Episode 17 - Lauren Tucker and Or Michaelo, Orbit Homes
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Prefab Review
Hi, my name is Michael Frank, and this is the Prefab Pod presented by Prefab Review, where we interview leading people and companies in the prefab housing industry. Today, we're speaking with Lauren Tucker and Or Michaelo, the founders of Orbit Homes, a modular housing company located in Malibu, Los Angeles. Welcome, Lauren and Or. Thank you for being here.
Orbit Homes
Great to be here.
Prefab Review
Thanks for joining us. So I'm excited to learn about your company. But first, I was hoping to learn a bit more about each of you. How did you both get into this business?
Orbit Homes
I'm coming from the stick build background, and I was always fascinated with the idea of like just creating a home that you know, was already pre-made, pre-inspected, and didn’t need to deal with all the, you know, the steps in order to do a stick built from, the planning to permitting to inspections to all of these long processes that can actually be done all in a factory. That was back like 15, 20 years ago. And then the world of prefab was starting to get more accepted. And through the passion about the idea of creating plug and play homes that can go anywhere that can be inspected in the factory it was growing. The passion has grown over the years.
Prefab Review
What about you Lauren?
Orbit Homes
Yeah, so I come from a very different background, I co-founded a nonprofit called Kiss the Ground and I have spent the last 10 years learning, teaching and working in the field of regenerative agriculture. And so my passion for prefab actually comes from the perspective of, "how do we get more people living on land and how do we get people closer to the land that they live on?" So I'm really excited about setting up communities and pieces of land where you can be regenerating soils, growing healthy food and then living there and moving a little more out of the city.
Prefab Review
And how did Orbit start and when did you all start this?
Orbit Homes
We'll say it started around 10 to 15 years ago. It started as a container home project and got involved to prefab. And then when we realized that you have to deal with all the ins and outs of all the different building codes in different areas, then going forward, it was like, "ok, what will be the one umbrella that will be recognized nationwide and will accept all the codes together?" And then we'll learn all the codes of what are the most strict codes for earthquakes and fire? And then this is what we did. We basically created a home that's kind of like calculating all of that into the structure and that will be able to go anywhere on a temporary foundation, permanent foundation, and can be an immediate response for four people that lost their homes in the fires. And then it's gotten more and more involved in contemporary design. And this is where we are now. Yes, the kind of journey of Orbit Homes started with me many years ago. And then this iteration of it really happened after the Woolsey fire. So we met with residents and witnessed a lot of our friends losing properties and losing homes they've had in their family for generations. And we saw an opportunity to help people rebuild in a way that was quicker and more affordable. And so this showroom that we have in Malibu has been open since December of last year.
Prefab Review
So it sounds like the things that make you different are affordability and seeing your designs are quite contemporary and basically you have like five or six, or you can tell me, how many sort of standard homes do you have or do you do custom stuff as well?
Orbit Homes
At this point, we have about 11 models, starting from 450 all the way to 3,000, and we're always looking to bring new designs. So we were trying to get to the point that it's pre-approved, you know, in the factory and can go anywhere. So it's much easier to define a floor plan and then work all the fire codes and the earthquake codes when you're trying to be too wide and offer too many models, you just have to calculate all this stuff into the homes all the time. And this is where we are right now. We are, I think, at number 11, 12. Yeah. So again, we're not super custom in that you can come to us and say we want this and that and this, but all of our models are flexible. So you're going to pick all of your finishes. It is possible to move some things around if you really need to move windows or sliders or things like that. But, yeah, one of our intentions is that it's much easier to build a home in the regular construction stick build world where you're many years to get a home on land. And I just want to make it easier for people to pick a home that they like and move in,
Prefab Review
I'm on your website, OrbitHomes.us, looking at your homes right now, are there sort of specific design tenants that you kind of keep uniform throughout your homes?
Orbit Homes
I would like to think that we have a certain aesthetic, an eye for beauty and simplicity, but I guess that that's up to everyone else to decide. And the one thing that we wanted to do is give the clients the options to choose the finishes, the exterior, like you can go with smooth stucco or any kind of textures and and cement siding because we're trying to be up to the fire code. So we have on the website, you will see, we kind of went with cement siding that looks like wood and we can do different colors of that. And you have like a ranch contemporary look out of it and it. In the interior, some people want more like cabin style and the finishes and some people are going more modern. So there are some customizations to that. But, you know, we're trying to stay in the floor plans that we created in order to make life easier for everybody.
Prefab Review
one of you architects or do you have an in-house architect or how did you design the homes?
Orbit Homes
Yeah, we have in-house architects and engineers and we basically have a full team.
Prefab Review
Do you have your own factory or do you use third party factories. And where is it?
Orbit Homes
We are in Riverside and we don't own the factory. We basically have a line of contemporary houses that we came up with that we're basically working with that factory to make and and redefine all the time, trying to make it nicer. We will have our own factory.
Prefab Review
So I know you do a lot in the Southern California area, is that the primary area you're serving right now?
Orbit Homes
Yeah, we primarily serve Southern California. We are able to ship nationwide. So if you want to take on the installation with local contractors, we actually can ship almost anywhere. But the majority of our current clients are local to southern California right now. To be clear, it's like much more into Malibu because we respond to all the fire victims around here and people need to get back to their land. So we kind of prioritized for people the people that needed the most and are close to us? And then with all these responses and an interest from many other people after, we started to open up ourselves more and more, opening the radius. But we also have this idea about creating a house that will go to Hawaii. So we worked on one model. Now it's the second model that we're working on that will be approved to go to Hawaii like wind loads and termite treatments and everything else that needs to be considered. It also has to be solar ready with all the wires and everything ready to be plug and play to the solar system.
Prefab Review
We've done a few projects where, both in Hawaii and I think in Maine as well, where we had to ship them. I'd be interested in what you guys found, I think we thought it added about $50 a square foot or so, which wasn't insignificant, but for what the person wanted to build, ended up making sense compared to the local options. But it was definitely some investigation involved.
Orbit Homes
But it's definitely like all the shipping, you know, it makes more sense to have, you know, more than one house to be delivered on a barge then just sending a single home.
Prefab Review
It was big. It was like a four thousand square foot modular home.
Orbit Homes
This is going to be very expensive.
Prefab Review
OK, so for this sort of contractor site, work foundation, all that stuff, stitch everything. Is that something you do in-house or do you work with a network of contractors? How does that work?
Orbit Homes
Right now we have a project manager that is running and doing everything and coming from a family to doing it for about 30 years. But yeah, we have a network and there is a limit of projects you can take with that person.
Prefab Review
So you're saying you primarily have a general contractor who sort of does the project management and finds the subs?
Orbit Homes
From a customer perspective, we take care of everything. So as a customer, you're not running around and finding all your subcontractors and doing all the communication. That's our role. If you're around California. But if you're getting out of California, we are serving from San Diego to the bay.
Prefab Review
So are customers signing a single contract with you, or do they sign a contract with you for manufacturing and then a separate one with a local builder?
Orbit Homes
It's one. Basically we're taking care of everything. And the only thing that's different is the signing outside of us is the expediters. Then for each area we have the expediters that will deal with local authorities and we'll help to get it together.
Prefab Review
That's great. I mean, I know there are some people who do that, but they're definitely assuming that sort of costs work out. I find it's nice to sort of, like the bad projects I've seen happen, the local builder blames the manufacturer and the manufacturer blames local builders. That's good that there's sort of accountability across the board for real, trying to make it easy for people.
Orbit Homes
We're managing that whole process. And the only thing that you might sub yourself but we're introducing you to, are the expediters, because that's before we even know if you can get a permit. We are helping to manage the whole thing, like from the soil test, you know, and finding out if it's septic what they need, what type of septic system, dense water, whether it's just an on-site water treatment system. You still need to do the infrastructure according to the place where people want to live and the whole goal is to get to the point that it's like much more plug and play and making the life of the customers much easier. Most people don't know much and are afraid of construction and you're trying to get the whole experience like you're picking the floor plan, the exterior finishes, the interior finishes, and we're taking care of the rest, you know, and you'll enjoy yourself.
Prefab Review
And from a structural standpoint, are you building to the HUD code like the manufactured code? Are you building to like the state modular code? How does that work? I wasn't totally clear on that.
Orbit Homes
You know, we can do both ways. We prefer to go with the federal codes because they have one umbrella. They have the most strict codes for earthquakes or wind load or fire codes.
Prefab Review
Or that's the HUD code that you're talking about?
Orbit Homes
Yeah, the federal one. And this is making life for everybody much easier. Because the city doesn't need to look at the structure itself, the moment it's being approved by the federal, they just want to see what type of foundation and how you're connecting to the infrastructure. So in most cases, we over-engineer the house to meet all these codes, the most restrictive codes that they have, and most times we'll even over-engineer that a bit more. Really making thick walls and very solid floors and kind of over-engineer everything and doing it solar-ready. This is why most times I recommend, let's go with the federal, because if it's for zoning and now we go to the point that we have nationwide, we're following the most strict codes for everywhere. And I find it much easier from the expeditor's point of view, they're very happy with just not dealing with every detail.
Prefab Review
And does that affect the ability to finance the homes? Have you found that to be true?
Orbit Homes
No, not like that. The cool thing about federal you know, it's been I think since the 1950s or 60s and it's being changed according to different lessons and mistakes of people or natural disasters that look more severe. More severe codes over time. And it's being accepted in real estate at the moment that it's attached to permanent foundation. It's real estate. So you can basically compare yourself to whatever comps in that area. When you're walking around the house, it's pretty cool to see the response from the architects or expediters of being impressed that it's being done and over-engineering for that. And we have a network of lenders that we've been working with and so far with all of our clients, we haven't had any problems with financing.
Prefab Review
That's great. I'm just always curious, right? In California, we see a lot of our clients using Umpqua or US Bank or there's a handful of people. you don't mind me asking which are the types of lenders that you find are good for you.
Orbit Homes
So we're basically serving Malibu right now. So First Bank of Malibu was the first one that came in and was like, I want to serve my community. And they are the ones that came in.
Prefab Review
And are those construction loans or temp to perm loans? What's that product like?
Orbit Homes
So keep in mind that we're serving right now, 99% of our business right now is for fire rebuilds of the main residence. OK, it's people that lost their homes in the fire. So they just have land and some of them had insurance money. Some of them were not insured. So they got loans based on their land value, knowing what the final value will be after we attach the house on the permanent foundation.
Prefab Review
Is it a construction loan that then turns into like kind of fixed 30 year loans. Do you know the structure? I'm just curious.
Orbit Homes
So I didn't really go into that. We have a financing officer who is responsible for the whole part. But from the conversation that I was taking part in, most people were just building with whatever they had from the insurance money. And some people didn't have much from insurance or people that were really under insured were using the land as the down payment. Yeah, It's definitely not the question to ask us, but we have an amazing financing person that we've been working with. And we haven't had any issues with finding loans for our clients.
Prefab Review
That's great. And then lets go through the pricing a little bit. It's probably the one question we ask, and you all are commendable you basically have the price of the modules, is that right? Is that what you list on your site?
Orbit Homes
Yeah, because we're shipping outside of California and we have some people that would like the models for Hawaii and all the models can go anywhere basically. And people ask all the time, what will be the price for the house without delivery, without installation and listed on the website. And so when getting to the point of installing a home, we kind of estimate that if the ground is pretty much level, anywhere from $250 - 275. But even when you're looking at prefab, you still need to go through what your site allows.
Prefab Review
And so when you're saying $250 - $275,
Orbit Homes
When you're going to 2,300 square feet, we even go to the point of $230. So I will say as you go bigger it's getting a bit cheaper.
Prefab Review
So are you talking about dollars per square foot?
Orbit Homes
Yes.
Prefab Review
OK, so you're saying, so just to be clear, you're saying that total cost is going to be in the $250 - $270 range?
Orbit Homes
Yeah, so if you look at our website, we have the price of the home itself. I said that estimate is what it's going to cost you all in. That's when we are talking about these numbers.
Prefab Review
OK, so when I'm looking at your website right now and I'm not the best at math, but it looks like typical homes are probably like $160 to $180 per square foot range, coming out of the factory in a module. And you're saying that then take that and add like $100 for a foundation, site and stitch and all the transportation of all that stuff. Am I getting that right?
Orbit Homes
It varies a lot. And that's on average what it costs customers. If you're building an ADU and you just want to get it there, we're only going to charge you transportation if we're doing it on a hill in Malibu where we have to do grading and fire access and you want a garage, it's different.
Prefab Review
And I assume when you're talking about those numbers, you're talking about for a permanent foundation.
Orbit Homes
Correct.
Prefab Review
So when you're doing the manufacturing, you also do the temporary foundation just to save costs or whatever.
Orbit Homes
In some places if the zoning allows it and they need a temporary solution and then you just do skirting or something to make it look OK.
Prefab Review
And in those situations what's the cost end up being? Is it similar or does it end up being, I would assume the foundation costs are lower?
Orbit Homes
Yeah, lower. I would say, like you're about anywhere between 20 to 30 percent lower. And also, you will have all the utilities already done in some places where you're sending it to a temporary foundation. So we calculate including connecting to the septic or connecting to the sewer and running all the utilities to the house. Right. So side by side we will define and start from, you know, what is the route to deliver and what is the soil test. And that's basically the definition of what will go there and what will be the final cost, because the house doesn't change the cost. It's really like the preparations to get the house.
Prefab Review
And we've actually had that, particularly in Malibu, we've had a few people who we've tried to help post the fires there, where, as you said, the site access to get a crane up there, we unfortunately just had to say, like, this isn't viable. So I'm sure that's part of your diligence. What's the timing like? Probably one of the great things for you, is I bet you the fire rebuild communities are very motivated. Right? You probably don't have people, you know, changing fixtures and decisions for 18 months. What does it end up being from beginning to end? Because a lot of times you get expedited permitting on this stuff as well. Right. With the fire rebuilds, what is it? And are you exempt from the solar laws? I believe you are on some of the fire rebuilds as well, right?
Orbit Homes
Yeah, but we still do that anyway. So part of our motto of the company is like we're trying to project what are the most severe codes, and then to comply with that too. So every house is leaving our factory on our contemporary design solar ready. So people can just call the local installers and they will come in and just attach the racks and the solar panels and all the wiring already installed in the roof to connect to the main. So it's part of what we do because we just like to over-engineer everything, then it's easier.
Prefab Review
From a timing perspective. I realize you don't have to use this year as a total example, but we've had the same issue of California stuff. There was sort of a 30 day period where I think most factories sort of stayed open, but half as many people went in the factory or whatever.
Orbit Homes
But the most challenging thing that happened, you know, we started really working on all the fire rebuilds right in the beginning of this year and we're just starting the whole thing and took time for everybody to adjust and to move on. And the permitting process slowed. So we don't really have an indication, but it should be, you know, I would say less than three months for the period. And then after getting the permits done for us to make a house in the factory, it depends on that. With how backed up the factory is now with all the fires, of course, it will be much more. Like two to three months to get a house done. And then on location, you have only about a week to two weeks and you're handling the key.
Prefab Review
You're talking about post the set to like move-in time.
Orbit Homes
So, yeah, I mean, in an ideal situation, it's under six months, six months in a long permitting situation and in times of Covid, it could be a year. But also the authorities are getting much smarter, like I can tell you that dealing with this city of Malibu has been amazing when it comes to adjusting to the situation and they prioritize all the fire rebuilds first. really worked hard to make things happen in the time of Covid. We were really amazed by the response time and the guidance and in every way they're really serving the community so differently. I definitely miss counter hours, but it's possible that we're all going to learn an easier way of doing business. Emailing and learning how to actually make the process much faster because they don't need to go through every small detail relating to how this house is built and all the materials are being chosen, and it's all basically done in the factory. And after the first few houses, this will be much faster understanding how to get people back on their land faster. It's really, the first definition is the soil check. And after that, it's kind of like a fast track to get the house on their land.
Prefab Review
Got it, cool. And then how many houses did you say you've built or are working on at the moment? Like in total?
Orbit Homes
About eight. And then the factory we work with has been in business for over 50 years. So, you know, again, we have a newer line that we design with them. But as far as reputation and ability to turn out an amazing house, we have a great partner for the fire rebuild right now, eight in Malibu and about another 16 people that we are looking into how to get it on their land. And we definitely learned a lot through covid on how to fast track everything.
Prefab Review
And I don't think you're going to have a lack of people needing to rebuild stuff in California any time soon, unfortunately.
Orbit Homes
That makes me very sad. It's actually scary, like the amount of people that go to us in the last three weeks is insane. And people are doing a lot of research for their family members. They're in shock time that they don't even know how to respond to what happened to them.
Prefab Review
So, yeah, especially Malibu has a big older population, like we've had a lot of that in the area.
Orbit Homes
But we also are looking at the ADU market and some smaller models that we've built I think are really cool. So, our main focus right now, because we live here and we're here right after the fires is fire rebuilds, but I don't think that that's where the business, hopefully we're not going to rebuild forever.
Prefab Review
Yeah, I really like L.A.. It has such a dynamic ADU market compared to most other parts of the country so that makes sense.
Orbit Homes
When you're trying to be an all around solution. Like it started from finding a solution for all the main residences, getting the contemporary ranch design. And then we kind of grew with different models, addressing different challenges that were happening along with requests from different clients. That was like turning out to be too many people who were asking about different sizes for ADUs and ADUs that can be on a temporary foundation and then can we convert to a permanent foundation. So we had to figure that out. And it's a long journey adjusting to the changes that are happening in the world of prefab.
Prefab Review
Yeah, we get thousands of weird requests every month.
Orbit Homes
I mean, every once in a while it pops a good creation. Like we're doing the site assessments in Malibu and sometimes you get into a place and you're looking at a client and are like, "OK, where do you think that you're going to put the house?" He's like "there". And it's a hill. It's a very steep hill, you know. A lot of times people imagine that if it's a prefab it can be dropped anywhere. And it's pretty cool to see, you know, all these people coming up with, like, the idea. And then you have to bring the common sense about it cannot be placed here. The only way to get it here to bring a helicopter to get it to the location.
Prefab Review
Yeah. I mean, we're helping a project right now where the cost of the foundation is going to be the same price as the cost of the whole house, which is crazy, but that can happen. And it's in the Oakland Hills. So it's a very steep place. All right. This has been awesome. Learning a bit about your company. I want to quickly transition to our fire round. These are quick questions. One minute or less, we won't come down too hard on you if you take more than a minute. But just questions we get all the time or random questions I have. So question number one, have you had people look into orbit homes as an investment? And what do you think about the investment opportunity with modular homes?
Orbit Homes
I will answer that. I think it's a no brainer when it comes to the point of doing that, you can easily calculate your expenses and the moment you know what the foundation costs you can really know what you're facing ahead of time. So from the investor point of view, it's a no brainer. And again, as I was sharing, my background is regenerative agriculture and getting people closer to land.And I think there's a huge opportunity, especially in what's happening this year with our health crisis and economic crisis, to get people living more community style in rural areas. And prefabs are such an amazing way to get a bunch of people on a farm or a piece of land.
Prefab Review
Great question number two, so I saw on your website you have a partnership with a smart solar flower. Can you explain what that is and how that works and how that came about?
Orbit Homes
It's really a flower. It's open in the morning.
Prefab Review
By the way, everyone should Google this on the Orbit site because it looks very cool. I just hadn't seen it before.
Orbit Homes
It's basically made for a lot of places where they have houses under a tree that they don't want to cut or the house doesn't face the right direction to get the most solar as possible. Or the house is very small and they want to be completely solar. So then they're just getting that. And it can be dropped about a few hundred feet away from the house and still generate the amount of energy you need. And you have the battery storage that's installed as part of the smart flower. So you can buy some with battery storage and some without, and then they will communicate between themselves and communicate with the solar you have on the roof. So it's a really smart flower because it's open in the morning and tracks the sun during the day and closes at night and cleans itself. And when it's windy it will go completely horizontal and when it's too windy it will close himself. And when the wind goes down, it will open itself and continue tracking the sun. So it's really taking care of itself.
Prefab Review
Have you actually had any clients opt for that? It's very cool looking.
Orbit Homes
A lot of people coming over are impressed by looking at it, yeah, I like to think of it as solar in sculpture form. But it's a very advanced technology. I love it. Every time that I see it open and tracking the sun during the day, I just love watching it.
Prefab Review
And last question. So one of the biggest questions we get is, is my site appropriate for prefab or modular? Is there like a quick checklist you have or that you can explain on how to think about site feasibility, at least in sort of a common sense standpoint?
Orbit Homes
Site feasibility?
Prefab Review
So basically like. Is this site appropriate for an Orbit home? How do you evaluate that?
Orbit Homes
First of all, we check the access to the site, what is the route. Second, I would say it's f we need to crane the house or can just drive it in. So this is the first step that we're doing, and then if we need to crane it, if we have, any electric wires that the house needs to go above, you have to lower down. So it's all these steps that we take. And then what's the type of soil and what is the type of foundation that will be relating to the site. So the best way to look at it is to go through the first steps that we just described and see that it makes sense to to look into prefab and at some places and clients I say it's a beautiful location and a prefab will not fit there. So these are really the basic steps to consider when you're looking into site assessments.
Prefab Review
Thank you guys so much for being on the podcast. The final question that we ask everyone, I guess each of you can answer that would be great is, what are you most excited about for the company or for the industry in the near future?
Orbit Homes
The most exciting thing is to innovate all the time and create houses that will comply with every area and to create houses that will be the most ecologically friendly and over-engineer to meet any project. This is, I think, where we wish to go. I think I'm most excited about the environmental materials. We have friends who are making drywall out of recycled yogurt containers and just looking at all the amazing materials that we can come up with and just live in a way that's a little lighter on the planet, and all of our designs are oriented to the outside and outdoor living and getting people to appreciate the trees and the ocean and whatever's in their neighborhood. So, yeah, I think sustainability and how do we define a new way of living?
Prefab Review
Awesome. Well, it was really great talking to both of you and learning more about your company for everyone at home, for more information about Orbit Holmes, visit orbithomes.us. And as always, you can always learn more about the industry as a whole at prefabreview.com. Thanks again to both of you.
Orbit Homes
Thank you very much, Michael. It's really been a pleasure. Take care.