‘Another Type Of Builder’ Who Takes On Projects For Profit

Drive east down Route 27 and the evidence that building big houses is big business is everywhere—from the views of massive estates rising along the potato fields, to the glossy signs and offices of the builders and architects who build them.

But there is another type of builder able to coexist with the big boys, one who provides a unique home designed with thought, creativity and style. Each of their projects is different, depending on the lot, location or existing house to be renovated. The finished projects appeal to buyers who are looking for something that’s not cookie-cutter, that has the feel of a custom-built and custom-designed home.

For the sake of this article, I am going to refer to us as “owner-builders” instead of “spec builders,” because many of us started with one house that we had designed and built or renovated for ourselves. When we sold, it left us with a nice profit—and an itch to do it again, but better.

Outsiders often think it looks easy to buy and “flip” (a term I detest), but it takes skill to see the value in the properties we choose, many of which are overlooked by other buyers. Sometimes we live in the projects and sometimes we live in rentals—it’s not the easiest lifestyle. And it takes time and money to really design something thoughtfully with an architect or designer, rather than just build the same house over and over again.

The best scenario is to find a slightly underpriced lot or home with potential, and budget at the very least $350 per square foot for new construction or renovation, then assess whether the improved property can sell in a price range that will create a profit that’s worth the time, effort and outlay of capital. Generally, the builder’s ideal is to spend one-third on the land and one-third on the build and come away with one-third profit, but in the Hamptons the land and building costs are more expensive, so that formula is nearly impossible to achieve.

In my case, my husband, George Fontanals, and I moved to East Hampton from New York for my teaching job. We couldn’t find any homes we liked in our price range, so we bought a 1-acre lot on a nice street in Springs near the harbor and had an old friend, a New York architect who had worked for I.M. Pei, design us a very cool house with Japanese elements—sliders that evoked Shoji screens and a rock garden—as well as traditional elements like long views and a southern exposure. George acted as the general contractor—he had experience doing renovations—and I quickly learned about interior design. The house was modest in size, but it had great flow, light and style. We chose earthy paint colors and natural materials like limestone, marble and slate to warm up the contemporary design.

After we had lived in the house for two years, the neighborhood had changed, so we decided to sell. Unfortunately, this was in 2008, when the real estate market was in a freefall, but remarkably we had to show the house only a few times before we had a buyer. We believe the individuality and quality of the house made it desirable even in a weak market.

The profit allowed us to buy a 1.6-acre lot in Amagansett North, but also meant we would have to move into a rental. We went back to the drawing board, this time with a new architect who had more local experience. This second house was also a custom design with a southern exposure, but it was double the size of the first house and had a two-car garage and gunite pool. We called it a “contemporary farmhouse” (a term now quite overused) for a style that was hybrid—with both contemporary and traditional elements. The project took four years from land purchase to house sale, which is slow for most builders, but we were also working full time as real estate brokers.

Our last buyer fell in love with the house while the outside was still quite rough. We didn’t have the pool landscaping or garage in, but the interior was practically done, with a beautiful kitchen, baths and white oak floors, so she felt confident the rest would be just as good. We have had good relationships with past buyers, and they can call us anytime if problems arise.

Our current project is a renovation and expansion of a house we lived in for three years, also in Amagansett North. We worked with yet another designer, and the house has elements of our previous projects and new elements like an infinity edge pool and meditation room. We tried to start construction in January 2015—the foundations for additions were in—but couldn’t really start until April 2015 because of snowstorms. This put us three months behind, meaning our loan and insurances needed to be renewed, adding extra cost.

It has also put us in an awkward season to sell—summer. These projects always cost more than you budget, so the last few months can be stressful financially. However, the house is approaching completion and will be ready for sale soon.

There are a handful of other people doing what we do, but I chose to speak with Ed Krug, who has renovated and sold five projects in East Hampton, because I’ve always admired the contemporary but warm design and quality workmanship of his projects. He has graduated from owner-builder to developer with his own firm, Rennew Properties.

A marketing consultant with a firm in New York, he had been trained as an architect and had done a few projects for himself before moving to East Hampton. His first project here was his own house in the village, a 1960s builder’s modern that he transformed into a stylish contemporary, both inside and out. He feels, and I agree, that there is a knack to seeing the value in potential house projects, or lots, that sharpens with experience, and that the successful owner/builder needs to be able to see through the negatives to find gems in the rough.

Mr. Krug is on the Architectural Review Board of East Hampton Town and on the board of the Peconic Land Trust, and so has a vested interest in “preserving this special place” where we live. He prefers renovating existing structures to tearing them down, because it’s more challenging and environmentally friendly to “reimagine and re-use” rather than just cart the house away in dumpsters.

Using existing structures also preserves the feel of the neighborhood, where original homes are generally about the same size, instead of maxing out the lot for a big house that will dwarf the others.

His projects are always staged and furnished beautifully, providing an atmosphere where buyers can imagine themselves just moving in. “Staging is crucial for a timely sale,” he said. In terms of landscaping, he believes less is more and consults with landscape designer Edwina Von Gal and her Perfect Earth Project to create natural, toxin-free and sustainable landscapes.

His latest project with New York architect Stephen Alton is a fully renovated, 3,200-square-foot, modern waterfront home with 120 feet of frontage on Hands Creek.

Designing and selling custom renovations, and new constructions for sale, is not for the faint of heart. Mr. Krug feels HGTV remodeling shows lead people to false conclusions and unfounded confidence in costs, and I agree— the costs they give on those shows are impossibly low and very misleading.

Financially, these projects can be risky, and there are always problems and delays. But the satisfaction of imagining and then designing and creating thoughtful and beautiful new living spaces cannot be beat. And making a profit doesn’t hurt, either.