Homebuilder supplements primary business as home inspection franchisee

(Franchise Buy) - By . Updated Apr 3, 2013

Homebuilder supplements primary business as home inspection franchisee

Danny Niemi started his own homebuilding business just months before the economic downturn hit. He has diversified while the housing market recovers.

 Danny Niemi, the sole proprietor of River Rock Construction Inc., hasn’t always been on his own as a homebuilder.

He spent almost eight years with FaxonGillis Homes before branching out with a partner in the early 2000s. After four years, the partnership dissolved and Niemi struck out on his own.

The timing couldn’t have been worse.

“Just about the time I got my feet on the ground, about six months in, that’s when the downturn hit,” he says.

For more than a year, Niemi was able to maintain his previous volume of six to seven homes a year. Then, as he puts it, “Things started to fizzle.”

While name recognition helped carry him through the worst of the housing crash, it didn’t take long for Niemi to realize that he needed to diversify. Reluctant to throw away more than two decades of homebuilding expertise, he enlisted in May 2012 as a franchisee with Pillar to Post Inc.

The professional home inspection franchise has given Niemi the ability to continue working as a homebuilder — albeit at annual volumes equal to about half of what he was doing pre-recession — while helping him get a foot in the door as the housing market gradually recovers.

“I’ve managed to hold my own, but in the last few years, it’s been slim,” he says. “Then again, that’s true for most builders.”

But for this particular venture, Niemi’s timing perhaps could not have been better.

According to data from Memphis-based Chandler Reports, the sales volume of homes priced at $300,000 or more increased 25 percent from 2011 through 2012; January housing inventory, meanwhile, has declined almost 13 percent each year since 2008.

At the same time, an end to the foreclosure crisis is in sight, with figures from real estate data provider RealtyTrac indicating a 73 percent decline in foreclosure inventory from its peak in January 2009.

The story told by these statistics indicates the local real estate market is indeed recovering, and as more people decide to purchase homes, more opportunities for home inspection will present to inspectors like Niemi.

“Danny being a builder is an added attribute that he brings to the table and because he has been on the building side, he knows the structural aspects and can define to the buyer exactly what is going on with a house,” says Tim Forrester, a broker in the Cordova office of Crye-Leike Inc. “It is technical, but he does it with real clarity.”

While home inspections are not required by law, a thorough inspection can identify problems that can save homebuyers tens of thousands of dollars on the front end. Especially as more foreclosures are worked off of bank balance sheets, the peculiarities of these properties in particular can lie undiscovered until after a home has been purchased.

“With foreclosures, you won’t learn the history of a house as well as you would in a party-to-party transfer,” Niemi says. “That’s why it’s so important to have a home inspection. Real estate agents definitely understand the need to have an inspection and they’re really pushing for it.”

Niemi, who has been working on the home inspection side for less than a year, says March 2013 has been his best month yet. He hopes to ratchet up inspection volume to the point of hiring an additional inspector, and he is presently building three speculative homes.

Like many other local builders in recent months, he has seen signs of promise on the construction side, as well.

“In the last week, I’ve heard activity on one of those,” he says. “I don’t know if it will turn into a contract, but they are close to being finished and as long as I keep my ties with the banks, I’m going to keep building.”