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Business Observer Wednesday, Jul. 1, 2020 1 month ago

Homebuilder uses key manufacturing strategy — continuous improvement — to build affordable homes faster and better

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The GulfStar Homes team was busy in May and June catching up with pent-up demand.
by: Grier Ferguson Sarasota-Manatee Editor

Lots of people talk about the need for affordable housing. North Port-based GulfStar Homes is doing something about it.

GulfStar builds affordable houses on scattered lots in North Port, the southern edge of Sarasota County. Homes are priced at $219,900 for a 1,437-square-foot house and $239,900 for a 1,670-square-foot house. The company has a clear strategy, eschewing the opportunity to drive up prices through add-on features. Instead, GulfStar sells its homes for a fixed price. The homebuilder also takes a page out of the manufacturing playbook, using the concept of continuous improvement to build homes faster and better.

Even with the coronavirus pandemic, the company hasn’t stopped building. Although GulfStar didn’t have any sales in April, staff has been busy in May and June catching up with pent-up demand.

‘We want to continue to grow in a manageable fashion, so we can provide these high-value homes. It’s a winning formula.’ — Deb Kabinoff, GulfStar Homes

At the helm of GulfStar is CEO Deb Kabinoff, who founded the company with her late husband, Larry. “He was really creative and had a great ability to predict what was going to happen next in the business world,” Kabinoff says. “That was Larry’s vision — to make something that was affordable and high quality. The question was, ‘How can we get there?’ We started out with that goal. How do we engineer the product and process so we can continue to do this?”

The Kabinoffs were no strangers to real estate. In 2010, before North Port was the spring training home of the Atlanta Braves or bustling with construction projects, Larry had the foresight to buy land there. He told Deb they were going to build it into a community. She looked around and saw nothing but trees and deserted streets. During the recession, they had bought houses out of foreclosure and remodeled them. They sold some, keeping others as rentals. In 2014, when the pool of foreclosed homes shrunk, they decided to shift strategies and start a construction company.

Larry developed two main house models, at first thinking they would build rental houses. But another path presented itself. Real estate agents familiar with their remodels brought customers to the houses. “We never got to keep them as rentals,” Kabinoff says. “They were sold before they were built.”

Then, just as the business was getting started, Larry was diagnosed with leukemia. Despite the diagnosis, the Kabinoffs decided to move forward with the company and keep hoping for a cure.

The Kabinoffs financed and built houses themselves, and in 2015, they sold their first newly constructed home. Revenue that year was more than $4 million. With Larry in and out of doctors’ offices and hospitals for treatments, Kabinoff and Kathryn Hopkinson, now COO, pushed the company forward. By 2016, GulfStar’s revenue was more than $8 million.

To make the homes better, they looked for efficiencies. “This is a process that can benefit from continuous improvement just like any other manufacturing process,” says Kabinoff, who started her first company at 28 and sold it at 30. “We were always looking at data and finding those pinch points. What can we do to make homes more quickly, easier and more functional?” The concept was something she had experience with from two companies she built in operations management in the health care industry. “It was that same idea,” she says, “of using data to make better decisions to manage your business.”

Larry died in December 2018, and Kabinoff considered selling the company. By then, annual revenue had grown to more than $12 million. She and Hopkinson started working on projections, but after a couple of weeks, Hopkinson said, “Why would we sell this?” Kabinoff decided she was right.

Since then, the company, whose buyers range from young families to retirees, has continued to focus on improving its home construction methods. GulfStar also opened a new headquarters in March to optimize the staff’s work. Kabinoff says, “We are constantly reviewing our entire process — every screw, every piece of tile — and saying, ‘Are we ordering this in the most efficient way? Are we getting the most value for the supplies we’re buying?’”

Every Thursday, GulfStar meets to review homes under construction. If a milestone hasn’t been reached, the team analyzes how to get through the problem and make sure it doesn’t happen again. Staff also asks key questions: How can this be done more smoothly? How can unnecessary steps be eliminated?

In 2019, the company’s revenue reached more than $14 million. During the pandemic, employees at the office and construction sites have taken health precautions, and GulfStar continues to build homes. “I was worried about our supply chain at first, but our suppliers did not miss one shingle,” Kabinoff says. May and June have been busy, with staff catching up. “The big demand that came the minute people didn’t have to quarantine anymore showed there was demand for affordable housing,” she says. “We see a very strong rest of the year for the company.”

GulfStar, with nine employees plus subcontractors, has built and sold about 300 homes, and it’s acquiring lots in North Port for more houses. Word of mouth is big for the company, Kabinoff says. “We want to continue to grow in a manageable fashion, so we can provide these high-value homes,” she says. “We find that customers really appreciate that. It’s a winning formula.”

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