How ADUs Turn Backyard Space Into Cash Flow, Equity, and Real Estate Wealth

John Maxie (00:00)
we’re building a 300 square foot or 600 square foot casita in their backyard that’s costing them 150 grand and it’s worth 200 right or 250 depending on where they’re where they’re at in town. And you know it takes a while to build equity and property so this is kind of like you know the process of doing a new build. You know it takes some time six to eight months but when they own the land already and the value of the square footage price per square in that area is high. It’s really a

Michelle Tack (00:08)
Mm-hmm. Mm-hmm.

Mm-hmm.

John Maxie (00:30)
you know, kind of a no-brainer for some of the customers, right? On a thousand square foot casita that you spend 300 grand on, but it’s worth 450 a square, you know, you made a 50 % return on your money in six to eight months.

Michelle Tack (00:33)
Yeah, absolutely.

Hi, I’m Michelle Tack. Welcome to Real Estate Pros podcast. We have a fantastic operator here today with us, John Maxie. John, give a shout out to the team.

John Maxie (02:26)
Hey everybody, John Maxie here, excited to be here.

Michelle Tack (02:30)
John and I have spent some time ⁓ getting to know each other and understanding his business. And I’m really psyched to have him here today. John specializes in ADUs. ⁓ And not only the build out of those, the

delivery of those through that build out, but also ⁓ the actual ⁓ consultation.

to people about how

this could be a revenue generating ⁓ potential for you, but also just in terms of a good investment. So with that, John, ⁓ could you, for those people that don’t come from the ADU world, explain what you do and what market you serve, please?

John Maxie (03:20)
Sure. So I’m in Arizona and recently Katie Hobbs in 2024 passed an ADU law here in our state that just made it a little bit easier for homeowners to add the ADUs without having to cut corners, right? In the past, a homeowner would put an ADU in the backyard, have the permitting department come in and kind of look the other way when they saw the spot for the stove, right?

Michelle Tack (03:46)
You

John Maxie (03:47)
They didn’t allow the full casitas with kitchens in it for homeowners to rent out. ⁓ And so they had passed a law that made it a little easier. So we decided to start a company that would focus 100 % on building these casitas for homeowners at affordable price per square cost so that they could do three things. One is to really increase the equity of the property by adding square footage in the casita. A lot of times you’ll see properties where

Michelle Tack (04:15)
Yes.

John Maxie (04:17)
350 400 a square foot and your your pricing is a lot less than that. So you’re able to build equity cash flow by renting it out and then the need right now for housing a lot of homeowners are looking to Put a loved one in there. Maybe it’s an in-law or a parent that’s coming back or a child that’s coming back to the house So there’s lots of need for these types of products and we just wanted to build a company that focused on doing that from start to finish

So from design to permitting to finance, yeah.

Michelle Tack (04:48)
That’s awesome.

John Maxie (04:51)
So that’s our main thing.

Michelle Tack (04:51)
I know that, ⁓

I really appreciate that. What really impressed me about our discussion is that you’ve come in and into a market that some people, they know what a casita is, but they don’t really know what the opportunities that they can ⁓ derive for themselves in terms of having that as an income. But also your background in, and you had represented a solar company previously.

And what I really enjoyed was your understanding of how to put processes in place to make the business run in an effective manner. Can you talk about how you’re doing that today to make, you know, what you’re implementing to ensure for continued success and as you’re growing, as the company has been, you know, fairly nascent, under two years old, ⁓ but a lot of success today.

John Maxie (06:33)
Yeah.

Yeah, so the main thing that we focused on was really educating our consumer, right? So we we look at ourselves as as part of that same culture of coaches and and trainers on real estate, right? We sell casitas, but we really help people build wealth one casita at a time. ⁓ When we are discussing the process with the customer about the value out of this, we understand that not everybody understands. Real estate, right? A lot of our homeowners are not

Michelle Tack (06:45)
Mm-hmm.

John Maxie (07:09)
seasoned investors. So they haven’t even thought about the fact that building the casita is going to increase the equity of their home until we’ve explained that to them. ⁓ They don’t realize that the amount of money that they can collect from renting it is less than what the note would be on financing it. So ⁓ it’s really an education process that we put the customer through. And we look at our customers as future partners because

Michelle Tack (07:30)
Mm-hmm.

John Maxie (07:39)
If they have success with the first project that we do in their backyard and they see this as a way that they could build wealth, we’re going to be the resource for helping them buy that next property, get that property financed, and put a casita on there. So it’s ⁓ an educational type approach.

Michelle Tack (07:53)
That’s awesome.

It’s. Yeah, and and you know when you look forward. To growing right, we talked about that. You know you have a the company has an audacious, you know. don’t know if it’s audacious, but certainly has a multiple growth pattern. You know double digits looking to and continuing to do going forward. Can you talk about?

John Maxie (08:13)
yeah.

Michelle Tack (08:26)
⁓ things as you grow ⁓ that you may need to morph to or react quickly to. Maybe it’s a deal that went sideways at some point, but that you want to make sure that you’re armed for as you prepare yourself for this growth and continue to grow.

John Maxie (08:47)
Sure,

I mean, I think one of the things that we are underestimating is the power of the referral and how many clients, like we’ve had several projects where, oh wow, this makes a whole lot of sense. Can you do it on my other four properties? And really quickly, you know, we can morph into some rapid growth where we’re gonna have to up, you know, the amount of crews that we have.

the amount of staff that’s handling all the processes, the permitting. And we only have one architect working for us right now. At some point, you might need to take on another architect to build all these out. So it’s really just being strategic about the growth because the talent that we have in the room and the concepts that we’re teaching are contagious, right? A lot of our homeowners go back to the kitchen table the next day after talking to us and they’re sharing with their friends and family what they learned because

we’re building a 300 square foot or 600 square foot casita in their backyard that’s costing them 150 grand and it’s worth 200 right or 250 depending on where they’re where they’re at in town. And you know it takes a while to build equity and property so this is kind of like you know the process of doing a new build. You know it takes some time six to eight months but when they own the land already and the value of the square footage price per square in that area is high. It’s really a

Michelle Tack (09:53)
Mm-hmm. Mm-hmm.

Mm-hmm.

John Maxie (10:14)
you know, kind of a no-brainer for some of the customers, right? On a thousand square foot casita that you spend 300 grand on, but it’s worth 450 a square, you know, you made a 50 % return on your money in six to eight months.

Michelle Tack (10:18)
Yeah, absolutely.

Yeah, absolutely. Absolutely. ⁓ In terms of things like, you know, that you think about as you’re growing, know, help me understand some of your more daily challenges that you might have that you’re bringing your skill set from the solar business into making this

a continued success. Can you talk to that a little bit?

John Maxie (11:32)
Sure. Yeah,

for sure. I want to in my solar career, I was responsible for what’s called a dealer network. So most solar companies, the actual installer that does the physical work, does the permitting, they don’t they’re not responsible for the sales. They outsource it to a dealer network. These are kind of like your realtors for a broker, right? Or your mortgage specialist for the mortgage broker. So they’re the sales force.

And a lot of them are independent, some of them knock doors, some of them write ads. ⁓ And when we got here to ⁓ Sunflower, the company was doing everything internal. And so that’s going to limit the growth because you only have a few people that can actually meet with the customers. ⁓ And so when we expand it to the dealer network, ⁓ the plus is we’re to have a lot more people talking about the product.

Michelle Tack (12:11)
Mm-hmm. Yep.

John Maxie (12:24)
having an opportunity to generate revenue for their family as well as help families grow their real estate portfolio. But one of the strategic things that we’ve already realized is we got a 6,000 square foot office here in Phoenix and it’s where our clients come to meet us, right? Because we want them to see the brick and mortar building, meet our architect, meet our finance department. And we’re probably gonna have to make some more space for conference rooms.

Michelle Tack (12:42)
Mm-hmm.

John Maxie (12:51)
because we’ve had days here where there’s three or four clients at the same time, you know, just because the volume is starting to kick up. At least for the people that are interested in looking at this as an opportunity, we’re getting more and more people in the doors, you know, talking about their project and what it would mean to put a casita in their backyard. So we’ll have to adjust for that, you know, as volume kicks up. We did meet with a company in California that’s using the same marketing company as us.

Michelle Tack (12:52)
Yeah.

Yes.

Mm-hmm.

John Maxie (13:21)
But they built casitas in California and they didn’t have any in-house financing. So we ended up working with them to become their finance company. But then in meeting with them, we flew them out. They’re actually coming out next week to spend some time with us because we realized, I guess in that market, they’re closing a little faster by closing at the kitchen table when they do the house visit. ⁓ We’ve decided to bring them down to the office and see a brick and mortar building before they make that investment.

But maybe we can speed things up by getting the initial agreement signed at the home as opposed to coming into the office. And again, like I said, we’re a year and a half into the business, so we’re still learning a lot of the ins and outs. But the value that we add is tremendous, so it’s starting to pick up some speed.

Michelle Tack (14:08)
How would you say, in, and we talked about this before, you talked about it throughout the conversation today, but how would you say that you really differentiate yourself ⁓ versus your competition?

John Maxie (15:03)
Sure. So we’re one of the pioneers in at least in our state to do this. We have more permits in the city, ⁓ you know, waiting to get approved than any other Casita builder here. ⁓ Most of the Casita companies are GCs that build Casitas on the side. So you ask a GC to do that. They absolutely can, but it’s not their primary focus. So when it comes to financing, they’re going to ask you to get your own financing. Sometimes they’ll have an architect in house. Otherwise they’re going to

ask if you’ve already got plans, right? So for the homeowner, it makes it a little bit more difficult when they’re not dealing with a company that is start to finish, right? Because of the people we have involved in our organization, everything is done for the customer so that they don’t have to worry about permit, utility, the design, finance. And even if they’re looking to rent it out, we have our partners here that can help them get a tenant in there. So we really try to make it

as seamless as possible and you would think that that would result in a higher price per square. And the reality is we have some competitors that are $150 more per square than us to build the exact same casita and we’re not quite sure why. I think what it is is that they have to make a lot of profit because they don’t do a lot of, they’re not anticipating as that as their main business, right? Whereas if we’re trying to pull a shell 30, 40 of these a month,

Michelle Tack (16:20)
Mm-hmm. Mm-hmm.

Yep. Yep.

John Maxie (16:30)
we don’t need to make a killing on each Casita. We’re trying to build a Casita machine, right? So this brings tremendous value to the customer because they’re able to have all that for the partner in building it, but then not have it cost them an arm and a leg or eat up all the equity that would be built because we charge them for it, right? If I’m in Arcadia and it’s 600 a square there and I’m in the Far East Valley and it’s 195 a square there,

Michelle Tack (16:36)
Right, exactly.

Yep, got it. Yep.

John Maxie (17:00)
cost to build a Casita is the same. But what you’ll see is people are going to charge the Arcadia customer a premium just because of the area of town it’s in. And then we’ve decided not to do that. And so, yeah.

Michelle Tack (17:11)
Yeah, good

for you. That’s great. Last question before we wrap up ⁓ for the day and you give your contact information. I have a question as to how you’re using your network. What is your network? And again, I don’t mean that by name, but just how did you, John, come into the company and start?

thinking through how to increase the referral basis, folks that know you.

John Maxie (17:47)
Sure. ⁓ you know, social media content, right? ⁓ I’ve been posting on all the platforms to let them know, you know, what I’ve moved on to. Because most of my associates know me as the solar guy because I had been in the solar industry for six years running a large installer here in the Valley. ⁓ What I noticed from the other executives in the company that all the referral sources are realtors, mortgage professionals. ⁓

It’s sometimes some people in the landscaping and remodeling business because it’s outside of their scope. And so they’ll refer business over to us. ⁓ And then more recently, looking at a lot of the coaching platforms for real estate ⁓ investors, right? Because I follow an investor that this is his main play. Like he teaches people how to strategically buy properties that you can put a casita on to house hack and sometimes subdivide that.

into two separate parcels so that you can maximize ⁓ your return on that investment because building in dense areas just has a high return on the investment, right? So my goal now is to get involved in as many networks as I can that are real estate focused just to share what we’re doing ⁓ and see if we can’t get some volume from those referrals. ⁓ It’s also, you know, ⁓

a referral program that pays pretty well when they’re referring over customers just because everybody wants to make a little bit of extra money for themselves. ⁓ And even at our prices where there’s still revenue there that can be ⁓ paid out as referral fees.

Michelle Tack (19:21)
Right.

Great. Before we go, John, Maxie, can you provide the listeners with your contact information for those that may want to invest, buy, refer, et cetera, before we leave?

John Maxie (19:41)
Yes,

definitely, Michelle, and thank you again so much for having me on the show. My phone number is 480-388-7950. And that’s actually my direct line. The company is Sunflower Casitas. So it’s www.sunflowercasita.com. And then my email is [email protected].

Michelle Tack (19:46)
Absolutely.

We really appreciate everything that you’ve done and through the education, John. And so thank you very much. For those that are listening ⁓ that are subscribers, we continue to thank you. ⁓ And I’m hoping that you enjoy the content today. For those who are not subscribers yet and enjoy the content, please sign up. And John, continued success and wish you the best.