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Welcome to the Purpose-Driven Investor, where we build more than portfolios, we build communities.
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I'm your host, Robert Howell, a real estate investor and founder of Define Communities.
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Each week we'll explore how purpose and profit connect through affordable housing, land home packages, and impact-driven investing.
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If you're a lender, land seller, or a partner who believes money should move.
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With meaning, you're in the right place.
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Welcome back to the Purpose-Driven Investor Podcast, where we go behind the deals and get to know the people, the purpose, and the principles that drive them.
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I'm your host, Robert Howell, and today we have a great guest with me, Pat.
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Pat's a Phoenix-based home building and operations professional with a unique perspective on construction, supply chain, housing, and the numbers behind the business.
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So today we're going to talk about Pat's journey, what he's learned from home building, what he sees happening in the housing market, and maybe even a little bit about golf along the way.
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So, Pat, welcome to the Purpose Driven Investor Podcast.
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I'm glad to have you.
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Thank you, Robert.
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Glad to be here.
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All right, good deal.
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Well, when I start these podcasts, I love to start with the beginning and really talk about where how did you get into real estate?
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Tell us a little bit about your background and um how you settled on home building in the construction world.
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Yeah.
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So uh I graduated from the University of Arizona in 1989.
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And uh as I graduated, I immediately went to work for the world's largest carpet manufacturer, Shaw Industries.
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So I moved from Tucson, Arizona to Dalton, Georgia.
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Let's get it, was in Dalton, Georgia, in Atlanta for six months, and they moved me to Southern California where I sold carpet to carpet retailers and really met a lot of folks, learned a lot about uh flooring in general.
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Um, and along the way, in Southern California, there was a business model that really dealt with new home builders.
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And uh that that business model was called the design center world, but the big rocks of home building options are cabinets, flooring, and countertops.
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So typically in the early 90s, flooring contractors would be the management resources for home builders for these design center companies.
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So in the early 90s, I was exposed to the home building trade via the carpet business, via the flooring options segment.
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And uh it was good and I and I liked it.
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And my career with Shaw blossomed and developed, and I moved into the Pacific Northwest and ended up with a management role on the West Coast with them.
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And uh a couple of us left Shaw Industries and started our own flooring contract company, and uh we became design center professionals, and that's how I am where I am today in 2026.
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That's great.
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That's great.
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What uh as you as you got into the industry, what originally tr attracted you to the industry?
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Um the uh flooring is uh an awesome business.
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It's it's a need for every consumer, every home that we live in, every unit that we rent.
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Um so I recognize this uh need, this demand.
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It's readily available.
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But with home building, it was virtually automatic.
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The integration of the options process into the new home, though, really opened a whole world of uh technological um retailing and how we communicated to home builders uh uh and home buyers.
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At the end of the day, it was really about the home buyer, not the home builder.
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So making that move from home builder to home buyer was what was really intriguing.
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Love it, love it.
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And as you as you got into the industry, was there a particular person or maybe an experience that really changed the direction or the uh the the way you thought about flooring and the way you thought about where your career may go?
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Yeah, uh my business partner in Seattle, we we um changed the name of uh of a flooring company to Superfloor.
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So we were identified as a flooring contractor.
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Um but Mark Carens, um, who was with me at Shaw Industries, we started really looking at um software management when it came to variable options.
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So every home we we really needed to develop um automated processes to put different services in different rooms and have them priced immediately and effectively so the home buyer could understand what they were getting, where it was going.
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And as basic as that sounds, in 1998, that was not done.
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You went to um a big retail store, there were rolls of carpet, they cut the carpet out, they went to your house, they measured your home with a tape measure.
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So we really tried to systemically automate the process for the home builder, and that's that was the tipping point of what really took our company off at Superfloors.
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I imagine that was uh probably like first of its kind, right?
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Back then.
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Uh well, a partner of ours actually wrote the code and uh sin simple DOS language to uh to create this variable pricing platform.
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The big challenge is it was only done with flooring, and flooring is typically about high 20s to low 30s percent of the total options that go into a new home.
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So it was the big chunk.
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But what we really needed to develop, Mark and I really needed to develop was how do we integrate all of the options cabinetry, lighting, plumbing, and uh that's where we headed.
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Got it, got it.
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So as we talk about home building, uh you spend a lot of time on the operation side of home building.
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What's something that maybe people don't understand about building houses and and maybe they're they're not thinking about?
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Well, the the thing that that very few people understand, this is the greatest time to ever be in the home building business or have ever been in it is today.
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The solutions to build affordable homes, deliver products efficiently, um with uh an efficient manufacturing platform have never been greater than they are today.
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Um what folks don't know is we've been building them the same way for the last 50 years.
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And in fact, our productivity has declined significantly since 1970.
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So the opportunity is just amazing right now.
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It's a wonderful time to be in home building.
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Love it.
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Love it.
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There's a lot of a lot of news media that would probably tell you the uh opposite, right?
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But um I think you're exactly right.
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Well, the uh the basic economics of home building are there for us.
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We're we are so undersupplied right now.
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Part of the cost challenges are the simple supply and demand economics of the market.
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We're very undersupplied.
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Um, but but uh we can't continue to raise prices to overcome the sins of the industry, our manufacturing and efficiencies.
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And that's what we've been able to do for the last 50 years.
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We just continue to raise the price, which has been great for um for us as homeowners and and equity development, but um we have not created uh an efficient and effective platform logistically to build homes on site.
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Yeah.
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I love that.
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And I I think, well, I don't love it, but I I think that analogy is important, right?
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And I'm big into manufactured housing, right?
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So every every house that I buy is made in a factory and should be made by the the same exact process every single time.
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Do you think that the on-site building process can get there in terms of that systemized, same process, efficient process every single time um at scale?
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I mean, I I know there's a lot of builders that are building that way, national, regional builders, but for the smaller uh builders, you think they could develop processes to get to that efficiency?
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I I am sure that we can get to that um optimization of the manufactured home of which you speak.
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And ideally, that is the best way to replicate an efficient manufacturing process, is in an industrialized setting in a factory.
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Um, but we lose a lot of the appeal of a new home when we don't allow the options platform, which really started my run into this business.
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We want to live in the home that we want.
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It's home.
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It should be ours, it should feel like ours, not just what it looks like, what finishes are in it, but emotionally, it belongs to us.
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It's our family and our home and where we live.
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We can build and we can optimize on site, just as you speak of.
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And we do optimize in a manufacturing plant, but our ability to adapt, change, and deliver variable product is very challenged in a manufacturing environment.
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I think we're moving a long way toward creating more option availability in a manufactured environment.
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But uh the capital requirements are totally different.
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If we could just get our act together on site, we can parallel that experience.
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Yeah, I think that's good.
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And you know, potentially the the economics or the the environment that we're in will force that, right?
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To your point, you can only continue to raise prices so much.
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Um, and so now you've got to become more efficient to keep the same profit margin.
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Well, the median new home um price in Phoenix, Arizona is now $489,000.
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That basically puts about 70 to 80 percent of the uh aggregate uh population base here in Phoenix out of the new home market.
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Consequently, the average age of the first-time home buyer is now 43.
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So we've left two decades of people behind.
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Right.
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That's not just Phoenix, that's everywhere in the country.
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That's everywhere, yeah.
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Yeah, and that's not sustainable long term, right?
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Because that's uh, I mean, the younger generation needs to have a house to call their own, needs to build equity and not be renters forever.
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Yeah, and the family experience is changing as a result, and um, you're seeing baby boomer and early generation X parents moving in with these 20 and 30 somethings, you're seeing ADU type units where we're putting smaller homes in backyard type environments.
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So the um fundamental um structure by town, by city, all those things have changed, but it's not solving the problem.
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It's it's trying to work around the problem.
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We're not dealing with the problem.
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Yep, 100%.
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So we touched a bit on the housing market, um, and you've clearly got a front row seat to what's happening in in your area and sounds based on your knowledge and insight nationally, uh, what's happening.
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What are you seeing right now that you think investors and consumers should be paying attention to?
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Um, investors and consumers.
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The the most important thing is that we have to take responsibility first.
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When you hear us talking about housing and housing affordability, the first thing that everyone says is, well, the land prices are the problem.
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And then they move immediately from land prices to regulation.
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Now, both land prices and the acceleration of land costs, that is a challenge.
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Um, and regulation is a problem, and and um, it is worse in some states and some municipalities more so than others.
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But two-thirds of every single family new home is materials and labor.
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So nearly 70% of the cost of every home is within the controllable environment of which we speak.
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So that is the biggest thing that I get frustrated with.
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And and those other two categorical costs are significant, land and regulation, but they're not the only costs, and they're not the large lion's share of what is impacting the cost.
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Yeah.
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Right.
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Yeah, 100%.
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What are what are some of the things that y'all are doing to try to control that 70% on your side, at least for what you've you've got control over?
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The most significant thing is we have to have the ability to capture true on-site data.
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When you go back to the manufacturing parallel, manufactured home parallel, they know exactly what they're building.
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They know what people are doing in the factory every hour of every day.
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They have a good handle on the supply chain material coming in, they understand their production rates, what they can do, what they can't do.
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With 25 to 35 different subcontractors building a home, and a lot of the labor that is employed by those subcontractors being 1099, we have absolutely no control of that labor.
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And when I say control, it's not to direct control, it's really to understand and create efficiency and get us working together efficiently.
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Yeah.
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Yeah, I like that.
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More collaboration, right?
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Absolutely.
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And we have a huge collaborate trade collaboration chasm in the industry, and that is the most significant challenge with this cost mechanism.
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So are you, as you look towards the the market over the next few years, uh, are you bullish about the market or or bearish?
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I am more bullish than anyone in the entire country.
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I I feel so I feel so blessed to be in this industry.
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Um the ability to change this is quite simple.
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The the um the uh ability, um, the willingness to challenge convention is what has to happen, and it is really easy to do.
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I love it.
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I love it.
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What's uh what what do you think the biggest opportunities are?
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Um the the biggest opportunity um is to stop the supply chain drain.
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So over the last uh 50, 60 years, the farther from the manufacturer to the finished product the materials get, the more expensive, the more margin layers that are added on.
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And uh between manufacturer, distributor, dealer, and then installer, we've got multiple layers of margin that are all great and we've all built wonderful businesses around them.
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But now it's time to unbundle those uh mechanics and and get the product to the home at the right price.
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Right.
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Yeah, more directly.
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Yeah.
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Um, so to that point, your bio says you're a numbers guy.
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Um, I think you've you've shown us here that you're a numbers guy.
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Uh, when you're looking at a project or maybe a business, what are the numbers that immediately get your attention?
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You know, that that is a that is the toughest question to answer because our ability to capture the data of which I speak, which is our biggest vulnerability, is our biggest weakness, especially as we evolve in the AI world and generative data and our ability to get better and better every time we do things.
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That question for me is about impossible to answer.
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I do believe we know what the market can bear, and that's a $200,000 home.
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That that is the point, but how do we get to that $200,000 home and all those cost mechanics within that?
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And that's where we've got to unbundle that complexity.
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Yeah.
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Okay, good stuff.
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All right, so let's talk about purpose.
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Um, the whole premise of this podcast is really around purpose and talking to investors or business people that uh are driven by purpose.
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What drives you personally?
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What makes you get up and want to do this every single day?
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Uh, the aim of my charge is to love the issues from a pure heart and a good conscience and sincere faith.
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That uh is 1 Timothy 1 uh verse 5.
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That's what drives me.
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I want to do this for the right reasons.
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I grew up in a in a house with three brothers, which was 900 square feet in Phoenix, Arizona, which my father bought in 1966 for $9,000.
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Wow.
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So that home was a castle for us, and uh it was the unintended the foundation of my life, and uh we've gone so far, and the houses have gotten so big, and our understanding of what home is now is a big part of the problem.
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So I think we have to go back to this little house at 41st Avenue, McDowell in Phoenix, Arizona, and give that to as many folks and re-restore the American dream.
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That's great.
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Love that.
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And you it sounds like you're doing as much as you can possibly to change the little bit you can, right?
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And uh that that little bit then will go a long way.
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Well, uh Robert, I there's going to be a tipping point.
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And um, from a business perspective, the most significant tipping point that I can recall is uh the gentleman who ran Ford, Mr.
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Alan Malale, when Ford was losing about 16 billion dollars a year in 2006.
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How did he get that changed?
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He he got folks to say, folks, we have a problem and we can fix it.
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And you know what?
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He was the only manufacturer that did not take government bailout money.
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And and he got Ford turned around.
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And that tipping point is gonna hit for us in home building as well.
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Yeah, yeah, I believe it for sure.
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It's gonna be forced to.
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Yeah.
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All right, so let's go, let's talk um about some lessons from the past or uh lessons that you have uh currently.
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If you could go back and talk to yourself 20 years ago, what would you tell yourself?
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If I could go back 20 years ago, um I I wished I could have seen that that the success of the businesses that we build was not sustainable.
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That we couldn't continue to raise prices and raise margin and make more money and sustain it.
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That's what I wished I would have had the insight to understand.
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Got it.
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Okay.
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What's um what's one piece of advice that you'd give someone trying to get into real estate or entrepreneurship today?
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Entrepreneurship uh would be the the the the side of that question I'd like to focus on.
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And uh what what I've learned is that we have to challenge convention always.
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We have to challenge convention every day with every part of the business, everything that we look at.
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And a lot of times we're doing the right thing the right way.
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But if we don't challenge it day in and day out, we're moving backward.
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We're not moving.
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And how did And how do you make that challenge?
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Are you always asking why are we doing it this way?
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I'm not that wise necessarily.
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To ask why are we doing it this way?
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I think uh at 58 years old and graduating from uh the Harvard of the West, the University of Arizona in 1989, I watched what the internet did to the world in the early 90s.
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And I remember talking to people that got involved in, quote, the web and and uh and I saw that evolution of how people willing to open their minds and change and how impactful those changes were to the world.
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We're at that point again with what we call AI or artificial intelligence.
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The reality is there's nothing artificial about it, it's just a better way to manage data, to get our hands on data.
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How do we get our hands on good, credible data is the challenge now, because there's so much information out there.
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So much, so much.
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So I hope that answered the question.
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Yeah, I think it's just the it's just the insight to to be aware.
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For sure.
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Yeah.
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All right.
00:23:08.160 --> 00:23:11.359
Uh well, we're gonna go two more sections here.
00:23:11.359 --> 00:23:14.720
We couldn't finish this without talking a little bit about golf.
00:23:14.720 --> 00:23:17.200
Um, you're you're obviously pretty serious about it.
00:23:17.200 --> 00:23:24.400
We talked a little bit um about it before the call, but if you think about golf, what's what's golf taught you about business?
00:23:26.319 --> 00:23:32.559
Uh well, I've never been a real good player, but I've been around a lot of very good players.
00:23:32.559 --> 00:23:43.359
Um so um what golf has taught me about business is that when you are around the best, you can become the best you can possibly be.
00:23:43.359 --> 00:23:50.480
Golf has taught me that being around uh those that are much better is the place to be.
00:23:50.480 --> 00:23:52.319
And that is the parallel to business.
00:23:52.319 --> 00:23:54.799
I have to be around in business.
00:23:54.799 --> 00:24:07.359
I want to, I desire to learn from the Alan Malales as I referenced Ford and his challenge to overcome a $16 billion loss in one company.
00:24:07.359 --> 00:24:10.000
Just amazing stuff.
00:24:10.000 --> 00:24:19.519
A friend of mine um was just he just was named the number one senior amateur in the world within the last two weeks.
00:24:19.519 --> 00:24:25.200
And I played a lot of golf with him, and I was never ever close to him.
00:24:25.200 --> 00:24:31.519
But holy smokes, being around that guy, it it did make me a very competent player.
00:24:32.000 --> 00:24:33.440
That's so true, you know.
00:24:33.440 --> 00:24:38.640
And I I've got two high school sons, and we try to reinforce that with them all the time.
00:24:38.640 --> 00:24:41.279
It's like you are who you surround yourself with, right?
00:24:41.279 --> 00:24:45.119
And you always want to try to surround yourself with people that are better than you.
00:24:45.119 --> 00:24:53.759
And even if that's this year, you're the best, they run cross-country, you're the best cross-country runner that maybe this year, maybe somebody's better than you next year.
00:24:53.759 --> 00:24:54.960
That's not a bad thing, right?
00:24:54.960 --> 00:24:59.119
Because now you're you're competing and you're learning and developing.
00:24:59.680 --> 00:25:13.440
Yeah, and you know, for those young men, for your boys, they're running four minute, 30-second miles, and we are just blown away.
00:25:13.440 --> 00:25:23.200
And uh, but in their world, they know that's just getting to the upper third of that of that world.
00:25:23.200 --> 00:25:28.000
So your perspective totally changes when you open the world up to the best.
00:25:28.000 --> 00:25:29.759
That's great.
00:25:30.160 --> 00:25:33.039
All right, let's conclude with the lightning round.
00:25:33.039 --> 00:25:37.359
I have four or five questions here, and we'll go through them quick.
00:25:37.680 --> 00:25:41.920
Um, what's the best business advice that you've ever received?
00:25:41.920 --> 00:25:47.599
Challenge yourself.
00:25:47.599 --> 00:25:49.359
Love it.
00:25:49.359 --> 00:25:52.240
Best investment that you've ever made.
00:25:52.240 --> 00:25:54.720
Myself.
00:25:54.720 --> 00:25:56.640
Love it.
00:25:56.640 --> 00:25:59.440
The best golf course you've ever played.
00:25:59.440 --> 00:26:07.839
Um it is uh Carson Creek in uh Stillwater, Oklahoma.
00:26:07.839 --> 00:26:11.200
Alright, we'll mark it down.
00:26:11.200 --> 00:26:15.440
Um what is uh one book everyone should read?
00:26:15.440 --> 00:26:17.839
As a man thinketh.
00:26:17.839 --> 00:26:22.880
One thing that you're most excited about right now.
00:26:23.920 --> 00:26:30.319
The home building industry and uh the future for my family and the world and the ability to change this.
00:26:31.279 --> 00:26:32.079
Awesome.
00:26:32.079 --> 00:26:34.720
Well, Pat, I really appreciate you coming on.
00:26:34.720 --> 00:26:44.319
Um, I really enjoyed the conversation and really enjoyed that it went beyond just talking about flooring or uh house building materials, right?
00:26:44.319 --> 00:26:47.680
I think you offered some really great advice to people that are listening.
00:26:47.680 --> 00:26:57.200
Uh, so everybody that's listening, if you enjoyed this conversation, make sure you follow the podcast and um and we'll see you next time on the purpose-driven investor.
00:26:57.200 --> 00:27:02.319
But Pat, before we leave, if people want to reach out to you, what's the best way to reach out to you?
00:27:04.559 --> 00:27:07.279
Oh, uh, you know, email is great.
00:27:07.359 --> 00:27:09.680
Um, I I always respond.
00:27:09.680 --> 00:27:15.359
Um and uh if you can get them my email address, that would be wonderful.
00:27:15.359 --> 00:27:20.640
I love to talk to people, I love to listen, and I welcome every call.
00:27:20.640 --> 00:27:24.720
Um I just uh would love I'd be grateful for that, Robert.
00:27:24.880 --> 00:27:25.200
Yeah.
00:27:25.200 --> 00:27:26.480
All right, good deal.
00:27:26.480 --> 00:27:29.440
Well, I'll I'll make sure to drop it down in the show notes here.
00:27:29.440 --> 00:27:30.640
Thanks again, Pat.
00:27:30.640 --> 00:27:31.759
Really appreciate it.
00:27:31.759 --> 00:27:32.880
Thank you, Robert.
00:27:32.880 --> 00:27:34.000
Enjoy it.
00:27:34.000 --> 00:27:38.640
Thanks for listening to the Purpose Driven Investor.
00:27:38.640 --> 00:27:45.599
If today's episode sparked an idea or inspired you to make an impact, connect with me at howellandsons.com.
00:27:45.599 --> 00:27:53.839
Join our community of purpose driven investors who are helping families find stable homes while building real returns.
00:27:53.839 --> 00:27:57.119
Because when we invest with purpose, everyone wins.
00:00:02.879 --> 00:00:09.599
Welcome to the Purpose-Driven Investor, where we build more than portfolios, we build communities.
00:00:09.599 --> 00:00:14.640
I'm your host, Robert Howell, a real estate investor and founder of Define Communities.
00:00:14.640 --> 00:00:22.640
Each week we'll explore how purpose and profit connect through affordable housing, land home packages, and impact-driven investing.
00:00:22.640 --> 00:00:27.600
If you're a lender, land seller, or a partner who believes money should move.
00:00:27.600 --> 00:00:29.920
With meaning, you're in the right place.
00:00:29.920 --> 00:00:45.840
Welcome back to the Purpose-Driven Investor Podcast, where we go behind the deals and get to know the people, the purpose, and the principles that drive them.
00:00:45.840 --> 00:00:50.399
I'm your host, Robert Howell, and today we have a great guest with me, Pat.
00:00:50.399 --> 00:01:01.679
Pat's a Phoenix-based home building and operations professional with a unique perspective on construction, supply chain, housing, and the numbers behind the business.
00:01:01.679 --> 00:01:11.680
So today we're going to talk about Pat's journey, what he's learned from home building, what he sees happening in the housing market, and maybe even a little bit about golf along the way.
00:01:11.680 --> 00:01:15.200
So, Pat, welcome to the Purpose Driven Investor Podcast.
00:01:15.200 --> 00:01:16.239
I'm glad to have you.
00:01:16.239 --> 00:01:17.359
Thank you, Robert.
00:01:17.359 --> 00:01:18.560
Glad to be here.
00:01:18.560 --> 00:01:20.159
All right, good deal.
00:01:20.159 --> 00:01:28.319
Well, when I start these podcasts, I love to start with the beginning and really talk about where how did you get into real estate?
00:01:28.319 --> 00:01:34.480
Tell us a little bit about your background and um how you settled on home building in the construction world.
00:01:34.799 --> 00:01:35.359
Yeah.
00:01:35.359 --> 00:01:39.680
So uh I graduated from the University of Arizona in 1989.
00:01:39.680 --> 00:01:47.359
And uh as I graduated, I immediately went to work for the world's largest carpet manufacturer, Shaw Industries.
00:01:47.359 --> 00:01:51.200
So I moved from Tucson, Arizona to Dalton, Georgia.
00:01:51.200 --> 00:02:07.120
Let's get it, was in Dalton, Georgia, in Atlanta for six months, and they moved me to Southern California where I sold carpet to carpet retailers and really met a lot of folks, learned a lot about uh flooring in general.
00:02:07.120 --> 00:02:15.360
Um, and along the way, in Southern California, there was a business model that really dealt with new home builders.
00:02:15.360 --> 00:02:26.560
And uh that that business model was called the design center world, but the big rocks of home building options are cabinets, flooring, and countertops.
00:02:26.560 --> 00:02:35.840
So typically in the early 90s, flooring contractors would be the management resources for home builders for these design center companies.
00:02:35.840 --> 00:02:44.560
So in the early 90s, I was exposed to the home building trade via the carpet business, via the flooring options segment.
00:02:44.560 --> 00:02:47.840
And uh it was good and I and I liked it.
00:02:47.840 --> 00:02:58.080
And my career with Shaw blossomed and developed, and I moved into the Pacific Northwest and ended up with a management role on the West Coast with them.
00:02:58.080 --> 00:03:12.800
And uh a couple of us left Shaw Industries and started our own flooring contract company, and uh we became design center professionals, and that's how I am where I am today in 2026.
00:03:12.800 --> 00:03:14.400
That's great.
00:03:14.400 --> 00:03:15.439
That's great.
00:03:15.759 --> 00:03:21.439
What uh as you as you got into the industry, what originally tr attracted you to the industry?
00:03:21.439 --> 00:03:33.759
Um the uh flooring is uh an awesome business.
00:03:34.000 --> 00:03:42.479
It's it's a need for every consumer, every home that we live in, every unit that we rent.
00:03:42.479 --> 00:03:49.520
Um so I recognize this uh need, this demand.
00:03:49.520 --> 00:03:51.599
It's readily available.
00:03:51.599 --> 00:03:56.400
But with home building, it was virtually automatic.
00:03:56.400 --> 00:04:14.879
The integration of the options process into the new home, though, really opened a whole world of uh technological um retailing and how we communicated to home builders uh uh and home buyers.
00:04:14.879 --> 00:04:18.399
At the end of the day, it was really about the home buyer, not the home builder.
00:04:18.399 --> 00:04:24.160
So making that move from home builder to home buyer was what was really intriguing.
00:04:24.160 --> 00:04:26.000
Love it, love it.
00:04:26.240 --> 00:04:40.399
And as you as you got into the industry, was there a particular person or maybe an experience that really changed the direction or the uh the the way you thought about flooring and the way you thought about where your career may go?
00:04:41.360 --> 00:04:51.279
Yeah, uh my business partner in Seattle, we we um changed the name of uh of a flooring company to Superfloor.
00:04:51.279 --> 00:04:54.720
So we were identified as a flooring contractor.
00:04:54.720 --> 00:05:08.480
Um but Mark Carens, um, who was with me at Shaw Industries, we started really looking at um software management when it came to variable options.
00:05:08.480 --> 00:05:26.319
So every home we we really needed to develop um automated processes to put different services in different rooms and have them priced immediately and effectively so the home buyer could understand what they were getting, where it was going.
00:05:26.319 --> 00:05:35.199
And as basic as that sounds, in 1998, that was not done.
00:05:35.199 --> 00:05:45.360
You went to um a big retail store, there were rolls of carpet, they cut the carpet out, they went to your house, they measured your home with a tape measure.
00:05:45.360 --> 00:05:58.319
So we really tried to systemically automate the process for the home builder, and that's that was the tipping point of what really took our company off at Superfloors.
00:05:58.959 --> 00:06:02.399
I imagine that was uh probably like first of its kind, right?
00:06:02.399 --> 00:06:03.439
Back then.
00:06:04.160 --> 00:06:14.240
Uh well, a partner of ours actually wrote the code and uh sin simple DOS language to uh to create this variable pricing platform.
00:06:14.240 --> 00:06:26.959
The big challenge is it was only done with flooring, and flooring is typically about high 20s to low 30s percent of the total options that go into a new home.
00:06:26.959 --> 00:06:28.879
So it was the big chunk.
00:06:28.879 --> 00:06:42.399
But what we really needed to develop, Mark and I really needed to develop was how do we integrate all of the options cabinetry, lighting, plumbing, and uh that's where we headed.
00:06:43.920 --> 00:06:45.279
Got it, got it.
00:06:45.279 --> 00:06:50.480
So as we talk about home building, uh you spend a lot of time on the operation side of home building.
00:06:50.480 --> 00:06:58.319
What's something that maybe people don't understand about building houses and and maybe they're they're not thinking about?
00:07:00.959 --> 00:07:10.720
Well, the the thing that that very few people understand, this is the greatest time to ever be in the home building business or have ever been in it is today.
00:07:10.720 --> 00:07:24.720
The solutions to build affordable homes, deliver products efficiently, um with uh an efficient manufacturing platform have never been greater than they are today.
00:07:24.720 --> 00:07:30.240
Um what folks don't know is we've been building them the same way for the last 50 years.
00:07:30.240 --> 00:07:35.759
And in fact, our productivity has declined significantly since 1970.
00:07:36.720 --> 00:07:41.040
So the opportunity is just amazing right now.
00:07:41.040 --> 00:07:43.600
It's a wonderful time to be in home building.
00:07:44.720 --> 00:07:45.279
Love it.
00:07:45.279 --> 00:07:45.839
Love it.
00:07:45.839 --> 00:07:50.800
There's a lot of a lot of news media that would probably tell you the uh opposite, right?
00:07:50.800 --> 00:07:53.600
But um I think you're exactly right.
00:07:54.160 --> 00:07:58.480
Well, the uh the basic economics of home building are there for us.
00:07:58.480 --> 00:08:01.360
We're we are so undersupplied right now.
00:08:01.360 --> 00:08:06.800
Part of the cost challenges are the simple supply and demand economics of the market.
00:08:06.800 --> 00:08:08.879
We're very undersupplied.
00:08:08.879 --> 00:08:19.279
Um, but but uh we can't continue to raise prices to overcome the sins of the industry, our manufacturing and efficiencies.
00:08:19.279 --> 00:08:21.839
And that's what we've been able to do for the last 50 years.
00:08:21.839 --> 00:08:41.679
We just continue to raise the price, which has been great for um for us as homeowners and and equity development, but um we have not created uh an efficient and effective platform logistically to build homes on site.
00:08:42.080 --> 00:08:42.559
Yeah.
00:08:42.559 --> 00:08:43.360
I love that.
00:08:43.360 --> 00:08:48.000
And I I think, well, I don't love it, but I I think that analogy is important, right?
00:08:48.000 --> 00:08:51.200
And I'm big into manufactured housing, right?
00:08:51.200 --> 00:08:59.679
So every every house that I buy is made in a factory and should be made by the the same exact process every single time.
00:08:59.679 --> 00:09:12.960
Do you think that the on-site building process can get there in terms of that systemized, same process, efficient process every single time um at scale?
00:09:12.960 --> 00:09:24.639
I mean, I I know there's a lot of builders that are building that way, national, regional builders, but for the smaller uh builders, you think they could develop processes to get to that efficiency?
00:09:24.799 --> 00:09:32.639
I I am sure that we can get to that um optimization of the manufactured home of which you speak.
00:09:32.639 --> 00:09:42.960
And ideally, that is the best way to replicate an efficient manufacturing process, is in an industrialized setting in a factory.
00:09:42.960 --> 00:09:53.919
Um, but we lose a lot of the appeal of a new home when we don't allow the options platform, which really started my run into this business.
00:09:53.919 --> 00:09:56.720
We want to live in the home that we want.
00:09:56.720 --> 00:09:57.519
It's home.
00:09:57.519 --> 00:10:05.279
It should be ours, it should feel like ours, not just what it looks like, what finishes are in it, but emotionally, it belongs to us.
00:10:05.279 --> 00:10:08.080
It's our family and our home and where we live.
00:10:08.080 --> 00:10:14.240
We can build and we can optimize on site, just as you speak of.
00:10:14.240 --> 00:10:27.120
And we do optimize in a manufacturing plant, but our ability to adapt, change, and deliver variable product is very challenged in a manufacturing environment.
00:10:27.120 --> 00:10:35.200
I think we're moving a long way toward creating more option availability in a manufactured environment.
00:10:35.200 --> 00:10:38.799
But uh the capital requirements are totally different.
00:10:38.799 --> 00:10:44.639
If we could just get our act together on site, we can parallel that experience.
00:10:45.039 --> 00:10:46.720
Yeah, I think that's good.
00:10:46.720 --> 00:10:53.519
And you know, potentially the the economics or the the environment that we're in will force that, right?
00:10:53.519 --> 00:10:56.960
To your point, you can only continue to raise prices so much.
00:10:56.960 --> 00:11:02.960
Um, and so now you've got to become more efficient to keep the same profit margin.
00:11:03.519 --> 00:11:09.840
Well, the median new home um price in Phoenix, Arizona is now $489,000.
00:11:09.840 --> 00:11:23.279
That basically puts about 70 to 80 percent of the uh aggregate uh population base here in Phoenix out of the new home market.
00:11:23.279 --> 00:11:28.080
Consequently, the average age of the first-time home buyer is now 43.
00:11:28.080 --> 00:11:32.720
So we've left two decades of people behind.
00:11:32.720 --> 00:11:34.240
Right.
00:11:34.240 --> 00:11:36.639
That's not just Phoenix, that's everywhere in the country.
00:11:36.879 --> 00:11:37.840
That's everywhere, yeah.
00:11:37.840 --> 00:11:41.679
Yeah, and that's not sustainable long term, right?
00:11:41.679 --> 00:11:49.759
Because that's uh, I mean, the younger generation needs to have a house to call their own, needs to build equity and not be renters forever.
00:11:50.080 --> 00:12:09.440
Yeah, and the family experience is changing as a result, and um, you're seeing baby boomer and early generation X parents moving in with these 20 and 30 somethings, you're seeing ADU type units where we're putting smaller homes in backyard type environments.
00:12:09.440 --> 00:12:20.879
So the um fundamental um structure by town, by city, all those things have changed, but it's not solving the problem.
00:12:20.879 --> 00:12:24.240
It's it's trying to work around the problem.
00:12:24.240 --> 00:12:26.000
We're not dealing with the problem.
00:12:26.399 --> 00:12:27.440
Yep, 100%.
00:12:27.440 --> 00:12:40.720
So we touched a bit on the housing market, um, and you've clearly got a front row seat to what's happening in in your area and sounds based on your knowledge and insight nationally, uh, what's happening.
00:12:40.720 --> 00:12:46.320
What are you seeing right now that you think investors and consumers should be paying attention to?
00:12:48.000 --> 00:12:50.399
Um, investors and consumers.
00:12:50.399 --> 00:12:56.399
The the most important thing is that we have to take responsibility first.
00:12:56.399 --> 00:13:04.480
When you hear us talking about housing and housing affordability, the first thing that everyone says is, well, the land prices are the problem.
00:13:04.480 --> 00:13:10.159
And then they move immediately from land prices to regulation.
00:13:10.159 --> 00:13:16.000
Now, both land prices and the acceleration of land costs, that is a challenge.
00:13:16.000 --> 00:13:24.960
Um, and regulation is a problem, and and um, it is worse in some states and some municipalities more so than others.
00:13:24.960 --> 00:13:32.080
But two-thirds of every single family new home is materials and labor.
00:13:32.080 --> 00:13:39.759
So nearly 70% of the cost of every home is within the controllable environment of which we speak.
00:13:39.759 --> 00:13:44.639
So that is the biggest thing that I get frustrated with.
00:13:44.639 --> 00:13:57.519
And and those other two categorical costs are significant, land and regulation, but they're not the only costs, and they're not the large lion's share of what is impacting the cost.
00:13:57.519 --> 00:13:58.240
Yeah.
00:13:58.639 --> 00:13:59.120
Right.
00:13:59.120 --> 00:14:00.080
Yeah, 100%.
00:14:00.080 --> 00:14:07.519
What are what are some of the things that y'all are doing to try to control that 70% on your side, at least for what you've you've got control over?
00:14:08.000 --> 00:14:15.039
The most significant thing is we have to have the ability to capture true on-site data.
00:14:15.039 --> 00:14:22.320
When you go back to the manufacturing parallel, manufactured home parallel, they know exactly what they're building.
00:14:22.320 --> 00:14:26.159
They know what people are doing in the factory every hour of every day.
00:14:26.159 --> 00:14:34.879
They have a good handle on the supply chain material coming in, they understand their production rates, what they can do, what they can't do.
00:14:34.879 --> 00:14:50.159
With 25 to 35 different subcontractors building a home, and a lot of the labor that is employed by those subcontractors being 1099, we have absolutely no control of that labor.
00:14:50.159 --> 00:15:00.960
And when I say control, it's not to direct control, it's really to understand and create efficiency and get us working together efficiently.
00:15:00.960 --> 00:15:01.679
Yeah.
00:15:01.679 --> 00:15:03.039
Yeah, I like that.
00:15:03.039 --> 00:15:04.720
More collaboration, right?
00:15:04.720 --> 00:15:05.919
Absolutely.
00:15:05.919 --> 00:15:16.000
And we have a huge collaborate trade collaboration chasm in the industry, and that is the most significant challenge with this cost mechanism.
00:15:17.440 --> 00:15:24.639
So are you, as you look towards the the market over the next few years, uh, are you bullish about the market or or bearish?
00:15:25.759 --> 00:15:29.440
I am more bullish than anyone in the entire country.
00:15:29.440 --> 00:15:33.440
I I feel so I feel so blessed to be in this industry.
00:15:34.000 --> 00:15:40.080
Um the ability to change this is quite simple.
00:15:40.960 --> 00:15:51.440
The the um the uh ability, um, the willingness to challenge convention is what has to happen, and it is really easy to do.
00:15:53.200 --> 00:15:53.759
I love it.
00:15:53.759 --> 00:15:54.399
I love it.
00:15:54.399 --> 00:15:57.519
What's uh what what do you think the biggest opportunities are?
00:16:00.159 --> 00:16:07.600
Um the the biggest opportunity um is to stop the supply chain drain.
00:16:07.600 --> 00:16:23.039
So over the last uh 50, 60 years, the farther from the manufacturer to the finished product the materials get, the more expensive, the more margin layers that are added on.
00:16:23.039 --> 00:16:36.960
And uh between manufacturer, distributor, dealer, and then installer, we've got multiple layers of margin that are all great and we've all built wonderful businesses around them.
00:16:36.960 --> 00:16:45.360
But now it's time to unbundle those uh mechanics and and get the product to the home at the right price.
00:16:45.360 --> 00:16:46.159
Right.
00:16:46.159 --> 00:16:47.679
Yeah, more directly.
00:16:47.919 --> 00:16:48.240
Yeah.
00:16:48.240 --> 00:16:52.879
Um, so to that point, your bio says you're a numbers guy.
00:16:52.879 --> 00:16:56.399
Um, I think you've you've shown us here that you're a numbers guy.
00:16:56.399 --> 00:17:03.200
Uh, when you're looking at a project or maybe a business, what are the numbers that immediately get your attention?
00:17:06.960 --> 00:17:30.799
You know, that that is a that is the toughest question to answer because our ability to capture the data of which I speak, which is our biggest vulnerability, is our biggest weakness, especially as we evolve in the AI world and generative data and our ability to get better and better every time we do things.
00:17:30.799 --> 00:17:34.799
That question for me is about impossible to answer.
00:17:34.799 --> 00:17:41.599
I do believe we know what the market can bear, and that's a $200,000 home.
00:17:41.599 --> 00:17:50.960
That that is the point, but how do we get to that $200,000 home and all those cost mechanics within that?
00:17:50.960 --> 00:17:54.640
And that's where we've got to unbundle that complexity.
00:17:54.640 --> 00:17:55.599
Yeah.
00:17:55.599 --> 00:17:57.279
Okay, good stuff.
00:17:57.599 --> 00:18:00.319
All right, so let's talk about purpose.
00:18:00.319 --> 00:18:09.359
Um, the whole premise of this podcast is really around purpose and talking to investors or business people that uh are driven by purpose.
00:18:09.359 --> 00:18:11.279
What drives you personally?
00:18:11.279 --> 00:18:14.799
What makes you get up and want to do this every single day?
00:18:15.599 --> 00:18:24.480
Uh, the aim of my charge is to love the issues from a pure heart and a good conscience and sincere faith.
00:18:24.480 --> 00:18:29.200
That uh is 1 Timothy 1 uh verse 5.
00:18:29.200 --> 00:18:30.720
That's what drives me.
00:18:30.720 --> 00:18:32.799
I want to do this for the right reasons.
00:18:32.799 --> 00:18:43.519
I grew up in a in a house with three brothers, which was 900 square feet in Phoenix, Arizona, which my father bought in 1966 for $9,000.
00:18:43.519 --> 00:18:44.960
Wow.
00:18:44.960 --> 00:19:06.480
So that home was a castle for us, and uh it was the unintended the foundation of my life, and uh we've gone so far, and the houses have gotten so big, and our understanding of what home is now is a big part of the problem.
00:19:06.480 --> 00:19:20.079
So I think we have to go back to this little house at 41st Avenue, McDowell in Phoenix, Arizona, and give that to as many folks and re-restore the American dream.
00:19:20.079 --> 00:19:22.079
That's great.
00:19:22.319 --> 00:19:23.039
Love that.
00:19:23.039 --> 00:19:29.839
And you it sounds like you're doing as much as you can possibly to change the little bit you can, right?
00:19:29.839 --> 00:19:34.079
And uh that that little bit then will go a long way.
00:19:35.039 --> 00:19:39.119
Well, uh Robert, I there's going to be a tipping point.
00:19:39.119 --> 00:19:49.039
And um, from a business perspective, the most significant tipping point that I can recall is uh the gentleman who ran Ford, Mr.
00:19:49.039 --> 00:19:56.240
Alan Malale, when Ford was losing about 16 billion dollars a year in 2006.
00:19:56.240 --> 00:19:58.480
How did he get that changed?
00:19:58.480 --> 00:20:02.960
He he got folks to say, folks, we have a problem and we can fix it.
00:20:02.960 --> 00:20:03.680
And you know what?
00:20:03.680 --> 00:20:08.880
He was the only manufacturer that did not take government bailout money.
00:20:08.880 --> 00:20:11.680
And and he got Ford turned around.
00:20:11.920 --> 00:20:15.680
And that tipping point is gonna hit for us in home building as well.
00:20:15.680 --> 00:20:18.400
Yeah, yeah, I believe it for sure.
00:20:18.400 --> 00:20:19.920
It's gonna be forced to.
00:20:19.920 --> 00:20:21.039
Yeah.
00:20:21.440 --> 00:20:29.519
All right, so let's go, let's talk um about some lessons from the past or uh lessons that you have uh currently.
00:20:29.839 --> 00:20:34.319
If you could go back and talk to yourself 20 years ago, what would you tell yourself?
00:20:37.519 --> 00:20:50.720
If I could go back 20 years ago, um I I wished I could have seen that that the success of the businesses that we build was not sustainable.
00:20:50.720 --> 00:20:57.759
That we couldn't continue to raise prices and raise margin and make more money and sustain it.
00:20:57.759 --> 00:21:01.680
That's what I wished I would have had the insight to understand.
00:21:02.559 --> 00:21:03.119
Got it.
00:21:03.119 --> 00:21:03.680
Okay.
00:21:03.680 --> 00:21:12.400
What's um what's one piece of advice that you'd give someone trying to get into real estate or entrepreneurship today?
00:21:17.279 --> 00:21:22.880
Entrepreneurship uh would be the the the the side of that question I'd like to focus on.
00:21:22.880 --> 00:21:29.599
And uh what what I've learned is that we have to challenge convention always.
00:21:29.599 --> 00:21:37.359
We have to challenge convention every day with every part of the business, everything that we look at.
00:21:37.359 --> 00:21:41.359
And a lot of times we're doing the right thing the right way.
00:21:41.359 --> 00:21:45.920
But if we don't challenge it day in and day out, we're moving backward.
00:21:45.920 --> 00:21:46.960
We're not moving.
00:21:47.440 --> 00:21:49.440
And how did And how do you make that challenge?
00:21:49.440 --> 00:21:52.720
Are you always asking why are we doing it this way?
00:21:52.720 --> 00:21:59.759
I'm not that wise necessarily.
00:21:59.759 --> 00:22:02.160
To ask why are we doing it this way?
00:22:02.319 --> 00:22:17.759
I think uh at 58 years old and graduating from uh the Harvard of the West, the University of Arizona in 1989, I watched what the internet did to the world in the early 90s.
00:22:17.759 --> 00:22:35.119
And I remember talking to people that got involved in, quote, the web and and uh and I saw that evolution of how people willing to open their minds and change and how impactful those changes were to the world.
00:22:35.119 --> 00:22:42.000
We're at that point again with what we call AI or artificial intelligence.
00:22:42.000 --> 00:22:48.880
The reality is there's nothing artificial about it, it's just a better way to manage data, to get our hands on data.
00:22:48.880 --> 00:22:56.559
How do we get our hands on good, credible data is the challenge now, because there's so much information out there.
00:22:56.559 --> 00:22:58.400
So much, so much.
00:22:58.400 --> 00:23:00.880
So I hope that answered the question.
00:23:00.880 --> 00:23:05.200
Yeah, I think it's just the it's just the insight to to be aware.
00:23:05.200 --> 00:23:06.319
For sure.
00:23:06.559 --> 00:23:07.200
Yeah.
00:23:07.200 --> 00:23:08.160
All right.
00:23:08.160 --> 00:23:11.359
Uh well, we're gonna go two more sections here.
00:23:11.359 --> 00:23:14.720
We couldn't finish this without talking a little bit about golf.
00:23:14.720 --> 00:23:17.200
Um, you're you're obviously pretty serious about it.
00:23:17.200 --> 00:23:24.400
We talked a little bit um about it before the call, but if you think about golf, what's what's golf taught you about business?
00:23:26.319 --> 00:23:32.559
Uh well, I've never been a real good player, but I've been around a lot of very good players.
00:23:32.559 --> 00:23:43.359
Um so um what golf has taught me about business is that when you are around the best, you can become the best you can possibly be.
00:23:43.359 --> 00:23:50.480
Golf has taught me that being around uh those that are much better is the place to be.
00:23:50.480 --> 00:23:52.319
And that is the parallel to business.
00:23:52.319 --> 00:23:54.799
I have to be around in business.
00:23:54.799 --> 00:24:07.359
I want to, I desire to learn from the Alan Malales as I referenced Ford and his challenge to overcome a $16 billion loss in one company.
00:24:07.359 --> 00:24:10.000
Just amazing stuff.
00:24:10.000 --> 00:24:19.519
A friend of mine um was just he just was named the number one senior amateur in the world within the last two weeks.
00:24:19.519 --> 00:24:25.200
And I played a lot of golf with him, and I was never ever close to him.
00:24:25.200 --> 00:24:31.519
But holy smokes, being around that guy, it it did make me a very competent player.
00:24:32.000 --> 00:24:33.440
That's so true, you know.
00:24:33.440 --> 00:24:38.640
And I I've got two high school sons, and we try to reinforce that with them all the time.
00:24:38.640 --> 00:24:41.279
It's like you are who you surround yourself with, right?
00:24:41.279 --> 00:24:45.119
And you always want to try to surround yourself with people that are better than you.
00:24:45.119 --> 00:24:53.759
And even if that's this year, you're the best, they run cross-country, you're the best cross-country runner that maybe this year, maybe somebody's better than you next year.
00:24:53.759 --> 00:24:54.960
That's not a bad thing, right?
00:24:54.960 --> 00:24:59.119
Because now you're you're competing and you're learning and developing.
00:24:59.680 --> 00:25:13.440
Yeah, and you know, for those young men, for your boys, they're running four minute, 30-second miles, and we are just blown away.
00:25:13.440 --> 00:25:23.200
And uh, but in their world, they know that's just getting to the upper third of that of that world.
00:25:23.200 --> 00:25:28.000
So your perspective totally changes when you open the world up to the best.
00:25:28.000 --> 00:25:29.759
That's great.
00:25:30.160 --> 00:25:33.039
All right, let's conclude with the lightning round.
00:25:33.039 --> 00:25:37.359
I have four or five questions here, and we'll go through them quick.
00:25:37.680 --> 00:25:41.920
Um, what's the best business advice that you've ever received?
00:25:41.920 --> 00:25:47.599
Challenge yourself.
00:25:47.599 --> 00:25:49.359
Love it.
00:25:49.359 --> 00:25:52.240
Best investment that you've ever made.
00:25:52.240 --> 00:25:54.720
Myself.
00:25:54.720 --> 00:25:56.640
Love it.
00:25:56.640 --> 00:25:59.440
The best golf course you've ever played.
00:25:59.440 --> 00:26:07.839
Um it is uh Carson Creek in uh Stillwater, Oklahoma.
00:26:07.839 --> 00:26:11.200
Alright, we'll mark it down.
00:26:11.200 --> 00:26:15.440
Um what is uh one book everyone should read?
00:26:15.440 --> 00:26:17.839
As a man thinketh.
00:26:17.839 --> 00:26:22.880
One thing that you're most excited about right now.
00:26:23.920 --> 00:26:30.319
The home building industry and uh the future for my family and the world and the ability to change this.
00:26:31.279 --> 00:26:32.079
Awesome.
00:26:32.079 --> 00:26:34.720
Well, Pat, I really appreciate you coming on.
00:26:34.720 --> 00:26:44.319
Um, I really enjoyed the conversation and really enjoyed that it went beyond just talking about flooring or uh house building materials, right?
00:26:44.319 --> 00:26:47.680
I think you offered some really great advice to people that are listening.
00:26:47.680 --> 00:26:57.200
Uh, so everybody that's listening, if you enjoyed this conversation, make sure you follow the podcast and um and we'll see you next time on the purpose-driven investor.
00:26:57.200 --> 00:27:02.319
But Pat, before we leave, if people want to reach out to you, what's the best way to reach out to you?
00:27:04.559 --> 00:27:07.279
Oh, uh, you know, email is great.
00:27:07.359 --> 00:27:09.680
Um, I I always respond.
00:27:09.680 --> 00:27:15.359
Um and uh if you can get them my email address, that would be wonderful.
00:27:15.359 --> 00:27:20.640
I love to talk to people, I love to listen, and I welcome every call.
00:27:20.640 --> 00:27:24.720
Um I just uh would love I'd be grateful for that, Robert.
00:27:24.880 --> 00:27:25.200
Yeah.
00:27:25.200 --> 00:27:26.480
All right, good deal.
00:27:26.480 --> 00:27:29.440
Well, I'll I'll make sure to drop it down in the show notes here.
00:27:29.440 --> 00:27:30.640
Thanks again, Pat.
00:27:30.640 --> 00:27:31.759
Really appreciate it.
00:27:31.759 --> 00:27:32.880
Thank you, Robert.
00:27:32.880 --> 00:27:34.000
Enjoy it.
00:27:34.000 --> 00:27:38.640
Thanks for listening to the Purpose Driven Investor.
00:27:38.640 --> 00:27:45.599
If today's episode sparked an idea or inspired you to make an impact, connect with me at howellandsons.com.
00:27:45.599 --> 00:27:53.839
Join our community of purpose driven investors who are helping families find stable homes while building real returns.
00:27:53.839 --> 00:27:57.119
Because when we invest with purpose, everyone wins.
