How to Build Custom Homes for Profit | Sarasota Real Estate Investing with Jeff Eslinger

Jeffery Eslinger (00:00)
if when we work with investors, we identify a property and we identify what we think from our perspective because we are very dialed in on the community and what the community is looking for on basic areas of Sarasota Manatee County. We present that to them. okay, so we’ve identified a property.

we’ll identify a floor plan and then not only will we identify the floor plan, but we’ll also identify a price point of where that investor can remarket that house and make a rather a substantial profit.

Freddie Steen (02:12)
Hey everyone. Welcome to the Investor Fuel Podcast brought to you by Real Estate Pros. I’m your host, Freddie. And today I’m joined by someone I’ve been looking forward to chatting with. Jeff Eslinger, who’s the co-founder of E/M Custom Homes in one of my favorite cities in the United States, SRQ, Sarasota, Florida, sunny Sarasota.

Jeff, I’m glad to have you here. And he’s been making serious moves in the custom home builder space, making decisions that many custom builders that are more big box have seem to let astray with some of their clients. But Jeff is doing it the right way. I’m glad you’re here. I think our listeners are really going to take something away from how you’re approaching custom home building in a very affluent market. Let’s dive in. First off,

For people who may not be familiar with your world, Jeff, give us the short version. What’s your main focus these days at E/M Custom Homes and what markets are you operating in?

Jeffery Eslinger (03:22)
Well, Freddie, first of all, thanks for having us. we’ve been doing this a long time. both my partner and I were born and raised here in Sarasota. we’ve been in the custom home building business for I’m in my 51st year, so we’ve been doing it a long time. And I think what sets us apart is we’re a custom home from the ground up. We call it design build. And it’s really exciting for us because

Not only are we building custom homes, and traditionally the price point that we build in is anywhere from 900 to almost four million. and what what’s really exciting about being in the custom home business is somebody taking somebody’s idea that literally comes to us on a napkin and creating that from the ground up and then working with them through the process and seeing the end results.

And it’s just something that we’ve always had a passion to do from my great grandfather to my father and myself and my son works with us. And so, it’s just carrying on a family tradition.

Freddie Steen (04:33)
Jeff, you and Dan, your families both have we talked before the pod, forty five plus years of, individual building history in Florida. What was the strategic catalyst, Jeff, that made you merge forces to form E/M Custom Homes, I believe in twenty seventeen?

Jeffery Eslinger (04:52)
Yes, sir. Well, it was just, I know a lot of folks in this industry. And back in twenty seventeen, I was just in the right place at the right time with one of the developers that my brother and I had worked with historically for a long time, and they’re getting ready to put a phase that we would have built in 2008, but of course the world stopped then and he took it off the market, and I was just in the right place at the right time.

and I’ll be honest with you, my I approached my brother first and foremost, and he was happy where he was at and didn’t want to get back into, being a business owner again. And so there was only one person on the list and that was Dan Maglich. Because of the history of our families, I mean our folks used to hang out together in the

in the seventies and eighties and it was just it was a comfort level, it was a trust level. And my list included one name and that was him. And I approached him with the idea and I said, Hey, we got an opportunity to be a part of this neighborhood that my brother and I were in and let’s go build some houses. So here we are ten years later.

Freddie Steen (06:10)
Love it. Jeff, navigating SRQ demands, let’s talk about Sarasota. I told you I am a person who spends time at Siesta Key and St. Armands Circle and have had that famous salad that we talked about. Sarasota

Jeffery Eslinger (06:27)
Well, nineteen eighteen, I think it’s called.

Freddie Steen (06:30)
Ugh, if that salad is amazing. Sarasota is a hotbed for luxury, coastal and high end residential real estate. I spent a lot of time there myself. What specific macroeconomic or demographic shifts are you currently seeing in the SRQ market?

Jeffery Eslinger (07:38)
Well, I’ll tell you, throughout the years, Freddie, we’ve always seemed to be insulated from the rest of the world as far as what the economy is doing and how different parts of the country are suffering from this and suffering from that. But what has always been historically valuable for us was we’re insulated kind of from the rest of the world because Sarasota and Manatee County

is a destination for folks and they’re continuing to come down here because who wants to live up north in the snow when you can come down here and have wonderful weather basically year round and no disrespect to somebody that lives in Gary, Indiana, but the love is there.

Freddie Steen (08:25)
O-H, it’s O-H-I-O, it’s the Buckeyes. But you’re right. I mean, I think that the sand at Siesta Key, Jeff, never gets hot, right? There’s some something in there where no matter how warm it is in Sarasota, that sand is still cool. I wanna talk

Jeffery Eslinger (08:40)
Okay.

Freddie Steen (08:41)
about the regional difference with the ground when you’re doing your construction after that. But first, please finish that thought.

Jeffery Eslinger (08:49)
Well,

the biggest difference, when you go to the beach, the hardest part of going to the beach is is maneuvering your way through the parking lot as far as the pavement. I mean the pavement it’ll burn the bottom of your feet and then when you get to the sand it’s a completely different world. That’s all I wanted to say.

Freddie Steen (09:08)
No, you’re absolutely right. So talking about that at Siesta Key, that stark difference, when you’re building, you have to also account for the difference in geography opposed to people that maybe in other parts of the country Go Bucks.

Jeffery Eslinger (09:27)
okay. Well, before we move on, I’ll say Go Irish. But yeah, there’s the there’s a different way to build houses, especially on the key, on the barrier islands, you have to build to hurricanes, you have to build to a certain finished floor level. And that’s all been engineered and all been designed into what we’re doing. So that’s a little bit different. But I I’ll use this as an example.

In February 2020, the world stopped because of COVID. Okay. And we thought, my God, this is all over with. I had probably one of the best years from 2020 to 2022 in sales because there was a mass exit exodus from New York, from Boston, from Chicago. People just didn’t want to be in the big city anymore.

because of that. And I mean it’s like our sales and our opportunities doubled overnight. And again that’s an example of why people want to be in Florida and especially on the West Coast. if you go to the east coast of Florida it’s more commercialized and more different types of people. But if you come to the West Coast

Freddie Steen (10:50)
Explain the difference.

Jeffery Eslinger (10:50)
More of

a southern hospitality, no disrespect to Eastern Floridians, but there’s more of a there’s more of a southern hospitality on the West Coast, from where we’re at down south, So we love it here. We love it here. I think I told you before we started the podcast that I’ve lived in other places, but there is

like Dorothy said in *The Wizard of Oz*, there’s no place like home. And for me, it’s Sarasota and always will be.

Freddie Steen (11:26)
Let’s talk the lean model versus the big builders. I mean, your business model emphasizes being a lean hands-on building team without massive corporate overhead. I mean, how does this structural agility give you a competitive edge when bidding or executing a project?

Jeffery Eslinger (11:43)
Well, I think some of the bigger custom home builders, they’ve got tremendous overhead. We try to keep our machine lean and we we’re able to pass that on to the consumer because of that low overhead. when somebody’s out there building seven, building a house for six hundred and fifty dollars a square foot, we could do it for five. and it’s all about pa

Historically, my father had the same values of that too. we’re in this to make a living, we’re in this to make a profit, but we don’t have to beat somebody up. And if we have low overhead, then let’s pass that on to the consumer or the buyer and let them have the benefit of that compared to somebody else where, basically doing the same type of construction, the same design.

It might cost fifty to a hundred dollars more a square foot.

Freddie Steen (12:44)
Jeff, love it. What caught my attention about you was the way you’ve been able to maintain integrity as a mom and pop shop, going all the way back to Eslinger custom homes that your father built, your grandfather before him, and now you and your son coming in that legacy. And you’ve done that in markets that are very hard to gain traction in. That’s not easy.

Especially in this climate. One thing we discussed is the fact with custom homes that you’re building, you include hurricane rated windows and also an attention to detail that most custom home builders would charge more for. That’s not easy, especially in this climate. Jeff, what’s been the key to keeping that machine running smoothly?

Jeffery Eslinger (13:37)
Well, it’s identifying those things that first of all, the the items that you mentioned, the windows and some of the other finish level things that we consider standard is number one, our overhead’s a little bit lower. So it affords us the opportunity to include those items. And I think it I think it not only it it’s good for the consumer because

all the time when you’re building a three million dollar house and someone is talking to two different, three different builders and they ask the question, what sets you apart? Well, when I start throwing those things out, like standard hurricane windows, doors, and sliders, or Icynene spray foam application is standard, and that then and just some of the things that we want to include that others would be

that others would consider optional, I think that’s what sets us apart. and it still affords us to be able to make a living and support our families, but also carrying on the tradition of our families’ names in this community. And like I said before, it’s both Dan and I’s jobs to continue

the legacy of our fathers.

Freddie Steen (15:41)
You highlight that handling design changes in-house saves you saves your client significant money and time. for real estate investors, doing build to rent or speculative builds, how does the integration project protect their margins?

Jeffery Eslinger (15:59)
Well, I think what we’re gonna do is for example, if when we work with investors, we identify a property and we identify what we think from our perspective because we are very dialed in on the community and what the community is looking for on basic areas of Sarasota Manatee County. We present that to them. okay, so we’ve identified a property.

we we’ll identify a floor plan and then not only will we identify the floor plan, but we’ll also identify a price point of where that investor can remarket that house and make a rather a substantial profit. And at the same time, when we do something like that, we’re doing a cost plus to that to that investor.

to where he already knows going into it that the house is going to cost X number of dollars. Now, in a cost plus situation, pricing may fluctuate, but not that much to where it makes a difference because we’ve already locked in, once we execute the contract and we move forward with the build, we’ve already locked in the prices with our guys. So in from a from an investor’s perspective, they’re gonna know going into it,

what it’s gonna cost up front and what the potential profit is. And then we present all those ideas and we have a conversation if and if they feel that this is a good opportunity, then we’ll move forward. If it’s not, then we’ll go find something else. It’s plain and simple. We try to keep it as simple as we can. it’s and my father was always, the easier you make it for them

The easier it is for you. Does that make sense?

Freddie Steen (17:55)
Absolutely. Which leads me to a phrase stop swinging the hammer. A major theme on Investor Fuel is moving from a technician to a true business owner and operator. How did you structure your internal project management so that you’re scaling the business rather than getting stuck in managing daily site issues?

Jeffery Eslinger (18:23)
Well, it was plain and simple. When Dan and I first sat down, we started talking about getting together ten years ago and we had this opportunity, which created other opportunities. we made a conscious decision that, when my brother and I were together in the in at Eslinger Homes, we were doing forty, fifty, sixty houses a year. As we get older, that becomes a lot more stressful. And we made a conscious decision that we didn’t want to do that.

We’re gonna do 20, we’re gonna do 10 to 20 homes a year, and this is what the value is gonna be of those homes. And we want to keep our overhead down. I don’t want to hire a bunch of people, which in when I was with my brother in Eslinger Homes, we had I had 12 salespeople, five superintendents, six people in the office, and I don’t want to do that. I’m 65 years old. I’ve been doing this for 10 years. So we started this thing when I was 55, and we just made a conscious decision of

that’s the structure that we want to go with. So it breaks it down simple. I handle the office, I handle the pricing, the bids, the land opportunities. Dan, along with my son, handle the construction out in the field. And but we both of us have the experience, and I and I will just tell you this. My father’s philosophy when we were growing up in the business was.

Before I hand you the keys to the car, you’re gonna learn how to put the car together, which means I dug footers, I swung a hammer, I hung drywall. I was the first painter that we ever had, which kind of soured me on painting for the rest of my life. My wife likes to paint different things different times. And all I do for her is I say, I’m gonna get you the paint and here’s the paintbrush and call me when it’s done. I will not paint. But the point I’m trying to make was when not only and my dad used to say this, you’re

not only book smart, but you’re practical smart too. Meaning if that if we look at a set of plans and A goes into B and C, I know how to do it physically, not only by looking at the plan, but actually getting out there and doing it. So we’re hands on and we’ve always been hands on.

Freddie Steen (20:37)
Jeff, you’ve stated that your aim to deliver a fair price with absolutely no surprises at the end in custom builds. client change orders are notorious for blowing up budgets. how do you handle design variations midstream while saving the customer money?

Jeffery Eslinger (20:56)
Well we are

Here’s the biggest thing I tell people: there’s going to be changes as we go through this. As long as you make the change before we get to it, it’s going to be a lot less expensive than after we’ve already done it and we want to go back because now we’re going back and we’re renovating something. So I always, there’s a process when we when we sit down with a client. I’m the one that sits down with a client and I take him to the contract and I point out certain

things and one of those things would be exactly what you just said. How do we handle those changes during construction? So we always let them know up front, you’re better to make it now than afterwards because it’s going to be more expensive. But when we when we identify a change before we make that change, I’ll I basically between Dan and myself will interview the client of exactly what you want to do. So we get the definition of what they want to do.

And we figure out what the price is, then we present it to them. And if they want to move forward with that, then we just do a simple change order. And the change order is just the cost of the change. We don’t do any administration fees or like some of the other folks will do. And it’s just accommodating the customer or the client. Does that make sense?

Freddie Steen (22:23)
Absolutely. Jeff, not every operator I know has a moment where things got real. I mean, maybe a deal that went sideways or a time they had to pivot fast. Do you mind sharing one of those moments for you?

Jeffery Eslinger (22:40)
Hmm.

Well, you’re always gonna have competition and we try to accommodate, when well and I think I, I briefly said this to you when before the podcast started. there’s been different scenarios where some folks will come and they’ll say, I can get the same thing across the street for a hundred thousand dollars less. Well what I try to do is explain the difference between getting what you pay for and coming with me.

there’s a reason why we charge what we charge and there’s a reason why that we have a wonderful reputation in this town for fifty years is that we handle those things accordingly and it’s just I can’t really identify a particular scenario other than when you’re negotiating with somebody, especially in the neighborhood.

where we’re competing with four or five other builders and their models and stuff and everybody’s gonna have different desires and different wants and how do I address that? Well, I’m I may be less expensive than one guy, but more expensive than the other. And we just try to identify the things that make us different. And this is why you should go with us, regardless of whether it’s a little less expensive over there or a little more expensive over there. a lot of times

the way I look at this, I try to build a relationship with somebody. And I will tell you this, Freddie, over the many years that we’ve been building, some of the best friends that I have started off being a client. We built their house.

Freddie Steen (24:19)
Jeff, that that’s the kind of stuff people don’t talk about enough. and honestly, it’s what separates the folks who just dabble from the ones who stay in the game long term like you. Jeff, let me ask you this. what are you most focused on solving or scaling next? I mean, what’s the next real goal for you?

Jeffery Eslinger (24:39)
Well, the real goal is and again the opportunities for us as a as a medium sized custom home builder of being able to participate in a neighborhood, purchase land, build a model, those opportunities have basically dried up over the last few years because of the nationals and the and the and the large regional builders identifying that Sarasota Manatee County is a destination and they want to be here. So

We’re just kind of redirecting our focus on, I want to be more involved with investors that are looking at this area and knowing that based on our expertise, I want to create long term relationship with some investors. I’m still continuing to market the clientele as far as building houses, but

in order to fill that gap between going in like I said before, going into a neighborhood and building purchasing land and building a model, I’m trying to fill that gap with working with investor opportunities. That makes sense.

Freddie Steen (25:54)
That’s big. especially Jeff when you’ve already got over four decades of experience in place in construction. I mean the next move

Jeffery Eslinger (26:03)
Five brother. Over five.

Freddie Steen (26:05)
excuse me over five. The next move can either compound things or create chaos the way you depending on how you play it. I wanna get back to something you talked about, which were relationships. I know a lot of people listening are either earlier in their journey

or looking to level up like you. And I think they benefit from hearing this. When it comes to building relationships and growing your network in real estate, what’s made the biggest difference for you?

Jeffery Eslinger (26:37)
Well

Like I said before, my definition of, for example, with our subcontractors and people that we work with and clients that we build with, it’s all about creating long-term relationships. for example, if you walk through the door and we end up building your house, I’m not going to farm it out to five or six different guys. We’re going to use the guys that establish and know the way that we want to do things. And consistency for us is a real big deal.

Because we’re we don’t want to go through, I don’t want I don’t know if hassles the word, but bringing a new subcontractor in and dialing them into the way that we want to do things. And creating those long relationships and even with clients. I’ve got I’ve got clients that we’ve built two or three houses with based on that relationship. So it’s consistency, it’s creating long-term relationships and

part of creating those long term relationships is from time to time, especially with subcontractors, we’re constantly checking them on their pricing and not being able to have a conversation with somebody to basically just say, tell it like it is. There’s no beating around, as my mother used to say, God rest the soul, there’s no beating around the bush. it’s if you got an issue, whether with a client,

or talking with a subcontractor, hey man, let’s sit down and be honest and let’s talk about it. And I think that’s whatever direction we go in, my philosophy has always been creating long term relationships that accommodate both sides of the coin.

Freddie Steen (28:22)
Jeff, you can’t fake that. relationships are everything in this space. All right, before we wrap, if someone wanted to reach out, connect with you, maybe collaborate or learn from your five decades of experience about what you’re doing, what’s the best way for them to reach you?

Jeffery Eslinger (28:44)
Well, I’ll give you three different ways to reach me. The first would be and the easiest would be is contacting on my cell phone or shoot me a text message. Do you want me to give them the phone number? Okay,

Freddie Steen (28:57)
Absolutely.

Jeffery Eslinger (28:58)
well, great. You can either text or call me at 941-915-9961, or you can email me at [email protected] or

Before you do either contact me and you wanna check us out, you can go to www.e-mcustomhomes.com and check us out. And we’ve got a gallery of the things that we’ve done, that we do and it can kind of give you history of the partners and how we got to where we are and so yeah, that would be the three best ways to contact me. And the easiest way would be to

through the phone call or a text message. But in today’s world, most people are gonna text.

Freddie Steen (29:44)
Jeff, I can’t agree more. Perfect. Well listen, I appreciate your time, your story, your family legacy. God bless your mother, your father, your rich history of construction, and your son to come. we need more people in the space who are doing it the right way. Thanks again for being here.

and for those of you tuning in, from SRQ to Irvine, California, if you got value from this, make sure you’re subscribed. We’ve got more conversations coming with operators just like Jeff, who are out there building real businesses. We’ll see you on the next episode.