By Felipe Visser

A Florida company chronicles its experiences in building strong relationships with local builders.

Most of Visser Closets’ work is high-end wood veneer systems, like the one shown.

There are five key factors to successfully working with developers: good closet design, advanced research, marketing/relationship building, project planning and hands-on management. In the following article, I will discuss some of our experiences relative to these key factors and what we have done to be successful.

Build-out programs are packages of improvements (e.g. flooring, wall paint, window treatments, etc.) that developers sometimes offer home buyers in large residential projects. Build-out packages are attractive to buyers who do not want the hassle of dealing with contractors or have the desire to “do-it-yourself.” The cost of these build-out packages is typically included in the buyer’s mortgage.

Build-out programs that include closets in large projects are very attractive for a company in our field. The scale of large projects can mean lucrative revenues. However, success in large projects requires more than simply having a nice closet system. These endeavors require implementation of a complex operation.

Visser Closets is a custom closet company located in South Florida. It has been in the custom closet business since 1998. Like most closet companies, we began as a boutique operation, marketing our custom closets to individual customers. Our first steps toward large project work was to contact developers interested in including closets in their model or showcase homes. We found that having a model closet alone without a sales team actively marketing the closet (e.g. a build-out program) resulted in disappointing sales.

However, we continued to track the progress of new residential projects in our area, focusing on projects where we believed there was a market for our closets. Pertinent information about most projects (including key contacts) is readily available from public sources or the media.

By late 2003, our research and marketing efforts began to produce results. We currently are engaged in several build-out projects for upscale condos and homes. Each build-out program is unique and includes different contractors in other areas (e.g. floors, painting, window treatments, etc.). The typical program offers a variety of closet finishes and materials, and requires that the systems must be installed within a 30- to 45-day period.

Our closet designs for these projects completely wrap around the closet and include features like inclined shoe shelves, full-extension drawer runners and wood backing. Each type of unit has a unique layout and is offered in two finishes in order to keep each closet relatively custom and basically simple.

Providing closet systems for units in high-rise buildings such as this one in Florida can be a lucrative venture. But it does require careful planning and management or it can become a revenue drain.

Plan carefully and pay attention to detail

The first step in quoting a large project is to design each closet using the final floor plans. It is important to create designs that use standardized elements whenever possible. For example, we designed one project with 200 closets, for which we used 27,000 wood parts and fittings. So it was very important to be able to interchange some of those pieces in different designs.

Additionally, component lengths must be optimized in order to avoid material waste at the factory. The evaluation of material costs must include the inevitable contingencies such as delays, increased cost of raw materials and the recurrent increases in the cost of freight.

When the project reaches the final construction stages, you will need to take field measurements for each model type. In high-rise condominium projects, the actual dimensions can vary significantly from one floor to next. Even so, it is not always practical to measure every unit, so a representative sample of measurements should be taken. Normally, architectural floor plans accurately show dimensions, but they often omit columns or other details, like wall boxes for alarm systems and media communications. Your designs must be revised in order to reflect the actual shape and characteristics of the closets.

At this stage, you must make adjustments to the individual closet elements and the associated costs. It is important in the bidding stage that the developer understands that you will make adjustments to the original designs and costs based on the actual measurements.

If you are selected to be the closet provider, it is necessary to obtain a Letter of Interest (LOI) and, later, a contract from the developer. We highly recommend using a commercial attorney to review these items. Be particularly cautious regarding the terms of payment and penalties in reference to time of completion. The contract should recognize that your progress is often dependent on the progress of other subcontractors that must precede you.

Custom closets are usually the last improvement in the build-out of a unit so that the wood finishes are not damaged. The contract should recognize that you will not be penalized for delays caused by the preceding subcontractors. Take the time necessary to make all the comments and changes before signing any agreements.

Scheduling and cash flow are challenges

One of the more unpredictable aspects of build-out programs is estimating the number of packages that will be sold. The process of marketing those packages can start five to six months prior to when final project approvals (certificates of occupancy, etc.) are obtained by the developer. It has been our experience that developers will sell approximately 50 percent of the total number of units three months before closings begin. The remaining packages are often sold only days before a unit is scheduled to close.

This is important in regards to scheduling the production and delivery of the correct number and color of components. Ultimately, you will have to place your closet component orders with about 80 percent certainty of your final needs, in order to make the tight build-out schedule.

After you have all the calculations and know approximately how much and when you are going to receive payments, it is important to make a cash-flow plan. This is important in order to be prepared to pay suppliers, closet installer labor and to cover contingencies that will inevitably occur.

These are two examples of the types of closet systems Visser Closets offers in its developer build-out programs.

Be certain that your price quotes from suppliers of raw material will not expire before you submit your order. Most quotes are made in 30-day increments (30, 60 or 90 days). It is also critical to calculate the time required to install your closets, to calculate your cash-flow from start to finish. Even a minor error in the design or your calculations could result in a significant loss of revenue over the course of a large project.

With custom closets, roughly 50 percent of your product’s success or failure depends on the quality of your installation. Most closet systems are similar, but have some differences that make them unique. It is important you take time to properly train installers to be detailed and use the correct tools. Often on a large project you must hire additional staff to meet the schedule. Be sure your new installers understand why the details of your system are important, even if they are experienced craftsman.

The logistics of the installation process also are critical for the project. The pieces for each unit must be in the place before the install crew enters that unit. Coordination and dispatch of closet components should be the responsibility of the person who manages the inventory. For optimum efficiency, maintain a weekly schedule of installations. The inventory manager must ensure that the correct closet components, as well as fittings and hardware, are dispatched to the corresponding unit in a timely manner.

Our inventory manager is also responsible for overseeing the necessary adjustments (shelf cuts) to closet components. It’s important to have a secure location onsite where you maintain the inventory and make adjustments to system components. The competition between subcontractors for resources and access (e.g. loading docks, elevators, etc.) makes it impossible to coordinate large projects from an offsite location.

Finally, coordination with other subcontractor crews is vital to the success of large projects. You must endeavor to maintain a harmonious relationship with the other subcontractors as well as the project supervisors. Your relationship with the onsite supervisor is especially important, and you should attempt to communicate on a daily basis during the critical phases of the project. Normally, the closet installers are the last crew to enter a unit, so you must keep apprised of the progress of the preceding crews.

There is still a great deal of opportunity for working with developers on large projects despite the current downturn in the housing market. Upscale residential development is especially resilient to swings in the economy. The key to successfully working with developers is: good closet design, advanced research, marketing/relationship building, project planning and hands-on management.

 Felipe Visser is owner of Visser Closets in Miami, FL. Information about the company is available at its Web site, www.vclosets.com.