Episode 35 - Mike Wneck, Jacobsen Homes
Listen to the episode
Transcript
Prefab Review
Hi, My name is Michael Frank and this is the Prefab Pod presented by Prefab Review where we interview leading people in companies in the prefab and modular housing industry. Today, we're speaking with Mike Wneck VP of New Business Development at Jacobsen Homes. Welcome, Mike.
Mike Wneck - Jacobsen Homes
Thank you.
Prefab Review
It's great to have you here. As I mentioned before, I think we tend to interview sort of small or more bespoke companies. So, it's definitely awesome to have a company that I think is at the scale of yours. Can you tell me a bit about the history of Jacobsen Homes and where you are today?
Jacobsen Homes
Sure. Jacobson is privately owned and operated and has been for 61 years. And they're located in Safety Harbor, Florida in a very seasoned manufacturing facility. They build manufactured and modular housing - about 70% manufactured and 30% modular. There are many similarities between manufactured and modular because we build such high-grade manufactured housing, and obviously, we build a high-grade modular.
Prefab Review
That makes sense. And what's the scale? How many homes are you building a year, to the extent you can talk about it?
Jacobsen Homes
We’ve built about 100 a month in this environment. Yeah, we're capable of another 40 or 50 when we get back to peak production. Coming back from covid and the labor issues surrounding covid have kept us from getting back to our peak but we also are building a lot lot more complex products. There are lots of things affecting it but we are the largest single plant builder of manufactured and modular homes in the state of Florida. And we are known for the highest quality finished standards and service after the fact that we take good care of our customers. We build to a philosophy of quality beyond code. We do not build to minimum codes. We build to the strength, material conditions, and features that will withstand the storms that come to Florida. And we have proudly survived every storm that's come this way since the ah 9094 new wind standards came into place.
Prefab Review
The beauty of time. So you're saying they're all built out of the same manufacturing facility?
Jacobsen Homes
Yes, all the houses are built out of the same facility.
Prefab Review
Wow. That must be a must be large facility. And are you doing exclusively single family homes right now? And obviously you talked about manufactured homes and you talked about modular homes. Can you give a little bit of color and details on the range of products that you sell?
Jacobsen Homes
Sure.Our manufactured housing product is built to the HUD code, the federal code. And it tops out at about 130 mph wind standard, which is very adequate for the majority of Florida. And it's a very high grade product that we sell about half to the 55+ market and the other half to the traditional family market. The modular product we build up to a high wind standard. Most of our modular product goes up on stilts, elevated platforms, and in coastal areas with high wind. High water surge areas. You know, very tough to build in areas and again, they're built to you withstand the worst that nature's going to throw at it.
Prefab Review
And all these are single-story homes, correct?
Jacobsen Homes
Well, they're single story with the exception when you're building them on on stilts. The majority of people finish the lower level, so they become de facto 2 stories.
Prefab Review
It might still be 15 or 20 feet high okay, got it. That's interesting. Okay, so it's almost like having like a site built walkout basement kind of thing.
Jacobsen Homes
Right? Well, you're building them on a concrete platform with reinforced concrete piers and you're craning this unit up in 2 or 3 sections and then typically people are framing in the bottom with the garage, utility room, workshops, whatever it might be.
Prefab Review
Right. That makes sense. What's the range of costs on these?
Jacobsen Homes
Well, are you talking about HUD or modular? Well you know, with HUD, and again, if you're talking about just a house set on a piece of dirt without any of the amenities, you know, no garage, no carport. You’ve got one price point and then you can move it all the way up to the stilt levels and you can build HUD on either grade level or stilts and typically a HUD house today, just the home will go out to a marketplace site in the $70 range. And you'll add $20 a square foot for amenities - driveway, carport, that kind of thing. If you go with a garage, you're gonna add another $10 - $20 per square foot. If you go to stilts, a typical stilt platform for 1,500 square foot houses is $75,000.
Prefab Review
Right.
Jacobsen Homes
And so it it bumps it up. Again, if you throw the modular consequence in and in the case of modular going up on stilts, today we primarily build to the majority of them in 100 mph to 200 mph wind zones. And they are craned into place. They have a triple 1 by 12 perimeter rail. They have an engineered eyejoist. They have plywood flooring that is built beefed-up at every level and the majority of them are hardboard siding and metal roofs and impact glass. All those things take cost up a notch. So a 1,500 quare foot home, going in ocean breeze we'll sell just the basic house delivered to the builder is going to be about $100 to $150 a square foot. That’s not counting the set, air, plumbing, electricity, all the rest of it.
Prefab Review
Right. So on the modular ones you're delivering the box. And then are you working with one party build to do the site work and help finish it?
Jacobsen Homes
Correct. We work with the community owners, and the retailers, who all have a general contractor and it's the GC that's handling all the construction. And for them, we just provide the sections of the manufactured or modular home.
Prefab Review
Got it. So that means for a modular home you’re at like $150 to $200 a square foot. It sounds like at this point you have a pretty big network of builders who have just done your homes over and over again.
Jacobsen Homes
Yes, we have 60 or 70 communities and 100 retail sales centers that employ their own GCs, their own construction elements to finish the home, typically on an acre to five acres, ten acres of property. We build a lot in more difficult to reach areas, difficult to build in areas. Those are all good reasons to buy modular or manufacture them because building them in sections and bringing them out makes it a lot easier than driving in and out of a location that's 40 miles from town. And when you talk about any of the waterfront, riverfront, oceanfront areas, you name it. And you're building up on stilts, obviously, the speed and execution of a stilt home is months faster than being on high lifts and ladders and you know all the inconvenience of building a site built home on stilts.
Prefab Review
Yeah, it's funny. We had a different modular company on a couple weeks ago and they were talking about this area outside of Boston called Nantucket and they were saying they thought it's the highest concentration modular homes in the country because when you're building on an island, you basically get one day to deliver a house. And apparently, there's one crane company that services the entire island and sets a home every day. So it totally makes sense that there'd be similar factors for you all. What are the most popular plans, especially on the modular side?
Jacobsen Homes
The most popular are view floor plans. You know, they're going up on stills typically in a waterfront area, sometimes on the golf course, some wetlands but view homes. So you know an end load, full width porch. You know, our width sizes are usually 24, 28 or 32 feet wide but up to 40 feet wide. And they'll go up in one by one sections. And they'll all typically have at least a ten-foot, full-width porch on them. So the floor plans are usually a front living room. Great room view plans are the best selling when it comes to stilts if it's on private property. Yeah, then there are typical traditional side-set ranch-style homes. And there's of plans. There are just so many. And we customize regularly. We also operate on a custom made easy kind of philosophy. So people come in and bring their floor plan that they dreamed up years ago and are finally in a position to build it and ask my retailers, my builders, to quote them on it. So it can be anything. But the most common are all view-oriented, end load plans where the porch and living room dining room, great room face the view of the water, the golf, the woods.
Prefab Review
That makes sense. Talking about these sorts of homes, you talked about customization. So you're actually customizing for individual people or are you mostly customizing for communities?
Jacobsen Homes
Well for the builder, which ends up being for the customer. In the community business, there's much less customization there. There is some but much less. As you get into the stilt homes, it's the high-end, view homes.
Prefab Review
Yeah, okay.
Jacobsen Homes
On those high end homes, those are the ones customizing for the individual customer through their builder/retailer.
Prefab Review
So can you tell me a bit about the retail model and the process there? So let's say you listen to this podcast, right? You're in Florida and you think this sounds cool. They go to your website. There's a phone number on your website but there's also a handful of retail centers, I guess. Are those only for manufactured housing or are those modular and manufacturer housing?.
Jacobsen Homes
Correct. The community ones are all manufactured except for ocean breeze at the moment, which does modular in a 55+ environment. And then the retailers are a mixture of HUD and modular if you look at.
Prefab Review
Got it.
Jacobsen Homes
We've got Jacobsson Homes of Lake City. Pretty much pick a city and I’ve got a variety of retailers. But none by individual entrepreneurs.
Prefab Review
And are those owned and operated by you or do they buy into the company. Okay got it. Are they also essentially fulfilling and doing the building and site work or are they only doing the selling of the plans?
Jacobsen Homes
Well, they primarily do the organizing of the design and the layout. And then also organizing all the contractors through their general contractor. You know, to be able to perform all the services needed to complete it, these are all pretty talented people. They're not just out there selling off a catalog. They're out in the field, they go out with a customer, they'll walk the lots with the customer and help them. You know can configure a layout in their mind that we can build.
Prefab Review
And then are you selling homes directly via your phone number as well or does the phone number essentially push people to one of these retailers?
Jacobsen Homes
We don't sell anything directly. You buy from a community or from a retail builder.
Prefab Review
Got it. I see interesting concept. Will you tell me a little bit about how how the community set up works. Because again, I assume that there are individual entrepreneurs that go into that too.
Jacobsen Homes
Well, they're also big companies. The real estate investment trusts, the 55+ properties in Florida, many of them are quite exotic. You know, golf course communities, waterfront communities, right down to the very basic, affordable properties.
Prefab Review
Right.
Jacobsen Homes
But they usually have gated entries and terrific amenities - clubhouses, swimming pools, hot tubs. You know, social activities of every sort. And they're incredibly popular. And they're quite frankly, a wonderful lifestyle-oriented product that folks flock to.
Prefab Review
Yeah, when those exist are you typically like the exclusive provider of housing or are they pre-building all your housing? Or is it like, okay if I'm coming into that I get a selection of options and you're one of a selection that could be built?
Jacobsen Homes
Most of them would like us to be their only supplier. We just can't build enough to keep everybody happy. So they'll buy from 1 or 2 other suppliers to be able to get enough supply.
Prefab Review
And are they pre-building these like sort of spec style or are the individual owners coming in and selecting from the developer actually building each of these to spec it out? Or is the owner coming in and designing their own home?
Jacobsen Homes
No, it's both.
Prefab Review
Got it. And how does financing work for all the stuff? Do you have a preferred lender you work with on all of this stuff?
Jacobsen Homes
It’s just like buying any product. Now we deal with banks of every sort, just like you would site built.
Prefab Review
Got it. Okay, that's awesome. And then what's the timing like? So someone comes to one of your retailers they say, “Hey, I have this piece of land. I want to put a modular box on top.” What is the sort of timing and process from there?
Jacobsen Homes
It varies widely. And you have circumstances where some of my retailers have orders online or scheduled to go online or a schedule with backlog months and months out. And depending on where they are in that process, some of those would have been built as models or as specs but in this environment, they're getting sucked up and taken down much sooner. So there's not much random inventory for sale. But if you're starting and you get in the queue and go through the permitting process and with the backlogs being what they are due to Covid and pressure on labor, you know, you can easily go nine months to a year to get a house.
Prefab Review
And how long does it actually take in the factory?
Jacobsen Homes
It's three weeks in the good old days when the backlogs weren't blown out of proportion. You know you could go to a retailer. It typically is taking 60 days to get your permits anyway, get the permits to get the product ordered. And depending on the backlog, we could deliver a house in four weeks to eight weeks, and then they'd complete it in four weeks. So the turnaround was four months or five months, sometimes six months. Now, it's very common to go much much longer. And depending on which retailer you're buying from or whether you're starting totally from scratch and depending on the permitting issues which are becoming more and more difficult, it can get stretched out. The quick turnaround has had a lot of pressure put on it.
Prefab Review
That makes sense. So this has been really terrific to learn a bit about your operation. If you don't mind, do you think we could move to our fire round, where we ask experts like you a few questions we get from our audience? Question number one: do you end up working, it sounds like on the community side you probably do, with investors, and how does what they're looking for differing from typical homeowners? Because we work with both groups.
Jacobsen Homes
I work with investors all the time and people coming in looking to build everything from 20 lot cul-de-sacs to up to 100 or more sites. And then I deal with many of the big real estate investment trusts and big development companies that are owned by pension companies and things like that. And they can easily be huge sites. We've got a few commutes even up into the 1,500 range. So we have a little of everything. We’ve had lots of wanna-be investors and a lot of them came in with a lot of preconceived notions and thinking it's gonna be a lot easier and lot quicker than it is.
Prefab Review
Yeah.
Jacobsen Homes
But the biggest problem in Florida is the entitlement process and the permitting. To get any kind of development done whether it's manufactured, modular, or any grade level, I mean you better plan on a long process. To be able to get the finish line before you're going to be able to put a house on a lot. And it's like that in much of the country.
Prefab Review
I'm in California. It could take longer than that. Yeah, there are a lot of boxes to check. One question we get a lot, particularly on the manufactured side is the appreciation question. I'm sure you have lots of data points given the scale. So what's your response to that?
Jacobsen Homes
That's a great question. That's my specialty. That has changed over time and at one point in time and on the 55+ side, you're building to someone who's already well up in age and then you get somebody's community in 20-30 years and all of a sudden, you're dealing with folks that are 65 and older. And one of the facts of life is we don't live forever, and so before a lot of the market changes there was more supply. That's all slowed down. You know, it's gotten balanced out today. And in those days, you know the product could depreciate slightly or could depreciate a lot, but it typically depends on where you put the home and what kind of amenities the community had. How well you took care of your house. All the things that apply to a site-built home as well. Now today, in the 55+ properties, which are primarily leased properties where you buy the home and lease the lot, part of that lease is you're getting a great amenity package and you know good management, et cetera. The total churn in manufactured and those houses have gone up in price dramatically. On the resale end, demand is tremendous.
Prefab Review
That's from the manufactured ones
Jacobsen Homes
And it's not unusual for a home to sell for what it sold for originally and even up to $20,000 - $50,000 more. And we had houses just sell in Charlamo Creek which is a beautiful golf course club community here in Lakeland that sold in 2000 for just over $22,000. So it's all over the boards. But there's far more appreciation.
Prefab Review
Yeah. It sounds like it's more of a supply-demand issue than it is anything sort of systematically.
Jacobsen Homes
Well in the houses that I would see back in the old days when people would bitch about depreciation, it's because they bought a cheap house to start with. They bought at the lowest price they could find. They bought one with the lowest common denominator of siding and roofing and windows, et cetera. Then, one of the few good things our government has done is increasing the windspeed requirements and that type of stuff. Then, people had to start using quality products. And so guess what, when you build quality it lasts longer and it looks good longer. It sells for more and that's what's really turned around. We build so many houses today with either very high-grade vinyl siding - high-grade 30-year shingle roofs, metal roofs, either dual pane or very fine insulated glass windows or high-grade impact glass windows. And then many of our houses that are built with garages and better outside amenity packages and voila. If you build quality and you take care of it, it sells for more.
Prefab Review
So this transitions to the next question which is you obviously talked about making a very high-quality product. If I'm a consumer and I'm looking at different manufactured home options, is there a sort of a quick checklist or a few things that you would look at to sort of understand quality differences between homes and home manufacturers?
Jacobsen Homes
Sure, start structurally. To begin with, the minimum code you can build with a 2x4 side wall. You can build with particle board or low-grade sheathing. You can put thermal insulation or foam. Or these cheap, substandard in my opinion, sheathing boards, and uninsulated windows. And that kind of thing whereas in our house, even to my entry-level, I put OSB sheathing on all of my houses. I don't put on the foam core or thermal or some of these other substandard products. In my opinion, we're using a very high-grade shingle, very high-grade vinyl lap, or hardy siding. You know hardy cement products and so yeah, we put more into our product but we are efficient without it being a knock-your-head-off premium.
Prefab Review
Yeah, we use hardy board even in really high-end homes all the time here.
Jacobsen Homes
And so that kind of product is going to look good. You know, wear well and resell well. But you get some cliches and stereotypes that get built into anything as it happened to the manufactured housing business when people would build anything they could get down the road. That's not how Jacobson has ever built and as I said, we've always looked at building products from a quality beyond code perspective. We want to build a product that's going to wear and tear and weather the storms years after your warranty expires.
Prefab Review
Yep, that makes sense. And then the last question is from a land perspective. If I'm a consumer trying to think about if Jacobson or manufactured or modular housing works for me, is there kind of a viability checklist or feasibility checklist that you sort of have in terms of like swamps and floods in certain parts of Florida, which is, I assume, one of the many reasons for stilts. But are there other things, right? Obviously, access to a crane would be another that I assume is totally necessary.
Jacobsen Homes
Yeah, you're going up on stills. It certainly is. You don't have to use cranes. They are most commonly set with frames they manufactured and are set with Trans Lifts for the most part because they're blocked and anchored. Yeah, and you can use a Trans lift to get a frame on a modular on-site. But anything on stem walls, still any of that nature does require a crane and yes that's a big part of what the retail representatives and retail stores are doing. They're going out to the site they're mapping the route out to the site. Take pictures of anything that might cause difficulties like low-hanging electric wires or bridges and then they work out how to work around it. You can't always work around it.
Prefab Review
Makes sense. I don't think we've had any Florida issues but some other projects we've done across the country, we've had to say that modular is not feasible because there's a crazy road to get here and there's just no way we can get a huge crane up there, so that makes sense. All right. The final question that we ask everyone is, what are you most excited about for your company or for the industry in the near future?
Jacobsen Homes
Well, I'm most excited that the demand for housing is extraordinary. The demand for housing in Florida is even more extraordinary. You know, it's a great place to come and live for weather perspective, sunshine, and amenities and features. It's a great place to live. The folks up north want to get out of that part of the world in large part for economics. You know, we have a lower tax base and lower cost of living. You know, it's just an overall better place to live. So we look ahead feeling good about having years of good business conditions for us. They may tighten it up. Housing is cyclical. But we build a product that is so well built and we have such a good distribution and a great team. We know we're going to thrive no matter what happens in the market and we're especially thrilled that there is a demand for a customer who appreciates a better-grade product. We like building. The more innovative, thoughtful, exciting products as opposed to a basic econo-box that that's, you know, that's just not our thing. We build a stylish product. We build a product you'd love to move into tomorrow. And I build housing. You're satisfying a need, giving people a product that they're going to be able to afford years and years from now. And one that's going to stand up to the weather and is going to look good and appreciate on and on. It's ah that's a tough environment not to enjoy.
Prefab Review
That's great. Yeah, one of my favorite things about the industry, with very few exceptions, people really want the info, so I'm with you. Thanks again. Mike I really appreciate you taking the time to be on our podcast.
Jacobsen Homes
Anytime you want to come to Florida, come to our factory, come north to our model centers, we'd love to have you and any people listening to your podcast to our model center. And safety harbor is accessible. The factory is almost back to a regular factory tour schedule. It's been slow coming back from Covid. So make sure to call ahead. But we will be back in a mode of giving regular factory tours and seeing is believing. It's seeing the factory, seeing the quality, seeing the detail go in.
Prefab Review
That's great.
Jacobsen Homes
That helps everybody make a good decision.
Prefab Review
So for everyone listening at home, for more information about Mike and Jacobsen Homes, jachomes.com
Jacobsen Homes
Yeah, mikew@jachomes.com and if you send me a question, I will respond to it or I'll get one of my teammates to respond to it, but we do respond to everybody.
Prefab Review
Yeah anyway, thanks again, we really appreciated it.
Jacobsen Homes
My pleasure. Thanks for the opportunity.