The days of remodelers being jacks-of-all-trades may be coming to an end. According to the Joint Center for Housing Studies of Harvard University (JCHS) report, specialization, which offers opportunities for vertical integration, is becoming the most effective way to grow a remodeling business.

Front Porch Group, a Michigan based remodeling company, made the decision in 2008 to specialize in a very specific market: renovation loan projects. The group only works with FHA203K, HomeStyle, and Escrow Repair Loans. For Josh Smith, the company’s owner and founder, this niche space allows him to harness his prior experience and knowledge of the real estate, construction, and home development business to grow his company. Here’s what Smith has to say about his business and the decision to specialize.

RM: What made you decide to focus only on repairs/renovations that are part of a home purchase?

JS: Our history. I grew up in the real estate, construction, and home-development business. Plus, I have a real estate license and experience as a broker. I saw a need for a good contractor who knows the buyer as well as the lender. Lots of contractors don’t know what a title company is.

Tell us about your market.

Builders stopped building for a few years during the recession, so our housing stock is old. Renovation loans are going to be a big deal to get America’s housing stock back in order for the next generation.

We cover the whole west half of Michigan. Our average demographic is probably age 25 to 45. Kitchens and bathrooms are big and so are energy-efficient upgrades (e.g. windows and furnaces). People can get grants for energy-efficient upgrades.

There are four components to this market: real estate agents, contractors, lenders, and consumers.

  • Contractors don’t want to do renovation type loans because there is lots of paperwork and understanding of rules.
  • Real estate agents don’t want to do these deals because they only get paid on the sale of a home, not renovations, and it makes the process more difficult if your contractor and lender don’t know what they’re doing.
  • Lenders don’t want to do this loan because it’s a difficult process that if you don’t have a contractor who can do things right and put things together, you’ll flop as a lender.
  • Consumers want this product. People love HGTV and want to do this.

What are the benefits to focusing on this niche market? Are there negatives?

There are lots of benefits. You’re not one of 100 renovation contractors out there. The saying “jack-of-all-trades, master of none” is very true. From a consumer standpoint, if you can speak intelligently on one thing, it’s better than speaking partially on 10 things. You bring value to the situation and are looked at as an expert. From a marketing perspective, it can’t get any better than that.

When you decide to specialize, it is going to be very tough for the first few years. Once you get past that, the rewards are there. Being able to stick it out can be hard—it can be tempting to take other jobs. We decided to go all in and stick with it.

What advice do you have for other remodelers thinking about specializing?

This isn’t an easy decision. Take a step back and figure out where your specialty lies. Look at your life, career, and experience.

Smith recommends that you ask yourself the following questions before deciding to specialize:

  • What jobs have you done where clients were the most happy?
  • What do you love to do?
  • Is there enough work to sustain you?
  • Will you have clients and will they be happy with your work?