David Willan doesn’t want his company ever to build a $250,000 house in the suburbs. That would defeat Evergreen Homes LLC’s purpose — to provide alternative financing for unconventional buyers to build homes in Northeast Ohio’s thriving urban neighborhoods.
“(Although) they haven’t been good on some of their other (bills), they will pay their rent, and those are the people that are good candidates to buy a new house from us,” says Willan, the company’s president.
Evergreen Homes has grown from two employees in 2000 to 60 today, while sales are estimated to hit $33 this year, up from $20 million in 2005.
Smart Business spoke with Willan about how he meets the demands of an untapped Ohio housing market.
How have you grown your company’s sales 400 percent over the last four years?
We targeted — and we’re continuing to target — what we consider to be an underserved group of homebuyers — those that are in entry-level type houses, who can only afford price points of under $125,000 or $150,000. We feel that most builders have gotten outside of that and have very few houses offered below $150,000.
We also target a niche of borrowers and buyers who are slightly credit-impaired. We’re able to participate in the financing along with the bank so we can help some folks who just don’t quite make it for regular financing get financing for their house.
We feel that there’s a growing desire for people to move back into urban areas, and that’s where our specialties are, in building urban development.
The new land prices and the construction prices in the suburbs have really put homes out of reach for a lot of people. By concentrating on less expensive land in urban areas, it allows us to keep our product costs down and opens up new construction to a whole bunch of additional people who are usually shut out.
How did you decide to do that?
I’d been in the rental business, and I had a lot of very good tenants (who) should be able to own their own house, but because of some credit problem here or there, they just didn’t really think it was possible.
We’re really a marketing company that builds houses rather than a builder that sells houses. Our first priority is marketing and financing for our buyers.
Fifteen years ago, you had to go down to your corner bank and get a mortgage. Now the majority of the lending is done not by banks but by institutions that bundle all the mortgages and sell them as mortgage-backed securities on Wall Street. As a result, mortgage lending has completely changed over the last 10 years, and therefore, there are hundreds of new lenders out there and hundreds of new loan programs out there that just didn’t exist 10 years ago.
How do you plan to expand your company’s reach?
Our primary office is in Akron, and we have offices in Canton and Cleveland. We intend to open some satellite offices in other urban areas in Ohio.
We have a core group of people here who really know our business well. We will send them out into that marketplace. They’ll begin to hire a staff, buy land and begin the construction process. They’ll begin to build a customer base and a sales base.
We just plant that seed, start to build it and generate it from this office to build something in our other urban areas.
How do you determine new office locations?
We need to be in an urban area with a semi-aging housing stock. The majority of the housing stock in a city like Akron, Canton or Cleveland is 75-plus years old, so it’s beginning to need to be replaced.
There are not very many good alternatives for folks who want to live in those urban areas. We’re providing some alternatives and some new construction so there’s a demand for it.
Also, we will only be targeting urban areas that have a very active, progressive local government in regards to urban redevelopment. For instance, Cleveland and Akron have relatively sophisticated organizations within the city departments that are promoting urban development.
In order for us to be really successful in a particular urban marketplace, we need that assistance — not direct assistance from the city government but indirect assistance. They’re planting seed money, they’re having redevelopment projects.
We really depend on those local governments planting those seeds in the urban areas to start the re-growth, and then we just hold onto their coattails and develop around those areas. Columbus and Cincinnati are good opportunities; those are probably the next two directions we want to go.
HOW TO REACH: Evergreen Homes LLC, (330) 762-1881 or www.evergreenhomesllc.com