MODULAR HOME BUILDER

The leading blog for the modular home industry.

Sunday, October 26, 2014

My Interview with Anthony Zarrilli, President of Zarrilli Homes in NJ

This week I interviewed Anthony Zarrilli, the President and CEO of Zarrilli Homes in Brick, NJ. Anthony is one of the biggest custom modular home builders in the east.

Anthony Zarrilli

Modcoach (Gary Fleisher): Let’s start off with an easy question. How did you get started in the modular housing industry?

Anthony: My father constructed a modular over 41 years ago but it was basically a glorified double wide that rolled off the truck onto the foundation. He vowed to never do one again. Then about 18 years ago I started investigating the industry and after two years of due diligence set my first modular approximately 16 years ago.

I grew up in a family of builders and proud to say I am a third generation builder.

My career started at a very early age taking rides to job sites along side my father in his truck. At age 4-5 years old he would bring me on job sites and I would pick up nails to reuse and watch all the workers perform their duties. From that point as I matured I worked up to pushing a broom and cleaning up sites, then masonry, carpentry-framing and finish work, electrical work, HVAC, tile, hardwood, plumbing, siding, roofing, etc. I performed ALL facets of construction hands on for many years prior to running the jobs as a supervisor. I went to college at the University of Florida in Gainesville and obtained a degree in Economics with a minor in Finance. I also obtained my MBA from Georgian Court University in NJ. The Zarrilli family has been building at the Jersey Shore for well over 75 years. I can go much further into my experiences and education (reading blueprints, using survey equipment, operating machinery (heavy and light equipment), schooling, etc. but I am not sure how much you would like to hear or know.

Modcoach: That is one awesome background. Now on the some questions about modular construction today. How has Hurricane Sandy or other natural disasters, like floods or forest fires, impacted your business?

Anthony: Sandy is noted as one of the worst natural disasters to hit the continental US ever. Obviously it created more physically work in our area but has caused many other problems as well. I will focus on a few that directly affect the modular industry. Before Sandy Zarrilli Homes was growing at a double digit percentage year after year with 2012 being our best year. We were steadily growing and building homes for our customers that “wanted” to build a new home. Now after the storm almost all customers that are building are for the fact that they “have” to rebuild their home. This starts the process of on a completely different mindset and stress level; coupled with the fact that they are not obtaining the necessary money from their insurance company, SBA, FEMA, Government Agencies, etc. Add that to the permit process is much more complicated and lengthy, everyone became a contractor or located themselves here to be one, and we went from having approximately a half dozen modular builders in our area to 3-4 dozen.

Their lies the main problems that need to be dealt with that’s directly hurting the modular industry not only in NJ but throughout many parts of the US:

Modular homes are being sold by inexperienced and unqualified “salesmen” and I use the term loosely. How is someone supposed to correctly sell a product that they know nothing or little about and has no experience within the industry. Right here alone it is a situation set up to fail.
Unqualified builders have become attached to a or several factories to build modular homes. I drive around every day seeing homes set that have or proceeding with MANY problems. (boxes don’t line up, roof lines are off, set in wrong locations and must be moved, and the worst one homes are sitting for 6-12 months before being worked on for completion. There are two main reasons that are industry is looked at as the “advantage” to build modular- one time and two cost savings. Well when a project is sold by someone who doesn’t know what they are talking about and then built by an inexperience modular builder you just took the only two items presently keeping our industry alive. I know we offer many more advantages but these are the two that are perceived presently by the public as the main reasons to build modular. If you take them away due to the reasons stated above we are at a much more disadvantage than we deal with presently.
A lot of out of town or state contractors have come to our area and besides the problems above causing other legal problems. They are under or not insured at all. They are offering unrealistic expectations and taking large deposits then under delivering and/or leaving without doing work with the only money that the customer has to work. By the time they get to me, again, the stress and frustration levels are at a boiling point. Modular manufactures, at the least, should be “interviewing” properly their customer base and just don’t sell to anyone who comes along-this is EXTREMELY bad for our industry’s reputation.
We are also assisting our customers from day one after the storm from the ICC, insurance, RREM, bank financing, etc. paperwork to obtain the necessary funds to complete the project through variances, lot consolidation and other documentation. We also are doing a lot of volunteering work to assist the public with a lot of the paperwork stated and also remediation of job sites, demolitions, clothes and furniture drives, etc. to also get people back on their feet. There is so much more I can go into but for the mere fact of time and space will end with these three. If anyone would like to discuss further I can be contacted at my office anytime.

Here is a house we are finishing up in Long Beach Township for a Sandy victim-NOT your “typical” modular home.

Modcoach: Are you doing commercial projects like hotels, apartment buildings, etc?

Anthony: We are currently in the process of building a few commercial projects with the one that will come first is the Shellilegh Club in Belmar, NJ. This is a private club that is sole purpose is to raise money and help the community. I am proud to be a member as well be the company chosen to lead this project into becoming a reality. It is a 40’ x 90’ structure that is going to have a prefabricated basement, Superior Walls, and twelve boxes that make up the modular structure. We helped the Club in obtaining necessary variances, demolition, plans, engineering, site work, etc. We are going to build this structure behind the existing one and finish it prior to knocking down the old one. We will obtain Certificate of Occupancy on new then knock down the old one so that the Club does not skip a beat in their fund raising activities. We are constantly trying to accommodate all of our customers in their each unique situations. Once done the club will continue working on fundraising to help so many less fortunate throughout our community. I cannot wait to see what this new building will help them do in the future!

Modcoach: Is the size of today’s homes different from the boom times before 2008?

Anthony: The homes we are constructing today are much more filled with amenities than square footage. Although we still are doing homes presently from 6000-11000, we are not choosing to do them as frequently. Our resources are much better used to assist in getting people back in their homes and having them obtain some sense of normalcy in their lives. Our home sizes are typically falling between 1800 sq. ft and 2800 sq. ft packed with items such as pot fillers, elevators, IT smart homes, high efficiency products, Gourmet kitchens and spa style baths, master bedrooms with sitting/reading areas, large balconies and entertainment areas, etc. People want to be pampered when they come home and these types of features are what they are looking to enjoy when coming home after a long day at work or from the beach. Customers are not looking to have large rooms that are un/partially furnished and not used but more modest but extremely “comfortable.

Modcoach: I’ve written quite a bit lately about stricter codes and regs for modular housing. Have state and local code regulations been hurting your business?

Anthony: New Jersey’s local municipalities regulations differ from township to township. Zoning, Engineering, Building codes, etc. Townships in our area understaffed with an extreme workload. Lost permit packages, high frustration and stress levels, long approval times are common place every day. It has been extremely difficult obtaining any type of updates on permits during the process from any township department. This was always a problem prior to the storm but manageable, presently it has become a huge bottleneck in the process stifling the entire building process. Typically a permit once submitted would take 6 weeks for approval now are taking 3-4 months… We are trying to work closely with the townships, having meetings to discuss ways that each party can improve their part of the process to assist in becoming more efficient. A lot of work is ahead of us but we are making progress slowly. If we all work together this process can be streamlined but all parties must be willing participants; and quite frankly some townships choose to ‘participate” some others not.

Modcoach: The cost of shipping homes is continuing to rise. How is that impacting your home sales?

Anthony: Any increase in cost has an impact on each and every home sale. Shipping happens to be a major cost that has continuously been on the rise. The factories as well as the their trucking services need to be more sensitive of their costs and how it is affecting the number of homes being delivered. This cost is one of the largest disadvantages we, as an industry, have in comparison to the “ on-site stick built” market. I am not sure of a solution to this problem but I am sure if we all work together we can come up with a more efficient and cost effective solution to not price modular homes out of the market.

Modcoach: Are you getting more involved in social media such as Facebook and Pinterest?

Anthony: We have always found social media as a great tool for advertising, branding, and getting information out to the public at an inexpensive cost. For example: we will post pictures and videos on Facebook the day of the house set. We start with delivery and take it box by box through raising the roof and the crane leaving the site-all time stamped. We then do weekly pictures with job progress. You can’t imagine the feedback we get from the customers as well as the general public. They are amazed and ask a lot of questions as well as share the information with their friends, family and colleagues. Twitter, Pinterst, YouTube, etc. are inexpensive powerful tools to get your presence known and distribute information. If you are not on social media and using it as much as possible you behind the curve.

Modcoach: Until last week I used 3% as the modular share of the new home market but I have downgraded that to only 1.3% since seeing the second quarter of 2014 report. Why do you think that the modular home industry has such a low % of the total new home market?

Anthony: There is no easy answer to that question but here is what I have observed.

The industry in of itself is its own worst enemy. There is lack of knowledge, experience, training, etc. from the factory to the retail sales teams. Everyone just wants to sell homes but are not really sure how to do it. Our industry, and not by choice, is under the microscope and everyone is always looking for a reason for us to fail. This is not the case in the “stick built” world. We have a great product but need to move it from factory to families as seamless as possible. I find that Zarrilli Homes’ biggest obstacle is time. For some reason, whether it be tv shows, books, paper ads, etc. stating an unreasonable time to be in your new home from day of set, is really setting us up for failure as well. We ALL need to be more conscience of the information being distributed to the public. Inaccurate information, as minute as it may seem, can have long lasting ripple effect for years to come throughout the industry.

State and local regulatory agencies, (most the permit agencies), need to be educated on modular process. They seem to require MUCH more information on a modular home for the permit process than for the conventional stick built home. This deters many customers and builders from going that route due to the shear amount of paperwork and assistance required to get through the process. I compiled a permit package for a stick built home and a modular home side by side and send a picture in the your blog-the stick built home package was about 2” thick while the modular home was over 14+” thick. I think this is a sign of just how tedious the modular permit process can be. I am confused on why it has to be this way for we are all building homes just one method is building more off site and trucking in to the lot (much more efficiently and higher quality as well) than the other. Why is SO MUCH more information required?

Educating, Educating, Educating-I can’t stress this enough. We must educate everyone from the factories, builders, permitting agencies, to the customer or final end user, about the modular home industry. There are too many misconceptions, misinformation and miscommunication going on every day. Homes can be made in any style, size, or layout that a homeowner wants-there isn’t any modular home we cannot build-it is just a matter of how much work will be done on site. We have built homes from 500 sq. ft. through 12,000 and the process is the same it is just how much work is left to do on site.

For example most people think that a modular home can only have rooms the size of the “boxes” transported on the trucks and the specifications shown on websites of factories is all you can choose when this is just not the case. You can have rooms 30’ x 30’ without a wall in the room but a piece of steel will be installed on site to accommodate and any cabinet, plumbing fixture, elevator or fireplace, etc. installed in your home..
We cannot let builders who are not qualified or don’t have the proper knowledge build modular homes without training. Factories have to be more prepared to do more than sell a home to someone who has never built a modular successfully. This can be devastating to our industry when a modular home is set and problems start from day one-from the home not fitting properly, to sitting for long lengths of time without work being done, etc. all ending with a very dissatisfied customer. I see this going on every day and if we want to raise the bar in our industry we must raise the bar on the “players” involved.

Anthony: Gary, you ALWAYS do a wonderful job with highlighting both the good that is going on in our industry as well as the “not so good”. The best part is when we see you go above and beyond to showcase the reasons for our struggles and what we can do to correct them. I can literally write a book on this industry, including the processes from sales to certificate of occupancy as well as warranty and customer relations but hope the few points I’ve made is enough for now. I am optimistic the information I shared will in some way help in the process of educating, if only one more person, a builder, factory, vendor or customer, so that they can see how great our industry and the product is that we offer. I truly love what I do but just wish that so many facets of it weren’t made so unnecessarily difficult so that we may complete our homes and see families enjoying more of them every day.

Modcoach: As always it is a good experience talking with you. The issues you have mentioned are what every modular home builder faces. Thank you so much for taking the time to share with everyone your thoughts about improving our industry