The Boxabl “Casita”: Your Primary Home, or Backyard Rental

What will it take to close the inventory gap for housing? A start-up in Nevada believes it has the answer with a unique, affordable, assembly line approach to housing. The company is manufacturing tiny homes for a tiny price tag that unfold for delivery and are move-in ready in about one hour. And, there are plans to go much bigger than just tiny homes.

Hi I’m Kathy Fettke and this is The Real Wealth Show. Thanks for joining me and don’t forget to hit the subscribe button for our podcast.

In this episode, you’ll hear from Galiano Tiramani, who’s the Co-Founder of construction technology company Boxabl. He has a bachelor’s degree in Business and has launched a few other successful start-ups, including one for cryptocurrency and one for cannabis.

His latest endeavor began with an idea from Dad several years ago, and is now poised to shake up the housing world with a 375 square foot pre-manufactured “casita” that is folded up for delivery. It’s even caught the attention of Elon Musk who reportedly lives in one, although Galiano was “mum” on those details.

Check out this interview for a peek into what could be a new trend in residential construction. You can also check out new trends in real estate investing by joining our network RealWealth, for free, at realwealthshow.com. As a member, you'll have access to the Investor Portal where you can view sample property pro-formas and connect with our network of resources, including experienced investment counselors, property teams, lenders, 1031 exchange facilitators, attorneys, CPAs and more.

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Disclaimer from Boxabl:

BOXABL IS CONSIDERING UNDERTAKING AN OFFERING OF SECURITIES UNDER TIER 2 OF REGULATION A. NO MONEY OR OTHER CONSIDERATION IS BEING SOLICITED, AND IF SENT IN RESPONSE, WILL NOT BE ACCEPTED. NO OFFER TO BUY THE SECURITIES CAN BE ACCEPTED AND NO PART OF THE PURCHASE PRICE CAN BE RECEIVED UNTIL THE OFFERING STATEMENT FILED BY THE COMPANY WITH THE SEC HAS BEEN QUALIFIED BY THE SEC. ANY SUCH OFFER MAY BE WITHDRAWN OR REVOKED, WITHOUT OBLIGATION OR COMMITMENT OF ANY KIND, AT ANY TIME BEFORE NOTICE OF ACCEPTANCE GIVEN AFTER THE DATE OF QUALIFICATION. AN INDICATION OF INTEREST INVOLVES NO OBLIGATION OR COMMITMENT OF ANY KIND. A COPY OF OUR PRELIMINARY OFFERING CIRCULAR MAY BE OBTAINED HERE, https://www.sec.gov/Archives/edgar/data/1816937/000109690621000494/box_1aa.htm

TRANSCRIPT

Announcer: [00:00:00] You're listening to The Real Wealth Show with Kathy Fettke the real estate investors resource.

Kathy: What will it take to close the inventory gap in housing I'm Kathy Fettke and welcome to The Real Wealth Show. Our guest today thinks he's got the solution. In this episode, you'll hear from Galiano Tiramani who's the co-founder of the construction technology company boxabl. He has a bachelor's degree in business and has launched a few other successful startups. His latest endeavor began with an idea from dad several years ago. It even caught the attention of Elon Musk. It's basically a 375 square foot pre-manufactured casita that can fold up for delivery. Galliano welcome to The Real Wealth Show . I can tell you that our team is really excited to hear what you have to say, because I think everybody wants to run out and buy a $50,000 box all. Tell me what boxabl.

Galiano: Thank you so much for having me. My name is Galiano Tiramani, I'm one of the founders of boxabl and they are houses. We are setting up a big factory to mass produce a different type of housing.

Kathy: Well, and you've already had some really good publicity from one of the best marketers in the world. I did read that Elon Musk is living in a box bowl. Is that true?

Galiano: That's the rumor. I cannot comment. Sorry.

Kathy: You can't comment. Well, that would be quite a change if true living kept going from a few mansions into-- How much square footage is in a typical boxabl.

Galiano: It's been cool. We've gotten so much press on that. A lot of people have become aware of the product. Essentially what it is, the first product [00:02:00] that we're starting with is a 400 square foot house. It's about 20 feet by 20 feet with nine and a half foot high ceilings. It's got a kitchen bathroom, a bedroom, and a couch. We are planning to retail it for $50,000. One of the cool things that everyone notices, if you want to go to boxabl.com, is that the house actually folds up. The reason it folds up is so that it can ship more affordably because that's one of the big reasons why most houses are not built in the factory. Most of them are built on site.

It's very slow and expensive and cumbersome to build something on site, by hand in kind of a custom manner, well, versus everything else, all the other modern products that are mass produced in the factory. The reason that, we are still building houses on site instead of on an assembly line is they're just so big, so they're hard to ship. That was like the first problem that we had to solve here to make it compatible with the mass production factory assembly line.

Kathy: Basically, someone orders it and it's brought in a truck and you just unfold it. How does that work?

Galiano: We spent a lot of time making things really simple. We've got the bulk of the work done for the building in the factory. Really all you need on site is, some type of foundation. Actually, you don't need a foundation, but in most cases like the local government's going to require it. You're going to need a foundation and you're going to need some utilities, connection, water, electric whatever. Essentially, our unit shows up gets, placed on the foundation. It unfolds the floor comes down, the walls come out, they all lock into place. They connect to those utilities that are ready prepared on site in advance, and you're done and you have a house and that means kitchen, bathroom [00:04:00] flooring, electrical air conditioning, all of that's done at our factory before it arrives on site. You go from maybe seven, eight months to build a house to an hour to build a house.

Kathy: Oh my gosh, that's incredible. All right. Zoning appears to be changing in California, allowing residents to potentially subdivide their property, and put another property on there. Are you seeing an uptick in phone calls because of this?

Galiano: Well, just because of the good marketing we've done from the beginning, we've always had crazy amount of phone calls and interest--

Kathy: Good for you. Love it.

Galiano: The way things are going in California is very friendly towards what we're doing. It actually started before-- What you're referencing, I think is a new law that just came into effect like last week that Newsom signed, but there was even some before that, that have all been great for us. The first one was accessory dwelling units. They basically legalized accessory dwelling units in almost every backyard in the whole state. Accessory dwelling unit just means an extra house on the same property. Usually it's like a granny flat, just a small house and people want to do that because, you have a site that's already developed a lot that's already developed.

You have a backyard, and if you can just throw down a little apartment, little house there, the numbers really crunch for rentals. Maybe they want to put their family members in there. That's been really big one. That's why we decided to start with the Casita product because our grand vision is a building system where different size room modules will stack and connect. The first one that you see on the website is 20 feet by 20 feet. We can also do 20 by 30, 20 by 40. We can do bigger modules with different configurations inside. Maybe one module would be a kitchen only, one would be a bedroom only.

Then you can start stacking and connecting and arranging them [00:06:00] to build, hopefully, almost every building type on the planet, a thousand unit apartment building down to this little Casita. We thought, how do we start? Let's start with the smallest room module targeted towards backyard ADUs, California incredibly friendly towards that. They've done things like prohibited the local governments from blocking people from building these. The state has said to the local governments, you must allow the backyard units, they've reduced setback requirements, a whole bunch of different stuff. Then last week, or so the new rules that they've done now go even further. Now they're letting people, I think subdivide their lots, and do all different stuff. It's pretty good timing for us.

Kathy: I'm in the coastal commission area and I think that there's still certain parts of California where it's going to be tough to get this through, but I'm not sure. Have you heard anything about that if you're closer to the coast?

Galiano: I don't know too many details on it. All I know from my perspective is there's so much demand for housing all over and so much need for it.

Kathy: Yes.

Galiano: I'm good to go. I think everything we make in this factory will sell out and we'll just be looking to scale. In general role, the attitude towards increasing housing availability is very positive, people want to do this. They want to open it up and that's why these new laws are happening, not just in California, but elsewhere around the country.

Kathy: Does your team work on the permit side of it or does that have to be done by someone else?

Galiano: Our goal is just to be the manufacturer of the remodule and to sell that to builders and developers, to speed up and simplify their process, get all the heavy lifting done for them. We will have resources on our website where people can get help with permitting, they can get help with financing and they can get help with finding a contractor to do whatever it is, want to do with the building [00:08:00]. Then we'll just focus on cranking out these remodules and they'll usually be a contractor in between us and the end user who helps with the setup and the permits and all that.

Kathy: Okay. Are they customizable?

Galiano: Yes and no. Especially early on, we want to be very standardized and have this very repeatable product so that our manufacturing is efficient. You can definitely customize them when they get to the field. Eventually when we have these different modules that connect together at that point, we have endless configurations. If we had 20 different rooms types, and then you start stacking connecting them arranging them, you can get for the most part, a huge range of buildings.

Kathy: Okay, so let's say I wanted a bigger window, I could carve that out and do it on my own.

Galiano: Yes. The contractors who install the unit should have no problem doing that. One cool thing about the way our actual buildings work is our innovations go beyond the shipping solution. We've also picked all new building materials and manufacturing methods. These are not lumber frame houses like you would see traditionally in North America, They don't use pieces of wood and nails. It's a eliminated panel system, and that has many benefits, but one of the benefits related to what you just said is you can actually just cut a hole anywhere on the wall anywhere you want any shape and not worry about anything.

Kathy: That's amazing. Wow. Well, obviously we know that lumber prices have were insane and then they drop back down. Were you seeing those kinds of issues on your materials?

Galiano: It's been really crazy time, especially starting a manufacturing startup, all kind of supply chain issues. I think the lumber one was little bit tricky because it was more about like a [00:10:00] future speculation and trading so it was just a spike, it went up and down but overall, everything is going up. There are delays everywhere, now you see manufacturing issues with many major companies. We have been buying all kinds of stuff to build hundreds of houses and had a hard time getting it. A shipping container from China has gone from 2,000 up to 10,000 or maybe even more.

Pretty much every single supplier we have has hit us with price increases and it's just total madness. I don't know what happens, but I believe that boxabl is more well-equipped to handle it than others because everyone is buying the same stuff for the most part of it. We enjoy these other efficiencies and benefits by being in the factory and having the simplified product design, we produce components and be able to purchase things because we're building at scale and using automation and using low skilled labor and having an assembly process. We believe that all those principles put us ahead of everyone else who will be still buying the same piece of steel or toilet or piece of wood.

Kathy: I know that in LA there's been initiatives to provide housing for the homeless and the first round of houses it's my understating costs hundreds of thousands of dollars. Have you had cities reaching out for that purpose?

Galiano: Oh, yes, I heard about those sheds that they put up that were like 200,000 each or something.

[laughter]

Galiano: That's pretty hilarious.

Kathy: Awful. Yes.

Galiano: Another story of government waste. We definitely have had a huge amount of inquiries for every use case under the sun. We've had inquiries from many, many different types of governments all over the place. In fact, our first customer is the government for [00:12:00] military-based housing. I think the grand plan for us is a very big scale. This first factory, that I'm sitting in now, it's at 170,000 for building. It should be able to produce several thousand houses per year, but we need to go way past that with a way bigger factory after we approved the concept here and hopefully being able to supply that quantity of houses brings the price down for everyone and makes a big impact. On the homeless side, it's pretty complicated. It's not really about housing, housing is a component there, but there's more issues surrounding mental health and drugs.

Kathy: Of course, yes. Well, so you're sitting in your factory in Nevada?

Galiano: Yes. We are in City of North Las Vegas. We have a 170,000 feet building. We moved in here maybe a month ago after spending several months, setting it up. Now we're rapidly hiring people. Actually, the first house is just moving down the assembly line right now, so that's a very, very exciting milestone for us.

Kathy: Oh my God, it's so exciting, so our audiences, mostly real estate investors, but a lot of business owners too are-- Tell me about how you got here with a concept. There's so many of us who are visionaries, and we got great ideas but man, making those ideas [laughs] come true is a whole another process, so how did that start? Were you all sitting around, having a glass of wine and somebody said I want a folding house, I mean [laughs] whose idea was it?

Galiano: Well, it's been a pretty, pretty crazy journey and pretty quick as well, but basically back in 2017, I was actually living in California, my father had just moved to Vegas and there is another guy Kyle. My Father had the idea for the folding house [00:14:00] many years before when he built a traditional modular and experienced problems with the wide load shipping where it was just so ridiculous and didn't work at all, it was not scalable, and so he had the original idea to fold the house up.

Then in 2017, I said, "Hey, what about that folding house idea?" Because, as usual, I was just looking for ideas and businesses to start and stuff. Then we just dove in and started developing it again and started exploring what the problems were in the market. We build a little website and started doing research and testing and development and engineering, and it just got more and more attraction and eventually, we got invited to go to the Builders' Show, which is like a trade show, one of the biggest ones.

We got invited to bring a house to put outside at what they call show village where they have modular houses outside. We sat down and said, all right, "Well, we haven't built anything yet, we just had a bunch of drawings. Can we do this? Shall we commit to it?" and we said, "Yes, let's do it," and pulled the trigger and agreed to do it and then build the first prototypes, went to the show and from there just kept going and going and now we're sitting in the big factory and it's happening.

Kathy: That's just so incredible. That's a whole new learning of okay- you learn how to create the product now you got to learn how to hire people and [laughs] everything that goes into that process.

Galiano: Yes, definitely.

Kathy: Good for you. Once you went to the Builders' Show, you had an initial investor to help you with that prototype?

Galiano: No. Paulo funded it. It was several million dollars, basically getting us through the RND and to the point where we had [00:16:00] a product that we thought was ready to sell and manufacture. That came a year after we got invited to go back to Builders' Show. At the first show, we went with a big house, like a big 1400 square foot house. Then we said, "All right, what is the good, better place to start?" and we came up with, "Let's start with the smallest unit we have."

Then next year we went back to the show with those prototypes and said all right, we're ready to do it, Let's do a factory and then started raising money. Really the way I raised money was all through general marketing. Sending web traffic to the website and allowing people, anyone, creditor investors to invest through the website. We've raised all the money to date through that method and it's basically through the last year, we've been raising money and that's got us here to this very big factory.

[crosstalk]

Kathy: Oh my God. You didn't have to bring in an institutional investor who takes control of things.

Galiano: I've had many discussions with guys like that, and I still do, and often exactly you said, they ask for too much. We love the strategy we've used because we're still in full control ca, we're calling all the shots, and we now have an army of supporters, cheerleaders who are our investors and hopefully we'll do very well also. It's a really, really great strategy. I'm sure those institutional investors will come into play eventually and hopefully when they do, I'll have much more leverage to shop around and get a better deal.

Kathy: Oh, yes. Good for you. It's like a five or six C kind of offering.

Galiano: Exactly.

Kathy: Right, I'm curious because do see indications too, is it sort of a note or convertible note, or?

Galiano: Well, it is a note, but really, it's a fixed share price.[00:18:00] The reason it's a note was just as a way to discount the share price, and you can read more about it on the website. The plan of the company is just to eventually IPO, so really we're really just selling shares to people and then hopefully we're very successful and then eventually get liquidity at a higher share price when we IPO.

Kathy: Wow, wow. I'm so thrilled I got to talk to you before that happens [laughs] It'd be pretty a lot harder to get you on the show afterwards. Galiano Tiramani, it's just such a pleasure to have you on The Real Wealth Show. I'm certain there will be a lot of our investors calling you to figure out how they can get one of these in their backyard or build a whole subdivision of them, who knows, but very exciting. All right, thank you so much. Any last comments, any tips, or places that people should find out more about you?

Galiano: Yes, they can definitely go to boxabl.com, B-O-X-A-B-L.com, check out YouTube, we have lots of videos on there, social media, we do a lot of on-going updates. People can also email me directly if they want to, it's g@boxabl.com and also the general inbox hello@boxabl.com and we'll reply pretty fast.

Kathy: Great. Once again thank you so much for being here on The Real Wealth Show and we wish you the greatest of success.

Galiano: Thank you for having me.

Kathy: Thank you for joining me here on The Real Wealth Show. This is an exciting time in history with so much new technology coming down the line and we'll keep you posted here on The Real Wealth Show and on my other podcast will Real Estate News for the investors. Have a great day. I'm Kathy Fettke and thanks for joining me.

Announcer: The views and opinions expressed in this podcast are provided for informational purposes only and should not be construed as an offer to buy or sell any securities or to make or consider [00:20:00] any investments or course of action. For more information go to realwealthshow.com