Construction is an essential industry in real estate. While construction deals with properties that we buy and sell, some inefficiencies can tank your budget which isn’t so great. However, this episode’s guest host, Josh Stroup, co-founder of Iron Valley Modular introduces modular construction! r construction is a method of construction where they construct sections of property off-site and stack it up like Legos once they’re delivered to the building site! Gather around for this episode, as we’ll talk more about how modular construction benefits you, the skepticism surrounding it, and the gold mine of information you can take in for this one. Prop your ears up and make sure to listen!
What You’ll Learn on this Episode:
An Introduction to Josh Stroup
Site-built vs Modular
What is modular construction?
The timeline of a construction
Skepticism regarding modular construction
Got questions for Josh regarding modular construction and want to address them?
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Episode 83: Building Houses Like Playing Legos: Modular Construction with Josh Stroup
CORWYN:
Good morning. Good morning. Good morning guys. Welcome to another fabulous episode of Exit Strategies Radio Show guys. I am very fortunate to be your host Corwyn J. Melette, broker and owner of Exit Realty Lowcountry Group and beautiful, North Charleston, South Carolina. So if this is your first time listening to the show you Sir or Ma’am, are in for a treat because our mission is very simple. And that is to empower our community through real estate education. Yes, we’re gonna tell you some things and financial literacy. We got to show you some stuff too. All right. So guys, look, y’all know we’ve been on this mission to make sure that we expand and grow the show that we bring you a wealth of information, we will not disappoint you today. We’re very, very, very fortunate with us. And just as a sneaky little teaser right here. Guys, this is something that I’ve been looking at personally myself. So I’m very fortunate, and very honored to have you with us on the show. None other than Josh Stroup. With our Iron Valley Modular. Josh, how are you doing today?
JOSH:
I’m doing well. Cory, thanks so much for having me. I’m excited. Happy to be here.
CORWYN:
So look, so you were telling me, you know, we were backstage here a moment ago out of the studio. So your company is in Pennsylvania. You live in California. And you guys are building houses in Tennessee and other places south and west of that. Boom, my mind is blown! So tell our listeners about you and what it is that you do.
JOSH:
Well, I’m the founder of Iron Valley Modular. As you said, we’re a modular construction company based out of Pennsylvania and effectively a design-build general contractor. We leverage the efficiencies of modular construction, which have ties to manufacturing. It applies a lot of the same principle laws and same facets that make manufacturing so efficient. Assembly line processes, interchangeable parts, standardized processes, and allows us to take those efficiencies and apply them to construction, which for generations has been plagued with inefficiencies that overall inflate costs for homeowners and investors alike. And we’re, as you said, I mean, I live in California, our team is in Pennsylvania, and I’m from Pennsylvania. So that’s why we build houses there to employ the local community, which I’ll get into later. But through our process, we effectively have the capabilities to tackle projects pretty much anywhere.
CORWYN:
So you know, Josh, I’m gonna come in, just right in for us here, because many people don’t know what modular construction is. Now, as a practitioner, I do. But there are a lot of people that practice real estate that have no idea the difference between a modular manufactured or site built, so if you don’t mind, can you break that down for our listeners today?
JOSH:
Absolutely. The best way I can explain it to the uninitiated is just to imagine the coolest life-size Lego project you’ve ever seen in your life. That’s effectively what it is. It’s Legos for grownups, and I was a Lego kid growing up. And that’s one of the reasons I was drawn to it. Because I thought it was just so cool. Effectively, what we do is we build your house or build your apartment, building your condo building, whatever it is, we build it within a controlled environment. So when I say that we’re building our projects in central Pennsylvania, we’re building it inside a large, you know, 150,000 square foot facility, where we have no rain delays, no snow days, we can build every single day of the year. And take your project, break it down into sections, put it in the back of trucks, put them back rail cars, ship them out to the site, and then we use cranes to effectively like Legos, just stack the boxes on top and configure them in a way so that when we leave, you have a completed house, that’s we do the plumbing, the wiring, and everything. In the factory, the only thing that’s done on-site nowadays for us is our foundation work, time utilities into the main, and that kind of thing. It’s a fantastic process, it’s been around for a long time that really saw a resurgence over the last decade or so I think coming off the heels of just unprecedented cost increases with skilled labor. And now builders and investors are looking for alternatives to get their jobs done. So that’s really where we fit in.
CORWYN:
You touched on something I had a gentleman couple come into an open house with me recently and essentially began to try to beat me down about market prices and all that stuff, we kind of went around a lot. But one of the things that we touched on in that process is that the cost of construction has substantially increased. I mean, you got material costs, you have labor costs, and then you have the variable most times with people that are building on-site in between your modeling, and their model is not only the waste but also the theft, you leave a pack of lumber, drop a pack of lumber on a job site. And if you don’t have eyes or something on it, there’s a high probability that some of that lumber is going to get missed. And if not all of it, which is a cost to the builder and therefore increases the cost to produce. Now your controlled environment is less likely to happen, correct?
JOSH:
Yes, exactly. You know, we have securities in place, I mean, it’s a closed industrial building effectively, it’s, you know, everything that we use, the parts and everything I mean, are stored in our facility and our yards and everything. So it does minimize the number of materials and tools and equipment that you have to store on-site. So it is safer. From a staff standpoint, it’s also I would say safer from the sort of a neighborhood nuisance standpoint as well and attracts less attention from people who want to come onto the site and mess around because there’s nothing there. It’s also less sort of intrusive to neighbors, in the community. Because instead of us being on a job site for eight or nine months, every single day, loud equipment, loud power tools, we’re on a job site for one to two days, and then we’re out and then we’re done. There are a lot of benefits that extend beyond just simply the cost savings that you get. Yeah, for sure.
CORWYN:
Let’s touch on it, you kind of gave a snippet in there about timing and timelines. From my experience in the past, usually, construction periods vary. But typically, let’s say it’s 2000 square foot home period for you to you know, minus having to order in something special or particular, what have you, but just kind of like what you guys keep on as far as available inventory as far as fixtures and upgrades and things of that nature. What is the typical turn time to full construction? And then let’s get into what shipping and delivery setup if you will, or finish, let’s say let’s not call it delivery setup because that gives a connotation of manufactured housing, which this is not. So what does that look like as far as the time off of construction?
JOSH:
Most of us if we’re real estate investors, or you’ve ever built a home. Most of us have interacted with a home builder, a GC, and all GCS like to quote Hey, I’ll finish your project in six, seven months. And that never happens. That has never happened in history. If it’s ever happened to any of you out there, please let me know, I want to know who that GC is I want them working with us. It takes about a year, it takes a solid year to build a brand-new house. By the time you factor in permitting, zoning processes might even be more than that, you know, some, some municipalities might take a few months to get going. And then obviously, you have just the typical phase of construction, which Yeah, I mean, different subs have different schedules, it just it can become a mess. So yeah, basically a year figure on a year to build something to build a 2000 square foot house, we actually can. And I know I just after saying that it sounds great, we actually can finish a project in about six or seven months. And the reason I say that is because and that’s including zoning and permitting which some of our areas, some of our markets, we figure it’s gonna take probably two or three months, two or three months for zoning and permitting. The reason we can build a project in such a compressed timeframe saving about 50% is that while we’re doing all the zoning, and all the permitting, and while we’re building the foundation on site, we can already get a jump on building the project. off-site. In the factory, we typically operate on about a four-month four and half month backlog of projects. So when we get started, it only takes us about 24 days to build the house, you think about seven, eight months versus three weeks, it takes us about three weeks to build the standard 2000-foot house. So most of the time what you’re waiting for is not us building, it’s just us waiting to begin your project because we just have that kind of a backlog. And so once we get the project done, or while we’re waiting to start your project, again, we can do all the stuff on site. Once the monster modules once the house is finished, we just have to schedule your crane day schedule your transportation to the site. And it takes us about a day to put together the average 2000-foot house. So it allows us to significantly compress our construction schedules.
CORWYN:
So typically, for our listeners, I want you to understand that when you’re talking about finished, usually you see in modular, and Josh, I know you’re gonna bust me in the head with this one. So I’m ready for it. Because I’m excited because I didn’t hear you say anything along this vein, which tells me you guys go a step beyond. But typically, in modular construction, you’re seeing a product come 95% complete, that has to be completed. So the foundation, obviously outside of that, but the home itself. So I didn’t hear you say anything about that. So you guys are fully when you guys put the house, as you say stacking the Legos, I liked that when they finished with that. It is a complete product. I mean everything is there, all the floors, finishes, all that stuff is already in.
JOSH:
Yes, absolutely. And thank you for bringing that up. So that is one thing that actually makes us a little different from other modular companies is that again, we are a design-build general contractor. And so we will hold your hand we will, you know, take care of everything that you’re not comfortable taking care of yourself. If you’re a GC fine, that’s great, you can take care of everything else, we’ll build the modules, send them down help you put it together, but most people don’t want to handle all that. So we will handle design, we’ll work with local realtors, local zoning to help you get your project off the ground, we’ll take care of the foundation, we sub that out almost, you know because that’s going to do local work. So in most cases, we sub that out. But we’ll take care of all that. That is one thing that sets us apart. Now as far as the houses come when the houses are delivered from the factory, they’re delivered from the factory about 95% complete on average, because in most cases, local building inspectors will want to see how everything was done. So we have to leave certain like sheets of drywall open, we have to leave the walls open in certain areas just so they can kind of see in and look at our wiring look at our plumbing, some siding is undone because we don’t want the cables from the crane to damage it when we lift it. So some work just has to be tidied up and taken care of post delivery. But we stay with you to handle that. We do all that. So when we walk off the job, the job is done.
CORWYN:
So how are you seeing people? So I want to hit two facets our listeners and our viewers for our show, they run the gamut. So we have the people that are looking to buy the first home people that’s looking move up. And obviously on the other end of the spectrum, as you go further down, you have investors and some of them are single families, some of them are multifamily. Some of them are looking for many larger-scale products. How much of that do you cover? So let me start with that. How many people do you serve in that whole paradigm?
JOSH:
That’s something that I’m very proud of something we took our time to get set up is that we do cater to a wide variety of builders. We carry a broad range of finishes if you’re a real estate investor, a landlord, and maybe you want to build some rental properties or build an apartment building, but you don’t want super high finishes, you want cost-effective stuff, durable things, we have options for that. Conversely, if you’re someone who wants to build a, you know, three 4000, square foot luxury home for your family, we have options for that as well. So we do. Again, we’re custom, we’re design-build. So we do have solutions for pretty much anybody.
CORWYN:
We have 48 contiguous states, and I’m pretty sure you ain’t figured out how to get a highway over to Hawaii yet, or kind of get around and get to Alaska. But for the most part, you deliver to, let’s say, what percentage of the US. How far do you guys go?
JOSH:
If you’re talking about just in terms of land surface area, I would say we’re maybe 30-40%, if you’re talking about population, just given where our population is based, we’re over half of the country. Again, I mean, when our facilities in central Pennsylvania, one of the nice things about where we’re located is that we’re centrally located, almost half of the US population is within a three or four-hour drive, you know, with all those major cities there. So that is a very nice sort of strategic reason why we’re there that goes beyond just, you know, us wanting to help out our hometown. But we do have the capabilities to ship within reason, pretty much anywhere we need to go. Now what I tell most people is, if we are within, let’s say, we’re in central Pennsylvania, and we’re going from Pennsylvania to the Carolinas, we will be on average, more cost-effective, less expensive than just about anybody out there, because we can save that much money on that on the overall build, mind you we have costs that maybe other home builders don’t have, we have transportation costs that they’re not going to incur crane cost they’re not going to incur. But we’re less expensive in the aggregate so it makes sense. Once you start going further out than that in terms of radius, then the costs start to creep up to the point where it’s almost a wash, you know, the transportation costs just become so, so big. That’s why we’re not doing projects in Colorado or California right now, it’s because shipping across the country just doesn’t make sense. We are working on that. We’re working on that. And we do have plans in place, things that we believe we can do to kind of level the playing field. But pretty much right now, if you’re on the East Coast, Mid-Atlantic area of the United States, we would be an extremely viable option for you.
CORWYN:
So what do you say, Josh? And I know you’ve got a response to this one, for sure. But what do you say to the person who is skeptical about modular construction versus site built?
JOSH:
It depends really where that apprehension comes from. If you’re an older investor, perhaps you were born in the 60s or 70s. And you are investing you remember, modular construction is something different. And for those who may not be aware, I’ll just give you a quick, quick history lesson. But I mean, modular construction, as we know it today has been around for decades, back in the 70s. It was quite different, you know, modular builders did not have to follow the same residential codes that they have to follow now. They were governed by HUD, and not by the residential building codes. And because of that, the quality did sort of falter there for a bit. Modular homes were built in the 70s. We’re not built the way they are now, on average. I’m not saying that’s true in every case, but there were just different types of builders back in the day. And because of that, I think there was a stigma about modular construction that carried on for a couple of decades, a lot has changed now, so it’s very different. And again, these homes appraise the same way, as any home built on-site. They’re indistinguishable from any house built on site. Appraisers cannot treat them any differently. Just because they’re modular. They’re not manufactured. Thank you for bringing that up. So they’re not trailers. They’re not double wides. Once they’re set, they’re permanent structures. And because of that, you get all the benefits of increased equity and value appreciation that you would with any other simple home, and I would say is the other thing. There’s another I think, aspect there that I think leads to some people getting a little nervous about trying modular is it’s a market disrupter, I mean, plain and simple. It’s a market disrupter. So if you go out to some of your other builders, some of your other contractors who you’ve been buddies with, or maybe you’ve used for years, doing residential properties, I mean, what do you think they’re gonna say? It’s honestly we disrupt the market, we’re taking work away from some of those other builders, and of course, they’re not going to like that. And that’s something that we deal with all the time. Education is a big part of our sales. is a big part of any modular builders’ sale. So if you’re ever concerned or curious, you want to learn more, I think the best thing that you could do is just ask, just get on the phone with somebody, whether it’s me or somebody like me to just, you know, share your concerns. And I think what you’ll find is that it’s the way construction is going to be going here in the future,
CORWYN:
Your website, so kind of, you know, looking around where you guys are design-build. So what I heard in that, and Josh, please correct me if I’m wrong about this, but you specialize in Okay, what’s your idea? What’s the concept, you deliver? Now I’m sure somewhere, you all have plans that you guys have built or do kind of repetitive that you’d be able to share with a consumer. But I want to kind of take you back around to something you were saying they bring you back through what I just asked about, which is you said that your industry is a disrupter. Tiny houses are kind of the thing. You know, everybody wants to do a tiny house, you looked at me in the Charleston market, and I remember talking to someone some years because we have an abundance of empty containers here. Because they come in, they get emptied, and they don’t ship them back because of the cause. So they end up in a yard somewhere and other people go by. And people wanted to make those because you saw may have seen places, In California some places take those containers and convert them into residences for the homeless and some people use them, design them, and make massive homes out of them. But I imagine you guys do a lot of tiny houses, correct?
JOSH:
We don’t, I’m glad you asked that tiny homes, certainly, I could see how tiny homes would lend themselves to modular construction. And most people would assume that that that’s a very sort of economical way to leverage modular construction. But when you think about it, in terms of economies of scale standpoint, you get more bang for your buck, the bigger you build, because to some extent, our transportation costs and our crane costs are going to be whatever they are. Now, so we are looking at possible strategic partnerships. I can’t get into too much right now, where perhaps we would be built up to kind of do more, yeah, kind of like there’s tiny homes that you saw like people kind of tow behind their vehicle to like to live across the country and that sort of thing. But right now that the folks who realize the best benefit to modular construction are the folks who are building single-family homes, building apartment buildings, affordable housing, and things like that because your cost per square foot then is going down.
CORWYN:
Okay, that makes perfect sense, Josh. Again, is always a numbers game people, most times don’t understand that or realize that because it is most certainly a numbers game. And the larger a home that you build, the less it cost to build per foot. And the smaller it scales, the costs are considerably higher. So I’m not going to try to get you boxed in on anything here on the show today. Because each project respectively required its analysis, and therefore pricing will differ depending on location, finishes, size, and all that other stuff that goes in there. But if someone was looking to get started with you get more information about the process. Let’s start with where they reach you. And then let’s touch on what that will look like and what that process is
JOSH:
Sure if they want to reach out to us specifically, I’ll always love to talk modular I mean, we love this stuff. So always love to share your story and answer questions, and they can reach us at info@ironvalleyci.com. And be more than happy to set up a talk with anyone who wants to learn more about modular construction. There are also several educational resources in online modular building institutes. MBI is another really good sort of nonpartial, impartial, industry-wide resource that you can research to just learn about modular construction and wonder about how it works. That way you’re learning from a third party and a lot of good resources like that out there. I think most people when they come to us we’re able to and folks like us we said we’re not the only game in town, but when they come to us we can usually give them some significant cost savings
CORWYN:
Awesome, so Josh look we have quickly got towards the end of today’s show. So I’m gonna ask you for that jewel, that nugget that you have because I know you got one for our listeners, anything that we may not have touched on. This a question they should ask as they look or consider approaching this process because I know you have a jewel or nugget for them. So if you don’t mind, let’s share that.
JOSH:
Sure to real estate investors. I would just say remain curious. Be curious, and be open to finding opportunities where perhaps other people aren’t looking to where perhaps previously you didn’t think they were present. Because as the industry in the markets becomes ever so more competitive, it’ll be those creative folks who can find success And do companies like us support sort of a wedge in that industry to perhaps provide viability of torture projects where otherwise they wouldn’t exist? So be hungry, be curious, and learn all you can. And folks like myself, folks, like Corwyn are here to help however we can.
CORWYN:
Awesome, well Josh, thank you so much. For our listeners, guys, you know, that we are out here, knocking down doors, climbing walls, and we’re doing things to make sure that we can get you the broadest exposure to people that are doing amazing things within our industry. You know, we always talk about finance, we always talk about the opportunity. Sometimes we have to tie in the availability of the product as well. And I’m a firm believer, Josh, I know I didn’t tell you this earlier. But when there’s a lack of inventory, then we have to create it. And you got our demand for creating inventory. You’re the person that people should go to look to, to help create that opportunity that may not exist as they wanted otherwise. So please make sure to reach out to Josh. For our listeners a second time, guys, thank you so much for tuning in today. Thanks for being a part of the Exit Strategy Radio Show Family, Joshua, sincerely thank you from the bottom of my heart when you do as well. And we appreciate you for the third time and last time for our listeners. Y’all know what I say y’all know how I feel. But y’all gonna get it from me anyhow because that’s what we do. As always say to you guys, I love you. I love you. I love you. And we gon’ see you guys out there in the streets.
Guys, that was a great show today. And we thank you so much for taking the time to listen to Exit Strategies Radio Show. My name is Corwyn J. Melette. Yes, that is me. And I thank you from the bottom of my heart for tuning in to today’s episode. Exit strategies are my faith. It is how I give back to our community. It is how I foster goodwill. spread the good news, and trustfully help you get great results. Guys, as I always say to you, as I always say to you, I love you. I love you. I love you. And we gon’ see you guys out there in the streets.
