Changing Your Floor Plans to Make Millions More | John Burns Real Estate Consulting

Changing Your Floor Plans to Make Millions More


Rezoning and repositioning your communities can earn you millions. The following is a hypothetical illustration of much of the work we are doing these days. In this example, we offer the builder of a high-density community two alternative scenarios: one that increases revenue by $3.25 million and reduces the sales period from 3.9 years to 2.5 years. The second alternative increases revenue by $3.75 million and reduces the sales period by 0.6 years.

In this particular market, we determined that many potential buyers simply cannot afford a $250,000 detached home, and ownership opportunities in the $175,000 price range are very difficult to find. We also determined that the floor plan had wasted space that the buyers were not valuing.

In this example, we recommend:

  1. Increasing overall demand by offering two products, including one detached home and one affordable duplex. The addition of a duplex allows for more 30 – 40 more homes. The buildable square feet of 30 more homes (Scenario 3) is only 3% more than Scenario 1 (the builder’s original plan)
  2. Decreasing the size of the detached homes, but offering an efficient floor plan that lives better and offers a bigger yard, which is what this consumer wants
  3. Without increasing the sales pace per community, finishing the project in only 2.5 years in one scenario and 3.3 years in another
  4. Achieving a higher IRR and reducing debt much more quickly

Our work took us into more than 1,000 communities last year, and we closely watch the housing and market trends in over 75 of the country’s biggest markets. We have observed that the buyer profiles in most markets have changed dramatically, and you should change your communities to adapt. A small investment in research and repositioning can easily payoff tenfold.

If you are going to do this yourself, the four major factors you have to understand are:

  1. Buyer profiles and preferences by price point
  2. Buyer demand by price point, including the resale market
  3. Competitive supply by price point, including the resale market, and
  4. Marketing strategies that work

 


If you have any questions, please contact us at (949) 870-1200 or fill out this form.