Rethink, Resize, Remodel: Profitable Projects for Surviving the Recession

Michael Anschel is having a good year. Despite the housing bubble burst and the onslaught of economic recession, the principal of Minneapolis-based Otogawa-Anschel Design-Build LLC recently charted his most profitable year of business to date.

“[Last year] was our best year in the 13 we have been in business—and this year, we have more leads than ever before,” says Anschel, a member of both the National Association of Homebuilders (NAHB) and the National Association of the Remodeling Industry (NARI).

In a time when many builders and remodelers are folding their operations, Anschel is instead growing his business meeting his clients’ needs—and playing into one of the most profitable building concepts of the day: Green building.

“Green building puts the remodeler in the role of being an advocate for the homeowner,” Anschel says. “You are a solutions provider looking at how you can make a home healthier. That is the number-one selling point for my clients.”

What other selling points are clients seeking in an economic downturn? Consider these profit-maximizing trends:

The green fix
According to a new study commissioned by Green Seal and EnviroMedia Social Marketing, 82 percent of all consumers are still buying green products and services today, even though they cost more. Anschel says to forget the myth that green building creates more upfront costs; he sees green remodeling jobs as being less expensive than conventional build-outs on both the contractor and client sides.

Contractors can advocate for their clients’ causes by offering services that improve the health of their homes for as little as $50.

“Walk around a client’s house and offer to switch out their incandescent light bulbs for high-efficiency ones,” Anschel says. Or go into a client’s basement and look for any penetrations from pipes or wires jutting into the first floor and causing insulation leaks. Plug the holes with a can spray foam, he suggests.

Offering these types of services provide remodelers with an opportunity to recommend other services or products. Additionally, Anschel has seen clients significantly increase their project budgets by adding green remodeling measures to their projects. A short list of affordable upgrades include:

• Replacing old faucets with low-flow 1.5-gallon-per-minute models.
• Replacing five-gallon per-flush toilets with dual flush models. “It runs the client between $180 and $250,” Anschel says.
• Adding extensions on down spouts to move water away from a house.
• Eliminating exterior bark chips and laying down rock to better insulate the foundation.

Additionally, Anschel recommends builders and remodelers investigate neighborhood loan and energy efficiency programs in areas where they do heavy business.

“If you present yourself as a resource in this area you can end up on a list of recommended [green] remodelers provided by that municipality,” he says.

Universal design
In Franklin Square, N.Y., Vita Burdi has found her version of green-building gold by marketing her company’s expertise in the practice of Universal Remodeling™, a concept that ensures all products and environments are usable by all people without the need for adaptation or specialized design. According to Burdi, the concept evolved through studies by the University of North Carolina and Virginia Tech with the concept of full accessibility.

The vice president of DJ’s Home Improvements and member of NARI has kept business steady by marketing to an increasing population of baby boomers who want to stay in their homes as they age.

“We used Universal Remodeling™ to spark interest in our company, marketing to different people and getting more business,” says Burdi, who predicts the concept “will be bigger than green.”
In her pitch to clients, she promotes remodeling homes to be navigational for all ages. A few affordable upgrades she recommends include:

• Installing handrails to ease entering or exiting a residence and levers to substitute for doorknobs. “Everyone from an older person with arthritis to a young mom with a baby would benefit from [the convenience of] having levers instead of doorknobs,” Burdi says.
• Remodeling a bathroom with a fold-down shower seat and a handheld device to direct water.
• Waterproofing a shower floor during a build out.
• Widening doorways and removing standard curb around the shower for wheelchair or walker access.

Most importantly, Burdi advises framing these remodeling jobs as investments in the future.
“Baby boomers have gone through [recessions] before so they want to tighten their belts—they want to think that any remodeling project they do is a good investment,” she says.

Resizing the deal
When it comes to remodeling investments, Anschel and Burdi are seeing clients size down their spaces in favor of efficiency.

“People who were doing $180,000 renovations are now doing $150,000,” Anschel says. And while build outs for areas such as bedrooms are getting smaller, he is making up for costs on upgrades to bathrooms, which are getting larger.

“People are looking for places to relax and unwind,” he says, noting that adding benches in bathrooms has become a hot, if not profitable, trend.

Stylish substitution
Burdi has watched the trend of many clients slashing kitchen-remodeling budgets in half over the last year. In order to compensate, she has creatively substituted materials.

“Instead of using all hardwood for cabinets, we have some made out of a high-density fiber board with veneer,” Burdi says. For countertops, she substitutes quartz for granite—which is actually better because quartz doesn’t stain, she says.

“Right now I am suggesting more Formica to customers; it’s a one-third of the cost of granite and looks phenomenal.”

Such practices keep job orders coming, even if the bottom lines are smaller.

Adds Anschel: “Overall, we are adjusting to smaller projects, which we used to do a lot of seven to eight years ago—and tool our message and practices to what the customers need.”