Looking Back - Paying it ForwardVeteran Home Builders Share Their Advice for Newer Builders
They've seen it all, 18% mortgage interest rates in the early 80s; 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" until the COVID-19 pandemic threw everything into confusion for the housing market. How did these veteran builders survive? 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.