Wednesday, July 23, 2014

USA Today Dismisses the Entire Modular Home Industry

USA Today's online version just printed an article that every modular factory and builder, whether you our homes prefab or modular, should be up in arms about.

These dumbasses did so little research into what is being built today that they should change their name to "USA 20 years ago". Not one mention of all the factories across the US pumping out great modular or prefab homes for decades. Not one picture of a traditional 2 story modular home. Instead they use Blu Homes as the best example they could find and even then USA Today kind of trashed Blu Homes.

"Who do I talk to about this article?"
Here is the first part of USA Today's article followed by a link to entire web page. My comments are in RED.
You can't buy a house on Amazon.com for self-assembly. Not yet, anyway. 
But prefab (or prefabricated) houses, long a modernist fantasy, are having a kind of moment. Over in Brooklyn's Atlantic Yards, cranes are stacking factory-built modules on top of one another like Legos. When the stacking is done, it'll be a 32-story apartment complex, and the tallest prefab in the world, according to the developer, Forest City Ratner. Prestige architects like David Rockwell (better known for luxury hotels and restaurants) are throwing their hats in the prefab ring, too. And a brash startup called Blu Homes, established in 2008, is spurring envy REALLY? and some resentment: It has about $150 million in investment, as well as technology that folds glass walls and high ceilings on flatbed trucks — and says it's already doing more volume than anyone in the prefab business. REALLY??????
It's way too early to say whether any of these efforts will modernize the homebuilding industry, which relies on old methods and remains fragmented and inefficient. These methods are the same site builders use.
Historically, the prefab dream has ebbed and flowed; at times, cost overruns and impossible promises have turned it into a total nightmare. What the hell are they talking about?
Even now, the upswing is relative: Blu Homes may be leading the industry Again, REALLY?, but it's built fewer than 300 houses in total. (Compare that to the 569,000 homes constructed last year.)
CLICK HERE to read the entire stupid article.

Modular Home Factory Sales Manager Worried About Growth

A couple of days ago I talked with a modular home factory sales manager about the owner coming into his office a week earlier wanting to expand the territory they served adding about another 100 miles to the north and west.

The sales manager called me because the owner assumes that entering these markets would be a big boost to sales and the bottom line and wants to see $2.5 M in sales by July 1, 2015. He is worried that not only will it not happen but that he might just be fired if it doesn't. He asked for my help.

What a loaded situation!  After talking for almost two hours I would like to share the results of this first of what will probably be many more.

I started out by asking if he has any modular or site builders in the new areas that want to buy their homes. NO.

Have you hired any sales reps for either territory? NO.

Have you done any research into the number of new home currently being built and how many are modular? YES to the number of new homes, NO to the % of modular homes. I told him to multiply the total new homes by 3%, multiply that number by the average FOB price of their homes and assuming that they get every one of those homes, does it equal $2.5M or greater? NO.

Now he has the first piece of information to take back to the owner. More pieces followed.

Then I asked if he had any candidates for the two new territories? NO. He hadn't even placed an ad for new sales reps. He was hoping to steal a couple of reps from other factories.

I asked if he did that, does he know how much the owner willing to pay? NO. The other sales reps have all been with him for a couple of years or more and work mostly on a small salary plus a commission.

We all know that that there are two types of sales reps; one that can bring his builders with him to the new factory and one that has no builders. Assuming that he will not be able to steal a sales rep, does he have the time to train and meet with the new sales reps on at least a weekly basis for the first six months? NO. He has no formal training program and riding with each new rep for one day a week for six months will hinder his relationship with his other reps.

This is more information that he needs to taken back to the owner.

Great sales managers think of sales as a simple game of managing their reps' numbers. For example, I asked if he knew that in the modular home industry that 100 builder leads typically yields 20 meetings, which will convert to 8 visiting the factory, which will result in 4 sales and that this will take at least 6 months? NO

Instead of hounding their reps for a sale, the best sales managers focus on the status of the sales funnel, making sure their sales reps have the right number of leads and meetings, which they know—if they just work the system—will result in the right number of sales. With that in mind, are there enough independent site and modular builders to keep a sales funnel full through the next 12 months? NO, Maybe, "I don’t know!"

That last piece of information is critical when talking with the owner.

Now he has some ammunition when he sits down with the owner and discusses these new territories.

I just got a call and was asked if I could meet with him and the owner. YES 

Tuesday, July 22, 2014

Why Don't Modular Home Builders Use Business Plans?

If business plans are so important, why don’t modular home builders use them?

I’ve been asked that many times still don’t have a good answer.  I do know that builders that write a business plan and follow it are 50% more successful and are less likely to go out of business within 3 years. Companies with a Business Plan have 63% higher revenue growth and 100% more profit than ones without a plan.

So, let me ask you; “Why haven’t you written a Business Plan yet?”

Without a Business Plan, here are some of the problem areas that won’t be addressed:
  • Poor Management Systems
  • No Overall Vision
  • Lack of Market Planning
  • Not Understanding the Competition
  • No Strategic Plan
  • No Established Performance Measures
  • Inadequate Financial Planning
I can just see you now.  You will look like a firefighter stepping on each of these areas and trying to put out one fire while another bursts into flames.  Soon, you’ll look like a drunken clog dancer and finally you’ll just fall over and your business will fail.

Please, start preparing a business plan today.  Even though housing is better this year, many builders will go out of business simply because they have no roadmap to success.

If you don’t have a clue where to start, just drop me a line and I’ll send you some info….FREE, of course.

Monday, July 21, 2014

Signature Homes is Expanding Their Sales Force


Signature Building Systems of PA LLC, based in Moosic, PA, is looking to hire qualified and experienced sales people to help our company transition from recovery to growth.

The ideal candidate has been in the industry for a number of years and has a consistent, reliable customer base that would benefit from working with one of the industry leaders in customization and flexibility.

Any interested candidates are encouraged to contact Justin DePhillips, Director of Sales and Marketing for SBS, via email (justind@signaturecustomhomes.com) or phone (570)774-1000 ext. 297

Modcoach note: I had the pleasure of working for Vic and Justin DePhillips before I retired. Great factory, good people. Only downside was that they didn't have a good coffee machine when I was there.

Irontown Homes Hits It Out of the Park

Modern and Modular Homes of Santa Barbara, CA

Santa Barbara Independent
Wednesday, April 24, 2013

So you want to build a house in Santa Barbara — but you’re not enamored of red-tiled roofs, and your budget is a bit smaller than Oprah’s. Can an average family hope to build a beautiful, modern home here? Behold: Three families who have done just that.

From Utah, with Love
Even before they married in 2002, San Marcos High School grads Rain and Dana Longo started looking for a house to buy. In 2009, they were still searching. “We couldn’t quite get anything,” Rain remembers. “We were outbid every time.”

We’re standing in the kitchen of the Longos’ brand-new two-story home. Light streams through the massive windows above the sink and spills in from the clerestory windows in the dining room. It’s hard to believe that just a few months ago, this stylish modern house was zipping along the freeway on the bed of a flatbed truck.

For the Longos, a factory-built house was the perfect solution: aesthetically pleasing, eco-friendly, and quicker and more affordable than traditional construction — even cheaper than many of the older tract homes they had considered buying.

The Longos worked with Irontown Homes, a company in Utah that allows for custom design. They hired an architect, and they bought what had been a blighted, undeveloped lot — a 6,000-square-foot corner property near Bishop Diego High School. They went door-to-door to speak with their neighbors and found their project warmly received.

Convincing the Architectural Board of Review wasn’t quite so easy. “They finally acknowledged that you’re not going to build a 1950s tract home in 2011,” Dana says.

The final result is an eye-catching, 2,100-square-foot house with four bedrooms, two-and-a-half bathrooms, front yard and backyard, and mountain views. With three small children and a fourth on the way, they feel there’s just enough space for everyone. “We got a big house by Santa Barbara standards,” Rain says. “We never could have done it without modular.”

Out of the Ashes
In 1973, Donnis Galvan took a risk and bought a piece of property nobody else seemed to want: an irregular 1.25-acre lot on a steep hillside, with a creek running through the middle. She and her husband, Peter Hale, decided to build a house there, and after years of planning and permitting, they completed the project in 1990, with Hale designing and managing the construction himself. Their unassuming modern house was set below the level of the street, providing privacy and quiet. It was cantilevered over the creek so that, from the kitchen and the back deck, you looked out into a canopy of leaves. The foundation had been so expensive that they had resorted to cheaper materials for the house itself, but they loved their home.

Among the many benefits of modular houses, this custom kitchen was installed in the factory.

Then, in November 2008, the Tea Fire swept through the Montecito foothills, taking Galvan and Hale’s house with it. Even in the immediate aftermath of their loss, the couple knew they would rebuild on-site. So they did, finally completing the new house in November 2011 and living in a borrowed Airstream trailer for the final year of the project.

The new house appears similar to its predecessor — a petite, modern structure that from the street looks like little more than a garage. Inside, a flight of stairs descends to an open-plan living room and beyond to the kitchen with its views of the canyon below. This time around, with an intact foundation, Galvan and Hale were able to invest more in their building materials and appliances. Still, they’ve kept things minimal: exposed steel beams, bare wood floors, and lots of glass. “We like things simple, uncluttered, and practical,” Hale explains. With 1,900 square feet of dwelling space, it’s the ideal size for two — and that’s just the way they like it.

Like the Longos, the Wilson family worked with modular company Irontown Homes, based in Utah, to design their home.

Until 2011, the Wilson family lived in a comfortable San Roque neighborhood house. They were happy with the size of their home, but they ached for more land. So they took a risk and bought an undeveloped four-acre property, sold their house, and started looking for a way to build. They had heard about modular houses but associated the idea with a cheap, prefabricated structure — until they did their research.

Like the Longos, the Wilsons chose Irontown Homes, in large part because of the company’s willingness to allow for custom design. They decided to work with area architect Keith Rivera, who was new to modular and who took on the project with some degree of skepticism — he worried it might be of a lower quality than a stick-built home and that it wouldn’t allow for enough flexibility. Two years later, both Rivera and the Wilsons are modular converts.

Just last month, the Wilsons moved into their single-story, four-bedroom, two-bath house. It’s sleek and modern, and unlike their San Roque house, they look out at an expanse of open land — plenty of space for gardening, and for their three young children to explore. “This house and other prefabs like it may be an example of a new, post-recession approach to home building,” Rivera says. “It’s modern, sensible, and efficient.”

The Wilsons agree. “Prefab used to be a dirty word, but this is not a mobile home — it’s a real home,” they say. “It’s beautiful. We’re very happy.”

A Site Builder Gives Out Misinformation About Modular Homes

OMG! Welbilt Homes in Leesport, PA, just north of Reading, has the following statement on their website. I can’t let this go without responding. My thoughts are in RED. Let me know if I missed a point or two.

Link to their web page:

Things to Know BeforeYou Buy a Modular Home. This is why you build Stick Built Homes!!! What do you folks think we build our homes with? Mud and straw!

By definition and for purposes of this article, a modular home is a house that has been built in sections in a manufacturing facility and then moved to the site where it’s put together on a foundation, crawl space, or concrete slab. Once completed, a modular home is virtually undetectable from a site or stick-built house. Great point!

Shopping for a modular home is a lot like shopping for a new car. There’s the base price that doesn’t sound all that bad and is certainly not over your budget. Then there’s the “real” price. That’s the price the car will cost if you want a steering wheel and tires. I jest, but you’re probably getting the idea. No, I really don’t get the idea. Are you saying that Welbilt Homes doesn’t have a base price for your homes?

Modular home buying is similar. You see the pictures and walk through a few models and you just know this will be the best way to go. And there definitely are advantages to buying a modular home. They’re built indoors, so there’s no weather delays or weather-damaged building materials. Once construction begins in the plant, it takes less than a week to build the sections and prepare them for transport. The cost per square foot is generally less than a site built house, and in most cases the construction itself is high quality. Another Great Point!

But here’s the catch. There’s a lot more expense to buying a modular home than selecting the model you like and waiting for its delivery and final construction. There are options you’ll need to choose from. Apparently Welbilt Homes doesn’t have options. There are contractors you’ll need to hire. Again, Welbilt must not use contractors for anything. There are many expenses and things to consider that are not included in the base price of the house. So, before you sit down with the friendly salesperson, investigate and think about the following:

Dimension. What size house can you afford? On average, a modular home will cost anywhere from $65 to $85 per square foot to build. But this is for the house itself and nothing more. Again, what’s your point?

Site. Do you already own the site, or do you have to buy that too? Is your site undeveloped, or are the utilities already nearby? Will you be installing a septic system? Where is your electricity, water, and natural gas or propane coming from? Who will dig your basement or crawl space or pour the cement slab? Estimates and costs from contractors and utility companies might surprise you. This applies to site building as well. The owners of the company will do a site visit with you to get a estimate of what you might need. After that we will send it out to our Septic Designer or Engineer and they will design the system you need. Then they figure the cost and we forward that onto you. Everything is up front and on paper. I don’t think that any builder, modular or site, can get a building permit without these things being completed.

Heating, air conditioning, plumbing. Remember that your house will not come from the factory with any duct work or wiring or water lines. This statement is total BS. You’ll need contractors for your sheet metal, electrical, and plumbing plans and installation. Have you thought about what kind of heating and air conditioning units you want? How about appliances? OMG, how could a modular home builder forget to ask if the buyer wants heat and appliances. We must be stupid not to think of this.

Garage, porches, and decks. Pictures of modular homes always display garages and pretty porches and decks. But those don’t come with the price of your modular home either. If you can’t do the work yourself, you’ll need to hire someone to pour the garage floor and a carpenter to build your porches, decks, and garage. The modular home builder is a contractor and can do this work….Duh!

Options. And then there are the options. Electrical outlets and phone jacks, priced by the number of each. Wall and floor coverings made to sound like great inclusions, when in reality the quality is fair and the selection poor. Basic lighting fixtures that are also included, but would be better left out with a discount so you can shop and buy what you really want from your favorite home building center. All of our outlets and switches are to code. You will have plenty and don’t have to worry about not having enough. The light fixture you pick out yourself. We give you a allowance and you buy whatever you want and we install them. This is about the most asinine statement I’ve ever read. There are electrical codes that determine these things and you can’t build a house with meeting them.

When all is said and done, expect to pay at least 20% more than the friendly salesperson’s figures. How would a modular home builder stay in business if they underquoted their homes and then tried to get a higher mortgage at the last minute? That’s not to say the salesperson won’t make you aware of the things I’ve written about, but the cost estimates and work involved will likely be downplayed and considerably less than reality. I can’t believe Welbilt Homes doesn’t give estimates when quoting excavation, well and septic. Your friendly salesperson will also encourage you to believe you are getting many wonderful inclusions, when in fact you would be better off to ask for the inclusions to become exclusions, with the house discounted accordingly. Then when your home arrives, go to your favorite department stores and home building centers and buy the best you can afford. Another stupid statement. The cost of deleting a special order faucet and the customer buying it a Lowe’s and having a plumber install it will probably be more than the modular home builder would have charged.

Our salesperson at Welbilt Homes are straight forward and upfront with everyone. Unlike modular home builders that are sneaky and deceitful? You pick out whatever options you want on your dream home. He prices it out for you and then you pick and choose what you want. Then that is added to your contract. Everything is up front and in writing. We never install anything you don’t want or pay for. And modular home builders do something different than that?

This statement seems to have written by a site builder that has been losing home sales to modular home builders and doesn’t know how else to compete except by making these statements. And you know what they say…”I saw it on the Internet, so it must be true.”

Friday, July 18, 2014

New Housing Starts Drop in June

The U.S. Commerce Department reported Thursday that housing starts fell 9.3% in June to a seasonally adjusted annual rate of 893,000, led by drops for single-family homes and apartments. Economists had expected the government to report that the seasonally adjusted annual rate for housing starts hit 1.02 million units in June, slightly up from an originally reported rate of 1 million in May. On Thursday, the U.S. Commerce Department revised May’s starts rate to 985,000.

For context, economists say about 1.7 million starts are needed each year to maintain current stock and meet demand for replacement and second homes.

It’s worth noting that June’s construction-starts drop of 9.3% had a confidence interval of plus or minus 10.3% — indicating that the government isn’t sure whether the pace of new construction actually fell last month.

Over the past year, escalating prices and mortgage rates have hit housing demand, and a particularly harsh winter took a toll in the first quarter. A relatively low number of homes on the market has also constrained sales.

Officials have been worried about whether the housing market’s rebound has petered out. Earlier this week, Federal Reserve Chairwoman Janet Yellen told U.S. lawmakers that the housing sector has “shown little recent progress,”  and that readings this year “continued to be disappointing.”

Starts for single-family homes fell 9% last month to the slowest pace since November 2012, while starts in structures with at least five units dropped 11.3%.

Why the home construction report wasn’t completely awful

Although June’s headline home-construction data were surprisingly bad, underlying details hint that the market may not be in awful shape.

Of note, among the four U.S. regions, only the South — the largest market — recorded a starts drop in June.

“The headline number was very weak, but the report is exceptionally uneven and on balance is not an indication of a significant turn in housing construction,” said Eric Green, head of U.S. rates & economic research at TD Securities.

Meanwhile, in a spot of good news, permits for single-family homes — an indicator of future demand — rose 2.6% to an annual rate of 631,000, the fastest pace in seven months. Overall permits, which also include apartments, fell 4.2% to a 963,000 pace in June.

Looking forward, sales and building rates could pick up, thanks to a strengthening labor market. Indeed, home builders are becoming perkier, with a reading on their confidence showing that they turned optimistic this month on sales trends, following five months of pessimism.