Carl Mulac, owner of Joseph Carl homes in Phoenix is on a roll, again. Mulac started his company of the same name for the first time in 2008 amidst the devastation of the housing collapse and still managed to attract the attention of AV Homes, which at the time was known as Avatar Homes and based in Florida.
AV bought Mulac’s company in 2010 and made him the president of home building. His swallowed-up firm also got two seats on the board of directors and Mulac became a frequent flyer to the East Coast. “We had an operation here in Phoenix and one in Orlando. We were doing 350 homes the first year, and when I left in 2016, we were doing just over 2,500,” says Mulac. “We had opened up Jacksonville, Charlotte, and Raleigh and I was spending a lot of time on airplanes.”
Mulac bailed out of AV in 2016 (the company was recently acquired by Taylor Morrison), served out a one year non-compete clause in his contract, and has gone back to work in an industry that he has an obvious affinity for in the place he knows best. “I have three grown children and now a baby grandson who are all here so I wasn’t going to leave Phoenix,” he says. “I’ve been in the business since 1983 and most of the guys who are still in it do it is because they have a passion for it.”
While Mulac was waiting for his chance to get back into the game, he studied the Phoenix market, looking for niches to fill and planning a compact organizational chart. “The last time I had my own company I had a private equity partner, this time I wanted to keep more control myself,” he says. In his research Mulac found large swaths of finished lots and identified a need for starter homes. During his first go-round he built active adult communities but he believed building something more affordable might be an easier lift. It turns out he was more than right.
“We opened our first community, which was Riverbend, and right before we were getting ready to start our model, we had a local rental company come in and offer to buy all 92 houses,” he says. “I went back and forth because I’ve always been a new home builder but for a start-up company to get 92 sold and have a backlog and have money coming in monthly it was a great way to start a company.”
Mulac is now officially and accidentally in the rental home building industry, which he feels is exerting a great change on the industry. “When the rental companies came into the market, the new home builders said, ‘it’s not sustainable and what’s the end game?’” he says. “But it’s a part of home building now. The negative connotation of renting a home is no longer out there, it’s gone. There’s full subdivisions of homes being built in Phoenix as rentals.”
Affordable Solutions From his rental house launchpad Mulac went back to plan “A” which includes starter homes and less competition. “Everyone in Phoenix is crammed into the $275,000 to $550,000 range, battling it out. I saw these finished lots all below replacement cost and a chance to provide attainable housing,” says Mulac. “Housing has not been available for the people in the $150,000 to $190,000 range in 15 years here in Phoenix.”
To acquire the land he needed Mulac leaned on his 25 years of experience in the market to gain access to available parcels and also took advantage of C-grade locations that would work for more affordable, entry-level homes.
The new iteration of Joseph Carl Homes is focusing on renters living in apartments who are looking for a home of their own with a yard and garage. The company’s smallest offering is 1,350 square feet and includes three bedrooms and a two-car garage. The firm is an Energy Star Builder which equates to tight building envelopes and high efficiency appliances.
The Joseph Carl team also employs “line building,” where the company works on a line of eight houses at a time, which helps keep the trades happy and in place on its sites. “The market in Phoenix is constrained by the trades,” he says. “We meet with them and say ‘You can come here for the next 10 months, because we’re starting eight houses a month.’”
Steady work and the ability to lean on the personal relationships he’s established over the years has helped keep things humming along on over 500 lots the company has control over. Mulac has found the labor shortage can be countered by keeping things simple. “It’s all about relationships and a lot of times a builder will make his own problems with the trades,” he says. “They can make it too complicated and give them too many options, if you can keep it simple, do what you say you’re going to do and keep your jobsites clean, you’ll have less problems.”
Public vs. Private Mulac has seen the building business from several vantage points since he started with Ryan Homes in 1983. Serving as an executive in a publicly-owned firm came with a constant dose of uncertainty. “I didn’t really like being in four board meetings a year, spending the time preparing for those board meetings and being judged every 90 days,” he says.
Starting your own firm for the second time in a competitive market has its own set of challenges. “The first year, there’s so many things that are happening for the first time, setting up your brokerage, getting a payroll company, all your licenses, all your insurance, things you don’t think about when you’re with a public company,” says Mulac. “We spent the first eight months working out of my house until my wife threw us out.” The firm is now up to a staff of nine and working out of shared office space.
Mulac has seen a lot of changes in the business since the 1980s and the rate of change seems to be accelerating. “I’ve seen more change in the last three or four years than I’ve seen in the previous 30. The outside industries including Wall Street are getting into it and there’s been a tremendous increase in software being used,” he says. “Now you have the offsite construction guys and the things they talked about at the Hive [conference] three years ago are now in place.”
Through all the ups and downs, the thing that keeps Mulac excited about the industry is actually the constant change. “It’s always changing and I love that. I love seeing a piece of raw land and two years later you come back and kids are riding their bicycles up and down the street,” he says. “That part of it is always there. I love the change and I love learning from the change.”