Real Estate Investing School Podcast: Episode 213 Summary

Title: The Reality of Tiny Home Resorts with Owner of Zip Kit Homes, Chris Jaussi
Release Date: November 25, 2024
Host: Brody Fossett (guest: Chris Jaussi, Owner of Zip Kit Homes)

Introduction

In Episode 213 of the Real Estate Investing School Podcast, host Brody Fossett engages in a compelling conversation with Chris Jaussi, the owner of Zip Kit Homes. This episode delves deep into the intricacies of building and developing tiny home resorts, offering valuable insights for investors and enthusiasts interested in maximizing their real estate investments through innovative housing solutions.

Zip Kit Homes’ Mission and Background

Post-Financial Crisis Origins:
Chris Jaussi shares that Zip Kit Homes was established in the aftermath of the 2008 financial crisis. Originally a contractor, Chris sought to address the pressing issue of affordable housing during a time when the market was turbulent.

Mission Statement:
“Our mission is to help with affordable housing, but it’s also about design,” says Chris [02:24]. Zip Kit Homes aims to create affordable housing solutions that don’t compromise on aesthetics, making them suitable for high-demand areas like ski resorts and mountain towns. By blending affordability with high-end design, Zip Kit Homes ensures that their units are both cost-effective and visually appealing.

Panelized Kits vs. Prefab/Modular Homes

Understanding Panelized Kits:
Chris explains that Zip Kit Homes specializes in panelized kits, which involve framed panels manufactured in a factory. These panels are shipped to the construction site, where Zip Kit’s crews assemble the structure swiftly.

Construction Process:
“We can get the structure up really fast,” Chris states [04:35]. The process involves erecting 12 and 16-foot wall and floor panels, followed by immediate weatherproofing, allowing the house to become 100% weather-tight within three to four days.

Prefab vs. Modular Terminology:
While often used interchangeably, Chris clarifies the distinction. “We started going with the prefab just seemed like a better word as far as positioning, making it seem a little bit more high,” he notes [06:16]. Both terms refer to off-site construction, but Zip Kit Homes prefers “prefab” to emphasize quality and modern aesthetics.

Building Codes Compliance:
“All our homes are built to the same building code as any other site-built home,” emphasizes Chris [06:29]. This adherence ensures that prefab homes are treated equivalently by banks and appraisers, debunking myths about their quality.

Designing Tiny Homes for Comfort and Flexibility

Redefining Tiny Homes:
Chris challenges the conventional notion of tiny homes as cramped and utilitarian. “We design ours so it feels like a normal house,” he explains [09:08]. Zip Kit’s tiny homes feature standard appliances, queen-size beds, and regular-sized bathrooms, providing a comfortable living experience despite the smaller footprint.

Maximizing Space:
The design philosophy focuses on efficient space utilization. Brody remarks on the impressive use of kitchen space and loafing areas during a site visit [10:55]. Chris agrees, highlighting that well-designed tiny homes can accommodate families without feeling restrictive.

Opportunities in Affordable Housing and ADUs

Affordable Housing Solutions:
Chris discusses innovative projects aimed at providing affordable housing in expensive areas. For instance, a project in Idaho offers modular units with three studios per module, priced between $1,200 and $1,500 per month [10:18]. This model not only makes housing affordable but also maximizes rental income.

Accessory Dwelling Units (ADUs):
The conversation shifts to ADUs, which have gained popularity as a solution for affordable housing. Chris mentions, “In Utah, now there's the ADU law. So you can put an ADU at any house that you build” [13:19]. These units offer flexibility for homeowners to generate additional income while providing affordable living spaces.

Permitting and Grants:
Brody brings up recent legislative changes, such as Maui's grant for adding ADUs, which can cover up to $100,000 [13:56]. Chris adds that municipalities like California are streamlining the permitting process for ADUs, making it easier and faster to implement these units [13:56].

ROI of Adding Rental Units

Cost vs. Return on Investment:
The discussion highlights the financial benefits of adding rental units. Chris provides a tangible example: adding a separate entrance and kitchenette might cost around $15,000 but can generate $800 to $900 per month [18:55]. This represents a substantial return on investment, making it a smart financial decision for homeowners.

Flexibility for Long-Term and Short-Term Rentals:
Chris advocates for designing homes that can serve both long-term and short-term rental markets. “If you can do a little duplex that has a big side and a little side, then, and you can Airbnb it and you can long term rent it, then you're going to be okay” [19:00]. This dual-purpose design ensures sustained income regardless of market fluctuations.

Advice for Building Tiny Home Resorts and Rentals

Upfront Planning and Homework:
Chris emphasizes the importance of thorough upfront planning. “People need to do a lot more homework up front and have realistic expectations about what's involved” [26:36]. This includes securing the right land, zoning approvals, and building permits before commencing construction.

Tenacity and Problem-Solving:
Success in building tiny home resorts requires persistence. Chris advises, “The people that do it, there's always a way. They just have to be tenacious” [27:35]. Overcoming initial setbacks and regulatory hurdles is crucial for project completion.

Flexible Design Solutions:
Chris encourages designing projects that offer flexibility for future changes. This adaptability ensures that properties remain profitable and functional in various scenarios, whether for personal use or rental income.

Final Thoughts

Brody and Chris conclude the episode by reinforcing the value of innovative and flexible real estate investments. Zip Kit Homes provides versatile solutions that cater to both aesthetic and financial objectives, making them an ideal partner for those looking to invest in tiny home resorts or enhance their primary residences with rental units.

Chris final remarks:
“They're just not moving," referring to Zip Kit’s modular units being permanently placed [22:41]. This permanence adds to their appeal for both rental and personal use.

Brody’s appreciation:
“I appreciate working with you on multiple projects now. I just love all the pieces and how it relates to creating something you're proud to own” [30:15].

Notable Quotes

• Chris Jaussi [02:24]: “Our mission is to help with affordable housing, but it’s also about design.”
• Chris Jaussi [04:35]: “We can get the structure up really fast.”
• Chris Jaussi [06:29]: “All our homes are built to the same building code as any other site-built home.”
• Chris Jaussi [09:08]: “We design ours so it feels like a normal house.”
• Chris Jaussi [10:18]: “They’re going to kill it... when it’s designed well and it’s modern and it’s cool.”
• Chris Jaussi [13:19]: “In Utah, now there's the ADU law. So you can put an ADU at any house that you build.”
• Chris Jaussi [18:55]: “If you spend 15,000 and make eight or nine a month... that’s pretty good.”
• Chris Jaussi [26:36]: “People need to do a lot more homework up front and have realistic expectations.”

Conclusion

Episode 213 offers a comprehensive exploration of the realities and opportunities within the tiny home resort market. Chris Jaussi’s expertise provides listeners with actionable insights into designing flexible, affordable, and aesthetically pleasing housing solutions that cater to both short-term and long-term rental markets. Whether you're an investor, homeowner, or enthusiast, this episode equips you with the knowledge to navigate and succeed in the evolving landscape of real estate investing.