Podcast: Download (Duration: 36:02 — 36.6MB)
Welcome to another episode of the Investor Financing Podcast! Today, we have an exciting show lined up for you. We often talk to multifamily syndicators, but today we have someone who goes beyond syndication. Meet Mike Kaeding, the visionary behind Norhart, a company that designs, builds, and manages apartment complexes. In this episode, we delve into the innovative strategies Norhart employs to construct high-quality, efficient properties. Join us as we explore how Norhart's approach is revolutionizing the multifamily construction industry and addressing the housing shortage.
The Birth of Norhart
Norhart, a combination of “Norwegian” and “heart,” embodies the company's philosophy of strength and compassion. Mike Kaeding's father initially started the business, and when tragedy struck unexpectedly, Mike found himself thrust into the world of running a construction business. Despite being relatively inexperienced at the time, this unforeseen circumstance became a catalyst for change. Mike and his team began questioning the conventional methods of construction, embarking on a journey of experimentation and innovation.
Challenging the Status Quo
Norhart's primary goal is to reduce the cost of housing. Currently, they have achieved a 20 to 30 percent reduction and aim to reach a remarkable 50 percent reduction over time. Mike draws inspiration from other industries, such as manufacturing and agriculture, where productivity has soared over the years. In contrast, the construction industry has lagged behind. Norhart refuses to accept this status quo and instead focuses on adapting innovative techniques and principles from other sectors.
Streamlining the Construction Process
One key aspect of Norhart's approach is consolidating all construction processes under one roof. By bringing everything in-house, they can implement a range of efficient techniques. For instance, they have condensed the workspace, enabling them to complete a 15-month project in just nine months. This not only accelerates construction but also minimizes costs.
Embracing Technological Advancements
Norhart leverages various technologies and designs to enhance energy efficiency and overall building performance. By scrutinizing each component of the construction process, they identify opportunities for improvement. For instance, Norhart recently transitioned to steel structures and implemented standardized joist dimensions. These initiatives promote consistency, cost-effectiveness, and quality across their projects.
Driving Affordability through Innovation
Norhart is committed to solving America's housing affordability crisis. While they offer market-rate properties, their focus is on delivering high-quality housing that is accessible to a broader population. To achieve this, they reinvest profits from each building into developing a system that streamlines and lowers the cost of construction. By reducing construction expenses, Norhart can deliver superior properties at competitive prices, ultimately benefiting tenants and the community.
A Sustainable Future
Norhart's success stems from the dedication and expertise of their team. While their processes are deeply embedded in their team members' skills and knowledge, they continue to refine and improve their systems. This ongoing evolution positions them to scale their operations and replicate their model across the country.
The Future of Investing in Norhart
Unlike traditional real estate investments, Norhart offers a unique opportunity for individuals to invest directly, bypassing banks and syndicators. By eliminating unnecessary intermediaries, Norhart aims to make real estate investment accessible to everyday people. This democratization of investment allows individuals to contribute directly to solving the housing crisis while potentially earning attractive returns.
Conclusion
Norhart's innovative approach to multifamily construction is transforming the industry and offering a promising solution to the housing shortage. Through their streamlined processes, technological advancements, and unwavering commitment to affordability, they are reshaping the future of real estate development.