Episode 14 - Sergio Rodriguez: Transforming Silicon Valley's Construction Horizon
Welcome to another episode of The BreakThrough Podcast! I'm your host, Stephen Husted. Today, we're joined by a special guest, Sergio Rodriguez, a residential general contractor who has harnessed the power of social media to elevate his construction business. Let's dive into the discussion and explore the transformative role of social media in marketing, Sergio's journey, and valuable insights into real estate investment opportunities.
Takeaway 1: Leveraging Social Media for Business Growth Sergio shares his journey of using social media as a marketing tool. Learn how he strategically posts daily updates, interacts with his audience, and generates leads, resulting in a substantial following of 20,000 followers in just three years.
Takeaway 2: Overcoming Insecurities and Building a Personal Brand Discover how social media helps Sergio break through his initial apprehensions about going on camera. Sergio emphasizes the importance of showcasing the person behind the business, building authenticity, and setting personal goals to go on camera more often.
Takeaway 3: Real Estate Investment Strategies for Success Sergio unveils lucrative real estate investment opportunities, emphasizing the ADU movement. Learn about purchasing a lot, constructing Accessory Dwelling Units (ADUs), and converting garages. Explore the lasting trend of ADUs, empowered by California's Assembly Bill 1038, opening new doors for investors.
TRANSCRIPT
∎ Teaser / Highlighted Clip
[Sergio Rodriguez] (0:00 - 0:32)
If you can buy a fourplex with land, with a big lot, because the law says that you can build a detached ADU if you have the land on that multifamily housing project. So think about you have a fourplex, then you'll have a detached ADU, and then you're able to convert 25% of the existing floor plan of convertible space. So a fourplex with carports, you can convert 25% of the floor plan into an ADU.
So you could end up with a sixplex.
∎ Podcast Intro:
[Stephen Husted] (0:33 - 2:21)
Welcome to the breakthrough with Steven Husted, the show that takes you behind the scenes with successful entrepreneurs, real estate investors, and other movers and shakers in the business world. In each episode, we'll sit down with our guests to explore their personal and professional journeys, including the challenges they faced, the breakthrough moments that propelled them to success, and the strategies and the tactics they used to get there. Get inspired by new ideas and strategies and get to know our guests on a deeper level.
Join us for candid conversations, powerful insights, and plenty of breakthrough moments. Please help us grow by subscribing and sharing the podcast. And welcome to the show.
∎ Guest Introduction:
Hey, everyone, Steven Husted here. And today we have the founder and the owner of Integrum Construction, one of the top builders in Silicon Valley, none other than Sergio Rodriguez. Sergio acquired his home building skills working with his father, a professional builder.
Eventually, he decided to follow the same path. As the company specializes in working on accessory dwelling units, ADUs, we're diving deep into the discussing garage conversions, both attached and detached. Sergio breaks down the costs and the timelines while navigating those tricky city rules.
As a bonus, we're unraveling the Silicon Valley landscape, exploring market conditions, home ownership trends, and Sergio's strategy for maximizing land potential. Stick around for our project reveals. It's a thorough journey into Silicon Valley with Sergio Rodriguez.
Let's get into it.
∎ Podcast Proper:
Sergio, how's it going, buddy?
[Sergio Rodriguez] (2:21 - 2:22)
Hey, how you doing?
[Stephen Husted] (2:22 - 3:01)
I'm doing good. Thanks for jumping on. I was following you on Instagram and really liked your page.
And the thing that I brought up to my assistant is I haven't seen a lot of contractors that are shooting content and putting it on Instagram. And I was happy that you reacted and responded back to my DM. And here we are.
And I really appreciate you jumping on and really curious to understand what you've been doing with social media, what's been going on in your business. And yeah, I appreciate you getting on here.
[Sergio Rodriguez] (3:01 - 3:51)
No, it's an honor. No, thanks for having us. Yeah, marketing is really big for us.
We try to post around two stories a day. We try to post at least twice, probably a couple of reams a week. But at least every day, we try to post something on Instagram, LinkedIn, probably once a week, we try to post something.
So it's a big part of our company. I know a lot of the younger guys are starting to do it. A lot of the older GCs, they don't really see the value in doing it.
But we do. We get a lot of leads. We've got a lot of fans on Instagram.
We have about, I think, close to 20,000 followers on Instagram now. So it's- How fast did it grow? It's been almost three years.
Almost three years. Yeah.
[Stephen Husted] (3:51 - 3:51)
Okay.
[Sergio Rodriguez] (3:52 - 3:57)
It's not too fast, but 20,000, we're happy with that.
[Stephen Husted] (3:57 - 4:09)
Yeah, yeah. That's a good number. How do you run it within your business?
Are you the one shooting content? Are you making some of your subs shoot content? How are you approaching it?
[Sergio Rodriguez] (4:09 - 4:30)
Both. All my subs, my employees, they all know that social media is important to us. So if they're not shooting videos, when I do my job walks, I'm always shooting something cool, little details, like a little tile detail that I like, I'll take a picture of it and I'll post it, little things like that.
So it's a collaboration of many people.
[Stephen Husted] (4:31 - 4:40)
Did you find it hard to get into at first? Or were you somebody that just naturally saw the value and just went for it?
[Sergio Rodriguez] (4:40 - 4:40)
Yeah.
[Stephen Husted] (4:40 - 5:09)
Because I have a lot of people that reach out to me. I have general contractors in the Midwest that reach out to me and they want to get started and they just don't know how to have that breakthrough moment of just doing it. I said, look, get a decent microphone, make sure you have a decent camera, whether you're using your iPhone or just a regular camera and just start shooting.
Don't make it so perfect. Just go and just do it. It doesn't matter really what you're doing at first.
[Sergio Rodriguez] (5:10 - 5:46)
Yeah. I think in the beginning, I was very insecure of like, hey, if I post something and another GC says and critiques my work, little things like that. And I just don't care.
Everybody does things their way and we post. I just stop caring and you just got to jump into it. You just got to do it.
I struggle with going on camera, actually. A lot of people have told me, we want to see you. We see what you're doing, but we want to see the face.
And so I have a goal to go more on camera. This is maybe a breakthrough moment for me. Good.
[Stephen Husted] (5:47 - 5:54)
Yeah. Well, it's probably going to happen because you're already in this. There's really no going back.
[Sergio Rodriguez] (5:54 - 5:55)
Yeah, for sure. For sure.
[Stephen Husted] (5:55 - 5:59)
You know what I mean? Have you been on a podcast before?
[Sergio Rodriguez] (5:59 - 6:13)
No, it's my first time. I've had two people reach out to me. One financial advisor can connect me with another gentleman who's running a podcast.
So I'll probably do a couple more, but you're the first, man.
[Stephen Husted] (6:14 - 6:55)
That's great. Yeah. Doing a podcast, it's kind of a trip.
The first couple I did, well, I'm eight episodes in so far on mine. And thank you. It's crazy.
I'll be driving here to get ready for this. And I'm playing out how it's going to go. And it never goes the way that I think it's going to go.
And that's the funny part about it. It's just us having a conversation. And this would be the same conversation we would have if we went and got coffee or jump on an hour phone call, but we're just recording it now.
And that's the difference.
[Sergio Rodriguez] (6:55 - 7:02)
I remember when you called me and we just started vibing. We just started flowing in our conversation. I was like, see, this could be on the podcast.
[Stephen Husted] (7:03 - 7:04)
Yeah, exactly.
[Sergio Rodriguez] (7:04 - 7:07)
Yeah, definitely. That's the beauty of it.
[Stephen Husted] (7:09 - 7:22)
100%. And it's funny. I've had guests on and we usually chat in the very beginning before we record.
And it starts to go and I'm like, okay, we got to go. We just have to jump on now because we've got a good vibe going. Let's get going on it.
[Sergio Rodriguez] (7:22 - 7:23)
Exactly.
[Stephen Husted] (7:24 - 7:24)
Yeah.
[Sergio Rodriguez] (7:24 - 7:55)
And I know there's a couple of GCs that I mentor and they want to up their sales. And I always tell them, just be you. Just be yourself.
Be nice. Be polite. Know your stuff and just sell your product.
Be natural. You don't have to be robotic and formal. People gravitate to realness for sure.
And so that's why podcasts are so popular. They're so famous now because people like to hear real conversations.
[Stephen Husted] (7:57 - 8:38)
They do. And you almost get into a zone of you forget you're even recording it. I've had some interesting things that I've said in a podcast that I went, gosh, I should have said that.
You know what I mean? But it's like this is what it is. It's how I feel about certain things.
And I think you get more and more comfortable as time goes on doing one as well. Absolutely. So walk me through.
Why don't you tell everybody what you actually do as a contractor? Because I know what you do, but why don't you give us a little breakdown? Give us your elevator pitch.
[Sergio Rodriguez] (8:39 - 8:56)
We're a residential general contractor. We specialize in ADUs, custom ADUs, stick framed. And we also do remodels and custom homes.
70% of our business is ADUs.
[Stephen Husted] (8:57 - 8:58)
So huge right now.
[Sergio Rodriguez] (8:59 - 9:48)
That's where it is. And then the other 30% is remodels and custom homes. But our main focus right now is the ADUs because I have a soft spot for housing.
So I came from an affordable housing industry where I worked at Eden Housing for almost 10 years. And I've seen the housing crisis. It's real.
There's waiting lists for people looking for an apartment five years. Families with kids living in shacks. And so I know that the housing crisis is real in California.
And so ADUs are helping solve that. I have a lot of stories, man, of ADUs that we built. Really?
Oh man, incredible stories.
[Stephen Husted] (9:48 - 9:50)
Tell me a story.
[Sergio Rodriguez] (9:51 - 11:04)
What comes to mind right now? Right now, I built an ADU for an older couple, former NFL player. And their daughter, they were going to leave out of state because they couldn't afford to buy a house here in the Bay Area.
So what they ended up doing was they ended up remodeling the main home. Daughter moved into the main home and they did an addition, an ADU, attached ADU. And they really needed it because they didn't have any space.
And so mom and dad lives in ADU. And it happens to be, I don't know if you're familiar with Cal football, Cal Berkeley football, Joe Capp. He used to be the coach.
He was the first Latino NFL player in the 60s. And so he lived there and he recently passed, but we were honored to give him a nice home for him and his wife before he passed. So that's one story.
So it's really helping people stay close to home.
[Stephen Husted] (11:06 - 11:13)
Without having to get displaced and move out of state or somewhere else because they just really can't afford. And where was this property at?
[Sergio Rodriguez] (11:14 - 11:15)
This is in Los Gatos.
[Stephen Husted] (11:16 - 11:19)
It was in Los Gatos. And you said it was an attached ADU?
[Sergio Rodriguez] (11:19 - 11:21)
An attached ADU, yeah.
[Stephen Husted] (11:21 - 11:22)
Okay. And how big was that?
[Sergio Rodriguez] (11:23 - 11:27)
About 600 square feet. Yeah. Two bedroom.
No, one bedroom, one bath.
[Stephen Husted] (11:28 - 11:36)
One bedroom, one bath, 600 square feet. And that just helped them. Now everybody's still under one roof, so to speak.
[Sergio Rodriguez] (11:36 - 11:37)
That's right.
[Stephen Husted] (11:37 - 11:42)
It's all them from having to move. That's right. Yeah.
That's a win-win.
[Sergio Rodriguez] (11:42 - 12:33)
That's right. It's a win. There's another story where this is in Fremont.
The homeowner is a deaf lady. She used to be a teacher for the School of the Deaf in Fremont. And her son is also disabled and he's deaf as well.
And he needed his own place. I think he's about 30 years old and she desperately needed him to live on his own. And so we built him an ADU.
And now he's an artist. He paints. He takes photography.
And he's so happy. She has his son next to him in the backyard. It's just great to see that he's independent, but he's still close.
[Stephen Husted] (12:34 - 12:38)
Right. Easy to deal. If there's anything that come up, they're close by.
[Sergio Rodriguez] (12:38 - 12:56)
Yeah. And I just remember seeing their faces when they move in. It's so cool.
It's a little different than a custom home. When you're building a custom home, the demands are higher. It's just different, man.
ADUs serve a different purpose.
[Stephen Husted] (12:58 - 13:14)
Where in the process do people reach out to you? Have they looked into financing first? Are they trying to just figure out, do they do a prefab or do they hire a contractor?
When people reach out to you, where are they typically at in the process?
[Sergio Rodriguez] (13:14 - 14:31)
No, that's a good question. All over the place. A lot of clients reach out to me and they don't know where to start.
They don't have a designer. They don't have nothing. We usually refer them to an architect.
If they don't have then we'll take it from there. Then we can give them a proposal, but we're not a design build firm. A lot of clients want a design build firm and I never recommend that at all.
Why is that? Because general contractors are not designers. We're builders.
That's true. We just build. What a lot of these builders are doing is they're calling themselves design build firms, but they're really just outsourcing the design.
Of course. They're charging you a markup. Yeah, just for that.
I want to be true to my business. It's like, that's not what we do. I'm not a broker.
I only have my subs. During the build, I only have my subs, but we're not going to broker out anything. I'll refer them to a designer and then the designer will circle back and say, hey, remember that client that you referred me?
He's ready. Here's the plan. You can give them a proposal.
It's kind of a full cycle, which is great.
[Stephen Husted] (14:33 - 14:41)
You're putting the process in the hands of the experts. Let everybody who's the expert deal with what they are the experts in.
[Sergio Rodriguez] (14:42 - 14:51)
Correct. Guess what? If there's a design flaw, which happens, if you're a GC and you're claiming to be a design build firm, who's going to take the hit?
[Stephen Husted] (14:51 - 14:52)
You're taking that whole hit.
[Sergio Rodriguez] (14:52 - 15:10)
The GC is taking the hit. If you're the GC and you say, we're not a design firm, hire the architect. If there's a design flaw, it's less liability for the GC.
We stay away from that whole process.
[Stephen Husted] (15:13 - 15:20)
I know that you're out in Sunnyvale. Is that where most of your business is getting done as far as ADUs? Are you pretty much throughout Silicon Valley?
[Sergio Rodriguez] (15:20 - 15:44)
Throughout Silicon Valley. Our coverage area is south of San Francisco. We don't go into the city, but we'll do South San Francisco all the way down to San Jose.
We'll cover that whole peninsula. All the way to the East Bay, we'll do that loop into Milpitas, Fremont, and we'll stop around Hayward area. We're also now doing the Tri-Valley.
We're doing Pleasanton, Livermore, Dublin.
[Stephen Husted] (15:45 - 15:46)
What about the coast?
[Sergio Rodriguez] (15:47 - 15:48)
Like Moss Beach.
[Stephen Husted] (15:49 - 15:50)
Santa Cruz area?
[Sergio Rodriguez] (15:50 - 15:55)
No. No, it's out of our area. Out of your range?
Correct.
[Stephen Husted] (15:59 - 16:10)
There are so many different models. You brought up something in our conversation about how you deter people from building at 600 square feet compared to 1,000 square feet.
[Sergio Rodriguez] (16:10 - 16:10)
Correct.
[Stephen Husted] (16:11 - 16:13)
What was that about? Explain that to me.
[Sergio Rodriguez] (16:13 - 16:42)
It just depends. It depends on your usage. There's clients who are not going to rent this out.
They're not going to rent out the ADU. It's for them. It's for their parents.
They want to build a 1,200 square foot ADU. That's great. But if you're looking for an investment, we don't really see the value in going past 750, 800 square feet.
The cost to build it versus the return on your investment isn't that great.
[Stephen Husted] (16:43 - 16:45)
You've learned this over experience over the years. Correct.
[Sergio Rodriguez] (16:47 - 17:11)
Because I develop myself. So we just do the cost analysis and it just doesn't really hash out. So 750 square feet is kind of the sweet spot.
If you can do two bedroom, two bath, great. Two bedroom, one bath, 750, that's a good place to be to rent it out and maximize your rent. How do you...
[Stephen Husted] (17:11 - 17:26)
You brought up two bedroom, one bath at 750, but then you said if you could squeeze out a two-two at 750, what would be the scenario where that... Is it the plans and what the design looks like? Is that where it would...
Correct. Okay. Yeah.
[Sergio Rodriguez] (17:27 - 17:29)
Yeah. Correct. Yeah.
Exactly.
[Stephen Husted] (17:30 - 17:47)
And then a lot of them are doing... I noticed a lot of the new builds, they're definitely adding ADUs. That's a mandatory thing at this point when you're doing a brand new construction is to have some type of ADU over the garage.
Right. Over a detached garage.
[Sergio Rodriguez] (17:47 - 17:53)
Exactly. A lot of the remodels that we're doing now are interior remodels additions with a junior ADU.
[Stephen Husted] (17:54 - 17:55)
With a junior ADU.
[Sergio Rodriguez] (17:55 - 18:09)
You know what I mean? Yeah. It's a no-brainer.
A lot of the custom home builds that we're bidding on have detached ADUs on them. So it's kind of just... That's where people are going.
[Stephen Husted] (18:10 - 18:26)
How do you feel like the market's going as far as building costs and running your business right now? Is it tight for you as much as it is for the homeowner or everybody that's in real estate? Everything's expensive right now.
Has it been hurting you as well?
[Sergio Rodriguez] (18:27 - 19:05)
Uh, business has slowed down a tad for sure because of the interest rates. So a lot of the clients who... I had a couple cancellations where clients were like, you know what?
I can't... Interest rates are just way too high. We're going to postpone the project.
That's not too much, but I've had two this year, which in 2020, 2019, 2021, no way. I mean, people are building these things. But for us, business has...
I mean, it hasn't slowed down really for us. The cost of build hasn't really changed. In 2020, the lumber prices were ridiculous.
[Stephen Husted] (19:05 - 19:06)
Insane.
[Sergio Rodriguez] (19:06 - 19:10)
They were just... It was dumb. It was $80 a sheet of plywood.
[Stephen Husted] (19:11 - 19:12)
And that's come down.
[Sergio Rodriguez] (19:13 - 19:37)
Yeah. Now it's come down, but it's still not what it used to be. In 2017, a sheet of plywood was $16, $17.
You know, you're not getting that no more. So it's not as high as it used to be, but it's kind of tapered down. But the cost per square feet to build is about the same from last year.
[Stephen Husted] (19:38 - 19:51)
Interesting. So when did you first... When did you go into business?
What year was that? And what were you doing prior to becoming a general contractor? Did you work in trades and work your way up?
[Sergio Rodriguez] (19:51 - 20:00)
Yeah. Not necessarily. So my dad's been a general contractor for over 40 years.
[Stephen Husted] (20:01 - 20:04)
Your dad has a... Oh, wow. Okay.
And where is he based out of?
[Sergio Rodriguez] (20:05 - 21:47)
He's based out of Richmond. So originally, that's where I'm from. That's where...
I'm Silicon Valley based, but I got the East Bay hustle for sure. And so that's where my family's from. And he's also building ADUs, but he's more boutique.
And so I grew up in this industry my whole life, my whole life as a kid, summers with my dad. And then I got into commercial again, multifamily housing, that industry. Affordable housing.
Yeah. I worked at Eden Housing. Eden Housing was a big, big...
It was a privilege to work there because I learned a lot. I learned a lot about people. I learned a lot about the value of housing people.
And I think that transferred over to what I'm doing now. But yeah, I was there for 10 years. And then I started my first venture, which focused on kind of flipping apartments and doing multifamily renovation projects.
We call them rehabs for HUD housing. So that was my first venture. And I started that in 2014.
And then I closed that in 18. And then I started working for a high-end builder, Baywest Builders out of Redwood City. They did nothing but homes from $5 to $15 million.
Beautiful, beautiful homes. And then I got that itch, man. In 19, I just got that itch to do my own thing again.
And I started small. I got my own license and I started doing side projects, small renovation projects. And then it just kind of snowballed from there.
[Stephen Husted] (21:49 - 22:04)
So you got your general license. And so what was your role within the business? Like, were you swinging a hammer or did you just sub out everybody and you just managed your jobs and bid on them?
[Sergio Rodriguez] (22:05 - 22:37)
Yeah. So I had a small crew. It started with like a couple of guys and we were doing demo.
We were putting in baseboards, cabinets. This was back in 2018. Just this two, three guy crew.
And then as the projects got bigger, then I started looking for a framing crew, a foundation crew. And then they ended up kind of just working for me full time as employees. And then that was it.
But I wasn't swinging the hammer. I was more doing the management, clients, sales, making sure things were doing right, running inspections. That's kind of the thing that I was doing.
[Stephen Husted] (22:38 - 22:50)
And it's tough getting the right subs. Just putting that team together and managing that team month after month, year after year, that's a big job in itself.
[Sergio Rodriguez] (22:51 - 23:42)
So I went through... Yeah, yeah, yeah, for sure. I'd like to hear about that.
Yeah. From 2018 to 2020, it's a complete different team. It took me about two years to actually find my team.
It's like a football team. A football team goes through cycles of stars and players. And then finally you get that team that just goes to the Super Bowl.
That clicks. Yeah. Draymond, Steph, Clay.
It takes years to build that chemistry. That's where we're at right now. I feel like I finally found, two years ago, finalized my team.
And they just follow me. They just go with me everywhere I go. A lot of my subs don't work for another GC.
We just keep them busy. And I won't let them.
[Stephen Husted] (23:42 - 23:52)
That's a big part of it right there. If you're keeping them busy and they're happy and everybody's working cohesively with each other and the business is thriving, then why go anywhere else?
[Sergio Rodriguez] (23:52 - 24:28)
That's right. That's right. Especially now.
Especially now. And I'm really big on consistency. In everything?
How do you get consistency? You got to use the same people. A lot of GCs, what they do is they get your plans and they send it out to five plumbers, the five HVAC guys.
It's like, no. We use the same people, project after project. They know the role.
They know how we run things. And we just keep it moving. And that's how we're able to stay efficient.
[Stephen Husted] (24:30 - 24:42)
That's huge too. Because when you put it out to five different people, and especially if you haven't worked with them before, you just don't know how it's all going to play out. There's no guarantees it's going to go the way you think it's going to go.
[Sergio Rodriguez] (24:42 - 24:45)
Absolutely. Absolutely. Yeah.
[Stephen Husted] (24:45 - 25:11)
I'm a firm believer on that. I have investment properties in the Midwest and I have contractors and I've been through everything with them. And now I just know, hey, this is what I have in front of me and I know how to deal with them.
If there's something that is a big change within there, I'm very weary of others coming in the mix too.
[Sergio Rodriguez] (25:12 - 25:12)
Oh yeah.
[Stephen Husted] (25:12 - 25:13)
Yeah.
[Sergio Rodriguez] (25:13 - 26:01)
Yeah. Absolutely. Absolutely.
And there's so much value in using the same people over and over again, because the relationship is so tight and you can leverage off of that. And when you hear that word leverage, people say, it's not negative. I'll give you one example.
I had a client who a change order came up, something super unexpected. She's like, Sergio, I'm literally out of money. I'm to my last...
I just have enough money to move back in, to get through and just to continue my life. I can't, I'm done. So I spoke to the sub, hey man, this is the situation.
We give you a lot of work. Come on. And he was like, all right, just get me on the next job.
[Stephen Husted] (26:02 - 26:03)
Yeah. Get you on the next job.
[Sergio Rodriguez] (26:03 - 26:19)
You know what I mean? And I was like, you know what? We took care of it.
We're going to take care of it. Don't worry. So that's the people that work for me and that's very important to us.
So what we look for in subs is just loyalty and compassion and hard work.
[Stephen Husted] (26:20 - 26:40)
Well, you're doing something right, because I've been seeing it online. What type of builds do you gravitate towards? I mean, I guess a lot of that comes down to your clients and what they're into, but everything seems to be on the modern side, I would say.
Would that be accurate?
[Sergio Rodriguez] (26:41 - 26:43)
Yeah. I think that's a regional thing though.
[Stephen Husted] (26:44 - 26:44)
It is, huh?
[Sergio Rodriguez] (26:44 - 27:44)
Especially for something that's new. Yeah. I like craftsmen.
I like it all. There's beauty in everything. Absolutely.
But I think we're in Silicon Valley. They like modern. They like farmhouse.
They like farmhouse. They like modern. Modern farmhouse.
Yeah. There's a mixture of both. So we're doing those big cantina doors.
There was one project in Mountain View where we put in, I'll send you some pictures of that. It's been a while. I got to revisit those pics and post them again, because that's cool to recycle.
There's an ADU with a built-in projector. It's a theater system and a projector kind of comes down. We built the little sofas so you don't see it and it kind of just comes down.
Super awesome stuff. So yeah, we like it all. We don't discriminate.
People come to us. They want us to bid their project. Modern craftsmen will build it.
[Stephen Husted] (27:45 - 28:09)
I feel like when I see... Well, good example, my clients. You just saw my clients that was finally finished and furnished.
Modern. I mean, all of them have a very interesting modern feel to them. They're all different looking to me, which is good compared to what ADUs look like 10 years ago.
They carbon copied the house in a lot of ways.
[Sergio Rodriguez] (28:09 - 28:10)
Yeah.
[Stephen Husted] (28:10 - 28:16)
You know what I mean? It was like, oh, yeah, here's my house and then here's another one that looks very close to it.
[Sergio Rodriguez] (28:16 - 28:41)
Yeah. No, no, no. And we were doing a lot of that too.
But a lot of my clients... I mean, I built a two-story... I'll send you pictures of that one too.
I built a two-story ADU. That one was designed by Inspired ADUs and her designs are beautiful. Two-story steel roof.
Gorgeous. Gorgeous. The main home is just a basic stuccoed home.
[Stephen Husted] (28:41 - 28:48)
Right, right. And that's cool. So they got two different vibes on one lot.
Yeah. Wait, where is this one at?
[Sergio Rodriguez] (28:49 - 28:49)
Redwood City.
[Stephen Husted] (28:50 - 29:10)
Redwood City. I know this is a huge... This is a big question, but I know you can't break it down to just one area.
But depending on where you're doing an ADU, you're going to run into a lot of different types of challenges dealing with the city and permits, right? Some are easier to deal with than others.
[Sergio Rodriguez] (29:12 - 29:23)
Very much so. Inspectors vary from city to city. The way they interpret code is different than this guy over here.
[Stephen Husted] (29:23 - 29:24)
Right.
[Sergio Rodriguez] (29:25 - 29:49)
And we have to find a way. We find a way to just pass inspections and if the guy wants this to be done, we'll make it happen. But yeah, that's a challenge.
That's a challenge for sure. San Jose a challenge? No, San Jose is pretty straightforward.
The challenge with San Jose is that they got enough inspectors and they go through inspectors like they can't keep inspectors there.
[Stephen Husted] (29:50 - 29:50)
Interesting.
[Sergio Rodriguez] (29:53 - 30:00)
And you can't schedule an inspection because they're three weeks out. So you got to look every day for cancellations. It's ridiculous.
[Stephen Husted] (30:02 - 30:05)
So it just drags your project on.
[Sergio Rodriguez] (30:05 - 30:24)
Drags the timeline. Clients are not happy. And so we have to call in, get a cancellation opening.
You know, but you got to push. You got to really be active. You got to stay on top of them.
You got to stay on top. You got to stay on top. So we have staff that always looking for inspections.
[Stephen Husted] (30:26 - 30:39)
So then you probably, because of over time, you've learned how each city works that you know how to put more pressure on one particular city compared to the other. So Sunnyvale can be completely different than San Jose.
[Sergio Rodriguez] (30:40 - 31:02)
Sunnyvale was about three weeks out too because they didn't have any inspectors. They had one guy retire. They had like two guys retire.
One guy left to Texas. And so they were looking for inspectors. And I think they're caught up now, but it's becoming a thing where the cities, they don't have a lot of inspectors.
Why is that? I have no idea.
[Stephen Husted] (31:03 - 31:07)
Did that change during COVID? Did you experience this?
[Sergio Rodriguez] (31:07 - 32:06)
I think the new generation, the older guys are leaving or they're becoming GCEs or they're just, I have no idea. But it is a struggle. But I think the hardest part is just adapting, right?
I'll give you one example. We've never put a drain, Matt. Are you familiar with Stucco?
Yes. Okay. So you know how you put your black paper and you put your laugh?
Yep. Right? And then you call it for inspections.
Well, in Los Altos County, they require a drain mat. So you put your paper, a piece of drain mat, and then your laugh, and then you schedule the inspection. The reason is because when moisture gets through, Stucco, it's porous.
So water will get through. It'll still hit the paper. But what this drain mat does is it allows the water to drain down.
[Stephen Husted] (32:06 - 32:06)
Right?
[Sergio Rodriguez] (32:08 - 32:32)
So it's like another, it's an extra insurance policy. So guess what? We're like, you know what?
This is cool. I like this. So we're just doing it on every project now.
And we just had an inspection in Los Gatos. And the inspector said, I'm so glad you did this because we started enforcing this in January of this year. So we would have failed if we didn't do it.
You know?
[Stephen Husted] (32:32 - 32:39)
And it's kind of a, it starts in one spot and then it starts to go through different locations. Is that what happens?
[Sergio Rodriguez] (32:39 - 32:41)
That's right. They all know each other, man.
[Stephen Husted] (32:41 - 32:43)
And they start hearing about things and then it's okay.
[Sergio Rodriguez] (32:43 - 32:45)
They all know each other. Yeah. Let's throw this in the mix.
[Stephen Husted] (32:46 - 32:46)
Yeah.
[Sergio Rodriguez] (32:46 - 32:53)
Just like GCs, we all kind of know each other. You know, it's like inspectors. They all kind of know each other, you know?
So, yep.
[Stephen Husted] (32:54 - 32:57)
You've been hearing what they've been doing over here? They got this new thing going on.
[Sergio Rodriguez] (32:57 - 33:01)
Absolutely. Absolutely. Yeah, for sure.
For sure.
[Stephen Husted] (33:02 - 33:16)
And how much, so what are a typical ADU costing a client at this point? I know that varies because it could be from size to finishes, but what are the averages?
[Sergio Rodriguez] (33:18 - 33:19)
Detached or attached?
[Stephen Husted] (33:20 - 33:24)
That's good. Well, let's talk about both. I'm curious to understand both.
[Sergio Rodriguez] (33:24 - 33:59)
So there's really three different kinds of ADUs. There's a garage conversion, there's attached, and then there's detached, right? Attached, the difference between garage and attached is that the attached ADU is just, you still have your garage and it's just like an addition and you have a separate door entrance.
So that's your ADU, right? And then of course detached, that's a no-brainer. It's just minimum five feet from the building and there you go.
So the garage conversions, around three a foot, 300 a foot.
[Stephen Husted] (33:59 - 34:24)
300 a foot. With the garage conversions, let's just talk about, let's just say Willow Glen. Garages are super old.
Everything has to get required to look at, is the garage slab to the health of the garage itself before even building it or do you just scrape it down and start from scratch? How is it usually approached?
[Sergio Rodriguez] (34:24 - 35:17)
Yeah, usually what they make you do is the structure stays in place. If it doesn't have any ceiling joists, the engineer will make you put ceiling joists and then they'll make you put a curb, like a footing curb so that the water doesn't go through. And then they'll make you put like a moisture barrier on the existing slab.
You'll have to cut through the slab because you got to install your plumbing, your underfloor plumbing. But usually they'll just make you put a curb, they'll make you patch the slab, level the slab and you put a liquid membrane on the slab or a vapor barrier. And then that's pretty much it.
It's a conversion, right? So you're salvaging what you have. Sometimes they'll make you put shear walls, but honestly on a few, there wasn't any shear walls.
It was just a straight up conversion.
[Stephen Husted] (35:18 - 35:31)
What's the time difference between doing a attached ADU, a detached, and then the garage conversion? Are they similar in timelines to get them finished or is one faster than the other?
[Sergio Rodriguez] (35:31 - 35:49)
So the garage conversions, we finished one last month. That was six weeks. We knocked that out of the park.
We did another conversion that took us about seven weeks. That was in Menlo Park, garage conversion.
[Stephen Husted] (35:50 - 35:57)
That was just the build. How long did it take going through planning and how long was the whole process?
[Sergio Rodriguez] (35:57 - 36:03)
Oh yeah. So the whole permitting process is the design permitting usually is about six months.
[Stephen Husted] (36:04 - 36:04)
Okay.
[Sergio Rodriguez] (36:05 - 36:43)
Usually. I've seen three months. Oh really?
Oh yeah. I've seen three months. The planners are in a good mood and the plan checkers are happy and they're just, we get through.
We get this going. Yeah. Yeah, exactly.
Yeah. But I would say six months design and permitting and then the build is quick. For a detached, we average around three months.
That's our average. We've done eight weeks. I've done five weeks.
[Stephen Husted] (36:43 - 36:55)
How long does it take for planning? Same type of? Okay.
Same. So you're like 10 to 12 months start to finish.
[Sergio Rodriguez] (36:55 - 37:04)
Right. Yeah. I think a year, nine months to a year for the whole thing is reasonable.
[Stephen Husted] (37:05 - 37:14)
And how long is it taking you to do a new build start to finish? I know that's a broad question as well, depending on where it's located.
[Sergio Rodriguez] (37:14 - 37:15)
Yeah.
[Stephen Husted] (37:15 - 37:15)
Yeah.
[Sergio Rodriguez] (37:15 - 37:31)
Yeah, for sure. So if it's on a flat lot, average 800 square foot ADU, 700 square foot ADU, again, we're averaging around three months. But three, four months ago, we completed a 500 square foot ADU in five weeks.
[Stephen Husted] (37:33 - 37:36)
And what made that go faster?
[Sergio Rodriguez] (37:37 - 38:09)
I mean, everything went right. Our excavator finished early. Our foundation guy, our foundation crew went in there.
We were able to pour it the same week that we started. And I was like, you know what? We framed it in one day and let's just keep going, build on momentum.
Yeah. And the client was really nice. She wanted simple finishes.
She was like, just pick. I trust you. I just want subway tile.
It was really easy build. So we were able to fly through that project.
[Stephen Husted] (38:11 - 38:29)
And that is definitely something that could add more time to it is when the clients make change orders or they're indecisive. There's a husband and wife, and maybe they have different opinions and they want to change things and everything, then time gets added on very quick.
[Sergio Rodriguez] (38:29 - 38:31)
Very quick. Very quick.
[Stephen Husted] (38:31 - 38:31)
Yeah.
[Sergio Rodriguez] (38:32 - 38:32)
Absolutely.
[Stephen Husted] (38:33 - 38:37)
I've seen this many, many times before. So where...
[Sergio Rodriguez] (38:39 - 38:40)
Couples get divorced.
[Stephen Husted] (38:41 - 38:42)
Oh, really?
[Sergio Rodriguez] (38:42 - 39:25)
Oh yeah. Couples get divorced. Really?
Oh yeah. I'm bidding a project in Mellow Park. Beautiful home.
Man, this looks like Apple campus. Gorgeous home. They want me to build an ADU that looks just like the home.
And met the homeowners, really nice couple. And they were like, yeah, this was built in 2005. We bought it in 2007, I believe.
When it was done, the couple, they got divorced because of the build. And my old employer, yeah, he actually had a record. He was like, man, every home I'm building, they're getting divorced.
[Stephen Husted] (39:26 - 39:27)
Interesting.
[Sergio Rodriguez] (39:27 - 39:38)
Yeah. It puts a lot of strain on the couple, especially when you're doing that kind of build. I haven't seen that on ADUs, but you do see it on bigger projects.
It is a real thing.
[Stephen Husted] (39:39 - 40:01)
Interesting. Wow. It's like you finished it.
You're like, all right, we're done with this. Let's get divorced. Get out of here.
Call an agent. Call the divorce attorney, call an agent, and we're done. So where do you live?
Sunnyvale. You live in Sunnyvale? I live in Sunnyvale.
Tell me about your family.
[Sergio Rodriguez] (40:01 - 40:37)
So my wife is born and raised in Sunnyvale. Her parents came here from the Philippines in the 70s and they settled down here. They're both electrical engineers.
They were part of the early tech boom. And so I lived in Dublin for nine years. And then when my wife was pregnant, we migrated back down to our hometown.
It was either Richmond or Sunnyvale. We went with Sunnyvale. Yeah, I know.
I'm proud of you, Richmond.
[Stephen Husted] (40:41 - 40:47)
Richmond, it's on the up and up. It is. It is.
That's why we're investing there.
[Sergio Rodriguez] (40:48 - 40:57)
Yeah. We recently bought a property there. I'm going to do a conversion.
At the end of the day, we're going to make it a triplex.
[Stephen Husted] (40:57 - 41:08)
You are. So do you invest outside of what you do as far as a general contractor? Correct.
Yeah. You got... Yeah.
So tell me some of the things you like to do.
[Sergio Rodriguez] (41:09 - 41:21)
I like to buy the crappiest home, just with some land that I can do a decent remodel on. I'm big on doors. I want to add doors to the property, especially with- Right.
[Stephen Husted] (41:21 - 41:24)
What can we do on this lot to maximize that?
[Sergio Rodriguez] (41:24 - 41:50)
Yeah. So for example, if I have a thousand square foot home, I'm not going to do a two-story remodel on that thing. I don't see the value in that.
So what I do is I'll remodel the home and then I'll do a detached ADU. And then after a year, you can convert the garage. Look at that.
[Stephen Husted] (41:51 - 41:51)
There you go.
[Sergio Rodriguez] (41:52 - 41:53)
You end up with three doors on one property.
[Stephen Husted] (41:53 - 42:32)
You know- I mean, it's a no-brainer. That's a no-brainer. It's just perfect.
And you know what's crazy? I had my architect that I've known for a few years now. Met him at an investor meetup and he was walking through a scenario on a lot in San Jose that was 3,500 square feet.
And he was doing a detached ground up ADU and building a two-story duplex on a 3,500 square foot lot.
[Sergio Rodriguez] (42:32 - 42:33)
Yeah. That's crazy.
[Stephen Husted] (42:33 - 42:34)
I was like, what?
[Sergio Rodriguez] (42:35 - 42:36)
That's insane.
[Stephen Husted] (42:36 - 42:53)
What? That blew my mind. It just opened up.
I was like, oh my gosh. There's so much. You know what it did?
It made me just want to look at different projects instead of going, oh, that's a 3,500 square foot lot. No, that's a 3,500. How do we build that lot out?
How can we maximize that lot and add housing?
[Sergio Rodriguez] (42:53 - 43:21)
Yeah. It's crazy. And you know what?
There's been so much criticism without getting into politics. There's been so much criticism with California politics in the last five years, rightly so. California has some issues.
But this whole ADU movement, the laws that they passed, it's opened up the doors to so many opportunities, not only for investors but for people who are really looking for housing.
[Stephen Husted] (43:23 - 43:27)
100%. Well, did you hear what?
[Sergio Rodriguez] (43:27 - 43:27)
I heard. Yeah.
[Stephen Husted] (43:27 - 43:28)
Oh.
[Sergio Rodriguez] (43:28 - 43:29)
Crazy.
[Stephen Husted] (43:29 - 43:30)
Oh, man.
[Sergio Rodriguez] (43:30 - 43:31)
Heard. I heard.
[Stephen Husted] (43:31 - 43:39)
Wait, so it's- You can sell- Assembly Bill 1038?
[Sergio Rodriguez] (43:40 - 43:40)
Yeah.
[Stephen Husted] (43:40 - 43:41)
You haven't just signed?
[Sergio Rodriguez] (43:41 - 43:43)
You can sell the ADU.
[Stephen Husted] (43:45 - 44:49)
Yes, as a condo. As a condo. So I've been thinking about that when I read the article.
I think it's going to do a lot of interesting things. Let me paint one picture. So a lot of boomers want to move.
What do they do? They sell their house in Sunnyvale, $1.5 million in cash, and they move to Arizona, Nevada. A lot of them don't typically- they kind of want their cake and eat it too.
They want to have a place here too. They want to play somewhere else. They want to snowbird it.
Now they could basically move into the ADU and they could sell their primary- That's wild. And get that whole chunk of cash or vice versa. It gives them some options to do a lot of different things.
And especially if they have a house that's in a phenomenal location, they just don't want to give that up, but they need that equity.
[Sergio Rodriguez] (44:49 - 44:50)
Yeah.
[Stephen Husted] (44:50 - 44:53)
It's going to open up some big doors there.
[Sergio Rodriguez] (44:54 - 45:31)
Absolutely. My in-laws own a house in Sunnyvale, big corner lot, beautiful lot. He can build two ADUs in his backyard.
His daughter, my sister-in-law, and her husband, they've been missionaries for 25 years. And so that's the plan, right? Think about that.
Now they can actually, when they come back, settle down, they can come back, get their careers going, they can build an ADU for them, and they can actually sell it to them. And they have their own piece of property.
[Stephen Husted] (45:32 - 45:34)
It's going to be, it's wild.
[Sergio Rodriguez] (45:35 - 45:37)
Yeah, or vice versa. Yeah, exactly.
[Stephen Husted] (45:37 - 46:22)
So it's good stuff. I know a lot of people aren't going to like that, but- There's pros and cons. Maybe it's not for everybody and that's fine.
It was the same thing when ADUs, when lot splits and all this different stuff came up, there was a lot of agents that were against some of the things that got passed because they thought that it would change the way certain neighborhoods looked. Really haven't seen that because it seems like everything I, I don't know, everything that I've seen when it's come to ADUs, especially on like a new construction, like I said, they just build something brand new. It just blends in with the neighborhood.
I don't, right? Zero effect. I built, so I built an ADU- What about parking?
[Sergio Rodriguez] (46:22 - 46:39)
I think the parking part is what people- Yeah, some neighborhoods are a struggle. Yeah, it depends where you're at. It depends where you're at.
I built an ADU in Saratoga, Saratoga Montessorino border.
[Stephen Husted] (46:41 - 46:42)
Beautiful estate.
[Sergio Rodriguez] (46:42 - 46:58)
Gorgeous estate, winery in the backyard. I mean, it was, I think it's four lots put in one. I think they bought like four lots and they just developed a whole, and built them a 900 square foot ADU.
You can't even tell it's back there.
[Stephen Husted] (46:58 - 46:59)
Yeah, it just blends.
[Sergio Rodriguez] (46:59 - 47:01)
Just blends right in.
[Stephen Husted] (47:01 - 48:30)
Just, so I don't see- I see a ton of them in Saratoga and Montessorino. I road bike and I get the bird's eye view on everything that goes on and what's getting built throughout Santa Clara County by riding my bike. Oh, yeah, yeah, yeah.
Or I see new, or I'll see new, I'll see a house that's kind of run down like, okay, this could be a good development right here and I'll talk to a client. But everything that I've been seeing, it's been super. One thing I did see recently off of, in San Jose on Camden, a corner lot, single family home, probably about a 1400 square foot home.
They just built another home right in the back, five feet set back from the main house to the neighbor's fence. I mean, there's no backyard anymore. It's two houses on this lot.
And it went on the market, it's pending right now. I've been meaning to look it up, but I was like, wow, that's wild. It wouldn't be for everybody because you basically got two houses.
But hey, now let's think of that scenario. You could pull the same scenario that Gavin just passed on that. You could just sell that one and live in the other, sell it to your family.
Yeah. Correct. I'll sell you this house for 600 grand, 700 grand.
[Sergio Rodriguez] (48:30 - 48:40)
Right. Exactly. Exactly.
It's wild. It's wild. But we'll see.
We'll see how things turn out. But so far, it's an ADU revolution for sure.
[Stephen Husted] (48:41 - 48:41)
Yeah.
[Sergio Rodriguez] (48:41 - 48:49)
I agree. And we're in it. We're in it.
So we plan on doing this for many years to come. I think we're just scratching the surface.
[Stephen Husted] (48:49 - 48:50)
I think so too.
[Sergio Rodriguez] (48:50 - 48:51)
Yeah.
[Stephen Husted] (48:51 - 48:52)
I think so too.
[Sergio Rodriguez] (48:52 - 48:55)
This is going to last many, many years to come.
[Stephen Husted] (48:55 - 49:20)
I just wish the process could get sped up a little bit more. I wish that we could get this movement a little quicker than how long it takes. I think that people were complaining that we have a shortage of housing.
However, they make the process so long and drawn out. I just wish it was a little faster.
[Sergio Rodriguez] (49:21 - 49:41)
It's ridiculous. So that's one of the laws that they passed as well, that they're only allowed to review. And I might have this wrong, but what I understood was they're only allowed to review it once.
And then after that one-time scrutiny, they have to streamline the process.
[Stephen Husted] (49:43 - 49:47)
That's good. Yeah. Time is money and it all adds up.
[Sergio Rodriguez] (49:48 - 50:31)
Because there's been projects where you got the same city, you got the same design, different lot, and the comments are ridiculous. And yeah, it's a different law. But the comments are not consistent.
And so it really, really holds up the process. And it really leaves the homeowner with a bad experience. And sometimes it transfers over to the build.
Sometimes we have a client that's like, man, it took a year to get permits. And then they're just going into the build with their head down. They're already frustrated.
And it kind of stinks because we get that inherited stress.
[Stephen Husted] (50:34 - 50:53)
I know we've kind of touched on this, but it took them a year just because they weren't guided correctly? Or the inexperience and just having to deal with the architect and everybody involved just made it a slow process?
[Sergio Rodriguez] (50:53 - 51:36)
It could be a mixture of things. It could be that the planner got fired or retired and it got sent to another planner. It could be the architect wasn't that efficient.
It could be a mixture of things. I had a project in Sunnyvale that the city lost the file. Lost the file?
They literally lost. They logged it in and then two, three months later, we keep emailing, keep emailing. Oh, this fell through the cracks.
We don't know how that happened. So those things happen and- How did they resolve that problem?
[Stephen Husted] (51:37 - 51:39)
Did they speed it up once they figured that out?
[Sergio Rodriguez] (51:39 - 51:41)
Nope. No. No, they're like, too bad.
[Stephen Husted] (51:44 - 51:45)
Go through the process.
[Sergio Rodriguez] (51:45 - 51:46)
Go through the process.
[Stephen Husted] (51:47 - 51:48)
Interesting. Yeah.
[Sergio Rodriguez] (51:48 - 51:52)
Yeah, that's- That's why we're not design building.
[Stephen Husted] (51:53 - 52:19)
Build only. Yeah, keep it that way. Besides ADUs, what other opportunity, let's talk about for investors.
What would you see what would be a smart move for an investor in the Silicon Valley market as far as building? What do you think pencils out? What would you look for as opportunity?
Of course. So you've got yours that you're thinking about enrichment, right?
[Sergio Rodriguez] (52:19 - 52:24)
Yeah. So I would go into, again, doors.
[Stephen Husted] (52:24 - 52:25)
Doors.
[Sergio Rodriguez] (52:25 - 53:04)
Doors. So multifamily housing. If you can buy a fourplex with land, with a big lot, because the law says that you can build a detached ADU if you have the land on that multifamily housing project.
So think about you have a fourplex, then you'll have a detached ADU and then you're able to convert 25% of the existing floor plan of convertible space. So a fourplex with carports, you can convert 25% of the floor plan into an ADU. So you could end up with a sixplex or a sevenplex.
[Stephen Husted] (53:05 - 53:06)
Just like that.
[Sergio Rodriguez] (53:06 - 53:07)
Just like that.
[Stephen Husted] (53:08 - 53:17)
Do you have clients that reach, are they reaching out to you first? Are they talking to their agent about what they can and cannot do?
[Sergio Rodriguez] (53:18 - 53:46)
Yeah. A lot of agents reach out to me. They say, hey, what can we do with this lot?
Exactly. Of course, that's an architect question. Right over here.
I would refer them to my... There's only a couple architects that I trust that I would refer them to. But we know on a high level, what are the possibilities?
I know going in- Yeah, in general. I know.
[Stephen Husted] (53:48 - 53:57)
Yeah. And then just leave it up to them. Like, okay, this is what I think, but if you really want to go down that rabbit hole, we need to bring the architect in the mix.
[Sergio Rodriguez] (53:57 - 53:57)
Correct.
[Stephen Husted] (53:58 - 54:03)
And let them really get the survey done and figure it all out.
[Sergio Rodriguez] (54:03 - 54:27)
Right. Yeah. But that's what I would do.
I would look into multifamily housing and I would also look into these properties, these homes, single families, homes with land, with at least 5,000 to 6,000 square feet. You need the land because you need to build that ADU and then wait, sit on it, wait, convert the garage after a year.
[Stephen Husted] (54:28 - 55:44)
That's the combo. That's the combo. I have a listing coming soon here.
It's in Santa Cruz. It's built in 1918, Victorian, sits close to the sidewalk and it's got just all dirt, the backyard, just dirt. It's got a deck off the kitchen and then it's just dirt.
And I'm like, oh gosh, this is such a great opportunity right here. And it was interesting, the neighbor to the right, basically same size lot, they have a two-story in the backyard as well. So they built, I don't know if it's a duplex or a single family.
I'm going to pull the county records and look into it. But it was wild because I looked at this lot and I'm like, this lot is like 8,000 square feet. It was 6,500.
Now, maybe it's wrong. I don't know. I could show it to you and you'd probably think the same thing, but it's just ready.
And now that I had talked to my architect, who I had on my podcast, I just might start my going, okay, you could probably build two here. There's so many different options. You could do one attached to the house.
It's just crazy.
[Sergio Rodriguez] (55:45 - 55:46)
Have you got a survey?
[Stephen Husted] (55:47 - 55:48)
No, no.
[Sergio Rodriguez] (55:48 - 55:52)
She's already surveyed. What's it going to cost? It's not your, you're selling the house.
[Stephen Husted] (55:53 - 56:30)
We're selling it. But right now what I'm doing is I just want to get as much information as I possibly can to pass over to the buyer, the buyer's agent, and let them go down that rabbit hole. But I think that the seller has already had permits pulled, I guess, for an ADU, but just never did it.
But it's definitely, you could probably do much more than just the ADU. I see the ADU, I'm like, I don't know. I think I'd probably build a duplex, a two-story.
That makes more sense financially to me, but two each is own.
[Sergio Rodriguez] (56:30 - 56:43)
Yeah, yeah, yeah. For sure, for sure. Yeah, there's so many opportunities out there.
But yeah, we're always looking for opportunities to add more doors to our portfolio. We'll see what happens next here.
[Stephen Husted] (56:43 - 56:44)
Oh, really?
[Sergio Rodriguez] (56:44 - 57:12)
Right? A lot of people are just waiting for the housing crisis to hit and homes to be at like 2009 prices. I just don't see that happening.
I just don't. To me, just get in, get your foot in the door, get in the market. And look, if things go bad, just hold on tight if you can and ride the storm.
[Stephen Husted] (57:13 - 58:49)
Yeah, look at how long you really need to stay into that particular asset when you buy it. If it's something that maybe you think you're going to sell in a couple of years, maybe it's not a good idea to do that. But if you're in it for the long haul and you're building on it and you're adding value and adding doors, like you just said, then it probably will work itself out over time.
The biggest problem right now we're facing is, of course, everybody knows we have high interest rates, but we also have low inventory. And the two together is keeping this market where it's at. And we're still short on housing.
And that's not just here in Silicon Valley. That's across the United States. There's a shortage of housing.
And until we can solve that, prices are going to stay where they are. There's going to be fluctuations up and down. I definitely think that if the rates go down, they get back down to like 5%, just going to be another feeding frenzy in the market.
So it's an interesting time in real estate. I got my license in 2008. The day the market crashed, I got my license in the mail and I showed up.
I was working on a mom and pop mortgage, real estate kind of combo. And I was just like, yes, I'm going to- Where was this? Where was this?
The San Jose. I don't even know the name of the place. I can't even tell you the name of the first place I worked at, to be honest with you.
[Sergio Rodriguez] (58:49 - 58:52)
Did you ever get into REOs and all that?
[Stephen Husted] (58:53 - 58:54)
Oh, yeah. Yeah.
[Sergio Rodriguez] (58:54 - 59:04)
That was the thing. I just remember hearing about REOs and short sales. Oh, it was crazy.
People were moving their homes left and right at that time, I remember.
[Stephen Husted] (59:05 - 1:00:19)
You know what was really interesting about that time period is, like I said, I got my license and came into the broker's office. And they had the sales reps that come around and give you all the different programs that were going on for financing. They'd come in with these sheets like, you know, stated income, no dock, you know, all this stuff.
Well, these people were in there and it was like panic mode. I was like, I came in the office and it was like, hey, if you have a loan, you better close it right now because the market's about to crash. And that day Bear Stearns went under and I just got my license and didn't have any clue what I was doing.
And next you know, it's short sales and foreclosures. You know, that's what we did. If I look back from that market, you know, and people go, oh, I'm waiting for it to go back to 2008.
I'd be happy. Great. Believe me, I wouldn't be making the same mistakes I did then and not be buying because back then I thought it was never going to end.
It was just always going down. In hindsight, what a great – that was the biggest opportunity ever.
[Sergio Rodriguez] (1:00:19 - 1:00:32)
Yeah. My dad bought a – what is it? A sixplex in Richmond for 100,000.
That's his retirement. That's his retirement.
[Stephen Husted] (1:00:33 - 1:00:34)
Yeah, that's insane.
[Sergio Rodriguez] (1:00:35 - 1:00:38)
You know, I mean, he's never ever going to sell that thing, you know.
[Stephen Husted] (1:00:39 - 1:01:10)
Yeah, that was a – I don't know. I would say that that was kind of our once in a lifetime event that we went through. I don't know.
Maybe we do have one. But it's a great time to build during that period of time. A lot of investors, even homeowners that bought during that crazy period, there was so much doubt and uncertainty then.
But they rode the wave. It was the perfect wave to ride. Now, we're in a different one.
Now, it's kind of just like a standstill.
[Sergio Rodriguez] (1:01:10 - 1:01:13)
Where do you see the market in the next five years?
[Stephen Husted] (1:01:16 - 1:02:24)
Well, I think that once rates get back down to 5% in that range, it's going to kick back up and we'll still have low inventory. How do we solve having more inventory if there's so much? Think about it like in San Francisco.
It's so hard to build. So hard to build. It's so hard to build.
So you need housing. You talk about housing, but you make it hard to build it. And then you have to think of also you have a lot of these hedge funds that are buying single family homes and making them into rentals and taking that inventory off.
So we're just short. And it all breaks down to supply and demand. You got a ton of supply, a little bit of demand, prices come down.
But when you have low inventory, it makes everything, keeps the prices up high no matter what. And you got buyers out there looking.
[Sergio Rodriguez] (1:02:24 - 1:02:48)
Yeah. And I wonder how in five years, what the impact of circling back to the ADU movement, what the actual impact is going to be. I think it's going to...
Here in California? Yeah, in California. But I think we'll still be in a shortage because how many homeowners are actually going to do this, right?
[Stephen Husted] (1:02:49 - 1:02:51)
Do what? Do an ADU or do that? Yeah.
[Sergio Rodriguez] (1:02:53 - 1:02:56)
Build an ADU, build a condo pretty much in your backyard at this point.
[Stephen Husted] (1:02:56 - 1:03:43)
Yes. I think some will and some are definitely not going to. But I think the housing market is going to stay as strong as it's been in the last 10 years.
I think that 2008 was something that was very unique. And I think that people didn't really realize at that time period would have been the best time to buy. A lot of people held off.
I always hear from buyers, there's a lot of, and now sellers too, is, I'm going to wait for this. I'm going to wait for this shift. I'm going to wait for this signal.
And I feel like the ones who don't try to wait for those timing and that type of imitation to jump in the market always do better.
[Sergio Rodriguez] (1:03:45 - 1:03:52)
Yeah. And that was a big thing for me last year. That was me.
[Stephen Husted] (1:03:54 - 1:03:54)
Was it?
[Sergio Rodriguez] (1:03:54 - 1:04:21)
We were building all these ADUs and just killing it. And then just my gut was telling me, man, I got to do this for me. I have to get my own deal.
Got to get my own piece of property. And then I was just like, no, I got to wait. No, because next year the homes are going to...
No, maybe the next year. And then I just kept pushing it out. And then I just said, you know what?
I just got to do this. And that was it.
[Stephen Husted] (1:04:22 - 1:05:43)
Yeah. You just got to jump in. And some people are going to think that that's not the correct way to do it.
And everybody has a different opinion. Let me just tell you a quick little story. I met this two engineers, both had PhDs, worked at Google.
And they contacted me and they said they'd been looking for a couple of years and still hadn't found their dream home and all these different things, met them at the house. And the first thing that the wife said when she came in the door was that they had PhDs. I'm like, oh, got a PhD in real estate or PhDs engineering background.
Okay. They reached back out. They stopped their search.
It wasn't working in their buy box. Reached out a couple of years later from getting my newsletter and was asking me about the market. They've been waiting five years for this perfect time to jump in.
They had plenty of money. They had plenty of money, great jobs, but they were just trying to time everything and they just feel like everything has to line up. And that's just really not how real estate works.
[Sergio Rodriguez] (1:05:44 - 1:06:29)
But that's an engineer brain though. That's how they think. And a lot of my clients, sorry, my engineer clients could be listening to this, love you.
But this is the truth. A lot of my clients who are engineers, sometimes it's a struggle because yeah, that's how they think. That's their thought process.
And everything has to line up perfectly and sometimes they overanalyze. And in construction, it's not, that's not good. You got to just jump in there sometimes and just get it done and see how this works.
And in real estate too, sometimes you just have to, you just got to jump in.
[Stephen Husted] (1:06:30 - 1:07:16)
Well, because they're so used to taking, whether they're trying to solve a problem and they're working through that problem, they're condensing that problem down to make it perfect because in technology, that's kind of what you're trying. That is the end goal for the most part you're trying to do. And then as it gets launched, you're making adjustments to it.
You're getting, you're doing updates to it, but it's hard to kind of bring that into real estate. I haven't gone through it a lot, but this one particular client, I was just shocked that five years had passed, how much equity they would have in a particular home. But that's how it goes.
That's how it goes. We're all here to learn and evolve in our journeys.
[Sergio Rodriguez] (1:07:16 - 1:07:55)
Exactly. Well, we've evolved as a company and we'll see what happens next year. Next year, it's looking pretty good.
What we're doing next year is we're doing a lot more commercial ADUs. So going back to the multifamily housing idea was a lot of my clients are now wanting to add or convert in their multifamily housing portfolio. So that janitor's room, that's now going to be an ADU.
All those carports that they had, you see these like- The janitor room, that was great.
[Stephen Husted] (1:07:55 - 1:07:57)
Yeah. Yeah.
[Sergio Rodriguez] (1:07:57 - 1:07:58)
Yeah.
[Stephen Husted] (1:07:59 - 1:08:04)
Your mops are brilliant. You're not going there anymore. They're going to this smaller little area and then that's getting built out.
That's great.
[Sergio Rodriguez] (1:08:04 - 1:08:13)
Right. There's a client. They own a ton of buildings and they're putting ADUs on their entire portfolio.
[Stephen Husted] (1:08:14 - 1:08:34)
Yeah. That's great. Smart.
It's smart. It's smart. It's smart.
Well, I really appreciate you jumping on today. I knew that... You know what I'd love to do?
I'd love to go shoot some content with you at some of your developments.
[Sergio Rodriguez] (1:08:34 - 1:08:37)
Oh, yeah. Yeah, for sure. For sure.
[Stephen Husted] (1:08:37 - 1:08:43)
Maybe we can start with that to get you on camera because you said this would be a good starting point. We could do it together.
[Sergio Rodriguez] (1:08:43 - 1:09:02)
Yeah. Yeah. I'm breaking ground on one of my developments, hopefully in December.
I know it's a terrible time to start, but we just got to... I need to break ground. So yeah, we'll definitely do it.
And then I'd love to show you around and just in general, you know, our projects, you know?
[Stephen Husted] (1:09:02 - 1:09:02)
Yeah, that'd be great.
[Sergio Rodriguez] (1:09:03 - 1:09:05)
Work and stuff like that. You know, we're in your backyard, so...
[Stephen Husted] (1:09:06 - 1:09:31)
Yeah, you're not far. Yeah, you literally are. I'm in San Jose, so we're close.
I will definitely in the show notes put your contact in there so people can reach out to you if they have any questions or people that want to build an ADU or whatever kind of construction questions, you know, I'll make sure that we have that in there. And yeah, I'd love to have you back on for sure. Or we're going to do stuff in person.
[Sergio Rodriguez] (1:09:32 - 1:09:37)
Yeah. Yeah. I'd love to do it again.
And yeah, man, we'll keep in touch. And yeah, we'll do another one in the field.
[Stephen Husted] (1:09:38 - 1:09:42)
Right. Sounds great. Well, thanks a lot.
Have a great day. All right, you too. Take care.
