Although it’s a relatively new company, RSI Communities (founded in 2008) is poised for some major growth in the coming years – it plans on investing $400 million in land acquisition and development in the next three years and tripling the number of homes it delivers from 2015 to 2016.
And now it has a new president and CEO to lead the way: Todd Palmaer.
Having spent the last 17 years of his 30-year career at the public Standard Pacific, where he most recently served as president of its Northern California, Texas, and Colorado regions, Palmaer is relishing the chance to work for RSI, a smaller private, Newport Beach, Calif.-based builder. He came aboard in November.
“When you’re with a public home builder you can’t help but be focused quarterly results and there’s a lot of pressure to drive that short-term performance,” he says. “Being with a private company, we really have the ability to focus on a long-term strategy and not get caught up in quarterly [mindset] or make business decisions that are a little bit more short-term oriented.”
This long-term goals are optimistic. In 2015, RSI Communities, an affiliate of RSI Holdings, delivered about 100 homes in Southern California and the Texas markets of San Antonio and Austin. This year, Palmaer expects to deliver 300, followed by 800 in 2017 and 1,200 to 1,400 in 2018. The company currently controls more than 1,400 lots in its markets and is in escrow for another 1,500, Palmaer says.
RSI Communities currently has nine active projects – three of which are under construction, three that are in the land development phase, and three that will begin land development in the summer. Eight of the communities are in San Antonio or Austin while one is in Southern California.
Targeting millennials and first-time home buyers, RSI Communities will have an average selling price in Texas of about $260,000 and in Southern California of about $350,000. Palmaer says. The company will be able to keep prices low in Southern California, he adds, after purchasing land in the Inland Empire region, which is less expensive than other areas nearby.
Citing home buying trends that show more millennials purchasing more homes, and making up a larger portion of total home buyers in 2015, Palmaer is pleased with the company’s situation.
“We really feel that being in this first-time home buyer position, even if we have some bumps along the road, as long as we can deliver homes cost-effective and affordable for people, we feel we’re in a really good position and we’ll have a competitive advantage being at this price point,” he says.
Another part of the strategy, where RSI Communities differs from other builders, is its two single-family rental communities under construction in San Antonio. Each community is about 100 lots and the first batch of renters will move in at the end of the month, Palmaer says.
“We feel it’s really an untapped need out there,” he says of the Texas markets. “The apartment markets have been doing very well and we feel we can deliver single-family homes, given our low construction costs, and provide a rental option for people that is slightly more than an apartment rental but they get all the benefits of a yard and living in a conventional home.”
With a tight trades and labor market, Palmaer plans to out-efficient the competition. Citing an uncomplicated building process and steady volume flow, he says RSI Communities will be very attractive for trades to want to work for. “Our goal is to be the builder of choice for many trades and we think that’s a competitive advantage in a market where labor is very difficult to attract,” he says.
He currently has about 20 employees, but plans on hiring 20 more by the end of the year and to have roughly 200 employees by the end of 2018. While the company is presently focused on Southern California, San Antonio, and Austin, Palmaer says he is eyeing other Texas markets, like Dallas and Houston, Northern California, and Florida as expansion targets.
Ronald Simon, founder and chairman of RSI Holdings, says that Palmaer is the right choice to grow RSI Communities. “Under Todd’s leadership, we will continue to expand our team as well as reach into other high-growth markets,” Simon said in a statement.
Palmaer says he considered starting his own home building company prior to accepting his current role, but the opportunity at RSI Communities was one he couldn’t pass up.