24-week time period on the construction of a home.
Meridian Custom Homes
Owners: Rod and Alex Mitchell
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Type of Business: custom home and subdivision development and building
Location: One Richmond Square, Providence
Employees: 12 in-office; 30 to 40 subcontractors on-site
Annual Sales: $15 million projected in 2004
Brothers Rod and Alex Mitchell applied their business savvy to something they’ve
always loved to do – home construction work – to form Meridian Custom Homes, a
custom home and subdivision construction business that offers design, planning,
development and construction services with fixed pricing.
“We were both in business school in Boston and we got into construction during
the summer – painting houses, shingling, building decks, putting up fences,”
said Rod Mitchell, Meridian’s managing director. “I interned with developers
… and went to work for a construction company after college. I did project management
and on-site supervision.”
Alex went to Bentley College and Rod to Boston College – and after Alex graduated,
two years after Rod, the two started their own home construction business.
In the first 10 years of business, the Barrington natives had a third partner,
but for the last 10 years Meridian has been the brothers and their team of personnel,
designers and subcontractors.
One-third of the homes that Meridian builds are in Rhode Island, Mitchell
said; the other two-thirds are in Massachusetts. The company is currently working
on a custom home in Westerly and has a 38-lot subdivision built in South Kingstown
off South County Trail (all but one of the 12 homes built are pre-sold).
“We’ve done the subdivision development from the inception of the company,
and we would always do occasional individual custom homes,” Mitchell said. “Eighteen
months ago we decided to make (custom homes) a much more important part of the
business.”
The custom home market is under-served by quality custom builders, Mitchell
said. If the homeowner has a budget and a timeline, and doesn’t want an “adventurous”
construction experience, many times they’re out of luck in finding an alternative,
he said.
“All of them are at the super top level” in design and price, he said. “What
we offer is an attention to detail and breadth of choices and high-end specifications
similar to other custom home builders, but with a fixed price guarantee and
accurate timetable.”
The subdivisions can also be customized, Mitchell said, but are not as flexible
as individual custom homes – the homes must work together and also with the
surrounding neighborhood. Meridian is currently working on a 162-lot subdivision
in Bourne, Mass., a 35-lot development in North Attleboro and individual homes
in Norwell and Foxboro, Mass., and Barrington and Providence.
“Buyers say they like the fact that we’re so concerned with harmony” among
the homes and neighborhood, Mitchell said. “Our intention has always been to
honor the feel of the local community.” In South Kingstown, Meridian had narrow
roads leading into the development, kept a tree canopy and left plenty of trees
close to the road and curved a road in order to preserve some native mountain
laurel growing there.
“In most subdivisions, they cut a wide swath of trees, with major road construction,
and there are sidewalks on both sides because the towns think that is in the
best interest of the town,” Mitchell said. “You end up with a very commercial
feeling.” Meridian offers uniquely designed homes with the details and amenities
one might expect in a much pricier home.
The standard custom home comes with Andersen windows, marble fireplaces, wood
and tile floors, crown moldings, chair rails and a range of cabinet selections,
Mitchell said. Meridian also has a library of about 100 home styles that customers
can choose from, as an alternative to introducing their own development designs
or starting from scratch. Mitchell said buyers usually choose one of the company’s
12 best-selling styles, however.
“We will build a custom home designed from scratch, but people often find
a house they like” in the collection, he said. “The majority of buyers like
that – they have so many other details to worry about. Our price sheet is also
available – we give it to our customers.”
Each home is priced differently, depending on its size, elevation and amenities.
Homes built by the company range in price (lot and other related costs not included)
from $159,900 to $380,000. Meridian can also find a buyer a lot, if they don’t
own one or have one chosen, he said.
“It takes all the conflict out of pricing,” Mitchell said of the fixed pricing.
“If the price of lumber goes up, we absorb that.
“A large component is the loyalty of our contractor base,” he said. “We’ve
worked for such a long duration with each contractor that there’s very little
labor cost volatility. We can’t help materials volatility, but we’re able to
absorb that.”
There is much volatility with contractor bidding, Mitchell added, which results
in price instability. Some of the homeowner horrors he’s heard are a company
took a longer time to finish the home than expected, the contractor didn’t pay
his bills, or the company kept finding ways to increase costs.
The first step in the design and planning process, Mitchell said, is to get
an idea of what the buyer wants. This process could be as quick as a week, but
usually takes several months, he said. Meridian pledges a 24-week time period
from the time the foundation is poured; the last home was completed in 17 weeks,
however.
“We ask them to share with us all of their thoughts and aspirations; they’ve
usually given it a lot of thought,” he said. “We talk about their general budget
and what things might be important to them. We ask them if they have their own
developed plans, and (if not) we show them the homes that we think will fit
their needs.”
Once financial and design decisions are made, the Meridian team turns to the
color pallet and other details, like what additional amenities the buyers might
want. Meridian uses a standard contract, Mitchell said, and can even help the
customers look for a lot to purchase if needed; they also own some lots.
As for the typical Meridian custom home buyer, Mitchell said most are move-up
buyers – they have owned a home and currently own one, and are looking for something
better and different. Meridian also builds homes for first-time buyers and move-down
buyers – those looking for something smaller because their children have moved
out, he said.
