In the 1990s, Jeff Demaske had no intention of building houses. Instead, as owner of J & J Construction, his plan was to prepare lots for other builders.
That plan took a different direction when some builders couldn’t close on the lots during the economic downturn in the late ’90s. So Demaske did what they couldn’t do; he built a handful of houses.
That’s when he saw there was profit to be made not just in dirt work but in building homes.
If asked to identify any emerging theme resulting from the events of 2020, I’d have to say that we are challenging historical norms at a record-setting pace. There is a large degree of discord in our political system regarding the state of our economy and the suggestions on how to fix it are endless.
Shortly after, he met Scott Mueller, then owner of Journey Homes.
“I started doing his excavating work. We got to be friends. We hunted and fished together. The conversation always turned to if we could have more lots we could build more houses.”
They became partners on Willowbrook, a Greeley subdivision, with each keeping 75 lots and selling the remaining 50. In 2003, when Mueller picked up stakes and moved to South Dakota, Demaske bought his company.
Journey Homes has been on an upward trajectory ever since.
Today Demaske, along with Larry Buckendorf, who became his partner in 2001, and Scott Schumacher, who came on board as a minority partner in 2017, oversee three companies: Journey Homes, J & J Construction and Crow Creek Construction with a total of 125 employees. Factor in subcontractors and trades and there are about 2,000 people working on Journey subdivisions and homes at any given time, Buckendorf said.
“Our subs are incredibly loyal. Some have been with us from the beginning. Behrens Roofing has roofed every roof of ours. We talk to subs every month if not weekly. We have high expectations and hold them to it. The opinion out in the field is we’re hard to get along with. We just hold everyone accountable. There’s a difference.”
Subs bank on getting paid, Buckendorf added, and Journey doesn’t disappoint.
“They know there’s a steady and consistent revenue stream and that they will be paid,” he said.
Not only have the number of closings spiraled upward, so have home prices.
When Demaske got in the business, a starter home — which Journey Homes specializes in — sold for $89,000. Today Journey’s starter homes range from $330,000 to $500,000 in multiple subdivisions along the Front Range, including Greeley, Loveland, Fort Collins, Timnath, the Tri-Town area of Frederick, Firestone and Dacono, and most noticeably Severance, essentially in Demaske’s backyard. At one time Journey Homes even had a division in Colorado Springs.
“We believe we’re 20 to 25 percent of the market share,” said Buckendorf, a lawyer and CPA who cut his teeth in land development working at Clarkson Land and Lifestyle Homes in Greeley before joining Demaske.
The company has grown from 187 closings in 2001 to 644 closings in 2019. Demaske said they anticipate 500 to 600 closings annually for the next three to five years, unless the economy throws them a curveball. He also anticipates building 300 to 400 apartment units annually as well.
“We run our business based on what we do well. We don’t pay attention to what competitors do,” Buckendorf said.
What they do well is build the same houses. Over and over and over. A Model 1444 in Greeley, for example, is the same as a Model 1444 in Severance and in Loveland.
The downside, Buckendorf said, is there’s not much flexibility. “The upside is we know how to build those houses.”
From the time the foundation is poured and framing begins, a Journey home goes up in 45 work days.
“We had good success working on our efficiencies, bringing ways to finish products with high quality standards and quicker than other builders,” Buckendorf said. “Jeff is hands on. You’ll find him onsite, behind the backhoe, managing the site, dealing with inspectors.”
It hasn’t always been smooth sailing, but during the Great Recession of 2007-09, Journey Homes was one builder that escaped unscathed.
“We weren’t over leveraged,” Buckendforf explained. “We went to our banking partners and explained how we’d get through it. We also had cash reserves. Jeff pumped a significant amount of cash back into the business to keep us solvent.
“We made it through by following through with what we said we’d do,” he added. “We never defaulted on loans in the late 2000s. That speaks to the tenacity of our entire organization.”
Without intending to, and only because the opportunity presented itself, the partners became bankers in about 2012 when they bought Loveland-based Advantage Bank.
“It was a very risky market and we were the largest shareholder, and stuff was just going wrong,” Demaske said. “All we were trying to do was help the bank survive. It is our favorite bank. The only way for it to survive was to buy it. They needed two things: capital, which wasn’t easy to come by, and structure. We provided both,” Demaske said.
During their ownership the market changed and assets that once were worth $10 were worth $20 a year later.
“We sold it in August 2019. It was another timing deal. That goal was to exit in ‘21 or ‘22, never to be in it long term. We didn’t see ourselves being 25-year bank owners. There’s a lot of regulation in banking, but Larry was able to deal with it. Without him that deal wouldn’t have been possible.”
OK, let’s talk about the lake in front of Demaske’s home at the intersection of Colorado Highway. 257 and Weld County Road 74 (Harmony Road).
“It’s not a lake because Jeff wanted a fishing lake,” Demaske said. Instead, the water, which comes from the Eaton Ditch system, is not treated but instead filtered multiple times and delivered as nonpotable water to 1,500 lots in Severance as well as to 50 acres of parks and 30 to 40 acres of open space in Severance.
“Cornfield to carpet is our bread and butter,” Demaske said. “It’s pretty darn fun in the spring to go to the subdivisions one or two years later and see 30 kids playing in the park you built. Quite honestly, most of those people would never be able to afford a house if it weren’t for us.”