American Builders Quarterly – Featured Article

"Homebuilding in Hard Times" By Jennifer Hogeland was featured in the July/Aug/Sept 2013 issue of American Builders Quarterly. In the article Schwartz discusses building his business during "one of the worst housing markets the country has seen..." and how he survived. You can read the full article below or view original article with pictures of his work here >>.
Homebuilding in Hard Times Amid the recession, Mitch Schwartz grew his own firm, Schwartz Custom Homes, from experience By Jennifer Hogeland Sometimes a career is as much about the journey as it is the final destination. Mitch Schwartz had occupied various positions in the construction industry for 30 years and had experienced two recessions before he decided to branch into something new, and it was only the decline of this venture that pushed him into some of his best business decisions in a field he already knew well: homebuilding. Schwartz established Schwartz Custom Homes in 2010 in Austin, Texas, in the midst of one of the worst housing markets the country has seen, and his firm’s subsequent success serves as a model of how to survive by relying on industry know-how while purchasing properties shrewdly. Schwartz’s first experiences in construction were working summers with his father, a custom homebuilder in the Detroit area. By 1979, though, when Schwartz completed his degree in construction management at Michigan State University, the region was in a bad economic state, so Schwartz found himself lured to the East Coast by an offer to join the management program at Ryan Homes, a well-known public homebuilder. “I joined Ryan Homes in Richmond, Virginia, at a time when they were building 800 homes in the area a year,” Schwartz says. “But, less than two years later, the recession caught up to me there.” In the early 1980s, Schwartz moved to Texas, where he worked for Trammel Crow Company, one of the largest commercial apartment developers in the nation. Within a year he was promoted to superintendent, and over the next nine years he was responsible for the construction of approximately 2,500 apartment units throughout the country. In 1990, Schwartz started working for two major public homebuilding companies, and during the next two decades he made his way up the corporate ladder, moving from project management to director of construction to vice president of operations. Eventually, though, the most recent recession found him, too, when Austin saw a dramatic shift in the number of homes sold as the economy struggled. Schwartz says the city went from 18,000 closings a year to approximately 5,600. His instinct was to search for a new opportunity, so he spent six months working for a friend’s roofing firm and then moved on to what seemed to be a promising portable-toilet company. This failed, though, when Schwartz found himself with a bad business partner, so he played pretty much the only card he had left. “I more or less started my own business kicking and screaming,” he says. “I got tired of doors closing and decided it was time to take matters into my own hands and to do what I know.” “I got tired of doors closing and decided it was time to take matters into my own hands and to do what I know.” mitch schwartz, owner Although he was initially hesitant to go out on his own, Schwartz found confidence from his lengthy résumé. “I knew I had a real history on my own,” he says. “The last few years I closed over 850 homes a year.” In addition to his deep knowledge and proven ability, Schwartz had earned the respect of his community and peers. He drew on these strengths when developing strategies to support his business growth. Building basics told Schwartz he should first concentrate on location. “Austin is a very difficult place to build,” he says. “It is hard environmentally and with neighborhood associations, so I decided to go infill, to look for lots and to try my wares.” He bought two spots at the edge of Hyde Park, which is close to the city and in a desirable location, and he demolished five of the older, turn-of-the-century community’s residences in order to construct Parker City Homes, a two building, four-unit complex. The project launched in April 2012, and he expects it to be complete this year. From this experience, Schwartz learned that he needed to own land outright to spur growth in the struggling economy. By owning the land, he could finance the construction and move the project forward at a faster pace. This approach led him to secure six lots in Berkley Court, and in mid-2012 he began construction on the first of a series of freestanding single-family homes there. He closed the first and second homes in early 2013, and he expects to start the remaining four sites soon. “Berkley Court is a contemporary product; it’s energy-efficient and a good value for the area,” Schwartz says. He believes that little touches make a big difference in the sale of a property, so he included concrete floors, granite or solid surfacing throughout, and undermount sinks. The properties will range in size from 1,600 to 2,100 square feet. To accomplish such projects on his own, Schwartz keeps an eye on market demands such as sustainability and conservation, and he assures clients they will pay a fair price and have a positive building experience. He also remains engaged in every project from start to finish, and because of his efforts, he expects to close 10 homes in 2013. Many builders would rather keep out of the city than deal with the crippling regulations, but Schwartz knows how to maneuver through the red tape of neighborhood associations and city officials. “If people have questions or concerns about a new construction project, I’m happy to talk to them,” he says. “And if I have an issue with something, I am able to make a phone call and reach one of the building officials in town.” In early 2013, Schwartz also partnered with another general contractor to work on a commercial project: the Hyde Meadow Winery. Schwartz will construct three buildings—primarily of metal and iron—on the 80-acre property, and the work highlights his firm’s new goal to expand its capabilities. “In this climate, and being a small, independent builder, you have to be flexible and figure out how to be successful,” he says, and he goes on to hint that the diversification of the company isn’t likely to stop in 2014 and beyond. “I’m looking for a small patio community, and I hope to grow my business that way.”