Home builder turns to Czech homeland

MISSIONARY FOR CAPITALISM

December 28, 1992|By Ellen James Martin | Ellen James Martin,Staff Writer

He was a refugee from Communist Czechoslovakia, a home builder in New Jersey and Ohio and, for two decades, chief economist for the National Association of Homebuilders.

Now the entrepreneur has turned his attention to a labor of love: building homes in his native land.

"Obviously, I have an emotional attachment to the country," says 71-year-old Michael Sumichrast, who portrays himself as something of a missionary for capitalism. Along with his 26-year-old son, Martin, Mr. Sumichrast is plotting subdivisions in a dozen suburban areas around Prague.

"Building a house there is probably 10 times as difficult as it is here," says the elder Mr. Sumichrast, who plans to build Mediterranean-style houses -- complete with American kitchens and bathrooms. He expects to break ground next spring.

Facing bureaucratic hurdles to gain title to lots in Czechoslovakia, the Sumichrasts will start modestly -- 10 to 20 homes early next year. Within five years, they expect to have built up to 300 homes.

"The distance is an enormous problem," says Mr. Sumichrast. Given that he and his son must make frequent trips to Prague, it is proving expensive to compete with European businessmen for scarce building lots. Site development is also a costly problem. That's because finished building lots with sewer and water service are tough to find in the Prague area.

Still, the well-to-do economist -- who, since retiring from the National Association of Homebuilders, has developed a prosperous consulting and publishing empire -- wouldn't be doing business in Prague if he didn't think there was profit to be made.

"Money is money," he says with a knowing smile during an interview at his home in Potomac. Demand for modern housing is "enormous" within the rising class of Czech entrepreneurs and business executives, not to mention the swelling demand of foreign nationals who are moving to Eastern Europe to take advantage of business opportunities there, he asserts.

Believing that the market will pay them back for the ordeals of doing business in Czechoslovakia, the father and son, along with a Pennsylvania investor, have formed a partnership known as USA Builders. The builder of prefabricated panels for the homes will be Liberty Homes of Stevensville, Md., on the Eastern Shore.

The Czech home-building venture is hardly the first entrepreneurial enterprise for Mr. Sumichrast.

Five years ago, he started Rockville-based Sumichrast Publications, which publishes "The Sumichrast Report," a newsletter that forecasts residential real estate trends. The company also focuses on commercial real estate with publication of "Real Estate Perspectives," along with the Arthur Andersen accounting firm.

In addition, Mr. Sumichrast is the author or co-author of 11 books on housing or finance. And he has pursued a lucrative business as an economic consultant to home building companies, having trademarked a method of rating real estate markets known as the "Strike Price" system.

"Mike is full of enthusiasm and a little euphoria," says Jay Buchert, president of the National Association of Homebuilders.

"He's the right man for the job."

With the fall of Communism, Eastern Europe is now confronting the biggest demand for new housing since the end of World War II, Mr. Buchert contends. But he says it will be difficult for any American builder to transfer the light construction techniques of the United States to a European population accustomed to concrete homes.

"People over there are used to walls poured of solid concrete that are heavier and thicker," Mr. Buchert says. "Ours are framed out of lumber and covered with gypsum dry wall."

But the Sumichrasts, who did their own rudimentary research last spring by interviewing 400 potential Czech buyers about their housing preferences, are convinced that the predominantly wood homes can gain acceptance in the Czech market.

USA Builders favors American-style home building because it involves "panelized construction," an efficient technique that makes use of factory-produced roofs, floors and walls. Through such techniques, a home can be constructed in three to five months. By contrast, it typically takes three to seven years to build a masonry house of the same size using traditional Czech techniques, Mr. Sumichrast says.

To calm fears that lumber homes are prone to fire, the Sumichrasts guarantee installation of sprinkler systems in all their Prague homes. To meet Czech housing tastes, they have adapted their U.S. designs to give their homes brick or stucco veneers, red tile roofs and other architectural features favored by the Eastern European market. The homes they sell will go for $100,000 to $300,000, they estimate.

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