I’m Thatcher, President of KBS Builders. We build modular homes and multifamily buildings in South Paris, Maine, and ship them all over New England.
Starting this week, we’ll post something here every week. This won’t be a press release page. The plan is to write about what we actually see — what’s moving across our floor, what’s changing in codes and financing, and the arguments in this industry that are worth having out loud.
I’m writing this mostly for the builders, GCs, developers, and housing folks we work with every day. You already know how to build. What you may not know is how the factory side of this actually works, where it saves you money, and where it honestly doesn’t. I’d rather tell you both than sell you one.
If I get something wrong, please tell me. The best emails I get start with “not quite.”
Let’s start with the one I hear most.
That’s usually the second sentence of a first phone call. And there’s a number behind it — most people are quietly expecting 30 or 40 percent off.
Then the module quote comes back closer to the site-built package than they figured, and the conversation cools off. I’ve watched good projects die right there, on a comparison that was never the right comparison in the first place.
Here’s the thing. The myth cuts in two directions, and both of them hurt us.
Homebuyers hear “factory-built” and think trailer — cheap house, cheap materials, no resale. Developers hear “factory-built” and think discount stick-built — same house, 40 percent off, because a factory did it. Neither one is true, and the second one is the more expensive mistake, because it sets an expectation that the math was never going to meet.
Offsite Builder ran a piece this month that put a number on something we’ve been saying for years. On a $450,000 modular home, the portion actually leaving the factory may only be $170,000 to $190,000. Roughly a third to a half.
Everything else is land, roads, utilities, stormwater, environmental work, permits, foundation, set crew, finish trades, financing, and carrying cost. None of that gets cheaper because the house showed up on trucks.
So when someone asks me to knock 40 percent off the project, they’re asking me to discount a third of it by more than a third of itself. That’s not a negotiation; that’s arithmetic that doesn’t work.
Modular is a coordination business, not just a manufacturing business. We’re one link — an important one — in a chain that has a dozen other people pulling cost out of the same project.
Here’s the part that doesn’t get talked about enough, and from my chair it may be the biggest one.
When you contract with us, a substantial portion of your project cost is fixed. Not estimated. Not “subject to change.” Fixed, in writing, before we cut anything.
Think about what that’s worth right now. Lumber moves. Tariffs move. Labor rates move. On a site-built job, all of that risk stays on the table for the length of the build, and somebody eats it — usually you, sometimes through a contingency you carried all year and hoped not to spend.
We take that risk off the table for the biggest single line on your budget. We buy the materials, we schedule the labor, we own the exposure. Your lender sees a hard number. Your investors see a hard number. And when you’re pricing a deal, a hard number on a third to a half of the project is worth a great deal more than a slightly lower estimate that can move on you.
Certainty has a price. It also has a value, and in this market the value is running ahead of the price.
The other place this pays is the schedule. If you compare us line item to line item against a stick frame package, we will sometimes lose. I’ll say that plainly.
Compare total cost of delivery, and the picture changes:
Time is money, and interest doesn’t take the winter off. Our modules go up while the site work is happening, not after it. On a construction loan, months of carry are real dollars, and they don’t show up anywhere on a framing bid.
Weather stops being a line of your schedule. In Maine, that’s not a small thing. Our buildings get built indoors, on a floor, in February, by people who came to work that morning regardless of what was falling out of the sky.
Labor you can actually count on. Every builder I talk to is short crews. We’re not immune to that, but we’re solving it once, in one building, with a trained crew that does the same work every day — instead of you solving it on every site, every time.
You get to revenue sooner. Earlier occupancy, earlier rent, earlier sale. On a multifamily deal, that’s usually a bigger number than anything you were going to squeeze out of the framing package.
That’s the honest pitch. We’re not selling you a cheaper house. We’re selling you a firm number and a shorter, more predictable path to a finished one — and on most projects, that’s worth more.
Modular homes are built to the same state building code as anything on your site — IRC/IBC, in-house and third-party inspected in the plant.
That’s a different animal from a HUD-code manufactured home, which is built to a federal standard instead of your local code. Both have a place. They are not the same product, and the vocabulary gets sloppy in a way that costs us all credibility. There’s a proposed HUD rule in front of the industry right now that muddies that line further — I’ll get into it in a few weeks, because it deserves its own post.
I’d rather tell you up front than take your deposit and find out together:
If your project is one of those, we’ll tell you so. That costs us a job and buys us a customer.
Permanent modular construction was about $20.5 billion in the U.S. last year — call it 5 percent of the construction it competes for. Five percent. In a country that cannot build housing fast enough.
The technology isn’t what’s holding that number down. HUD’s own research this spring said the same thing: it’s the systems around us — codes, approvals, financing, and expectations. From my chair, the expectation problem is the one we can fix ourselves, one conversation at a time. That’s a big part of why I’m writing this.
Next week: what a design freeze actually means, and why it’s the single biggest thing that decides whether your modular project makes money.
If there’s something you want me to take on, send it over.
— Thatcher
