|Discovering New Niche Market
New England Home Partners Saves Owner-Builders Money, Sees Sales Skyrocket As A Result
On the East Coast the 911 terrorist attacks had far ranging economic repercussions, even influencing home buying decisions and the amount of square footage needed.
Just ask Andre and Kathleen Ferenczy. When they went house hunting, they needed not only enough space for them and their two children, but also room for Andreâs mother, Ingrid.
âMy mom was laid off in the wake of the attacks and itâs really very tough getting back into the work force when youâre older,â? recalls Andre Ferenczy. âSo we decided to get something where there was enough room for a mother-in-law suite.â?
Affording it was the real challenge. But then the Ferenczys found New England Home Partners (Windsor, CT) that offers a unique service to home buyers who want to serve as their own general contractor or GC. For as little as $2,000 down, New England Home Partners ushers buyers through the process of being their own GC, saving them money that would otherwise go to a builder. At the heart of the program is the panelized building system offered by Barden Homes (Homer, NY).
The Ferenczys ultimately decided on a 3,800 sq.ft. addition that matched the existing home in style and exterior treatments.
âI donât have any experience with construction,â? recalls Andre Ferenczy. âIâm in computers. I work as an IT guy for a company in Bridgeport. But by serving as our own GC, we saved thousands of dollars. We really wouldnât have been able to afford this size home otherwise. For instance, we didnât need the services of an architect. Barden Homes took care of all that.
âWe had to make our addition a little bit larger than perhaps we needed. But we wanted to meet an LTV of 20% to keep PMI off of our mortgage,â? Andre Ferenczy says. âAnd serving as our own GC certainly wasnât easy. We had to learn a lot. But we saved a lot.â?
Kathleen Ferenczy agrees the process was challenging but worth it. âMy husband was a lot more excited about building than I was. He had to talk me into it,â? says Kathleen Ferenczy. âYou have to make a lot of decisionsâa lot of decisions. But New England Home Partners were great people to work with. Things got done as fast as they said they would. As far as being able to afford a much larger house, this was certainly the way to go. We got a lot more house than we thought we could initially afford.â?
âWe went into the Barden program a year ago January. The reason we did it was that we knew the owner-builder market was strong and getting stronger. We knew it was the way to go for us,â? says Griffin. The response from buyers has been more than encouraging. Since launching the company, it has helped 42 clients into new homes with an expected total of 50 homes by the end of December.
Both Griffin and Ehlan bring a lot of building expertise to the table. Griffin has been in construction for 26 years and Ehlan has been around the building systems industries (including log, modular and panel) nearly as long, most recently as a regional sales manager for a modular home manufacturer.
New England Home Partners bundles a long list of services together for its clients, including a financing program through Barden Homes, site and soil inspections, creating a design, a budget, specification list, a construction schedule, and help ushering the project through the local planning department.
The program works and works well because of three crucial parts, Griffin says. The financing program through Barden allows clients to finance 100% of the cost of land and construction with as little as $2,000 down (with the loan-to-value being balanced by the savings in the building system and the sweat equity of the buyers); the panelized building system (which gets structures under roof in a matter of days and helps avoid weather related damages, jobsite theft, and fewer after construction problems, like nail pops); and Griffin and Ehlanâs longstanding relationships with a host of dependable subcontractors (whose craftsmanship has proven critical for satisfying clients).
âI would say 75% of our clients are professionals, white collar workers for the most part, who usually have a combined income of somewhere in the $80,000 to $100,000. If they were to go to their local lender and ask to build a house with $2,000 down, theyâd be laughed out of the bank. Thatâs why we have become such believers in this program. It may sound corny but it comes from the heart. Weâre helping people get into their dream homes that they otherwise wouldnât be able to afford and weâre making a living on top of that. It really doesnât get any better than that,â? says Griffin.
In the first year, homes have ranged from a modest 1,800 sq.ft. to as large as 5,000 sq.ft. âThese arenât low end houses by any means. But the average is probably 2,700 sq.ft.,â? says Griffin.
To save on construction financing portion of the loan, construction cycle times are fast paced, averaging 120 days–regardless of the size of the home. âFortunately because these homes are panelized, the frames go up quick. Some people are done in 90 days. We had a manager from Barden build a home here in Connecticut who set a recordâ82 days from start to finish,â? says Griffin.
About 80% of their customers already have land. For those that donât, New England Home Partners will point them toward real estate agents in the area that they want to live or they will talk with local developers and town planners for them to locate suitable plots.
âWe try to get customers involved right away in all decisions,â? says Griffin. âItâs important that they realize this requires some effort on their part to make the deal work. Some clients help other tradesmen with insulating, painting, landscaping, roofing, plumbing. Some of our clients have done it all themselves. The more work they do, the more they save,â? Griffin says.
The key to keeping subcontractors happy and coming back for more work is more frequent disbursements from the construction loan. Typically subs get a portion of their pay when they first show up, a deposit that can be as much
Three days before final inspection for certification of occupancy, a local utility company was working on lines on the street next to their home. While the exact cause is being decided by the court system and insurance companies, the end result was the original Cape home purchased and remodeled for Andreâs mother Ingrid caught fire from an overhead electrical line.
âThe house burned down,â? Andre says. âFortunately, no one was home and all our pets got out just fine. That was the good part. Also our 3,800 addition survived the fire, although the sunroom was damaged.â?
After considering options, the Ferenczys decided to rebuild that portion using New England Home Partners once again. âWhen pushed came to shove, we just decided this was the fastest and easiest way to resolve the situation. It was a good experience with the addition,â? says Andre.
âThe new building will come in around 1,600 sq.ft., so itâs a little larger than the original. And there are other changes. We are turning it 90 degrees and weâre updating it with things like nine-foot ceilings, granite countertops, marble in the bathrooms and a three-car garage. So because we never closed, weâre doing this all with just the same $2,000 down. And once all is said and done, weâll probably come out of this with $200,000 to $300,000 in equity, which isnât a bad deal for $2,000 down.â?