LGI Homes, Inc. (LGIH) announces the introduction of a new product to the Albuquerque, New Mexico market: affordable luxury townhomes.
As an established homebuilder in the Albuquerque market, LGI Homes has been offering three to five-bedroom single family homes in the area since 2015. New to LGI Homes’ lineup is a series of meticulously crafted two, three, and four-bedroom luxury townhomes in the highly desired community of Volterra Village. Located just minutes east of downtown Albuquerque, residents enjoy the close proximity to the area’s best shopping, dining and entertainment. Other nearby amenities include Manzano Mesa Park, the Sandia Peak Ski Area and the Museum of Nuclear Science & History…
…starting from the low-$200s.
I have no problem in and of itself with them building town homes, but I do have one concern that may or may not really affect them.
I don’t know how many town homes have already been built by LGIH. However, I am under the impression they are almost exclusively single home builders. IF this is true, then the caution I have with town homes comes from my experience with a residential builder that went into town homes.
Say you have a property that is going to take 24 structures (pick a number) with 3 units each. I open the subdivision for sales, and “start” construction of three each, 3-unit complexes. Until I have a “sale”, I have now started a total of nine “specs”. All nine specs go against my allowed spec amount per agreement with the lending institution.
Then one customer comes in and wants to buy a town home in a unit that has not been started. You aren’t likely to turn down the sale, so you sign the contract and start to build that contract’s unit. However, since you can’t build just one unit of a three unit structure (you may not have to finish the guts of the other two, but you have to have it framed and dried in at a minimum), your one contract actually requires you to start two more “specs”.
This method has a way of eating up all your allowed spec houses. Now you can’t build any specs elsewhere (once you reach your limit), until some of them turn to contract. This ended up hurting the company I was working with, as it hurt our ability to build specs in other subdivisions.
I am sure LGIH has way more specs they can build that what I was doing at the time, and this might not be an issue at all.
Just a cautionary note from a prior single unit residential builder, that went to multi unit housing…