LGI Homes (LGIH)

The WSJ highlights LGI Homes (LGIH), a Texas-based homebuilder. Unlike others in the industry, LGI focuses on entry-level homes, and is seeing a booming business.

The key: LGI’s extensive marketing operation. The company sends out 400,000 targeted fliers each week to apartment complexes and other rental units within a 25-mile radius of its new home developments.

“Tired of paying rent?” reads one LGI flier from the Phoenix area. “Own a new home for $799/mo.”

LGI also notes in its fliers that its homes may not require a down payment. That is because home buyers may be able to qualify for rural home buyer programs run by the U.S. Department of Agriculture or loans from the U.S. Department of Veterans Affairs.

To close the deal, LGI instructs prospective buyers to call a toll-free number to set up an appointment for viewing a home.

“They know what they’re paying on rent, and if that number on the flier is lower, that’s going to open their eyes,” said Rick Palacios Jr., director of research at John Burns Real Estate Consulting.

The WSJ notes that the company is experiencing very rapid growth. LGI builds its homes in more remote areas in order to keep costs down. According to the WSJ, LGI’s average sale price is $197,450. That “compares with $362,000 and $290,400 for large builders Lennar Corp. and D.R. Horton Inc., respectively.”

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Posted by on October 24th, 2016 at 11:52 am


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