Building a New Construction Business through Affordability and Environmental Efficiency

Nate Trunfio: Here we are again to start another great episode of The Real Estate of Things. I'm your host Nate Trunfio with Lima One Capital and I am really, really excited to welcome Corey Donahue from Bettr Homes, and a number of other companies, to impart some great knowledge. I call Corey, as a new nickname, a smooth operator. Just because he is such a smooth cat, but he's also a really great operator that has a ton of different experience. He's helped start a single- family institutional aggregator and buyer. He's flipped and done a ton of transactions throughout the last 20- plus years in real estate. He's now focused adamantly in the new construction realm, things related to net- zero energy efficient. He actually owns a manufacturer of sips structured insulated panels. So there's a lot of ground that we're going to cover here on a lot of things. But first and foremost, Corey, welcome to The Real Estate of Things podcast, my man.

Corey Donahue: Thanks Nate. Pleasure to be here man. Pleasure to be here.

Nate Trunfio: Right on. And Corey's, we're good friends, so we're going to have some fun here. So first man, you are going to bring some great perspective for somebody that has not only helped start, and work for, and run an institutional single- family investor, an aggregator if you will. But you also now in many capacities work with them in different realms. And so can you just give us some perspective on what you've seen in the evolution of institutional single- family investors and aggregators over the last number of years here?

Corey Donahue: Yeah. I mean look, when we started the business with Institutional Capital entering the space, and really creating what is now an institutional asset class of single- family rentals, I've been a single- family aggregator for my whole career. I bought, fixed, sold. Bought, fixed, keep. Followed the bur concept. So did all the things that a small starting entrepreneur would do, and then I was buying foreclosure auction properties and all this distress back in 2008, 9, 10, 11. And we've seen this massive evolution as institutional capitals come into our space, and I was very fortunate to be part of the group that really got invitation homes off the ground. And now Invitation Homes is of course the largest single- family operator in the country, which by default means in the world. So the evolution has really been technology enabling property management of scattered site. I mean, that's been the biggest challenge for the industry. We can all go buy houses, we can all go get them to a place where we put a tenant in them. But managing those residents to a place where customer service can be on the forefront, something that had never been done before. So managing rehab scattered, managing tenants scattered was not something that had been done before. So it was a crazy evolution of acquisition coming out of the great recession into stabilizing. Personally, we stabilized here in Florida about 13,000 houses. So I mean, it was insane. We started with zero assets in 2012, middle of 2012. And by the middle of'14 we had bought 13,000 and put 11,000 tenants in. So it was quite a ride.

Nate Trunfio: I mean, I don't even know how to say, I couldn't imagine that ride. It's got to be some realm of a rollercoaster that's going probably too fast to keep the train on the tracks. But clearly it's been done, it has continued to be done and replicated. And again, that's where it's just excited to, for our listeners here, to really get inside and a little bit behind the scenes. So I want to talk a couple of things. You said it fairly nonchalantly, and I'm going to exaggerate what you said. But the buying side of things is easy, probably not so much. But specifically buying from an institutionally- backed aggregator, how does that really work? How do you go about buying that many homes, man? Just give us some of the behind the scenes on that.

Corey Donahue: Yeah, so I think there's three channels that have really developed over time. The first channel is a very traditional channel where you're making offers on properties that are listed with realtors. The second is an off- market channel, which then the eye- buyers have now taken a big hunk out of, right? And so you have kind of direct- to- consumer marketing, and buying direct from consumers like Zillow Offers attempted to do, and OfferPad still does, and Open Door of course. And then they're basically, their first line of defense in disposition is to go to the single- family large operators, large aggregators, and move the houses to them. So I think there's kind of the on- market and the- off market. And then you have the foreclosure auction and non- performing loans kind of channel, which hasn't really been in existence for a while. Because the market's been so hot, everything's been consumed in the other two channels. But I think we're going to head towards the market, and I think we'll spend some time talking about what's going on in the market today, where that could change. And so the opportunities for smaller operators are significant. Because you have to look at institutional operators as an aircraft carrier, and the smaller operators are going to be the speedboats who can weave in and out. And do very, very well winding in front of the aircraft carrier, and maybe throwing off some off the back for letting them catch them, right? And so I think that's the opportunity going forward for smaller operators.

Nate Trunfio: Well that's some good insights man, and certainly see all those three strategies play out. I think there's also a lot of times where rising ties have lifted all ships. And whether they're the small boats or the large vessels, a lot of times I've seen a lot of the aggregator relationships with smaller operators, and they're buying their finished product and plugging into that. Maybe a little harder to do now because the frothiness of the market is gone, but maybe a story for a different day. So you touched on something that I can't avoid, and I have to hear your insights on. So what is Corey Donahue's perspective on eye- buyers, and can they be successful possibly maybe moving forward?

Corey Donahue: So I've got some pretty deep insight, in that I was an early executive in one of the large ones. And so the strategy is tough strategy. And it's such a capitally intensive strategy that when margins are tight, it's really challenging to operate in a productive and in a financially beneficial way. And I think we've seen that, right? We've seen the collapse of Zillow Offers, we've seen Open Door and OfferPad's stock just get completely corrected down to almost nothing. So I think there's a platform belief that I don't, I've never really believed in. That if you control all of the transactions, it spins off enough of ancillary revenue and ancillary businesses that it all makes sense. Title companies and rehab businesses and things like that, I don't know. They actually produce enough revenue to make up for a miss, right? Especially in a falling knife market like we're in today. And we're in this place where we don't know if it's really a falling knife, is it, isn't it? One minute, the eastern side of the country, the values are still going up and the west side of the country they're plummeting. The next minute everybody's down, the next minute everybody's up. The data seems to bounce all over the place based on what's going on with the Fed, or consumer confidence, whatever. So long- winded answer, I think there is a place for eye- buyers. But I think those eye- buyers over time, my opinion for what it's worth in my little brain, is that that has to become more of a transaction- based business where there's a fee structure involved. Rather than taking it on a balance sheet and then doing the physical work it takes to do value add and then exit. It very much feels like it needs to be transactional, and be fee- based. Because I just don't know how you balance sheet that many billions of dollars with that teeny tiny of margin that disappears instantly with anything that isn't perfect. So I think that somebody's going to figure it out. But do I think that what we know as eye- buyers today are going to be here in a very productive way long term? I think they have to evolve. And I think we're seeing some evolution in one of the big ones. I mean, they're starting to use their vertically- integrated structure to venture out into other pieces of business like rehab, like home improvement. So I think those things and pivoting are pretty smart. But what we've known traditionally as the eye- buyer business I stepped away from, because I didn't really believe in it when I saw it continue to evolve. And so that's my take. I don't know how that business survives with that much balance sheet risk.

Nate Trunfio: No, I think that's some great perspective, and obviously from someone that has seen a number of sides from an inside and outside. It's a tough business in an ever- changing market. And look, the market's going to continue to be ever- changing. But in the last number of years on this big run up, everything up and to the right, you know would argue, and I hear from a lot of people that I talk to, flippers per se, nine out of 10 deals were profitable. And it's pretty easy to create some really scalable business models on that. But even if you say what most people lie to me about and say, okay, well now maybe seven out of 10 are profitable. And again, even that's questionable. But even that is a big differentiation when, like you said, billions of dollars on balance sheet. And you can't move and get through scattered site management, construction rehab, and dispositions quick enough to keep up with this very fast moving market, man. So very much agree with you there. So if we just take a step back, you can include iBuyers, or just call it institutional operators in the single- family investing space. What are some of the key advantages that they do have over your small mom and pop? And there's some obvious ones, so call that out. But I'm interested in your perspective on it.

Corey Donahue: Yeah, I mean the obvious one is financing, right? I mean, when you can go to endowments and you can go directly to these huge capital sources and you have enough scale that you're securitizing 500 million to a billion dollars at a time, it's really tough for a small operator to get the debt that the large operator can attain, in terms of rate and term. And I think now there's enough platform development that they also have other economies of scale. So they can reduce their operating expenses, because when you have several thousand units in a particular MSA to manage, it takes a lot less people to manage several thousand units on a per- unit basis than it does if you only have several hundred. Because you always have your fixed cost of it takes... If you have one house, you have to have someone to manage it. Or if you have a thousand houses, you know have to have a couple people to manage them, right? So the economies of scale are obvious. I think that's the biggest thing. It's cost of capital, economies of scale. But I think that what they can't do is operate outside of their box. And so I think smaller operators have a opportunity to really operate outside of the boxes, but we have to be pros. I would consider myself now a smaller operator. I've kind of stepped away from the institutional space at this point. And we have to know what the world looks like in the institutional space as it relates to especially our macro and micro markets. And then look where their opportunities operate, and they exist. I mean, creative financing deals exist, buying things that don't fit everybody's box. And right now we're kind of in this mode where distress is starting to show up again. And there are distressed sales happening where we haven't had distress. And so kind of what I said earlier, that other channel of direct- to- consumer, that does involve a lot of distress. And that's when that becomes significant opportunity. And that's what we're kind of looking at now. The course we're building, and we're very, very focused on ESG and on doing something better than we've historically done it in the building world. But I think you're, you're going to see more and more distress coming. And it's really tough for large institutional operators to be able to navigate through some of that distress, especially on the front end.

Nate Trunfio: Yeah, I mean some really great insights there. But before I transition to the new construction side, which I want to talk a lot about with you man, and excited for you to share what you're doing there and your insights specifically, I got one last question on this. You've touched on it a couple of times. So we just hit a lot of the opportunities and maybe the advantages that large institutional operators may have. But specifically on the challenges side, you said it earlier, let's call it sort of all things of management on scattered sites. So whether it's if somebody's is doing some repositioning, renovation, construction, but also just sheer property management. Just, can you dive in a little bit to just some of the specific challenges that you've seen there, and even how somebody of that size and scale could potentially overcome? Or maybe in some scenarios, that just can't overcome some of these big issues?

Corey Donahue: Yeah, I mean I think the biggest issue is a relationship with a resident. And I spent enough time with enough residents, especially recently of the large institutional owners, to know that very few of them are really happy. And I don't know that traditionally, people are usually happy with their landlord, right? Because it's kind of diametrically opposed. But I think the biggest challenge that still is exists in the industry is, how do you create a brand that people believe in, that are going to be your customer? So the resident is the customer of the institution. It has two, it has the investor customer and it has the resident customer. But the resident customer allows the investor to create a return, to have a return. So I just, literally right before we started this podcast, I was out meeting with a resident of one of the large institutional owners, and it's the same story. The institutional owner is motivated to minimize the expense line, and the resident has things that are real problems that they need fixed. And so what happens is, the institutional owner oftentimes gets the bottom of the barrel repair guy. Which doesn't present well to the resident, and then the resident gets frustrated. So the R& M piece of this is still a huge challenge, and that's where the customer service piece really comes in. And then the other side is, with economies of scale, if you scale too much and you have too big of a portfolio and not enough people to communicate with residents effectively, even if it's simply over email or text, you lose the customer experience there too. And I think they're glaring in my face every day with one of our business lines. And that's where, again, I think there's a differentiation that can happen for a smaller operator, even a medium- sized operator, to create a real brand around great resident experience. And I know that some of the big operators love to say they have it, but I can tell you from working directly with those residents every single day, it's just not there yet.

Nate Trunfio: Man, it's really interesting stuff. I think what's funny is as listeners listen to you, you're very conditioned in making sure you even talk about this topic in the realms of customer experience. What I always pick up on, and I've probably learned a lot from you on this honestly, is they're not tenants, they're residents. Because residents has a different connotation with, they have to live in a home. Not just, oh, they're just a tenant that pays a check to you, and you make money, and da-da-da. So I think it's just a way of trying to create culture and an experience, but man, it's really easy to say that fast, but it's really hard to do fast with all the things moving, especially the size and scale. When you get thousands, and thousands, and thousands of doors and people in residence that live there, then that's what they call their home. And so I'm sure it's always going to be the biggest challenge. I couldn't imagine that there's a bigger challenge than that, unless another pandemic or something comes and hits us all in the gut and face. But thank you for sharing that. Let's depart from the institutional world a little bit, although I think we'll still dance on some of that some. But I want to talk about Bettr Homes. And Bettr Homes for you spelled with only one E. But why is your Bettr Homes a better product? And by definition of that question, just help educate a little bit on what Bettr Homes does in order to provide a better product to the market.

Corey Donahue: Yeah, so I think the real quick answer is, we build an energy- efficient home that is constructed to last 300 years instead of a hundred. That's what we do. And with that comes lower operating expenses, which means it's cheaper to live in our homes, mostly due to energy efficiency. But our mission is really to change the build environment that exists today. We've been building the same way for 150 years, two- by- fours, 16 inches on center. Here in Florida we built with CBS block construction because we have bugs and moisture. But it's been the same thing. I mean you up north, in the northeast where I grew up and where you are, it's all framing right? Down here, it's all blocked. But at the end of the day, it's still a very porous house that allows airflow through it all the time that is super energy- efficient and takes 70 different trades to get to an end. And so we're trying to take the friction out of that building process. And I looked at everything. I mean, I've looked at all the modular construction methods. I've looked at a lot of the onsite stuff like 3D printing. We've looked at all the new technologies. And kind of where we landed so far on our launch, it's been over two years now, was structural onsite panels. Because they give us the opportunity to do kind of a hybrid offsite construction, and then build a house like Legos that is a better built house. It's more hurricane resistant, it's more bug resistant, it's more moisture resistant. It's higher energy efficiency. And then when you add the right fit and finish on the inside, you end up getting to this place where you can certify a new home to the net- zero energy ready standard that is provided by the Department of Energy. So zero energy ready is basically energy star, indoor air plus, which we can talk about healthy homes and why that's important, especially coming out of pandemic. So there's just multiple certifications that are involved to get that. And for me, it's about having a mission that's greater than just providing a rental return. Getting to a place of a brand. And we talked about what it takes to get a brand and a customer experience briefly, but I think everybody's been spoiled because we have a housing shortage. And that housing shortage isn't going away anytime soon, which is why it's great... Real estate in general, if you're just relatively smart about how you do things, it's the best thing you could possibly be involved in for a career. Especially if you're buying and holding assets. So for us it's very long- term thinking, we're very focused on creating a differentiated resident experience that starts with the actual construction of the home. And then of course in the subdivisions as we build them out, there's a active lifestyle and an ESG. The S in the ESG, the social aspect of ESG, focus is how we design our communities as well.

Nate Trunfio: That's awesome man. And you opened up a lot of doors that we're going to have to start walking into here. So let's hit that last one first. So ESG, for somebody that doesn't fully understand what it is, break it down. And then continue to go into a little bit more detail on how you're filling some voids in operating with that sort of as a core focus in mind.

Corey Donahue: Sure. So ESG stands for environmental social governance, and it's three different things. So the environmental piece, which we all probably have the most experience in ESG with, we've heard a lot about. It's carbon neutrality, it's working towards changing the carbon footprint. Which, real estate is the largest culprit. Then the S is social. So that brings in all the social things we hear about on news all the time. So it's talking about equality, and really trying to have a people effect. To me it's a people effect as it's not just a commodity, the people part, the S is to me the people part. Doing the right thing by people. And then G is being governed by those things, and having a very specific business plan and written plan that drives your business and governs your business to really be focused on making a difference, making change with the E and the S. So that's the easiest way I can explain it. It's a big focus of institutional players as well. It's gotten a lot of, since Covid and since a lot of the social issues we've had in our country, it's gotten a lot of attention. And nobody's really solved for how we do that well in real estate. There's a lot of people working on it, and I think we're going to see some really cool things over the next 10 years that really are focused on doing things with a real ESG bent to them, and a real ESG focus. But so far today there's very few, in the real estate business, there's very few places you can turn and know that you either have one or the other. But there's not a lot of environmental and social governance happening. I think some of the big companies have done a good job on the social piece, but environmental's tough. It's tough to retrofit an existing structure to make it environmentally friendly, it's just a hard thing to do. So that's why we started on the build side.

Nate Trunfio: That's awesome, and we're going to get into that. But I do want you to hit something and man, for a little pea brain like myself, you really broke that down in layman's terms, to where it's something that now maybe I can go tell people about. So great job there. So why would an operator, institutional or of any size, have a focus in it? AKA, what are some of the benefits that you can get? Although the whole initiative is to provide value to the environment and society and people, what can you as an operator get and benefit by doing that? Because there is some sort of return. And break that down for us.

Corey Donahue: Yeah. I think one is we should all be, as humans, doing the right thing. And we know... Growing up a conservative, I had a natural aversion to environmentalists, right? But as I've learned over the past 10 years, there is a lot of truth in what's happening in the environment around us and in our world. So I think just being good stewards and being good humans, the first driver, that's what got me kind of where we are. But in terms of economics, which I think at the end of the day, capital is always what drives change. It's always about money unfortunately and fortunately. So knowing that, capital has to push this initiative. And it's starting to happen. BlackRock, you can read a lot of white papers that they put out on what their focus is, and how they want to change. And then everybody else is kind of following suit. And so I think what it looks like for a small operator, we can create, with our energy efficiency, higher cap rate and a higher NOI, and lower operating expenses by building differently. And so when you reduce a resident's electric bill by, call it$ 200 a month, there's obvious opportunity for increasing your cap rate. And the overhead for doing so is de minimis, right? It's not a huge expense upfront, it's not a huge expense monthly when you build that into the new construction piece. Now, if you had to take that and add solar to an existing home that is built where air flows through it all the time and it's not airtight, it's going to be a little bit of a different challenge. It's going to get a little too expensive probably, to justify. So I think that's part of it. But the other part is really looking at the long- term customer experience, and what we hope drives our brand, and what we hope will drive the industry to make change is the consumer demanding change and what that looks like. And so that's going to come only through continued education and alternative ways that a resident sees options. And so the reason why I think branding in this space is so important, that's our differentiator. And so when you look at something, you look at a company like Apple. What did Apple do for years? I mean, they provided the best product, they had the best brand, therefore they got paid for both of those things. And so like Apple or not like Apple, and I'm Switzerland on the Android- Apple thing. But either way, you can't argue that they commanded a premium for their products that effectively were the same piece of metal and piece of silicone that a Windows based computer was, and they got a super premium in price. So that's our model, is to look at how do we provide a superior product with superior long- term service, and then get paid for doing so? So we're started comparing ourselves apples to apples and just providing a better product. And then as we go forward we'll work on the premium.

Nate Trunfio: That's awesome man. I think most of the time in real estate, we always think it's just about hard assets. But at the end of the day, it's all about being in the people business, no matter what way you want to slice it. And I think you tied all of that there together, and certainly it's really great and awesome perspective to hear just how you look at benefiting others, that in turn does benefit you in the end, bottom line. So net- zero, energy efficient, that's a product that you build and do a great job of it. The product's awesome. But there's a lot of things that you could argue could make a home more energy efficient. But building a true net- zero product, what are the various components that you need to implement in your product in order to achieve that?

Corey Donahue: Yeah, I mean I think when you look at energy efficiency, what are your biggest energy drains in a home? In any kind of building, it always air conditioning, heating, cooling, it's regulating temperature. And then it's appliances. And so we started with the shell of the home. And so when we build a house out of structural insulated panels, you're basically building a Yeti Cooler as a house. And so if you've ever cut or seen someone cut into a Yeti Cooler, it's got styrofoam on the inside, and then it has a sheeting on the outside, plastic in the case of Yeti, that really contains the fluctuation of heating and cooling inside. And so if you put ice in a Yeti cooler, you get ice for a long time, which means you have a drop of temperature for a long time. If you put heat packs in it, you're going to get the same effect. And so when you build a house that way, you're by default reducing your energy exposure and energy need by 60 to 70% before changing any of the other components of the home. So we build with structural insulated panels. Our HERS scores if you're familiar, and if you're not a builder you probably wouldn't be familiar HERS score. HERS is home energy rating score. Every builder in the country builds to whatever that HERS score is, you can get it on every new home. Traditionally that number in the US has been a HERS score of about a hundred. Lately, basically every municipality's codes have changed over time and they continue to evolve. Those HERS scores now are in the kind of 70, 80 range for a traditional builder, and ours are in the low high twenties, low thirties. And then we add solar, which takes us to zero. So you can extrapolate from that, that if an average builder, let's say is around number 70 and our average is 35, we're 50% more energy efficient without doing anything else. And so by default, it costs less to operate. And then you add other things that add to the healthiness of the home, like controlling the indoor air exchange, obviously Energy Star appliances, and high- efficiency water heaters and things like that. And then you've just reduced the need for energy of that home, which then translates into real dollars

Nate Trunfio: That great. So this ESG and energy efficient, it's gotten a lot of attention as it should. But with anything that gets hyped like that, there's just a lot of misnomers and misconceptions. So from somebody that's truly operating and delivering a product that hits square in the bullseye of what this nation and world is continuing to try to be better to the environment, its people, break down though what people typically don't know or misunderstand about doing all that.

Corey Donahue: Yeah, I mean think it's easy to just say, oh, we're green. Or we're energy efficient because we use Energy Star appliances. Which are great, we should all do that. It's an easy one. Almost everything is Energy Star now. But Department of Energy has a lot of good standards that large builders are starting to push their way to, and they're getting smaller certifications. And so I think from a greenwashing perspective, which is effectively I think what you're asking, it's really looking at what is the impact really, of either the building or the social piece of that business? What is the real impact that they're having? Is it just they're saying they're green because they threw Energy Star appliances in, or because they did some small piece of a bigger picture that... That's where the governance piece comes in, nobody talks about. So everybody talks about the environment. ESG is... 80% of the conversations you hear are environmental. I'd say 18 more percent are social, and 2% if ever are on governance. But the governance is the key that ties it all together. And so looking at the businesses that claim to be ESG- focused, do their governances really drive that? Is it really the bottom line that's driving it, or is it the E and the S that are really driving their business health? And it's really a long- term approach that makes sense in any business. It's just, you're not going to create short- term gains trying to be ESG focused. It's a long- term thinking. It's a 20, 30, 40 year process that you're looking at down the road. Rather than, how can I make a quick buck today? Anybody who's looking to make short term profitability is probably not going to be ESG focused.

Nate Trunfio: That's awesome man. And to me, and as you just said, I think most people have a really hard time understanding the G in the governance part. So can you actually redefine governance for me? Because I think some listeners may have, and even myself admittedly, have a hard time truly understanding what you mean by governance. So I know you explained it again, but specifically the governance, get in a little more detail and help me at least better understand that.

Corey Donahue: Yeah, I mean I think it's a worldview of how you operate. I mean, that's really what it comes down to. And putting that on paper in a way that puts some guardrails and some structure around what is acceptable and what isn't, right? And that's really all it is. It's basically a defined worldview of what drives your business. And is your business driven only by how much return, or how much capital, or how much money you can make? Or is your business driven by a bigger mission, that then by nature is going to throw off cash. And for us, that's what it is. It's mission- first. And then knowing that we're making good decisions, we want to be profitable, we have to be profitable to keep moving forward. But you can do better by doing better. I mean that's our core value. And so that's our mission, is to do better by doing better. And that's kind of the easy way to put it, right?

Nate Trunfio: And it's awesome how the mission also just ties into the name of Bettr Homes. But it's really cool to hear how the governance principles and mission there help drive your long- term strategy, as well as providing back to the environment, and society, and people, and things of that nature. I just want to hit one more question on this topic. Which is, there is some financial, economic benefits. As any operators in any realm, not just real estate, drive towards and achieves things in sort of this ESG realm. So can you just high- level, because I think there's a lot of them from the little that I know. It's tax credits, or what's the economic gains as you achieve this? And not to say that that is a core focus of specifically yours or others, but I just want to break that down quickly.

Corey Donahue: Yeah, and I think it has to be a part of the focus, right? Because without capital and without profitability there's no capital. Without capital, there's no business. So I think it has to be part of it. It just can't be, in my opinion, the only thing that drives you. And so in the real estate business, there's a couple places where there's additional value that can be created. Again, it's got to be a long- term approach. So you have lower operating expenses, you have a better- built home, you're going to have lower monthly operating expenses because you have less energy need. So those places provide opportunities for kind of front end and back end. Front end, you charge more rent potentially. Because you have less electrical, right? On the back end, you have a purpose- built house that is built with material that is made to last a lot longer. You're putting less wear and tear on the major items in major mechanical systems in the home. So your AC has less load, you're providing better throughput for all of the energy in the house. So appliances generally are going to last longer. But these are long- term approaches that, we're just in the beginning of showing data that has enough credibility to say, hey, you can depend on a net- zero home, especially one built with structural insulated panels, to provide an NOI that is 12% better, or 6% better. The other piece, and part of your NOIs, is insurance. And so here in Florida, insurance is a big deal. Because of the way we build, we have a natural aversion of fire, we have natural aversion to wind. So that provides a savings on the insurance side that you have to back into and look at the NOI. So I think those things are the kind of more obvious ones all based on the efficiency piece. Again, back to the brand piece, I think over time there is a significant value in creating a brand that put a stake in the ground that says, when you live in one of our houses, you're going to have a healthy living experience. We're going to take care of you, we're going to make sure that they provide great service. And you're going to breathe better. You're going to have a better experience inside your home. Provided you do your part. You can't cook with gas every night and put your grill in the house or something. But if you live like a normal human being, there's a potential that there's going to be healthier environment for you inside these houses. So I think those are all places. And the part we haven't touched on, that I should have really focused on a little bit in the S- conversation, is how do we get to affordability? And so if you take the extra NOI bump out of it, and you just give that piece to the resident, you're going to have kind of market- rate rents, but you're going to provide more affordability to an occupant. And we've got a massive problem with affordable housing. And so that's the other part of what I love, and that I'm really excited about. Is that I think we can get enough scale with our build technology to really provide an affordable housing product that's truly affordable. Because I think that's another thing, right? Attainable, affordable piece that we don't always touch on. Because it's always about maximizing rents. But I think there's a long- term strategy that if you can really solve affordable housing with an ESG product, sky's the limit. You're going to have better financing. You touched on tax benefits. Building to an zero- energy ready standard, significant tax benefits for doing so as a builder and as an operator. So there's another place I think there's an opportunity down the road for better financing. We're not seeing it yet, maybe it's just because we don't have enough scale. But I think there's some green bond initiatives that are out there. There's some help in a lot of the bills that have been passed over the past 24 months that we can go after. Again, it's going to take some scale. It's going to take some ability to go nowhere to find it. But financing benefits as well.

Nate Trunfio: That's awesome man. And I'm going to use a big C word, and I do truly think there's an affordability crisis. I think all the numbers show it with some realm of low 40% affordability across the nation, which is well- above where it needs to be. And that's why I personally, and from what you're saying as well, is a huge believer in sort of building, or renovating, or owning rentals in this affordable median realm. Because there's still going to be so much demand, and especially if things don't continue to be affordable for people. We really need to continue to drive that product in a number of ways, and clearly you're doing that. So as we depart, my last question man, you've talked a lot about, you think about things long- term. I just know you'd have a very strategic and visionary mind. So what are some of the trends that you see moving forward in new construction as you fast- forward a couple years down the road? Land us with that one, man.

Corey Donahue: Yeah. I mean, I think one thing we haven't touched on at all that I think answers that question, and the most important thing in my mind, is the labor force is reducing, is shrinking every year. And so if we don't solve building a house with less friction and taking less hands, we're going to continue to have an affordability crisis, and it's going to get worse. Because the less people there are to swing hammers, the more those hammers cost to be swung, therefore the higher the price. And it's the same thing when it comes to manufacturing and the goods that we use. So the labor force is going to continue to drive. And if we don't solve for reducing friction in the build environment, and solve for how do we automate as much as we can? Or solve for growing a labor force, one of those two, we're going to continue to have an affordability issue. And a crisis that's going to continue to grow

Nate Trunfio: That's some really, really, really insightful feedback there. And Corey, man, I just want to say thank you. I hope, and I hope you like the nickname Smooth Operator. But I think you've really lived up and shown that here to all of our listeners. And so I just very much thank you for that. And at this point we're going to call it a wrap, but a lot of what we've talked about is going to continue on in a number of ways. And Corey, you've provided some great insights. So thank you all for tuning in here. This closes out another great episode of the Real Estate of Things. Check us out every Tuesday for new episodes to launch, with really smart and insightful people like Corey here as well. You can always check us out on our website, www. realestateofthings. co, and we will continue to bring you some high value. But Corey, thank you for doing that here, man, Mr. Smooth Operator. And just appreciate you, brother.

Corey Donahue: Nate, thanks so much for having me. I really appreciate it. It's great to see you.