Welcome And Why Havasu Matters

SPEAKER_00 0:20

Hey everybody, Ryan Garland here, founder of Paradigm. I want to thank you for joining us today. I am honored to have Luke Steele with Desert Land Group. We're excited to bring him on. We're going to ask him a ton of questions. This guy knows where all the bodies are buried here in Lake Havasu. He kind of started the larger developers movement here. I'd like to kind of think of it that way. And you know, the takeaway for today is really just to uh high highlight really what's going on in Havasu. And um, this is the data nerd. Just like I like to blame, you know, say that I'm a data nerd. This guy's got me beat by miles. So, Luke, thanks for joining me today.

SPEAKER_02 0:52

I'm happy to do so.

From Bank Appraiser To Havasu

SPEAKER_00 0:54

Yeah, we got a cool little workout. We worked out for about an hour before uh before this podcast. So uh we're still moving and shaking. So if we're talking fast, forgive us, guys. I think you guys will still enjoy it. But so, Luke, let's talk a little bit about your background. Let's get right to it. Um, that how did uh Desert Land Group uh kind of get developed and started? And then let's talk a little bit like where you came from to then go into Desert Land Group.

SPEAKER_02 1:14

Yeah, so um I moved out here in the year 2000. I was 25 years old. I was the chief appraiser of a bank that I really didn't even mean to get the job in the first place. I uh went to college, came back to my little hometown of 10,000 people in Baker City, Oregon, and my dad was an appraiser. And at the time, you needed to get a certain number of hours underneath an appraiser to get your own license, and I had been going in that direction during college, had went and got a finance degree so I could tie in the commercial side of real estate into the appraisal world, and that was my goal at the time. Um, but when I got my license, I went to a bank and gave them my resume, and they wanted to hire me because they had just gone through a FDIC exercise where they wanted to separate bankers from appraisers and borrowers from appraisers, and so started going through like third party for they don't want influence before the third party thing even became uh popular. Banks thought they could do internal programs, so they hired me to create an appraisal department at the bank. They had 19 banks, a little regional bank with 19 different banks. So great learning experience for me, though, because I'm fresh into the appraisal world. I'm getting to review, you know, 20 different appraisers that were on our list all over eastern Oregon and western Washington or uh western Idaho. Um great experience for me. But after two years, the appraisal department was up and running. I was 25, related to half the girls there, um, probably dated the other half the girls there. And so my uh grandma said, Why would you stay in Baker? Like, you know, your family's here, you're a fourth generation in this little mining town, but there's bigger things for you, and you you're not going to find gold in a copper mine. I'm sorry, it's not. And this this is like literally coming from my that's in an assisted living place at the time. She's 90 years old. I'm like, well, if she's smart enough to figure that out, maybe I should maybe I should look into this. And so I didn't even have Havasu on the map, but literally then the next day I was driving out to Havasu with a buddy to bring him here to play baseball for the Havasu Heat. He had he had gotten picked up by the Mets and had was looking to get back into Major League Baseball. So just being a friend, I took him down here. I mean, I got here and I saw Entrepreneurial City USA, which which Lake Havasu was absolutely per capita one of the more entrepreneurial cities I've ever been in.

SPEAKER_00 3:19

Yeah.

Partners Mentors And Early Developments

SPEAKER_02 3:20

And um, so I saw that opportunity, I saw better social opportunities than I had in Little Eastern Oregon. And I literally drove back and I thought about it and I put my resume or my resume or my uh resonation in the next day and put my house on the market, sold it in two weeks. The only downside is I had to move out by Christmas Day. So I moved to Lake Abbaso on Christmas. My mom was not happy, so I figured why not just like full send right now. That's it. You don't like that, mom? Guess what? I'm not gonna be here on Christmas Day either. But yeah, I love you, and I'll come back every once in a while. That's a great one. So I got over here and um immediately I met uh I opened an appraisal business, my own appraisal business. I met Michael through doing valuations on the refuge at the time um was being developed. And Michael, my partner, had come out. He had just graduated college, he was a D1 golfer. He was super passionate about the golf world and the idea of getting into golf design. So he worked for um a company out of Minnesota that built the refuge. He got to work with the Arnold Palmer team, he got to caddy Arnold Palmer when they opened it up, and he got to oversee the entire construction, and he fell in love with the entitlement and the development process as much as in that world of golf architecture, it's pretty limited. If you're if your last name's not Fozio or something like that, I mean it's it's not it's hard to get all the way to the very top. Yeah. So Michael and I ended up getting hired by different developers from that time forward. Once the refuge was done, we both got hired by the Comick family to develop the foothills. And the foothills uh at the time was the biggest of its kind master plan community, the the refuge being the second biggest. But this was a full section of land. And King Comick, one of our partners, is 85 years old today. At the time he was 70 years old. He had kind of been retired, but he came out here originally with uh McCulloch in the 70s and was asked to come out to help build multifamily. Him and McCulloch were friends, they'd done work together in Southern California before.

SPEAKER_00 5:11

He was trying to bring in workforce housing together.

SPEAKER_02 5:13

So he was trying to make sure that there was enough housing going up to make sure that could support what was going on with his companies and the infrastructure. So King came out and he ended up developing everything you see by the the bridge, all those townhomes and and all except for the green roof ones, Ken Comick developed.

SPEAKER_00 5:28

Got it.

North Dakota Oil Boom Development Lessons

SPEAKER_02 5:28

And then he went out and developed the islander out on the island. Okay. So um I didn't know that. And then he and then he kind of retired. And in the late 90s, Jim, his nephew, who was younger, um came out and said we should look at doing something in Havasu. He was he was doing some development at Newman at the time. He had just sold some big RV parks in Sholo. So it was like, let's look at Havasu. So Ken came out of retirement, bought the foothills, and Michael and I were blessed enough to be approached by the Comics to help them from a consulting side. Michael was consulting on the entitlement side, I was consulting on the the feasibility analysis, market studies, doing valuation work, not really for the banks. He they wanted me to actually do the internal work and then I'd be like, basically family office internal work. Yeah, exactly. Yeah. And so um, we got to know them through that, and then every time I get called by a developer to do consulting, I would recommend Michael because he was we worked together so well. And then the market kind of took a tank. And in 2012, we both ended up in North Dakota with a gentleman that we had helped. We we'd done some work on sailing hawks with a guy that had taken it over, and so we had kind of got that straightened out. He really liked working with us, and he said, Hey, I have a a banker friend that owns this little town up in North Dakota, and he wants to protect it from the man cave type of thing happening or the man camps happening. Yeah. And um, so we hopped on his little plane and flew up to this awesome air park. He knew what he was doing. He sold Michael and I before we ever got to North Dakota because he knew once we hit North Dakota ground, we were gonna be like, I don't know about this.

SPEAKER_00 6:54

And this is uh were they building basically like man caves with houses? Is that what they were doing?

SPEAKER_02 6:58

So we were trying to avoid that. The banker wanted to protect his land, and it was it's an amazing story because this guy, his parents had started the bank. It became the second biggest privately owned bank in North Dakota. He even has its first savings, uh, first international savings. So they have branches here in Arizona now, too. Um, but he it was a town of 6,000 people. He he gave the town 40 acres of land that was surrounded by another 1,500 acres that we were going to develop. And he the town at an 80% clip passed a$85 million bond for 6,000 people to build like one of the coolest high school and event centers you've ever seen. Like this hockey radio stadium they have there is just a notch. 2012, 2013.

SPEAKER_00 7:38

So recovery.

SPEAKER_02 7:39

Yeah, so recovering, but oil's at an all-time high. So like there's not a lot of work in Lake Cavasu. And that's Michael and I really wanted to sink our teeth into some bigger developments, and we were willing to travel and kind of do whatever it took. And this older developer trusted us and took us under his wing. He wasn't gonna go do all that work without having two guys to kind of push the effort.

SPEAKER_01 7:57

Sure.

SPEAKER_02 7:57

And so we flew up with him to his air park that he developed in Wyoming called Alpine Air Park, and we looked at it. And it Michael wasn't gonna say no to anything after that because he is so creative. And when he saw what this guy had done, I mean, so outside of the box. Like we fly in, and there's a gate that literally on the runway comes down into the ground with a button off your yoke on your on your stealing wheel, steering wheel, and then you like take the plane over to your house that has a uh a hangar built onto it with an apartment above it for the the you know, and so Michael's unbelievable. Michael's totally hooked up. I'm looking at it going, how could this possibly be feasible? Like, I don't understand how you can make money on something like this, but by the time we left, I fully understood it because I understood what people were paying for that. And it was it was crazy because people would come not to spend a whole bunch of time like fishing and things like that, which is abundant around there, and it's amazing. They all have little huskies, they're just aviation nuts. Like so they fly it in the real jet and then they get into the the you know the hangar and they pull out the little toys and they just fly around. It's awesome, it's awesome. So we sat there and we kind of game planned on what we were gonna do. We went to North Dakota and and and we spent quite a bit of time up in North Dakota and we're very successful in doing what the banker wanted us to do. Great experience. Built things off of napkins, like literally three weeks in. I went to a city council meeting. Michael had been there for two weeks before me, like getting all this stuff done. And I go to the city council meeting, and the mayor's asking Michael about what's gonna happen over here and what's gonna happen like in a matter of three weeks because there was so much stuff happening there. Yeah, like you can imagine going into the city and asking about an easement. Well, they had just recorded three more easements the week before that, like nobody knows where anything on the ground is. And so, because the banker owned almost everything, we kind of became the central point of development. So we we got a great experience out of that, met a lot of really cool.

SPEAKER_00 9:38

You're able to advise probably a lot of the utility work too.

Desert Land Group Takes Shape

SPEAKER_02 9:40

We were, yeah, and so we would get we would get called into city meetings, even to say, hey, you guys are putting your stuff here, these guys need to go over here. What elevation could we go in at? Infrastructure, a lot of stuff about tunneling underneath existing highways and other infrastructure, and it's just some muddy mess there, and so now you have to have a vacuum machine just so you can you know keep the hole going. Yeah, like we learned a lot of things that we never would have learned without doing that. Sure. And um when that kind of when the oil came back and that was done, we kind of wrapped that up, we'd developed something, sold off an entire park for about 40 million dollars for an industrial deal. Wow. And then we had all the other stuff kind of teed up and the market started coming back. So we got back here, and at the same time, the Havasu market was ramping up. And um, Riviera had been purchased back in 2006. We'd put that on the shelf after getting the entitlements and everything because of the 08 market. So all that stuff, it just kind of worked out perfect. So Michael and I thought, well, why are we being consultants if we can put our efforts together and really offer an A through Z service? Because that's what we're doing right now. So let's put our money where our mouth is and and give up with the businesses that we independently own and go all in on this. And it was doing big things from day one, and and today we're doing big things with Desert Land Group, and it's it's been way above my expectations. And I have to say, like I've seen a lot of partnerships, and there's not one that I'm envious of compared to Michael and I he has everything that I don't have, and I can do a lot of things that that he doesn't want to do. Um, and so it's worked out really good. So in 2012, 13, we we opened up Desert Land Group. We've done a lot of really cool things, you know, in the community. We were able to help get a corporate-owned golf course transferred over to um a local group that's owned it and done a lot of things with it since then. Those are some of the early things that we did. That was the golf course in the middle of the town. It was owned by American Golf and Eagle Golf for a long time. Okay, they didn't have any regional presence here, so they weren't putting any money back into it. It's 36 holes, yeah, 210 acres of great, you know, centrally located land. But yeah, um, that was fun for us, and then you know that kind of led to the market started picking up, so we started doing some other developments, some on smaller scale on our own equity. We we started Lux Locker back then.

SPEAKER_00 11:46

Yep.

SPEAKER_02 11:47

Um that's really cool.

SPEAKER_00 11:48

I want to talk about that too. So you I'm glad you put you're gonna you're gonna tee off on that because as you know, I do storage too. So the fact that you guys were actually original uh founders of that.

SPEAKER_02 11:57

We've never compared notes. I think it would be fun to to kind of go back and forth a little bit about just some some things we look for when we do storage versus what you're looking for. I think we've probably learned some things from each other. Sure.

Riviera Origins And Entitlement Gauntlet

SPEAKER_00 12:07

Oh, I believe it. Yeah, so let's keep staying uh on the uh uh Riviera. Let's keep going through the Riviera and then we'll go back to that. But so where are you guys at? Let's talk about the Riviera because that the marina is like that's the only place I go to launch my boat now. And I didn't even really know it was coming into town, you know, because I'm kind of an outsider still, you know. I've I've been here now full full-time, pretty much going on to three years, yeah. But I've been coming out here for 35 years, and I just had the opportunity to buy the land where Padum Storage is, and I just fell in love with the whole entire city, kind of similar to what you did. So now I'm just like fully entrenched here, fully bought in, and just falling in love with the place. And the riff uh the Riviera is the only development that I have not been fully involved or engaged in because I don't have a lot of business over there. Yeah, so I was just kind of more on the opposite side of town, but yeah, let's keep going on the on the on the uh Riviera.

SPEAKER_02 12:53

So Riviera is a you know a great story. I think it's a once-in-a-lifetime kind of thing. I've had people tell me that it's a unicorn.

SPEAKER_00 12:59

Oh, yeah.

SPEAKER_02 12:59

Um I agree. And I and I think maybe getting all the entitlements and but it started, it's it's way more than people think. And I'm glad you asked me because there's so many stories about Riviera. I mean, I've heard people, I mean, even builders that are in our neighborhood don't really know exactly how all that came about. Sure. You know, and most people were so doubtful on it. I think I told you earlier I had no less than a hundred people that I put a an investment deck in front of before Riviera started, and and nobody was was buying into what we were trying to sell. Yeah, it was just an impossible story. Yeah, and it was more than possible.

SPEAKER_00 13:30

Which is really intriguing and inspiring too, because that just does tell you that if you if you really know what's going on and you can educate people, especially with your background kind of on the data side, you know, it really does help the people that will buy into it and see it and have actually made those those those risky decisions. Yeah, and it does pay off. Yeah, you know, so like kudos to you because that's kind of the the game I play too.

SPEAKER_02 13:52

You know, it so it all ties into each other, right? So 2006 was the year that Riviera got purchased the land, but it was in 1976 that Ken Comic stood on that land with Robert McCulloch and it was surrounded by BLM land. It was clearly a BLM swap at some point where they swapped something out with the private owner on a more precious spot for conservation or whatever the BLM was interested in at the time. And um McCulloch and Ken both agreed, but there was really with no access, it wasn't very valuable.

SPEAKER_01 14:18

Yeah.

SPEAKER_02 14:19

And one family had owned it forever. Um, Ken and Jim had finally started started talking about an actual transaction with this family, and the gentleman was older at the time, and he ended up passing away while it was an escrow. And he had given a couple shares away of an LLC that owned the land to his grandkids, which we closed without those shares in possession and worked through that. But so it was, you know, everything about Rivera was something was a little different. So we always had to look outside of the box, we always had to look at what the need was for the community, whether or not, you know, state parks, BLM, Army Corps of Engineers, Fort Mojave Indian Tribe, Lake Avaso City, all these agencies had to sign something at the same time for this to really happen.

SPEAKER_00 15:01

I had to get the stars to align.

SPEAKER_02 15:03

And the city had always promised the marine the state parks that if they built a marina, which was really looked at all the way back in the 90s, like Ken Komick and Army Corps of Engineers worked together on finding, because Ken was probably the most prominent developer at the time, they reached out to him and said, We'd like to have another access point on the lake. We'd like it to be on the south side if possible, but Army Corps of Engineers is always going to dictate from an environmental standpoint where really the best site is when you consider everything. Yeah. So it took a long time to study that. That site was always put on the map. And from 1996, when it was identified to the day that we sat in an office with the city and decided that we would be the ones that bid on the public request for proposal. We didn't necessarily know if we'd get it or not, but we had no plans to build a marina. And even fast forwarding, state parks had raised money, they'd done some designs, but there was always a more important budgetary thing at the state level, whether it was education, I'm sure they were all good reasons, but they never could actually get all the way to the finish line with the funds.

SPEAKER_01 16:00

Yeah.

SPEAKER_02 16:01

So they looked at the city and said, Well, City, you're willing to build a road down there if we build the marina, but what happens if you guys build the marina? And I don't think the city had any interest in building something that they'd have to operate. Yeah. Most cities don't.

SPEAKER_00 16:12

No, of course not.

SPEAKER_02 16:13

And we happen to be the only state other stakeholders. So we were in the room at the time, and both parties kind of looked at us and said, Well, how would you guys feel about building a marina? And at the time it was kind of far-fetched, but we said, Well, we're thinking just a boat launch. We weren't thinking what you see down there right now. We're just thinking we really need the road, and it would be a great amenity, it'd be great that that the people in the neighborhood can drive a golf cart down to launch their boats. So we'll look at it. But we didn't really, we didn't know anything about marinas. Like we no, we were trying to develop a neighborhood, and the marina was an important component, but that wasn't supposed to be on us. So it evolved into yes, it went to an RFP, and we we were the successful bidders. And as we went through the process, we started to go do research and development and look at all these other marinas across the United States. We said, you know what, this actually this could be something. This this could be really so it morphed into what it is now.

SPEAKER_00 17:04

And so we we went all in on the plans.

Building A Class A Marina

SPEAKER_02 17:06

I mean, we we we asked for everything that would be good, and we asked for it in a way that, hey, this is something the public needs, this is something the public needs. But at the end of the day, the basis of everything was a high level of service in class A. And there's just there are not a lot of marinas built. You don't see like, you know, once every X number of years in Lake Cavasu, if you look at it, we only have a few marinas, right? So let's do this right. And so we we we went and did a lot of research. We went to marina conventions, and by the time we were done, we didn't even hire marina companies to build it for us. We went down to Mexico and figured out where to fab the the steel for the docks. We figured out where to get a powder coated out. Now it was good, except that we signed contracts in April of 2020. So I want you to think about that timing. Yeah, so for all the steel oh yeah. So we signed this contract, and the steel company was like, hey, the the world's gonna fall apart because COVID's just coming on right now. So they signed an agreement that was really low. It was great for us. Yeah, but the day they were supposed to deliver it in September, they gave us a cancellation of contract and let us know that you know, like there's nothing we can really do. Like we yeah, we committed to something we can't do. We can't deliver and and you know, litigation or what what have you, that's not gonna help because everybody's in the same position. So we kind of just took a deep breath, signed back up, and got them going. And luckily, the demand, obviously, what what happened in in those years with Lake Havasu and it being so attractive to people that didn't want to be restricted to the same level that they were maybe being restricted in other areas, it blew up. Like I live on a I live on the largest cul-de-sac street in Lake Havaso, and it's like literally it's at four o'clock, five o'clock in the afternoon, there's nobody walking around. During those, it was like a parade in my street because all the houses were full. Like, you know, probably only 50% of them are occupied.

SPEAKER_00 18:48

Everybody from California and Vegas and Phoenix that's locked down, they're here.

SPEAKER_02 18:51

They were occupied full time, they had their brothers and sisters staying in the same house. Like they, I mean, it was so much activity. Yep. And I don't think people really understand this, but like when you look at the Lake Havasu City stats, our restaurant sales and our and our hotel stats went 52% up in one year. Now, this isn't like a new business where you expect 52% growth. This is established restaurant sales went up 52% in one year, and and hotel sales were right there with it. And then the next year, 40-something percent again. When you do the compounding on that, it's like 120% out of the same square footage of restaurants and out of the same square footage of hotels or number of doors. Now, we did add a lot of short-term rentals that added to that tax base. So part of it was that. But I think we went from 800 short-term rentals to 1,600 registered short-term rentals in a matter of a year and a half. That that's a that's a crazy stat. There's only 30,000 houses in Lake Abbasid. So, you know, you add 800 more to that role. That's a and you see what happened with pricing and everything else. And people started buying based on investment value versus single family living at value. So it did a lot of things to our market that we're trying to figure out now. So there's definitely some downside to some of that. But as it related to the marina, it couldn't have been better. And we had a senior housing thing in town at the same time, and it couldn't have been worse for that. So COVID wasn't good for everything, but for the marina, it it's exactly where people wanted to be outside and recreating. And so we just kept building at a bigger and bigger pace. We opened up the marina and the first neighborhood about the same, we opened up the first neighborhood first, and the marina was already under construction at that point. And it uh it went really well. Like we think we thought it would take two to three years to sell off our first 72 sites. We thought we'd probably average around$250,000 a site just based on what we were seeing in the market. That's where we were gonna start to create some momentum. And there was no moment, I mean, the momentum was there. Like we we canceled the grand opening with 300 people that were already committed to coming. It was supposed to happen like the very end of March. Instead, on April 1st or 2nd, we started scheduling tours and we just had all those people that wanted to come out and look like individual tours. Yep. And the first 22 people that came out signed a contract, and we already had the contracts drawn up. We didn't change terms, we didn't change. I mean, it was a lot of demand.

SPEAKER_01 20:59

Yeah.

COVID Demand Shock And Fast Sellout

SPEAKER_02 20:59

And after those first 22 people, we went back to our price list and we changed it, and then we signed up another, call it 40 out of 50 people that came and it was sold out within six weeks.

SPEAKER_00 21:08

Wow.

SPEAKER_02 21:08

And so we were frantically building. And the prices went up. Prices doubled from when we started to when we got done with the first neighborhood. And they they kept going up for the next year. And then about 2022 is when you saw in Lake Cavasoo and Riviera, you saw the post-COVID thing starting to happen. But honestly, it fell back a lot less than I thought it would because there was so much of a boost at the beginning. Yeah. So yeah, I mean Riviera was was definitely um a long, long road to get there. And we're we're you know, our Michael and I really worked a lot with Jim Comic. Yeah. And Jim was the younger nephew, and he was 56 years old, and he and he passed away unexpectedly, and you know, we missed him terribly. Yeah, but he was a really good guy. He was a he was an amazing guy. And he was he was he was Michael and I both. It was it was incredible because I'm really good with numbers. Not very many people can keep up with me unless they even if they have a calculator, they still have to listen. Um and and Michael is such a creative guy, and Jim had it both. Like and they're it's such a rare thing.

SPEAKER_01 22:07

Yeah.

SPEAKER_02 22:07

And Jim had the benefit of his dad kind of mentoring him and his uncle Ken mentoring him. And they the thing that I pull the most out of that, honestly, is that he loved what he did. Yeah. And that, you know, in development, that there's nothing to love sometimes. But getting through the challenge, he he showed us how that was what you what you bring it on.

SPEAKER_00 22:26

Yeah.

SPEAKER_02 22:26

Let's get through it. Let's do it the right way. And I guarantee it's gonna work out at the at the end of the day.

SPEAKER_00 22:30

You know, Luke, that you you nailed it. This is why I wanted to bring you on, you know, is to is to highlight the the craziness and the demand that's really going on in Lake Havasu. So let's let's keep moving this forward. Where are you guys at now with the Riviera?

SPEAKER_02 22:43

So fast forwarding through all those entitlements and everything, um, we've now been open for five and a half years. It's actually six years now. Um we've sold 320 out of the 335 sites that we've built. So we are frantically building the last neighborhoods. And because I just talked about Jim, I have to tell the story because it is kind of a funny story. But Jim was born in 1967. So we had eight neighborhoods in this community, uh, one through eight. And we had developed the first five. And Jim had passed away, unfortunately, back in 2022. So we had built neighborhood four and five, and as we got to six and six and seven, before the kids were saying '67, this is way before. I was that has nothing to do with that. Got it. It has everything to do with Jim would never put his name on anything. This this guy has developed so much stuff, and he was such a high-level guy, but you will not find his name or his uncle's name, Ken Cole Make on really anything. And he's developed a huge part of this town.

SPEAKER_01 23:36

Yeah.

SPEAKER_02 23:36

So instead of putting his name on something, we called the neighborhood 67 because it was the year he was born. It was a big it was a big number for all of us. Like we always it always came back. It's like I never really believed in magic number type of stuff.

SPEAKER_00 23:48

But that's the magic number.

SPEAKER_02 23:50

It is the magic number for us.

SPEAKER_00 23:51

Because you guys were developing 67 while he was, he passed, got it.

SPEAKER_02 23:54

And we weren't there yet. This is afterwards. We we developed neighborhood four and five after he passed, but by the time we got to 67, and the neighborhood right after that, called Solitude, is is it is the highlight of Riviera. Yeah. And it's the culmination of everything we've done in there. We have the best actual land and orientation of the entire 250 acres is on that last piece. It's we call it the mountain. It'll be known as Solitude going forward. But it sits right across from Copper Canyon and it has a view to the southwest of rugged mountains in the background towards Parker that nobody can see from anywhere else in town. Like it literally is a one-of-a-kind view. And it is my favorite view.

SPEAKER_00 24:31

And you have a 180-degree view of the lake if you're in the back. If you're saying in the back of the lot, over or maybe more. Yeah.

SPEAKER_02 24:36

So I call it because you can go all the way around where you go into steamboat and there's areas I call it the owl view because you literally can't see the whole view without turning unless you're an owl without turning your body. Yeah. You know, so I mean it's it's nuts.

SPEAKER_00 24:48

It's true. You go from one, you literally have to do a complete 180 to even see the other side. Yeah, I completely agree.

SPEAKER_02 24:52

So we're super stoked because we are just finishing the grading of 67 right now. And 67 on top of being named 67, just the the words 67. When you look at the streets, they're they're all named after Jim's volleyball crew. And he had a best friend that passed away from cancer right before him, and they know him as Otter. And so there's Otter Court.

SPEAKER_00 25:11

Oh, that's cool.

SPEAKER_02 25:12

Jim was known as the Havasu Hammer, so there's Hammer Lane. His whole crew was named his whole crew was named the Crux Crew. So without naming anything after Jim, I hope he doesn't get mad at me from above, but we we made a little play on him.

SPEAKER_00 25:24

So that's really cool, man. I love it. Um, all right, see, let's uh what would you like people to know more about the Riviera?

Neighborhood 67 And Solitude Vision

SPEAKER_02 25:31

You know, I think um because Riviera was so doubted early on, there was a lot of you know people that said it would never happen. I've heard all kinds of stories. But what I'd say about Riviera. Yeah, what I'd say about Riviera is like we we had a vision. You know, Michael and Jim um certainly had a vision, and people like Scott Ward helped us improve on that vision. And without people like Scott and like Jennifer and Brady Hayek, who are great builders in there as well, and without some of the people from outside of our market that brought some of their great builders in that also brought their good subcontractors in, because I know Scott and everybody else was having a really hard time understanding how to build some of the details these world-class architects were bringing with the existing subs. Scott knew how to do it, the the general contractors understood it, but teaching the subs how to do it, I mean, you're either getting a really high number, like a never get off the horse until it bucks you off. So the sub gives you like an extra zero on the end of it because they don't know exactly how it's gonna work, or you have to educate them. And I think Scott and other builders did a good job of that. But then we had these other crews come in from Los Angeles, and now we're seeing structural steel out there, we're seeing true level five drywall. Like nobody really knew what that meant in Lake Avasu. We just talked about that yesterday. Yeah, it it's it's it's brought a whole new level of housing, I'm sure, you know, in terms of Riviera. But I think what I want people to understand is that we're building this for the benefit of the community. Yeah, it doesn't fit every single price point, it is something that you know you have to be wealthy to attain. But what I would say about it is there's a lot of people interested in that, and they love this town just like you love this town and just like I love this town. And when they come, they come with, you know, the attitude of having fun. And they wouldn't be here if they didn't like the people around them. And so I find it a little ironic that I do see a lot of hate, is the best way to say it. But at the same time, I mean, this was estimated to be a billion-dollar impact to the economy, not by us, but by a third-party study that was hired by the Partnership for Economic Development before Riviera was ever even a thing. And I I think that it's exceeded every expectation that was in that study, because I remember looking at it and looking at the assumptions and going, hey, can we really build 100 houses over the first 10 years? Well, we're gonna we have 45 houses built, 50 that are under construction, and we've only sold 300, you know, like people can buy in sites, so there's really only about 300 building sites that have been sold so far. So to have that much activity this soon, in the average price, I would tell you, take out of the hundred homes more or less that are being built or have been built, take 20 out of those. Those are the spec inventory, it's more like 15, probably. But you take the average price of the ones that people are building for themselves, custom, it's probably definitely north of four million dollars.

SPEAKER_00 28:07

Well, you know, Scott's got one going on for 10 million right there on the corner over there by where he built the other kind of row of properties. He's got some he's got some pretty big things.

SPEAKER_02 28:15

And when you get when you see what's going on, when you see what happens at Solitude, people are gonna drive by that and they're gonna say, Hold my beer.

SPEAKER_00 28:20

Oh, yeah.

SPEAKER_02 28:21

It is gonna be nuts because we're building sites out there. Like the one thing we underestimated is that everybody would build out every square foot of potential. I mean, retaining walls and everything else. They're using every square foot that's available on the last the last two phases, it's kind of a culmination of everything we've learned. So we don't have anything that's smaller than an 80-foot wide site. Yeah, every site is, you know, like in the solitude, we're we're half an acre up, and the sites are, you know, the the the streets are it's gonna be used. It's it's going to be used. And so when you start doing the math on that, it's like you're going to see 15 and 20 million dollar houses in Lake Havaso. Yeah. That's going to happen.

The Data Model Behind Havasu Buyers

SPEAKER_00 28:53

And I don't think people quite it's hard for them to fathom that. But it but it's what and this is where I want to bring you in on this part of it. I wanted you to what we were talking about when we were working out is kind of that that data that reflects kind of the income levels and kind of how it went from LA to like secondary markets and how that flowed because that was really impressive. And I think for my audience, I really want them to hear what you have to say because this is so powerful when you understand the flow of capital and kind of where it's all coming from. And that really does highlight where this place is going. So please share.

SPEAKER_02 29:27

Yeah, I mean, this dates back to 20 years ago. I was trying to get my MAI designation as an appraiser, and um the MAI just means member of the appraisal institute. But to do it, you have to be peer-reviewed, you have to come up with what amounts to a thesis, you have to go through a bunch of extra education and peer-reviewed work. But the very last part of it is a thesis, and you want to stand out because you have these peers around you kind of looking at your work and they're gonna ask you hard questions. And I'm not a big market guy, I'm a tertiary market guy, so I don't have all the tools that these other big markets have. I mean, they have third-party companies that study every single angle and they just pull the studies. I actually have to do the studies. Yeah. And so what they wanted me to do is show them a fundamental analysis. And usually in the appraisal world, that means a mathematical equation that works, right? Like if you have a thousand people moving into town, two persons per household, well, you need to build 500 houses. And if the average income is$50,000 and you can afford 30% of that for a mortgage, then you can afford$15,000. So you can do the math on what they can afford to pay if they put 20% down. That's the price point you're supposed to build to. Yeah. Well, if anybody was to ever follow that fundamental analysis that's supposed to be a fact in Lake Havasu, it would turn out totally wrong because Lake Havasu is not driven by median family income. It's driven by second homeowners.

SPEAKER_01 30:40

Yep.

SPEAKER_02 30:40

It's driven by tourism, it's driven by people that are spending a lot more money here when they're here than they would when they're even back home and they're accelerating their spending. Yep. And so what I set out to do is try and prove that without knowing exactly who's in my town, I can tell you kind of where they're coming from and I can tell you roughly what they're going to spend on housing because we shouldn't build 500 houses that are in that price point. We need some in that price point, but we need stuff that's not even showing up on this study.

SPEAKER_01 31:07

Yeah.

SPEAKER_02 31:07

So what I did is I started looking at, okay, like Havasu restaurant sales. They're collecting 100 million in restaurant sales. You can back into that from the tax. It's it's verified by the state, divide that by the percentage they charge. Okay, they're doing$100 million. And you're telling me that there's 60,000 people here and they're making 50,000. That means they're spending like 20% of their income on restaurants. And I think that everybody knows that's not the case. So where is that money coming from? That it begs the question. So now let's look at hotels and now let's start looking at some of the upper end neighborhoods that are selling. Where's the concentration of zip codes? And what I was able to do is literally map out the highest-end sales were concentrated on closer to the ocean in California, whereas a lot of the sales in the middle of town and the infill neighborhoods that traditionally sell for a little bit less, they were concentrated in the inland empire. And so by by correlating all that out, I was able to prove to my peers that even without having a census that tells me something, I can come up with a pretty high correlation and confidence interval by looking at all these things through regression analysis and playing around with different variables and seeing where it tightens up at. And by doing that, I was able to kind of identify the demographic that we'd be shooting for in any kind of upper end neighborhood. And what's funny is I did that without even knowing that we had developed Riviera at the time. Um wasn't even useful. This is prior. This is like, I mean, I'd done some studies for Riviera, but I certainly didn't go into that geeky analysis to figure that out, right? So I mean, we had our own theories about it, but it it definitely far exceeded what we ever thought would happen. But it was interesting to see people that are are nerds like me, like their jaws dropped when I presented it to them, and then after they got done and asked me questions or like that, that honestly is brilliant.

Deposits Wealth Transfer And Velocity

SPEAKER_00 32:45

Yeah. And that's and that's kind of the, you know, we we piggyback off kind of some of that data, but we're also looking at spending habits of baby boomers, how many people are actually moving their um, you know, getting their uh IDs and licenses here in Havasu, where they came, where they came from, how many trusts are being recorded and people are using trust to buy. You know, we're looking at uh uh company sales, deferred sales trust. We're tracking a lot of that data to identify kind of the spending habits of boomers, and then obviously whether going for healthcare. You know, and when you're looking at some of the from some of the data that we're tracking, you know, people are just trying to maneuver around taxes, cost of living, and when you retire, you're balling on a budget. So now you're you're constantly trying to identify how to live a good life, buy all the toys that you want, and be amongst friends, which is important. And and the political environment has really pushed people here too. The volatility has really driven a lot of people here, and it's it's it's it's accelerated people's exits out of businesses and in and pushing themselves into retirement and making those moves here, or start positioning themselves for retirement early and start buying a second home here, getting ready for retirement out of California, two, three, four, five years ahead of time. And but they're just starting to buy all their toys here and start maneuvering and start shifting their wealth here, all the way down to the smaller banks. You know, a lot of these regional banks are opening up here, and that's kind of crazy because you saw a couple of years ago regional banks get crushed. Everyone was, you know, kind of pulling their capital and going to bigger institutions, and now all of a sudden you're seeing some of these smaller regional banks open up here. Okay. Tell me about your thoughts on that. If you think I my thoughts, and I'll back it before you go into that. My my two is that as people are moving here and and full on retiring here too, as people come in, they believe in this area. Obviously, they're moving here. So a lot of times they move their wealth here. So you're you're starting to see more depositors come in on the smaller regional banks. That's kind of what I'm saying.

SPEAKER_02 34:35

You're 100% right. Yeah, it's not even that's not even a question. Like go ask Arizona um credit union right now, go ask for savings right now, go ask Foothills Bank right now. They and the credit union doesn't even have a reason to take more deposits, they don't operate the same as the other banks, and yet they're getting more than they ever anticipated. They're actually getting more than they're trying to get. Um, so it's happening for sure. And what you said, I think there's two different things. There's there's the macro regional and uh economics of baby boomers getting the largest transfer of wealth from their parents that's ever happened. I mean, they literally control like 60% of net disposable wealth, 60%, and and half of it's already been passed to the baby boomers. So at one time it was like 72%. And they're frugal. And they're frugal. And but they're frugal, but the kids have been waiting for a minute, and they probably have a wish list. And I'm sorry, but they're going to spend money at a much higher rate, the velocity at which money moves through that generation versus the previous generation. And if you really look at the biggest impacts that we've ever seen in my lifetime at least, I I would look back at the 2008 mortgage crisis, really 2006 mortgage crisis, but we knew it by then. And I would look at the transfer of wealth that's happening right now as the two most obvious things in hindsight. I know uh a lot of us got fooled by 2008, but if you if you watch the big short, you're like, yeah, which you and I talked about when we were working out. Who didn't see that coming, right? But yeah, I mean it's kind of obvious. Well, this is happening too. And when you look at velocity of money, it it's a super important thing because forever, banks, when there's a stimulus and 08 or whatever, whatever it is, they issue money through banks. When COVID happened, they issued money directly to people and they printed a lot more of it than they usually would were during a stimulus. So there's two things that happen. But when you look at the impact of what that happened in our economy, the only thing that explains it to me is that the velocity of money moves so much faster because it got given directly to the people and the business owners. I I think that's something to be learned from. Because when when this transfer of wealth happens, the same thing's gonna happen. That generation does spend money and it probably has some pent-up demand for spending, and on top of that, at a greater rate than their parents did.

SPEAKER_00 36:44

It shows when the PPP was pumped in. You know, people are spending that money on things that weren't necessarily for the businesses. You know, they were kind of going out and doing using that money for the thing. So the the as that money was transferring into those hands, those people were just spending it like crazy.

SPEAKER_02 36:57

That's my point about the banks, right? Banks wouldn't let you do that before because they gave it to you in a controlled way. What do you need that?

SPEAKER_00 37:02

It was underwritten a lot tighter. Right. Then they were just trying to get it into the market.

SPEAKER_02 37:05

They just wanted to make sure that everybody that had an employee wouldn't have to fire an employee, no matter whether or not there was a bad consequence or not. So it that's my point, is the velocity of money because of that moves so much faster. Well, this transfer of wealth is, in my opinion, similar. Like I think that generation will spend it faster. It won't stay on the sidelines as much as it has been in the past. And I think, you know, like you can see it in this market too. Like the if the the most affluent among among us are not not buying because they think the market's in a bad spot. They're they're buying not buying because they want to maximize their purchase, they want to do it for the timing. But they the ones that want to, they're doing it.

SPEAKER_00 37:39

Yeah, they're doing it no matter what's going on.

SPEAKER_02 37:41

Yeah.

SPEAKER_00 37:41

Yeah. And if they have that money given to them or let's say they're whatever it is, exiting the business, they're just they don't, they're not as um impacted by market adjustments. So they're just going in and buying whatever they want to do. And again, that's that's that's that's kind of the big takeaway that I'm trying to kind of lay home for people is I people need to understand how Lake Havasu moves, like the people here.

Land Scarcity And The Market Floor

SPEAKER_02 38:02

Well, and I would love to so this that to your point, I think this is really important about Lake Avasu because it it to me it speaks to the bottom of where we can go, okay? All this money is on the sidelines. On top of that, we have a very limited supply of what can be built in Lake Aviso. There's 2,000 finished lots left in Lake Havasu right now. The only land that will become available in the future is Arizona State Trust land. And when I add all that up and put the timelines to what it takes to get it entitled and start building, we will run out of developable land if we keep growing at the same percentage rate in about eight years. And we'll we'll add some, but like there was 600 acres just purchased recently. Well, that might have 1100 home sites on it. Well, that's enough for two years. There's only been one of those in the last five. So how are we going to keep up with that?

SPEAKER_00 38:44

Yeah. So that's a big takedown. So think about that. You said 600 acres and 1100 home sites, and that's only in two years, they're gone.

SPEAKER_02 38:52

And and Havasu, we're, you know, if we kept up with our population growth, we're not building quite that much. When you take the when you take Lake Havasu stats and the county stats that are applicable to the refuge and some of the communities that are considered Lake Havasu, but they're technically in the county. We're building around 450 to 500 sites a year.

SPEAKER_00 39:08

Yeah, we're I'm looking at the um permits that are pulled. Yeah, I'm looking at those numbers.

SPEAKER_02 39:12

So the city's like 250 to 280, but then you look at the other stuff that's surrounding it, and you get you get a little over 400 over the last three years on average. Yep. Um, so we're building actually a little bit underneath our population, and that's because of the affordability of housing, I would tell you. Um, but there's actually a pent-up demand for it, which adds to the the argument that I have that we aren't going to see a huge dip in Lake Kavasu. There's no such thing as a 2008 coming because that was an excess of land, an excess of supply. We actually are in a deficit right now for supply, and it's only going to get worse. And on top of that, to your point earlier, to kind of circle back to that, the money that's coming into Lake Kavasu is totally different now, and there's a there's a higher demand because of political reasons, tax reasons, you know, retirement is coming. I see, I see firsthand what you're talking about with people setting up their retirement, their exit plan three to five years from now. They want to buy something in Riviera so they know where they're going to be three to five years from now, if they can't accelerate it otherwise. So I feel like the bottom of this market, if we ever do have a downturn, and I don't see that right now. I it's been a very stable market. We've had some post-COVID declines in some of our leading indicators like retail sales and like restaurant sales, but we're talking like a 4%, 5% decrease in a couple of those categories in the face of 120% increase when you count 2020, 21, and 22 together. So 4% down off of 120. You kind of really can't even really factor that. Yeah, it's not even a thing. We've stabilized is the best way to say it, right? And it's it's stabilized at that level, it's stabilized well above where I ever thought it would be. And and kind of back to your point about like like Havasu being a small market, tertiary market. The reason we don't have, I mean, Trader Jroves we're not gonna get that. We just don't have there. But the reason we don't have as many of the franchises that you see in a bullhead city is because our demographics people don't they need to read my thesis study so they understand like it's not the census track. You you can't look at that, like it's not gonna give you good information.

SPEAKER_00 41:09

You know, I didn't know if I wanted to bring that up during this podcast, but man, I'm telling you the data that's out there on Google doesn't make any sense at all. It's because it's not really yeah. So like we work with um Green Street advisors, and I'm thinking about uh engaging with them and doing like a huge write-up on kind of all these little things that I'm wanting to just kind of pull together, right? For kind of our our brand. Yeah. Um, but those are the groups that I really they will do a deeper dive, you know, and they actually I don't you probably you know Green Street.

SPEAKER_02 41:35

I do, and I'd tell you this like I could be a huge help to them because my appraisal database tracks stuff all the way back to 2000. Nobody has that except for my database. So I would hand that over to them because they could do a lot with it in terms of trending and a lot of the stuff that I've done.

SPEAKER_00 41:49

Well, when I engage, I'll just introduce them to you and post some of that data because I'd love to put that in some a deeper report.

SPEAKER_02 41:54

I I would love to just give it to them and you know perfect. I'd love to see what they come up with too.

SPEAKER_00 41:59

I I got a really good relationship with a guy, and I actually went to high school with one of the guys that is their they're one of their data analysts. And so he hits me up. I he gives me I'm on like all their free uh like emails and I get all the data and all these asset classes and kind of what's going on. So that's actually how I kind of maneuver a little bit around our movement on what we're doing.

SPEAKER_01 42:15

Yeah.

SPEAKER_00 42:15

And it does allow us to kind of look at construction costs because they break that down and you know, material bottlenecks and what's going on with tariffs. Like they really give you real data and like stuff you can't, you can watch the news all you want, but like boots on the ground data, like that's what I that's what you do, and that's why I respect you guys so much. That's why I wanted you here because I want people to really know there's a deal there is a difference between what you see on the news or online or what have you compared to what's really going on. And at the same time, this is kind of funny, you brought this up during our conversation earlier. You know, because of the nature of the generation and the wealth that is being moved here, those people aren't naturally loud people, they're not on social media, they're not wanting people to know the moves that they're making. So there is, you know, where I'm a loud guy, I'm all over social media, have these big old platforms, right? But that's what we do to build our uh the what we're trying to do to raise capital. What you're seeing though are the people that are actually moving here are those people that are exiting businesses, they're trying to, you know, mitigate risk, they're just trying to lower their stress and right, they're just positioning themselves. So it's it's just the most amazing thing to see how much is being sent here, but that's why it's so hard to get the data because not everybody wants to know what's happening. So a lot of the, for example, the majority of my investors, I've seen a huge difference over the last, since let's say COVID, since 2020 to now, from you know, IRAs were really, really, really big about four years ago. Those IRAs went from like 50%, 45%, 30%, you know, from people trying to invest. Now I can only take in so much in IRAs per offering, right? And you probably know about this. But I'm seeing a huge, a huge, huge shift on not as many IRAs making investments. I'm seeing dry powder and a lot of 1031 exchanges, a lot of deferred sales trust and a lot of kind of positioning for taxes. A lot of the, a lot of the uh investment strategy that we have have more tax credits involved, and that's what people are really, you know, tying themselves to. Even people that are W 2 employees currently are looking, but they're making so much money, they're looking for tax credits. So it's really impressive on how much the the market has shifted as far as the the strategy of investors. But the what what's wild is that the wealthy ones that are Kind of quiet and moving here, those are also the ones that are investing. Yeah, they're investing into a town they believe. So, like our demographic, like are people that are local to Havasu or come to Havasu. Most of our investors are people who come to Havasu or have retired and have already moved to Havasu. It's because they know the market, they believe in it, they're driving the streets and seeing it get busier kind of thing. And they're like, Yeah, we believe that no matter what's going on in the world, you know, this is gonna hold. And that's huge. So I was talking to uh Eric. Eric, I was I'm just gonna say it on the podcast. He goes, This is such a right-leaning area that we could be going to war, which we are in, and people are still buying here, right? Because like, you know, two years ago, we're like, even if we go to war, what are the what ifs, right? Here's you know, the let's say the policies or the kind of practices that we have to try to mitigate risk, if that were to happen. But we are in something like that, and like how many people are still making moves. But because of the volatility, people are moving faster. So we're picking up and seeing an increase in activity from investors right now. And all we're doing ultimately is just flying the flag, letting them know this is what we have. If you guys like it, jump in. But the point is that the volatility is driving people to make those moves. You know, so it's it's it's just you never would think that because back in the day, people would just go to dry powder, they'd pull their money, go into an all-cash position, and it'll just wait it out. They're not doing that anymore.

SPEAKER_02 45:35

Uh kind of. Part of the reason they're coming is they've been waiting for so long.

SPEAKER_00 45:39

That's true.

SPEAKER_02 45:40

It's been on the sideline a long time. That's true. And they're like, maybe this new market is the new market. Yeah. Because we've never been in an up cycle quite like this one, right? Like we were kind of looking like we might go down to a down cycle in 2019, and then COVID happened.

SPEAKER_01 45:53

Boom.

Construction Costs Steel And Value Engineering

SPEAKER_02 45:53

So now we've extended this run that was already unbelievable. And so people have had that, you know, it all it is is perception. Yeah. Because it's it's somebody's perception on whether or not their money's safer if you're going to have inflation come down. And every single person I've talked to, when I give them this analogy, when they when they talk about, well, I think I'm going to be able to build that house for less next year, I'm like, no, you're not. There's no way. And I said, Do you think that, do you think people are getting a living wage right now? Do you think people are making enough to afford everything that we have in this market? Well, no, obviously not. Okay, well, then let's talk about lumber. Let's talk about why you think it's going to come down because really lumber, the commodity, is all labor. If you think about it, you have a guy that goes out and does the timber grazing and decides, you know, what we can cut down, what we can't cut down. Then you have somebody that goes out and actually cuts it down. And then you have a choker chaser, which I did when I was in college. Part of the reason I'm probably not ever out in the field anymore is that I got enough hard work out of that one summer to last year. You smashed your fingers in over the hammer, got your. Man, it's so dangerous. But you know, it's it's and then you bring it up to a guy that has to haul it down to a mill that has people again, right? So 80% of that lumber cost is labor. And there is no such thing as somebody that goes from$30 an hour to$25 an hour overnight unless there's some really extraordinary circumstance. So, how does that inflation come down?

SPEAKER_00 47:06

So, one of the one of the things I'm adding to to the conversation when I'm talking to somebody coming out here and buy a property, I'm gonna use my father as an example. He just bought up in the in the uh estates. We he put an offer in on a property. I I I walked it with him, of course, and I said, Pops, there's no way you can build this for the cost you're buying it for right now. The replacement cost will be more than this, and this property's in damn near perfect condition. I would pull the trigger on this now. So I'm seeing that happen too, where people are kind of coming out. I would say more the attainable, affordable side here, like that, you know, million and a half and down. I'm telling people, you cannot build these for the price that you're buying it for right now. So from a replacement cost, I'm building stuff. You can't do that. And people are going, I make sense. I need to pull the trigger now.

SPEAKER_02 47:47

People do realize that it costs 600 plus a square foot now. Uh it used to be, you know, for a long time, you could build an RV garage house in Lake Havasu for$150 a square foot. And it wasn't that long ago. I mean, I was it, you know, it was 2010. That was the number.

SPEAKER_00 48:01

Yeah.

SPEAKER_02 48:02

And now it's it's 600.

SPEAKER_00 48:04

Yeah. Yeah, it it's in real all in, yeah.

SPEAKER_02 48:07

If you're building a nice house, a nice house, and you're gonna have an RV garage on it. And the other thing people don't think about, this is my number kind of being a geek, but we're doing this with all my agents right now because I think it's super important to understand. But most of these upper end houses are 2,500 to 5,000 square feet. Okay, we we talk about prices per square foot to build and to sell, but yet they're building another 2,000 square feet with tongue and groove ceilings, like more finishes outside on a patio than you, and you have 4,000 square feet of garage, it's not even part of the consideration. So kind of going back to what I talked about earlier, I've correlated now sales with price per square foot under roof. And guess what? There's a much higher correlation to what you get for that stat than it is if you graph out price per square foot and you're like, that doesn't make any sense. That is well, it does make sense if you dive down into it, yeah, and really just breaking it all down to price under in the same categories at least, under roof, it's a way higher correlation.

SPEAKER_00 49:03

Yeah, it's it's a it's just a different, you know, and it's moved. I tell people this all the time things are moving so fast. If you watch, if you watch how fast things are going on politically, you have to move as a business owner or whatever you're doing in life, you have to move just as equally as fast. Otherwise, you will fall behind. And that goes along with building, building practices, material AI technology. You need to bring in different practices, even on your building, building techniques. You know, I think one of the things that have saved us a lot is just people's understanding of insurance and and costs for either end users or even you know builders' risk policies to build out of lumber. The fact that we started moving to steel a long time ago helped us a lot. And what was what was helping me was, and I don't know if you know much about this story, but um, I when the pandemic hit, we started, we decided to make you know a big push towards Nashville. The Southeast was just a big deal for us. And uh as a private lender, I manage a hundred million dollar debt fund. We were underwriting a lot of requests that were barn dominiums, these barn, these are barn cage products. And I was like, these are like glorified, you know, like tree houses. What is going on? Right. So and then I started looking at just how they're developed and the technology and some of the steel manufacturing and you know, it really shifted my mind on manufacturing homes, right? Which goes hand in hand how you manufacture our our um storage units. Yeah. And I'm like, no, these things are being cut off site, you're cutting timelines down. In fact, you're cutting your cost down, you have less trade, and you can actually build these for a pretty good cost. And for the most part, you can build them in you know, any atmosphere, snow loads, you can kind of consider all that. And I'm like, man, these things are killer. We can you can compress your cost if you do it right, and speed is uh is is the right thing. So we just kind of started looking at like Lake Havas, you know, you will know this mother. We started laughing about it. I was talking to Scott about this. This if you're not bringing those new kind of like techniques or strategies to Lake Havas, so you got to do something to stand out, right? And I think with the the our buyer's pool, when you bring kind of that spin to the game, they go, okay, you're building something new, we love it, but then you're also looking at just the overall um, you know, again, going just to go using insurance as a as an example, you know, that's a big play, especially with the when all those fires just tapped off in California last year or what have you. It it changed everything for the way people looked at or the way we're building now. Yeah, you know, anyway. So go, what were you gonna say? Because I know you were gonna go something, building methods.

SPEAKER_02 51:21

Oh, uh when I walked into your building today, like we we build a lot of storage and things like that, not necessarily heavy steel or red iron like this, but your building today, I have to say, is just next level. And when I walked in here, I'm literally getting done with design on another one that's not quite like this, but similar materials. I mean, I literally was studying it, like, oh, yeah, that's how that works better. So you clearly have a lot of experience in the steel game, and uh I'll definitely hit you up for some information.

SPEAKER_00 51:48

Even the saddles and so forth, like we really went through a lot of that, and you you can't with steel, you can't really shave stuff down, you know, it has to come like damn near perfect. Yeah, so yeah, it's it was it was a learning experience for us too, but it's really it's opening our eyes to again, if you can do it right, you're in essence manufacturing at the same time, all your horizontals are going in. Yeah, so as soon as you, you know, you're dropping your foundation and these things are dropping. And if you have a good team, you know, it's like for example, on building G on Paradigm Storage, we decide to go ahead and re-engage with our uh our builder, I call them our building team, and uh they're gonna double their labor force. And we think we're gonna be able to deliver that building in half the time we do deliver some of the other buildings, right? So it's but they've had the practice of building those exact same buildings, same engineering, same manufacturer, what have you. So we're trying to cut our our our our you know, cut our cost by increasing our speed, you know.

SPEAKER_02 52:38

The by far the best way to cut costs in this market right now. Time is that because at the end of the project and the debt that's on it at the end, like every month matters at that point.

SPEAKER_00 52:46

Value engineering is just such a conversation piece that people don't talk about, you know. And I think that is for us guys like you and I, that is like where we have to hover. And in this environment, you absolutely need to.

SPEAKER_02 52:58

You know, and it's it's um it's funny about value engineering. I've worked with some pretty good design build firms that you're really doing the value engineering before you do the engineering, and that's by far the best way to do it. Because when you start working with new guys, I have a project right now where the engineer was from Idaho. So I'm wondering why the footings are what they are, and I start thinking, huh, frost lines.

SPEAKER_00 53:17

Yeah, yeah, yeah.

SPEAKER_02 53:18

So then I call him and I'm like, hey, is this design with that in mind? And of course, he's just used to different means and methods of building anyway up there. And so I ran by him what both my concrete subs were telling me. And he's like, Oh, if you want it that way, no problem. And he just redid it for me, which is really refreshing when you have a structural engineer actually willing to listen and do something. And he was like, Yeah, we can do it that way. Well, it saved like$200,000 on concrete.

SPEAKER_00 53:42

We did the same thing on our steel buildings. Our engineer and architect, they're from like Houston, they do a bunch of stuff like on the, you know, like on the coastal, you know, and and we're always like, guys, this is like way over engineered, like compared to our soils report. Like, we can cut some costs. That's why I was telling you, you know, where we're thinking we're shaving our costs off or on the structural side, that did save us a lot, you know. Um, but it's true. The value in the value in it's it's always in planning, you know, where you save your money is in planning, and then obviously getting your contracts in place and getting your subs in place and materials too.

SPEAKER_01 54:08

Yeah.

SPEAKER_00 54:09

Now, cash is king if you can start ordering material ahead of time and storing it, but you keep it under your roof, you know, that's that helps a lot. Um, but yeah, so we're just, you know, that's that's kind of where I've hovered. I think, you know, I stepped, I stepped aside as CEO four years ago and just start focusing on those things, right? Acquisitions, entitlements, planning, um, capital raising, securities, legal, all that fun stuff, and then design. And that's where I nerd at is the design.

SPEAKER_02 54:34

You can save the most money on the design and putting the right team together and having them there from the beginning so the vision is held together the whole time. Yep. That way when you are on project and things are changing on the fly, like everybody's kind of on the same page and you don't have holdups, you don't have huge change orders, you just get it get it right.

SPEAKER_00 54:49

You know what's crazy is that I I it's hard to explain this, but I love to see I know that you and I are gonna totally disconnect on this part, this one part. When you do what we do, you make decisions on the fly on the in the field that are like could be epic in how it turns out. And it's almost it seems like sometimes it's on a daily basis, you know, and it's just so hard for people to think, you know, people that are closest to me, like, I don't know how you deal with the stress. I'm like, you know what? I don't either, but it's taken a long time to figure a way to build the scales to deal with it, but it's just the cost of doing business, you know? And uh, but it's it's it's it's so you feel alive and it's the most beautiful thing when it actually comes together. It's like worth it. It feels like you have real purpose, you know, and then people fall in love with it and build memories, and you know, like this fitness and health center here, people are just coming to me, telling me about you know how much this is um their mental health, you know, those type of things when you start getting that type of feedback for your design and hard work, it changes the way you feel. And I can only imagine how you guys feel about the Riviera because honestly, man, that is one of the most beautiful projects. And I've traveled the world, and I will tell you, it's it that's this is why I love to be here.

Why Havasu Can Beat Cabo

SPEAKER_02 55:51

Here's here's where we're trying to go with Riviera right now. And I and I think I think San Diego, Phoenix, and Vegas huge markets. We get hardly any love from those markets in Lake Havasu. The ones that come the ones that come get addicted. But I this is the best story I can tell. I had a uh a guy about a month ago fly out from San Diego, a couple really, really nice people. They had never been to Lake Havasu. He owns a big development company, he's like a civil engineer kind of guy, but on the side, he's picked up uh a charter company and he owns the FBO and he's chartering services for people. Yeah, like total study. He didn't need to tell me all this. Like I had to look him up for afterwards, like kind of figured it out. Yeah, I figured it out. Like I found out what his tail number was, called the airport, tracked him down. But really nice guy because I wanted to see what his background was because he was saying things that I knew he wasn't giving me the whole story. He knew a lot. But what he said to me that really hit home, I took him out to to Rivier, and I don't give a lot of people tours of solitude, but I had an agent call and say, I have this guy out here, it seems like it'd be worth your time to come meet him. And I said, Yeah, of course. So I went out there, met him and his wife. We we stand out on one of the best sites in all of Solitude that we're building on the last. And he looked at his wife, he goes, Why would we go to Cabo? Because they're from San Diego, and everybody from San Diego just goes to Cabo and spends$20 or$39 or whatever it is, right? And he looked, I mean, I listened to him have the conversation with his wife as he was realizing what he was looking at. He's like, I don't understand. If people see this, they're not gonna go to Cabo. We can go wake surf right there. We can get over here in the plane in 45 minutes. We have these views at night, we have this sunset at night, we have that view in the morning, we have walking trails. Why would we go to Cabo? And not everybody's gonna ditch Cabo, but a small percentage of people from San Diego, Phoenix, and and Phoenix goes to Cabo pretty heavy, also. I I think Lake Habasu over time is going to be a very good substitute for that type of trip.

SPEAKER_00 57:45

Isn't that right there? So let's hang on that for a second. So I've been down to Costa Palmas where you know the four seasons have been built and that whole man-made marina and all that stuff. You you probably know what I'm talking about. I do.

SPEAKER_02 57:56

Is this is this the surfer that's involved?

SPEAKER_00 57:58

No, this is uh it's 1,600 acres, it's got two golf courses. Um, you know, there's some big institutional backing here. Um, to give you an idea how big this project is, they basically went into an old fishing town with 3,000 people and basically employed all of those people that were in this little tiny, you know, fishing town to develop this project. And when you go through the there's old retired like Navy SEALs that are their um private security, and you go through two sets of gates. I mean, it's like a whole thing, man. It's stunning, beautiful. Um, you know, the you know, um, I actually sat in a restaurant uh with my wife at the time, and there was, you know, Larry Fink was sitting at the at the at the table, you know, uh the CEO of Black Rock. Yeah, and so him and I had a nice conversation. I'll talk about that later, but it was kind of I it just it was a good conversation. But you know, I you know, that's the type of capital that was getting pushed into developing this project. And I did not know this until I started mingling and talking to people that are around there. Anyways, the point is that that was probably one of the most beautiful places I've ever been. And it would like look at the sunset right now. I mean, look at that view from the office, it's stunning.

SPEAKER_02 59:00

I mean, Havasu has the best sunsets consistently of any place I've ever been in the world. And I've heard Hawaii's special, but it doesn't really have anything on Lake Havasu. If there's a fire in California and the sun's going down, that water's gonna turn pink and then it's gonna turn the sky even more pink. And if you're wake surfing on it right when it's going down, I don't know where else you would want to be.

SPEAKER_00 59:20

It's gorgeous, yeah. And it's yeah, I think that's the what I'm trying to lay the hook in is like when you're here and you spend some time here and you you fall in love with the people real quick too, because there's some really good people here, but it's so beautiful and so peaceful that it's it's that's why people fall in love with it. Now they just they don't want to leave and they start going, okay, well, hey honey, let's not go to Kaaba. Why don't we just go right here? Because a lot of times they're like, hey, our kids are over here, our grandkids are much closer, it's just easier to kind of get to. And you know, this we're also amongst friends, you know. And and that's that's what I'm want people to start seeing. If you haven't been to Lake Avaso, you have to come here. You will understand why people are flocking here, you know.

SPEAKER_02 1:00:00

So we did a survey of the PED. I sat on the PED board for actually, I just kind of gave up my seat this month. So I've been on it for 15 or plus years. Um, and Michael and I collectively sat on the planning and zoning commissions for 10 plus years. He was on the county one and the city one. So we love to dive into the community, but through the PED, I got a lot of good data because they would hire studies sometimes, and of course, I'd help advise on what kind of scope we'd need for the study to get the the information that we really needed. And what they're trying to accomplish? They did a study one time on um the favorability of Lake Kavasu and the rec and how recognized it is. So they did a they sent a bunch of stuff to Oregon and Washington, they sent some to the Midwest, Southern California we didn't need to send because we we knew that. Um and in Canada. And this is probably back in 2010 before the Canadians stopped coming quite as you know in in in large numbers like they used to.

SPEAKER_00 1:00:53

We saw a downtick in like Palm Springs area too.

SPEAKER_02 1:00:56

Yeah, it's it's the Looney was at an all-time high. I mean, there's there's lots of reasons for it. But um when we looked at those studies, there was like a it was it was some insane number. Like you would expect 40% of people to say, I love like Havasu, I would go back. It was like 75%. It was nuts. And then the people when you got more Midwest, the rec people didn't recognize it, they didn't know what it was. It's true. Um, and and so I think that's where Havasu is going to continue to see growth. Because I'll tell you, some of the coolest people in this community are from the Midwest. Yeah, you know, and it they aren't they don't come in the same numbers, but man, you want to talk about salt of the earth people now salt of the earth, and they're never gonna be braggadocious, they're never going to tell you who they are or anything else. But if you sit down and just have a coffee or a beer or whatever, like you you will want to go back and hang out again. Yeah, good people.

Storage Doors HVAC And Pricing Strategy

SPEAKER_00 1:01:42

And that's the takeaway, right? There is when that's the people you fall in love with the people, and and you know, just like anywhere, you have your your salty people, but you know, I will say that the majority of the people that I get a chance to talk to are the rooms I'm at least deciding to step into, um, or all people that just are here to do good business and they they love their family, they're very family oriented. Um, and they just want to continue to give back to others. Like that just that's where their hearts are, and it's that's the best feeling for me, you know. And I think when you when you get older, you're kind of tired of chasing, you know, everything else. So you start kind of just being a little more humble and peace, and that's what you get here, you know. Yeah, all right. So let's dive into uh let's compare notes on the on the stored stuff because I just love how you guys operate. I know you guys said you how many, how many inches you and Mike do you think you guys have built?

SPEAKER_02 1:02:24

I bet we've built 2,000 or 2,500 doors.

SPEAKER_00 1:02:27

I mean, that's institutional level there, buddy. I mean, that's there's nothing, you know. Yeah, I don't know a lot of people that do that.

SPEAKER_02 1:02:32

We got a a project in Montana that we're playing with right now, but it's not really our main focus anymore. But um we like it, we think we understand the market really well. And this is a stat I think you'll get a kick out of. The first one that we ever did, I was on a golf course with Adam Pakes, who was our uh partners in the original Lux Locker. Yep. Um and he goes, Hey, do you know where I can find a storage unit? And I said, Well, you can't, and they're all full. And he's like, Man, that's what I've been finding out. And I said, Well, we could always build one. And he goes, Really? You think we could? And I said, Yeah, I know a piece of land. And he said, he said, Well, how much would that cost? And I said, What I thought. And he said, Well, I could come up with the money. You guys want to build it? And like literally, we we started building something a few months later after we got it designed. We built that project very hands-on, and you know what it costs a day per square foot. So take the land out of it. But everything else, all in from design through C of O. Yeah,$37.50 a square foot. How long ago was that? It's 2015.

SPEAKER_00 1:03:26

Yeah, right, yeah.

SPEAKER_02 1:03:27

And now if I told you 90 was my last project, you'd probably bet the over on the 90. But it's it's you know, it's in part of that's not quite as hands-on because we were we were doing stuff for free that we would otherwise charge for if we were working for somebody, but um, we couldn't have built it for we could have built it for 45 or 50 back then, yeah. And and now it's double.

SPEAKER_00 1:03:46

Oh yeah, easy. Yeah, I mean, I'm over a hundred dollars, I'm like 104 a foot on paradigm storage, but that's also all in.

SPEAKER_02 1:03:52

Yeah.

SPEAKER_00 1:03:52

And then I uh and then I think on my other project, I'm at like 140 a foot. So it shifted big time, you know.

SPEAKER_02 1:03:58

It does shift. And so you you just named a per square foot thing. Like one thing I like to do when I go into other markets and I'm trying to find the demographic that we want. And um, I always look at land on a price per square foot of the building area you're gonna get. Like everybody's like, I'm gonna pay$10 a square foot usable land. No, that doesn't matter. I'm gonna get 40,000 square feet on that piece of land, so I do divide the price by the 40,000 square feet, and I'm paying$18 a square foot for the land that I can build, right? And so I'm paying$18 a square foot into my building costs. I'm putting it on the same level. Man, that helps me streamline all that analysis so much because you go into any market, you have swamplands in some, you have FEMA in another, you have easements, you have the usable land area of every parcel in every in every district is different, but you can kind of normalize it like that. And that's what that's what I always try and do is try and rough numbers.

SPEAKER_00 1:04:47

It is.

SPEAKER_02 1:04:47

It's a it's a really good way to start honing in and filtering down to things you really want to look at.

SPEAKER_00 1:04:51

That's a good that's a really good advice for people, you know, that they're kind of trying to get into the space and kind of a good little metric to chat.

SPEAKER_02 1:04:56

And they do they do it on apartments, it's always when you're buying dirt, how much am I paying per door, right? Same thing with single family production neighborhoods at least. Yeah. Um, and nobody really does that in the storage market. I don't know why, but we do pretty much the same thing almost, you know.

SPEAKER_00 1:05:09

It's exactly the same thing. So this you know, paradigm storage, I think we were kind of the first ones to bring in, you know, already um, and correct me if I'm wrong, you're gonna know probably more than me in some cases, but um, you know, temperature controlled units. And just what we gathered was people just want turnkey stuff, you know, and uh and that really helped us, I think, on our sales.

SPEAKER_02 1:05:28

Yeah, we we'd put some in a little before you, but not all in like you guys did. Like you're you're you're on almost all your units like that. Yeah, they're all yeah. We were always like 25% of our units are gonna be the upgraded units with and where we ran into problems, and you've obviously solved it, is the amount of electrical load on some of the sites started becoming exponential because of the length of the runs of those wires and so forth. Yep. So we always tried to try and size our overall electric, and if we had enough, we would put up the the HVAC and we didn't do that at first though. We did that, we kind of evolved into that by 2018-19. In other markets, we started kind of in in high end markets, we'd do 40%. Yeah. In Chandler, we'd do 60%, but not all of them.

SPEAKER_00 1:06:08

You know, when you when you plan it, I mean obviously we were planning it with all of that in consideration. So that's where we're able to plan for it. But you know, if that's the that that's the problem, it's such a cost, a massive increase in cost, that it's really hard to justify. Because it's just so much. And then so you're like, what are you going to sell these for? You could so obviously what you're going to put into it, you need to make sure you're making a profit. But the other side of it too was is the insulation. We decided to insulate literally every piece. And that helped a lot. Um but there was times where we realized not everybody's going to use their air conditioning because they don't want to pay for the electric bill, right? So we'll put it in and it's good for resale if they want to resell. So it's like a hey, like if you can have it in, if you want to resell it, you can. We were even thinking about putting the infrastructure in without the actual head unit. And if people want to put it in later, they could do that. So we've kind of looked at every thing that you know we thought would work, but we just said, screw it. We got such a good discount on just doing it all in bulk.

SPEAKER_01 1:07:00

Yeah.

SPEAKER_00 1:07:01

We just kind of what we did is we just passed those costs over to the buyer, but we didn't really change the increase in in cost. So like let's say it cost us$2,500 to put in it per unit, just a$25 by or sorry, a uh$14 by$50.

SPEAKER_01 1:07:14

Yeah.

SPEAKER_00 1:07:14

I didn't charge, I didn't increase my sales price necessarily to chase the more profit because we delivered that. It was just we're handing that cost over to our buyer, going, hey, if you were to do this outside, it's gonna cost you five grand, it's gonna be double the cost. Right. You know, that's all we really did.

SPEAKER_02 1:07:31

That's a good way to sell it. I mean, that's a and then I the only reason we don't do it all is I always look at any project we're doing and try and find a diversification of of prices that are gonna match the buyer set that I have.

SPEAKER_00 1:07:43

Yeah.

SPEAKER_02 1:07:43

You know, the one thing in this market is everybody. There's 12,000 doors in this market now, and everybody has you know doors that don't have HVAC behind them. So when you when you're building into when you're building 200 units into 12,000 doors, there you're still a really small percentage of the overall market. You're going to take people from those 12,000 doors because they've been wanting that HVAC for a long time. So it's a brilliant play on your guys' part because that's and and they've sold so much faster. Like we built that show place deal right out by you, and and the units that we put HVAC in sold. The other units a little harder, you know. Um and there's I look at it, I think it costs you said$2,500. Yeah, that's the the mini split system. But by the time you add in the insulation you put under those, so you can put the HVAC in there and the extra electric load. And are you putting a hundred amp in there or less? You know, like it it all adds up, and it's it's probably I I I would say it's more like ten thousand dollars a year every time you do that.

Ozarks Opportunity And Concierge Storage

SPEAKER_00 1:08:35

I think it was more like 11, to be honest with you, with electrical and everything else. Um, you know, all the way down to where we saved a little bit was we ran all the condensation lines like through the walls instead of like on the exterior. So a lot of that was already pre-plumbed, like before we paneled and put insulation in. So that helped a little bit. Um, but that's not by much. That's not enough to really move the needle. Over time, a lot of units were chasing that number, yeah. But but when you we were going to insulate all the walls regardless if we put the head unit in, you know. So it was like, just do it all at one shot and just increase the value.

SPEAKER_02 1:09:05

I don't know if this is true or not, but we looked pretty hard at Lake of the Ozarks. It just kind of seems like a natural, natural fit, right? And so I have a buddy moving there right now. Um, and he asked me, hey, would storage work here? And I said, Well, I don't know. I just talked to him today. So I don't know, but I I know a guy that I'm gonna talk to tonight that I think has looked at that market pretty hard. So I'll let you I'll let you know.

SPEAKER_00 1:09:24

So uh without dropping a name, I have a connection to a guy who's the largest landowner right now in Ozarks, one of them, and he owns a ton of businesses there. He's kind of getting tired. Um, his son unfortunately ended up uh um just getting into a position uh health-wise where he can't take over the family business. And his grandson is just too young. So he's he and he's been injured and he's kind of I mean, he's on his last leg. And so him and I have been uh talking about where I can repurpose a big position of his real estate holdings, but it's all just land. Um and uh and so I'm looking at some of those parcels right now on on putting some paradigm storage on it, and it's really close to water. I mean, some of them have lake views, I mean, some of them are real close to marinas, uh launch ramps and so forth. It pencils for sure out there. And to be candid, your labor costs are cheaper there. Um, your materials obviously are all kind of fixed, but your labor costs are a little bit cheaper there, and they have the labor force. So what's nice is you can, and I I know this sounds kind of harsh, but just to be candid, um, you know, you can you have more uh subs that can bid the job. So you can negotiate better, better rates on on uh the building cost, um, and you can increase your labor force so ultimately you can build faster. So you're you can actually make more money out there, and the demand is the it's if you look at like for example, if you look at how many RV parks are going in, just where they're you know, ready lots, tie-ins, and they're just you know, it's crazy. Well, what's happening is these people just want a place where they have covered and power so they can um you know store their toys. And these toys are not cheap, as you know. I mean, these people are they're they're investments for people now. This isn't just like you know, a small boat back in the day. These are people are going like this is a this is a an asset that if God forbid something happens, my wife's got 200 grand, 500 grand have access to, you know, yeah, that type of stuff. So people want to keep good good uh um good care of it, but then also you get the the bonus depreciation, you get some real estate holdings, you get some tax strategy by owning some of these, right? So it's like when you look at what the absorption rate is there and the demand, uh you you can build another thousand units there in the next four or five years and it'll be sucked right up, you know.

SPEAKER_02 1:11:40

Sounds like you don't need to take a trip.

SPEAKER_00 1:11:41

Yeah, I'm totally down. And I know where all the little hidden spots are, and I know some of the projects where people are ultimately trying to get out of and have more land to sell. I like I've been keeping an eye on that pretty quickly.

SPEAKER_02 1:11:51

Here's our take on the Montana project. I want to put this out there. Okay and this is I I think this is gonna work really well for us, and I love this idea for the Ozark market too. But we ran into a concierge business up there, and he works with a lot of dealers. So we found this spot right on the highway. You know, the land behind it goes deep and it's long, it's perfect for storage. Yep. Um, so you know, we we love the idea of building that dealership out front and having a gate that's right next to it that ties back into the storage with roll-up doors that also tie into the storage because we believe that that dealer will sell at least 10 units for us a year, if not more, just from people he's selling boats to. And then on top of that, do they have a mechanic there? Yes, there you go. Full service mechanic, detail everything. So it and so the concierge already works with that dealer, dealer needs a new location. So that's what we're trying to get to right now is hey, if we can find a partner that's going to drive more demand than we would get otherwise. Like, hey, would you rather store your place here where we're gonna concierge it to the the lake for you? And you can have your own place, you can come get it whenever you want. We're putting a golf simulator over there into our into our clubhouse because in Montana, I figure you need something to do for most of the year if you can only boat for three months. True. So, and with a golf simulator now, I mean, we're building a little clubhouse that has some classic car components to it and so forth. So um we figured, well, for for that amount of money, it doesn't seem like we could lose without well, you know, think about Havasu, there's so many mechanics here.

SPEAKER_00 1:13:14

People bring their boats and RVs from all over the country and they drop them off and they go do other things while their stuff gets worked on here. I mean, yeah, you having a mechanic that so that's the money mark maker right there. First of all, buy it and then you have to you know store it. You know what's funny? The amount of friends that I had that there was, you know, super excited to buy their first toy, and then they forgot where they're gonna store it after they bought it. They're like, oh shoot, Ryan, do you have a storage unit?

SPEAKER_02 1:13:35

I don't know how many people bought a when they came to Havasu, they accidentally bought a boat and then they bought a storage unit because they figured out what you just mentioned. Yep. And then they buy a house with an RV garage and they get rid of the storage unit. But like literally, I've never seen a market where the leading indicator is how many storage units are in town, but it it literally is the leading indicator.

SPEAKER_00 1:13:53

When someone buys a toy that then buys a house, like it's usually the house and then the toy, but people are buying the toys and then the storage and then the house.

SPEAKER_02 1:13:59

Yeah, they have to buy the storage first because they they don't want to leave that week and leave their, you know, like they need something for their boats.

SPEAKER_00 1:14:04

And they come full circle, then they buy a house, and the house has an RV garage, then they buy more toys and they go back to buying another storage unit. Right.

SPEAKER_02 1:14:11

Actually, by the time the house is built, they don't have they can't they can't fit everything anymore anyway. So they keep the storage unit, buy the house and eventually.

SPEAKER_00 1:14:18

Two boats side by side, golf carts, jet skis. I mean, man, it's a car, you know, it's an endless. We we laugh, and you're gonna you are gonna second this, but you know, we talk about how there's more money in people's garages than there are in the whole house, you know, the value of the house.

SPEAKER_02 1:14:31

There is so true. There's a hundred percent.

SPEAKER_00 1:14:34

You'll you'll have a you'll have two hundred two million dollars in toys, and the house is worth a million and half. Like that's just how this is here.

SPEAKER_02 1:14:38

And half the house is being built now. Literally, the garage is bigger than the square footage of the house. It's nuts.

SPEAKER_00 1:14:43

Dude, your house is like, it's you know, it's your it's a the man cave, mecca here, man. I mean, people just want their little three bedrooms, two baths, like low overhead, you know, very you know, easy to kind of maneuver around inside the house, and then you have you want this big old man cave for toys, man. You know, it's pretty cool.

SPEAKER_02 1:14:56

Think about the Lake Havasoo City Market just from a stat, right? Like 60,000 people, if you want to believe the census. It's really more like 85, is the way this town feels because of the winter and the summer users. It's it it's demographically, it looks a lot more like 85.

SPEAKER_00 1:15:09

I think during the winter, there's more people here.

SPEAKER_02 1:15:11

There is for sure. They don't spend they aren't spending as much per capita as the summer people, but they're they're here more full time. Um, but 12,000 units divided by 60,000 people. So now you have like think about that. But then on top of that, out of the 30,000 houses, you know, especially over the last 20 years, eight out of ten were built with RV garages. And over the last 10 years, out of those eight RV garages, half of them are double RV garages. Like it's just it's not even close. We have more storage per capita in Lake Havasu City, and I've traveled the country looking for other storage locations. Um, League City, Texas is kind of like Havasu, but I mean it's like 20% as much.

SPEAKER_00 1:15:48

Dude, it's just not Lenar's building house, building houses with RV garages now. I mean, like institutional public builders are butt building homes in like high dense areas with RV garages right now.

SPEAKER_01 1:15:59

Yep.

SPEAKER_00 1:16:00

It's like it's it's undeniable what's happening, you know. And I think I think those guys come out here and get jealous that we're building cooler stuff than they are.

SPEAKER_02 1:16:07

Yeah. Not very often that you get out National Home Bidder, take our take our stuff back to their place.

How To Reach Luke And What’s Next

SPEAKER_00 1:16:12

Totally true, man. All right, Luke. Well, thank you, buddy, for joining me today. I really appreciate it. For people that you know want to get a hold of you, what's the best way? Email, uh, website, what's the best way to get a hold of you? And what's the best way to kind of keep up with you guys and what you're doing?

SPEAKER_02 1:16:25

Yeah. Um, our website's great desertlandgroup.com, uh, habasue riviera.com is a secondary website that we have. Love that. Um, if you want to talk about Riviera, my sales team is is fantastic. I have eight different agents out there that will be there.

SPEAKER_00 1:16:39

I work out with one of them every morning.

SPEAKER_02 1:16:40

You do, yeah. He's he's he's new to the team, and I expect him to do big things.

SPEAKER_00 1:16:44

He's doing great.

SPEAKER_02 1:16:45

Um, he has great attitude and he knows he knows a lot about real estate. So very smart guy. And I love his angle on everything. So cool. He's uh he's doing it for the right reasons. So yeah, call us out at Havasu Rivera. Um, sales team out there is is there seven days a week. We are releasing the new 67 neighborhood. Like literally, we haven't made it public yet, but we just got a public report, and so pricing is now available. Um, people that are out there on our waiting list are starting to go do tours, and we the first two people that saw them, we signed up a 795 and a$950,000 sale. First two that came through the door. Easy. Yep. So uh because they've been watching it forever, waiting. Yeah, those folks have been waiting, they knew what they wanted. And so the second that it was open, they they came out.

SPEAKER_00 1:17:26

Good for you guys. Well, hey, thank you very much. And by the way, for everyone who's listening, um, we're gonna have his partner on. It'll probably be our next podcast. So if you're listening to this one, you liked it, you're gonna have to listen to his partner, Mike. So, Luke, thank you very much for joining me today, man. It was it was an honor to have you.

SPEAKER_02 1:17:38

It really is. My pleasure. Thank you.

SPEAKER_00 1:17:40

Well, thank you guys.