Dream Homes and Development Corp.
Dream Building LLC.
Atlantic Northeast Construction LLC
Nearly Famous Rebuilding Blog –
Hello Sandsters –
Hope you are well and moving along with your project. Today I am writing a short blog about profit, and what builders really earn on your project.
Often people are under misconceptions about the amount of money which is earned on a construction project. Today, I’ll get into a little more detail to help you understand the financial aspects of a new home or renovation project.
The short new home version is this: new home builders earn between 8% – 12% EBIT (earnings before interest taxes). That’s it and yes, really. That’s about $20,000 on a $200,000 sale. It’s NOT $35,000, $50,000, $75,000 or $100,000 like many people think. Believe me – I’ve built and sold over 1600 new homes in the last 24 years. Those are real numbers.
The short renovation/elevation project version is this: general contractors, remodelers, and renovation providers earn between 10% – 18% EBIT (earnings before interest & taxes). That’s about $14,000 on a $100,000 renovation project. It’s NOT $25,000, $35,000 or $50,000. Again, we’ve completed over 160 renovation projects since Storm Sandy so I have real data to draw from.
For background, and so you can gauge the accuracy of what I am revealing here, I’ve owned and operated a construction and development company since 1993 and have been working with audited financial statements for the last 15 years.
Audited statements are the highest level of financial reporting available, and enable one to see accurate profit & loss, assets and liabilities and equity. I bring up this point, because there are 2 other (lesser) levels of financial reporting, which cannot be relied upon to give an accurate picture of a companies’ financial condition.
These forms are Compiled (fairly worthless – you say whatever you want to say to your accountant and he puts in in proper form) and Reviewed (you provide your accountant with some documentation and he reviews it for reasonableness and proves some of your larger items like payroll, overhead, etc). Reviewed financial are slightly more useful than compiled, but any serious company uses audited financials.
Dream Homes & Development Corp. (OTCOB: Ticker DREM) is a publicly traded, fully reporting (audited financials) company. (Note that over 95% of the companies trading on the OTC market are not audited, but merely compiled financials. Those are the “pink sheets” companies, and are usually trading at some percentage or multiple of a penny).
So, what I’m telling you today is reality, not make-believe. Like many other myths on social media, the myth of half (50%) of the price of a construction job is profit is just that – a fairy tale.
Let’s dig deeper now and provide some answers to some popular questions.
Question 1: Why was Shore House Lifters able to charge $30,000 – $50,000 less than everyone else for the same job? How did Price Home Group (PHG) sell 1600 square foot houses for $159,900?
Answer 1: Duh. Do you believe people still ask me that question? Shore wasn’t able to actually charge those prices. They were ripping people off from the beginning. PHG didn’t have a clue what they were doing. They priced their jobs at or below actual material and labor costs, so they lost money on each job. They believed they would make it up in volume.
However, idiocy multiplied does not create intelligence. 124 Wrongs don’t make a Right. And, a Ponzi scheme by any other name is still a Ponzi scheme.
Lesson: If you receive an estimate that’s too good to be true, you’re probably about to get robbed. Don’t be the person standing up when the music stops. Your estimate should be reasonable, in the mid-range of an active, honest market and provide for a fair profit.
Question 2: Why should I pay someone to build for me if I can save $10,000, $15,000 or even $20,000 by doing it myself? Answer 2: Ladies and gents, that’s a complete sucker bet. 98% of the time paying a professional to perform a complex multiple month function will be the best money you ever spend. Depending on the level of error, if you make one mistake you could easily cost yourself as much or more than you would spend hiring a professional. If you make 2 mistakes, you’re usually past the $10,000 point in actual costs and that ignores the cost of your time and the increased project duration. In addition, unless you are some type of construction professional, you’re probably not capable of effectively managing a complex construction project correctly.
Question 3: Why should I let anyone make a profit on me? I can’t afford to spend $1 more than I should. Why shouldn’t I keep shopping until I get the price I want for the scope of work I want?
Answer 3: This is a bit more complex and touches on common sense as well as philosophy. Starting with the answer to the second part of the question, see Question 1 above.
If you look hard enough, you can always find someone who will tell you what you want to hear, (usually) in exchange for a large upfront deposit, for which you’ll be given a “special price”. Sandsters, construction is a commodity business (food, clothing, shelter). There are no special prices.
(Remember- a fool and his money are soon parted. PT Barnum said, “There’s a sucker born every minute”. Don’t be either of those.)
There are legitimate variables (which we’ll cover in a minute) but they are minor, provable and quantifiable. There are no variables that allow one company to charge 30% – 40% less than another company and still be able to complete the job.
Why should you allow a company to make a profit on your project? Folks, thank God we live in a laissez-faire capitalist society. You want the company you’re dealing with to make a profit, so they can finish your project correctly and be in business to provide service to you in the future. You have a very small chance of being the last client serviced correctly if you are dealing with a company who is taking deposits from the next person to pay to finish your job. It’s like trying to time the stock market and attempting to sell at the very top, or buy at the bottom.
A very smart person told me about 30 years ago, “Be very careful of anyone who tells you they are not making a profit, or are “losing money on your job”. I’ll never deal with someone who tells me that up front – and won’t keep dealing with a person or company who tells me that in the middle of their job”. That’s some of the best advice I’ve ever received and it’s one of the rules we operate under at Dream. Other than profit, the only other motivation for a company to provide goods and services to another company or individual is altruism or love of humanity. With a little thought we can demonstrate that true altruism may be the most selfish of activities (why else would you do something wonderful for nothing other than for the incredible feeling it gives you?), but that’s a topic for another day.
Suffice to say, we won’t deal with anyone who can’t demonstrate that they’re making a fair profit on our business. It’s foolish. If you’re not making money, who’s answering the phone when I call? What if there is a problem that needs to be addressed?
The lesson is that the amount of money your builder is attempting (hoping) to earn from your project is modest compared to the amount of risk and work that will be done. It’s truly money well spent and probably one of the more judicious expenditures you’ll make in your life.
Hopefully this clarifies some concerns about overpaying for your project, and thinking that your builder is retiring on the money he’s making from your project.
Nearly Famous Rebuilding Seminar – Wednesday June 14th, 2017 – On Facebook Live!!
Our next Rebuilding Seminar will be held Wednesday June 14th, 2017 from 6 pm at the Tuscan Bar and Grill on Hooper Avenue in Toms River, across from the Ocean County Mall. We’ll also be streaming it on Facebook Live and be online if you want to email questions or comments while the seminar is under way.
If you are planning a project, whether a new home, elevation or renovation, make sure you attend for tons of great information from our excellent speakers. It will really help you get started on the right track. We try to focus on Sandsters that are early in the process, and have not completed design work, or chosen a builder or architect.
Topics covered will include architectural and engineering planning, construction technique, RREM guidance, help with choosing the right builder and consumer safety cautions when dealing with him, advice on financing your project, comments and tips about home elevation and finally advice on how to buy a new home or sell your existing one. We also talk about RREM issues, (the lunacy of) managing your own project, the money builders really make on your project and ways to avoid delays and going over budget.
Mark the date and call to reserve – Wednesday, June 14th at 6:00 pm at the Tuscan Bistro 1250 Hooper Ave. in Toms River, across Hooper from the OC Mall. Please call 732 300 5619 to reserve your space if you want to attend. Refreshments will be served and space is limited.
Dream Homes and Development Corporation (DREM) A publicly traded OTCQB company
On March 14th, our name change was finally approved and we are now trading as Dream Homes & Development Corp., with the ticker symbol of DREM. We’re one of very few companies trading on the OTC which is a fully reporting audited company and to my knowledge, we’re the only public company doing home elevation work in New Jersey. Please check us out online – we would love to have you as shareholders! For more information and an information package, contact Matt Chipman, our investor relations person. Matt can be reached at (818)923-5302, (310) 709-5646
Communications – What Works, What Doesn’t and How to Improve – Repeat
We’ve spoken often about this topic but I can’t really focus on this enough. It is a crucial subject for any complex undertaking, whether it is construction or otherwise. Today we’ll focus on 2 aspects – written communication and field discussions.
I’m a reasonably intelligent person, but no one has ever nominated me for a Nobel prize in anything and I doubt anyone ever will. I’ve won hundreds of wars and thousands of battles from diligence, persistence, good communication and organization and precisely none due to brilliance or a perfect memory. I mention this because organization and written lists are vitally important. No one can remember everything.
Ben Franklin said, “The faintest pencil is better than the sharpest memory.”
If you don’t write things down, they effectively don’t exist. If one doesn’t commit thoughts and agreements to paper or email, they may as well not have occurred.
No matter how smart you are, unless you have total recall (some people do – I am not one of them), you must write things down for them to be completed.
So, please remember the following two thoughts, which will serve you well.
Point 1: If you have discussions with anyone in the field (project manager, owner, salesperson, mechanic, inspector) and review several items, someone should be taking notes. If no one writes anything down or enters it into a tablet, assume that over 50% of what is discussed will be forgotten, remembered incorrectly, or misunderstood upon later reflection.
Point 2: Stop texting novels and long lists of worries, thoughts and ideas. If it takes more than 140 characters in a normal text message, don’t text.
Use email like an adult, or type your thoughts into a document and fax it if you don’t like email. If neither of those methods works for you, write your concerns and thoughts in longhand with pencil and paper and send it snail mail.
Teenagers, college students and immature people rely on texting as their primary method of communication. This does not work in real life. The founding fathers didn’t text their thoughts at the Constitutional Convention in 1776, and neither should you about your project in 2017.
Lesson: If you care about your project, reduce your thoughts to writing and email or fax them to your builder so they can be addressed correctly
Remember – if you don’t write it down, it doesn’t exist.
If you do write it down, and present it to your professional for comment, it will be taken in, categorized, disseminated through the organization to the proper people and (most importantly), followed up upon.
Summary: If you have concerns, questions or comments, write them in a 1-2 page email and send them to your builder to address.
Telling a project manager in the field a list of concerns serves little purpose. You are focused only on your 5 items. They are focused on the 1000 items needed to complete your project and others. If you don’t see him or her commit your conversation to paper, assume it didn’t occur and don’t expect that your items will be addressed.
New Dream Homes Team Member – Welcome to Lou Obsuth, Owner of Jersey Proud Modular
We have a new team member at Dream Homes who we’ve brought on to help us develop our modular home business as well as address many of our clients’ needs in northern Ocean county. We’ve been speaking with Lou for the last 2 years and he finally decided to fold his remaining construction operations into Dream Homes and come with us full time. Again, I’d like to welcome Lou to the Dream Homes family and really look forward to working together with him. Lou is a Point Pleasant resident for over 20 years and has successfully run Jersey Proud Modular with an office on Bridge Avenue for the last 8. He has a wealth of experience in modular and elevation construction, as well as sales and marketing and we’re glad to have him aboard. If you come to our next Rebuilding Seminar on June 14th, you can meet him.
General Resource – Consumer Protection: Kathleen Dotoli, Esquire is a workers’ compensation and disability attorney in Toms River and speaks regularly at our Rebuilding Seminar. Kathy gives an excellent presentation about consumer protection which is filled with great information to save you money and grief. (Next one is this Wednesday, June 14th, 2017). Email Kathy at email@example.com or call her office at 732 228 7534 for a copy of her seminar presentation.
New Blog Development – Easier for you to read and use for reference –
We added some specific Pages on the main page, including References, Definitions, About Dream and Photos/Videos. Result: blogs can be shorter and more focused and refer you to specific pages. Hopefully it will help you use the blog more easily.
Grand Opening – New Office Glen Kelly Real Estate branch office – 2818 Bridge Avenue – Point Pleasant – Glen Kelly Real Estate is sharing an office with Dream Homes and handling all Dream Homes inquiries for elevations, renovations, new homes as well as the rest of your real estate buying and selling needs. Stop by with your real estate and construction needs.
Mission Statement and Comment: AT Dream Homes, we’ll help you when no one else will. We regularly handle the messiest, most unpleasant, real estate, construction and renovation situations. We do the projects that few other people can do, and help people finish their projects and get back in their homes. If you’re stuck and can’t figure out how to proceed, call us and we’ll do our best to help you.
At Dream Homes, we believe that taking on difficult unpopular projects is part of the social contract we have with the community and the Jersey Shore. We’ve never abandoned a client or failed to finish a project – we feel very strongly that it is our obligation to help Sandsters and others in need.
Video & Past Seminars
Photos & Videos – Click on the link below
Future Homes & Townhomes for Sale: We’re actively working on the development approvals for several properties in Bayville and Forked River.
Dream Homes at Tallwoods: We’ll be offering 13 beautiful new 3 and 4 bedroom single-family homes for sale in the mid $200,000 range in late 2017 / early 2018.
Dream Homes at the Pines: 58 new 2-3 bedroom townhomes, with garages. Anticipated opening in spring / summer 2018.
If you’re looking for new homes this year or early next year, give us a call and we’ll get you information.
2017 Scheduling & Priority projects – Critical dates to remember: If you are stuck in a stalled project for whatever reason (contractor in jail or indicted, bankrupt, lazy, inept, no money, etc.) at least we can help you with a prompt evaluation of your situation. As an additional service to our neighbors in the Jersey Shore community, we do initial consultation and estimates immediately for projects that are stuck in the poop. It doesn’t change what happened to you, but at least you’ll know what’s happening and how to get back on track, without chasing someone for a month to get an initial meeting and then a written estimate.
Timing for permits: Up and down the shore, we’re running 4-6 weeks to get through building and zoning Save time – submit zoning as soon as you have the footprint and the stair/entries done even if you’re still working on finalizing your architectural plans. Zoning and Building Departments are separate functions in each municipality. They work together, but can be pursued separately.
Perfect Time for Fall 2017: It is however, the perfect time to start working on a September or October 2017 start. Get agreements signed, engineering and design scope started, and get plot plans and architecturals submitted to zoning for review. There’s no reason you can’t have an approved plan set of plans waiting at the township in July or August, awaiting receipt of your utility disconnect letters. Planning doesn’t cost you any additional money, and the value to you is priceless. This is the type of service that you receive from us, and what you should expect from a good builder.
There’s Real…and then there’s Memorex…What an Estimate and Scope of Work is Supposed to Look Like…
Click on the link above or call us and we’ll send you a blank scope of work for your reference.
Yeah, We Do That for You… This was an excellent (if I do say so myself) article from the 1/8/17 blog, which received much positive response from many people. If you missed it, go back and read it now at
Definitions & Important Considerations That Can Delay Your Project: Click on the link below
References & Testimonials – Click on the link below
Remember – if you have a specific question, send me an email or a text. Don’t wait for a seminar or a site visit to clarify a point. Whether you are Dream Homes/Atlantic Northeast Construction client or not, I’ll always try and help you or guide you in the right direction. If you’ve sent an email or left a voice mail and haven’t received a response, try and contact me again. Messages are lost occasionally.
Note to Sandsters: Though I write this blog and hold the seminars to help guide Sandsters and others through the maze that is any reconstruction project, Dream Homes actually does what I write about. Dream Homes & Development Corp. and Atlantic Northeast Construction LLC are new home builders and general contractors who are actively renovating and reconstructing projects up and down the shore. We supervise and manage elevation projects & house moves, demolish and build new homes, and develop and build entire new neighborhoods. In the past 23 years, we’ve completed over 1500 new homes, 190 elevation projects and 500,000 square feet of commercial buildings. 28 of our elevation projects have been rescue projects, where we came in to save a homeowner when someone else left. Dream builds new homes, demolishes existing damaged homes, elevates and move homes, complete additions and renovations and rescues homeowners when their other builder abandons them. We work with private clients as well as Path B clients in the RREM program. Call, text or email to set up an appointment for a free estimate on your rebuilding project.
That’s all for today Sandsters. I hope my words helps you move forward. As always, call or write with any questions.
Dream Homes & Development Corp. (OTCQB: DREM)
Dream Building LLC
Atlantic Northeast Construction LLC
New Home Builder #045894
Home Improvement Contractor #13VH07489000
Office: 314 S. Main Street
Mailing: PO Box 627
Forked River, NJ 08731
Office: 609 693 8881 F: 609 693 3802 Cell: 732 300 5619