Mis-direction, and knowing when to fold them.
Of all the things self-employed people have in common, I’m sure one that ranks way up there is getting into something that in retrospect either you shouldn’t have, or maybe you should have, but if you knew what you were signing up, you wouldn’t have.
As I look across my small business colleagues, there isn’t literally one of them that didn’t bite from the wrong apple, or took too big of a bite of that apple, or bit the apple too early when unripe, or too late when overripe.
I’ve done it too many times to count, but in at least one regard if you are one that looks for silver linings in things, I haven’t made the fatal mistake that strikes a lot of people in my business, and that is buying the wrong piece of land, or overbuilding a spec house, or getting stuck with a house for a lot longer than you want. Other than that pretty important mistake avoidance, I’ve made all the rest.
What got me thinking about the corners I’ve fought out of, all the tight spots I’ve wriggled out of, all the hairpin turns I’ve navigated on 2 wheels, is this 4 house, single family rental community I built and own down in Phoenixville PA. P-ville is just a fabulous town, and has been growing for 15 years or 20 years and it’s one of those towns you can feel the civic enthusiasm across the cultural, business and neighborhood environments.
My sister lives down there, so around 2014 or so I was riding my bike on the trail that hugs the Schuylkil River (not a word easily spelled) and came across this 5 acres parcel with a distress box for a structure on it. Being such a vibrant area, my thinking juices got pumping, and before you knew it, I owned it.
That began a 8 year journey of false starts, mis-starts, wrong starts, what seemed like good ideas but turned out not to be, etc… Just a never ending process of experimenting, brainstorming, switching gears and changing directions - what made it worse, was it was far from home and I was really busy on the home front, and I had zero for a team down there.
So the original building was a community hall, built in 1935. From outerspace google earth, you can still see the faintest traces of a baseball field. From there, it was a hardcore biker bar (my neighbor has bullet holes in his stucco when he would occasionally complain to the police), an underground lesbian bar, a korean church, a charter school, then sat vacant, then I got suckered into it.
Thing is, it sits in a flood plain, last flooded when everything on the east coast flooded in the early 1970’s Hurricane Agnes, more than a generation ago, so all memory of it was mostly lost, especially for those younger people involved in its nascent gentrification and who didn’t have any relations or contacts down in the area. Christ, it hadn’t flooded in 50 years, until it did, in 2021, when Ida began in New Orleans and somehow came up inland and hovered over Southeast PA, and dumped a lot of rain really quickly. And flood did it flood. Right after I had spent 7 years of my life improving that home that sat in the flood plain, but also building 3 more, just out of the flood plain.
Flood it did. Worse than anyone could remember. The entire canal and river area under 5' water. 130,000 gallons of water in my basement - 8' high, in a 40x60 space. Poured in in a matter of one hour. My tenant had to be rescued in a canoe, and canoe back every day to feed her cat. That was hard, post-pandemic (actually not quite post), and a lot of really taxing events that pushed me to the brink, literally not figuratively. After events like that, compounded by a 2 year pandemic, when I measure myself of what I'm capable of dealing with, sustaining and navigating - I'm almost on a different planet than most people.
Turns out, getting the plot surveyed, as I always do, was a good thing, and one a lot of people don’t do. I’d never buy a piece of land without surveying it - just a simple exercise, and can reveal so much from property line misunderstanding to deed issues. Anyway, what this survey did was reveal to me (and not the other dozens of people interested) that the flood plain stopped 2/3s up the property which gave me a development opportunity.
A lot of people think I’m a skill developer, but I’m really not. I mostly buy parcels that are building permit ready and leave the subdividing to others, in the far past or recent past. Subdividing can just cause so much expense, delay, time and uncertainty and there is no real guarantee that you will succeed, regardless of the expense and money invested. In the end, it’s up to 5-6 people on a planning board, many who have very little expertise. Though on the other hand, it’s fascinating how many boards are made up of a diverse cross section of skilled persons as well.
I’ve purchased, either in bulk or one by one, several subdivisions done by others. Autumn Ridge in Saugerties, 12 lots in Bethel, 200 acres and 20 building lots in North Branch, (2) 4 lot subdivisions in Kerhonkson, a 15 lot project in Kerhonkson, a 3 lot subdivision in Olive, 16 lots in Saugerties and there’s probably more. I’ve built them all out, many of them had been sitting around for years if not decades.
So where was I going with this - basically I guess, just to demonstrate 1 project I bought, had a plan, the plan sucked, had another plan, plan sucked more, and kept coming up with ideas until one didn’t suck and actually stuck. 4 lot subdivision instead of a pre-school, of single family rentals. Nothing about it was easy. Nothing about it was straight-forward, nothing about it went according to plan, but in the end, through perseverance and really no other option, I saw it through, and it’s now generating $10k of rental income a month, plus the depreciation and tax advantages of owning real estate. That’s forever.
But my point is, all of us business people get into these situations - and the hard part is when to know when it’s a lost cause and time to admit defeat and move on, or whether to stick it out and see it through. It’s hard to admit defeat, and defeat comes in many forms - it may be that it’s just sucking up so much time that it is materially taking away from your core business.
It’s impossible to avoid - these mis-judgements and misdirections - it’s just what you do with them that counts. Plenty of folks have made lemonade out of lemons, and probably just as many refused to let go, and drug the whole enterprise down with it, maybe not ‘out of business’, but less mobile, less healthy, less positioned for growth and less positioned to take advantage of the next opportunity that comes your way - miss too many opportunities (most not even close to being well-timed, which helped me coin the idea that 'you don't get to time opportunities, you get to decide to pounce or not.'
The building when I found it.
