Welcome back to the show. Today, we’re diving into one of the most overlooked but absolutely critical aspects of the homebuilding business: the velocity of capital and the cash conversion cycle.
Most people think of real estate as static — land, bricks, and concrete. But the truth is, homebuilding is all about speed. How fast can you turn your capital, and how efficiently can you cycle from outflows — land acquisition, permits, construction — back into inflows when you close and collect?
Velocity of capital tells you how quickly every dollar you invest comes back to you, ready to be redeployed. The cash conversion cycle breaks it down step by step: how long cash is tied up in land, how long it sits in work-in-progress, and how quickly you can exit with a sale.
Understanding this isn’t just academic. It’s the difference between a builder who struggles for liquidity and one who compounds returns year after year.
So today, we’ll talk about how builders can shorten their cycle times, manage capital intensity, and ultimately create a business model that scales without running out of cash
