Envision Homes is branching into townehomes in addition to its single-family homes in the Raleigh-Durham, N.C., area. By Russ Gager
The Research Triangle Park area of Raleigh, Durham and Chapel Hill, N.C., has been popular since the 1990s for homebuilders because of its large population of technology professionals. “Raleigh has always been pretty steady in the highs and lows of the housing market, but it’s on fire again right now,” Envision Homes President Mick Michael reports.
“We’re a midsized market, but we have the presence of a major market,” Michael continues. “We have 10 or 12 national builders here and a lot of regional ones. So the name of the game here will always be land-buying – it’s very competitive – and the hardest part will remain the acquisition of quality land.”
Michael has been in the area for 16 years and has many local contacts, which helps him get ahead of the larger companies. He praises the versatility of his partners, one of whom is a utility contractor and another a manager one of the largest brokerage offices in the area. “We try to find smaller land parcels that typically are too small or too complex for the national builders,” Michael says. “We try to figure those deals out, and sometimes we will joint-venture with other successful home builders.”
Landowners will approach Michael or his partners at Envision Homes with their land before it is put up for sale because of Envision’s reputation for understanding entitlements and delivering on its promises. Michael also examines the public county maps to determine what land is attractive for acquisition for a variety of different reasons. “We try to be the first or second guy in line and go from there,” Michael says. “Typically, we get more of our leads based on our individual professional competencies, market trends and word of mouth. Once land is listed for sale, you’re too late.”
Envision Home’s competitive advantage is its ability to personalize its semi-custom single-family and townhomes through years of experience, both in the custom and production segments of the homebuilding industry, and along the way creating a personalized home, but with the economic advantages that its buyers require. Instead of offering a limited amount of designs and finishes, Envision Homes gives its customers budget allowances for the finishes that make each home unique.
This means that if a customer economizes on flooring, for example, the money saved can be applied to more elaborate lighting or another feature. If customers do not spend their entire budget, the savings is credited back to the bottom-line, or if they decide to add additional features, the consumer simply makes that decision during the process with each vendor, thereby allowing for the optimum buying experience. “The key to success is that you have to give a proportional budget for the total value of the home,” Michael points out.
Until now, Envision Homes has concentrated on building semi-custom single-family homes in the Raleigh-Durham area. This year, the company is developing and building Trinity Heights, a high-end, 40-unit townhome complex. Construction of up to seven buildings is scheduled to start in February 2017 and will require approximately two years to complete.
The townhomes will be the first vertically integrated project for Envision Homes. “We’re not like a traditional builder,” Michael says. “Our goal has always been to slowly integrate the acquisition, horizontal development and homebuilding functions.”
Envision Homes usually subcontracts most of the construction of its single-family homes to an average of 20 to 25 quality subcontractors. It builds both speculative and presale homes, although the company has amassed a library of plans. “At this point in time in our business, each home is brand-new for the most part,” Michael says.
Michael says the key to success is honesty, transparency and competency, along with managing risk. “You can’t wait to only pre-sell,” he says. “The nice thing about spec homes for small companies like ours is it relieves you of the need to overstaff to handle front-end process complexities. Often times, I won’t even list the homes until I get cabinets in because at that point, the house is shaped. This allows for predictable cash flow and also still leaves the buyer ample opportunity to have input into the overall design, as well.”