Small Business

Housing slump not all bad news: Slow residential market boosts some small businesses

April 28, 2008

Many homeowners watching the housing market are fretting about their property values as for-sale signs linger, foreclosure postings dot neighborhoods and credit is harder to come by.

But the housing turmoil is actually helping some local businesses-particularly those specializing in marketing properties and helping to sell them.

"There are positives and negatives to the housing slump," said Brian Mayo, owner of Life Homes Inc., an Indianapolis-based property-sales and -management company started in 2005. "Purely from our business's perspective, we're one of the few beneficiaries of this market."

His company, which handles singlefamily homes and duplexes, has seen growth thanks to accidental landlords-homeowners who have moved but can't sell their homes here. Life Homes lines up renters, handles contracts and manages repairs for property owners who don't want to be hands-on.

Last fall, the company managed fewer than 100 units. Now it's overseeing about 160 homes-and still growing.

Mayo runs the business with his wife and one other employee, and the increased workload has sent him looking for help. In addition to hiring some part-time workers, for example, he hired another growing business, locally based Place 2 Live Rentals LLC, to help find tenants. Its finder's fee is one month's rent.

"We do a lot of single-family houses for an individual owner now," said Place 2 Live co-owner Ryan Mullin. "Business has been absolutely great."

Foreclosures have been another source of business. As individuals lose their homes, investors snap them up, Mullin said, and convert them into rental properties. Those investors then turn to Place 2 Live.

"There have been plenty of new rental properties on the market and plenty of new tenants," Mullin said. "It's been great for us."

The company started in January 2005, but business really started booming early this year. The company has about 350 unique visitors on its Web site daily, up 100 visitors from late last year. It's averaging up to 40 leases a month, up from 15 leases monthly last year. It has added a third leasing agent to handle volume.

Homeowners who don't want to go the landlord route are doing more to make sure their houses stand out. That often means calling on home stagers, experts who do everything from rearranging furniture to remodeling interiors to make homes more appealing.

Indianapolis-based Transitions Inc.'s staging business is booming, said coowner Carolyn Kennedy. Still, the year started out slowly as homeowners tried to figure out whether to risk putting a home on the market, she said.

"Then all of the sudden, it's like they realized, 'We better look like the best kid on the block or else,'" she said. "It needs to look like a model home."

The company's services range from a bare-bones appraisal for $200 to drawing up design changes, hiring contractors to remodel the home and even bringing in furniture that the company owns.

Spring is usually the busiest time of year for Transitions anyway, but business is up 25 percent over last year, Kennedy said.

And while it may be hard for some frustrated homeowners to believe, there are still buyers in the market. But there are fewer and fewer with good credit-another opportunity for small businesses.

Mayo's property-management company also helps sell homes through lease options, in which a would-be homebuyer who doesn't qualify for a traditional home loan becomes a renter in the home he'd like to buy, paying a fee for the purchase rights after a certain number of years. In the interim, Mayo helps the would-be buyer improve his credit score.

"The traditional route of buyers getting pre-qualified and buying a home is gone for quite a while," May said, especially for less-expensive homes. "That's the only way houses are going to move."

All three business owners said they didn't expect the housing market to rebound soon-late 2009 at the earliest.

That's good news for them, but they shouldn't rest on their laurels, said Victoria Hall, executive director of the Indianapolis Small Business Development Center. Companies doing well now should be revising their business to make sure they'll be profitable when the housing market picks back up.

"Two years from now when [the housing market] is on the uptick, companies need to know what the business model is then," she said.

The best plan, Hall said, is to make certain a company offers services that cater to each side of cycles.

"People need to think, 'Maybe I don't put all my eggs in one basket,'" she said.
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