In my last blog I wrote how our design-build remodeling company, Brothers Strong was surviving these times of economic uncertainty. I also offered anecdotal hope on how our project mix is changing and why I believe our business is already seeing the beginning of the end of the downturn.
Now I would like to share with you similar information from our custom home building company, GreenHaus Builders where, thanks to the banking industry, the forecast remains decidedly less clear or optimistic. At GreenHaus Builders, we build only LEED and ANSI certified homes. In January we completed a 5 month design and budgeting process on our next home (LEED Silver) and we have unfortunately since spent the last 6 months trying to help the client get financing.
Our current best banking hope is actually the bank where our company currently does business. This bank has our company accounts, we have a 6 figure line of credit, they have my personal banking accounts, just refinanced my home, have my dads personal banking and one of my partners. Sounds promising eh? I’ll keep you posted. In our last communication the bank required the following information
from us before they would lend our client the money needed to hire us to build their home:
- Articles of Incorporation
- Two years corporate tax returns
- Current company financials
- Two years tax returns on each of the partners
- Two years personal financials on each of the partners
- List of homes and homeowners of homes we have built in the last several years
Unbelievable! And yet were it not for our intervention the same bank would have taken crap from an appraiser that doesn’t know jack about the true value of a green home. I can’t imagine what the clients are going through trying to get approved but at the moment I am clueless because we are too busy jumping through hoops to make sure we get qualified. What an insult! 20 years in business, never been sued, no bankruptcy and they want to approve us! And they’re the ones getting a bailout from the federal government-I have yet to see a custom builder get a handout but the banks don’t mind standing in line at all!
I guess at this stage since my sentiments are now so obvious I will not bore you with the details of our other prospects-but they remain strong. Let me share this piece of advice. Before your clients get too much invested in designing and pricing their home you must let them now, more than ever, it is imperative that they get pre-approved from their lending institution as soon as possible.
Posted: 8/16/2010 10:00:37 AM by
Michael Strong | with 0 comments
Now maybe I’ve been reading too much Stephen Ambrose lately but at the moment I believe the lights over head are fireworks and not incoming artillery. In fact I believe they are signaling an end to the slow down for our company’s two businesses. At a minimum, we are at the bottom of the cycle and recent substantial positive events in our business give us cause for considerable optimism.
In my next blog I will report on our green new construction pipeline at GreenHaus Builders but for now let’s look at the remodeling side of our business with Brothers Strong and see just how green it is. At Brothers Strong, our design-build remodeling company, we have received certification on two NAHB ANSI remodels (1st gold remodel in Texas and a bronze) this year, we have a third ANSI remodeling project under construction (bronze) and two more in design (silver and bronze). Combined these five projects represent over $ 1,150,000 in volume. Some projects followed the Prescriptive Path, but most have followed the Performance Path. One is a whole house fire-rehab gut, two are room addition/kitchen remodels, another is a whole house remodel/deep energy retrofit and the last is a pro-bono major whole house retrofit for a non-profit organization.
None of these projects or clients would be considered trophy homes and upper class homeowners. All homes are in the “better” neighborhoods of either the historic district (Houston Heights) or part of the older suburbs not too far from the center of town. None the homes are less than 50 years. None were worth over $ 500,000 before the remodeling.
The clients are all two income white collar professionals. They range from “30 Somethings” with no kids, to 55 year olds whose kids long since left home to “40 Somethings” with kids in middle and high school. I know for a fact some are Republican and some are Democrat. Except for one area, saving energy and improved indoor air quality were their two most dominant green drivers. That one exception? “Doing the right thing”, “reducing our environmental footprint”, “making a difference” or some variation on all three was the one desire each of them expressed repeatedly throughout the sales process!
If you like, you can spend the rest of the summer arguing that going green is too expensive for your clients, or that they don’t want to pay extra or they won’t wait for the payback, or that no other aspect of green resonates with them but ROI. You can continue to remodel to obsolete design and building standards for obsolete homeowners who have not been taught the difference or you have two choices: Teach them the difference or find prospects that already know the difference. It really is that simple. Quit making excuses for them and instead get educated about green, train your staff and change yourself into one big fat green magnet and your new clients will come to you!
Posted: 8/2/2010 10:19:57 AM by
Michael Strong | with 0 comments
With the Obama Administration’s recent announcement of $ 2 Billion for solar plants in the US you better believe we are going to be seeing both price drops and improved product efficiencies as manufacturers and installers fight for your business. The $1/2 Billion going to Abound Solar Manufacturing in Colorado and Indiana will in particular benefit those of us interested in solar technologies for our homes. Unfortunately many builders only equate solar technology with solar panels on their homes, producing electricity and “getting off the grid”. That is, never having to pay for electricity again.
Solar power has great curb appeal and is a noble consideration in that it reduces demand for traditional energy producing technologies that pollute the environment. However, with current economies in terms of saving money the cost vs. benefit usually just does not add up In southeast Texas a typical solar pv installation will cost about $ 25,000-$ 30,000.00 not deducting for the federal energy tax credit. And it is important to note there are no state or local tax credits available for this installation at this time in this part of the country. (To confirm exactly what rebates are available in your area visit
www.dsireusa.org for a complete listing based on where you live.)
This installation will buy you a standard 3kW system which will offset about 15% of your electricity bill depending on exactly on what you are paying for your electricity and how much you use. Thus the payback period will extend out well past 15 years, a time frame most folks are not attracted to. In most of Texas you can choose your electricity and rate plan by visiting
www.powertochoose.org and this too will affect your payback period.
But the $2 Billion program is a game changer. With money like that all the players are going to move around as we will see price drops and more efficient systems come to market. That means you need to quit ignoring solar and get more comfortable with it as it will increasingly become an option more of your homeowners are willing to consider. Additionally, there are other solar options that are not as expensive yet will offer you immediate savings.
First is a solar powered attic fan. These fans use no electricity, are as reliable as their electricity powered counterparts and can be installed for less than $ 750.00 in almost all applications. And they begin saving money immediately. After all what’s the point of installing a ventilation fan designed to save you money by removing hot air from the attic if your savings are offset by the electrical cost of operating the fan? Installing a solar powered attic fans makes a lot more sense.
Once you are comfortable with that technology try moving up to a solar powered water heater. Installed costs for a typical pv installation in a residential application are now down to about $ 3,500.00 and depending on your water usage payback will be in about 5 years for a family of five. Bear in mind you will now have an 80 gallon storage tank so you have to have the space to accommodate this system. But this technology is proven, it is reliable and the payback is pretty fast. So if you want to be ready for more affordable solar pv in the years ahead, now is the time to get comfortable with the technology that makes it all possible. Look at solar powered attic fans and water heating as options that will help you lay the ground work for the pv installations to come!
Posted: 7/8/2010 2:24:42 PM by
Michael Strong | with 0 comments
For those of you that could not make the trip out the NAHB’s National Green Building Conference in Raleigh last month, let me share with you what I learned in no particular order.
Green Has Value! In case there was any doubt the “Market Value Studies on Certified Residential Properties” presentation put that to rest. Looking at data from 1-1-09 through 4-30-10 I learned 3rd Party Green Certified homes in Portland sold at a 3-5% price premium over non-certified homes and they spent 18 less days on the market! In Seattle the premium was 9.6% which translates into a premium of $ 20/square foot!
If you are having trouble with your appraisals, ask your bank for a “competent” appraiser. You and your client have the right to request, or suggest an appraiser with proven competency. Dave Porter also recommends you purchase the Marshall & Swift Green Cost Guide and get it in the hands of your lender and appraiser.
John Replogle, the CEO of Burt’s Bees reminded us, as leaders of our companies, that there are benefits of having BHAG’s (Big Hairy Audacious Goals) and then went on to describe theirs. Me? I came home and freaked out my partners and production staff by suggesting we eliminate all dumpsters from our job sites. Not just the dumpsters but the waste that would fill them! I’ll keep you posted on how that goes.
Green Building is still hot! My 2-day class I taught, Green Building for Building Professionals, and the 2-day class right next door (Advanced Green Building: Building Science) were both packed! We had over 70 people in each class both days! I hope you were there. If you weren’t I hope for your sake your competition wasn’t!
Networking was full of unexpected surprises. The vendors were approachable; they wanted to talk about what I needed, listen to what I had to say and did not push a hard sell. They are learning about this green stuff awfully fast, I just don’t know if we are keeping pace with them.
Talk about surprises, even the USGBC had a booth! With top level attendance the enthusiasm was high. I am absolutely certain that in the next 12 months, I will be able to directly link at least $ 250,000 in revenue to the networking I did. For me networking is not just fun, it is business and for me there is no more intimate show in the country where networking fanatics like myself could get it going on.
Finally, I learned that Raleigh, NC is a really cool place. We ate at lots of independent vegetarian restaurants. We experienced a nice open air art market right by the convention while were there. We took a cab out of town and ran a ½ Marathon. Downtown was wireless so we got in work between play. The point being: life is short so don’t work yourself to death. Take a break. If you are trying to make a living as a green builder or remodeler like I am I know you’ve earned it. So mark your calendars and make the show next year. I’ll be there and I hope I see you-instead of your competition!
Posted: 6/11/2010 2:51:02 PM by
Michael Strong | with 0 comments
OK, I’ll be right up front on where I stand with the last year’s worth of debate over health care reform: I pretty much support most of it. Not all of it, not 100%, but I do believe in Mahatma Gandhi’s statement that “you can judge a society by how they treat their weakest members”. Will this be an American axiom, one day? I hope so but apparently when it comes to the health care debate we are not there yet.
So what do bad knees, health care reform and Mahatma Gandhi have to do with a Green Business Blog? Bear with me please. Remember, I wore a nail bag for many years building homes before I plugged in a fax machine and began building a business. I remember what aches and pains feel like after working all day in the hot Texas sun. Over the course of my career I have accepted responsibility for my own health and taken steps to protect it. I eat really healthy, I exercise like a mad man and I have the right health metrics to prove it!
Over the years I bought health insurance out of my own pocket to cover blown knees and shoulders that happen when you fall off rickety ladders, slippery roofs, steep mountains and fast bikes. The money simply was not there for my company to pay for it. My partner and bookkeeper were covered under Medicaid, our office manager had coverage under her husband’s policy (he worked for a multi-national), our project manager had it under his wife’s policy (she worked for city government) and my brother…..I still don’t know what he was thinking but he went 20 years without!
The point is we were like most small US businesses and everybody in our company just kind of did their own thing. But out of fortune and fate we all managed to get by. Fast forward to 2009 and we merged our company with a local competitor. With newly combined resources and new priorities our company now offers health coverage. As a business owner I am proud of that. But as an individual I am mostly indifferent because I’m healthy, I never use it and I already had it anyway. I was and am paying for it either way.
But as I sit here on my couch looking out at my abandoned chop saw on the back porch with my knee on ice it has me thinking about health care reform like never before. Installing moulding in my master bedroom I think I may have really torn something getting up from the Dewalt I had set up on the porch (I know you are not supposed to have them on the ground when cutting trim thank you!). I’m sure, notwithstanding that the last 4 months of training for a ½ Iron Man in two weeks is about to go down the drain, this will all play out fine with my health insurance.
But what if this happened to my brother a year before the company paid for his health insurance? What if it was Arturo, the best painter I have worked with for 19 years? What about J.Q. our mason for the last 7 years? Rigo, our cabinet man or Matt, our plumber? These are important questions, we need to answer because as you know, if they don’t have health insurance it can cost you money! Directly or indirectly we can all suffer because we all have Matt’s and Rigo’s and Tommy’s we work with and an extended absence by any one of them can mess up production schedules as well as the quality and amount of work we can get done. If they lack health insurance, they could go bankrupt. If their coverage is insufficient they may not fully recover and be as productive as they once were.
How many of you have trade partners that do what they do because you pay them so much? How many of you do what you do because you get paid so much? Yeah, me too. This industry simply is not made up of fat cats with big benefit packages including health care. It is, however, composed of countless individuals who take pride in working with their hands, the “old fashioned” way. And since we won’t see kitchen remodeling being outsourced overseas in the foreseeable future, we are going to remain highly dependent on the physical health of our fellow Americans that have to perform the physical task of building and remodeling our American homes. Craftsmen and women, who do not get paid enough to afford basic health insurance. This takes me back to Mahatma and my hope that by making health insurance more accessible to more Americans all our ships will rise. Green builders and green remodelers lead the industry in so many different ways. Perhaps we will lead it in this way as well.
Posted: 4/11/2010 8:27:29 AM by
Michael Strong | with 0 comments
