July Musing from the NorthEast
It’s been hot here in the NorthEast. And muggy. As I sit in my screened porch at 6am, it’s clear another hot and heavy day is upon us. I’m a big fan of promoting the non-traditional career route of less college more real life practice, but you can’t deny one of the true drawbacks of pure trades work is being exposed to the elements. Hot, cold, rain, etc… you are out there.
Currently we are having a ‘trades’ conversation across the country - the college route and the non-college route. It’s gotten a bit linear - be a plumber or work in an office. The term ‘trades’ needs to be expanded and rebranded since it doesn’t do justice to all the real alternatives out there to a four year degree. You look at a construction company - or a trades company - and just inside that company are many positions that don’t require a college degree and don’t require swinging a hammer. Same thing at a grocery store, physical therapy office, doctors office, accounting firm, hvac company, auto dealership.
Yes, you need to know how to read and write. The better, the better. Some book-keeping, some excel, some communication. What seems to be lost in the academic career prep track is the ability to prepare for the work-force - in fact, I think there could be a curriculum that is junior college, community college cost that is designed for work place prep. Basic quickbooks, advanced use of MS office- word, excel, powerpoint-, communication etiquette, personal finance, basic business practices and law. A foundation of useful skills that are valuable to a small business.
The team in the office is humming away. All men. A major switch from mostly all female. Looks like it’s a good team, a sustainable team. A talented team.
Without any homes to sell - currently working on 3 ‘your land our homes’ projects- I’m losing a little bit of my in-depth in-touchness with the real estate marketplace. Looks like homes are still moving, and moving at reasonable prices, and looks like there are some really nice homes for sale. Some of the new construction that went up and sold over the last few years are coming back on the market - interestingly, not much of it is our homes. People keep our homes. Other new construction, that seems to turnover sometimes pretty quick. People have always kept our homes - for decades. Just the back of an envelope - of my first 10 homes, I think 5 families still own them after 20 years. That’s pretty rare in a 2nd home marketplace that averages turnover every 7 years. I think it’s a compliment to our efforts.
Our 16 homes in Saugerties built in 2020-2021, only 2 have been put back on the market, and one was always an ill-advised investment play. 12 homes in North Branch, people are just getting settled in. 15 in Kerhonkson, maybe 2 have resold. 4 in Stone Ridge built 10 years ago - no one has sold. 40 in Narrowsburg - maybe 10 over 20 years have resold.
Which brings me to an interesting tidbit I was thinking on the other day - that two of my biggest successes of the last 5 years have been nearly inadvertent, near misses.
In Saugerties, when I bought 16 lots in 2 tranches of 8, the transaction was occurring just as covid was springing forth its bountiful wrath. I had already purchased the first 8, and the 2nd 8 were set to close in 60 days, and I did everything in my power to get out of the deal, since I personally had no idea where the market was going, and I was of the mind-set pre-covid (2020) that the sales environment was going to get rough, and was preparing to stay prepared for a rough spell - I think we were building a half a dozen smaller homes. The last thing I wanted to be was the guy holding 16 parcels of land (with borrowed money) as the market churned to a stop.
The NYC seller, who had owned all 16, would have none of it. A sophisticated seller with a tough attorney, they were going to hold my feet to the fire and sell these lots to me whether I liked it or not. This was March and April. So I bought them. Turns out these $40k-$60k lots were a good mine, as the Covid restrictions and fears pushed people upstate in a gold rush like volume. Soon, everyone was buying land; soon, everyone was buying homes; soon, lots of builders, designers and developers were seeking out land. And the cost was going up, quickly, and more than that, there was never a lot of land available, and it was becoming scarce rapidly. Prices for that $50k piece of land now ranges from $185k-$300k, and there’s not much to choose from.
What that did for Catskill Farms was give us a ton of land to project our building schedule - we weren’t out searching and competing for land - we owned it, we could show it, we could couple it with a house and sell it. And that we did - one after another after another after another And we were doing the same at several spots across our building area. We put up a shit ton of houses.
Same thing but different up in North Branch/Fremont NY, where I had a deal that was so good I had to buy it, but again, didn’t really want to. I think it was 300 acres - already subdivided - and ready to go. But before I bought it, I unsuccessfully tried to find a partner, and after I bought it, I tried like hell to find a buyer for the whole thing. Unsuccessful in both efforts, I did what I go best - double down, hold my breath, work like hell, and build the damn thing out.
Turns out, while a ton of work and a ton of risk, both projects (and others going on at the same time) were hugely profitable - and I was still selling at under true market value of what real estate was going for since, I was making deals on unbuilt homes that would take 8 months to monetize, and the market was going up like crazy in those 8 months - especially at the beginning when my prices started at $450k and then $550k and then $650k and then $950k (in 2024 when I finally caught up mostly with them market). You start making $200k-$300k a house and you start building real wealth.
But the point of the story is that it only happened because I got stuck in deals I was dying to get out of but turned into the best things that ever happened to me - being loaded up with great land when the great covid rush hit. I wouldn’t get the reward with venturing out into the deep seas of the flat earth first, chartering and navigating by the stars and currents.
I had a couple of things working for me - 1, I was used to death-defying risk-taking, 2, I had a great bank (Jeff Bank), 3, I knew the market inside and out, 4, I had a great marketing machine I could switch on, 5, I had a good foundation of a team to get the work done and monetize the opportunity, and 6, I had been doing this for 2 decades, so had a lot of soft relationships with engineers, building departments, utilities, etc… To scale, this was not the time to build relationships, this was the time to leverage ones you had built over many projects.
I’ve probably written this here before the clever analogy I came up with during this time or shortly after - that for many businesses, Covid was like being on a raft in the salt water ocean - there was lots of water (potential clients) but you couldn’t drink it because is was salt water (capture the business) - yes, your phone might have been ringing off the hook but because of a lack of business infrastructure, cash flow, employee recruiting acumen, production process - you weren’t able to scale and the only thing you got good at was saying ‘no, can’t do it’, or worse, saying ‘yes’ only to fail to finish properly or finish at all.
This was when having a business degree, a communications degree and 20 years of experience helped - we scaled, we met the moment, we executed, at the highest level, at the highest RPM, with our steering wheel shaking and our hands gripped tight - we scaled, we met the moment, we surfed that incredible wave of demand that swept right through our hood.