Success By The Numbers

THE IRONY OF BEING NAMED as one of America's Best Builders in 2005 isn't lost on Jim McVaugh—after all, as the president of Houston-based McVaugh Custom Homes, he has been building in one form or another his whole life. “I don't know if I can remember a time in my early childhood that I wasn't planning or building a fort or a clubhouse,” he recalls. Even into his teenage years, Mc-Vaugh was highly regarded for his elaborate tree house designs. “I must have at least 15 of those under my belt,” he laughs.

Despite that early passion for construction, when it came time to determine his career, McVaugh chose another vocation. Experience in accounting ran in his family, and with a CPA father, and a mother in banking, accounting seemed like an ideal career choice to McVaugh as well. But he couldn't evade the lure of real estate completely. It wasn't long before McVaugh found himself coming full circle—discovering a way to apply the accounting skills he had honed with the creativity in construction that he craved. “It's almost like I was destined to do it,” he admits. “I just don't have the personality for accounting.”

Jim McVaugh, president

After crunching numbers in a general accounting environment, McVaugh found himself working for a Houston-based, multi-family real estate developer, O&D Developments, in the late 1980s. The joint-venture Canadian company bought and rehabbed about $10 million worth of projects a year, including apartment complexes, shopping centers, and high-rises. It was then that Mc-Vaugh decided to build his own home. While searching for a lot, he found three. “I just planned to build three homes, sell two, and keep one,” recalls McVaugh. “I ended up selling all three—and the rest is history.”

From 1991 to 1994, McVaugh completed nearly 30 homes in Houston, all the while maintaining his day job as an accountant and collaborating on the side with his boss at O&D Developments as a joint venture partner in home building. His product line focused on semi-custom patio homes starting near $175,000. But in 1994, he decided the time was right to make a leap. With a desire to move into higher-end products, he broke away to dedicate himself full time to the growth of McVaugh Custom Homes.

Although the business has been in operation for 13 years, the McVaugh story really started to gel in 2000. Since that time, the company has tripled in size—growing from 11 units in 2000 to 32 in 2003, and an estimated 45 units in 2004.

By balancing the diversity of its product mix—expanding its offerings from sheer high-end custom to include semi-custom products—the company has blossomed in Houston's demanding market. By maximizing the advantages of technology, the firm has successfully scrutinized its efficiencies and integrated operational enhancements. And with a continuing dedication to cutting-edge design and unique features, Mc-Vaugh continues to stay a step ahead of its competition.

CUSTOM TOUCHES: McVaugh Custom Homes' dedication to creativity continues to set it apart from its competition. The company has committed to using high-end materials in all of its homes.

After committing himself to home building, McVaugh's products gradually crept up in price until he found himself working in the truly custom market, building 10 to 12 homes a year at an average sale price of $900,000 with spec homes up to $1.8 million. His banking relations were solid, and he found that a track record of funding for projects of four- or five-unit townhomes easily qualified him for the higher-end specs. “Financially, it wasn't much different.”

But when the Houston high-end environment got tough in 2001, he made the decision to apply his custom touches to patio homes and zero lot-line products, a diversification move that now accounts for 40 percent of the company's sales. “High-end custom pretty much dried up when the stock market took a nose-dive—and, of course, there was 9/11. I had to transition back to where the majority of buyers were,” McVaugh recalls.