Inside Lake Havasu's Biggest Development Play | Luke Still E47 - The Paradyme Shift

Episode Transcript
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SPEAKER_00 (00:20):
Hey everybody, Ryan Garland here, founder of
Paradigm.
I want to thank you for joiningus today.
I am honored to have Luke Steelewith Desert Land Group.
We're excited to bring him on.
We're going to ask him a ton ofquestions.
This guy knows where all thebodies are buried here in Lake
Havasu.
He kind of started the largerdevelopers movement here.
I'd like to kind of think of itthat way.
And you know, the takeaway fortoday is really just to uh high

(00:42):
highlight really what's going onin Havasu.
And um, this is the data nerd.
Just like I like to blame, youknow, say that I'm a data nerd.
This guy's got me beat by miles.
So, Luke, thanks for joining metoday.

SPEAKER_02 (00:52):
I'm happy to do so.

SPEAKER_00 (00:54):
Yeah, we got a cool little workout.
We worked out for about an hourbefore uh before this podcast.
So uh we're still moving andshaking.
So if we're talking fast,forgive us, guys.
I think you guys will stillenjoy it.
But so, Luke, let's talk alittle bit about your
background.
Let's get right to it.
Um, that how did uh Desert LandGroup uh kind of get developed
and started?
And then let's talk a little bitlike where you came from to then
go into Desert Land Group.

SPEAKER_02 (01:14):
Yeah, so um I moved out here in the year 2000.
I was 25 years old.
I was the chief appraiser of abank that I really didn't even
mean to get the job in the firstplace.
I uh went to college, came backto my little hometown of 10,000
people in Baker City, Oregon,and my dad was an appraiser.
And at the time, you needed toget a certain number of hours
underneath an appraiser to getyour own license, and I had been

(01:35):
going in that direction duringcollege, had went and got a
finance degree so I could tie inthe commercial side of real
estate into the appraisal world,and that was my goal at the
time.
Um, but when I got my license, Iwent to a bank and gave them my
resume, and they wanted to hireme because they had just gone
through a FDIC exercise wherethey wanted to separate bankers
from appraisers and borrowersfrom appraisers, and so started

(01:58):
going through like third partyfor they don't want influence
before the third party thingeven became uh popular.
Banks thought they could dointernal programs, so they hired
me to create an appraisaldepartment at the bank.
They had 19 banks, a littleregional bank with 19 different
banks.
So great learning experience forme, though, because I'm fresh
into the appraisal world.
I'm getting to review, you know,20 different appraisers that

(02:19):
were on our list all overeastern Oregon and western
Washington or uh western Idaho.
Um great experience for me.
But after two years, theappraisal department was up and
running.
I was 25, related to half thegirls there, um, probably dated
the other half the girls there.
And so my uh grandma said, Whywould you stay in Baker?
Like, you know, your family'shere, you're a fourth generation
in this little mining town, butthere's bigger things for you,

(02:41):
and you you're not going to findgold in a copper mine.
I'm sorry, it's not.
And this this is like literallycoming from my that's in an
assisted living place at thetime.
She's 90 years old.
I'm like, well, if she's smartenough to figure that out, maybe
I should maybe I should lookinto this.
And so I didn't even have Havasuon the map, but literally then
the next day I was driving outto Havasu with a buddy to bring

(03:02):
him here to play baseball forthe Havasu Heat.
He had he had gotten picked upby the Mets and had was looking
to get back into Major LeagueBaseball.
So just being a friend, I tookhim down here.
I mean, I got here and I sawEntrepreneurial City USA, which
which Lake Havasu was absolutelyper capita one of the more
entrepreneurial cities I've everbeen in.

SPEAKER_00 (03:19):
Yeah.

SPEAKER_02 (03:20):
And um, so I saw that opportunity, I saw better
social opportunities than I hadin Little Eastern Oregon.
And I literally drove back and Ithought about it and I put my
resume or my resume or my uhresonation in the next day and
put my house on the market, soldit in two weeks.
The only downside is I had tomove out by Christmas Day.
So I moved to Lake Abbaso onChristmas.
My mom was not happy, so Ifigured why not just like full

(03:40):
send right now.
That's it.
You don't like that, mom?
Guess what?
I'm not gonna be here onChristmas Day either.
But yeah, I love you, and I'llcome back every once in a while.
That's a great one.
So I got over here and umimmediately I met uh I opened an
appraisal business, my ownappraisal business.
I met Michael through doingvaluations on the refuge at the
time um was being developed.

(04:01):
And Michael, my partner, hadcome out.
He had just graduated college,he was a D1 golfer.
He was super passionate aboutthe golf world and the idea of
getting into golf design.
So he worked for um a companyout of Minnesota that built the
refuge.
He got to work with the ArnoldPalmer team, he got to caddy
Arnold Palmer when they openedit up, and he got to oversee the
entire construction, and he fellin love with the entitlement and

(04:22):
the development process as muchas in that world of golf
architecture, it's prettylimited.
If you're if your last name'snot Fozio or something like
that, I mean it's it's not it'shard to get all the way to the
very top.
Yeah.
So Michael and I ended upgetting hired by different
developers from that timeforward.
Once the refuge was done, weboth got hired by the Comick
family to develop the foothills.

(04:43):
And the foothills uh at the timewas the biggest of its kind
master plan community, the therefuge being the second biggest.
But this was a full section ofland.
And King Comick, one of ourpartners, is 85 years old today.
At the time he was 70 years old.
He had kind of been retired, buthe came out here originally with
uh McCulloch in the 70s and wasasked to come out to help build

(05:06):
multifamily.
Him and McCulloch were friends,they'd done work together in
Southern California before.

SPEAKER_00 (05:11):
He was trying to bring in workforce housing
together.

SPEAKER_02 (05:13):
So he was trying to make sure that there was enough
housing going up to make surethat could support what was
going on with his companies andthe infrastructure.
So King came out and he ended updeveloping everything you see by
the the bridge, all thosetownhomes and and all except for
the green roof ones, Ken Comickdeveloped.

SPEAKER_00 (05:28):
Got it.

SPEAKER_02 (05:28):
And then he went out and developed the islander out
on the island.
Okay.
So um I didn't know that.
And then he and then he kind ofretired.
And in the late 90s, Jim, hisnephew, who was younger, um came
out and said we should look atdoing something in Havasu.
He was he was doing somedevelopment at Newman at the
time.
He had just sold some big RVparks in Sholo.
So it was like, let's look atHavasu.

(05:50):
So Ken came out of retirement,bought the foothills, and
Michael and I were blessedenough to be approached by the
Comics to help them from aconsulting side.
Michael was consulting on theentitlement side, I was
consulting on the thefeasibility analysis, market
studies, doing valuation work,not really for the banks.
He they wanted me to actually dothe internal work and then I'd
be like, basically family officeinternal work.

(06:11):
Yeah, exactly.
Yeah.
And so um, we got to know themthrough that, and then every
time I get called by a developerto do consulting, I would
recommend Michael because he waswe worked together so well.
And then the market kind of tooka tank.
And in 2012, we both ended up inNorth Dakota with a gentleman
that we had helped.
We we'd done some work onsailing hawks with a guy that
had taken it over, and so we hadkind of got that straightened

(06:32):
out.
He really liked working with us,and he said, Hey, I have a a
banker friend that owns thislittle town up in North Dakota,
and he wants to protect it fromthe man cave type of thing
happening or the man campshappening.
Yeah.
And um, so we hopped on hislittle plane and flew up to this
awesome air park.
He knew what he was doing.
He sold Michael and I before weever got to North Dakota because
he knew once we hit North Dakotaground, we were gonna be like, I

(06:54):
don't know about this.

SPEAKER_00 (06:54):
And this is uh were they building basically like man
caves with houses?
Is that what they were doing?

SPEAKER_02 (06:58):
So we were trying to avoid that.
The banker wanted to protect hisland, and it was it's an amazing
story because this guy, hisparents had started the bank.
It became the second biggestprivately owned bank in North
Dakota.
He even has its first savings,uh, first international savings.
So they have branches here inArizona now, too.
Um, but he it was a town of6,000 people.
He he gave the town 40 acres ofland that was surrounded by

(07:19):
another 1,500 acres that we weregoing to develop.
And he the town at an 80% clippassed a$85 million bond for
6,000 people to build like oneof the coolest high school and
event centers you've ever seen.
Like this hockey radio stadiumthey have there is just a notch.
2012, 2013.

SPEAKER_00 (07:38):
So recovery.

SPEAKER_02 (07:39):
Yeah, so recovering, but oil's at an all-time high.
So like there's not a lot ofwork in Lake Cavasu.
And that's Michael and I reallywanted to sink our teeth into
some bigger developments, and wewere willing to travel and kind
of do whatever it took.
And this older developer trustedus and took us under his wing.
He wasn't gonna go do all thatwork without having two guys to
kind of push the effort.

SPEAKER_01 (07:57):
Sure.

SPEAKER_02 (07:57):
And so we flew up with him to his air park that he
developed in Wyoming calledAlpine Air Park, and we looked
at it.
And it Michael wasn't gonna sayno to anything after that
because he is so creative.
And when he saw what this guyhad done, I mean, so outside of
the box.
Like we fly in, and there's agate that literally on the
runway comes down into theground with a button off your

(08:17):
yoke on your on your stealingwheel, steering wheel, and then
you like take the plane over toyour house that has a uh a
hangar built onto it with anapartment above it for the the
you know, and so Michael'sunbelievable.
Michael's totally hooked up.
I'm looking at it going, howcould this possibly be feasible?
Like, I don't understand how youcan make money on something like
this, but by the time we left, Ifully understood it because I
understood what people werepaying for that.

(08:38):
And it was it was crazy becausepeople would come not to spend a
whole bunch of time like fishingand things like that, which is
abundant around there, and it'samazing.
They all have little huskies,they're just aviation nuts.
Like so they fly it in the realjet and then they get into the
the you know the hangar and theypull out the little toys and
they just fly around.
It's awesome, it's awesome.
So we sat there and we kind ofgame planned on what we were
gonna do.
We went to North Dakota and andand we spent quite a bit of time

(09:01):
up in North Dakota and we'revery successful in doing what
the banker wanted us to do.
Great experience.
Built things off of napkins,like literally three weeks in.
I went to a city councilmeeting.
Michael had been there for twoweeks before me, like getting
all this stuff done.
And I go to the city councilmeeting, and the mayor's asking
Michael about what's gonnahappen over here and what's
gonna happen like in a matter ofthree weeks because there was so
much stuff happening there.

(09:22):
Yeah, like you can imagine goinginto the city and asking about
an easement.
Well, they had just recordedthree more easements the week
before that, like nobody knowswhere anything on the ground is.
And so, because the banker ownedalmost everything, we kind of
became the central point ofdevelopment.
So we we got a great experienceout of that, met a lot of really
cool.

SPEAKER_00 (09:38):
You're able to advise probably a lot of the
utility work too.

SPEAKER_02 (09:40):
We were, yeah, and so we would get we would get
called into city meetings, evento say, hey, you guys are
putting your stuff here, theseguys need to go over here.
What elevation could we go inat?
Infrastructure, a lot of stuffabout tunneling underneath
existing highways and otherinfrastructure, and it's just
some muddy mess there, and sonow you have to have a vacuum
machine just so you can you knowkeep the hole going.

(10:00):
Yeah, like we learned a lot ofthings that we never would have
learned without doing that.
Sure.
And um when that kind of whenthe oil came back and that was
done, we kind of wrapped thatup, we'd developed something,
sold off an entire park forabout 40 million dollars for an
industrial deal.
Wow.
And then we had all the otherstuff kind of teed up and the
market started coming back.
So we got back here, and at thesame time, the Havasu market was
ramping up.

(10:21):
And um, Riviera had beenpurchased back in 2006.
We'd put that on the shelf aftergetting the entitlements and
everything because of the 08market.
So all that stuff, it just kindof worked out perfect.
So Michael and I thought, well,why are we being consultants if
we can put our efforts togetherand really offer an A through Z
service?
Because that's what we're doingright now.
So let's put our money where ourmouth is and and give up with

(10:44):
the businesses that weindependently own and go all in
on this.
And it was doing big things fromday one, and and today we're
doing big things with DesertLand Group, and it's it's been
way above my expectations.
And I have to say, like I'veseen a lot of partnerships, and
there's not one that I'm enviousof compared to Michael and I he
has everything that I don'thave, and I can do a lot of

(11:04):
things that that he doesn't wantto do.
Um, and so it's worked outreally good.
So in 2012, 13, we we opened upDesert Land Group.
We've done a lot of really coolthings, you know, in the
community.
We were able to help get acorporate-owned golf course
transferred over to um a localgroup that's owned it and done a
lot of things with it sincethen.
Those are some of the earlythings that we did.
That was the golf course in themiddle of the town.
It was owned by American Golfand Eagle Golf for a long time.

(11:27):
Okay, they didn't have anyregional presence here, so they
weren't putting any money backinto it.
It's 36 holes, yeah, 210 acresof great, you know, centrally
located land.
But yeah, um, that was fun forus, and then you know that kind
of led to the market startedpicking up, so we started doing
some other developments, some onsmaller scale on our own equity.
We we started Lux Locker backthen.

SPEAKER_00 (11:46):
Yep.

SPEAKER_02 (11:47):
Um that's really cool.

SPEAKER_00 (11:48):
I want to talk about that too.
So you I'm glad you put you'regonna you're gonna tee off on
that because as you know, I dostorage too.
So the fact that you guys wereactually original uh founders of
that.

SPEAKER_02 (11:57):
We've never compared notes.
I think it would be fun to tokind of go back and forth a
little bit about just some somethings we look for when we do
storage versus what you'relooking for.
I think we've probably learnedsome things from each other.
Sure.

SPEAKER_00 (12:07):
Oh, I believe it.
Yeah, so let's keep staying uhon the uh uh Riviera.
Let's keep going through theRiviera and then we'll go back
to that.
But so where are you guys at?
Let's talk about the Rivierabecause that the marina is like
that's the only place I go tolaunch my boat now.
And I didn't even really know itwas coming into town, you know,
because I'm kind of an outsiderstill, you know.
I've I've been here now fullfull-time, pretty much going on

(12:27):
to three years, yeah.
But I've been coming out herefor 35 years, and I just had the
opportunity to buy the landwhere Padum Storage is, and I
just fell in love with the wholeentire city, kind of similar to
what you did.
So now I'm just like fullyentrenched here, fully bought
in, and just falling in lovewith the place.
And the riff uh the Riviera isthe only development that I have
not been fully involved orengaged in because I don't have

(12:47):
a lot of business over there.
Yeah, so I was just kind of moreon the opposite side of town,
but yeah, let's keep going onthe on the on the uh Riviera.

SPEAKER_02 (12:53):
So Riviera is a you know a great story.
I think it's aonce-in-a-lifetime kind of
thing.
I've had people tell me thatit's a unicorn.

SPEAKER_00 (12:59):
Oh, yeah.

SPEAKER_02 (12:59):
Um I agree.
And I and I think maybe gettingall the entitlements and but it
started, it's it's way more thanpeople think.
And I'm glad you asked mebecause there's so many stories
about Riviera.
I mean, I've heard people, Imean, even builders that are in
our neighborhood don't reallyknow exactly how all that came
about.
Sure.
You know, and most people wereso doubtful on it.
I think I told you earlier I hadno less than a hundred people

(13:19):
that I put a an investment deckin front of before Riviera
started, and and nobody was wasbuying into what we were trying
to sell.
Yeah, it was just an impossiblestory.
Yeah, and it was more thanpossible.

SPEAKER_00 (13:30):
Which is really intriguing and inspiring too,
because that just does tell youthat if you if you really know
what's going on and you caneducate people, especially with
your background kind of on thedata side, you know, it really
does help the people that willbuy into it and see it and have
actually made those those thoserisky decisions.
Yeah, and it does pay off.
Yeah, you know, so like kudos toyou because that's kind of the

(13:50):
the game I play too.

SPEAKER_02 (13:52):
You know, it so it all ties into each other, right?
So 2006 was the year thatRiviera got purchased the land,
but it was in 1976 that KenComic stood on that land with
Robert McCulloch and it wassurrounded by BLM land.
It was clearly a BLM swap atsome point where they swapped
something out with the privateowner on a more precious spot
for conservation or whatever theBLM was interested in at the

(14:13):
time.
And um McCulloch and Ken bothagreed, but there was really
with no access, it wasn't veryvaluable.

SPEAKER_01 (14:18):
Yeah.

SPEAKER_02 (14:19):
And one family had owned it forever.
Um, Ken and Jim had finallystarted started talking about an
actual transaction with thisfamily, and the gentleman was
older at the time, and he endedup passing away while it was an
escrow.
And he had given a couple sharesaway of an LLC that owned the
land to his grandkids, which weclosed without those shares in
possession and worked throughthat.

(14:40):
But so it was, you know,everything about Rivera was
something was a littledifferent.
So we always had to look outsideof the box, we always had to
look at what the need was forthe community, whether or not,
you know, state parks, BLM, ArmyCorps of Engineers, Fort Mojave
Indian Tribe, Lake Avaso City,all these agencies had to sign
something at the same time forthis to really happen.

SPEAKER_00 (15:01):
I had to get the stars to align.

SPEAKER_02 (15:03):
And the city had always promised the marine the
state parks that if they built amarina, which was really looked
at all the way back in the 90s,like Ken Komick and Army Corps
of Engineers worked together onfinding, because Ken was
probably the most prominentdeveloper at the time, they
reached out to him and said,We'd like to have another access
point on the lake.
We'd like it to be on the southside if possible, but Army Corps

(15:24):
of Engineers is always going todictate from an environmental
standpoint where really the bestsite is when you consider
everything.
Yeah.
So it took a long time to studythat.
That site was always put on themap.
And from 1996, when it wasidentified to the day that we
sat in an office with the cityand decided that we would be the
ones that bid on the publicrequest for proposal.
We didn't necessarily know ifwe'd get it or not, but we had

(15:45):
no plans to build a marina.
And even fast forwarding, stateparks had raised money, they'd
done some designs, but there wasalways a more important
budgetary thing at the statelevel, whether it was education,
I'm sure they were all goodreasons, but they never could
actually get all the way to thefinish line with the funds.

SPEAKER_01 (16:00):
Yeah.

SPEAKER_02 (16:01):
So they looked at the city and said, Well, City,
you're willing to build a roaddown there if we build the
marina, but what happens if youguys build the marina?
And I don't think the city hadany interest in building
something that they'd have tooperate.
Yeah.
Most cities don't.

SPEAKER_00 (16:12):
No, of course not.

SPEAKER_02 (16:13):
And we happen to be the only state other
stakeholders.
So we were in the room at thetime, and both parties kind of
looked at us and said, Well, howwould you guys feel about
building a marina?
And at the time it was kind offar-fetched, but we said, Well,
we're thinking just a boatlaunch.
We weren't thinking what you seedown there right now.
We're just thinking we reallyneed the road, and it would be a
great amenity, it'd be greatthat that the people in the

(16:35):
neighborhood can drive a golfcart down to launch their boats.
So we'll look at it.
But we didn't really, we didn'tknow anything about marinas.
Like we no, we were trying todevelop a neighborhood, and the
marina was an importantcomponent, but that wasn't
supposed to be on us.
So it evolved into yes, it wentto an RFP, and we we were the
successful bidders.
And as we went through theprocess, we started to go do

(16:55):
research and development andlook at all these other marinas
across the United States.
We said, you know what, thisactually this could be
something.
This this could be really so itmorphed into what it is now.

SPEAKER_00 (17:04):
And so we we went all in on the plans.

SPEAKER_02 (17:06):
I mean, we we we asked for everything that would
be good, and we asked for it ina way that, hey, this is
something the public needs, thisis something the public needs.
But at the end of the day, thebasis of everything was a high
level of service in class A.
And there's just there are not alot of marinas built.
You don't see like, you know,once every X number of years in
Lake Cavasu, if you look at it,we only have a few marinas,

(17:28):
right?
So let's do this right.
And so we we we went and did alot of research.
We went to marina conventions,and by the time we were done, we
didn't even hire marinacompanies to build it for us.
We went down to Mexico andfigured out where to fab the the
steel for the docks.
We figured out where to get apowder coated out.
Now it was good, except that wesigned contracts in April of
2020.
So I want you to think aboutthat timing.
Yeah, so for all the steel ohyeah.

(17:49):
So we signed this contract, andthe steel company was like, hey,
the the world's gonna fall apartbecause COVID's just coming on
right now.
So they signed an agreement thatwas really low.
It was great for us.
Yeah, but the day they weresupposed to deliver it in
September, they gave us acancellation of contract and let
us know that you know, likethere's nothing we can really
do.
Like we yeah, we committed tosomething we can't do.
We can't deliver and and youknow, litigation or what what

(18:12):
have you, that's not gonna helpbecause everybody's in the same
position.
So we kind of just took a deepbreath, signed back up, and got
them going.
And luckily, the demand,obviously, what what happened in
in those years with Lake Havasuand it being so attractive to
people that didn't want to berestricted to the same level
that they were maybe beingrestricted in other areas, it

(18:32):
blew up.
Like I live on a I live on thelargest cul-de-sac street in
Lake Havaso, and it's likeliterally it's at four o'clock,
five o'clock in the afternoon,there's nobody walking around.
During those, it was like aparade in my street because all
the houses were full.
Like, you know, probably only50% of them are occupied.

SPEAKER_00 (18:48):
Everybody from California and Vegas and Phoenix
that's locked down, they'rehere.

SPEAKER_02 (18:51):
They were occupied full time, they had their
brothers and sisters staying inthe same house.
Like they, I mean, it was somuch activity.
Yep.
And I don't think people reallyunderstand this, but like when
you look at the Lake Havasu Citystats, our restaurant sales and
our and our hotel stats went 52%up in one year.
Now, this isn't like a newbusiness where you expect 52%
growth.
This is established restaurantsales went up 52% in one year,

(19:12):
and and hotel sales were rightthere with it.
And then the next year,40-something percent again.
When you do the compounding onthat, it's like 120% out of the
same square footage ofrestaurants and out of the same
square footage of hotels ornumber of doors.
Now, we did add a lot ofshort-term rentals that added to
that tax base.
So part of it was that.
But I think we went from 800short-term rentals to 1,600

(19:33):
registered short-term rentals ina matter of a year and a half.
That that's a that's a crazystat.
There's only 30,000 houses inLake Abbasid.
So, you know, you add 800 moreto that role.
That's a and you see whathappened with pricing and
everything else.
And people started buying basedon investment value versus
single family living at value.
So it did a lot of things to ourmarket that we're trying to
figure out now.
So there's definitely somedownside to some of that.

(19:54):
But as it related to the marina,it couldn't have been better.
And we had a senior housingthing in town at the same time,
and it couldn't have been worsefor that.
So COVID wasn't good foreverything, but for the marina,
it it's exactly where peoplewanted to be outside and
recreating.
And so we just kept building ata bigger and bigger pace.
We opened up the marina and thefirst neighborhood about the
same, we opened up the firstneighborhood first, and the

(20:16):
marina was already underconstruction at that point.
And it uh it went really well.
Like we think we thought itwould take two to three years to
sell off our first 72 sites.
We thought we'd probably averagearound$250,000 a site just based
on what we were seeing in themarket.
That's where we were gonna startto create some momentum.
And there was no moment, I mean,the momentum was there.
Like we we canceled the grandopening with 300 people that

(20:39):
were already committed tocoming.
It was supposed to happen likethe very end of March.
Instead, on April 1st or 2nd, westarted scheduling tours and we
just had all those people thatwanted to come out and look like
individual tours.
Yep.
And the first 22 people thatcame out signed a contract, and
we already had the contractsdrawn up.
We didn't change terms, wedidn't change.
I mean, it was a lot of demand.

SPEAKER_01 (20:59):
Yeah.

SPEAKER_02 (20:59):
And after those first 22 people, we went back to
our price list and we changedit, and then we signed up
another, call it 40 out of 50people that came and it was sold
out within six weeks.

SPEAKER_00 (21:08):
Wow.

SPEAKER_02 (21:08):
And so we were frantically building.
And the prices went up.
Prices doubled from when westarted to when we got done with
the first neighborhood.
And they they kept going up forthe next year.
And then about 2022 is when yousaw in Lake Cavasoo and Riviera,
you saw the post-COVID thingstarting to happen.
But honestly, it fell back a lotless than I thought it would
because there was so much of aboost at the beginning.

(21:30):
Yeah.
So yeah, I mean Riviera was wasdefinitely um a long, long road
to get there.
And we're we're you know, ourMichael and I really worked a
lot with Jim Comic.
Yeah.
And Jim was the younger nephew,and he was 56 years old, and he
and he passed away unexpectedly,and you know, we missed him
terribly.
Yeah, but he was a really goodguy.

(21:51):
He was a he was an amazing guy.
And he was he was he was Michaeland I both.
It was it was incredible becauseI'm really good with numbers.
Not very many people can keep upwith me unless they even if they
have a calculator, they stillhave to listen.
Um and and Michael is such acreative guy, and Jim had it
both.
Like and they're it's such arare thing.

SPEAKER_01 (22:07):
Yeah.

SPEAKER_02 (22:07):
And Jim had the benefit of his dad kind of
mentoring him and his uncle Kenmentoring him.
And they the thing that I pullthe most out of that, honestly,
is that he loved what he did.
Yeah.
And that, you know, indevelopment, that there's
nothing to love sometimes.
But getting through thechallenge, he he showed us how
that was what you what you bringit on.

SPEAKER_00 (22:26):
Yeah.

SPEAKER_02 (22:26):
Let's get through it.
Let's do it the right way.
And I guarantee it's gonna workout at the at the end of the
day.

SPEAKER_00 (22:30):
You know, Luke, that you you nailed it.
This is why I wanted to bringyou on, you know, is to is to
highlight the the craziness andthe demand that's really going
on in Lake Havasu.
So let's let's keep moving thisforward.
Where are you guys at now withthe Riviera?

SPEAKER_02 (22:43):
So fast forwarding through all those entitlements
and everything, um, we've nowbeen open for five and a half
years.
It's actually six years now.
Um we've sold 320 out of the 335sites that we've built.
So we are frantically buildingthe last neighborhoods.
And because I just talked aboutJim, I have to tell the story
because it is kind of a funnystory.
But Jim was born in 1967.

(23:04):
So we had eight neighborhoods inthis community, uh, one through
eight.
And we had developed the firstfive.
And Jim had passed away,unfortunately, back in 2022.
So we had built neighborhoodfour and five, and as we got to
six and six and seven, beforethe kids were saying '67, this
is way before.
I was that has nothing to dowith that.
Got it.
It has everything to do with Jimwould never put his name on

(23:26):
anything.
This this guy has developed somuch stuff, and he was such a
high-level guy, but you will notfind his name or his uncle's
name, Ken Cole Make on reallyanything.
And he's developed a huge partof this town.

SPEAKER_01 (23:36):
Yeah.

SPEAKER_02 (23:36):
So instead of putting his name on something,
we called the neighborhood 67because it was the year he was
born.
It was a big it was a big numberfor all of us.
Like we always it always cameback.
It's like I never reallybelieved in magic number type of
stuff.

SPEAKER_00 (23:48):
But that's the magic number.

SPEAKER_02 (23:50):
It is the magic number for us.

SPEAKER_00 (23:51):
Because you guys were developing 67 while he was,
he passed, got it.

SPEAKER_02 (23:54):
And we weren't there yet.
This is afterwards.
We we developed neighborhoodfour and five after he passed,
but by the time we got to 67,and the neighborhood right after
that, called Solitude, is is itis the highlight of Riviera.
Yeah.
And it's the culmination ofeverything we've done in there.
We have the best actual land andorientation of the entire 250
acres is on that last piece.

(24:15):
It's we call it the mountain.
It'll be known as Solitude goingforward.
But it sits right across fromCopper Canyon and it has a view
to the southwest of ruggedmountains in the background
towards Parker that nobody cansee from anywhere else in town.
Like it literally is aone-of-a-kind view.
And it is my favorite view.

SPEAKER_00 (24:31):
And you have a 180-degree view of the lake if
you're in the back.
If you're saying in the back ofthe lot, over or maybe more.
Yeah.

SPEAKER_02 (24:36):
So I call it because you can go all the way around
where you go into steamboat andthere's areas I call it the owl
view because you literally can'tsee the whole view without
turning unless you're an owlwithout turning your body.
Yeah.
You know, so I mean it's it'snuts.

SPEAKER_00 (24:48):
It's true.
You go from one, you literallyhave to do a complete 180 to
even see the other side.
Yeah, I completely agree.

SPEAKER_02 (24:52):
So we're super stoked because we are just
finishing the grading of 67right now.
And 67 on top of being named 67,just the the words 67.
When you look at the streets,they're they're all named after
Jim's volleyball crew.
And he had a best friend thatpassed away from cancer right
before him, and they know him asOtter.
And so there's Otter Court.

SPEAKER_00 (25:11):
Oh, that's cool.

SPEAKER_02 (25:12):
Jim was known as the Havasu Hammer, so there's Hammer
Lane.
His whole crew was named hiswhole crew was named the Crux
Crew.
So without naming anything afterJim, I hope he doesn't get mad
at me from above, but we we madea little play on him.

SPEAKER_00 (25:24):
So that's really cool, man.
I love it.
Um, all right, see, let's uhwhat would you like people to
know more about the Riviera?

SPEAKER_02 (25:31):
You know, I think um because Riviera was so doubted
early on, there was a lot of youknow people that said it would
never happen.
I've heard all kinds of stories.
But what I'd say about Riviera.
Yeah, what I'd say about Rivierais like we we had a vision.
You know, Michael and Jim umcertainly had a vision, and
people like Scott Ward helped usimprove on that vision.

(25:51):
And without people like Scottand like Jennifer and Brady
Hayek, who are great builders inthere as well, and without some
of the people from outside ofour market that brought some of
their great builders in thatalso brought their good
subcontractors in, because Iknow Scott and everybody else
was having a really hard timeunderstanding how to build some
of the details these world-classarchitects were bringing with
the existing subs.

(26:12):
Scott knew how to do it, the thegeneral contractors understood
it, but teaching the subs how todo it, I mean, you're either
getting a really high number,like a never get off the horse
until it bucks you off.
So the sub gives you like anextra zero on the end of it
because they don't know exactlyhow it's gonna work, or you have
to educate them.
And I think Scott and otherbuilders did a good job of that.
But then we had these othercrews come in from Los Angeles,

(26:32):
and now we're seeing structuralsteel out there, we're seeing
true level five drywall.
Like nobody really knew whatthat meant in Lake Avasu.
We just talked about thatyesterday.
Yeah, it it's it's it's broughta whole new level of housing,
I'm sure, you know, in terms ofRiviera.
But I think what I want peopleto understand is that we're
building this for the benefit ofthe community.
Yeah, it doesn't fit everysingle price point, it is

(26:52):
something that you know you haveto be wealthy to attain.
But what I would say about it isthere's a lot of people
interested in that, and theylove this town just like you
love this town and just like Ilove this town.
And when they come, they comewith, you know, the attitude of
having fun.
And they wouldn't be here ifthey didn't like the people
around them.
And so I find it a little ironicthat I do see a lot of hate, is

(27:14):
the best way to say it.
But at the same time, I mean,this was estimated to be a
billion-dollar impact to theeconomy, not by us, but by a
third-party study that was hiredby the Partnership for Economic
Development before Riviera wasever even a thing.
And I I think that it's exceededevery expectation that was in
that study, because I rememberlooking at it and looking at the
assumptions and going, hey, canwe really build 100 houses over

(27:36):
the first 10 years?
Well, we're gonna we have 45houses built, 50 that are under
construction, and we've onlysold 300, you know, like people
can buy in sites, so there'sreally only about 300 building
sites that have been sold sofar.
So to have that much activitythis soon, in the average price,
I would tell you, take out ofthe hundred homes more or less
that are being built or havebeen built, take 20 out of

(27:57):
those.
Those are the spec inventory,it's more like 15, probably.
But you take the average priceof the ones that people are
building for themselves, custom,it's probably definitely north
of four million dollars.

SPEAKER_00 (28:07):
Well, you know, Scott's got one going on for 10
million right there on thecorner over there by where he
built the other kind of row ofproperties.
He's got some he's got somepretty big things.

SPEAKER_02 (28:15):
And when you get when you see what's going on,
when you see what happens atSolitude, people are gonna drive
by that and they're gonna say,Hold my beer.

SPEAKER_00 (28:20):
Oh, yeah.

SPEAKER_02 (28:21):
It is gonna be nuts because we're building sites out
there.
Like the one thing weunderestimated is that everybody
would build out every squarefoot of potential.
I mean, retaining walls andeverything else.
They're using every square footthat's available on the last the
last two phases, it's kind of aculmination of everything we've
learned.
So we don't have anything that'ssmaller than an 80-foot wide
site.
Yeah, every site is, you know,like in the solitude, we're
we're half an acre up, and thesites are, you know, the the the

(28:44):
streets are it's gonna be used.
It's it's going to be used.
And so when you start doing themath on that, it's like you're
going to see 15 and 20 milliondollar houses in Lake Havaso.
Yeah.
That's going to happen.

SPEAKER_00 (28:53):
And I don't think people quite it's hard for them
to fathom that.
But it but it's what and this iswhere I want to bring you in on
this part of it.
I wanted you to what we weretalking about when we were
working out is kind of that thatdata that reflects kind of the
income levels and kind of how itwent from LA to like secondary
markets and how that flowedbecause that was really
impressive.
And I think for my audience, Ireally want them to hear what

(29:15):
you have to say because this isso powerful when you understand
the flow of capital and kind ofwhere it's all coming from.
And that really does highlightwhere this place is going.
So please share.

SPEAKER_02 (29:27):
Yeah, I mean, this dates back to 20 years ago.
I was trying to get my MAIdesignation as an appraiser, and
um the MAI just means member ofthe appraisal institute.
But to do it, you have to bepeer-reviewed, you have to come
up with what amounts to athesis, you have to go through a
bunch of extra education andpeer-reviewed work.
But the very last part of it isa thesis, and you want to stand
out because you have these peersaround you kind of looking at

(29:48):
your work and they're gonna askyou hard questions.
And I'm not a big market guy,I'm a tertiary market guy, so I
don't have all the tools thatthese other big markets have.
I mean, they have third-partycompanies that study every
single angle and they just pullthe studies.
I actually have to do thestudies.
Yeah.
And so what they wanted me to dois show them a fundamental
analysis.
And usually in the appraisalworld, that means a mathematical

(30:10):
equation that works, right?
Like if you have a thousandpeople moving into town, two
persons per household, well, youneed to build 500 houses.
And if the average income is$50,000 and you can afford 30%
of that for a mortgage, then youcan afford$15,000.
So you can do the math on whatthey can afford to pay if they
put 20% down.
That's the price point you'resupposed to build to.
Yeah.
Well, if anybody was to everfollow that fundamental analysis

(30:31):
that's supposed to be a fact inLake Havasu, it would turn out
totally wrong because LakeHavasu is not driven by median
family income.
It's driven by secondhomeowners.

SPEAKER_01 (30:40):
Yep.

SPEAKER_02 (30:40):
It's driven by tourism, it's driven by people
that are spending a lot moremoney here when they're here
than they would when they'reeven back home and they're
accelerating their spending.
Yep.
And so what I set out to do istry and prove that without
knowing exactly who's in mytown, I can tell you kind of
where they're coming from and Ican tell you roughly what
they're going to spend onhousing because we shouldn't
build 500 houses that are inthat price point.

(31:03):
We need some in that pricepoint, but we need stuff that's
not even showing up on thisstudy.

SPEAKER_01 (31:07):
Yeah.

SPEAKER_02 (31:07):
So what I did is I started looking at, okay, like
Havasu restaurant sales.
They're collecting 100 millionin restaurant sales.
You can back into that from thetax.
It's it's verified by the state,divide that by the percentage
they charge.
Okay, they're doing$100 million.
And you're telling me thatthere's 60,000 people here and
they're making 50,000.
That means they're spending like20% of their income on
restaurants.
And I think that everybody knowsthat's not the case.

(31:29):
So where is that money comingfrom?
That it begs the question.
So now let's look at hotels andnow let's start looking at some
of the upper end neighborhoodsthat are selling.
Where's the concentration of zipcodes?
And what I was able to do isliterally map out the
highest-end sales wereconcentrated on closer to the
ocean in California, whereas alot of the sales in the middle
of town and the infillneighborhoods that traditionally

(31:51):
sell for a little bit less, theywere concentrated in the inland
empire.
And so by by correlating allthat out, I was able to prove to
my peers that even withouthaving a census that tells me
something, I can come up with apretty high correlation and
confidence interval by lookingat all these things through
regression analysis and playingaround with different variables
and seeing where it tightens upat.

(32:12):
And by doing that, I was able tokind of identify the demographic
that we'd be shooting for in anykind of upper end neighborhood.
And what's funny is I did thatwithout even knowing that we had
developed Riviera at the time.
Um wasn't even useful.
This is prior.
This is like, I mean, I'd donesome studies for Riviera, but I
certainly didn't go into thatgeeky analysis to figure that
out, right?
So I mean, we had our owntheories about it, but it it

(32:32):
definitely far exceeded what weever thought would happen.
But it was interesting to seepeople that are are nerds like
me, like their jaws dropped whenI presented it to them, and then
after they got done and asked mequestions or like that, that
honestly is brilliant.

SPEAKER_00 (32:45):
Yeah.
And that's and that's kind ofthe, you know, we we piggyback
off kind of some of that data,but we're also looking at
spending habits of baby boomers,how many people are actually
moving their um, you know,getting their uh IDs and
licenses here in Havasu, wherethey came, where they came from,
how many trusts are beingrecorded and people are using
trust to buy.
You know, we're looking at uh uhcompany sales, deferred sales

(33:07):
trust.
We're tracking a lot of thatdata to identify kind of the
spending habits of boomers, andthen obviously whether going for
healthcare.
You know, and when you'relooking at some of the from some
of the data that we're tracking,you know, people are just trying
to maneuver around taxes, costof living, and when you retire,
you're balling on a budget.
So now you're you're constantlytrying to identify how to live a

(33:28):
good life, buy all the toys thatyou want, and be amongst
friends, which is important.
And and the politicalenvironment has really pushed
people here too.
The volatility has really drivena lot of people here, and it's
it's it's it's acceleratedpeople's exits out of businesses
and in and pushing themselvesinto retirement and making those
moves here, or start positioningthemselves for retirement early
and start buying a second homehere, getting ready for

(33:50):
retirement out of California,two, three, four, five years
ahead of time.
And but they're just starting tobuy all their toys here and
start maneuvering and startshifting their wealth here, all
the way down to the smallerbanks.
You know, a lot of theseregional banks are opening up
here, and that's kind of crazybecause you saw a couple of
years ago regional banks getcrushed.
Everyone was, you know, kind ofpulling their capital and going
to bigger institutions, and nowall of a sudden you're seeing

(34:12):
some of these smaller regionalbanks open up here.
Okay.
Tell me about your thoughts onthat.
If you think I my thoughts, andI'll back it before you go into
that.
My my two is that as people aremoving here and and full on
retiring here too, as peoplecome in, they believe in this
area.
Obviously, they're moving here.
So a lot of times they movetheir wealth here.
So you're you're starting to seemore depositors come in on the

(34:32):
smaller regional banks.
That's kind of what I'm saying.

SPEAKER_02 (34:35):
You're 100% right.
Yeah, it's not even that's noteven a question.
Like go ask Arizona um creditunion right now, go ask for
savings right now, go askFoothills Bank right now.
They and the credit uniondoesn't even have a reason to
take more deposits, they don'toperate the same as the other
banks, and yet they're gettingmore than they ever anticipated.
They're actually getting morethan they're trying to get.
Um, so it's happening for sure.

(34:56):
And what you said, I thinkthere's two different things.
There's there's the macroregional and uh economics of
baby boomers getting the largesttransfer of wealth from their
parents that's ever happened.
I mean, they literally controllike 60% of net disposable
wealth, 60%, and and half ofit's already been passed to the
baby boomers.
So at one time it was like 72%.
And they're frugal.

(35:17):
And they're frugal.
And but they're frugal, but thekids have been waiting for a
minute, and they probably have awish list.
And I'm sorry, but they're goingto spend money at a much higher
rate, the velocity at whichmoney moves through that
generation versus the previousgeneration.
And if you really look at thebiggest impacts that we've ever
seen in my lifetime at least, II would look back at the 2008

(35:40):
mortgage crisis, really 2006mortgage crisis, but we knew it
by then.
And I would look at the transferof wealth that's happening right
now as the two most obviousthings in hindsight.
I know uh a lot of us got fooledby 2008, but if you if you watch
the big short, you're like,yeah, which you and I talked
about when we were working out.
Who didn't see that coming,right?
But yeah, I mean it's kind ofobvious.
Well, this is happening too.

(36:01):
And when you look at velocity ofmoney, it it's a super important
thing because forever, banks,when there's a stimulus and 08
or whatever, whatever it is,they issue money through banks.
When COVID happened, they issuedmoney directly to people and
they printed a lot more of itthan they usually would were
during a stimulus.
So there's two things thathappen.
But when you look at the impactof what that happened in our

(36:22):
economy, the only thing thatexplains it to me is that the
velocity of money moves so muchfaster because it got given
directly to the people and thebusiness owners.
I I think that's something to belearned from.
Because when when this transferof wealth happens, the same
thing's gonna happen.
That generation does spend moneyand it probably has some pent-up
demand for spending, and on topof that, at a greater rate than

(36:44):
their parents did.

SPEAKER_00 (36:44):
It shows when the PPP was pumped in.
You know, people are spendingthat money on things that
weren't necessarily for thebusinesses.
You know, they were kind ofgoing out and doing using that
money for the thing.
So the the as that money wastransferring into those hands,
those people were just spendingit like crazy.

SPEAKER_02 (36:57):
That's my point about the banks, right?
Banks wouldn't let you do thatbefore because they gave it to
you in a controlled way.
What do you need that?

SPEAKER_00 (37:02):
It was underwritten a lot tighter.
Right.
Then they were just trying toget it into the market.

SPEAKER_02 (37:05):
They just wanted to make sure that everybody that
had an employee wouldn't have tofire an employee, no matter
whether or not there was a badconsequence or not.
So it that's my point, is thevelocity of money because of
that moves so much faster.
Well, this transfer of wealthis, in my opinion, similar.
Like I think that generationwill spend it faster.
It won't stay on the sidelinesas much as it has been in the
past.
And I think, you know, like youcan see it in this market too.

(37:26):
Like the if the the mostaffluent among among us are not
not buying because they thinkthe market's in a bad spot.
They're they're buying notbuying because they want to
maximize their purchase, theywant to do it for the timing.
But they the ones that want to,they're doing it.

SPEAKER_00 (37:39):
Yeah, they're doing it no matter what's going on.

SPEAKER_02 (37:41):
Yeah.

SPEAKER_00 (37:41):
Yeah.
And if they have that moneygiven to them or let's say
they're whatever it is, exitingthe business, they're just they
don't, they're not as umimpacted by market adjustments.
So they're just going in andbuying whatever they want to do.
And again, that's that's that'sthat's kind of the big takeaway
that I'm trying to kind of layhome for people is I people need
to understand how Lake Havasumoves, like the people here.

SPEAKER_02 (38:02):
Well, and I would love to so this that to your
point, I think this is reallyimportant about Lake Avasu
because it it to me it speaks tothe bottom of where we can go,
okay?
All this money is on thesidelines.
On top of that, we have a verylimited supply of what can be
built in Lake Aviso.
There's 2,000 finished lots leftin Lake Havasu right now.
The only land that will becomeavailable in the future is
Arizona State Trust land.

(38:23):
And when I add all that up andput the timelines to what it
takes to get it entitled andstart building, we will run out
of developable land if we keepgrowing at the same percentage
rate in about eight years.
And we'll we'll add some, butlike there was 600 acres just
purchased recently.
Well, that might have 1100 homesites on it.
Well, that's enough for twoyears.
There's only been one of thosein the last five.
So how are we going to keep upwith that?

SPEAKER_00 (38:44):
Yeah.
So that's a big takedown.
So think about that.
You said 600 acres and 1100 homesites, and that's only in two
years, they're gone.

SPEAKER_02 (38:52):
And and Havasu, we're, you know, if we kept up
with our population growth,we're not building quite that
much.
When you take the when you takeLake Havasu stats and the county
stats that are applicable to therefuge and some of the
communities that are consideredLake Havasu, but they're
technically in the county.
We're building around 450 to 500sites a year.

SPEAKER_00 (39:08):
Yeah, we're I'm looking at the um permits that
are pulled.
Yeah, I'm looking at thosenumbers.

SPEAKER_02 (39:12):
So the city's like 250 to 280, but then you look at
the other stuff that'ssurrounding it, and you get you
get a little over 400 over thelast three years on average.
Yep.
Um, so we're building actually alittle bit underneath our
population, and that's becauseof the affordability of housing,
I would tell you.
Um, but there's actually apent-up demand for it, which
adds to the the argument that Ihave that we aren't going to see

(39:33):
a huge dip in Lake Kavasu.
There's no such thing as a 2008coming because that was an
excess of land, an excess ofsupply.
We actually are in a deficitright now for supply, and it's
only going to get worse.
And on top of that, to yourpoint earlier, to kind of circle
back to that, the money that'scoming into Lake Kavasu is
totally different now, andthere's a there's a higher
demand because of politicalreasons, tax reasons, you know,

(39:57):
retirement is coming.
I see, I see firsthand whatyou're talking about with people
setting up their retirement,their exit plan three to five
years from now.
They want to buy something inRiviera so they know where
they're going to be three tofive years from now, if they
can't accelerate it otherwise.
So I feel like the bottom ofthis market, if we ever do have
a downturn, and I don't see thatright now.
I it's been a very stablemarket.

(40:19):
We've had some post-COVIDdeclines in some of our leading
indicators like retail sales andlike restaurant sales, but we're
talking like a 4%, 5% decreasein a couple of those categories
in the face of 120% increasewhen you count 2020, 21, and 22
together.
So 4% down off of 120.
You kind of really can't evenreally factor that.

(40:41):
Yeah, it's not even a thing.
We've stabilized is the best wayto say it, right?
And it's it's stabilized at thatlevel, it's stabilized well
above where I ever thought itwould be.
And and kind of back to yourpoint about like like Havasu
being a small market, tertiarymarket.
The reason we don't have, Imean, Trader Jroves we're not
gonna get that.
We just don't have there.
But the reason we don't have asmany of the franchises that you
see in a bullhead city isbecause our demographics people

(41:02):
don't they need to read mythesis study so they understand
like it's not the census track.
You you can't look at that, likeit's not gonna give you good
information.

SPEAKER_00 (41:09):
You know, I didn't know if I wanted to bring that
up during this podcast, but man,I'm telling you the data that's
out there on Google doesn't makeany sense at all.
It's because it's not reallyyeah.
So like we work with um GreenStreet advisors, and I'm
thinking about uh engaging withthem and doing like a huge
write-up on kind of all theselittle things that I'm wanting
to just kind of pull together,right?
For kind of our our brand.
Yeah.
Um, but those are the groupsthat I really they will do a

(41:32):
deeper dive, you know, and theyactually I don't you probably
you know Green Street.

SPEAKER_02 (41:35):
I do, and I'd tell you this like I could be a huge
help to them because myappraisal database tracks stuff
all the way back to 2000.
Nobody has that except for mydatabase.
So I would hand that over tothem because they could do a lot
with it in terms of trending anda lot of the stuff that I've
done.

SPEAKER_00 (41:49):
Well, when I engage, I'll just introduce them to you
and post some of that databecause I'd love to put that in
some a deeper report.

SPEAKER_02 (41:54):
I I would love to just give it to them and you
know perfect.
I'd love to see what they comeup with too.

SPEAKER_00 (41:59):
I I got a really good relationship with a guy,
and I actually went to highschool with one of the guys that
is their they're one of theirdata analysts.
And so he hits me up.
I he gives me I'm on like alltheir free uh like emails and I
get all the data and all theseasset classes and kind of what's
going on.
So that's actually how I kind ofmaneuver a little bit around our
movement on what we're doing.

SPEAKER_01 (42:15):
Yeah.

SPEAKER_00 (42:15):
And it does allow us to kind of look at construction
costs because they break thatdown and you know, material
bottlenecks and what's going onwith tariffs.
Like they really give you realdata and like stuff you can't,
you can watch the news all youwant, but like boots on the
ground data, like that's what Ithat's what you do, and that's
why I respect you guys so much.
That's why I wanted you herebecause I want people to really
know there's a deal there is adifference between what you see

(42:37):
on the news or online or whathave you compared to what's
really going on.
And at the same time, this iskind of funny, you brought this
up during our conversationearlier.
You know, because of the natureof the generation and the wealth
that is being moved here, thosepeople aren't naturally loud
people, they're not on socialmedia, they're not wanting
people to know the moves thatthey're making.
So there is, you know, where I'ma loud guy, I'm all over social

(42:59):
media, have these big oldplatforms, right?
But that's what we do to buildour uh the what we're trying to
do to raise capital.
What you're seeing though arethe people that are actually
moving here are those peoplethat are exiting businesses,
they're trying to, you know,mitigate risk, they're just
trying to lower their stress andright, they're just positioning
themselves.
So it's it's just the mostamazing thing to see how much is

(43:21):
being sent here, but that's whyit's so hard to get the data
because not everybody wants toknow what's happening.
So a lot of the, for example,the majority of my investors,
I've seen a huge difference overthe last, since let's say COVID,
since 2020 to now, from youknow, IRAs were really, really,
really big about four years ago.
Those IRAs went from like 50%,45%, 30%, you know, from people

(43:41):
trying to invest.
Now I can only take in so muchin IRAs per offering, right?
And you probably know aboutthis.
But I'm seeing a huge, a huge,huge shift on not as many IRAs
making investments.
I'm seeing dry powder and a lotof 1031 exchanges, a lot of
deferred sales trust and a lotof kind of positioning for
taxes.
A lot of the, a lot of the uhinvestment strategy that we have
have more tax credits involved,and that's what people are

(44:03):
really, you know, tyingthemselves to.
Even people that are W 2employees currently are looking,
but they're making so muchmoney, they're looking for tax
credits.
So it's really impressive on howmuch the the market has shifted
as far as the the strategy ofinvestors.
But the what what's wild is thatthe wealthy ones that are Kind
of quiet and moving here, thoseare also the ones that are
investing.
Yeah, they're investing into atown they believe.

(44:25):
So, like our demographic, likeare people that are local to
Havasu or come to Havasu.
Most of our investors are peoplewho come to Havasu or have
retired and have already movedto Havasu.
It's because they know themarket, they believe in it,
they're driving the streets andseeing it get busier kind of
thing.
And they're like, Yeah, webelieve that no matter what's
going on in the world, you know,this is gonna hold.
And that's huge.
So I was talking to uh Eric.

(44:47):
Eric, I was I'm just gonna sayit on the podcast.
He goes, This is such aright-leaning area that we could
be going to war, which we arein, and people are still buying
here, right?
Because like, you know, twoyears ago, we're like, even if
we go to war, what are the whatifs, right?
Here's you know, the let's saythe policies or the kind of
practices that we have to try tomitigate risk, if that were to
happen.
But we are in something likethat, and like how many people

(45:09):
are still making moves.
But because of the volatility,people are moving faster.
So we're picking up and seeingan increase in activity from
investors right now.
And all we're doing ultimatelyis just flying the flag, letting
them know this is what we have.
If you guys like it, jump in.
But the point is that thevolatility is driving people to
make those moves.
You know, so it's it's it's justyou never would think that
because back in the day, peoplewould just go to dry powder,

(45:31):
they'd pull their money, go intoan all-cash position, and it'll
just wait it out.
They're not doing that anymore.

SPEAKER_02 (45:35):
Uh kind of.
Part of the reason they'recoming is they've been waiting
for so long.

SPEAKER_00 (45:39):
That's true.

SPEAKER_02 (45:40):
It's been on the sideline a long time.
That's true.
And they're like, maybe this newmarket is the new market.
Yeah.
Because we've never been in anup cycle quite like this one,
right?
Like we were kind of lookinglike we might go down to a down
cycle in 2019, and then COVIDhappened.

SPEAKER_01 (45:53):
Boom.

SPEAKER_02 (45:53):
So now we've extended this run that was
already unbelievable.
And so people have had that, youknow, it all it is is
perception.
Yeah.
Because it's it's somebody'sperception on whether or not
their money's safer if you'regoing to have inflation come
down.
And every single person I'vetalked to, when I give them this
analogy, when they when theytalk about, well, I think I'm
going to be able to build thathouse for less next year, I'm
like, no, you're not.
There's no way.
And I said, Do you think that,do you think people are getting

(46:15):
a living wage right now?
Do you think people are makingenough to afford everything that
we have in this market?
Well, no, obviously not.
Okay, well, then let's talkabout lumber.
Let's talk about why you thinkit's going to come down because
really lumber, the commodity, isall labor.
If you think about it, you havea guy that goes out and does the
timber grazing and decides, youknow, what we can cut down, what
we can't cut down.
Then you have somebody that goesout and actually cuts it down.
And then you have a chokerchaser, which I did when I was

(46:38):
in college.
Part of the reason I'm probablynot ever out in the field
anymore is that I got enoughhard work out of that one summer
to last year.
You smashed your fingers in overthe hammer, got your.
Man, it's so dangerous.
But you know, it's it's and thenyou bring it up to a guy that
has to haul it down to a millthat has people again, right?
So 80% of that lumber cost islabor.
And there is no such thing assomebody that goes from$30 an

(46:59):
hour to$25 an hour overnightunless there's some really
extraordinary circumstance.
So, how does that inflation comedown?

SPEAKER_00 (47:06):
So, one of the one of the things I'm adding to to
the conversation when I'mtalking to somebody coming out
here and buy a property, I'mgonna use my father as an
example.
He just bought up in the in theuh estates.
We he put an offer in on aproperty.
I I I walked it with him, ofcourse, and I said, Pops,
there's no way you can buildthis for the cost you're buying
it for right now.
The replacement cost will bemore than this, and this
property's in damn near perfectcondition.

(47:27):
I would pull the trigger on thisnow.
So I'm seeing that happen too,where people are kind of coming
out.
I would say more the attainable,affordable side here, like that,
you know, million and a half anddown.
I'm telling people, you cannotbuild these for the price that
you're buying it for right now.
So from a replacement cost, I'mbuilding stuff.
You can't do that.
And people are going, I makesense.
I need to pull the trigger now.

SPEAKER_02 (47:47):
People do realize that it costs 600 plus a square
foot now.
Uh it used to be, you know, fora long time, you could build an
RV garage house in Lake Havasufor$150 a square foot.
And it wasn't that long ago.
I mean, I was it, you know, itwas 2010.
That was the number.

SPEAKER_00 (48:01):
Yeah.

SPEAKER_02 (48:02):
And now it's it's 600.

SPEAKER_00 (48:04):
Yeah.
Yeah, it it's in real all in,yeah.

SPEAKER_02 (48:07):
If you're building a nice house, a nice house, and
you're gonna have an RV garageon it.
And the other thing people don'tthink about, this is my number
kind of being a geek, but we'redoing this with all my agents
right now because I think it'ssuper important to understand.
But most of these upper endhouses are 2,500 to 5,000 square
feet.
Okay, we we talk about pricesper square foot to build and to

(48:28):
sell, but yet they're buildinganother 2,000 square feet with
tongue and groove ceilings, likemore finishes outside on a patio
than you, and you have 4,000square feet of garage, it's not
even part of the consideration.
So kind of going back to what Italked about earlier, I've
correlated now sales with priceper square foot under roof.
And guess what?
There's a much highercorrelation to what you get for
that stat than it is if yougraph out price per square foot

(48:51):
and you're like, that doesn'tmake any sense.
That is well, it does make senseif you dive down into it, yeah,
and really just breaking it alldown to price under in the same
categories at least, under roof,it's a way higher correlation.

SPEAKER_00 (49:03):
Yeah, it's it's a it's just a different, you know,
and it's moved.
I tell people this all the timethings are moving so fast.
If you watch, if you watch howfast things are going on
politically, you have to move asa business owner or whatever
you're doing in life, you haveto move just as equally as fast.
Otherwise, you will fall behind.
And that goes along withbuilding, building practices,

(49:23):
material AI technology.
You need to bring in differentpractices, even on your
building, building techniques.
You know, I think one of thethings that have saved us a lot
is just people's understandingof insurance and and costs for
either end users or even youknow builders' risk policies to
build out of lumber.
The fact that we started movingto steel a long time ago helped
us a lot.
And what was what was helping mewas, and I don't know if you

(49:44):
know much about this story, butum, I when the pandemic hit, we
started, we decided to make youknow a big push towards
Nashville.
The Southeast was just a bigdeal for us.
And uh as a private lender, Imanage a hundred million dollar
debt fund.
We were underwriting a lot ofrequests that were barn
dominiums, these barn, these arebarn cage products.
And I was like, these are likeglorified, you know, like tree

(50:05):
houses.
What is going on?
Right.
So and then I started looking atjust how they're developed and
the technology and some of thesteel manufacturing and you
know, it really shifted my mindon manufacturing homes, right?
Which goes hand in hand how youmanufacture our our um storage
units.
Yeah.
And I'm like, no, these thingsare being cut off site, you're
cutting timelines down.
In fact, you're cutting yourcost down, you have less trade,

(50:26):
and you can actually build thesefor a pretty good cost.
And for the most part, you canbuild them in you know, any
atmosphere, snow loads, you cankind of consider all that.
And I'm like, man, these thingsare killer.
We can you can compress yourcost if you do it right, and
speed is uh is is the rightthing.
So we just kind of startedlooking at like Lake Havas, you
know, you will know this mother.
We started laughing about it.
I was talking to Scott aboutthis.
This if you're not bringingthose new kind of like

(50:49):
techniques or strategies to LakeHavas, so you got to do
something to stand out, right?
And I think with the the ourbuyer's pool, when you bring
kind of that spin to the game,they go, okay, you're building
something new, we love it, butthen you're also looking at just
the overall um, you know, again,going just to go using insurance
as a as an example, you know,that's a big play, especially

(51:09):
with the when all those firesjust tapped off in California
last year or what have you.
It it changed everything for theway people looked at or the way
we're building now.
Yeah, you know, anyway.
So go, what were you gonna say?
Because I know you were gonna gosomething, building methods.

SPEAKER_02 (51:21):
Oh, uh when I walked into your building today, like
we we build a lot of storage andthings like that, not
necessarily heavy steel or rediron like this, but your
building today, I have to say,is just next level.
And when I walked in here, I'mliterally getting done with
design on another one that's notquite like this, but similar
materials.
I mean, I literally was studyingit, like, oh, yeah, that's how

(51:41):
that works better.
So you clearly have a lot ofexperience in the steel game,
and uh I'll definitely hit youup for some information.

SPEAKER_00 (51:48):
Even the saddles and so forth, like we really went
through a lot of that, and youyou can't with steel, you can't
really shave stuff down, youknow, it has to come like damn
near perfect.
Yeah, so yeah, it's it was itwas a learning experience for us
too, but it's really it'sopening our eyes to again, if
you can do it right, you're inessence manufacturing at the
same time, all your horizontalsare going in.
Yeah, so as soon as you, youknow, you're dropping your

(52:09):
foundation and these things aredropping.
And if you have a good team, youknow, it's like for example, on
building G on Paradigm Storage,we decide to go ahead and
re-engage with our uh ourbuilder, I call them our
building team, and uh they'regonna double their labor force.
And we think we're gonna be ableto deliver that building in half
the time we do deliver some ofthe other buildings, right?
So it's but they've had thepractice of building those exact

(52:30):
same buildings, sameengineering, same manufacturer,
what have you.
So we're trying to cut our ourour our you know, cut our cost
by increasing our speed, youknow.

SPEAKER_02 (52:38):
The by far the best way to cut costs in this market
right now.
Time is that because at the endof the project and the debt
that's on it at the end, likeevery month matters at that
point.

SPEAKER_00 (52:46):
Value engineering is just such a conversation piece
that people don't talk about,you know.
And I think that is for us guyslike you and I, that is like
where we have to hover.
And in this environment, youabsolutely need to.

SPEAKER_02 (52:58):
You know, and it's it's um it's funny about value
engineering.
I've worked with some prettygood design build firms that
you're really doing the valueengineering before you do the
engineering, and that's by farthe best way to do it.
Because when you start workingwith new guys, I have a project
right now where the engineer wasfrom Idaho.
So I'm wondering why thefootings are what they are, and
I start thinking, huh, frostlines.

SPEAKER_00 (53:17):
Yeah, yeah, yeah.

SPEAKER_02 (53:18):
So then I call him and I'm like, hey, is this
design with that in mind?
And of course, he's just used todifferent means and methods of
building anyway up there.
And so I ran by him what both myconcrete subs were telling me.
And he's like, Oh, if you wantit that way, no problem.
And he just redid it for me,which is really refreshing when
you have a structural engineeractually willing to listen and
do something.
And he was like, Yeah, we can doit that way.

(53:38):
Well, it saved like$200,000 onconcrete.

SPEAKER_00 (53:42):
We did the same thing on our steel buildings.
Our engineer and architect,they're from like Houston, they
do a bunch of stuff like on the,you know, like on the coastal,
you know, and and we're alwayslike, guys, this is like way
over engineered, like comparedto our soils report.
Like, we can cut some costs.
That's why I was telling you,you know, where we're thinking
we're shaving our costs off oron the structural side, that did
save us a lot, you know.
Um, but it's true.
The value in the value in it'sit's always in planning, you

(54:03):
know, where you save your moneyis in planning, and then
obviously getting your contractsin place and getting your subs
in place and materials too.

SPEAKER_01 (54:08):
Yeah.

SPEAKER_00 (54:09):
Now, cash is king if you can start ordering material
ahead of time and storing it,but you keep it under your roof,
you know, that's that helps alot.
Um, but yeah, so we're just, youknow, that's that's kind of
where I've hovered.
I think, you know, I stepped, Istepped aside as CEO four years
ago and just start focusing onthose things, right?
Acquisitions, entitlements,planning, um, capital raising,

(54:29):
securities, legal, all that funstuff, and then design.
And that's where I nerd at isthe design.

SPEAKER_02 (54:34):
You can save the most money on the design and
putting the right team togetherand having them there from the
beginning so the vision is heldtogether the whole time.
Yep.
That way when you are on projectand things are changing on the
fly, like everybody's kind of onthe same page and you don't have
holdups, you don't have hugechange orders, you just get it
get it right.

SPEAKER_00 (54:49):
You know what's crazy is that I I it's hard to
explain this, but I love to seeI know that you and I are gonna
totally disconnect on this part,this one part.
When you do what we do, you makedecisions on the fly on the in
the field that are like could beepic in how it turns out.
And it's almost it seems likesometimes it's on a daily basis,
you know, and it's just so hardfor people to think, you know,

(55:11):
people that are closest to me,like, I don't know how you deal
with the stress.
I'm like, you know what?
I don't either, but it's taken along time to figure a way to
build the scales to deal withit, but it's just the cost of
doing business, you know?
And uh, but it's it's it's it'sso you feel alive and it's the
most beautiful thing when itactually comes together.
It's like worth it.
It feels like you have realpurpose, you know, and then
people fall in love with it andbuild memories, and you know,

(55:31):
like this fitness and healthcenter here, people are just
coming to me, telling me aboutyou know how much this is um
their mental health, you know,those type of things when you
start getting that type offeedback for your design and
hard work, it changes the wayyou feel.
And I can only imagine how youguys feel about the Riviera
because honestly, man, that isone of the most beautiful
projects.
And I've traveled the world, andI will tell you, it's it that's
this is why I love to be here.

SPEAKER_02 (55:51):
Here's here's where we're trying to go with Riviera
right now.
And I and I think I think SanDiego, Phoenix, and Vegas huge
markets.
We get hardly any love fromthose markets in Lake Havasu.
The ones that come the ones thatcome get addicted.
But I this is the best story Ican tell.
I had a uh a guy about a monthago fly out from San Diego, a

(56:12):
couple really, really nicepeople.
They had never been to LakeHavasu.
He owns a big developmentcompany, he's like a civil
engineer kind of guy, but on theside, he's picked up uh a
charter company and he owns theFBO and he's chartering services
for people.
Yeah, like total study.
He didn't need to tell me allthis.
Like I had to look him up forafterwards, like kind of figured
it out.
Yeah, I figured it out.
Like I found out what his tailnumber was, called the airport,

(56:35):
tracked him down.
But really nice guy because Iwanted to see what his
background was because he wassaying things that I knew he
wasn't giving me the wholestory.
He knew a lot.
But what he said to me thatreally hit home, I took him out
to to Rivier, and I don't give alot of people tours of solitude,
but I had an agent call and say,I have this guy out here, it
seems like it'd be worth yourtime to come meet him.
And I said, Yeah, of course.
So I went out there, met him andhis wife.

(56:56):
We we stand out on one of thebest sites in all of Solitude
that we're building on the last.
And he looked at his wife, hegoes, Why would we go to Cabo?
Because they're from San Diego,and everybody from San Diego
just goes to Cabo and spends$20or$39 or whatever it is, right?
And he looked, I mean, Ilistened to him have the
conversation with his wife as hewas realizing what he was
looking at.
He's like, I don't understand.

(57:16):
If people see this, they're notgonna go to Cabo.
We can go wake surf right there.
We can get over here in theplane in 45 minutes.
We have these views at night, wehave this sunset at night, we
have that view in the morning,we have walking trails.
Why would we go to Cabo?
And not everybody's gonna ditchCabo, but a small percentage of
people from San Diego, Phoenix,and and Phoenix goes to Cabo

(57:37):
pretty heavy, also.
I I think Lake Habasu over timeis going to be a very good
substitute for that type oftrip.

SPEAKER_00 (57:45):
Isn't that right there?
So let's hang on that for asecond.
So I've been down to CostaPalmas where you know the four
seasons have been built and thatwhole man-made marina and all
that stuff.
You you probably know what I'mtalking about.
I do.

SPEAKER_02 (57:56):
Is this is this the surfer that's involved?

SPEAKER_00 (57:58):
No, this is uh it's 1,600 acres, it's got two golf
courses.
Um, you know, there's some biginstitutional backing here.
Um, to give you an idea how bigthis project is, they basically
went into an old fishing townwith 3,000 people and basically
employed all of those peoplethat were in this little tiny,
you know, fishing town todevelop this project.
And when you go through thethere's old retired like Navy

(58:20):
SEALs that are their um privatesecurity, and you go through two
sets of gates.
I mean, it's like a whole thing,man.
It's stunning, beautiful.
Um, you know, the you know, um,I actually sat in a restaurant
uh with my wife at the time, andthere was, you know, Larry Fink
was sitting at the at the at thetable, you know, uh the CEO of
Black Rock.
Yeah, and so him and I had anice conversation.
I'll talk about that later, butit was kind of I it just it was

(58:42):
a good conversation.
But you know, I you know, that'sthe type of capital that was
getting pushed into developingthis project.
And I did not know this until Istarted mingling and talking to
people that are around there.
Anyways, the point is that thatwas probably one of the most
beautiful places I've ever been.
And it would like look at thesunset right now.
I mean, look at that view fromthe office, it's stunning.

SPEAKER_02 (59:00):
I mean, Havasu has the best sunsets consistently of
any place I've ever been in theworld.
And I've heard Hawaii's special,but it doesn't really have
anything on Lake Havasu.
If there's a fire in Californiaand the sun's going down, that
water's gonna turn pink and thenit's gonna turn the sky even
more pink.
And if you're wake surfing on itright when it's going down, I
don't know where else you wouldwant to be.

SPEAKER_00 (59:20):
It's gorgeous, yeah.
And it's yeah, I think that'sthe what I'm trying to lay the
hook in is like when you're hereand you spend some time here and
you you fall in love with thepeople real quick too, because
there's some really good peoplehere, but it's so beautiful and
so peaceful that it's it'sthat's why people fall in love
with it.
Now they just they don't want toleave and they start going,
okay, well, hey honey, let's notgo to Kaaba.

(59:43):
Why don't we just go right here?
Because a lot of times they'relike, hey, our kids are over
here, our grandkids are muchcloser, it's just easier to kind
of get to.
And you know, this we're alsoamongst friends, you know.
And and that's that's what I'mwant people to start seeing.
If you haven't been to LakeAvaso, you have to come here.
You will understand why peopleare flocking here, you know.

SPEAKER_02 (01:00:00):
So we did a survey of the PED.
I sat on the PED board foractually, I just kind of gave up
my seat this month.
So I've been on it for 15 orplus years.
Um, and Michael and Icollectively sat on the planning
and zoning commissions for 10plus years.
He was on the county one and thecity one.
So we love to dive into thecommunity, but through the PED,
I got a lot of good data becausethey would hire studies

(01:00:20):
sometimes, and of course, I'dhelp advise on what kind of
scope we'd need for the study toget the the information that we
really needed.
And what they're trying toaccomplish?
They did a study one time on umthe favorability of Lake Kavasu
and the rec and how recognizedit is.
So they did a they sent a bunchof stuff to Oregon and
Washington, they sent some tothe Midwest, Southern California

(01:00:40):
we didn't need to send becausewe we knew that.
Um and in Canada.
And this is probably back in2010 before the Canadians
stopped coming quite as you knowin in in large numbers like they
used to.

SPEAKER_00 (01:00:53):
We saw a downtick in like Palm Springs area too.

SPEAKER_02 (01:00:56):
Yeah, it's it's the Looney was at an all-time high.
I mean, there's there's lots ofreasons for it.
But um when we looked at thosestudies, there was like a it was
it was some insane number.
Like you would expect 40% ofpeople to say, I love like
Havasu, I would go back.
It was like 75%.
It was nuts.
And then the people when you gotmore Midwest, the rec people
didn't recognize it, they didn'tknow what it was.

(01:01:17):
It's true.
Um, and and so I think that'swhere Havasu is going to
continue to see growth.
Because I'll tell you, some ofthe coolest people in this
community are from the Midwest.
Yeah, you know, and it theyaren't they don't come in the
same numbers, but man, you wantto talk about salt of the earth
people now salt of the earth,and they're never gonna be
braggadocious, they're nevergoing to tell you who they are
or anything else.
But if you sit down and justhave a coffee or a beer or

(01:01:38):
whatever, like you you will wantto go back and hang out again.
Yeah, good people.

SPEAKER_00 (01:01:42):
And that's the takeaway, right?
There is when that's the peopleyou fall in love with the
people, and and you know, justlike anywhere, you have your
your salty people, but you know,I will say that the majority of
the people that I get a chanceto talk to are the rooms I'm at
least deciding to step into, um,or all people that just are here
to do good business and theythey love their family, they're
very family oriented.

(01:02:03):
Um, and they just want tocontinue to give back to others.
Like that just that's wheretheir hearts are, and it's
that's the best feeling for me,you know.
And I think when you when youget older, you're kind of tired
of chasing, you know, everythingelse.
So you start kind of just beinga little more humble and peace,
and that's what you get here,you know.
Yeah, all right.
So let's dive into uh let'scompare notes on the on the
stored stuff because I just lovehow you guys operate.
I know you guys said you howmany, how many inches you and

(01:02:23):
Mike do you think you guys havebuilt?

SPEAKER_02 (01:02:24):
I bet we've built 2,000 or 2,500 doors.

SPEAKER_00 (01:02:27):
I mean, that's institutional level there,
buddy.
I mean, that's there's nothing,you know.
Yeah, I don't know a lot ofpeople that do that.

SPEAKER_02 (01:02:32):
We got a a project in Montana that we're playing
with right now, but it's notreally our main focus anymore.
But um we like it, we think weunderstand the market really
well.
And this is a stat I thinkyou'll get a kick out of.
The first one that we ever did,I was on a golf course with Adam
Pakes, who was our uh partnersin the original Lux Locker.
Yep.
Um and he goes, Hey, do you knowwhere I can find a storage unit?
And I said, Well, you can't, andthey're all full.
And he's like, Man, that's whatI've been finding out.

(01:02:54):
And I said, Well, we couldalways build one.
And he goes, Really?
You think we could?
And I said, Yeah, I know a pieceof land.
And he said, he said, Well, howmuch would that cost?
And I said, What I thought.
And he said, Well, I could comeup with the money.
You guys want to build it?
And like literally, we westarted building something a few
months later after we got itdesigned.
We built that project veryhands-on, and you know what it
costs a day per square foot.

(01:03:15):
So take the land out of it.
But everything else, all in fromdesign through C of O.
Yeah,$37.50 a square foot.
How long ago was that?
It's 2015.

SPEAKER_00 (01:03:26):
Yeah, right, yeah.

SPEAKER_02 (01:03:27):
And now if I told you 90 was my last project,
you'd probably bet the over onthe 90.
But it's it's you know, it's inpart of that's not quite as
hands-on because we were we weredoing stuff for free that we
would otherwise charge for if wewere working for somebody, but
um, we couldn't have built itfor we could have built it for
45 or 50 back then, yeah.
And and now it's double.

SPEAKER_00 (01:03:46):
Oh yeah, easy.
Yeah, I mean, I'm over a hundreddollars, I'm like 104 a foot on
paradigm storage, but that'salso all in.

SPEAKER_02 (01:03:52):
Yeah.

SPEAKER_00 (01:03:52):
And then I uh and then I think on my other
project, I'm at like 140 a foot.
So it shifted big time, youknow.

SPEAKER_02 (01:03:58):
It does shift.
And so you you just named a persquare foot thing.
Like one thing I like to do whenI go into other markets and I'm
trying to find the demographicthat we want.
And um, I always look at land ona price per square foot of the
building area you're gonna get.
Like everybody's like, I'm gonnapay$10 a square foot usable
land.
No, that doesn't matter.
I'm gonna get 40,000 square feeton that piece of land, so I do
divide the price by the 40,000square feet, and I'm paying$18 a

(01:04:21):
square foot for the land that Ican build, right?
And so I'm paying$18 a squarefoot into my building costs.
I'm putting it on the samelevel.
Man, that helps me streamlineall that analysis so much
because you go into any market,you have swamplands in some, you
have FEMA in another, you haveeasements, you have the usable
land area of every parcel inevery in every district is

(01:04:42):
different, but you can kind ofnormalize it like that.
And that's what that's what Ialways try and do is try and
rough numbers.

SPEAKER_00 (01:04:47):
It is.

SPEAKER_02 (01:04:47):
It's a it's a really good way to start honing in and
filtering down to things youreally want to look at.

SPEAKER_00 (01:04:51):
That's a good that's a really good advice for people,
you know, that they're kind oftrying to get into the space and
kind of a good little metric tochat.

SPEAKER_02 (01:04:56):
And they do they do it on apartments, it's always
when you're buying dirt, howmuch am I paying per door,
right?
Same thing with single familyproduction neighborhoods at
least.
Yeah.
Um, and nobody really does thatin the storage market.
I don't know why, but we dopretty much the same thing
almost, you know.

SPEAKER_00 (01:05:09):
It's exactly the same thing.
So this you know, paradigmstorage, I think we were kind of
the first ones to bring in, youknow, already um, and correct me
if I'm wrong, you're gonna knowprobably more than me in some
cases, but um, you know,temperature controlled units.
And just what we gathered waspeople just want turnkey stuff,
you know, and uh and that reallyhelped us, I think, on our
sales.

SPEAKER_02 (01:05:28):
Yeah, we we'd put some in a little before you, but
not all in like you guys did.
Like you're you're you're onalmost all your units like that.
Yeah, they're all yeah.
We were always like 25% of ourunits are gonna be the upgraded
units with and where we ran intoproblems, and you've obviously
solved it, is the amount ofelectrical load on some of the
sites started becomingexponential because of the
length of the runs of thosewires and so forth.

(01:05:49):
Yep.
So we always tried to try andsize our overall electric, and
if we had enough, we would putup the the HVAC and we didn't do
that at first though.
We did that, we kind of evolvedinto that by 2018-19.
In other markets, we startedkind of in in high end markets,
we'd do 40%.
Yeah.
In Chandler, we'd do 60%, butnot all of them.

SPEAKER_00 (01:06:08):
You know, when you when you plan it, I mean
obviously we were planning itwith all of that in
consideration.
So that's where we're able toplan for it.
But you know, if that's the thatthat's the problem, it's such a
cost, a massive increase incost, that it's really hard to
justify.
Because it's just so much.
And then so you're like, whatare you going to sell these for?
You could so obviously whatyou're going to put into it, you
need to make sure you're makinga profit.
But the other side of it too wasis the insulation.

(01:06:30):
We decided to insulate literallyevery piece.
And that helped a lot.
Um but there was times where werealized not everybody's going
to use their air conditioningbecause they don't want to pay
for the electric bill, right?
So we'll put it in and it's goodfor resale if they want to
resell.
So it's like a hey, like if youcan have it in, if you want to
resell it, you can.
We were even thinking aboutputting the infrastructure in
without the actual head unit.

(01:06:51):
And if people want to put it inlater, they could do that.
So we've kind of looked at everything that you know we thought
would work, but we just said,screw it.
We got such a good discount onjust doing it all in bulk.

SPEAKER_01 (01:07:00):
Yeah.

SPEAKER_00 (01:07:01):
We just kind of what we did is we just passed those
costs over to the buyer, but wedidn't really change the
increase in in cost.
So like let's say it cost us$2,500 to put in it per unit,
just a$25 by or sorry, a uh$14by$50.

SPEAKER_01 (01:07:14):
Yeah.

SPEAKER_00 (01:07:14):
I didn't charge, I didn't increase my sales price
necessarily to chase the moreprofit because we delivered
that.
It was just we're handing thatcost over to our buyer, going,
hey, if you were to do thisoutside, it's gonna cost you
five grand, it's gonna be doublethe cost.
Right.
You know, that's all we reallydid.

SPEAKER_02 (01:07:31):
That's a good way to sell it.
I mean, that's a and then I theonly reason we don't do it all
is I always look at any projectwe're doing and try and find a
diversification of of pricesthat are gonna match the buyer
set that I have.

SPEAKER_00 (01:07:43):
Yeah.

SPEAKER_02 (01:07:43):
You know, the one thing in this market is
everybody.
There's 12,000 doors in thismarket now, and everybody has
you know doors that don't haveHVAC behind them.
So when you when you're buildinginto when you're building 200
units into 12,000 doors, thereyou're still a really small
percentage of the overallmarket.
You're going to take people fromthose 12,000 doors because
they've been wanting that HVACfor a long time.
So it's a brilliant play on yourguys' part because that's and

(01:08:05):
and they've sold so much faster.
Like we built that show placedeal right out by you, and and
the units that we put HVAC insold.
The other units a little harder,you know.
Um and there's I look at it, Ithink it costs you said$2,500.
Yeah, that's the the mini splitsystem.
But by the time you add in theinsulation you put under those,
so you can put the HVAC in thereand the extra electric load.

(01:08:27):
And are you putting a hundredamp in there or less?
You know, like it it all addsup, and it's it's probably I I I
would say it's more like tenthousand dollars a year every
time you do that.

SPEAKER_00 (01:08:35):
I think it was more like 11, to be honest with you,
with electrical and everythingelse.
Um, you know, all the way downto where we saved a little bit
was we ran all the condensationlines like through the walls
instead of like on the exterior.
So a lot of that was alreadypre-plumbed, like before we
paneled and put insulation in.
So that helped a little bit.
Um, but that's not by much.
That's not enough to really movethe needle.
Over time, a lot of units werechasing that number, yeah.

(01:08:57):
But but when you we were goingto insulate all the walls
regardless if we put the headunit in, you know.
So it was like, just do it allat one shot and just increase
the value.

SPEAKER_02 (01:09:05):
I don't know if this is true or not, but we looked
pretty hard at Lake of theOzarks.
It just kind of seems like anatural, natural fit, right?
And so I have a buddy movingthere right now.
Um, and he asked me, hey, wouldstorage work here?
And I said, Well, I don't know.
I just talked to him today.
So I don't know, but I I know aguy that I'm gonna talk to
tonight that I think has lookedat that market pretty hard.
So I'll let you I'll let youknow.

SPEAKER_00 (01:09:24):
So uh without dropping a name, I have a
connection to a guy who's thelargest landowner right now in
Ozarks, one of them, and he ownsa ton of businesses there.
He's kind of getting tired.
Um, his son unfortunately endedup uh um just getting into a
position uh health-wise where hecan't take over the family
business.
And his grandson is just tooyoung.

(01:09:46):
So he's he and he's been injuredand he's kind of I mean, he's on
his last leg.
And so him and I have been uhtalking about where I can
repurpose a big position of hisreal estate holdings, but it's
all just land.
Um and uh and so I'm looking atsome of those parcels right now
on on putting some paradigmstorage on it, and it's really
close to water.
I mean, some of them have lakeviews, I mean, some of them are

(01:10:06):
real close to marinas, uh launchramps and so forth.
It pencils for sure out there.
And to be candid, your laborcosts are cheaper there.
Um, your materials obviously areall kind of fixed, but your
labor costs are a little bitcheaper there, and they have the
labor force.
So what's nice is you can, and II know this sounds kind of
harsh, but just to be candid,um, you know, you can you have

(01:10:29):
more uh subs that can bid thejob.
So you can negotiate better,better rates on on uh the
building cost, um, and you canincrease your labor force so
ultimately you can build faster.
So you're you can actually makemore money out there, and the
demand is the it's if you lookat like for example, if you look
at how many RV parks are goingin, just where they're you know,

(01:10:51):
ready lots, tie-ins, and they'rejust you know, it's crazy.
Well, what's happening is thesepeople just want a place where
they have covered and power sothey can um you know store their
toys.
And these toys are not cheap, asyou know.
I mean, these people are they'rethey're investments for people
now.
This isn't just like you know, asmall boat back in the day.
These are people are going likethis is a this is a an asset
that if God forbid somethinghappens, my wife's got 200

(01:11:14):
grand, 500 grand have access to,you know, yeah, that type of
stuff.
So people want to keep good gooduh um good care of it, but then
also you get the the bonusdepreciation, you get some real
estate holdings, you get sometax strategy by owning some of
these, right?
So it's like when you look atwhat the absorption rate is
there and the demand, uh you youcan build another thousand units

(01:11:36):
there in the next four or fiveyears and it'll be sucked right
up, you know.

SPEAKER_02 (01:11:40):
Sounds like you don't need to take a trip.

SPEAKER_00 (01:11:41):
Yeah, I'm totally down.
And I know where all the littlehidden spots are, and I know
some of the projects wherepeople are ultimately trying to
get out of and have more land tosell.
I like I've been keeping an eyeon that pretty quickly.

SPEAKER_02 (01:11:51):
Here's our take on the Montana project.
I want to put this out there.
Okay and this is I I think thisis gonna work really well for
us, and I love this idea for theOzark market too.
But we ran into a conciergebusiness up there, and he works
with a lot of dealers.
So we found this spot right onthe highway.
You know, the land behind itgoes deep and it's long, it's
perfect for storage.
Yep.

(01:12:11):
Um, so you know, we we love theidea of building that dealership
out front and having a gatethat's right next to it that
ties back into the storage withroll-up doors that also tie into
the storage because we believethat that dealer will sell at
least 10 units for us a year, ifnot more, just from people he's
selling boats to.
And then on top of that, do theyhave a mechanic there?
Yes, there you go.

(01:12:32):
Full service mechanic, detaileverything.
So it and so the conciergealready works with that dealer,
dealer needs a new location.
So that's what we're trying toget to right now is hey, if we
can find a partner that's goingto drive more demand than we
would get otherwise.
Like, hey, would you ratherstore your place here where
we're gonna concierge it to thethe lake for you?
And you can have your own place,you can come get it whenever you

(01:12:52):
want.
We're putting a golf simulatorover there into our into our
clubhouse because in Montana, Ifigure you need something to do
for most of the year if you canonly boat for three months.
True.
So, and with a golf simulatornow, I mean, we're building a
little clubhouse that has someclassic car components to it and
so forth.
So um we figured, well, for forthat amount of money, it doesn't
seem like we could lose withoutwell, you know, think about
Havasu, there's so manymechanics here.

SPEAKER_00 (01:13:14):
People bring their boats and RVs from all over the
country and they drop them offand they go do other things
while their stuff gets worked onhere.
I mean, yeah, you having amechanic that so that's the
money mark maker right there.
First of all, buy it and thenyou have to you know store it.
You know what's funny?
The amount of friends that I hadthat there was, you know, super
excited to buy their first toy,and then they forgot where
they're gonna store it afterthey bought it.
They're like, oh shoot, Ryan, doyou have a storage unit?

SPEAKER_02 (01:13:35):
I don't know how many people bought a when they
came to Havasu, theyaccidentally bought a boat and
then they bought a storage unitbecause they figured out what
you just mentioned.
Yep.
And then they buy a house withan RV garage and they get rid of
the storage unit.
But like literally, I've neverseen a market where the leading
indicator is how many storageunits are in town, but it it
literally is the leadingindicator.

SPEAKER_00 (01:13:53):
When someone buys a toy that then buys a house, like
it's usually the house and thenthe toy, but people are buying
the toys and then the storageand then the house.

SPEAKER_02 (01:13:59):
Yeah, they have to buy the storage first because
they they don't want to leavethat week and leave their, you
know, like they need somethingfor their boats.

SPEAKER_00 (01:14:04):
And they come full circle, then they buy a house,
and the house has an RV garage,then they buy more toys and they
go back to buying anotherstorage unit.
Right.

SPEAKER_02 (01:14:11):
Actually, by the time the house is built, they
don't have they can't they can'tfit everything anymore anyway.
So they keep the storage unit,buy the house and eventually.

SPEAKER_00 (01:14:18):
Two boats side by side, golf carts, jet skis.
I mean, man, it's a car, youknow, it's an endless.
We we laugh, and you're gonnayou are gonna second this, but
you know, we talk about howthere's more money in people's
garages than there are in thewhole house, you know, the value
of the house.

SPEAKER_02 (01:14:31):
There is so true.
There's a hundred percent.

SPEAKER_00 (01:14:34):
You'll you'll have a you'll have two hundred two
million dollars in toys, and thehouse is worth a million and
half.
Like that's just how this ishere.

SPEAKER_02 (01:14:38):
And half the house is being built now.
Literally, the garage is biggerthan the square footage of the
house.
It's nuts.

SPEAKER_00 (01:14:43):
Dude, your house is like, it's you know, it's your
it's a the man cave, mecca here,man.
I mean, people just want theirlittle three bedrooms, two
baths, like low overhead, youknow, very you know, easy to
kind of maneuver around insidethe house, and then you have you
want this big old man cave fortoys, man.
You know, it's pretty cool.

SPEAKER_02 (01:14:56):
Think about the Lake Havasoo City Market just from a
stat, right?
Like 60,000 people, if you wantto believe the census.
It's really more like 85, is theway this town feels because of
the winter and the summer users.
It's it it's demographically, itlooks a lot more like 85.

SPEAKER_00 (01:15:09):
I think during the winter, there's more people
here.

SPEAKER_02 (01:15:11):
There is for sure.
They don't spend they aren'tspending as much per capita as
the summer people, but they'rethey're here more full time.
Um, but 12,000 units divided by60,000 people.
So now you have like think aboutthat.
But then on top of that, out ofthe 30,000 houses, you know,
especially over the last 20years, eight out of ten were
built with RV garages.
And over the last 10 years, outof those eight RV garages, half

(01:15:32):
of them are double RV garages.
Like it's just it's not evenclose.
We have more storage per capitain Lake Havasu City, and I've
traveled the country looking forother storage locations.
Um, League City, Texas is kindof like Havasu, but I mean it's
like 20% as much.

SPEAKER_00 (01:15:48):
Dude, it's just not Lenar's building house, building
houses with RV garages now.
I mean, like institutionalpublic builders are butt
building homes in like highdense areas with RV garages
right now.

SPEAKER_01 (01:15:59):
Yep.

SPEAKER_00 (01:16:00):
It's like it's it's undeniable what's happening, you
know.
And I think I think those guyscome out here and get jealous
that we're building cooler stuffthan they are.

SPEAKER_02 (01:16:07):
Yeah.
Not very often that you get outNational Home Bidder, take our
take our stuff back to theirplace.

SPEAKER_00 (01:16:12):
Totally true, man.
All right, Luke.
Well, thank you, buddy, forjoining me today.
I really appreciate it.
For people that you know want toget a hold of you, what's the
best way?
Email, uh, website, what's thebest way to get a hold of you?
And what's the best way to kindof keep up with you guys and
what you're doing?

SPEAKER_02 (01:16:25):
Yeah.
Um, our website's greatdesertlandgroup.com, uh, habasue
riviera.com is a secondarywebsite that we have.
Love that.
Um, if you want to talk aboutRiviera, my sales team is is
fantastic.
I have eight different agentsout there that will be there.

SPEAKER_00 (01:16:39):
I work out with one of them every morning.

SPEAKER_02 (01:16:40):
You do, yeah.
He's he's he's new to the team,and I expect him to do big
things.

SPEAKER_00 (01:16:44):
He's doing great.

SPEAKER_02 (01:16:45):
Um, he has great attitude and he knows he knows a
lot about real estate.
So very smart guy.
And I love his angle oneverything.
So cool.
He's uh he's doing it for theright reasons.
So yeah, call us out at HavasuRivera.
Um, sales team out there is isthere seven days a week.
We are releasing the new 67neighborhood.
Like literally, we haven't madeit public yet, but we just got a
public report, and so pricing isnow available.

(01:17:07):
Um, people that are out there onour waiting list are starting to
go do tours, and we the firsttwo people that saw them, we
signed up a 795 and a$950,000sale.
First two that came through thedoor.
Easy.
Yep.
So uh because they've beenwatching it forever, waiting.
Yeah, those folks have beenwaiting, they knew what they
wanted.
And so the second that it wasopen, they they came out.

SPEAKER_00 (01:17:26):
Good for you guys.
Well, hey, thank you very much.
And by the way, for everyonewho's listening, um, we're gonna
have his partner on.
It'll probably be our nextpodcast.
So if you're listening to thisone, you liked it, you're gonna
have to listen to his partner,Mike.
So, Luke, thank you very muchfor joining me today, man.
It was it was an honor to haveyou.

SPEAKER_02 (01:17:38):
It really is.
My pleasure.
Thank you.

SPEAKER_00 (01:17:40):
Well, thank you guys.

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Inside Lake Havasu's Biggest Development Play | Luke Still E47

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.css-14f5ked{margin:0;word-break:break-word;display:-webkit-box;-webkit-box-orient:vertical;box-orient:vertical;-webkit-line-clamp:2;overflow:hidden;}Inside Lake Havasu's Biggest Development Play | Luke Still E47