“One is making old-fashioned shelter and hoping if I build it, they will come,” said the 67-year-old Virginia entrepreneur. “The other is a transient lodging business tied to the Internet and dependent on millennials.”
Like entrepreneurs everywhere, Spear had to navigate the Great Recession, which humbled his once-robust construction business. He also had to figure out how to grab a corner of the hospitality business as it was being upended by the Internet. A decade later, he has the reward end of the risk-reward equation in hand.
The two companies — Spear Builders and the Inn at Stevenson Ridge — together gross just over $5 million, delivering a decent profit to Spear. The inn contributes about $1 million of the gross.
“It’s been a major accomplishment for me to weather this,” Spear said.
There’s also a fun part to his efforts. The Inn at Stevenson Ridge is a fact-filled history lesson. It includes a bunch of private cottages from the 18th and 19th centuries, anchored by the 6,000-square-foot Riddick House, which Spear imported, piece by piece, from North Carolina.
“It took six months to take it apart, label it, disassemble and ship it” Spear said of the house, which was finished in 1812. “Every room started with a letter of the alphabet. Every floor had a different color.”
Four flatbed truckloads later, the house was reassembled in 2004. Spear said the entire project cost $500,000.
“An investment in my own backyard seemed like a good thing to do,” he said. “Not everyone gets the opportunity to resurrect a historic house.”
Spear opined at length on the history of the house and how houses were built in Colonial times. Carpenters back then had only rudimentary tools.
“I am fascinated by what they can do with a pit saw, a brace, and a hammer and chisel,” said the builder.
Spear said Riddick House is all the more amazing because it was built at a time when only 12 master carpenters were on the East Coast — “eight of whom were at Monticello.” Monticello is Thomas Jefferson’s home in Charlottesville.
“If you were a merchant or landowner, you could go upscale,” he said, describing Riddick House. “Somewhere along the line, this family had visions of grandeur and a goal to build a magnificent house before its time. We tried to put it back the way we found it.”
Building houses was “the natural progression” for the son of an Ohio construction worker. “I had good hands,” said Spear, a former carpenter. “I knew building.”
He earned his construction chops building Olympic-size swimming pools.
“I was a young kid and [my boss] pounded in the fundamentals,” he said. And what does that mean? “You build a house that’s level, square and plumb.” In other words, exact.
He started Spear Builders after he came to Virginia from Ohio in 1989. He worked with a bank that provided financing for the land. The bank got its money back with each home sale. Spear said his company’s take was about 7 percent of the sale price.
He made a few thousand dollars after selling his first home for $89,000.
“We got a lot better at it,” he said.
The company grew, and in a few years was building as many as 152 houses a year. Spear Builders’ gross revenue ranged from $3 million to $4 million a year.
Spear said most of the national home builders at the time did not venture south of the Rappahannock River. That gave Spear freedom to build his customized, midrange houses in hot subdivisions between Washington and Richmond. Many of the customers were relocating from Northern Virginia to a less expensive area. The profit from selling Northern Virginia homes bought a lot of house just a few miles south.
“We burned a pretty hard path for a long time,” Spear said. “I found talented people who didn’t mind some hard work.”
Then the financial crisis hit. The recession cut annual sales from more than 100 houses to fewer than 30. Prices dropped, too, from more than $500,000 each to about $400,000, squeezing profit margins down to almost nothing.
When the market dried up, Spear had millions invested in lots and in homes that he could not sell.
“The music stopped,” Spear said. “I had a pile of housing inventory. I weathered it. It hasn’t been pleasant.”
I asked how he got through such a difficult economic contraction. His answer was simple: “Cut costs.”
“You have to immediately cut the number of your employees, unfortunately,” Spear said. His head count dropped from 38 employees to nine, where it is to this day. The business never completely rebounded to its pre-recession heyday, but “we are coming out of the tunnel,” Spear said.
Things were difficult for several years, he said, as he kept his construction business afloat while trying to make money on the inn.
Spear’s daughter, Jennifer Mackowski, runs the Inn at Stevenson Ridge, which includes a 265-person event space. At first, Mackowski said, they just wanted the inn to break even. They marketed it as a special events venue and as a convenient location for people visiting Civil War battlefields, including Chancellorsville, the Wilderness Campaign and Spotsylvania.
Spear urged his daughter to try Airbnb, the online hospitality marketplace, whose members provide private, temporary lodging. When Mackowski joined the service three years ago, the inn received seven bookings in five days.
“My parents wanted to turn it into a business and try to make some money to help pay for the expenses of restoring the cabins,” Mackowski said. Thanks to Airbnb, the inn is doing more than paying for itself. It has become a profit center.
“We have an entirely different clientele than what we had before,” she said. “Before Airbnb, our clients were mostly event-related and people in their 50s and older coming for a romantic getaway or Civil War touring.”
Airbnb brought lots of younger visitors from Northern Virginia and Southern Maryland who want to get out of the city with their dogs.
“It’s the millennials,” Spear said. “I knew we had made it when I saw all the Zipcars in the parking lot.”