Modular Homes vs Stick Built: The Future of Affordable Housing & Faster Construction

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Show Summary

In this conversation, Dylan Silver interviews Anthony Zarrilli, a modular home builder, discussing the benefits of modular homes in addressing the affordable housing crisis. They explore the construction process, the resilience of modular homes, and the growing market in areas like the Carolinas. Anthony shares insights on navigating the buying process and the advantages of modular construction over traditional methods.

Resources and Links from this show:

• • • Investor Fuel Real Estate Mastermind
    • Investor Machine Real Estate Lead Generation
    • Mike on Facebook
    • Mike on Instagram
    • Mike on LinkedIn
    • Zarrilli Homes’ Website
    • Mantoloking Road Alehouse’s Website
    • The Mantoloking Road Playhouse’s Website
    • Anthony Zarrilli’s Email Address: [email protected]
    • Anthony Zarrilli’s Phone Number: (732) 262-4848

  Listen to the Audio Version of this Episode

  Investor Fuel Show Transcript:

  Anthony Zarrilli (00:00)
  They’re built in a factory. So ⁓ I’ll say this, I was brought up a stick builder. I think we build an incredibly great stick built home, but you can’t, and not that it’s any more, it’s unsafe or it’s ⁓ not built correctly, but when you’re building stick by stick out in these weather elements, we just had a blizzard the other day. I’m driving past stick built homes that,

  we’re just framed, they’re partially framed, that are covered in snow and ice. And it’s going to be that way for weeks. These structures are built, ⁓ never touched by water, ice, rain, and they’re built in a controlled environment.

  Dylan Silver (00:31)
  That’s right.

  Hey folks, welcome back to the show. Today’s guest, Anthony Zarrilli is a modular home and stick builder in residential and commercial real estate. He’s active in New Jersey and the Florida Keys. Outside of real estate, he’s also a restaurant owner, theater owner, and an active member in multiple real estate communities. You can find him at zarrillihomes.com. Thank you for joining us today, Anthony, and welcome to the show.

  Anthony Zarrilli (02:34)
  thanks for having me, Dylan. I appreciate it. It’s great to be here.

  Dylan Silver (02:38)
  Now, modular home, didn’t mention this to you before hopping on here, but modular home I’m particularly passionate about because I feel like, and I don’t feel like it’s caught the wind that it can in the coming years, but I feel like it’s an answer or one of the answers to an affordable housing crisis that we’re seeing.

  Anthony Zarrilli (02:57)
  It absolutely is. Our market here that we build for is ⁓ more on the ⁓ primary home residents. We’re in ⁓ on the ocean and waterfront communities. So it’s higher end, but I’ve done ⁓ homes that are first time buyers and you can build them with any specifications that you want. And they’re much quicker.

  to get completed, which saves time and money for everyone. So for the affordable housing side, yes, it can fulfill that need that’s out there and it’s starting to catch on. And I think the more that people are educated and the public is educated, they’ll see that this is something that can really help that ⁓ segment of the market.

  Dylan Silver (03:50)
  Now, for folks who are looking into modular, do they have to have a plot of land on the outskirts of city limits or something like this where there’s going to be maybe less restrictions and maybe an easier permitting process? Or can you put a modular home in the middle of a highly developed area?

  Anthony Zarrilli (04:13)
  Oh, it’s funny you say that. we build, most of our building is done in highly, highly densely populated areas. Meaning, you know, the properties are typically 40 or 50 by 100 and the properties next to it are. So when we come in to, if you’ve seen some of these sets that we do, the crane comes in, lifts the boxes up, puts them in place.

  We’re literally lifting up and over other structures to get to our property. We’re going over other homes, we’re going over other buildings, we’re going over power lines. So there has not been a location that ⁓ I’ve been asked to build at that I haven’t been able to make it work. It’s a little challenging, but we absolutely can get it done. ⁓ Whether it’s in the suburbs or it’s in ⁓ the downtown Philadelphia area.

  Dylan Silver (04:58)
  Yeah.

  Anthony Zarrilli (05:06)
  or New York City, you can put these anywhere.

  Dylan Silver (05:56)
  Now, are you in the modular space? Are you going direct to consumer? Are you working alongside investors who may be holding these properties as a rental of some kind?

  Anthony Zarrilli (06:08)
  So the majority of our market is single family homeowners. ⁓ It’s either their primary residence or a secondary ⁓ vacation home. But we also do and I’m in the process as actually right now about 20 minutes from my office, we’re building a rental home for a customer. So we do both. ⁓ And it just depends on the needs of the customer.

  Dylan Silver (06:35)
  One of the interesting things that I think people when they think modular, sometimes they get this misconception, but I’ve now had so many folks who I’ve spoken with on the show and then outside of the show who really educated me, modular homes in many cases are disaster resilient, that they’re wind rated beyond what potentially a stick built home could be. And then I was also unaware of this. ⁓ In most cases, they’re being built in like a temperature or maybe not temperature, but outside

  Anthony Zarrilli (06:53)
  Yes.

  Yes.

  Dylan Silver (07:05)
  of the inclement weather so they may be being built indoors which means that the build quality could even be higher.

  Anthony Zarrilli (07:09)
  Yes.

  So yes, I’m finding there’s less of this, but I don’t know where along the line people with modular and mobile kind of put them together. And when they thought of modular homes, they’re thinking of mobile homes, which mobile homes have their own market. Nothing wrong with that. But when you’re thinking of modular people really had, there was a stigma.

  Make a long story short, what you brought up about wind resistance, I’m building them in the Florida Keys, Key West, Big Pine Key, Ramrod Key, it’s 180 mile an hour wind zone in Monroe County. These can withstand any of those hurricanes that have gone through there. I’m actually going down there in a couple of weeks, because we’re doing a few more. We’re building them in North Carolina. And yes, kind of jumping on what you said about controlled environment.

  Dylan Silver (08:01)
  Yeah.

  Anthony Zarrilli (08:06)
  They’re built in a factory. So ⁓ I’ll say this, I was brought up a stick builder. I think we build an incredibly great stick built home, but you can’t, and not that it’s any more, it’s unsafe or it’s ⁓ not built correctly, but when you’re building stick by stick out in these weather elements, we just had a blizzard the other day. I’m driving past stick built homes that,

  we’re just framed, they’re partially framed, that are covered in snow and ice. And it’s going to be that way for weeks. These structures are built, ⁓ never touched by water, ice, rain, and they’re built in a controlled environment.

  Dylan Silver (08:38)
  That’s right.

  Anthony Zarrilli (08:47)
  They’re brought out, wrapped in plastic, and then we set them on the foundation, and then we finish them from there. and I could go, I mean, we could be on this call for hours, and I can go into specs and details about the efficiencies, but…

  Basically, you’re talking about strength. They have approximately 20 % more lumber. They’re held to much higher standards with the metal strapping that holds them together. And again, not that the stick belt is unsafe, but if you picked up any stick belt home that’s built and put it on a truck and drove it at 85 miles an hour for five or six hours, it’s not making the ride. Modulars, that’s how they get to the property.

  Dylan Silver (09:04)
  Yeah, yeah, yeah.

  Right.

  Yeah, yeah. And you mentioned something, you know, coming from the stick built background. Are you seeing a lot of this? Are people with a stick built background getting into modular? Or are these two distinct spaces?

  Anthony Zarrilli (09:44)
  So it’s funny you say that. ⁓ Again, it’s a whole backstory of how I got involved in it. I’m glad I did. ⁓ But what I’m finding the problem is with stick builders is they’re not giving it enough time for the learning curve. They’ll do one and you’re still building, but it’s a different process.

  You’re still building a home. You still have plumbing, electric, HVAC, foundation, decks, porches, all that stuff. It’s just done and not the same ⁓ scheduling as you would a stick bill. So they’ll do one. They get confused and frustrated. Maybe they didn’t put the margins in there to cover their costs to get through it and they walk away. And I hear about this over and over and over. But if you do one,

  Dylan Silver (10:37)
  Hmm.

  Anthony Zarrilli (10:38)
  then two, then three. By the time you get through that learning curve and the ones that stick it out, you go, my God, like, why didn’t I do this before? The time that you save, the manpower that you don’t need on site. And again, a whole nother conversation that the construction industry, there’s a lack of electricians, plumbers, HVAC, framers, SET crews. It’s just what’s going on in the country right now. Not a lot of… ⁓

  Dylan Silver (11:02)
  That’s right.

  Anthony Zarrilli (11:08)
  You know, for years, everybody was pushing, go to college, go to college. And that’s great. There’s nothing wrong with it. But we weren’t looking at the skilled workers on site. So Modular takes a lot of that ⁓ labor that you need on site out of the equation. Again, thus saving time and money and getting the job completed.

  Dylan Silver (12:03)
  Now for folks who are interested in modular and they are not exactly sure how to go about the process, what is typically their first point of contact? Are they reaching out to a builder? Are they reaching out to a realtor? Are they reaching out to a lender? And how do these pieces coalesce?

  Anthony Zarrilli (12:22)
  Okay, so there’s a couple different ways. If they own land already and they contact me, I’ll go do a site inspection. I like to see what’s there, what has to be demoed to come down. We do a lot of demolitions before we put up homes. We’re actually doing one today down in Surf City on Long Beach Island. ⁓ And then we set the foundation, put it in. So they’ll come to me, we’ll design the house out that fits in the property. ⁓

  You know, we try to avoid variances and things like that, but it happens, but we still design the house to fit. ⁓ We also have customers that come in that don’t have any land, but they know the towns they want to go in. And I, from doing this for ⁓ over 45 years, I know like costs of land, where they should go when they tell me their budget. What we do is we work backwards. We design the house that they want and we get the cost. Now they go, okay.

  Now I need to find the property that it could fit on and the price point to add to the cost of the house that I want to fit in my budget. We do that. I have real estate agents call me. They have customers that are looking to build a new home and they’ll come to me and say, they want to be in town here, whether it’s Brick, Point, Manisquon, Ocean, Monmouth County. And this is what they’re looking to build. Can you give me your price? I work with them. Lenders, as far as lenders,

  ⁓ I’m not a big fan of the big lenders, you know, I don’t want to throw out names, but you know, mean the primary banks. ⁓ I deal with some local guys. And I could say that say this Manisquan Bank, they’re phenomenal. I’ve been dealing with them for over 25 years. ⁓ They know the process, they know Modular. They make it seamless for the customer, whether they own the land and we’re knocking down and putting up a new home, or someone coming in to buy the land, because they

  Dylan Silver (13:52)
  Yeah, sure.

  Anthony Zarrilli (14:18)
  they’ll give them funds for their land purchase and then for the construction loan. And it converts directly into a mortgage when they’re done.

  Dylan Silver (14:24)
  That’s a huge deal.

  That’s a huge deal. I’ve had issues with this anytime that there’s land involved in being financed, it seems to be like out of almost everyone’s wheelhouse, right?

  And so if they’re able to do the land plus the modular, that’s a big deal.

  Anthony Zarrilli (14:39)
  Yes.

  ⁓ it’s awesome. And it’s seamless. they just, we have disbursements. It’s typically eight payments. And then at the end, there’s no extra fees or anything. converts directly into their mortgage.

  Dylan Silver (14:54)
  Now I would like to pivot a bit here. When we talk about New Jersey, East Coast in general, going down to Florida, there’s a couple different markets that I’ve seen just have really developed a lot of steam. You mentioned at one point that the Carolinas, are you active as well in some capacity in the Carolinas?

  Anthony Zarrilli (15:13)
  Yes.

  Right now I’m in the process of putting together, and I actually have the plans right here in front of me. I’m putting together a 157 lot subdivision in Western North Carolina.

  Dylan Silver (16:12)
  It does seem to be like, and I don’t know what’s in the water out there, but I haven’t actually been to the Carolina, shame on me, but it does seem to be a great place for families. And then also a hotbed right now, particularly for real estate investors, both in state and also out of state. A lot of people looking at the Carolinas.

  Anthony Zarrilli (16:23)
  Yes.

  Yes, the Carolinas are booming. Tennessee is booming. It’s funny, I’m actually going to go down there in about a month and a half in Monroe County, Tennessee, and people are looking to move to away from the cities to more. We were talking about this a little bit prior prior to a place that makes them happier and is a little more peaceful away from the hustle and bustle.

  of the everyday life. And Tennessee and the Carolinas are offering that. ⁓ It really is a beautiful place.

  Dylan Silver (17:01)
  Yeah.

  Now, when we talk specifically about building out communities, is this a bulk of your business or would you also be doing, is this a separate segment, right? You’ll work with folks who are buying one modular home and then you’re also building out subdivisions.

  Anthony Zarrilli (17:25)
  Yes, yeah, so we do both. We actually have a land investor in the Carolinas and they came to us. I have had several conference calls with them. I’m in the process of finalizing designs. And like I said, it’s 157 units and they appreciate the speed, the efficiency, the cost savings of building with modular. Like we’re gonna put up

  a couple ⁓ models, and when people come in and purchase them, they’re gonna come in and purchase them, within a few months, they’re gonna have a house sitting on the property that we’re gonna be sitting completing. And weather is not gonna deter us finishing anything. ⁓ So that side of it, it works. And then on the individual side, which has been our ⁓ staple of our business, that’s what we started with, individual homes, ⁓

  Dylan Silver (18:05)
  Yeah.

  Anthony Zarrilli (18:25)
  I have people every day coming in asking me, you know, we designed it to fit on their property ⁓ and we can make it as custom as they want it. And from a price standpoint, you know, designing a home from scratch and putting it on their property costs no more than picking out a plan. We’ve built over 1500 homes, picking out a plan and building that on their property. They’re all finished exactly how they want them, whether it’s…

  you know, nine foot ceilings, tankless hot water heaters, granite, silestone tops, crown moldings, all of that. And it doesn’t cost anymore whether we design it or they pick one. ⁓ It’s the same, you know, same price.

  Dylan Silver (19:06)
  Yeah.

  Right, right. We are coming up on time here, Anthony. Any new projects that you’re working on and then as well, what’s the best way for folks to get in contact with you or your team?

  Anthony Zarrilli (19:13)
  Okay.

  So we are working on the project, like I said, a larger project in Carolina when that develops, you know, I can let you know and we can get back on that. in New Jersey, we’re setting houses every few weeks. If someone would like in the area here, would love to come to a house set to see it or walk when ⁓ any of the homes that are under construction or even some that are done. have hundreds of homeowners that allow me to use their house quote as like a model. If someone sees something they like.

  and want to see the inside. And I have lists that I can send out, but if they want to contact me directly, they can email me at [email protected]. They can call the office at 732-262-4848, or check us out. All our information is on our website at zarrillihomes.com.

  Dylan Silver (20:09)
  Anthony, thank you so much for coming on the show. Thanks for your time today.