Episode 30 - Jake Knoth, BarnPros

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Prefab Review

Hi, my name is Michael Frank and this is the Prefab Pod presented by Prefab Review where we interview leading people in companies in the prefab housing industry. Today, we're speaking with Jake Knoth, CEO of BarnPros. Welcome, Jake. Well, as we were just sort of talking offline, I think it sounds like you are, I don't know, a pseudo-family business. So it'd be great to learn a little bit more about the history of BarnPros.

BarnPros

Absolutely. Yeah, I would call it generational. You might say the history of our company is pretty interesting. Basically, we have been around for just over 30 years. We had our 30th birthday about a week ago. Actually, so a little bit before that, our 2 founders had been working together. But it basically, looks like this: throughout the late 80s, our founders met and were working on a number of spec projects and a few custom homes together. And throughout the 90s, this is just outside of Seattle, Washington, on the east side, if you're familiar with the area. They began to build homes. Realistically, they had built their first barn together and this story becomes really interesting. I'll try to keep it short for the podcast. But basically, that barn went really well, they fell in love with the post and beam style of construction during that process and they began to do more. It started to catch on in our area and then really, as Seattle grew, especially as say Microsoft moved in a couple of towns over, we kind of got on their bulletin board and then all of a sudden, we began to really catch on in our area. And so, throughout the 90s we became kind of a large regional general contractor specializing in barn construction. And really do barns. We would do indoor riding facilities. We would do shops, but the focus was really on these high-quality, high-end barns.

Prefab Review

And was this 100% on-site at that time or was there sort of a kit component the whole time?

BarnPros

So this was 100% on-site. They were really, you could say, going through the motions, but the learning as it pertained to doing the same thing continually, but they were doing it on-site. And this is over dozens and dozens of projects. Towards the end, they had about 3 full-time crews operating.

Prefab Review

Yeah, yeah.

BarnPros

But eventually, they opened a warehouse locally where they started to do some of their door components - the things that took them a long time on site. And they realized that they could do it faster and more securely in a contained environment. You know, you're environmentally controlled. You're inside. It's warm and you know, that was the advent of a little bit of prefabrication for us 25 years ago. So where the story gets exciting, is in the early 2000’s about 2002, we opened our first website, and if you go to the way-back machine, it's pretty interesting to go see it back on Microsoft Front Page, but they began to advertise. And they did so with paid search in like 2003 way before it was cool. And it really exploded for us. What happened was, we were advertising supposedly locally but it was so new that it was getting national traction and so we'd have folks calling up from back east saying, “Hey. I'd love for you guys to come build for me.” And for us, we're sitting here in Western Washington going, “Wait, you know we can't really service Georgia?” And it became kind of this confusing thing because the internet was so new for everybody. And so basically, our founders looked at each other, their names were Jeff and Steve, and they looked at that and said, “you know what? I bet we could provide the value that we have here in terms of architectural experience. Probably hundreds at that point it's hard to say, but hundreds of iterations gained in terms of, again this was primarily horse barns at that time, so stall configurations, sizing, what the components needed to look like, what made for a high-quality horse stall.” All sorts of stuff that's pretty deep into the equestrian world, but offer that value on a national scale. And so that was the first time that they began to do kits. That was in 2003. And from 2003 until right up to the recession in about 2007, we grew almost in a couple of years over 100% per year. Literally four or five years in a row. So, it was an incredible timeframe moving in.

Prefab Review

Was this all barns? We'll get to your products, like you do barns, but you also do all sorts of other sorts of barns and things. Was this all barns at that point?

BarnPros

Certainly. Yeah, at that point it was all barns. That's correct. And a quick note on that, so today barns are the heritage. They are the namesake. They are the style but true equestrian or equine facilities are probably 30 to 40% of our overall project base if you will. The vast majority are residential and but it’s barn-style homes, right? And then there's a lot of shops in there and a lot of our favorite projects. We do a ton nowadays of breweries, wineries, event venues, wedding venues, yeah pseudo commercial. That's a really interesting topic in terms of permitting and the technicalities.

Prefab Review

Right? Commercial stuff.

BarnPros

You know, commercial versus not. But anyway, yeah, the barn-style wedding venues were definitely a fun ride for us over the past decade or so. As that really was in vogue and becoming very popular. But yeah, so the recession came around and it slowed down a lot of builds for us. It curved the say 100% year-over-year growth to something more normal, twenty-thirty percent. Still great. The advantage that we found during that time was because this is a package or kit, we call it a materials package for a couple of reasons, but you're leveraging the expertise of a local contractor, or back in the day, you know twenty years ago, permits were not handed to you but they were a little bit easier than they are now and general construction practices were simpler for a number of reasons.

Prefab Review

Yeah.

BarnPros

And you know a lot of homeowners on the smaller structures could take a stab at it themselves whereas today, you know, our average footprint is about 4,300 square feet. So it's not quite approachable to do it yourself. But during the recession, we had work and that's something that really helped in terms of our clients or our customers finding somebody to work with to bring their project to life for them. So post-recession things picked up again and kept moving. And you know, that's almost 12 years ago, to where we are today. And the last decade has been very interesting in terms of product expansion and watching changes throughout the industry. The biggest changes happening in the past couple of years with what's been going on in the world and I'll pause on that cause I'm sure we'll get into the logistics of covid and how that's affected everything. But.

Prefab Review

Yeah, so so let's talk about kind of product, expansion, etc. So when you talk about residential. I'm just looking at your website now, you have you know, five sorts of residential structures. And I think they're in kind of a couple of different sizes. Are those the basic models you're creating packages for? Or are there other ones as well?

BarnPros

So all of our model configurations are on the website. The biggest changes that you'll see, so basically, you have a starting package, and on our website, you'll see starting at pricing: what that means for us, though it's based on options.

Prefab Review

Yeah.

BarnPros

It's really a common configuration. So we'll take you know, our Denali. We can use that for a couple of use cases here. That's our most common model a Denali 48, so the way we term our models is, the Denali is the use case. It's you know, the level of engineering that dictate foundation style. It dictates framing style. And then 48 is the length. So again, Denali 48 is very common but we just did a Denali 108 down in Nevada. And so you get variance in sizing. And then from there, we design these to be very configurable. The biggest competition that we would see is, basically you know, you go find a local architect and maybe a local engineer and you put together a custom build. For us, we achieve near-custom through heavy configuration. And that really is our approach to that.

Prefab Review

Right. So I'm looking at the Denali plan which, at least based on your site is, right? It's essentially an open floor plan where the barn would be and then right, it's like a pretty big 3 or 4-bedroom kind of full-size apartment on the upper floor. When people buy that, as you're saying it's very configurable, are they frequently also using the lower floor for residential, or is that you know a garage or for horses?

BarnPros

Great questions. So more and more commonly, folks are using the lower floor, which makes a lot of traditional conversations much easier, be that around financing be that around comparables because you don't have a 2,000 square foot home over a 2,000 square foot shop.

Prefab Review

Right.

BarnPros

It can be very hard to figure out the value of that. Just from a comparables perspective, is what I mean. But yeah, so usually downstairs there's always at least 1 entry room that has to be fire blocked, right? So that's always a minimum and then oftentimes folks will expand that just to have maybe bigger mudrooms, say a bathroom with a big shower. And that's a really common thing. More and more commonly though, folks are doing entire living rooms downstairs with you know, big open to above floor plans which are really pretty cool. The buildings are really tall. That Denali is about, it depends on a couple of factors, but usually lands between a 26’ and a 28’ ridge. So if you're standing on the ground floor, and you're in a great room, it's just has a massive open feeling to it. And so yeah, more and more commonly folks are adding that downstairs.

Prefab Review

Right.

BarnPros

Actually, one quick note on that. Recently, a couple of years ago, we expanded. The Denali’s little brother is a smaller mountain peak the Huntington. And we expanded that to have a true, you know, we designed it to be a two-story model. That's our Rainier Barn Home. Yeah.

Prefab Review

Yeah, cool. And then on these, I guess one of the questions I had is, are there internal beams on these things, or is it all external? How does that work in terms of configurability?

BarnPros

Yeah, awesome. So basically, this is true post and beam style construction. We have some hybrid kind of timber frame elements in there and then in some of the residential models, we will leverage bearing stud walls tastefully. So basically, the structures are built upon a grid system and it's that repeatability that you'll see as a pattern through a lot of our business. And what we do on those 12’ grids, so if you follow the outside of the structure, you know to that point, you'll have the primary beams or in this case, the primary posts, all located in the exterior walls and then you'll have a couple on the inside of the floor plan. So, generally on a 36’ for example, you'll have four. So there will be just 4 inside. Usually in a barn that's where you'll mount your stall components to upstairs. You'll have a kind of intersection where a hallway meets a bedroom and it's in a wall anyways. And then kind of one nice center point in a great room to give you that kind of lodge feel.

Prefab Review

Yeah, yeah.Got it. And how do you sort of develop and come up with these different options? Because as you're saying, you've certainly been in this industry a lot longer than I have. But I mean on our site we get thousands and thousands and thousands of requests every month for people who are like, “I want to build a barn modular or you know, some kind of variant on you know a barn feeling, but residential. So there are a gazillion different options you could go with. How do you sort of hone in on the specific plans you have?

BarnPros

So the part you mentioned about the requests is really a driving factor for us and it's really interesting to see that flow over the course of a couple of decades. So basically, we are lucky to have very high volume traffic to our website. And just in general, over the last 20 years with a couple thousand structures out there. It's taking in the feedback and trying to build that into institutional knowledge. A small use case example is the Denali which again, is our primary residential model. That's what folks will go for. It came from our Olympic. And the Olympic has basically envisioned that same roofline. So for those of you listening, it's a 9-12 roof pitch. So it's not cathedral steep, but it's a nice steep roof pitch. It's got a couple of gable dormers to add some architectural flair to the roofline.

Prefab Review

It's pretty steep. Yeah.

BarnPros

I'll simplify that a little bit, It's about a 12’6” sidewall and in the case of the Olympic it's a true barn. So that was kind of the original BarnPros barn design that really helped us grow throughout the 90s, kind of in that version 1 phase before we went to package format. What ended up happening is especially in the late 90s and early 2000s, I mean it's kind of happening right now again with the changes California has made in terms of the ADU buzz that's been going on. But that was happening a lot at that time. Everyone called it a mother-in-law suite. But they were adding apartments into the Olympic. And so what that drove was, “okay. you had this apartment-style Olympic apartment. And we made kind an offshoot with some modifications to the Olympic to make it better suited. In those days, we were using grids on the upstairs wall framing to hold the siding because it was true post and beam. But eventually, we switched that. So all the upper gable framing and upstairs framing as a whole was a stud wall. So when people added an apartment, it made sense. And then eventually, we thought well why don't we just make a barn that is literally made for this? And so now, our Denali, you know we basically change some of the grades. So the loft grade is a little bit taller. It comes standard with a wider array of dormer options that get you the clearance you need upstairs in a true barn apartment. The style is you know, so popular but a true barn apartment with a steep roof where it meets a loft, it's not that usable on the sides because you get too low clearance. So we have, we call them shed dormers. But it's basically, lift the roof pitch in that area from 9/12 to say 5/12. So you get plenty of head clearance to have this usable apartment space. Other things we did with the Denali were converting to what is most commonly now known as a stem wall style foundation as opposed to a true embedded post design in the original. In this case you hang it on all your floor joists which works amazingly. In a barn, the point for that is you get head clearance because you don't have any beam work below your floor. But the problem is, when you go to do it in a house you can't drill through those levels and you don't really have a great chase for plumbing. But it's harder to insulate. There are a lot of challenges. So all our residential lines have a more conventional design. There's a glue jam beam below each loft section and then the loft joists just run over that like you would see on the first floor in a home that's over a crawl space. For example.

Prefab Review

And do you work with outside architects? Are you designing them in-house? How does that work?

BarnPros

So the cool part about the history is a short answer. Yes, we've had a lot of both. So basically we did in 2017 maybe 2018, we did a revamp on the Denalis. And we did an entire set of floor plans with an outside architectural firm. So that was advantageous in the sense that the stock floor plan was fully thought through, and that flows nicely. You get good views and then additionally some of the floor plans and designs will be client-driven. Over the years there is some stuff that we try to keep architecturally interesting or make sense. But there are some features that folks continually ask for and we'll try to work those in where we can. For example, our decks grew as a result of customer requests.

Prefab Review

That makes sense.

BarnPros

But the really interesting one, that's probably the most fun, is a lot of our clients or customers are architects and so what's interesting for us is our primary user is the person receiving the value. The customer, the homeowner, right? But due to the way our program works, we get a lot of folks who are general contractors who have a client and they want to build whether it's a barn-style home or an actual barn or you know the outbuilding, and they come to us because they can see the expertise and it simplifies it for the builder. The same thing for an architect. Usually, what'll happen there is if you have raw land and someone's building a new home, the architect is focused on the home and they are delivering their value into this really nice custom home. But they want to compliment that with a beautiful barn. Maybe they either don't have barn experience or don't have the time. That's where they search, “hey can I find a barn?” They find us and then it becomes this great compliment to a custom build. Or something on raw land from that example.

Prefab Review

That's cool. So let's talk about this from the consumer perspective. And if it's cool, let's assume, actually it doesn't really matter what plan we would use for this exercise.

BarnPros

Sure.

Prefab Review

Let's say I'm coming to you because I want to do something residential in nature with you all. And you know, I see some plans I like on the website. What are the next steps and how does this work to sort of go from, “hey, I think I want to build this with you all.” To, “I have a certificate of occupancy and all that stuff.” What are the sort of steps in terms of working with you all, hiring GCs. How does that happe?

BarnPros

Yeah, thank you. That is a perfect question. So, one call out I'll make is a resource center on our website that is geared towards this. It's something we're really working on right now to continue to help folks depending on which phase they're in, whether it's a long way out, or if they're starting in the near term, or if they're like, “no, I want to build this right now. This summer. I'm ready to go.” We kind of gear that towards the different phases of planning if you will, but it basically looks like this. So usually, folks will have found our website and oftentimes they will be interacting with our marketing and our resource materials. We have a beautiful print catalog we do. There's a beautiful winery that we did over in Chilene, Washington this last year and you know they had been looking at the particular barn model for almost a decade and it's this beautiful story. So during that time, usually they're doing the research. Almost always, these are folks where, “you know, I sold my house and I want to build this dream house” or “I bought my house but I want to add an ADU, I want to add a barn” and something like that. Usually, they're doing some planning but in the most conventional way. They've looked at the website and experienced some of the resources. Maybe they've found the prefab review and they're learning but they call us up. Our sales team is geared less towards sales you would say, and more toward helping understand the needs of the client and matching them with the right structure. Our absolute success is to get the perfect structure based on understanding the needs of the project and moving from there. I can you know, pause or skip past this but basically, when they call, there's a big question of, “okay, I want to build a barn in my yard.” Usually, folks will have an understanding of what they're looking for and they might have a model they've already looked at but the basic intent is to figure out what are their goals for the project, if we can prioritize those to where you know, if you ran short on room, or money, or time, or whatever, would you rather have 3 bedrooms or 3 stalls or 3 car garages; and prioritize those so you can really get into design from there. It's looking at parameters be that the land itself. You know, we say the dirt drives the design in a lot of ways. So what can the property truly fit? You don't want to put too much building on a property and ruin the sort of feel.

Prefab Review

Right.

BarnPros

Also building not enough building can leave you feeling dissatisfied. Not dissatisfied but leave you wanting more, I guess, is a better way to put that. So what does the dirt have to say about it? What does the county or the jurisdiction have to say about it? We use county because almost all of our projects are rural. Probably 15% are the city and the other 85%, if there's permit, the County is usually how that goes. And then, the last parameter is the financing of the project. How will it be paid for? Financing is probably a different topic. But how's it going to go so what equals the budget and that all leads to design. And so for us, our goal is to help share institutional knowledge with our client base so that they can kind of understand. Okay, so based on the information that I saw and in talking to BarnPros I now have an understanding that I'm thinking the Olympic 60 is a great fit for my property, hopefully during this time. They have been looking for a local builder or you know usually folks will oftentimes already have someone. They've found someone that they want to work with to build but they're so early in the process of, “hey, I want to build something” that they may not have selected somebody yet. So either they've already found a builder they want to work with or they know someone. Or they choose a model with us and now that they're armed with an initial set of elevations and a couple of weeks later a set of full site engineered blueprints, they're armed with what they're actually building and can go find a general contractor if they haven't already.

Prefab Review

Yeah. So how does that work because in terms of you all, you obviously provide the package of materials - a kit. But for some of these municipalities, some level of permitting is almost definitely going to be needed. And at least some level of construction docs are going to be needed to get bids, oftentimes from the GC. So sequentially, is there a deposit or some amount of money in order for you to provide whatever plans are necessary for that, or how does that work?

BarnPros

Yeah, so our goal at the beginning of the process is to in our opinion, overdeliver on value. So we will do the entire structural blueprint set and elevations and the construction dock that they would need from us. Starting from just a flat $10,000 deposit. We don't ask for any money again until it's time to ship the structure and that depends on the structure. But basically, usually it's a progress payment of about a month or six weeks prior to departure and then the final about three weeks prior.

Prefab Review

Okay. So basically $10,000 should hopefully get you through, is there engineering involved with that as well, or is that not an engineered plan?

BarnPros

So all of our projects are fully site engineered to meet or exceed any code. It can be really tricky sometimes. And like Wyoming or Tennessee, where there's really no jurisdiction to talk to, and so then you basically go with the flow.

Prefab Review

Right.

BarnPros

If you're in Washington or California, it's super easy. You flow from the state to your local jurisdiction. But obviously, there are standards and you know to expect places where there's no local jurisdiction. We just flow from the state and flow downward to the most specific information that can be found and go from there. So usually, the state will have you know which version of the IBC. Or their flavor of it. If they're California, on what they want to do. And so it's working downward from there. But it's fully site engineered and that is included in the price of the package as well as shipping to the site. So in the one price that we provide it's exactly everything that will be included. And we're not going to throw in add-ons and say, “oh, engineering is variable or you know, shipping is variable,” or whatever. For the core product line, it's just included.

Prefab Review

Okay, got it. That's helpful. So then, basically the consumer it sounds like they normally hire, do you have a network or do they normally hire the sort of GC directly?

BarnPros

So yes, and no basically in the current moment we've gone through different phases of this and it's interesting. We can speak about the pros and cons of different phases for a long time. We maintained an actual builder network that we were referring to where you know, it was a full sort of full-service program. You know, here's a builder and then there have been other points in time where you know, especially in the beginning, where we didn't have much to offer. Nowadays, we've laid it on. What we prefer and what we found to be most successful, which is basically we have a long list of folks who have built our product before and that our customers have worked with. Then, if the customer enjoyed the experience, we'll share the contact information. We're careful with that. So there's a couple gentleman in Texas who are one of our favorite builders. He's been building with us for a decade. He's done dozens and dozens of these and pretty much everyone loves him. Because he's a great guy. He's a good old boy. Really good builder and has good pricing. But you know, not everybody gets along and so you know 10 clients have had a great experience with this builder. But then you have something that isn't perfect on another iteration and so it can be tricky from that perspective because we're not doing it in-house. So the way we approach that again, is looking at the success that clients have had. If the client had a good experience. If they had a good experience with their builder. We will recommend from there but beyond our referrals or recommendations, really our preferred method is basically this: we design the package to be very buildable. So one of our primary filters when it comes to design intent, how we engineer, and how it goes together is to put it simply, buildability. But let's use that Denali. For example, we switched from a foundation that I might argue is more affordable via you know say a very simple thickened edge. Because it's possible. But we've moved that to a stem wall foundation by standard. And what that does is basically you can take this to a guy or a gal or you know a general contractor who has never built one of these before but if they have experience building homes or if they've ever touched post and beam, we design the packages to be approachable. So another way is we do have a list of folks that we can recommend from but more importantly, really, this is designed to be built by you know any licensed general contractor who can read a set of plans.

Prefab Review

Got it. And then in terms of site feasibility et cetera. Do you need a crane to put these up?

BarnPros

Yeah, that's a cool question. So that’s a really interesting topic and that's what we call hybrid prefabrication - where you don't need a crane because it's not you know, a series of twelve foot pre-done panels or sections that get craned-in. It's primarily sitebuilt but a crane can be useful depending on the size of package. Basically, that answer gets tuned for are we talking about a 2,000 total square foot shop or are we talking about a 6,000 square foot wedding venue? There's a big discrepancy there. But we have a series of buildings that are meant for indoor horse facilities - horse riding. It's called an arena, that has a sixty foot steel beams. Obviously you need to crane for that. But for our most common designs - barns, shops, et cetera. It can almost always be done with just a telehandler. So you know the favorite machine for that is usually like an 8040 what they call them. But it's an 8,000 pound lifting capability, 40’ boom machine, is usually all that's needed.

Prefab Review

So, we deal with kits, we deal with modular. One of the things from a feasibility standpoint we always try to figure out is, actually build this house, what are the pieces of equipment you need in terms of trucks to get the material? Because we have all sorts of people trying to find the coolest, most remote, piece of land possible, and build stuff. And sometimes that's feasible and sometimes it's not. Some of the more fun, possibly outlier-ish things we get a good amount of requests from people, are for party barns. I'm sure you get some of those as well. Can you to talk a little bit about your experience with those?

BarnPros

I love that you mentioned party barn. That is a fun outlier because it lands smack dab in the middle between this is a barn and this is a house. It is both but it's also neither. And they are, I would say, if I had to throw a percentage at it, I don't know. It's a high percentage of what we do because usually it'll start as some folks will come in straight to a party barn. That's usually if it's going to be a venue. They already know what they want and, “hey, this is what I need.” But usually what happens, is they're going to do a barn or a shop or whatever, and they realize, “okay, well they were thinking about the first floor - so where am I going to park my boat? Where am I going to put my Rv? Where am I going to put the toys? Or the workshop? Or the blacksmith’s shop? Or the woodshop? Or whatever it is?” And then you have upstairs and usually that started with, “we'll put the Christmas ornaments up there.” But then you realize that it's you know, twelve foot clearance in the middle and you've got a ton of room and all of a sudden, It's like wait a minute, we can have a lot of fun with that. Let's put a pool table up there. Let's start to add to it and before you know it, you have this really cool party barn. So for us, basically what we do is try to figure out the intent - if the party barn is just the occasional hangout but it's primarily meant to be an outbuilding, be that the shop, we will recommend one of our barn structures. The reason being, it's way more cost-effective to build an embedded post design where it's applicable and where it makes sense. But if someone's going to do something where, “hey, I want my party barn to be, you know I'm not living in it. But I want it to have a bathroom. I want it to be fully insulated. I want it to be basically a house but it just doesn't technically have a bedroom from a code perspective.” Then we'll go to the Denali. We'll go to a residential model that you know it's built for that. So with the biggest thing on the party barn situation gets into code. And you know what you can do, my biggest recommendation for folks when they're getting into this, especially in rural areas, the tendency that we notice is, “I'm just gonna build what I want to build and I'll worry about the permit later.” Depending on where you are in the country, it's not a big deal and it's funny if you talk to somebody in Tennessee and you mentioned doing a permit. You're maybe not crazy but you know I don't need that at all. That makes perfect sense. But then in California or Washington where, if you talk about skipping it, now that doesn't make sense because it depends on how that state operates. Anyway, so yeah, the big thing on party barns is what does the jurisdiction look like? What do they allow or not? And then you know, is it going to trigger a guest house type code or an ADU type code that needs to be considered. And that's a conversation that we're pretty fluent with. Our team is able to discuss that in such a way, and where I would say we have pretty a pretty high level of success, is getting them into the right path based on what they're asking of us and where they're talking about wanting to go.

Prefab Review

Cool. This has been awesome learning a bunch about your company, the company's history, and products. But if you don't mind, when we have experts on the show, we try to bug them for a few minutes with general questions. We call it our fire round. Just to kind of tap into your expertise. So if it's all right, I'll ask you a couple of questions and if you can keep answers to one minute or less, great, but you know it's all good. Okay, so I guess question number one, it's sort of related to the last question. Can you talk a little bit about working with people using barns and your different buildings as investments and how that works and how the experience would be different?

BarnPros

Absolutely. So, I'm just trying to think about how to do that in a minute. So the type of income-generating facilities that we see are either you have the higher, more heavy-capital investment-end, you have wedding venues, you have general event venues, you have wineriess and breweries, and those are usually if they're financed. They've done on a SBA loan most often. They're a full business in the outbuilding world. You have revenue-generating activities through usually boarding, so folks will take our barns and they actually work well as boarding facilities because they're beautiful. There's a ton of value built into the package. Those sometimes are on SBA loans. But usually, that's through a farm loan, like a farm credit. And then the one that I think you're probably getting to is more of the, “I built a rental property and I want to rent out the apartment that's in it.” So that one is probably the most common. Basically, it comes down to: where's the financing coming from? So, from an investment perspective, if it's a capital investment obviously anything in the construction world that is by far the fastest and the easiest. You are in total control. Second best to that is obviously going to be the HELOC. So if someone is a homeowner and they're building this on their property and they have equity in the home. I know there's probably a ton of episodes that discussed this topic but the HELOC is still king because it's basically your cash. And then the construction loan. The construction loan is obviously challenging. This does fit decently well because it's still site-built, so I know it.

Prefab Review

Yeah, it's pretty easy. You don't need modular specific financing?

BarnPros

Yeah, that's exactly what I was going to say. I know that obviously going a modular path or a full completely done in a factory can be hard to get financing under say, a construction loan. But so that's the funding side of it. But on the return side.

Prefab Review

It's a little more complicated. Yeah.

BarnPros

The biggest thing and our biggest goal as a company is to help. Basically it's one thing to offer a good client experience and I hope everyone says that, but the reality for us is what we want to target. And that is a smooth experience because to us, smooth is fast. Sometimes slow is smooth, but smooth is fast. And so what we mean by that is helping plan. Okay, so can we talk about your sequencing. We can talk about you know, don't clear those trees until you do your permit, please. But you know is it going to flow quickly through because if you are looking at this as an investment, a long period from the beginning of putting your capital toward it toward when you can actually have occupancy and start renting, that's a liability. That can be really challenging. But once they're in it, you know, does it make sense? I would say affirmitive. Yes, there are Reddit communities that follow BarnPros projects and look for existing ones that are coming up for sale. There's a beautiful riding facility in a little town called Kashmere, Washington for example. Right now, that's for sale and so you know that would get called out. But the most common scenario was like somewhere between 850 and 1,200 square foot residential apartment that's going to be rented out.

Prefab Review

Oh cool.

BarnPros

The amount you can rent that for obviously varies so much based on where you are in the country. Yeah, but the general feedback we get is that it makes sense for them, I can talk to build costs a little bit to contribute. But that again varies so widely. But there are some principles behind it.

Prefab Review

We never talked about costs. We're gonna do a quick detour from this. This is the most requested thing. So this is no longer a fire round question. Okay, yeah, so on one of your residential floor plans, ideally one that's fully house versus kind of apartment, say the blue ridge or the Rainier. Can we go through and pick your sort of big West Coast area, right? Like we get a ton of requests for barns in California wine country which is an expensive area but has flat land etc. I'm sure you guys get them as well.

BarnPros

Yeah, yeah, we do. Napa and Sonoma are two of our biggest counties and then south of everything,you know San Diego, we do a lot of stuff together. Yeah.

Prefab Review

So let's say I'm looking at your Rainier Home, like 48 by 36 footprint. I guess that's like 2,000 square feet or so. Yeah, I see that it says starting at a $33,000. Let's just assume a pretty flat lot, pretty easyish there. And it has power and sewer and all that stuff. What do we usually see in terms of finished costs for something like that?

BarnPros

Wow, I Love this problem. Yeah, super good question. So the way I'll frame it is and actually I really appreciate the way you lay that out because I was doing the math in my head, “I'm like well, really the biggest thing is always the site, right?” You know, your point on accessibility, your point on equipment, all of that plays such a big role.

Prefab Review

Yeah, especially for material providers like you.

BarnPros

So we're gonna assume we have a basically a flat site. I'm going to take out sort of site prep, the driveway, utility. So basically the materials package pricing's on the website. It's not an option where okay, the price I see for the Rainier, I need to go add a bunch of stuff to that. The intent is to offer, if you were to just come to us and say you know I want the Rainier Barn Home. Perfect, you can add zero things to it and it's a fully deliverable home. There is literally nothing else needed. If you want, most folks want to configure. So usually folks will grow that, oftentimes it comes in less cause they'll remove stuff.

Prefab Review

Yeah, so it lists at $130,000 and you know it turned out to be $140,000 or something like that.

BarnPros

Often we'll grow say ten to twenty percent or more. But yeah, that's pretty common sometimes if folks really want to make it bigger. That's where you'll see that. But fortunately the Rainier, the way it's engineered, It's really a 24 foot wide structure that we've added to. Shed roofs, to use our nomenclature and so that one yeah, that's a pretty good assumption. So April of 2022, call it $140k to $160k range for the materials package. So that's going to have from a construction-specific look, all of the wood. All of the frame material. It's going to have all the siding. That'll have all your exterior doors and windows in that package. You'll have all the interior framing. So the low floor and the beaming and then we include all of the stud walls material as well. All the hardware. And again, that's shipped to site. Everything is good to go. So from a purely material perspective, you're looking at, that also includes house wrap. I left that out. What's left to be built? So kind of the next bucket is what we like to use the term general construction. It's close to kind of a dry-in but a little bit further because you end up with siding, the windows, and trim. But basically in kind of bucket A here, would be the materials package as we just discussed, the big bucket of construction being general construction. So what is that? That's basically the material and installation of the foundation. So fortunately in the Rainier. It's a conforming house. The foundation most often is a stem wall. There’s nothing crazy even with the point loading of the posts that gets distributed. There's some rebar in there to do it. It works really well. So foundation, usually there's slab on grade so that's slab and then you know, construction of all those wood products. So you frame it, you install the doors and windows. So labor for that. And then you're fastening your nails. And then lastly, roofing. So we stop at the roof sheeting. There are so many options of what folks want to do. So they'll be providing roof underlayment and the roofing itself.

Prefab Review

Right? Whether it's standing steam or tyvek or whatever.

BarnPros

Yeah, exactly. It just depends on where you are in the country. But usually, you see like a 30 year architectural comp. We try to recommend away from screw through fasteners or metal roofing just because there's, I mean I don't like the idea of thousands of grommets on my roof but maybe that's just me. So that bucket. That's the big one, right? So we had a materials package. We used about $150,000.

Prefab Review

Yeah.

BarnPros

General construction, it's difficult because it depends on where you are in the country. We notice a massive insane discrepancy between like Texas versus in Washington. Washington's kind of a middle ground towards the expensive end.

Prefab Review

Yeah, oh sure. Yeah, Sonoma or whatever is going to be a lot more expensive than Ohio or something. Yeah, exactly.

BarnPros

Often we'll see about, say $65 per general constructed square foot. And that's total square feet. So to your point that's about 2,500 square feet.

Prefab Review

Oh okay, so you're saying that's way less than that. But okay, so you're saying that like that they're finishing the house and that would cost basically the same amount as the house. Okay.

BarnPros

So that's general construction. That's before finishes. And so we break it out for folks so they can really dial in if that makes sense. So the first bucket, in that case, being the price of the package that bucket. We just discussed that number was around to your point, a little over the price of the package.

Prefab Review

Yeah.

BarnPros

It can fluctuate depending on materials i.e. the cost of lumber versus concrete can change that percentage. But basically, that second bucket, in our case, that's about $160k to $180k. I would say you took our package. It's built. It's roofed. It has a foundation. You're ready for your finishes on the inside. And now you're talking, your inside finishes are just gonna be your plumbing, electrical, insulation, wall coverings, flooring, and appliances.So the nice part is there is a massive fluctuation and also a lot of our folks are looking more for the empowerment versus handed to them, if that makes sense. So some folks will pay a GC to go completely start to finish. But usually, what'll happen is they'll have a GC go through the general construction phase. They'll have them do at least the rough-ins. But a lot of folks will get involved at that point to help with the finishes. They'll do their own sheet rock if they want to, or flooring. And cabinets if they have woodworking experience. But that number can range anywhere from say $75 a foot to a finished square foot on the inside up to like $150 if you're importing things and you know doing really smooth walls and stuff like that. It really depends on the level of finish. But I like to use say $80 to $100 a foot as a good average once you are framed in, just to get your last phase. That's your finish-out bucket. So in the case of our example, you're at 2,500 square feet. Basically you're coming around that same range. You'll land around say maybe $160 - $180? It lands to kind of an all-in number, is usually where I like to go from a translucency perspective. Talking about the mechanics can often get really in-depth as we are just now.

Prefab Review

Yeah, yeah, yeah.

BarnPros

But realistically, we see a lot of our products especially in a whole house, landing somewhere in between say $225 to $300 per finished square foot built. So including the pack, including the inside, including stuff. And by stuff I mean you know, kitchen walls and all that stuff.

Prefab Review

Yeah. For this time in the world, that's quite competitive with what we see in other places.

BarnPros

So yeah, and that's appreciated and so that's our goal. We do our absolute best to keep the packages value-oriented. The point in that, is it's a really high-end product but we do a large volume. We have thousands of these. You know, we have a 3/4 acre indoor facility where we're doing our prefabrication and adding our components. And so really, from a financial perspective, so much rides on how smoothly does the execution go and the level of finish. That's the big one.

Prefab Review

Yeah, you know and what's the timing? So if I order the Rainier from you all tomorrow, if I'm in an area of the world where I don't really need much from a permitting perspective and have my GC lined up and all that stuff, between like queue and time, how long does it actually take to get the package?

BarnPros

Yeah, so super good question and really what it comes down to, again, we have such a wide product. We'll stick with your Rainier example. I like Rainier pretty standard and you're in a place that can be pretty readily engineered so you know, most of our products end up either near water or in the mountains. Near water means high wind. In mountains means you know big snow. And if you're on the west side, that means seismic to contend with, as well. And if you're in California, maybe liquefaction. And there's a lot of things to kind of get into. But if you're in I think, this mythical place that we're discussing today is outside. Now it's flat. There are builders and there's not a lot of permits. So we're outside Nashville. I'm happy. So we get started with that deposit usually within about a week. We'll basically a 3D design and set of elevations for you. So what that looks like is the first say 3 pages or 4 pages of a set of plans. So you'll have your isometric views. You'll have a lot of the detailing. You'll have your front sides and rear elevations and you'll have your floor plan views. So usually that's within about the first week. And basically what we're doing there, taking any configurations the client has. Our favorite scenario is if folks take the stock floor plan. But that almost never happens because everyone has a need. Maybe the closet needs to be a little bit bigger or I don't need 2 bedrooms actually a office. Or you know, I really want to grow this kitchen. That sort of thing. So really personalizing that layout. That's about the first week. It just it depends a little bit on time of year and is really heavily driven by the complexity of engineering. But in a great scenario, we'll have another, fully engineered, site-specific set of plans to them after another 3 or 4 weeks. Right now, today and throughout the last year, we are running little bit longer. It was kind of bittersweet in the sense. We're very lucky to have an insane amount of work come to us in the last year but it also led to a little bit longer engineering timeframes for us throughout say 2021. But we're pretty much back to normal now. So in the scenario you and I are discussing, you call us today. We can probably have you a set of plans in say anywhere from 4 to 6 weeks on the fast side in a simple zone or for most of our clients in heavy snow or heavy wind more like 8. But now you are good to go and so from there, permitting. If we're in Tennessee, and there's nothing going on in terms of a permit, amazing. You could pretty much proceed straight to building. And so the actual prep timeframe where we are doing the prefabrication for the select components and preparing the rest of the package, usually we need about 6 weeks for that. Sometimes we can do it in less - 4 or 5. Other times we can do it if you have a manufactured truss, that might take a little bit longer. That might be like 8 to 12. It just depends on, last year around December for example, the truss manufacturers were quoting 18 weeks. And you know, the big track home builders were buying plates for the trust manufacturers and just owning them. So we ended up shipping trusses from out of state to make it work. Anyway, the total timeframe on that again, right now blueprints probably between you know 6 to 8 weeks and in a good scenario. It's kind of an average. And then in terms of once you're land is ready, the second part of the timeframe, when you are ready to build. We really only need about six weeks. So I'll lay it out this way. The way that works well is most often, folks have a permit to contend with, so while the permit is going on we'll provide help if there are any red lines on the structure. We'll get those you know turned around as quick as we can for them. Usually, what happens once that permit is approved that's about the perfect time that they'll call us up and we’ll get the actual production pipeline started. Usually with their approval, any remaining site prep that they need to do, they'll get that handled and then the foundation. So if you have any plumbing in the foundation or radiant slab or anything like that, you need a few weeks to do that. So final prep, doing this slab and then in the best-executed scenario, the package gets delivered to site maybe a week or two after the slab is complete. So it's set up, ready to build on, and they can just proceed smoothly from there.

Prefab Review

Awesome! Well Jake, thank you so much. This has been incredibly helpful. Sorry for going a bit out of order compared to our normal stuff. But it's been really great learning about your company and about your personal journey. For those who listening who want to learn more about BarnPros, their website's got a lot of awesome content on it. Barnpros.com. And as always, you can visit us at prefabreview.com. Thanks again.

BarnPros

Thank you very much, Michael.

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