To do that, the company has to be very efficient. If another company is building a super luxury apartment development in the same market and they’re going to get $1.25 per square foot in rent, they’re still paying basically the same cost for supplies and labor, points out Brisben.
“They’re getting $1.25 per square foot, where my rents are considerably less, because [my rents are] controlled by 60 percent of the area median income,” he says. “We’ve got tax credits that we can sell to make up some of that difference. But, believe me, if we are not 20 percent more efficient than the next builder, we wouldn’t be able to make money in this business.”
Some of the company’s cost-control methods are very basic. For instance, the company chooses to emphasize quality interior finishes and exterior materials rather than spending a disproportionate amount of the budget on glorified amenities which are only used by a small percentage of residents.
“I think you really have to divide up the total costs. High-end amenities vs. unit costs,” says Brisben. The Brisben Cos. prefers to put money into the units through things like nice finishes, upgraded appliances and significant use of brick on the exteriors.
“We focus on materials that will make projects last in the long run,” says John L. Gambini, president of Brisben Development Inc., a subsidiary of The Brisben Cos. “We use quality materials in all key components of construction, from lumber to the finishes, including kitchen cabinets. We use oak cabinets instead of particleboard laminated. We also buy higher-quality material such as 28-ounce carpet with color through yarn so they will hold up [for] long periods of time and provide greater wearability.”
The company understands that to be successful, it has to build its projects with quality in mind, says Gambini. “First and foremost, we focus on quality. Even though we are in the affordable housing business, we are delivering product equal to or better than market-rate projects.
I think that really helps us stand head and shoulders above competition.”
Focusing on quality is good for the residents, and good for the company. The Brisben Cos. has a long-term ownership perspective in all of its developments.
“I’ve done quite a bit of LIHTC financing, and he is probably the best in the business. He’s got a strong organization,” says James H. Beck, vice president, commercial real estate at Firstar Bank N.A.
Beck also has praise for the company. “[It pays] a lot of attention to detail and numbers on a deal. [It has] been very successful at developing and producing good quality housing that ends up being very profitable for [the company] and the bank.”