Episode 22 - Jordan Bem, Moliving
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Michael Frank - Prefab Review
Hi, My name is Michael Frank and this is The Prefab Pod presented by Prefab Review where we interview leading people and companies in the prefab and modular housing industry. Today we're speaking with Jordan Bem of Moliving - a company that makes a kind of hotel in a box offering. Though he'll give more information on that, using beautiful prefab modular units. This is the center of something we're getting a lot of interest in, and that's the convergence of short term rentals, high yield real estate assets, and modular. Jordan, thanks for joining and can you tell us a little bit more about your offering.
Jordan Bem - Moliving
Thanks for having me Michael. My name is Jordan Bem and I'm the co-founder of Moliving. Moliving is the first luxury nomadic hospitality solution. It's a lot of words, but what we basically created is the first truly mobile hotel room.
Prefab Review
Awesome! So can you provide some more details on what that means when you say, “the first truly mobile hotel room.”
Moliving
Yeah, absolutely. So a lot of companies you know are utilizing prefab today, whether it's utilizing containers or utilizing airstreams or whatnot to create hotels. Where we believe we position ourselves basically between that mobility space. So the wonderful companies like autocamp the casinos of the world. The collective retreats, getaways, and so on. And on the other side the luxury resorts, The 4 Seasons, the 6 Senses of the world. So that's where we position ourselves today. What we've created is a truly mobile hotel room that's supported by true 5 star operations.
Prefab Review
Cool. So one of the things that caught my eye when I learned about your company, at least on your website. It shows these kinds of very attractive units. Maybe you can talk about this a little more, kind of 1 bedroom modular units. Is that right? And is that the sort of standard unit or is there a variety of different types of units?
Moliving
Yeah, so every footprint is basically the same, all of our units are about forty five feet long and twelve feet wide which makes a big difference compared to all the tiny homes and usual prefabs that we see. So most prefabs you see are actually eight feet wide. Ours are 50% wider. The inside square footage of our rooms is 399 Square feet plus we have two exterior decks that are about 120 square feet each. The rooms that you see online are actually real rooms that we took pictures of. They're not renderings. And the package is basically the same and every single setup is going to be a 399 square foot setup. What changes from location to location is your FF&E package. So obviously your rooms that are going to be positioned by the water, you know by the beach, will have a different interior décor than they would have if there were in the mountains.
Prefab Review
Got it that makes sense. And then we were talking about this a second ago, you're talking about how this is really a joint venture between you and I guess the landowners, can you talk a little bit more about who you're trying to appeal to. And just what the value prop is all around.
Moliving
Yeah, absolutely. So our goal is to democratize the hospitality space both on the development side and on the experience side. So on the development side, what we basically do is we joint venture with landowners and as we joint venture with landowners, landowners provide the land and some minor permanent infrastructure, in forms of utility hookups or in forms of an existing building on a property where we can operate all the FMB out of. And we bring in all the services that are common to the hospitality space. Your reservation systems, your operations, your staffing, your marketing setup. And so instead of providing key money to entice landowners to let us utilize their land, what we do is we bring in our hotel rooms. And then in exchange for that, what we basically do is that on every dollar that comes in, there's a profit split on the bottom line.
Prefab Review
I see. So essentially the equity that the landowner is putting in is essentially the land in that situation.
Moliving
Correct, so we focus on seasonal markets and the real issue of seasonal markets in terms of development is that first of all, development is expensive and second of all, it's a very short period of time where you can generate profits. So if you're in a location by the beach it could be 2 or 3 months out of the year or 4 months out of the year for example. In markets near New York which usually is memorial day to labor day. So banks are very iffy on providing very large loans to build permanent infrastructure. What we do is, since we bring in our hotel keys at Molivings cost to the table, if a landowner goes to a bank for a senior, basically on a project. Let's use the example of our first hotel that's going to be in Upstate New York, the permanent infrastructure development plus you know the acquisition of the land and so on, roughly represents a $12,000,000 - $13,000,000 development cost. So that JV partner went to the bank and asked for a loan on that amount but is showing performance on a project that's actually $24,000,000 because the rest of the money is actually brought in in terms of rooms by Moliving itself.
Prefab Review
Got it. That's Interesting. What are you all looking for? So it sounds like location, right? Having enough demand and willingness to pay your sort of daily rates are and have the occupancy necessary to generate revenue to make these JVs kind of work for everyone. So what are the metrics and information you're looking for in terms of picking locations.
Moliving
So we can't really tell you too much about the metrics because they're proprietary to the brand. But you pinpointed it quite well, we're looking for seasonal locations that generate high ADRs and high occupancy in short spurs. So pick and choose, I don't know, a market for example near New York, the Hamptons for example or upstate New York have very high ADRs as well as very high occupancy for periods that are roughly four to five months out of the year. During the rest of the time we have pieces of land that we jv on. That are in opposing markets. So what we'll do during the low season, is pick up our rooms from location a and all the excess inventory and move it to location b. So hotels from both locations a and location b will be open year round but what we basically do is tailor the supply to respond in real time to demand.
Prefab Review
Got it. And just for context for our site, I know we have hundreds of thousands of visitors a month but then on our sort of concierge service, we help tens of homeowners a month actually get in homes. So we have some level of experience moving modules from place to place and you know getting them set and all that stuff and you know not necessarily at the scale of doing 20 or 50 or however many are in sort of your kind of hotel style places at a time. But the cost isn't totally trivial in moving stuff. I guess my sort of question is, how much of an issue are switching costs because it sounds like you're basically, it sort of sounds like your canonical example is, “you're gonna have a partner in Florida who is going to take your upstate New York units for the winter or something like that. How big of an undertaking is this from both a time and money perspective to move a bunch of units you know twice a year.
Moliving
Yeah, money wise we underwrote a $6 mile cost, it seems like for the moment we're paying on average $4 a mile to move our units. On the undertakings side,
Prefab Review
Yeah, that's actually almost exactly what we see on the residential side as well.
Moliving
Yeah, so it's um, you know it's just a semi-truck basically coming to pick up our units. And they hook on directly, sort of exactly what you've seen previously. It hooks on to the semi and goes. So it takes about 15 minutes to basically get it ready, to go unhook the unit.
Prefab Review
And are you using RV style connections?.
Moliving
Absolutely.
Prefab Review
Okay, got it.
Moliving
In addition to utilizing RV style connections, we can also operate 100% off the grid. So that makes the process a little bit faster. The only lengthy process is basically taking apart the FF&E package because obviously your FF&E package upstate isn't going to be the same one as Florida for example.
Prefab Review
Right.
Moliving
But you're talking about probably an hour and a half to 2 hours to actually empty out the unit.
Prefab Review
Yeah, so one of the things that we've helped people do a lot who are doing this subscale right? You know like we’re working on a really cool project right now aimed at golfers in Palm Springs is kind of designed these sort of purpose built, ground-up modules. Yeah for like very sort of specific tailored models. Can you tell me a little bit about the sort of design and factory process for your unit? So far, I saw you have job listings for Oklahoma and Texas for your engineering team. So. I'm guessing you may have a factory down there or are working with a factory. Can you talk about it? Yeah, just to sort of the architecture process and then like are you using your own factory, are you partnering with someone else, etc.
Moliving
Yeah, so everything we've done in regards to our units is designed in house. So Stephen Chen, who's currently one of our advisors, designed the unit. Basically every single bolt has been designed by him. The units are then fabricated in Oklahoma with our partner SG Blocks. So SG Blocks and Moliving have been partners for the past four years. And we build them out there and then ship them. Basically we have partnerships with a couple different trucking companies that take care of us.
Prefab Review
Got it. So are these are not containers? They're just these factory built modules, right?
Moliving
Correct. So we voted to not utilize containers. It's been something that's been done. Yeah, but you could still cut through the center of the container and make it wider. What we did is we inspired ourselves.
Prefab Review
I assume because containers are usually eight feet wide so doing the twelves that you talked about would be right?
Moliving
By the engineering of a container with the 4 corners and so on and decided to really tailor make a product specifically for the hospitality space. And what we realized is most of these other companies that utilize tiny homes, containers, and so on, you feel cramped in eight feet wide. But when you walk into one of our units, you really feel like you're walking into a 5 star product. I mean you walk in and the ceilings are extremely high. The insulation is extremely good. You can't hear anything around you. But as you walk in, there's these beautiful huge windows. So you're immediately projected to be outside while having the comfort of a 5 star space around you.
Prefab Review
And then I guess one question I had is, I'd say we spend a tremendous amount of time with clients trying to navigate, especially on these sort of higher end vacation markets, navigating permitting and all that stuff. Again, these are mostly for residential areas, not commercial areas. I guess you've at least done that in New York a little bit so far. How much of a beast of a task is that, given that you're doing something kind of innovative and maybe a little different than probably what's been approved before?
Moliving
Without giving you guys the whole secret sauce, what I could tell you is that the undertaking of permitting, the first hotel was huge and took us about two and a half to 3 years to actually permit it properly. Ah, the beautiful thing from there is that our product is the same and everything's replicable and today we have a replicable process that's actually a real legal case. So wherever we go, the process is now extremely quick.
Prefab Review
Got it, and extremely quick as in like six months or a year from like the time you start doing stuff or is it faster than that?
Moliving
We can open a hotel in six months today which is unheard of in the hospitality space or construction space because the real advantage of not only you know, developing modular, is not only the permitting, but is really the fact that we're building an assembly line. And as we build on the assembly line, we don't have weather delays. We also at the same time know exactly how much product is going to be built. S I know that for unit one I need you know x amount of steel. So my waste is exponentially lower than it would be on a regular job site. So on a regular job site for something that's four hundred Square feet, maybe you’d have you know half a dumpster. Yeah, probably half a dumpster of trash and unused materials versus when we're building in a factory. We now have probably half a trash can and that's unbelievable.
Prefab Review
That makes sense. You mentioned the upstate New York one, I think that's called Hurley House, can you talk a little about that project?
Moliving
Yeah, yeah.
Prefab Review
And yeah, just like the scale and scope of it.
Moliving
Sure. So it's actually going to be called Moliving at Hurley house. But your research is right. The project is a 55 acre project there's going to be about 60 rooms on the property. It is going to be a flagship for Moliving. It's going to be opening later this year. The project itself is going to be a true five star with full FMB and an amazing eighty feet long pool. 300 person capacity pavilion, 2 lakes, miles of trails. A really unbelievable piece of land. We're very fortunate to be launching a product there.
Prefab Review
Then I guess 2 more questions. One question I have when I hear all of this, is like it sounds like you guys are bringing a ton of value with your offering. Why JV? Why not just buy the land too? Does this just make it more capital efficient or are there other things that I'm not appreciating?
Moliving
I think today it's more capital efficient and it just matches our schedule better. My previous experience is in the development space. And today I think, if there is an unbelievable piece of land that we absolutely want to be purchasing, maybe we will purchase it. But today, we really want to focus on developing the brand itself. You know, the real value of what we're doing is the intrinsic value of Moliving is the brand. If you're staying for 4 seasons for example, wherever in the world, 4 seasons don't own their pieces of land. But you know it's synonymous to a 5 star experience. Same thing with six senses and with W hotels. Wherever you go, you know what to expect and that's what we want to create at Moliving, is this unbelievable experience.
Prefab Review
So one of the things we get a lot of people to our site are people who are interested in the idea of, you know, making money. They love the idea of, “hey I get to put this beautiful thing on my land. So what you're doing may actually resonate a lot like, you know at least dozens of people who sort of comment into our site or reach out every month. Maybe thousands. So from the perspective of a landowner and a potential JV partner for you all, What is the elevator pitch? How do you quantify the opportunity for them? Like a lot of times, people are looking for IRR or cash on cash returns. Yeah, how do you sort of describe both the economic and just general opportunity to potential land partners.
Moliving
Well we're more in cash on cash than IRR because IRR depends specifically on the re-sell, cash on cash makes more sense. Most of the people we've dealt with today and we have a lot of sites that are currently under due diligence for actually early2023 openings, so just be ready to see way more Moliving sites. The most important part from the economics that we found is actually finding people that have the same vision as us. And when it comes to vision, it's not only the vision for the property itself but its respective nature. That's what we found was actually the biggest selling point prior even to discussing economics and as we discuss economics, it's very simple, it's minimum capital going in. 9 out of 10 times you already own the piece of land and maximum capital coming out because we're bringing in a lot of the capital ourselves basically to the table and we're just splitting it on the back end.
Prefab Review
And is this pretty passive for the landowner because you're doing operations?
Moliving
It's it's a hundred percent passive
Prefab Review
Okay, so this is like, so I'm sure you know what Triple net leases are. This isn't exactly like that. But like there's sort of some similarities in terms of like you and the lease but like most of this stuff is actually taken care of by you, the lease or operator etc.
Moliving
It's the equivalent of a triple net lease. So just to give you a little bit of background on myself, My previous life was development throughout Europe. And that's the only thing we deal in is triple net leases on commercial spaces. Yeah.
Prefab Review
So that's actually kind of helpful in terms of an analogy. This has been super helpful to learn about. just ah now that we've learned a little about you. One thing we try to do is sort of tap into the expertise of the people we're talking to quickly. It sounds like you have a rich investment background. So if you don't mind, we're going to do a quick fire around these are sort of some general questions. If possible, try to keep your answers to 1 minute or less. That'd be great, but not too much of a stickler on this.
Question number 1 is, in terms of evaluating sites for this kind of undertaking can you give us a quick checklist of the kind of things you look for for a hospitality site to work?
Moliving
Yeah, we look at the comp-set, usually look at high ADRs, high occupancy, short periods of time. So seasonal markets basically and construction cost.
Prefab Review
When you're looking at ADRs a lot of people in our sort of neck of the world end up using a lot of these airbnb sites, sort of the air DNAs of the world. For your projects, do you end up just looking more at hotel comps or do you look at the short-term rental cops as well?
Moliving
Now we of course take a look at air DNA, I actually met with them probably about five, six years ago when they were launching it which is just really neat right? It's crazy how big that company's become but air DNA makes sense for less rural areas and more city areas, basically more urban areas. We take a look at it because it turns out their appraisers request it. We haven't really found a value in air DNA specifically so we look closer to the sdr reports than than the air DNA.
Prefab Review
Yeah, that makes sense. Can you talk about the interior design of your rooms? That's something we get a lot of questions on too, like okay so you've got this box. How do you fill this out with the kind of furniture that strikes the right combo of I guess in your case, luxury but also sort of economy on the operator/owner side?
Moliving
Ah, so I'm a developer and I am not an interior designer, so we actually enlisted the help of a designer to help us.
Prefab Review
That makes sense. Did you have a sense for sort of the features in rooms that guests care most about? This is something we get a lot. In terms of, okay how important is a hot tub? How important is an on suite bathroom in every room etc? Were there specific features that you were like we need to have this etc.
Moliving
Yeah, so we wanted seamless integration of technology. These are sort of the instructions that we gave to the interior design team. We want the unit to be filled with technology but the technology to actually not be visible. So for example, our desks have integrated induction chargers so you put your phone on the desk and the phone charges. Or we have Samsung frame Tvs or we have devialet speakers which are very high end. We wanted the wood to feel warm. These are sort of the instructions that we gave to the interior design team that came up with an unbelievable at least to my taste unbelievable package in the unit. But at the same time the idea was giving true 5 star almost city like interiors. But with nature as your party piece. The whole concept of Moliving is that I love nature. I love walking around and in nature sitting next to a lake you know, enjoying myself and so on. But I don't want to stay in a tent. The idea is really creating a product for that is to enjoy nature while being in the comfort of what I'm used to.
Prefab Review
That's great and then I guess the final question, this is not a fire round question but we ask this to everyone. What are you most excited about for your company or industry in the near future?
Moliving
Honestly, just developing more and more sites and changing the face of hospitality. I mean I really think that our product and our brand will really revolutionize the seasonal market because we can build cheaper than anyone else. And as we build cheaper, that means that we can sell our rooms slightly under market value. And if we're selling a room slightly under market value. We're opening up the market to more and more people to be able to come to places that had high barriers of entry prior. So we're just really, we're stoked to to be quite honest with you to really change the way things currently are. I don't think it's right that places like the Hamptons, for example, are charging $2,000 a night or you're from San Francisco. I don't think it's right if you're going to Napa. You're paying $2,700 a night, I saw the other day.
Prefab Review
That makes sense. We are definitely looking forward to hopefully seeing a lot of Molivings pop up and yeah, just seeing the way this concept develops and hopefully getting to stay in one soon. Thanks again. Jordan, it's been really great learning more about this. For more information about Jordan and Moliving - moliving.com I think it's the best place and as always you can visit us at prefabreview.com. Thanks again.
Moliving
Awesome! Thank you so much!