Kol Peterson: [00:01:38] It is Earth Day! That is exciting because for a lot of us the whole ADU movement is really around environmental issues or is precipitated by environmental issues. It is for me. I didn't even realize it was earth day till, Kelcy reminded me. Kelcy King: [00:01:56] Happy earth day, everyone. Thanks for supporting this [00:02:00] content and supporting Kol and all of our guests. Kol Peterson: [00:02:02] So let's bring out Jake. Jake Fry: [00:02:03] I just want to, before we start to say, this is such a great idea. And I'm really honored to be asked to join in this discussion. I think it's really tremendous all the work you've done over the years.Kol Peterson: [00:02:13] Thanks man. Jake Fry: [00:02:14] Kudos to you. Kol Peterson: [00:02:15] Yeah, this is great. And I am honored to be able to pull this kind of thing together with people your caliber, to be able to share the wealth of information that you have. I've been just diving right into heavy material because that's what we're doing. Why don't I start by just having you do a one minute intro of you and your company and your relationship to ADUS?Jake Fry: [00:02:40] Sure. I will say, , And, and the immediate front , I think I'm most known for the running of my company, which I started in 2005, in Vancouver, Canada, I think on some level, it's a different country and we have different dynamics that are happening here. It's a fairly small city. It's only about a million people, when you look at the greater [00:03:00] city. We really had a number of pressures on our urban environment and I was always enamored with the ADU form. And it was something that I was just drawn to. My background had been as a carpenter. Going back to that early two thousands, did this seem that something had to happen in our town that was going to be different. Land prices through speculation were just going through the roof. Housing, even at that point was an issue, it's even more so now. And there was issues of affordability and this urban growth and what the city was going to look like and how it was going to change.And for me, although there's never a magic bullet to these urban matters, the ADU makes so much sense. And I just basically stuck a flag in the ground and said, we're going to make this happen. And I worked really hard, advocating for the built form. There had been some precedent from historical, little coach houses, that existed in the city and some precedent through heritage retention that, that wasn't completely without example, but we were able to really push it.And by 2009 through [00:04:00] some pretty concerted effort around marketing and getting people on board, we actually got a citywide ordinance passed and opened up 70,000 building sites to ADUs. And since that time, , I think we've maintained sort of a leadership role. , certainly we're very, very active in advocacy as the built form is involved in the city.Personally our company's put in a little over 300 ADUs , and citywide we've certainly capped over 5,000 across the city and it continues to be a very strong built form within this sort of spectrum of housing in Vancouver.Kol Peterson: [00:04:35] Wow. There's so many different things I want to ask you about now that I didn't even think about writing initially. So I'm just going to go in that direction for a moment. You just said that, the city of Vancouver has roughly 5,000 ADUs. Now, I think we should just do a little bit of myth dispelling about some of the numbers that are coming out of Vancouver.A lot of the documentation media coverage about the ADU scene in Vancouver says vast number [00:05:00] of homes have ADUs. So let's talk about the vernacular that's used in Vancouver and talk about the legal permitted secondary suites and the unpermitted secondary suites and just kind of help tease those different issues apart for us.Jake Fry: [00:05:13] A hundred percent. And so, I think that's a great point you bring up, I mean, for us, a couple of things, what we immediately considered to be ADU is a standalone building in the rear of the property. And I know from our work that we're starting to do in California, the ADU also includes what we call a secondary suite.So going back to the eighties, certainly in the nineties, land value starts going up in everybody. And his brother puts in an illegal suite in their basement. It's a very common built form. It took about 12 years for that to become a legalized citywide and so some of our numbers around ADUs include that. If you were to look at the city and to tease out those numbers, we have a city core , which is very urban and lots of towers and condominiums.And that's an ongoing concern, but about 85 [00:06:00] percent our land mass is a traditional single-family home development where we have, you know, kind of a grid pattern. Although we're hemmed in by mountains and ocean, we have a bit of a grid pattern. Those that grid has lots of laneways.Up and down those streets and varying sizes, we have single family homes. And so if you were to land here in 2000, I would say a large percentage of those homes, quite, quite big. We have a scenario where we have a basement suite. Some sort of rental unit within the home, that became legalized towards the late nineties, early two thousands.Subsequent to that, moving up to 2009, is when we have this rear unit that could then be legalized. In both cases, they were few and far between, where you have an ownership model with that built form, it's all rental where it would be commonplace in a block. If you were to go to a typical street right now, I would say it wouldn't be uncommon to see half the homes having a basement suite , and maybe one or two of [00:07:00] those homes having a rear ADU.And if we were to tease that out a bit more, I would say we roughly have about 1% housing stock that gets torn down per annum, and rebuilt. And I would say over 75% of those new builds, which is somebody who's come in and whether it's for development or speculation, or just because they're building their dream home. They're putting a new house in the property. But 75% of those people will install a secondary suite in the basement and an ADU in the backyard because it's square footage that otherwise wouldn't be there. There's no cost to it beyond construction. And about 25% of the ADUs that go in, maybe even a little less, tend to be someone just going, "Oh, I need to house my kids or, my Mom and I are going to consolidate our properties and she's going to live in the backyard or I'm going to live in the backyard."So that's, that's kind of the preview. What small works does. We only do the infield part of that, that market . Kol Peterson: [00:07:55] So when we talk about the secondary suites, [00:08:00] do you have solid numbers or a guess as to actual permitted numbers, there are versus unpermitted secondary suites that exist?Jake Fry: [00:08:10] Well, there was an amnesty program. So if there's unpermitted, laneway, unpermitted secondary suites, I think they call them California they call them junior ADUs, they're going to be pretty modest. No, I don't have those numbers, but that amnesty program has been extinct for a long time. As an aside, if you build a single family home, you have to put provisions for a secondary suite in the basement, even if you're going to use it for family use, because rental is so rare here that they don't want to be in a position where they don't have that opportunity with future owners to have an ADU.Kol Peterson: [00:08:43] Dive into that a little bit more for us, Jake. So you're saying it's a building code requirement or planning zoning requirement that you must create a secondary suite ready lower level? Jake Fry: [00:08:53] A hundred percent. If you're doing a single family home, you have to have some accommodation that in the [00:09:00] future, that rear unit or some part of the home could accommodate a standalone living unit. Even if it's not going to be at the original point of usage. . Kol Peterson: [00:09:11] And that's, that's a pretty, aggressive standard. I really like it. Do you know of any other places that are doing that? Jake Fry: [00:09:20] No. You know, and I have to say Kol, , and not to toot Vancouver's horn, but, , I think there's, there's a couple of things that are really different.And again, maybe I could use a comparison to California because we've been looking at the Bay area a lot, cause it's very similar. What we have here is a different tax structure than you do in the States. Canada has a longstanding relationship, because it's part of the Commonwealth, with Hong Kong. I won't attribute it strictly to that, but there has been , in the last 25 years, quite a bit of, investment in property in Vancouver. And in the last 15 years, it's very speculative and because we have a different tax [00:10:00] structure than you do in the States, it's a really good place to legally shelter money with property. They don't look at their global wealth. They just look at what wealth they have in Canada. And there's any number of drivers that makes it a very attractive place to invest money in real estate. And it's a very large community, a diverse community in Vancouver. So it was also an established community of Chinese origin. And so there was any number of driving factors that really in the end basically just took the land value in this, blew it out of proportion for what local economy would support. So by example , about 4% of the earners can actually afford a single family home. The top 4% of the earners can afford a single family home in Vancouver. So, you know, we have trouble attracting doctors because even at , a good rate of a surgeon, it's still pretty expensive to buy a house here. There's lots of home ownership that's people having homes through family and so forth. But if you were to actually land in [00:11:00] Vancouver and trying to buy a home, not conceivable, to be able to do that with a normal income and certainly blue collar or middle-class income, it's almost impossible. In comparison to California. Where there are local high earning people, right? So there are people in the tech industry and yes, that's kind of a real negative effect around land prices. And that kind of wage disparity that happens , is quite acute in that part of the world that has its own challenge. But. Going back to your key point. What's the driver behind this rental is so important for local people to live here. We haven't been able to crack the nut on affordability or their home homeownership attainability, which is something that I think, we've been really working on , along with others.10 years ago, we have such an emergency. We have to enforce an ability to at least create rental stock. And that's really what was behind both the basement suite ADU or the junior ADU and the ADU develop. Kol Peterson: [00:11:56] So Vancouver is prices are roughly akin [00:12:00] to the Bay area, I believe. So could you talk about the average price point for a single family house in Vancouver. And then talk about how you see laneway homes fit into economic sustainability for homeowners who are looking at buying a property or who are thinking about building one? Jake Fry: [00:12:17] Yeah. So, this in two little pieces. So first off, what is the average property value? If you were looking at the average stand-alone home. It's going to range from the East to the West side. The further West, you get closer to the ocean, the higher the prices, but I'd say as an average, we're creeping up to $2 million for a single family home. And just to put that in context, our mean income is $80,000 per family , so there's a big disparity . Of course there are, there's always those properties that sort of skew the price at a $10 million property, $12 million property. And we do have quite a few of those. But I would say even if you were to scrub those outliers outside of the equation, you still dealing with homes that are well over $1.8 million on [00:13:00] average. Kol Peterson: [00:13:00] Right, that, just for everybody's reference, I think that's almost the exact same price point as the Bay area, right? Jake Fry: [00:13:09] Yeah. And that's probably the only large jurisdictional area within the United States where that's a comparable price point for sales on the homes.Yeah. And one of the questions is ,this popped up in the string and we weren't taking it, but someone's saying, "well, what's that how's that compared to a American dollar?" And yeah the Canadian dollar is much lower right now, but I mean, our earned dollars are the same, right? So a carpenter with a truck who's really skilled, he might have an annual income of $110k, or his family might have an annual income, $110,000, but it's for pretty skilled employee who's rarefied here.Right. So, just to put it in context, I would think a Bay area carpenter of a similar quality would make the same in American money. So in some respects, I think it's a level playing field, right? We're, we're really judging this against income.Kol Peterson: [00:13:58] The second part was how do you [00:14:00] think of secondary suites and laneway homes fitting into economic sustainability and, and sorry. And also just the homeowner mentality around the role that ADUs play.Jake Fry: [00:14:11] Yeah, sure. I'm going to break it into two parts because I think it's important. I'm going to focus on what we tend to do, which is that we're a green builder. We believe in embedded energy, the importance of keeping that principal residence because that's probably the greenest thing anyone can do as opposed to ripping down a house and building new for new sakes. So in our context, how that fits into affordability's, it's twofold probably about 80% of our customers tend to have some sort of familial relationship with the current property owner. So really typical scenario is a young couple. maybe they're just married, but they've been living together. Maybe they lived in a condo, maybe they were renting. Maybe they owned a condo and they're going to start a family. And one of the parents of the couple is like, well, build in the backyard it's all yours, you pay for it. [00:15:00] And all of a sudden you're living really nice setting, close to schools and close to babysitters, being the grandparents and so forth. That's really typical for us. It's incredibly affordable.A two bedroom condo downtown is getting close to $2,000 a month. If we were to build one of our nicer homes, we're probably just under $400,000. The cost of service that mortgage right now is probably around $1,800, something like that. And so all of a sudden we've moved from a rental scenario to a scenario where you're actually building up some equity. Now, on paper these lane homes are ADUs are for rental, but when you're dealing with a family member and they're putting equity in the property, whether it's a handshake or a formal legal document, people make arrangements so that equity's protected. And we've also found that, anecdotally, those people who've built an ADU and sold it generally make [00:16:00] about 20% off their investment on the property. So it's kind of a win-win. So if the family, and we've had this before, a family buys a home, they do it together. They lived there for a while. They sell, they both make money off the investment and they can go on into a different strata of home ownership. If we look at the lion share, the ADUs that are going in, someone will build up a property, even a speculator, will build a house and put an ADU in the back. As well, it's a basement suite. What happens here is a lot of people use the credit unions. The credit unions will take the income that the rent will generate off those ADUs and consider that part of your recognized income. And again, typically what we're finding in those rental ones is that your investment, if you were to rent that ADU, you're probably renting it $3,000. The one I just described , so you might very well be making 40% on your investment. So again becomes quite a lucrative investment. Although they're usually building for family just to compliment that [00:17:00] once in a while. We'll have somebody who's moving from a little bungalow a slightly bigger house. And they'll talk to us about building laneway house because that will help them afford the mortgage to the more expensive properties. So that's another aspect of that.Kol Peterson: [00:17:12] You tossed out a number, I realized it's not based in science, but you said, people get 20% return on their investment when they sell the property. Did you mean that if you had a $100 thousand dollar laneway home, the property would sell for $20,000 more? Jake Fry: [00:17:26] No, $120,000 more. So if we had a property worth $2 million. Kol Peterson: [00:17:31] Yep. Jake Fry: [00:17:32] Didn't do much, but you put a laneway house in and that was worth $300,000. You would probably, sell that property for 1 million, $360,000 in the market. Right that investment it's $300 for come back as a three is, when you went to sell it, anecdotally, what we're finding is that property you probably made about $60,000 on that $300,000 investment.Kol Peterson: [00:17:58] 60? [00:18:00] Six zero. Jake Fry: [00:18:00] So on a $300,000 investment. What we've been finding is people who build them and then go to sell them. They probably make $20,000 off the investment, the property's worth more to the buyers. Kol Peterson: [00:18:11] Yeah. So it's fair to say that there's no way that the ADU is going to add a dollar for dollar value. It would not be a good short-term speculative addition to the property. Jake Fry: [00:18:24] I mean, it caps out because it's, at one point it's only worth so much. Its value is only what it generates in income, if you're looking at it in that kind of very, ROI type of lens.Kol Peterson: [00:18:37] This is a really interesting topic, Jake, because there's so little clarity around this contributory value question because there's lack of sales comps. I think Vancouver, like Portland is in a position to actually be able to analyze the question a little bit more. In California there's definitely people who are thinking that an ADU is going to add more than it costs to [00:19:00] build. And I'm, I've been like, no, it just doesn't. But I mean maybe, maybe it's a local market thing and maybe it will add more? But it doesn't seem like that's the case here. I would say in Portland as a general matter, it might add 50% of what it costs to actually construct, maybe.Jake Fry: [00:19:17] I mean, yeah. We're also in a scenario, and California will be the same, where there's not a lot of contemplation about stratification or subdivision, I think you'd call it. And it's those rare projects that have an ADU in the back that can sell, they tend to be in our environment, I'd say almost a hundred percent.They just can be something around, you know, a property's been bought and there's a deal made with the city around heritage preservation. And that's benefit that's been given to the person undertaking a project. If you're a builder, you were at our level, but you're sort of a builder investor, let's say, you're making a fee on your construction and you're maybe making 15 or 20% off the overall investment.So, you know, it's not a $1 [00:20:00] in $2 venture by any stretch. Kol Peterson: [00:20:03] All right. I haven't even started on my questions yet. I knew I knew this would go in different directions. All right. I wanted to ask you about the duplex code provision. So we've been talking about missing middle housing with, Eli yesterday in Portland and Oregon.And tell us a little bit about what's going on with Vancouver with the duplex code, when that went into effect and help explain the difference between a duplex and a house with a secondary suite. Jake Fry: [00:20:29] Oh, it's pretty simple I think. One way to look at it is that our current provisions for duplex in Vancouver produces four living units on the whole property.So what happens is you usually have a principal residence. In the basement area, you'll have a dwelling unit and then someone will elect to have a laneway house. With the new duplex incentive, which we can talk about how viable it is as an equation, but not withstanding their idea was that you'd have a [00:21:00] structure that would have be a side by side or back to front duplex. And in the basement of each one, you'd have a modest one bedroom or studio. We call them walk-off rental units. So you'd have sort of student rental, you know, typically, in that first scenario where you have a house with a basement suite, you might have a two bedroom like a small family dwelling, what the duplex contemplates is much more of a single person for young couple rental. So it's really not a duplex. It's really a fourplex that's being built on that single family property. Ostensibly, but just to clarify, those basement rental units are studio to one bedroom at most, but they're quite modest. I will say, in my experience, although that's been pursued, and there is some value to it , it doesn't create enough value in the increased practices that there was a big uptick in the duplex movement.Yeah, there's, there's other things that could be done. And there's other things that have been done in the past that have been more successful [00:22:00] and part of it has to do with the challenges our land cost is so high and the construction costs it has an impact. Some of these initiatives tend to drive more expensive housing, right?So you're taking something that's currently in the market as a built form for maybe a thousand dollars a square foot. You're creating something that, although it's a little smaller, the price point might be up to $1,400 . And so you're somewhat working against affordability, granted, all of a sudden you have a 1200 square foot living unit in prior to you didn't have something that modest, but that $1200 is so dear, that it falls out of the affordability spectrum. Right? So it doesn't really get to the missing middle because you're not getting enough value out of the land, right? Cause you're not going to affect land costs too much. You not really gonna affect construction and have something that's nice.What we're contemplating, what we've been pushing, is to sort of broach a bit more density to give us one more living unit. But what we're going to do is [00:23:00] drive all that extra land value and we're going to subsidize one unit. So it will be sold below market and it will have a covenant on it.So it has to stay below market. So, you as a homeowner could go, "Well, if I do this, I'll make a little bit more money, than if I just sold my property to the land developer. I'll get a living unit for myself. I'll put a bunch of cash in my pocket, and the benefit to the city is that they get this affordable unit in perpetuity." and that's some of the ideas that we've been working on for the next phase of where we hope our ADU program goes. Kol Peterson: [00:23:33] I'd like to hear more about that, but I'm going to keep going through the list of questions that I had. So one of the trends that we're now witnessing here in Portland, in Oregon at large, in Seattle and now in California, is allowing for two ADUs. Vancouver has a lot more experience, I was hoping you could share some insights with practitioners who are considering this type of change and what are some practical considerations? Jake Fry: [00:23:57] Two things. One, we had a [00:24:00] big parking relaxation because parking is always a big issue in these discussions and we knocked our parking down to one car on the property.And I have to say, there'll be a couple of people who will disagree with me and there are certain pockets of the city where this comment is not accurate, but it didn't have a big impact. Right. And that parking relaxation is the only reason we were able to get those three units, this moving to one, one exterior stall, nothing inside the ADU, because it's just going to get co-opted into living space.Doing that made the program work. And went a long, long, long way to really secure rental tenure for people. I would say as a practitioner, if I could wave a magic wand and go, "this is the best way to do it". Getting that residential unit out of the basement and having that secondary ADU be more of a front back or side to side configuration is a much more humane way and creates [00:25:00] a lot more value for both the who's ever investing it and expecting to get a return from it. And also for somebody who wants to rent that as a living space. Which is the dream of the ADU.So you have these smaller living spaces that meet your immediate needs, and don't have nature of any excessiveness, but your have contact with the ground, we live in such a temparate place. It really adds to our livability of our domestic existence, right?Kol Peterson: [00:25:27] When there is a whole site redevelopment project, developers are compelled to build a secondary suite in the basement. Are they typically finishing that out? Or are they creating a secondary suite ready structure? Jake Fry: [00:25:41] You know, I would have to say it's a little case by case and I can't really definitively answer that, but I can tell you , anecdotally being in the streets a lot, looking at our job sites, going around the city, I'd say over three quarters of those new projects generally have those units up and running. The rear ADU that's is free square footage. [00:26:00] So I don't know a builder, who won't take advantage of that. You know, some of the really higher end places, they don't want something in the backyard. They may feel it's declasse, but, those are pretty rare individuals. And the basement suite, again, because it's home owner's discretion, but most people do it. And the rental here is still below 1% vacancy. We're dying on it. You know? And obviously the last two months is becomes very acute because now a lot of those people who are in those units are the service workers who are trying to live locally. So that's presents another challenge.Kol Peterson: [00:26:30] What additional changes would you like to see occur within the residential code in terms of middle housing in Vancouver? Given that the context here is Vancouver is already vastly in front of the curve. So what other changes would you like to see?Jake Fry: [00:26:48] I think there's threefold, in the context of our discussion I'd like to see the ADU's take on the realm of the starter home and the retirement home because it really preserves the neighborhoods. The other thing is, I'd like to see is [00:27:00] just starting to deal with things like getting three or four or sorry, four or five townhomes on corner lots. I think that's really important. We haven't gone there yet. I think it's something that's there and it's something we've seen in the past happen. We've had a lot development where we were taking our typical 33 foot wide lot and doing skinny homes, and that's something that might be interesting to revisit. I think what I'd like to do though, is I'd really like us to make the conversations more sophisticated and less complicated. Right. Really looking at end outcomes more than prescriptive scenarios.We should be dealing with general massing on the size of our ADUs and not getting into well that dormer is two inches, "like this." We've done a whole bunch of work to lower embedded energy costs while still maintaining a building code. But someone's got to look at, "Oh, wait a minute, if we can do a foundation system like this and it meets code, but it's not our common practice here or it doesn't have energy requirements, but [00:28:00] it has a net benefit ." I think those are the conversations we really need to have up and down through Cascadia. We're often held to a standard that's not necessarily appropriate to our environment. They're more national standards. And I think we need to have something that focuses on outcomes and mitigates unintended consequences rather than getting too mired in a rule book that seems to be at odds with itself sometimes.Kol Peterson: [00:28:23] What other cities in Canada are worth looking at in terms of making strides towards opening up their zoning code to allow for more housing types in residential zones.. Jake Fry: [00:28:34] The, I think every major cities had some stab at this in candor. We've just been really successful for a number of reasons. So there's lessons learned from us. There is a publication just out of Ryerson university in Toronto, which contemplates the value of the type of modest density that we work in. It really does a very good look at what the impact of that full scale of tower through medium rise and the type [00:29:00] of housing form that I think we're focusing our efforts on. I mean, we really outweigh the other ones. A whole bunch spread out through a city in an urban area. And what that brings is depth, much more beneficial than a, say a tower that might have more affordable units in it per hectare. But the impact of that is this disproportionate to the value of the whole city when you look at something that's much more widespread. Kol Peterson: [00:29:24] You mentioned that Small Works has built roughly 300 laneway homes. Could you describe, Small Works in terms of the process that you guys use for design build? Are you guys using mostly standardized models. And I just want to ask you to give a little bit of context about the standard lot sizes and alley loaded lots that you have in Vancouver.Jake Fry: [00:29:49] I'll work that backwards. So generally Vancouver is an odd shape city, but a lot of the development was done when the railroads were coming in at the turn of the century. So it's very much a grid pattern. And we have an [00:30:00] extensive I think you call them alleys we call them lanes. So most lots are serviced out the rear yard and the cars come into the property a rear access system. Hence the name laneway that we coined. And those lots pretty much are 50 feet or, or 33 feet or some derivative of that. Primarily because there was two survey companies and one had a 50 foot chain and one had a 33 foot chain and that's how the city got divided up. So we're full service. We have a sales team, we have a design team. We used to have our own factory cause we build partially off site. We're now have a joint venture with another company. And then we have a construction team and a service team. So we're the full compliment. We work on fixed prices. And so far we just find that that's the best way to work with the customer. They need to know from day one, generally, what's, it's going to cost them. We had started with the idea of having six or seven fixed plans and people could personalize them. What we found was that the city wants to comment on every plan. Things changed. It was hard to [00:31:00] create a surety. And then meanwhile, generally, the clients, because we were building for sort of homeowners, and they were living in the property, this was the retirement home. This was their starter home. So, you know, we started to get that kind of Dwell magazine creep of higher and higher finishes. You know, when I started it, I really intended to be beautiful, but modest cute little cottages, but they really became much more custom homes.So our process is custom. Every home is different, so I've got 300 homes. Every one is significantly different. And, I mean, we can only go so different, our building envelope is quite regulated. We can build to about 24 feet in height. We have so much depth off the backyard. But , for us, every project is a little different. Generally, we have three architects working or designers, I should say they're they're architect trained, but do not stamping our drawings in the office. And then we have a staff at nine in the office and then comparable staff in the fields. And then we work with sub-trades with annual contracts.So. I'll talk to Keith and I go, "Keith, you know, what are we [00:32:00] going to talk about for plumbing for these houses per year. And I have 25 homes that have contracts for, so let's work at a price," and then we're able to bring that cost to surety and reflect that into our pricing to our customers.Kol Peterson: [00:32:10] So Kelcy let's have you come on, and, if you could, show some of the images of some of the laneway homes, that would be great.Jake Fry: [00:32:18] So these are really typical. You can see this quite a variety of styles. And if anyone wants to go take a email@example.com . You can see there's quite a range of traditional modern, kind of a Cape Cod influenced. Our homes range roughly, I'd say around anywhere from 500 to 950 square feet. That one right there called Petit Versailles because our clients showed up, a very charming woman, and she had a picture of Versailles. She goes, "get me as close as you can". So if you go inside. Here we have a herring tooth, Walnut floor fireplaces, lots of custom millwork, big vaulted spaces. I mean, this is very much client driven about what they wanted. [00:33:00] Re high-end millwork. MIllwork is king in our home speaks is that's where you really get your viability of creating that storage that you need to make these as livable as possible. So, maybe I could show you one in contrast, which is one of my favorite ones, called the quintessential laneway home. I really liked this one. It's very modest. It's about 580 square feet. Really has a nice feel to it, it's very livable. Was built for a current homeowner and really met her needs.It's a small two bedroom . She later sold this and went on to house a family of four in this little house, but I think it really speaks to how much you can get out of a small space. Kelcy King: [00:33:40] That wraps up the interview portion of this episode of the ADU hour. As a reminder, these episodes are the edited audio version of interviews that we conducted via a webinar series. Good news. You can access the full video series via Kol's website, BuildinganADU.com. Now for the second half of the show [00:34:00] I curate questions from the audience that gives our guests the opportunity to dive deeper into a topic or address new ideas and questions. I see a lot of questions coming in that deal with the condoization strategy. So when you're saying that they use can really serve the first-time home buyer and retirees, people are selling the ADU's individually? Is it detached or they remain with the primary dwelling? Jake Fry: [00:34:27] Yeah. So these are not currently on the market as something you can buy, you can only rent. But what we find at our firm is because we're getting people who tend to be related to the homeowner. They're treating it as if it's their first home or the retirement home. Right. And so what happens is that in a way it's, it's having a defacto kind of co-ownership model that's naturally progressing, but, in the context of the city and in the context of how there should be functioning there, the rental units. Right. But, I think [00:35:00] it's a positive unintended consequences. This is filled the niche in the market that allows people to do this under certain circumstances. Kelcy King: [00:35:07] Can you dig into the co-ownership model a little bit more? Are you seeing that a lot? Jake Fry: [00:35:13] Yeah, increasingly because again, we discussed how challenging it is to own. We're starting to see this naturally we're getting people coming together and going, "Okay. We've had this friendship for a long period of time, or maybe we're cousins. I can't afford a home. You can't afford a home. Let's go buy one together. And we'll just have a private agreement between us." And we do see that increasingly. There's been a big drive for co-ownership in, in multi-family. And so there's a couple of groups doing that in a much larger scale, but we're seeing a heck of a lot about it on this much more smaller scale.Kol Peterson: [00:35:49] So one of the questions from the attendees was how are people financing these things, is there a renovation loan product where banks are learning [00:36:00] against the future value? Jake Fry: [00:36:02] Yeah, you'll have somebody who's lived in a property over 20 years, they bought it for $200,000 or less, even though they're sitting at something it's 1.8, they own it outright. And to get a line of credit just because of that untapped capital tied up in the land. But, again, the banks really look at that income or it's certainly the credit unions look at the income that generated. So they consider it to be quite a safe investment. A local credit union, we have a relationship for the longest time they would ask for floor plans and they go, oh, this is a Small Works floor plan, this is a two bedroom, this'll get this, and they would base the evaluation of the viabilities off the income that they talk to have some generate rent.Kol Peterson: [00:36:43] Yeah. And you say that lightly, but I think that's a really important point that a lot of banks in the U S are not able to make that leap right now. Jake Fry: [00:36:51] And we did it by fostering a relationship with a credit union and we helped them develop a product. But we were like, "Hey, look, you can do this, and this will lead to this." And they were amenable [00:37:00] to that. Kelcy King: [00:37:00] Can you talk a little bit about your experience with the prefab components? How far do you take that and what kind of savings do you see? Jake Fry: [00:37:09] It's a great question and I'm glad we get to talk about that. We went the full gamut. We never really went fully modular. Primarily we do our framing offsite. So right now, by the time we get to slab on grade, it takes us about five to six days to walk away from the building with the building erected, doors and windows on, and the roof on, and that'll be for a 900 square foot building.In our facility we work with a truss factory, as I said, it's a joint venture with them. So we do all our wall panels, floor panels, roof cassettes in that environment. We have in the past, and it was really good, process built kind of a cube that facilitated a kitchen, that would basically get bolted onto it, and it was a fully functioning bathroom and mechanical room. And we said, that's the sweet spot. You know, once you start to get into any modules that are bigger than that, it just becomes more of a hassle to deal [00:38:00] with. We are working right now in a modular foundation system, which I hope to bring to the market the next four months and I think that's going to be big game changer for us. So that's, that's probably going to be the biggest innovation. Kelcy King: [00:38:11] Thank you. I think we're going to do one more. In the U S in Portland and here in Bellingham, we have a size limit. So 66% of the main dwelling or 800 square feet, whichever is more. Is that something that you see? Jake Fry: [00:38:25] Yeah, the Vancouver equation is basically 16% of the lot. And then there's an area within the lot that you have to comply with size-wise a couple of feet off the alley. You need a minimum of 16 feet between the two residences. But we work on more of a percentage basis, but really where that takes you is in the standard lot of 33 feet, you have something just under 600 square feet. And then by the time you get to 40 or wider, you're out your maximum square footage, which is 950 square.Kelcy King: [00:38:53] I just want a little clarification. It's based on the lot, not the main dwelling. Jake Fry: [00:38:58] Yeah. It's a standalone [00:39:00] equation for the ADU. So your, your principal residence could be overbuilt or underbuilt. One of the things I will say that was really progressive of the local council at the time, was they said they wouldn't worry about any upgrades to the main house they would just like, "that's not there, that's not the house you're looking for." They would just focus on what was happening with the ADU and let any noncompliance things, unless it was egregious, be in situ and stay there. Kol Peterson: [00:39:23] Awesome. Jake, thank you so much for participating today.
Building Small for a Sustainable World with Jake Fry
The Regenerative Real Estate Podcast
In 2005 Jake Fry left his carpentry job building luxury homes in Vancouver BC to chase a dream of building small structures tucked away in people’s backyards and on alleys. Since then Jake and his firm Smallworks Studios has gone on to build over 300 laneway houses (also known as accessory dwelling units) and is arguably one of the most prolific design/builders of beautifully designed and meticulously built small houses in North America. Jake is a builder, change maker, and progressive housing policy advocate.
Families face many challenges in today’s world. Our kids are watching repurposed television shows with uncensored advertisements, while playing endless computer games and surfing the web on every topic imaginable. If it is not hours on facebook, it is the temptation to give your toddler your ‘smart’ phone for a few minutes of quite! There is no getting around it, our world is different and with it comes a whole new set of challenges, including how to parent in the digital age. This seminar will provide some practical tools for navigating the “new normal” as a family.