Two former division presidents for Pulte Homes have joined forces to launch a start-up focusing on residential infill development in the suburbs around Chicago.
Headquartered in Deerfield, Ill., Meritus Homes is the brain trust of husband and wife team Brian and Karen Brunhofer, both of whom previously served as division presidents for Pulte Homes’ Chicago operations. Their new venture will offer move-up single family homes and townhomes in the Windy City’s north, northwest, and western suburbs.
Founded in partnership with Gary Janko of Janko Group, a privately-held real estate investment firm, Meritus Homes currently controls nearly 500 home sites in well-to-do areas such as Inverness, St. Charles, Naperville, Lake Villa, Lindenhurst, and Addison--land holdings that Janko and Mrs. Brunhofer acquired during the downturn at rock-bottom prices. The new venture rounds out Janko's assets portfolio, which until now focused more heavily on office, industrial, retail, and hospitality properties.
“Our land acquisition strategy has been to concentrate on high-demand, low-supply areas in suburban locations that are near schools, employment corridors, and transit,” Mrs. Brunhofer explains, noting that she expects resale homes to pose the most direct competition. “In most cases, we were careful not to surround ourselves with vacant lots where there would be competition from new construction.”
If all goes according to plan, Meritus hopes to build 25 to 30 homes in three communities in 2011, expanding that number to between 50 and 75 homes by 2012.
The builder’s first community, set for a grand opening this fall, is Creekside at the Estates of Inverness Ridge. Sited on a parcel that was first developed by Toll Brothers and later owned by KB Home, the enclave will include a mix of ranch and two-story homes ranging from 2,600 to 4,000 square feet. Upon completion, it will fill in last 27 remaining lots at Inverness, a development of 200 homes. Although a pricing structure has yet to be finalized, Mr. Brunhofer says the price tags on the new homes will reflect current market conditions and likely fall below the area average of $600,000.
The two bring considerable experience to the venture. Each Brunhofer served as a division president in Chicago in the early 2000s, with Mr. Brunhofer initially overseeing Pulte operations and Mrs. Brunhofer managing Del Webb-branded communities. Their divisions were later reorganized geographically so each oversaw Pulte and Del Webb projects within specific boundaries.
Mr. Brunhofer, who will lead the Meritus's field operations, home construction, and sales and marketing efforts, worked for Pulte Homes for 11 years until his job was eliminated during the Pulte-Centex merger.
Mrs. Brunhofer, whose focus will include land acquisitions, financing, and joint ventures, left Pulte in 2007 during a corporate restructuring. She had been with the company for 12 years.
Meritus Homes’ competitive advantage, the owners say, is that it will offer the efficiency and expertise of a large production builder, combined with the personalized attention and customer service of a family-owned business. Furthermore, its land positions mean it can offer affordable new homes that compete directly with resales and foreclosures on price.
“We are starting out with a good portfolio of land at today’s prices,” Mrs. Brunhofer says. “We are not burdened with task of working through troubled assets that have been on our balance sheets for a long time that we have to figure out what to do with. And because we are small, we’ll be able to react quickly to banks, homeowners, and property owners. We can make decisions quickly, based on what’s best for this market without having to worry about Wall Street and what’s going on in the rest of country.”
Adhering to a lean business model, the company’s starting payroll will support five full-time staff (including the owners) handling acquisition, asset management, sales, marketing, construction, purchasing, and warranties. Accounting and HR functions will be outsourced.
Meritus’ marketing strategy will take a three-tiered approach, concentrating resources on real estate agents, referrals, and a website. “We have spent a lot of time developing a website that is informative and user-friendly, taking into account the importance of search engine optimization for people who are looking for new homes online,” Mr. Brunhofer says.
The name, “Meritus,” he says, comes from the Latin word meaning, “having earned” or “deserving of.”
“We love our family heritage but we didn’t think Brunhofer Homes had the best ring to it. The name Meritus reflects an important part of the experience we hope to deliver to our customers," he explains. "It represents the fulfillment of the dream of homeownership and the excitement of buying a new home, as well as the fact that our buyers are deserving of a great experience. These are the themes guiding us as we get up and running. This business is about delivering not just a great home, but a great experience.”
Jenny Sullivan is a senior editor for BUILDER.
Learn more about markets featured in this article: Chicago, IL.