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FEATURE STORY


Building Homes Faster Can Get More Mileage Out of Limited Capital


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mall builders who retool their businesses to complete their homes faster will have a sizable advantage over their local competition in today’s housing market, which


remains challenging despite signs that things are getting better, according to speakers participating in a webinar on “Doing More With Less.”


With the understanding that they needed to do things differently to move out of a survival mode and position themselves for longer-term prosperity, builders in Phoenix made the commitment to build homes in from 30 to 40 days, from start to close, said George Casey, Jr., president of Stockbridge Associates, LLC in Paradise Valley, Ariz. That is roughly the same cycle time that has been attained by big production builders in the area who used to take from 120 and 150 days to finish a home. “You need to be tracking your cycle time, working with the construction trades and doing your schedules on a day-by-day, sometimes hourly basis,” said Casey.


Custom builders, he said, don’t have the production builders’ advantage of being able to fine-tune their construction schedule from building the same product over and over, but they can build their homes just as quickly and efficiently. “It’s not that it can’t be done,” he said. Habitat for Humanity homes go up in five days, demonstrating that the key factor is “the organization of how you do it.”


Turning over homes more rapidly is also a good solution for


builders who are straining to find loans at a time when lenders are notoriously averse to making them, enabling cash-strapped builders to get more use out of the limited capital they do have and “go further on that tank of gas,” he said. “Any hour you don’t have something productive going on in the house, you’re wasting money.”


Making It With Niche Markets


Also essential in the self-examination process that every small builder should be submitting their business to, he said, is coming up with a product that can stand up to the competition from the public companies, the bargain-basement foreclosures and short sales that continue to flood the market and the other new homes that are being built.


“Private builders have to make it happen with niche product,” Casey said. “The winners will be those who are entrepreneurs, who figure out how to be different and contribute something people value.” His advice: “Understand what the customer values and give it to them instead of trying to throw everything at them.” Niche possibilities include multi-generational housing, remodeling, small rental or commercial properties, adaptive reuse, retooling foreclosures for investors, and more.


Casey also recommended having a few spec homes on hand available for short delivery. A semi-furnished model helps a builder establish a presence in the marketplace, and can bring in sales when it is a home that is “different in a meaningful way.” Casey cited a builder in California who is seeing success in a home with a multi-generational design aimed at middle-aged home owners who are looking for housing that enables them to be joined by their young-adult children and their aging parents. “People see it, brokers know it is interesting, it is different enough in the marketplace, it serves a need and it is a great way of putting yourself out there.”


“If you’re trying to build the same house as everybody else, you’re a commodity and it is very difficult to get a margin,” he said. Possibilities for generating profits include houses with ideal designs for members of Generation X or Y, or a single mom. “Put yourself out there and figure out what the market segment wants.”


Continued on next page 12 APRIL 2011 | HOUSTON BUILDER | GREATER HOUSTON BUILDERS ASSOCIATION – BUILDING A BETTER FUTURE 


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