Big builders like Lennar, D.R. Horton, and LGI get a lot of attention for thriving recently with business models targetting first-time buyers amid a housing recovery that has been driven mainly by move-up customers. But Stylecraft Builders is more than holding its own with entry-level clients in Central Texas having generated $75.4 million on 430 closings last year, up 41 percent and 23 percent respectively from 2013. The builder expects 2015 revenues to grow by 23 percent.
Q. What is happening in your market where first time buyers accounted for 85 percent of Stylecraft’s closings last year?
A. That is the product we build, and that is the buyer we are going after. The $30,000 to $35,000 lot, you no longer can get it, or it’s very difficult to get now. In some of our key markets we’re no longer able to deliver homes under $200,000, but in others we are. My dad’s philosophy (Randy French, president) is we want to be more of a niche builder. We’re not going into neighborhoods and build the exact same product as every other builder. There are a lot of custom builders in our markets who do a really good job to deliver for the move up buyer. But we saw big demand for the first time buyer that wasn’t being met and that’s primarily in Bryan and College Station.
Then we took that business model across central Texas. You read a lot about student debt and how that hampers first-time home buyers, but in most of our market—Bryan, College Station, Huntsville, Brenham, Waco—we have a lot of college towns. College education is relatively affordable especially at Texas A&M and Sam Houston. The kids going to those schools and staying around in those towns are not as burdened with all this debt because education is relatively inexpensive in Texas.
My dad saw the niche; we design the lots; we design the product, we really went after it, and it’s been successful. We dress up our houses a little bit with strong elevations, granite countertops, and separate showers. A lot of stuff that people would consider an upgrade is standard in our product. That is one way we are able to differentiate ourselves from the herd and the larger national builders in some of our other markets. We are a little more expensive than them, but we try to sell value.
Q. Half your management team is younger than 40, what advantages or challenges does that makeup present for running your company?
A. I am about to turn 32, but I probably look like I’m 25. I really enjoy the energy that they bring, and it’s one of those things when you don’t know any better, you will try anything. Our guys are really hard working and they bring a good energy.
One of the drawbacks is most of our guys were hired right out of college or out of a different industry, so they have to learn from experience and sometimes you have to learn things the hard way, which is through mistakes. We try to minimize those, but like any maturing company there are lessons to be learned but as long as were learning from our mistakes and progressing that is all that we can ask. I think the pros outweigh the cons just from the energy that they bring.
Q. How do you establish your credibility and authority as a young chief executive when with an older generation?
A. All my coworkers have been gracious to me and taught me a lot. But it is awkward. I worked in the warehouse for my father when I was 14, 15 years old and a lot of same employees are still here. It used to be me working in the warehouse and then the warranty van and now those same employees who were here then are reporting to me. But it really has gone well. Everyone is humble and very gracious. I always took the attitude that the only way I’m going to gain the respect is by going in there and working harder than anyone else because I looked at being the son (of the boss) as almost a con rather than a pro. Instead of having instant credibility, in my mind, I felt there was doubt. So I had to work that much harder. I had to prove myself that much more because I already had a strike against me being the son of the owner.
Q. What can you tell us about your latest projects?
A. One of the markets we’re excited about is getting into Temple, Texas. Temple is between Killeen And Waco. We are in both those markets, so Temple is just a logical step for us. It’s a market that we feel has some good long-term growth potential. We’ll put in a subdivision across from a brand new school and a major thoroughfare. We’ll start our model home there by June or July.
We’re also looking to expand our presence in the Conroe area, and we’ll kick off our first townhome project in a number of years. We’re looking at some more dirt there as well and that will fill that niche I talked about earlier which is the first time buyer. We may not be able to deliver that single-family detached home for under $200K, so we’re going to see if we can do it with the townhome.
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