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Young and Hungry
Two Sarasota men, in their 30s, took their home building company, Vision Homes of Southwest Florida, from $45,000 in sales to $14 million in just four years.
By Sean Roth
Real Estate Editor
Start-up companies of any type have a hard row to hoe, but Gulf Coast home-building startups face an almost mountainous capital hurdle, which makes successful start ups a rarity. Vision Homes of Southwest Florida Inc., based in Sarasota, is one of the exceptions.
The company founded by two Sarasotans, Charles "Chip" Nemec and Mike Padgett in 1999, is now one of the largest homebuilders in the Sarasota-Manatee county area. The company has grown from 90th in home construction starts, with just 15 starts in 2000, to 31st, with 46 starts, through the first nine months of this year. And the company broke into the top 20 largest builders in the local market in 2002 after only being in business for two and a half years, producing about $10.2 million in gross sales. This year, Vision Homes is on track to increase gross revenue by 37.2% to about $14 million.
The main lessons from the early success of Vision Homes? Learn from your family and start young when you can take chances. Nemec and Padgett, both 35, learned about the building business from their fathers.
In 1990, after getting a bachelor's of science degree in international relations, Padgett found it difficult to find a political job overseas. So he returned home and went to work as a manager for AMC Theatres' Sarasota Square Mall movie theater.
"My father saw that I was coming in at two in the morning or later so he offered me a job making the same money at his company," Padgett says. In 1991, he went to work as a salesman at Sarasota's Padgett Homes, owned by his father and an uncle.
"It took me six months to sell my first home," Padgett says. But during his best year, he sold 18 homes.
Nemec, on the other hand, grew up in the business with his father, an electrical and general contractor. After he obtained a degree in occupational safety and industrial hygiene from Iowa State, he worked for a residential framing company in Denver.
Two years later, Nemec moved to Sarasota and started doing residential renovations. "All my jobs came from word of mouth," Nemec says. "I never did any marketing."
The partners met by happenstance.
"The first time we met was at a Christmas party I was holding," Padgett says. "A week or so later we got to know each other better at the World's Largest Office Party held at the Hyatt. We just were lucky. We ran in the same circle of friends."
Then a customer called Padgett about building custom homes on land outside the subdivision where Padgett Homes was building. "At the time, my father and uncle were winding down and didn't want to build out there," Padgett says.
He called Nemec.
Their first home didn't work out as planned.
"It was an abject disaster from a financial standpoint," says Padgett. "Looking back, the only thing we didn't do was require written change orders. The owner made a lot of changes to the home, and when it was done they never paid for them. They threatened to sue us if we tried to charge for the changes, and they had the money to back it up. Chip lost a lot of money on the deal, so much so, that I told him he could even pay me half the commission. But he went ahead and paid me the full commission. To me that said a mountainful about his character."
They made a profit on their second home.
Fueled by that success, the two partners each contributed $2,000 and formed Vision Homes. "Mike knew he could sell them," says Nemec, "and I knew I could build them."
The fledgling company also had support from an investor group that had wanted to purchase lakefront property.
"Initially, I had told them we couldn't meet their needs (when they had called Padgett Homes)," Padgett says. "They had wanted to invest in lakeside properties and Padgett Homes didn't have any lakeside property." Padgett called up a past associate from Padgett Homes, Billy Springer, president of Ridgewood Building and Development, and purchased parcels in phase two of Three Oaks, a single-family subdivision just off Proctor Road in Sarasota.
"To this day, 24% of our spec homes are financed through that investor group," says Padgett. "That got us started. We could the build the houses on spec. Our customers weren't required to put down 10% and take out a construction loan. That was huge for our customers." Instead of having to count on a startup company with very little name recognition to build a house, customers could buy homes that were already completed. In 2000, the company built eight homes.
This year the company expects to build more than 50 homes. "We have really grown rapidly," Padgett says.
Another important piece of the success of Vision Homes, the two partners say is the addition of Padgett's brother, J. Walter Padgett, as sales manager. Although officially a subcontractor, Padgett and his Blaketon Investments Inc. took over home sales toward the end of 2000.
"Before he came here he was laying tile flooring," says Mike Padgett. "He has the incredible gift for gab. He sold two homes in the first four months he was here." The partners say he was a big part of the increase in completed homes from eight in 2000 to 24 in 2001.
What's even more unusual is that the company has survived without appealing to a particular niche. "We take kind of the shotgun approach," says Padgett. "We build in every category from the low $200,000s to $3 million. We feel it put us in a good position if any one sector of the economy slows down."
The company assigns one of its four construction supervisors exclusively to construction valued at more than $600,000. While at the same time establishing a solid market for building homes, valued at more than $600,000, west of Tamiami Trail, Vision is also exploring the development of more affordable homes ($145,000 to $200,000) in Sarasota.
The company is still trim. It employs only eight people: the two owners, two office staff and four construction supervisors. Blaketon Investment has three employees, including J. Walter Padgett, but the subcontractor expects to add about three more employees by next June.
The company is now building in Three Oaks Preserve, Laurel Meadows, Park Trace and Country Creek. Development has started on new homes communities in Rye Wilderness, Trillium, Enclave at Ashton and Eagle Trace.
The company's growth has not gone unnoticed in the industry.
"I think Mike (and Chip) have done an excellent job in a very short time," says John Cannon, president of John Cannon Homes Inc. one of the largest home builders in the Tampa Bay area. "This is a tough industry. Ten to 20 years ago the idea of a smaller new builder was much more common. Now, there is less of an opportunity. People have always gone with more established companies because of brand recognition, but the capital needs now are just so much greater. Builders have money tied up in design people, model homes... and land."
Asked about the company's future, Nemec smiles and says, "We had set a goal that in 10 years, we won't have to work anymore. But we probably will until we stop having fun. We are looking to get up our home (production) to about 120 homes per year while keeping the same profit per home. But we aren't going to work ourselves to death. We have both said we will not work more than 60 hours a week, and usually we work less than 50."
sarasota-manatee area vision
Ranking by home starts
YearRankingstarts
200090th* 15
2001 (includes pool starts)31st** 41
200234th43
2003 (thru 9/30) 31st46
Source: The Construction Guide
Gross Revenue Growth
YearGross Revenue
1999$45,000
2000$2.5 million
2001$4.2 million
2002$10.2 million
2003$14 million
Projection 2004 more than $20 million
Source: Vision Homes
Homes completed
YearNumber
20008
200124
2002 42
200352 homes
Source: Vision Homes
* (includes 8 other companies)
**(shared with Sam Rodgers Enterprises Inc.)
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