Keep It Simple

Price, quality, and scheduling”have propelled the rapid expansion of DSLD Homes.

  • Dizzying Growth: Pwner Saun Sullivan has seen DSLD Homes' sales go from 51 units in 2008 to 238 last year.

    Credit: Sean Gardner/Aurora Select

    Dizzying Growth: Pwner Saun Sullivan has seen DSLD Homes' sales go from 51 units in 2008 to 238 last year.
When Saun Sullivan sold his home building company, PCC Homes in Baton Rouge, La., to D.R. Horton in early 2006, he had no intention of getting back into residential construction.

Sullivan, now 37, had been building homes since he got out of college in 2000. He had taken PCC’s yearly production to around 450 units when Horton paid an estimated $65 million to acquire its assets.

As part of the deal, Sullivan and his partner, land developer H. Allen Thomason, who still develops lots for Horton, signed a two-year noncompete clause. But Sullivan discovered that he still had a building itch. His portion of the Horton sale—plus lines of credit from three banks totaling more than $14 million—provided the capital he needed to launch DSLD Homes in 2008. In its first year, the company, which didn’t start building until the summer, sold 51 homes. In 2009, it ramped up to 238 sales. And this year DSLD expects to sell 350 homes in six Louisiana parishes and one county in Mississippi.

Quicker Delivery

Sullivan is coy about his company’s success at a time when the state’s economy has been struggling, and the national economy is in recession. He jokes that he doesn’t even remember what the initials of his company’s name stand for. “That shows you the extensive planning we went through.” As for future planning, it’s “day to day,” he insists.

But unlike most startup builders, DSLD Homes had PCC Homes’ operational blueprint to work from. A key to the company’s success is evenflow construction, the idea for which Sullivan says he “stole” from Quadrant Homes in the Pacific Northwest. (Sullivan’s father-in-law works for Quadrant’s parent Weyerhaeuser.)

  • Quick Turnaround: DSLD's cycle time is 45 days from framing to completion. It also rewards its trade partners with prompt payment.

    Credit: Courtesy DSLD

    Quick Turnaround: DSLD's cycle time is 45 days from framing to completion. It also rewards its trade partners with prompt payment.
Under that regimen, DSLD builds on a 45-day cycle from when the framing package is dropped to completion. DSLD starts eight homes per week, on average; most have three bedrooms and average 1,648 square feet of living space. The homes target entry-level buyers with prices that range from $125,000 to $210,000.

Grading Subs

This evenflow approach extends to DSLD’s subs and suppliers. Sullivan says that the pro dealer 84 Lumber supplies much of his company’s building materials and receives payment via a direct-deposit account three days after products are delivered. Subs are paid the same way, too, as they complete their phases. Using this process, the company saves time and money by minimizing paperwork and billing disputes.

Sullivan says “price, quality, and scheduling” are what separate his homes from the competition. About one-third of what DSLD builds are spec homes, to accommodate buyers who need to move in quickly. And the builder’s quality control includes a points-system program in which subs grade the company and the trades that precede them in construction. “We haven’t had a dry run [where a sub shows up on a jobsite but can’t work] forever,” says Sullivan.

“Saun recognized early on that the scores relate to the construction process,” says Ed Caldeira, the quality-control consultant who has helped DSLD set up its grading system. He observes that this system is particularly helpful in elevating the productivity of “in-between” subs, “who are neither mediocre nor great.” “They are coached for improvement, and they either get there or they don’t get work in the future,” say Caldeira.

Sullivan can’t say how big he wants his company to get. “We don’t know yet what our Peter Principle is.” He admires how larger builders such as NVR and Fulton Homes operate, but for now he’s content to expand within his company’s existing markets. “They’ve figured out some things, and the beauty is how simple their operation is,” says Caldeira.

DSLD’s land holdings are modest; only about 215 lots valued at $22 million as of late February. It’s only buying finished lots right now because, Sullivan explains, “our banks don’t want us to develop, and there’s plenty of lots out there.” Plus, Sullivan isn’t sure that the recession is over. He thinks there could be another “shock” to the economy in the second half of the year, now that the federal government is out of the mortgage-purchasing business.

“Too many builders are still taking things for granted, until everything blows up in their faces again,” he says.