In 2018, following the sale of Gehan Homes, home builder veteran Glenn Gehan launched GFO Home in Austin, Texas. Four short years later and with a pandemic thrown into the mix, Gehan announced his expansion into the Dallas-Fort Worth market as well as plans for future expansion into Houston and eventually other larger cities in Texas.
BUILDER had the opportunity to speak with Gehan to hear more about him and the family business, the path he took to establish GFO Home, how it fared when the pandemic hit two years ago, and his goals for the company moving forward.
BUILDER: Tell me a little bit about yourself and how you got into the home building industry.
Gehan: I graduated from college, and there was a recession going. I only had two job offers—an all-commission, no-salary job with Pulte Homes and a trainee job with a bank.
I decided that I might be able to figure out how to start a home building company, but I was not going to start at a bank so I took the home building job. After six months, they moved me from Dallas to the corporate office in Detroit for a management training program; after three months to Tampa where I stayed for a year. I decided to move from sales to construction and became assistant superintendent in Tampa, then got recruited away by Centex Homes to go to Orlando and run my own subdivision. After two-and-a-half years, my older brother, Tim, and I decided to start Gehan Homes, and I moved back to Dallas.
BUILDER: As a fourth-generation home builder, what have been the biggest takeaways from earlier generations?
Gehan: Don’t retire. My dad told me that retiring would be a bad decision prior to the sale of Gehan Homes. Dad has been retired for 42 years and is still around. But he was right, retiring wouldn’t have worked for me.
I also learned that working with your family is the best. Starting Gehan Homes was a great opportunity for me to work with my family. I was 26 years old, had enough capital, and my brother and I got to do whatever we wanted to do and try out whatever ideas we wanted to—we were completely autonomous.
BUILDER: After selling Gehan Homes in 2016, what inspired you to start GFO Home two years later?
Gehan: I wanted to try something completely different, the opposite of what everybody else was doing. I wanted to build a bigger, nicer, move-up home and not have to compete for the first-time buyer. GFO Home has all brand-new floor plans, something that is uncommon across the industry in part because having new floor plans means changing all of your data, so most companies move very, very slowly on changing floor plans.
BUILDER: Did you ever consider retiring?
Gehan: Hell no, there was never a minute I thought I’d retire after Gehan Homes. Retiring is not in my personality. I have a lot of friends my age who don’t work or are on the verge of retiring. For me, it was going out and accomplishing things not related to money.
At Gehan, we were doing very well in Dallas, very financially successful, and growing like crazy. I respected what Pulte did, which was going to different markets. That was very uncommon, only a couple of home builders were successfully doing that. I wanted to see if I could be successful in Houston while not living in Houston. In 2016, after selling Gehan Homes, I had a lot of choices, and what I really wanted was to try to have a different market position and see if I could accomplish a different goal. For me personally, this is an opportunity that if you’re lucky and successful you’ll have at a certain time in your life.
BUILDER: How did you come up with the name? Does GFO stand for anything?
Gehan: I had to spell my last name to people for 25 years. One reason for GFO Home is that it’s a phonetic email address. GFO Home stands for Gehan Family Office and encompasses different interests at this phase of my career. I knew that I had other opportunities in addition to being a home builder, because I had capital to invest in all kinds of different investments. And I also feel a responsibility to reinvest the proceeds of Gehan Homes in other areas in addition to home building.
BUILDER: How did GFO Home fare in its initial years before the onset of the pandemic?
Gehan: What I wasn’t going to do was solicit any employees from Gehan Homes or my personal friends’ home building companies. We started with just myself, and it went really, really well because this was my fifth startup from scratch. There was no question at all about exactly how to do it.
After six years in Dallas with Gehan, I decided to make an investment in Houston. The process was this: Fly to Houston on Southwest Airlines, rent a car, and drive around the city, stopping at land-for-sale signs, and calling the brokers who were listed.
I would go for two nights and drive around Houston, stay in these extended-stay motels, which were new at the time and cost $59 per night, would drive until it got dark at 8:45 p.m., drive back to the hotel, walk to HEB across the street, and buy a bottle of rose wine for $10, put it in the full-size fridge and let it get cold, watch television or read a book, set alarm for 7 a.m., and get back in the rental car to do it all over again the next day.
The first day I did this, I got off the plane at Hobby airport, took the van to the rental car place, got in a car, and started driving. I’d never really been to Houston, and there were so many properties for sale, I thought it must be a Houston thing. Brokers started calling me back. It worked really well, and we started to get traction. We were closing 700 houses a year in Houston after year three. Then, I realized we could do the exact same thing in Austin. Houses in our market position all looked the same as they were in Dallas. I realized I could take our floor plans and do that in Houston, Austin, San Antonio.
So when I started GFO Home, it was my fifth startup. All I did was pick a different market segment. This time I was flying around in my Challenger and ordering more expensive wine at dinner than what I got at the HEB across from my extended-stay hotel in Houston.
BUILDER: Then, the pandemic hits. How has the company handled the ups and downs since early 2020?
Gehan: The first month or two we had a similar emotional reaction to what everybody had: What is this leading to? The first business thought that I had was that we don’t own a lot of assets because we’re new. So our balance sheet was not going to suffer even with a huge asset price decline. We had a lot of cash and not a lot of debt. Two months into the pandemic we started getting opportunities to buy assets in Austin from public home builders who were shedding assets, and that’s what started our incredible growth. We bought every asset that fit our market. While other companies were laying off employees and selling assets, we went from one employee to 135 employees in four years. So the pandemic really super-charged our growth.
BUILDER: The company has now expanded from Austin to Dallas. What are your goals for the company moving forward?
Gehan: We’ve made an investment in Houston on GFO’s first master-planned community, Fulshear Lakes, and we’re going to open our Houston office in the next 12 months. Our first goal is to have 1% market share in Austin, Dallas, and Houston. Why 1%? It’s the lowest number I could think of. You can’t start a meeting and say our goal is to have 0% market share. At today’s current math, with 1% market share in Austin, Dallas, and Houston, GFO would be valued at $2 billion. We’re absolutely not going beyond the three major cities in Texas.