Episode 2 of The Dallas Builders Club

Investor returns, how to get fired as a vendor, risking it all to bet on yourself, and lots more SPICY unfiltered and raw content from real builders. 

@dallas_builders_club 

Transcript

SPEAKER_01 0:02

Why we fire vendors.

SPEAKER_00 0:05

I mean, my comment really on that is just we we run a lean operation. So our vendors, like the expectation is they have to know how we do things. Um, you know, so we if we've done 10 jobs with you, and you know, all those 10 jobs have had a specific detail that's that's part of our SPs, and then all of a sudden on job number 11, it's a miss. Don't come at me and be like, well, you didn't say anything. It's like, dude, this is two guys in a truck over here, you know. I mean, we're we're trying to do as much as we can, as quick as we can, as efficiently as we can. And the reason why we use you is not your price. You know, it's it's it's not uh it's not because you're handsome or pretty, it's like because we have a relationship. You know, you mentioned something the other day when we were talking to um we'll call it one of our vendors, but you you were saying that you know we do business with you because you're you and we're friends. Like that's the way that we roll. You know, we go. If we're not friends, we're not doing business. We don't give a shit how good you are. If I don't like you, piss in the wind. We know about your family, we go to lunch with you. Um, you know, we do all these things. We want to have a relationship with you. And the reason why we do that is because we we want you to know us and be near and dear with us. Yeah. So for me, it's like, you know, you're my guy for this trade on the house. You know that we do, you know, whatever, this detail. Like, I need you to come through on that. And if you can't come through on it, please bring it up. No shit, dude. I that that that drives me nuts.

SPEAKER_01 1:29

That's like, okay, so just recently we had excuse me, send out a house for bids, and we use the same trim guy. We're we're loyal to our to our guys, okay? We're we're I mean, we're loyal to the companies, but more than anything, we're loyal to our guys. Yeah, our reps, our sales rep, whatever. You know, if my bank rep leaves that bank to go to another bank, we're going to another bank. Like we're we're loyal to people, right? Which I think is a huge, huge difference in this industry where you really get to be able to choose to be like that. So, like, we were loyal to our trim guy and we had priced out some other options, but nothing was like dramatically different to where we felt like we needed to switch because switching's a pain in the ass, right? Yeah, or it can be. So we had the house bid, and like every other house, we have the swing doors we purchase from the lumber yard, right? Because we save, I don't know, 2,500 bucks a door versus getting them from Peller or something. Yeah. And this particular house had 10-foot doors, and uh he didn't have them on the bid. And uh, you know, I I run the numbers, I put all the numbers in, we get the job approved, we're moving, and I'm assuming that that number for those exterior doors is in that trim and door bid. And obviously it's not. So we obviously jump in and we're like, why the hell isn't this in here? Well, it's because there are 10-foot doors and we don't make 10-foot doors. Well, don't you think that would have been fucking good to know? Don't you think you should have reached out to me and said, hey, dude, just so you know, these doors that are probably $10,000 to $15,000 are not in this bid, and they're not in there because we don't do those. Not just don't put them in there, don't say shit to anybody and just say, Oh, here's your bid. Yeah, that's how you get fired. That guy got fired last week. I called his boss, I don't want to work with him ever again. I'll consider working with you guys again, make this shit right. But like, we don't have time to sit here and thumb through every line item. So when we have a process and a system in place and you divert, we need a red flag. You need to come to me and say, hey, I didn't do this because this, just so you know, I don't want you to go, you know what I mean? Because it's it's it's now it's a it's an uncomfortable conversation with a homeowner. Like, hey, sorry we missed this.

SPEAKER_00 3:27

Yeah, and it's not like a guessing game, right? I mean, we've done 10 houses with you before. Like you, you know, we do you're there on the trim walks, like you know that those are your doors on all of our houses. So we're we're we put the work in on the front end as far as just making sure that that vendor knows, you know, our standards and procedures. Um, and to be honest with you, I mean, really, like when it comes to these guys who are constantly emailing us, calling us, trying to have lunch with us to get their work, it's like when it gets down to brass tacks and we're reviewing the estimates, like there's not much difference in this stuff, right? No. So the only thing that can really set you apart is making our lives easier and understanding, you know, how our business works. And that helps, that helps us across the board. That's your value add.

SPEAKER_01 4:08

Making our lives easier is the biggest point there. Like I do not want to have to have another call or make another call or figure, like, if you you're the you're the expert, yeah, right. Yes, we can build a custom house from start to scratch with no issues, no concerns, whatever, but I'm not an HVAC guy. I'm not a plumber. Do I care to know every in and out of your job? Absolutely not. I could give two shits less. We hire our vendors because you're the best, because we can trust you and you have our best interest in mind. When you when you do something that doesn't have our best interest in mind and don't look out for us, you know, we don't know that this needs that and that. Oh, oh, well, if you don't have this zone on this and dah, it's like, dude, that's your job. That's not my job. I'm not in the weeds. I rely on you to be honest with me, tell me, educate me when I need to be educated, help me save money, and just, you know what I mean, have my best interests in mind. And when you don't, man, you just, I just I don't got time for that.

SPEAKER_00 5:00

I mean, on the flip side of that, how awesome is it when you get blown away by a new vendor? Oh, I love it. You take a risk on someone and you're like, all right, like I'm gonna, I'm gonna bring you in, let's see how you do. Um, I mean, we had that with like our mill work, right? I mean, it's like, oh gosh, all right, we're gonna try someone we've never used. The company was kind of like, hey, you should really give us a try. We hear that all the time. You go on one trim walk with this guy, and you're like, dude, this guy's Picasso. I mean, he's like, he's with the designer, he's speaking the language, the customers love him. He's like, oh, by the way, you know, he's like pointing things out to quickly fix before we get into it, you know, during the job, he's checking on things. I mean, it's like, all right, you are you're you're it.

SPEAKER_01 5:38

That's you're the guy. Nothing's better than that. And you're like, oh wow, we what if brush up brush they leave and it's like a breakup. Brian, we're talking to you. No, then they leave and you're you're crying. Um, I hope that gets to him. Yeah, that's that's too funny. Another reason that people can get fired, and this is an actual scenario. So, you know, we don't do remodels very often. If we do, it's a full house remodel, it's somewhere around a million bucks. You're moving out, it's walls. I mean, we're ripping the whole thing down to the studs and we're remodeling your house. Uh, we do them a lot in South Lake, Westlake area. We did this one, it was about a million dollar remodel. New windows, painted the outside, roofing, added a cabana on the back. I mean, full gut on the interior, full complete remodel. So when I do these remodels, okay, so the point of this whole conversation before I get through it is, you know, again, how you get fired as a vendor and in pointing fingers and saying, It's not my fault, is what I'm getting to here. So the process for that is the plumber goes in and unhook everything and unhooks all the valves and makes sure the water's off to the house before we have the demo guys because the demo guys will rip shit off the wall, break pipes, you know, all kinds of stuff. So the plumber goes in, unhooks everything, okay? And then we demo the house, we put it all back together, it's beautiful. And this is a real scenario that happened to me. The plumber who goes back in and installs everything back the way it was, I expect you to put everything that you disconnected back the way it was. Well, a condensate line from an HVAC system is technically an HVAC guy's job. But if I paid you, the plumber, to come take that apart and you left it in the wall, and then I pay you to come put it back together. Your job is to reconnect that. It's not on the HVAC guy, right? We didn't really touch anything with HVAC on this job besides adding another duct. The house, they turn on the power for the house. We sit over the weekend, uh, and massive leak from this uh condensate line in the ceiling. The entire ceiling of the living room falls down on all the new floor and all the new stuff, complete catastrophe, total mess. And I call the plumber and I'm like, I paid you to unhook it. I paid you to hook it back up. It's a water leak, it's your problem. No, it's the HVAC guy's problem, and we don't do that. That's not how this works. HVAC was never here. Exactly. HVAC never touched that line. You unhooked it. I expect you to put it back. Yeah. The pointing finger shit just doesn't work for me. It's like you gotta own your portion of the business. Yeah. If you unhooked it, you're hooking it back up. You can't say, oh, I unhooked the just the trap, and I, you know, that's their life. You unhooked it. Yeah, it tied in the P trap. Like, I mean, what did you think about the cost us tens of thousands of dollars, cost us an embarrassment for the client, right? And we're, you know, we're prideful on how efficient we are. And we smoked that job. We we did a great job on that job. And lo and behold, at the very, very end, where the customers excited about moving in, now they got to stay in their rental a little bit longer, super pissed off, had movers scheduled, the whole deal, and it ruined that whole project, right? It puts an egg on our face, so you're fired. You you just do there's no coming back from that because again, you didn't come to me and say, I'm gonna fix it, make it right, and I'll pay for it. You came to me and said, I didn't do it, it wasn't my fault, not my problem, and and we're pieced out.

SPEAKER_00 8:35

So see ya. That's like uh that's worst case scenario. Oh, dude. I mean, to be at the tail end of a project and have something like that happen and set you back that far. And let's be honest, I mean, remodels, custom home construction. Like, I don't want to say something as easy as like these things happen, but perfection is unattainable. Now, it's good to strive for it, don't get me wrong, and we're after it, but you're not building the same house ever. I mean, everything is all it's all. And a remodel's even more of a even more of a game changer. You never know what you're gonna, at least with the custom home, like you get a blank slate. Yeah, a remodel, you never know what you're gonna do.

SPEAKER_01 9:11

Yeah, you a custom home is like here's the Legos and here's the map on how to put them all together, right? Yeah, the other one's like, hey, here's our Lego thing half torn apart. Somebody rebuilt, tear it all back apart, yeah, and then rebuild it with no instructions. You know what I mean?

SPEAKER_00 9:24

By the way, it was built in 1980. Go get the plans from the city. And also please price it accurately. Pricing is a big deal.

SPEAKER_01 9:31

You know, honestly, yeah. Well, well, the with the pricing on a remodel, you really just have to have a strong contingency in there. Always because everything's a can of worms, every wall you open up has something you don't see coming. So it's just again, that's why we stay away from them. Unless you're moving out, it's a full-blown remodel and you want it done right and there's no cutting corners, you want a legitimate remodel, not like, oh, tinker with my bathroom and then maybe change my counter. We don't do all that. Like, that's just a waste of time. We don't work in homes where people live in them because it just never goes right. I don't want contractors in my house working. Yeah. When I'm there, I sure as hell don't want to be in your house and getting calls like there's dust in the back of my TV. It's like, I'm not doing that.

SPEAKER_00 10:08

Well, plus, like the clients during the construction process don't understand that things will look the way they're supposed to when it's done because they don't look the way they're supposed to when it's mid-build.

SPEAKER_01 10:16

That brings up such a good story. Okay, so so so yeah. So things during construction don't look like they're, you know, they're not finished, right? And sometimes homeowners will see these things and lose their shit, right? Funniest stories, okay. One story that comes to mind, one of our good buddies, Joe, who I love dearly, one of my best friends now, one of our investors. I mean, he's he's you know, he's a good guy, right? Great guy. Building his house. Yeah, great guy, Joe. Building his house, and we put all the glass up, and he had mole bars that he wanted around his wine area, and he called in in his gym area, and he calls me on FaceTime or sends me a video. The nicest guy, right? Sends me the video and he's like, hey guys, just want to let you know, uh, looks like they put the wrong glass in. Like, none of the mole bars are there. And he's like, You're gonna have to rip all this out. I'm like, I could hear this in his voice. He's trying to be polite, but he's also like, oh, what you know what I mean? And I'm like, Joe, those get put on afterwards. Uh, so they're they're coming tomorrow and they're gonna put those. Oh, okay. Another one, I'm not gonna say the client's name, but something what didn't look right with their cabinets. Again, house isn't painted, cabinets aren't painted, but it just looked a little off, and they got so upset that they put a for sale sign in front of their yard. I mean, you're talking about, man, these houses are not easy to build. And not only are the houses not easy to build, I mean, we're talking multi-million dollar homes. The clients are are they're smart people, they're not dumb. They look at every little detail, but this isn't what they do for a living, right? And so there's a lot of there's a lot of this sometimes, you know, where they they feel like, oh no, it's gonna be all wrong. It's the whole house is ruined now. Four sale sign in the yard. Next week, the force sale sign's gone, everybody's happy, go lucky. Two weeks later, oh, we you know, the paint was a different color. It's just for sale signs back in the yard. It's like yeah, it's not sometimes, it's it's on, it's every time. But the craziest part about it is you finish the house and then we're best friends. Yeah, we're drinking, we went over there for a drinking party, we're hanging out, they're one of our best clients. They let us show their house all the time. Yep, and it's just like it just goes to show like when you're in this process for 12 months with somebody, it's it's gonna do a lot of the it's exactly right. And it's like it's more drama than people, and we're trying to keep this thing moving. And we're like, I know you're busy, we're busy, but like I'll work at 8 o'clock at night, six o'clock in the morning. Like, we need to have this meeting and get these selections done so we can move forward. And it's those are hard conversations with really powerful rich people who have their own companies. It's like, hey, dude, that this is where we're at.

SPEAKER_00 12:44

We gotta get this done. I think that's why you see a lot of builders who will just nix the whole custom build for clients, you know, they'll agree. They'll just agree build, they do stay. The smart ones with well capitalized stay away from it because it it wears you out, you know. I mean, and we're in such a we're in such a AI chat GPT society that everyone's an expert. And then on top of that, we're in such a litigious society that it's like the the arguments go from you know, hey, let's work this out. All of a sudden it's like contract sue, you know, this is not correct. You know what I'm saying? It's so it goes from zero to a hundred so quick, and you just gotta kind of grab the customer and be like, listen, we got you, we're gonna figure this out, you know.

SPEAKER_01 13:25

Yeah, please don't freak out. It's it but but there's no there's just so much emotion involved in the process, right? I mean, we've had customers like, meet me in my garage in five minutes, I'm gonna beat your ass. Right. I'm like, all right, I'll be there in three, you know, and then and then they're they buy us gifts when we finish their home and they get us the nicest gifts and the nicest gifts. Again, it's just there's a lot of emotion, there's a lot of money involved, right? Uh, and you know, they they we're transparent, so they see that we're making three, four hundred thousand dollars on building their home. And they they you know it's high stakes. Exactly. It is, it is it's very high stakes, and mistakes can be very costly. And um, you know, the finger pointing doesn't work, they don't give a shit whose problem it is or how it happened. It's you're my builder. Yeah, buck stops at us. So you gotta you gotta you gotta make it right. Okay, so uh Thursday the 25th, we're going to do a live webinar and we're gonna talk about Falcon Estates. Falcon Estates is an eight-lot development in Trophy Club, Texas that we did. And uh I quit my job working for a builder, which was Atwood Custom Homes in South Lake, great builder. Um, and and I secured an eight-lot development deal in trophy club, and that's uh around the same time that my ex-wife got pregnant with our twins, and that was like, okay, I'm leaving, I'm gonna go do this eight-lot development, and hopefully by the time I'm done, we have a business and I can continue to stay in business. So um we did this development, we got the dirt locked up per lot, made some money on the dirt, about eight, nine hundred thousand dollars on the dirt, and made a couple million dollars on building the eight houses. So um, we sold out quickly. The entire thing from the time that we broke ground on the first slab was January of 24, and we were done in two years with the entire neighborhood fully developed right now, people living in there. Uh, so we're gonna do a webinar that breaks down what we had it locked up for, the whole strategy behind it, how we made money on the dirt, how fast we sold them, how we sold them, the strategy behind it, and the custom homes. Some were specs with investors, some were homeowners uh and build jobs. We had a trailer park there on that street until it got stolen on Christmas Day. I'm gonna find you, Miller Runger. Um you don't want it back now. Yeah, no, no. So yeah, we're gonna break that down in a webinar. It will cost uh a couple hundred bucks, I think, because it's we're giving away a lot of detail, a lot of juice. But if you guys want to tune in for that, I just wanted to plug that real quick because that is gonna be a really cool webinar. Uh, and then we'll obviously we'll have some coaching calls after that that we'll have to deal with. So that was our coming out party.

SPEAKER_00 15:48

Coming out party, the Falcon estate stuff. Yeah, that was our coming out party. I mean, hey, listen, all I mean, all jokes aside, we broke all kinds of real estate records in trophy clubs. We built houses that you can't find in trophy club. Yep. When people initially saw it, the nice homes in all of the neighborhoods, they're like, you're not gonna be able to do that in here. Yeah, you know what? Stucco, like you know, investors backed out initially, yeah. Guys that were in the dirt, they're like, nope, we're not gonna get it. It was it was definitely one of those like backs against the wall, everyone telling you you're not gonna be able to do it. And then what? The first house six months. Six months, you know, slab uh to CO and was sold immediately.

SPEAKER_01 16:20

Yeah, and the crazy part about that is just to give you another little teaser on that, that first home that we sold in that development for $1.8 million was $4,200 square foot. Yep. The last house we sold, which is right next door, 3,900 square foot single story, sold for 2.1. Yep. So think about the value that the guy has in the $1.8 million house. Being the first person to live in a development is a pain in the ass, but I tell you what, for three, four hundred thousand dollars in in equity when the neighborhood's done, yeah, sign me up. I know. You guys can you get you can drive high lows on my front lawn for two years if that's what it can do. I mean, you you're a winner. So we want to teach people how to do that. We also want to you know educate clients uh on on when to get in on some of these new neighborhoods. Because again, if if you if I build for you, you're gonna have some equity no matter what. But if you're buying from me after I built it and did the spec and paid the interest and all that stuff, you're gonna be paying the premium, the market price, right? We talk about that all the time. All the time. I mean, people, you know, they're like, well, should we remodel? Should we buy new? Should we buy existing? Because everybody's so impatient. But it's like if you have the patience in the capital to wait and build yourself, you're gonna have way more equity in your house.

SPEAKER_00 17:22

Yeah. Immediately. Yeah. I mean, you think about him, it's like the first guy in there bought at 1.8. It's like you got a neighbor two doors down that's over three million.

SPEAKER_01 17:30

Yeah.

unknown 17:31

Yeah.

SPEAKER_01 17:31

That looks pretty good. That looks pretty good on your cons.

SPEAKER_00 17:34

And honestly, his house probably gonna end up being like two four. Yeah. It's like, what you're welcome. You know what was great is when we were building that development because it it's on that cul-de-sac. It it was like the parade of people every single day. I mean, it was just all day long. It got hot in the evening. I put it on the weekends. It was there was so much traffic on that street. People wanted to stop by and just see the front doors or you know, just all the details because those are those are unheard of in the whole neighborhood. I know.

SPEAKER_01 18:00

I mean, every house in that whole entire neighborhood's thermal plot. Yeah, you know, eighth-inch thick thermal ply exterior sheathing. We were doing zip. We were doing all the pellet windows. I mean, we blew out that project. Nobody thought we would be able to get those values. I mean, you're surrounded by houses that are capped out at one two, one five and we're selling three million. Ugly.

SPEAKER_00 18:18

The homeowner and the HOA won't let you change anything.

SPEAKER_01 18:21

And everything of comp with the bank, because we again we kind of built it up slowly. That's another strategic point to talk about. Is we built it up slowly: 1.8, 2, 2 million, 2.1, 2.6. You know what I mean? We slowly just kept on justifying the value. And it's one of those neighborhoods, to be honest, where people who live in trophy club have money to live somewhere else. They have South Lake money, they have West Lake money, but they love trophy club, they love the golf cart community, they love the two golf courses, driving your golf cart to Walgreens or Walmart or Chick-fil-A, it doesn't matter. I mean, you got it's such a cool lifestyle. Yes, it is 100%. 90% of our clients in that neighborhood work living in trophy club and selling their house to come and build a custom home, which is really cool.

SPEAKER_00 18:59

You took the words out of my mouth. You know, I'm not a native Texan, but obviously with us building in the mid-cities area, like I've had exposure to West Lake, South Lake, trophy club, all that. And trophy club is like to me by far, like that's where I see would see myself living.

SPEAKER_01 19:11

Same, same. And again, it's just because it, you know, it's a it's a prestigious neighborhood, but it's not like overly hoity-toity. Yeah, yeah. You know, I want my kids to to get rough and tough and play baseball with their friends and you know what I mean, ride their bikes around the neighborhood and be safe. Yeah. Ride their e-scooter 19 miles an hour and blow stop signs. I'm just, I can't, I can't with the e-scooters, dude. Another thing I want to kind of touch on, um, people ask me a lot of times, like, you know, what separates you as a builder in the industry? And a lot of guys will go back, oh, my you know, my vendors or whatever the case, like we all use the same vendors. What has separated me and made me successful is because I come from a real estate investing background where we're syndicating to raise money for apartment deals or we're syndicating to raise money for development deals. So I understand the raising money, the capital, the investor, the pitching a deal and all that stuff, the spreadsheets, the analysis, the asset management. And I think not a lot of guys would have gone off on their own as a custom home builder and been able to spin and put, you know, do two or three spec homes, you know, three, four million dollar spec homes with investors because they don't really know how to show those numbers and the returns and the IRR and the bank projections and all this stuff. Knowing how to do that is really what separates me from a lot of the other buildings. Right. And that's why I've decided to sell the coaching stuff, is because not only can we build the house, which is honestly, that's kind of the easiest part. The hardest part is making money. You know what I mean? The hardest part is looking at a lot, does it make sense? What's the perfect size house to build here? You know what I mean? There's just so much more to it.

SPEAKER_00 20:43

Yeah, we, you know, that brings me back. We get the comments like, well, you didn't actually build the house, right? Like you didn't pound the nails in the wood. And it's I get that. No, like we didn't pound the nails in the wood, but there's so much more to the actual process. And really, the biggest hurdles that I feel like most people can't get over are marketing the deal. Hey, listen, in order to build a house for somebody, you got to land the client. Yeah, and we're in DFW, there's a lot of options to choose from. So why are you choosing us? So marketing the deal and then your customer service or your customer relations. Like, you know, you you need to be able to uh, you know, keep them happy and put out fires and have great communication with them. Like these are all things that are outside of, like I said, putting the nails in the wood. Like if you talk to any of our trades, like the owners of the companies and stuff, they're like, Yeah, I'm I'm doing framing because I don't want to deal with clients, or I'm doing masonry because I only deal with the builders, you know. I mean, our Mason won't even do work for people. No, he will only do work for builders because because he's gotten so burned out over doing, and that's that's kind of across the board. So yeah, no, am I up there on a ladder, you know, banging nails in two by fours? Like, no, I'm not, but there's far, far more involved in it that gets that entire project to the finish line. Yeah, and again, I've done all that stuff, right?

SPEAKER_01 21:59

Like I I installed hardwood floor. I did carpeting. I did tile work. I did trim work. I did roofing. I did siding. I've done all that stuff because I was always suspended from school, right? From 12 years old to whenever I stopped going to school. Anytime I was suspended, I was going to work with my dad or my stepdad, and they both were in construction, roofing, siding, you name it. And then obviously, as a young entrepreneur going through college, I was a flooring installer. Then I was a fire, flood, and mold specialist. You know what I mean? It's like I did all that. I don't do it now because I'm smart and I know that, you know, how to how to look for and find the right guys to do it for me so I can go and then manage the business. Yeah. Because managing the business aspect of it is a hell of a lot harder. It's a hell of a lot more stressful than going and pounding nails and doing that stuff for you. I mean, you get exercise, you ain't got nobody bothering you, you got music in your ears, the problems are very minor, all fixable, right? Like the problems we have are multi-million dollar problems. I lost 50 grand yesterday because you know I didn't realize X, Y, and Z. Like it's just so much more to it being the business owner than there is. I and I'm not hating on any of the vendors. No, no, because again, there's a lot of days where I'm I'm like, I'm just gonna go buy a trailer and be a trim guy. Uh because our vendors make better money than we do.

SPEAKER_00 23:07

My roofers, my roofers got a McLaren. Yeah, you know, exactly. I don't have a McLaren, but I was cracking up because you know, the like the kind of pressure that's on us. I I sent you a text message yesterday. I'm like, uh, you know, because we went to the title agency, right? I'm like, I just signed on a $1.8 million loan, put myself $1.8 million in debt, and then went grocery shopping and presented a $7 digital coupon on paper towel. You know, like this is the life that I'm living, you know. I'm risking it all for the hope that all of this is gonna work out. And that's the thing is like when you are of that mindset and you do own the business, that that's a risk that a lot of people are not willing to take. You know, a lot of people like to play it safe, and that's what's so scary. That's what keeps us up at night. So um, I have it's huge respect for the trades. Uh the mechanical trades are, I mean, making great money. I sometimes I'm like, am I you know that's the thing.

SPEAKER_01 24:02

It's like could I do plumbing? You you we we do it because we love what we do and it's fulfilling, right? We talked about this before, but at the same time, I don't want a bunch of employees, I don't want a bunch of staff, I don't want OSHA. You know what I mean? People are like, well, you guys are just two guys and you got a few, you know, people in the office and whatnot. Why don't you want to be, you know, the the Calais, the Willow Trees, all these bigger builders? And it's like, for me, I just don't want the headache. I don't want to have to manage a million different things. I don't want things slipping through the cracks. I like to make sure I don't need to make $20 million a year. I don't. I, you know, I'm cool making a couple million dollars a year. We have a good office, our families are taken care of, our stuff is taken care of. I'm not over here trying to be greedy and bury myself in employees and all kinds of bullshit that I don't want to deal with. I like being lean. I like being the guys who are owning the company and also on site, doing those walks with the clients in the mix, right? Knowing the product we're putting out, being involved. It's it's not a it's not a thing where it's like we can't grow to that other stage. It's just like we we really like the small boutique builder stage. It's it's great, it does what we need. You gotta earn your stripes, right? Yeah, of course.

SPEAKER_00 25:08

I mean, you can't you can't just come out of the gate and and get a size of a company like that and then never be able to like tell your war stories.

SPEAKER_01 25:15

Yeah, exactly.

SPEAKER_00 25:16

You know, you have to be like, oh yeah, you know, five years ago I had that problem and I lost my ass on that, and I'll never make that mistake again.

SPEAKER_01 25:22

Uh and it's hard to teach somebody new if you haven't been in there with your sleeves rolled up doing it your damn self. Yeah. That's the same thing, like like I said earlier with uh the video editing and all that other stuff that I learned along my career. It's like I did it because not because I wanted to be a video editor, not because I I uh my degree's in marketing, but it had nothing to do with that. I just didn't want to hire somebody to do something that I didn't understand fully enough to communicate what I really wanted. Because then you're just paying out the ass, and that's how you get taken for a ride. And I wasted a lot of money on marketing early on because I just didn't know what I didn't know. And I'm paying for websites and sales funnels and all this bullshit. It's like I just gotta dive in and figure this out. You know what I mean?

SPEAKER_00 25:59

It's like anything. Yeah, I mean, I think that is just that's like the basis of what we do, right? Like you gotta be, you gotta lit know a little bit about everything to be dangerous. You gotta know a little bit about QuickBooks, you got a little bit know about all the trades, and you know, you got a little know a little bit about marketing and all this stuff because otherwise, like you mentioned, like you're gonna get taken for a ride. Yeah. Um, so you certainly can't be an expert because you can't choose both. Um, but yeah, it's it's super important and it's super beneficial. I mean, all of this stuff uh, you know, is really possible because of you. I mean, you're you know, your your knowledge of everything, you know, that and chat GPT a little bit.

SPEAKER_01 26:34

Yeah, yeah. I I definitely couldn't do it without you, without Jamie, without the people that are around me that are constantly helping me, you know, because my brain moves a million miles an hour, right? I'm and you're just like most people are just so taken back by the energy at work. It's like, you need thick skin to be around me at the office. You need to know how to. I'm looking at Jamie over there. Jamie's like thick skin. I bark, you know what I mean? I kind of like, but I don't, it's not, it's not my intention is not to be rude. It's just like my brain is a million miles an hour. So I like shout things out and expect somebody to hear it over here. Bring me my coffee without, you know what I'm saying? I'm in the middle. Nan, I'm out of coffee. And I like said it loud enough, it's like uh that was like that was a cue. Like, come on. Somebody grab the moose head. Everyone's got to be fine on all, you know, firing on all cylinders. Yeah, the moose head, that was a pain in the ass to hang. What a what a what a pain in the ass. Uh okay, so a lot of things that people, a lot of times people ask us, like, well, how much money are you making doing this? Like, uh I've got a lot of coaching kids I've been talking to recently, coaching guys I've been talking to recently. And they're, you know, they're asking me, like, is this profitable? Like, is this a business that I could make money in? Well, let's put it this way. Okay, last year, in one year, we paid a passive investor on three deals he did with us, 900 grand. His minimum return for that year was 36%, 41% was another one, 43% was another one on his on his overall uh return on investment, right? He leveraged the lots, he purchased a lot of cash, leveraged the construction. We paid him almost a million dollars. He didn't do anything. He's retired, made almost a million dollars. We obviously split those deals with him 50-50, and we made, you know, our our portion on that. Aside from that, you know, it's it's it's it's a sliding scale. People always want to pin us down about like, well, what are you gonna charge me to build my house? Well, it's if it's a million dollar house, then you're gonna get all of 20 to 25 percent because it's just a small house and it's not worth a lot of time. I'm not, it's not a rude thing, it's just like time is money. I'm building a four million dollar house and I might do that for 13%. You know what I mean? It's just because I'm making much more money on that deal and it's a bigger project. So it's just like there really is a sliding scale. Maybe not for these guys who are out here and established and driving Bugattis and wearing diamond chains and going to Monaco and all this stuff. Fine, do what you do. I'm not hating on you, bro. I I'm proud of you. I'm happy that you guys are making that kind of money. We're not, we're a young company, we've been in business for two and a half years, three years, whatever it is. We've been off to the races, I think faster than any other builder that I've ever met. But, you know, we negotiate on our price, and that's because we are still a young company. I mean, a portfolio. Yeah, we exactly. You need a portfolio. You need to be there's houses where you know deals have fallen through. We could have sued the owner and been on our way, but it's like, no, we work with them to build that house because we want another house in South Lake that's standing up with our flag on it. So, you know, on a deal, you don't want to make less than 200 grand. Period. I I don't want to build anybody's house for under 200 grand because it costs a lot. It's too timely. I'm working 12 months out of the year, you're working 12 months out of the year, she's worked, there's all this draw process, there's so much to it. I would say 200 is the minimum we would accept, right? And to be honest, I mean, you can make obviously up to a million bucks. If we're funding our own deals in a South Lake West Lake flip, you can make a million bucks.

SPEAKER_00 29:31

Well, that's what I'll say. There's a few different ways to skin that cat. Like if you're well capitalized and you can avoid all the middlemen and you can go ahead and buy the land, do the construction loan, and you're the you're the guy when they go ahead and sell that house for retail that the check's coming back to, like, that's where you're gonna make the most profits. You know, for us, a lot of times you you're building a home for a client, so you just have your builder profit in because they're the ones that are gonna get all that equity. Also, for us, if we have an investor, well, you know, because he put that capital up, like the investor at the end of the day is gonna get all that money. So um there's there's several different ways that you can earn money on the deal, but um, I think it's important to understand that you know, we we get our builder fee, and then you know, we're just completely transparent about the cost it is to build that house, right? Um, I don't know if many people realize, you know, when you're budgeting or pricing or doing estimates for these houses, like it, it's not a perfected process, especially when it's not a home that's ever been built before, right? So we try to dial it in, but we were talking earlier about the the doors, you know, on that job. And it's like there's gonna be some things. But the nice thing about the way that we do business and being cost plus is the customer has to understand like this is our build fee and what we're charging you to build the house. The rest of the costs are are just being passed along to you with 100% transparency. If something was missed or or there needed to be additional labor in order to achieve what you're after, it's like okay, like the but I'm not paying for it.

SPEAKER_01 30:49

No, that's why we set the contingency.

SPEAKER_00 30:51

Yeah, you know, so that that's you know, that's just something that I feel people, the students need to understand as well.

SPEAKER_01 30:58

Yeah, exactly. Well, the students need to say and clients too, because again, sometimes they they forget how to differentiate between a fixed cost builder and a cost plus builder. Right. A fixed cost builder, if something messes up and you're like, hey, I'm sorry I missed this, they're like, sorry. Yeah, let me know when it's ordered because you're paying for it, right? Cost plus, it's like, hey, we're transparent, we're doing everything transparently. Things do get missed, there's a contingency for that. Right. But regardless, it it's you paying for it. We're just managing this thing for a fee. And again, that's for me coming out of the gate, that's the safe way to do it. Now, we make way more money being fixed costs. Right. Because they're not going to be able to do that. Because if we build it, exactly. We build it, they don't see the price, we list it, we're gonna make more money, right? We're on a house that we would have made 300 grand, we're probably gonna make 400 grand because again, we we kind of buffer everything to make sure we're not biting our heads off or losing money if price changes, you know, prices change all the time, the tariffs hit us and all that bullshit. Things change. And so we're we try to pad everything just a little bit, plus have a contingency because we never want to give the bad news. I don't ever want to tell somebody, oh, there's gonna cost more money, right? I'd rather always have good news, whether it's me as the investor myself or a homeowner.

SPEAKER_00 32:00

Yeah, I mean, with the cost plus the client's getting like the rock bottom pricing. You know, I always think about roofs, and it's like sometimes we'll have some of our um roofing people hit us up and they'll ask us, like, you know, what you're paying per square or what's that job cost or whatever. And you know, we I'll show them, you know, how much a roof costs, and they're like, well, I could never compete with that. Well, it's like I know because that that's the bill the roofing crew is sending to us, and we're not putting any markup on it. Yeah. You know, when you go with uh, you know, whatever name brand roofing companies in town, nothing wrong with that, but they have a markup from what the crew charges them. So with Cost Plus, it's like I get my builder fee, but you also get the cheapest price to do that roof, you know, in in town for whatever material you know that is.

SPEAKER_01 32:41

All right, I think we gave you guys enough, honestly. We we've got we got some gold here today. So yeah, so holl holler at your boys. We'll see you on Facebook, Instagram, all that jazz. Follow us, follow the podcast, it'll be live this week. We're going live on everything, Spotify, you name it, and uh check us out on YouTube. But more importantly, follow the Instagram, the Dallas Builder Club, the DFW Custom Home Builder. We gotta take a talk to. So let's make it happen.