Scott and Jeff Linnemeyer grew up in the small town of Mexico, Mo., about 40 miles from Columbia, home to the University of Missouri. The brothers eventually broke away from their small-town roots to become traders, Jeff for Getco LLC, a global electronic trading firm; and Scott at the Chicago Mercantile Exchange, where he worked in the trading pit for a decade.
Scott soured on trading when it went electronic, and in August 2006 he returned to Columbia to launch Beacon Street Properties, a builder and developer. Jeff, who left Getco in June 2012, helped capitalize that startup, and is now its managing principal.
Back in 2006, there were “a good number of builders” in Columbia, recalls Jeff, and Beacon Street spent the next few years building homes here and there just to pay the bills. But the company managed to survive the housing recession that drove several other local competitors out of business.
The brothers’ struggles finally paid off last year, when its $10 million in revenue and 40 closings made Beacon Street Columbia’s top builder. More important, the company’s profit last year improved by threefold over the previous two years, says Jeff.
Beacon Street Properties is active in three local subdivisions, including a community called Magnolia Falls where the builder recently acquired a 99-lot REO property. Beacon Street’s homes range from 1,350 to 3,000 square feet and are priced from $150,000 to $500,000. Its sweet spot, says Jeff, is between $175,000 and $200,000, which places Beacon Street “at the middle to high side” of the market, he says.
Beacon Street is among the dozen or so “highly active” builders in Columbia, says Don Stamper, executive director of the HBA of Columbia, where Scott’s wife, Kara, is a board member and on the education committee. The market, Stamper says, is “in a good phase of recovery,” although there hasn’t been a lot of new development lately, “and we could be heading into a new-home shortage.” Stamper says new-home inventory is about half of what it was a year ago, and that the time a new home is on the market for sale averages only about 90 days.
Beacon Street currently has a 2½-year supply of lots, based on a 50% projected annual growth rate for the next few years. Closings are expected to hit between 70 and 80 units this year, and the brothers are already considering expansion into such markets as Springfield or Kansas City, Mo. Beacon Street currently has 10 full-time employees, and Jeff thinks it would be fairly simple to replicate the company’s operations in other markets.
The company also has about 80 rental units, the majority of which are duplexes, and Jeff says Beacon Street would like to expand that portfolio to take advantage of its proximity to Mizzou’s student body.
However, like builders in other parts of the country, Beacon Street Properties has been running into labor shortages, for framers and concrete trades in particular. “We’ve struggled with this, and we’re trying to get commitments from our ‘A’ squads to grow with us, or we’ll need to go with other subs.” Jeff says he and his brother are also considering hiring captive framers to ensure that Beacon Street can achieve its future production goals.
John Caulfield is senior editor for Builder magazine.