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Entrepreneurs
Business Observer Friday, Jun. 24, 2011 7 years ago

Raise the Roof

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Ken Kelly says new investors from outside the area are buying foreclosed homes and spending money to fix roofs. He's eyeing an expansion to Sarasota.
by: Jean Gruss Contributing Writer

Like many 17-year-olds, Ken Kelly was getting ready to leave home for college in summer 1993.

But plans to attend the University of Southern Alabama were cut short when his father, Joe Kelly Sr., crushed his wrists in a roofing accident that summer.

With the elder Kelly's wrists in braces for a year, Ken Kelly took over his father's Naples-based roofing business, and provided for the family, which included two younger siblings. “It wasn't scary,” Kelly recalls. “It's just what I had to do.”

Kelly has never shied from a challenge. Besides steering his company through the real estate collapse, Kelly is a single dad and earned his pilot's license.

Kelly Roofing posted $8.5 million in revenues last year, up nearly 15% from the prior year. Recently, Kelly was named one of the 50 best contractors in the nation by trade publisher Hanley Wood, which feted him with a “Business Savvy” award at the Ritz-Carlton hotel in Pentagon City near Washington, D.C.

Kelly Roofing is one of the few survivors of the bust. In 2005, Kelly says there were 255 roofing companies operating in Lee and Collier counties. Today there are just 30 roofing companies pulling permits monthly and 10 pulling permits weekly, including Kelly Roofing.

Kelly attributes his firm's survival during the bust to several factors. For one thing, he never ventured into construction of new homes, preferring to fix and repair the roofs of owners of existing homes and commercial buildings. “I don't enjoy working with contractors,” he says. Besides, the margins on new construction are too thin, he notes.

Even though the reroofing business was booming in 2006, Kelly relied on data from insurance companies that showed that half the roofs in Lee and Collier counties had already been replaced after hurricanes Charley and Wilma. So he bought three repair trucks instead of reroofing equipment. Each project manager is equipped with a $12,000 infrared camera to detect leaks, for example.

Kelly's promise of a single guaranteed price instead of an estimate also won over customers. “The project managers are friendly, personable and clean cut,” says Kelly, who hires for these traits. Now, 78% of the company's leads are from current customers, and he spends less than $60,000 on marketing.

Kelly certainly had to face the brutal recession by cutting back during the downturn. Between November 2007 and July 2008, he cut his staff in half from 130 people to 65. “We simply didn't have the work,” Kelly says. The biggest warning sign was a photo of a Naples bungalow that appeared on the front page of USA Today in November 2007 with a headline declaring it the most overpriced real estate in the country, he recalls.

Today, Kelly says he's encouraged by the fact that investors are buying foreclosed homes on the Gulf Coast. “They're looking for bargains and spending,” he says. “A lot are paying cash.”

Kelly is eyeing Sarasota to expand his company, in part because new buyers from outside the area have arrived to buy lower-priced homes. Using social media and the Web, Kelly bets he can be successful even as he competes against well-established competitors.

The key to expansion to Sarasota will be finding the talent. “New markets require the right people,” he says.

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