Barry Frey has deep roots in the home building industry, first as part of his family's building companies, Sanibel Homes and Frey and Son Homes in the Fort Myers, Fla., area, and now as managing partner of America's First Home.
Under Frey's leadership, America's First Home, which broke off from partner First Home Builders of Florida in 2001, grew from 92 home sales in its first year of operation to a peak of 1,129 in '05. The builder, which focuses on selling to first-time home buyers, also expanded beyond its Orlando origins to the Fort Myers area and Ocala, building homes ranging from $150,000 to $280,000 on both scattered lots and its own developments. Last year, despite spiking cancellation rates around the country, the company managed to hold onto an impressive 1,096 sales. This year's closings are expected to be closer to 500. Frey, 44, lives in Bonita Springs with his wife and 10-year-old daughter. The family is also expecting a son, due to be born in mid-December. Frey spoke with associate editor Teresa Burney in October.
BB: Unlike many, you were able to hold onto most of your backlog in '06.
BF: One of the things that I think helped is that a portion of our sales, and it's been running about 150 homes a year, has been to a group of investors whom we have had a very close relationship with.
BB: They didn't back out like everybody else?
BF: No. We actually help them sell these houses under a rent-to-own program. When somebody comes to the model center, the first thing we try to do is sell them a home. If they don't have adequate credit, then the next option is to sell them a rent-to-own option [with one of the investors]. The program has worked well for the downturn in business. It has become a pretty important part of our strategy. It's a defensive strategy. The old strategies that worked in '05 aren't working now, so we have to evolve.
BB: You are targeting the first-time home buyer, a business that a lot of builders are getting out of.
BF: Once people buy a home, they tend to act more responsibly; they tend to save more. They develop roots in the community, versus the transient lifestyle of the renter. So, we firmly believe that homeownership is very important to the country.
BB: You knew and trusted the investors you have been working with. Did you turn down other unknown investors over the years?
BF: We had groups of people coming to us. I got this call from this guy in California who said, "I want to buy 100 homes from you." And we weren't doing it. We didn't have an interest in that because we felt that if there was a downturn, they would skedaddle. We didn't go after those kinds of investors.
BB: Did you anticipate the housing slowdown?
BF: I firmly believed it [would happen], and that is one of the reasons we are in better shape than some. We stopped buying land in mid-2004. We were aggressive about managing our backlog. We planned for it, but this has been a bigger freight train than I think anybody expected. We are survivors, so we are hacking away. We did build up a big cash reserve. We have got about $20 million in excess liquidity, so we are in good shape, but it's still not fun laying people off.
BB: How do you decompress when you can get away from the business?
BF: I love to ski. The Florida heat just gets old after awhile. It's nice to get up to the mountains and enjoy that change of scenery. It seems like, especially with this downturn, I haven't done as much playing as I used to. I do golf and [play] tennis occasionally, but I spend a lot of time managing the business. It seems like, as much as I work, when I have a weekend I want to try to spend it with my family.
