What happens when you marry the artistry of a custom home builder with the purchasing power and operational efficiencies of a volume builder? Hopefully, a union that will leave these two Orlando, Fla.-based home construction companies in better stead to weather the downturn.
Homes by Carmen Dominguez and Rey Group last week announced a joint venture to build high-performance homes at Reunion Resorts & Club, an upscale second-home community in Osceola County, Fla. The collaborative move gives merchant builder Rey Homes, which builds roughly 100 homes per year, entre' to a highbrow development with the instant brand cache of the Dominguez name. "This is an easier way for us to enter the custom home market than doing a start-up and just going in ourselves," says Tony Rey Jr., COO of Rey Group, the parent company of Rey Homes.
For Dominguez, the hybrid entity presents an opportunity to move land holdings inside Reunion at a faster clip. It also gives her firm the backing of Rey Homes' sizable purchasing and estimating staff, construction managers, customer service department, and a design studio.
"I see this as an amazing opportunity because [Rey Homes] has a fantastic infrastructure and I have great creativity," says Dominguez, whose eponymous outfit has, until now, built only six high-end homes per year-one being the NAHB's 2007 New American Home, which was showcased during the 2007 International Builders' Show in Orlando. "We're putting our brains together to find ways to be more efficient and save money while still building homes that look great. People right now are looking for baseline pricing, but they don't want to sacrifice custom details."
If the business plan moves forward as anticipated, the partners say they will be able to build homes on par with Reunion's upper-crust standards for about $100 per square foot less than the going rate. For prospective home buyers, that could translate to a price reduction of nearly $300,000 on a 3,000-square-foot home (taking the price tag from $900,000 to $600,000). By comparison, two spec homes that Dominguez built at Reunion prior to the partnership are listed at $900,000 and $1.3 million.
"At Reunion, the price range in the product we are working with used to be around $300 per square foot. It's since shifted down to about $275, but the place has become very price sensitive," says Aldo Martin, president of Rey Homes. "We think we'll be able to build comparable homes for $200 per square foot."
Rey says cost efficiencies will be achieved through supply chain management, value engineering and more strategic use of subcontractors. Trim and finish work will be executed by custom subs with whom Dominguez has previous relationships, while masonry and framing contracts will likely go to production subs that charge lower rates.
"Carmen is an artist, while we are more of a high-volume, bricks and mortar company," says Rey, whose company has focused on lower- to middle-income housing. "With this venture, we're getting to the peak of the pricing triangle so we can cover the whole spectrum."
Drawing on a portfolio of nine plans by Apopka, Fla.-based Morales-Keesee Design Associates, the new entity, known as Carmen Dominguez with Rey Homes, expects to build 10 to 12 homes at Reunion this year. The first model home will break ground this quarter, offering energy-efficient features such as tankless water heaters, solar panels, low-flow plumbing fixtures, and fluorescent lighting. The partners also are exploring opportunities in other Central Florida communities, although they declined to share specifics.
The joint venture will operate out of Rey Homes' Baldwin Park offices in northeast Orlando. Both companies plan to continue building homes as stand-alone entities in addition to their collaborative projects together.
Learn more about markets featured in this article: Orlando, FL.