Saturday, November 8, 2014

My Interview with Kris Megna from Dreamline Modular Homes

This week I have the pleasure of interviewing Kristopher Megna from Dreamline Modular Homes in Lexington, MA. Kris and Doug Carlson have become one of the best high end custom modular home builders in New England. I have featured their beautiful homes many times on this blog.

Kristopher Megna

Modcoach (Gary Fleisher): Kris, what is your current title?

Kris: I am the President/Co-owner of Dreamline Modular Homes along with Doug Carlson

Modcoach: How long have you been in the modular industry?

Kris: Dreamline Modular Homes opened its doors in 2010, but I have been in the modular industry for about 10 years.

Modcoach: What is your background?

Kris: I am born and raised in Massachusetts and went to college at Roger Williams University. I originally was going to go into the architectural program to become and architect, but I ended up changing my major to Business as I was set on starting my own company. I met my business partner, Doug Carlson, in college and our junior year we decided we wanted to start a business together. I had family in the industry and it peaked my interest in this concept of building. When I presented the idea to Doug we both saw such potential and exponential growth that we decided this is what we were going to do. I wrote my thesis in college on the company we run today and in 2010 started Dreamline Modular Homes. We are located in Lexington Massachusetts and have constructed over 100 homes in just under 5 years.  

One of Dreamline's Latest Homes
Modcoach: Let’s get into the heart of this interview. Are the modular home builders getting what they need from the factories?

Kris: I will preface this statement with saying the manufacturer I am currently working with, Excel Homes, has taken leaps and bounds in improving its relationships with builders and listening to our suggestions to improve the industry. Now with that said there is still a long way to go before we get to where we need to be. I see a pretty consistent trend with builders having the same two complaints, Service and Marketing. The industry is notoriously bad on the service end of it once the product leaves the yard. In our industry timing is everything with the speed of construction and we do not have 3 months to wait for parts to come in that were damaged or defective. This leads to clients holding back funds upon a certificate of occupancy, a spoiled relationship between the builder and the client, and of course a headache and level of aggravation that is unimaginable. We rely on the factory having the right relationship with the suppliers to get certain items on time and it is a helpless feeling on the builder’s end when we can’t go direct to the source and fix it ourselves. On the marketing standpoint the industry is just dated. Considering we are so far advanced in our building methods it does amaze me how out of check we are with advertising, digital marketing and social media. The industry is stuck in 1985 with floor plans and other sources of marketing. Also with marketing the factories don’t market themselves at all. They rely on the builder to promote the industry, which is a tough pill to swallow. It would be like Ford manufacturing cars and leaving it to local dealers to provide all the advertising, national and local, to sell them. If the builders and the factories work together all of this can turn around fairly quickly.

Modcoach: Is Dreamline Homes getting more involved with social media, such as Facebook and Pinterest?

Kris: My favorite four letter word is FREE and that is what these sources of advertisement are. Facebook and Houzz are the two I would say we use the most, but we are constantly looking at any avenue to get our name out to the public. Most of our marketing budget goes to improving our location on Google using SEO and of course our website. We will be launching a completely new website the first of the year which we are very excited about. It will be an easy way to follow us on all social media networks in hopes to continue the success we have had to date. I am the generation of social media and I see how important this is for the future of business. Having friends and family in the later 20’s and early 30’s in Boston/Cambridge MA  you are constantly being introduced to the “next big thing” and it is mind boggling how advanced we are getting. There is no one I know who has a phone book, doesn’t have a smart phone, and doesn’t go straight to Google or Facebook to find information. I know I am one of those people as well. It has its issues of course, but you can’t hide from it and in order to grow your business you have to embrace it. Believe me there are days I want to shut it all off, but it doesn’t mean you should be completely against it. Word of mouth is still everything in building, but not many things are free in this world so you have to take advantage of it when it is there.

Modcoach: The cost of shipping continues to rise. How has that impacted modular homes sales and more importantly, your bottom line?

Kris: Any cost increase is difficult and shipping is just one more item that continues to increase. Transportation is a major cost in our business and something that is pretty unpredictable. The problem I constantly run into is it takes time to put a plan together, specifications, serialize a home and close on a project. With gasoline being a fluctuating commodity and road work being unpredictable it is impossible to get an idea in February what your shipping costs will be in November. When you are dealing with some of the houses we build that are 10 boxes this can throw off numbers thousands of dollars. This does not get past onto the homeowner, but we end up eating costs because it is an impossible increase to explain to a homeowner. The biggest issue we have with shipping is state and local jurisdiction on when we can bring the modules through certain states, state police officers not showing up on time or at all (which the driver or factory still pay for the police detail cough cough CT) and road construction issues. To say New England was not designed for modular transportation would be an understatement. Transportation to me will end up being the biggest hurdle we will face in the upcoming years as an industry. As modular continues to grow you know just as much as I do that permit fees to travel are just going to go up, up and up. Just in Massachusetts alone an oversized box fee went from $50 to $300 this year. That is a difference of $1,000.00 on a four box home just in permitting costs!

Modcoach: One of my recurring themes in this blog is the disconnect between the factory and the builder. Do you feel the relationship between builder and factory need to improve and how?

Kris: Yes of course it does. There is no loyalty anymore in any industry and that really is disappointing. I will do anything for anyone as long as they give it back and we live in a society that only takes and doesn’t give. I was always told to not throw your eggs in one basket, but if you don’t how will you ever create a relationship? It took me a few years in this business to finally feel comfortable with the factory I am working with and I am very happy at the progression Excel has taken with us in building a relationship. I have worked with a few factories over the years and I even worked for a few as a sales representative before Dreamline. The message was simple from the sales side, sell as many houses as you can and ask for forgiveness later. That wasn’t me to say the least so that venture ended quickly, but it gave me the grounds I needed on how it should be done. We are building houses, but at the same time we are building a brand. If the factory and the builder do not work together on building both it will all fall apart quickly. I don’t price shop to factories or try and keep them honest by sending them quotes of other companies. It is worthless to me. If you give all your business to one company and you have enough they should reciprocate the favor and treat you right. For me this has worked, but I know with many other factories and builders this is not the case. For a few years it was all about survival on both sides, but as the market turns I am hopeful to see more loyalty between builder and factory. Not to resort back to the car industry again, but if you are a Ford dealer they do not want you selling new Toyota’s in the parking lot. Ford gives the dealers support to make sure this is the case so in our case the factories need to support the builder, which can be done through territories or preferred treatment.

Modcoach: Recently I have been asking everyone why modular housing has such a small part of the market. Why do you think that the modular home industry is still stuck at 3% of the total new home market

Kris: Education! Here is how a typical conversation between someone new I meet.
Person A- What do you do?
Me- I am a modular home builder.
Person A will have two responses. “Oh you sell mobile homes?” or “What is that?”

No one knows what a modular home is so why are they going to spend their life savings on a product they are not educated on? I always say 99% of my job is education and 1% is building. Luckily for me I grew up in a family full of teachers and builders so it’s lends itself nicely in my favor. There is absolutely no education on the modular home industry and the stigmatisms associated with it are tough to break. We have all heard what everyone thinks the modular homes industry is and it is our job as an industry to prove them wrong and educate the general public. One way to do this is factories marketing their product on a national level.  You had a recent article from one of your builder breakfasts in which Steve Scheinkman made a great statement about the factories working together to promote the industry and not just themselves. It is a breath of fresh air to hear something like that and I hope one day that ends up being the case.  The next way we need to educate is how the builder communicates with the buyer. The phrase I hear constantly from perspective buyers on why they are looking at modular is “it is less money.” Can someone please come out and just say MODULAR IS NOT ALWAYS LESS MONEY. You want to build a modular because it is a better finished product than a stick built house. Yes you can absolutely save money, but that should not be reason #1. If I am building a house that I am going to live in for 30+ years I am not going to worry about another 10-15% of my front end costs if it means a better built home. If our clients are under the impression to build modular because it is less money and not a better product the industry will never grow. We should not strive to be the cheapest, but to be the best.  At the end of the day we are not sales people selling a product, but we are builders building someone’s dream. We need to be proud of our industry and somehow someway stay united.

Kris, thank you for great answers to some tough questions. I wish you and Doug continued success.

Thank you Gary for your help with this industry as well. When you ask the question what can be done to help the industry grow it is exactly what you are doing. We need to show off our work to the public and let the product speak for itself. 


Anonymous said...

Going back to any product advertised. When we watch TV we do not necessarily see all ads being placed by the retailer. Instead, the manufacturer of the product puts the ad through and then advises the public to visit their authorized dealer. Ever see an ad on TV from a Modular Manufacturer? Enough said!!

Anonymous said...

Great interview with a class-act builder. I have see many photos of houses completed by Dreamline adn I just wished I lived closer to Mass so they could complete my house.

Excel Homes said...

Kris – we completely agree with Anonymous: “Great interview with a class-act builder”.

We could not ask for a better partner than Dreamline Modular Homes. We appreciate your kind words about Excel Homes. There is still a lot of work to done on the factory side and hopefully you know we are willing to put in the work to help grow the industry. Working with partners like you, we know we can make it happen. Especially when you keep building these beautiful homes!