Big Gainers - Learning from the nation’s fast-growing builders

Grayhawk Homes – Making the Most of Opportunities

For Columbus, Ga.-based Grayhawk Homes, success in 2011 was the result of months of ramping up operations for a coming surge in buyers to the area. Years earlier, the U.S. Department of Defense announced that as many as 30,000 military personnel and families would be relocated to nearby Fort Benning as part of a BRAC expansion. This presented a prime opportunity for local builders like Grayhawk.

“Having an opportunity is one thing; being prepared for it and taking advantage is another,” says David Erickson, president of Grayhawk Homes. To capitalize on the increased demand for new homes in the area, Erickson beefed up his staff and nearly doubled the number of lots in company’s pipeline. “We were prepared to do as many as 400 houses per year; we had the lots in the supply chain, staff on board, the systems ready to go,” he says. “We ended up selling 248.” The strategy paid off to the tune of 67 percent growth to $61 million.

The challenge for Grayhawk is sustaining its growth in a market that, while stable due to its proximity to Fort Benning, has its limitations. The BRAC expansion program expired last September, and Erickson is now seeing a slowdown in the number of soldiers being relocated to the base. Looking for opportunities, Erickson and his team have turned their attention 1,000 miles north to Des Moines, Iowa, where a failed partnership with a developer led the builder to discover real estate deals there, including a fire sale of the assests from Rottlund Homes, which closed its doors last fall.

Erickson still envisions Grayhawk becoming a 400-home builder one day. “We’re going to fall back to a sustainable level of about 200 houses per year in Columbus, but we have a chance to get to 200 a year in Des Moines by maybe 2015,” he says.

Lombardo Homes – Staying Aggressive Through the Downturn

Grow or die. That’s the general attitude that encapsulates Lombardo Homes’ strategy for navigating the housing downturn and recovery. At a time when many of its competitors cut back or went out of business, the Shelby Township, Mich.-based production builder invested heavily in its operations and products, targeting key talent from other builder firms; aggressively buying land in strategic locations; expanding into the St. Louis market; and launching a custom division. By having a no-fear mindset and long-term strategy, the builder was able to grow revenue 32 percent last year.

“I wouldn’t attribute our success to simply our land position, processes, people, or expansion — it was a combination of all of those things,” says Michael Van Pamel, president of Lombardo’s new St. Louis division. He says the builder leveraged its strong, 50-year history and healthy banking relationships to acquire land in “A-plus” locations in both St. Louis and Michigan. They then made it as easy as possible for potential buyers to purchase one of their homes, offering creative solutions like a “trade-in, trade-up” option (via provider MarketPlace Homes) for homeowners who are either underwater on their mortgage or can’t sell their existing home.

“The MarketPlace partnership has allowed us to target a percentage of the population that wouldn’t likely be buyers without it,” says Van Pamel, noting that about a quarter of the builder’s customers in recent years have used the program.

Heading into 2013, Van Pamel says to expect more of the same from Lombardo, especially in the areas of land acquisition and organizational development. “Investing in our people has been valuable to our customers and our performance,” he says.

DSLD – Healthy Geographic Expansion

Coming off a year when it experienced an incredible 57 percent growth in revenue, Denham Springs, La.-based DSLD nearly doubled its revenue in 2011, to more than $115 million. In just three years as a start-up, the builder has gone from zero to 687 annual closings across some 45 communities in south Louisiana and Mississippi. And the company is forecasting another 36 percent jump in revenue in 2012. DSLD managing member Saun Sullivan says the keys to the company’s rapid growth are its ability to acquire lots in high-demand locations; its fundamental, no-frills approach to production home building; and its customer-first motto in business.

“We’ve been able to grow because of the people we took care of the year before,” says Sullivan. “We have a 40 percent referral rate, so four out of every 10 buyers got there as a result of talking to somebody who bought a house from us.”

The builder also stepped up efforts in the areas of sales management and training, hiring consultant Jason Forrest to improve the team’s sales processes and performance. “We never wanted a crew that could sell ice to Eskimos, but we wanted a crew that could advocate for our houses and still be advocates for our customers,” says Sullivan.

For 2013, he says the firm is focused on increasing the number of sales per subdivision by adding new product to cater to buyers that they normally would not attract. DSLD is also planning to offer buyers more options, including electrical upgrades, enhanced lighting packages, and paint options. “They’re not big options, but they give people more of a feel that they’re customizing their house,” says Sullivan.