design standards and then selling to the kind of the next tier up of second or third home buyers, you know, and it’s been really good to see them delivering great quality with those same sustainability and community outcomes.

Jeremy: [00:27:51] And in fact, around here, Eve, you’ve been to this suburb that we’re in, Brunswick, in the north of Melbourne here, it’s kind of a, you know, I guess, let’s call it a Williamsburg of, you know, of Melbourne, right? It can be gritty, and it can be great. And it’s pretty diverse. But what we’ve seen around here now is that no developer builds here now, who is serious. No one here plumbs gas into their building, no one here builds something that’s kind of under seven stars. You know, everyone who’s building here now knows that the purchasers in and around this area expect that their building is going to be energy efficient and there’s going to be 100% electrified. So, it’s been really interesting to watch the market shift. And I think that, you know, the epicenter is here around where we’ve built 14 nightingale buildings in this suburb. And I think that it’s kind of rippling out through the rest of Melbourne and then it’ll kind of ripple up the East coast here and get to Sydney and Brisbane.

Eve: [00:28:54] What about other countries?

Jeremy: [00:28:58] No, no, no, that’s a really good question. I mean, yeah, it’s interesting that lots of people around the world know about Nightingale, and we’ve spoken to people in London, you know, Sweden, Canada.

Eve: [00:29:12] And plenty of students who know about Nightingale and Breathe.

Jeremy: [00:29:16] Yeah, yeah. It’s really interesting. But New Zealand has paid a lot of attention. So, New Zealand is, you know, Australia only has 25 million people. New Zealand only has 5 million. It is the most beautiful place. It’s incredible.

Eve: [00:29:33] It is gorgeous, yeah.

Jeremy: [00:29:34] The New Zealand central government has a housing crisis on its hand that the cost of housing in New Zealand is like, you know, I think it’s like know third after, you know, Paris and Hong Kong or something like it’s crazy how expensive housing is in Auckland. The central government from New Zealand sent a delegation of about ten senior planners, planners, urban designers out to come through, and economists, to come and walk through the commons and look at Nightingale One. They’ve recently announced a new housing policy under their incredible Prime Minister, Jacinda Ardern.

Eve: [00:30:12] I know. She’s amazing.

Jeremy: [00:30:13] She’s amazing. Yeah, she’s like, Oh, there’s a problem with housing. Let’s write a housing policy and let’s actually change planning policy to solve that. And basically, when that delegation met with me, they said, what is the biggest barrier to building affordable housing? And I said, it is, in Melbourne, it’s actually third-party objection. Right? So, it’s.

Eve: [00:30:36] Yeah, I was going to say the same thing. Zoning. Well, it’s, yeah, objection rights are really strong there, but definitely zoning impacts what you can do.

Jeremy: [00:30:44] Yeah. So, one person living, you know, 500 meters away, you know, or half a mile away can put in an objection and delay the entire project and cost the project hundreds of thousands of dollars. Absolutely, and it’s alive and well here. And the thing that they complain about is lack of car parking, despite the fact that our road network is absolutely at capacity and that the City of Melbourne has 30,000 available car spaces in existing buildings. And all we need is an app called Parkhound or Spacer to link people up to those things. So, we don’t have a car parking problem, we’ve just got a management issue about where those people being able to find those car spaces, so car parking and height and so basically anything over two stories, everyone in Melbourne is up in arms. And so, basically what they did in New Zealand is that they heard that, and they’ve got a new policy which says that anything up to five story, there’s no third-party objection rights, even if it’s got zero car parking. So, they’re happy to waive the car parking to zero because construction of basement is, like labour costs are very high, really high in Australia and New Zealand. We’re literally saving like 15, sometimes 20% of the housing cost out by taking out basement car parking.

Jeremy: [00:32:08] So, so New Zealand has changed their planning rules and Breathe have been working with the with the kind of community-based developer, believe it or not, with an incredible constitution out of Hamilton and New Zealand and a local architect called Edwards White in New Zealand. And we’ve been working with them to build their version of Nightingale. You know, that’s specific to New Zealand. And so, we’re working on a project with them. But the first project isn’t like Nightingale One, like 20 apartments. It’s like Nightingale Village. So, it’s, you know, it’s eight buildings by eight different architects, all carbon neutral in a village. And we’re working really closely to make sure that we knocked that out of the park and we’re building the infrastructure around that. It’s called Project Korimako. Korimako is a New Zealand bird, you know, as opposed to, you know, the Nightingale. Anyway, I’m really looking forward to. So, the Breathe team kind are working with them and we’ve taken all the learnings from our time at Nightingale over there to kind of try and, you know, just leapfrog kind of five years of R&D. So yeah, it’s, it’s definitely it’s definitely spreading.

Eve: [00:33:16] Interesting. So, in the meantime, what’s happening with Breathe? I know a little bit because, full disclosure, Jeremy is my architect on a project in Australia which has suffered through the pandemic and objection rights. Right?

Jeremy: [00:33:33] Well, I mean you saw that there was one objector on your project, which was a really aspirational project, not an overdevelopment. And we had to spend a lot of time with that one objector, you know, to kind of work through that was painful. And now our big challenge is funding, right? Funding and finance.

Eve: [00:33:53] Well, also the contractor, it’s a very, very dense urban site. The contractor is really concerned about how he’s going to build there. And so, you’re not going to like this but he says, you know, they need the whole road. That objector went away because we gave them an accessible parking spot, which the contractor says he now needs. It is really, I mean, I’ve never seen, I mean, I’m in a small town. I know that entitlements and zoning moves very slowly in places like San Francisco, but I’ve really never been through anything quite like it. Especially with the pandemic. And everyone disappeared and there were no phones, and no one responded to email.

Jeremy: [00:34:40] Yeah, it was challenging, wasn’t it? Anyway, we’ll get there, Eve. So, what was the question again?

Eve: [00:34:47] So, like, what’s happening in your architecture studio?

Jeremy: [00:34:53] Yeah, okay. Okay. Right. So, you know, we’ve kind of specialized in sustainability for a long time. And when I say specialized, it’s just been something that we’ve always done. I think the big change for us in the last couple of years is that one of our great architects, Bonnie Herring, was the director of architecture here, we’ve now made her a director of sustainability. We’re now doing lifecycle assessment on all of our buildings. So, we’re one of three firms in the country that are kind of measuring carbon and trying to deal with whole of life carbon or embodied carbon, which has been interesting. And, you know, everyone says to us, you know, it’s funny that you guys tend to focus on narrow your focus down and doesn’t that cost you work? But interestingly, by narrowing our focus, we’ve got clients like ANZ Bank. So, you know, we’re a relatively small practice. You know, I think there’s 27 staff here and ANZ Bank are again one of the big four banks here, and they’ve been working with us in the last couple of years about changing their branch rollouts to being, you know, instead of constructing branches, basically working on a system where we build, you know, a carbon neutral, like kit of parts or furniture installation basically that can be installed and then removed at the end of each lease and taken to other branches and, and all the parts can be used. There’s a barcode on all of the parts so you know.

Eve: [00:36:23] It’s like knock down furniture for ANZ Bank.

Jeremy: [00:36:25] Exactly, exactly. So basically, kind of, and the incredible thing about that is, you know, just in the 21st century, being able to design everything in 3D, you know, prototype everything, build a prototype branch, test everything, and then start to roll out, you know, branches. And so, we basically built this kit of parts, a 3D model, a handbook, basically like an IKEA catalogue showing how it all goes together. A little YouTube tutorial to future architects working on these branches.

Eve: [00:37:02] A phone number.

Jeremy: [00:37:04] No phone number, but, you know, so we designed that. We rolled out the first three branches together with ANZ and then we worked with their three other architects to then take them through it and then we worked with another three. And so, we’ve kind of been spreading how to do that, you know? Yeah, like a tutorial, but you know, they’ve just finished their 60th branch and they’re rolling out across the country, so they’ll roll out hundreds of these things. So, these carbon neutral branches in operation with a massive reduction in embodied carbon, that’ll be totally circular. So, there’s no glue in these things, Everything’s screwed together or bolted together. So, at the end of a component’s life, it can all be, you know, broken down to its kit of parts and reused. I mean, that’s been pretty interesting.

Eve: [00:37:48] For people listening, they’re wondering, is this really what an architect does? So, you know, is this the role of an architect?

Jeremy: [00:37:58] Well, that’s a really good question, right? Because what is an architect in the 21st century? You know, I’m on the National Council of the Institute of Architects in Australia. And, you know, a lot of architects think their job is to draw buildings. You know, and I would say to any architects listening that that is absolutely not our job, that, you know, 39% of all carbon emissions on this planet come from the built environment. And that, you know, we’re in a time of massive climate crisis and that we as a profession need to be asking ourselves big questions like, eh, should we be drawing a building at all? Or should or should we be finding a different solution? So as architects, we’re trained as systems thinkers, you know, Eve, you’re trained as an architect, and you know.

Eve: [00:38:46] It’s a great training, it’s creative, and it’s systematic and it’s, you train to be a problem solver and make something from nothing. Yeah.

Jeremy: [00:38:55] Yeah. Correct. And so what I would say to architects is to use that thinking to say, what is the answer to this solution? Is it building more basement car parks or is it actually just introducing the council to apps that already exist, or is it building an app? You know, like what is the answer to the problem? And it’s not always drawing a building, you know? So, yeah, I think that where, you know, yeah, we probably approach architecture a little bit differently to traditional firms. I’m not a big fan of single, you know, residential family houses, you know, or the inequity in that that so many architects focus on this fetish-ization of you know I want to do this big luxurious house, you know, and I want to get it photographed and put in a magazine.

Jeremy: [00:39:48] But if you think about the impact that you can have, you know, spending all that time with a pedantic, wealthy client to build their one dream house as opposed to you could be working with Aboriginal Housing Victoria, you know, and building housing for First Nations Australians who have been, you know, pushed off their own land in this country, you know, or you could be working with ANZ to say, well you’re about to roll out 400 branches, how do we pull out thousands and thousands of tonnes of carbon out of that and how do you improve the working experience for all of your staff through that, by, you know, introducing Biophilic design and flooding the place with plants and pink UV grow lights so that at night time when the branch closes, it glows pink, you know. So, yeah, I think that we have to ask ourselves. You know, this is post, we are we exist post peak oil. We exist post, you know, the debate on climate change. There is no debate now. And we have to choose who we want to be in the profession and what we want to be doing, but it shouldn’t be adding to that 39% of carbon emissions. It shouldn’t be adding to social injustice. You know, we get to be change makers and we should, you know, focus our time and our energy on that.

Eve: [00:41:14] Yes, I totally agree. For me, it’s also that buildings make better cities for everyone. And I get.

Jeremy: [00:41:25] Absolutely.

Eve: [00:41:26] Really upset when all the focus is on that special Italian marble finish inside, when really, it’s the external walls of the building that are going to make a street or a place or a square, really a wonderful, really place to be, you know.

Jeremy: [00:41:43] I had an architect at Breathe the other day, quote, a famous quote to me, and he said, Jeremy, God is in the detail. And I banged my fist on the table and I said, absolutely not. Not in this place. You know, it’s in the big idea and it’s in the ethic of what you’re doing, you know?

Eve: [00:42:02] But on the other hand, your details are gorgeous. So…

Jeremy: [00:42:05] Yeah, absolutely. I mean, but those two things have to coexist, right? You know, you can’t just obsess about a detail without actually if you think about Bonnie in the way that she worked and designed the commons, you know, every detail is about a reduction. How do I take things out? And so, it’s so reductive that it’s really, really beautiful. But there was a reason for that, right? A sustainability reason, a cost reason. So yeah, but also Eve, interesting that you studied architecture, but you saw that what actually needed to happen in the built environment was funding for the right type of projects. So, Small Change is an example of I teach at Melbourne University, I teach Nightingale night school to thesis students, you know, every second semester at Melbourne University. And I become incredibly proud when I hear about one of my graduates going out and they might work for Lend Lease in and become the head of their sustainability, you know, or they might go and work for a property developer and become a development manager there, or they might go and work for the public housing team in Singapore, you know. But I get really inspired when I hear that architects understand that sometimes the most impact they can have is not drawing buildings but using their systems thinking to actually make massive change. So, I think the key is getting up upstream, right? Architects are always downstream. You’ve got to get up to the source to be able to kind of change be outcomes.

Eve: [00:43:45] I think that’s right. And I don’t know if it’s changing, but I taught in architecture school for a while and I found it incredibly myopic that students were taught to design just buildings and very little time was spent on everything else they could do with their education.

Jeremy: [00:44:05] I think it depends a lot on what university, you know, like I was at the Royal College of the Arts a couple of years ago, you know, with a woman, Tash, there seeing what she was doing. And she was there really trying to get, you know, these architects in London thinking really about systems, big things, you know, how do we, you know, how do we as a profession have, massive impact which leads to massive change.

Eve: [00:44:32] Yes. So, I’m going to ask you one more question. When are we going to build a Nightingale project together in the US? That’s what I really want to do.

Jeremy: [00:44:43] Well I mean, if you think of if you think about what the barriers are. So, can we get a great architect in the US? Absolutely. You know. Can we find a site with lots of opportunity in the US? Like, absolutely. You know, I mean, often, you know, we’ll try and align strategic planning support with community support. You know, and you can imagine that there would be states or cities within the US. I mean, it’s obviously quite divided at the moment, but we but we would need to go to the right place to do it. And then the biggest piece of the puzzle is funding, you know. So, and I think that…

Eve: [00:45:22] It always is. Yeah.

Jeremy: [00:45:23] And I think that, you know, that you could solve that. So, and well, actually the last piece of the puzzle is that the Nightingale Housing Board has said absolutely no to any, the reason that Breathe are working with the New Zealand crew is that the Nightingale Housing Board have said Jeremy No we’re, we’ve got a sole, let’s just solve Melbourne, you know, and I’ve kind of pushed them to, you know, Adelaide to the next state to the west of us and I’ll push them north into, into New South Wales. So, we’re kind of in a few states here. But yeah, I think that, you know, we could call it the Eagle.

Eve: [00:46:07] I love this idea of sustainability through reductionism. Like I worked in this Pittsburgh market, which is a really soft market when I was doing real estate development. And I had to reduce everything down to the bare minimum for different reasons, just because the market couldn’t support anything else. But there are now places here where it can support, it can support more. But I mean, you know, my own apartment has polished concrete floors because we really couldn’t afford to cover it. And I’ve got, you know, concrete, raw concrete block walls because painting it just wasn’t part of the budget. I think that’s beautiful. You know, I think that it’s exposing that, you know.

Jeremy: [00:46:50] But if you detail it well, I mean, the fascinating thing is if you think about the Commons, you know, Bonnie being so reductive that even the surfaces. So, all of the tap ware that we used to specify in Melbourne was cast in brass and it made it made in Melbourne, cast in brass sent off to the chrome platers so to be electro plated with chrome. And then it would come back to the manufacturers that would brush the chrome, that would repackage it, they would send it out. And chrome plating is a very toxic process, anyway. It’s very, very energy intensive and it requires all of this transport between the brass caster and the chrome platter and back again. So, Bonnie pulls all of the chrome plating off, you know, talks to the manufacturer, gets them to agree to give us basically the rough cast brass, you know, just buff off.

Eve: [00:47:40] Which are beautiful, right.

Jeremy: [00:47:42] Absolutely beautiful. And now in Melbourne, you know, find me a building you know, whatever, ten years on that doesn’t have bar store furniture and brass tap you know. So, it’s actually, it’s become an aesthetic and I’m not saying that again, maybe it was just the time, but you know, it’s become an aesthetic in its own right in this city. But it’s really come out of, you know, Bonnie Herring pushing this, just really pushing the reductionist agenda. So, yeah, I mean, it’s interesting. And then if you think that all of the apartments around here, we pull all the ceilings out to give us, you know, taller ceiling heights and to not put all of the, you know, embodied carbon in those ceilings and to expose all the thermal mass to give us really stable temperatures. You know, we’ve been pulling the ceilings out since 2014 and now no apartments around here, you know, like they’ve all got exposed concrete ceilings, you know.

Eve: [00:48:52] So, there was this language in construction and building homes that wasn’t really there for good purpose, right. And you’ve stripped it away and it’s really quite a beautiful aesthetic and people are adopting it, it’s a great thing.

Jeremy: [00:49:07] It’s interesting. Eve, I better run because I’ve got to go and talk to someone. So good to speak with you.

Eve: [00:49:15] And I want to, I’ll want to know in two or three years where you are then, because this was enormous progress, especially given that there was a pandemic during all of this.

Jeremy: [00:49:25] Yeah, but I think that I’m sure it was the same in the States. We were expecting the sky to fall, and everything was upside down. So, you know, housing prices went up, construction prices went up, yet demand went up like nothing made any sense. So, yeah, you know, I am still expecting the sky to fall, Eve.

Eve: [00:49:49] I’m hoping to come to Melbourne sooner and we’re going to catch up again then. Thank you very much.

Jeremy: [00:49:56] Thanks, Eve. Thank you.

Eve: [00:49:58] You too. Bye.

Eve: [00:50:16] I hope you enjoyed today’s guest and our deep dive. You can find out more about this episode or others you might have missed on the show notes page at RethinkRealEstateforGood.co. There’s lots to listen to there. You can support this podcast by sharing it with others, posting about it on social media or leaving a rating and review. To catch all the latest from me you can follow me on LinkedIn. Even better, if you’re ready to dabble in some impact investing yourself head on over to wefunder.com/smallchange, where you can invest directly in Small Change and our mission to democratize capital formation to create impact in commercial real estate development. A special thanks to David Allardice for his excellent editing of this podcast and original music, and a big thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Jeremy McLeod

Flat is the new normal.

January 10, 2023

“Mass-market production and the commodification of housing has led to a ‘flattening’ of design into a limited set of bland, homogeneous options” writes Diana Ionescu for Planetizen.

Once upon a time, houses used to have unique features. Today, if you drive around any American city, you’ll see neighborhoods full of cookie cutter homes and rows of surprisingly similar, cheaply constructed apartment blocks. Architecture critic Mark Lamster, from Dallas Morning News, writes: “To call this ‘architecture’ is an insult to the art. Rather, think of these buildings as spreadsheets bumped up to three dimensions.” He calls this “The Flattening, a gradual draining of character from just about every corner of our lives.”

How did this happen? Cookie cutter suburbs are not new, but the trend seems to have accelerated. The status of houses has changed from family home to commodity. This has led to their design being driven purely by economics. Builders who want to appeal to a wide range of buyers, to embrace the demand for greater efficiency and to use the cheapest materials available, now favour quantity over quality and character.

Will this shift be kind to us in the long run? We think not.

For economic and sustainable reasons, we need to shift our focus to long-term growth of cities. This means designing and building a variety of housing types for the ever-increasing variety of family types. And it also means designing and building to improve our cities, making them delightful places to live, not flattening them.

Read the Planetizen article here or the original Dallas Morning News article here.

Image by BrianScantlebury licensed by Canva

Counting on Crowdfunding.

October 26, 2022

Jamison Manwaring is the co-founder and CEO of Neighborhood Ventures, a remarkable Arizona-based real estate crowdfunding company, focused on value-add multi-family properties.

It’s a real estate company, for sure – they buy, hold and sell property. But the capital plan is innovative, with a growing pool of state residents who are permitted to invest through Arizona intrastate securities law. Nine successful projects later, Jamison is now taking his plan to the national stage with their latest project, a short-stay hotel he wants to repurpose into affordable housing. And he’s raising funds on SmallChange.co, not just once, but a second time now.

Jamison attended business school at the University of Utah where he graduated with a BS in Finance. He was always interested in finance. He loved it enough to become president of the finance club. Even at a young age Jamison’s determination shone through. He wanted to work in New York, at a top finance firm. But those companies have their pick of Ivy league school graduates, which he was not. So, every Thursday night he flew the red eye to New York to network.

You’ll have to listen in to hear the rest of the story.

Read the podcast transcript here

Eve Picker: [00:00:06] Eve Picker: Hi there. Thanks for joining me on Rethink Real Estate. For Good. I’m Eve Picker and I’m on a mission to make real estate work for everyone. I love real estate. Real estate makes places good or bad, rich or poor, beautiful or not. In this show, I’m interviewing the disruptors, those creative thinkers and doers that are shrugging off the status quo in order to build better for everyone. And speaking of building better, I’m very excited to share that my company, Small Change, is now raising capital through a community round that is open to the public. Small Change is a leading equity crowdfunding platform for impact investment in real estate. For as little as $250, anyone 18 and over can invest in Small Change, helping to fuel our growth as we disrupt the old boys club of capital that routinely ignores so many qualified people and projects. Please visit wefunder.com/smallchange to review the full details of our raise and to make an investment if you can. And remember, investing is risky. Don’t invest more than you can afford to lose.

Eve: [00:01:39] Today I’m talking with Jamison Manwaring, for a second time. Jamison is enjoying success as the co-founder and CEO of Neighborhood Ventures, an Arizona based real estate crowdfunding company focused on value-add multifamily properties. Always interested in finance, Jamison went to business school and studied finance. He loved it enough to become president of the finance club. Even at a young age, Jamison’s determination shone through. He wanted to work in New York at a top finance firm, but those companies have their pick of Ivy League school graduates, which he was not. So, every Thursday night he flew the redeye to New York to network. But wait, if I tell you what happened next, I’d be a spoiler. So, listen in to hear the rest of the story.

Eve: [00:02:39] If you’d like to join me in my quest to rethink real estate, there are two simple things you can do. Share this podcast or head over to rethinkrealestateforgood.co and subscribe. You’ll be the first to hear about my podcasts, blog posts and other goodies.

Eve: [00:03:02] Hi, Jamison. It’s great to have you back on my show.

Jamison Manwaring: [00:03:05] Hey, Eve. Good to be back. As I was mentioning in the intro, I’d much rather be in Pittsburgh right now. You’re 80 degrees. We’re supposed to get 99 degrees and it’s still mid-September. So, we’re ready for the cooler weather here in Phoenix. But real estate is hot as well.

Eve: [00:03:23] As hot as the weather. That’s right. So, I want to go back to your background, which is solidly in finance, all the way back to college when you majored in finance. And I’m wondering what led you to launch Neighborhood Ventures and focus on real estate?

Jamison: [00:03:39] I didn’t know what I was going to study when I got to college, not unlike many people. And started in accounting, did some accounting classes, ended up landing with finance because what I knew I wanted to learn was how to analyze a business. And I kind of look at finance as the language of business. You know, if you are a good entrepreneur and you can start a business at some point, you’re going to need to understand what’s happening in the business. And I had actually started a small business right out of high school that was like a for sale by owner service. At one point we had a couple hundred listings and we charged people a flat fee, like $1,000 fee to list their home and would market it for them. And the business was great at times and then at times it wasn’t great, and I really didn’t understand why, what was driving that, what was beneath the results.

Jamison: [00:04:40] So, I ended up knowing that I wanted to go to college to be able to learn how to analyze a business and ended up in finance, which is where trying to understand a business for either investment purposes, if you’re from the, looking at the company kind of outside in or if you’re inside the company learning how to manage the business properly, where to spend money, where to pull back capital, where to reinvest more capital. And so, that was a very useful skill that I’m really happy I ended up sticking with that major.

Eve: [00:05:14] That’s where you started with finance. So, take me on the journey from there to Neighborhood Ventures.

Jamison: [00:05:20] Out of college, well, my junior year of college, I decided I wanted to go to Wall Street and I don’t know if I had seen a movie. I’m trying to think back at the time it was after the great financial crisis. So, some of those movies were out, the Big Short was out. And I was definitely intrigued by everything that was done by the investment banks, the importance of that in our economy and the importance of the work they do. And so, I determined that I wanted to go get to Wall Street. And I was from University of Utah, which is not a school that the investment banks recruit at. They don’t really consider.

Eve: [00:06:02] Not Ivy League, right?

Jamison: [00:06:04] Yeah, they really focus on those Ivy League schools. So, I had to go in what I call the side door and I started flying out on a Thursday night redeye after class, I didn’t have class on Friday. I’d fly out to New York Thursday night, redeye. I would arrive at about 6:30 a.m. in JFK, JetBlue flight. And I would start reaching out to folks. I would try to have a few meetings, set up an advance, just an info session. So, I would ask, I would tell folks, hey, if I can have 15 minutes of your time, I’m just trying to, I’m a college student. Which kind of opens people, opens doors. And these were alumni from either University of Utah or BYU, which there’s a lot of close ties there. And I’m here in New York for the day, I would love to be able to come by and meet. What I also found is Friday afternoons, a lot of people on Wall Street, it’s a little bit of downtime. They kind of have to be in the office, but they don’t mind having, spending some time with somebody to get off of their desk. And so, I did that for a couple of months. I probably did a half a dozen trips.

Eve: [00:07:19] That’s exhausting!

Jamison: [00:07:19] It was, and I spent the night at the beginning in a hostel with eight other people. And that was a new experience for me. I was like, I got to get out of here.

Eve: [00:07:32] At least it wasn’t a park bench, right?

Jamison: [00:07:34] Yeah, it was close. It was about, I think it was 25 bucks a night. And then even the cheapest hotel was like 125, which I couldn’t afford. So, I ended up meeting a lot of great people who even to this day are I’m connected with and view them as mentors through that process. So, it was kind of one of my experiences that was really hard. But you look back and you’re like, I’m very glad I did that, and I don’t know if I could do it again.

Eve: [00:08:05] It’s pretty gutsy. I don’t know how many people would take that on. You know, that’s.

Jamison: [00:08:10] Well, and being from Utah, the people who know say you have to do it that way if you want to get there.

Eve: [00:08:16] Interesting.

Jamison: [00:08:18] You got to go hustle. I ended up meeting an alumni who, I didn’t ask him for an internship, but we connected a few times and he said, Hey, would you be interested in doing an internship with us? He was at Barclays Capital, which had bought Lehman Brothers. He was a senior person there. And I said, Yeah, I’d love an internship. And now that you ask, I would love one. And he got me an interview, phone interview. And then when I passed that, they flew me out and did a super day. I didn’t know what would happen. I didn’t have any other options for that, that internship. But they ended up giving me an offer. And I think they paid pretty decent, enough that I could move to there for the summer, live in New York.

Eve: [00:09:08] Not have to stay in the hostel, right?

Jamison: [00:09:10] Not have to stay in a hostel, which was very exciting. And I worked on a sales and trading floor there. Selling equities and talking about equities that. Basically, what we did was we would promote the research of the firm. Hey, this is a stock that we like. This is stock we don’t like. Talk to clients about their thoughts on it. And it was a great experience. I ended up moving from the sales floor to the actual research floor, which I’m very happy I did. That’s where you can really do deep dive financial analysis on companies. And I worked on a few IPOs and ended up moving to Goldman Sachs in their technology team and working with software stocks.

Eve: [00:09:53] That’s pretty impressive from Utah.

Jamison: [00:09:56] Yeah, and it’s, kind of, back to your question. One of the things that I learned through this time was I loved investing, but I didn’t like equities in particular, tech equities. They’re very volatile. They have big swings, daily swings, sometimes especially software stocks up 15, 20% after earnings down 15 to 20% after earnings if they miss. And it did not suit me when it came to my kind of temperament.

Eve: [00:10:33] Yeah, I get that. It doesn’t suit me either. Maybe it’s a control thing. You kind of got to understand what’s making those swings happen, right? And it’s pretty hard to get that.

Jamison: [00:10:46] And there’s a lot of factors in public equities that are outside of our knowledge and our control. There’s a lot of quant funds that are just trading on the algorithm, and they don’t make sense, but they move the market. I was certainly turned off by any impact I could have. Right. You’re just one person in such a large pool of people. So, I learned a lot there, but I began looking for my next option and knew that I wouldn’t be there forever. One of the companies I worked on their IPO was LifeLock. They’re based in Tempe, Arizona, and had grown a business to several million subscribers around identity protection. I worked on their IPO, and I got to know the CEO and the CFO, and through that process I kind of let them know, Hey, if anything comes up, I would be interested in getting out of New York and getting back west and ended up moving out here in 2015. When I joined the company, our stock was $8 a share. And I knew it had a long way to go, and that’s why I wanted to join. I saw it as a real opportunity. We ended up selling to another company 18 months later for $24 a share, 3x.

Eve: [00:12:02] That’s pretty good. Yeah.

Jamison: [00:12:04] So, that was great. At that point, I didn’t have a job because we got acquired by a bigger company, but I had bought a property when I was in New York, a ten-unit building, in my home, near my hometown of Idaho. And just kind of going back to what we were talking about before, Eve, how much I didn’t like software stocks and equities, public equities. I really liked, for about a year and a half, that I had had this little ten unit building on the side. I don’t know, there was just something about that it was physical that I could see it, that we could improve the operations, we could enhance what the property looked like from the street, all those little things. And then we would see big improvements in our revenue. And I really love that experience. And I was kind of just doing it for investment. I didn’t expect that I would go into that now, looking back. But I could clearly see that I like that a lot better. And I think you have to enjoy what you do. And so, that was one thing that, it was pretty clear to me. I wanted to do more of that and less of public equities.

Eve: [00:13:16] So then, tell us about Neighborhood Ventures, because that’s what grew out of that love, right?

Jamison: [00:13:22] Yeah. So, I had actually followed you and some other folks in the industry in the mid 2000, 2014, 2015, 2016. My company got, Lifelock got bought out in 2017, and a lot was happening in the crowdfunding space. And I wanted to figure out how could I raise more capital to do more projects. I had done this one project of my own on the side, and I really saw crowdfunding as a unique way to do that. I didn’t want to do the old-fashioned country club route where you go out and get a few wealthy people to raise, to write checks. That didn’t seem very interesting to me. And I wanted to do something new and different and creative and kind of a new challenge. And I was looking at a building to potentially buy and try to crowdfund. And my broker, I told him what I was looking to do, and my broker said, well, you know, my boss talks about real estate crowdfunding all the time. And I said, well, what’s his name? He said, John Kobierowski.

Jamison: [00:14:27] And I ended up emailing him and he had been an apartment veteran for 30 years in Phoenix and was very interested in launching a real estate crowdfunding company as well. And he brought a lot of industry knowledge and over 30 years in the Phoenix market. It was kind of an instant match where I said, well, let me focus on the capital raising, the crowdfunding, the technology side, and you could really focus on the real estate side. So, we realized that we had a good match. We’re very different in the skills that we bring and what we like to do, but that’s when we launched the company. And the name Neighborhood Ventures, he had already bought and already had the domain name. And so, we, I love the name and we launched in, basically 2018 was our first offering.

Eve: [00:15:22] So, let’s talk about that a little bit. Like, what are you trying to accomplish with Neighborhood Ventures? What is it? What does it look like? What’s the business?

Jamison: [00:15:30] I was talking about this yesterday in a team meeting with our team at work, at Neighborhood Ventures. And I think it’s important to go to your why. Why you do what you do? Your motivation. I think that’s very, it’s important to me to understand why am I doing what I’m doing? And I also look at that in other people. If somebody is being very friendly to me because they’re trying to sell me a pair of shoes at the mall, I kind of question that. I’m like, well, they’re just being, you know, they’re just buttering me up so they can sell me something. So, I think motivation matters a lot. And I don’t like it when, in that situation I can see real quick, okay, they’re just trying, they have an angle here, right? So what Neighborhood Ventures are, it’s very simple.

Jamison: [00:16:22] With John and I, we want to get more people involved in the opportunity to invest in commercial real estate. That is, has been our mission from day one. It’s always been a really good asset to own. That’s what drew me to it. It’s very stable relative to other assets. It goes up in value, it produces cash flow. There’s all these things about it that are really appealing, but it’s only been available to a small group of people. So, what our mission is and our reason why we started this is we want to get a lot more people involved. And we have big ambitions, we think we can grow that to a lot of folks nationally, there’s a big pool, about 40 million people nationally who have funds they want to invest, but they don’t reach that accredited status, which most people have to reach to invest in most projects on on crowdfunding platforms.

Eve: [00:17:20] So that’s 97% of the population, right? Approximately, yeah.

Jamison: [00:17:24] Yeah, yeah. And young folks right now who want to start putting money away. I think commercial real estate is very appealing, if they can invest in smaller increments. For us, it’s $1,000 minimum, and then they can start putting even $100 increments after that or whatever it might be. But you can start with small amounts and start to build that nest egg. And then we do have larger investors who like to do more than that, too. But our goal is to broaden that group, to allow a lot of people to own this asset. And I think we’re in the second inning so far and we think the next few years are going to be really interesting for us.

Eve: [00:18:08] So the buildings you focus on, what are they like?

Jamison: [00:18:13] John’s an expert in multifamily, so we’ve largely focused on multifamily projects in the Arizona market, both in Phoenix and then Flagstaff, which if you’re not from Arizona, Flagstaff is about 2 hours north of Phoenix. And when it’s 110 in Phoenix, it’s 90 or 85 in Flagstaff.

Eve: [00:18:36] Balmy.

Jamison: [00:18:38] And it’s 2 hours away. So, it’s pretty amazing. The elevation is pretty, is a big factor in that. But if you’re in Phoenix and you can get up to Flagstaff, it’s an amazing place. It’s kind of almost like a a Jackson Hole or an Aspen or a Park City. One of these cities, it’s mountain town, but it’s great for Phoenix. So, we have two projects in Flagstaff. It’s an area that’s landlocked. So, there’s not much development going to happen there, and if you can get a piece of property, it’s a good property to hold on to. And so, we largely focus on finding properties that are in these core areas that have good trends happening there, but they need to be repositioned. The assets are underperforming for some reason. A lot of times it’s because the amenities aren’t up to date. There’s been deferred maintenance, there’s poor property management, and we can look at the other properties in the neighborhood and see that the rents are much higher in those properties than in this property. And that’s when we act. We say, look, we know we can go purchase that property.

Eve: [00:19:46] So really, value add.

Jamison: [00:19:48] Yeah.

Eve: [00:19:49] And that’s smart because you can probably offer a return much earlier because the building continues to cash flow or starts to cash flow pretty quickly, right?

Jamison: [00:20:00] That’s right, yeah. We typically don’t pay distributions for the first year, but it cash flows earlier. Sometimes it’s been four or five months. We’re paying distributions to investors.

Eve: [00:20:12] That’s pretty amazing. So, you know, you actually did an offering, it was a three-way offering, and one part of it was on my funding portal Small Change. And that was a pretty big repositioning of a rather worn-out looking hotel. Do you want to talk about how that went?

Jamison: [00:20:34] Yeah, we still, we own the asset. It’s performing well. This was a, as I think the way you put it, worn out hotel in a neighborhood in Mesa, which is a bedroom community to Phoenix. Originally a very good property, well built, beautiful pool courtyard all of the units were suite, so they all had kitchens. But the manager who had owned it for ten years really ran it into the ground and there was illegal activity going on at the property. The Mesa police were, and the fire department were locked out of the property. The owner was very antagonistic to them for a lot of interesting reasons. And it was the blight of the neighborhood.

Eve: [00:21:21] How many units was it? It was pretty big.

Jamison: [00:21:23] 120.

Eve: [00:21:24] Right right. It’s a big blight.

Jamison: [00:21:27] And here it sits in a really, an up-and-coming neighborhood. But it was pulling the neighborhood back. There had been a Starbucks that popped up 100 yards from the property. There’s a Costco a quarter of a mile away. It was on the up and coming, but this place just continued to drag it down. And it was the place that bad people came to do bad things, frankly. And I’m sure there was other people there that were just looking for a cheap place and that’s where they stayed. So, when we saw it, we saw the potential. And ultimately, we are planning to get it rezoned to multifamily. We’ve been working with the city of Mesa on that, and that does take some time. But until then we operate it as a vacation rental and it’s doing very well. And ultimately.

Eve: [00:22:20] I gather you made improvements to it, right?

Jamison: [00:22:23] Yeah, that’s right. So, we went in and new carpet, new flooring, new fixtures, new cabinetry, new paint. And you know what? This didn’t take a lot. It wasn’t a gut. It was kind of a they call it lipstick and eyeshadow. You know, the bones were good, right? So, we just went in and made it look good, made it look like it’s a place that you’d want to stay, freshen it up, make it contemporary. And people love staying there. And we do want to add it as a multifamily, as an apartment building, because there’s a shortage of affordable housing across the board and definitely in Phoenix. And these units, I think the city will be able to get this rezoning and folks will, for example, a normal two-bedroom, one bath in Phoenix is about 1800. And I think ours is going to be more like 1500. So, to be able to add 120 units onto that will help.

Eve: [00:23:23] How many buildings have you raised funds for now through Neighborhood Ventures?

Jamison: [00:23:27] We’ve done 13 projects so far. 12 of them have been multifamily, and then we did do one retail project. We brought on a retail expert. And that’s a project in Tempe that’s three buildings. One’s a fast-food restaurant, one’s a Dunkin Donuts, which we’re in the process of building right now. And then we have a third vacant that we’re going to start leasing up soon, once the Dunkin Donuts comes in and their sign goes up, then we’re going to lease that out. So, that’s been a really fun reposition, very similar idea. This was before a cannabis shop, kind of a rundown mattress shop. And, you know, not a place that, not well maintained. There hadn’t been a capital investment. The parking was weird. The dumpster was right in the middle of the property, that kind of thing.

Eve: [00:24:19] Now you have your retail legs, right?

Jamison: [00:24:22] Yeah, yeah. And the city was very excited. We were going to come in and help revamp that part of town. But we believe you need to have deep expertise in whatever you’re doing. So, we took that on once we brought out a retail expert. Chris My mind is blanking his last name, but.

Eve: [00:24:47] He’ll forgive you.

Jamison: [00:24:48] Yeah, maybe we’ll see. He’s a retail expert, so he’s led that for us. And it’s been a great project.

Eve: [00:24:57] Great. So, your current project, full disclosure, is also raising funds on Small Change, which we’re delighted about. And you want to tell us about that? Where is it? What is it?

Jamison: [00:25:08] Yeah. So, this is in again one of these up-and-coming areas. This one is in central Phoenix. It’s near my home where I live in central Phoenix. I live right off the light rail and love this area. But this area has seen a lot of revitalization in the last decade. Downtown kind of used to be a place in Phoenix where you didn’t want to go. And this is uptown, which means it’s about two, two and a half miles north of downtown. It’s a highly desirable area because you’re in the middle of everything. You don’t have to commute to work if you’re working downtown. We’ve seen more of the young folks who are moving to the area want to live in these areas that have a bit more culture, they have more activities they don’t want, they’re not going out to the suburbs. And so that’s really exciting. And so, this area, this project fits right into that. It’s 30 units and as we went and did the tour, it was very clear that they haven’t done anything on this property for probably 25 years, except the minimum amount. But it’s sitting right here around all of these new build projects that are six, seven stories, and they’re great, two-bedroom, one bath townhouses and stacked apartments. And so, we saw the opportunity immediately to go in and bring this up to the standard of today’s renter, and we’ll see a really good return on that.

Eve: [00:26:39] What are your plans for the project? I think it’s actually six little buildings, right?

Jamison: [00:26:43] It’s six separate buildings. But one of the things that you don’t know when you do value add, sometimes you dig in there and you open a wall, so to speak, and you realize you’re going to have to do more plumbing, you’re going to have to do some electrical work. The part of the flooring needs to be repaired, you know, those are the sorts of things you don’t know going in. So, we always build a contingency around that. But the plan here is, the units were laid out really nicely, so we don’t have, we don’t have to get permits to build anything different or to move walls. We avoid moving walls, but we’re going to go in and update it. New flooring, new paint, new fixtures, new cabinetry. We’re going to rethink the outside area. The outside area is kind of weird, kind of felt like a prison yard for whatever reason. It’s all blocked off and the pool has a really weird, big fence around it that you can’t see. So, that’s actually going to be one of the big value-adds is kind of rethinking how the outside space is used, which is really important in Arizona, especially in the winter when people just want to spend time outside. So, rethinking the outside, updating the inside and then the location, because of where it’s at, people will be really excited to live in that area in a brand new newly renovated unit.

Eve: [00:28:05] So, then what’s the total development cost, including the building? And tell us about how you’re financing it.

Jamison: [00:28:13] Yeah, so it’s 30 units. The purchase price is 222 per unit. And so, I like to look at it on a per unit basis, but 222 per units what we’re buying it at and then we’re going to end up spending about 35,000 to renovate it. So, our cost basis is 260, 265,000 and some of that includes contingencies. So, if we can shave some of that off, might be closer to 260 on the high side 265, that’s our cost basis. And then when we look at what the value of that building is going to be, it will depend on what the rents are going to be. And we’re expecting the rents will be around the average of that neighborhood, which is about 1800 for two bed, one bath. And that would put the value of that unit around three 325 to 340.

Eve: [00:29:11] What are the rents now for that unit?

Jamison: [00:29:16] They’re in rough shape so they’re renting for under 1000.

Eve: [00:29:19] So, it’s a pretty big shift.

Jamison: [00:29:21] It’s a big jump. They’re all over the place. There’s one that’s 100 and there’s one that’s 800, which is kind of strange that, and they’re the exact same unit. But the neighborhood comps are real right now, are 18 to 1900.

Eve: [00:29:40] That sounds like a great project. So, just generally, what are some of the challenges that you’ve been confronted with this business? Because it’s different. I mean, the product is pretty normal, but the way you’re tackling it is different.

Jamison: [00:29:53] Yeah. I think one of the, our goals is to make it a frictionless experience for our investors. But we know how difficult this is to get from purchasing a property, getting, securing debt and capital to buy it, do the renovations. All of those steps perform the renovations, which we have a crew in house that does all our renovations, which helps us a lot. Then leasing up the property to qualified tenants who are going to pay the rent. That’s a big process in and of itself and then continue to collect the rent and manage that. And for our investors, we want it to feel like they’re involved, that they get to see what’s happening, but they don’t have to worry about all of that stress. For them, it’s easy. It’s almost like when you’re on Amazon and you just three clicks, you get some you order something, and it shows up at your doorstep a few hours later. That type of experience is what we really aim for our investors, even though there’s a lot of complications to get there. So, I think the biggest thing that is a challenge is ensuring that you don’t go over budget in the renovation. It’s really easy to do.

Eve: [00:31:05] That’s for sure.

Jamison: [00:31:06] When you get into one, a project, you say, oh, let’s do that, let’s do that, let’s do that. And then you kind of realize, look, you have to have an ROI at the end of this, so you can’t do everything you want to do. You have to be strategic about that and you have to hit deadlines. If one thing gets pushed back, then it pushes everything back. So, that’s the biggest challenge.

Eve: [00:31:30] And that must have been super big the last couple of years because the construction industry got really weird there.

Jamison: [00:31:38] Yeah, yeah, prices went up. It was harder to get materials. So, we were, we tried to be ahead of that. We tried to order stuff well in advance, so that helped us. Still, there were some things that we just couldn’t get for a long time, right? But we think about that. We try to get ahead of the game. You know, and then the other big challenge is finding good deals. And we are very picky about the deals that we do because we don’t have to do deals, meaning we’re going to only do deals that we really believe we can achieve, and we have a high level of confidence. Some of the ones on the fence we’ll look at and we’ll pass on. Other people might move on it because they need to deploy capital, or they need to keep their investors happy or whatever. For us, we’re not going to do deal unless we really have a high level of confidence. We believe in it, and that means we pass on a lot of deals, we see a lot of them, and we just say, look, we’ll let somebody else take that. We’re going to go after something that we think has a better opportunity. Which, we want to keep the risk as low as we can.

Jamison: [00:32:48] So, finding deals is hard in this market. And my co-founder, John, he runs day to day. He’s the CEO of ABI Multifamily, they’re the largest broker in Arizona that sells apartments. They sold 125 apartments so far this year. And that’s where we get our deal flow. A lot of times old clients call him and say, hey, look at this. Here’s a project that I’m looking at selling, and we buy it off market. So, figuring out where those deals are going to come from, especially in a market where it’s tight, has been really important for us and we have a big advantage there. But it can be really challenging to find those deals and, that really have a good amount of juice left in them.

Eve: [00:33:36] So, are you thinking about expanding operations beyond Flagstaff and Phoenix and maybe even beyond Arizona?

Jamison: [00:33:45] Yeah, yeah. So, working with Small Change is kind of our first step into that, where we can now raise capital from investors nationally. Prior to that, we’ve only raised capital from Arizona investors through the Arizona crowdfunding laws. So, we’re excited to begin to raise capital and to begin building in our investor base nationally and over the next 18 months, I think they’ll be, actually sooner than that, probably six months, I think we’ll have some exciting announcements, more things we’re doing nationally to meet our mission. We want to, we have about 5000 investors in Arizona so far, and we’re just in Arizona. So, we want to go nationally and offer what we are doing to the whole country. And we’re really excited about that. And so, I think it’s going to be an exciting time for us. We’ve been building towards this. Our momentum just kind of keeps carrying us through to this next step.

Eve: [00:34:41] Well, thank you very much for joining me. I’m really looking forward to seeing the next exciting announcements.

Jamison: [00:34:47] Yes.

Eve: [00:34:48] Thanks, Jamison.

Jamison: [00:34:49] We’re excited, thanks again for having us. We love everything Small Change is doing and love to partner with you guys and you guys are great to work with. So, thanks for having us on.

Eve: [00:35:00] Appreciate that. I appreciate that.

Eve: [00:35:10] That was Jamison Manwaring, CEO of Neighborhood Ventures. Jamison is putting his determination to work building his innovative company in Arizona. It’s a real estate company for sure. They buy, hold and sell property, but the capital plan is innovative, with the growing pool of Arizona residents permitted to invest through Arizona intrastate securities law. He’s seen early success, and he’s taken his plan to the national stage, raising funds, for a second time now, on my crowdfunding platform, SmallChange.co. We can’t wait to see how it turns out.

Eve: [00:36:00] I hope you enjoyed today’s guest and our deep dive. You can find out more about this episode or others you might have missed on the show notes page at RethinkRealEstateforGood.co. There’s lots to listen to there. You can support this podcast by sharing it with others, posting about it on social media or leaving a rating and review. To catch all the latest from me you can follow me on LinkedIn. Even better, if you’re ready to dabble in some impact investing yourself head on over to wefunder.com/smallchange, where you can invest directly in Small Change and our mission to democratize capital formation to create impact in commercial real estate development. A special thanks to David Allardice for his excellent editing of this podcast and original music, and a big thanks to you for spending your time with me today. We’ll talk again soon. But for now, this is Eve Picker signing off to go make some change.

Image courtesy of Jamison Manwaring

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