The availability of thousands of finished lots in the Phoenix area has enticed a veteran housing executive to give home building there another try.

Within the next 30 days, the startup Joseph Carl Homes should have a sales office open in the gated community of Arboleda Ranch, near downtown Phoenix. This nascent builder is the creation of Carl Mulac (Joseph is his first name, but he goes by Carl), a former officer with Engle Homes, Standard Pacific, and Ryan Homes. Mulac is partnering in this venture with JEN Partners, a private equity firm that specializes in real estate investment and was instrumental in starting up and expanding such builders as MJ Block, Pacific Greystone, and GreenPark.

That Phoenix remains one of the country’s worst foreclosure markets doesn’t seem to faze this start-up's principals. They see the glass half-full with 50,000 to 60,000 finished lots available there, of which 15,000 to 17,000 are “grade A” locations “that interloop with where we want to be,” said Mulac, who is CEO of the newly established builder. “Phoenix is going to come back; maybe not to anywhere near what it was, but it will come back.”

Mulac and Reuben Leibowitz, JEN’s founder and managing director, told BUILDER Tuesday that Joseph Carl Homes could launch with a “very low” annual operating budget—$1 million to $1.5 million, versus $3 million to $5 million it would have cost only a few years ago, said Leibowitz—because controlling land through options and takedowns is much cheaper these days. “The ‘land lite’ model is an opportunity that’s really out there right now, and we’ll use other people’s land whenever possible,” Mulac agreed.

Joseph Carl Homes is looking to build in five or six communities in and around Phoenix, and will start out completing construction of homes that are partially built. Its homes will target move-up buyers primarily and will range from 1,800 square feet to 3,000 square feet in size with pricing between $150,000 and the mid-$300s. Mulac said his company should be able to close some homes by the end of this year. (It will not build spec homes, at least initially.)

Leibowitz also said JEN is looking to expand this business eventually beyond Phoenix, noting that Mulac—who has worked in the Phoenix market for 11 years—has previous experience in Las Vegas. Possibilities also include Southern California and Orlando, Fla., where JEN has "land people" looking for growth opportunities, according to Leibowitz.

When asked why private equity money generally still isn’t aggressively pursuing openings in the housing industry, despite dropping land costs, Leibowitz explained “a lot of the private equity guys that are circling around residential are looking at it from a numerical perspective. The numbers are important, but this is an industry where you need expertise and the ability to envision what the builder can do. I’m not a dirt guy, but when I’m driving around with Carl, I can understand how the put the pieces together.”

In terms of assembling his team, CEO Mulac has turned to people with whom he's worked at other builders, including his CFO Steve Adams, his controller Melissa Jones, and his vice president of operations Dennis Palmer. Together they helped expand Engle Homes from 500 closings in 2003 to 2,500 closings and $1 billion in revenue in 2005. He declined to project how many homes Joseph Carl Homes would build this year and beyond, except to say “we’ll start out slowly.”

John Caulfield is senior editor at BUILDER magazine.

Learn more about markets featured in this article: Phoenix, AZ.