Has anyone reviewed S2A modular? Just doing my diligence

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Has anyone reviewed S2A modular? Just doing my diligence

Mark Caudill
Investor · Elizabeth, CO · Member since 2016 · 32 posts · 29 votes

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.

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Artur Madej
Investor · Orlando, FL · Member since 2016 · 6 posts · 36 votes
6y

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

DateFiling TypeOfferedSoldRemainingMin. investmentInvest. countExemption / Exlusions
2020-06-08New Form D$15,000,000$300,000$14,700,000$150,000206c[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.
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  • Scott Sprague
    Member since 2020 · 17 posts · 19 votes
    6y

    I am also starting the due diligence work on S2A.  I have attended the 2-hour webinar presentation, reviewed the exec summary and PPM, and had a phone call with their investor representative.  I am evaluating both the investment opportunity and the builder/developer opportunity.  Here are some of my thoughts/concerns:

    1) Two main concerns with the investment opportunity are the $30m valuation per location and the suggested ROI that seems way too good to be true. I'd like to know how they come to a $30m valuation for a facility that cost $15m to construct and has not yet had any actual revenue produced? The suggestion that 100% of investment would be returned to investor in 1-2 years and then additional significant investor distributions in the following years creates skepticism as well. Also, the offering summary is the same for each mega factory location. It seems to me that each location would have different costs and expect different revenues, so I'm not sure why the offering summary would be the same for each location.

    2) From the builder/developer point of view, I'm concerned that a profit could not be made in locations where real estate is typical sold for less than $400 per sq ft.  My understanding is that S2A will charge about $169 psf and an additional $106 psf should be expected for onsite work done by the local contractor.  That is a total cost of $275 psf and that doesn't include the land!

    I have not yet done any dd on the company founders/executives.  I only know what is posted on the S2a website.  If anyone has done some background research on these people, please share.

    I do like the S2A product and I think there would be high demand for it.  I just need to be convinced that they can deliver the product, and at a cost that works for all.

    2Reply
  • Mark CaudillPro Member
    Pensacola, FL · Member since 2018 · 51 posts · 32 votes
    6y

    @Artur Madej, @Mauricio Osorio, @scott Sprague, gentlemen, thank you for your valuable input. I saw the potential in the product, yet there are many "but" this scenarios. I agree that their 1st product should come out for us to see.

    I believe their business model as mentioned in their presentation states they could divert overage orders to adjoining production facilities. This is under the assumption that orders will not be even across the country.

    0Reply
  • Marjorie Diaz
    Member since 2018 · 4 posts · 1 vote
    6y

    I would like to use them.  I heard from the potential loan company that they have 6 projects in California so far with the company but none are completed yet.  I'd like to see a completed project.  Anyone know of any or have seen one?

    0Reply
  • Mark CaudillPro Member
    Pensacola, FL · Member since 2018 · 51 posts · 32 votes
    6y

    @Marjorie Diaz their production facility in Hemet, CA is not operational yet. They project product availability in 2021.

    1Reply
  • Marjorie Diaz
    Member since 2018 · 4 posts · 1 vote
    6y

    Thanks Mark!

    0Reply
  • Artur Madej
    Investor · Orlando, FL · Member since 2016 · 6 posts · 36 votes
    6y

    The Hemet, CA location was purchased in May 2019 for 300k. I don't see how the factory can be in production by 2021 if you take into account design, permitting, site prep, construction etc. That alone will probably take 3 years. I built a medical office in an approved location and that process alone took 4 years. 
    Why build from scratch anyway? I would think that it would be much cheaper and quicker to find an empty building and start operations from there. Building something from scratch is a huge time waste and resource hungry.
    I looked at the Riverside county website to see if there was any permit information available but the site is not easy to navigate. Has anyone talked to S2A to get an update on status? A paper trail - other than a conversation - would help tremendously with our DD. 

    2Reply
  • Doreen Kose
    Member since 2019 · 1 post · 1 vote
    6y

    I also just keep hearing the sales talk. Supposably they already broke ground on the Hemet, CA factory. I may just drive by to check it out....any idea how you can do some more digging into the company finances? Also, should I do the feasibility study with them and then decide to either go normal stick built or with another modular company, anyone any input if that is a relatively easy switch?

    1Reply
  • Olga Levin
    Investor · Alameda, CA · Member since 2012 · 47 posts · 10 votes
    6y

    Thank you all for starting and contributing to this thread! I also listened to the webinar and got excited with the concept S2A is promoting both for building and investing in their offering. I have learned from previous experience however that anyone can put numbers in a spreadsheet and make big promises. Leadership and execution are what will determine actual results.

    Track record for the the leadership is a bit hard to find. John Rowland owns a Rowland developments company for over 20 years, yet there are just a few reviews online and they are not positive.

    There seem to be a few court case filings against Mr Kuzdas. I wasn't able to see the details of those, but also not a great indicator.

    @Artur Madej 
    Regarding amounts raised, the amount shown on form D indicates what was raised when the forms were filed, it doesn't necessarily reflect current amount funded, but it would be a good question to get actual proof of.

    https://sec.report/Document/00... This filing is a bit odd. In the presentation they mentioned having raised 50M for the opportunity fund, but I do not see anything raised or even a target ot timeline for this raise. The money would be used to place orders to S2A factories and are part of a projection for their profit targets...

    3Reply
  • Shawn Windley
    Member since 2020 · 3 posts · 8 votes
    6y

    I was so pumped about this company. Learned about it, did webinar, loved pricing, even though their investing model looked strategically misaligned, I gave them benefit of doubt. I did the sales call for buying my home and never did they bring up that they haven't built even a single home. This is not a good sign. I will give them another chance to clear things out and answer some hard questions but it was a disappointing rollercoaster ride for me. 

    3Reply
  • Scott Sprague
    Member since 2020 · 17 posts · 19 votes
    6y

    I sure do like their idea and proposed product.  However, my dd is creating many more questions than answers.  Their marketing & promotion is very good, but I want to see if they can actually get a factory open and producing.  I'm going to have to sit on the sidelines until they have some actual real revenue to review.  I'll be watching this message board for more info.

    2Reply
  • Artur Madej
    Investor · Orlando, FL · Member since 2016 · 6 posts · 36 votes
    6y
    Originally posted by @Doreen Kose:

    I also just keep hearing the sales talk. Supposably they already broke ground on the Hemet, CA factory. I may just drive by to check it out....any idea how you can do some more digging into the company finances? Also, should I do the feasibility study with them and then decide to either go normal stick built or with another modular company, anyone any input if that is a relatively easy switch?

    Doreen - if it's convenient for you it would be fantastic if you could take a physical look at the site. I think this would put a lot of questions to bed. Right now it's all marketing and PR. Marketing is in Brian Kuzdas's (S2A CEO) DNA. A cursory search for his achievements show him to be a real estate educator, realtor, marketeer etc. I don't see anything demonstrating a caliber and skill set of being able to run a venture of this magnitude. Their stated goals are on a totally different level to his past history.

    2Reply
  • Sharon Laudisi
    Member since 2020 · 2 posts · 3 votes
    6y

    Hi, I have been in the energy industry for 20 years with my early years at the 3 largest utilities in the US before consulting.  I am one of the Originators of the transition from fossil fuels to clean energy, over a 6 year period was responsible with approx $400 million for building the NY solar Infrastructure on Long Island, changing policy and laws as well as working with all Trade Associations which resulted in towns incoporating Energy Star Homes into law, made LEED standards, transition the lights to LEDs,  played a big part in construction of the first Solar Hydrogen home in US, involved in ES, wind, Electric Vehicles, Battery Storage, new and retrofit commercial and more.Over my career I have encountered every possible technology, good bad and scam. I've won EPA and DOE awards and my efforts gained National Recognition.

    I had been speaking with S2A a couple years ago inquiring of their technologies and entry to market, it was too early for my participation. 

    Of recent discussions,  from a development perspective, what they have is legit, they have diligently built out the business, though more is required but they are at a point which warrants my involvement and are finalizing my company's involvement with the S2A to pull it together on the East Coast. My stellar credibility is on the line....if I am involved, and am able to do what I have planned,  I will be able to expedite their plans and the S2A name will become the Gold Standard of the market Sector. I give myself 12-18month on an initiative which in such time a make or break outcome is reached.  I will have this made in 12 months. S2A will not be a disruptor but the leader of the new homes model working and uniting industry involved while working with local government and colleges/universities for workforce development. 

    Without me, S2A will accomplish it's mission but it may take a bit longer.

    I am not advising anything just stating from career my experience and express with exception to my offshore wind efforts which were before their time, I only work of projects or with companies that can be successful. 

    2Reply
  • Scott Sprague
    Member since 2020 · 17 posts · 19 votes
    6y

    @Sharon Laudisi, it sounds like you have been communicating with S2A longer than many here on this thread.  Are you able to share what your involvement with S2A is expected to be?  Is it of a consulting nature, a partner/investment nature, or perhaps building/development?

    0Reply
  • Sharon Laudisi
    Member since 2020 · 2 posts · 3 votes
    6y

    @Scott since I am still negotiating so I can't yet provide concise efforts I will concentrate on but if/when that happens I am extremely transparent and accessible.  I am not an investor, nor seeking partner but my experiences with bringing new technology to the market place requires similar due diligence and when my name associates itself with it, I'm very sensitive to not only the product but the ability to produce it. 

    I created my consulting firm 4years ago, as mentioned in previous post I started in the Clean Energy sector almost 20yrs ago.  I do develop project of my own, 17MW of solar in permitting phase. So I'm a hybrid. 

    As part of building the NY infrastructure and basically asking people to spend more money and in return telling them you'll help the environment save money in the end and help start a new workforce chain, they were taking a leap of faith putting their trust in my hands. I learned to be diligent in how to communicate exactly what was the offering. I will walk at the first sign of issue.

    i had started conversation with S2A about 1.5/2 yrs ago as what they are forming caught my eye buy now S2A  has all the right pieces from a technology perspective and they have grown at an appropriate speed. From a purely technology price point,  given that the homes can achieve a net-zero or net-positive it does work. Land cost are what they are but with Covid-19 and the exodus from various locations coupled with continued push for energy independence and sustainability S2A is positioned nicely. 

    Any investment has it's risks, as putting funding behind a company has it's risks, by putting my name with something comes risk.. All we can do at best is evaluate and ask questions. I'm sorry I can't provide more insight at this time as to what if any role comes from negotiations. My credentials as well as my team are well documented publicly so if I take on any role with S2A on the East Coast I seek consensus building, live by milestones and results while also balancing what's best for the client, the customer, contractors, investors.

    1Reply
  • Robert James Brown
    Member since 2020 · 1 post · 0 votes
    6y

    Hi All -- 

    I attended S2A Modular webinar too.  I was impressed, yet I am unsure of their product and the possibilities they presented so I like to stay on this thread and do my due diligence.   I potentially might purchase a modular from them and might become an investor eventually.   I like hearing abut their net-positive graphene solar panel/tesla power wall configuration and their partnerships.  Made me hopeful... there are many older homes here in Northern Virginia/Alexandria that have lived out there useful service life that could use technological upgrades,  Olease include me on your threads.

    Thanks so much

    0Reply
  • Sandra Derr
    Member since 2020 · 2 posts · 0 votes
    6y

    I participated yesterday in a S2A webinar.  Very interesting.  I live in a house with solar panels and a heat-on demand water system.  Very friendly to eco ideas. I'm mostly thinking of being an investor. I also live in DE and DE is the "Switzerland" of LLCs.  Many LLCs are "housed" only in a file cabinet.  Frankly I think that is something DE should correct, but that has happened for a long time.

    0Reply
  • Shawn Windley
    Member since 2020 · 3 posts · 8 votes
    6y

    I am deciding not to invest in S2A as there are too many red flags for me.

    1) I have seen first hand (Enron) how creating many companies creates incentives for management which are misaligned with rest of the investors. S2A claims that they are modeling it after franchise models like McDonalds, but thats BS, in my experience franchise model is needed only when you need the investor to be involved with the day to day business to ensure quality/operations. In a model where investor is not expected to be involved in running the factories, the LLC structure is created for financial reasons only .. and in this case is done to screw the investor.

    2) They promise good numbers in terms of $/sqft but none of their competitors are willing to deliver at those numbers. It is hard to believe that S2A will be able to deliver when they havent run such a factory before.

    3) too much fluff -- the tesla trucks is not necessary nor economical at this point. In my opinion those shiny pieces of technology are there just to pump adrenaline. I feel the same about tesla batteries etc, but since they are add-on options, I am not deducting any points for that

    4) Please take advice only from other investors who are investing their money (not reputation). From a distance, a lot of things can look good but if you have friends in the industry .. you can find out exactly how robust people are.

    If I were them, I would have only one factory (as part of the main company) to prove out the model and the economics and then raise a lot of money at very favorable terms from VCs and PEs. The reason they are not doing that and are going for even small investments like 150k is ... I suspect .. because it is easier to entice potential consumers to become investors.  It seems to be working for them but in my eyes it is a really really bad deal for the investors.

    That said, do your own due deligence and take your own risks, I am not giving advice just sharing my thought process. If they are ever successful (I would give them less than 10% chance) at delivering, I will be a happy customer.

    5Reply
  • Josh Bunts
    Member since 2020 · 1 post · 0 votes
    5y

    Just here for the updates...

    0Reply
  • Nicholas Ethan
    Member since 2020 · 2 posts · 1 vote
    5y

    I'm also in search of a modular solution in Utah. I'm surprised the industry is still ten years behind in regards to the green initiative. I produced a building green TV series back in 2007 and the costs/technology hasn't progressed near as much as expected. As far as costs go, $150 to $250 is fairly reasonable depending on location. People are getting gutted left and right with the housing and building boom.


    I was initially leaning towards modular to reduce some of the lift of the sub-contractors, but after some due diligence it looks like there is still quite a bit of onsite work required after framing.

    1Reply
  • Liz J.
    Rental Property Investor · San Diego, CA · Member since 2016 · 10 posts · 3 votes
    5y

    following and so thankful for this informative discussion. @Mauricio Osorio , @Mark Caudill , @Raisa Rodriguez , @Frank Edwards , @Federico Morales @Artur Madej

    Has anyone actually spoken to S2A, outside of investing? I am looking to develop and wanted information after attending their presentation. I got a call from someone handling investors and the minute I said that wasn't my need he was done talking. He referred me to a sales person who has not contacted me despite repeat emails. I have looked the company number up online and asked to be transferred to him. I genuinely felt like the "sales person" is some code name to not reach anyone. The receptionist took a message. I worked in sales. I have a project that is legitimate and in 0-3 month timeframe. There is no sales person in the world who I know that wouldn't call back on that. So either they are totally unprepared for real orders, or not at all intending to. So that's why I'd like to know who HAS had conversations with them (@Sharon Laudisi I appreciate your input but it was too vague and did not ease my skepticism). 

    2Reply
  • Frank Edwards
    Rental Property Investor · San Francisco, CA · Member since 2020 · 4 posts · 4 votes
    5y

    @Liz J.

    My two cents on anyone trying to use S2A to build a home, they aren't ready to have that type of conversation (unless you're wanting to build a massive amount of square footage). If you want to invest, be a building contractor or lending partner, they are responsive. The manufacturing plants in California aren't even built yet and won't be producing anything until early 2021 from what they are saying. If you need something built ASAP, you'll have to find someone else. Check out Prefab Review, they have good articles and resources. They also have a Prefab Concierge serve that might be of use to you (I'm actually looking into this right now).

    4Reply
  • Federico Morales
    Rental Property Investor · San Jose, CA · Member since 2015 · 34 posts · 8 votes
    5y

    S2A had popped up for me a couple times in research. I'm a millennial, so stuff like environmental impact, waste, affordability, etc. matter to me. Then I also heard their co-founder speak on the pre-fab review podcast. I was impressed by the general philosophy. 

    I am working on a townhome development project in SF Bay Area, California of about 45 units set up as duplex, triplex, and fourplex on 1.5 acres of land. We already own the land. I'm not a big developer so I was attracted by their A to Z approach in California. It would require some zoning changes. 

    I reached out to them in April, but didn't get an immediate response by filling the online form, so I emailed their marketing guys or something. We had several phone calls in May and June and I sent them some documentation on the project.

    My project has developed to the point that I can make first submissions to the city for preliminary review. Once I am finished with that process in about two months and see the results, then I'll reach back out to S2A. 

    If not them, then I'll probably go with another modular group, but I'll have to figure out grading, utilities, foundations, etc. I had originally reached out to Guerdon, based out of Idaho, but they only handle orders of fifty units at a time, so I probably wouldn't have something that big. 

    Since I am doing mostly fourplexes one or two at a time, I might be able to do it with lots of different modular groups. Unfortunately, most of what I have seen in modular is super custom, high end stuff. I want something that is multifamily and affordable. Cali has a housing crisis. 

    S2A seemed legit, so I hope they will be operational soon. 

    1Reply
  • John Teachout
    Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
    5y

    This company may be able to make something happen for their energy efficiency efforts but as a whole I just don't see the modular home industry taking off. I toured a modular home factory in Texas back about 1983 and was impressed with the potential of it. I think modulars are a good product and own one that's a rental. However there's still a stigma attached to them in that municipalities lump them in  with mobile/manufactured homes (which they aren't). Also, there's just not enough "spread" in many cases to lean people in there direction. My concern would be that S2A would be sorta like the "tiny house" thing in that it sounds like a great idea but there's not that many people that actually want to buy one. Time will tell.

    1Reply
  • Liz J.
    Rental Property Investor · San Diego, CA · Member since 2016 · 10 posts · 3 votes
    5y

    @frederico morales That's what I'm looking at too. 8-12 affordable rentals. If s2A isn't the answer maybe we need to start our own :) @frank edwards I hope that it is just a matter of not being ready. Seems like it has potential. 

    0Reply
  • Jerry Hsieh
    Member since 2020 · 2 posts · 0 votes
    5y

    Subscribing.  Just watched the webinar and would like to follow up :)

    0Reply
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