For new home builder, Joseph Carl Homes, the moment to rise from Phoenix’s ashes is now
When Joseph “Carl” Mulac grand opens his CantaMia active adult community in the Estrella master plan in Goodyear (Phoenix market), Az., Feb. 10, home building’s spring selling season officially begins.
Mulac–whose youthful appearance belies his three decades of experience in home building management–is a veteran of large enterprise companies, most recently as the Phoenix division president of the now no-longer TOUSA’s Engle Homes. But to him, he is one thing.
“I’ve worked for several of the nationals, but I think of myself as a home builder,” Mulac told me over a cup of coffee at Caesar Palace’s Augustus cafe at the International Builders Show in Las Vegas last week, talking about the fledgling Joseph Carl Homes’ imminent ramp up to big builder-dom in one fell swoop.
Mulac is living proof that “you have to be good to be lucky.”
His opportunity right now in Phoenix springs from being the right guy in the right place at the right time. He’s the right guy for a couple of reasons. Amid and despite TOUSA’s demise in 2007 and 2008, he ran the Engle division like a pro and remained one of CEO Tony Mon’s most reliably successful value producers.
Now, staying in Tony’s graces as TOUSA’s fortunes deteriorated after its disastrous acquisition of Transeastern Homes at peak market prices on the eve of the meltdown was a smart thing to do for a number of reasons. Not the least of which was that when Reuben Leibowitz–the fellow who originally invested in and made an eventual killing on Tony Mon’s Pacific Greystone back in the early 1990s–asked Tony who he should tap to lead his charge on an up from the ashes play in Phoenix that would start by getting Engle’s holdings back out of the banks, Mon didn’t hesitate to tell Leibowitz that Mulac was his man.
Leibowitz didn’t have to ask Mulac twice. Here’s how the Arizona Republic reported the big deal went down:
The first phase encompasses 215 acres and calls for 643 homes to be built over about four years. Future land purchases could expand the development to 1,700 homes.
Community amenities will include indoor and outdoor swimming pools, a fitness center and tennis courts.
Province was only a month from opening when the project came to a halt, according to Mulac, an Engle executive at the time.
Property records show Engle financed the project under a $250 million loan in March 2006. Mulac, who signed the documents for Engle, said the loan funded up to 18 communities around the Valley.
At Province, Engle built 14 model homes, a 15,000-square-foot sales center and infrastructure, and began construction on a 30,000-square-foot recreation center.
But Engle’s parent company, TOUSA Inc., filed for Chapter 11 bankruptcy protection in January 2008.
Property records show E/S Property Holdings LLC, managed by JPMorgan Chase Bank, bought Engle’s Estrella property at a trustee sale in February.
Joseph Carl Homes paid $8.5 million for 215 acres, according to Mulac.
So, the land price has been reset massively; he’s coming out of the gate with 14 models and a sales center already built, and he just hired his 21st employee–Joseph Carl Mulac 3rd–out of University of Arizona to work harder than he imagines and wear a lot of hats.
They say that even in these most hostile of times, you can start a home building company with a lot of immediate momentum and promise if you have the money, the people, the land, and the product. Carl Mulac counts himself fortunate on all of these accounts, but it doesn’t mean he’s not working his butt off. But that’s nothing new.
Until he had a major run-in with a medial collateral ligament in the early 1980s, the elder Mulac was starting point guard material, albeit, he protests, at Pittsburgh’s Carnegie Mellon, which is no Division 1 powerhouse. Still, that floor general, court-sense approach comes through with Mulac to this day, as does the confidence amid the challenges.
Why does he say he’s a home builder? He says he finished his last tasks and proceedings at Carnegie Mellon on a Friday, and by the following day, he was on a home building site in Cincinnati, working for Ryan Homes.
With a flattering title along the lines of Technical Assistant, Mulac soon discovered during his job of inspecting and recording problems in homes during various stages of construction that one of three problems needed recording in almost every home he inspected:
“I was always frustrated,” Mulac recalls. “Something was either always broken, didn’t work, or missing because it was stolen. Home after home after home this was the case. I went back and talked to my supervisor about how frustrated I was about this, and he said, ’The good news is that this is why you have a job.’ I looked at the problems more positively from that point.”
So, Mulac in his DNA is not only good enough to be lucky, he’s also the kind of guy who, by nature, looks at problems as opportunities. Not just other people’s problems either.
“Every company I’ve spent time working at has gone bankrupt,” Mulac says. “Ryan Homes in the early 1990s, UDC Homes in the mid-90s, and TOUSA. In every case, it was the land that got them. I have to figure I’ve learned that lesson.”
The other critical lesson learned Mulac will abide by will be research and branding.
“When we were with Engle, we’d get approached about doing all the work and study to make sure we had the right value proposition and the right understanding of who our potential buyers are, but we always decided it was too expensive, and we didn’t really need it,” Mulac says. That’s changed.
Mulac brought on Michelle Mace-Basha’s M3B Inc. to work through a disciplined several-month process [see Michelle as part of the Big Builder Virtual Event Phoenix Dream Team ] to learn as much as possible about the “who?” of his potential home buyer, and what would appeal to those buyers.
So, from the outset, Mulac is launching a community whose offerings reflect a full-commitment to customers needs–not simply his sense of those needs, but their sense of them, which is entirely different. This is why CantaMia’s product will come standard not only with solar panels, but with thermal features as well.
“Our research showed that our customer segments profiled as wanting sustainability in their homes at an affordable price point,” Mulac says. “We had to decide from the beginning whether we were going to invest fully in that commitment to our customers or not, and we felt it’s the right thing to do.”
By the time Joseph Carl Homes officially opens CantaMia for business, they’ll have sold a couple of dozen of the 600-plus homes in the first phase of the 1,700-home tract. Once he gets that part going, he’s going to be doing his damndest to line-up business for an operator he’s got on the ground in Las Vegas.
Just like that, a big builder rising out of Phoenix’s ashes, even as uncertainty prevails in the big builder landscape. In some cases private equity money is proving it’s ready to rumble, and in some cases the banks are ready to make their play to get what they can on their holdings.
Although many home builders are finding that bank loans for vertical construction loans are well nigh impossible to come by, Mulac got a line from National Bank of Arizona to get things started.
He’s taking nothing for granted, not even office space.
“A friend in the business was going through the tragedy of having to auction off everything from his office, including the 30-foot marble-top conference room table he was so proud of,” says Mulac. “I don’t think we’ll be seeing the days of fancy 30-foot conference tables coming back anytime soon.”
For now, and the near future, Mulac is running Joseph Carl Homes out of his own home.
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