CONSTRUCTION LEADERS TODAY
T H E M A G A Z I N E F O R C A P TA I N S O F I N D U S T RY www.constructionleaderstoday.com
Hallmark Homes
SUCCESS IN THE MIDWEST For co-founders Derek Wilder and Paul Schwinghammer, starting a home construction business was the logical step for the former business consultant and real estate broker, respectively. Today, Hallmark is one of the Midwest’s largest and most successful firms.
midwest
2 Winter 2010
| residential
residential
| midwest
Hallmark Homes: The Perfect Balance of Cost & Customization by Amelia Doenlen
Construction Leaders Today 3
midwest
| residential
W THIS PAGE: When Hallmark Homes was asked to build a home for ABC's Extreme Home Makeover, the company pulled out all the stops to build a beautiful home for a family whose youngest daughter faces a congenital blood disease. Photo by Cochran Photography. THIS PAGE: Derek Wilder and Paul Schwinghammer, the company's CEO and President, respectively, have been friends since their days of working for Deloitte. Photo by Cochran Photography. OPPOSITE PAGE: Community volunteers, led by Hallmark Homes, come together to build a house for a needy family. Photo by Peter Gaunt.
4 Winter 2010
hen working as a CPA at international consulting giant Deloitte, Derek Wilder specialized in business consulting for construction companies. While working on a job, he met real estate broker Paul Schwinghammer. Between Wilder's financial skills - he received a degree in accounting from Anderson University in 1990 - and Schwinghammer's real estate expertise, they identified a niche in the market that wasn't being addressed: affordable custom homes on your lot. “It seemed like there were many track builders in subdivisions that didn’t allow you to customize your home,” Wilder said, “and then there were a lot of high end custom builders where customization was unlimited, but at a very high price. Paul felt like there was a market in between, and that was the direction that we headed.” Since founding the company in 1992, Wilder, CEO, and Schwinghammer, President, have built Hallmark into one of the largest custom builders in the Midwest. While it is a fullservice builder, its focus is building affordable custom homes on a clients’ lot. The two have found a great balance within the company. Wilder works with CAD systems, marketing, accounting and quality-control programs and is continuously improving and developing them to propel the business
forward. Schwinghammer is the authority on the jobsite, accessible to customers 24/7 and answering any questions construction managers and customers may have. He also works heavily with their sales consultants across the state at their five model locations as well as reviewing every jobsite before a customer moves in. “I go through each home with a fine tooth comb, crawl into crawl spaces and the attic and go over the house as if I were going to live in it myself. I make my own list for construction managers to clear prior to handing over the keys to each and every owner,” Schwinghammer said. Besides their attention to detail, it is the tight focus of the company and the customizable options that really set them apart from other builders. “There are some builders that will build on a customer’s lot but won’t allow the customer to customize the house,” Wilder said. “Then, you have custom builders that focus on one county and will let you customize a house, but they only build a few a year. You have other builders that build all over the Midwest but they won’t let you change anything. Finally, you have national builders that might let you change a few things, but you have to build in their subdivision.” “Our business model is really different than others,” Schwinghammer added, “and has really focused on allowing customers to make
residential
| midwest
Construction Leaders Today 5
midwest
6 Winter 2010
| residential
residential
changes and customize whatever kind of pleted the customer would obtain a loan that home they want and because of our scale would cover the sales price. Eventually, banks we are much more affordable than builders across the nation either stopped extending that only build two or three a year.” builders’ lines of credit or they revoked the As a full service firm, it’s not just building a line altogether. client’s home that Hallmark focuses on but “It really hurt the industry,” Wilder said. the entire process from dreaming it to mov- “Many builders had sales that could have kept ing in. The sales staff works with a client to them going, but they couldn’t stay in business determine the type of house they are looking because their financing was revoked by the for and gets a basic idea of the design. Then banks so they didn’t have a way to build the they send those ideas to the CAD department, homes with their current business model.” who draw a series of drafts for the client to In the light of these changes, Hallmark review. Once the design is finalized, the plans found ways to adapt and has worked diligently go back to the CAD department for final to prosper in one of the most challenging construction details. economic environments since the Great “A significant difference between our company Depression. and the competition is that we do every- “We had to reorganize our financing by thing turnkey as opposed to requiring our helping our customers obtain the necessary customers to subcontract out a portion of construction financing on their own and carry the house,” Schwinghammer said. “Some it through the process,” Wilder said. “While on-the-lot builders will build the house but we didn’t really see a drop off in demand for not do certain things like the septic system people wanting to build homes, there was or the well or the exterior concrete, whereas a huge drop off in sales, primarily because we do it all as a packaged deal.” many people weren’t qualifying for loans.” While the economy has impacted the indusToday, Wilder and Schwinghammer spend try as a whole, Hallmark has ridden the brunt more time working with their in-house loan of the storm remarkably well, changing and specialist, Connie Herring, in order to help adapting their financing practices to meet customers make their dream homes happen. the changes in the industry. Before the eco- “Connie has spent a lot of time modifying nomic downturn, many builders were using the way we were doing financing and the way large lines of credit to cover the construction we were supporting customers by trying to costs of a project. Once the project was com- help them procure financing,” Wilder said.
| midwest
OPPOSITE PAGE: (TOP LEFT) The kitchen of this model home, the Hudson, features hardwood floors, stainless steel appliances and a breakfast bar which looks out into the living room. (TOP RIGHT) The great room of the Princeton, another Hallmark Homes' design, features a fireplace and opens up into a beautiful dining room, allowing residents to move freely through through the house. All photos by Hallmark Homes.
Construction Leaders Today 7
midwest
| residential
The company also has kept their fixed costs low over the years and has recently spent considerable effort enhancing their online marketing and customer outreach. As a result, Hallmark has seen a 37 percent increase in sales from 2009 to 2010 and sees more growth in their future. In the fall of 2009 Hallmark was tapped to build a house for ABC’s Extreme Makeover: Home Edition where they built a high-end, custom house in approximately 106 hours for a deserving family. “We were honored to be selected by ABC,” Schwinghammer said, “It’s gratifying to know that we could help make
THIS PAGE & PREVIOUS PAGE (BOTTOM): These two-story homes were based on one of Hallmark's plans, and then adapted and changed until it fit the customer's needs perfectly. OPPOSITE PAGE: Paul reviews the building plans as he oversees the building of the Extreme Home Makeover home, which was completely built in about 106 hours. Photo by Peter Gaunt.
CARTER LUMBER Carter Lumber knows the importance of a trusted name. A privately owned company since 1932, Carter Lumber has supplied construction companies like Hallmark Homes for many years. A company with purchasing power to deliver you the products you need at the right price, Carter Lumber is the name you can trust. For more information, please visit www.carterlumber.com.
8 Winter 2010
a positive difference for a Hoosier family.” Wilder added, “It’s not just the family who had a positive experience, the real excitement came in knowing how much the people who volunteered on the project were changed. It was great to be a part of something bigger than yourself.” In looking toward the future Hallmark’s plan is to continue to stay focused on their niche of affordable custom homes. “Our goal is to continue to expand into other areas of the Midwest and look forward to continuing to serve our customers in local communities,” Wilder said. CLT
residential
| midwest
Construction Leaders Today 9