The ledger was so dreadful at Medallion Homes in the early 1990s that founder and owner Carlos Beruff admits he should have filed for bankruptcy — business and personal.
But Beruff held steadfast, he says, primarily for one reason: Sheer stubbornness, a tenacity likely handed down from his mother, who fled Fidel Castro-led Cuba a few years before he was born.
The resolve ultimately paid off. The Manatee County-based company still stands today and is on its best three-year run of home sales ever. Plus, Beruff learned a valuable entrepreneurial lesson, that liquidity trumps all other worries.
“I was young and immature and didn't realize that when a business gets difficult the only people who survive are the people with cash,” Beruff says. “It also taught me how to be extra careful and to take risks with my own money, not other people's money.”
Those principles are what guide Medallion Homes, where sales increased 74% since 2010, from $32.8 million to $56.9 million in 2012. Annual revenues based strictly on home sales, not including land deals, are at an all-time high.
A Miami native, Beruff founded Medallion in 1984, after a short but successful stint selling houses for U.S. Homes. Living in Tampa in 1980, Beruff recalls he saw a newspaper ad that sought home salesmen in Sarasota. The pay was $3,000 a month, plus commissions.
That salary sounded dreamy to Beruff. His family, including his Cuban-born older sister and brother, struggled to get by for several years. Beruff says they would pick up government-sponsored food every Saturday, such as surplus cornmeal. Beruff, his siblings, his mom, his aunt and some cousins, eight people total, all lived in a two-car converted garage for a few years.
Yet Beruff grew up determined, not bitter. “When you're a kid,” he says, “you don't know you're poor. I never went hungry.”
Beruff founded Medallion basically on a hunch, when he bought 22 lots on Tallevast Road and Tuttle Avenue in Manatee County. He paid for the lots with a $120,000 bank loan that came with a two-year term. Beruff paid it back in eight months.
The next big turning point for Medallion Homes came in 2005. That's when Beruff decided to sell five projects to national builders, a purge of lots and land that lasted 18 months and brought in $110 million.
Beruff says he sold because the financials of the homebuilding industry had gotten out of whack. Specifically, he believed a key rule in the industry was being shredded, that the price of a lot shouldn't exceed 20% of the sale price of the home. If it does, Beruff had learned, then profits would likely evaporate.
Cash from those deals was Beruff's downturn savior, and it gave him the ability to buy lots in the recovery. “Now I look like a genius,” says Beruff. “But as it was happening, that's not what I thought.”
Beruff's thoughts now have turned to the future, and how he will manage a fast-growth business. Beruff is determined to not let growth negate the firm's customer service.
Beruff is also determined to remember another key lesson he learned 30 years ago, second only to having enough liquidity. The lesson: That success in homebuilding is predicated on getting people to see homes. He says if three out of 100 prospects buy a home, that's good, and if four out of 100 buy one, that's really good.
“I worry about this business when I can't get people to see my models,” Beruff says. “This business is driven by footsteps through the door. You can't sell homes to ghosts.”