Location, Location, Location
Imagine a wide-open piece of land with weeds, trees and bushes, and maybe a small creek or two. Now imagine that same piece of earth buzzing with activity and dotted with beautifully crafted homes, freshly paved streets, sidewalks and street lights among the beautiful trees and natural landscape.
To work in the land department at Eastwood Homes, that’s exactly the kind of imagination you have to have. Well, to be more precise, you have to have an imagination backed by years of experience moving projects through from “dirt” to “developed.” They start with a tract of land, and must anticipate how many homes can fit, how the streets will run, how to build homes with minimal change to the natural beauty, and most importantly, how the piece of land will affect company profitability.
Just as we mentioned in last week’s blog that discussed how many companies and crews are involved in the physical construction of a home, there are many people involved in finding and developing the land that we build a house on. And, not all land is created equal. We estimate that only about half the land deals we consider actually result in a new community for Eastwood Homes. There are a lot of factors we’ll discuss here that play a part in that decision. But ultimately, it comes down to the decision of our management team and our company owners Joe Stewart and his son, Clark Stewart.
In fact, Joe Stewart is still hands-on in the purchase of land, even after growing his homebuilding business to the 44th largest builder in the country. He walks the land, and wants to know how many homes, and which floor plans we are proposing to build. And, he would like to have the final approval in all land agreements! That’s yet another way Eastwood Homes differentiates itself from other builders. While our management team has autonomy and decision-making authority, our owners care about and are actively involved in the day-to-day operations of our company.
But let’s discuss all the work that goes into just preparing a land deal to present to Mr. Stewart.
First, we have to find the land. A tract must have many acres of land to be considered, which means it could involve multiple homeowners and multiple contracts. We look at schools, nearby commercial development, such as grocery stores and shopping malls, and other competing home builders in the area. Sometimes, members of our team are actually proactively out driving around searching for land. Other times, our land manager is tasked with finding our next community and he may work with land brokers to secure those future communities. And sometimes, developers or land owners contact us.
Once we go under contract on a piece of land, we are in a due diligence period. It’s then that we deal with items such as drawing up plat maps, zoning changes, density limitations, etc. Some larger neighborhoods also require traffic studies, which can take some time to complete. Each municipality has different requirements that must be met, so the time it takes to complete this approval stage varies greatly. Sometimes, municipalities also have specific architectural standards that must be met and that may require us to develop new floorplans or adjust our existing plans to meet those standards. It is at the end of this due diligence period that our management and owners will decide whether to proceed with a land deal. This all happens before the land ever becomes our property, or any “coming soon” signage is put in place.
Once the land changes hands and becomes ours, then the actual development of the site begins. Sometimes, we will act as the developer and handle the actual grading, utilities, and roads on our own, with the help of our trade partners. In other situations, we will find land that fits our needs and we ask a partner company to develop it on our behalf. We will then purchase the prepared home sites from that developer. In other cases, we come into the picture at a later stage, when the development of the land has already been completed and we have the option to buy a set of home sites that have been zoned, platted and graded, with utilities and roads in place.
The length of time it takes to prepare a piece of land for home construction can vary greatly, from as short as six months to as long as three years. Delays can be attributed to a host of reasons such as governmental hold-ups, rainy seasons, or if our preferred development trade partners are not available. If you’ve ever been waiting for a community to open up, it may seem like the builder (us or otherwise) is dragging their feet. But in reality, they are just as anxious to begin building as a future homebuyer is to see the “open” sign go up.
The land department is also responsible for developing future phases of our existing communities and maintaining our communities as we continue developing them through management of the homeowners’ association. When we begin building in existing communities, we sometimes help the existing homeowners’ association by stepping in where needed, such as cleaning up common areas and amenities. That means that our team members are regularly challenged with something new as each project brings with it a unique set of needs. And, like in most industries, our team members tell us they like the variety that comes with each development job.
At Eastwood Homes, we’re not just your builder. We start from the ground up, literally. Our team members are out looking for land while our other team members are developing floorplans to build on future tracts of land, and our purchasing and estimating department is figuring out how many parts and pieces are needed for each floorplan. Once we we’re prepared for construction, we have team members building the homes, and more team members standing by ready to begin selling those homes.
It’s a real team effort.