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Kit Home Companies Going Broke

Troubles with Kit Home CompaniesHow does a Kit Home Company go broke?

There has been cause for concern over the number of Kit Home companies that are in financial trouble and the number of customers and Owner Builders that have been adversely affected by this.

In particular, if you had a chance to read the recent article in the Bundaberg Newspaper about an Owner Builder losing money with a kit home company that went broke, and basically the Owner Builder having no protection under any warranty legislation. When you have a moment check out the article:

Kit Home Customers Fall Through Cracks

Here are some insights into the issue:

  • First of all the UBuild mantra for Owner Builders should be: Trust No One. The Building and Construction Industry is an extremely volatile and difficult industry and whether you are owner building or not, you should be extremely careful with every transaction. Ensure that you have good written contracts in place and that you manage your risks very carefully.
  • Kit Home Companies should not go broke! It’s that simple. Kit Home Companies go broke because their parent company or their manufacturing company goes broke. Any Kit Home Company that manages their own manufacturing or that is owned by a building company is a risk because they need to feed the beast, and so all revenue goes back into ensuring cash flow for the parent and partner company.

As a potential customer/Owner Builder you should be asking the following questions of a prospective Kit Home Supplier:

  1. Do you operate solely as a Kit Home Company or are you a building company with a division that is a Kit Home Supplier? 
  2. Do you own the suppliers you put the kits together from? ie The Frame and Truss Manufacturing (Steel or Timber), the Window Manufacturing Company, etc?

If the answer to these questions is “Yes” then you are at risk because these businesses require large amounts of cash flow to keep them going. Your kit home deposits go into that pool of cash flow.

A Kit Home Company should be cash flow positive. In other words they should be using their buying power to source the Kit Home Package for the client at the best possible price by ensuring that good suppliers are competing against each other for the business of that Kit Home Supplier. Kit Home Suppliers should then be flexible and customer driven in their ability to manage the needs of the customer in terms of product and finance.

UBuild cannot comment in detail about the Warranty Insurance issues raised in the Bundaberg Newspaper article, except to say that in every state the Home Warranty Insurance process is different – and that it is a mess. The fact that there is on ongoing Federal Government enquiry into Home Warranty Insurance is a testament to that fact. 

The bottom line is that customers should not lose money dealing with Kit Home Companies. These companies, if properly managed, should be service focused, flexible, wholesale building material supply companies. If they are involved in other businesses then you, as a potential customer, are at risk.

Please check out a recent article on the Owner Builder Advice site about a real customer who was rescued from a difficult situation because of the inherent flexibility in the UBuild Kit Homes process:

Close Shave for a Kit Home Customer

Good luck out there and keep us posted with any challenges or questions.

Close Shave for a Kit Home Customer

Recently a Perth Owner Builder almost lost her deposit to a kit home company. This Owner Builder was just about to pay her deposit when by sheer luck she discovered that the kit home company was heading into liquidation… unfortunately, a common problem at present with the challenging economic climate.

Lucky Kit Home BuyerThis customer contacted UBuild Homes through the Internet and asked for some advice on how she might be able to move forward. She was a bit distraught about her dealings with the other company, but we were able to reassure her that all was not lost. UBuild showed her a process with a flexible approach, and now things are well and truly on track.

Some of the benefits that this customer received by working through UBuild Homes:

  1. As she already had her design we were able to take that design and put a kit package together to her desired specifications. Even better news – we were able to do this at a price better than the original kit home company had provided!
  2. The customer was provided with a fixed quote to supply her kit home to lock up stage. Fully detailed and specified.
  3. UBuild Homes were able to source all of the materials locally. As the customer was in Perth this made for very low freight costs. As UBuild Homes are not beholden to specific manufacturers we can shop around locally and use our national buying power to keep your costs down.
  4. We were able to organize the delivery of the kit home package of materials in stages to suit the customer’s building schedule.

Things are now going according to plan and the customer has gone from distraught to extremely happy. It’s all about figuring out what solution is the right one, and then with help from experts, putting that solution into place.

Something else you might find of interest is the subject of ‘sustainable kit homes’. It has been pointed out that many of the components to a UBuild Kit Home are “low embodied energy products” due to local sourcing of materials, minimizing freight distance and the types of product used, eg. plantation timber.

UBuild Homes is dedicated to managed sustainable construction and you’ll read a number of articles on this topic in the future.

So if you need help finding the right solution to your Kit Home challenge or want to investigate sustainable kit homes further, then give us a call or simply contact us.

Ways to a Successful Kit Home Project

Anyone can Owner Build and the most effective way to Owner Build a house is by using the services of a Kit Home Company.

Ways to a successful Kit Home Project:

  • Research
  • Ask heaps of questions
  • Know what you want
  • Compare all the alternatives
  • Know exactly what is included (and excluded) with the Kit Home you choose.

You will save money if you are well planned, well managed, have good systems and are an active participant in the project management of your building project.

Owner Building is about flexibility and Kit Home Packages should always be flexible to meet the needs of each individual Owner Builder. There are multiple answers to many of the questions that need to be asked when building a Kit Home. The correct answers will vary depending on your circumstances, your location, your goals and your budget. We live in a fantastic country that gives you so many choices – which is great. But with that comes with the challenge of knowing how to make the right choices to ensure you have a successful outcome for your project.

At UBuild Homes you’ll find basic Kit Home Packages of $40,000 for extensions, right through to large Kit Home Packages of $400,000 for mansions. They are available in timber or steel, with flexible delivery schedules or as one delivery. You name it – and UBuild has been able to say “Yes, we can do that”. Take advantage of the UBuild Team’s experience, and give us a call, tell us where you’re at, what you want to achieve, how you want to manage your project, etc. We will only ever steer you in an alternative direction if there is a better, smarter or cheaper way of doing it without taking anything away from your style or the quality of your project outcome.

Modifying Kit Home Plans

Common questions about Kit Home Plans are:

“What if I have my own plan?”

“Can I modify a plan from the Kit Home Company?”

A Kit Home is usually packaged using a standard plan which is owned by the Kit Home Supply Company. Some Kit Home Suppliers only sell their standard Kit Home Packages and lack the flexibility or resources to modify or design a plan to suit your needs.

UBuild Homes is one of the Kit Home Suppliers that can create a customised Kit Home around your own plan. In fact this request is becoming more and more common. Let’s say you see a design from the product list that requires modifications in order to suit your own individual needs. This can be done, and why we recommend you choose a Kit Home Supplier who has the flexibility to tailor-make your Kit Home to suit you.