Has anyone reviewed S2A modular? Just doing my diligence

[Mark Caudill]

There is a new green modular company out of hemet, ca. S2A Modular Went thru their presentation yesterday. Just wanted to see if anyone else has looked into them. Supposedly they can build a custom or one of their predesigned floor plans with tesla powerwall, graphene solar panels for a "net-zero" or "net-positive" house for $165 a sq ft. First units out by 2021.

[Eric Teran]

@Mark Caudill I took a quick look and it looks promising. However, the $165 per SF is not a big deal. That does not include any site work, foundations, utilities, and so forth. You can add another $30 to $75 per SF for those items. A modular home around $200 SF isn’t that great. It is fine for California but not for Kansas.

It is nice that they are using new technology. I have contacted numerous modular companies and my biggest complaint is that they are stuck in the 80’s.

[Mark Caudill]

@Eric Teran I think you are dismissing this too quickly. Additional cost for a "net-zero" home let alone a "net-positive" home as the owner professes would justify the increased cost. If net zero, deduct the monthly cost of electricity from the expense to operate this house. If the house supplies energy to the grid you have to deduct the cost of electric PLUS the additional revenue to the expense to operate the home.

I believe this company will have their supply chain in place before other manufacturers have completed their designs. Also, if they partner with Tesla, Google, Amazon, the next modular manufacturer will have to provide greater benefit then their incumbent partner. By networking, material costs should decrease from increased supply thus driving cost to manufacture down.

[Eric Teran]

@Mark Caudill I agree that a net-zero home is great and worth it. I tried to do it to my modular home that I built for myself in Alexandria, VA. However, no modular company (called over 30) was willing to go the extra mile to do it. A few of the companies had even competed in the solar decathlon but it was a one-off for them. It was extremely frustrating.

I believe this is great for an individual homeowner who is looking to keep and live in. That makes sense. However, from a developer standpoint, I don't know if it does. $200 SF or more for a home will not have the returns unless they can sell it for the right price. That doesn't even include the cost of the land. I guess it does state luxury homes so they might be able to price it high enough. 

I wish more modular companies on the East coast start to follow this trend because they are falling behind. The biggest items for sustainability are to insulate the house properly, correctly size the mechanical systems, and face the windows the correct way (stock plans don't work for this). From there solar panels and a Tesla Powerwall can be installed. I am doing this for a client near Baltimore who is building a 12,000 SF house out of SIPs (Structurally Insulated Panels), installing solar panels, Tesla Powerall, and many more sustainable features to make it net-zero. The nice thing with S2A is that they will do it for you and it doesn't have to be piecemeal. 

My biggest point is that it works for an individual homeowner or a big development. A duplex or small multifamily will depend on the site cost and land purchase to see if it is feasible. Don't get me wrong, I'm all for this. 

[Mark Caudill]

@eric teran I always appreciate getting input from someone who is "doing the work" rather than hypothesis and uninformed perceptions. 

For me its seeing the potential impact this would have for developers on many levels ( they build custom homes and apts and hotels). 

I always "check myself, before I wreck myself" if it seems too good to be true. Im booking a flight to hemet, ca to check them out. Ill report back.

[Eric Teran]

@Mark Caudill please keep me updated. It will not be feasible for me on the East Coast but at least I can pressure the modular company I work with to look at them for inspiration. For example. I tried for a year to have multiple modular companies install cellulose insulation. I even had an installer willing to go to the factory to show them how it was done and was willing to provide documentation that the cellulose will not settle during transportation. No one wanted to try. One thought about it but got scared in the end. I noticed SA2 also had the typical fiberglass insulation. 

Let me know how it goes.  

[Raisa Rodriguez]

@Mark Caudill @Eric Teran How is your search for modular builders going?  I too am on the East coast but looking to build a community of modular homes.  The designs of S2a Modular are modern and attractive.  Can't find anything like it.  Are they too good to be true? 

[Mark Caudill]

No, its all true. Their challange now is production. If you review their website they are planning on multiple hubs throughout the US. Maiking a trip out west soon to get a look. I'll kepp you posted 

[Federico Morales]

Hey Mark,

I have been looking at S2A as well. I have a piece of land that I grew up on in San Jose, CA on which I'd like to put some 4-plexes for a build and hold strategy. I thought their price points were excellent, but I don't know much about it... Maybe $180 to $250 /SF, including soft costs, but excluding land is not so good? 

I think they are planning to put a factory somewhere near Denver. 

I'm in Castle Rock, so if you want to grab a coffee some time, let me know. Would love to compare notes. 

I still have family out in bay area and was planning to make a trip out to check their factory some time soon, too. 

Thanks, 

Federico 

[Federico Morales]

@Eric Teran, thanks for the note on pricing. Do we have any references on what you think would be appropriate pricing? 

[Frank Edwards]

@Mark Caudill - Were you looking to invest in S2A Modular or just have them build something for you? I just started doing my own due diligence on them because I am interested in investing in the company.

[Raisa Rodriguez]

@Frank Edwards I sent them a message through FB asking them if they've ever actually built a house. Still waiting for a reply... 

[Frank Edwards]

@Raisa Rodriguez - I can answer that (more or less). Their Mega-factories in California are in the process of being built (just broke ground on two locations in California), so they haven't built anything yet. They are estimating the factories will be built by the end of the year and start running in 2021.

[Mauricio Osorio]

Originally posted by @Mark Caudill:

 Im booking a flight to hemet, ca to check them out. Ill report back.

 Mark, I'd like to learn more about what you find. I just talked to S2A about investing, and it sounds very promising but since they are just breaking ground for their new factory it would be good to know how solid they are looking into the future. Please keep us posted on your discovery.

[Eric Teran]

@Mauricio Osorio, @Mark Caudill, @Raisa Rodriguez, @Frank Edwards, @Federico Morales I figured I would tag all of you in case you want to register for their webinar. They will be holding a few of them for the next few weeks. I signed up for tomorrow.

https://register.gotowebinar.com/rt/8411220377670097931?fbclid=IwAR0XlQDXe1F7RsukiYrXYlON4FliIk1QPe_Y0Ko7aQNvhVojrhCZBIAD45A

Should be interesting.

[Mark Caudill]

@Frank Edwards, Actually both. I see a need for good green technology at an affordable price. There business model looks like their forecasts are attainable based on booked business YTD.

@Mauricio Osorio I will update this post. The wildfires do play a role in the timing of the visit.

@Eric Teran I have been thru their presentation and yes it is very informative.

Thanks everyone, and make sure you do your own diligence please.

[Linda Vu Nguyen]

Thanks for sharing all. I’m interested in what S2A offers as well. I would suggest scheduling a call after the webinar as the offering summary, PPM and addendum provide a lot of info to further aid in due diligence. 

[Raisa Rodriguez]

@Eric Teran I already took the webinar.  It is very informative and all designs are concept designs.  I heard nothing of opening up factories on our side of the country.  Know that you type your questions as the webinar is occurring.  

[Julie Ward]

I’m interested too. I just watched the webinar today. But I may be ready before them. So I’ll be looking for other places that offer the Tesla battery and solar option. I’d like to be in my new place by next year. Let me know if anyone runs across another company. Thanks.

[Artur Madej]

Please do your DD carefully. There are many companies out there offering similar solutions and ideas. I almost invested in a near identical scenario in Orlando a few years back. I listened to this particular webinar and it was a deja-vu experience, it was surreal. The company I evaluated in orlando claimed to be able to build "ecco homes" using pre-fabricated pieces with solar panels. They actually had a production line set up and I visited it. The concept was brilliant and exciting. The numbers looked too good to be true. However, I'm a seasoned investor and business man and have learnt over the years to be very skeptical of people with grand visions but not much of a track record, but great presentations. The company that I was seriously considering folded within a few months and there were accusations of nepotism, embezzlement, usurping of projects... the list goes on. Needless to say the house of cards collapsed and not a single house was built. I believe they are mired in lawsuits now. But oh my, what a great sales pitch they had!

Now... take a look at the webinar and look between the PR fluff. The tech guy knows his stuff but does the webinar from a bedroom with the bed right behind him. What professional person does that ? I get it that we are in a Covid induced environment and we are all working from home.... but how can you possibly think that is a positive image that gives the audience comfort? What does it say about his judgement?

A quick google search shows for S2A shows the following:

S2A Investments 2, LLC raised $300,000 from 2 investors on 2020-06-08.

S2A Investments 2, LLC Filings

Date	Filing Type	Offered	Sold	Remaining	Min. investment	Invest. count	Exemption / Exlusions
2020-06-08	New Form D	$15,000,000	$300,000	$14,700,000	$150,000	2	06c	[SEC Filing]

S2A Investments 2, LLC raised $300,000 in total.

So they managed to get 300k by mid June.
Look up the registered address for the LLC



This is where their registered office is.

Do you really want to send your 150k investment here?
Do you really believe it will be worth 2m in 5 years?

Now... they many be legit and I may be watering the wrong tree..BUT... I could write a book on all the shenanigans and screws up I have seen in my 30 years of adult life in a business setting. In reading some of the innocent comments from fellow investors I felt very strongly in posting this comment. I've seen this play out - in a bad way - too many times.

Proceed with great caution.

[Raisa Rodriguez]

@Artur Madej Thank you so much fo the info.  I am in Florida too. We are a group of people looking to build a sustainable modular community in Northern Florida.  Do you work with or know of any reputable modular factories in your area?  

[Artur Madej]

Hi Raisa,

No, I don't know of any factories per se but I do have direct knowledge of some of the individuals that were involved in the Orlando venture (that I evaluated) and they were genuine. The problem there was with the leadership and their insatiable appetite for easy funding. How big a community are you considering? There is a community somewhere close to Sarasota that is powered by solar panels. I forgot the name but it you search with the right keywords I am sure you will find them. They could be a good starting point for you.

[Mark Caudill]

Artur,

Thank you for your cautionary words. Hence the reason for the diligence disclaimer. Im glad you are open minded enough not to kabash the whole thing. I want to see where it goes. BTW, would you have invested in Microsoft, Dish Network, or Apple if you had seen where they started? I know the odds are not in their favor but lets see where it leads before we invest a dime.

[Artur Madej]

Thanks Mark.

For sure not I would not have invested in Dish, Apple or Microsoft - had they started out of the garage in 2020. But they started in the 1980's (?) when technology was nascent, norms and operating procedures totally different. Now we live in the modern age where competition is much fiercer and tech tools at our disposal enable us to move at lightning speed and crash at lightning speed. We have co-location offices and higher technical standards - all priced very modestly. I wish S2A the very best; I'm just giving my personal feedback on what I experienced less than 12 months ago.

[Mauricio Osorio]

Artur, thank you for your input. It is really helpful. 

I talked to someone from S2A over the phone and he said that they are already fully funded ($15M) for the Hemet factory, and they are halfway for another 3 factories, that's another $40M roughly. If that is the case, they would probably be operating a more consolidated team, but also, nowadays many companies start small despite their initial funding.  

This is for sure a good topic to follow up and see how this company will behave in the next 6 months or so.

[Artur Madej]

Mauricio,

Agree and thank you for the update on the funding.

It's always tough making the go/no go decision. There's so much money sitting on the sidelines these days waiting for a good investment.