8 Some Assembly Required
By Michael V. Copeland

(Business 2.0) – The Strategy: Build High-End Prefab Homes Minimum Investment: $300,000

Six months ago, Darryl Caldwell knew nothing about building houses. A respiratory therapist at a San Diego hospital, he had only recently gotten his real estate license. Then came the brainstorm: Find a decent-size lot in a desert suburb, plop down some ultramodern prefab homes, reel in a few buyers, and be $1 million ahead when the dust settles.

With a deep breath, a chunk of equity from his $800,000 home, and $100,000 in savings, Caldwell and his partner, Robert McClure, went prospecting. Today they're building 13 high-end prefab homes in Desert Hot Springs, Calif., a bustling suburban enclave 10 miles north of Palm Springs.

Prefab homes are no longer the sole province of Buckminster Fuller fans and kit hobbyists. In recent years, prefab construction has gone upscale in materials, design, and quality, drawing a new market of buyers: extreme do-it-yourselfers who want a dream home on a budget.

Caldwell and McClure are building three-bedroom, two-bath houses manufactured by San Francisco-based Clever Homes. The 2,200-square-foot modernist structures include environment-friendly materials like bamboo flooring and cement-board siding. Polystyrene foam between plywood sheets makes up the walls, which offer better strength and energy efficiency than stick-frame construction. And because the parts come factory-assembled, construction is mostly a matter of connecting panels.

Putting together the deals is surprisingly simple too. First, Caldwell found a 3.5-acre lot for $400,000. Then, after placing a small ad in Dwell, a glossy magazine for modern-design buffs, he got commitments from 13 buyers to purchase the homes for $600,000 apiece. Three of the buyers put down 15 percent deposits to get the first units built before they ever laid eyes on a completed home.

Caldwell estimates that his crew will spend six weeks finishing the first house but eventually will get the process down to a month. "It's going amazingly well," Caldwell says, "but this isn't for the faint of heart." -- M.V.C.

The Back of Caldwell's Envelope