Big opportunity in tiny homes: Tapping into a new market

Charley Burtwistle:

What is up everybody? Welcome back to another episode of “The Building Code.” I’m Charley Burtwistle, and today I’m joined by not Zach, but …

Courtney Mattern:

Courtney Mattern.

Charley Burtwistle:

Heck yeah. Very exciting. We’ve heard the feedback from the listeners, we want more Courtney, we want more Courtney. It’s what everyone’s saying. We brought back more Courtney. How are you doing today?

Courtney Mattern:

I’m great. Yeah. I’m sure I’m backed by popular demand or actually, because Zach is really important and had to be at a conference. I’m not sure which one.

Charley Burtwistle:

Oh yeah, it’s not even a Buildertrend. He’s attending a conference, not even hosting one.

Courtney Mattern:

Oh, darn.

Charley Burtwistle:

That has nothing to do with importance level. It’s just a vacation in my books.

Courtney Mattern:

I mean, he’s kind of important, right?

Charley Burtwistle:

Yeah. I suppose, I just don’t like to give compliments to him when he’s not here because what’s the point? But in all honesty, both my mom and my dad know you now as not just the girl on the podcast, but Courtney, the girl from the podcast. So, you are …

Courtney Mattern:

Wow. I’m famous at the Burtwistle house.

Charley Burtwistle:

You are. Yeah. We’ll probably talk about you at Thanksgiving in a couple days.

Courtney Mattern:

I kind of feel like Beyoncé now.

Charley Burtwistle:

Well, I guess when this is released, Thanksgiving would’ve been a couple of months ago, so we’re dating ourselves a bit there, but we’re ahead of the game. It’s a fantastic day in the studio, and we have a fantastic guest today. Today we have Seif El-Sahly who is joining us from the great North Canada, going to talk about some very exciting stuff. Courtney, are you excited?

Courtney Mattern:

Yeah, I’m really excited. He’s talking tiny homes and that always gets my brain going because I always have a long list of dream home projects I want to do, and that’s one of them.

Charley Burtwistle:

There you go. Well, let’s learn from the expert himself. Let’s get them in here. Hey, Seif, welcome to “The Building code.” Very happy to have you. We always like to kick these things off with just for our listeners, if you could tell us a little bit about yourself and maybe your career journey to how you got to where you are today.

Seif El-Sahly:

Sounds good. Thanks for having me, Charley. I’m a contractor based in Hamilton, Ontario, which is a suburb, I guess, to Toronto. And I started off studying engineering. I then went off to not quite the Northwestern territories, but quite north in British Columbia. Did the remote location fly in and fly out in mining and metals. And then when I moved back here, I wanted a bit of a life for myself. I started buying rental properties and then I started fixing them up. That’s where I started first getting exposed to renovations and that sector in general. And from there it snowballed and now here we are today, and we have a construction and renovation company that has done over the last three years, 150 units.

Charley Burtwistle:

Wow. Yeah. I always find it interesting to ask how people ended up in construction because it’s always two very extremes. Either they were born in a family business and knew their entire life that’s what they were going to do, or they just stumbled upon it and had woke up one day and they’re doing 150 units in a year. Yeah. That’s very interesting to hear. When you were mining, you said, so were you a mining engineer? Would that have been your official title or …

Seif El-Sahly:

Not quite. The sector was mining and metals.

Charley Burtwistle:

Okay.

Seif El-Sahly:

It’s basically any project that has anything to do with you extracting or refining any kind of metal. Up there, they were refining aluminum, and the way you do that is there’s a multi-billion dollar facility and each one of the plants or each one of the buildings has a group of engineers, design engineers and field engineers. I was one of the junior field engineers.

Charley Burtwistle:

Gotcha. Well, if this was a mining and metals podcast, I would love to dive into that. That’s extremely interesting to me.

Seif El-Sahly:

Yeah.

Courtney Mattern:

Well, but instead of diving into mining, let’s dive into your company, Newfore Construction and Renovations. Can you tell us about how your company got started and what your focus is now?

Seif El-Sahly:

Yeah. We started doing odds and ends on the interior of homes. It would be flooring projects, paint, little bit of trim, maybe some touch up and plaster. From there, the jobs, just because of the area that we’re focused in, homes are much older in this area. They need typically extensive rehabs and renovation budgets. From there it started spiraling, and we started doing even millwork, the kitchen cabinets, the bathrooms, and then we started doing full guts on the interior. After you really take a home down to the studs and rebuild it all again, you have a pretty good understanding of how to do it. We then started working on investment projects, which is the conversions of single family homes to legal duplexes, triplexes, and that’s where we got into the really popular garden suites, what we call it here. There’s a whole bunch of names for it. It’s either tiny home, garden suite, additional dwelling unit, laneway housing, super popular now. It’s like you build a house on the back of your home and a lot of people are doing that right now.

Courtney Mattern:

My favorite is the granny flat. I know I have two, my mom and my mother-in-Law, they’re both grandmas and begging me to build one of these on the back of my house, so they can come move in.

Charley Burtwistle:

Yeah. Well, if Seif ever makes it way down to Omaha, Nebraska.

Courtney Mattern:

Yeah, you can make me a granny flat.

Charley Burtwistle:

You’ve got two leads for you right there.

Seif El-Sahly:

Wow, that’s pretty good. It’s a pretty productive podcast. It’s the …

Courtney Mattern:

What inspired you to get involved with tiny homes? Because I took a look at your website, you’ve done commercial, you’ve done home renovations and then getting into the garden suite. What was it about those projects that appealed to you?

Seif El-Sahly:

The garden suites, it’s a low hanging fruit, right? When you’ve already got homes, and you’ve built additions and second stories and done commercial projects from a technical standpoint, we can do it all. And the natural way that the investments were kind of going is the duplexes and the kind of triplex conversions and really squeezing too many units into one building envelope stopped becoming as feasible as it once was, and now it’s a lot more attractive to have a separate house on the back of the home. I think right place, right time with the right amount of experience, just everything lined up, and it was a very easy market to start going after. We still do everything else, but this is the one thing that everybody wants to talk about is the tiny homes.

Charley Burtwistle:

Yeah. Because I feel like it’s definitely gained a ton of momentum in recent years, hearing more and more about it, more companies kind of leaning into that vertical, specifically. What do you think it is about the industry in the past few years that’s leading towards that kind of gaining momentum and people wanting to build more, and we’re seeing more and more of it?

Seif El-Sahly:

Well, here in Canada we had a bill that was passed allowing you to build up to four units on any residential address without having to rezone.

Charley Burtwistle:

Wow.

Seif El-Sahly:

If you don’t have to rezone, you don’t have to do any minor variances, you don’t have to ask your neighbors for permission or anything like that, makes it a lot more attractive. Now it’s just a matter of the constructability. That’s what diverted a lot of people’s attention to it. And then from there, a few people that are obviously in different municipalities tried to build them, tried to get a building permits for it, and it’s a lot easier than it would’ve been if you had to rezone the property, of course.

Charley Burtwistle:

Gotcha. We’ve had a couple people on before that specialize in the ADU space and repurposing backyards and things like that for additional dwellings. Based on some of the stuff that you’ve told us about, one of the areas that you guys lean into is repurposing garage spaces. Is that correct?

Seif El-Sahly:

That’s true, yes. That one, if you have an existing structure in the back, you don’t have to build it from scratch and a lot of stuff gets, so to speak, grandfathered in.

Courtney Mattern:

Mm-hmm.

Seif El-Sahly:

And it becomes a lot more cost-effective. But now you have to have a lot that it has something legitimately in the backyard because if you are building new, you got to build everything to today’s standard. That’s today’s code, today’s footings, everything below the frost line. And if it’s existing, it’s kind of already been there for that long, and you can reuse a lot of it.

Courtney Mattern:

Can you describe a little bit about the market in your area in Ontario and what the demand is like for new homes renovations? I think across the U.S. we have kind of a housing shortage, and I know that’s the case in Canada, too, but it varies so much geographically. What kind of market conditions are you seeing? What kind of trends and how have you had to pivot around them?

Seif El-Sahly:

Well, we have an extreme housing shortage here. They’re not building enough and the number of immigrants that are coming in per year has increased. I think it’s doubled now to this province to about half a million a year compared to about 250 even just a few years ago, even before COVID. There’s almost double the amount of immigrants that are coming in and the output of housing simply can’t keep up. The only way is to retrofit existing housing that’s here. It’s one of those where everything is working out in a perfect time. You have a shortage of housing, there are a lot of people that need housing. Naturally what are you going to do? You’re going to chop up the spaces and still make it work.

Charley Burtwistle:

And the affordability aspect is what I am fascinated by, too, not just for the current residents that could potentially have an additional source of income, but also for the people that are looking for places to buy. And with mortgage rates, at least where they are in the U.S. right now, just atrocious. I bought a house earlier this year, and I’m suffering for it, but having those more affordable options, it’s just a huge driver in bridging that gap between the supply and demand side.

Seif El-Sahly:

You know what? You’re right. I spoke specifically maybe to the end, sorry, the investor standpoint, but also from the end user there’s a really good functionality portion of this. A lot of people, I think after COVID, moved in with family members. Even if you were out on your own, life became so expensive, a lot of millennials moved back in with family. I forget the numbers, but the numbers were absolutely crazy. A massive chunk of millennials moved back in with their parents. This is a way for people to still move back in, but not really moved in, if you know what I mean. You’re at one address, almost one address. It’s one plot of land, but it’s two separate houses.

Courtney Mattern:

I was in Twin Falls earlier this year to visit a customer, Meg Billings of Meg & Co. Homes and some of her newer builds, she had one just with a granny flat on the side or a built-in mother-in-law suite or a built-in Airbnb. And the house was a pretty modest size. But there is something to say for when your house is designed for you to have multiple family members living in it. What are some of the design aspects of these spaces that you think of that make them functional even though they’re smaller because they are built specifically for that purpose of an additional housing unit and an existing home?

Seif El-Sahly:

Yeah. Anything that’s a new build is always going to have better functionality. There’s many reasons for that, right? If you go into, let’s say the most popular thing that’s retrofitted is a basement. You walk in, the first thing you imagine with the basement already I’m talking about it, I started ducking.

Charley Burtwistle:

Yeah.

Seif El-Sahly:

It’s like you got bulkheads, you got walls all over the place, bulkheads all over the place. You’re ducking down, different ceiling heights. You walk in and it just doesn’t feel like this was purpose-built. The windows, there’s not as much natural light. The garage or the garden suites, these ADUs, once you build them purpose-built, you come in, and you walk into a living room, there’s a massive window. There’s another one right next to it. They’re both open. You can get a cross breeze going. The kitchen is designed exactly where it needs to go. The bedroom is where it’s supposed to go, and there’s clean lines everywhere. You don’t have bulkheads and stacks that are bulkheaded in and all these corners all over the place. It just feels like a space that’s functional. You know what I mean? If you have a bedroom that has sort of four walls versus if you have it in a basement, then you have to bulkhead a stack here and this one has low ceiling heights, you can’t really put your bed anywhere, right? Now all of a sudden it’s similar square footage, but the functionality is not as good.

Charley Burtwistle:

Right. That’s really interesting. I guess, I don’t know, I have a couple of questions. First of all, what does the design process look like? Do people typically come to you and say, “Hey, we just have this space and we want additional unit there,” and already have a pretty decent idea, or are they coming to you for more so advice where you’ve seen a lot of different things with other clients as well, too? And then second part of that question is do you find it challenging based on the space they have that they want to convert? You mentioned the basement. I’d have to imagine they’re a very different set of challenges trying to repurpose that as opposed to, “Hey, I have this giant backyard and want to stand up a completely new build.”

Seif El-Sahly:

Yeah. The new build, those are the best kind of projects. If somebody comes to us and they want a new build in the backyard and when they do, the first step is they’re going to call us. They probably have preferences what they want to do, but we’ll tell them right away depending on the municipality that they’re in and what the bylaws are, what they can build. Because depending on the municipality you’re at, you can build as small as 374 square feet on one level versus in Toronto where you can build 645 square feet times two levels, almost 1,300 square feet.

Charley Burtwistle:

Wow.

Seif El-Sahly:

One is almost more than four times the size of the other. Depends what municipality you’re in. We’re probably going to come back with you and say, “Okay, realistically this is what you can do. Here’s some ballpark pricing. Let’s start with the design.”

Charley Burtwistle:

Yeah. Then is that pretty back and forth then, or it sounds like they kind of lean on you pretty heavily for what’s possible and what you think best route is?

Seif El-Sahly:

That’s the best choice really, because the last thing you want is someone to just come and say yes to everything. And then you spend these hours working on a set of drawings and weeks pass by, you submit it to the city and then they’re tossing it back saying, what is this? You can’t build two stories here.

Charley Burtwistle:

Right. Yeah.

Seif El-Sahly:

It’s best that you kind of lean on the experts, our designers, they understand this stuff inside out.

Courtney Mattern:

Seif, what does your day-to-day look like at your business and how has it changed since you started it?

Seif El-Sahly:

It’s like a firefighter, it depends on the day. There’s always fires. You got to put out wherever the fires are. They could be anything. There could be a technical issue in the field. It could be something that relates with a handover of the project. It could be scheduling. Something is not scheduled to be on time, but the homeowner absolutely has a drop dead deadline that they got to move in in two weeks. Managing resources, sometimes it’s team members getting along, whatever it is, it’s like you kind of go wherever the immediate urgency is.

Charley Burtwistle:

Yeah. I’m sure Courtney and I are both looking at each other there. That doesn’t sound anything like our life. It sounds exactly like what we deal with every single day.

Seif El-Sahly:

Yeah.

Charley Burtwistle:

You’d mentioned how things vary from place to place, whether where you build or down in Toronto. Are you covering a pretty wide geographical range of where you guys build?

Seif El-Sahly:

Yeah. We cover from Toronto to Niagara, which is about an hour and a half or hour 45 minute drive from each other.

Charley Burtwistle:

Well, it sounds like that’s pretty incredibly impressive to be able to keep up with all the different regulation and bylaws and what’s approved in one spot and not the other.

Seif El-Sahly:

Yeah, that’s true. But you got to do what you got to do. We also rely heavily on people that understand this stuff inside out.

Charley Burtwistle:

Right.

Seif El-Sahly:

The designers, for example, use the exact same designers. We’re not always going out to the market finding the best price and price shopping type of thing. We developed a couple of partnerships and that’s the people we stick with because we know job after job, we’re learning one after the other and we’re going through all the hiccups and they definitely understand it because they’re doing a lot more volume. We lean on them when we need help, sorry.

Courtney Mattern:

What do your partnerships look like with your designers and your subs? Do you have a big team or do you work with a lot of trades?

Seif El-Sahly:

We work with a lot of trades and we also have a big team in here as well. Right now we have 20 people in-house, and then we also have a ton of subtrades as well. The regular subtrades, we use the same people. For example, electrical, plumbing, mechanical, designer, siding, it’s exact same subtrades we use every single time. We do have a backup subtrade sometimes in case they get that busy, but for most of the time we lean on those specific people for those disciplines. Anything that’s a little bit more specialty, of course, sometimes we have to go around and ask around and find things like that, but that’s, I would say, less than 5% of our work.

Courtney Mattern:

What are some of the lessons you would have or advice for other builders about building partnerships and building relationships? It can be hard to find the right partner, but when you do, you want to hold onto them. What do you do to keep those relationships strong?

Seif El-Sahly:

I think if you have a bit of long-term vision, always exercise long-term relationships with other trades. If you find an electrician, and they’re great, you like working with them, they pick up the phone, they do what they say, they show up on site when they need to show up on site and they have good work, if their pricing is a little bit off work with them because sometimes people just tend to look right beneath their feet, and they say, “Well, you know what? This guy charged me 10% more. Now I’m pissed off.” But maybe there’s something happening on his end where he’s got to cover cost or there’s a reason for that. Maybe his unit rates aren’t in line, he hasn’t been paying attention to material costs, whatever it is. When you find good people, always think long-term and just stick with them and sort of work and grow together.

Courtney Mattern:

I love that advice. It’s sort of assuming positive intent from your partners and the people that you’re working with and starting a conversation before you jump to that judgment that can hurt the relationship in the long run.

Charley Burtwistle:

Yeah. I think our last four or five episodes have been around relationship building and understanding how to find good partners and things like that. Courtney was actually just out onsite. You flew back this morning looking at the next location of a builder conference that we’re trying to host to enable those sort of networking and communications and win together type thing. Even though that wasn’t the specific topic of our interview today, it continues to pop up having those skilled trade partners and those relationships.

Courtney Mattern:

It does seem to be a theme that pops up because like Seif, you said, you have a couple partners that the pricing might be a little higher, but you work with them time after time, they know your projects, they know you. And in a market where there’s labor shortages or talent shortages, it’s key to have really great partners. It’s cool to see you investing in those relationships.

Seif El-Sahly:

Yeah, I think it gives you real long-term success because this is something that you don’t reap the rewards today. You reap the rewards one, two, three, five years from today. You know what I mean? Each year and more and more when you’re working with the same guys always showing up on time, they know exactly how it’s done. Things become way more smooth, and it’s a well-oiled machine, then everybody wins. And once your customer’s winning, you’re winning, too. Things are being done quality and on time, and you guys are still able to keep pricing somewhat competitive, then you’ll end up in a pretty good place.

Courtney Mattern:

It’s interesting the way you frame that. I know you’re an investor, you’re making good investments in real estate, but you’re also investing in people and your relationships. It’s sort of a similar mindset, right? There’s compounding interest on the people that you work with, just like in the moves you make with your business.

Seif El-Sahly:

You’re right. And the easiest things to see are typically on a balance sheet. Many times, I have even some friends that are investors, and they look at the balance sheet, got to cut this back, got to add a little bit more to this. And it doesn’t always work like that. There are sometimes things that are in between the lines, and you don’t exactly see what the direct production is of that expense. You know what I mean? If you’re going around and the guys or the people in the field aren’t being treated well, well that’s not exactly a line item and an expense line item, but you’re going to see it in production. Sometimes you have to do things kind of on an emotional basis as a human basis and make sure people are treated well, so you can get that kind of production.

Charley Burtwistle:

Yeah. I feel like you’re definitely speaking Courtney’s love language right now. We constantly talk about, she oversees our brand here at Buildertrend and another really hard thing to quantify on a line item in a P&L of like, okay, well how much ROI are we getting from the podcast or from the blog post or the builder bond and different things like that. It’s like, well, it doesn’t have direct revenue component, but we’re paving the way. There’s that compounding interest of things continuing to stack up, and we’ll see the results one year, three years, five years later.

Courtney Mattern:

Yeah. I always wish there was a chart for what people’s brand attitudes are or their customer experience. What does that chart when they just love you, the emotion part of it, too. And I see that theme a lot with our customers and their teams and building teams that are feeling connected to the mission of the projects that they’re building. Do you think over the course of your career that you’ve had to grow that kind of mindset when you first started your business, did you manage your people differently?

Seif El-Sahly:

Yeah, of course. When you start it’s like a catch 22. You can talk all this big kind of company culture and all that stuff, but at the end of the day, people pay the bills or the bank account with the almighty dollars. It’s like it’s really hard to disconnect from that at the start because it takes an immense amount of production and correct decisions to get a construction company going. It’s really hard to focus on those things when it still hasn’t quite gotten off the ground. You have to reach a certain size first before you can start thinking like that in a very practical sense.

Courtney Mattern:

And when you made the dive into these garden suites or these tiny homes, because you’ve done a wide amount of different types of projects, was there a bit of change management that had to happen with the team to get on board with these different types of projects or were they pretty nimble by that point?

Seif El-Sahly:

I would say it’s always growing, and it’s always changing and as the dynamic of even the project changes and of the team changes, everybody’s shuffled into roles where they’re more effective. That’s what I see. It’s not necessarily about being up or down or mid-level management or higher up. It’s about what they say in all these productivity and those coaches, single and best use. You just see whatever someone’s single and best use is, and you push them towards that direction, because they’re going to be a lot happier doing that, too. If somebody is an excellent, excellent framer, that doesn’t mean you all of a sudden got to give him 10 guys under him. Maybe he doesn’t like to manage 10 guys and now all of a sudden he’s not an effective framer.

Charley Burtwistle:

Yeah. Snaps all around right there for that one.

Courtney Mattern:

I always tell people, don’t get too good at something you don’t like doing because then you just get stuck in that role.

Charley Burtwistle:

Right.

Courtney Mattern:

And so it’s great when you can focus on what you are really good at and be successful.

Charley Burtwistle:

Yeah. I know we’re getting close on time here, but kind of exciting note to end on. You recently shot a pilot episode for HGTV about transforming garages into tiny homes, which is awesome. Can you share any more about that yet or is it still …

Courtney Mattern:

Is it top secret?

Charley Burtwistle:

Yeah, top secret. Want to wait for the grand reveal?

Seif El-Sahly:

Yes. We’re in talks right now. To kind of clarify, we shot a pilot episode, which we produced, and we plan on selling it to HGTV. We’ve spoken to quite a few producers and networks, and we’re sort of in the process, I don’t want to say finalizing, but it’s still in process right now and definitely not something that I can openly discuss just yet.

Charley Burtwistle:

Well, that’s a perfect little teaser to keep people on the edge of their seats.

Courtney Mattern:

I would be curious.

Charley Burtwistle:

And a great segue hopefully into if you ever come back on “The Building Code,” it could be after that’s released and then we can dive all into it.

Courtney Mattern:

Yeah. We can have a watch party.

Charley Burtwistle:

Yeah. That’d be awesome. We’ll fly out to Toronto for it.

Courtney Mattern:

Yeah.

Charley Burtwistle:

I always try to sneak my way onto business trips any way as I can. I feel like a watch party would be a perfect opportunity.

Courtney Mattern:

Yeah. And we definitely should have it in Canada.

Charley Burtwistle:

Yeah. Yeah, of course.

Courtney Mattern:

We should come to you.

Seif El-Sahly:

That would make sense.

Charley Burtwistle:

Well, Seif, thank you so much for joining us today. It was awesome to talk through the tiny home movement, what you guys are doing, and then towards the end there all about just how you manage relationships, grow businesses and grow people as well, too. Really appreciate your time today.

Courtney Mattern:

Yeah, thanks for being with us. We really appreciate it.

Seif El-Sahly:

Yeah. Charley, Courtney, thank you guys so much for having me. It’s been fun.

Charley Burtwistle:

Well, another fantastic interview. Seif was incredible. I definitely learned a ton. Normally, Zach asked me what I thought, but today, Courtney, what did you think?

Courtney Mattern:

I thought it was a really good interview. We always come into these topics thinking we know what we’re going to talk about. We wanted to dive into tiny homes and how he’s grown his business. But I loved our tangent on relationships and people because that’s really what makes the world go round is the people you work with, your relationships, your trade partners, your subs, and you can tell that in his experience with his company, he’s built some of those soft skills that sometimes we don’t talk about.

Charley Burtwistle:

Yeah, absolutely. I feel like the organic tangent type topics we dive down always end up being even cooler than what we were planning on talking about. We may have to have him on for a second episode. Watch the HGTV episode and talk about relationship management as well, too.

Courtney Mattern:

Yeah, I think it’s so funny how many of our customers, there’s so many that have come close to fame on HGTV or a TV show or had a pilot here, but there’s so many stories in this industry.

Charley Burtwistle:

Yeah.

Courtney Mattern:

And I would love to see an episode of one of these garage makeovers. Fingers crossed that we’ll see him again in a year at a watch party in Canada.

Charley Burtwistle:

Absolutely.

Courtney Mattern:

We’ll invite all of our listeners.

Charley Burtwistle:

Yeah. That would actually be incredible. Well, as we wrap up today, Zach and I always struggle with what we’re supposed to say on the outro, so I’m going to let you record it here live, how we should end every single episode.

Courtney Mattern:

Well, we have podcast group called The Building Code Crew, so hop over to Facebook and join the Facebook group, so you can chime in on what kind of episodes you want to hear in the future. Make sure you rate, review and subscribe to the podcast anywhere you listen to podcasts, Spotify, Apple. And every time you rate and review us, that helps us with our rankings. It helps us keep the show going, keeps feeding our fire for what we love to do, which is talk to customers and awesome people in the industry.

Charley Burtwistle:

Feeding our fire, there you go. From now on out, every time that Zach and I butcher the outro, just remember Courtney saying that, and that was perfect.

Courtney Mattern:

Feed our fire.

Charley Burtwistle:

Yes. Until next time, I am Charley Burtwistle.

Courtney Mattern:

And I’m Courtney Mattern.

Charley Burtwistle:

Thanks for listening.