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Tuesday, September 2, 2014

New to Modular Home Building? Keep Reading

Modular housing is having a good run right now and that tends to attract not only site builders wanting to build more houses in less time but also people that have never built a house before and are entering our industry from other fields like banking, IT, sales reps and even early retirees.


Many of them will fail. Not because they weren’t smart enough or didn’t work hard, rather from not following some simple guidelines that every startup business needs to know. Here are some basic rules for any business but is especially important for new modular home builders.

  • Thinking you are profitable once money begins to flow in from bank draws. Money flowing in has to exceed all costs, including inventory, credit, and your salary, before there is a real profit. Many new builders see initial revenue from customers, and love the fast growth, but fail to anticipate the cost of early vendor payments, monthly overhead costs, and later taxes.
  • Considering the job done once a client has been handed the keys to their new home. A new builder must be aware that they have to stand behind their home for at least a year to fix or repair problems. Some states require an even longer period of time for specific items. Not preparing for service calls after the sale by building a cash reserve into your selling price can be dangerous. This difference will kill your profit margin.
  • Not paying close enough attention to cash flow. For new builders, cash is king. If you fail to pay a cash obligation when it is due, the business is technically insolvent. Insolvency is the primary reason firms go bankrupt, even while making a profit. Entrepreneurs should sign every check and manage cash personally, rather than delegate this task to anyone.
  • Not producing and reviewing financial reports regularly. Too many new builders, and even veteran ones, hate the numbers side of the business, so they assume their accountants will warn them of danger signs. But accountants rarely see the big picture, which you need for profitability and survival. It’s well worthwhile to learn the basics and use financial reports.
  • Not having a budget. A budget is the financial plan and road map to get you from your business plan to profitability. Without a road map, you can be lost and not know it. Make sure you have a budget which is specific, measurable, achievable, realistic, and timed (SMART). Prepare it, update it regularly, and use it.
  • Not having a Marketing or Business plan. The time to complete the rough draft of both of these is before you even start your home building business. Be realistic and know that it will take twice as much money and three times longer than you anticipate to succeed.
  • Wasting money unnecessarily. Every business ends up buying things they don’t need, or paying more than they should, due to lack of attention and lack of negotiation. Review supplier terms regularly, and don’t be afraid to shop around. Take advantage of early payment and volume discounts, where possible. Don’t stop looking at different modular home factories. It’s possible that the factory you area currently with may not be the best fit for you right now.
  • Avoid self-sabotaging behavior that you may not even be aware of, like blaming others rather than taking responsibility for all decisions, or not charging what your homes are worth, due to lack of current market information or a personal bias.
These are just the basic rules of what you need to do if you are new to the modular housing industry. This is not rocket science stuff, just good old common sense and if you think you don’t need to follow these rules, I hear there are plenty of openings in the food service industry.


Monday, September 1, 2014

Another Ad Disaster by those HUD Home People

The modular housing industry is always trying to distance itself from being confused with single and double wide HUD homes. Well my friends, this is the type of ad you will NEVER see from a modular home builder.

Brooklyn's Other Huge Modular Project on Schedule

Capsys Corp is currently finishing up the first grouping of homes for the next phase of Nehemiah’s Spring Creek project located on a former 45 acre former landfill site east of Brooklyn, NY

Built in partnership with East Brooklyn Congregations and designed by architect Alexander Gorlin, Nehemiah is composed of prefabricated one-, two- and three-family homes assembled at the Brooklyn Navy Yard. Homeowners put down as little as $8,000 to purchase their houses, which ranged in price from $158,000 to $488,000.

When completed by 2016, over 1,525 new homes and apartments will be built on these streets tucked in behind Related Companies Gateway Plaza Mall, Belt Parkway, and two state parks opening by 2014. In September, three new schools will open on a $75 million campus constructed by the Department of Education.

Spring Creek Nehemiah (as residents call it) will be home to 233 first-time homeowners who won the right to live at Nehemiah in a lottery sponsored by the city’s Department of Housing Preservation and Development, a major partner in the project. They applied to the lottery more than five years ago, some as many as 17 years back. Soon, 50 new owners will move in. Five parks, a supermarket and EMS station will be finished upon plan completion.



These prefabricated townhouses are part of the Nehemiah program to build the largest affordable housing development for first-time homebuyers in New York City. More than 800 homes are planned around a vibrant community-oriented streetscape and neighborhood. 

The first two phases and phase 3B, approximately 287 of 578 townhouses, are now complete with phase 3A under construction. Individual modular units are constructed in a nearby factory and trucked to the site where they are then joined together into two-, three- and four-story houses.  To create visual interest and distinct identities, multiple facade types were designed, each of which can be clad in one of a dozen different colors of siding. A modern interpretation of traditional Brooklyn townhouses, stoops line the street leading to a raised front door. Parking is along rear alleys in the interior of each block, allowing the homes to open directly onto the sidewalk.



Work Stops on Barclay Center High-Rise in Brooklyn

Design flaws and cost overruns have brought construction on a prefab 32-story residential high-rise next to Brooklyn’s Barclays Center to a screeching halt.


The Swedish construction company Skanska stopped work on the $117 million project Tuesday and closed down its prefabrication hub at the Brooklyn Navy Yard on Wednesday, August 27th.

The company said design flaws and tens of million of dollars in extra cost went into its decision to shut the project down.

The building is the first of 14 planned prefabricated structures in the recently renamed Pacific Park development.

Project developer Forest City Ratner told The Times it is confident the buildings will be finished and that the Skanska dispute is strictly over money.


Ground was broken in December on what is to be the world’s tallest modular building.

NJ Housing Starts Posts Best Year Since 2006

Despite last winter's weather delays, New Jersey builders are on track to start the largest number of homes since 2006, led by a boom in rental construction.

Through July, home builders have obtained more than 17,200 building permits this year, up 30 percent over the same period last year, according to the U.S. Census Bureau. Multifamily construction has continued to lead the way, accounting for 63 percent of the activity this year.

Approximately 1,100 of those permits were for modular single and multi-family homes.


Builders are focusing on rentals because many households have been unable to buy homes in a time of tight mortgage lending standards and flat incomes. In addition, many younger residents are wary of owning a home because the housing bust showed them that property values could drop.

Multifamily projects have recently been completed or are under construction in Fort Lee, Edgewater, Elmwood Park, Fair Lawn, Wood-Ridge and Bloomingdale, among other North Jersey towns.


Single-family permits have also risen this year, but at a much slower pace than multifamily. Single-family builders are being careful not to produce houses more quickly than sellers can buy them.

Sunday, August 31, 2014

The Reports of Cold Calling's Death are Greatly Exaggerated

What is the future for cold calling? It seems to me that most of you think it is a dying art. Most modular home sales reps started their careers with a list of prospective builders to reach, and bashing the phones was the origin of most early sales cycles. It was virtually unheard of for a customer to contact you back if you left a message or proactively contact you. That is where the sales cycle is really changing. Social media advertising has become the message left by the cold caller of old. Customers are more likely to now proactively return messages and make that call – albeit behind the comfort wall of email or digital engagement as opposed to over the phone.


Interestingly the advent of many social networks, within which we choose to selectively follow in return for a stream of messages seem to be providing a more targeted means for companies to continue to exert outbound messaging than cold calling. I guess the question is how do these modern means of communication compare to cold calling when it comes to conversion and ROI?

So how many sales reps are still wasting large amounts of time and resources trying to cold call customers?  What is the real ROI of most businesses lead generation activity? Is this something that enough businesses are measuring. Granted just one sale from one of those expressions in some of those industries could have produced enough profit to justify the investment – every industry is different – but it just doesn’t seem a solid long term strategy.

If you are a factory sales rep, you have to ask just how effective is your social media in capturing the attention of a new builder looking into modular home construction. Aren’t all Facebook, Pinterest and other social media campaigns run by a factory aimed almost solely at the end user, the new home buyer?

And what happens if someone “Likes” your factory’s FB page. Do the reps go after that “Like” or does the factory have someone that begins an email program with them? Are the factory’s builders alerted that someone living in their area has “Liked” the factory FB page? Of course not, nothing is done. There is no follow up done by the factory folks, the sales reps or the builders. If one of the primary goals for the factory sales rep is to find and recruit new home builders, then all the social media in the world won’t help because there is no “next step” when someone “Likes” your social media page.

On the flip side, there is still a place for a sales person learning from the ground up. Why? Because I’ve seen several waves of new modular home sales reps in recent years enter modular construction industry, assuming that sitting and emailing contacts or pinging them on Facebook and LinkedIn will deliver sufficient inbound opportunity. This might work for some – but the real art in cold calling over the phone is being able to communicate with a prospect in a manner that will lead you further down the sales cycle AND build a mutually beneficial relationship. It also means you learn more about how to present yourself the next time you have to sit in front of a potential new builder – something that isn’t taught at an MBA university.

The bottom line is that cold calling by phone is not dead or dying. It’s very much alive but instead of just picking up the phone and dialing the builder’s number, you first have to look and see if they have had any activity on your company’s social media sites. You also have to look at their websites and social media presence and finally do some in-depth research before picking up the phone.

The art of cold calling is alive but it looks a lot different than just 5 short years ago.


Thursday, August 28, 2014

Renewable Jersey LLC Getting Closer to Opening NJ Modular Home Factory

Economically depressed Brighton, NJ took a major step in landing 120 new jobs when the sale of part of its debt-ridden port was approved by the state's local finance board.

Econcomic Development Director Kevin Rabago announced the move Thursday by saying Mayor Albert Kelly described the approval "significant progress.''

The sale includes an 83,000-square-foot warehouse to modular home manufacturer Renewable Jersey, LLC. 

"The approval clears the way for Titusville-based Renewable Jersey, LLC to move ahead with the long-planned adaptive reuse that will see the warehouse converted to accommodate the state's first modular home manufacturing operation,'' said Rabsgo.


"It will provide up to 120 full-time jobs as part of Phase I development.
Kelly recounted the tough progress.

"We've been working through issues on this project for over two years now,'' he said.

"The decision by the local finance board marks significant progress in our efforts to bring jobs to our community and, while there's still a number of things to be done before we get to a ribbon-cutting, this was a big hurdle we had to clear." 

In 2013, the Township entered into an agreement with Renewable Jersey for the building of affordable housing units at the Clarion Hotel. The agreement was for 144 units in two phases (first phase 84 units, second phase 60 units). Renewable Jersey proposes amendment to build the 144 units with 103 units in the first phase and 41 units in the second phase.


CLICK HERE to read my previous article