During its four decades in business, Garman Builders has gotten “really good” at building spec homes, says Mike Garman, who co-owns the business with his two brothers. About half of the 50 or so houses this Lancaster, Pa.–based company expects to complete in its 13 neighborhoods this year will be specs. (The rest will be custom homes that sell for up to $1.5 million.) And recently, Garman Builders has been working on standardizing all of its house plans.
However, during the recession the builder got deeper into renovation and remodeling, which Garman says “threw a wrench” into that effort “because now we’ll do anything for anybody.”
In the past, the company would get requests from customers with remodeling work, which it typically farmed out to other contractors. Then two years ago, it started working with a captive contractor. And in May 2011, the builder set up a separate LLC, Renovations by Garman, which has its own trucks, salespeople, and project managers.
Renovations by Garman is on track to generate $4.7 million in revenue during 2012 from projects that have ranged from smaller jobs to room additions.
Garman tells Builder that the operational disciplines his company transfers from home building to remodeling, particularly in how it bids jobs, separates it from many competitors who “are good craftsmen but not necessarily good managers.” Then again, the bidding process is often less intense for remodeling than for new-home construction. “When we quote the price, there’s not much haggling.”
The remodeling jobs his company has completed this year alone include five basements, seven kitchens and baths, and 10 additions. It has also done 17 smaller projects that priced out at $5,000 or less, as well as what Garman refers to as “handyman” repair jobs.
Past referrals from former home-buying customers are generating new leads for Renovations by Garman. (One job could trace its referrals back through four different clients.) But while he likes the margins remodeling offers and sees “lots of growth potential,” Garman says he never wants to get away completely from his first love, home building. His company entered eight of its houses (out of a total of 47) in Lancaster’s recent Parade of Homes. “We really like building homes, but with renovation, it’s never really yours.”
John Caulfield is senior editor for Builder magazine.
Learn more about markets featured in this article: Lancaster, PA.