This past September, we wrote extensively about the state of builder and buyer financing, which no doubt is one of the most-difficult challenges home builders face today.
For weeks after the issue had hit our readers’ desks, I received nearly a dozen letters from builders stating how our special report was spot-on, and that they feel “stuck” without support from their traditional banking partnerships — stuck with land that cannot feasibly be developed, stuck with homes that are partially completed, and stuck with buyers that cannot quality for a mortgage under the new rules of lending.
As one builder put it: “Home building and purchasing is in a bad way everywhere, and the shortage of money from our local banks is a real issue. Until money becomes available and homes start moving again, this belt tightening for the whole country is not over. I look forward to this problem being fixed, and soon.”
But for every hardship case like this, I hear multiple stories of builders that are not waiting around for someone else to fix their problems. They flat out refuse to participate in the recession (see our Builder of the Year Jagoe Homes) and they’re building and selling homes, and making plenty of money in a very difficult market. Even those firms that aren’t selling enough homes have gotten creative by finding other sources of income to keep their businesses afloat until the market recovers.
Nowhere is this more evident than with the dozens of builders that contributed to our cover story this month, “35 Moneymaking Ideas for 2011.” The editors worked feverishly for the past month talking to builders and industry consultants to find the best ideas for growing revenue and increasing profits in the new year.
Sitting on land that cannot be developed for homes? Well, have it re-zoned for commercial work and build rental storage units. Can’t get bank financing for your next project? Start a small equity fund. Have staff sitting idle between home building projects? Utilize their expertise to break into new real-estate markets, such as property management, home inspection, maintenance/repair, and government consulting. Examples abound, and the ideas are proven because they come from you, our readers.
The best part of my job is talking with builders about their businesses. Time and time again I’m amazed at what they’re able to accomplish in the most difficult of circumstances. Yes, the entrepreneurial spirit is alive and well in the home building market.