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Maria Kuntz: Every episode, we have an LBIdea or a key takeaway. And today’s LBIdea is that taking an entrepreneurial approach can help us find new solutions to pressing issues, including making home ownership more attainable for first-time buyers.

Jamie Saunders is a Leeds MBA alumna with a background in architecture and real estate analysis. She's the founder of Affix Communities, a company using innovative tactics to bring attainable starter homes to Colorado.

Jamie, welcome to the podcast.

Jamie Saunders: Thank you so much for having me. I really appreciate it.

Kuntz: Yeah, it's great to have you with us today. And I'm really excited to learn more about Affix and your journey to starting this company. So, just to get us started, can you tell us a little about Affix and how the idea for it came about?

Saunders: Sure. I mean, as you mentioned, we're really focused on creating attainable starter homes. These are a little bit smaller than the homes that are typically on the market. There's plenty of people who are looking for smaller homes, but we're really focusing on that, sort of, first-time buyer looking for a small place to get their footing in the housing market.

So, the way that this project started was, actually, a phone call with my little sister who has been looking to buy her first home for a couple of years, but it's a little tricky for her because she's also an entrepreneur and her income can fluctuate — you know, big boom one month, pretty lean the next month. So, it's been a challenge for her to find a house that is at a good price point for her.

There was a day that we had a phone call. She called me because her car had finally just died. And it was the same day that she found out that her rent was increasing again. And this was, I believe, in 2021, which was the year that rents were, like, really surging, like, 10% rent growth, just crazy. So, yeah, she was pretty distressed and she said, “I feel like I'm trapped in this, like, hopeless rental cycle. I don't have any stability. I feel like I can't get enough money to scrape together for a down payment. And owning a home, it just seems like a pipe dream.”

And that moment, it really broke my heart, obviously. But it also made me furious. How is this the best that we can do? I just don't believe that that is acceptable. And, you know, at the time I was working as an architect and I was looking at all these things that make housing more expensive, and I started to see some places where I thought maybe there was opportunity. But when you're an architect, you are working for the developer. And if the developer is unable or unwilling to explore new avenues, there's really not a whole lot that you can do from the architecture side to push innovation.

So, as soon as I, kind of, realized that that was the case, I was like, “All right, I guess I got to go back to school, got to figure out how to be the client, how to be the developer, and see if there's any opportunities, you know, if I can do more research into this innovation and see if there's, you know, anything there.” And so, that was what led me back to �鶹��Ѱ�����to pursue my MBA.

Kuntz:��So, you really wanted to flip which side of the table you were sitting on and which side of the challenge.

Saunders: Yeah. You know, I think a lot of architects are very forward-thinking people, but we are constrained by what our clients will allow us to do. And so, yeah, flipping onto the other side of the table, I think, was critical for me in expanding my, sort of, capacity to explore.

Kuntz:��So, Jamie, tell us about your time in the Leeds MBA program.

Saunders:��So, I went back to get my MBA at the Leeds School of Business. And one of the reasons that I chose Leeds was because they, sort of, offered this opportunity for me to do an MBA with two focuses. So, I have a dual focus in real estate and, also, in entrepreneurship. And that was pretty critical for me to be able to launch Affix. And I was commuting from Denver, so I would be spending, like, 8 to 10 hours a day in the Leeds Business School. And there's a place there called the Deming Center for Entrepreneurship. So, I would be spending the vast majority of my days, sitting and studying in that space.

And there was this guy who would be in and out of that center. He's a really noticeable guy. He's got a really loud voice. He's very animated. And so, I would be, like, eavesdropping on his conversations that he would be having with students, his faculty. And he would be sitting with some of the other entrepreneurship students and really just grilling them on their business ideas.

Sometimes, he was very funny. Sometimes he's very intense. But I noticed this guy a lot. And one day, he came up to me while I was studying in the Deming Center. And he's like, “I noticed that you're in here all the time. What is your deal?”

Kuntz: “What's going on here?”

Saunders: Yeah. So, I told him a little bit about my interest in finding new ways to build. And he's like, “You know what? You should take some of my entrepreneurship classes.” So, it turns out that this guy was Brad Werner. And he is one of the faculty in charge of the New Venture Launch class at CU. This is a class that helps new founders prepare themselves to compete in the New Venture Challenge Competition, which was the path that I eventually took.

And through all of Brad's classes, that's where I met my co-founder, Ben Asser, who's been amazing and has worked with me the past year and a half, really working out all the kinks of this idea and doing financial modeling, interviewing hundreds of people, professionals in the industry, as well as potential clients, home buyers, really, to understand where we can optimize this idea.

So, thank you to Ben Asser for his instrumental part that he has played in this. But I did mention the New Venture Challenge, and that was something that was a great springboard for us. We competed in the challenge, where there were, I believe, was 92 businesses that were competing. And we made it into the top five, which was, it was an incredible experience to be able to pitch over and over. Though the format of the competition is that you pitch to venture capitalists. And of course, they grill you, and you make it through three different levels in the competition. And that ends with the five finalists in the finals competition, which was an amazing experience. And it really helped us to win a little bit of money and get off the ground. So, I would say my time at �鶹��Ѱ�����really culminated with that competition. And it was a really amazing experience.

Kuntz: That is really incredible and something to be so proud of. And obviously, it's working because, you know, we're here talking today about Affix. Before we dig a little bit more into, sort of, what's happening in real estate in Colorado, I'd love to just know about Brad Werner and about the Deming Center. Were there other classmates, colleagues, or experiences that really were integral to your success in launching Affix?

Saunders: That's a great question. There were so many students that were very inspirational to me along the way, other founders of their own businesses that I was, kind of, within that New Venture Launch cohort. Really cool because we're all going through some of the same difficulties and can really support each other in some of the challenges that come along with a super, super early stage venture. And a lot of these businesses, I'm really looking forward to those founders and those businesses really exploding as well.

But I do want to shout out, also, the Klump Center for Real Estate. They've been really helpful, also, in supporting me, not only with the Affix Venture, but also just getting me a really good solid understanding of the fundamentals of real estate, which is the thing that I came to �鶹��Ѱ�����to learn.

Specifically, I really appreciated Ben Woolf's class, which was The Principles of Real Estate. That foundational class was really great. And then, I did compete also in the NAIOP Rocky Mountain Real Estate Challenge, which was another really instrumental part of my education and definitely a really difficult process to go through. In that competition, you act as a developer. And for our competition, we had a 40-acre site. So, that's a lot to develop or try to come up with a development plan in a couple of months. My team made it to the finals in the NAIOP Rocky Mountain Real Estate Challenge as well. And that also was a really great experience. So, I'm very thankful to all of the faculty also connected to the Klump Center for Real Estate.

Kuntz: Yeah, it sounds like you did a really incredible job of just building this robust network of peers, faculty, mentors, and that community of success around you.

Saunders: Oh, absolutely.

Kuntz: I love that. I love your openness to feedback and connections. It sounds like, I mean, obviously, you've spoken to so many people, and that, in and of itself, takes a lot of time and really says something about your dedication to, not just the business, but to finding a solution.

Saunders: Absolutely. Yeah, we are focused 100% on finding a solution to this. And Affix might be the answer. It might not be the answer. We might have to pivot. We might have to completely scrap this and try something else. But we are here for the long haul, and this is a problem that we really want to solve.

Kuntz: Well, with that, let's talk a little bit more about the problem or the challenge that's facing many folks who are aspiring to be homeowners. So, what are the factors that you're seeing in Colorado and across the country that make buying a home feel unattainable to a lot of people?

Saunders: Gosh, there are a ton of things that factor into this, and they all build on top of each other. So, I'll pick a couple of things that are, sort of, what I see as being big factors to this. But please, know that there are so many other things that play into this as well. In my mind, I see, actually, zoning laws as being the crux of a lot of the affordability problems that we're facing right now. Zoning are the rules that control what we're allowed to build. And there's just a lot of things embedded into these rules that makes affordability really difficult.

So, one example, single family zoning in the area that we are looking to build our first prototype, they won't allow a lot smaller than 12,500 square feet for one home. In my opinion, that's a lot of land and, kind of, a waste of land if we're trying to achieve attainable home ownership, because land is the biggest single line item as far as your costs go. And it's much better to split that cost across more people. So, if you can get smaller lot sizes, that's one way to accomplish it. For a developer, it doesn't make a ton of sense to spend a ton of money on this giant piece of land and then put a teeny, teeny house on it. So, unfortunately, that has incentivized developers and builders to make these bigger and bigger houses that fill up these bigger and bigger lots. And that becomes something that, eventually, prospective homebuyers struggle to afford.

So, that, sort of, ties into the next layer of things, which is that the average home size in America has ballooned. In 1950, the average American home size was 983 square feet, and there was an average household size of 3.8 people. So, that turns into about 250 square foot per person in that house. The average home size in America today is about 2,500 square feet, with an average household size of 2.6 people. So, that's close to 1,000 square feet per person.

Kuntz: Wow. It's four times more space per person. That's incredible.

Saunders: Yes. Which, you know, that's really interesting, in and of itself. Like, why is it that we're feeling that we need so much more space? What's going on with that? But a lot of young people that we have been interviewing for Affix, they don't need 2,500 square feet. When you ask them, “What is your first-purchase dream home?” They are looking for something that might be around 1,000 or maybe 1,200 at the most. I think a lot of people don't want to maintain really huge houses, especially if they're buying for themselves or maybe it's just them and their spouse or something. They just need something to get a foot in the door.

Kuntz: Well, I think, just going back to the zoning, what you said, it's really interesting that the zoning laws, if I understood you correctly, have led to bigger homes, which then maybe has normalized larger homes and more space. And those larger homes and more space, they take time to maintain, they take more resources to maintain. So, it's really interesting that you're hearing from folks who are looking to buy homes that a lot of them don't want to have all of that house and all of that responsibility.

Saunders: Yeah. I mean, what's really interesting, you know, how I said earlier that these things, kind of, feed on themselves. That's an example of it. And then it feeds back even in another way, where, to some level, the reason why, sometimes, the zoning for the lot sizes gets larger is because there are people who already own homes and they think to themselves,, “Oh, well, a 2,500-square-foot home is totally normal to me.” And, you know, it might be nice to even have a little bit more space because maybe they have a family of six. Maybe they really need that space and they're voting. And using their voices as they should to influence some of these decisions that are being made.

But my fear is just that it may not always be that the people who are at the bottom of that homeownership ladder, they may not be having their voices be heard. And if you can't get your foot onto that first level of the ladder, all of the decisions that are being made about zoning and all of these laws, we're not hearing from the people who really need that first rung in the ladder. So, that's why I think it's really important that we ran as many interviews as we did to really gather that data on what it is that the first-time homebuyer is really looking for. There's a lot that goes into it.

And another part of this, where it feeds back into itself again, is that if you have this really large home, the construction price per square foot continues to increase, pretty much every single year. And this is not a problem just in Colorado, it's across the entire U.S. There are a lot of people much, much smarter than me that have looked into why construction pricing is so sticky, as they say. Once it increases, it's very rare that it will ever come down.

But what I have witnessed firsthand, when working as an architect, working on these job sites, I've noticed that a lot of the general contractors really struggle to find good tradespeople. I think a lot of people started thinking that college was, you know, the only way to go, which meant that people stopped learning the trades. So, now, we don't have as many electricians and plumbers. And those people now are in high demand, as they should be. But when you're in really high demand, you can charge a lot for your services.

And so, I think this has created some of the construction pricing that we're seeing, maybe because we just don't have enough skilled tradespeople to make that pricing become more affordable. So, there's a lot that gets wrapped into this.

Kuntz: Yeah. So, a lot of challenges contributing to the real and perceived barriers to buying a home. You know, if we go back to that anecdote with your sister having this day where it's like, “How am I ever going to do this,” and the inspiration for Affix. So, talk to me about, what are the tactics Affix is using today to address the challenges in the market and produce less expensive housing?

Saunders: Yeah. So, there's three main tactics that we are using — prefabrication, creative use of land, and a design that allows for the possibility of short-term rental revenue if the homeowner desires that.

So, we'll start with prefabrication. And what this means is that the house is built off-site rather than being built on the piece of land that it will eventually sit. I want to clarify that there is absolutely no difference in the quality of these homes. They have to meet the exact same residential code, international residential code standards, regardless of if they are built in a factory or if they're built on site. The literal only difference is where they are built. So, as of right now, prefabrication is typically, in and of itself, not much cheaper than a site-built home because of some of those things we talked about, with construction pricing just is what it is because the labor and the trades just charge what they charge. It doesn't matter if they're on site, it doesn't matter if they're in a factory, right? But where you can get cost savings from that house is that you can start that house in the factory while you're preparing the land. So, before you even get a shovel in the ground, you can start in the factory building the home.

And what that means is that you can shorten your build time substantially. So, by the time that you have your foundation poured, you could basically bring in either the whole house or large sections of that house and have the construction be done in a matter of weeks or a month or two at the most, when, traditionally, you would have to wait until that foundation is complete and cured before you could even think about building a wall, right?

So, when you're a developer and you buy a piece of land, you're paying on that land every single day that you hold it. These are called carrying costs. And the longer that the developer has to hold that land without making any money on it, they have to mark up the pricing to the end buyer. In mountain regions, it’s especially a major problem because the scheduling of construction can be very risky, where you only have about three months to get the whole house, what they call, dried in. That is, you know, the roof and the walls and the cladding, so that you're not getting snow and rain on the inside of the house.

That's part of the reason that there's such an acute problem with attainable housing in the mountains, specifically, is that those build timelines, if you miss and you end up in the wintertime and you're not dried in, it's a major problem for you. So, we are looking to shorten that build time. And by shortening that build time, we can basically avoid passing on carrying costs to future homebuyers.

The next way that we're looking at reducing costs to the homebuyer is creative use of land. I mentioned earlier that zoning is one of the major drivers of cost because it can create inefficient uses of land. So, our plan is to utilize zoning types that allow us to fit, basically, more people onto one piece of very expensive land. Essentially, we're looking for zoning types that will allow us to create something that functions like a duplex. So, some examples of zoning types that we can use would be, of course, regular duplex zoning, cottage zoning, if it exists in the municipality that we're looking to work, a piece of land that's zoned for a single-family home but that also allows for an accessory dwelling unit, or an ADU. Any of these types of zonings can allow us to get more people onto one piece of land. So, we're basically taking the biggest cost, which is the piece of land, and we're splitting that cost in half.

The third way that we're looking to achieve a more attainable home price is by creating a design that allows for the possibility of short-term rental revenue if the owner of the home is interested in that. One thing that we learned that was, kind of, mind-boggling while we were doing all of these interviews of potential homebuyers is that it came up again and again that younger folks, they're like, “I would love to offset some of the cost of my mortgage by renting out a room,” maybe not all the time, maybe just occasionally, maybe just on weekends, you know, whatever works for them.

So, we listened to that, and we designed our pilot home with an area in the back that can be locked off that has its own entry bedroom and a private bathroom. So, that enables people to make the decision, if they want, they can just lock off that area and rent it whenever they want. So, these are the three tactics that we are using to allow more naturally occurring affordability.

Kuntz:��So, talking about naturally occurring affordability, that's a new term for me, and I was hoping that you could break down what that means for the listener.

Saunders: Yeah, absolutely. So, there's only two ways to make housing more affordable, right? The most common way that we see right now is through government subsidy. That's what people usually think of when they hear “affordable housing.” And in that scenario, a house is built,�� same house, same materials, same, in a lot of cases, almost the same finish quality, even. And then the government will just pay for a portion of the construction costs, which makes the end product cheaper to the consumer.

That is not the way that Affix is trying to create affordability. We're trying to create naturally occurring affordability, which means that we are looking for innovative ways to build, more affordable ways to build the actual construction costs, basically. And land costs themselves are actually lower. So, we're not using any kind of government subsidy to accomplish this. We are not intending to skimp on quality at all. As a matter of fact, the fabricators that we're working with can actually build homes that surpass the energy code requirements, for example, because of their construction methods.

In our case, in Affix’s case, our design of the home also allows people to, kind of, “subsidize or offset” the mortgage payment, but with Airbnb revenue, not with government subsidy. So, the nice thing about that, also, is that the homeowner or homebuyer can choose whether or not they need that help in a certain month, or if they don't need it, they don't have to do it. So, we're just trying to see whether or not there's basically private industry solutions to this affordability problem. And that is generally considered to be naturally occurring affordability.��

Kuntz: Just to, kind of, circle back on the ways that Affix is doing this, it sounds like, you know, you're really approaching an innovative home design build. High quality finishes, the same finishes you'd see in any major development, but really coming up with a unique design with this lock-off option so that families can buy their first home and also rent part of it out.

Saunders: Yeah, absolutely. That's exactly right. Everything that we're building absolutely meets the international residential code, just like any other home that you would see on the market today.

Kuntz: So, Jamie, tell us, where is Affix now in the building process? And what's the timeline for the next few years?

Saunders: Yeah, our plan as of right now is to build our first prototype duplex somewhere in Clear Creek County. We're not yet disclosing the location until we have our building permit. But we do have the financing pretty well in order. And we are currently weighing the pros and cons between a few different prefabrication groups. Our goal is to have a shovel in the ground by spring. And hopefully, if all goes well, we could potentially have a prototype duplex ready for occupancy in late summer of 2025.

Kuntz: That's exciting. So, folks could be keeping their ears to the ground, listening for the news, and hopefully see a prototype pretty soon. And before you know it, people are going to be buying up these homes.

Saunders: Yeah, absolutely. So, our plan as of now, actually, is to hold that prototype, also, for a couple of years and potentially even use it as a short-term rental so that people can come and stay in it and really experience what it feels like to live in Affix home if they're interested to purchase. So, it's something that we see holding and using as a model home, but taking it a step further that people might be able to actually spend a few nights in it and really experience it. So, our goal with the prototype is also to learn where we can optimize in the construction process, help us gather data on rental rates and things of that nature, so that future homebuyers could also benefit from any data that we collected in our prototype.

Kuntz:��Incredible. So, you have this pretty clear path, hopefully. It's looking clear for the next year or so. And that's really exciting. What are you hoping that Affix has accomplished? What's the impact that you're hoping to create in, say, 5 or 10 years?

Saunders: Yeah, great question. In 5 to 10 years, my hope is that we've created a system that can be replicated by developers across the country. And I'm really hoping that we can all work together to bring real starter homes back to America. I think, historically, home ownership has been one of the top ways that Americans have built wealth for themselves and for their families. And I think that that's something that everyone deserves access to. And I think that there are a lot of developers out there who share my opinion on that. And I think, if we all work together, we could really make a big difference in this.

Kuntz: Jamie, I know that you're making a huge impact already and it's going to be incredible to watch your journey and see where Affix goes in the next couple of years and maybe 20, 30 years from now.

Saunders: I really hope so.

Kuntz: Yeah. Well, thank you so much for sharing your story today with the Leeds community. If people are interested and want to follow up with you, where can they find you or how can they get in contact with you?

Saunders: Absolutely. Our website that we keep pretty well updated is affixcommunities.com. And you can also reach out to me via email at jamie.saunders@affixcommunities.com.

Kuntz: Amazing. Thank you, Jamie, for sharing this time with us. And listeners, I hope you really enjoyed this podcast and look forward to joining us for the next episode.

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