Scaling Up: Our First Major Multifamily Development, Explained (EP40)

Trust the Process Podcast · Season 2, Episode 40 · Hosted by Krista with Michael Johnson · Originally aired February 20, 2026

Episode Summary

What does it really take to scale from custom homes into multifamily development? In this episode, Michael and Krista pull back the curtain on Trust Home Builders' first major multifamily project — how the opportunity came together, and what changes operationally when you go from building a handful of luxury homes to delivering dozens of units at once. They talk financing, risk, timing, team structure, the unique downtown Las Vegas buyer, and how they decide whether a project truly pencils in today's market. Whether you're building, investing, or just curious about how development works behind the scenes, this conversation walks through the strategy, the numbers, and the mindset behind scaling up.

What We Cover

• Moving from custom luxury homes into multifamily development

• How a 79-unit downtown opportunity came back around to Trust

• Reading a unique downtown Las Vegas buyer (and why it isn't all entry-level)

• Taking over a partially built project: rewiring, re-piping, new floor plans

• Financing, risk, phasing, and timelines at a larger scale

• A second JV townhome project — and why infill is becoming a specialty

• Attainable price points: delivering new construction below the county median

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Full Transcript

Michael: To pull back the curtain a little bit — we're buying this from another developer who lost it. A multi-state developer; not a nationwide, publicly traded company, but not small potatoes either. He's partially started 15 units. The density for 79 is approved, and 15 of the 31 are halfway built. It's five acres total. The zoning is there, but the map is not, so we're kind of picking up from there.

Krista: Welcome back to Trust the Process, the podcast where we chat about the construction industry, real estate, new homes, and everything happening in the housing market. Welcome back, Michael, and welcome back to all of you — thanks for being here. Today we're going to talk about something we've dribbled a little bit of information about: some of the new projects we have coming up this year, the land we have, and the things that are changing. One of those changes is that we're adding some multifamily to our repertoire. We're going to keep doing our luxury custom homes — we love that world and that buyer — but we're adding something a little different.

As home prices go up and it gets harder and harder for people to get into the housing market, it feels like the right time to incorporate a multifamily product type that allows for a slightly lower price point — with the Trust flair, of course. I'm really excited about it. I come from a builder that did multifamily, so from the marketing and sales side, it feels good to be back in that world. And before that, when I was with Homes.com, I was an ad executive — this was maybe 2012, 2013, 2014 — and my book of business was in the multifamily sector: condo, townhome, apartment, all rentals.

Michael: That's your wheelhouse.

Krista: It is. I managed their online and digital services. At the time we were still in print, too — which kind of dates me. You could go to the grocery store and grab the book. I created those ads, and then we'd track and run the analytics on the accounts. This was when digital marketing was still in its infancy. So there's a language you speak to that multifamily buyer, and going back into that world touches my roots in a way that's fun for me. I love the custom homes and that demographic too, but there's something nostalgic about circling back to multifamily.

And with that — I know for you, Michael, this is a world Trust hasn't been in before. So I'm sure there's some trepidation, and the way we acquired this parcel is unique in itself. I'd love to hear more about how we got into it, where we're going with it, your thoughts and feelings, and some of the hurdles we're already facing in taking over a project that once belonged to someone else. Tell us more about it.

Michael: Well, I want to start by saying — thankfully you're comfortable, because I'm terrified.

Krista: I didn't say comfortable, I said excited. Not necessarily the same thing — but ready. Come what may, it's happening, so I'm ready to embrace it.

Michael: Excited, okay. You know how they say the opposite of love is indifference, not hate? It's like that. Anyway — this project found us. That said, I've wanted to venture into this space for some time. I wanted to see what we could do as a company, bringing our flair — which is a lot; I love that you use that word — to different price points. This is a great opportunity to do that. It's also a really unique project in the downtown Las Vegas area, so it's a unique buyer. It's not a dime-a-dozen buyer who stumbled upon it — it's probably someone seeking it out. Which is even more reason for it to be a builder like us building a compelling product.

Some of these buyers may materialize — meaning they weren't going to buy anything anyway. They were renting a luxury high-rise or a luxury apartment, wanting that downtown lifestyle, and now they'll consider buying. Previously the only option was a home in the suburbs, 25 miles from anything they want to be near — work, friends, walkability. This is a new product, something compelling enough to push them to say, "I'm going to stretch and look at buying in the area." Our nearest competitors are basically no one. The only other housing stock is either other townhomes — and there aren't many — or some very old Vegas rambler homes that are in disrepair. It's a challenging zip code, real-estate-wise. The sales comps are definitely not in our favor, but they're also nothing like what we're going to put out. Beyond that, you've got the mid-rise and luxury apartment market if you're looking at housing at large.

There might also be some out-of-state people drawn to downtown Las Vegas for a vacation home. I wouldn't rule out a decent number of retirees splitting their time between a townhome here and a main home in Santa Barbara, San Diego, wherever — people who want something in Vegas for tax reasons. If they're going to be here, they want to be close to the strip and close to the airport. You could take the monorail and a $10 Uber from the airport to this house. So there's an appeal, and we have to make the product compelling enough to get those people to say, "We always rent a house or a hotel here — let's own our own place and keep it stocked with our stuff, since we come here often enough."

Krista: And to your point about who that is — so often when you're talking multifamily, you think of an entry-level buyer, because they're buying a product type that gets them into the market for the first time. That's not necessarily going to be our demographic here. That's not to say we won't have any of it, but I don't think that's who we'll have primarily. Often it's a lifestyle choice more than a product type. They want to be in that area, they want that minimal lifestyle, they're only here part-time, they want a vacation property. So I think we'll be talking to a very different audience than the typical multifamily buyer.

Michael: That's a great point. Townhomes generally resonate with the entry-level buyer — someone either upsizing or downsizing, where low maintenance cost is a big factor. A lot of townhome buyers are divorced couples who sell their main home and each buy a townhouse. That's generally who's attracted to townhouses, and that's a different demographic than what I think we'll get in this area. We'll get some of it — and I'm firing from the hip here — but from our walk of the site on Tuesday, I'm thinking only about 30% will be that entry-level buyer driven by cost and by the excitement of homeownership. These might be third or fifth homes for some people, or a primary residence for a move-up, move-out buyer. So we have to make our product offering, from the ground up, fit that demographic — down to the floor plans and everything.

Krista: And we'll have to research it entirely, right? I want us to be completely informed — I don't want to enter into this without any absolutes about who's buying. So: more market research into the demographic, the product type, the location. That's work you and I will dive into over the next few weeks. It's coming quickly — more quickly than I imagined. I was going to say a few months, but I don't know if we have months on this one.

Michael: Well — to pull back the curtain a little more — we're buying this from another developer who lost it. He partially started 15 units. The density for 79 is approved. Thirty-one are parceled and recorded on the map — they have their own parcel numbers and addresses — and 15 of the 31 are halfway built. The back parcel is 48 units; it's five acres total. The zoning is there, but the map is not, so we're picking up from there.

Our first goal is to close on the property, which will be imminent, and to get the permits reactivated — we're working on that too. If all of that goes according to plan, some of these will hit the market in spring. We can finish some of those partially built units very quickly — maybe eight weeks start to finish. Other things will slow us up — the NV Energy power plan, getting all the utility work done — so we may have to slow-roll it a little. I hope not too much; I don't want completed homes sitting there like sitting ducks without power. I'm assuming the other points of connection are there, because you can't pour your slabs until the sewer connection and water supply lines are in. So I'm imagining we're good there — it's really just power and permitting.

Krista: And for some context: when you drive down that street, these look like homes. We're not buying dirt. This is a project that's already well underway — there are buildings stood up, garage doors on. They look like dwellings.

Michael: Yeah, six of the 15 look done from the outside. If not for the lack of curb, gutter, driveways, and landscaping, they look like homes. Inside there's been a little vandalism, but nothing we haven't handled before. We'll get them up to shape quickly — we'll probably be limited more by the utilities and connections than by the homes themselves.

Krista: We'll take it back down to a raw home and then build it back up.

Michael: Right. We'll remove anything that's damaged, and we'll end up rewiring and re-piping the homes, which we likely wanted to do anyway. They've been sitting about 18 months. We'll also replace a good amount of the windows — especially the operable ones — because I want them to be new and to feel like a new-construction home to the buyer.

So we'll probably just finish the 15 that are there. I'm stuck with the footprints of those homes, and the plat map is already drawn for the back 48. All that to say, I'm pretty stuck with the footprints the original developer devised — but I'm not going to stick with their floor plans. We'll finish out the 15, and then we'll create four new floor plans. They'll be similar — small-footprint townhomes, there's only so much you can do — but I've got ideas. They're 1,800 to 2,200 square feet.

Krista: Not small, though — the square footage isn't bad. Eighteen to twenty-two hundred is a really good size to work with, and perfect for that product. Well-used, high ceilings, comfortable spaces.

Michael: That's single-family-home square footage — they just happen to be connected. There's nothing we can't make fantastic. We can play with ceiling heights and get creative with the floor plans. Maybe some have living on the third floor instead of the mezzanine. Right now they all have a mezzanine-level living space: the first floor is a garage, a flex space, and a bedroom; the middle floor is the great room and communal space; and the third floor is the owner's suite and secondary bedrooms. So we'll get really creative and flip some around.

Krista: That was fun when we stood there the other day as a team — "what if this were on the third floor? What if this were on the first floor? How could we reconfigure it?" It's fun to reimagine the spaces in real time. I know we'll make it great.

Michael: It'll be amazing. We're stuck with the confines of the footprints, but that's only the footprint — there's a lot we can do inside it. Say the main footprint, minus the garage, is about 600 square feet; the second level is 800 to 1,000 to play with, and then another 800 on the third. You can see how you can get really creative with windows, ceiling heights, and layouts.

Krista: Even standing there, we started getting creative with one shower — it has an oversized shower, and we thought, why not turn it into a wet room, put a bathtub in there? It's just reimagining the spaces within the walls that already exist. A little creativity goes a long way.

Michael: A spa room — that's right. Just with what we have. I'm excited for it. I'm also terrified. We'll get a lot more clarity in the next two to three weeks. We've already gotten a lot in the last four to five. We were on the project originally back in September, then we thought we lost it to a nationwide home builder — and it came back to us. Which either means that builder didn't want it or couldn't perform, for whatever reason.

Krista: Should we be scared? I just think they weren't up for the challenge.

Michael: For us to control 79 lots in one tract — I don't want to say once in a lifetime, because this will probably now unlock a lot more — but it's something we couldn't say no to. A nationwide builder is used to controlling 80 to 150 individual building lots, so 79 in one tract is small for them, and it's a unique demographic. They kind of had to stick with those footprints and those 15 units — would they demo the 15 and start with their own product? There were just a lot of unanswered questions for them that I was willing to get creative around.

Krista: Right, and they probably just wanted the land — the location and the entitlements.

Michael: The land and the entitlements, yeah — all the zoning. On its surface it's a killer deal, and I'm sure there will be some unknowns that make it more of a "maiming" deal than a killer deal. But there's enough wiggle room in the margins, because of the way we're purchasing it, that for a builder like us to take on something this large, it'll be nice to have that cushion — because there will be things we run into that we didn't foresee, things that can spiral fast when you're at 79 units versus doing four, five, or six at a time. It's a different scale than we're used to as a company.

Krista: Different scale and a different build style — we've talked about that. Even the timelines will be shuffled from our typical custom timelines. Even though we're further along here because we're taking it over, the build itself will be different than a single-family home.

Michael: It will. It's going to be like how we've been building out at SouthShore for six years — something we're building out over, conservatively, three years. That's around 25 to 30 units sold per year, which is a healthy sales pace; even a nationwide builder probably wouldn't go much faster. I can see a world where it's four years by the time we build out the last few units. By then the bullet train could be in — they're saying 2028 or 2029. Imminently it'll be in the south part of town, but I think there's a plan to connect it via light rail to downtown. We'll see.

Krista: Where's that station?

Michael: It's a gift for Las Vegas if Brightline comes. If we can't finish the thought and get a light rail system — like BART, the Bay Area transit that runs in the median — then that's kind of a failing on our side, as a city or metro area. But it crosses a lot of jurisdictions.

Krista: We've grown to capacity as a city. We need more than just the monorail down the strip — there needs to be a better central transit system within the city.

Michael: Agreed. It'll be nice to go from, I think, LA to Rancho Cucamonga, then somewhere like Hesperia, then Las Vegas — quite a few stops. Brightline's building it, so anyone curious can look up Brightline's rail; it's already under construction. There was a world where they thought it'd finish by the 2028 Olympics in LA. I don't know if we'll make that, but it'll be huge.

When you're spanning three to four years of market, what we're selling in phase one for the 470s might be the 570s or 600s by the time we're out of there. That's also exciting. And there's nothing stopping us from designing a couple of floor plans, then recycling or changing them. We have 26 other lots left — we're not stuck with those floor plans. If the market changes, we can zig and zag and offer a different product.

Krista: Exactly — because we own the land. We might get halfway through and realize a hundred people have walked through the door asking for XYZ, and because of our size, we can flip on a dime and create that to serve the need. That's really fun. It lends itself to a very open-ended opportunity.

Michael: I'm very thrilled — not to overuse the word "excited" — very, very excited. There's still a creative aspect to it, but there's also the scale I've always wanted to accomplish and didn't think was possible this decade. I thought maybe in the 2030s I could grow the company to where we control entire tracts. And oddly enough, another townhouse project found us — a ground-up project about five miles away.

Krista: Two more have found us. You open yourself up to new ideas and all of a sudden...

Michael: Two more — one for sure. I couldn't believe it when it came my way. We're doing it as a joint venture, and they signed their JV documents yesterday morning, so it's happening. That's another 24 units, most likely, and that one will be entry-level on price point, just based on where it is. It's also a bit of a challenging zip code, but an established one — there's a lot of housing stock there, which means a lot of population, and not a lot of land.

Krista: Which is an advantage.

Michael: It's another infill project, which seems to be our specialty. Price is going to be a huge motivator there, because those will be probably 90% first-time homebuyers. And if they aren't, they're probably relocating — or an older person wanting to sell a high-maintenance home.

Krista: They want low maintenance — no yard, no pool, a simple lifestyle — or snowbirds here part of the year, though probably less of that on this parcel. It's funny — the last company I was with had primarily a first-time-buyer profile, and we had an 84-year-old woman buy her first home ever. The celebration we had with her was so fun. You always celebrate purchases, but there's something really special about a first-time homebuyer. And that profile isn't just young anymore — it's pushed further and further back. It used to be 23 to 28; now it's really 34 to 40.

Michael: If you pull the median, it's the late 30s. Statistically, you're most likely to buy your first home in your late 30s — which isn't a good sign for the overall health of the market.

Krista: It's indicative of the market — it's where prices have pushed people; they just can't get in any earlier.

Michael: Especially in Sun Belt cities and desirable cities. If you're in an exurb of a city in Ohio, maybe that's not the case. I'm from upstate New York, and all my cousins owned houses by 24 because they were all under $200,000 — and they still are, by the way, 15 years later. What we see in two years of appreciation, they see in twenty. Las Vegas isn't a cheap city anymore — it hasn't been for probably 10 years, and certainly not the last four or five. We've outpaced some Inland Empire cities in California and some Northern California exurbs. We've become a city in our own right in terms of sales price, population, and amenities. So there's no reason to expect homeownership here to be any better than the national averages.

Krista: That's true. So when you say "first-time homebuyer," that's a really broad spectrum. Sometimes they're waiting until they've finished college, or for a promotion or a new job, or until they have a partner and a dual income. So those 24 homes will be a pretty diverse opportunity of people to sell to.

Michael: It is. It's definitely something we'll have to phase in with demand.

Krista: That one's a little further out, because it's still dirt.

Michael: Yes — though I met with my engineering firm yesterday, and believe it or not, there's a world where we have a map recorded by the end of this year, because the owners I JV'd with already did the zoning change. So all I have to do is the drainage and hydrology studies, the water network analysis, traffic, and lay out the map — zoning's approved. So we're in the fun part now where we get to get creative. Believe it or not, it might be started, finished, and closed out before even phase one of downtown is. The way the buildings are downtown — it's only three buildings, like 10, seven, and seven — I can only phase it so much. Probably seven, then 10, then seven. An 18-month project.

Krista: Twenty-four goes quick. It sounds big, but it's kind of a get-in-and-get-out.

Michael: We'll see. I'm targeting the 370s to 400s. I don't think we'll get much more than $400,000 out of even a big model, even a three-story concept on a couple of them. They're smaller.

Krista: And they're smaller — 24-foot pads, so they're really narrow homes. Our square footage on those will be significantly less than the downtown project.

Michael: Correct — versus 1,800, we're looking at more like 1,300 square feet of livable space.

Krista: Twelve, thirteen hundred — you can build a great home in that 1,100-to-1,400-square-foot space.

Michael: Yeah. And if we can deliver something $150,000 below the median sales price for the county, and it's new construction, I'd be pretty proud of that. We'll see how our build costs come in, but I think we can get there. I know where we can make adjustments — I don't want to say cuts, adjustments — to the product offering, and we'll still probably be better than where a big production builder would be at that price point. I'll still opt for an extra $300 worth of baseboards so they have five-inch baseboards instead of two-inch. I just know how I am — it'll come out of the margin, not get trickled up to the sale price.

Krista: Because that's what you're used to. That's exciting — and like you said, something to be proud of: putting something in the marketplace that's attainable for people who maybe didn't think they could afford a home.

Michael: It's a passion of mine. When I got into home building, I wish-cast it into the universe that I wanted to do more attainable product — and these projects have found me, including our Westridge and Argos projects. Now, those are twice the median sales price — but we're used to building four to six times the median. And although I love that space, I'm a little tired of buying $60,000 worth of appliances for one house. It'll be kind of nice to say, "$60,000 bought the whole phase" of 10 or 20.

Krista: Different ballgame. Just different — very different. Fun.

Michael: So that's what we have going on. We're teasing it a little now — stay tuned for more. We'll definitely have more developments, especially once we officially own it. It's under contract; it's ours, with just some hurdles to jump through logistically and legally. Nothing that should throw a major wrench in it — just going through the motions. Meanwhile, we're doing all of our back-end work to limit our downtime as soon as we own it and start paying interest.

Krista: I had a meeting out there earlier this week — Tuesday — with all of our subcontractors, getting them on board: "This is what the electrical looks like, this is what it's going to need," so they can start collecting pricing and make sure they have the time in their schedules and the labor available to hit the ground as soon as we sign to own it.

Michael: Right — because there are things we can do before our first permit. We can clean up the site and get rid of anything damaged. We can do demo, because of what we're doing — we're not taking down entire structures, just removing damaged drywall, cutting access points for wiring and piping, things like that.

Krista: And it's been an abandoned site, so there are weeds and trash that's blown down the street. We've already got someone going out to handle that part — and even that will be a huge improvement. It makes it feel alive when it's not covered in weeds and tumbleweeds and trash.

Michael: Agreed. And we'll have hiccups and drama — and we're going to have great security downtown, especially until the first residents move in, just to make sure we're covered.

Krista: Construction sites notoriously have things that walk off — people want the copper, the appliances. It's just part of it, factored into the margin. Having security on site is really the only way to make sure you don't lose a lot of inventory.

Michael: You have to plan for it. There's a lot of management that comes with that — timing things, timing appliances, securing the houses, more on-site project management. We're used to a little bit of a laissez-faire management style in our guard-gated communities, where — I probably shouldn't say this — but a couple of our houses weren't even locked for a month.

Krista: I'm like, what are you going to say?

Michael: They were fully done houses, and we just... got complacent. Not lazy — complacent.

Krista: When you're guard-gated and patrolled, and the patrol knows us and watches our homes carefully, it really isn't completely unattended. But once finishes start going in, it's time to lock them up. In this case, we'll have to do that far sooner.

Michael: For sure — it's a new consideration.

Krista: And because it's been abandoned, you and I know what's out there — people have tried to make it a comfortable place when no one else was around. So there'll be a little cleanup and a little starting-over on some of them, but it'll be a fun challenge. The whole team is excited — I don't think one person has said, "are we crazy?"

Michael: Even our vendors and contractors — everybody's excited. Hopefully the market's excited too.

Krista: It'll be a good one. I'll keep you all updated — this is going to take up a lot of our bandwidth, time, and energy, so new topics and updates will come up regularly. You can expect to hear a lot more about it. This is just the first of many conversations we'll have about this project and other townhome projects that may come our way. Thanks for your time, Michael — thank you for your knowledge, I appreciate it. And thank you all for being here. We'll see you on the next episode of Trust the Process. Until then, be well. Bye-bye.

Michael: Thank you.