Joe Roy, president and founder of Charlotte, N.C.–based Meeting Street Communities, has been in love with traditional neighborhoods his entire life. Growing up in Baton Rouge, La., he spent his childhood “wandering through the Garden District,” an upscale neighborhood listed on the National Register of Historic Places. “I couldn’t tell you why I enjoyed it, but I did,” he says. “Every little street had something to keep me going to the next block.”
Armed with a degree in construction management from Louisiana State University, Roy spent his early career doing estimating and cost accounting for a large design/build firm. He worked on manufacturing facilities for Dupont and Westinghouse, developing product prototypes and designing tight management systems.
In 1996, Roy followed his heart and his ambition to open his own business. With a partner, he started the residential development firm that would become Meeting Street. They had two communities underway and contracts for several presales. Roy ran the company. His partner, custom home builder David Simonini, was its front man.
“He loved the limelight, loved the attention,” Roy recalls. But Simonini’s personality got the better of him. He was indicted and served 33 months in federal prison for money laundering and fraud before being released last year. “He nearly took me down with him,” says Roy. “We lost all our sales when he filed for bankruptcy. But we had a great concept and a great product. I bought him out, fired every attorney and CPA, and ended up with three or four employees that had been there from the start. We decided to scale it down, make a small custom home, and make it affordable.”
Roy did that by combining his love of traditional neighborhoods with the skills he’d developed as an estimator and cost accountant. The company’s core product is affordable urban infill townhomes. They account for 80 percent of Meeting Street’s sales. The other 20 percent is made up of luxury townhomes, single-family detached, and live/work units.
“Our amenities are not swimming pools, clubhouses, and big lots,” says Robert Swaringen, who oversees sales and land acquisition for Meeting Street’s divisions in Charlotte and Charleston. “They’re coffee shops and grocery stores. Our buyer likes to come home from work, park the car, and walk to dinner. Towns know that and call us.” The typical buyer, Swaringen says, is a woman between the ages of 28 and 33. Most are single; few have children.
“We did focus groups with Realtors and asked about pricing,” Roy says. “If they said they thought the units could sell for $200,000, we said, ‘How about if we priced them from $148,000 to $175,000?’ They said they could sell them all day long at that price. That’s what we wanted.” Prices for the townhomes actually start as low as $135,000.
Roy bought his plans from a local architect “who didn’t think they were worth anything. I bought his live/work plans, too.” Roy chose a simple box for the structure of the house, rejecting the intricate roof lines that were popular on products built by national builders that had entered Charlotte.
“I thought that if we took the extra details off, we could put in nice windows and doors,” Roy says. “That’s it. We make them as affordable as we can with high-quality materials.”
By cutting that cost, he could spend extra money to add touches of architectural styling and to use good-quality, low-maintenance materials for the exteriors. It keeps the neighborhoods looking nice for years and reduces his warranty costs.
“Developers drive through the neighborhoods and say the townhomes look great,” Roy says. “That’s created more opportunities for us.”
He invested upfront to fully integrate the company’s systems from prospect tracking to warranty service, which eliminates redundancies and turf wars between purchasing and accounting that drove him to distraction at Dupont and Westinghouse. “If we had paper files here, our office would be twice as big,” Roy says.
He hired a former Pulte builder, Scott Dirkschneider, to incorporate efficiencies that are common at national builders. But he also told Dirkschneider that he wanted to do panelized construction.
“Scott said they’d tried it at Pulte, and it didn’t work,” Roy says. “I wanted to try it anyway. Panels are quicker, easier, and more efficient. We save money because every house is the same. Our window heights and sizes are always the same. The door frames are always the same. We don’t have six dumpsters of trash on the jobsite. We don’t have lumber shrinkage.”
Meeting Street’s purchasing manager Amy Whidden, initially a skeptic about panelization, has become a convert. “There’s less error and less waste,” she says. “We see exact efficiencies. Yes, it costs us $1,100 more per house to do it, but it might allow us to do 20 more starts a year. A builder would spend a day on a framing check with stick-built. We do it in three hours.”
She now buys panels as if she were buying loose lumber. “We used to lock in prices for a year,” she says. “Now we buy it as a commodity. We’ve got all the efficiencies of panels with the benefit of the market volatility.”
She also does takeoffs so she knows “exactly what to buy if we can’t get panels. If a panel guy quits [the business], we have a plan B.” In fact, of all the processes the company has in place, Whidden says panelization has made the biggest impact on its ability to build smarter.
“If we went back to loose lumber, we’d have theft, short shipments, and variances,” she says. “The townhomes may vary [by] $400, plus or minus. If there’s a bigger variance, it’s the land.”
This level of accuracy in projecting its costs allows Meeting Street to meet its goal of building quality homes at an extremely affordable price point, which in turn lets it reach first-time buyers.
“Our buyer is a discriminating buyer,” Roy says. “They’re not shopping at Wal-Mart. Our pricing goal is to make a good profit. I never had an ambition of making a ridiculous profit.”