LGI Homes, Inc. (‘LGI’) engages in the design, construction and sale of new homes in markets in Texas, Arizona, Florida, Georgia, New Mexico, Colorado, North Carolina, South Carolina, Washington, Tennessee, Minnesota, Oklahoma, Alabama, California, Oregon, Nevada, West Virginia, Virginia, Pennsylvania, Maryland and Utah.
During the year ended December 31, 2024, the company had 6,131 home closings, including the bulk sale of 103 leased, single-family homes.
Business Opportunities
Since Decembe...
LGI Homes, Inc. (‘LGI’) engages in the design, construction and sale of new homes in markets in Texas, Arizona, Florida, Georgia, New Mexico, Colorado, North Carolina, South Carolina, Washington, Tennessee, Minnesota, Oklahoma, Alabama, California, Oregon, Nevada, West Virginia, Virginia, Pennsylvania, Maryland and Utah.
During the year ended December 31, 2024, the company had 6,131 home closings, including the bulk sale of 103 leased, single-family homes.
Business Opportunities
Since December 2013, the company has grown substantially, expanding its operations to various markets in multiple states. As of December 31, 2024, the company was active in various communities throughout the United States.
The company offers multiple product lines, including attached and detached entry-level homes, and active adult offerings that are marketed and sold under its LGI Homes brand, and luxury homes that are marketed and sold under its Terrata Homes brand.
During 2024, the company’s average home completion time was approximately 105 to 135 calendar days, and its home size ranged between 900 to approximately 4,100 square feet.
The company pursues a flexible land acquisition strategy of purchasing or optioning finished lots at attractive prices, or purchasing raw land for residential development. Given the company’s successful history as a land developer, it is experienced in converting raw land into residential communities. The company endeavors to maintain a pipeline of desirable land positions for replacement and new communities. It generally targets land acquisitions that are further away from urban centers than many other suburban communities, but have access to major thoroughfares, retail districts, and centers of business. Such areas generally result in a better value for the homeowner, either through lower sales prices or larger lot sizes. The company considers development opportunities that meet its profit and return objectives. Projects of interest are typically evaluated at the division level using an extensive due diligence checklist that includes assessing the permitting and regulatory requirements, environmental considerations, and local market conditions, and evaluating anticipated floor plans, pricing, and financial returns. The company also determines the number of potential residents in the market and rental households that are within driving distance of the proposed project.
Additionally, the company engages in other business activities that leverage or complement its core homebuilding operations. The company’s wholesale business builds and sells homes primarily to large institutions interested in acquiring single-family rental properties through bulk sales agreements. Beginning in 2021, the company began building and leasing a number of single-family homes in select, existing communities. These rental projects are income-producing, and the company maintains the option to sell these homes in a bulk purchase agreement. Finally, from time to time, the company enters into strategic joint ventures. It has two equity-method real estate joint ventures and four additional joint ventures engaged primarily to provide services, such as mortgage and insurance, to its homebuyers.
Sales and Marketing
The company’s well-defined sales and marketing approach focuses on converting renters of apartments and single-family homes into homeowners. The company uses extensive digital and print advertising to attract potential homebuyers. It employs various marketing methods, such as digital marketing strategies, interactive online media, social media, direct mail, directional signage, and billboards. These methods have proven highly successful in reaching its target market, placing potential homebuyers in front of its trained sales professionals, and communicating its core messages of value and dream fulfillment.
While a proportion of the company’s business comes from realtors, its marketing efforts are principally designed to connect directly with potential customers currently renting their residences and encourage them to schedule an in-person appointment at one of its information centers. The company’s information centers are typically open eight to ten hours per day, 359 days per year, and are generally staffed by two to four sales professionals who are supported by a dedicated loan officer.
The company provides each customer with a comprehensive introduction to the community and the surrounding area, furnishing them with detailed information regarding utilities, schools, homeowners association dues and restrictions, local entertainment, and nearby dining and shopping options.
Homebuilding Operations
The company’s homebuilding operations are organized and managed by seven operating segments: West, Northwest, Central, Midwest, Florida, Southeast, and Mid-Atlantic. The Midwest division is included in the company’s Central reportable segment, and the Mid-Atlantic division is included in its Southeast reportable segment.
The company offers a set number of floor plans in each community with standardized finishes. Doing so enables the company to utilize an even-flow, continuous construction process that is designed to efficiently build and maintain an inventory of move-in ready homes that are available for immediate sale.
The company employs experienced construction management professionals to perform the tasks of general contractors for home construction in each of its communities. The company’s employees provide the purchasing, construction management, and quality assurance for the homes it builds, while third-party subcontractors provide the material and labor components of its homes. In each of the company’s markets, it employs construction managers with local market knowledge and expertise. Additionally, the company’s construction managers monitor its compliance with zoning, safety, and other regulations, production schedules, and quality standards for its projects.
The company also works closely with its construction managers and subcontractors and trains them using a comprehensive construction manual that outlines the most efficient way to build an LGI home.
The company’s homebuilding operations utilize a paperless purchase order system to conduct business with its subcontractors and suppliers. The company’s master build schedule allows its trade partners to receive their specific tasks from its electronic system and plan several weeks in advance before starting their work. This means of communication allows the company’s subcontractors to schedule their crews efficiently, thereby allowing for better pricing and better quality of work. Typically, the company’s contractors are paid every week, which contributes to the strength of its business relationships with them.
The company’s homes are designed to meet the preferences of its target market of potential homebuyers and enable cost-efficient and effective construction processes. In 2019, the company introduced its CompleteHomeTM and CompleteHome PlusTM packages to continue its legacy of offering buyers well-appointed, move-in ready homes, a streamlined buying experience, and superior quality with even more standard features than offered before. Each of these packages includes preselected, upgraded features, including stainless steel appliances, cabinets with crown molding, granite or quartz countertops, undermount sinks, as well as convenient outlets with USB charging capability and a Wi-Fi-enabled garage door opener. Additionally, both packages include programmable thermostats, double-pane Low-E vinyl windows, LED flush mount ENERGY STAR lights, and a variety of other energy-saving features. The company’s CompleteHome Plus package includes everything in the CompleteHome package plus 42’ upper cabinets, nine-foot ceilings, designer paint selections, additional landscaping, and window blinds in every room of the house.
The company offers an attached townhome product in certain markets that enables it to keep its entry-level price point within reach of more new homebuyers.
The company’s active adult community offers affordable homes in both open and age-restricted lifestyles in amenity-rich communities. This community leverages existing floor plans with minor modifications designed to meet the needs of active adult homebuyers at prices that present a compelling value proposition.
The company’s Terrata Homes brand allows it to leverage its systems and processes, including its customer-centric sales system, to deliver move-in ready homes with preselected luxury features. During 2024, the company closed 318 Terrata Homes. As of December 31, 2024, the company offered Terrata Homes in 18 of its active communities.
The company’s two equity-method real estate joint ventures and four additional joint ventures provide a streamlined, customer-focused experience for its homebuyers. LGI Mortgage Solutions provides mortgage services to its customers through an unconsolidated joint venture. LGI Insurance Solutions provides homeowners and other insurance products to its customers through an unconsolidated joint venture.
The company’s wholesale business provides opportunities for it to leverage its even-flow construction methodology to build and sell homes primarily to large institutions interested in acquiring homes to be used as rental properties through bulk sales agreements. During 2024, the company had 552 wholesale home closings, which represented 9.2% of its total home closings in 2024.
Land Acquisition Policies and Development
The company continues to be an active and opportunistic acquirer of land for residential development in its markets. The company sources land from a wide range of landowners, brokers, lenders, builders, and other land development companies. It generally acquires raw land and finished lots in affordable locations that are further away from urban centers than many other suburban communities, but have access to major thoroughfares, retail districts, and centers of business. The company conducts thorough due diligence on each of its potential land acquisitions, and it typically looks at numerous opportunities before finding one that meets its requirements. The company also maintains a pipeline of desirable land positions for replacement communities and new communities.
The company’s lot inventory was 70,899 owned or controlled lots as of December 31, 2024. The company had 151 active communities as of December 31, 2024.
The company utilizes land banking financing arrangements on a limited and strategic basis. It has land banking financing arrangements with a third-party land banker to repurchase land that it sold to the land banker as a method of acquiring finished lots in staged takedowns, while limiting risk and minimizing the use of funds from its available cash or other financing sources.
The company has also purchased larger tracts of land across its markets, which will provide it with more opportunities to build homes with multiple price points in its communities. Similar to the company’s home building operations, its personnel oversee the contractors who perform the development work.
The company has strong relationships with the land brokerage community in many of its markets.
Homes in Inventory
When entering a new community, the company intends to build a sufficient number of move-in ready homes to meet its budgets. The company bases future home starts on home closings. As homes are closed, the company starts more homes to maintain its inventory. As of December 31, 2024, the company had a total of 2,685 completed homes, including information centers, and 1,358 homes in progress.
Seasonality
In all of the company’s reportable segments, it has historically experienced similar variability in its results of operations and in capital requirements from quarter to quarter due to the seasonal nature of the homebuilding industry. The company generally closes more homes in its second, third, and fourth quarters. The company’s revenues and capital requirements are generally similar across its second, third, and fourth quarters (year ended December 31, 2024).
History
LGI Homes, Inc. was founded in 2003. The company, a Delaware corporation, was incorporated in 2013.