Luxury custom home builders often build less than a dozen homes per year. But, to keep their business exciting and profitable, many are making the move to other ventures—such as multifamily housing.
For some, like Barry Hensley, the transition came in the form of attempting to conquer a very specific market.
“We’ve always had an eye open for niche markets, so we don’t have to compete with everybody out there, especially volume builders,” says Hensley, president of NorthStar Luxury Homes in Texas. “My market is dominated by volume builders to a tune of about 98 percent of the single family dwellings, so it doesn’t leave much on the table as far as opportunities for custom builders.”
This led Hensley to pursue the “niche market” of multifamily townhomes. He states that multifamily is typically avoided by production builders, so this opened up an opportunity for NorthStar to participate in a market previously unexplored, while avoiding competition.
Anthony Lightman, owner of Orlando’s Osprey Custom Homes, found himself in a similar situation.
“There is a lack of developers in Orlando, right now, in the luxury division, because they all sort of went away in the recession. National production builders pretty much snatched up all the available land for their production homes,” says Lightman, who is currently in the process of developing his Park Shore townhome community, which is projected for completion in about eight months.
SEE the Marketing Brochure for Lightman’s Park Shore Community
Multifamily: Simpler and Streamlined
Both Hensley and Lightman agree that multifamily endeavors are easier than luxury custom homes in terms of customer relations, planning and technology integration.
“The townhomes are much easier, much faster, much simpler. We include smart home integration in the townhome, but we’re not dealing with swimming pools, access gates, and there is a limited number of security cameras, if any,” says Hensley.
Lightman finds that with luxury homes, builders are extremely involved with the homeowner for upwards of a year. With multifamily, it can be planned and constructed far more quickly.
“You’re more construction management than you are customer management. I think that’s the best way of putting it,” says Lightman.
Jeff Ainslie, president of Ainslie Group, has balanced a mix of custom homes and multifamily for most of his career. While he agrees that many aspects are easier that custom homebuilding, he does find that there is far more difficulty in the scheduling aspect of multifamily construction.
But there is a benefit that comes with the burdens.
“Once you put the scheduling work in on the multifamily side, you can replicate it over and over again,” says Ainslie. “So, you have a great return on investment in terms of design, criteria and applications. Compare that to custom, where you’re often recreating the wheel.”
Tackling the Tech Conversation
Technology is becoming more and more a deciding factor in whether buyers choose a home, whether this be luxury custom, production or multifamily.
In pursuing technology for multifamily, specifically, Ainslie offers advice for an approach that highlights the longevity of products and simplicity of these devices’ functionality.
“Your multifamily clients, today, are really comparing you to the five star resorts they visit. It’s a luxury they’re looking for when they come back home,” says Ainslie.
Lightman is offering cutting edge brands like Lutron, Kwikset and Qolsys in his Park Shore townhome community, but he believes that all technology in multifamily needs to be both adaptable to the consumer and easy to use.
“That’s the common denominator—simple, easy-to-use electronics,” says Lightman.
“At the same time, it needs to be smart home ready, so if the customer wants more, you aren’t alienating somebody who wants more technology. The home needs to be, at the very least, ready to accept the technology or else you are building an outdated product that nobody will want.”
Quite simply, potential buyers need to be aware of what their home can do. Therefore, custom builders and multifamily developers alike need to market not only what a home looks like, but also how it works.
“You don’t want to assume anything with technology, because it’s changing so quickly,” says Lightman.
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