The company—which has closed in excess of $500 million in combined debt and equity—recently added retail and affordable single-family properties to its portfolio mix and hopes to expand the business to other states. A long-term owner of its properties, Southwest is fully integrated with in-house development, construction, and management divisions.
A New Look Southwest Housing is leaving its physical stamp on communities by redefining the look of affordable housing, one property at a time. “Our philosophy is to build communities that no one can drive by and say, ‘That’s affordable housing,’” says Potashnik.
And the company is certainly accomplishing its goal. “Their projects are head and shoulders above [other] affordable projects,” says Buzz Owens, a principal at Beeler Guest Owens Architects, a Dallas-based firm that designs many of their buildings. “Honestly, Brian does things in some of his projects that we don’t even do in A++ projects, like flooring treatment in corridors,” says Owens.
Whenever possible, Southwest offers a townhome design with a single-family feel instead of the traditional garden-style layout. Units feature 9-foot ceilings, space-saver microwaves, ceiling fans, French-style patio doors, and energy-efficient appliances, while amenities include elaborate clubhouses, colorful playgrounds, and more.
Such a top-notch amenity package and attention to detail surprised Kent Plemons when he first joined the Southwest team as vice president of operations two years ago. “Coming from a very high-end luxury JPI [Cos.] world to this, you have these pre-conceived notions that it’s custom home versus a tract,” Plemons says. “It’s really surprising the way Brian does it very much on par with a lot of conventional products, if not better.”
As long-term owners of the properties—typically 15 to 30 years—Southwest tries to eliminate any possible headaches that may emerge over time. The company carefully selects quality building products that will last, even if the up-front cost is higher. Mission- and Craftsman-style structures feature fiber-cement siding, stone, brick, and stucco. Units often include ceramic tile entries, instead of more destructible vinyl composite tile.
“We spend money that we don’t have to spend in a lot of areas,” says Potashnik. “We do it for long-term benefit. The only thing that you have in this industry is your reputation with your lenders, your investors, with the community.” Southwest’s dedication to sound construction has helped the company enter neighborhoods that other developers have been shut out of, he adds. “We can take them to see product that we have built that is of quality.”
Brian constantly tours his properties, picking up empty soda cans and candy wrappers as he carefully inspects the sites. “I tour properties everyday,” says Potashnik. “In fact, my kids won’t even get in the car with me because they don’t want to go to another construction site.”
Southwest Strategies So just how does Southwest build great-looking projects that rent at affordable rates? Like many affordable developers, the company relies on the usual strategies. Southwest keeps architectural and engineering fees down and speeds up the development schedule by reusing basic floor plans and building types. Plus, in-house construction, development, and management divisions help control daily costs, while the company pursues every source of possible funding, from tax credits and bonds to HOME funds and community grants.
But what really sets Southwest apart from the competition and helps get these high-end projects off the ground is the strategic partnerships the company forms with housing authorities, housing finance corporations, and nonprofits. Southwest acts as a service provider in these deals, providing development, construction, and property management services, while the nonprofit entities retain the majority of the benefits of the ownership of the property. The partnerships help Southwest get its hands on much sought-after land and a break on property taxes.