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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Elroy Jetson who wrote (57613)	7/12/2006 10:25:01 PM
From: renovator	Read Replies (2) \| Respond to of 306849

As an active GC I see an awful lot of missing pieces to this story. I am short Lennar as well as many other homebuilders, but not because any of them stiffed their subs. The license for Veemac is not in effect which could possibly create a conflict for Lennar to pay an unlicensed sub, particularly if some other major procedural lapse had taken place, perhaps an workers compensation coverage lapse. The license notes the suspension due to lack of a bond which could be just a payment problem or could indicate another level of unsuitability. No framing company is going to quadruple their crew without getting upfront money on the units to be framed. These units frame fast enough to have very quick invoicing as the progress points like frame-sheath-roof deck-windows in-are met so the cash flow should have been a matter of weeks only. Elroy's point about supply chain fraud is plausible. Something significant about this part of the story is missing. Something I wonder about is the possibility of conflicting deadline issues. If Veemac was crewed up because they were knocking out extra units for Lennar as well as a couple of the biggest local competitors to Lennar and site supers were lacking crews only to find them banging out the other guys work the fur would definitely fly. It is always possible that Veemac was also building out their own spec projects and not sending men to Lennar. Or worse, doing their own spec work with material billed to Lennar, or even worse-just tossed in the back of the trucks from the Lennar sites. If they were building on spec in the face of a dead market their shallow pockets would be picked long before Lennar. If the homes were not to code the follow up contractor would be charging for removals, rebuilding, extra inspections and their usual markup on top of it all. They would want big upfront money too, I suspect. This sort of thing is absolute poison in the construction community. All the crews from all the builders talk to each other all the time. In the old days much of that discussion took place over mahogany bars, now more of it takes place by the baristas. Everyone sees everyone else at the supply houses.