Looking Back - Paying it ForwardVeteran Home Builders Share Their Advice for Newer Builders
They've seen it all, 18% mortgage interest rates; a bottoming out of the market in 1993; the record prolonged upturn that lasted until 2007; the Great Recession of 2008-2013; and, the current "strong demand meets sticker shock" housing market. We asked builders what advice they would give newer contractors who want to make home building their lifetime career:
Mark Kiester - Unique Homes
Des Moines, IA
- Don't leverage yourself too deep.
- Find a builder willing to mentor you.
- Remember, you're only as good as the people who work for you!
Frank Morin - Accent Homes, Inc.
- In a declining market, take defensive action quickly and liquidate any inventory.
- Take advantage of local/state/national Home Builder Association resources. There are excellent learning opportunities, particularly at the NAHB International Builders' Show.
Chris Jones - C.A. Jones, Inc.
- Set up a reserve account. The line of credit is not operating funds – it is for emergencies.
- Cut expenses quickly and only dip into the line of credit for emergencies.
- Use your reserves for marketing and advertising to generate sales.
- Builders cut marketing because it’s easy, but you’ve got to keep people coming through the doors!
Tyrone Leslie - Heritage Homes
- Only get into home building for the right reasons. If you're not passionate about building the American Dream, then find another career you can be passionate about.
- You've always got to be learning and growing in this business.
- You have to find trades, subcontractors, and vendors that are aligned with your company's goals.
Robert Foushee - Foushee Homes, Inc.
- Put the money you earn back into the business to reduce your borrowing needs. Live within your means.
- Find a mentor - someone who's willing to teach you.
- Don't drop subs just because someone else is cheaper. Good subs may cost a little more, but you get consistent quality from them, and your reputation is worth more than saving a few bucks.
Alex de Parry - Ann Arbor Builders, Inc.
Ann Arbor, MI
- Know your costs. Keep accurate accounting records. Too many builders don't actually know if they're making money or not.
- You can't compete with national builders. Pick a niche, analyze it, then stick with the niche you select. You can't be everything to everybody.
Bill Kimberley - Kimberley Development
Des Moines, IA
- Follow through and do what you promise. You keep your word, and it will pay off in the long haul.
- Don't grow too quickly. Pay all subcontractors and suppliers on time. Honor your financial obligations.
- You have to achieve enough profit margin to both grow and save at the same time.
- Set reasonable expectations.