The current mantra in designing homes is “tear down those walls!” Open floorplans are must-haves because they accentuate the casual living environment that consumers crave.
Builders and Banks Must Work Out the Work-Outs
For workouts to work between banks and builders, swiftness, transparency and property maintenance are the keys to shedding unwanted properties
Builders need to re-evaluate their holdings, perform demand studies and go to their lenders with those revised numbers, says Patrick Duffy, a building industry blogger and consultant with MetroIntelligence Real Estate Advisors, a division of Beacon Economics. It just might be time for a workout with your bank.
"Banks are willing to take 20 to 30 cents on the dollar. In some cases the banks are just looking for the easy way out. ... It's up to the builder to convince the banks that with a little bit of time and mercy, the banks can get twice that return," says Duffy.
Don Todrin, principal of Todrin and Associates, says swiftness is the key. "You have to do a pre-emptive workout. You have to downsize now. My position is this: get in front of the train," he says. Builders who might not have placed as much emphasis on bookkeeping and now must review numbers daily. "If you're going to be in business, then be in business or get out as fast as you can."
Lately, says Todrin, workouts have followed a similar restructuring and consolidating plan. He points to five tips for before and during discussions with banks.
- Identify, weed out and eliminate all non-performing and redundant departments, projects, programs and people. This will show debt reduction on a written, scheduled basis.
- Restore the bank's confidence through open and constant communication; full and timely disclosure of financial results; and updating on any significant developments.
- Meet with the bank at regular intervals to review the progress of defined objectives.
- Initiate meetings with key strategic suppliers to negotiate extended payment terms, and develop an accounts payable triage system for all other non-vital suppliers
- Dissect the inventory situation to determine how many days of supply are on hand, what's moving, what's not moving, what can be returned to suppliers and what can be sold immediately to free-up cash.
For more on working out your workouts, visit www.housingzone.com