Financing the Dream

Lending has been part of the Custom Design & Construction business model since its inception in 1986. A big part, in fact — not only do the majority of the Los Angeles firm's clients finance their projects, 70 percent of them do so through the residential remodeling company's in-house financing arm, Custom Funding.

"Most have some cash or a home equity loan," explains company president Bill Simone, CGR, CAPS. "It's just not big enough."

The kitchen features two dishwashers and sinks, plus a deep fryer, a double oven, a built-in coffee maker and counters made from honed black Zimbabwe granite.

With a view of the Hollywood Hills, Joel Becker's 1926, 870-square-foot home located in West Hollywood near the Beverly Center and the Pacific Design Center had good bones but needed a makeover.

Becker, a psychologist and trained gourmet chef, sought a true cook's kitchen, a media room and more space for him and his partner to entertain friends. The design Simone created left the footprint of the single-story home the same, but added a 628-square-foot second floor. The plan relocated the master suite upstairs, converted the existing master bedroom into a media room and office, then removed the powder room and study to expand the kitchen and add a breakfast nook.

Moving the washer and dryer to the kitchen makes multi-tasking easier. The hand-scraped hickory flooring provides old-hous cachet.   After photos by Robert Peterson

Two walls of the media room feature a built-in desk and bookshelves. It also includes a wall-mounted, 60-inch plasma television; controls for the zoned whole-house sound system are located in the pantry.

Ricciotti served as project manager on the house and subcontracted all the labor, as he does on every job. This approach makes the company more flexible and adaptable as project sizes grow. It also means he has to maintain relationships with a wide range of tradespeople.

"Every day now we're putting in granites and products I've never even heard of," he says. "It really is as simple as matching the right craftsman with the right project." He has to make sure subs take the time to read installation instructions. In addition, he adds, sometimes he must hire factory-certified installers for the warranty to remain valid.

Only one "surprise" emerged — the house had undersized framing and had to be bolted to the foundation because of current seismic requirements.

An extra stream of income

Simone and Ricciotti believe in home-improvement lending so much that in addition to co-owning Custom Design & Construction, they are two of five partners in a national lending firm, HomePlus Finance Corporation. As Simone's involvement in that business grows, he sees Custom Funding as a stream of income that will continue even after Custom Design closes its doors. Does that mean it's a retirement plan in and of itself?

"At the end of the day most people are going to refinance," Ricciotti acknowledges. Some clients, however, don't seem to have any intention of doing so.

"You can end up with a portfolio of notes that are secured by valuable real estate that is work that you have done," Ricciotti says. "You've got credit-worthy clients who are paying these mortgages. You're forgoing your profit this year, but you're taking it in payments. It continues to pay you in interest rates."