THEY DO THINGS A LITTLE differently in Texas. In Houston's Western suburbs, for example, Ryland Homes and Trend Development have exchanged a pair of 107-acre parcels at Long Meadow Farms so the builder can gain what amounts to a four-year supply of entry-level home sites within the now 1,400-acre project; the developer, meanwhile, can add a section of larger, more profitable lots.

And in San Antonio, Centex Homes, Pulte Homes, and Wilshire Homes have formed an alliance to purchase, partially develop, and build a 500-acre property. The site is too big for one builder to handle alone, at least in the San Antonio market, so they're doing it together.

While both deals are unusual—if not unique—they make sound business sense, according to the various principals.

TRADING PLACES Ryland's land swap of undeveloped sites with Houston-based Trend Development was largely a marriage of convenience, according to Ernie Loeb, director of land acquisition and development at the Calabasas, Calif.-based builder's Houston division. The piece Ryland traded away wasn't available when the developer put together the original 1,300-acre Long Meadow property. And even though it could hold larger lots that would command the highest prices from builders, the developer didn't want to go back to its general partners to buy it now. Trend, says Loeb, “didn't want to reopen the partnership,” which might have required taking out another loan or perhaps asking for another contribution from the partners. “So we bought it and swapped it. We basically bought it for them.”

The tract will accommodate 60-foot-deep lots, but the site within the community that Ryland received is platted for only 50- to 55-foot lots. With the exchange of raw ground, the developer will be able to sell lots at the new site—and at a higher profit margin—to builders who want to put up more expensive houses. And Ryland, which already has the higher price points covered at Long Meadow, will get a site where it can eventually build 421 entry-level houses—largely made possible because the builder will develop the site itself, thus bringing down the cost to about 30 percent below retail.

“This was a way for Ryland to come in and offer affordable houses in a master planned community,” Trend principal Dave Cannon told the Houston Business Journal, “and it was a way for us to acquire land more suitable for our needs.”

Ryland will build its 10-model Premier Series at the new site. Priced from the $130,000s to the $150,000s, the line features one- and two-story designs ranging from 1,291 square feet to 2,367 square feet.

Long Meadow Farms will have about 2,800 homes by the time it is built out over the next decade. The first phase of development, which is nearing completion, will contain 440 houses ranging from the $130,000s to more than $500,000. The community is buzzing with activity from other builders such as David Weekley Homes, Newmark Homes, Trademaker Homes, and MHI.

The land swap, says Jay McManus, Ryland's regional vice president of sales and marketing, gives his company “an exclusive position to offer the most affordable new homes in Long Meadow.

“We don't do this kind of thing every day,” she says. “Most of the time, developers want to control the entire property from the get-go and you have to buy lots at retail. [But] we get to control the low price-point, and they get land on which they can build some value.”

Learn more about markets featured in this article: San Antonio, TX.